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Health Care Reform Studies I
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1
HEALTH CARE REFORM STUDIES
I
THE WHITE HOUSE
WASHINGTON
April 2, 1990
MEMORANDUM FOR DAVID Q. BATES
FROM:
KEN YALE Ky
SUBJECT:
Health Care Reform Studies
The President gave the DPC a mandate to review studies and
recommendations for health care delivery system reform.
Due to the growing interest in the health care reform
debate, there are many such studies currently underway or
recently completed. Some are major government initiatives: ie.,
the "Pepper Commission", Social Security Quadrennial Commission,
and Treasury Department Health Care Financing. Others are major
private sector reports and recommendations: ie., the American
Medical Association and Health Insurance Association of America
reports. In addition, there are several major legislative
proposals introduced or in the formative stages on the Hill.
We are working with HHS to develop a system to compile these
reports and recommendations. You will recall that Governor
Sununu had asked about the different reports at an earlier
meeting. At some point it may be appropriate to develop a side-
by-side comparison, to address questions such as those raised by
the Governor. In addition, we can produce a summary of any
report for your use, should it be necessary.
CC: Stephen Danzansky
Dan Heimbach
John Schall
Justine D'Andrea
Sara Sumner
HEALTH CARE REFORM STUDIES
1.
A National Health System for America, The Heritage Foundation (1989)
2.
A National Health Program for the United States: A Physician's Proposal, The
New England Journal of Medicine (January 12, 1989)
3.
National Governors' Association Study on Medicaid Eligibility and Coverage for
Pregnant Women, Children and Families (July 1989)
4.
Insurance Association of Connecticut Proposal on Medically Uninsured (January
9, 1990)
5.
S.2032, Health Care Insurance Credit Legislation (Cohen, introduced January
30, 1990)
6.
S.2050, Medigap Fraud and Abuse Prevention Act (Kohl, introduced February
1,1990)
7.
H.R. 3931-3, Medicaid Expansions (Waxman, reintroduced February 1, 1990)
8.
Health Insurance Association of America (HIAA) Proposal to Expand Access to
Health Care (February 19, 1990)
9.
AFL-CIO Principles For National Health Care Reform (February 20, 1990)
10.
S.2163, Universal Health Insurance for Seniors (Kennedy, introduced February
22, 1990)
11.
H.R.4070, The Health Care Empowerment and Access Legislation (Grandy,
introduced February 22, 1990)
12.
S.2199, The Health and Long-Term Security Act of 1990 (Packwood,
introduced February 28, 1990)
13.
Department of the Treasury Report: Financing Health and Long-Term Care
(March 1990)
14.
A Report to the Governor and Members of the California Legislature on Health
Insurance Coverage (March 1, 1990)
15.
Pepper Commission Report on Access to Health Care and Long-Term Care
(March 2, 1990)
16.
American Medical Association (AMA) Health Care Reform Proposal (March 5,
1990)
17.
S.2246, Medicare Home Benefits Improvement Act (Bradley, introduced March
7, 1990)
18.
H.R. 4253, Universal Health Program for All Americans (Oaker, introduced
March 13, 1990)
19.
H.R. 4280, Health Insurance for Children and Mothers Act of 1990 (Stark,
introduced March 15, 1990)
20.
Steelman Report
Abstracts in the
The
advertising
MEDICINE OF 1823 1812 NEW 1828 ENGLAND
sections
1928
JOURNAL
New England
Journal of Medicine
Established in 1812 as The NEW ENGLAND JOURNAL OF MEDICINE AND SURGERY
VOLUME 320
JANUARY 12, 1989
NUMBER 2
Original Articles
Case Records of the
Effect of Omeprazole and Ranitidine on UI-
Massachusetts General Hospital
cer Healing and Relapse Rates in Pa-
A 59-Year-Old Woman with Asthma and
tients with Benign Gastric Ulcer
69
Multiple Pulmonary Nodules
108
ANDERS WALAN, JEAN-PIERRE BADER.
BARRY W. LEVINE AND EUGENE J. MARK
MEINHARD CLASSEN, CORNELIS B.H.W. LAMERS.
DOUGLAS W. PIPER, KERSTIN RUTGERSSON,
AND SVEN ERIKSSON
Editorial
Patterns of Transmission in Measles Out-
Universal Health Insurance: Its Time Has
breaks in the United States, 1985-1986
75
Come
117
LAURI E. MARKOWITZ. STEPHEN R. PREBLUD,
WALTER A. ORENSTEIN, ELIZABETH Z. ROVIRA,
NANCY C. ADAMS, CARL E. HAWKINS.
Sounding Board
AND ALAN R. HINMAN
Technology and the Allocation of Resources
118
The Efficacy of Endoscopic Sphincterotomy
MAURICE McGREGOR
after Cholecystectomy in Patients with
Sphincter-of-Oddi Dysfunction
82
Correspondence
JOSEPH E. GEENEN, WALTER J. HOGAN,
WYLIE J. DODDS, JAMES TOOULI,
Do Physicians Have an Obligation to Treat Pa-
AND RAMA P. VENU
tients with AIDS?
120
Aplastic Anemia after Liver Transplantation for
High-Frequency Oscillatory Ventilation
Non-A, Non-B Hepatitis
122
Compared with Conventional Mechani-
Diltiazem and Mortality and Reinfarction after
cal Ventilation in the Treatment of Res-
Myocardial Infarction
123
piratory Failure in Preterm Infants
88
Atrial Fibrillation Induced by Breath Spray
124
THE HIFI STUDY GROUP
Release of Endogenous Digitalis-like Factor with
Sodium Loading
124
Treatment of Ethylene Glycol Poisoning with
Special Articles
Intravenous 4-Methylpyrazole
125
Recognizing the Alcoholic Patient
125
A Consumer-Choice Health Plan for the
Critical Care Medicine
126
1990s: Universal Health Insurance in a
Teenagers' Concerns about Nuclear War
127
System Designed to Promote Quality
and Economy (Second of Two Parts)
94
ALAIN ENTHOVEN AND RICHARD KRONICK
Book Reviews
127
A National Health Program for the United
States: A Physicians' Proposal
102
Books Received
130
DAVID U. HIMMELSTEIN, STEFFIE WOOLHANDLER,
AND THE WRITING COMMITTEE OF THE WORKING
GROUP ON PROGRAM DESIGN
Notices
132
Owned, Published, and Copyrighted. 1989, by the Massachusetts Medical Society
THE NEW ENGLAND JOURNAL OF MEDICINE JISSN 0028-4793; is published weekly from editorial offices at 10 Shattuck Street. Boston. MA 02115-6094.
Subscription price: $74.00 per year. Second-dass postage paid at Boston and at additional mailing offices.
POSTMASTER: Send address changes to P.O. Box 803, Waltham, MA 02254-0803.
102
THE NEW ENGLAND JOURNAL OF MEDICINE
Jan. 12, 1989
A NATIONAL HEALTH PROGRAM FOR THE UNITED STATES
A Physicians' Proposal
DAVID U. HIMMELSTEIN, M.D., STEFFIE WOOLHANDLER, M.D., M.P.H.,
AND THE WRITING COMMITTEE OF THE WORKING GROUP ON PROGRAM DESIGN*
Abstract Our health care system is failing. Tens of mil-
tional health program payment as the total payment for a
lions of people are uninsured, costs are skyrocketing, and
service or procedure (assignment), through global bud-
the bureaucracy is expanding. Patchwork reforms suc-
gets for hospitals and clinics employing salaried physi-
ceed only in exchanging old problems for new ones. It is
cians, or on a per capita basis (capitation); (5) be funded.
time for basic change in American medicine. We propose
at least initially, from the same sources as at present,
a national health program that would (1) fully cover every-
but with all payments disbursed from a single pool; and
one under a single, comprehensive public insurance pro-
(6) contain costs through savings on billing and bureau-
gram; (2) pay hospitals and nursing homes a total (global)
cracy, improved health planning, and the ability of the na-
annual amount to cover all operating expenses; (3) fund
tional health program, as the single payer for services, to
capital costs through separate appropriations; (4) pay for
establish overall spending limits. Through this proposal,
physicians' services and ambulatory services in any of
we hope to provide a pragmatic framework for public de-
three ways: through fee-for-service payments with a sim-
bate of fundamental health-policy reform. (N Engl J Med
plified fee schedule and mandatory acceptance of the na-
1989; 320:102-8.)
O
UR health care system is failing. It denies ac-
are greatly experienced, and some have held senior
cess to many in need and is expensive. ineffi-
positions in American medicine.
cient, and increasingly bureaucratic. The pressures of
As physicians, we constantly confront the irration-
cost control. competition. and profit threaten the tra-
ality of the present health care system. In private
ditional tenets of medical practice. For patients. the
practice. we waste countless hours on billing and bu-
misfortune of illness is often amplified by the fear
reaucracy. For uninsured patients, we avoid proce-
of financial ruin. For physicians, the gratifications
dures, consultations, and costly medications. Diagno-
of healing often give way to anger and alienation.
sis-related groups (DRGs) have placed us between
Patchwork reforms succeed only in exchanging old
administrators demanding early discharge and elderly
problems for new ones. It is time to change fundamen-
patients with no one to help at home - - all the while
tally the trajectory of American medicine - to devel-
glancing over our shoulders at the peer-review organi-
op a comprehensive national health program for the
zation. In HMOs we walk a tightrope between thrift
United States.
and penuriousness, too often under the pressure of
We are physicians active in the full range of medical
surveillance by bureaucrats more concerned with the
endeavors. We are primary care doctors and surgeons,
bottom line than with other measures of achievement.
psychiatrists and public health specialists. patholo-
In public health work we are frustrated in the face of
gists and administrators. We work in hospitals. clin-
plenty; the world's richest health care system is unable
ics, private practices, health maintenance organiza-
to ensure such basic services as prenatal care and im-
tions (HMOs), universities, corporations, and public
munizations.
agencies. Some of us are young. still in training: others
Despite our disparate perspectives, we are united by
dismay at the current state of medicine and by the
conviction that an alternative must be developed. We
From the Working Group on Program Design. Physicians for a National Health
Program. Center for National Health Program Studies. Cambridge Hospital-Har-
hope to spark debate, to transform disaffection with
vard Medical School. 1493 Cambridge St.. Cambridge. MA 02139. where reprint
what exists into a vision of what might be. To this end,
requests should be addressed to Dr. Himmelstein.
we submit for public review, comment, and revision a
*This proposal was drafted by a 30-member Writing Committee. then reviewed
and endorsed by 412 other physicians representing virtually every state and medi-
working plan for a rational and humane health care
cal specialty. A full list of the endorsers is available on request. The members of
system - a national health program.
the Writing Committee were as follows: David U. Himmelstein. M.D.. Cam-
We envisage a program that would be federally
bridge, Mass. (cochair): Steffie Woolhandler. M.D., M.P.H.. Cambridge. Mass.
(cochair): Thomas S. Bodenheimer. M.D., San Francisco: David H. Bor. M.D.,
mandated and ultimately funded by the federal gov-
Cambridge. Mass.: Christine K. Cassel. M.D., Chicago: Mardge Cohen. M.D.,
ernment but administered largely at the state and lo-
Chicago: David A. Danielson, M.P.H.. Newton. Mass.: Alan Drabkin. M.D.,
cal level. The proposed system would eliminate finan-
Cambridge. Mass.: Paul Epstein. M.D.. Brookline. Mass.: Kenneth Frisof.
M.D., Cleveland: Howard Frumkin. M.D., M.P.H.. Philadelphia: Martha S.
cial barriers to care; minimize economic incentives for
Gerrity. M.D., Chapel Hill, N.C.; Jerome D. Gorman. M.D., Richmond. Va.;
both excessive and insufficient care, discourage ad-
Michelle D. Holmes. M.D., Cambridge. Mass.: Henry S. Kahn. M.D.. Atlanta:
ministrative interference and expense, improve the
Robert S. Lawrence. M.D., Cambridge. Mass.: Joanne Lukomnik. M.D.. Bronx.
N.Y.: Arthur Mazer. M.P.H., Cambridge. Mass.: Alan Meyers. M.D.. Boston:
distribution of health facilities, and control costs by
Patrick Murray. M.D., Cleveland: Vicente Navarro. M.D., Dr.P.H.. Baltimore:
curtailing bureaucracy and fostering health planning.
Peter Orris. M.D.. Chicago; David C. Parish. M.D.. M.P.H.. Macon. Ga.:
Richard J. Pels. M.D., Boston; Leonard S. Rodberg. Ph.D.. New York City:
Our plan borrows many features from the Canadian
Jeffrey Scavron. M.D.. Springfield. Mass.: Gorden Schiff. M.D.. Chicago:
national health program and adapts them to the
Isaac M. Taylor. M.D., Boston: Howard Waitzkin. M.D. Ph.D.. Anaheim.
Calif.: Paul H. Wise. M.D., M.P.H.. Boston: and William Zinn. M.D..
unique circumstances of the United States. We sug-
Cambridge. Mass.
gest that, as in Canada's provinces. the national
Vol. 320 No. 2
NATIONAL HEALTH PROGRAM - HIMMELSTEIN ET AL.
103
health program be tested initially in statewide demon-
Instead of the confused and often unjust dictates of
stration projects. Thus. our proposal addresses both
insurance companies, a greatly expanded program of
the structure of the national health program and the
technology assessment and cost-effectiveness evalua-
transition process necessary to implement the pro-
tion would guide decisions about covered services, as
gram in a single state. In each section below. we pre-
well as about the allocation of funds for capital spend-
sent a key feature of the proposal. followed by the ra-
ing, drug formularies, and other issues.
tionale for our approach. Areas such as long-term
PAYMENT FOR HOSPITAL SERVICES
care; public. occupational. environmental. and mental
health; and medical education need much more devel-
Each hospital would receive an annual lump-sum
opment and will be addressed in detail in future pro-
payment to cover all operating expenses - a "global"
posals.
budget. The amount of this payment would be negoti-
ated with the state national health program payment
COVERAGE
board and would be based on past expenditures, pre-
Everyone would be included in a single public plan
vious financial and clinical performance, projected
covering all medically necessary services. including
changes in levels of services, wages and other costs,
acute, rehabilitative, long-term. and home care;
and proposed new and innovative programs. Hospi-
mental health services; dental services: occupational
tals would not bill for services covered by the national
health care; prescription drugs and medical supplies;
health program. No part of the operating budget
and preventive and public health measures. Boards
could be used for hospital expansion, profit, market-
of experts and community representatives would de-
ing, or major capital purchases or leases. These ex-
termine which services were unnecessary or ineffec-
penditures would also come from the national health
tive, and these would be excluded from coverage. As
program fund, but monies for them would be appro-
in Canada. alternative insurance coverage for serv-
priated separately.
ices included under the national health program
Global prospective budgeting would simplify hospi-
would be eliminated. as would patient copayments
tal. administration and virtually eliminate billing, thus
and deductibles.
freeing up substantial resources for increased clinical
Universal coverage would solve the gravest problem
care. Before the nationwide implementation of the na-
in health care by climinating financial barriers to care.
tional health program. hospitals in the states with
A single comprehensive program is necessary both to
demonstration programs could bill out-of-state pa-
ensure equal access to care and to minimize the com-
tients on a simple per diem basis. Prohibiting the use
plexity and expense of billing and administration. The
of operating funds for capital purchases or profit
public administration of insurance funds would save
would eliminate the main financial incentive for both
tens of billions of dollars each year. The more than
excessive intervention (under fee-for-service payment)
1500 private health insurers in the United States now
and skimping on care (under DRG-type prospective-
consume about 8 percent of revenues for overhead,
payment systems). since neither inflating revenues nor
whereas both the Medicare program and the Canadi-
limiting care could result in gain for the institution.
an national health program have overhead costs of
The separate appropriation of funds explicitly desig-
only 2 to 3 percent. The complexity of our current
nated for capital expenditures would facilitate rational
insurance system. with its multiplicity of payers.
health planning. In Canada, this method of hospital
forces U.S. hospitals to spend more than twice as
payment has been successful in containing costs, mini-
much as Canadian hospitals on billing and adminis-
mizing bureaucracy, improving the distribution of
tration and requires U.S. physicians to spend about 10
health resources. and maintaining the quality of
percent of their gross incomes on excess billing costs.¹
care. 6-9 It shifts the focus of hospital administration
Eliminating insurance programs that duplicated the
away from the bottom line and toward the provision of
national health program coverage. though politically
optimal clinical services.
thorny, would clearly be within the prerogative of the
PAYMENT FOR PHYSICIANS' SERVICES,
Congress.² Failure to do so would require the continu-
ation of the costly bureaucracy necessary to adminis-
AMBULATORY CARE, AND MEDICAL HOME CARE
ter and deal with such programs.
To minimize the disruption of existing patterns of
Copayments and deductibles endanger the health
care, the national health program would include three
of poor people who are sick,³ decrease the use of vital
payment options for physicians and other practition-
inpatient medical services as much as they discourage
ers: fee-for-service payment, salaried positions in insti-
the use of unnecessary ones,⁴ discourage preventive
tutions receiving global budgets. and salaried posi-
care,⁵ and are unwieldy and expensive to administer.
tions within group practices or HMOs receiving per
Canada has few such charges, yet health costs are
capita (capitation) payments.
lower than in the United States and have risen slow-
ly.6.7 In the United States. in contrast. increasing co-
Fee-for-Service Payment
payments and deductibles have failed to slow the esca-
The state national health program payment board
lation of costs.
and a representative of the fee-for-service practition-
104
THE NEW ENGLAND JOURNAL OF MEDICINE
Jan. 12, 1989
ers (perhaps the state medical society) would negoti-
access to and satisfaction with care on the part of
ate a simplified. binding fee schedule. Physicians
patients. 6,7 The Canadian provinces have responded
would submit bills to the national health program on a
to the inflationary potential of fee-for-service payment
simple form or by computer and would receive extra
in various ways: by limiting the number of physicians,
payment for any bill not paid within 30 days. Pay-
by monitoring physicians for outlandish practice pat-
ments to physicians would cover only the services pro-
terns, by setting overall limits on a province's spend-
vided by physicians and their support staff and would
ing for physicians' services (thus relying on the profes-
exclude reimbursement for costly capital purchases of
sion to police itself), and even by capping the total
equipment for the office. such as CT scanners. Phy-
reimbursement of individual physicians. These regu-
sicians who accepted payment from the national
latory options have been made possible (and have not
health program could bill patients directly only for
required an extensive bureaucracy) because all pay-
uncovered services (as is done for cosmetic surgery
ment comes from a single source. Similar measures
in Canada).
might be needed in the United States, although our
penchant for bureaucratic hypertrophy might require
Global Budgets
a concomitant cap on spending for the regulatory ap-
Institutions such as hospitals, health centers. group
paratus. For example, spending for program adminis-
practices, clinics serving migrant workers, and medi-
tration and reimbursement bureaucracy might be re-
cal home care agencies could elect to receive a global
stricted to 3 percent of total costs.
budget for the delivery of outpatient, home care, and
Global budgets for institutional providers would
physicians' services, as well as for preventive health
eliminate billing, while providing a predictable and
care and patient-education programs. The negotiation
stable source of income. Such funding could also en-
process and the regulations covering capital expendi-
courage the development of preventive health pro-
tures and profits would be similar to those for inpa-
grams in the community, such as education programs
tient hospital services. Physicians employed in such
on the acquired immunodeficiency syndrome (AIDS),
institutions would be salaried.
whose costs are difficult to attribute and bill to indi-
vidual patients.
Capitation
Continuity of care would no longer be disrupted
HMOs, group practices, and other institutions
when patients' insurance coverage changed as a result
could elect to be paid fees on a per capita basis to cover
of retirement or a job change. Incentives for providers
all outpatient care. physicians' services, and medical
receiving capitation payments to skimp on care would
home care. The regulations covering the use of such
be minimized. since unused operating funds could not
payments for capital expenditures and for profits
be devoted to expansion or profit.
would be similar to those that would apply to hospi-
PAYMENT FOR LONG-TERM CARE
tals. The capitation fee would not cover inpatient serv-
ices (except care provided by a physician), which
A separate proposal for long-term care is under de-
would be included in hospitals' global budgets. Selec-
velopment, guided by three principles. First, access
tive enrollment policies would be prohibited, and pa-
to care should be based on need rather than on
tients would be permitted to leave an HMO or other
age or ability to pay. Second, social and community-
health plan with appropriate notice. Physicians work-
based services should be expanded and integrated
ing in HMOs would be salaried, and financial incen-
with institutional care. Third, bureaucracy and entre-
tives to physicians based on the HMO's financial per-
preneurial incentives should be minimized through
formance would be prohibited.
global budgeting with separate funding for capital
The diversity of existing practice arrangements,
expenses.
each with strong proponents, necessitates a pluralistic
ALLOCATION OF CAPITAL FUNDS, HEALTH
approach. Under all three proposed options, capital
purchases and profits would be uncoupled from pay-
PLANNING, AND RETURN ON EQUITY
ments to physicians and other operating costs - a
Funds for the construction or renovation of health
feature that is essential for minimizing entrepreneurial
facilities and for purchases of major equipment would
incentives, containing costs, and facilitating health
be appropriated from the national health program
planning.
budget. The funds would be distributed by state and
Under the fee-for-service option, physicians' office
regional health-planning boards composed of both ex-
overhead would be reduced by the simplification of
perts and community representatives. Capital projects
billing.¹ The improved coverage would encourage pre-
funded by private donations would require approval
ventive care. 10 In Canada, fee-for-service practice
by the health-planning board if they entailed an in-
with negotiated fee schedules and mandatory assign-
crease in future operating expenses.
ment (acceptance of the assigned fee as total payment)
The national health program would pay owners of
has proved to be compatible with cost containment.
for-profit hospitals, nursing homes, and clinics a rea-
adequate incomes for physicians, and a high level of
sonable fixed rate of return on existing equity. Since
Vol. 320 No. 2
A NATIONAL HEALTH PROGRAM - HIMMELSTEIN ET AL.
105
virtually all new capital investment would be funded
structure would mimic existing funding patterns and
by the national health program, it would not be in-
minimize economic disruption.
cluded in calculating the return on equity.
Medicare and Medicaid
Current capital spending greatly affects future oper-
ating costs, as well as the distribution of resources.
All current federal funds allocated to Medicare and
Effective health planning requires that funds go to
Medicaid would be paid to the national health pro-
high-quality, efficient programs in the areas of great-
gram. The contribution of each program would be
est need. Under the existing reimbursement system,
based on the previous year's expenditures. adjusted
which combines operating and capital payments,
for inflation. Using Medicare and Medicaid funds in
prosperous hospitals can expand and modernize,
this manner would require a federal waiver.
whereas impoverished ones cannot, regardless of the
State and Local Funds
health needs of the population they serve or the qual-
ity of services they provide. The national health pro-
All current state and local funds for health care ex-
gram would replace this implicit mechanism for dis-
penditures, adjusted for inflation, would be paid to the
tributing capital with an explicit one, which would
national health program.
facilitate (though not guarantee) allocation on the ba-
sis of need and quality. Insulating these crucial deci-
Employer Contributions
sions from distortion by narrow interests would re-
A tax earmarked for the national health program
quire the rigorous evaluation of the technology and
would be levied on all employers. The tax rate would
assessment of needs, as well as the active involvement
be set so that total collections equaled the previous
of providers and patients.
year's statewide total of employers' expenditures for
For-profit providers would be compensated for ex-
health benefits, adjusted for inflation. Employers obli-
isting investments. Since new for-profit investment
gated by preexisting contracts to provide health bene-
would be barred, the proprietary sector would gradu-
fits could credit the cost of those benefits toward their
ally shrink.
national health program tax liability.
PUBLIC, ENVIRONMENTAL, AND OCCUPATIONAL
Private Insurance Revenues
HEALTH SERVICES
Private health insurance plans duplicating the cov-
Existing arrangements for public, occupational, and
erage of the national health program would be phased
environmental health services would be retained in
out over three years. During this transition period,
the short term. Funding for preventive health care
all revenues from such plans would be turned over
would be expanded. Additional proposals dealing
to the national health program, after the deduction
with these issues are planned.
of a reasonable fee to cover the costs of collecting
premiums.
PRESCRIPTION DRUGS AND SUPPLIES
General Tax Revenues
An expert panel would establish and regularly up-
date a list of all necessary and useful drugs and out-
Additional taxes, equivalent to the amount now
patient equipment. Suppliers would bill the national
spent by individual citizens for insurance premiums
health program directly for the wholesale cost. plus a
and out-of-pocket health costs, would be levied.
reasonable dispensing fee, of any item in the list that
It would be critical for all funds for health care to
was prescribed by a licensed practitioner. The substi-
flow through the national health program. Such sin-
tution of generic for proprietary drugs would be en-
gle-source payment (monopsony) has been the corner-
couraged.
stone of cost containment and health planning in Can-
ada. The mechanism of raising funds for the national
FUNDING
health program would be a matter of tax policy, large-
The national health program would disburse virtu-
ly separate from the organization of the health care
ally all payments for health services. The total expend-
system itself. As in Canada, federal funding could at-
iture would be set at the same proportion of the gross
tenuate inequalities among the states in financial and
national product as health costs represented in the
medical resources.
year preceding the establishment of the national
The transitional proposal for demonstration pro-
health program. Funds for the national health pro-
grams in selected states illustrates how monopsony
gram could be raised through a variety of mecha-
payment could be established with limited disruption
nisms. In the long run, funding based on an income
of existing patterns of health care funding. The em-
tax or other progressive tax might be the fairest and
ployers' contribution would represent a decrease in
most efficient solution, since tax-based funding is the
costs for most firms that now provide health insurance
least cumbersome and least expensive mechanism for
and an increase for those that do not currently pay for
collecting money. During the transition period in
benefits. Some provision might be needed to cushion
states with demonstration programs, the following
the impact of the change on financially strapped small
106
THE NEW ENGLAND JOURNAL OF MEDICINE
Jan. 12, 1989
businesses. Decreased individual spending for health
er countries with national health programs) than in
care would offset the additional tax burden on individ-
the United States. 11,12
ual citizens. Private health insurance, with its attend-
Salaried practitioners would be insulated from the
ant inefficiency and waste, would be largely eliminat-
financial consequences of clinical decisions. Because
ed. A program of job placement and retraining for
savings on patient care could no longer be used for
insurance and hospital-billing employees would be an
institutional expansion or profits, the pressure to
important component of the program during the tran-
skimp on care would be minimized.
sition period.
The Effect on Other Health Workers
DISCUSSION
The Patient's View
Nurses and other health care personnel would enjoy
a more humane and efficient clinical milieu. The bur-
The national health program would establish a
dens of paperwork associated with billing would be
right to comprehensive health care. As in Canada,
lightened. The jobs of many administrative and insur-
each person would receive a national health program
ance employees would be eliminated, necessitating a
card entitling him or her to all necessary medical care
major effort at job placement and retraining. We ad-
without copayments or deductibles. The card could be
vocate that many of these displaced workers be de-
used with any fee-for-service practitioner and at any
ployed in expanded programs of public health, health
institution receiving a global budget. HMO members
promotion and education, and home care and as sup-
could receive nonemergency care only through their
port personnel to free nurses for clinical tasks.
HMO, although they could readily transfer to the
non-HMO option.
The Effect on Hospitals
Thus, patients would have a free choice of provid-
Hospitals' revenues would become stable and pre-
ers. and the financial threat of illness would be elimi-
dictable. More than half the current hospital bureau-
nated. Taxes would increase by an amount equivalent
cracy would be eliminated, and the remaining ad-
to the current total of medical expenditures by indi-
ministrators could focus on facilitating clinical care
viduals. Conversely, individuals' aggregate payments
and planning for future health needs.
for medical care would decrease by the same amount.
The capital budget requests of hospitals would be
The Practitioner's View
weighed against other priorities for health care invest-
ment. Hospitals would neither grow because they
Physicians would have a free choice of practice set-
were profitable nor fail because of unpaid bills - al-
tings. Treatment would no longer bc constrained by
though regional health planning would undoubtedly
the patient's insurance status or by bureaucratic dicta.
mandate that some expand and others close or be put
On the basis of the Canadian experience, we antici-
to other uses. Responsiveness to community needs, the
pate that the average physician's income would
quality of care, efficiency, and innovation would re-
change little, although differences among specialties
place financial performance as the bottom line. The
might be attenuated.
elimination of new for-profit investment would lead to
Fee-for-service practitioners would be paid for the
a gradual conversion of proprietary hospitals to not-
care of anyone not enrolled in an HMO. The entre-
for-profit status.
preneurial aspects of medicine - with the attendant
problems as well as the possibilities - would be limit-
The Effect on the Insurance Industry
ed. Physicians could concentrate on medicine; every
The insurance industry would feel the greatest im-
patient would be fully insured, but physicians could
pact of this proposal. Private insurance firms would
increase their incomes only by providing more care.
have no role in health care financing, since the public
Billing would involve imprinting the patient's national
administration of insurance is more efficient¹ and
health program card on a charge slip, checking a box
single-source payment is the key to both equal access
to indicate the complexity of the procedure or service,
and cost control. Indeed, most of the extra funds need-
and sending the slip (or a computer record) to the
ed to finance the expansion of care would come from
physician-payment board. This simplification of bill-
eliminating the overhead and profits of insurance
ing would save thousands of dollars per practitioner in
companies and abolishing the billing apparatus neces-
annual office expenses. I
sary to apportion costs among the various plans.
Bureaucratic interference in clinical decision mak-
ing would sharply diminish. Costs would be contained
The Effect on Corporate America
by controlling overall spending and by limiting entre-
Firms that now provide generous employee health
preneurial incentives, thus obviating the need for the
benefits would realize savings, because their contri-
kind of detailed administrative oversight that is char-
bution to the national health program would be less
acteristic of the DRG program and similar schemes.
than their current health insurance costs. For exam-
Indeed, there is much less administrative intrusion in
ple, health care expenditures by Chrysler, current-
day-to-day clinical practice in Canada (and most oth-
ly $5,300 annually per employee, It would fall to about
Vol. 320 No. 2
A NATIONAL HEALTH PROGRAM - HIMMELSTEIN ET AL.
107
$1,600, a figure calculated by dividing the total cur-
a national health program. Similarly, racial, linguis-
rent U.S. spending on health by private employers by
tic, geographic, and other nonfinancial barriers to
the total number of full-time-equivalent, nongovern-
access would persist. The need for quality assur-
ment employees. Since most firms that compete in
ance and continuing medical education would be no
international markets would save money, the com-
less pressing. High medical school tuitions that skew
petitiveness of U.S. products would be enhanced.
specialty choices and discourage low-income appli-
However, costs would increase for companies that do
cants, the underrepresentation of minorities, the
not now provide health benefits. The average health
role of foreign medical graduates, and other issues
care costs for employers would be unchanged in the
in medical education would remain. Some patients
short run. In the long run, overall health costs would
would still seek inappropriate emergency care, and
rise less steeply because of improved health planning
some physicians might still succumb to the temptation
and greater efficiency. The funding mechanism ulti-
to increase their incomes by encouraging unneeded
mately adopted would determine the corporate share
services. The malpractice crisis would be only par-
of those costs.
tially ameliorated. The 25 percent of judgments
now awarded for future medical costs would be elimi-
Health Benefits and Financial Costs
nated, but our society would remain litigious, and
There is ample evidence that removing financial
legal and insurance fees would still consume about two
barriers to health care encourages timely care and im-
thirds of all malpractice premiums. 23 Establishing
proves health. After Canada instituted a national
research priorities and directing funds to high-quality
health program, visits to physicians increased among
investigations would be no easier. Much further work
patients with serious symptoms. 15 Mortality rates,
in the area of long-term care would be required.
which were higher than U.S. rates through the 1950s
Regional health planning and capital allocation would
and early 1960s, fell below those in the United
make possible, but not ensure, the fair and efficient
States. 16 In the Rand Health Insurance Experiment,
allocation of resources. Finally, although insurance
free care reduced the annual risk of dying by 10 per-
coverage for patients with AIDS would be ensured,
cent among the 25 percent of U.S. adults at highest
the need for expanded prevention and research and
risk.³ Conversely, cuts in California's Medicaid pro-
for new models of care would continue. Although
gram led to worsening health. 17 Strong circumstantial
all these problems would not be solved, a national
evidence links the poor U.S. record on infant mortality
health program would establish a framework for ad-
with inadequate access to prenatal care. 18
dressing them.
We expect that the national health program would
Political Prospects
cause little change in the total costs of ambulatory and
hospital care; savings on administration and billing
Our proposal will undoubtedly encounter power-
(about 10 percent of current health spending¹) would
ful opponents in the health insurance industry, firms
approximately offset the costs of expanded serv-
that do not now provide health benefits to employees,
ices. 19,20 Indeed, current low hospital-occupancy rates
and medical entrepreneurs. However, we also have
suggest that the additional care could be provided at
allies. Most physicians (56 percent) support some
low cost. Similarly, many physicians with empty ap-
form of national health program, although 74 percent
pointment slots could take on more patients without
are convinced that most other doctors oppose it.²⁴
added office, secretarial, or other overhead costs.
Many of the largest corporations would enjoy sub-
However, the expansion of long-term care (under any
stantial savings if our proposal were adopted. Most
system) would increase costs. The experience in Can-
significant, the great majority of Americans support
ada suggests that the increased demand for acute care
a universal, comprehensive, publicly administered na-
would be modest after an initial surge²¹,²² and that
tional health program, as shown by virtually every
improvements in health planning⁸ and cost contain-
opinion poll in the past 30 years. 25,26 Indeed, a
ment made possible by single-source payment⁹ would
1986 referendum question in Massachusetts calling for
slow the escalation of health care costs. Vigilance
a national health program was approved two to one,
would be needed to stem the regrowth of costly and
carrying all 39 cities and 307 of the 312 towns in
intrusive bureaucracy.
the commonwealth.²⁷ If mobilized, such public con-
viction could override even the most strenuous private
Unsolved Problems
opposition.
Our brief proposal leaves many vexing problems
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86-269-MP. R.I. Sup. Ct. Jan 5. 1987).
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NATIONAL
Terry E. Branstad
Raymond C. Scheppach
Governor of Iowa
Executive Director
GOVERNORS
Chairman
Hall of the States
ASSOCIATION
Booth Gardner
444 North Capitol Street
Governor of Washington
Washington, D.C. 20001-1572
Vice Chairman
Telephone (202) 624-5300
August 17, 1989
MEMORANDUM
TO:
Interested Parties
FROM:
Senior Policy J-1+9 Analyst
Ian Hill
RE:
Medicaid Eligibility and Coverage for Pregnant Women, Children
and Families
In our continuing effort to monitor and report on state Medicaid
programs' coverage of low-income pregnant women, children, and
families, the Health Programs unit of NGA's Center for Policy Research
has developed the enclosed, updated summary tables.
Please find attached: 1) a map displaying states' responses to both
OBRA-86 and OBRA-87 authority to raise income eligibility thresholds
for pregnant women and children; 2) a more detailed summary of state
OBRA-86/87 program characteristics including information on income
thresholds as a percent of poverty, coverage of children, treatment of
assets, continuous eligibility, and presumptive eligibility; 3) a
table displaying annualized income eligibility thresholds, by state for
family size three, for AFDC programs, Medically Needy programs, and
OBRA-86/87 programs; 4) a table displaying AFDC Need and Payment
Standards for family sizes one through four; and 5) a table displaying
Medically Needy Protected Income Levels for family sizes one through
four. All information is current as of July 1989.
To summarize, a full 44 states and the District of Columbia have
expanded their Medicaid programs by creating special income limits for
pregnant women and children. This spring 8 more states raised their
income thresholds above the poverty level to as high as 185% ofpoverty,
bringing the total number of states in this range to 20. Twenty-four
other states have established limits at 100% of poverty and 1 state
maintains a level above AFDC limits but below 100% of poverty. Also,
one state covers a similar population of pregnant women and children
under a state-funded assistance program. A total of just 5 states were
affected by mandated expansions under the Catastrophic Coverage Act of
1988 and expanded eligibility to 75% of poverty.
In addition to these expansions for pregnant women and infants, a
number of states have taken advantage of OBRA-87 flexibility to
accelerate coverage of older children. This spring the number of
states covering children up to the poverty level between the ages of 5
and 8 more than doubled from 9 to 19, while 19 other states will
continue phasing in coverage of children between the ages of 2 and 5
one year at a time.
In an encouraging effort to simplify and streamline eligibility
systems, 6 more states have done away with resource restrictions this
spring, bringing the total number of states who have dropped their
assets test to 42. In addition, 41 states have guaranteed pregnant
women continuous eligibility throughout their pregnancy regardless of
fluctuations in income. Twenty-three states have adopted the
presumptive eligibility option in order to extend temporary eligibility
to women so that they can receive Medicaid-reimbursed prenatal care
while their formal application is being reviewed.
Approximately two-fifths of the states increased their AFDC income
eligibility thresholds in July 1989. These increases tended to only
keep pace with inflation. In the average state, the AFDC threshold for
a family of three stands at $4942 per year, or 48.6% of the federal
poverty level. This average threshold has hovered at just under 50% of
poverty for the last several years. Similarly, the Medically Needy
threshold in the average state increased only slightly from 60% to 61%
of poverty, although 17 of the 36 state Medically Needy programs
experienced increases.
We appreciate the assistance states provided in compiling this
information and hope that it will be useful in your work. If you have
any questions or require further information, please call Ian Hill at
(202) 624-7820 or Haiden Huskamp at (202) 624-5348.
STATES BROADENING MEDICAID ELIGIBILITY
Coverage of Pregnant Women and Children Up To/Above Poverty
July 1989
State Responses
Adopted OBRA-87
Adopted OBRA-86
Other State Program
Federally Mandated Level
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, JULY 1989
OBRA '86/'87 SUMMARY STATUS
COVERAGE OPTIONS FOR PREGNANT WOMEN AND CHILDREN, AS OF JULY 1989
ORIGINAL
PREGNANT WOMEN OLDER CHILDREN COVERED
AND INFANTS
UNDER POVERTY TO AGE
DROPPED
CONTINUOUS
PRESUMPTIVE
EFFECTIVE
PERCENT POVERTY
2- 4
5 - 8
ASSETS TEST
ELIGIBILITY
ELIGIBILITY
DATE
Alabama
100
X
X
X
7/88
Alaska
100
X
X
X
1/89
Arizona
100
X
X
X
1/88
100
X
X
X
X
4/87
Arkansas
California
185
7/89*
Colorado
75**
X*
7/89
Connecticut
185
X
X
4/88
Delaware
100
X
X
X
1/88
DC
100
X
X
X
4/87
Florida
150
X
X
X
X
10/87
Georgia
100
X
X
X
1/89
Hawaii
185*
X
X
X
X
1/89
Idaho
75**
X
X
X
1/89
Illinois
100
X
X
7/88
Indiana
100
X
X
X
X
7/88
lowa
185
X
X
X
1/89
Kansas
150
X
X
7/88
Kentucky
125
X
X
10/87
Louisiana
100
X
X
X
X
1/89
Maine
185
X
X
X
10/88
Maryland
185
X
X
X
X
7/87
Massachusetts
185
X
X
X
X
7/87
Michigan
185
X
X
X
1/88
Minnesota
185
X
X
X
7/88
Mississippi
185
X
X
X
10/87
ouri
100
X
X
1/88
ana
100
X
7/89
braska
100
X
X
X
X
7/88
Nevada
75**
X
X
7/89
New Hampshire
75**
X
7/89
New Jersey
100
X
X
X
X
7/87
New Mexico
100
X
X
X
X
1/88
New York
185
X
X
X
1/90*
North Carolina
100
X
X
X
X
10/87
North Dakota
75**
7/89
Ohio
100
X
X
1/89
Oklahoma
100
X
X
X
1/88
Oregon
85
X
X
X
11/87
Pennsylvania
100
X
X
X
4/88
Rhode Island
185
X
X
X
4/87
South Carolina
185
X
X
X
10/87
South Dakota
100
X
X
X
7/88
Tennessee
100
X
X
X
X
7/87
Texas
130
X
X
X
9/88
Utah
100
X
X
X
1/89
Vermont
185
X
X
X
10/87
Virginia
100
X
X
X
7/88
Washington
185
X
X
X
7/87
West Virginia
150
X
X
X
7/87
Wisconsin
***
X
4/88
Wyoming
100
X
X
X
10/88
TOTAL
45
19
19
42
41
23
FUTURE IMPLEMENTATION DATE
COMPLIANCE WITH MINIMUM MANDATED COVERAGE
*** STATE FUNDED PROGRAM COVERS PREGNANT WOMEN AND INFANTS BELOW 120% OF POVERTY
SOURCE: NATIONAL GOVERNORS' ASSOCIATION - JULY, 1989
ANNUALIZED MEDICAID ELIGIBILITY THRESHOLDS a
AFDC, MEDICALLY NEEDY,
OBRA 86/87 PREGNANT WOMEN - JULY 1989
AFDC
PERCENT OF
MEDICALLY
PERCENT OF
OBRA-86/87
PERCENT OF
FAMILY OF 3
POVERTY
NEEDY
POVERTY
PREGNANT WOMEN
POVERTY
$10,060
FAMILY OF 3
$10,060
FAMILY OF 3
$10,060
b
Alabama
$1,416
14.1%
$
$10,060
100.0%
Alaska
9,708
77.2%
12,580
100.0%
Arizona
3,516
35.0%
10,060
100.0%
Arkansas
2,448
24.3%
3,300
32.8%
10,060
100.0%
California
8,328
82.8%
10,704
106.4%
18,611
185.0%
Colorado
5,052
50.2%
7,545
75.0%
*
Connecticut
6,660
66.2%
8,857
88.0%
18,611
185.0%
Delaware
3,996
39.7%
10,060
100.0%
D.C.
4,716
46.9%
6,288
62.5%
10,060
100.0%
Florida
3,444
34.2%
4,596
45.7%
15,090
150.0%
Georgia
4,968
49.4%
4,404
43.8%
10,060
100.0%
Hawaii
7,224
62.4%
7,224
62.4%
21,405
185.0%
Idaho
3,780
37.6%
7,545
75.0%
Illinois
4,104
40.8%
5,496
54.6%
10,060
100.0%
Indiana
3,456
34.4%
10,060
100.0%
lowa
4,920
48.9%
6,600
65.6%
18,611
185.0%
Kansas
4,920
48.9%
5,760
57.3%
15,090
150.0%
Kentucky
6,312
62.7%
3,696
36.7%
12,575
125.0%
Louisiana
2,280
22.7%
3,096
30.8%
10,060
100.0%
Maine
7,584
75.4%
7,092
70.5%
18,611
185.0%
Maryland
4,752
47.2%
5,508
54.8%
18,611
185.0%
Massachusetts
6,948
69.1%
9,300
92.4%
18,611
185.0%
Michigan
6,900
68.6%
6,660
66.2%
18,611
185.0%
Minnesota
6,384
63.5%
8,508
84.6%
18,611
185.0%
Mississippi
4,416
43.9%
18,611
185.0%
Missouri
3,420
34.0%
10,060
100.0%
Montana
4,308
42.8%
4,896
48.7%
10,060
100.0%
Nebraska
4,368
43.4%
5,904
58.7%
10,060
100.0%
Nevada
3,960
39.4%
75.0%
*
7,545
New Hampshire
6,072
60.4%
6,900
68.6%
75.0%
*
7,545
New Jersey
5,088
50.6%
6,792
67.5%
10,060
100.0%
New Mexico
3,168
31.5%
10,060
100.0%
New York
6,468
64.3%
8,508
84.6%
18,611
185.0%
North Carolina
3,192
31.7%
4,296
42.7%
10,060
100.0%
North Dakota
4,632
46.0%
5,220
51.9%
7,545
75.0%
Ohio
3,852
38.3%
10,060
100.0%
Oklahoma
5,652
56.2%
5,196
51.7%
10,060
100.0%
Oregon
5,184
51.5%
6,900
68.6%
8,591
85.4%
Pennsylvania
4,608
45.8%
5,400
53.7%
10,060
100.0%
Rhode Island
6,516
64.8%
8,700
86.5%
18,611
185.0%
South Carolina
5,028
50.0%
18,611
185.0%
South Dakota
4,524
45.0%
10,060
100.0%
Tennessee
4,644
46.2%
3,000
29.8%
10,060
100.0%
Texas
2,208
21.9%
3,204
31.8%
13,078
130.0%
Utah
6,192
61.6%
6,192
61.6%
10,060
100.0%
Vermont
7,812
77.7%
10,500
104.4%
18,611
185.0%
Virginia
3,492
34.7%
4,296
42.7%
10,060
100.0%
Washington
5,904
58.7%
7,188
71.5%
18,611
185.0%
West Virginia
2,988
29.7%
3,480
34.6%
15,090
150.0%
Wisconsin
6,204
61.7%
8,268
82.2%
Wyoming
4,320
42.9%
10,060
100.0%
AVG. STATE
$4,942
48.6%
$6,165
61.0%
$14,617
144.1%
*
COMPLYING WITH FEDERAL MANDATE
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, JULY 1989
ANNUALIZED MEDICAID ELIGIBILITY THRESHOLDS a
AFDC, MEDICALLY NEEDY,
OBRA 86/87 PREGNANT WOMEN - JULY 1989
NOTES:
a. AFDC and Medically Needy thresholds current through July 1989. Under AFDC, the term
"threshold" refers to that income limit that truly drives program eligibility. In most states, this is
the Payment Standard. In COLORADO, GEORGIA, KENTUCKY, MAINE, MICHIGAN,
MISSISSIPPI, OKLAHOMA, SOUTH CAROLINA, TENNESSEE and UTAH, the threshold is
the state's Need Standard. Please note, in these ten states, the threshold that appears on
the table is not what the state pays to AFDC recipients. These states' Payment Standards
are actually significantly lower than the eligibility threshold.
b. Poverty levels for Hawaii and Alaska differ from other states: Alaska - family of three = $12,580;
Hawaii - family of three = $11,570.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, JULY 1989
AID TO FAMILIES WITH DEPENDENT CHILDREN (AFDC)
MONTHLY NEED AND PAYMENT AMOUNTS - JULY 1989
FAMILY
OF ONE
FAMILY OF TWO
FAMILY OF THREE
FAMILY OF FOUR
NEED
MAXIMUM
NEED
MAXIMUM
NEED
MAXIMUM
NEED
MAXIMUM
STANDARD
PAYMENT
STANDARD
PAYMENT
STANDARD
PAYMENT
STANDARD
PAYMENT
Alabama
$390
$59
$479
$88
$571
$118
$670
$147
Alaska
453
453
719
719
809
809
899
899
Arizona
367
173
494
233
621
293
748
353
Arkansas
280
81
560
162
705
204
850
247
California
341
341
560
560
694
694
824
824
Colorado
253
214
331
280
421
356
510
432
Connecticut
340
340
452
452
555
555
652
652
Delaware
184
184
247
247
333
333
402
402
DC
450
248
560
309
712
393
870
480
Florida
498
163
668
220
838
287
1008
338
Georgia
229
151
347
229
414
273
488
322
Hawaii
572
357
768
480
964
602
1160
725
Idaho
365
208
446
254
554
315
627
357
Illinois
427
198
539
250
740
342
835
386
Indiana
155
139
255
229
320
288
385
346
lowa
213
176
421
347
497
410
578
476
Kansas
243
243
330
330
410
410
480
480
Kentucky
394
162
460
196
526
228
592
285
Louisiana
245
72
472
138
658
190
809
234
Maine
299
207
470
326
632
438
794
551
Maryland
243
175
428
309
548
396
660
477
Massachusetts
392
392
486
486
579
579
668
668
Michigan
348
291
466
388
575
479
702
585
Minnesota
250
250
437
437
532
532
621
621
Mississippi
218
60
293
96
368
120
443
144
Missouri
145
132
250
228
312
285
365
333
Montana
256
212
346
286
434
359
523
433
Nebraska
222
222
293
293
364
364
435
435
Nevada
350
210
450
270
550
330
650
390
New Hampshire
380
380
442
442
506
506
563
563
New Jersey
162
162
322
322
424
424
488
488
New Mexico
156
156
210
210
264
264
317
317
New York
334
334
439
439
539
539
639
639
North Carolina
354
177
462
231
532
266
582
291
North Dakota
209
209
313
313
386
386
472
472
Ohio
440
191
606
263
739
321
914
397
Oklahoma
291
201
364
252
471
325
583
403
Oregon
289
289
369
369
432
432
526
526
Pennsylvania
298
195
461
301
587
384
724
474
Rhode Island
321
321
440
440
543
543
620
620
South Carolina
249
123
335
165
419
206
504
248
South Dakota
265
265
333
333
377
377
421
421
Tennesee
198
94
297
141
387
184
472
224
Texas
235
75
493
158
574
184
691
221
Utah
299
224
414
310
516
387
603
452
Vermont
670
431
817
547
973
651
1090
730
Virginia
174
157
257
231
322
291
386
347
Washington
557
314
705
397
872
492
1026
578
West Virginia
289
145
401
201
497
249
623
312
Wisconsin
311
248
550
440
647
517
772
617
Wyoming
195
195
320
320
360
360
390
390
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, JULY 1989
AID TO FAMILIES WITH DEPENDENT CHILDREN (AFDC)
MONTHLY NEED AND PAYMENT AMOUNTS - JULY 1989
NOTES:
IN A NUMBER OF STATES, NEED AND PAYMENT AMOUNTS VARY DEPENDING ON FACTORS SUCH AS REGION,
SEASON (SUMMER OR WINTER), AND WHAT COMPONENTS ARE INCLUDED IN THE STANDARD (E.G., RENTAL
ALLOWANCE. IN ALL SUCH CASES, THE REGION WITH THE HIGHEST CONCENTRATION OF RECIPIENTS AND/OR
THE HIGHEST SEASONAL RATE IS DISPLAYED. DETAILED NOTES BY STATE (WHERE APPLICABLE) APPEAR
BELOW.
CT - REGION B
KS - METROPOLITAN AREAS
LA - URBAN AREAS
MA - RENTAL ALLOWANCE INCLUDED
MI - ANNUALIZED SUMMER/WINTER AVERAGE
NY - NEW YORK CITY REGION
PA - PHILADELPHIA REGION
VT - CHITTENDEN COUNTY
VA GROUP 2
WI AREA 1
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, JULY 1989
MEDICALLY NEEDY MONTHLY PROTECTED INCOME LEVELS
FAMILY SIZE ONE THROUGH FOUR - JULY 1989
FAMILY OF ONE
FAMILY OF TWO
FAMILY OF THREE
FAMILY OF FOUR
Alabama
$
$
$
$
Alaska
Arizona
Arkansas
108
217
275
333
California
575
714
892
1059
Colorado
Connecticut
452
601
738
867
Delaware
DC
391
412
524
640
Florida
300
300
383
458
Georgia
208
308
367
433
Hawaii
357
480
602
725
Idaho
Illinois
267
333
458
517
Indiana
lowa
466
466
550
633
Kansas
368
475
480
506
Kentucky
217
267
308
383
Louisiana
100
192
258
317
Maine
400
441
591
741
Maryland
375
417
459
500
Massachusetts
483
650
775
891
Michigan
391
525
555
585
Minnesota
466
582
709
828
Mississippi
Missouri
Montana
368
383
408
433
Nebraska
392
392
492
584
Nevada
New Hampshire
382
554
575
597
New Jersey
350
433
566
658
New Mexico
New York
459
659
709
850
North Carolina
242
308
358
392
North Dakota
345
400
435
530
Ohio
Oklahoma
275
341
433
541
Oregon
385
491
575
701
Pennsylvania
408
425
450
542
Rhode Island
550
592
725
833
South Carolina
South Dakota
Tennessee
175
192
250
300
Texas
100
211
267
301
Utah
337
413
516
602
Vermont
733
733
875
975
Virginia
250
308
358
400
Washington
396
532
599
667
West Virginia
200
275
290
312
Wisconsin
471
592
689
823
Wyoming
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, JULY 1989
MEDICAID ELIGIBILITY:
SELECTED PROGRAM CHARACTERISTICS
September, 1989
Medicaid eligibility is acknowledged to be the most intricate piece of a very complex
program. Designed in 1965 as a medical program for persons on existing welfare
programs, the Medicaid program originally served only those eligible for Aid to Families
with Dependent Children (AFDC) or for the programs now encompassed by the Supplemental
Security Income (SSI) program.
However, since that time there have been numerous revisions and additions to the
original list of mandated and optional eligibility categories. Some changes added large
numbers of Medicaid eligibles, while others developed to protect selected groups of
individuals added few new recipients. Over the years the revisions have resulted in
overlapping categories rendering several unnecessary and others impossible to
distinguish.
The myriad categories present program management challenges to Medicaid directors in
terms of training eligibility workers, accounting for the various categories of
individuals, and program budgeting. For local eligibility workers, there is the
difficult task of learning all the different "boxes" into which an individual might fit
and then the challenge of determining how the boxes relate to the real live applicant
sitting at your desk. A person placed in the wrong box, especially a person allowed
Medicaid access in error, can result in penalties imposed by the federal government
against the state. Eligibility errors can result in substantial financial penalties.
This narrative and attached tables provide information on state coverage of major
eligibility options as of September 30, 1989, the end of the federal fiscal year.
Following a brief discussion on recent changes in Medicaid eligibility concepts, there
is a description of state eligibility criteria. In that description, the myriad
separate categories are combined into four general ways of achieving Medicaid access.
Each of the four are discussed with special attention paid to state response to recent
federal legislative changes. Finally, there is a comparison of eligibility across the
four major categories. While the attempt is to create an overview of Medicaid
eligibility across states, it must be remembered that the attached only addresses major
issues and eligibility categories. A comprehensive analysis would require detailed
examination of all eligibility categories and requirements.
RECENT DIRECTIONS IN MEDICAID ELIGIBILITY
Most revisions to Medicaid eligibility were actually changes to eligibility for the
welfare programs, until the Omnibus Budget Reconciliation Act of 1986 (OBRA 86) added
new categories of poverty-related rather than welfare-related persons. While the
OBRA 86 provisions broadened eligibility options for needy persons through the addition
of new categories and the severing of traditional links between Medicaid eligibility and
the financial requirements of income assistance programs, they also further complicated
Medicaid eligibility.
Prior to OBRA 86 individuals became Medicaid eligible because they met the
characteristics, income thresholds and resource standards of the AFDC program or the SSI
program, or because they met the AFDC or SSI characteristics and had sufficient medical
bills to reduce their countable income to Medicaid Medically Needy income thresholds.
OBRA 86 established new Medicaid eligibility options. The new categories include poor
pregnant women and children, and aged and disabled, who do not meet AFDC or SSI income
standards, but do meet a state-selected percentage of the federal poverty guidelines.
The new coverage groups represent a first severing of the link between AFDC and Medicaid
eligibility for poor pregnant women and children as well as a severing of the link
between SSI and Medicaid eligibility for the elderly.
Since OBRA 86, there have been several expansions to the poor pregnant women and
children groups and an expansion for the poor elderly. OBRA 87 allowed states to
increase income standards for pregnant women and infants up to 185 percent of poverty.
It also permitted broader coverage of children under poverty. The Medicare Catastrophic
Coverage Act of 1988 (MCCA 88) mandated that all states phase-in coverage of pregnant
women and infants up to 100 percent of poverty. It also required state Medicaid
programs to pay Medicare cost-sharing amounts for poor Medicare beneficiaries. OBRA '89
added additional coverages effective in 1990. Most importantly, as of April 1990,
states must cover pregnant women and children up to age 6 in families with incomes up to
133 percent of poverty.
MAJOR ELIGIBILITY CATEGORIES
The numerous eligibility categories can be grouped into four routes to Medicaid
eligibility: AFDC; SSI; Medically Needy; and Poverty-related Pregnant Women and
Children, and Aged/Disabled. AFDC is generally the route to Medicaid for families with
children where one parent is absent from the home. SSI is the route for aged, blind,
and disabled meeting that program's requirements. Medically Needy individuals are those
who have income in excess of AFDC or SSI income thresholds, but have sufficient medical
bills that reduce their countable income to Medically Needy income thresholds. The
process of counting medical bills against income is known as "spenddown."
Poverty-related Pregnant Women and Children are those who have income exceeding the AFDC
income standard up to a state-selected percentage of poverty. Similarly, the
Aged/Disabled may have income in excess of SSI standards up to the state-selected
poverty figure.
However, within these categories there are many permutations of the general program
rules. For example, while Medicaid is required to cover AFDC recipients, there are AFDC
"type" or "AFDC-related" individuals who must also be covered, including: families
losing AFDC because of employment, families losing AFDC because earned income disregard
provisions do not apply, families losing AFDC because of child support, and persons
whose AFDC cash payment would be less than $10.
At the same time that there are different family types within one category, a particular
type of individual may qualify through more than one eligibility route. For example, a
poor pregnant woman may qualify as AFDC-related, Medically Needy, or through the
Poverty-related Pregnant Women category. To qualify as AFDC-related, the woman must be
single and meet AFDC income and resource standards. If she is married and has income
above the AFDC standard, but below the state-selected percentage of poverty, she may
qualify under the Poverty-related Pregnant Women category. In most states, under this
option, her resources are not considered. If she has income and resources exceeding the
standards in either of these programs, but can spenddown to the state's Medically Needy
income level, she can qualify through the Medically Needy program. Because Medically
Needy income standards are considerably lower than the poverty-related standards, she
spends down to a significantly lower percentage of poverty to qualify for Medicaid.
- - 2-
AFDC-Related Groups
Nearly three-quarters of all recipients access Medicaid because of their AFDC-related
status. States must provide Medicaid to all persons receiving AFDC. Generally, AFDC
payments are made to families with children where one parent is absent from the home.
States establish income and resource standards for their AFDC programs. As part of the
income standard, states establish a monthly "need standard," representing the state's
determination of the minimum amount of money a family of a given size needs to subsist,
and a monthly "payment standard," the actual maximum payment a state makes to an
eligible family. States use these standards differently to calculate payments and
depending upon the method used either the need or payment standard may drive program
eligibility. (For further explanation of calculation methods refer to "Medicaid
Eligibility: Summary Status of Selected Program Characteristics," Catalogue of State
Medicaid Program Characteristics, 1989.)
Table 1 lists each state's AFDC Need Standard and Maximum Payment. Using these
standards along with the information on which standard drives eligibility determinations
in each state, it is possible to determine that for a family of three, which is the
average AFDC family size, the income threshold across states averages $412/month. This
amount represents 49.7 percent of the 1989 federal poverty level standard for that
family. For an AFDC family of two, the income threshold averages $335/month (50 percent
of poverty). Twenty-one states have income standards that are above 50 percent of
poverty.
States have the option of covering two-parent families who meet AFDC income and resource
standards when the principal breadwinner is unemployed. Thirty-four states extend
Medicaid coverage to such AFDC-unemployed parent (AFDC-UP) families (Table 2).
Beginning October 1, 1990, this optional group becomes mandatory because of a Medicaid
provision in the Family Support Act of 1988.
