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Health Security Act 93
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HEALTH SECURITY ACT
103d CONGRESS
1st Session
H. R. / S._
IN THE HOUSE OF REPRESENTATIVES /
IN THE SENATE OF THE UNITED STATES
Mr. ________________ _(for himself, [insert cosponsor list
attached])_ introduced the following bill; which was [read twice
and] referred to the Committee on _XXXXXXXXXXXXXXX
BILL
To ensure individual and family security through health care
coverage for all Americans in a manner that contains the rate of
growth in health care costs and promotes responsible health
insurance practices, to promote choice in health care, and to
ensure and protect the health care of all Americans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
Health Security Act
Table
SECTION 1. SHORT TITLE; TABLE OF TITLES AND SUBTITLES.
(a) Short Title._This Act may be cited as the ``Health Security
Act''.
(b) Table of Titles and Subtitles in Act._The following are the
titles and subtitles contained in this Act:
TITLE I_HEALTH CARE SECURITY
Subtitle A_Universal Coverage and Individual Responsibility
Subtitle B_Benefits
Subtitle C_State Responsibilities
Subtitle D_Health Alliances
Subtitle E_Health Plans
Subtitle F_Federal Responsibilities
Subtitle G_Employer Responsiblities
Subtitle J_General Definitions; Miscellaneous Provisions
TITLE II_NEW BENEFITS
Subtitle A_Medicare Outpatient Prescription Drug Benefit
Subtitle B_Long-Term Care
TITLE III_PUBLIC HEALTH INITIATIVES
Subtitle A_Workforce Priorities Under Federal Payments
Subtitle B_Academic Health Centers
Subtitle C_Health Research Initiatives
Subtitle D_Core Functions of Public Health Programs; National
Initiatives Regarding Preventive Health
Subtitle E_Health Services for Medically Underserved Populations
Subtitle F_Mental Health; Substance Abuse
Subtitle G_Comprehensive School Health Education; School-Related
Health Services
Subtitle H_Public Health Service Initiatives Fund
Subtitle I_Coordination With COBRA Continuation Coverage
TITLE IV_MEDICARE AND MEDICAID
Subtitle A_Medicare and the Alliance System
Subtitle B_Savings in Medicare Program
Subtitle C_Medicaid
Subtitle D_Increase in SSI Personal Needs Allowance
TITLE V_QUALITY AND CONSUMER PROTECTION
Subtitle A_Quality Management and Improvement
Subtitle B_Information Systems, Privacy, and Administrative
Simplification
Subtitle C_Remedies and Enforcement
Subtitle D_Medical Malpractice
Subtitle E_Fraud and Abuse
Subtitle F_McCarran-Ferguson Reform
TITLE VI_PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS
Subtitle A_Premium Caps
Subtitle B_Premium-Related Financings
Subtitle C_Payments to Regional Alliance Health Plans
TITLE VII_REVENUE PROVISIONS
Subtitle A_Financing Provisions
Subtitle B_Tax Treatment of Employer-Provided Health Care
Subtitle C_Employment Status Provisions
Subtitle D_Tax Treatment of Funding of Retiree Health Benefits
Subtitle E_Coordination With COBRA Continuing Care Provisions
Subtitle F_Tax Treatment of Organizations Providing Health Care
Services and Related Organizations
Subtitle G_Tax Treatment of Long-term Care Insurance and Services
Subtitle H_Tax Incentives for Health Services Providers
Subtitle I_Miscellaneous Provisions
TITLE VIII_HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL
GOVERNMENT
Subtitle A_Military Health Care Reform
Subtitle B_Department of Veterans Affairs
Subtitle C_Federal Employees Health Benefits Program
Subtitle D_Indian Health Service
Subtitle E_Amendments to the Employee Retirement Income Security
Act of 1974
Subtitle F_Special Fund for WIC Program
TITLE IX_AGGREGATE GOVERNMENT PAYMENTS TO REGIONAL ALLIANCES
Subtitle A_Aggregate State Payments
Subtitle B_Aggregate Federal Alliance Payments
Subtitle C_Borrowing Authority to Cover Cash-Flow Shortfalls
TITLE X_COORDINATION OF MEDICAL PORTION OF WORKERS COMPENSATION
AND AUTOMOBILE INSURANCE
Subtitle A_Workers Compensation Insurance
Subtitle B_Automobile Insurance
Subtitle C_Commission on Integration of Health Benefits
Subtitle D_Federal Employees' Compensation Act
Subtitle E_Davis-Bacon Act and Service Contract Act
Subtitle F_Effective Dates
TITLE XI_TRANSITIONAL INSURANCE REFORM
TITLE XII_TEMPORARY ASSESSMENT ON EMPLOYERS WITH RETIREE HEALTH
BENEFIT COSTS
Findings
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) Under the current health care system in the United States_
(A) individuals risk losing their health care coverage when they
move, when they lose or change jobs, when they become seriously
ill, or when the coverage becomes unaffordable;
(B) continued escalation of health care costs threatens the
economy of the United States, undermines the international
competitiveness of the Nation, and strains Federal, State, and
local budgets;
(C) an excessive burden of forms, paperwork, and bureaucratic
procedures confuses consumers and overwhelms health care
providers;
(D) fraud and abuse sap the strength of the health care system;
and
(E) health care is a critical part of the economy of the United
States and interstate commerce, consumes a significant percentage
of public and private spending, and affects all industries and
individuals in the United States.
(2) Under any reform of the health care system_
(A) health insurance and high quality health care should be
secure, uninterrupted, and affordable for all individuals in the
United States;
(B) comprehensive health care benefits that meet the full range
of health needs, including primary, preventive, and specialized
care, should be available to all individuals in the United
States;
(C) the current high quality of health care in the United States
should be maintained;
(D) individuals in the United States should be afforded a
meaningful opportunity to choose among a range of health plans,
health care providers, and treatments;
(E) regulatory and administrative burdens should be reduced;
(F) the rapidly escalating costs of health care should be
contained without sacrificing high quality or impeding
technological improvements;
(G) competition in the health care industry should ensure that
health plans and health care providers are efficient and charge
reasonable prices;
(H) a partnership between the Federal Government and each State
should allow the State and its local communities to design an
effective, high-quality system of care that serves the residents
of the State;
(I) all individuals should have a responsibility to pay their
fair share of the costs of health care coverage;
(J) a health care system should build on the strength of the
employment-based coverage arrangements that now exist in the
United States;
(K) the penalties for fraud and abuse should be swift and severe;
and
(L) an individual's medical information should remain
confidential and should be protected from unauthorized disclosure
and use.
Purposes
SEC. 3. PURPOSES.
The purposes of this Act are as follows:
(1) To guarantee comprehensive and secure health care coverage.
(2) To simplify the health care system for consumers and health
care professionals.
(3) To control the cost of health care for employers, employees,
and others who pay for health care coverage.
(4) To promote individual choice among health plans and health
care providers.
(5) To ensure high quality health care.
(6) To encourage all individuals to take responsibility for their
health care coverage.
Title I: HEALTH CARE SECURITY
Table of contents
Subtitle A. Universal Coverage and Individual Responsibility
Part 1. UNIVERSAL COVERAGE
Section 1001. Entitlement to health benefits.
Section 1002. Individual responsibilities.
Section 1003. Protection of consumer choice.
Section 1004. Applicable health plan providing coverage.
Section 1005. Treatment of other nonimmigrants.
Section 1006. Effective date of entitlement.
Part 2. TREATMENT OF FAMILIES AND SPECIAL RULES
Section 1011. General rule of enrollment of family in same health
plan.
Section 1012. Treatment of certain families.
Section 1013. Multiple employment situations.
Section 1014. Treatment of residents of States with Statewide
single-payer systems.
Subtitle B. Benefits
Part 1. Comprehensive Benefit Package
Section 1101. Provision of comprehensive benefits by plans.
Part 2. Description of Items and Services Covered
Section 1111. Hospital services.
Section 1112. Services of health professionals.
Section 1113. Emergency and ambulatory medical and surgical
services.
Section 1114. Clinical preventive services.
Section 1115. Mental health and substance abuse services.
Section 1116. Family planning services and services for pregnant
women.
Section 1117. Hospice care.
Section 1118. Home health care.
Section 1119. Extended care services.
Section 1120. Ambulance services.
Section 1121. Outpatient laboratory, radiology, and diagnostic
services.
Section 1122. Outpatient prescription drugs and biologicals.
Section 1123. Outpatient rehabilitation services.
Section 1124. Durable medical equipment and prosthetic and
orthotic devices.
Section 1125. Vision care.
Section 1126. Dental care.
Section 1127. Health education classes.
Section 1128. Investigational treatments.
Part 3. Cost Sharing
Section 1131. Cost sharing.
Section 1132. Lower cost sharing.
Section 1133. Higher cost sharing.
Section 1134. Combination cost sharing.
Section 1135. Table of copayments and coinsurance.
Section 1136. Indexing dollar amounts relating to cost sharing.
Part 4. Exclusions
Section 1141. Exclusions.
Part 5. Role of the National Health Board
Section 1151. Definition of benefits.
Section 1152. Acceleration of expanded benefits.
Section 1153. Authority with respect to clinical preventive
services.
Section 1154. Establishment of standards regarding medical
necessity.
Part 6. Additional Provisions Relating to Health Care Providers
Section 1161. Override of restrictive State practice laws.
Section 1162. Provision of items or services contrary to religious
belief or moral conviction.
Subtitle C. State Responsibilities
Section 1200. Participating State.
Part 1. General State Responsibilities
Section 1201. General State responsibilities.
Section 1202. State responsibilities with respect to alliances.
Section 1203. State responsibilities relating to health plans.
Section 1204. Financial solvency; fiscal oversight; guaranty fund.
Section 1205. Restrictions on funding of additional benefits.
Part 2. Requirements for State Single-payer Systems
Section 1221. Single-payer system described.
Section 1222. General requirements for single-payer systems.
Section 1223. Special rules for States operating Statewide
single-payer system.
Section 1224. Special rules for alliance-specific single-payer
systems.
Subtitle D. Health Alliances
Section 1300. Health alliance defined.
Part 1. Establishment of Regional and Corporate Alliances
Subpart A. Regional Alliances
Section 1301. Regional alliance defined.
Section 1302. Board of directors.
Section 1303. Provider advisory boards for regional alliances.
Subpart B. Corporate Alliances
Section 1311. Corporate alliance defined; individuals eligible for
coverage through corporate alliances; additional
definitions.
Section 1312. Timing of elections.
Section 1313. Termination of alliance election.
Part 2. General Responsibilities and Authorities of Regional Alliances
Section 1321. Contracts with health plans.
Section 1322. Offering choice of health plans for enrollment;
establishment of fee-for-service schedule.
Section 1323. Enrollment rules and procedures.
Section 1324. Issuance of health security cards.
Section 1325. Consumer information and marketing.
Section 1326. Ombudsman.
Section 1327. Data collection; quality.
Section 1328. Additional duties.
Section 1329. Additional authorities for regional alliances to
address needs in areas with inadequate health
services; prohibition of insurance role.
Section 1330. Prohibition against self-dealing and conflicts of
interest.
Part 3. Authorities and Responsibilities Relating to Financing and Income
Determinations
Subpart A. COLLECTION OF FUNDS
Section 1341. Information and negotiation and acceptance of bids.
Section 1342. Amount of premiums charged.
Section 1343. Determination of family obligation for family share
and alliance credit amount.
Section 1344. Notice of family payments due.
Section 1345. Collection of premium payments.
Section 1346. Coordination among regional alliances.
Subpart B. PAYMENTS
Section 1351. Payment to regional alliance health plans.
Section 1352. Alliance administrative allowance percentage.
Section 1353. Payments for graduate medical education and academic
health centers.
Subpart C. FINANCIAL MANAGEMENT
Section 1361. Management of finances and records.
Subpart D. REDUCTIONS IN COST SHARING; INCOME DETERMINATIONS
Section 1371. Reduction in cost sharing for low-income families.
Section 1372. Application process for cost sharing reductions.
Section 1373. Application for premium reductions and reduction in
liability to alliance.
Section 1374. General provisions relating to application process.
Section 1375. End-of-year reconciliation for premium discount and
repayment reduction with actual income.
Part 4. Responsibilities and Authorities of Corporate Alliances
Section 1381. Contracts with health plans.
Section 1382. Offering choice of health plans for enrollment.
Section 1383. Enrollment; issuance of health security card.
Section 1384. Community-rated premiums within premium areas.
Section 1385. Assistance for low-wage families.
Section 1386. Consumer information and marketing; consumer
assistance; data collection and quality; additional
duties.
Section 1387. Plan and information requirements.
Section 1388. Management of funds; relations with employees.
Section 1389. Cost control.
Section 1390. Payments by corporate alliance employers to
corporate alliances.
Section 1391. Coordination of payments.
Section 1392. Applicability of ERISA enforcement mechanisms for
enforcement of certain requirements.
Section 1393. Applicability of certain ERISA protections to
covered individuals.
Section 1394. Disclosure and reserve requirements.
Section 1395. Trusteeship by the Secretary of insolvent corporate
alliance health plans.
Section 1396. Guaranteed benefits under trusteeship of the
secretary.
Section 1397. Imposition and collection of periodic assessments on
self-insured corporate alliance plans.
Subtitle E. Health Plans
Section 1400. Health plan defined.
Part 1. Requirements Relating to Comprehensive Benefit Package
Section 1401. Application of requirements.
Section 1402. Requirements relating to enrollment and coverage.
Section 1403. Community rating.
Section 1404. Marketing of health plans; information.
Section 1405. Grievance procedure.
Section 1406. Health plan arrangements with providers.
Section 1407. Preemption of certain State laws relating to health
plans.
Section 1408. Financial solvency.
Section 1409. Requirement for offering cost sharing policy.
Section 1410. Quality assurance.
Section 1411. Provider verification.
Section 1412. Consumer disclosures of utilization management
protocols.
Section 1413. Confidentiality, data management, and reporting.
Section 1414. Participation in reinsurance system.
Part 2. Requirements Relating to Supplemental Insurance
Section 1421. Imposition of requirements on supplemental
insurance.
Section 1422. Standards for supplemental health benefit policies.
Section 1423. Standards for cost sharing policies.
Part 3. Requirements Relating to Essential Community Providers
Section 1431. Health plan requirement.
Section 1432. Sunset of requirement.
Part 4. Requirements Relating to Workers' Compensation and Automobile
Medical Liability Coverage
Section 1441. Reference to requirements relating to workers
compensation services.
Section 1442. Reference to requirements relating to automobile
medical liability services.
Subtitle F. Federal Responsibilities
Part 1. National Health Board
Subpart A. ESTABLISHMENT OF NATIONAL HEALTH BOARD
Section 1501. Creation of National Health Board; membership.
Section 1502. Qualifications of board members.
Section 1503. General duties and responsibilities.
Section 1504. Annual report.
Section 1505. Powers.
Section 1506. Funding.
Subpart B. RESPONSIBILITIES RELATING TO REVIEW AND APPROVAL OF STATE
SYSTEMS
Section 1511. Federal review and action on State systems.
Section 1512. Failure of participating States to meet conditions
for compliance.
Section 1513. Reduction in payments for health programs by
secretary of health and human services.
Section 1514. Review of Federal determinations.
Section 1515. Federal support for State implementation.
Subpart C. RESPONSIBILITIES IN ABSENCE OF STATE SYSTEMS
Section 1521. Application of subpart.
Section 1522. Federal assumption of responsibilities in
non-participating States.
Section 1523. Imposition of surcharge on premiums under
federally-operated system.
Section 1524. Return to State operation.
Subpart D. ESTABLISHMENT OF CLASS FACTORS FOR CHARGING PREMIUMS
Section 1531. Premium class factors.
Subpart E. RISK ADJUSTMENT AND REINSURANCE METHODOLOGY FOR
PAYMENT OF
PLANS
Section 1541. Development of a risk adjustment and reinsurance
methodology.
Section 1542. Incentives to enroll disadvantaged groups.
Section 1543. Advisory committee.
Section 1544. Research and demonstrations.
Section 1545. Technical assistance to States and alliances.
Subpart F. RESPONSIBILITIES FOR FINANCIAL REQUIREMENTS
Section 1551. Capital standards for regional alliance health plan.
Section 1552. Standard for guaranty funds.
Part 2. Responsibilities of Department of Health and Human Services
Subpart A. GENERAL RESPONSIBILITIES
Section 1571. General responsibilities of Secretary of Health and
Human Services.
Section 1572. Establishment of breakthrough drug committee.
Subpart B. CERTIFICATION OF ESSENTIAL COMMUNITY PROVIDERS
Section 1581. Certification.
Section 1582. Categories of providers automatically certified.
Section 1583. Standards for additional providers.
Section 1584. Certification process; review; termination of
certifications.
Section 1585. Notification of health alliances and participating
States.
Part 3. Specific Responsibilities of Secretary of Labor.
Section 1591. Responsibilities of Secretary of Labor.
Subtitle G. Employer Responsiblities
Section 1601. Payment requirement.
Section 1602. Requirement for information reporting.
Section 1603. Requirements relating to new employees.
Section 1604. Auditing of records.
Section 1605. Prohibition of certain employer discrimination.
Section 1606. Obligation relating to retiree health benefits.
[THIS SECTION TO FOLLOW]
Section 1607. Prohibition on self-funding of cost sharing benefits
by regional alliance employers.
Subtitle J. General Definitions; Miscellaneous Provisions
Part 1. General Definitions
Section 1901. Definitions relating to employment and income.
Section 1902. Other general definitions.
Part 2. Miscellaneous Provisions
Section 1911. Use of interim, final regulations.
--------
Subtitle A. Universal Coverage and Individual Responsibility
Part 1. UNIVERSAL COVERAGE
SEC. 1001. ENTITLEMENT TO HEALTH BENEFITS.
(a) In General. In accordance with this part, each eligible individual is
entitled to the comprehensive benefit package under subtitle B through the
applicable health plan in which the individual is enrolled consistent with
this title.
(b) Health Security Card. Each eligible individual is entitled to a
health security card to be issued by the alliance or other entity that
offers the applicable health plan in which the individual is enrolled.
(c) Eligible Individual Defined. In this Act, the term ``eligible
individual'' means an individual who is residing in the United States and
who is
(1) a citizen or national of the United States;
(2) an alien permanently residing in the United States under color of
law (as defined in section 1902(1)); or
(3) a long-term nonimmigrant (as defined in section 1902(19)).
(d) Treatment of Medicare-Eligible Individuals. Subject to section
1012(a), a medicare-eligible individual is entitled to health benefits
under the medicare program instead of the entitlement under subsection (a).
(e) Treatment of Prisoners. A prisoner (as defined in section 1902(26))
is entitled to health care services provided by the authority responsible
for the prisoner instead of the entitlement under subsection (a).
SEC. 1002. INDIVIDUAL RESPONSIBILITIES.
(a) In General. In accordance with this Act, each eligible individual
(other than a medicare-eligible individual)
(1) must enroll in an applicable health plan for the individual, and
(2) must pay any premium required, consistent with this Act, with
respect to such enrollment.
(b) Limitation on Disenrollment. No eligible individual shall be
disenrolled from an applicable health plan until the individual
(1) is enrolled under another applicable health plan, or
(2) becomes a medicare-eligible individual.
SEC. 1003. PROTECTION OF CONSUMER CHOICE.
Nothing in this Act shall be construed as prohibiting the following:
(1) An individual from purchasing any health care services.
(2) An individual from purchasing supplemental insurance (offered
consistent with this Act) to cover health care services not included
within the comprehensive benefit package.
(3) An individual who is not an eligible individual from purchasing
health insurance (other than through a regional alliance).
(4) Employers from providing coverage for benefits in addition to the
comprehensive benefit package (subject to part 2 of subtitle E).
SEC. 1004. APPLICABLE HEALTH PLAN PROVIDING COVERAGE.
(a) Specification of Applicable Health Plan. Except as otherwise
provided:
(1) General rule: regional alliance health plans. The applicable health
plan for a family is a regional alliance health plan for the alliance
area in which the family resides.
(2) Corporate alliance health plans. In the case of a family member
that is eligible to enroll in a corporate alliance health plan under
section 1311(c), the applicable health plan for the family is such a
corporate alliance health plan.
(b) Choice of Plans for Certain Groups.
(1) Military personnel and families. For military personnel and
families who elect a Uniformed Services Health Plan of the Department of
Defense under section 1073a(d) of title 10, United States Code, as
inserted by section 8001(a) of this Act, that plan shall be the
applicable health plan.
(2) Veterans. For veterans and families who elect to enroll in a
veterans health plan under section 1801 of title 38, United States Code,
as inserted by section 8101(a) of this Act, that plan shall be the
applicable health plan.
(3) Indians. For those individuals who are eligible to enroll, and who
elect to enroll, in a health program of the Indian Health Service under
section 8302(b), that program shall be the applicable health plan.
SEC. 1005. TREATMENT OF OTHER NONIMMIGRANTS.
(a) Undocumented Aliens Ineligible for Benefits. An undocumented alien is
not eligible to obtain the comprehensive benefit package through enrollment
in a health plan pursuant to this Act.
(b) Diplomats and Other Foreign Government Officials. Subject to
conditions established by the National Health Board in consultation with
the Secretary of State, a nonimmigrant under subparagraph (A) or (G) of
section 101(a)(15) of the Immigration and Nationality Act may obtain the
comprehensive benefit package through enrollment in the regional alliance
health plan for the alliance area in which the nonimmigrant resides.
(c) Reciprocal Treatment of Other Nonimmigrants. With respect to those
classes of individuals who are lawful nonimmigrants but who are not
long-term nonimmigrants (as defined in section 1902(19)) or described in
subsection (b), such individuals may obtain such benefits through
enrollment with regional alliance health plans only in accordance with such
reciprocal agreements between the United States and foreign states as may
be entered into.
SEC. 1006. EFFECTIVE DATE OF ENTITLEMENT.
(a) Regional Alliance Eligible Individuals.
(1) In general. In the case of regional alliance eligible individuals
residing in a State, the entitlement under this part (and requirements
under section 1002) shall not take effect until the State becomes a
participating State (as defined in section 1200).
(2) Transitional rule for corporate alliances.
(A) In general. In the case of a State that becomes a participating
State before the general effective date (as defined in subsection (c))
and for periods before such date, under rules established by the Board,
an individual who is covered under an employee benefit plan (described
in subparagraph (C)) based on the individual (or the individual's
spouse) being a qualifying employee of a qualifying employer, the
individual shall not be treated under this Act as a regional alliance
eligible individual.
(B) Qualifying employer defined. In subparagraph (A), the term
``qualifying employer'' means an employer that
(i) is described in section 1311(b)(1)(A), or is participating in a
multiemployer plan described in section 1311(b)(1)(B) or arrangement
described in section 1311(b)(1)(C), and
(ii) provides such notice to the regional alliance involved as the
Board specifies.
(C) Benefits plan described. A plan described in this subparagraph is
an employee benefit plan that
(i) provides (through insurance or otherwise) the comprehensive
benefit package, and
(ii) provides an employer contribution of at least 80 percent of
the premium (or premium equivalent) for coverage
(b) Corporate Alliance Eligible Individuals.
(1) In general. In the case of corporate alliance eligible individuals,
the entitlement under this part shall not take effect until the general
effective date.
(2) Transition. For purposes of this Act and before the general
effective date, in the case of an eligible individual who resides in a
participating State, the individual is deemed a regional alliance
eligible individual until the individual becomes a corporate alliance
eligible individual, unless paragraph (2)(A) applies to the individual.
(c) General Effective Date Defined. In this Act, the term ``general
effective date'' means January 1, 1998.
Part 2. TREATMENT OF FAMILIES AND SPECIAL RULES
SEC. 1011. GENERAL RULE OF ENROLLMENT OF FAMILY IN SAME HEALTH PLAN.
(a) In General. Except as provided in this part or otherwise, all members
of the same family (as defined in subsection (b)) shall be enrolled in the
same applicable health plan.
(b) Family Defined. In this Act, unless otherwise provided, the term
``family''
(1) means, with respect to an eligible individual who is not a child
(as defined in subsection (c)), the individual; and
(2) includes the following persons (if any):
(A) The individual's spouse if the spouse is an eligible individual.
(B) The individual's children (and, if applicable, the children of
the individual's spouse) if they are eligible individuals.
(c) Classes of Family Enrollment; Terminology.
(1) In general. In this Act, each of the following is a separate class
of family enrollment under this Act:
(A) Coverage only of an individual (referred to in this Act as the
``individual'' class of enrollment).
(B) Coverage of a married couple without children (referred to in
this Act as the ``couple-only'' class of enrollment).
(C) Coverage of an unmarried individual and one or more children
(referred to in this Act as the ``single parent'' class of enrollment).
(D) Coverage of a married couple and one or more children (referred
to in this Act as the ``dual parent'' class of enrollment).
(2) References to family and couple classes of enrollment. In this Act:
(A) Family. The term ``family'', with respect to a class of
enrollment, refers to enrollment in a class of enrollment described in
subparagraph (B), (C), or (D) of paragraph (1).
(B) Couple. The term ``couple'', with respect to a class of
enrollment, refers to enrollment in a class of enrollment described in
subparagraph (B) or (D) of paragraph (1).
(d) Spouse; Married; Couple.
(1) In general. In this Act, the terms ``spouse'' and ``married'' mean,
with respect to a person, another individual who is the spouse of the
person or married to the person, as determined under applicable State
law.
(2) Couple. The term ``couple'' means an individual and the
individual's spouse.
(e) Child Defined.
(1) In general. In this Act, except as otherwise provided, the term
``child'' means an eligible individual who (consistent with paragraph
(3))
(A) is under 18 years of age (or under 24 years of age in the case of
a full-time student), and
(B) is a dependent of an eligible individual.
(2) Application of State law. Subject to paragraph (3), determinations
of whether a person is the child of another person shall be made in
accordance with applicable State law.
(3) National rules. The National Health Board may establish such
national rules respecting individuals who will be treated as children as
the Board determines to be necessary. Such rules shall be consistent with
the following principles:
(A) Step and foster child. A child includes a step child or foster
child who is an eligible individual living with an adult in a regular
parent-child relationship.
(B) Disabled child. A child includes an unmarried dependent eligible
individual regardless of age who is incapable of self-support because
of mental or physical disability which existed before age 21.
(C) Certain 3-generation families. A child includes the grandchild of
an individual, if the parent of the grandchild is a child and the
parent and grandchild are living with the grandparent.
(D) Treatment of emancipated minors and married individuals. An
emancipated minor or married individual shall not be treated as a
child.
(f) Additional Rules. The Board shall provide for such additional
exceptions and special rules, including rules relating to
(1) families in which members are not residing in the same area,
(2) the treatment of individuals who are under 19 years of age and who
are not a dependent of an eligible individual, and
(3) changes in family composition occurring during a year,
as the Board finds appropriate.
SEC. 1012. TREATMENT OF CERTAIN FAMILIES.
(a) Treatment of Medicare-Eligible Individuals Who are Qualified
Employees or Spouses of Qualified Employees.
(1) In general. Except as specifically provided, in the case of an
individual who is an individual described in paragraph (2) with respect
to 2 consecutive months in a year (and it is anticipated would be in the
following month), the individual shall not be treated as a
medicare-eligible individual under this Act during the following month
and the remainder of the year.
(2) Individual described. An individual described in this paragraph
with respect to a month is a medicare-eligible individual (determined
without regard to paragraph (1)) who is a qualifying employee or the
spouse or family member of a qualifying employee in the month.
(3) Exception. Paragraph (1) shall not apply, in the case of an
individual, if the individual described in paragraph (2) terminates
qualifying employment in the month preceding the first month in which
paragraph (1) applies. The previous sentence shall apply until with
respect to qualifying employment occurring before such first month.
(b) Separate Treatment for Certain Groups of Individuals. In the case of
a family that includes one or more individuals in a group described in
subsection (c)
(1) all the individuals in each such group within the family shall be
treated as a separate family, and
(2) all the individuals not described in any such group shall be
treated collectively as a separate family.
(c) Groups of Individuals Described. Each of the following is a group of
individuals described in this subsection:
(1) AFDC recipients (as defined in section 1902(3)).
(2) Disabled SSI recipients (as defined in section 1902(13)) .
(3) SSI recipients who are not disabled SSI recipients.
(4) Electing veterans (as defined in subsection (d)(1)).
(5) Active duty military personnel (as defined in subsection (d)(2)).
(6) Electing Indians (as defined in subsection (d)(3)).
(7) Prisoners (as defined in section 1902(26)).
(d) Special Rules. In this Act:
(1) Electing veterans.
(A) Defined. Subject to subparagraph (B), the term ``electing
veteran'' means a veteran who makes an election to enroll with a health
plan of the Department of Veterans Affairs under chapter 18 of title
38, United States Code.
(B) Family exception. Subparagraph (A) shall not apply with respect
to coverage under a health plan referred to in such subparagraph if,
for the area in which the electing veteran resides, such health plan
offers coverage to family members of an electing veteran and the
veteran elects family enrollment under such plan (instead of individual
enrollment).
(2) Active duty military personnel.
(A) In general. Subject to subparagraph (B), the term ``active duty
military personnel'' means an individual on active duty in the
Uniformed Services of the United States.
(B) Exception. If an individual described in subparagraph (A) elects
family coverage under section 1073a(d)(1) of title 10, United States
Code, then paragraph (5) of subsection (c) shall not apply with respect
to such coverage.
(3) Electing indians.
(A) In general. Subject to subparagraph (B), the term ``electing
Indian'' means an eligible individual who makes an election under
section 8302(b) of this Act.
(B) Family election for all individuals eligible to elect. No such
election shall be made with respect to an individual in a family (as
defined without regard to this section) unless such election is made
for all eligible individuals (described in section 8302(a)) who are
family members of the family.
(4) Multiple choice. Eligible individuals who are permitted to elect
coverage under more than one health plan or program referred to in this
subsection may elect which of such plans or programs will be the
applicable health plan under this Act.
(e) Qualifying Students.
(1) In general. In the case of a qualifying student (described in
paragraph (2)), the individual may elect to enroll in a regional alliance
health plan offered by the regional alliance for the area in which the
school is located.
(2) Qualifying student. In paragraph (1), the term ``qualifying
student'' means an individual who
(A) but for this subsection would receive coverage under a health
plan as a child of another person, and
(B) is a full-time student at a school in an alliance area that is
different from the alliance area (or, in the case of a corporate
alliance, such coverage area as the Board may specify) providing the
coverage described in subparagraph (A).
(3) Payment rules.
(A) Continued treatment as family. Except as provided in subparagraph
(B), nothing in this subsection shall be construed as affecting the
payment liabilities between families and health alliances or between
health alliances and health plans.
(B) Transfer payment. In the case of an election under paragraph (1),
the health plan described in paragraph (2)(A) shall make payment to the
health plan referred to in paragraph (1) in accordance with rules
specified by the Board.
(f) Spouses Living in Different Alliance Areas. The Board shall provide
for such special rules in applying this Act in the case of a couple in
which the spouses reside in different alliance areas as the Board finds
appropriate.
SEC. 1013. MULTIPLE EMPLOYMENT SITUATIONS.
(a) Multiple Employment of an Individual. In the case of an individual
who
(1)(A) is not married or (B) is married and whose spouse is not a
qualifying employee (as defined in section 6121(c)(1)),
(2) is not a child, and
(3) who is a qualifying employee both of a regional alliance employer
and of a corporate alliance employer (or of 2 corporate alliance
employers),
the individual may elect the applicable health plan to be either a
regional alliance health plan (for the alliance area in which the
individual resides) or a corporate alliance health plan (for an employer
employing the individual).
(b) Multiple Employment Within a Family.
(1) Married couple with employment with a regional alliance employer
and with a corporate alliance employer. In the case of a married
individual
(A) who is a qualifying employee of a regional alliance employer and
whose spouse is an qualifying employee of a corporate alliance
employer, or
(B) who is a qualifying employee of a corporate alliance employer and
whose spouse is an qualifying employee of a regional alliance employer,
the individual and the individual's spouse may elect the applicable
health plan to be either a regional alliance health plan (for the
alliance area in which the couple resides) or a corporate alliance
health plan (for an employer employing the individual or the spouse).
(2) Married couple with different corporate alliance employers. In the
case of a married individual
(A) who is a qualifying employee of a corporate alliance employer,
and
(B) whose spouse is a qualifying employee of a different corporate
alliance employer,
the individual and the individual's spouse may elect the applicable
health plan to be a corporate alliance health plan for an employer
employing either the individual or the spouse.
SEC. 1014. TREATMENT OF RESIDENTS OF STATES WITH STATEWIDE SINGLE-PAYER
SYSTEMS.
(a) Universal Coverage. Notwithstanding the previous provisions of this
title, except as provided in part 2 of subtitle C, in the case of an
individual who resides in a State that has a Statewide single-payer system
under section 1223, universal coverage shall be provided consistent with
section 1222(3).
(b) Individual Responsibilities. In the case of an individual who resides
in a single-payer State, the responsibilities of such individual under such
system shall supersede the obligations of the individual under section
1002.
Subtitle B. Benefits
Part 1. COMPREHENSIVE BENEFIT PACKAGE
SEC. 1101. PROVISION OF COMPREHENSIVE BENEFITS BY PLANS.
(a) In General. The comprehensive benefit package shall consist of the
following items and services (as described in part 2), subject to the cost
sharing requirements described in part 3, the exclusions described in part
4, and the duties and authority of the National Health Board described in
part 5:
(1) Hospital services (described in section 1111).
(2) Services of health professionals (described in section 1112).
(3) Emergency and ambulatory medical and surgical services (described
in section 1113).
(4) Clinical preventive services (described in section 1114).
(5) Mental health and substance abuse services (described in section
1115).
(6) Family planning services and services for pregnant women (described
in section 1116).
(7) Hospice care (described in section 1117).
(8) Home health care (described in section 1118).
(9) Extended care services (described in section 1119).
(10) Ambulance services (described in section 1120).
(11) Outpatient laboratory, radiology, and diagnostic services
(described in section 1121).
(12) Outpatient prescription drugs and biologicals (described in
section 1122).
(13) Outpatient rehabilitation services (described in section 1123).
(14) Durable medical equipment and prosthetic and orthotic devices
(described in section 1124).
(15) Vision care (described in section 1125).
(16) Dental care (described in section 1126).
(17) Health education classes (described in section 1127).
(18) Investigational treatments (described in section 1128).
(b) No Other Limitations or Cost Sharing. The items and services in the
comprehensive benefit package shall not be subject to any duration or scope
limitation or any deductible, copayment, or coinsurance amount that is not
required or authorized under this Act.
(c) Health Plan. Unless otherwise provided in this subtitle, for purposes
of this subtitle, the term ``health plan'' has the meaning given such term
in section 1400.
Part .
SEC. 1111. HOSPITAL SERVICES.
(a) Coverage. The hospital services described in this section are the
following items and services:
(1) Inpatient hospital services.
(2) Outpatient hospital services.
(3) 24-hour a day hospital emergency services.
(b) Limitation. The hospital services described in this section do not
include hospital services provided for the treatment of a mental or
substance abuse disorder (which are subject to section 1115), except for
medical detoxification as required for the management of medical conditions
associated with withdrawal from alcohol or drugs (which is not covered
under such section).
(c) Definitions. For purposes of this subtitle:
(1) Hospital. The term ``hospital'' has the meaning given such term in
section 1861(e) of the Social Security Act, except that such term shall
include
(A) in the case of an item or service provided to an individual whose
applicable health plan is specified pursuant to section 1004(b)(1), a
facility of the uniformed services under title 10, United States Code,
that is primarily engaged in providing services to inpatients that are
equivalent to the services provided by a hospital defined in section
1861(e);
(B) in the case of an item or service provided to an individual whose
applicable health plan is specified pursuant to section 1004(b)(2), a
facility operated by the Department of Veterans Affairs that is
primarily engaged in providing services to inpatients that are
equivalent to the services provided by a hospital defined in section
1861(e); and
(C) in the case of an item or service provided to an individual whose
applicable health plan is specified pursuant to section 1004(b)(3), a
facility operated by the Indian Health Service that is primarily
engaged in providing services to inpatients that are equivalent to the
services provided by a hospital defined in section 1861(e).
(2) Inpatient hospital services. The term ``inpatient hospital
services'' means items and services described in paragraphs (1) through
(3) of section 1861(b) of the Social Security Act when provided to an
inpatient of a hospital. The National Health Board shall specify those
health professional services described in section 1112 that shall be
treated as inpatient hospital services when provided to an inpatient of a
hospital.
SEC. 1112. SERVICES OF HEALTH PROFESSIONALS.
(a) Coverage. The items and services described in this section are
(1) inpatient and outpatient health professional services, including
consultations, that are provided in
(A) a home, office, or other ambulatory care setting; or
(B) an institutional setting; and
(2) services and supplies (including drugs and biologicals which cannot
be self-administered) furnished as an incident to such health
professional services, of kinds which are commonly furnished in the
office of a health professional and are commonly either rendered without
charge or included in the bill of such professional.
(b) Limitation. The items and services described in this section do not
include items or services that are described in any other section of this
part. An item or service that is described in section 1114 but is not
provided consistent with a periodicity schedule for such item or service
specified in such section or under section 1153 may be covered under this
section if the item or service otherwise meets the requirements of this
section.
(c) Definitions. Unless otherwise provided in this Act, for purposes of
this Act:
(1) Health Professional. The term ``health professional'' means an
individual who provides health professional services.
(2) Health Professional Services. The term ``health professional
services'' means professional services that
(A) are lawfully provided by a physician; or
(B) would be described in subparagraph (A) if provided by a
physician, but are provided by another person who is legally authorized
to provide such services in the State in which the services are
provided.
SEC. 1113. EMERGENCY AND AMBULATORY MEDICAL AND SURGICAL SERVICES.
The emergency and ambulatory medical and surgical services described
in this section are the following items and services provided by a
health facility that is not a hospital and that is legally authorized
to provide the services in the State in which they are provided:
(1) 24-hour a day emergency services.
(2) Ambulatory medical and surgical services.
SEC. 1114. CLINICAL PREVENTIVE SERVICES.
(a) Coverage. The clinical preventive services described in this section
are
(1) an item or service for high risk populations (as defined by the
National Health Board) that is specified and defined by the Board under
section 1153, but only when the item or service is provided consistent
with any periodicity schedule for the item or service promulgated by the
Board;
(2) except as modified by the National Health Board under section 1153,
an age-appropriate immunization, test, or clinician visit specified in
one of subsections (b) through (h) that is provided consistent with any
periodicity schedule for the item or service specified in the applicable
subsection or by the National Health Board under section 1153; and
(3) an immunization, test, or clinician visit that is provided to an
individual during an age range other than the age range for such
immunization, test, or clinician visit that is specified in one of
subsections (b) through (h), but only when provided consistent with any
requirements for such immunizations, tests, and clinician visits
established by the National Health Board under section 1153.
(b) Individuals Under 3. For an individual under 3 years of age:
(1) Immunizations. The immunizations specified in this subsection are
age-appropriate immunizations for the following illnesses:
(A) Diphtheria.
(B) Tetanus.
(C) Pertussis.
(D) Polio.
(E) Haemophilus influenzae type B.
(F) Measles.
(G) Mumps.
(H) Rubella.
(I) Hepatitis B.
(2) Tests. The tests specified in this subsection are as follows:
(A) 1 hematocrit.
(B) 2 blood tests to screen for blood lead levels for individuals who
are at risk for lead exposure.
(3) Clinician visits. The clinician visits specified in this subsection
are 1 clinician visit for an individual who is newborn and 7 other
clinician visits.
(c) Individuals Age 3 to 5. For an individual at least 3 years of age,
but less than 6 years of age:
(1) Immunizations. The immunizations specified in this subsection are
age-appropriate immunizations for the following illnesses:
(A) Diphtheria.
(B) Tetanus.
(C) Pertussis.
(D) Polio.
(E) Measles.
(F) Mumps.
(G) Rubella.
(2) Tests. The tests specified in this subsection are 1 urinalysis.
(3) Clinician visits. The clinician visits specified in this subsection
are 3 clinician visits.
(d) Individuals Age 6 to 19. For an individual at least 6 years of age,
but less than 20 years of age:
(1) Immunizations. The immunizations specified in this subsection are
age-appropriate immunizations for the following illnesses:
(A) Tetanus.
(B) Diphtheria.
(2) Tests. The tests specified in this subsection are as follows:
(A) Papanicolaou smears and pelvic exams for females who have reached
childbearing age and are at risk for cervical cancer every 3 years, but
(i) annually until 3 consecutive negative smears have been
obtained; and
(ii) annually for females who are at risk for fertility related
infectious illnesses.
(B) Annual screening for chlamydia and gonorrhea for females who have
reached childbearing age and are at risk for fertility related
infectious illnesses.
(3) Clinician visits. The clinician visits specified in this subsection
are 5 clinician visits.
(e) Individuals Age 20 to 39. For an individual at least 20 years of age,
but less than 40 years of age:
(1) Immunizations. The immunizations specified in this subsection are
booster immunizations against tetanus and diphtheria every 10 years.
(2) Tests. The tests specified in this subsection are as follows:
(A) Papanicolaou smears and pelvic exams for females every 3 years,
but
(i) annually if an abnormal smear has been obtained, until 3
consecutive negative smears have been obtained; and
(ii) annually for females who are at risk for fertility related
infectious illnesses.
(B) Annual screening for chlamydia and gonorrhea for females who are
at risk for fertility related infectious illnesses.
(C) Cholesterol every 5 years.
(3) Clinician visits. The clinician visits specified in this subsection
are 1 clinician visit every 3 years.
(f) Individuals Age 40 to 49. For an individual at least 40 years of age,
but less than 50 years of age:
(1) Immunizations. The immunizations specified in this subsection are
booster immunizations against tetanus and diphtheria every 10 years.
(2) Tests. The tests specified in this subsection are as follows:
(A) Papanicolaou smears and pelvic exams for females every 2 years,
but
(i) annually if an abnormal smear has been obtained, until 3
consecutive negative smears have been obtained; and
(ii) annually for females who are at risk for fertility related
infectious illnesses.
(B) Annual screening for chlamydia and gonorrhea for females who are
at risk for fertility related infectious illnesses.
(C) Cholesterol every 5 years.
(3) Clinician visits. The clinician visits specified in this subsection
are 1 clinician visit every 2 years.
(g) Individuals Age 50 to 65. For an individual at least 50 years of age,
but less than 65 years of age:
(1) Immunizations. The immunizations specified in this subsection are
booster immunizations against tetanus and diphtheria every 10 years.
(2) Tests. The tests specified in this subsection are as follows:
(A) Papanicolaou smears and pelvic exams for females every 2 years.
(B) Mammograms for females every 2 years.
(C) Cholesterol every 5 years.
(3) Clinician visits. The clinician visits specified in this subsection
are 1 clinician visit every 2 years.
(h) Individuals Age 65 or Older. For an individual at least 65 years of
age who is enrolled under a health plan:
(1) Immunizations. The immunizations specified in this subsection are
as follows:
(A) Booster immunizations against tetanus and diphtheria every 10
years.
(B) Age-appropriate immunizations for the following illnesses:
(i) Influenza.
(ii) Pneumococcal invasive disease.
(2) Tests. The tests specified in this subsection are as follows:
(A) Papanicolaou smears and pelvic exams for females who are at risk
for cervical cancer every 2 years.
(B) Mammograms for females every 2 years.
(C) Cholesterol every 5 years.
(3) Clinician visits. The clinician visits specified in this subsection
are 1 clinician visit every year.
(i) Clinician Visit. For purposes of this section, the term
``clinician visit'' includes the following health professional
services (as defined in section 1112(c)):
(1) A complete medical history.
(2) An appropriate physical examination.
(3) Risk assessment.
(4) Targeted health advice and counseling, including nutrition
counseling.
(5) The administration of age-appropriate immunizations and tests
specified in subsections (b) through (h).
(j) Immunizations and Tests Not Administered During Clinician Visit.
Notwithstanding subsection (i)(5), the clinical preventive services
described in this section include an immunization or test described in this
section that is administered to an individual consistent with any
periodicity schedule for the immunization or test during the age range
specified for the immunization or test, and any administration fee for such
immunization or test, even if the immunization or test is not administered
during a clinician visit.
SEC. 1115. MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES.
(a) Coverage. The mental health and substance abuse services that are
described in this section are the following items and services for eligible
individuals, as defined in section 1001(c), who satisfy the eligibility
requirements in subsection (b):
(1) Inpatient and residential mental health and substance abuse
treatment.
(2) Intensive nonresidential mental health and substance abuse
treatment.
(3) Outpatient mental health and substance abuse treatment, including
case management, screening and assessment, crisis services, and
collateral services.
(b) Eligibility. The eligibility requirements referred to in subsection
(a) are as follows:
(1) Inpatient, residential, nonresidential, and outpatient treatment.
An eligible individual is eligible to receive coverage for inpatient and
residential mental health and substance abuse treatment, intensive
nonresidential mental health and substance abuse treatment, or outpatient
mental health and substance abuse treatment (except case management and
collateral services) if the individual
(A) has, or has had during the 1-year period preceding the date of
such treatment, a diagnosable mental or substance abuse disorder; and
(B) is experiencing, or is at significant risk of experiencing,
functional impairment in family, work, school, or community activities.
For purposes of this paragraph, an individual who has a diagnosable
mental or substance abuse disorder, is receiving treatment for such
disorder, but does not satisfy the functional impairment criterion in
subparagraph (B) shall be treated as satisfying such criterion if the
individual would satisfy such criterion without such treatment.
(2) Case management. An eligible individual is eligible to receive
coverage for case management if
(A) the health plan in which the individual is enrolled has elected
to offer case management and determines that the individual should
receive such services; and
(B) the individual is eligible to receive coverage for, and is
receiving, outpatient mental health and substance abuse treatment.
(3) Screening and assessment and crisis services. All eligible
individuals enrolled under a health plan are eligible to receive coverage
for outpatient mental health and substance abuse treatment consisting of
screening and assessment and crisis services.
(4) Collateral services. An eligible individual is eligible to receive
coverage for outpatient mental health and substance abuse treatment
consisting of collateral services if the individual is a family member
(as defined in section 1011(b)) of an individual who is receiving
inpatient and residential mental health and substance abuse treatment,
intensive nonresidential mental health and substance abuse treatment, or
outpatient mental health and substance abuse treatment.
(c) Inpatient and Residential Treatment.
(1) Definition. For purposes of this subtitle, the term ``inpatient and
residential mental health and substance abuse treatment'' means the items
and services described in paragraphs (1) through (3) of section 1861(b)
of the Social Security Act when provided with respect to a diagnosable
mental or substance abuse disorder to
(A) an inpatient of a hospital, psychiatric hospital, residential
treatment center, residential detoxification center, crisis residential
program, or mental health residential treatment program; or
(B) a resident of a therapeutic family or group treatment home or
community residential treatment and recovery center for substance
abuse.
The National Health Board shall specify those health professional
services described in section 1112 that shall be treated as inpatient
and residential mental health and substance abuse treatment when
provided to such an inpatient or resident.
(2) Limitations. Coverage for inpatient and residential mental health
and substance abuse treatment is subject to the following limitations:
(A) Least restrictive setting. Such treatment is covered only when
(i) provided to an individual in the least restrictive inpatient or
residential setting that is effective and appropriate for the
individual; and
(ii) less restrictive intensive nonresidential or outpatient
treatment would be ineffective or inappropriate.
(B) Licensed facility. Such treatment is only covered when provided
by a facility described in paragraph (1) that is legally authorized to
provide the treatment in the State in which the facility is located.
(C) Day limits. Subject to subparagraph (D), such treatment is
covered for each period beginning on the date an episode of inpatient
or residential treatment begins and ending on the date the episode
ends, except that, prior to January 1, 2001, such treatment is not
covered after such an episode exceeds 30 days unless the individual
receiving treatment poses a threat to their own life or the life of
another individual. Whether such a threat exists shall be determined by
a health professional designated by the health plan in which the
individual receiving treatment is enrolled. For purposes of this
subtitle, an episode of inpatient and residential mental health and
substance abuse treatment shall be considered to begin on the date an
individual is admitted to a facility for such treatment and to end on
the date the individual is discharged from the facility.
(D) Annual limit. Prior to January 1, 2001, such treatment in all
settings is subject to an aggregate annual limit of 60 days.
(E) Inpatient hospital treatment for substance abuse. Substance abuse
treatment, when provided to an inpatient of a hospital or psychiatric
hospital, is covered under this section only for medical detoxification
associated with withdrawal from alcohol or drugs.
(d) Intensive Nonresidential Treatment.
(1) Definition. For purposes of this subtitle, the term ``intensive
nonresidential mental health and substance abuse treatment'' means
diagnostic or therapeutic items or services provided with respect to a
diagnosable mental or substance abuse disorder to an individual
(A) participating in a partial hospitalization program, a day
treatment program, a psychiatric rehabilitation program, or an
ambulatory detoxification program; or
(B) receiving home-based mental health services or behavioral aide
mental health services.
The National Health Board shall specify those health professional
services described in section 1112 that shall be treated as intensive
nonresidential mental health and substance abuse treatment when
provided to such an individual.
(2) Limitations. Coverage for intensive nonresidential mental health
and substance abuse treatment is subject to the following limitations:
(A) Discretion of plan. A health plan may cover intensive
nonresidential mental health and substance abuse treatment at its
discretion.
(B) Treatment purposes. Such treatment is covered only when provided
(i) to avert the need for, or as an alternative to, treatment in
residential or inpatient settings;
(ii) to facilitate the earlier discharge of an individual receiving
inpatient or residential care;
(iii) to restore the functioning of an individual with a
diagnosable mental health or substance abuse disorder; or
(iv) to assist the individual to develop the skills and gain access
to the support services the individual needs to achieve the maximum
level of functioning of the individual within the community.
(C) Annual limit.
(i) In general. Prior to January 1, 2001, such treatment in all
settings is subject to an aggregate annual limit of 120 days.
(ii) Relationship to other annual limits. For each 2 days of
intensive nonresidential mental health and substance abuse treatment
provided to an individual, the number of treatment days available to
the individual before the annual aggregate limit on inpatient and
residential mental health and substance abuse treatment described in
subsection (c)(2)(D) is exceeded shall be reduced by 1 day. The
preceding sentence shall not apply after an individual has received
60 days of intensive nonresidential mental health and substance abuse
treatment in a year.
(iii) Additional days. A maximum of 60 additional days of intensive
nonresidential mental health and substance abuse treatment may be
provided to an individual if a health professional designated by the
health plan in which the individual receiving treatment is enrolled
determines that such additional treatment is medically necessary or
appropriate.
(D) Out-of-pocket maximum. Prior to January 1, 2001, expenses for
intensive nonresidential mental health and substance abuse treatment
that an individual incurs prior to satisfying a deductible applicable
to such treatment, and copayments and coinsurance paid by or on behalf
of the individual for such treatment, that substitute for inpatient and
residential mental health and substance abuse treatment (up to 60 days)
may be applied toward the annual out-of-pocket limit on cost sharing
under any cost sharing schedule described in part 3 of this subtitle.
(e) Outpatient Treatment.
(1) Definition. For purposes of this subtitle, the term ``outpatient
mental health and substance abuse treatment'' means the following
services provided with respect to a diagnosable mental or substance abuse
disorder in an outpatient setting:
(A) Screening and assessment.
(B) Diagnosis.
(C) Medical management.
(D) Substance abuse counseling and relapse prevention.
(E) Crisis services.
(F) Somatic treatment services.
(G) Psychotherapy.
(H) Case management.
(I) Collateral services.
(2) Limitations. Coverage for outpatient mental health and substance
abuse treatment is subject to the following limitations:
(A) Health professional services. Such treatment is covered only when
it constitutes health professional services (as defined in section
1112(c)(2)).
(B) Substance abuse counseling. Substance abuse counseling and
relapse prevention is covered only when provided by a substance abuse
treatment provider who
(i) is legally authorized to provide such services in the State in
which the services are provided; and
(ii) provides no items or services other than substance abuse
counseling and relapse prevention, medical management, or laboratory
and diagnostic tests for individuals with substance abuse disorders.
(C) Annual limits.
(i) Pychotherapy and collateral services. Prior to January 1, 2001,
psychotherapy and collateral services are subject to annual limits of
30 visits for each type of service. Additional visits may be covered,
at the discretion of the health plan in which the individual
receiving treatment is enrolled, to prevent hospitalization or to
facilitate earlier hospital release, for which the annual aggregate
limit on inpatient and residential mental health and substance abuse
treatment described in subsection (c)(2)(D) shall be reduced by 1 day
for each 4 visits.
(ii) Substance abuse. At the discretion of the health plan in which
an individual receiving outpatient substance abuse treatment is
enrolled, the annual aggregate limit on inpatient and residential
mental health and substance abuse treatment described in subsection
(c)(2)(D) may be reduced by 1 day for each 4 outpatient visits.
Within 12 months after inpatient and residential treatment or
intensive nonresidential treatment, 30 visits in group therapy shall
be covered for substance abuse counseling and relapse prevention. For
individuals who were not initially treated in an inpatient,
residential, or intensive nonresidential setting, additional visits
shall be covered for which the annual aggregate limit on inpatient
and residential mental health and substance abuse treatment described
in subsection (c)(2)(D) shall be reduced by 1 day for each 4 visits.
(D) Out-of-pocket maximum. Prior to January 1, 2001, expenses for
outpatient mental health and substance abuse treatment that an
individual incurs prior to satisfying a deductible applicable to such
treatment, and copayments and coinsurance paid by or on behalf of the
individual for such treatment, may not be applied toward any annual
out-of-pocket limit on cost sharing under any cost sharing schedule
described in part 3 of this subtitle.
(E) Detoxification. Outpatient detoxification shall be provided only
in the context of a treatment program. If the first detoxification
treatment is unsuccessful, subsequent treatments are covered if a
health professional designated by the health plan in which the
individual receiving treatment is enrolled determines that there is a
substantial chance of success.
(f) Other Definitions. For purposes of this subtitle:
(1) Case management. The term ``case management'' means services that
assist individuals in gaining access to needed medical, social,
educational, and other services.
(2) Diagnosable mental or substance abuse disorder. The term
``diagnosable mental or substance abuse disorder'' means a disorder that
is listed in any authoritative text specifying diagnostic criteria for
mental or substance abuse disorders that is identified by the National
Health Board.
(3) Psychiatric hospital. The term ``psychiatric hospital'' has the
meaning given such term in section 1861(f) of the Social Security Act,
except that such term shall include
(A) in the case of an item or service provided to an individual whose
applicable health plan is specified pursuant to section 1004(b)(1), a
facility of the uniformed services under title 10, United States Code,
that is engaged in providing services to inpatients that are equivalent
to the services provided by a psychiatric hospital;
(B) in the case of an item or service provided to an individual whose
applicable health plan is specified pursuant to section 1004(b)(2), a
facility operated by the Department of Veterans Affairs that is engaged
in providing services to inpatients that are equivalent to the services
provided by a psychiatric hospital; and
(C) in the case of an item or service provided to an individual whose
applicable health plan is specified pursuant to section 1004(b)(3), a
facility operated by the Indian Health Service that is engaged in
providing services to inpatients that are equivalent to the services
provided by a psychiatric hospital.
SEC. 1116. FAMILY PLANNING SERVICES AND SERVICES FOR PREGNANT WOMEN.
The services described in this section are the following items and
services:
(1) Voluntary family planning services.
(2) Contraceptive devices that
(A) may only be dispensed upon prescription; and
(B) are subject to approval by the Secretary of Health and Human
Services under the Federal Food, Drug, and Cosmetic Act.
(3) Services for pregnant women.
SEC. 1117. HOSPICE CARE.
The hospice care described in this section is the items and services
described in paragraph (1) of section 1861(dd) of the Social Security
Act, as defined in paragraphs (2), (3), and (4)(A) of such section (with
the exception of paragraph (2)(A)(iii)), except that all references to
the Secretary of Health and Human Services in such paragraphs shall be
treated as references to the National Health Board.
SEC. 1118. HOME HEALTH CARE.
(a) Coverage. The home health care described in this section is
(1) the items and services described in section 1861(m) of the Social
Security Act; and
(2) home infusion drug therapy services described in section 1861(ll)
of the Social Security Act (as added by section 2006).
(b) Limitations. Coverage for home health care is subject to the
following limitations:
(1) Inpatient treatment alternative. Such care is covered only as an
alternative to inpatient treatment in a hospital, skilled nursing
facility, or rehabilitation facility after an illness or injury.
(2) Reevaluation. At the end of each 60-day period of home health care,
the need for continued care shall be reevaluated by the person who is
primarily responsible for providing the home health care. Additional
periods of care are covered only if such person determines that the
requirement in paragraph (1) is satisfied.
SEC. 1119. EXTENDED CARE SERVICES.
(a) Coverage. The extended care services described in this section are
the items and services described in section 1861(h) of the Social Security
Act when provided to an inpatient of a skilled nursing facility or a
rehabilitation facility.
(b) Limitations. Coverage for extended care services is subject to the
following limitations:
(1) Hospital alternative. Such services are covered only as an
alternative to inpatient treatment in a hospital after an illness or
injury.
(2) Annual limit. Such services are subject to an aggregate annual
limit of 100 days.
(c) Definitions. For purposes of this subtitle:
(1) Rehabilitation facility. The term ``rehabilitation facility'' means
an institution (or a distinct part of an institution) which is
established and operated for the purpose of providing diagnostic,
therapeutic, and rehabilitation services to individuals for
rehabilitation from illness or injury.
(2) Skilled nursing facility. The term ``skilled nursing facility''
means an institution (or a distinct part of an institution) which is
primarily engaged in providing to residents
(A) skilled nursing care and related services for residents who
require medical or nursing care; or
(B) rehabilitation services to residents for rehabilitation from
illness or injury.
SEC. 1120. AMBULANCE SERVICES.
(a) Coverage. The ambulance services described in this section are the
following items and services:
(1) Ground transportation by ambulance.
(2) Air transportation by an aircraft equipped for transporting an
injured or sick individual.
(3) Water transportation by a vessel equipped for transporting an
injured or sick individual.
(b) Limitations. Coverage for ambulance services is subject to the
following limitations:
(1) Medical indication. Ambulance services are covered only in cases in
which the use of an ambulance is indicated by the medical condition of
the individual concerned.
(2) Air transport. Air transportation is covered only in cases in which
there is no other method of transportation or where the use of another
method of transportation is contra-indicated by the medical condition of
the individual concerned.
(3) Water transport. Water transportation is covered only in cases in
which there is no other method of transportation or where the use of
another method of transportation is contra-indicated by the medical
condition of the individual concerned.
SEC. 1121. OUTPATIENT LABORATORY, RADIOLOGY, AND DIAGNOSTIC SERVICES.
The items and services described in this section are laboratory,
radiology, and diagnostic services provided upon prescription to
individuals who are not inpatients of a hospital, hospice, skilled
nursing facility, or rehabilitation facility.
SEC. 1122. OUTPATIENT PRESCRIPTION DRUGS AND BIOLOGICALS.
(a) Coverage. The items described in this section are the following:
(1) Covered outpatient drugs described in section 1861(t) of the Social
Security Act (as amended by section 2001(b))
(A) except that, for purposes of this section, a medically accepted
indication with respect to the use of a covered outpatient drug
includes any use which has been approved by the Food and Drug
Administration for the drug, and includes another use of the drug if
(i) the drug has been approved by the Food and Drug Administration;
and
(ii) such use is supported by one or more citations which are
included (or approved for inclusion) in one or more of the following
compendia: the American Hospital Formulary Service-Drug Information,
the American Medical Association Drug Evaluations, the United States
Pharmacopoeia-Drug Information, and other authoritative compendia as
identified by the National Health Board, unless the Board has
determined that the use is not medically appropriate or the use is
identified as not indicated in one or more such compendia; or
(iii) such use is medically accepted based on supportive clinical
evidence in peer reviewed medical literature appearing in
publications which have been identified for purposes of this clause
by the Board; and
(B) notwithstanding any exclusion from coverage that may be made with
respect to such a drug under title XVIII of such Act pursuant to
section 1862(a)(18) of such Act.
(2) Blood clotting factors when provided on an outpatient basis.
(b) Revision of Compendia List. The National Health Board may revise the
list of compendia in subsection (a)(1)(A)(ii) designated as appropriate for
identifying medically accepted indications for drugs.
(c) Blood clotting factors. For purposes of this subtitle, the term
``blood clotting factors'' has the meaning given such term in section
1861(s)(2)(I) of the Social Security Act.
SEC. 1123. OUTPATIENT REHABILITATION SERVICES.
(a) Coverage. The outpatient rehabilitation services described in this
section are
(1) outpatient occupational therapy;
(2) outpatient physical therapy; and
(3) outpatient speech pathology services for the purpose of attaining
or restoring speech.
(b) Limitations. Coverage for outpatient rehabilitation services is
subject to the following limitations:
(1) Restoration of capacity or minimization of limitations. Such
services include only items or services used to restore functional
capacity or minimize limitations on physical and cognitive functions as a
result of an illness or injury.
(2) Reevaluation. At the end of each 60-day period of outpatient
rehabilitation services, the need for continued services shall be
reevaluated by the person who is primarily responsible for providing the
services. Additional periods of services are covered only if such person
determines that functioning is improving.
SEC. 1124. DURABLE MEDICAL EQUIPMENT AND PROSTHETIC AND ORTHOTIC
DEVICES.
(a) Coverage. The items and services described in this section are
(1) durable medical equipment, including accessories and supplies
necessary for repair and maintenance of such equipment;
(2) prosthetic devices (other than dental) which replace all or part of
the function of an internal body organ (including colostomy bags and
supplies directly related to colostomy care), including replacement of
such devices;
(3) accessories and supplies which are used directly with a prosthetic
device to achieve the therapeutic benefits of the prosthesis or to assure
the proper functioning of the device;
(4) leg, arm, back, and neck braces;
(5) artificial legs, arms, and eyes, including replacements if required
because of a change in the patient's physical condition; and
(6) fitting and training for use of the items described in paragraphs
(1) through (5).
(b) Limitation. An item or service described in this section is covered
only if it improves functional ability or prevents further deterioration in
function.
(c) Durable Medical Equipment. For purposes of this subtitle, the term
``durable medical equipment'' has the meaning given such term in section
1861(n) of the Social Security Act.
SEC. 1125. VISION CARE.
(a) Coverage. The vision care described in this section is diagnosis and
treatment for defects in vision.
(b) Limitation. Eyeglasses and contact lenses are covered only for
individuals less than 18 years of age.
SEC. 1126. DENTAL CARE.
(a) Coverage. The dental care described in this section is the following:
(1) Emergency dental treatment, including simple extractions, for acute
infections, bleeding, and injuries to natural teeth and oral structures
for conditions requiring immediate attention to prevent risks to life or
significant medical complications, as specified by the National Health
Board. (2) Prevention and diagnosis of dental disease, including oral
dental examinations, radiographs, dental sealants, fluoride application,
and dental prophylaxis.
(3) Treatment of dental disease, including routine fillings,
prosthetics for genetic defects, periodontal maintenance, and endodontic
services.
(4) Space maintenance procedures to prevent orthodontic complications.
(5) Interceptive orthodontic treatment to prevent severe malocclusion.
(b) Limitations. Coverage for dental care is subject to the following
limitations:
(1) Prevention and diagnosis. Prior to January 1, 2001, the items and
services described in subsection (a)(2) are covered only for individuals
less than 18 years of age. On or after such date, such items and services
are covered for all eligible individuals enrolled under a health plan,
except that dental sealants are not covered for individuals 18 years of
age or older.
(2) Treatment of dental disease. Prior to January 1, 2001, the items
and services described in subsection (a)(3) are covered only for
individuals less than 18 years of age. On or after such date, such items
and services are covered for all eligible individuals enrolled under a
health plan, except that endodontic services are not covered for
individuals 18 years of age or older.
(3) Space maintenance. The items and services described in subsection
(a)(4) are covered only for individuals at least 3 years of age, but less
than 13 years of age and
(A) are limited to posterior teeth;
(B) involve maintenance of a space or spaces for permanent posterior
teeth that would otherwise be prevented from normal eruption if the
space were not maintained; and
(C) do not include a space maintainer that is placed within 6 months
of the expected eruption of the permanent posterior tooth concerned.
(4) Interceptive orthodontic treatment. Prior to January 1, 2001, the
items and services described in subsection (a)(5) are not covered. On or
after such date, such items and services are covered only for individuals
at least 6 years of age, but less than 12 years of age.
SEC. 1127. HEALTH EDUCATION CLASSES.
(a) Coverage. Subject to subsection (b), the items and services described
in this section are health education and training classes to encourage the
reduction of behavioral risk factors and to promote healthy activities.
Such education and training classes may include smoking cessation,
nutrition counseling, stress management, support groups, and physical
training classes.
(b) Discretion of Plan. A health plan may offer education and training
classes at its discretion.
(c) Construction. This section shall not be construed to include or limit
education or training that is provided in the course of the delivery of
health professional services (as defined in section 1112(c)).
SEC. 1128. INVESTIGATIONAL TREATMENTS.
(a) Coverage. Subject to subsection (b), the items and services described
in this subsection are qualifying investigational treatments that are
administered for a life-threatening disease, disorder, or other health
condition (as defined by the National Health Board).
(b) Discretion of Plan. A health plan may cover an investigational
treatment described in subsection (a) at its discretion.
(c) Routine Care During Investigational Treatments. The comprehensive
benefit package includes an item or service described in any other section
of this part, subject to the limitations and cost sharing requirements
applicable to the item or service, when the item or service is provided to
an individual in the course of an investigational treatment, if
(1) the treatment is a qualifying investigational treatment; and
(2) the item or service would have been provided to the individual even
if the individual were not receiving the investigational treatment.
(d) Definitions. For purposes of this subtitle:
(1) Qualifying investigational treatment. The term ``qualifying
investigational treatment'' means a treatment
(A) the effectiveness of which has not been determined; and
(B) that is under clinical investigation as part of an approved
research trial.
(2) Approved research trial. The term ``approved research trial'' means
(A) a research trial approved by the Secretary of Health and Human
Services, the Director of the National Institutes of Health, the
Commissioner of the Food and Drug Administration, the Secretary of
Veterans Affairs, the Secretary of Defense, or a qualified
nongovernmental research entity as defined in guidelines of the
National Institutes of Health; or
(B) a peer-reviewed and approved research program, as defined by the
Secretary of Health and Human Services, conducted for the primary
purpose of determining whether or not a treatment is safe, efficacious,
or having any other characteristic of a treatment which must be
demonstrated in order for the treatment to be medically necessary or
appropriate.
Part 3. COST SHARING
SEC. 1131. COST SHARING.
(a) In General. Each health plan shall offer to individuals enrolled
under the plan one of the following cost sharing schedules, which schedule
shall be offered to all such enrollees:
(1) lower cost sharing (described in section 1132);
(2) higher cost sharing (described in section 1133); or
(3) combination cost sharing (described in section 1134).
(b) Cost Sharing for Low-Income Families. For provisions relating to
reducing cost sharing for certain low-income families, see section 1371.
(c) Deductibles, Cost Sharing, and Out-of-Pocket Limits on Cost Sharing.
(1) Application on an annual basis. The deductibles and out-of-pocket
limits on cost sharing for a year under the schedules referred to in
subsection (a) shall be applied based upon expenses incurred for items
and services furnished in the year.
(2) Individual and family general deductibles.
(A) Individual. Subject to subparagraph (B), with respect to an
individual enrolled under a health plan (regardless of the class of
enrollment), any individual general deductible in the cost sharing
schedule offered by the plan represents the amount of countable
expenses (as defined in subparagraph (C)) that the individual may be
required to incur in a year before the plan incurs liability for
expenses for such items and services furnished to the individual.
(B) Family. In the case of an individual enrolled under a health plan
under a family class of enrollment (as defined in section
1011(c)(2)(A)), the individual general deductible under subparagraph
(A) shall not apply to countable expenses incurred by any member of the
individual's family in a year at such time as the family has incurred,
in the aggregate, countable expenses in the amount of the family
general deductible for the year.
(C) Countable expense. In this paragraph, the term ``countable
expense'' means, with respect to an individual for a year, an expense
for an item or service covered by the comprehensive benefit package
that is subject to the general deductible and for which, but for such
deductible and other cost sharing under this subtitle, a health plan is
liable for payment. The amount of countable expenses for an individual
for a year under this paragraph shall not exceed the individual general
deductible for the year.
(3) Coinsurance and copayments. After a general or separate deductible
that applies to an item or service covered by the comprehensive benefit
package has been satisfied for a year, subject to paragraph (4),
coinsurance and copayments are amounts that an individual may be required
to pay with respect to the item or service.
(4) Individual and family limits on cost sharing.
(A) Individual. Subject to subparagraph (B), with respect to an
individual enrolled under a health plan (regardless of the class of
enrollment), the individual out-of-pocket limit on cost sharing in the
cost sharing schedule offered by the plan represents the amount of
expenses that the individual may be required to incur under the plan in
a year because of a general deductible, separate deductibles,
copayments, and coinsurance before the plan may no longer impose any
cost sharing with respect to items or services covered by the
comprehensive benefit package that are provided to the individual,
except as provided in subsections (d)(2)(D) and (e)(2)(D) of section
1115.
(B) Family. In the case of an individual enrolled under a health plan
under a family class of enrollment (as defined in section
1011(c)(2)(A)), the family out-of-pocket limit on cost sharing in the
cost sharing schedule offered by the plan represents the amount of
expenses that members of the individual's family, in the aggregate, may
be required to incur under the plan in a year because of a general
deductible, separate deductibles, copayments, and coinsurance before
the plan may no longer impose any cost sharing with respect to items or
services covered by the comprehensive benefit package that are provided
to any member of the individual's family, except as provided in
subsections (d)(2)(D) and (e)(2)(D) of section 1115.
SEC. 1132. LOWER COST SHARING.
(a) In General. The lower cost sharing schedule referred to in section
1131 that is offered by a health plan
(1) may not include a deductible;
(2) shall have
(A) an annual individual out-of-pocket limit on cost sharing of
$1500; and
(B) an annual family out-of-pocket limit on cost sharing of $3000;
(3) except as provided in paragraph (4)
(A) shall prohibit payment of any coinsurance; and
(B) subject to section 1152, shall require payment of the copayment
for an item or service (if any) that is specified for the item or
service in the table under section 1135; and
(4) shall require payment of coinsurance for an out-of-network item or
service (as defined in section 1402(f)) in an amount that is a percentage
(determined under subsection (b)) of the applicable payment rate for the
item or service established under section 1322(c), but only if the item
or service is subject to coinsurance under the higher cost sharing
schedule described in section 1133.
(b) Out-of-Network Coinsurance Percentage.
(1) In general. The National Health Board shall determine a percentage
referred to in subsection (a)(4). The percentage
(A) may not be less than 20 percent; and
(B) shall be the same with respect to all out-of-network items and
services that are subject to coinsurance, except as provided in
paragraph (2).
(2) Exception. The National Health Board may provide for a percentage
that is greater than a percentage determined under paragraph (1) in the
case of an out-of-network item or service for which the coinsurance is
greater than 20 percent of the applicable payment rate under the higher
cost sharing schedule described in section 1133.
SEC. 1133. HIGHER COST SHARING.
The higher cost sharing schedule referred to in section 1131 that is
offered by a health plan
(1) shall have an annual individual general deductible of $200 and an
annual family general deductible of $400 that apply with respect to
expenses incurred for all items and services in the comprehensive benefit
package except
(A) an item or service with respect to which a separate individual
deductible applies under paragraph (2), (3), or (4); or
(B) an item or service described in paragraph (5), (6), or (7) with
respect to which a deductible does not apply;
(2) shall require an individual to incur expenses during each episode
of inpatient and residential mental health and substance abuse treatment
(described in section 1115) equal to the cost of one day of such
treatment before the plan provides benefits for such treatment to the
individual;
(3) shall require an individual to incur expenses in a year for
outpatient prescription drugs and biologicals (described in section 1122)
equal to $250 before the plan provides benefits for such items to the
individual;
(4) shall require an individual to incur expenses in a year for dental
care described in section 1126, except the items and services for
prevention and diagnosis of dental disease described in section
1126(a)(2), equal to $50 before the plan provides benefits for such care
to the individual;
(5) may not require any deductible for clinical preventive services
(described in section 1114);
(6) may not require any deductible for clinician visits and associated
services related to prenatal care or 1 post-partum visit under section
1116;
(7) may not require any deductible for the items and services for
prevention and diagnosis of dental disease described in section
1126(a)(2);
(8) shall have
(A) an annual individual out-of-pocket limit on cost sharing of
$1500; and
(B) an annual family out-of-pocket limit on cost sharing of $3000;
(9) shall prohibit payment of any copayment; and
(10) subject to section 1152, shall require payment of the coinsurance
for an item or service (if any) that is specified for the item or service
in the table under section 1135.
SEC. 1134. COMBINATION COST SHARING.
(a) In General. The combination cost sharing schedule referred to in
section 1131 that is offered by a health plan
(1) shall have
(A) an annual individual out-of-pocket limit on cost sharing of
$1500; and
(B) an annual family out-of-pocket limit on cost sharing of $3000;
and
(2) otherwise shall require different cost sharing for in-network items
and services than for out-of-network items and services.
(b) In-Network Items and Services. With respect to an in-network item or
service (as defined in section 1402(f)(1)), the combination cost sharing
schedule that is offered by a health plan
(1) may not apply a deductible;
(2) shall prohibit payment of any coinsurance; and
(3) shall require payment of a copayment in accordance with the lower
cost sharing schedule described in section 1132.
(c) Out-of-Network Items and Services. With respect to an out-of-network
item or service (as defined in section 1402(f)(2)), the combination cost
sharing schedule that is offered by a health plan
(1) shall require an individual and a family to incur expenses before
the plan provides benefits for the item or service in accordance with the
deductibles under the higher cost sharing schedule described in section
1133;
(2) shall prohibit payment of any copayment; and
(3) shall require payment of coinsurance in accordance with such
schedule.
SEC. 1135. TABLE OF COPAYMENTS AND COINSURANCE.
(a) In General. The following table specifies, for different items and
services, the copayments and coinsurance referred to in sections 1132 and
1133:
Copayments and Coinsurance for Items and Services
Benefit
Section
Lower Cost Sharing Schedule
Higher Cost Sharing Schedule
Inpatient hospital services No copayment 20 percent of applicable payment
rate
Outpatient hospital services $10 per visit 20 percent of applicable
payment rate
Hospital emergency room services
$25 per visit (unless patient has an emergency medical condition as
defined in section 1867(e)(1) of the Social Security Act) 20 percent of
applicable payment rate
Services of health professionals $10 per visit 20 percent of applicable
payment rate
Emergency services other than hospital emergency room services
$25 per visit (unless patient has an emergency medical condition as
defined in section 1867(e)(1) of the Social Security Act) 20 percent of
applicable payment rate
Ambulatory medical and surgical services $10 per visit 20 percent of
applicable payment rate
Clinical preventive services No copayment No coinsurance
Inpatient and residential mental health and substance abuse treatment No
copayment 20 percent of applicable payment rate
Intensive nonresidential mental health and substance abuse treatment No
copayment 20 percent of applicable payment rate
Outpatient mental health and substance abuse treatment (except
psychotherapy, collateral services, and case management) $10 per visit 20
percent of applicable payment rate
Outpatient psychotherapy and collateral services $25 per visit until
January 1, 2001, and $10 per visit thereafter 50 percent of applicable
payment rate until January 1, 2001, and 20 percent thereafter
Case management No copayment No coinsurance
Family planning and services for pregnant women (except clinician visits
and associated services related to prenatal care and 1 post-partum visit)
$10 per visit 20 percent of applicable payment rate
Clinician visits and associated services related to prenatal care and 1
post-partum visit No copayment No coinsurance
Hospice care No copayment 20 percent of applicable payment rate
Home health care No copayment 20 percent of applicable payment rate
Extended care services No copayment 20 percent of applicable payment rate
Ambulance services No copayment 20 percent of applicable payment rate
Outpatient laboratory, radiology, and diagnostic services No copayment 20
percent of applicable payment rate
Outpatient prescription drugs and biologicals $5 per prescription 20
percent of applicable payment rate
Outpatient rehabilitation services $10 per visit 20 percent of applicable
payment rate
Durable medical equipment and prosthetic and orthotic devices No
copayment 20 percent of applicable payment rate
Vision care $10 per visit (No additional charge for 1 set of necessary
eyeglasses for an individual less than 18 years of age) 20 percent of
applicable payment rate
Dental care (except space maintenance procedures and interceptive
orthodontic treatment) $10 per visit 20 percent of applicable payment rate
Space maintenance procedures and interceptive orthodontic treatment $20
per visit 40 percent of applicable payment rate
Health education classes All cost sharing rules determined by plans cost
sharing rules determined by plans
Investigational treatment for life-threatening condition All cost sharing
rules determined by plans cost sharing rules determined by plans
(b) Applicable Payment Rate. For purposes of this section, the term
``applicable payment rate'', when used with respect to an item or service,
means the applicable payment rate for the item or service established under
section 1322(c).
SEC. 1136. INDEXING DOLLAR AMOUNTS RELATING TO COST SHARING.
(a) In General. Any deductible, copayment, out-of-pocket limit on cost
sharing, or other amount expressed in dollars in this subtitle for items or
services provided in a year after 1994 shall be such amount increased by
the percentage specified in subsection (b) for the year.
(b) Percentage. The percentage specified in this subsection for a year is
equal to the product of the factors described in subsection (d) for the
year and for each previous year after 1994.
(c) Rounding. Any increase (or decrease) under subsection (a) shall be
rounded, in the case of an amount specified in this subtitle of
(1) $200 or less, to the nearest multiple of $1,
(2) more than $200, but less $500, to the nearest multiple of $5, or
(3) $500 or more, to the nearest multiple of $10.
(d) Factor.
(1) In general. The factor described in this subsection for a year is 1
plus the general health care inflation factor (as specified in section
6001(a)(3) and determined under paragraph (2)) for the year.
(2) Determination. In computing such factor for a year, the percentage
increase in the CPI for a year (referred to in section 6001(b)) shall be
determined based upon the percentage increase in the average of the CPI
for the 12-month period ending with August 31 of the previous year over
such average for the preceding 12-month period.
Part 4. EXCLUSIONS
SEC. 1141. EXCLUSIONS.
(a) Medical Necessity. The comprehensive benefit package does not include
(1) an item or service (other than services referred to in paragraph
(2)) that is not medically necessary or appropriate; or
(2) an item or service that the National Health Board may determine is
not medically necessary or appropriate in a regulation promulgated under
section 1154.
(b) Additional Exclusions. The comprehensive benefit package does not
include the following items and services:
(1) Custodial care, except in the case of hospice care under section
1117.
(2) Surgery and other procedures performed solely for cosmetic purposes
and hospital or other services incident thereto, unless
(A) required to correct a congenital anomaly; or
(B) required to restore or correct a part of the body that has been
altered as a result of
(i) accidental injury;
(ii) disease; or
(iii) surgery that is otherwise covered under this subtitle.
(3) Hearing aids.
(4) Eyeglasses and contact lenses for individuals at least 18 years of
age.
(5) In vitro fertilization services.
(6) Sex change surgery and related services.
(7) Private duty nursing.
(8) Personal comfort items, except in the case of hospice care under
section 1117.
(9) Any dental procedures involving orthodontic care, inlays, gold or
platinum fillings, bridges, crowns, pin/post retention, dental implants,
surgical periodontal procedures, or the preparation of the mouth for the
fitting or continued use of dentures, except as specifically described in
section 1126.
Part 5. ROLE OF THE NATIONAL HEALTH BOARD
SEC. 1151. DEFINITION OF BENEFITS.
(a) In General. The National Health Board may promulgate such regulations
or establish such guidelines as may be necessary to assure uniformity in
the application of the comprehensive benefit package across all health
plans.
(b) Flexibility in Delivery. The regulations or guidelines under
subsection (a) shall permit a health plan to deliver covered items and
services to individuals enrolled under the plan using the providers and
methods that the plan determines to be appropriate.
SEC. 1152. ACCELERATION OF EXPANDED BENEFITS.
(a) In General. Subject to subsection (b), at any time prior to January
1, 2001, the National Health Board, in its discretion, may by regulation
expand the comprehensive benefit package by
(1) adding any item or service that is added to the package as of
January 1, 2001; and
(2) requiring that a cost sharing schedule described in part 3 of this
subtitle reflect (wholly or in part) any of the cost sharing requirements
that apply to the schedule as of January 1, 2001.
No such expansion shall be effective except as of January 1 of a year.
(b) Condition. The Board may not expand the benefit package under
subsection (a) which is to become effective with respect to a year, by
adding any item or service or altering any cost sharing schedule, unless
the Board estimates that the additional increase in per capita health care
expenditures resulting from the addition or alteration, for each regional
alliance for the year, will not cause any regional alliance to exceed its
per capita target (as determined under section 6003(a)).
SEC. 1153. AUTHORITY WITH RESPECT TO CLINICAL PREVENTIVE SERVICES.
(a) In General. With respect to clinical preventive services described in
section 1114, the National Health Board
(1) shall specify and define specific items and services as clinical
preventive services for high risk populations and shall establish and
update a periodicity schedule for such items and services;
(2) shall update the periodicity schedules for the age-appropriate
immunizations, tests, and clinician visits specified in subsections (b)
through (h) of such section;
(3) shall establish rules with respect to coverage for an immunization,
test, or clinician visit that is not provided to an individual during the
age range for such immunization, test, or clinician visit that is
specified in one of subsections (b) through (h) of such section; and
(4) may otherwise modify the items and services described in such
section, taking into account age and other risk factors, but may not
modify the cost sharing for any such item or service.
(b) Consultation. In performing the functions described in subsection
(a), the National Health Board shall consult with experts in clinical
preventive services.
SEC. 1154. ESTABLISHMENT OF STANDARDS REGARDING MEDICAL NECESSITY.
The National Health Board may promulgate such regulations as may be
necessary to carry out section 1141(a)(2) (relating to the exclusion of
certain services that are not medically necessary or appropriate).
Part 6. ADDITIONAL PROVISIONS RELATING TO HEALTH CARE PROVIDERS
SEC. 1161. OVERRIDE OF RESTRICTIVE STATE PRACTICE LAWS.
No State may, through licensure or otherwise, restrict the practice of
any class of health professionals beyond what is justified by the skills
and training of such professionals.
SEC. 1162. PROVISION OF ITEMS OR SERVICES CONTRARY TO RELIGIOUS BELIEF OR
MORAL
CONVICTION.
A health professional or a health facility may not be required to provide
an item or service in the comprehensive benefit package if the professional
or facility objects to doing so on the basis of a religious belief or moral
conviction.
Subtitle C. State Responsibilities
SEC. 1200. PARTICIPATING STATE.
(a) In General. For purposes of the approval of a State health care
system by the Board under section 1511, a State is a ``participating
State'' if the State meets the applicable requirements of this subtitle.
(b) Submission of System Document.
(1) In general. In order to be approved as a participating State under
section 1511, a State shall submit to the National Health Board a
document (in a form and manner specified by the Board) that describes the
State health care system that the State is establishing (or has
established).
(2) Deadline. If a State is not a participating State with a State
health care system in operation by January 1, 1998, the provisions of
subpart B of part 2 of subtitle F (relating to Federal operation of a
State health care system) shall take effect.
(3) Submission of information subsequent to approval. A State approved
as a participating State under section 1511 shall submit to the Board an
annual update to the State health care system not later than February 15
of each year following the first year for which the State is a
participating State that contains
(A) such information as the Board may require to determine that the
system shall meet the applicable requirements of subtitle C for the
succeeding year; and
(B) such information as the Board may require to determine that the
State operated the system during the previous year in accordance with
the Board's approval of the system for such previous year.
Part 1. GENERAL STATE RESPONSIBILITIES
SEC. 1201. GENERAL STATE RESPONSIBILITIES.
The responsibilities for a participating State are as follows:
(1) Regional alliances. Establishing one or more regional alliances (in
accordance with section 1202).
(2) Health plans. Certifying health plans (in accordance with section
1203).
(3) Financial solvency of plans. Assuring the financial solvency of
health plans (in accordance with section 1204).
(4) Administration. esignating an agency or official charged with
coordinating the State responsibilities under Federal law.
(5) Workers compensation and automobile insurance. Conforming State
laws to meet the requirements of title X (relating to medical benefits
under workers compensation and automobile insurance).
(6) Other responsibilities. Carrying out other responsibilities of
participating States specified under this Act.
SEC. 1202. STATE RESPONSIBILITIES WITH RESPECT TO ALLIANCES.
(a) Establishment of Alliances.
(1) In general. A participating State shall
(A) establish and maintain one or more regional alliances in
accordance with this section and subtitle D, and ensure that such
alliances meet the requirements of this Act; and
(B) designate alliance areas in accordance with subsection (b).
(2) Deadline. A State may not be a participating State for a year
unless the State has established such alliances by March 1 of the
previous year.
(b) Alliance Areas.
(1) In general. In accordance with this subsection, each State shall
designate a geographic area assigned to each regional alliance. Each such
area is referred to in this Act as an ``alliance area''.
(2) Population required.
(A) In general. Each alliance area shall encompass a population large
enough to ensure that the alliance has adequate market share to
negotiate effectively with health plans providing the comprehensive
benefit package to eligible individuals who reside in the area.
(B) Treatment of consolidated metropolitan statistical areas. An
alliance area that includes a Consolidated Metropolitan Statistical
Area within a State is presumed to meet the requirements of
subparagraph (A).
(3) Single alliance in each area. No geographic area may be assigned to
more than one regional alliance.
(4) Boundaries. In establishing boundaries for alliance areas, the
State may not discriminate on the basis of or otherwise take into account
race, ethnicity, language, religion, national origin, socio-economic
status, disability, or perceived health status.
(5) Treatment of metropolitan areas. The entire portion of a
metropolitan statistical area located in a State shall be included in the
same alliance area.
(6) No portions of State permitted to be outside alliance area. Each
portion of the State shall be assigned to a regional alliance under this
subsection.
(c) State Coordination of Regional Alliances. One or more States may
allow or require two or more regional alliances to coordinate their
operations, whether such alliances are in the same or different States.
Such coordination may include adoption of joint operating rules,
contracting with health plans, enforcement activities, and establishment of
fee schedules for health providers.
(d) Assistance in Collection of Amounts Owed to Alliances. Each State
shall assure that the amounts owed to regional alliances in the State are
collected and paid to such alliances.
(e) Assistance in Eligibility Verifications.
(1) In general. Each State shall assure that the determinations of
eligibility for cost sharing assistance (and premium discounts and cost
sharing reductions for families) are made by regional alliances in the
State on the basis of the best information available to the alliances and
the State.
(2) Provision of information. Each State shall use the information
available to the State under section 6103(l)(7)(D)(x) of the Internal
Revenue Code of 1986 to assist regional alliances in verifying such
eligibility status.
(f) Special Requirements for Alliances With Single-Payer System. If the
State operates an alliance-specific single-payer system (as described in
part 2), the State shall assure that the regional alliance in which the
system is operated meets the requirements for such an alliance described in
section 1224(b).
(g) Payment of Shortfalls for Certain Administrative Errors. Each
participating State is financially responsible, under section 9201(c)(2),
for administrative errors described in section 9201(e)(2).
SEC. 1203. STATE RESPONSIBILITIES RELATING TO HEALTH PLANS.
(a) Criteria for Certification.
(1) In general. For purposes of this section, a participating State
shall establish and publish the criteria that are used in the
certification of health plans under this section.
(2) Requirements. Such criteria shall be established with respect to
(A) the quality of the plan,
(B) the financial stability of the plan,
(C) the plan's capacity to deliver the comprehensive benefit package
in the designated service area,
(D) other applicable requirements for health plans under parts 1, 3,
and 4 of subtitle E, and
(E) other requirements imposed by the State consistent with this
part.
(b) Certification of Health Plans. A participating State shall certify
each plan as a regional alliance health plan that it determines meet the
criteria for certification established and published under subsection (a).
(c) Monitoring. A participating State shall monitor the performance of
each State-certified regional alliance health plan to ensure that it
continues to meet the criteria for certification.
(d) Limitations on Authority. A participating State may not
(1) discriminate against a plan based on the domicile of the entity
offering of the plan; and
(2) regulate premium rates charged by health plans, except as may be
required under title VI (relating to the enforcement of cost containment
rules for plans in the State) or as may be necessary to ensure that plans
meet financial solvency requirements under section 1408.
(e) Assuring Adequate Access to a Choice of Health Plans.
(1) General access.
(A) In general. Each participating State shall ensure that
(i) each regional alliance eligible family has adequate access to
enroll in a choice of regional alliance health plans providing
services in the area in which the individual resides, including (to
the maximum extent practicable) adequate access to a plan whose
premium is at or below the weighted average premium for plans in the
regional alliance, and
(ii) each such family that is eligible for a premium discount under
section 6104(b) is provided a discount in accordance with such
section (including an increase in such discount described in section
6104(b)(2)).
(B) Authority. In order to carry out its responsibility under
subparagraph (A), a participating State may require, as a condition of
entering into a contract with a regional alliance under section 1321,
that one or more certified regional alliance health plans cover all (or
selected portions) of the alliance area.
(2) Access to plans using centers of excellence. Each participating
State may require, as a condition of entering into a contract with a
regional alliance under section 1321, that one or more certified health
plans provide access (through reimbursement, contracts, or otherwise) of
enrolled individuals to services of centers of excellence (as designated
by the State in accordance with rules promulgated by the Secretary).
(3) Use of incentives to enroll and serve disadvantaged groups. A State
may provide
(A) for an adjustment to the risk-adjustment methodology under
section 1542(c) and other financial incentives to regional alliance
health plans to ensure that such plans enroll individuals who are
members of disadvantaged groups, and
(B) for appropriate extra services, such as outreach to encourage
enrollment and transportation and interpreting services to ensure
access to care, for certain population groups that face barriers to
access because of geographic location, income levels, or racial or
cultural differences.
(f) Coordination of Workers' Compensation Services and Automobile
Insurance. Each participating State shall comply with the responsibilities
regarding workers' compensation and automobile insurance specified in title
X.
(g) Implementation of Mandatory Reinsurance System. If the risk
adjustment and reinsurance methodology developed under section 1541
includes a mandatory reinsurance system, each participating State shall
establish a reinsurance program consistent with such methodology and any
additional standards established by the Board.
(h) Requirements for Plans Offering Supplemental Insurance.
Notwithstanding any other provision of this Act a State may not certify a
regional alliance health plan under this section if
(1) the plan (or any entity with which the plan is affiliated under
such rules as the Board may establish) offers a supplemental health
benefit policy (as defined in section 1421(a)(1)) that fails to meet the
applicable requirements for such a policy under part 2 of subtitle E
(without regard to the State in which the policy is offered); or
(2) the plan offers a cost sharing policy (as defined in section
1421(a)(2)) that fails to meet the applicable requirements for such a
policy under part 2 of subtitle E.
SEC. 1204. FINANCIAL SOLVENCY; FISCAL OVERSIGHT; GUARANTY FUND.
(a) Capital Standards. A participating State shall establish capital
standards for health plans that meet minimum Federal requirements
established by the National Health Board under section 1505(i).
(b) Reporting and Auditing Requirements. Each participating State shall
define financial reporting and auditing requirements and requirements for
fund reserves adequate to monitor the financial status of plans.
(c) Guaranty Fund.
(1) Establishment. Each participating State shall ensure that there is
a guaranty fund that meets the requirements established by the Board
under section 1505(j)(2), in order to provide financial protection to
health care providers and others in the case of a failure of a regional
alliance health plan.
(2) Assessments to provide funds. In the case of a failure of one or
more regional alliance health plans, the State may require each regional
alliance health plan within the State to pay an assessment to the State
in an amount not to exceed 2 percent of the premiums of such plans paid
by or on behalf of regional alliance eligible individuals during a year
for so long as necessary to generate sufficient revenue to cover any
outstanding claims against the failed plan.
(d) Procedures in Event of Plan Failure.
(1) In general. A participating State shall assure that, in the event
of the failure of a regional alliance health plan in the State, eligible
individuals enrolled in the plan will be assured continuity of coverage
for the comprehensive benefit package.
(2) Designation of state agency. A participating State shall designate
an agency of State government that supervises or assumes control of the
operation of a regional alliance health plan in the case of the failure
of the plan.
(3) Protections for health care providers and enrollees. Each
participating State shall assure that in the case of a plan failure
(A) the guaranty fund shall pay health care providers for items and
services covered under the comprehensive benefit package for enrollees
of the plan for which the plan is otherwise obligated to make payment;
(B) after making all payments required to be made to providers under
subparagraph (A), the guaranty fund shall make payments for the
operational, administrative, and other costs and debts of the plan (in
accordance with requirements imposed by the State based on rules
promulgated by the Board);
(C) such health care providers have no legal right to seek payment
from eligible individuals enrolled in the plan for any such covered
items or services (other than the enrollees' obligations under cost
sharing arrangements); and
(D) health care providers are required to continue caring for such
eligible individuals until such individuals are enrolled in a new
health plan.
(4) Plan failure. For purposes of this section, the failure of a health
plan means the current or imminent inability to pay claims.
SEC. 1205. RESTRICTIONS ON FUNDING OF ADDITIONAL BENEFITS.
If a participating State provides benefits (either directly or through
regional alliance health plans or otherwise) in addition to those covered
under the comprehensive benefit package, the State may not provide for
payment for such benefits through funds provided under this Act.
Part 2. REQUIREMENTS FOR STATE SINGLE-PAYER SYSTEMS
SEC. 1221. SINGLE-PAYER SYSTEM DESCRIBED.
The Board shall approve the application of a State to operate a
single-payer system if the Board finds that the system
(1) meets the requirements of section 1222;
(2) meets the requirements for a Statewide single-payer system under
section 1223, in the case of a system offered throughout a State; and
(3) meets the requirements for an alliance-specific single-payer system
under section 1224, in the case of a system offered in a single alliance
of a State.
SEC. 1222. GENERAL REQUIREMENTS FOR SINGLE-PAYER SYSTEMS.
Each single-payer system shall meet the following requirements:
(1) Establishment by state. The system is established under State law,
and State law provides for mechanisms to enforce the requirements of the
plan.
(2) Operation by state. The system is operated by the State or a
designated agency of the State.
(3) Enrollment of eligible individuals.
(A) Mandatory enrollment of all regional alliance individuals. The
system provides for the enrollment of all eligible individuals residing
in the State (or, in the case of an alliance-specific single-payer
system, in the alliance area) for whom the applicable health plan would
otherwise be a regional alliance health plan.
(B) Optional enrollment of medicare-eligible individuals. At the
option of the State, the system may provide for the enrollment of
medicare-individuals residing in the State (or, in the case of an
alliance-specific single-payer system, in the alliance area) if the
Secretary of Health and Human Services has approved an application
submitted by the State under section 1893 of the Social Security Act
(as added by section 4001(a)) for the integration of medicare
beneficiaries into plans of the State. Nothing in this subparagraph
shall be construed as requiring that a State have a single-payer system
in order to provide for such integration.
(C) Optional enrollment of corporate alliance individuals in
statewide plans. At the option of the State, a Statewide single-payer
system may provide for the enrollment of individuals residing in the
State who are otherwise eligible to enroll in a corporate alliance
health plan under section 1311.
(D) Options included in State system document. A State may not
exercise any of the options described in subparagraphs (A) or (B) for a
year unless the State included a description of the option in the
submission of its system document to the Board for the year under
section 1200(b).
(E) Exclusion of certain individuals. A single-payer system may not
require the enrollment of electing veterans, active duty military
personnel, and electing Indians (as defined in 1012(d)).
(4) Direct payment to providers.
(A) In general. With respect to providers who furnish items and
services included in the comprehensive benefit package to individuals
enrolled in the system, the State shall make payments directly to such
providers and assume (subject to subparagraph (B)) all financial risk
associated with making such payments.
(B) Capitated payments permitted. Nothing in subparagraph (A) shall
be construed to prohibit providers furnishing items and services under
the system from receiving payments from the plan on a capitated,
at-risk basis based on prospectively determined rates.
(5) Provision of comprehensive benefit package.
(A) In general. The system shall provide for coverage of the
comprehensive benefit package, including the cost sharing provided
under the package (subject to subparagraph (B)), to all individuals
enrolled in the system.
(B) Imposition of reduced cost sharing. The system may decrease the
cost sharing otherwise provided in the comprehensive benefit package
with respect to any class of individuals enrolled in the system or any
class of services included in the package, so long as the system does
not increase the cost sharing otherwise imposed with respect to any
other class of individuals or services.
(6) Cost containment. The system shall provide for mechanisms to
ensure, in a manner satisfactory to the Board, that
(A) per capita expenditures for items and services in the
comprehensive benefit package under the system for a year (beginning
with the first year) do not exceed an amount equivalent to the regional
alliance per capita premium target that is determined under section
6003 (based on the State being a single regional alliance) for the
year;
(B) the per capita expenditures described in subparagraph (A) are
computed and effectively monitored; and
(C) automatic, mandatory, nondiscretionary reductions in payments to
health care providers will be imposed to the extent required to assure
that such per capita expenditures do not exceed in the applicable
target referred to in subparagraph (A).
(7) Requirements generally applicable to health plans. The system shall
meet the requirements applicable to a health plan under section 1400(a),
except that
(A) the system does not have the authority provided to health plans
under section 1402(a)(2) (relating to permissible limitations on the
enrollment of eligible individuals on the basis of limits on the plan's
capacity);
(B) the system is not required to meet the requirements of section
1404(a) (relating to restrictions on the marketing of plan materials);
and
(C) the system is not required to meet the requirements of section
1408 (relating to plan solvency).
SEC. 1223. SPECIAL RULES FOR STATES OPERATING STATEWIDE SINGLE-PAYER
SYSTEM.
(a) In General. In the case of a State operating a Statewide single-payer
system
(1) the State shall operate the system throughout the State through a
single alliance;
(2) except as provided in subsection (b), the State shall meet the
requirements for participating States under part 1; and
(3) the State shall assume the functions described in subsection (c)
that are otherwise required to be performed by regional alliances in
participating States that do not operate a Statewide single-payer system.
(b) Exceptions to Certain Requirements for Participating States. In the
case of a State operating a Statewide single-payer system, the State is not
required to meet the following requirements otherwise applicable to
participating States under part 1:
(1) Establishment of alliances. The requirements of section 1202
(relating to the establishment of alliances).
(2) Health plans. The requirements of section 1203 (relating to health
plans), other than the requirement of subsection (f) of such section
(relating to coordination of workers' compensation services and
automobile liability insurance).
(3) Financial solvency. The requirements of section 1204 (relating to
the financial solvency of health plans in the State).
(c) Assumption by State of Certain Requirements Applicable to Regional
Alliances. A State operating a Statewide single-payer system shall be
subject to the following requirements otherwise applicable to regional
alliances in other participating States:
(1) Enrollment; issuance of health security cards. The requirements of
subsections (a) and (c) of section 1323 and section 1324 shall apply to
the State, eligible individuals residing in the State, and the
single-payer system operated by the State in the same manner as such
requirements apply to a regional alliance, alliance eligible individuals,
and regional alliance plans.
(2) Reductions in cost sharing for low-income individuals. The
requirement of section 1371 shall apply to the State in the same manner
as such requirement applies to a regional alliance.
(3) Data collection; quality. The requirements of section 1327(a) shall
apply to the State and the single-payer system operated by the State in
the same manner as such requirement applies to a regional alliance and
health plans offered through a regional alliance.
(4) Anti-discrimination; coordination. The requirements of section 1328
shall apply to the State in the same manner as such requirements apply
with respect to a regional alliance.
(d) Financing.
(1) In general. A State operating a Statewide single-payer system shall
provide for the financing of the system using, at least in part, a
payroll-based financing system that requires employers to pay at least
the amount that the employers would be required to pay if the employers
were subject to the requirements of subtitle B of title VI.
(2) Use of financing methods. Such a State may use, consistent with
paragraph (1), any other method of financing.
(e) Single-Payer State Defined. In this Act, the term ``single-payer
State'' means a State with a Statewide single-payer system in effect that
has been approved by the Board in accordance with this part.
SEC. 1224. SPECIAL RULES FOR ALLIANCE-SPECIFIC SINGLE-PAYER SYSTEMS.
(a) In General. In the case of a State operating an alliance-specific
single-payer system
(1) the State shall meet the requirements for participating States
under part 1, except that in establishing the regional alliance through
which the system is offered, the requirement of section 1202(a)(1)(A)
shall not apply to the extent necessary for the alliance to meet the
requirements of section 1242; and
(2) the regional alliance in which the system is operated shall meet
the requirements of subsection (b).
(b) Requirements for Alliance in Which System Operates. A regional
alliance in which an alliance-specific single payer system is operated
shall meet the requirements applicable to regional alliances under subtitle
D, except that the alliance is not required to meet the following
requirements of such subtitle:
(1) Contracts with health plans. The requirements of section 1321
(relating to contracts with health plans).
(2) Choice of health plans offered. The requirements of subsections (a)
or (b) of section 1322 (relating to offering a choice of health plans to
eligible enrollees).
(4) Establishment of process for consumer complaints. The requirements
of section 1326(a) (relating to the establishment of a process for the
hearing and resolution of consumer complaints against plans offered
through the alliance).
(5) Addressing needs of areas with inadequate health services. The
regional alliance does not have any of the authorities described in
subsections (a) and (b) of section 1329 (relating to adjusting payments
to plans and encouraging the establishment of new plans).
Subtitle D. Health Alliances
SEC. 1300. HEALTH ALLIANCE DEFINED.
In this Act, the term ``health alliance'' means a regional alliance (as
defined in section 1301) and a corporate alliance (as defined in section
1311).
Part 1. ESTABLISHMENT OF REGIONAL AND CORPORATE ALLIANCES
Subpart A. Regional Alliances
SEC. 1301. REGIONAL ALLIANCE DEFINED.
In this Act, the term ``regional alliance'' means a non-profit
organization, an independent state agency, or an agency of the State
which
(1) meets the applicable organizational requirements of this subpart,
and
(2) is carrying out activities consistent with part 2.
SEC. 1302. BOARD OF DIRECTORS.
(a) In General. A regional alliance must be governed by a Board of
Directors appointed consistent with the provisions of this title. All
powers vested in a regional alliance under this Act shall be vested in the
Board of Directors.
(b) Membership.
(1) In general. Such a Board of Directors shall consist of
(A) members who represent employers whose employees purchase health
coverage through the alliance, including self-employed individuals who
purchase such coverage; and
(B) members who represent individuals who purchase such coverage,
including employees who purchase such coverage.
(2) Equal representation of employers and consumers. The number of
members of the Board described under subparagraph (A) of paragraph (1)
shall be the same as the number of members described in subparagraph (B)
of such paragraph.
(c) No Conflict of Interest Permitted. An individual may not serve as a
member of the Board of Directors if the individual is one of the following
(or an immediate family member of one of the following):
(1) A health care provider.
(2) An individual who is an employee or member of the Board of
Directors of, has a substantial ownership in, or derives substantial
income from, a health care provider, health plan, pharmaceutical company,
or a supplier of medical equipment, devices, or services.
(3) A person who derives substantial income from the provision of
health care.
(4)(A) A member or employee of an association, law firm, or other
institution or organization that represents the interests of one or more
health care providers, health plans or others involved in the health care
field, or (B) an individual who practices as a professional in an area
involving health care.
SEC. 1303. PROVIDER ADVISORY BOARDS FOR REGIONAL ALLIANCES.
Each regional alliance must establish a provider advisory board
consisting of representatives of health care providers and professionals
who provide covered services through health plans offered by the
alliance.
Subpart B. Corporate Alliances
SEC. 1311. CORPORATE ALLIANCE DEFINED; INDIVIDUALS ELIGIBLE FOR COVERAGE
THROUGH CORPORATE ALLIANCES; ADDITIONAL DEFINITIONS.
(a) Corporate Alliance Defined. In this Act, the term ``corporate
alliance'' means an eligible sponsor (as defined in subsection (b)) if
(1) the sponsor elects, in a form and manner specified by the Secretary
of Labor consistent with this subpart, to be treated as a corporate
alliance under this title and such election has not been terminated under
section 1313; and
(2) the sponsor has filed with the Secretary of Labor a document
describing how the sponsor shall carry out activities as such an alliance
consistent with part 3.
(b) Eligible Sponsors.
(1) In general. In this subpart, each of the following is an eligible
sponsor of a corporate alliance:
(A) Large employer. An employer that
(i) is a large employer (as defined in subsection (e)(3)) as of the
date of an election under subsection (a)(1), and
(ii) is not an excluded employer described in paragraph (2).
(B) Plan sponsor of a multiemployer plan. A plan sponsor described in
section 3(16)(B)(iii) of Employee Retirement Income Security Act of
1974, but only with respect to a group health plan that is a
multiemployer plan (as defined in subsection (e)(4)) maintained by the
sponsor and only if
(i) such plan offered health benefits as of September 1, 1993, and
(ii) as of both September 1, 1993, and January 1, 1996, such plan
has more than 5,000 active participants in the United States, or the
plan is affiliated with a national labor agreement covering more than
5,000 employees.
(C) Rural electric cooperative and rural telephone cooperative
association. A rural electric cooperative or a rural telephone
cooperative association, but only with respect to a group health plan
that is maintained by such cooperative or association (or members of
such cooperative or association) and only if such plan
(i) offered health benefits as of September 1, 1993, and
(ii) as of both September 1, 1993, and January 1, 1996, has more
than 5,000 full-time employees in the United States entitled to
health benefits under the plan.
(2) Excluded employers. For purposes of paragraph (1)(A), any of the
following are excluded employers described in this paragraph:
(A) An employer whose primary business is employee leasing.
(B) The Federal government (other than the United States Postal
Service).
(C) A State government, a unit of local government, and an agency or
instrumentality of government, including any special purpose unit of
government.
(c) Individuals Eligible to Enroll in Corporate Alliance Health Plans.
For purposes of part 1 of subtitle A, subject to subsection (d)
(1) Large employer alliances.
(A) Full-time employees. Each eligible individual who is a full-time
employee of a large employer that has an election in effect as a
corporate alliance is eligible to enroll in a corporate alliance health
plan offered by such corporate alliance.
(B) One-time option to exempt employees in small establishments. At
the time of making an election to become a corporate alliance under
this subpart, a large employer may exercise an option to make
ineligible for enrollment all full-time employees of the employer
employed in any establishment of the employer which has (at the time of
the election) fewer than 100 full-time employees. The option under this
subparagraph may be exercised separately with respect to each
establishment of the employer.
(2) Multiemployer alliances.
(A) Participants. Each participant and beneficiary (as defined in
subparagraph (B)) under a multiemployer plan, with respect to which an
eligible sponsor of the plan described in subsection (b)(1)(B) has an
election in effect as a corporate alliance, is eligible to enroll in a
corporate alliance health plan offered by such corporate alliance.
(B) Participant and beneficiary defined. In subparagraph (A), the
terms ``participant'' and ``beneficiary'' have the meaning given such
terms in section 3 of the Employee Retirement Income Security Act of
1974.
(3) Full-time employees of rural cooperative alliances. Each full-time
employee of a rural electric cooperative or rural telephone cooperative
association (or of a member of such a cooperative or association) which
has an election in effect as a corporate alliance is eligible to enroll
in a corporate alliance health plan offered by such corporate alliance.
(4) Ineligible to enroll in regional alliance health plan. Except as
provided in section 1013(b), a corporate alliance eligible individual is
not eligible to enroll under a regional alliance health plan.
(d) Exclusion of Certain Individuals. In accordance with rules of the
Board, the following individuals shall not be treated as corporate alliance
eligible individuals:
(1) AFDC recipients.
(2) SSI recipients.
(3) Individuals who are described in section 1004(b) (relating to
veterans, military personnel, and Indians) and who elect an applicable
health plan described in such section.
(4) Employees who are seasonal or temporary workers (as defined by the
Board), other than such workers who are treated as corporate alliance
eligible individuals pursuant to a collective bargaining agreement (as
defined by the Secretary of Labor).
(e) Definitions Relating to Corporate Alliances. In this subtitle, except
as otherwise provided:
(1) Establishment. The term ``establishment'' shall be defined by the
Secretary of Labor.
(2) Group health plan. The term ``group health plan'' means an employee
welfare benefit plan (as defined in section 3(1) of the Employee
Retirement Income Security Act of 1974) providing medical care (as
defined in section 213(d) of the Internal Revenue Code of 1986) to
participants or beneficiaries (as defined in section 3 of the Employee
Retirement Income Security Act of 1974) directly or through insurance,
reimbursement, or otherwise.
(3) Large employer. The term ``large employer'' means an employer that
has more than 5,000 full-time employees in the United States, not
including (subject to section 1312(a)(3)) any employee located at an
establishment for which the option described in subsection (c)(1)(B) is
in effect. Such term includes the United States Postal Service.
(4) Multiemployer plan. The term ``multiemployer plan'' has the meaning
given such term in section 3(37) of the Employee Retirement Income
Security Act of 1974, and includes any plan that is treated as such a
plan under title I of such Act.
(5) Rural electric cooperative. The term ``rural electric cooperative''
has the meaning given such term in section 3(40)(A)(iv) of the Employee
Retirement Income Security Act of 1974.
(6) Rural telephone cooperative associations. The term ``rural
telephone cooperative association'' has the meaning given such term in
section 3(40)(A)(v) of the Employee Retirement Income Security Act of
1974.
SEC. 1312. TIMING OF ELECTIONS.
(a) For Large Employers.
(1) Current large employers.
(A) In general. In the case of an employer that is an eligible
sponsor described in section 1311(b)(1)(A) as of the most recent
January 1 prior to the general effective date, the sponsor's election
to be a corporate alliance under such section must be made and filed
with the Secretary of Labor not later than the date specified in
subparagraph (B).
(B) Deadline for notice. The date specified in this subparagraph is
January 1 of the second year preceding the general effective date or,
in the case of a State that elects to become a participating State
before the general effective date, not later than one month later than
the date specified for States to provide notice of their intent under
section 1202(a)(2).
(2) New large employers. In the case of an employer that is not an
eligible sponsor described in section 1311(b)(1)(A) as of the most recent
January 1 prior to the general effective date, but first becomes such a
sponsor as of a subsequent date, the election to be a corporate alliance
under such section must be made and filed with the Secretary of Labor not
later than March 1 of the year following the year in such report is
submitted.
(3) Application of option. The Secretary of Labor shall promulgate
rules regarding how the option described in section 1311(c)(1)(B) will be
applied to the determination of whether an employer is a large employer
before an election is made under section 1311.
(b) For Multiemployer Plans and Rural Cooperatives. In the case of an
eligible sponsor described in section 1311(b)(1)(B) or (C), the sponsor's
election to be a corporate alliance under such section must be made and
filed with the Secretary of Labor not later than the second most recent
March 1 prior to the general effective date.
(c) Effective Date of Election. An election made under subsection (a) or
(b) shall be effective for coverage provided under health plans on and
after January 1 of the year following the year in which the election is
made.
(d) One-time Election. If an eligible sponsor fails to make the election
on a timely manner under subsection (a) or (b), the sponsor may not make
such election at any other time.
SEC. 1313. TERMINATION OF ALLIANCE ELECTION.
(a) Termination for Insufficient Number of Full-Time Employees or
Participants. If a corporate alliance reports under section 1387(c), that
there were fewer than 4,800 full-time employees (or, active participants,
in the case of one or more plans offered by a corporate alliance which is
an eligible sponsor described in section 1311(b)(1)(B)) who are enrolled in
a health plan through the alliance, the election under this part with
respect to the alliance shall terminate.
(b) Termination for Failure to Meet Requirements.
(1) In general. If the Secretary of Labor finds that a corporate
alliance has failed substantially to meet the applicable requirements of
this subtitle, the Secretary shall terminate the election under this part
with respect to the alliance
(2) Excess increase in premium equivalent. If the Secretary of Labor
finds that the alliance is in violation of the requirements of section
6022 (relating to prohibition against excess increase in premium
expenditures), the Secretary shall terminate the alliance in accordance
with such section.
(c) Elective Termination. A corporate alliance may terminate an election
under this part by filing with the National Health Board and the Secretary
of Labor a notice of intent to terminate.
(d) Effective Date of Termination. In the case of a termination of an
election under this section, in accordance with rules established by the
Secretary of Labor
(1) the termination shall take effect as of the effective date of
enrollments in regional alliance health plans made during the next open
enrollment period (as provided in section 1323(d)), and
(2) the enrollment of eligible individuals in corporate alliance
health plans of the corporate alliance shall be terminated as of such
date and such individuals shall be enrolled in other applicable health
plans effective on such date.
(e) Notice to Board. If an election with respect to a corporate alliance
is terminated pursuant to subsection (a) or subsection (b), the Secretary
of Labor shall notify the National Health Board of the termination of the
election.
Part 2. GENERAL RESPONSIBILITIES AND AUTHORITIES OF REGIONAL ALLIANCES
SEC. 1321. CONTRACTS WITH HEALTH PLANS.
(a) Contracts with Plans.
(1) In general. In order to assure the availability of the
comprehensive benefit package to eligible individuals residing in the
alliance area in a cost-effective manner, except as provided in this
section, each regional alliance shall negotiate with any willing
State-certified health plan to enter into a contract with the alliance
for the enrollment under the plan of eligible individuals in the alliance
area. Subject to paragraph (2), a regional alliance shall not enter into
any such contract with a health plan that is not a State-certified health
plan.
(2) Treatment of certain plans. Each regional alliance shall enter into
a contract under this section with any veterans health plan of the
Department of Veterans Affairs and with a Uniformed Services Health Plan
of the Department of Defense, that offers the comprehensive benefit
package to eligible individuals residing in the alliance area if the
appropriate official requests to enter into such a contract.
(b) General Conditions for Denial of Contract by a Regional Alliance. A
regional alliance is not required under this section to offer a contract
with a health plan if
(1) the alliance finds that the proposed premium exceeds 120 percent of
the weighted-average premium within the alliance; or
(2) the plan has failed to comply with requirements under prior
contracts with the alliance, including failing to offer coverage for all
the services in the comprehensive benefit package in the entire service
area of the plan.
SEC. 1322. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT;
ESTABLISHMENT OF
FEE-FOR-SERVICE SCHEDULE.
(a) In General. Each health alliance must provide to each eligible
enrollee with respect to the alliance a choice of health plans among the
plans which have contracts in effect with the alliance under section 1321
(in the case of a regional alliance) or section 1341 (in the case of a
corporate alliance).
(b) Offering of Plans by Alliances.
(1) In general. Each regional alliance shall include among its health
plan offerings at least one fee-for-service plan (as defined in paragraph
(2)).
(2) Fee-for-service plan defined.
(A) In general. For purposes of this Act, the term ``fee-for-service
plan'' means a health plan that
(i) provides coverage for all items and services included in the
comprehensive benefit package that are furnished by any lawful health
care provider of the enrollee's choice, subject to reasonable
restrictions (described in subparagraph (B)), and
(ii) makes payment to such a provider without regard to whether or
not there is a contractual arrangement between the plan and the
provider.
(B) Reasonable restrictions described. The reasonable restrictions on
coverage permitted under a fee-for-service plan (as specified by the
National Health Board) are as follows:
(i) Utilization review.
(ii) Prior approval for specified services.
(iii) Exclusion of providers on the basis of poor quality of care,
based on evidence obtainable by the plan.
Clause (ii) shall not be construed as permitting a plan to require
prior approval for non-primary health care services through a
gatekeeper or other process.
(c) Establishment of Fee-for-Service Schedule.
(1) In general. Except in the case of regional alliances of a State
that has established a Statewide fee schedule under paragraph (3), each
regional alliance shall establish a fee schedule setting forth the
payment rates applicable to services furnished during a year to
individuals enrolled in fee-for-service plans (or to services furnished
under the fee-for-service component of any regional alliance health plan)
for use by regional alliance health plans under section 1406(c) and
corporate alliance health plans providing services subject to the
schedule in the regional alliance area.
(2) Negotiation with providers. The fee schedule under paragraph (1)
shall be established after negotiations with providers, and (subject to
paragraphs (5) and (6)) providers may collectively negotiate the fee
schedule with the regional alliance.
(3) Use of statewide schedule. At the option of a State, the State may
establish its own statewide fee schedule which shall apply to all
fee-for-service plans offered by regional alliances and corporate
alliances in the State instead of alliance-specific schedules established
under paragraph (1).
(4) Annual revision. A regional alliance or State (as the case may be)
shall annually update the payment rates provided under the fee schedule
established pursuant to paragraph (1) or paragraph (3).
(5) Activities treated as State action or efforts intended to influence
government action. The establishment of a fee schedule under this
subsection by a regional alliance of a State shall be considered to be
pursuant to a clearly articulated and affirmatively expressed State
policy to displace competition and actively supervised by the State, and
conduct by providers respecting the establishment of the fee schedule,
including collective negotiations by providers with the regional alliance
(or the State) pursuant to paragraph (2), shall be considered as efforts
intended to influence governmental action.
(6) No boycott permitted. Nothing in this subsection shall be construed
to permit providers to threaten or engage in any boycott.
(7) Negotiations defined. In this subsection, ``negotiations'' are the
process by which providers collectively and jointly meet, confer,
consult, discuss, share information, among and between themselves in
order to agree on information to be provided, presentations to be made,
and other such activities with respect to regional alliances (or States)
relating to the establishment of the fee schedule (but not including any
activity that constitutes engaging in or threatening to engage in a
boycott), as well as any and all collective and joint meetings,
discussions, presentations, conferences, and consultations between or
among providers and any regional alliance (or State) for the purpose of
establishing the fee schedule described in this subsection.
(d) Prospective Budgeting of Fee-for-Service.
(1) In general. The fee schedule established by a regional alliance or
a State under subsection (c) may be based on prospective budgeting
described in paragraph (2).
(2) Prospective budgeting described. Under prospective budgeting
(A) the regional alliance or State (as the case may be) shall
negotiate with health providers annually to develop a budget for the
designated fee-for-service plan;
(B) the negotiated budget shall establish spending targets for each
sector of health expenditures made by the plan; and
(C) if the regional alliance or State (as the case may be) determines
that the utilization of services under the plan is at a level that will
result in expenditures under the plan exceeding the negotiated budget,
the plan shall reduce the amount of payments otherwise made to
providers (through a withhold or delay in payments or adjustments) in
such a manner and by such amounts as necessary to assure that
expenditures will not exceed the budget.
(3) Use of prospective budgeting exclusive. If a regional alliance or
State establishes the fee schedule for fee-for-service plans on the basis
of prospective budgeting under this subsection, payment for all services
provided by fee-for-service plans in the alliance or State shall be
determined on such basis.
SEC. 1323. ENROLLMENT RULES AND PROCEDURES.
(a) In General. Each regional alliance shall assure that each regional
alliance eligible individual who resides in the alliance area is enrolled
in a regional alliance health plan and shall establish and maintain methods
and procedures, consistent with this section, sufficient to assure such
enrollment. Such methods and procedures shall assure the enrollment of
alliance eligible individuals at the time they first become eligible
enrollees in the alliance area, including individuals at the time of birth,
at the time they move into the alliance area, and at the time of reaching
the age of individual eligibility as an eligible enrollee (and not merely
as a family member). Each regional alliance shall establish procedures,
consistent with subtitle A, for the selection of a single health plan in
which all members of a family are enrolled.
(b) Point of Service Enrollment Mechanism.
(1) In general. Each regional alliance shall establish a
point-of-service enrollment mechanism (meeting the requirements of this
subsection) for enrolling eligible individuals who are not enrolled in a
health plan of the alliance when the individual seeks health services.
(2) Requirements of mechanism. Under such a mechanism, if an eligible
individual seeks to receive services (included in the comprehensive
benefit package) from a provider in an alliance area and does not present
evidence of enrollment under any applicable health plan, or if the
provider has no evidence of the individual's enrollment under any such
plan, the following rules shall apply:
(A) Notice to alliance. The provider
(i) shall provide the regional alliance with information relating
to the identity of the eligible individual, and
(ii) may request payment from the regional alliance for the
furnishing of such services.
(B) Initial determination of eligibility and enrollment status. The
regional alliance shall determine
(i) if the individual is an alliance eligible individual for the
alliance, and
(ii) if the individual is enrolled under an applicable health plan
(including a corporate alliance health plan).
(C) Treatment of alliance eligible individuals. If the regional
alliance determines that the individual is an alliance eligible
individual with respect to the alliance and
(i) is enrolled under a regional alliance health plan of the
alliance, the alliance shall forward the claim to the health plan
involved and shall notify the provider (and the individual) of the
fact of such enrollment and the forwarding of such claim (and the
plan shall make payment to the provider for the services furnished to
the individual as described in paragraph (3)(C));
(ii) is not enrolled under a regional alliance health plan of the
alliance but is required to be so enrolled in a specific health plan
as a family member under section 1021, the alliance shall record the
individual's enrollment under such specific plan, shall forward the
claim to such plan, and shall notify the provider (and the
individual) of the fact of such enrollment and the forwarding of such
claim (and the plan shall make payment to the provider for the
services furnished to the individual as described in paragraph
(3)(C)); or
(iii) is not enrolled under such a plan and is not described in
clause (ii), the point-of-service enrollment procedures described in
paragraph (3) shall apply.
(D) Treatment of individuals enrolled under health plans of other
alliances. If the regional alliance determines that the individual is
not an alliance eligible individual with respect to the alliance but
the individual is enrolled
(i) under a regional alliance health plan of another alliance, the
alliance shall forward the claim to the other regional alliance and
shall notify the provider (and the individual) of the fact of such
enrollment and the forwarding of such claim (and the plan shall make
payment to the provider for the services furnished to the individual
as described in paragraph (3)(C)); or
(ii) under a corporate alliance health plan, the alliance shall
forward the claim to the corporate alliance involved and shall notify
the provider (and the individual) of the fact of such enrollment and
the forwarding of such claim (and the plan shall make payment to the
provider for the services furnished to the individual as described in
section 1383(b)(2)(B)).
(E) Treatment of other alliance eligible individuals not enrolled in
health plan. If the regional alliance determines that the individual is
not an alliance eligible individual with respect to the alliance and
the individual is an alliance eligible individual with respect to
another health alliance but is not enrolled in a health plan of such
alliance, the regional alliance shall forward the claim to the other
alliance involved and shall notify the provider (and the individual) of
the forwarding of such claim and the requirement for prompt enrollment
of the individual under an applicable health plan of such alliance
pursuant to the procedures described in paragraph (3) (in the case of a
regional alliance) or in section 1383(b) (in the case of a corporate
alliance).
(F) Treatment of all other individuals. The National Board shall
promulgate rules regarding the responsibilities of regional alliances
relating to individuals whose applicable health plan is not an alliance
plan and other individuals the alliance is unable to identify as
eligible individuals.
(3) Point-of-service enrollment procedures described. The
point-of-service enrollment procedures under this paragraph are as
follows:
(A) Not later than 10 days after the date an alliance is notified of
the receipt of services by an unenrolled individual, the alliance
provides the individual with materials describing health plans offered
through the alliance.
(B) The individual shall be provided a period of 30 days in which to
enroll in a health plan of the individual's choice. If the individual
fails to so enroll during such period, the alliance shall enroll the
individual in a health plan of the alliance selected on a random basis.
(C) Using the fee-for-service schedule adopted by the alliance under
section, the health plan in which the individual is enrolled under this
subparagraph shall reimburse the provider who provided the services
referred to in subparagraph (A) to the same extent as if the individual
had been enrolled under the plan at the time of provision of the
services.
(c) Enrollment of New Residents.
(1) In general. Each regional alliance shall establish procedures for
enrolling regional alliance eligible individuals who move into the
alliance area.
(2) Long-term residents. Such procedures shall assure that regional
alliance eligible individuals who intend to reside in the alliance area
for longer than 6 months shall register with the regional alliance for
the area and shall enroll in a regional alliance health plan offered by
the alliance.
(3) Short-term residents. Such procedures shall permit eligible
individuals who intend to reside in the alliance area for more than 3
months but less than 6 months to choose among the following options:
(A) To continue coverage through the health plan in which such
individual is previously enrolled, in which case coverage for care in
the area of temporary residence may be limited to emergency services
and urgent care.
(B) To register with the regional alliance and enroll in a regional
alliance health plan offered by the alliance.
(C) To change enrollment in the previous alliance area to enrollment
in a health plan of such alliance that provides for coverage on a
fee-for-service basis of services provided outside the area of that
alliance.
(d) Changes in Enrollment.
(1) Annual open enrollment period to change plan enrollment. Each
regional alliance shall hold an annual open enrollment period during
which each eligible enrollee in the alliance has the opportunity to
choose among health plans offered through the alliance, according to
rules to be promulgated by the National Health Board.
(2) Disenrollment for cause. In addition to the annual open enrollment
period held under paragraph (1), each regional alliance shall establish
procedures under which alliance eligible individuals enrolled in a plan
may disenroll from the plan for good cause at any time during a year and
enroll in another plan of the alliance. Such procedures shall be
implemented in a manner that ensures continuity of coverage for the
comprehensive benefit package for such individuals during the year.
(e) Enrollment of Family Members. Each regional alliance shall provide
for the enrollment of all family members in the same plan, consistent with
part 2 of subtitle A.
(f) Oversubscription of Plans.
(1) In general. Each regional alliance shall establish a method for
establishing enrollment priorities in the case of a health plan that does
not have sufficient capacity to enroll all eligible individuals seeking
enrollment.
(2) Preference for current members. Such method shall provide that in
the case of such an oversubscribed plan
(A) individuals already enrolled in the plan are given priority in
continuing enrollment in the plan, and
(B) other individuals who seek enrollment during an applicable
enrollment period are permitted to enroll in accordance with a random
selection method, up to the enrollment capacity of the plan.
(g) Termination of Enrollment.
(1) In general. Each regional alliance shall establish special
enrollment procedures to permit alliance eligible individuals to change
the plan in which they are enrolled in the case of the termination of
coverage under a plan, in a manner that ensures the individuals'
continuation of coverage for the comprehensive benefit package.
(2) Failure of a corporate alliance. Each regional alliance shall
establish special enrollment procedures to permit individuals, who become
alliance eligible individuals as a result of the failure of a corporate
alliance, to enroll promptly in regional alliance health plans in a
manner that ensures the individuals' continuation of coverage for the
comprehensive benefit package.
(h) Limitation on Offering of Coverage to Ineligible Individuals. A
regional alliance may not knowingly offer coverage under a regional
alliance health plan or other health insurance or health benefits to an
individual who is not an eligible individual. Nothing in this section shall
be construed as affecting the ability of a regional alliance health plan or
other health plan to offer coverage to such individuals without any
financial payment by a regional alliance.
(i) Enforcement of Enrollment Requirement. In the case of a regional
alliance eligible individual who fails to enroll in an applicable health
plan as required under section 1002(a)
(1) the applicable regional alliance shall enroll the individual in a
regional alliance health plan (selected by the alliance consistent with
this Act and with any rules established by the Board), and
(2) such alliance shall require the payment of twice the amount of the
family share of premiums that would have been payable under subtitle B of
title VI if the individual had enrolled on a timely basis in the plan,
unless the individual has established to the satisfaction of the alliance
good cause for the failure to enroll on a timely basis.
SEC. 1324. ISSUANCE OF HEALTH SECURITY CARDS.
A regional alliance is responsible for the issuance of health security
cards to regional alliance eligible individuals under section 1001(b).
SEC. 1325. CONSUMER INFORMATION AND MARKETING.
(a) Consumer Information.
(1) In general. Each regional alliance shall make available to eligible
enrollees information, in an easily understood and useful form, that
allows such enrollees (and other alliance eligible individuals) to make
valid comparisons among health plans offered by the alliance. Such
information shall be made available in a brochure, published not less
often than annually.
(2) Information to be included. Such information must include, in the
same format for each plan, such information as the National Health Board
shall require, including at least the following:
(A) The cost of the plan, including premiums and average
out-of-pocket expenses.
(B) The characteristics and availability of health care professionals
and institutions participating in the plan.
(C) Any restrictions on access to providers and services under the
plan.
(D) A summary of the annual quality performance report, established
pursuant to section 5005(d)(1), which contains measures of quality
presented in a standard format.
(b) Marketing. Each regional alliance shall review and approve or
disapprove the distribution of any materials used to market health plans
offered through the alliance.
SEC. 1326. OMBUDSMAN.
(a) Establishment. Each regional alliance must establish and maintain an
office of an ombudsman to assist consumers in dealing with problems that
arise with health plans and the alliance.
(b) Optional Financing Through Voluntary Contribution. At the option of
State in which a regional alliance is located, the alliance
(1) shall permit alliance eligible individuals to designate that one
dollar of the premium paid for enrollment in the individual's regional
alliance health plan for the operation of the office of the alliance's
ombudsman; and
(2) shall apply any such amounts towards the establishment and
operation of such office.
SEC. 1327. DATA COLLECTION; QUALITY.
Each regional alliance shall comply with requirements of subtitles A
and B of title V (relating to quality, information systems, and privacy),
and shall take appropriate steps to ensure that health plans offered
through the alliance comply with such requirements.
SEC. 1328. ADDITIONAL DUTIES.
(a) Anti-Discrimination. In carrying out its activities under this part,
a health alliance may not discriminate against health plans on the basis
of race, gender, ethnicity, religion, mix of health professionals, location
of the plan's headquarters, or (except as specifically provided in this
part) organizational arrangement.
(b) Coordination of Enrollment Activities. Each regional alliance shall
coordinate, in a manner specified by the National Health Board, with other
health alliances its activities, including enrollment and disenrollment
activities, in a manner that ensures continuous, nonduplicative coverage of
alliance eligible individuals in health plans and that minimizes
administrative procedures and paperwork.
SEC. 1329. ADDITIONAL AUTHORITIES FOR REGIONAL ALLIANCES TO ADDRESS
NEEDS IN
AREAS WITH INADEQUATE HEALTH SERVICES; PROHIBITION OF INSURANCE ROLE.
(a) Payment Adjustment. In order to ensure that plans are available to
all eligible individuals residing in all portions of the alliance area, a
regional alliance may adjust payments to plans or use other financial
incentives to encourage health plans to expand into areas that have
inadequate health services.
(b) Encouraging New Plans. Subject to subsection (c), in order to
encourage the establishment of a new health plan in an area that has
inadequate health services, an alliance may
(1) organize health providers to create such a plan in such an area a
new health plan targeted at such an area,
(2) provide assistance with setting up and administering such a plan,
and
(3) arrange favorable financing for such a plan.
(c) Prohibition of Regional Alliances Bearing Risk. A regional alliance
may not bear insurance risk.
SEC. 1330. PROHIBITION AGAINST SELF-DEALING AND CONFLICTS OF INTEREST.
(a) Promulgation of Standards. The Board shall promulgate standards of
conduct in accordance with subsection (b) for any administrator, officer,
trustee, fiduciary, custodian, counsel, agent, or employee of any regional
alliance.
(b) Requirements for Standards. The standards of conduct shall referred
to in subsection (a) shall set forth
(1) the types of investment interests, ownership interests,
affiliations or other employment that would be improper for an individual
described in subsection (a) to hold during the time of the individual's
service or employment with an alliance; and
(2) the circumstances that will constitute impermissible conflicts of
interest or self-dealing by such employees in performing their official
duties and functions for any regional alliance.
(c) Civil Monetary Penalty. Any individual who engages in an activity
that the individual knows or has reason to know is in violation of the
regulations and standards promulgated by the Board pursuant to paragraphs
(a) and (b) shall be subject, in addition to any other penalties that may
be prescribed by law, to a civil money penalty of not more than $10,000 for
each such violation.
Part 3. AUTHORITIES AND RESPONSIBILITIES RELATING TO FINANCING AND
INCOME
DETERMINATIONS
Subpart A. Collection of Funds
SEC. 1341. INFORMATION AND NEGOTIATION AND ACCEPTANCE OF BIDS.
(a) Information Provided to Plans Before Soliciting Bids.
(1) In general. Each regional alliance shall make available, by April 1
of each year, to each plan that indicates an interest in submitting a
premium bid under section 6004 in the year, information (including
information described in paragraph (2)) that the Board specifies as being
necessary to enable a plan to estimate, based upon an accepted bid, the
amounts payable to such a plan under section 1351.
(2) Information to be included. Such information shall include the
following:
(A) The demographic and other characteristics of regional alliance
eligible individuals for the regional alliance.
(B) The uniform per capita conversion factor for the regional
alliance (established under subsection (b)).
(C) The premium class factors (established by the Board under section
1531).
(D) The regional alliance inflation factor (determined under section
6001(a)).
(E) The risk-adjustment factors and reinsurance methodology and
payment amounts (published under subsection (c)) to be used by the
regional alliance in computing blended plan per capita rates (in
accordance with section 6201).
(F) The plan bid proportion, the AFDC proportion, the SSI proportion,
the AFDC per capita premium amount, and the SSI per capita premium
amount, for the year, as computed under subtitle D of title VI.
(G) The alliance administrative allowance percentage, computed under
section 1352(b).
(b) Determination of Uniform Per Capita Conversion Factor. Each regional
alliance shall specify, not later than April 1 of each year (beginning with
the year before the first year) a uniform per capita conversion factor to
be used under section 6102(a)(2) in converting the accepted bid for each
plan for the year into the premium for an individual enrollment for such
plan for the year. SSI or AFDC recipients shall not be included for
purposes of computing the conversion factor.
(c) Determination of Risk-Adjustment Factors and Reinsurance Payment
Amounts. Each regional alliance shall compute and publish the
risk-adjustment factors and reinsurance payment amounts to be used by the
regional alliance in computing blended plan per capita rates under section
6201.
(d) Solicitation of Bids. Each regional alliance shall solicit and
negotiate, consistent with section 6004, with each regional alliance health
plan a bid for the payment rate on a per capita basis for the comprehensive
benefit package for all alliance eligible individuals in the alliance area.
SEC. 1342. CALCULATION AND PUBLICATION OF GENERAL FAMILY SHARE AND
GENERAL
EMPLOYER PREMIUM AMOUNTS.
(a) Calculation of Components in General Family Share and General
Employer Premiums.
(1) Family share. Each regional alliance shall compute the following
components of the general family share of premiums:
(A) Plan premiums. For each plan offered, the premium for the plan
for each class of family enrollment (including the amount of any family
collection shortfall).
(B) Alliance credit. The alliance credit amount for each class of
family enrollment, under section 6103.
(C) Excess premium credit. The amount of any excess premium credit
provided under section 6105 for each class of family enrollment.
(D) Corporate alliance opt-in credit. The amount of any corporate
alliance opt-in credit provided under section 6106 for each class of
family enrollment.
(2) Employer premiums. Each regional alliance shall compute the
following components of the general employer premium payment:
(A) Base employer monthly premium per worker. The base employer
monthly premium determined under section 6122 for each class of family
enrollment.
(B) Employer collection shortfall add-on. The employer collection
shortfall add-on computed under section 6125(b).
(b) Publication.
(1) Family share.
(A) In general. Each regional alliance shall publish, before the open
enrollment period in each year, the general family share of the premium
(as defined in subparagraph (B)) for each class of family enrollment
for each regional alliance health plan to be offered by the alliance in
the following year.
(B) General family share of premium defined. In this subpart, the
term ``general family share of premium'' means the family share of
premium under section 6101 computed without regard to section 6104 and
without regard to section 6101(b)(2)(C)(v).
(2) Employer premium.
(A) In general. Each regional alliance shall publish, in December
before each year (beginning with December before the first year) the
general employer premium payment amount (as defined in subparagraph
(B)) for each class of family enrollment for the following year.
(B) General employer premium payment amount defined. In this subpart,
the term ``general employer premium payment amount'' means the employer
premium payment under section 6121 computed, as an amount per full-time
equivalent worker, without regard to sections 6124, 6125, 6126.
SEC. 1343. DETERMINATION OF FAMILY SHARE FOR FAMILIES.
(a) Amount of Family Share. The amount charged by a regional alliance to
a family for a class of family enrollment (specified under section 1011(c))
under a regional alliance health plan is equal to the family share of
premium established under section 6101(a) for the family. Based upon the
information described in this section, each regional alliance shall
determine the amount required to be paid under section 6101 and under
section 6111 for each year for families enrolling in regional alliance
health plans.
(b) Family Share Amount. The amount required to be paid under section
6101, with respect to each family, takes into account
(1) the general family share of premium (as defined in section
1342(b)(1)(B)) for the class of enrollment involved;
(2) any income-related discount provided under section 6104(a)(1) for
the family; and
(3) whether or not the family is an SSI or AFDC family.
(c) Alliance Credit Amount. The amount of the alliance credit under
section 6111, with respect to each family, takes into account the
following:
(1) The number of months of enrollment, and class of enrollment, in
regional alliance health plans, used in determining the amount of the
alliance credit under section 6103 for the family.
(2) Reductions in liability under section 6111(b) based on employer
premium payments based on net earnings from self-employment for the
family.
(3) Reductions in liability under section 6112 based on months of
employment for the family.
(4) Limitations in liability under section 6113 on the basis of the
adjusted family income for the family.
(5) The elimination of liability in the case of certain retirees and
qualified spouses and children under section 6114.
(6) The elimination of liability in the case of certain working
medicare beneficiaries under section 6115.
(d) Access to Necessary Information to Make Determination. Information
required for an alliance to make the determination under subsection (a)
shall be based on information obtained or maintained by the alliance in the
conduct of its business, including the following:
(1) Information required for income-related determinations shall be
obtained under subpart B.
(2) Information on SSI and AFDC recipients under subsection (e).
(3) Information submitted on a monthly and annual basis by employers
under section 1602.
(4) Information submitted by self-employed individuals on net earnings
from self-employment under section 1602(d).
(5) Applications for premium reductions under section 6114.
(6) Information concerning medicare-eligible individuals under
subsection (f).
(7) Any income-related discount provided under section 6104(a)(1) for
the family.
(8) Whether or not the family is an SSI or AFDC family.
(e) Information Concerning Cash Assistance Status. Each participating
State and the Secretary shall make available (in a time and manner
specified by the Secretary) to each regional alliance such information as
may be necessary to determine and verify whether an individual is an AFDC
or SSI recipient for a month in a year.
(f) Information Concerning Medicare-Eligible Individuals.
(1) Information to regional alliances. The Secretary shall make
available to regional alliances (through regional information centers or
otherwise) information necessary to determine
(A) whether an individual is a medicare-eligible individual,
(B) the eligibility of individuals for the special treatment under
section 6115,
(C) if medicare-eligible individuals are described in section
1012(a), and
(D) the amounts of payments owed the alliance under section 1895 of
the Social Security Act.
(2) Information to secretary. Each regional alliance shall make
available to the Secretary (through the national information system under
section 5101 or otherwise) information relating to the enrollment of
individuals who would be medicare-eligible individuals but for section
1012(a).
(g) Alliance Accounting System.
(1) In general. Each regional alliance shall establish an accounting
system that meets standards established by the Secretary.
(2) Specifics. Such system shall collect information, on a timely basis
for each individual enrolled (and, to the extent required by the
Secretary, identified and required to be enrolled) in a regional alliance
health plan regarding
(A) the applicable premium for such enrollment,
(B) family members covered under such enrollment,
(C) the premium payments made by (or on behalf of) the individual for
such enrollment,
(D) employer premium payments made respecting the employment of the
individual and other employer contributions made respecting such
enrollment, and
(E) any government contributions made with respect to such enrollment
(including contributions for electing veterans and active duty military
personnel).
(3) End-of-year reporting. Such system shall provide for a report, at
the end of each year, regarding the total premiums imposed, and total
amounts collected, for individuals enrolled under regional health
alliance plans, in such manner as identifies net amounts that may be owed
to the regional alliance.
SEC. 1344. NOTICE OF FAMILY PAYMENTS DUE.
(a) Family Statements.
(1) Notice of no amount owed. If the regional alliance determines under
section 1343 that a family has paid any family share required under
section 6101 and is not required to repay any amount under section 6111
for a year, the alliance shall mail notice of such determination to the
family. Such notice shall include a prominent statement that the family
is not required to make any additional payment and is not required to
file any additional information with the regional alliance.
(2) Notice of amount owed.
(A) In general. If the regional alliance determines that a family has
not paid the entire family share required under section 6101 or is
required to repay an amount under section 6111 for a year, the alliance
shall mail to the family a notice of such determination.
(B) Information on amount due. Such notice shall include detailed
information regarding the amount owed, the basis for the computation
(including the amount of any reductions that have been made in the
family's liability under subtitle B of title VI), and the date the
amount is due and the manner in which such amount is payable.
(C) Information on discounts and reductions available. Such notice
shall include
(i) information regarding the discounts and reductions available
(under sections 6104, 6112, 6113, 6114, and 6115) to reduce or
eliminate any liability, and
(ii) a worksheet which may be used to calculate reductions in
liability based on income under sections 6104 and 6113.
(3) Inclusion of income reconciliation form for families provided
premium discounts.
(A) In general. A notice under this subsection shall include, in the
case of a family that has been provided a premium discount under
section 6103 (or section 6113) for the previous year, an income
verification statement (described in section 1375) to be completed and
returned to the regional alliance (along with any additional amounts
owed) by the deadline specified in subsection (b). Such form shall
require the submission of such information as Secretary specifies to
establish or verify eligiblility for such premium discount.
(B) Other families. Any family which has not been provided such a
discount but may be eligible for such a discount may submit such an
income verification form and, if eligible, receive a rebate of the
amount of excess family share paid for the previous year.
(C) Additional information. The alliance shall permit a family to
provide additional information relating to the amount of such
reductions or the income of the family (insofar as it may relate to a
premium discount or reduction in liability under section 6104 or 6113).
(4) Timing of notice. Notices under this subsection shall be mailed to
each family at least 45 days before the deadline specified in subsection
(b).
(b) Deadline for Payment. The deadline specified in this subsection for
amounts owed for a year is such date as the Secretary may specify, taking
into account the dates when the information specified in section 1343
becomes available to compute the amounts owed and the information required
to file income reconcilation statements under section 1375. Amounts not
paid by such deadline are subject to interest and penalty.
(c) Change in Regional Alliance. In the case of a family that during a
year changes the regional alliance through which the family obtains
coverage under a regional alliance health plan, the Secretary shall
establish rules which provide that the regional alliance in which the
family last obtained such coverage in a year
(1) is responsible for recovering amounts due under this subpart for
the year (whether or not attributable to periods of coverage obtained
through that alliance);
(2) shall obtain such information, through the health information
system implemented under section 5201, as the alliance may require in
order to compute the amount of any liability owed under this subpart
(taking into account any reduction in such amount under this section),
and
(3) shall provide for the payment to other regional alliances of such
amounts collected as may be attributable to amounts owed for periods of
coverage obtained through such alliances.
(d) No Loss of Coverage. In no case shall the failure to pay amounts owed
under this subsection result in an individual's or family's loss of
coverage under this Act.
(e) Dispute Resolution. Each regional alliance shall establish a fair
hearing mechanism for the resolution of disputes concerning amounts owed
the alliance under this subpart.
SEC. 1345. COLLECTIONS.
(a) In General. Each regional alliance is responsible for the collection
of all amounts owed the alliance (whether by individuals, employers, or
others and whether on the basis of premiums owed, incorrect amounts of
discounts or premium, cost sharing, or other reductions made, or
otherwise), and no amounts are payable by the Federal Government under this
Act (including section 9102) with respect to the failure to collect any
such amounts. Each regional alliance shall use credit and collection
procedures, including the imposition of interest charges and late fees for
failure to make timely payment, as may be necessary to collect amounts owed
to the alliance. States assist regional alliances in such collection
process under section 1202(d).
(b) Collection of Family Share.
(1) Withholding.
(A) in general. In the case of a family that includes a qualifying
employee of an employer, the employer shall deduct from the wages of
the qualifying employee (in a manner consistent with any rules of the
Secretary of Labor) the amount of the family share of the premium for
the plan in which the family is enrolled.
