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17
6
5
1
II
102D CONGRESS
1ST SESSION
S.1227
To amend the Public Health Service Act, the Social Security Act, and the
Internal Revenue Code of 1986 to provide affordable health care of
all Americans, to reduce health care costs, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JUNE 5 (legislative day, JUNE 3), 1991
Mr. MITCHELL (for himself, Mr. KENNEDY, Mr. RIEGLE, and Mr. ROCKEFEL-
LER) introduced the following bill; which was read twice and ordered held
at the desk until the close of business June 6, 1991
JUNE 6 (legislative day, JUNE 3), 1991
Referred to the Committee on Finance
A BILL
To amend the Public Health Service Act, the Social Security
Act, and the Internal Revenue Code of 1986 to provide
affordable health care of all Americans, to reduce health
care costs, 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
5 "HealthAmerica: Affordable Health Care for All Ameri-
6 cans Act".
2
1
(b) REFERENCE TO ACT.-Hereafter this Act may be
2 referred to as the "HealthAmerica Act".
3
(c) TABLE OF CONTENTS.-The table of contents of
4 this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I-AMENDMENTS TO PUBLIC HEALTH SERVICE ACT
Sec. 101. Basic health benefits for employees and their families.
Sec. 102. Obligation to secure health insurance.
TITLE II-REQUIREMENTS FOR HEALTH BENEFIT PLANS
Sec. 201. Requirements for health benefit plans.
TITLE III-SPECIAL ASSISTANCE FOR SMALL AND MEDIUM-SIZED
BUSINESS
Sec. 301. Preemption of State mandated benefit laws.
Subtitle A-Reform of Small Group Insurance
Sec. 311. Group health insurance standards.
Subtitle B-Tax Equity for Small and Medium-Sized Businesses
Sec. 321. Deductible health coverage provisions.
Sec. 322. Excise tax for violation of health benefit plan requirements.
Subtitle C-Opportunity for Voluntary Provision of Coverage
Sec. 331. Medium-sized employers.
Sec. 332. Measurement surveys.
Sec. 333. Small employers.
Sec. 334. Failure to make surveys.
Subtitle D-Small Business Tax Credit
Sec. 341. Allowance of a credit for small and medium-sized business group
health plan expenditures.
Subtitle E-Additional Assistance to Small and Medium-Sized Businesses
Sec. 351. Opportunity to buy coverage at medicare rates.
Sec. 352. Special provisions for new small businesses.
Sec. 353. Small and medium-sized business advisory committee.
TITLE IV-REDUCING HEALTH CARE COST INFLATION
Subtitle A-Outcomes Research and Practice Guideline Development and
Dissemination
Sec. 401. Initial guidelines and standards.
Sec. 402. Amendments to the Social Security Act.
.S 1227 IS
3
Subtitle B-Federal Health Expenditure Board
Sec. 411. Federal Health Expenditure Board.
Subtitle C-State Purchasing Consortia
Sec. 421. State purchasing consortia.
Subtitle D-Cost Control Grant Program
Sec. 431. Cost Control Grant Program.
Subtitle E-Malpractice Reform
Sec. 441. Malpractice reform.
Sec. 442. Study of medical malpractice.
Subtitle F-Reducing the Administrative Cost of Assuring Appropriate Utili-
zation of Health Care Services and Improving the Quality of
Health Care Services
Sec. 451. Establishment of a quality improvement board.
Subtitle G-Use of Practice Guidelines in Federal Health Insurance and
Service Programs
Sec. 461. Use of practice guidelines in Federal health insurance and service
programs.
Subtitle H-National Standards for the Promotion of Managed Care
Sec. 471. National standards for the promotion of managed care.
Subtitle I-Expansion of Technology Assessment
Sec. 481. Expansion of technology assessment.
TITLE V-CONTRIBUTION TO PUBLIC PLAN BY EMPLOYERS NOT
PROVIDING HEALTH COVERAGE
Sec. 501. Contribution by employers not providing required private health bene-
fit plans.
TITLE VI-ASSURING PROVISION OF HEALTH BENEFITS TO ALL
AMERICANS
Sec. 601. Establishment of AmeriCare.
TITLE VII-DEVELOPMENT OF HEALTH SERVICE CAPACITY
Sec. 701. Grants for expansion of availability of primary care services.
TITLE VIII-EFFECTIVE DATE
Sec. 801. Effective date.
Sec. 802. Policy respecting additional benefits.
4
1
TITLE I-AMENDMENTS TO
2
PUBLIC HEALTH SERVICE ACT
3 SEC. 101. BASIC HEALTH BENEFITS FOR EMPLOYEES AND
4
THEIR FAMILIES.
5
(a) REQUIREMENT.-The Public Health Service Act
6 is amended-
7
(1) by redesignating title XXVII (42 U.S.C.
8
300cc et seq.) as title XXVIII; and
9
(2) by inserting after title XXVI the following
10
new title:
11 "TITLE XXVII-BASIC HEALTH
12
BENEFITS FOR EMPLOYEES
13
AND THEIR FAMILIES
14
"PART A-REQUIREMENTS OF HEALTH BENEFITS
15 "SEC. 2701. HEALTH BENEFITS.
16
"(a) REQUIREMENT.-
17
"(1) IN GENERAL.-Except as provided in part
18
B, each employer shall-
19
"(A) enroll each of its employees (other
20
than part-time employees) and their families in
21
a health benefit plan in accordance with part B;
22
or
23
"(B) make a contribution under title V of
24
the HealthAmerica Act, for the coverage for
25
such employees and their families under the
.S 1227 IS
5
1
public health insurance plan established under
2
title XXI of the Social Security Act.
3
"(2) PART-TIME EMPLOYEES.-In meeting the
4
requirements of paragraph (1) with respect to part-
5
time employees, an employer may, except as provid-
6
ed in part B-
7
"(A) enroll all of its part-time employees
8
and their families as required under paragraph
9
(1)(A); or
10
"(B) make a contribution to the public
11
health insurance plan referred to in paragraph
12
(1) (B) on behalf of all such employees.
13
"(3) LIMITATION.-An employer providing
14
health insurance coverage for pregnancy-related
15
services and for services for children in the 1-year
16
period prior to the date of enactment of this section
17
may not terminate coverage for such services or re-
18
duce the financial contribution provided for the cost
19
of coverage for such services prior to the time such
20
employer is required to provide or contribute to cov-
21
erage under paragraph (1).
22
"(b) COORDINATION WITH PUBLIC HEALTH INSUR-
23 ANCE PLAN.-An employer making a contribution for cov-
24 erage under the public health insurance plan as provided
25 for in subsection (a)(1)(B) shall follow such procedures
.S 1227 IS
6
1 as the Secretary may prescribe to facilitate the enrollment
2 of its employees in such public health insurance plan. Such
3 procedures shall include-
4
"(1) the distribution of enrollment forms and
5
information to employees;
6
"(2) notifying in writing each employee of the
7
availability of premium and cost-sharing subsidies
8
for low-income families;
9
"(3) notifying the State in which an employee
10
resides concerning the identify of an employee on be-
11
half of whom a contribution is being made;
12
"(4) submitting enrollment forms and informa-
13
tion to the State agency administering the public
14
health insurance plan established under title XXI of
15
the Social Security Act on behalf of the employee
16
and the employee's family, if required by the State
17
in which the employee resides;
18
"(5) withholding, in the form of payroll deduc-
19
tions, an employee's share of the public health insur-
20
ance plan premium and submitting such withholding
21
to the administering State agency on behalf of the
22
employee, if required by the State in which the em-
23
ployee resides; and
.S 1227 IS
7
1
'(6) notifying the appropriate administering
2
State agency of the public health insurance plan
3
when an employee ceases to be an employee.
4
"(c) ENFORCEMENT-Any employer that does not
5 comply with subsections (a) and (b) shall be subject to
6 section 2732.
7
"(d) DEFINITIONS.-The terms used in this section
8 shall have the meanings prescribed for such terms by sec-
9 tion 2713."
10
(b) CONFORMING AMENDMENTS.-
11
(1) Sections 2701 through 2714 of the Public
12
Health Service Act (42 U.S.C. 300cc through
13
300cc-15) are redesignated as sections 2801
14
through 2814, respectively.
15
(2)(A) Sections 465(f) and 497 of such Act (42
16
U.S.C. 286(f) and 289(f)) are amended by striking
17
out "2701" each place that such appears and insert-
18
ing in lieu thereof "2801".
19
(B) Section 305(i) of such Act (42 U.S.C.
20
242c(i)) is amended by striking out "2711" each
21
place such appears and inserting in lieu thereof
22
"2811".
23 SEC. 102. OBLIGATION TO SECURE HEALTH INSURANCE.
24
(a) FEDERAL PROGRAMS.-Beginning with the sev-
25 enth full year after the date of enactment of this Act, to
.S 1227 IS
8
1 be eligible for benefits under a Federal program, an indi-
2 vidual seeking benefits under such program shall certify
3 to the administrator of such program that such individual
4 and the dependents of such individual possess health in-
5 surance coverage that meets the applicable minimum
6 standards under this Act.
7
(b) INTERNAL REVENUE EXEMPTIONS.-To be eligi-
8 ble to claim the exemption amount to which an individual
9 is entitled under section 151 of the Internal Revenue Code
10 of 1986, such individual shall certify, as part of the per-
11 sonal income tax return filed by such individual with the
12 Internal Revenue Service, that such individual is covered
13 under a health insurance plan that meets the applicable
14 minimum standards under this Act. A parent shall make
15 such certification on behalf of a dependent child.
16 TITLE II-REQUIREMENTS FOR
17
HEALTH BENEFIT PLANS
18 SEC. 201. REQUIREMENTS FOR HEALTH BENEFIT PLANS.
19
Title XXVII of the Public Health Service Act (as
20 added by section 101) is amended by adding at the end
21 thereof the following new part:
.S 1227 IS
9
1
"PART B-REQUIREMENTS FOR HEALTH BENEFIT
2
PLANS
3
"Subpart 1-Requirement and Definitions
4 "SEC. 2711. REQUIREMENT TO ENROLL EMPLOYEES AND
5
FAMILIES.
6
"(a) IN GENERAL.-This part shall apply to employ-
7 ers required to enroll employees and their families in
8 health benefit plans under section 2701(a).
9
"(b) TYPES OF PLANS PERMITTED.-Except as re-
10 quired under chapter 2 of subtitle A of title III of the
11 HealthAmerica Act (relating to small and medium-sized
12 business insurance), an employer may meet the require-
13 ments of this part by means of enrollment in any health
14 benefit plan.