Another AFDC-related optional group is "Ribicoff Children." These are children who meet
AFDC income and resource requirements, but not the characteristics of a "dependent"
child. States may cover all such children up to a specified age limit including those
from intact two-parent families. Alternatively, a state may cover selected categories
of Ribicoff children. Major categories of these children include those whose adoptions
were partially or fully subsidized through public funds, children in foster homes or
private institutions, children in intermediate care facilities, those in intermediate
care facilities for the mentally retarded, and children in inpatient psychiatric
facilities. In addition, states may define other reasonable categories of such children
(Table 3).
To cover children in foster homes or private institutions, states must have assumed
partial or full financial responsibility for the children. If states cover such
publicly supported children, they may choose to cover children placed in foster homes or
private institutions when placed by private non-profit agencies. Coverage of children
in institutions is contingent upon that institutional coverage being a part of the state
plan. Three states do not cover psychiatric facilities and, therefore, do not cover
this category of Ribicoff children.
All states cover some Ribicoff children. Thirty states cover all such AFDC-related
children, including those in intact families, up to age 18. Of these states, twenty
cover these children up to age 21. Six of the nine states covering all children up to
- 3 -
age 18 cover selected categories of them up to age 21. The remaining states cover some
categories, often using different age limits for the various categories. Six of these
states have developed additional reasonable classifications of Ribicoff children.
In addition to optional coverage of Ribicoff children. It is important to note that all
states are required to cover some "Ribicoff-type" children. The Deficit Reduction Act
of 1984 (DEFRA) mandated a phase-in of all children who meet AFDC financial requirements
and were born after September 30, 1983, regardless of family structure. The DEFRA
requirement only applied to such qualified children up to age 5. Subsequent amendments
have been made to that provision so that currently states are required to cover all
children up to age 7 who meet AFDC income and resource requirements. As of September
30, 1989, the oldest children in this AFDC-related group were age 6. States may cover
additional children in this age bracket through the poverty-related coverages.
Other optional AFDC-related individuals include those eligible for, but not receiving
AFDC payments (28 states) and those who would be eligible for Medicaid if not in a
Medicaid institution or intermediate care facility because of lower income standards
used to determine eligibility in these institutions (29 states). Another category is of
families who would be eligible if their child care costs were paid from their earnings,
rather than by a state agency (12 states) (Table 4).
Supplemental Security Income-Related Groups
Aged, blind, and disabled persons often access Medicaid by meeting the characteristics,
income thresholds, and resource standards of the SSI program. The non-financial
requirements include that the individual be age 65 or over, blind, or have a permanent
disability preventing that person from engaging in substantial gainful activity. For
children, qualifying disabilities are those that would qualify an adult for SSI payments.
Unlike the AFDC program, federal statute dictates a uniform SSI program income or
payment standard. In 1989, the standard was $368/month for an individual and $553/month
for a couple. The statute set resource standard was $2,000 for an individual and $3,000
for couples.
The payment standard plus any state supplement payments (SSPs) made to an SSI recipient
constitutes the eligibility threshold for an SSI recipient. Most states make such
optional SSPs to some categories of SSI elderly and disabled individuals in selected
assisted living arrangements. The amount of these payments generally relates to the
level of assistance provided in the living arrangement. The most typical SSP category
that applies equally across states is the SSP for individuals and couples living
independently in the community. About half of the states make this category of SSP
payment (Table 6).
All states cover some SSI individuals. Thirty-eight provide Medicaid to all SSI
recipients. Thirteen states, commonly referred to as "209(b)" states, cover only SSI
individuals who meet their generally more restrictive criteria. The "209(b)" states use
disability definitions, income disregards, or resource standards which vary from those
used by the SSI program (The term "209(b)" refers to the section of the enabling
legislation authorizing this latitude.) States using more restrictive financial
standards must allow higher income individuals to spenddown to those standards even if
the state does not have a Medically Needy program. The standards used by these 13
states are listed on Table 7. There were 14 such states, but Utah indicates that it has
elected to cover all SSI eligibles.
- 4
In twenty-seven states, institutionalized individuals may qualify for Medicaid based
upon a higher income standard than that used for AFDC or SSI individuals. States are
allowed to use an income standard that is as much as 300 percent of the SSI uniform
payment, which in 1989 meant states could use an income threshold up to $1104. The
resource standard for this group is the same as for non-institutionalized SSI persons.
If a state uses a higher income threshold for this group, the same standard may be used
for home- and community-based services (HCBS) waiver recipients and must be used for
optional disabled children who are served in the home in lieu of institutionalization.
Ten states do not use an income threshold for institutional individuals, instead
treating them as Medically Needy and allowing them to spenddown to Medically Needy
Income Levels (MNIL). All states use either Medically Needy programs or higher income
standards to qualify persons in institutions with income and/or resources in excess of
SSI standards.
Another SSI-related group is disabled children under age 18 who require an institutional
level of care, but can be cared for cost-effectively at home. Coverage for this group,
authorized by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), has been
adopted by eighteen states (Table 9). All of these states and most other states operate
HCBS waivers which include such children, thus using a service option to extend
eligibility for disabled children (For further information, see Medicaid Home Care
Options for Disabled Children, NGA 1990).
Similar to the disabled children option is the option for ventilator-dependent
individuals authorized by OBRA 87 which has been adopted by six states (Table 9).
However, as they do for disabled children, many states use HCBS waivers to provide
cost-effective home care to these individuals who would otherwise require
institutionalization.
Other eligibility expansions authorized in MCCA 88, which are significant for disabled
and institutionalized individuals include those related to "spousal impoverishment."
These provisions, which were effective September 30, 1989, protect a portion of the
couple's income and resources for the community spouse.
Under the provisions, the community spouse's income is protected up to at least 122
percent of the 1989 poverty level for a family of two ($815/month). In terms of
resources, community spouses retain their home, as well as a community spouse resource
allowance (CSRA). The allowance may vary from $12,000 up to $60,000 depending on the
couple's resources and the state-selected CSRA minimum. States must allow community
spouses to keep the greater of $12,000 and one-half of the couple's joint assets up to
$60,000. However, states may choose to raise the $12,000 minimum as high as $60,000,
which allows the community spouse to retain all resources up to $60,000. Sixteen states
have chosen $60,000 as the minimum allowance (Table 9).
Medically Needy Individuals
Medically needy persons are those whose income and/or resources exceed the AFDC or SSI
standards, but meet the higher income and resource standards of a state's Medically
Needy program, or have sufficient medical expenses to reduce their countable income to
Medically Needy Income Levels. The process of subtracting medical expenses from income
is referred to as "spenddown."
- 5 -
Medically Needy programs must cover pregnant women and children under age 18. In
addition, categories of individuals selected for the Medically Needy program must
already be covered in the state's Medicaid program.
Thirty-six states have Medically Needy programs. Of these, thirty cover all the
classifications shown on Table 11. Six cover selected categories. Twenty-five states
with Medically Needy programs cover qualifying children up to age 21; eleven states
cover children up to age 18 or 19. Moreover, nearly all the states cover caretaker
relatives, aged, blind, and disabled.
States specify income standards for each group within their Medically Needy program.
Standards must be based on family size and be uniform for all individuals within the
group. Several states have varying rates for geographic regions within the state or for
seasons of the year. The income standards may not exceed 133 1/3 percent of the state's
AFDC payment for the same size family. The Medically Needy Income Levels for a family
of two across all states averages $435/month which represents 65 percent of poverty
(Table 12).
Poverty-Related Pregnant Women, Children, and Aged/Disabled
Poverty-Related Pregnant Women and Infants
The optional coverage of Poverty-related Pregnant Women and Infants was established in
OBRA 86 and expanded upon in OBRA 87 and MCCA 88. As of July 1989, states were required
to cover pregnant women and their infants in families with incomes up to 75 percent of
poverty ($629/month for a family of three). Forty-six states exceeded the mandate and
extended eligibility to pregnant women and infants up to as much as 185 percent of
poverty ($1,551/month for a family of three) (Table 5). On average, states cover this
group up to 126 percent of poverty ($1,056/month for a family of three). A family of
two at 126 percent of poverty translates to $848/month.
Also for this group, states can simplify eligibility by waiving resource standards
(assets tests) (42 states) or by adopting continuous eligibility (41 states).
Twenty-three states have established presumptive eligibility for this group. Thus, the
majority of states have increased eligibility thresholds and streamlined applications in
order to improve Medicaid access for pregnant women. (For additional information, see
"Medicaid Eligibility: Summary Status of Selected Program Characteristics," Catalogue of
State Medicaid Program Characteristics, 1989 and Reaching Women Who Need Prenatal Care:
Strategies for Improving State Perinatal Programs, 1988.)
Poverty-Related Children
Increased options for Poverty-related Children were also authorized in OBRA 86 and
OBRA 87. The options in these statutes allow states to phase-in children up to age 8,
born after September 30, 1983, and in families with incomes above AFDC and up to the
poverty level. Thirty-seven states extend eligibility to such children, using either
the original OBRA 86 phase-in and cover children in the 2-4 age range or on the
accelerated OBRA 87 plan and cover children in the 5-6 age bracket. As of September 30,
1989, age 6 was the upper limit for poor children covered through these options. Table
5 shows coverage of these children as implemented in September 1989, although some
tates have already selected higher age groups and will "age-in" these children as they
row older.
- 6
Aged/Disabled and Qualified Medicare Beneficiaries
OBRA 86 allowed states to extend Medicaid coverage to the Poverty-related Aged and
Disabled with incomes up to 100 percent of poverty and resources at the SSI level or the
state's Medically Needy Income Level. OBRA 86 also required states selecting this
option to simultaneously adopt the Poverty-related Pregnant Women and Infants option.
Six states have selected the Aged/Disabled option, four of them adopted it in 1989.
Additional assistance is available for poverty-related aged and disabled as a result of
MCCA 88 provisions on Medicare cost-sharing for certain poor Medicare persons whether or
not they are Medicaid eligible. Prior to MCCA 88, Medicaid programs could choose to pay
Medicare cost-sharing expenses for Medicaid recipients who were also Medicare eligible.
All states covered some cost-sharing expenses for at least some dually eligible
recipients. The new provisions require states to cover Medicare premiums, deductibles,
and coinsurance cost-sharing amounts for all qualified Medicare beneficiaries (QMBs)
whether or not they are Medicaid eligible.
Beginning in January 1989, states were required to pay Medicare cost-sharing payments
for Medicare beneficiaries who are Medicare Part A eligible persons with incomes up to
85 percent of poverty and resources up to two times the SSI program resource standard.
Thus, in 1989, an elderly individual could qualify for this cost-sharing coverage if he
or she had income up to $424/month and resources up to $4,000.
On January 1, 1990, states are required to cover QMBs up to 90 percent of poverty. The
resource limit remains the same. The mandated phase-in continues until QMBs are covered
up to 100 percent of poverty in January 1992. A more gradual phase-in was granted to
states that as of January 1987 used more restrictive income standards for persons over
age 65 than those used by the SSI program. Four states are following the 5-year
phase-in plan and will reach 100 percent of poverty by January 1993.
While QMB coverage was mandated at 85 percent of poverty, states were allowed to select
a higher percentage, up to 100 percent. Twelve states opted for immediate
implementation of the 100 percent standard (Table 9).
Five of the six states having selected the Poverty-related Aged and Disabled option have
matched the percentage of poverty for this optional group to the percentage used for
QMBs, thus somewhat simplifying eligibility and coverage issues relating to the aged and
disabled.
SUMMARY
The monthly eligibility threshold, the maximum amount of income or protected income, for
each major group is presented in Table 13. The thresholds are then expressed as a
percentage of the 1989 federal poverty level. The attempt is to provide some comparison
across eligibility categories, by comparing eligibility thresholds for each group. For
this comparison, a family size of two was chosen because a pregnant woman is always
counted as two persons and a family size of two can be assessed for the other programs.
The Medicaid eligibility route with the lowest average eligibility threshold is AFDC at
$335/month or 50 percent of poverty. The elderly, who are primarily in the SSI and QMB
programs, fare better because these programs cover individuals up to about 91 percent of
poverty. The highest threshold is for Poverty-related Pregnant Women and Infants who,
on average, are covered up to 126 percent of poverty ($848/month).
- 7
While this table provides some interesting comparisons among groups, the percentage for
each group is only calculated against the federal poverty which is a national standard.
Further study of these thresholds might be enhanced by comparing each state's
eligibility thresholds with data specific to the state. For example, state average per
capita income or the income distribution data for each state would be useful. Such
comparisons might develop a better picture of how each Medicaid program serves its
low-income people.
What is clear from this comparison is that the different routes to Medicaid offer access
at varying levels of generosity. These variations reflect policymakers' concerns over
the years as to each group's need for Medicaid coverage in order to access adequate
health care. As adjustments were made to facilitate access for selected groups,
Medicaid eligibility has become more complex, as has Medicaid agencies' task of
administering the Medicaid program.
For further information or clarification of material presented in this narrative or the
attached tables, please contact Linda A. Hall (202) 624-7729.
SOURCE: National Governors' Association, 1990.
- 8
TABLE 1
AID TO FAMILIES WITH DEPENDENT CHILDREN (AFDC)
MONTHLY NEED AND PAYMENT AMOUNTS - SEPTEMBER 1989
FAMILY
OF ONE
FAMILY OF TWO
FAMILY
OF THREE
FAMILY OF FOUR
NEED
MAXIMUM
NEED
MAXIMUM
NEED
MAXIMUM
NEED
MAXIMUM
STANDARD
PAYMENT
STANDARD
PAYMENT
STANDARD
PAYMENT
STANDARD
PAYMENT
Alabama
$390
$59
$479
$88
$571
$118
$670
$147
Alaska
453
453
719
719
809
809
899
899
Arizona
367
173
494
233
621
293
748
353
Arkansas
280
81
560
162
705
204
850
247
California
341
341
560
560
694
694
824
824
Colorado
253
214
331
280
421
356
510
432
Connecticut
340
340
452
452
555
555
652
652
Delaware
184
184
247
247
333
333
402
402
DC
450
248
560
309
712
393
870
480
Florida
498
163
668
220
838
287
1008
338
Georgia
229
151
347
229
414
273
488
322
Hawaii
572
357
768
480
964
602
1160
725
Idaho
365
208
446
254
554
315
627
357
Illinois
427
198
539
250
740
342
835
386
Indiana
155
139
255
229
320
288
385
346
lowa
213
176
421
347
497
410
578
476
Kansas
243
243
330
330
410
410
480
480
Kentucky
394
162
460
196
526
228
592
285
Louisiana
245
72
472
138
658
190
809
234
Maine
299
207
470
326
632
438
794
551
Maryland
243
175
428
309
548
396
660
477
Massachusetts
392
392
486
486
579
579
668
668
Michigan
348
291
466
388
575
479
702
585
Minnesota
250
250
437
437
532
532
621
621
Mississippi
218
60
293
96
368
120
443
144
Missouri
145
134
250
232
312
289
365
338
Montana
256
212
346
286
434
359
523
433
Nebraska
222
222
293
293
364
364
435
435
Nevada
350
210
450
270
550
330
650
390
New Hampshire
380
380
442
442
506
506
563
563
New Jersey
162
162
322
322
424
424
488
488
New Mexico
156
156
210
210
264
264
317
317
New York
334
334
439
439
539
539
639
639
North Carolina
354
177
462
231
532
266
582
291
North Dakota
209
209
313
313
386
386
472
472
Ohio
440
191
606
263
739
321
914
397
Oklahoma
291
201
364
252
471
325
583
403
Oregon
289
289
369
369
432
432
526
526
Pennsylvania
298
195
461
315
587
402
724
490
Rhode Island
321
321
440
440
543
543
620
620
South Carolina
249
123
335
165
419
206
504
248
South Dakota
265
265
333
333
377
377
421
421
Tennesee
198
94
297
141
387
184
472
224
Texas
235
75
493
158
574
184
691
221
Utah
299
224
414
310
516
387
603
452
Vermont
670
448
817
547
973
651
1090
730
Virginia
174
157
257
231
322
291
386
347
Washington
579
314
733
397
907
492
1068
578
West Virginia
289
145
401
201
497
249
623
312
Wisconsin
311
248
550
440
647
517
772
617
Wyoming
195
195
320
320
360
360
390
390
SEE NOTES ON NEXT PAGE
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 1
AID TO FAMILIES WITH DEPENDENT CHILDREN (AFDC)
MONTHLY NEED AND PAYMENT AMOUNTS - SEPTEMBER 1989
NOTES:
In a number of states, need and payment amounts vary depending on factors such as region, season (summer or winter),
and what components are included in the standard (e.g., allowance). In all such cases, the region with the highest
concentration of recipients and/or the highest seasonal rate is displayed. Detailed notes by state (where applicable) appear below.
CT - REGION B
KS - METROPOLITAN AREAS
LA - URBAN AREAS
MA - RENTAL ALLOWANCE INCLUDED
MI - ANNUALIZED SUMMER/WINTER AVERAGE
NY - NEW YORK CITY REGION
PA - PHILADELPHIA REGION
VT - CHITTENDEN COUNTY
VA GROUP 2
WI AREA 1
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 2
FAMILIES WITH UNEMPLOYED PARENTS*
AFDC-UP Families
AFDC Cash &
Medicaid-
Does Not
State
Medicaid
Only
Cover
Alabama
X
Alaska
X
Arizona
X
Arkansas
X
California
X
Colorado
X
Connecticut
X
Delaware
X
District of Columbia
X
Florida
X
Georgia
X
Hawaii
X
Idaho
X
Illinois
X
Indiana
X
lowa
X
Kansas
X
Kentucky
X
Lousiana
X
Maine
X
Maryland
X
Massachusetts
X(19)
X(21)
Michigan
X
Minnesota
X
Mississippi
X
Missouri
X
Montana
X
Nebraska
X
Nevada
X
New Hampshire
X
New Jersey
X
New Mexico
X
New York
X
North Carolina
X
North Dakota
X
Ohio
X
Oklahoma
X
Oregon
X
Pennsylvania
X
Rhode Island
X
South Carolina
X
South Dakota
X
Tennessee
X
Texas
X
Utah
X**
Vermont
X
Virginia
X
Washington
X
West Virginia
X
Wisconsin
X
Wyoming
X
TOTAL
29
6
17
*
The Family Support Act makes this option mandatory as of October 1, 1990.
** Limited coverage under 1115 demonstration project
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 3
AFDC-RELATED CHILDREN COVERAGE
RIBICOFF CHILDREN*
State
All Under Age **
Reasonable Classification
Foster Homes/
Other
Private Inst.
Adoptions
ICFs
ICFs/MR
Psych. Faclt.
Defined Groups
Alabama
18
18
18
18
18
Alaska
21
Arizona
18
Arkansas
18
21
18
18
18
21
California
21
Colorado
21
21
21
21
21
Connecticut
21
Delaware
21
21
21
21
21
District of Columbia
21
Florida
18
21
18
21
Georgia
18
18
18
18
Hawaii
19
21
19
19
19
Idaho
21
21
21
21
N/C
18
Illinois
18
21
21
21
21
N/C
Indiana
21
21
lowa
21
Kansas
18
21
21
21
21
21
Kentucky
19
19
19
19
19
Lousiana
18
18
18
18
18
Maine
21
Maryland
21
Massachusetts
21
Michigan
21
Minnesota
21
ssissippi
18
Missouri
21
21
21
21
21
Montana
21
21
21
Nebraska
21
Nevada
19
19
19
19
N/C
New Hampshire
19
19
18
New Jersey
21
New Mexico
18
18
21
21
New York
21
North Carolina
21
21
18
21
21
21
North Dakota
21
Ohio
21
Oklahoma
21
Oregon
18
18
21
21
21
Pennsylvania
21
19
19
21
21
21
Rhode Island
18
21
21
21
South Carolina
18
21
21
21
21
21
South Dakota
21
21
21
21
21
Tennessee
21
Texas
19
Utah
18
Vermont
21
Virginia
21
21
21
21
N/C
Washington
21
21
21
21
21
18
West Virginia
18
18
18
18
18
Wisconsin
18
18
18
18
18
21
Wyoming
19
19
ey: N/C = Service not covered in the state
NOTES:
*
Ribicoff children meet the AFDC financial criteria, but not the dependent" criteria, i.e.; deprived of the support of a parent. Most come
from two-parent households; some are in other living arrangements.
** All Ribicoff children are covered up to the specified age, unless otherwise indicated in the adjacent columns.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 4
FAMILIES WITH DEPENDENT CHILDREN: SELECTED OPTIONAL MEDICAID ELIGIBILITY GROUPS
Eligible For But Not
Would Be Eligible If Not
Would Be Eligible If Child Care
State
Receiving AFDC
In An Institution
Costs Were Paid From Earnings
Alabama
No
Yes
No
Alaska
Yes
Yes
No
Arizona
Yes
Yes
No
Arkansas
Yes
Yes
No
California
No
No
No
Colorado
Yes
No
Yes
Connecticut
Yes
Yes
Yes
Delaware
No
Yes
No
District of Columbia
Yes
Yes
Yes
Florida
No
Yes
No
Georgia
No
Yes
No
Hawaii
Yes
Yes
Yes
Idaho
Yes
Yes
No
Illinois
No
No
No
Indiana
No
No
No
lowa
Yes
Yes
No
Kansas
No
No
No
Kentucky
No
No
No
Lousiana
No
Yes
No
Maine
Yes
Yes
No
Maryland
Yes
Yes
No
Massachusetts
Yes
Yes
No
Michigan
No
No
No
Minnesota
Yes
Yes
No
Mississippi
No
Yes
No
Missouri
No
No
No
Montana
Yes
Yes
Yes
Nebraska
No
No
No
Nevada
No
Yes
No
New Hampshire
Yes
Yes
No
New Jersey
Yes
Yes
No
New Mexico
No
Yes
No
New York
Yes
Yes
Yes
North Carolina
Yes
No
No
North Dakota
No
No
No
Ohio
No
Yes
Yes
Oklahoma
Yes
Yes
Yes
Oregon
Yes
Yes
No
Pennsylvania
Yes
Yes
Yes
Rhode Island
Yes
Yes
Yes
South Carolina
No
Yes
No
South Dakota
No
Yes
No
Tennessee
Yes
Yes
No
Texas
No
Yes
No
Utah
Yes
Yes
Yes
Vermont
Yes
Yes
Yes
Virginia
Yes
Yes
No
Washington
Yes
Yes
No
West Virginia
Yes
No
No
Wisconsin
Yes
Yes
Yes
Wyoming
No
Yes
No
TOTALS:
Yes
28
39
12
No
23
12
39
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 5
COVERAGE OPTIONS FOR PREGNANT WOMEN AND CHILDREN, AS OF SEPTEMBER 1989
PREGNANT WOMEN
OLDER CHILDREN
ORIGINAL
AND INFANTS
COVERED UNDER
DROPPED
CONTINUOUS
PRESUMPTIVE
EFFECTIVE
PERCENT POVERTY
POVERTY TO AGE 6*
ASSETS TEST
ELIGIBILITY
ELIGIBILITY
DATE
Alabama
100
X
X
X
7/88
Alaska
100
3
X
X
1/89
Arizona
100
6
X
1/88
Arkansas
100
6
X
4/87
California
185
7/89
Colorado
75
X**
7/89
Connecticut
185
X
4/88
Delaware
100
3
1/88
DC
100
3
X
4/87
Florida
150
6
X
10/87
Georgia
100
3
X
X
1/89
Hawaii
185**
5
X
X
X
1/89
Idaho
75
X
X
1/89
Illinois
100
X
X
7/88
Indiana
100
3
X
X
X
7/88
lowa
185
6
X
X
1/89
Kansas
150
5
X
7/88
Kentucky
125
2
X
10/87
Louisiana
100
6
X
X
X
1/89
Maine
185
6
X
10/88
Maryland
185
2
X
X
X
7/87
Massachusetts
185
5
X
X
X
7/87
Michigan
185
3
X
X
1/88
Minnesota
185
6
X
X
7/88
Mississippi
185
5
10/87
Missouri
100
3
X
1/88
Montana
100
X
7/89
Nebraska
100
3
X
X
7/88
Nevada
75
6
X
7/89
New Hampshire
75
7/89
New Jersey
100
2
X
X
7/87
New Mexico
100
3
X
X
X
1/88
New York
185
X
X
X
1/90**
North Carolina
100
6
X
X
X
10/87
North Dakota
75
7/89
Ohio
100
X
X
1/89
Oklahoma
100
2
X
X
1/88
Oregon
85
3
X
X
11/87
Pennsylvania
100
3
X
X
4/88
Rhode Island
185
6
X
4/87
South Carolina
185
6
X
X
10/87
South Dakota
100
2
X
X
7/88
Tennessee
100
5
X
X
7/87
Texas
130
4
X
X
9/88
Utah
100
X
X
1/89
Vermont
185
6
X
X
10/87
Virginia
100
2
X
7/88
Washington
185
6
X
X
7/87
West Virginia
150
6
X
7/87
Wisconsin
82
X
4/88
Wyoming
100
X
X
10/88
TOTAL
46***
37
42
41
23
*
This column does not include children's coverage groups supported by state only funds. Effective April 1, 1990 coverage is mandatory
for children up to age 6 in families with income up to 133% of poverty.
** Future implementation date.
*** Forty-six states exceed minimum mandated coverage of 75% of poverty. Wisconsin covers pregnant women up to 130% of poverty
but receives federal match up to 82%. Effective April 1, 1990 all states must cover pregnant women and infants up to 133% of poverty.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, September 1989
TABLE 6
SSI INCOME THRESHOLDS AND SUPPLEMENTS
INDIVIDUALS
COUPLES
Other Supp Programs
(Living independently in the community)
(Living independently in the community)
(other Indp living)
State
Total
State
Total
SSI
Supplement
Cash
SSI
Supplement
Cash
State
Base
Payment
Payment
Base
Payment
Payment
Alabama
368
0
368
553
0
553
N
Alaska
368
317
685
553
462
1015
Y
Arizona
368
0
368
552
0
552
N
Arkansas
368
0
368
553
0
553
N
California
368
234
602
553
563
1116
Y
Colorado
368
58
426
553
284
837
Y
Connecticut
368
170
538
553
312
865
N
Delaware
368
0
368
553
0
553
Y
District of Columbia
368
0
368
553
0
553
N/R
Florida
368
0
368
553
0
553
N
Georgia
368
0
368
553
0
553
N
Hawaii
368
4.9
372.9
553
8.8
561.8
Y
Idaho
368
73
441
553
45
598
Y
Illinois
368
368
553
553
Y
Indiana
368
0
368
553
0
553
Y
lowa
368
0
368
553
0
553
Y
Kansas
368
0
368
553
0
553
N
Kentucky
368
0
368
553
0
553
Y
Lousiana
368
0
368
553
0
553
N
Maine
368
10
378
553
15
568
Y
Maryland
368
0
368
553
0
553
N
Massachusetts
368
128.82
496.82
553
201.72
754.72
N/R
higan
368
30.2
398.2
553
45.3
598.3
Y
nnesota
368
46
414
553
41
594
Y
Mississippi
368
0
368
553
0
553
N
Missouri
368
0
368
553
0
553
Y
Montana
368
0
368
553
0
553
Y
Nebraska
368
62.5
430.5
553
91.5
644.5
Y
Nevada
368
36.4
404.4
553
74.46
627.46
Y
New Hampshire
368
14
382
553
1
554
Y
New Jersey
368
31.25
399.25
553
25.36
578.36
Y
New Mexico
368
0
368
553
0
553
N
New York
368
86
454
553
102.5
655.5
Y
North Carolina
368
0
368
553
0
553
N
North Dakota
368
0
368
553
0
553
N
Ohio
368
0
368
553
0
553
Y
Oklahoma
368
64
432
553
128
681
N
Oregon
368
1.7
369.7
553
0
553
Y
Pennsylvania
368
32.4
400.4
553
48.7
601.7
Y
Rhode Island
368
61.45
429.45
553
115.1
668.1
Y
South Carolina
368
0
368
553
0
553
Y
South Dakota
368
15
383
553
15
568
Y
Tennessee
368
0
368
553
0
553
N
Texas
368
0
368
553
0
553
N
Utah
368
6
374
553
12
565
N
Vermont
368
61.9
429.9
553
112.6
665.6
Y
Virginia
368
0
368
553
0
553
Y
Washington
368
28
396
553
22
575
N
West Virginia
368
0
368
553
0
553
N
Visconsin
368
102.72
470.72
553
165.86
718.86
Y
oming
368
20
388
553
40
593
N
Key: N/R = NO RESPONSE
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 7
States with Disability Definitions, Income, and Resource Standards Which Vary
from Supplemental Security Income Program Standards
(209(b) States)
DISABILITY DEFINITION
INCOME RULES AND DISREGARDS
RESOURCES
CT
Coverage not provided to disabled individuals under
UNEARNED INCOME: $202.20 if residing in the community.
$1,600
age 18. Blind are covered regardless of age.
EARNED INCOME:
AGED/DISABLED: $65 + 1/2 of the remainder.
BLIND: first $85, and half the excess over $85.
HI
More restrictive than SSI.
ALL GROUPS: (1) deduct $20, first from unearned
Same as SSI.
income and any remainder from earned income.
(2) from earned income, $65 plus 1/2 of remainder of
earned income.
IL
Same as SSI.
AGED/DISABLED: first $25 of any income. Next $20 of
Same as SSI.
earnings plus half of next $60 earned income.
BLIND: first $25 of any income. Next $85 of earnings
plus half of remaining balance of earnings.
IN
Impairment must appear reasonably certain to con-
ALL GROUPS: first $15.50 of any income.
Limits placed on resources of parents
tinue throughout a lifetime without significant
BLIND: first $15.50 of any income. First $85 of earnings
of unmarried blind or disabled appli-
improvement, and must impair ability to perform
plus half of the remaining earnings if blind before 12/73.
cants or recipients.
labor/services.
First $65 plus half remaining income if after 1/74.
MN
Same as SSI.
Same as SSI, except Aged/Disabled: Income Taxes and
$1,500 Individual, $3,000 Couple
FICA payments withheld are disregarded up to FFP limit.
Aged/Blind/Disabled: household goods
Parental income is deemed available to children < 21
and personal effects are excluded.
who reside with parents.
MO
State does not cover blind and disabled children
AGED/DISABLED:
under age 18.
Individuals: cash/securities < $1000.
Couples: cash/securities < $2000.
No property worth > $31,000; no
real property not lived in with equity
> $1,000 if single, > $2000 if married.
BLIND:
Individuals: cash/securities < $2000.
Couples: cash/securities < $4000.
NE
Same as SSI.
AGED/DISABLED Unearned $7.50.
Earned $65 plus half of the remainder.
BLIND: Unearned $7.50.
Earned - $85 plus half the remainder.
NH
Disability must be permanent, with no improvement
Aged/Disabled: Uneamed $13.
Categorically Needy: Individuals--$1500
likely throughout the lifetime. Also, state has more
Earned - $20 plus half of the next $60 up to $30 (50 total).
Couples-$1500.
restrictive definition of blindness.
Blind unearned $13. Earned $85 plus 1/2 of remainder.
Medically Needy: Individuals--$2500.
All Groups: Work expenses $18 standard or actual
Couples--$4000.
mandatory expenses. whichever is higher.
Parental income and resources deemed available to
disabled children < 18 who reside with parents.
NC
ALL GROUPS: $4 general disregard. First $20 and half
Aged/Blind/Disabled: $1500, $2,250.
the remaining earnings not to exceed a total of $50
disregarded. Financial responsibility: spouse to spouse
if living together. Parent to dependent unless blind,
disabled child under 18 anticipated stay in SNF, ICF/MR,
or hospital for 12 months
ND
Same as SSI.
State sets more restrictive resource
limits.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 7
States with Disability Definitions, Income, and Resource Standards Which Vary
from Supplemental Security Income Program Standards
(209(b) States)
DISABILITY DEFINITION
INCOME DISREGARD
RESOURCES
OH
Same as SSI.
Earned or Unearned disregard: $20.
Exempt: reasonable value of household
$65 plus one-half of the remaining income.
goods and personal effects.
Work expenses of the blind: ordinary and necessary;
Motor vehicle used for employment or
work expenses may be deducted from the earned income.
medical appointments; or specially
equipped; or value > $4500.
Life insurance policy < or = $1500.
Real and personal income-producing
property <$6000 or > 6% annual return.
Burial contracts exempt if irrevocable.
Home is exempt only if it is principle
residence.
Countable: Total value of liquid assets.
OK
Maximum monthly countable income (all groups):
Countable: Total value of $6000 limit
Individual: $265; Couple: $397.
on prepaid burial contract if irrevocable.
No income other than SSI - - $79, other income $59.
VA
Presumptive disabled or blind SSI recipients are not
covered. Conditionally eligible SSI recipients are
not covered.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 8
INCOME THRESHOLDS FOR INSTITUTIONALIZED INDIVIDUALS
Program Standard
Institutionalized Individual
Percentage of
State
Used*
Income Threshold
SSI Income Threshold
Alabama
SSI
$950
258
Alaska
SSI
$1,104
300
Arizona
SSI
$1,104
300
Arkansas
SSI
$1,104
300
California
MNIL**
$600
163
Colorado
SSP
$1,104
300
Connecticut
SSI
$1,104
300
Delaware
SSI
$662
180
District of Columbia
N/R
$391
106
Florida
SSI
$1,104
300
Georgia
SSI
$1,104
300
Hawaii
MNIL**
$357
97
Idaho
SSI
$1,104
300
Illinois
SSI
$368
100
Indiana
SSI
$368
100
lowa
SSI
$1,104
300
Kansas
MNIL**
$368
100
Kentucky
SSI
$1,104
300
Lousiana
SSI
$1,104
300
Maine
SSI
$368
100
Maryland
MNIL**
$375
102
Massachusetts
MNIL**
$483
131
Michigan
MNIL**
$391
106
Minnesota
MNIL**
$466
127
Mississippi
SSI
$1,104
300
Missouri
SSI
$368
100
Montana
SSI
$368
100
Nebraska
N/R
Nevada
SSI
$736
200
New Hampshire
SSP
$931
253
New Jersey
SSI
$1,104
300
New Mexico
$944
257
New York
MNIL**
$459
125
North Carolina
MNIL**
$242
66
North Dakota
MNIL**
$345
94
Ohio
SSI
$1,104
300
Oklahoma
SSI
$1,104
300
Oregon
SSI
$1,104
300
Pennsylvania
N/R
Rhode Island
SSI
$1,104
300
South Carolina
SSI
$1,104
300
South Dakota
SSI
$1,104
300
Tennessee
SSI
$1,104
300
Texas
SSI
$1,104
300
Utah
SSI
$1,104
300
Vermont
SSI
$1,104
300
Virginia
SSI
$368
100
Washington
SSI
$1,104
300
West Virginia
SSI
$1,104
300
Wisconsin
SSI
$1,104
300
Wyoming
SSI
$1,104
300
Key: N/R = No Response
*
This column provides the methodology for calculating the income threshold shown in the next column.
**
In these states, there is no income threshold, medical need is calculated for each individual.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 9
HOME CARE FOR THE DISABLED AND OTHER ELIGIBILITY OPTIONS
HOME CARE FOR THE DISABLED
OTHER ELIGIBILITY OPTIONS
Disabled Child.
Ventilator-depen.
Poverty-related
Community Spouse
< 18 (TEFRA opt.,
opt. (Section
Aged/Disabled
Resource Allowance
Sec. 1902(e)(3))
1902(e)(9))
(OBRA 86 opt.)
Minimum (MCCA 88)
AL
No
No
No
$12,000
AK
No
No
No
$60,000
AZ
No
Yes
No
$12,000
AR
Yes
Yes
No
$12,000
CA
No
No
No
$60,000
CO
No
No
No
$60,000
CT
No
No
No
$12,000
DE
Yes
No
No
$12,000
DC
No
No
N/R
N/R
FL
No
No
100%
$60,000
GA
Yes
No
No
$60,000
HI
Yes
No
100%
$60,000
ID
Yes
No
No
$12,000
IL
No
No
No
$60,000
IN
No
No
No
$12,000
IA
No
No
No
$12,000
KS
No
No
No
$12,500
KY
No
No
No
$60,000
LA
No
No
No
$12,000
ME
Yes
Yes
100%
$12,000
MD
No
No
No
$12,000
MA
Yes
No
N/R
N/R
MI
Yes
Yes
85%
$12,000
MN
Yes
No
No
$12,000
MS
Yes
No
85%
$60,000
MO
No
No
No
$12,000
MT
No
No
No
$12,000*
NE
Yes
No
No
$12,000
NV
Yes
No
No
$12,000
NH
Yes
No
No
$12,000
NJ
No
No
100%
$12,000
NM
No
No
No
$30,000
NY
No
No
No
$60,000
NC
No
No
No
$12,000
ND
No
No
No
$60,000
OH
No
No
No
$12,000
OK
No
No
No
$25,000
OR
No
No
No
$12,000
PA
No
No
No
$12,000
RI
Yes
No
No
$60,000
SC
No
No
No
$60,000
SD
Yes
No
No
$20,000
TN
No
No
No
$12,000
TX
No
No
No
$12,000
UT
No
No
No
$12,000
VT
Yes
No
No
$60,000
VA
No
No
No
$12,000
WA
No
Yes
No
$60,000
WV
Yes
No
No
$12,000
WI
Yes
Yes
No
$60,000
WY
No
No
No
$12,000
TOTAL:
18
6
6
Key: N/R = No response
* To be implemented January 1990, ** To be implemented October 1, 1989
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 10
QUALIFIED MEDICARE BENEFICIARIES (QMBs)*
% of Poverty
% of Poverty
% of Poverty
% of Poverty
State
1989
1990
1991
1992
Alabama
85
90
95
100
Alaska
100
100
100
100
Arizona
85
90
95
100
Arkansas
85
90
95
100
California
85
90
95
100
Colorado
85
90
95
100
Connecticut
85
90
95
100
Delaware
85
100
100
100
District of Columbia
100
100
100
100
Florida
100
100
100
100
Georgia
85
90
95
100
Hawaii
100
100
100
100
Idaho
85
90
95
100
Illinois**
80
85
90
95
Indiana**
80
85
90
95
lowa
85
90
95
100
Kansas
85
90
95
100
Kentucky
85
90
95
100
Lousiana
85
90
95
100
Maine
85
90
95
100
Maryland
85
90
95
100
Massachusetts
100
100
100
100
Michigan
85
90
95
100
Minnesota
85
90
95
100
Mississippi
85
90
95
100
Missouri
85
90
95
100
Montana
85
90
95
100
Nebraska
85
90
95
100
Nevada
100
100
100
100
New Hampshire
85
90
95
100
New Jersey
100
100
100
100
New Mexico
85
90
95
100
New York
100
100
100
100
North Carolina**
80
85
90
95
North Dakota**
85
90
95
100
Ohio**
80
85
90
95
Oklahoma
90
90
95
100
Oregon
85
90
95
100
Pennsylvania
100
100
100
100
Rhode Island
85
90
95
100
South Carolina
100
100
100
100
South Dakota
85
90
95
100
Tennessee
85
90
95
100
Texas
85
90
95
100
Utah
100
100
100
100
Vermont
86
91
96
100
Virginia
85
90
95
100
Washington
85
90
95
100
West Virginia
85
90
95
100
Wisconsin
100
100
100
100
Wyoming
85
90
95
100
* The Medicare Catastrophic Coverage Act 1988 mandated 1/89, 85%; 1/90, 90%; 1/91, 95%; and 1/92, 100%.
** MCCA 88 also allowed a more gradual phase-in for states that as of January 1987 used more restrictive income
standards for persons over 65, than those used by the SSI program.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, SEPTEMBER 1989
TABLE 11
MEDICALLY NEEDY PROGRAMS AND OPTIONAL COVERAGE GROUPS
PRESENCE OF
AGE LIMIT
MEDICALLY
FOR MEDICALLY
CARE-
NEEDY
NEEDY CHILDREN
TAKER
DIS-
STATE
PROGRAM*
18 TO 21
REL.
AGED
BLIND
ABLED
Alabama
No
N/A
N/A
N/A
N/A
N/A
Alaska
No
N/A
N/A
N/A
N/A
N/A
Arizona
No
N/A
N/A
N/A
N/A
N/A
Arkansas
Yes
21
Yes
Yes
Yes
Yes
California
Yes
21
Yes
Yes
Yes
Yes
Colorado
No
N/A
N/A
N/A
N/A
N/A
Connecticut
Yes
21
Yes
Yes
Yes
Yes
Delaware
No
N/A
N/A
N/A
N/A
N/A
District of Columbia
Yes
21
Yes
Yes
Yes
Yes
Florida
Yes
21
Yes
Yes
Yes
Yes
Georgia
Yes
18
No
No
No
No
Hawaii
Yes
19
No
Yes
Yes
Yes
Idaho
No
N/A
N/A
N/A
N/A
N/A
Illinois
Yes
19
Yes
Yes
Yes
Yes
Indiana
No
N/A
N/A
N/A
N/A
N/A
lowa
Yes
21
Yes
Yes
Yes
Yes
Kansas
Yes
21
Yes
Yes
Yes
Yes
Kentucky
Yes
19
Yes
Yes
Yes
Yes
Louisiana
Yes
18
Yes
Yes
Yes
Yes
Maine
Yes
21
Yes
Yes
Yes
Yes
Maryland
Yes
21
Yes
Yes
Yes
Yes
Massachusetts
Yes
21
Yes
Yes
Yes
Yes
Michigan
Yes
21
Yes
Yes
Yes
Yes
Minnesota
Yes
21
Yes
Yes
Yes
Yes
Mississippi
No
N/A
N/A
N/A
N/A
N/A
Missouri
No
N/A
N/A
N/A
N/A
N/A
Montana
Yes
21
Yes
Yes
Yes
Yes
Nebraska
Yes
21
Yes
Yes
Yes
Yes
Nevada
No
N/A
N/A
N/A
N/A
N/A
New Hampshire
Yes
19
Yes
Yes
Yes
Yes
New Jersey
Yes
21
No
Yes
Yes
Yes
New Mexico
No
N/A
N/A
N/A
N/A
N/A
New York
Yes
21
Yes
Yes
Yes
Yes
North Carolina
Yes
21
Yes
Yes
Yes
Yes
North Dakota
Yes
21
Yes
Yes
Yes
Yes
Ohio
No
N/A
N/A
N/A
N/A
N/A
Oklahoma
Yes
21
Yes
Yes
Yes
Yes
Oregon
Yes
18
Yes
Yes
Yes
Yes
Pennsylvania
Yes
21
Yes
Yes
Yes
Yes
Rhode Island
Yes
18
Yes
Yes
Yes
Yes
South Carolina
No**
N/A
N/A
N/A
N/A
N/A
South Dakota
No
N/A
N/A
N/A
N/A
N/A
Tennessee
Yes
21
Yes
Yes
Yes
Yes
Texas
Yes
18
Yes
No
No
No
Utah
Yes
18
Yes
Yes
Yes
Yes
Vermont
Yes
21
Yes
Yes
Yes
Yes
Virginia
Yes
21
No
Yes
Yes
Yes
Washington
Yes
21
Yes
Yes
Yes
Yes
West Virginia
Yes
19
Yes
Yes
Yes
Yes
Wisconsin
Yes
21
No
Yes
Yes
Yes
Wyoming
No
N/A
N/A
N/A
N/A
N/A
TOTALS
36
36
32
34
34
34
Key: N/A = Not applicable, no Medically Needy Program
*
Pregnant women are required in Medically Needy programs.
**
Planned implementation, March 1990.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, September 1989
TABLE 12
MEDICALL NEEDY MONTHLY PROTECTED INCOME LEVELS
FAMILY SIZE ONE THROUGH FOUR - SEPTEMBER 1989
FAMILY OF ONE
FAMILY OF TWO
FAMILY OF THREE
FAMILY OF FOUR
Alabama
N/A
N/A
N/A
N/A
Alaska
N/A
N/A
N/A
N/A
Arizona
N/A
N/A
N/A
N/A
Arkansas
$108
$217
$275
$333
California
600
750
934
1110
Colorado
N/A
N/A
N/A
N/A
Connecticut
452
601
738
867
Delaware
N/A
N/A
N/A
N/A
DC
391
412
524
640
Florida
300
300
383
458
Georgia
208
308
367
433
Hawaii
357
480
602
725
Idaho
N/A
N/A
N/A
N/A
Illinois
267
333
458
517
Indiana
N/A
N/A
N/A
N/A
lowa
466
466
550
633
Kansas
368
475
480
506
Kentucky
217
267
308
383
Louisiana
100
192
258
317
Maine
400
441
591
741
Maryland
375
417
459
500
Massachusetts
483
650
775
891
Michigan
391
525
555
585
Minnesota
466
582
709
828
Mississippi
N/A
N/A
N/A
N/A
Missouri
N/A
N/A
N/A
N/A
Montana
368
383
408
433
Nebraska
392
392
492
584
Nevada
N/A
N/A
N/A
N/A
New Hampshire
382
554
575
597
New Jersey
350
433
566
658
New Mexico
N/A
N/A
N/A
N/A
New York
459
659
709
850
North Carolina
242
308
358
392
North Dakota
345
400
435
530
Ohio
N/A
N/A
N/A
N/A
Oklahoma
275
341
433
541
Oregon
385
491
575
701
Pennsylvania
408
425
450
542
Rhode Island
550
592
725
833
South Carolina
N/A
N/A
N/A
N/A
South Dakota
N/A
N/A
N/A
N/A
Tennessee
175
192
250
300
Texas
100
211
267
301
Utah
337
413
516
602
Vermont
733
733
875
975
Virginia
250
308
358
400
Washington
396
532
599
667
West Virginia
200
275
290
312
Wisconsin
471
592
689
823
Wyoming
N/A
N/A
N/A
N/A
Key: N/A = Not applicable - state has no Medically Needy program.
SEE NOTES ON NEXT PAGE.
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, September 1989
TABLE 12
MEDICALLY NEEDY MONTHLY PROTECTED INCOME LEVELS
FAMILY SIZE ONE THROUGH FOUR - SEPTEMBER 1989
NOTES:
In a number of states, need and payment amounts vary depending on factors such as region, season
(summer or winter) and what components are included in the standard (e.g., rental allowance). In all such cases,
the region with the highest concentration of recipients and/or the highest seasonal rate is displayed.
Detailed notes by state (where applicable) appear below.
CT - REGION B
KS - METROPOLITAN AREAS
LA URBAN AREAS
MA - RENTAL ALLOWANCE INCLUDED
MI - ANNUALIZED SUMMER/WINTER AVERAGE
NY - NEW YORK CITY REGION
PA - PHILADELPHIA REGION
VT - CHITTENDEN COUNTY
VA GROUP 2
WI AREA 1
SOURCE: NATIONAL GOVERNORS' ASSOCIATION, September 1989
TABLE 13
MONTHLY INCOME ELIGIBILITY THRESHOLDS AND THEIR PERCENTAGE OF POVERTY - September 1989
(Families of Two)
AFDC
PREGNANT WOMEN
SSI
QMB
MEDICALLY NEEDY
State
INCOME
PERCENT
INCOME
PERCENT
INCOME*
PERCENT
INCOME
PERCENT
INCOME
PERCENT
AL
$88
13%
$668
100%
$553
83%
$568
85%
NA
NA
AK
$719
86%
$836
100%
$1,015
121%
$710
100%
NA
NA
AZ
$233
35%
$668
100%
$552
83%
$568
85%
NA
NA
AR
$162
24%
$668
100%
$553
83%
$568
85%
$217
32%
CA
$560
84%
$1,236
185%
$1,116
167%
$568
85%
$750
112%
CO
$331
50%
$501
75%
$837
125%
$568
85%
NA
NA
CT
$452
68%
$1,236
185%
$865
129%
$568
85%
$601
90%
DE
$247
37%
$668
100%
$553
83%
$568
85%
NA
NA
DC
$309
46%
$668
100%
$553
83%
$668
100%
$412
62%
FL
$220
33%
$1,003
150%
$553
83%
$668
100%
$300
45%
GA
$347
52%
$668
100%
$553
83%
$568
85%
$308
46%
HI
$480
62%
$1,421
185%
$562
73%
$768
100%
$480
62%
ID
$254
38%
$501
75%
$598
89%
$568
85%
NA
NA
IL
$250
37%
$668
100%
$553
83%
$535
80%
$333
50%
IN
$229
34%
$668
100%
$553
83%
$535
80%
NA
NA
IA
$347
52%
$1,236
185%
$553
83%
$568
85%
$466
70%
KS
$347
52%
$1,003
150%
$553
83%
$568
85%
$475
71%
KY
$460
69%
$835
125%
$553
83%
$568
85%
$267
40%
LA
$138
21%
$668
100%
$553
83%
$568
85%
$192
29%
ME
$470
70%
$1,236
185%
$568
85%
$568
85%
$441
66%
MD
$309
46%
$1,236
185%
$553
83%
$568
85%
$417
62%
MA
$486
73%
$1,236
185%
$755
113%
$668
100%
$650
97%
$466
70%
$1,236
185%
$598
89%
$568
85%
$525
79%
N
$437
65%
$1,236
185%
$594
89%
$568
85%
$582
87%
MS
$293
44%
$1,236
185%
$553
83%
$568
85%
NA
NA
MO
$232
35%
$668
100%
$553
83%
$568
85%
NA
NA
MT
$286
43%
$668
100%
$553
83%
$568
85%
$383
57%
NE
$293
44%
$668
100%
$645
97%
$568
85%
$392
59%
NV
$270
40%
$501
75%
$627
94%
$668
100%
NA
NA
NH
$442
66%
$501
75%
$554
83%
$568
85%
$554
83%
NJ
$322
48%
$668
100%
$578
86%
$668
100%
$433
65%
NM
$210
31%
$668
100%
$553
83%
$568
85%
NA
NA
NY
$439
66%
$1,236
185%
$656
98%
$668
100%
$659
99%
NC
$231
35%
$668
100%
$553
83%
$535
80%
$308
46%
ND
$313
47%
$501
75%
$553
83%
$568
85%
$400
60%
OH
$263
39%
$668
100%
$553
83%
$535
80%
NA
NA
OK
$364
54%
$668
100%
$681
102%
$602
90%
$341
51%
OR
$369
55%
$568
85%
$553
83%
$568
85%
$491
73%
PA
$315
47%
$668
100%
$602
90%
$668
100%
$425
64%
RI
$440
66%
$1,236
185%
$668
100%
$568
85%
$592
89%
SC
$335
50%
$1,236
185%
$553
83%
$668
100%
NA
NA
SD
$333
50%
$668
100%
$568
85%
$568
85%
NA
NA
TN
$297
44%
$668
100%
$553
83%
$568
85%
$192
29%
TX
$158
24%
$869
130%
$553
83%
$568
85%
$211
32%
UT
$414
62%
$668
100%
$565
85%
$668
100%
$413
62%
VT
$547
82%
$1,236
185%
$666
100%
$575
86%
$733
110%
VA
$231
35%
$668
100%
$553
83%
$568
85%
$308
46%
WA
$397
59%
$1,236
185%
$575
86%
$568
85%
$532
80%
WV
$201
30%
$1,003
150%
$553
83%
$568
85%
$275
41%
WI**
$440
66%
$548
82%
$719
108%
$668
100%
$592
89%
Y
$320
48%
$668
100%
$593
89%
$568
85%
NA
NA
AVERAGE
$335
50%
$848
126%
$610
91%
$593
88%
$435
65%
*
Includes optional state supplement payments amounts.
** Wisconsin covers pregnant women up to 130%, but receives federal match only up to 82%.
SOURCE: National Governors' Association, September 1989.
STATE MEDICAID INPATIENT HOSPITAL REIMBURSEMENT AND COVERAGE
Introduction
Historically, as an individual service, hospital expenditures have
represented the largest proportion of the Medicaid program. Hospital
services have continually consumed slightly over one-quarter of
Medicaid expenditures.
In fiscal year 1980 Medicaid inpatient hospital services cost state and
federal government a total of $6.3 billion. By 1988 total state and
federal inpatient hospital services were $12 billion for 3.7 million
recipients. This amount represents approximately 25 percent of the
total amount spent on Medicaid services.
Background
Medicaid reimbursement of inpatient services is guided by provisions of
the Omnibus Budget Reconciliation Act of 1981 (OBRA '81). Said to have
made the most substantial changes in the Medicaid program since its
inception in 1965, OBRA '81 enabled states to move away from reasonable
cost-based payment methods and set ceilings on rates of payment that
are independent of what a particular hospital spends or of increases in
the costs of goods and services used by the hospital. State payment
for inpatient hospital services must be reasonable and adequate to meet
the costs incurred by efficiently and economically operated facilities,
meeting state and federal laws and regulations as well as quality and
safety standards. The new law required state rates to be sufficient to
assure that Medicaid patients have reasonable access to quality
services.
In addition, OBRA '81 established a provision requiring states to take
into account hospitals serving a disproportionate number of low income
patients. Since OBRA '81, several pieces of legislation have been
targeted at the calculation of hospital rates, specifically for
disproportionate share hospitals. OBRA '86 prohibited limits on the
amount of payment adjustments under the state Medicaid plan with
respect to hospitals serving a disproportionate number of low income
patients with special needs. Later, OBRA '87 was added requiring
states to define disproportionate share hospitals and increase payment
rates for inpatient services provided by these hospitals.
While coverage of inpatient hospital services is required by federal
statute, states have authority over various aspects of the services,
within federal statutory parameters. For example, states specify the
amount, duration, and scope of hospital services sufficient to
reasonably achieve their purpose. States may also impose limits
focused on amount, duration, and scope. Limiting services also serves
to constrain costs by preventing the program from paying for
unnecessary care. (See "Program Changes Affecting The Medicaid
Hospital Services," NGA, December 1987.)
In addition to service restrictions, states have implemented a variety
of utilization controls. The most commonly used methods focus on
monitoring to assure that patient admissions are medically necessary,
and screening to ensure that the patient could not be appropriately
cared for in an outpatient setting.
Finally, there are other services that can be provided in the hospital
setting. These include: skilled nursing services, rehabilitation
services, psychiatric services, and drug and alcohol treatment
services. Each of these services carries its own definition and
payment methods.
Data Summary
The following series of tables displays information on Medicaid
inpatient payment method, coverage of bed type, as well as annual and
summary characteristics of inpatient hospital expenditures and
recipients.
Although states' Medicaid acute care inpatient reimbursement systems
vary widely, for descriptive purposes, they have been classified into
four broad categories. The first category, used by twenty states, sets
prospective rates unadjusted by either diagnosis related groups (DRGs)
or the actual costs or charges related to particular care. The second
category is similar to the first except that the prospective rates are
weighted by DRG for each individual case. Seventeen states set
prospective rates adjusted for the DRG associated with the case. The
third category of payment, used by ten states, calculates rates based
on the lesser of: a prospective rate or a percentage of either costs or
charges. Finally, four states reimburse hospitals based on a
percentage of their costs or charges, typically using Medicare
principles.
Prospective rate setting is the method preferred by the states.
Typically this is done by using costs to establish a rate for a base
year and then trending forward for future years using the inflation
index or another index. Forty-seven states use some form of
prospective rate-setting. Within this category, however, states base
their payments on different criteria. Seventeen use DRGs, sixteen
states reimburse on a per diem basis, and fourteen reimburse based on
discharge.
Maryland is the only state that uses a system in which Medicaid is part
of a pure all-payer payment system. In an all-payer system Medicaid
pays hospitals through the same methodology, and in some cases at the
same rate as other public and private payers. New York's and New
Jersey's payment systems include other payers with Medicaid. In New
Jersey and New York, unlike Maryland, Medicare does not participate in
the all payer system.
Two states, California and Illinois, selectively contract for inpatient
hospital services and payment. Under this method, made possible
through use of federal waiver authority, hospitals bid for price or
volume of services.
Rates can also be established for individual hospitals or for a group
of hospitals. Some states group hospitals by the number of beds or by
rural or urban distinction to form a peer group. In this case,
prospective payment rates are based on the peer group's typical costs
for treating Medicaid patients.
Thirty of the forty-seven states which have prospective rates compute
averages for individual hospitals rather than compute an average for a
peer group. Three states calculate payment based on a blend of
hospital-specific rates and peer group rates. Other methods of
calculating prospective rates include using historical or expected
costs to establish a rate (two states) or computing a prospective
payment for all general acute hospitals within the state (five states).
States may choose to cover various types of services in a hospital
including; swing-beds, skilled nursing beds, rehabilitation beds,
psychiatric beds, and alcohol and drug treatment beds. While the
information we received on the number of facilities and the number of
beds is somewhat limited, it appears from the variation in the number
of beds allocated for such services that some states make more use of
these options than others, based on their needs.
Swing-beds allow hospitals to be reimbursed for providing certain types
of post-acute care, without designating beds exclusively to either
acute or post-acute care. Given the popularity of swing-beds under
Medicare, it is surprising that only thirty-two states reported
coverage of swing-beds.
As the average length of stay continues to decline and the number of
admissions also declines, hospitals are increasing the use of non-acute
inpatient services such as skilled nursing facility (SNF) units,
rehabilitation services, psychiatric services, and alcohol and drug
treatment services. Thirty-five states reported coverage of SNF units
within their general hospitals. The majority of states indicated that
they cover rehabilitation (forty-five) and psychiatric units
(forty-three) within general hospitals. However, the number of states
indicating coverage of alcohol and drug units is lower (thirty-six).
One likely reason for more widespread coverage of rehabilitation and
psychiatric services compared with swing-beds and SNF units is that
most states only cover rehabilitation and psychiatric services within
institutions.
Finally, enclosed is a series of tables (II-3 - II-7) presenting data
on inpatient hospital use and expenditures for 1985 through 1988. The
data for this section were collected from the HCFA - 2082 report.
Because some of these numbers may be estimates, this information should
be used purely for descriptive purposes and should not be used to make
comparisons.
However, generally Table II-3 shows that inpatient expenditures grew at
an annual rate of about 11 percent between 1985-1989. On the other
hand, the average cost for each recipient grew, on average, at a slower
rate of about 6 percent. With overall expenditures growing almost
twice as fast as the expenditures per recipient, this data suggests
that Medicaid is covering larger numbers of hospital inpatients and
spending increasingly more per inpatient visit.
For 1988, total Medicaid inpatient expenditures (table II-4) continue
to represent approximately one quarter of the $48 billion that make up
total Medicaid expenditures. These dollars provided coverage for
approximately 3.7 million inpatient hospital recipients at an average
cost of $3,048 per recipient. One-quarter of total Medicaid
expenditures is consistent with the proportions spent in recent years.
However, it does reflect a slight decrease in inpatient expenditures of
earlier years, when inpatient expenditures consistently represented 30
percent of Medicaid expenditures. It is likely that this slight
decrease in inpatient expenditures, as a percentage of total Medicaid
expenditures, can be attributed to the gradual shift of many inpatient
procedures to outpatient settings.