(B) Multiple employment. In the case of a family that includes more
than one qualifying employee, the family shall choose the employer to
which subparagraph (A) will apply.
(C) Payment. Amounts withheld under this paragraph shall be
maintained in a manner consistent with standards established by the
Secretary of Labor and paid to the regional alliance involved in a
manner consistent with the payment of employer premiums under
subsection (c).
(D) Satisfaction of liability. An amount deducted from wages of a
qualifying employee by an employer is deemed to have been paid by the
employee and to have satisfied the employee's obligation under
subsection (a) to the extent of such amount.
(2) Other methods. In the case of a family that does not include a
qualifying employee, the regional alliance shall require payment to be
made prospectively and such payment may be required to be made not less
frequently than monthly. The Secretary may issue regulations in order to
assure the timely and accurate collection of the family share due.
(c) Timing and Method of Payment of Employer Premiums.
(1) Frequency of payment. Payment of employer premiums under section
6121 for a month shall be made not less frequently than monthly (or
quarterly in the case of such payments made by virtue of section 6126).
The Secretary of Labor may establish a method under which employers that
pay wages on a weekly or biweekly basis are permitted to make such
employer payments on such a weekly or biweekly basis.
(2) Electronic transfer. A regional alliance may require those
employers that have the capacity to make payments by electronic transfer
to make payments under this section by electronic transfer.
(d) Assistance.
(1) Employer collections. The Secretary of Labor shall provide regional
alliances with such technical and other assistance as may promote the
efficient collection of all amounts owed such alliances under this Act by
employers. Such assistance may include the assessment of civil monetary
penalties, not to exceed $5,000 or three times the amount of the
liability owed, whichever is greater, in the case of repeated failure to
pay (as specified in rules of the Secretary of Labor).
(2) Family collections. Except as provided in paragraph (1), the
Secretary shall provide regional alliances with such technical and other
assistance as may promote the efficient collection of other amounts owed
such alliances under this Act. Such assistance may include the assessment
of civil monetary penalties, not to exceed $5,000 or three times the
amount of the liability owed, whichever is greater, in the case of
repeated failure to pay (as specified in rules of the Secretary).
(e) Receipt of Miscellaneous Amounts. For payments to regional alliances
by
(1) States, see subtitle A of title IX, and
(2) the Federal Government, see subtitle B of such title and section
1895 of the Social Security Act (as added by section 4003).
SEC. 1346. COORDINATION AMONG REGIONAL ALLIANCES.
(a) In General. The regional alliance which offers the regional alliance
health plan in which a family is enrolled in December of each year (in this
section referred to as the ``final alliance'') is responsible for the
collection of any amounts owed under this subpart, without regard to
whether the family resided in the alliance area during the entire year.
(b) Provision of Information in the Case of Change of Residence. In the
case of a family that moves from one alliance area to another alliance area
during a year, each regional alliance (other than the final alliance) is
responsible for providing to the final alliance (through the national
information system under section 5101 or otherwise) such information as the
final alliance may require in order to determine the liability (and
reductions in liability under section 6112) attributable to alliance
credits provided by such regional alliance.
(c) Distribution of Proceeds. In accordance with rules established by the
Secretary, in consultation with the Secretary of Labor, the final alliance
shall provide for the distribution of amounts collected under this subpart
with respect to families in a year in an equitable manner among the
regional alliances that provided health plan coverage to the families in
the year.
(d) Expediting Process. In order to reduce paperwork and promote
efficiency in the collection of amounts owed regional alliances under this
subpart, the Secretary may require or permit regional alliances to share
such information (through the national information system under section
5101 or otherwise) as the Secretary determines to be cost-effective,
subject to such confidentiality restrictions as may otherwise apply.
(e) Students. In the case of a qualifying student who makes an election
described in section 1012(e)(2)) (relating to certain full-time students
who are covered under the plan of a parent but enrolled in a health plan
offered by a different regional alliance from the one in which the parent
is enrolled), the regional alliance that offered the plan to the parent
shall provide for transfers of an appropriate portion of the premium
(determined in accordance with procedures specified by the Board) to the
other regional alliance in order to compensate that alliance for the
provision of such coverage.
(f) Payments of Certain Amounts to Corporate Alliances. In the case of a
married couple in which one spouse is a qualifying employee of a regional
alliance employer and the other spouse is a qualifying employee of a
corporate alliance employer, if the couple is enrolled with a corporate
alliance health plan the regional alliance (which receives employer premium
payments from such regional alliance employer with respect to such
employee) shall pay to the corporate alliance the amounts so paid (or would
be payable by the employer if section 6123 did not apply).
Subpart B. Payments
SEC. 1351. PAYMENT TO REGIONAL ALLIANCE HEALTH PLANS.
(a) Computation of Blended Plan Per Capita Payment Amount. For purposes
of making payments to plans under this section, each regional alliance
shall compute, under section 6201(a), a blended plan per capita payment
amount for each regional alliance health plan for enrollment in the
alliance for a year.
(b) Amount of Payment to Plans.
(1) In general. Subject to subsection (e) and section 6121(b)(5)(B),
each regional alliance shall provide for payment to each regional
alliance health plan, in which an alliance eligible individual is
enrolled, an amount equal to the net blended rate (described in paragraph
(2)) adjusted (consistent with subsection (c)) to take into account the
relative actuarial risk associated with the coverage with respect to the
individual.
(2) Net blended rate. The net blended rate described in this paragraph
is the blended plan per capita payment amount (determined under section
6201(a)), reduced by
(A) the consolidated set aside percentage specified under subsection
(d), and
(B) any plan payment reduction imposed under section 6011 for the
plan for the year.
(c) Application of Risk Adjustment and Reinsurance Methodology. Each
regional alliance shall use the risk adjustment methodology developed under
section 1541 in making payments to regional alliance health plans under
this section, except as provided in section 1542.
(d) Consolidated Set Aside Percentage. The consolidated set aside
percentage, for a regional alliance for a year, is the sum of
(1) the administrative allowance percentage for the regional alliance,
computed by the alliance under section 1352(b); and
(2) 1.5 percentage points.
Amounts attributable to paragraph (2) are paid to the Federal
Government (for academic health centers and graduate medical education)
under section 1353.
(e) Treatment of Veterans, Military, and Indian Health Plans and
Programs.
(1) Veterans health plan. In applying this subtitle (and title VI) in
the case of a regional alliance health plan that is a veterans health
plan of the Department of Veterans Affairs, the following rules apply:
(A) For purposes of applying subtitle A of title VI, families
enrolled under the plan shall not be taken into account.
(B) The provisions of subtitle A of title VI shall not apply to the
plan, other than such provisions as require the plan to submit a per
capita amount for each regional alliance area on a timely basis, which
amount shall be treated as the final accepted bid of the plan for the
area for purposes of subtitle B of such title and this section. This
amount shall not be subject to negotiation and not subject to reduction
under section 6011.
(C) For purposes of computing the blended plan per capita payment
amount under this section, the AFDC and SSI proportions (under section
6202(a)) are deemed to be 0 percent.
(2) Uniformed services health plan. In applying this subtitle (and
title VI) in the case of a regional alliance health plan that is a
Uniformed Services Health Plan of the Department of Defense, the
following rules apply:
(A) For purposes of applying subtitle A of title VI, families
enrolled under the plan shall not be taken into account.
(B) The provisions of subtitle A of title VI shall not apply to the
plan, other than such provisions as require the plan to submit a per
capita amount on a timely basis, which amount shall be treated as the
final accepted bid of the plan for the area involved for purposes of
subtitle B of such title and this section. This amount shall not be
subject to negotiation and not subject to reduction under section 6011.
The Board, in consultation with the Secretary of Defense, shall
establish rules relating to the area (or areas) in which such a bid
shall apply.
(C) For purposes of computing the blended plan per capita payment
amount under this section, the AFDC and SSI proportions (under section
6202(a)) are deemed to be 0 percent.
(3) Indian health programs. In applying this subtitle (and title VI) in
the case of a health program of the Indian Health Service, the following
rules apply:
(A) Except as provided in this paragraph, the plan shall not be
considered or treated to be a regional alliance health plan and for
purposes of applying title VI, families enrolled under the program
shall not be taken into account.
(B) In accordance with rules established by the Secretary, regional
alliances shall act as agents for the collection of employer premium
payments (including payments of corporate alliance employers) required
under subtitle B of title VI with respect to qualifying employees who
are enrolled under a health program of the Indian Health Service. The
Secretary shall permit such alliances to retain a nominal fee to
compensate them for such collection activities. In applying this
subparagraph, the family share of premium for such employees is deemed
to be zero for electing Indians (as defined in section 1012(d)(3)) and
for other employees is the amount of the premium established under
section 8306(b)(4)(A), employees are deemed to be residing in the area
of residence (or area of employment), as specified under rules of the
Secretary, and the class of enrollment shall be such class (or classes)
as specified under rules of the Secretary.
SEC. 1352. ALLIANCE ADMINISTRATIVE ALLOWANCE PERCENTAGE.
(a) Specification by Alliance. Before obtaining bids under 6004 from
health plans for a year, each regional alliance shall establish the
administrative allowance for the operation of regional alliance in the
year.
(b) Administrative Allowance Percentage. Subject to subsection (c), the
regional alliance shall compute an administrative allowance percentage for
each year equal to
(1) the administrative allowance determined under subsection (a) for
the year, divided by
(2) the total of the amounts payable to regional alliance health plans
under section 1343 (as estimated by the alliance and determined without
regard to section 1343(d)).
(c) Limitation to 2\1/2\ percent. In no case shall an administrative
allowance percentage exceed 2.5 percent.
SEC. 1353. PAYMENTS TO THE FEDERAL GOVERNMENT FOR ACADEMIC HEALTH
CENTERS AND
GRADUATE MEDICAL EDUCATION.
Each regional alliance shall make payment to the Secretary each year of
an amount equal to the reduction in payments by the alliance to regional
alliance health plans resulting from the consolidated set aside percentage
under section 1351(d) including the 1.5 percentage points under paragraph
(2) of such section.
Subpart C. Financial Management
SEC. 1361. MANAGEMENT OF FINANCES AND RECORDS.
(a) In General. Each regional alliance shall comply with standards
established under section 1571(b) (relating to the management of finances,
maintenance of records, accounting practices, auditing procedures, and
financial reporting) and under section 1591(d) (relating to employer
payments).
(b) Specific Provisions. In accordance with such standards
(1) Financial statements.
(A) In general. Each regional alliance shall publish periodic audited
financial statements.
(B) Annual financial audit.
(i) In general. Each regional alliance shall have an annual
financial audit conducted by an independent auditor in accordance
with generally accepted auditing standards.
(ii) Publication. A report on each such audit shall be made
available to the public at nominal cost.
(iii) Required actions for deficiencies. If the report from such an
audit does not bear an unqualified opinion, the alliance shall take
such steps on a timely basis as may be necessary to correct any
material deficiency identified in the report.
(C) Eligibility error rates. Each regional alliance shall make
eligibility determinations for premium discounts, liability reductions,
and cost sharing reductions under sections 6104 and 6123, section 6113,
and section 1371, respectively, in a manner that maintains the error
rates below an applicable maximum permissible error rate specified by
the Secretary (or the Secretary of Labor with respect to section 6123).
In specifying such a rate, the Secretary shall take into account
maximum permissible error rates recognized by the Federal Government
under comparable State-administered programs.
(2) Safeguarding of funds. Each regional alliance shall safeguard
family, employer, State, and Federal government payments to the alliance
in accordance with fiduciary standards and shall hold such payments in
financial institutions and instruments that meet standards recognized or
established by the Secretary, in consultation with the Secretaries of
Labor and the Treasury and taking into account current Federal laws and
regulations relating to fiduciary responsibilities and financial
management of public funds.
(3) Contingencies. Each regional alliance shall provide that any
surplus of funds resulting from an estimation discrepancy described in
section 9201(b)(1)(D), up to a reasonable amount specified by the
Secretary, shall be held in a contingency fund established by the
alliance and used to fund any future shortfalls resulting from such a
discrepancy.
(4) Auditing of employer payments.
(A) In general. Each regional alliance is responsible for auditing
the records of regional alliance employers to assure that employer
payments (including the payment of amounts withheld) were made in the
appropriate amount as provided under subpart A of part 2 of subtitle B
of title VI.
(B) Employers with employees residing in different alliance areas. In
the case of a regional alliance employer which has employees who reside
in more than one alliance area, the Secretary of Labor, in consultation
with the Secretary, shall establish a process for the coordination of
regional alliance auditing activities among the regional alliances
involved.
(C) Appeal. In the case of an audit conducted by a regional alliance
on an employer under this paragraph, an employer or other regional
alliance that is aggrieved by the determination in the audit is
entitled to review of such audit by the Secretary of Labor in a manner
to be provided by such Secretary.
Subpart D. Reductions in Cost Sharing; Income Determinations
SEC. 1371. REDUCTION IN COST SHARING FOR LOW-INCOME FAMILIES.
(a) Reduction.
(1) In general. Subject to subsection (b), in the case of a family that
is enrolled in a regional alliance health plan and that is either (A) an
AFDC or SSI family or (B) is determined under this subpart to have family
adjusted income below 150 percent of the applicable poverty level, the
family is entitled to a reduction in cost sharing in accordance with this
section.
(2) Timing of reduction. The reduction in cost sharing shall only apply
to items and services furnished after the date the application for such
reduction is approved under section 1372(c) and before the date of
termination of the reduction under this subpart, or, in the case of an
AFDC or SSI family, during the period in which the family is such a
family.
(3) Information to providers and plans. Each regional alliance shall
provide, through electronic means and otherwise, health care providers
and regional alliance health plans with access to such information as may
be necessary in order to provide for the cost sharing reductions under
this section.
(b) Limitation. No reduction in cost sharing shall be available for
families residing in an alliance area if the regional alliance for the area
determines that there are sufficient low-cost plans (as defined in section
6104(b)(3)) that are lower or combination cost sharing plans available in
the alliance area to enroll AFDC and SSI families and families with family
adjusted income below 150 percent of the applicable poverty level.
(c) Amount of Cost Sharing Reduction.
(1) In general. Subject to paragraph (2), the reduction in cost sharing
under this section shall be such reduction as will reduce cost sharing to
the level of a lower or combination cost sharing plan.
(2) Additional reduction for afdc and ssi families. In the case of an
AFDC or SSI family, in applying paragraph (1) (other than with respect to
hospital emergency room services for which there is no emergency medical
condition, as defined in section 1867(e)(1) of the Social Security Act)
there shall be substituted, for $5, $10, $20, and $25 in the table in
section 1135(a), 20 percent of such respective amounts. The dollar
amounts substituted by the previous sentence shall be subject to
adjustment in the same manner under section 1136 as the dollar amounts
otherwise specified in such section.
(d) Administration.
(1) In general. In the case of an approved family (as defined in
section 1372(b)(3)) enrolled in a regional alliance health plan, the
regional alliance shall pay the plan for cost sharing reductions (other
than cost sharing reductions under subsection (c)(2)) provided under this
section and included in payments made by the plan to its providers.
(2) Estimated payments, subject to reconciliation. Such payment shall
be made initially on the basis of reasonable estimates of cost sharing
reductions incurred by such a plan with respect to approved families and
shall be reconciled not less often than quarterly based on actual claims
for items and services provided.
(e) No Cost Sharing for Indians and Certain Veterans and Military
Personnel. The provisions of section 6104(a)(3) shall apply to cost sharing
reductions under this section in the same manner as such provisions apply
to premium discounts under section 6104.
SEC. 1372. APPLICATION PROCESS FOR COST SHARING REDUCTIONS.
(a) Application.
(1) In general. A regional alliance eligible family may apply for a
determination of the family adjusted income of the family, for the
purpose of establishing eligibility for cost sharing reductions under
section 1371.
(2) Form. An application under this section shall include such
information as may be determined by the regional alliance (consistent
with rules developed by the Secretary) and shall include at least
information about the family's employment status and income.
(b) Timing.
(1) In general. An application under this section may be filed at such
times as the Secretary may provide, including during any open enrollment
period, at the time of a move, or after a change in life circumstances
(such as unemployment or divorce) affecting class of enrollment or amount
of family share or repayment amount.
(2) Consideration. Each regional alliance shall approve or disapprove
an application under this section, and notify the applicant of such
decision, within such period (specified by the Secretary) after the date
of the filing of the application.
(3) Approved family defined. In this section and section 1371, the term
``approved family'' means a family for which an application under this
section is approved, until the date of termination of such approval under
this section.
(c) Approval of Application.
(1) In general. A regional alliance shall approve an application of a
family under this section filed in a month if the application
demonstrates that that family adjusted income of the family (as defined
in subsection (d) and determined under paragraph (2)) is (or is expected
to be) less than 150 percent of the applicable poverty level.
(2) Use of current income. In making the determination under paragraph
(1), a regional alliance shall take into account the income for the
previous 3-month period and current wages from employment (if any),
consistent with rules specified by the Secretary.
(d) Family Adjusted Income.
(1) In general. Except as provided in paragraph (4), in this Act the
term ``family adjusted income'' means, with respect to a family, the sum
of the adjusted incomes (as defined in paragraph (2)) for all members of
the family (determined without regard to section 1012).
(2) Adjusted income. In paragraph (1), the term ``adjusted income''
means, with respect to an individual, adjusted gross income (as defined
in section 62(a) of the Internal Revenue Code of 1986)
(A) determined without regard to sections 135, 162(l), 911, 931, and
933 of such Code, and
(B) increased by the amount of interest received or accrued by the
individual which is exempt from tax.
(3) Presence of additional dependents. At the option of an individual,
a family may include (and not be required to separate out) the income of
other individuals who are claimed as dependents of the family for income
tax purposes, but such individuals shall not be counted as part of the
family for purposes of determining the size of the family.
(e) Requirement for Periodic Confirmation and Verification and Notices.
(1) Confirmation and verification requirement. The continued
eligibility of a family for cost sharing reductions under this section is
conditioned upon the family's eligibility being
(A) confirmed periodically by the regional alliance, and
(B) verified (through the filing of a new application under this
section) by the regional alliance at the time income reconciliation
statements are required to be filed under section 1375.
(2) Rules. The Secretary shall issue rules related to the manner in
which alliances confirm and verify eligibility under this section.
(3) Notices of changes in income and employment status.
(A) In general. Each approved family shall promptly notify the
regional alliance of any material increase in the family adjusted
income (as defined by the Secretary).
(B) Response. If a regional alliance receives notice under
subparagraph (A) (or from an employer under section 1602(b)(3)(A)(i))
or otherwise receives information indicating a potential significant
change in the family's employment status or increase in adjusted family
income, the regional alliance shall promptly take steps necessary to
reconfirm the family's eligibility.
(f) Termination of Cost Sharing Reduction. The regional alliance shall,
after notice to the family, terminate the reduction of cost sharing under
this subpart for an approved family if the family fails to provide for
confirmation or verification or notice required under subsection (c) on a
timely basis or the alliance otherwise determines that the family is no
longer eligible for such reduction. The previous sentence shall not prevent
the family from subsequently reapplying for cost sharing reduction under
this section.
(g) Treatment of AFDC and SSI Recipients.
(1) No application required. AFDC and SSI families are not required to
make an application under this section.
(2) Notice requirement. Each State (and the Secretary) shall notify
each regional alliance, in a manner specified by the Secretary, of the
identity (and period of eligibility under the AFDC or SSI programs) of
each AFDC and SSI recipient, unless such a recipient elects (in a manner
specified by the Secretary) not to accept the reduction of cost sharing
under this section.
SEC. 1373. APPLICATION FOR PREMIUM REDUCTIONS AND REDUCTION IN
LIABILITIES TO
ALLIANCES.
(a) In General. Any regional alliance eligible family may apply for a
determination of the family adjusted income of the family, for the purpose
of establishing eligibility for a premium discount under section 6104 or a
reduction in liability under section 6113.
(b) Timing. Such an application may be filed at such times as an
application for a cost sharing reduction may be filed under section 1372(b)
and also may be filed after the end of the year to obtain a rebate for
excess premium payments made during a year.
(c) Approval of Application.
(1) In general. A regional alliance shall approve an application of a
family under this section filed in a month
(A) for a premium discount under section 6104, if the application
demonstrates that family adjusted income of the family (as determined
under paragraph (2)) is (or is expected to be) less than 150 percent of
the applicable poverty level, or
(B) for a reduction in liability under section 6113, if the
application demonstrates that the wage-adjusted income (as defined in
subsection 6113(d)) of the family (as determined under paragraph (2))
is (or is expected to be) less than 250 percent of the applicable
poverty level.
(2) Use of current income. In making the determination under paragraph
(1), a regional alliance shall take into account the income for the
previous 3-month period and current wages from employment (if any) and
the statement of estimated income for the year (filed under section
1374(c)), consistent with rules specified by the Secretary.
(d) Requirement for Periodic Confirmation and Verification and Notices.
The provisions of section (e) of section 1372 shall apply under this
section in the same manner as it applies under such section, except that
any reference to family adjusted income is deemed a reference to
wage-adjusted income.
SEC. 1374. GENERAL PROVISIONS RELATING TO APPLICATION PROCESS.
(a) Distribution of Applications. Each regional alliance shall distribute
applications under this subpart directly to consumers and through
employers, banks, and designated public agencies.
(b) To Whom Application Made. Applications under this subpart shall be
filed, by person or mail, with a regional alliance or an agency designated
by the State for this purpose. The application may be submitted with an
application to enroll with a health plan under this subtitle or separately.
(c) Income Statement. Each application shall include a declaration of
estimated annual income for the year involved.
(d) Form and Contents. An application for a discount or reduction under
this subpart shall be in a form and manner specified by the Secretary and
shall require the provision of information necessary to make the
determinations required under this subpart.
(e) Frequency of Applications.
(1) In general. An application under this subpart may be filed at any
time during the year (including, in the case of section 1373, during the
reconciliation process).
(2) Correction of income. Nothing in paragraph (1) shall be construed
as preventing an individual or family from, at any time, submitting an
application to reduce the amount of premium reduction or reduction of
liability under this subpart based upon an increase in income from that
stated in the previous application.
(e) Timing of Reductions and Discounts.
(1) In general. Subject to reconciliation under section 1375, premium
discounts and cost sharing reductions under this subpart shall be applied
to premium payments required (and for expenses incurred) after the date
of approval of the application under this subpart.
(2) AFDC and ssi recipients. In the case of an AFDC or SSI family, in
applying paragraph (1), the date of approval of benefits under the AFDC
or SSI program shall be considered the date of approval of an an
application under this subpart.
(f) Verification. The Secretary shall provide for verification, on a
sample basis or other basis, of the information supplied in applications
under this part. This verification shall be separate from the
reconciliation provided under section 1375.
(g) Help in Completing Applications. Each regional alliance shall assist
individuals in the filing of applications and income reconciliation
statements under this subpart.
(h) Penalties for Inaccurate Information.
(1) Interest for understatements. Each individual who knowingly
understates income reported in an application to a regional alliance
under this subpart or otherwise makes a material misrepresentation of
information in such an application shall be liable to the alliance for
excess payments made based on such understatement or misrepresentation,
and for interest on such excess payments at a rate specified by the
Secretary.
(2) Penalties for misrepresentation. In addition to the liability
established under paragraph (1), each individual who knowingly
misrepresents material information in an application under this subpart
to a regional alliance shall be liable to the State in which the alliance
is located for $2,000 or, if greater, three times the excess payments
made based on such misrepresentation. The State shall provide for the
transfer of a significant portion of such amount to the regional alliance
involved.
SEC. 1375. END-OF-YEAR RECONCILIATION FOR PREMIUM DISCOUNT AND
REPAYMENT
REDUCTION WITH ACTUAL INCOME.
(a) In General. In the case of a family whose application for a premium
discount or reduction of liability for a year has been approved before the
end of the year under this subpart, the family shall, subject to subsection
(c) and by the deadline specified in section 1344(b) file with the regional
alliance an income reconciliation statement to verify the family's adjusted
income or wage-adjusted income, as the case may be, for the previous year.
Such a statement shall contain such information as the Secretary may
specify. Each regional alliance shall coordinate the submission of such
statements with the notice and payment of family payments due under section
1344.
(b) Reconciliation of Premium Premium Discount and Liability Assistance
Based on Actual Income. Based on and using the income reported in the
reconciliation statement filed under subsection (a) with respect to a
family, the regional alliance shall compute the amount of premium discount
or reduction in liability that should have been provided under section 6104
or section 6113 with respect for the family for the year involved. If the
amount of such discount or liability reduction computed is
(1) greater than the amount that has been provided, the family is
liable to the regional alliance to pay (directly or through an increase
in future family share of premiums or other payments) a total amount
equal to the amount of the excess payment, or
(2) less than the amount that has been provided, the regional alliance
shall pay to the family (directly or through a reduction in future family
share of premiums or other payments) a total amount equal to the amount
of the deficit.
(c) No Reconciliation for AFDC and SSI Families; No Reconciliation for
Cost Sharing Reductions. No reconciliation statement is required under this
section
(1) with respect to cost sharing reductions provided under section
1372, or
(2) for a family that only claims a premium discount or liability
reduction under this subpart on the basis of being an AFDC or SSI family.
(d) Disqualification for Failure to File. In the case of any family that
is required to file a statement under this section in a year and that fails
to file such a statement by the deadline specified, members of the family
shall not be eligible for premium reductions under section 6104 or
reductions in liability under section 6113 until such statement is filed. A
regional alliance, using rules established by the Secretary, shall waive
the application of this subsection if the family establishes, to the
satisfaction of the alliance under such rules, good cause for the failure
to file the statement on a timely basis.
(e) Penalties for False Information. Any individual that provides false
information in a statement under subsection (a) is subject to the same
liabilities as are provided under section 1374(h) for a misrepresentation
of material fact described in such section.
(f) Notice of Requirement. Each regional alliance (directly or in
coordination with other regional alliances) shall provide for written
notice, at the end of each year, of the requirement of this section to each
family which had received premium discount or reduction in liability under
this subpart in any month during the preceding year and to which such
requirement applies.
(g) Transmittal of Information; Verification.
(1) In general. Each participating State shall transmit annually to the
Secretary such information relating to the income of families for the
previous year as the Secretary may require to verify such income under
this subpart.
(2) Verification. Each participating State may use such information as
it has available to it to assist regional alliances in verifying income
of families with applications filed under this subpart. The Secretary of
the Treasury may, consistent with section 6103 of the Internal Revenue
Code of 1986, permit return information to be disclosed and used by a
participating State in verifying such income but only in accordance with
such section and only if the information is not directly disclosed to a
regional alliance.
(h) Construction. Nothing in this section shall be construed as
authorizing reconciliation of any cost sharing reduction provided under
this subpart.
Part 4. RESPONSIBILITIES AND AUTHORITIES OF CORPORATE ALLIANCES
SEC. 1381. CONTRACTS WITH HEALTH PLANS.
(a) Contracts with Plans. Subject to section 1382, each corporate
alliance may
(1) offer to individuals eligible to enroll under section 1311(c)
coverage under an appropriate self-insured health plan (as defined in
section 1400(b)), or
(2) negotiate with a State-certified health plan to enter into a
contract with the plan for the enrollment of such individuals under the
plan,
or do both.
(b) Terms of Contracts with State-Certified Health Plans. Contracts under
this section between a corporate alliance and a State-certified health plan
may contain such provisions (not inconsistent with the requirements of this
title) as the alliance and plan may provide, except that in no case does
such contract remove the obligation of the sponsor of the corporate
alliance to provide for health benefits to corporate alliance eligible
individuals consistent with this part.
SEC. 1382. OFFERING CHOICE OF HEALTH PLANS FOR ENROLLMENT.
(a) In General. Each corporate alliance must provide to each eligible
enrollee with respect to the alliance a choice of health plans among the
plans which have contracts with the alliance under section 1381.
(b) Offering of Plans by Alliances. A corporate alliance shall include
among its health plan offerings for any eligible enrollee at least 3 health
plans to enrollees, of which the alliance must offer
(1) at least one fee-for-service plan (as defined in section
1322(b)(3)); and
(2) at least two health plans that are not fee-for-service plans.
SEC. 1383. ENROLLMENT; ISSUANCE OF HEALTH SECURITY CARD.
(a) In General.
(1) Enrollment of alliance eligible individuals. Each corporate
alliance shall assure that each alliance eligible individual with respect
to the alliance is enrolled in a corporate alliance health plan offered
by the alliance, and shall establish and maintain methods and procedures
consistent with this section sufficient to assure such enrollment. Such
methods and procedures shall assure the enrollment of such individuals at
the time they first become alliance eligible individuals with respect to
the alliance.
(2) Issuance of health security cards. A corporate alliance is
responsible for the issuance of health security cards to corporate
alliance eligible individuals under section 1001(b).
(b) Response to Point-of-Service Notices. If a corporate alliance is
notified under section 1323(b)(2) regarding an individual who has received
services and appears to be an alliance eligible individual
(1) the alliance shall promptly ascertain the individual's eligibility
as an alliance eligible individual; and
(2) if the alliance determines that the individual is an alliance
eligible individual
(A) the alliance shall promptly provide for the enrollment of the
individual in a health plan offered by the alliance (and notify the
Secretary of Labor of such enrollment), and
(B) the alliance shall forward the claim for payment for the services
to the health plan in which the individual is so enrolled and the plan
shall make payment to the provider for such claim (in a manner
consistent with requirements of the Secretary of Labor).
(c) Annual Open Enrollment; Enrollment of Family Members;
Oversubscription of Plans. The provisions of subsections (d) through (f) of
section 1323 shall apply to a corporate alliance in the same manner as such
provisions apply to a regional alliance.
(d) Termination.
(1) In general. The provisions of section 1323(g)(1) shall apply to a
corporate alliance in the same manner as such provisions apply to a
regional alliance.
(2) Failure to pay premiums. If a corporate alliance fails to make
premium payments to a health plan, the plan, after reasonable written
notice to the alliance and the Secretary of Labor, may terminate coverage
(and any contract with the alliance under this subpart). If such coverage
is terminated the corporate alliance is responsible for the prompt
enrollment of alliance eligible individuals whose coverage is terminated
in another corporate alliance health plan.
(e) Corporate Alliance Transition. Each corporate alliance must provide
coverage
(1) as of the first day of any month in which an individual first
becomes a corporate alliance eligible individual, and
(2) through the end of the month in the case of a corporate alliance
eligible individual who loses such eligibility during the month.
SEC. 1384. COMMUNITY-RATED PREMIUMS WITHIN PREMIUM AREAS.
(a) Application of Community-Rated Premiums. The premiums charged by a
corporate alliance for enrollment in a corporate alliance health plan (not
taking into account any employer premium payment required under section
6131) shall vary only by class of family enrollment (specified in section
1011(c)) and by premium area.
(b) Designation of Premium Areas.
(1) Designation. Each corporate alliance shall designate premium areas
to be used for the imposition of premiums (and calculation of employer
premium payments) under this Act.
(2) Conditions. The boundaries of such areas shall reasonably reflect
labor market areas or health care delivery areas and shall be consistent
with rules the Secretary of Labor establishes (consistent with paragraph
(3)) so that within such areas there are not substantial differences in
average per capita health care expenditures.
(3) Anti-redlining. The provisions of paragraphs (4) and (5) of section
1202(b) (relating to redlining and metropolitan statistical areas) shall
apply to the establishment of premium areas in the same manner as they
apply to the establishment of the boundaries of regional alliance areas.
(c) Applications of Classes of Enrollment.
(1) In general. The premiums shall be applied under this section based
on class of family enrollment and shall vary based on such class in
accordance with factors specified by the corporate alliance.
(2) Basis for factors. Such factors shall be the same in each premium
and shall take into account such appropriate considerations (including
the considerations the Board takes into account in the establishment of
premium class factors under section 1531 and the costs of regional
alliance health plans providing the comprehensive benefit package for
families enrolled in the different classes) as the alliance considers
appropriate, consistent with rules the Secretary of Labor establishes.
(d) Special Treatment of Multiemployer Alliances. The Secretary of Labor
shall provide for such exceptions to the requirements of this section in
the case of a corporate alliance with a sponsor described in section
1311(b)(1)(B) as may be appropriate to reflect the unique and historical
relationship between the employers and employees under such alliances.
SEC. 1385. ASSISTANCE FOR LOW-WAGE FAMILIES.
Each corporate alliance shall make an additional contribution towards the
enrollment in health plans of the alliance by certain low-wage families in
accordance with section 6131(b)(2).
SEC. 1386. CONSUMER INFORMATION AND MARKETING; DATA COLLECTION AND
QUALITY;
ADDITIONAL DUTIES.
The provisions of sections 1325(a), 1327(a), 1328(a), and 1328(b) shall
apply to a corporate alliance in the same manner as such provisions apply
to a regional alliance.
SEC. 1387. PLAN AND INFORMATION REQUIREMENTS.
(a) In General. A corporate alliance shall provide a written submission
to the Secretary of Labor (in such form as the Secretary may require)
detailing how the corporate alliance will carry out its activities under
this part.
(b) Annual Information. A corporate alliance shall provide to the
Secretary of Labor each year, in such form and manner as the Secretary may
require, such information as the Secretary may require in order to monitor
the compliance of the alliance with the requirements of this part.
(c) Annual Notice of Employees or Participants.
(1) Corporate alliance. Each corporate alliance shall submit to the
Secretary of Labor, by not later than March 1 of each year, information
on the number of full-time employees or participants obtaining coverage
through the alliance as of January 1 of that year.
(2) Employers that become large employers. Each employer that is not a
corporate alliance but employs 5,000 full-time employees as of January 1
of a year, shall submit to the Secretary of Labor, by not later than
March 1 of the year, information on the number of such employees.
SEC. 1388. MANAGEMENT OF FUNDS; RELATIONS WITH EMPLOYEES.
(a) Management of Funds. The management of funds by a corporate alliance
shall be subject to the applicable fiduciary requirements of part 4 of
subtitle B of title I of the Employee Retirement Income Security Act of
1974, together with the applicable enforcement provisions of part 5 of
subtitle B of title I of such Act.
(b) Management of Finances and Records; Accounting System. Each corporate
alliance shall comply with standards relating to the management of finances
and records and accounting systems as the Secretary of Labor shall specify.
SEC. 1389. COST CONTROL.
Each corporate alliance shall control covered expenditures in a manner
that meets the requirements of part 2 of subtitle A of title VI.
SEC. 1390. PAYMENTS BY CORPORATE ALLIANCE EMPLOYERS TO CORPORATE
ALLIANCES.
(a) Large Employer Alliances. In the case of a corporate alliance with a
sponsor described in section 1311(b)(1)(A), the sponsor shall provide for
the funding of benefits, through insurance or otherwise, consistent with
section 6131, the applicable solvency requirements of sections 1395 and
1396, and any rules established by the Secretary of Labor.
(b) Other Alliances. In the case of a corporate alliance with a sponsor
described in subparagraph (B) or (C) of section 1311(b)(1), a corporate
alliance employer shall make payment of the employer premiums required
under section 6131 under rules established by the corporate alliance, which
rules shall be consistent with rules established by the Secretary of Labor.
SEC. 1391. COORDINATION OF PAYMENTS.
(a) Payments of Certain Amounts to Regional Alliances. In the case of a
married couple in which one spouse is a qualifying employee of a regional
alliance employer and the other spouse is a qualifying employee of a
corporate alliance employer, if the couple is enrolled with a regional
alliance health plan the corporate alliance (which receives employer
premium payments from such corporate alliance employer with respect to such
employee) shall pay to the regional alliance the amounts so paid.
(b) Payments of Certain Amounts to Corporate Alliances. In the case of a
married couple in which one spouse is a qualifying employee of a corporate
alliance employer and the other spouse is a qualifying employee of another
corporate alliance employer, the corporate alliance of the corporate
alliance health plan in which the couple is not enrolled shall pay to the
corporate alliance of the plan in which the couple is enrolled any employer
premium payments received from such corporate alliance employer with
respect to such employee.
SEC. 1392. APPLICABILITY OF ERISA ENFORCEMENT MECHANISMS FOR
ENFORCEMENT OF
CERTAIN REQUIREMENTS.
The provisions of sections 502 (relating to civil enforcement) and 504
(relating to investigative authority) of the Employee Retirement Income
Security Act of 1974 shall apply to enforcement by the Secretary of Labor
of this part in the same manner and to same extent as such provisions apply
to enforcement of title I of such Act.
SEC. 1393. APPLICABILITY OF CERTAIN ERISA PROTECTIONS TO ENROLLED
INDIVIDUALS.
The provisions of sections 510 (relating to interference with rights
protected under Act) and 511 (relating to coercive interference) of the
Employee Retirement Income Security Act of 1974 shall apply, in relation to
the provisions of this Act, with respect to individuals enrolled under
corporate alliance health plans in the same manner and to the same extent
as such provisions apply, in relation to the provisions of the Employee
Retirement Income Security Act of 1974, with respect to participants and
beneficiaries under employee welfare benefit plans covered by title I of
such Act.
SEC. 1394. DISCLOSURE AND RESERVE REQUIREMENTS.
(a) In General. The Secretary of Labor shall ensure that each corporate
alliance health plan which is a self-insured plan maintains plan assets in
trust as provided in section 403 of the Employee Retirement Income Security
Act of 1974
(1) without any exemption under section 403(b)(4) of such Act, and
(2) in amounts which the Secretary determines are sufficient to provide
at any time for payment to health care providers of all outstanding
balances owed by the plan at such time.
The requirements of the preceding sentence may be met through letters
of credit, bonds, or other appropriate security to the extent provided in
regulations of the Secretary.
(b) Disclosure. Each self-insured corporate alliance health plan shall
notify the Secretary at such time as the financial reserve requirements of
this section are not being met. The Secretary may assess a civil money
penalty of not more than $100,000 against any corporate alliance for any
failure to provide such notification in such form and manner and within
such time periods as the Secretary may prescribe by regulation.
SEC. 1395. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT CORPORATE ALLIANCE
HEALTH
PLANS.
(d) Appointment of Secretary as Trustee for Insolvent Plans.Whenever the
Secretary of Labor determines that a corporate alliance health plan which
is a self-insured plan will be unable to provide benefits when due or is
otherwise in a financially hazardous condition as defined in regulations of
the Secretary, the Secretary shall, upon notice to the plan, apply to the
appropriate United States district court for appointment of the Secretary
as trustee to administer the plan for the duration of the insolvency. The
plan may appear as a party and other interested persons may intervene in
the proceedings at the discretion of the court. The court shall appoint the
Secretary trustee if the court determines that the trusteeship is necessary
to protect the interests of the covered individuals or health care
providers or to avoid any unreasonable deterioration of the financial
condition of the plan or any unreasonable increase in the liability of the
Corporate Alliance Insolvency Fund. The trusteeship of the Secretary shall
continue until the conditions described in the first sentence of this
subsection are remedied or the plan is terminated.
(b) Powers as Trustee. The Secretary of Labor, upon appointment as
trustee under subsection (a), shall have the power
(1) to do any act authorized by the plan, this Act, or other applicable
provisions of law to be done by the plan administrator or any trustee of
the plan,
(2) to require the transfer of all (or any part) of the assets and
records of the plan to the Secretary as trustee,
(3) to invest any assets of the plan which the Secretary holds in
accordance with the provisions of the plan, regulations of the Secretary,
and applicable provisions of law,
(4) to do such other acts as the Secretary deems necessary to continue
operation of the plan without increasing the potential liability of the
Corporate Alliance Insolvency Fund, if such acts may be done under the
provisions of the plan,
(5) to require the corporate alliance, the plan administrator, any
contributing employer, and any employee organization representing covered
individuals to furnish any information with respect to the plan which the
Secretary as trustee may reasonably need in order to administer the plan,
(6) to collect for the plan any amounts due the plan and to recover
reasonable expenses of the trusteeship,
(7) to commence, prosecute, or defend on behalf of the plan any suit or
proceeding involving the plan,
(8) to issue, publish, or file such notices, statements, and reports as
may be required under regulations of the Secretary or by any order of the
court,
(9) to terminate the plan and liquidate the plan assets in accordance
with applicable provisions of this Act and other provisions of law, to
restore the plan to the responsibility of the corporate alliance, or to
continue the trusteeship,
(10) to provide for the enrollment of individuals covered under the
plan in an appropriate regional alliance health plan, and
(11) to do such other acts as may be necessary to comply with this Act
or any order of the court and to protect the interests of enrolled
individuals and health care providers.
(b) Notice of Appointment. As soon as practicable after the Secretary's
appointment as trustee, the Secretary shall give notice of such appointment
to
(1) the plan administrator,
(2) each enrolled individual,
(3) each employer who may be liable for contributions to the plan, and
(4) each employee organization which, for purposes of collective
bargaining, represents enrolled individuals.
(d) Additional Duties. Except to the extent inconsistent with the
provisions of this Act or part 4 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974, or as may be otherwise ordered by
the court, the Secretary of Labor, upon appointment as trustee under this
subsection, shall be subject to the same duties as those of a trustee under
section 704 of title 11, United States Code, and shall have the duties of a
fiduciary for purposes of such part 4.
(e) Other Proceedings. An application by the Secretary of Labor under
this subsection may be filed notwithstanding the pendency in the same or
any other court of any bankruptcy, mortgage foreclosure, or equity
receivership proceeding, or any proceeding to reorganize, conserve, or
liquidate such plan or its property, or any proceeding to enforce a lien
against property of the plan.
(f) Jurisdiction of Court.
(1) In general. Upon the filing of an application for the appointment
as trustee or the issuance of a decree under this subsection, the court
to which the application is made shall have exclusive jurisdiction of the
plan involved and its property wherever located with the powers, to the
extent consistent with the purposes of this subsection, of a court of the
United States having jurisdiction over cases under chapter 11 of title
11, United States Code. Pending an adjudication under paragraph (1) such
court shall stay, and upon appointment by it of the Secretary of Labor as
trustee, such court shall continue the stay of, any pending mortgage
foreclosure, equity receivership, or other proceeding to reorganize,
conserve, or liquidate the plan, the sponsoring alliance, or property of
such plan or alliance, and any other suit against any receiver,
conservator, or trustee of the plan, the sponsoring alliance, or property
of the plan or alliance. Pending such adjudication and upon the
appointment by it of the Secretary as trustee, the court may stay any
proceeding to enforce a lien against property of the plan or the
sponsoring alliance or any other suit against the plan or the alliance.
(2) Venue. An action under this subsection may be brought in the
judicial district where the plan administrator resides or does business
or where any asset of the plan is situated. A district court in which
such action is brought may issue process with respect to such action in
any other judicial district.
(g) Personnel. In accordance with regulations of the Secretary of Labor,
the Secretary shall appoint, retain, and compensate accountants, actuaries,
and other professional service personnel as may be necessary in connection
with the Secretary's service as trustee under this subsection.
SEC. 1396. GUARANTEED BENEFITS UNDER TRUSTEESHIP OF THE SECRETARY.
(a) In General. Subject to subsection (b), the Secretary shall guarantee
the payment of all benefits under a corporate alliance health plan which is
a self-insured plan while such plan is under the Secretary's trusteeship
under section 1396.
(b) Limitations. Any increase in the amount of benefits under the plan
resulting from a plan amendment which was made, or became effective,
whichever is later, within 180 days (or such other reasonable time as may
be prescribed in regulations of the Secretary of Labor) before the date of
the Secretary's appointment as trustee of the plan shall be disregarded for
purposes of determining the guarantee under this section.
(c) Corporate Alliance Health Plan Insolvency Fund.
(1) Establishment. The Secretary of Labor shall establish a Corporate
Alliance Health Plan Insolvency Fund (hereinafter in this section
referred to as the ``Fund'') from which the Secretary shall make payment
of all guaranteed benefits under this section.
(2) Receipts and disbursements.
(A) Receipts. The Fund shall be credited with
(i) funds borrowed under paragraph (4),
(ii) assessments collected under section 1397, and
(iii) earnings on investment of the fund.
(B) Disbursements. The Fund shall be available
(i) for making such payments as the Secretary determines are
necessary to pay benefits guaranteed under this section,
(ii) to repay the Secretary of the Treasury such sums as may be
borrowed (together with interest thereon) under paragraph (4), and
(iii) to pay the operational and administrative expenses of the
Fund.
(3) Borrowing authority. At the direction of the Secretary of Labor,
the Fund may, to the extent necessary to carry out the purposes of
paragraph (1), issue to the Secretary of the Treasury notes or other
obligations, in such forms and denominations, bearing such maturities,
and subject to such terms and conditions as may be prescribed by the
Secretary of the Treasury. Such notes or other obligations shall bear
interest at a rate determined by the Secretary of the Treasury, taking
into consideration the current average market yield on outstanding
marketable obligations of the United States of comparable maturities
during the month preceding the issuance of such notes or other
obligations by the Fund. The Secretary of the Treasury shall purchase any
notes or other obligations issued by the Fund under this paragraph, and
for that purpose the Secretary of the Treasury may use as a public debt
transaction the proceeds from the sale of any securities issued under
chapter 31 of title 31, United States Code and the purposes for which
securities may be issued under such chapter are extended to include any
purchase of such notes and obligations. The Secretary of the Treasury may
at any time sell any of the notes or other obligations acquired by such
Secretary under this paragraph. All redemptions, purchases, and sales by
the Secretary of the Treasury of such notes or other obligations shall be
treated as public debt transactions of the United States.
(4) Investment authority. Whenever the Secretary of Labor determines
that the moneys of the Fund are in excess of current needs, the Secretary
may request the investment of such amounts as the Secretary determines
advisable by the Secretary of the Treasury in obligations issued or
guaranteed by the United States, but, until all borrowings under
paragraph (4) have been repaid, the obligations in which such excess
moneys are invested may not yield a rate of return in excess of the rate
of interest payable on such borrowings.
SEC. 1397. IMPOSITION AND COLLECTION OF PERIODIC ASSESSMENTS ON
SELF-INSURED
CORPORATE ALLIANCE PLANS.
(a) Imposition of Assessments. Upon a determination that additional
receipts to the Fund are necessary in order to enable the Fund to repay
amounts borrowed by the Fund under section 1396(c)(3) while maintaining a
balance sufficient to ensure the solvency of the Fund, the Secretary may
impose assessments under this section. The Secretary shall prescribe from
time to time such schedules of assessment rates and bases for the
application of such rates as may be necessary to provide for such
repayments.
(b) Uniformity of Assessments. The assessment rates prescribed by the
Secretary for any period shall be uniform for all plans, except that the
Secretary may vary the amount of such assessments by category, or waive the
application of such assessments by category, taking into account
differences in the financial solvency of, and financial reserves maintained
by, plans in each category.
(c) Limitation on Amount of Assessment. The total amount assessed against
a corporate alliance health plan under this section during a year may not
exceed 2 percent of the total premiums paid to the plan with respect to
corporate alliance eligible individuals enrolled with the plan during the
year.
(d) Payment of Assessments.
(1) Obligation to pay. The designated payor of each plan shall pay the
assessments imposed by the Secretary of Labor under this section with
respect to that plan when they are due. Assessments under this section
are payable at the time, and on an estimated, advance, or other basis, as
determined by the Secretary. Assessments shall continue to accrue until
the plan's assets are distributed pursuant to a termination procedure or
the Secretary is appointed to serve as trustee of the plan under section
1395.
(2) Late payment charges and interest.
(A) Late payment charges. If any assessment is not paid when it is
due, the Secretary may assess a late payment charge of not more than
100 percent of the assessment payment which was not timely paid.
(B) Waivers. Subparagraph (A) shall not apply to any assessment
payment made within 60 days after the date on which payment is due, if
before such date, the designated payor obtains a waiver from the
Secretary of Labor based upon a showing of substantial hardship arising
from the timely payment of the assessment. The Secretary may grant a
waiver under this subparagraph upon application made by the designated
payor, but the Secretary may not grant a waiver if it appears that the
designated payor will be unable to pay the assessment within 60 days
after the date on which it is due.
(C) Interest. If any assessment is not paid by the last date
prescribed for a payment, interest on the amount of such assessment at
the rate imposed under section 6601(a) of the Internal Revenue Code of
1986 shall be paid for the period from such last date to the date paid.
(e) Civil Action upon Nonpayment. If any designated payor fails to pay an
assessment when due, the Secretary of Labor may bring a civil action in any
district court of the United States within the jurisdiction of which the
plan assets are located, the plan is administered, or in which a defendant
resides or is found, for the recovery of the amount of the unpaid
assessment, any late payment charge, and interest, and process may be
served in any other district. The district courts of the United States
shall have jurisdiction over actions brought under this subsection by the
Secretary without regard to the amount in controversy.
(f) Guarantee Held Harmless. The Secretary of Labor shall not cease to
guarantee benefits on account of the failure of a designated payor to pay
any assessment when due.
(g) Designated Payor Defined.
(1) In general. For purposes of this section, the term ``designated
payor'' means
(A) the employer or plan administrator in any case in which the
eligible sponsor of the corporate alliance health plan is described in
subparagraph (A) or (D) of section 1311(b)(1); and
(B) the contributing employers or the plan administrator in any case
in which the eligible sponsor of the corporate alliance health plan is
described in subparagraph (B) or (C) of section 1311(b)(1).
(2) Controlled groups. If an employer is a member of a controlled
group, each member of such group shall be jointly and severally liable
for any assessments required to be paid by such employer. For purposes of
the preceding sentence, the term ``controlled group'' means any group
treated as a single employer under subsection (b), (c), (m), or (o) of
section 414 of the Internal Revenue Code of 1986.
Subtitle E. Health Plans
SEC. 1400. HEALTH PLAN DEFINED.
(a) In General. In this Act, the term ``health plan'' means a plan that
provides the comprehensive benefit package and meets the requirements of
parts 1, 3, and 4.
(b) Appropriate Self-Insured Health Plan. In this Act, the term
``appropriate self-insured health plan'' means a group health plan (as
defined in section 3(42) of the Employee Retirement Income Security Act of
1974) with respect to which the applicable requirements of title I of the
Employee Retirement Income Security Act of 1974 are met and which is a
self-insured plan.
(c) State-Certified Health Plan. In this Act, the term ``State-certified
health plan'' means a health plan that has been certified by a State under
section 1203(a) (or, in the case in which the Board is exercising
certification authority under section 1522(e), that has been certified by
the Board).
(d) Applicable Regulatory Authority Defined. In this subtitle, the term
``applicable regulatory authority'' means
(1) with respect to a self-insured health plan, the Secretary of Labor,
or
(2) with respect to a State-certified health plan, the State authority
responsible for certification of the plan.
Part 1. REQUIREMENTS RELATING TO COMPREHENSIVE BENEFIT PACKAGE
SEC. 1401. APPLICATION OF REQUIREMENTS.
No plan shall be treated under this Act as a health plan
(1) unless the plan is a self-insured plan or a State-certified plan;
or
(2) on and after the effective date of a finding by the applicable
regulatory authority that the plan has failed to comply with such
applicable requirements.
SEC. 1402. REQUIREMENTS RELATING TO ENROLLMENT AND COVERAGE.
(a) No Underwriting.
(1) In general. Subject to paragraph (2), each health plan offered by a
regional alliance or a corporate alliance must accept for enrollment
every alliance eligible individual who seeks such enrollment. No plan may
engage in any practice that has the effect of attracting or limiting
enrollees on the basis of personal characteristics, such as health
status, anticipated need for health care, age, occupation, or affiliation
with any person or entity.
(2) Capacity limitations. With the approval of the applicable
regulatory authority, a health plan may limit enrollment because of the
plan's capacity to deliver services or to maintain financial stability.
If such a limitation is imposed, the limitation may not be imposed on a
basis referred to in paragraph (1).
(b) No Limits on Coverage; No Pre-Existing Condition Limits. A health
plan may not
(1) terminate, restrict, or limit coverage for the comprehensive
benefit package in any portion of the plan's service area for any
reason, including nonpayment of premiums;
(2) cancel coverage for any alliance eligible individual until that
individual is enrolled in another applicable health plan;
(3) exclude coverage of an alliance eligible individual because of
existing medical conditions;
(4) impose waiting periods before coverage begins; or
(5) impose a rider that serves to exclude coverage of particular
eligible individuals.
(c) Anti-Discrimination.
(1) In general. No health plan may engage (directly or through
contractual arrangements) in any activity, including the selection of a
service area, that has the effect of discriminating against an individual
on the basis of race, national origin, gender, income, health status, or
anticipated need for health services.
(2) Selection of providers for plan network. In selecting among
providers of health services for membership in a provider network, or in
establishing the terms and conditions of such membership, a health plan
may not engage in any practice that has the effect of discriminating
against a provider
(A) based on the race, national origin, or gender of the provider; or
(B) based on the income, health status, or anticipated need for
health services of a patient of the provider.
(3) Normal Operation of Health Plan. Except in the case of intentional
discrimination, it shall not be a violation of this subsection, or of any
regulation issued under this subsection, for any person to take any
action otherwise prohibited under this subsection, if the action is
necessary to the normal operation of the health plan.
(4) Regulations. Not later than 1 year after the date of the enactment
of this Act, the Secretary of Health and Human Services shall issue
regulations in an accessible form to carry out this subsection.
(d) Requirements for Plans Offering Lower Cost Sharing. Each health plan
that offers enrollees the lower cost sharing schedule referred to in
section 1131
(1) shall apply such schedule to all items and services in the
comprehensive benefit package;
(2) shall offer enrollees the opportunity to obtain coverage for
out-of-network items and services (as described in subsection (f)(2));
and
(3) notwithstanding section 1403, in the case of an enrollee who
obtains coverage for such items and services, may charge an alternative
premium to take into account such coverage.
(e) Treatment of Cost Sharing. Each health plan, in providing benefits in
the comprehensive benefit package
(1) shall include in its payments to providers, such additional
reimbursement as may be necessary to reflect cost sharing reductions to
which individuals are entitled under section 1371, and
(2) shall maintain such claims or encounter records as may be necessary
to audit the amount of such additional reimbursements and the individuals
for which such reimbursement is provided.
(f) In-Network and Out-of-Network Items and Services Defined.
(1) In-network items and services. For purposes of this Act, the term
``in-network'', when used with respect to items or services described in
this subtitle, means items or services provided to an individual enrolled
under a health plan by a health care provider who is a member of a
provider network of the plan (as defined in paragraph (3)).
(2) Out-of-network items and services. For purposes of this Act, the
term ``out-of network'', when used with respect to items or services
described in this subtitle, means items or services provided to an
individual enrolled under a health plan by a health care provider who is
not a member of a provider network of the plan (as defined in paragraph
(3)).
(3) Provider network defined. A ``provider network'' means, with
respect to a health plan, providers who have entered into an agreement
with the plan under which such providers are obligated to provide items
and services in the comprehensive benefit package to individuals enrolled
in the plan, or have an agreement to provide services on a
fee-for-service basis.
(g) Relation to Detention. A health plan is not required to provide any
reimbursement to any detention facility for services performed in that
facility for detainees in the facility.
SEC. 1403. COMMUNITY RATING.
(a) Regional Alliance Health Plans. Each regional alliance health plan
may not vary the premium imposed with respect to residents of an alliance
area, except as may be required under section 6102(a) with respect to
different types of individual and family coverage under the plan.
(b) Corporate Alliance Health Plans. Each corporate alliance health plan
may not vary the premium imposed with respect to individuals enrolled in
the plan, except as may be required under section 1364 with respect to
different types of individual and family coverage under the plan.
SEC. 1404. MARKETING OF HEALTH PLANS; INFORMATION.
(a) Regional Alliance Marketing Restrictions.
(1) In general. The contract entered into between a regional alliance
and a regional alliance health plan shall prohibit the distribution by
the health plan of marketing materials within the regional alliance that
contain false or materially misleading information and shall provide for
prior approval by the regional alliance of any marketing materials to be
distributed by the plan.
(2) Entire market. A health plan offered by a health alliance may not
distribute marketing materials to an area smaller than the entire area
served by the plan.
(3) Prohibition of tie-ins. A regional alliance health plan, and any
agency of such a plan, may not seek to influence an individual's choice
of plans in conjunction with the sale of any other insurance.
(b) Information Available.
(1) In general. Each regional alliance health plan must provide to the
regional alliance and make available to alliance eligible individuals and
health care professionals complete and timely information concerning the
following:
(A) Costs.
(B) The identity, locations, qualifications, and availability of
participating providers.
(C) Procedures used to control utilization of services and
expenditures.
(D) Procedures for assuring and improving the quality of care.
(E) Rights and responsibilities of enrollees.
(F) Information on the number of plan members who disenroll from the
plan.
(2) Prohibition against certification of plans providing inaccurate
information. No regional alliance health plan may be a State-certified
health plan under this title if the State determines that the plan
submitted materially inaccurate information under paragraph (1).
(c) Advance Directives. Each self-insured health plan and each
State-certified health plan shall meet the requirement of section 1866(f)
of the Social Security Act (relating to maintaining written policies and
procedures respecting advance directives) in the same manner as such
requirement relates to organizations with contracts under section 1876 of
such Act.
SEC. 1405. GRIEVANCE PROCEDURE.
(a) In General. Each health plan must establish a grievance procedure for
enrollees to use in pursuing complaints. Such procedure shall be consistent
with subtitle C of title V.
(b) Additional Remedies. If the grievance procedure fails to resolve an
enrollee's complaint
(1) in the case of an enrollee of a regional alliance health plan, the
enrollee has the option of seeking assistance from the office of the
ombudsman for the regional alliance established under section 1326(a),
and
(2) the enrollee may pursue additional legal remedies, including those
provided under subtitle C of title V.
SEC. 1406. HEALTH PLAN ARRANGEMENTS WITH PROVIDERS.
(a) Requirement. Each health plan must enter into such agreements with
health care providers or have such other arrangements as may be necessary
to assure the provision of all services covered by the comprehensive
benefit package to eligible individuals enrolled with the plan.
(b) Emergency and Urgent Care Services.
(1) In general. Each health plan must cover emergency and urgent care
services provided to enrollees, without regard to whether or not the
provider furnishing such services has a contractual (or other)
arrangement with the plan to provide items or services to enrollees of
the plan.
(2) Payment amounts. In the case of emergency and urgent care provided
to an enrollee outside of a health plan's service area, the payment
amounts of the plan shall be based on the fee for service rate schedule
established by the regional alliance for the alliance area where the
services were provided.
(c) Application of Fee Schedule.
(1) In general. Subject to paragraph (2), each regional alliance health
plan or corporate alliance health plan that provides for payment for
services on a fee-for-service basis shall make such payment in the
amounts provided under the fee schedule established by the regional
alliance under section 1322(c) (or, in the case of a plan offered in a
State that has established a Statewide fee schedule under section
1322(c)(3), under such Statewide fee schedule).
(2) Reduction for providers voluntarily reducing charges. If a provider
under a health plan voluntarily agrees to reduce the amount charged to an
individual enrolled under the plan, the plan shall reduce the amount
otherwise determined under the fee schedule applicable under paragraph
(1) by the proportion of the reduction in such amount charged.
(3) Reduction for noncomplying plan. Each regional alliance health plan
that is a noncomplying plan shall provide for reductions in payments
under the fee schedule to providers that are not participating providers
in accordance with section 6012(b).
(d) Prohibition Against Balance Billing; Requirement of Direct Billing.
(1) Prohibition of balance billing. A provider may not charge or
collect from an enrollee a fee in excess of the applicable payment amount
under the applicable fee schedule under subsection (c), and the health
plan and its enrollees are not legally responsible for payment of any
amount in excess of such applicable payment amount for items and services
covered under the comprehensive benefits package.
(2) Direct billing. A provider may not charge or collect from an
enrollee amounts that are payable by the health plan (including any cost
sharing reduction assistance payable by the plan) and shall submit
charges to such plan in accordance with any applicable requirements of
part 1 of subtitle B of title V (relating to health information systems).
(3) Coverage under agreements with plans. The agreements or other
arrangements entered into under subsection (a) between a health plan and
the health care providers providing the comprehensive benefit package to
individuals enrolled with the plan shall prohibit a provider from
engaging in balance billing described in paragraph (1).
(e) Imposition of Participating Provider Assessment in Case of a
Noncomplying Plan. Each health plan shall provide that if the plan is a
noncomplying plan for a year under section 6012, payments to participating
providers shall be reduced by the applicable network reduction percentage
under such section.
SEC. 1407. PREEMPTION OF CERTAIN STATE LAWS RELATING TO HEALTH PLANS.
(a) Laws Restricting Plans Other Than Fee-for-Service Plans. Except as
may otherwise be provided in this section, no State law shall apply to any
services provided under a health plan that is not a fee-for-service plan
(or a fee-for-service component of a plan) if such law has the effect of
prohibiting or otherwise restricting plans from
(1) except as provided in section 1203, limiting the number and type of
health care providers who participate in the plan;
(2) requiring enrollees to obtain health services (other than emergency
services) from participating providers or from providers authorized by
the plan;
(3) requiring enrollees to obtain a referral for treatment by a
specialized physician or health institution;
(4) establishing different payment rates for participating providers
and providers outside the plan;
(5) creating incentives to encourage the use of participating
providers; or
(6) requiring the use single-source suppliers for pharmacy, medical
equipment, and other health products and services.
(b) Preemption of State Corporate Practice Acts. Any State law related to
the corporate practice of medicine and to provider ownership of health
plans or other providers shall not apply to arrangements between health
plans that are not fee-for-service plans and their participating providers.
(c) Participating Provider Defined. In this title, a ``participating
provider'' means, with respect to a health plan, a provider of health care
services who is a member of a provider network of the plan (as described in
section 1402(f)(3)).
SEC. 1408. FINANCIAL SOLVENCY.
Each regional alliance health plan must
(1) meet or exceed minimum capital requirements established by States
under section 1204(a);
(2) in the case of a plan operating in a State, must participate in the
guaranty fund established by the State under section 1204(c); and
(3) meet such other requirements relating to fiscal soundness as the
State may establish (subject to the establishment of any alternative
standards by the Board).
SEC. 1409. REQUIREMENT FOR OFFERING COST SHARING POLICY.
Each regional alliance health plan shall offer a cost sharing policy
(as defined in section 1421(b)(2)) to each eligible family enrolled under
the plan.
SEC. 1410. QUALITY ASSURANCE.
Each health plan shall comply with such quality assurance requirements
as are imposed under subtitle A of title V with respect to such a plan.
SEC. 1411. PROVIDER VERIFICATION.
Each health plan shall
(1) verify the credentials of practitioners and facilities;
(2) ensure that all providers participating in the plan meet applicable
State licensing and certification standards;
(3) oversee the quality and performance of participating providers,
consistent with section 1410; and
(4) investigate and resolve consumer complaints against participating
providers.
SEC. 1412. CONSUMER DISCLOSURES OF UTILIZATION MANAGEMENT PROTOCOLS.
Each health plan shall disclose to enrollees (and prospective
enrollees) the protocols used by the plan for controlling utilization and
costs.
SEC. 1413. CONFIDENTIALITY, DATA MANAGEMENT, AND REPORTING.
(a) In General. Each health plan shall comply with the confidentiality,
data management, and reporting requirements imposed under subtitle B of
title V.
(b) Treatment of Electronic Information.
(1) Accuracy and reliability. Each health plan shall take such measures
as may be necessary to ensure that health care information in electronic
form that the plan, or a member of a provider network of the plan,
collects for or transmits to the Board under subtitle B of title V is
accurate and reliable.
(2) Privacy and security. Each health plan shall take such measures as
may be necessary to ensure that health care information described in
paragraph (1) is not distributed to any individual or entity in violation
of a standard promulgated by the Board under part 2 of subtitle B of
title V.
SEC. 1414. PARTICIPATION IN REINSURANCE SYSTEM.
Each regional alliance health plan of a State that has established a
reinsurance system under section 1203(g) shall participate in the system
in the manner specified by the State.
Part 2. REQUIREMENTS RELATING TO SUPPLEMENTAL INSURANCE
SEC. 1421. IMPOSITION OF REQUIREMENTS ON SUPPLEMENTAL INSURANCE.
(a) In General. An entity may offer a supplemental insurance policy but
only if
(1) in the case of a supplemental health benefit policy (as defined in
subsection (b)(1)), the entity and the policy meet the requirements of
section 1422; and
(2) in the case of a cost sharing policy (as defined in subsection
(b)(2)), the entity and the policy meet the requirements of section 1423.
(b) Policies Defined.
(1) Supplemental health benefit policy.
(A) In general. In this part, the term ``supplemental health benefit
policy'' means a health insurance policy or health benefit plan offered
to an alliance-eligible individual which provides
(i) coverage for services and items not included in the
comprehensive benefit package, or
(ii) coverage for items and services included in such package but
not covered because of a limitation in amount, duration, or scope
provided under such title,
or both.
(B) Exclusions. Such term does not include the following:
(i) A cost sharing policy (as defined in paragraph (2)).
(ii) A long-term care insurance policy (as defined in section
2304(10)).
(iii) Insurance that limits benefits with respect to specific
diseases (or conditions).
(iv) Hospital or nursing home indemnity insurance.
(v) A medicare supplemental policy (as defined in section 1882(g) of the
Social Security Act).
(vi) Insurance with respect to accidents.
(2) Cost sharing policy. In this part, the term ``cost sharing policy''
means a health insurance policy or health benefit plan offered to an
alliance-eligible individual which provides coverage for deductibles,
coinsurance, and copayments imposed as part of the comprehensive benefit
package under title II, whether imposed under a higher cost sharing plan
or with respect to out-of-network providers.
SEC. 1422. STANDARDS FOR SUPPLEMENTAL HEALTH BENEFIT POLICIES.
(a) Prohibiting Duplication of Coverage.
(1) In general. No health plan, insurer, or any other person may offer
(A) to any eligible individual a supplemental health benefit policy
that duplicates any coverage provided in the comprehensive benefit
package; or
(B) to any medicare-eligible individual a supplemental health benefit
policy that duplicates any coverage provided under part B of the
medicare program.
(2) Exception for medicare-eligible individuals. For purposes of this
subsection, for the period in which an individual is a medicare-eligible
individual and also is an alliance-eligible individual (and is enrolled
under a regional alliance or corporate alliance health plan), paragraph
(1)(A) (and not paragraph (1)(B)) shall apply.
(b) No Limitation on Individuals Offered Policy.
(1) In general. Except as provided in paragraph (2), each entity
offering a supplemental health benefit policy must accept for enrollment
every individual who seeks such enrollment, subject to capacity and
financial limits.
(2) Exception for certain offerors. Paragraph (1) shall not apply to
any supplemental health benefit policy offered to an individual only on
the basis of
(A) the individual's employment (in the case of a policy offered by
the individual's employer); or
(B) the individual's membership or enrollment in a fraternal,
religious, professional, educational, or other similar organization.
(c) Restrictions on Marketing Abuses. Not later than January 1, 1996, the
Board shall develop (in consultation with the States) minimum standards
that prohibit marketing practices by entities offering supplemental health
benefit policies that involve:
(1) Providing monetary incentives for or tying or otherwise
conditioning the sale of the policy to enrollment in a regional alliance
health plan of the entity.
(2) Using or disclosing to any party information about the health
status or claims experience of participants in a regional alliance health
plan for the purpose of marketing such a policy.
(d) Civil Monetary Penalty. An entity that knowingly and willfully
violates any provision of this section with respect to the offering of a
supplemental health benefit policy to any individual shall be subject to a
civil monetary penalty (not to exceed $10,000) for each such violation.
SEC. 1423. STANDARDS FOR COST SHARING POLICIES.
(a) Rules for Offering of Policies. Subject to subsection (f), a cost
sharing policy may be offered to an individual only if
(1) the policy is offered by the regional alliance health plan in which
the individual is enrolled;
(2) the regional alliance health plan offers the policy to all
individuals enrolled in the plan;
(3) the plan offers each such individual a choice of a policy that
provides standard coverage and a policy that provides maximum coverage
(in accordance with standards established by the Board); and
(4) the policy is offered only during the annual open enrollment period
for regional alliance health plans (described in section 1323(d)(1)).
(b) Prohibition of Coverage of Copayments. Each cost sharing policy may
not provide any benefits relating to any copayments established under the
schedule of copayments and coinsurance under section 1135.
(c) Equivalent Coverage for All Services. Each cost sharing policy must
provide coverage for items and services in the comprehensive benefit
package to the same extent as the policy provides coverage for all items
and services in the package.
(d) Requirements for Pricing.
(1) In general. The price of any cost sharing policy shall
(A) be the same for each individual to whom the policy is offered;
(B) take into account any expected increase in utilization resulting
from the purchase of the policy by individuals enrolled in the regional
alliance health plan; and
(C) not result in a loss-ratio of less than 90 percent.
(2) Loss-ratio defined. In paragraph (1)(C), a ``loss-ratio'' is the
ratio of the premium returned to the consumer in payout relative to the
total premium collected.
(e) Loss of State Certification for Regional Alliance Health Plans
Failing to Meet Standards. A State may not certify a regional alliance
health plan that offers a cost sharing policy unless the plan and the
policy meet the standards described in this section.
(f) Special Rules for FEHBP Supplemental Plans. Subsection (a) shall not
apply to an FEHBP supplemental plan described in section 8203(f)(1), but
only if the plan meets the following requirements:
(1) The plan must be offered to all individuals to whom such a plan is
required to be offered under section 8204.
(2) The plan must offers each such individual a choice of a policy that
provides standard coverage and a policy that provides maximum coverage
(in accordance with standards established by the Board under subsection
(a)(3)).
(3) The plan is offered only during the annual open enrollment period
for regional alliance health plans (described in section 1323(d)(1)).
(4)(A) The price of the plan shall include an amount, established in
accordance with rules established by the Board in consultation with the
Office of Personnel Management, that takes into account any expected
increase in utilization of the items and services in the comprehensive
benefit package resulting from the purchase of the plan by individuals
enrolled in a regional alliance health plan.
(B) The plan provides for payment, in a manner specified by the Board
in the case of an individual enrolled in the plan and in a regional
alliance health plan, to the regional alliance health plan of an amount
equivalent to the additional amount described in subparagraph (A).
Part 3. REQUIREMENTS RELATING TO ESSENTIAL COMMUNITY PROVIDERS
SEC. 1431. HEALTH PLAN REQUIREMENT.
(a) In General. Subject to section 1432, each health plan shall, with
respect to each electing essential community provider (as defined in
subsection (d), other than a provider of school health services) located
within the plan's service area, either
(1) enter into a written provider participation agreement (described in
subsection (b)) with the provider, or
(2) enter into a written agreement under which the plan shall make
payment to the provider in accordance with subsection (c).
(b) Participation Agreement. A participation agreement between a health
plan and an electing essential community provider under this subsection
shall provide that the health plan agrees to treat the provider in
accordance with terms and conditions at least as favorable as those that
are applicable to other providers participating in the health plan with
respect to each of the following:
(1) The scope of services for which payment is made by the plan to the
provider.
(2) The rate of payment for covered care and services.
(3) The availability of financial incentives to participating
providers.
(4) Limitations on financial risk provided to other participating
providers.
(5) Assignment of enrollees to participating providers.
(6) Access by the provider's patients to providers in medical
specialties or subspecialties participating in the plan.
(c) Payments for Providers Without Participation Agreements.
(1) In general. Payment in accordance with this subsection is payment
based, as elected by the electing essential community provider, either
(A) on the fee schedule developed by the applicable health alliance
(or the State) under section 1322(c), or
(B) on payment methodologies and rates used under the applicable
Medicare payment methodology and rates (or the most closely applicable
methodology under such program as the Secretary of Health and Human
Services specifies in regulations).
(2) No application of gate-keeper limitations. Payment in accordance
with this subsection may be subject to utilization review, but may not be
subject to otherwise applicable gate-keeper requirements under the plan.
(d) Election.
(1) In general. In this part, the term ``electing essential community
provider'' means, with respect to a health plan, an essential community
provider that elects this subpart to apply to the health plan.
(2) Form of election. An election under this subsection shall be made
in a form and manner specified by the Secretary, and shall include notice
to the health plan involved. Such an election may be made annually with
respect to a health plan, except that the plan and provider may agree to
make such an election on a more frequent basis.
(e) Special Rule for Providers of School Health Services. A health plan
shall pay, to each provider of school health services located in the plan's
service area an amount determined by the Secretary for such services
furnished to enrollees of the plan.
SEC. 1432. SUNSET OF REQUIREMENT.
(a) In General. Subject to subsection (d), the requirement of section
1431 shall only apply to health plans offered by a health alliance during
the 5-year period beginning with the first year in which any regional
alliance health plan is offered by the alliance.
(b) Studies. In order to prepare recommendations under subsection (c),
the Secretary shall conduct studies regarding essential community
providers, including studies that assess
(1) the definition of essential community provider,
(2) the sufficiency of the funding levels for providers, for both
covered and uncovered benefits under this Act,
(3) the effects of contracting requirements relating to such providers
on such providers, health plans, and enrollees,
(4) the impact of the payment rules for such providers, and
(5) the impact of national health reform on such providers.
(c) Recommendations to Congress. The Secretary shall submit to Congress,
by not later than March 1, 2001, specific recommendations respecting
whether, and to what extent, section 1431 should continue to apply to some
or all essential community providers. Such recommendations may include a
description of the particular types of such providers and circumstances
under which such section should continue to apply.
(d) Congressional Consideration.
(1) In general. Recommendations submitted under subsection (c) shall
apply under this part (and may supersede the provisions of subsection
(a)) unless a joint resolution (described in paragraph (2)) disapproving
such recommendations is enacted, in accordance with the provisions of
paragraph (3), before the end of the 60-day period beginning on the date
on which such recommendations were submitted. For purposes of applying
the preceding sentence and paragraphs (2) and (3), the days on which
either House of Congress is not in session because of an adjournment of
more than three days to a day certain shall be excluded in the
computation of a period.
(2) Joint resolution of disapproval. A joint resolution described in
this paragraph means only a joint resolution which is introduced within
the 10-day period beginning on the date on which the Secretary submits
recommendations under subsection (c) and
(A) which does not have a preamble;
(B) the matter after the resolving clause of which is as follows:
``That Congress disapproves the recommendations of the Secretary of
Health and Human Services concerning the continued application of
certain essential community provider requirements under section 1431 of
the Health Security Act, as submitted by the Secretary on
G7XXXXXXX.'', the blank space being filled in with the appropriate
date; and
(C) the title of which is as follows: ``Joint resolution disapproving
recommendations of the Secretary of Health and Human Services
concerning the continued application of certain essential community
provider requirements under section 1431 of the Health Security Act, as
submitted by the Secretary on G7XXXXXXX.'', the blank space being
filled in with the appropriate date.
(3) Procedures for consideration of resolution of approval. Subject to
paragraph (4), the provisions of section 2908 (other than subsection (a))
of the Defense Base Closure and Realignment Act of 1990 shall apply to
the consideration of a joint resolution described in paragraph (2) in the
same manner as such provisions apply to a joint resolution described in
section 2908(a) of such Act.
(4) Special rules. For purposes of applying paragraph (3) with respect
to such provisions
(A) any reference to the Committee on Armed Services of the House of
Representatives shall be deemed a reference to an appropriate Committee
of the House of Representatives (specified by the Speaker of the House
of Representatives at the time of submission of recommendations under
subsection (c)) and any reference to the Committee on Armed Services of
the Senate shall be deemed a reference to an appropriate Committee of
the House of Representatives (specified by the Majority Leader of the
Senate at the time of submission of recommendations under subsection
(c)); and
(B) any reference to the date on which the President transmits a
report shall be deemed a reference to the date on which the Secretary
submits recommendations under subsection (c).
Part 4. REQUIREMENTS RELATING TO WORKERS' COMPENSATION AND
AUTOMOBILE MEDICAL
LIABILITY COVERAGE
SEC. 1441. REFERENCE TO REQUIREMENTS RELATING TO WORKERS COMPENSATION
SERVICES.
Each health plan shall meet the applicable requirements of part 2 of
subtitle A of title VIII (relating to provision of workers compensation
services to enrollees).
SEC. 1442. REFERENCE TO REQUIREMENTS RELATING TO AUTOMOBILE MEDICAL
LIABILITY
SERVICES.
Each health plan shall meet the applicable requirements of part 2 of
subtitle B of title VIII (relating to provision of automobile medical
liability services to enrollees).
Subtitle F. Federal Responsibilities
Part 1. NATIONAL HEALTH BOARD
Subpart A. Establishment of National Health Board
SEC. 1501. CREATION OF NATIONAL HEALTH BOARD; MEMBERSHIP.
(a) In General. There is hereby created in the Executive Branch a
National Health Board.
(b) Composition. The Board is composed of 7 members appointed by the
President, by and with the advice and consent of the Senate.
(c) Chair. The President shall designate one of the members as chair. The
chair serves a term concurrent with that of the President. The chair may
serve a maximum of 3 terms. The chair shall serve as the chief executive
officer of the Board.
(d) Terms.
(1) In general. Except as provided in paragraphs (2) and (4), the term
of each member of the Board, except the chair, is 4 years and begins when
the term of the predecessor of that member ends.
(2) Initial terms. The initial terms of the members of the Board (other
than the chair) first taking office after the date of the enactment of
this Act, shall expire as designated by the President, two at the end of
one year, two at the end of two years, and two at the end of three years.
(3) Reappointment. A member (other than the chair) may be reappointed
for one additional term.
(4) Continuation in office. Upon the expiration of a term of office, a
member shall continue to serve until a successor is appointed and
qualified.
(e) Vacancies.
(1) In general. Whenever a vacancy shall occur, other than by
expiration of term, a successor shall be appointed by the President as
provided above, by and with the consent of the Senate, to fill such
vacancy, and is appointed for the remainder of the term of the
predecessor.
(2) No impairment of function. A vacancy in the membership of the Board
does not impair the right of the remaining members to exercise all of the
powers of the Board.
(3) Acting chair. The Board may designate a Member to Act as chair
during any period in which there is no chair designated by the President.
(f) Meetings; Quorum.
(1) Meetings. At meetings of the Board the chair shall preside, and in
the absence of the chair, the Board shall elect a member to act as chair
pro tempore.
(2) Quorum. Four members of the Board shall constitute a quorum
thereof.
SEC. 1502. QUALIFICATIONS OF BOARD MEMBERS.
(a) Citizenship. Each member of the Board shall be a citizen of the
United States.
(b) Basis of Selection. Board members will be selected on the basis of
their experience and expertise in relevant subjects, including the practice
of medicine, health care financing and delivery, state health systems,
consumer protection, business, law, and delivery of care to vulnerable
populations.
(c) Exclusive Employment. uring the term of appointment, Board members
shall serve as employees of the Federal Government and shall hold no other
employment.
(d) Prohibition of Conflict of Interest. A member of the Board may not
have a pecuniary interest in or hold an official relation to any health
care plan, health care provider, insurance company, pharmaceutical company,
medical equipment company, or other affected industry. Before entering upon
the duties as a member of the Board, the member shall certify under oath
compliance with this requirement.
(e) Post-Employment Restrictions. After leaving the Board, former members
are subject to post-employment restrictions applicable to comparable
Federal employees.
(f) Compensation of Board Members. Each member of the Board (other than
the chair) shall receive an annual salary at the annual rate payable from
time to time for level IV of the Executive Schedule. The chair of the
Board, during the period of service as chair, shall receive an annual
salary at the annual rate payable from time to time for level III of the
Executive Schedule.
SEC. 1503. GENERAL DUTIES AND RESPONSIBILITIES.
(a) Comprehensive Benefit Package.
(1) Interpretation. The Board shall interpret the comprehensive benefit
package, adjust the delivery of preventive services under section 1153,
and take such steps as may be necessary to assure that the comprehensive
benefit package is available on a uniform national basis to all eligible
individuals.
(2) Recommendations. The Board may recommend to the President and the
Congress appropriate revisions to such package. Such recommendations may
reflect changes in technology, health care needs, health care costs, and
methods of service delivery.
(b) Administration of Cost Containment Provisions. The Board shall
oversee the cost containment requirements of subtitle A of title VI and
certify compliance with such requirements.
(c) Coverage and Families. The Board shall develop and implement
standards relating to the eligibility of individuals for coverage in
applicable health plans under subtitle A of title I and may provide such
additional exceptions and special rules relating to the treatment of family
members under section 1012 as the Board finds appropriate.
(d) Quality Management and Improvement. The Board shall establish and
have ultimate responsibility for a performance-based system of quality
management and improvement as required by section 5001.
(e) Information Standards. The Board shall develop and implement
standards to establish national health information system to measure
quality as required by section 5101.
(f) Participating State Requirements. Consistent with the provisions of
subtitle C, the Board shall
(1) establish requirements for participating States,
(2) monitor State compliance with those requirements,
(3) provide technical assistance,
in a manner that ensures access to the comprehensive benefit package
for all eligible individuals.
(g) Development of Premium Class Factors. The Board shall establish
premium class factors under subpart D of this part.
(h) Development of Risk-Adjustment Methodology. The Board shall develop a
methodology for the risk-adjustment of premium payments to regional
alliance health plans in accordance with part 3 of this subtitle.
(i) Encouraging the Reasonable Pricing of Breakthrough Drugs. The Board
shall establish the Breakthrough Drug Committee in accordance with subpart
F of this part.
(j) Financial Requirements. The Board shall establish minimum capital
requirements and requirements for guaranty funds under subpart G of this
part.
(k) Standards for Health Plan Grievance Procedures. The Board shall
establish standards for health plan grievance procedures that are used by
enrollees in pursuing complaints.
SEC. 1504. ANNUAL REPORT.
(a) In General. The Board shall prepare and send to the President and
Congress an annual report addressing the overall implementation of the new
health care system.
(b) Matters to be Included. The Board shall include in each annual report
under this section the following:
(1) Information on Federal and State implementation.
(2) Data related to quality improvement.
(3) Recommendations or changes in the administration, regulation and
laws related to health care and coverage.
(4) A full account of all actions taken during the previous year.
SEC. 1505. POWERS.
(a) Staff; Contract Authority. The Board shall have authority, subject to
the provisions of the civil-service laws and chapter 51 and subchapter III
of chapter 53 of title 5, United States Code, to appoint such officers and
employees as are necessary to carry out its functions. To the extent
provided in advance in appropriations Acts, the Board may contract with any
person (including an agency of the Federal Government) for studies and
analysis as required to execute its functions. Any employee of the
Executive Branch may be detailed to the Board to assist the Board in
carrying out its duties.
(b) Establishment of Advisory Committees. The Board may establish
advisory committees.
(c) Access to Information. The Board may secure directly from any
department or agency of the United States information necessary to enable
it to carry out its functions, to the extent such information is otherwise
available to a department or agency of the United States. Upon request of
the chair, the head of that department or agency shall furnish that
information to the Board.
(d) Delegation of Authority. Except as otherwise provided in this Act,
the Board may delegate any function to such officers and employees as the
Board may designate and may authorize such successive redelegations of such
functions with the Board as the Board deems to be necessary or appropriate.
No delegation of functions by the Board shall relieve the Board of
responsibility for the administration of such functions.
(e) Rulemaking. The National Health Board is authorized to establish such
rules as may be necessary to carry out this Act.
SEC. 1506. FUNDING.
(a) Authorization of Appropriations. There are authorized to be
appropriated to the Board such sums as may be necessary for fiscal years
1994, 1995, 1996, 1997, and 1998.
(b) Submission of Budget. Under the procedures of chapter 11 of title 31,
United States Code, the budget for the Board for a fiscal year shall be
reviewed by the Director of the Office of Management and Budget and
submitted to the Congress as part of the President's submission of the
Budget of the United States for the fiscal year.
Subpart B. Responsibilities Relating to Review and Approval of State
Systems
SEC. 1511. FEDERAL REVIEW AND ACTION ON STATE SYSTEMS.
(a) Approval of State Systems by National Board.
(1) In general. The National Health Board shall approve a State health
care system for which a document is submitted under section 1200(a)
unless the Board finds that the system (as set forth in the document)
does not (or will not) provide for the State meeting the responsibilities
for participating States under this Act.
(2) Regulations. The Board shall issue regulations, not later than July
1, 1995, prescribing the requirements for State health care systems under
parts 2 and 3 of subtitle C, except that in the case of a document
submitted under section 1201(a) before the date of issuance of such
regulations, the Board shall take action on such document notwithstanding
the fact that such regulations have not been issued.
(3) No approval permitted for years prior to 1996. The Board may not
approve a State health care system under this part for any year prior to
1996.
(b) Review of Completeness of Documents.
(1) In general. If a State submits a document under subsection (a)(1),
the Board shall notify the State, not later than 7 working days after the
date of submission, whether or not the document is complete and provides
the Board with sufficient information to approve or disapprove the
document.
(2) Additional information on incomplete document. If the Board
notifies a State that the State's document is not complete, the State
shall be provided such additional period (not to exceed 45 days) as the
Board may by regulation establish in which to submit such additional
information as the Board may require. Not later than 7 working days after
the State submits the additional information, the Board shall notify the
State respecting the completeness of the document.
(c) Action on Completed Documents.
(1) In general. The Board shall make a determination (and notify the
State) on whether the State's document provides for implementation of a
State system that meets the applicable requirements of subtitle C
(A) in the case of a State that did not require the additional period
described in subsection (b)(2) to file a complete document, not later
than 90 days after notifying a State under subsection (b) that the
State's document is complete, or
(B) in the case of a State that required the additional period
described in subsection (b)(2) to file a complete document, not later
than 90 days after notifying a State under subsection (b) that the
State's document is complete.
(2) Plans deemed approved. If the Board does not meet the applicable
deadline for making a determination and providing notice established
under paragraph (1) with respect to a State's document, the Board shall
be deemed to have approved the State's document for purposes of this Act.
(d) Opportunity to Respond to Rejected Document.
(1) In general. If (within the applicable deadline under subsection
(c)(1)) the Board notifies a State that its document does not provide for
implementation of a State system that meets the applicable requirements
of subtitle C, the Board shall provide the State with a period of 30 days
in which to submit such additional information and assurances as the
Board may require.
(2) Deadline for response. Not later than 30 days after receiving such
additional information and assurances, the Board shall make a
determination (and notify the State) on whether the State's document
provides for implementation of a State system that meets the applicable
requirements of subtitle C.
(3) Plan deemed approved. If the Board does not meet the deadline
established under paragraph (2) with respect to a State, the Board shall
be deemed to have approved the State's document for purposes of this Act.
(e) Approval of Previously Terminated States. If the Board has approved a
State system under this part for a year but subsequently terminated the
approval of the system under section 1513, the Board shall approve the
system for a succeeding year if the State
(1) demonstrates to the satisfaction of the Board that the failure that
formed the basis for the termination no longer exists, and
(2) provides reasonable assurances that the types of actions (or
inactions) which formed the basis for such termination will not recur.
(f) Revisions to State System.
(1) Submission. A State may revise a system approved for a year under
this section, except that such revision shall not take effect unless the
State has submitted to the Board a document describing such revision and
the Board has approved such revision.
(2) Actions on amendments. Not later than 60 days after a document is
submitted under paragraph (1), the Board shall make a determination (and
notify the State) on whether the implementation of the State system, as
proposed to be revised, meets the applicable requirements of subtitle C.
If the Board fails to meet the requirement of the preceding sentence, the
Board shall be deemed to have approved the implementation of the State
system as proposed to be revised.
(3) Rejection of amendments. Subsection (d) shall apply to an amendment
submitted under this subsection in the same manner as it applies to a
completed document submitted under subsection (b).
(g) Notification of Non-Participating States. If a State fails to submit
a document for a State system by the deadline referred to in section 1200,
or such a document is not approved under subsection (c), the Board shall
immediately notify the Secretary of Health and Human Services and the
Secretary of the Treasury of the State's failure for purposes of applying
subpart B in that State.
SEC. 1512. FAILURE OF PARTICIPATING STATES TO MEET CONDITIONS FOR
COMPLIANCE.
(a) In General. In the case of a participating State, if the Board
determines that the operation of the State system under subtitle C fails to
meet the applicable requirements of this Act, sanctions shall apply against
the State in accordance with subsection (b).
(b) Type of Sanction Applicable. The sanctions applicable under this part
are as follows:
(1) If the Board determines that the State's failure does not
substantially jeopardize the ability of eligible individuals in the State
to obtain coverage for the comprehensive benefit package
(A) the Board may order a regional alliance in the State to comply
with applicable requirements of this Act and take such additional
measures to assure compliance with such requirements as the Board may
impose, if the Board determines that the State's failure relates to a
requirement applicable to a regional alliance in the State, or
(B) if the Board does not take the action described in subparagraph
(A) (or if the Board takes the action and determines that the action
has not remedied the violation that led to the imposition of the
sanction), the Board shall notify the Secretary of Health and Human
Services, who shall reduce payments with respect to the State in
accordance with section 1513.
(2) If the Board determines that the failure substantially jeopardizes
the ability of eligible individuals in the State to obtain coverage for
the comprehensive benefit package
(A) the Board shall terminate its approval of the State system; and
(B) the Board shall notify the Secretary of Health and Human
Services, who shall assume the responsibilities described in section
1522.
(c) Termination of Sanction.
(1) Compliance by State. A State against which a sanction is imposed
may submit information at any time to the Board to demonstrate that the
failure that led to the imposition of the sanction has been corrected.
(2) Termination of sanction. If the Board determines that the failure
that led to the imposition of a sanction has been corrected
(A) in the case of the sanction described in subsection (b)(1)(A),
the Board shall notify the regional alliance against which the sanction
is imposed; or
(B) in the case of any other sanction described in subsection (b),
the Board shall notify the Secretary of Health and Human Services.
(d) Protection of Access to Benefits. The Board and the Secretary of
Health and Human Services shall exercise authority to take actions under
this section with respect to a State only in a manner that assures the
continuous coverage of eligible individuals under regional alliance health
plans.
SEC. 1513. REDUCTION IN PAYMENTS FOR HEALTH PROGRAMS BY SECRETARY OF
HEALTH AND
HUMAN SERVICES.
(a) In General. Upon receiving notice from the Board under section
1512(b)(1)(B), the Secretary of Health and Human Services shall reduce the
amount of any of the payments described in subsection (b) that would
otherwise be made to individuals and entities in the State by such amount
as the Secretary determines to be appropriate.
(b) Payments Described. The payments described in this subsection are as
follows:
(1) Payments to academic health centers in the State under subtitle B
of title III for medical education training programs funds.
(2) Payments to individuals and entities in the State for health
research activities under section 301 and title IV of the Public Health
Service Act.
(3) Payments to hospitals in the State under part 4 of subtitle E of
title III (relating to payments to hospitals serving vulnerable
populations)
SEC. 1514. REVIEW OF FEDERAL DETERMINATIONS.
Any State or alliance affected by a determination by the Board under
this subpart may appeal such determination in accordance with section
5231.
SEC. 1515. FEDERAL SUPPORT FOR STATE IMPLEMENTATION.
(a) Planning Grants.
(1) In general. Not later than 90 days after the date of the enactment
of this Act, the Secretary shall make available to each State a planning
grant to assist a State in the development of a health care system to
become a participating State under subtitle C.
(2) Formula. The Secretary shall establish a formula for the
distribution of funds made available under this subsection.
(3) Authorization of appropriations. There are authorized to be
appropriated $50,000,000 in each of fiscal years 1995 and 1996.
(b) Grants for Start-up Support.
(1) In general. The Secretary shall make available to States, upon
their enacting of enabling legislation to become participating States,
grants to assist in the establishment of regional alliances.
(2) Formula. The Secretary shall establish a formula for the
distribution of funds made available under this subsection.
(3) State matching funds required. Funds are payable to a State under
this subsection only if the State provides assurances, satisfactory to
the Secretary, that amounts of State funds (at least equal to the amount
made available under this subsection) are expended for the purposes
described in paragraph (1).
(4) Authorization of appropriations. There are authorized to be
appropriated $313,000,000 for fiscal year 1996, $625,000,000 for fiscal
year 1997, and $313,000,000 for fiscal year 1998.
(c) Formula.
(1) In general. The Board shall develop a formula for the distribution
of
Subpart C. Responsibilities in Absence of State Systems
SEC. 1521. APPLICATION OF SUBPART.
(a) Initial Application. This subpart shall apply with respect to a State
as of January 1, 1998, unless
(1) the State submits a document for a State system under section
1511(a)(1) by July 1, 1997, and
(2) the Board determines under section 1511 that such system meets the
requirements of part 1 of subtitle C.
(b) Termination of Approval of System of Participating State. In the case
of a participating State for which the Board terminates approval of the
State system under section 1512(2), this subpart shall apply with respect
to the State as of such date as is appropriate to assure the continuity of
coverage for the comprehensive benefit package for eligible individuals in
the State.
SEC. 1522. FEDERAL ASSUMPTION OF RESPONSIBILITIES IN NON-PARTICIPATING
STATES.
(a) Notice. When the Board determines that this subpart will apply to a
State for a calendar year, the Board shall notify the Secretary of Health
and Human Services.
(b) Establishment of Regional Alliance System. Upon receiving notice
under subsection (a), the Secretary shall take such steps, including the
establishment of regional alliances, and compliance with other requirements
applicable to participating States under subtitle C, as are necessary to
ensure that the comprehensive benefit package is provided to eligible
individuals in the State during the year.
(c) Requirements for Alliances. Subject to section 1523, any regional
alliance established by the Secretary pursuant to this section must meet
all the requirements applicable under subtitle D to a regional alliance
established and operated by a participating State, and the Secretary shall
have the authority to fulfill all the functions of such an alliance.
(d) Establishment of Guaranty Fund.
(1) Establishment. The Secretary must ensure that there is a guaranty
fund that meets the requirements established by the Board under section
1562, in order to provide financial protection to health care providers
and others in the case of a failure of a regional alliance health plan
under a regional alliance established and operated by the Secretary under
this section.
(2) Assessments to provide guaranty funds. In the case of a failure of
one or more regional alliance health plans under a regional alliance
established and operated by the Secretary under this section, the
Secretary may require each regional alliance health plan under the
alliance to pay an assessment to the Secretary in an amount not to exceed
2 percent of the premiums of such plans paid by or on behalf of regional
alliance eligible individuals during a year for so long as necessary to
generate sufficient revenue to cover any outstanding claims against the
failed plan.
SEC. 1523. IMPOSITION OF SURCHARGE ON PREMIUMS UNDER
FEDERALLY-OPERATED SYSTEM.
(a) In General. If this subpart applies to a State for a calendar year,
the premiums charged under the regional alliance established and operated
by the Secretary in the State shall be equal to premiums that would
otherwise be charged under a regional alliance established and operated by
the State, increased by 15 percent. Such 15 percent increase shall be used
to reimburse the Secretary for any administrative or other expenses
incurred as a result of establishing and operating the system.
(b) Treatment of Surcharge as Part of Premium. For purposes of
determining the compliance of a State for which this subpart applies in a
year with the requirements for budgeting under subtitle A of title VI for
the year, the 15 percent increase described in subsection (a) shall be
treated as part of the premium for payment to a regional alliance.
SEC. 1524. RETURN TO STATE OPERATION.
(a) Application Process. After the establishment and operation of an
alliance system by the Secretary in a State under section 1522, the State
may at any time apply to the Board for the approval of a State system in
accordance with the procedures described in section 1511.
(b) Timing. If the Board approves the system of a State for which the
Secretary has operated an alliance system during a year, the Secretary
shall terminate the operation of the system, and the State shall establish
and operate its approved system, as of January 1 of the first year
beginning after the Board approves the State system. The termination of the
Secretary's system and the operation of the State's system shall be
conducted in a manner that assures the continuous coverage of eligible
individuals in the State under regional alliance health plans.
Subpart D. Establishment of Class Factors for Charging Premiums
SEC. 1531. PREMIUM CLASS FACTORS.
(a) In General. For each of the classes of family enrollment (as
specified in section 1011(c)), for purposes of title VI, the Board shall
establish a premium class factor that reflects, subject to subsection (b),
the relative actuarial value of the comprehensive benefit package of the
class of family enrollment compared to such value of such package for
individual enrollment.
(b) Conditions. In establishing such factors, the factor for the class of
individual enrollment shall be 1 and the factor for the class of family
enrollment of coverage of a married couple without children shall be 2.
Subpart E. Risk Adjustment and Reinsurance Methodology for Payment of Plans
SEC. 1541. DEVELOPMENT OF A RISK ADJUSTMENT AND REINSURANCE
METHODOLOGY.
(a) Development.
(1) Initial development. Not later than April 1, 1995, the Board shall
develop a risk adjustment and reinsurance methodology in accordance with
this subpart.
(2) Improvements. The Board shall make such improvements in such
methodology as may be appropriate to achieve the purposes described in
subsection (b)(1).
(b) Methodology.
(1) Purposes. Such methodology shall provide for the adjustment of
payments to regional alliance health plans for the purposes of
(A) assuring that payments to such plans reflect the expected
relative utilization and expenditures for such services by each plan's
enrollees compared to the average utilization and expenditures for
regional alliance eligible individuals, and
(B) protecting health plans that enroll a disproportionate share of
regional alliance eligible individuals with respect to whom expected
utilization of health care services (included in the comprehensive
benefit package) and expected health care expenditures for such
services are greater than the average level of such utilization and
expenditures for regional alliance eligible individuals.
(2) Factors to be considered. In developing such methodology, the Board
shall take into account the following factors:
(A) Demographic characteristics.
(B) Health status.
(C) Geographic area of residence.
(D) Socio-economic status.
(E) Subject to paragraph (5), (i) the proportion of enrollees who are
SSI recipients and (ii) the proportion of enrollees who are AFDC
recipients.
(F) Any other factors determined by the Board to be material to the
purposes described in paragraph (1).
(3) Zero sum. The methodology shall assure that the total payments to
health plans by the regional alliance after application of the
methodology are the same as the amount of payments that would have been
made without application of the methodology.
(4) Prospective adjustment of payments . The methodology, to the extent
possible and except in the case of a mandatory reinsurance system
described in subsection (b), shall be applied in manner that provides for
the prospective adjustment of payments to health plans.
(5) Treatment of ssi/afdc adjustment. The Board is not required to
apply the factor described in clause (i) or (ii) of paragraph (2)(E) if
the Board determines that the application of the other risk adjustment
factors described in paragraph (2) is sufficient to adjust premiums to
take into account the enrollment in plans of AFDC recipients and SSI
recipients.
(6) Special consideration for mental illness. In developing the
methodology under this section, the Board shall give consideration to the
unique problems of adjusting payments to health plans with respect to
individuals with mental illness.
(7) Special consideration for veterans, military, and indian health
plans. In developing the methodology under this section, the Board shall
give consideration to the special enrollment and funding provisions
relating to plans described in section 1004(b).
(8) Adjustment to account for use of estimates. Subject to section
1346(b)(3) (relating to establishment of regional alliance reserve
funds), if the total payments made by a regional alliance to all regional
alliance health plans in a year under section 1324(c) exceeds, or is less
than, the total of such payments estimated by the alliance in the
application of the methodology under this subsection, because of a
difference between
(A) the alliance's estimate of the distribution of enrolled families
in different risk categories (assumed in the application of risk
factors under this subsection in making payments to regional alliance
health plans), and
(B) the actual distribution of such enrolled families in such
categories,
the methodology under this subsection shall provide for an adjustment
in the application of such methodology in the second succeeding year in
a manner that would reduce, or increase, respectively, by the amount of
such excess (or deficit) the total of such payments made by the
alliance to all such plans.
(b) Mandatory Reinsurance.
(1) In general. The methodology developed under this section may
include a system of mandatory reinsurance, but may not include a system
of voluntary reinsurance.
(2) Requirement in certain cases. If the Board determines that an
adequate system of prospective adjustment of payments to health plans to
account for the health status of individuals enrolled by regional
alliance health plans cannot be developed (and ready for implementation)
by the date specified in subsection (a)(1), the Board shall include a
mandatory reinsurance system as a component of the methodology. The Board
may thereafter reduce or eliminate such a system at such time as the
Board determines that an adequate prospective payment adjustment for
health status has been developed and is ready for implementation.
(3) Reinsurance system. The Board, in developing the methodology for a
mandatory reinsurance system under this subsection, shall
(A) provide for health plans to make payments to state-established
reinsurance programs for the purpose of reinsuring part or all of the
health care expenses for items and services included in the
comprehensive benefit package for specified classes of high-cost
enrollees or specified high-cost treatments or diagnoses; and
(B) specify the manner of creation, structure, and operation of the
system in each State, including
(i) the manner (which may be prospective or retrospective) in which
health plans make payments to the system, and
(ii) the type and level of reinsurance coverage provided by the
system.
(c) Confidentiality of Information. The methodology shall be developed in
a manner consistent with privacy standards promulgated under section
5102(a). In developing such standards, the Board shall take into account
any potential need of alliances for certain individually identifiable
health information in order to carry out risk-adjustment and reinsurance
activities under this Act, but only to the minimum extent necessary to
carry out such activities and with protections provided to minimize the
identification of the individuals to whom the information relates.
SEC. 1542. INCENTIVES TO ENROLL DISADVANTAGED GROUPS.
The Board shall establish standards under which States may provide (under
section 1203(e)(3)) for an adjustment in the risk-adjustment methodology
developed under section 1541 in order to provide a financial incentive for
regional alliance health plans to enroll individuals who are members of
disadvantaged groups.
SEC. 1543. ADVISORY COMMITTEE.
(a) In General. The Board shall establish an advisory committee to
provide technical advice and recommendations regarding the development and
modification of the risk adjustment and reinsurance methodology developed
under this part.
(b) Composition. Such advisory committee shall consist of 15 individuals
and shall include individuals who are representative of health plans,
regional alliances, consumers, experts, employers, and health providers.
SEC. 1544. RESEARCH AND DEMONSTRATIONS.
The Secretary shall conduct and support research and demonstration
projects to develop and improve, on a continuing basis, the risk adjustment
and reinsurance methodology under this subpart.
SEC. 1545. TECHNICAL ASSISTANCE TO STATES AND ALLIANCES.
The Board shall provide technical assistance to States and regional
alliances in implementing the methodology developed under this subpart.
Subpart F. Responsibilities for Financial Requirements
SEC. 1551. CAPITAL STANDARDS FOR REGIONAL ALLIANCE HEALTH PLAN.
(a) In General. The Board shall establish, in consultation with the
States, minimum capital requirements for regional alliance health plans,
for purposes of section 1203(c).
(b) $500,000 Minimum. Subject to paragraph (3), under such requirements
there shall be not less than $500,000 of capital maintained for each plan
offered in each alliance area, regardless of whether or not the same
sponsor offered more than one of such plans.
(c) Additional Capital Requirements. The Board may require additional
capital for factors likely to affect the financial stability of health
plans, including the following:
(1) Projected plan enrollment and number of providers participating in
the plan.
(2) Market share and strength of competition.
(3) Extent and nature of risk-sharing with participating providers and
the financial stability of risk-sharing providers.
(4) Prior performance of the plan, risk history, and liquidity of
assets.
(d) Development of Standards by NAIC. The Board may request the National
Association of Insurance Commissioners to develop model standards for the
additional capital requirements described in subsection (c) and to present
such standards to the Board not later than July 1, 1995. The Board may
accept such standards as the standards to be applied under subsection (c)
or modify the standards in any manner it finds appropriate.
SEC. 1552. STANDARD FOR GUARANTY FUNDS.
(a) In General. In consultation with the States, the Board shall
establish standards for guaranty funds established by States under section
1204(c).
(b) Guaranty Fund Standards. The standards established under subsection
(a) for a guaranty fund shall include the following:
(1) Each fund must have a method to generate sufficient resources to
pay health providers and others in the case of a failure of a health plan
(as described in section 1204(d)(4)) in order to meet obligations with
respect to
(A) services rendered by the health plan for the comprehensive
benefit package, including any supplemental coverage for cost sharing
provided by the health plan, and
(B) services rendered prior to health plan insolvency and services to
patients after the insolvency but prior to their enrollment in other
health plans.
(2) The fund is liable for all claims against the plan by health care
providers with respect to their provision of items and services covered
under the comprehensive benefit package to enrollees of the failed plan.
Such claims, in full, shall take priority over all other claims. The fund
also is liable, to the extent and in the manner provided in accordance
with rules established by the Board, for other claims, including other
claims of such providers and the claims of contractors, employees,
governments, or any other claimants.
(3) The fund stands as a creditor for any payments owed the plan to the
extent of the payments made by the fund for obligations of the plan.
(4) The fund has authority to borrow against future assessments
(payable under section 1204(c)(2)) in order to meet the obligations of
failed plans participating in the fund.
Part 2. RESPONSIBILITIES OF DEPARTMENT OF HEALTH AND HUMAN SERVICES
Subpart A. General Responsibilities
SEC. 1571. GENERAL RESPONSIBILITIES OF SECRETARY OF HEALTH AND HUMAN
SERVICES.
(a) In General. Except as otherwise specifically provided under this Act
(or with respect to administration of provisions in the Internal Revenue
Code of 1986 or in the Employee Retirement Income Security Act of 1974),
the Secretary of Health and Human Services shall administer and implement
all of the provisions of this Act, except those duties delegated to the
National Health Board, any other executive agency, or to any State.
(b) Financial Management Standards. The Secretary, in consultation with
the Secretaries of Labor and the Treasury, shall establish, for purposes of
section 1361, standards relating to the management of finances, maintenance
of records, accounting practices, auditing procedures, and financial
reporting for health alliances. Such standards shall take into account
current Federal laws and regulations relating to fiduciary responsibilities
and financial management of funds.
(c) Auditing Regional Alliance Performance. The Secretary shall perform
periodic financial and other audits of regional alliances to assure that
such alliances are carrying out their responsibilities under this Act
consistent with this Act. Such audits shall include audits of alliance
performance in the areas of
(1) assuring enrollment of all regional alliance eligible individuals
in health plans,
(2) management of premium and cost sharing discounts and reductions
provided; and
(3) financial management of the alliance, including allocation of
collection shortfalls.
SEC. 1572. ADVISORY COUNCIL ON BREAKTHROUGH DRUGS.
(a) In General. The Secretary shall appoint an Advisory Council on
Breakthrough Drugs (in this section referred to as the ``Council'') that
will examine the reasonableness of launch prices of new drugs that
represent a breakthrough or significant advance over existing therapies.
(b) Duties. (1) At the request of the Secretary, or a member of the
Council, the Council shall make a determination regarding the
reasonableness of launch prices of a breakthrough drug. Such a
determination shall be based on:
(A) prices of other drugs in the same therapeutic class;
(B) cost information supplied by the manufacturer;
(C) prices of the drug in countries specified in section 302(b)(4)(A)
of the Federal Food, Drug, and Cosmetic Act; and
(D) projected prescription volume, economies of scale, product
stability, special manufacturing requirements and research costs.
(2) The Secretary shall review the determinations of the Council and
publish the results of such review along with the Council's determination
(including minority opinions) as a notice in the Federal Register.
(c) Membership. The Council shall consist of a chair and 12 other
persons, appointed without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service. The Council
shall include a representative from the pharmaceutical industry, consumer
organizations, physician organizations, the hospital industry, and the
managed care industry. Other individuals appointed by the Secretary shall
be recognized experts in the fields of health care economics, pharmacology,
pharmacy and prescription drug reimbursement. Only one member of the
Council may have direct or indirect financial ties to the pharmaceutical
industry.
(d) Term of Appointments. Appointments shall be for a term of 3 years,
except that the Secretary may provide initially for such shorter terms as
will ensure that the terms of not more than 5 members expire in any one
year.
(e) Compensation. Members of the Council shall be entitled to receive
reimbursement of expenses and per diem in lieu of subsistence in the same
manner as other members of advisory councils appointed by the Secretary are
provided such reimbursements under the Social Security Act.
(f) No Termination. Notwithstanding the provisions of the Federal
Advisory Committee Act, the Council shall continue in existence until
otherwise specified in law.
Subpart B. Certification of Essential Community Providers
SEC. 1581. CERTIFICATION.
(a) In General. For purposes of this Act, the Secretary shall certify as
an ``essential community provider'' any health care provider or
organization that
(1) is within any of the categories of providers and organizations
specified in section 1582(a), or
(2) meets the standards for certification under section 1583(a).
(b) Timely Establishment of Process. The Secretary shall take such
actions as may be necessary to permit health care providers and
organizations to be certified as essential community providers in a State
before the beginning of the first year for the State.
SEC. 1582. CATEGORIES OF PROVIDERS AUTOMATICALLY CERTIFIED.
(a) In General. The categories of providers and organizations described
in this subsection are as follows:
(1) Migrant health centers. A recipient or subrecipient of a grant
under section 329 of the Public Health Service Act.
(2) Community health centers. A recipient or subrecipient of a grant
under section 330 of the Public Health Service Act.
(3) Homeless program providers. A recipient or subrecipient of a grant
under section 340 of the Public Health Service Act.
(4) Public housing providers. A recipient or subrecipient of a grant
under section 340A of the Public Health Service Act.
(5) Family planning clinics. A recipient or subrecipient of a grant
under title X of the Public Health Service Act.
(6) Indian health programs. A service unit of the Indian Health
Service, a tribal organization, or an urban Indian program, as defined in
the Indian Health Care Improvement Act.
(7) AIDS providers under ryan white act. A public or private nonprofit
health care provider that is a recipient or subrecipient of a grant under
title XXIII of the Public Health Service Act.
(8) Maternal and child health providers. A public or private nonprofit
entity that provides prenatal care, pediatric care, or ambulatory
services to children, including children with special health care needs,
and that receives funding for such care or services under title V of the
Social Security Act.
(9) Federally qualified health center; rural health clinic. A
Federally-qualified health center or a rural health clinic (as such terms
are defined in section 1861(aa) of the Social Security Act.
(10) Provider of school health services. A provider of school health
services that receives funding for such services under subtitle G of
title III.
(11) Community practice network. A community practice networking
receiving development funds under subtitle E of title III.
(b) Subrecipient Defined. In this subpart, the term ``subrecipient''
means, with respect to a recipient of a grant under a particular authority,
an entity that
(1) is receiving funding from such a grant under a contract with the
principal recipient of such a grant, and
(2) meets the requirements established to be a recipient of such a
grant.
(c) Health Professional Defined. In this subpart, the term ``health
professional'' means a physician, nurse, nurse practitioner, certified
nurse midwife, physician assistant, psychologist, dentist, pharmacist, and
other health care professional recognized by the Secretary.
SEC. .
(a) Standards. The Secretary shall publish standards for the
certification of additional categories of health care providers and
organizations as essential community providers, including the categories
described in subsection (b). Such a health care provider or organization
shall not be certified unless the Secretary determines, under such
standards, that health plans operating in the area served by the applicant
would not be able to assure adequate access to items and services included
in the comprehensive benefit package.
(b) Categories To Be Included. The categories described in this
subsection are as follows:
(1) Health professionals. Health professionals
(A) located in an area designated as a health professional shortage
area (under section 332 of the Public Health Service Act), or
(B) providing a substantial amount of health services (as determined
in accordance with standards established by the Secretary) to a
medically underserved population (as designated under section 330 of
such Act).
(2) Institutional providers. Public and private nonprofit hospitals and
other institutional health care providers located in such an area or
providing health services to such a population.
(3) Other providers. Other public and private nonprofit agencies and
organizations that
(A) are located in such an area or providing health services to such
a population, and
(B) provide health care and services essential to residents of such
an area or such populations.
SEC. 1584. CERTIFICATION PROCESS; REVIEW; TERMINATION OF CERTIFICATIONS.
(a) Certification Process.
(1) Publication of procedures. The Secretary shall publish, not later
than 6 months after the date of the enactment of this Act, the procedures
to be used by health care professionals, providers, agencies, and
organizations seeking certification under this subpart, including the
form and manner in which an application for such certification is to be
made.
(2) Timely determination. The Secretary shall make a determination upon
such an application not later than 60 days (or 15 days in the case of a
certification for an entity described in section 1582) after the date the
complete application has been submitted. The determination on an
application for certification of an entity described in section 1582
shall only involve the verification that the entity is an entity
described in such section.
(b) Review of Certifications. The Secretary shall periodically review
whether professionals, providers, agencies, and organizations certified
under this subpart continue to meet the requirements for such
certification.
(c) Termination or Denial of Certification.
(1) Preliminary finding. If the Secretary preliminarily finds that an
entity seeking certification under this section does not meet the
requirements for such certification or such an entity certified under
this subpart fails to continue to meet the requirements for such
certification, the Secretary shall notify the entity of such preliminary
finding and permit the entity an opportunity, under subtitle E of title
V, to rebut such findings.
(2) Final determination. If, after such opportunity, the Secretary
continues to find that such an entity continues to fail to meet such
requirements, the Secretary shall terminate the certification and shall
notify the entity, regional alliances, and corporate alliances of such
termination and the effective date of the termination.
SEC. 1585. NOTIFICATION OF HEALTH ALLIANCES AND PARTICIPATING STATES.
(a) In General. Not less often than annually the Secretary shall notify
each participating State and each health alliance of essential community
providers that have been certified under this subpart.
(b) Contents. Such notice shall include sufficient information to permit
each health alliance to notify health plans of the identify of each entity
certified as an essential community provider, including
(1) the location of the provider within each plan's service area,
(2) the health services furnished by the provider, and
(3) other information necessary for health plans to carry out part 3 of
subtitle E.
Part 3. SPECIFIC RESPONSIBILITIES OF SECRETARY OF LABOR.
SEC. 1591. RESPONSIBILITIES OF SECRETARY OF LABOR.
(a) In General. The Secretary of Labor is responsible
(1) under subtitle D of title I, for the enforcement of requirements
applicable to employers under regional health alliances (including
requirements relating to payment of premiums) and the administration of
corporate health alliances;
(2) under subtitle E of title I, with respect to elections by eligible
sponsors to become corporate alliances and the termination of such
elections;
(3) under section 1395, for the temporary assumption of the operation
of self-insured corporate alliance health plans that are insolvent;
(4) under section 1396, for the establishment and administration of
Corporate Alliance Health Plan Insolvency Fund;
(5) for carrying out any other responsibilities assigned to the
Secretary under this Act; and
(6) for administering title I of the Employee Retirement Income
Security Act of 1974 as it relates to group health plans maintained by
corporate alliances.
(b) Agreements with States. The Secretary of Labor may enter into
agreements with States in order to enforce responsibilities of employers
and corporate alliances, and requirements of corporate alliance health
plans, under subtitle B of title I of the Employee Retirement Income
Security Act of 1974.
(c) Consultation with Board. In carrying out activities under this Act
with respect to corporate alliances, corporate alliance health plans, and
employers, the Secretary of Labor shall consult with the National Health
Board.
(d) Employer-Related Requirements.
(1) In general. The Secretary of Labor, in consultation with the
Secretary, shall be responsible for assuring that employers
(A) make payments of any employer premiums (and withhold and make
payment of the family share of premiums with respect to qualifying
employees) as required under this Act, including auditing of regional
alliance collection activities with respect to such payments,
(B) submit timely reports as required under this Act, and
(C) otherwise comply with requirements imposed on employers under
this Act.
(2) Audit and similar authorities. The Secretary of Labor
(A) may carry out such audits (directly or through contract) and such
investigations of employers and health alliances,
(B) may exercise such authorities under section 504 of Employee
Retirement Income Security Act of 1974 (in relation to activities under
this Act),
(C) may, with the permission of the Board, provide (through contract
or otherwise) for such collection activities (in relation to amounts
owed to regional alliances and for the benefit of such alliances), and
(D) may impose such civil penalties under section 1347(c),
as may be necessary to carry out such Secretary's responsibilities
under this section.
(e) Authority. The Secretary of Labor is authorized to issue such
regulations as may be necessary to carry out responsibilities of the
Secretary under this Act.
Subtitle G. Employer Responsibilities
SEC. 1601. PAYMENT REQUIREMENT.
(a) In General. Each employer shall provide for payments required under
section 6121 or 6131 in accordance with the applicable provisions of this
Act.
(b) Employers in Single-Payer States. In the case of an employer with
respect to employees who reside in a single-payer State, the
responsibilities of such employer under such system shall supersede the
obligations of the employer under subsection (a), except as the Board may
provide.
SEC. 1602. REQUIREMENT FOR INFORMATION REPORTING.
(a) Reporting of End-of-Year Information to Qualifying Employees.
(1) In general. Each employer shall provide to each individual who was
a qualifying employee of the employer during any month in the previous
year information described in paragraph (2) with respect to the employee.
(2) Information to be supplied. The information described in this
paragraph, with respect to a qualifying employee, is the following (as
specified by the Secretary):
(A) Regional alliance information. With respect to each regional
alliance through which the individual obtained health coverage:
(i) The total number of months of full-time equivalent employment
(as determined for purposes of section 6121(d)) for each class of
enrollment.
(ii) The amount of wages attributable to qualified employment and
the amount of covered wages (as defined in paragraph (4)).
(iii) The total amount deducted from wages and paid for the family
share of the premium.
(iv) Such other information as the Secretary of Labor may specify.
(B) Corporate alliance information. With respect to a qualifying
employee who obtains coverage through a corporate alliance health plan:
(i) The total number of months of full-time equivalent employees
(as determined under section 1901(b)(2)) for each class of
enrollment.
(ii) Such other information as the Secretary of Labor may specify.
(3) Alliance specific information. In the case of a qualifying employee
with respect to whom an employer made employer premium payments during
the year to more than one regional alliance, the information under this
subsection shall be reported separately with respect to each such
alliance.
(4) Covered wages defined. In this section, the term ``covered wages''
means wages paid an employee of an employer during a month in which the
employee was a qualifying employee of the employer.
(b) Reporting of Information for Use of Regional Alliances.
(1) In general. Each employer (including corporate alliance employers)
shall provide under subsection (f) on behalf of each regional alliance
information described in paragraph (2) on an annual basis, information
described in paragraph (3) on a monthly basis, and information described
in paragraph (4) on a one-time basis, with respect to the employment of
qualified employees in each year, month, or other time, respectively.
(2) Information to be supplied on an annual basis. The information
described in this paragraph, with respect to an employer, is the
following (as specified by the Secretary of Labor).
(A) Regional alliance information. With respect to each regional
alliance to which employer premium payments were payable in the year:
(i) For each qualifying employee in the year
(I) The total number of months of full-time equivalent employment (as
determined for purposes of section 6121(d)) for the employee for each
class of enrollment.
(II) The total amount deducted from wages and paid for the family
share of the premium of the qualifying employee.
(ii) The total employer premium payment made under section 6121 for
the year with respect to the employment of all qualifying employees
residing in the alliance area and, in the case of an employer that
has obtained (or seeks to obtain) a premium discount under section
6123, the total employer premium payment that would have been owed
for such employment for the year but for such section.
(iii) The number of full-time equivalent employees (determined
under section 6121(d)) for each class of family enrollment in the
year (and for each month in the year in the case of an employer that
has obtained or is seeking a premium discount under section 6123).
(iv) In the case of an employer to which section 6124 applies in a
year, such additional information as the Secretary of Labor may
require for purposes of that section.
(v) The amounts paid (and payable) pursuant to section 6125.
(vi) The amount of covered wages for each qualified employee.
(3) Information on a monthly basis.
(A) In general. The information described in this paragraph for a
month for an employer is such information as the Secretary of Labor may
specify regarding
(i) the identity of each eligible individual who changed qualifying
employee status with respect to the employer in the month; and
(ii) in the case of such an individual described in subparagraph
(B)(i)
(I) the regional alliance for the alliance area in which the
individual resides, and
(II) the individual's class of family enrollment.
(B) Changes in qualifying employee status described. For purposes of
subparagraph (A), an individual is considered to have changed
qualifying employee status in a month if the individual either (i) is a
qualifying employee of the employer in the month and was not a
qualifying employee of the employer in the previous month, or (ii) is
not a qualifying employee of the employer in the month but was a
qualifying employee of the employer in the previous month.
(4) Initial information. Each employer, at such time before the first
year in which qualifying employees of the employer are enrolled in
regional alliance health plans as the Board may specify, shall provide
for the reporting of such information relating to employment of eligible
individuals as the Board may specify.
(c) Reconciliation of Employer Premium Payments.
(1) Provision of information. Each employer (whether or not the
employer claimed (or claims) an employer premium discount under section
6123 for a year) that is liable for employer premium payments to a
regional alliance for any month in a year shall provide the alliance with
such information as the alliance may require (consistent with rules of
the Secretary of Labor) to determine the appropriate amount of employer
premium payments that should have been made for all months in the year
(taking into account any employer premium discount under section 6123 for
the employer).
(2) Deadline. Such information shall be provided not later than the
beginning of February of the following year with the payment to be made
for that month.
(3) Reconciliation.
(A) Continuing employers. Based on such information, the employer
shall adjust the amount of employer premium payment made in the month
in which the information is provided to reflect the amount by which the
payments in the previous year were greater or less than the amount of
payments that should have been made.
(B) Discontinuing employers. In the case of a person that ceases to
be an employer in a year, such adjustment shall be made in the form of
a payment to, or from, the alliance involved.
(4) Special treatment of self-employed individuals. Except as the
Secretary of Labor may provide, individuals who are employers only be
virtue of the operation of section 6126 shall have employer premium
payments attributable to such section reconciled (in the manner
previously described in this subsection) under the process for the
collection of the family share of premiums under section 1344 rather than
under this subsection.
(d) Special Rules for Self-Employed.
(1) In general. In the case of an individual who is treated as an
employer under section 6126, the individual shall provide, under
subsection (f) on behalf of each regional alliance, information described
in paragraph (2) with respect to net earnings from self-employment income
of the individual in each year.
(2) Information to be supplied. The information described in this
paragraph, with respect to an individual, is such information as may be
necessary to compute the amount payable under section 6131 by virtue of
section 6126.
(e) Form. Information shall be provided under this subsection in such
electronic or other form as the Secretary specifies. Such specifications
shall be done in a manner that, to the maximum extent practicable,
simplifies administration for small employers.
(f) Information Clearinghouse Functions.
(1) Designation. The Board shall provide for the use of the regional
centers (which are part of the electronic data network under section
5103) to perform information clearinghouse functions under this section
with respect to employers and regional and corporate alliances.
(2) Functions. The functions referred to in paragraph (1) shall include
(A) receipt of information submitted by employers under subsection
(b) on an annual (or one-time) basis,
(B) from the information received, transmittal of information
required to regional alliances,
(C) such other functions as the Board specifies.
(g) Deadline. Information required to be provided by an employer for a
year under this section
(1) to a qualifying employee shall be provided not later than the date
the employer is required under law to provide for statements under
section 6051 of the Internal Revenue Code of 1986 for that year, or
(2) to a health alliance (through a regional center) shall be provided
not later than the date by which information is required to be filed with
the Secretary pursuant to agreements under section 232 of the Social
Security Act for that year.
(h) Notice to Certain Individuals Who Are Not Employees.
(1) In general. A person that carries on a trade or business shall
notify in writing each individual described in paragraph (2) that the
person is not obligated to make any employer health care premium payment
(under section 6121) in relation to the services performed by the
individual for the person.
(2) Individual described. An individual described in this paragraph,
with respect to a person, is an individual who normally performs services
for the person in the person's trade or business for more than 40 hours
per month but who is not an employee of the person (within the meaning of
section 1901(a)).
(3) Timing; effective date. Such notice shall be provided within a
reasonable time after the individual begins performing services for the
person, except that in no event is such a notice required to be provided
with respect to services performed before January 1, 1998.
(4) Exceptions. The Secretary shall issue regulations providing
exceptions to the notice requirement of paragraph (1) with respect to
individuals performing services on an irregular, incidental, or casual
basis.
(5) Model notice. The Secretary shall publish a model notice that is
easily understood by the average reader and that persons may use to
satisfy the requirements of paragraph (1).
SEC. 1603. REQUIREMENTS RELATING TO NEW EMPLOYEES.
(a) Completion of Enrollment Information Form. At the time an individual
is hired as a qualifying employee of a regional alliance employer, the
employer shall obtain from the individual the following information
(pursuant to rules established by the Secretary of Labor):
(1) The identity of the individual.
(2) The individual's alliance area of residence and whether the
individual has moved from another alliance area.
(3) The class of family enrollment applicable to the individual.
(4) The health plan (and health alliance) in which the individual is
enrolled at that time.
(5) If the individual has moved from another alliance area, whether the
individual intends to enroll in a regional alliance health plan.
(b) Transmittal of Information to Alliance.
(1) In general. Each employer shall transmit the information obtained
under subsection (a) to the regional alliance for the alliance area in
which the qualifying employee resides (or will reside at the time of
initial employment).
(2) Deadline. Such information shall be transmitted within 30 days of
the date of hiring of the employee.
(3) Form. Information under this section may be forwarded in electronic
form to a regional alliance.
(c) Provision of Enrollment Form and Information. In the case of an
individual described in subsection (a)(5), the employer shall provide the
individual, at the time of hiring, with
(1) such information regarding the choice of, and enrollment in,
regional alliance health plans, and
(2) such enrollment form,
as the regional alliance provides to the employer.
SEC. 1604. AUDITING OF RECORDS.
Each regional alliance employer shall maintain such records, and
provide the regional alliance for the area in which the employer
maintains the principal place of employment (as specified by the
Secretary of Labor) with access to such records, as may be necessary to
verify and audit the information reported under this subtitle.
SEC. 1605. PROHIBITION OF CERTAIN EMPLOYER DISCRIMINATION.
No employer may discriminate with respect to an employee on the basis
of the family status of the employee or on the basis of the class of
family enrollment selected with respect to the employee.
SEC. 1606. PROHIBITION ON SELF-FUNDING OF COST SHARING BENEFITS BY
REGIONAL
ALLIANCE EMPLOYERS.
(a) Prohibition. A regional alliance employer (and a corporate alliance
employer with respect to employees who are regional alliance eligible
individuals) may provide benefits to employees that consist of the benefits
included in a cost sharing policy (as defined in section 1421(b)(2)) only
through a contribution toward the purchase of a cost sharing policy which
is funded primarily through insurance.
(b) Individual and Employer Responsibilities. In the case of an
individual who resides in a single-payer State and an employer with respect
to employees who reside in such a State, the responsibilities of such
individual and employer under such system shall supersede the obligations
of the individual and employer under part 2 of this subtitle.
SEC. 1607. EQUAL VOLUNTARY CONTRIBUTION REQUIREMENT.
(a) In General. An employer may not discriminate in the wages or
compensation paid, or other terms or conditions of employment, with respect
to an employee based on the health plan (or premium of such a plan) in
which the employee is enrolled.
(b) Rebate Required in Certain Cases.
(1) In general. Subject to paragraph (3), if
(A) an employer makes available a voluntary premium payment on behalf
of an employee towards the enrollment of the employee in a health plan,
and
(B) the premium for the plan selected is less than the sum of the
amounts of the employer premium payment (required under part 3) and the
voluntary premium payment,
the employer must rebate to the employee an amount equal to the
difference described in subparagraph (B).
(2) Rebates.
(A) In general. Any rebate provided under paragraph (1) shall be
treated, for purposes of the Internal Revenue Code of 1986, as wages
described in section 3121(a) of such Act.
(B) Treatment of multiple full-time employment in a family. In the
case of
(i) an individual who is an employee of more than one employer, or
(ii) a couple for which both spouses are employees,
if more than one employer provides for voluntary premium payments,
the individual or couple may elect to have paragraph (1) applied with
respect to all employment.
(c) Exception for Collective Bargaining Agreement. Subsections (a) and
(b) shall not apply with respect to voluntary employer contributions made
pursuant to a bona fide collective bargaining agreement.
(d) Construction.
(1) Subsection (a) shall not be construed as preventing variations in
net wages of an employee to reflect the family share of premiums for the
health plan selected, so long as any excess employer payments (as defined
in paragraph (2)) are added to the pay of the employee involved.
(2) In paragraph (1), the term ``excess employer payments'' means, with
respect to an employee, the amount by which the voluntary employer
contribution toward health care expenses exceeds the family share of
premium under section 6101(b) for such enrollment.
(e) Voluntary Employer Contribution Defined. In this section, the term
``voluntary employer contribution'' means any payment designed to be used
exclusively (or primarily) towards the cost of the family share of premiums
for a health plan. Such term does not include any employer premiums
required to be paid under part 3 of subtitle B of title VI.
SEC. 1608. ENFORCEMENT.
In the case of a person that violates a requirement of this subtitle, the
Secretary of Labor may impose a civil money penalty, in an amount not to
exceed $10,000, for each violation with respect to each individual.
Subtitle J. General Definitions; Miscellaneous Provisions
Part 1. GENERAL DEFINITIONS
SEC. 1901. DEFINITIONS RELATING TO EMPLOYMENT AND INCOME.
(a) In General. Except as otherwise specifically provided, in this Act
the following definitions and rules apply:
(1) Employer, employee, employment, and wages defined. Except as
provided in this section
(A) the terms ``wages'' and ``employment'' have the meanings given
such terms under section 3121 of the Internal Revenue Code of 1986,
(B) the term ``employee'' hs the meaning given such term under
subtitle C of such Code, and
(C) the term ``employer'' has the same meaning as the term
``employer'' as used in such section.
(2) Exceptions. For purposes of paragraph (1)
(A) Employment.
(i) Employment included. Paragraphs (1), (2), (5), (7) (other than
clauses (i) through (iv) of subparagraph (C) and clauses (i) through
(v) of subparagraph (F)), (8), (9), (10), (11), (13), (15), (18), and
(19) of section 3121(b) of the Internal Revenue Code of 1986 shall
not apply.
(ii) Exclusion of inmates as employees. Employment shall not
include services performed in a penal institution by an inmate
thereof or in a hospital or other health care institution by a
patient thereof.
(B) Wages.
(i) In general. Paragraph (1) of section 3121(a) of the Internal
Revenue Code of 1986 shall not apply.
(ii) Tips not included. The term ``wages'' does not include cash
tips.
(C) Exclusion of employees outside the united states. The term
``employee'' does not include an individual who does not reside in the
United States.
(D) Exclusion of foreign employment. The term ``employee'' does not
include an individual
(i) with respect to service, if the individual is not a citizen or
resident of the United States and the service is performed outside
the United States, or
(ii) with respect to service, if the individual is a citizen or
resident of the United States and the service is performed outside
the United States for an employer other than an American employer (as
defined in section 3121(h) of the Internal Revenue Code of 1986).
(3) Aggregation rules for employers. For purposes of this Act
(A) all employers treated as a single employer under subsection (a)
or (b) of section 52 of the Internal Revenue Code of 1986 shall be
treated as a single employer, and
(B) under regulations of the Secretary of Labor, all employees of
organizations which are under common control with one or more
organizations which are exempt from income tax under subtitle A of the
Internal Revenue Code of 1986 shall be treated as employed by a single
employer.
The regulations prescribed under subparagraph (B) shall be based on
principles similar to the principles which apply to taxable
organizations under subparagraph (A).
(4) Employer premium. The term ``employer premium'' refers to the
premium established and imposed under part 2 of subtitle B of title VI.
(b) Qualifying Employee; Full-Time Employment.
(1) Qualifying employee.
(A) In general. In this Act, the term ``qualifying employee'' means,
with respect to an employer for a month, an employee (other than a
covered child, as defined in subparagraph (C)) who is employed by the
employer for at least 40 hours (as determined under paragraph (3)) in
the month.
(B) No special treatment of medicare beneficiaries, ssi recipients,
afdc recipients, and others. Subparagraph (A) shall apply regardless of
whether or not the qualifying employee is a medicare-eligible
individual, an SSI recipient, an AFDC recipient, an individual
described in section 1004(b), an eligible individual or is authorized
to be so employed.
(C) Covered child defined. In subparagraph (A), the term ``covered
child'' means an eligible individual who is a child and is enrolled
under a health plan as a family member described in section
1011(b)(2)(B).
(2) Full-time equivalent employees; part-time employees.
(A) In general. For purposes of this Act, a qualifying employee who
is employed by an employer
(i) for at least 120 hours in a month, is counted as 1 full-time
equivalent employee for the month and shall be deemed to be employed
on a full-time basis, or
(ii) for at least 40 hours, but less than 120 hours, in a month, is
counted as a fraction of a full-time equivalent employee in the month
equal to the full-time employment ratio (as defined in subparagraph
(B)) for the employee and shall be deemed to be employed on a
part-time basis.
(B) Full-time employment ratio defined. For purposes of this Act, the
term ``full-time employment ratio'' means, with respect to a qualifying
employee of an employer in a month, the lesser of 1 or the ratio of
(i) the number of hours of employment such employee is employed by
such employer for the month (as determined under paragraph (3)), to
(ii) 120 hours.
(C) Full-time employee. For purposes of this Act, the term
``full-time employee'' means, with respect to an employer, an employee
who is employed on a full-time basis (as specified in subparagraph (A))
by the employer.
(3) Hours of employment.
(A) In general. For purposes of this Act, the Board shall specify the
method for computing hours of employment for employees of an employer
consistent with this paragraph. The Board shall take into account rules
used for purposes of applying the Fair Labor Standards Act.
(B) Hourly wage earners. In the case of an individual who receives
compensation (in the form of hourly wages or compensation) for the
performance of services, the individual is considered to be
``employed'' by an employer for an hour if compensation is payable with
respect to that hour of employment, without regard to whether or not
the employee is actually performing services during such hours.
(4) Treatment of salaried employees and employee paid on contingent or
bonus arrangements. In the case of an employee who receives compensation
on a salaried basis or on the basis of a commission (or other contigent
or bonus basis), rather than an hourly, the Board shall establish rules
for the conversion of the compensation to hours of employment, taking
into account the minimum monthly compensation levels for workers employed
on a full-time basis under the Fair Labor Standards Act and other factors
the Board considers relevant.
(c) Definitions Relating to Self-Employment. In this Act:
(1) Net earnings from self-employment. The term ``net earnings from
self-employment'' has the meaning given such term under section 1402(a)
of the Internal Revenue Code of 1986.
(2) Self-employed individual. The term ``self-employed individual''
means, for a year, an individual who has net earnings from
self-employment for the year.
SEC. 1902. OTHER GENERAL DEFINITIONS.
Except as otherwise specifically provided, in this Act the following
definitions apply:
(1) Alien permanently residing in the united states under color of law.
The term ``alien permanently residing in the United States under color of
law'' means an alien lawfully admitted for permanent residence (within
the meaning of section 101(a)(19) of the Immigration and Nationality
Act), and includes any of the following:
(A) An alien who is admitted as a refugee under section 207 of the
Immigration and Nationality Act.
(B) An alien who is granted asylum under section 208 of such Act.
(C) An alien whose deportation is withheld under section 243(h) of
such Act.
(D) An alien who is admitted for temporary residence under section
210, 210A, or 245A of such Act.
(E) An alien who has been paroled into the United States under
section 212(d)(5) of such Act for an indefinite period or who has been
granted extended voluntary departure as a member of a nationality
group.
(F) An alien who is the spouse or unmarried child under 21 years of
age of a citizen of the United States, or the parent of such a citizen
if the citizen is over 21 years of age, and with respect to whom an
application for adjustment to lawful permanent residence is pending.
(G) An alien within such other classification of permanent resident
aliens as the National Health Board may establish by regulation.
(2) AFDC family. The term ``AFDC family'' means a family composed
entirely of one or more AFDC recipients.
(3) AFDC recipient. The term ``AFDC recipient'' means an individual who
is receiving aid or assistance under any plan of the State approved under
title I, X, XIV, or XVI, or part A or part E of title IV, of the Social
Security Act.
(4) Alliance area. The term ``alliance area'' means the area served by
a regional alliance and specified under section 1202(b).
(5) Alliance eligible individual. The term ``alliance eligible
individual'' means, with respect to a health alliance, an eligible
individual with respect to whom the applicable health plan is a health
plan offered by or through such alliance and does not include a prisoner.
(6) Applicable health plan. The term ``applicable health plan'' means,
with respect to an eligible individual, the health plan specified
pursuant to section 1004 and part 2 of subtitle A.
(7) Combination cost sharing plan. The term ``combination cost sharing
plan'' means a health plan that provides combination cost sharing
schedule (consistent with section 1134).
(8) Comprehensive benefit package. The term ``comprehensive benefit
package'' means the package of health benefits provided under subtitle B
of title II.
(9) Consumer price index; cpi. The terms consumer price index'' and
``CPI'' mean the Consumer Price Index for all urban consumers (U.S. city
average), as published by the Bureau of Labor Statistics.
(10) Corporate alliance eligible individual. The term ``corporate
alliance eligible individual'' means, with respect to a corporate
alliance, an eligible individual with respect to whom the corporate
alliance is the applicable health plan.
(11) Corporate alliance employer. The term ``corporate alliance
employer'' means, with respect to a corporate alliance, an employer of an
individual who is a participant in a corporate alliance health plan of
that alliance.
(12) Corporate alliance health plan. The term ``corporate alliance
health plan'' means a health plan offered by a corporate alliance under
part 2 of subtitle E.
(13) Disabled ssi recipient. The term ``disabled SSI recipient'' means
an individual who
(A) is an SSI recipient, and
(B) has been determined to be disabled for purposes of the
supplemental security income program (under title XVI of the Social
Security Act).
(14) Eligible enrollee. The term ``eligible enrollee'' means, with
respect to an health plan offered by a health alliance, an alliance
eligible individual, but does not include such an individual if the
individual is enrolled under such a plan as the family member of another
alliance eligible individual.
(15) Essential community provider. The term ``essential community
provider'' means an entity certified as such a provider under subpart B
of part 2 of subtitle F.
(16) Fee-for-service plan. The term ``fee-for-service plan'' means a
health plan described in section 1322(b)(2)(A).
(17) First year. The term ``first year'' means, with respect to
(A) a State that is a participating State in a year before 1998, the
year in which the State first is a participating State, or
(B) any other State, 1998.
(18) Higher cost sharing plan. The term ``higher cost sharing plan''
means a health plan that provides a high cost sharing schedule
(consistent with section 1133).
(19) Long-term nonimmigrant. The term ``long-term nonimmigrant'' means
a nonimmigrant described in subparagraph (E), (H), (I), (J), (K), (L),
(M), (N), (O), (Q), or (R) of section 101(a)(15) of the Immigration and
Nationality Act or an alien within such other classification of
nonimmigrant as the National Health Board may establish by regulation.
(20) Lower cost sharing plan. The term ``lower cost sharing plan''
means a health plan that provides a lower cost sharing schedule
(consistent with section 1132).
(21) Medicare program. The term ``medicare program'' means the health
insurance program under title XVIII of the Social Security Act.
(22) Medicare-eligible individual. The term ``medicare-eligible
individual'' means, subject to section 1012(a), an individual who is
entitled to benefits under part A of the medicare program.
(23) Move. The term ``move'' means, respect to an individual, a change
of residence of the individual from one alliance area to another alliance
area.
(24) National health board; board. The terms ``National Health Board''
and ``Board'' mean the National Health Board established under part 1 of
subtitle F of title I.
(25) Poverty level.
(A) In general. The term ``applicable poverty level'' means, for a
family for a year, the official poverty line (as defined by the Office
of Management and Budget, and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved (as determined under
subparagraph (B)) for 1994 adjusted by the percentage increase or
decrease described in subparagraph (C) for the year involved.
(B) Family size. In applying the applicable poverty level to
(i) an individual enrollment, the family size is deemed to be one
person;
(ii) a couple-only enrollment, the family size is deemed to be two
persons;
(iii) a single parent enrollment, the family size is deemed to be
three persons; or
(iv) a dual parent, the family size is deemed to be four persons.
(C) Percentage adjustment. The percentage increase or decrease
described in this subparagraph for a year is the percentage increase or
decrease by which the average CPI for the 12-month-period ending with
August 31 of the preceding year exceeds such average for the 12-month
period ending with August 31, 1993.
(D) Rounding. Any adjustment made under subparagraph (A) for a year
shall be rounded to the nearest multiple of $100.
(26) Prisoner. The term ``prisoner'' means, as specified by the Board,
an eligible individual during a period of imprisonment under Federal,
State, or local authority after conviction as an adult.
(27) Regional alliance eligible individual. The term ``regional
alliance eligible individual'' means an eligible individual with respect
to whom a regional alliance health plan is an applicable health plan.
(28) Regional alliance employer. The term ``regional alliance
employer'' means an employer that is meeting the requirement of section
1003 other than through an agreement with one or more health alliances.
(29) Regional alliance health plan. The term ``regional alliance health
plan'' means a health plan offered by a regional alliance under part 1 of
subtitle E of title I.
(30) Reside.
(A) An individual is considered to reside in the location in which
the individual maintains a primary residence (as established under
rules of the National Health Board).
(B) Under such rules and subject to section 1323(c), in the case of
an individual who maintains more than one residence, the primary
residence of the individual shall be determined taking into account the
proportion of time spent at each residence.
(C) In the case of a couple only one spouse of which is a qualifying
employee, except as the Board may provide, the residence of the
employee shall be the residence of the couple.
(31) Secretary. The term ``Secretary'' means the Secretary of Health
and Human Services.
(32) SSI family. The term ``SSI family'' means a family composed
entirely of one or more SSI recipients.
(33) SSI recipient. The term ``SSI recipient'' means an individual
(A) with respect to whom supplemental security income benefits are
being paid under title XVI of the Social Security Act,
(B) who receiving a supplementary payment under section 1616 of such
Act or under section 212 of Public Law 93 66, or
(C) who receiving monthly benefits under section 1619(a) of such Act
(whether or not pursuant to section 1616(c)(3) of such Act).
(34) State. The term ``State'' includes the District of Columbia,
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern
Mariana Islands.
(35) State medicaid plan. The term ``State medicaid plan'' means a plan
of medical assistance of a State approved under title XIX of the Social
Security Act.
(36) Undocumented alien. The term ``undocumented alien'' means an alien
who is not a long-term nonimmigrant, a diplomat, or described in section
1004(c).
(37) United States. The term ``United States'' means the 50 States, the
District of Columbia, Puerto Rico, the Virgin Islands, Guam, American
Samoa, and Northern Mariana Islands.
Subtitle B. Miscellaneous Provisions
SEC. 1911. USE OF INTERIM, FINAL REGULATIONS.
In order to permit the timely implementation of the provisions of this
Act, the National Health Board, the Secretary of Health and Human
Services, the Secretary of Labor are each authorized to issue regulations
under this Act on an interim basis that become final on the date of
publication, subject to change based on subsequent public comment.
SEC. 1912. SOCIAL SECURITY ACT REFERENCES.
Except as may otherwise be provided, any reference in this title, or in
title V or VI, to the Social Security Act shall be to the Social Security
Act as in effect on the date of the enactment of this Act.
Title II: NEW BENEFITS
Table of contents
Subtitle A. Medicare Outpatient Prescription Drug Benefit
Section 2001. Coverage of outpatient prescription drugs.
Section 2002. Payment rules and related requirements for
outpatient drugs.
Section 2003. Medicare rebates for covered outpatient drugs.
Section 2004. Counseling by participating pharmacies.
Section 2005. Extension of 25 percent rule for portion of premium
attributable to covered outpatient drugs.
Section 2006. Coverage of home infusion drug therapy services.
Section 2007. Civil money penalties for excessive charges.
Section 2008. Conforming amendments to medicaid program.
Section 2009. Effective date.
Subtitle B. Long-Term Care
Part 1. State Programs for Home and Community-Based Services for
Individuals With Disabilities
Section 2101. State programs for home and community-based services
for individuals with disabilities.
Section 2102. State plans.
Section 2103. Individuals with disabilities defined.
Section 2104. Home and community-based services covered under
State plan.
Section 2105. Cost sharing.
Section 2106. Quality assurance and safeguards.
Section 2107. Advisory groups.
Section 2108. Payments to States.
Section 2109. Total Federal budget; allotments to States.
Part 2. Medicaid Nursing Home Improvements
Section 2201. Reference to amendments.
Part 3. Private Long-Term Care Insurance
Subpart A. GENERAL PROVISIONS
Section 2301. Federal regulations; prior application or certain
requirements.
Section 2302. National Long-term Care Insurance Advisory Council.
Section 2303. Relation to State law.
Section 2304. Definitions.