15
"(c) EXCEPTION FOR EMPLOYERS IN HAWAII-Em-
16 ployers that have employees in the State of Hawaii shall
17 be exempt from the requirements of this part with respect
18 to such employees, for SO long as the Hawaii Prepaid
19 Health Care Act (Hawaii Rev. Stat. Chapter 393) remains
20 in effect. This subsection shall not apply if the proportion
21 of the population with health care coverage provided under
22 such Act that is at least actuarially equivalent to the cov-
23 erage required under this title is, or becomes, less than
24 that required to be provided in other States under this
25 title or the HealthAmerica Act.
.S 1227 IS
10
1 "SEC. 2712. COVERAGE OF EMPLOYEES AND FAMILY MEM-
2
BERS.
3
"(a) REQUIREMENT.-Except as permitted under
4 subsections (b) and (d) and section 2723(c)-
5
"(1) the enrollment of an employee in a health
6
benefit plan under this part shall include the enroll-
7
ment of the family of such employee in the plan; and
8
"(2) the enrollment of an employee or the fami-
9
ly of an employee in a health benefit plan may not
10
be waived by the employee.
11
"(b) EXCEPTIONS To AVOID DUPLICATE FAMILY
12 COVERAGE.-
13
"(1) SPOUSE OR PARENT EMPLOYED.-An em-
14
ployee may waive enrollment in a health benefit plan
15
under this part for the spouse or a child of the em-
16
ployee but only for such period as the employee dem-
17
onstrates that such spouse or child, respectively, is
18
actually covered under a health benefit plan.
19
"(2) CHILD EMPLOYED.-A child who is em-
20
ployed (or a parent on behalf of the child) may
21
waive enrollment in a health benefit plan provided
22
by the employer of such child during any period in
23
which the child otherwise is covered under a health
24
benefit plan.
25
"(c) NONDISCRIMINATION BASED ON FAMILY STA-
26 TUS.-An employer shall not fail or refuse to hire, and
.S 1227 IS
11
1 shall not discharge or otherwise discriminate against, any
2 individual because the individual has a spouse or child that
3 would be required under this part to be enrolled by such
4 employer in a health benefit plan.
5
"(d) WAIVER IN CASE OF MULTIPLE EMPLOYERS.-
6 In the case of an individual who is an employee with re-
7 spect to more than one employer and who is required to
8 enroll in a health benefit plan, such employee may waive
9 enrollment in the health benefit plan of any such employer,
10 but only if such employee is, and certifies to the employer
11 that such employee is, enrolled in the health benefit plan
12 of one employer.
13 "SEC. 2713. DEFINITIONS.
14
"(a) IN GENERAL.-Unless otherwise specifically
15 provided, as used in this title:
16
"(1) CHILD.-The term 'child' means with re-
17
spect to an employee, an individual-
18
"(A) who-
19
"(i) is under 19 years of age;
20
"(ii) is under : ; years of age and a
21
full-time student; or
22
"(iii) is an unmarried, dependent
23
child, regardless of age, who is incapable of
24
self-support as a result of a mental or
.S 1227 IS
12
1
physical disability that existed prior to the
2
individual reaching 22 years of age; and
3
"(B)(i) who is the biological, adopted, or
4
foster child of the employee or the spouse of the
5
employee, or of the dependent child of the em-
6
ployee or the spouse of the employee;
7
"(ii) who is the legal ward of the employee
8
or the spouse of the employee; or
9
"(iii) with respect to whom the employee or
10
spouse of the employee, stands in loco parentis
11
during the course of an adoption application.
12
"(2) EMPLOYEE.-
13
"(A) IN GENERAL.-Except as otherwise
14
provided in this paragraph, the term 'employee'
15
means, with respect to an employer, an individ-
16
ual who normally performs at least 1 hour of
17
service per week for that employer.
18
"(B) HANDICAPPED WORKERS.-The term
19
'employee' does not include an individual de-
20
scribed in section 14(c) of the Fair Labor
21
Standards Act of 1938 (29 U.S.C. 214(c)).
22
"(C) CERTAIN EMPLOYEES.-The term
23
'employee' means, with respect to an employer
24
described in section 3(37) of the Employee Re-
25
tirement Income Security Act of 1974 (29
.S 1227 IS
13
1
U.S.C.
1002(37)),
an
individual
who
2
performs—
3
"(i) 17.5 hours or more of service per
4
week for the employer; or
5
"(ii) an equivalent amount of service
6
during a 1-, 3-, or 6-month period for the
7
employer, as determined under regulations
8
issued by the Secretary.
9
"(D) LESS-THAN-FULL-TIME EMPLOYEE
10
DEFINED.-The term 'less-than-full-time em-
11
ployee' means, with respect to an employer, an
12
employee who normally performs on a monthly
13
basis less than 25 hours of service per week but
14
more than 17.5 hours per week for that employ-
15
er.
16
"(E) CONSULTANTS AND CONTRACTORS.-
17
The term 'employee' shall include an individual
18
who is a consultant or independent contractor
19
of an employer if the Secretary determines that
20
the consulting arrangement or contract was en-
21
tered into to avoid the requirements of this
22
part.
23
"(F) PART-TIME EMPLOYEE.-The term
24
'part-time employee' means, with respect to an
.S 1227 IS
14
1
employer, an individual who normally performs
2
on a monthly basis-
3
"(i) less than 17.5 hours per week;
4
and
5
"(ii) 1 hour or more per week for that
6 employer.
7
"(3) EMPLOYER.-
8
"(A) IN GENERAL.-Except as otherwise
9
provided in this paragraph, the term 'employer'
10
means—
11
"(i) an entity that is required to pay
12
the individuals it employs the minimum
13
wage prescribed by section 6 of the Fair
14
Labor Standards Act of 1938 (29 U.S.C.
15
206) (or would be required to pay such
16
wage but for the dollar volume standards
17
prescribed in section 3(s) of such Act (29
18
U.S.C. 203(s)) or the exemptions pre-
19
scribed in section 13(a) of such Act (29
20
U.S.C. 213(a)); and
21
"(ii) any State or political subdivision
22
thereof, or any agency or instrumentality
23
thereof;
24
but such term does not include the Federal
25
Government or a subdivision thereof.
.S 1227 IS
15
1
"(B) OWNER-OPERATORS.-An owner-op-
2
erator of a business shall be considered to be
3
both an employer and employee with respect to
4
himself or herself if the owner-operator has one
5
or more other employees.
6
"(C) SMALL AND MEDIUM-SIZED EMPLOY-
7
ERS.-The term 'small employer' means, with
8
respect to a calendar year, an employer that
9
normally employs fewer than 25 employees dur-
10
ing the calendar year, and the term 'medium-
11
sized employer' means, with respect to a calen-
12
dar year, an employer that normally employs 25
13
or more employees, but not more than 100 em-
14
ployees, during the calendar year.
15
"(D) APPLICATION OF CONTROLLED
16
GROUP RULES.-Section 607(4) of the Employ-
17
ee Retirement Income Security Act of 1974 (29
18
U.S.C. 1167(4)) shall apply in the determina-
19
tion under this part of whether an employer is
20
a small or medium-sized employer and the num-
21
ber of employees an employer normally employs.
22
"(E) FAMILY FARMERS.-
23
"(i) PRICE SUPPORT GREATER THAN
24
70 PERCENT OF PARITY.-The term 'em-
25
ployer' shall not include the owner or oper-
.S 1227 IS
16
1
ator of a family farm unless the level of
2
agricultural prices, or the minimum level of
3
agricultural price support provided by the
4
Secretary of Agriculture for loans and pur-
5
chases, for the major commodity produced
6
on the farm is equal to or greater than 70
7
percent of the parity price of the commodi-
8
ty as maintained by the Secretary during
9
the preceding 2 crop years.
10
"(ii) PRICE SUPPORT LESS THAN 70
11
PERCENT OF PARITY.-Owners and opera-
12
tors of a family farm who do not receive
13
minimum agricultural price support
14
through loans and purchases that is equal
15
to or greater than 70 percent of parity for
16
the major commodity produced on the
17
farm from the Secretary of Agriculture for
18
the preceding crop year shall be included
19
within the definition of the term 'employer'
20
only if, based on a national referendum
21
conducted by the Secretary of Agriculture,
22
a majority of the owners and operators
23
vote in favor of mandatory participation in
24
the small business insurance program pro-
.S 1227 IS
17
1
vided by part C and the HealthAmerica
2
Act.
3
"(iii) No COVERED EMPLOYEES.-
4
Owners and operators of family farms with
5
no employees required to be enrolled in
6
health benefit plans under this part, shall
7
be included in the definition of 'employee'
8
under this part if, based on a national ref-
9
erendum conducted by the Secretary of
10
Agriculture, a majority of farmers in the
11
commodity group vote in favor of mandato-
12
ry participation in the small business in-
13
surance program provided by part C and
14
the HealthAmerica Act.
15
"(iv)
DEFINITION
OF
FAMILY
16
FARM.-As used in this subparagraph, the
17
term 'family farm' means a farm with re-
18
spect to which
19
(I) the operator or the family of
20
the operator, or both (or, if the opera-
21
tor is a cooperative, corporation, part-
22
nership, or joint operation, the mem-
23
bers, stockholders, partners, or joint
24
operators, respectively) devote a sub-
.S 1227 IS
BI
18
1
stantial amount of time daily to the
2
management or operation of the farm;
3
"(II) a majority of the hours of
4
labor required annually for the (farm
5
and nonfarm) enterprise of the farm
6
is provided by the operator or the
7
family of the operator, or both (or, if
8
the operator is a cooperative, corpora-
9
tion, partnership, or joint operation,
10
by the members, stockholders, part-
11
ners, or joint operators, respectively,
12
and the families of such individuals);
13
and
14
"(III) the value of the gross an-
15
nual sales of agricultural commodities
16
produced on the farm is not more
17
than $750,000.
18
"(4) FAMILY AND FAMILY MEMBER.-The
19
terms 'family' and 'family member' mean, with re-
20
spect to an employee, the spouse and children of the
21
employee.
22
"(5) HEALTH BENEFIT PLAN.-The term
23
'health benefit plan' means an employee welfare ben-
24
efit plan (as defined in section 3(1) of the Employee
S 1227 IS
19
1
Retirement Income Security Act of 1974 (29 U.S.C.
2
1002(1)) that-
3
"(A) provides medical care to participants
4
or beneficiaries directly or through insurance,
5
reimbursement, or otherwise; and
6
"(B) meets the requirements of section
7
2721.
8
"(6) INSURER.-The term 'insurer' means an
9
entity qualified under the laws of a State to offer in-
10
surance or provide health benefits in that State.