Conclusion
Although we hesitate to draw conclusions, for the reasons mentioned
above, some trends in this data are apparent. Almost all states are
using prospective payment systems to establish hospital rates. Within
prospective systems, states vary their payment policies using per diem,
per discharge and DRGs about equally. States are also experiencing
growth in both Medicaid inpatient hospital expenditures and the number
of recipients. While there may be some general statements about
Medicaid inpatient hospital services, based on this data, the diversity
across states is significant enough to temper any broad conclusions.
If you have any questions you may contact John Luehrs at (202) 624 -
7812 or Amanda Hock at (202) 624 - 5349.
TABLE II-1
MEDICAID HOSPITAL INPATIENT FACILITIES AND
REIMBURSEMENT METHODS
Reimbursement Method
Medicaid Inpatient Facilities
Prospective
Diagnoses
% of Costs
# of
# of
State
Rates
Weighted
or Charges
Beds
Facilities
Alabama
A (1)
19,922
119
Alaska
B
1,278
17
Arizona
Arkansas
A
N/A
88
California
B (1,2)
#
107,200
559
Colorado
B
X
12,830
98
Connecticut
B
11,049
37
Delaware
X
N/A
N/A
District of Columbia
B
N/A
N/A
Florida
A (1)
#
55,715
243
Georgia
C
25,927
172
Hawaii
A
2,855
23
Idaho
A
#
2,876
44
Illinois
A (2)
60,000
28
Indiana
B
#
25,919
123
lowa
B (3)
X
15,326
127
Kansas
B
X
N/A
N/A
Kentucky
A
#
17,586
108
Lousiana
B
#
N/A
N/A
Maine
B
5,372
44
Maryland
D
12,522
500
Massachusetts
B (4)
22,212
110
Michigan
B
X
#
43,230
213
Minnesota
C
X
19,546
163
Mississippi
A
#
12,748
109
Missouri
A
32,252
165
Montana
B
X
N/A
57
Nebraska
A
12,166
108
Nevada
B (5)
4,003
32
New Hampshire
B
X
N/A
N/A
New Jersey
B
X
30,934
89
New Mexico
B (1)
#
4,578
40
New York
B (3)
N/A
264
North Carolina
A
30,970
146
North Dakota
B
X
N/A
N/A
Ohio
B
X
44,721
194
Oklahoma
A
N/A
N/A
Oregon
B
X
8,960
71
Pennsylvania
B (3)
X
54,690
229
Rhode Island
A (8)
N/A
N/A
South Carolina
B (6)
X
12,107
112
South Dakota
B (1)
X
N/A
55
Tennessee
A
N/A
N/A
Texas
C
X
N/A
440
Utah
B (7)
X
4,613
42
Vermont
A
1,603
10
Virginia
A
#
25,026
110
Washington
B
X
11,759
107
West Virginia
X
10,689
69
Wisconsin
B
N/A
N/A
Wyoming
X
1,781
30
TOTAL
47
17
13
SOURCE: NGA, State Medicaid Information Center
TABLE II-1
KEY:
A = PER DIEM
B = PER DISCHARGE
C = PER ADMISSION
D = PER SERVICE
NOTES:
# = IF A STATE IS MARKED IN BOTH COLUMN 1 AND 3, PAYMENT EQUALS THE LESSER OF
THE TWO AMOUNTS.
1. HOSPITAL SPECIFIC UP TO PEER GROUP CEILING.
2. NEGOTIATED CONTRACTS (ONE OF SEVERAL ALTERNATIVE SYSTEMS IN CALIFORNIA.
3. BLEND OF HOSPITAL SPECIFIC AND PEER GROUP RATES.
4. HOSPITAL'S BUDGET ADJUSTED FOR ANY EXCESS CHARGES IN PREVIOUS YEAR.
5. PER DIEM RATE AFTER FIFTEENTH DAY.
6. HOSPITAL SPECIFIC PER DIEM RATES FOR INFREQUENT DRSs.
7. RURAL HOSPITALS PAID 95 PERCENT OF CHARGES.
8. BASED ON NEGOTIATED HOSPITAL BUDGETS.
SOURCE: NGA, State Medicaid Information Center
TABLE II-2
MEDICAID COVERAGE FOR VARIOUS BED TYPES WITHIN GENERAL ACUTE CARE HOSPITALS
SWING-BEDS
SKILLED NURSING
REHABILITATION
PSYCHIATRIC
ALCOHOL/DRUGS
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
AL
X
2
20
X
X (a)
X (a)
32
1202
X (a)
15
235
AK
X
9
24
X
7
125
X
X
3
77
X
2
34
AZ
X
N/A
X
N/A
X
N/A
AR
N/A
N/A
N/A
X
N/A
X
X
CA
X
N/A
N/A
X
N/A
X
X
N/A
N/A
N/A
N/A
CO
X
X
X
N/A
N/A
X
N/A
N/A
CT
X (a)
X (a)
X (a)
DE
X
X
X
DC
X
X
X
FL
X
30
X (c)
45
X (a)
X (a)
N/A
N/A
X
N/A
N/A
GA
(e)
X
X
X
N/A
N/A
X
N/A
N/A
HI
X
X
X
X
N/A
N/A
X
NA
N/A
ID
X
1
N/A
X
15
X
4
3
NA
>
IL
X
IN
15
X
20
X
27
y
20
NA
X
7
N/A
IA
X
71
2395
X
27
485
X
8
N/A
X
16
N/A
X
18
N/A
KS
X
X
X
N/A
N/A
X (a)
KY
X (k)
17
152
X
16
379
X
6
X
LA
X
X
X
X
ME
X
2
12
X
9
166
X
5
52
X
8
139
X
3
148
MD
X
X
4
494
X
6
336
X
29
811
X
MA
X
5
163
X
47
1257
X
3
115
MI
1
N/A
X
29
N/A
X
22
N/A
X
63
N/A
X
19
N/A
MN
X (c, j)
4
X
X
X
X
MS
X
54
N/A
X
12
N/A
X
X
X
MO
X (j)
N/A
N/A
X
N/A
N/A
X
N/A
N/A
X
N/A
N/A
X
N/A
N/A
MT
X
X
35
N/A
X
4
N/A
X
4
N/A
X
4
N/A
NE
X
65
2123
X
15
274
X
2
115
11
904
X
10
321
NV
X
7
145
X
X (a)
X (a)
NH
X
N/A
N/A
X
N/A
N/A
X
N/A
N/A
NJ
(m)
X
N/A
N/A
X
N/A
1531
NM
X
10
165
X
2
47
X
N/A
N/A
X
6
N/A
N/A
N/A
NY
(n)
(n)
50
X
X
X
NC
X
22
1100
X
28
996
X
554
554
X
40
1288
X
14
651
ND
X
X
X
X
X
SOUP
TIONAL GOVERNORS' ASSOCIATION, 1989
TABLE II-2
MEDICAID COVERAGE FOR VARIOUS BED TYPES WITHIN GENERAL ACUTE CARE HOSPITALS
SWING-BEDS
SKILLED NURSING
REHABILITATION
PSYCHIATRIC
ALCOHOL/DRUGS
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
MEDICAID
# OF
# OF
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
COVERAGE
FACILITIES
BEDS
OH
22
1138
X
21
470
X
76
2796
>. (a)
43
1161
OK
6
54
X
9
360
X
25
232
X
11
310
X
21
217
OR
X (j, k)
X
X
X (a)
PA
N/A
N/A
X
43
N/A
X
93
2949
X
8
233
RI
N/A
N/A
N/A
N/A
N/A
SC
X
15
306
X
12
712
N/A
N/A
N/A
N/A
N/A
N/A
SD
X
39
N/A
X
N/A
X
2
N/A
X
3
2
TN
X
TX
X (a)
N/A
N/A
X (a)
N/A
N/A
UT
X
18
487
X
4
238
X (a)
3
N/A
X
7
N/A
X (a)
VT
X
5
33
X
1
32
X
1
50
X
4
78
X
2
25
VA
X
12
375
X
9
485
X
N/A
N/A
WA
X
20
N/A
X
11
365
X (a)
19
397
X
16
483
X (a)
N/A
N/A
WV
X
9
566
2
160
13
588
WI
X (a)
X (a)
X (a)
WY
X
13
163
2
43
X
2
N/A
X (a)
3
N/A
X (a)
2
N/A
Total
32
35
45
43
36
KEY:
NOTES:
a. ACUTE-CARE COVERAGE ONLY.
N/A = NOT AVAILABLE
b. MINIMUM EXPENDITURE THRESHOLDS
C. PARTICIPATION LIMITED TO SMALL HOSPITALS.
d. EXEMPT UP TO A MAXIMUM NUMBER OR PERCENTAGE OF HOSPITAL BEDS.
e. COVERAGE EFFECTIVE 1/1/90
f. ACCESSIBILITY VARIANCE.
g. ONLY NEW BEDS, NOT CONVERSIONS.
h. EXPEDITED CONVERSION PROCEDURE.
i. ONLY WHEN A NEW SERVICE.
j. LIMITED TO AREAS WITHOUT BEDS OF SIMILAR TYPE.
k. LIMITED TO A SET NUMBER PER HOSPITAL.
I. MORATORIUM ON NEW BEDS.
m. WHILE AWAITING NURSING HOME PLACEMENT.
n. NO, BUT COVERS A SIMILAR SERVICE.
O. CLASS OF HOSPITALS EXEMPT.
p. ALL NEW SERVICES.
SOUP
ATIONAL GOVERNORS' ASSOCIATION, 1989
TABLE II-3
INPATIENT HOSPITAL USE AND EXPENDITURES
( Excluding Mental Health and Outpatient Departments)
1985 - 1988
Average Compound Rate of Growth
% Growth of
% Growth of Total
% Growth of Average
State
Inpatient Expend.
Inpatient Recipients
Per Recipient Expend.
Alabama
3.4
-7.4
11.6
Alaska
11.9
10.7
1.1
Arkansas
5.9
5.6
0.33
California
7.2
2.9
4.2
Colorado
18.2
12.4
5.1
Connecticut
1.7
-0.5
2.2
Delaware
14.2
-0.4
14.6
District of Columbia
3.3
8.6
-4.8
Florida
27.9
27.8
0.1
Georgia
9.8
8.8
0.9
Hawaii
2.2
-3.8
6.2
Idaho
19.9
6.9
12.2
Illinois
-1.7
-4
2.3
Indiana
20.2
1.9
7
lowa
13.5
7.4
5.7
Kansas
17.9
-5.8
25.2
Kentucky
5.2
-0.3
5.6
Lousiana
-4.2
-9.1
5.2
Maine
18.4
0.92
17.3
Maryland
11.6
6.3
5.2
Massachusetts
8.1
2.2
5.8
Michigan
4
2.5
1.5
Minnesota
5.7
1.1
4.5
Mississippi
21.8
5.3
15.6
Missouri
7.1
2.2
4.9
Montana
15.9
13.3
2.3
Nebraska
15.1
5.2
9.4
Nevada
19.4
13.5
5.2
New Hampshire
12.1
1.2
10.8
New Jersey
15.4
-0.8
16.3
New Mexico
10.3
6.3
3.9
New York
8.2
5.9
2.2
North Carolina
16.1
19.5
5.1
North Dakota
6.6
-3.6
10.5
Ohio
3.6
1.4
2.1
Oklahoma
9.5
7.6
1.8
Oregon
10.8
8.4
2.3
Pennsylvania
5.9
-1.3
7.3
Rhode Island
18.3
0.8
5
South Carolina
14.2
7.1
6.7
South Dakota
6.4
3.3
3
Tennessee
15.6
3.9
11.3
Texas
15.8
12.5
2.9
Utah
17.37
9.39
7.25
Vermont
7.2
-2.7
10.3
Virginia
16
5.3
10.2
Washington
12.3
9:1
2.9
West Virginia
21.3
5.6
14.9
Wisconsin
-0.9
-1.5
0.57
Wyoming
18.6
75
10.3
Average
10.92
4.38
6.48
SOURCE: HCFA-2082 REPORT
TABLE II-4
STATE MEDICAID INPATIENT HOSPITAL EXPENDITURES FOR 1988*
(Excluding Mental Health and Outpatient Departments)
Inpatient
Total Inpatient
Average Per
% Growth in Avg.
State
Expenditure
Recipients
Recipient Expend.
Per Recipient Expend.
Alabama
$81,520,393
46,108
$1,768
-10.8
Alaska
$24,496,119
4,052
$6,045
4.1
Arkansas
$88,513,030
55,119
$1,606
-4.6
California
$1,861,818,981
514,960
$3,615
9.2
Colorado
$77,279,206
30,704
$2,517
-3
Connecticut
$120,447,360
38,960
$3,092
1.5
Delaware
$22,597,413
5,858
$3,858
0.5
District of Columbia
$122,419,624
24,543
$4,988
-16.5
Florida
$441,354,121
136,242
$3,239
6.3
Georgia
$280,333,830
124,841
$2,246
2.1
Hawaii
$35,968,687
11,289
$3,186
24.5
Idaho
$24,618,643
7,209
$3,415
32.8
Illinois
$555,418,764
174,496
$3,183
1.2
Indiana
$218,807,617
64,113
$3,413
6.3
lowa
$112,342,693
38,506
$2,918
23.2
Kansas
$73,719,360
20,550
$3,587
49
Kentucky
$173,304,403
76,180
$2,275
8.5
Lousiana
$136,640,389
63,596
$2,149
13.4
Maine
$79,306,982
28,953
$2,739
-33.7
Maryland
$253,022,485
81,318
$3,112
4.9
Massachusetts
$492,240,463
114,974
$4,281
-8.6
Michigan
$497,262,583
147,224
$3,378
-4.7
Minnesota
$164,767,230
54,184
$3,041
-1.6
Mississippi
$108,884,485
71,333
$1,526
17.1
Missouri
$143,876,824
71,161
$2,022
4.6
Montana
$29,571,790
11,783
$2,510
7.3
Nebraska
$50,505,329
19,757
$2,556
5
Nevada
$25,822,812
6,793
$3,801
11.2
New Hampshire
$18,843,677
6,548
$2,878
0.41
New Jersey
$443,852,981
83,220
$5,333
33.6
New Mexico
$62,339,423
20,873
$2,987
10.9
New York
$2,232,282,165
387,434
$5,762
10.2
North Carolina
$252,517,068
97,789
$2,582
7.7
North Dakota
$23,631,729
8,705
$2,715
4.8
Ohio
$558,720,160
184,264
$3,032
5.1
Oklahoma
$162,840,396
58,114
$2,802
16.5
Oregon
$45,208,059
28,023
$1,613
29.8
Pennsylvania
$434,457,714
167,086
$2,600
11.3
Rhode Island
$101,224,131
15,532
$6,517
7.8
South Carolina
$100,201,736
77,369
$1,295
12.2
South Dakota
$23,756,490
8,645
$2,748
2
Tennessee
$182,946,659
100,416
$1,822
-15.3
Texas
$417,097,672
224,215
$1,860
3
Utah
$46,595,588
15,404
$3,025
5.9
Vermont
$19,379,472
7,001
$2,768
1.7
Virginia
$165,462,165
65,433
$2,529
13.8
Washington
$178,955,742
54,055
$3,311
26.2
West Virginia
$102,879,247
40,652
$2,531
-1
Wisconsin
$127,587,224
57,020
$2,238
-7.9
Wyoming
$12,298,303
3,649
$3,370
15.4
SUMMARY:
$ TOTAL:
TOTAL:
AVG $:
AVG GROWTH:
$12,009,939,417
3,756,253
$3,048
6.87
*
All dollar amounts refer to both federal and state money.
SOURCE: HCFA-2082 REPORT
TABLE II-5
STATE MEDICAID INPATIENT HOSPITAL EXPENDITURES FOR 1987*
(Excluding Mental Health and Outpatient Departments)
Inpatient
Total Inpatient
Average Per
% Growth in Avg.
State
Expenditure
Recipients
Recipient Expend.
Per Recipient Expend.
Alabama
$69,169,961
34,887
$1,983
41.8
Alaska
$22,325,445
3,832
$5,826
-5.8
Arkansas
$81,313,254
48,288
$1,684
-12.7
California
$1,672,814,388
505,560
$3,309
4.9
Colorado
$60,816,232
23,431
$2,596
7.4
Connecticut
$113,466,135
37,261
$3,045
1.2
Delaware
$22,180,600
5,791
$3,830
35.7
District of Columbia
$128,518,770
21,497
$5,978
-11.6
Florida
$338,463,753
110,839
$3,054
13.1
Georgia
$231,287,185
105,178
$2,199
-3.9
Hawaii
$28,907,784
11,306
$2,557
-3.5
Idaho
$15,601,984
5,981
$2,609
2.7
Illinois
$551,733,461
171,220
$3,222
9.2
Indiana
$192,101,360
64,203
$2,992
0.26
lowa
$87,929,169
37,153
$2,367
-2.3
Kansas
$54,804,533
22,770
$2,407
7.4
Kentucky
$160,873,387
76,773
$2,095
11.8
Lousiana
$161,299,237
85,142
$1,894
-0.78
Maine
$76,411,767
18,484
$4,134
9.6
Maryland
$232,315,876
78,373
$2,964
7.6
Massachusetts
$503,752,903
107,468
$4,687
2.8
Michigan
$567,107,125
159,893
$3,547
-2.7
Minnesota
$136,548,541
44,141
$3,093
7.3
Mississippi
$92,706,043
71,132
$1,303
22.4
Missouri
$130,904,860
67,726
$1,933
20.2
Montana
$27,748,946
11,862
$2,339
-2.7
Nebraska
$50,674,013
20,822
$2,434
21.7
Nevada
$22,284,486
6,519
$3,418
5.6
New Hampshire
$16,999,747
5,932
$2,866
11.1
New Jersey
$380,729,611
95,449
$3,989
7.4
New Mexico
$51,023,088
18,950
$2,693
2.6
New York
$2,103,152,603
402,418
$5,226
-14.9
North Carolina
$205,140,535
85,574
$2,397
4.9
North Dakota
$22,389,657
8,649
$2,589
48.3
Ohio
$608,520,728
210,892
$2,885
-5
Oklahoma
$139,072,114
57,834
$2,405
34.6
Oregon
$33,254,443
26,785
$1,242
-6.2
Pennsylvania
$409,486,604
175,421
$2,334
-1.7
Rhode Island
$91,055,819
15,067
$6,043
7.3
South Carolina
$109,629,751
74,347
$1,475
0.82
South Dakota
$23,231,466
8,626
$2,693
2.9
Tennessee
$193,565,535
89,935
$2,152
3
Texas
$381,820,180
211,511
$1,805
-2.5
Utah
$43,244,245
15,152
$2,854
2.9
Vermont
$19,319,383
7,101
$2,721
14.2
Virginia
$139,719,915
62,906
$2,221
10.9
Washington
$175,980,330
67,098
$2,623
3.6
West Virginia
$95,458,290
37,330
$2,557
19.5
Wisconsin
$143,267,220
58,938
$2,431
11.1
Wyoming
$16,480,290
5,643
$2,920
7.3
SUMMARY:
$ TOTAL:
TOTAL:
AVG $:
AVG GROWTH:
$11,236,602,752
3,699,090
$2,892
6.98
*
All dollar amounts refer to both federal and state money.
SOURCE: HCFA-2082 REPORT
TABLE II-6
STATE MEDICAID INPATIENT HOSPITAL EXPENDITURES FOR 1986*
(Excluding Mental Health and Outpatient Departments)
Inpatient
Total Inpatient
Average Per
% Growth in Avg.
State
Expenditure
Recipients
Recipient Expend.
Per Recipient Expend.
Alabama
$80,157,879
57,323
$1,398
9.9
Alaska
$17,983,226
2,906
$6,188
6.1
Arkansas
$96,713,284
50,117
$1,930
21.1
California
$1,478,305,383
468,960
$3,152
1.3
Colorado
$31,578,820
13,067
$2,417
11.4
Connecticut
$123,634,155
41,078
$3,010
3.9
Delaware
$17,321,497
6,137
$2,822
10.2
District of Columbia
$111,866,765
16,523
$6,770
17
Florida
$262,311,448
97,168
$2,700
16.3
Georgia
$220,542,364
96,453
$2,287
4.7
Hawaii
$30,559,567
11,533
$2,650
-4.5
Idaho
$15,623,640
6,152
$2,540
4.9
Illinois
$558,080,434
189,298
$2,948
-0.97
Indiana
$181,046,160
60,656
$2,985
7.2
lowa
$74,748,784
30,856
$2,423
2.6
Kansas
$36,549,540
16,309
$2,241
22.6
Kentucky
$140,350,149
74,930
$1,873
3.2
Lousiana
$167,518,223
87,767
$1,909
3.4
Maine
$75,831,116
20,113
$3,770
55
Maryland
$206,004,316
74,839
$2,753
2.9
Massachusetts
$506,027,233
111,074
$4,556
25.9
Michigan
$591,811,521
162,206
$3,649
13
Minnesota
$126,608,577
43,956
$2,880
8.1
Mississippi
$75,209,544
70,674
$1,064
7.8
Missouri
$115,465,019
71,797
$1,608
-8.3
Montana
$25,534,041
10,617
$2,405
2.5
Nebraska
$40,756,148
20,380
$2,000
2.5
Nevada
$20,917,673
6,467
$3,235
-0.8
New Hampshire
$15,557,936
6,033
$2,579
21.8
New Jersey
$316,974,220
85,346
$3,714
9.3
New Mexico
$48,095,094
18,328
$2,624
1.6
New York
$2,019,534,277
328,668
$6,145
13.6
North Carolina
$193,523,334
84,675
$2,285
2.6
North Dakota
$19,085,278
10,938
$1,745
13.3
Ohio
$572,571,308
188,505
$3,037
6.7
Oklahoma
$109,796,153
29,837
$3,680
38.6
Oregon
$34,496,851
26,032
$1,325
-7.1
Pennsylvania
$422,020,135
177,652
$2,376
12.8
Rhode Island
$79,940,556
14,207
$5,627
0.26
South Carolina
$107,914,309
73,777
$1,463
37.1
South Dakota
$21,404,814
8,185
$2,615
4.2
Tennessee
$182,520,165
82,198
$2,220
11.5
Texas
$342,499,882
184,952
$1,852
8.7
Utah
$34,081,285
12,299
$2,771
13
Vermont
$16,768,180
7,043
$2,381
15.3
Virginia
$122,312,010
61,085
$2,002
6
Washington
$128,897,019
47,338
$2,723
10.4
West Virginia
$73,405,906
34,314
$2,139
28.1
Wisconsin
$112,194,062
51,276
$2,188
0.5
Wyoming
$9,854,467
3,624
$2,719
8.1
SUMMARY:
$ TOTAL:
TOTAL:
AVG $:
AVG GROWTH:
$10,412,503,747
3,455,668
$2,807
10.11
*
All dollar amounts refer to both federal and state money.
SOURCE: HCFA-2082 REPORT
TABLE II-7
STATE MEDICAID INPATIENT HOSPITAL EXPENDITURES FOR 1985*
(Excluding Mental Health and Outpatient Expenditures)
Inpatient
Total Inpatient
Average Per
State
Expenditure
Recipients
Recipient Expend.
Alabama
$73,847,525
58,095
$1,271
Alaska
$17,483,241
2,989
$5,849
Arkansas
$74,542,961
46,875
$1,590
California
$1,509,936,841
472,420
$3,196
Colorado
$46,821,625
21,600
$2,168
Connecticut
$114,533,761
39,536
$2,897
Delaware
$15,193,444
5,932
$2,561
District of Columbia
$110,802,341
19,153
$5,785
Florida
$210,814,201
65,286
$3,229
Georgia
$212,013,490
97,075
$2,184
Hawaii
$33,731,942
12,672
$2,662
Idaho
$14,290,682
5,905
$2,420
Illinois
$585,428,882
197,144
$2,970
Indiana
$168,607,996
60,556
$2,784
lowa
$76,901,151
31,088
$2,474
Kansas
$44,914,590
24,587
$1,827
Kentucky
$148,756,604
76,908
$1,934
Lousiana
$156,490,747
84,711
$1,847
Maine
$47,767,873
28,168
$1,696
Maryland
$180,812,021
67,640
$2,673
Massachusetts
$389,914,137
107,816
$3,616
Michigan
$441,961,618
136,907
$3,228
Minnesota
$139,547,390
52,423
$2,662
Mississippi
$60,273,800
61,051
$987
Missouri
$117,026,742
66,707
$1,754
Montana
$18,998,044
8,101
$2,345
Nebraska
$33,141,303
16,994
$1,950
Nevada
$15,159,228
4,645
$3,264
New Hampshire
$13,369,683
6,319
$2,116
New Jersey
$289,018,338
85,131
$3,395
New Mexico
$46,393,668
17,396
$2,667
New York
$1,762,284,543
326,038
$5,405
North Carolina
$161,571,650
72,593
$2,226
North Dakota
$19,533,678
9,702
$2,013
Ohio
$503,233,256
176,836
$2,846
Oklahoma
$123,998,203
46,720
$2,654
Oregon
$33,213,121
22,007
$1,509
Pennsylvania
$365,568,839
173,574
$2,106
Rhode Island
$79,710,349
15,173
$5,253
South Carolina
$67,244,399
63,013
$1,067
South Dakota
$19,698,425
7,850
$2,509
Tennessee
$118,392,332
89,489
$1,323
Texas
$268,172,533
157,439
$1,703
Utah
$28,856,582
11,769
$2,452
Vermont
$15,711,394
7,610
$2,065
Virginia
$105,905,697
56,081
$1,888
Washington
$126,512,619
41,606
$3,041
West Virginia
$57,586,074
34,506
$1,669
Wisconsin
$131,292,836
59,672
$2,200
Wyoming
$7,374,384
2,934
$2,513
SUMMARY:
$ TOTAL:
TOTAL:
AVG $:
$9,404,356,783
3,356,442
$2,569
* All dollar amounts refer to both federal and state money.
SOURCE: HCFA-2082 REPORT
THE WHITE HOUSE
WASHINGTON
March 27, 1990
NOTE TO KEN YALE
DAN HEIMBACH
JOHN SCHALL
Mike Duncan of Public Liaison has arranged
for Peter Libassi of The Travelers, representing
the Connecticut Insurance Association and
Carl Schramm of the Health Insurance Association
of America to come by Friday at 10 am in my
office to discuss the proposal to expand
access to health insurance in Connecticut
put forward by that state's insurance
community.
Please join us if you can. Peggy Polk
will circulate the material we receive
from them in advance.
&
Hanns Kuttner
Information for
White House Meeting
March 30, 1990
Bruce W. Butler
Vice President and General Manager
Local Customer Accounts
The Travelers
SS# 471-40-9967
DOB 8/9/39
Frank Peter Libassi
Senior Vice President
Corporate Communications Dept.
The Travelers
SS# 126-22-7360
DOB 4/20/30
Carole T. Roberts
Second Vice President
Federal Government Affairs
The Travelers
SS# 077-36-7889
DOB 5/23/47
Carl J. Schramm
President
Health Insurance Association of America
SS# 078-40-3465
DOB 8/12/46
mally
R
TheTravelersJ
F. Peter Libassi
Senior Vice President
Corporate Communications
The Travelers Companies
One Tower Square
Hartford, CT 06183
203-277-2509
,
To mike Phone Seen- P-2-
the
232-0341 (h)
January 30, 1990
To come PIR
Ms. Bobbie Kilberg
meet t wals be
Deputy Assistant to
the President
Office of the Public Liaison
you
The White House, Room 128
Washington, D.C. 20500
Blso
Dear Ms. Kilberg:
Knowing of your interest in expanding access to health
care, I want to bring to your attention a new initiative by the
Insurance Association of Connecticut (IAC). This innovative
program, recently presented to the Connecticut Blue Ribbon
Commission on State Health Insurance, is designed to provide
access to the financing of health care for small businesses
(firms having fewer than 25 employees). Information about the
proposal is attached.
Travelers, the largest commercial insurer in the small
group market, helped craft and supports the IAC proposal. We
believe it represents a responsible approach to the serious
concerns expressed by our customers and by public policymakers.
It entails fundamental changes in the way that we as insurers do
business in the small group market. The plan would:
*
Guarantee access and availability by offering a more
affordable core benefits plan to small companies and
by reinsuring against high risks.
*
Bring stability to this market by limiting premium
increases and by restricting termination of coverage.
Smill Group
*
Allow employees to change jobs without losing coverage
been
Ir
because of a pre-existing condition.
The IAC program is one piece of what must be a partnership
Bruce Bullr
between business and government. The private and public
sectors, working in concert, have a unique opportunity to
resolve the access dilemma without undermining an employer-based
health care financing system that already provides 180 million
Americans with access to care.
Hans 6563
SNA
-2-
We would be pleased to brief you about the details of this
proposal. At your convenience, Travelers representatives are
available to meet with you to discuss the Connecticut plan as
well as Travelers commitment to the small business market.
Sincerely,
Peta L.
F. Peter Libassi
Enclosure
FPL/lh
INSURANCE ASSOCIATION OF CONNECTICUT
SUITE 1304 60 WASHINGTON STREET, HARTFORD, CONN. 06106 PHONE (203) 547-0610
PRESS RELEASE
For Release:
January 9, 1990
11:30 a.m.
CONTACT: E. Joseph Martin
Director of Information
Insurance Association of Connecticut
60 Washington Street, Suite 1304
Hartford, CT 06106
(203) 547-0610
IAC PRESIDENT LEROY UNVEILS
INNOVATIVE PROPOSALS ON MEDICALLY UNINSURED
HARTFORD -- The Insurance Association of Connecticut (IAC)
today unveiled a bold new proposal concerning medical insurance for
the 272,000 Connecticut citizens who are uninsured -- a program
never before advanced anywhere in the U.S.
H. Craig Leroy, president of the IAC, said the insurance
industry's plan "would radically change how we do business in the
small group health insurance marketplace for the better." He also
asked for a cooperative public/private partnership to fill the needs
of the poor and near poor. Leroy stated that, "This proposal
demands a shared responsibility among government, business, the
insurance industry and health care community. =
AN ASSOCIATION OF CONNECTICUT INSURANCE COMPANIES
-2-
Nationwide surveys show that two-thirds of the working uninsured
are employed in companies with fewer than 25 employees. To provide
affordable coverage to these employers, the plan would allow
insurance companies to sell lower-cost benefit plans free of some of
the benefits mandated by Connecticut law. "We have developed
several low-cost, pared-down plans that could be offered to the
small employer community," Leroy said.
Those employers who purchase a pared-down policy would be
granted a tax credit and such policies would be exempt from the
state's two percent premium tax with the savings being passed on to
the policyholder.
A reinsurance mechanism coupled with underwriting and rating
restrictions would provide more affordable coverage to small
employers, he explained. The reinsurance mechanism would also
protect employee privacy.
Rating restrictions would eliminate the "traumatic" rate
increases currently being levied on some small employers. These
restrictions Leroy outlined would include:
-- A prohibition on all carriers from cancelling a small
employer's coverage except for fraud, non-payment of premium
and the like.
-- A restriction on the ability to impose pre-existing condition
limitations under certain circumstances.
-- A requirement to mandate carriers to accept or reject entire
groups.
-- A requirement that all small group insurers operate according
to these rules.
-3-
"We believe this plan would make insurance more available, make
the pricing structure more predictable and stable, and small
employers would be more fully protected from being cancelled
outright or being priced out of the market due to adverse claims
experience, = Leroy said.
In addressing the coverage for the poor population, Leroy said
insurance companies and the government "should jointly begin the
process of discussing how Medicaid should help more low income
individuals obtain Medicaid services." He said that the IAC would
work cooperatively with the state government to devise new options
for Medicaid to expand coverage to the poor and near poor.
Another important component for maintaining and expanding
employer coverage and expanding the number of people covered by
public sector plans is controlling health costs.
"Policymakers should encourage development of the private
sector's cost-management techniques," he concluded.
lc
INSURANCE ASSOCIATION OF CONNECTICUT
SUITE 1304 60 WASHINGTON STREET, HARTFORD, CONN. 06106 PHONE (203) 547-0610
IAC INITIATIVE ON STATE HEALTH INSURANCE
The IAC has been developing a comprehensive plan to address the
problem of the health uninsured in Connecticut. The major elements of
the IAC program are:
1. Basic, more affordable policies for small groups - - make less
expensive health insurance policies available to currently uninsured
small groups (2 to 25 lives), where the majority of working uninsured
are employed, and create financial incentives to encourage purchasing
the policies, thereby helping to reduce the number of uninsured. The
proposal includes:
A. Pared-down health insurance policy- the IAC has formed
several model insurance plans, which vary in the degree to which
preventive and catastrophic coverage is provided. The policies
would be marketed by individual insurers, would eliminate or
reduce certain mandates and would be made available to new
employers and employers who had not insured their employees for at
least two years. The program would be sunset after four years.
B. Tax credit--grant employers who are purchasing a
pared-down policy for their employees a tax credit against any
corporation business tax owed, provided the employer pays at least
50% of the premium. The credit would sunset after four years.
C. Premium tax waiver exempt pared-down policies from 2%
premium tax with the savings to be passed onto the policyholder.
This will cost the state minimal amounts, since no premiums are
currently being paid by such employers.
D. Legislative study of efficacy of pared-down policy study
the program after three years; submit recommendations to General
Assembly as to continuation, elimination or modification of the
program.
AN ASSOCIATION OF CONNECTICUT INSURANCE COMPANIES
-2-
2. Medicaid the 1989 Budget Reconciliation Act provides
funds for Medicaid demonstration projects targeting maternal and
child-care benefits, the IAC will offer its member companies'
expertise to the state to assist it in developing such projects for
Connecticut, as these projects could be useful in addressing a
sizeable segment of the problem of the health uninsured. IAC
assistance will also be offered to explore the possibility of Medicaid
"buy-in" and "buy-out" programs.
3. Market stability--increase the stability and accessibility of
the small group health insurance market (2 to 25 lives) by making
fundamental changes in industry practices regarding underwriting and
rating and by establishing a statewide reinsurance mechanism. The
characteristics of this proposal are:
A. Guaranteed Availability--All small employers would be
guaranteed the right to purchase a plan of benefits without regard
to the health condition of their employees or dependents. This
program would be similar to the current Connecticut Health
Reinsurance Association's program for purchase of health
insurance, but would be especially designed for the small employer
market.
B. Guaranteed Continuity of Coverage for Small
Groups--Insurers would be precluded from discontinuing an
employer's health benefits plan except for non-payment of premium,
fraud, material change in risk or failure to meet participation
requirements. Individuals who continue to meet eligibility
requirements could not be terminated from group plans.
C. Pre-existing Health Conditions--Pre-existing condition
limitations may be applied to the individual employee or his
dependents when the employee changes jobs. The IAC proposal would
prohibit application of pre-existing condition limitations in
these situations in the small group market.
D. Premium Rates-- In order to provide for a more stable and
affordable market for the purchase of small group health insurance:
1. Regardless of the health condition or numbers of
claims of any insureds in a small group, the annual increase
in premium rates for the group could not exceed the total of
the increase in the insurer's premium rates for a similar new
group plus a specified amount for necessary rating
flexibility.
2. Also, despite health conditions, premium rates for a
small group could never be more than an amount, to be
determined, higher than those of the insurer's lowest rating
category for a similar employer with similar benefits.
-3-
E. Reinsurance Pool for the Small Employer Market. In order
to provide for a more stable market and to encourage the insuring
of groups that might not otherwise be underwritten, the proposal
calls for establishment of a reinsurance pool for high risk
individuals within the small group market with the following major
provisions:
1. The pool would be available for use by small group
insurers, who may put the group as a whole or individuals
from the group in the pool, depending on who is considered to
be of sufficient risk to warrant reinsuring that risk.
2. A reinsurance premium would be charged the insurer
for each reinsured risk. Employers would pay some or all of
the reinsurance premium, depending on the circumstances of
reinsurance.
3. Losses from the mechanism would be covered by
assessments against pool members. The IAC proposal
anticipates that all insurers in the small group marketplace
will be members of the pool, including all commercial
insurance companies, health maintenance organizations, and
any other organizations doing a small group insurance
business in Connecticut.
4. Assessments paid by small group members will not
exceed 5% of the total premium for small group health
insurance in Connecticut, SO as not to exacerbate the
affordability concerns in the market. A premium tax offset
or other broad-based financing mechanism will be provided for
liability exceeding the 5% level.
5. The reinsurance mechanism is transparent to the
beneficiary and to third parties in order to avoid
discriminatory treatment and protect employee privacy.
Employees who are placed in the reinsurance mechanism pay no
more for coverage than other employees with the same
employer.
F. Transition- rules will be established for a specified
period of time to cover the initial application of rating
restrictions to each insurer's existing book of business.
STATEMENT
TESTIMONY OF H. CRAIG LEROY
THE BLUE RIBBON COMMISSION ON STATE HEALTH INSURANCE
TUESDAY, JANUARY 9, 1990
The insurance industry is greatly concerned about the near 272,000
Connecticut citizens who do not enjoy the protection of health
insurance. The industry has worked hard to develop creative
solutions for extending health care benefits to uninsured groups and
individuals. Our companies are committed to working with government
to implement effective approaches for providing coverage to this
population.
Indeed, we need a shared partnership between government, business,
insurers, as well as health care providers if we are to step forward
in Connecticut and address the issue of the medically uninsured. It
is no one's sole responsibility but it is going to take everyone's
willingness to do things differently if we are to make progress in
Connecticut. As you will hear, the Connecticut insurance industry
is willing to answer that challenge. We hope others are also
willing.
The task of ensuring that all our citizens enjoy the protection of
health insurance is complex. This complexity is largely a function
of the diversity of the uninsured population; this diversity
requires a combination of private and public solutions.
-2-
A positive, multi-faceted approach that addresses the people
greatest in need and responds to the different portions of the
uninsured population is necessary.
The IAC proposes a 6-point program of public and private sector
partnership to respond positively to this challenge:
1. Creation of basic, no-frills insurance policies for the small
group market (25 lives and less). These plans would focus on
preventative and catastrophic coverages and eliminate or reduce
certain mandated benefits. These policies would provide significant
premium savings for the purchasing small employer.
2. Tax Credits for small employers who purchase the basic policy
for their employees and who pay at least 50% of the premium;
3. Premium tax waiver for these basic policies to further reduce
the cost to the policyholder;
4. Legislative study of the efficacy of the basic policy program
outlined above after a three-year period so the Legislature can
determine whether it works, should be modified or eliminated;
-3- -
5. Expand the Medicaid program to ensure that all individuals below
the poverty line are covered, consider Medicaid "buy-in" and
"buy-out" programs, and work to develop demonstration projects
targeting maternal and child-care benefits. The IAC and its member
companies will be willing to assist in exploring these initiatives
with the state;
6. Enhance the stability and accessibility of the small group
health insurance market in Connecticut by establishing a statewide
reinsurance mechanism and by making fundamental changes in industry
practices regarding underwriting and rating.
I will now discuss each of these in more detail.
Expanding Coverage in the Small Employer Market
More has to be done, with efforts from both the public and private
sectors, to provide small businesses with the opportunity to
purchase affordable health coverage. Nationwide surveys show that
two-thirds of the working uninsured are employed in companies with
fewer than 25 employees. Also, surveys demonstrate that small
businesses do provide health coverage to their workers once they
grow or can afford it. Currently, health coverage is unaffordable
4
to many small employers. This is because the cost of health
services continues to increase much more rapidly than overall
inflation and the rate of utilization of these services continues to
increase. Health insurance premiums must reflect these underlying
cost trends.
We believe, however, there are actions that can be taken to provide
more affordable health coverage for small employers, incentives that
encourage small businesses to buy coverage for the first time, and a
more stable market in which to purchase coverage.
More Affordable Coverage is Needed
Underlying affordability problems faced by small employers must be
addressed. Currently, Connecticut's mandated benefit laws prevent
insurers from offering lower cost benefit plans. The increase in
the cost of coverage due to the state's mandated benefit laws is
responsible for some businesses choosing not to purchase health
coverage. Making affordable coverage available would allow
employers and employees the flexibility to decide the type of
healthcare they would like to purchase. Furthermore, small
employers should be provided the very same freedom from state
-5-
mandated benefits laws now enjoyed by self-insured plans (which
typically are used by larger employers). It is ironic that small
employers, those least able to afford health coverage, are saddled
with purchasing these costly mandated benefits.
Carriers should be permitted to sell to small employers low-cost
benefit plans free of some of Connecticut's mandated benefits. We
have developed several low cost prototype "pared-down" plans that
could be offered to the small employer community. "Pared-down"
coverage should be offered for a limited time to small employers not
yet offering coverage as an incentive to have these employers begin
offering coverage. A sunset provision and study of the effect of
offering such policies should be included in any proposed
legislation.
Tax Credits are Needed
We should grant employers who are purchasing a pared-down policy for
their employees a tax credit. Pared down policies should also be
exempt from the state 2% premium tax with the savings being passed
to the policyholder. (This exemption would have little fiscal
impact on the state since these would be new policies being sold.)
Providing tax credits and a premium tax waiver for the purchase of a
pared-down policy could have a significant impact on making health
coverage more affordable.
- 6
A More Stable and Predictable Marketplace that Guarantees
Availability Is Needed
A reinsurance mechanism, coupled with underwriting and rating
restrictions for health coverage written in the small employer
market, should be established. In the present marketplace, certain
small employer groups may present a high or even uninsurable risk
due to the presence of high risk individuals or the high risk nature
of their business. For many of these businesses, the cost of health
coverage is prohibitively expensive. The small employer reinsurance
mechanism coupled with reasonable underwriting and rating
restrictions would help provide more affordable coverage to small
employers.
A not-for-profit reinsurance mechanism should be established and
would serve to promote availability. It would allow insurers to
"reinsure" high risks with the reinsurance mechanism in exchange for
a reinsurance premium. Claims incurred by reinsured risks would be
covered by the reinsurer. This would encourage insurers to accept
risks that they might not normally accept since they are protected
by the marketplace at large from the costs of accumulating a
disproportionate number of high risks.
-7-
Employers would pay some or all of the reinsurance premium,
depending on the circumstances of reinsurance. However, the process
of reinsurance is intended to be invisible to the insureds within
the groups in order to avoid discriminatory treatment and protect
employee privacy. To accomplish these objectives, an employee will
not be aware that he is being reinsured by an insurer. When a
carrier has chosen to reinsure, they will continue to pay the claims
(and/or utilize the same delivery system) for the nonreinsured and
reinsured risks. The processes of reinsurance premium payment and
reimbursement for reinsured risks are purely transactions between
the carrier and the reinsurer.
Naturally, the reinsurer will incur losses. Insurers will generally
only reinsure risks for which they expect the actual claims costs to
exceed the premium for reinsurance. Therefore, the losses generated
would be spread back equitably across the marketplace. However, to
avoid exacerbating the affordability concerns of the small employer
market, limitations on the amount of losses are necessary.
Legislation creating the mechanism should not require the small
business community to pay any pool losses which exceed 5% of the
total premium for small business group health insurance in
Connecticut. To that end, a premium tax offfset should be provided
for participating insurers for any losses exceeding 5%. Otherwise,
serious harm could be done to small business due to increased
affordability problems.
-8- -
In addition, reasonable underwriting and rating restrictions would
also be imposed on carriers writing in the small employer market in
order to provide needed stability to this marketplace. These
restrictions include:
-Rate restrictions to eliminate the traumatic rate increases
currently levied on some small employers. Medical costs continue to
increase rapidly and premium rates will continue to reflect those
increases. However, these rate limitations would inject some needed
predictability and stability into the small employer market, thereby
allowing small employers to plan and budget for health coverage
costs with greater ease.
-A prohibition on all carriers from cancelling a small employer's
coverage except for fraud, non-payment of premium and the like.
Thus, cancelling a group for adverse claims experience would be
prohibited.
-A restriction on all carriers on their ability to impose
pre-existing condition limitations under certain circumstances.
-A requirement imposed on all carriers to accept or reject entire
groups. Employers and insurers could not exclude any individual in
the group who wanted coverage.
- 9
-A prohibition on all carriers from operating in the small group
market unless they operated according to these rules.
The small employer reinsurance mechanism coupled with the
underwriting and rating restrictions is intended to serve several
goals. First, it would promote the availability of coverage to all
small employers, including groups with high risk individuals. The
reinsurance mechanism will provide the necessary safety net for
those employers and employees who are currently experiencing
difficulty obtaining health coverage due to existing medical
conditions. Second, the reinsurance mechanism and the rating
restrictions would interact to provide a more predictable and stable
pricing structure for small employers, as well as making the
coverage more affordable for groups with employees possessing
existing serious medical conditions. The rate restrictions will
also help alleviate tremendous premium increases some employers are
currently experiencing. Lastly, by imposing the underwriting and
rating restrictions (both initially and at renewal), small employers
will be more fully protected from being cancelled outright or being
priced out of the market due to adverse claims experience.
-10-
Let me emphasize what I have just described. This proposal would
impose significant but reasonable underwriting and rating
restrictions on carriers and it would radically change the way
carriers operate in the small group market for the better. While
these restrictions may increase costs for some groups, we believe it
is a necessary response to the problems experienced in the small
group market and it should provide a more stable market for small
employers, thereby encouraging them to provide coverage to their
workers.
Public Assistance for the Uninsured with Low Income
The proper role of government and a priority of any program for the
uninsured must be to provide coverage to low income individuals
through carefully targeted, improved, and expanded public assistance
programs. Eligibility for public assistance programs should be
broadened to ensure that all persons who fall below the poverty line
are covered for health care services, irrespective of age,
disability, family or employment status. If available funds prevent
full coverage up to the poverty level, priority should be given to
children before other populations. Priority should also be placed
on primary care and preventive services. Governmental assistance to
the poor and near poor could take several creative forms and could
-11-
involve public/private cooperative efforts. The suggested forms of
public assistance outlined below are just that--suggèstions. The
IAC, representing major Connecticut insurers, offers the resources
of our member companies to help state government examine current
Medicaid programs and devise possible expansion. We are also aware
of certain budget realities. However, we should jointly begin the
process of discussing how Medicaid should evolve to help more low
income individuals obtain medical services.
Medicaid Buy-In
Connecticut should evaluate creating a limited Medicaid "buy in"
program. Individuals and families with income above the poverty
line but below 150 percent of the federal poverty level should be
eligible to purchase first-dollar coverage of a limited package of
primary, preventive and related ambulatory care coverages through
the state's Medicaid Program.
Such a limited benefit package meets the near-poor's need for access
to basic primary care (so that illness does not become more severe
and expensive through lack of treatment), while not significantly
lessening employers' incentives to offer basic insurance protection.
-12-
The limited benefit package keeps costs of the buy-in coverage per
se to a minimum, thus permitting very low premiums, constraining
government costs, broadening participation, and reducing the chance
of adverse selection.
Medicaid Buv-Out
We should also examine creating a Medicaid "buy-out" program.
Medicaid eligibles who are working should be encouraged to make use
of employment-based health insurance, where it is available. To
accomplish this goal, state Medicaid programs could be given the
option of paying (and receiving federal matching funds which would
take federal legislation) the employee's share (if any) of the
private insurance premium, as well as other costs. Medicaid would
continue to be available to cover deductibles and other benefits not
covered under the employer plan; and Medicaid's contribution, for
the employee's premium plus Medicaid's "wrap-around" coverage, would
not be permitted to exceed the average cost of traditional Medicaid
coverage. For both the "buy out" of Medicaid eligibles and the "buy
out" of individuals transitioning off Medicaid, participating
employers should be required to make the same premium contribution
on behalf of Medicaid-eligible employees as they do for other
employees.
-13-
Such a program would support the current public policy concept of
encouraging low-income persons to work by easing the transition from
public support to self support.
Health Care Management Initiatives
Controlling health care costs is an important component of
maintaining and expanding employer coverage and expanding the number
of people covered by public sector plans. Healthcare costs are
being driven mainly by a number of factors including demographics,
new technology and cost-shifting from the public sector. The
private sector is, however, developing and implementing programs
aimed at better management of health care costs. The goal of health
care cost management is to restrain costs without reducing quality
of care.
New and creative provider networks are also being developed to cost
efficiently provide care. Both PPOs and HMOs are used for this
purpose. New services such as utilization review which introduces
an informed buyer into the health care services transaction are
being implemented. The health care delivery system continues to
evolve in response to concerns about the costs of health care and
carriers continue to develop innovative cost management techniques.
-14-
Policymakers should encourage development of the private sector's
cost-management techniques. Restrictions on the use of these
techniques will cause an increase in a currently unaffordable
product for many. In addition, the public sector could benefit from
aggressively implementing these healthcare cost management
techniques in their own health care programs.
Conclusion
I would like to conclude by reemphasizing my initial point.
Addressing this issue of providing health insurance for all our
citizens is complex. It demands a shared responsibility among
government, business, the insurance industry, as well as the health
care community. We in the insurance industry have offered today a
proposal which would radically change how we do business in the
small business health insurance marketplace. Nothing like this has
been proposed elsewhere in our country. Yet, it is the
responsibility of all involved in the health care system to shoulder
part of the responsibility in addressing this issue. As the growth
of health care costs continues to skyrocket, the ability of insurers
to slow the increase in insurance premiums is limited. Only by
working together can we create a solution in Connecticut which can
be effective and, of which, we can all be proud.
IX
101ST CONGRESS
2D SESSION
H.R.3932
To amend title XIX of the Social Security Act to improve access to basic health
care services to needy children.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 1, 1990
Mr. SLATTERY (for himself, Mr. WAXMAN, Mr. MILLER of California, Mr.
SCHEUER, Mr. WALGREN, Mr. WYDEN, Mr. SIKORSKI, Mr. BATES, Mr.
BRUCE, Mrs. COLLINS, Mr. TOWNS, Mr. MARKEY, Mr. BOUCHER, Mr.
DURBIN, Mr. BERMAN, Mr. WILLIAMS, Mr. McDERMOTT, Mr. FRANK, Mr.
RANGEL, Mr. FAUNTROY, Ms. SCHNEIDER, Mr. PAYNE of New Jersey, Ms.
PELOSI, Mr. WHEAT, Mr. JOHNSTON of Florida, Mr. FOGLIETTA, Mr. DE
LUGO, Mr. CROCKETT, Mr. ACKERMAN, and Mr. HAWKINS) introduced the
following bill; which was referred to the Committee on Energy and Com-
merce
A
BILL
To amend title XIX of the Social Security Act to improve
access to basic health care services to needy children.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3
TITLE I-SHORT TITLE
4 SECTION 101. SHORT TITLE.
5
This Act may be cited as the "Medicaid Child Health
6 Amendments of 1990".
(J. 39-080)
2
1
TITLE II-CHILD HEALTH
2
AMENDMENTS
3 SEC. 201. PHASED-IN MANDATORY COVERAGE OF CHILDREN
4
UP TO 100 PERCENT OF POVERTY LEVEL.
5
(a) IN GENERAL.-Section 1902 of the Social Security
6 Act (42 U.S.C. 1396a), as amended by section 6401(a) of the
7 Omnibus Budget Reconciliation Act of 1989, is amended-
8
(1) in subsection (a)(10)(A)(i)-
9
(A) by striking "or" at the end of subclause
10
(V),
11
(B) by striking the semicolon at the end of
12
subclause (VI) and inserting ", or", and
13
(C) by adding at the end the following new
14
subclause:
15
"(VII) who are described in sub-
16
paragraph (D) of subsection (l)(1) and
17
whose family income does not exceed
18
the income level the State is required to
19
establish under subsection (1)(2)(C) for
20
such a family;";
21
(2) in subsection (a)(10)(A)(ii)(IX), by striking "or
22
clause (i)(VI)" and inserting ", clause (i)(VI), or clause
23
(i)(VII)";
24
(3) in subsection (1)-
HR 3932 IH
3
1
(A) by amending subparagraph (D) of para-
2
graph (1) to read as follows:
3
"(D) children born after September 30, 1983, who
4
have attained one year of age but have not attained 18
5
years of age,";
6
(B) by striking subparagraph (C) of para-
7
graph (2) and inserting the following:
8
"(C) For purposes of paragraph (1) with respect
9
to individuals described in subparagraph (D) of that
10
paragraph, the State shall establish an income level
11
which is equal to the 100 percent of the income official
12
poverty line described in subparagraph (A) applicable
13
to a family of the size involved.";
14
(C) in paragraph (3)-
15
(i) by inserting ", (a)(10)(A)(i)(VII),"
16
after "(a)(10)(A)(i)(VI)", and
17
(ii) in subparagraph (E), by striking
18
"the methodology employed" and inserting
19
"a methodology which is no more restrictive
20
than the methodology employed";
21
(D) in paragraph (4)(A), by inserting "or sub-
22
section (a)(10)(A)(i)(VII)" after ("(a)(10)(A)(i)(VI)";
23
and
HR 3932 IH
4
1
(E) in paragraph (4)(B), by striking "or
2
(a)(10)(A)(i)(VI)" after ", (a)(10)(A)(i)(VI), or
3
(a)(10)(A)(i)(VII)'; and
4
(4) in subsection (r)(2)(A), by inserting
5
"(a)(10)(A)(i)(VII)," after ('(a)(10)(A)(i)(VI),'.
6
(b) CONFORMING AMENDMENT TO QUALIFIED CHIL-
7 DREN.-Section 1905(n)(2) of such Act (42 U.S.C.
8 1396d(n)(2)) is amended by striking "age of 7 (or any age
9 designated by the State that exceeds 7 but does not exceed
10 8)" and inserting "age of 18".
11
(c) ADDITIONAL CONFORMING AMENDMENTS.-
12
(1) Section 1903(f)(4) of such Act (42 U.S.C.
13
1396b(f)(4)) is amended-
14
(A) by striking "1902(a)(10)(A)(i)(IV)," and
15
inserting
"1902(a)(10)(A)(i)(III),
16
1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V),", and
17
(B) by inserting after "1902(a)(10)(A)(i)(VI),"
18
the
following:
19
1902(a)(1)(A)(ii)(I),".
20
(2) Subsections (a)(3)(C) and (b)(3)(C)(i) of section
21
1925 of such Act (42 U.S.C. 1396r-6), as amended by
22
section 6411(i)(3) of the Omnibus Budget Reconcilia-
23
tion Act of 1989, are each amended by inserting
24
"(i)(VII)," after "(i)(VI)".
HR 3932 IH
5
1
(d) EFFECTIVE DATE.-(1) The amendments made by
2 this section apply (except as otherwise provided in this sub-
3 section) to payments under title XIX of the Social Security
4 Act for calendar quarters beginning on or after July 1, 1991,
5 without regard to whether or not final regulations to carry
6 out such amendments have been promulgated by such date.
7
(2)(A) In the case of a State plan for medical assistance
8 under title XIX of the Social Security Act which the Secre-
9 tary of Health and Human Services determines requires
10 State legislation (other than legislation authorizing or appro-
11 priating funds) in order for the plan to meet the additional
12 requirements imposed by the amendments made by this sec-
13 tion, the State plan shall not be regarded as failing to comply
14 with the requirements of such title solely on the basis of its
15 failure to meet these additional requirements before the first
16 day of the first calendar quarter beginning after the close of
17 the first regular session of the State legislature that begins
18 after the date of the enactment of this Act. For purposes of
19 the previous sentence, in the case of a State that has a 2-
20 year legislative session, each year of such session shall be
21 deemed to be a separate regular session of the State
22 legislature.
23
(B) In the case of the State of Texas, the State plan
24 shall not be regarded as failing to comply with the require-
25 ments of title XIX of the Social Security Act solely on the
HR 3932 IH
6
1 basis of its failure to meet the additional requirements im-
2 posed by the amendments made by this section before Sep-
3 tember 1, 1991.
4 SEC. 202. OPTIONAL COVERAGE OF CHILDREN UP TO AGE 6
5
WITH INCOME BELOW 185 PERCENT OF THE
6
POVERTY LEVEL.
7
(a) IN GENERAL.-Section 1902 of the Social Security
8 Act, as amended by section 6401(a) of the Omnibus Budget
9 Reconciliation Act of 1989, is amended-
10
(1) in subsection (a)(10)(A)(i)(VI), by inserting
11
"minimum" before "income level", and
12
(2) in subsection (I)(2)(B), by striking "133 per-
13
cent" and inserting "a percentage (established by the
14
State, which is not less than 133 percent and not more
15
than 185 percent)".
16
(b) EFFECTIVE DATE.-The amendments made by sub-
17 section (a) shall apply to payments under title XIX of the
18 Social Security Act for calendar quarters beginning on or
19 after January 1, 1991, with respect to eligibility for medical
20 assistance on or after such date, without regard to whether
21 or not final regulations to carry out such amendments have
22 been promulgated by such date.
23 SEC. 203. APPLICATIONS USING OUTREACH LOCATIONS.
24
(a) IN GENERAL.-Section 1902(a) of the Social
25 Security Act (42 U.S.C. 1396a(a)), as amended by section
HR 3932 IH
7
1 6406(a) of the Omnibus Budget Reconciliation Act of 1989,
2 is amended-
3
(1) by striking "and" at the end of paragraph
4
(52),
5
(2) by striking the period at the end of paragraph
6
(53) and inserting "; and", and
7
(3) by inserting after paragraph (53) the following
8
new paragraph:
9
"(54) provide for receipt and initial processing
10
of applications of individuals for medical assistance
11
under subsections (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI),
12
(a)(10)(A)(i)(VII), or (a)(10)(A)(ii)(IX)-
13
"(A) at locations which include locations
14
(such as hospitals or clinics providing covered
15
services to such individuals, without discrimina-
16
tion based on whether the hospital or clinic is
17
public or private) which are other than those used
18
for the receipt and processing of applications for
19
aid under part A of title IV, and
20
"(B) using applications which are other than
21
those used for applications for aid under such
22
part.".
23
(b) EFFECTIVE DATE.-The amendments made by sub-
24 section (a) apply to payments under title XIX of the Social
25 Security Act for calendar quarters beginning on or after July
HR 3932 IH
8
1 1, 1991, without regard to whether or not final regulations to
2 carry out such amendments have been promulgated by such
3 date.
4 SEC. 204. EXTENSION OF MEDICAID TRANSITION COVERAGE.
5
(a) OPTIONAL ADDITIONAL 12-MONTH EXTENSION.-
6 Section 1925(b) of the Social Security Act (42 U.S.C.
7 1396s(b)) is amended-
8
(1) in the heading, by striking "6-MONTH";
9
(2) in paragraph (1), by striking "the succeeding
10
6-month period" and inserting "the succeeding period
11
of 6 months (or, at the State option as specified by the
12
State, of 9 months, 12 months, 15 months, or 18
13
months)";
14
(3) in paragraph (2)(A)(ii), by inserting "(and, if
15
applicable, 6th, 9th, 12th, and 15th month)" after "3rd
16
month";
17
(4) in paragraph (2)(B)(ii), by inserting "(and, if
18
applicable, 7th, 10th, 13th, and 16th month)" after
19
"4th month";
20
(5) in paragraph (3)(A), in the matter before
21
clause (i), by striking "6-month";
22
(6) in paragraph (3)(A)(iii), by striking "of the 6-
23
month period" and inserting "(or, if applicable, the
24
7th, 10th, 13th, or 16th month) of the period"; and
HR 3932 IH
9
1
(7) in paragraph (5)(D)(i), by striking "of the 6-
2
month additional extension period" and inserting "(or,
3
if applicable, the 7th, 10th, 13th, or 16th month) of
4
the additional extension period".