Subpart B. FEDERAL STANDARDS AND REQUIREMENTS
Section 2321. Requirements to facilitate understanding and
comparison of benefits.
Section 2322. Requirements relating to coverage.
Section 2323. Requirements relating to premiums.
Section 2324. Requirements relating to sales practices.
Section 2325. Continuation, renewal, replacement, conversion, and
cancellation of policies.
Section 2326. Requirements relating to payment of benefits.
Subpart C. ENFORCEMENT
Section 2342. State programs for enforcement of standards.
Section 2342. Authorization of appropriations for State programs.
Section 2343. Allotments to States.
Section 2344. Payments to States.
Section 2345. Federal oversight of State enforcement.
Section 2346. Effect of failure to have approved State program.
Subpart D. CONSUMER EDUCATION GRANTS
Section 2361. Grants for consumer education.
Part 4. Tax Treatment of Long-term Care Insurance and Services
Section 2401. Reference to tax provisions.
Part 5. Tax Incentives for Individuals with Disabilities Who Work
Section 2501. Reference to tax provision.
Part 6. Demonstration and Evaluation
Section 2601. Demonstration on acute and long-term care
integration.
Section 2602. Performance review of the long-term care programs.
--------
Subtitle A. Medicare Outpatient Prescription Drug Benefit
SEC. 2001. COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.
(a) Covered Outpatient Drugs as Medical and Other Health Services.
Section 1861(s)(2)(J) of the Social Security Act (42 U.S.C. 1395x(s)(2)(J))
is amended to read as follows:
``(J) covered outpatient drugs;''.
(b) Definition of Covered Outpatient Drug. Section 1861(t) of such Act
(42 U.S.C. 1395x(t)), as amended by section 13553(b) of the Omnibus Budget
Reconciliation Act of 1993 (hereafter in this subtitle referred to as
``OBRA 1993''), is amended
(1) in the heading, by adding at the end the following: ``; Covered
Outpatient Drugs'';
(2) in paragraph (1), by striking ``paragraph (2)'' and inserting ``the
succeeding paragraphs of this subsection''; and
(3) by striking paragraph (2) and inserting the following:
``(2) Except as otherwise provided in paragraph (3), the term `covered
outpatient drug' means any of the following products used for a medically
accepted indication (as described in paragraph (4)):
``(A) A drug which may be dispensed only upon prescription and
``(i) which is approved for safety and effectiveness as a prescription
drug under section 505 or 507 of the Federal Food, Drug, and Cosmetic Act
or which is approved under section 505(j) of such Act;
``(ii)(I) which was commercially used or sold in the United States
before the date of the enactment of the Drug Amendments of 1962 or which
is identical, similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal Regulations) to such a
drug, and (II) which has not been the subject of a final determination by
the Secretary that it is a `new drug' (within the meaning of section
201(p) of the Federal Food, Drug, and Cosmetic Act) or an action brought
by the Secretary under section 301, 302(a), or 304(a) of such Act to
enforce section 502(f) or 505(a) of such Act; or
``(iii)(I) which is described in section 107(c)(3) of the Drug
Amendments of 1962 and for which the Secretary has determined there is a
compelling justification for its medical need, or is identical, similar,
or related (within the meaning of section 310.6(b)(1) of title 21 of the
Code of Federal Regulations) to such a drug, and (II) for which the
Secretary has not issued a notice of an opportunity for a hearing under
section 505(e) of the Federal Food, Drug, and Cosmetic Act on a proposed
order of the Secretary to withdraw approval of an application for such
drug under such section because the Secretary has determined that the
drug is less than effective for all conditions of use prescribed,
recommended, or suggested in its labeling;
``(B) A biological product which
``(i) may only be dispensed upon prescription,
``(ii) is licensed under section 351 of the Public Health Service Act,
and
``(iii) is produced at an establishment licensed under such section to
produce such product; and
``(C) Insulin certified under section 506 of the Federal Food, Drug,
and Cosmetic Act.
``(3) The term `covered outpatient drug' does not include any product
which is intravenously administered in a home setting unless it is a
covered home infusion drug (as described in paragraph (5)).
``(4) For purposes of paragraph (2), the term `medically accepted
indication', with respect to the use of an outpatient drug, includes any
use which has been approved by the Food and Drug Administration for the
drug, and includes another use of the drug if
``(A) the drug has been approved by the Food and Drug Administration;
and
``(B)(i) such use is supported by one or more citations which are
included (or approved for inclusion) in one or more of the following
compendia: the American Hospital Formulary Service-Drug Information, the
American Medical Association Drug Evaluations, the United States
Pharmacopoeia-Drug Information, and other authoritative compendia as
identified by the Secretary, unless the Secretary has determined that the
use is not medically appropriate or the use is identified as not
indicated in one or more such compendia, or
``(ii) the carrier involved determines, based upon guidance provided by
the Secretary to carriers for determining accepted uses of drugs, that
such use is medically accepted based on supportive clinical evidence in
peer reviewed medical literature appearing in publications which have
been identified for purposes of this clause by the Secretary.
The Secretary may revise the list of compendia in paragraph (B)(i)
designated as appropriate for identifying medically accepted indications
for drugs.
``(5)(A) For purposes of paragraph (3), the term `covered home infusion
drug' means a covered outpatient drug dispensed to an individual that
``(i) is administered intravenously, subcutaneously, epidurally, or
through other means determined by the Secretary, using an access device
that is inserted in to the body and an infusion device to control the
rate of flow of the drug,
``(ii) is administered in the individual's home (including an
institution used as his home, other than a hospital under subsection (e)
or a skilled nursing facility that meets the requirements of section
1819(a)), and
``(iii)(I) is an antibiotic drug and the Secretary has not determined,
for the specific drug or the indication to which the drug is applied,
that the drug cannot generally be administered safely and effectively in
a home setting, or
``(II) is not an antibiotic drug and the Secretary has determined, for
the specific drug or the indication to which the drug is applied, that
the drug can generally be administered safely and effectively in a home
setting.
``(B) Not later than January 1, 1996, (and periodically thereafter),
the Secretary shall publish a list of the drugs, and indications for such
drugs, that are covered home infusion drugs, with respect to which home
infusion drug therapy may be provided under this title.''.
(c) Exceptions; Exclusions From Coverage. Section 1862(a) of such Act (42
U.S.C. 1395y(a)), as amended by sections 4034(b)(4) and 4118(b), is amended
(1) by striking ``and'' at the end of paragraph (15),
(2) by striking the period at the end of paragraph (16) and inserting
``; or'', and
(3) by inserting after paragraph (16) the following new paragraph:
``(17) A covered outpatient drug (as described in section 1861(t))
``(A) when furnished as part of, or as incident to, any other item or
service for which payment may be made under this title, or
``(B) which is listed under paragraph (2) of section 1927(d) (other
than subparagraph (I) or (J) of such paragraph) as a drug which may be
excluded from coverage under a State plan under title XIX and which the
Secretary elects to exclude from coverage under this part.
(d) Other Conforming Amendments. (1) Section 1861 of such Act (42 U.S.C.
1395x) is amended
(A) in subsection (s)(2), as amended by section 13553 of OBRA 1993
(i) by striking subparagraphs (O) and (Q),
(ii) by adding ``and'' at the end of subparagraph (N),
(iii) by striking ``; and'' at the end of subparagraph (P) and
inserting a period, and
(iv) by redesignating subparagraph (P) as subparagraph (O); and
(B) by striking the subsection (jj) added by section 4156(a)(2) of
the Omnibus Budget Reconciliation Act of 1990.
(2) Section 1881(b)(1)(C) of such Act (42 U.S.C. 1395rr(b)(1)(C)), as
amended by section 13566(a) of OBRA 1993, is amended by striking
``section 1861(s)(2)(P)'' and inserting ``section 1861(s)(2)(O)''.
SEC. 2002. PAYMENT RULES AND RELATED REQUIREMENTS FOR COVERED
OUTPATIENT DRUGS.
(a) In General. Section 1834 of the Social Security Act (42 U.S.C. 1395m)
is amended by inserting after subsection (c) the following new subsection:
``(d) Payment for and Certain Requirements Concerning Covered Outpatient
Drugs.
``(1) Deductible.
``(A) In general. Payment shall be made under paragraph (2) only for
expenses incurred by an individual for a covered outpatient drug during a
calendar year after the individual has incurred expenses in the year for
such drugs (during a period in which the individual is entitled to benefits
under this part) equal to the deductible amount for that year.
``(B) Deductible amount.
``(i) For purposes of subparagraph (A), the deductible amount is
``(I) for 1996, $250, and
``(II) for any succeeding year, the amount (rounded to the nearest
dollar) that the Secretary estimates will ensure that the percentage of the
average number of individuals covered under this part (other than
individuals enrolled with an eligible organization under section 1876 or an
organization described in section 1833(a)(1)(A)) during the year who will
incur expenses for covered outpatient drugs equal to or greater than such
amount will be the same as the percentage for the previous year.
``(ii) The Secretary shall promulgate the deductible amount for 1997 and
each succeeding year during September of the previous year.
``(C) Special rule for determination of expenses incurred. In determining
the amount of expenses incurred by an individual for covered outpatient
drugs during a year for purposes of subparagraph (A), there shall not be
included any expenses incurred with respect to a drug to the extent such
expenses exceed the payment basis for such drug under paragraph (3).
``(2) Payment amount.
``(A) In general. Subject to the deductible established under paragraph
(1), the amount payable under this part for a covered outpatient drug
furnished to an individual during a calendar year shall be equal to
``(i) 80 percent of the payment basis described in paragraph (3), in the
case of an individual who has not incurred expenses for covered outpatient
drugs during the year (including the deductible imposed under paragraph
(1)) in excess of the out-of-pocket limit for the year under subparagraph
(B); and
``(ii) 100 percent of the payment basis described in paragraph (3), in
the case of any other individual.
``(B) Out-of-pocket limit described.
``(i) For purposes of subparagraph (A), the out-of-pocket limit for a
year is equal to
``(I) for 1996, $1000, and
``(II) for any succeeding year, the amount (rounded to the nearest
dollar) that the Secretary estimates will ensure that the percentage of the
average number of individuals covered under this part (other than
individuals enrolled with an eligible organization under section 1876 or an
organization described in section 1833(a)(1)(A)) during the year who will
incur expenses for covered outpatient drugs equal to or greater than such
amount will be the same as the percentage for the previous year.
``(ii) The Secretary shall promulgate the out-of-pocket limit for 1997
and each succeeding year during September of the previous year.
``(C) Special rule for determination of expenses incurred. In determining
the amount of expenses incurred by an individual for covered outpatient
drugs during a year for purposes of subparagraph (A), there shall not be
included any expenses incurred with respect to a drug to the extent such
expenses exceed the payment basis for such drug under paragraph (3).
``(3) Payment basis. For purposes of paragraph (2), the payment basis is
the lesser of
``(A) the actual charge for a covered outpatient drug, or
``(B) the applicable payment limit established under paragraph (4).
``(4) Payment limits.
``(A) Payment limit for single source drugs and multiple source drugs
with restrictive prescriptions. In the case of a covered outpatient drug
that is a multiple source drug which has a restrictive prescription, or
that is single source drug, the payment limit for a payment calculation
period is equal to
``(i) for drugs furnished after 1996, the 90th percentile of the actual
charges (computed on the geographic basis specified by the Secretary) for
the drug product for the second previous payment calculation period, or
``(ii) the amount of the administrative allowance (established under
paragraph (5)) plus the product of the number of dosage units dispensed and
the per unit estimated acquisition cost for the drug product (determined
under subparagraph (C)) for the period,
whichever is less.
``(B) Payment limit for multiple source drugs without restrictive
prescriptions. In the case of a drug that is a multiple source drug which
does not have a restrictive prescription, the payment limit for a payment
calculation period is equal to the amount of the administrative allowance
(established under paragraph (5)) plus the product of the number of dosage
units dispensed and the unweighted median of the unit estimated acquisition
cost (determined under subparagraph (C)) for the drug products for the
period.
``(C) Determination of unit price.
``(i) In general. The Secretary shall determine, for the dispensing of a
covered outpatient drug product in a payment calculation period, the
estimated acquisition cost for the drug product. With respect to any
covered outpatient drug product, such cost may not exceed 93 percent of the
average manufacturer non-retail price for the drug (as defined in section
1850(f)(2)) during the period.
``(ii) Compliance with request for information. If a wholesaler or direct
seller of a covered outpatient drug refuses, after being requested by the
Secretary, to provide price information requested to carry out clause (i),
or deliberately provides information that is false, the Secretary may
impose a civil money penalty of not to exceed $10,000 for each such refusal
or provision of false information. The provisions of section 1128A (other
than subsections (a) and (b)) shall apply to civil money penalties under
the previous sentence in the same manner as they apply to a penalty or
proceeding under section 1128A(a). Information gathered pursuant to clause
(i) shall not be disclosed except as the Secretary determines to be
necessary to carry out the purposes of this part.
``(5) Administrative allowance for purposes of payment limit.
``(A) In general. Except as provided in subparagraph (B), the
administrative allowance under paragraph (4) is
``(i) for 1996, $5, and
``(ii) for each succeeding year, the amount for the previous year
adjusted by the percentage change in the consumer price index for all urban
consumers (U.S. city average) for the 12-month period ending with June of
that previous year.
``(B) Reduction for mail order pharmacies. The Secretary may, after
consulting with representatives of pharmacists, individuals enrolled under
this part, and of private insurers, reduce the administrative allowances
established under subparagraph (A) for any covered outpatient drug
dispensed by a mail order pharmacy, based on differences between such
pharmacies and other pharmacies with respect to operating costs and other
economies.
``(6) Assuring appropriate prescribing and dispensing practices.
``(A) In general. The Secretary shall establish a program to identify
(and to educate physicians and pharmacists concerning)
``(i) instances or patterns of unnecessary or inappropriate prescribing
or dispensing practices for covered outpatient drugs,
``(ii) instances or patterns of substandard care with respect to such
drugs,
``(iii) potential adverse reactions, and
``(iv) appropriate use of generic products.
``(B) Standards. In carrying out the program under subparagraph (A), the
Secretary shall establish for each covered outpatient drug standards for
the prescribing of the drug which are based on accepted medical practice.
In establishing such standards, the Secretary shall incorporate standards
from such current authoritative compendia as the Secretary may select,
except that the Secretary may modify such a standard by regulation on the
basis of scientific and medical information that such standard is not
consistent with the safe and effective use of the drug.
``(C) Drug use review. The Secretary may provide for a drug use review
program with respect to covered outpatient drugs dispensed to individuals
eligible for benefits under this part. Such program may include such
elements as the Secretary determines to be necessary to assure that
prescriptions (i) are appropriate, (ii) are medically necessary, and (iii)
are not likely to result in adverse medical results, including any elements
of the State drug use review programs required under section 1927(g) that
the Secretary determines to be appropriate.
``(7) Administrative improvements. The Secretary shall develop, in
consultation with representatives of pharmacies and of other interested
persons, a standard claims form for covered outpatient drugs in accordance
with title V of the Health Security Act.
``(8) Definitions. In this subsection:
``(A) Multiple and single source drugs. The terms `multiple source drug'
and `single source drug' have the meanings of those terms under section
1927(k)(7).
``(B) Restrictive prescription. A drug has a `restrictive prescription'
only if
``(i) in the case of a written prescription, the prescription for the
drug indicates, in the handwriting of the physician or other person
prescribing the drug and with an appropriate phrase (such as `brand
medically necessary') recognized by the Secretary, that a particular drug
product must be dispensed, or
``(ii) in the case of a prescription issued by telephone
``(I) the physician or other person prescribing the drug (through use of
such an appropriate phrase) states that a particular drug product must be
dispensed, and
``(II) the physician or other person submits to the pharmacy involved,
within 30 days after the date of the telephone prescription, a written
confirmation which is in the handwriting of the physician or other person
prescribing the drug and which indicates with such appropriate phrase that
the particular drug product was required to have been dispensed.
``(C) Payment Calculation Period. The term `payment calculation period'
means the 6-month period beginning with January of each year and the
6-month period beginning with July of each year.''.
(b) Submission of Claims by Pharmacies. Section 1848(g)(4) of such Act
(42 U.S.C. 1395w 4(g)(4)) is amended
(1) in the heading
(A) by striking ``Physician'', and
(B) by inserting ``by physicians and suppliers'' after ``claims'',
(2) in the matter in subparagraph (A) preceding clause (i)
(A) by striking ``For services furnished on or after September 1,
1990, within 1 year'' and inserting ``Within 1 year (90 days in the
case of covered outpatient drugs)'',
(B) by striking ``a service'' and inserting ``an item or service'',
and
(C) by inserting ``or of providing a covered outpatient drug,'' after
``basis,'' and
(3) in subparagraph (A)(i), by inserting ``item or'' before ``service.
(c) Special Rules for Carriers.
(1) Use of regional carriers. Section 1842(b)(2) of such Act (42 U.S.C.
1395u(b)(2)) is amended by adding at the end the following:
``(D) With respect to activities related to covered outpatient drugs,
the Secretary may enter into contracts with carriers under this section
to perform the activities on a regional basis.''.
(2) Payment on other than a cost basis. Section 1842(c)(1)(A) of such
Act (42 U.S.C. 1395u(c)(1)(A)) is amended
(A) by inserting ``(i)'' after ``(c)(1)(A)'',
(B) in the first sentence, by inserting ``, except as otherwise
provided in clause (ii),'' after ``under this part, and'', and
(C) by adding at the end the following:
``(ii) To the extent that a contract under this section provides for
activities related to covered outpatient drugs, the Secretary may
provide for payment for those activities based on any method of payment
determined by the Secretary to be appropriate.''.
(3) Use of other entities for covered outpatient drugs. Section 1842(f)
of such Act (42 U.S.C. 1395u(f)) is amended
(A) by striking ``and'' at the end of paragraph (1),
(B) by substituting ``; and'' for the period at the end of paragraph
(2), and,
(C) by adding at the end the following:
``(3) with respect to activities related to covered outpatient drugs,
any other private entity which the Secretary determines is qualified to
conduct such activities.''.
(4) Designated carriers to process claims of railroad retirees. Section
1842(g) of such Act (42 U.S.C. 1395u(g)) is amended by inserting ``(other
than functions related to covered outpatient drugs)'' after
``functions''.
(d) Contracts for Automatic Data Processing Equipment. Actions taken
before 1995 that affect contracts related to the processing of claims for
covered outpatient drugs (as defined in section 1861(t) of the Social
Security Act) shall not be subject to section 111 of the Federal Property
and Administrative Services Act of 1949, and shall not be subject to
administrative or judicial review.
(e) Conforming Amendments.
(1)(A) Section 1833(a)(1) of such Act (42 U.S.C. 1395l(a)(1)), as
amended by section 13544(b)(2) of OBRA 1993, is amended
(i) by striking ``and'' at the end of clause (O), and
(ii) by inserting before the semicolon at the end the following:
``, and (Q) with respect to covered outpatient drugs, the amounts
paid shall be as prescribed by section 1834(d)''.
(B) Section 1833(a)(2) of such Act (42 U.S.C. 1395l(a)(2)) is amended
in the matter preceding subparagraph (A) by inserting ``, except for
covered outpatient drugs,'' after ``and (I) of such section''.
(2) Section 1833(b)(2) of such Act (42 U.S.C. 1395l(b)(2)) is amended
by inserting ``or with respect to covered outpatient drugs'' before the
comma.
(3) The first sentence of section 1842(h)(2) of such Act (42 U.S.C.
1395u(h)(2)) is amended by inserting ``(other than a carrier described in
subsection (f)(3))'' after ``Each carrier''.
(4) The first sentence of section 1866(a)(2)(A) of such Act (42 U.S.C.
1395cc(a)(2)(A)) is amended
(A) in clause (i), by inserting ``section 1834(d), after ``section
1833(b),'', and
(B) in clause (ii), by inserting ``, other than for covered
outpatient drugs,'' after ``provider)''.
SEC. 2003. MEDICARE REBATES FOR COVERED OUTPATIENT DRUGS.
(a) In General. Part B of title XVIII of the Social Security Act is
amended by adding at the end the following new section:
``REBATES FOR COVERED OUTPATIENT DRUGS
``Sec. 1850. (a) Requirement for Rebate Agreement. In order for payment
to be available under this part for covered outpatient drugs of a
manufacturer dispensed on or after January 1, 1996, the manufacturer must
have entered into and have in effect a rebate agreement with the Secretary
meeting the requirements of subsection (b), and an agreement to give equal
access to discounts in accordance with subsection (e).
``(b) Terms, Implementation, and Enforcement of Rebate Agreement.
``(1) Periodic rebates.
``(A) In general. A rebate agreement under this section shall require the
manufacturer to pay to the Secretary for each calendar quarter, not later
than 30 days after the date of receipt of the information described in
paragraph (2) for such quarter, a rebate in an amount determined under
subsection (c) for all covered outpatient drugs of the manufacturer
described in subparagraph (B).
``(B) Drugs included in quarterly rebate calculation. Drugs subject to
rebate with respect to a calendar quarter are drugs which are either
``(i) dispensed by participating pharmacies during such quarter to
individuals (other than individuals enrolled with an eligible organization
with a contract under section 1876) eligible for benefits under this part,
as reported by such pharmacies to the Secretary, or
``(ii) dispensed by nonparticipating pharmacies to such individuals and
included in claims for payment of benefits received by the Secretary during
such quarter.
``(2) Information furnished to manufacturers.
``(A) In general. The Secretary shall report to each manufacturer, not
later than 60 days after the end of each calendar quarter, information on
the total number, for each covered outpatient drug, of units of each dosage
form, strength, and package size dispensed under the plan during the
quarter, on the basis of the data reported to the Secretary described in
paragraph (1)(B).
``(B) Audit. The Comptroller General may audit the records of the
Secretary to the extent necessary to determine the accuracy of reports by
the Secretary pursuant to subparagraph (A). Adjustments to rebates shall be
made to the extent determined necessary by the audit to reflect actual
units of drugs dispensed.
``(3) Provision of price information by manufacturer.
``(A) Quarterly pricing information. Each manufacturer with an agreement
in effect under this section shall report to the Secretary, not later than
30 days after the last day of each calendar quarter, on the average
manufacturer retail price and the average manufacturer non-retail price for
each dosage form and strength of each covered outpatient drug for the
quarter.
``(B) Base quarter prices. Each manufacturer of a covered outpatient drug
with an agreement under this section shall report to the Secretary, by not
later than 30 days after the effective date of such agreement (or, if
later, 30 days after the end of the base quarter), the average manufacturer
retail price, for such base quarter, for each dosage form and strength of
each such covered drug.
``(C) Verification of average manufacturer price. The Secretary may
inspect the records of manufacturers, and survey wholesalers, pharmacies,
and institutional purchasers of drugs, as necessary to verify prices
reported under subparagraph (A).
``(D) Penalties.
``(i) Civil money penalties. The Secretary may impose a civil money
penalty on a manufacturer with an agreement under this section
``(I) for failure to provide information required under subparagraph (A)
on a timely basis, in an amount up to $10,000 per day of delay;
``(II) for refusal to provide information about charges or prices
requested by the Secretary for purposes of verification pursuant to
subparagraph (C), in an amount up to $100,000; and
``(III) for provision, pursuant to subparagraph (A) or (B), of
information that the manufacturer knows or should know is false, in an
amount up to $100,000 per item of information.
Such civil money penalties are in addition to any other penalties
prescribed by law. The provisions of section 1128A (other than subsections
(a) (with respect to amounts of penalties or additional assessments) and
(b)) shall apply to a civil money penalty under this subparagraph in the
same manner as such provisions apply to a penalty or proceeding under
section 1128A(a).
``(ii) Termination of agreement. If a manufacturer with an agreement
under this section has not provided information required under subparagraph
(A) or (B) within 90 days of the deadline imposed, the Secretary may
suspend the agreement with respect to covered outpatient drugs dispensed
after the end of such 90-day period and until the date such information is
reported (but in no case shall a suspension be for less than 30 days).
``(4) Length of agreement.
``(A) In general. A rebate agreement shall be effective for an initial
period of not less than one year and shall be automatically renewed for a
period of not less than one year unless terminated under subparagraph (B).
``(B) Termination.
``(i) By the secretary. The Secretary may provide for termination of a
rebate agreement for violation of the requirements of the agreement or
other good cause shown. Such termination shall not be effective earlier
than 60 days after the date of notice of such termination. The Secretary
shall afford a manufacturer an opportunity for a hearing concerning such
termination, but such hearing shall not delay the effective date of the
termination.
``(ii) By a manufacturer. A manufacturer may terminate a rebate agreement
under this section for any reason. Any such termination shall not be
effective until the calendar quarter beginning at least 60 days after the
date the manufacturer provides notice to the Secretary.
``(iii) Effective date of termination. Any termination under this
subparagraph shall not affect rebates due under the agreement before the
effective date of its termination.
``(iv) Notice to pharmacies. In the case of a termination under this
subparagraph, the Secretary shall notify pharmacies that are participating
suppliers under this part and physician organizations not less than 30 days
before the effective date of such termination.
``(c) Amount of Rebate.
``(1) Basic rebate. Each manufacturer shall remit a basic rebate to the
Secretary for each calendar quarter in an amount, with respect to each
dosage form and strength of a covered drug (except as provided under
paragraph (4)), equal to the product of
``(A) the total number of units subject to rebate for such quarter, as
described in subsection (b)(1)(B); and
``(B) the greater of
``(i) the difference between the average manufacturer retail price and
the average manufacturer non-retail price,
``(ii) 17 percent of the average manufacturer retail price, or
``(iii) the amount determined pursuant to paragraph (4).
``(2) Additional rebate. Each manufacturer shall remit to the Secretary,
for each calendar quarter, an additional rebate for each dosage form and
strength of a covered drug (except as provided under paragraph (4)), in an
amount equal to
``(A) the total number of units subject to rebate for such quarter, as
described in subsection (b)(1)(B), multiplied by
``(B) the amount, if any, by which the average manufacturer retail price
for covered drugs of the manufacturer exceeds the average manufacturer
retail price for the base quarter, increased by the percentage increase in
the Consumer Price Index for all urban consumers (U.S. average) from the
end of such base quarter to the month before the beginning of such calendar
quarter.
``(3) Negotiated rebate amount for new drugs.
``(A) In general. The Secretary may negotiate with the manufacturer a
per-unit rebate amount, in accordance with this paragraph, for any covered
outpatient drug (except as provided under paragraph (4)) first marketed
after June 30, 1993
``(i) which is not marketed in any country specified in section
802(b)(4)(A) of the Federal Food, Drug, and Cosmetic Act and for which the
Secretary believes the average manufacturer's retail price may be
excessive, or
``(ii) which is marketed in one or more of such countries, at prices
significantly lower than the average manufacturer retail price.
``(B) Maximum rebate amount for drugs marketed in certain countries. The
rebate negotiated pursuant to this paragraph for a drug described in
subparagraph (A)(ii) may be an amount up to the difference between the
average manufacturer retail price and any price at which the drug is
available to wholesalers in a country specified in such section
802(b)(4)(A).
``(C) Factors to be considered. In making determinations with respect to
the prices of a covered drug described in subparagraph (A) and in
negotiating a rebate amount pursuant to this paragraph, the Secretary shall
take into consideration, as applicable and appropriate, the prices of other
drugs in the same therapeutic class, cost information requested by the
Secretary and supplied by the manufacturer or estimated by the Secretary,
prescription volumes, economies of scale, product stability, special
manufacturing requirements, prices of the drug in countries specified in
subparagraph (A)(i) (in the case of a drug described in such subparagraph),
and other relevant factors.
``(D) Option to exclude coverage. If the Secretary is unable to negotiate
with the manufacturer an acceptable rebate amount with respect to a covered
outpatient drug pursuant to this paragraph, the Secretary may exclude such
drug from coverage under this part.
``(E) Effective date of exclusion from coverage. An exclusion of a drug
from coverage pursuant to subparagraph (D) shall be effective on and after
``(i) the date 6 months after the effective date of marketing approval of
such drug by the Food and Drug Administration, or
``(ii) (if earlier) the date the manufacturer terminates negotiations
with the Secretary concerning the rebate amount.
``(4) No rebate required for generic drugs. Paragraphs (1) through (3)
shall not apply with respect to a covered outpatient drug that is not a
single source drug or an innovator multiple source drug (as such terms are
defined in section 1927(k)).
``(5) Deposit of rebates. The Secretary shall deposit rebates under this
section in the Federal Supplementary Medical Insurance Trust Fund
established under section 1841.
``(d) Confidentiality of Information. Notwithstanding any other provision
of law, information disclosed by a manufacturer under this section is
confidential and shall not be disclosed by the Secretary, except
``(A) as the Secretary determines to be necessary to carry out this
section,
``(B) to permit the Comptroller General to review the information
provided, and
``(C) to permit the Director of the Congressional Budget Office to review
the information provided.
``(e) Agreement to Give Equal Access to Discounts. An agreement under
this subsection by a manufacturer of covered outpatient drugs shall
guarantee that the manufacturer will offer, to each wholesaler or retailer
(or other purchaser representing a group of such wholesalers or retailers)
that purchases such drugs on substantially the same terms (including such
terms as prompt payment, cash payment, volume purchase, single-site
delivery, the use of formularies by purchasers, and any other terms
effectively reducing the manufacturer's costs) as any other purchaser
(including any institutional purchaser) the same price for such drugs as is
offered to such other purchaser. In determining a manufacturer's compliance
with the previous sentence, there shall not be taken into account terms
offered to the Department of Veterans Affairs, the Department of Defense,
or any public program.
``(f) Definitions. For purposes of this section
``(1) Average manufacturer retail price. The term `average manufacturer
retail price' means, with respect to a covered outpatient drug of a
manufacturer for a calendar quarter, the average price (inclusive of
discounts for cash payment, prompt payment, volume purchases, and rebates
(other than rebates under this section), but exclusive of nominal prices)
paid to the manufacturer for the drug in the United States for drugs
distributed to the retail pharmacy class of trade.
``(2) Average manufacturer non-retail price. The term `average
manufacturer non-retail price' means, with respect to a covered outpatient
drug of a manufacturer for a calendar quarter, the weighted average price
(inclusive of discounts for cash payment, prompt payment, volume purchases,
and rebates (other than rebates under this section), but exclusive of
nominal prices) paid to the manufacturer for the drug in the United States
by hospitals and other institutional purchasers that purchase drugs for
institutional use and not for resale.
``(3) Base quarter. The term `base quarter' means, with respect to a
covered outpatient drug of a manufacturer, the calendar quarter beginning
April 1, 1993, or (if later) the first full calendar quarter during which
the drug was marketed in the United States.
``(4) Covered drug. The term `covered drug' includes each innovator
multiple source drug and single source drug, as those terms are defined in
section 1927(k)(7).
``(5) Manufacturer. The term `manufacturer' means, with respect to a
covered outpatient drug
``(A) the entity whose National Drug Code number (as issued pursuant to
section 510(e) of the Federal Food, Drug, and Cosmetic Act) appears on the
labeling of the drug; or
``(B) if the number described in subparagraph (A) does not appear on the
labeling of the drug, the person named as the applicant in a human drug
application (in the case of a new drug) or the product license application
(in the case of a biological product) for such drug approved by the Food
and Drug Administration.''.
(b) Conforming Amendment Relating to Exclusions From Coverage. Section
1862(a)(18) of such Act (42 U.S.C. 1395y(a)), as added by section 2001(c),
is amended
(A) by striking ``or'' at the end of subparagraph (A),
(B) by striking the period at the end of subparagraph (B) and
inserting ``, or'', and
(C) by adding at the end the following new subparagraphs:
``(C) furnished during a year for which the drug's manufacturer does
not have in effect a rebate agreement with the Secretary that meets the
requirements of section 1850 for the year, or
``(D) excluded from coverage during the year by the Secretary
pursuant to section 1850(c)(3)(D) (relating to negotiated rebate
amounts for certain new drugs).''.
SEC. 2004. COUNSELING BY PARTICIPATING PHARMACIES.
Section 1842(h) of the Social Security Act (42 U.S.C. 1395u(h)) is
amended by adding at the end the following:
``(8) A pharmacy that is a participating supplier under this part
shall agree to answer questions of individuals enrolled under this part
who receive a covered outpatient drug from the pharmacy regarding the
appropriate use of the drug, potential interactions between the drug
and other drugs dispensed to the individual, and other matters relating
to the dispensing of such drugs.''.
SEC. 2005. EXTENSION OF 25 PERCENT RULE FOR PORTION OF PREMIUM
ATTRIBUTABLE TO
COVERED OUTPATIENT DRUGS.
Section 1839(e) of the Social Security Act (42 U.S.C. 1395r(e)) is
amended by adding at the end the following:
``(3) Notwithstanding the provisions of subsection (a), the portion
of the monthly premium for each individual enrolled under this part for
each month after December 1998 that is attributable to covered
outpatient drugs shall be an amount equal to 50 percent of the portion
of the monthly actuarial rate for enrollees age 65 and over, as
determined under subsection (a)(1) and applicable to such month, that
is attributable to covered outpatient drugs.''.
SEC. 2006. COVERAGE OF HOME INFUSION DRUG THERAPY SERVICES.
(a) In General. Section 1832(a)(2)(A) of the Social Security Act (42
U.S.C. 1395k(a)(2)(A)) is amended by inserting ``and home infusion drug
therapy services'' before the semicolon.
(b) Home Infusion Drug Therapy Services Defined. Section 1861 of such Act
(42 U.S.C. 1395x) is amended
(1) by redesignating the subsection (jj) inserted by section 4156(a)(2)
of the Omnibus Budget Reconciliation Act of 1990 as subsection (kk); and
(2) by inserting after such subsection the following new subsection:
``Home Infusion Drug Therapy Services
``(ll)(1) The term `home infusion drug therapy services' means the
items and services described in paragraph (2) furnished to an individual
who is under the care of a physician
``(A) in a place of residence used as the individual's home,
``(B) by a qualified home infusion drug therapy provider (as defined in
paragraph (3)) or by others under arrangements with them made by that
provider, and
``(C) under a plan established and periodically reviewed by a
physician.
``(2) The items and services described in this paragraph are such
nursing, pharmacy, and related services (including medical supplies,
intravenous fluids, delivery, and equipment) as are necessary to conduct
safely and effectively a drug regimen through use of a covered home
infusion drug (as defined in subsection (t)(5)), but do not include such
covered outpatient drugs.
``(3) The term `qualified home infusion drug therapy provider' means
any entity that the secretary determines meets the following
requirements:
``(A) The entity is capable of providing or arranging for the items and
services described in paragraph (2) and covered home infusion drugs.
``(B) The entity maintains clinical records on all patients.
``(C) The entity adheres to written protocols and policies with respect
to the provision of items and services.
``(D) The entity makes services available (as needed) seven days a week
on a 24-hour basis.
``(E) The entity coordinates all service with the patient's physician.
``(F) The entity conducts a quality assessment and assurance program,
including drug regimen review and coordination of patient care.
``(G) The entity assures that only trained personnel provide covered
home infusion drugs (and any other service for which training is required
to provide the service safely).
``(H) The entity assumes responsibility for the quality of services
provided by others under arrangements with the entity.
``(I) In the case of an entity in any State in which State or
applicable local law provides for the licensing of entities of this
nature, (A) is licensed pursuant to such law, or (B) is approved, by the
agency of such State or locality responsible for licensing entities of
this nature, as meeting the standards established for such licensing.
``(J) The entity meets such other requirements as the Secretary may
determine are necessary to assure the safe and effective provision of
home infusion drug therapy services and the efficient administration of
the home infusion drug therapy benefit.''.
(c) Payment.
(1) In general. Section 1833 of such Act (42 U.S.C. 1395l) is amended
(A) in subsection (a)(2)(B), by striking ``or (E)'' and inserting
``(E), or (F)'',
(B) in subsection (a)(2)(D), by striking ``and'' at the end,
(C) in subsection (a)(2)(E), by striking the semicolon and inserting
``; and'',
(D) by inserting after subsection (a)(2)(E) the following new
subparagraph:
``(F) with resect to home infusion drug therapy services, the amounts
described in section 1834(j);'',
(E) in the first sentence of subsection (b), by striking ``services,
(3)'' and inserting ``services and home infusion drug therapy services,
(3)''.
(2) Amount described. Section 1834 of such Act, as amended by section
13544(b)(i) of OBRA 1993, is amended by adding at the end the following
new subsection:
``(j) Home infusion Drug Therapy Services.
``(1) In general. With respect to home infusion drug therapy services,
payment under this part shall be made in an amount equal to the lesser of
the actual charges for such services or the fee schedule established
under paragraph (2).
``(2) Establishment of fee schedule. The Secretary shall establish by
regulation before the beginning of 1996 and each succeeding year a fee
schedule for home infusion drug therapy services for which payment is
made under this part. A fee schedule established under this subsection
shall be on a per diem basis.''.
(3) Prohibition on certain referrals. Section 1877(h)(6) of such Act
(42 U.S.C. 1395nn(h)(6)), as amended by section 13562(a) of OBRA 1993, is
amended by adding at the end the following:
``(L) Home infusion drug therapy services.''.
(d) Certification. Section 1835(a)(2) of such Act (42 U.S.C. 1395n(a)(2))
is amended
(1) by striking ``and'' at the end of subparagraph (E),
(2) by striking the period at the end of subparagraph (F) and inserting
``; and'', and
(3) by inserting after subparagraph (F) the following:
``(G) in the case of home infusion drug therapy services, (i) such
services are or were required because the individual needed such services
for the administration of a covered home infusion drug, (ii) a plan for
furnishing such services has been established and is reviewed
periodically by a physician, and (iii) such services are or were
furnished while the individual is or was under the care of a
physician.''.
(e) Certification of Home infusion Drug Therapy Providers; Intermediate
Sanctions for Noncompliance.
(1) Treatment as provider of services. Section 1861(u) of such Act (42
U.S.C. 1395x(u)) is amended by inserting ``home infusion drug therapy
provider,'' after ``hospice program,''.
(2) Consultation with state agencies and other organizations. Section
1863 of such Act (42 U.S.C. 1395z) is amended by striking ``and (dd)(2)''
and inserting ``(dd)(2), and (ll)(3)''.
(3) Use of state agencies in determining compliance. Section 1864(a) of
such Act (42 U.S.C. 1395aa(a)) is amended
(A) in the first sentence, by striking ``an agency is a hospice
program'' and inserting ``an agency or entity is a hospice program or a
home infusion drug therapy provider,'' after ``home health agency, or
whether''; and
(B) in the second sentence
(i) by striking ``institution or agency'' and inserting
``institution, agency, or entity'', and
(ii) by striking ``or hospice program'' and inserting ``hospice
program, or home infusion drug therapy provider''.
(4) Application of intermediate sanctions. Section 1846 of such Act (42
U.S.C. 1395w 2) is amended
(A) in the heading, by adding ``and for qualified home infusion drug
therapy providers'' at the end,
(B) in subsection (a), by inserting ``or that a qualified home
infusion drug therapy provider that is certified for participation
under this title no longer substantially meets the requirements of
section 1861(ll)(3)'' after ``under this part'', and
(C) in subsection (b)(2)(A)(iv), by inserting ``or home infusion drug
therapy services'' after ``clinical diagnostic laboratory tests''.
(f) Use of Regional Intermediaries in Administration of Benefit. Section
1816 of such Act (42 U.S.C. 1395h) is amended by adding at the end the
following new subsection:
``(k) With respect to carrying out functions relating to payment for home
infusion drug therapy services and covered home infusion drugs, the
Secretary may enter into contracts with agencies or organizations under
this section to perform such functions on a regional basis.''.
SEC. 2007. CIVIL MONEY PENALTIES FOR EXCESSIVE CHARGES.
Section 1128A(a) of the Social Security Act (42 U.S.C. 1320a 7a(a)), as
amended by sections 4041(a)(1), 4043(a)(1), and 4043(c), is amended
(1) by striking ``,or'' at the end of paragraph (5) and adding a
semicolon,
(3) by adding ``or'' at the end of paragraph (6), and
(4) by inserting after paragraph (6) the following:
``(7) in the case of a pharmacy, presents or causes to be presented to
any person a request for payment for covered outpatient drugs (as defined
in section 1861(t)) dispensed to an individual enrolled under part B of
title XVIII and for which the amount charged by the pharmacy is greater
than the amount the pharmacy charges the general public (as determined by
the Secretary);''.
SEC. 2008. CONFORMING AMENDMENTS TO MEDICAID PROGRAM.
(a) In General.
(1) Requiring medicare rebate as condition of coverage. The first
sentence of section 1927(a)(1) of the Social Security Act (42 U.S.C.
1396r 8(a)(1)) is amended
(A) in the first sentence of paragraph (1), by striking ``and
paragraph (6)'' and inserting ``, paragraph (6), and (for calendar
quarters beginning on or after January 1, 1996) paragraph (7)''; and
(B) by adding at the end the following new paragraph:
``(7) Requirement relating to rebate agreements for covered
outpatient drugs under medicare program. A manufacturer meets the
requirements of this paragraph for quarters in a year if the
manufacturer has in effect an agreement with the Secretary under
section 1850 for providing rebates for covered outpatient drugs
furnished to individuals under title XVIII during the year.''.
(2) Non-duplication of rebates. Section 1927(b)(1) of the Social
Security Act (42 U.S.C. 1396r 8(b)(1)) is amended
(A) by redesignating subparagraph (B) as subparagraph (C), and
(B) by inserting after subparagraph (A) the following new
subparagraph:
``(B) Non-duplication of medicare rebate. Covered drugs furnished to
an individual eligible for benefits under both part B of title XVIII
and a State plan under this title shall not be included in the
determination of units of covered outpatient drugs subject to rebate
under this section.''.
(b) Effective Date. The amendments made by subsection (a) shall apply to
quarters beginning on or after January 1, 1996.
SEC. 2009. EFFECTIVE DATE.
The amendments made by this subtitle shall apply to items and services
furnished on or after January 1, 1996.
Subtitle B. Long-Term Care
Part 1. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR
INDIVIDUALS
WITH DISABILITIES
SEC. 2101. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR
INDIVIDUALS
WITH DISABILITIES.
(a) In General. Each State that has a plan for the home and
community-based services to individuals with disabilities submitted to and
approved by the Secretary under section 2102(b) is entitled to payment in
accordance with section 2108.
(b) No Individual Entitlement Established. Nothing in this part shall be
construed to create an entitlement in individuals or a requirement that a
State with such an approved plan expend the entire amount of funds to which
it is entitled in any year.
(c) State Defined. In this subpart, the term ``State'' includes the
District of Columbia, Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Northern Mariana Islands.
SEC. 2102. STATE PLANS.
(a) Plan Requirements. In order to be approved under subsection (b), a
State plan for home and community-based services for individuals with
disabilities must meet the following requirements (except to the extent
provided in subsection (b)(2), relating to phase-in period):
(1) Eligibility.
(A) In general. Within the amounts provided by the State (and under
section 2108) for such program, the plan shall provide that services
under the plan will be available to individuals with disabilities (as
defined in section 2103(a)) in the State.
(B) Initial screening. The plan shall provide a process for the
initial screening of individuals who appear to have some reasonable
likelihood of being an individual with disabilities.
(C) Restrictions. The plan may not limit the eligibility of
individuals with disabilities based on
(i) income,
(ii) age,
(iii) geography,
(iv) nature, severity, or category of disability,
(v) residential setting (other than an institutional setting), or
(vi) other grounds specified by the Secretary.
(D) Maintenance of effort. The plan must provide assurances that, in
the case of an individual receiving medical assistance for home and
community-based services under the State medicaid plan as of the date
of the enactment of this Act, the State will continue to make available
(either under this plan, under the State medicaid plan, or otherwise)
to such individual an appropriate level of assistance for home and
community-based services, taking into account the level of assistance
provided as of such date and the individual's need for home and
community-based services.
(2) Services.
(A) Specification. Consistent with section 2104, the plan shall
specify
(i) the services made available under the State plan,
(ii) the extent and manner in which such services are allocated and
made available to individuals with disabilities, and
(iii) the manner in which services under the State plan are
coordinated with each other and with health and long-term care
services available outside the plan for individuals with
disabilities.
Subject to section 2104(e)(1)(B), such services may be delivered in
an individual's home, a range of community residential arrangements,
or outside the home.
(B) Allocation. The State plan
(i) shall specify how it will allocate services under the plan,
during and after the 7-fiscal-year phase-in period beginning with
fiscal year 1996, among covered individuals with disabilities, and
(ii) may not allocate such services based on the income or other
financial resources of such individuals.
(C) Limitation on licensure or certification. The State may not
subject consumer-directed providers of personal assistance services to
licensure, certification, or other requirements which the Secretary
finds not to be necessary for the health and safety of individuals with
disabilities.
(D) Consumer choice. To the extent possible, the choice of an
individual with disabilities (and that individual's family) regarding
which covered services to receive and the providers who will provide
such services shall be followed.
(E) Requirement to serve low-income individuals. The State plan shall
assure that
(i) the proportion of the population of low-income individuals with
disabilities in the State that represents individuals with
disabilities who are provided home and community-based services
either under the plan, under the State medicaid plan, or under both,
is not less than
(ii) the proportion of the population of the State that represents
individuals who are low-income individuals.
(3) Cost sharing. The plan shall impose cost sharing with respect to
covered services only in accordance with section 2105.
(4) Types of providers and requirements for participation. The plan
shall specify
(A) the types of service providers eligible to participate in the
program under the plan, which shall include consumer-directed
providers, and
(B) any requirements for participation applicable to each type of
service provider.
(5) Budget. The plan shall specify how the State will manage Federal
and State funds available under the plan during each 5-fiscal-year period
(with the first such period beginning with fiscal year 1996) to serve all
categories of individuals with disabilities and meet the requirements of
this subsection.
(6) Provider reimbursement.
(A) Payment methods. The plan shall specify the payment methods to be
used to reimburse providers for services furnished under the plan. Such
methods may include retrospective reimbursement on a fee-for-service
basis, prepayment on a capitation basis, payment by cash or vouchers to
individuals with disabilities, or any combination of these methods. In
the case of the use of cash or vouchers, the plan shall specify how the
plan will assure compliance with applicable employment tax provisions.
(B) Payment rates. The plan shall specify the methods and criteria to
be used to set payment rates for services furnished under the plan
(including rates for cash payments or vouchers to individuals with
disabilities).
(C) Plan payment as payment in full. The plan shall restrict payment
under the plan for covered services to those providers that agree to
accept the payment under the plan (at the rates established pursuant to
subparagraph (B)) and any cost sharing permitted or provided for under
section 2105 as payment in full for services furnished under the plan.
(7) Quality assurance and safeguards. The State plan shall provide for
quality assurance and safeguards for applicants and beneficiaries in
accordance with section 2106.
(8) Advisory group. The State plan shall
(A) assure the establishment and maintenance of an advisory group
under section 2107(b), and
(B) include the documentation prepared by the group under section
2107(b)(4)..
(9) Administration.
(A) State agency. The plan shall designate a State agency or agencies
to administer (or to supervise the administration of) the plan.
(B) Administrative expenditures. Effective beginning with fiscal year
2003, the plan shall contain assurances that not more than 10 percent
of expenditures under the plan for all quarters in any fiscal year
shall be for administrative costs.
(C) Coordination. The plan shall specify how the plan
(i) will be integrated with the State medicaid plan, titles V and
XX of the Social Security Act, programs under the Older Americans Act
of 1965, programs under the Developmental Disabilities Assistance and
Bill of Rights Act, the Individuals with Disabilities Education Act,
and any other Federal or State programs that provide services or
assistance targeted to individuals with disabilities, and
(ii) will be coordinated with health plans.
(10) Reports and information to secretary; audits. The plan shall
provide that the State will furnish to the Secretary
(A) such reports, and will cooperate with such audits, as the
Secretary determines are needed concerning the State's administration
of its plan under this subpart, including the processing of claims
under the plan, and
(B) such data and information as the Secretary may require in order
to carry out the Secretary's responsibilities.
(11) Use of state funds for matching.
(A) In general. The plan shall provide assurances that Federal funds
will not be used to provide for the State share of expenditures under
this subpart.
(B) Incorporation of disqualification for certain provider-related
donations and health related taxes. The Secretary shall apply the
provisions of section 1903(w) of the Social Security Act to plans and
payment under this title in a manner similar to the manner in which
such section applies to plans and payment under title XIX of such Act.
(b) Approval of Plans. The Secretary shall approve a plan submitted by a
State if the Secretary determines that the plan
(1) was developed by the State after consultation with individuals with
disabilities and representatives of groups of such individuals, and
(2) meets the requirements of subsection (a).
(c) Monitoring. The Secretary shall monitor the compliance of State plans
with the eligibility requirements of section 2103 and may monitor the
compliance of such plans with other requirements of this subpart.
(d) Regulations. The Secretary shall issue such regulations as may be
appropriate to carry out this subpart on a timely basis.
SEC. 2103. INDIVIDUALS WITH DISABILITIES DEFINED.
(a) In General. In this subpart, the term ``individual with
disabilities'' means any individual within one or more of the following 4
categories of individuals:
(1) Individuals requiring help with activities of daily living. An
individual of any age who
(A) requires hands-on or standby assistance, supervision, or cueing
(as defined in regulations) to perform three or more activities of
daily living (as defined in subsection (c)), and
(B) is expected to require such assistance, supervision, or cueing
over a period of at least 100 days.
(2) Individuals with severe cognitive or mental impairment. An
individual of any age
(A) whose score, on a standard mental status protocol (or protocols)
appropriate for measuring the individual's particular condition
specified by the Secretary, indicates either severe cognitive
impairment or severe mental impairment, or both;
(B) who
(i) requires hands-on or standby assistance, supervision, or cueing
with one or more activities of daily living,
(ii) requires hands-on or standby assistance, supervision, or
cueing with at least such instrumental activity (or activities) of
daily living related to cognitive or mental impairment as the
Secretary specifies, or
(iii) displays symptoms of one or more serious behavioral problems
(that is on a list of such problems specified by the Secretary) which
create a need for supervision to prevent harm to self or others, and
(C) whose is expected to meet the requirements of subparagraphs (A)
and (B) over a period of at least 100 days.
(3) Individuals with severe or profound mental retardation. An
individual of any age who has severe or profound mental retardation (as
determined according to a protocol specified by the Secretary).
(4) Severely disabled children. An individual under 6 years of age who
(A) has a severe disability or chronic medical condition,
(B) but for receiving personal assistance services or any of the
services described in section 2104(d)(1), would require
institutionalization in a hospital, nursing facility, or intermediate
care facility for the mentally retarded, and
(C) is expected to have such disability or condition and require such
services over a period of at least 100 days.
(b) Determination.
(1) In general. The determination of whether an individual is an
individual with disabilities shall be made, by persons or entities
specified under the State plan, using a uniform protocol consisting of an
initial screening and assessment specified by the Secretary. A State may
collect additional information, at the time of obtaining information to
make such determination, in order to provide for the assessment and plan
described in section 2104(b) or for other purposes. The State shall
establish a fair hearing process for appeals of such determinations.
(2) Periodic reassessment. The determination that an individual is an
individual with disabilities shall be considered to be effective under
the State plan for a period of not more than 12 months (or for such
longer period in such cases as a significant change in an individual's
condition that may affect such determination is unlikely). A reassessment
shall be made if there is a significant change in an individual's
condition that may affect such determination.
(c) Activity of Daily Living Defined. In this subpart, the term
``activity of daily living'' means any of the following: eating, toileting,
dressing, bathing, and transferring in and out of bed.
SEC. 2104. HOME AND COMMUNITY-BASED SERVICES COVERED UNDER STATE PLAN.
(a) Specification.
(1) In general. Subject to the succeeding provisions of this section,
the State plan under this subpart shall specify
(A) the home and community-based services available under the plan to
individuals with disabilities (or to such categories of such
individuals), and
(B) any limits with respect to such services.
(2) Flexibility in meeting individual needs. The services shall be
specified in a manner that permits sufficient flexibility for providers
to meet the needs of individuals with disabilities in a cost effective
manner. Subject to subsection (e)(1)(B), such services may be delivered
in an individual's home, a range of community residential arrangements,
or outside the home.
(b) Requirement for Needs Assessment and Plan of Care.
(1) In general. The State plan shall provide for home and
community-based services to an individual with disabilities only if
(A) a comprehensive assessment of the individual's need for home and
community-based services (regardless of whether all needed services are
available under the plan) has been made,
(B) an individualized plan of care based on such assessment is
developed, and
(C) such services are provided consistent with such plan of care.
(2) Involvement of individuals. The individualized plan of care under
paragraph (1)(B) for an individual with disabilities shall
(A) be developed by qualified individuals (specified under the State
plan),
(B) be developed and implemented in close consultation with the
individual and the individual's family,
(C) be approved by the individual (or the individual's
representative), and
(D) be reviewed and updated not less often than every 6 months.
(3) Plan of care. The plan of care under paragraph (1)(B) shall
(A) specify which services specified under the individual plan will
be provided under the State plan under this subpart,
(B) identify (to the extent possible) how the individual will be
provided any services specified under the plan of care and not provided
under the State plan, and
(C) specify how the provision of services to the individual under the
plan will be coordinated with the provision of other health care
services to the individual.
The State shall make reasonable efforts to identify and arrange for
services described in subparagraph (B). Nothing in this subsection
shall be construed as requiring a State (under the State plan or
otherwise) to provide all the services specified in such a plan.
(c) Mandatory Coverage of Personal Assistance Services. The State plan
shall include, in the array of services made available to each category of
individuals with disabilities, both agency-administered and
consumer-directed personal assistance services (as defined in subsection
(g)).
(d) Additional Services.
(1) Types of services. Subject to subsection (e), services available
under a State plan under this subpart shall include any (or all) of the
following:
(A) Case management.
(B) Homemaker and chore assistance.
(C) Home modifications.
(D) Respite services.
(E) Assistive devices.
(F) Adult day services.
(G) Habilitation and rehabilitation.
(H) Supported employment.
(I) Home health services.
(J) Any other care or assistive services (approved by the Secretary)
that the State determines will help individuals with disabilities to
remain in their homes and communities.
(2) Criteria for selection of services. The State plan shall specify
(A) the methods and standards used to select the types, and the
amount, duration, and scope, of services to be covered under the plan
and to be available to each category of individuals with disabilities,
and
(B) how the types, and the amount, duration, and scope, of services
specified meet the needs of individuals within each of the 4 categories
of individuals with disabilities.
(e) Exclusions and Limitations.
(1) In general. A State plan may not provide for coverage of
(A) room and board,
(B) services furnished in a hospital, nursing facility, intermediate
care facility for the mentally retarded, or other institutional setting
specified by the Secretary,
(C) items and services to the extent coverage is provided for the
individual under a health plan or the medicare program.
(2) Taking into account informal care. A State plan may take into
account, in determining the amount and array of services made available
to covered individuals with disability, the availability of informal
care.
(f) Payment for Services. A State plan may provide for the use of
(1) vouchers,
(2) cash payments directly to individuals with disabilities,
(3) capitation payments to health plans, and
(4) payment to providers,
to pay for covered services.
(g) Personal Assistance Services.
(1) In general. In this section, the term ``personal assistance
services'' means those services specified under the State plan as
personal assistance services and shall include at least hands-on and
standby assistance, supervision, and cueing with activities of daily
living, whether agency-administered or consumer-directed (as defined in
paragraph (2)).
(2) Consumer-directed; agency-administered. In this part:
(A) The term ``consumer-directed'' means, with reference to personal
assistance services or the provider of such services, services that are
provided by an individual who is selected and managed (and, at the
individual's option, trained) by the individual receiving the services.
(B) The term ``agency-administered'' means, with respect to such
services, services that are not consumer-directed.
SEC. 2105. COST SHARING.
(a) No or Nominal Cost Sharing for Poorest. The State plan may not impose
any cost sharing (other than nominal cost sharing) for individuals with
income (as determined under subsection (c)) less than 150 percent of the
poverty level (as defined in section 1902(25)) applicable to a family of
the size involved.
(b) Sliding Scale for Remainder. The State plan shall impose cost sharing
in the form of coinsurance (based on the amount paid under the State plan
for a service)
(1) at a rate of 10 percent for individuals with disabilities with
income not less than 150 percent, and less than 250 percent, of the
poverty level applicable to a family of the size involved;
(2) at a rate of 25 percent for such individuals with income not less
than 250 percent, and less than 400 percent, of the poverty level
applicable to a family of the size involved; and
(3) at a rate of 40 percent for such individuals with income equal to
at least 400 percent of the poverty level applicable to a family of the
size involved.
(c) Determination of Income for Purposes of Cost Sharing. The State plan
shall specify the process to be used to determine the income of an
individual with disabilities for purposes of this section. Such process
shall be consistent with standards specified by the Secretary.
SEC. 2106. QUALITY ASSURANCE AND SAFEGUARDS.
(a) Quality Assurance. The State plan shall specify how the State will
ensure and monitor the quality of services, including
(1) safeguarding the health and safety of individuals with
disabilities,
(2) the minimum standards for agency providers and how such standards
will be enforced,
(3) the minimum competency requirements for agency provider employees
who provide direct services under this subpart and how the competency of
such employees will be enforced,
(4) obtaining meaningful consumer input, including consumer surveys
that measure the extent to which participants receive the services
described in the plan of care and participant satisfaction with such
services,
(5) participation in quality assurance activities, and
(6) specifying the role of the long-term care ombudsman (under the
Older Americans Act of 1965) and the Protection and Advocacy Agency
(under the Developmental Disabilities Assistance and Bill of Rights Act)
in assuring quality of services and protecting the rights of individuals
with disabilities.
(b) Safeguards.
(1) Confidentiality. The State plan shall provide safeguards which
restrict the use or disclosure of information concerning applicants and
beneficiaries to purposes directly connected with the administration of
the plan (including performance reviews under section 2602).
(2) Safeguards against abuse. The State plans shall provide safeguards
against physical, emotional, or financial abuse or exploitation
(specifically including appropriate safeguards in cases where payment for
program benefits is made by cash payments or vouchers given directly to
individuals with disabilities).
SEC. 2107. ADVISORY GROUPS.
(a) Federal Advisory Group.
(1) Establishment. The Secretary shall establish an advisory group, to
advise the Secretary and States on all aspects of the program under this
subpart.
(2) Composition. The group shall be composed of individuals with
disabilities and their representatives, providers, Federal and State
officials, and local community implementing agencies and a majority of
its members shall be individuals with disabilities and their
representatives.
(b) State Advisory Groups.
(1) In general. Each State plan shall provide for the establishment and
maintenance of an advisory group to advise the State on all aspects of
the State plan under this subpart.
(2) Composition. Members of each advisory group shall be appointed by
the Governor (or other chief executive officer of the State) and shall
include individuals with disabilities and their representatives,
providers, State officials, and local community implementing agencies and
a majority of its members shall be individuals with disabilities and
their representatives.
(3) Selection of members. Each State shall establish a process whereby
all residents of the State, including individuals with disabilities and
their representatives, shall be given the opportunity to nominate members
to the advisory group.
(4) Particular concerns. Each advisory group shall
(A) before the State plan is developed, advise the State on guiding
principles and values, policy directions, and specific components of
the plan,
(B) meet regularly with State officials involved in developing the
plan, during the development phase, to review and comment on all
aspects of the plan,
(C) participate in the public hearings to help assure that public
comments are addressed to the extent practicable,
(D) document any differences between the group's recommendations and
the plan,
(E) document specifically the degree to which the plan is
consumer-directed, and
(F) meet regularly with officials of the designated State agency (or
agencies) to provide advice on all aspects of implementation and
evaluation of the plan.
SEC. 2108. PAYMENTS TO STATES.
(a) In General. Subject to section 2102(a)(9)(B) (relating to limitation
on payment for administrative costs), the Secretary shall pay to each State
with a plan approved under this subpart, for each quarter, from its
allotment under section 2109(b), an amount equal to
(1) the Federal matching percentage (as defined in subsection (b)) of
amount demonstrated by State claims to have been expended during the
quarter for home and community-based services under the plan for
individuals with disabilities; plus
(2) an amount equal to 90 percent of amount expended during the quarter
under the plan for activities (including preliminary screening) relating
to determination of eligibility and performance of needs assessment; plus
(3) an amount equal to 90 percent (or, beginning with quarters in
fiscal year 2003, 75 percent) of the amount expended during the quarter
for the design, development, and installation of mechanical claims
processing systems and for information retrieval; plus
(4) an amount equal to 50 percent of the remainder of the amounts
expended during the quarter as found necessary by the Secretary for the
proper and efficient administration of the State plan.
(b) Federal Matching Percentage.
(1) In general. In subsection (a), the term ``Federal matching
percentage'' means, with respect to a State, the reference percentage
specified in paragraph (2) increased by 28 percentage points, except that
the Federal matching percentage shall in no case be less than 75 percent
or more than 95 percent.
(2) Reference percentage.
(A) In general. The reference percentage specified in this paragraph
is 100 percent less the State percentage specified in subparagraph (B),
except that
(i) the percentage under this paragraph shall in no case be less
than 50 percent or more than 83 percent, and
(ii) the percentage for Puerto Rico, the Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa shall be 50 percent.
(B) State percentage. The State percentage specified in this
subparagraph is that percentage which bears the same ratio to 45
percent as the square of the per capita income of such State bears to
the square of the per capita income of the continental United States
(including Alaska) and Hawaii.
(c) Payments on Estimates with Retrospective Adjustments. The method of
computing and making payments under this section shall be as follows:
(1) The Secretary shall, prior to the beginning of each quarter,
estimate the amount to be paid to the State under subsection (a) for such
quarter, based on a report filed by the State containing its estimate of
the total sum to be expended in such quarter, and such other information
as the Secretary may find necessary.
(2) From the allotment available therefore, the Secretary shall pay the
amount so estimated, reduced or increased, as the case may be, by any sum
(not previously adjusted under this section) by which the Secretary finds
that the estimate of the amount to be paid the State for any prior period
under this section was greater or less than the amount which should have
been paid.
(d) Application of Rules Regarding Limitations on Provider-Related
Donations and Health Care Related Taxes. The provisions of section 1903(w)
of the Social Security Act shall apply to payments to States under this
section in the same manner as they apply to payments to States under
section 1903(a) of such Act .
SEC. 2109. TOTAL FEDERAL BUDGET; ALLOTMENTS TO STATES.
(a) Total Federal Budget.
(1) Fiscal years 1996 through 2003. For purposes of this subpart, the
total Federal budget for State plans under this subpart for each of
fiscal years 1996 through 2003 is the following:
(A) For fiscal year 1996, 4.5 billion.
(B) For fiscal year 1997, 7.8 billion.
(C) For fiscal year 1998, 11.0 billion.
(D) For fiscal year 1999, 14.7 billion.
(E) For fiscal year 2000, 18.7 billion. [$56 to 2000}
(F) For fiscal year 2001, 26.7 billion. [48-56 for out years]
(G) For fiscal year 2002, 35.5 billion.
(H) For fiscal year 2003, 38.3 billion.
(2) Subsequent fiscal years. For purposes of this subpart, the total
Federal budget for State plans under this subpart for each fiscal year
after fiscal year 2003 is the total Federal budget under this subsection
for the preceding fiscal year multiplied by
(A) a factor (described in paragraph (3)) reflecting the change in
the CPI for the fiscal year, and
(B) a factor (described in paragraph (4)) reflecting the change in
the number of individuals with disabilities for the fiscal year.
(3) CPI increase factor. For purposes of paragraph (2)(A), the factor
described in this paragraph for a fiscal year is the ratio of
(A) the annual average index of the consumer price index for the
preceding fiscal year, to
(B) such index, as so measured, for the second preceding fiscal year.
(4) Disabled population factor. For purposes of paragraph (2)(B), the
factor described in this paragraph for a fiscal year is 100 percent plus
(or minus) the percentage increase (or decrease) change in the disabled
population of the United States (as determined for purposes of the most
recent update under subsection (b)(3)(D).
T3[review:] (5) Additional funds due to medicaid offsets.
(A) In general. Each participating State must provide the Secretary
with information concerning offsets and reductions in the medicaid
program resulting from home and community-based services provided under
this title, that would have been paid for under the State medicaid plan
but for the provision of similar services under the program under this
title.
(B) Reports. Each State with a program under this title shall submit
such reports to the Secretary as the Secretary may require in order to
monitor compliance with subparagraph (A).
(C) Compliance. The Secretary shall review such reports. The
Secretary shall increase the total Federal budget for State plans under
subsection (a)(1) by the amount of any reduction in Federal
expenditures for medical assistance under the State medicaid plan for
home and community based services.
(D) No duplicate payment. No paymet may be made to a State under this
section for any services to the extent that the State received payment
for such services under section 1903(a) of the Social Security Act.
(b) Allotments to States.
(1) In general. The Secretary shall allot to each State for each fiscal
year an amount that bears the same ratio to the total Federal budget for
the fiscal year (specified under paragraph (1) or (2) of subsection (a))
as the State allotment factor (under paragraph (2) for the State for the
fiscal year) bears to the sum of such factors for all States for that
fiscal year.
(2) State allotment factor.
(A) In general. For each State for each fiscal year, the Secretary
shall compute a State allotment factor equal to the sum of
(i) the base allotment factor (specified in subparagraph (B)), and
(ii) the low income allotment factor (specified in subparagraph
(C)),
for the State for the fiscal year.
(B) Base allotment factor. The base allotment factor, specified in
this subparagraph, for a State for a fiscal year is equal to the
product of the following:
(i) Number of individuals with disabilities. The number of
individuals with disabilities in the State (determined under
paragraph (3)) for the fiscal year.
(ii) 80 percent of the national per capita budget. 80 percent of
the national average per capita budget amount (determined under
paragraph (4)) for the fiscal year.
(iii) Wage adjustment factor. The wage adjustment factor
(determined under paragraph (5)) for the State for the fiscal year.
(iv) Federal matching rate. The Federal matching rate (determined
under section 2108(b)) for the fiscal year.
(C) Low income allotment factor. The low income allotment factor,
specified in this subparagraph, for a State for a fiscal year is equal
to the product of the following:
(i) Number of individuals with disabilities. The number of
individuals with disabilities in the State (determined under
paragraph (3)) for the fiscal year.
(ii) 10 percent of the national per capita budget. 10 percent of
the national average per capita budget amount (determined under
paragraph (4)) for the fiscal year.
(iii) Wage adjustment factor. The wage adjustment factor
(determined under paragraph (5)) for the State for the fiscal year.
(iv) Federal matching rate. The Federal matching rate (determined
under section 2108(b)) for the fiscal year.
(v) Low income index. The low income index (determined under paragraph
(6)) for the State for the preceding fiscal year.
(3) Number of individuals with disabilities. The number of individuals
with disabilities in a State for a fiscal year shall be determined as
follows:
(A) Base. The Secretary shall determine the number of individuals in
the State by age, sex, and income category, based on the 1990 decennial
census, adjusted (as appropriate) by the March 1994 current population
survey.
(B) Disability prevalence level by population category. The Secretary
shall determine, for each such age, sex, and income category, the
national average proportion of the population of such category that
represents individuals with disabilities. The Secretary may conduct
periodic surveys in order to determine such proportions.
(C) Base disabled population in a State. The number of individuals
with disabilities in a State in 1994 is equal to the sum of the
products, for such each age, sex, and income category, of
(i) the population of individuals in the State in the category
(determined under subparagraph (A)), and
(ii) the national average proportion for such category (determined
under subparagraph (B)).
(D) Update. The Secretary shall determine the number of individuals
with disabilities in a State in a fiscal year equal to the number
determined under subparagraph (C) for the State increased (or
decreased) by the percentage increase (or decrease) in the disabled
population of the State as determined under the current population
survey from 1994 to the year before the fiscal year involved.
(4) National per capita budget amount. The national average per capita
budget amount, for a fiscal year, is
(A) the total Federal budget specified under subsection (a) for the
fiscal year; divided by
(B) the sum, for the fiscal year, of the numbers of individuals with
disabilities (determined under paragraph (3)) for all the States for
the fiscal year.
(5) Wage adjustment factor. The wage adjustment factor, for a State for
a fiscal year, is equal to the ratio of
(A) the average hourly wages for service workers (other than
household or protective services) in the State, to
(B) the national average hourly wages for service workers (other than
household or protective services).
The hourly wages shall be determined under this paragraph based on
data from the most recent decennial census for which such data are
available.
(6) Low income index. The low income index for each State for a fiscal
year is the ratio, determined for the preceding fiscal year, of
(A) the percentage of the State's population that has income below
150 percent of the poverty level, to
(B) the percentage of the population of the United States that has
income below 150 percent of the poverty level.
Such percentages shall be based on data from the most recent
decennial census for which such data are available, adjusted by data
from the most recent current population survey as determined
appropriate by the Secretary.
(c) State Entitlement. This subpart constitutes budget authority in
advance of appropriations Acts, and represents the obligation of the
Federal Government to provide for the payment to States of amounts
described in section 2109(a).
Part 2. MEDICAID NURSING HOME IMPROVEMENTS
SEC. 2201. REFERENCE TO AMENDMENTS.
For amendments to the medicaid program under title XIX of the Social
Security Act to improvement nursing home benefits under such program, see
part 2 of subtitle C of title IV.
Part 3. PRIVATE LONG-TERM CARE INSURANCE
Subpart A. General Provisions
SEC. 2301. FEDERAL REGULATIONS; PRIOR APPLICATION OR CERTAIN
REQUIREMENTS.
(a) In General. The Secretary, with the advice and assistance of the
Advisory Council, as appropriate, shall promulgate regulations as necessary
to implement the provisions of this part, in accordance with the timetable
specified in subsection (b).
(b) Timetable for Publication of Regulations.
(1) Federal register notice. Within 120 days after the date a majority
of the members are first appointed to the Advisory Council pursuant to
section 2302, the Secretary shall publish in the Federal Register a
notice setting forth the projected timetable for promulgation of
regulations required under this part. Such timetable shall indicate which
regulations are proposed to be published by the end of the first, second,
and third years after appointment of the Advisory Council.
(2) Final deadline. All regulations required under this part shall be
published by the end of the third year after appointment of the Advisory
Council.
(c) Provisions Effective Without Regard to Promulgation of Regulations.
(1) In general. Notwithstanding any other provision of this part,
insurers shall be required, not later than 6 months after the enactment
of this Act, regardless of whether final implementing regulations have
been promulgated by the Secretary, to comply with the following
provisions of this part:
(A) Section 2321(c) (standard outline of coverage);
(B) Section 2321(d) (reporting to State insurance commissioners);
(C) Section 2322(b) (preexisting condition exclusions);
(D) Section 2322(c) (limiting conditions on benefits);
(E) Section 2322(d) (inflation protection);
(F) Section 2324 (sales practices);
(G) Section 2325 (continuation, renewal, replacement, conversion, and
cancellation of policies); and
(H) Section 2326 (payment of benefits).
(2) Interim requirements. Before the effective date of applicable
regulations promulgated by the Secretary implementing requirements of
this part as specified below, such requirements will be considered to be
met
(A) in the case of section 2321(c) (requiring a standard outline of
coverage), if the long-term care insurance policy meets the
requirements of section 6.G.(2) of the NAIC Model Act and of section 24
of the NAIC Model Regulation;
(B) in the case of section 2321(d) (requiring reporting to the State
insurance commissioner), if the insurer meets the requirements of
section 14 of the NAIC Model Regulation;
(C) in the case of section 2322(c)(1) (general requirements
concerning limiting conditions on benefits), if such policy meets the
requirements of section 6.D. of the NAIC Model Act;
(D) in the case of section 2322(c)(2) (limiting conditions on home
health care or community-based services) if such policy meets the
requirements of section 11 of the NAIC Model Regulations;
(E) in the case of section 2322(d) (concerning inflation protection),
if the insurer meets the requirements of section 12 of the NAIC Model
Regulation;
(F) in the case of section 2324(b) (concerning applications for the
purchase of insurance), if the insurer meets the requirements of
section 10 of the NAIC Model Regulation;
(G) in the case of section 2324(d) (concerning compensation for the
sale of policies), if the insurer meets the requirements of the
optional regulation entitled ``Permitted Compensation Arrangements''
included in the NAIC Model Regulation;
(H) in the case of section 2324(g) (concerning sales through
employers or membership organizations), if the insurer and the
membership organization meet the requirements of section 21.C. of the
NAIC Model Regulation;
(I) in the case of section 2324(h) (concerning interstate sales of
group policies), if the insurer and the policy meet the requirements of
section 5 of the NAIC Model Act; and
(J) in the case of section 2325(f) (concerning continuation, renewal,
replacement, and conversion of policies), if the insurer and the policy
meet the requirements of section 7 of the NAIC Model Regulation.
SEC. 2302. NATIONAL LONG-TERM CARE INSURANCE ADVISORY COUNCIL.
(a) Appointment. The Secretary shall appoint an advisory board to be
known as the National Long-Term Care Insurance Advisory Council.
(b) Composition.
(1) Number and qualifications of members. The Advisory Council shall
consist of 5 members, each of whom has substantial expertise in matters
relating to the provision and regulation of long-term care insurance. At
least one member shall have experience as a State insurance commissioner
or legislator with expertise in policy development with respect to, and
regulation of, long-term care insurance.
(2) Terms of Office.
(A) In general. Except as otherwise provided in this subsection,
members shall be appointed for terms of office of 5 years.
(B) Initial members. Of the initial members of the Council, one shall
be appointed for a term of 5 years, one for 4 years, one for 3 years,
one for 2 years, and one for 1 year.
(C) Two-term limit. No member shall be eligible to serve in excess of
two consecutive terms, but may continue to serve until such member's
successor is appointed.
(3) Vacancies. Any member appointed to fill a vacancy occurring before
the expiration of the term of such member's predecessor shall be
appointed for the remainder of such term.
(4) Removal. No member may be removed during the member's term of
office except for just and sufficient cause.
(c) Chairperson. The Secretary shall appoint a Chairperson from among the
members.
(d) Compensation.
(1) In general. Except as provided in paragraph (3), members of the
Advisory Council, while serving on business of the Advisory Council,
shall be entitled to receive compensation at a rate not to exceed the
daily equivalent of the rate specified for level V of the Executive
Schedule under section 5316 of title 5, United States Code.
(2) Travel. Except as provided in paragraph (3), members of the
Advisory Council, while serving on business of the Advisory Council away
from their homes or regular places of business, may be allowed travel
expenses (including per diem in lieu of subsistence) as authorized by
section 5703(b) of title 5, United States Code, for persons in the
Government service employed intermittently.
(3) Restriction. A member of the Advisory Council may not be
compensated under this section if the member is receiving compensation or
travel expenses from another source while serving on business of the
Advisory Council.
(e) Meetings. The Advisory Council shall meet not less often than 2 times
a year at the direction of the Chairperson.
(f) Staff and Support.
(1) In general. The Advisory Council shall have a salaried executive
director appointed by the Chairperson, and staff appointed by the
executive director with the approval of the Chairperson.
(2) Federal entities. The head of each Federal department and agency
shall make available to the Advisory Council such information and other
assistance as it may require to carry out its responsibilities.
(g) General Responsibilities. The Advisory Council shall
(1) provide advice, recommendations, and assistance to the Secretary on
matters relating to long-term care insurance as specified in this part
and as otherwise required by the Secretary;
(2) collect, analyze, and disseminate information relating to long-term
care insurance in order to increase the understanding of insurers,
providers, consumers, and regulatory bodies of the issues relating to,
and to facilitate improvements in, such insurance;
(3) develop for the Secretary's consideration proposed models,
standards, requirements, and procedures relating to long-term care
insurance, as appropriate, with respect to the content and format of
insurance policies, agent and insurer practices concerning the sale and
servicing of such policies, and regulatory activities; and
(4) monitor the development of the long-term care insurance market
(including policies, marketing practices, pricing, eligibility and
benefit preconditions, and claims payment procedures) and advise the
Secretary concerning the need for regulatory changes.
(h) Specific Matters for Consideration. The Advisory Council shall
consider, and provide views and recommendations to the Secretary
concerning, the following matters relating to long-term care insurance:
(1) Uniform terms, definitions, and formats. The Advisory Council shall
develop and propose to the Secretary uniform terminology, definitions,
and formats for use in long-term care insurance policies.
(2) Standard outline of coverage. The Advisory Council shall develop
and propose to the Secretary a standard format for use by all insurers
offering long-term care policies for the outline of coverage required
pursuant to section 2321(c).
(3) Premiums.
(A) Consideration of federal requirements. The Advisory Council shall
consider, and make recommendations to the Secretary concerning
(i) whether Federal standards should be established governing the amounts
of and rates of increase in premiums in long-term care policies, and
(ii) if so, what factors should be taken into account (and whether
such factors should include the age of the insured, actuarial
information, cost of care, lapse rates, financial reserve
requirements, insurer solvency, and tax treatment of premiums, and
benefits.
(4) Upgrades of coverage. The Advisory Council shall consider, and make
recommendations to the Secretary concerning, whether Federal standards
are needed governing the terms and conditions insurers may place on
insured individuals' eligibility to obtain improved coverage (including
any restrictions considered advisable with respect to premium increases,
agent commissions, medical underwriting, and age rating).
(5) Threshold conditions for payment of benefits. The Advisory Council
shall
(A) consider, and make recommendations to the Secretary concerning,
the advisability of establishing standardized sets of threshold
conditions (based on degrees of functional or cognitive impairment or
on other conditions) for payment of covered benefits;
(B) to the extent found appropriate, recommend to the Secretary
specific sets of threshold conditions to be used for such purpose;
(C) develop and propose to the Secretary, with respect to assessments
of insured individuals' levels of need for purposes of receipt of
covered benefits
(i) professional qualification standards applicable to individuals
making such determinations; and
(ii) uniform procedures and formats for use in performing and
documenting such assessments.
(6) Dispute resolution. The Advisory Council shall consider, and make
recommendations to the Secretary concerning, procedures that insurers and
States should be required to implement to afford insured individuals a
reasonable opportunity to dispute denial of benefits under a long-term
care insurance policy.
(7) Sales and servicing of policies. The Advisory Council shall
consider, and make recommendations to the Secretary concerning
(A) training and certification to be required of agents involved in
selling or servicing long-term care insurance policies;
(B) appropriate limits on commissions or other compensation paid to
agents for the sale or servicing of such policies;
(C) sales practices that should be prohibited or limited with respect
to such policies (including any financial limits that should be applied
concerning the individuals to whom such policies may be sold); and
(D) appropriate standards and requirements with respect to sales of
such policies by or through employers and other entities, to employees,
members, or affiliates of such entities.
(8) Continuing care retirement communities. The Advisory Council shall
consider, and make recommendations to the Secretary concerning, the
extent to which the long-term care insurance aspects of continuing care
retirement community arrangements should be subject to regulation under
this part (and the Secretary, in consultation with the Secretary of the
Treasury, shall consider such recommendations and promulgate appropriate
regulations).
(i) Activities. In order to carry out its responsibilities under
this part, the Advisory Council is authorized to
(1) consult individuals and public and private entities with experience
and expertise in matters relating to long-term care insurance (and shall
consult the National Association of Insurance Commissioners);
(2) conduct meetings and hold hearings;
(3) conduct research (either directly or under grant or contract);
(4) collect, analyze, publish, and disseminate data and information
(either directly or under grant or contract); and
(5) develop model formats and procedures for insurance policies and
marketing materials; and develop proposed standards, rules, and
procedures for regulatory programs.
(j) Authorization of Appropriations. There are authorized to be
appropriated, for activities of the Advisory Council, $1,500,000 for fiscal
year 1995, and $2,000,000 for each succeeding fiscal year.
SEC. 2303. RELATION TO STATE LAW.
Nothing in this part shall be construed as preventing a State from
applying standards that provide greater protection to insured individuals
under long-term care insurance policies than the standards promulgated
under this part, except that such State standards may not be inconsistent
with any of the requirements of this part or of regulations hereunder.
SEC. 2304. DEFINITIONS.
For purposes of this part:
(1) Activity of daily living. The term ``activity of daily living''
means any of the following: eating, toileting, dressing, bathing, and
transferring in and out of bed.
(2) Adult day care. The term ``adult day care'' means a program
providing social and health-related services during the day to six or
more adults with disabilities (or such smaller number as the Secretary
may specify in regulations) in a community group setting outside the
home.
(3) Advisory council. The term ``Advisory Council'' means the National
Long-Term Care Insurance Advisory Council established pursuant to section
2302.
(4) Certificate. The term ``certificate'' means a document issued to an
individual as evidence of such individual's coverage under a group
insurance policy.
(5) Continuing care retirement community. The term ``continuing care
retirement community'' means a residential community operated by a
private entity that enters into contractual agreements with residents
under which such entity guarantees, in consideration for residents'
purchase of or periodic payment for membership in the community, to
provide for such residents' future long-term care needs.
(6) Designated representative. The term ``designated representative''
means the person designated by an insured individual (or, if such
individual is incapacitated, pursuant to an appropriate administrative or
judicial procedure) to communicate with the insurer on behalf of such
individual in the event of such individual's incapacitation.
(7) Home health care. The term ``home health care'' means medical and
nonmedical services including such services as homemaker services,
assistance with activities of daily living, and respite care provided to
individuals in their residences.
(8) Insured individual. The term ``insured individual'' means, with
respect to a long-term care insurance policy, any individual who has
coverage of benefits under such policy.
(9) Insurer. The term ``insurer'' means any person that offers or sells
an individual or group long-term care insurance policy under which such
person is at risk for all or part of the cost of benefits under the
policy, and includes any agent of such person.
(10) Long-term care insurance policy. The term ``long-term care
insurance policy'' has the meaning given that term in section 4 of the
NAIC Model Act, except that the last sentence of such section shall not
apply.
(11) NAIC model act. The term ``NAIC Model Act'' means the Long-Term
Care Insurance Model Act published by the NAIC, as amended through
January 1993.
(12) NAIC model regulation. The term ``NAIC Model Regulation'' means
the Long-Term Care Insurance Model Regulation published by the NAIC, as
amended through January 1993.
(13) Nursing facility. The term ``nursing facility'' means a facility
licensed by the State to provide to residents
(A) skilled nursing care and related services for residents who
require medical or nursing care;
(B) rehabilitation services for the rehabilitation of injured,
disabled, or sick individuals, or
(C) on a regular basis, health-related care and services to
individuals who because of their mental or physical condition require
care and services (above the level of room and board) which can be made
available to them only through institutional facilities.
(14) Policyholder. The term ``policyholder'' means the entity which is
the holder of record of a group long-term care insurance policy.
(15) Residential care facility. The term ``residential care facility''
means a facility (including a nursing facility) that
(A) provides to residents medical or personal care services
(including at a minimum assistance with activities of daily living) in
a setting other than an individual or single-family home, and
(B) does not provide services of a higher level than can be provided
by a nursing facility.
(16) Respite care. The term ``respite care'' means the temporary
provision of care (including assistance with activities of daily living)
to an individual, in the individual's home or another setting in the
community, for the purpose of affording such individual's unpaid
caregiver a respite from the responsibilities of such care.
(17) State insurance commissioner. The term ``State insurance
commissioner'' means the State official bearing such title, or, in the
case of a jurisdiction where such title is not used, the State official
with primary responsibility for the regulation of insurance.
Subpart B. Federal Standards and Requirements
SEC. 2321. REQUIREMENTS TO FACILITATE UNDERSTANDING AND COMPARISON OF
BENEFITS.
(a) In General. The Secretary, after considering (where appropriate)
recommendations of the Advisory Council, shall promulgate regulations
designed to standardize formats and terminology used in long-term care
insurance policies, to require insurers to provide to customers and
beneficiaries information on the range of public and private long-term care
coverage available, and to establish such other requirements as may be
appropriate to promote consumer understanding and facilitate comparison of
benefits, which shall include at a minimum the requirements specified in
this section.
(b) Uniform Terms, Definitions, and Formats. Insurers shall be required
to use, in long-term care insurance policies, uniform terminology,
definitions of terms, and formats, in accordance with regulations
promulgated by the Secretary, after considering recommendations of the
Advisory Council.
(c) Standard Outline of Coverage.
(1) In general. Insurers shall be required to develop for each
long-term care insurance policy offered or sold, to include as a part of
each such policy, and to make available to each potential purchaser and
furnish to each insured individual and policyholder, an outline of
coverage under such policy that
(A) includes the elements specified in paragraph (2),
(B) is in a uniform format (as prescribed by Secretary on the basis
of recommendations by the Advisory Council),
(C) accurately and clearly reflects the contents of the policy, and
(D) is updated periodically on such timetable as may be required by
the Secretary (or more frequently as necessary to reflect significant
changes in outlined information).
(2) Contents of outline. The outline of coverage for each long-term
care insurance policy shall include at least the following:
(A) Benefits. A description of
(i) the principal benefits covered, including the extent of
(I) benefits for services furnished in residential care facilities,
and
(II) other benefits,
(ii) the principal exclusions from and limitations on coverage,
(iii) the terms and conditions, if any, upon which the insured
individual may obtain upgraded benefits, and
(iv) the threshold conditions for entitlement to receive benefits.
(B) Continuation, renewal, and conversion. A statement of the terms
under which a policy may be
(i) returned (and premium refunded) during an initial examination
period,
(ii) continued in force or renewed,
(iii) converted to an individual policy (in the case of coverage
under a group policy),
(C) Cancellation. A statement of the circumstances in which a policy
may be terminated, and the refund or nonforfeitures benefits (if any)
applicable in each such circumstance, including
(i) death of the insured individual,
(ii) nonpayment of premiums,
(iii) election by the insured individual not to renew,
(iv) any other circumstance.
(D) Premium. A statement of
(i) the total annual premium, and the portion of such premium
attributable to each covered benefit,
(ii) any reservation by the insurer of a right to change premiums,
(iii) any limit on annual premium increases,
(iv) any expected premium increases associated with automatic or
optional benefit increases (including inflation protection), and
(v) any circumstances under which payment of premium is waived.
(E) Declaration concerning summary. A statement, in bold face type on
the face of the document in language understandable to the average
individual, that the outline of coverage is a summary only, not a
contract of insurance, and that the policy contains the contractual
provisions that govern.
(F) Cost/value comparison.
(i) Information on average costs (and variation in such costs) for
nursing facility care (and such other care as the Secretary may
specify) and information on the value of benefits relative to such
costs.
(ii) A comparison of benefits, over a period of at least 20 years,
for policies with and without inflation protection.
(iii) A declaration as to whether the amount of benefits will
increase over time, and, if so, a statement of the type and amount
of, any limitations on, and any premium increases for, such benefit
increases.
(G) Tax treatment. A statement of the Federal income tax treatment of
premiums and benefits under the policy, as determined by the Secretary
of the Treasury.
(H) Other. Such other information as the Secretary may require.
(d) Reporting to State Insurance Commissioner. Each insurer shall be
required to report at least annually, to the State insurance commissioner
of each State in which any long-term care insurance policy of the insurer
is sold, such information, in such format, as the Secretary may specify
with respect to each such policy, including
(1) the standard outline of coverage required pursuant to subsection
(c);
(2) lapse rates and replacement rates for such policies;
(3) the ratio of premiums collected to benefits paid;
(4) reserves;
(5) written materials used in sale or promotion of such policy; and
(6) any other information the Secretary may require.
(e) Comparison of Long-Term Care Coverage Alternatives. Each insurer
shall be required to furnish to each individual before a long-term care
insurance policy of the insurer is sold to the individual information on
the conditions of eligibility for, and benefits under, each of the
following:
(1) Policies offered by the insurer. The standard outline of coverage,
and such other information as the Secretary may specify, with respect to
each long-term care insurance policy offered by the insurer.
(2) Comparison to other available private insurance. Information, in
such format as may be required under this part, on
(A) benefits offered under long-term care insurance policies of the
insurer (and the threshold conditions for receipt by an insured
individual of each such benefit); and
(B) additional benefits available under policies offered by other
private insurers (to the extent such information is made available by
the State insurance commissioner).
(3) Public programs; regional alliances. Information furnished to the
insurer, pursuant to section 2342(b)(2), by the State in which such
individual resides, on conditions of eligibility for, and long-term care
benefits (or the lack of such benefits) under
(A) each public long-term care program administered by the State,
(B) the Medicare programs under title XVIII of the Social Security
Act; and
(C) each regional alliance operating in the State.
SEC. 2322. REQUIREMENTS RELATING TO COVERAGE.
(a) In General. The Secretary, after considering (where appropriate)
recommendations of the Advisory Council, shall promulgate regulations
establishing requirements with respect to the terms of and benefits under
long-term care insurance policies, which shall include at a minimum the
requirements specified in this section.
(b) Limitations on Preexisting Condition Exclusions.
(1) Initial policies. A long-term care insurance policy may not exclude
or limit coverage for any service or benefit, the need for which is the
result of a medical condition or disability because an insured individual
received medical treatment for, or was diagnosed as having, such
condition before the issuance of the policy, unless
(A) the insurer, prior to issuance of the policy, determines and
documents (with evidence including written evidence that such condition
has been treated or diagnosed by a qualified health care professional)
that the insured individual had such condition during the 6-month
period (or such longer period as the Secretary may specify) ending on
the effective date of the policy; and
(B) the need or such service or benefit begins within 6 months (or
such longer period as the Secretary may specify) following the
effective date of the policy.
(2) Replacement policies. Solely for purposes of the requirements of
paragraph (1), with respect to an insured individual, the effective date
of a long-term care insurance policy issued to replace a previous policy,
with respect to benefits which are the same as or substantially
equivalent to benefits under such previous policy, shall be considered to
be the effective date of such previous policy with respect to such
individual.
(c) Limiting Conditions on Benefits.
(1) In general. A long-term care insurance policy may not
(A) condition eligibility for benefits for a type of service on the
need for or receipt of any other type of service (such as prior
hospitalization or institutionalization, or a higher level of care than
the care for which benefits are covered);
(B) condition eligibility for any benefit (where the need for such
benefit has been established by an independent assessment of
impairment) on any particular medical diagnosis (including any acute
condition) or on one of a group of diagnoses;
(C) condition eligibility for benefits furnished by licensed or
certified providers on compliance by such providers with conditions not
required under Federal or State law; or
(D) condition coverage of any service on provision of such service by
a provider, or in a setting, providing a higher level of care than that
required by an insured individual.
(2) Home care or community-based services. A long-term care insurance
policy that provides benefits for any home care or community-based
services provided in a setting other than a residential care facility
(A) may not limit such benefits to services provided by registered
nurses or licensed practical nurses;
(B) may not limit such benefits to services furnished by persons or
entities participating in programs under titles XVIII and XIX of the
Social Security Act and in part 1 of this subtitle; and
(C) must provide, at a minimum, benefits for personal assistance with
activities of daily living, home health care, adult day care, and
respite care.
(3) Nursing facility services. A long-term care insurance policy that
provides benefits for any nursing facility services
(A) must provide benefits for such services provided by all types of
nursing facilities licensed by the State, and
(B) may provide benefits for care in other residential facilities.
(4) Prohibition on discrimination by diagnosis. A long-term care
insurance policy may not provide for treatment of
(A) Alzheimer's disease or any other progressive degenerative
dementia of an organic origin,
(B) any organic or inorganic mental illness,
(C) mental retardation or any other cognitive or mental impairment,
or
(D) HIV infection or AIDS,
different from the treatment of any other medical condition for
purposes of determining whether threshold conditions for the receipt of
benefits have been met, or the amount of benefits under the policy.
(d) Inflation Protection.
(1) Requirement to offer. An insurer offering for sale any long-term
care insurance policy shall be required to afford the purchaser the
option to obtain coverage under such policy (upon payment of increased
premiums) of annual increases in benefits at rates in accordance with
paragraph (2).
(2) Rate increase in benefits. For purposes of paragraph (1), the
benefits under a policy for each year shall be increased by a percentage
of the full value of benefits under the policy for the previous year,
which shall be not less than 5 percent of such value (or such other rate
of increase as may be determined by the Secretary to be adequate to
offset increases in the costs of long-term care services for which
coverage is provided under the policy).
(3) Requirement of written rejection. Inflation protection in
accordance with paragraph (1) may be excluded from the coverage under a
policy only if the insured individual (or, if different, the person
responsible for payment of premiums has rejected in writing the option to
obtain such coverage.
SEC. 2323. REQUIREMENTS RELATING TO PREMIUMS.
(a) In General. The Secretary, after considering (where appropriate)
recommendations of the Advisory Council, shall promulgate regulations
establishing requirements applicable to premiums for long-term care
insurance policies, which shall include at a minimum the requirements
specified in this section.
(b) Limitations on Rates and Increases. The Secretary, after considering
recommendations of the Advisory Council, may establish by regulation such
standards and requirements as may be determined appropriate with respect to
(1) mandatory or optional State procedures for review and approval of
premium rates and rate increases or decreases;
(2) limitations on the amount of initial premiums, or on the rate or
amount of premium increases;
(3) the factors to be taken into consideration by an insurer in
proposing, and by a State in approving or disapproving, premium rates and
increases; and
(4) the extent to which consumers should be entitled to participate or
be represented in the rate-setting process and to have access to
actuarial and other information relied on in setting rates.
SEC. 2324. REQUIREMENTS RELATING TO SALES PRACTICES.
(a) In General. The Secretary, after considering (where appropriate)
recommendations of the Advisory Council, shall promulgate regulations
establishing requirements applicable to the sale or offering for sale of
long-term care insurance policies, which shall include at a minimum the
requirements specified in this section.
(b) Applications. Any insurer that offers any long-term care insurance
policy (including any group policy) shall be required to meet such
requirements with respect to the content, format, and use of application
forms for long-term care insurance as the Secretary may require by
regulation.
(c) Agent Training and Certification. An insurer may not sell or offer
for sale a long-term care insurance policy through an agent who does not
comply with minimum standards with respect to training and certification
established by the Secretary after consideration of recommendations by the
Advisory Council.
(d) Compensation for Sale of Policies. Compensation by an insurer to an
agent or agents for the sale of an original long-term care insurance
policy, or for servicing or renewing such a policy, may not exceed amounts
(or percentage shares of premiums or other reference amounts) specified by
the Secretary in regulations, after considering recommendations of the
Advisory Council.
(e) Prohibited Sales Practices. The following practices by insurers shall
be prohibited with respect to the sale or offer for sale of long-term care
insurance policies:
(1) False and misleading representations. Making any statement or
representation
(A) which the insurer knows or should know is false or misleading
(including the inaccurate, incomplete, or misleading comparison of
long-term care insurance policies or insurers), and
(B) which is intended, or would be likely, to induce any person to
purchase, retain, terminate, forfeit, permit to lapse, pledge, assign,
borrow against, convert, or effect a change with respect to, any
long-term care insurance policy.
(2) Inaccurate completion of medical history. Making or causing to be
made (by any means including failure to inquire about or to record
information relating to preexisting conditions) statements or omissions,
in records detailing the medical history of an applicant for insurance,
which the insurer knows or should know render such records false,
incomplete, or misleading in any way material to such applicant's
eligibility for or coverage under a long-term care insurance policy.
(3) Undue pressure. Employing force, fright, threat, or other undue
pressure, whether explicit or implicit, which is intended, or would be
likely, to induce the purchase of a long-term care insurance policy.
(4) Cold lead advertising. Using, directly or indirectly, any method of
contacting consumers (including any method designed to induce consumers
to contact the insurer or agent) for the purpose of inducing the purchase
of long-term care insurance (regardless of whether such purpose is the
sole or primary purpose of the contact) without conspicuously disclosing
such purpose.
(f) Prohibition on Sale of Duplicate Benefits. An insurer or agent may
not sell or issue to an individual a long-term care insurance policy that
the insurer or agent knows or should know provides for coverage that
duplicates coverage already provided in another long-term care insurance
policy held by such individual (unless the policy is intended to replace
such other policy).
(g) Sales Through Employers or Membership Organizations.
(1) Requirements concerning such arrangements. In any case where an
employer, organization, association, or other entity (referred to as a
``membership entity'') endorses a long-term care insurance policy to, or
such policy is marketed or sold through such membership entity to,
employees, members, or other individuals affiliated with such membership
entity
(A) the insurer offering such policy shall not permit its marketing
or sale through such entity unless the requirements of this subsection
are met; and
(B) a membership entity that receives any compensation for such sale,
marketing, or endorsement of such policy shall be considered the agent
of the insurer for purposes of this part.
(2) Disclosure and information requirements. A membership entity that
endorses a long-term care insurance policy, or through which such policy
is sold, to individuals affiliated with such entity, shall
(A) disclose prominently, in a form and manner designed to ensure
that each such individual who receives information concerning any such
policy through such entity is aware of and understands such disclosure
(i) the manner in which the insurer and policy were selected;
(ii) the extent (if any) to which a person independent of the
insurer with expertise in long-term care insurance analyzed the
advantages and disadvantages of such policy from the standpoint of
such individuals (including such matters as the merits of the policy
compared to other available benefit packages, and the financial
stability of the insurer), and the results of any such analysis;
(iii) any organizational or financial ties between the entity (or a
related entity) and the insurer (or a related entity);
(iv) the nature of compensation arrangements (if any) and the
amount of compensation (including all fees, commissions, and other
forms of financial support) for the endorsement or sale of such
policy; and
(B) make available to such individuals, either directly or through
referrals, appropriate counseling to assist such individuals to make
educated and informed decisions concerning the purchase of such
policies.
SEC. 2325. CONTINUATION, RENEWAL, REPLACEMENT, CONVERSION, AND
CANCELLATION OF
POLICIES.
(a) In General. The Secretary, after considering (where appropriate)
recommendations of the Advisory Council, shall promulgate regulations
establishing requirements applicable to the renewal, replacement,
conversion, and cancellation of long-term care insurance policies, which
shall include at a minimum the requirements specified in this section.
(b) Insured's Right to Cancel During Examination Period. Each individual
insured (or, if different, each individual liable for payment of premiums)
under a long-term care insurance policy shall have the unconditional right
to return the policy within 30 days after the date of its issuance and
delivery, and to obtain a full refund of any premium paid.
(c) Insurer's Right to Cancel (or Deny Benefits) Based on Fraud or
Nondisclosure. An insurer shall have the right to cancel a long-term care
insurance policy, or to refuse to pay a claim for benefits, based on
evidence that the insured falsely represented or failed to disclose
information material to the determination of eligibility to purchase such
insurance, but only if
(1) the insurer presents written documentation, developed at the time
the insured applied for such insurance, of the insurer's request for the
information thus withheld or misrepresented, and the insured individual's
response to such request;
(2) the insurer presents medical records or other evidence showing that
the insured individual knew or should have known that such response was
false, incomplete, or misleading;
(3) notice of cancellation is furnished to the insured individual
before the date 3 years after the effective date of the policy (or such
earlier date as the Secretary may specify in regulations); and
(4) the insured individual is afforded the opportunity to review and
refute the evidence presented by the insurer pursuant to paragraphs (1)
and (2).
(d) Insurer's Right to Cancel for Nonpayment of Premiums.
(1) In general. Insurers shall have the right to cancel long-term care
insurance policies for nonpayment of premiums, subject to the provisions
of this subsection and subsection (e) (relating to nonforfeiture).
(2) Notice and acknowledgement.
(A) In general. The insurer may not cancel coverage of an insured
individual until
(i) the insurer, not earlier than the date when such payment is 30
days past due, has given written notice to the insured individual (by
registered letter or the equivalent) of such intent, and
(ii) 30 days have elapsed since the insurer obtained written
acknowledgment of receipt of such notice from the insured individual
(or the designated representative, at the insured individual's option
or in the case of an insured individual determined to be
incapacitated in accordance with paragraph (4)).
(B) Additional Requirement for Group Policies. In the case of a group
long-term care insurance policy, the notice and acknowledgement
requirements of subparagraph (A) apply with respect to the policyholder
and to each insured individual.
(3) Reinstatement of coverage of incapacitated individuals. In any case
where the coverage of an individual under a long-term care insurance
policy has been canceled pursuant to paragraph (2), the insurer shall be
required to reinstate full coverage of such individual under such policy,
retroactive to the effective date of cancellation, if the insurer
receives from such individual (or the designated representative of such
individual), within 5 months after such date
(A) evidence of a determination of such individual's incapacitation
in accordance with paragraph (4) (whether made before or after such
date), and
(B) payment of all premiums due and past due, and all charges for
late payment.
(4) Determination of incapacitation. For purposes of this subsection,
the term ``determination of incapacitation'' means a determination by a
qualified health professional (in accordance with such requirements as
the Secretary may specify), that an insured individual has suffered a
cognitive impairment or loss of functional capacity which could
reasonably be expected to render the individual permanently or
temporarily unable to deal with business or financial matters. The
standard used to make such determination shall not be more stringent than
the threshold conditions for the receipt of covered benefits.
(5) Designation of representative. The insurer shall be required
(A) to require the insured individual, at the time of sale or
issuance of a long-term care insurance policy
(i) to designate a representative for purposes of communication
with the insurer concerning premium payments in the event the insured
individual cannot be located or is incapacitated, or
(ii) to complete a signed and dated statement declining to
designate a representative, and
(B) to obtain from the insured individual, at the time of each
premium payment (but in no event less often than once in each 12-month
period) reconfirmation or revision of such designation or declination.
(e) Nonforfeiture.
(1) In general. The Secretary, after consideration of recommendations
by the Advisory Council, shall by regulation require appropriate
nonforfeiture benefits with respect to each long-term care insurance
policy that lapses for any reason (including nonpayment of premiums,
cancellation, or failure to renew, but excluding lapses due to death)
after remaining in effect beyond a specified minimum period.
(2) Nonforfeiture benefits. The standards established under this
subsection shall require that the amount or percentage of nonforfeiture
benefits shall increase proportionally with the amount of premiums paid
by a policyholder.
(f) Continuation, Renewal, Replacement, and Conversion of Policies.
(1) In general. Insurers shall not be permitted to cancel, or refuse to
renew (or replace with a substantial equivalent), any long-term care
insurance policy for any reason other than for fraud or material
misrepresentation (as provided in subsection (c)) or for nonpayment of
premium (as provided in subsection (d)).
(2) Duration and renewal of policies. Each long-term care insurance
policy shall contain a provision that clearly states
(A) the duration of the policy,
(B) the right of the insured individual (or policyholder) to renewal
(or to replacement with a substantial equivalent),
(C) the date by which, and the manner in which, the option to renew
must be exercised, and
(D) any applicable restrictions or limitations (which may not be
inconsistent with the requirements of this part).
(3) Replacement of policies.
(A) In general. Except as provided in subparagraph (B), an insurer
shall not be permitted to sell any long-term care insurance policy as a
replacement for another such policy unless coverage under such
replacement policy is available to an individual insured for benefits
covered under the previous policy to the same extent as under such
previous policy (including every individual insured under a group
policy) on the date of termination of such previous policy, without
exclusions or limitations that did not apply under such previous
policy.
(B) Insured's option to reduce coverage. In any case where an insured
individual covered under a long-term care insurance policy knowingly
and voluntarily elects to substitute for such policy a policy that
provides less coverage, substitute policy shall be considered a
replacement policy for purposes of this part.
(3) Continuation and conversion rights with respect to group policies.
(A) In general. Insurers shall be required to include in each group
long-term care insurance policy, a provision affording to each insured
individual, when such policy would otherwise terminate, the opportunity
(at the insurer's option, subject to approval of the State insurance
commissioner) either to continue or to convert coverage under such
policy in accordance with this paragraph.
(B) Rights of related individuals. In the case of any insured
individual whose eligibility for coverage under a group policy is based
on relationship to another individual, the insurer shall be required to
continue such coverage upon termination of the relationship due to
divorce or death.
(C) Continuation of coverage. A group policy shall be considered to
meet the requirements of this paragraph with respect to rights of an
insured individual to continuation of coverage if coverage of the same
(or substantially equivalent) benefits for such individual under such
policy is maintained, subject only to timely payment of premiums.
(D) Conversion of coverage. A group policy shall be considered to
meet the requirements of this paragraph with respect to conversion if
it entitles each individual who has been continuously covered under the
policy for at least 6 months before the date of the termination to
issuance of a replacement policy providing benefits identical to,
substantially equivalent to, or in excess of, the benefits under such
terminated group policy
(i) without requiring evidence of insurability with respect to
benefits covered under such previous policy, and
(ii) at premium rates no higher than would apply if the insured
individual had initially obtained coverage under such replacement
policy on the date such insured individual initially obtained
coverage under such group policy.
(4) Treatment of substantial equivalence.
(A) Under secretary's guidelines. The Secretary, after considering
recommendations by the Advisory Council, shall develop guidelines for
comparing long-term care insurance policies for the purpose of
determining whether benefits under such policies are substantially
equivalent.
(B) Before effective date of secretary's guidelines. During the
period prior to the effective date of guidelines published by the
Secretary under this paragraph, insurers shall comply with standards
for determinations of substantial equivalence established by State
insurance commissioners.
(5) Additional requirements. Insurers shall comply with such other
requirements relating to continuation, renewal, replacement, and
conversion of long-term care insurance policies as the Secretary may
establish.
SEC. 2326. REQUIREMENTS RELATING TO PAYMENT OF BENEFITS.
(a) In General. The Secretary, after considering (where appropriate)
recommendations of the Advisory Council, shall promulgate regulations
establishing requirements with respect to claims for and payment of
benefits under long-term care insurance policies, which shall include at a
minimum the requirements specified in this section.
(b) Standards Relating to Threshold Conditions for Receipt of Covered
Benefits. Each long-term care insurance policy shall meet the following
requirements with respect to identification of, and determination of
whether an insured individual meets, the threshold conditions for receipt
of benefits covered under such policy:
(1) Declaration of threshold conditions.
(A) In general. The policy shall specify the level (or levels) of
functional or cognitive mental impairment (or combination of
impairments) required as a threshold condition of entitlement to
receive benefits under the policy (which threshold condition or
conditions shall be consistent with any regulations promulgated by the
Secretary pursuant to subsection (B)).
(B) Secretarial responsibility. The Secretary (after considering the
views of the Advisory Council on current practices of insurers
concerning, and the appropriateness of standardizing, threshold
conditions) may promulgate such regulations as the Secretary finds
appropriate establishing standardized thresholds to be used under such
policies as preconditions for varying levels of benefits.
(2) Independent professional assessment. The policy shall provide for a
procedure for determining whether the threshold conditions specified
under paragraph (1) have been met with respect to an insured individual
which
(A) applies such uniform assessment standards, procedures, and
formats as the Secretary may specify, after consideration of
recommendations by the Advisory Council;
(B) permits an initial evaluation (or, if the initial evaluation was
performed by a qualified independent assessor selected by the insurer,
a reevaluation) to be made by a qualified independent assessor selected
by the insured individual (or designated representative) as to whether
the threshold conditions for receipt of benefits have been met;
(C) permits the insurer the option to obtain a reevaluation by a
qualified independent assessor selected and reimbursed by the insurer;
(D) provides that the insurer will consider that the threshold
conditions have been met in any case where
(i) the assessment under subparagraph (B) concluded that such
conditions had been met, and the insurer declined the option under
subparagraph (C), or
(ii) assessments under both subparagraphs (B) and (C) concluded
that such conditions had been met; and
(E) provides for final resolution of the question by a State agency
or other impartial third party in any case where assessments under
subparagraphs (B) and (C) reach inconsistent conclusions.
(3) Qualified independent assessor. For purposes of paragraph (2), the
term ``qualified independent assessor'' means a licensed or certified
professional, as appropriate, who
(A) meets such standards with respect to professional qualifications
as may be established by the Secretary, after consulting with the
Secretary of the Treasury, and
(B) has no significant or controlling financial interest in, is not
an employee of, and does not derive more than 5 percent of gross income
from, the insurer (or any provider of services for which benefits are
available under the policy and in which the insurer has a significant
or controlling financial interest).
(c) Requirements Relating to Claims for Benefits. Insurers shall be
required
(1) to promptly pay or deny claims for benefits submitted by (or on
behalf of) insured individuals who have been determined pursuant to
subsection (b) to meet the threshold conditions for payment of benefits;
(2) to provide an explanation in writing of the reasons for payment,
partial payment, or denial of each such claim; and
(3) to provide an administrative procedure under which an insured
individual may appeal the denial of any claim.
Subpart C. Enforcement
SEC. 2342. STATE PROGRAMS FOR ENFORCEMENT OF STANDARDS.
(a) Requirement for State Programs Implementing Federal Standards. In
order for a State to be eligible for grants under this subpart, the State
must have in effect a program (including such laws and procedures as may be
necessary) for the regulation of long-term care insurance which the
Secretary has determined
(1) includes the elements required under this subpart, and
(2) is designed to ensure the compliance of long-term care insurance
policies sold in the State, and insurers offering such policies and their
agents, with the requirements established pursuant to subpart B.
(b) Activities Under State Program. A State program approved under this
subpart shall provide for the following procedures and activities:
(1) Monitoring of insurers and policies. Procedures for ongoing
monitoring of the compliance of insurers doing business in the State, and
of long-term care insurance policies sold in the State, with requirements
under this part, including at least the following:
(A) Policy review and certification. A program for review and
certification (and annual recertification) of each such policy sold in
the State.
(B) Reporting by insurers. Requirements of annual reporting by
insurers selling or servicing long-term care insurance policies in the
State, in such form and containing such information as the State may
require to determine whether the insurer (and policies) are in
compliance with requirements under this part.
(C) Data collection. Procedures for collection, from insurers,
service providers, insured individuals, and others, of information
required by the State for purposes of carrying out its responsibilities
under this part (including authority to compel compliance of insurers
with requests for such information).
(D) Marketing oversight. Procedures for monitoring (through sampling
or other appropriate procedures) the sales practices of insurers and
agents, including review of marketing literature.
(E) Oversight of administration of benefits. Procedures for
monitoring (through sampling or other appropriate procedures) insurers'
administration of benefits, including monitoring of
(i) determinations of insured individuals' eligibility to receive
benefits, and
(ii) disposition of claims for payment.
(2) Information to insurers. Procedures for furnishing, to insurers
selling or servicing any long-term care insurance policies in the State,
information on conditions of eligibility for, and benefits under, each
public long-term care program administered by the State, in order to
enable them to comply with the requirement under section 2321(e)(3).
(3) Consumer complaints and dispute resolution. Administrative
procedures for the investigation and resolution of complaints by
consumers, and disputes between consumers and insurers, with respect to
long-term care insurance, including
(A) procedures for the filing, investigation, and adjudication of
consumer complaints with respect to the compliance of insurers and
policies with requirements under this part, or other requirements under
State law; and
(B) procedures for resolution of disputes between insured individuals
and insurers concerning eligibility for, or the amount of, benefits
payable under such policies, and other issues with respect to the
rights and responsibilities of insurers and insured individuals under
such policies.
(4) Technical assistance to insurers. Provision of technical assistance
to insurers to help them to understand and comply with the requirements
of this part, and other State laws, concerning long-term care insurance
policies and business practices.
(c) State Enforcement Authorities. A State program meeting the
requirements of this subpart shall ensure that the State insurance
commissioner (or other appropriate official or agency) has the following
authority with respect to long-term care insurers and policies:
(1) Prohibition of sale. Authority to prohibit the sale, or offering
for sale, of any long-term care insurance policy that fails to comply
with all applicable requirements under this part.
(2) Plans of correction. Authority, in cases where the business
practices of an insurer are determined not to comply with requirements
under this part, to require the insurer to develop, submit for State
approval, and implement a plan of correction which must be fulfilled
within the shortest period possible (not to exceed a year) as a condition
of continuing to do business in the State.
(3) Corrective action orders. Authority, in cases where an insurer is
determined to have failed to comply with requirements of this part, or
with the terms of a policy, with respect to a consumer or insured
individual, to direct the insurer (subject to appropriate due process) to
eliminate such noncompliance within 30 days.
(4) Civil money penalties. Authority to assess civil money penalties,
in amounts for each violative act up to the greater of $10,000 or three
times the amount of any commission involved
(A) for violations of subsections (d) (concerning compensation or
sale of policies), (e) (concerning prohibited sales practices), and (f)
(prohibition on sale of duplicate benefits) of section 2324,
(B) for such other violative acts as the Secretary may specify in
regulations, and
(C) in such other cases as the State finds appropriate.
(5) Other authorities. Such other authorities as the State finds
necessary or appropriate to enforce requirements under this part.
(d) Records, Reports, and Audits. As a condition of approval of its
program under this part, a State must agree to maintain such records, make
such reports (including expenditure reports), and cooperate with such
audits, as the Secretary finds necessary to determine the compliance of
such State program (and insurers and policies regulated under such program)
with the requirements of this part.
(e) Secretarial Responsibilities.
(1) Approval of state programs. The Secretary shall approve a State
program meeting the requirements of this part.
(2) Information on medicare benefits. The Secretary shall furnish, to
the official in each State with chief responsibility for the regulation
of long-term care insurance, a description of the Medicare programs under
title XVIII of the Social Security Act which makes clear the
unavailability of long-term benefits under such programs, for
distribution by such State official to insurers selling long-term care
insurance in the State, in accordance with subsection (b)(2).
SEC. 2342. AUTHORIZATION OF APPROPRIATIONS FOR STATE PROGRAMS.
There are authorized to be appropriated $10,000,000 for fiscal year
1996, $10,000,000 for fiscal year 1997, $7,500,000 for fiscal year 1998,
and $5,000,000 for fiscal year 1999 and each succeeding fiscal year, for
grants to States with programs meeting the requirements of this part, to
remain available until expended.
SEC. 2343. ALLOTMENTS TO STATES.
The allotment for any fiscal year to a State with a program approved
under this part shall be an amount determined by the Secretary, taking
into account the numbers of long-term care insurance policies sold, and
of elderly individuals residing, in the State, and such other factors as
the Secretary finds appropriate.
SEC. 2344. PAYMENTS TO STATES.
(a) In General. Each State with a program approved under this part shall
be entitled to payment under this title for each fiscal year in an amount
equal to its allotment for such fiscal year, for expenditure by such State
for up to 50 percent of the cost of activities under such program.
(b) State Share of Program Expenditures. No Federal funds from any source
may be used as any part of the non-Federal share of expenditures under the
State program under this subpart.
(c) Transfer and Deposit Requirements. The Secretary shall make payments
under this section in accordance with section 6503 of title 31, United
States Code.
SEC. 2345. FEDERAL OVERSIGHT OF STATE ENFORCEMENT.
(a) In General. The Secretary shall periodically review State regulatory
programs approved under section 2341 to determine whether they continue to
comply with the requirements of this part.
(b) Notice of Determination of Noncompliance. The Secretary shall
promptly notify the State of a determination that a State program fails to
comply with this part, specifying the requirement or requirements not met
and the elements of the State program requiring correction.
(c) Opportunity for Correction.
(1) In general. The Secretary shall afford a State notified of
noncompliance pursuant to subsection (b) a reasonable opportunity to
eliminate such noncompliance.
(2) Correction plans. In a case where substantial corrections are
needed to eliminate noncompliance of a State program, the Secretary may
(A) permit the State a reasonable time after the date of the notice
pursuant to subsection (b) to develop and obtain the Secretary's
approval of a correction plan, and
(B) permit the State a reasonable time after the date of approval of
such plan to eliminate the noncompliance.
(d) Withdrawal of Program Approval. In the case of a State that fails to
eliminate noncompliance with requirements under this part by the date
specified by the Secretary pursuant to subsection (c), the Secretary shall
withdraw the approval of the State program pursuant to section 2341(e).
SEC. 2346. EFFECT OF FAILURE TO HAVE APPROVED STATE PROGRAM.
(a) Restriction on Sale of Long-Term Care Insurance.
(1) In general. No insurer may sell or offer for sale any long-term
care insurance policy, on or after the date specified in subsection (c),
in a State that does not have in effect a regulatory program approved
under section 2341(e).
(2) Application of prohibition. For purposes of paragraph (1), an
insurance policy shall not be considered to be sold or offered for sale
in a State solely because it is sold or offered to a resident of such
State.
(b) Civil Money Penalty.
(1) In general. An insurer shall be subject to a civil money penalty,
in an amount up to the greater of $10,000 or three times any commission
involved, for each incident in which the insurer sells, or offers to
sell, an insurance policy to an individual in violation of subsection
(a).
(2) Enforcement procedure. The Secretary shall enforce the provisions
of this subsection in accordance with the procedures provided under
section 5412 of this Act.
(c) Effective Date.
(1) In general. The date specified in this subsection, for purposes of
subsection (a), with respect to any requirement under this part, is the
date one year after the date the Secretary first promulgates regulations
with respect to such requirement.
(2) Exception. To the extent that a State demonstrates to the Secretary
that State legislation is required to meet any such requirement, the
State shall not be regarded as failing to have in effect a program in
compliance with this part solely on the basis of its failure to comply
with such requirement before the first day of the first calendar quarter
beginning after the close of the first regular session of the State
legislature that begins after the promulgation of the regulation imposing
such requirement. For purposes of the preceding sentence, in the case of
a State that has a 2-year legislative session, each year of such session
shall be deemed to be a separate regular session of the State
legislature.
Subpart D. Consumer Education Grants
SEC. 2361. GRANTS FOR CONSUMER EDUCATION.
(a) Grant Program Authorized. The Secretary is authorized to make grants
(1) to States,
(2) to regional alliances (at the option of States within which such
Alliances are located), and
(3) to national organizations representing insurance consumers,
long-term care providers, and insurers,
for the development and implementation of long-term care information,
counseling, and other programs.
(b) Applications.
(1) In general. Each State or organization seeking a grant under this
section shall submit to the Secretary an application, in such format and
containing such information as the Secretary may require.
(2) Goals. Programs under this section shall be directed at the goals
of increasing consumers' understanding and awareness of options available
to them with respect to long-term care insurance (and alternatives, such
as public long-term care programs), including
(A) the risk of needing long-term care;
(B) the costs associated with long-term care services;
(C) the lack of long-term care coverage under the Medicare program,
Medicare supplemental (Medigap) policies, and standard private health
insurance;
(D) the limitations on (and conditions of eligibility for) long-term
care coverage under State programs;
(E) the availability, and variations in coverage and cost, of private
long-term care insurance;
(F) features common to many private long-term care insurance
policies; and
(G) pitfalls to avoid when purchasing a long-term care insurance
policy.
(3) Activities. An application for a grant under this section shall
indicate the activities the State or organization would carry out under
such grant, which activities may include
(A) coordination of the activities of State agencies and private
entities as necessary to carry out the State's program under this
section;
(B) collection, analysis, publication, and dissemination of
information,
(C) conducting or sponsoring of consumer education, outreach, and
information programs,
(D) providing (directly or through referral) counseling and
consultation services to consumers to assist them in choosing long-term
care insurance coverage appropriate to their circumstances, and
(E) other appropriate activities.
(4) Priority for innovation. In awarding grants under this section, the
Secretary shall give priority to applications proposing to use innovative
approaches to providing information, counseling, and other assistance to
individuals who might benefit from, or are considering the purchase of,
long-term care insurance.
(c) Period of Grants. Grants under this section shall be for not longer
than 3 years.
(d) Evaluations and Reports.
(1) By grantees to the secretary. Each recipient of a grant under this
section shall annually evaluate the effectiveness of its program under
such grant, and report its conclusions to the Secretary.
(2) By the secretary to the congress. The Secretary shall annually
evaluate, and report to the Congress on, the effectiveness of programs
under this section, on the basis of reports received under paragraph (1)
and such independent evaluation as the Secretary finds necessary.
(e) Authorization of Appropriations. There are authorized to be
appropriated, for grants under this section
(1) $10,000,000 for each of fiscal years 1995 through 1997 for grants
to States, and
(2) $1,000,000 for each of fiscal years 1995 through 1997,
for grants to eligible organizations.
Part 4. TAX TREATMENT OF LONG-TERM CARE INSURANCE AND SERVICES
SEC. 2401. REFERENCE TO TAX PROVISIONS.
For amendments to the Internal Revenue Code of 1986 relating to the
treatment of long-term care insurance and services, see subtitle G of
title VII.
Part 5. TAX INCENTIVES FOR INDIVIDUALS WITH DISABILITIES WHO WORK
SEC. 2501. REFERENCE TO TAX PROVISION.
For amendment to the Internal Revenue Code of 1986 providing for a tax
credit for cost of personal assistance services required by employed
individuals, see section 7901.
Part 6. DEMONSTRATION AND EVALUATION
SEC. 2601. DEMONSTRATION ON ACUTE AND LONG-TERM CARE INTEGRATION.
(a) Program Authorized. The Secretary of Health and Human Services shall
conduct a demonstration program to test the effectiveness of various
approaches to financing and providing integrated acute and long-term care
services described in subsection (b) for the chronically ill and disabled
who meet eligibility criteria under subsection (c).
(b) Services and Benefits.
(1) In general. Except as provided in paragraph (2), the following
services and benefits shall be provided under each demonstration approved
under this section:
(A) Comprehensive benefit package. All benefits included in the
comprehensive benefit package under title I of this Act.
(B) Transitional benefits. Specialized benefits relating to the
transition from acute to long-term care, including
(i) assessment and consultation,
(ii) inpatient transitional care,
(iii) medical rehabilitation,
(iv) home health care and home care,
(v) caregiver support, and
(vi) self-help technology.
(C) Long-term care benefits. Long-term care benefits, including
(i) adult day care,
(ii) personal assistance services,
(iii) homemaker services and chore services;
(iv) home-delivered meals;
(v) respite services;
(vi) nursing facility services in specialized care units;
(vii) services in other residential settings including community
supported living arrangements and assisted living facilities; and
(viii) assistive devices and environmental modifications.
(D) Habilitation services. Specialized habilitation services for
participants with developmental disabilities.
(2) Variations in minimum benefits.
(A) In general. Subject to the requirement of subparagraph (B),
demonstrations may omit specified services listed under subparagraphs
(C) and (D) of paragraph (1), or provide additional services, as found
appropriate by the Secretary in the case of a particular demonstration,
taking into consideration factors such as
(i) the needs of a specialized group of eligible beneficiaries;
(ii) the availability of the omitted benefits under other programs
in the service area; and
(iii) the geographic availability of service providers.
(B) Breadth requirement. In approving variant demonstrations pursuant
to subparagraph (A), the Secretary shall ensure that demonstrations
under this section, taken as a group, adequately test financing and
delivery models covering the entire array of services and benefits
described in paragraph (1).
(c) Eligibility Criteria. The Secretary shall establish eligibility
criteria for individuals who may receive services under demonstrations
under this section. Under such criteria, any of the following may be found
to be eligible populations for such demonstrations:
(1) Individuals with disabilities who are entitled to services and
benefits under a State program under part 1 of this subtitle.
(2) Individuals who are entitled to benefits under parts A and B of
title XVIII of the Social Security Act.
(3) Individuals who are entitled to medical assistance under a State
plan under title XIX of the Social Security Act, and are also
(A) individuals described in paragraph (2), or
(B) individuals eligible for supplemental security income under title
XVI of that Act.
(d) Application.
(1) In general. Each entity seeking to participate in a demonstration
under this section shall submit an application, in such format and
containing such information as the Secretary may require, including the
information specified in this subsection.
(2) Service delivery. The application shall state the services to be
provided under the demonstration (either directly by the applicant or
under other arrangements approved by the Secretary), which shall include
services specified pursuant to subsection (b) and
(A) enrollment services;
(B) client assessment and care planning;
(C) simplified access to needed services;
(D) integrated management of acute and chronic care, including
measures to ensure continuity of care across settings and services;
(E) quality assurance, grievance, and appeals mechanisms; and
(F) such other services as the Secretary may require.
(3) Consumer protection and participation. The applicant shall provide
evidence of consumer participation
(A) in the planning of the demonstration (including a showing of
support from community agencies or consumer interest groups); and
(B) in the conduct of the demonstration, including descriptions of
methods and procedures to be used
(i) to make available to individuals enrolled in the demonstration
information on self-help, health promotion and disability prevention
practices, and enrollees' contributions to the costs of care;
(ii) to ensure participation by such enrollees (or their designated
representatives, where appropriate) in care planning and in decisions
concerning treatment;
(iii) to handle and resolve client grievances and appeals;
(iv) to take enrollee views into account in quality assurance and
provider contracting procedures; and
(v) to evaluate enrollee satisfaction with the program.
(4) Applicant qualifications. Applicants for grants under this section
shall meet eligibility criteria established by the Secretary, including
requirements relating to
(A) adequate financial controls to monitor administrative and service
costs,
(B) demonstrated commitment of the Board of Directors or comparable
governing body to the goals of demonstration,
(C) information systems adequate to pay service providers, to collect
required utilization and cost data, and to provide data adequate to
permit evaluation of program performance, and
(D) compliance with applicable State laws.
(e) Payments to Participants. An entity conducting a demonstration under
this section shall be entitled to receive, with respect to each enrollee,
for the period during which it is providing to such enrollee services under
a demonstration under this section, such amounts as the Secretary shall
provide, which amounts
(1) may include risk-based payments and non-risk based payments by
governmental programs, by third parties, or by project enrollees, or any
combination of such payments, and
(2) may vary by project and by enrollee.
(f) Number and Duration of Demonstration Projects.
(1) Request for applications. The Secretary shall publish a request for
applications under this section not later than one year after enactment
of this Act.
(2) Number and duration. The Secretary shall authorize not more than 25
demonstrations under this section, each of which shall run for 7 years
from the date of the award.
(g) Evaluation and Reports. The Secretary shall evaluate the
demonstration projects under this section, and shall submit to the Congress
(1) an interim report, by three years after enactment, describing the
status of the demonstration and characteristics of the approved projects;
and
(2) a final report, by one year after completion of such demonstration
projects, evaluating their effectiveness (including cost-effectiveness),
and discussing the advisability of including some or all of the
integrated models tested in the demonstration as a benefit under the
comprehensive benefit package under title I of this Act, or under the
programs under title XVIII of the Social Security Act.
(h) Authorization of Appropriations.
(1) For secretarial responsibilities.
(A) In general. There are authorized to be appropriated $7,000,000
for fiscal year 1996, and $4,500,000 for each of the 6 succeeding
fiscal years, for payment of costs of the Secretary in carrying out
this section (including costs for technical assistance to potential
service providers, and research and evaluation), which amounts shall
remain available until expended.
(B) Set-aside for feasibility studies. Of the total amount authorized
to be appropriated under subparagraph (A), not less than $1,000,000
shall be available for studies of the feasibility of systems to provide
integrated care for nonaged populations (including physically disabled
children and adults, the chronically mentally ill, and individuals with
disabilities, and combinations of these groups).
(2) For covered benefits. There are authorized to be appropriated
$50,000,000 for the first fiscal year for which grants are awarded under
this section, and for each of the four succeeding fiscal years, for
payment of costs of benefits for which no public or private program or
entity is legally obligated to pay.
SEC. 2602. PERFORMANCE REVIEW OF THE LONG-TERM CARE PROGRAMS.
(a) In General. The Secretary of Health and Human Services shall prepare
and submit to the Congress
(1) an interim report, not later than the end of the seventh full
calendar year beginning after the date of the enactment of this Act, and
(2) a final report, not later than two years after the date of the
interim report,
evaluating the effectiveness of the programs established and amendments
made by this subtitle (and including at a minimum the elements specified
in subsection (b)).
(b) Elements of Assessment. The evaluations to be made, and included in
the reports required pursuant to subsection (a), include at least the
following:
(1) State service delivery programs. An evaluation of States'
effectiveness in meeting the needs for home and community-based services
(including personal assistance services) of individuals with disabilities
(including individuals who do, and who do not, meet the eligibility
criteria for the service program under part 1, individuals of different
ages, type and degree of disability, and income levels, members of
minority groups, and individuals residing in rural areas).
(2) Service access. An evaluation of the degree of (and obstacles to)
access of individuals with disabilities to needed home and
community-based services and to inpatient services.
(3) Quality. An evaluation of the quality of long-term care services
available.
(4) Private insurance. An evaluation of the performance of the private
sector in offering affordable long-term care insurance that provides
adequate protection against the costs of long-term care, and of the
effectiveness of Federal standards and State enforcement, pursuant to
part 3, in adequately protecting long-term care insurance consumers.
(5) Cost issues. An evaluation of the effectiveness of amendments made
by this subtitle in containing the costs of long-term care, and in
limiting the share of such costs borne by individuals with lower incomes.
(6) Service coordination and integration. An evaluation of the
effectiveness of the programs established or amended under this subtitle
in achieving coordination and integration of long-term care services, and
of such services with acute care services and social services, and in
ensuring provision of services in the least restrictive setting possible.
Title III: PUBLIC HEALTH INITIATIVES
Table of contents
Subtitle A. Workforce Priorities Under Federal Payments
Part 1. Institutional Costs of Graduate Medical Education; Workforce
Priorities
Subpart A. NATIONAL COUNCIL REGARDING WORKFORCE PRIORITIES
Section 3001. National Council on Graduate Medical Education.
Subpart B. AUTHORIZED POSITIONS IN SPECIALTY TRAINING
Section 3011. Cooperation of approved physician training programs.
Section 3012. Annual authorization of number of specialty
positions; requirements regarding primary health
care.
Section 3013. Allocations among specialities and programs.
Subpart C. INSTITUTIONAL COSTS OF GRADUATE MEDICAL EDUCATION
Section 3031. Federal formula payments to approved physician
training programs.
Section 3032. Application for payments.
Section 3033. Availability of funds for payments; annual amount of
payments.
Section 3034. Additional funding provisions.
Subpart D. GENERAL PROVISIONS
Section 3041. Definitions.
Subpart E. TRANSITIONAL PROVISIONS
Section 3051. Transitional payments to institutions.
Part 2. Related Programs
Section 3061. Additional funding for certain workforce programs.
Section 3062. Programs of the Secretary of Health and Human
Services.
Section 3063. Programs of the Secretary of Labor.
Section 3064. National Institute for Health Care Workforce
Development.
Subtitle B. Academic Health Centers
Part 1. Formula Payments
Section 3101. Federal formula payments to academic health centers.
Section 3102. Request for payments.
Section 3103. Availability of funds for payments; annual amount of
payments.
Section 3104. Additional funding provisions.
Part 2. Access of Patients to Academic Health Centers
Section 3131. Contracts for ensuring access to centers.
Section 3132. Discretionary grants regarding access to centers.
Subtitle C. Health Research Initiatives
Part 1. Programs for Certain Agencies
Section 3201. Biomedical and behavioral research on health
promotion and disease prevention.
Section 3202. Health services research.
Part 2. Funding for Programs
Section 3211. Authorizations regarding Public Health Service
Initiatives Fund.
Subtitle D. Core Functions of Public Health Programs; National Initiatives
Regarding Preventive Health
Part 1. Funding
Section 3301. Authorizations regarding Public Health Service
Initiatives Fund.
Part 2. Core Functions of Public Health Programs
Section 3311. Purposes.
Section 3312. Grants to States for core health functions.
Section 3313. Submission of information.
Section 3314. Reports.
Section 3315. Application for grant.
Section 3316. General provisions.
Section 3317. Allocations for certain activities.
Section 3318. Definitions.
Part 3. National Initiatives Regarding Health Promotion and Disease
Prevention
Section 3331. Grants for national prevention initiatives.
Section 3332. Priorities.
Section 3333. Submission of information.
Section 3334. Application for grant.
Subtitle E. Health Services for Medically Underserved Populations
Part 1. Community and Migrant Health Centers
Section 3401. Authorizations regarding Public Health Service
Initiatives Fund.
Section 3402. Use of funds.
Part 2. Initiatives for Access to Health Care
Subpart A. PURPOSES; FUNDING
Section 3411. Purposes.
Section 3412. Authorizations regarding Public Health Service
Initiatives Fund.
Subpart B. DEVELOPMENT OF QUALIFIED COMMUNITY HEALTH PLANS AND
PRACTICE NETWORKS
Section 3421. Grants and contracts for development of plans and
networks.
Section 3422. Preferences in making awards of assistance.
Section 3423. Certain uses of awards.
Section 3424. Accessibility of services.
Section 3425. Additional agreements.
Section 3426. Submission of certain information.
Section 3427. Reports; audits.
Section 3428. Application for assistance.
Section 3429. General provisions.
Subpart C. CAPITAL COST OF DEVELOPMENT OF QUALIFIED COMMUNITY
HEALTH
PLANS AND PRACTICE NETWORKS
Section 3441. Loans and loan guarantees regarding plans and
networks.
Section 3442. Certain requirements.
Section 3443. Defaults; right of recovery.
Section 3444. Provisions regarding construction or expansion of
facilities.
Section 3445. Application for assistance.
Section 3446. Administration of programs.
Subpart D. ENABLING SERVICES
Section 3461. Grants and contracts for enabling services.
Section 3462. Authorizations regarding Public Health Service
Initiatives Fund.
Part 3. National Health Service Corps
Section 3471. Authorizations regarding Public Health Service
Initiatives Fund.
Section 3472. Allocation for participation of nurses in
scholarship and loan repayment programs.
Part 4. Payments to Hospitals Serving Vulnerable Populations
Section 3481. Payments to hospitals.
Section 3482. Identification of eligible hospitals.
Section 3483. Amount of payments.
Section 3484. Base year.
Subtitle F. Mental Health; Substance Abuse
Part 1. Financial Assistance
Section 3501. Authorizations regarding Public Health Service
Initiatives Fund.
Section 3502. Supplemental formula grants for States regarding
activities under part B of title XIX of Public
Health Service Act.
Section 3503. Capital costs of development of certain centers and
clinics.
Part 2. Authorities Regarding Participating States
Subpart A. Reports
Section 3511. Report on integration of mental health systems.
Subpart B. Pilot Program
Section 3521. Pilot program.
Subtitle G. Comprehensive School Health Education; School-Related Health
Services
Part 1. General Provisions
Section 3601. Purposes.
Section 3602. Definitions.
Part 2. School Health Education; General Provisions
Section 3611. Authorizations regarding Public Health Service
Initiatives Fund.
Section 3612. Waivers of statutory and regulatory requirements.
Part 3. School Health Education; Grants to States
Subpart A. PLANNING GRANTS FOR STATES
Section 3621. Application for grant.
Section 3622. Approval of Secretary.
Section 3623. Amount of grant.
Section 3624. Authorized activities.
Subpart B. IMPLEMENTATION GRANTS FOR STATES
Section 3631. Application for grant.
Section 3632. Selection of grantees.
Section 3633. Amount of grant.
Section 3634. Authorized activities; limitation on administrative
costs.
Section 3635. Subgrants to local educational agencies.
Subpart C. STATE AND LOCAL REPORTS
Section 3641. State and local reports.
Part 4. School Health Education; Grants to Certain Local Educational
Agencies
Subpart A. ELIGIBILITY
Section 3651. Substantial need of area served by agency.
Subpart B. PLANNING GRANTS FOR LOCAL EDUCATION AGENCIES
Section 3661. Application for grant.
Section 3662. Selection of grantees.
Section 3663. Amount of grant.
Section 3664. Authorized activities.
Subpart C. IMPLEMENTATION GRANTS FOR LOCAL EDUCATIONAL AGENCIES
Section 3671. Application for grant.
Section 3672. Selection of grantees.
Section 3673. Amount of grant.
Section 3674. Authorized activities.
Section 3675. Reports.
Part 5. School-Related Health Services
Subpart A. DEVELOPMENT AND OPERATION OF PROJECTS
Section 3681. Authorizations regarding Public Health Service
Initiatives Fund.
Section 3682. Eligibility for development and operation grants.
Section 3683. Preferences.
Section 3684. Grants for development of projects.
Section 3685. Grants for operation of projects.
Section 3686. Federal administrative costs.
Subpart B. CAPITAL COSTS OF DEVELOPING PROJECTS
Section 3691. Loans and loan guarantees regarding projects.
Section 3692. Funding.
Subtitle H. Public Health Service Initiative
Section 3701. Public Health Service Initiative.
Subtitle I. Coordination With Cobra Continuation Coverage
Section 3801. Public Health Service Act; coordination with COBRA
continuation coverage.
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Subtitle A. Workforce Priorities Under Federal Payments
Part 1. INSTITUTIONAL COSTS OF GRADUATE MEDICAL EDUCATION; WORKFORCE
PRIORITIES
Subpart A. National Council Regarding Workforce Priorities
SEC. 3001. NATIONAL COUNCIL ON GRADUATE MEDICAL EDUCATION.
(a) In General. There is established within the Department of Health and
Human Services a council to be known as the National Council on Graduate
Medical Education.
(b) Duties. The Secretary shall carry out subpart B acting through the
National Council.
(c) Composition.
(1) In general. The membership of the National Council shall include
individuals who are appointed to the Council from among individuals who
are not officers or employees of the United States. Such individuals
shall be appointed by the Secretary, and shall include individuals from
each of the following categories:
(A) Consumers of health care services.
(B) Physicians who are faculty members of medical schools.
(C) Physicians in private practice who are not physicians described
in subparagraph (B).
(D) Officers or employees of regional and corporate health alliances.
(E) Officers or employees of health care plans that participate in
such alliances.
(F) Such other individuals as the Secretary determines to be
appropriate.
(2) Ex officio members; other federal officers or employees. The
membership of the National Council shall include individuals designated
by the Secretary to serve as members of the Council from among Federal
officers or employees who are appointed by the President, or by the
Secretary or other Federal officers who are appointed by the President
with the advice and consent of the Senate.
(d) Chair. The Secretary shall, from among members of the National
Council appointed under subsection (a)(1), designate an individual to serve
as the Chair of the Council.
(e) Definitions. For purposes of this subtitle:
(1) The term ``medical school'' means a school of medicine (as defined
in section 799 of the Public Health Service Act) or a school of
osteopathic medicine (as defined in such section).
(2) The term ``National Council'' means the council established in
subsection (a).
Subpart B. Authorized Positions in Specialty Training
SEC. 3011. COOPERATION OF APPROVED PHYSICIAN TRAINING PROGRAMS.
(a) In General. With respect to an approved physician training program in
a medical specialty, a funding agreement for payments under section 3031
for a calendar year is that the program will ensure that the number of
individuals enrolled in the program in the subsequent academic year is in
accordance with this subpart.
(b) Definitions.
(1) Approved program.
(A) For purposes of this subtitle, the term ``approved physician
training program'', with respect to the medical speciality involved,
means a residency or other postgraduate program that trains physicians
and meets the following conditions:
(i) Participation in the program may be counted toward
certification in the medical specialty.
(ii) The program is accredited by the Accreditation Council on
Graduate Medical Education, or approved by the Council on
Postgraduate Training of the American Osteopathic Association.
(B) For purposes of this subtitle, the term ``approved physician
training program'' includes any postgraduate program described in
subparagraph (A) that provides health services in an ambulatory
setting, without regard to whether the program provides inpatient
hospital services.
(2) Eligible program; subpart definition. For purposes of this subpart,
the term ``eligible program'', with respect to an academic year, means an
approved physician training program that receives payments under subpart
C for the calendar year in which the academic year begins.
(3) Other definitions. For purposes of this subtitle:
(A)(i) The term ``academic year'' means the 1-year period beginning
on July 1. The academic year beginning July 1, 1993, is academic year
1993-94.
(ii) With respect to the funding agreement described in subsection
(a), the term ``subsequent academic year'' means the academic year
beginning July 1 of the calendar year for which payments are to be
made under the agreement.
(B) The term ``funding agreement'', with respect to payments under
section 3031 to an approved physician training program, means that the
Secretary may make the payments only if the program makes the agreement
involved.
(C) The term ``medical specialty'' includes subspecialties.
SEC. 3012. ANNUAL AUTHORIZATION OF NUMBER OF SPECIALTY POSITIONS;
REQUIREMENTS
REGARDING PRIMARY HEALTH CARE.
(a) Annual Authorization of Number of Positions. In the case of each
medical specialty, the National Council shall designate for each academic
year the number of individuals nationwide who under section 3011 are
authorized to be enrolled in eligible programs. The preceding sentence is
subject to subsection (c)(2).
(b) Primary Health Care.
(1) In general. Subject to paragraph (2), in carrying out subsection
(a) for an academic year, the National Council shall ensure that, of the
class of training participants entering eligible programs for academic
year 2002-03 or any subsequent academic year, the percentage of such
class that completes eligible programs in primary health care is not less
than 55 percent (without regard to the academic year in which the members
of the class complete the programs).
(2) Rule of construction. The requirement of paragraph (1) regarding a
percentage applies in the aggregate to training participants entering
eligible programs for the academic year involved, and not individually to
any eligible program.
(c) Designations Regarding 3-Year Periods.
(1) Designation periods. For each medical specialty, the National
Council shall make the annual designations under subsection (a) for
periods of 3 academic years.
(2) Initial period. The first designation period established by the
National Council after the date of the enactment of this Act shall be the
academic years 1998-99 through 2000-01.
(d) Certain Considerations in Designating Annual Numbers.
(1) In general. Factors considered by the National Council in
designating the annual number of specialty positions for an academic year
for a medical specialty shall include the extent to which there is a need
for additional practitioners in the speciality, as indicated by the
following:
(A) The incidence and prevalence (in the general population and in
various other populations) of the diseases, disorders, or other health
conditions with which the specialty is concerned.
(B) The number of physicians who will be practicing in the specialty
in the academic year.
(C) The number of physicians who will be practicing in the specialty
at the end of the 5-year period beginning on the first day of the
academic year.
(2) Recommendations of private organizations. In designating the annual
number of specialty positions for an academic year for a medical
specialty, the National Council shall consider the recommendations of
organizations representing physicians in the specialty and the
recommendations of organizations representing consumers of the services
of such physicians.
(3) Minimum total of respective annual numbers.
(A) Subject to subparagraph (B), for academic year 2003-04 and
subsequent academic years, the National Council shall ensure that the
total of the respective annual numbers designated under subsection (a)
for an academic year is a total that
(i) bears a relationship to the number of individuals who graduated
from medical schools in the United States in the preceding academic
year; and
(ii) is consistent with the purposes of this subpart.
(B) For each of the academic years 2003-04 through 2007-08, the total
determined under subparagraph (A) shall be reduced by a percentage
determined by the National Council.
(e) Definitions. For purposes of this subtitle:
(1) The term ``annual number of specialty positions'', with respect to
a medical specialty, means the number designated by the National Council
under subsection (a) for eligible programs for the academic year
involved.
(2) The term ``designation period'' means a 3-year period under
subsection (c)(1) for which designations under subsection (a) are made by
the National Council.
(3) The term ``primary health care'' means the following medical
specialties: Family medicine, general internal medicine, general
pediatrics, and obstetrics and gynecology.
(4) The term ``specialty position'', with respect to a medical
specialty, means a position (designated under subsection (a)) as one of
the individuals who may be a training participant in an eligible program.
(5) The term ``training participant'' means an individual who is
enrolled in an approved physician training program.
SEC. 3013. ALLOCATIONS AMONG SPECIALITIES AND PROGRAMS.
(a) In General. For each academic year, the National Council shall for
each medical specialty make allocations among eligible programs of the
annual number of specialty positions that the Council has designated for
such year. The preceding sentence is subject to subsection (b)(3).
(b) Allocations Regarding 3-Year Period.
(1) In general. For each medical specialty, the National Council shall
make the annual allocations under subsection (a) for periods of 3
academic years.
(2) Advance notice to programs. With respect to the first academic year
of an allocation period established by the National Council, the National
Council shall, not later than July 1 of the preceding academic year,
notify each eligible program of the allocations made for the program for
each of the academic years of the period.
(3) Initial period. The first allocation period established by the
National Council after the date of the enactment of this Act shall be the
academic years 1998-99 through 2000-01.
(c) Certain Considerations.
(1) Geographic areas; quality of residency programs. In making
allocations under subsection (a) for eligible programs of the various
geographic areas, the National Council shall include among the factors
considered the historical distribution among the areas of approved
physician training programs, and the quality of each of the programs.
(2) Underrepresentation of minority groups. In making an allocation
under subsection (a) for an eligible program, the National Council shall
include among the factors considered the following:
(A) The extent to which the population of training participants in
the program includes training participants who are members of racial or
ethnic minority groups.
(B) With respect to a racial or ethnic group represented among the
training participants, the extent to which the group is
underrepresented in the field of medicine generally and in the various
medical specialities.