11
"(7) MANAGED CARE.-
12
"(A) MANAGED CARE ENTITY.-The term
13
'managed care entity' means an insurer, health
14
maintenance organization, preferred provider
15
organization, dental plan organization, or other
16
entity licensed to do business in a State, that
17
markets managed care plans to groups or indi-
18
viduals or an employer, labor union or other
19
State licensed entity that provides managed
20
care plans for its employees or members.
21
"(B) MANAGED CARE PLAN.-The term
22
'managed care plan' means a health benefit
23
plan-
24
"(i) in which the insurer-
.S 1227 IS
20
1
"(I) utilizes explicit standards for
2
the selection and recertification of
3
participating providers;
4
"(II) has organizational arrange-
5
ments, established in accordance with
6
regulations of the Secretary, for an
7
ongoing quality assurance program
8
for its health services, which program
9
(aa) stresses health outcomes, and
10
(bb) provides review by physicians and
11
other health professionals of the proc-
12
ess followed in the provision of health
13
services; and
14
"(III) contains significant incen-
15
tives to use the participating providers
16
and procedures provided for by the
17
plan; and
18
"(ii) which, if it limits coverage of
19
services to those provided by participating
20
providers or permits deductibles and coin-
21
surance with respect to basic health serv-
22
ices provided by persons who are not par-
23
ticipating providers which are in excess of
24
those permitted under health benefit
25
plans
.S 1227 IS
21
1
"(I) has a sufficient number and
2
distribution of participating providers
3
to assure that all covered items and
4
services are (aa) available and accessi-
5
ble to each enrollee, within the area
6
served by the plan, with reasonable
7
promptness and in a manner which
8
assures continuity, and (bb) when
9
medically necessary, available and ac-
10
cessible twenty-four hours a day and
11
seven days a week; and
12
"(II) provides benefits for cov-
13
ered items and services not furnished
14
by participating providers if the items
15
and services are medically necessary
16
and immediately required because of
17
an unforeseen illness, injury, or condi-
18
tion.
19
"(C) PARTICIPATING PROVIDER.-The
20
term 'participating provider' means a physician,
21
hospital, health maintenance organization,
22
pharmacy, laboratory, or other appropriately li-
23
censed provider of health care services or sup-
24
plies, that has entered into an agreement with
25
a managed care entity to provide such services
.S 1227 IS
22
1
or supplies to a patient enrolled in a managed
2
care plan.
3
"(D) UTILIZATION REVIEW.-The term
4
'utilization review' means a program for review-
5
ing the necessity and appropriateness of health
6
care services provided or proposed to be provid-
7
ed to a patient.
8
"(8) MENTAL DISORDER.-The term 'mental
9
disorder' has the same meaning given such term in
10
the International Classification of Diseases, 9th Re-
11
vision, Clinical Modification.
12
"(9) NONGOVERNMENTAL EMPLOYER.-The
13
term 'nongovernmental employer' means an employ-
14
er not described in paragraph (3)(A)(ii).
15
"(10) PHYSICIAN SERVICES.-The term 'physi-
16
cian services' means professional medical services
17
lawfully provided by a physician under State medical
18
practice acts, and includes professional services pro-
19
vided by a dentist, licensed advanced-practice nurse,
20
optometrist, podiatrist, or chiropractor acting within
21
the scope of their practices (as determined under
22
State law) if such services would be treated as physi-
23
cian services if furnished by a physician, except as
24
provided in section 2722(e).
25
"(11) STATE.-
.S 1227 IS
23
1
"(A) IN GENERAL.-The term 'State'
2
means each of the several States and the Dis-
3
trict of Columbia.
4
"(B) ELECTION.-If the Governor of the
5
Commonwealth of Puerto Rico or of any terri-
6
tory of the United States certifies to the Presi-
7
dent that Puerto Rico or such territory has en-
8
acted legislation stating that Puerto Rico or
9
such territory desires to be included under the
10
provisions of this Act, Puerto Rico or such ter-
11
ritory shall be included under the definition of
12
State for the purposes of this part beginning
13
with January 1 of the first calendar year which
14
begins later than 90 days after the President
15
receives such notification.
16
"Subpart 2-Requirements for Health Benefit Plans
17 "SEC. 2721. GENERAL REQUIREMENTS; PERMITTING ACTU-
18
ARIALLY EQUIVALENT PLANS.
19
"(a) GENERAL REQUIREMENTS.-Subject to subsec-
20 tions (b) and (c), in order for a health benefit plan to
21 meet the requirements of this section, such plan shall-
22
"(1) provide benefits for items and services in
23
accordance with section 2722;
.S 1227 IS
24
1
"(2) provide coverage of employees and family
2
enrolled in the plan in accordance with section 2723;
3
and
4
"(3) provide for premiums, deductibles,
5
copayments, and coinsurance in accordance with sec-
6
tion 2724.
7
"(b) ACTUARIALLY EQUIVALENT PLANS PERMIT-
8
TED.-
9
"(1) VARIATIONS IN PREMIUMS, DEDUCTIBLES,
10
AND COST-SHARING.-A health benefit plan shall
11
meet the requirements of this section, notwithstand-
12
ing that such plan does not meet one or more of the
13
requirements of section 2724 (relating to premiums,
14
deductibles, copayments, coinsurance, and limit on
15
out-of-pocket expenses) if the actuarial value of ben-
16
efits provided under the plan (as defined in para-
17
graph (8)) is not less than the equivalent of the ac-
18
tuarial value of benefits provided under the plan
19
that would have applied if the plan met the require-
20
ments described in subsection (a).
21
"(2) MINIMUM REQUIREMENTS.-Nothing in
22
this subsection shall be construed as not requiring
23
each plan-
24
"(A) to meet the requirements of section
25
2723; or
.S 1227 IS
25
1
"(B) to establish a limit on out-of-pocket
2
expenses under section 2724(d), except that
3
this subparagraph shall not be construed to
4
require the establishment of the out-of-pocket
5
limit described in section 2724(d)(5)(B).
6
"(3) MENTAL HEALTH BENEFITS.-Notwith-
7
standing any other provision of this part or of the
8
HealthAmerica Act, a health benefit plan may meet
9
the requirements of section 2722(a)(6) by including
10
payment for any reasonable combination of benefits
11
described in subparagraphs (A) and (B) of such sec-
12
tion if the plan includes payment for-
13
"(A) benefits the value of which is at least
14
actuarially equivalent to the value of the bene-
15
fits for which payment is otherwise required
16
under such subparagraphs; and
17
"(B) both types of benefits described in
18
each such subparagraph.
19
"(4) ADVISORY BOARD.-
20
"(A) ESTABLISHMENT.-The Secretary
21
shall establish an Advisory Board to provide ad-
22
vice to the Secretary concerning the develop-
23
ment of actuarial equivalency standards and
24
such other matters relating to the administra-
.S 1227 IS
26
1
tion of this part as the Secretary or the Board
2
considers appropriate.
3
"(B) MEMBERSHIP.-The Advisory Board
4
shall consist of 15 members appointed by the
5
Secretary, of whom-
6
"(i) four members shall be representa-
7
tives of employers, who shall be experi-
8
enced in the administration of and knowl-
9
edgeable about health insurance and ac-
10
tively engaged in the management or de-
11
sign of health insurance programs, of
12
which-
13
"(I) two members shall be repre-
14
sentatives of large businesses, as de-
15
termined by the Secretary; and
16
"(II) two members shall be rep-
17
resentatives of small and medium-
18
sized businesses;
19
"(ii) two members shall be representa-
20
tives of labor organizations, who shall pos-
21
sess qualifications of the type required for
22
representatives under clause (i);
23
"(iii) four members shall be represent-
24
atives of the insurance industry, at least
.S 1227 IS
27
1
one of whom shall be knowledgeable about
2
small group policies;
3
"(iv) two members shall be actuaries,
4
who shall be experienced in the administra-
5
tion of and knowledgeable about health in-
6
surance programs; and
7
"(v) three members shall be repre-
8
sentatives of consumers not described in
9
clauses (i) through (iv).
10
"(C) TERMS.-Each member of the Advi-
11
sory Board shall serve for a term of 4 years, ex-
12
cept that members initially appointed shall
13
serve for staggered terms, as designated by the
14
Secretary. A member may serve on the Board
15
after the expiration of the term of the member
16
until a successor has taken office as a member
17
of the Board.
18
"(D) COMPENSATION.-The members of
19
the Advisory Board may be allowed travel ex-
20
penses, including per diem in lieu of subsist-
21
ence, as authorized by section 5703 of title 5,
22
United States Code, while away from their
23
homes or regular places of business, for each
24
day (including travel time) during which they
25
are attending meetings or conferences of the
.S 1227 IS
28
1
Advisory Board or otherwise engaged in the
2
business of the Board.
Hems
3 "(E) DEVELOPMENT OF ACTUARIAL
4
EQUIVALENCY VARIATIONS.-Not later than 6
5
months before the effective date of this part,
6
the Advisory Board shall develop and transmit
7
to the Secretary-
8
"(i) at least three model health plans
9
each with an actuarial value of benefits
10
that is equivalent to the actuarial value of
11
benefits of a basic plan (as defined in
12
paragraph (9));
13
"(ii) a table of actuarial equivalency
14
describing permitted expansions in covered
15
services and variations in copayments,
16
deductibles, limits on out-of-pocket ex-
17
penses, and an employer's share of the pre-
18
mium or premiums under a health plan, as
19
a percentage increase or decrease in the
20
actuarial value of the basic plan, with the
21
table describing as many expansions and
22
variations as practicable in order to facili-
23
tate compliance with this section; and
ES
24
"(iii) recommendations for procedures
25
to facilitate the process by which an em-
.S 1227 IS
Be
29
1
ployer may certify actuarial equivalency for
2
plan variations not provided in the model
3
health plans or the table of actuarial
4
equivalency and for the certification of
5
multiple plans offered by the same em-
6
ployer.
7
"(F) REVIEW OF CHANGES.-The Advisory
8
Board shall review proposed changes to the
9
basic benefit package required of health benefit
10
plans and transmit a cost benefit analysis of
11
such changes, along with recommendations, to
12
the appropriate committees of Congress and the
13
Secretary.
14
'(5) TABLE OF ACTUARIAL EQUIVALENCY.-
15
The Secretary shall publish, at least 3 months prior
16
to the effective date of this part, a table that speci-
17
fies the percentage increase or decrease in the actu-
18
arial value of benefits under a health benefit plan
19
providing only the required benefits that would re-
20
sult from variations in covered services, copayments,
21
deductibles, limits on out-of-pocket expenses, an em-
22
ployer's share of the premium or premiums under a
23
health benefit plan, or any combination thereof. The
24
table shall describe as many variations as feasible.