5
(b) REPEAL OF SUNSET PROVISION.-Subsection (f) of
6 section 1925 of such Act is repealed.
7
(c) EFFECTIVE DATES.-The amendments made by
8 this section shall take effect on April 1, 1990.
9 SEC. 205. EXTENSION OF PAYMENT PROVISIONS FOR MEDI-
10
CALLY NECESSARY SERVICES IN DISPROPOR-
11
TIONATE SHARE HOSPITALS TO CHILDREN
12
UNDER 18 YEARS OF AGE.
13
(a) COVERAGE OF MEDICALLY NECESSARY SERVICES
14 FOR CHILDREN.-Section 1902(a)(10) of the Social Security
15 Act (42 U.S.C. 1396a(a)(10)) is amended, in the subdivision
16 (X) following subparagraph (E), by striking "under one year
17 of age" and inserting "under 18 years of age".
18
(b) ASSURING ADEQUATE PAYMENT FOR INPATIENT
19 HOSPITAL SERVICES FOR CHILDREN IN DISPROPORTION-
20 ATE SHARE HOSPITALS.-Section 1923(a)(2) of such Act
21 (42 U.S.C. 1396r-4) is amended by adding at the end the
22 following new subparagraph:
23
"(D) If a State plan under this title provides for
24
payments for inpatient hospital services on a prospec-
25
tive basis (whether per diem, per case, or otherwise),
HR 3932 IH
10
1
in order for the plan to be considered to have met such
2
requirement of section 1902(a)(13)(A) as of July 1,
3
1991, the State must submit to the Secretary by not
4
later than April 1, 1991, a State plan amendment that
5
provides, in the case of hospitals defined by the State
6
as disproportionate share hospitals under paragraph
7
(1)(A), for an outlier adjustment in payment amounts
8
for medically necessary inpatient hospital services pro-
9
vided on or after July 1, 1991, involving exceptionally
10
high costs or exceptionally long lengths of stay for in-
11
dividuals one year of age or older, but under 18 years
12
of age.".
13
(c) EFFECTIVE DATES.-(1)(A) The amendment made
14 by subsection (a) applies (except as provided under subpara-
15 graph (B)) to payments under title XIX of the Social Security
16 Act for calendar quarters beginning on or after July 1, 1991,
17 without regard to whether or not final regulations to carry
18 out such amendment have been promulgated by such date.
19
(B) In the case of a State plan for medical assistance
20 under title XIX of the Social Security Act which the Secre-
21 tary of Health and Human Services determines requires
22 State legislation (other than legislation authorizing or appro-
23 priating funds) in order for the plan to meet the additional
24 requirement imposed by the amendment made by subsection
25 (a), the State plan shall not be regarded as failing to comply
HR 3932 IH
11
1 with the requirements of such title solely on the basis of its
2 failure to meet this additional requirement before the first day
3 of the first calendar quarter beginning after the close of the
4 first regular session of the State legislature that begins after
5 the date of the enactment of this Act. For purposes of the
6 previous sentence, in the case of a State that has a 2-year
7 legislative session, each year of such session shall be deemed
8 to be a separate regular session of the State legislature.
9
(2) The amendment made by subsection (b) shall take
10 effect on the date of the enactment of this Act.
11 SEC. 206. REQUIRING "SECTION 209(B)" STATES TO PROVIDE
12
MEDICAL ASSISTANCE TO DISABLED CHILDREN
13
RECEIVING SSI BENEFITS.
14
(a) IN GENERAL.-Section 1902(f) of the Social Securi-
15 ty Act (42 U.S.C. 1396a(f)) is amended-
16
(1) by inserting "paragraph (2) of this subsection
17
and" after ", except as provided in",
18
(2) by striking "(1)" and "(2)" and inserting
19
"(A)" and "(B)", respectively,
20
(3) by inserting "(1)" after "(f)", and
21
(4) by adding at the end the following new para-
22
graph:
23
"(2) A State shall provide medical assistance to any in-
24 dividual under 18 years of age with respect to whom supple-
HR 3932 IH
12
1 mental security income benefits are payable under title
2 XVI."
3
(b) EFFECTIVE DATE.-(1) The amendments made by
4 subsection (a) apply (except as provided under paragraph (2))
5 to payments under title XIX of the Social Security Act for
6 calendar quarters beginning on or after July 1, 1991, without
7 regard to whether or not final regulations to carry out such
8 amendments have been promulgated by such date.
of
9
(2) In the case of a State plan for medical assistance
10 under title XIX of the Social Security Act which the Secre-
11 tary of Health and Human Services determines requires
12 State legislation (other than legislation authorizing or appro-
13 priating funds) in order for the plan to meet the additional
14 requirement imposed by the amendments made by subsection
15 (a), the State plan shall not be regarded as failing to comply
16 with the requirements of such title solely on the basis of its
17 failure to meet this additional requirement before the first day
18 of the first calendar quarter beginning after the close of the
19 first regular session of the State legislature that begins after
20 the date of the enactment of this Act. For purposes of the
21 previous sentence, in the case of a State that has a 2-year
22 legislative session, each year of such session shall be deemed
23 to be a separate regular session of the State legislature.
89
HR 3932 III
13
1
SEC. 207. MANDATORY CONTINUATION OF COVERAGE FOR
2
CHILDREN OTHERWISE QUALIFIED FOR BENE-
3
FITS UNTIL REDETERMINATION.
4
(a) IN GENERAL.-Section 1902(e) of the Social Securi-
5 ty Act (42 U.S.C. 1396a(e)) is amended by adding at the end
6 the following new paragraph:
7
"(11) With respect to an individual who has not attained
8 the age of 18, who is receiving medical assistance under this
9 title, and who is determined to be no longer eligible for such
10 assistance, the State may not discontinue such assistance
11 until the State has determined that the individual is not eligi-
12 ble for assistance under this title on any basis.".
13
(b) CONFORMING AMENDMENT TO QUALITY CON-
14 TROL.Section 1903(u)(1)(D) of such Act (42 U.S.C.
15 1396b(u)(1)(D)) is amended by adding at the end the follow-
16 ing new clause:
17
"(vi) In determining the amount of erroneous excess
18 payments for quarters beginning on or after July 1, 1991,
19 there shall not be included any erroneous payments which
20 are attributable to individuals described in section
21 1902(e)(11) who are determined to be no longer eligible for
22 assistance but whose assistance has not been discontinued
23 because a determination on other bases for such assistance
24 has not been made.".
25
(c) EFFECTIVE DATE.-The amendment made by sub-
26 section (a) shall become effective with respect to eligibility
HR 3932 IH
14
1 determinations for medical assistance under title XIX of the
2 Social Security Act on or after July 1, 1991, without regard
3 to whether or not final regulations to carry out such amend-
4 ment have been promulgated by such date.
5 SEC. 208. OPTIONAL MEDICAID COVERAGE FOR FOSTER CHIL-
6
DREN.
7
(a) IN GENERAL.-Section 1902 of the Social Security
8 Act (42 U.S.C. 1396a) is amended-
9
(1) in subsection (a)(10)(A)(ii)-
10
(A) by striking "or" at the end of subclause
11
(X),
12
(B) by inserting "or" at the end of subclause
13
(XI), and
14
(C) by adding at the end the following new
15
subclause:
16
"(XII) who are described in sub-
17
section (s)(1);";
18
(2) in subsection (a)(17), by striking "and (m)(4)"
19
and inserting "(m)(4), and (s)(1)"; and
20
(3) by adding at the end the following new sub-
21
section:
22
"(s)(1) Individuals described in this paragraph are indi-
23 viduals for whom a public agency assumes full or partial fi-
24 nancial responsibility-
25
"(A) who have not attained the age of 18,
HR 3932 IH
15
1
"(B) who reside in a foster home, group home, or
2
private institution, and
3
"(C) whose incomes do not exceed 100 percent of
4
the income official poverty line (as defined by the
5
Office of Management and Budget and revised annually
6
in accordance with section 673(2) of the Omnibus
7
Budget Reconciliation Act of 1981) applicable to a
8
family of one.
9
"(2) Notwithstanding subsection (a)(17), for individuals
10 who are eligible for medical assistance because of subsection
11 (a)(10)(A)(ii)(XII)-
12
"(A) no resource standard or methodology shall be
13
applied,
14
"(B) the income standard to be applied is the
15
income standard described in paragraph (1)(C), and
16
"(C) income for these individuals shall be deter-
17
mined in accordance with a methodology which is no
18
more restrictive than the methodology employed under
19
the State plan under part E of title IV.".
20
(b) EFFECTIVE DATE.-The amendments made by this
21 section shall become effective with respect to payments under
22 title XIX of the Social Security Act for calendar quarters
23 beginning on or after July 1, 1991, without regard to wheth-
24 er or not final regulations to carry out such amendments have
25 been promulgated by such date.
HR 3932 IH
II
101ST CONGRESS
2D SESSION
S.2032
To amend the Internal Revenue Code of 1986 to provide for a credit for health
insurance expenses.
IN THE SENATE OF THE UNITED STATES
JANUARY 30 (legislative day, JANUARY 23), 1990
Mr. COHEN introduced the following bill; which was read twice and referred to
the Committee on Finance
A
BILL
To amend the Internal Revenue Code of 1986 to provide for a
credit for health insurance expenses.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. CREDIT FOR HEALTH INSURANCE EXPENSES.
4
(a) IN GENERAL.-Subpart C of part IV of subchapter
5 A of chapter 1 of the Internal Revenue Code of 1986 (relat-
6 ing to refundable personal credits) is amended by inserting
7 after section 34 the following new section:
8 "SEC. 34A. HEALTH INSURANCE EXPENSES.
9
"(a) ALLOWANCE OF CREDIT.-
2
1
"(1) IN GENERAL.-In the case of an eligible in-
2
dividual, there shall be allowed as a credit against the
3
tax imposed by this subtitle for the taxable year an
4
amount equal to the applicable percentage of the quali-
5
fied health insurance expenses paid by such individual
6
during the taxable year.
7
"(2) APPLICABLE PERCENTAGE.-For purposes
8
of paragraph (1), the term 'applicable percentage'
9
means 60 percent reduced (but not below zero) by 10
10
percentage points for each $1,000 (or fraction thereof)
11
by which the taxpayer's adjusted gross income for the
12
taxable year exceeds the applicable dollar amount.
13
"(3) APPLICABLE DOLLAR AMOUNT.-For pur-
14
poses of this subsection, the term 'applicable dollar
15
amount' means-
16
"(A) in the case of a taxpayer filing a joint
17
return, $28,000,
18
"(B) in the case of any other taxpayer (other
19
than a married individual filing a separate return),
20
$18,000, and
21
"(C) in the case of a married individual filing
22
a separate return, zero.
23
For purposes of this subsection, the rule of section
24
219(g)(4) shall apply.
S
2032 IS
3
1
"(b) QUALIFIED HEALTH INSURANCE EXPENSES.-
2 For purposes of this section-
3
"(1) IN GENERAL.-The term 'qualified health in-
4
surance expenses' means amounts paid during the tax-
5
able year for insurance which constitutes medical care
6
(within the meaning of section 213(d)(1)(C)). For pur-
7
poses of the preceding sentence, the rules of section
8
213(d)(6) shall apply.
9
"(2) DOLLAR LIMIT ON QUALIFIED HEALTH IN-
10
SURANCE EXPENSES.-The amount of the qualified
11
health insurance expenses paid during any taxable year
12
which may be taken into account under subsection
13
(a)(1) shall not exceed $1,200 ($2,400 in the case of a
14
taxpayer filing a joint return).
15
"(3) ELECTION NOT TO TAKE CREDIT.-A tax-
16
payer may elect for any taxable year to have amounts
17
described in paragraph (1) not treated as qualified
18
health insurance expenses.
19
"(c) ELIGIBLE INDIVIDUAL.-For purposes of this sec-
20 tion, the term 'eligible individual' means, with respect to any
21 period, an individual who is not covered during such period
22 by a health plan maintained by an employer of such individ-
23 ual or such individual's spouse.
24
"(d) SPECIAL RULES.-For purposes of this section-
S
2032 IS
4
1
"(1) COORDINATION WITH ADVANCE PAYMENT
2
AND MINIMUM TAX.-Rules similar to the rules of
3
subsections (g) and (h) of section 32 shall apply to any
4
credit to which this section applies.
5
"(2) MEDICARE-ELIGIBLE INDIVIDUALS.-No ex-
6
pense shall be treated as a qualified health insurance
7
expense if it is an amount paid for insurance for an in-
8
dividual for any period with respect to which such indi-
9
vidual is entitled (or, on application without the pay-
10
ment of an additional premium, would be entitled to)
11
benefits under part A of title XVIII of the Social
12
Security Act.
13
"(3) SUBSIDIZED EXPENSES.-No expense shall
14
be treated as a qualified health insurance expense to
15
the extent-
16
"(A) such expense is paid, reimbursed, or
17
subsidized (whether by being disregarded for pur-
18
poses of another program or otherwise) by the
19
Federal Government, a State or local govern-
20
ment, or any agency or instrumentality thereof,
21
and
22
"(B) the payment, reimbursement, or subsidy
23
of such expense is not includible in the gross
24
income of the recipient.
S
2032 IS
5
1
"(e) REGULATIONS.-The Secretary shall prescribe
2 such regulations as may be necessary to carry out the pur-
3 poses of this section."
4
(b) ADVANCE PAYMENT OF CREDIT.-
5
(1) IN GENERAL.-Chapter 25 of the Internal
6
Revenue Code of 1986 is amended by inserting after
7
section 3507 the following new section:
8 "SEC. 3507A. ADVANCE PAYMENT OF HEALTH INSURANCE
9
EXPENSES CREDIT.
10
"(a) GENERAL RULE.-Except as otherwise provided
11 in this section, every employer making payment of wages
12 with respect to whom a health insurance expenses eligibility
13 certificate is in effect shall, at the time of paying such wages,
14 make an additional payment equal to such employee's de-
15 pendent care advance amount.
16
"(b) HEALTH INSURANCE EXPENSES ELIGIBILITY
17 CERTIFICATE.-For purposes of this title, a health insurance
18 expenses eligibility certificate is a statement furnished by an
19 employee to the employer which-
20
"(1) certifies that the employee will be eligible to
21
receive the credit provided by section 34A for the tax-
22
able year,
23
"(2) certifies that the employee does not have a
24
health insurance expenses eligibility certificate in effect
S 2032 IS
6
1
for the calendar year with respect to the payment of
2
wages by another employer,
3
"(3) states whether or not the employee's spouse
4
has a health insurance expenses eligibility certificate in
5
effect,
6
"(4) estimates the amount of qualified health in-
7
surance expenses (as defined in section 34A(b)) for the
8
calendar year.
9 For purposes of this section, a certificate shall be treated as
10 being in effect with respect to a spouse if such a certificate
11 will be in effect on the first status determination date follow-
12 ing the date on which the employee furnishes the statement
13 in question.
14
"(c) HEALTH INSURANCE EXPENSES ADVANCE
15 AMOUNT.-
16
"(1) IN GENERAL.-For purposes of this title, the
17
term 'health insurance expenses advance amount'
18
means, with respect to any payroll period, the amount
19
determined—
20
"(A) on the basis of the employee's wages
21
from the employer for such period,
22
"(B) on the basis of the employee's estimated
23
qualified health insurance expenses included in the
24
health insurance expenses eligibility certificate,
25
and
S
2032 IS
7
1
"(C) in accordance with tables provided by
2
the Secretary.
3
"(2) ADVANCE AMOUNT TABLES.-The tables re-
4
ferred to in paragraph (1)(D) shall be similar in form to
5
the tables prescribed under section 3402 and, to the
6
maximum extent feasible, shall be coordinated with
7
such tables and the tables prescribed under section
8
3507(c).
9
"(d) OTHER RULES.-For purposes of this section,
10 rules similar to the rules of subsections (d) and (e) of section
11 3507 shall apply.
12
"(e) REGULATIONS.-The Secretary shall prescribe
13 such regulations as may be necessary to carry out the pur-
14 poses of this section."
15
(2) CONFORMING AMENDMENT.-The table of
16
sections for chapter 25 of such Code is amended by
17
adding after the item relating to section 3507 the fol-
18
lowing new item:
"Sec. 3507A. Advance payment of health insurance expenses
credit."
19
(c) COORDINATION WITH DEDUCTIONS FOR HEALTH
20 INSURANCE EXPENSES.-
21
(1) SELF-EMPLOYED INDIVIDUALS.-Section
22
162(l) of the Internal Revenue Code of 1986 is amend-
23
ed by redesignating paragraph (6) as paragraph (7) and
S
2032 IS
8
1
by inserting after paragraph (5) the following new
2
paragraph:
3
"(6) COORDINATION WITH HEALTH INSURANCE
4
PREMIUM CREDIT.-Paragraph (1) shall not apply to
5
any amount taken into account in computing the
6
amount of the credit allowed under section 34A."
7
(2) MEDICAL, DENTAL, ETC., EXPENSES.-Sub-
8
section (e) of section 213 of such Code is amended by
9
inserting "or section 34A" after "section 21".
10
(d) CLERICAL AMENDMENT.-The table of sections for
11 subpart A of part IV of subchapter A of chapter 1 of the
12 Internal Revenue Code of 1986 is amended by inserting after
13 the item relating to section 34 the following new item:
"Sec. 34A. Health insurance expenses."
14
(e) EFFECTIVE DATE.-The amendments made by this
15 section shall apply to taxable years beginning after Decem-
16 ber 31, 1990.
O
S 2032 IS
II
101ST CONGRESS
2D SESSION
S. 2050
To amend title ХѴШ of the Social Security Act to provide toll-free hotlines for
individuals receiving benefits under such title and to provide increased pro-
tection against fraud and abuse with respect to the marketing and selling of
medicare supplemental policies to such individuals, and for other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY 1 (legislative day, JANUARY 23), 1990
Mr. KOHL introduced the following bill; which was read twice and referred to the
Committee on Finance
A
BILL
To amend title ХѴШ of the Social Security Act to provide toll-
free hotlines for individuals receiving benefits under such
title and to provide increased protection against fraud and
abuse with respect to the marketing and selling of medicare
supplemental policies to such individuals, and for other
purposes.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4
This Act may be cited as the "Medigap Fraud and
5 Abuse Prevention Act of 1990".
2
1 SEC. 2. MEDIGAP FRAUD AND ABUSE PROTECTIONS IN-
2
CREASED.
3
(a) CIVIL PENALTIES INCREASED.-Section 1882(d) of
4 the Social Security Act (42 U.S.C. 1395ss(d)) is amended by
5 striking "$5,000" each place it appears and inserting
6 "$25,000".
7
(b) PROTECTION AGAINST DUPLICATION OF POLICY
8 INCREASED.-Section 1882(d)(3)(A) of such Act (42 U.S.C.
9 1395ss(d)(3)(A)) is amended by striking "policy substantially
10 duplicates" and inserting "policy duplicates".
11
(c) MINIMUM BENEFIT TO PREMIUM RATIO IN-
12 CREASED.-Section 1882(c)(2) of such Act (42 U.S.C.
13 1395ss(c)(2)) is amended by striking "60" and inserting
14 "70".
15
(d) ENFORCEMENT OF BENEFIT TO PREMIUM RATIO
16 STRENGTHENED.-Section 1882(b)(1) of such Act (42
17 U.S.C. 1395ss(b)(1)) is amended-
18
(1) by striking "and" at the end of subparagraph
19
(D); and
20
(2) by adding "and" at the end of subparagraph
21
(E); and
22
(3) by adding at the end thereof the following new
23
subparagraph:
24
"(F) provides for strict enforcement of the
25
percentage requirements described in subsection
S 2050 IS
3
1
(c)(2) in place with respect to the actual ratio of
2
benefits provided to premiums collected,".
3
(e) IMPLEMENTATION OF PROCESS TO APPROVE PRE-
4 MIUM INCREASES.-Section 1882(b)(1) of such Act (42
5 U.S.C. 1395ss(b)(1)) as amended by subsection (d) of this
6 Act, is further amended-
7
(1) by striking "and" at the end of subparagraph
8
(E);
9
(2) by adding "and" at the end of subparagraph
10
(F); and
11
(3) by adding at the end thereof the following new
12
subparagraph:
13
"(G) provides for a process for approving or
14
disapproving proposed premium increases with re-
15
spect to such policies,"
16 SEC. 3. ESTABLISHMENT OF MEDIGAP TOLL-FREE HOTLINES.
17
(a) IN GENERAL.-
18
(1) GRANTS.-The Secretary of Health and
19
Human Services (hereinafter referred to as the "Secre-
20
tary") shall provide grants to States submitting appli-
21
cations to the Secretary which meet the requirements
22
of this section for the purpose of establishing within
23
such States a toll-free telephone hotline to provide in-
24
dividuals with information concerning medicare supple-
25
mental insurance.
S 2050 IS
4
1
(2) AMOUNT OF GRANT.-The amount of a grant
2
awarded to a State under this section shall be deter-
3
mined by the Secretary in the same manner as used by
4
the Commissioner on Aging for determining the
5
amount of allotments under section 304(a) of the Older
6
Americans Act of 1965 (42 U.S.C. 3035 et seq.).
7
(3) MATCHING REQUIREMENTS.-A State receiv-
8
ing a grant under this section shall provide State funds
9
for use in establishing a toll-free hotline in an amount
10
that is equal to the amount of the grant made under
11
this subsection to such State.
12
(b) TYPE OF INFORMATION.-Information to be
13 provided through the use of the toll-free hotlines established
14 under subsection (a) shall include-
15
(1) policy comparison information for all medicare
16
supplemental policies (as described in section
17
1882(g)(1) of the Social Security Act (42 U.S.C.
18
1395ss(g)(1))) and long-term care policies available to
19
individuals within the State;
20
(2) information that will assist individuals in filing
21
claims and obtaining benefits under titles ХѴШ and
22
XIX of the Social Security Act (42 U.S.C. 1395 et
23
seq. and 1396 et seq.);
S 2050 IS
5
1
(3) information that will assist individuals in filing
2
claims or obtaining benefits under a medicare supple-
3
mental policy;
4
(4) information concerning medicare supplemental
5
policy problem resolution, or appropriate referral of
6
such problems or complaints to the State insurance
7
commissioner or the State attorney general;
8
(5) information concerning the resources, informa-
9
tion, and procedures that are available within the State
10
to assist individuals with questions or complaints con-
11
cerning health insurance; and
12
(6) any other information determined appropriate
13
by the Secretary.
14
(c) TRAINING.-
15
(1) INDIVIDUALS ANSWERING HOTLINE.-The
16
Secretary shall promulgate regulations to insure that
17
individuals providing assistance through the use of the
18
toll-free hotlines established under subsection (a) are
19
adequately qualified to provide such assistance.
20
(2) VOLUNTEER ORGANIZATIONS.-States that
21
receive a grant under this title shall provide training,
22
educational materials, and technical assistance to vol-
23
unteer organizations that are willing and able to pro-
24
vide medicare supplemental policies and medical assist-
S 2050 IS
6
1
ance eligibility information and counseling to consum-
2
ers.
3
(3) COUNTY BENEFIT SPECIALISTS.-States that
4
receive a grant under this title shall conduct seminars
5
to provide training to county benefit specialists in local
6
welfare area agencies on aging concerning the toll-free
7
hotlines established under subsection (a) and the loca-
8
tion and functions of State aging agencies and offices.
9
(d) EDUCATIONAL BROCHURE.-Not later than 180
10 days after the date of enactment of this section, each State
11 that receives a grant under this title shall, through the State
12 commissioner of insurance, develop and disseminate a medi-
13 care supplemental policy educational brochure that shall
14 summerize the information described in subsection (b)(1).
15 Such brochure shall be distributed with each medicare sup-
16 plemental policy inquiry or application made to an insurance
17 carrier within the State. The State toll-free number described
18 in subsection (a) shall be clearly printed on the front page of
19 the brochure.
20
(e) AUTHORIZATION OF APPROPRIATIONS.-There are
21 authorized to be appropriated from the Federal Supplementa-
22 ry Medical Insurance Trust Fund to carry out this section,
23 $5,000,000 for each of the fiscal years 1991 through 1993.
S
2050 IS
7
1 SEC. 4. GAO STUDY AND REPORT ON STATE ENFORCEMENT
2
OF FEDERAL MEDIGAP REQUIREMENTS AND
3
PENALTIES.
4
(a) STUDY.-The General Accounting Office shall con-
5 duct a study on State efforts in enforcing the standards and
6 requirements set forth in section 1882(c) of the Social Securi-
7 ty Act with respect to the issuance and marketing of medi-
8 care supplemental policies within each State. The study shall
9 further evaluate efforts with regard to imposing civil or crimi-
10 nal penalties under section 1882(d) of the Social Security Act
11 with respect to persons found guilty of violating any of the
12 provisions described in such section. Such study shall further
13 evaluate the ratio of benefits to premiums collected with re-
14 spect to the supplemental policies described in section 1882,
15 and the effectiveness of State enforcement of such ratios.
16
(b) REPORT.-The General Accounting Office shall no
17 later than July 1, 1990, submit a report to Congress summa-
18 rizing the findings of the study described in subsection (a),
19 including legislative recommendations on strengthening and
20 improving the enforcement of the fraud and abuse provisions
21 provided for in section 1882 of the Social Security Act and
22 recommendations on improving enforcement of benefit to pre-
23 mium ratio requirements.
S 2050 IS
I
101ST CONGRESS
2D SESSION
H.R.3931
To amend title XIX of the Social Security Act to reduce infant mortality through
improvement of coverage of services to pregnant women and infants under
the medicaid program.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 1, 1990
Mrs. COLLINS (for herself, Mr. HYDE, Mr. WAXMAN, Mr. MILLER of California,
Mr. SCHEUER, Mr. WALGREN, Mr. WYDEN, Mr. SIKORSKI, Mr. BATES, Mr.
BRUCE, Mr. TOWNS, Mr. MARKEY, Mr. BOUCHER, Mr. DURBIN, Mr.
BERMAN, Mr. McDERMOTT, Mr. WILLIAMS, Mr. DE LUGO, Mr. CROCKETT,
Mr. ACKERMAN, Mr. HAWKINS, Mr. FRANK, Mr. RANGEL, Mr. FAUNTROY,
Ms. SCHNEIDER, Mr. PAYNE of New Jersey, Ms. PELOSI, Mr. WHEAT, Mr.
JOHNSTON of Florida, and Mr. FOGLIETTA) introduced the following bill;
which was referred to the Committee on Energy and Commerce
A
BILL
To amend title XIX of the Social Security Act to reduce infant
mortality through improvement of coverage of services to
pregnant women and infants under the medicaid program.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3
TITLE I-SHORT TITLE
4 SECTION 101. SHORT TITLE.
5
This Act may be cited as the "Medicaid Infant Mortality
6 Amendments of 1990".
2
1
TITLE II-INFANT MORTALITY
2
PROVISIONS
3 SEC. 201. PHASED-IN COVERAGE OF PREGNANT WOMEN AND
4
INFANTS UP TO 185 PERCENT OF POVERTY
5
LEVEL.
6
(a) IN GENERAL.-Section 1902(1)(2)(A) of the Social
7 Security Act (42 U.S.C. 1396a(l)(2)(A)), as amended by sec-
8 tion 6401(a) of the Omnibus Budget Reconciliation Act of
9 1989, is amended-
10
(1) in clause (ii)-
11
(A) in subclause (I), by striking "and" at the
12
end of subclause (I),
13
(B) by striking the period at the end of sub-
14
clause (II) and inserting a comma, and
15
(C) by adding at the end the following new
16
subclauses:
17
"(III) July 1, 1991, 150 percent, or, if greater,
18
the percentage provided under clause (v), and
19
"(IV) July 1, 1993, 185 percent."; and
20
(2) by adding at the end the following new clause:
21
"(v) In the case of a State which, as of the date of the
22 enactment of this clause, has established under clause (i), or
23 has enacted legislation authorizing, or appropriating funds, to
24 provide for, a percentage (of the income official poverty line)
25 that is greater than 150 percent, the percentage provided
HR 3931 IH
3
1 under clause (ii) for medical assistance on or after July 1,
2 1991, shall not be less than-
3
"(I) the percentage specified by the State in an
4
amendment to its State plan (whether approved or not)
5
as of the date of the enactment of this clause, or
6
"(II) if no such percentage is specified as of the
7
date of the enactment of this clause, the percentage es-
8
tablished under the State's authorizing legislation or
9
provided for under the State's appropriations.".
10
(b) FLEXIBILITY IN INCOME METHODOLOGY AND DE-
11 DUCTION OF CHILD CARE IN COMPUTATION OF INCOME.-
12 Section 1902(1)(3)(E) of such Act (42 U.S.C. 1396a(1)(3)(E))
13 is amended by striking "(E)" and inserting the following:
14
"(E)(i) with respect to an individual described in
15
subparagraph (A) or (B) of paragraph (1), family
16
income shall be determined in accordance with a meth-
17
odology which is no more restrictive than the method-
18
ology employed under the State plan under part A or
19
E of title IV (except to the extent such methodology is
20
inconsistent with clause (D) of subsection (a)(17) and
21
except that there shall be disregarded costs for such
22
child care as is necessary for the employment of the
23
pregnant woman or the caretaker of the infant), and
24
costs incurred for medical care or for any other type of
25
remedial care shall not be taken into account, and
HR 3931 IH
4
1
"(ii) with respect to an individual described in
2
paragraph (1)(C) or (1)(D),".
3
(c) PROHIBITING APPLICATION OF RESOURCE
4 TEST.-Section 1902(I)(3) of such Act (42 U.S.C.
5 1396a(l)(3)) is amended-
6
(1) by amending subparagraph (A) to read as
7
follows:
8
"(A)(i) no resource standard or methodology shall
9
be applied to individuals who are eligible for medical
10
assistance because of subsection (a)(10)(A)(i)(IV), and
11
(ii) application of a resource standard or methodology
12
for individuals who are eligible for medical assist-
13
ance because of subsection (a)(10)(A)(i)(VT) or
14
(a)(10)(A)(ii)(IX) shall be at the option of the State, but
15
any such resource standard or methodology may not be
16
more restrictive than the corresponding standard or
17
methodology that is applied under the State plan under
18
part A of title IV;",
19
(2) by striking subparagraphs (B) and (C), and
20
(3) by redesignating subparagraphs (D) and (E) as
21
subparagraphs (B) and (C), respectively.
22
(d) REPORT AND TRANSITION ON ERRORS IN ELIGI-
23 BILITY DETERMINATIONS.-
24
(1) REPORT.-The Secretary of Health and
25
Human Services shall report to Congress, by not later
HR 3931 IH
5
1
than July 1, 1991, on error rates by States in deter-
2
mining eligibility of individuals described in subpara-
3
graph (A) or (B) of section 1902(I)(1) of the Social Se-
4
curity Act for medical assistance under plans approved
5
under title XIX of such Act. Such report may include
6
data for medical assistance provided before July 1,
7
1989.
8
(2) ERROR RATE TRANSITION.-There shall not
9
be taken into account, for purposes of section 1903(u)
10
of the Social Security Act, payments and expenditures
11
for medical assistance which-
12
(A) are attributable to medical assistance for
13
individuals described in subparagraph (A) or (B) of
14
section 1902(I)(1) of such Act, and
15
(B) are made on or after July 1, 1989, and
16
before the first calendar quarter that begins more
17
than 12 months after the date of submission of the
18
report under paragraph (1).
19
(e) EFFECTIVE DATES.-
20
(1) HIGHER INCOME STANDARDS.-Except as
21
provided in paragraph (3), the amendments made by
22
subsection (a) shall apply to payments under title XIX
23
of the Social Security Act for calendar quarters begin-
24
ning on or after July 1, 1991, with respect to eligibil-
25
ity for medical assistance on or after such date, with-
HR 3931 IH
6
1
out regard to whether or not final regulations to carry
2
out such amendments have been promulgated by such
3
date.
4
(2) INCOME METHODOLOGY AND RESOURCE
5
STANDARD.-Except as provided in paragraph (3), the
6
amendments made by subsections (b) and (c) shall
7
apply to payments under title XIX of the Social Secu-
8
rity Act for calendar quarters beginning on or after
9
July 1, 1991, with respect to eligibility for medical as-
10
sistance on or after such date, without regard to
11
whether or not final regulations to carry out such
12
amendments have been promulgated by such date.
13
(3) EXCEPTION FOR CERTAIN STATES.-(A) In
14
the case of a State plan for medical assistance under
15
title XIX of the Social Security Act which the Secre-
16
tary of Health and Human Services determines re-
17
quires State legislation (other than legislation authoriz-
18
ing or appropriating funds) in order for the plan to
19
meet the additional requirements imposed by the
20
amendments made by this section, the State plan shall
21
not be regarded as failing to comply with the require-
22
ments of such title solely on the basis of its failure to
23
meet these additional requirements before the first day
24
of the first calendar quarter beginning after the close of
25
the first regular session of the State legislature that
HR 3931 IH
7
1
begins after the date of the enactment of this Act. For
2
purposes of the previous sentence, in the case of a
3
State that has a 2-year legislative session, each year of
4
such session shall be deemed to be a separate regular
5
session of the State legislature.
6
(B) In the case of the State of Texas, the State
7
plan shall not be regarded as failing to comply with the
8
requirements of title XIX of the Social Security Act
9
solely on the basis of its failure to meet the additional
10
requirements imposed by the amendments made by this
11
section before September 1, 1991.
12 SEC. 202. PRESUMPTIVE ELIGIBILITY.
13
(a) EXTENSION OF PRESUMPTIVE ELIGIBILITY
14 PERIOD.-Section 1920 of the Social Security Act (42
15 U.S.C. 1396r-1) is amended-
16
(1) in subsection (b)(1)(B)-
17
(A) by adding "or" at the end of clause (i),
18
(B) by striking clause (ii), and
19
(C) by amending clause (iii) to read as
20
follows:
21
"(ii) in the case of a woman who does
22
not file an application by the last day of the
23
month following the month during which the
24
provider makes the determination referred to
HR 3931 IH
8
1
in subparagraph (A), such last day; and";
2
and
3
(2) in subsections (c)(2)(B) and (c)(3), by striking
4
"within 14 calendar days after the date on which" and
5
inserting "by not later than the last day of the month
6
following the month during which".
7
(b) FLEXIBILITY IN APPLICATION.-Section 1920(c)(3)
8 of such Act (42 U.S.C. 1396r-1(c)(3)) is amended by insert-
9 ing before the period at the end the following: ", which appli-
10 cation may be the application used for the receipt of medical
11 assistance by individuals described in section 1902(1)(1)(A)".
12
(c) EFFECTIVE DATES.-
13
(1) The amendments made by subsection (a) apply
14
to payments under title XIX of the Social Security Act
15
for calendar quarters beginning on or after July 1,
16
1991, without regard to whether or not final regula-
17
tions to carry out such amendments have been promul-
18
gated by such date.
19
(2) The amendment made by subsection (b) shall
20
be effective as if included in the enactment of section
21
9407(b) of the Omnibus Budget Reconciliation Act of
22
1986.
HR 3931 IH
9
1 SEC. 203. OPTIONAL COVERAGE OF PRENATAL AND POSTPAR-
2
TUM HOME VISITATION SERVICES.
3
(a) IN GENERAL.-Section 1905(a) of the Social Securi-
4 ty Act (42 U.S.C. 1396d(a)), as amended by section 6405(a)
5 of the Omnibus Budget Reconciliation Act of 1989, is
6 amended-
7
(1) by striking "and" at the end of paragraph
8
(21),
9
(2) by redesignating paragraph (22) as paragraph
10
(23), and
11
(3) by inserting after paragraph (20) the following
12
new paragraph:
13
"(22) prenatal home visitation services for high-
14
risk pregnant women, postpartum home visitation serv-
15
ices with respect to high-risk infants under 1 year of
16
age, or both (as specified by the State), as prescribed
17
by a physician; and".
18
(b) CONFORMING AMENDMENTS.-Section 1902 of
19 such Act (42 U.S.C. 1396a) is amended-
20
(1) in subsection (a)(10)(C)(iv), by striking "(20)"
21
and inserting "(22)", and
22
(2) in subsection (j), by striking "(21)" and insert-
23
ing "(23)".
24
(c) EFFECTIVE DATE.-The amendments made by this
25 section shall apply to services furnished on or after July 1,
26 1991, without regard to whether or not final regulations to
HR 3931 IH
10
1 carry out such amendments have been promulgated by such
2 date.
3 SEC. 204. ROLE IN PATERNITY DETERMINATIONS.
4
(a) IN GENERAL.-Section 1912(a)(1)(B) of the Social
5 Security Act (42 U.S.C. 1396k(a)(1)(B)) is amended by in-
6 serting "the individual is described in section 1902(l)(1)(A)
7 or" after "unless (in either case)".
8
(b) EFFECTIVE DATE.-The amendment made by sub-
9 section (a) shall take effect on the date of the enactment of
10 this Act.
HR 3931 IH
I
101ST CONGRESS
2D SESSION
H.R.3933
To amend title XIX of the Social Security Act to provide States the option of
providing quality community care to the elderly under their medicaid programs.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 1, 1990
Mr. WYDEN (for himself, Mr. WAXMAN, Mr. ROYBAL, Mr. RINALDO, Mr.
SCHEUER, Mr. WALGREN, Mr. SIKORSKI, Mr. BATES, Mr. BRUCE, Mrs.
COLLINS, Mr. TOWNS, Mr. MARKEY, Mr. ECKART, Mr. RICHARDSON, Mr.
BOUCHER, Mr. SCHUMER, Mrs. BOXER, Mr. DURBIN, Mr. ESPY, Mr.
DWYER of New Jersey, Mr. BERMAN, Ms. KAPTUR, Mr. FAUNTROY, Mr.
LEVINE of California, Mr. MCDERMOTT, Mr. KOSTMAYER, Mr. MRAZEK,
Ms. PELOSI, Mr. FOGLIETTA, Mr. MORRISON of Connecticut, Mr. HARRIS,
Mr. LEVIN of Michigan, Mr. HUGHES, Mr. HERTEL, Mrs. SAIKI, Mr.
RANGEL, Mr. EDWARDS of California, Mr. FORD of Tennessee, Mr. FAZIO,
Mr. BROWN of California, Mr. PALLONE, Mr. ROWLAND of Connecticut, Mr.
OWENS of New York, Mr. PAYNE of New Jersey, Mr. CLEMENT, Mr. MOL-
LOHAN, Mr. ENGEL, Mr. MATSUI, Mr. STAGGERS, Mr. WOLPE, Mr. GEJD-
ENSON, Mr. DE LUGO, Mr. CROCKETT, Mr. ACKERMAN, Mr. HAWKINS, Mr.
HYDE, Mr. FRANK, Mr. MILLER of California, Ms. SCHNEIDER, Mr.
WHEAT, Mr. JOHNSTON of Florida, Mr. WILLIAMS, and Mr. WALSH) intro-
duced the following bill; which was referred to the Committee on Energy
and Commerce
A
BILL
To amend title XIX of the Social Security Act to provide States
the option of providing quality community care to the
elderly under their medicaid programs.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
2
1
TITLE I-SHORT TITLE
2 SECTION 101. SHORT TITLE.
3
This Act may be cited as the "Medicaid Frail Elderly
4 Community Care Amendments of 1990".
5 TITLE II-FRAIL ELDERLY COM-
6
MUNITY CARE AMENDMENTS
7 SEC. 201. COMMUNITY CARE AS OPTIONAL, STATEWIDE
8
SERVICE.
9
(a) PROVISION AS OPTIONAL, STATEWIDE SERVICE.-
10 Section 1905(a) of the Social Security Act (42 U.S.C.
11 1396d(a)), as amended by section 6405(a) of the Omnibus
12 Budget Reconciliation Act of 1989, is amended-
13
(1) by striking "and" at the end of paragraph
14
(21),
15
(2) by redesignating paragraph (22) as paragraph
16
(23), and
17
(3) by inserting after paragraph (21) the following
18
new paragraph:
19
"(22) community care (as defined in section
20
1927(a)) for functionally disabled elderly individuals;
21
and".
22
(b) COMMUNITY CARE FOR FUNCTIONALLY DISABLED
23 ELDERLY INDIVIDUALS.-Title XIX of such Act, as amend-
24 ed by section 6402(b) of the Omnibus Budget Reconciliation
25 Act of 1989, is amended-
HR 3933 IH
3
1
(1) by redesignating section 1927 as section 1928,
2
and
3
(2) by inserting after section 1926 the following
4
new section:
5
"COMMUNITY CARE FOR FUNCTIONALLY DISABLED
6
ELDERLY INDIVIDUALS
7
"SEC. 1927. (a) COMMUNITY CARE DEFINED.-In this
8 title, the term 'community care' means one or more of the
9 following services furnished to an individual who has been
10 determined, after an assessment under subsection (c), to be a
11 functionally disabled elderly individual, and in accordance
12 with an individual community care plan (established and peri-
13 odically reviewed and revised by a qualified community care
14 case manager under subsection (d)):
15
"(1) Homemaker/home health aide services.
16
"(2) Chore services.
17
"(3) Personal care services.
18
"(4) Nursing care services (other than continuous
19
24-hour nursing care services) provided by, or under
20
the supervision of, a registered nurse.
21
"(5) Respite care.
22
"(6) Training for family members in managing the
23
individual.
24
(7) Adult day health services.
25
"(8) In the case of an individual with chronic
26
mental illness, day treatment or other partial hospitali-
HR 3933 IH
4
1
zation, psychosocial rehabilitation services, and clinic
2
services (whether or not furnished in a facility).
3
"(9) Such other home and community-based serv-
4
ices (other than room and board) as the Secretary may
5
approve.
6 With respect to services described in paragraphs (1) through
7 (4), the services must be provided in a place of residence used
8 as the individual's home.
9
"(b) FUNCTIONALLY DISABLED ELDERLY INDIVIDUAL
10 DEFINED.-
11
"(1) IN GENERAL.-In this title, the term 'func-
12
tionally disabled elderly individual' means an individual
13
who-
14
"(A) is 65 years of age or older;
15
"(B) is determined to be a functionally dis-
16
abled individual under subsection (c); and
17
"(C)(i) subject to section 1902(f) (as applied
18
consistent with section 1902(r)(2)), is described in
19
section 1902(a)(10)(A)(i), or
20
"(ii) at the option of the State, is described
21
in section 1902(a)(10)(C).
22
"(2) TREATMENT OF CERTAIN INDIVIDUALS COV-
23
ERED UNDER CERTAIN WAIVERS.-
24
"(A) HOME AND COMMUNITY-BASED WAIV-
25
ERS.-In the case of a State which-
HR 3933 IH
5
1
"(i) at the time of its election to provide
2
coverage for community care under this sec-
3
tion has a waiver approved under section
4
1915(c) or 1915(d) with respect to individ-
5
uals 65 years of age or older, and
6
"(ii) subsequently discontinues such
7
waiver,
8
an individual who was eligible for benefits under
9
the waiver as of the date of its discontinuance and
10
who would, but for income or resources, be eligi-
11
ble for medical assistance for community care
12
under the plan shall, notwithstanding any other
13
provision of this title, be deemed a functionally
14
disabled elderly individual for SO long as the indi-
15
vidual would have remained eligible for medical
16
assistance under such waiver.
17
"(B) OTHER WAIVERS.-In the case of a
18
State which, as of December 31, 1989, had in
19
effect a waiver under section 1115 that provides
20
under the State plan under this title for personal
21
care services for functionally disabled individuals,
22
the term 'functionally disabled elderly individual'
23
may include, at the option of the State, an indi-
24
vidual who-
HR 3933 IH
6
1
"(i) is 65 years of age or older or is dis-
2
abled (as determined under the supplemental
3
security income program under title XVI);
4
"(ii) is determined to meet the test of
5
functional disability applied under the waiver
6
as of such date; and
7
"(iii) meets the resource requirement
8
and income standard that apply in the State
9
to
individuals
described
in
section
10
1902(a)(10)(A)(i)(V).
11
"(3) USE OF PROJECTED INCOME.-In applying
12
section 1903(f)(1) in determining the eligibility of an in-
13
dividual (described in section 1902(a)(10)(C)) for medi-
14
cal assistance for community care, a State may, at its
15
option, provide for the determination of the individual's
16
anticipated medical expenses (to be deducted from
17
income) over a period of up to 6 months.
18
"(c) DETERMINATIONS OF FUNCTIONAL DISABIL-
19 ITY.-
20
"(1) IN GENERAL.-In this section, an individual
21
is 'functionally disabled' if the individual-
22
"(A) is unable to perform without substantial
23
assistance from another individual at least 2 of
24
the following 3 activities of daily living: toileting,
25
transferring, and eating; or
HR 3933 IH
7
1
"(B) has a primary or secondary diagnosis of
2
Alzheimer's disease and is (i) unable to perform
3
without substantial human assistance (including
4
verbal reminding or physical cueing) or supervi-
5
sion at least 2 of the following 5 activities of daily
6
living: bathing, dressing, toileting, transferring,
7
and eating, or (ii) cognitively impaired SO as to re-
8
quire substantial supervision from another individ-
9
ual because the individual engages in inappropri-
10
ate behaviors that pose serious health or safety
11
hazards to himself or herself or others.
12
"(2) ASSESSMENTS OF FUNCTIONAL DISABIL-
13
ITY.-
14
"(A) REQUESTS FOR ASSESSMENTS.-If a
15
State has elected to provide community care
16
under this section, upon the request of an individ-
17
ual who is 65 years of age or older and who
18
meets the requirements of subsection (b)(1)(C) (or
19
another person on such individual's behalf), the
20
State shall provide for a comprehensive functional
21
assessment under this subparagraph which-
22
"(i) is used to determine whether or not
23
the individual is functionally disabled,
HR 3933 IH
8
1
"(ii) is based on a uniform minimum
2
data set specified by the Secretary under
3
subparagraph (C)(i), and
4
"(iii) uses an instrument which has been
5
specified by the State under subparagraph
6
(B).
7
No fee may be charged for such an assessment.
8
"(B) SPECIFICATION OF ASSESSMENT IN-
9
STRUMENT.-The State shall specify the instru-
10
ment to be used in the State in complying with
11
the requirement of subparagraph (A)(iii). Such in-
12
strument shall be-
13
"(i) one of the instruments identified
14
under subparagraph (C)(ii), or
15
"(ii) an instrument which the Secretary
16
has approved as being consistent with the
17
minimum data set of core elements, common
18
definitions, and utilization guidelines specified
19
by the Secretary in subparagraph (C)(i).
20
"(C) SPECIFICATION OF ASSESSMENT DATA
21
SET AND INSTRUMENTS.-The Secretary shall-
22
"(i) not later than July 1, 1991-
23
"(I) specify a minimum data set of
24
core elements and common definitions
HR 3933 IH
9
1
for use in conducting the assessments
2
required under subparagraph (A), and
3
"(II) establish guidelines for use of
4
the data set; and
5
"(ii) by not later than July 1, 1991,
6
identify one or more instruments which are
7
consistent with the specification made under
8
subparagraph (A) and which a State may
9
specify under subparagraph (B) for use in
10
complying with the requirements of subpara-
11
graph (A).
12
"(D) PERIODIC REVIEW.-Each individual
13
who qualifies as a functionally disabled elderly in-
14
dividual shall have the individual's assessment pe-
15
riodically reviewed and revised not less often than
16
once every 12 months.
17
"(E) CONDUCT OF ASSESSMENT BY INTER-
18
DISCIPLINARY TEAMS.-
19
"(i) IN GENERAL.-An assessment
20
under subparagraph (A) and a review under
21
subparagraph (D) must be conducted by an
22
interdisciplinary team designated by the
23
State.
24
"(ii) DELEGATION.-The Secretary
25
shall permit a State to provide for assess-
HR 3933 IH-2
10
1
ments and reviews through teams under con-
2
tracts—
3
"(I) with State or local agencies,
4
or
5
"(II) with nonprofit or public orga-
6
nizations which do not provide commu-
7
nity care or nursing facility services and
8
do not have a direct or indirect owner-
9
ship or control interest in, or direct or
10
indirect affiliation or relationship with,
11
an entity that provides, community care
12
or nursing facility services.
13
"(F) CONTENTS OF ASSESSMENT.-The
14
interdisciplinary team must-
15
"(i) identify in each such assessment or
16
review each client's functional disabilities
17
and need for community care (based on
18
social, cognitive, and other relevant factors),
19
and
20
"(ii) based on such assessment or
21
review, determine whether the individual is
22
(or continues to be) functionally disabled.
23
The results of such an assessment or review shall
24
be used in establishing, reviewing, and revising
25
the individual's ICCP under subsection (d)(1).
HR 3933 IH
11
1
"(G) APPEAL PROCEDURES.-Each State
2
which elects to provide community care under this
3
section must have in effect an appeals process for
4
individuals adversely affected by determinations
5
under subparagraph (F).
6
"(d) INDIVIDUAL COMMUNITY CARE PLAN (ICCP).-
7
"(1) INDIVIDUAL COMMUNITY CARE PLAN DE-
8
FINED.-In this section, the terms 'individual commu-
9
nity care plan' and 'ICCP' mean, with respect to a
10
functionally disabled elderly individual, a written plan
11
which-
12
"(A)(i) is established by a qualified communi-
13
ty care case manager in face-to-face consultation
14
with (and with notice to) the individual and based
15
upon a visit to the individual in the individual's
16
residence and the most recent comprehensive
17
functional assessment of such individual conducted
18
under subsection (c)(2);
19
"(ii) is periodically reviewed and (as appro-
20
priate) revised by such a manager in face-to-face
21
consultation with (and with notice to) the individ-
22
ual and based upon a visit to the individual in the
23
individual's residence and the most recent compre-
24
hensive functional assessment of such individual
25
conducted under subsection (c)(2);
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1
"(B) reflects, consistent with subparagraph
2
(C), the needs and preferences of the individual
3
and, to the extent feasible, allows for and pro-
4
motes the direction and oversight of community
5
care by the individual;
6
"(C) specifies, within any amount, duration,
7
and scope limitations imposed on community care
8
provided under the State plan, the community
9
care to be provided to such individual under the
10
plan;
11
"(D) does not include community care for
12
which payment is made by the individual or on
13
the individual's behalf; and
14
"(E) may specify services (other than those
15
to be provided to the individual under the plan)
16
required by such individual.
17
Nothing in this section shall be construed as authoriz-
18
ing an ICCP or the State to restrict the specific per-
19
sons or individuals (who are competent to provide com-
20
munity care under the State plan) who will provide the
21
community care described in subparagraph (C).
22
"(2) QUALIFIED COMMUNITY CARE CASE MAN-
23
AGER DEFINED.-In this section, the term 'qualified
24
community care case manager' means a nonprofit or
25
public agency or organization which-
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1
"(A) has experience in establishing, and in
2
periodically reviewing and revising, assessments
3
or individual community care plans and in the
4
provision of case management services to the el-
5
derly;
6
"(B) is responsible (i) for assuring that com-
7
munity care covered under the State plan and
8
specified in the ICCP is being provided and (ii) for
9
visiting each individual receiving such care at the
10
individual's residence not less often than once
11
every 90 days;
12
"(C) in the case of a non-public organization,
13
does not provide community care or nursing facili-
14
ty services and does not have a direct or indirect
15
ownership or control interest in, or direct or indi-
16
rect affiliation or relationship with, an entity that
17
provides, community care or nursing facility
18
services;
19
"(D) has procedures for assuring the quality
20
of case management services it provides; and
21
"(E) meets such other standards, established
22
by the Secretary, as assure that-
23
"(i) such a manager is competent to
24
perform case management functions,
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1
"(ii) individuals whose community care
2
they manage are not at risk of financial ex-
3
ploitation due to such a manager, and
4
"(iii) meets such other standards as the
5
State may establish.
6
"(3) APPEAL PROCEDURES.-Each State which
7
elects to provide community care under this section
8
must have in effect an appeals process for individuals
9
who disagree with the ICCP established under this
10
subsection.
11
"(e) CEILING ON PAYMENT AMOUNTS AND MAINTE-
12 NANCE OF EFFORT.-
13
"(1) CEILING ON PAYMENT AMOUNTS.-Pay-
14
ments may not be made under section 1903(a) to a
15
State for community care provided under this section
16
in a quarter to the extent that the medical assistance
17
for such care in the quarter exceeds 30 percent of the
18
product of-
19
"(A) the average number of individuals in
20
the quarter receiving such care under this section,
21
"(B) the average per diem rate of payment
22
which the Secretary has determined (before the
23
beginning of the quarter) will be payable under
24
title XVIII (without regard to coinsurance) for
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1
extended care services to be provided in the State
2
during such quarter, and
3
"(C) the number of days in such quarter.
4
"(2) MAINTENANCE OF EFFORT.-
5
"(A) ANNUAL REPORTS.-As a condition for
6
the receipt of payment under section 1903(a) with
7
respect to medical assistance provided by a State
8
for community care (other than under a waiver
9
under section 1915(c) and other than home health
10
care services described in section 1905(a)(7) and
11
personal care services (specified under regulations
12
under section 1905(a)(23)) to functionally disabled
13
elderly individuals, the State shall report to the
14
Secretary, with respect to each Federal fiscal
15
year (beginning with fiscal year 1990) and in a
16
format developed or approved by the Secretary,
17
the amount of non-Federal funds obligated by the
18
State (including funds obligated by localities in the
19
State) with respect to the provision of community
20
care (other than under such a waiver or such
21
services) to functionally disabled elderly individ-
22
uals in that fiscal year.
23
"(B) REDUCTION IN PAYMENT IF FAILURE
24
TO MAINTAIN EFFORT.-In applying section
25
1903(a)(1) with respect to the total amount ex-
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1
pended by a State for calendar quarters in a fiscal
2
year (beginning with fiscal year 1991) for commu-
3
nity care to the functionally disabled elderly indi-
4
viduals (other than under a waiver under section
5
1915(c) and other than home health care services
6
described in section 1905(a)(7) and personal care
7
services (specified under regulations under section
8
1905(a)(23)), such expenditures shall be reduced
9
by the amount reported under subparagraph (A)
10
with respect to fiscal year 1990.
11
"(3) DIRECT PAYMENT TO PROVIDERS OF COM-
12
MUNITY CARE.-Nothing in this title shall be con-
13
strued as authorizing a State to permit payment for
14
community care to be made through a qualified com-
15
munity care case manager.
16
"(f) MINIMUM REQUIREMENTS FOR COMMUNITY
17 CARE.-
18
"(1) IN GENERAL.-Community care provided
19
under this section must meet such requirements for in-
20
dividuals' rights and quality as are published or devel-
21
oped by the Secretary under subsection (j). Such re-
22
quirements shall include-
23
"(A) the requirement that individuals provid-
24
ing community care are competent to provide
25
such care,
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1
"(B) guidelines for such minimum compensa-
2
tion for individuals providing such care as will
3
assure the availability and continuity of competent
4
individuals to provide such care for functionally
5
disabled individuals who have functional disabil-
6
ities of varying levels of severity, and
7
"(C) the rights specified in paragraph (2).
8
Nothing in this section shall be construed as preventing
9
competent individuals (other than members of the
10
family of an individual) from providing, and being paid
11
directly for, community care.
12
"(2) SPECIFIED RIGHTS.-The rights specified in
13
this paragraph are as follows:
14
"(A) FREE CHOICE.-The right to be fully
15
informed in advance about care and treatment, to
16
be fully informed in advance of any changes in
17
care or treatment that may affect the individual's
18
well-being, and (except with respect to an individ-
19
ual adjudged incompetent) to participate in plan-
20
ning care and treatment or changes in care and
21
treatment.
22
"(B) FREE FROM RESTRAINTS.-The right
23
to be free from physical or mental abuse, corporal
24
punishment, involuntary seclusion, and any physi-
25
cal or chemical restraints imposed for purposes of
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1
discipline or convenience and not required to treat
2
the individual's medical symptoms. Restraints may
3
only be imposed-
4
"(i) to ensure the physical safety of the
5
individual or other individuals, and
6
"(ii) only upon the written order of a
7
physician that specifies the duration and cir-
8
cumstances under which the restraints are to
9
be used (except in emergency circumstances
10
specified by the Secretary until such an order
11
could reasonably be obtained).
12
"(C) PRIVACY.-The right to privacy with
13
regard to accommodations, medical treatment,
14
written and telephonic communications, visits, and
15
meetings of family and friends and of groups.
16
"(D) CONFIDENTIALITY.-The right to con-
17
fidentiality of personal and clinical records.
18
"(E) GRIEVANCES.-The right to voice
19
grievances with respect to treatment or care that
20
is (or fails to be) furnished, without discrimination
21
or reprisal (or threat of discrimination or reprisal)
22
for voicing the grievances and the right to prompt
23
efforts by the provider to resolve grievances the
24
individual may have, including those with respect
25
to the behavior of other individuals.
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1
"(F) OTHER RIGHTS.-Any other right es-
2
tablished by the Secretary.
3
"(g) MINIMUM REQUIREMENTS FOR COMMUNITY
4 CARE SETTINGS.-
5
"(1) COMMUNITY CARE SETTING DEFINED.-In
6
this section, the term 'community care setting'
7
means-
8
"(A) a nonresidential setting, or
9
"(B) a residential setting (including a foster
10
home, board-and-care facility, or other group
11
living arrangement, but not including a setting to
12
the extent it is a nursing facility) in which more
13
than 2 unrelated adults reside and in which per-
14
sonal services (other than merely board) are pro-
15
vided in conjunction with residing in the setting,
16
in which community care under this section is pro-
17
vided.
18
"(2) MINIMUM REQUIREMENTS.-A community
19
care setting in which community care is provided under
20
this section must meet the following requirements:
21
"(A) SECRETARIAL REQUIREMENTS.-A
22
setting must meet such requirements as are pub-
23
lished or developed by the Secretary under sub-
24
section (j).
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1
"(B) SPECIFIED RIGHTS, RIGHTS OF INCOM-
2
PETENT RESIDENTS, USE OF PSYCHOPHARMACO-
3
LOGIC DRUGS, ACCESS AND VISITATION RIGHTS,
4
PROTECTION OF RESIDENT FUNDS.-A setting
5
must meet the requirements of subparagraphs (A),
6
(C), and (D) of paragraph (1), paragraph (3), and
7
paragraph (6) of section 1919(c), to the extent ap-
8
plicable to such a setting.