(3) Recommendations of private organizations. In making allocations
under subsection (a) for eligible programs, the National Council shall
consider the recommendations of organizations representing physicians in
the medical specialties and the recommendations of organizations
representing consumers of the services of such physicians.
(d) Definitions. For purposes of this subtitle, the term ``allocation
period'' means a 3-year period under subsection (b)(1) for which
allocations under subsection (a) are made by the National Council.
Subpart C. Institutional Costs of Graduate Medical Education
SEC. 3031. FEDERAL FORMULA PAYMENTS TO APPROVED PHYSICIAN TRAINING
PROGRAMS.
(a) In General.
(1) Formula payments. Subject to paragraph (2), in the case of any
approved physician training program that submits to the Secretary an
application for a calendar year in accordance with section 3032, the
Secretary shall make payments for such year to the program for the
purpose specified in subsection (b). The Secretary shall make the
payments in an amount determined in accordance with section 3033, and may
administer the payments as a contract, grant, or cooperative agreement.
(2) Applicable years. Payments under paragraph (1) may not be made
before calendar year 1998, except that the Secretary may make such
payments before such year to eligible programs in any State that has
become a participating State under title I.
(b) Payments for Operation of Approved Physician Training Programs. The
purpose of payments under subsection (a) is to assist an eligible program
with the costs of operation. A funding agreement for such payments is that
the program will expend the payments only for such purpose.
(c) Eligible Program; Subpart Definition. For purposes of this subpart,
the term ``eligible program'', with respect to the calendar year involved,
means an approved physician training program that submits to the Secretary
an application for such year in accordance with section 3032.
SEC. 3032. APPLICATION FOR PAYMENTS.
(a) In General. For purposes of section 3031, an application for payments
under such section is in accordance with this section if
(1) the approved physician training program involved submits the
application not later than the date specified by the Secretary;
(2) the condition described in subsection (b) is met with respect to
the program;
(3) the application contains each funding agreement described in this
part and the application provides assurances of compliance with such
agreements that are satisfactory to the Secretary; and
(4) the application is in such form, is made in such manner, and
contains such agreements, assurances, and information as the Secretary
determines to be necessary to carry out this part.
(b) Certain Conditions. An approved physician training program meets the
condition described in this subsection for receiving payments under section
3031 for a calendar year if the institution within which the program
operates agrees that such payments will be made by the Secretary directly
to the program (and such agreement is included in the application under
subsection (a)), and the Secretary shall ensure that such institution is
permitted to participate as a provider in a regional or corporate alliance
health plan during such year only if each of the approved physician
training programs of the institution meets the requirements for receiving
payments under such section for such year.
SEC. 3033. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF
PAYMENTS.
(a) Determination by Secretary of Funds Available for Payments.
(1) Annual health professions workforce account. Subject to paragraph
(2) and section 3034, the Secretary shall determine for each calendar
year the amount to be made available for the purpose of making payments
under section 3031 (and under section 3051, as applicable) for the year.
In determining such amount, the Secretary shall consider the amount
necessary for making payments in the amounts determined under subsection
(b) (and the amounts necessary for making payments in the amounts
determined under section 3051(e) for institutions, in the case of
calendar years 1998 through 2001).
(2) Limitation. The amount determined by the Secretary for a calendar
year under paragraph (1) may not exceed the following amount, as
applicable to the calendar year:
(A) In the case of calendar year 1996, $3,200,000,000.
(B) In the case of calendar year 1997, $3,500,000,000.
(C) In the case of calendar year 1998, $4,800,000,000.
(D) In the case of each of the calendar years 1999 and 2000,
$5,800,000,000.
(E) In the case of each subsequent calendar year, the amount
specified in subparagraph (D) increased by the product of such amount
and the general health care inflation factor for such year (as defined
in subsection (c)).
(b) Amount of Payments for Individual Eligible Programs.
(1) In general. Subject to the annual health professions workforce
account determined by the Secretary under subsection (a) for the calendar
year involved, the amount of payments required in section 3031 to be made
to an eligible program for the calendar year is an amount equal to the
product of
(A) the number of full-time equivalent training participants in the
program; and
(B) the national average of the costs of such programs in training an
individual, as determined by consideration of the following factors
(and as adjusted under paragraph (2)(B)):
(i) The national average salary of training participants.
(ii) The national average costs of such programs in providing for
faculty supervision of training participants and for related
activities.
(2) Additional provisions regarding national average cost.
(A) The Secretary shall in accordance with paragraph (1)(B)
determine, for academic year 1992-93, an amount equal to the national
average described in such paragraph with respect to training an
individual. The national average applicable under such paragraph for a
calendar year is, subject to subparagraph (B), the amount determined
under the preceding sentence increased by an amount necessary to offset
the effects of health care inflation occurring since academic year
1992-93, as determined through use of the general health care inflation
factors for such years (or if there is no such factor for a calendar
year, the consumer price index for the year).
(B) The national average determined under subparagraph (A) and
applicable to a calendar year shall, in the case of the eligible
program involved, be adjusted by a factor to reflect regional
differences in the applicable wage and wage-related costs.
(c) Definitions. For purposes of this subtitle:
(1) The term ``annual health professions workforce account'', with
respect to a calendar year, means the amount determined under subsection
(a) for such year.
(2) The term ``consumer price index'' has the meaning given such term
in section 1902.
(3) The term ``general health care inflation factor'', with respect to
a year, has the meaning given such term in section 6001(a)(3) for such
year.
SEC. 3034. ADDITIONAL FUNDING PROVISIONS.
(a) Sources of Funds for Annual Health Professions Workforce Account. The
annual health professions workforce account under section 3033(a) for a
calendar year shall be derived from the sources specified in subsection
(b).
(b) Contributions From Medicare Trust Funds, Regional Alliances, and
Corporate Alliances. For purposes of subsection (a), the sources specified
in this subsection for a calendar year are the following:
(1) Transfers made by the Secretary under section 4051.
(2) Payments made by regional alliances under section 1353 and
transferred in an amount equal to the aggregate regional alliance portion
determined under subsection (c)(2)(A).
(3) The transfer made under section (d)(1).
(c) Contributions From Regional and Corporate Alliances.
(1) Determination of aggregate regional and corporate alliance amount.
For purposes regarding the provision of funds for the annual health
professions workforce account for a calendar year, the Secretary shall
determine an aggregate regional and corporate alliance amount, which
amount is to be paid by such alliances pursuant to paragraphs (2) and (3)
of subsection (b), respectively, and which amount shall be equal to the
difference between
(A) the annual health professions workforce account for such year;
and
(B) the amount transferred under section 4051 for the year.
(2) Allocation of amount among regional and corporate alliances. With
respect to the aggregate regional and corporate alliance amount
determined under paragraph (1) for a calendar year
(A) the aggregate regional alliance portion of such amount is the
product of such amount and the percentage constituted by the ratio of
the total plan payments of regional alliances to the combined total
plan payments of regional alliances and corporate alliances; and
(B) the aggregate corporate alliance portion of such amount is the
product of such amount and the percentage constituted by the ratio of
the total plan payments of corporate alliances to such combined total
plan payments.
(d) Compliance Regarding Corporate Alliances.
(1) In general. Effective January 15 of each calendar year, there is
hereby transferred to the Secretary, out of any money in the Treasury not
otherwise appropriated, an amount equal to the aggregate corporate
alliance portion determined under subsection (c)(2)(B) for such year.
(2) Manner of compliance. The payment by corporate alliances of the tax
imposed under section 3461 of the Internal Revenue Code of 1986 (as added
by section 7121 of this Act), together with the transfer made in
paragraph (1) for the calendar year involved, is deemed to be the payment
required pursuant to subsection (c)(1) for corporate alliances for such
year.
(e) Definitions. For purposes of this subtitle, the term ``plan
payments'' with respect to a regional or corporate alliance, means the
amount paid to health plans by the alliance.
Subpart D. General Provisions
SEC. 3041. DEFINITIONS.
For purposes of this subtitle:
(1) The term ``academic year'' has the meaning given such term in
section 3011(b).
(2) The term ``allocation period'' has the meaning given such term in
section 3013(d).
(3) The term ``annual health professions workforce account'' has the
meaning given such term in section 3033(c).
(4) The term ``annual number of specialty positions'' has the meaning
given such term in section 3012(e).
(5) The term ``approved physician training program'' has the meaning
given such term in section 3011(b).
(6) The term ``consumer price index'' has the meaning given such term
in section 3033(c).
(7) The term ``designation period'' has the meaning given such term in
section 3012(e).
(8) The term ``eligible program'' has the meaning given such term in
section 3011(b), in the case of subpart B; and has the meaning given such
term in section 3031(c), in the case of subpart C.
(9) The term ``funding agreement'' has the meaning given such term in
section 3011(b).
(10) The term ``general health care inflation factor'' has the meaning
given such term in section 3033(c).
(11) The term ``medical school'' has the meaning given such term in
section 3001(e).
(12) The term ``medical specialty'' has the meaning given such term in
section 3011(b).
(13) The term ``National Council'' has the meaning given such term in
section 3001(e).
(14) The term ``plan payments'' has the meaning given such term in
section 3034(e).
(15) The term ``primary health care'' has the meaning given such term
in section 3012(e).
(16) The term ``specialty position'' has the meaning given such term in
section 3012(e).
(17) The term ``training participant'' has the meaning given such term
in section 3012(e).
Subpart E. Transitional Provisions
SEC. 3051. TRANSITIONAL PAYMENTS TO INSTITUTIONS.
(a) Payments Regarding Effects of Subpart B Allocations.
(1) In general. For each of the calendar years 1998 through 2001, in
the case of any eligible institution that submits to the Secretary an
application for the year involved in accordance with subsection (d), the
Secretary shall make payments for such year to the institution for the
purpose specified in subsection (c). The Secretary shall make the
payments in an amount determined in accordance with subsection (e), and
may administer the payments as a contract, grant, or cooperative
agreement.
(2) Applicable years. Payments under paragraph (1) may not be made
before calendar year 1998, except that the Secretary may make such
payments before such year to eligible institutions in any State that has
become a participating State under title I.
(b) Eligible Institution. For purposes of this section, the term
``eligible institution'', with respect to a calendar year, means an
institution
(1) in which there are one or more programs that
(A) are approved physician training programs; and
(B) are receiving payments under section 3031 for such year; and
(2) whose number of speciality positions (in the medical specialities
with respect to which such payments are made) is below the number of such
positions at the institution for academic year 1993-94 as a result of
allocations under subpart B.
(c) Purpose of Payments. The purpose of payments under subsection (a) is
to assist an eligible institution with the costs of operation. A funding
agreement for such payments is that the institution will expend the
payments only for such purpose.
(d) Application for Payments. For purposes of subsection (a), an
application for payments under such subsection is in accordance with this
subsection if the institution involved submits the application not later
than the date specified by the Secretary; the institution has cooperated
with the approved physician training programs of the institution in meeting
the condition described in section 3032(b); the application contains each
funding agreement described in this section and provides assurances of
compliance with such agreements satisfactory to the Secretary; and the
application is in such form, is made in such manner, and contains such
agreements, assurances, and information as the Secretary determines to be
necessary to carry out this section.
(e) Amount of Payments.
(1) In general. Subject to the annual health professions workforce
account determined by the Secretary under section 3033(a) for the
calendar year involved, the amount of payments required in subsection (a)
to be made to an eligible institution for the calendar year is the
product of the amount determined under paragraph (2) and the applicable
percentage specified in paragraph (3).
(2) Number of specialty positions lost; national average salary. For
purposes of paragraph (1), the amount determined under this paragraph for
an eligible institution for the calendar year involved is the product of
(A) an amount equal to the number of full-time equivalent specialty
positions lost; and
(B) the national average salary of training participants.
(3) Applicable percentage. For purposes of paragraph (1), the
applicable percentage for a calendar year is the following, as applicable
to such year:
(A) For calendar year 1998, 100 percent.
(B) For calendar year 1999, 75 percent.
(C) For calendar year 2000, 50 percent.
(D) For calendar year 2001, 25 percent.
(4) Determination of specialty positions lost.
(A) For purposes of this section, the number of specialty positions
lost, with respect to a calendar year, is the difference between
(i) the number of specialty positions described in subparagraph (B)
that are estimated for the institution involved for the academic year
beginning in such calendar year; and
(ii) the number of such specialty positions at the institution for
academic year 1993-94.
(B) For purposes of subparagraph (A), the specialty positions
described in this subparagraph are specialty positions in the medical
specialities with respect to which payments under section 3031 are made
to programs of the institution involved.
(5) Additional provision regarding national average salary.
(A) The Secretary shall determine, for academic year 1992-93, an
amount equal to the national average described in paragraph (2)(B). The
national average applicable under such paragraph for a calendar year
is, subject to subparagraph (B), the amount determined under the
preceding sentence increased by an amount necessary to offset the
effects of health care inflation occurring since academic year 1992-93,
as determined through use of the general health care inflation factors
for such years (or if there is no such factor for a year, the consumer
price index for the year).
(B) The national average determined under subparagraph (A) and
applicable to a calendar year shall, in the case of the eligible
institution involved, be adjusted by a factor to reflect regional
differences in the applicable wage and wage-related costs.
Part 2. RELATED PROGRAMS
SEC. 3061. ADDITIONAL FUNDING FOR CERTAIN WORKFORCE PROGRAMS.
(a) In General. For purpose of carrying out the programs described in
sections 3062 and 3063, there is authorized to be appropriated
$200,000,000 for fiscal year 1994 and each subsequent fiscal year (in
addition to amounts that may otherwise be authorized to be appropriated for
carrying out the programs).
(b) Allocations. With respect to the amount appropriated under subsection
(a) for a fiscal year, the Secretary of Health and Human Services and the
Secretary of Labor shall enter into an agreement specifying the aggregate
portion of such amount to be made available for the programs described in
section 3062 and the aggregate portion to be made available for the
programs described in section 3063.
SEC. 3062. PROGRAMS OF THE SECRETARY OF HEALTH AND HUMAN SERVICES.
(a) In General. The programs described in this section and carried out
with amounts made available under section 3061 shall be carried out by the
Secretary of Health and Human Services.
(b) Primary Care Physician and Physician Assistant Training. For purposes
of section 3061, the programs described in this section include programs to
support projects to train additional numbers of primary care physicians and
physician assistants, including projects to enhance community-based
generalist training for medical students, residents, and practicing
physicians; to retrain mid-career physicians previously certified in a
nonprimary care medical specialty; to expand the supply of physicians with
special training to serve in rural and inner-city medically underserved
areas; to support expansion of service-linked educational networks that
train a range of primary care providers in community settings; to provide
for training in managed care, cost-effective practice management, and
continuous quality improvement; and to develop additional information on
primary care workforce issues as required to meet future needs in health
care.
(b) Training of Underrepresented Minorities and Disadvantaged Persons.
For purposes of section 3061, the programs described in this section
include a program to support projects to increase the number of
underrepresented minority and disadvantaged persons in medicine,
osteopathy, dentistry, nursing, public health, and other health
professions, including projects to provide continuing financial assistance
for such persons entering health professions training programs; to increase
support for recruitment and retention of such persons in the health
professions; to maintain efforts to foster interest in health careers among
such persons at the preprofessional level; and to increase the number of
minority health professions faculty.
(c) Nurse Training. For purposes of section 3061, the programs described
in this section include the following:
(1) A program to support projects to support midlevel provider training
and address priority nursing workforce needs, including projects to train
additional nurse practitioners and nurse midwives; to support
baccalaureate-level nurse training programs providing preparation for
careers in teaching, community health service, and specialized clinical
care; to train additional nurse clinicians and nurse anesthetists; to
support interdisciplinary school-based community nursing programs; and to
promote research on nursing workforce issues.
(2) A program to develop and encourage the adoption of model
professional practice statutes for advanced practice nurses and physician
assistants, and to otherwise support efforts to remove inappropriate
barriers to practice by such nurses and such physician assistants.
(d) Other Programs. For purposes of section 3061, the programs described
in this section include a program to train health professionals and
administrators in managed care, cost-effective practice management,
continuous quality improvement practices, and provision of culturally
sensitive care.
(e) Relationship to Existing Programs. This section may be carried out
through programs established in title VII or VIII of the Public Health
Service Act, as appropriate and as consistent with the purposes of such
programs.
SEC. 3063. PROGRAMS OF THE SECRETARY OF LABOR.
(a) In General. The programs described in this section and carried out
with amounts made available under section 3061 shall be carried out by the
Secretary of Labor (in this section referred to as the ``Secretary'').
(b) Retraining Programs; Advanced Career Positions; Job Banks.
(1) In general. For purposes of section 3061, the programs described in
this section are the following:
(A) A program to retrain administrative and clerical workers for
positions as technicians, nurses, and physician assistants.
(B) A demonstration program to assist workers in health care
institutions in obtaining advanced career positions.
(C) A program to support development of health-worker job banks in
local employment services agencies.
(D) A program for skills upgrading, occupational retraining, and
quality improvement.
(E) A program to facilitate the comprehensive workforce adjustment
initiative.
(2) Use of funds. Amounts made available under section 3061 for
carrying out this section may be expended for program support, faculty
development, trainee support, workforce analysis, and dissemination of
information, as necessary to produce required performance outcomes, and
for establishing and operating the Institute authorized in section 3064.
(c) Certain Requirements for Programs. In carrying out the programs
described in subsection (b), the Secretary shall, with respect to the
organizations and employment positions involved, provide for the following:
(1) Explicit, clearly defined skill requirements developed for all the
positions and projections of the number of openings for each position.
(2) Opportunities for internal career movement.
(3) Opportunities to work while training or completing and educational
program.
(4) Evaluation and dissemination.
(5) Training opportunities in several forms, as appropriate.
(d) Administrative Requirements. In carrying out the programs described
in subsection (b), the Secretary shall, with respect to the organizations
and employment positions involved, provide for the following:
(1) Implementation and administration jointly by management and
employees and their representatives.
(2) Discussion with employees as to training needs for career
advancement.
(3) Commitment to a policy of internal hirings and promotion.
(4) Provision of support services.
(5) Consultations with employers and with organized labor.
SEC. 3064. NATIONAL INSTITUTE FOR HEALTH CARE WORKFORCE DEVELOPMENT.
(a) Establishment of Institute. The Secretary of Health and Human
Services and the Secretary of Labor may jointly establish an office to be
known as the National Institute for Health Care Workforce Development. The
subsequent provisions of this section apply to any such Institute.
(b) Director. The Institute shall be headed by a director, who shall be
appointed jointly by the Secretaries.
(c) Duties.
(1) In general. The Director of the Institute shall make
recommendations to the Secretaries regarding
(A) the supply of health care workers needed for the system of
regional and corporate alliance health plans established under title I;
and
(B) the impact of such system on health care workers and the needs of
such workers with respect to the system, including needs regarding
education, training, and other matters relating to career development.
(2) Administration of programs regarding retraining, advanced career
positions, and job banks. The Secretary of Labor may carry out section
3063 acting through the Director of the Institute.
(d) Advisory Board.
(1) In general. The Secretaries shall establish an advisory board to
assist in the develop of recommendations under subsection (c).
(2) Composition. The Advisory Board shall be composed of
(A) the Secretary of Labor;
(B) the Secretary of Health and Human Services;
(C) representatives of health care workers in organized labor;
(D) representatives of health care institutions;
(E) representatives of health care education organizations;
(F) representatives of consumer organizations; and
(G) such other individuals as the Secretaries determine to be
appropriate.
(e) Staff, Quarters, and Other Assistance. The Secretaries shall provide
the Institute and the Advisory Board with such staff, quarters, and other
administrative assistance as may be necessary for the Institute and the
Advisory Board to carry out this section.
(f) Definitions. For purposes of this section:
(1) The term ``Advisory Board'' means the advisory board established
under subsection (c).
(2) The term ``Institute'' means an Institute established under
subsection (a).
(3) The term ``Secretaries'' means the Secretary of Health and Human
Services and the Secretary of Labor.
(g) Sunset. Effective upon the end of calendar year 2000, this section is
repealed.
Subtitle B. Academic Health Centers
Part 1. FORMULA PAYMENTS
SEC. 3101. FEDERAL FORMULA PAYMENTS TO ACADEMIC HEALTH CENTERS.
(a) In General.
(1) Formula payments. In the case of any academic health center that
submits to the Secretary a written request for a calendar year in
accordance with section 3102, the Secretary shall make payments for such
year to the center for the purpose specified in subsection (b). The
Secretary shall make the payments in an amount determined in accordance
with section 3103, and shall administer the payments as a contract,
grant, or cooperative agreement.
(2) Applicable years. Payments under paragraph (1) may not be made
before calendar year 1998, except that the Secretary may make such
payments before such year to eligible programs in any State that has
become a participating State under title I.
(b) Payments for Costs Attributable to Academic Nature of Centers. The
purpose of payments under subsection (a) is to assist academic health
centers with costs that are not routinely incurred by other entities in
providing health services, but are incurred by such centers in providing
health services by virtue of the academic nature of such centers.
(c) Academic Health Centers. For purposes of this subtitle, the term
``academic health center'' means an entity that operates a teaching
hospital that carries out an approved physician training program (as
defined in section 3011(b)).
SEC. 3102. REQUEST FOR PAYMENTS.
(a) In General. For purposes of section 3101, a written request for
payments under such section is in accordance with this section if the
academic health center involved submits the request not later than the date
specified by the Secretary; the request is accompanied by each funding
agreement described in this part; and the request is in such form, is made
in such manner, and contains such agreements, assurances, and information
as the Secretary determines to be necessary to carry out this part.
(b) Continued Status as Academic Health Center. A funding agreement for
payments under section 3101 is that the entity involved will maintain
status as an academic health center. For purposes of this subtitle, the
term ``funding agreement'', with respect to payments under section 3101 to
an entity, means that the Secretary may make the payments only if the
entity makes the agreement involved.
SEC. 3103. AVAILABILITY OF FUNDS FOR PAYMENTS; ANNUAL AMOUNT OF
PAYMENTS.
(a) Determination by Secretary of Funds Available for Payments.
(1) Annual academic health center account. Subject to paragraph (2) and
section 3104, the Secretary shall determine for each calendar year the
amount to be made available for the purpose of making payments under
section 3101 for the year to eligible centers. In determining such
amount, the Secretary shall consider the need of eligible centers for
assistance with the costs described in section 3101(b).
(2) Limitation. The amount determined by the Secretary for a calendar
year under paragraph (1) may not exceed the following amount, as
applicable to the calendar year:
(A) In the case of calendar year 1996, $3,100,000,000.
(B) In the case of each of the calendar years 1997 and 1998,
$3,200,000,000.
(C) In the case of calendar year 1999, $3,700,000,000.
(D) In the case of calendar year 2000, $3,800,000,000.
(E) In the case of each subsequent calendar year, the amount
specified in subparagraph (C) increased by the product of such amount
and the general health care inflation factor (as defined in subsection
(c)).
(b) Amount of Payments for Individual Eligible Centers. The amount of
payments required in section 3101 to be made to an eligible center for a
calendar year is an amount equal to the product of
(1) the annual academic health center account determined by the
Secretary under subsection (a) for the calendar year; and
(2) the percentage constituted by the ratio of
(A) an amount equal to product of
(i) the portion of the gross receipts of the center for the
preceding calendar year that was derived from providing services to
patients (both inpatients and outpatients); and
(ii) the indirect teaching adjustment factor determined under
section 1886(d)(5)(B)(ii) of the Social Security Act (as in effect
before January 1, 1998) and applicable to patients discharged from
the center in such preceding year (or, in the case of patients
discharged from the center on or after January 1, 1998, applicable to
patients discharged in calendar year 1997); to
(B) the sum of the respective amounts determined under subparagraph
(A) for eligible centers.
(c) Report Regarding Modifications in Formula. Not later than July 1,
1996, the Secretary shall submit to the Congress a report containing any
recommendations of the Secretary regarding policies for allocating amounts
under subsection (a) among eligible centers.
(d) Definition. For purposes of this subtitle:
(1) The term ``eligible center'', with respect to the calendar year
involved, means an academic health center that submits to the Secretary a
written request for such year in accordance with section 3102.
(2) The term ``annual academic health center account'', with respect to
a calendar year, means the amount determined under subsection (a) for
such year.
(2) The term ``general health care inflation factor'', with respect to
a year, has the meaning given such term in section 6001(a)(3) for such
year.
SEC. 3104. ADDITIONAL FUNDING PROVISIONS.
(a) Sources of Funds for Annual Academic Health Center. The annual
academic health center account under section 3103(a) for a calendar year
shall be derived from the sources specified in subsection (b).
(b) Contributions From Medicare Trust Funds, Regional Alliances, and
Corporate Alliances. For purposes of subsection (a), the sources specified
in this subsection for a calendar year are the following:
(1) Transfers made by the Secretary under section 4052.
(2) Payments made by regional alliances under section 1353 and
transferred in an amount equal to the aggregate regional alliance portion
determined under subsection (c)(2)(A).
(3) The transfer made under section (d)(1).
(c) Contributions From Regional and Corporate Alliances.
(1) Determination of aggregate regional and corporate alliance amount.
For purposes regarding the provision of funds for the annual academic
health center account for a calendar year, the Secretary shall determine
an aggregate regional and corporate alliance amount, which amount is to
be paid by such alliances pursuant to paragraphs (2) and (3) of
subsection (b), respectively, and which amount shall be equal to the
difference between
(A) the annual academic health center account for such year; and
(B) the amount transferred under section 4052 for the year.
(2) Allocation of amount among regional and corporate alliances. With
respect to the aggregate regional and corporate alliance amount
determined under paragraph (1) for a calendar year
(A) the aggregate regional alliance portion of such amount is the
product of such amount and the percentage constituted by the ratio of
the total plan payments of regional alliances to the combined total
plan payments of regional alliances and corporate alliances; and
(B) the aggregate corporate alliance portion of such amount is the
product of such amount and the percentage constituted by the ratio of
the total plan payments of corporate alliances to such combined total
plan payments.
(d) Compliance Regarding Corporate Alliances.
(1) In general. Effective January 15 of each calendar year, there is
hereby transferred to the Secretary, out of any money in the Treasury not
otherwise appropriated, an amount equal to the aggregate corporate
alliance portion determined under subsection (c)(2)(B) for such year.
(2) Manner of compliance. The payment by corporate alliances of the tax
imposed under section 3461 of the Internal Revenue Code of 1986 (as added
by section 7121 of this Act), together with the transfer made in
paragraph (1) for the calendar year involved, is deemed to be the payment
required pursuant to subsection (c)(1) for corporate alliances for such
year..
(e) Definitions. For purposes of this subtitle, the term ``plan
payments'' with respect to a regional or corporate alliance, means the
amount paid to health plans by the alliance.
Part 2. ACCESS OF PATIENTS TO ACADEMIC HEALTH CENTERS
SEC. 3131. CONTRACTS FOR ENSURING ACCESS TO CENTERS.
(a) Contracts With Health Plans. Regional and corporate health alliances
under this Act shall ensure that, in accordance with subsection (b), the
health plans of the alliances enter into sufficient contracts with eligible
centers to ensure that enrollees in regional or corporate alliance health
plans, as appropriate, receive the specialized treatment expertise of such
centers, subject to such exceptions as the Secretary may provide.
(b) Utilization of Specialized Treatment Expertise of Centers. Contracts
under subsection (a) between eligible centers and health plans are in
accordance with this subsection if the contracts provide that, with respect
to health conditions within the specialized treatment expertise of the
centers, health plans will refer medical cases involving such conditions to
the centers.
(c) Specialized Treatment Expertise. For purposes of this subtitle, the
term ``specialized treatment expertise'', with respect to treatment of a
health condition by an academic health center, means expertise in treating
rare diseases, treating unusually severe conditions, and providing other
specialized health care.
SEC. 3132. DISCRETIONARY GRANTS REGARDING ACCESS TO CENTERS.
(a) Rural Information and Referral Systems. The Secretary may make grants
to eligible centers for the establishment and operation of information and
referral systems to provide the services of such centers to rural regional
and corporate health alliance health plans.
(b) Other Purposes Regarding Urban and Rural Areas. The Secretary may
make grants to eligible centers to carry out activities (other than
activities carried out under subsection (a)) for the purpose of providing
the services of eligible centers to residents of rural or urban communities
who otherwise would not have adequate access to such services.
Subtitle C. Health Research Initiatives
Part 1. PROGRAMS FOR CERTAIN AGENCIES
SEC. 3201. BIOMEDICAL AND BEHAVIORAL RESEARCH ON HEALTH PROMOTION
AND DISEASE
PREVENTION.
Section 402(f) of the Public Health Service Act (42 U.S.C. 282(f)), as
amended by section 201 of Public Law 103-43 (107 Stat. 144), is amended
(1) in paragraph (3), by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively;
(2) by redesignating paragraphs (1) through (3) as subparagraphs (A)
through (C);
(3) by inserting ``(1)'' after ``(f)''; and
(4) by adding at the end the following paragraph:
``(2)(A) The Director of NIH, in collaboration with the Associate
Director for Prevention and with the heads of the agencies of the
National Institutes of Health, shall ensure that such Institutes conduct
and support biomedical and behavioral research on promoting health and
preventing diseases, disorders, and other health conditions (including
Alzheimer's disease, breast cancer, heart disease, and stroke).
``(B) In carrying out subparagraph (A), the Director of NIH shall give
priority to conducting and supporting research on child and adolescent
health (including birth defects), chronic and recurrent health
conditions, reproductive health, mental health, elderly health, substance
abuse, infectious diseases, health and wellness promotion, and
environmental health, and to resource development related to such
research.''.
SEC. 3202. HEALTH SERVICES RESEARCH.
Section 902 of the Public Health Service Act (42 U.S.C. 299a), as
amended by section 2(b) of Public Law 102-410 (106 Stat. 2094), is
amended by adding at the end the following subsection:
``(f) Research on Health Care Reform.
``(1) In general. In carrying out section 901(b), the Administrator
shall conduct and support research on the reform of the health care
system of the United States, as directed by the National Board.
``(2) Priorities. In carrying out paragraph (1), the Administrator
shall give priority to the following:
``(A) Conducting and supporting research on the appropriateness and
effectiveness of alternative clinical strategies; the quality and
outcomes of care; and administrative simplification.
``(B) Conducting and supporting research on consumer choice and
information resources; the effects of health care reform on health
delivery systems; workplace injury and illness prevention; methods for
risk adjustment; factors influencing access to health care for
underserved populations; and primary care.
``(C) The development of clinical practice guidelines consistent with
section 913, the dissemination of such guidelines consistent with section
903, and the assessment of the effectiveness of such guidelines.''.
Part 2. FUNDING FOR PROGRAMS
SEC. 3211. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Biomedical and Behavioral Research on Health Promotion and Disease
Prevention. For the purpose of carrying out activities pursuant to the
amendments made by section 3201, there are authorized to be appropriated
from the Public Health Service Initiatives Fund (established in section
3701) $400,000,000 for fiscal year 1995, and $500,000,000 for each of the
fiscal years 1996 through 2000.
(b) Health Services Research. For the purpose of carrying out activities
pursuant to the amendments made by section 3202, there are authorized to be
appropriated from the Public Health Service Initiatives Fund $150,000,000
for fiscal year 1995, $400,000,000 for fiscal year 1996, $500,000,000 for
fiscal year 1997, and $600,000,000 for each of the fiscal years 1998
through 2000.
(c) Relation to Other Funds. The authorizations of appropriations
established in subsections (a) and (b) are in addition to any other
authorizations of appropriations that are available for the purposes
described in such subsections.
Subtitle D. Core Functions of Public Health Programs; National Initiatives
Regarding Preventive Health
Part 1. FUNDING
SEC. 3301. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Core Functions of Public Health Programs. For the purpose of carrying
out part 2, there are authorized to be appropriated from the Public Health
Service Initiatives Fund (established in section 3701) $12,000,000 for
fiscal year 1995, $325,000,000 for fiscal year 1996, $450,000,000 for
fiscal year 1997, $550,000,000 for fiscal year 1998, $650,000,000 for
fiscal year 1999, and $750,000,000 for fiscal year 2000.
(b) National Initiatives Regarding Health Promotion and Disease
Prevention. For the purpose of carrying out part 3, there are authorized to
be appropriated from the Public Health Service Initiatives Fund
(established in section 3701) $175,000,000 for fiscal year 1996, and
$200,000,000 for each of the fiscal years 1997 through 2000.
(c) Relation to Other Funds. The authorizations of appropriations
established in subsections (a) and (b) are in addition to any other
authorizations of appropriations that are available for the purposes
described in such subsections.
Part 2. CORE FUNCTIONS OF PUBLIC HEALTH PROGRAMS
SEC. 3311. PURPOSES.
Subject to the subsequent provisions of this subtitle, the purposes of
this part are to strengthen the capacity of State and local public health
agencies to carry out the following functions:
(1) To monitor and protect the health of communities against
communicable diseases and exposure to toxic environmental pollutants,
occupational hazards, harmful products, and poor quality health care.
(2) To identify and control outbreaks of infectious disease and
patterns of chronic disease and injury.
(3) To inform and educate health care consumers and providers about
their roles in preventing and controlling disease and the appropriate use
of medical services.
(4) To develop and test new prevention and public health control
interventions.
SEC. 3312. GRANTS TO STATES FOR CORE HEALTH FUNCTIONS.
(a) In General. The Secretary may make grants to States for the purpose
of carrying out one or more of the functions described in subsection (b).
(b) Core Functions of Public Health Programs. For purposes of subsection
(a), the functions described in this subsection are, subject to subsection
to subsection (c), as follows:
(1) Data collection, activities related to population health
measurement and outcomes monitoring, including the regular collection and
analysis of public health data, vital statistics, and personal health
services data and analysis for planning and needs assessment purposes of
data collected from health plans through the information system under
title V of this Act.
(2) Activities to protect the environment and to assure the safety of
housing, workplaces, food and water, including the following activities:
(A) Monitoring the overall public health quality and safety of
communities.
(B) Assessing exposure to high lead levels and water contamination.
(C) Monitoring sewage and solid waste disposal, radiation exposure,
radon exposure, and noise levels.
(D) Abatement of lead-related hazards.
(E) Assuring recreation and worker safety.
(F) Enforcing public health safety and sanitary codes.
(G) Other activities relating to promoting the public health of
communities.
(3) Investigation and control of adverse health conditions, including
improvements in emergency treatment preparedness, cooperative activities
to reduce violence levels in communities, activities to control the
outbreak of disease, exposure related conditions and other threats to the
health status of individuals.
(4) Public information and education programs to reduce risks to health
such as use of tobacco, alcohol and other drugs, sexual activities that
increase the risk to HIV transmission and sexually transmitted diseases,
poor diet, physical inactivity, and low childhood immunization levels.
(5) Accountability and quality assurance activities, including
monitoring the quality of personal health services furnished by health
plans and providers of medical and health services in a manner consistent
with the overall quality of care monitoring activities undertaken under
title V, and monitoring communities' overall access to health services.
(6) Provision of public health laboratory services to complement
private clinical laboratory services and that screen for diseases and
conditions such as metabolic diseases in newborns, provide toxicology
assessments of blood lead levels and other environmental toxins, diagnose
sexually transmitted diseases, tuberculosis and other diseases requiring
partner notification, test for infectious and food-borne diseases, and
monitor the safety of water and food supplies.
(7) Training and education to assure provision of care by all health
professionals, with special emphasis placed on the training of public
health professions including epidemiologists, biostatisticians, health
educators, public health administrators, sanitarians and laboratory
technicians.
(8) Leadership, policy development and administration activities,
including needs assessment, the setting of public health standards, the
development of community public health policies, and the development of
community public health coalitions.
(c) Restrictions on Use of Grant.
(1) In general. A funding agreement for a grant under subsection (a) for
a State is that the grant will not be expended
(A) to provide inpatient services;
(B) to make cash payments to intended recipients of health services;
(C) to purchase or improve land, purchase, construct, or permanently
improve (other than minor remodeling) any building or other facility,
or purchase major medical equipment;
(D) to satisfy any requirement for the expenditure of non-Federal
funds as a condition for the receipt of Federal funds; or
(E) to provide financial assistance to any entity other than a public
or nonprofit private entity.
(2) Limitation on administrative expenses. A funding agreement for a
grant under subsection (a) is that the State involved will not expend
more than 10 percent of the grant for administrative expenses with
respect to the grant.
(d) Maintenance of Effort. A funding agreement for a grant under
subsection (a) is that the State involved will maintain expenditures of
non-Federal amounts for core health functions at a level that is not less
than the level of such expenditures maintained by the State for the fiscal
year preceding the first fiscal year for which the State receives such a
grant.
SEC. 3313. SUBMISSION OF INFORMATION.
The Secretary may make a grant under section 3312 only if the State
involved submits to the Secretary the following information:
(1) A description of existing deficiencies in the State's public health
system (at the State level and the local level), using standards of
sufficiency developed by the Secretary.
(2) A description of health status measures to be improved within the
State (at the State level and the local level) through expanded public
health functions.
(3) Measurable outcomes and process objectives for improving health
status and core health functions for which the grant is to be expended.
(4) Information regarding each such function, which
(A) identifies the amount of State and local funding expended on each
such function for the fiscal year preceding the fiscal year for which
the grant is sought; and
(B) provides a detailed description of how additional Federal funding
will improve each such function by both the State and local public
health agencies.
(5) A description of the core health functions to be carried out at the
local level, and a specification for each such function of
(A) the communities in which the function will be carried out; and
(B) the amount of the grant to be expended for the function in each
community so specified.
SEC. 3314. REPORTS.
A funding agreement for a grant under section 3312 is that the States
involved will, not later than the date specified by the Secretary,
submit to the Secretary a report describing
(1) the purposes for which the grant was expended; and
(2) describing the extent of progress made by the State in achieving
measurable outcomes and process objectives described in section 3313(3).
SEC. 3315. APPLICATION FOR GRANT.
The Secretary may make a grant under section 3312 only if an
application for the grant is submitted to the Secretary, the application
contains each agreement described in this part, the application contains
the information required in section 3314, and the application is in such
form, is made in such manner, and contains such agreements, assurances,
and information as the Secretary determines to be necessary to carry out
this part.
SEC. 3316. GENERAL PROVISIONS.
(a) Uniform Data Sets. The Secretary, in consultation with the States,
shall develop uniform sets of data for the purpose of monitoring the core
health functions carried out with grants under section 3312.
(b) Duration of Grant. The period during which payments are made to a
State from a grant under section 3312 may not exceed 5 years. The provision
of such payments shall be subject to annual approval by the Secretary of
the payments. This subsection may not be construed as establishing a
limitation on the number of grants under such section that may be made to
the State.
SEC. 3317. ALLOCATIONS FOR CERTAIN ACTIVITIES.
Of the amounts made available under section 3301 for a fiscal year for
carrying out this part, the Secretary may reserve not more than 5 percent
for carrying out the following activities:
(1) Technical assistance with respect to planning, development, and
operation of core health functions carried out under section 3312,
including provision of biostatistical and epidemiological expertise and
provision of laboratory expertise.
(2) Development and operation of a national information network among
State and local health agencies.
(3) Program monitoring and evaluation of core health functions carried
out under section 3312.
(4) Development of a unified electronic reporting mechanism to improve
the efficiency of administrative management requirements regarding the
provision of Federal grants to State public health agencies.
SEC. 3318. DEFINITIONS.
For purposes of this part:
(1) The term ``funding agreement'', with respect to a grant under
section 3312 to a State, means that the Secretary may make the grant only
if the State makes the agreement involved.
(2) The term ``core health functions'', with respect to a State, means
the functions described in section 3312(b).
Part 3. NATIONAL INITIATIVES REGARDING HEALTH PROMOTION AND DISEASE
PREVENTION
SEC. 3331. GRANTS FOR NATIONAL PREVENTION INITIATIVES.
(a) In General. The Secretary may make grants to entities described in
subsection (b) for the purpose of carrying out projects to develop and
implement innovative community-based strategies to provide for health
promotion and disease prevention activities for which there is a
significant need, as identified under section 1701 of the Public Health
Service Act.
(b) Eligible Entities. The entities referred to in subsection (a) are
agencies of State or local government, private nonprofit organizations
(including research institutions), and coalitions that link two or more of
these groups.
(c) Certain Activities. The Secretary shall ensure that projects carried
out under subsection (a)
(1) reflect approaches that take into account the special needs and
concerns of the affected populations;
(2) are targeted to the most needy and vulnerable population groups and
geographic areas of the Nation;
(3) examine links between various high priority preventable health
problems and the potential community-based remedial actions; and
(4) establish or strengthen the links between the activities of
agencies engaged in public health activities with those of health
alliances, health care providers, and other entities involved in the
personal health care delivery system described in title I.
SEC. 3332. PRIORITIES.
(a) Establishment.
(1) Annual statement. After consultation with the advisory board
established in section 3335, the Secretary shall for each fiscal year
develop a statement of proposed priorities for grants under section 3331
for the fiscal year.
(2) Allocations among priorities. With respect to the amounts available
under section 3301 for the fiscal year for carrying out this part, each
statement under paragraph (1) for a fiscal year shall include a
specification of the percentage of the amount to be devoted to projects
addressing each of the proposed priorities established in the statement.
(3) Process for establishing priorities. Not later than January 1 of
each fiscal year, the Secretary shall publish a statement under paragraph
(1) in the Federal Register. A period of 60 days shall be allowed for
the submission of public comments and suggestions concerning the proposed
priorities. After analyzing and considering comments on the proposed
priorities, the Secretary shall publish in the Federal Register final
priorities (and associated reservations of funds) for approval of
projects for the following fiscal year.
(b) Applicability to Making of Grants.
(1) In general. Subject to paragraph (3), the Secretary may make grants
under section 3331 for projects that the Secretary determines
(A) are consistent with the applicable final statement of priorities
and otherwise meets the objectives described in subsection (a); and
(B) will assist in meeting a health need or concern of a population
served by a health plan or health alliance established under title I.
(2) Special consideration for certain projects. In making grants under
section 3331, the Secretary shall, subject to paragraph (3), give special
consideration to applicants that will carry out projects that, in
addition to being consistent with the applicable published priorities
under subsection (a) and otherwise meeting the requirements of this part,
have the potential for replication in other communities.
SEC. 3333. SUBMISSION OF INFORMATION.
The Secretary may make a grant under section 3331 only if the applicant
involved submits to the Secretary the following information:
(1) A description of the activities to be conducted, and the manner in
which the activities are expected to contribute to meeting one or more of
the priority health needs specified under section 3332 for the fiscal
year for which the grant is initially sought.
(2) A description of the total amount of Federal funding requested, the
geographic area and populations to be served, and the evaluation
procedures to be followed.
(3) Such other information as the Secretary determines to be
appropriate.
SEC. 3334. APPLICATION FOR GRANT.
The Secretary may make a grant under section 3331 only if an
application for the grant is submitted to the Secretary, the application
contains each agreement described in this part, the application contains
the information required in section 3333, and the application is in such
form, is made in such manner, and contains such agreements, assurances,
and information as the Secretary determines to be necessary to carry out
this part.
Subtitle E. Health Services for Medically Underserved Populations
Part 1. COMMUNITY AND MIGRANT HEALTH CENTERS
SEC. 3401. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Grants to Community and Migrant Health Centers. The Secretary shall
make grants in accordance with this part to migrant health centers and
community health centers.
(b) Authorization of Appropriations. For the purpose of carrying out
subsection (a), there are authorized to be appropriated from the Public
Health Service Initiatives Fund (established in section 3701) $100,000,000
for each of the fiscal years 1995 through 2000.
(c) Relation to Other Funds. The authorizations of appropriations
established in subsection (b) for the purpose described in such subsection
are in addition to any other authorizations of appropriations that are
available for such purpose.
(d) Definitions. For purposes of this subtitle, the terms ``migrant
health center'' and ``community health center'' have the meanings given
such terms in sections 329(a)(1) and 330(a) of the Public Health Service
Act, respectively.
SEC. 3402. USE OF FUNDS.
(a) Development, Operation, and Other Purposes Regarding Centers. Subject
to subsection (b), grants under section 3401 to migrant health centers and
community health centers may be made only in accordance with the conditions
upon which grants are made under sections 329 and 330 of the Public Health
Service Act, respectively.
(b) Required Financial Reserves. The Secretary may authorize migrant
health centers and community health centers to expend a grant under section
3401 to establish and maintain the financial reserves required under title
I for providers of health services.
Part 2. INITIATIVES FOR ACCESS TO HEALTH CARE
Subpart A. Purposes; Funding
SEC. 3411. PURPOSES.
Subject to the provisions of subparts B through D, the purposes of this
part are as follows:
(1) To improve access to health services for urban and rural
medically-underserved populations through a program of flexible grants,
contracts, and loans.
(2) To facilitate transition to a system in which medically-underserved
populations have an adequate choice of community-oriented providers and
health plans.
(3) To promote the development of community practice networks and
community health plans that integrate health professionals and health
care organizations supported through public funding with other providers
in medically underserved areas.
(4) To support linkages between providers of health care for
medically-underserved populations and regional and corporate alliance
health plans.
(5) To expand the capacity of community practice networks and community
health plans in underserved areas by increasing the number of practice
sites and by renovating and converting substandard inpatient and
outpatient facilities.
(6) To link providers in underserved areas with each other and with
regional health care institutions and academic health centers through
information systems and telecommunications.
(7) To support activities that enable medically underserved populations
to gain access to the health care system and use it effectively.
SEC. 3412. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Development of Qualified Community Health Plans and Practice Groups.
For the purpose of carrying out subparts B and C, there are authorized to
be appropriated from the Public Health Service Initiatives Fund
(established in section 3701) $200,000,000 for fiscal year 1995,
$500,000,000 for fiscal year 1996, $600,000,000 for fiscal year 1997,
$700,000,000 for fiscal year 1998, $500,000,000 for fiscal year 1999, and
$200,000,000 for fiscal year 2000.
(b) Relation to Other Funds. The authorizations of appropriations
established in subsection (a) are in addition to any other authorizations
of appropriations that are available for the purpose described in such
subsection.
(c) Relationship to Program Regarding School-Related Health Services.
This section is subject to section 3692.
Subpart B. Development of Qualified Community Health Plans and Practice
Networks
SEC. 3421. GRANTS AND CONTRACTS FOR DEVELOPMENT OF PLANS AND
NETWORKS.
(a) In General. The Secretary may make grants to and enter into contracts
with consortia of public or private health care providers for the
development of qualified community health plans and qualified community
practice networks. For purposes of this subtitle, the term ``qualified
community health group'' means such a health plan or such a practice
network.
(b) Qualified Community Health Plans. For purposes of this subtitle, the
term ``qualified community health plan'' means a health plan that meets the
following conditions:
(1) The health plan is a public or nonprofit private entity whose
principal purpose is, with respect to the items and services included in
the comprehensive benefit package under title I, to provide each of such
items and services in one or more health professional shortage areas or
to provide such items and services to a significant number of individuals
who are members of a medically underserved population.
(2) The health plan is a participant in one or more health alliances.
(3) Two or more of the categories specified in subsection (d) are
represented among the entities providing health services through the
health plan.
(c) Qualified Community Practice Networks. For purposes of this subtitle,
the term ``qualified community practice network'' means a consortium of
health care providers meeting the following conditions:
(1) The consortium is a public or nonprofit private entity whose
principal purpose is the purpose described in subsection (b)(1).
(2) The consortium has an agreement with one or more health plans that
are participating in one or more health alliances.
(3) The participation of health care providers in the consortium is
governed by a written agreement to which each of the participating
providers is a party.
(4) Two or more of the categories described in subsection (d) are
represented among the entities participating in the consortium.
(d) Relevant Categories of Entities. For purposes of subsections (b)(3)
and (c)(4), the categories described in this subsection are the following
categories of entities:
(1) Physicians, other health professionals, or health care institutions
that provide health services in one or more health professional shortage
areas or provide such services to a significant number of individuals who
are members of a medically underserved population, and that do not
provide health services under any of the programs specified in paragraphs
(2) through (7) or as employees of public entities.
(2) Entities providing health services under grants under sections 329
and 330 of the Public Health Service Act.
(3) Entities providing health services under grants under sections 340
and 340A of such Act.
(4) Entities providing health services under grants under section 1001
or title XXIII of such Act.
(5) Entities providing health services under title V of the Social
Security Act.
(6) Entities providing health services through rural health clinics and
other federally qualified health centers.
(7) Entities providing health services in urban areas through programs
under title V of the Indian Health Care Improvement Act, and entities
providing outpatient health services through programs under the Indian
Self-Determination Act.
(8) Programs providing personal health services and operating through
State or local public health agencies.
(e) Rule of Construction. The consortia to which the Secretary may make
an award of financial assistance under subsection (a) for the development
of qualified community practice networks include any health plan that
participates in one or more health alliances, without regard to whether the
health plan is a qualified community health plan.
(f) Service Area. In making an award of financial assistance under
subsection (a), the Secretary shall designate the geographic area with
respect to which the qualified community health group involved is to
provide health services. A funding agreement for such an award is that the
qualified community health group involved will provide such services in the
area so designated.
(g) Definitions. For purposes of this subtitle:
(1) The term ``health professional shortage areas'' means health
professional shortage areas designated under section 332 of the Public
Health Service Act.
(2) The term ``medically underserved population'' means a medically
underserved population designated under section 330 of the Public Health
Service Act.
(3) The term ``rural health clinic'' has the meaning given such term in
section 1861(aa)(2) of the Social Security Act.
(4) The term ``federally qualified health centers'' has the meaning
given such term in section 1861(aa)(4) of the Social Security Act.
(5) The term ``service area'', with respect to a qualified community
health group, means the geographic area designated under subsection (g).
(6) The term ``funding agreement'', with respect to an award of
financial assistance under this section, means that the Secretary may
make the award only if the applicant for the award makes the agreement
involved.
(7) The term ``financial assistance'', with respect to awards under
subsection (a), means a grant or contract.
SEC. 3422. PREFERENCES IN MAKING AWARDS OF ASSISTANCE.
In making awards of financial assistance under section 3421, the
Secretary shall give preference to applicants in accordance with the
following:
(1) The Secretary shall give preference if 3 or more of the categories
described in subsection (d) of such section will be represented in the
qualified community health group involved (pursuant to subsection (b)(3)
or (c)(4), as the case may be).
(2) Of applicants receiving preference under paragraph (1), the
Secretary shall give a greater degree of preference according to the
extent to which a greater number of categories are represented.
(3) Of applicants receiving preference under paragraph (1), the
Secretary shall give a greater degree of preference if one of the
categories represented is the category described in subsection (d)(1) of
such section.
SEC. 3423. CERTAIN USES OF AWARDS.
(a) In General. Subject to subsection (b), the purposes for which an
award of financial assistance under section 3421 may be expended in
developing a qualified community health group include the following:
(1) Planning such group, including entering into contracts between the
recipient of the award and health care providers who are to participate
in the group.
(2) Recruitment, compensation, and training of health professionals and
administrative staff.
(3) Acquisition, expansion, modernization, and conversion of
facilities, including for purposes of providing for sites at which health
services are to be provided through such group.
(4) Acquisition and development of information systems (exclusive of
systems that the Secretary determines are information highways).
(5) Such other expenditures as the Secretary determines to be
appropriate.
(b) Twenty-year Obligation Regarding Significant Capital Expenditures;
Right of Recovery.
(1) In general. With respect to a facility for which substantial
capital costs are to paid from an award of financial assistance under
section 3421, the Secretary may make the award only if the applicant
involved agrees that the applicant will be liable to the United States
for the amount of the award expended for such costs, together with an
amount representing interest, if at any time during the 20-period
beginning on the date of completion of the activities involved, the
facility
(A) ceases to be a facility utilized by a qualified community health
group, or by another public or nonprofit private entity that provides
health services in one or more health professional shortage areas or
that provides such services to a significant number of individuals who
are members of a medically underserved population; or
(B) is sold or transferred to any entity other than an entity that is
(i) a qualified community health group or other entity described in
subparagraph (A); and
(ii) approved by the Secretary as a purchaser or transferee
regarding the facility.
(2) Subordination; waivers. The Secretary may subordinate or waive the
right of recovery under paragraph (1), and any other Federal interest
that may be derived by virtue of an award of financial assistance under
section 3421 from which substantial capital costs are to paid from an
award, if the Secretary determines that subordination or waiver will
further the objectives of this part.
SEC. 3424. ACCESSIBILITY OF SERVICES.
(a) Services for Certain Individuals. A funding agreement for an award of
financial assistance under section 3421 is that the qualified community
health group involved will ensure that the services of the group will be
accessible directly or through formal contractual arrangements with its
participating providers regardless of whether individuals who seek care
from the applicant are eligible persons under title I.
(b) Use of Third-Party Payors. A funding agreement for an award of
financial assistance under section 3421 is that the qualified community
health group involved will ensure that the health care providers of the
group are all approved by the Secretary as providers under title XVIII of
the Social Security Act and by the appropriate State agency as providers
under title XIX of the Social Security Act, and the applicant has made or
will make every reasonable effort to collect appropriate reimbursement for
its costs in providing health services to individuals who are entitled to
health benefits under title I of this Act, insurance benefits under title
XVIII of the Social Security Act, medical assistance under a State plan
approved under title XIX of the Social Security Act, or to assistance for
medical expenses under any other public assistance program or private
health insurance program.
(c) Schedule of Fees. A funding agreement for an award of financial
assistance under section 3421 is that the qualified community health group
involved will
(1) prepare a schedule of fees or payments for the provision of health
services not covered by title I that is consistent with locally
prevailing rates or charges and designed to cover its reasonable costs of
operation and has prepared a corresponding schedule of discounts to be
applied to the payment of such fees or payments (or payments of cost
sharing amounts owed in the case of covered benefits) which discounts are
applied on the basis of the patient's ability to pay; and
(2) make every reasonable effort to secure from patients payment in
accordance with such schedules, and to collect reimbursement for services
to persons entitled to public or private insurance benefits or other
medical assistance on the basis of full fees without application of
discounts, except that the applicant will ensure that no person is denied
service based on the person's inability to pay therefor.
(d) Barriers Within Service Area. A funding agreement for an award of
financial assistance under section 3421 is that the qualified community
health group involved will ensure that the following conditions are met:
(1) In the service area of the group, the group will ensure that
(A) the services of the group are accessible to all residents; and
(B) to the maximum extent possible, barriers to access to the
services of the group are eliminated, including barriers resulting from
the area's physical characteristics, its residential patterns, its
economic, social and cultural groupings, and available transportation.
(2) The group will periodically conduct reviews within the service area
of the group to determine whether the conditions described in paragraph
(1) are being met.
(e) Limited Ability to Speak English Language. A funding agreement for an
award of financial assistance under section 3421 is that, if the service
area of the qualified community health group involved serves a substantial
number of individuals who have a limited ability to speak the English
language, the applicant will
(1) maintain arrangements responsive to the needs of such individuals
for providing services to the extent practicable in the language and
cultural context most appropriate to such individuals; and
(2) maintain a sufficient number of staff members who are fluent in
both English and the languages spoken by such individuals, and will
ensure that the responsibilities of the employees include providing
guidance and assistance to such individuals and to other staff members of
the group.
SEC. 3425. ADDITIONAL AGREEMENTS.
(a) Required Services. A funding agreement for an award of financial
assistance under section 3421 is that the qualified community health group
involved will provide enabling services (as defined in section 3461(g)) and
all of the items and services identified by the Secretary in rules
regarding qualified community health plans and practice networks.
(b) Quality Control System. A funding agreement for an award of financial
assistance under section 3421 is that the qualified community health group
involved will maintain a community-oriented, patient responsive, quality
control system under which the group, in accordance with regulations
prescribed by the Secretary
(1) conducts an ongoing quality assurance program for the health
services delivered by participating provider entities;
(2) maintains a continuous community health status improvement process;
and
(3) maintains a system for development, compilation, evaluation and
reporting of information to the public regarding the costs of operation,
service utilization patterns, availability, accessibility and
acceptability of services, developments in the health status of the
populations served, uniform health and clinical performance measures and
financial performance of the network or plan.
(c) Use of Existing Resources. A funding agreement for an award of
financial assistance under section 3421 is that the applicant will, in
developing the qualified community health group involved, utilize existing
resources to the maximum extent practicable.
SEC. 3426. SUBMISSION OF CERTAIN INFORMATION.
(a) Assessment of Need. The Secretary may make an award of financial
assistance under section 3421 only if the applicant involved submits to the
Secretary an assessment of the need that the medically underserved
population or populations proposed to be served by the applicant have for
health services and for enabling services (as defined in section 3461(g)).
(b) Description of Intended Expenditures; Related Information. The
Secretary may make an award of financial assistance under section 3421 only
if the applicant involved submits to the Secretary the following
information:
(1) A description of how the applicant will design the proposed quality
community health plan or practice network (including the service sites
involved) for such populations based on the assessment of need.
(2) A description of efforts to secure, within the proposed service
area of such health plan or practice network (including the service sites
involved), financial and professional assistance and support for the
project.
(3) Evidence of significant community involvement in the initiation,
development and ongoing operation of the project.
SEC. 3427. REPORTS; AUDITS.
A funding agreement for an award of financial assistance under section
3421 is that the applicant involved will
(1) provide such reports and information on activities carried out
under this section in a manner and form required by the Secretary; and
(2) provide an annual organization-wide audit that meets applicable
standards of the Secretary.
SEC. 3428. APPLICATION FOR ASSISTANCE.
The Secretary may make an award of financial assistance under section
3421 only if an application for the award is submitted to the Secretary,
the application contains each funding agreement described in this
subpart, the application contains the information required in section
3426, and the application is in such form, is made in such manner, and
contains such agreements, assurances, and information as the Secretary
determines to be necessary to carry out this subpart.
SEC. 3429. GENERAL PROVISIONS.
(a) Limitation on Number of Awards. The Secretary may not make more than
two awards of financial assistance under section 3421 for the same project.
(b) Amount. The amount of any award of financial assistance under section
3421 for any project shall be determined by the Secretary.
Subpart C. Capital Cost of Development of Qualified Community Health Plans
and Practice Networks
SEC. 3441. LOANS AND LOAN GUARANTEES REGARDING PLANS AND NETWORKS.
(a) In General. The Secretary may make loans to, and guarantee the
payment of principal and interest to Federal and non-Federal lenders on
behalf of, public and private entities for the capital costs of developing
qualified community health groups (as defined in section 3421(a)).
(b) Preferences; Accessibility of Services; Certain Other Provisions. The
provisions of subpart B apply to loans and loan guarantees under subsection
(a) to the same extent and in the same manner as such provisions apply to
awards of grants and contracts under section 3421.
(c) Use of Assistance.
(1) In general. With respect to the development of qualified community
health groups, the capital costs for which loans made pursuant to
subsection (a) may be expended are, subject to paragraphs (2) and (3),
the following:
(A) The acquisition, modernization, expansion or construction of
facilities, or the conversion of unneeded hospital facilities to
facilities that will assure or enhance the provision and accessibility
of health care and enabling services to medically underserved
populations.
(B) The purchase of major equipment, including equipment necessary
for the support of external and internal information systems.
(C) The establishment of reserves required for furnishing services on
a prepaid basis.
(D) Such other capital costs as the Secretary may determine are
necessary to achieve the objectives of this section.
(2) Priorities regarding use of funds. In providing loans or loan
guarantees under subsection (a) for an entity, the Secretary shall give
priority to authorizing the use of amounts for projects for the
renovation and modernization of medical facilities necessary to prevent
or eliminate safety hazards, avoid noncompliance with licensure or
accreditation standards, or projects to replace obsolete facilities.
(3) Limitation. The Secretary may authorize the use of amounts under
subsection (a) for the construction of new buildings only if the
Secretary determines that appropriate facilities are not available
through acquiring, modernizing, expanding or converting existing
buildings, or that construction new buildings will cost less.
(d) Amount of assistance. The principal amount of loans or loan
guarantees under subsection (a) may, when added to any other assistance
under this section, cover up to 100 percent of the costs involved.
SEC. 3442. CERTAIN REQUIREMENTS.
(a) Loans.
(1) In general. The Secretary may approve a loan under section 3441
only if
(A) the Secretary is reasonably satisfied that the applicant for the
project for which the loan would be made will be able to make payments
of principal and interest thereon when due; and
(B) the applicant provides the Secretary with reasonable assurances
that there will be available to it such additional funds as may be
necessary to complete the project or undertaking with respect to which
such loan is requested.
(2) Terms and conditions. Any loan made under section 3441 shall meet
such terms and conditions (including provisions for recovery in case of
default) as the Secretary determines to be necessary to carry out the
purposes of such section while adequately protecting the financial
interests of the United States. Terms and conditions for such loans shall
include provisions regarding the following:
(A) Security.
(B) Maturity date.
(C) Amount and frequency of installments.
(D) Rate of interest, which shall be at a rate comparable to the rate
of interest prevailing on the date the loan is made.
(b) Loan Guarantees. The Secretary may not approve a loan guarantee under
section 3441 unless the Secretary determines that the terms, conditions,
security (if any), schedule and amount of repayments with respect to the
loan are sufficient to protect the financial interests of the United States
and are otherwise reasonable. Such loan guarantees shall be subject to such
further terms and conditions as the Secretary determines to be necessary
to ensure that the purposes of this section will be achieved.
(c) Use of Existing Resources. The Secretary may provide a loan or loan
guarantee under section 3441 only if the applicant involved agrees that, in
developing the qualified community health group involved, the applicant
will utilize existing resources to the maximum extent practicable.
SEC. 3443. DEFAULTS; RIGHT OF RECOVERY.
(a) Defaults.
(1) In general. The Secretary may take such action as may be necessary
to prevent a default on loans or loan guarantees under section 3441,
including the waiver of regulatory conditions, deferral of loan payments,
renegotiation of loans, and the expenditure of funds for technical and
consultative assistance, for the temporary payment of the interest and
principal on such a loan, and for other purposes.
(2) Foreclosure. The Secretary may take such action, consistent with
State law respecting foreclosure procedures, as the Secretary deems
appropriate to protect the interest of the United States in the event of
a default on a loan made pursuant to section 3441, including selling real
property pledged as security for such a loan or loan guarantee and for a
reasonable period of time taking possession of, holding, and using real
property pledged as security for such a loan or loan guarantee.
(3) Waivers. The Secretary may, for good cause, but with due regard to
the financial interests of the United States, waive any right of recovery
which the Secretary has by reasons of the failure of a borrower to make
payments of principal of and interest on a loan made pursuant to section
3441, except that if such loan is sold and guaranteed, any such waiver
shall have no effect upon the Secretary's guarantee of timely payment of
principal and interest.
(b) Twenty-year Obligation; Right of Recovery.
(1) In general. With respect to a facility for which a loan is to be
made pursuant to section 3441, the Secretary may provide the loan or loan
guarantee only if the applicant involved agrees that the applicant will
be liable to the United States for the amount of the loan or loan
guarantee, together with an amount representing interest, if at any time
during the 20-period beginning on the date of completion of the
activities involved, the facility
(A) ceases to be a facility utilized by a qualified community health
group, or by another public or nonprofit private entity that provides
health services in one or more health professional shortage areas or
that provides such services to a significant number of individuals who
are members of a medically underserved population; or
(B) is sold or transferred to any entity other than an entity that is
(i) a qualified community health group or other entity described in
subparagraph (A); and
(ii) approved by the Secretary as a purchaser or transferee
regarding the facility.
(2) Subordination; waivers. The Secretary may subordinate or waive the
right of recovery under paragraph (1), and any other Federal interest
that may be derived by virtue of a loan or loan guarantee under
subsection (a), if the Secretary determines that subordination or waiver
will further the objectives of this part.
SEC. 3444. PROVISIONS REGARDING CONSTRUCTION OR EXPANSION OF FACILITIES.
(a) Submission of Information. In the case of a project for construction,
conversion, expansion or modernization of a facility, the Secretary may
provide loans or loan guarantees under section 3441 only if the applicant
submits to the Secretary the following:
(1) A description of the site.
(2) Plans and specifications which meet requirements prescribed by the
Secretary.
(3) Information reasonably demonstrating that title to such site is
vested in one or more of the entities filing the application (unless the
agreement described in subsection (b)(1) is made).
(4) A specification of the type of assistance being requested under
section 3441.
(b) Agreements. In the case of a project for construction, conversion,
expansion or modernization of a facility, the Secretary may provide loans
or loan guarantees under section 3441 only if the applicant makes the
following agreements:
(1) Title to such site will be vested in one or more of the entities
filing the application (unless the assurance described in subsection
(a)(3) has been submitted under such subsection).
(2) Adequate financial support will be available for completion of the
project and for its maintenance and operation when completed.
(3) All laborers and mechanics employed by contractors or
subcontractors in the performance of work on a project will be paid wages
at rates not less than those prevailing on similar construction in the
locality as determined by the Secretary of Labor in accordance with the
Act of March 3, 1931 (40 U.S.C. 276a et seq; commonly known as the
Davis-Bacon Act), and the Secretary of Labor shall have with respect to
such labor standards the authority and functions set forth in
Reorganization Plan Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. Appendix)
and section 276c of title 40.
(4) The facility will be made available to all persons seeking service
regardless of their ability to pay.
SEC. 3445. APPLICATION FOR ASSISTANCE.
The Secretary may provide loans or loan guarantees under section 3441
only if an application for such assistance is submitted to the Secretary,
the application contains each agreement described in this subpart, the
application contains the information required in section 3444(a), and the
application is in such form, is made in such manner, and contains such
agreements, assurances, and information as the Secretary determines to be
necessary to carry out this subpart.
SEC. 3446. ADMINISTRATION OF PROGRAMS.
This subpart, and any other program of the Secretary that provides
loans or loan guarantees, shall be carried out by a centralized loan unit
established within the Department of Health and Human Services.
Subpart D. Enabling Services
SEC. 3461. GRANTS AND CONTRACTS FOR ENABLING SERVICES.
(a) In General.
(1) Grants and contracts. The Secretary may make grants to and enter
into contracts with entities described in paragraph (2) to assist such
entities in providing the services described in subsection (b) for the
purpose of increasing the capacity of individuals to utilize the items
and services included in the comprehensive benefits package under title
I.
(2) Relevant entities. For purposes of paragraph (1), the entities
described in this paragraph are qualified community health groups (as
defined in section 3421(a)), and other public or nonprofit private
entities, that
(A) provide health services in one or more health professional
shortage areas or that provide such services to a significant number of
individuals who are members of a medically underserved population; and
(B) are experienced in providing services to increase the capacity of
individuals to utilize health services.
(b) Enabling Services. The services referred to in subsection (a)(1) are
transportation, community and patient outreach, patient education,
translation services, and such other services as the Secretary determines
to be appropriate in carrying out the purpose described in such subsection.
(c) Certain Requirements Regarding Project Area. The Secretary may make
an award of a grant or contract under subsection (a) only if the applicant
involved
(1) submits to the Secretary
(A) information demonstrating that the medically underserved
populations in the community to be served under the award have a need
for enabling services; and
(B) a proposed budget for providing such services; and
(2) the applicant for the award agrees that the residents of the
community will be significantly involved in the project carried out with
the award.
(d) Imposition of Fees. The Secretary may make an award of a grant or
contract under subsection (a) only if the applicant involved agrees that,
in the project carried out under such subsection, enabling services will be
provided without charge to the recipients of the services.
(e) Use of Existing Resources. The Secretary may make an award of a grant
or contract under subsection (a) only if the applicant involved agrees
that, in carrying out the project under such subsection, the applicant will
utilize existing resources to the maximum extent practicable.
(f) Application for Awards of Assistance. The Secretary may make an award
of a grant or contract under subsection (a) only if an application for the
award is submitted to the Secretary, the application contains each
agreement described in this subpart, the application contains the
information required in subsection (d)(1), and the application is in such
form, is made in such manner, and contains such agreements, assurances, and
information as the Secretary determines to be necessary to carry out this
subpart.
(g) Definition. For purposes of this section, the term ``enabling
services'' means services described in subsection (b) that are provided for
the purpose described in subsection (a)(1).
SEC. 3462. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Enabling Services. For the purpose of carrying out section 3461,
there are authorized to be appropriated from the Public Health Service
Initiatives Fund (established in section 3701) $200,000,000 for fiscal year
1996, $300,000,000 for each of the fiscal years 1997 through 1999, and
$100,000,000 for fiscal year 2000.
(b) Relation to Other Funds. The authorizations of appropriations
established in subsection (a) are in addition to any other authorizations
of appropriations that are available for the purpose described in such
subsection.
Part 3. NATIONAL HEALTH SERVICE CORPS
SEC. 3471. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Additional Funding; General Corps Program; Allocations Regarding
Nurses. For the purpose of carrying out subpart II of part D of title III
of the Public Health Service Act, and for the purpose of carrying out
section 3472, there are authorized to be appropriated from the Public
Health Service Initiatives Fund (established in section 3701) $50,000,000
for fiscal year 1995, $100,000,000 for fiscal year 1996, and $200,000,000
for each of the fiscal years 1997 through 2000.
(b) Relation to Other Funds. The authorizations of appropriations
established in subsection (a) are in addition to any other authorizations
of appropriations that are available for the purpose described in such
subsection.
(c) Availability of Funds. An appropriation under this section for any
fiscal year may be made at any time before that fiscal year and may be
included in an Act making an appropriation under an authorization under
subsection (a) for another fiscal year; but no funds may be made available
from any appropriation under this section for obligation under sections 331
through 335, section 336A, and section 337 before the fiscal year involved.
SEC. 3472. ALLOCATION FOR PARTICIPATION OF NURSES IN SCHOLARSHIP AND
LOAN
REPAYMENT PROGRAMS.
Of the amounts appropriated under section 3471, the Secretary shall
reserve such amounts as may be necessary to ensure that, of the aggregate
number of individuals who are participants in the Scholarship Program under
section 338A of the Public Health Service Act, or in the Loan Repayment
Program under section 338B of such Act, the total number who are being
educated as nurses or are serving as nurses, respectively, is increased to
20 percent.
Part 4. PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS
SEC. 3481. PAYMENTS TO HOSPITALS.
(a) Entitlement Status. The Secretary shall make payments in accordance
with this part to eligible hospitals described in section 3482. The
preceding sentence
(1) is an entitlement in the Secretary on behalf of such eligible
hospitals (but is not an entitlement in the State in which any such
hospital is located or in any individual receiving services from any such
hospital); and
(2) constitutes budget authority in advance of appropriations Acts and
represents the obligation of the Federal Government to provide funding
for such payments in the amounts, and for the fiscal years, specified in
subsection (b).
(b) Amount of Entitlement.
(1) In general. For purposes of subsection (a)(2), the amounts and
fiscal years specified in this subsection are (in the aggregate for all
eligible hospitals) $800,000,000 for the fiscal year in which the general
effective date occurs and for each subsequent fiscal year.
(2) Special rule for years before general effective date.
(A) In general. For any fiscal year that begins prior to the general
effective date, the amount specified in this subsection for purposes of
subsection (a)(2) shall be equal to the aggregate DSH percentage of the
amount otherwise determined under paragraph (1).
(B) Aggregate DSH percentage defined. In subparagraph (A), the
``aggregate DSH percentage'' for a year is the amount (expressed as a
percentage) equal to
(i) the total amount of payment made by the Secretary under section
1903(a) of the Social Security Act during the base year with respect
to payment adjustments made under section 1923(c) of such Act for
hospitals in the States in which eligible hospitals for the year are
located; divided by
(ii) the total amount of payment made by the Secretary under
section 1903(a) of such Act during the base year with respect to
payment adjustments made under section 1923(c) of such Act for
hospitals in all States.
(c) Period of Payment. An eligible hospital shall receive a payment under
this section for a period of 5 years, without regard to the year for which
the hospital first receives a payment.
(d) Payments Made on Quarterly Basis. Payments to an eligible hospital
under this section for a year shall be made on a quarterly basis during the
year.
SEC. 3482. IDENTIFICATION OF ELIGIBLE HOSPITALS.
(a) Hospitals in Participating States. In order to be an eligible
hospital under this part, a hospital must be located in a State that is a
participating State under this Act, except that an eligible hospital
remains eligible to receive a payment under this part notwithstanding that,
during the 5-year period for which the payment is to be made, the State in
which it is located no longer meets the requirements for participating
States under this Act.
(b) State Identification. In accordance with the criteria described in
subsection (c) and such procedures as the Secretary may require, each State
shall identify the hospitals in the State that meet such criteria and
provide the Secretary with a list of such hospitals.
(c) Criteria for Eligibility. A hospital meets the criteria described in
this subsection if the hospital's low-income utilization rate for the base
year under section 1923(b)(3) of the Social Security Act (as such section
is in effect on the day before the date of the enactment of this Act) is
not less than 25 percent.
SEC. 3483. AMOUNT OF PAYMENTS.
(a) Distribution of Allocation for Low-Income Assistance.
(1) Allocation from total amount. Of the total amount available for
payments under this section in a year, 75 percent shall be allocated to
hospitals for low-income assistance in accordance with this subsection.
(2) Determination of hospital payment amount. The amount of payment to
an eligible hospital from the allocation made under paragraph (1) during
a year shall be the equal to the hospital's low-income percentage of the
allocation for the year.
(b) Distribution of Allocation for Assistance for Uncovered Services.
(1) Allocation from total amount; determination of State-specific
portion of allocation. Of the total amount available for payments under
this section in a year, 25 percent shall be allocated to hospitals for
assistance in furnishing inpatient hospital services that are not covered
services under title I (in accordance with regulations of the Secretary)
in accordance with this subsection. The amount available for payments to
eligible hospitals in a State shall be equal to an amount determined in
accordance with a methodology specified by the Secretary.
(2) Determination of hospital payment amount. The amount of payment to
an eligible hospital in a State from the amount available for payments to
eligible hospitals in the State under paragraph (1) during a year shall
be the equal to the hospital's low-income percentage of such amount for
the year.
(c) Low-Income Percentage Defined.
(1) In general. In this subsection, an eligible hospital's ``low-income
percentage'' for a year is equal to the amount (expressed as a
percentage) of the total low-income days for all eligible hospitals for
the year that are attributable to the hospital.
(2) Low-income days described. For purposes of paragraph (1), an
eligible hospital's low-income days for a year shall be equal to the
product of
(A) the total number of inpatient days for the hospital for the year
(as reported to the Secretary by the State in which the hospital is
located, in accordance with a reporting schedule and procedures
established by the Secretary); and
(B) the hospital's low-income utilization rate for the base year
under section 1923(b)(3) of the Social Security Act (as such section is
in effect on the day before the date of the enactment of this Act).
SEC. 3484. BASE YEAR.
In this part, the ``base year'' is, with respect to a State and
hospitals in a State, the year immediately prior to the year in which
the general effective date occurs.
Subtitle F. Mental Health; Substance Abuse
Part 1. FINANCIAL ASSISTANCE
SEC. 3501. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) In General. For the purpose of carrying out this part, there are
authorized to be appropriated from the Public Health Service Initiatives
Fund (established in section 3701) $100,000,000 for fiscal year 1995,
$150,000,000 for fiscal year 1996, and $250,000,000 for each of the fiscal
years 1997 through 2000.
(b) Allocation Among Programs. Of the amounts made available under
subsection (a) for a fiscal year
(1) the Secretary may reserve for carrying out section 3503 such
amounts as the Secretary determines to be appropriate; and
(2) the Secretary shall, of the remaining amounts, reserve 50 percent
for carrying out subsection (a) of section 3502 and 50 percent for
carrying out subsection (b) of such section.
(c) Relation to Other Funds. The authorizations of appropriations
established in subsection (a) are in addition to any other authorizations
of appropriations that are available for the purpose described in such
subsection.
SEC. 3502. SUPPLEMENTAL FORMULA GRANTS FOR STATES REGARDING ACTIVITIES
UNDER
PART B OF TITLE XIX OF PUBLIC HEALTH SERVICE ACT.
(a) Mental Health.
(1) In general. In the case of any State that submits to the Secretary
an application in accordance with subsection (e) for a fiscal year with
respect to mental health, the Secretary shall make a grant to the State
for the purposes authorized in subsection (c) with respect to mental
health. The grant shall consist of the allotment determined under
paragraph (2) for the State for such year.
(2) Determination of allotment. For purposes of paragraph (1), the
allotment under this paragraph for a State for a fiscal year shall be
determined as follows: With respect to the amount reserved under section
3501(c)(2) for carrying out this subsection, section 1918 of the Public
Health Service Act shall be applied to such amount to the same extent and
in the same manner as such section 1918 is applied to the amount
determined under section 1918(a)(2) of such Act.
(b) Substance Abuse.
(1) In general. In the case of any State that submits to the Secretary
an application in accordance with subsection (e) for a fiscal year with
respect to substance abuse, the Secretary shall make a grant to the State
for the purposes authorized in subsection (c) with respect to substance
abuse. The grant shall consist of the allotment determined under
paragraph (2) for the State for such year.
(2) Determination of allotment. For purposes of paragraph (1), the
allotment under this paragraph for a State for a fiscal year shall be
determined as follows: With respect to the amount reserved under section
3501(c)(2) for carrying out this subsection, section 1933 of the Public
Health Service Act shall be applied to such amount to the same extent and
in the same manner as such section 1933 is applied to the amount
determined pursuant to sections 1933(a)(1)(B)(i) and 1918(a)(2)(A) of
such Act.
(c) Use of Grants.
(1) In general. With respect to the expenditure of a grant to a State
under subsection (a) or (b), the Secretary
(A) shall designate as authorized expenditures such of the activities
described in paragraph (2) with respect to mental health and substance
abuse, respectively, as the Secretary determines to be appropriate; and
(B) may make the grant only if the State agrees to expend the grant
in accordance with the activities so designated.
(2) Description of activities. The activities referred to in paragraph
(1) are (as applicable to the grant involved) the following:
(A) For the purpose of increasing the access of individuals to
services relating to mental health and substance abuse, the following
services: Transportation, community and patient outreach, patient
education, translation services, and such other services as the
Secretary determines to be appropriate regarding such purpose.
(B) Improving the capacity of State and local service systems to
coordinate and monitor mental health and substance abuse services,
including improvement of management information systems, and
establishment of linkages between providers of mental health and
substance abuse services and primary care providers and health plans.
(C) Providing incentives to integrate public and private systems for
the treatment of mental health and substance abuse disorders.
(D) Any activity for which a grant under section 1911 or section 1921
of the Public Health Service Act is authorized to be expended.
(d) Maintenance of Effort.
(1) In general. With respect to the activities for which a grant under
subsection (a) or (b) is to be made, the Secretary may make the grant
only if the State involved agrees to maintain expenditures of non-Federal
amounts for such activities at a level that is not less than the level of
such expenditures maintained by the State for the fiscal year preceding
the first fiscal year for which the State receives such a grant.
(2) Waiver. The Secretary may waive all or part of the requirement
established for a State under paragraph (1) if
(A) the State agrees that the amounts that otherwise would have been
subject to such requirement will be expended for the purpose of
developing community-based systems of care to promote the eventual
integration of the public and private systems for treatment of mental
health, or substance abuse, as applicable to the grant;
(B) the State submits to the Secretary a request for the waiver and a
description of the manner in which the State will carry out such
purpose; and
(C) the Secretary approves the waiver.
(e) Application for Grant. For purposes of subsection (a)(1) and (b)(1),
an application for a grant under this section regarding mental health or
substance abuse, respectively, is in accordance with this subsection if the
State involved submits the application not later than the date specified by
the Secretary, the application contains each applicable agreement described
in this section, and the application otherwise is in such form, is made in
such manner, and contains such agreements, assurances, and information as
the Secretary determines to be necessary to carry out the purpose involved.
SEC. 3503. CAPITAL COSTS OF DEVELOPMENT OF CERTAIN CENTERS AND CLINICS.
(a) In General. The Secretary may make loans to, and guarantee the
payment of principal and interest to Federal and non-Federal lenders on
behalf of, public and private entities for the capital costs to be incurred
by the entities in the development of non-acute, residential treatment
centers and community-based ambulatory clinics.
(b) Priorities Regarding Use of Funds. In providing loans or loan
guarantees under subsection (a), the Secretary shall give priority to
authorizing the use of amounts for projects in health professional shortage
areas or in geographic area in which there resides a significant number of
individuals who are members of a medically underserved population.
(c) Applicability of Certain Provisions. The Secretary may provide loans
or loan guarantees under subsection (a) only if the applicant involved
agrees that, except to the extent inconsistent with the purpose described
in subsection (a), subpart C of part 2 of subtitle E applies to such
assistance to the same extent and in the same manner as such subpart
applies to loans and loan guarantees under section 3441.
Part 2. AUTHORITIES REGARDING PARTICIPATING STATES
Subpart A. Report
SEC. 3511. REPORT ON INTEGRATION OF MENTAL HEALTH SYSTEMS.
(a) In General. As a condition of being a participating State under title
I, each State shall, not later than October 1, 1998, submit to the
Secretary a plan to achieve the integration of the mental health and
substance abuse services of the State and its political subdivisions with
the mental health and substance abuse services that are included in the
comprehensive benefit package under title I.
(b) Required Contents. With respect to the provision of items and
services relating to mental health and substance abuse, the report of a
State under subsection (a) shall, at a minimum, contain the following
information:
(1) Information on the number of individuals served by or through
mental health and substance abuse programs administered by State and
local agencies and the proportion who are eligible persons under title I.
(2) The following information on services furnished to eligible
persons:
(A) Each type of benefit furnished.
(B) The mental health diagnoses for which each type of benefit is
covered, the amount, duration and scope of coverage for each covered
benefit, and any applicable limits on benefits.
(C) Cost sharing rules that apply.
(3) Information on the extent to which each health provider furnishing
mental health and substance abuse services under a State program
participates in one or more regional or corporate alliance health plans,
and, in the case of providers that do not so participate, the reasons for
the lack of participation.
(4) The amount of revenues from health plans received by mental health
and substance abuse providers that are participating in such health plans
and are funded under one or more State programs.
(5) With respect to the two years preceding the year in which the State
becomes a participating State under title I
(A) the amount of funds expended by the State and its political
subdivisions for each of such years for items and services that are
included in the comprehensive benefit package under such title;
(B) the amount of funds expended for medically necessary and
appropriate items and services not included in such benefit package,
including medical care, other health care, and supportive services
related to the provision of health care.
(6) An estimate of the amount that the State will expend to furnish
items and services not included in such package once the expansion of
coverage for mental health and substance abuse services is implemented in
the year 2001.
(7) A description of how the State will assure that all individuals
served by mental health and substance abuse programs funded by the State
will be enrolled in a health plan and how mental health and substance
abuse services not covered under the benefit package will continue to be
furnished to such enrollees.
(8) A description of the conditions under which the integration of
mental health and substance abuse providers into regional and corporate
alliances can be achieved, and an identification of changes in
participation and certification requirements that are needed to achieve
the integration of such programs and providers into health plans.
(9) If the integration of mental health and substance abuse programs
operated by the State into one or more health plans is not medically
appropriate or feasible for one or more groups of individuals treated
under State programs, a description of the reasons that integration is
not feasible or appropriate and a plan for assuring the coordination for
such individuals of the care and services covered under the comprehensive
benefit package with the additional items and services furnished by such
programs.
(c) General Provisions. Reports under subsection (a) shall be provided at
the a time and in the manner prescribed by the Secretary.
Subpart B. Pilot Program
SEC. 3521. PILOT PROGRAM.
(a) In General. The Secretary shall establish a pilot program to
demonstrate model methods of achieving the integration of the mental health
and substance abuse services of the States with the mental health and
substance abuse services that are included in the comprehensive benefit
package under title I.
(b) Certain Considerations, With respect to the provision of items and
services relating to mental health and substance abuse, the Secretary, in
carrying out subsection (a), shall consider the following:
(1) The types of items and services needed in addition to the items and
services included in the comprehensive benefits package under title I.
(2) The optimal methods of treatment for individuals with long-term
conditions.
(3) The capacity of alliance health plans to furnish such treatment.
(4) The modifications that should be made in the items and services
furnished by such health plans.
(5) The role of publicly-funded health providers in the integration of
acute and long-term treatment.
Subtitle G. Comprehensive School Health Education; School-Related Health
Services
Part 1. GENERAL PROVISIONS
SEC. 3601. PURPOSES.
Subject to the subsequent provisions of this subtitle, the purposes of
this subtitle are as follows:
(1) To support the provision in kindergarten through grade 12 of
sequential, age-appropriate, comprehensive health education programs that
address locally relevant priorities.
(2) To establish a national framework within which States can create
comprehensive school health education programs that
(A) target the health risk behaviors accounting for the majority of
the morbidity and mortality among youth and adults, including the
following: Tobacco use; alcohol and other drug abuse; sexual behaviors
resulting in infection with the human immunodeficiency virus, in other
sexually transmitted diseases or in unintended pregnancy; behaviors
resulting in intentional and unintentional injuries; dietary patterns
resulting in disease; and sedentary lifestyles; and
(B) are integrated with plans and programs in the State, if any,
under title III of the Goals 2000: Educate America Act and those
targeting health promotion and disease prevention goals related to the
national health objectives set forth in Healthy People 2000.
(3) To pay the initial costs of planning and establishing Statewide
comprehensive school health education programs that will be implemented
and maintained with local, State, and other Federal resources.
(4) To support Federal activities such as research and demonstrations,
evaluations, and training and technical assistance regarding
comprehensive school health education.
(5) To motivate youth, especially low-achieving youth, to stay in
school, avoid teen pregnancy, and strive for success by providing
intensive, high-quality health education programs that include
peer-teaching, family, and community involvement.
(6) To improve the knowledge and skills of children and youth by
integrating academic and experiential learning in health education with
other elements of a comprehensive school health program.
(7) To further the National Education Goals set forth in title I of the
Goals 2000: Educate America Act and the national health objectives set
forth in Healthy People 2000.
(8) With respect to health services, to make awards of financial
assistance to eligible State health agencies and local community
partnerships to provide for the development and operation of projects to
coordinate and deliver comprehensive health services to children or youth
in school-based, school-linked, or community-based locations.
SEC. 3602. DEFINITIONS.
(a) Comprehensive School Health Education Program. For purposes of this
subtitle, the term ``comprehensive school health education program'' means
a program that addresses locally relevant priorities and meets the
following conditions:
(1) The program is sequential, and age and developmentally appropriate.
(2) The program is provided, in the area served by the program, every
year for all students from kindergarten through grade 12.
(3) The program provides comprehensive health education, including the
following components:
(A) Community health.
(B) Environmental health.
(C) Personal health.
(D) Family life.
(E) Growth and development.
(F) Nutritional health.
(G) Prevention and control of disease and disorders.
(I) Safety and prevention of injuries.
(J) Substance abuse, including tobacco and alcohol use.
(K) Consumer health, including education to ensure that students
understand the benefits and appropriate use of medical services,
including immunizations and other clinical preventive services.
(4) The program promotes personal responsibility for a healthy
lifestyle and provides the knowledge and skills necessary to adopt a
healthy lifestyle, including teaching the legal, social, and health
consequences of behaviors that pose health risks.
(5) The program is sensitive to cultural and ethnic issues in the
content of instructional materials and approaches.
(6) The program includes activities that support instruction.
(7) The program includes activities to promote involvement by parents,
families, community organizations, and other appropriate entities.
(8) The program is coordinated with other Federal, State, and local
health education and prevention programs and with other Federal, State
and local education programs, including those carried out under title I
of the Elementary and Secondary Education Act of 1965.
(9) The program focuses on the particular health concerns of the
students in the State, school district, or school, as the case may be.
(b) Other Definitions. For purposes of this subtitle:
(1) The term ``local educational agency'' has the meaning given such
term in section 1471(12) of the Elementary and Secondary Education Act of
1965.
(2) The term ``State educational agency'' has the meaning given such
term in section 1471(23) of the Elementary and Secondary Education Act of
1965.
Part 2. SCHOOL HEALTH EDUCATION; GENERAL PROVISIONS
SEC. 3611. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND..
(a) Funding for School Health Education. For the purpose of carrying out
parts 3 and 4, there are authorized to be appropriated from the Public
Health Service Initiatives Fund (established in section 3701) $50,000,000
for each of the fiscal year 1995 through 2000.
(b) Allocations. Of the amounts appropriated under subsection (a) for a
fiscal year
(1) the Secretary may reserve not more than $13,000,000 for carrying
out part 4;
(2) the Secretary may reserve not more than $5,000,000 to support
national leadership activities, such as research and demonstration,
evaluation, and training and technical assistance in comprehensive school
health education; and
(3) the Secretary may reserve not more than 5 percent for
administrative expenses regarding parts 3 and 4.
(c) Relation to Other Funds. The authorizations of appropriations
established in subsection (a) are in addition to any other authorizations
of appropriations that are available for the purpose described in such
subsection.
SEC. 3612. WAIVERS OF STATUTORY AND REGULATORY REQUIREMENTS.
(a) In General.
(1) Waivers. Except as provided in subsection (c), upon the request of
an entity receiving funds under part 3 or part 4 and under a program
specified in paragraph (2), the Secretary of Health and Human Services or
the Secretary of Education (as the case may be, according to which
Secretary administers the program so specified) may grant to the entity a
waiver of any requirement of such program regarding the use of funds, or
of the regulations issued for the program by the Secretary involved, if
the following conditions are met with respect to such program:
(A) The Secretary involved determines that the requirement of such
program impedes the ability of the State educational agency or other
recipient to achieve more effectively the purposes of part 3 or 4.
(B) The Secretary involved determines that, with respect to the use
of funds under such program, the requested use of the funds by the
entity would be consistent with the purposes of part 3 or 4.
(C) In the case of a request for a waiver submitted by a State
educational agency, the State educational agency
(i) provides all interested local educational agencies in the State
with notice and an opportunity to comment on the proposal; and
(ii) submits the comments to the Secretary involved.
(D) In the case of a request for a waiver submitted by a local
educational agency or other agency, institution, or organization that
receives funds under part 3 from the State educational agency, such
request has been reviewed by the State educational agency and is
accompanied by the comments, if any, of such agency.
(2) Relevant programs. For purposes of paragraph (1), the programs
specified in this paragraph are as follows:
(A) In the case of programs administered by the Secretary of Health
and Human Services, the following:
(i) The program known as the Prevention, Treatment, and
Rehabilitation Model Projects for High Risk Youth, carried out under
section 517 of the Public Health Service Act.
(ii) The program known as the State and Local Comprehensive School
Health Programs to Prevent Important Health Problems and Improve
Educational Outcomes, carried out under such Act.
(B) In the case of programs administered by the Secretary of
Education, any program carried out under part B of the Drug-Free
Schools and Communities Act of 1986.
(b) Waiver Period.
(1) In general. A waiver under this section shall be for a period not
to exceed three years.
(2) Extensions. The Secretary involved under subsection (a) may extend
such period if the Secretary determines that
(A) the waiver has been effective in enabling the State or affected
recipients to carry out the activities for which it was requested and
has contributed to improved performance; and
(B) such extension is in the public interest.
(c) Waivers Not Authorized. The Secretary involved under subsection (a)
may not waive, under this section, any statutory or regulatory requirement
relating to
(1) comparability of services;
(2) maintenance of effort;
(3) the equitable participation of students attending private schools;
(4) parental participation and involvement;
(5) the distribution of funds to States or to local educational
agencies or other recipients of funds under the programs specified in
subsection (a)(2);
(6) maintenance of records;
(7) applicable civil rights requirements; or
(8) the requirements of sections 438 and 439 of the General Education
Provisions Act.
(d) Termination of Waiver. The Secretary involved under subsection (a)
shall terminate a waiver under this section if the Secretary determines
that the performance of the State or other recipient affected by the waiver
has been inadequate to justify a continuation of the waiver or if it is no
longer necessary to achieve its original purposes.
Part 3. SCHOOL HEALTH EDUCATION; GRANTS TO STATES
Subpart A. Planning Grants for States
SEC. 3621. APPLICATION FOR GRANT.
(a) In General. Any State educational agency that wishes to receive a
planning grant under this subpart shall submit an application to the
Secretary of Health and Human Services, at such time and in such manner as
the Secretary may require.
(b) Application; Joint Development; Contents. An application under
subsection (a) shall be jointly developed by the State educational agency
and the State health agencies of the State involved, and shall contain the
following:
(1) An assessment of the State's need for comprehensive school health
education, using goals established by the Department of Health and Human
Services and the Department of Education and goals established under
Goals 2000: Educate America Act.
(2) A description of how the State educational agency will collaborate
with the State health agency in the planning and development of a
comprehensive school health education program in the State, including
coordination of existing health education programs and resources.
(3) A plan to build capacity at the State and local levels to provide
staff development and technical assistance to local educational agency
and local health agency personnel involved with comprehensive school
health education.
(4) A preliminary plan for evaluating comprehensive school health
education activities.
(5) Information demonstrating that the State has established a
State-level advisory council whose membership includes representatives of
the State agencies with principal responsibilities for programs regarding
health, education, and mental health.
(6) A timetable and proposed budget for the planning process.
(7) Such other information and assurances as the Secretary may require.
(c) Number of Grants. States may receive one planning grant annually and
no more than two planning grants may be awarded to any one State.
SEC. 3622. APPROVAL OF SECRETARY.
The Secretary may approve the application of a State under section 3621
if the Secretary determines that
(1) the application meets the requirements of this subpart; and
(2) there is a substantial likelihood that the State will be able to
develop and implement a comprehensive school health education plan that
complies with the requirements of subpart B.
SEC. 3623. AMOUNT OF GRANT.
For any fiscal year, the minimum grant to any State under this subpart
is an amount determined by the Secretary to be necessary to enable the
State to conduct the planning process, and the maximum such grant is
$500,000.
SEC. 3624. AUTHORIZED ACTIVITIES.
A State may use funds received under this subpart only for the
following:
(1) To establish and carry out the State planning process.
(2) To conduct Statewide or sub-State regional coordination and
collaboration activities for local educational agencies, local health
agencies, and other agencies and organizations, as appropriate.
(3) To conduct activities to build capacity to provide staff
development and technical assistance services to local educational agency
and local health agency personnel involved with comprehensive school
health education.
(4) To develop student learning objectives and assessment instruments.
(5) To work with State and local health agencies and State and local
educational agencies to reduce barriers to the implementation of
comprehensive school health education programs in schools.
(6) To prepare the plan required to receive an implementation grant
under subpart B.
(7) To adopt, validate, and disseminate curriculum models and program
strategies, if the Secretary determines that such activities are
necessary to achieving the objectives of the State's program.
Subpart B. Implementation Grants for States
SEC. 3631. APPLICATION FOR GRANT.
(a) In General. Any State that wishes to receive an implementation grant
under this subpart shall submit an application to the Secretary of Health
and Human Services, at such time, in such manner, and containing such
information and assurances as the Secretary may require.
(b) Application and State Plan; Joint Development; Contents. An
application under subsection (a) shall be jointly developed by the State
educational agency and the State health agencies of the State involved, and
shall include a State plan for comprehensive school health education
programs (as defined in section 3602) that describes the following:
(1) The State's goals and objectives for those programs.
(2) How the State will allocate funds, if any, to local educational
agencies in accordance with section 3634.
(3) How the State will coordinate programs under this subpart with
other local, State and Federal health education programs.
(4) How comprehensive school health education programs will be
coordinated with other local, State and Federal education programs, such
as programs under title I of the Elementary and Secondary Education Act
of 1965, with the State's school improvement plan, if any, under title
III of the Goals 2000: Educate America Act, and with any similar
programs.
(5) How the State has worked with State and local education agencies
and with State and local health agencies to reduce barriers to
implementing comprehensive school health education programs.
(6) How the State will monitor the implementation of such programs by
local educational agencies.
(7) How the State will build capacity for professional development of
health educators.
(8) How the State will provide staff development and technical
assistance to local educational agencies.
(9) The respective roles of the State educational agency, local
educational agencies, the State health agency, and the local health
agencies in developing and implementing such school health education
programs.
(10) How such school health education programs will be tailored to the
extent practicable to be culturally and linguistically sensitive and
responsive to the various needs of the students served, including
individuals with disabilities, and individuals from disadvantaged
backgrounds (including racial and ethnic minorities). (11) How the
State will evaluate and report on the State's progress toward attaining
the goals and objectives described in paragraph (1).
SEC. 3632. SELECTION OF GRANTEES.
(a) Selection of Grantees. The Secretary shall establish criteria for
the competitive selection of grantees under this subpart.
(b) Opportunity for Planning Grant. If the Secretary does not approve a
State's application under this subpart and determines that the State could
benefit from a planning grant under subpart A, the Secretary shall inform
the State of any planning grant funds that may be available to it under
subpart A, subject to section 3621(c).
SEC. 3633. AMOUNT OF GRANT.
(a) In General. For any fiscal year, the minimum grant to any State
under this subpart is an amount determined by the Secretary to be necessary
to enable the State to conduct the implementation process.
(b) Criteria. In determining the amount of any such grant, the Secretary
may consider such factors as the number of children enrolled in schools in
the State, the number of school-aged children living in poverty in the
State, and the scope and quality of the State's plan.
SEC. 3634. AUTHORIZED ACTIVITIES; LIMITATION ON ADMINISTRATIVE COSTS.
(a) Subgrants to Local Educational Agencies. Each State that receives
funds under this subpart for any fiscal year shall retain not more than 75
percent of those funds in the first year, 50 percent of those funds in the
second and third years, and 25 percent of those funds in each succeeding
year. Those funds not retained by the State shall be used to make grants to
local educational agencies in accordance with section 3635.
b) State-level Activities. Each State shall use retained funds for any
fiscal year for the following purposes:
(1) To conduct Statewide or sub-State regional coordination and
collaboration activities.
(2) To adapt, validate, or disseminate program models or strategies for
comprehensive school health education.
(3) To build capacity to deliver staff development and technical
assistance services to local educational agencies, and State and local
health agencies.
(4) To promote program activities involving families and coordinating
program activities with community groups and agencies.
(5) To evaluate and report to the Secretary on the progress made toward
attaining the goals and objectives described in section 3621(b)(1).
(6) To conduct such other activities to achieve the objectives of this
subpart as the Secretary may by regulation authorize.
(c) State Administration. Of the amounts received by a State for a fiscal
year under this subpart and remaining after any grants to local educational
agencies made from such amounts, the State may use up to 10 percent for the
costs of administering such amounts, including the activities of the State
advisory council and monitoring the performance of local educational
agencies.
SEC. 3635. SUBGRANTS TO LOCAL EDUCATIONAL AGENCIES.
(a) Application for Grant. Any local educational agency that wishes to
receive a grant under this subpart shall submit an application to the
State, containing such information and assurances as the State may require,
including a description of the following:
(1) The local educational agency's goals and objectives for
comprehensive school health education programs.
(2) How the local educational agency will concentrate funds in
high-need schools and provide sufficient funds to targeted schools to
ensure the implementation of comprehensive programs.
(3) How the local educational agency will monitor the implementation of
these programs.
(4) How the local educational agency will ensure that school health
education programs are tailored to the extent practicable to be
culturally and linguistically sensitive and responsive to the various
needs of the students served, including individuals with disabilities,
and individuals from disadvantaged backgrounds (including racial and
ethnic minorities).
(5) How the local educational agency, in consultation with the local
health agency, will evaluate and report on its progress toward attaining
the goals and objectives described in paragraph (1).
(b) Selection of Subgrantees. Each State shall give priority to
applications from local educational agencies serving areas with high needs,
as indicated by criteria developed by the State, which shall include, but
need not be limited to, high rates of any of the following:
(1) Poverty among school-aged youth.
(2) Births to adolescents.
(3) Sexually transmitted diseases among school-aged youth.
(4) Drug and alcohol use among school-aged youth.
(5) Violence among school-aged youth.
(c) Authorized Activities. Each local educational agency that receives a
grant under this subpart shall use the grant funds to implement
comprehensive school health education programs, as defined in section 3602.
Subpart C. State and Local Reports
SEC. 3641. STATE AND LOCAL REPORTS.
(a) State Reports. Each State that receives a grant under this part shall
collect and submit to the Secretary such data and other information on
State and local programs as the Secretary may require.
(b) In General. Each local educational agency that receives a grant
under subpart B shall collect and report to the State such data and other
information as the Secretary may require.
Part 4. SCHOOL HEALTH EDUCATION; GRANTS TO CERTAIN LOCAL EDUCATIONAL
AGENCIES
Subpart A. Eligibility
SEC. 3651. SUBSTANTIAL NEED OF AREA SERVED BY AGENCY.
Any local educational agency is eligible for a grant under this part for
any fiscal year if
(1) the agency enrolls at least 25,000 students; and
(2) the geographic area served by the agency has a substantial need for
such a grant, relative to other geographic areas in the United States.
Subpart B. Planning Grants for Local Education Agencies
SEC. 3661. APPLICATION FOR GRANT.
(a) In General. Any local educational agency that wishes to receive a
planning grant under this subpart shall submit an application to the
Secretary of Health and Human Services at such time and in such manner as
the Secretary may require.
(b) State Educational Agency Review. Each such local educational agency,
before submitting its application to the Secretary, shall submit the
application to the State educational agency for comment by such agency and
by the State health agencies of the State.
(c) Contents of Applications. Each such application shall contain the
following:
(1) An assessment of the local educational agency's need for
comprehensive school health education, using goals established by the
Department of Health and Human Services and the Department of Education,
as well as local health and education strategies, such as State school
improvement plans, if any, under title III of the Goals 2000: Educate
America Act.
(2) Information demonstrating that the local educational agency has
established or selected a community-level advisory council, which shall
include representatives of relevant community agencies such as those that
administer education, child nutrition, health, and mental health
programs.
(3) A description of how the local educational agency will collaborate
with the State educational agency, the State health agency, and the local
health agency in the planning and development of a comprehensive school
health education program in the local educational agency, including
coordination of existing health education programs and resources.
(4) A plan to build capacity at the local educational agency to provide
staff development and technical assistance to local educational agency
and local health agency personnel involved with comprehensive school
health education.
(5) A preliminary plan for evaluating comprehensive school health
education activities.
(6) A timetable and proposed budget for the planning process.
(7) Such other information and assurances as the Secretary may require.
(d) Number of Grants. Local educational agencies may receive at a maximum
two annual planning grants.
SEC. 3662. SELECTION OF GRANTEES.
(a) Selection Criteria. The Secretary shall establish criteria for the
competitive selection of grantees under this part.
(b) Limitation. The Secretary shall not approve an application from a
local educational agency in a State that has an approved plan under subpart
A or B of part 3 of this subtitle unless the Secretary determines, after
consultation with the State that the local application is consistent with
the State plan, if one exists.
SEC. 3663. AMOUNT OF GRANT.
For any fiscal year, the minimum grant to any local educational agency
under this subpart is an amount determined by the Secretary to be necessary
to enable the local educational agency to conduct the planning process, and
the maximum such grant is $500,000.
SEC. 3664. AUTHORIZED ACTIVITIES.
A local educational agency may use funds received under this subpart only
for the following:
(1) To establish and carry out the local educational agency planning
process.
(2) To undertake joint training, staffing, administration, and other
coordination and collaboration activities for local educational agencies,
local health agencies, and other agencies and organizations, as
appropriate.
(3) To conduct activities to build capacity to provide staff
development and technical assistance services to local educational agency
and local health agency personnel involved with comprehensive school
health education.
(4) To develop student learning objectives and assessment instruments.
(5) To work with State and local health agencies and State educational
agencies to reduce barriers to the implementation of comprehensive school
health education programs in schools, by, for example, ensuring that
adequate time is a available during the school day for such programs.
(6) To prepare the plan required to receive an implementation grant
under subpart C.
Subpart C. Implementation Grants for Local Educational Agencies
SEC. 3671. APPLICATION FOR GRANT.
(a) In General. Any local educational agency that wishes to receive an
implementation grant under this subpart shall submit an application to the
Secretary of Health and Human Services, at such time, in such manner, and
containing such information and assurances as the Secretary may require.
(b) State Educational Agency Review. Each such local educational agency
shall submit its application to the State educational agency for comment
before submitting it to the Secretary.
(c) Local Educational Agency Plan. Each such application shall include a
local educational agency plan for comprehensive school health education
programs (as defined in section 3602) that describes the following:
(1) The local educational agency's goals and objectives for those
programs.
(2) How the local educational agency will coordinate programs under
this subpart with other local, State and Federal health education
programs.
(3) How comprehensive school health education programs will be
coordinated with other local, State and Federal education programs, such
as programs under title I of the Elementary and Secondary Education Act
of 1965, and with State's school improvement plan, if any, under title
III of the Goals 2000: Educate America Act.
(4) How the local educational agency has worked with State educational
agencies and with State and local health agencies to reduce barriers to
implementing comprehensive school health education programs.
(5) How local educational agencies will monitor the implementation of
such programs.
(6) How the local educational agency, in consultation with the State
educational agency and State and local health agencies and in conjunction
with other local professional development activities, will build capacity
for professional development of health educators.
(7) How the local educational agency, in consultation with the State
educational agency and State and local health agencies, will provide
staff development and technical assistance.
(8) The respective roles of the State educational agency, local
educational agencies, the State health agency, and the local health
agencies in developing and implementing such school health education
programs.
(9) How such school health education programs will be tailored to the
extent practicable to be culturally and linguistically sensitive and
responsive to the various needs of the students served, including
individuals with disabilities, and individuals from disadvantaged
backgrounds (including racial and ethnic minorities).
(10) How the local educational agency, in consultation with the local
health agency, will evaluate and report on the local educational agency's
progress toward attaining the goals and objectives described in paragraph
(1).
SEC. 3672. SELECTION OF GRANTEES.
(a) Selection of Grantees. The Secretary shall establish criteria for the
competitive selection of grantees under this subpart.
(b) Limitation. The Secretary shall not approve an application from a
local educational agency in a State that has an approved plan under subpart
A or B of part 3 unless the Secretary determines, after consultation with
the State that the local application is consistent with such State plan.
(c) Opportunity for Planning Grant. If the Secretary does not approve a
local educational agency's application under this subpart and determines
that the local educational agency could benefit from a planning grant under
subpart B, the Secretary shall inform the local educational agency of any
planning grant funds that may be available to it under subpart B, subject
to section 3661(d).
SEC. 3673. AMOUNT OF GRANT.
(a) In General. For any fiscal year, the minimum grant to any local
educational agency under this subpart is an amount determined by the
Secretary to be necessary to enable the local educational agency to conduct
the implementation process.
(b) Criteria. In determining the amount of any such grant, the Secretary
may consider such factors as the number of children enrolled in schools in
the local educational agency, the number of school-aged children living in
poverty in the local educational agency, and the scope and quality of the
local educational agency's plan.
SEC. 3674. AUTHORIZED ACTIVITIES.
Each local educational agency that receives a grant under this subpart
shall use the grant funds as follows:
(1) To implement comprehensive school health education programs, as
defined in section 3602.
(2) To conduct local or regional coordination and collaboration
activities.
(3) To provide staff development and technical assistance to schools,
local health agencies, and other community agencies involved in providing
comprehensive school health education programs.
(4) To administer the program and monitor program implementation at the
local level.
(5) To evaluate and report to the Secretary on the local educational
agency's progress toward attaining the goals and objectives described in
section 3671(c)(1).
(6) To conduct such other activities as the Secretary may by regulation
authorize.
SEC. 3675. REPORTS.
Each local educational agency that receives a grant under this subpart
shall collect and report to the Secretary and the State such data and
other information as the Secretary may require.
Part 5. SCHOOL-RELATED HEALTH SERVICES
Subpart A. Development and Operation of Projects
SEC. 3681. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Funding for School-Related Health Services. For the purpose of
carrying out this subpart, there are authorized to be appropriated from the
Public Health Service Initiatives Fund (established in section 3701)
$100,000,000 for fiscal year 1996, $275,000,000 for fiscal year 1997,
$350,000,000 for fiscal year 1998, and $400,000,000 for each of the fiscal
years 1999 and 2000.
(b) Relation to Other Funds. The authorizations of appropriations
established in subsection (a) are in addition to any other authorizations
of appropriations that are available for the purpose described in such
subsection.
SEC. 3682. ELIGIBILITY FOR DEVELOPMENT AND OPERATION GRANTS.
(a) In General. Entities eligible to apply for and receive grants under
section 3484 or 3485 are:
(1) State health agencies that apply on behalf of local community
partnerships and other communities in need of adolescent health services
within the State.
(2) Local community partnerships in States in which health agencies
have not applied.
(b) Local Community Partnerships.
(1) In general. A local community partnership under subsection (a)(2)
is an entity that, at a minimum, includes
(A) a local health care provider with experience in delivering
services to adolescents;
(B) one or more local public schools; and
(C) at least one community based organization located in the
community to be served that has a history of providing services to
at-risk youth in the community.
(2) Participation. A partnership described in paragraph (1) shall, to
the maximum extent feasible, involve broad based community participation
from parents and youth to be served, health and social service providers
(including regional alliance health plans and corporate alliance health
plans in which families in the community are enrolled), teachers and
other public school and school board personnel, the regional health
alliance in which the schools participating in the partnership are
located, youth development and service organizations, and interested
business leaders. Such participation may be evidenced through an
expanded partnership, or an advisory board to such partnership.
SEC. 3683. PREFERENCES
(a) In General. In making grants under sections 3484 and 3485, the
Secretary shall give preference to applicants whose communities to be
served show the most substantial level of need for such services among
individuals who are between the ages of 10 and 19 (inclusive), as measured
by indicators of community health including the following:
(1) High levels of poverty.
(2) The presence of a medically underserved area or population (as
defined under section 330(a) of the Public Health Service Act).
(3) A health professional shortage area, as designated under section
332 of the Public Health Service Act.
(4) High rates of indicators of health risk among children and youth,
including a high proportion of children receiving services through the
Individuals with Disabilities Education Act, adolescent pregnancy,
sexually transmitted disease (including infection with the human
immunodeficiency virus), preventable disease, communicable disease,
intentional and unintentional injuries among children and youth,
community and gang violence, youth unemployment, juvenile justice
involvement, and high rates of drug and alcohol exposure.
(b) Linkage to Qualified Community Health Groups. In making grants under
sections 3484 and 3485, the Secretary shall give preference to applicants
that demonstrate a linkage to qualified community health groups (as defined
in section 3421(a)).
SEC. 3684. GRANTS FOR DEVELOPMENT OF PROJECTS.
(a) In General. The Secretary may make grants to State health agencies or
to local community partnerships to develop school health service sites.
(b) Use of Funds. A project for which a grant may be made under
subsection (a) may include but not be limited to the cost of the following:
(1) Planning for the provision of school health services.
(2) Recruitment, compensation, and training of health and
administrative staff.
(3) The development of agreements with regional and corporate alliance
health plans and the acquisition and development of equipment and
information services necessary to support information exchange between
school health service sites and health plans, health providers, and other
entities authorized to collect information under this Act.
(4) In the case of communities described in subsection (d)(2)(B), funds
to aid in the establishment of local community partnerships.
(5) Other activities necessary to assume operational status.
(c) Authority Regarding Qualified Community Health Groups. A project
under subsection (a) may require that, in order to receive services from
the project, an individual be enrolled in a health plan of a qualified
community health group (as defined in section 3421(a)).
(d) Application for Grant.
(1) In general. Applicants shall submit applications in a form and
manner prescribed by the Secretary.
(2) Applications by State health agencies.
(A) In the case of applicants that are State health agencies, the
application shall contain assurances that the State health agency is
applying for funds
(i) on behalf of at least one local community partnership; and
(ii) on behalf of at least one other community identified by the
State as in need of the services funded under this part but without a
local community partnership.
(B) In the case of communities identified in applications submitted
by State health agencies that do not yet have local community
partnerships, the State shall describe the steps that will be taken to
aid the community in developing a local community partnership.
(C) A State applying on behalf of local community partnerships and
other communities may retain not more than 10 percent of grants awarded
under this part for administrative costs.
(e) Contents of Application. In order to receive a grant under this
section, an applicant must include in the application the following
information:
(1) An assessment of the need for school health services in the
communities to be served, using the latest available health data and
health goals and objectives established by the Secretary.
(2) A description of how the applicant will design the proposed school
health services to reach the maximum number of school-aged children and
youth at risk for poor health outcome.
(3) An explanation of how the applicant will integrate its services
with those of other health and social service programs within the
community.
(4) An explanation of how the applicant will link its activities to the
regional and corporate alliance health plans serving the communities in
which the applicant's program is to be located.
(5) Evidence of linkages with regional and corporate health alliances
in whose areas the applicant's program is to be located.
(6) A description of a quality assurance program which complies with
standards that the Secretary may prescribe.
(f) Number of Grants. Not more than two planning grants may be made to a
single applicant.
SEC. 3685. GRANTS FOR OPERATION OF PROJECTS.
(a) In General. The Secretary may make grants to State health agencies or
to local community partnerships for the cost of operating school health
service sites
(b) Use of Grant. The costs for which a grant may be made under this
section include but are not limited to the following:
(1) The cost of furnishing health services that are not covered under
title I of this Act or by any other public or private insurer.
(2) The cost of furnishing enabling services, as defined in section
3461(h).
(3) Training, recruitment and compensation of health professionals and
other staff.
(4) Outreach services to at-risk youth and to parents.
(5) Linkage of individuals to health plans, community health services
and social services.
(6) Other activities deemed necessary by the Secretary.
(c) Application for Grant. Applicants shall submit applications in a form
and manner prescribed by the Secretary. In order to receive a grant under
this section, an applicant must include in the application the following
information:
(1) A description of the services to be furnished by the applicant.
(2) The amounts and sources of funding that the applicant will expend,
including estimates of the amount of payments the applicant will received
from alliance health plans and from other sources.
(3) Such other information as the Secretary determines to be
appropriate.
(d) Additional Contents of Application. In order to receive a grant under
this section, an applicant must meet the following conditions:
(1) The applicant furnishes the following services:
(A) Diagnosis and treatment of simple illnesses and minor injuries.
(B) Preventive health services, including health screenings.
(C) Enabling services, as defined in section 3461(h).
(D) Referrals and followups in situations involving illness or
injury.
(E) Health and social services, counseling services, and necessary
referrals, including referrals regarding mental health and substance
abuse.
(F) Such other services as the Secretary determines to be
appropriate.
(2) The applicant maintains agreements with all regional and corporate
alliance health plans offering services in the applicant's service area.
(3) The applicant is a participating provider in the State's program
for medical assistance under title XIX of the Social Security Act.
(4) The applicant does not impose charges on students or their families
for services (including collection of any cost-sharing for services under
the comprehensive benefit package that otherwise would be required).
(5) The applicant has reviewed and will periodically review the needs
of the population served by the applicant in order to ensure that its
services are accessible to the maximum number of school age children and
youth in the area, and that, to the maximum extent possible, barriers to
access to services of the applicant are removed (including barriers
resulting from the area's physical characteristics, its economic, social
and cultural grouping, the health care utilization patterns of children
and youth, and available transportation).
(6) In the case of an applicant which serves a population that includes
a substantial proportion of individuals of limited English speaking
ability, the applicant has developed a plan to meet the needs of such
population to the extent practicable in the language and cultural context
most appropriate to such individuals.
(7) The applicant will provide non-Federal contributions toward the
cost of the project in an amount determined by the Secretary.
(8) The applicant will operate a quality assurance program consistent
with section 3684(e)(6).
(e) Duration of Grant. A grant under this section shall be for a period
determined by the Secretary.
(f) Reports. A recipient of funding under this section shall provide such
reports and information as are required in regulations of the Secretary.
SEC. 3686. FEDERAL ADMINISTRATIVE COSTS.
Of the amounts made available under section 3681, the Secretary may
reserve not more than 5 percent for administrative expenses regarding this
subpart.
Subpart B. Capital Costs of Developing Projects
SEC. 3691. LOANS AND LOAN GUARANTEES REGARDING PROJECTS.
(a) In General. The Secretary may make loans to, and guarantee the
payment of principal and interest to Federal and non-Federal lenders on
behalf of, State health agencies and local community partnerships for the
capital costs of developing projects in accordance with subpart A.
(b) Applicability of Certain Provisions. The provisions of subpart A
apply to loans and loan guarantees under subsection (a) to the same extent
and in the same manner as such provisions apply to grants under subpart A.
Except for any provision inconsistent with the purpose described in
subsection (a), the provisions of subpart C of part 2 of subtitle E apply
to loans and loan guarantees under subsection (a) to the same extent and in
the same manner as such provisions apply to loans and loan guarantees under
section 3441.
SEC. 3692. FUNDING.
Amounts available to the Secretary under section 3412 for the purpose of
carrying out subparts B and C of part 2 of subtitle E are, in addition to
such purpose, available to the Secretary for the purpose of carrying out
this subpart.
Subtitle H. Public Health Service Initiative
SEC. 3701. PUBLIC HEALTH SERVICE INITIATIVE.
(a) In General. There is established pursuant to this title a Public
Health Service Initiative consisting of the total amounts authorized and
described in subsection (b). The Initiative includes all the programs
authorized under the previous provisions of this title.
(b) Total of the Amounts Authorized to be Appropriated. The following is
the total of the amounts authorized to be appropriated for the Initiative
under the previous subtitles of this title:
(1) For fiscal year 1995, $1,125,000,000.
(2) For fiscal year 1996, $2,984,000,000.
(3) For fiscal year 1997, $3,830,000,000.
(4) For fiscal year 1998, $4,205,000,000.
(5) For fiscal year 1999, $4,055,000,000.
(6) For fiscal year 2000, $3,666,000,000.
(c) Use of Amounts; Availability.
(1) Use; annual appropriations. Amounts appropriated to carry out the
Initiative, including subtitles A through F of this title, are available
to carry out the specific programs for which the amounts are
appropriated.
(2) Availability of appropriated amounts. Amounts appropriated for
programs in the Initiative are available until expended.
Subtitle I. Coordination With Cobra Continuation Coverage
SEC. 3801. PUBLIC HEALTH SERVICE ACT; COORDINATION WITH COBRA
CONTINUATION
COVERAGE.
(a) Period of Coverage. Subparagraph (D) of section 2202(2) of the Public
Health Service Act (42 U.S.C. 300bb 2(2)) is amended
(1) by striking ``or'' at the end of clause (i), by striking the period
at the end of clause (ii) and inserting ``, or'', and by adding at the
end the following new clause:
``(iii) eligible for comprehensive health coverage described in section
1101 of the Health Security Act.'', and
(2) by striking ``or medicare entitlement'' in the heading and
inserting ``, medicare entitlement, or health security act eligibility''.
(b) Qualified Beneficiary. Section 2208(3) of such Act (42 U.S.C.
300bb 8(3)) is amended by adding at the end the following new subparagraph:
``(C) Special rule for individuals covered by health security act. The
term `qualified beneficiary' shall not include any individual who, upon
termination of coverage under a group health plan, is eligible for
comprehensive health coverage described in section 1101 of the Health
Security Act.''.
(c) Repeal Upon Implementation of Health Security Act.
(1) In general. Title XXII of such Act (42 U.S.C. 300bb 1 et seq.) is
hereby repealed.
(2) Conforming amendment. The table of contents of such Act is amended
by striking the item relating to title XXII.
(3) Effective date. The amendments made by this subsection shall take
effect on the earlier of
(A) January 1, 1998, or
(B) the first day of the first calendar year following the calendar
year in which all States have in effect plans under which individuals
are eligible for comprehensive health coverage described in section
1101 of this Act.
Title IV: MEDICARE AND MEDICAID
Table of contents
Section 4000. References in title.
Subtitle A. Medicare and the Alliance System
Part 1. Enrollment of Medicare Beneficiaries in Regional Alliance Plans
Section 4001. Optional State integration of medicare beneficiaries
into regional alliance plans.
Section 4002. Individual election to remain in certain health
plans.
Section 4003. Treatment of certain medicare beneficiaries.
Section 4004. Prohibiting employers from taking into account
status as medicare beneficiary on any grounds.
Part 2. Encouraging Managed Care Under Medicare Program; Coordination With
Medigap Plans
Section 4011. Enrollment and termination of enrollment.
Section 4012. Uniform informational materials.
Section 4013. Outlier payments.
Section 4014. Point of service option.
Part 3. Medicare Coverage Expansions
Section 4021. Reference to coverage of outpatient prescription
drugs.
Section 4022. Coverage of services of advanced practice nurses.
Part 4. Coordination With Administrative Simplification and Quality
Management Initiatives
Section 4031. Repeal of separate medicare peer review program.
Section 4032. Mandatory assignment for all part B services.
Section 4033. Elimination of complexities caused by dual funding
sources and rules for payment of claims.
Section 4034. Repeal of PRO precertification requirement for
certain surgical procedures.
Section 4035. Requirements for changes in billing procedures.
Part 5. Amendments to Anti-fraud and Abuse Provisions
Section 4041. Anti-kickback provisions.
Section 4042. Revisions to limitations on physician self-referral.
Section 4043. Civil monetary penalties.
Section 4044. Exclusions from program participation.
Section 4045. Sanctions against practitioners and persons for
failure to comply with statutory obligations
relating to quality of care.
Section 4046. Effective date.
Part 6. Funding of Graduate Medical Education and Academic Health Centers
Section 4051. Transfers from medicare trust funds for graduate
medical education.
Section 4052. Transfers from hospital insurance trust fund for
academic health centers.
Part 7. Coverage of Services Provided by Facilities and Plans of
Departments of Defense and Veterans Affairs
Section 4061. Treatment of uniformed services health plan as
eligible organization under medicare.
Section 4062. Coverage of services provided to medicare
beneficiaries by plans and facilities of Department
of Veterans Affairs.
Section 4063. Conforming amendments.
Subtitle B. Savings in Medicare Program
Part 1. Savings Relating to Part A
Section 4101. Reduction in update for inpatient hospital services.
Section 4102. Reduction in adjustment for indirect medical
education.
Section 4103. Reduction in payments for capital-related costs for
inpatient hospital services.
Section 4104. Revisions to payment adjustments for
disproportionate share hospitals in participating
States.
Section 4105. Moratorium on designation of additional long-term
care hospitals.
Section 4106. Extension of freeze on updates to routine service
costs of skilled nursing facilities.
Part 2. Savings Relating to Part B
Section 4111. Establishment of cumulative expenditure goals for
physician services.
Section 4112. Use of real GDP to adjust for volume and intensity;
repeal of restriction on maximum reduction permitted
in default update.
Section 4113. Reduction in conversion factor for physician fee
schedule for 1995.
Section 4114. Limitations on payment for physicians' services
furnished by high-cost hospital medical staffs.
Section 4115. Medicare incentives for physicians to provide
primary care.
Section 4116. Elimination of formula-driven overpayments for
certain outpatient hospital services.
Section 4117. Imposition of coinsurance on laboratory services.
Section 4118. Application of competitive bidding process for Part
B items and services.
Section 4119. Application of competitive acquisition procedures
for laboratory services.
Part 3. Savings Relating to Parts A and B
Section 4131. Medicare secondary payer changes.
Section 4132. Payment limits for HMOs and CMPs with risk-sharing
contracts.
Section 4133. Reduction in routine cost limits for home health
services.
Section 4134. Imposition of copayment for certain home health
visits.
Section 4135. Expansion of centers of excellence.
Part 4. Part B Premium
Section 4141. General Part B premium.
Subtitle C. Medicaid
Part 1. Comprehensive Benefit Package
Section 4201. Limiting coverage under medicaid of items and
services covered under comprehensive benefit
package.
Part 2. Expanding Eligibility for Nursing Facility Services; Long-term
Care Integration Option
Section 4211. Spenddown eligibility for nursing facility
residents.
Section 4212. Increased income and resource disregards for nursing
facility residents.
Section 4213. New State long-term care integration option.
Section 4214. Informing nursing home residents about availability
of assistance for home and community-based services.
Part 3. Other Benefits
Section 4221. Treatment of items and services not covered under
the comprehensive benefit package.
Section 4222. Establishment of program for poverty-level children
with special needs.
Part 4. Discontinuation of Certain Payment Policies
Section 4231. Discontinuation of medicaid DSH payments.
Section 4232. Discontinuation of reimbursement standards for
inpatient hospital services.
Part 5. Coordination With Administrative Simplification and Quality
Management Initiatives
Section 4241. Requirements for changes in billing procedures.
Part 6. Medicaid Commission
Section 4251. Medicaid commission.
Subtitle D. Increase in SSI Personal Needs Allowance
Section 4301. Increase in ssi personal needs allowance.
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SEC. 4000. REFERENCES IN TITLE.
(a) Amendments to Social Security Act. Except as otherwise specifically
provided, whenever in this title an amendment is expressed in terms of an
amendment to or repeal of a section or other provision, the reference shall
be considered to be made to that section or other provision of the Social
Security Act.
(b) References to OBRA. In this title, the terms ``OBRA 1986'',
``OBRA 1987'', ``OBRA 1989'', ``OBRA 1990'', and ``OBRA 1993'' refer to the
Omnibus Budget Reconciliation Act of 1986 (Public Law 99 509), the Omnibus
Budget Reconciliation Act of 1987 (Public Law 100 203), the Omnibus Budget
Reconciliation Act of 1989 (Public Law 101 239), the Omnibus Budget
Reconciliation Act of 1990 (Public Law 101 508), and the Omnibus Budget
Reconciliation Act of 1993 (Public Law 103 66), respectively.
Subtitle A. Medicare and the Alliance System
Part 1. ENROLLMENT OF MEDICARE BENEFICIARIES IN REGIONAL ALLIANCE PLANS
SEC. 4001. OPTIONAL STATE INTEGRATION OF MEDICARE BENEFICIARIES INTO
REGIONAL
ALLIANCE PLANS.
Title XVIII is amended by adding at the end the following:
``integration of medicare into state health security programs
``Sec. 1893. (a) Payment to States. The Secretary shall pay a
participating State that has submitted an application, as specified by
subsection (b) which the Secretary has approved under subsection (c), the
amount specified by subsection (d) for the period specified by subsection
(e) for covered medicare beneficiaries. This section shall apply without
regard to whether or not a State is a single-payer State.
``(b) Application by State. An application submitted by a participating
State shall contain the following assurances:
``(1) Designation of classes covered.
``(A) Designation of classes of medicare beneficiaries covered. In the
application the State shall designate which of the following classes of
medicare beneficiaries are to be covered:
``(i) Individuals who are 65 years of age or older.
``(ii) Individuals who are eligible for benefits under part A by reason
of section 226(b) or section 1818A (relating to disabled individuals).
``(iii) Individuals who are eligible for benefits under part A only by
reason of section 226A (relating to individuals with end stage renal
disease).
A State may not restrict the individuals within such a class who are to
be covered under this section.
``(B) Limitation. An individual may not be covered under the application
unless the individual is entitled to benefits under part A and is enrolled
under part B.
``(2) Enrollment in and selection of health plans.
``(A) Enrollment. Each medicare-eligible individual (within a class of
medicare beneficiaries covered under the application) who is a resident of
the State will be enrolled in a regional alliance health plan serving the
area in which the individual resides (or, in the case of an individual who
is a resident of a single-payer State, in the Statewide single-payer system
operated under part 2 of subtitle C of title I of the Health Security Act).
``(B) Selection. Each such individual will have the same choice among
applicable health plans as other individuals in the State who are eligible
individuals under the Health Security Act.
``(C) Offer of fee-for-service plan. Each such individual shall be
offered enrollment in at least one health plan that is a fee-for-service
plan (or, in the case of an indivdiual who is a resident of a single-payer
State, the Statewide single-payer system under part 2 of subtitle B of
title I of the Health Security Act) that meets the following requirements:
``(i) The plan's premium rate, and the actuarial value of the plan's
deductibles, coinsurance, and copayments, charged to the individual do not
exceed the actuarial value of the premium rate, coinsurance, and
deductibles that would be applicable on the average to such individuals if
this section did not apply to those individuals.
``(ii) The plan's payment rates for hospital services, post-hospital
extended care services, home health services, home intravenous drug therapy
services, comprehensive outpatient rehabilitation facility services,
hospice care, dialysis services for individuals with end stage renal
disease, and facility services furnished in connection with ambulatory
surgical procedures are accepted as payment in full.
``(iii) The plan's payment rates for physicians' services are no less a
percentage of the amounts accepted as payment in full than are the payment
rates for physicians' services under part B.
``(3) Coverage of full medicare benefits. For each health plan providing
coverage under this section
``(A) the plan shall cover at least the items and services for which
payment would otherwise be made under this title, and
``(B) coverage determinations under the plan are made under rules that
are no more restrictive than otherwise applicable under this title.
``(4) Premium. During the period for which payments are made to a State
under this section, the requirements of the Health Security Act relating to
premiums that are otherwise applicable with respect to individuals enrolled
in health plans in a State shall not apply with respect to
medicare-eligible individuals in the State who are covered under the
State's application under this section. Nothing in the previous sentence
shall operate to permit a State or health plans in a State to charge
different premiums among medicare-eligible individuals within the same
premium class under the Health Security Act.
``(5) Quality assurance. For each health plan providing coverage under
this section there are quality assurance mechanisms for covered medicare
individuals that equal, or exceed, such mechanisms otherwise applicable
under this title.
``(6) Review rights. Covered medicare individuals have review,
reconsideration, and appeal rights (including appeals to courts of the
State) that equal or exceed such rights otherwise applicable under this
title.
``(7) Data reporting and access to documents. The State will
``(A) provide such utilization and statistical data as the Secretary
determines are needed for purposes of the programs established under this
title, and
``(B) the State will ensure access by the Secretary or the Comptroller
General to relevant documents.
``(8) Use of payments. Payments made to the State under subsection (a)
will be used only to carry out the purposes of this section.
``(c) Approval by Secretary. The Secretary shall approve an application
under subsection (b) if the Secretary finds
``(1) that the individuals covered under the State's application shall
receive at least the benefits provided under this title (including cost
sharing);
``(2) that the amount of expenditures that will be made under this title
will not exceed the amount of expenditures that will be made if the State's
application is not accepted; and
``(3) that the State is able and willing to carry out the assurances
provided in its application.
``(d) Amount and Source of Payment.
``(1) Amount of payment. For purposes of subsection (a), the amount of
payments to a State
``(A) for the first year for which payments are made to the State under
this section shall be determined by the applicable rate specified in
section 1876(a)(1)(C) (but at 100 percent, rather than 95 percent, of the
applicable amount) for each medicare-eligible individual who is a resident
of the State (but without regard to any reduction based on payments to be
made under section 1876(a)(1)(G)), and
``(B) for each succeeding year, shall be determined by the applicable
rate determined under subparagraph (A) or this subparagraph for the
preceding year for each such individual, adjusted by the regional alliance
inflation factor applicable to regional alliances in the State (as
determined in accordance with subtitle A of title VI of the Health Security
Act) for the year.
``(2) Source of payment. Payment shall be made from the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust
Fund as provided under paragraph (5) of section 1876(a) (other than as
provided under subparagraph (B) of that paragraph).
``(e) Period for Which Payment Made. The period for which payment may be
made under subsection (a) to a State
``(1) begins with January 1 of the first calendar year for which the
Secretary approves under subsection (c) the application of the State; and
``(2) ends
``(A) on December 31 of the year in which the State notifies the
Secretary (before April of that year) that the State no longer intends to
receive payments under this section, or
``(B) if the Secretary finds that the State is no longer in substantial
compliance with the requirements under paragraphs (2) or (3) of subsection
(c), at the time specified by the Secretary.
``No termination is effective under paragraph (2) unless notice has been
provided to medicare covered individuals, health providers, and health
plans affected by the termination.
``(f) Payments Under this Section as Sole Medicare Benefits. Payments to
a State under subsection (a) shall be instead of the amounts that would
otherwise be payable, pursuant to sections 1814(b) and 1833(a), for
services furnished to medicare-eligible residents of the State covered
under the application.
``(g) Evaluation. The Secretary shall evaluate on an ongoing basis the
compliance of a State with the requirements of this section.
``(h) Definitions. In this section the terms `applicable health plan',
`fee-for-service plan', `health care budget', `health plan',
`medicare-eligible individual', `participating State', `single-payer
State', and `Statewide single-payer system' have the meanings of those
terms in the Health Security Act.''.
SEC. 4002. INDIVIDUAL ELECTION TO REMAIN IN CERTAIN HEALTH PLANS.
(a) In General. Section 1876 (42 U.S.C. 1395mm) is amended by adding at
the end the following new subsection:
``(k)(1) Notwithstanding any other provision of this section, each
eligible organization with a risk-sharing contract that is the sponsor of a
health plan under subtitle E of title I of the Health Security Act shall
provide each individual who meets the requirements of paragraph (2) with
the opportunity to elect (by submitting an application at such time and in
such manner as specified by the Secretary) to continue enrollment in such
plan and to have payments made by the Secretary to the plan on the
individual's behalf in accordance with paragraph (3).
``(2) An individual meets the requirements of this paragraph if the
individual is
``(A) enrolled in the health plan of an eligible organization in a month
in which the individual is either not entitled to benefits under part A, or
is an eligible employee (as defined in the Health Security Act) or the
spouse of an eligible employee,
``(B) entitled to benefits under part A and enrolled under part B in the
succeeding month,
``(C) an eligible individual under the Health Security Act in that
succeeding month, and
``(D) not an eligible employee (as defined in the Health Security Act) or
the spouse of an eligible employee in that succeeding month.
``(3) The Secretary shall make a payment to an eligible organization on
behalf of each individual enrolled with the organization for whom an
election is in effect under this subsection in an amount determined by the
rate specified by subsection (a)(1)(C). Such payment shall be made from the
Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund as provided under subsection (a)(5) (other than as
provided under subparagraph (B) of that paragraph).
``(4) The period for which payment may be made under paragraph (3)
``(A) begins with the first month for which the individual meets the
requirements of paragraph (2) (or a later month, in the case of a late
application, as may be specified by the Secretary); and
``(B) ends with the earliest of
``(i) the month following the month
``(I) in which the individual notifies the Secretary that the individual
no longer wishes to be enrolled in the health plan of the eligible
organization and to have payment made on the individual's behalf under this
subsection; and
``(II) which is a month specified by the Secretary as a uniform open
enrollment period under subsection (c)(3)(A)(i), or
``(ii) the month in which the individual ceases to meet the requirements
of paragraph (2).
``(5) Notwithstanding any other provision of this title, payments to a
health plan under this subsection on behalf of an individual shall be the
sole payments made with respect to items and services furnished to the
individual during the period for which the indivdual's election under this
subsection is in effect.''.
(b) Conforming Amendment. Section 1838(b) (42 U.S.C. 1395q(b)) is amended
by inserting after ``section 1843(e)'' the following: ``, 1876(c)(3)(B),
1876(k)(4)(B), or 1890(j)(1)(B)(iv)''.
SEC. 4003. TREATMENT OF CERTAIN MEDICARE BENEFICIARIES.
Title XVIII, as amended by section 4001, is further amended by adding at
the end the following new section:
``treatment of certain medicare-eligible individuals under health security
act
``Sec. 1894. (a) No Medicare Coverage for Certain Medicare-Eligible
Individuals. Notwithstanding any other provision of this title or title II,
an individual is not entitled to receive payment or have payment made on
the individual's behalf under this title for items and services furnished
during a year if the individual is not treated as a medicare-eligible
individual under the Health Security Act during the year through the
application of section 1012(a) of such Act.
``(b) Transfers to Regional Alliances. The Secretary shall provide for a
transfer from the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund, in appropriate proportions, to
each regional alliance in each year of the amount of the reductions in
liability owed to the alliance in the year resulting from the application
of section 6115 of the Health Security Act.''.
SEC. 4004. PROHIBITING EMPLOYERS FROM TAKING INTO ACCOUNT STATUS AS
MEDICARE
BENEFICIARY ON ANY GROUNDS.
(a) Extension of Protections for Working Aged to Group Health Plans of
All Employers. Section 1862(b)(1)(A) (42 U.S.C. 1395y(b)(1)(A)) is amended
by striking clauses (ii) and (iii).
(b) Extension of Protections for Disabled Active Individuals to All Group
Health Plans.
(1) In general. Section 1862(b)(1)(B) (42 U.S.C. 1395y(b)(1)(B)), as
amended by section 13561(e) of OBRA 1993, is amended
(A) in clause (i)
(i) by striking ``large group health plan (as defined in clause
(iv)(II))'' and inserting ``group health plan (as defined in
subparagraph (A)(v))'', and
(ii) by striking ``clause (iv)(I)'' and inserting ``clause (iv)'';
and
(B) by striking clause (iv).
(2) Conforming amendment. Section 1862(b)(1)(A)(v) (42 U.S.C.
1395y(b)(1)(A)(v)) is amended by striking ``this subparagraph, and
subparagraph (C)'' and inserting ``this paragraph''.
(c) Repeal of Limitation on Period of Protection for Individuals With End
Stage Renal Disease.
(1) In general. Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)), as
amended by section 13561(c) of OBRA 1993, is amended
(A) in clause (i), by striking ``during the 12-month period'' and all
that follows through ``such benefits'';
(B) in clause (ii), by striking the semicolon at the end and
inserting a period; and
(C) by striking the matter following clause (ii).
(2) Conforming amendment. Section 1862(b)(1) is amended
(A) in subparagraph (A), by striking clause (iv); and
(B) in subparagraph (B), by striking clause (ii).
(d) Effective Date. The amendments made by this section shall apply with
respect to medicare-eligible individuals residing in a participating State
as of January 1 of the first year for which the State is a participating
State.
Part 2. ENCOURAGING MANAGED CARE UNDER MEDICARE PROGRAM;
COORDINATION WITH
MEDIGAP PLANS
SEC. 4011. ENROLLMENT AND TERMINATION OF ENROLLMENT.
(a) Uniform Open Enrollment Periods.
(1) For capitated plans. The first sentence of section 1876(c)(3)(A)(i)
(42 U.S.C. 1395mm(c)(3)(A)(i)) is amended by inserting ``(which may be
specified by the Secretary)'' after ``open enrollment period''.
(2) For medigap plans. Section 1882(s) (42 U.S.C. 1395ss(s)) is amended
(A) in paragraph (3), by striking ``paragraphs (1) and (2)'' and
inserting ``paragraph (1), (2), or (3)'',
(B) by redesignating paragraph (3) as paragraph (4), and
(C) by inserting after paragraph (2) the following new paragraph:
``(3) Each issuer of a medicare supplemental policy shall have an
open enrollment period (which may be specified by the Secretary), of at
least 30 days duration every year, during which the issuer may not deny
or condition the issuance or effectiveness of a medicare supplemental
policy, or discriminate in the pricing of the policy, because of age,
health status, claims experience, receipt of health care, or medical
condition. The policy may not provide any time period applicable to
pre-existing conditions, waiting periods, elimination periods, and
probationary periods (except as provided by paragraph (2)(B)). The
Secretary may require enrollment through a third party.''.
(b) Enrollments for New Medicare Beneficiaries and Those Who Move.
Section 1876(c)(3)(A) (42 U.S.C. 1395mm(c)(3)(A)) is amended
(1) in clause (i), by striking ``clause (ii)'' and inserting ``clauses
(ii) through (iv)'', and
(2) by adding at the end the following:
``(iii) Each eligible organization shall have an open enrollment period
for each individual eligible to enroll under subsection (d) during any
enrollment period specified by section 1837 that applies to that
individual. Enrollment under this clause shall be effective as specified
by section 1838.
``(iv) Each eligible organization shall have an open enrollment period
for each individual eligible to enroll under subsection (d) who has
previously resided outside the geographic area which the organization
serves. The enrollment period shall begin with the beginning of the month
that precedes the month in which the individual becomes a resident of
that geographic area and shall end at the end of the following month.
Enrollment under this clause shall be effective as of the first of the
month following the month in which the individual enrolls.''.
(c) Enrollment Through Third Party; Uniform Termination of Enrollment.
The first sentence of section 1876(c)(3)(B) (42 U.S.C. 1395mm(c)(3)(B)) is
amended
(1) by inserting ``(including enrollment through a third party)'' after
``regulations'', and
(2) by striking everything after ``with the eligible organization'' and
inserting ``during an annual period as prescribed by the Secretary, and
as specified by the Secretary in the case of financial insolvency of the
organization, if the individual moves from the geographic area served by
the organization, or in other special circumstances that the Secretary
may prescribe.''.
(d) Effective Date. The amendments made by the previous subsections apply
to enrollments and terminations of enrollments occurring after 1995 (but
only after the Secretary of Health and Human Services has prescribed the
relevant annual period), except that the amendments made by subsection
(a)(2) apply to enrollments for a medicare supplemental policy made after
1995.
SEC. 4012. UNIFORM INFORMATIONAL MATERIALS.
(a) For Capitation Plans. Section 1876(c)(3)(C) (42 U.S.C.
1395mm(c)(3)(C)) is amended by adding at the end the following: ``In
addition, the Secretary shall develop and distribute comparative materials
about all eligible organizations. Each eligible organization shall
reimburse the Secretary for its pro rata share (as determined by the
Secretary) of the costs incurred by the Secretary in carrying out the
requirements of the preceding sentence and other enrollment activities.''.
(b) For Medigap Plans. Paragraph (1) of section 1882(f) (42 U.S.C.
1395ss(f)) is amended to read as follows:
``(f)(1) The Secretary shall develop and distribute comparative materials
about all medicare supplemental policies issued in a State. Each issuer of
such a policy shall reimburse the Secretary for its pro rata share (as
determined by the Secretary) of the costs incurred by the Secretary in
carrying out the requirements of the preceding sentence and other
enrollment activities, or the issuer shall no longer be considered as
meeting the requirements of this section.''.
(c) Effective Date. The amendments made by this section shall apply with
respect to materials for enrollment in years after 1995.
SEC. 4013. OUTLIER PAYMENTS.
(a) General Rule. Section 1876(a)(1) (42 U.S.C. 1395mm(a)(1)) is amended
by adding at the end the following:
``(G)(i) In the case of an eligible organization with a risk-sharing
contract, the Secretary may make additional payments to the organization
equal to not more than 50 percent of the imputed reasonable cost (or, if so
requested by the organization, the reasonable cost) above the threshold
amount of services covered under parts A and B and provided (or paid for)
in a year by the organization to any individual enrolled with the
organization under this section.
``(ii) For purposes of clause (i), the `imputed reasonable cost' is an
amount determined by the Secretary on a national, regional, or other basis
that is related to the reasonable cost of services.
``(iii) For purposes of clause (i), the `threshold amount' is an amount
determined by the Secretary from time to time, adjusted by the geographic
factor utilized in determining payments to the organization under
subparagraph (C) and rounded to the nearest multiple of $100, such that the
total amount to be paid under this subparagraph for a year is estimated to
be 5 percent or less of the total amount to be paid under risk-sharing
contracts for services furnished for that year.
``(iv) An eligible organization shall submit a claim for additional
payments under subsection (i) within such time as the Secretary may
specify.''.
(b) Conforming Amendment. Section 1876(a)(1)(C) (42 U.S.C.
1395mm(a)(1)(C)), as amended by section 4122(a), is further amended by
inserting ``, and reduced (by a uniform percentage) determined by the
Secretary so that the total reduction is estimated to equal the amount to
be paid under subparagraph (G) for a particular year'' before the period.
(c) Effective Date. The amendments made by the preceding subsections
apply to services furnished after 1994.
SEC. 4014. POINT OF SERVICE OPTION.
(a) Point of Service Contracts. Part C of title XVIII is amended by
inserting after section 1889 the following:
``point of service option
``Sec. 1890. (a) Establishment of Program. Not later than July 1, 1995,
the Secretary shall promulgate regulations establishing a point-of-service
program under which individuals entitled to benefits under this title may
enroll in a point-of-service network that meets such criteria as the
Secretary may establish and may obtain such benefits through providers and
suppliers who are members of the network.