25
In developing the table, the Secretary shall consider
.S 1227 IS
30
1
the recommendations of the Advisory Board estab-
2
lished under paragraph (4).
3
"(6) COMPLIANCE WITH FIDUCIARY DUTIES.-
4
In the case of health benefit plan variations for
5
which relative actuarial values are not expressly pro-
6
vided for in the table published under paragraph (5)
7
or in the case of variations in which one or more ele-
8
ments of covered services, copayments, deductibles,
9
and limits on out-of-pocket expenses are given a rel-
10
ative actuarial value by the plan administrator that
11
is different from that provided by such table, the
12
plan shall not be considered out of compliance with
13
this section-
14
"(A) if, under a process consistent with the
15
duties of a fiduciary under part 4 of title I of
16
the Employee Retirement Income Security Act
17
of 1974, it is established that, and an actuary
18
meeting credentials established by the American
19
Academy of Actuaries or by the Secretary has
20
certified that, the actuarial value of the benefits
21
of the plan is at least equivalent to the actuar-
22
ial value of the benefits of a basic plan; and
23
"(B) until and unless the Secretary has de-
24
termined that such variations are not in compli-
25
ance with the requirements of this section.
.S 1227 IS
31
1
"(7) MULTIPLE PLANS.-In the case of an em-
2
ployer that has a health benefit plan that meets the
3
requirements of paragraph (6)(A) or is otherwise de-
4
termined to have an actuarial value of benefits that
5
is at least equivalent to the actuarial value of a basic
6
plan, the Secretary shall establish by regulation
7
streamlined procedures for the approval of additional
8
health benefit plans the actuarial value of the bene-
9
fits of which is at least equivalent to the actuarial
10
value of the benefits of the approved health benefit
11
plan.
12
"(8) ACTUARIAL VALUE OF BENEFITS DE-
13
FINED.-For purposes of this subsection, the "actu-
14
arial value of benefits" of a plan is the amount by
15
which the total of the amounts payable as benefits
16
under the plan exceeds the amount of the premiums,
17
deductibles, copayments, and coinsurance payable by
18
the employee under the plan, as determined on an
19
actuarial basis per enrollee for a plan year.
20
"(9) BASIC PLAN DEFINED.-For purposes of
21
this subsection, the term 'basic plan' means a health
22
benefit plan that only provides the basic benefits re-
23
quired under this part.
.S 1227 IS
32
1
"SEC. 2722. REQUIREMENTS RELATING TO COVERED ITEMS
2
AND SERVICES.
3
"(a) IN GENERAL.-Except as otherwise provided in
4 this section, a health benefit plan shall include payment
5 for-
6
"(1) inpatient and outpatient hospital care, ex-
7
cept that treatment for a mental disorder is subject
8
to the special limitations described in paragraph
9
(6)(A);
10
"(2) inpatient and outpatient physician serv-
11
ices, except that psychotherapy or counseling for a
12
mental disorder is subject to the special limitations
13
described in paragraph (6)(B);
14
"(3) diagnostic tests;
15
"(4) prenatal care and well-baby care provided
16
to children who are 1 year of age or younger;
17
"(5) preventive services, limited to-
18
"(A) well child care;
19
"(B) pap smears; and
20
"(C) mammograms; and
21
"(6)(A) inpatient hospital care for a mental dis-
22
order for not less than 45 days per year, except that
23
days of partial hospitalization or residential care
24
may be substituted for days of inpatient care accord-
25
ing to a ratio established by the Secretary; and
.S 1227 IS
33
1
"(B) outpatient psychotherapy and counseling
2
for a mental disorder for not less than 20 visits per
3
year provided by a provider who is acting within the
4
scope of State law and who-
5
"(i) is a physician; or
6
"(ii) meets the standards of subsection
7
(g)(2)(B) and is a duly licensed or certified
8
clinical psychologist or a duly licensed or certi-
9
fied clinical social worker, a duly licensed or
10
certified equivalent mental health professional,
11
or a clinic or center providing duly licensed or
12
certified mental health services.
13
"(b) EXCEPTIONS.-Subsection (a) shall not be con-
14 strued as requiring a plan to include payment for-
15
"(1) items and services that are not medically
16
necessary;
17
"(2) routine physical examinations or preventive
18
care (other than care and services described in para-
19
graphs (4) and (5) of subsection (a); or
20
"(3) experimental services and procedures, ex-
21
cept that this paragraph shall not apply to routine
22
medical costs associated with peer-reviewed and ap-
23
proved protocols conducted in connection with peer-
24
reviewed and approved research programs, pursuant
25
to standards established by the Secretary.
.S 1227 IS
34
1
"(c) AMOUNT, SCOPE, AND DURATION OF CERTAIN
2 BENEFITS.-Except as provided in subsection (b), a
3 health benefit plan shall place no limits on the amount,
4 scope, or duration of benefits described in paragraphs (1)
5 through (3) of subsection (a).
6
"(d) AMOUNT, SCOPE, AND DURATION OF PREVEN-
7 TIVE SERVICES.-A health benefit plan may limit the
8 amount, scope, and duration of preventive services de-
9 scribed in subsection (a) (5) pursuant to regulations of the
10 Secretary specifying the amount, scope, and duration of
11 such care. The Secretary shall develop such regulations
12 after consultation with appropriate medical experts.
13
"(e) LIMITATIONS.-
14
"(1) PANELS AND MANAGED CARE SYSTEMS.-
15
Nothing in this title or the HealthAmerica Act, shall
16
prohibit a health benefit plan from providing bene-
17
fits for the items and services described in this sec-
18
tion through a managed care system, and from se-
19
lecting particular health care providers or types,
20
classes, or categories of health care providers to par-
21
ticipate in such managed care system. Such man-
22
aged care system shall provide, in accordance with
23
regulations issued by the Secretary, reasonable ac-
24
cess to care by plan enrollees.
.S 1227 IS
35
1
"(2) DIFFERENT LEVELS OF PAYMENTS.-
2
Nothing in this title or the HealthAmerica Act, shall
3
prohibit a health benefit plan from establishing a
4
different level of payments for reimbursement for
5
different health care providers furnishing the bene-
6
fits for the items and services described in this sec-
7
tion.
8
"(3) HEALTH CARE PROVIDERS.-Nothing in
9
this title or the HealthAmerica Act, shall be con-
10
strued to require a health benefit plan to utilize any
11
health care provider (or type, class, or category of
12
health care provider) to provide benefits for the
13
items and services described in this section that were
14
provided by the plan before the effective date of this
15
part, other than the health care providers being uti-
16
lized by the health benefit plan on such effective
17
date, except that this paragraph shall not apply to
18
duly licensed or certified clinical psychologists (act-
19
ing within the scope of State law) after the end of
20
the 5-year period beginning on the effective date of
21
this part. This paragraph shall not apply to plans
22
offered under part C.
23
"(4) DENIAL OF PAYMENT TO EXCLUDED PRO-
24
VIDERS.-Nothing in this title or the HealthAmerica
25
Act, shall require a health benefit plan to make pay-
S 1227 IS---2
36
1
ment to any health care provider that is excluded
2
from participation in any Federal health care pro-
3 gram.
4
"(f) BASIS OF PAYMENT MAY DIFFER FROM ACTUAL
5 CHARGES.-The requirement of payment for services de-
6 scribed in subsection (a) shall not prevent an employer
7 from establishing a fee schedule or other basis of payment
8 that is different from actual charges, but only if such fee
9 schedule or other basis provides, pursuant to regulations
10 of the Secretary, for payment at a level sufficient to
11 achieve adequate access to services covered by the plan
12 without additional out-of-pocket expenses for the covered
13 service (but for copayments and deductibles permitted
14 under section 2724).
15
"(g) MENTAL HEALTH CARE.-
16
"(1) INPATIENT CARE.-Subject to the provi-
17
sions of subsection (e), inpatient hospital care de-
18
scribed in subsection (a)(6)(A) shall include reim-
19
bursement for professional care provided to the indi-
20
vidual while the individual is receiving such inpatient
21
care, by a physician or duly licensed or certified clin-
22
ical psychologist operating within the scope of prac-
23
tice of the physician or psychologist, as determined
24
appropriate under State law. Nothing in this subsec-
25
tion shall be construed to modify hospital practices
.S 1227 IS
37
1
with regard to scope of practice, admitting privi-
2
leges, or billing arrangements.
3
"(2) OUTPATIENT CARE.-
4
"(A) USE OF PROVIDERS.-Subject to the
5
provisions of subsection (e), a health benefit
6
plan that provided benefits with respect to out-
7
patient psychotherapy described in subsection
8
(a)(6)(B) prior to January 1, 1991, shall not be
9
required under such subsection to provide bene-
10
fits for outpatient psychotherapy provided by
11
any health care provider (or type, class, or cate-
12
gory of health care provider) described in sub-
13
section (a)(6)(B)(ii), other than duly licensed or
14
certified clinical psychologists and health care
15
providers being utilized by the plan on January
16
1, 1991. This subparagraph shall not apply to
17
plans offered under part C.
18
"(B) STANDARDS FOR CERTAIN PROVID-
19
ERS.-The Secretary shall establish standards
20
that providers referred to in subsection
21
(a)(6)(B)(ii) must meet to be eligible for pay-
22
ment under a health benefit plan and such
23
standards shall require that such providers have
24
training and education equivalent to a licensed
.S 1227 IS
38
1
clinical social worker (as defined in title XVIII
2
of the Social Security Act).
3
"(h) STUDIES.-
4
"(1) SERVICES.-The Secretary shall periodi-
5
cally review the appropriateness of the preventive
6
services required to be covered under this section
7
and prepare and submit to the appropriate commit-
8
tees of Congress a report concerning any recommen-
9
dations for changes in the list of such services that
10
are required to be covered.
11
"(2) COVERAGE FOR CERTAIN SERVICES.-Not
12
later than 1 year after the date of enactment of this
13
part, the Secretary shall prepare and submit to the
14
appropriate committees of Congress a report con-
15
cerning the cost-effectiveness and desirability of
16
coverage of colorectal cancer screening, prostate
17
cancer screening, osteoporosis screening, and outpa-
18
tient prescription drugs.
19 "SEC. 2723. REQUIREMENTS RELATING TO TIMING OF COV-
20
ERAGE AND PROHIBITION OF PREEXISTING
21
CONDITION LIMITATIONS.