9
"(C) NOTICE OF RIGHTS.-A setting must
10
inform each individual receiving community care
11
under this section in the setting, orally and in
12
writing at the time the individual first receives
13
community care in the setting, of the individual's
14
legal rights with respect to such a setting and the
15
care provided in the setting.
16
"(D) LICENSING.-A setting must be li-
17
censed under applicable State and local law.
18
"(E) LIFE SAFETY CODE.-A setting must
19
meet such provisions of such edition (as specified
20
by the Secretary in regulation) of the Life Safety
21
Code of the National Fire Protection Association
22
as are applicable and appropriate to the commu-
23
nity care setting; except that-
24
"(i) the Secretary may waive, for such
25
periods as he deems appropriate, specific
HR 3933 IH
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1
provisions of such Code which if rigidly ap-
2
plied would result in unreasonable hardship
3
upon a setting, but only if such waiver would
4
not adversely affect the health and safety of
5
clients or personnel, and
6
"(ii) the provisions of such Code shall
7
not apply in any State if the Secretary finds
8
that in such State there is in effect a fire and
9
safety code, imposed by State law, which
10
adequately protects clients of and personnel
11
in community care settings.
12
"(F) SANITARY AND INSPECTION CONTROL
13
AND MAINTENANCE OF PHYSICAL ENVIRON-
14
MENT. A setting must-
15
"(i) establish and maintain infection con-
16
trol standards designed to provide a safe,
17
sanitary, and comfortable environment in
18
which residents reside and to help prevent
19
the development and transmission of disease
20
and infection, and
21
"(ii) be maintained in a manner to pro-
22
tect the health and safety of residents, per-
23
sonnel, and the general public.
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1
"(3) DISCLOSURE OF OWNERSHIP AND CONTROL
2
INTERESTS AND EXCLUSION OF REPEATED VIOLA-
3
TORS.-A community care setting-
4
"(A) must disclose persons with an owner-
5
ship or control interest (including such persons as
6
defined in section 1124(a)(3)) in the setting, and
7
"(B) may not have, as a person with an
8
ownership or control interest in the setting, any
9
individual or person who has been excluded from
10
participation in the program under this title or
11
who has had such an ownership or control interest
12
in one or more community care settings which
13
have been found repeatedly to be substandard or
14
to have failed to meet the requirements of para-
15
graph (2).
16
"(h) SURVEY AND CERTIFICATION PROCESS.-
17
"(1) CERTIFICATIONS.-
18
"(A) RESPONSIBILITIES OF THE STATE.-
19
"(i) IN GENERAL.-Under each State
20
plan under this title, the State shall be re-
21
sponsible for certifying the compliance of
22
providers of community care and community
23
care settings with the applicable require-
24
ments of subsections (f) and (g).
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1
"(ii) CONSTRUCTION.-The failure of
2
the Secretary to issue regulations to carry
3
out this subsection shall not relieve a State
4
of its responsibility under this subsection.
5
"(B) RESPONSIBILITIES OF THE SECRE-
6
TARY.-The Secretary shall be responsible for
7
certifying the compliance of State providers of
8
community care, and of State community care set-
9
tings in which such care is provided, with the re-
10
quirements of subsections (f) and (g).
11
"(C) FREQUENCY OF CERTIFICATIONS.-
12
Certification of providers, and settings under this
13
subsection shall occur no less frequently than once
14
every 12 months.
15
"(2) REVIEWS OF PROVIDERS.-
16
"(A) IN GENERAL.-The certification under
17
this subsection with respect to a provider of com-
18
munity care must be based on a periodic review of
19
the provider's performance in providing the care
20
required under ICPP's in accordance with the re-
21
quirements of subsection (f). Such periodic review
22
shall be conducted, not less often than annually,
23
by an agency (other than the single State agency
24
described in section 1902(a)(5)) and shall be based
25
on information that includes the views of qualified
HR 3933 IH
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1
community care case managers whose clients
2
have received community care from such provid-
3
ers and from a sample of individuals receiving
4
community care from such providers.
5
"(B) SPECIAL REVIEWS OF COMPLIANCE.
6
If the Secretary has reason to question the com-
7
pliance of a provider of community care with any
8
of the requirements of subsection (f), the Secretary
9
may conduct a review of the provider and, on the
10
basis of that review, make independent and bind-
11
ing determinations concerning the extent to which
12
the provider meets such requirements.
13
"(3) SURVEYS OF COMMUNITY CARE SET-
14
TINGS.-
15
"(A) IN GENERAL.-The certification under
16
this subsection with respect to a community care
17
setting must be based on a survey. Such survey
18
for such a setting must be conducted without prior
19
notice to the setting. Any individual who notifies
20
(or causes to be notified) a community care setting
21
of the time or date on which such a survey is
22
scheduled to be conducted is subject to a civil
23
money penalty of not to exceed $2,000. The pro-
24
visions of section 1128A (other than subsections
25
(a) and (b)) shall apply to a civil money penalty
HR 3933 IH
25
1
under the previous sentence in the same manner
2
as such provisions apply to a penalty or proceed-
3
ing under section 1128A(a). The Secretary shall
4
review each State's procedures for scheduling and
5
conducting such surveys to assure that the State
6
has taken all reasonable steps to avoid giving
7
notice of such a survey through the scheduling
8
procedures and the conduct of the surveys them-
9
selves.
10
"(B) SURVEY PROTOCOL.-Surveys under
11
this paragraph shall be conducted based upon a
12
protocol which the Secretary has provided for
13
under subsection (j).
14
"(C) PROHIBITION OF CONFLICT OF INTER-
15
EST IN SURVEY TEAM MEMBERSHIP.-A State
16
and the Secretary may not use as a member of a
17
survey team under this paragraph an individual
18
who is serving (or has served within the previous
19
2 years) as a member of the staff of, or as a con-
20
sultant to, the community care setting being sur-
21
veyed (or the person responsible for such setting)
22
respecting compliance with the requirements of
23
subsection (g) or who has a personal or familial
24
financial interest in the setting being surveyed.
HR 3933 IH
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1
"(D) VALIDATION SURVEYS OF COMMUNITY
2
CARE SETTINGS.-The Secretary shall conduct
3
onsite surveys of a representative sample of com-
4
munity care settings in each State, within 2
5
months of the date of surveys conducted under
6
subparagraph (A) by the State, in a sufficient
7
number to allow inferences about the adequacies
8
of each State's surveys conducted under subpara-
9
graph (A). In conducting such surveys, the Secre-
10
tary shall use the same survey protocols as the
11
State is required to use under subparagraph (B).
12
If the State has determined that an individual set-
13
ting meets the requirements of subsection (g), but
14
the Secretary determines that the setting does not
15
meet such requirements, the Secretary's determi-
16
nation as to the setting's noncompliance with such
17
requirements is binding and supersedes that of the
18
State survey.
19
"(E) SPECIAL SURVEYS OF COMPLIANCE.-
20
If the Secretary has reason to question the com-
21
pliance of a community care setting with any of
22
the requirements of subsection (g), the Secretary
23
may conduct a survey of the setting and, on the
24
basis of that survey, make independent and bind-
HR 3933 IH
27
1
ing determinations concerning the extent to which
2
the setting meets such requirements.
3
"(4) INVESTIGATION OF COMPLAINTS AND MONI-
4
TORING OF PROVIDERS AND SETTINGS.-Each State
5
and the Secretary shall maintain procedures and ade-
6
quate staff to investigate complaints of violations of ap-
7
plicable requirements imposed on providers of commu-
8
nity care or on community care settings under subsec-
9
tions (f) and (g).
10
"(5) INVESTIGATION OF ALLEGATIONS OF INDI-
11
VIDUAL NEGLECT AND ABUSE AND MISAPPROPRIA-
12
TION OF INDIVIDUAL PROPERTY AND PUBLIC DISCLO-
13
SURE OF FINDINGS.-The State shall provide, through
14
the agency responsible for surveys and certification of
15
providers of community care and community care set-
16
tings under this subsection, for a process for the re-
17
ceipt, review, and investigation of allegations of indi-
18
vidual neglect and abuse (including injuries of unknown
19
source) by individuals providing such care or in such
20
setting and of misappropriation of individual property
21
by such individuals. The State shall, after notice to the
22
individual involved and a reasonable opportunity for
23
hearing for the individual to rebut allegations, make a
24
finding as to the accuracy of the allegations. If the
25
State finds that an individual has neglected or abused
HR 3933 IH
28
1
an individual receiving community care or misappropri-
2
ated such individual's property, the State shall notify
3
the individual against whom the finding is made. A
4
State shall not make a finding that a person has ne-
5
glected an individual receiving community care if the
6
person demonstrates that such neglect was caused by
7
factors beyond the control of the person. The State
8
shall provide for public disclosure of findings under this
9
paragraph upon request and for inclusion, in any such
10
disclosure of such findings, of any brief statement (or of
11
a clear and accurate summary thereof) of the individual
12
disputing such findings.
13
"(6) DISCLOSURE OF RESULTS OF INSPECTIONS
14
AND ACTIVITIES.-
15
"(A) PUBLIC INFORMATION.-Each State,
16
and the Secretary, shall make available to the
17
public-
18
"(i) information respecting all surveys,
19
reviews, and certifications made under this
20
subsection respecting providers of community
21
care and community care settings, including
22
statements of deficiencies,
23
"(ii) copies of cost reports (if any) of
24
such providers and settings filed under this
25
title,
HR 3933 IH
29
1
"(iii) copies of statements of ownership
2
under section 1124, and
3
"(iv) information disclosed under section
4
1126.
5
"(B) NOTICES OF SUBSTANDARD CARE.-If
6
a State finds that-
7
"(i) a provider of community care has
8
provided care of substandard quality with re-
9
spect to an individual, the State shall make a
10
reasonable effort to notify promptly (I) an
11
immediate family member of each such indi-
12
vidual and (II) individuals receiving commu-
13
nity care from that provider under this title,
14
or
15
"(ii) a community care setting is sub-
16
standard, the State shall make a reasonable
17
effort to notify promptly (I) individuals re-
18
ceiving community care in that setting, and
19
(II) immediate family members of such indi-
20
viduals.
21
"(C) ACCESS TO FRAUD CONTROL UNITS.-
22
Each State shall provide its State medicaid fraud
23
and abuse control unit (established under section
24
1903(q)) with access to all information of the
HR 3933 IH
30
1
State agency responsible for surveys, reviews, and
2
certifications under this subsection.
3
"(i) ENFORCEMENT PROCESS FOR PROVIDERS OF
4 COMMUNITY CARE.-
5
"(1) STATE AUTHORITY.-
6
"(A) IN GENERAL.-If a State finds, on the
7
basis of a review under subsection (h)(2) or other-
8
wise, that a provider of community care no longer
9
meets the requirements of this section and further
10
finds that the provider's deficiencies-
11
"(i) immediately jeopardize the health
12
or safety of individuals receiving its services,
13
the State shall take immediate action to
14
remove the jeopardy and correct the deficien-
15
cies or terminate the provider's participation
16
under the State plan and may, in addition,
17
provide for a civil money penalty, or
18
"(ii) do not immediately jeopardize the
19
health or safety of such individuals, the State
20
may-
21
"(I) terminate the provider's par-
22
ticipation under the State plan,
23
"(II) provide for a civil money
24
penalty, or
25
"(III) do both.
HR 3933 IH
31
1
Nothing in this subparagraph shall be construed
2
as restricting the remedies available to a State to
3
remedy a provider's deficiencies. If the State finds
4
that a provider meets such requirements but, as of
5
a previous period, did not meet such require-
6
ments, the State may provide for a civil money
7
penalty under subparagraph (B) for the period
8
during which it finds that the provider was not in
9
compliance with such requirements.
10
"(B) CIVIL MONEY PENALTY.-
11
"(i) IN GENERAL.-Each State shall es-
12
tablish by law (whether statute or regulation)
13
at least the following remedy: A civil money
14
penalty assessed and collected, with interest,
15
for each day in which the provider is or was
16
out of compliance with a requirement of this
17
section. Funds collected by a State as a
18
result of imposition of such a penalty (or as a
19
result of the imposition by the State of a
20
civil money penalty under subsection
21
(h)(3)(A)) may be applied to reimbursement of
22
individuals for personal funds lost due to a
23
failure of community care providers to meet
24
the requirements of this section. The State
25
also shall specify criteria, as to when and
HR 3933 IH
32
1
how this remedy is to be applied and the
2
amounts of any penalties. Such criteria shall
3
be designed SO as to minimize the time be-
4
tween the identification of violations and
5
final imposition of the penalties and shall
6
provide for the imposition of incrementally
7
more severe penalties for repeated or uncor-
8
rected deficiencies.
9
"(ii) DEADLINE AND GUIDANCE.-Each
10
State which elects to provide community
11
care under this section must establish the
12
civil money penalty remedy described in
13
clause (i) applicable to all providers of com-
14
munity care covered under this section. The
15
Secretary shall provide, through regulations
16
or otherwise by not later than July 1, 1991,
17
guidance to States in establishing such
18
remedy; but the failure of the Secretary to
19
provide such guidance shall not relieve a
20
State of the responsibility for establishing
21
such remedy.
22
"(2) SECRETARIAL AUTHORITY.-
23
"(A) FOR STATE PROVIDERS.- respect
24
to a State provider of community care, the Secre-
25
tary shall have the authority and duties of a State
HR 3933 IH
33
1
under this subsection, except that the civil money
2
penalty remedy described in subparagraph (C)
3
shall be substituted for the civil money remedy
4
described in paragraph (1)(B)(i).
5
"(B) OTHER PROVIDERS. - With respect to
6
any other provider of community care in a State,
7
if the Secretary finds that a provider no longer
8
meets a requirement of this section and further
9
finds that the provider's deficiencies-
10
"(i) immediately jeopardize the health
11
or safety of individuals receiving its services,
12
the Secretary shall take immediate action to
13
remove the jeopardy and correct the deficien-
14
cies or terminate the provider's participation
15
under the State plan and may, in addition,
16
provide for a civil money penalty under sub-
17
paragraph (C), or
18
"(ii) do not immediately jeopardize the
19
health or safety of such individuals, the Sec-
20
retary may-
21
"(I) terminate the provider's par-
22
ticipation under the State plan,
23
"(II) provide for a civil money
24
penalty under subparagraph (C), or
25
"(III) do both.
HR 3933 IH
34
1
If the Secretary finds that a provider meets such
2
requirements but, as of a previous period, did not
3
meet such requirements, the Secretary may pro-
4
vide for a civil money penalty under subparagraph
5
(C) for the period during which the Secretary
6
finds that the provider was not in compliance with
7
such requirements.
8
"(C) CIVIL MONEY PENALTY.-If the Secre-
9
tary finds on the basis of a review under subsec-
10
tion (h)(2) or otherwise that a community care
11
provider no longer meets the requirements of this
12
section, the Secretary shall impose a civil money
13
penalty in an amount not to exceed $10,000 for
14
each day of noncompliance. The provisions of sec-
15
tion 1128A (other than subsections (a) and (b))
16
shall apply to a civil money penalty under the
17
previous sentence in the same manner as such
18
provisions apply to a penalty or proceeding under
19
section 1128A(a). The Secretary shall specify cri-
20
teria, as to when and how this remedy is to be
21
applied and the amounts of any penalties. Such
22
criteria shall be designed SO as to minimize the
23
time between the identification of violations and
24
final imposition of the penalties and shall provide
HR 3933 IH
35
1
for the imposition of incrementally more severe
2
penalties for repeated or uncorrected deficiencies.
3
"(j) SECRETARIAL RESPONSIBILITIES.-
4
"(1) PUBLICATION OF INTERIM REQUIRE-
5
MENTS.-
6
"(A) IN GENERAL.-The Secretary shall
7
publish, by July 1, 1991, a regulation (that shall
8
be effective on an interim basis pending the pro-
9
mulgation of final regulations) that sets forth in-
10
terim requirements, consistent with subparagraph
11
(B), for the provision of community care and for
12
community care settings, including-
13
"(i) the requirements of subsection (c)(2)
14
(relating to comprehensive functional assess-
15
ments, including the use of assessment in-
16
struments), of subsection (d)(2)(E) (relating to
17
qualifications for qualified community care
18
case managers), of subsection (f) (relating to
19
minimum requirements for community care),
20
and of subsection (g) (relating to minimum
21
requirements for community care settings),
22
and
23
"(ii) survey protocols (for use under sub-
24
section (h)(3)(A)) which relate to such re-
25
quirements.
HR 3933 IH
36
1
"(B) MINIMUM PROTECTIONS.-Interim re-
2
quirements under subparagraph (A) and final re-
3
quirements under paragraph (2) shall assure,
4
through methods other than reliance on State li-
5
censure processes, that individuals receiving com-
6
munity care are protected from neglect, physical
7
and sexual abuse, financial exploitation, inappro-
8
priate involuntary restraint, and the provision of
9
health care services by individuals in community
10
care settings who are not competent to provide
11
such care.
12
"(2) DEVELOPMENT OF FINAL REQUIRE-
13
MENTS.-The Secretary shall develop, by not later
14
than October 1, 1992-
15
"(A) final requirements, consistent with para-
16
graph (1)(B), respecting the provision of appropri-
17
ate, quality community care and respecting com-
18
munity care settings under this section, and in-
19
cluding at least the requirements referred to in
20
paragraph (1)(A)(i), and
21
"(B) survey protocols and methods for evalu-
22
ating and assuring the quality of community care
23
settings.
24
The Secretary may, from time to time, revise such re-
25
quirements, protocols, and methods.
HR 3933 IH
37
1
"(3) CONSTRUCTION.-Nothing in this subsection
2
shall be construed as authorizing the Secretary to de-
3
velop standards respecting the quality of community
4
care and standards respecting community care settings
5
beyond the scope of the interim and final requirements
6
specified under paragraphs (1) and (2).
7
"(4) No DELEGATION TO STATES.-The Secre-
8
tary's authority under this subsection shall not be dele-
9
gated to States.
10
"(5) No PREVENTION OF MORE STRINGENT RE-
11
QUIREMENTS BY STATES.-Nothing in this section
12
shall be construed as preventing States from imposing
13
requirements that are more stringent than the require-
14
ments published or developed by the Secretary under
15
this subsection.
16
"(k) APPLICABILITY IN STATES OPERATING UNDER
17 DEMONSTRATION PROJECTs.-In the case of any State
18 which is providing medical assistance under a waiver granted
19 under section 1115(a) with respect to community care, the
20 Secretary shall require the State to meet the requirements of
21 this section in the same manner as the State would be re-
22 quired to meet such requirements if the State had in effect a
23 plan approved under this title and had elected to cover com-
24 munity care under this section.".
25
(c) PAYMENT FOR COMMUNITY CARE.-
HR 3933 IH
38
1
(1) REASONABLE AND ADEQUATE PAYMENT
2
RATES.-Section 1902 of such Act (42 U.S.C. 1396a)
3
is amended-
4
(A) in subsection (a)(13)-
5
(i) by striking "and" at the end of sub-
6
paragraph (D),
7
(ii) by inserting "and" at the end of
8
subparagraph (E), and
9
(iii) by adding at the end the following
10
new subparagraph:
11
"(F) for payment for community care (as de-
12
fined in section 1927(a) and provided under such
13
section) through rates which are reasonable and
14
adequate (and which may not be established on a
15
capitation basis or any other risk basis) to meet
16
the costs of providing care, efficiently and eco-
17
nomically, in conformity with applicable State and
18
Federal laws, regulations, and quality and safety
19
standards (including those described in section
20
1927(f)(1)(B));"; and
21
(B) in subsection (h), by inserting before the
22
period at the end the following: "or to limit the
23
amount of payment that may be made under a
24
plan under this title for community care".
HR 3933 IH
39
1
(2) DENIAL OF PAYMENT FOR CIVIL MONEY PEN-
2
ALTIES, ETC.-Section 1903(i)(8) of such Act (42
3
U.S.C. 1396b(i)(8)) is amended by inserting "(A)" after
4
"medical assistance" and by inserting before the semi-
5
colon the following: ", or (B) for community care to
6
reimburse (or otherwise compensate) a provider of such
7
care for payment of a civil money penalty imposed
8
under this title or title XI or for legal expenses in de-
9
fense of an exclusion or civil money penalty under this
10
title or title XI if there is no reasonable legal ground
11
for the provider's case".
12
(3) DENIAL OF PAYMENT FOR SUBSTANDARD
13
COMMUNITY CARE AND COMMUNITY CARE FURNISHED
14
BY FAMILY MEMBERS OR OTHERWISE PAID FOR.-
15
Section 1903(i) of such Act is further amended-
16
(A) by striking "or" at the end of paragraph
17
(8),
18
(B) by striking the period at the end of para-
19
graph (9) and inserting ''; or",
20
(C) by inserting after paragraph (9) the fol-
21
lowing new paragraph:
22
"(10) for community care under sections
23
1905(a)(22) and 1927-
HR 3933 IH
40
1
"(A) which does not meet the applicable re-
2
quirements published or developed under section
3
1927(j),
4
"(B) which is furnished in a community care
5
setting-
6
"(i) if a survey under section
7
1927(h)(3)(A) indicates that such setting is
8
substandard,
9
"(ii) on or after January 1, 1993, with
10
respect to which the State has not applied
11
the protocols and methods developed under
12
section 1927(j)(2)(B), or
13
"(iii) that does not meet the applicable
14
requirements of paragraphs (2) and (3) of
15
section 1927(g),
16
"(C) which is provided to a functionally dis-
17
abled elderly individual by members of the family
18
of such individual, or
19
"(D) to the extent payment is made for such
20
care other than under this title.", , and
21
(D) by adding at the end the following:
22 "Clauses (i) and (iii) of paragraph (10)(B) shall not apply
23 once, and only once, in the case of a setting found to be
24 substandard or not to meet applicable requirements if the set-
HR 3933 IH
41
1 ting is changed within 3 months of the finding to no longer be
2 substandard and to meet applicable requirements."
3
(d) CONFORMING AMENDMENTS.-
4
(1) Section 1902(j) of such Act (42 U.S.C.
5
1396a(j)) is amended by striking "(21)" and inserting
6
"(23)".
7
(2) Section 1902(a)(10)(C)(iv) of such Act (42
8
U.S.C. 1396a(a)(10)(C)(iv)) is amended by striking
9
"(20)" and inserting "(22)".
10
(3) Section 1903(a)(2)(A) of such Act (42 U.S.C.
11
1396b(a)(2)(A)) is amended by inserting "and are not
12
attributable to community care for functionally disabled
13
elderly individuals" before the semicolon at the end.
14
(4) Section 9523(a) of the Consolidated Omnibus
15
Budget Reconciliation Act of 1985, as amended by
16
section 4115(d) of the Omnibus Budget Reconciliation
17
Act of 1987 (added by section 411(k)(9) of the Medi-
18
care Catastrophic Coverage Act of 1988) and by sec-
19
tion 6408(b) of the Omnibus Budget Reconciliation Act
20
of 1989, is amended by striking "July 1, 1990" and
21
inserting "July 1, 1991".
22
(e) EFFECTIVE DATES.-
23
(1) Except as provided in this subsection, the
24
amendments made by this section shall apply to com-
25
munity care furnished on or after July 1, 1991, with-
HR 3933 IH
42
1
out regard to whether or not final regulations to carry
2
out such amendments have been promulgated by such
3
date.
4
(2)(A) The amendments made by subsection (c)(1)
5
shall apply to community care furnished on or after
6
July 1, 1991, or, if later, 30 days after the date of
7
publication of regulations effective on an interim basis
8
under section 1927(j)(1) of the Social Security Act.
9
(B) The amendment made by subsection (c)(2)
10
shall apply to civil money penalties imposed after the
11
date of the enactment of this Act.
12
(f) WAIVER OF PAPERWORK REDUCTION, ETc.-
13 Chapter 35 of title 44, United States Code, and Executive
14 Order 12291 shall not apply to information and regulations
15 required for purposes of carrying out this section and imple-
16 menting the amendments made by this section.
O
HR 3933 IH
HIAA
Health Insurance Association of America
HEALTH CARE
FINANCING
FOR
ALL AMERICANS
Private Market Reform & Public Responsibility
HEALTH CARE
FINANCING
FOR
ALL AMERICANS
Private Market Reform & Public Responsibility
1991
Health Care
Financing for
All Americans:
A Synopsis
The Health Insurance Association of America
(HIAA) has formulated a proposal to provide
access to health care coverage for all Americans.
HIAA's proposal focuses on expanding cover-
age through the workplace and expanding pub-
lic coverage for the poor and the near poor. Its
essential elements follow.
Reform of the Small-
Employer Market
Reforms are needed to ensure the availability and
reliability of private health insurance in the small-
employer market. The aim of small-employer
market reforms is to assure private coverage on a
continuing basis for small employers and to assure
that individual high-risk employees are not denied
coverage. If an employer changes insurers or an
employee changes jobs, new preexisting condition
restrictions would not be imposed. Limits would
apply to variations in premiums and premium
increases.
2
Private Reinsurance
For example, the self-employed would find
coverage more affordable if, instead of receiving
A private reinsurance mechanism for the small-
a 25 percent deduction for the cost of health
employer health benefit market needs to be
benefits, they received 100 percent, as do other
authorized. This would allow insurers to imple-
employers (as long as they provide equal cover-
ment market reforms by permitting insurers to
age for their employees). Financially vulnerable
spread losses for high-risk individuals equitably
groups should receive new tax subsidies; such
across the market. Under the HIAA proposal, no
subsidies should be directed toward financially
employer would have to pay more than 150
fragile employers and low-income employed
percent of the relevant market averages for basic
individuals.
coverage.
Expanded Public Coverage
State Pools for the Medically
for the Poor and Near Poor
Uninsurable
HIAA recommends expanding Medicaid to cover
State pools for medically uninsurable individuals
all those below the federal poverty level, regard-
who are not part of an employer group need to
less of family structure, age or employment
be established. Losses should be financed by
status. Medicaid's link to welfare categorical
state general revenues or other broad-based
restrictions should be eliminated. As an impor-
funding. If a state does not act, the U.S. Depart-
tant first step, HIAA supports the recent enact-
ment of Health and Human Services (HHS)
ment of phased-in coverage for poor children.
should be authorized to set up a federally funded
The Medicaid "spend-down" program should be
pool in that state to pay for losses. The funds for
extended to all states and eligibility thresholds
the pool would come from funds that HHS
should be set to prevent impoverishment by
would otherwise spend in that state.
medical expenses.
Low-income individuals above the poverty
Affordable Coverage
level should be allowed to "buy into" an income-
related package of primary and preventive health
Insurers should be allowed to offer more afford-
care services. Also, the recent federal Medicaid
able coverage to small employer groups. Insur-
"buy-out" requirement (which eventuated from
ers should be permitted to market lower-cost
HIAA's original proposal to authorize such state
prototype plans; and insured employer plans
actions) should be implemented. States should
should receive exemptions from costly state
pay the employee share of available employer
provider and service coverage mandates (such
group insurance where the average employee's
exemptions are given to self-insured plans).
premium costs are less than what the same
benefit would cost on an average per capita
Targeted Tax Assistance
basis under direct Medicaid financing. This will
maximize state savings and avoid adverse selec-
Tax assistance must be targeted so that small
tion between the public and private sectors.
employers and their financially vulnerable em-
ployees can afford health insurance coverage.
Health Insurance Association of America
3
Cost Containment
Moving forward with cost-containment efforts to
make health care more affordable has become a
national imperative. HIAA recommends promot-
ing the development of managed care systems
(HMOs, PPOs, point-of-service plans, and the
like) that rationalize and integrate health deliv-
ery and financing; HIAA also supports such
managed care mechanisms as utilization review
and quality assurance. Government must be
encouraged to create a climate hospitable to the
growth of managed care, and to refrain from
creating barriers to utilization review and other
key cost-containment strategies.
Better methods for assessing the cost-effec-
tiveness of new technologies and procedures
are also needed, as are increased efforts to
formulate medical practice guidelines and pro-
tocols. (The latter would encourage efficiency in
physicians' practice styles.) Another way to
control costs is to provide financial incentives for
consumers, so that they will be cost-conscious
when they select health plan alternatives, health
care providers, and medical services. Efforts also
must be made to reduce the incidence of mal-
practice and to reform the malpractice system,
making it more efficient and assuring that victims
are reasonably compensated.
Health Insurance Association of America
5
Health Care
Financing for
All Americans
Introduction
Today, more than 30 million Americans have
neither public nor private health care coverage.
These Americans often have greater problems
gaining access to the health care system than do
those who have coverage. They may forgo
necessary care or delay getting treatment until
their problems worsen - and become more
costly.
These individuals represent the widening
gap in our nation's health care financing system.
HIAA believes that policy makers must devise
ways to close the gap. More precisely, govern-
ment action is needed to provide the legislative
and fiscal base that will enable a combination of
public and private providers of health care
coverage to meet the health care financing needs
of all Americans.
The HIAA proposal takes into account the
important policy implications of the relationship
between income, the workplace, and health care
coverage. The vast majority of Americans with
adequate incomes have health coverage. Ninety
percent of all nonelderly Americans with in-
6
comes of over three times the federal poverty
supports wellness and prevention activities, as
level have some form of coverage. Approxi-
well as economic incentives for the consumer to
mately 150 million nonelderly in this country
be "cost conscious" in the use of medical re-
obtain health coverage through an employment-
sources and in choosing a health plan.
based plan.
Yet most individuals without health care
Proposal
coverage are in families with some involvement
in the work force. In fact, 66 percent of the
uninsured are full-time workers or are depen-
Reform of the Small-Employer Market
dents of full-time workers. Another 14 percent
Those who are concerned with assuring the avail-
either work half-time (18 to 34 hours a week) or
ability and reliability of health insurance coverage
belong to families with one or more part-time
are paying increasing attention to the small-em-
working members. (Current Population Survey,
ployer health benefit market. This is largely be-
U.S. Dept. of Health and Human Services, March
cause a high proportion of workers without health
1988 tabulations.)
care coverage - fully two-thirds - work for a
Efforts to make coverage more available and
business establishment with 25 or fewer employ-
more affordable should take into account the
ees at that establishment's location; but only one in
fact that most Americans receive their health care
three firms with fewer than 10 employees offers
coverage through employment. A realistic ap-
health benefits. (Figures 1 and 2.)
proach is to focus on improving the ability of
Increasingly, small employers seek relief from
financially vulnerable employers to offer health
rising health care costs by an aggressive search
insurance to their often low-income employees.
for the lowest possible price for health care
In addition, low-income employees need direct
coverage. Those with healthy employees are
government assistance so that they can afford
more likely to seek, and to obtain, coverage at
their share of premiums.
prices that reflect their low risk.
To be cost effective, expansion strategies
In turn, more and more insurers have found
should build on existing coverage and target
that to be price competitive for these low risk
public coverage to the poor and near poor.
employers, they are less able to spread the costs
Extending public coverage to higher income
of groups with employees at high risk of incur-
individuals will lead inevitably to unnecessary
ring large medical expenses broadly across the
tax increases to support substitution of public
lower risk groups. This has led to a growing
coverage for private coverage.
number of higher risk employers that cannot
HIAA also believes that efforts to expand the
find coverage at an affordable price. Moreover,
nation's health care financing system must be
those employer groups that are at lower risk
complemented by responsible cost-containment
today, and thus initially obtain a lower premium,
measures. HIAA's policy on cost containment
are likely to have employees who will develop
includes an emphasis on the development of
expensive medical conditions. Those employers
managed health care systems. It also calls for
may then face large premium increases.
greater scrutiny of one of the major causes of
In general, then, small employers have greater
high costs - the use of new, often unproven,
difficulty than large employers in affording and
technologies and procedures. HIAA also strongly
sometimes even obtaining health coverage. Fur-
Health Insurance Association of America
7
Workers Who Have Employer-Based Coverage,
Workers without Employer-Based Coverage,
by Establishment Size
by Establishment Size
10-25
Under 10
17%
44%
(13.4m)
(6.2m)
Under 10
19%
(15.3m)
26-100
24%
(18.9m)
Over 500
10-25
22%
7%
(3.1m)
(0.93m)
Over 500
101-500
19%
9%
(15.3m)
101-500
(1.3m)
21%
26-100
(16.9m)
19%
(2.7m)
Source: 1987 National Medical Expenditure Survey
Source: 1987 National Medical Expenditure Survey
(Because of rounding, numbers do not add up to 100%)
Figure 1
Figure 2
thermore, the greater frequency with which
up subsidizing older, higher income workers.
small employers change carriers and their work-
Subsidies could occur on a regional scale, too,
ers change jobs exposes these individuals to
because some community rating schemes fail to
greater risk of being left out of the system.
permit rate adjustment by geographic area: these
Finally, small employers are highly sensitive to
would force lower cost, more efficient and often
very large, unanticipated premium increases
lower-income localities to subsidize higher cost,
and may fail to obtain, or to retain, coverage in
less efficient localities that often have higher per
a marketplace where individual employer expe-
capita incomes. Community rating gives carriers
rience is highly unpredictable.
little if any latitude to fine-tune their rates,
Substantial reforms are needed if health in-
thereby increasing the risk of insolvency.
surers are to serve the broader interests of small
There are far better avenues to reforming the
employers and their employees. Many recom-
small-employer health benefits market than com-
mendations are under discussion. But not all are
munity rating schemes. The best approach is a
of equal value.
multi-faceted blend of private and public strate-
One ill-advised proposal is to institute a flat
gies that take into account the complexity and
"community rate" for all small employers. This
realities of health care financing. Accordingly,
would increase rates for the populations least
HIAA has developed a comprehensive set of
able to pay, and younger workers (who on
legislative reforms that can be implemented
average earn less than older workers) would end
while allowing a viable private marketplace.
8
HIAA recommends market reforms and
could vary for groups similar in geography,
reinsurance mechanisms to ensure fair access to,
demographic composition and plan design.
and continuity of coverage for, small employers
and their employees. When enacted by the
More specifically, a carrier's premiums for
states, these reforms will introduce a greater
similar groups could not vary by more than 35
degree of predictability and stability to the small-
percent from the carrier's midpoint rate (halfway
employer health benefit marketplace.
between the lowest and highest rate). There
would also be a 15 percent limitation on how
Guaranteed Availability. All small-employer
much a carrier could vary rates by industry.
groups would be able to obtain private health
Finally, carriers would have to limit a group's
insurance regardless of the health risk they
year-to-year premium increases to no more than
present. A significant number of carriers in a
15 percent above the carrier's "trend" (the year-
state (defined by their small-employer mar-
to-year increase in the lowest new business
ket share) would be required to guarantee to
rate). Separate "trends" should be allowed for
issue health care coverage to any legitimate
managed care and non-managed care to reflect
small-employer group. HIAA is willing to
health care cost/efficiency differences in these
consider variations on this approach (in a
structures.
given state) to enhance consumer choice.
In order for these reforms to succeed, the
implementing legislation will have to pertain to
Coverage of Whole Groups. Coverage would
all competitors in the small-employer market. If
be made available to entire employer groups;
any one company or segment of the market
no small employer nor any insurer would be
pursues such reforms independently, without
able to exclude from the group's coverage
rules for marketplace behavior spelled out in
individuals who present high medical risks.
legislation, it might invite financial ruin. It is
therefore important that states have the clear
Renewability of Coverage. At renewal time,
authority to impose these rules on all competi-
employer groups and/or individuals in these
tors in the small-employer marketplace. Within
groups would be assured that their coverage
the scope of these rules, insurers would be
would not be canceled because of deteriorat-
allowed to use individual risk assessment and
ing health.
classification initially to assess risk, to set rates,
and to determine for which individuals to pur-
Continuity of Coverage. Once a person is
chase reinsurance.
covered in the employer market and has
satisfied an initial plan's preexisting condi-
Private Reinsurance
tion restrictions, he or she would not have to
A private marketwide reinsurance system would
meet those requirements again when chang-
make possible the reform of the small-employer
ing jobs or when the employer changes
market. Reinsurance means to "insure again."
carriers.
Under reinsurance, an insurance company, called
the ceding or direct-writing insurer, purchases
Premium Pricing Limits. Insurance carriers
insurance from the reinsurer to cover all or part
would be required to limit how much their rates
of the loss against which it protects its policy-
Health Insurance Association of America
9
holder. The reinsurer is, in a sense, a silent
ing reinsurance losses to unacceptable levels.)
partner of the original insurer. Reinsurance en-
Nonguaranteed issue carriers would be permit-
ables an insurer to accept a greater variety of
ted only to reinsure new entrants to existing
risks. By sharing these risks with a reinsurer, the
groups through individual reinsurance. This
ceding insurer obtains an adequate spread within
reflects the fact that under the "whole group"
which the law of averages can operate.
rule, all carriers would have to make coverage
Reinsurance will allow individual insurers (or
available to any new employees entering a
other small-employer health plan entities) to
group they already insure.
implement reforms without facing high financial
The reinsurer would cover the costs associ-
losses. Reinsurance will allow carriers to assure
ated with reinsured cases. The process of rein-
small-employer groups presenting a high health
surance is invisible to employers and employees
risk access to a basic set of benefits at a rate no
and is purely a transaction between the ceding
higher than 50 percent above the applicable
insurer and the reinsurer.
average market premium. For groups already
In the aggregate, the cost of reinsured per-
covered by an insurance carrier, the premium
sons will exceed the reinsurance premiums; this
pricing limits described above would pertain,
is because reinsurance would be aimed at em-
and would in many cases limit a high-risk
ployer groups and employees known to be high
employer's rates to a level below the guaranteed
risk, and because the premium price would be
marketwide maximum level of 50 percent above
limited in order to encourage carriers to accept
average.
high risk applicants. Under this proposal, the
Under this approach, a significant number of
reinsurer's losses would be spread equitably
carriers in a state's small-employee health ben-
across all competitors in the private marketplace
efit market (defined by small-employer pre-
- both the guaranteed issue and nonguaranteed
mium) would be required to guarantee to issue
issue carriers.
health coverage to any legitimate small-em-
Losses would be covered first through contri-
ployer group applicant. Not all carriers would be
butions from all carriers in the small-employer
required to guarantee to issue coverage, but they
market. If losses were significantly higher than
would be strongly encouraged to do so through
expected, a second "safety valve" of broad-
better reinsurance terms for guaranteed issue
based financing would be made available.
carriers. Guaranteed issue carriers could reinsure
HIAA will aggressively pursue reinsurance
entire high-risk small-employer groups at a
and related small-employer market reform at the
reinsurance premium price of 150 percent of
state level. HIAA will also recommend federal
average market costs or reinsure high-risk indi-
legislation to give states the authority, where
viduals within groups at 500 percent of average
necessary, to assure compliance with the market
market costs. (Individual reinsurance would
reforms outlined here and to finance the
include a $5,000 deductible.)
reinsurance system.
To reduce the volume of reinsured claims,
With HIAA's recommended market changes
reinsurance would be on a three-year basis. (If
in place, the small employer will stand to benefit
reinsurance were permitted annually, carriers
greatly from the rapidly evolving cost-manage-
could declare more groups or individuals high-
ment capacity. These reforms will encourage
risk and utilize reinsurance more often, increas-
competition based more on efficiency and less
10
on selection. Competitors would no longer be
One reason that mandated benefit laws in-
allowed to draw business away from more
crease the cost of coverage is that multi-state
efficient health benefit plans by offering tempo-
insurers must monitor and comply with so many
rarily low prices that rise sharply once an em-
different state rules and regulations. Insurers are
ployee gets sick. Insurers that reduce inefficient
precluded from developing lower-cost proto-
operating expenses and that offer cost-effective
type plans that would be marketable across state
financing systems and delivery systems will gain
lines. Instead, they are often forced to offer only
a larger share of what is an extremely price-
"Cadillac" plans based on a multitude of man-
sensitive market.
dates from many states.
Many of these benefits, are expensive in their
State Pools for Uninsurable Individuals
own right. Taken together, mandated benefits in
Even with increased employer-based coverage
many states provide a package that many small
and with Medicaid expansions (see below),
employers simply cannot afford.
medically uninsurable individuals who are not
A 1989 study (conducted by Gail Jensen, then
part of an insured employer group would remain
a health care economist with the University of
without coverage. High-risk pools should be
Illinois, and now at the University of North Caro-
established in the states so that coverage would
lina) concluded that 16 percent of small employers
become available to such individuals. Pool losses
not now providing health insurance would offer
should be funded by general revenues or similar
benefits in the absence of state mandates.
sources, which spread the cost broadly across
State-mandated benefit laws do not apply
society. (As of December 1990, 25 states had
equally to all employer-sponsored health plans.
enacted broad-based pools for uninsurable indi-
The Employee Retirement Income Security Act
viduals.)
of 1974 (ERISA) exempts self-insured plans from
state mandated benefit laws and other forms of
Allow Insurers to Offer More
state insurance regulations. In general, only
Affordable Benefit Plans to Small-
large employers have the financial resources or
Employer Groups
the risk-spreading base to self-insure; self-insur-
Over the years, the list of state laws mandating
ance allows multi-state employers not only to
benefits and providers has grown dramatically.
save administrative costs through plan unifor-
There are about 800 such laws nationwide -
mity but to pick and choose those benefits that
and they mandate coverage of such disparate
are most desirable and cost effective. Employers
services and provider categories as chiropractic
too small to self-insure do not have this flexibility,
and podiatry, acupuncture, expansive inpatient
and they are thus less likely to offer health
mental health services (even where most cost
insurance at all.
effective alternatives exist), in vitro fertilization,
In 1985, the U.S. Supreme Court ruled that to
and pastoral counseling. The cumulative effect
put employee health benefit plans on the same
of this hodgepodge of state laws is to increase
footing as self-insured plans required congres-
the cost of health insurance, particularly for
sional action. Moreover, in recent years, there
small employers who are most in need of
also has been a proliferation of state actions that
affordable basic benefits and who are too small
obstruct or hinder private-sector managed care
to self-insure and thus escape these mandates as
efforts that would make health care coverage
larger employers often do.
more affordable. These state bills are aimed at
Health Insurance Association of America
11
limiting contractual arrangements with cost-ef-
Percentage of Uninsured Workers
Who Are Self-Employed
fective provider networks, as well as preventing
or limiting insurers' ability to carry out effective
utilization review programs. Again, small em-
ployers should be able to benefit from the same
Self-Employed
13.6%
cost-management approaches as do larger em-
ployers.
Targeted Tax Assistance for Small
Employers and Their Financially
Vulnerable Employees
Non-Self-Employed
Small businesses tend to be younger, financially
86.4%
less stable and employ a lower wage work force.
Thus, health benefits often represent a greater
Source: EBRI Tabulations of March 1990 Current
financial burden to small businesses, who are far
Population Survey
less likely to offer them than are other employers.
A 1989 HIAA survey found that only 27 percent
Figure 3
of firms with fewer than 10 employees offer
health benefits. Conversely, over 90 percent of
firms with more than 25 employees offer health
benefits. (Figures 3 and 4.)
Percentage of Firms That Offer Health
Benefits by Number of Employees
Eleven percent of uninsured workers are self-
employed. They are uninsured in part because
self-employed workers receive only a 25 percent
income tax deduction for the cost of health
99%
benefits. Other (incorporated) businesses re-
100
89%
85%
ceive a full 100 percent deduction.
80
73%
The financial vulnerability of small employers
60
and uninsured workers, as well as government
fiscal realities, suggest that additional tax assis-
40
27%
tance should be carefully targeted to those popu-
20
lations most in need. For instance, government
0
should direct new tax subsidies to assist employ-
1-9
10-24
25-49
50-99
100+
Number of Employees
ers and individuals with inadequate financial
resources in purchasing private coverage. Sliding
scale subsidies should be targeted, for example,
Source: HIAA Employer Survey, 1990
to small employers paying average wages of less
than $18,000 annually. The subsidy rate for such
Figure 4
employers should increase as the percent of total
payroll going to hospital and medical benefits
increases. A temporarily higher subsidy could be
given to firms offering benefits for the first time.
12
times the federal poverty level. (Figure 5.) The
Persons without Health Care Coverage
current federal/state Medicaid program covers
by Family Income
only four out of ten poor Americans. Many states
as a Percentage of Poverty
do not have a medically needy program, and
Medicaid income eligibility thresholds for the
nonelderly generally fall far below the poverty
100%-149%
Below Poverty
of poverty
28.6%
level.
17.8%
Because the poor and many of the near poor
do not have the means to purchase coverage on
their own, the health care financing responsibil-
150%-199%
of poverty
ity for these populations rests largely with the
14%
government.
200% or more
HIAA proposes that the Medicaid program be
of poverty
39.6%
extended to cover all poor Americans regardless
of age, family structure or employment status. To
carry out this recommendation fully, Medicaid
Source: EBRI Tabulations of the March 1990 Current
eligibility will have to be independent of such
Population Survey
cash assistance programs as Aid to Families with
Dependent Children (AFDC). Moreover, fiscal
Figure 5
constraints suggest first priority should be phas-
Subsidies should be targeted to low-income
ing in coverage to all poor children under age 18.
individuals and families. A refundable tax credit
For poor workers who have access to employer-
equaling 50 percent of the employee share of
based private coverage, HIAA supports appro-
premium cost could be made available for
priate state implementation of recent federal
taxpayers at or below the poverty level. Above
legislation on a "buy-out" of employed individu-
poverty, the percentage credit would decrease
als and their families from the Medicaid pro-
as income rises and phase out completely at
gram. States should pay the poor employees'
twice poverty. Advance payment of the tax
premium contributions and cost sharing (co-
credit through the employer should be made for
pays and deductibles) associated with available
employees with little or no income tax liability;
employer plans when Medicaid outlays would
and, government should extend to the self-
be reduced on an average per capita basis. This
employed the 100 percent tax deduction en-
will help ease individuals' transition into economic
joyed by other employers (as long as they
self-reliance and often improve access to medical
provide equal coverage for their employees, if
care.
they have any).
Near-poor individuals who have family in-
comes between one and one-and-a-half times the
Expand Public Coverage for the Poor
federal poverty level should be allowed to "buy
and Near Poor
into" a package of primary and preventive care
Close to 29 percent of the uninsured have family
services only. Premiums would be based on a
incomes below the federal poverty level ($10,560
sliding scale related to their income. This would
for a family of three in 1990). Another 18 percent
target government assistance to the primary and
have incomes between one and one-and-a-half
preventive services the near poor most often forgo
Health Insurance Association of America
13
and for which employer-sponsored plans' cost-
the cost of treatment, it is imperative to make
sharing sometimes presents a financial obstacle.
sure that patients get care from physicians (and
To assure that no American falls beneath the
other providers) who use resources efficiently.
poverty level as a consequence of medical
Managed care systems build on that premise by
expenses, all states should deduct medical ex-
selecting panels of providers for their networks
penses from income when determining eligibil-
who meet specified criteria and who agree to be
ity for Medicaid. "Medically needy" or "spend-
monitored to assure that they continue to pro-
down" programs (and many states have already
vide high-quality cost-effective care. Patients are
adopted such programs) constitute a last-resort
then given financial incentives to choose these
financial safety net covering a full range of health
providers as their caregivers. By integrating the
services.
financing and delivery of care, managed care
Raising eligibility standards for Medicaid to
improves quality while constraining costs.
100 percent of the federal poverty level will give
A second major element in effective cost
an estimated 9.5 million to 11 million uninsured
containment must be improved knowledge about
Americans access to Medicaid coverage. (The
what constitutes cost-effective care. New tech-
Medicaid program currently pays for the care of
nologies that promise better care are introduced
over 21 million people annually.) These reforms
into medical practice, often at great cost, before
would increase Medicaid costs by only about 25
anyone has made a careful assessment of their
percent while increasing the population served
cost-effectiveness or even appropriateness for
by the program by about 70 percent. This is
certain treatments. Insurers, government, and all
because three-quarters of Medicaid spending
who pay for medical services have a stake in
now goes for long-term care and other services
developing better mechanisms and procedures
for the elderly and disabled. Medicaid coverage
for that assessment.
for poor uninsured populations is far less expen-
Related to the need for better knowledge
sive on a per capita basis.
about technologies is the need for better infor-
mation about what constitutes good medical
Contain Health Care Costs
practice. (One symptom of this need is that in
Efforts to improve access will be thwarted, at
many areas of medicine there is broad variation
least to some extent, if no way is found to curb
in the treatment of patients with similar condi-
the escalation of health care costs. As the cost of
tions.) Increased efforts should be directed to
care continues to rise, employers who are on the
filling the knowledge gap by establishing
margin with respect to decisions to offer cover-
mechanisms and financing to develop medical
age will find coverage unaffordable. Solving the
practice guidelines and protocols that define the
cost problem is a prerequisite to solving the
range of acceptable medical practice for particu-
access problem.
lar conditions. This task will require a substantial
Although there are no simple solutions to the
commitment of resources from both govern-
cost problem, a key component of any effective
ment and the private sector. These kinds of
cost containment strategy is the further develop-
advances in medical knowledge will help to
ment of managed care systems that integrate
improve utilization review activities by provid-
financing and delivery - HMOs, PPOs, point-
ing standards that are accepted by both physi-
of-service plans, and the like. Since physicians
cians and, very likely, the courts as well.
make most of the key decisions that determine
Government has a vital role to play in the
14
battle against cost escalation, particularly with
respect to technology assessment, protocol de-
velopment, and the collection and analysis of
data that can be used to develop more accurate
measures of cost, use, and medical outcomes.
Also necessary is a legal climate that is hospi-
table to the growth of managed care. Govern-
ment should refrain from limiting insurers' abil-
ity to employ appropriate utilization review
techniques and should not outlaw managed care
plans that require patients to pay significantly
more when they opt to get care from non-
network providers (thus generating significantly
higher costs).
Government can help reduce administrative
costs by cooperating with industry-wide efforts
to utilize common claims forms and expand
electronic collection, analysis, and payment of
claims. Finally, government has to take the lead
in malpractice reform. Such reform includes
reducing the incidence of malpractice by en-
couraging better risk management activities by
providers, taking steps to assure that only com-
petent providers treat patients, and making
legislative changes in the malpractice system so
that awards are appropriate and adjudication
does not absorb an excessive percentage of the
costs of righting the wrongs done to patients.
HIAA
Health Insurance Association of America
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036-3998
PP191
Statement by the AFL-CIO Executive Council
on
Health Care
February 20, 1990
Bal Harbour, Flordia
Our nation is now at a crossroads on health care. Because
of cutbacks in public programs, jobs that offer no benefits and
efforts by employers to shift health care costs to workers,
50 million Americans have health care coverage that is inadequate
to meet their needs and another 37 million have no protection at
all.
The United States spends $2 billion a day, or 11 percent of
its gross national product, on health care. As insurance
premiums increase 18 to 30 percent a year, basic health care has
moved well beyond the reach of a growing number of working
families. This increase also places heavy pressure on employer
labor costs. There is no end in sight to this trend.
The AFL-CIO through a grassroots health reform campaign is
assisting affiliates in defending health benefits against
employer attacks and is sending a strong message to Congress that
bold and innovative action is urged to address this grave
problem.
The AFL-CIO stands ready to explore a variety of
alternatives, so long as the overall objective is the enactment
of health care legislation that deals with the issues of cost,
access and quality based on the following ten principles:
Universality -- Through federal legislation, make health
care a right for all Americans regardless of age, sex, race,
health status, employment or income.
Health Care
-2-
Public Accountability -- Assure that the program is
administered by an independent entity. Provide opportunity for
the participation of labor, management, consumers and the health
care community in the development and implementation of the
national health care program.
Affordability and Accessibility -- Require that health
care be provided in a manner which assures that services are
affordable and out-of-pocket charges do not limit access.
Comprehensiveness -- Assure all Americans a federally-
mandated set of comprehensive health care benefits. Develop a
national program to provide access to services for long-term and
chronic health conditions.
Equitable and Progressive Financing -- Require all
employers to contribute to the cost of health care benefits for
employees, including part-time workers and their dependents. Re-
channel federal and state revenue sources and, to the extent
necessary, explore other sources of revenue, including tax-based
financing. Link employee contributions with ability to pay.
Fairness -- Assure that the unemployed, the poor and their
dependents have affordable access to health care services.
Portability -- Guarantee all Americans, regardless of
where they live, access to the same mandated package of benefits.
Cost Containment -- Require the development of mechanisms
to contain rising health care costs for all payors. Establish
guidelines that prohibit physicians and other providers from
charging patients more than they are paid under the program.
Substantially reduce paper work and red tape in the system and
develop health care information systems that will provide
consumers, purchasers and providers adequate data on the cost and
quality of health care services. Develop a process to manage the
expansion or updating of existing health care facilities, as well
as the acquisition and proliferation of new health care
technology.
Quality Assurance -- Develop appropriate mechanisms to
encourage the delivery of high quality services and an equitable
and cost-effective system for handling medical malpractice.
Better coordinate existing medical research and commit the
resources necessary to achieve the nation's health care
objectives.
Public/Private Administration -- Establish national
standards for the program at the federal level. Pooled funds
should be available at the federal, state or regional level for
the purchase of affordable, community-rated coverage administered
through insurers or other third parties.
###
FACT SHEET
on
AFL-CIO PRINCIPLES FOR
NATIONAL HEALTH CARE REFORM
Improving Quality and Administration
An entity should be established to administer the
national health care program. It should involve the
participation of workers, employers, consumers and the
health care community.
The national health care program should encourage the
development of alternative delivery systems.
The
national administrative entity should develop standards
for such systems.
This body should coordinate the development and
dissemination of guidelines for medical practice. Having
practice pattern guidelines available could begin the
process of resolving the malpractice crisis.
The national administrative entity should take steps to
reduce paperwork and red tape in the system.
This body should develop standard claim forms to be used
in the national health care program. This would help
reduce excessive administrative costs currently in the
system.
This body should develop guidelines for the development
of health information systems so that consumers,
purchasers and providers can have the information
necessary. to assess the quality and cost of services
provided under the program.
The national administrative entity should make an
assessment of the adequacy of the level of existing
medical research, as well as the relative distribution
of these funds for specific diseases and conditions.
Improving Access to Care
Health care services should be a right for all Americans,
regardless of age, sex, race, income, health status,
employment or geographic location.
All Americans should have access to a comprehensive
federally mandated benefit package.
This should include hospital care, physicians services,
diagnostic tests and preventive care.
These benefits would be the minimum package of services
that could be provided by state Medicaid programs.
States should be allowed to supplement the federal
package for the low income, Medicaid population. These
individuals have special health care needs that they
cannot afford to address without the support of public
programs.
For the non-Medicaid population states should not be
allowed to mandate that any benefits, in addition to the
federally mandated package, be provided.
Through collective bargaining, unions could negotiate
with employers to obtain additional benefits or reduce
any out-of-pocket costs.
All Americans should continue to have access to basic
benefits when traveling out of their home state or
region.
A national program must be developed to provide all
citizens protection against the high cost of long-term
and chronic health conditions.
Access to services should not be impeded by out-of-pocket
charges required at point of service.
Employers should be required to contribute to the cost
of health care coverage for all of their workers and
their dependents.
Individuals could be required to participate in the
financing of coverage based on their ability to pay.
The federal government, states or regions should
establish pools through which affordable community-rated
coverage would be made widely available.
The pools could be administered by insurance companies
or other third parties that would function as
intermediaries in the system.
Private and public employers and multi-employer plans
should be given the option of buying into the pools.
States could buy into the pools for the Medicaid
population.
Retirees not yet eligible for Medicare and other
individuals could buy into the pools, with or without an
employer contribution, based on their ability to pay.
Containing Costs
The national health care program should include a system
for containing costs for all payors.
A national health care expenditure target should be
developed to assure that health care spending remains
within pre-determined limits. Targets also should be
developed for states or regions.
Various cost containment mechanisms should be
incorporated into the program, such as physicians' fee
schedules and limits on hospital charges.
States or regions should be given the option of using
cost containment techniques developed at the federal
level or adopting other alternatives under predetermined
federal standards.
Balance billing, or the practice by providers of charging
patients more than the rate paid to providers, should be
prohibited.
A system for controlling capital expenditures in
hospitals, physicians offices and outpatient centers
should be developed and implemented on a state or
regional basis.
Technology assessment should be better coordinated at the
federal level. There should be wide dissemination of
information about the efficiency and efficacy of new
technology.
Health care information systems that provide adequate
information to consumers and providers must be developed.
II
101ST CONGRESS
2D SESSION
S.2163
To amend the Public Health Service Act to establish a lifecare long-term care
program, and for other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY 22 (legislative day, JANUARY 23), 1990
Mr. KENNEDY (for himself, Mr. SIMON, and Mr. INOUYE) introduced the following
bill; which was read twice and referred to the Committee on Labor and
Human Resources
A
BILL
To amend the Public Health Service Act to establish a lifecare
long-term care program, and for other purposes.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
4
(a) SHORT TITLE.-This Act may be cited as the "Life-
5 care Long-Term Care Protection Act".
6
(b) TABLE OF CONTENTS.-The table of contents is as
7 follows:
Sec. 1. Short title; table of contents.
Sec. 2. Lifecare long-term care protection program.
"TITLE XXVI-LIFECARE LONG-TERM CARE PROTECTION
PROGRAM
2
"PART A-GENERAL PROVISIONS
"Sec. 2601. Definitions.
"Sec. 2602. Long-term care agencies.
"Sec. 2603. Contribution of State funds.
"PART B-COVERAGE OF HOME AND COMMUNITY-BASED CARE SERVICES
"Sec. 2611. Benefits.
"Sec. 2612. Eligibility.
"Sec. 2613. Respite care.
"Sec. 2614. Qualified service providers.
"Sec. 2615. Payment for services.
"Sec. 2616. Home and Community-Based Advisory Council.
"Sec. 2617. Quality assurance boards and community advisory boards.
"Sec. 2618. Home and community-based care quality assurance.
"Sec. 2619. Certification.
"Sec. 2620. Reimbursement.
"PART C-COVERAGE OF FIRST 6 MONTHS OF NURSING HOME CARE
"Sec. 2621. Benefits.
"Sec. 2622. Eligibility.
"Sec. 2623. Limitations on payment.
"Sec. 2624. Reimbursement.
"Sec. 2625. Relationship to other entitlement programs.
"PART D-INSURANCE COVERAGE FOR NURSING HOME CARE THAT EXCEEDS
6 MONTHS
"Sec. 2631. Establishment of Federal Long-Term Care Insurance Program.
"Sec. 2632. Eligibility.
"Sec. 2633. Premium rates.
"Sec. 2634. Benefits.
"Sec. 2635. Qualified service providers.
"Sec. 2636. Reimbursement.
"PART E-TRAINING AND RESEARCH
"Sec. 2641. Grants for training for home and community-based care for the elderly.
"Sec. 2642. Grants for home health aides.
"Sec. 2643. Grants for model consumer training programs.
"Sec. 2644. Centers for long-term care planning and technical assistance.
"PART F-DEMONSTRATION PROJECTS
"Sec. 2651. Demonstration projects for seriously mentally ill individuals.