``(b) Criteria for Networks. In establishing criteria for
point-of-service networks under the program under this section, the
Secretary shall
``(1) designate appropriate geographic service areas for such networks to
ensure that each network has a sufficient number of participating members
to provide items and services under this title to beneficiaries;
``(2) establish qualifications relating to the business structure and
ownership of networks;
``(3) establish requirements for participating members;
``(4) establish a schedule of payments for services furnished by
networks, including a schedule of bundled payment arrangements for selected
medical and surgical procedures;
``(5) delineate permissible incentive arrangements to encourage
physicians and other suppliers to join the network;
``(6) specify the rules under which carriers under section 1842 may
administer the program;
``(7) identify certain illnesses and conditions for which the use of case
management by the network will result in savings;
``(8) standards for the processing and payment of claims for payment for
services furnished by the network, including standards for the
apportionment of payments among the Trust Funds established under this
title; and
``(9) such other criteria as the Secretary considers appropriate.''.
(b) Conforming Amendments.
(1) Section 1812(a) (42 U.S.C. 1395d(a)) is amended
(A) by striking ``and'' at the end of paragraph (3),
(B) by substituting ``; and'' for the period at the end of paragraph
(4), and
(C) by adding at the end the following:
``(5) such additional items and services furnished by a provider of
services to an individual subject to case management as may be
specified under a point-of-service network arrangement under section
1890.''.
(2)(A) Section 1814(b) (42 U.S.C. 1395f(b)) is amended
(i) in paragraph (1), by inserting ``or (4)'' after ``paragraph
(3)'',
(ii) by striking ``or'' at the end of paragraph (2),
(iii) by substituting ``; and'' for the period at the end of
paragraph (3), and
(iv) by inserting after paragraph (3) the following:
``(4) in the case of items and services furnished through a point
of service network (as described in section 1890), the payment basis
specified under the arrangement established for such network, plus
any bonus payments as determined under subsection (i) of that
section.''.
(B) The matter in section 1886(d)(1)(A) (42 U.S.C. 1395ww(d)(1)(A))
preceding clause (i) is amended by inserting ``(other than paragraph
(4))'' after ``1814(b)''.
(3) Section 1832(a)(2) (42 U.S.C. 1395k(a)(2)) is amended
(A) by striking ``and'' at the end of subparagraph (I),
(B) by substituting ``; and'' for the period at the end of
subparagraph (J), and
(C) by adding at the end the following:
``(K) such additional items and services (other than inpatient
services furnished by providers of services) as may be specified in an
arrangement for a point-of-service network under section 1890.''.
(4) Section 1833 (42 U.S.C. 1395l), as amended by section 4032, is
amended by adding at the end the following new subsection:
``(u) In the case of items and services furnished through a point of
service network (as described in section 1890), there shall be paid
(subject to subsection (b)) amounts equal to 80 percent of the payment
basis specified in an agreement entered into pursuant to that section,
plus any bonus payments as determined under subsection (i) of that
section.''.
(5) Section 1862(a)(1)(B) (42 U.S.C. 1395y(a)(1)(B)) is amended by
inserting ``or section 1890(h)'' after ``section 1861(s)(10)''.
(6) Section 1862(a) (42 U.S.C. 1395y(a)), as amended by sections
4034(b)(4), 4118(b), and 2001(c), is further amended
(A) in paragraph (7), by striking ``or under paragraph (1)(F)'' and
inserting ``, under paragraph (1)(F), or under a contract under section
1890'',
(B) by striking ``or'' at the end of paragraph (16),
(C) by striking the period at the end of paragraph (17) and inserting
``; or'', and
(D) by inserting after paragraph (17) the following new paragraph:
``(18) which are furnished to an individual and related to a health
condition with respect to which he is subject to case management
through a point-of-service network under section 1890 but which are not
included in the plan of care developed for such individual and agreed
to by him and the case manager.''.
(c) Effective Date. The amendments made by this subsection shall take
effect January 1, 1996.
Part 3. MEDICARE COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS
SEC. 4021. REFERENCE TO COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.
For provisions adding a new outpatient prescription drug benefit to the
medicare program, see subtitle A of title II.
SEC. 4022. COVERAGE OF SERVICES OF ADVANCED PRACTICE NURSES.
(a) Coverage. Section 1861(s)(2)(K) (42 U.S.C. 1395x(s)(2)(K)) is amended
(1) by striking ``and'' at the end of clause (iii);
(2) in clause (iv), by striking ``(i) or (ii)'' and inserting ``(i),
(ii), or (iv)'';
(3) by redesignating clause (iv) as clause (v); and
(4) by inserting after clause (iii) the following new clause:
``(iv) services which would be physicians' services if furnished by a
physician (as defined in subsection (r)(1)) and which are performed by an
advanced practice nurse (as defined in subsection (aa)(5)) working in
collaboration (as defined in subsection (aa)(6)) with such a physician
which the advanced practice nurse is legally authorized to perform by the
State in which the services are performed, and''.
(b) Application of Payment Rules and Methodology Used for Services of
Nurse Practitioners and Clinical Nurse Specialists in Rural Areas.
(1) Direct payment. Section 1832(a)(2)(B)(iii) (42 U.S.C.
1395k(a)(2)(B)(iii)) is amended by striking ``1861(s)(2)(K)(i),'' and
inserting ``1861(s)(2)(K)(i) or section 1861(s)(2)(K)(iv),''.
(2) Amount of payment. Section 1833(a)(1)(O) (42 U.S.C.
1395l(a)(1)(M)), as amended by section 13544(b)(2)(B) of OBRA 1993, is
amended by striking ``rural area),'' and inserting ``rural area) or
section 1861(s)(2)(K)(iv) (relating to services of advanced practice
nurses),''.
(3) Mandatory assignment. The section 1833(r) added by section
4155(b)(3) of OBRA 1990 is amended
(1) in paragraph (1)
(A) by striking ``rural area),'' and inserting ``rural area) or
section 1861(s)(2)(K)(iv) (relating to services of advanced practice
nurses),'', and
(B) by striking ``nurse practitioner or clinical nurse specialist''
each place it appears and inserting ``nurse practitioner, clinical
nurse specialist, or advanced practice nurse''; and
(2) by inserting ``or section 1861(s)(2)(K)(iv)'' after ``section
1861(s)(2)(K)(iii)'' each place it appears.
(c) Services Defined. Section 1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is
amended
(1) by striking ``and the term `clinical nurse specialist''' and
inserting ``, the term `clinical nurse specialist', and the term
`advanced practice nurse'''; and
(2) by striking ``or clinical nurse specialist'' and inserting
``clinical nurse specialist, or advanced practice nurse''.
(d) Effective Date. The amendments made by this section shall apply to
services furnished on or after January 1, 1995.
Part 4. COORDINATION WITH ADMINISTRATIVE SIMPLIFICATION AND QUALITY
MANAGEMENT INITIATIVES
SEC. 4031. REPEAL OF SEPARATE MEDICARE PEER REVIEW PROGRAM.
Part B of title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following new section:
``termination
``Sec. 1165. The provisions of this part shall terminate effective upon
the adoption of the National Quality Management Program under subtitle A of
title V of the Health Security Act. Any reference to this part or any
section in this part shall not be effective after such date.''.
SEC. 4032. MANDATORY ASSIGNMENT FOR ALL PART B SERVICES.
Section 1833 (42 U.S.C. 1395l) is amended
(1) by redesignating the subsection (r) added by section 4206(b)(2) of
OBRA 1990 as subsection (s); and
(2) by adding at the end the following new subsection:
``(t)(1) Notwithstanding any other provision of this part, payment
under this part for any item or service furnished on or after January 1,
1996, may only be made on an assignment-related basis.
``(2) Except for deductible, coinsurance, or copayment amounts
applicable under this part, no physician, supplier, or other person may
bill or collect any amount from an individual enrolled under this part a
bill for an item or service for which payment may be made under this
part. No such individual is liable for payment of any amounts billed in
violation of the previous sentence.
``(3) If a physician, supplier, or other person knowingly and willfully
bills or collects an amount in violation of paragraph (2), the Secretary
may apply sanctions against such physician, supplier, or other person in
accordance with section 1842(j)(2). Paragraph (4) of section 1842(j)
shall apply in this paragraph in the same manner as such paragraph
applies to such section.''.
SEC. 4033. ELIMINATION OF COMPLEXITIES CAUSED BY DUAL FUNDING SOURCES
AND RULES
FOR PAYMENT OF CLAIMS.
(a) In General. The Secretary of Health and Human Services shall take
such steps as may be necessary to consolidate the administration (including
processing systems) of parts A and B of the medicare program (under title
XVIII of the Social Security Act).
(b) Combination of Intermediary and Carrier Functions. In taking such
steps, the Secretary shall contract with a single entity that combines the
fiscal intermediary and carrier functions in each area except where the
Secretary finds that special regional or national contracts are
appropriate.
(c) Superseding Conflicting Requirements. The provisions of sections 1816
and 1842 of the Social Security Act (including provider nominating
provisions in such section 1816) are superseded to the extent required to
carry out this section.
SEC. 4034. REPEAL OF PRO PRECERTIFICATION REQUIREMENT FOR CERTAIN
SURGICAL
PROCEDURES.
(a) In General. Section 1164 (42 U.S.C. 1320c 13) is repealed.
(b) Conforming Amendments.
(1) Section 1154 (42 U.S.C. 1320c 3) is amended
(A) in subsection (a), by striking paragraph (12), and
(B) in subsection (d), by striking ``(and except as provided in
section 1164)''.
(2) Section 1833 (42 U.S.C. 1395l) is amended
(A) in subsection (a)(1)(D)(i), by striking ``, or for tests
furnished in connection with obtaining a second opinion required under
section 1164(c)(2) (or a third opinion, if the second opinion was in
disagreement with the first opinion)'';
(B) in subsection (a)(1), by striking clause (G);
(C) in subsection (a)(2)(A), by striking ``, to items and services
(other than clinical diagnostic laboratory tests) furnished in
connection with obtaining a second opinion required under section
1164(c)(2) (or a third opinion, if the second opinion was in
disagreement with the first opinion),'';
(D) in subsection (a)(2)(D)(i)
(i) by striking ``basis,'' and inserting ``basis or'', and
(ii) by striking ``, or for tests furnished in connection with
obtaining a second opinion required under section 1164(c)(2) (or a
third opinion, if the second opinion was in disagreement with the
first opinion)'';
(E) in subsection (a)(3), by striking ``and for items and services
furnished in connection with obtaining a second opinion required under
section 1164(c)(2), or a third opinion, if the second opinion was in
disagreement with the first opinion)''; and
(F) in the first sentence of subsection (b), by striking ``(4)'' and
all that follows through ``and (5)'' and inserting and ``(4)''.
(3) Section 1834(g)(1)(B) (42 U.S.C. 1395m(g)(1)(B)) is amended by
striking ``and for items and services furnished in connection with
obtaining a second opinion required under section 1164(c)(2), or a third
opinion, if the second opinion was in disagreement with the first
opinion)''.
(4) Section 1862(a) (42 U.S.C. 1395y(a)) is amended
(A) by adding ``or'' at the end of paragraph (14),
(B) by striking ``; or'' at the end of paragraph (15) and inserting a
period, and
(C) by striking paragraph (16).
(5) The third sentence of section 1866(a)(2)(A) (42 U.S.C.
1395w(a)(2)(A)) is amended by striking ``, with respect to items and
services furnished in connection with obtaining a second opinion required
under section 1164(c)(2) (or a third opinion, if the second opinion was
in disagreement with the first opinion),''.
(c) Effective Date. The amendments made by this section shall apply to
services provided on or after the date of the enactment of this Act.
SEC. 4035. REQUIREMENTS FOR CHANGES IN BILLING PROCEDURES.
(a) Limitation on Frequency of System Changes. The Secretary of Health
and Human Services may not implement any change in the system used for the
billing and processing of claims for payment for items and services
furnished under title XVIII of the Social Security Act within 6 months of
implementing any previous change in such system.
(b) Advance Notification to Providers as Requirement for Carriers and
Fiscal Intermediaries.
(1) Fiscal intermediaries. Section 1816(c) (42 U.S.C. 1395h(c)) is
amended by adding at the end the following new paragraph:
``(4) Each agreement with an agency or organization under this section
shall provide that the agency or organization shall notify providers of
services of any major change in the procedures for billing for services
furnished under this part at least 120 days before such change is to take
effect.''.
(2) Carriers. Section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended
(A) by striking ``and'' at the end of subparagraph (G) and the end of
subparagraph (H); and
(B) by inserting after subparagraph (H) the following new
subparagraph:
``(I) will notify individuals and entities furnishing items and
services for which payment may be made under this part of any major
change in the procedures for billing for such items and services at
least 120 days before such change is to take effect; and''.
(3) Effective date. The amendments made by paragraphs (1) and (2) shall
apply to agreements with fiscal intermediaries under section 1816 of the
Social Security Act and to contracts with carriers under section 1842 of
such Act for years beginning after the expiration of the 9-month period
beginning on the date of the enactment of this Act.
Part 5. AMENDMENTS TO ANTI-FRAUD AND ABUSE PROVISIONS
SEC. 4041. ANTI-KICKBACK PROVISIONS.
(a) Revision to Penalties.
(1) Permitting secretary to impose civil monetary penalty. Section
1128A(a) (42 U.S.C. 1320a 7a(a)) is amended
(A) by striking ``or'' at the end of paragraphs (1) and (2);
(B) by striking the semicolon at the end of paragraph (3) and
inserting ``; or''; and
(C) by inserting after paragraph (3) the following new paragraph:
``(4) carries out any activity in violation of paragraph (1) or (2)
of section 1128B(b);''.
(2) Description of civil monetary penalty applicable. Section 1128A(a)
(42 U.S.C. 1320a 7a(a)) is amended
(A) by striking ``given).'' at the end of the first sentence and
inserting the following: ``given or, in cases under paragraph (4),
$50,000 for each such violation).''; and
(B) by striking ``claim.'' at the end of the second sentence and
inserting the following: ``claim (or, in cases under paragraph (4), an
assessment of not more than three times the total amount of
remuneration offered, paid, solicited, or received, without regard to
whether a portion of such remuneration was offered, paid solicited, or
received for a lawful purpose).''.
(3) Increase in criminal penalty. Paragraphs (1) and (2) of section
1128B(b) (42 U.S.C. 1320a 7b(b)) are each amended
(A) by striking ``$25,000'' and inserting ``$50,000''; and
(B) by striking the period at the end and inserting the following:
``, and shall be subject to an assessment of not more than three times
the total remuneration offered, paid, solicited, or received, without
regard to whether a portion of such remuneration was offered, paid
solicited, or received for a lawful purpose.''.
(4) Civil remedy. Section 1128B(b) (42 U.S.C. 1320a 7b(b)) is amended
by adding at the end the following new paragraph:
``(4) Any person who carries out any activity in violation of paragraph
(1) or (2) shall be subject to a penalty of not more than $50,000 fo
reach such violation, and shall be subject to an assessment of not more
than three times the total remuneration offered, paid, solicited, or
received, without regard to whether a portion of such remuneration was
offered, paid solicited, or received for a lawful purpose.''.
(b) Revisions to Exceptions.
(1) Exception for discounts. Section 1128B(b)(3)(A) (42 U.S.C.
1320a-7b(b)(3)(A)) is amended by striking ``program;'' and inserting
``program and is not
``(i) for the furnishing of one item or service without charge or at a
reduced charge in exchange for any agreement to buy a different item or
service;
``(ii) applicable to one payor but not to providers of services or
other entities under title XVIII or a State health care program; or
``(iii) in the form of a cash payment;''.
(2) Exception for payments to employees. Section 1128B(b)(3)(B) (42
U.S.C. 1320a 7b(b)(3)(B)) is amended by inserting at the end ``if the
amount of remuneration under the arrangement is consistent with the fair
market value of the services and is not determined in a manner that takes
into account (directly or indirectly) the volume or value of any
referrals, except that such employees can be paid remuneration in the
form of a productivity bonus based on services personally performed by
the employee.
(3) Exception for waiver of coinsurance by certain providers. Section
1128B(b)(3)(D) (42 U.S.C. 1320a-7b(b)(3)(D)) is amended to read as
follows:
``(D) a waiver or reduction of any coinsurance or other copayment
``(i) if the waiver or reduction is made pursuant to a public schedule
of discounts which the person is obligated as a matter of law to apply to
certain individuals, or
``(ii) under part B of title XVIII by any person if the person does not
routinely waive coinsurance or deductible amounts and the person
``(I) waives the coinsurance and deductible amounts after determining
in good faith that the individual is indigent;
``(II) fails to collect coinsurance or deductible amounts after making
reasonable collection efforts; or
``(III) provides for any permissible waiver as specified in section
1128B(b)(3) or in regulations issued by the Secretary.''.
(4) New exception for certain providers. Section 1128B(b)(3) (42 U.S.C.
1320a 7b(b)(3)) is amended
(A) by striking ``and'' at the end of subparagraph (D);
(B) by striking the period at the end of subparagraph (E) and
inserting ``; and''; and
(C) by adding at the end the following new subparagraph:
``(F) any remuneration obtained by or given to an individual or
entity who is obligated as a matter of law to waive or reduce
coinsurance or other copayment for certain individuals pursuant to a
public schedule of discounts, if the remuneration is pursuant to a
written arrangement for the use or procurement of space, equipment,
goods or services or for the referral of patients if
``(i) the arrangement does not result in private inurement to any
current employee, officer, member of the Board of Directors, or agent
of the recipient or any other person involved in recommending or
negotiating the arrangement; and
``(ii) the arrangement does not preclude the referral of patients to
other providers of service of the patient's own choosing and does not
interfere with the ability of health professionals to refer patients to
providers of services they believe are the most appropriate, except to
the extent such choices or referrals are limited by the terms of a
health plan in which the patient has enrolled or the terms of the
Federal grant or cooperative agreement.''.
(5) New exception for capitated payments. Section 1128B(b)(3) (42
U.S.C. 1320a-7b(b)(3)), as amended by paragraph (4), is further amended
(A) by striking ``and'' at the end of subparagraph (E);
(B) by striking the period at the end of subparagraph (F) and
inserting ``; and''; and
(C) by adding at the end the following new subparagraph
``(G) any reduction in cost sharing or increased benefits given to an
individual, any amounts paid to a provider of services for items or
services furnished to an individual, or any discount or reduction in
price given by the provider for such items or services, if the
individual is enrolled with and such items and services are covered
under any of the following:
``(i) A health plan which is furnishing items or services under title
XVIII or a State health care program to individuals on an at-risk,
prepaid, capitated basis pursuant to a written agreement with the
Secretary or a State health care program.
``(ii) An organization receiving payments on a prepaid basis, under a
demonstration project under section 402(a) of the Social Security
Amendments of 1967 or under section 222(a) of the Social Security
Amendments of 1972.
``(iii) Any other plan or insurer under which a participating
provider is paid wholly on an at-risk, prepaid, capitated basis for
such items or services pursuant to a written arrangement between the
plan and the provider.''.
(c) Clarification of Coverage of Employers and Employees. Section
1128B(b) (42 U.S.C. 1320a 7b(b)), as amended by subsection (a)(4), is
further amended by adding at the end the following new paragraph:
``(5) In this subsection, the term `referral' includes the referral by an
employee to his or her employer of any item or service for which payment
may be made in whole or in part under title XVIII or a State health care
program.''
(d) Authorization for the Secretary To Issue Regulations. Section
1128B(b) (42 U.S.C. 1320a 7b(b)), as amended by subsections (a)(4) and (c),
is further amended by adding at the end the following new paragraph
``(6) The Secretary is authorized to impose by regulation such other
requirements as needed to protect against program or patient abuse with
respect to any of the exceptions described in paragraph (3).''.
(e) Clarification of Other Elements of Offense. Section 1128B(b) (42
U.S.C. 1320a 7b(b)) is amended
(1) in paragraph (1) in the matter preceding subparagraph (A), by
striking ``kind '' and inserting ``kind with intent to be influenced '';
(2) in paragraph (1)(A), by striking ``in return for referring'' and
inserting ``to refer'';
(3) in paragraph (1)(B), by striking ``in return for purchasing,
leasing, ordering, or arranging for or recommending'' and inserting ``to
purchase, lease, order, or arrange for or recommend''; and
(4) in paragraph (2) in the matter preceding subparagraph (A), by
striking ``to induce such person'' and inserting ``with intent to
influence such person''.
SEC. 4042. REVISIONS TO LIMITATIONS ON PHYSICIAN SELF-REFERRAL.
(a) Clarification of Payment Ban. Section 1877(a)(1)(B) (42 U.S.C.
1395nn(a)(1)(B)) is amended to read as follows:
``(B) no physician or entity may present or cause to be presented a claim
under this title or bill to any third party payor or other entity for
designated health services furnished pursuant to a referral prohibited
under subparagraph (A).''.
(b) Clarification of Coverage of Holding Company Type Arrangements and
Loans. The last sentence of section 1877(a)(2) (42 U.S.C. 1395nn(a)(2)) is
amended by striking ``an interest in an entity that holds an ownership or
investment interest in any entity providing the designated health service''
and inserting the following: ``a loan from the entity, and an interest held
indirectly through means such as (but not limited to) having a family
member hold such investment interest or holding a legal or beneficial
interest in another entity (such as a trust or holding company) that holds
such investment interest''.
(c) Revisions to General Exceptions to Both Ownership and Compensation
Arrangement Prohibitions.
(1) Repeal of exception for physicians' services. Section 1877(b) (42
U.S.C. 1395nn(b)) is amended
(A) by striking paragraph (1); and
(B) by redesignating paragraphs (2) and (3) as paragraphs paragraphs
(1) and (2).
(2) Revision to in-office ancillary services exception. Section
1877(b)(1) (42 U.S.C. 1395nn(b)(1)), as redesignated by paragraph (1), is
amended
(A) in the matter preceding subparagraph (A), by striking ``services
(other than durable medical equipment (excluding infusion pumps) and
parenteral and enteral nutrients, equipment, and supplies)'' and
inserting ``clinical laboratory services, x-ray and ultrasound services
that are provided at low-cost (as determined in accordance with
regulations of the Secretary)''; and
(B) in subparagraph (A)
(i) in clause (ii)(I), by striking ``(or another physician who is a
member of the same group practice)'',
(ii) in clause (ii)(II) by inserting ``the same or'' before
``another building'', and
(iii) in clause (ii)(II)(bb), by inserting ``all of'' after
``centralized provision of''.
(3) Revision to prepaid plan exception. Section 1877(b)(2), (42 U.S.C.
1395nn(b)(2)), as redesignated by paragraph (1), is amended to read as
follows:
``(2) Prepaid plans. In the case of services furnished by an
organization
``(A) with a risk sharing contract under section 1876(g) to an
individual enrolled with the organization,
``(B) receiving payments on a prepaid basis, under a demonstration
project under section 402(a) of the Social Security Amendments of 1967 or
under section 222(a) of the Social Security Amendments of 1972, to an
individual enrolled with the organization, or
``(C) that is a qualified health maintenance organization (within the
meaning of section 1310(d) of the Public Health Service Act) to an
individual enrolled with the organization.''.
(4) New exception for capitated payments. Section 1877(b) (42 U.S.C.
1395nn(b)), as amended by paragraph (1), is amended by inserting after
paragraph (2) the following new paragraph:
``(3) Capitated payments. In the case of a designated health service,
if the designated health service is included in the services for which a
physician or physician group is paid wholly on an at-risk, prepaid,
capitated basis by a health plan or insurer pursuant to a written
arrangement between the plan or insurer and the physician or physician
group.''.
(d) Revision to Publicly Traded Securities Exception. Section 1877(c)(1)
(42 U.S.C. 1395nn(c)(1)) is amended by inserting ``at the time acquired by
the physician'' after ``which may be purchased on terms generally available
to the public''.
(e) Revision to Rural Provider Exception. Section 1877(d)(2) (42 U.S.C.
1395nn(d)(2)) is amended by striking ``substantially all'' and inserting
``not less than 85 percent (as determined in accordance with regulations of
the Secretary)''.
(f) Revisions to Exceptions Relating to Other Compensation Arrangements.
(1) Exception for personal services arrangements. (A) Section
1877(e)(3)(B)(i)(II) (42 U.S.C. 1395nn(e)(3)(B)(i)(II)) is amended to
read as follows:
``(II) If the plan places a physician or physician group at substantial
financial risk (as determined by the Secretary pursuant to section
1876(i)(8)(A)(ii)), for services not provided by the physician, the
entity complies with the provisions of subclauses (I) and (II) of section
1876(i)(8)(A)(ii).'';
(B) Section 1877(e)(3)(B)(ii), 42 U.S.C. 1395nn(e)(3)(B)(ii) is
amended by striking ``may directly or indirectly have the effect of''
and inserting ``has the purpose of''.
(2) Repeal of exception for remuneration unrelated to the provision of
designated health services. Section 1877(e) (42 U.S.C. 1395nn(e)) is
amended
(A) by striking paragraph (4); and
(B) by redesignating paragraphs (5), (6), (7), and (8) as paragraphs
(4), (5), (6), and (7).
(3) Exception for certain physician recruitment. Section 1877(e)(4) (42
U.S.C. 1395nn(e)(4)), as redesignated by paragraph (2), is amended to
read as follows:
``(4) Physician recruitment. In the case of remuneration which is
provided by an entity located in a rural area (as defined in section
1886(d)(2)(D)) or a health professional shortage areas (designated under
section 332 of the Public Health Service Act), or an entity that serves a
significant number of individuals who are members of a medically
underserved population (designated under section 330 of the Public Health
Service Act), in order to induce a physician who has been practicing
within the physician's current specialty for less than one year to
establish staff privileges at the entity, or to induce any other
physician to relocate his or her primary place of practice to the
geographic area served by the entity, if the following standards are met:
``(A) The arrangement is set forth in a written agreement that
specifies the benefits provided by the entity to the physician, the terms
under which the benefits are to be provided, and the obligations of each
party.
``(B) If a physician is leaving an established practice, the physical
location of the new primary place of practice must be not less than 100
miles from the location of the established primary place of practice and
at least 85 percent of the revenues of the physician's new practice must
be generated from new patients for whom the physician did not previously
provide services at the former practice.
``(C) The benefits are provided by the entity for a period not in
excess of 3 years, and the terms of the agreement are not renegotiated
during this 3-year period in any substantial aspect, unless the
physician's new primary place of practice is designated as a health
professional shortage area (pursuant to section 332 of the Public Health
Service Act) for the physician's specialty category during the entire
duration of the relationship between the physician and the entity.
``(D) There is no requirement that the physician make referrals to, be
in a position to make or influence referrals to, or otherwise generate
business for the entity as a condition for receiving the benefits.
``(E) The physician is not restricted from establishing staff
privileges at, referring any service to, or otherwise generating any
business for any other entity of the physician's choosing.
``(F) The amount or value of the benefits provided by the entity may
not vary (or be adjusted or renegotiated) in any manner based on the
volume or value of any expected referrals to or business otherwise
generated for the entity by the physician for which payment may be made
in whole or in part under this title or a State health care program (as
defined in section 1128(h)).
``(G) The physician agrees to treat patients entitled to benefits under
this title or enrolled in a State plan for medical assistance under title
XIX.''.
(4) Exception for isolated transactions. Section 1877(e)(5) (42 U.S.C.
1395nn(e)(6)), as redesignated by paragraph (2), is amended
(A) by redesignating subparagraph (B) as subparagraph (C);
(B) by striking ``and'' at the end of subparagraph (A); and
(C) by inserting after subparagraph (A) the following new
subparagraph:
``(B) there is no financing of the sale between the parties, and''.
(5) Exception for payments by a physician. Section 1877(e)(7) (42
U.S.C. 1395nn(e)(7)), as redesignated by paragraph (2), is amended to
read as follows:
``(7) Payments by a physician for items and services. Payments made by
a physician to a laboratory in exchange for the provision of clinical
laboratory services furnished at a price that is consistent with fair
market value.''.
(6) Additional exception for discounts or other reductions in price.
Section 1877(e) (42 U.S.C. 1395nn(e)), as amended by paragraph (2), is
amended by adding at the end the following new paragraph:
``(8) Discounts or other reductions in price. Discounts or other
reductions in price between a physician and an entity for items or
services for which payment may be made under this title so long as the
discount or other reduction in price is properly disclosed and
appropriately reflected in the costs claimed or charges made by the
physician or entity under this title and is not
``(A) for the furnishing of one item or service without charge or at a
reduced charge in exchange for any agreement to buy a different item or
service,
``(B) applicable to one or more payers but not to all individuals and
entities providing services for which payment may be made under this
title, or
``(C) in the form of a cash payment.''.
(g) Clarification of Sanction Authority. Section 1877(g)(4) (42 U.S.C.
1395nn(g)(4)) is amended by striking ``Any physician'' and all that follows
through ``to such entity,'' and inserting the following: ``Any physician or
other entity that enters into an arrangement or scheme (such as a
cross-referral arrangement or an arrangement with multiple leases
overlapping in time for the same or similar rental space or equipment)
which the physician or entity knows or should know has a principal purpose
of inducing referrals to another entity, which referrals, if made directly
by the physician or entity to such other entity,''.
(h) Clarification of Definition of Remuneration. Section 1877(h)(1)(B)
(42 U.S.C. 1395nn(h)(1)(B)) is amended to read as follows:
``(B) The term `remuneration' includes any payment, discount or other
reduction in price, forgiveness of debt or other benefit made directly or
indirectly, overtly or covertly, in cash or in kind.''.
(i) Revision to Definition of Group Practice. Section 1877(h)(4) (42
U.S.C. 1395nn(h)(4)) is amended
(1) in subparagraph (A)(vi), by striking the period at the end and
inserting the following: ``, including a requirement for the physical
grouping of physician practices as may be reasonably required to prevent
the abuse of any exceptions provided to group practices under this
section.''; and
(2) in subparagraph (B)(i), by striking ``or services incident to such
personally performed services''.
(j) Revision of Definition of Referral; Referring Physician.
(1) In general. Section 1877(h)(5) (42 U.S.C. 1395nn(h)(5)) is amended
by striking subparagraph (C).
(2) Conforming amendments. Section 1877(h)(5) (42 U.S.C. 1395nn(h)(5))
is amended
(A) in subparagraph (A), by striking ``Except as provided in
subparagraph (C), in'' and inserting ``In''; and
(B) in subparagraph (B), by striking ``Except as provided in
subparagraph (C), the'' and inserting ``The''.
(k) Expansion to Cover Additional Items and Services. Section 1877(h)(6)
(42 U.S.C. 1395nn(h)(6)), as amended by section 2006(c)(3), is amended
(1) in subparagraph (D), by striking ``or other''; and
(2) by adding at the end the following new subparagraphs:
``(M) Diagnostic services.
``(N) Any other item or service not rendered by the physician
personally or by a person under the physician's direct supervision.''.
(l) Authorization for the Secretary to Issue Regulations. Section 1877
(42 U.S.C. 1395nn) is amended by adding the following new subsection:
``(i) Additional Requirements. The Secretary is authorized to impose by
regulation such other requirements as needed to protect against program or
patient abuse with respect to any of the exceptions under this section.''.
(m) Incorporation of Amendments Made Under OBRA 1993. In this section,
any reference to section 1877 of the Social Security Act shall be
considered a reference to such section as amended by section 13562(a) of
OBRA 1993.
SEC. 4043. CIVIL MONETARY PENALTIES.
(a) Prohibition Against Offering Inducements to Individuals Enrolled
Under Plans.
(1) Offer of remuneration. Section 1128A(a) (42 U.S.C. 1320a 7a(a)) (as
amended by section 4041(a)(1)) is amended
(A) by striking ``; or'' at the end of paragraph (3) and inserting a
semicolon;
(B) by striking the semicolon at the end of paragraph (4) and
inserting ``; or''; and
(C) by inserting after paragraph (4) the following new paragraph:
``(5) offers, pays, or transfers remuneration to any individual
eligible for benefits under title XVIII of this Act, or under a State
health care program (as defined in section 1128(h)) that such person
knows or should know is likely to influence such individual to order or
receive from a particular provider, practitioner, or supplier any item
or service for which payment may be made, in whole or in part, under
title XVIII, or a State health care program;''.
(2) Remuneration defined. Section 1128A(i) (42 U.S.C. 1320a 7a(i)) is
amended by adding at the end the following new paragraph:
``(6) The term `remuneration' includes the waiver of coinsurance and
deductible amounts (or any part thereof), and transfers of items or
services for free or for other than fair market value, except that such
term does not include the waiver of coinsurance or deductible amounts by
a person or entity, if
``(A) the waiver is not offered as part of any advertisement or
solicitation;
``(B) the person does not routinely waive coinsurance or deductible
amounts; and
``(C) the person
``(i) waives the coinsurance and deductible amounts after determining
in good faith that the individual is indigent;
``(ii) fails to collect coinsurance or deductible amounts after making
reasonable collection efforts; or
``(iii) provides for any permissible waiver as specified in section
1128B(b)(3) or in regulations issued by the Secretary.''.
(b) Claim for Item or Service Based on Incorrect Coding or Medically
Unnecessary Services. Section 1128A(a)(1) (42 U.S.C. 1320a-7a(a)(1)) is
amended
(1) in subparagraph (A), by striking ``claimed,'' and inserting the
following: ``claimed, including any person who presents or causes to be
presented a claim for an item or service which includes a procedure or
diagnosis code that the person knows or should know will result in a
greater payment to the person than the code applicable to the item or
service actually provided or actual patient medical condition,'';
(2) in subparagraph (C), by striking ``or'' at the end;
(3) in subparagraph (D), by striking ``; or'' and inserting ``, or'';
and
(4) by inserting after subparagraph (D) the following new subparagraph:
``(E) is for a medical or other item or service that a person knows or
should know is not medically necessary; or''.
(c) Excluded Individual Retaining Ownership or Control Interest in
Participating Entity. Section 1128A(a) of such Act, as amended by section
4041(a)(1) and subsection (a)(1), is further amended
(1) by striking ``or'' at the end of paragraph (4);
(2) by striking the semicolon at the end of paragraph (5) and inserting
``; or''; and
(3) by inserting after paragraph (5) the following new paragraph:
``(6) in the case of a person who is not an organization, agency, or
other entity, who is excluded from participating in a program under title
XVIII or a State health care program in accordance with this section,
section 1128, or section 1156 and who, during the period of exclusion,
retains either a direct or indirect ownership or control interest of 5
percent or more in, or an ownership or control interest (as defined in
section 1124(a)(3)) in, or who is an officer, director, agent, or
managing employee (as defined in section 1126(b)) of, an entity that is
participating in a program under title XVIII or a State health care
program;''.
(d) Additional Offenses Relating to Alliance System. Section 1128A(a) of
such Act, as amended by section 4041(a)(1) and subsections (a)(1) and (c),
is further amended
(1) by striking ``or'' at the end of paragraph (5);
(2) by striking the semicolon at the end of paragraph (6) and inserting
``; or''; and
(3) by inserting after paragraph (6) the following new paragraphs:
``(7) engages in a practice that circumvents a payment methodology
intended to reimburse for two or more discreet medical items or services
at a single or fixed amount, including but not limited to, multiple
admissions or readmission to hospitals and other institutions reimbursed
on a diagnosis reimbursement grouping basis;
``(8) engages in a practice which has the effect of limiting or
discouraging (as compared to other plan enrollees) the utilization of
health care services covered by law or under the service contract by
title XIX or other publicly subsidized patients, including but not
limited to differential standards for the location and hours of service
offered by providers participating in the plan;
``(9) substantially fails to cooperate with a quality assurance program
or a utilization review activity;
``(10) fails substantially to provide or authorize medically necessary
items and services that are required to be provided to an individual
covered under a health plan or public program for the delivery of or
payment for health care items or services, if the failure has adversely
affected (or had a substantial likelihood of adversely affecting) the
individual;
``(11) employs or contracts with any individual or entity who is
excluded from participating in a program under title XVIII or a State
health care program in accordance with this section, section 1128, or
section 1156, for the provision of any services (including but not
limited to health care, utilization review, medical social work, or
administrative), or employs or contracts with any entity for the direct
or indirect provision of such services, through such an excluded
individual or entity; or
``(12) submits false or fraudulent statements, data or information or
claims to the National Health Board established under part 1 of subtitle
F of title I of the Health Security Act, any other federal agency, a
state health care agency, a health alliance, or any other Federal, state
or local agency charged with implementation or oversight of the plan that
the person knows or should know is fraudulent;''.
(e) Modifications of Amounts of Penalties and Assessments. Section
1128A(a) (42 U.S.C. 1320a-7a(a)), as amended by section 4041(a), subsection
(a)(1), subsection (c), and subsection (d), is amended in the matter
following paragraph (6)
(1) by striking ``$2,000'' and inserting ``$10,000'';
(2) by inserting after ``under paragraph (4), $50,000 for each such
violation'' the following: ``; in cases under paragraph (5), $10,000 for
each such offer of transfer; in cases under paragraph (6), $10,000 for
each day the prohibited relationship occurs; in cases under paragraphs
(7) through (12), an amount not to exceed $50,000 for each such
determination by the Secretary''; and
(3) by striking ``twice the amount'' and inserting ``three times the
amount''.
(f) Interest on Penalties. Section 1128A(f) (42 U.S.C. 1320a-7a(f)) is
amended by adding after the first sentence the following: ``Interest shall
accrue on the penalties and assessments (as defined in subsection (g))
imposed by a final determination of the Secretary in accordance with an
annual rate established by the Secretary under the Federal Claims
Collection Act. The rate of interest charged shall be the rate in effect on
the date the determination becomes final and shall remain fixed at that
rate until the entire amount due is paid. In addition, the Secretary is
authorized to recover the costs of collection in any case where the
penalties and assessments are not paid within 30 days after the
determination becomes final, or in the case of a compromised amount, where
payments are more than 90 days past due. In lieu of actual costs, the
Secretary is authorized to impose a charge of up to 10 percent of the
amount of penalties and assessments owed to cover the costs of
collection.''.
(g) Authorization To Act.
(1) In general. The first sentence of section 1128A(c)(1) (42 U.S.C.
1320a-7a(c)(1)) is amended by striking all that follows ``(b)'' and
inserting the following: ``unless, within one year after the date the
Secretary presents a case to the Attorney General for consideration, the
Attorney General brings an action in a district court of the United
States.''.
(2) Effective date. The amendment made by this paragraph (1) shall
apply to cases presented by the Secretary of Health and Human Services
for consideration on or after the date of the enactment of this Act.
(h) Deposit of Penalties Collected into All-Payer Trust Fund. Section
1128A(f)(3) (42 U.S.C. 1320a 7a(f)(3)) is amended by striking ``as
miscellaneous receipts of the Treasury of the United States'' and inserting
``in the All-Payer Health Care Fraud and Abuse Control Trust Fund
established under section 5402 of the Health Security Act''.
(i) Clarification of Penalty Imposed on Excluded Provider Furnishing
Services. Section 1128A(a)(1)(D) (42 U.S.C. 1320a 7a(a)(1)(D)) is amended
by inserting ``who furnished the service'' after ``in which the person
was''.
SEC. 4044. EXCLUSIONS FROM PROGRAM PARTICIPATION.
(a) Mandatory Exclusion for Individual Convicted of Criminal Offense
Related to Health Care Fraud. Section 1128 (42 U.S.C. 1320a-7) is amended
(1) by amending paragraph (1) of subsection (a) to read as follows:
``(1) Convictions of program-related crimes and health care fraud.
``(A) Any individual or entity that has been convicted of a criminal
offense related to the delivery of an item or service under title XVIII
or under any State health care program; or
``(B) Any individual or entity that has been convicted, under Federal
or State law, in connection with the delivery of a health care item or
service of a criminal offense relating to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial misconduct.''; and
(2) in subsection (b)(1), by striking ``in connection with the delivery
of a health care item or service or''.
(b) Establishment of Minimum Period of Exclusion for Certain Individuals
and Entities Subject to Permissive Exclusion From Medicare and State Health
Care Programs. Section 1128(c)(3) (42 U.S.C. 1320a 7(c)(3)) is amended by
adding at the end the following new subparagraphs:
``(D) In the case of an exclusion of an individual or entity under
paragraphs (1), (2), or (3) of subsection (b), the period of exclusion
shall be a minimum of 3 years, unless the Secretary determines that a
longer period is appropriate because of aggravating circumstances.
``(E) In the case of an exclusion of an individual or entity under
paragraph (4) or (5) of subsection (b), the period of the exclusion shall
not be less than the period during which the individual's or entity's
license to provide health care is revoked, suspended, or surrendered, or
the individual or the entity is excluded or suspended from a Federal or
State health care program.
``(F) In the case of an exclusion of an individual or entity under
subsection (b)(6)(B), the period of the exclusion shall be not less than 1
year.''.
(c) Revision to Exclusion for Default on Health Education Loan or
Scholarship Obligations. Section 1128(b)(14) (42 U.S.C. 1320a 7(b)(14)) is
amended by striking ``all reasonable steps'' and inserting ``reasonable
steps''.
(d) Permissive Exclusion of Individuals With Ownership or Control
Interest in Sanctioned Entities. Section 1128(b) (42 U.S.C. 1320a-7(b)), is
amended by adding at the end the following new paragraph:
``(15) Individuals controlling a sanctioned entity. Any individual who
has a direct or indirect ownership or control interest of 5 percent or
more, or an ownership or control interest (as defined in section
1124(a)(3)) in, or who is an officer, director, agent, or managing employee
(as defined in section 1126(b)) of, an entity
``(A) that has been convicted of any offense described in subsection (a)
or in paragraph (1), (2), or (3) of this subsection;
``(B) against which a civil monetary penalty has been assessed under
section 1128A; or
``(C) that has been excluded from participation under a program under
title XVIII or under a State health care program.''.
(e) Exclusions Based on Actions Under Alliance System. Section 1128(b)
(42 U.S.C. 1320a 7(b)), as amended by subsections (a) and (d), is amended
(1) in paragraph (1), by striking ``XVIII or under a State health care
program'' and inserting ``XVIII, a State health care program, or under an
applicable health plan (as defined in section 1902(6) of the Health
Security Act)'';
(2) in paragraph (7), by striking the period at the end and inserting
``, or in section 5412 of the Health Security Act.'';
(3) in paragraph (8)(B)
(A) in clause (ii), by striking ``1128A'' and inserting ``1128A or
under section 5412 of the Health Security Act'', and
(B) in clause (iii), by striking ``XVIII or under a State health care
program'' and inserting ``XVIII, a State health care program, or under
an applicable health plan (as defined in section 1902(6) of the Health
Security Act)'';
(4) in paragraph (9), by striking the period at the end and inserting
``, or any information requested by the Inspector General of the
Department of Health and Human Services to carry out the All-Payer Health
Care Fraud and Abuse Control Program established under section 5401 of
the Health Security Act.'';
(5) in paragraph (11)
(A) by striking ``title XVIII or a State health care program'' and
inserting ``title XVIII, a State health care program, or an applicable
health plan (as defined in section 1902(6) of the Health Security
Act)'',
(B) by striking ``Secretary or the appropriate State agency'' and
inserting ``Secretary, the appropriate State agency, or plan sponsor'',
and
(C) by striking ``Secretary or that agency'' and inserting
``Secretary, that agency, or that sponsor'';
(6) in paragraph (12), by adding at the end the following new
subparagraph:
``(E) Any entity authorized by law to (i) conduct on-site health,
safety or patient care reviews and surveys or (ii) to investigate whether
any actions have occurred that would subject an individual or entity to
the imposition of any sanctions under this section, section 1128A,
section 1128B, or part 2 of subtitle E of title V of the Health Security
Act.''; and
(7) in paragraph (15)
(A) in subparagraph (B), by striking ``1128A'' and inserting ``1128A
or section 54.. of the Health Security Act'', and
(B) in subparagraph (C), by striking ``title XVIII or under a State
health care program'' and inserting ``title XVIII, a State health care
program, or an applicable health plan (as defined in section 1902(6) of
the Health Security Act''.
(f) Appeal of Exclusions to Court of Appeals. Section 1128(f)(1) (42
U.S.C. 1320a 7(f)(1)) is amended by striking the period at the end and
inserting the following: ``, except that any action brought to appeal such
decision shall be brought in the United States Court of Appeals for the
judicial circuit in which the individual or entity resides or has a
principal place of business (or, if the individual or entity does not
reside or have a principal place of business within any such judicial
circuit, in the United States Court of Appeals for the District of Columbia
Circuit).''.
SEC. 4045. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO
COMPLY
WITH STATUTORY OBLIGATIONS RELATING TO QUALITY OF CARE.
(a) Minimum Period of Exclusion for Practitioners and Persons Failing To
Meet Statutory Obligations.
(1) In general. The second sentence of section 1156(b)(1) (42 U.S.C.
1320c-5(b)(1)) is amended by striking ``may prescribe)'' and inserting
``may prescribe, except that such period may not be less than one
year)''.
(2) Conforming amendment. Section 1156(b)(2) (42 U.S.C. 1320c-5(b)(2))
is amended by striking ``shall remain'' and inserting ``shall (subject to
the minimum period specified in the second sentence of paragraph (1))
remain''.
(b) Repeal of ``Unwilling or Unable'' Condition for Imposition of
Sanction. Section 1156(b)(1) (42 U.S.C. 1320c-5(b)(1)) is amended
(1) in the second sentence, by striking ``and determines'' and all that
follows through ``such obligations,'' and
(2) by striking the third sentence.
(c) Amount of Civil Money Penalty. Section 1156(b)(3) (42 U.S.C.
1320c-5(b)(3)) is amended by striking ``the actual or estimated cost'' and
inserting the following: ``$50,000 for each instance''.
SEC. 4046. EFFECTIVE DATE.
The amendments made by this part shall take effect January 1, 1995.
Part 6. FUNDING OF GRADUATE MEDICAL EDUCATION AND ACADEMIC HEALTH
CENTERS
SEC. 4051. TRANSFERS FROM MEDICARE TRUST FUNDS FOR GRADUATE MEDICAL
EDUCATION.
(a) In General. For purposes of complying with section 3034(a), there
shall be transferred to the Secretary from the Federal Hospital Insurance
Trust Fund (established under section 1817 of the Social Security Act) and
the Federal Supplementary Medical Insurance Trust Fund (established under
section 1841 of such Act) the following amount (in the aggregate), as
applicable to a calendar year:
(1) In the case of a calendar year prior to 1998, the proportion of the
amounts expended from such Trust Funds during the most recent fiscal year
ending before the first day of such calendar year for payments for the
direct costs of graduate medical education under section 1886(h) of such
Act that is attributable to payments to hospitals located in the States
that are participating States for the calendar year.
(2) In the case of calendar year 1998, the amount expended from such
Trust Funds during fiscal year 1997 for payments for such direct costs of
graduate medical education.
(3) In the case of each subsequent calendar year, the amount specified
in paragraph (2) increased by the product of such amount and the general
health care inflation factor (as defined in section 6001(a)(3), except
that for purposes of this subparagraph the increases provided for in
subparagraphs (A) through (C) of such section shall not be made).
(b) Allocation of Amount Among Funds. With respect to the amount required
under subsection (a) to be transferred for an academic year from the
Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund, the Secretary shall determine an equitable allocation
of such amount among the funds.
(c) Termination of Graduate Medical Education Payments Under Medicare.
(1) In General. Section 1886(h) (42 U.S.C. 1395ww(h)) is amended by
adding at the end the following new paragraph:
``(6) Termination of payments attributable to costs of training
physicians. Notwithstanding any other provision of this section or
section 1861(v), no payment may be made under this title for direct
graduate medical education costs attributable to an approved medical
residency training program for any cost reporting period (or portion
thereof) beginning on or after January 1, 1998 (or, in the case of costs
of a program operating in a State that is a participating State under the
Health Security Act for a year prior to 1998, on or after January 1 of
the first year for which the State is such a participating State).''.
(2) Prohibition against recognition of costs. Section 1861(v)(1) (42
U.S.C. 1395x(v)(1)) is amended by adding at the end the following new
subparagraph:
``(T) Such regulations shall not include any provision for specific
recognition of the costs of graduate medical education for hospitals for
any cost reporting period (or portion thereof) beginning on or after
January 1, 1998 (or, in the case of a hospital located in a State that is
a participating State under the Health Security Act for a year prior to
1998, ending on or before December 31 of the year prior to the first year
for which the State is such a participating State). Nothing in the
previous sentence shall be construed to affect in any way payments to
hospitals for the costs of any approved educational activities that are
not described in such sentence.''.
SEC. 4052. TRANSFERS FROM HOSPITAL INSURANCE TRUST FUND FOR ACADEMIC
HEALTH
CENTERS.
(a) In General. For purposes of complying with section 3104(a), there
shall be transferred to the Secretary from the Federal Hospital Insurance
Trust Fund (established under section 1817 of the Social Security Act) the
following amount (in the aggregate), as applicable to a calendar year:
(1) In the case of a calendar year prior to 1998, the proportion of the
amounts expended from such Trust Fund during the most recent fiscal year
ending before the first day of such calendar year for payments for the
indirect costs of medical education under section 1886(d)(5)(B) of such
Act that is attributable to discharges of hospitals located in the States
that are participating States for the calendar year.
(2) In the case of calendar year 1998, the amount expended from such
Trust Fund during fiscal year 1997 for payments for such indirect costs
of medical education.
(3) In the case of each subsequent calendar year, the amount specified
in paragraph (2) increased by the product of such amount and the general
health care inflation factor (as defined in section 6001(a)(3), except
that for purposes of this subparagraph the increases provided for in
subparagraphs (A) through (C) of such section shall not be made).
(b) Termination of Payments Under Medicare.
(1) In general. Section 1886(d)(5)(B) (42 U.S.C. 1395ww(d)(5)(B)) is
amended in the matter preceding clause (i) by striking ``The Secretary''
and inserting ``For discharges occurring before January 1, 1998 (or, in
the case of discharges of a hospital located in a State that is a
participating State under the Health Security Act for a year prior to
1998, before January 1 of the first year for which the State is such a
participating State), the Secretary''.
(2) Adjustment to standardized amounts. Section 1886(d)(2)(C)(i) (42
U.S.C. 1395ww(d)(2)(C)(i)) is amended by striking ``excluding'' and
inserting ``for discharges occurring before January 1, 1998, (or, in the
case of discharges of a hospital located in a State that is a
participating State under the Health Security Act for a year prior to
1998, before January 1 of the first year for which the State is such a
participating State) excluding''.
Part 7. COVERAGE OF SERVICES PROVIDED BY FACILITIES AND PLANS OF
DEPARTMENTS
OF DEFENSE AND VETERANS AFFAIRS
SEC. 4061. TREATMENT OF UNIFORMED SERVICES HEALTH PLAN AS ELIGIBLE
ORGANIZATION
UNDER MEDICARE.
(a) In General. Section 1876 (42 U.S.C. 1395mm), as amended by section
4002(a), is further amended by adding at the end the following new
subsection:
``(l) Notwithstanding any other provision of this section, a Uniformed
Services Health Plan of the Department of Defense under chapter 55 of title
10, United States Code, shall be considered an eligible organization under
this section, and the Secretary shall make payments to such Plan during a
year on behalf of any individuals entitled to benefits under this title who
are enrolled with such a Plan during the year in such amounts and under
such terms and conditions as may be imposed under an agreement between the
Secretary and the Secretary of Defense.''.
(b) Effective Date. The amendment made by subsection (a) shall apply to
items and services furnished under title XVIII of the Social Security Act
on or after January 1, 1998.
SEC. 4062. COVERAGE OF SERVICES PROVIDED TO MEDICARE BENEFICIARIES BY
PLANS AND
FACILITIES OF DEPARTMENT OF VETERANS AFFAIRS.
(a) In General. Title XVIII, as amended by sections 4001 and 4003, is
further amended by adding at the end the following new section:
``treatment of plans and facilities of department of veterans affairs as
providers
``Sec. 1895. (a) In General. Notwithstanding any other provision of this
title
``(1) a VA health plan (as defined in section 1801(2) of title 38, United
States Code) shall be considered an eligible organization for purposes of
section 1876; and
``(2) a health care facility of the Department of Veterans Affairs shall
be considered a provider of services under section 1861(u).
``(b) Eligibility for Payments.
``(1) VA health plans. The Secretary shall make payments to a VA health
plan during a year on behalf of any individuals entitled to benefits under
this title who are enrolled with such a plan during the year in the same
amounts and under the same terms and conditions under which the Secretary
makes payments to eligible organizations with a risk-sharing contract under
section 1876.
``(2) Health care facilities. The Secretary shall make payments to a
health care facility of the Department of Veterans Affairs for services
provided to an individual entitled to benefits under this title in the same
amounts and under the same terms and conditions under which the Secretary
makes payments to provider of services under this title.''.
(b) Effective Date. The amendment made by subsection (a) shall apply to
items and services furnished under title XVIII of the Social Security Act
on or after January 1, 1998.
SEC. 4063. CONFORMING AMENDMENTS.
(a) Part A. Section 1814 (42 U.S.C. 1395f) is amended by striking
subsection (c).
(b) Part B. Section 1835 (42 U.S.C. 1395n) is amended by striking
subsection (d).
(c) Additional Conforming Amendment. Section 1880(a) (42 U.S.C.
1395qq(a)) is amended by striking ``, notwithstanding sections 1814(c) and
1835(d),''.
(d) Effective Date. The amendments made by this section shall take effect
January 1, 1998.
Subtitle B. Savings in Medicare Program
Part 1. SAVINGS RELATING TO PART A
SEC. 4101. REDUCTION IN UPDATE FOR INPATIENT HOSPITAL SERVICES.
Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)), as amended by
section 13501(a)(1) of OBRA 1993, is amended
(1) in subclause (XII)
(A) by striking ``fiscal year 1997'' and inserting ``for each of the
fiscal years 1997 through 2000'', and
(B) by striking ``0.5 percentage point'' and inserting ``2.0
percentage points''; and
(2) in subclause (XIII), by striking ``fiscal year 1998'' and inserting
``fiscal year 2001''.
SEC. 4102. REDUCTION IN ADJUSTMENT FOR INDIRECT MEDICAL EDUCATION.
Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended to
read as follows:
``(ii) For purposes of clause (i)(II), the indirect teaching adjustment
factor is equal to c * (((1+r) to the nth power) - 1), where `r' is the
ratio of the hospital's full-time equivalent interns and residents to
beds and `n' equals .405. For discharges occurring on or after
``(I) May 1, 1986, and before October 1, 1994, `c' is equal to 1.89,
``(II) October 1, 1994, and before October 1, 1995, `c' is equal to
1.395, and
``(III) October 1, 1995, `c' is equal to 0.74.''.
SEC. 4103. REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS FOR INPATIENT
HOSPITAL SERVICES.
(a) PPS Hospitals.
(1) Reduction in base payment rates. Section 1886(g)(1)(A) (42 U.S.C.
1395ww(g)(1)(A)), as amended by section 13501(a)(3) of OBRA 1993, is
amended by adding at the end the following new sentence: ``In addition to
the reduction described in the preceding sentence, the Secretary shall
reduce by 7.31 percent the unadjusted standard Federal capital payment
rate (as described in 42 CFR 412.308(c), as in effect on the date of the
enactment of the Health Security Act) and shall reduce by 10.41 percent
the unadjusted hospital-specific rate (as described in 42 CFR
412.328(e)(1), as in effect on the date of the enactment of the Health
Security Act).''.
(2) Reduction in update. Section 1886(g)(1) (42 U.S.C. 1395ww(g)(1)) is
amended
(A) in subparagraph (B)(i)
(i) by striking ``and (II)'' and inserting ``(II)'', and
(ii) by striking the semicolon at the end and inserting the
following: ``, and (III) an annual update factor established for the
prospective payment rates applicable to discharges in a fiscal year
which (subject to reduction under subparagraph (C)) will be based
upon such factor as the Secretary determines appropriate to take into
account amounts necessary for the efficient and effective delivery of
medically appropriate and necessary care of high quality;'';
(B) by redesignating subparagraph (C) as subparagraph (D); and
(C) by inserting after subparagraph (B) the following new
subparagraph:
``(C)(i) With respect to payments attributable to portions of cost
reporting periods or discharges occurring during each of the fiscal
years 1996 through 2000, the Secretary shall include a reduction in the
annual update factor established under subparagraph (B)(i)(III) for
discharges in the year equal to the applicable update reduction
described in clause (ii) to adjust for excessive increases in capital
costs per discharge for fiscal years prior to fiscal year 1992 (but in
no event may such reduction result in an annual update factor less than
zero).
``(ii) In clause (i), the term `applicable update reduction' means,
with respect to the update factor for a fiscal year
``(I) 4.9 percentage points; or
``(II) if the annual update factor for the previous fiscal year was
less than the applicable update reduction for the previous year, the
sum of 4.9 percentage points and the difference between the annual
update factor for the previous year and the applicable update reduction
for the previous year.''.
(b) PPS-Exempt Hospitals. Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as
amended by section 4051(c)(2), is further amended by adding at the end the
following new subparagraph:
``(U) Such regulations shall provide that, in determining the amount of
the payments that may be made under this title with respect to the
capital-related costs of inpatient hospital services furnished by a
hospital that is not a subsection (d) hospital (as defined in section
1886(d)(1)(B)) or a subsection (d) Puerto Rico hospital (as defined in
section 1886(d)(9)(A)), the Secretary shall reduce the amounts of such
payments otherwise established under this title by 15 percent for payments
attributable to portions of cost reporting periods occurring during each of
the fiscal years 1996 through 2000.''.
SEC. 4104. REVISIONS TO PAYMENT ADJUSTMENTS FOR DISPROPORTIONATE SHARE
HOSPITALS IN PARTICIPATING STATES.
(a) Application of Alternative Adjustments. Section 1886(d)(5) (42 U.S.C.
1395ww(d)(5)) is amended
(1) by redesignating subparagraphs (H) and (I) as subparagraphs (I) and
(J); and
(2) by inserting after subparagraph (G) the following new subparagraph:
``(H)(i) In accordance with this subparagraph, the Secretary shall
provide for an additional payment for each subsection (d) hospital that
is located in a participating State under subtitle C of title I of the
Health Security Act during a cost reporting period and that meets the
eligibility requirements described in clause (iii).
``(ii) The amount of the additional payment made under clause (i) for
each discharge shall be determined by multiplying
``(I) the sum of the amount determined under paragraph (1)(A)(ii)(II)
(or, if applicable, the amount determined under paragraph (1)(A)(iii))
and the amount paid to the hospital under subparagraph (A) for the
discharge, by
``(II) the SSI adjustment percentage for the cost reporting period in
which the discharge occurs (as defined in clause (iv)).
``(iii) A hospital meets the eligibility requirements described in this
clause with respect to a cost reporting period if
``(I) in the case of a hospital that is located in an urban area and
that has more than 100 beds, the hospital's SSI patient percentage (as
defined in clause (v)) for the cost reporting period is not less than 5
percent;
``(II) in the case of a hospital that is located in an urban area and
that has less than 100 beds, the hospital's SSI patient percentage is not
less than 17 percent;
``(III) in the case of a hospital that is classified as a rural
referral center under subparagraph (C) or a sole community hospital under
subparagraph (D), the hospital's SSI patient percentage for the cost
reporting period is not less than 23 percent; and
``(IV) in the case of any other hospital, the hospital's SSI patient
percentage is not less than 23 percent.
``(iv) For purposes of clause (ii), the `SSI adjustment percentage'
applicable to a hospital for a cost reporting period is equal to
``(I) in the case of a hospital described in clause (iii)(I), the
percentage determined in accordance with the following formula: e to the
nth power, where `e' is the natural antilog of 1 and where `n' is equal
to (.5642 * (the hospital's SSI patient percentage for the cost reporting
period - .055)) - 1;
``(II) in the case of a hospital described in clause (iii)(II) or
clause (iii)(IV), 2 percent; and
``(III) in the case of a hospital described in clause (iii)(III), the
sum of 2 percent and .30 percent of the difference between the hospital's
SSI patient percentage for the cost reporting period and 23 percent.
``(v) In this subparagraph, a hospital's `SSI patient percentage' with
respect to a cost reporting period is equal to the fraction (expressed as
a percentage)
``(I) the numerator of which is the number of the hospital's patient
days for such period which were made up of patients who (for such days)
were entitled to benefits under part A and were entitled to supplementary
security income benefits (excluding State supplementation) under title
XVI; and
``(II) the denominator of which is the number of the hospital's patient
days for such period which were made up of patients who (for such days)
were entitled to benefits under part A.''.
(b) No Standardization Resulting From Reduction. Section
1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)) is amended
(1) by striking ``exclude additional payments'' and inserting ``adjust
such estimate for changes in payments'';
(2) by striking ``1989 or'' and inserting ``1989,''; and
(3) by striking the period at the end and inserting the following: ``,
or the enactment of section 4104 of the Health Security Act.''.
(c) Conforming Amendment. Section 1886(d)(5)(F)(i) (42 U.S.C.
1395ww(d)(5)(F)(i)) is amended in the matter preceding subclause (I) by
inserting after ``hospital'' the following: ``that is not located in a
State that is a participating State under subtitle C of title I of the
Health Security Act''.
SEC. 4105. MORATORIUM ON DESIGNATION OF ADDITIONAL LONG-TERM CARE
HOSPITALS.
Notwithstanding clause (iv) of section 1886(d)(1)(B) of the Social
Security Act, a hospital which has an average inpatient length of stay (as
determined by the Secretary of Health and Human Services) of greater than
25 days shall not be treated as a hospital described in such clause for
purposes of title XVIII of such Act unless the hospital was treated as a
hospital described in such clause for purposes of such title as of the date
of the enactment of this Act.
SEC. 4106. EXTENSION OF FREEZE ON UPDATES TO ROUTINE SERVICE COSTS OF
SKILLED
NURSING FACILITIES.
(a) Payments Based on Cost Limits. Section 1888(a) (42 U.S.C. 1395yy(a))
is amended by striking ``112 percent'' each place it appears and inserting
``100 percent (adjusted by such amount as the Secretary determines to be
necessary to preserve the savings resulting from the enactment of section
13503(a)(1) of the Omnibus Budget Reconciliation Act of 1993)''.
(b) Payments Determined on Prospective Basis. Section 1888(d)(2)(B) (42
U.S.C. 1395yy(d)(2)(B)) is amended by striking ``105 percent'' and
inserting ``100 percent (adjusted by such amount as the Secretary
determines to be necessary to preserve the savings resulting from the
enactment of section 13503(b) of the Omnibus Budget Reconciliation Act of
1993)''.
(c) Effective Date. The amendments made by subsections (a) and(b) shall
apply to cost reporting periods beginning on or after October 1, 1995.
Part 2. SAVINGS RELATING TO PART B
SEC. 4111. ESTABLISHMENT OF CUMULATIVE EXPENDITURE GOALS FOR PHYSICIAN
SERVICES.
(a) Use of Cumulative Performance Standard. Section 1848(f)(2) (42 U.S.C.
1395w 4(f)(2)) is amended
(1) in subparagraph (A)
(A) in the heading, by striking ``In general'' and inserting ``Fiscal
years 1991 through 1993. '',
(B) in the matter preceding clause (i), by striking ``a fiscal year
(beginning with fiscal year 1991)'' and inserting ``fiscal years 1991,
1992, and 1993'', and
(C) in the matter following clause (iv), by striking ``subparagraph
(B)'' and inserting ``subparagraph (C)'';
(2) in subparagraph (B), by striking ``subparagraph (A)'' and inserting
``subparagraphs (A) and (B)'';
(3) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and
(D); and
(4) by inserting after subparagraph (A) the following new subparagraph:
``(B) Fiscal years beginning with fiscal year 1994. Unless Congress
otherwise provides, the performance standard rate of increase, for all
physicians' services and for each category of physicians's services, for
a fiscal year beginning with fiscal year 1994 shall be equal to the
performance standard rate of increase determined under this paragraph for
the previous fiscal year, increased by the product of
``(i) 1 plus the Secretary's estimate of the weighted average
percentage increase (divided by 100) in the fees for all physicians'
services or for the category of physicians' services, respectively, under
this part for portions of calendar years included in the fiscal year
involved,
``(ii) 1 plus the Secretary's estimate of the percentage increase or
decrease (divided by 100) in the average number of individuals enrolled
under this part (other than HMO enrollees) from the previous fiscal year
to the fiscal year involved,
``(iii) 1 plus the Secretary's estimate of the average annual
percentage growth (divided by 100) in volume and intensity of all
physicians' services or of the category of physicians' services,
respectively, under this part for the 5-fiscal-year period ending with
the preceding fiscal year (based upon information contained in the most
recent annual report made pursuant to section 1841(b)(2)), and
``(iv) 1 plus the Secretary's estimate of the percentage increase or
decrease (divided by 100) in expenditures for all physicians' services or
of the category of physicians' services, respectively, in the fiscal year
(compared with the previous fiscal year) which are estimated to result
from changes in law or regulations affecting the percentage increase
described in clause (i) and which is not taken into account in the
percentage increase described in clause (i),
``minus 1, multiplied by 100, and reduced by the performance standard
factor (specified in subparagraph (C)).''.
(b) Treatment of Default Update.
(1) In general. Section 1848(d)(3)(B) (42 U.S.C. 1395w 4(d)(3)(B)) is
amended
(A) in clause (i)
(i) in the heading, by striking ``In general'' and inserting ``1992
through 1995'', and
(ii) by striking ``for a year'' and inserting ``for 1992, 1993,
1994, and 1995''; and
(B) by adding after clause (ii) the following new clause:
``(iii) Years beginning with 1996.
``(I) In general. The update for a category of physicians' services
for a year beginning with 1996 provided under subparagraph (A) shall be
increased or decreased by the same percentage by which the cumulative
percentage increase in actual expenditures for such category of
physicians' services for such year was less or greater, respectively,
than the performance standard rate of increase (established under
subsection (f)) for such category of services for such year.
``(II) Cumulative percentage increase defined. In subclause (I), the
`cumulative percentage increase in actual expenditures' for a year
shall be equal to the product of the adjusted increases for each year
beginning with 1994 up to and including the year involved, minus 1 and
multiplied by 100. In the previous sentence, the `adjusted increase'
for a year is equal to 1 plus the percentage increase in actual
expenditures for the year.''.
(2) Conforming amendment. Section 1848(d)(3)(A)(i) (42 U.S.C.
1395w 4(d)(3)(A)(i)) is amended by striking ``subparagraph (B)'' and
inserting ``subparagraphs (B) and (C)''.
SEC. 4112. USE OF REAL GDP TO ADJUST FOR VOLUME AND INTENSITY; REPEAL OF
RESTRICTION ON MAXIMUM REDUCTION PERMITTED IN DEFAULT UPDATE.
(a) Use of Real GDP to Adjust for Volume and Intensity. Section
1848(f)(2)(B)(iii) (42 U.S.C. 1395w 4(f)(2)(B)(iii)), as added by section
4111(a), is amended to read as follows:
``(iii) 1 plus the average per capita growth in the real gross domestic
product (divided by 100) for the 5-fiscal-year period ending with the
previous fiscal year (increased by 1.5 percentage points for the category
of services consisting of primary care services), and''.
(b) Repeal of Restriction on Maximum Reduction. Section 1848(d)(3)(B)(ii)
(42 U.S.C. 1395w 4(d)(3)(B)(ii)), as amended by section 13512(b) of
OBRA 1993, is amended
(1) in the heading, by inserting ``in certain years'' after
``adjustment'';
(2) in the matter preceding subclause (I), by striking ``for a year'';
(3) in subclause (I), by adding ``and'' at the end;
(4) in subclause (II), by striking ``, and'' and inserting a period;
and
(5) by striking subclause (III).
SEC. 4113. REDUCTION IN CONVERSION FACTOR FOR PHYSICIAN FEE SCHEDULE FOR
1995.
Section 1848(d)(1) (42 U.S.C. 1395w 4(d)(1)) is amended
(1) in subparagraph (A), by inserting after ``subparagraph (B)'' the
following: ``, and, in the case of 1995, specified in subparagraph (C)'';
(2) by redesignating subparagraph (C) as subparagraph (D); and
(3) by inserting after subparagraph (B) the following new subparagraph:
``(C) Special provision for 1995. For purposes of subparagraph (A), the
conversion factor specified in this subparagraph for 1995 is
``(i) in the case of physicians' services included in the category of
primary care services (as defined in subsection (j)(1)), the conversion
factor established under this subsection for 1994 adjusted by the update
established under paragraph (3) for 1995; and
``(ii) in the case of any other physicians' services, the conversion
factor established under this subsection for 1994 reduced by 3 percentage
points.''.
SEC. 4114. LIMITATIONS ON PAYMENT FOR PHYSICIANS' SERVICES FURNISHED BY
HIGH-COST HOSPITAL MEDICAL STAFFS.
(a) In General.
(1) Limitations described. Part B of title XVIII, as amended by section
2003(a), is amended by inserting after section 1848 the following new
section:
``limitations on payment for physicians' services furnished by high-cost
hospital medical staffs
``Sec. 1849. (a) Services Subject to Reduction.
``(1) Determination of hospital-specific per admission relative value.
Not later than October 1 of each year (beginning with 1997), the
Secretary shall determine for each hospital
``(A) the hospital-specific per admission relative value under
subsection (b)(2) for the following year; and
``(B)(i) whether such hospital-specific relative value is projected to
exceed the allowable average per admission relative value applicable to
the hospital for the following year under subsection (b)(1), and, if so,
(ii) the hospital's projected excess relative value for the year under
subsection (b)(3).
``(2) Reduction for services at hospitals exceeding allowable average
per admission relative value. If the Secretary determines (under
paragraph (1)) that a medical staff's hospital-specific per admission
relative value for a year (beginning with 1998) is projected to exceed
the allowable average per admission relative value applicable to the
medical staff for the year, the Secretary shall reduce (in accordance
with subsection (c)) the amount of payment otherwise determined under
this part for each physicians' service furnished during the year to an
inpatient of the hospital by an individual who is a member of the
hospital's medical staff.
``(3) Timing of determination; notice to hospitals and carriers. Not
later than October 1 of each year (beginning with 1997), the Secretary
shall notify the medical executive committee of each hospital (as set
forth in the Standards of the Joint Commission on the Accreditation of
Health Organizations) of the determinations made with respect to the
medical staff under paragraph (1).
``(b) Determination of Allowable Average Per Admission Relative Value
and Hospital-Specific Per Admission Relative Values.
``(1) Allowable average per admission relative value.
``(A) Urban hospitals. In the case of a hospital located in an urban
area, the allowable average per admission relative value established
under this subsection
``(i) for 1998 and 1999, is equal to 125 percent of the median of the
1996 hospital-specific per admission relative values determined under
paragraph (2) for all hospital medical staffs; and
``(ii) for 2000 and each succeeding year, is equal to 120 percent of
the median of such relative values for all hospital medical staffs.
``(B) Rural hospitals. In the case of a hospital located in a rural
area, the allowable average per admission relative value established
under this subsection for 1998 and each succeeding year, is equal to 140
percent of the median of the 1996 hospital-specific per admission
relative values determined under paragraph (2) for all hospital medical
staffs.
``(2) Hospital-specific per admission relative value.
``(A) In general. The hospital-specific per admission relative value
for a hospital (other than a teaching hospital), shall be equal to the
average per admission relative value (as determined under section
1848(c)(2)) for each physician's service furnished to inpatients of the
hospital by the hospital's medical staff (excluding interns and
residents) during 1996, adjusted for variations in case-mix and
disproportionate share status among hospitals (as determined by the
Secretary under subparagraph (C)).
``(B) Special rule for teaching hospitals. The hospital-specific
relative value for a teaching hospital shall be equal to the sum of
``(i) the average per admission relative value (as determined under
section 1848(c)(2)) for each physician's service furnished to inpatients
of the hospital by the hospital's medical staff (excluding interns and
residents) during 1996, adjusted for variations in case-mix,
disproportionate share status, and teaching status among hospitals (as
determined by the Secretary under subparagraph (C)); and
``(ii) the equivalent per admission relative value (as determined under
section 1848(c)(2)) for each physician's service furnished to inpatients
of the hospital by interns and residents of the hospital during 1996,
adjusted for variations in case-mix, disproportionate share status, and
teaching status among hospitals (as determined by the Secretary under
subparagraph (C)). The Secretary shall determine such equivalent relative
value unit per admission for interns and residents based on the best
available data for teaching hospitals and may make such adjustment in the
aggregate.
``(C) Adjustment for teaching and disproportionate share hospitals. The
Secretary shall adjust the allowable per admission relative values
otherwise determined under this paragraph to take into account the needs
of teaching hospitals and hospitals receiving additional payments under
subparagraphs (F) and (G) of section 1886(d)(5). The adjustment for
teaching status or disproportionate share shall not be less than zero.
``(3) Projected excess relative value defined. The `projected excess
relative value' with respect to a hospital's medical staff for a year
means the number of percentage points by which the Secretary determines
(under subsection (a)(1)(B)) that the medical staff's hospital-specific
per admission relative value (determined under paragraph (2)) will exceed
the allowable average per admission relative value applicable to the
hospital medical staff for the year (as determined under paragraph (1)).
``(c) Amount of Reduction. The amount of payment otherwise made under
this part for a physician's service that is subject to a reduction under
subsection (a) during a year shall be reduced 15 percent, in the case of
a service furnished by a member of the medical staff of a hospital for
which the Secretary determines under subsection (a)(1) that the hospital
medical staff's projected relative value per admission exceeds the
allowable average per admission relative value.
``(d) Reconciliation of Reductions Based on Hospital-Specific Relative
Value Per Admission With Actual Relative Values.
``(1) Determination of actual average per admission relative value. Not
later than October 1 of each year (beginning with 1999), the Secretary
shall determine the actual average per admission relative value (as
determined pursuant to section 1848(c)(2)) for the physicians' services
furnished by members of a hospital's medical staff to inpatients of the
hospital during the previous year, on the basis of claims for payment for
such services that are submitted to the Secretary not later than 90 days
after the last day of such previous year. The actual average per
admission shall be adjusted by the appropriate case-mix, disproportionate
share factor, and teaching factor for the hospital medical staff (as
determined by the Secretary under subsection (b)(2)(C)).
``(2) Reconciliation with reductions taken. In the case of a hospital
for which the payment amounts for physicians' services furnished by
members of the hospital's medical staff to inpatients of the hospital
were reduced under this section for a year
``(A) if the actual average per admission relative value for such
hospital's medical staff during the year (as determined by the Secretary
under paragraph (1)) did not exceed the allowable average per admission
relative value applicable to the hospital's medical staff under
subsection (b)(1) for the year, the Secretary shall reimburse the
fiduciary agent for the medical staff by the amount by which payments for
such services were reduced for the year under subsection (c);
``(B) if the actual average per admission relative value for such
hospital's medical staff during the year is less than 10 percentage
points above the allowable average per admission relative value
applicable to the hospital's medical staff under subsection (b)(1) for
the year, the Secretary shall reimburse the fiduciary agent for the
medical staff, as a percent of the total allowed charges for physicians'
services performed in such hospital (prior to the withhold), the
difference between 10 percentage points and the actual number of
percentage points that the staff exceeds the limit;
``(C) if the actual average per admission relative value for such
hospital's medical staff during the year exceeded the allowable average
per admission relative value applicable to the hospital's medical staff
by 10 percentage points or more, none of the withhold is paid to the
fiduciary agent for the medical staff.
``(3) Medical executive committee of a hospital. Each medical executive
committee of a hospital whose medical staff is projected to exceed the
allowable relative value per admission for a year, shall have one year
from the date of notification that such medical staff is projected to
exceed the allowable relative value per admission to designate a
fiduciary agent for the medical staff to receive and disburse any
appropriate withhold amount made by the carrier.
``(4) Alternative reimbursement to members of staff. At the request of
a fiduciary agent for the medical staff, if the fiduciary agent for the
medical staff is owed the reimbursement described in paragraph (2)(B) for
excess reductions in payments during a year, the Secretary shall make
such reimbursement to the members of the hospital's medical staff.
``(e) Definitions. In this section, the following definitions apply:
``(1) Medical staff. An individual furnishing a physician's service is
considered to be on the medical staff of a hospital
``(A) if (in accordance with requirements for hospitals established by
the Joint Commission on Accreditation of Health Organizations)
``(i) the individual is subject to bylaws, rules, and regulations
established by the hospital to provide a framework for the
self-governance of medical staff activities;
``(ii) subject to such bylaws, rules, and regulations, the individual
has clinical privileges granted by the hospital's governing body; and
``(iii) under such clinical privileges, the individual may provide
physicians' services independently within the scope of the individual's
clinical privileges, or
``(B) if such physician provides at least one service to a Medicare
beneficiary in such hospital.
``(2) Rural area; urban area. The terms `rural area' and `urban area'
have the meaning given such terms under section 1886(d)(2)(D).
``(3) Teaching hospital. The term `teaching hospital' means a hospital
which has a teaching program approved as specified in section
1861(b)(6).''.
(2) Conforming amendments. (A) Section 1833(a)(1)(N) (42 U.S.C.
1395l(a)(1)(N)) is amended by inserting ``(subject to reduction under
section 1849)'' after ``1848(a)(1)''.
(B) Section 1848(a)(1)(B) (42 U.S.C. 1395w 4(a)(1)(B)) is amended by
striking ``this subsection,'' and inserting ``this subsection and
section 1849,''.
(b) Requiring Physicians to Identify Hospital at Which Service Furnished.
Section 1848(g)(4)(A)(i) (42 U.S.C. 1395w 4(g)(4)(A)(i)) is amended by
striking ``beneficiary,'' and inserting ``beneficiary (and, in the case of
a service furnished to an inpatient of a hospital, report the hospital
identification number on such claim form),''.
(c) Effective Date. The amendments made by this section shall apply to
services furnished on or after January 1, 1998.
SEC. 4115. MEDICARE INCENTIVES FOR PHYSICIANS TO PROVIDE PRIMARY CARE.
(a) Resource-Based Practice Expense Relative Value Units.
(1) Increase in practice expense relative value units for certain
services. Section 1848(c)(2) (42 U.S.C. 1395w 4(c)(2)), as amended by
sections 13513 and 13514 of OBRA 93, is amended by adding at the end the
following new subparagraph:
``(G) Increase in practice expense relative value units for certain
services. The Secretary shall increase the practice expense relative
value units applied in primary care services, as defined in section
1842(i)(4), by 10 percent, beginning with 1996.''.
(2) Assuring budget neutrality. Section 1842(c)(2)(F) (42 U.S.C.
1395u(c)(2)(F)), as added by section 13513 and amended by section 13514
of OBRA 93, is amended by adding at the end the following new clause:
``(iii) shall reduce the relative values for all services (other than
anesthesia services and primary care services, as defined in section
1842(i)(4)) established under this paragraph (and, in the case of
anesthesia services, the conversion factor established by the Secretary
for such services) by such percentage as the Secretary determines to be
necessary so that, beginning in 1996, the amendment made by section
4115(a)(1) of the Health Security Act would not result in expenditures
under this section that exceed the amount of such expenditures that would
have been made if such amendment had not been made.''.
(3) Study. The Secretary of Health and Human Services shall
(A) develop a methodology for implementing in 1997 a resource-based
system for determining practice expense relative values unit for each
physician's service, and
(B) transmit a report by June 30, 1996, on the methodology developed
under paragraph (1) to the Committees on Ways and Means and Energy and
Commerce of the House of Representatives and the Committee on Fiance of
the Senate. The reported shall include a presentation of the data
utilized in developing the methodology and an explanation of the
methodology.
(b) Office Visit Pre- and Post-Time.
(1) Increase in work relative value units for office visits. Section
1848(c)(2) (42 U.S.C. 1395w 4(c)(2)) is amended by adding at the end the
following new subparagraph:
``(H) Increase in work relative value units for certain services. The
Secretary shall increase the work relative value units applied to office
visits by 10 percent, beginning with 1996.''.
(2) Assuring budget neutrality. Section 1842(c)(2)(F)(iii) is amended
by striking ``section 4115(a)'' and substituting ``sections 4115(a)(1)
and (b)(1)''.
(c) Office Consultations. Section 1848(c)(2) (42 U.S.C. 1395w 4(c)(2)) is
amended by adding at the end the following new subparagraph:
``(1) Amendment in relative values for office consultations. The
Secretary shall reduce the work, practice expense and malpractice relative
value components of office consultations to be equal to the work, practice
expense and malpractice relative value components for comparable office
visits beginning with 1996. In making such adjustment, the Secretary shall
apply the savings from such reduction to increase each of the relative
value components for office visits in a manner that would not result in
expenditures under this section that exceed the amount of such expenditures
that would have been made if such amendment had not been made.''.
(d) Outlier Intensity Relative Value Adjustments.
(1) Adjustment of outlier intensity of relative values. Section
1848(c)(2) (42 U.S.C. 1395w 4(c)(2)) is amended by adding at the end the
following new subparagraph:
``(J) Adjustment of outlier intensity of relative values. Beginning
with 1996, the Secretary shall reduce the work relative value components
of procedures, or classes of procedures, where the intensity exceeds
thresholds established by the Secretary. In the previous sentence,
intensity shall mean the work relative value units for the procedure
divided by the time for the procedure. The Secretary shall apply the
savings from such reductions to increase the work relative value
components of primary care services, as defined in section 1842(i)(4),
such that the changes made by this subsection would not result in
expenditures under this section that exceed the amount of such
expenditures that would have been made if such amendment had not been
made.''.
(e) Changes In Underserved Area Bonus Payments.
(1) Section 1833(m) (42 U.S.C. 1395l(m)) is amended by
(A) striking ``10 percent'' and inserting ``a percent'',
(B) striking ``service'' the last time it appears and inserting
``services'', and
(C) adding the following new sentence: ``The percent referred to in
the previous sentence is 20 percent in the case of primary care
services, as defined in section 1842(i)(4), and 10 percent for services
other than primary care services furnished in health professional
shortage areas located in rural areas as defined in section 1886(d).''.
(2) The amendments made by subparagraph (A) are effective for services
furnished on or after January 1, 1996.
SEC. 4116. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR CERTAIN
OUTPATIENT
HOSPITAL SERVICES.
(a) Ambulatory Surgical Center Procedures. Section 1833(i)(3)(B)(i)(II)
(42 U.S.C. 1395l(i)(3)(B)(i)(II)) is amended
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting the following: ``,
less the amount a provider may charge as described in clause (ii) of
section 1866(a)(2)(A).''.
(b) Radiology Services and Diagnostic Procedures. Section
1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is amended
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting the following: ``,
less the amount a provider may charge as described in clause (ii) of
section 1866(a)(2)(A).''.
(c) Effective Date. The amendments made by this section shall apply to
services furnished during portions of cost reporting periods occurring on
or after July 1, 1994.
SEC. 4117. IMPOSITION OF COINSURANCE ON LABORATORY SERVICES.
(a) In General. Paragraphs (1)(D) and (2)(D) of section 1833(a) (42
U.S.C. 1395l(a)) are each amended
(1) by striking ``(or 100 percent'' and all that follows through ``the
first opinion))''; and
(2) by striking ``100 percent of such negotiated rate'' and inserting
``80 percent of such negotiated rate''.
(b) Effective Date. The amendments made by subsection (a) shall apply to
tests furnished on or after January 1, 1995.
SEC. 4118. APPLICATION OF COMPETITIVE BIDDING PROCESS FOR PART B ITEMS AND
SERVICES.
(a) General Rule. Part B of title XVIII of the Social Security Act is
amended by inserting after section 1846 the following:
``competition acquisition for items and services
``Sec. 1847. (a) Establishment of Bidding Areas.
``(1) In general. The Secretary shall establish competitive acquisition
areas for the purpose of awarding a contract or contracts for the
furnishing under this part of the items and services described in
subsection (c) on or after January 1, 1995. The Secretary may establish
different competitive acquisition areas under this subsection for different
classes of items and services under this part.
``(2) Criteria for establishment. The competitive acquisition areas
established under paragraph (1) shall
``(A) initially be, or be within, metropolitan statistical areas; and
``(B) be chosen based on the availability and accessibility of suppliers
and the probable savings to be realized by the use of competitive bidding
in the furnishing of items and services in the area.
``(b) Awarding of Contracts in Areas.
``(1) In general. The Secretary shall conduct a competition among
individuals and entities supplying items and services under this part for
each competitive acquisition area established under subsection (a) for each
class of items and services.
``(2) Conditions for awarding contract. The Secretary may not award a
contract to any individual or entity under the competition conducted
pursuant to paragraph (1) to furnish an item or service under this part
unless the Secretary finds that the individual or entity
``(A) meets quality standards specified by the Secretary for the
furnishing of such item or service; and
``(B) offers to furnish a total quantity of such item or service that is
sufficient to meet the expected need within the competitive acquisition
area.
``(3) Contents of contract. A contract entered into with an individual or
entity under the competition conducted pursuant to paragraph (1) shall
specify (for all of the items and services within a class)
``(A) the quantity of items and services the entity shall provide; and
``(B) such other terms and conditions as the Secretary may require.
``(c) Services Described. The items and services to which the provisions
of this section shall apply are as follows:
``(1) Magnetic resonance imaging tests and computerized axial tomography
scans, including a physician's interpretation of the results of such tests
and scans.
``(2) Oxygen and oxygen equipment.
``(3) Enteral and parenteral nutrients, supplies, and equipment.
``(4) Such other items and services for which the Secretary determines
that the use of competitive acquisition under this section will be
appropriate and cost-effective.''.
(b) Items and Services To Be Furnished Only Through Competitive
Acquisition. Section 1862(a) (42 U.S.C. 1395y(a)), as amended by section
4034(b)(4), is amended
(1) by striking ``or'' at the end of paragraph (14);
(2) by striking the period at the end of paragraph (15) and inserting
``; or''; and
(3) by inserting after paragraph (15) the following new paragraph:
``(16) where such expenses are for an item or service furnished in a
competitive acquisition area (as established by the Secretary under
section 1847(a)) by an individual or entity other than the supplier with
whom the Secretary has entered into a contract under section 1847(b) for
the furnishing of such item or service in that area, unless the Secretary
finds that such expenses were incurred in a case of urgent need.''.
(c) Reduction in Payment Amounts if Competitive Acquisition Fails to
Achieve Minimum Reduction in Payments. Notwithstanding any other provision
of title XVIII of the Social Security Act, if the establishment of
competitive acquisition areas under section 1847 of such Act (as added by
subsection (a)) and the limitation of coverage for items and services under
part B of such title to items and services furnished by providers with
competitive acquisition contracts under such section does not result in a
reduction of at least 10 percent in the payment amount under part B during
a year for any such item or service from the payment amount for the
previous year, the Secretary shall reduce the payment amount by such
percentage as the Secretary determines necessary to result in such a
reduction.
(d) Effective Date. The amendments made by this section shall apply to
items and services furnished under part B of title XVIII of the Social
Security Act on or after January 1, 1995.
SEC. 4119. APPLICATION OF COMPETITIVE ACQUISITION PROCEDURES FOR
LABORATORY
SERVICES.
(a) In General. Section 1847(c), as added by section 4117(a), is amended
(1) by redesignating paragraph (4) as paragraph (5); and
(2) by inserting after paragraph (3) the following new paragraph:
``(4) Clinical diagnostic laboratory tests.''.
(b) Reduction in Fee Schedule Amounts if Competitive Acquisition Fails to
Achieve Savings. Section 1833(h) (42 U.S.C. 1395l(h)) is amended by adding
at the end the following new paragraph:
``(7) Notwithstanding any other provision of this subsection, if the
Secretary applies the authority provided under section 1847 to establish
competitive acquisition areas for the furnishing of clinical diagnostic
laboratory tests in a year and the application of such authority does not
result in a reduction of at least 10 percent in the fee schedules and
negotiated rates established under this subsection for such tests under
this part during the year from the fee schedules and rates for the previous
year, the Secretary shall reduce each payment amount otherwise determined
under the fee schedules and negotiated rates established under this
subsection by such percentage as the Secretary determines necessary to
result in such a reduction.''.
Part 3. SAVINGS RELATING TO PARTS A AND B
SEC. 4131. MEDICARE SECONDARY PAYER CHANGES.
(a) Extension of Data Match.
(1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is amended by
striking clause (iii).
(2) Section 6103(l)(12) of the Internal Revenue Code of 1986 is amended
by striking subparagraph (F).
(b) Repeal of Sunset on Application to Disabled Employees of Employers
with More than 20 Employees. Section 1862(b)(1)(B)(iii) (42 U.S.C.
1395y(b)(1)(B)(iii)), as amended by section 13561(b) of OBRA 1993, is
amended
(1) in the heading, by striking ``Sunset'' and inserting ``Effective
date''; and
(2) by striking ``, and October 1, 1998''.
(c) Extension of Period for End Stage Renal Disease Beneficiaries.
Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)), as amended by section
13561(c) of OBRA 1993, is amended in the second sentence by striking ``and
on or before October 1, 1998,''.
SEC. 4132. PAYMENT LIMITS FOR HMOS AND CMPS WITH RISK-SHARING
CONTRACTS.
(a) In General. Section 1876(a)(1)(C) (42 U.S.C. 1395mm(a)(1)(C)) is
amended
(1) by inserting ``, subject to adjustment to take into account the
provisions of the succeeding clauses'' before the period,
(2) by striking ``(C)'' and inserting ``(C)(i)'', and
(3) by adding at the end the following new clauses:
``(ii) The portion of the annual per capita rate of payment for each
such class attributable to payments made from the Federal Supplementary
Medical Insurance Trust Fund may not exceed 95 percent of the following
amount (unless the portion of the annual per capita rate of payment for
each such class attributable to payments made from the Federal Hospital
Insurance Trust Fund is less than 95 percent of the weighted national
average of all adjusted average per capita costs determined under
paragraph (4) for that class that are attributable to payments made from
the Federal Hospital Insurance Trust Fund):
``(I) For 1995, 150 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
80 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 150 percent of that weighted national
average.
``(II) For 1996, 150 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
60 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 150 percent of that weighted national
average.
``(III) For 1997, 150 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
40 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 150 percent of that weighted national
average.
``(IV) For 1998, 150 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
20 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 150 percent of that weighted national
average.
``(V) For 1999 and each succeeding year (subject to the establishment
by the Secretary of alternative limits under clause (vi)), 150 percent of
the weighted national average of all adjusted average per capita costs
determined under paragraph (4) for that class that are attributable to
payments made from such Trust Fund.
``(iii) The portion of the annual per capita rate of payment for each
such class attributable to payments made from the Federal Hospital
Insurance Trust Fund may not exceed 95 percent of the following amount
(unless the portion of the annual per capita rate of payment for each
such class attributable to payments made from the Federal Supplementary
Medical Insurance Trust Fund is less than 95 percent of the weighted
national average of all adjusted average per capita costs determined
under paragraph (4) for that class that are attributable to payments made
from the Federal Supplementary Medical Insurance Trust Fund):
``(I) For 1995, 170 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
80 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 170 percent of that weighted national
average.
``(II) For 1996, 170 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
60 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 170 percent of that weighted national
average.
``(III) For 1997, 170 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
40 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 170 percent of that weighted national
average.
``(IV) For 1998, 170 percent of the weighted national average of all
adjusted average per capita costs determined under paragraph (4) for that
class that are attributable to payments made from such Trust Fund, plus
20 percent of the amount by which (if any) the adjusted average per
capita cost for that class exceeds 170 percent of that weighted national
average.
``(V) For 1999 and each succeeding year (subject to the establishment
by the Secretary of alternative limits under clause (vi)), 170 percent of
the weighted national average of all adjusted average per capita costs
determined under paragraph (4) for that class that are attributable to
payments made from such Trust Fund.
``(iv) The portion of the annual per capita rate of payment for each
such class attributable to payments made from the Federal Supplementary
Medical Insurance Trust Fund may not be less than 80 percent of 95
percent of the weighted national average of all adjusted average per
capita costs determined under paragraph (4) for that class that are
attributable to payments made from such Trust Fund, unless the portion of
the annual per capita rate of payment for each such class attributable to
payments made from the Federal Hospital Insurance Trust Fund is greater
than 95 percent of the weighted national average of all adjusted average
per capita costs determined under paragraph (4) for that class that are
attributable to payments made from the Federal Hospital Insurance Trust
Fund.
``(v) The portion of the annual per capita rate of payment for each
such class attributable to payments made from the Federal Hospital
Insurance Trust Fund may not be less than 80 percent of 95 percent of the
weighted national average of all adjusted average per capita costs
determined under paragraph (4) for that class that are attributable to
payments made from such Trust Fund, unless the portion of the annual per
capita rate of payment for each such class attributable to payments made
from the Federal Supplementary Medical Insurance Trust Fund is greater
than 95 percent of the weighted national average of all adjusted average
per capita costs determined under paragraph (4) for that class that are
attributable to payments made from the Federal Supplementary Medical
Insurance Trust Fund.
``(vi) For 2000 and succeeding years, the Secretary may revise any of
the percentages otherwise applicable during a year under the preceding
clauses (other than clause (i)), but only if the aggregate payments made
under this title to eligible organizations under risk-sharing contracts
during the year is not greater than the aggregate payments that would
have been made under this title to such organizations during the year if
the Secretary had not revised the percentages.''.
(b) Conforming Amendment. Section 1876(a)(5)(A) (42 U.S.C.
1395mm(a)(5)(A)) is amended by inserting ``, adjusted to take into account
the limitations imposed by clauses (ii) through (vi) of paragraph (1)(C)''
before the period.
SEC. 4133. REDUCTION IN ROUTINE COST LIMITS FOR HOME HEALTH SERVICES.
(a) Reduction in Update to Maintain Freeze in 1996. Section
1861(v)(1)(L)(i) (42 U.S.C. 1395x(v)(1)(L)(i)) is amended
(1) in subclause (II), by striking ``or'' at the end;
(2) in subclause (III), by striking ``112 percent,'' and inserting
``and before July 1, 1996, 112 percent, or''; and
(3) by inserting after subclause (III) the following new subclause:
``(IV) July 1, 1996, 100 percent (adjusted by such amount as the
Secretary determines to be necessary to preserve the savings resulting
from the enactment of section 13564(a)(1) of the Omnibus Budget
Reconciliation Act of 1993),''.
(b) Basing Limits in Subsequent Years on Median of Costs.
(1) In general. Section 1861(v)(1)(L)(i) (U.S.C. 1395x(v)(1)(L)(i)), as
amended by subsection (a), is amended in the matter following subclause
(IV) by striking ``the mean'' and inserting ``the median''.
(2) Effective date. The amendment made by paragraph (1) shall apply to
cost reporting periods beginning on or after July 1, 1997.
SEC. 4134. IMPOSITION OF COPAYMENT FOR CERTAIN HOME HEALTH VISITS.
(a) In General.
(1) Part a. Section 1813(a) (42 U.S.C. 1395e(a)) is amended by adding
at the end the following new paragraph:
``(5) The amount payable for home health services furnished to an
individual under this part shall be reduced by a copayment amount equal
to 10 percent of the average of all per visit costs for home health
services furnished under this title determined under section
1861(v)(1)(L) (as determined by the Secretary on a prospective basis for
services furnished during a calendar year), unless such services were
furnished to the individual during the 30-day period that begins on the
date the individual is discharged as an inpatient from a hospital.''.
(2) Part b. Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)) is amended
(A) in subparagraph (A), by striking ``to home health services,'' and
by striking the comma after ``opinion)'';
(B) in subparagraph (D), by striking ``and'' at the end;
(C) in subparagraph (E), by striking the semicolon at the end and
inserting ``; and''; and
(D) by adding at the end the following new subparagraph:
``(F) with respect to home health services
``(i) the lesser of
``(I) the reasonable cost of such services, as determined under
section 1861(v), or
``(II) the customary charges with respect to such services,
``less the amount a provider may charge as described in clause (ii)
of section 1866(a)(2)(A),
``(ii) if such services are furnished by a public provider of
services, or by another provider which demonstrates to the satisfaction
of the Secretary that a significant portion of its patients are
low-income (and requests that payment be made under this clause), free
of charge or at nominal charges to the public, the amount determined in
accordance with section 1814(b)(2), or
``(iii) if (and for so long as) the conditions described in section
1814(b)(3) are met, the amounts determined under the reimbursement
system described in such section,
``less a copayment amount equal to 10 percent of the average of all
per visit costs for home health services furnished under this title
determined under section 1861(v)(1)(L) (as determined by the Secretary
on a prospective basis for services furnished during a calendar year),
unless such services were furnished to the individual during the 30-day
period that begins on the date the individual is discharged as an
inpatient from a hospital;''.
(3) Provider charges. Section 1866(a)(2)(A)(i) (42 U.S.C.
1395cc(a)(2)(A)(i)) is amended
(A) by striking ``deduction or coinsurance'' and inserting
``deduction, coinsurance, or copayment''; and
(B) by striking ``or (a)(4)'' and inserting ``(a)(4), or (a)(5)''.
(b) Effective Date. The amendments made by subsection (a) shall apply to
home health services furnished on or after July 1, 1995.
SEC. 4135. EXPANSION OF CENTERS OF EXCELLENCE.
(a) In General. The Secretary of Health and Human Services shall use a
competitive process to contract with centers of excellence for cataract
surgery and such other services as the Secretary determines to be
appropriate. Payment under title XVIII of the Social Security Act will be
made for services subject to such contracts on the basis of negotiated or
all-inclusive rates as follows:
(1) The center shall cover services provided in an urban area (as
defined in section 1886(d)(2)(D) of the Social Security Act) for years
beginning with fiscal year 1995.
(2) The amount of payment made by the Secretary to the center under
title XVIII of the Social Security Act for services covered under the
project shall be less than the aggregate amount of the payments that the
Secretary would have made to the center for such services had the project
not been in effect.
(3) The Secretary shall make payments to the center on such a basis for
the following services furnished to individuals entitled to benefits
under such title:
(A) Facility, professional, and related services relating to cataract
surgery.
(B) Coronary artery bypass surgery and related services.
(C) Such other services as the Secretary and the center may agree to
cover under the agreement.
(b) Rebate of Portion of Savings. In the case of any services provided
under a demonstration project conducted under subsection (a), the Secretary
shall make a payment to each individual to whom such services are furnished
(at such time and in such manner as the Secretary may provide) in an amount
equal to 10 percent of the amount by which
(1) the amount of payment that would have been made by the Secretary
under title XVIII of the Social Security Act to the center for such
services if the services had not been provided under the project, exceeds
(2) the amount of payment made by the Secretary under such title to the
center for such services.
Part 4. PART B PREMIUM
SEC. 4141. GENERAL PART B PREMIUM.
Section 1839(e) (42 U.S.C. 1395r(e)), as amended by section 13571 of
OBRA 1993, is amended
(1) in paragraph (1)(A), by striking ``and prior to January 1999''; and
(2) in paragraph (2), by striking ``prior to January 1998''.
S6301Title IV, Subtitle C
Subtitle C. Medicaid
Part 1. COMPREHENSIVE BENEFIT PACKAGE
SEC. 4201. LIMITING COVERAGE UNDER MEDICAID OF ITEMS AND SERVICES
COVERED UNDER
COMPREHENSIVE BENEFIT PACKAGE.
(a) Removal of Comprehensive Benefits Package from State Plan. Title XIX
is amended by redesignating section 1931 as section 1932 and by inserting
after section 1930 the following new section:
``treatment of comprehensive benefit package under health security act
``Sec. 1931. (a) Items and Services Covered Under Comprehensive Benefit
Package. If a State plan for medical assistance under this title provides
for payment in accordance with section 1902(a)(63) for a year,
notwithstanding any other provision of this title, the State plan under
this title is not required to provide medical assistance consisting of
payment for items and services in the comprehensive benefit package under
subtitle B of title I of the Health Security Act for alliance eligible
individuals (as defined in section 1902(5) of such Act).
``(b) Construction. (1) Payment under section 1902(a)(63) shall not
constitute medical assistance for purposes of section 1903(a).
``(2) This section shall not be construed as affecting the provision of
medical assistance under this title for items and services included in the
comprehensive benefit package for
``(A) medicare-eligible individuals, or
``(B) certain emergency services to certain aliens under section
1903(v)(2).''.
(b) Substitute Requirement of State Payment. Section 1902(a) (42 U.S.C.
1396a(a)) is amended
(1) by striking ``and'' at the end of paragraph (61),
(2) by striking the period at the end of paragraph (62) and inserting
``; and'', and
(3) by inserting after paragraph (62) the following new paragraph:
``(63) provide for payment to regional alliances of the amounts
required under part 1 of subtitle C of title VI of such Act.''.
(c) No Federal Financial Participation. Section 1903(i) (42 U.S.C.
1396b(i)) is amended
(1) by striking ``or'' at the end of paragraph (14),
(2) by striking the period at the end of paragraph (15) and inserting
``; or'', and
(3) by inserting after paragraph (15) the following new paragraph:
``(16) with respect to items and services covered under the
comprehensive benefit package under subtitle B of title I of the Health
Security Act for alliance eligible individuals (as defined in section
1902(5) of such Act).''.
(d) Effective Date. The amendments made by this section shall apply with
respect to items or services furnished in a State on or after January 1 of
the first year (as defined in section 1902(17)) for the State.
Part 2. EXPANDING ELIGIBILITY FOR NURSING FACILITY SERVICES; LONG-TERM
CARE
INTEGRATION OPTION
SEC. 4211. SPENDDOWN ELIGIBILITY FOR NURSING FACILITY RESIDENTS.
(a) In General. Section 1902(a)(10)(A)(i) (42 U.S.C. 1396a(a)(10)(A)(i))
is amended
(1) by striking ``or'' at the end of subclause (VI);
(2) by striking the semicolon at the end of subclause (VII) and
inserting ``, or''; and
(3) by inserting after subclause (VII) the following new subclause:
``(VIII) who are individuals who would meet the income and resource
requirements of the appropriate State plan described in subclause (I) or
the supplemental security income program (as the case may be), if
incurred expenses for medical care as recognized under State law were
deducted from income;''.
(b) Limitation to Benefits for Nursing Facility Services. Section
1902(a)(10)(A) of such Act (42 U.S.C. 1396a(a)(10)(A)), as amended by
section 13603(c)(1) of OBRA 1993, is amended in the matter following
subparagraph (F)
(1) by striking ``and (XIII)'' and inserting ``(XIII)''; and
(2) by inserting before the semicolon at the end the following: ``, and
(XIV) the medical assistance made available to an individual described in
subparagraph (A)(i)(VIII) shall be limited to medical assistance for
nursing facility services, except to the extent that assistance is
provided in accordance with the option described in section 1932 in the
case of a State exercising such option''.
(c) Effective Date. The amendments made by subsections (a) and (b) shall
apply with respect to a State as of January 1, 1996.
SEC. 4212. INCREASED INCOME AND RESOURCE DISREGARDS FOR NURSING
FACILITY
RESIDENTS.
(a) Increased Disregards for Personal Needs Allowance; Resources. Section
1902(a)(10) (42 U.S.C. 1396a(a)(1)) is amended
(1) by striking ``and'' at the end of paragraph (F); and
(2) by adding at the end the following new paragraph:
``(G) that, in determining the eligibility of any individual who is an
inpatient in a nursing facility or intermediate care facility for the
mentally retarded
``(i) the first $70 of income for each month shall be disregarded; and
``(ii) in the case of an unmarried individual, the first $12,000 of
resources may, at the option of the State, be disregarded;''.
(b) Conforming SSI Personal Needs Allowance. For provision increasing SSI
personal needs allowance, see section 4301.
(c) Federal Reimbursement for Reductions in State Funds Attributable to
Increased Disregard. Section 1903(a) (42 U.S.C. 1396b(a)) is amended
(1) by striking ``plus'' at the end of paragraph (6);
(2) by striking the period at the end of paragraph (7) and inserting
``; plus''; and
(3) by adding at the end the following new paragraph:
``(8) an amount equal to 100 percent of the difference between the
amount of expenditures made by the State for nursing facility services
and services in an intermediate care facility for the mentally retarded
during the quarter and the amount of expenditures that would have been
made by the State for such services during the quarter if the amendment
made by subsection (a) had not taken effect (as estimated by the
Secretary).''.
(d) Effective Date. The amendments made by subsection (a) shall apply
with respect to months beginning with January 1996.
SEC. 4213. NEW STATE LONG-TERM CARE INTEGRATION OPTION.
Title XIX, as amended by section 4201(a), is amended by redesignating
section 1932 as section 1933 and by inserting after section 1931 the
following new section:
``state long-term care option
``Sec. 1932. (a) In General. A State under this title may make an
election under and subject to the succeeding provisions of this section.
Under such an election instead of being entitled to receive payment under
section 1903(a) for medical assistance for nursing facility services and
intermediate care facilities for the mentally retarded, for one or more
defined populations, the State is entitled to receive, subject to
subsection (e), payment under section 1903(a) for long-term care services
described in subsection (b)(2) for such populations under this section.
``(b) Plan Amendment Required. A State making an election under
subsection (a) shall submit a State plan amendment describing
``(1) the category (or categories) of defined populations (otherwise
eligible for medical assistance with respect to nursing facility services
or home and community-based services or described in subsection (d)) with
respect to whom this section shall apply;
``(2) the long-term care services (within the range of services described
in subsection (c)(1)) for which medical assistance is available under the
State plan for eligible individuals within each such category of
individuals;
``(3) how the provision of such services, and expenditures under this
section, will be coordinated with the provision of services and
expenditures under part 1 of subtitle B of title II of the Health Security
Act (relating to State programs for home and community-based services for
individuals with disabilities); and
``(4) such other information as the Secretary determines as necessary to
carry out this section.
``(c) Care and Services.
``(1) Continuum of care required. The services described in this
paragraph shall represent a continuum of long-term care, and shall include
(as appropriate based upon a plan of care described in paragraph (2))
``(A) nursing facility services and other services described in section
1905(a),
``(B) home and community-based services described in section 1915(c) or
1915(d),
``(C) home and community care for functionally disabled elderly
individuals described in section 1929, and
``(D) community supported living arrangements services (as defined in
section 1930(a)).
``(2) Plan of care and service evaluation. A plan of care described in
this paragraph shall
``(A) be developed in consultation with the individual or, in the case of
an individual incapable of participating in the development of the plan of
care, the individual's family members or guardian;
``(C) be based on a comprehensive assessment of the individual's need for
the continuum of services described in paragraph (1), and
``(D) be periodically updated based upon the individual's needs (but in
no event less frequently than every 6 months).
``(3) Intake and assessment process. A State shall use an intake and
assessment process meeting standards established by the Secretary to
develop the plan of care required under paragraph (2).
``(4) Dissemination of information. The State shall provide information
about the availability of services under this section, and how to obtain
them, in a manner that ensures that such information is widely disseminated
to all eligible providers, agencies, and organizations providing services
to the population of individuals receiving assistance under this section.
``(d) Additional Eligible Populations.
``(1) In general. A State may provide medical assistance under this
section, in addition to individuals otherwise eligible for medical
assistance, to individuals who would be so eligible but for
``(A) failure to meet the disability criteria otherwise applicable, or
``(B) subject to paragraph (2), failure to meet income or resource
requirements otherwise applicable.
``(2) Limitation on income. A State may not provide under this subsection
medical assistance to an individual whose income (as determined under
section 1612 for purposes of the supplemental security income program)
exceeds the greater of
``(A) 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), or
``(B) the maximum level of State supplementary payment under section 1616
(or under section 212 of Public Law 93 66).
``(e) Rules Relating to Federal Financial Participation.
``(1) In general. With respect to medical assistance provided under this
section for a category of individuals (specified under subsection (b)(1))
``(A) the amount of medical assistance that may otherwise be taken into
account in making payment under section 1903(a)(1) shall not exceed the
amount specified in paragraph (2) for the category;
``(B) the amount of State expenditures (other than for medical
assistance) that may otherwise be taken into account in making payment
under section 1903(a) (other than paragraph (1)) shall not exceed the
amount specified in paragraph (3) for the category; and
``(C) a State may include (as expenditures for medical assistance under
the State plan) expenditures for room and board and other
community-assisted residential services furnished in settings that meet
standards established by the Secretary and that otherwise may not qualify
as settings for which Federal financial participation is available under
this title.
``(2) Limit on medical assistance. The amount specified in this paragraph
(for a calendar quarter or other period) is as follows:
``(A) Base medical assistance. The total medical assistance provided
under the State plan for the services described in subsection (c)(1) for
the category of individuals in the base period (specified by the
Secretary).
``(B) Update. The amount determined under subparagraph (A) shall be
updated (to the calendar quarter or other period involved)
``(i) for periods through fiscal year 2002, by the rate of growth
(estimated by the Secretary) in the medical assistance described in
subparagraph (A) under the State plan if the election in subsection (a) had
not been made, and
``(ii) beginning in fiscal year 2003, by a factor (for each such fiscal
year) equivalent to the product of the factors described in subparagraph
(A) and (B) of section 2109(a)(2) of the Health Security Act for the fiscal
year.
``(3) Limit on administration. The amount specified in this paragraph is
such amount as the State establishes, to the satisfaction of the Secretary,
does not exceed the amount of expenditures that would have been made for
administrative expenditures with respect to services covered under this
section if the election in subsection (a) had not been made.
``(4) Effect on entitlement. In the case of a State that has made an
election under subsection (a), notwithstanding any other provision of this
title, no individual is entitled to medical assistance under the State plan
for nursing facility services and intermediate care facilities for the
mentally retarded except as the State provides under this section.
``(f) Other Requirements.
``(1) Safeguards. The State must establish necessary safeguards
(including adequate standards for provider participation) have been taken
to protect the health and welfare of individuals provided services under
this section and to assure financial accountability of funds. Nothing in
this section shall be construed as waiving requirements otherwise
applicable under this title with respect to providers of covered services.
``(2) Financial coordination. The State must provide for the financial
coordination of expenditures for medical assistance under this section with
expenditures under any State program for home and community-based services
for individuals with disabilities under part 1 of subtitle B of title II of
the Health Security Act.''.
SEC. 4214. INFORMING NURSING HOME RESIDENTS ABOUT AVAILABILITY OF
ASSISTANCE
FOR HOME AND COMMUNITY-BASED SERVICES.
(a) In General. Section 1902(a) (42 U.S.C. 1396a(a)) is amended
(1) by striking ``and'' at the end of paragraph (61),
(2) by striking the period at the end of paragraph (62) and inserting
``; and'', and
(3) by inserting after paragraph (62) the following new paragraph:
``(63) provide, in the case of an individual who is a resident (or who
is applying to become a resident) of a nursing facility or intermediate
care facility for the mentally retarded, at the time of application for
medical assistance and periodically thereafter, the individual (or a
designated representative) with information on the range of home and
community-based services for which assistance is available in the State
either under the plan under this title, under the program under part 1 of
subtitle B of title II of the Health Security Act, or any other public
program.''.
(b) Effective Date. The amendments made by this section shall apply to
quarters beginning on or after January 1, 1996.
Part 3. OTHER BENEFITS
SEC. 4221. TREATMENT OF ITEMS AND SERVICES NOT COVERED UNDER THE
COMPREHENSIVE
BENEFIT PACKAGE.
(a) Continuation of Eligibility for Assistance for AFDC and SSI
Recipients. With respect to an individual who is described in section
1933(b) of the Social Security Act (as added by subsection (b)(1)), nothing
in this Act shall be construed as
(1) changing the eligibility of the individual for medical assistance
under title XIX of the Social Security Act for items and services not
covered under the comprehensive benefit package, or
(2) subject to the amendments made by this subtitle, changing the
amount, duration, or scope of medical assistance required (or permitted)
to be provided to the individual under such title.
(b) Limitation on Scope of Assistance for Other Medicaid Beneficiaries.
(1) In general. Title XIX, as amended by sections 4201 and 4213, is
amended by redesignating section 1933 as section 1934 and by inserting
after section 1932 the following new section:
``limitation on scope of assistance for most non-cash beneficiaries
``Sec 1933. (a) Limitation. Notwithstanding any other provision of this
title, the medical assistance made available under section 1902(a) to an
individual not described in subsection (b) shall be limited to medical
assistance for
``(1) long-term care services (as defined in subsection (c)); and
``(2) medicare cost-sharing (as defined in section 1905(p)(3)), in
accordance with the requirements of section 1902(a)(10)(E).
``(b) Individuals Exempt from Limitation. The individuals described in
this subsection are the following:
``(1) AFDC recipients (as defined in section 1902(3) of the Health
Security Act) 18 years of age or older.
``(2) SSI recipients (as defined in section 1902(33) of the Health
Security Act) 18 years of age or older.
``(3) Individuals entitled to benefits under title XVIII.
``(c) Long-Term Care Services Defined. In subsection (a), the term
`long-term care services' means the following items and services, but
only to the extent they are not included as an item or service under the
comprehensive benefit package under the Health Security Act:
``(1) Nursing facility services and intermediate care facility services
for the mentally retarded (including items and services that may be
included in such services pursuant to regulations in effect as of October
26, 1993).
``(2) Personal care services.
``(3) Home or community-based services provided under a waiver granted
under subsection (c), (d), or (e) of section 1915.
``(4) Home and community care provided to functionally disabled elderly
individuals under section 1929.
``(5) Community supported living arrangements services provided under
section 1930.
``(6) Case-management services (as described in section 1915(g)(2)).
``(7) Home health care services, clinic services, and rehabilitation
services that are furnished to an individual who has a condition or
disability that qualifies the individual to receive any of the services
described in paragraphs (1) through (6).
``(8) Hospice care.''.
(2) Conforming amendment. Section 1902(a)(10) of such Act (42 U.S.C.
1396a(a)(10)), as amended by section 13603(c)(1) of OBRA 1993 and section
4211(b), is amended in the matter following subparagraph (G) (as inserted
by section 4212(a))
(A) by striking ``and (XIV)'' and inserting ``(XIV)''; and
(B) by inserting before the semicolon at the end the following: ``,
and (XV) the medical assistance made available to an individual who is
not described in section 1933(b) shall be limited in accordance with
section 1933''.
(c) Conforming Amendments Relating to Secondary Payer. (1) Section
1902(a)(25)(A) (42 U.S.C. 1396a(a)(25)(A)), as amended by section 13622(a)
of OBRA 1993, is amended by inserting ``health plans (as defined in section
1400 of the Health Security Act),'' after ``of 1974),''.
(2) Section 1903(o) (42 U.S.C. 1396b(o)), as so amended, is amended by
inserting ``and a health plan (as defined in section 1400 of the Health
Security Act)'' after ``of 1974)''.
(d) Effective Date. The amendments made by this section shall apply to
items and services furnished in a State on or after January 1 of the first
year for which the State is a participating State under the Health Security
Act.
SEC. 4222. ESTABLISHMENT OF PROGRAM FOR POVERTY-LEVEL CHILDREN WITH
SPECIAL
NEEDS.
(a) Establishment of Program. Title XIX, as amended by sections 4201 and
4213 and by subsection (b), is amended by redesignating section 1934 as
section 1935 and by inserting after section 1933 the following new section:
``services for poverty-level children with special needs
``Sec 1934. (a) Establishment of Program. There is hereby established a
program under which the Secretary shall make payments on behalf of each
qualified child (as defined in subsection (b)) during a year for all
medically necessary items and services described in section 1905(a)
(including items and services described in section 1905(r) but excluding
long-term care services described in section 1933(c)) that are not included
in the comprehensive benefit package under subtitle B of title I of the
Health Security Act.
``(b) Qualified Child Defined.
``(1) In general. In this section, a `qualified child' is an eligible
individual (as defined in section 1001(c)) who
``(A) for years prior to 1998, is a resident of a participating State
under the Health Security Act;
``(B) is under the age of 18; and
``(C) meets the requirements relating to financial eligibility described
in paragraph (2).
``for kids over 6, is 100%: missing date; at 100% (vo. 133%); also
excluded children eligible by virtue of medcailly needy;
``(2) Requirements relating to financial eligibility. An individual meets
the requirements of this paragraph if
``(A) the individual is an AFDC recipient or an SSI recipient (as such
terms are defined in section 1902 of the Health Security Act);
``(B) the individual is eligible to receive medical assistance under the
State plan under section 1902(a)(10)(C); or
``(C) the individual is
``(i) under one year of age and has adjusted family income at or below
133 percent of the applicable poverty level (as defined in section
1902(25)(A) of the Health Security Act) (or, in the case of a State that
established an income level greater than 133 percent for individuals under
1 year of age for purposes of section 1902(l)(2)(A) as of October 1, 1993,
an income level which is a percentage of such level not greater than 185
percent),
``(ii) the individual has attained 1 year of age but is under 6 years of
age and has adjusted family income at or below 133 percent of the
applicable poverty level (as defined in section 1902(25)(A) of the Health
Security Act), or
``(iii) the individual was born after September 30, 1983, has attained 6
years of age, and has adjusted family income at or below 100 percent of the
applicable poverty level (as defined in section 1902(25)(A) of the Health
Security Act).
``(3) Enrollment procedures.
``(A) In general. Not later than July 1, 1995, the Secretary shall
establish procedures for the enrollment of qualified children in the
program under this section under which
``(i) essential community providers certified by the Secretary under
subpart B of part 2 of subtitle F of title I of the Health Security Act
serve as enrollment sites for the program; and
``(ii) any forms used for enrollment purposes are designed to make the
enrollment as simple as practicable.
``(B) Individuals under alliance plans automatically enrolled. The
Secretary shall establish a process under which an individual who is a
qualified child under paragraph (1) and is enrolled in an alliance health
plan (as defined in section 1300 of the Health Security Act) shall
automatically be deemed to have met any enrollment requirements established
under paragraph (1).
``(c) Additional Responsibilities of Secretary. Not later than July 1,
1995, the Secretary shall promulgate such regulations as are necessary to
establish and operate the program under this section, including regulations
with respect to the following:
``(1) The benefits to be provided and the circumstances under which such
benefits shall be considered medically necessary.
``(2) Procedures for the periodic redetermination of an individual's
eligibility for benefits.
``(3) Qualification criteria for providers participating in the program.
``(4) Payment amounts for services provided under the program, the
methodology used to determine such payment amounts, and the procedures for
making payments to providers.
``(5) Standards to ensure the quality of services and the coordination of
services under the program with services under the comprehensive benefit
package, as well as services under parts B and H of the Individuals With
Disabilities Education Act, title V, and any other program providing health
care, remedial, educational, and social services to qualified children as
the Secretary may identify.
``(6) Hearing and appeals for individuals adversely affected by any
determination by the Secretary under the program.
``(7) Such other requirements as the Secretary determines to be necessary
for the proper and efficient administration of the program.
``(d) Federal Payment for Program.
``(1) In general. Subject to paragraph (2), the Secretary shall pay 100
percent of the costs of providing benefits under this program in a year,
including all administrative expenses.
``(2) Annual limit on expenditures. The total amount of Federal
expenditures that may be made under this section in a year may not exceed
``(A) for a year prior to 1998, an amount equal to the percentage of
total expenditures for medical assistance under State plans under this
title during fiscal year 1993 for services described in subsection (a)
furnished to qualified children that is attributable to States in which the
program is in operation during the year (adjusted to take into account the
operation of the program under this section on a calendar year basis)
``(i) adjusted to take into account any increases or decreases in the
number of qualified children under the most recent decennial census, as
adjusted by the most recent current population survey for the year in
question, and
``(ii) adjusted by the applicable percentage applied to the State
non-cash baseline amount for the year under section 9003(a) of the Health
Security Act; and
``(B) for 1998, the total expenditures for medical assistance under State
plans under this title during 1993 for services described in subsection (a)
furnished to qualified children (adjusted to take into account the
operation of the program under this section on a calendar year basis)
``(i) adjusted to take into account any increases or decreases in the
number of qualified children under the most recent decennial census, as
adjusted by the most recent current population survey for the year in
question, and
``(ii) adjusted by the update applied to the State non-cash baseline
amount for the year under section 9003(b) of the Health Security Act; and
``(C) for each succeeding year, the limit established under this
paragraph for the previous year (adjusted to take into account the
operation of the program under this section on a calendar year basis),
adjusted by the update applied to the State non-cash baseline amount for
the year under section 9003(b) of the Health Security Act.''.
(b) Repeal of Alternative Eligibility Standards for Children in
Participating States. Section 1902(r)(2) (42 U.S.C. 1396a(r)(2)) is amended
by adding at the end the following new subparagraph:
``(C) Subparagraph (A) shall not apply with respect to the determination
of income and resources for children under age 18 under the State plan of a
State (other than under the State plan of a State that utilized an
alternative methodology pursuant to such subparagraph as of October 1,
1993)
``(i) in the case of a State that is a participating State under the
Health Security Act for a year prior to 1998, for quarters beginning on or
after January 1 of the first year for which the State is such a
participating State; and
``(ii) in the case of any State not described in clause (i), for quarters
beginning on or after January 1, 1998.''.
Part 4. DISCONTINUATION OF CERTAIN PAYMENT POLICIES
SEC. 4231. DISCONTINUATION OF MEDICAID DSH PAYMENTS.
(a) Elimination of Specific Obligation. Section 1923(a) (42 U.S.C.
1396r 4(a)) is amended by adding at the end the following new paragraph:
``(5) Notwithstanding any other provision of this title, the requirement
of this subsection shall not apply
``(A) with respect to a State for any portion of a fiscal year during
which the State is a participating State within the meaning of section 1200
of the Health Security Act; or
``(B) with respect to any State for any months beginning on or after
January 1, 1997.''.
(b) Elimination of State Plan Requirement. Section 1902(a)(13)(A) (42
U.S.C. 1396a(a)(13)(A)) is amended by inserting after ``special needs'' the
following: ``(but only with respect to a quarters during which the State is
not a participating State within the meaning of section 1200 of the Health
Security Act or with respect to any quarters ending on or before December
31, 1996)''.
(c) Elimination of State DSH Allotments and Federal Financial
Participation. Section 1923(f) (42 U.S.C. 1396r 4(f)) is amended
(1) in paragraph (2), by inserting ``and paragraph (5)'' after
``subparagraph (B)'', and
(2) by adding at the end the following new paragraph:
``(5) Elimination of allotments for participating States and sunset for
all States.
``(A) In general. Notwithstanding any other provision of this section ,
the State DSH allotment shall be zero with respect to
``(i) any participating State within the meaning of section 1200 of the
Health Security Act; and
``(ii) any State for any portion of a fiscal year that occurs on or
after January 1, 1997.
``(B) No redistribution of reductions. In the computation of State
supplemental amounts under paragraph (3), the State DSH allotments shall
be determined under subparagraph (A)(ii) of such paragraph as if this
paragraph did not apply.''.
SEC. 4232. DISCONTINUATION OF REIMBURSEMENT STANDARDS FOR INPATIENT
HOSPITAL
SERVICES.
Section 1902(a)(13)(A) (42 U.S.C. 1396a(a)(13)(A)), as amended by
section 4231(b), is amended by inserting ``(in the case of services other
than hospital services in a State that is a participating State under the
Health Security Act)'' before ``are reasonable and adequate''.
Part 5. COORDINATION WITH ADMINISTRATIVE SIMPLIFICATION AND QUALITY
MANAGEMENT INITIATIVES
SEC. 4241. REQUIREMENTS FOR CHANGES IN BILLING PROCEDURES.
(a) Limitation on Frequency of System Changes; Advance Notification to
Providers. Section 1902(a) (42 U.S.C. 1396a(a)), as amended by section
4213, is amended
(1) by striking ``and'' at the end of paragraph (62),
(2) by striking the period at the end of paragraph (63) and inserting
``; and'', and
(3) by inserting after paragraph (63) the following new paragraph:
``(64) provide that the State
``(A) will not implement any change in the system used for the billing
and processing of claims for payment for items and services furnished
under the State plan within 6 months of implementing any previous change
in such system; and
``(B) shall notify individuals and entities providing medical
assistance under the State plan of any major change in the procedures for
billing for services furnished under the plan at least 120 days before
such change is to take effect.''.
(b) Effective Date. The amendments made by subsection (a) shall apply to
a State as of January 1 of the first year for which the State is a
participating State.
Part 6. MEDICAID COMMISSION
SEC. 4251. MEDICAID COMMISSION.
(a) Establishment. There is established a commission to be known as the
``Medicaid Commission'' (in this section referred to as the
``Commission'').
(b) Membership. (1) The Commission shall be composed of 15 members
appointed by the Secretary for the life of the Commission.
(2) Members shall include representatives of the Federal Government and
State Governments.
(3) The Administrator of the Health Care Financing Administration shall
be an ex officio member of the Commission.
(4) Individuals, while serving as members of the Commission, shall not
be entitled to compensation, other than travel expenses, including per
diem in lieu of subsistence, in accordance with sections 5702 and 5703 of
title 5, United States Code.
(c) Study. The Commission shall study options with respect to each of the
following in relation to the medicaid program under title XIX of the Social
Security Act:
(1) Use of block grant. Whether, and (if so) how, to convert payments
for services not covered in the comprehensive benefit package (for all
recipients, including AFDC and SSI recipients defined in section 1902 of
the Health Security Act) into new financing mechanisms that give the
States greater flexibility in targeting and delivering needed services.
(2) Integration of acute and long-term care services for health plans.
Whether, and (if so) how, to integrate long-term care services and the
home and community-based services program under part 1 of subtitle B of
title II with the services covered under the comprehensive benefit
package offered by health plans.
(3) Consolidating institutional and home and community-based long-term
care. Whether, and (if so) how, to offer States an option to combine
together expenditures under the home and community-based services program
(under part 1 of subtitle B of title II) with continuing home and
community-based services and institutional care under the medicaid
program into a global budget for long-term care services, and how such a
combined program could be implemented.
(d) Report and Recommendations. The Commission shall submit to the
Secretary and the National Health Board, not later than 1 year after the
date of the enactment of this Act, a report on its study under subsection
(c). The Commission shall include in such report such recommendations for
changes in the medicaid program, and the programs under this Act, as it
deems appropriate.
(e) Operations. (1) The Commission shall appoint a chair from among its
members.
(2) Upon request of the Chair of the Commission, the head of any
Federal department or agency may detail, on a reimbursable basis, any of
the personnel of that department or agency to the Commission to assist it
in carrying out its duties under this section.
(3) The Commission may secure directly from any department or agency of
the United States information necessary to enable it to carry out this
section. Upon request of the Chair of the Commission, the head of that
department or agency shall furnish that information to the Commission.
(4) Upon the request of the Commission, the Administrator of General
Services shall provide to the Commission, on a reimbursable basis, the
administrative support services necessary for the Commission to carry out
its responsibilities under this section.
(e) Termination. The Commission shall terminate 90 days after the date of
submission of its report under subsection (d).
(f) Authorization of Appropriations. There are authorized to be
appropriate such sums as may be necessary to carry out this section.
Subtitle D. Increase in SSI Personal Needs Allowance
SEC. 4301. INCREASE IN SSI PERSONAL NEEDS ALLOWANCE.
(a) In General. Section 1611(e)(1)(B) (42 U.S.C. 1382(e)(1)(B)) is
amended
(1) in clauses (i) and (ii)(I), by striking ``$360'' and inserting
``$840''; and
(2) in clause (iii), by striking ``$720'' and inserting ``$1,680''.
(b) Effective Date. The amendments made by subsection (a) shall apply
with respect to months beginning with January 1996.
Title V: QUALITY AND CONSUMER PROTECTION
Table of contents
Subtitle A. Quality Management and Improvement
Section 5001. National Quality Management Program.
Section 5002. National Quality Management Council.
Section 5003. National measures of quality performance.
Section 5004. Consumer surveys.
Section 5005. Evaluation and reporting of quality performance.
Section 5006. Development and dissemination of practice
guidelines.
Section 5007. Research on health care quality.
Section 5008. Regional professional foundations.
Section 5009. National Quality Consortium.
Section 5010. Eliminating CLIA requirement for certificate of
waiver for simple laboratory examinations and
procedures.
Section 5012. Role of alliances in quality assurance.
Section 5013. Role of health plans in quality management.
Subtitle B. Information Systems, Privacy, and Administrative Simplification
Part 1. Health Information Systems
Section 5101. Establishment of health information system.
Section 5102. Additional requirements for health information
system.
Section 5103. Electronic data network.
Section 5104. Unique identifier numbers.
Section 5105. Health security cards.
Section 5106. Technical assistance in the establishment of health
information systems.
Part 2. Privacy of Information
Section 5120. Health information system privacy standards.
Section 5121. Other duties with respect to privacy.
Section 5122. Comprehensive health information privacy protection
act.
Section 5123. Definitions.
Part 3. Interim Requirements for Administrative Simplification
Section 5130. Standard benefit forms.
Part 4. General Provisions
Section 5140. National Privacy and Health Data Advisory Council.
Section 5141. Civil money penalties.
Section 5142. Relationship to other laws.
Subtitle C. Remedies and Enforcement
Part 1. Review of Benefit Determinations for Enrolled Individuals
Subpart A. GENERAL RULES
Section 5201. Health plan claims procedure.
Section 5202. Review in regional alliance complaint review offices
of grievances based on acts or practices by health
plans.
Section 5203. Initial proceedings in complaint review offices.
Section 5204. Hearings before hearing officers in complaint review
offices.
Section 5205. Review by Federal Health Plan Review Board.
Section 5206. Civil money penalties.
Subpart B. EARLY RESOLUTION PROGRAMS
Section 5211. Establishment of early resolution programs in
complaint review offices.
Section 5212. Initiation of participation in mediation
proceedings.
Section 5213. Mediation proceedings.
Section 5214. Legal effect of participation in mediation
proceedings.
Section 5215. Enforcement of settlement agreements.
Part 2. Additional Remedies and Enforcement Provisions
Section 5231. Judicial review of Federal action on State systems.
Section 5232. Administrative and judicial review relating to cost
containment.
Section 5233. Civil enforcement.
Section 5234. Priority of certain bankruptcy claims.
Section 5235. Private right to enforce State responsibilities.
Section 5236. Private right to enforce Federal responsibilities in
operating a system in a State.
Section 5237. Private right to enforce responsibilities of
alliances.
Section 5238. Discrimination claims.
Section 5239. Nondiscrimination in federally assisted programs.
Section 5240. Civil action by essential community provider.
Section 5241. Facial constitutional challenges.
Section 5242. Treatment of plans as parties in civil actions.
Section 5243. General nonpreemption of existing rights and
remedies.
Subtitle D. Medical Malpractice
Part 1. Liability Reform
Section 5301. Federal tort reform.
Section 5302. Plan-based alternative dispute resolution
mechanisms.
Section 5303. Requirement for certificate of merit.
Section 5304. Limitation on amount of attorney's contingency fees.
Section 5305. Reduction of awards for recovery from collateral
sources.
Section 5306. Periodic payment of awards.
Part 2. Other Provisions Relating to Medical Malpractice Liability
Section 5311. Enterprise liability demonstration project.
Section 5312. Pilot program applying practice guidelines to
medical malpractice liability actions.
Subtitle E. Fraud and Abuse
Part 1. Establishment of All-payer Health Care Fraud and Abuse Control
Program
Section 5401. All-Payer Health Care Fraud and Abuse Control
Program.
Section 5402. Establishment of All-Payer Health Care Fraud and
Abuse Control Account.
Section 5403. Use of funds by Inspector General.
Part 2. Application of Fraud and Abuse Authorities Under the Social
Security Act to All Payers
Section 5411. Exclusion from participation.
Section 5412. Civil monetary penalties.
Section 5413. Limitations on physician self-referral.
Section 5414. Construction of Social Security Act references.
Part 3. Amendments to Anti-fraud and Abuse Provisions Under the Social
Security Act
Section 5421. Reference to amendments.
Part 4. Amendments to Criminal Law
Section 5431. Health care fraud.
Section 5432. Forfeitures for violations of fraud statutes.
Section 5433. False statements.
Section 5434. Bribery and graft.
Section 5435. Injunctive relief relating to health care offenses.
Section 5436. Grand jury disclosure.
Section 5437. Theft or embezzlement.
Section 5438. Misuse of health security card or unique identifier.
Part 5. Amendments to Civil False Claims Act
Section 5441. Amendments to Civil False Claims Act.
Subtitle F. McCarran-Ferguson Reform
Section 5501. Repeal of exemption for health insurance.
--------
Subtitle A. Quality Management and Improvement
SEC. 5001. NATIONAL QUALITY MANAGEMENT PROGRAM.
Not later than 1 year after the date of the enactment of this Act, the
National Health Board shall establish and oversee a performance-based program
of quality management and improvement designed to enhance the quality,
appropriateness, and effectiveness of health care services and access to such
services. The program shall be known as the National Quality Management
Program and shall be administered by the National Quality Management Council
established under section 5002.
SEC. 5002. NATIONAL QUALITY MANAGEMENT COUNCIL.
(a) Establishment. There is established a council to be known as the
National Quality Management Council.
(b) Duties. The Council shall
(1) administer the National Quality Management Program;
(2) perform any other duty specified as a duty of the Council in this
subtitle; and
(3) advise the National Health Board with respect its duties under this
subtitle.
(c) Number and Appointment. The Council shall be composed of 15 members
appointed by the President. The Council shall consist of members who are
broadly representative of the population of the United States and shall
include
(1) individuals representing the interests of governmental and
corporate purchasers of health care;
(2) individuals representing the interests of health plans;
(3) individuals representing the interests of States;
(4) individuals representing the interests of health care providers and
academic health centers (as defined in section 3101(c)); and
(5) individuals distinguished in the fields of public health, health
care quality, and related fields of health services research.
(d) Terms.
(1) In general. Except as provided in paragraph (2), members of the
Council shall serve for a term of 3 years.
(2) Staggered rotation. Of the members first appointed to the Council
under subsection (c), the President shall appoint 5 members to serve for
a term of 3 years, 5 members to serve for a term of 2 years, and 5
members to serve for a term of 1 year.
(3) Service beyond term. A member of the Council may continue to serve
after the expiration of the term of the member until a successor is
appointed.
(e) Vacancies. If a member of the Council does not serve the full term
applicable under subsection (d), the individual appointed to fill the
resulting vacancy shall be appointed for the remainder of the term of the
predecessor of the individual.
(f) Chair. The President shall designate an individual to serve as the
chair of the Council.
(g) Meetings. The Council shall meet not less than once during each
discrete 4-month period and shall otherwise meet at the call of the
President or the chair.
(h) Compensation and Reimbursement of Expenses. Members of the Council
shall receive compensation for each day (including travel time) engaged in
carrying out the duties of the Council. Such compensation may not be in an
amount in excess of the maximum rate of basic pay payable for level IV of
the Executive Schedule under section 5315 of title 5, United States Code.
(i) Staff. The National Health Board shall provide to the Council such
staff, information, and other assistance as may be necessary to carry out
the duties of the Council.
(j) Health Care Provider. For purposes of this subtitle, the term
``health care provider'' means an individual who, or entity that, provides
an item or service to an individual that is covered under the health plan
(as defined in section 1400) in which the individual is enrolled.
SEC. 5003. NATIONAL MEASURES OF QUALITY PERFORMANCE.
(a) In General. The National Quality Management Council shall develop a
set of national measures of quality performance, which shall be used to
assess the provision of health care services and access to such services.
(b) Subject of Measures. National measures of quality performance shall
be selected in a manner that provides information on the following
subjects:
(1) Access to health care services by consumers.
(2) Appropriateness of health care services provided to consumers.
(3) Outcomes of health care services and procedures.
(4) Health promotion.
(5) Prevention of diseases, disorders, and other health conditions.
(6) Consumer satisfaction with care.
(c) Selection of Measures.
(1) Consultation. In developing and selecting the national measures of
quality performance, the National Quality Management Council shall
consult with appropriate interested parties, including
(A) States;
(B) health plans;
(C) employers and individuals purchasing health care through regional
and corporate alliances;
(D) health care providers;
(E) the National Quality Consortium established under section 5009;
(F) individuals distinguished in the fields of law, medicine,
economics, public health, and health services research;
(G) the Administrator for Health Care Policy and Research;
(H) the Director of the National Institutes of Health; and
(I) the Administrator of the Health Care Financing Administration.
(2) Criteria. The following criteria shall be used in developing and
selecting national measures of quality performance:
(A) Significance. When a measure relates to a specific disease,
disorder, or other health condition, the disease, disorder, or
condition shall be of significance in terms of prevalence, morbidity,
mortality, or the costs associated with the prevention, diagnosis,
treatment, or clinical management of the disease, disorder, or
condition.
(B) Range of services. The set of measures, taken as a whole, shall
be representative of the range of services provided to consumers of
health care by the individuals and entities described in subsection
(a).
(C) Reliability and validity. The measures shall be reliable and
valid.
(D) Undue burden. The data needed to calculate the measures shall be
obtained without undue burden on the entity or individual providing the
data.
(E) Variation. Performance with respect to measures that are
applicable to each category of individual or entity described in
subsection (a) shall be expected to vary widely among individuals or
entities in the category.
(F) Linkage to health outcome. When a measure is a rate of a process
of care, the process shall be linked to a health outcome based upon the
best available scientific evidence.
(G) Provider control and risk adjustment. When a measure is an
outcome of the provision of care, the outcome shall be within the
control of the provider and one with respect to which an adequate risk
adjustment can be made.
(H) Public health. The measures may incorporate standards identified
by the Secretary of Health and Human Services for meeting public health
objectives.
(d) Updating. The National Quality Management Council shall review and
update the set of national measures of quality performance annually to
reflect changing goals for quality improvement. The Board shall establish
and maintain a priority list of performance measures that within a 5-year
period it intends to consider for inclusion within the set through the
updating process.
SEC. 5004. CONSUMER SURVEYS.
(a) In General. The National Quality Management Council shall conduct
periodic surveys of health care consumers to gather information concerning
access to care, use of health services, health outcomes, and patient
satisfaction. The surveys shall monitor consumer reaction to the
implementation of this Act and be designed to assess the impact of this Act
on the general population of the United States and potentially vulnerable
populations.
(b) Survey Administration. The National Quality Management Council shall
develop and approve a standard design for the surveys, which shall be
administered by the Administrator for Health Care Policy and Research on a
plan-by-plan and State-by-State basis. A State may add survey questions on
quality measures of local interest to surveys conducted in the State.
(c) Sampling Strategies. The National Quality Management Council shall
develop sampling strategies that ensure that survey samples adequately
measure populations that are considered to be at risk of receiving
inadequate health care and may be difficult to reach through
consumer-sampling methods, including individuals who
(1) fail to enroll in a health plan;
(2) resign from a plan; or
(3) are members of a vulnerable population.
SEC. 5005. EVALUATION AND REPORTING OF QUALITY PERFORMANCE.
(a) National Goals. In subject matter areas with respect to which the
National Quality Management Council determines that sufficient information
and consensus exist, the Council will recommend to the Board that it
establish goals for performance by health plans and health care providers
on a subset of the set of national measures of quality performance.
(b) Impact of Reform. The National Quality Management Council shall
evaluate the impact of the implementation of this Act on the quality of
health care services in the United States and the access of consumers to
such services.
(c) Performance Reports.
(1) Alliance and health plan reports. Each health alliance annually
shall publish and make available to the public a performance report
outlining in a standard format the performance of each health plan
offered in the alliance on the set of national measures of quality
performance. The report shall include the results of a smaller number of
such measures for health care providers who are members of provider
networks of such plans (as defined in section 1402(f)), if the available
information is statistically meaningful. The report also shall include
the results of consumer surveys described in section 5004 that were
conducted in the alliance during the year that is the subject of the
report.
(2) National quality reports. The National Quality Management Council
annually shall provide to the Congress and to each health alliance a
report that
(A) outlines in a standard format the performance of each regional
alliance, corporate alliance, and health plan;
(B) discusses State-level and national trends relating to health care
quality; and
(C) presents data for each health alliance from consumer surveys
described in section 5004 that were conducted during the year that is
the subject of the report.
SEC. 5006. DEVELOPMENT AND DISSEMINATION OF PRACTICE GUIDELINES.
(a) Development of Guidelines.
(1) In general. The National Quality Management Council shall direct
the Administrator for Health Care Policy and Research to develop and
periodically review and update clinically relevant guidelines that may be
used by health care providers to assist in determining how diseases,
disorders, and other health conditions can most effectively and
appropriately be prevented, diagnosed, treated, and managed clinically.
(2) Certain Requirements. Guidelines under paragraph (1) shall
(A) be based on the best available research and professional judgment
regarding the effectiveness and appropriateness of health care services
and procedures;
(B) be presented in formats appropriate for use by health care
providers, medical educators, medical review organizations, and
consumers of health care;
(C) include treatment-specific or condition-specific practice
guidelines for clinical treatments and conditions in forms appropriate
for use in clinical practice, for use in educational programs, and for
use in reviewing quality and appropriateness of medical care;
(D) include information on risks and benefits of alternative
strategies for prevention, diagnosis, treatment, and management of a
given disease, disorder, or other health condition;
(E) include information on the costs of alternative strategies for
the prevention, diagnosis, treatment, and management of a given
disease, disorder, or other health condition, where cost information is
available and reliable; and
(F) be developed in accordance with priorities that shall be
established by the National Quality Management Council based on the
research priorities that are established under section 5007(b) and the
5-year priority list of performance measures described in section
5003(d).
(3) Health service utilization protocols. The National Quality
Management Council shall establish standards and procedures for
evaluating the clinical appropriateness of protocols used to manage
health service utilization.
(4) Use in medical malpractice liability pilot program. Guidelines
developed under this subsection may be used by the Secretary of Health
and Human Services in the pilot program applying practice guidelines to
medical malpractice liability under section 5312.
(b) Evaluation and Certification of Other Guidelines.
(1) Methodology. The National Quality Management Council shall direct
the Administrator for Health Care Policy and Research to develop and
publish standards relating to methodologies for developing the types of
guidelines described in subsection (a)(1).
(2) Evaluation and certification. The National Quality Management
Council shall direct the Administrator for Health Care Policy and
Research to establish a procedure by which individuals and entities may
submit guidelines of the type described in subsection (a)(1) to the
Council for evaluation and certification by the Council using the
standards developed under paragraph (1).
(3) Use in medical malpractice liability pilot program. Guidelines
certified under paragraph (2) may be used by the Secretary of Health and
Human Services in the pilot program applying practice guidelines to
medical malpractice liability under section 5312.
(c) Guideline Clearinghouse. The National Quality Management Council
shall direct the Administrator for Health Care Policy and Research to
establish and oversee a clearinghouse and dissemination program for
practice guidelines that are developed or certified under this section.
(d) Dissemination of information on ineffective treatments. The National
Quality Management Council shall disseminate information documenting
clinically ineffective treatments and procedures.
SEC. 5007. RESEARCH ON HEALTH CARE QUALITY.
(a) Research Support. The National Quality Management Council shall
direct the Administrator for Health Care Policy and Research to support
research directly related to the 5-year priority list of performance
measures described in section 5003(d), including research with respect to
(1) outcomes of health care services and procedures;
(2) effective and efficient dissemination of information, standards,
and guidelines;
(3) methods of measuring quality and shared decisionmaking; and
(4) design and organization of quality of care components of automated
health information systems.
(b) Research Priorities. The National Quality Management Council shall
establish priorities for research with respect to the quality,
appropriateness, and effectiveness of health care and make recommendations
concerning research projects. In establishing the priorities, the National
Quality Management Council shall emphasize research involving diseases,
disorders, and health conditions as to which
(1) there is the highest level of uncertainty concerning treatment;
(2) there is the widest variation in practice patterns;
(3) the costs associated with prevention, diagnosis, treatment, or
clinical management are significant; and
(4) the rate of incidence or prevalence is high for the population as a
whole or for particular subpopulations.
SEC. 5008. REGIONAL PROFESSIONAL FOUNDATIONS.
(a) Establishment. The National Health Board shall establish and oversee
regional professional foundations to perform the duties specified in
subsection (c).
(b) Structure and Membership.
(1) In general. The National Quality Consortium established under
section 5009 shall oversee the establishment of regional professional
foundations, the membership requirements for each foundation, and any
other requirement for the internal operation of each foundation.
(2) Entities eligible for membership. Each regional professional
foundation shall include at least one academic health center (as defined
in section 3101(c)). The following entities also shall be eligible to
serve as members of the regional professional foundation for the region
in which the entity is located:
(A) Schools of public health (as defined in section 799 of the Public
Health Service Act).
(B) Other schools and programs defined in such section.
(C) Health plans.
(D) Regional alliances.
(E) Corporate alliances.
(F) Health care providers.