22
"(a) DATE OF INITIAL COVERAGE.-In the case of
23 an employee (and family members) enrolled under a health
24 benefit plan provided by an employer, the coverage under
.S 1227 IS
39
1 the plan shall begin not later than the latest of the follow-
2 ing:
3
"(1) 30 days after the date on which the em-
4
ployee first performs an hour of service as an em-
5
ployee of that employer, or in a case where an em-
6
ployer does not provide immediate coverage under
7
the plan, on the day on which an employee who has
8
performed an hour of service for the employer agrees
9
to pay 100 percent of the normal employer and em-
10
ployee premium for the period prior to the normal
11
beginning of coverage under the plan. The employer
12
shall notify the employee on the first day on which
13
the employee first performs an hour of service for
14
the employer of the rights of the employee under
15
this subsection.
16
"(2) The first day on which the employer is re-
17
quired to meet the requirements of this part.
18
"(3) In the case of an employer described in
19
section 2713(a)(2)(C)-
20
"(A) 90 days after the date on which the
21
employee first performs an hour of plan-covered
22
service as an employee of the employer, except
23
that if the initial waiting period is greater than
24
30 days, coverage under the plan shall continue
25
for an equivalent period after the last day on
.S 1227 IS
40
1
which the employee performs an hour of plan-
2
covered service as an employee of the employer;
3
or
4
"(B) 180 days after the date on which the
5
employee first performs an hour of plan-covered
6
service, except that if the initial waiting period
7
is greater than 30 days, coverage under the
8
plan shall continue for an equivalent period
9
after the last day on which the employee per-
10
forms an hour of plan-covered service.
11
"(4) Subject to section 2712(b), in the case of
12
a child, coverage applies for any period during which
13
the employee, who is the parent of the child, is cov-
14
ered.
15
"(b) PROHIBITION OF PREEXISTING CONDITION
16 PROVISIONS.-A health benefit plan shall not exclude or
17 otherwise limit any individual from coverage under the
18 plan on the basis that the individual has (or at any time
19 has had) any disease, disorder, or condition.
20
"(c) RIGHT To WAIVE ENROLLMENT.-
21
"(1) LESS-THAN-FULL-TIME OR PART-TIME EM-
22
PLOYEES WITH INCREASED PREMIUMS.-In the case
23
of a less-than-full-time or part-time employee who is
24
subject to, and is charged, an increased premium
25
under section 2724(b)(5), the employee may, not-
S 1227 IS
41
1
withstanding any other provision of this part, waive
2
enrollment under this part. Such waiver shall be ex-
3
ercised in such form and manner as the Secretary
4
shall specify and shall terminate on the date the em-
5
ployee is no longer being subject to, and charged,
6
such an increased premium.
7
"(2) EMPLOYER CONTRIBUTION TO PUBLIC
8
HEALTH INSURANCE PLAN.-In the case of a less-
9
than-full-time or part-time employee who waives en-
10
rollment under paragraph (1), the employer shall, in
11
a manner required by the Secretary, make a pay-
12
ment under title V of the HealthAmerica Act equal
13
to the minimum amount the employer would have
14
made towards the actuarial cost of coverage of the
15
employee if the employee had not waived such enroll-
16
ment.
17
"(d) CONTINUED COVERAGE.-If an employee's cov-
18 erage or coverage for the family members of an employee
19 would normally terminate during a period of hospitaliza-
20 tion, such coverage shall continue until the employee or
21 family member is discharged from the hospital.
.S 1227 IS
42
1 "SEC. 2724. REQUIREMENTS RELATING TO PREMIUMS,
2
DEDUCTIBLES, COPAYMENTS, COINSURANCE,
3
AND LIMIT ON OUT-OF-POCKET EXPENSES.
4
"(a) ENROLLEE COST-SHARING PERMITTED.-A
5 health benefit plan may require an enrollee to pay for pre-
6 miums, deductibles, copayments, and coinsurance amounts
7 for coverage under the plan, but only if such premiums,
8 deductibles, copayments, and coinsurance do not exceed
9 the limitations imposed under this section.
10
"(b) LIMITATION ON PREMIUMS.-
11
"(1) MONTHLY PREMIUM LIMITED TO 20 PER-
12
CENT OF ACTUARIAL RATE.-
13
"(A) IN GENERAL.-Subject to paragraphs
14
(4) and (5), a health benefit plan shall not re-
15
quire an employee to pay a premium-
16
"(i) for coverage for a period of longer
17
than one month; or
18
"(ii) the amount of which on a month-
19
ly basis exceeds 20 percent of the monthly
20
actuarial rate defined under subparagraph
21
(B).
22
"(B) MONTHLY ACTUARIAL RATE DE-
23
FINED.-For purposes of this subsection, the
24
term 'monthly actuarial rate' means, with re-
25
spect to a health benefit plan in a plan year,
26
the average monthly per enrollee amount that
.S 1227 IS
43
1
the employer providing the plan estimates,
2
based on actuarial calculations conducted in
3
conformity with requirements established by the
4
Secretary, for enrollees under the plan during
5
the year, would be necessary to pay for the
6
total benefits required under the plan (including
7
administrative costs for the provision of such
8
benefits and an appropriate amount for a con-
9
tingency margin) during the year.
10
"(C) APPLICATION ON BASIS OF FAMILY
11
STATUS.-For purposes of this paragraph, a
12
health benefits plan may provide for the premi-
13
um to be applied, and the monthly actuarial
14
rate to be computed-
15
"(i) separately for employees who
16
have family members covered under the
17
plan and for employees who do not have
18
family members covered under the plan;
19
and
20
"(ii) with respect to employees with
21
such covered family members, separately-
22
"(I) for employees who have a
23
covered spouse and one or more cov-
24
ered children;
1227 IS
44
1
"(II) for employees who have a
2
covered spouse but no covered chil-
3
dren; and
4
"(III) for employees who do not
5
have a covered spouse but have one or
6
more covered children.
7
"(D) ADJUSTMENT FOR COVERED SPOUSE
8
WITH OTHER COVERAGE.-For purposes of this
9
paragraph, if a health benefit plan charges an
10
employee for a share of the premium, the plan
11
shall establish a separate premium category (or
12
categories) for family coverage in the case of a
13
covered spouse who is receiving primary health
14
insurance coverage from another health benefit
15
plan. The premium for such categories shall be
16
established based on actual or projected plan
17
experience or according to a formula established
18
by the Secretary, and shall take into account
19
the reduction in health insurance costs resulting
20
from such coverage.
21
"(E) ADJUSTMENT OF PREMIUMS FOR EM-
22
PLOYED RETIREES UNDER HEALTH BENEFIT
23
PLANS.-If an employer provides a health bene-
24
fit plan with respect to retirees and the plan
25
charges a retiree for a share of the premium of
.S 1227 IS
45
1
the plan, in the case of such a retiree who is
2
enrolled as an employee (or dependent) under
3
another health benefit plan under this part, the
4
health benefit plan with respect to the retiree
5
shall provide for an adjustment of the amount
6
of the premium paid by the retiree to take into
7
account the reduction in health insurance costs
8
resulting from such coverage.
9
"(2) PAYMENT OF PREMIUMS.-An employee
10
enrolled under a health benefit plan is liable for pay-
11
ment of premiums required under that plan in ac-
12
cordance with this subsection.
13
"(3) WITHHOLDING PERMITTED.-No provision
14
of State law shall prevent an employer of an employ-
15
ee enrolled under a health benefit plan established
16
under this part from withholding the amount of any
17
premium due by the employee from the payroll of
18
the employee.
19
"(4) SPECIAL RULE FOR LESS-THAN-FULL-TIME
20
EMPLOYEES.-In the case of a less-than-full-time
21
employee (as defined in section 2713(3)(D)), a
22
health benefit plan may require the employee to pay
23
a premium the amount of which (on a monthly
24
basis) does not exceed-
25
"(A) 100 percent, minus
1227 IS
46
1
"(B) 80 percent, multiplied by the ratio
2
of-
3
"(i) the average number of hours per
4
week the employee is normally employed by
5
the employer in the calendar quarter; to
6
"(ii) 25,
7
of the monthly actuarial rate (as defined in para-
8
graph (1)(B)).
9
"(5) PART-TIME EMPLOYEES.-In the case of a
10
part-time employee, a health benefit plan may re-
11
quire the employee to pay a premium amount that
12
does not exceed 50 percent of the monthly actuarial
13
rate (as defined in paragraph (1)(B)).
14
"(c) LIMITATION ON DEDUCTIBLES.-
15
"(1) IN GENERAL.-Except as permitted under
16
paragraph (2), a health benefit plan shall not pro-
17
vide, for benefits provided in any plan year, for a de-
18
ductible amount that exceeds—
19
"(A) with respect to benefits payable for
20
items and services furnished to any employee
21
with no family member enrolled under the plan,
22
for a plan year beginning in-
23
"(i) the first calendar year that begins
24
more than 1 year after the effective date of
25
this Act, $250; or
.S 1227 IS
47
1
'(ii) for a subsequent calendar year,
2
the limitation of deductions specified in
3
this subparagraph for the previous calen-
4
dar year increased by the percentage in-
5
crease in the consumer price index for all
6
urban consumers (United States city aver-
7
age, as published by the Bureau of Labor
8
Statistics) for the 12-month period ending
9
on September 30 of the preceding calendar
10
year; and
11
"(B) with respect to benefits payable for
12
items and services furnished to any employee
13
with a family member enrolled under the plan,
14
for a plan year beginning in-
15
"(i) the first calendar year that begins
16
more than 1 year after the effective date of
17
this part, $250 per family member and
18
$500 per family; or
19
"(ii) for a subsequent calendar year,
20
the limitation of deductions specified in
21
this subparagraph for the previous calen-
22
dar year increased by the percentage in-
23
crease in the consumer price index for all
24
urban consumers (United States city aver-
25
age, as published by the Bureau of Labor
.S 1227 IS
48
1
Statistics) for the 12-month period ending
2
on September 30 of the preceding calendar
3
year.
4
If the limitation of deductions computed under sub-
5
paragraph (A) (ii) or (B) (ii) is not a multiple of $10,
6
it shall be rounded to the next highest multiple of
7
$10.
8
"(2) WAGE-RELATED DEDUCTIBLE.-A health
9
benefit plan may provide for any other deductible
10
amount instead of the limitations under-
11
"(A) paragraph (1)(A), if such amount
12
does not exceed (on an annualized basis) 1 per-
13
cent of the total wages paid to the employee in
14
the plan year; or
15
"(B) paragraph (1)(B), if such amount
16
does not exceed (on an annualized basis) 1 per-
17
cent per family member or 2 percent per family
18
of the total wages paid to the employee in the
19
plan year.