"Sec. 2652. Demonstration projects for working age individuals with severe func-
tional limitations.
"Sec. 2653. General authority.".
Sec. 3. Conforming amendments.
Sec. 4. Effective date.
S
2163 IS
3
1 SEC. 2. LIFECARE LONG-TERM CARE PROTECTION PROGRAM.
2
The Public Health Service Act is amended-
3
(1) by redesignating title XXVI (42 U.S.C.
4
300aaa et seq.) as title XXVII;
5
(2) by redesignating sections 2601 through 2614
6
(42 U.S.C. 300aaa through 300aaa-13) as sections
7
2701 through 2714, respectively; and
8
(3) by inserting after title XXV the following new
9
title:
10 "TITLE XXVI-LIFECARE LONG-
11
TERM CARE PROTECTION PRO-
12
GRAM
13
"PART A-GENERAL PROVISIONS
14 "SEC. 2601. DEFINITIONS.
15
"As used in this title:
16
"(1) ACTIVITY OF DAILY LIVING.-The term 'ac-
17
tivity of daily living' includes:
18
"(A) BATHING.-Getting water and cleans-
19
ing the whole body, including turning on the
20
water for a bath, shower, or sponge bath, getting
21
to, in, and out of a tub or shower, and washing
22
and drying oneself;
23
"(B) DRESSING.-Getting clothes from clos-
24
ets and drawers and then getting dressed, includ-
25
ing putting on braces or other devices and fasten-
26
ing buttons, zippers, snaps, or other closures, se-
S
2163 IS
4
1
lecting appropriate attire, and dressing in the
2
proper order;
3
"(C) TOILETING.-Going to a bathroom for
4
bowel and bladder function, transferring on and
5
off the toilet, cleaning after elimination, and ar-
6
ranging clothes;
7
"(D) TRANSFERRING.-Moving in and out of
8
bed and in and out of a chair or wheelchair; or
9
"(E) EATING.-Transferring food from a
10
plate or its equivalent into the body, including
11
cutting food SO as to make possible safe ingestion.
12
"(2) ADULT DAY HEALTH CARE.-The term
13
'adult day health care' means a community-based
14
group program designed to-
15
"(A) meet the need for adult day health care
16
for functionally impaired individuals in a struc-
17
tured, comprehensive program; and
18
"(B) provide a variety of health and social
19
services furnished by an adult day health care
20
center in an ambulatory group care setting during
21
any part of a day, but on a less than 24-hour
22
basis, to an individual described in section 2612.
23
"(3) ADULT DAY HEALTH CARE CENTER.-
24
"(A) IN GENERAL.-The term 'adult day
25
health care center' means a public agency or pri-
S
2163 IS
5
1
vate organization (or a subdivision thereof), with
2
an identifiable administrative unit headed by a Di-
3
rector, that meets such standards for personnel,
4
program, physical characteristics of the facility,
5
recordkeeping, and such other aspects of the func-
6
tion of such center as the Secretary considers nec-
7
essary or desirable for the health, safety, and ef-
8
fective treatment of patients and establishes by
9
regulation.
10
"(B) PROFESSIONAL ORGANIZATION STAND-
11
ARDS.-In promulgating such regulations, the
12
Secretary shall carefully consider certification
13
standards established by the National Council on
14
Aging and its professional membership unit, the
15
National Institute for Adult Day Care.
16
"(C) PERSONNEL.-Such standards shall in-
17
clude the participation in the provision of the
18
services of the center of a multidisciplinary group
19
of personnel that includes at least—
20
"(i) one physician or nurse practitioner,
21
which could be the individual's own physi-
22
cian or nurse practitioner;
23
"(ii) one registered professional nurse;
24
"(iii) one social worker;
S 2163 IS
6
1
"(iv) individuals with skills representing
2
physical, recreational, or occupational ther-
3
apy or speech-language pathology; and
4
"(v) a dietitian.
5
"Such personnel may be employed directly by the
6
center or on a consultant basis, as specified by the
7
Secretary by regulation.
8
"(D) STATE CERTIFICATION.-To be con-
9
sidered an adult health care center under this
10
title, a center shall be certified by a State, pursu-
11
ant to regulations issued by the Secretary.
12
"(4) CARE PLAN.-
13
"(A) IN GENERAL.-The term 'care plan'
14
means a plan that has been developed by a Case
15
Management Agency, or a home care or home
16
health agency working under contract with the
17
Case Management Agency to provide case man-
18
agement services. Such a care plan shall be based
19
on the results of a comprehensive needs assess-
20
ment of an eligible individual conducted by a case
21
management team in cooperation with the individ-
22
ual, the family of the individual, or other informal
23
caregivers, and in consultation with such other
24
health professionals as the case management team
25
considers appropriate for the needs of the individ-
S
2163 IS
7
1
ual. A care plan developed by a home care or
2
home health agency is subject to review and ap-
3
proval by the Case Management Agency. Any
4
entity performing case management services for
5
individuals determined eligible for services under
6
this title shall not be allowed to self-refer for
7
services included in the care plan of such individ-
8
ual.
9
"(B) CONTENTS.-The plan shall-
10
"(i) include a definition of specific out-
11
come goals on which improvement, reduced
12
rate of decline, maintenance, or improved
13
quality of life for the individual is expected;
14
and
15
"(ii) identify the specific mix of services
16
necessary to meet the outcome goals allotted
17
to the patient and reimbursable under this
18
title as determined by the procedure de-
19
scribed in section 2602.
20
"(5) CASE MANAGEMENT SERVICES.-
21
"(A) IN GENERAL.-The term 'case manage-
22
ment services' means services performed by a
23
case management team that include-
24
"(i) conducting a comprehensive needs
25
assessment in cooperation with an individual
S
2163 IS
8
1
and the family of an individual and in consul-
2
tation with such other health professionals
3
(including a physical therapist, occupational
4
therapist, nurse practitioner, certified dieti-
5
tian, or physician) as the case management
6
team considers appropriate for the needs of
7
the individual to assess the physical, social,
8
cognitive, and environmental status of the in-
9
dividual;
10
"(ii) developing, implementing, and
11
modifying (when necessary) the care plan of
12
an individual;
13
"(iii) coordinating the services provided
14
under the care plan;
15
"(iv) monitoring the care plan to ensure
16
the quality, quantity, timeliness, and effec-
17
tiveness of the services;
18
"(v) monitoring the progress of an indi-
19
vidual toward achievement of the goals spec-
20
ified in the care plan; and
21
"(vi) reviewing and revising, as neces-
22
sary, the care plan at least once every three
23
months or earlier in the event that the condi-
24
tion of the individual changes.
S
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9
1
"(B) REQUIREMENT.-Individuals providing
2
case management services to children and the dis-
3
abled under this Act shall demonstrate their expe-
4
rience with the special needs of these populations.
5
"(6) CASE MANAGEMENT TEAM.-The term
6
'case management team' means a registered profession-
7
al nurse and a qualified social worker (who is licensed
8
or certified, if applicable, in the State in which the in-
9
dividual is providing services), working in consultation
10
with other health professionals as needed, who are em-
11
ployed by a Case Management Agency or by a certi-
12
fied home health agency, home care agency, or other
13
private nonprofit organization under contract with the
14
agency to provide case management services pursuant
15
to the requirements of this title and standards pre-
16
scribed by the Secretary by regulation. Such nurse and
17
social worker shall meet standards of education, train-
18
ing, and experience established by the Secretary by
19
regulation to qualify to provide case management serv-
20
ices under this title. The case management team for
21
any person determined eligible for services under this
22
part, as defined under section 2612(a)(2)(B)(ii), shall
23
also include a physician.
24
"(7) COMPREHENSIVE NEEDS ASSESSMENT.-
25
The term 'comprehensive needs assessment' means a
S 2163 IS-2
10
1
comprehensive interdisciplinary assessment of the
2
status and needs of an individual that is conducted by a
3
case management team. The assessment shall address
4
functional status (including activities of daily living), in-
5
strumental activities of daily living (such as housekeep-
6
ing, shopping, transportation, meal preparation, and
7
taking medication), medically defined conditions, drug
8
regimen, nutrition status, mental status, living arrange-
9
ment, and availability of caregiver support.
10
"(8) HEAVY CHORE SERVICES.-The term 'heavy
11
chore services' means heavy cleaning and minor home
12
repair. Chore services may not be used to perform ac-
13
tivities that are the responsibility of a housing author-
14
ity or landlord, or both. Heavy chore services shall be
15
provided by personnel not requiring special training but
16
who work under supervision of the case management
17
agency or other qualified provider. Heavy chore serv-
18
ices include those services determined by a case man-
19
ager to be necessary to protect the health and safety of
20
an individual such as washing floors and walls, wood-
21
cutting, changing storm windows, replacing window
22
panes, door and window locks, installing minor home
23
adaptations, snow shoveling, weatherization, and such
24
other needed heavy chore services as are specified by a
25
case manager.
S
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11
1
"(9) HOME AND COMMUNITY-BASED CARE SERV-
2
ICES.-The term 'home and community-based care
3
services' means items and services provided to an indi-
4
vidual-
5
"(A) under a written plan of care for furnish-
6
ing such items and services to the individual;
7
"(B) except as provided clauses (iv), (v), and
8
(xii) of subparagraph (C), on a visiting basis in a
9
place of residence of the individual and in other
10
facilities (but not including a nursing home); and
11
"(C) that include-
12
"(i) homemaker services;
13
"(ii) home health aide services;
14
"(iii) heavy chore services;
15
"(iv) adult day health care provided at
16
an adult day health care center;
17
"(v) respite care;
18
"(vi) home mobility aids and minor ad-
19
aptations to the home of the individual that
20
promote independence (such as installation of
21
an emergency alarm system, railings, ramps,
22
and special toilets) that are approved by the
23
case manager and included in the care plan
24
of the individual;
S
2163 IS
12
1
"(vii) nursing care provided by or under
2
the supervision of a registered professional
3
nurse;
4
"(viii) medical social work services;
5
"(ix) physical, occupational, or speech
6
therapy or rehabilitative services to preserve
7
and restore functional capability or to pre-
8
vent functional deterioration;
9
"(x) transportation to and from health
10
or social services;
11
"(xi) nutrition and dietary counseling
12
provided by or under the supervision of a
13
qualified dietitian; and
14
"(xii) any of the items and services re-
15
ferred to in clauses (i) through (xi)-
16
"(I) that are provided on an outpa-
17
tient basis, under arrangements made
18
by the case manager, at a hospital or
19
nursing facility, or at a rehabilitation
20
center that meets such standards as
21
may be prescribed in regulation; and
22
"(II) the furnishing of which
23
cannot readily be made available to the
24
individual in such place of residence, or
25
can be provided more economically or
S
2163 IS
13
1
effectively in such hospital, facility, or
2
center.
3
"(10) HOME CARE AGENCY.-The term 'home
4
care agency' means an agency in any State that has
5
been certified by the State to provide home care serv-
6
ices pursuant to regulations of the Secretary. Such
7
services include homemaker services, heavy chore serv-
8
ices, and respite services.
9
"(11) HOME HEALTH AGENCY.-The term 'home
10
health agency' means an agency in any State that has
11
been certified by the Secretary to provide home health
12
services. Such services shall include home health aide
13
services, homemaker services, nursing services, respite
14
services, medical social work services, and occupation-
15
al, physical, speech therapy, and nutrition and dietary
16
counseling.
17
"(12) HOME HEALTH AIDE SERVICES.-
18
"(A) IN GENERAL.-The term 'home health
19
aide services' means the services provided by a
20
home health aide who meets such educational,
21
training, and any other requirements as the Secre-
22
tary shall establish by regulation and who is em-
23
ployed by a home health or home care agency or
24
whose services are provided under a contract
S 2163 IS
14
1
with, or subcontract on behalf of, a Case Manage-
2
ment Agency.
3
"(B) SERVICES.-Such services shall in-
4
clude-
5
"(i) providing personal care in following
6
the instructions of the case management
7
team of an individual under the supervision
8
of a registered professional nurse or, if ap-
9
propriate, a physical, speech, or occupational
10
therapist;
11
"(ii) assisting the individual with activi-
12
ties of daily living;
13
"(iii) assisting the individual with the
14
taking of medications ordered by a physician,
15
that are ordinarily self-administered;
16
"(iv) assisting and reinforcing the indi-
17
vidual with necessary self-help skills; and
18
"(v) reporting to the registered profes-
19
sional nurse supervisor any change in the
20
condition or family situation of the individual.
21
"(13) HOMEMAKER SERVICES.-
22
"(A) IN GENERAL.-The term 'homemaker
23
services' means services provided by a homemak-
24
er who meets such educational, training, and any
25
other requirements as the Secretary shall establish
S
2163 IS
15
1
by regulation and who is employed by a home
2
health or home care agency or who are working
3
under contract with, or subcontract on behalf of, a
4
Case Management Agency.
5
"(B) SERVICES.-Homemaker services may
6
include-
7
"(i) organizing the homemaking activity
8
of the household with the active participation
9
of an individual, if possible, and other re-
10
sponsible family members;
11
"(ii) coordinating efforts of other family
12
members in planning and carrying out the
13
duties necessary for the normal functioning
14
of the household;
15
"(iii) performing routine housekeeping
16
tasks, planning and preparing meals, doing
17
the marketing and simple errands, and taking
18
care of light laundry;
19
"(iv) assisting the individual with per-
20
sonal care services including performing ac-
21
tivities of daily living; and
22
"(v) performing such incidental house-
23
hold services as are essential to the care of
24
an individual at home, such as reporting to a
25
registered professional nurse supervisor
S
2163 IS
16
1
changes in the condition or family situation
2
of the individual and following a written case
3
plan established by a case management
4
team.
5
"(14) NURSING FACILITY.-
6
"(A) IN GENERAL.-The term 'nursing facil-
7
ity' means an institution that meets such require-
8
ments as the Secretary shall prescribe by regula-
9
tion to ensure the safe and efficient provision of
10
nursing home services under this title.
11
"(B) REQUIREMENTS.-
12
"(i)
REGISTERED
PROFESSIONAL
13
NURSE.-All nursing facilities shall maintain
14
at least one registered professional nurse on
15
duty at all times. The Secretary may provide
16
limited waivers of such requirement if-
17
"(I) the facility demonstrates to
18
the satisfaction of the Secretary that it
19
has been unable, despite diligent efforts
20
(including offering wages at the commu-
21
nity prevailing rate) to recruit and
22
retain appropriate personnel;
23
"(II) the Secretary determines that
24
a waiver of the requirement will not en-
S 2163 IS
17
1
danger the health, safety, or well being
2
of residents of the facility;
3
"(III) the facility meets any other
4
requirements that the Secretary may es-
5
tablish for the approval of such a
6
waiver; and
7
"(IV) such waiver is not for a
8
period in excess of 6 months, but such
9
may be renewed on a limited basis for
10
additional periods not to exceed 6
11
months.
12
"(ii) REGISTERED PROFESSIONAL
13
SOCIAL WORKER.-All nursing facilities
14
shall maintain at least one full-time regis-
15
tered professional social worker to direct its
16
social services program.
17
"(15) RESPITE CARE.-The term 'respite care'
18
means a temporary break provided to an individual
19
who supplies regular care to a dependent relative or
20
friend. For purposes of this title, the break may not
21
exceed 30 days or 720 hours, in a calendar year. The
22
term includes institutional or noninstitutional patient
23
supervisory services to temporarily relieve the care-
24
giver of an eligible individual as determined by a Care
S 2163 IS-3
18
1
Management Agency and included in the care plan of
2
the individual.
3
"(17) SPELL OF ILLNESS.-The term 'spell of ill-
4
ness' means a period of consecutive days beginning
5
with the first day on which an individual is furnished a
6
covered service and ending with the close of the first 6
7
consecutive months thereafter during which the individ-
8
ual is not an inpatient of a hospital or a nursing
9
facility.
10 "SEC. 2602. LONG-TERM CARE AGENCIES.
11
"(a) LONG-TERM CARE SCREENING AGENCY.-
12
"(1) ESTABLISHMENT.-The Secretary shall con-
13
tract with entities to act as Long-Term Care Screening
14
Agencies (hereinafter referred to in this title as the
15
'Screening Agency') for each designated area of a
16
State. It shall be the responsibility of such agency to
17
assess the eligibility of individuals residing in the geo-
18
graphic jurisdiction of the agency, for services provided
19
under this Act according to the requirements of this
20
Act and regulations prescribed by the Secretary.
21
"(2) ELIGIBILITY.-The Screening Agency shall
22
determine the eligibility of an individual based on the
23
results of a preliminary telephone or written question-
24
naire (completed by the applicant, by the caregiver of
25
the applicant, or by the legal guardian or representa-
S
2163 IS
19
1
tive of the applicant) that shall be validated through
2
the use of a screening tool administered in person by a
3
physician, nurse practitioner, or registered professional
4
nurse, to each applicant determined eligible through
5
initial telephone or written questionnaire interviews not
6
later than 15 days from the date on which such indi-
7
vidual initially applied for services under this part.
8
"(3)
QUESTIONNAIRES
AND
SCREENING
9
TOOLS.-
10
"(A) IN GENERAL.-The Secretary shall es-
11
tablish a telephone or written questionnaire and a
12
screening tool to be used by the Screening
13
Agency to determine the eligibility of an individ-
14
ual for services under this title consistent with re-
15
quirements of this title and standards established
16
by the Secretary by regulation.
17
"(B) QUESTIONNAIRES.-The questionnaire
18
shall include questions about the functional im-
19
pairment, mental status, and living arrangement
20
of an individual and other criteria that the Secre-
21
tary shall prescribe by regulation.
22
"(C) SCREENING TOOLS.-The screening
23
tool should measure functional impairment caused
24
by physical or cognitive conditions as well as in-
25
formation concerning cognition disability, behav-
S
2163 IS
20
1
ioral problems (such as wandering or abusive and
2
aggressive behavior), the living arrangement of an
3
individual, availability of caregivers, and any
4
other criteria that the Secretary shall prescribe by
5
regulation. The screening tool shall be adminis-
6
tered in person.
7
"(4) NOTIFICATION.-Not later than 15 days
8
after the date on which an individual initially applied
9
for services under this part (by phone or written ques-
10
tionnaire), the Screening Agency shall notify such indi-
11
vidual that such individual is not eligible for benefits,
12
or that such individuals must schedule an in-person
13
screening to determine final eligibility for benefits
14
under this title. The Screening Agency shall notify
15
such individual of its final decision not later than 2
16
working days after the in-person screening.
17
"(5) IN-PERSON SCREENING.-An individual (or
18
the legal guardian or representative of such individual)
19
whose application for long-term care benefits under
20
this Act is denied on the basis of information provided
21
through a telephone or written questionnaire, shall be
22
notified of such individual's right to an in-person
23
screening by a nurse or appropriate health care profes-
24
sionals.
S
2163 IS
21
1
"(6) APPEALS.-The Secretary shall establish a
2
mechanism for hearings and appeals in cases in which
3
individuals contest the eligibility findings of the Screen-
4
ing Agency.
5
"(7) FUNDING LEVEL.-The Screening Agency
6
shall be responsible for determining the estimated fund-
7
ing level that shall be allotted for individuals eligible
8
for home and community-based care, pursuant to
9
standards established under section 2615(e) and regula-
10
tions of the Secretary.
11
"(b) LONG-TERM CARE CASE MANAGEMENT
12 AGENCY.-
13
"(1) ESTABLISHMENT.-The Secretary shall con-
14
tract with a State or, in any case in which a State de-
15
clines to contract with the Secretary, a private non-
16
profit organization, to establish and administer a Long-
17
Term Care Case Management Agency (hereinafter re-
18
ferred to in this title as 'Case Management Agency')
19
for each designated area of a State. Such agency shall
20
demonstrate expertise in the delivery of health and
21
social services to the chronically ill and disabled pursu-
22
ant to requirements established in this title and such
23
standards as the Secretary may establish by regulation
24
(including standards for training and qualification of
25
personnel, financial responsibility, and governance).
S 2163 IS
22
1
"(2) DUTIES.-A Case Management Agency shall
2
provide case management services for eligible individ-
3
uals directly or through contracts with home care or
4
home health agencies that meet the requirements of
5
this title and standards prescribed by the Secretary by
6
regulation for providing case management services.
7
"(3) CARE PLAN.-The Case Management
8
Agency shall develop a care plan for each individual
9
determined to be eligible by a Screening Agency. In
10
developing a care plan for an individual, the Case
11
Management Agency shall design a plan that meets the
12
service needs of the individual, consistent with the re-
13
sources available to the agency.
14
"(4) FUNDING.-
15
"(A) IN GENERAL.-The actual level of
16
funding allotted to an eligible individual by the
17
Case Management Agency to cover services in-
18
cluded in the individual's care plan may fall above
19
or below the estimated annualized level allotted to
20
the individual by the Screening Agency based on
21
the detailed assessment and plan of care provided
22
by the Case Management Agency.
23
"(B) LIMITATION.-The Case Management
24
Agency shall allocate the resources available from
25
the Screening Agency (as described in section
S
2163 IS
23
1
2615(a)) to ensure that the total expenditures for
2
home and community-based care for individuals
3
eligible for services covered under this title resid-
4
ing within the geographic jurisdiction of the
5
agency do not exceed the total amount available
6
monthly to the Case Management Agency, pursu-
7
ant to this section, for home and community-based
8
services. The Case Management Agency shall es-
9
tablish specific financial controls (including author-
10
izing the amount, scope, and duration of services
11
to be provided to an individual) to carry out this
12
I
subparagraph.
13
"(c) REGISTRY.-A Case Management Agency shall
14 maintain a registry of qualified providers of home and com-
15 munity-based and nursing home care in the State and shall
16 assist individuals in choosing qualified providers to carry out
17 the care plan. An individual eligible for services under this
18 title shall be free to choose from the registry the home care
19 agency, home health agency, or other qualified provider of
20 services to carry out the care plan of such individual. The
21 Case Management Agency shall assist the individual in locat-
22 ing alternative providers if the individual becomes dissatisfied
23 with the provider initially chosen.
24
"(d) MONITORING.-A State shall, along with the Sec-
25 retary, monitor the performance of all designated Case Man-
S
2163 IS
24
1 agement Agencies and assure the fiscal stability of such
2 agencies. A State shall act as the financial guarantor of each
3 agency.
4 "SEC. 2603. CONTRIBUTION OF STATE FUNDS.
5
"(a) ESTIMATE.-The Secretary shall estimate the
6 amount that a State would have spent during each calendar
7 year for individuals eligible for long-term care services under
8 each Federal-State entitlement program in the absence of the
9 program established by this title. Such estimate shall be up-
10 dated annually based on the projected increases in the cost of
11 carrying out this title.
12
"(b) CONTRIBUTION.-For residents of a State to be
13 eligible to participate in the program established by this title
14 during a calendar year, the State shall contribute the amount
15 estimated under subsection (a) to the Secretary to share in
16 the costs of providing services to such State residents under
17 the program established by this title for such calendar year.
18 "PART B-COVERAGE OF HOME AND COMMUNITY-
19
BASED CARE SERVICES
20 "SEC. 2611. BENEFITS.
21
"An individual who meets the eligibility criteria pre-
22 scribed in section 2612 shall be eligible under the program
23 established by this part for coverage for home and communi-
24 ty-based care services that are-
S 2163 IS
25
1
"(1) determined to be necessary by a Case Man-
2
agement Agency;
3
"(2) described in the care plan of the individual;
4
"(3) services for which the individual is eligible;
5
and
6
"(4) consistent with the need for care of the indi-
7
vidual, regulations issued by the Secretary, and stand-
8
ards established under this part.
9 "SEC. 2612. ELIGIBILITY.
10
"(a) IN GENERAL.-An individual shall be eligible for
11 benefits under this part only if the individual-
12
"(1)(A) is-
13
"(i) 65 years of age or older; or
14
"(ii) eligible for benefits under part A of title
15
ХѴШ of the Social Security Act (42 U.S.C.
16
1395 et seq.) as the result of a disability; and
17
"(B) has been determined by a Screening Agency
18
through a screening process (conducted in accordance
19
with section 2602) to be-
20
"(i) completely dependent (does not partici-
21
pate) in at least one age-appropriate activity of
22
daily living or unable to perform two or more
23
age-appropriate activities of daily living without
24
human assistance or supervision; or
S 2163 IS-4
26
1
"(ii) SO cognitively impaired (due to adult
2
onset or acquired chronic organic disease of the
3
brain, occurring in clear consciousness, and in-
4
cluding those individuals who would meet such
5
criteria except for the presence of a transient de-
6
lirium in such individuals) as to require substantial
7
supervision from another individual because such
8
impaired individual engages in inappropriate be-
9
havior that poses a substantial health and safety
10
hazard to such impaired individual or to others; or
11
"(2)(A) is under 19 years of age; and
12
"(B) has been determined by a Screening Agency
13
through a screening process (conducted in accordance
14
with section 2602)-
15
"(i) to be unable to perform two or more
16
age-appropriate activities of daily living without
17
human assistance or supervision; or
18
"(ii) to require both a medical devise to com-
19
pensate for the loss of a vital body function that is
20
necessary to avert death or major loss of bodily
21
functional capacity and substantial and ongoing
22
nursing care to avert death or further disability;
23
or
24
"(3)(A) would be eligible for benefits under title
25
ХѴШ of the Social Security Act (42 U.S.C. 1395 et
S
2163 IS
27
1
seq.) on the basis of a disability except for the required
2
24-month waiting period;
3
"(B) has been determined by a Screening Agency
4
through a screening process (conducted in accordance
5
with section 2602) to be completely dependent (does
6
not participate) in at least one age-appropriate activity
7
of daily living or unable to perform two or more age-
8
appropriate activities of daily living without human as-
9
sistance or supervision; and
10
"(C) has a medical prognosis that such individ-
11
ual's life expectancy is 12 months or less.
12
"(b) APPLICATION.-An individual shall be eligible for
13 benefits under this part only if-
14
"(1) the individual has filed an application for, and
15
is in need of, benefits covered under this part;
16
"(2) the legal guardian of the individual has filed
17
an application on behalf of an individual who is in need
18
of benefits covered under this part; or
19
"(3) the representative of an individual who is
20
cognitively impaired, who has no legal guardian, and
21
who is in need of benefits covered under this part, files
22
an application on behalf of the individual.
23
"SEC. 2613. RESPITE CARE.
24
"(a) ELIGIBILITY.-An individual shall be eligible for
25 respite care benefits under this part if-
S
2163 IS
28
1
"(1)(A) the individual meets the requirements es-
2
tablished in section 2612;
3
"(B) the individual is dependent on a daily basis
4
on a primary caregiver and is assisting the individual
5
without monetary compensation in the performance of
6
at least two age-appropriate activities of daily living;
7
and
8
"(C) without such assistance the individual could
9
not perform such activities of daily living; or
10
"(2) the individual has dementia or other cognitive
11
impairments, as determined by a Screening Agency.
12
"(b) DETERMINATION OF NEED.-The determination
13 of the need of an individual for respite care shall be made by
14 the Case Management Agency. An analysis of such need
15 shall be included in the care plan of the individual.
16
"(c) SERVICES.-Respite care services under this sec-
17 tion may include home and community-based services or
18 nursing home services described in section 2621(b).
19
"(d) PERIOD OF COVERAGE.-Coverage for such serv-
20 ices shall be for short periods of time of not to exceed 30 days
21 or 720 hours during a given calendar year.
22
"(e) REIMBURSEMENT RATES.-Reimbursement rates
23 for respite care services covered under this section shall be
24 the same as rates established elsewhere in this part for home
25 and community-based services and nursing home services.
S
2163 IS
29
1
"SEC. 2614. QUALIFIED SERVICE PROVIDERS.
2
"(a) IN GENERAL.-Services provided to eligible indi-
3 viduals pursuant to a plan of care under this part shall be
4 provided by qualified service providers.
5
"(b) TYPES.-A qualified service provider shall in-
6 clude-
7
"(1) a home care agency certified by the State;
8
"(2) a home health agency certified by the Secre-
9
tary;
10
"(3) an adult day health care center certified by
11
the State; and
12
"(4) other certified or licensed provider of specific
13
services including a registered professional nurse, quali-
14
fied social worker, physician, nurse practitioner, physi-
15
cal, occupational or speech therapist, certified dietitian,
16
and other providers as the Secretary shall designate by
17
regulation that meet standards established by the Sec-
18
retary.
19
"(c) APPROVAL REQUIRED FOR REIMBURSEMENT.-
20 No individual or agency shall be eligible for reimbursement
21 for services provided to an individual under this part unless
22 the Case Management Agency approves the provision of
23 services to such individual or agency.
24 "SEC. 2615. PAYMENT FOR SERVICES.
25
"(a) CASE MANAGEMENT AGENCIES.-The Secretary
26 shall pay an amount monthly to each Case Management
S 2163 IS
30
1 Agency that equals the sum of the amounts allotted by the
2 Screening Agency for eligible individuals in the geographic
3 jurisdiction of such Case Management Agency who have
4 been determined by such Screening Agency to be eligible to
5 receive services covered under this part.
6
"(b) SERVICE PROVIDERS.-
7
"(1) DIRECT PAYMENTS.-The Case Manage-
8
ment Agency shall make direct payments to certified
9
home care and home health agencies, and other quali-
10
fied providers of home and community-based services
11
reimbursable under this part, in accordance with such
12
methods as the State may establish pursuant to regula-
13
tions promulgated by the Secretary.
14
"(2) FULL PAYMENT FOR SERVICES.-All provid-
15
ers of home and community-based care services under
16
the program established under this part shall accept
17
payment rates established by the Case Management
18
Agency as payment in full for services and shall not
19
pass on additional charges to beneficiaries for services
20
rendered under a plan of care.
21
"(c) PROVIDERS OF CASE MANAGEMENT SERVICES.-
22 If a Case Management Agency contracts with a home health
23 or home care agency to provide case management services,
24 the Case Management Agency shall make direct payments to
25 such organization in accordance with such methods as the
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31
1 State may establish pursuant to regulations promulgated by
2 the Secretary.
3
"(d) LIMIT ON PAYMENT FOR HOME HEALTH AND
4 COMMUNITY-BASED SERVICES.-
5
"(1) INITIAL PERIOD.-During the 3-year period
6
beginning on the date of enactment of this title, the
7
maximum amount of payments that may be made to a
8
Case Management Agency for home and community-
9
based services provided to an individual who resides in
10
the geographic jurisdiction of the agency and who is el-
11
igible for services under this part shall be, on an an-
12
nualized basis, not more than 65 percent of the aver-
13
age amount payable, including the cost of ancillary
14
services, for the same number of care days in a nursing
15
home under title ХѴШ of the Social Security Act (42
16
U.S.C. 1395 et seq.) in the area in which the home
17
and community-based care is provided.
18
"(2) SUBSEQUENT YEARS.-In years subsequent
19
to the period referred to in paragraph (1), the maxi-
20
mum amount referred to in such paragraph shall be es-
21
tablished by the Secretary according to such prospec-
22
tive payment methods as the Secretary may establish
23
by regulation to assure that no payment is made for
24
home and community-based services that will exceed
25
the cost of an alternative placement in a nursing facili-
S
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32
1
ty, less a reasonable estimate of the cost of room and
2
board in such facilities or in the community.
3
"(e) AMOUNT OF COVERAGE.-
4
"(1) IN GENERAL.-Subject to subsection (d) and
5
other provisions of this subsection, the amount of cov-
6
erage allotted to an eligible individual shall be the
7
amount necessary to carry out the service needs of the
8
individual.
9
"(2) MAXIMUM AVERAGE AMOUNT.-In the case
10
of an individual in a given geographic area, the aver-
11
age amount payable for such individual shall not
12
exceed an amount determined by multiplying-
13
"(A) the maximum amount prescribed in sub-
14
section (d); by
15
"(B) a measure of the severity of the need
16
for services of the individual.
17
"(3) SEVERITY OF NEED FOR SERVICES.-For
18
purposes of paragraph (2), the severity of the need for
19
services of an individual shall be estimated by such sta-
20
tistical models and techniques, that shall include a
21
measure of the severity of dependency in activities of
22
daily living, cognitive impairment, living arrangement,
23
age, and such other factors as the Secretary shall
24
specify by regulation, except that all individuals deter-
25
mined to be eligible for services under this part shall
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33
1
be presumed to face a monthly need for services of at
2
least 5 percent of the maximum allotment. In deter-
3
mining eligibility, the Secretary shall not use any
4
measures of the income and assets of the individual.
5
Expenditures authorized by this paragraph shall be
6
made only for the services specified in this part in ac-
7
cordance with a written care plan prepared through
8
case management services provided by the Case Man-
9
agement Agency or a home care or home health
10
agency under contract with the agency to provide case
11
management services.
12
"(4)
CHRONICALLY-ILL
INDIVIDUAL.-The
13
amount of coverage allotted in a month to an eligible
14
individual who is a chronically-ill individual, as de-
15
scribed in section 2612(a)(2)(B)(ii), who resides in a
16
State shall be an amount that the Secretary estimates
17
is equal to 100 percent of the amount that would be
18
payable, under the plan of the State approved under
19
title XIX of the Social Security Act during the month
20
if such individual were provided appropriate care in an
21
appropriate institutional setting, if no limit on amount,
22
duration, or scope of covered institutional services ap-
23
plied other than medical necessity.
24
"(f) COPAYMENT.-The amount payable for home and
25 community-based services under this part shall be reduced by
S 2163 IS-5
34
1 a copayment amount equal to 5 percent of the amount of the
2 monthly insurance benefits of the individual under title II of
3 the Social Security Act (42 U.S.C. 401 et seq.), if any, or 10
4 percent of the cost of services provided to the individual,
5 whichever is less.
6 "SEC. 2616. HOME AND COMMUNITY-BASED CARE ADVISORY
7
COUNCIL.
8
"(a) ESTABLISHMENT.-No later than 60 days after
9 the date of enactment of this title, there shall be established
10 an independent body to be known as the 'Home and Commu-
11 nity-Based Care Advisory Council' (hereinafter referred to in
12 this section as the 'Council').
13
"(b) MEMBERSHIP.-
14
"(1) IN GENERAL.-The Council shall be com-
15
posed of 13 individuals appointed by the Secretary.
16
"(2) EXPERTISE.-To the maximum extent prac-
17
ticable, the Council shall include individuals with ex-
18
pertise in pediatrics, geriatrics, gerontology, disability,
19
case management of home and community-based serv-
20
ices and home and community-based care reimburse-
21
ment, home and community-based care consumers and
22
their representatives, home and community-based care
23
providers and their representatives, professionals with
24
expertise in long-term care including nurses, social
25
workers, discharge planners, third party payors, long-
S
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35
1
term care ombudsmen, and State and local health and
2
social service agency representatives.
3
"(3) TERM.- An appointment to the Council shall
4
be for a term of not to exceed 4 years.
5
"(c) PURPOSE.-The purpose of the Council shall be-
6
"(1) to assist the Secretary in assuring the prompt
7
and efficient implementation of this part;
8
"(2) to regularly review the implementation of
9
this part; and
10
"(3) to recommend to the Secretary and Congress
11
any necessary modifications of this part.
12
"(d) CONSULTATION.-The Secretary shall regularly
13 and closely consult with the Council in the implementation
14 and administration of this part.
15
"(e) MEETINGS.-To carry out this section, the Secre-
16 tary shall meet with the Council at least once every month
17 during the 24-month period beginning 60 days after the date
18 of enactment of this title and at least quarterly after such
19 period.
20 "SEC. 2617. QUALITY ASSURANCE BOARDS AND COMMUNITY
21
ADVISORY BOARDS.
22
"(a) QUALITY ASSURANCE BOARD.-A State shall es-
23 tablish and appoint members to a quality assurance board
24 that will monitor the quality of care provided under this part
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36
1 in a given area of the State, pursuant to procedures estab-
2 lished by the Secretary by regulation.
3
"(b) COMMUNITY ADVISORY BOARD.-A State shall
4 establish and appoint members to a community advisory
5 board for each Case Management Agency pursuant to regula-
6 tions by the Secretary. The advisory board shall be composed
7 of consumers of services and their families, representatives of
8 agencies and organizations, professionals providing services
9 to the elderly, and public members. Public members and con-
10 sumers and their families shall form a majority of the mem-
11 bers of the advisory board.
12 "SEC. 2618. HOME AND COMMUNITY-BASED CARE QUALITY
13
ASSURANCE.
14
"(a) HOME AND COMMUNITY-BASED CARE SERVICES
15 CONSUMERS' BILL OF RIGHTS.-The Secretary shall pro-
16 mulgate regulations that shall establish a bill of rights for
17 consumers of home and community-based services (hereafter
18 referred to in this section as the 'consumer'), that shall recog-
19 nize the following as the rights of consumers that may be
20 asserted by the consumer or the representative or guardian of
21 the consumer:
22
"(1) TREATMENT OF INDIVIDUAL.-To be treat-
23
ed with courtesy, respect, and full recognition of one's
24
dignity, individuality, and right to control one's own
25
household and lifestyle.
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37
1
"(2) FULL INFORMATION.-To be fully informed
2
by the individual's case management team of his or her
3
condition.
4
"(3) REFUSAL OF TREATMENT.-To refuse all or
5
part of any treatment, care, or service, and to be in-
6
formed of the likely consequences of such refusal.
7
"(4) NONDISCRIMINATION.-To receive treat-
8
ment, care, and services in compliance with all State
9
and local laws and regulations without discrimination
10
in the provision or quality of services based on race,
11
religion, gender, age, or creed (except as provided
12
under the Age Discrimination Act of 1975 (42 U.S.C.
13
6101 et seq.)), or because of a change in the source of
14
payment.
15
"(5) FREEDOM FROM ABUSE.-To be free from
16
mental and physical abuse, neglect, and exploitation,
17
and to be free from chemical and physical restraints.
18
"(6) RESPECT AND PRIVACY.-To receive respect
19
and privacy in the home care consumer's treatment,
20
care, and services in caring for personal needs, in com-
21
munications, and in all daily activities.
22
"(7) CONFIDENTIALITY.-To be assured of the
23
confidential treatment of personal and financial records
24
and to approve or refuse the release of such records to
S
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38
1
any individuals outside the agency except as otherwise
2
required by law or third-party payment contract.
3
"(8) EXERCISE OF RIGHTS.-To be free to fully
4
exercise the consumer's civil rights and to be assisted
5
in doing SO when assistance is needed.
6
"(9) TRANSITION OF SERVICES.-To receive as-
7
sistance to assure a smooth transition in services con-
8
sistent with the welfare of the home care consumer.
9
"(b) HOME AND COMMUNITY-BASED PROVIDER QUAL-
10 ITY ASSURANCE REQUIREMENTS.-
11
"(1) IN GENERAL.-In addition to such other re-
12
quirements as may apply, the Secretary shall promul-
13
gate regulations that require that in order to receive
14
funding under this title for the provision of home or
15
community-based services (hereinafter referred to in
16
this section as 'services'), all qualified providers shall,
17
not later than 6 months after the date of the publica-
18
tion of such regulations-
19
"(A) comply with the consumers' bill of
20
rights promulgated under subsection (a);
21
"(B)(i) implement procedures for promptly re-
22
viewing and resolving the grievances of consum-
23
ers; and
24
"(ii) provide an oral notification and a writ-
25
ten copy of such procedures to each consumer (or
S
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39
1
the representative or guardian of the consumer)
2
who receives services provided by a qualified pro-
3
vider;
4
"(C) ensure that each provider employed by
5
or under contract with a home care or home
6
health agency receives training-
7
"(i) sufficient to meet a level of profi-
8
ciency established by the Secretary in regu-
9
lations (in consultation with representatives
10
of the elderly, disabled, and children, home
11
health and home care agencies, and experts
12
in the fields of geriatric nursing, pediatric
13
nursing, geriatric social work, pediatric social
14
work, mental health, rehabilitation, and other
15
appropriate health care professionals) that
16
are appropriate in content and amount as are
17
consistent with the requirements of section
18
4021(b) of the Omnibus Budget Reconcilia-
19
tion Act of 1987;
20
"(ii) that develops separate levels of
21
proficiency in and is reflective of the range of
22
skills required of providers that provide dif-
23
ferent levels of services; and
24
"(iii) the extent of which shall be made
25
available on request to each consumer with
S
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40
1
respect to the amount of training or level of
2
certification achieved by each provider;
3
"(D) supervise all care providers employed
4
by or under contract with a qualified provider in
5
accordance with regulations promulgated by the
6
Secretary (including regular random on-site super-
7
visory visits by registered nurses or other appro-
8
priate health care professionals); and
9
"(E) perform annual evaluations of the qual-
10
ity of services provided by providers employed by
11
or under contract with a qualified provider that
12
shall document consumer involvement through a
13
process that shall include client interviews.
14
"(2) DURABLE MEDICAL EQUIPMENT SERV-
15
ICES.-In addition to such other requirements as may
16
apply, to receive funding for the provision of durable
17
medical equipment services under this title, a qualified
18
provider shall in each case of a consumer to which
19
such services are provided-
20
"(A) issue written instructions for the oper-
21
ation of such equipment;
22
"(B) provide sufficient training to the con-
23
sumer, the family of the consumer, and the staff
24
to permit the appropriate and safe operation of all
25
such equipment; and
S
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41
1
"(C) formulate an emergency plan that is ap-
2
propriate for the services provided to the home
3
care consumer.
4
"(c) CASE MANAGEMENT AGENCY QUALITY ASSUR-
5 ANCE REQUIREMENTS.-In addition to such other require-
6 ments as may apply, the Secretary shall promulgate regula-
7 tions requiring that an agency, to receive funding for the pro-
8 vision of case management services under this Act, shall, not
9 later than 6 months after the date of the publication of such
10 regulations-
11
"(1)(A) comply with the consumers' bill of rights
12
promulgated under subsection (a); and
13
"(B) provide an oral notification and a written
14
copy of such bill of rights to each consumer (or the
15
representative or guardian of the consumer) who re-
16
ceives services under this Act;
17
"(2)(A) implement procedures for the prompt
18
review and resolution of the grievances of consumers;
19
and
20
"(B) provide an oral notification and a written
21
copy of such procedures to each consumer (or the rep-
22
resentative or guardian of such consumer) who receives
23
services from the agency;
24
"(3) provide to each consumer (or the representa-
25
tive or guardian of the consumer) a written statement
S
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42
1
of the services to be provided to the consumer and the
2
schedule for the provision of such services, as agreed
3
on by the consumer;
4
"(4) provide to each consumer a clear written
5
statement as to how the consumer (or the representa-
6
tive or guardian of the consumer), may appeal the ben-
7
efit and level decisions made by the agency;
8
"(5) maintain procedures that assure prompt
9
access by eligible consumers to services;
10
"(6) ensure that the personnel that provide case
11
management services to each consumer have received
12
adequate training as prescribed in regulations promul-
13
gated by the Secretary, in consultation with the appro-
14
priate Home Care Quality Assurance Board; and
15
"(7) establish and implement case management
16
procedures that shall include-
17
"(A) a plan of care that establishes reasona-
18
ble and measurable client objectives and the serv-
19
ices to be provided to meet such objectives;
20
"(B) a plan of care that employs outcome
21
measures of care insofar as they are appropriate
22
and available for each consumer served;
23
"(C) methods for a review that shall be con-
24
ducted at least once during every 3-month period
25
of-
S 2163 IS
43
1
"(i) the needs of the consumer; and
2
"(ii) the plan of care for the consumer;
3
"(D) methods for follow-up and on-going
4
monitoring of patient and services delivery; and
5
"(E) a statement of the criteria and proce-
6
dures to be applied for the discharge or transfer of
7
the consumer to another agency, program, or
8
service.
9
"(d) STANDARD AND EXTENDED SURVEY.-Section
10 1891(c) and (d) of the Social Security Act (42 U.S.C.
11 1395bbb(c) and (d)) shall apply to home health agencies certi-
12 fied to receive payments for services provided under this title.
13
"(e) SURVEY.-The Secretary shall develop and imple-
14 ment a standard and extended survey of home care agencies
15 certified to receive payments for services provided under this
16 title.
17 "SEC. 2619. CERTIFICATION.
18
"(a) REQUIREMENT.-
19
"(1) IN GENERAL.-A State shall-
20
"(A) survey home care agencies, home
21
health agencies, and adult day health care centers
22
to determine their eligibility to participate in the
23
program established under this part; and
24
"(B) certify such an agency or center as eli-
25
gible to participate in such program if the agency
S
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44
1
meets the requirements of this part and regula-
2
tions prescribed by the Secretary.
3
"(2) FREQUENCY.-A State shall conduct the
4
survey and certification required under paragraph (1)
5
not less than once during each fiscal year.
6
"(b) INDIVIDUAL PROVIDERS.-
7
"(1) IN GENERAL.-To be eligible to be reim-
8
bursed for services covered under this part, a qualified
9
service provider referred to in section 2614 shall be li-
10
censed or, if applicable, certified by the State in which
11
the provider practices pursuant to the requirements of
12
this part and regulations prescribed by the Secretary.
13
"(2) HOMEMAKERS AND HOME HEALTH
14
AIDES.-To be reimbursed for services covered under
15
this part, a homemaker or home health aide must be a
16
trained employee of a certified home care or home
17
health agency working under professional supervision.
18
"(3) WAIVER.-The Secretary may waive the
19
certification requirement for providers that do not pro-
20
vide direct patient care.
21 "SEC. 2620. REIMBURSEMENT.
22
"(a) ACCEPTANCE OF REFERRALS AND REIMBURSE-
23
MENT.-
24
"(1) IN GENERAL.-Except as provided in para-
25
graph (2), a home health or home care agency or other
S
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45
1
provider certified by a State to provide services reim-
2
bursable under this part shall provide services to all in-
3
dividuals referred to the provider by a Case Manage-
4
ment Agency or by an organization under contract
5
with the agency to provide case management services
6
and accept as payment in full the reimbursement
7
amounts provided under this part.
8
"(2) EXCEPTION.-The service requirement im-
9
posed under paragraph (1) shall not apply if the re-
10
quirement would be in conflict with the operating poli-
11
cies under which the provider was certified (such as
12
the maximum number of individuals an agency may
13
care for at any time).
14
"(b) ADDITIONAL SERVICES.-Nothing contained in
15 this part shall be construed to preclude any individual who is
16 eligible to receive services under this part from purchasing
17 home and community-based services that are more generous
18 than services provided for in the care plan of the individual.
19 If an individual purchases more generous services, a provider
20 may not charge such individual higher rates for such services
21 than the amount the provider is reimbursed under this part.
22
"(c) RELATIONSHIP TO OTHER ENTITLEMENT PRO-
23 GRAMS.-Notwithstanding any other provision of law, in the
24 case of any service covered under this part that is also cov-
25 ered under another Federally administered entitlement pro-
S
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46
1 gram, the Secretary shall act as a secondary payer under this
2 part.
3
"(d) REIMBURSEMENT.-Reimbursement for services
4 provided under this part shall be subject to the requirements
5 of this part and regulations prescribed by the Secretary.
6
"PART C-COVERAGE OF FIRST 6 MONTHS OF
7
NURSING HOME CARE
8
"SEC. 2621. BENEFITS.
9
"(a) IN GENERAL.Subject to subsection (c), an indi-
10 vidual who meets the eligibility criteria prescribed in section
11 2622 shall be eligible under the program established by this
12 part for coverage for services described in subsection (b) pro-
13 vided to the individual by a nursing facility that are required
14 by the individual, while the individual is an inpatient of the
15 facility, for a period of time not to exceed 6 months for a spell
16 of illness.
17
"(b) TYPES.-Coverage may be provided under this
18 part for-
19
"(1) nursing care provided by or under the super-
20
vision of a registered professional nurse;
21
"(2) bed and board in connection with the furnish-
22
ing of nursing care;
23
"(3) physical, occupational, or speech therapy fur-
24
nished by a facility or by others under arrangements
25
with a facility;
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47
1
"(4) medical social services;
2
"(5) drug, biological, supply, appliance, and equip-
3
ment for use in the facility, that is ordinarily furnished
4
by the facility for the care and treatment of an inpa-
5
tient;
6
"(6) medical service of an intern or resident-in-
7
training under an approved teaching program of a hos-
8
pital with which a facility has in effect a transfer
9
agreement or other diagnostic or therapeutic service
10
provided by a hospital with which a facility has in
11
effect a transfer agreement; and
12
"(7) such other health services necessary to the
13
health of a patient as are generally provided by a nurs-
14
ing home facility.
15
"(c) BENEFITS AFTER COVERED STAYS.-An individ-
16 ual shall be eligible for additional nursing home coverage
17 under this part subsequent to a covered stay if-
18
"(1) the individual has not been an inpatient in a
19
hospital or nursing facility for at least 6 consecutive
20
months after any covered stay; and
21
"(2)(A) the individual has a diagnosis that is dif-
22
ferent than that provided for the preceding nursing
23
home stay; or
S 2163 IS
48
1
"(B) there has been a substantial worsening of the
2
condition of the individual since the latest discharge of
3
the individual.
4 "SEC. 2622. ELIGIBILITY.
5
"(a) IN GENERAL.-An individual shall be eligible for
6 benefits under this part if-
7
"(1)(A) the individual is-
8
"(i) 65 years of age or older; or
9
"(ii) eligible for benefits under Part A of title
10
ХѴШ of the Social Security Act (42 U.S.C.
11
1395 et seq.) as the result of disability; and
12
"(B) has been determined by a Screening Agency
13
through a screening process (conducted in accordance
14
with section 2602) to be-
15
"(i) completely dependent with respect to at
16
least one activity of daily living or unable to per-
17
form two or more activities of daily living without
18
human assistance or supervision; or
19
"(ii) SO cognitively impaired (due to adult
20
onset or acquired chronic organic disease of the
21
brain, occurring in clear consciousness, and in-
22
cluding those individuals who would meet such
23
criteria except for the presence of a transient de-
24
lirium in such individuals) as to require substantial
25
supervision from another individual because such
S
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49
1
impaired individual engages in inappropriate be-
2
havior that poses a substantial health and safety
3
hazard to such impaired individual or to others;
4
"(2)(A) the individual is under 19 years of age;
5
and
6
"(B) has been determined by a Screening Agency
7
through a screening process (conducted in accordance
8
with section 2602)-
9
"(i) to be unable to perform two or more
10
age-appropriate activities of daily living without
11
human assistance or supervision; or
12
"(ii) to require both a medical devise to com-
13
pensate for the loss of a vital body function that is
14
necessary to avert death or major loss of bodily
15
functional capacity and substantial and ongoing
16
nursing care to avert death or further disability;
17
"(3) the individual (or legal guardian) has filed an
18
application for such benefits, and is in need of, benefits
19
covered under this title;
20
"(4) receiving nursing home services in a nursing
21
facility would be in the best interest of the individual;
22
and
23
"(5) the Secretary determines that the individual
24
meets the eligibility requirements imposed under this
25
subsection.
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50
1
"(b) CURRENT INDIVIDUALS.-An individual who is in
2 a hospital or nursing home on the date of the enrollment of
3 the individual in the program established by this part shall be
4 ineligible for coverage under this section until the individual's
5 first spell of illness beginning after such date.
6 "SEC. 2623. LIMITATIONS ON PAYMENT.
7
"(a) IN GENERAL.-Monthly reimbursement for nursing
8 home services covered under this part shall be an amount the
9 Secretary determines to be reasonable and appropriate,
10 taking into account the average cost of providing appropriate
11 care.
12
"(b) PROSPECTIVE PAYMENT.-To the extent feasible,
13 the Secretary shall establish a prospective payment mecha-
14 nism for payment for nursing home services covered under
15 this part that takes into account the expected resource utili-
16 zation of individual patients based on the degree of impair-
17 ment of the patients and other factors affecting service re-
18 quirements.
19 "SEC. 2624. REIMBURSEMENT.
20
"Certified nursing homes shall accept payment for serv-
21 ices rendered under this part as payment in full and shall not
22 be allowed to pass on additional charges to beneficiaries for
23 covered services.
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51
1 "SEC. 2625. RELATIONSHIP TO OTHER ENTITLEMENT PRO-
2
GRAMS.
3
"Notwithstanding any other provision of law, in the
4 case of any service covered under this part that is also cov-
5 ered under any other Federally administered entitlement pro-
6 gram, the Secretary shall act as a secondary payer under this
7 part.
8
"PART D-INSURANCE COVERAGE FOR NURSING
9
HOME CARE THAT EXCEEDS 6 MONTHS
10 "SEC. 2631. ESTABLISHMENT OF FEDERAL LONG-TERM CARE
11
INSURANCE PROGRAM.
12
"The Secretary shall establish an optional insurance
13 program for individuals 45 and over to cover nursing home
14 stays that exceed 6 months.
15 "SEC. 2632. ELIGIBILITY.
16
"(a) DETERMINATION.-
17
"(1) IN GENERAL.-A Screening Agency shall
18
determine whether an individual is eligible to receive
19
benefits covered under this part.
20
"(2) SCREENING TOOL.-The agency shall use
21
the same screening the first 6 months of nursing home
22
care under part C in order to determine the continued
23
need of an individual for nursing home care and there-
24
fore eligibility for benefits under this part.
25
"(3) PERIODIC EVALUATION.-The Case Man-
26
agement Agency shall continue to make such an eval-
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52
1
uation periodically, pursuant to regulations of the Sec-
2
retary, as long as an individual remains in a nursing
3
home.
4
"(b) ELECTION OF COVERAGE.-
5
"(1) IN GENERAL.-Subject to the other provi-
6
sions of this subsection, an individual shall have the
7
option to purchase coverage under this part at 45
8
years of age or at 65 years of age.
9
"(2) INITIAL YEAR.-During the 1-year period
10
beginning on the effective date of this part, an individ-
11
ual who is 45 years of age or over shall be eligible to
12
purchase insurance under this part, except that such an
13
individual shall not be eligible to purchase insurance
14
while confined to a hospital or nursing home or within
15
6 months after a period of confinement in a nursing
16
home or 90 days after a period of confinement in a
17
hospital.
18
"(3) EXTENSION BEYOND INITIAL YEAR.-If an
19
individual is confined to a nursing home or hospital
20
during a period that extends beyond the first year after
21
the effective date of this part, an individual shall be eli-
22
gible to enroll in the program established by this part
23
during the 60-day period beginning after the individ-
24
ual's first spell of illness.
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53
1
"(4) SUBSEQUENT YEARS.-During years subse-
2
quent to the period referred to in paragraph (2), an in-
3
dividual shall be eligible to purchase insurance under
4
this part within 6 months of the 45th or 65th birthday
5
of the individual.
6
"(5) ACTIVATION OF BENEFITS.-To receive cov-
7
erage under the insurance program established by this
8
part, an individual shall have purchased such coverage
9
at least 1 month prior to admission to a nursing facili-
10
ty, unless the reason for the need of services is because
11
of an accident or stroke subsequent to the date that
12
such individual signed up for coverage under this part.
13 "SEC. 2633. PREMIUM RATES.
14
"(a) IN GENERAL.-The Secretary shall determine one
15 premium rate for individuals electing to purchase coverage
16 under this part at age 45 (or between ages 45 and 64 during
17 the initial enrollment period) and a separate rate for those
18 who elect such coverage at age 65 (or at age 65 and over
19 during the initial enrollment period).
20
"(b) REVISION.-The Secretary shall revise the premi-
21 ums annually.
22
"(c) RATES.-In developing premium rates under the
23 program established by this part, the Secretary shall establish
24 rates that are expected to cover 45 percent of the estimated
S 2163 IS
54
1 costs of nursing home stays that exceed 6 months for those
2 individuals enrolled in the program.
3
"(d) COST SHARING FOR LOW-INCOME INDIVID-
4 UALS.-
5
"(1) IN GENERAL.-Subject to paragraph (2), the
6
Secretary shall pay-
7
"(A) an amount equal to 100 percent of the
8
amount of the premium charged an eligible indi-
9
vidual under this section if the income of the indi-
10
vidual does not exceed 100 percent of the poverty
11
line for a single individual (as defined in section
12
673(2) of the Community Services Block Grant
13
Act (42 U.S.C. 9902(2)));
14
"(B) an amount equal to 75 percent of the
15
amount of the premium charged an eligible indi-
16
vidual under this section if the income of the indi-
17
vidual is between 100 percent and 150 percent of
18
the poverty line for a single individual (as defined
19
in section 673(2) of the Community Services
20
Block Grant Act (42 U.S.C. 9902(2))); and
21
"(C) an amount equal to 50 percent of the
22
amount of the premium charged an eligible indi-
23
vidual under this section if the income of the indi-
24
vidual is between 150 percent and 200 percent of
25
the poverty line for a single individual (as defined
S
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55
1
in section 673(2) of the Community Services
2
Block Grant Act (42 U.S.C. 9902(2))).
3
"(2) MINIMUM PAYMENT.-Notwithstanding
4
paragraph (1), an eligible individual who elects to pur-
5
chase insurance under this part shall pay not less than
6
$5 per month as part of the premium for such insur-
7
ance.
8
"SEC. 2634. BENEFITS.
9
"(a) TYPES.-An eligible individual who elects to pur-
10 chase insurance under this part shall be eligible to receive
11 from a nursing facility for an unlimited period of time (contin-
12 gent on the continued need of the individual for services)-
13
"(1) nursing care, provided by or under the super-
14
vision of a registered professional nurse;
15
"(2) physical, occupational, or speech therapy fur-
16
nished by the facility or by others under arrangements
17
with the facility;
18
"(3) medical social services;
19
"(4) drugs, biologicals, supplies, appliances, and
20
equipment for use in the facility, that are ordinarily
21
furnished by the facility for the care and treatment of
22
inpatients;
23
"(5) medical services of interns and residents-in-
24
training under an approved teaching program of a hos-
25
pital with which the facility has in effect a transfer
S
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56
1
agreement and other diagnostic or therapeutic services
2
provided by a hospital with which the facility has in
3
effect a transfer agreement; and
4
"(6) such other health services necessary to the
5
health of patients as are generally provided by nursing
6
facilities.
7
"(b) DURATION.-The duration of benefits covered
8 under this part shall be unlimited as long as the Case Man-
9 agement Agency determines, through its periodic review of a
10 patient, that the patient continues to require nursing home
11 services.
12 "SEC. 2635. QUALIFIED SERVICE PROVIDERS.
13
"(a) IN GENERAL-Covered nursing home services
14 under this part shall be provided by qualified service
15 providers.
16
"(b) TYPES.-A provider shall be considered a qualified
17 service provider under this part if the provider is a nursing
18 facility that is certified by the State and meets the require-
19 ments of this part and any other standards established by the
20 Secretary by regulation for the safe and efficient provision of
21 services covered under this part.
22 "SEC. 2636. REIMBURSEMENT.
23
"(a) AMOUNT.-Monthly reimbursement for nursing
24 home services under this part shall be 65 percent of the
25 amount the Secretary determines to be reasonable and appro-
S 2163 IS
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1 priate to cover the cost of care provided under this part,
2 taking into account the average cost of providing appropriate
3 care in the most efficient manner.