(c) Duties. A regional professional foundation shall carry out the
following duties for the region in which the foundation is located (such
region to be demarcated by the National Health Board with the advice of the
National Quality Consortium established under section 5009):
(1) Developing programs in lifetime learning for health professionals
(as defined in section 1112(c)(1)) to ensure the delivery of quality
health care.
(2) Fostering collaboration among health plans and health care
providers to improve the quality of primary and specialized health care.
(3) Disseminating information about successful quality improvement
programs, practice guidelines, and research findings.
(4) Disseminating information on innovative uses of health
professionals.
(5) Developing innovative patient education systems that enhance
patient involvement in decisions relating their health care.
(6) Applying for and conducting research described in section 5007.
(d) Programs in Lifetime Learning. The programs described in subsection
(c)(1) shall ensure that health professionals remain abreast of new
knowledge, acquire new skills, and adopt new roles as technology and
societal demands change.
SEC. 5009. NATIONAL QUALITY CONSORTIUM.
(a) Establishment. The National Health Board shall establish a consortium
to be known as the National Quality Consortium.
(b) Duties. The Consortium shall
(1) establish programs for continuing education for health
professionals;
(2) advise the National Quality Management Council and the
Administrator for Health Care Policy and Research on research priorities;
(3) oversee the development of the regional professional foundations
established under section 5008;
(4) advise the National Quality Management Council with respect to the
funding of proposals to establish such foundations;
(5) consult with the National Quality Management Council regarding the
selection of national measures of quality performance under section
5003(c); and
(6) advise the National Health Board and the National Quality
Management Council with respect to any other duty of the Board or the
Council under this subtitle.
(c) Membership. The Consortium shall be composed of 11 members appointed
by the National Health Board. The members of the Consortium shall include
(1) 5 individuals representing the interests of academic health
centers; and
(2) 6 other individuals representing the interests of one of the
following persons:
(A) Schools of public health.
(B) Other schools and programs defined in section 799 of the Public
Health Service Act (including medical schools, nursing schools, and
allied health professional schools).
(d) Terms.
(1) In general. Except as provided in paragraph (2), members of the
Consortium shall serve for a term of 3 years.
(2) Staggered rotation. Of the members first appointed to the
Consortium under subsection (c), the National Health Board shall appoint
4 members to serve for a term of 3 years, 3 members to serve for a term
of 2 years, and 4 members to serve for a term of 1 year.
(e) Chair. The National Health Board shall designate an individual to
serve as the chair of the Consortium.
SEC. 5010. ELIMINATING CLIA REQUIREMENT FOR CERTIFICATE OF WAIVER FOR
SIMPLE
LABORATORY EXAMINATIONS AND PROCEDURES.
(a) In General. Section 353 of the Public Health Service Act (42 U.S.C.
263a) is amended
(1) in subsection (b), by inserting before the period at the end the
following: ``or unless the laboratory is exempt from the certificate
requirement under subsection (d)(2)'';
(2) by amending paragraph (2) of subsection (d) to read as follows:
``(2) Exemption from certificate requirement for laboratories
performing only simple examinations and procedures. A laboratory which
performs only laboratory examinations and procedures described in
paragraph (3) is not required to have in effect a certificate under this
section.''; and
(3) by striking paragraph (4) of subsection (d).
(b) Effective Date. The amendments made by this section shall take effect
on the first day of the first month beginning after the date of the
enactment of this Act.
SEC. 5012. ROLE OF ALLIANCES IN QUALITY ASSURANCE.
Each regional alliance and each corporate alliance shall
(1) disseminate to consumers information related to quality and access
to aid in their selection of plans in accordance with section 1325;
(2) disseminate information on the quality of health plans and health
care providers contained in reports of the National Quality Management
Council section 5005(d);
(3) ensure through negotiations with health plans that performance and
quality standards are continually improved; and
(4) conduct educational programs in cooperation with regional quality
foundations to assist consumers in using quality and other information in
choosing health plans.
SEC. 5013. ROLE OF HEALTH PLANS IN QUALITY MANAGEMENT.
Each health plan shall
(1) measure and disclose performance on quality measures used by
(A) participating States in which the plan does business;
(B) regional alliances and corporate alliances that offer the plan;
and
(C) the National Quality Management Council;
(2) furnish information required under subtitle B of this title and
provide such other reports and information on the quality of care
delivered by health care providers who are members of a provider network
of the plan (as defined in section 1402(f)) as may be required under this
Act; and
(3) maintain quality management systems that
(A) use the national measures of quality performance developed by the
National Quality Management Council under section 5003; and
(B) measure the quality of health care furnished to enrollees under
the plan by all health care providers who are members of a provider
network of the plan.
Subtitle B. Information Systems, Privacy, and Administrative Simplification
Part 1. HEALTH INFORMATION SYSTEMS
SEC. 5101. ESTABLISHMENT OF HEALTH INFORMATION SYSTEM.
(a) In General. Not later than 2 years after the date of the enactment of
this Act, the National Health Board shall develop and implement a health
information system by which the Board shall collect, report, and regulate
the collection and dissemination of the health care information described
in subsection (e) pursuant to standards promulgated by the Board and (if
applicable) consistent with policies established as part of the National
Information Infrastructure Act of 1993.
(b) Privacy. The health information system shall be developed and
implemented in a manner that is consistent with the privacy and security
standards established under section 5120.
(c) Reduction in Administrative Costs. The health information system
shall be developed and implemented in a manner that is consistent with the
objectives of reducing wherever practicable and appropriate
(1) the costs of providing and paying for health care;
(2) the time, effort, and financial resources expended by persons to
provide information to States and the Federal Government.
(d) Uses of Information. The health care information described in
subsection (e) shall be collected and reported in a manner that facilitates
its use for the following purposes:
(1) Health care planning, policy development, policy evaluation, and
research by Federal, State, and local governments and regional and
corporate alliances.
(2) Establishing and monitoring payments for health services by the
Federal Government, States, regional alliances, and corporate alliances.
(3) Assessing and improving the quality of health care.
(4) Measuring and optimizing access to health care.
(5) Evaluating the cost of specific clinical or administrative
functions.
(6) Supporting public health functions and objectives.
(7) Improving the ability of health plans, health care providers, and
consumers to coordinate, improve, and make choices about health care.
(8) Managing and containing costs at the alliance and plan levels.
(e) Health Care Information. The health care information referred to in
subsection (a) shall include data on
(1) enrollment and disenrollment in health plans;
(2) clinical encounters and other items and services provided by health
care providers;
(3) administrative and financial transactions and activities of
participating States, regional alliances, corporate alliances, health
plans, health care providers, employers, and individuals that are
necessary to determine compliance with this Act or an Act amended by this
Act;
(4) the characteristics of regional alliances, including the number,
and demographic characteristics of eligible individuals residing in each
alliance area;
(5) the characteristics of corporate alliances, including the number,
and demographic characteristics of individuals who are eligible to be
enrolled in each corporate alliance health plan and individuals with
respect to whom a large employer has exercised an option under section
1311 to make ineligible for such enrollment;
(6) terms of agreement between health plans and the health care
providers who are members of provider networks of the plans (as defined
in section 1402(f));
(7) payment of benefits in cases in which benefits may be payable under
a health plan and any other insurance policy or health program;
(8) utilization management by health plans and health care providers;
(9) the information collected and reported by the Board or disseminated
by other individuals or entities as part of the National Quality
Management Program under subtitle A;
(10) grievances filed against regional alliances, corporate alliances,
and health plans and the resolutions of such grievances; and
(11) any other fact that may be necessary to determine whether a health
plan or a health care provider has complied with a Federal statute
pertaining to fraud or misrepresentation in the provision or purchasing
of health care or in the submission of a claim for benefits or payment
under a health plan.
SEC. 5102. ADDITIONAL REQUIREMENTS FOR HEALTH INFORMATION SYSTEM.
(a) Consultation. The health information system shall be developed in
consultation with
(1) Federal agencies that
(A) collect health care information;
(B) oversee the collection of information or records management by
other Federal agencies;
(C) directly provide health care services;
(D) provide for payments for health care services; or
(E) enforce a provision of this Act or any Act amended by this Act;
(2) the National Quality Management Council established under section
5002;
(3) participating States;
(4) regional alliances and corporate alliances;
(5) health plans;
(6) representatives of health care providers;
(7) representatives of employers;
(8) representatives of consumers of health care;
(9) experts in public health and health care information and
technology; and
(10) representatives of organizations furnishing health care supplies,
services, and equipment.
(b) Collection and Transmission Requirements. In establishing standards
under section 5101, the National Health Board shall specify the form and
manner in which individuals and entities are required to collect or
transmit health care information for or to the Board. The Board also shall
specify the frequency with which individuals and entities are required to
transmit such information to the Board. Such specifications shall include,
to the extent practicable
(1) requirements for use of uniform paper forms containing standard
data elements, definitions, and instructions for completion in cases
where the collection or transmission of data in electronic form is not
specified by the Board;
(2) requirements for use of uniform health data sets with common
definitions to standardize the collection and transmission of data in
electronic form;
(3) uniform presentation requirements for data in electronic form; and
(4) electronic data interchange requirements for the exchange of data
among automated health information systems.
(c) Preemption of State ``Pen & Quill'' Laws. A standard established by
the National Health Board relating to the form in which medical or health
plan records are required to be maintained shall supercede any contrary
provision of State law, except where the Board determines that the
provision is necessary to prevent fraud and abuse, with respect to
controlled substances, or for other purposes.
SEC. 5103. ELECTRONIC DATA NETWORK.
(a) In General. As part of the health information system, the National
Health Board shall oversee the establishment of an electronic data network
consisting of regional centers that collect, compile, and transmit
information.
(b) Consultation. The electronic data network shall be developed in
consultation with
(1) Federal agencies that
(A) collect health care information;
(B) oversee the collection of information or records management by
other Federal agencies;
(C) directly provide health care services;
(D) provide for payments for health care services; or
(E) enforce a provision of this Act or any Act amended by this Act;
(2) the National Quality Management Council established under section
5002;
(3) participating States;
(4) regional alliances and corporate alliances; and
(5) health plans.
(c) Demonstration Projects. The electronic data network shall be tested
prior to full implementation through the establishment of demonstration
projects.
(d) Disclosure of Individually Identifiable Information. The electronic
data network may be used to disclose individually identifiable health
information (as defined in section 5123(3)) to any individual or entity
only in accordance with the health information system privacy standards
promulgated by the National Health Board under section 5120.
SEC. 5104. UNIQUE IDENTIFIER NUMBERS.
(a) In General. As part of the health information system, the Board shall
establish a system to provide for a unique identifier number for each
(1) eligible individual;
(2) employer;
(3) health plan; and
(4) health care provider.
(b) Impermissible Data Links. In establishing the system under subsection
(a), the National Health Board shall ensure that a unique identifier number
may not be used to connect individually identifiable health information (as
defined in section 5123(3)) that is collected as part of the health
information system or that otherwise may be accessed through the number
with individually identifiable information from any other source, except in
cases where the National Health Board determines that such connection is
necessary to carry out a duty imposed on any individual or entity under
this Act.
(c) Permissible Uses of Identifier. The National Health Board shall by
regulation establish the purposes for which a unique identifier number
provided pursuant to this section may be used.
SEC. 5105. HEALTH SECURITY CARDS.
(a) Permissible Uses of Card. A health security card that is issued to an
eligible individual under section 1001(b) may be used by an individual or
entity, in accordance with regulations promulgated by the Board, only for
the purpose of providing or assisting the eligible individual in obtaining
an item or service that is covered under
(1) the applicable health plan in which the individual is enrolled (as
defined in section 1902);
(2) a policy consisting of a supplemental health benefit policy
(described in part 2 of subtitle E of title I), a cost sharing policy
(described in such part), or both;
(3) a FEHBP supplemental plan (described in subtitle C of title VIII);
(4) a FEHBP medicare supplemental plan (described in such subtitle); or
(5) such other programs as the Board may specify.
(b) Form of Card and Encoded Information. The National Health Board shall
establish standards respecting the form of health security cards and the
information to be encoded in electronic form on the cards. Such information
shall include
(1) the identity of the individual to whom the card is issued;
(2) the applicable health plan in which the individual is enrolled;
(3) any policy described in paragraph (2), (3), or (4) of subsection
(a) in which the individual is enrolled; and
(4) any other information that the National Health Board determines to
be necessary in order for the card to serve the purpose described in
subsection (a).
(c) Unique Identifier Numbers. The unique identifier number system
developed by the National Health Board under section 5104 shall be used in
encoding the information described in subsection (b).
(d) Registration of Card. The Board shall take appropriate steps to
register the card, the name of the card, and other indicia relating to the
card as a trademark or service mark (as appropriate) under the Trademark
Act of 1946. 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. et seq.).
(e) Reference to Crime. For a provision relating to criminal penalties
for misuse of a health security card or a unique identifier number, see
section 5438.
SEC. 5106. TECHNICAL ASSISTANCE IN THE ESTABLISHMENT OF HEALTH
INFORMATION
SYSTEMS.
The National Health Board shall provide information and technical
assistance to participating States, regional alliances, corporate
alliances, health plans, and health care providers with respect to the
establishment and operation of automated health information systems. Such
assistance shall focus on
(1) the promotion of community-based health information systems; and
(2) the promotion of patient care information systems that collect data
at the point of care or as a by-product of the delivery of care.
Part 2. PRIVACY OF INFORMATION
SEC. 5120. HEALTH INFORMATION SYSTEM PRIVACY STANDARDS.
(a) Health Information System Standards. Not later than 2 years after the
date of the enactment of this Act, the National Health Board shall
promulgate standards respecting the privacy of individually identifiable
health information that is in the health information system described in
part 1 of this subtitle. Such standards shall include standards concerning
safeguards for the security of such information. The Board shall develop
and periodically revise the standards in consultation with
(1) Federal agencies that
(A) collect health care information;
(B) oversee the collection of information or records management by
other Federal agencies;
(C) directly provide health care services;
(D) provide for payments for health care services; or
(E) enforce a provision of this Act or any Act amended by this Act;
(2) the National Quality Management Council established under section
5002;
(3) participating States;
(4) regional alliances and corporate alliances;
(5) health plans; and
(6) representatives of consumers of health care.
(b) Information Covered. The standards established under subsection (a)
shall apply to individually identifiable health information collected for
or by, reported to or by, or the dissemination of which is regulated by,
the National Health Board under section 5101.
(c) Principles. The standards established under subsection (a) shall
incorporate the following principles:
(1) Unauthorized Disclosure. All disclosures of individually
identifiable health information by an individual or entity shall be
unauthorized unless
(A) the disclosure is by the enrollee identified in the information
or whose identity can be associated with the information;
(B) the disclosure is authorized by such enrollee in writing in a
manner prescribed by the Board;
(C) the disclosure is to Federal, State, or local law enforcement
agencies for the purpose of enforcing this Act or an Act amended by
this Act; or
(D) the disclosure otherwise is consistent with this Act and specific
criteria governing disclosure established by the Board.
(2) Minimal disclosure. All disclosures of individually identifiable
health information shall be restricted to the minimum amount of
information necessary to accomplish the purpose for which the information
is being disclosed.
(3) Risk adjustment. No individually identifiable health information
may be provided by a health plan to a regional alliance or a corporate
alliance for the purpose of setting premiums based on risk adjustment
factors.
(4) Required safeguards. Any individual or entity who maintains, uses,
or disseminates individually identifiable health information shall
implement administrative, technical, and physical safeguards for the
security of such information.
(5) Right to know. An enrollee (or an enrollee representative of the
enrollee) has the right to know
(A) whether any individual or entity uses or maintains individually
identifiable health information concerning the enrollee; and
(B) for what purposes the information may be used or maintained.
(6) Right to access. Subject to appropriate procedures, an enrollee (or
an enrollee representative of the enrollee) has the right, with respect
to individually identifiable health information concerning the enrollee
that is recorded in any form or medium
(A) to see such information;
(B) to copy such information; and
(C) to have a notation made with or in such information of any
amendment or correction of such information requested by the enrollee
or enrollee representative.
(7) Right to notice. An enrollee and an enrollee representative have
the right to receive a written statement concerning
(A) the purposes for which individually identifiable health
information provided to a health care provider, a health plan, a
regional alliance, a corporate alliance, or the National Health Board
may be used or disclosed by, or disclosed to, any individual or entity;
and
(B) the right of access described in paragraph (6).
(8) Use of Unique Identifier. When individually identifiable health
information concerning an enrollee is required to accomplish the purpose
for which information is being transmitted between or among the National
Health Board, regional and corporate alliances, health plans, and health
care providers, the transmissions shall use the unique identifier number
provided to the enrollee pursuant to section 5104 in lieu of the name of
the enrollee.
(9) Use for Employment Decisions. Individually identifiable health care
information may not be used in making employment decisions.
SEC. 5121. OTHER DUTIES WITH RESPECT TO PRIVACY.
(a) Research and Technical Support. The National Health Board may sponsor
(1) research relating to the privacy and security of individually
identifiable health information;
(2) the development of consent forms governing disclosure of such
information; and
(3) the development of technology to implement standards regarding such
information.
(c) Education. The National Health Board shall establish education and
awareness programs
(1) to foster adequate security practices by States, regional
alliances, corporate alliances, health plans, and health care providers;
(2) to train personnel of public and private entities who have access
to individually identifiable health information respecting the duties of
such personnel with respect to such information; and
(3) to inform individuals and employers who purchase health care
respecting their rights with respect to such information.
SEC. 5122. COMPREHENSIVE HEALTH INFORMATION PRIVACY PROTECTION ACT.
(a) In General. Not later than 3 years after the date of the enactment of
this Act, the National Health Board shall submit to the President and the
Congress a detailed proposal for legislation to provide a comprehensive
scheme of Federal privacy protection for individually identifiable health
information.
(b) Code of Fair Information Practices. The proposal shall include a Code
of Fair Information Practices to be used to advise enrollees to whom
individually identifiable health information pertains of their rights with
respect to such information in an easily understood and useful form.
(c) Enforcement. The proposal shall include provisions to enforce
effectively the rights and duties that would be created by the legislation.
SEC. 5123. DEFINITIONS.
For purposes of this part:
(1) Enrollee. The term ``enrollee'' means an individual who enrolls or
has enrolled under a health plan. The term includes a deceased individual
who was enrolled under a health plan.
(2) Enrollee representative. The term ``enrollee representative'' means
any individual legally empowered to make decisions concerning the
provision of health care to an enrollee or the administrator or executor
of the estate of a deceased enrollee.
(3) Individually identifiable health information. The term
``individually identifiable health information'' means any information,
whether oral or recorded in any form or medium, that
(A) identifies or can readily be associated with the identity of an
enrollee; and
(B) relates to
(i) the past, present, or future physical or mental health of the
enrollee;
(ii) the provision of health care to the enrollee; or
(iii) payment for the provision of health care to the enrollee.
Part 3. INTERIM REQUIREMENTS FOR ADMINISTRATIVE SIMPLIFICATION
SEC. 5130. STANDARD BENEFIT FORMS.
(a) Development. Not later than 1 year after the date of the enactment of
this Act, the National Health Board shall develop, promulgate, and publish
in the Federal Register the following standard health care benefit forms:
(1) An enrollment and disenrollment form to be used to record
enrollment and disenrollment in a health benefit plan.
(2) A clinical encounter record to be used by health benefit plans and
health service providers.
(3) A claim form to be used in the submission of claims for benefits or
payment under a health benefit plan.
(b) Instructions, Definitions, and Codes. Each standard form developed
under subsection (a) shall include instructions for completing the form
that
(1) specifically define, to the extent practicable, the data elements
contained in the form; and
(2) standardize any codes or data sets to be used in completing the
form.
(c) Requirements for Adoption of Forms.
(1) Health Service Providers. On or after the date that is 270 days
after the publication of the standard forms developed under subsection
(a), a health service provider that furnishes items or services in the
United States for which payment may be made under a health benefit plan
may not
(A) maintain records of clinical encounters involving such items or
services that are required to be maintained by the National Health
Board in a paper form that is not the clinical encounter record
promulgated by the Board; or
(B) submit any claim for benefits or payment for such services to
such plan in a paper form that is not the claim form promulgated by the
National Health Board.
(2) Health Benefit Plans. On or after the date that is 270 days after
the publication of the standard forms developed under subsection (a), a
health benefit plan may not
(A) record enrollment and disenrollment in a paper form that is not
the enrollment and disenrollment form promulgated by the National
Health Board;
(B) maintain records of clinical encounters that are required to be
maintained by the National Health Board in a paper form that is not the
clinical encounter record promulgated by the Board; or
(C) reject a claim for benefits or payment under the plan on the
basis of the form or manner in which the claim is submitted if
(i) the claim is submitted on the claim form promulgated by the
National Health Board; and
(ii) the plan accepts claims submitted in paper form.
(d) Definitions. For purposes of this subtitle:
(1) Health Benefit Plan.
(A) In general. The term ``health benefit plan'' means, except as
provided in subparagraphs (B) through (D), any public or private entity
or program that provides for payments for health care services,
including
(i) a group health plan (as defined in section 5000(b)(1) of the
Internal Revenue Code of 1986); and
(ii) any other health insurance arrangement, including any
arrangement consisting of a hospital or medical expense incurred
policy or certificate, hospital or medical service plan contract, or
health maintenance organization subscriber contract.
(B) Plans excluded. Such term does not include
(i) accident-only, credit, or disability income insurance;
(ii) coverage issued as a supplement to liability insurance;
(iii) an individual making payment on the individual's own behalf
(or on behalf of a relative or other individual) for deductibles,
coinsurance, or services not covered under a health benefit plan; and
(iv) such other plans as the National Health Board may determine,
because of the limitation of benefits to a single type or kind of
health care, such as dental services or hospital indemnity plans, or
other reasons should not be subject to the requirements of this
section.
(C) Plans included. Such term includes
(i) workers compensation or similar insurance insofar as it relates
to workers compensation medical benefits (as defined in section
10000(3)) provided by or through health plans; and
(ii) automobile medical insurance insofar as it relates to
automobile insurance medical benefits (as defined in section
10100(2)) provided by or through health plans.
(D) Treatment of direct provision of services. Such term does not
include a Federal or State program that provides directly for the
provision of health services to beneficiaries.
(2) Health service provider. The term ``health service provider''
includes a provider of services (as defined in section 1861(u) of the
Social Security Act), physician, supplier, and other person furnishing
health care services. Such term includes a Federal or State program that
provides directly for the provision of health services to beneficiaries.
(e) Interim Nature of Requirements. The National Health Board may modify,
update, or supercede any standard form or requirement developed,
promulgated, or imposed under this section through the establishment of a
standard under section 5101.
Part 4. GENERAL PROVISIONS
SEC. 5140. NATIONAL PRIVACY AND HEALTH DATA ADVISORY COUNCIL.
(a) Establishment. There is established an advisory council to be known
as the National Privacy and Health Data Advisory Council.
(b) Duties. The Council shall advise the National Health Board with
respect its duties under this subtitle.
(c) Number and Appointment. The Council shall be composed of 15 members
appointed by the National Health Board. The members of the Council shall
include
(1) individuals representing the interests of consumers, employers, and
other purchasers of health care;
(2) individuals representing the interests of health plans, health care
providers, corporate alliances, regional alliances, public health
agencies, and participating States; and
(3) individuals distinguished in the fields of data collection, data
protection and privacy, law, ethics, medical and health services
research, public health, and civil liberties and patient advocacy.
(d) Terms.
(1) In general. Except as provided in paragraph (2), members of the
Council shall serve for a term of 3 years.
(2) Staggered rotation. Of the members first appointed to the Council
under subsection (c), the National Health Board shall appoint 5 members
to serve for a term of 3 years, 5 members to serve for a term of 2 years,
and 5 members to serve for a term of 1 year.
(3) Service beyond term. A member of the Council may continue to serve
after the expiration of the term of the member until a successor is
appointed.
(e) Vacancies. If a member of the Council does not serve the full term
applicable under subsection (d), the individual appointed to fill the
resulting vacancy shall be appointed for the remainder of the term of the
predecessor of the individual.
(f) Chair. The National Health Board shall designate an individual to
serve as the chair of the Council.
(g) Meetings. The Council shall meet not less than once during each
discrete 4-month period and shall otherwise meet at the call of the
National Health Board or the chair.
(h) Compensation and Reimbursement of Expenses. Members of the Council
shall receive compensation for each day (including travel time) engaged in
carrying out the duties of the Council. Such compensation may not be in an
amount in excess of the maximum rate of basic pay payable for level IV of
the Executive Schedule under section 5315 of title 5, United States Code.
(i) Staff. The National Health Board shall provide to the Council such
staff, information, and other assistance as may be necessary to carry out
the duties of the Council.
(j) Duration. Notwithstanding section 14(a) of the Federal Advisory
Committee Act, the Council shall continue in existence until otherwise
provided by law.
SEC. 5141. CIVIL MONEY PENALTIES.
(a) Violation of Health Information System Standards. Any person who the
Secretary of Health and Human Services determines
(1) is required, but has substantially failed, to comply with a
standard established by the National Health Board under section 5101 or
5120;
(2) has required the display of, has required the use of, or has used a
health security card for any purpose other than a purpose described in
section 5105(a); or
(3) has required the disclosure of, has required the use of, or has
used a unique identifier number provided pursuant to section 5104 for any
purpose that is not authorized by the National Health Board pursuant to
such section
shall be subject, in addition to any other penalties that may be
prescribed by law, to a civil money penalty of not more than $10,000 for
each such violation.
(b) Standard Benefit Forms. Any health service provider or health benefit
plan that the Secretary of Health and Human Services determines is
required, but has substantially failed, to comply with section 5130(c)
shall be subject, in addition to any other penalties that may be prescribed
by law, to a civil money penalty of not more than $10,000 for each such
violation.
(c) Process. The process for the imposition of a civil money penalty
under the All-Payer Health Care Fraud and Abuse Control Program under part
1 of subtitle E of this title shall apply to a civil money penalty under
this section in the same manner as such process applies to a penalty or
proceeding under such program.
SEC. 5142. RELATIONSHIP TO OTHER LAWS.
(a) Court Orders. Nothing in this title shall be construed to invalidate
or limit the power or authority of any court of competent jurisdiction with
respect to health care information.
(b) Public Health Reporting. Nothing in this title shall be construed to
invalidate or limit the authorities, powers, or procedures established
under any law that provides for the reporting of disease, child abuse,
birth, or death.
Subtitle C. Remedies and Enforcement
Part 1. REVIEW OF BENEFIT DETERMINATIONS FOR ENROLLED INDIVIDUALS
Subpart A. General Rules
SEC. 5201. HEALTH PLAN CLAIMS PROCEDURE.
(a) Definitions. For purposes of this section
(1) Claim. The term ``claim'' means a claim for payment or provision of
benefits under a health plan or a request for preauthorization of items
or services which is submitted to a health plan prior to receipt of the
items or services.
(2) Individual claimant. The term ``individual claimant'' with respect
to a claim means any individual who submits the claim to a health plan in
connection with the individual's enrollment under the plan, or on whose
behalf the claim is submitted to the plan by a provider.
(3) Provider claimant. The term ``provider claimant'' with respect to a
claim means any provider who submits the claim to a health plan with
respect to items or services provided to an individual enrolled under the
plan.
(b) General Rules Governing Treatment of Claims.
(1) Adequate notice of disposition of claim. In any case in which a
claim is submitted in complete form to a health plan, the plan shall
provide to the individual claimant and any provider claimant with respect
to the claim a written notice of the plan's approval or denial of the
claim within 30 days after the date of the submission of the claim. The
notice to the individual claimant shall be written in language calculated
to be understood by the typical individual enrolled under the plan and in
a form which takes into account accessibility to the information by
individuals whose primary language is not English. In the case of a
denial of the claim, the notice shall be provided within 5 days after the
date of the determination to deny the claim, and shall set forth the
specific reasons for the denial. The notice of a denial shall include
notice of the right to appeal the denial under paragraph (2). Failure by
any plan to comply with the requirements of this paragraph with respect
to any claim submitted to the plan shall be treated as approval by the
plan of the claim.
(2) Plan's duty to review denials upon timely request. The plan shall
review its denial of the claim if an individual claimant or provider
claimant with respect to the claim submits to the plan a written request
for reconsideration of the claim after receipt of written notice from the
plan of the denial. The plan shall allow any such claimant not less than
60 days, after receipt of written notice from the plan of the denial, to
submit the claimant's request for reconsideration of the claim.
(3) Time limit for review. The plan shall complete any review required
under paragraph (2), and shall provide the individual claimant and any
provider claimant with respect to the claim written notice of the plan's
decision on the claim after reconsideration pursuant to the review,
within 30 days after the date of the receipt of the request for
reconsideration.
(4) De novo reviews. Any review required under paragraph (2)
(A) shall be de novo,
(B) shall be conducted by an individual who did not make the initial
decision denying the claim and who is authorized to approve the claim,
and
(C) shall include review by a qualified physician if the resolution
of any issues involved requires medical expertise.
(c) Treatment of Urgent Requests to Plans for Preauthorization.
(1) In general. This subsection applies in the case of any claim
submitted by an individual claimant or a provider claimant consisting of
a request for preauthorization of items or services which is accompanied
by an attestation that
(A) failure to immediately provide the items or services could
reasonably be expected to result in
(i) placing the health of the individual claimant (or, with respect
to an individual claimant who is a pregnant woman, the health of the
woman or her unborn child) in serious jeopardy,
(ii) serious impairment to bodily functions, or
(iii) serious dysfunction of any bodily organ or part,
or
(B) immediate provision of the items or services is necessary because
the individual claimant has made or is at serious risk of making an
attempt to harm such individual claimant or another individual.
(2) Shortened time limit for consideration of requests for
preauthorization. Notwithstanding subsection (b)(1), a health plan shall
approve or deny any claim described in paragraph (1) within 24 hours
after submission of the claim to the plan. Failure by the plan to comply
with the requirements of this paragraph with respect to the claim shall
be treated as approval by the plan of the claim.
(3) Expedited exhaustion of plan remedies. Any claim described in
paragraph (1) which is denied by the plan shall be treated as a claim
with respect to which all remedies under the plan provided pursuant to
this section are exhausted, irrespective of any review provided under
subsection (b)(2).
(4) Denial of previously authorized claims not permitted. In any case
in which a health plan approves a claim described in paragraph (1)
(A) the plan may not subsequently deny payment or provision of
benefits pursuant to the claim, unless the plan makes a showing of an
intentional misrepresentation of a material fact by the individual
claimant, and
(B) in the case of a violation of subparagraph (A) in connection with
the claim, all remedies under the plan provided pursuant to this
section with respect to the claim shall be treated as exhausted.
(d) Time Limit for Determination of Incompleteness of Claim. For purposes
of this section
(1) any claim submitted by an individual claimant and accepted by a
provider serving under contract with a health plan and any claim
described in subsection (b)(1) shall be treated with respect to the
individual claimant as submitted in complete form, and
(2) any other claim for benefits under the plan shall be treated as
filed in complete form as of 10 days after the date of the submission of
the claim, unless the plan provides to the individual claimant and any
provider claimant, within such period, a written notice of any required
matter remaining to be filed in order to complete the claim.
Any filing by the individual claimant or the provider claimant of
additional matter requested by the plan pursuant to paragraph (2) shall
be treated for purposes of this section as an initial filing of the
claim.
(e) Additional Notice and Disclosure Requirements for Health Plans. In
the case of a denial of a claim for benefits under a health plan, the plan
shall include, together with the specific reasons provided to the
individual claimant and any provider claimant under subsection (b)(1)
(1) if the denial is based in whole or in part on a determination that
the claim is for an item or service which is not covered by the
comprehensive benefit package or exceeds payment rates under the
applicable alliance or State fee schedule, the factual basis for the
determination,
(2) if the denial is based in whole or in part on exclusion of coverage
with respect to services because the services are determined to comprise
an experimental treatment or investigatory procedure, the medical basis
for the determination and a description of the process used in making the
determination, and
(3) if the denial is based in whole or in part on a determination that
the treatment is not medically necessary or appropriate or is
inconsistent with the plan's practice guidelines, the medical basis for
the determination, the guidelines used in making the determination, and a
description of the process used in making the determination.
(f) Waiver of Rights Prohibited. A health plan may not require any party
to waive any right under the plan or this Act as a condition for approval
of any claim under the plan, except to the extent otherwise specified in a
formal settlement agreement.
SEC. 5202. REVIEW IN REGIONAL ALLIANCE COMPLAINT REVIEW OFFICES OF
GRIEVANCES
BASED ON ACTS OR PRACTICES BY HEALTH PLANS.
(a) Complaint Review Offices.
(1) In general. In accordance with rules which shall be prescribed by
the Secretary of Labor, each State shall establish and maintain a
complaint review office for each regional alliance established by such
State. According to designations which shall be made by each State under
regulations of the Secretary of Labor, the complaint review office for a
regional alliance established by such State shall also serve as the
complaint review office for corporate alliances operating in the State
with respect to individuals who are enrolled under corporate alliance
health plans maintained by such corporate alliances and who reside within
the area of the regional alliance.
(2) Regional alliances not established by States. In the case of any
regional alliance established in any State by the Secretary of Health and
Human Services, the Secretary of Health and Human Services shall assume
all duties and obligations of such State under this part in accordance
with the applicable regulations of the Secretary of Labor under this
part.
(b) Filings of Complaints by Aggrieved Persons. In the case of any person
who is aggrieved by
(1) any act or practice engaged in by any health plan which consists of
or results in denial of payment or provision of benefits under the plan
or delay in the payment or provision of benefits, or
(2) any act or practice engaged in by any other plan maintained by a
regional alliance or a corporate alliance which consists of or results in
denial of payment or provision of benefits under a cost sharing policy
described in section 1421(b)(2) or delay in the payment or provision of
the benefits,
if the denial or delay consists of a failure to comply with the terms
of the plan (including the provision of benefits in full when due in
accordance with the terms of the plan), or with the applicable
requirements of this Act, such person may file a complaint with the
appropriate complaint review office.
(c) Exhaustion of Plan Remedies. Any complaint including a claim to which
section 5201 applies may not be filed until the complainant has exhausted
all remedies provided under the plan with respect to the claim in
accordance with such section.
(d) Exclusive Means of Review for Plans Maintained by Corporate
Alliances. Proceedings under sections 5203 and 5204 pursuant to complaints
filed under subsection (b), and review under section 5205 of determinations
made under section 5204, shall be the exclusive means of review of acts or
practices described in subsection (b) which are engaged in by a corporate
alliance health plan or by any plan maintained by a corporate alliance with
respect to benefits under a cost sharing policy described in section
1421(b)(2).
(e) Form of Complaint. The complaint shall be in writing under oath or
affirmation, shall set forth the complaint in a manner calculated to give
notice of the nature of the complaint, and shall contain such information
as may be prescribed in regulations of the Secretary of Labor.
(f) Notice of Filing. The complaint review office shall serve by
certified mail a notice of the complaint (including the date, place, and
circumstances of the alleged violation) on the person or persons alleged in
the complaint to have committed the violation within 10 days after the
filing of the complaint.
(g) Time Limitation. Complaints may not be brought under this section
with respect to any violation later than one year after the date on which
the violation occurs. This subsection shall not prevent the subsequent
amending of a complaint.
SEC. 5203. INITIAL PROCEEDINGS IN COMPLAINT REVIEW OFFICES.
(a) Elections. Whenever a complaint is brought to the complaint review
office under section 5202(b), the complaint review office shall provide the
complainant with an opportunity, in such form and manner as shall be
prescribed in regulations of the Secretary of Labor, to elect one of the
following:
(1) to forego further proceedings in the complaint review office and
rely on remedies available in a court of competent jurisdiction, except
with respect to any matter in the complaint with respect to which
proceedings under this section and section 5204, and review under section
5205, are not under section 5202(d) the exclusive means of review,
(2) to submit the complaint as a dispute under the Early Resolution
Program established under subpart B and thereby suspend further review
proceedings under this section pending termination of proceedings under
the Program, or
(3) in any case in which an election under paragraph (2) is not made,
or such an election was made but resolution of all matters in the
complaint was not obtained upon termination of proceedings pursuant to
the election by settlement agreement or otherwise, to proceed with the
complaint to a hearing in the complaint review office under section 5204
regarding the unresolved matters.
(b) Effect of Participation in Early Resolution Program. Any matter in a
complaint brought to the complaint review office which is included in a
dispute which is timely submitted to the Early Resolution Program
established under subpart B shall not be assigned to a hearing under this
section unless the proceedings under the Program with respect to the
dispute are terminated without settlement or resolution of the dispute with
respect to such matter. Upon termination of any proceedings regarding a
dispute submitted to the Program, the applicability of this section to any
matter in a complaint which was included in the dispute shall not be
affected by participation in the proceedings, except to the extent
otherwise required under the terms of any settlement agreement or other
formal resolution obtained in the proceedings.
SEC. 5204. HEARINGS BEFORE HEARING OFFICERS IN COMPLAINT REVIEW OFFICES.
(a) Hearing Process.
(1) Assignment of complaints to hearing officers and notice to parties.
(A) In general. In the case of an election under section 5203(a)(3)
(i) the complaint review office shall assign the complaint, and
each motion in connection with the complaint, to a hearing officer
employed by the State in the office; and
(ii) the hearing officer shall have the power to issue and cause to
be served upon the plan named in the complaint a copy of the
complaint and a notice of hearing before the hearing officer at a
place fixed in the notice, not less than 5 days after the serving of
the complaint.
(B) Qualifications for hearing officers. No individual may serve in a
complaint review office as a hearing officer unless the individual
meets standards which shall be prescribed by the Secretary of Labor.
Such standards shall include experience, training, affiliations,
diligence, actual or potential conflicts of interest, and other
qualifications deemed relevant by the Secretary of Labor. At no time
shall a hearing officer have any official, financial, or personal
conflict of interest with respect to issues in controversy before the
hearing officer.
(2) Amendment of complaints. Any such complaint may be amended by the
hearing officer conducting the hearing, upon the motion of the
complainant, in the hearing officer's discretion at any time prior to the
issuance of an order based thereon.
(3) Answers. The party against whom the complaint is filed shall have
the right to file an answer to the original or amended complaint and to
appear in person or otherwise and give testimony at the place and time
fixed in the complaint.
(b) Additional Parties. In the discretion of the hearing officer
conducting the hearing, any other person may be allowed to intervene in the
proceeding and to present testimony.
(c) Hearings.
(1) De novo hearing. Each hearing officer shall hear complaints and
motions de novo.
(2) Testimony. The testimony taken by the hearing officer shall be
reduced to writing. Thereafter, the hearing officer, in his or her
discretion, upon notice may provide for the taking of further testimony
or hear argument.
(3) Authority of hearing officers. The hearing officer may compel by
subpoena the attendance of witnesses and the production of evidence at
any designated place or hearing. In case of contumacy or refusal to obey
a subpoena lawfully issued under this paragraph and upon application of
the hearing officer, an appropriate district court may issue an order
requiring compliance with the subpoena and any failure to obey the order
may be punished by the court as a contempt thereof. The hearing officer
may also seek enforcement of the subpoena in a State court of competent
jurisdiction.
(4) Expedited hearings. Notwithstanding section 5203 and the preceding
provisions of this section, upon receipt of a complaint containing a
claim described in section 5201(c)(1), the complaint review office shall
promptly provide the complainant with the opportunity to make an election
under section 5203(a)(3) and assignment to a hearing on the complaint
before a hearing officer. The complaint review office shall ensure that
such a hearing commences not later than 24 hours after receipt of the
complaint by the complaint hearing office.
(d) Decision of Hearing Officer.
(1) In general. The hearing officer shall decide upon the preponderance
of the evidence whether to decide in favor of the complainant with
respect to each alleged act or practice. Each such decision
(A) shall include the hearing officer's findings of fact, and
(B) shall constitute the hearing officer's final disposition of the
proceedings.
(2) Decisions finding in favor of complainant.
(A) In general. If the hearing officer's decision includes a
determination that any party named in the complaint has engaged in or
is engaged in an act or practice described in section 5202(b), the
hearing officer shall issue and cause to be served on such party an
order which requires such party
(i) to cease and desist from such act or practice,
(ii) to provide the benefits due under the terms of the plan and to
otherwise comply with the terms of the plan and the applicable
requirements of this Act,
(iii) to pay to the complainant prejudgment interest on the actual
costs incurred in obtaining the items and services at issue in the
complaint, and
(iv) to pay to the prevailing complainant a reasonable attorney's
fee, reasonable expert witness fees, and other reasonable costs
relating to the hearing on the charges on which the complainant
prevails.
(3) Decisions not in favor of complainant. If the hearing officer's
decision includes a determination that the party named in the complaint
has not engaged in or is not engaged in an act or practice referred to in
section 5202(b), the hearing officer
(A) shall include in the decision a dismissal of the charge in the
complaint relating to the act or practice, and
(B) upon a finding that such charge is frivolous, shall issue and
cause to be served on the complainant an order which requires the
complainant to pay to such party a reasonable attorney's fee,
reasonable expert witness fees, and other reasonable costs relating to
the proceedings on such charge.
(4) Submission and service of decisions. The hearing officer shall
submit each decision to the complaint review office at the conclusion of
the proceedings and the office shall cause a copy of the decision to be
served on the parties to the proceedings.
(e) Review.
(1) In general. The decision of the hearing officer shall be final and
binding upon all parties. Except as provided in paragraph (2), any party
to the complaint may, within 30 days after service of the decision by the
complaint review office, file an appeal of the decision with the Federal
Health Plan Review Board under section 5205 in such form and manner as
may be prescribed by such Board.
(2) Exception. The decision in the case of an expedited hearing under
subsection (c)(4) shall not be subject to review.
(f) Court Enforcement of Orders.
(1) In general. If a decision of the hearing officer in favor of the
complainant is not appealed under section 5205, the complainant may
petition any court of competent jurisdiction for enforcement of the
order. In any such proceeding, the order of the hearing officer shall not
be subject to review.
(2) Awarding of costs. In any action for court enforcement under this
subsection, a prevailing complainant shall be entitled to a reasonable
attorney's fee, reasonable expert witness fees, and other reasonable
costs relating to such action.
SEC. 5205. REVIEW BY FEDERAL HEALTH PLAN REVIEW BOARD.
(a) Establishment and Membership. The Secretary of Labor shall establish
by regulation a Federal Health Plan Review Board (hereinafter in this
subtitle referred to as the ``Review Board''). The Review Board shall be
composed of 5 members appointed by the Secretary of Labor from among
persons who by reason of training, education, or experience are qualified
to carry out the functions of the Review Board under this subtitle. The
Secretary of Labor shall prescribe such rules as are necessary for the
orderly transaction of proceedings by the Review Board. Every official act
of the Review Board shall be entered of record, and its hearings and
records shall be open to the public.
(b) Review Process. The Review Board shall ensure, in accordance with
rules prescribed by the Secretary of Labor, that reasonable notice is
provided for each appeal before the Review Board of a hearing officer's
decision under section 5304, and shall provide for the orderly
consideration of arguments by any party to the hearing upon which the
hearing officer's decision is based. In the discretion of the Review Board,
any other person may be allowed to intervene in the proceeding and to
present written argument. The National Health Board may intervene in the
proceeding as a matter of right.
(c) Scope of Review. The Review Board shall review the decision of the
hearing officer from which the appeal is made, except that the review shall
be only for the purposes of determining
(1) whether the determination is supported by substantial evidence on
the record considered as a whole,
(2) in the case of any interpretation by the hearing officer of
contractual terms (irrespective of the extent to which extrinsic evidence
was considered), whether the determination is supported by a
preponderance of the evidence,
(3) whether the determination is in excess of statutory jurisdiction,
authority, or limitations, or in violation of a statutory right, or
(4) whether the determination is without observance of procedure
required by law.
(d) Decision of Review Board. The decision of the hearing officer as
affirmed or modified by the Review Board (or any reversal by the Review
Board of the hearing officer's final disposition of the proceedings) shall
become the final order of the Review Board and binding on all parties,
subject to review under subsection (e). The Review Board shall cause a copy
of its decision to be served on the parties to the proceedings not later
than 5 days after the date of the proceeding.
(e) Review of Final Orders.
(1) In general. Not later than 60 days after the entry of the final
order, any person aggrieved by any such final order under which the
amount or value in controversy exceeds $10,000 may seek a review of the
order in the United States court of appeals for the circuit in which the
violation is alleged to have occurred or in which the complainant
resides.
(2) Further review. Upon the filing of the record with the court, the
jurisdiction of the court shall be exclusive and its judgment shall be
final, except that the judgment shall be subject to review by the Supreme
Court of the United States upon writ of certiorari or certification as
provided in section 1254 of title 28 of the United States Code.
(3) Enforcement decree in original review. If, upon appeal of an order
under paragraph (1), the United States court of appeals does not reverse
the order, the court shall have the jurisdiction to make and enter a
decree enforcing the order of the Review Board.
(f) Determinations. Determinations made under this section shall be in
accordance with the provisions of this Act, the comprehensive benefit
package as provided by this Act, the rules and regulations of the National
Health Board prescribed under this Act, and decisions of the National
Health Board published under this Act.
(g) Awarding of Attorneys' Fees and Other Costs and Expenses. In any
proceeding before the Review Board under this section or any judicial
proceeding under subsection (e), the Review Board or the court (as the case
may be) shall award to a prevailing complainant reasonable costs and
expenses (including a reasonable attorney's fee) on the causes on which the
complainant prevails.
SEC. 5206. CIVIL MONEY PENALTIES.
(a) Denial or Delay in Payment or Provision of Benefits.
(1) In general. The Secretary of Labor may assess a civil penalty
against any health plan, or against any other plan in connection with
benefits provided thereunder under a cost sharing policy described in
section 1421(b)(2), for unreasonable denial or delay in the payment or
provision of benefits thereunder, in an amount not to exceed
(A) $25,000 per violation, or $75,000 per violation in the case of a
finding of bad faith on the part of the plan, and
(B) in the case of a finding of a pattern or practice of such
violations engaged in by the plan, $1,000,000 in addition to the total
amount of penalties assessed under subparagraph (A) with respect to
such violations.
For purposes of subparagraph (A), each violation with respect to any
single individual shall be treated as a separate violation.
(2) Civil action to enforce civil penalty. The Secretary of Labor may
commence a civil action in any court of competent jurisdiction to enforce
a civil penalty assessed under subsection (a).
(b) Civil Penalties for Certain Other Actions. The Secretary of Labor may
assess a civil penalty described in section 5412(b)(1) against any
corporate alliance health plan, or against any other plan sponsored by a
corporate alliance in connection with benefits provided thereunder under a
cost sharing policy described in section 1421(b)(2), for any action
described in section 5412(a). The Secretary of Labor may initiate
proceedings to impose such penalty in the same manner as the Secretary of
Health and Human Services may initiate proceedings under section 5412 with
respect to actions described in section 5412(a).
Subpart B. Early Resolution Programs
SEC. 5211. ESTABLISHMENT OF EARLY RESOLUTION PROGRAMS IN COMPLAINT
REVIEW
OFFICES.
(a) Establishment of Programs. Each State shall establish and maintain an
Early Resolution Program in each complaint review office in such State. The
Program shall include
(1) the establishment and maintenance of forums for mediation of
disputes in accordance with this subpart, and
(2) the establishment and maintenance of such forums for other forms of
alternative dispute resolution (including binding arbitration) as may be
prescribed in regulations of the Secretary of Labor.
Each State shall ensure that the standards applied in Early Resolution
Programs administered in such State which apply to any form of
alternative dispute resolution described in paragraph (2) and which
relate to time requirements, qualifications of facilitators, arbitrators,
or other mediators, and confidentiality are at least equivalent to the
standards which apply to mediation proceedings under this subpart.
(b) Duties of Complaint Review Offices. Each complaint review office in a
State
(1) shall administer its Early Resolution Program in accordance with
regulations of the Secretary of Labor,
(2) shall, pursuant to subsection (a)(1)
(A) recruit and train individuals to serve as facilitators for
mediation proceedings under the Early Resolution Program from attorneys
who have the requisite expertise for such service, which shall be
specified in regulations of the Secretary of Labor,
(B) provide meeting sites, maintain records, and provide facilitators
with administrative support staff, and
(C) establish and maintain attorney referral panels,
(3) shall ensure that, upon the filing of a complaint with the office,
the complainant is adequately apprised of the complainant's options for
review under this part, and
(4) shall monitor and evaluate the Program on an ongoing basis.
SEC. 5212. INITIATION OF PARTICIPATION IN MEDIATION PROCEEDINGS.
(a) Eligibility of Cases for Submission to Early Resolution Program. A
dispute may be submitted to the Early Resolution Program only if the
following requirements are met with respect to the dispute:
(1) Nature of dispute. The dispute consists of an assertion by an
individual enrolled under a health plan of one or more claims against the
health plan for payment or provision of benefits, or against any other
plan maintained by the regional alliance or corporate alliance sponsoring
the health plan with respect to benefits provided under a cost sharing
policy described in section 1421(b)(2), based on alleged coverage under
the plan, and a denial of the claims, or a denial of appropriate
reimbursement based on the claims, by the plan.
(2) Nature of disputed claim. Each claim consists of
(A) a claim for payment or provision of benefits under the plan; or
(B) a request for information or documents the disclosure of which is
required under this Act (including claims of entitlement to disclosure
based on colorable claims to rights to benefits under the plan).
(b) Filing of Election. A complainant with a dispute which is eligible
for submission to the Early Resolution Program may make the election under
section 5203(a)(2) to submit the dispute to mediation proceedings under the
Program not later than 15 days after the date the complaint is filed with
the complaint review office under subpart A.
(c) Agreement to Participate.
(1) Election by claimant. A complainant may elect participation in the
mediation proceedings only by entering into a written agreement
(including an agreement to comply with the rules of the Program and
consent for the complaint review office to contact the health plan
regarding the agreement), and by releasing plan records to the Program
for the exclusive use of the facilitator assigned to the dispute.
(2) Participation by plans or health benefits contractors. Each party
whose participation in the mediation proceedings has been elected by a
claimant pursuant to paragraph (1) shall participate in, and cooperate
fully with, the proceedings. The claims review office shall provide such
party with a copy of the participation agreement described in paragraph
(1), together with a written description of the Program. Such party shall
submit the copy of the agreement, together with its authorized signature
signifying receipt of notice of the agreement, to the claims review
office, and shall include in the submission to the claims review office a
copy of the written record of the plan claims procedure completed
pursuant to section 5201 with respect to the dispute and all relevant
plan documents. The relevant documents shall include all documents under
which the health plan is or was administered or operated, including
copies of any insurance contracts under which benefits are or were
provided and any fee or reimbursement schedules for health care
providers.
SEC. 5213. MEDIATION PROCEEDINGS.
(a) Role of Facilitator. In the course of mediation proceedings under the
Early Resolution Program, the facilitator assigned to the dispute shall
prepare the parties for a conference regarding the dispute and serve as a
neutral mediator at such conference, with the goal of achieving settlement
of the dispute.
(b) Preparations for Conference. In advance of convening the conference,
after identifying the necessary parties and confirming that the case is
eligible for the Program, the facilitator shall analyze the record of the
claims procedure conducted pursuant to section 5201 and any position papers
submitted by the parties to determine if further case development is needed
to clarify the legal and factual issues in dispute, and whether there is
any need for additional information and documents.
(c) Conference. Upon convening the conference, the facilitator shall
assist the parties in identifying undisputed issues and exploring
settlement. If settlement is reached, the facilitator shall assist in the
preparation of a written settlement agreement. If no settlement is reached,
the facilitator shall present the facilitator's evaluation, including an
assessment of the parties' positions, the likely outcome of further
administrative action or litigation, and suggestions for narrowing the
issues in dispute.
(d) Time Limit. The facilitator shall ensure that mediation proceedings
with respect to any dispute under the Early Resolution Program shall be
completed within 120 days after the election to participate. The parties
may agree to one extension of the proceedings by not more than 30 days if
the proceedings are suspended to obtain an agency ruling or to reconvene
the conference in a subsequent session.
(e) Inapplicability of Formal Rules. Formal rules of evidence shall not
apply to mediation proceedings under the Early Resolution Program. All
statements made and evidence presented in the proceedings shall be
admissible in the proceedings. The facilitator shall be the sole judge of
the proper weight to be afforded to each submission. The parties to
mediation proceedings under the Program shall not be required to make
statements or present evidence under oath.
(f) Representation. Parties may participate pro se or be represented by
attorneys throughout the proceedings of the Early Resolution Program.
(g) Confidentiality.
(1) In general. Under regulations of the Secretary of Labor, rules
similar to the rules under section 574 of title 5, United States Code
(relating to confidentiality in dispute resolution proceedings) shall
apply to the mediation proceedings under the Early Resolution Program.
(2) Civil remedies. The Secretary of Labor may assess a civil penalty
against any person who discloses information in violation of the
regulations prescribed pursuant to subsection (a) in the amount of three
times the amount of the claim involved. The Secretary of Labor may bring
a civil action to enforce such civil penalty in any court of competent
jurisdiction.
SEC. 5214. LEGAL EFFECT OF PARTICIPATION IN MEDIATION PROCEEDINGS.
(a) Process Nonbinding. Findings and conclusions made in the mediation
proceedings of the Early Resolution Program shall be treated as advisory in
nature and nonbinding. Except as provided in subsection (b), the rights of
the parties under subpart A shall not be affected by participation in the
Program.
(b) Resolution Through Settlement Agreement. If a case is settled through
participation in mediation proceedings under the Program, the facilitator
shall assist the parties in drawing up an agreement which shall constitute,
upon signature of the parties, a binding contract between the parties,
which shall be enforceable under section 5215.
(c) Preservation of Rights of Non-Parties. The settlement agreement shall
not have the effect of waiving or otherwise affecting any rights to review
under subpart A, or any other right under this Act or the plan, with
respect to any person who is not a party to the settlement agreement.
SEC. 5215. ENFORCEMENT OF SETTLEMENT AGREEMENTS.
(a) Enforcement. Any party to a settlement agreement entered pursuant to
mediation proceedings under this subpart may petition any court of
competent jurisdiction for the enforcement of the agreement, by filing in
the court a written petition praying that the agreement be enforced. In
such a proceeding, the order of the hearing officer shall not be subject to
review.
(b) Court Review. It shall be the duty of the court to advance on the
docket and to expedite to the greatest possible extent the disposition of
any petition filed under this section, with due deference to the role of
settlement agreements under this part in achieving prompt resolution of
disputes involving health plans.
(d) Awarding of Attorney's Fees and Other Costs and Expenses. In any
action by an individual enrolled under a health plan for court enforcement
under this section, a prevailing plaintiff shall be entitled to reasonable
costs and expenses (including a reasonable attorney's fee and reasonable
expert witness fees) on the charges on which the plaintiff prevails.
Part 2. ADDITIONAL REMEDIES AND ENFORCEMENT PROVISIONS
SEC. 5231. JUDICIAL REVIEW OF FEDERAL ACTION ON STATE SYSTEMS.
(a) In General. Any State or an alliance that is aggrieved by a
determination by the National Health Board under subpart B of part 1 of
subtitle F of title I shall be entitled to judicial review of such
determination in accordance with this section.
(b) Judicial Review.
(1) Jurisdiction. The courts of appeals of the United States (other
than the United States Court of Appeals for the Federal Circuit) shall
have jurisdiction to review a determination described in subsection (a),
to affirm the determination, or to set it aside, in whole or in part. A
judgment of a court of appeals in such an action shall be subject to
review by the Supreme Court of the United States upon certiorari or
certification as provided in section 1254 of title 28, United States
Code.
(2) Petition for review. A State or an alliance that desires judicial
review of a determination described in subsection (a) shall, within 30
days after it has been notified of such determination, file with the
United States court of appeals for the circuit in which the State or
alliance is located a petition for review of such determination. A copy
of the petition shall be transmitted by the clerk of the court to the
National Health Board, and the Board shall file in the court the record
of the proceedings on which the determination or action was based, as
provided in section 2112 of title 28, United States Code.
(3) Scope of review. The findings of fact of the National Health Board,
if supported by substantial evidence, shall be conclusive; but the court,
for good cause shown, may remand the case to the Board to take further
evidence, and the Board may make new or modified findings of fact and may
modify its previous action, and shall certify to the court the record of
the further proceedings. Such new or modified findings of fact shall
likewise be conclusive if supported by substantial evidence.
SEC. 5232. ADMINISTRATIVE AND JUDICIAL REVIEW RELATING TO COST
CONTAINMENT.
There shall be no administrative or judicial review of any
determination by the National Health Board respecting any matter under
subtitle A of title VI.
SEC. 5233. CIVIL ENFORCEMENT.
Unless otherwise provided in this Act, the district courts of the
United States shall have jurisdiction of civil actions brought by
(1) the Secretary of Labor to enforce any final order of such Secretary
or to collect any civil monetary penalty assessed by such Secretary under
this Act; and
(2) the Secretary of Health and Human Services to enforce any final
order of such Secretary or to collect any civil monetary penalty assessed
by such Secretary under this Act.
SEC. 5234. PRIORITY OF CERTAIN BANKRUPTCY CLAIMS.
Section 507(a)(8) of title 11, United States Code, is amended to read
as follows:
``(8) Eighth, allowed unsecured claims
``(A) based upon any commitment by the debtor to the Federal Deposit
Insurance Corporation, the Resolution Trust Corporation, the Director of
the Office of Thrift Supervision, the Comptroller of the Currency, or the
Board of Governors of the Federal Reserve System, or their predecessors
or successors, to maintain the capital of an insured depository
institution;
``(B) for payments under subtitle B of title IV of the Health Security
Act owed to a regional alliance (as defined in section 1301 of such Act);
``(C) for payments owed to a corporate alliance health plan under
trusteeship of the Secretary of Labor under section 1395 of the Health
Security Act; or
``(D) for assessments and related amounts owed to the Secretary of
Labor under section 1397 of the Health Security Act.''.
SEC. 5235. PRIVATE RIGHT TO ENFORCE STATE RESPONSIBILITIES.
The failure of a participating State to carry out a responsibility
applicable to participating States under this Act constitutes a
deprivation of rights secured by this Act for the purposes of section
1977 of the Revised Statutes of the United States (42 U.S.C. 1983). In an
action brought under such section, the court shall exercise jurisdiction
without regard to whether the aggrieved person has exhausted any
administrative or other remedies that may be provided by law.
SEC. 5236. PRIVATE RIGHT TO ENFORCE FEDERAL RESPONSIBILITIES IN OPERATING
A
SYSTEM IN A STATE.
(a) In General. The failure of the Secretary of Health and Human Services
to carry out a responsibility under section 1522 (relating to operation of
an alliance system in a State) confers an enforceable right of action on
any person who is aggrieved by such failure. Such a person may commence a
civil action against the Secretary in an appropriate State court or
district court of the United States.
(b) Exhaustion of Remedies. In an action under subsection (a), the court
shall exercise jurisdiction without regard to whether the aggrieved person
has exhausted any administrative or other remedies that may be provided by
law.
(c) Relief. In an action under subsection (a), if the court finds that a
failure described in such subsection has occurred, the aggrieved person may
recover compensatory and punitive damages and the court may order any other
appropriate relief.
(d) Attorney's Fees. In an action under subsection (a), the court, in its
discretion, may allow the prevailing party, other than the United States, a
reasonable attorney's fee (including expert fees) as part of the costs, and
the United States shall be liable for costs the same as a private person.
SEC. 5237. PRIVATE RIGHT TO ENFORCE RESPONSIBILITIES OF ALLIANCES.
(a) In General. The failure of a regional alliance or a corporate
alliance to carry out a responsibility applicable to the alliance under
this Act confers an enforceable right of action on any person who is
aggrieved by such failure. Such a person may commence a civil action
against the alliance in an appropriate State court or district court of the
United States.
(b) Exhaustion of Remedies.
(1) In general. Except as provided in paragraph (2), in an action under
subsection (a) the court may not exercise jurisdiction until the
aggrieved person has exhausted any administrative remedies that may be
provided by law.
(2) No exhaustion required. In an action under subsection (a), the
court shall exercise jurisdiction without regard to whether the aggrieved
person has exhausted any administrative or other remedies that may be
provided by law if the action relates to
(A) whether the person is an eligible individual within the meaning
of section 1001(c);
(B) whether the person is eligible for a premium discount under
subpart A of part 1 of subtitle B of title VI;
(C) whether the person is eligible for a reduction in cost sharing
under subpart D of part 3 of subtitle D of title I; or
(D) enrollment or disenrollment in a health plan.
(c) Relief. In an action under subsection (a), if the court finds that a
failure described in such subsection has occurred, the aggrieved person may
recover compensatory and punitive damages and the court may order any other
appropriate relief.
(d) Attorney's Fees. In any action under subsection (a), the court, in
its discretion, may allow the prevailing party, other than the United
States, a reasonable attorney's fee (including expert fees) as part of the
costs, and the United States shall be liable for costs the same as a
private person.
SEC. 5238. DISCRIMINATION CLAIMS.
(a) Civil Action by Aggrieved Person.
(1) In general. Any person who is aggrieved by the failure of a health
plan to comply with section 1402(c) may commence a civil action against
the plan in an appropriate State court or district court of the United
States.
(2) Standards. The standards used to determine whether a violation has
occurred in a complaint alleging discrimination under section 1402(c)
shall be the standards applied under the Age Discrimination Act of 1973
(42 U.S.C. 6102 et seq.) and the Americans with Disabilities Act of 1990
(42 U.S.C. 12101 et seq.).
(3) Relief. In an action under paragraph (1), if the court finds that
the health plan has failed to comply with section 1402(c), the aggreived
person may recover compensatory and punitive damages and the court may
order any other appropriate relief.
(4) Attorney's fees. In any action under paragraph (1), the court, in
its discretion, may allow the prevailing party, other than the United
States, a reasonable attorney's fee (including expert fees) as part of
the costs, and the United States shall be liable for costs the same as a
private person.
(c) Action by Secretary. Whenever the Secretary of Health and Human
Services finds that the health plan has failed to comply with section
1402(c), or with an applicable regulation issued under such section, the
Secretary shall notify the plan. If within a reasonable period of time the
health plan fails or refuses to comply, the Secretary may
(1) refer the matter to the Attorney General with a recommendation that
an appropriate civil action be instituted;
(2) terminate the participation of the health plan in an alliance; or
(3) take such other action as may be provided by law.
(d) Action by Attorney General. When a matter is referred to the Attorney
General under subsection (c)(1), the Attorney General may bring a civil
action in a district court of the United States for such relief as may be
appropriate, including injunctive relief. In a civil action under this
section, the court
(1) may grant any equitable relief that the court considers to be
appropriate;
(2) may award such other relief as the court considers to be
appropriate, including compensatory and punitive damages; and
(3) may, to vindicate the public interest when requested by the
Attorney General, assess a civil money penalty against the health plan in
an amount
(A) not exceeding $50,000 for a first violation; and
(B) not exceeding $100,000 for any subsequent violation.
SEC. 5239. NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS.
Federal payments to regional alliances under part 2 of subtitle C of
title VI shall be treated as Federal financial assistance for purposes
of section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794),
section 303 of the Age Discrimination Act of 1975 (42 U.S.C. 6102), and
section 601 of the Civil Rights Act of 1964 (42 U.S.C. 2000d).
SEC. 5240. CIVIL ACTION BY ESSENTIAL COMMUNITY PROVIDER.
(a) In General. An electing essential community provider (as defined in
section 1431(d)) who is aggrieved by the failure of a health plan to
fulfill a duty imposed on the plan by section 1431 may commence a civil
action against the plan in an appropriate State court or district court of
the United States.
(b) Relief. In an action under subsection (a), if the court finds that
the health plan has failed to fulfill a duty imposed on the plan by section
1431, the electing essential community provider may recover compensatory
damages and the court may order any other appropriate relief.
(c) Attorney's Fees. In any action under subsection (a), the court, in
its discretion, may allow the prevailing party, other than the United
States, a reasonable attorney's fee (including expert fees) as part of the
costs, and the United States shall be liable for costs the same as a
private person.
SEC. 5241. FACIAL CONSTITUTIONAL CHALLENGES.
(a) Jurisdiction. The United States District Court for the District of
Columbia shall have original and exclusive jurisdiction of any civil action
brought to invalidate this Act or a provision of this Act on the ground of
its being repugnant to the Constitution of the United States on its face
and for every purpose. In any action described in this subsection, the
district court may not grant any temporary order or preliminary injunction
restraining the enforcement, operation, or execution of this Act or any
provision of this Act.
(b) Statute of Limitations. An action described in subsection (a) shall
be commenced not later than 1 year after the date of the enactment of this
Act.
(c) Convening of Three-Judge Court. An action described in subsection (a)
shall be heard and determined by a district court of three judges in
accordance with section 2284 of title 28, United States Code.
(d) Consolidation. When actions described in subsection (a) involving a
common question of law or fact are pending before a district court, the
court shall order all the actions consolidated.
(e) Direct Appeal to Supreme Court. In any action described in subsection
(a), an appeal may be taken directly to the Supreme Court of the United
States from any final judgment, decree, or order in which the district
court
(1) holds this Act or any provision of this Act invalid; and
(2) makes a determination that its holding will materially undermine
the application of the Act as whole.
(f) Construction. This section does not limit
(1) the right of any person
(A) to a litigation concerning the Act or any portion of the Act; or
(B) to petition the Supreme Court for review of any holding of a
district court by writ of certiorari at any time before the rendition
of judgment in a court of appeals; or
(2) the authority of the Supreme Court to grant a writ of certiorari
for the review described in paragraph (1)(B).
SEC. 5242. TREATMENT OF PLANS AS PARTIES IN CIVIL ACTIONS.
(a) In General. A health plan may sue or be sued under this Act as an
entity. Service of summons, subpoena, or other legal process of a court or
hearing officer upon a trustee or an administrator of any such plan in his
capacity as such shall constitute service upon the plan. In a case where a
plan has not designated in applicable plan documents an individual as agent
for the service of legal process, service upon the Secretary of Health and
Human Services (in the case of a regional alliance health plan) or the
Secretary of Labor (in the case of a corporate alliance health plan) shall
constitute such service. The Secretary, not later than 15 days after
receipt of service under the preceding sentence, shall notify the
administrator or any trustee of the plan of receipt of such service.
(b) Other Parties. Any money judgment under this Act against a plan
referred to in subsection (b) shall be enforceable only against the plan as
an entity and shall not be enforceable against any other person unless
liability against such person is established in his individual capacity
under this Act.
SEC. 5243. GENERAL NONPREEMPTION OF EXISTING RIGHTS AND REMEDIES.
Nothing in this title shall be construed to deny, impair, or otherwise
adversely affect a right or remedy available under law to any person on the
date of the enactment of this Act or thereafter, except to the extent the
right or remedy is inconsistent with this title.
Subtitle D. Medical Malpractice
Part 1. LIABILITY REFORM
SEC. 5301. FEDERAL TORT REFORM.
(a) Applicability.
(1) In general. Except as provided in section 5302, this part shall
apply with respect to any medical malpractice liability action brought in
any State or Federal court, except that this part shall not apply to a
claim or action for damages arising from a vaccine-related injury or
death to the extent that title XXI of the Public Health Service Act
applies to the claim or action.
(2) Preemption. The provisions of this part shall preempt any State law
to the extent such law is inconsistent with the limitations contained in
such provisions. The provisions of this part shall not preempt any State
law that provides for defenses or places limitations on a person's
liability in addition to those contained in this subtitle, places greater
limitations on the amount of attorneys' fees that can be collected, or
otherwise imposes greater restrictions than those provided in this part.
(3) Effect on sovereign immunity and choice of law or venue. Nothing in
paragraph (2) shall be construed to
(A) waive or affect any defense of sovereign immunity asserted by any
State under any provision of law;
(B) waive or affect any defense of sovereign immunity asserted by the
United States;
(C) affect the applicability of any provision of the Foreign
Sovereign Immunities Act of 1976;
(D) preempt State choice-of-law rules with respect to claims brought
by a foreign nation or a citizen of a foreign nation; or
(E) affect the right of any court to transfer venue or to apply the
law of a foreign nation or to dismiss a claim of a foreign nation or of
a citizen of a foreign nation on the ground of inconvenient forum.
(4) Federal court jurisdiction not established on federal question
grounds. Nothing in this part shall be construed to establish any
jurisdiction in the district courts of the United States over medical
malpractice liability actions on the basis of section 1331 or 1337 of
title 28, United States Code.
(b) Definitions. In this subtitle, the following definitions apply:
(1) Alternative dispute resolution system; ADR. The term ``alternative
dispute resolution system'' or ``ADR'' means a system that provides for
the resolution of medical malpractice claims in a manner other than
through medical malpractice liability actions.
(2) Claimant. The term ``claimant'' means any person who alleges a
medical malpractice claim, and any person on whose behalf such a claim is
alleged, including the decedent in the case of an action brought through
or on behalf of an estate.
(3) Health care professional. The term ``health care professional''
means any individual who provides health care services in a State and who
is required by the laws or regulations of the State to be licensed or
certified by the State to provide such services in the State.
(4) Health care provider. The term ``health care provider'' means any
organization or institution that is engaged in the delivery of health
care services in a State and that is required by the laws or regulations
of the State to be licensed or certified by the State to engage in the
delivery of such services in the State.
(5) Injury. The term ``injury'' means any illness, disease, or other
harm that is the subject of a medical malpractice liability action or a
medical malpractice claim.
(6) Medical malpractice liability action. The term ``medical
malpractice liability action'' means a civil action brought in a State or
Federal court against a health care provider or health care professional
(regardless of the theory of liability on which the claim is based) in
which the plaintiff alleges a medical malpractice claim.
(7) Medical malpractice claim. The term ``medical malpractice claim''
means a claim in a civil action brought against a health care provider or
health care professional in which a claimant alleges that injury was
caused by the provision of (or the failure to provide) health care
services, except that such term does not include
(A) any claim based on an allegation of an intentional tort; or
(B) any claim based on an allegation that a product is defective that
is brought against any individual or entity that is not a health care
professional or health care provider.
SEC. 5302. PLAN-BASED ALTERNATIVE DISPUTE RESOLUTION MECHANISMS.
(a) Application to Malpractice Claims Under Plans. In the case of any
medical malpractice claim arising from the provision of (or failure to
provide) health care services to an individual enrolled in a regional
alliance plan or a corporate alliance plan, no medical malpractice
liability action may be brought with respect to such claim until the final
resolution of the claim under the alternative dispute resolution system
adopted by the plan under subsection (b).
(b) Adoption of Mechanism by Plans. Each regional alliance plan and
corporate alliance plan shall
(1) adopt at least one of the alternative dispute resolution methods
specified under subsection (c) for the resolution of medical malpractice
claims arising from the provision of health care services to individuals
enrolled in the plan; and
(2) disclose to enrollees (and potential enrollees), in a manner
specified by the regional alliance or the corporate alliance, the
availability and procedures for consumer grievances under the plan,
including the alternative dispute resolution method or methods adopted
under this subsection.
(c) Specification of Permissible Alternative Dispute Resolution Methods.
(1) In general. The National Health Board shall, by regulation, develop
alternative dispute resolution methods for the use by regional alliance
and corporate alliance plans in resolving medical malpractice claims
under subsection (a). Such methods shall include at least the following:
(A) Arbitration. The use of arbitration.
(B) Mediation. The use of required mediation.
(C) Early offers of settlement. The use of a process under which
parties are required to make early offers of settlement.
(2) Standards for establishing methods. In developing alternative
dispute resolution methods under paragraph (1), the National Health Board
shall assure that the methods promote the resolution of medical
malpractice claims in a manner that
(A) is affordable for the parties involved;
(B) provides for timely resolution of claims;
(C) provides for the consistent and fair resolution of claims; and
(D) provides for reasonably convenient access to dispute resolution
for individuals enrolled in plans.
(d) Further Redress. A plan enrollee dissatisfied with the determination
reached as a result of an alternative dispute resolution method applied
under this section may, after the final resolution of the enrollee's claim
under the method, bring a cause of action to seek damages or other redress
with respect to the claim to the extent otherwise permitted under State
law.
SEC. 5303. REQUIREMENT FOR CERTIFICATE OF MERIT.
(a) Requiring Submission With Complaint. No medical malpractice liability
action may be brought by any individual unless, at the time the individual
brings the action (except as provided in subsection (b)(2)), the individual
submits an affidavit
(1) declaring that the individual (or the individual's attorney) has
consulted and reviewed the facts of the action with a qualified medical
specialist (as defined in subsection (c));
(2) including a written report by a qualified medical specialist that
clearly identifies the individual and that includes the medical
specialist's determination that, after a review of the medical record and
other relevant material, there is a reasonable and meritorious cause for
the filing of the action against the defendant; and
(3) on the basis of the qualified medical specialist's review and
consultation, that the individual (or the individual's attorney) has
concluded that there is a reasonable and meritorious cause for the filing
of the action.
(b) Extension in Certain Instances.
(1) In general. Subject to paragraph (2), subsection (a) shall not
apply with respect to an individual who brings a medical malpractice
liability action without submitting an affidavit described in such
subsection if
(A) the individual is unable to obtain the affidavit before the
expiration of the applicable statute of limitations; or
(B) at the time the individual brings the action, the individual has
been unable to obtain medical records or other information necessary to
prepare the affidavit requested pursuant to any applicable law.
(2) Deadline for submission where extension applies. In the case of an
individual who brings an action for which paragraph (1) applies, the
action shall be dismissed unless the individual submits the affidavit
described in subsection (a) not later than
(A) in the case of an action for which subparagraph (A) of paragraph
(1) applies, 90 days after bringing the action; or
(B) in the case of an action for which subparagraph (B) of paragraph
(1) applies, 90 days after obtaining the information described in such
subparagraph.
(c) Qualified Medical Specialist Defined. In subsection (a), a
``qualified medical specialist'' means, with respect to a defendant to a
medical malpractice liability action, a health care professional who
(1) is knowledgeable of, and has expertise in, the same specialty area
of medical practice that is the subject of the action; and
(2) is reasonably believed by the individual bringing the action (or
the individual's attorney)
(A) to be knowledgeable in the relevant issues involved in the
particular action,
(B) to practice (or to have practiced within the preceding 6 years)
or to teach (or to have taught within the preceding 6 years) in the
same area of health care or medicine that is at issue in the action,
and
(C) to be qualified by experience or demonstrated competence in the
subject of the case.
(d) Sanctions for Submitting False Allegations. Upon the motion of any
party or its own initiative, the court in a medical malpractice liability
action may impose a sanction on a party or the party's attorney (or both),
including a requirement that the party reimburse the other party to the
action for costs and reasonable attorney's fees, if any information
contained in an affidavit described in subsection (a) is submitted without
reasonable cause and is found to be untrue.
SEC. 5304. LIMITATION ON AMOUNT OF ATTORNEY'S CONTINGENCY FEES.
(a) In General. An attorney who represents, on a contingency fee basis, a
plaintiff in a medical malpractice liability action may not charge, demand,
receive, or collect for services rendered in connection with such action
(including the resolution of the claim that is the subject of the action
under any alternative dispute resolution) in excess of 33\1/3\ of the total
amount recovered by judgment or settlement in such action.
(b) Calculation of periodic payments. In the event that a judgment or
settlement includes periodic or future payments of damages, the amount
recovered for purposes of computing the limitation on the contingency fee
under subsection (a) shall be based on the cost of the annuity or trust
established to make the payments. In any case in which an annuity or trust
is not established to make such payments, such amount shall be based on the
present value of the payments.
(c) Contingency Fee Defined. As used in this section, the term
``contingency fee'' means any fee for professional legal services which is,
in whole or in part, contingent upon the recovery of any amount of damages,
whether through judgment or settlement.
SEC. 5305. REDUCTION OF AWARDS FOR RECOVERY FROM COLLATERAL SOURCES.
The total amount of damages recovered by a plaintiff in a medical
malpractice liability action shall be reduced by the amount of any past or
future payment which the claimant has received or for which the claimant is
eligible on account of the same injury for which the damages are awarded,
including payment under
(1) Federal or State disability or sickness programs;
(2) Federal, State, or private health insurance programs;
(3) private disability insurance programs;
(4) employer wage continuation programs; and
(5) any other program, if the payment is intended to compensate the
claimant for the same injury for which damages are awarded.
SEC. 5306. PERIODIC PAYMENT OF AWARDS.
At the request of any party to a medical malpractice liability action,
the defendant shall not be required to pay damages in a single, lump-sum
payment, but shall be permitted to make such payments periodically based
on such schedule as the court considers appropriate, taking into account
the periods for which the injured party will need medical and other
services.
Part 2. OTHER PROVISIONS RELATING TO MEDICAL MALPRACTICE LIABILITY
SEC. 5311. ENTERPRISE LIABILITY DEMONSTRATION PROJECT.
(a) Establishment. Not later than January 1, 1996, the Secretary of
Health and Human Services shall establish a demonstration project under
which the Secretary shall provide funds (in such amount as the Secretary
considers appropriate) to one or more eligible States to demonstrate
whether substituting liability for medical malpractice on the part of the
health plan in which a physician participates for the personal liability of
the physician will result in improvements in the quality of care provided
under the plan, reductions in defensive medical practices, and better risk
management.
(b) Eligibility of State. A State is eligible to participate in the
demonstration project established under subsection (a) if the State submits
an application to the Secretary (at such time and in such form as the
Secretary may require) containing such information and assurances as the
Secretary may require, including assurances that the State
(1) has entered into an agreement with a health plan (other than a
fee-for-service plan) operating in the State under which the plan assumes
legal liability with respect to any medical malpractice claim arising
from the provision of (or failure to provide) services under the plan by
any physician participating in the plan;
(2) has provided that, under the law of the State, a physician
participating in a plan that has entered into an agreement with the State
under paragraph (1) may not be liable in damages or otherwise for such a
claim and the plan may not require such physician to indemnify the plan
for any such liability; and
(3) will provide the Secretary with such reports on the operation of
the project as the Secretary may require.
(c) Authorization of Appropriations. There are authorized to be
appropriated such sums as may be necessary to carry out demonstration
projects under this section.
SEC. 5312. PILOT PROGRAM APPLYING PRACTICE GUIDELINES TO MEDICAL
MALPRACTICE
LIABILITY ACTIONS.
(a) Establishment. Not later than 1 year after the Secretary of Health
and Human Services determines that appropriate practice guidelines are
available, the Secretary shall establish a pilot program under which the
Secretary shall provide funds (in such amount as the Secretary considers
appropriate) to one or more eligible States to determine the effect of
applying practice guidelines in the resolution of medical malpractice
liability actions.
(b) Eligibility of State. A State is eligible to participate in the pilot
program established under subsection (a) if the State submits an
application to the Secretary (at such time and in such form as the
Secretary may require) containing
(1) assurances that, under the law of the State, in the resolution of
any medical malpractice liability action, it shall be a complete defense
to any allegation that a party against whom the action is filed was
negligent that, in the provision of (or the failure to provide) the
services that are the subject of the action, the party followed the
appropriate practice guideline established by the National Quality
Management Program under subtitle A; and
(2) such other information and assurances as the Secretary may require.
(c) Reports to Congress. Not later than 3 months after each year for
which the pilot program established under subsection (a) is in effect, the
Secretary shall submit a report to Congress describing the operation of the
program during the previous year and containing such recommendations as the
Secretary considers appropriate, including recommendations relating to
revisions to the laws governing medical malpractice liability.
Subtitle E. Fraud and Abuse
Part 1. ESTABLISHMENT OF ALL-PAYER HEALTH CARE FRAUD AND ABUSE
CONTROL
PROGRAM
SEC. 5401. ALL-PAYER HEALTH CARE FRAUD AND ABUSE CONTROL PROGRAM.
(a) In General. Not later than January 1, 1996, the Secretary of Health
and Human Services (acting through the Office of the Inspector General of
the Department of Health and Human Services) and the Attorney General shall
establish a program
(1) to coordinate the functions of the Attorney General, the Secretary,
and other organizations with respect to the prevention, detection, and
control of health care fraud and abuse,
(2) to conduct investigations, audits, evaluations, and inspections
relating to the delivery of and payment for health care in the United
States, and
(3) to facilitate the enforcement of this subtitle and other statutes
applicable to health care fraud and abuse.
(b) Coordination With Law Enforcement Agencies. In carrying out the
program under subsection (a), the Secretary and Attorney General shall
consult with, and arrange for the sharing of data and resources with
Federal, State and local law enforcement agencies, State Medicaid Fraud
Control Units, and State agencies responsible for the licensing and
certification of health care providers.
(c) Coordination With Health Alliances and Health Plans. In carrying out
the program under subsection (a), the Secretary and Attorney General shall
consult with, and arrange for the sharing of data with representatives of
health alliances and health plans.
(d) Authorities of Attorney General, Secretary, and Inspector General. In
carrying out duties established under subsection (a), the Attorney General,
the Secretary, and the Inspector General are authorized
(1) to conduct, supervise, and coordinate audits, civil and criminal
investigations, inspections, and evaluations relating to the program
established under such subsection; and
(2) to have access (including on-line access as requested and
available) to all records available to health alliances and health plans
that relate to ongoing investigations or the imposition of sanctions
under such program (subject to restrictions based on the confidentiality
of certain information under subtitle B).
(e) Qualified Immunity for Providing Information. The provisions of
section 1157(a) of the Social Security Act (relating to limitation on
liability) shall apply to a person providing information or communications
to the Secretary or Attorney General in conjunction with their performance
of duties under this section, in the same manner as such section applies to
information provided to organizations with a contract under part B of title
XI of such Act.
(f) Authorizations of Appropriations for Investigators and Other
Personnel. In addition to any other amounts authorized to be appropriated
to the Secretary and the Attorney General for health care anti-fraud and
abuse activities for a fiscal year, there are authorized to be appropriated
such additional amounts as may be necessary to enable the Secretary and the
Attorney General to conduct investigations, audits, evaluations, and
inspections of allegations of health care fraud and abuse and otherwise
carry out the program established under subsection (a) in a fiscal year.
(g) Use of Powers Under Inspector General Act of 1978. In carrying out
duties and responsibilities under the program established under subsection
(a), the Inspector General is authorized to exercise all powers granted
under the Inspector General Act of 1978 to the same manner and extent as
provided in that Act.
(h) Definitions. In this part and part 2
(1) the term ``Inspector General'' means the Inspector General of the
Department of Health and Human Services; and
(2) the term ``Secretary'' means Secretary of Health and Human
Services.
SEC. 5402. ESTABLISHMENT OF ALL-PAYER HEALTH CARE FRAUD AND ABUSE
CONTROL
ACCOUNT.
(a) Establishment.
(1) In general. There is hereby created on the books of the Treasury of
the United States an account to be known as the ``All-Payer Health Care
Fraud and Abuse Control Account'' (in this section referred to as the
``Anti-Fraud Account ''). The Anti-Fraud Account shall consist of such
gifts and bequests as may be made as provided in paragraph (2) and such
amounts as may be deposited in such Anti-Fraud Account as provided in
subsection (b)(4) and title XI of the Social Security Act. It shall also
include the following:
(A) All criminal fines imposed in cases involving a Federal health
care offense (as defined in subsection (e)).
(B) Penalties and damages imposed under the False Claims Act (31
U.S.C. 3729 et seq.), in cases involving claims related to the
provision of health care items and services (other than funds awarded
to a relator or for restitution).
(C) Administrative penalties and assessments imposed under titles XI,
XVIII and XIX of the Social Security Act and section 5412 (except as
otherwise provided by law).
(D) Amounts resulting from the forfeiture of property by reason of a
Federal health care offense.
Any such funds received on or after the date of the enactment of this
Act shall be deposited in the Anti-Fraud Account.
(2) Authorization to accept gifts. The Anti-Fraud Account is authorized
to accept on behalf of the United States money gifts and bequests made
unconditionally to the Anti-Fraud Account, for the benefit of the
Anti-Fraud Account, or any activity financed through the Anti-Fraud
Account.
(b) Use of Funds.
(1) In general. Amounts in the Anti-Fraud Account shall be available
without appropriation and until expended to assist the Secretary and
Attorney General in carrying out the All-Payer Health Care Fraud and
Abuse Control Program established under section 5401 (including the
administration of the Program), and may be used to cover costs incurred
in operating the Program, including
(A) costs of prosecuting health care matters (through criminal, civil
and administrative proceedings);
(B) costs of investigations (including equipment, salaries,
administratively uncontrollable work, travel and training of law
enforcement personnel);
(C) costs of financial and performance audits of health care programs
and operations;
(D) costs of inspections and other evaluations.
(2) Funds used to supplement agency appropriations. It is intended that
disbursements made from the Anti-Fraud Account to any Federal agency be
used to increase and not supplant the recipient agency's appropriated
operating budget.
(c) Annual Report. The Secretary and the Attorney General shall submit an
annual report to Congress on the amount of revenue which is generated and
disbursed by the Anti-Fraud Account in each fiscal year.
(d) Federal Health Care Offense Defined. The term ``Federal health care
offense'' means a violation of, or a criminal conspiracy to violate
(1) sections 226, 668, 1033, or 1347 of title 18, United States Code;
(2) section 1128B of the Social Security Act;
(3) sections 287, 371, 664, 666, 1001, 1027, 1341, 1343, or 1954 of
title 18, United States Code, if the violation or conspiracy relates to
health care fraud;
(4) sections 501 or 511 of the Employee Retirement Income Security Act
of 1974, if the violation or conspiracy relates to health care fraud;
(5) sections 301, 303(a)(2), or 303(b) or (e) of the Federal Food Drug
and Cosmetic Act, if the violation or conspiracy relates to health care
fraud.
SEC. 5403. USE OF FUNDS BY INSPECTOR GENERAL.
(a) Reimbursements for Investigations.
(1) In general. The Inspector General is authorized to receive and
retain for current use reimbursement for the costs of conducting
investigations, when such restitution is ordered by a court, voluntarily
agreed to by the payor, or otherwise.
(2) Crediting. Funds received by such Office as reimbursement for costs
of conducting investigations shall be deposited to the credit of such
Office appropriation from which initially paid, or to appropriations for
similar purposes currently available at the time of deposit, and shall
remain available for obligation for 365 days from the date of their
deposit.
(3) Exception for forfeitures. This subsection does not apply to
investigative costs paid to such Office from the Health Care Asset
Forfeiture Fund, which monies shall be deposited and expended in
accordance with subsection (b).
(b) HHS Office of Inspector General Asset Forfeiture Proceeds Fund.
(1) In general. There is established in the Treasury of the United
States the ``HHS Office of Inspector General Asset Forfeiture Proceeds
Fund,'' to be administered by the Inspector General, which shall be
available to such Office without fiscal year limitation for expenses
relating to the investigation of matters within the jurisdiction of such
Office.
(2) Deposits. There shall be deposited in the Fund all proceeds from
forfeitures that have been transferred to the Office of Inspector General
from the Department of Justice Asset Forfeiture Fund under section
524(d)(1) of title 28, United States Code.
Part 2. APPLICATION OF FRAUD AND ABUSE AUTHORITIES UNDER THE SOCIAL
SECURITY
ACT TO ALL PAYERS
SEC. 5411. EXCLUSION FROM PARTICIPATION.
(a) Mandatory Exclusion. The Secretary shall exclude an individual or
entity from participation in any applicable health plan if the individual
or entity is described in section 1128(a) of the Social Security Act
(relating to individuals and entities convicted of health care-related
crimes or patient abuse).
(b) Permissive Exclusion. The Secretary may exclude an individual or
entity from participation in any applicable health plan if the individual
or entity is described in section 1128(b) of the Social Security Act (other
than paragraphs (6)(A), (6)(C), (6)(D), (10), or (13) of such section).
(c) Notice, Effective Date, and Period of Exclusion. (1) An exclusion
under this section or section 5412(b)(3) shall be effective at such time
and upon such reasonable notice to the public and to the individual or
entity excluded as may be specified in regulations consistent with
paragraph (2).
(2) Such an exclusion shall be effective with respect to services
furnished to an individual on or after the effective date of the
exclusion.
(3)(A) The Secretary shall specify, in the notice of exclusion under
paragraph (1) and the written notice under section 5412 of this Act, the
minimum period (or, in the case of an exclusion of an individual
described in section 1128(b)(12) of the Social Security Act, the period)
of the exclusion.
(B) In the case of a mandatory exclusion under subsection (a), the
minimum period of exclusion shall be not less than 5 years.
(C) In the case of an exclusion of an individual described in
paragraph (1), (2), or (3) of section 1128(b) of the Social Security
Act, the period of exclusion shall be a minimum of 3 years, unless the
Secretary determines that a longer period is necessary because of
aggravating circumstances.
(D) In the case of an exclusion of an individual or entity described
in paragraph (4) or (5) of sections 1128(b) of the Social Security Act,
the period of the exclusion shall not be less than the period during
which the individual's or entity's license to provide health care is
revoked, suspended or surrendered, or the individual or the entity is
excluded or suspended from a Federal or State health care program.
(E) In the case of an exclusion of an individual or entity described
in paragraph (6)(B) of section 1128(b) of the Social Security Act, the
period of the exclusion shall be not less than 1 year.
(F) In the case of an exclusion of an individual described in
paragraph (12) of section 1128(b) of the Social Security Act, the
period of the exclusion shall be equal to the sum of
(i) the length of the period in which the individual failed to
grant the immediate access described in that paragraph, and
(ii) an additional period, not to exceed 90 days, set by the
Secretary.
(d) Notice to Entities Administering Public Programs for the Delivery of
or Payment for Health Care Items or Services. (1) The Secretary shall
exercise the authority under this section in a manner that results in an
individual's or entity's exclusion from all applicable health plans for the
delivery of or payment for health care items or services.
(2) The Secretary shall promptly notify each sponsor of an applicable
health plan and each entity that administers a State health care program
described in section 1128(h) of the Social Security Act of the fact and
circumstances of each exclusion effected against an individual or entity
under this section or under section 5412.
(e) Notice to State Licensing Agencies. The provisions of section 1128(e)
of the Social Security Act shall apply to this section in the same manner
as such provisions apply to sections 1128 and 1128A of such Act.
(f) Notice, Hearing, and Judicial Review. (1) Subject to paragraph (2),
any individual or entity that is excluded (or directed to be excluded) from
participation under this section is entitled to reasonable notice and
opportunity for a hearing thereon by the Secretary to the same extent as is
provided in section 205(b) of the Social Security Act, and to judicial
review of the Secretary's final decision after such hearing as is provided
in section 205(g) of such Act, except that such action shall be brought in
the Court of Appeals of the United States for the judicial circuit in which
the individual or entity resides, or has a principal place of business, or,
if the individual or entity does not reside or have a principal place of
business within any such judicial circuit, in the United States Court of
Appeals for the District of Columbia Circuit.
(2) Unless the Secretary determines that the health or safety of
individuals receiving services warrants the exclusion taking effect
earlier, any individual or entity that is the subject of an adverse
determination based on paragraphs (3), (4), (5), (6), (7), (8), (9), or
(14) of section 1128(b) of the Social Security Act, shall be entitled to
a hearing by an administrative law judge (as provided under section
205(b) of the Social Security Act) on the determination before any
exclusion based upon the determination takes effect. If a hearing is
requested, the exclusion shall be effective upon the issuance of an order
by the administrative law judge upholding the determination of the
Secretary to exclude.
(3) The provisions of section 205(h) of the Social Security Act shall
apply with respect to this section to the same extent as such provisions
apply with respect to title II of such Act.
(g) Application for Termination of Exclusion. (1) An individual or entity
excluded (or directed to be excluded) from participation under this section
or section 5412(b)(3) may apply to the Secretary, in the manner specified
by the Secretary in regulations and at the end of the minimum period of
exclusion (or, in the case of an individual or entity described in section
1128(b)(8), the period of exclusion) provided under this section and a such
other times as the Secretary may provide, for termination of the exclusion.
(2) The Secretary may terminate the exclusion if the Secretary
determines, on the basis of the conduct of the applicant which occurred
after the date of the notice of exclusion or which was unknown to the
Secretary at the time of the exclusion, that
(A) there is no basis under this section or section 5412(b)(3) for a
continuation of the exclusion, and
(B) there are reasonable assurances that the types of actions which
formed the basis for the original exclusion have not recurred and will
not recur.
(3) The Secretary shall promptly notify each sponsor of an applicable
health plan entity that administers a State health care program described
in section 1128(h) of the Social Security Act of each termination of
exclusion made under this subsection.
(h) Convicted Defined. In this section, the term ``convicted'' has the
meaning given such term in section 1128(i) of the Social Security Act.
(i) Request for Exclusion. The sponsor of any applicable health plan
(including a State in the case of a regional alliance health plan and the
Secretary of Labor in the case of a corporate alliance health plan) may
request that the Secretary of Health and Human Services exclude an
individual or entity with respect to actions under such a plan in
accordance with this section.
SEC. 5412. CIVIL MONETARY PENALTIES.
(a) Actions Subject to Penalty. Any person who is determined by the
Secretary to have committed any of the following actions with respect to an
applicable health plan shall be subject to a penalty in accordance with
subsection (b):
(1) Actions subject to penalty under medicare, medicaid, and other
social security health programs. Any action that would subject the person
to a penalty under paragraphs (1) through (12) of section 1128A of the
Social Security Act if the action was taken with respect to title V,
XVIII, XIX or XX of such Act.
(2) Termination of enrollment. The termination of an individual's
enrollment (including the refusal to re-enroll an individual) in
violation of subtitle E of title I or State law.
(3) Discriminating on basis of medical condition. The engagement in any
practice that would reasonably be expected to have the effect of denying
or discouraging the initial or continued enrollment in a health plan by
individuals whose medical condition or history indicates a need for
substantial future medical services.
(4) Inducing enrollment on false pretenses. The engagement in any
practice to induce enrollment in an applicable health plan through
representations to individuals which the person knows or should know are
false or fraudulent.
(5) Providing incentives to enroll. The offer or payment of
remuneration to any individual eligible to enroll in an applicable health
plan that such person knows or should know is likely to influence such
individual to enroll in a particular plan.
(b) Penalties Described.
(1) General rule. Any person who the Secretary determines has committed
an action described in paragraphs (2) through (6) of subsection (a) shall
be subject to a civil monetary penalty in an amount not to exceed $50,000
for each such determination.
(2) Actions subject to penalties under social security act. In the case
of a person who the Secretary determines has committed an action
described in paragraph (1) of subsection (a), the person shall be subject
to the civil monetary penalty (together with any additional assessment)
to which the person would be subject under section 1128A of the Social
Security Act if the action on which the determination is based had been
committed with respect to title V, XVIII, XIX or XX of such Act.
(3) Determinations to exclude permitted. In addition to any civil
monetary penalty imposed under this subsection, the Secretary may make a
determination in the same proceeding to exclude the person from
participation in all applicable health plans for the delivery of or
payment for health care items or services (in accordance with section
5411(c)).
(c) Procedures for Imposition of Penalties.
(1) Applicability of procedures under social security act. Except as
otherwise provided in paragraphs (2) and (3), the provisions of
subsections (c), (d), (e), (g), (j), (k), and (l) of section 1128A of the
Social Security Act shall apply with respect to the imposition of
penalties under this section in the same manner as such provisions apply
with respect to the imposition of civil monetary penalties under section
1128A of such Act.
(2) Limitation on time for attorney general to act. The first sentence
of section 1128A(c) of the Social Security Act shall be applied with
respect to civil monetary penalties under this section as if the
reference in such section to ``one year'' was a reference to ``60 days''.
(3) Authority of states to impose penalties. If no proceeding to impose
a civil monetary penalty under this section with respect to actions
relating to a regional alliance health plan has been initiated (by either
the Attorney General or the Secretary) within 120 days after the
Secretary presents a case to the Attorney General for consideration of
the imposition of such a penalty, the State in which the alliance is
located may initiate proceedings to impose a civil monetary penalty under
this section with respect to the action in the same manner as the
Secretary may initiate such proceedings.
(d) Treatment of Amounts Recovered. Any amounts recovered under this
section shall be paid to the Secretary and disposed of as follows:
(1) Such portions of the amounts recovered as is determined to have
been improperly paid from an applicable health plan for the delivery of
or payment for health care items or services shall be repaid to such
plan.
(2) The remainder of the amounts recovered shall be deposited in the
All-Payer Health Care Fraud and Abuse Control Account established under
section 5402.
(e) Notification of Licensing Authorities. Whenever the Secretary's
determination to impose a penalty, assessment, or exclusion under this
section becomes final, the Secretary shall notify the appropriate State or
local licensing agency or organization (including the agency specified in
section 1864(a) and 1902(a)(33) of the Social Security Act) that such a
penalty, assessment, or exclusion has become final and the reasons
therefor.
SEC. 5413. LIMITATIONS ON PHYSICIAN SELF-REFERRAL.
The provisions of section 1877 of the Social Security Act shall apply
(1) to items and services (and payments and claims for payment for such
items and services) furnished under any applicable health plan in the
same manner as such provisions apply to designated health services (and
payments and claims for payment for such services) under title XVIII of
the Social Security Act; and
(2) to a State (with respect to an item or service furnished or payment
made under a regional alliance health plan) and to the Secretary of Labor
(with respect to a an item or service furnished or payment made under a
corporate alliance health plan) in the same manner as such provisions
apply to the Secretary.
SEC. 5414. CONSTRUCTION OF SOCIAL SECURITY ACT REFERENCES.
(a) Incorporation of Other Amendments. Any reference in this part to a
provision of the Social Security Act shall be considered a reference to the
provision as amended under title IV.
(b) Effect of Subsequent Amendments. Except as provided in subsection
(a), any reference to a provision of the Social Security Act in this part
shall be deemed to be a reference to such provision as in effect on the
date of the enactment of this Act, and (except as Congress may otherwise
provide) any amendments made to such provisions after such date shall not
be taken into account in determining the applicability of such provisions
to individuals and entities under this Act.
Part 3. AMENDMENTS TO ANTI-FRAUD AND ABUSE PROVISIONS UNDER THE
SOCIAL
SECURITY ACT
SEC. 5421. REFERENCE TO AMENDMENTS.
For provisions amending the anti-fraud and abuse provisions existing
under the Social Security Act, see part 5 of subtitle A of title IV.
Part 4. AMENDMENTS TO CRIMINAL LAW
SEC. 5431. HEALTH CARE FRAUD.
(a) In General. Chapter 63 of title 18, United States Code, is amended by
adding at the end the following:
`` 1347. Health care fraud
``(a) Whoever knowingly executes, or attempts to execute, a scheme or
artifice
``(1) to defraud any health alliance, health plan, or other person, in
connection with the delivery of or payment for health care benefits, items,
or services;
``(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property owned by, or
under the custody or control of, any health alliance, health plan, or
person in connection with the delivery of or payment for health care
benefits, items, or services;
``shall be fined under this title or imprisoned not more than 10 years,
or both. If the violation results in serious bodily injury (as defined in
section 1365 of this title) such person shall be imprisoned for life or any
term of years.
``(b) As used in this section, the terms `health alliance' and `health
plan' have the meanings given those terms in title I of the Health Security
Act.''.
(b) Clerical Amendment. The table of sections at the beginning of chapter
63 of title 18, United States Code, is amended by adding at the end the
following:
``1347. Health care fraud.''.
SEC. 5432. FORFEITURES FOR VIOLATIONS OF FRAUD STATUTES.
(a) In General. Section 982(a) of title 18, United States Code, is
amended by inserting after paragraph (5) the following:
``(6) If the court determines that a Federal health care offense (as
defined in section 5402(e) of the Health Security Act) is of a type that
poses a serious threat to the health of any person or has a significant
detrimental impact on the health care system, the court, in imposing
sentence on a person convicted of that offense, shall order that person to
forfeit property, real or personal, that
``(A)(i) is used in the commission of the offense; or
``(ii) constitutes or is derived from proceeds traceable to the
commission of the offense; and
``(B) is of a value proportionate to the seriousness of the offense.''.
(b) Proceeds of Health Care Fraud Forfeitures. Section 524(c)(4)(A) of
title 28, United States Code, is amended by inserting ``all proceeds of
forfeitures relating to Federal health care offenses (as defined in section
5402(e) of the Health Security Act), and'' after ``except''.
SEC. 5433. FALSE STATEMENTS.
(a) In General. Chapter 47 of title 18, United States Code, is amended by
adding at the end the following:
`` 1033. False statements relating to health care matters
``(a) Whoever, in any matter involving a health alliance or health plan,
knowingly and willfully falsifies, conceals, or covers up by any trick,
scheme, or device a material fact, or makes any false, fictitious, or
fraudulent statements or representations, or makes or uses any false
writing or document knowing the same to contain any false, fictitious, or
fraudulent statement or entry, shall be fined under this title or
imprisoned not more than 5 years, or both.
``(b) As used in this section the terms `health alliance' and `health
plan' have the meanings given those terms in title I of the Health Security
Act.''.
(b) Clerical Amendment. The table of sections at the beginning of chapter
47 of title 18, United States Code, is amended by adding at the end the
following:
``1033. False statements relating to health care matters.''.
SEC. 5434. BRIBERY AND GRAFT.
(a) In General. Chapter 11 of title 18, United States Code, is amended by
adding at the end the following:
``. Bribery and graft in connection with health care
``(a) Whoever
``(1) directly or indirectly, corruptly gives, offers, or promises
anything of value to a health care official, or offers or promises a health
care official to give anything of value to any other person, with intent
``(A) to influence, or for or because of, any of the health care
official's actions, decisions, or duties relating to a health alliance or
health plan;
``(B) to influence such an official to commit or aid in the committing,
or collude in or allow, any fraud, or make opportunity for the commission
of any fraud, on a health alliance or health plan, or for or because of any
such conduct on the part of such an official; or
``(C) to induce such an official to engage in any conduct in violation of
the lawful duty of such official, or for or because of such conduct; or
``(2) being a health care official, directly or indirectly, corruptly
demands, seeks, receives, accepts, or agrees to accept anything of value
personally or for any other person or entity, the giving of which violates
paragraph (1) of this subsection.
``(b) As used in this section
``(1) the term `health care official' means
``(A) an administrator, officer, trustee, fiduciary, custodian, counsel,
agent, or employee of any health care alliance or health plan;
``(B) an officer, counsel, agent, or employee, of an organization that
provides services under contract to any health alliance or health plan;
``(C) an official or employee of a State agency having regulatory
authority over any health alliance or health plan;
``(D) an officer, counsel, agent, or employee of a health care sponsor;
and
``(2) the term `health care sponsor' means any individual or entity
serving as the sponsor of a health alliance or health plan for purposes of
the Health Security Act, and includes the joint board of trustees or other
similar body used by two or more employers to administer a health alliance
or health plan for purposes of such Act.''.
(b) Clerical Amendment. The table of chapters at the beginning of chapter
11 of title 18, United States Code, is amended by adding at the end the
following:
`` Bribery and graft in connection with health care.''.
SEC. 5435. INJUNCTIVE RELIEF RELATING TO HEALTH CARE OFFENSES.
Section 1345(a)(1) of title 18, United States Code, is amended
(1) by striking ``or'' at the end of subparagraph (A);
(2) by inserting ``or'' at the end of subparagraph (B); and
(3) by adding at the end the following:
``(C) committing or about to commit a Federal health care offense (as
defined in section 5402(e) of the Health Security Act);''.
SEC. 5436. GRAND JURY DISCLOSURE.
Section 3322 of title 18, United States Code, is amended
(1) by redesignating subsections (c) and (d) as subsections (d) and
(e), respectively; and
(2) by inserting after subsection (b) the following:
``(c) A person who is privy to grand jury information concerning a
health law violation
``(1) received in the course of duty as an attorney for the Government;
or
``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal Rules of
Criminal Procedure;
``may disclose that information to an attorney for the Government to
use in any civil proceeding related to a Federal health care offense (as
defined in section 5402(e) of the Health Security Act), or for use in
connection with civil forfeiture under section 981(a)(1)(C) of this
title.''.
SEC. 5437. THEFT OR EMBEZZLEMENT.
(a) In General. Chapter 31 of title 18, United States Code, is amended by
adding at the end the following:
`` 668. Theft or embezzlement in connection with health care
``(a) Whoever embezzles, steals, willfully and unlawfully converts to the
use of any person other than the rightful owner, or intentionally
misapplies any of the moneys, securities, premiums, credits, property, or
other assets of a health alliance, health plan, or of any fund connected
with such an alliance or plan, shall be fined under this title or
imprisoned not more than 10 years, or both.
``(b) As used in this section, the terms `health alliance' and `health
plan' have the meanings given those terms under title I of the Health
Security Act.''.
(b) Clerical Amendment. The table of sections at the beginning of chapter
31 of title 18, United States Code, is amended by adding at the end the
following:
``668. Theft or embezzlement in connection with health care.''.
SEC. 5438. MISUSE OF HEALTH SECURITY CARD OR UNIQUE IDENTIFIER.
(a) In General. Chapter 33 of title 18, United States Code, is amended by
adding at the end the following new section:
`` Misuse of health security card or unique identifier
``Whoever
``(1) requires the display of, requires the use of, or uses a health
security card that is issued under section 1001(b) of the American Health
Security Act for any purpose other than a purpose described in section
5105(a) of such Act; or
``(2) requires the disclosure of, requires the use of, or uses a unique
identifier number provided pursuant to section 5104 of such Act for any
purpose that is not authorized by the National Health Board pursuant to
such section;
``shall be fined under this title or imprisoned not more than 2 years, or
both.''.
(b) Clerical Amendments to Table of Sections. The table of sections at
the beginning of chapter 33, United States Code, is amended
(1) by amending the catchline to read as follows:
``CHAPTER 33 EMBLEMS, INSIGNIA, IDENTIFIERS, AND NAMES'';
and
(2) by adding at the end the following new item:
`` Misuse of health security card or unique identifier.''.
(c) Clerical Amendment to Table of Chapters. The item relating to chapter
33 in the table of chapters at the beginning of part 1 of title 18, United
States Code, is amended to read as follows:
``Emblems, insignia, identifiers, and names''.
Part 5. AMENDMENTS TO CIVIL FALSE CLAIMS ACT
SEC. 5441. AMENDMENTS TO CIVIL FALSE CLAIMS ACT.
Section 3729 of title 31, United States Code, is amended
(1) in subsection (a)(7), by inserting ``or to a health plan,'' after
``property to the Government,'';
(2) in the matter following subsection (a)(7), by inserting ``or health
plan'' before ``sustains because of the act of that person,'' ;
(3) at the end of the first sentence of subsection (a), by inserting
``or health plan'' before ``sustains because of the act of the person.''
;
(4) in subsection (c)
(A) by inserting ``the term'' after ``section,''; and
(B) by adding at the end the following: ``The term also includes any
request or demand, whether under contract of otherwise, for money or
property which is made or presented to a health plan.'' ; and
(5) by adding at the end the following:
``(f) Health Plan Defined. For purposes of this section, the term
`health plan' has the meaning given such term under section 1400 of the
Health Security Act.''.
Subtitle F. McCarran-Ferguson Reform
SEC. 5501. REPEAL OF EXEMPTION FOR HEALTH INSURANCE.
(a) In General. Section 3 of the Act of March 9, 1945 (15 U.S.C. 1013),
known as the McCarran-Ferguson Act, is amended by adding at the end the
following:
``(c) Notwithstanding that the business of insurance is regulated by
State law, nothing in this Act shall limit the applicability of the
following Acts to the business of insurance to the extent that such
business relates to the provision of health benefits:
``(1) The Sherman Act (15 U.S.C. 1 et seq.).
``(2) The Clayton Act (15 U.S.C. 12 et seq.).
``(3) Federal Trade Commission Act (15 U.S.C. 41 et seq.). ``(4) The
Act of June 19, 1936 (49 Stat. 1526; 15 U.S.C. 21a et seq.), known as the
Robinson-Patman Antidiscrimination Act.''.
(b) Effective Date. The amendment made by subsection (a) shall take
effect on the first day of the sixth month beginning after the date of the
enactment of this Act.
Title VI: PREMIUM CAPS; PREMIUM-BASED FINANCING; AND PLAN PAYMENTS
Table of contents
Section 6000. General definitions.
Subtitle A. Premium Caps
Part 1. Regional Alliance Health Expenditures
Subpart A. COMPUTATION OF TARGETS AND ACCEPTED BIDS
Section 6001. Computation of regional alliance inflation factors.
Section 6002. Board determination of national per capita baseline
premium target.
Section 6003. Determination of alliance per capita premium
targets.
Section 6004. Alliance initial bidding and negotiation process.
Section 6005. State financial incentives.
Section 6006. Recommendations to eliminate regional variations in
alliance targets due to variation in practice
patterns; congressional consideration.
Section 6007. Reference to limitation on administrative and
judicial review of certain determinations.
Subpart B. PLAN AND PROVIDER PAYMENT REDUCTIONS TO MAINTAIN
EXPENDITURES WITHIN TARGETS
Section 6011. Plan payment reduction.
Section 6012. Provider payment reduction.
Part 2. Corporate Alliances Health Expenditures
Section 6021. Calculation of premium equivalents.
Section 6022. Termination of corporate alliance for excess
increase in expenditures.
Part 3. Treatment of Single-Payer States
Section 6031. Special rules for single-payer States.
Part 4. Transition Provisions
Section 6041. Monitoring prices and expenditures.
Subtitle B. Premium-Related Financing
Part 1. Family Premium Payments
Subpart A. FAMILY SHARE
Section 6101. Family share of premium.
Section 6102. Amount of premium.
Section 6103. Alliance credit.
Section 6104. Premium discount based on income.
Section 6105. Excess premium credit.
Section 6106. Corporate alliance opt-in credit.
Section 6107. Family collection shortfall add-on.
Subpart B. REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES
Section 6111. Repayment of alliance credit by certain families.
Section 6112. No liability for families employed full-time;
reduction in liability for part-time employment.
Section 6113. Limitation of liability based on income.
Section 6114. Special treatment of certain retirees and qualified
spouses and children.
Section 6115. Special treatment of certain medicare beneficiaries.
Part 2. Employer Premium Payments
Subpart A. REGIONAL ALLIANCE EMPLOYERS
Section 6121. Employer premium payment required.
Section 6122. Computation of base employment monthly premium.
Section 6123. Premium discount for certain employers.
Section 6124. Payment adjustment for large employers electing
coverage in a regional alliance.
Section 6125. Employer collection shortfall add-on.
Section 6126. Application to self-employed individuals.
Subpart B. CORPORATE ALLIANCE EMPLOYERS
Section 6131. Employer premium payment required.
Subtitle C. Payments to Regional Alliance Health Plans
Section 6201. Computation of blended plan per capita payment
amount.
Section 6202. Computation of plan bid, AFDC, and SSI proportions.
--------
SEC. 6000. GENERAL DEFINITIONS
(a) Definitions Relating to Bids. In this title:
(1) Accepted bid. The term ``accepted bid'' means the bid which is
agreed to between a regional alliance health plan and a regional alliance
for coverage of the comprehensive benefit package in the alliance area
under part 1.
(2) Final accepted bid. The term ``final accepted bid'' means the
accepted bid, taking into account any voluntary reduction in such bid
made under section 6004(e).
(3) Weighted average accepted bid. The term ``weighted average accepted
bid'' means, for a regional alliance for a year, the average of the
accepted bids for all regional alliance health plans offered by such
alliance, weighted to reflect the relative enrollment of regional
alliance eligible individuals among such plans.
(4) Reduced weighted average accepted bid. The term ``reduced weighted
average accepted bid'', for a health plan offered by a regional alliance
for a year, is the lesser of
(A) the weighted average accepted bid for the regional alliance for
the year (determined using the final accepted bids as the accepted
bids), or
(B) the regional alliance per capita target for the year.
(b) Weighted Average Premium. In this title, the term ``weighted average
premium'' means, for a class of family enrollment and with respect to a
regional alliance for a year, the product of
(1) reduced weighted average accepted bid (as defined in subsection
(a)(4));
(2) the uniform per capita conversion factor (established under
section 1341(b)) for the alliance; and
(3) the premium class factor established by the Board for that class
under section 1531.
(c) Incorporation of Other Definitions. Except as otherwise provided in
this title, the definitions of terms in subtitle J of title I of this Act
shall apply to this title.
Subtitle A. Premium Caps
Part 1. REGIONAL ALLIANCE HEALTH EXPENDITURES
Subpart A. Computation of Targets and Accepted Bids
SEC. 6001. COMPUTATION OF REGIONAL ALLIANCE INFLATION FACTORS.
(a) Computation.
(1) In general. This section provides for the computation of a factors
that limit the growth of premiums for the comprehensive benefit package
in regional alliance health plans. The Board shall compute and publish,
not later than March 1 of each year (beginning with 1995) the regional
alliance inflation factor (as defined in paragraph (2)) for each regional
alliance for the following year.
(2) Regional alliance inflation factor. In this part, the term
``regional alliance inflation factor'' means, for a year for a regional
alliance
(A) the general health care inflation factor for the year (as defined
in paragraph (2));
(B) adjusted under subsection (c) (to take into account material
changes in the demographic and socio-economic characteristics of the
population of alliance eligible individuals);
(C) decreased by the percentage adjustment (if any) provided with
respect to the regional alliance under subsection (d) (relating to
adjustment for previous excess expenditures); and
(D) in the case of the year 2001, increased by a factor that the
Board determines to reflect the ratio of (i) the actuarial value of the
increase in benefits provided in that year under the comprehensive
benefit package to (ii) the actuarial value of the benefits that would
have been in such package in the year without regard to the increase.
(3) General health care inflation factor.
(A) 1996 through 1999his part, the term ``general health care
inflation factor'', for a year, means the percentage increase in the
CPI (as specified under subsection (b)) for the year plus the
following:
(i) For 1996, 1.5 percentage points.
(ii) For 1997, 1.0 percentage points.
(iii) For 1998, 0.5 percentage points.
(iv) For 1999, 0 percentage points.
(B) Years after 1999.
(i) Recommendation to congress. In 1998, the Board shall submit to
Congress recommendations on what the general health care inflation
factor should be for years beginning with 2000.
(ii) Failure of congress to act. If the Congress fails to enact a
law specifying the general health care inflation factor for a year
after 1999, the Board, in January of the year before the year
involved, shall compute such factor for the year involved. Such
factor shall be the product of the factors described in subparagraph
(C) for that fiscal year.
(C) Factor. The factor described in this subparagraph for a year is 1
plus the following:
(i) CPI. The percentage change in the CPI for the year, determined
based upon the percentage change in the average of the CPI for the
12-month period ending with August 31 of the previous fiscal year
over such average for the preceding 12-month period.
(ii) Population. The average annual percentage change in the
population of the United States during the 3-year period ending in
the calendar year, determined by the Board based on data supplied by
the Bureau of the Census.
(iii) Real gdp per capita. The average annual percentage change in
the real, per capita gross domestic product of the United States
during the 3-year period ending in the preceding calendar year,
determined by the Board based on data supplied by the Department of
Commerce.
(b) Projection of Increase in CPI.
(1) In general. For purposes of this section, the Board shall specify,
as of the time of publication, the annual percentage increase in the CPI
(as defined in section 1902(9)) for the following year.
(2) Data to be used. Such increase shall be the projection of the CPI
contained in the budget of the United States transmitted by the President
to the Congress in the year.
(c) Special Adjustment for Material Changes in Demographic
Characteristics of Population.
(1) Adjustment for corporate alliance opt-in.
(A) In general. The Board shall develop a method for adjusting the
regional alliance inflator factor for each regional alliance in order
to reflect material changes in the demographic characteristics of
regional alliance eligible individuals residing in the alliance area
(in comparison with such characteristics for the previous year) as a
result of one or more corporate alliances terminating an election under
section 1313.
(B) Basis for adjustments. Adjustments under this paragraph (whether
an increase or decrease) shall be based on the characteristics and
factors used for making adjustments in payments under section 6124.
(2) Adjustment for regional trend compared to national trend.
(A) In general. The Board shall develop a method for adjusting the
regional alliance inflator factor for each regional alliance in order
to reflect material changes in the demographic characteristics
(including at least age, gender, and socio-economic status) and health
status of regional alliance eligible individuals residing in the
alliance area in comparison with the average change in such
characteristics for such individuals residing in the United States. The
adjustment under this paragraph shall be for changes not taken into
account in the adjustment under paragraph (1).
(B) Neutral adjustment. Such method (and any annual adjustment under
this paragraph) shall be designed to result in the adjustment effected
under this paragraph for a year not changing the weighted average of
the regional alliance inflation factors.
(3) Application. The Board shall provide, on an annual basis, for an
adjustment of regional alliance inflation factors under this subsection
using such method.
(d) Adjustment for Previous Excess Rate of Increase in Expenditures.
(1) In general. If actual weighted average accepted bid for a regional
alliance for a year (as determined by the Board based on actual
enrollment in the first month of the year) exceeds the regional alliance
per capita premium target (determined under section 6003(a)) for the
year, then the regional alliance inflation factor
(A) for the succeeding year shall be reduced by the product of
(i) \1/2\ of the excess percentage (described in paragraph (3)) for
the previous year, and
(ii) the adjustment factor (described in paragraph (2)(A)) for such
succeeding year; and
(B) in the second succeeding year shall be reduced by the product of
(i) \1/2\ of such excess percentage, and
(ii) the adjustment factor (described in paragraph (2)(B)) for such
second succeeding year.
(2) Adjustment factors.
(A) Succeeding year. With respect to a succeeding year, the
adjustment factor described in this subparagraph is 1 plus the regional
alliance inflation factor for such year.
(B) Second succeeding year. With respect to a second succeeding year,
the adjustment factor described in this subparagraph is the product of
(i) 1 plus the regional alliance inflation factor for such year,
and
(ii) 1 plus the regional alliance inflation factor for the previous
year.
(C) No adjustment in factor considered. For purposes of subparagraphs
(A) and (B), the regional alliance inflation factor for a year shall
not take into account any adjustment under this subsection.
(3) Excess percentage. The excess percentage described in this
paragraph for a year is the percentage by which
(A) actual weighted average accepted bid (referred to in paragraph
(1)) for a regional alliance for the year, exceeds
(B) the regional alliance per capita premium target (determined under
section 6003(a)) for the year.
(e) Consultation Process. The Board shall have a process for consulting
with representatives of States and regional alliances before establishing
the regional alliance inflation factors for each year under this section.
SEC. 6002. BOARD DETERMINATION OF NATIONAL PER CAPITA BASELINE PREMIUM
TARGET.
(a) In General. Not later than January 1, 1995, the Board shall determine
a national per capita baseline premium target. Such target is equal to
(1) the national average per capita current coverage health
expenditures (determined under subsection (b)),
(2) updated under subsection (c).
(b) Determination of National Average Per Capita Current Coverage Health
Expenditures.
(1) In general. The Board shall determine the national average per
capita current coverage health expenditures equal to
(A) total covered current health care expenditures (described in
paragraph (2)), divided by
(B) the estimated population in the United States of regional
alliance eligible individuals (as determined by the Board as of the
1993 under subsection (c)(3)) for whom such expenditures were
determined.
The population under subparagraph (B) shall not include SSI
recipients or AFDC recipients.
(2) Current health care expenditures. For purposes of paragraph (1)(A),
the Board shall determine current health care expenditures as follows:
(A) Determination of total expenditures. The Board shall first
determine the amount of total payments made for items and services
included in the comprehensive benefit package (determined without
regard to cost sharing) in the United States in 1993.
(B) Removal of certain expenditures not to be covered through
regional alliances. The amount so determined shall be decreased by the
proportion of such amount that is attributable to any of the following:
(i) Medicare beneficiaries (other than such beneficiaries who are
regional alliance eligible individuals).
(ii) AFDC recipients or SSI recipients.
(iii) Expenditures which are paid for through workers' compensation
or automobile or other liability insurance.
(iv) Expenditures by parties (including the Federal Government)
that the Board determines will not be payable by regional alliance
health plans for coverage of the comprehensive benefit package under
this Act.
(C) Addition of projected expenditures for uninsured and underinsured
individuals. The amount so determined and adjusted shall be increased
to take into account increased utilization of, and expenditures for,
items and services covered under the comprehensive benefit package
likely to occur, as a result of coverage under a regional alliance
health plan of individuals who, as of 1993 were uninsured or
underinsured with respect to the comprehensive benefit package. In
making such determination, such expenditures shall be based on the
estimated average cost for such services in 1993 (and not on private
payment rates established for such services). In making such
determination, the estimated amount of uncompensated care in 1993 shall
be removed.
(D) Addition of health plan and alliance costs of administration.
(i) In general. The amount so determined and adjusted shall be
increased by an estimated percentage (determined by the Board, but no
more than 15 percent) that reflects the proportion of premiums that
are required for health plan and regional alliance administration
(including regional alliance costs for administration of
income-related premium discounts and cost sharing reductions) and for
State premium taxes (which taxes shall be limited to such amounts in
1993 as are attributable to the health benefits to be included in the
comprehensive benefit package).
(E) Decrease for cost sharing. The amount so determined and adjusted
shall be decreased by a percentage that reflects (i) the estimated
average percentage of total amounts payable for items and services
covered under the comprehensive benefit package that will be payments
in the form of cost sharing under a high cost sharing plan, and (ii)
the percentage reduction in utilization estimated to result from the
application of high cost sharing.
(3) Special rules.
(A) Benefits used. The determinations under this section shall be
based on the comprehensive benefit package as in effect in 1996.
(B) Assuming no change in expenditure pattern. The determination
under paragraph (2) shall be made without regard to any change in the
pattern of expenditures that may result from the enrollment of AFDC
recipients and SSI recipients in regional alliance health plans.
(C) Eligible individuals. In this subsection, the determination of
who are regional alliance eligible individuals under this subsection
shall be made as though this Act was fully in effect in each State as
of 1993.
(c) Updating.
(1) In general. Subject to paragraph (3), the Board shall update the
amount determined under subsection (b)(1) for each of 1994, 1995, and
1996 by the appropriate update factor described in paragraph (2) for the
year.
(2) Appropriate update factor. In paragraph (1), the appropriate update
factor for a year is 1 plus the annual percentage increase for the year
(as determined by the Administrator of the Health Care Financing
Administration, based on actual or projected information) in private
sector health care spending for items and services included in the
comprehensive benefit package (as of 1996).
(3) Limit. The total, cumulative update under this subsection shall not
exceed 15 percent.
SEC. 6003. DETERMINATION OF ALLIANCE PER CAPITA PREMIUM TARGETS.
(a) Initial Determination. Not later than January 1, 1995, the Board
shall determine, for each regional alliance for 1996, a regional alliance
per capita premium target. Such target shall equal
(1) the national per capita baseline premium target (determined by the
Board under section 6002),
(2) updated by the regional alliance inflation factor (as determined
under section 6001(a)(2)) for 1996, and
(3) adjusted by the adjustment factor for the regional alliance
(determined under subsection (c)).
(b) Subsequent Determinations.
(1) Determination. Not later than March 1 of each year (beginning with
1996) the Board shall determine, for each regional alliance for the
succeeding year a regional alliance per capita premium target.
(2) General rule. Subject to paragraph (3), such target shall equal
(A) the regional alliance per capita target determined under this
section for the regional alliance for the previous year, and
(B) updated by the regional alliance inflation factor (as determined
in section 6001(a)) for the year.
(c) Adjustment Factors for Regional Alliances for Initial Determination.
(1) In general. The Board shall establish an adjustment factor for each
regional alliance in a manner consistent with this subsection.
(2) Considerations. In establishing the factor for each regional
alliance, the Board shall consider, using information of the type
described in paragraph (3), the difference between the national average
of the factors taken into account in determining the national per capita
baseline premium target and such factors for the regional alliance,
including variations in health care expenditures and in rates of
uninsurance and underinsurance in the different alliance areas and
including variations in the proportion of expenditures for services
provided by academic health centers in the different alliance areas.
(3) Types of information. The type of information described in this
paragraph is
(A) information on variations in premiums across States and across
alliance areas within a State (based on surveys and other data);
(B) information on variations in per capita health spending by State,
as measured by the Health Care Financing Administration;
(C) information on variations across States in per capita spending
under the medicare program and in such spending among alliance areas
within a State under such program; and
(D) area rating factors commonly used by actuaries.
(4) Application of factors in neutral manner. The application of the
adjustment factors under this subsection for 1996 shall be done in a
manner so that the weighted average of the regional alliance per capita
premium targets for 1996 is equal to the national per capita baseline
premium target determined under section 6002. Such weighted average shall
be based on the Board's estimate of the expected distribution of alliance
eligible individuals (taken into account under section 6002) among the
regional alliances.
(5) Consultation process. The Board shall have a process for consulting
with representatives of States and regional alliances before establishing
the adjustment for regional alliances under this subsection.
(d) Treatment of Certain States.
(1) Non-alliance states. In the case of a State that is not a
participating State or otherwise has not established regional alliances,
the entire State shall be treated under the provisions of this part as
composing a single regional alliance.
(2) Changes in alliance boundaries. In the case of a State that changes
the boundaries of its regional alliances (including the establishment of
such alliances after 1996), the Board shall provide a method for
computing a regional alliance per capita premium target for each regional
alliance affected by such change in a manner that
(A) reflects the factors taken into account in establishing the
adjustment factors for regional alliances under subsection (c), and
(B) results in the weighted average of the newly computed regional
targets for the regional alliances affected by the change equal to the
weighted average of the regional targets for the regional alliances as
previously established.
SEC. 6004. ALLIANCE INITIAL BIDDING AND NEGOTIATION PROCESS.
(a) Bidding Process.
(1) Obtaining bids.
(A) In general. Not later than July 1 before the first year, and not
later than August 1 of each succeeding year, the regional alliance
shall have obtained premium bids from each plan seeking to participate
as a regional alliance health plan with respect to the alliance in the
following year.
(B) Disclosure. In obtaining such bids, a regional alliance may
determine to disclose (or not to disclose) the regional alliance per
capita premium target for the regional alliance (determined under
section 6003) for the year involved.
(C) Condition. Each bid submitted by a plan under this subsection
shall be conditioned upon the plan's agreement to accept any premium
payment reduction that may be imposed under section 6011.
(2) Negotiation process. Following the bidding process under paragraph
(1), a State may provide for negotiations with health plans relating to
the premiums to be charged by such plans. Such negotiations may result in
the resubmission of bids, but in no case shall a health plan resubmit a
bid that exceeds its prior bid.
(3) Legally binding bids. All bids submitted under this subsection must
be legally binding with respect to the plans involved.
(4) Acceptance. The final bid submitted by a plan under this subsection
shall be considered to be the accepted bid, except as provided in
subsection (e).
(5) Assistance. The Board shall provide regional alliances with such
information and technical assistance as may assist such alliances in the
bidding process under this subsection.
(b) Submission of Information to Board. By not later than September 1 of
each year for which bids are obtained under subsection (a), each regional
alliance shall submit to the Board a report that discloses
(1) information regarding the final bids obtained under subsection (a)
by the different plans;
(2)(A) for the first year, any information the Board may request
concerning an estimation of the enrollment likely in each such plan of
alliance eligible individuals who will be offered enrollment in a health
plan by alliance in the first year, or
(B) for a succeeding year, the actual distribution of enrollment of
alliance eligible individuals in regional alliance health plans in the
year in which the report is transmitted; and
(3) limitations on capacity of regional alliance health plans.
(c) Computation of Weighted Average Accepted Bid.
(1) In general. For each regional alliance the Board shall determine a
weighted average accepted bid for each year for which bids are obtained
under subsection (a). Such determination shall be based on information on
accepted bids for the year, submitted under subsection (b)(1), and shall
take into account, subject to paragraph (2), the information on
enrollment distribution submitted under subsection (b)(2).
(2) Enrollment distribution rules. In making the determination under
paragraph (1) for a regional alliance, the Board shall establish rules
respecting the treatment of enrollment in plans that are discontinued or
are newly offered.
(d) Notice to Certain Alliances.
(1) In general. By not later than October 1 of each year for which bids
are obtained, the Board shall notify a regional alliance
(A) if the weighted average accepted bid (determined under subsection
(c)) for the alliance is greater than the regional alliance per capita
premium target for the alliance (determined under section 6002) for the
year, and
(B) the reduced weighted average accepted bid for the alliance.
(2) Notice of premium reductions. If notice is provided to a regional
alliance under paragraph (1), the Board shall notify the regional
alliance and each noncomplying plan of any plan payment reduction
computed under section 6011 for such a plan and the opportunity to
voluntarily reduce the accepted bid under subsection (e) in order to
avoid such a reduction.
(e) Voluntary Reduction of Accepted Bid (Final Accepted Bid). After the
Board has determined under subsection (c) the weighted average accepted bid
for a regional alliance and the Board has determined preliminary plan
payment reductions, before such date as the Board may specify (in order to
provide for an open enrollment period), a noncomplying plan has the
opportunity to voluntarily reduce its accepted bid by the amount of the
plan payment reduction that would otherwise apply to the plan. Such
reduction shall not affect the amount of the plan payment reduction for any
other plan for that year.
SEC. 6005. STATE FINANCIAL INCENTIVES.
(a) Election. Any participating State may elect to assume responsibility
for containment of health care expenditures in the State consistent with
this part. Such responsibility shall include submitting annual reports to
the Board on any activities undertaken by the State to contain such
expenditures.
(b) Financial Incentive. In the case of a State that has made an election
under subsection (a), if Board determines for a particular year (beginning
with the first year) that the statewide weighted average of the reduced
weighted average accepted bids (based on actual average enrollment for the
year), for regional alliances in the State, is less than the statewide
weighted average of the regional alliance per capita premium targets (based
upon such enrollment) for such alliances for the year, then the amount of
the State maintenance-of-effort payment under section 9001(b), for the
following year, shall be reduced by \1/2\ of the product of
(1)(A) the amount by which the amount of such target exceeds the amount
of such premium, divided by (B) the amount of such target; and
(2) the total of the amount of the Federal payments made in that
particular year to regional alliances in the State under subtitle B of
title IX.
SEC. 6006. RECOMMENDATIONS TO ELIMINATE REGIONAL VARIATIONS IN
ALLIANCE TARGETS
DUE TO VARIATION IN PRACTICE PATTERNS; CONGRESSIONAL CONSIDERATION.
(a) Establishment of Advisory Commission on Regional Variations in Health
Expenditures. The chair of the Board shall establish, by not later than 60
days after the date of appointment of the first chair, an advisory
commission on regional variations in health expenditures.
(b) Composition. The advisory commission shall be composed of consumers,
employers, providers, representatives of health plans, States, regional
alliances, individuals with expertise in the financing of health care,
individuals with expertise in the economics of health care, and
representatives of diverse geographic areas.
(c) Regional Variations.
(1) Information. The advisory commission shall provide the Board,
States, and regional alliances with information about regional
differences in health care costs and practice patterns.
(2) Methods for elimination of regional variation due to practice
pattern. The advisory commission shall examine methods of eliminating
variation in regional alliance per capita premium targets due to
variation in practice patterns, not due to other factors (such as health
care input prices and demographic factors), by 2002.
(3) Methods for reducing regional variation in premium payments for
afdc and ssi recipients due to historical variation in characteristics of
state medicaid plans. The advisory commission shall examine methods of
reducing the variation in Federal and State payments under sections 9011
and 9101. In addition to the factors considered in paragraph (2), the
commission shall examine methods of reducing variation due to historical
differences in the rates of reimbursement to providers and in the amount,
duration, and scope of benefits covered under State medicaid plans.
(4) Methods for reduction of regional variation in state
maintenance-of-effort payments for non-cash assistance recipients. The
advisory commission shall study the reasons for variation among State in
the level of maintenance of effort payments for non-cash assistance
recipients and shall examine methods of reducing variation across States
in the level of maintenance of effort payments compared to the population
of the State. The commission shall link consideration of the variation in
premium targets under paragraph (2) with the variation in State and
Federal payments described in this paragraph.
(5) Other factors. The advisory commission shall examine methods of
reducing variations in spending among States for health care services
that are attributable to historical differences.
(d) Recommendations to Board. The advisory commission shall submit to the
Board a report that specifies
(1) one or more methods for eliminating the variation described in
subsection (c)(2), and
(2) one or more methods for reducing variations described in subsection
(c)(4) across States.
(e) Report to Congress.
(1) In general. The Board shall submit to Congress, by not later July
1, 1995, detailed recommendations respecting the specific method to be
used to achieve each of the following:
(A) The elimination of the variation in the regional alliance per
capita premium (as described in subsection (b)(2)) by 2002.
(B) Reducing the variation in State payments under sections 9001 and
9011 (taking into account any interaction between these payments), in a
manner that is budget neutral with respect to total government payments
and payments by the Federal Government.
In making recommendations in subparagraph (B), the Board shall
consider the fiscal capacity of the States.
(2) Subsequent report. If a joint resolution described in subsection
(f) does not become law, the Board shall submit to Congress revised
detailed recommendations respecting the specific method to be used to
achieve the elimination of such variation by 2002. Such recommendations
shall be submitted not later than 90 days after the date such resolution
is disapproved by either House (or vetoed by the President) or, if
earlier, 150 days after the date of submission of the recommendations
under paragraph (1).
(f) Congressional Consideration.
(1) In general. Detailed recommendations submitted under paragraph
(1)(A) or (1)(B) or (2) of subsection (e) shall apply under this subtitle
only if a joint resolution (described in paragraph (2)) approving such
recommendations is enacted, in accordance with the provisions of
paragraph (3), before the end of the 60-day period beginning on the date
on which such recommendations were submitted. For purposes of applying
the preceding sentence and paragraphs (2) and (3), the days on which
either House of Congress is not in session because of an adjournment of
more than three days to a day certain shall be excluded in the
computation of a period.
(2) Joint resolution of approval. A joint resolution described in this
paragraph means only a joint resolution which is introduced within the
10-day period beginning on the date on which the Board submits
recommendations under paragraph (1)(A), (1)(B), or (2) of subsection (e)
and
(A) which does not have a preamble;
(B) the matter after the resolving clause of which is either of the
following 2 clauses:
(i) For recommendations under paragraph (1)(A): ``That Congress
approves the recommendations of the National Health Board concerning
elimination of regional variation in regional alliance per capita
premium targets under subtitle A of title VI of the Health Security
Act, as submitted by the Board on G7XXXXXXX.'', the blank space
being filled in with the appropriate date; or
(ii) For recommendations under paragraph (1)(B): ``That Congress
approves the recommendations of the National Health Board concerning
reducing the variation in State payments under sections 9001 and 9011
of the Health Security Act, as submitted by the Board on
G7XXXXXXX.'', the blank space being filled in with the appropriate
date; and
(C) the title of which, respectively, is either of the following:
(i) For recommendations under paragraph (1)(A): ``Joint resolution
approving recommendations of the National Health Board concerning
elimination of regional variation in regional alliance per capita
premium targets under subtitle A of title VI of the Health Security
Act, as submitted by the Board on G7XXXXXXX.'', the blank space
being filled in with the appropriate date; or
(ii) For recommendations under paragraph (1)(B): ``Joint resolution
approving recommendations of the National Health Board concerning
reducing the variation in State payments under sections 9001 and 9011
of the Health Security Act, as submitted by the Board on
G7XXXXXXX.'', the blank space being filled in with the appropriate
date.
(3) Procedures for consideration of resolution of approval. Subject to
paragraph (4), the provisions of section 2908 (other than subsection (a))
of the Defense Base Closure and Realignment Act of 1990 shall apply to
the consideration of a joint resolution described in paragraph (2) in the
same manner as such provisions apply to a joint resolution described in
section 2908(a) of such Act.
(4) Special rules. For purposes of applying paragraph (3) with respect
to such provisions
(A) any reference to the Committee on Armed Services of the House of
Representatives shall be deemed a reference to an appropriate Committee
of the House of Representatives (specified by the Speaker of the House
of Representatives at the time of submission of recommendations under
subsection (e)) and any reference to the Committee on Armed Services of
the Senate shall be deemed a reference to an appropriate Committee of
the House of Representatives (specified by the Majority Leader of the
Senate at the time of submission of recommendations under subsection
(e)); and
(B) any reference to the date on which the President transmits a
report shall be deemed a reference to the date on which the Board
submits a recommendation under paragraph (1)(A), (1)(B), or (2) of
subsection (e).
SEC. 6007. REFERENCE TO LIMITATION ON ADMINISTRATIVE AND JUDICIAL REVIEW
OF
CERTAIN DETERMINATIONS.
For limitation on administrative and judicial review of certain
determinations under this part, see section 5232.
Subpart B. Plan and Provider Payment Reductions to Maintain Expenditures
within Targets
SEC. 6011. PLAN PAYMENT REDUCTION.
(a) Plan Payment Reduction. In order to assure that payments to regional
alliance health plans by a regional alliance are consistent with the
applicable regional alliance per capita target for the alliance (computed
under this subtitle), each noncomplying plan (as defined in subsection
(b)(2)) for a year is subject to a reduction in plan payment (under section
1351) by the amount equal to plan payment reduction specified in subsection
(c) for the year.
(b) Noncomplying Alliance and Noncomplying Plan Defined. In this part:
(1) Noncomplying alliance. The term ``noncomplying alliance'' means,
for a year, a regional alliance for which the weighted average accepted
bid (computed under section 6004(c)) exceeds the regional alliance per
capita target for the year.
(2) Noncomplying plan. The term ``noncomplying plan'' means, for a
year, a regional alliance health plan offered through a noncomplying
alliance if the final accepted bid for the year exceeds the maximum
complying bid (as defined in subsection (d)) for the year. No plan shall
be a noncomplying plan for a year before the first year in which the plan
is offered by a regional alliance.
(c) Amount of Plan Payment Reduction.
(1) In general. The amount of the plan payment reduction, for a
noncomplying plan offered by an alliance, is the alliance-wide reduction
percentage (as defined in paragraph (2)) of the excess bid amount (as
defined in paragraph (3)).
(2) Alliance-wide reduction percentage.
(A) In general. In paragraph (1), the term ``alliance-wide reduction
percentage'' means, for a noncomplying plan offered by an alliance for
a year
(i) the amount by which (I) the weighted average accepted bid
(computed under section 6004(c)(1)) for the alliance for the year,
exceeds the regional alliance per capita target for the alliance for
the year; divided by
(ii) the sum, for noncomplying plans offered by the alliance, of
the plan proportions of alliance excess bid amount (described in
subparagraph (B)(i)) for the year.
(B) Plan proportion of alliance excess bid amount described.
(i) In general. The ``plan proportion of alliance excess bid
amount'' described in this clause, for a noncomplying plan, is the
product of
(I) the excess bid amount (as defined in paragraph (4)) for the plan,
and
(II) the plan enrollment proportion (as defined in clause (ii)) for
the plan.
(ii) Plan enrollment proportion. In clause (i)(II), the term ``plan
enrollment proportion'' means, with respect to a health plan offered
by a regional alliance, the total enrollment of alliance eligible
individuals enrolled in such plan expressed as a percentage of the
total enrollment of alliance eligible individuals in all regional
alliance plans offered by the alliance. Such proportion shall be
computed based on the information used in computing the weighted
average accepted bid for the alliance under section 6004(c)(1).
(3) Excess bid amount. In this subsection, the ``excess bid amount'',
with respect to a noncomplying plan for a year, is the amount by which
(i) the accepted bid for the year (not taking into account any
voluntary reduction under section 6004(e)), exceeds
(ii) the maximum complying bid (as defined in subsection (d)) for
the plan for the year.
(d) Maximum Complying Bid.
(1) First year. In this part, subject to paragraph (3), for the first
year, the ``maximum complying bid'' for each plan offered by a regional
alliance, is the regional alliance per capita premium target for the
alliance (determined under section 6002) for the year.
(2) Subsequent years. In this part, subject to paragraph (3), for a
subsequent year, the ``maximum complying bid'', for a plan offered by an
alliance for a year, is the sum of the following:
(A) Net previous year accepted bid for plan. The accepted bid for the
previous year (not taking into account any voluntary reduction under
section 6004(e)), minus the amount of any plan payment reduction for
the plan for that year.
(B) Alliance-wide inflation allowance. The amount by which
(i) regional alliance per capita premium target for the year,
exceeds
(ii) such target for the previous year, or, if less, the weighted
average accepted bid (computed under section 6004(c)(1)) for such
year.
(3) Special rules for new plans.
(A) In general. Subject to subparagraph (B), in the case of a plan
that is first offered by a regional alliance in a year after the first
year the maximum complying bid shall be the regional alliance per
capita premium target for the year.
(B) Authority. The Board or a State may establish rules to modify the
application of subparagraph (A) for regional alliance health plans in
the State in order
(i) to prevent abusive premium practices by entities previously
offering plans, or
(ii) to encourage the availability of all types of plans in the
State and to permit establishment of new plans.
SEC. 6012. PROVIDER PAYMENT REDUCTION.
(a) Participating Providers.
(1) In general. Each regional alliance health plan, as part of its
contract under section 1406(e) with any participating provider (as
defined in section 1407(c), or group of participating providers) shall
(A) include a provision that provides that if the plan is a
noncomplying plan for a year, payments to the provider (or group) shall
be reduced by the applicable network reduction percentage (described in
paragraph (2)) for the year, and
(B) not include any provision which the State determines otherwise
varies the payments to such providers (or group) because of, or in
relation to, a plan payment reduction under section 6011 or otherwise
is intended to nullify the effect of subparagraph (A).
The Board may issue regulations relating to the requirements of this
paragraph.
(2) Applicable network reduction percentage.
(A) In general. Subject to subparagraphs (B) and (C), the ``adjusted
plan reduction percentage'', with respect to network providers of a
noncomplying plan for a year is
(i) the plan payment reduction amount for the plan for the year (as
determined under section 6011(c)), divided by
(ii) the final accepted bid for the plan for the year, adjusted
under subparagraph (B).
(B) Induced volume offset. The Board shall provide for an appropriate
increase of the percentage reduction computed under subparagraph (A) to
take into account any estimated increase in volume of services provided
that may reasonably be anticipated as a consequence of applying a
reduction in payment under this subsection. The Board may compute and
apply such increase differently for different classes of providers or
services or different types of health plans (as the Board may define).
(b) Other Providers.
(1) In general. Each regional alliance health plan that is a
noncomplying plan in a year shall provide for a reduction in the amount
of payments to providers (or groups of providers) that are not
participating providers under the applicable alliance fee schedule under
section 1406(c)(3) by the applicable nonnetwork reduction percentage
(described in paragraph (2)) for the year.
(2) Applicable nonnetwork reduction percentage.
(A) In general. Subject to subparagraph (B), the ``adjusted plan
reduction percentage'', with respect to nonnetwork providers of a
noncomplying plan for a year is
(i) the plan payment reduction amount for the plan for the year (as
determined under section 6011(c)), divided by
(ii) the final accepted bid for the plan for the year, adjusted
under subparagraph (B).
(B) Induced volume offset. The Board shall provide for an appropriate
adjustment of the percentage reduction computed under subparagraph (A)
to take into account any estimated increase in volume of services
provided that may reasonably be anticipated as a consequence of
applying a reduction in payment under this subsection.
(c) Application to Cost Sharing and to Balance Billing Restrictions. For
purposes of applying section 1406(d) (relating to balance billing
limitations) and part 3 of subtitle B of title I (relating to computation
of cost sharing), the payment basis otherwise used for computing any
limitation on billing or cost sharing shall be such payment basis as
adjusted by any reductions effected under this section.
Part 2. CORPORATE ALLIANCES HEALTH EXPENDITURES
SEC. 6021. CALCULATION OF PREMIUM EQUIVALENTS.
(a) In General. By January 1, 1997, the Board shall develop a methodology
for calculating an annual per capita expenditure equivalent for amounts
paid for coverage for the comprehensive benefit package within a corporate
alliance.
(b) Adjustment Permitted. Such methodology shall permit a corporate
alliance to petition the Secretary of Labor for an adjustment of the
inflation adjustment that would otherwise apply to compensate for material
changes in the demographic characteristics of the eligible individuals
receiving coverage through the alliance.
(c) Reporting. In 2000 and each subsequent year, each corporate alliance
shall report to the Secretary of Labor, in a form and manner specified by
the Secretary, the average of the annual per capita expenditure equivalent
for the previous 3-year period.