20
"(d) LIMITATION ON COPAYMENTS AND COINSUR-
21 ANCE.-
22
"(1) IN GENERAL.Subject to paragraphs (2)
23
through (4), a health benefit plan shall not-
24
"(A) require the payment of any
25
copayment or coinsurance for an item or service
.S 1227 IS
49
1
for which coverage is required by this part in
2
an amount that exceeds 20 percent of the cost
3
of the item or service; or
4
"(B) require the payment of any
5
copayment or coinsurance for items and serv-
6
ices required under section 2722 to be fur-
7
nished in a plan year for an employee after the
8
employee has incurred out-of-pocket expenses
9
under the plan that are equal to the out-of-
10
pocket limit (as defined in paragraph (5)(B)).
11
"(2) EXCEPTION FOR PREFERRED PROVID-
12
ERS.-If a health benefit plan establishes reasonable
13
classifications of participating and nonparticipating
14
providers of items and services, the plan may require
15
payments in excess of the amount permitted under
16
paragraph (1) in the case of items and services fur-
17
nished by nonparticipating providers.
18
"(3) EXCEPTION FOR IMPROPER UTILIZA-
19
TION.-A health benefit plan may provide for
20
copayment or coinsurance in excess of the amount
21
permitted under paragraph (1) for any item or serv-
22
ice that an individual obtains without complying
23
with any reasonable procedures established by the
24
plan to ensure the efficient and appropriate utiliza-
25
tion of covered services.
.S 1227 IS
50
1
"(4) MENTAL HEALTH CARE.-In the case of
2
care provided under section 2722(a)(6)(B), a health
3
benefit plan shall not require payment of any
4
copayment or coinsurance for an item or service for
5
which coverage is required by this part in an amount
6
that exceeds 50 percent of the cost of the item or
7
service.
8
"(5) LIMIT ON OUT-OF-POCKET EXPENSES.-
9
"(A) OUT-OF-POCKET EXPENSES DE-
10
FINED.-As used in this section, the term 'out-
11
of-pocket expenses' means, with respect to an
12
employee in a plan year, amounts payable under
13
the plan as deductibles and coinsurance with re-
14
spect to items and services provided under the
15
plan and furnished in the plan year on behalf
16
of the employee and family covered under the
17
plan.
18
"(B) OUT-OF-POCKET LIMIT DEFINED.-
19
As used in this section and except as provided
20
in subparagraph (C), the term 'out-of-pocket
21
limit' means for a plan year beginning in-
22
"(i) the first calendar year that begins
23
more than 1 year after the effective date of
24
this part, $3,000; or
.S 1227 IS
51
1
"(ii) for a subsequent calendar year,
2
the out-of-pocket limit specified in this
3
subparagraph for the previous calendar
4
year increased by the percentage increase
5
in the consumer price index for all urban
6
consumers (United States city average, as
7
published by the Bureau of Labor Statis-
8
tics) for the 12-month period ending on
9
September 30 of the preceding calendar
10
year.
11
If the out-of-pocket limit computed under
12
clause (ii) is not a multiple of $10, it shall be
13
rounded to the next highest multiple of $10.
14
"(C)
ALTERNATIVE
OUT-OF-POCKET
15
LIMIT.-A health benefit plan may provide for
16
an out-of-pocket limit other than that defined
17
in subparagraph (B) if, for a plan year with re-
18
spect to an employee and the family of the em-
19
ployee, the limit does not exceed (on an
20
annualized basis) 10 percent of the total wages
21
paid to the employee in the plan year.
22 "SEC. 2725. ENROLLEE PROTECTION.
23
"(a) ADMINISTRATION.
24
"(1) INSURANCE COMMISSIONER.-The require-
25
ments and standards established under this section
.S 1227 IS
52
1
shall be administered in a State by the insurance
2
commissioner of that State, or by any other State
3
agency, as designated by the chief executive officer
4
of the State.
5
"(2) NONCOMPLIANCE.-If the State fails to
6
comply with the requirements of paragraph (1), or,
7
in the judgment of the Secretary, fails to adequately
8
perform the administrative functions required under
9
such paragraph, the Secretary shall assume the ad-
10
ministrative responsibilities and duties required
11
under such paragraph in that State.
12
"(b) INFORMATIONAL REQUIREMENT.-
13
"(1) SUMMARY OF HEALTH PLAN.-
14
"(A) REQUIREMENT.-Not later than 30
15
days after the date on which the coverage of an
16
employee under a health benefit plan under this
17
part begins, the employer of such employee
18
shall provide the employee with a copy of the
19
health benefit plan and a summary of such plan
20
in accordance with subparagraph (B).
21
"(B) CONTENTS.-The plan and summary
22
provided under subparagraph (A) shall be writ-
23
ten in a manner reasonably assumed to be un-
24
derstandable by the average individual. Such
25
summary and plan shall be sufficiently accurate
S 1227 IS
53
1
and comprehensive to reasonably apprise indi-
2
viduals of their rights and obligations under the
3
plan.
4
"(2) AVAILABILITY OF SUBSIDY.-Not later
5
than 30 days after the date on which coverage of an
6
employee under a health benefit plan under this part
7
begins, the employer shall notify the employee of the
8
availability of low-income subsidies for employees,
9
through the public health insurance plan established
10
under title XXI of the Social Security Act, to cover
11
all or part of the cost of the employee's share of the
12
premium for such health benefit plan and of any
13
cost-sharing under such plan. Such notification shall
14
be provided in such form as the Secretary shall re-
15
quire.
16
"(3) CHANGES IN PLAN.-An employee shall be
17
notified in writing of any changes in the terms of
18
their health benefit plan, not less than 30 days in
19
advance of the implementation of such changes.
20
"(4) FAILURE TO PAY PREMIUMS.-With re-
21
spect to a health benefit plan, the insurer issuing
22
such plan shall notify the employee and the Secre-
23
tary of the failure of the employer to make timely
24
premium payments on behalf of the employee and
25
the employee's family members as required under
.S 1227 IS
54
1
such plan. Such notification shall be provided not
2
less that 30 days prior to any termination of cover-
3
age by the insurer as the result of such nonpayment
4
of premiums.
5
'(5) FINANCIAL STATEMENT.-An employee
6
shall be entitled to receive, on request, a copy of the
7
most recent financial statement prepared for the
8
health benefit plan under which such employee is
9
covered. An employee shall be entitled to no more
10
than one such request during each 1-year period.
11
"(6) AVAILABILITY OF INFORMATION.-
12
"(A) FILING WITH SECRETARY AND PROVI-
13
SION TO STATES.-A copy of each health bene-
14
fit plan provided under this part, and any addi-
15
tional information prepared under this subsec-
16
tion concerning such plans, shall be filed with
17
the Secretary who shall make such information
18
available to the State or States in which the
19
employees eligible for benefits under such plans
20
are employed.
21
"(B) PROVISION TO EMPLOYEES.-Em-
22
ployees not receiving the information required
23
under this subsection may request such infor-
24
mation from the State, or, if the program in
.S 1227 IS
55
1
such State is administered by the Secretary,
2
from the Secretary.
3
"(c) STANDARDS AND TECHNICAL ASSISTANCE.-
4
"(1) MODEL PLANS AND SUMMARIES.-Not
5
later than 9 months after the date of enactment of
6
this part, the Secretary shall establish and make
7
available model language for health benefit plans
8
and the summaries of such plans.
9
"(2) PLAN INFORMATION.-Not later than 9
10
months after the date of enactment of this part, the
11
Secretary shall promulgate regulations that describe
12
the health benefit plan information that shall be pro-
13
vided to employees under this section, that shall
14
include-
15
"(A) the name and address of the adminis-
16
trator of the plan;
17
"(B) the requirements of the plan with re-
18
spect to eligibility;
19
"(C) the benefits to be provided under the
20
plan;
21
"(D) the procedures for filing claims for
22
benefits under the plan;
23
"(E) the procedures for appealing the de-
24
nial of any claim filed under the plan; and
.S 1227 IS
56
1
"(F) other information determined appro-
2
priate by the Secretary.
3
"(d) RIGHT TO ASSISTANCE.-
4
"(1) DESIGNATION OF INDIVIDUAL.-Each
5
health benefit plan provided under this part shall
6
designate an appropriate individual or individuals
7
who shall be available to answer questions concern-
8
ing the plan or the applicable plan requirements.
9
"(2) TIMELY RESPONSE.-Employ shall have
10
the right to receive a timely written response to any
11
questions that such employees may submit concern-
12
ing their rights under the health benefits plan. Em-
13
ployees shall be able to rely on such written re-
14
sponses.
15
"(3) ASSISTANCE BY ADMINISTERING AUTHOR-
16
ITY.-The authority designated under subsection (a)
17
shall provide assistance to employees in that State
18
with respect to their rights under such plans and
19
under Federal or State law.
20
"(e) RIGHT TO REVIEW DENIED CLAIMS.-
21
"(1) NOTICE.-An administrator under a
22
health benefit plan under this part shall provide an
23
employee with written notice concerning the denial
24
of a claim submitted by such employee. Such notice
25
shall include the reasons for such denial.
oS 1227 IS
57
1
"(2) PROCESS FOR REVIEW.-Each health ben-
2
efit plan provided under this part shall utilize a fair
3
process for the timely review of claims denied under
4
such plan.
5
"(3) CLAIM FOR CARE NEEDED FOR LIFE-
6
THREATENING ILLNESS.-In cases in which the fail-
7
ure to provide health care promptly would be life-
8
threatening or result in a risk of permanent disabil-
9
ity, the beneficiary under the health benefit plan
10
shall be entitled to a decision as to whether care will
11
be provided under such plan not later than 1 day
12
after supplying the insurer with all requested infor-
13
mation. In the event of a denial of coverage for such
14
care, the beneficiary shall be entitled to an expedited
15
review of an appeal of such denial within 5 days.
16
"(4) APPEALS.-Individuals shall be entitled to
17
appeal the denial of a claim submitted by such indi-
18
vidual to the authority administering the require-
19
ments and standards under subsection (a). The Sec-
20
retary shall promulgate regulations establishing pro-
21
cedures to be utilized for appealing denials of claims
22
under a health benefit plan under this part that are
23
similar to the procedures established under title
24
XVIII of the Social Security Act for appealing deni-
1997
TQ
58
1
als of claims under such title XVIII, including the
2
right to a trial de novo.
3
"(f) RIGHT TO CHOICE.-
4
"(1) NONMANAGED CARE PLANS.-An employer
5
may offer its employees a nonmanaged care plan
6
that meets the requirements of this part as well as
7
a managed care plan.
8
"(2) USE OF PROVIDERS.-If a nonmanaged
9
care plan is not offered by an employer, the man-
10
aged care plan or plans offered by such employer
11
shall permit the utilization of providers not partici-
12
pating in the plan for services otherwise covered
13
under the plan. If an employee elects to utilize such
14
out-of-plan providers, the plan may provide for cost
15
sharing that shall not exceed 200 percent of the nor-
16
mal cost-sharing imposed under the plan or 200 per-
17
cent of the cost-sharing permitted under the mini-
18
mum plan established under this part, whichever is
19
greater.