4
"(b) PROSPECTIVE PAYMENT.-To the extent feasible,
5 the Secretary shall establish a prospective payment mecha-
6 nism for payment for nursing home services under this part
7 that takes into account the expected resource utilization of
8 individual patients based on their degree of disability and
9 other factors determining service requirements.
10
"(c) ROOM AND BOARD.-
11
"(1) IN GENERAL.-Notwithstanding section
12
2632(b)(2), payment for room and board under this part
13
shall be made by an individual participating in the pro-
14
gram established by this part for those days spent in a
15
nursing facility beyond 6 months.
16
"(2) MANNER OF PAYMENT.-Such payments for
17
room and board shall be made by an individual directly
18
to the nursing facility.
19
"(3) RATES.-Charges for room and board shall
20
be 35 percent of the average per diem rate paid by the
21
Secretary to nursing facilities receiving reimbursement
22
under this part.
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1
"PART E-TRAINING AND RESEARCH
2 "SEC. 2641. GRANTS FOR TRAINING FOR HOME AND COMMUNI-
3
TY-BASED CARE FOR THE ELDERLY.
4
"(a) IN GENERAL.-The Secretary shall make grants to
5 schools of nursing, social work, allied health, and public
6 health of accredited universities to develop and conduct pro-
7 grams to train individuals in the provision, supervision, plan-
8 ning, and analysis of home and community-based care and
9 nursing home care for the elderly, disabled, and chronically ill
10 children and in the administration of such programs.
11
"(b) USE OF FUNDS.-Funding made available under
12 this section may be used for curriculum development, faculty
13 support, and traineeships and fellowships.
14
"(c) GRANT PREFERENCES.-In awarding grants under
15 this section, the Secretary shall give a preference to pro-
16 grams that-
17
"(1) provide for the development or conduct of
18.
programs for continuing education and certification of
19
professionals currently working in the field of geriatric
20
health in the provision of services to the chronically
21
impaired and working in the field of pediatric care spe-
22
cialization in the provision of care services to chron-
23
ically ill, disabled, and medical technology dependent
24
children;
25
"(2) have established or will establish affiliations
26
with nursing homes, agencies providing home and com-
S
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59
1
munity-based care, senior citizen centers, adult day
2
care centers, and other institutions and agencies pro-
3
viding health and social services to the impaired elder-
4
ly, for the purpose of providing in-service training to
5
individuals being trained at the grant-receiving institu-
6
tion and technical assistance to the institution provid-
7
ing services; and
8
"(3) have established or will establish affiliations
9
with programs of geriatric training based in accredited
10
medical schools or schools of nursing, or both.
11
"(d) AUTHORIZATION OF APPROPRIATIONS.-There
12 are authorized to be appropriated to carry out this section
13 $15,000,000 for fiscal year 1991, $20,000,000 for fiscal year
14 1992, and $25,000,000 for fiscal year 1993.
15 "SEC. 2642. GRANTS FOR HOME HEALTH AIDES.
16
"(a) IN GENERAL.-The Secretary shall make grants to
17 State approved programs (that meet requirements established
18 by the Secretary relating to minimum course hours, curricu-
19 lum content, competency evaluation, and qualifications of in-
20 structors) to develop and conduct programs to train individ-
21 uals in the provision of home health aide services. Such train-
22 ing programs shall be designed and conducted according to
23 guidelines and requirements established by the Secretary by
24 regulation.
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60
1
"(b) GRANT PREFERENCES.-Preferene shall be given
2 to programs that have established or will have established
3 affiliations with nursing homes, agencies providing home and
4 community-based care, senior citizen centers, adult day
5 health care centers, and other institutions providing health
6 and social services to the impaired elderly, for the purpose of
7 providing in-service training to individuals being trained at
8 the grant-receiving program and technical assistance to the
9 institution providing services.
10
"(c) AUTHORIZATION OF APPROPRIATIONS.-There
11 are authorized to be appropriated to carry out this section
12 $10,000,000 for each of the fiscal years 1991 and 1992 and
13 $25,000,000 for fiscal year 1993.
14 "SEC. 2643. GRANTS FOR MODEL CONSUMER TRAINING PRO-
15
GRAMS.
16
"(a) IN GENERAL.-The Secretary shall make grants
17 available to accredited university schools of nursing to devel-
18 op model consumer training programs. Such programs shall
19 provide information and training about the delivery of home
20 care services for caregivers as well as general information
21 about the home and community-based care service system for
22 consumers or potential consumers of home care or home
23 health services, or both, pursuant to regulations established
24 by the Secretary.
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61
1
"(b) AUTHORIZATION OF APPROPRIATIONS.-There
2 are authorized to be appropriated to carry out this section
3 $5,000,000 for fiscal year 1991, $10,000,000 for fiscal year
4 1992, and $15,000,000 for fiscal year 1993.
5 "SEC. 2644. CENTERS FOR LONG-TERM CARE PLANNING AND
6
TECHNICAL ASSISTANCE.
7
"(a) IN GENERAL.-The Secretary shall through grants
8 or contracts, or both, assist public or private nonprofit enti-
9 ties in meeting the costs of planning and developing new cen-
10 ters, and operating existing and new centers, for multidisci-
11 plinary health planning development and assistance under
12 this section for the purpose of-
13
"(1) assisting the Secretary in carrying out this
14
part;
15
"(2) providing such technical and consulting as-
16
sistance as States may require;
17
"(3) conducting research, studies, and analysis of
18
planning and resource development for the provision of
19
long-term care services; and
20
"(4) developing long-term care planning approach-
21
es, methodologies, policies, and standards.
22
"(b) NUMBER OF CENTERS.-The Secretary shall pro-
23 vide assistance under this section SO that at least 6 such cen-
24 ters shall be in operation by January 1, 1992.
S 2163 IS
62
1
"(c) CASE-MANAGEMENT AGENCIES.-Agencies as-
2 sisted under this section-
3
"(1) may enter into arrangements with Case Man-
4
agement Agencies for the provision of such services as
5
may be appropriate and necessary in assisting the
6
agencies in performing their functions under this part;
7
and
8
"(2) shall develop and use methods (satisfactory to
9
the Secretary) to disseminate to such agencies long-
10
term care planning approaches, methodologies, policies,
11
and standards.
12
"(d) STAFF.-
13
"(1) DIRECTOR.-Each center shall have a full-
14
time director who possesses a demonstrated capacity
15
for substantial accomplishment and leadership in the
16
field of planning and resource development in the area
17
of long-term care.
18
"(2) ADDITIONAL STAFF.-Each center shall
19
employ such other additional staff as may be appropri-
20
ate. The staff of the center shall meet such additional
21
requirements as the Secretary may by regulation pre-
22
scribe.
23
"(e) AUTHORIZATION OF APPROPRIATIONS.-There
24 are authorized to be appropriated to carry out this section
S
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63
1 $10,000,000 for fiscal year 1991 and $15,000,000 for each
2 of the fiscal years 1992 and 1993.
3
"PART F-DEMONSTRATION PROJECTS
4 "SEC. 2651. DEMONSTRATION PROJECTS FOR SERIOUSLY MEN-
5
TALLY ILL INDIVIDUALS.
6
"(a) IN GENERAL.-The Secretary shall conduct at
7 least 5 (but not more than 10) demonstration projects to de-
8 termine the relative effectiveness, cost, and impact on quality
9 of long-term home care of using different models of providing
10 and reimbursing long-term home care services for seriously
11 mentally ill individuals and family caregivers.
12
"(b) DEFINITION.-As used in this section, the term
13 'seriously mentally ill individual" means an individual who is a
14 licensed mental health professional in the individual's State of
15 residence certifies—
16
"(1) has schizophrenia, bipolar or unipolar disor-
17
der or other significant mental illness that restrict the
18
ability of the individual to function in activities of daily
19
living, employment, and social interaction;
20
"(2) has been previously institutionalized or is at
21
risk of being institutionalized in the absence of the
22
services provided under this section; and
23
"(3) is not institutionalized at the time of the
24
certification.
S 2163 IS
64
1
"(c) REQUIREMENTS.-Demonstration projects con-
2 ducted under this section shall-
3
"(1) each be conducted over a period of 3 years;
4
"(2) be conducted in sites that are chosen to be
5
geographically diverse and include at least one rural
6
site;
7
"(3) be sensitive to the needs of racial and ethnic
8
minorities;
9
"(4) include outreach and case management ac-
10
tivities;
11
"(5) be responsive to family needs and concerns
12
and appropriately involve and consult with family
13
members regarding the provision of services under this
14
section;
15
"(6) specify, at the time of application, specific
16
outcome expectations to be met by the project and
17
identify appropriate mechanisms for measuring such
18
outcomes; and
19
"(7) include testing the use of different agencies
20
as Case Management Agencies and providing for the
21
selection of such agencies in consultation with the
22
Comptroller General.
23
"(d) OTHER projects con-
24 ducted under this subsection may-
S
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65
1
"(1) provide services or reimbursement for nursing
2
care, homemaker or homehealth aide services, psycho-
3
social services, medical services, including the provi-
4
sion, monitoring, and testing of necessary medications,
5
client and family education, training, and counseling,
6
respite care, crisis intervention, information and refer-
7
ral services, and rehabilitation; and
8
"(2) provide services to seriously mentally ill indi-
9
viduals or provide services to home caregivers (includ-
10
ing family members) when such services augment and
11
support home caregivers in the care of seriously men-
12
tally ill individuals.
13
"(e) EVALUATION.-The Secretary shall provide for the
14 evaluation of the projects on a concurrent basis and shall
15 prepare and submit to the appropriate Committees of Con-
16 gress, not later than 18 months after the initiation of the
17 projects and on the completion of the projects, a report on the
18 findings of the evaluation. Such evaluation shall measure the
19 cost and effectiveness of funded projects against the outcome
20 expectations identified in the initial applications and include
21 relevant data on client and family satisfaction and perceived
22 benefits, together with such additional information as the
23 Secretary may consider appropriate.
24
"(f) AUTHORIZATION OF APPROPRIATIONS.-There
25 are authorized to be appropriated to carry out this section for
S 2163 IS
66
1 each of the fiscal years 1991, 1992, and 1993, not to exceed
2 $10,000,000 to carry out demonstration projects under this
3 section and not to exceed $1,000,000 to carry out the eval-
4 uation of such projects under subsection (e).
5 "SEC. 2652. DEMONSTRATION PROJECTS FOR WORKING AGE
6
INDIVIDUALS WITH SEVERE FUNCTIONAL LIMI-
7
TATIONS.
8
"(a) IN GENERAL.-The Secretary shall conduct at
9 least 5 and not more than 10 demonstration projects to deter-
10 mine the feasibility of providing long-term home care benefits
11 for working-age individuals with severe functional limitations
12 (as defined in subsection (b)).
13
"(b) DEFINITION.-As used in this section, the term
14 'working-age individual with severe functional limitations'
15 means an individual who is over 18 years of age, but under
16 65 years of age, who is not entitled to benefits under title
17 ХѴШ of the Social Security Act but who is a chronically ill
18 individual, within the meaning of section 1861(jj)(1)(A)(i) of
19 such Act.
20
"(c) REQUIREMENTS.-Demonstration projects under
21 this section-
22
"(1) shall include, in the items and services cov-
23
ered under long-term home care, personal care serv-
24
ices, short term respite, and emergency assistance and
25
shall permit coverage of items and services provided
S
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67
1
either by home health agencies or by other qualified
2
persons;
3
"(2) may provide for limited cost-sharing for long-
4
term home care;
5
"(3) shall provide that payment rates for long-
6
term home care provided by persons other than home
7
health agencies shall be comparable to the payment
8
rates for such care provided by home health agencies;
9
"(4) shall provide that each plan of care for an in-
10
dividual shall take into account the capability of the in-
11
dividual to direct the long-term home care of the indi-
12
vidual and to train persons in providing that care;
13
"(5) shall test the effectiveness of consumer-di-
14
rected living centers that are primarily engaged in as-
15
sisting working age individuals with severe functional
16
limitations in maximizing their independence;
17
"(6) shall, to the maximum extent practicable,
18
cover working age individuals with severe functional
19
limitations who-
20
"(A) are at imminent risk of institutionaliza-
21
tion within 30 days if such individual is not pro-
22
vided long-term home care;
23
"(B) are institutionalized but who, if provid-
24
ed long-term home care, could be discharged from
25
the institution; or
S
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68
1
"(C) need long-term home care to secure or
2
continue employment, to increase independence,
3
to enable present caregivers to secure or continue
4
employment, or to stabilize families;
5
"(7) shall include projects under which personal
6
care services are made available away from the pri-
7
mary residence of the individual, as well as at that res-
8
idence; and
9
"(8) shall include projects under which family
10
members may be employed as caregivers if the family
11
members would be employed if not providing such care
12
or if the individual requires more than 20 hours a week
13
of long-term home care.
14
"(d) CONSULTATION, EVALUATION, REPORT.-
15
"(1) CONSULTATION.-In designing and evaluat-
16
ing the projects conducted under this section, the Sec-
17
retary shall consult with experts in the field of disabil-
18
ity policy and independent living and with groups rep-
19
resenting working age individuals with severe function-
20
al limitations.
21
"(2) EVALUATION.-The Secretary shall provide
22
for the evaluation of the projects conducted under this
23
section on a concurrent basis. Such evaluation shall in-
24
clude an evaluation of the size of the demand, cost, rel-
25
ative effectiveness, and impact on quality of life, of
S
2163 IS
69
1
providing long-term home care to working age individ-
2
uals with severe functional limitations.
3
"(3) REPORT.-Not later than 18 months after
4
the date on which the projects conducted under this
5
section are completed, the Secretary shall prepare and
6
submit, to the appropriate Committees of Congress, a
7
report concerning the findings of the evaluation under
8
paragraph (2). The Secretary shall include in such
9
report recommendations for appropriate legislative
10
changes.
11
"(e) AUTHORIZATION OF APPROPRIATIONS.-There
12 are authorized to be appropriated -
13
"(1) for each of fiscal years 1991, 1992, and
14
1993 not to exceed $10,000,000 to carry out demon-
15
stration projects under this section; and
16
"(2) for the 3-fiscal-year period beginning with
17
fiscal year 1991 not to exceed $1,000,000 to carry out
18
the evaluation of such projects under this section.
19 "SEC. 2653. GENERAL AUTHORITY.
20
"(a) PAYMENTS.-Payments under demonstration
21 projects under this part may be made in advance or by way of
22 reimbursement, as may be determined by the Secretary, and
23 shall be made in such installments and on such conditions as
24 the Secretary finds necessary to carry out the purpose of this
25 section.
S 2163 IS
70
1
"(b) SOCIAL SECURITY Аст.-The Secretary may
2 waive such requirements of title ХѴШ of the Social Security
3 Act as may be required to carry out demonstration projects
4 under this section.".
5 SEC. 3. CONFORMING AMENDMENTS.
6
(a) Section 305(i) of the Public Health Service (42
7 U.S.C. 242c(i)) is amended by striking out "2511" each
8 place it appears and inserting in lieu thereof "2713".
9
(b) Sections 406(a)(2), 480(a)(2), 485(a)(2), and 505(a)(2)
10 of such Act (42 U.S.C. 284a(a)(2), 287a(a)(2), 287c-2(a)(2),
11 and 290aa-3a(a)(2)) are each amended by striking out
12 "2101" and inserting in lieu thereof "2701".
13
(c) Sections 465(f) and 497 of such Act (42 U.S.C. 286f
14 and 289f) are each amended by striking out "2601" and in-
15 serting in lieu thereof "2701".
16 SEC. 4. EFFECTIVE DATE.
17
(a) IN GENERAL.-Except as otherwise provided in this
18 section, this Act and the amendments made by this Act shall
19 become effective on the date of enactment of this Act.
20
(b) COVERAGE OF HOME AND COMMUNITY-BASED
21 CARE SERVICES.-Part B of title XXVI of the Public
22 Health Service Act (as added by section 2 of this Act) shall
23 require payment for services provided in accordance with
24 such part after 1 year after the date of enactment of this Act.
S
2163 IS
71
1
(c) COVERAGE FOR NURSING HOME CARE.-Part C of
2 such title shall apply to nursing home care provided in ac-
3 cordance with such part on or after January 1 of the third
4 year that begins after the date of enactment of this Act.
5
(d) FEDERAL LONG-TERM CARE INSURANCE PRO-
6 GRAM.-Part D of such title shall require the establishment
7 of a Federal long-term care insurance program in accordance
8 with such part on and after January of the second year that
9 begins after the date of enactment of this Act. Payment for
10 nursing care under such part shall begin on January 1 of
11 third year that begins after the date of enactment of this Act.
12
(e) TRAINING AND RESEARCH.-Part E of such title
13 shall require training and research programs in accordance
14 with such part on and after January 1, 1991.
o
S 2163 IS
I
101ST CONGRESS
2D SESSION
H.R.4070
To provide for universal access to basic group health benefits coverage and to
remove barriers and provide incentives in order to make such coverage more
affordable.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 22, 1990
Mr. GRANDY (for himself, Mr. GOODLING, and Mr. BUNNING) introduced the fol-
lowing bill; which was referred jointly to the Committees on Education and
Labor, Ways and Means, and Energy and Commerce
A
BILL
To provide for universal access to basic group health benefits
coverage and to remove barriers and provide incentives in
order to make such coverage more affordable.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4
This Act may be cited as the "Universal Health Bene-
5 fits Empowerment and Partnership Act of 1990".
6 SEC. 2. FINDINGS AND DECLARATION OF POLICY.
7
(a) FINDINGS.-The Congress finds that-
2
1
(1) the health care delivery system of the United
2
States provides most Americans with a level of access
3
and quality of care that is unsurpassed;
4
(2) for a significant minority of Americans, the
5
system works less well because they cannot obtain or
6
otherwise do not have basic health care coverage under
7
either public or private programs;
8
(3) these individuals represent a diversity of situa-
9
tions for which there is no single solution;
10
(4) assuring access to basic health care coverage
11
and quality care for these individuals is a compelling
12
national priority that will require commitments from
13
both the private and public sectors;
14
(5) the most practical and effective solutions for
15
these access problems are ones that-
16
(A) preserve the pluralistic base of the health
17
care delivery system of the United States;
18
(B) emphasize incentives, innovation, and the
19
removal of current barriers to access; and
20
(C) recognize that both the complexity of the
21
problem and the existence of fiscal constraints
22
means that responsibility must be shared among
23
employers, employees, insurers, providers, and
24
patients, as well as Federal, State, and local
25
governments;
HR 4070 IH
3
1
(6) Federal efforts need to be closely coordinated
2
with others who share in the responsibility for improv-
3
ing access to basic health care services;
4
(7) Federal efforts need to reflect not only the di-
5
versity of interested parties but also the diversity of
6
areas where action is appropriate, including public
7
health, basic group health coverage, State initiatives,
8
medical malpractice laws, Medicaid, and tax incentives;
9
and
10
(8) improving access requires dealing with many
11
of the most difficult problems in the health system, in-
12
cluding-
13
(A) the escalating costs, State mandated
14
health benefits, and other factors that have made
15
health care coverage less affordable for many em-
16
ployers and individuals, especially the near poor
17
who need more creative workplace and public op-
18
tions to be able to obtain basic health care cover-
19
age; and
20
(B) the inability of many individuals to pro-
21
tect themselves against catastrophic health care
22
expenses because preexisting conditions make
23
them "uninsurable".
24
(b) PURPOSES.-Therefore the Congress declares the
25 purposes of this Act to be to provide a sound, flexible, and
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1 workable Federal framework to simultaneously address the
2 issues of access to basic health care coverage and the afford-
3 ability of such coverage, with an emphasis on improving
4 health care quality by-
5
(1) empowering employers, employees, and other
6
individuals to obtain more affordable basic health care
7
coverage, and
8
(2) providing incentives for private and public-pri-
9
vate partnership arrangements to be established for
10
such purposes.
11
(c) DECLARATION OF POLICY.-In carrying out such
12 purposes, it is the policy of this Act to-
13
(1) provide universal access to basic group health
14
coverage for all Americans under plans offered by em-
15
ployers or, in the case in which such coverage is un-
16
available to employees and other individuals from pri-
17
vate sources or existing public programs, under a State
18
health benefits system; and
19
(2) make such basic health coverage more afford-
20
able-
21
(A) by removing barriers and encouraging
22
"group" plans and arrangements to spread risk
23
and lower expenses;
24
(B) by preempting State health benefit man-
25
dates, thereby encouraging group health coverage
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5
1
providers to offer lower cost basic coverage to the
2
uninsured;
3
(C) by preempting State barriers to the pro-
4
viding of managed care, thereby encouraging com-
5
petition, innovation of cost-control approaches,
6
and quality review;
7
(D) by encouraging the development of treat-
8
ment practice guidelines and outcomes research to
9
aid in reducing unnecessary services, increasing
10
quality care, and reducing malpractice costs;
11
(E) by eliminating tax inequities and
12
barriers-
13
(i) to the full deductibility of contribu-
14
tions to health plans covering the self-em-
15
ployed, and
16
(ii) to the establishment of soundly fi-
17
nanced multiple employer basic group health
18
plans.
19 SEC. 3. UNIVERSAL COVERAGE UNDER GROUP HEALTH PLANS
20
AND STATE HEALTH BENEFITS SYSTEMS.
21
(a) IN GENERAL-Subtitle B of title I of the Employee
22 Retirement Income Security Act of 1974 is amended-
23
(1) by striking the heading for part 6 and inserting
24
the following:
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1
"Subpart E-Continuation Coverage Requirements";
2
(2) by redesignating sections 601 through 608 as
3
sections 641 through 648, respectively; and
4
(3) by inserting after part 5 the following:
5
"PART 6-UNIVERSAL COVERAGE UNDER GROUP HEALTH PLANS
6
AND STATE HEALTH BENEFITS SYSTEMS
7
"Subpart A-General Provisions
8 "SEC. 601. DEFINITIONS AND SPECIAL RULES.
9
"(a) IN GENERAL.-For purposes of this part-
10
"(1) GROUP HEALTH PLAN.-The term 'group
11
health plan' means an employee welfare benefit plan
12
providing medical care (as defined in section 213(d) of
13
the Internal Revenue Code of 1986) to participants or
14
beneficiaries directly or through insurance, reimburse-
15
ment, or otherwise.
16
"(2) BASIC GROUP HEALTH PLAN.-
17
"(A) IN GENERAL.-The term 'basic group
18
health plan' means a group health plan, or any
19
combination of two or more group health plans,
20
which includes at least a basic health benefits
21
provision.
22
"(B)
TREATMENT
OF
UNINSURABLE
23
RISKS.-A plan which excludes from coverage
24
any individual (who would otherwise be eligible
25
for coverage) solely because the individual is an
26
uninsurable risk shall not be treated as a basic
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1
group health plan, unless the requirements of sub-
2
paragraph (D) are met for purposes of this sub-
3
paragraph with respect to such individual.
4
"(C) TREATMENT OF MATERIAL PRE-EX-
5
ISTING CONDITIONS.-A plan which provides
6
coverage to any individual under a substantial re-
7
striction based on a material pre-existing condition
8
shall not be treated as a basic group health plan,
9
unless the requirements of subparagraph (D) are
10
met for purposes of this subparagraph with re-
11
spect to such individual.
12
"(D) EXEMPTION WHERE ADEQUATE
13
STATE HEALTH BENEFITS SYSTEM OR ALTER-
14
NATIVE SYSTEM IS AVAILABLE.-The require-
15
ments of this subparagraph are met with respect
16
to any individual-
17
"(i) for purposes of subparagraph (B), if
18
such individual is eligible for coverage under
19
a health benefits system established and
20
maintained by a State under terms and con-
21
ditions in accordance with subpart C (or any
22
alternative basic health benefits system with
23
respect to which the Secretary of Health and
24
Human Services has made a determination
25
pursuant to section 4 of the Universal Health
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1
Benefits Empowerment and Partnership Act
2
of 1990 relating to the element of coverage
3
described in section 4(a)(2)(B)(i) of such Act
4
(relating to treatment of individuals as unin-
5
surable risks)), or
6
"(ii) for purposes of subparagraph (C), if
7
such individual is eligible for coverage for
8
the material pre-existing condition referred to
9
in subparagraph (C) under a health benefits
10
system established and maintained by a State
11
under terms and conditions in accordance
12
with subpart C (or any alternative basic
13
health benefits system with respect to which
14
the Secretary of Health and Human Services
15
has made a determination pursuant to section
16
4 of the Universal Health Benefits
17
Empowerment and Partnership Act of 1990
18
relating to the element of coverage described
19
in section 4(a)(2)(B)(ii) of such Act (relating
20
to treatment of material pre-existing condi-
21
tions)).
22
"(3) BASIC HEALTH BENEFITS PROVISION.-The
23
term 'basic health benefits provision' means, with re-
24
spect to any plan or combination of plans, an arrange-
25
ment which-
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9
1
(A) provides to individuals provided coverage
2
under such plan or combination of plans, directly
3
or through insurance, reimbursement, or other-
4
wise, medical care (as defined in section 213(d) of
5
the Internal Revenue Code of 1986)-
6
"(i) which consists of services deter-
7
mined by the Secretary of Health and
8
Human Services, under regulations pre-
9
scribed by such Secretary pursuant to section
10
3(c) of the Universal Health Benefits
11
Empowerment and Partnership Act of 1990,
12
to consist of basic health care services (in-
13
cluding physician's, inpatient hospital, and
14
outpatient hospital services which are preva-
15
lent under group health plans and other serv-
16
ices which may be necessary for basic health
17
care), and
18
"(ii) which is covered at a percentage of
19
cost determined by such Secretary under
20
such regulations (by means of deductibles,
21
coinsurance, and other limits on covered
22
services) to be not less than a percentage
23
which is, taking into account the population
24
covered and the extent of cost currently cov-
HR 4070 IH-2
10
1
ered under group health plans, adequate to
2
meet basic health care needs, and
3
"(B) in the case of any individual described
4
in paragraph (2) (B) or (C) in relation to a basic
5
group health plan maintained by the employer of
6
such individual (or of the person of whom such in-
7
dividual is a dependent), requires contributions by
8
the employer of not less than the amount provided
9
under the plan with respect to individuals covered
10
under such plan who are similarly situated, disre-
11
garding any condition under the plan relating to
12
uninsurable risks (in the case of an individual de-
13
scribed in paragraph (2)(B)) or to material pre-ex-
14
isting conditions (in the case of an individual de-
15
scribed in paragraph (2)(C)).
16
"(4) DEPENDENT.-The term 'dependent' means,
17
with respect to any individual, any person who-
18
"(A) is the spouse or surviving spouse of the
19
individual, or
,
20
"(B) is, under regulations of the Secretary, a
21
child of such individual who-
22
"(i) is under 18 years of age,
23
"(ii) is under 23 years of age and a full-
24
time student, or
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1
"(iii) is otherwise dependent on such
2
individual.
3
"(5) EMPLOYER.-The term 'employer' shall
4
have the meaning applicable under section 3(5), except
5
that such term shall include any State (or political sub-
6
division thereof), or any agency or instrumentality of 1
7
or more of the foregoing.
8
"(6) ELIGIBLE INDIVIDUAL.-The term 'eligible
9
individual' means any employee or dependent thereof
10
who is not covered under a basic group health plan
11
which is maintained by the employer and to which the
12
employer makes contributions, unless such employee or
13
dependent-
14
"(A) was eligible for coverage under such
15
plan but such coverage was declined under such
16
plan, or
17
"(B) is excluded from coverage under the
18
plan as an uninsurable risk but is eligible for unin-
19
surable risk coverage under any health benefits
20
system established and maintained by a State in
21
accordance with subpart C (or any alternative
22
basic health benefits system with respect to which
23
the Secretary of Health and Human Services has
24
made a determination pursuant to section 4 of the
25
Universal Health Benefits Empowerment and
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12
1
Partnership Act of 1990 relating to the element
2
of coverage described in section 4(a)(2)(B)(i) of
3
such Act (relating to treatment of individuals as
4
uninsurable risks)).
5
"(7) UNINSURABLE RISK.-An individual shall be
6
deemed to have been rejected for coverage by a basic
7
group health plan or a health benefits system estab-
8
lished and maintained by a State as an uninsurable
9
risk' if the plan or system supports the denial of
10
coverage-
11
"(A) in such terms, or
12
"(B) in such other terms or under such cir-
13
cumstances as are, subject to such regulations as
14
the Secretary of Health and Human Services may
15
prescribe, reasonably equivalent to such a denial.
16
"(8) MATERIAL PRE-EXISTING CONDITION.-An
17
individual shall be deemed to have been provided cov-
18
erage by a basic group health plan, or by a health ben-
19
efits system established and maintained by a State,
20
under a restriction based on a 'material pre-existing
21
condition' if, subject to such regulations as the Secre-
22
tary of Health and Human Services may prescribe,
23
under the plan or system—
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1
"(A) benefits (which would otherwise be pay-
2
able) are not paid solely on the basis of a material
3
pre-existing condition, or
4
"(B) the costs for coverage of the individual
5
with a material pre-existing condition, to either an
6
employer or to the individual, are at a rate mate-
7
rially greater than costs for coverage of similarly
8
situated individuals without such a material pre-
9
existing condition, to the extent such costs are
10
payable to a third party.
11
"(b) CROSS-REFERENCES.-
12
"(1) GENERAL RULE.-Except as otherwise pro-
13
vided in this part, for definitions of terms used in this
14
part, see section 3.
15
"(2) SECRETARY.-Except with respect to refer-
16
ences specifically to the Secretary of Health and
17
Human Services, for the definition of 'Secretary', see
18
section 3(13).
19
"(3) REGULATIONS.-Except with respect to pro-
20
visions for which regulatory authority is specifically
21
provided to the Secretary of Health and Human Serv-
22
ices, for provisions governing regulatory authority
23
under this part, see section 505.
HR 4070 IH
14
1
"Subpart B-Required Coverage Options; Group Health
2
Payroll Deduction Plans
3 "SEC. 611. COVERAGE FOR ELIGIBLE INDIVIDUALS UNDER
4
BASIC GROUP HEALTH PLANS OR GROUP
5
HEALTH PAYROLL DEDUCTION PLANS.
6
"(a) REQUIREMENT THAT EMPLOYERS OFFER Cov-
7 ERAGE FOR ELIGIBLE INDIVIDUALS UNDER BASIC GROUP
8 HEALTH PLANS OR GROUP HEALTH PAYROLL DEDUC-
9 TION PLANS.-Each employer shall maintain with respect to
10 each eligible individual a basic group health plan under which
11 coverage of such individual may be elected or a group health
12 payroll deduction plan (as defined in section 612).
13
"(b) SPECIAL RULES.-
14
"(1) EXCLUSION OF CERTAIN EMPLOYERS.-
15
"(A) IN GENERAL.-This section shall not
16
apply to any employer for any plan year if, as of
17
the beginning of such plan year-
18
"(i) such employer (including any prede-
19
cessor thereof) has been an employer for less
20
than 2 years,
21
"(ii) such employer has no more than 2
22
individuals in such employer's employ, or
23
"(iii) no more than 2 individuals in such
24
employer's employ are not covered under
25
any basic group health plan.
HR 4070 IH
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1
"(B) EXCLUSION OF FAMILY MEMBERS.-
2
Under such procedures as the Secretary may pre-
3
scribe, any relative of an employer may be, at the
4
election of the employer, excluded from consider-
5
ation as an employee for purposes of this para-
6
graph. In the case of an employer that is not an
7
individual, an employee who is a relative of a key
8
employee (as defined in section 416(i)(1) of the In-
9
ternal Revenue Code of 1986) of the employer
10
may, at the election of the key employee, be con-
11
sidered a relative excludible under this subpara-
12
graph.
13
"(2) EXCLUSION OF CERTAIN TEMPORARY EM-
14
PLOYEES.-A plan shall not be treated as failing to
15
meet the requirements of this section solely because a
16
period of service by an employee of not more than 60
17
days is required under the plan for coverage of such
18
employee or any dependent thereof under the plan.
19 "SEC. 612. GROUP HEALTH PAYROLL DEDUCTION PLANS.
20
"(a) GENERAL RULE.-For purposes of this subpart,
21 the term 'group health payroll deduction plan' means a basic
22 group health plan under which amounts are deducted by the
23 employer from the employee's wages pursuant to an election
24 by the employee and paid as a contribution to such plan in
25 accordance with such regulations as the Secretary may pre-
HR 4070 IH
16
1 scribe relating to withholding procedures and timely payment
2 of premiums.
3
"(b) ELECTIONS.-
4
"(1) IN GENERAL.-Any election by an employee
5
under a group health payroll deduction plan shall
6
specify the amount which is to be deducted in relation
7
to the benefits provided under the plan. Any such elec-
8
tion may be revoked or changed by the employee
9
under the terms of the plan.
10
"(2) MANNER FOR MAKING OR REVOKING ELEC-
11
TIONS.-Any election under a group health payroll de-
12
duction plan (and any revocation or change of such an
13
election) shall be made in such form and in such
14
manner as the Secretary may by regulations prescribe.
15 "SEC. 613. AVAILABILITY OF COVERAGE UNDER STATE
16
HEALTH BENEFITS SYSTEMS.
17
"In any case in which there is in effect, as of the begin-
18 ning of a plan year of any group health payroll deduction
19 plan, an entity determined by the Secretary of Health and
20 Human Services to be a health benefits system which is es-
21 tablished and maintained by a State and meets the require-
22 ments of subpart C with respect to the employee, such plan
23 shall not be treated as failing to meet the requirements of
24 section 612(a) for such plan solely because the amounts de-
25 ducted are, under such plan, paid for such plan year or the
HR 4070 IH
17
1 succeeding plan year as a contribution to such a system ac-
2 cepting coverage of such employee rather than to such plan,
3 if a provider of group health plan coverage with respect to
4 the plan rejects an individual otherwise eligible for coverage
5 under such plan because of a requirement that a certain
6 number or percentage of individuals otherwise eligible for
7 coverage under the plan are not covered.
8
"Subpart C-State Health Benefits Systems
9 "SEC. 621. GENERAL REQUIREMENTS.
10
"(a) IN GENERAL.-For purposes of this part, a health
11 benefits system established and maintained by a State in ac-
12 cordance with this subpart is any system which-
13
"(1) is established by State law,
14
"(2) is administered by a nonprofit corporation
15
which is established by and regulated under the laws of
16
such State and with respect to which the requirements
17
of subsection (b) are met,
18
"(3) meets the reporting requirements of section
19
622,
20
"(4) meets the participation requirements of sec-
21
tion 623 with respect to residents of the State,
22
"(5) meets the benefit requirements of section
23
624,
24
"(6) meets the contribution requirements of sec-
25
tion 625, and
HR 4070 IH-3
18
1
"(7) provides coverage in accordance with subpart
2
D (relating to uninsurable risks and material pre-exist-
3
ing conditions) with respect to residents of the State.
4
"(b) GOVERNANCE OF SYSTEM.-The requirements of
5 this subsection are met with respect to a corporation referred
6 to in subsection (a)(2) if-
7
"(1) such corporation is governed by a Board of
8
Directors whose membership includes repesentatives of
9
at least employers, employee organizations, and provid-
10
ers of group health plan coverage, and
11
"(2) such corporation is subject under State law
12
to the supervision of an agency of the State which is
13
responsible for the regulation of providers of group
14
health plan coverage.
15 "SEC. 622. REPORTING REQUIREMENTS.
16
"(a) IN GENERAL.-A health benefits system estab-
17 lished and maintained by a State meets the reporting require-
18 ments of this section if the system maintains a program under
19 which the system provides, upon the request of group health
20 payroll deduction plans under which amounts are paid from
21 such plans to the system, such information held by the
22 system as the plans require to meet the requirements of part
23 1 of subtitle B of title I.
24
"(b) FORM OF REQUESTS.-Each system shall be re-
25 quired to process requests made under this section only if
HR 4070 IH
19
1 such requests are made in such form and manner as may be
2 prescribed in regulations of the Secretary.
3 "SEC. 623. PARTICIPATION REQUIREMENTS.
4
"(a) IN GENERAL.-A health benefits system estab-
5 lished and maintained by a State meets the participation re-
6 quirements of this section if the system provides that an indi-
7 vidual is provided coverage under the system if such individ-
8 ual-
9
"(1) is an eligible individual (as defined in section
10
601(a)(6)),
11
"(2) is an individual required to be provided cov-
12
erage under subpart E of this part or under title XXII
13
of the Public Health Service Act,
14
"(3) is an individual described in section 632, or
15
"(4) is an individual (other than an individual de-
16
scribed in paragraph (1), (2), or (3)) who is not covered
17
under any arrangement providing basic health care
18
services described in section 601(a)(3)(A),
19 and is not otherwise eligible for coverage under a basic group
20 health plan or under a plan for medical assistance under title
21 XIX of the Social Security Act.
22
"(b) EXCLUSIONS.-A health benefits system estab-
23 lished and maintained by a State does not meet the participa-
24 tion requirements of this section unless such system excludes
25 from coverage-
HR 4070 IH
20
1
"(1) except to the extent permitted under section
2
625(c)(3), individuals entitled to benefits under title
3
XVIII or XIX of the Social Security Act, or
4
"(2) inmates of public institutions.
5 "SEC. 624. BENEFITS REQUIREMENTS.
6
"(a) IN GENERAL.-A health benefits system estab-
7 lished and maintained by a State meets the benefits require-
8 ments of this section if the system provides medical care in
9 the form of at least the following options, available at the
10 election of the individual provided coverage:
11
"(1) BASIC AND CATASTROPHIC BENEFITS.-
12
Coverage of basic health care services (including physi-
13
cian's services, inpatient and outpatient hospital serv-
14
ices, and other services that may be necessary for basic
15
health care), including catastrophic coverage.
16
"(2) CATASTROPHIC ONLY COVERAGE.-Cata-
17
strophic coverage with respect to basic health care
18
services.
19
"(3) BENEFITS EQUIVALENT TO STATE EMPLOY-
20
EE BENEFITS.-Benefits which are equivalent to cov-
21
erage available to a substantial number of employees of
22
the State government.
23
"(b) COST CONTAINMENT AND QUALITY OF CARE.-A
24 health benefits system established and maintained by a State
25 shall, to the maximum extent practicable, taking into account
HR 4070 IH
21
1 quality of care, provide for a hospital precertification utiliza-
2 tion review program, constraint of costs to the extent practi-
3 cable through the use of appropriately managed care, and
4 such other cost containment procedures as may from time to
5 time be proven effective.
6
"(c) TREATMENT OF UNINSURABLE RISKS AND MATE-
7 RIAL PRE-EXISTING CONDITIONS.-In any case in which
8 the requirements of section 633 are met with respect to any
9 individual with respect to whom the system meets the re-
10 quirements of section 631, the requirements of subsection (a)
11 shall be treated as satisfied with respect to such individual.
12
"(d) DURATION OF COVERAGE.-Subject to section
13 623(b), coverage under a health benefits system established
14 and maintained by a State shall not terminate solely by
15 reason of the termination of a period of coverage required
16 under subpart E of this part or title XXII of the Public
17 Health Service Act.
18
"(e) COVERAGE UNDER STATE SYSTEM SECONDARY
19 TO COVERAGE UNDER EMPLOYEE BENEFIT PLANS.-Cov-
20 erage under a health benefits system established and main-
21 tained by a State with respect to any claim shall be second-
22 ary to coverage provided under any employee benefit plan
23 with respect to such claim.
HR 4070 IH
22
1
"SEC. 625. CONTRIBUTION REQUIREMENTS.
2
"(a) IN GENERAL.-Except as otherwise provided in
3 this section, a health benefits system established and main-
4 tained by a State meets the contribution requirements of this
5 section if the system does not require, for coverage of individ-
6 uals described in paragraphs (1) and (2) of section 623(a),
7 contributions in excess of levels determined-
8
"(1) on the basis of its own experience with re-
9
spect to covered individuals described in such para-
10
graphs (1) and (2), and
11
"(2) without regard to any coverage provided
12
under the system to individuals who are not described
13
in such paragraphs (1) and (2).
14
"(b) VARIANCES IN RATE LEVEL.-
15
"(1) SEPARATE SCHEDULE REQUIRED FOR CHIL-
16
DREN-ONLY COVERAGE.-A health benefits system es-
17
tablished and maintained by a State does not meet the
18
contribution requirements of this section unless the
19
system provides for a separate schedule of contribu-
,
20
tions with respect to children-only coverage.
21
"(2) OTHER VARIANCES PERMITTED.- health
22
benefits system established and maintained by a State
23
shall not be treated as failing to meet the requirements
24
of this section solely because the system otherwise pro-
25
vides for differing rates of contributions to reflect the
26
age, family composition, or income of the covered indi-
HR 4070 IH
23
1
vidual and the location at which the covered individual
2
is expected to normally receive medical care.
3
"(c) CERTAIN STATE AND OTHER CONTRIBUTIONS
4 PERMITTED.-A health benefits system established and
5 maintained by a State shall not be treated as failing to meet
6 the requirements of this section solely because the system
7 provides for-
8
"(1) payment by the State or any other entity of
9
part or all of the contribution with respect to any cov-
10
ered individual,
11
"(2) varying the amount of such payment based
12
on the individual's income or any other basis, or
13
"(3) payment by the State or any other entity of
14
all or part of monthly premiums for purposes of enroll-
15
ment under section 1818 or 1818A of the Social Secu-
16
rity Act, or of premiums under section 1916(c) of such
17
Act.
18
"(d) MAXIMIZED PARTICIPATION.-A health benefits
19 system established and maintained by a State shall be treated
20 as failing to meet the contribution requirements of this sec-
21 tion if the Secretary of Health and Human Services deter-
22 mines, under regulations prescribed by such Secretary and on
23 the basis of past experience, that, under such system, contri-
24 butions are not established and maintained in such form and
25 manner as to be promotive of participation in the system.
HR 4070 IH
24
1 "SEC. 626. RECIPROCITY AND RELIANCE BY STATES ON
2
OTHER STATE SYSTEMS.
3
"The requirements of the preceding provisions of this
4 subpart may be met with respect to any State by means of
5 reciprocity agreements between such State and any other
6 State with respect to which such requirements are met.
7 "SEC. 627. REGULATORY AUTHORITY OF SECRETARY OF
8
HEALTH AND HUMAN SERVICES.
9
"The Secretary of Health and Human Services shall
10 prescribe such regulations as such Secretary considers neces-
11 sary to carry out the provisions of this subpart (other than
12 section 622).
13
"Subpart D-State Coverage for Uninsurable Risks and
14
Material Pre-Existing Conditions
15 "SEC. 631. STATE COVERAGE FOR UNINSURABLE RISKS AND
16
PRE-EXISTING CONDITIONS.
17
"A health benefits system established and maintained by
18 a State provides coverage in accordance with this subpart if
19 such system-
20
"(1) meets the participation requirements of
21
section 632,
22
"(2) meets the benefits requirements of section
23
633, and
24
"(3) to the extent practicable and actuarially
25
sound, provides for separate accounting for such cover-
26
age SO as to separately account at least for individuals
HR 4070 IH
25
1
described in section 632(1)(A) and for individuals de-
2
scribed in section 632(2)(A).
3 "SEC. 632. PARTICIPATION REQUIREMENTS FOR UNINSUR-
4
ABLE RISKS AND MATERIAL PRE-EXISTING
5
CONDITIONS.
6
"A health benefits system established and maintained by
7 a State meets the participation requirements of this section if
8 the system meets the following requirements:
9
"(1) COVERAGE FOR UNINSURABLE RISKS.-The
10
system provides that an individual is provided coverage
11
under the system if such individual-
12
"(A) is an employee (or a dependent thereof)
13
and has been rejected for coverage under a basic
14
group health plan maintained by the employer or
15
by the system but would be eligible for such cov-
16
erage but for the rejection of such employee (or
17
dependent) as an uninsurable risk, or
18
"(B) is not an employee (or dependent) de-
19
scribed in subparagraph (A), and-
20
"(i) is rejected for coverage under the
21
system, or
22
"(ii) in the case of an individual not oth-
23
erwise eligible for coverage under a basic
24
group health plan, the system, or title XIX
25
of the Social Security Act, is rejected for
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26
1
coverage under any policy of insurance
2
which provides at least basic health care
3
services described in section 601(a)(3)(A),
4
but would be eligible for such coverage but for the
5
rejection of such individual as an uninsurable risk.
6
"(2) COVERAGE FOR MATERIAL PRE-EXISTING
7
CONDITIONS.-The system provides that an individual
8
is provided coverage under the system for any material
9
pre-existing condition if such individual-
10
"(A) is an employee (or a dependent thereof)
11
who is provided coverage under a basic group
12
health plan or the system under a substantial re-
13
striction based on such material pre-existing con-
14
dition, or
15
"(B) is not an employee (or dependent) de-
16
scribed in subparagraph (A), and-
17
"(i) is provided coverage under the
18
system under subpart C, or
19
"(ii) in the case of an individual not oth-
20
erwise eligible for coverage under a basic
21
group health plan, the system under subpart
22
C, or title XIX of the Social Security Act, is
23
provided coverage under a policy of insur-
24
ance which provides at least basic health
25
care services,
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1
but such coverage is provided under such a sub-
2
stantial restriction.
3 "SEC. 633. BENEFITS REQUIREMENTS FOR UNINSURABLE
4
RISKS AND MATERIAL PRE-EXISTING CONDI-
5
TIONS.
6
"A health benefits system established and maintained by
7 a State meets the benefits requirements of this section if the
8 system provides, directly or through insurance, reinsurance,
9 or otherwise-
10
"(1) in the case of individuals described in section
11
632(1), benefits described in section 624(a), and
12
"(2) in the case of individuals described in section
13
632(2), coverage of the material pre-existing condition
14
which is not otherwise covered to the extent necessary
15
to constitute basic health care services described in
16
section 601(a)(3)(A) with respect to such condition, in
17
accordance with such regulations as the Secretary of
18
Health and Human Services may prescribe.
19 "SEC. 634. REGULATORY AUTHORITY OF SECRETARY OF
20
HEALTH AND HUMAN SERVICES.
21
"The Secretary of Health and Human Services shall
22 prescribe such regulations as such Secretary considers neces-
23 sary to carry out the provisions of this subpart."
24
(b) REGULATIONS FOR DEFINING BASIC HEALTH
25 CARE PROVISIONS.-
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1
(1) INITIAL REGULATIONS.-Not later than
2
July 1, 1991, the Secretary of Health and Human
3
Services shall publish in the Federal Register proposed
4
regulations referred to in section 601(a)(3) of the Em-
5
ployee Retirement Income Security Act of 1989 (as
6
amended by subsection (a)). In prescribing such pro-
7
posed regulations, the Secretary shall take into account
8
recommendations submitted to the Secretary by the
9
Federal Advisory Council on Health Care Coverage
10
and Costs pursuant to section 9(d)(1) of this Act.
11
(2) INTERIM REVIEW PERIOD BEFORE ISSUANCE
12
OF FINAL REGULATIONS.-The Secretary of Health
13
and Human Services shall not issue the regulations re-
14
ferred to in section 601(a)(3) of the Employee Retire-
15
ment Income Security Act of 1974 in final form before
16
July 1, 1992.
17
(3) REVISION OF REGULATIONS.-In revising, on
18
or after the effective date of the amendments made by
,
19
this section, the regulations referred to in section
20
601(a)(3) of the Employee Retirement Income Security
21
Act of 1974, the Secretary of Health and Human
22
Services shall take into account recommendations sub-
23
mitted to the Secretary by the Federal Advisory Coun-
24
cil on Health Care Coverage and Costs pursuant to
25
section 9(d)(2) of this Act.
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1
(c) ENFORCEMENT OF CERTAIN PROVISIONS BY SEC-
2 RETARY OF HEALTH AND HUMAN SERVICES.-Section
3 502(a) of the Employee Retirement Income Security Act of
4 1974 (29 U.S.C. 1132(a)) is amended by adding at the the
5 end, after and below paragraph (6), the following new flush
6 sentence:
7 "With respect to provisions of subparts C and D of part 6
8 (other than section 622), the references to 'Secretary' in
9 paragraph (5), and in other provisions of this part relating to
10 actions brought under such paragraph, shall be deemed a ref-
11 erence to the Secretary of Health and Human Services.".
12
(d) CLERICAL AMENDMENT.-The table of contents in
13 section 1 of such Act is amended by striking out the items
14 relating to part 6 of subtitle B of title I and inserting the
15 following new items:
"PART 6-COVERAGE UNDER GROUP HEALTH PLANS AND STATE HEALTH
BENEFITS SYSTEMS
"Subpart A-General Provisions
"Sec. 601. Definitions and special rules.
"Subpart B-Required Coverage Options; Group Health Payroll Deduction Plans
"Sec. 611. Coverage for eligible individuals under basic group health plans or group
health payroll deduction plans.
"Sec. 612. Group health payroll deduction plans.
"Sec. 613. Availability of coverage under State health benefits systems.
"Subpart C-State Health Benefits Systems
"Sec. 621. General requirements.
"Sec. 622. Reporting requirements.
"Sec. 623. Participation requirements.
"Sec. 624. Benefits requirements.
"Sec. 625. Contribution requirements.
"Sec. 626. Reciprocity and reliance by States on other State systems.
"Sec. 627. Regulatory Authority of Secretary of Health and Human Services.
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"Subpart D-State Coverage for Uninsurable Risks and Material Pre-Existing
Conditions
"Sec. 631. State coverage for uninsurable risks and material pre-existing conditions.
"Sec. 632. Participation requirements for uninsurable risks and material pre-existing
conditions.
"Sec. 633. Benefit requirements for uninsurable risks and material pre-existing
conditions.
"Sec. 634. Regulatory authority of Secretary of Health and Human Services.
"Subpart E-Continuation Coverage Requirements
"Sec. 641. Plans must provide continuation coverage to certain individuals.
"Sec. 642. Continuation coverage.
"Sec. 643. Qualifying event.
"Sec. 644. Applicable premium.
"Sec. 645. Election.
"Sec. 646. Notice requirements.
"Sec. 647. Definitions.
"Sec. 648. Regulations."
1 SEC. 4. ALTERNATIVES TO STATE HEALTH BENEFITS
2
SYSTEMS.
3
(a) ALTERNATIVE BASIC HEALTH BENEFITS
4 SYSTEMS.-
5
(1) IN GENERAL.-If, at any time before the ef-
6
fective date for the amendments made by section 3, the
7
Secretary of Health and Human Services determines,
8
under regulations prescribed by the Secretary-
9
(A) that there is in effect, with respect to
10
any group of individuals, an arrangement which is
11
an alternative basic health benefits system, and
12
(B) that, with respect to such group of indi-
13
viduals, such system meets requirements (provided
14
in such regulations) for a specified element of cov-
15
erage which are substantially equivalent to the re-
16
quirements of the specified ERISA provision
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1
which is applicable to such specified element of
2
coverage,
3
then the requirements of such specified ERISA provi-
4
sion shall be treated as met with respect to such indi-
5
viduals until such Secretary nullifies such determina-
6
tion under such regulations.
7
(2) DEFINITIONS AND SPECIAL RULES.-For
8
purposes of this subsection-
9
(A) ALTERNATIVE BASIC HEALTH BENE-
10
FITS SYSTEM.-The term "alternative basic
11
health benefits system" means, with respect to
12
any group of individuals, any arrangement (other
13
than a health benefits system established and
14
maintained by a State in accordance with subpart
15
C of part 6 of subtitle B of title I of ERISA)
16
which-
17
(i) includes at least a basic health bene-
18
fits provision (as defined in section 601(a)(3)
19
of ERISA), and
20
(ii) meets, with respect to such individ-
21
uals, the reporting requirements of section
22
622 of ERISA, the participation require-
23
ments of section 623 of ERISA, the benefits
24
requirements of section 624 of ERISA, and
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1
the contribution requirements of section 625
2
of ERISA.
3
(B) SPECIFIED ELEMENT OF COVERAGE.-
4
The term "specified element of coverage" means
5
any of the following:
6
(i) TREATMENT OF UNINSURABLE
7
RISKS.-Rejection by a plan of an individual
8
for coverage as an uninsurable risk, within
9
the meaning of section 601(a)(7) of ERISA.
10
(ii) TREATMENT OF MATERIAL PRE-
11
EXISTING CONDITIONS.-Provision of cover-
12
age by a plan to an individual under a re-
13
striction based on a material pre-existing
14
condition, within the meaning of section
15
601(a)(8) of ERISA.
16
(iii) PROVISION OF CONTINUATION cov-
17
ERAGE.-Provision of coverage by a plan to
18
qualified beneficiaries required under subpart
19
E of part 6 of subtitle B of title I of ERISA
20
or under title XXII of the Public Health
21
Service Act.
22
(C) SPECIFIED ERISA PROVISIONS.-
23
(i) TREATMENT OF UNINSURABLE
24
RISKS.-The "specified ERISA provision"
25
applicable to the specified element of cover-
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33
1
age described in subparagraph (B)(i) is sec-
2
tion 601(a)(2)(D)(i) of ERISA.
3
(ii) TREATMENT OF MATERIAL PRE-
4
EXISTING CONDITIONS.-The "specified
5
ERISA provision" applicable to the specified
6
element of coverage described in subpara-
7
graph (B)(ii) is section 601(a)(2)(D)(ii) of
8
ERISA.
9
(iii) PROVISION OF CONTINUATION COV-
10
ERAGE.-The "specified ERISA provisions"
11
applicable to the specified element of cover-
12
age described in subparagraph (B)(iii) are
13
section 641(b) of ERISA, section 4980B(f)(8)
14
of the Internal Revenue Code of 1986 (as
15
amended by section 3(b)), and section
16
2201(b) of the Public Health Service Act (as
17
amended by section 5(c)).
18
(D) STATE.-The term "State" has the
19
meaning provided in section 3(10) of ERISA.
20
(E) ERISA.-The term "ERISA" means
21
the Employee Retirement Income Security Act of
22
1974, as amended by this Act.
23
(b) FEDERAL ASSISTANCE IN ESTABLISHMENT OF
24 UNIVERSAL COVERAGE.-
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34
1
(1) GRANT PROGRAM.-The Secretary of Health
2
and Human Services shall establish by regulation a
3
program of monetary assistance in the form of grants
4
to health benefits systems established and maintained
5
by States (within the meaning of section 3(10) of the
6
Employee Retirement Income Security Act of 1974)
7
pursuant to the amendments made by this Act and to
8
alternative basic health benefits systems with respect
9
to which such Secretary has made determinations de-
10
scribed in subparagraphs (A) and (B) of subsection
11
(a)(1). Grants to any system shall be in such amount as
12
such Secretary considers appropriate to facilitate the
13
effectuation of the policies of this Act.
14
(2) AUTHORIZATION OF APPROPRIATIONS.-
15
There is authorized to be appropriated for the Depart-
16
ment of Health and Human Services, for the purpose
17
of carrying out the provisions of paragraph (1),
18
$200,000,000 for each of the fiscal years 1991, 1992,
,
19
and 1993.
20 SEC. 5. CONTINUATION COVERAGE AND STATE HEALTH BENE-
21
FITS SYSTEMS OR ALTERNATIVE SYSTEMS.
22
(a) AMENDMENT TO ERISA.-Section 641(b) of the
23 Employee Retirement Income Security Act of 1974 (as re-
24 designated by section 3) is amended to read as follows:
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35
1
"(b) SUBSTITUTION OF STATE HEALTH BENEFITS
2 SYSTEM OR ALTERNATIVE SYSTEM.-The requirements of
3 this subpart may be met by providing, as an option to quali-
4 fied beneficiaries or otherwise, for coverage of them under an
5 applicable health benefits system established and maintained
6 by a State (or any alternative basic health benefits system
7 with respect to which the Secretary of Health and Human
8 Services has made a determination pursuant to section 4 of
9 the Universal Health Benefits Empowerment and Partner-
10 ship Act of 1990 relating to the element of coverage de-
11 scribed in section 4(a)(2)(B)(iii) of such Act (relating to provi-
12 sion of continuation coverage)) in lieu of coverage as other-
13 wise required under this subpart."
14
(b) CONFORMING AMENDMENT TO INTERNAL REVE-
15 NUE CODE.Section 4980B of the Internal Revenue Code
16 of 1986 (relating to excise tax for failure to satisfy continu-
17 ation coverage requirements of group health plans) is
18 amended-
19
(1) in subsection (d), by striking paragraph (1) and
20
redesignating paragraphs (2) and (3) as paragraphs (1)
21
and (2), respectively; and
22
(2) by adding at the end of subsection (f) the fol-
23
lowing new paragraph:
24
"(8) SUBSTITUTION OF STATE HEALTH BENE-
25
FITS SYSTEM OR ALTERNATIVE SYSTEM.-The re-
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36
1
quirements of this subsection may be met by providing,
2
as an option to qualified beneficiaries or otherwise, for
3
coverage of them under an applicable health benefits
4
system established and maintained by a State in ac-
5
cordance with part 6 of subtitle B of title I of the Em-
6
ployee Retirement Income Security Act of 1974 (or
7
any alternative basic health benefits system with re-
8
spect to which the Secretary of Health and Human
9
Services has made a determination pursuant to section
10
4 of the Universal Health Benefits Empowerment and
11
Partnership Act of 1990 relating to the element of
12
coverage described in section 4(a)(2)(B)(iii) of such Act
13
(relating to provision of continuation coverage)) in lieu
14
of coverage as otherwise required under this subsec-
15
tion.".
16
(c) CONFORMING AMENDMENT TO PUBLIC HEALTH
17 SERVICE ACT.-Section 2201 of the Public Health Service
18 Act is amended by striking subsection (b) and inserting the
19 following new subsection:
20
"(b) SUBSTITUTION OF STATE HEALTH BENEFITS
21 SYSTEM OR ALTERNATIVE SYSTEM.-The requirements of
22 this title may be met by providing, as an option to qualified
23 beneficiaries or otherwise, for coverage of them under an ap-
24 plicable health benefits system established and maintained by
25 a State in accordance with part 6 of subtitle B of title I of the
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37
1 Employee Retirement Income Security Act of 1974 (or any
2 alternative basic health benefits system with respect to which
3 the Secretary of Health and Human Services has made a
4 determination pursuant to section 4 of the Universal Health
5 Benefits Empowerment and Partnership Act of 1990 relating
6 to the element of coverage described in section 4(a)(2)(B)(iii)
7 of such Act (relating to provision of continuation coverage))
8 in lieu of coverage as otherwise required under this title.".
9 SEC. 6. PREEMPTION OF STATE LAW TO PROVIDE FOR MORE
10
AFFORDABLE HEALTH CARE COVERAGE.
11
(a) IN GENERAL.-Section 514(b)(2)(B) of the Employ-
12 ee Retirement Income Security Act of 1974 (29 U.S.C.