SEC. 6022. TERMINATION OF CORPORATE ALLIANCE FOR EXCESS INCREASE IN
EXPENDITURES.
(a) Termination.
(1) In general. If a corporate alliance has two excess years (as
defined in subsection (b)) in a 3-year-period, then, effective beginning
with the second year following the second excess year in such period
(A) the Secretary of Labor shall terminate the corporate alliance,
and
(B) employers that were corporate alliance employers with respect to
such corporate alliance shall become regional alliance employers
(unless, in the case of a corporate alliance with a plan sponsor
described in subparagraph (B) or (C) of section 1311(b)(1), the
employers become corporate alliance employers of another such corporate
alliance).
(2) Initial 3-year-period. Paragraph (1) shall first apply to the
3-year-period beginning with 1997.
(3) Special subsequent treatment for large employers. In the case of
corporate alliance employers described in paragraph (1)(B) that are large
employers, the employer premium payments under section 6121 are subject
to adjustment under section 6124.
(4) No further election. If a corporate alliance of a large employer is
terminated under this subsection, no employer that is a corporate
alliance employer for that alliance is eligible to be a sponsor of a
corporate alliance.
(b) Excess Year.
(1) In general. In subsection (a), the term ``excess year'' means, for
a corporate alliance, a year (beginning on or after 2000) for which
(A) the rate of increase for the corporate alliance (specified in
paragraph (2)) for the year, exceeds
(B) the national corporate inflation factor (specified in paragraph
(3)) for the year.
(2) Rate of increase for corporate alliance. The rate of increase for a
corporate alliance for a year, specified in this paragraph, is the
percentage by which
(A) the average of the annual per capita expenditure equivalent for
the corporate alliance (reported under section 6021(c)) for the 3-year
period ending with such year, exceeds
(B) the average of the annual per capita expenditure equivalent for
the corporate alliance (reported under such subsection) for the 3-year
period ending with the previous year.
(3) National corporate inflation factor. The national corporate
inflation factor for a year, specified in this paragraph, is the average
of the general health care inflation factors (as defined in section
6001(a)(3)) for each of the 3 years ending with such year.
Part 3. TREATMENT OF SINGLE-PAYER STATES
SEC. 6031. SPECIAL RULES FOR SINGLE-PAYER STATES.
In the case of a Statewide single-payer State, for purposes of section
1222(6), the Board shall compute a Statewide per capita premium target
for each year in the same manner as a regional alliance per capita
premium target is determined under section 6003.
Part 4. TRANSITION PROVISIONS
SEC. 6041. MONITORING PRICES AND EXPENDITURES.
(a) In General. The Secretary shall establish a program to monitor prices
and expenditures in the health care system in the Unites States.
(b) Reports. The Secretary shall periodically report to the President on
(1) the rate of increase in expenditures in each sector of the health
care system, and
(2) how such rates compare with rate of overall increase in health care
spending and rate of increase in the consumer price index.
(c) Access to Information.
(1) In general. The Secretary may obtain, through surveys or otherwise,
information on prices and expenditures for health care services. The
Secretary may compel health care providers and third party payers to
disclose such information as is necessary to carry out the program under
this section.
(2) Confidentiality. Non-public information obtained under this
subsection with respect to individual patients is confidential.
(d) Periodic Reports. The Secretary shall periodically issue public
reports on the matters described in subsection (b).
Subtitle B. Premium-Related Financings
Part 1. FAMILY PREMIUM PAYMENTS
Subpart A. Family Share
SEC. 6101. FAMILY SHARE OF PREMIUM.
(a) Requirement. Each family enrolled in a regional alliance health plan
or in a corporate alliance health plan in a class of family enrollment is
responsible for payment of the family share of premium payable respecting
such enrollment. Such premium may be paid by an employer or other person on
behalf of such a family.
(b) Family Share of Premium Defined.
(1) In general. In this subtitle, the term ``family share of premium''
means, with respect to enrollment of a family
(A) in a regional alliance health plan, the amount specified in
paragraph (2) for the class, or
(B) in a corporate alliance health plan, the amount specified in
paragraph (3) for the class.
(2) Regional alliance.
(A) In general. The amount specified in this paragraph for a health
plan based on a class of family enrollment is the sum of the base
amounts described in subparagraph (B) reduced (but not below zero) by
the sum of the amounts described in subparagraph (C).
(B) Base. The base amounts described in this subparagraph (for a plan
for a class of enrollment) are as follows:
(i) Regional alliance premium. The premium specified in section
6102(a) with respect to such class of enrollment.
(ii) Family collection shortfall. 20 percent of the family
collection shortfall add-on (computed under section 6107 for such
class).
(C) Credits and discounts. The amounts described in this subparagraph
(for a plan for a class of enrollment) are as follows:
(i) Alliance credit. The amount of the alliance credit under
section 6103(a).
(ii) Income related discount. The amount of any income-related
discount provided under section 6104(a)(1).
(iii) Excess premium credit. The amount of any excess premium
credit provided under section 6105.
(iv) Corporate alliance opt-in credit. The amount of any corporate
alliance opt-in credit provided under section 6106.
(v) Additional credit for ssi and afdc recipients. In the case of an SSI
or AFDC family or for whom the amount described in clause (ii) is equal to
the amount described in section 6104(b)(1)(A), the amount described in
subparagraph (B)(ii).
(D) Limit on miscellaneous credits. In no case shall the family
share, due to credits under subparagraph (C), be less than zero.
(3) Corporate alliance.
(A) In general. The amount specified in this paragraph for a health
plan based on a class of family enrollment is the sum of the premium
described in subparagraph (B) reduced (but not below zero) by the sum
of the amounts described in subparagraph (C).
(B) Premium. The premium described in this subparagraph (for a plan
for a class of enrollment) is premium specified under section 1364 with
respect to the plan and class of enrollment involved.
(C) Credits and discounts. The amounts described in this subparagraph
(for a plan for a class of enrollment) are as follows:
(i) Alliance credit. The amount of the alliance credit under
section 6103(b).
(ii) Income related discount. The amount of any income-related
discount provided under section 6104(a)(2).
SEC. 6102. AMOUNT OF PREMIUM.
(a) Regional Alliance. The amount of the premium charged by a regional
alliance for all families in a class of family enrollment under a regional
alliance health plan offered by the alliance is equal to the product of
(1) the final accepted bid for the plan (as defined in section
6000(a)(2)),
(2) the uniform per capita conversion factor (established under section
1341(b)) for the alliance; and
(3) the premium class factor established by the Board for that class
under section 1531.
(b) Reference to Corporate Alliance Premium Provisions. The amount of the
premium charged by a corporate alliance for all families in a class of
family enrollment under a corporate alliance health plan offered by the
alliance is specified under section 1364.
(c) Special Rules for Divided Families. In the case of an individual who
is a qualifying employee of an employer and the individual has a spouse or
child who is not treated as part of the individual's family because of
section 1012
(1) the combined premium for both families under this section shall be
computed as though such section had not applied,
(2) the regional alliance shall divide such premium between the
families proportionally (consistent with rules established by the Board),
and
(3) credits and other amounts shall be pro-rated in a manner consistent
with rules established by the Board.
SEC. 6103. ALLIANCE CREDIT.
(a) Regional Alliances. The credit provided under this section for a
family enrolled in a regional alliance health plan through a regional
alliance for a class of family enrollment is equal to 80 percent of the
weighted average premium (as defined in section 6000(c)) for health plans
offered by the alliance for the class.
(b) Corporate Alliances. The credit provided under this section for a
family enrolled in a health corporate alliance health plan for a class of
family enrollment is equal to the minimum employer premium payment required
under section 6131 with respect to the family.
SEC. 6104. PREMIUM DISCOUNT BASED ON INCOME.
(a) In General.
(1) Enrollees in regional alliance health plans. Each family enrolled
with a regional alliance health plan is entitled to a premium discount
under this section, in the amount specified in subsection (b), if the
family
(A) is an AFDC or SSI family,
(B) is determined, under subpart B of part 2 of subtitle B of title D
of title I, to have family adjusted income below 150 percent of the
applicable poverty level, or
(C) is a family described in subsection (c)(3) for which the family
obligation amount under this subsection for the year would otherwise
exceed a specified percent of family adjusted income described in such
subsection.
(2) Enrollees in corporate alliance health plans.
(A) In general. Subject to subparagraph (B), each family enrolled
with a corporate alliance health plan in a class of family enrollment
by virtue of the full-time employment of a low-wage employee (as
defined in subparagraph (B)) is entitled to a premium discount under
this section in the amount (if any) by which
(i) 95 percent of the premium (specified in section 1364) for the
least expensive corporate alliance health plan that is offered to the
employee and that is a low or combination cost sharing plan (as
defined in section 1903( )) for that class, exceeds
(ii) the alliance credit under section 6103 for that class.
(B) Low-wage employee defined.
(i) In general. In this paragraph, the term ``low-wage employee''
means, with respect to an employer, an employee who is employed on a
full-time basis and who is receiving wages (as defined in section
1902( )) for employment for the employer, as determined under clause
(ii), at an annual rate of less than $15,000 (as adjusted under
clause (ii)).
(ii) Indexing. For a year after 1994, the dollar amount specified
in clause (i) shall be increased or decreased by the same percentage
as the percentage increase or decrease by which the average CPI
(described in section 1902( )) for the 12-month-period ending with
August 31 of the preceding year exceeds such average for the 12-month
period ending with August 31, 1993.
(C) Timing of determination.
(i) In general. The determination of whether or not an employee is
a low-wage employee shall be made, in accordance with rules of the
Secretary of Labor, at the time of initial enrollment and shall also
be made at the time of each subsequent open enrollment period, on the
basis of the wages payable by the employer at that time.
(ii) Effective date. Such determination shall apply as of the
effective date of the initial enrollment, or, in the case of an open
enrollment period, as of the effective date of changes in enrollment
during such period.
(3) No liability for indians and certain veterans and military
personnel.
(A) In general. In the case of an individual described in
subparagraph (B), because the applicable health plan does not impose
any premium for such an individual, the individual is not eligible for
any premium discount under this section.
(B) Individuals described. An individual described in this
subparagraph is
(i) an electing veteran (as defined in section 1012(d)(1)) who is
enrolled under a health plan of the Department of Veterans Affairs
and who, under the laws and rules as in effect as of December 31,
1994, has a service-connected disability or who is unable to defray
the expenses of necessary care as determined under section 1722(a) of
title 38, United States Code,
(ii) active duty military personnel (as defined in section
1012(d)(2)), and
(iii) an electing Indian (described in section 1012(d)(3)).
(b) Amount of Premium Discount for Regional Alliance Health Plans.
(1) In general. Subject to the succeeding paragraphs of this
subsection, the amount of premium discount under this subsection for a
family enrolled in a regional alliance health plan under a class of
family enrollment is equal to
(A) 20 percent of the weighted average premium for regional alliance
health plans offered by the regional alliance for that class of
enrollment, increased by any amount provided under paragraph (2);
reduced (but not below zero) by
(B) the sum of
(i) the family obligation amount described in subsection (c), and
(ii) the amount of any employer payment (not required under part 2)
towards the family share of premiums for covered members of the
family.
(2) Increase to assure enrollment in lower-than-average-cost plan. If a
regional alliance determines that a family eligible for a discount under
this section is unable to enroll in a lower-than-average-cost plan (as
defined in paragraph (3)) that serves the area in which the family
resides, the amount of the premium discount under this subsection is
increased but only to such amount as will permit the family to enroll in
a regional alliance health plan without the need to pay a family share of
premium under this part in excess of the sum described in paragraph
(1)(B).
(3) Lower-than-average-cost plan defined. In this section, the term
``lower-than-average-cost plan'' means a regional alliance health plan
the premium for which does not exceed, for the class of family enrollment
involved, the weighted average premium for the regional alliance.
(c) Family Obligation Amount.
(1) Determination. Subject to paragraphs (2) and (3), the family
obligation amount under this subsection is determined as follows:
(A) No obligation if income below income threshold amount or if afdc
or ssi family. If the family adjusted income (as determined under
section 1332(a)) of the family is less than the income threshold amount
(specified in paragraph (4)) or if the family is an AFDC or SSI family,
the family obligation amount is zero.
(B) Income above income threshold amount. If such income is at least
such income threshold amount and the family is not an AFDC or SSI
family, the family obligation amount is the sum of the following:
(i) For income (above income threshold amount) up to the poverty
level. The product of the initial marginal rate (specified in
paragraph (2)(A)) and the amount by which
(I) the family adjusted income (not including any portion that
exceeds the applicable poverty level for the class of family involved),
exceeds
(II) such income threshold amount.
(ii) Graduated phase out of discount up to 150 percent of poverty
level. The product of the final marginal rate (specified in paragraph
(2)(B)) and the amount by which the family adjusted income exceeds
100 percent (but is less than 150 percent) of the applicable poverty
level.
(2) Marginal rates. In paragraph (1)
(A) Individual marginal rates. For a year for an individual class of
enrollment
(i) Initial marginal rate. The initial marginal rate is the ratio
of
(I) 3 percent of the applicable poverty level for the individual
class of enrollment for the year, to
(II) the amount by which such poverty level exceeds such income
threshold amount.
(ii) Final marginal rate. The final marginal rate is the ratio of
(I) the amount by which the general family share (as defined in
subparagraph (C)) for an individual class of enrollment exceeds 3
percent of the applicable poverty level (for an individual class of
enrollment for the year); to
(ii) 50 percent of such poverty level.
(B) Family marginal rates. For a year for a family class of
enrollment (as defined in section 1011(c)(2)(A))
(i) Initial marginal rate. The initial marginal rate is the ratio
of
(I) 3 percent of the applicable poverty level for a dual parent class
of enrollment for the year, to
(II) the amount by which such poverty level exceeds such income
threshold amount.
(ii) Final marginal rate. The final marginal rate is the ratio of
(I) the amount by which the general family share (as defined in
subparagraph (C)) for a dual parent class of enrollment exceeds 3
percent of the applicable poverty level (for such a class for the
year); to
(ii) 50 percent of such poverty level.
(C) General family share. In subparagraphs (A) and (B), the term
``general family share'' means, for a class, the weighted average
premium for the class minus the alliance credit (determined without
regard to this section).
(3) Limitation to 3.9 percent for all families.
(A) In general. In the case of a family with family adjusted income
of less than $40,000 (adjusted under subparagraph (B)) for a year, in
no case shall the family obligation amount under this subsection for
the year exceed 3.9 percent (adjusted under subparagraph (C)) of the
amount of such adjusted income.
(B) Indexing of dollar amounts.
(i) In general. For a year after 1994, the dollar amounts specified
in subparagraph (A) and in section 6113(d)(1)(B) shall be increased
or decreased by the same percentage as the percentage increase or
decrease by which the average CPI (described in section 1902( )) for
the 12-month-period ending with August 31 of the preceding year
exceeds such average for the 12-month period ending with August 31,
1993.
(ii) Rounding. The dollar amounts adjusted under this subparagraph
shall be rounded each year to the nearest multiple of $100.
(C) Indexing of percentage.
(i) In general. The percentage specified in subparagraph (A) shall
be adjusted for any year after 1994 so that the percentage for the
year bears the same ratio to the percentage so specified as the ratio
of
(I) 1 plus general health care inflation factor (as defined in
section 6001(a)(3)) for the year, bears to
(II) 1 plus the percentage increase or decrease specified in section
1136(b) (relating to indexing of dollar amounts related to cost
sharing) for the year.
(ii) Rounding. Any adjustment under clause (i) for a year shall be
rounded to the nearest multiple of \1/10\ of 1 percentage point.
(4) Income threshold amount.
(A) In general. For purposes of this subtitle, the income threshold
amount specified in this paragraph is $1,000 (adjusted under
subparagraph (B)) .
(B) Indexing. For a year after 1994, the income threshold amount
specified in subparagraph (A) shall be increased or decreased by the
same percentage as the percentage increase or decrease by which the
average CPI (described in section 1902( )) for the 12-month-period
ending with August 31 of the preceding year exceeds such average for
the 12-month period ending with August 31, 1993.
(C) Rounding. Any increase or decrease under subparagraph (B) for a
year shall be rounded to the nearest multiple of $10.
SEC. 6105. EXCESS PREMIUM CREDIT.
(a) In General. If plan payment reductions are made for one or more
regional alliance health plans offered by a regional alliance for plan
payments in a year under section 6021, the alliance shall provide for a
credit under this section, in the amount described in subsection (b), in
the case of each family enrolled in a regional alliance health plan offered
by the alliance for premiums in the year.
(b) Amount of Credit.
(1) In general. Subject to paragraph (2), the amount of the credit
under this subsection, for a family enrolled in a class of family
enrollment for a regional alliance for a year, is the amount that would
be the weighted average premium for such alliance, class, and year, if
the per capita excess premium amount (determined under subsection (c))
for the alliance for the year were substituted for the reduced weighted
average accepted bid for the regional alliance for the year.
(2) Adjustment to account for use of estimates. Subject to section
1361(b)(3), if the total payments made by a regional alliance to all
regional alliance health plans in a year under section 1351(b) exceeds
(or is less than) the total of such payments estimated by the alliance
(based on the reduced weighted average accepted bid under subsection
(c)(1)), because of a difference between
(A) the alliance's estimate of the distribution of enrolled families
between excess premium plans and other plans, and
(B) the actual distribution of such enrolled families among such
plans. The amount of the credit under this section in the second
succeeding year shall be reduced (or increased, respectively) by the
amount of such excess (or deficit) in the total of such payments made
by the alliance to all such plans.
(c) Per Capita Excess Premium Amount. The per capita excess premium
amount, for a regional alliance for a year, is the amount by which
(1) the reduced weighted average accepted bid for the alliance for the
year, exceeds
(2) the regional alliance per capita target for the alliance for the
year.
SEC. 6106. CORPORATE ALLIANCE OPT-IN CREDIT.
(a) In General. If a regional alliance is owed a payment adjustment under
section 6124 for a year, then the alliance shall provide for a credit under
this section, equal to 20 percent of the amount described in subsection
(b), in the case of each family enrolled in a regional alliance plan
offered by the alliance.
(b) Amount of Credit. The amount described in this subsection, for a
family enrolled in a class of family enrollment for a regional alliance for
a year, is the amount that would be the weighted average premium for such
alliance, class, and year, if the per capita corporate alliance opt-in
amount (determined under subsection (c)) for the alliance for the year were
substituted for the reduced weighted average accepted bid for the regional
alliance for the year.
(c) Per Capita Corporate Alliance Opt-in Amount. The per capita corporate
alliance opt-in amount, for a regional alliance for a year, is
(1) the total amount of the payment adjustments owed for the year under
section 6124, divided by
(2) the estimated average number of regional alliance eligible
individuals in the regional alliance during the year (reduced by the
average number of such individuals whose family share of premiums,
determined without regard to this section and section 6107, is zero).
SEC. 6107. FAMILY COLLECTION SHORTFALL ADD-ON.
(a) In General. The family collection shortfall add-on, for a regional
alliance for a class of enrollment for a year, is the amount that would be
the weighted average premium for such alliance, class, and year, if the per
capita collection shortfall amount (determined under subsection (b)) for
the alliance for the year were substituted for the reduced weighted average
accepted bid for the regional alliance for the year.
(b) Computation of Per Capita Adjustment for Collection Shortfalls.
(1) Per capita collection shortfall amount . The per capita collection
shortfall amount, for a regional alliance for a year, under this
subsection is equal to
(A) the amount estimated under paragraph (2)(A) for the year, divided
by
(B) the estimated average number of regional alliance eligible
individuals in the regional alliance during the year (reduced by the
average number of such individuals whose family share of premiums,
determined without regard to this section and section 6106, is zero).
(2) Aggregate collection shortfall.
(A) In general. Each regional alliance shall estimate, for each year
(beginning with the first year) the total amount of payments which the
alliance can reasonably identify as owed to the alliance under this Act
(taking into account any premium reduction or discount under this
subtitle and including amounts owed under subpart B and not taking into
account any penalties) for the year and not likely to be collected
(after making collection efforts described in section 1345) during a
period specified by the Secretary beginning on the first day of the
year.
(B) Exclusion of government debts. The amount under subparagraph (A)
shall not include any payments owed to a regional alliance by the
Federal, State, or local governments.
(C) Adjustment for previous shortfall estimation discrepancy. Subject
to section 1361(b)(3), the amount estimated under this paragraph for a
year shall be adjusted to reflect over (or under) estimations in the
amounts so computed under this paragraph for previous years (based on
actual collections), taking into account interest payable based upon
borrowings (or savings) attributable to such over or under estimations.
Subpart B. Repayment of Alliance Credit by Certain Families
SEC. 6111. REPAYMENT OF ALLIANCE CREDIT BY CERTAIN FAMILIES.
(a) In General. Subject to the succeeding provisions of this subpart,
each family which is provided an alliance credit under section 6103 for a
class of enrollment is liable to the regional alliance for repayment of the
amount of such credit in accordance with section 1343.
(b) Reduction for Self-Employment Payments. The liability of a family
under this section for a year shall be reduced (but not below zero) by the
amount of any employer payments made in the year under section 6126 based
on the net earnings from self-employment of a family member.
SEC. 6112. NO LIABILITY FOR FAMILIES EMPLOYED FULL-TIME; REDUCTION IN
LIABILITY
FOR PART-TIME EMPLOYMENT.
(a) In General. The amount of any liability under section 6111 shall be
reduced, in accordance with rules established by the National Health Board
consistent with this section, based on employer premiums payable, under
section 6121, with respect to the employment of a family member who is a
qualifying employee or with respect to a family member. In no case shall
the reduction under this section result in any payment owing to a family.
(b) Credit for Full-Time and Part-Time Employment.
(1) In general. Under such rules, in the case of a family enrolled
under a class of family enrollment, if a family member is a qualifying
employee for a month and the employer is liable for payment under section
6121 based on such employment
(A) Full-time employment credit. If the employment is on a full-time
basis (as defined in section 1902(b)(2)) the liability under section
6111 shall be reduced by the credit amount described in subparagraph
(C).
(B) Part-time employment credit. If the employment is on a part-time
basis (as defined in section 6121(d)) the liability under section 6111
shall be reduced by the employment ratio (as defined in section
6121(d)) of the credit amount described in subparagraph (C).
(C) Full-time monthly credit. The amount of the credit under this
subparagraph, with respect to employment by an employer in a month, is
\1/12\ (or, if applicable, the fraction described in paragraph (2)) the
amount owed under section 6111, based on the class of enrollment, for
the year.
(2) Coverage during only part of a year. In the case of a family that
is not enrolled in a regional alliance health plan for all the months in
a year, the fraction described in this paragraph is 1 divided by the
number of months in the year in which the family was enrolled in such a
plan.
(3) Aggregation of credits.
(A) Individuals. In the case of an individual who is a qualifying
employee of more than one employer in a month, the credit for the month
shall equal the sum of the credits earned with respect to employment by
each employer. Such sum may exceed the credit amount described in
paragraph (1)(C).
(B) Couples. In the case of a couple each spouse of which is a
qualifying employee in a month, the credit for the month shall equal
the sum of the credits earned with respect to employment by each
spouse. Such sum may exceed the credit amount described in paragraph
(1)(C).
(c) Treatment of Change of Enrollment Status. In the case of a family for
which the class of family enrollment changes during a year, the Board shall
establish rules for appropriate conversion and allocation of the credit
amounts under the previous provisions of this section in a manner that
reflects the relative values of the base employment monthly premiums (as
determined under section 6122) among the different classes of family
enrollment.
SEC. 6113. LIMITATION OF LIABILITY BASED ON INCOME.
(a) In General. In the case of an eligible family described in subsection
(b), the repayment amount required under this subpart (after taking into
account any work credit earned under section 6112) with respect to a year
shall not exceed the amount of liability described in subsection (c) for
the year.
(b) Eligible Family Described. An eligible family described in this
subsection is a family which is determined, under subpart B of part 2 of
subtitle D of title I by the regional alliance for the alliance area in
which the family resides, to have wage-adjusted income (as defined in
subsection (d)) below 250 percent of the applicable poverty level.
(c) Amount of Liability.
(1) Determination. Subject to paragraph (2), in the case of a family
enrolled in a class of enrollment with wage-adjusted income (as defined
in subsection (d)), the amount of liability under this subsection is
determined as follows:
(A) No obligation if income below income threshold amount or if afdc
or ssi family. If such income is than the income threshold amount
(specified in section 6104(c)(4)) or if the family is an AFDC or SSI
family, the amount of liability is zero.
(B) Income above income threshold amount. If such income is at least
such income threshold amount and the family is not an AFDC or SSI
family, the amount of liability is the sum of the following:
(i) 5.5 percent of income (above income threshold amount) up to the
poverty level. The initial marginal rate (specified in paragraph
(2)(A)) of the amount by which
(I) the wage-adjusted income (not including any portion that exceeds
the applicable poverty level for the class of family involved), exceeds
(II) such income threshold amount.
(ii) Graduated phase out of discount up to 250 percent of poverty
level. The final marginal rate (specified in paragraph (2)(B)) of the
amount by which the wage-adjusted income exceeds 100 percent of the
applicable poverty level.
(2) Marginal rates. In paragraph (1)
(A) Initial marginal rate. The initial marginal rate, for a year for
a class of enrollment, is the ratio of
(i) 5.5 percent of the applicable poverty level for the class of
enrollment for the year, to
(ii) the amount by which such poverty level exceeds such income
threshold amount.
(B) Final marginal rate. The final marginal rate, for a year for a
class of enrollment, is the ratio of
(i) the amount by which (I) the amount of the alliance credit
exceeds (II) 5.5 percent of the applicable poverty (for the class and
year); to
(ii) 150 percent of such poverty level.
(C) Application for family enrollment based on based on dual parent
enrollment. The marginal rates under this paragraph for any family
class of enrollment shall be determined based on the applicable poverty
level for a dual parent class of enrollment.
(d) Wage-Adjusted Income Defined. In this subtitle, the term
``wage-adjusted income'' means, for a family, family adjusted income of the
family (as defined in section 1372(d)(1)), reduced by the sum of the
following:
(1)(A) Subject to subparagraph (B), the amount of any wages included in
such family's income that is received for employment which is taken into
account in the computation of the amount of employer premiums under
section 6121 (without consideration of section 6126).
(B) The reduction under subparagraph (A) shall not exceed for a year
$5,000 (adjusted under section 6104(c)(3)(B)) multiplied by the number
of months (including portions of months) of employment with respect to
which employer premiums were payable under section 6121 (determined in
a manner consistent with section 6121(e)).
(2) The amount of net earnings from self employment of the family taken
into account under section 6126).
(3) The amount of unemployment compensation included in income under
section 85 of the Internal Revenue Code of 1986.
(e) Determinations. A family's wage-adjusted income and the amount of
liability under subsection (c) shall be determined by the applicable
regional alliance upon application by a family under under subpart B of
part 2 of subtitle D of title I.
(f) No Liability for Indians and Certain Veterans and Military Personnel.
The provisions of paragraph (3) of section 6104(a) shall apply to the
reduction in liability under this section in the same manner as such
paragraph applies to the premium discount under section 6104.
SEC. 6114. SPECIAL TREATMENT OF CERTAIN RETIREES AND QUALIFIED SPOUSES
AND
CHILDREN.
(a) Treatment as Full-Time Employee.
(1) In general. Subject to subsection (d) and paragraph (2), an
individual who is an eligible retiree (as defined in susection (b)) or a
qualified spouse or child (as defined in subsection (c)) for a month in a
year (beginning with 2000) is considered, for purposes of section 6112,
to be a full-time employee described in such section in such month.
(2) Phase-in. For months in 2000, the reduction in liability under
section 6111 resulting from paragraph (1) for an individual (or qualified
spouse or child) shall be 62.5 percent of the reduction in liability that
would apply but for this paragraph.
(b) Eligible Retiree Defined. In subsection (a), the term ``eligible
retiree'' means, for a month, an individual who establishes to the
satisfaction of the regional alliance (for the alliance area in which the
individual resides), pursuant to rules of the Secretary, that the
individual, as of the first day of the month
(1) is at least 55, but less than 65, years of age,
(2) is not employed on a full-time basis (as defined in section
6121(d)(1)(A)),
(3) would be eligible (under section 226(a) of the Social Security Act)
for hospital insurance benefits under part A of title XVIII of such Act
if the individual were 65 years of age based only on the employment of
the individual, and
(4) is not a medicare-eligible individual.
(c) Qualified Spouse or Child Defined. In subsection (a), the term
``qualified spouse or child'' means, in relation to an eligible retiree for
a month, an individual who establishes to the satisfaction of the regional
alliance (for the alliance area in which the individual resides) under
rules of the Secretary that the requirements in one of the following
paragraphs is met with respect to the individual:
(1) The individual (A) is under 65 years of age and is (and has been
for a period of at least one year) married to an eligible retiree or (B)
is a child of the eligible retiree.
(2) In the case of a person who was an eligible retiree at the time of
the person's death
(A) the individual was (and had for a period of at least one year
been) married to the retiree at the time of the person's death,
(B) the individual is under 65 years of age,
(C) the individual is not employed on a full-time basis (as defined
in section 6121(d)(1)(A)),
(D) the individual is not remarried, and
(E) the deceased spouse would still be an eligible retiree in the
month if such spouse had not died.
(3) The individual is a child of an individual described in paragraph
(2).
(d) Individuals Disqualified. Subsection (a) shall not apply to an
individual for a month in a year if the individual would be subject to
section 59B of the Internal Revenue Code of 1986 as a taxpayer in the year
if the individual were covered under Medicare part B for any month during
the year.
(e) Application. An individual may not be determined to be an eligible
retiree or qualified spouse or child unless an application has been filed
with the regional alliance. Such application shall contain such information
as the Secretary may require to establish such status and verify
information in the application. Any material misrepresentation in the
application is subject to a penalty in the same manner as a
misrepresentation described in section 1374(h)(2).
SEC. 6115. SPECIAL TREATMENT OF CERTAIN MEDICARE BENEFICIARIES.
In the case of an individual who would be a medicare-eligible individual
in a month but for the application of section 1012(a) on the basis of
employment (in the month or a previous month) of the individual or the
individual's spouse, the individual (or spouse, as the case may be) so
employed is considered, for purposes of section 6112, to be a full-time
employee described in such section in such month.
Part 2. EMPLOYER PREMIUM PAYMENTS
Subpart A. Regional Alliance Employers
SEC. 6121. EMPLOYER PREMIUM PAYMENT REQUIRED.
(a) Requirement.
(1) In general. Each regional alliance employer described in paragraph
(2) for a month shall pay to the regional alliance that provides health
coverage to a qualifying employee of the employer an employer premium in
a amount at least equal to the amount specified in subsection (b). Such
payments shall be made in accordance with section 1345.
(2) Employer described. An employer described in this paragraph for a
month, is an employer that in the month employs one or more qualifying
employees (as defined in section 1902(b)(1)).
(3) Treatment of certain employment by corporate alliance employers. A
corporate alliance employer shall be deemed, for purposes of this
subpart, to be a regional alliance employer with respect to qualifying
employees who are not corporate alliance eligible individuals.
(b) Premium Payment Amount.
(1) In general. Except as provided in section 6123 (relating to a
discount for certain employers), section 6124 (relating to large
employers electing coverage in a regional alliance), and section 6125
(relating to the employer collection shortfall add-on), the amount of the
employer premium payment, for a month for qualifying employees of the
employer who reside in an alliance area, is the sum of the payment
amounts computed under paragraph (2) for each class of family enrollment
with respect to such employees in such area.
(2) Payment amount for all employees in a class of family enrollment.
Subject to paragraph (3), the payment amount under this paragraph, for an
employer for a class of family enrollment for a month for qualifying
employees residing in an alliance area, is the product of
(A) the base employer monthly premium determined under section 6122
for the class of family enrollment for the previous month for the
regional alliance, and
(B) the number of full-time equivalent employees (determined under
section 1901(b)(2)) enrolled in that class of family enrollment for the
previous month and residing in the alliance area.
(3) Treatment of certain employees. In applying this subpart in the
case of a qualifying employee (other than a medicare-eligible individual)
who is not enrolled in any alliance health plan
(A) the employee is deemed enrolled in a regional alliance health
plan (for the alliance area in which the individual resides) in the
dual parent class of enrollment, and
(B) if the employee's residence is not known, the employee is deemed
to reside in the alliance area in which the employee principally is
employed for the employer.
(4) Transitional rules for first month in first year for a State. In
the case of an employer for a State in the first month of the State's
first year
(A) the premium amount for such month shall be computed by
substituting ``month'' for ``previous month'' in paragraph (2);
(B) payment for such month shall be made on the first of the month
based on an estimate of the payment for such month;
(C) an adjustment shall be made to the payment in the following month
to reflect the difference between the payment in the first month and
the payment in the following month (calculated without regard to the
adjustment under this subparagraph); and
(D) the reconciliation of premiums for such first month under section
1602(c) shall be included in the reconciliation of premiums for the
following 12 months.
(5) Special rules for divided families. In the case of an individual
who is a qualifying employee of an employer and the individual has a
spouse or child who is not treated as part of the individual's family
because of section 1012
(A) the employer premium payment under this section shall be computed
as though such section had not applied, and
(B) the regional alliance shall make proportional payments
(consistent with rules established by the Secretary) to the health
plans (if different) of the qualifying employee and of the employee's
spouse and children.
(c) Application During Transition Period.
(1) In general. For purposes of applying this subpart in the case of an
employer described in paragraph (3), there shall only be taken into
account qualifying employees (and wages of such employees) who reside in
a participating State.
(2) Exception. Paragraph (1) shall not apply in determining the average
number of full-time equivalent employees or whether an employer is a
small employer.
(3) Employer described. An employer described in this paragraph is an
employer that employs one or more qualifying employees in a participating
State and one or more qualifying employees in a State that is not a
participating State.
SEC. 6122. COMPUTATION OF BASE EMPLOYMENT MONTHLY PREMIUM.
(a) In General. Each regional alliance shall provide for the computation
for each year (beginning with the first year) of a base employment monthly
premium for each class of family enrollment equal to \1/12\ of 80 percent
of
(1) the weighted average premium for such regional alliance and class
of enrollment, reduced by the amount described in section 6106(b),
divided by
(2)(A) in the case of a class of enrollment that does not include a
couple, 1, or
(B) in the case of a couple class of enrollment, the average number
of premium payments per family, as determined under subsection (b), for
families receiving coverage within such class from regional alliance
health plans offered by the regional alliance.
(b) Determination of Average Employer Premium Payments Per Family for
Couples Classes.
(1) In general. Subject to paragraph (4), the regional alliance shall
determine, for each couple class of family enrollment and in a manner
specified by the Board, an average, annual, estimated number of premium
payments per family equal to
(A) the alliance-wide monthly average number of premium payments (as
determined under paragraph (2)) for covered families (as defined in
paragraph (3)) within such class of enrollment, divided by
(B) the monthly average number of covered families receiving coverage
through regional alliance health plans within such class of employment.
(2) Computation of alliance-wide monthly average number.
(A) In general. In determining the alliance-wide monthly average
number of premium payments under paragraph (1)(A), a covered family
shall count for a month as 1, or, if greater, the number computed under
subparagraph (B) (but in no case greater than 2).
(B) Counting of families in which both spouses are qualifying
employees. The number computed under this subparagraph over all
families within a couple class of enrollment in which both spouses are
qualifying employees, is determined on an alliance-wide basis based on
the following:
(i) For such a spouse, determine, using the rules under section
1902(b)(2)(A), how many full-time equivalent employees the spouse is
counted as, but not to exceed 1 for either spouse.
(ii) Add the 2 numbers determined under clause (i) for spouses in
such families.
(3) Covered family defined. In this subsection, the term ``covered
family'' means a family other than
(A) an SSI family or AFDC family,
(B) a family in which a spouse is a medicare-eligible individual, or
(C) a family that is enrolled in a health plan other than a regional
alliance health plan.
(4) Adjustment to account for use of estimates. Subject to section
1361(b)(3), if the total receipts of a regional alliance to all regional
alliance health plans in a year under this subpart exceeds, or is less
than, the total of such receipts estimated by the alliance (based on the
base employment monthly premium under subsection (a)), because of a
difference between
(A) the alliance's estimate of the average, annual, estimated number
of premium payments per family for the alliance, and
(B) the actual number of premium payments per family for the
alliance,
the average, annual, estimated number of premium payments per family
to be applied under this section in the second succeeding year shall be
reduced, or increased, respectively, in a manner that results in total
receipts of the alliance under this subpart in such succeeding year
being increased or decreased by the amount of such excess (or deficit).
(c) Basis for Determinations.
(1) Premiums. The determinations of premiums and families under plans
under this section shall be made in a manner determined by the Board and
based on the premiums and families used by the Board in carrying out
subtitle A (relating to cost containment) and shall be based on estimates
on an annualized basis.
(2) Employment.
(A) For first year. The determinations of employment under this
section for the first year for a State shall be based on estimates of
employment established by the regional alliance in accordance with
standards promulgated by the Secretary of Labor in consultation with
the National Health Board.
(B) For subsequent years. The determinations of employment under this
section for a year after the first year for a State shall be based on
estimates of employment established by the regional alliance in
accordance with standards promulgated by the Secretary of Labor in
consultation with the National Health Board.
(3) Reports. In accordance with rules established by the Secretary of
Labor in consultation with the National Health Board, a regional alliance
may require regional alliance employers to submit such periodic
information on employment as may be necessary to monitor the
determinations made under subsections (a) and (c), including months and
extent of employment.
(d) Timing of Determination. Determinations under this section for a year
shall be made by not later than December 1, or such other date as the Board
may specify, before the beginning of the year.
SEC. 6123. PREMIUM DISCOUNT FOR CERTAIN EMPLOYERS.
(a) Employer Discount.
(1) In general. Subject to section 6124(c) (relating to phase in for
certain large corporate alliance employers) and section 6125 (relating to
the employer collection shortfall add-on), the amount of the employer
premium payment required under this part for a regional alliance employer
for any year shall not exceed the limiting percentage (as defined in
subsection (b)) of the employer's wages for that year.
(2) Exclusion of governmental employers and certain corporate alliance
employers. Paragraph (1) shall not apply to
(A) the Federal Government, a State government, or a unit of local
government, or a unit or instrumentality of such government, before
2002; and
(B) a corporate alliance employer which is treated as a regional
alliance employer under section 6131(a)(2).
(b) Limiting Percentage Defined. In subsection (a)
(1) Any employer. For an employer that is not a small employer (as
defined in subsection (c)), the limiting percentage is 7.9 percent.
(2) Small employers. For an employer that is a small employer and that
has an average number of full-time equivalent employees and average
annual wages per full-time equivalent employee (as determined under
subsection (d)), the limiting percentage is the applicable percentage
determined based on following table:
Limiting Percentage
Average number of full-time equivalent employees
Employer's average annual wages per full-time equivalent employee are:
$0 $12,000
$12,001 $15,000
$15,001 $18,000
$18,001 $21,000
$21,001 $24,000
Fewer than
25 03.5% 04.4% 05.3% 06.2% 07.1%
25 but fewer than 50 04.4% 05.3% 06.2% 07.1% 07.9%
50 but fewer than 75 05.3% 06.2% 07.1% 07.9% 07.9%
(c) Small Employer Defined.
(1) In general. In this section
(A) the term ``small employer'' means an employer that does not
employ, on average, more than 75 full-time equivalent employees; and
(B) subject to subsection (b)(3)(C)(i), the average number of
full-time equivalent employees shall be determined by averaging the
number of full-time equivalent employees employed by the employer in
each countable month during the year.
(2) Countable month. In paragraph (1), the term ``countable month''
means, for an employer, a month in which the employer employs any
qualifying employee.
(3) Determinations. The number of full-time equivalent employees shall
be determined using the rules under section 1902(b)(2).
(d) Average Annual Wages Defined.
(1) In general. In this section, the term ``average annual wages''
means, for an employer for a year
(A) the total wages paid in the year to individuals who, at the time
of payment of the wages, are qualifying employees of the employer;
divided by
(B) the number of full-time equivalent employees of the employer in
the year.
(2) Determination. The Board may establish rules relating to the
computation of the average annual wages for employers.
(e) Determinations. For purposes of this section, the number of employees
and average wages shall be determined on an annual basis.
(f) Treatment of Certain Self-employed Individuals. In the case of an
individual who is a partner in a partnership, is a 2-percent shareholder in
an S corporation (within the meaning of section 1372 of the Internal
Revenue Code of 1986), or is any other individual who carries on a trade or
business as a sole proprietorship, for purposes of this section
(1) the individual is deemed to be an employee of the partnership, S
corporation, or proprietorship, and
(2) the individual's net earnings from self employment attributable to
the partnership, S corporation, or sole proprietorship are deemed to be
wages from the partnership, S corporation, or proprietorship.
(g) Application to Employers. An employer that claims that this section
applies
(1) shall provide notice to the regional alliance involved of the claim
at the time of making payments under this part; and
(2) shall make available such information (and provide access to such
information) as the regional alliance may require (in accordance with
regulations of the Secretary of Labor) to audit the determination of
(A) whether the employer is a small employer, and, if so, the average
number of full-time equivalent employees and average annual wages of
the employer; and
(B) the total wages paid by the employer for qualifying employees.
SEC. 6124. PAYMENT ADJUSTMENT FOR LARGE EMPLOYERS ELECTING COVERAGE
IN A
REGIONAL ALLIANCE.
(a) Application of Section.
(1) In general. Except as otherwise provided in this subsection, this
section shall apply to the employer premium payments for full-time
employees in a State of an employer if
(A)(i) the employer is an eligible sponsor described in section
1311(b)(1)(A), (ii) the employer elected to be a corporate alliance
under section 1312(a)(1), and (iii) the election is terminated under
section 1313;
(B)(i) the employer is such an eligible sponsor as of the first day
of the first year of the State, and (ii) the employer did not provide
the notice required under section 1312(a)(1) (with respect to an
election to become a corporate alliance); or
(C) the employer is such an eligible sponsor, (ii) the employer
subsequently became a large employer and elected to be a corporate
alliance under section 1312(a)(2), and (iii) the election was
terminated under section 1313.
(2) Effective date. In the case of an employer described in
(A) paragraph (1)(A) or (1)(C), this section shall first apply on the
effective date of the termination of the election under section 1313,
or
(B) paragraph (1)(B), this section shall first apply as of January 1,
1996 (or, if later with respect to a State, the first day of the first
year for the State).
(3) Treatment of employees in small establishments. This section shall
not apply to the payment of premiums for full-time employees of an
employer described in paragraph (1)(A) or (1)(C), if the employees are
employed at an establishment with respect to which the option described
in section 1311(b)(1)(C) was exercised.
(4) Sunset. This section shall cease applying to an employer with
respect to employment in a State after the 7th year in which this section
applies to the employer in the State.
(5) Large employer defined. In this section, the term ``large
employer'' has the meaning given such term in section 1311(d)(3).
(b) Additional Amount.
(1) In general. If an employer subject to this section for a year has
an excess risk percentage (as defined in paragraph (3)) of greater than
zero with respect to an alliance area, then the employer shall provide,
on a monthly basis, for payment to the regional alliance for such area of
an amount equal to \1/12\ of the excess amount described in paragraph (2)
for the year.
(2) Excess amount. The excess amount described in this paragraph, for
an employer for a year with respect to an alliance area, is equal to the
product of the following:
(A) The reduced weighted average accepted bid for the regional
alliance for the area for the year.
(B) The total average number of alliance eligible individuals who
(i) were full-time employees (or family members of such employees)
of the employer, and
(ii) residing in the regional alliance area,
in the year before the first year in which this section applies to
the employer.
(C) The extra risk proportion (specified in paragraph (3)) for the
employer for such area.
(D) The phase-down percentage (specified in paragraph (4)) for the
year.
(3) Extra risk proportion.
(A) In general. The ``extra risk proportion'', specified in this
paragraph, with respect to an employer and an alliance area, is a
percentage that reflects, for the year before the first year in which
this section applies to the employer, the amount by which
(i) the average demographic risk for employees (and family members)
described in paragraph (2)(B) residing in the alliance area, exceeds
(ii) the average demographic risk for all regional alliance
eligible individuals residing in the area.
(B) Measurement of demographic risk.
(i) In general. Demographic risk under subparagraph (A) shall be
measured, in a manner specified by the Board, based on the
demographic characteristics described in section 6001(c)(1)(A), that
relate to the actuarial value of the comprehensive benefit package.
(ii) Provision of information. Each employer to which this section
applies shall submit, to each regional alliance for which an
additional payment is required under this section, such information
(and at such time) as the Board may require in order to determine the
demographic risk referred to in subparagraph (A)(i).
(4) Phase-down percentage. The phase down percentage, specified in this
paragraph for an employer for
(A) each of the first 4 years to which this section applies to the
employer, is 100 percent,
(B) the fifth such year, is 75 percent,
(C) the sixth such year, is 50 percent, and
(D) the seventh such year, is 25 percent.
(c) Phase in of Employer Premium Discount. For
(1) each of the first 4 years in which this section applies to such
employer, section 6123 shall not apply to the employer;
(2) the fifth such year, section 6123 shall apply to the employer but
the reduction in premium payment effected by such section shall be 25
percent of the reduction that would otherwise apply (but for this
subsection);
(3) the sixth such year, section 6123 shall apply to the employer but
the reduction in premium payment effected by such section shall be 50
percent of the reduction that would otherwise apply (but for this
subsection);
(4) the seventh such year, section 6123 shall apply to the employer but
the reduction in premium payment effected by such section shall be 75
percent of the reduction that would otherwise apply (but for this
subsection); or
(5) a subsequent year, section 6123 shall apply to the employer without
any reduction under this subsection.
SEC. 6125. EMPLOYER COLLECTION SHORTFALL ADD-ON.
(a) In General. The amount payable by an employer under this subpart
shall be increased by the amount computed under subsection (b).
(b) Amount. The amount under this subsection for an employer is equal to
the premium payment amount that would be computed under section 6121(b)(2)
if the per capita collection shortfall amount (computed under section
6107(b)(1)) for the year were substituted for the reduced weighted average
accepted bid for the year.
(c) Discount Not Applicable. Section 6123 shall not apply to the increase
in the amount payable by virtue of this section.
SEC. 6126. APPLICATION TO SELF-EMPLOYED INDIVIDUALS.
(a) In General. A self-employed individual (as defined in section
1901(6)) shall be considered, for purposes of this subpart to be an
employer of himself or herself and to pay wages to himself or herself equal
to the amount of net earnings from self-employment (as defined in section
1901(c)(1)).
(b) Credit for Employer Premiums.
(1) In general. In the case of a self-employed individual, the amount
of any employer premium payable by virtue of subsection (a) in a year
shall be reduced (but not below zero) by the sum of the following:
(A) Subject to paragraph (2), the amount of any employer premiums
payable under this subpart (determined not taking into account any
adjustment in the premium amounts under section 6123 or 6124) with
respect to the employment of that individual in the year.
(B) The product of (i) the number of months in the year the
individual was employed on a full-time basis by a corporate alliance
employer, and (ii) the employer premium that would have been payable
for such months under this subpart (determined not taking into account
any adjustment in the premium amounts under section 6123 or 6124) for
the class of enrollment if such employer had been a regional alliance
employer.
(2) Special rule for certain closely-held businesses.
(A) In general. In the case of an individual who
(i) has wage-adjusted income (as defined in section 6113(d),
determined without regard to paragraphs (1)(B) and (2) thereof) that
exceeds 250 percent (or such higher percentage as the Board may
establish) of the applicable poverty level, and
(ii) is both a substantial owner and an employee of a closely held
business,
the amount of any reduction under paragraph (1)(A) that is
attributable to the individual's employment by that business shall be
appropriately reduced in accordance with rules prescribed by the
Board, in order to prevent individuals from avoiding payment of the
full amount owed through sham or secondary employment arrangements.
(B) Closely held business. For purposes of subparagraph (A), a
business is ``closely held'' if it is an employer that meets the
requirements of section 542(a)(2) of the Internal Revenue Code of 1986
or similar requirements as appropriate in the case of a partnership or
other entity.
Subpart B. Corporate Alliance Employers
SEC. 6131. EMPLOYER PREMIUM PAYMENT REQUIRED.
(a) Per Employee Premium Payment. Subject to section 6124, each corporate
alliance employer of a corporate alliance that in a month in a year employs
a qualifying employee who is
(1) enrolled in a corporate alliance health plan offered by the
alliance, shall provide for a payment toward the premium for the plan in
an amount at least equal to the corporate employer premium specified in
subsection (b); or
(2) is not so enrolled, shall make employer premium payments with
respect to such employment under subpart A in the same manner as if the
employer were a regional alliance employer (except as otherwise provided
in such subpart).
(b) Corporate Employer Premium.
(1) Amount.
(A) In general. Except as provided in paragraph (2), the amount of
the corporate employer premium for a month in a year for a class of
family enrollment for a family residing in a premium area (established
under section 1364(b)) is 80 percent of the weighted average monthly
premium of the corporate alliance health plans offered by the corporate
alliance for that class of enrollment for families residing in that
area.
(B) Application to self-insured plans. In applying this paragraph in
the case of one or more corporate alliance health plans that are
self-insured plans
(i) the ``premium'' for the plan is the actuarial equivalent of
such premium, based upon the methodology (or such other consistent
methodology) used under section 6021(a) (relating to application of
cost containment to corporate alliance health plans), and
(ii) the premium amount, for different classes and, if applicable,
for different premium areas, shall be computed in a manner based on
such factors as may bear a reasonable relationship to costs for the
provision of the comprehensive benefit package to the different
classes in such areas.
The Secretary of Labor shall establish rules to carry out this
subparagraph.
(2) Low-wage employees. In the case of a low-wage employee entitled to
a premium discount under section 6104(a)(2), the amount of the employer
premium payment for a month in a year for a class of family enrollment
shall be increased by the amount of such premium discount.
(c) Determinations.
(1) Basis. Determinations under this section shall be made based on
such information as the Secretary of Labor shall specify.
(2) Timing. Determinations of the monthly premiums under this section
for months in a year shall be made not later than December 1 of the
previous year.
Subtitle C. Payments to Regional Alliance Health Plans
SEC. 6201. COMPUTATION OF BLENDED PLAN PER CAPITA PAYMENT AMOUNT.
(a) In General. For purposes of section 1342, the blended plan per capita
payment amount for a regional alliance health plan for enrollments in an
alliance for a year is equal to the sum of the 3 components described in
subsection (b), multiplied by any adjustment factor applied for the year
under subsection (d).
(b) Sum of Products. The 3 components described in this subsection are:
(1) Plan bid component for that plan. The product of
(A) the final accepted bid for plan (as defined in section
6000(a)(2)) for the year, and
(B) the plan bid proportion determined under section 6202(a)(1) for
the year.
(2) AFDC component for alliance. The product of
(A) the AFDC per capita premium amount for the regional alliance for
the year (determined under section 9012), and
(B) the AFDC proportion determined under section 6202(a)(2) for the
year.
(3) SSI component for alliance. The product of
(A) the SSI per capita premium amount for the regional alliance for
the year (determined under section 9013) for the year, and
(B) the SSI proportion determined under section 6202(a)(3) for the
year.
SEC. 6202. COMPUTATION OF PLAN BID, AFDC, AND SSI PROPORTIONS.
(a) In General. For purposes of this subtitle:
(1) Plan bid proportion. The ``plan bid proportion'' is, for a type of
enrollment, 1 minus the sum of (A) the AFDC proportion, and (B) the SSI
proportion.
(2) AFDC proportion. The ``AFDC proportion'' is, for a class of family
enrollment for a year, the ratio of
(A) the average of the number of AFDC recipients (as determined under
subsection (c)) enrolled in regional alliance health plans in that
class of enrollment for the year, to
(B) the average of the total number of individuals enrolled in
regional alliance health plans in that class of enrollment for the
year.
(3) SSI proportion. The ``SSI proportion'' is, for a class of family
enrollment for a year, the ratio of
(A) the average of the number of SSI recipients (as determined under
subsection (c)) enrolled in regional alliance health plans in that
class of enrollment for the year, to
(B) the average described in paragraph (2)(B).
(b) Computation.
(1) Projections. The proportions described in subsection (a) shall be
determined and applied by the State, based upon the best available data,
at least 1 month before the date bids are submitted under section 6004
before the beginning of the calendar year involved.
(2) Actual. For purposes of making adjustments under subsection (d),
the regional alliance shall determine, after the end of each year, the
actual proportions described in subsection (a).
(c) Counting of AFDC and SSI Recipients. For purposes of subsections
(a)(2)(A) and (a)(3)(A), the terms ``SSI recipient'' and ``AFDC recipient''
do not include a medicare-eligible individual.
(d) Adjustments For Discrepancies In Estimations.
(1) In general. If the actual AFDC proportion or SSI proportion (as
determined under subsection (a)) for a year (in this subsection referred
to as the ``reference year''), determined after the end of the year based
upon actual number of AFDC recipients and SSI recipients in the year, is
different from the projected AFDC and SSI proportions (as determined
under subsection (b)(1)) used in computing the blended plan payment
amount for the year, then, subject to section 1361(b)(3), the regional
alliance shall adjust the blended plan payment amount in the second
succeeding year (in this subsection referred to as the ``applicable
year'') in the manner described in paragraph (2). By regulation the
Secretary may apply the adjustment, based on estimated amounts, in the
year before the applicable year, with final adjustment in the applicable
year.
(2) Adjustment described.
(A) Positive cash flow. If the cash flow difference (as defined in
paragraph (3)(A)) for the reference year is positive, then in the
applicable year the blended plan payment amount shall be increased by
the adjustment percentage described in paragraph (4).
(B) Negative cash flow. If the cash flow difference (as defined in
paragraph (3)(A)) for the reference year is negative, then in the
applicable year the blended plan payment amount shall be reduced by the
adjustment percentage described in paragraph (4).
(3) Cash flow difference defined. In this subsection:
(A) In general. The term ``cash flow difference'' means, for a
regional alliance for a reference year, the amount by which
(i) the actual cash flow (as defined in subparagraph (B)) for the
alliance for the year, exceeds
(ii) the reconciled cash flow (as defined in subparagraph (C)) for
the alliance for the year.
(B) Actual cash flow. The term ``actual cash flow'' means, for a
regional alliance for a reference year, the total amount paid by the
regional alliance to the regional alliance health plans in the year
based on the blended plan payment amount (computed on the basis of
projected AFDC and SSI proportions determined under subsection (b)(1).
(C) Reconciled cash flow. The term ``reconciled cash flow'' means,
for a regional alliance for a reference year, the total amount that
would have been paid to regional alliance health plans in the year if
such payments had been made based on the blended plan payment amount
computed on the basis of the actual AFDC and SSI proportions for the
year (determined under subsection (b)(2), rather than based on such
payment amount computed on the basis of the projected AFDC and SSI
proportions for the year (determined under subsection (b)(1)).
(4) Percentage adjustment. The percentage adjustment described in this
paragraph for a regional alliance for an applicable year is the ratio
(expressed as a percentage) of
(A) the cash flow difference for the reference year, to
(B) the total payments estimated by the regional alliance to be paid
to regional alliance health plans under this subtitle in the applicable
year (determined without regard to any adjustment under this
subsection).
Title VII: REVENUE PROVISIONS
Table of contents
Section 7001. Amendment of 1986 Code.
Subtitle A. Financing Provisions
Part 1. Increase in Tax on Tobacco Products
Section 7111. Increase in excise taxes on tobacco _products.
Section 7112. Modifications of certain tobacco tax provisions.
Section 7113. Imposition of excise tax on manufacture or
importation of roll-your-own tobacco.
Part 2. Health Related Assessment
Section 7121. Assessment on corporate alliance employers.
Part 3. Recapture of Certain Health Care Subsidies
Section 7131. Recapture of certain health care subsidies received
by high-income individuals.
Part 4. Other Provisions
Section 7141. Modification to self-employment tax treatment of
certain S corporation shareholders and partners.
Section 7142. Extending medicare coverage of, and application of
hospital insurance tax to, all State and local
government employees.
Subtitle B. Tax Treatment of Employer-Provided Health Care
Section 7201. Limitation on exclusion for employer-provided health
benefits.
Section 7202. Health benefits may not be provided under cafeteria
plans.
Section 7203. Increase in deduction for health insurance costs of
self-employed individuals.
Section 7204. Limitation on prepayment of medical insurance
premiums.
Subtitle C. Employment Status Provisions
Section 7301. Definition of employee.
Section 7302. Increase in services reporting penalties.
Section 7303. Revision of section 530 safe harbor rules.
Subtitle D. Tax Treatment of Funding of Retiree Health Benefits
Section 7401. Post-retirement medical and life insurance reserves.
Section 7402. Health benefits accounts maintained by pension
plans.
Subtitle E. Coordination With COBRA Continuing Care Provisions
Section 7501. Coordination with COBRA continuing care provisions.
Subtitle F. Tax Treatment of Organizations Providing Health Care Services and
Related Organizations
Section 7601. Treatment of nonprofit health care organizations.
Section 7602. Tax treatment of taxable organizations providing
health insurance and other prepaid health care
services.
Section 7603. Exemption from income tax for regional alliances.
Subtitle G. Tax Treatment of Long-term Care Insurance and Services
Section 7701. Qualified long-term care services treated as medical
care.
Section 7702. Treatment of long-term care insurance.
Section 7703. Tax treatment of accelerated death benefits under
life insurance contracts.
Section 7704. Tax treatment of companies issuing qualified
accelerated death benefit riders.
Subtitle H. Tax Incentives for Health Services Providers
Section 7801. Nonrefundable credit for certain primary health
services providers.
Section 7802. Expensing of medical equipment.
Subtitle I. Miscellaneous Provisions
Section 7901. Credit for cost of personal assistance services
required by employed individuals.
Section 7902. Denial of tax-exempt status for borrowings of health
care-related entities.
Section 7903. Disclosure of return information for administration
of certain programs under the Health Security Act.
--------
SEC. 7001. AMENDMENT OF 1986 CODE
Except as otherwise expressly provided, whenever in this title an amendment
or repeal is expressed in terms of an amendment to, or repeal of, a section
or other provision, the reference shall be considered to be made to a section
or other provision of the Internal Revenue Code of 1986.
Subtitle A. Financing Provisions
Part 1. INCREASE IN TAX ON TOBACCO PRODUCTS
SEC. 7111. INCREASE IN EXCISE TAXES ON TOBACCO _PRODUCTS.
(a) Cigarettes. Subsection (b) of section 5701 is amended
(1) by striking ``$12 per thousand ($10 per thousand on cigarettes
removed during 1991 or 1992)'' in paragraph (1) and inserting ``$49.50
per thousand'', and
(2) by striking ``$25.20 per thousand ($21 per thousand on cigarettes
removed during 1991 or 1992)'' in paragraph (2) and inserting ``$103.95
per thousand''.
(b) Cigars. Subsection (a) of section 5701 is amended
(1) by striking ``$1.125 cents per thousand (93.75 cents per thousand
on cigars removed during 1991 or 1992)'' in paragraph (1) and inserting
``$38.62\1/2\ per thousand'', and
(2) by striking ``equal to'' and all that follows in paragraph (2) and
inserting ``equal to 52.594 percent of the price for which sold but not
more than $123.75 per thousand.''
(c) Cigarette Papers. Subsection (c) of section 5701 is amended by
striking ``0.75 cent (0.625 cent on cigarette papers removed during 1991 or
1992)'' and inserting ``3.09 cents''.
(d) Cigarette Tubes. Subsection (d) of section 5701 is amended by
striking ``1.5 cents (1.25 cents on cigarette tubes removed during 1991 or
1992)'' and inserting ``6.19 cents''.
(e) Smokeless Tobacco. Subsection (e) of section 5701 is amended
(1) by striking ``36 cents (30 cents on snuff removed during 1991 or
1992)'' in paragraph (1) and inserting ``$12.86'', and
(2) by striking ``12 cents (10 cents on chewing tobacco removed during
1991 or 1992)'' in paragraph (2) and inserting ``$12.62''.
(f) Pipe Tobacco. Subsection (f) of section 5701 is amended by striking
``67.5 cents (56.25 cents on pipe tobacco removed during 1991 or 1992)''
and inserting ``$13.17\1/2\''.
(g) Effective Date. The amendments made by this section shall apply to
articles removed (as defined in section 5702(k) of the Internal Revenue
Code of 1986, as amended by this Act) after September 30, 1994.
(h) Floor Stocks Taxes.
(1) Imposition of tax. On tobacco products and cigarette papers and
tubes manufactured in or imported into the United States which are
removed before October 1, 1994, and held on such date for sale by any
person, there is hereby imposed a tax in an amount equal to the excess of
(A) the tax which would be imposed under section 5701 of the Internal
Revenue Code of 1986 on the article if the article had been removed on
such date, over
(B) the prior tax (if any) imposed under section 5701 or 7652 of such
Code on such article.
(2) Authority to exempt cigarettes held in vending machines. To the
extent provided in regulations prescribed by the Secretary, no tax shall
be imposed by paragraph (1) on cigarettes held for retail sale on October
1, 1994, by any person in any vending machine. If the Secretary provides
such a benefit with respect to any person, the Secretary may reduce the
$500 amount in paragraph (3) with respect to such person.
(3) Credit against tax. Each person shall be allowed as a credit
against the taxes imposed by paragraph (1) an amount equal to $500. Such
credit shall not exceed the amount of taxes imposed by paragraph (1) for
which such person is liable.
(4) Liability for tax and method of payment.
(A) Liability for tax. A person holding cigarettes on October 1,
1994, to which any tax imposed by paragraph (1) applies shall be liable
for such tax.
(B) Method of payment. The tax imposed by paragraph (1) shall be paid
in such manner as the Secretary shall prescribe by regulations.
(C) Time for payment. The tax imposed by paragraph (1) shall be paid
on or before December 31, 1994.
(5) Articles in foreign trade zones. Notwithstanding the Act of June
18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any other provision of law,
any article which is located in a foreign trade zone on October 1, 1994,
shall be subject to the tax imposed by paragraph (1) if
(A) internal revenue taxes have been determined, or customs duties
liquidated, with respect to such article before such date pursuant to a
request made under the 1st proviso of section 3(a) of such Act, or
(B) such article is held on such date under the supervision of a
customs officer pursuant to the 2d proviso of such section 3(a).
(6) Definitions. For purposes of this subsection
(A) In general. Terms used in this subsection which are also used in
section 5702 of the Internal Revenue Code of 1986 shall have the
respective meanings such terms have in such section, and such term
shall include articles first subject to the tax imposed by section 5701
of such Code by reason of the amendments made by this Act.
(B) Secretary. The term ``Secretary'' means the Secretary of the
Treasury or his delegate.
(7) Controlled groups. Rules similar to the rules of section 5061(e)(3)
of such Code shall apply for purposes of this subsection.
(8) Other laws applicable. All provisions of law, including penalties,
applicable with respect to the taxes imposed by section 5701 of such Code
shall, insofar as applicable and not inconsistent with the provisions of
this subsection, apply to the floor stocks taxes imposed by paragraph
(1), to the same extent as if such taxes were imposed by such section
5701. The Secretary may treat any person who bore the ultimate burden of
the tax imposed by paragraph (1) as the person to whom a credit or refund
under such provisions may be allowed or made.
SEC. 7112. MODIFICATIONS OF CERTAIN TOBACCO TAX PROVISIONS.
(a) Exemption for Exported Tobacco Products and Cigarette Papers and
Tubes To Apply Only to Articles Marked for Export.
(1) Subsection (b) of section 5704 is amended by adding at the end
thereof the following new sentence: ``Tobacco products and cigarette
papers and tubes may not be transferred or removed under this subsection
unless such products or papers and tubes bear such marks, labels, or
notices as the Secretary shall by regulations prescribe.''
(2) Section 5761 is amended by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively, and by inserting after subsection
(b) the following new subsection:
``(c) Sale of Tobacco Products and Cigarette Papers and Tubes for
Export. Except as provided in subsections (b) and (d) of section 5704
``(1) every person who sells, relands, or receives within the
jurisdiction of the United States any tobacco products or cigarette
papers or tubes which have been labeled or shipped for exportation under
this chapter,
``(2) every person who sells or receives such relanded tobacco products
or cigarette papers or tubes, and
``(3) every person who aids or abets in such selling, relanding, or
receiving,
``shall, in addition to the tax and any other penalty provided in this
title, be liable for a penalty equal to the greater of $1,000 or 5 times
the amount of the tax imposed by this chapter. All tobacco products and
cigarette papers and tubes relanded within the jurisdiction of the United
States, and all vessels, vehicles, and aircraft used in such relanding or
in removing such products, papers, and tubes from the place where
relanded, shall be forfeited to the United States.''
(3) Subsection (a) of section 5761 is amended by striking ``subsection
(b)'' and inserting ``subsection (b) or (c)''.
(4) Subsection (d) of section 5761, as redesignated by paragraph (2),
is amended by striking ``The penalty imposed by subsection (b)'' and
inserting ``The penalties imposed by subsections (b) and (c)''.
(5)(A) Subpart F of chapter 52 is amended by adding at the end thereof
the following new section:
``SEC. 5754. RESTRICTION ON IMPORTATION OF PREVIOUSLY EXPORTED TOBACCO
PRODUCTS.
``(a) In General. Tobacco products and cigarette papers and tubes
previously exported from the United States may be imported or brought
into the United States only as provided in section 5704(d).
``(b) Cross Reference.
I41 ``For penalty for the sale of cigarettes in the United States which
are labeled for export, see section 5761(d).''
(B) The table of sections for subpart F of chapter 52 is amended by
adding at the end thereof the following new item:
``Sec. 5754. Restriction on importation of previously exported tobacco
products.''
(b) Importers Required To Be Qualified.
(1) Sections 5712, 5713(a), 5721, 5722, 5762(a)(1), and 5763(b) and (c)
are each amended by inserting ``or importer'' after ``manufacturer''.
(2) The heading of subsection (b) of section 5763 is amended by
inserting ``Qualified Importers,'' after ``Manufacturers,''.
(3) The heading for subchapter B of chapter 52 is amended by inserting
``and Importers'' after ``Manufacturers''.
(4) The item relating to subchapter B in the table of subchapters for
chapter 52 is amended by inserting ``and importers'' after
``manufacturers''.
(c) Repeal of Tax-Exempt Sales to Employees of Cigarette Manufacturers.
(1) Subsection (a) of section 5704 is amended
(A) by striking ``Employee Use or'' in the heading, and
(B) by striking ``for use or consumption by employees or'' in the
text.
(2) Subsection (e) of section 5723 is amended by striking ``for use or
consumption by their employees, or for experimental purposes'' and
inserting ``for experimental purposes''.
(d) Repeal of Tax-Exempt Sales to United States. Subsection (b) of
section 5704 is amended by striking ``and manufacturers may similarly
remove such articles for use of the United States;''.
(e) Books of 25 or Fewer Cigarette Papers Subject to Tax. Subsection (c)
of section 5701 is amended by striking ``On each book or set of cigarette
papers containing more than 25 papers,'' and inserting ``On cigarette
papers,''.
(f) Storage of Tobacco Products. Subsection (k) of section 5702 is
amended by inserting ``under section 5704'' after ``internal revenue
bond''.
(g) Authority To Prescribe Minimum Manufacturing Activity Requirements.
Section 5712 is amended by striking ``or'' at the end of paragraph (1), by
redesignating paragraph (2) as paragraph (3), and by inserting after
paragraph (1) the following new paragraph:
``(2) the activity proposed to be carried out at such premises does not
meet such minimum capacity or activity requirements as the Secretary may
prescribe, or''.
(h) Limitation on Cover Over of Tax on Tobacco Products. Section 7652 is
amended by adding at the end thereof the following new subsection:
``(h) Limitation on Cover Over of Tax on Tobacco Products. For purposes
of this section, with respect to taxes imposed under section 5701 or this
section on any tobacco product or cigarette paper or tube, the amount
covered into the treasuries of Puerto Rico and the Virgin Islands shall not
exceed the rate of tax under section 5701 in effect on the article on the
day before the date of the enactment of the Health Security Act.''
(i) Effective Date. The amendments made by this section shall apply to
articles removed (as defined in section 5702(k) of the Internal Revenue
Code of 1986, as amended by this Act) after September 30, 1994.
SEC. 7113. IMPOSITION OF EXCISE TAX ON MANUFACTURE OR IMPORTATION OF
ROLL-YOUR-OWN TOBACCO.
(a) In General. Section 5701 (relating to rate of tax) is amended by
redesignating subsection (g) as subsection (h) and by inserting after
subsection (f) the following new subsection:
``(g) Roll-Your-Own Tobacco. On roll-your-own tobacco, manufactured in or
imported into the United States, there shall be imposed a tax of $12.50 per
pound (and a proportionate tax at the like rate on all fractional parts of
a pound).''
(b) Roll-Your-Own Tobacco. Section 5702 (relating to definitions) is
amended by adding at the end thereof the following new subsection :
``(p) Roll-Your-Own Tobacco. The term `roll-your-own tobacco' means any
tobacco which, because of its appearance, type, packaging, or labeling, is
suitable for use and likely to be offered to, or purchased by, consumers as
tobacco for making cigarettes.''
(c) Technical Amendments.
(1) Subsection (c) of section 5702 is amended by striking ``and pipe
tobacco'' and inserting ``pipe tobacco, and roll-your-own tobacco''.
(2) Subsection (d) of section 5702 is amended
(A) in the material preceding paragraph (1), by striking ``or pipe
tobacco'' and inserting ``pipe tobacco, or roll-your-own tobacco'', and
(B) by striking paragraph (1) and inserting the following new
paragraph:
``(1) a person who produces cigars, cigarettes, smokeless tobacco,
pipe tobacco, or roll-your-own tobacco solely for his own personal
consumption or use, and''.
(3) The chapter heading for chapter 52 is amended to read as follows:
``CHAPTER 52 TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES''.
(4) The table of chapters for subtitle E is amended by striking the
item relating to chapter 52 and inserting the following new item:
``Chapter 52. Tobacco products and cigarette papers and tubes.''
``(d) Effective Date.
``(1) In general. The amendments made by this section shall apply to
roll-your-own tobacco removed (as defined in section 5702(k) of the
Internal Revenue Code of 1986, as amended by this Act) after September
30, 1994.
``(2) Transitional rule. Any person who
``(A) on the date of the enactment of this Act is engaged in business
as a manufacturer of roll-your-own tobacco or as an importer of tobacco
products or cigarette papers and tubes, and
``(B) before October 1, 1994, submits an application under subchapter B
of chapter 52 of such Code to engage in such business,
``may, notwithstanding such subchapter B, continue to engage in such
business pending final action on such application. Pending such final
action, all provisions of such chapter 52 shall apply to such applicant
in the same manner and to the same extent as if such applicant were a
holder of a permit under such chapter 52 to engage in such business.
Part 2. HEALTH RELATED ASSESSMENT
SEC. 7121. ASSESSMENT ON CORPORATE ALLIANCE EMPLOYERS.
(a) In General. Subtitle C (relating to employment taxes) is amended by
inserting after chapter 24 the following new chapter:
``CHAPTER 24A ASSESSMENT ON CORPORATE ALLIANCE EMPLOYERS
``Sec. 3461. Assessment on corporate alliance employers.
``SEC. 3461. ASSESSMENT ON CORPORATE ALLIANCE EMPLOYERS.
``(a) Imposition of Assessment. Every corporate alliance employer shall
pay (in addition to any other amount imposed by this subtitle) for each
calendar year an assessment equal to 1 percent of the payroll of such
employer.
``(b) Definitions. For purposes of this section
``(1) Corporate alliance employer. The term `corporate alliance employer'
means any employer if any individual, by reason of being an employee of
such employer, is provided with health coverage through any corporate
alliance described in section 1311 of the Health Security Act.
``(2) Payroll. The term `payroll' means the sum of
``(A) the wages (as defined in section 3121(a) without regard to
paragraph (1) thereof) paid by the employer during the calendar year, plus
``(B)(i) in the case of a sole proprietorship, the net earnings from
self-employment of the proprietor from such trade or business for the
taxable year ending with or within the calendar year,
``(ii) in the case of a partnership, the aggregate of the net earnings
from self-employment of each partner which is attributable to such
partnership for the taxable year of such partnership ending with or within
the calendar year, and
``(ii) in the case of an S corporation, the aggregate of the net earnings
from self-employment of each shareholder which is attributable to such
corporation for the taxable year of such corporation ending with or within
the calendar year.
``(3) Net earnings from self-employment. The term `net earnings from
self-employment' has the meaning given such term by section 1402; except
that the amount thereof
``(A) may never be less than zero, and
``(B) shall be determined without regard to any deduction for an
assessment under this section.
``(4) Employer.
``(A) In general. The term `employer' means any person for whom an
individual performs services, of whatever nature, as an employee (as
defined in section 3401(c)).
``(B) Special rules.
``(i) An individual who owns the entire interest in an unincorporated
trade or business shall be treated as his own employer.
``(ii) A partnership shall be treated as the employer of each partner who
is an employee within the meaning of section 401(c)(1).
``(iii) An S corporation shall be treated as the employer of each
shareholder who is an employee within the meaning of section 401(c)(1).
``(c) Special Rules. For purposes of this section
``(1) Treatment of certain employers. In the case of an employer who is a
corporate alliance employer solely by reason of employees who are provided
with health coverage through a corporate alliance the eligible sponsor of
which is a multiemployer plan described in section 1311(b)(1)(B) of the
Health Security Act, the payroll of such employer shall be determined by
taking into account only such employees.
``(2) Controlled group rules. All persons treated as a single employer
under section 1901 of the Health Security Act (relating to employer
premiums for comprehensive health care) shall be treated as a single
employer.
``(3) Application of assessment beginning in 1996.
``(A) In general. Every employer eligible to elect to be an eligible
sponsor under section 1311 of the Health Security Act shall be treated as a
corporate alliance employer as of January 1, 1996, unless the employer
waives such employer's rights ever to be treated as such a sponsor. The
waiver under this subparagraph shall be irrevocable.
``(B) Exception. Subparagraph (A) shall not apply to any employer
referred to in paragraph (1).
``(4) Treatment of federal government. Nothing in any provision of law
shall be construed to exempt any agency or instrumentality of the United
States from the assessment under this section.
``(d) Administrative Provisions.
``(1) Payment. The assessment under this section shall be paid at the
same time and manner as the tax imposed by chapter 21.
``(2) Collection, etc. For purposes of subtitle F, the assessment under
this section shall be treated as if it were a tax imposed by this
subtitle.''
(b) Clerical Amendment. The table of chapters for subtitle C is amended
by inserting after the item relating to chapter 24 the following new item:
``Chapter 24A. Assessment on corporate alliance employers.''
``(c) Effective Date. The amendments made by this section shall take
effect on January 1, 1996.
Part 3. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES
SEC. 7131. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES RECEIVED BY
HIGH-INCOME
INDIVIDUALS.
(a) In General. Subchapter A of chapter 1 is amended by adding at the end
thereof the following new part:
``PART VIII CERTAIN HEALTH CARE SUBSIDIES RECEIVED BY HIGH-INCOME
INDIVIDUALS
``Sec. 59B. Recapture of certain health care subsidies.
``SEC. 59B. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES.
``(a) Imposition of Recapture Amount. In the case of an individual, if
the modified adjusted gross income of the taxpayer for the taxable year
exceeds the threshold amount, such taxpayer shall pay (in addition to any
other amount imposed by this subtitle) a recapture amount for such taxable
year equal to the sum of
``(1) the aggregate of the Medicare part B recapture amounts (if any) for
months during such year that a premium is paid under part B of title XVIII
of the Social Security Act for the coverage of the individual under such
part, and
``(2) the aggregate reductions (if any) in the individual's liability for
periods after December 31, 1999, under section 6111 of the Health Security
Act (relating to repayment of alliance credit by certain families) pursuant
to section 6114 of such Act (relating to special treatment of certain
retirees and qualified spouses and children) for months during such year.
``(b) Medicare Part B Premium Recapture Amount for Month. For purposes of
this section, the Medicare part B premium recapture amount for any month is
the amount equal to the excess of
``(1) 150 percent of the monthly actuarial rate for enrollees age 65 and
over determined for that calendar year under section 1839(b) of the Social
Security Act, over
``(2) the total monthly premium under section 1839 of the Social Security
Act (determined without regard to subsections (b) and (f) of section 1839
of such Act).
``(c) Phasein of Recapture Amount. If the modified adjusted gross income
of the taxpayer for any taxable year exceeds the threshold amount by less
than $10,000, the recapture amount imposed by this section for such taxable
year shall be an amount which bears the same ratio to the recapture amount
which would (but for this subsection) be imposed by this section for such
taxable year as such excess bears to $10,000.
``(d) Other Definitions and Special Rules. For purposes of this section
``(1) Threshold amount. The term `threshold amount' means
``(A) except as otherwise provided in this paragraph, $90,000,
``(B) $115,000 in the case of a joint return, and
``(C) zero in the case of a taxpayer who
``(i) is married (as determined under section 7703) but does not file a
joint return for such year, and
``(ii) does not live apart from his spouse at all times during the
taxable year.
``(2) Modified adjusted gross income. The term `modified adjusted gross
income' means adjusted gross income
``(A) determined without regard to sections 135, 911, 931, and 933, and
``(B) increased by the amount of interest received or accrued by the
taxpayer during the taxable year which is exempt from tax.
``(3) Joint returns. In the case of a joint return
``(A) the recapture amount under subsection (a) shall be the sum of the
recapture amounts determined separately for each spouse, and
``(B) subsections (a) and (c) shall be applied by taking into account the
combined modified adjusted gross income of the spouses.
``(4) Coordination with other provisions.
``(A) Treated as tax for subtitle f. For purposes of subtitle F, the
recapture amount imposed by this section shall be treated as if it were a
tax imposed by section 1.
``(B) Not treated as tax for certain purposes. The recapture amount
imposed by this section shall not be treated as a tax imposed by this
chapter for purposes of determining
``(i) the amount of any credit allowable under this chapter, or
``(ii) the amount of the minimum tax under section 55.''
(b) Transfers to Supplemental Medical Insurance Trust Fund.
(1) In general. There are hereby appropriated to the Supplemental
Medical Insurance Trust Fund amounts equivalent to the aggregate increase
in liabilities under chapter 1 of the Internal Revenue Code of 1986 which
is attributable to the application of section 59B(a)(1) of such Code, as
added by this section.
(2) Transfers. The amounts appropriated by paragraph (1) to the
Supplemental Medical Insurance Trust Fund shall be transferred from time
to time (but not less frequently than quarterly) from the general fund of
the Treasury on the basis of estimates made by the Secretary of the
Treasury of the amounts referred to in paragraph (1). Any quarterly
payment shall be made on the first day of such quarter and shall take
into account the recapture amounts referred to in such section 59B(a)(1)
for such quarter. Proper adjustments shall be made in the amounts
subsequently transferred to the extent prior estimates were in excess of
or less than the amounts required to be transferred.
(c) Reporting Requirements.
(1)(A) Paragraph (1) of section 6050F(a) (relating to returns relating
to social security benefits) is amended by striking ``and'' at the end of
subparagraph (B) and by inserting after subparagraph (C) the following
new subparagraph:
``(D) the number of months during the calendar year for which a premium
was paid under part B of title XVIII of the Social Security Act for the
coverage of such individual under such part, and''.
(B) Paragraph (2) of section 6050F(b) is amended to read as follows:
``(2) the information required to be shown on such return with
respect to such individual.''
(C) Subparagraph (A) of section 6050F(c)(1) is amended by inserting
before the comma ``and in the case of the information specified in
subsection (a)(1)(D)''.
(D) The heading for section 6050F is amended by inserting `` G2and
medicare part b coverage'' before the period.
(E) The item relating to section 6050F in the table of sections for
subpart B of part III of subchapter A of chapter 61 is amended by
inserting ``and Medicare part B coverage'' before the period.
(2)(A) Subpart B of part III of subchapter A of chapter 61 (relating to
information concerning transactions with other persons) is amended by
adding at the end thereof the following new section:
``SEC. 6050Q. RETURNS RELATING TO CERTAIN RETIREE HEALTH CARE SUBSIDIES.
``(a) In General. Every alliance (as defined in section 1301 of the
Health Security Act) that reduces an individual's liability under section
6111 of such Act (relating to repayment of alliance credit by certain
families) pursuant to section 6114 of such Act (relating to special
treatment of certain retirees and qualified spouses and children) shall
make a return (according to the forms and regulations prescribed by the
Secretary) setting forth
``(1) the aggregate amount of such reductions by such alliance with
respect to any individual during such calendar year, and
``(2) the name and address of such individual.
``(b) Statements To Be Furnished to Individuals With Respect to Whom
Information Is Required To Be Reported. Every alliance required to make a
return under subsection (a) shall furnish to each individual whose name
is required to be set forth in such return a written statement showing
``(1) the name and address of such alliance, and
``(2) the information required to be shown on the return with respect
to such individual.
The written statement required under the preceding sentence shall be
furnished to the individual as soon as practicable after the close of the
calendar year for which the return under subsection (a) was made.''
(B) Subparagraph (B) of section 6724(d)(1) is amended by inserting
after clause (viii) the following new clause (and by redesignating the
following clauses accordingly):
``(ix) section 6050Q (relating to returns relating to certain retiree
health care subsidies),''.
(C) Paragraph (2) of section 6724(d) is amended by redesignating
subparagraphs (Q) through (T) as subparagraphs (R) through (U),
respectively, and by inserting after subparagraph (P) the following new
subparagraph:
``(Q) section 6050Q(b) (relating to returns relating to certain
retiree health care subsidies),''.
(D) The table of sections for subpart B of part III of subchapter A
of chapter 61 is amended by adding at the end thereof the following new
item:
``Sec. 6050Q. Returns relating to certain retiree health care subsidies.''
``(d) Waiver of Estimated Tax Penalties for 1996. No addition to tax
shall be imposed under section 6654 of the Internal Revenue Code of
1986 (relating to failure to pay estimated income tax) for any period
before
``(1) April 16, 1997, with respect to any underpayment to the extent
that such underpayment resulted from section 59B(a)(1) of the Internal
Revenue Code of 1986, as added by this section, and
``(2) April 16, 2001, with respect to any underpayment to the extent
that such underpayment resulted from section 59B(a)(2) of such Code, as
added by this section.
``(e) Clerical Amendment. The table of parts for subchapter A of
chapter 1 is amended by adding at the end thereof the following new
item:
``Part VIII. Certain health care subsidies received by high-income
individuals.''
``(f) Effective Date. The amendments made by this section shall apply
to periods after December 31, 1995, in taxable years ending after such
date.
Part 4. OTHER PROVISIONS
SEC. 7141. MODIFICATION TO SELF-EMPLOYMENT TAX TREATMENT OF CERTAIN S
CORPORATION SHAREHOLDERS AND PARTNERS.
(a) Treatment of Certain S Corporation Shareholders.
(1) Amendment to internal revenue code. Section 1402 (relating to
definitions) is amended by adding at the end thereof the following new
subsection:
``(k) Treatment of Certain S Corporation Shareholders.
``(1) In general. In the case of any individual
``(A) who is a 2-percent shareholder (as defined in section 1372(b)) of
an S corporation for any taxable year of such corporation, and
``(B) who materially participates in the activities of such S
corporation during such taxable year,
such shareholder's net earnings from self-employment for such
shareholder's taxable year in which the taxable year of the S corporation
ends shall include such shareholder's pro rata share (as determined under
section 1366(a)) of the taxable income or loss of such corporation from
service-related businesses carried on by such corporation.
``(2) Certain exceptions to apply. In determining the amount to be
taken into account under paragraph (1), the exceptions provided in
subsection (a) shall apply, except that, in the case of the exceptions
provided in subsection (a)(5), the rules of subparagraph (B) thereof
shall apply to shareholders in S corporations.
``(3) Service-related business. For purposes of this subsection, the
term `service-related business' means any trade or business described in
subparagraph (A) of section 1202(e)(3).''
(2) Amendment to social security act. Section 211 of the Social
Security Act is amended by adding at the end the following new
subsection:
``Treatment of Certain S Corporation Shareholders
``(k)(1) In the case of any individual
``(A) who is a 2-percent shareholder (as defined in section 1372(b) of
the Internal Revenue Code of 1986) of an S corporation for any taxable
year of such corporation, and
``(B) who materially participates in the activities of such S
corporation during such taxable year,
such shareholder's net earnings from self-employment for such
shareholder's taxable year in which the taxable year of the S corporation
ends shall include such shareholder's pro rata share (as determined under
section 1366(a) of such Code) of the taxable income or loss of such
corporation from service-related businesses (as defined in section
1402(k)(3) of such Code) carried on by such corporation.
``(2) In determining the amount to be taken into account under
paragraph (1), the exceptions provided in subsection (a) shall apply,
except that, in the case of the exceptions provided in subsection (a)(5),
the rules of subparagraph (B) thereof shall apply to shareholders in S
corporations.''.
(b) Treatment of Certain Limited Partners.
(1) Amendment of internal revenue code. Paragraph (13) of section
1402(a) is amended by striking ``limited partner, as such'' and inserting
``limited partner who does not materially participate in the activities
of the partnership''.
(2) Amendment of social security act. Paragraph (12) of section 211(a)
of the Social Security Act is amended by striking ``limited partner, as
such'' and inserting ``limited partner who does not materially
participate in the activities of the partnership''.
(c) Effective Date. The amendments made by this section shall apply to
taxable years of individuals beginning after December 31, 1995, and to
taxable years of S corporations and partnerships ending with or within such
taxable years of individuals.
SEC. 7142. EXTENDING MEDICARE COVERAGE OF, AND APPLICATION OF HOSPITAL
INSURANCE TAX TO, ALL STATE AND LOCAL GOVERNMENT EMPLOYEES.
(a) In General.
(1) Application of hospital insurance tax. Section 3121(u)(2) is
amended by striking subparagraphs (C) and (D).
(2) Coverage under medicare. Section 210(p) of the Social Security Act
(42 U.S.C. 410(p)) is amended by striking paragraphs (3) and (4).
(3) Effective date. The amendments made by this subsection shall apply
to services performed after September 30, 1995.
(b) Transition in Benefits for State and Local Government Employees and
Former Employees.
(1) In general.
(A) Employees newly subject to tax. For purposes of sections 226,
226A, and 1811 of the Social Security Act, in the case of any
individual who performs services during the calendar quarter beginning
October 1, 1995, the wages for which are subject to the tax imposed by
section 3101(b) of the Internal Revenue Code of 1986 only because of
the amendment made by subsection (a), the individual's medicare
qualified State or local government employment (as defined in
subparagraph (B)) performed before October 1, 1995, shall be considered
to be ``employment'' (as defined for purposes of title II of such Act),
but only for purposes of providing the individual (or another person)
with entitlement to hospital insurance benefits under part A of title
XVIII of such Act for months beginning with October 1995.
(B) Medicare qualified state or local government employment defined.
In this paragraph, the term ``medicare qualified State or local
government employment'' means medicare qualified government employment
described in section 210(p)(1)(B) of the Social Security Act
(determined without regard to section 210(p)(3) of such Act, as in
effect before its repeal under subsection (a)(2)).
(2) Authorization of appropriations. There are authorized to be
appropriated to the Federal Hospital Insurance Trust Fund from time to
time such sums as the Secretary of Health and Human Services deems
necessary for any fiscal year on account of
(A) payments made or to be made during such fiscal year from such
Trust Fund with respect to individuals who are entitled to benefits
under title XVIII of the Social Security Act solely by reason of
paragraph (1),
(B) the additional administrative expenses resulting or expected to
result therefrom, and
(C) any loss in interest to such Trust Fund resulting from the
payment of those amounts, in order to place such Trust Fund in the same
position at the end of such fiscal year as it would have been in if
this subsection had not been enacted.
(3) Information to individuals who are prospective medicare
beneficiaries based on state and local government employment. Section
226(g) of the Social Security Act (42 U.S.C. 426(g)) is amended
(A) by redesignating paragraphs (1) through (3) as subparagraphs (A)
through (C), respectively,
(B) by inserting ``(1)'' after ``(g)'', and
(C) by adding at the end the following new paragraph:
``(2) The Secretary, in consultation with State and local
governments, shall provide procedures designed to assure that
individuals who perform medicare qualified government employment by
virtue of service described in section 210(a)(7) are fully informed
with respect to (A) their eligibility or potential eligibility for
hospital insurance benefits (based on such employment) under part A of
title XVIII, (B) the requirements for, and conditions of, such
eligibility, and (C) the necessity of timely application as a condition
of becoming entitled under subsection (b)(2)(C), giving particular
attention to individuals who apply for an annuity or retirement benefit
and whose eligibility for such annuity or retirement benefit is based
on a disability.''
(c) Technical Amendments.
(1) Subparagraph (A) of section 3121(u)(2) is amended by striking
``subparagraphs (B) and (C),'' and inserting ``subparagraph (B),''.
(2) Subparagraph (B) of section 210(p)(1) of the Social Security Act
(42 U.S.C. 410(p)(1)) is amended by striking ``paragraphs (2) and (3).''
and inserting ``paragraph (2).''
(3) Section 218 of the Social Security Act (42 U.S.C. 418) is amended
by striking subsection (n).
(4) The amendments made by this subsection shall apply after September
30, 1995.
Subtitle B. Tax Treatment of Employer-Provided Health Care
SEC. 7201. LIMITATION ON EXCLUSION FOR EMPLOYER-PROVIDED HEALTH
BENEFITS.
(a) General Rule. Section 106 (relating to contributions by employer to
accident and health plans) is amended to read as follows:
``SEC. 106. CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS.
``(a) General Rule. Except as otherwise provided in this section, gross
income of an employee does not include employer-provided coverage under an
accident or health plan.
``(b) Inclusion of Certain Benefits Not Part of Comprehensive Benefit
Package.
``(1) In general. Effective on and after January 1, 2003, gross income of
an employee shall include employer-provided coverage under any accident or
health plan except to the extent that
``(A) such coverage consists of comprehensive health coverage described
in section 1101 of the Health Security Act, or
``(B) such coverage consists of permitted coverage.
``(2) Permitted coverage. For purposes of this subsection, the term
`permitted coverage' means
``(A) any coverage providing wages or payments in lieu of wages for any
period during which the employee is absent from work on account of sickness
or injury,
``(B) any coverage providing for payments referred to in section 105(c),
``(C) any coverage provided to an employee or former employee after such
employee has attained age 65, unless such coverage is provided by reason of
the current employment of the individual (within the meaning of section
1862(b)(1)(A)(i)(I) of the Social Security Act) with the employer providing
the coverage,
``(D) any coverage under a qualified long-term care insurance policy (as
defined in section 7702B),
``(E) any coverage provided under Federal law to any individual (or
spouse or dependent thereof) by reason of such individual being
``(i) a member of the Armed Forces of the United States, or
``(ii) a veteran, and
``(F) any other coverage to the extent that the Secretary determines that
the continuation of an exclusion for such coverage is not inconsistent
with the purposes of this subsection.
``(3) Special rules for flexible spending arrangements.
``(A) In general. To the extent that any employer-provided coverage is
provided through a flexible spending or similar arrangement, paragraph (1)
shall be applied by substituting `January 1, 1997,' for `January 1, 2003'.
``(B) Flexible spending arrangement. For purposes of this paragraph, a
flexible spending arrangement is a benefit program which provides employees
with coverage under which
``(i) specified incurred expenses may be reimbursed (subject to
reimbursement maximums and other reasonable conditions), and
``(ii) the maximum amount of reimbursement which is reasonably available
to a participant for such coverage is less than 200 percent of the value of
such coverage.
``In the case of an insured plan, the maximum amount reasonably available
shall be determined on the basis of the underlying coverage.
``(c) Special Rules for Determining Amount of Inclusion.
``(1) In general. For purposes of this section, the value of any coverage
shall be determined on the basis of the average cost of providing such
coverage to the beneficiaries receiving such coverage.
``(2) Special rule. To the extent provided by the Secretary, cost
determinations under paragraph (1) may be made on the basis of reasonable
estimates.
``(d) Potential Cash Payment Not To Affect Exclusion. No amount shall be
included in the gross income of an employee solely because the employee may
select coverage under an accident or health plan which results in a cash
payment referred to in section 1607 of the Health Security Act.''
(b) Employment Tax Treatment.
(1) Social security tax.
(A) Subsection (a) of section 3121 is amended by inserting after
paragraph (21) the following new sentence:
``Nothing in paragraph (2) shall exclude from the term `wages' any amount
which is required to be included in gross income under section 106(b).''
(B) Subsection (a) of section 209 of the Social Security Act is
amended by inserting after paragraph (21) the following new sentence:
``Nothing in paragraph (2) shall exclude from the term `wages' any amount
which is required to be included in gross income under section 106(b) of the
Internal Revenue Code of 1986.''
(2) Railroad retirement tax. Paragraph (1) of section 3231(e) is
amended by adding at the end thereof the following new sentence:
``Nothing in clause (i) of the second sentence of this paragraph shall
exclude from the term `compensation' any amount which is required to be
included in gross income under section 106(b).''
(3) Unemployment tax. Subsection (b) of section 3306 is amended by
inserting after paragraph (16) the following new sentence:
``Nothing in paragraph (2) shall exclude from the term `wages' any amount
which is required to be included in gross income under section 106(b).''
(4) Wage withholding. Subsection (a) of section 3401 is amended by
adding at the end thereof the following new sentence:
``Nothing in the preceding provisions of this subsection shall exclude from
the term `wages' any amount which is required to be included in gross income
under section 106(b).''
(c) Effective Date. The amendments made by this section shall take effect
on January 1, 1997.
SEC. 7202. HEALTH BENEFITS MAY NOT BE PROVIDED UNDER CAFETERIA PLANS.
(a) General Rule. Subsection (f) of section 125 (defining qualified
benefits) is amended by adding at the end thereof the following new
sentence: ``Such term shall not include any benefits or coverage (other
than coverage described in section 106(b)(2)(A)) under an accident or
health plan.''
(b) Conforming Amendment. Subsection (g) of section 125 is amended by
striking paragraph (2) and redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively.
(c) Effective Date. The amendments made by this section shall take effect
on January 1, 1997.
SEC. 7203. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF
SELF-EMPLOYED
INDIVIDUALS.
(a) Provision Made Permanent.
(1) In general. Subsection (l) of section 162 (relating to special
rules for health insurance costs of self-employed individuals) is amended
by striking paragraph (6).
(2) Effective date. The amendment made by paragraph (1) shall apply to
taxable years beginning after December 31, 1993.
(b) Deduction Limited to Basic Coverage Purchased From Health Alliance.
(1) In general. Paragraphs (1) and (2) of section 162(l) are amended to
read as follows:
``(1) In general. In the case of an individual who is an employee
within the meaning of section 401(c), there shall be allowed as a
deduction under this section an amount equal to 100 percent of the amount
paid during the taxable year for insurance which constitutes medical care
for the taxpayer, his spouse, and dependents; but only to the extent such
insurance is comprehensive health coverage described in section 1101 of
the Health Security Act purchased from a qualified alliance described in
section 1311 of such Act.
``(2) Limitations.
``(A) Lower percentage in certain cases. If
``(i) the taxpayer has 1 or more employees in a trade or business with
respect to which such taxpayer is treated as an employee within the
meaning of section 401(c), and
``(ii) the taxpayer does not pay at least 100 percent of the weighted
average premium applicable under the Health Security Act for each of such
employees,
paragraph (1) shall be applied by substituting for `100 percent' the
lowest percentage of such weighted average premium paid by the taxpayer
for any of such employees.
``(B) Deduction limited to earned income. No deduction shall be allowed
under paragraph (1) to the extent that the amount of such deduction
exceeds the taxpayer's earned income (within the meaning of section
401(c)).
``(C) Other coverage. Paragraph (1) shall not apply to amounts paid for
coverage for any individual for any calendar month if such individual is
employed on a full-time basis (within the meaning of section 1901 of the
Health Security Act) by an employer during such month.''
(2) Conforming amendment. Subparagraph (A) of section 162(l)(5) is
amended by striking ``shall be treated as such individual's earned
income'' and inserting ``shall be included in such individual's earned
income''.
(3) Effective date. The amendments made by this subsection shall take
effect on the earlier of
(A) January 1, 1997, or
(B) the first day on which the taxpayer could purchase comprehensive
health coverage from a qualified alliance.
SEC. 7204. LIMITATION ON PREPAYMENT OF MEDICAL INSURANCE PREMIUMS.
(a) General Rule. Subsection (d) of section 213 is amended by adding at
the end thereof the following new paragraph:
``(10) Limitation on prepayments. If the taxpayer pays a premium or other
amount which constitutes medical care under paragraph (1), to the extent
such premium or other amount is properly allocable to insurance coverage or
care to be provided during periods more than 12 months after the month in
which such payment is made, such premium shall be treated as paid ratably
over the period during which such insurance coverage or care is to be
provided. The preceding sentence shall not apply to any premium to which
paragraph (7) applies nor to any premium paid under a qualified long-term
care insurance policy.''
(b) Effective Date. The amendment made by subsection (a) shall apply to
amounts paid after December 31, 1996.
Subtitle C. Employment Status Provisions
SEC. 7301. DEFINITION OF EMPLOYEE.
(a) General Rule. Chapter 25 (relating to general provisions applicable
to employment taxes) is amended by adding at the end thereof the following
new section:
``SEC. 3510. DEFINITION OF EMPLOYEE.
``(a) Regulations. The Secretary shall prescribe regulations setting
forth rules for determining whether an individual is an employee for
purposes of
``(1) the employment taxes imposed under this subtitle, and
``(2) to the extent provided in such regulations, subtitle A.
``(b) Override of Current Rules. To the extent provided in the
regulations prescribed in subsection (a), such regulations shall be in lieu
of the rules (statutory or otherwise) otherwise applicable for the
determination referred to in subsection (a). Nothing in such regulations
shall override the provisions of section 3511.''
(b) Clerical Amendment. The table of sections for chapter 25 is amended
by adding at the end thereof the following new item:
``Sec. 3510. Definition of employee.''
SEC. 7302. INCREASE IN SERVICES REPORTING PENALTIES.
(a) Increase in Penalty. Section 6721(a) (relating to imposition of
penalty) is amended by adding at the end the following new paragraph:
``(3) Increased penalty for returns involving payments for services.
``(A) In general. Subject to the overall limitation of paragraph (1), the
amount of the penalty under paragraph (1) for any failure with respect to
any applicable return shall be equal to the greater of $50 or 5 percent of
the amount required to be reported correctly but not so reported.
``(B) Exception where substantial compliance. Subparagraph (A) shall not
apply to failures with respect to applicable returns required to be filed
by a person during any calendar year if the aggregate amount which is
timely and correctly reported on applicable returns filed by the person for
the calendar year is at least 97 percent of the aggregate amount which is
required to be reported on applicable returns by the person for the
calendar year.
``(C) Applicable return. For purposes of this paragraph, the term
`applicable return' means any information return required to be filed under
``(i) section 6041(a) which relates to payments to any person for
services performed by such person (other than as an employee), or
``(ii) section 6041A(a).''
(b) Conforming Amendment. Section 6721(a)(1) is amended by striking
``In'' and inserting ``Except as provided in paragraph (3), in''.
(c) Effective Date. The amendments made by this section shall apply to
returns the due date for which (without regard to extensions) is more than
30 days after the date of the enactment of this Act.
SEC. 7303. REVISION OF SECTION 530 SAFE HARBOR RULES.
(a) General Rule. Chapter 25 (relating to general provisions applicable
to employment taxes) is amended by adding at the end thereof the following
new section:
``SEC. 3511. PROTECTION AGAINST RETROACTIVE EMPLOYMENT TAX
RECLASSIFICATIONS.
``(a) General Rule. If
``(1) for purposes of employment taxes, the taxpayer treats an individual
as not being an employee for any period,
``(2) for such period, the taxpayer meets
``(A) the consistency requirements of subsection (b),
``(B) the return filing requirements of subsection (c), and
``(C) the safe harbor requirement of subsection (d), and
``(3) the Secretary has not notified the taxpayer in writing before the
beginning of such period that the Secretary has determined that the
taxpayer should treat such individual (or any individual holding a
substantially similar position) as an employee,
then, for purposes of applying this subtitle for such period, the
individual shall be deemed not to be an employee of the taxpayer. ``(b)
Consistency Requirements. A taxpayer meets the consistency requirements of
this subsection with respect to any individual for any period if the
taxpayer treats such individual (and all other individuals holding
substantially similar positions) as not being an employee for purposes of
the employment taxes for such period and all prior periods.
``(c) Return Filing Requirements.
``(1) In general. The taxpayer meets the return filing requirements of
this subsection with respect to any individual for any period if all
Federal tax returns (including information returns) required to be filed by
the taxpayer for such period with respect to such individual (and all other
individuals holding substantially similar positions) are timely filed on a
basis consistent with the taxpayer's treatment of such individuals as not
being employees.
``(2) Special rules. For purposes of paragraph (1)
``(A) any return filed for which the penalty under section 6721(a) is
reduced or waived pursuant to subsection (b) or (c) of section 6721 shall
be considered timely filed, and
``(B) a taxpayer shall not be considered as failing to meet the
requirements of paragraph (1) solely because the taxpayer failed to timely
file accurate information returns in respect of payments to individuals
holding substantially similar positions if the taxpayer satisfies the
requirements of section 6721(a)(3)(B) for such period.
``(d) Safe Harbors.
``(1) In general. The taxpayer meets the safe harbor requirement of this
subsection with respect to any individual for any period if the taxpayer's
treatment of such individual as not being an employee for such period was
``(A) in reasonable reliance on a written determination (as defined in
section 6110(b)(1)) issued to or in respect of the taxpayer that addressed
the employment status of the individual or an individual holding a
substantially similar position;
``(B) in reasonable reliance on a concluded Internal Revenue Service
audit of the taxpayer
``(i) which was for a period in which the rules for determining
employment status were the same as for the period in question, and
``(ii) in which the employment status of the individual or any individual
holding a substantially similar position was examined without change to any
such individual's status;
``(C) in reasonable reliance on a longstanding recognized practice of a
significant segment of the industry in which the individual is engaged; or
``(D) supported by substantial authority.
``For purposes of subparagraph (D), the term `substantial authority' has
the same meaning as when used in section 6662(d)(2)(B)(i); except that such
term shall not include any private letter ruling issued to a person other
than the taxpayer.
``(2) Special rules.
``(A) Subsequent authority. The taxpayer shall not be considered to meet
the safe harbor requirement of paragraph (1)(B) with respect to any
individual for any period if the treatment of such individual as not being
an employee is inconsistent with any regulation, Revenue Ruling, Revenue
Procedure, or other authority published by the Secretary before the
beginning of such period and after the conclusion of the audit referred to
in paragraph (1)(B).
``(B) Termination of industry practice safe harbor. The taxpayer shall
not be considered to meet the safe harbor requirement of paragraph (1)(C)
with respect to any individual for
``(i) any period beginning after the date on which the Secretary
prescribes regulations pursuant to section 3510, or
``(ii) any period if the treatment of such individual as not being an
employee is inconsistent with any regulation, Revenue Ruling, Revenue
Procedure, or other authority published by the Secretary before the
beginning of such period.
``(e) Definitions and Special Rules. For purposes of this section
``(1) Employment tax. The term `employment tax' means any tax imposed by
this subtitle.
``(2) Taxpayer. The term `taxpayer' includes any person or entity
(including a governmental entity) which is (or would be but for this
section) liable for any employment tax. Such term includes any predecessor
or successor to the taxpayer.
``(f) Regulations. The Secretary shall prescribe such regulations as may
be appropriate to carry out the purposes of this section.''
(b) Rules to Apply for Income Tax Purposes. Part I of subchapter B of
chapter 1 is amended by adding at the end thereof the following new
section:
``SEC. 69. DETERMINATION OF EMPLOYMENT STATUS.
``For purposes of this subtitle, an individual shall be treated as a
self-employed individual with respect to any services performed by such
individual for another person if, under the rules of section 3511, such
individual is treated as not being an employee of such other person with
respect to such services.''
(c) Conforming Amendment. Section 530 of the Revenue Act of 1978 is
hereby repealed.
(d) Clerical Amendments.
(1) The table of sections for chapter 25 is amended by adding at the
end thereof the following new item:
``Sec. 3511. Protection against retroactive employment tax
reclassifications.''
(2) The table of sections for part I of subchapter B of chapter 1 is
amended by adding at the end thereof the following new item:
``Sec. 69. Determination of employment status.''
(e) Effective Date.
(1) In general. Except as provided in paragraph (2), the amendments
made by this section shall apply to all periods beginning after December
31, 1995.
(2) Repeal of limitations on regulations and rulings. The repeal made
by subsection (c), insofar as it relates to section 530(b) of the Revenue
Act of 1978, shall take effect on the date of the enactment of this Act.
Subtitle D. Tax Treatment of Funding of Retiree Health Benefits
SEC. 7401. POST-RETIREMENT MEDICAL AND LIFE INSURANCE RESERVES.
(a) Minimum Period for Working Lives. Section 419A(c)(2) (relating to
additional reserves for post-retirement medical and life insurance
benefits) is amended by inserting ``(but not less than 10 years)'' after
``working lives of the covered employees''.
(b) Separate Accounting.
(1) Requirement. Section 419A(c)(2) is amended by adding at the end the
following new flush sentence:
``Such reserve shall be maintained as a separate account.''
(2) Use of reserve for other purposes. Paragraph (1) of section 4976(b)
(defining disqualified benefit) is amended by striking ``and'' at the end
of subparagraph (B), by striking the period at the end of subparagraph
(C) and inserting ``, and'', and by adding after subparagraph (C) the
following new subparagraph:
``(D) any payment to which subparagraph (C) does not apply which is out
of an account described in section 419A(c)(2) and which is not used to
provide a post-retirement medical benefit or life insurance benefit.''
(c) Special Limitations. Section 419A(e) (relating to special limitations
on reserves) is amended by adding at the end the following new paragraph:
``(3) Benefits must be excludable. Post-retirement medical benefits and
life insurance benefits shall not be taken into account under subsection
(c)(2) to the extent it may be reasonably anticipated that such benefits
will be required to be included in gross income when provided.''
(d) Effective Dates.
(1) In general. Except as provided in paragraph (2), the amendments
made by this section shall apply to contributions paid or accrued after
December 31, 1994, in taxable years ending after such date.
(2) Separate accounting. The amendments made by subsection (b) shall
apply to contributions paid or accrued after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 7402. HEALTH BENEFITS ACCOUNTS MAINTAINED BY PENSION PLANS.
(a) Termination of Accounts.
(1) In general. Section 401(h) (relating to medical, etc., benefits for
retired employees and their spouses and dependents) is amended by adding
at the end the following new paragraph:
``(2) Termination.
``(A) In general. In the case of a pension or annuity plan to which
paragraph (1) applies
``(i) no contributions may be made to the separate account described in
paragraph (1)(C) other than allowable contributions, and
``(ii) such plan may pay benefits described in paragraph (1) only from
funds attributable to allowable contributions and earnings allocable to
such contributions.
``(B) Allowable contribution. For purposes of subparagraph (A), the
term `allowable contribution' means
``(i) any contribution made before January 1, 1995,
``(ii) in the case of a plan maintained pursuant to 1 or more
collective bargaining agreements between employee representatives and 1
or more employees ratified on or before October 29, 1993, any
contribution under such plan made before the earlier of
``(I) the date on which the last of such agreements terminates
(determined without regard to any extension after October 29, 1993), or,
if later, January 1, 1995, or
``(II) January 1, 1998, or
``(iii) any qualified transfer under section 420.''
(2) Conforming amendments. Section 401(h) is amended
(A) by striking ``Under'' and inserting:
``(1) In general. Under'',
(B) by redesignating paragraphs (1) through (6) as subparagraphs (A)
through (F), respectively,
(C) by striking ``paragraph (6)'' and inserting ``subparagraph (F)'',
and
(D) by striking ``paragraph (1)'' and inserting ``subparagraph (A)''.
(b) Minimum Cost Requirements of Employer. Paragraph (3) of section
420(c) (relating to minimum cost requirements) is amended by adding at the
end the following new subparagraph:
``(E) Adjustment for cost savings under health security act. To the
extent provided by the Secretary, a plan shall not be treated as failing to
meet the requirements of this section to the extent such failure is
attributable to a reduction in qualified current retiree health liabilities
by reason of the enactment of the Health Security Act.''
Subtitle E. Coordination With COBRA Continuing Care Provisions
SEC. 7501. COORDINATION WITH COBRA CONTINUING CARE PROVISIONS.
(a) Period of Coverage. Clause (iv) of section 4980B(f)(2)(B) (defining
period of coverage) is amended
(1) by striking ``or'' at the end of subclause (I), by striking the
period at the end of subclause (II) and inserting ``, or'', and by adding
at the end the following new subclause:
``(III) eligible for comprehensive health coverage described in section
1101 of the Health Security Act.'', and
(2) by striking ``or medicare entitlement'' in the heading and
inserting ``, medicare entitlement, or health security act eligibility''.
(b) Qualified Beneficiary. Section 4980B(g)(1) (defining qualified
beneficiary) is amended by adding at the end the following new
subparagraph:
``(E) Special rule for individuals covered by health security act. The
term `qualified beneficiary' shall not include any individual who, upon
termination of coverage under a group health plan, is eligible for
comprehensive health coverage described in section 1101 of the Health
Security Act.''
(c) Repeal Upon Implementation of Health Security Act.
(1) In general. Section 4980B (relating to failure to satisfy
continuation coverage requirements of group health care plans) is hereby
repealed.
(2) Conforming amendments.
(A) Section 414(n)(3)(C) is amended by striking ``505, and 4980B''
and inserting ``and 505''.
(B) Section 414(t)(2) is amended by striking ``505, or 4980B'' and
inserting ``or 505''.
(C) The table of sections for chapter 43 is amended by striking the
item relating to section 4980B.
(3) Effective date. The amendments made by this subsection shall take
effect on the earlier of
(A) January 1, 1998, or
(B) the first day of the first calendar year following the calendar
year in which all States have in effect plans under which individuals
are eligible for comprehensive health coverage described in section
1101 of this Act.
Such amendments shall not apply in determining the amount of any tax
under section 4980B of the Internal Revenue Code of 1986 with respect
to any failure occurring before the date determined under the preceding
sentence.
Subtitle F. Tax Treatment of Organizations Providing Health Care Services and
Related Organizations
SEC. 7601. TREATMENT OF NONPROFIT HEALTH CARE ORGANIZATIONS.
(a) Treatment of Hospitals and Other Entities Providing Health Care
Services. Section 501 (relating to exemption from tax on corporations,
certain trusts, etc.) is amended by redesignating subsection (n) as
subsection (o) and by inserting after subsection (m) the following new
subsection:
``(n) Qualification of Organizations Providing Health Care Services as
Charitable Organizations. For purposes of subsection (c)(3), the provision
of health care services shall not be treated as an activity that
accomplishes a charitable purpose unless the organization providing such
services, on a periodic basis (no less frequently than annually), and with
the participation of community representatives
``(1) assesses the health care needs of its community, and
``(2) develops a plan to meet those needs.
In the case of a health maintenance organization, the provision of health
care services shall not be treated as an activity that accomplishes a
charitable purpose for purposes of subsection (c)(3) unless, in addition to
meeting the requirement of the preceding sentence, such services are
provided as described in subsection (m)(3)(B)(i).''
(b) Treatment of Health Maintenance Organizations. Section 501(m) is
amended by adding at the end thereof the following new paragraph:
``(6) Insurance provided by health maintenance organizations.
``(A) Certain insurance not treated as commercial-type insurance. Health
insurance provided by a health maintenance organization shall not be
treated as commercial-type insurance if such insurance relates to care
provided other than pursuant to a pre-existing arrangement with such
organization. In applying the preceding sentence, care described in
subparagraph (B)(iv) shall not be taken into account.
``(B) Certain insurance treated as commercial-type insurance. Health
insurance provided by a health maintenance organization shall be treated as
commercial-type insurance if it relates to
``(i) care provided by such organization to its members at its own
facilities through health care professionals who do not provide substantial
health care services other than on behalf of such organization,
``(ii) primary care provided by a health care professional to a member of
such organization on a basis under which the amount paid to such
professional does not vary with the amount of care provided to such member,
``(iii) services other than primary care provided pursuant to a
pre-existing arrangement with such organization, or
``(iv) emergency care provided to a member of such organization at a
location outside such member's area of residence.''
(c) Treatment of Parent Organizations of Health Care Providers. Section
509(a) (defining private foundation) is amended by striking ``and'' at the
end of paragraph (3), by redesignating paragraph (4) as paragraph (5), and
by inserting after paragraph (3) the following new paragraph:
``(4) an organization which is organized and operated for the benefit of,
and which directly or indirectly controls, an organization described in
section 170(b)(1)(A)(iii), and''.
(d) Effective Dates.
(1) In general. Except as provided in paragraph (2), the amendments
made by this section shall take effect on January 1, 1995.
(2) Subsections (b) and (c). The amendments made by subsections (b) and
(c) shall take effect on the date of the enactment of this Act.
SEC. 7602. TAX TREATMENT OF TAXABLE ORGANIZATIONS PROVIDING HEALTH
INSURANCE
AND OTHER PREPAID HEALTH CARE SERVICES.
(a) General Rule. Section 833 is amended to read as follows:
``SEC. 833. TREATMENT OF ORGANIZATIONS PROVIDING HEALTH INSURANCE
AND OTHER
PREPAID HEALTH CARE SERVICES.
``(a) General Rule. Any organization to which this section applies shall
be taxable under this part in the same manner as if it were an insurance
company other than a life insurance company.
``(b) Organizations To Which Section Applies. This section shall apply to
any organization
``(1) which is not exempt from taxation under this subtitle, and
``(2) the primary and predominant business activity of which during the
taxable year consists of 1 or more of the following:
``(A) Issuing accident and health insurance contracts or the reinsuring
of risks undertaken by other insurance companies under such contracts.
``(B) Operating as a health maintenance organization.
``(C) Entering into arrangements under which
``(i) fixed payments or premiums are received as consideration for the
organization's agreement to provide or arrange for the provision of health
care services, regardless of how the health care services are provided or
arranged to be provided, and
``(ii) such fixed payments or premiums do not vary depending on the
amount of health care services provided.''
(b) Conforming Amendments.
(1) Subsection (c) of section 56 is amended by striking paragraph (3).
(2) The table of sections for part II of subchapter L of chapter 1 is
amended by striking the item relating to section 833 and inserting the
following:
``Sec. 833. Treatment of organizations providing health insurance and other
prepaid health care services.''
(c) Effective Dates.
(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, 1996.
(2) Transition rules for blue cross and blue shield organizations.
(A) Prior fresh start preserved. The adjusted basis of any asset
determined under section 1012(c)(3)(A)(ii) of the Tax Reform Act of
1986 shall not be affected by the amendments made by this section nor
by reason of any failure to qualify in taxable years beginning after
December 31, 1996, as an existing Blue Cross or Blue Shield
organization (as defined in section 833(c)(2) of the Internal Revenue
Code of 1986, as in effect on the day before the date of the enactment
of this Act).
(B) Recoupment of prior reserve benefit. In the case of any
organization entitled to the benefits of section 833(a)(3) of the
Internal Revenue Code of 1986 (as in effect on the day before the date
of the enactment of this Act) for such organization's last taxable year
beginning before January 1, 1997, the amount determined under paragraph
(4) of section 832(b) of such Code for each of such organization's
first 6 taxable years beginning after December 31, 1996, shall be
increased by an amount equal to 3 \1/3\ percent of its unearned
premiums on outstanding business as of the close of such organization's
last taxable year beginning before January 1, 1997.
(C) Phase-out of special deduction for certain organizations.
(i) In general. In the case of an organization which meets the
requirements of clause (ii)
(I) such organization shall continue to be entitled to the deduction
provided under section 833(b) of the Internal Revenue Code of 1986 (as
in effect on the day before the date of the enactment of this Act) for
its first 2 taxable years beginning after December 31, 1996, except
that
(II) the amount of such deduction for such organization's taxable
year beginning in 1997 shall be 67 percent of the amount which would
have been determined under such section 833(b) as so in effect, and the
amount of such deduction for organization's taxable year beginning in
1998 shall be 33 percent of the amount which would have been so
determined.
Notwithstanding the amendment made by subsection (b)(1), any
deduction under the preceding sentence shall not be allowable in
computing alternative minimum taxable income.
(ii) Requirements. An organization meets the requirements of this
clause if, for each of its taxable years beginning in 1995 and 1996,
such organization
(I) was an organization to which section 833 of such Code (as so in
effect) applied, and
(II) met the requirements of subparagraph (A) of section 833(c)(3) of
such Code (as so in effect).
(3) Transitional rules for other companies.
(A) Organizations to which paragraph applies. This paragraph shall
apply to any organization to which section 833 of the Internal Revenue
Code of 1986 (as amended by subsection (a)) applies for such
organization's first taxable year beginning after December 31, 1996;
except that this paragraph shall not apply if such organization treated
itself as an insurance company taxable under part II of subchapter L of
chapter 1 of such Code on its original Federal income tax return for
its taxable year beginning in 1992 and for all of its taxable years
thereafter beginning before January 1, 1997.
(B) Treatment of currently taxable companies. Except as provided in
subparagraph (C), in the case of any organization to which this
paragraph applies
(i) the amendments made by this section shall be treated as a
change in the method of accounting, and
(ii) all adjustments required to be taken into account under
section 481 of the Internal Revenue Code of 1986, shall be taken into
account for such company's first taxable year beginning after
December 31, 1996.
(C) Treatment of currently tax exempt companies. In the case of any
organization to which this paragraph applies and which was exempt from
tax under chapter 1 of the Internal Revenue Code of 1986 for such
organization's last taxable year beginning before January 1, 1997
(i) no adjustment shall be made under section 481 (or any other
provision) of such Code on account of a change in its method of
accounting required by this section for its first taxable year
beginning after December 31, 1996, and
(ii) for purposes of determining gain or loss, the adjusted basis
of any asset held by such organization on the first day of such
taxable year shall be treated as equal to its fair market value as of
such day.
SEC. 7603. EXEMPTION FROM INCOME TAX FOR REGIONAL ALLIANCES.
(a) In General. Subsection (c) of section 501 (relating to exemption from
tax on corporations, certain trusts, etc.) is amended by adding at the end
thereof the following new paragraph:
``(26) Any regional alliance described in section 1301 of the Health
Security Act. Such an alliance shall be treated as not described in any
other paragraph of this subsection.''
(b) Effective Date. The amendment made by subsection (a) shall apply to
taxable years beginning after the date of the enactment of this Act.
Subtitle G. Tax Treatment of Long-term Care Insurance and Services
SEC. 7701. QUALIFIED LONG-TERM CARE SERVICES TREATED AS MEDICAL CARE.
(a) General Rule. Paragraph (1) of section 213(d) (defining medical care)
is amended by striking ``or'' at the end of subparagraph (B), by
redesignating subparagraph (C) as subparagraph (D), and by inserting after
subparagraph (B) the following new subparagraph:
``(C) for qualified long-term care services (as defined in subsection
(g)), or''.
(b) Qualified Long-Term Care Services Defined. Section 213 (relating to
the deduction for medical, dental, etc., expenses) is amended by adding at
the end thereof the following new subsection:
``(g) Qualified Long-Term Care Services. For purposes of this section
``(1) In general. The term `qualified long-term care services' means
necessary diagnostic, curing, mitigating, treating, preventive,
therapeutic, and rehabilitative services, and maintenance and personal care
services (whether performed in a residential or nonresidential setting)
which
``(A) are required by an individual during any period the individual is
an incapacitated individual (as defined in paragraph (2)),
``(B) have as their primary purpose
``(i) the provision of needed assistance with 1 or more activities of
daily living (as defined in paragraph (3)), or
``(ii) protection from threats to health and safety due to severe
cognitive impairment, and
``(C) are provided pursuant to a continuing plan of care prescribed by a
licensed professional (as defined in paragraph (4)).
``(2) Incapacitated individual. The term `incapacitated individual' means
any individual who
``(A) is unable to perform, without substantial assistance from another
individual (including assistance involving cueing or substantial
supervision), at least 2 activities of daily living as defined in paragraph
(3), or
``(B) has severe cognitive impairment as defined by the Secretary in
consultation with the Secretary of Health and Human Services.
Such term shall not include any individual otherwise meeting the
requirements of the preceding sentence unless a licensed professional
within the preceding 12-month period has certified that such individual
meets such requirements.
``(3) Activities of daily living. Each of the following is an activity of
daily living:
``(A) Eating.
``(B) Toileting.
``(C) Transferring.
``(D) Bathing.
``(E) Dressing.
``(4) Licensed professional. The term `licensed professional' means
``(A) a physician or registered professional nurse, or
``(B) any other individual who meets such requirements as may be
prescribed by the Secretary after consultation with the Secretary of Health
and Human Services.
``(5) Certain services not included. The term `qualified long-term care
services' shall not include any services provided to an individual
``(A) by a relative (directly or through a partnership, corporation, or
other entity) unless the relative is a licensed professional with respect
to such services, or
``(B) by a corporation or partnership which is related (within the
meaning of section 267(b) or 707(b)) to the individual.
``For purposes of this paragraph, the term `relative' means an individual
bearing a relationship to the individual which is described in paragraphs
(1) through (8) of section 152(a).''
(c) Technical Amendments.
(1) Subparagraph (D) of section 213(d)(1) (as redesignated by
subsection (a)) is amended to read as follows:
``(D) for insurance (including amounts paid as premiums under part B of
title XVIII of the Social Security Act, relating to supplementary medical
insurance for the aged) covering medical care referred to in
``(i) subparagraphs (A) and (B), or
``(ii) subparagraph (C), but only if such insurance is provided under a
qualified long-term care insurance policy (as defined in section
7702B(b)) and the amount paid for such insurance is not disallowed under
section 7702B(d)(4).''
(2) Paragraph (6) of section 213(d) is amended
(A) by striking ``subparagraphs (A) and (B)'' and inserting
``subparagraph (A), (B), and (C)'', and
(B) by striking ``paragraph (1)(C)'' in subparagraph (A) and
inserting ``paragraph (1)(D)''.
(d) Effective Date. The amendments made by this section shall apply to
taxable years beginning after December 31, 1995.
SEC. 7702. TREATMENT OF LONG-TERM CARE INSURANCE.
(a) General Rule. Chapter 79 (relating to definitions) is amended by
inserting after section 7702A the following new section:
``SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE.
``(a) In General. For purposes of this title
``(1) a qualified long-term care insurance policy (as defined in
subsection (b)) shall be treated as an accident and health insurance
contract,
``(2) amounts (other than policyholder dividends (as defined in section
808) or premium refunds) received under a qualified long-term care
insurance policy shall be treated as amounts received for personal injuries
and sickness and shall be treated as reimbursement for expenses actually
incurred for medical care (as defined in section 213(d)),
``(3) any plan of an employer providing coverage under a qualified
long-term care insurance policy shall be treated as an accident and health
plan with respect to such coverage,
``(4) amounts paid for a qualified long-term care insurance policy
providing the benefits described in subsection (b)(6)(B) shall be treated
as payments made for insurance for purposes of section 213(d)(1)(D), and
``(5) a qualified long-term care insurance policy shall be treated as a
guaranteed renewable contract subject to the rules of section 816(e).
``(b) Qualified Long-Term Care Insurance Policy. For purposes of this
title
``(1) In general. The term `qualified long-term care insurance policy'
means any long-term care insurance policy (as defined in section 2304 of
the Health Security Act) that
``(A) satisfies the requirements of subpart B of part 3 of subtitle B of
title II of the Health Security Act,
``(B) limits benefits under such policy to individuals who are certified
by a licensed professional (as defined in section 213(g)(4)) within the
preceding 12-month period as being unable to perform, without substantial
assistance from another individual (including assistance involving cueing
or substantial supervision), 2 or more activities of daily living (as
defined in section 213(g)(3)), or who have a severe cognitive impairment
(as defined in section 213(g)(2)(B)), and
``(C) satisfies the requirements of paragraphs (2), (3), (4), (5), and
(6).
``(2) Premium requirements. The requirements of this paragraph are met
with respect to a policy if such policy provides that premium payments may
not be made earlier than the date such payments would have been made if the
contract provided for level annual payments over the life expectancy of the
insured or 20 years, whichever is shorter. A policy shall not be treated as
failing to meet the requirements of the preceding sentence solely by reason
of a provision in the policy providing for a waiver of premiums if the
insured becomes an individual certified in accordance with paragraph
(1)(B).
``(3) Prohibition of cash value. The requirements of this paragraph are
met if the policy does not provide for a cash value or other money that can
be paid, assigned, pledged as collateral for a loan, or borrowed, other
than as provided in paragraph (4).
``(4) Refunds of premiums and dividends. The requirements of this
paragraph are met with respect to a policy if such policy provides that
``(A) policyholder dividends are required to be applied as a reduction in
future premiums or, to the extent permitted under paragraph (6), to
increase benefits described in subsection (a)(2), and
``(B) refunds of premiums upon a partial surrender or a partial
cancellation are required to be applied as a reduction in future premiums,
and
``(C) any refund on the death of the insured, or on a complete surrender
or cancellation of the policy, cannot exceed the aggregate premiums paid
under the contract.
``Any refund on a complete surrender or cancellation of the policy shall
be includible in gross income to the extent that any deduction or exclusion
was allowable with respect to the premiums.
``(5) Coordination with other entitlements. The requirements of this
paragraph are met with respect to a policy if such policy does not cover
expenses incurred to the extent that such expenses are also covered under
title XVIII of the Social Security Act or are covered under comprehensive
health coverage described in section 1101 of the Health Security Act.
``(6) Maximum benefit.
``(A) In general. The requirements of this paragraph are met if the
benefits payable under the policy for any period (whether on a periodic
basis or otherwise) shall not exceed the dollar amount in effect for such
period.
``(B) Nonreimbursement payments permitted. Benefits shall include all
payments described in subsection (a)(2) to or on behalf of an insured
individual without regard to the expenses incurred during the period to
which the payments relate. For purposes of section 213(a), such payments
shall be treated as compensation for expenses paid for medical care.
``(C) Dollar amount. The dollar amount in effect under this paragraph
shall be $150 per day (or the equivalent amount within the calendar year in
the case of payments on other than a per diem basis).
``(D) Adjustments for increased costs.
``(i) In general. In the case of any calendar year after 1996, the dollar
amount in effect under subparagraph (C) for any period or portion thereof
occurring during such calendar year shall be equal to the sum of
``(I) the amount in effect under subparagraph (C) for the preceding
calendar year (after application of this subparagraph), plus
``(II) the product of the amount referred to in subclause (I) multiplied
by the cost-of-living adjustment for the calendar year of the amount under
subclause (I).
``(ii) Cost-of-living adjustment. For purposes of clause (i), the
cost-of-living adjustment for any calendar year is the percentage (if any)
by which the cost index under clause (iii) for the preceding calendar year
exceeds such index for the second preceding calendar year.
``(iii) Cost index. The Secretary, in consultation with the Secretary of
Health and Human Services, shall before January 1, 1997, establish a cost
index to measure increases in costs of nursing home and similar facilities.
The Secretary may from time to time revise such index to the extent
necessary to accurately measure increases or decreases in such costs.
``(iv) Special rule for calendar year 1997. Notwithstanding clause (ii),
for purposes of clause (i), the cost-of-living adjustment for calendar year
1997 is the sum of 1 \1/2\ percent plus the percentage by which the CPI for
calendar year 1996 (as defined in section 1(f)(4)) exceeds the CPI for
calendar year 1995 (as so defined).
``(E) Period. For purposes of this paragraph, a period begins on the date
that an individual has a condition which would qualify for certification
under subsection (b)(1)(B) and ends on the earlier of the date upon which
``(i) such individual has not been so certified within the preceding
12-months, or
``(ii) the individual's condition ceases to be such as to qualify for
certification under subsection (b)(1)(B).
``(F) Aggregation rule. For purposes of this paragraph, all policies
issued with respect to the same insured shall be treated as one policy.
``(c) Treatment of Long-Term Care Insurance Policies. For purposes of
this title, any amount received or coverage provided under a long-term care
insurance policy that is not a qualified long-term care insurance policy
shall not be treated as an amount received for personal injuries or
sickness or provided under an accident and health plan and shall not be
treated as excludible from gross income under any provision of this title.
``(d) Treatment of Coverage Provided as Part of a Life Insurance
Contract. Except as otherwise provided in regulations prescribed by the
Secretary, in the case of any long-term care insurance coverage (whether or
not qualified) provided by rider on a life insurance contract
``(1) In general. This section shall apply as if the portion of the
contract providing such coverage is a separate contract or policy.
``(2) Premiums and charges for long-term care coverage. Premium payments
for coverage under a long-term care insurance policy and charges against
the life insurance contract's cash surrender value (within the meaning of
section 7702(f)(2)(A)) for such coverage shall be treated as premiums for
purposes of subsection (b)(2).
``(3) Application of 7702. Section 7702(c)(2) (relating to the guideline
premium limitation) shall be applied by increasing the guideline premium
limitation with respect to a life insurance contract, as of any date
``(A) by the sum of any charges (but not premium payments) described in
paragraph (2) made to that date under the contract, less
``(B) any such charges the imposition of which reduces the premiums paid
for the contract (within the meaning of section 7702(f)(1)).
``(4) Application of section 213. No deduction shall be allowed under
section 213(a) for charges against the life insurance contract's cash
surrender value described in paragraph (2), unless such charges are
includible in income as a result of the application of section 72(e)(10)
and the coverage provided by the rider is a qualified long-term care
insurance policy under subsection (b).
``For purposes of this subsection, the term `portion' means only the
terms and benefits under a life insurance contract that are in addition to
the terms and benefits under the contract without regard to the coverage
under a long-term care insurance policy.
``(e) Prohibition of Discrimination.
``(1) In general. Notwithstanding subsection (a)(3), any plan of an
employer providing coverage under a qualified long-term care insurance
policy shall qualify as an accident and health plan with respect to such
coverage only if
``(A) the plan allows all employees, except as provided in paragraph (2),
to participate, and
``(B) the benefits provided under the plan are identical for all
employees that choose to participate.
``(2) Exclusion of certain employees. For purposes of paragraph (1),
there may be excluded from consideration
``(A) employees who have not completed 3 years of service;
``(B) employees who have not attained age 25;
``(C) part-time or seasonal employees; and
``(D) employees who are nonresident aliens and who receive no earned
income (within the meaning of section 911(d)(2)) from the employer which
constitutes income from sources within the United States (within the
meaning of section 861(a)(3)).
``(f) Regulations. The Secretary shall prescribe such regulations as may
be necessary to carry out the requirements of this section, including
regulations to prevent the avoidance of this section by providing long-term
care insurance coverage under a life insurance contract and to provide for
the proper allocation of amounts between the long-term care and life
insurance portions of a contract.''.
(b) Clerical Amendment. The table of sections for chapter 79 is amended
by inserting after the item relating to section 7702A the following new
item:
``Sec. 7702B. Treatment of long-term care insurance.''.
(c) Effective Date.
(1) In general. The amendments made by this section shall apply to
policies issued after December 31, 1995. Solely for purposes of the
preceding sentence, a policy issued prior to January 1, 1996, that
satisfies the requirements of a qualified long-term care insurance policy
as set forth in section 7702B(b) shall, on and after January 1, 1996, be
treated as being issued after December 31, 1995.
(2) Transition rule. If, after the date of enactment of this Act and
before January 1, 1996, a policy providing for long-term care insurance
coverage is exchanged solely for a qualified long-term care insurance
policy (as defined in section 7702B(b)), no gain or loss shall be
recognized on the exchange. If, in addition to a qualified long-term care
insurance policy, money or other property is received in the exchange,
then any gain shall be recognized to the extent of the sum of the money
and the fair market value of the other property received. For purposes of
this paragraph, the cancellation of a policy providing for long-term care
insurance coverage and reinvestment of the cancellation proceeds in a
qualified long-term care insurance policy within 60 days thereafter shall
be treated as an exchange.
(3) Issuance of certain riders permitted. For purposes of determining
whether section 7702 or 7702A of the Internal Revenue Code of 1986
applies to any contract, the issuance, whether before, on, or after
December 31, 1995, of a rider on a life insurance contract providing
long-term care insurance coverage shall not be treated as a modification
or material change of such contract.
SEC. 7703. TAX TREATMENT OF ACCELERATED DEATH BENEFITS UNDER LIFE
INSURANCE
CONTRACTS.
(a) General Rule. Section 101 (relating to certain death benefits) is
amended by adding at the end thereof the following new subsection:
``(g) Treatment of Certain Accelerated Death Benefits.
``(1) In general. For purposes of this section, any amount distributed to
an individual under a life insurance contract on the life of an insured who
is a terminally ill individual (as defined in paragraph (3)) shall be
treated as an amount paid by reason of the death of such insured.
``(2) Necessary conditions.
``(A) Paragraph (1) shall not apply to any distribution unless
``(i) the distribution is not less than the present value (determined
under subparagraph (B)) of the reduction in the death benefit otherwise
payable in the event of the death of the insured, and
``(ii) the percentage derived from dividing the cash surrender value of
the contract, if any, immediately after the distribution by the cash
surrender value of the contract immediately before the distribution is
equal to or greater than the percentage derived by dividing the death
benefit immediately after the distribution by the death benefit immediately
before the distribution.
``(B) The present value of the reduction in the death benefit occurring
on the distribution must be determined by
``(i) using as the discount rate a rate not to exceed the highest rate
set forth in subparagraph (C), and
``(ii) assuming that the death benefit (or the portion thereof) would
have been paid at the end of a period that is no more than the insured's
life expectancy from the date of the distribution or 12 months, whichever
is shorter.
``(C) Rates. The rates set forth in this subparagraph are the following:
``(i) the 90-day Treasury bill yield,
``(ii) the rate described as Moody's Corporate Bond Yield Average-Monthly
Average Corporates as published by Moody's Investors Service, Inc., or any
successor thereto for the calendar month ending 2 months before the date on
which the rate is determined,
``(iii) the rate used to compute the cash surrender values under the
contract during the applicable period plus 1 percent per annum, and
``(iv) the maximum permissible interest rate applicable to policy loans
under the contract.
``(3) Terminally ill individual. For purposes of this subsection, the
term `terminally ill individual' means an individual who the insurer has
determined, after receipt of an acceptable certification by a licensed
physician, has an illness or physical condition which can reasonably be
expected to result in death within 12 months of the date of certification.
``(4) Application of section 72(e)(10). For purposes of section 72(e)(10)
(relating to the treatment of modified endowment contracts), section
72(e)(4)(A)(i) shall not apply to distributions described in paragraph (1).
(b) Effective Date. The amendment made by subsection (a) shall apply to
taxable years beginning after December 31, 1993.
SEC. 7704. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED ACCELERATED
DEATH
BENEFIT RIDERS.
(a) Qualified Accelerated Death Benefit Riders Treated as Life Insurance.
Section 818 (relating to other definitions and special rules) is amended by
adding at the end thereof the following new subsection:
``(g) Qualified Accelerated Death Benefit Riders Treated as Life
Insurance. For purposes of this part
``(1) In general. Any reference to a life insurance contract shall be
treated as including a reference to a qualified accelerated death benefit
rider on such contract.
``(2) Qualified accelerated death benefit riders. For purposes of this
subsection, the term `qualified accelerated death benefit rider' means any
rider on a life insurance contract which provides for a distribution to an
individual upon the insured becoming a terminally ill individual (as
defined in section 101(g)(3)).
(b) Definitions of Life Insurance and Modified Endowment Contracts.
Paragraph (5)(A) of section 7702(f) is amended by striking ``or'' at the
end of clause (iv), by redesignating clause (v) as clause (vi), and by
inserting after clause (iv) the following new clause:
``(v) any qualified accelerated death benefit rider (as defined in
section 818(g)), or''.
(c) Effective Date.
(1) In general. The amendments made by this section shall apply to
contracts issued after December 31, 1993.
(2) Transitional rule. For purposes of determining whether section 7702
or 7702A of the Internal Revenue Code of 1986 applies to any contract,
the issuance, whether before, on, or after December 31, 1993, of a rider
on a life insurance contract permitting the acceleration of death
benefits (as described in section 101(g) of such Code) shall not be
treated as a modification or material change of such contract.
Subtitle H. Tax Incentives for Health Services Providers
SEC. 7801. NONREFUNDABLE CREDIT FOR CERTAIN PRIMARY HEALTH SERVICES
PROVIDERS.
(a) In General. Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting after
section 22 the following new section:
``SEC. 23. PRIMARY HEALTH SERVICES PROVIDERS.
``(a) Allowance of Credit. There shall be allowed as a credit against the
tax imposed by this chapter for the taxable year an amount equal to the
product of
``(1) the number of months during such taxable year
``(A) during which the taxpayer is a qualified primary health services
provider, and
``(B) which are within the taxpayer's mandatory service period, and
``(2) $1,000 ($500 in the case of a qualified practitioner who is not a
physician).
``(b) Qualified Primary Health Services Provider. For purposes of this
section, the term `qualified primary health services provider' means, with
respect to any month, any qualified practitioner who
``(1) has in effect a certification by the Bureau as a provider of
primary health services and such certification is, when issued, for a
health professional shortage area in which the qualified practitioner is
commencing the providing of primary health services,
``(2) is providing primary health services full time in the health
professional shortage area identified in such certification, and
``(3) has not received a scholarship under the National Health Service
Corps Scholarship Program or any loan repayments under the National Health
Service Corps Loan Repayment Program.
``For purposes of paragraph (2), a provider shall be treated as providing
services in a health professional shortage area when such area ceases to be
such an area if it was such an area when the provider commenced providing
services in the area.
``(c) Mandatory Service Period. For purposes of this section, the term
`mandatory service period' means the period of 60 consecutive calendar
months beginning with the first month the taxpayer is a qualified primary
health services provider. A taxpayer shall not have more than 1 mandatory
service period.
``(d) Definitions and Special Rules. For purposes of this section
``(1) Bureau. The term `Bureau' means the Bureau of Primary Health Care,
Health Resources and Services Administration of the United States Public
Health Service.
``(2) Qualified practitioner. The term `qualified practitioner' means a
physician, a physician assistant, a nurse practitioner, or a certified
nurse-midwife.
``(3) Physician. The term `physician' has the meaning given to such term
by section 1861(r) of the Social Security Act.
``(4) Physician assistant; nurse practitioner. The terms `physician
assistant' and `nurse practitioner' have the meanings given to such terms
by section 1861(aa)(5) of the Social Security Act.
``(5) Certified nurse-midwife. The term `certified nurse-midwife' has the
meaning given to such term by section 1861(gg)(2) of the Social Security
Act.
``(6) Primary health services. The term `primary health services' has the
meaning given such term by section 330(b)(1) of the Public Health Service
Act.
``(7) Health professional shortage area. The term `health professional
shortage area' has the meaning given such term by section 332(a)(1)(A) of
the Public Health Service Act.
``(e) Recapture of Credit.
``(1) In general. If there is a recapture event during any taxable year,
then
``(A) no credit shall be allowed under subsection (a) for such taxable
year and any succeeding taxable year, and
``(B) the tax of the taxpayer under this chapter for such taxable year
shall be increased by an amount equal to the product of
``(i) the applicable percentage, and
``(ii) the aggregate unrecaptured credits allowed to such taxpayer under
this section for all prior taxable years.
``(2) Applicable recapture percentage.
``(A) In general. For purposes of this subsection, the applicable
recapture percentage shall be determined from the following table:
``If the recapture The applicable recapture percentage is:
event occurs during:
Months 1 24
Months 25 36
Months 37 48
Months 49 60
Months 61 and thereafter
``(B) Timing. For purposes of subparagraph (A), month 1 shall begin on
the first day of the mandatory service period.
``(3) Recapture event defined.
``(A) In general. For purposes of this subsection, the term `recapture
event' means the failure of the taxpayer to be a qualified primary health
services provider for any month during the taxpayer's mandatory service
period.
``(B) Cessation of designation. The cessation of the designation of any
area as a health professional shortage area after the beginning of the
mandatory service period for any taxpayer shall not constitute a recapture
event.
``(C) Secretarial waiver. The Secretary, in consultation with the
Secretary of Health and Human Services, may waive any recapture event
caused by extraordinary circumstances.
``(4) No credits against tax; minimum tax. Any increase in tax under this
subsection shall not be treated as a tax imposed by this chapter for
purposes of determining the amount of any credit under subpart A, B, or D
of this part or for purposes of section 55.''
(b) Clerical Amendment. The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting after the item relating
to section 22 the following new item:
``Sec. 23. Primary health services providers.''
(c) Effective Date. The amendments made by this section shall apply to
taxable years beginning after December 31, 1994.
SEC. 7802. EXPENSING OF MEDICAL EQUIPMENT.
(a) In General. Paragraph (1) of section 179(b) (relating to dollar
limitation on expensing of certain depreciable business assets) is amended
to read as follows:
``(1) Dollar limitation.
``(A) General rule. The aggregate cost which may be taken into account
under subsection (a) for any taxable year shall not exceed $17,500.
``(B) Health care property. The aggregate cost which may be taken into
account under subsection (a) shall be increased by the lesser of
``(i) the cost of section 179 property which is health care property
placed in service during the taxable year, or
``(ii) $10,000.''
(b) Definition. Section 179(d) (relating to definitions) is amended by
adding at the end the following new paragraph:
``(11) Health care property. For purposes of this section, the term
`health care property' means section 179 property
``(A) which is medical equipment used in the screening, monitoring,
observation, diagnosis, or treatment of patients in a laboratory, medical,
or hospital environment,
``(B) which is owned (directly or indirectly) and used by a physician (as
defined in section 1861(r) of the Social Security Act) in the active
conduct of such physician's full-time trade or business of providing
primary health services (as defined in section 330(b)(1) of the Public
Health Service Act) in a health professional shortage area (as defined in
section 332(a)(1)(A) of the Public Health Service Act), and
``(C) substantially all the use of which is in such area.''
(c) Effective Date. The amendments made by this section shall apply to
property placed in service after December 31, 1994.
Subtitle I. Miscellaneous Provisions
SEC. 7901. CREDIT FOR COST OF PERSONAL ASSISTANCE SERVICES REQUIRED BY
EMPLOYED
INDIVIDUALS.
(a) In General. Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting after
section 23 the following new section:
``SEC. 24. COST OF PERSONAL ASSISTANCE SERVICES REQUIRED BY EMPLOYED
INDIVIDUALS.
``(a) Allowance of Credit.
``(1) In general. In the case of an eligible individual, there shall be
allowed as a credit against the tax imposed by this chapter for the taxable
year an amount equal to the applicable percentage of the personal
assistance expenses paid or incurred by the taxpayer during such taxable
year.
``(2) Applicable percentage. For purposes of paragraph (1), the term
`applicable percentage' means 50 percent reduced (but not below zero) by 10
percentage points for each $5,000 by which the modified adjusted gross
income (as defined in section 59B(d)(2)) of the taxpayer for the taxable
year exceeds $45,000. In the case of a married individual filing a separate
return, the preceding sentence shall be applied by substituting `$2,500'
for `$5,000' and `$22,500' for `$45,000'.
``(b) Limitation. The amount of personal assistance expenses incurred for
the benefit of an individual which may be taken into account under
subsection (a) for the taxable year shall not exceed the lesser of
``(1) $15,000, or
``(2) such individual's earned income (as defined in section 32(c)(2))
for the taxable year.
``In the case of a joint return, the amount under the preceding sentence
shall be determined separately for each spouse.
``(c) Eligible Individual. For purposes of this section, the term
`eligible individual' means any individual (other than a nonresident alien)
who, by reason of any medically determinable physical impairment which can
be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months, is unable to
engage in any substantial gainful activity without personal assistance
services appropriate to carry out activities of daily living. An individual
shall not be treated as an eligible individual unless such individual
furnishes such proof thereof (in such form and manner, and at such times)
as the Secretary may require.