20
"(g) RIGHT TO CONFIDENTIALITY OF MEDICAL
21 RECORDS.-Health benefit plans under this title shall pro-
22 vide for the confidentiality of any medical records released
23 under such plan.
1997 TO
59
1
"Subpart 3-Regulations and Enforcement
2 "SEC. 2731. REGULATIONS.
3
"(a) PROPOSED RULES.-Not later than 4 months
4 after the date of enactment of this part, the Secretary
5 shall publish in the Federal Register a notice of proposed
6 rulemaking to carry out this part.
7
"(b) FINAL RULES.-Not later than 9 months after
8 the date of enactment of this part, the Secretary shall pro-
9 mulgate final rules to carry out this part. Such notice and
10 final rules shall be made in accordance with section 553
11 of title 5, United States Code.
12
"(c) EFFECT OF FAILURE To PROMULGATE
13 RULES.-The failure of the Secretary to promulgate final
14 rules under this part shall not relieve any person or entity
15 to which the provisions of this part apply of any obliga-
16 tions under this part.
17 "SEC. 2732. ENFORCEMENT.
18
"(a) CIVIL MONEY PENALTY AGAINST PRIVATE EM-
19 PLOYERS.-
20
"(1) 15 PERCENT OF TOTAL WAGES.-Any em-
21
ployer that does not comply with section 2712(c) or
22
the requirements of section 2701(a) in any calendar
23
year shall be subject to a civil penalty of not more
24
than 15 percent of the total amount of the expendi-
25
tures of the employer for wages for employees in
26
that year.
.S 1227 IS
60
1
"(2) INVESTIGATIONS.-The Secretary may
2
conduct investigation under this section. In conduct-
3
ing such investigations, the Secretary-
4
"(A) shall have reasonable access to exam-
5
ine evidence of any person or entity being inves-
6
tigated; and
7
"(B) may, if necessary, compel by subpoe-
8
na the attendance of witnesses and the produc-
9
tion of evidence at any designated place.
10
"(3) ASSESSMENT PROCEDURE.-A civil money
11
penalty under this subsection shall be assessed by
12
the Secretary and collected in a civil action brought
13
by the United States in a United States district
14
court. The Secretary shall not assess such a penalty
15
on an employer until the employer has been given
16
notice and an opportunity for a hearing on such
17
charge.
18
"(4) AMOUNT OF PENALTY.-In determining
19
the amount of the penalty, or the amount agreed on
20
in settlement, the Secretary shall consider the gravi-
21
ty of the noncompliance and the demonstrated good
22
faith of the employer charged in attempting to
23
achieve rapid compliance after notification of non-
24
compliance by the Secretary.
.S 1227 IS
61
1
"(5) JUDICIAL REVIEW.-In any civil action
2
brought to review the assessment of such a penalty
3
or to collect such a penalty, the court shall, at the
4
request of any party to such action, hold a trial de
5
novo on the assessment of the penalty, unless in a
6
prior action such a trial de novo was held on the as-
7
sessment.
8
"(6) USE OF AMOUNTS COLLECTED.-Civil
9
money penalties collected under this subsection shall
10
be credited to the account maintained to provide
11
health benefits under the program established under
12
title XXI of the Social Security Act.
13
"(b) LIABILITY TO INDIVIDUALS FOR DAMAGES.-
14 Any employer that knowingly does not comply with section
15 2712(c) or the requirements of section 2701(a) shall be
16 liable for damages (including health care costs incurred)
17 to the employee or the family of the employee resulting
18 from such failure to comply. Such an employee or family
19 member may bring a civil action to recover damages re-
20 sulting from an employers failure to comply with such re-
21 quirements.".
.S 1227 IS
62
1 TITLE III-SPECIAL ASSISTANCE
2
FOR SMALL AND MEDIUM-
3
SIZED BUSINESSES
4 SEC. 301. PREEMPTION OF STATE MANDATED BENEFIT
5
LAWS.
6
(a) IN GENERAL.-Section 514(b)(2) of the Employ-
7 ee Retirement Income Security Act of 1974 (29 U.S.C.
8 1144(b)(2)) is amended-
9
(1) in subparagraph (A), by striking out "sub-
10
paragraph (B)" and inserting in lieu thereof "sub-
11
paragraphs (B) and (C)"; and
12
(2) by adding at the end thereof the following
13
new subparagraph:
14
"(C) Nothing in subparagraph (A) shall be construed
15 to exempt from subsection (a) any provision of the law
16 of any State to the extent that such provision regulates,
17 or otherwise provides any requirement relating to, the ben-
18 efits to be provided under contracts or policies of insur-
19 ance issued to or under a health benefit plan under part
20 B of title XXVII of the Public Health Service Act.".
21
(b) CONFORMING AMENDMENT.-Paragraph (1) of
22 section 3 of such Act (29 U.S.C. 1002(1)) is amended by
23 adding at the end thereof the following new sentence:
24 "Such terms include a health benefit plan established in
.S 1227 IS
63
1 accordance with part B of title XXVII of the Public
2 Health Service Act.".
3 Subtitle A-Reform of Small Group
4
Insurance
5 SEC. 311. GROUP HEALTH INSURANCE STANDARDS.
6
(a) PUBLIC HEALTH SERVICE ACT.-Title XXVII of
7 the Public Health Service Act (as added under section 101
8 and amended by section 201) is further amended by add-
9 ing at the end thereof the following new part:
10
"PART C-GROUP HEALTH INSURANCE STANDARDS
11
"Subpart 1-General Standards; Definitions
12 "SEC. 2741. APPLICATION OF REQUIREMENTS TO HEALTH
13
BENEFIT PLANS.
14
"(a) PLAN UNDER STATE REGULATORY PROGRAM
15 OR CERTIFIED BY THE SECRETARY.-
16
"(1) IN GENERAL.-No health benefit plan may
17
be issued in a State on or after the effective date
18
specified in subsection (c) (and no new contract may
19
be offered under such plan with respect to any small
20
employer beginning on or after such effective date)
21
unless-
22
"(A) the Secretary determines that the
23
State has established a regulatory program that
24
provides for the application and enforcement of
25
the applicable standards established under sec-
.S 1227 IS
64
1
tion 2742 (to carry out the requirements of this
2
part) and that meets the requirements of sec-
3
tion 2742(b) by such effective date, or
4
"(B) if the State has not established such
5
a program, the plan has been certified by the
6
Secretary (in accordance with such procedures
7
as the Secretary establishes) as meeting the ap-
8
plicable standards established under section
9
2742 by such effective date.
10
"(2) PLAN DISAPPROVED UNDER LOOK-BEHIND
11
AUTHORITY.-If the Secretary determines, under
12
section 2742(c), that a health benefit plan does not
13
meet the applicable requirements of this part on or
14
after such effective date, regardless of whether or
15
not the State has taken any action with respect to
16
such noncompliance, no new contracts may be of-
17
fered to small employers under the plan on or after
18
the date of the determination.
19
"(b) SANCTIONS.-
20
"(1) COMPLAINTS AND INVESTIGATIONS.-The
21
Secretary shall establish procedures—
22
"(A) for individuals and entities to file
23
written, signed complaints with the Secretary
24
respecting potential violations of the require-
25
ments of this part;
.S 1227 IS
65
1
"(B) for the investigation of those com-
2
plaints which have a substantial probability of
3
validity; and
4
"(C) for the investigation of such other
5
violations of the requirements of this part as
6
the Secretary determines to be appropriate.
7
"(2) AUTHORITY IN INVESTIGATIONS.-In con-
8
ducting investigations and hearings under this
9
subsection-
10
"(A) agents of the Secretary and adminis-
11
trative law judges shall have reasonable access
12
to examine evidence of any person or entity
13
being investigated; and
14
"(B) administrative law judges, may, if
15
necessary, compel by subpoena the attendance
16
of witnesses and the production of evidence at
17
any designated place or hearing.
18
In case of contumacy or refusal to obey a subpoena
19
lawfully issued under this subsection and upon appli-
20
cation of the Secretary, an appropriate district court
21
of the United States may issue an order requiring
22
compliance with such subpoena and any failure to
23
obey such order may be punished by such court as
24
a contempt thereof.
25
"(3) HEARING.-
.S 1227 IS
66
1
"(A) IN GENERAL.-Before imposing an
2
order described in paragraph (4) against a car-
3
rier under this subsection for a violation of the
4
requirements of this part, the Secretary shall
5
provide the carrier with notice and, upon re-
6
quest made within a reasonable time (of not
7
less than 30 days, as established by the Secre-
8
tary) of the date of the notice, a hearing re-
9
specting the violation.
10
"(B) CONDUCT OF HEARING.-Any hear-
11
ing so requested shall be conducted before an
12
administrative law judge. If no hearing is so re-
13
quested, the Secretary's imposition of the order
14
shall constitute a final and unappealable order.
15
"(C) ISSUANCE OF ORDERS.-If the ad-
16
ministrative law judge determines, upon the
17
preponderance of the evidence received, that a
18
carrier named in the complaint has violated the
19
requirements of this part, the administrative
20
law judge shall state the findings of fact and
21
issue and cause to be served on such carrier an
22
order described in paragraph (4).
23
"(4) ENFORCEMENT AND CIVIL MONEY PENAL-
24
TY.-
.S 1227 IS
67
1
"(A) ENFORCEMENT.-Subject to the pro-
2
visions of this paragraph, an order issued under
3
this subsection-
4
"(i) shall require the carrier-
5
"(I) to cease and desist from
6
such violations; and
7
"(II) to pay a civil penalty as re-
8
quired in paragraph (9); and
9
"(ii) may require the carrier to take
10
such other corrective action as is appropri-
11
ate.
12
"(B) CORRECTIONS WITHIN 30 DAYS.-No
13
order shall be imposed under this subsection by
14
reason of any violation if the carrier establishes
15
to the satisfaction of the Secretary that-
16
"(i) such violation was due to reason-
17
able cause and not to willful neglect; and
18
"(ii) such violation is corrected within
19
the 30-day period beginning on earliest
20
date the carrier knew, or exercising reason-
21
able diligence could have known, that such
22
a violation was occurring.
23
"(C) WAIVER BY SECRETARY.-In the case
24
of a violation which is due to reasonable cause
25
and not to willful neglect, the Secretary may
S 1227 IS---3
68
1
waive part or all of the civil money penalty im-
2
posed by paragraph (9) to the extent that pay-
3
ment of such penalty would be grossly excessive
4
relative to the violation involved and to the need
5
for deterrence of violations.