13 1144(b)(2)(B)) is amended-
14
(1) by inserting "(i)" after "(B)"; and
15
(2) by adding at the end the following new clause:
16
"(ii) A provision of State law which provides that one or
17 more specific benefits must be provided or made available by
18 a contract or policy of health insurance issued to an employee
19 benefit plan, or which provides that services rendered by one
20 or more particular classes of health care providers must be
21 covered under such a contract or policy, is a law which re-
22 lates to an employee benefit plan within the meaning of sub-
23 section (a) and is not a law which regulates insurance within
24 the meaning of subparagraph (A).".
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1
(b) PREEMPTION OF CERTAIN STATE LAWS RE-
2 STRICTING MANAGED CARE UNDER EMPLOYEE WELFARE
3 BENEFIT PLANS.-Section 514(b) of such Act is amended by
4 adding at the end the following new paragraph:
5
"(9) For purposes of this section, a provision of State
6 law which in any manner restricts managed care under an
7 employee welfare benefit plan providing medical care (as de-
8 fined in section 213(d) of the Internal Revenue Code of 1986)
9 to participants or beneficiaries directly or through insurance,
10 reimbursement, or otherwise, by restricting the ability to ne-
11 gotiate provider reimbursement rates or to set such rates for
12 any provider, limiting the number or type of providers, or
13 restricting utilization or quality review in connection with
14 such plan shall be deemed a law which relates to an employ-
15 ee benefit plan within the meaning of subsection (a) and not a
16 law which regulates insurance within the meaning of para-
17 graph (2)(A).".
18 SEC. 7. ENCOURAGEMENT OF MULTIPLE EMPLOYER AR-
19
RANGEMENTS PROVIDING BASIC HEALTH BEN-
20
EFITS.
21
(a) TAX EXEMPT STATUS.-Paragraph (9) of section
22 501(c) of the Internal Revenue Code of 1986 (relating to
23 exempt organizations) is amended-
24
(1) by inserting "(A)" after "(9)"; and
25
(2) by adding at the end the following:
HR 4070 IH
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1
"(B) Any determination of whether a multiple em-
2
ployer welfare arrangement (as defined in section 3(25)
3
of the Employee Retirement Income Security Act of
4
1974) is a voluntary employees' beneficiary association
5
meeting the requirements of this paragraph shall be
6
made without regard to any determination of common-
7
ality of interest or geographic location if-
8
"(i) such arrangement provides at least basic
9
health care services described in section
10
601(a)(3)(A) of the Employee Retirement Income
11
Security Act of 1974, and
12
"(I) such arrangement is fully insured,
13
or
14
"(II) there is a provision of applicable
15
State law which provides standards, requir-
16
ing the maintenance of specified levels of re-
17
serves and specified levels of contributions,
18
which such arrangement must meet in order
19
to be considered under such law able to pay
20
benefits in full when due, and
21
"(ii) meets the reporting requirements similar
22
to the requirements of section 622 of such Act.".
23
(b) REPORTING REQUIREMENTS FOR MEWA's.-Sec-
24 tion 4 of the Employee Retirement Income Security Act of
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40
1 1974 (29 U.S.C. 1003) is amended by adding at the end the
2 following new subsection:
3
"(c) A multiple employer welfare arrangement that pro-
4 vides medical care (as defined in section 213(d) of the Inter-
5 nal Revenue Code of 1986) to employees or their dependents
6 shall be treated as an employee welfare benefit plan for pur-
7 poses of this title with respect to the requirements of this title
8 relating to the filing of annual reports under section 103,
9 except that such requirements shall not be treated as met
10 with respect to such arrangement unless such report is also
11 filed with the insurance commissioner (or similar official) of
12 each State in which at least 5 percent of the individuals cov-
13 ered under such arrangement reside.".
14 SEC. 8. TREATMENT PRACTICE GUIDELINES AND OUTCOMES
15
RESEARCH FOR ALL AMERICANS.
16
(a) AGENCY FOR HEALTH CARE POLICY AND RE-
17 SEARCH.-So much of part A of title IX of the Public
18 Health Service Act as precedes section 902(c) is amended to
19 read as follows:
20 "PART A-ESTABLISHMENT AND GENERAL DUTIES
21 "SEC. 901. ESTABLISHMENT.
22
"(a) IN GENERAL.-There is established within the
23 Service an agency to be known as the Agency for Health
24 Care Policy and Research.
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41
1
"(b) PURPOSE.-The purpose of the Agency is to en-
2 hance the quality, appropriateness, and effectiveness of
3 health care services for all Americans, and access to such
4 services, through the establishment of a broad base of scien-
5 tific research and through the promotion of improvements in
6 clinical practice and in the organization, financing, and deliv-
7 ery of health care services.
8
"(c) APPOINTMENT OF ADMINISTRATOR.-There shall
9 be at the head of the Agency an official to be known as the
10 Administrator for Health Care Policy and Research. The Ad-
11 ministrator shall be appointed by the Secretary. The Secre-
12 tary, acting through the Administrator, shall carry out the
13 authorities and duties established in this title.
14 "SEC. 902. GENERAL AUTHORITIES AND DUTIES.
15
"(a) IN GENERAL.-In carrying out section 901(b), the
16 Administrator shall conduct and support research, demon-
17 stration projects, evaluations, training, guideline develop-
18 ment, and the dissemination of information, on health care
19 services and on systems for the delivery of such services to
20 all Americans, including activities with respect to-
21
"(1) the effectiveness, efficiency, and quality of
22
health care services;
23
"(2) subject to subsection (d), the outcomes of
24
health care services and procedures;
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42
1
"(3) clinical practice, including primary care and
2
practice-oriented research;
3
"(4) health care technologies, facilities, and
4
equipment;
5
"(5) health care costs, productivity, and market
6
forces;
7
"(6) health promotion and disease prevention;
8
"(7) health statistics and epidemiology; and
9
"(8) medical liability.
10
"(b) REQUIREMENTS WITH RESPECT TO RURAL
11 AREAS AND UNDERSERVED POPULATIONS.-In carrying
12 out subsection (a), the Administrator shall undertake and sup-
13 port research, demonstration projects, and evaluations with
14 respect to-
15
"(1) the delivery of health care services in rural
16
areas (including frontier areas) to Americans of all
17
ages; and
18
"(2) the health of low-income groups, minority
19
groups, and the elderly.".
20
(b) FORUM FOR QUALITY AND EFFECTIVENESS IN
21 HEALTH CARE.-So much of part B of title IX of the Public
22 Health Service Act as precedes section 912(c) is amended to
23 read as follows:
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43
1
"PART B-FORUM FOR QUALITY AND
2
EFFECTIVENESS IN HEALTH CARE
3 "SEC. 911. ESTABLISHMENT OF OFFICE.
4
"There is established within the Agency an office to be
5 known as the Office of the Forum for Quality and Effective-
6 ness in Health Care. The office shall be headed by a Direc-
7 tor, who shall be appointed by the Administrator.
8 "SEC. 912. DUTIES.
9
"(a) ESTABLISHMENT OF FORUM PROGRAM.-The
10 Administrator, acting through the Director, shall establish a
11 program to be known as the Forum for Quality and Effec-
12 tiveness in Health Care. For the purpose of promoting the
13 quality, appropriateness, and effectiveness of health care, the
14 Director, using the process set forth in section 913, shall
15 arrange for the development and periodic review and up-
16 dating of-
17
"(1) clinically relevant guidelines that may be
18
used by physicians, educators, and health care practi-
19
tioners to assist in determining how diseases, disorders,
20
and other health conditions can most effectively and
21
appropriately be prevented, diagnosed, treated, and
22
managed clinically; and
23
"(2) standards of quality, performance measures,
24
and medical review criteria through which health care
25
providers and other appropriate entities may assess or
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44
1
review the provision of health care and assure the
2
quality of such care.
3
"(b) CERTAIN REQUIREMENTS.-Guidelines, stand-
4 ards, performance measures, and review criteria under sub-
5 section (a) shall-
6
"(1) be based on the best available research and
7
professional judgment regarding the effectiveness and
8
appropriateness of health care services and procedures;
9
"(2) be presented-
10
"(A) in formats appropriate for use by physi-
11
cians, health care practitioners, providers, medical
12
educators, and medical review organizations,
13
"(B) in formats appropriate for use by group
14
health plans (as defined in section 601(a)(1) of the
15
Employee Retirement Income Security Act of
16
1974), health benefits systems established and
17
maintained by States in accordance with subpart
18
C of part 6 of subtitle B of title I of the Employ-
19
ee Retirement Income Security Act of 1974, and
20
alternative basic health benefits systems with re-
21
spect to which the Secretary has made a determi-
22
nation pursuant to section 4 of the Universal
23
Health Benefits Empowerment and Partnership
24
Act of 1990 relating to an element of coverage
25
described in section 4(a)(2)(B) of such Act, and
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45
1
"(C) in formats appropriate for use by con-
2
sumers of health care; and
3
"(3) include treatment-specific or condition-specif-
4
ic practice guidelines for clinical treatments and condi-
5
tions in forms appropriate for use in clinical practice,
6
for use in educational programs, and for use in review-
7
ing quality and appropriateness of medical care.".
8
(c) DISSEMINATION OF STANDARDS, CRITERIA,
9 ETc.-Section 914(c) of the Public Health Service Act is
10 amended to read as follows:
11
"(c) DISSEMINATION.-
12
"(1) IN GENERAL.-The Director shall promote
13
and support the dissemination of the guidelines, stand-
14
ards, performance measures, and review criteria de-
15
scribed in section 912(a).
16
"(2) ORGANIZATIONS UTILIZED.-Such dissemi-
17
nation shall be carried out through-
18
"(1) organizations representing health care
19
providers,
20
"(2) group health plans (as defined in section
21
601(a)(1) of the Employee Retirement Income Se-
22
curity Act of 1974),
23
"(3) health benefits systems established and
24
maintained by States in accordance with subpart
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1
C of part 6 of subtitle B of title I of the Employ-
2
ee Retirement Income Security Act of 1974,
3
"(4) alternative basic health benefits systems
4
with respect to which the Secretary has made a
5
determination pursuant to section 4 of the Univer-
6
sal Health Benefits Empowerment and Partner-
7
ship Act of 1990 relating to an element of cover-
8
age described in section 4(a)(2)(B) of such Act,
9
"(5) organizations representing health care
10
consumers,
11
"(6) peer review organizations,
12
"(7) accrediting bodies, and
13
"(8) other appropriate entities."
14
(d) STUDY OF ROLE OF PRACTICE GUIDELINES IN RE-
15 DUCING MALPRACTICE COSTS.-As soon as practicable
16 after the date of the enactment of this Act, the Federal Advi-
17 sory Council on Health Care Coverage and Costs shall un-
18 dertake a study of the manner in which practice guidelines
19 may be used in reducing medical malpractice costs. The
20 Council shall submit the results of such study together with
21 any recommendations to the Secretary of Health and Human
22 Services.
23
(e) AUTHORIZATION OF ADDITIONAL APPROPRIA-
24 TIONS.-Section 926(a) of the Public Health Service Act is
25 amended by adding at the end the following: "In addition to
HR 4070 IH
47
1 amounts otherwise authorized by this subsection, for the pur-
2 pose of carrying out the amendments made by section 8 of
3 the Universal Health Benefits Empowerment and Partner-
4 ship Act of 1990, there are authorized to be appropriated
5 $10,000,000 for fiscal year 1991, $15,000,000 for fiscal year
6 1992, and $20,000,000 for fiscal year 1993."
7 SEC. 9. FEDERAL ADVISORY COUNCIL ON HEALTH CARE
8
COVERAGE AND COSTS.
9
(a) IN GENERAL.-There is hereby established a Fed-
10 eral Advisory Council on Health Care Coverage and Costs
11 for the purpose of reviewing, overseeing, and making recom-
12 mendations relating to the implementation of the provisions
13 of this Act and studying the causes of changes in the costs of
14 health care coverage and delivery.
15
(b) MEMBERSHIP.-The Council shall consist of a
16 Chairman and 12 other persons, appointed by the Secretary
17 of Health and Human Services with the concurrence of the
18 Secretary of Labor and without regard to the provisions of
19 title 5, United States Code, governing appointments in the
20 competitive service. The appointed members shall, to the
21 extent possible, represent organizations of small and large
22 employers, employee organizations, health care providers,
23 providers of group health plan coverage, State and local gov-
24 ernments, the field of actuarial counseling, and the general
25 public.
HR 4070 IH
48
1
(c) EXPENSES.-
2
(1) SERVICES AND ASSISTANCE.-The Council is
3
authorized to engage such technical assistance, includ-
4
ing actuarial services, as may be required to carry out
5
its functions, and the Secretary of Health and Human
6
Services and the Secretary of Labor shall, in addition,
7
make available to the Council such secretarial, clerical,
8
and other assistance as it may require to carry out
9
such functions. The Secretary of Health and Human
10
Services and the Secretary of Labor shall, in addition,
11
make available to the Council such actuarial and other
12
pertinent data prepared by the Department of Health
13
and Human Services, the Department of Labor, or
14
other agencies of the Government as it may require to
15
carry out such functions.
16
(2) TRAVEL AND PER DIEM.-Appointed members
17
of the Council, while serving on the business of the
18
Council (inclusive of travel time), while SO serving
19
away from their homes or regular places of business,
20
may be allowed travel expenses, including per diem in
21
lieu of subsistence, as authorized by section 5703 of
22
title 5, United States Code, for persons in the Govern-
23
ment employed intermittently.
24
(d) FUNCTIONS.-The Council shall-
HR 4070 IH
49
1
(1) make timely recommendations to the Secretary
2
of Health and Human Services for purposes of the is-
3
suance of initial regulations in accordance with para-
4
graphs (1) and (2) of section 3(b),
5
(2) make recommendations to the Secretary of
6
Health and Human Services relating to appropriate
7
mechanisms for and the frequency of revisions of regu-
8
lations in accordance with paragraph (3) of section
9
3(b),
10
(3) otherwise advise the Secretary of Health and
11
Human Services and the Secretary of Labor with re-
12
spect to the implementation of the amendments made
13
by this Act,
14
(4) offer States and other entities advice regarding
15
health benefits systems and implementation of the
16
amendments made by this Act,
17
(5) serve as a forum for exchange of advice, rec-
18
ommendations, and information regarding the amend-
19
ments made by this Act, their implementation, and
20
health benefits systems established and maintained by
21
States, and otherwise foster cooperation between
22
States and other entities in implementing such amend-
23
ments,
24
(6) make from time to time such recommendations
25
as it considers appropriate relating to possible improve-
HR 4070 IH
50
1
ments relating to the financing and affordability of
2
health care coverage for individuals eligible for cover-
3
age under health benefits systems established and
4
maintained by States and other entities, and
5
(7) make from time to time such recommendations
6
to the Secretary of Health and Human Services and to
7
the Congress as it considers appropriate relating to
8
changes in the costs of health care coverage and
9
delivery.
10
(e) REPORTS.-The Council shall, at least annually,
11 submit a report to the Secretary of Health and Human Serv-
12 ices and the Secretary of Labor of any findings or recommen-
13 dations relating to matters considered by the Council, and
14 such reports shall thereupon be transmitted to the Congress.
15
(f) FINAL REPORT AND TERMINATION.-Upon the re-
16 quest of the Secretary of Health and Human Services, the
17 Council shall submit a final report to such Secretary and the
18 Secretary of Labor. The Council shall terminate upon the
19 submission of such final report.
20 SEC. 10. INCREASE IN DEDUCTION FOR HEALTH. INSURANCE
21
COSTS OF SELF-EMPLOYED INDIVIDUALS
22
FROM 25 PERCENT TO 100 PERCENT.
23
(a) IN GENERAL.-Paragraph (1) of section 162(1) of
24 the Internal Revenue Code of 1986 (relating to special rules
HR 4070 IH
51
1 for health insurance costs of self-employed individuals) is
2 amended by striking "25 percent of".
3
(b) REPEAL OF TERMINATION PROVISION.-Para-
4 graph (5) of section 162(1) of such Code (relating to termina-
5 tion) is repealed.
6 SEC. 11. EFFECTIVE DATES.
7
(a) SECTIONS 3 AND 5.-The amendments made by
8 section 3 shall take effect January 1, 1993, and the amend-
9 ments made by section 5 shall apply with respect to plan
10 years beginning on or after such date.
11
(b) SECTION 4.-The provisions of section 4 shall take
12 effect on the date of the enactment of this Act.
13
(c) SECTION 6.-The amendments made by section 6(b)
14 shall take effect January 1, 1991. The amendments made by
15 section 6(a) shall take effect January 1, 1991, except that
16 with respect to plans in effect on the date of the enactment of
17 this Act, such amendments shall take effect on the effective
18 date of section 3.
19
(d) SECTION 7.-The amendments made by section 7(a)
20 shall apply with respect to determinations made on or after
21 January 1, 1991. The amendment made by section 7(b) shall
22 apply to plan years beginning on or after January 1, 1991.
23
(e) SECTION 8.-The amendments made by section 8
24 shall take effect January 1, 1991.
HR 4070 IH
52
1
(f) SECTION 9.-The provisions of section 9 shall take
2 effect on the date of the enactment of this Act.
3
(g) SECTION 10.-The amendments made by section 10
4 shall apply with respect to taxable years beginning on or
5 after January 1, 1991.
HR 4070 IH
II
101ST CONGRESS
2D SESSION
S.2199
To amend the Internal Revenue Code of 1986 with respect to the tax treatment
of the transfer of excess pension assets to retiree health accounts, and for
other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY 28 (legislative day, JANUARY 23), 1990
Mr. PACKWOOD (for himself and Mr. BOSCHWITZ) introduced the following bill;
which was read twice and referred to the Committee on Finance
A
BILL
To amend the Internal Revenue Code of 1986 with respect to
the tax treatment of the transfer of excess pension assets to
retiree health accounts, and for other purposes.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
4
(a) SHORT TITLE.-This Act may be cited as the
5 "Health and Long-Term Care Security Act of 1990".
6
(b) AMENDMENT OF 1986 CODE.-Except as otherwise
7 expressly provided, whenever in this Act an amendment or
8 repeal is expressed in terms of an amendment to, or repeal of,
9 a section or other provision, the reference shall be considered
2
1 to be made to a section or other provision of the Internal
2 Revenue Code of 1986.
3
TITLE I-TREATMENT OF LONG-
4
TERM HEALTH CARE
5 SEC. 101. MEDICAL DEDUCTIONS FOR LONG-TERM HEALTH
6
CARE EXPENSES.
7
(a) IN GENERAL.-Section 213(d) (defining medical
8 care) is amended by adding at the end thereof the following
9 new paragraph:
10
"(9) LONG-TERM HEALTH CARE.-
11
"(A) IN GENERAL.-The term 'medical care'
12
includes long-term health care.
13
"(B) LONG-TERM HEALTH CARE.-For pur-
14
poses of subparagraph (A)-
15
"(i) IN GENERAL.-The term 'long-
16
term health care' means the providing by a
17
qualified provider in a qualified facility of
18
necessary diagnostic, preventive, therapeutic,
19
rehabilitative, and personal care services, re-
20
quired by a chronically ill individual.
21
"(ii) CERTAIN ITEMS NOT INCLUDED.-
22
The term 'long-term health care' does not in-
23
clude basic medicare supplement coverage,
24
basic hospital expense coverage, basic medi-
25
cal-surgical expense coverage, hospital con-
S
2199 IS
3
1
finement indemnity coverage, major medical
2
expense coverage, disability income protec-
3
tion coverage, accident only coverage, speci-
4
fied disease or specified accident coverage, or
5
limited benefit health coverage.
6
"(iii) QUALIFIED FACILITY.-For pur-
7
poses of the subparagraph, the term 'quali-
8
fied facility' means-
9
"(I) a rehabilitative, hospice, or
10
adult day care facility, including a hos-
11
pital, retirement home, skilled nursing
12
facility (within the meaning of section
13
1919(a) of the Social Security Act), or
14
other similar facility determined by the
15
plan administrator, or
16
"(II) a home where the chronically
17
ill individual resides.
18
"(iv) CHRONICALLY ILL INDIVIDUAL.-
19
For purposes of this subparagraph, the term
20
'chronically ill individual' means an individ-
21
ual whose disability is such that the individ-
22
ual has been certified as requiring assistance
23
with daily living (as defined by the plan ad-
24
ministrator) for a period of at least 90 days.
S
2199 IS
4
1
"(v) QUALIFIED PROVIDER.-For pur-
2
poses of this subparagraph, the term 'quali-
3
fied provider' means a medical practitioner
4
licensed under State law, registered nurse, li-
5
censed vocational nurse, qualified therapist,
6
or trained home health aid (or any organiza-
7
tion employing such providers), but does not
8
include a relative or other person who ordi-
9
narily resides in the home where the chron-
10
ically ill individual resides."
11
(b) EFFECTIVE DATE.-
12
(1) IN GENERAL.-The amendment made by this
13
section shall apply to taxable years beginning after De-
14
cember 31, 1990.
15
(2) No INFERENCE.-Nothing in the amendment
16
made by this section shall be construed to infer that
17
long-term health care is or is not medical care for pur-
18
poses of section 213 of the Internal Revenue Code of
19
1986 for taxable years beginning before January 1,
20
1991, and any determination of such issue shall be
21
made as if this section had not been enacted.
S
2199 IS
5
1 SEC. 102. TREATMENT OF LONG-TERM HEALTH CARE INSUR-
2
ANCE CONTRACTS FOR INCOME TAXATION OF
3
INSURANCE COMPANIES.
4
(a) IN GENERAL.-Section 818 (relating to other defini-
5 tions and special rules involving life insurance companies) is
6 amended by adding at the end thereof the following new
7 subsection:
8
"(g) TREATMENT OF LONG-TERM HEALTH CARE IN-
9 SURANCE CONTRACTS.-
10
"(1) GENERAL RULE.-For purposes of this sub-
11
chapter, insurance contracts which provide long-term
12
health care shall be treated in the same manner as
13
noncancellable accident or health insurance contracts.
14
"(2) LONG-TERM HEALTH CARE.-For purposes
15
of paragraph (1), the term 'long-term health care' has
16
the meaning given such term by section 213(d)(9)(B)."
17
(b) EFFECTIVE DATE.-The amendment made by this
18 section shall apply to contracts entered into before, on, or
19 after the date of the enactment of this Act.
20
TITLE II-EMPLOYER FUNDING
21
OF MEDICAL BENEFITS
22 SEC. 201. MEDICAL BENEFITS FOR RETIRED EMPLOYEES AND
23
THEIR SPOUSES AND DEPENDENTS.
24
(a) IN GENERAL.-Section 401(h) (relating to medical,
25 etc., benefits for retired employees and their spouses and de-
26 pendents) is amended to read as follows:
S
2199 IS
6
1
"(h) RETIREE HEALTH ACCOUNTS.-
2
"(1) GENERAL RULE.-Under regulations pre-
3
scribed by the Secretary, a defined benefit plan may
4
establish and maintain a separate health benefits ac-
5
count for the payment of medical benefits of retired
6
employees and their spouses and dependents.
7
"(2) SEPARATE ACCOUNTING REQUIRED.-An
8
employer establishing a health benefits account shall
9
maintain separate accounts within the health benefits
10
account for funded reserve accounts established under
11
section 420A.
12
"(3) USE OF ASSETS.-Subject to the provisions
13
of part III of this subchapter, the corpus or income of
14
a health benefits account shall not be used for, or di-
15
verted to, any purpose other than providing medical
16
benefits to retired employees and their spouses and
17
dependents.
18
"(4) KEY EMPLOYEES.-
19
"(A) IN GENERAL.-In the case of an em-
20
ployee who is a key employee-
21
"(i) a separate account shall be estab-
22
lished and maintained for medical benefits
23
payable to such employee (and the employ-
24
ee's spouse or dependents), and
S
2199 IS
7
1
"(ii) medical benefits of such employee,
2
spouse, or dependents which are attributable
3
to plan years beginning after March 31,
4
1984, for which the employee is a key em-
5
ployee may be payable only from such ac-
6
count.
7
"(B) KEY EMPLOYEE.-For purposes of sub-
8
paragraph (A), the term 'key employee' means
9
any employee who, at any time during the plan
10
year or any preceding plan year during which
11
contributions were made on behalf of such em-
12
ployee, is or was a key employee (as defined in
13
section 416(i)).
14
"(5) APPLICABLE RULES.-For rules applicable
15
to health benefits accounts, see subpart E of this part
16
(sec. 420 et seq.)."
17
(b) CONFORMING AMENDMENT.-Section 415(1)(2) (re-
18 lating to treatment of certain medical benefits) is amended by
19 inserting "by reason of section 401(h)(4)" after "dependents"
20 in subparagraph (B).
21
(c) EFFECTIVE DATE.-
22
(1) IN GENERAL.-Except as provided in para-
23
graph (2), the amendments made by this section shall
24
apply to years beginning after December 31, 1990.
25
(2) TRANSITION RULE.-In the case of-
S
2199 IS
8
1
(A) a plan other than a defined benefit plan,
2
or
3
(B) a defined benefit plan which elects, at
4
such time and in such manner as the Secretary of
5
the Treasury or his delegate may prescribe, to
6
have this paragraph apply,
7
which on or before the date of the enactment of this
8
Act established an account to which section 401(h) of
9
the Internal Revenue Code of 1986 (as in effect before
10
the amendments made by this section) applied (and
11
which is in existence on such date), the amendments
12
made by this section shall not apply to such account.
13 SEC. 202. TREATMENT OF HEALTH BENEFITS ACCOUNTS.
14
(a) IN GENERAL.-Part III of subchapter D of chapter
15 1 (relating to health benefits accounts), as added by section
16 301 of this Act, is amended by adding at the end thereof the
17 following new subpart:
18
"Subpart B-Treatment of Health Benefits Accounts
"Sec. 420A. Deduction for employer contributions to health benefits accounts.
"Sec. 420B. Funded reserve account.
"Sec. 420C. Definitions; special rules.
19 "SEC. 420A. DEDUCTION FOR EMPLOYER CONTRIBUTIONS TO
20
HEALTH BENEFITS ACCOUNTS.
21
"(a) GENERAL RULE.-Amounts paid by an employer
22 to a defined benefit plan which are allocated to a health bene-
23 fits account-
S 2199 IS
9
1
"(1) shall not be allowed as a deduction under this
2
chapter, but
3
"(2) if they would otherwise be deductible, shall
4
be allowed as a deduction under this section for the
5
taxable year in which paid.
6
"(b) LIMITATION.-The amount of the deduction
7 allowable under subsection (a)(2) for any taxable year shall
8 not exceed the health benefits account's qualified cost for the
9 taxable year.
10
"(c) QUALIFIED COST.-For purposes of this section-
11
"(1) IN GENERAL.-The term 'qualified cost'
12
means, with respect to any taxable year, the sum of-
13
"(A) the qualified direct cost for such taxable
14
year, plus
15
"(B) subject to the limitation of section
16
420B(b), any addition to the funded reserve ac-
17
count established under section 420B.
18
"(2) QUALIFIED DIRECT COST.-
19
"(A) IN GENERAL.-The term 'qualified
20
direct cost' means, with respect to any taxable
21
year, the aggregate amount (including administra-
22
tive expenses) which would have been allowable
23
as a deduction to the employer with respect to the
24
qualified section 401(h) medical benefits provided
S 2199 IS—2
10
1
through the health benefits account during the
2
taxable year if-
3
"(i) such benefits were provided directly
4
by the employer, and
5
"(ii) the employer used the cash receipts
6
and disbursements method of accounting.
7
"(B) TIME WHEN BENEFITS PROVIDED.-
8
For purposes of subparagraph (A), a benefit shall
9
be treated as provided when such benefit would
10
be includible in the gross income of the employee
11
if provided directly by the employer (or would be
12
SO includible but for any provision of this chapter
13
excluding such benefit from gross income).
14 "SEC. 420B. FUNDED RESERVE ACCOUNT.
15
"(a) GENERAL RULE.-For purposes of this subpart
16 and section 401(h), the term 'funded reserve account' means
17 an account within a health benefits account-
18
"(1) to which contributions paid or accrued to a
19
defined benefit plan are allocated to provide a reserve
20
for the payment of qualified section 401(h) medical
21
benefits of employees and their spouses and depend-
22
ents,
23
"(2) with respect to which the only contributions
24
allocated are employer contributions, and
25
"(3) with respect to which-
S
2199 IS
11
1
"(A) the vesting requirements of subsection
2
(c),
3
"(B) the portability requirements of subsec-
4
tion (d), and
5
"(C) the availability requirements of subsec-
6
tion (e),
7
are met.
8
"(b) LIMITATION ON ALLOCATION TO ACCOUNT.-
9
"(1) IN GENERAL.-No amount may be allocated
10
to a funded reserve account (and taken into account
11
under section 420A(c)(1)(B)) to the extent such addi-
12
tion results in the amount allocated to such account
13
exceeding the account limit.
14
"(2) ACCOUNT LIMIT.-The account limit for any
15
taxable year is an amount equal to 125 percent of the
16
termination liability of the account as of the close of
17
the last plan year ending with or within the taxable
18
year.
19
"(3) TERMINATION LIABILITY.-For purposes of
20
this section-
21
"(A) IN GENERAL.-The term 'termination
22
liability' means the present value of the qualified
23
section 401(h) medical benefits-
24
"(i) which are to be provided to employ-
25
ees (and their spouses and dependents), and
S
2199 IS
12
1
"(ii) any portion of which is to be pro-
2
vided through a funded reserve account.
3
"(B) DETERMINATIONS.-The termination
4
liability under subparagraph (A) shall be deter-
5
mined-
6
"(i) on the basis of actuarial assump-
7
tions which are used in determining the full-
8
funding limitation of the plan under section
9
412(c)(7),
10
"(ii) as if the benefits under the plan
11
commenced at Social Security retirement
12
age, and
13
"(iii) by not taking into account any
14
portion of the maximum annual benefit under
15
the plan for-
16
"(I) benefits (other than post-
17
retirement long-term health care ben-
18
efits) in excess of $1,500,or
19
"(II) post-retirement long-term
20
health care benefits in excess of $1,500.
21
"(C) ADJUSTMENTS TO ACCOUNT.-The
22
amount in the account shall be adjusted at such
23
time and in such manner as the Secretary may
24
prescribe to take into account income, gains, de-
S 2199 IS
13
1
ductions, or losses which are properly allocable to
2
amounts in the account.
3
"(D) ACTUARIAL ADJUSTMENT.-For pur-
4
poses of determining termination liability, the ben-
5
efits provided to any participant under the plan
6
shall be actuarially adjusted to reflect any com-
7
mencement of benefits before or after Social Secu-
8
rity retirement age.
9
"(E) EMPLOYEE.-For purposes of this
10
paragraph, the term 'employee' does not include a
11
former employee.
12
"(F) COST-OF-LIVING ADJUSTMENT.-In the
13
case of years beginning after 1992, the $1,500
14
amounts in subparagraph (B) shall be adjusted an-
15
nually at the same time and in the same manner
16
as under section 415(d).
17
"(c) VESTING REQUIREMENTS.-
18
"(1) IN GENERAL.-The requirements of this sub-
19
section are met if the requirements of either subpara-
20
graph (A) or (B) of section 411(a)(2) are met with re-
21
spect to the accrued qualified section 401(h) medical
22
benefits derived from amounts which are allocated to
23
the funded reserve account.
24
"(2) UNIFORM RATE OF ACCRUAL OF BENE-
25
FITS.-
S
2199 IS
14
1
"(A) IN GENERAL.-Except as provided in
2
this paragraph, a plan shall not be treated as
3
meeting the requirements of this subsection unless
4
the rate at which benefits accrue during a plan
5
year is the same for all participants.
6
"(B) SPECIAL RULES FOR CERTAIN INDIVID-
7
UALS AGE 55 AND OVER.-A plan shall not be
8
treated as failing to meet the requirements of this
9
subsection if the plan provides that an employee
10
who as of the close of the plan year in which he
11
attains age 55 has accrued less than 30 percent of
12
the maximum amount of benefits which may be
13
accrued under the plan may accrue benefits during
14
succeeding plan years at a greater rate than the
15
rate for other employees (but not in excess of 125
16
percent of such other rate).
17
"(C) MINIMUM HOURS OF SERVICE.-For
18
purposes of subparagraph (A), an employee shall
19
not be treated as a participant for any plan year
20
unless such individual completes more than 500
21
hours of service during such year.
22
"(3) CERTAIN RULES MADE APPLICABLE.-
23
Except to the extent inconsistent with the provisions of
24
this subpart, the rules of section 411 shall apply for
25
purposes of this subsection.
S
2199 IS
15
1
"(d) PORTABILITY REQUIREMENTS.-
2
"(1) IN GENERAL.-Except as provided in para-
3
graph (2), the requirements of this subsection are met
4
if, in accordance with procedures determined by the
5
Secretary, the plan provides that-
6
"(A) except as provided in regulations, the
7
plan shall transfer, within 120 days after an em-
8
ployee separates from service with the employer
9
or after the termination of the plan, the present
10
value of the nonforfeitable accrued qualified sec-
11
tion 401(h) medical benefits of the employee at-
12
tributable to amounts which are allocated to the
13
funded reserve account to-
14
"(i) a plan which is maintained by an
15
employer of such employee and which main-
16
tains a health benefits account, or
17
"(ii) if the employer does not maintain a
18
plan described in clause (i), an individual re-
19
tirement account established for the benefit
20
of such employee, and
21
"(B) the plan accepts transfers under sub-
22
paragraph (A) from another plan or individual
23
retirement account.
24
"(2) No TRANSFERS AFTER EMPLOYEE IS DIS-
25
ABLED OR ATTAINS RETIREMENT AGE.-Except in
S
2199 IS
16
1
the case of a termination of a plan, a plan shall not
2
meet the requirements of this subsection if it permits
3
the transfer of a benefit after-
4
"(A) an employee has attained Social Securi-
5
ty retirement age, or
6
"(B) an employee has become disabled
7
(within the meaning of section 72(m)(7)).
8
"(3) INCLUSION IN INCOME WHERE MORE THAN
9
1 ACCOUNT.-
10
"(A) IN GENERAL.-If-
11
"(i) an individual is a participant or
12
beneficiary under 2 or more plans maintain-
13
ing a funded reserve account or individual
14
retirement account to which assets were
15
transferred from such a plan, and
16
"(ii) such individual does not (within a
17
reasonable period) consolidate the present
18
value of the individual's nonforfeitable ac-
19
crued benefit in all such plans and the assets
20
SO transferred to all such accounts into 1
21
such plan or into 1 such account,
22
then an amount equal to the sum of the present
23
value of such benefits and the fair market value of
24
such assets shall be treated as distributed in cash
25
to such individual at the close of the plan year for
S
2199 IS
17
1
the plan or account involved and such distribution
2
shall be included in gross income.
3
"(B) SPECIAL RULES.-
4
"(i) EMPLOYEE MUST CONSOLIDATE
5
INTO PLAN OF CURRENT EMPLOYER.-In
6
the case of an employee who is employed by
7
an employer maintaining a plan described in
8
subparagraph (A)(i), a consolidation satisfies
9
subparagraph (A) only if such consolidation is
10
into such a plan maintained by such
11
employer.
12
"(ii) MORE THAN 1 CURRENT EMPLOY-
13
ER.-If an individual is a participant in more
14
than 1 plan described in subparagraph (A)(i)
15
by reason of being currently employed by
16
more than 1 employer, such plans shall be
17
treated as 1 plan for purposes of subpara-
18
graph (A).
19
"(iii) EMPLOYEE WITH NO CURRENT
20
EMPLOYER MAINTAINING PLAN.-In the
21
case of an employee who is currently not
22
employed by an employer maintaining a plan
23
described in subparagraph (A)(i), a consolida-
24
tion satisfies subparagraph (A) only if such
25
consolidation is into-
S
2199 IS
18
1
"(I) a plan described in subpara-
2
graph (A)(i) maintained by his most
3
recent employer maintaining such plan,
4
or
5
"(II) an individual retirement ac-
6
count of the individual.
7
"(C) AMOUNT TRANSFERRED NOT INCLUD-
8
IBLE IN INCOME.-No amount shall be includible
9
in gross income by reason of any transfer which is
10
part of a consolidation required under this para-
11
graph.
12
"(e) RETIRED EMPLOYEES NOT COVERED BY HEALTH
13 BENEFITS ACCOUNT MAY ELECT COVERAGE.-
14
"(1) IN GENERAL.-The requirements of this sub-
15
section are met if the plan provides that a former em-
16
ployee who-
17
"(A) is in pay status under the plan, but
18
"(B) is not eligible to receive all or any por-
19
tion of qualified section 401(h) medical benefits
20
provided for any period through the funded re-
21
serve account,
22
is entitled to elect such benefits for himself or his
23
spouse and dependents. A plan shall not be treated as
24
failing to meet the requirements of this subsection if an
25
employee is required to pay a premium for such bene-
S
2199 IS
19
1
fits as long as such premium does not exceed 102 per-
2
cent of applicable premium for the period such benefits
3
are provided.
4
"(2) APPLICABLE PREMIUM.-For purposes of
5
paragraph (1), the applicable premium for any period
6
shall be determined in the same manner as under sec-
7
tion 4980B(f)(4).
8 "SEC. 420C. DEFINITIONS; SPECIAL RULES.
9
"(a) QUALIFIED SECTION 401(h) MEDICAL BENE-
10 FITS.-For purposes of this subpart, the term 'qualified sec-
11 tion 401(h) medical benefits' means benefits-
12
"(1) which are-
13
"(A) benefits for sickness, accident, hospitali-
14
zation, and medical expenses of former employees
15
who are in pay status under the plan (and their
16
spouse or dependents) after the former
17
employee-
18
"(i) has attained Social Security retire-
19
ment age, or
20
"(ii) is disabled (within the meaning of
21
section 72(m)(7)), or
22
"(B) post-retirement long-term health care
23
benefits, and
24
"(2) which are provided through 1 or more of the
25
following:
S
2199 IS
20
1
"(A) insurance acquired by the plan, or
2
"(B) self-insurance by the employer or the
3
plan.
4 Such term does not include any applicable health benefits (as
5 defined in section 420(e)(1)(C)) which are paid out of assets
6 transferred to the health benefits account in a qualified trans-
7 fer under section 420.
8
"(b) POST-RETIREMENT LONG-TERM HEALTH
9 CARE.-For purposes of this subpart-
10
"(1) IN GENERAL.-The term 'post-retirement
11
long-term health care' means long-term health care
12
benefits provided to a former employee (or the spouse
13
of the former employee) who is in pay status under the
14
plan after the former employee-
15
"(A) has attained Social Security retirement
16
age, or
17
"(B) is disabled (within the meaning of sec-
18
tion 72(m)(7)).
19
"(2) SPOUSE OF DECEASED EMPLOYEE.-For
20
purposes of paragraph (1), the spouse of a deceased
21
employee shall be treated-
22
"(A) as a former employee, and
23
"(B) as satisfying the requirements of para-
24
graph (1) if such spouse was receiving benefits im-
25
mediately before the death of the employee.
S
2199 IS
21
1
"(3) LONG-TERM HEALTH CARE BENEFIT.-
2
"(A) IN GENERAL.-The term 'long-term
3
health care benefit' means a benefit which con-
4
sists of the providing by a qualified provider in a
5
qualified facility of necessary diagnostic, preven-
6
tive, therapeutic, rehabilitative, and personal care
7
services, required by a chronically ill individual.
8
"(B) CERTAIN ITEMS NOT INCLUDED.-The
9
term 'long-term health care benefits' does not in-
10
clude basic medicare supplement coverage, basic
11
hospital expense coverage, basic medical-surgical
12
expense coverage, hospital confinement indemnity
13
coverage, major medical expense coverage, dis-
14
ability income protection coverage, accident only
15
coverage, specified disease or specified accident
16
coverage, or limited benefit health coverage.
17
"(4) QUALIFIED FACILITY.-The term 'qualified
18
facility' means-
19
"(A) a rehabilitative, hospice, or adult day
20
care facility, including a hospital, retirement
21
home, skilled nursing facility (within the meaning
22
of section 1919(a) of the Social Security Act), or
23
other similar facility determined by the plan ad-
24
ministrator, or
S
2199 IS
22
1
"(B) a home where the chronically ill indi-
2
vidual resides.
3
"(5) CHRONICALLY ILL INDIVIDUAL.-The term
4
'chronically ill individual' means an individual whose
5
disability is such that the individual has been certified
6
as requiring assistance with daily living (as defined by
7
the plan administrator) for a period of at least 90 days.
8
"(6) QUALIFIED PROVIDER.-The term 'qualified
9
provider' means a medical practitioner licensed under
10
State law, registered nurse, licensed vocational nurse,
11
qualified therapist, or trained home health aid (or any
12
organization employing such providers), but does not
13
include a relative or other person who ordinarily re-
14
sides in the home where the chronically ill individual
15
resides.
16
"(c) HEALTH BENEFITS ACCOUNT.-For purposes of
17 this subpart, the term 'health benefits account' means an ac-
18 count established and maintained under section 401(h).
19
"(d) SOCIAL SECURITY RETIREMENT AGE.-For pur-
20 poses of this subpart, the term 'Social Security retirement
21 age' has the meaning given such term by section 415(b)(8)."
22
(b) INDIVIDUAL RETIREMENT ACCOUNTS.-
23
(1) IN GENERAL.-Section 408 is amended by re-
24
designating subsection (p) as subsection (q) and by in-
S
2199 IS
23
1
serting after subsection (o) the following new subsec-
2
tion:
3
"(p) SPECIAL RULES FOR FUNDED RESERVE Ac-
4 COUNTS.-
5
"(1) IN GENERAL.-A trust shall not be treated
6
as an individual retirement account under subsection
7
(a) unless the trust instrument provides that the trust
8
will accept transfers of assets as provided in section
9
420B(d)(1).
10
"(2) ACCOUNTING.-The trustee of an individual
11
retirement account shall maintain separate accounting
12
for assets transferred to the account under section
13
420B(d)(1) (and any income allocable thereto)."
14
(2) PENALTY FOR EARLY DISTRIBUTIONS.-Sec
15
tion 72(t) (relating to 10-percent additional tax on
16
early distributions) is amended by adding at the end
17
thereof the following new paragraph:
18
"(6) EARLY DISTRIBUTION OF MEDICAL BENE-
19
FITS.-If-
20
"(A) a taxpayer receives a distribution of
21
amounts transferred to an individual retirement
22
account under section 420B(d)(1) (or any income
23
or gain allocable thereto), and
24
"(B) such distribution-
S
2199 IS
24
1
"(i) is made before the individual attains
2
Social Security retirement age (within the
3
meaning of section 415(b)(8)) or becomes dis-
4
abled (within the meaning of subsection
5
(m)(7)), or
6
"(ii) exceeds the amount of qualified
7
section 401(h) medical expenses of the tax-
8
payer, his spouse, or dependents for the tax-
9
able year,
10
then paragraph (1) shall apply to such distribution or
11
such excess, except that '50 percent' shall be substitut-
12
ed for '10 percent'. Paragraph (2) shall not apply to a
13
distribution to which this paragraph applies."
14
(c) EXCISE TAX ON ALLOCATED ASSETS NOT USED
15 To PROVIDE RETIREE HEALTH BENEFITS.-Section 4980
16 (relating to tax on reversion of qualified plan assets to em-
17 ployers) is amended by adding at the end thereof the follow-
18 ing new subsection:
19
"(e) ASSETS ALLOCATED TO RETIREE HEALTH BEN-
20 EFITS ACCOUNTS.-In the case of a plan which establishes a
21 health benefits account described in section 401(h), if-
22
"(1) amounts are allocated to a funded reserve ac-
23
count under section 420B, and
24
"(2) any amount in such account is paid or dis-
25
tributed other than to pay for qualified section 401(h)
S 2199 IS
25
1
medical benefits (as defined in section 420C(a)) provid-
2
ed through such account,
3 the amount SO paid or distributed shall be treated as an em-
4 ployer reversion for purposes of this section, except that sub-
5 section (a) shall be applied by substituting '100 percent' for
6 '25 percent'."
7
(d) CONFORMING AMENDMENTS.-
8
(1) Section 419(e) (defining welfare benefit fund) is
9
amended by adding at the end thereof the following
10
new paragraph:
11
"(5) HEALTH BENEFITS ACCOUNTS.-The term
12
'welfare benefits fund' does not include any health ben-
13
efits account established under section 401(h)."
14
(2) The table of contents for part III of subchap-
15
ter D of chapter 1 is amended by inserting before the
16
item relating to section 420 the following new items:
"Subpart A. Excess pension assets.
"Subpart B. Treatment of health benefit accounts.
17
"Subpart A-Excess Pension Assets".
18
(e) EFFECTIVE DATE.-
19
(1) IN GENERAL.-Except as provided in para-
20
graph (2), the amendments made by this section shall
21
apply to contributions after December 31, 1990, in
22
taxable years ending after such date.
S 2199 IS
26
1
(2) INDIVIDUAL RETIREMENT ACCOUNTS.-The
2
amendments made by subsection (b) shall apply to ac-
3
counts established after December 31, 1990.
4
TITLE ILI-TRANSFER OF EXCESS
5
PENSION ASSETS
6 SEC. 301. TRANSFER OF EXCESS PENSION ASSETS TO RE-
7
TIREE HEALTH ACCOUNTS.
8
(a) IN GENERAL.-Subchapter D of chapter 1 (relating
9 to deferred compensation) is amended by adding at the end
10 thereof the following new part:
11
"PART ILI-TREATMENT OF TRANSFERS TO
12
RETIREE HEALTH ACCOUNTS
"Sec. 420. Transfers of excess pension assets to retiree health ac-
counts.
13 "SEC. 420. TRANSFERS OF EXCESS PENSION ASSETS TO RETIR-
14
EE HEALTH ACCOUNTS.
15
"(a) GENERAL RULE.-If there is a qualified transfer of
16 any excess pension assets of a defined benefit plan to a health
17 benefits account which is part of such plan-
18
"(1) a trust which is part of such plan shall not be
19
treated as failing to meet the requirements of subsec-
20
tion (a) or (h) of section 401 solely by reason of such
21
transfer (or any other action authorized under this sec-
22
tion),
23
"(2) no amount shall be includible in the gross
24
income of the employer maintaining the plan solely by
S
2199 IS
27
1
reason of such transfer, and such transfer shall not be
2
treated as an employer reversion for purposes of sec-
3
tion 4980, and
4
"(3) the limitations of subsection (d) shall apply to
5
such employer.
6
"(b) QUALIFIED TRANSFER.-For purposes of this sec-
7 tion-
8
"(1) IN GENERAL.-The term 'qualified transfer'
9
means a transfer of excess pension assets by a defined
10
benefit plan to a health benefits account in a taxable
11
year beginning after December 31, 1990, with respect
12
to which the plan meets-
13
"(A) the use requirements of subsection
14
(c)(1),
15
"(B) the minimum benefit requirements of
16
subsection (c)(2), and
17
"(C) the long-term health care requirements
18
of subsection (c)(3).
19
"(2) ONLY 1 TRANSFER PER YEAR.-
20
"(A) IN GENERAL.-No more than 1 trans-
21
fer with respect to any plan during a taxable year
22
may be treated as a qualified transfer.
23
"(B) EXCEPTION.-A transfer described in
24
paragraph (4) shall not be taken into account for
25
purposes of subparagraph (A).
S
2199 IS
28
1
"(3) LIMITATION ON AMOUNT TRANSFERRED.-
2
The amount of excess pension assets which may be
3
transferred in a qualified transfer shall not exceed the
4
amount which is reasonably estimated to be the
5
amount the employer maintaining the plan will pay out
6
of such account under such plan during the taxable
7
year of the transfer for qualified current retiree health
8
liabilities.
9
"(4) SPECIAL RULE FOR 1990.-
10
"(A) IN GENERAL.-Subject to the provi-
11
sions of subsection (c), a transfer shall be treated
12
as a qualified transfer if such transfer-
13
"(i) is made after the close of the tax-
14
able year preceding the taxpayer's first tax-
15
able year beginning after December 31,
16
1990, and before the due date (including ex-
17
tensions) for filing the return of tax for such
18
preceding taxable year, and
19
"(ii) does not exceed the expenditures of
20
the employer for qualified current retiree
21
health liabilities for such preceding taxable
22
year.
23
"(B) INCLUSION WITH 1991 TRANSFER.-
24
An employer may elect to include the transfer de-
25
scribed in subparagraph (A) as part of the quali-
S
2199 IS
29
1
fied transfer for the employer's first taxable year
2
beginning after December 31, 1990. If an election
3
is made under this subparagraph, the limitation
4
under paragraph (3) for the taxable year shall be
5
increased by the amount determined under sub-
6
paragraph (A)(ii).
7
"(C) COORDINATION WITH REDUCTION
8
RULE.-Subsection (e)(1)(B) shall not apply to a
9
transfer described in subparagraph (A) with re-
10
spect to contributions to a welfare benefit fund.
11
"(5) TERMINATION.-No transfer in any taxable
12
year beginning after December 31, 1995, shall be
13
treated as a qualified transfer.
14
"(c) REQUIREMENTS OF PLANS TRANSFERRING
15 ASSETS.-
16
"(1) USE OF TRANSFERRED ASSETS.-
17
"(A) IN GENERAL.-Any assets transferred
18
to a health benefits account in a qualified transfer
19
(and any income allocable thereto) shall be used
20
only to pay qualified current retiree health liabil-
21
ities (whether directly or through reimbursement).
22
"(B) AMOUNTS NOT USED TO PAY FOR
23
HEALTH BENEFITS.-Any assets transferred to a
24
health benefits account in a qualified transfer (and
25
any income allocable thereto) which are not used
S
2199 IS
30
1
as provided in subparagraph (A) for the taxable
2
year of such transfer-
3
"(i) shall be transferred out of the ac-
4
count to the transferor plan, but
5
"(ii) shall not be includible in the gross
6
income of the employer for such taxable
7
year, and shall not be treated, for purposes
8
of section 4980, as an employer reversion.
9
"(2) MINIMUM BENEFIT REQUIREMENTS.-
10
"(A) IN GENERAL.-The requirements of
11
this paragraph are met if the applicable employer
12
cost for each year during the benefit maintenance
13
period is not less than the highest applicable em-
14
ployer cost for the 2 taxable years immediately
15
preceding the taxable year of the qualified
16
transfer.
17
"(B) APPLICABLE EMPLOYER cost.-For
18
purposes of this paragraph-
19
"(i) IN GENERAL.-The term 'applica-
20
ble employer cost' means the average em-
21
ployer cost per covered employee in provid-
22
ing applicable health benefits to covered em-
23
ployees.
24
"(ii) COVERED EMPLOYEE.-The term
25
'covered employee' means any employee who
S 2199 IS
31
1
is taken into account in determining the
2
qualified current retiree health liabilities with
3
respect to any qualified transfer.
4
"(C) BENEFIT MAINTENANCE PERIOD.-For
5
purposes of this paragraph, the term 'benefit
6
maintenance period' means the 3-taxable-year
7
period beginning with the taxable year in which
8
the qualified transfer occurs. If there is more than
9
1 qualified transfer applicable to any taxable year,
10
this paragraph shall be applied by taking into ac-
11
count the highest applicable employer cost.
12
"(D) MULTIPLE PLANS.-If applicable
13
health benefits are provided through more than 1
14
plan, such plans shall be treated as 1 plan for de-
15
termining the applicable employer cost.
16
"(E) SEPARATE APPLICATION FOR MEDI-
17
CARE-ELIGIBLE EMPLOYEES.-At the election of
18
the employer, this paragraph may be applied sep-
19
arately with respect to-
20
"(i) employees who are entitled to bene-
21
fits under title XVIII of the Social Security
22
Act, and
23
"(ii) employees not described in clause
24
(i).
S
2199 IS
32
1
"(3) LONG-TERM HEALTH CARE REQUIRE-
2
MENTS.-
3
"(A) IN GENERAL.-The requirements of
4
this paragraph are met if each employer maintain-
5
ing the plan-
6
"(i) makes available on and after the re-
7
quired beginning date a program providing
8
for long-term health care benefits to current
9
or retired employees through-
10
"(I) a health benefits account,
11
"(II) a cafeteria plan (as defined in
12
section 125(d)), or
13
"(III) any other arrangement
14
meeting the requirements of this chap-
15
ter, and
16
"(ii) participates in the cost of such pro-
17
gram.
18
"(B) LONG-TERM HEALTH CARE.-For pur-
19
poses of subparagraph (A)-
20
"(i) IN GENERAL.-The term 'long-
21
term health care benefit' means a benefit
22
which consists of the providing by a qualified
23
provider in a qualified facility of necessary
24
diagnostic, preventive, therapeutic, rehabili-
S 2199 IS
33
1
tative, and personal care services, required
2
by a chronically ill individual.
3
"(ii) CERTAIN ITEMS NOT INCLUDED.-
4
The term 'long-term health care benefits'
5
does not include basic medicare supplement
6
coverage, basic hospital expense coverage,
7
basic medical-surgical expense coverage, hos-
8
pital confinement indemnity coverage, major
9
medical expense coverage, disability income
10
protection coverage, accident only coverage,
11
specified disease or specified accident cover-
12
age, or limited benefit health coverage.
13
"(iii) QUALIFIED FACILITY.-For pur-
14
poses of this subparagraph, the term 'quali-
15
fied facility' means-
16
"(I) a rehabilitative, hospice, or
17
adult day care facility, including a hos-
18
pital, retirement home, skilled nursing
19
facility (within the meaning of section
20
1919(a) of the Social Security Act), or
21
other similar facility determined by the
22
plan administrator, or
23
"(II) a home where the chronically
24
ill individual resides.
S
2199 IS
34
1
"(iv) CHRONICALLY ILL INDIVIDUAL.-
2
For purposes of this subparagraph, the term
3
'chronically ill individual' means an individ-
4
ual whose disability is such that the individ-
5
ual has been certified as requiring assistance
6
with daily living (as defined by the plan ad-
7
ministrator) for a period of at least 90 days.
8
"(v) QUALIFIED PROVIDER.-For pur-
9
poses of this subparagraph, the term 'quali-
10
fied provider' means a medical practitioner
11
licensed under State law, registered nurse, li-
12
censed vocational nurse, qualified therapist,
13
or trained home health aid (or any organiza-
14
tion employing such providers), but does not
15
include a relative or other person who ordi-
16
narily resides in the home where the chron-
17
ically ill individual resides.
18
"(C) REQUIRED BEGINNING DATE.-For
19
purposes of paragraph (1), the term 'required be-
20
ginning date' means the later of the date which
21
is-
22
"(i) 2 years after the date of the enact-
23
ment of this paragraph, or
S
2199 IS
35
1
"(ii) 2 years after the date on which
2
excess pension assets are allocated to the
3
excess asset account.
4
A plan may provide a date which is earlier than
5
the date determined under the preceding sentence.
6
"(d) LIMITATIONS ON EMPLOYER.-For purposes of
7 this title-
8
"(1) DEDUCTION LIMITATIONS. No deduction
9
shall be allowed-
10
"(A) for the transfer of any amount to a
11
health benefits account in a qualified transfer (or
12
any retransfer to the plan under subsection
13
(c)(1)(B)),
14
"(B) for qualified current retiree health liabil-
15
ities paid out of the assets (and income) described
16
in subsection (c)(1), or
17
"(C) for any amounts to which subparagraph
18
(B) does not apply and which are paid for quali-
19
fied current retiree health liabilities for the tax-
20
able year to the extent such amounts are not
21
greater than the excess (if any) of-
22
"(i) the amount determined under sub-
23
paragraph (A) (and income allocable thereto),
24
over
S
2199 IS
36
1
"(ii) the amount determined under sub-
2
paragraph (B).
3
"(2) No CONTRIBUTIONS ALLOWED.-An em-
4
ployer may not contribute after December 31, 1990,
5
any amount to a health benefits account or welfare
6
benefit fund (as defined in section 419(e)(1)) with re-
7
spect to qualified current retiree health liabilities for
8
which transferred assets are required to be used under
9
subsection (c)(1).
10
"(e) DEFINITION AND SPECIAL RULES.-For purposes
11 of this section-
12
"(1) QUALIFIED CURRENT RETIREE HEALTH LI-
13
ABILITIES.-For purposes of this section-
14
"(A) IN GENERAL.-The term 'qualified cur-
15
rent retiree health liabilities' means, with respect
16
to any taxable year, the aggregate amounts (in-
17
cluding administrative expenses) which would
18
have been allowable as a deduction to the em-
19
ployer for such taxable year with respect to appli-
20
cable health benefits provided during such taxable
21
year if-
22
"(i) such benefits were provided directly
23
by the employer, and
24
"(ii) the employer used the cash receipts
25
and disbursements method of accounting.
S 2199 IS
37
1
For purposes of the preceding sentence, the rule
2
of section 419(c)(3)(B) shall apply.
3
"(B) REDUCTIONS FOR AMOUNTS PREVI-
4
OUSLY SET ASIDE.-The amount determined
5
under subparagraph (A) shall be reduced by any
6
amount previously contributed to a health benefits
7
account or welfare benefit fund (as defined in sec-
8
tion 419(e)(1)) to pay for the qualified current re-
9
tiree health liabilities.
10
"(C) APPLICABLE HEALTH BENEFITS.-
11
The term 'applicable health benefits' means health
12
benefits which are provided through the health
13
benefits account maintained by the employer to
14
employees of such employer who-
15
"(i) are eligible for pension benefits
16
under the defined benefit plan maintaining
17
the health benefits account, and
18
"(ii) have retired on or before the date
19
of the qualified transfer.
20
"(D) KEY EMPLOYEES EXCLUDED.-If an
21
employee is a key employee (within the meaning
22
of section 416(i)(1)) with respect to any plan year
23
ending in a taxable year, such employee shall not
24
be taken into account in computing qualified cur-
25
rent retiree health liabilities for such taxable year.
S
2199 IS
38
1
"(2) EXCESS PENSION ASSETS.-The term
2
'excess pension assets' means the excess (if any) of-
3
"(A) the amount determined under section
4
412(c)(7)(A)(ii), over
5
"(B) the amount determined under section
6
412(c)(7)(A)(i).
7
"(3) HEALTH BENEFITS ACCOUNT.-The term
8
'health benefits account' means an account established
9
and maintained under section 401(h).
10
"(4) COORDINATION WITH FULL-FUNDING LIMI-
11
TATION.-For purposes of determining the full-funding
12
limitation of any plan under paragraph (7) or (12) of
13
section 412(c), the assets transferred to a health bene-
14
fits account in a qualified transfer (and any income al-
15
locable thereto) shall be treated as assets of such
16
plan."
17
(b) CONFORMING AMENDMENT.-Section 401(h) is
18 amended by inserting ", and subject to the provisions of sec-
19 tion 420" after "Secretary".
20
(c) EFFECTIVE DATE.-The amendments made by this
21 section shall apply to taxable years beginning after
22 December 31, 1990.
O
S 2199 IS