``(d) Other Definitions. For purposes of this section
``(1) Personal assistance expenses. The term `personal assistance
expenses' means expenses for
``(A) personal assistance services appropriate to carry out activities of
daily living in or outside the home,
``(B) homemaker/chore services incidental to the provision of such
personal assistance services,
``(C) in the case of an individual with a cognitive impairment,
assistance with life skills,
``(D) communication services,
``(E) work-related support services,
``(F) coordination of services described in this paragraph,
``(G) assistive technology and devises, including assessment of the need
for particular technology and devices and training of family members, and
``(H) modifications to the principal place of abode of the individual to
the extent the expenses for such modifications would (but for subsection
(e)(2)) be expenses for medical care (as defined by section 213) of such
individual.
``(2) Activities of daily living. The term `activities of daily living'
means the activities referred to in section 213(g)(3).
``(e) Special Rules.
``(1) Payments to related persons. No credit shall be allowed under this
section for any amount paid by the taxpayer to any person who is related
(within the meaning of section 267 or 707(b)) to the taxpayer.
``(2) Coordination with medical expense deduction. Any amount taken into
account in determining the credit under this section shall not be taken
into account in determining the amount of the deduction under section 213.
``(3) Basis reduction. For purposes of this subtitle, if a credit is
allowed under this section for any expense with respect to any property,
the increase in the basis of such property which would (but for this
paragraph) result from such expense shall be reduced by the amount of the
credit so allowed.
``(f) Cost-of-Living Adjustment. In the case of any taxable year
beginning after 1996, the $45,000 and $22,500 amounts in subsection (a)(2)
and the $15,000 amount in subsection (b) shall be increased by an amount
equal to
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under section 1(f)(3) for
the calendar year in which the taxable year begins by substituting
`calendar year 1995' for `calendar year 1992' in subparagraph (B) thereof.
``If any increase determined under the preceding sentence is not a
multiple of $1,000, such increase shall be rounded to the nearest multiple
of $1,000.''
(b) Technical Amendment. Subsection (a) of section 1016 is amended by
striking ``and'' at the end of paragraph (24), by striking the period at
the end of paragraph (25) and inserting ``, and'', and by adding at the end
thereof the following new paragraph:
``(26) in the case of any property with respect to which a credit has
been allowed under section 23, to the extent provided in section
23(e)(3).''
(c) Clerical Amendment. The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting after the item relating
to section 22 the following new item:
``Sec. 23. Cost of personal assistance services required by employed
individuals.''
(d) Effective Date. The amendments made by this section shall apply to
taxable years beginning after December 31, 1995.
SEC. 7902. DENIAL OF TAX-EXEMPT STATUS FOR BORROWINGS OF HEALTH
CARE-RELATED
ENTITIES.
(a) In General. Paragraph (6) of section 141(b) (relating to private
business use) is amended by adding at the end thereof the following new
subparagraph:
``(C) Certain health care-related entities. Use by
``(i) any regional alliance described in section 1301 of the Heath
Security Act,
``(ii) any corporate alliance described in section 1311 of such Act, and
``(iii) any guaranty fund described in section 1204 of such Act,
``shall be treated as private business use by an organization that is not
a 501(c)(3) organization.''
(b) Effective Date. The amendment made by subsection (a) shall apply to
obligations issued after the date of the enactment of this Act.
SEC. 7903. DISCLOSURE OF RETURN INFORMATION FOR ADMINISTRATION OF
CERTAIN
PROGRAMS UNDER THE HEALTH SECURITY ACT.
(a) In General. Subparagraph (D) of section 6103(l)(7) (relating to
disclosure of return information to Federal, State, and local agencies
administering certain programs) is amended by striking ``and'' at the end
of clause (viii), by striking the period at the end of clause (ix) and
inserting ``; and'', and by inserting after clause (ix) the following new
clause:
``(x) assistance provided under the Health Security Act.''
(b) Information Not Available to Local Agencies. Subparagraph (D) of
section 6103(l)(7) is amended by adding at the end thereof the following
new sentence: ``Subparagraphs (A) and (B) shall be applied without regard
to any reference to any local agency with respect to the program referred
to in clause (x).''
Title VIII: HEALTH AND HEALTH-RELATED PROGRAMS OF THE FEDERAL
GOVERNMENT
Table of contents
Subtitle A. Military Health Care Reform
Section 8001. Uniformed services health plans.
Subtitle B. Department of Veterans Affairs
Section 8101. Benefits and eligibility through Department of
Veterans Affairs Medical System.
Section 8102. Organization of Department of Veterans Affairs
facilities as health plans.
Subtitle C. Federal Employees Health Benefits Program
Section 8201. Definitions.
Section 8202. FEHBP termination.
Section 8203. Treatment of Federal employees, annuitants, and
other individuals (who would otherwise have been
eligible for fehbp) under health plans.
Section 8204. Treatment of individuals residing abroad.
Section 8205. Transition and savings provisions.
Section 8206. Regulations.
Section 8207. Technical and conforming amendments.
Subtitle D. Indian Health Service
Section 8301. Definitions.
Section 8302. Eligibility and health service coverage of Indians.
Section 8303. Supplemental Indian health care benefits.
Section 8304. Health plan and health alliance requirements.
Section 8305. Exemption of tribal governments and tribal
organizations from employer payments.
Section 8306. Provision of health services to non-enrollees and
non-Indians.
Section 8307. Payment by other payors.
Section 8308. Contracting authority.
Section 8309. Consultation.
Section 8310. Infrastructure.
Section 8311. Financing.
Section 8312. Rule of construction.
Section 8313. Authorizations regarding Public Health Service
Initiatives fund.
Subtitle E. Amendments to the Employee Retirement Income Security Act of 1974
Section 8401. Group health plan defined.
Section 8402. Limitation on coverage of group health plans under
title I of ERISA.
Section 8403. Amendments relating to continuation coverage.
Section 8404. Additional amendments relating to group health
plans.
Section 8405. Plan claims procedures.
Section 8406. Effective dates.
Subtitle F. Special Fund for WIC Program
Section 8501. Additional funding for special supplemental food
program for women, infants, and children (WIC).
--------
Subtitle A. Military Health Care Reform
SEC. 8001. UNIFORMED SERVICES HEALTH PLANS.
(a) Establishment of Plans. (1) Chapter 55 of title 10, United States
Code, is amended by inserting after section 1073 the following new section:
``3a. Uniformed Services Health Plans: establishment and coordination with
national health care reform
``(a) Establishment Authorized. (1) The Secretary of Defense, in
consultation with the other administering Secretaries, may establish one or
more Uniformed Services Health Plans pursuant to this section in order to
provide health care services to members of the uniformed services on active
duty for a period of more than 30 days and persons described in subsection
(e)(2).
``(2) The establishment and operation of a Uniformed Services Health Plan
shall be carried out in accordance with regulations prescribed by the
Secretary of Defense, in consultation with the other administering
Secretaries. The Secretary shall assure that such regulations conform, to
the maximum extent practicable, to the requirements for health plans set
forth in the Health Security Act.
``(b) Use of Uniformed Services Facilities and Other Health Care
Providers. (1) A Uniformed Services Health Plan may rely upon the use of
facilities of the uniformed services for the provision of health care
services to persons enrolled in the plan, supplemented by the use of
civilian health care providers or health plans under agreements entered
into by the Secretary of Defense.
``(2) An agreement with a civilian health care provider or a health plan
under paragraph (1) may be entered into without regard to provisions of law
requiring the use of competitive procedures. An agreement with a health
plan may provide for the sharing of resources with the health plan that is
a party to the agreement.
``(c) Health Care Services Under a Plan. (1) Subject to paragraph (2), a
Uniformed Services Health Plan shall provide to persons enrolled in the
plan the items and services in the comprehensive benefit package under the
Health Security Act.
``(2)(A) In addition, a Uniformed Services Health Plan shall guarantee to
each person described in subparagraph (B) who is enrolled in the plan those
health care services that the person would be entitled to receive under
this chapter in the absence of this section. In the case of a person
described in subparagraph (B) who is a covered beneficiary, such health
care services shall consist of the types of health care services described
in section 1079(a) of this title.
``(B) A person referred to in subparagraph (A) is a member of the
uniformed services on active duty for a period of more than 30 days as of
December 31, 1994, or any person who is a covered beneficiary as of that
date, who is (or afterwards becomes) enrolled in a Uniformed Services
Health Plan.
``(d) Preemption of Conflicting State Requirements. In carrying out
responsibilities under the Health Security Act, a State (or
State-established entity)
``(1) may not impose any standard or requirement on a Uniformed Services
Health Plan that is inconsistent with this section or any regulation
prescribed under this section or other Federal law regarding the operation
of this section; and
``(2) may not deny certification of a Uniformed Services Health Plan as a
health plan under the Health Security Act on the basis of a conflict
between a rule of a State or health alliance and this section or any
regulation prescribed under this section or other Federal law regarding the
operation of this section.
``(e) Enrollment. (1) Except as authorized by the administering Secretary
concerned, each member of a uniformed service on active duty for a period
of more than 30 days shall be required to enroll in a Uniformed Services
Health Plan available to the member.
``(2) After enrolling members described in paragraph (1), opportunities
for further enrollment in a Uniformed Services Health Plan shall be offered
by the administering Secretaries to covered beneficiaries in the following
order of priority:
``(A) Spouses and children of members of the uniformed services who are
on active duty for a period of more than 30 days.
``(B) Persons described in subsection (c) of section 1086 of this title.
The administering Secretary concerned may disregard the exclusion set forth
in subsection (d)(1) of such section in the case of a person described in
subsection (c) of such section who is enrolled in the supplementary medical
insurance program under part B of title XVIII of the Social Security Act
(42 U.S.C. 1395j et seq.).
``(3) With respect to a member described in paragraph (1) or a covered
beneficiary described in paragraph (2) who enrolls in a Uniformed Services
Health Plan, participation in such a plan shall be the exclusive source of
health care services available to the member or person under this chapter.
``(f) Effect of Failure to Enroll. (1) Except as provided in paragraph
(2), if a person described in subsection (e)(2) declines the opportunity
offered by the administering Secretaries to enroll in a Uniformed Services
Health Plan, the person shall not be entitled or eligible for health care
services in facilities of the uniformed services or pursuant to a contract
entered into under this chapter. However, nothing in this paragraph shall
be construed to effect the right of a person to a premium payment by the
Secretary of Defense if the person is enrolled in another health plan under
the Health Security Act and is otherwise entitled to such a payment under
subsection (h).
``(2) A person described in subsection (e)(2) who is enrolled with a
health plan that is not a Uniformed Services Health Plan may receive the
items and services in the comprehensive benefit package in a facility of
the uniformed services only if
``(A) the Secretary of Defense authorizes the provision of a particular
item or service in the package to the person;
``(B) the Secretary determines that the provision of the item or service
involved will not interfere with the provision of health care services to
members of the uniformed services or persons enrolled in a Uniformed
Services Health Plan; and
``(C) the health plan in which the person is enrolled agrees to pay the
actual and full cost of the items and services in the package actually
provided to the person.
``(3) The administering Secretaries shall assure that all rights and
entitlements under this chapter of any person described in subsection
(e)(2) are fully preserved if the person
``(A) is not offered the opportunity to enroll in a Uniformed Services
Health Plan; and
``(B) is not otherwise enrolled in a health plan provided through a
health alliance under the Health Security Act.
``(g) Special Rule for Other Payers. (1)(A) In the case of a person who
is enrolled in the supplementary medical insurance program under part B of
title XVIII of the Social Security Act (42 U.S.C. 1395j et seq.) and who is
also enrolled in a Uniformed Services Health Plan, Medicare shall be
responsible for making a premium payment on behalf of the person. The
Secretary of Defense and the Secretary of Health and Human Services shall
enter into an agreement specifying the payment responsibilities of Medicare
under this paragraph, except that the amount of the premium payment may not
exceed the expected per capita costs that Medicare would bear for the
person if the person remained in the Medicare program. A premium payment by
Medicare under this paragraph shall be the person's exclusive benefit under
Medicare.
``(B) In this paragraph, the term `Medicare' means any plan administered
under title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.).
``(2) Nothing in this section shall affect the payment of the retiree
discount under the Health Security Act on behalf of a person who is
enrolled in a Uniformed Services Health Plan if the person is otherwise
eligible for the retiree discount.
``(h) Payment Responsibilities of the Secretary. (1) In the case of a
person described in subsection (e)(2) who is not enrolled in a Uniformed
Services Health Plan, the Secretary may make a premium payment for the
person's enrollment through a health alliance in another health plan. In
determining the amount of the payment, the Secretary shall consider the
amount of any retiree discount payable under the Health Security Act on
behalf of the person and the amount of any premium credits attributable to
employer payments with respect to employment of the person.
``(2) The Secretary shall not make a payment pursuant to this subsection
in connection with any person enrolled in a health plan of the Department
of Veterans Affairs or a health program of the Indian Health Service.
``(i) Payment Responsibilities of Persons Enrolled in a Uniformed
Services Health Plan. (1) In the case of an active duty member who is
enrolled in a Uniformed Services Health Plan, the administering Secretaries
may not impose or collect from the member a cost-share charge of any kind
(whether a premium, copayment, deductible, coinsurance charge, or other
charge) other than subsistence charges authorized under section 1075 of
this title.
``(2) Subject to paragraph (3), persons described in subsection (e)(2)
who are enrolled in a Uniformed Services Health Plan shall be required to
pay a family share under section 1342 of a premium and cost sharing.
Payment obligations established under this paragraph may not exceed those
obligations otherwise required under the national standards for health
plans established pursuant to the Health Security Act.
``(3)(A) Persons described in subsection (e)(2) who enroll in a Uniformed
Services Health Plan and who (in the absence of this section) would be
covered beneficiaries under section 1079 or 1086 of this title continuously
since December 31, 1994, shall have, as a group, out-of-pocket costs in
1995 no greater than the lesser of
``(i) the out-of-pocket costs in effect for such beneficiaries under
section 1075, 1078, 1079(b), or 1086(b) of this title (whichever applies)
on December 31, 1994; and
``(ii) those obligations otherwise required under the national standards
for health plans established pursuant to the Health Security Act.
``(B) Members of the uniformed services on active duty as of December 31,
1994, who afterward become covered beneficiaries under section 1079 or 1086
of this title (or would become covered beneficiaries in the absence of this
section) without a break in eligibility for health care services under this
chapter shall have, as a group, out-of-pocket costs as covered
beneficiaries no higher than the out-of-pocket costs in effect for
similarly situated covered beneficiaries described in subparagraph (A).
``(C) The limitation on out-of-pocket costs established pursuant to
subparagraph (A) may be adjusted for years after 1995 by an appropriate
economic index, as determined by the Secretary of Defense.
``(4) The Secretary of Defense shall establish the payment requirements
under paragraph (2), and enforce the limitations on such requirements
specified in paragraph (3), in regulations prescribed pursuant to
subsection (a).
``(j) Financial Account. There is hereby established in the Department of
Defense a financial account to which shall be credited all premium payments
and other receipts from other payers and beneficiaries made in connection
with any person enrolled in a Uniformed Services Health Plan. The account
shall be administered by the Secretary of Defense, and funds in the account
may be used by the Secretary for any purpose directly related to the
delivery and financing of health care services under this chapter,
including operations, maintenance, personnel, procurement, contributions
toward construction projects, and related costs. Funds in the account shall
remain available until expended.''.
(2) The table of sections at the beginning of such chapter is amended
by inserting after the item relating to section 1073 the following new
item:
``3a. Uniformed Services Health Plans: establishment and coordination with
national health care reform.''.
(b) Definition. Section 1072 of such title is amended by adding at the
end the following new paragraph:
``(6) The term `Uniformed Services Health Plan' means a plan established
by the Secretary of Defense under section 1073a(a) of this title in order
to provide health care services to members of the uniformed services on
active duty and other covered beneficiaries under this chapter.''.
(c) Report on Establishment. If the Secretary of Defense determines to
establish any Uniformed Services Health Plan under section 1073a of title
10, United States Code, as added by subsection (a), the Secretary shall
submit to Congress a report describing the Plans proposed to be initially
offered under such section. The report required by this subsection shall be
submitted not later than 30 days before the date on which the Secretary
first issues proposed rules under subsection (a) of such section to
establish any such Plan.
Subtitle B. Department of Veterans Affairs
SEC. 8101. BENEFITS AND ELIGIBILITY THROUGH DEPARTMENT OF VETERANS
AFFAIRS
MEDICAL SYSTEM.
(a) DVA As a Participant in Health Care Reform.
(1) In general. Title 38, United States Code, is amended by inserting
after chapter 17 the following new chapter:
``CHAPTER 18 ELIGIBILITY AND BENEFITS UNDER HEALTH SECURITY ACT
``SUBCHAPTER I GENERAL
``1801. Definitions.
``SUBCHAPTER II ENROLLMENT
``1811. Enrollment: veterans.
``1812. Enrollment: CHAMPVA eligibles.
``1813. Enrollment: family members.
``SUBCHAPTER III BENEFITS
``1821. Benefits for VA enrollees.
``1822. Chapter 17 benefits described.
``1823. Entitlement to chapter 17 benefits for certain veterans.
``1824. Supplemental benefits packages and policies.
``1825. Limitation regarding veterans enrolled with health plans outside
Department.
``SUBCHAPTER IV FINANCIAL MATTERS
``1831. Premiums, copayments, etc..
``1832. Medicare coverage and reimbursement.
``1833. Recovery of cost of certain care and services.
``1834. Health Plan Funds.
``SUBCHAPTER I GENERAL
`` 1801. Definitions
``For purposes of this chapter:
``(1) The term `health plan' means an entity that has been certified
under the Health Security Act as a health plan.
``(2) The term `VA health plan' means a health plan that is operated by
the Secretary under section 7341 of this title.
``(3) The term `VA enrollee' means an individual enrolled under the
Health Security Act in a VA health plan.
``SUBCHAPTER II ENROLLMENT
`` 1811. Enrollment: veterans
``Each veteran who is an eligible individual within the meaning of
section 1001 of the Health Security Act may enroll with a VA health plan.
A veteran who wants to receive the comprehensive benefit package through
the Department shall enroll with a VA health plan.
`` 1812. Enrollment: CHAMPVA eligibles
``An individual who is eligible for benefits under section 1713 of this
title and who is eligible to enroll in a health plan pursuant to section
1001 of the Health Security Act may enroll under that Act with a VA
health plan in the same manner as a veteran.
`` 1813. Enrollment: family members
``(a) The Secretary may authorize a VA health plan to enroll members of
the family of an enrollee under section 1811 or 1812 of this title,
subject to payment of premiums, deductibles, copayments, and coinsurance
as required under the Health Security Act.
``(b) For purposes of subsection (a), an enrollee's family is those
individuals (other than the enrollee) included within the term `family'
as defined in section 1011(b) of the Health Security Act.
``SUBCHAPTER III BENEFITS
`` 1821. Benefits for VA enrollees
``The Secretary shall ensure that each VA health plan provides to each
individual enrolled with it the items and services in the comprehensive
benefit package under the Health Security Act.
`` 1822. Chapter 17 benefits described
``The Secretary shall provide to each veteran described in section
1823(a) of this title the care and services that are authorized to be
provided under chapter 17 of this title in accordance with the terms and
conditions applicable to that care under such chapter, notwithstanding
that such care and services are not included in the comprehensive benefit
package.
`` 1823. Entitlement to chapter 17 benefits for certain veterans
``(a) The following veterans are eligible for additional care and
services as described in section 1822 of this title:
``(1) Any veteran with a service-connected disability.
``(2) Any veteran whose discharge or release from the active military,
naval or air service was for a disability incurred or aggravated in the
line of duty.
``(3) Any veteran who is in receipt of, or who, but for a suspension
pursuant to section 1151 of this title (or both such a suspension and the
receipt of retired pay), would be entitled to disability compensation,
but only to the extent that such a veteran's continuing eligibility for
such care is provided for in the judgment or settlement provided for in
such section.
``(4) Any veteran who is a former prisoner of war.
``(5) Any veteran of the Mexican border period or World War I.
``(6) Any veteran who is unable to defray the expenses of necessary
care as determined under section 1722(a) of this title.
``(b) In the case of a veteran who is eligible to receive care or
services under section 1710(a)(1)(G) of this title for a disability which
may be associated with exposure to a toxic substance, radiation, or
environmental hazard, the Secretary shall furnish such care or services
to that veteran.
``(c) A veteran covered by subsection (a) or (b)
``(1) is eligible for care and services described in that subsection
whether or not such veteran is a VA enrollee; and
``(2) shall not be subject to any charge or any other cost for such
care and services.
`` 1824. Supplemental benefits packages and policies
``(a)(1) In order to meet the special needs of veterans, the Secretary
may offer to veterans supplemental health benefits packages for health
care services not included in the comprehensive benefit package. A
veteran eligible under section 1823 of this title to receive the health
care services described in section 1822 of this title may not be offered
a supplemental health benefits package under this subsection. The
supplemental health benefits packages offered under this subsection may
consist of any or all of the benefits that the Secretary may provide
under chapter 17 of this title that are not included in the comprehensive
benefit package.
``(2) The Secretary shall charge a premium for a supplemental health
benefits package under this subsection. The amount of such premium shall
be established so as to cover the actual and full costs of such care.
``(b) A VA health plan may offer supplemental health benefits policies
for health care services not provided under chapter 17 of this title and
cost sharing policies consistent with the requirements of part 2 of
subtitle E of title I of the Health Security Act.
`` 1825. Limitation regarding veterans enrolled with health plans outside
Department
``A veteran who is residing in a regional alliance area in which the
Department operates a health plan and who is enrolled in a health plan
that is not operated by the Department may be provided the items and
services in the comprehensive benefit package by a VA health plan only if
the plan is reimbursed for the actual and full cost of the care provided.
``SUBCHAPTER IV FINANCIAL MATTERS
`` 1831. Premiums, copayments, etc.
``(a) In the case of a veteran described in section 1823(a) of this
title who is a VA enrollee, the Secretary may not impose or collect from
the veteran a cost-share charge of any kind (whether a premium,
copayment, deductible, coinsurance charge, or other charge). The
Secretary shall make such arrangements as necessary with health alliances
in order to carry out this subsection.
``(b) For other VA enrollees, the Secretary shall charge premiums and
establish copayments, deductibles, and coinsurance amounts. The premium
rate, and the rates for deductibles and copayments, for each VA health
plan shall be established by that health plan based on rules established
by the health alliance under which it is operating.
`` 1832. Medicare coverage and reimbursement
``(a) For purposes of any program administered by the Secretary of
Health and Human Services under title XVIII of the Social Security Act, a
VA health plan or Department facility shall be deemed to be a Medicare
provider.
``(b)(1) The Secretary of Health and Human Services shall enter into an
agreement with a VA health plan or Department health-care facility to
treat such plan or facility as a Medicare HMO in any case in which that
health plan or facility seeks to enter into such an agreement.
``(2) For purposes of this section, the term `Medicare HMO' means an
eligible organization under section 1876 of the Social Security Act.
``(c) In the case of care provided to a veteran other than a veteran
described in section 1823(a) of this title who is eligible for benefits
under the Medicare program under title XVIII of the Social Security Act,
the Secretary of Health and Human Services shall reimburse a VA health
plan or Department health-care facility providing services as a Medicare
provider or Medicare HMO on the same basis as that Secretary reimburses
other Medicare providers or Medicare HMOs, respectively. The Secretary of
Health and Human Services shall include with each such reimbursement a
Medicare explanation of benefits.
``(d) When the Secretary provides care to a veteran for which the
Secretary receives reimbursement under this section, the Secretary shall
require the veteran to pay to the Department any applicable deductible or
copayment that is not covered by Medicare.
`` 1833. Recovery of cost of certain care and services
``(a) In the case of an individual provided care or services through a
VA health plan who has coverage under a supplemental health insurance
policy pursuant to part 2 of subtitle E of title I of the Health Security
Act or under any other provision of law, or who has coverage under a
Medicare supplemental health insurance plan (as defined in the Health
Security Act) or under any other provision of law, the Secretary has the
right to recover or collect charges for care or services (as determined
by the Secretary, but not including care or services for a
service-connected disability) from the party providing that coverage to
the extent that the individual (or the provider of the care or services)
would be eligible to receive payment for such care or services from such
party if the care or services had not been furnished by a department or
agency of the United States.
``(b) The provisions of subsections (b) through (f) of section 1729 of
this title shall apply with respect to claims by the United States under
subsection (a) in the same manner as they apply to claims under
subsection (a) of that section.
`` 1834. Health Plan Funds
``(a) The Secretary shall establish for each VA health plan a separate
revolving fund.
``(b) Any amount received by the Department by reason of the furnishing
of health care by a VA health plan or the enrollment of an individual
with a VA health plan (including amounts received as premiums, premium
discount payments, copayments or coinsurance, and deductibles, amounts
received as third-party reimbursements, and amounts received as
reimbursements from another health plan for care furnished to one of its
enrollees) shall be credited to the revolving fund of that health plan.
``(c) Notwithstanding subsection (b), a VA health plan may not retain
amounts received for care furnished to a VA enrollee in a case in which
the costs of such care have been covered by appropriations. Such amounts
shall be deposited in the General Fund of the Treasury.
``(d) Each revolving fund for a health plan shall be managed by that
health plan.
``(e) Amounts in a revolving fund for a health plan are hereby made
available for the expenses of the delivery of the items and services in
the comprehensive benefit package by the health plan.''.
(2) The table of chapters at the beginning of part II of title 38,
United States Code, is amended by inserting after the item relating to
chapter 17 the following new item:
I60``18. Benefits and Eligibility Under Health Security Act I521801.''.
(b) Preservation of Existing Benefits for Facilities Not Operating as
health plans. (1) Chapter 17 of title 38, United States Code, is amended by
inserting after section 1704 the following new section:
`` 1705. Facilities not operating within health plans; veterans not
eligible to enroll in health plans
``The provisions of this chapter shall apply with respect to the
furnishing of care and services
``(1) by any facility of the Department that is not operating as or
within a health plan certified as a health plan under the Health Security
Act; and
``(2) to any veteran who is an eligible individual with the meaning of
section 1001 of the Health Security Act.''.
(2) The table of sections at the beginning of such chapter is amended
by inserting after the item relating to section 1704 the following new
item:
``1705. Facilities not operating within health plans; veterans not eligible
to enroll in health plans.''.
SEC. 8102. ORGANIZATION OF DEPARTMENT OF VETERANS AFFAIRS FACILITIES AS
HEALTH
PLANS.
(a) In General. Chapter 73 of title 38, United States Code, is amended
(1) by redesignating subchapter IV as subchapter V; and
(2) by inserting after subchapter III the following new subchapter:
``SUBCHAPTER IV PARTICIPATION AS PART OF NATIONAL HEALTH CARE REFORM
`` 7341. Organization of health care facilities as health plans
``(a) The Secretary shall organize health plans and operate Department
facilities as or within health plans under the Health Security Act. The
Secretary shall prescribe regulations establishing standards for the
operation of Department health care facilities as or within health plans
under that Act. In prescribing those standards, the Secretary shall
assure that they conform, to the maximum extent practicable, to the
requirements for health plans generally set forth in part 1 of subtitle E
of title I of the Health Security Act.
``(b) Within a geographic area or region, health care facilities of the
Department located within that area or region may be organized to operate
as a single health plan encompassing all Department facilities within
that area or region or may be organized to operate as several health
plans.
``(c) In carrying out responsibilities under the Health Security Act, a
State (or a State-established entity)
``(1) may not impose any standard or requirement on a VA health plan
that is inconsistent with this section or any regulation prescribed under
this section or other Federal laws regarding the operation of this
section; and
``(2) may not deny certification of a VA health plan under the Health
Security Act on the basis of a conflict between a rule of a State or
health alliance and this section or regulations prescribed under this
section or other Federal laws regarding the operation of this section.
`` 7342. Contract authority for facilities operating as or within health
plans
``The Secretary may enter into a contract (without regard to provisions
of law requiring the use of competitive procedures) for the provision of
services by a VA health plan in any case in which the Secretary
determines that such contracting is more cost-effective than providing
such services directly through Department facilities or when such
contracting is necessary because of geographic inaccessibility.
`` 7343. Resource sharing authority: facilities operating as or within
health plans
``The Secretary may enter into agreements under section 8153 of this
title with other health care plans, with health care providers, and with
other health industry organizations, and with individuals, for the
sharing of resources of the Department through facilities of the
Department operating as or within health plans.
`` 7344. Administrative and personnel flexibility
``(a) In order to carry out this subchapter, the Secretary may
``(1) carry out administrative reorganizations of the Department
without regard to those provisions of section 510 of this title following
subsection (a) of that section; and
``(2) enter into contracts for the performance of services previously
performed by employees of the Department without regard to section
8110(c) of this title.
``(b) The Secretary may establish alternative personnel systems or
procedures for personnel at facilities operating as or with health plans
under the Health Security Act whenever the Secretary considers such
action necessary in order to carry out the terms of that Act.
``(c) Subject to the provisions of section 1404 of the Health Security
Act, the Secretary may carry out appropriate promotional, advertising,
and marketing activities to inform individuals of the availability of
facilities of the Department operating as or within health plans. Such
activities may only be carried out using nonappropriated funds.
`` 7345. Funding provisions: grants and other sources of assistance
``The Secretary may apply for and accept, if awarded, any grant or
other source of funding that is intended to meet the needs of special
populations and that but for this section is unavailable to facilities of
the Department or to health plans operated by the Government if funds
obtained through the grant or other source of funding will be used
through a facility of the Department operating as or within a health
plan.''.
(b) Clerical Amendment. The table of sections at the beginning of chapter
73 is amended by striking out the item relating to the heading for
subchapter IV and inserting in lieu thereof the following:
``Subchapter IV Participation as Part of National Health Care Reform
``7341. Organization of health care facilities as health plans.
``7342. Contract authority for facilities operating as or within health
plans.
``7343. Resource sharing authority: facilities operating as or within
health plans.
``7344. Administrative and personnel flexibility.
``7345. Funding provisions: grants and other sources of assistance.
``Subchapter V Research Corporations''.
Subtitle C. Federal Employees Health Benefits Program
SEC. 8201. DEFINITIONS.
Except as otherwise specifically provided, in this subtitle:
(1) Abroad. The term ``abroad'' means outside the United States.
(2) Annuitant, etc. The terms ``annuitant'', ``employee'', and
``Government'', have the same respective meanings as are given such terms
by section 8901 of title 5, United States Code.
(3) Employees health benefits fund. The term ``Employees Health
Benefits Fund'' means the fund under section 8909 of title 5, United
States Code.
(4) FEHBP. The term ``FEHBP'' means the health insurance program under
chapter 89 of title 5, United States Code.
(5) FEHBP plan. The term ``FEHBP plan'' has the same meaning as is
given the term ``health benefits plan'' by section 8901(6) of title 5,
United States Code.
(6) FEHBP termination date. The term ``FEHBP termination date'' means
the date (specified in section 8202) after which FEHBP ceases to be in
effect.
(7) Retired employees health benefits fund. The term ``Retired
Employees Health Benefits Fund'' means the fund under section 8 of the
Retired Federal Employees Health Benefits Act (Public Law 86-724; 74
Stat. 851).
(8) RFEHBP. The term ``RFEHBP'' means the health insurance program
under the Retired Federal Employees Health Benefits Act.
SEC. 8202. FEHBP TERMINATION.
Chapter 89 of title 5, United States Code, is repealed effective as of
December 31, 1997, and all contracts under such chapter shall terminate
not later than such date.
SEC. 8203. TREATMENT OF FEDERAL EMPLOYEES, ANNUITANTS, AND OTHER
INDIVIDUALS
(WHO WOULD OTHERWISE HAVE BEEN ELIGIBLE FOR FEHBP) UNDER HEALTH
PLANS.
(a) Applicability. This section sets forth rules applicable, after the
FEHBP termination date, with respect to individuals who
(1) are eligible individuals under section 1001; and
(2) but for this subtitle, would be eligible to enroll in a FEHBP plan.
(b) Federal Employees.
(1) Same treatment as non federal employees. A Federal employee shall
be treated in the same way, for purposes of provisions of this Act
outside of this subtitle, as if that individual were a non-Federal
employee, including for purposes of any requirements relating to
enrollment, individual or family premium payments, and employer premium
payments.
(2) Employer premium payments. Any employer premium payment required
with respect to the employment of a Federal employee shall be payable
from the appropriation or fund from which any Government contribution on
behalf of such employee would have been payable under FEHBP.
(3) Optional offer of fehbp supplemental plans. The Federal Government
may, but is not required to
(A) offer to Federal employees one or more FEHBP supplemental plans
developed under subsection (f)(1); and
(B) make a Government contribution with respect to the premium for
such a plan.
Any Government contribution under subparagraph (B) shall be payable
from the same appropriation or fund as would a Government contribution
under paragraph (2) on behalf of the Federal employee involved.
(4) Definitions. In this subsection:
(A) Federal employee. The term ``Federal employee'' means an
``employee'' as defined by section 8201.
(B) Non-federal employee. The term ``non Federal employee'' means an
``employee'' as defined by section 1901.
(c) Annuitants.
(1) Health plan.
(A) Authority to make certain withholdings from annuities. The Office
of Personnel Management may, on the request of an annuitant enrolled in
a health plan, withhold from the annuity of such annuitant any premiums
required for such enrollment. The Office shall forward any amounts so
withheld to the appropriate fund or as otherwise indicated in the
request. A request under this subparagraph shall contain such
information, and otherwise be made in such form and manner, as the
Office shall by regulation prescribe.
(B) Payment of alliance credit liability for annuitants below age 55.
In the case of an annuitant who does not satisfy the eligibility
requirements under section 6115, a Government contribution shall be
made equal to such amount as is necessary to reduce the employee's
liability under section 6111 to zero.
(2) FEHBP supplemental plan.
(A) Current annuitants.
(i) In general. Each current annuitant
(I) shall be eligible to enroll in FEHBP supplemental plans developed
under subsection (f)(1); and
(II) shall be eligible for the Government contribution amount
described in clause (ii) toward the premium for such a plan.
(ii) Government contribution amount. The Office of Personnel
Management shall specify a level of Government contribution under
this paragraph for a FEHBP supplemental plan. Such level
(I) shall reasonably reflect the portion of the Government
contributions (last provided under FEHBP) attributable to the portion
of FEHBP benefits which the plan is designed to replace; and
(II) shall be applied toward premiums for such a plan.
(B) Future annuitants. In the case of a future annuitant, the Federal
Government may, but is not required
(i) to offer to such an annuitant one or more FEHBP supplemental
plans developed under subsection (f)(1); and
(ii) to make a Government contribution with respect to the premium
for such a plan.
(C) Definitions. In this paragraph:
(i) Current annuitant. The term ``current annuitant'' means an
individual who is residing in a State on January 1, 1998, and, on the
day before such date, was
(I) enrolled in a FEHBP plan as an annuitant; or
(II) covered under a FEHBP plan as a family member (but only if such
individual would otherwise have been eligible to enroll in a FEHBP plan
as an annuitant).
(ii) Future annuitant. The term ``future annuitant'' means an
annuitant who is not a current annuitant.
(d) Individuals Who Would Not Be Eligible for a Government Contribution
Under FEHBP.
(1) In general. In the case of an individual described in paragraph (2)
(A) the Federal Government may, but is not required to, offer one or
more FEHBP supplemental plans developed under subsection (f)(1); and
(B) no Government contribution shall be payable with respect to the
premium for such a plan.
(2) Applicability. This subsection shall apply with respect to any
individual who (but for this subtitle) would be eligible to enroll in a
FEHBP plan, but would not be eligible for a Government contribution
toward any such plan.
(e) Medicare-Eligible Individuals.
(1) Current medicare-eligible individuals.
(A) In general. Each current medicare-eligible individual
(i) shall be eligible to enroll in medicare supplemental plans
developed under subsection (f)(2); and
(ii) if such individual would (but for this subtitle) have been
eligible for a Government contribution under FEHBP (assuming such
individual were then enrolled thereunder), shall be eligible for the
Government medicare contribution amount described in subparagraph (B)
toward the premium for such a plan or toward the premium of a
medicare select plan (as defined in paragraph (3)).
(B) Medicare contribution amount. The Office of Personnel Management
shall specify a level of Government contribution under this paragraph
for a FEHBP medicare supplemental plan. Such level
(i) shall reasonably reflect the portion of the Government
contributions (last provided under FEHBP) attributable to the portion
of FEHBP benefits which the plan is designed to replace; and
(ii) except as otherwise provided in paragraph (3), shall be
applied toward premiums for such a plan.
(2) Future medicare-eligible individuals. In the case of a future
medicare-eligible individual, the Federal Government may, but is not
required to
(A) offer to such a medicare-eligible individual one or more FEHBP
medicare supplemental plans developed under subsection (f)(2); and
(B) make a Government contribution with respect to the premium for
such a plan.
(3) Application of contribution toward medicare hmo option.
(A) Election. A medicare-eligible individual may elect to have the
amount of the Government contribution described in paragraph (1)(B) or
referred to in paragraph (2)(B) applied toward premiums for enrollment
with an eligible organization under a risk-sharing contract under
section 1876 of the Social Security Act.
(B) Level contribution rule. The level of such Government
contribution on behalf of an individual shall be determined without
taking into account any election under subparagraph (A).
(4) Definitions. In this subsection:
(A) Current medicare-eligible individual. The term ``current
medicare-eligible individual'' means an individual who is residing in a
State on January 1, 1998, and, on the day before such date, was a
medicare-eligible individual.
(B) Future medicare-eligible individual. The term ``future
medicare-eligible individual'' means a medicare-eligible individual who
is not a current medicare-eligible individual.
(5) Inapplicability. Subsections (b) through (d) shall not apply with
respect to a medicare-eligible individual.
(f) Development of Supplemental Plans.
(1) FEHBP supplemental plans. The Office of Personnel Management shall
develop one or more FEHBP supplemental plans which are supplemental
health benefit policies or cost sharing policies (as defined in section
1421(b)). Each such plan shall
(A) be consistent with the applicable requirements of part 2 of
subtitle E of title I (including the requirements under section
1423(f)); and
(B) reflect (taking into consideration the benefits in the
comprehensive benefit package) the overall level of benefits generally
afforded under FEHBP (as last in effect).
(2) FEHBP medicare supplemental plans. The Office of Personnel
Management shall develop one or more medicare supplemental plans. Each
such plan shall
(A) offer benefits which shall include the core group of basic
benefits identified under section 1882(p)(2) of the Social Security
Act; and
(B) reflect (taking into consideration the benefits provided under
the medicare program) the overall level of benefits generally afforded
under FEHBP (as last in effect).
(g) Authorization of appropriations. The Government contributions
authorized by this section on behalf of an annuitant (including an
annuitant who is a medicare-eligible individual) shall be paid from annual
appropriations which are authorized to be made for that purpose and which
may be made available until expended.
(h) Fund.
(1) Establishment. There shall be established in the Treasury of the
United States a fund into which shall be paid all contributions relating
to any
(A) FEHBP supplemental plan developed under subsection (f)(1);
(B) FEHBP medicare supplemental plan developed under subsection
(f)(2); or
(C) health insurance program established under section 8204.
(2) Administration and use. The fund shall be administered by the
Office of Personnel Management, and any monies in the fund shall be
available for purposes of the plan or program (referred to in paragraph
(1)) to which they are attributable.
SEC. 8204. TREATMENT OF INDIVIDUALS RESIDING ABROAD.
(a) In General. After the FEHBP termination date, individuals residing
abroad who (but for this subtitle) would be eligible to enroll in a FEHBP
plan shall be eligible for health insurance under a program which the
Office of Personnel Management shall by regulation establish.
(b) Requirement. To the extent practicable, coverage and benefits
provided to individuals under such program shall be equal to the coverage
and benefits which would be available to them if they were residing in the
United States.
(c) Government Contributions. Any Government contribution payable under
such program shall be made from the appropriation or fund from which any
Government contribution would have been payable under FEHBP (if any) on
behalf of the individual involved, except that, in the case of an
annuitant, any such contribution shall be payable from amounts appropriated
pursuant to section 8203(g).
SEC. 8205. TRANSITION AND SAVINGS PROVISIONS.
(a) Employees Health Benefits Fund.
(1) Temporary continued availability. Notwithstanding section 8202, the
Employees Health Benefits Fund shall be maintained, and amounts in such
Fund shall remain available, after the FEHBP termination date, for such
period of time as the Office of Personnel Management considers necessary
in order to satisfy any outstanding claims.
(2) Final disbursement. After the end of the period referred to in
paragraph (1), any amounts remaining in the Fund shall be disbursed
(between the Government and former participants in FEHBP) in accordance
with a plan which the Office shall prepare, consistent with the
cost-sharing ratio between the Government and plan enrollees during the
final contract term. The details of any such plan shall be submitted to
the President and the Congress at least 1 year before the date of its
proposed implementation.
(b) Proceedings. After the FEHBP termination date, chapter 89 of title 5,
United States Code (as last in effect) shall be considered to have remained
in effect for purposes of any suit, action, or other proceeding with
respect to any liability incurred or violation which occurred on or before
such date.
(c) RFEHBA.
(1) Repeal. The Retired Federal Employees Health Benefits Act (Public
Law 86-724; 74 Stat. 849) is repealed effective as of the FEHBP
termination date.
(2) Related provisions. After the FEHBP termination date
(A) the Retired Employees Health Benefits Fund shall temporarily
remain available, and amounts in that fund shall subsequently be
disbursed, in a manner comparable to that provided for under subsection
(a); and
(B) retired employees who, but for this subtitle, would be eligible
for coverage under the Retired Federal Employees Health Benefits Act
shall be treated, for purposes of this subtitle, as if they were
annuitants (subject to any differences in the overall level of coverage
or benefits generally afforded them under FEHBP and RFEHBP,
respectively, as last in effect).
(3) Regulations. Regulations prescribed under section 8206 to carry out
this subsection shall include any necessary provisions relating to
individuals residing abroad.
SEC. 8206. REGULATIONS.
The Office of Personnel Management shall prescribe any regulations
which may be necessary to carry out this subtitle.
SEC. 8207. TECHNICAL AND CONFORMING AMENDMENTS.
(a) OPM's Annual Report on FEHBP. Subsection (c) of section 1308 of title
5, United States Code, is repealed.
(b) Other References to FEHBP. Any reference in any provision of law to
the health insurance program under chapter 89 of title 5, United States
Code (or any aspect of such program) shall be considered to be a reference
to the health insurance program under subtitle C of title VIII of the
Health Security Act (or corresponding aspect), subject to such
clarification as may be provided, or except as may otherwise be provided,
in regulations prescribed by the agency or other authority responsible for
the administration of such provision.
(c) Omnibus Budget Reconciliation Act of 1993. Effective as of the date
of the enactment of this Act, section 11101(b)(3) of the Omnibus Budget
Reconciliation Act of 1993 (Public Law 103-66; 107 Stat. 413) is amended by
striking ``September 30, 1998'' and inserting ``December 31, 1997''.
(d) Effective Date. Except as provided in subsection (c), this section
and the amendments made by this section shall take effect on the day after
the FEHBP termination date.
Subtitle D. Indian Health Service
SEC. 8301. DEFINITIONS.
For the purposes of this subtitle
(1) the term ``health program of the Indian Health Service'' means a
program which provides health services under this Act through a facility
of the Indian Health Service, a tribal organization under the authority
of the Indian Self-Determination Act or a self-governance compact, or an
urban Indian program;
(2) the term ``reservation'' means the reservation of any federally
recognized Indian tribe, former Indian reservations in Oklahoma, and
lands held by incorporated Native groups, regional corporations, and
village corporations under the provisions of the Alaska Native Claims
Settlement Act (43 U.S.C. 1601 et seq.);
(3) the term ``urban Indian program'' means any program operated
pursuant to title V of the Indian Health Care Improvement Act; and
(4) the terms ``Indian'', ``Indian tribe'', ``tribal organization'',
``urban Indian'', ``urban Indian organization'', and ``service unit''
have the same meaning as when used in the Indian Health Care Improvement
Act (25 U.S.C. 1601 et seq.).
SEC. 8302. ELIGIBILITY AND HEALTH SERVICE COVERAGE OF INDIANS.
(a) Eligibility. An eligible individual, as defined in section 1001(c),
is eligible to enroll in a health program of the Indian Health Service if
the individual is
(1) an Indian, or a descendent of a member of an Indian tribe who
belongs to and is regarded as an Indian by the Indian community in which
the individual lives, who resides on or near an Indian reservation or in
a geographical area designated by statute as meeting the requirements of
being on or near an Indian reservation notwithstanding the lack of an
Indian reservation;
(2) an urban Indian; or
(3) an Indian described in section 809(b) of the Indian Health Care
Improvement Act (25 U.S.C. 1679(b)).
(b) Election. An individual described in subsection (a) may elect a
health program of the Indian Health Service instead of a health plan.
(c) Enrollment for Benefits. An individual who elects a health program of
the Indian Health Service under subsection (b) shall enroll in such program
through a service unit, tribal organization, or urban Indian program. An
individual who enrolls in such program is not subject to any charge for
health insurance premiums, deductibles, copayments, coinsurance, or any
other cost for health services provided under such program.
(d) Payments by Individuals Who Do not Enroll. If an individual described
in subsection (a) does not enroll in a health program of the Indian Health
Service, no payment shall be made by the Indian Health Service to the
individual (or on behalf of the individual) with respect to premiums
charged for enrollment in an applicable health plan or any other cost of
health services under the applicable health plan which the individual is
required to pay.
SEC. 8303. SUPPLEMENTAL INDIAN HEALTH CARE BENEFITS.
(a) In General. All individuals described in sections 8302(a) remain
eligible for such benefits under the laws administered by the Indian Health
Service as supplement the comprehensive benefit package. The individual
shall not be subject to any charge or any other cost for such benefits.
(b) Authorization of Appropriations. In addition to amounts otherwise
authorized to be appropriated, there is authorized to be appropriated to
carry out this section $180,000,000 for fiscal year 1995, $200,000,000 for
each of the fiscal years 1996 through 1999, and such sums as may be
necessary for fiscal year 2000 and each fiscal year thereafter.
SEC. 8304. HEALTH PLAN AND HEALTH ALLIANCE REQUIREMENTS.
(a) Comprehensive Benefit Package. The Secretary shall ensure that the
comprehensive benefit package is provided by all health programs of the
Indian Health Service effective January 1, 1999, notwithstanding section
1001(a).
(b) Applicable Requirements of Health Plans. In addition to subsection
(a), the Secretary shall determine which other requirements relating to
health plans apply to health programs of the Indian Health Service.
(c) Certification. Effective January 1, 1999, all health programs of the
Indian Health Service must meet the certification requirements for health
plans, as required by the Secretary under this section, as certified from
time to time by the Secretary. Before January 1, 1999, all such health
programs shall, to the extent practicable, meet such certification
requirements.
(d) Health Alliance Requirements. The Secretary shall determine which
requirements relating to health alliances apply to the Indian Health
Service.
SEC. 8305. EXEMPTION OF TRIBAL GOVERNMENTS AND TRIBAL ORGANIZATIONS
FROM
EMPLOYER PAYMENTS.
A tribal government and a tribal organization under the Indian
Self-Determination and Educational Assistance Act or a self-governance
compact shall be exempt from making employer premium payments as an
employer under section 6121.
SEC. 8306. PROVISION OF HEALTH SERVICES TO NON-ENROLLEES AND
NON-INDIANS.
(a) Contracts With Health Plans.
(1) In general. A health program of the Indian Health Service, a
service unit, a tribal organization, or an urban Indian organization
operating within a health program may enter into a contract with a health
plan for the provision of health care services to individuals enrolled in
such health plan if the program, unit, or organization determines that
the provision of such health services will not result in a denial or
diminution of health services to any individual described in section
8302(a) who is enrolled for health services provided by such program,
unit, or organization.
(2) Reimbursement. Any contract entered into pursuant to paragraph (1)
shall provide for reimbursement to such program, unit, or organization in
accordance with the essential community provider provisions of section
1431(c), as determined by the Secretary.
(b) Family Treatment.
(1) Determination to open enrollment. A health program of the Indian
Health Service may open enrollment to family members of individuals
described in section 8302(a).
(2) Election. If a health program of the Indian Health Service opens
enrollment to family members of individuals described in section 8302(a),
an individual described in that section may elect family enrollment in
the health program instead of in a health plan.
(3) Enrollment.
(A) In general. An individual who elects family enrollment under
paragraph (2) in a health program of the Indian Health Service shall
enroll in such program.
(B) Applicable individual charges. The individual who enrolls in such
program under subparagraph (A) is not subject to any charge for health
insurance premiums, deductibles, copayments, coinsurance, or any other
cost for health services provided under such program attributable to
the individual, but the family members who are not eligible for a
health program of the Indian Health Service under section 8302(a) are
subject to all such charges.
(C) Applicable employer charges. Employers, other than tribal
governments and tribal organizations exempt under section 8305, are
liable for making employer premium payments as an employer under
section 6121 in the case of any family member enrolled under this
subsection who is not eligible for a health program of the Indian
Health Service under section 8302(a).
(4) Premium.
(A) Establishment and collection. The Secretary shall establish a
premium for all family members enrolled in a health program of the
Indian Health Service under this paragraph who are not eligible for a
health program of the Indian Health Service under section 8302(a). The
Secretary shall collect each premium payment owed under this paragraph.
(B) Reduction. The Secretary shall provide for a process for premium
reduction which is the same as the process, and uses the same
standards, used by regional alliances for the areas in which
individuals described in subparagraph (A), except that in computing the
family share of the premiums the Secretary shall use the lower of the
premium quoted or the reduced weighted average accepted bid for the
reference regional alliance.
(C) Payment by secretary. The Secretary shall pay to each health
program of the Indian Health Service, in the same manner as payments
under section 6201, amounts equivalent to the amount of payments that
would have been made to a regional alliance if the individuals
described in subparagraph (A) were enrolled in a regional alliance
health plan (with a final accepted bid equal to the reduced weighted
average accepted bid premium for the regional alliance).
(c) Essential Community Provider.
(1) Health services. If a health program of the Indian Health Service,
a service unit, a tribal organization, or an urban Indian organization
operating within a health program elects to be an essential community
provider under section 1431, an individual described in paragraph (2)
enrolled in a health plan other than a health program of the Indian
Health Service may receive health services from that essential community
provider.
(2) Individual covered. An individual referred to in paragraph (1) is
an individual who
(A) is described in section 8303(a)(1); or
(B) is a family member described in subsection (b) who does not
enroll in a health program of the Indian Health Service.
SEC. 8307. PAYMENT BY OTHER PAYORS.
(a) Payment for Services Provided by Indian Health Service Programs.
Nothing in this subtitle shall be construed as amending section 206, 401,
or 402 of the Indian Health Care Improvement Act (relating to payments on
behalf of Indians for health services from other Federal programs or from
other third party payors).
(b) Payment for Services Provided by Contractors. Nothing in this
subtitle shall be construed as affecting any other provision of law,
regulation, or judicial or administrative interpretation of law or policy
concerning the status of the Indian Health Service as the payor of last
resort for Indians eligible for contract health services under a health
program of the Indian Health Service.
SEC. 8308. CONTRACTING AUTHORITY.
Section 601(d)(1)(B) of the Indian Health Care Improvement Act (25 U.S.C.
1661(d)(1)(B)) is amended by inserting ``(including personal services for
the provision of direct health care services)'' after ``goods and
services''.
SEC. 8309. CONSULTATION.
The Secretary shall consult with representatives of Indian tribes, tribal
organizations, and urban Indian organizations annually concerning health
care reform initiatives that affect Indian communities.
SEC. 8310. INFRASTRUCTURE.
(a) Facilities. The Secretary, acting through the Indian Health Service,
may expend amounts appropriated pursuant to section 8313 for the
construction and renovation of hospitals, health centers, health stations,
and other facilities for the purpose of improving and expanding such
facilities to enable the delivery of the full array of items and services
guaranteed in the comprehensive benefit package.
(b) Capital Financing. There is established in the Indian Health Service
a revolving loan program. Under the program, the Secretary, acting through
the Indian Health Service, shall provide guaranteed loans under such terms
and conditions as the Secretary may prescribe to providers within the
Indian Health System to improve and expand health care facilities to enable
the delivery of the full array of items and services guaranteed in the
comprehensive benefit package.
SEC. 8311. FINANCING.
(a) Establishment of Fund. Each health program of the Indian Health
Service shall establish a comprehensive benefit package fund (hereafter in
this section referred to as the ``fund'').
(b) Deposits. There shall be deposited into the fund the following:
(1) All amounts received as employer premium payments pursuant to
section 1351(e)(3).
(2) All amounts received as family premium payments and premium
discount payments pursuant to section 8306(b)(4).
(3) All amounts appropriated for the fund for the purpose of providing
the comprehensive benefit package to individuals enrolled in a health
program of the Indian Health Service.
(4) Any other amount received with respect to health services for the
comprehensive benefit package.
(c) Administration and Expenditures.
(1) Management. The fund shall be managed by the health program of the
Indian Health Service.
(2) Expenditures. Expenditures may be made from the fund to provide for
the delivery of the items and services of the comprehensive benefit
package under the health program of the Indian Health Service.
(3) Availability of funds. Amounts in the fund established by a service
unit of the Indian Health Service under this section shall be available
without further appropriation and shall remain available until expended
for payments for the delivery of the items and services in the
comprehensive benefit package.
SEC. 8312. RULE OF CONSTRUCTION.
Unless otherwise provided by this Act, no part of this Act shall be
construed to rescind or otherwise modify any obligations, findings, or
purposes contained in the Indian Health Care Improvement Act (25 U.S.C.
1601 et seq.) and in the Indian Self-Determination and Education
Assistance Act.
SEC. 8313. AUTHORIZATIONS REGARDING PUBLIC HEALTH SERVICE INITIATIVES
FUND.
(a) Authorization of Appropriations. For the purpose of carrying out this
subtitle, there are authorized to be appropriated from the Public Health
Service Initiatives Fund (established in section 3701) $40,000,000 for
fiscal year 1995, $180,000,000 for fiscal year 1996, and $200,000,000 for
each of the fiscal years 1997 through 2000.
(b) Relation to Other Funds. The authorizations of appropriations
established in subsection (a) are in addition to any other authorizations
of appropriations that are available for the purposes described in such
subsection.
Subtitle E. Amendments to the Employee Retirement Income Security Act of 1974
SEC. 8401. GROUP HEALTH PLAN DEFINED.
Section 3 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002) is amended by adding at the end the following new paragraph:
``(42) The term `group health plan' means an employee welfare benefit
plan which provides medical care (as defined in section 213(d) of the
Internal Revenue Code of 1986) to participants or beneficiaries directly or
through insurance, reimbursement, or otherwise.''.
SEC. 8402. LIMITATION ON COVERAGE OF GROUP HEALTH PLANS UNDER TITLE I OF
ERISA.
(a) In General. Section 4 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1003) is amended
(1) in subsection (a), by striking ``subsection (b)'' and inserting
``subsections (b) and (c)'';
(2) in subsection (b), by striking ``The provisions'' and inserting
``Except as provided in subsection (c), the provisions''; and
(3) by adding at the end the following new subsection:
``(c) Coverage of Group Health Plans.
``(1) Limited inclusion. This title shall apply to a group health plan
only to the extent provided in this subsection.
``(2) Coverage under certain provisions with respect to certain plans.
``(A) In general. Except as provided in subparagraph (B), parts 1 and 4
of subtitle B shall apply to
``(i) a group health plan which is maintained by
``(I) a corporate alliance (as defined in section 1311(a) of the Health
Security Act), or
``(II) a member of a corporate alliance (as so defined) whose eligible
sponsor is described in section 1311(b)(1)(C) (relating to rural electric
cooperatives and rural telephone cooperative associations), and
``(ii) a group health plan not described in subparagraph (A) which
provides benefits which are permitted under paragraph (4) of section 1003
of the Health Security Act.
``(B) Inapplicability with respect to state-certified health plans.
Subparagraph (A) shall not apply with respect to any plan or portion
thereof which consists of a State-certified health plan (as defined in
section 1400(c) of the Health Security Act). The Secretary shall provide
by regulation for treatment as a separate group health plan of any
arrangement which would otherwise be treated under this title as part of
a group health plan to the extent necessary to carry out the purposes of
this title.
``(3) Civil actions by corporate alliance participants, beneficiaries,
and fiduciaries and by the secretary.
``(A) In general. Except as provided in subparagraph (B), in the case
of a group health plan to which parts 1 and 4 of subtitle B apply under
paragraph (2), section 502 shall apply with respect to a civil action
described in such section brought
``(i) by a participant, beneficiary, or fiduciary under such plan, or
``(ii) by the Secretary.
``(B) Exception where review is otherwise available under health
security act. Subparagraph (A) shall not apply with respect to any cause
of action for which, under section 5202(d) of the Health Security Act,
proceedings under sections 5203 and 5204 of such Act pursuant to
complaints filed under section 5202(b) of such Act, and review under
section 5205 of such Act of determinations made under such section 5204,
are the exclusive means of review.
``(4) Definitions and enforcement provisions. Sections 3, 501, 502,
503, 504, 505, 506, 507, 508, 509, 510, and 511 and the preceding
provisions of this section shall apply to a group health plan to the
extent necessary to effectively carry out, and enforce the requirements
under, the provisions of this title as they apply pursuant to this
subsection.
``(5) Applicability of preemption rules. Section 514 shall apply in the
case of any group health plan to which parts 1 and 4 of subtitle B apply
under paragraph (2).''.
(b) Reporting and Disclosure Requirements Applicable to Group Health
Plans.
(1) In general. Part 1 of subtitle B of title I of such Act is amended
(A) in the heading for section 110, by adding ``by pension plans'' at
the end;
(B) by redesignating section 111 as section 112; and
(C) by inserting after section 110 the following new section:
``special rules for group health plans
``Sec. 111. In General. The Secretary may by regulation provide
special rules for the application of this part to group health plans
which are consistent with the purposes of this title and the Health
Security Act and which take into account the special needs of
participants, beneficiaries, and health care providers under such
plans.
``(b) Expeditious Reporting and Disclosure. Such special rules may
include rules providing for
``(1) reductions in the periods of time referred to in this part,
``(2) increases in the frequency of reports and disclosures required
under this part, and
``(3) such other changes in the provisions of this part as may result
in more expeditious reporting and disclosure of plan terms and changes
in such terms to the Secretary and to plan participants and
beneficiaries,
``to the extent that the Secretary determines that the rules
described in this subsection are necessary to ensure timely reporting
and disclosure of information consistent with the purposes of this part
and the Health Security Act as they relate to group health plans.
``(c) Additional Requirements. Such special rules may include rules
providing for reporting and disclosure to the Secretary and to
participants and beneficiaries of additional information or at
additional times with respect to group health plans to which this part
applies under section 4(c)(2), if such reporting and disclosure would
be comparable to and consistent with similar requirements applicable
under the Health Security Act with respect to plans maintained by
regional alliances (as defined in such section 1301 of such Act) and
applicable regulations of the Secretary of Health and Human Services
prescribed thereunder.''.
(2) Clerical amendment. The table of contents in section 1 of such Act
is amended by striking the items relating to sections 110 and 111 and
inserting the following new items:
``Sec. 110. Alternative methods of compliance by pension plans.
``Sec. 111. Special rules for group health plans.
``Sec. 112. Repeal and effective date.''.
(d) Exclusion of Plans Maintained by Regional Alliances from Treatment as
Multiple Employer Welfare Arrangements. Section 3(40)(A) of such Act (29
U.S.C. 1002(40)(A)) is amended
(1) in clause (ii), by striking ``or'';
(2) in clause (iii), by striking the period and inserting ``, or''; and
(3) by adding after clause (iii) the following new clause:
``(iv) by a regional alliance (as defined in section 1301 of the Health
Security Act).''.
SEC. 8403. AMENDMENTS RELATING TO CONTINUATION COVERAGE.
(a) Period of Coverage. Subparagraph (D) of section 602(2) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1161(2)) is
amended
(1) by striking ``or'' at the end of clause (i), by striking the period
at the end of clause (ii) and inserting ``, or'', and by adding at the
end the following new clause:
``(iii) eligible for coverage under a comprehensive benefit package
described in section 1101 of the Health Security Act.'', and
(2) by striking ``or medicare entitlement'' in the heading and
inserting ``, medicare entitlement, or health security act eligibility''.
(b) Qualified Beneficiary. Section 607(3) of such Act (29 U.S.C. 1167(2))
is amended by adding at the end the following new subparagraph:
``(D) Special rule for individuals covered by health security act. The
term `qualified beneficiary' shall not include any individual who, upon
termination of coverage under a group health plan, is eligible for coverage
under a comprehensive benefit package described in section 1101 of the
Health Security Act.''
(c) Repeal Upon Implementation of Health Security Act.
(1) In general. Part 6 of subtitle B of title I of such Act (29 U.S.C.
601 et seq.) is amended by striking sections 601 through 608 and by
redesignating section 609 as section 601.
(2) Conforming amendments.
(A) Section 502(a)(7) of such Act (29 U.S.C. 1132(a)(7)) is amended
by striking ``609(a)(2)(A)'' and inserting ``601(a)(2)(A)''.
(B) Section 502(c)(1) is amended by striking ``paragraph (1) or (4)
of section 606''.
(C) Section 514 of such Act (29 U.S.C. 1144) is amended by striking
``609'' each place it appears in subsections (b)(7) and (b)(8) and
inserting ``601''.
(D) The table of contents in section 1 of such Act is amended by
striking the items relating to sections 601 through 609 and inserting
the following new item:
``Sec. 601. Additional standards for group health plans.''
(d) Effective Date.
(1) Subsections (a) and (b). The amendments made by subsections (a) and
(b) shall take effect on the date of the enactment of this Act.
(2) Subsection (c). The amendments made by subsection (c) shall take
effect on the earlier of
(A) January 1, 1998, or
(B) the first day of the first calendar year following the calendar
year in which all States have in effect plans under which individuals
are eligible for coverage under a comprehensive benefit package
described in section 1101 of this Act.
SEC. 8404. ADDITIONAL AMENDMENTS RELATING TO GROUP HEALTH PLANS.
(a) Regulations of the National Health Board Regarding Cases of Adoption.
Section 601(c) of such Act (as redesignated by section 8403) is amended by
adding at the end the following new subsection:
``(4) Regulations by national health board. The preceding provisions of
this subsection shall apply except to the extent otherwise provided in
regulations of the National Health Board under the Health Security Act.''.
(b) Coverage of Pediatric Vaccines. Section 601(d) of such Act (as
redesignated by section 8403) is amended by adding at the end the following
new sentence: ``The preceding sentence shall cease to apply to a group
health plan upon becoming a corporate alliance health plan pursuant to an
effective election of the plan sponsor to be a corporate alliance under
section 1311 of the Health Security Act.''.
(c) Technical Corrections.
(1) Subsection (a)(2)(B)(ii) of section 601 of such Act (as
redesignated by section 8403) is amended by striking ``section 13822''
and inserting ``section 13623''.
(2) Subsection (a)(4) of such section 601 is amended by striking
``section 13822'' and inserting ``section 13623''.
(3) Subsection (d) of such section 601 is amended by striking ``section
13830'' and inserting ``section 13631''.
SEC. 8405. PLAN CLAIMS PROCEDURES.
Section 503 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1133) is amended
(1) by inserting ``(a) In General. '' after ``Sec. 503.''; and
(2) by adding at the end the following new subsection:
``(b) Group Health Plans. In addition to the requirements of subsection
(a), a group health plan to which parts 1 and 4 apply under section
4(c)(2) shall comply with the requirements of section 5201 of the Health
Security Act (relating to health plan claims procedure).''.
SEC. 8406. EFFECTIVE DATES.
Except as otherwise provided in this subtitle, the amendments made by
this subtitle shall take effect on the earlier of
(1) January 1, 1998, or
(2) such date or dates as may be prescribed in regulations of the
National Health Board in connection with plans whose participants or
beneficiaries reside in any State which becomes a participating State
under the Health Security Act before January 1, 1998.
Subtitle F. Special Fund for WIC Program
SEC. 8501. ADDITIONAL FUNDING FOR SPECIAL SUPPLEMENTAL FOOD PROGRAM
FOR WOMEN,
INFANTS, AND CHILDREN (WIC).
(a) Authorization of Additional Appropriations. There is hereby
authorized to be appropriated for the special supplemental food program for
women, infants, and children (WIC) under section 17 of the Child Nutrition
Act of 1966, in addition to amounts otherwise authorized to be appropriated
for such program, such amounts as are necessary for the Secretary of the
Treasury to fulfill the requirements of subsection (b).
(b) WIC Fund.
(1) Credit. For each of fiscal years 1996 through 2000, the Secretary
of the Treasury shall credit to a special fund of the Treasury an amount
equal to
(A) $254,000,000 for fiscal year 1996,
(B) $407,000,000 for fiscal year 1997,
(C) $384,000,000 for fiscal year 1998,
(D) $398,000,000 for fiscal year 1999, and
(E) $411,000,000 for fiscal year 2000.
(2) Availability. Subject to paragraph (3), amounts in such fund
(A) shall be available only for the program authorized under section
17 of the Child Nutrition Act of 1966, exclusive of activities
authorized under section 17(m) of such Act, and
(B) shall be paid to the Secretary of Agriculture for such purposes.
(3) Limitation. For a fiscal year specified in paragraph (1), the
amount credited to such fund for the fiscal year shall be available for
use in such program only if appropriations Acts for the fiscal year,
without the addition of amounts provided under subsection (a) for the
fund, provide new budget authority for the program of no less than
(A) $3,660,000,000 for fiscal year 1996,
(B) $3,759,000,000 for fiscal year 1997,
(C) $3,861,000,000 for fiscal year 1998,
(D) $3,996,000,000 for fiscal year 1999, and
(E) $4,126,000,000 for fiscal year 2000.
Title IX: AGGREGATE GOVERNMENT PAYMENTS
Table of contents
Subtitle A. Aggregate State Payments
Part 1. State Maintenance of Effort Payment
Section 9001. State maintenance-of-effort payment relating to
non-cash assistance recipients.
Section 9002. Non-cash baseline amounts.
Section 9003. Updating of baseline amounts.
Section 9004. Non-cash assistance child and adult defined.
Part 2. State Premium Payments
Section 9011. State premium payment relating to cash assistance
recipients.
Section 9012. Determination of AFDC per capita premium amount for
regional alliances.
Section 9013. Determination of SSI per capita premium amount for
regional alliances.
Section 9014. Determination of number of AFDC and SSI recipients.
Section 9015. Regional alliance adjustment factors.
Part 3. General and Miscellaneous Provisions
Section 9021. Timing and manner of payments.
Section 9022. Review of payment level.
Section 9023. Special rules for Puerto Rico and other territories.
Subtitle B. Aggregate Federal Alliance Payments
Section 9101. Federal premium payments for cash assistance
recipients.
Section 9102. Capped Federal alliance payments.
Subtitle C. Borrowing Authority to Cover Cash-flow Shortfalls
Section 9201. Borrowing authority to cover cash-flow shortfalls.
--------
Subtitle A. Aggregate State Payment
Part 1. STATE MAINTENANCE OF EFFORT PAYMENT
SEC. 9001. STATE MAINTENANCE-OF-EFFORT PAYMENT RELATING TO NON-CASH
ASSISTANCE
RECIPIENTS.
(a) Payment.
(1) In general. Subject to paragraph (2), each participating State
shall provide for each year (beginning with State's first year) for
payment to regional alliances in the State in the amounts specified in
subsection (b).
(2) Exception. The amounts specified in subsection (b) that are
attributable to the element of the non-cash, non-DSH baseline amount
described in section 9002(a)(1)(C) shall be paid to the Federal
Government.
(b) Amount. Subject to sections 6005, 9023, and 9201(c)(2), the total
amount of such payment for a year shall be equal to the following:
(1) First year. In the case of the first year for a State, the sum of
(A) the State non-cash, non-DSH baseline amount for the State,
determined under section 9002(a)(1) and updated under section
9003(a)(1), and
(B) the State non-cash, DSH baseline amount for the State, determined
under section 9002(a)(2) and updated under section 9003(a)(2).
(2) Subsequent year. In the case of any succeeding year, the sum
computed under paragraph (1) for the first year updated to the year
involved under section 9003(b) .
(c) Division Among Regional Alliances. In the case of a State with more
than one regional alliance, the payment required to be made under this
section shall be distributed among the regional alliances in an equitable
manner (determined by the State) that takes into account, for each regional
alliance, the proportion of the non-cash baseline amount (described in
section 9002) that is attributable to individuals who resided in the
alliance area of the regional alliance.
SEC. 9002. NON-CASH BASELINE AMOUNTS.
(a) Baseline Amounts.
(1) Non-dsh amount. The Secretary shall determine a non-cash, non-DSH
baseline amount which is equal to the sum of the following:
(A) Expenditures for comprehensive benefit package for non-cash
assistance children. The aggregate State medicaid expenditures in
fiscal year 1993 (as defined in subsection (b)(1)) for the
comprehensive benefit package for non-cash assistance children (as
defined in section 9004(a)).
(B) Expenditures for comprehensive benefit package for non-cash
assistance adults. The aggregate State medicaid expenditures in fiscal
year 1993 for the comprehensive benefit package for non-cash assistance
adults (as defined in section 9004(b)).
(C) Expenditures for additional benefits for certain children. The
aggregate medicaid expenditures in fiscal year 1993 for all medically
necessary items and services described in section 1905(a) (including
items and services described in section 1905(r) but excluding long-term
care services described in section 1933(c)) for qualified children
described in section 1934(b)(1).
(2) DSH amount. The Secretary shall determine a non-cash, DSH baseline
amount which is equal to the DSH expenditures in fiscal year 1993 (as
defined in subsection (b)(2)).
(b) State Medicaid Expenditures and DSH Expenditures Defined.
(1) Aggregate state medicaid expenditures.
(A) In general. In this section, the term ``aggregate State medicaid
expenditures'' means, with respect to specified individuals and a State
in fiscal year 1993, the amount of payments under the State medicaid
plan with respect to medical assistance furnished for such individuals
for calendar quarters in fiscal year 1993, less the amount of Federal
financial participation paid to the State with respect to such
assistance, and not including any DSH expenditures.
(B) Limited to payments for services. In applying subparagraph (A),
payments under the State medicaid plan shall not be included unless
Federal financial participation is provided with respect to such
payments under section 1903(a)(1) of the Social Security Act and such
payments shall not include payments for medicare cost-sharing (as
defined in section 1905(p)(3) of the Social Security Act).
(2) DSH expenditures. In this section, the term ``DSH expenditures''
means, with respect to fiscal year 1993, payments made under section 1923
of the Social Security Act in fiscal year 1993 multiplied by proportion
of payments for medical assistance for hospital services (including
psychiatric hospital services) under the State medicaid plan in fiscal
year 1993 that is attributable to non-cash assistance adults and non-cash
asssistance children.
(3) Adjustment authorized to take into account cash flow variations. If
the Secretary finds that a State took an action that had the effect of
shifting the timing of medical assistance payments under the State
medicaid plan between quarters or fiscal years in a manner so that the
payments made in fiscal year 1993 do not accurately reflect the value of
the medical assistance provided with respect to items and services
furnished in that fiscal year, the Secretary may provide for such
adjustment in the amounts computed under this subsection as may be
necessary so that the non-cash baseline amounts determined under this
section accurately reflects such value.
(4) Treatment of disallowances. The amounts determined under this
subsection shall take into account amounts (or an estimate of amounts)
disallowed.
(c) Application to Particular Items and Services in Comprehensive Benefit
Package. For purposes of subsection (a)(1), in determining the aggregate
State medicaid expenditures for a category of items and services (within
the comprehensive benefit package) furnished in a State, there shall be
counted only that proportion of such expenditures that were attributable to
items and services included in the comprehensive benefit package (taking
into account any limitation on amount, duration, or scope of items and
services included in such package).
SEC. 9003. UPDATING OF BASELINE AMOUNTS.
(a) Initial Update Through the First Year.
(1) Non-cash, non-DSH baseline amount. The Secretary shall update the
non-cash, non-DSH baseline amount determined under section 9002(a)(1) for
each State from fiscal year 1993 through the first year, by the following
percentage:
(A) If such first year is 1996, the applicable percentage is 56.6
percent.
(B) If such first year is 1997, the applicable percentage is 78.1
percent.
(C) If such first year is 1998, the applicable percentage is 102.2
percent.
(2) Non-cash, DSH baseline amount. The Secretary shall update the
non-cash, DSH baseline amount determined under section 9002(a)(2) for
each State from fiscal year 1993 through the first year, by the following
percentage:
(A) If such first year is 1996, the applicable percentage is 45.9
percent.
(B) If such first year is 1997, the applicable percentage is 61.8
percent.
(C) If such first year is 1998, the applicable percentage is 79.0
percent.
(3) Adjustment authorized to take into account cash flow variations. In
determining the updates under paragraphs (1) and (2), the Secretary may
provide for an adjustment in a manner similar to the adjustment permitted
under section 9002(b)(3).
(b) Update For Subsequent Years. For each State for each year after the
first year, the Board shall update the non-cash baseline amount (as
previously updated under this subsection) by the product of
(1) 1 plus the general health care inflation factor (as defined in
section 6001(a)(3)) for the year, and
(2) 1 plus the annual percentage increase in the population of the
United States of individuals who are under 65 years of age (as estimated
by the Board based on projections made by the Bureau of Labor Statistics
of the Department of Labor) for the year.
SEC. 9004. NON-CASH ASSISTANCE CHILD AND ADULT DEFINED.
(a) Non-Cash Assistance Child. In this part, the term ``non-cash
assistance child'' means a child described in section 1934(b)(1) of the
Social Security Act (as inserted by section 4221(c)) who is not a
medicare-eligible individual.
(b) Non-Cash Assistance Adult. In this part, the term ``non-cash
assistance adult'' means an individual who is
(1) over 21 years,
(2) is a citizen or national of the United States or an alien who is
lawfully admitted for permanent residence or otherwise permanently
residing in the United States under color of law, and
(3) is not an AFDC or SSI recipient or a medicare-eligible individual.
Part 2. STATE PREMIUM PAYMENTS
SEC. 9011. STATE PREMIUM PAYMENT RELATING TO CASH ASSISTANCE RECIPIENTS.
(a) In General. Each participating State shall provide in each year
(beginning with the State's first year) for payment to each regional
alliance in the State of an amount equal to the State medical assistance
percentage (as defined in subsection (b)) of 95 percent of the sum of the
following products:
(1) AFDC portion. The product of
(A) the AFDC per capita premium amount for the regional alliance for
the year (determined under section 9012(a)), and
(B) the number of AFDC recipients residing in the alliance area in
the year (as determined under section 9014(b)(1)).
(2) SSI portion. The product of
(A) the SSI per capita premium amount for the regional alliance for
the year (determined under section 9013), and
(B) the number of SSI recipients residing in the alliance area in the
year (as determined under section 9014(b)(1)).
(b) State Medical Assistance Percentage Defined. In subsection (a), the
term ``State medical assistance percentage'' means, for a State for a
quarter in a fiscal year, 100 percent minus the Federal medical assistance
percentage (as defined in section 1905(b) of the Social Security Act) for
the State for the fiscal year.
SEC. 9012. DETERMINATION OF AFDC PER CAPITA PREMIUM AMOUNT FOR
REGIONAL
ALLIANCES.
(a) In General. For each regional alliance in a State for each year, the
Secretary shall determine an AFDC per capita premium amount in accordance
with this section. Such amount is equal to
(1) the per capita State medicaid expenditures for the comprehensive
benefit package for AFDC recipients for the State for the year (as
determined under subsection (b)), multiplied by
(2) the adjustment factor (determined under section 9015) for the year
for the regional alliance.
(b) Per Capita State Medicaid Expenditures Defined. The ``per capita
State medicaid expenditures for the comprehensive benefit package for AFDC
recipients'' for a State for a year is equal to the base per capita
expenditures (described in subsection (c)), updated to the year involved
under subsection (d)).
(c) Base Per Capita Expenditures. The ``base per capita expenditures''
described in this subsection, for a State for a year, is
(1) the baseline medicaid expenditures (as defined in subsection (e))
for the State, divided by
(2) the number of AFDC recipients enrolled in the State medicaid plan
in fiscal year 1993, as determined under section 9014(a).
(d) Updating.
(1) Initial update through year before first year.
(A) In general. The Secretary shall update the base per capita
expenditures described in subsection (c) for each State from fiscal
year 1993 through the year before first year, by the applicable
percentage specified in paragraph (2).
(B) Applicable percentage. For purposes of paragraph (1), the
applicable percentage specified in this paragraph, in the case of a
State in which the first year is
(i) 1996 is 32.2 percent,
(ii) 1997 is 46.6 percent, or
(iii) 1998 is 62.1 percent.
(C) Adjustment authorized to take into account cash flow variations.
In determining the update under paragraph (1), the Secretary may
provide for an adjustment in a manner similar to the adjustment
permitted under section 9002(b)(3).
(2) Update for subsequent years. For each State for the first year and
for each year after the first year, the Board shall update the base per
capita expenditures described in subsection (c) (as previously updated
under this subsection) by a factor equal to 1 plus the general health
care inflation factor (as defined in section 6001(a)(3)) for the year.
(e) Determination of Baseline Medicaid Expenditures.
(1) In general. For purposes of subsection (c)(1), the ``baseline
medicaid expenditures'' for a State is the gross amount of payments under
the State medicaid plan with respect to medical assistance furnished, for
items and services included in the comprehensive benefit package, for
AFDC recipients for calendar quarters in fiscal year 1993, but does not
include such expenditures for which no Federal financial participation is
provided under such plan.
(2) Disproportionate share payments not included. In applying paragraph
(1), payments made under section 1923 of the Social Security Act shall
not be counted in the gross amount of payments.
(3) Treatment of disallowances. The amount determined under this
subsection shall take into account amounts (or an estimate of amounts)
disallowed.
(f) Application to Particular Items and Services in Comprehensive Benefit
Package. For purposes of this section, in determining the per capita State
medicaid expenditures for a category of items and services (within the
comprehensive benefit package) furnished in a State, there shall be counted
only that proportion of such expenditures (determined only with respect to
medical assistance furnished to AFDC recipients) that were attributable to
items and services included in the comprehensive benefit package (taking
into account any limitation on amount, duration, or scope of items and
services included in such package).
SEC. 9013. DETERMINATION OF SSI PER CAPITA PREMIUM AMOUNT FOR REGIONAL
ALLIANCES.
For each regional alliance in a State for each year, the Secretary shall
determine an SSI per capita premium amount for each regional alliance in
accordance with this section. Such amount shall be determined in the same
manner as the AFDC per capita premium amount for the regional alliance is
determined under section 9012 except that, for purposes of this section
(1) any reference in such section (or in sections referred to in such
section) to an ``AFDC recipient'' is deemed a reference to an ``SSI
recipient'', and
(2) the following percents shall be substituted for the percents
specified in section 9012(d)(1)(B):
(A) For 1996, 29.4 percent.
(B) For 1997, 43.7 percent.
(C) For 1998, 58.8 percent.
SEC. 9014. DETERMINATION OF NUMBER OF AFDC AND SSI RECIPIENTS.
(a) Baseline. For purposes of section 9012 and section 9013, the number
of AFDC recipients and SSI recipients for a State for fiscal year 1993
shall be determined based on actual reports submitted by the State to the
Secretary. In the case of individuals who were not recipients for the
entire fiscal year, the number shall take into account only the portion of
the year in which they were such recipients. The Secretary may audit such
reports.
(b) Subsequent Years.
(1) Payments. For purposes of section 9011(b), the number of AFDC and
SSI recipients enrolled in regional alliance health plans for a regional
alliance shall be determined on a monthly basis based on actual
enrollment.
(2) Computation of regional adjustment factors and blended plan payment
rates. For purposes of computing regional alliance adjustment factors
under section 9015 and the AFDC and SSI proportions under section 6202,
the number of AFDC and SSI recipients for a regional alliance in a State
for a year (beginning with 1997) shall be determined by the State before
the date the State is required to compute AFDC and SSI proportions under
section 6202 based on the best available estimate of such proportion in
the previous year.
SEC. 9015. REGIONAL ALLIANCE ADJUSTMENT FACTORS.
(a) In General. If a State
(1) has more than one regional alliance operating in the State for a
year, the State shall compute under this section a regional alliance
adjustment factor for each such regional alliance for the year in
accordance with subsection (b), or
(2) has only one regional alliance for a year, the regional alliance
adjustment factor under this section is 1.
(b) Rules. The adjustment factors under subsection (a)(1) for a year
shall be computed in a manner so that
(1) such factors for the different regional alliances reflect
(A) the variation in regional alliance per capita premium targets
(determined under section 6003), and
(B) the variation in baseline per capita medicaid expenditures across
regional alliances; and
(2) the weighted average of such factors is 1.
(c) Use of Same Data. The weighted average under subsection (b)(2) shall
be determined based on the number of AFDC recipients or SSI recipients (as
the case may be) enrolled in each regional alliance in a State (as
determined for each regional alliance under section 9014(b)(2)).
(d) Clarification of Separate Computations. Determinations of adjustment
factors under this section shall be made separately for AFDC recipients and
for SSI recipients.
Part 3. GENERAL AND MISCELLANEOUS PROVISIONS
SEC. 9021. TIMING AND MANNER OF PAYMENTS.
The provisions of paragraphs (1) and (2) of section 9101(b) apply to
payments by a State under this subtitle in the same manner as they apply to
payments by the Secretary under section 9101, and any reference in such
provisions to the Secretary is deemed a reference to the State.
SEC. 9022. REVIEW OF PAYMENT LEVEL.
(a) In General. The National Health Board shall review from time to time
the appropriateness of the levels of payments required of States under this
subtitle.
(b) Report. The Board may report to the Congress on such adjustments as
should be made to assure an equitable distribution of State payments under
this Act, taking into account the revenue base in each of the States.
(c) Limit on Authority. Nothing in this subtitle shall be construed as
permitting the Board to change the amount of the payments required by
States under the the previous sections in this subtitle.
SEC. 9023. SPECIAL RULES FOR PUERTO RICO AND OTHER TERRITORIES.
(a) Waiver Authority. Notwithstanding any other requirement of this title
or title VI, the Secretary may waive or modify any requirement of this
title or title VI (other than financial contribution and subsidy
requirements) with respect to Puerto Rico, the Virgin Islands, Guam,
American Samoa, and the Northern Mariana Islands, consistent with this
section, to accommodate their unique geographic and social conditions and
features of their health care systems.
(b) Territorial Maintenance of Effort and Division of Financial
Responsibility.
(1) In general. In the case of such a territory, the Secretary shall
determine an appropriate allocation of the payments described in
paragraph (2) based on
(A) payments that qualify for Federal financial participation under
the medicaid program,
(B) payments would would qualify for such participation in the
absence of section 1108(c) of the Social Security Act, and
(C) other factors that the Secretary may consider.
(2) Payments described. The payments described in this paragraph are
(A) State cash assistance payments under section 9011;
(B) State maintenance of effort payments under section 9001;
(C) Federal payments under section 9101; and
(D) Federal payments under section 9111.
(3) Cash assistance recipients. With respect to such territories, in
this Act, the term ``SSI recipient'' means an individual receiving aid
under a territorial program for the aged, blind, or disabled under the
Social Security Act.
Subtitle B. Aggregate Federal Alliance Payments
SEC. 9101. FEDERAL PREMIUM PAYMENTS FOR CASH ASSISTANCE RECIPIENTS.
(a) Amount.
(1) In general. The Secretary shall provide each year (beginning with a
State's first year) for payment to each regional alliance of an amount
equal to the Federal medical assistance percentage (as defined in section
1905(b) of the Social Security Act) of 95 percent of the sum of the
products described in section 9011(a) for that State for that fiscal
year.
(2) Special rules for single-payer States. In determining the products
referred to in paragraph (1) in the case of a single-payer State, the
State is deemed to be a single regional alliance and the regional
alliance adjustment factor (under section 9015) is deemed to be 1.
(b) Timing and Manner of Payment.
(1) In general. Amounts required to be paid under this section shall be
paid on a periodic basis that reflects the cash flow requirements of
regional alliances for payments under this section in order to meet
obligations established under this Act.
(2) Periodic provision of information. Each regional alliance shall
periodically transmit to the Secretary such information as the Secretary
may require to make such payments.
(3) Reconciliation.
(A) Preliminary. At such time after the end of each year as the
Secretary shall specify, the State shall submit to the Secretary such
information as the Secretary may require to do a preliminary
reconciliation of the amounts paid under this section and the amounts
due.
(B) Final. No later than June 30 of each year, the Secretary shall
provide for a final reconciliation for such payments for quarters in
the previous year. Amounts subsequently payable are subject to
adjustment to reflect the results of such reconciliation.
(C) Audit. Payments under this section are subject to audits by the
Secretary in accordance with rules established by the Secretary.
SEC. 9102. CAPPED FEDERAL ALLIANCE PAYMENTS.
(a) Capped Entitlement.
(1) Payment. The Secretary shall provide for each calendar quarter
(beginning on or after January 1, 1996) for payment to each regional
alliance of an amount equal to the capped Federal alliance payment amount
(as defined in subsection (b)(1)) for the regional alliance for the
quarter.
(2) Entitlement. This section constitutes budget authority in advance
of appropriations Acts, and represents the obligation of the Federal
Government to provide for the payment to regional alliances of the capped
Federal alliance payment under this section.
(b) Capped Federal Alliance Payment Amount.
(1) In general. In this section, the term ``capped Federal alliance
payment amount'' means, for a regional alliance for a calendar quarter in
a year and subject to subsection (e), the amount by which
(A) \1/4\ of the total payment obligation (described in paragraph
(2)) for the alliance for the year, exceeds
(B) \1/4\ of the total amounts receivable (described in paragraph
(3)) by the alliance for the year.
(2) Total payment obligation. The total payment obligation described in
this paragraph for an alliance for a year is the total amount payable by
the alliance for the following:
(A) Plan payments (and certain cost sharing reductions). Payments to
regional alliance health plans under section 1351 (including amounts
attributable to cost sharing reductions under section 1371, not
including a reduction under subsection (c)(2) thereof) not otherwise
counted.
(B) Alliance administrative expenses. Payments retained by the
regional alliance for administration (in accordance with section 1352).
(3) Total amounts receivable. The total amounts receivable by a
regional alliance for a year is the sum of the following:
(A) Premiums. The amount payable to the regional alliance for the
family share of premiums, employer premiums, and liabilities owed the
alliance under subpart B of part 1, not taking into account any failure
to make or collect such payments.
(B) Other government payments. The amounts payable to the regional
alliance under sections 9001, 9011, and 9101, and payable under section
1895 of the Social Security Act during the year.
(4) No payment for certain amounts.
(A) Uncollected alliance premiums. Each regional alliance is
responsible, under section 1345(a), for the collection of all amounts
owed the alliance (whether by individuals, employers, or others and
whether on the basis of premiums owed, incorrect amounts of discounts
or premium, cost sharing, or other reductions made, or otherwise), and
no amounts are payable by the Federal Goverment under this section with
respect to the failure to collect any such amounts.
(B) Administrative errors.
(i) In general. Each participating State is responsible, under
section 1202(g), for the payment to regional alliances in the State
of amounts attributable to administrative errors (described in clause
(ii)).
(ii) Administrative errors described. The administrative errors
described in this clause include the following:
(I) An eligibility error rate for premium discounts, liability
reductions, and cost sharing reductions under sections 6104 and 6123,
section 6113, and section 1371, respectively, to the extent the
applicable error rate exceeds the maximum permissible error rate,
specified by the applicable Secretary under section 1361(b)(1)(C), with
respect to the section involved.
(II) Misappropriations or other regional alliance expenditures that
the Secretary finds are attributable to malfeasance or misfeasance by
the regional alliance or the State.
(5) Special rules for single-payer states. In applying this subsection
in the case of a single-payer State, the Secretary shall develop and
apply a methodology for computing an amount of payment (with respect to
each calendar quarter) that is equivalent to the amount of payment that
would have been made to all regional alliances in the State for the
quarter if the State were not a single-payer State.
(c) Determination of Capped Federal Alliance Payment Amounts.
(1) Reports. At such time as the Secretary may require before the
beginning of each fiscal year, each regional alliance shall submit to the
Secretary such information as the Secretary may require to estimate the
capped Federal alliance payment amount under this section for the
succeeding calendar year (and the portion of such year that falls in such
fiscal year).
(2) Estimation. Before the beginning of each year, the Secretary shall
estimate for each regional alliance the capped Federal alliance payment
amount for calendar quarters in such year. Such estimate shall be based
on factors including prior financial experience in the alliance, future
estimates of income, wages, and employment, and other characteristics of
the area found relevant by the Secretary. The Secretary shall transmit to
Congress, on a timely basis consistent with the timely appropriation of
funds under this section, a report that specifies an estimate of the
total capped Federal alliance payment amounts owed to States under this
section for the fiscal and calendar year involved.
(d) Payments to Regional Alliances. Subject to subsection (e), the
provisions of section 9101(b) apply to payments under this section in the
same manner as they apply to payments under section 9101.
(e) Cap on Payments.
(1) In general. The total amount of the capped Federal alliance
payments made under this section for quarters in a fiscal year may not
exceed the cap specified under paragraph (2) for the fiscal year.
(2) Cap. Subject to paragraphs (4) and (6)
(A) Fiscal years 1996 through 2000. The cap under this paragraph
(i) for fiscal year 1996, is $10.5 billion,
(ii) for fiscal year 1997, is $28.8 billion,
(iii) for fiscal year 1998, is $73.8 billion,
(iv) for fiscal year 1999, is $75.1 billion, and
(v) for fiscal year 2000, is $78.8 billion.
(B) Subsequent fiscal year. The cap under this paragraph for a fiscal
year after fiscal year 2000 is the cap under this paragraph for the
previous fiscal year (not taking into account paragraph (4)) multiplied
by the product of the factors described in subparagraph (C) for that
fiscal year and for each previous year after fiscal year 2000.
(C) Factor. The factor described in this subparagraph for a fiscal
year is 1 plus the following:
(i) CPI. The percentage change in the CPI for the fiscal year,
determined based upon the percentage change in the average of the CPI
for the 12-month period ending with May 31 of the previous fiscal
year over such average for the preceding 12-month period.
(ii) Population. The average annual percentage change in the
population of the United States during the 3-year period ending in
the preceding calendar year, determined by the Board based on data
supplied by the Bureau of the Census.
(iii) Real gdp per capita. The average annual percentage change in
the real, per capita gross domestic product of the United States
during the 3-year period ending in the preceding calendar year,
determined by the Board based on data supplied by the Department of
Commerce.
(3) Carryforward. If the total of the capped Federal alliance payment
amounts for all regional alliances for all calendar quarters in a fiscal
year is less than the cap specified in paragraph (2) for the fiscal year,
then the amount of such surplus shall be accumulated and will be
available in the case of a year in which the cap would otherwise be
breached.
(4) Notification.
(A) In general. If the Secretary anticipates that the amount of the
cap, plus any carryforward from a previous year accumulated under
paragraph (3), will not be sufficient for a fiscal year, the Secretary
shall notify the President, the Congress, and each regional alliance.
Such notification shall include information about the anticipated
amount of the shortfall and the anticipated time when the shortfall
will first occur.
(B) Required action. Within 30 days after receiving such a notice,
the President shall submit to Congress a report containing specific
legislative recommendations for actions which would eliminate the
shortfall.
(5) Congressional consideration.
(A) Expedited consideration. If a joint resolution the substance of
which approves the specific recommendations submitted under paragraph
(4)(A) is introduced, subject to subparagraph (B), 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 the
joint resolution in the same manner as such provisions apply to a joint
resolution described in section 2908(a) of such Act.
(B) Special rules. For purposes of applying subparagraph (A) with
respect to such provisions, any reference to the Committee on Armed
Services of the House of Representatives shall be deemed a reference to
an appropriate Committee of the House of Representatives (specified by
the Speaker of the House of Representatives at the time of submission
of recommendations under paragraph (4)) and any reference to the
Committee on Armed Services of the Senate shall be deemed a reference
to an appropriate Committee of the House of Representatives (specified
by the Majority Leader of the Senate at the time of submission of such
recommendations).
(6) Method for adjusting the cap for changes in inflation. If the
inflation rate, as measured by the percentage increase in the CPI, is
projected to be significantly different from the inflation rate projected
by the Council of Economic Advisors to the President as of October 1993,
the Secretary may adjust the caps under paragraph (2) so as to reflect
such deviation from the projection.
Subtitle C. Borrowing Authority to Cover Cash-flow Shortfalls
SEC. 9201. BORROWING AUTHORITY TO COVER CASH-FLOW SHORTFALLS.
(a) In General. The Secretary shall make available loans to regional
alliances in order to cover any period of temporary cash-flow shortfall
attributable to any of the following:
(1) Any estimation discrepancy (including those described in subsection
(e)(1)).
(2) A period of temporary cash-flow shortfall attributable to an
administrative error (described in subsection (e)(2)).
(3) A period of temporary cash-flow shortfall relating to the relative
timing during the year in which amounts are received and payments are
required to be made.
(b) Terms and Conditions.
(1) In general. Loans shall be made under this section under terms and
conditions, consistent with this subsection, specified by the Secretary,
in consultation with the Secretary of the Treasury and taking into
account Treasury cash management rules.
(2) Period. Loans under this section shall be repayable with interest
over a period of not to exceed 2 years.
(3) Interest rate. The rate of interest on such loans shall be at a
rate, determined by the Secretary of the Treasury taking into
consideration the current average rate on outstanding marketable
obligations of the United States.
(4) Appropriate payment adjustments. As a condition of providing a loan
under subsection (a)(1), the Secretary shall require the regional
alliance to make such adjustments under the appropriate estimation
adjustment provision (described in subsection (f)) in order to assure the
repayment of the amount so borrowed.
(c) Repayment.
(1) Estimation discrepancies and timing. Loans made under paragraphs
(1) and (3) of subsection (a) shall be repaid through a reduction in the
payment amounts otherwise required to be made under section 9102 to the
regional alliance.
(2) Administrative error. Loans made under subsection (a)(2) shall be
repaid through a temporary increase in the amount of the State
maintenance-of-effort payment required under section 9001.
(d) Reports. The Secretary shall annually report to Congress on the loans
made (and loan amounts repaid) under this section.
(e) Sources of Error Described.
(1) Estimation discrepancies. The estimation discrepancies described in
this paragraph are discrepancies in estimating the following:
(A) The average premium payments per family under section 6122(b).
(B) The AFDC and SSI proportions under section 6202.
(C) The distribution of enrolled families in different risk
categories for purposes of under section 1343(b)(2).
(D) The distribution of enrollment in excess premium plans (for
purposes of calculating and applying the reduced weighted average
accepted bid under section 6105(c)(1)).
(E) The collection shortfalls (used in computing the family
collection shortfall add-on under section 6107).
(2) Administrative errors. The administrative errors described in this
paragraph include the following:
(A) An eligibility error rate for premium discounts and liability
reductions under sections 6104 and 6113, to the extent such rate
exceeds the maximum permissible error rate established for the alliance
under subpart B of part 3 of subtitle D of title I.
(B) Misappropriations or other regional alliance expenditures that
are determined to be attributable to malfeasance or misfeasance by the
regional alliance or the State.
(f) Estimation Adjustment Provisions Described. The estimation adjustment
provisions, referred to in subsection (b)(3)) are the following adjustments
(corresponding to the respective estimation discrepancies specified in
subsection (d)(1)):
(1) Adjustments for average premium payments per family under section
6122(b) under section 6122(b)(4).
(2) Adjustments in the AFDC and SSI proportions under section 6202(d).
(3) Adjustments pursuant to methodology described in section
1541(b)(8).
(4) Adjustments in excess premium credit pursuant to section
6105(b)(2).
(5) Adjustment in the collection shortfall add-on under section
6017(b)(2)(C)).
Title X: COORDINATION OF MEDICAL PORTION OF WORKERS COMPENSATION AND
AUTOMOBILE
INSURANCE
Table of contents
Subtitle A. Workers Compensation Insurance
Section 10000. Definitions.
Part 1. Health Plan Requirements Relating to Workers Compensation
Section 10001. Provision of workers compensation services.
Section 10002. Payment by workers compensation carrier.
Part 2. Requirements of Participating States
Section 10011. Coordination of specialized workers compensation
providers.
Section 10012. Preemption of State laws restricting delivery of
workers compensation medical benefits.
Section 10013. Development of supplemental schedule.
Section 10014. Construction.
Part 3. Application of Information Requirements; Report on Premium
Reductions
Section 10021. Application of information requirements.
Section 10022. Report on reduction in workers compensation
premiums.
Part 4. Demonstration Projects
Section 10031. Authorization.
Section 10032. Development of work-related protocols.
Section 10033. Development of capitation payment models.
Subtitle B. Automobile Insurance
Section 10100. Definitions.
Part 1. Health Plan Requirements Relating to Automobile Insurance
Section 10101. Provision of automobile insurance medical benefits
through health plans.
Section 10102. Payment by automobile insurance carrier.
Part 2. Requirement of Participating States
Section 10111. Development of supplemental schedule.
Section 10112. Construction.
Part 3. Application of Information Requirements.
Section 10121. Application of information requirements.
Subtitle C. COMMISSION ON INTEGRATION OF HEALTH BENEFITS
Section 10201. Commission.
Subtitle D. Federal Employees' Compensation Act
Section 10301. Application of policy.
Subtitle E. Davis-Bacon Act and Service Contract Act
Section 10401. Coverage of benefits under Health Security Act.
Subtitle F. Effective Dates
Section 10501. Regional alliances.
Section 10502. Corporate alliances.
Section 10503. Federal requirements.
--------
Subtitle A. Workers Compensation Insurance
SEC. 10000. DEFINITIONS.
In this subtitle:
(1) Injured worker. The term ``injured worker'' means, with respect to
a health plan, an individual enrolled under the plan who has a
work-related injury or illness for which workers compensation medical
benefits are available under State law.
(2) Specialized workers compensation provider. The term ``specialized
workers compensation provider'' means a health care provider that
specializes in the provision of treatment relating to work-related
injuries or illness, and includes specialists in industrial medicine,
specialists in occupational therapy, and centers of excellence in
industrial medicine and occupational therapy.
(3) Workers compensation medical benefits. The term ``workers
compensation medical benefits'' means, with respect to an enrollee who is
an employee subject to the workers compensation laws of a State, the
comprehensive medical benefits for work-related injuries and illnesses
provided for under such laws with respect to such an employee.
(4) Workers compensation carrier. The term ``workers compensation
carrier'' means an insurance company that underwrites workers
compensation medical benefits with respect to one or more employers and
includes an employer or fund that is financially at risk for the
provision of workers compensation medical benefits.
(5) Workers compensation services. The term ``workers compensation
services'' means items and services included in workers compensation
medical benefits and includes items and services (including
rehabilitation services and long-term care services) commonly used for
treatment of work-related injuries and illnesses.
Part 1. HEALTH PLAN REQUIREMENTS RELATING TO WORKERS COMPENSATION
SEC. 10001. PROVISION OF WORKERS COMPENSATION SERVICES.
(a) Provision of Benefits. Subject to subsection (b)
(1) Requirement for certain health plans.
(A) In general. Each health plan that provides services to enrollees
through participating providers shall enter into such contracts and
arrangements as are necessary (in accordance with subparagraph (B)) to
provide or arrange for the provision of workers compensation services
to such enrollees, in return for payment from the workers compensation
carrier under section 10002.
(B) Provision of services. For purposes of this paragraph, a health
plan provides (or arranges for the provision of) workers compensation
services with respect to an enrollee if the services are provided by
(i) a participating provider in the plan,
(ii) any other provider with whom the plan has entered into an
agreement for the provision of such services, or
(iii) a specialized workers compensation provider (designated by
the State under 10011), whether or not the provider is a provider
described in clause (i) or (ii).
(2) Individual requirement. An individual entitled to workers
compensation medical benefits and enrolled in a health plan (whether or
not the plan is described in paragraph (1)(A)) shall receive workers
compensation services through the provision (or arrangement for the
provision) of such services by the health plan.
(3) Exceptions.
(A) Emergency services. Paragraphs (1) and (2) shall not apply in the
case of emergency services.
(B) Electing veterans, military personnel, indians, and prisoners.
Paragraphs (1) and (2) shall not apply in the case of an individual
described in section 1004(b) and making an election described in such
section.
(4) Use of specialized workers compensation providers. If a
participating State has designated under section 10011 specialized
workers compensation providers with respect to one or more types of
injuries or illnesses for a geographic area, either a health plan or an
injured worker who has an injury or illness of such type may elect to
provide or receive the benefits under this subsection through such a
provider.
(b) Alternative Permitted. Subsection (a) shall not be construed as
preventing an injured worker and a workers compensation carrier from
agreeing that workers compensation services shall be provided other than by
or through the health plan in which the worker is enrolled.
(c) Coordination.
(1) Designation of case manager. Each health plan shall employ or
contract with one or more individuals, such as occupational nurses, with
experience in the treatment of occupational illness and injury to provide
case management services with respect to workers compensation services
provided through the plan under this section.
(2) Functions of case manager. The health plan (through the case
manager described in paragraph (1)) is responsible for ensuring that
(A) there is plan of treatment (when appropriate) for each enrollee
who is an injured worker designed to assure appropriate treatment and
facilitate return to work;
(B) the plan of treatment is coordinated with the workers
compensation carrier, the employer, or both;
(C) the health plan (and its providers) comply with legal duties and
requirements under State workers compensation law; and
(D) if the health plan is unable to provide a workers compensation
service needed to treat a work-related injury or illness, that the
injured worker is referred (in consultation with the workers
compensation carrier) to an appropriate provider.
SEC. 10002. PAYMENT BY WORKERS COMPENSATION CARRIER.
(a) Payment.
(1) In general. Except as provided in subsection (b), each workers
compensation carrier that is liable for payment for workers compensation
services furnished by or through a health plan, regardless of whether or
not the services are included in the comprehensive benefit package, shall
make payment for such services.
(2) Use of regional alliance fee schedule. Such payment shall be made
in accordance with the applicable fee schedule established under section
1322(c) or section 10013.
(b) Alternative Payment Methodologies. Subsection (a) shall not apply
(1) in the case of a regional alliance or participating State that
establishes an alternative payment methodology (such as payment on a
negotiated fee for each case) for payment for workers compensation
services; or
(2) in the case in which a workers compensation carrier and the health
plan negotiate alternative payment arrangements.
(c) Limitation of Liability of Injured Worker. Nothing in this subpart
shall be construed as requiring an injured worker to make any payment
(including payment of any cost sharing or any amount in excess of the
applicable fee schedule) to any health plan or health care provider for the
receipt of workers compensation services.
Part 2. REQUIREMENTS OF PARTICIPATING STATES
SEC. 10011. COORDINATION OF SPECIALIZED WORKERS COMPENSATION
PROVIDERS.
(a) In General. Each participating State shall coordinate access to
specialized workers compensation providers on behalf of health plans,
providing coverage to individuals residing in the State, under part 1.
(b) Optional Designation of Specialized Workers Compensation Providers. A
participating State may designate such specialized workers compensation
providers, as the State determines to be appropriate, to provide under part
1 workers compensation services that
(1) are not included in the comprehensive benefit package, or
(2) are so included but are specialized services that are typically
provided (as determined by the State) by specialists in occupational or
rehabilitative medicine.
Injured workers and health plans may elect to use such providers under
section 10001(a)(4).
SEC. 10012. PREEMPTION OF STATE LAWS RESTRICTING DELIVERY OF WORKERS
COMPENSATION MEDICAL BENEFITS.
(a) In General. Subject to section 10011(b), no State law shall have any
effect that restricts the choice, or payment, of providers that may provide
workers compensation services for individuals enrolled in a health plan.
(b) Dispute Resolution. A State law may provide for a method for
resolving disputes among parties related to
(1) an individual's entitlement to workers compensation medical
benefits under State law,
(2) the necessity and appropriateness of workers compensation services
provided to an injured worker, and
(3) subject to section 10002, the reasonableness of charges or fees
charged for workers compensation services.
SEC. 10013. DEVELOPMENT OF SUPPLEMENTAL SCHEDULE.
Each participating State shall develop a fee schedule applicable to
payment for workers compensation services for which a fee is not included
in the applicable fee schedule established under section 1322(c).
SEC. 10014. CONSTRUCTION.
(a) In General. Nothing in this subtitle shall be construed as altering
(1) the effect of a State workers compensation law as the exclusive
remedy for work-related injuries or illnesses,
(2) the determination of whether or not a person is an injured worker
and entitled to workers compensation medical benefits under State law,
(3) the scope of items and services available to injured workers
entitled to workers compensation medical benefits under State law, or
(4) the eligibility of any individual or class of individuals for
workers compensation medical benefits under State law.
(b) Early Integration. Nothing in this subtitle shall prevent a State
from integrating or otherwise coordinating the payment for workers
compensation medical benefits with payment for benefits under health
insurance or health benefit plans before the date the Commission submits
its report under section 10201(e).
Part 3. APPLICATION OF INFORMATION REQUIREMENTS; REPORT ON PREMIUM
REDUCTIONS
SEC. 10021. APPLICATION OF INFORMATION REQUIREMENTS.
(a) In General. The provisions of
(1) part 3 of subtitle B of title V (relating to use of standard
forms), and
(2) section 5101(e)(9) (relating to provision of data on quality),
apply to the provision of workers compensation services in the same
manner as such provisions apply with respect to the provision of services
included in the comprehensive benefit package.
(b) Rules. The Secretary of Labor shall promulgate rules to clarify the
responsibilities of health plans and workers compensation carriers in
carrying out the provisions referred to in subsection (a).
SEC. 10022. REPORT ON REDUCTION IN WORKERS COMPENSATION PREMIUMS.
(a) Study and Report.
(1) Study. The Secretary of Labor shall provide for a study of the
impact of the provisions of this subtitle on the premium rates charged to
employers for workers compensation insurance. Such study shall use
information supplied by States relating to workers compensation premiums
and such other information as such Secretary finds appropriate.
(2) Report. Such Secretary shall submit to the Congress, by not later
than 2 years after the date that this subtitle applies in all States, a
report on the findings of the study.
(b) Workers Compensation Carrier Filings.
(1) In general. Within six months after the date this subtitle is
effective in a participating State, each workers compensation carrier
(other than a self-funded employer) providing workers compensation
insurance in the State shall make a filing with an agency designated by
the State. Such filing shall describe the manner in which such carrier
has modified (or intends to modify) its premium rates for workers
compensation insurance provided in the State to reflect the changes
brought about by the provisions in this subtitle. The filing shall
include such actuarial projections and assumptions as necessary to
support the modifications of such rates.
(2) Report to secretary. Each participating State shall provide to the
Secretary of Labor such information on filings made under paragraph (1)
as such Secretary may specify.
Part 4. DEMONSTRATION PROJECTS
SEC. 10031. AUTHORIZATION.
The Secretary of Health and Human Services and the Secretary of Labor
are authorized to conduct demonstration projects under this part in one
or more States with respect to treatment of work-related injuries and
illnesses.
SEC. 10032. DEVELOPMENT OF WORK-RELATED PROTOCOLS.
(a) In General. Under this part, the Secretaries, in consultation with
States and such experts on work-related injuries and illnesses as the
Secretaries find appropriate, shall develop protocols for the appropriate
treatment of work-related conditions.
(b) Testing of Protocols. The Secretaries shall enter into contracts with
one or more health alliances to test the validity of the protocols
developed under subsection (a).
SEC. 10033. DEVELOPMENT OF CAPITATION PAYMENT MODELS.
Under this part, the Secretaries shall develop, using protocols developed
under section 10032 if possible, methods of providing for payment by
workers compensation carriers to health plans on a per case, capitated
payment for the treatment of specified work-related injuries and illnesses.
Subtitle B. Automobile Insurance
SEC. 10100. DEFINITIONS.
In this subtitle:
(1) Injured individual. The term ``injured individual'' means, with
respect to a health plan, an individual enrolled under the plan who has
an injury or illness sustained in an automobile accident for which
automobile insurance medical benefits are available.
(2) Automobile insurance medical benefits. The term ``automobile
insurance medical benefits'' means, with respect to an enrollee, the
comprehensive medical benefits for injuries or illnesses sustained in
automobile accidents.
(3) Automobile insurance carrier. The term ``automobile insurance
carrier'' means an insurance company that underwrites automobile
insurance medical benefits and includes an employer or fund that is
financially at risk for the provision of automobile insurance medical
benefits.
(4) Automobile insurance medical services. The term ``automobile
insurance medical services'' means items and services included in
automobile insurance medical benefits and includes items and services
(such as rehabilitation services and long-term care services) commonly
used for treatment of injuries and illnesses sustained in automobile
accidents.
Part 1. HEALTH PLAN REQUIREMENTS RELATING TO AUTOMOBILE INSURANCE
SEC. 10101. PROVISION OF AUTOMOBILE INSURANCE MEDICAL BENEFITS THROUGH
HEALTH
PLANS.
(a) In General. An individual entitled to automobile insurance medical
benefits and enrolled in a health plan shall receive automobile insurance
medical services through the provision (or arrangement for the provision)
of such services by the health plan.
(b) Referral for Specialized Services. Each health plan shall provide for
such referral for automobile insurance medical services as may be necessary
to assure appropriate treatment of injured individuals.
(c) Exceptions. Subsections (a) and (b) shall not apply in the case of an
individual described in section 1004(b) and making an election described in
such section.
(d) Alternative Permitted. Subsection (a) shall not be construed as
preventing an injured individual and an automobile insurance carrier from
agreeing that automobile insurance medical services shall be provided other
than by or through the health plan in which the individual is enrolled.
SEC. 10102. PAYMENT BY AUTOMOBILE INSURANCE CARRIER.
(a) Payment.
(1) In general. Except as provided in subsection (b), each automobile
insurance carrier that is liable for payment for automobile insurance
medical services furnished by or through a health plan, regardless of
whether or not the services are included in the comprehensive benefit
package, shall make payment for such services.
(2) Use of regional alliance fee schedule. Such payment shall be made
in accordance with the applicable fee schedule established under section
1322(c) or section 10111.
(b) Alternative Payment Methodologies. Subsection (a) shall not apply
(1) in the case of a regional alliance or participating State that
establishes an alternative payment methodology (such as payment on a
negotiated fee for each case) for payment for automobile insurance
medical services; or
(2) in the case in which a automobile insurance carrier and the health
plan negotiate alternative payment arrangements.
(c) Limitation of Liability of Injured Individual. Nothing in this part
shall be construed as requiring an injured individual to make any payment
(including payment of any cost sharing or any amount in excess of the
applicable fee schedule) to any health plan or health care provider for the
receipt of automobile insurance medical services.
Part 2. REQUIREMENT OF PARTICIPATING STATES
SEC. 10111. DEVELOPMENT OF SUPPLEMENTAL SCHEDULE.
Each participating State shall develop a fee schedule applicable to
payment for automobile insurance medical services for which a fee is not
included in the applicable fee schedule established under section 1322(c).
SEC. 10112. CONSTRUCTION.
Nothing in this subtitle shall be construed as altering
(1) the determination of whether or not a person is an injured
individual and entitled to automobile insurance medical benefits under
State law, or
(2) the scope of items and services available to injured individuals
entitled to automobile insurance medical benefits under State law.
Part 3. APPLICATION OF INFORMATION REQUIREMENTS.
SEC. 10121. APPLICATION OF INFORMATION REQUIREMENTS.
(a) In General. The provisions of
(1) part 3 of subtitle B of title V (relating to use of standard
forms), and
(2) section 5101(e)(9) (relating to provision of data on quality),
apply to the provision of automobile insurance medical services in the
same manner as such provisions apply with respect to the provision of
services included in the comprehensive benefit package.
(b) Rules. The Secretary of Labor shall promulgate rules to clarify the
responsibilities of health plans and automobile insurance carriers in
carrying out the provisions referred to in subsection (a).
Subtitle C. COMMISSION ON INTEGRATION OF HEALTH BENEFITS
SEC. 10201. COMMISSION.
(a) Establishment. There is hereby created a Commission on Integration of
Health Benefits (in this section referred to as the ``Commission'').
(b) Composition.
(1) In general. The Commission shall consist of 15 members appointed
jointly by the Secretaries of Health and Human Services and the Secretary
of Labor.
(2) No compensation except travel expenses. Members of the Commission
shall serve without compensation, but the Secretaries shall provide that
each member shall receive travel expenses, including per diem in lieu of
subsistence, in accordance with sections 5702 and 5703 of title 5, United
States Code.
(c) Duties. The Commission shall study the feasibility and
appropriateness of transferring financial responsibility for all medical
benefits (including those currently covered under workers compensation and
automobile insurance) to health plans.
(d) Staff Support. The Secretaries shall provide staff support for the
Commission.
(e) Report. The Commission shall submit a report to the President by not
later than July 1, 1995. If such report recommends the integration of
financial responsibility for all medical benefits in health plans, such
report shall provide for a detailed plan as to how (and when) such an
integration should be effected under this Act.
(f) Termination. The Commission shall terminate 90 days after the date of
submission of its report under subsection (e).
(g) Authorization of Appropriations. There are authorized to be
appropriated such sums as may be necessary to carry out this section.
Subtitle D. Federal Employees' Compensation Act
SEC. 10301. APPLICATION OF POLICY.
(a) In General. Chapter 81 of title 5, United States Code, known as the
Federal Employees' Compensation Act shall be interpreted and administered
consistent with the provisions of subtitle A.
(b) Construction. In applying subsection (a), subtitle A shall be applied
as if the following modifications had been made in subtitle A:
(1) Any reference in section 10000, section 10001(c)(2)(C), section
10012(b), or section 10014 to a State law is deemed to include a
reference to chapter 81 of title 5, United States Code.
(2) The term ``workers compensation carrier'' includes the Employees
Compensation Fund (established under section 8147 of title 5, United
States Code).
Subtitle E. Davis-Bacon Act and Service Contract Act
SEC. 10401. COVERAGE OF BENEFITS UNDER HEALTH SECURITY ACT.
(a) Davis-Bacon Act. Section 1(b)(2) of the Davis Bacon Act (40 U.S.C.
276a(b)(2)) is amended in the matter following subparagraph (B) by
inserting after ``local law'' the following: ``(other than benefits
provided pursuant to the Health Security Act)''.
(b) Service Contract Act of 1965. The second sentence of section 2(a)(2)
of the Service Contract Act of 1965 (41 U.S.C. 351(a)(2)) is amended by
inserting after ``local law'' the following: ``(other than benefits
provided pursuant to the Health Security Act)''.
Subtitle F. Effective Dates
SEC. 10501. REGIONAL ALLIANCES.
The provisions of subtitles A and B of this title apply to regional
alliances, and regional alliance health plans, in a State 2 years after the
State's first year (as defined in section 1902(17)).
SEC. 10502. CORPORATE ALLIANCES.
The provisions of subtitles A and B of this title apply to corporate
alliances, and corporate alliance health plans, on January 1, 1998.
SEC. 10503. FEDERAL REQUIREMENTS.
The provisions of subtitle D of this title shall take effect on January
1, 1998.
Title XI: TRANSITIONAL INSURANCE REFORM
Table of contents
Section 11001. Imposition of requirements.
Section 11002. Enforcement.
Section 11003. Requirements relating to preserving current
coverage.
Section 11004. Restrictions on premium increases during
transition.
Section 11005. Requirements relating to portability.
Section 11006. Requirements limiting reduction of benefits.
Section 11007. National transitional health insurance risk pool.
Section 11008. Definitions.
Section 11009. Termination.
--------
SEC. 11001. IMPOSITION OF REQUIREMENTS
(a) In General. The Secretary and the Secretary of Labor shall apply the
provisions of this title to assure, to the extent possible, the maintenance
of current health care coverage and benefits during the period between the
enactment of the Health Security Act and the dates its provisions are
implemented in the various States.
(b) Enforcement.
(1) Health insurance plans. The Secretary shall enforce the
requirements of this title with respect to health insurance plans. The
Secretary shall promulgate regulations to carry out the requirements
under this title health insurance plans. The Secretary shall promulgate
regulations with respect to section 11004 within 90 days after the date
of the enactment of this Act.
(2) Self-insured plans. The Secretary of Labor shall enforce the
requirements of this title with respect to self-insured plans. Such
Secretary shall promulgate regulations to carry out the requirements
under this title as they relate to self-funded plans.
(3) Arrangements with states. The Secretary and the Secretary of Labor
may enter into arrangements with a State to enforce the requirements of
this title with respect to health insurance plans and self-insured plans
issued or sold, or established and maintained, in the State.
(c) Preemption. The requirements of this title do not preempt any State
law unless State law directly conflicts with such requirements. The
provision of additional protections under State law shall not be considered
to directly conflict with such requirements. The Secretary (or, in the case
of a self-insured plan, the Secretary of Labor) may issue letter
determinations with respect to whether this Act preempts a provision of
State law.
(d) Interim Final Regulations. Section 1911 shall apply to regulations
issued to carry out this title. The Secretary may consult with States and
the National Association of Insurance Commissioners in issuing regulations
and guidelines under this title.
(e) Construction. The provisions of this title shall be construed in a
manner that assures, to the greatest extent practicable, continuity of
health benefits under health benefit plans in effect on the effective date
of this Act.
(f) Special Rules for Acquisitions and Transfers. The Secretary may issue
regulations regarding the application of this title in the case of health
insurance plans (or groups of such plans) which are transferred from one
insurer to another insurer through assumption, acquisition, or otherwise.
SEC. 11002. ENFORCEMENT.
(a) In General. Any health insurer or health benefit plan sponsor that
violates a requirement of this title shall be subject to civil money
penalties of not more than $25,000 for each such violation. The provisions
of section 1128A of the Social Security Act (other than subsections (a) and
(b)) shall apply to civil money penalties under this subparagraph in the
same manner as they apply to a penalty or proceeding under section 1128A(a)
of such Act.
(b) Equitable Remedies.
(1) In general. A civil action may be brought by the applicable
Secretary
(A) to enjoin any act or practice which violates any provision of
this title, or
(B) to obtain other appropriate equitable relief (i) to redress such
violations, or (ii) to enforce any provision of this title, including,
in the case of a wrongful termination of (or refusal to renew)
coverage, reinstating coverage effective as of the date of the
violation.
SEC. 11003. REQUIREMENTS RELATING TO PRESERVING CURRENT COVERAGE.
(a) Prohibition of Termination.
(1) Group health insurance plans. Each health insurer that provides a
group health insurance plan may not terminate (or fail to renew) coverage
for any covered employee if the employer of the employee continues the
plan, except in the case of
(A) nonpayment of required premiums,
(B) fraud, or
(C) misrepresentation of a material fact relating to an application
for coverage or claim for benefits.
(2) Individual health insurance plans. Each health insurer that
provides coverage to a covered individual under an individual health
insurance plan may not terminate (or fail to renew) coverage for such
individual (or a covered dependent), except in the case of
(A) nonpayment of required premiums,
(B) fraud, or
(C) misrepresentation of a material fact relating to an application
for coverage or claim for benefits.
(2) Effective date of title.
(A) In general. This subsection shall take effect on the effective
date of this title and shall apply to coverage on or after such date.
(B) Definition. Except as otherwise provided, in this title the term
``effective date of this title'' means the date of the enactment of
this Act.
(b) Acceptance of New Members in a Group Health Insurance Plan.
(1) In general. In the case of a health insurer that provides a group
health insurance plan that is in effect on the effective date of this
title, the insurer is required
(A) to accept all individuals, and their eligible dependents, who
become full-time employees (as defined in section 1901(b)(2)(C)) of an
employer covered after such effective date;
(B) to establish and apply premium rates that are consistent with
section 11004(b); and
(C) to limit the application of pre-existing condition restrictions
in accordance with section 11005.
(2) Consistent application of rules relating to dependents and waiting
periods. In this subsection, the term ``eligible dependent'', with
respect to a group health insurance plan, has the meaning provided under
the plan as of the date of introduction of the Health Security Act or, in
the case of a plan not established as of such date, as of the date of
establishment of the plan.
SEC. 11004. RESTRICTIONS ON PREMIUM INCREASES DURING TRANSITION.
(a) Division of Health Insurance Plans by Sector. For purposes of this
section, each health insurer shall divide its health insurance business
into the following 3 sectors:
(1) Health insurance for groups with at least 100 covered lives (in
this section referred to as the ``large group sector'')
(2) Health insurance for groups with fewer than 100 covered lives (in
this section referred as the ``small group sector'').
(3) Health insurance for individuals, and not for groups (in this
section referred to as the ``individual sector'').
(b) Premium Changes to Reflect Changes in Group or Individual
Characteristics or Terms of Coverage.
(1) Application. The provisions of this subsection shall apply to
changes in premiums that reflect
(A) changes in the number of individuals covered under a plan;
(B) changes in the group or individual characteristics (including
age, gender, family composition or geographic area but not including
health status, claims experience or duration of coverage under the
plan) of individuals covered under a plan;
(C) changes in the level of benefits (including changes to in
cost-sharing) under the plan; and
(D) changes in any material terms and conditions of the health
insurance plan (other than factors related to health status, claims
experience and duration).
(2) Specification of reference rate for each sector. Each health
insurer shall calculate a reference rate for each such sector. The
reference rate for a sector shall be calculated so that, if it were
applied using the rate factors specified under paragraph (3), the average
premium rate for individuals and groups in that sector would approximate
the average premium rate charged individuals and groups in the sector as
of the effective date of this title.
(3) Single set of rate factors within each sector.
(A) In general. Each health insurer shall develop for each sector a
single set of rate factors which will be used to calculate any changes
in premium that relate to the reasons described in subparagraphs (B)
through (D) of paragraph (1).
(B) Standards. Such rate factors
(i) shall relate to reasonable and objective differences in
demographic characteristics, in the design and in levels of coverage,
and in other terms and conditions of a contract,
(ii) shall not relate to expected health status, claims experience,
or duration of coverage of the one or more groups or individuals, and
(iii) shall comply with regulations established under subsection
(f).
(4) Computation of Premium Changes.
(A) In general. Changes in premium rates that relate to the reasons
described in paragraph (1) shall be calculated using the rate factors
developed pursuant to paragraph (3).
(B) Application to changes in number of covered individuals. In the
case of a change in premium rates related to the reason described in
paragraph (1)(A), the change in premium rates shall be calculated to
reflect, with respect to the enrollees who enroll or disenroll in a
health insurance plan, the sum of the products, for such individuals,
of the reference rate (determined under paragraph (2)) and the rate
factors (specified under paragraph (3)) applicable to such enrollees.
(C) Application of other factors.
(i) In general. In the case of a change in premium rates related to
a reason described in subparagraph (B), (C), or (D) of paragraph (1),
the change in premium rates with respect to each health insurance
plan in each sector shall reflect the rate factors specified under
paragraph (3) applicable to the reason as applied to the current
premium charged for the health insurance plan. Such rate factors
shall be applied in a manner so that the resulting adjustment, to the
extent possible, reflects the premium that would have been charged
under the plan if the reason for the change in premium had existed at
the time that the current premium rate was calculated.
(ii) No reflection of change in health status. In applying the rate
factors under this subparagraph, the adjustment shall not reflect any
change in the health status, claims experience or duration of
coverage with respect to any employer or individual covered under the
plan.
(5) Limitation on application. This subsection shall only apply
(A) to changes in premiums occurring on or after the date of the
enactment of this Act to groups and individuals covered as of such
date, and
(B) with respect to groups and individuals subsequently covered, to
changes in premiums subsequent to such coverage.
(6) Application to community-rated plans. Nothing in this subsection
shall require the application of rate factors related to individual or
group characteristics with respect to community-rated plans.
(c) Limitations on Changes in Premiums Related to Increases in Health
Care Costs and Utilization.
(1) Application. The provisions of this subsection shall apply to
changes in premiums that reflect increases in health care costs and
utilization.
(2) Equal increase for all plans in all sectors.
(A) In general. Subject to subparagraph (B), the annual percentage
increase in premiums by a health insurer for health insurance plans in
the individual sector, small group sector, and large group sector, to
the extent such increase reflect increases in health care costs and
utilization, shall be the same for all such plans in those sectors.
(B) Special rule for large group sector. The annual percentage
increase in premiums by a health insurer for health insurance plans in
the large group sector may vary among such plans based on the claims
experience of such employer (to the extent the experience is credible),
so long as the weighted average of such increases for all such plans in
the sector complies with the requirement of subparagraph (A).
(C) Geographic application. Subparagraphs (A) and (B)
(i) may be applied on a national level, or
(ii) may vary based on geographic area, but only if (I) such areas
are sufficiently large to provide credible data on which to calculate
the variation and (II) the variation is due to reasonable factors
related to the objective differences among such areas in costs and
utilization of health services.
(D) Exceptions to accommodate state rate reform efforts.
Subparagraphs (A) and (B) shall not apply, in accordance with
guidelines of the Secretary, to the extent necessary to permit a State
to narrow the variations in premiums among health insurance plans
offered by health insurers to similarly situated groups or individuals
within a sector.
(E) Exception for rates subject to prior approval. Subparagraphs (A)
and (B) shall not apply to premiums that are subject to prior approval
by a State insurance commissioner (or similar official) and are
approved by such official.
(F) Other reasons specified by the secretary. The Secretary may
specify through regulations such other exceptions to the provisions of
this subsection as the Secretary determines are required to enhance
stability of the health insurance market and continued availability of
coverage.
(3) Even application throughout a year. In applying the provisions of
this subsection to health insurance plans that are renewed in different
months of a year, the annual percentage increase shall be applied in a
consistent, even manner so that any variations in the rate of increase
applied in consecutive months are even and continuous during the year.
(4) Petition for exception. A health insurer may petition the Secretary
(or a State acting under a contract with the Secretary under section
11001(b)(3)) for an exception from the application of the provisions of
this subsection. The Secretary may approve such an exception if
(A) the health insurer demonstrates that the application of this
subsection would threaten the financial viability of the insurer, and
(B) the health insurer offers an alternative method for increasing
premiums that is not substantially discriminatory to any sector or to
any group or individual covered by a health insurance plan offered by
the insurer.
(d) Prior Approval for Certain Rate Increases.
(1) In general. If the percentage increase in the premium rate for the
individual and small group sector exceeds a percentage specified by the
Secretary under paragraph (2), annualized over any 12-month period, the
increase shall not take effect unless the Secretary (or a State acting
under a contract with the Secretary under section 11001(b)(3)) has
approved the increase.
(2) Percentage. The Secretary shall specify, for each 12-month period
beginning after the date of the enactment of this Act, a percentage that
will apply under paragraph (1). Such percentage shall be determined
taking into consideration the rate of increase in health care costs and
utilization, previous trends in health insurance premiums, and the
conditions in the health insurance market. Within 30 days after the date
of the enactment of this Act, the Secretary shall first specify a
percentage under this paragraph.
(e) Documentation of Compliance.
(1) Period for conformance. Effective 1 year after the date of the
enactment of this Act, the premium for each policy shall be conformed in
a manner that complies with the provisions of this section.
(2) Methodology. Each health insurer shall document the methodology
used in applying subsections (b) and (c) with respect to each sector (and
each applicable health plan). Such documentation shall be sufficient to
permit the auditing of the application of such methodology to determine
if such application was consistent with such subsections.
(3) Certification. For each 6-month period in which this section is
effective, each health insurer shall file a certification with the
Secretary (or with a State with which the Secretary has entered into an
arrangement under section 11001(b)(3)) that the insurer is in compliance
with such requirements.
(f) Regulations. The Secretary shall establish regulations to carry out
this section. Such regulations may include guidelines relating to the
permissible variation that results from the use of demographic or other
characteristics in the development of rate factors. Such guidelines may be
based on the guidelines currently used by States in applying rate
limitations under State insurance regulations.
(g) Effective Period. This section shall apply to premium increases
occurring during the period beginning on the date of the enactment of this
Act and ending, for a health insurance plan provided in a State, on the
first day of the State's first year.
SEC. 11005. REQUIREMENTS RELATING TO PORTABILITY.
(a) Treatment of Preexisting Condition Exclusions.
(1) In general. Subject to the succeeding provisions of this
subsection, a group health benefit plan 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. The exclusion of
coverage shall not apply to services furnished to newborns or in the case
of a plan that did not apply such exclusions as of the effective date of
this title.
(2) Crediting of previous coverage.
(A) In general. A group health benefit plan shall provide that if an
individual covered under such plan is in a period of continuous
coverage (as defined in subparagraph (B)(i)) with respect to particular
services as of the date of initial coverage under such plan, any period
of exclusion of coverage with respect to a preexisting condition for
such services or type of services shall be reduced by 1 month for each
month in the period of continuous coverage.
(B) Definitions. As used in this paragraph:
(i) Period of continuous coverage. The term ``period of continuous
coverage'' means, with respect to particular services, the period
beginning on the date an individual is enrolled under a group or
individual health benefit plan, self-insured plan, the medicare
program, a State medicaid plan, or other health benefit arrangement
which provides benefits with respect to such services and ends on the
date the individual is not so enrolled for a continuous period of
more than 3 months.
(ii) Preexisting condition. The term ``preexisting condition''
means, with respect to coverage under a health benefits plan, a
condition which has been diagnosed or treated during the 6-month
period ending on the day before the first date of such coverage
(without regard to any waiting period).
(b) Waiting Periods. A self-insured plan, and an employer with respect to
a group health insurance plan, may not discriminate among employees in the
establishment of a waiting period before making health insurance coverage
available based on the health status, claims experience, receipt of health
care, medical history, or lack of evidence of insurability, of the employee
or the employee's dependents.
SEC. 11006. REQUIREMENTS LIMITING REDUCTION OF BENEFITS.
(a) In General. A self-insured sponsor may not make a modification of
benefits described in subsection (b).
(b) Modification of Benefits Described.
(1) In general. A modification of benefits described in this subsection
is any reduction or limitation in coverage, effected on or after the
effective date of this title, with respect to any medical condition or
course of treatment for which the anticipated cost is likely to exceed
$5,000 in any 12-month period.
(2) Treatment of termination. A modification of benefits includes the
termination of a plan if the sponsor, within a period establishes a
substitute plan that reflects the reduction or limitation described in
paragraph (1).
(c) Remedy. Any modification made in violation of this section shall not
be effective and the self-insured sponsor shall continue to provide
benefits as though the modification (described in subsection (b)) had not
occurred.
SEC. 11007. NATIONAL TRANSITIONAL HEALTH INSURANCE RISK POOL.
(a) Establishment. In order to assure access to health insurance during
the transition, the Secretary is authorized to establish a National
Transitional Health Insurance Risk Pool (in this section referred to as the
``national risk pool'') in accordance with this section.
(b) Administration.
(1) In general. The Secretary may administer the national risk pool
through contracts with
(A) one or more existing State health insurance risk pools,
(B) one or more private health insurers, or
(C) such other contracts as the Secretary deems appropriate.
(2) Coordination with state risk pools. The Secretary may enter into
such arrangements with existing State health insurance risk pools to
coordinate the coverage under such pools with the coverage under the
national risk pool. Such coordination may address eligibility and funding
of coverage for individuals currently covered under State risk pools.
(c) Eligibility for Coverage. The national risk pool shall provide health
insurance coverage to individuals who are unable to secure health insurance
coverage from private health insurers because of their health status or
condition (as determined in accordance with rules and procedures specified
by the Secretary).
(d) Benefits.
(1) In general. Benefits and terms of coverage provided through the
national risk pool shall include items and services, conditions of
coverage, and cost sharing (subject to out-of-pocket limits on cost
sharing) comparable to the benefits and terms of coverage available in
State health insurance risk pools.
(2) Payment rates. Payments under the national risk pool for covered
items and services shall be made at rates (specified by the Secretary)
based on payment rates for comparable items and services under the
medicare program. Providers who accept payment from the national risk
pool shall accept such payment as payment in full for the service, other
than for cost sharing provided under the national risk pool.
(e) Premiums.
(1) In general. Premiums for coverage in the national risk pool shall
be set in a manner specified by the Secretary.
(2) Variation. Such premiums shall vary based upon age, place of
residence, and other traditional underwriting factors other than on the
basis of health status or claims experience.
(3) Limitation. The premiums charged individuals shall be set at a
level that is no less than 150 percent of the premiums that the Secretary
estimates would be charged to a population of average risk for the
covered benefits.
(f) Treatment of Shortfalls.
(1) Estimates. The Secretary shall estimate each year the extent to
which the total premiums collected under subsection (c) in the year are
insufficient to cover the expenses of the national risk pool with respect
to the year.
(2) Temporary borrowing authority. The Secretary of the Treasury is
authorized to advance to the Secretary amounts sufficient to cover the
amount estimated under paragraph (1) during the year before assessments
are collected under paragraph (3). The Secretary shall repay such
amounts, with interest at a rate specified by the Secretary of the
Treasury, from the assessments under paragraph (3).
(3) Assessments.
(A) In general. Each health benefit plan sponsor shall be liable for
an assessment in the amount specified in subparagraph (C).
(B) Amount. For each year for which amounts are advanced under
paragraph (2), the Secretary shall
(i) estimate the total amount of premiums (and premium equivalents)
for health benefits under health benefit plans for the succeeding
year, and
(ii) calculate a percentage equal to (I) the total amounts
repayable by the Secretary to the Secretary of the Treasury under
paragraph (2) for the year, divided by the amount determined under
clause (i).
(C) Assessment amount. The amount of an assessment for a sponsor of a
health benefit plan for a year shall be equal to the percentage
calculated under subparagraph (B)(ii) (or, if less, \1/2\ of 1 percent)
of the total amount of premiums (and premium equivalents) for health
benefits under the plan for the previous year.
(D) Self-insured plans. The amount of premiums (and premium
equivalents) under this paragraph shall be estimated
(i) by the Secretary for health insurance plans, and
(ii) by the Secretary of Labor for self-insured plans.
Such estimates may be based on a methodology that requires plans
liable for assessment to file information with the applicable
Secretary.
SEC. 11008. DEFINITIONS.
In this title:
(1) Applicable secretary. The term ``applicable Secretary'' means
(A) the Secretary with respect to health insurance plans and
insurers, or
(B) the Secretary of labor with respect to self-insured plans and
self-insured plan sponsors.
(2) Covered employee. The term ``covered employee'' means an employee
(or dependent of such an employee) covered under a group health benefits
plan.
(3) Covered individual. The ``covered individual'' means, with respect
to a health benefit plan, an individual insured, enrolled, eligible for
benefits, or otherwise covered under the plan.
(4) Group health benefits plan. The term ``group health benefits plan''
means a group health insurance plan and a self-insured plan.
(5) Group health insurance plan.
(A) In general. The term ``group health insurance plan'' means a
health insurance plan offered primarily to employers for the purpose of
providing health insurance to the employees (and dependents) of the
employer.
(B) Inclusion of association plans and mewas. Such term includes
(i) any arrangement in which coverage for health benefits is
offered to employers through an association, trust, or other
arrangement, and
(ii) a multiple employer welfare arrangement (as defined in section
3(40) of the Employee Retirement Income Security Act of 1974),
whether funded through insurance or otherwise.
(6) Health benefits plan. The term ``health benefits plan'' means
health insurance plan and a self-insured health benefit plan.
(7) Health benefit plan sponsor. The term ``health benefit plan
sponsor'' means, with respect to a health insurance plan or self-insured
plan, the insurer offering the plan or the self-insured sponsor for the
plan, respectively.
(8) Health insurance plan.
(A) In general. Except as provided in subparagraph (B), the term
``health insurance plan'' means any contract of health insurance,
including any hospital or medical service policy or certificate, any
major medical policy or certificate, any hospital or medical service
plan contract, or health maintenance organization subscriber contract
offered by an insurer.
(B) Exception. Such term does not include any of the following
(i) coverage only for accident, dental, vision, disability income,
or long-term care insurance, or any combination thereof,
(ii) medicare supplemental health insurance,
(iii) coverage issued as a supplement to liability insurance,
(iv) worker's compensation or similar insurance, or
(v) automobile medical-payment insurance,
or any combination thereof.
(C) Stop loss insurance not covered. Such term does not include any
aggregate or specific stop-loss insurance or similar coverage
applicable to a self-insured plan. The Secretary may develop rules
determining the applicability of this subparagraph with respect to
minimum premium plans or other partially insured plans.
(9) Health insurer. The term ``health insurer'' means a licensed
insurance company, a prepaid hospital or medical service plan, a health
maintenance organization, or other entity providing a plan of health
insurance or health benefits with respect to which the State insurance
laws are not preempted under section 514 of the Employee Retirement
Income Security Act of 1974.
(10) Individual health insurance plan.
(A) In general. The term ``individual health insurance plan'' means
any health insurance plan directly purchased by an individual or
offered primarily to individuals (including families) for the purpose
of permitting individuals (without regard to an employer contribution)
to purchase health insurance coverage.
(B) Inclusion of association plans. Such term includes any
arrangement in which coverage for health benefits is offered to
individuals through an association, trust, list-billing arrangement, or
other arrangement in which the individual purchaser is primarily
responsible for the payment of any premium associated with the
contract.
(C) Treatment of certain association plans. In the case of a health
insurance plan sponsored by an association, trust, or other arrangement
that provides health insurance coverage both to employers and to
individuals, the plan shall be treated as
(i) a group health insurance plan with respect to such employers,
and
(ii) an individual health insurance plan with respect to such
individuals.
(11) Self-insured plan. The term ``self-insured plan'' means an
employee welfare benefit plan or other arrangement insofar as the plan or
arrangement provides benefits with respect to some or all of the items
and services included in the comprehensive benefit package (as in effect
as of January 1, 1995) that is funded in a manner other than through the
purchase of one or more health insurance plans. such term shall not
include a group health insurance plan (as defined in paragraph
(5)(B)(ii)).
(12) Self-insured sponsor. The term ``self-insured sponsor'' includes,
with respect to a self-insured plan, any entity which establishes or
maintains the plan.
(13) State commissioner of insurance. The term ``State commissioner of
insurance'' includes a State superintendent of insurance.
SEC. 11009. TERMINATION.
(a) Health Insurance Plans. The provisions of this title shall not apply
to a health insurance plan provided in a State on and after the first day
of the first year for the State.
(b) Self-Insured Plans. The provisions of this title shall not apply to a
self-insured plan that
(1) is sponsored by a sponsor that is an eligible sponsor of a
corporate alliance (described in section 1311(b)(1)), as of the effective
date of the election under section 1312(c).
(2) is sponsored by a sponsor that is not such an eligible sponsor,
with respect to individuals or groups in a State on and after the first
day of the first year for the State.
Title XII: TEMPORARY ASSESSMENT ON EMPLOYERS WITH RETIREE HEALTH BENEFIT
COSTS
Table of contents
Section 1201. Temporary assessment on employers with retiree
health benefit costs.
Section 1202. Recapture of retiree subsidy beginning in 1998.
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SEC. .
(a) In General. Subtitle C (relating to employment taxes) is amended by
inserting after chapter 24A the following new chapter:
``CHAPTER 24B TEMPORARY ASSESSMENT ON EMPLOYERS WITH RETIREE HEALTH
BENEFIT
COSTS
``Subchapter A. Temporary assessment.
``Subchapter B. Definitions and administrative provisions.
``Subchapter A Temporary Assessment
``Sec. 3463. Temporary assessment on employers with retiree health benefit
costs.
``SEC. 3463. TEMPORARY ASSESSMENT ON EMPLOYERS WITH RETIREE HEALTH
BENEFIT
COSTS.
``(a) Imposition of Assessment. Every employer with base period retiree
health costs shall pay (in addition to any other amount imposed by this
subtitle) for each calendar year to which this section applies an
assessment equal to the amount determined under subsection (b).
``(b) Amount of Assessment. For purposes of subsection (a), the amount
determined under this subsection with respect to any employer for any
calendar year is 50 percent of the greater of
``(1) the adjusted base period retiree health costs of such employer for
such calendar year, or
``(2) the amount (determined in the manner prescribed by the Secretary)
by which such employer's applicable retiree health costs for such calendar
year were reduced by reason of the enactment of the Health Security Act.
``(c) Definitions. For purposes of this section
``(1) Base period retiree health costs. The term `base period retiree
health costs' means the average of the applicable retiree health costs of
the employer for calendar years 1991, 1992, and 1993.
``(2) Adjusted base period retiree health costs.
``(A) In general. The term `adjusted base period retiree health costs'
means, with respect to any employer for any calendar year, the base period
retiree health costs of the employer adjusted in the manner prescribed by
the Secretary to reflect increases in the medical care component of the
Consumer Price Index during the period after 1992 and before such calendar
year.
``(B) Adjustments for acquisitions and dispositions. Rules similar to the
rules of subparagraphs (A) and (B) of section 41(f)(3) shall apply to
acquisitions and dispositions after December 31, 1993.
``(3) Applicable retiree health costs.
``(A) In general. The term `applicable retiree health costs' means, with
respect to any employer for any calendar year, the aggregate cost
(including administrative costs) of the health benefits or coverage
provided during such calendar year (whether directly by the employer or
through a plan described in section 401(h) or a welfare benefit fund as
defined in section 419(e)) to individuals who are entitled to receive such
benefits or coverage by reason of being retired employees of such employer
(or by reason of being a spouse or other beneficiary of such an employee).
``(B) Only benefits and coverage after age 55 and before age 65 taken
into account. In applying subparagraph (A), there shall be taken into
account only health benefits and coverage provided after the date the
retired employee attained age 55 and before the date such employee attained
(or, but for the death of such employee, would have attained) age 65.
``(d) Years to Which Assessment Applies. This section shall apply to
calendar years 1998, 1999, and 2000.
``Subchapter B Definitions and Administrative Provisions
``SEC. 3464. DEFINITIONS AND ADMINISTRATIVE PROVISIONS
``(a) Employer. For purposes of this chapter
``(1) In general. The term `employer' means any person or governmental
entity for whom an individual performs services, of whatever nature, as an
employee (as defined in section 3401(c)).
``(2) Special rules.
``(A) An individual who owns the entire interest in an unincorporated
trade or business shall be treated as his own employer.
``(B) A partnership shall be treated as the employer of each partner who
is an employee within the meaning of section 401(c)(1).
``(C) An S corporation shall be treated as the employer of each
shareholder who is an employee within the meaning of section 401(c)(1).
``(b) Assessment to Apply to Governmental and Other Tax-Exempt Entities.
Notwithstanding any other provision of law or rule of law, none of the
following shall be exempt from the assessment imposed by this chapter:
``(1) The United States, any State or political subdivision thereof, the
District of Columbia, and any agency or instrumentality of any of the
foregoing.
``(2) Any other entity otherwise exempt from tax under chapter 1.
``(c) Administrative Provisions.
``(1) Payment. Any assessment under section 3463 for any calendar year
shall be paid on or before March 15 of the following calendar year; except
that the Secretary may require quarterly estimated payments of such
assessment in a manner similar to the requirements of section 6655.
``(2) Collection, etc. For purposes of subtitle F, any assessment under
this subchapter shall be treated as if it were a tax imposed by this
subtitle.''
(b) Clerical Amendment. The table of chapters for subtitle C is amended
by inserting after the item relating to chapter 24A the following new item:
``Chapter 24B. Temporary Assessment on Employers With Retiree Health
Benefit Costs.''
(c) Effective Date. The amendments made by this section shall take effect
on January 1, 1998.
SEC. 1202. RECAPTURE OF RETIREE SUBSIDY BEGINNING IN 1998.
(a) In General. Paragraph (2) of section 59B(a) (relating to recapture of
certain health care subsidies), as added by title VII of this Act, is
amended by striking ``December 31, 1999'' and inserting ``December 31,
1997''.
(b) Technical Amendment. Paragraph (2) of section 7131(d) of this Act is
amended by striking ``December 31, 2001'' and inserting ``December 31,
1999''.