6
"(5) ADMINISTRATIVE APPELLATE REVIEW.-
7
The decision and order of an administrative law
8
judge under this subsection shall become the final
9
agency decision and order of the Secretary unless,
10
within 30 days, the Secretary modifies or vacates the
11
decision and order, in which case the decision and
12
order of the Secretary shall become a final order
13
under this subsection.
14
"(6) JUDICIAL REVIEW.-A carrier adversely
15
affected by a final order issued under this subsection
16
may, within 45 days after the date the final order
17
is issued, file a petition in the Court of Appeals for
18
the appropriate circuit for review of the order.
19
"(7) ENFORCEMENT OF ORDERS.-If a carrier
20
fails to comply with a final order issued under this
21
section against the carrier, the Secretary shall file a
22
suit to seek compliance with the order in any appro-
23
priate district court of the United States. In any
24
such suit, the validity and appropriateness of the
25
final order shall not be subject to review.
.S 1227 IS
69
1
"(8) USE OF AMOUNTS COLLECTED.-Civil
2
money penalties collected under this subsection shall
3
be credited to the AmeriCare Trust Fund.
4
"(9) AMOUNT OF CIVIL MONEY PENALTY.-The
5
amount of any civil money penalty imposed under
6
this subsection shall not exceed $25,000 for each
7
carrier with respect to which a violation occurs.
8
Such amount may take into account the penalties
9
imposed by a State with respect to the same such
10
violation.
11
"(10) NOTICE TO CARRIER IN THE CASE OF IN-
12
SURED PLANS.-As part of any order issued under
13
this subsection in the case of a health benefit plan,
14
the order shall require that notice be provided to the
15
carrier of the findings in the order.
16
"(11) Loss OF STATUS AS A HEALTH BENEFIT
17
PLAN.-If a carrier is not in compliance with subsec-
18
tion (a) and is not determined to have come into
19
compliance with the applicable standards within 30
20
days after the date of the initial determination of
21
such a violation, such carrier shall be subject to the
22
provisions of this subsection.
23
"(c) EFFECTIVE DATE.-The effective date specified
24 in this subsection is January 1 of the third full year that
25 begins after the date of the enactment of this subpart.
.S 1227 IS
70
1
"SEC. 2742. ESTABLISHMENT OF STANDARDS.
2
"(a) ESTABLISHMENT OF STANDARDS.-
3
"(1) NAIC.-The Secretary shall request the
4
NAIC-
5
"(A) to develop specific standards, in the
6
form of a model Act and model regulations, to
7
implement the requirements of this part; and
8
"(B) to report to the Secretary on such de-
9
velopment;
10
by not later than October 1 of the year following the
11
year in which this part is enacted. If the NAIC de-
12
velops such standards within such period and the
13
Secretary finds that such standards implement the
14
requirements of this part, such standards shall be
15
the standards applied under section 2741.
16
"(2) SECRETARY.-If the NAIC fails to develop
17
and report on such standards by such date or the
18
Secretary finds that such standards do not imple-
19
ment the requirements of this part, the Secretary
20
shall develop and publish, by not later than Novem-
21
ber 15 of the year following the year in which this
22
part is enacted, such standards. Such standards
23
shall then be the standards applied under section
24
2741.
25
"(b) ADDITIONAL ELEMENTS OF REGULATORY PRO-
26 GRAMS.-
.S 1227 IS
71
1
"(1) IN GENERAL.-A State regulatory pro-
2
gram shall include the following:
3
"(A) The enforcement under the
4
program-
5
"(i) shall be designed in a manner so
6
as to secure compliance with the standards
7
within 30 days after the date of a finding
8
of noncompliance with such standards; and
9
"(ii) shall provide for notice to the
10
Secretary in cases where such compliance
11
is not secured within such 30-day period.
12
"(B) A toll-free telephone number which
13
provides-
14
"(i) for a system for the receipt and
15
disposition of consumer complaints or in-
16
quiries regarding compliance of health ben-
17
efit plans with the requirements of this
18
part; and
19
"(ii) information to small employers
20
and consumers about carriers that offer
21
health benefit plans in the area covered by
22
the regulatory authority.
23
Such system shall provide for the recording of
24
consumer complaints in accordance with a uni-
.S 1227 IS
72
1
form methodology developed by the NAIC and
2
recognized by the Secretary.
3
"(2) SECRETARIAL AUTHORITY.-In the case of
4
a State without a regulatory program approved
5
under subsection (a), the Secretary shall provide for
6
the establishment of the toll-free telephone informa-
7
tion and complaint system described in paragraph
8
(1).
9
"(c) SECRETARIAL REVIEW.-
10
"(1) PERIODIC REVIEW OF STATE REGULATORY
11
PROGRAMS.-The Secretary periodically shall review
12
State regulatory programs to determine if they con-
13
tinue to meet the standards referred to in subsection
14
(a) and the requirements of subsection (b). If the
15
Secretary finds that a State regulatory program no
16
longer meets such standards and requirements, be-
17
fore making a final determination, the Secretary
18
shall provide the State an opportunity to adopt such
19
a plan of correction as would permit the program to
20
continue to meet such standards and requirements.
21
If the Secretary makes a final determination that
22
the State regulatory program, after such an oppor-
23
tunity, fails to meet such standards and require-
24
ments, the Secretary shall assume responsibility
.S 1227 IS
73
1
under section 2741(a)(1)(B) with respect to plans in
2
the State.
3
"(2) LOOK-BEHIND AUTHORITY.-In the case
4
of a State with a regulatory program found by the
5
Secretary to meet the standards and requirements
6
under this part, the Secretary nonetheless is author-
7
ized to determine whether or not health benefit
8
plans offered by carriers in the State have failed to
9
comply with the applicable requirements of this part.
10
"(d) GAO AUDITS.-The Comptroller General shall
11 conduct periodic audits on a sample of State regulatory
12 programs to determine their compliance with the require-
13 ments of this section. The Comptroller General shall re-
14 port to the Secretary and Congress on the findings in such
15 audits.
16 "SEC. 2743. TRANSITIONAL REQUIREMENTS APPLICABLE
17
TO ALL HEALTH BENEFIT PLANS ISSUED TO
18
SMALL EMPLOYERS.
19
"(a) APPLICATION.-The requirements of this section
20 shall apply only to health benefit plans offered to small
21 employers during the period that begins on the effective
22 date of this part and ends in the case of a small employer,
23 on the date that begins the fifth full year after the date
24 of enactment of this part.
.S 1227 IS
74
1
"(b) No DISCRIMINATION BASED ON HEALTH Sta-
2 TUS FOR CERTAIN SERVICES.-
3
"(1) IN GENERAL.-Except as provided under
4
paragraph (2), health benefit plans offered to small
5
employers by carriers may not deny, limit, or condi-
6
tion the coverage under (or benefits of) the plan
7
with respect to basic health services based on the
8
health status, claims experience, receipt of health
9
care, medical history, or lack of evidence of insur-
10
ability, of an individual.
11
"(2) TREATMENT OF PREEXISTING CONDITION
12
EXCLUSIONS FOR ALL SERVICES.-
13
"(A) IN GENERAL.-Subject to the suc-
14
ceeding provisions of this paragraph, health
15
benefit plans provided to small employers by
16
carriers may exclude coverage with respect to
17
services related to treatment of a preexisting
18
condition, but the period of such exclusion may
19
not exceed 6 months.
20
"(B) NONAPPLICATION TO NEWBORNS AND
21
SUNSET OF PREEXISTING CONDITION EXCLU-
22
SIONS FOR BASIC HEALTH SERVICES.-The ex-
23
clusion of coverage permitted under subpara-
24
graph (A) shall not apply to-
25
"(i) services furnished to newborns, or
.S 1227 IS
75
1
"(ii) basic health services furnished on
2
or after July 1 of the sixth full year begin-
3
ning after the date of the enactment of
4
this part.
5
"(C) CREDITING OF PREVIOUS COVER-
6
AGE.-
7
"(i) IN GENERAL.-A health benefit
8
plan issued to a small employer by a carri-
9
er shall provide that if an individual under
10
such plan is in a period of continuous cov-
11
erage (as defined in clause (ii) (I)) with re-
12
spect to particular services as of the date
13
of initial coverage under such plan, any pe-
14
riod of exclusion of coverage with respect
15
to a preexisting condition for such services
16
or type of services shall be reduced by 1
17
month for each month in the period of con-
18
tinuous coverage.
19
"(ii) DEFINITIONS.-As used in this
20
subparagraph:
21
"(I) PERIOD OF CONTINUOUS
22
COVERAGE.-The term 'period of con-
23
tinuous coverage' means, with respect
24
to particular services, the period be-
25
ginning on the date an individual is
oS 1227 IS
76
1
enrolled under a health benefit plan
2
issued to a small employer by a carri-
3
er which provides the same or sub-
4
stantially similar benefits with respect
5
to such services and ends on the date
6
the individual is not so enrolled for a
7
continuous period of more than 3
8
months.
9
"(II)
PREEXISTING
CONDI-
10
TION.-The term 'preexisting condi-
11
tion' means, with respect to coverage
12
under a health benefit plan issued to
13
a small employer by a carrier, a condi-
14
tion which has been diagnosed or
15
treated during the 3-month period
16
ending on the day before the first date
17
of such coverage, except that such
18
term does not include a condition
19
which was first diagnosed or treated
20
during a period of continuous cover-
21
age.
22
"(iii) STANDARDS FOR SIMILAR BENE-
23
FITS.-The standards established under
24
section 2742 shall establish such criteria
25
for determining if benefits are substantial-
.S 1227 IS
77
1
ly similar as may be necessary to carry out
2
this subparagraph.
3
"(c) PERMITTING COVERAGE DURING WAITING PE-
4 RIOD.-
5
"(1) IN GENERAL.-If a health benefit plan is-
6
sued to a small employer by a carrier imposes a
7
waiting period before an eligible individual may be
8
covered under the plan, the plan-
9
"(A) must make available to the individual
10
coverage (including coverage of dependents)
11
equivalent to the coverage available to the em-
12
ployee upon the completion of any applicable
13
waiting period; and
14
"(B) may not impose for such coverage
15
charges that exceed the cost under the plan of
16
providing such coverage with respect to the em-
17
ployee if such waiting period did not apply.
18
Nothing in this paragraph shall be construed as re-
19
quiring a health benefit plan issued to a small em-
20
ployer by a carrier to make coverage available to an
21
individual who no longer has an employment rela-
22
tionship (or who is the spouse or dependent of such
23
an individual) with respect to the plan.
24
"(2) ELIGIBLE INDIVIDUAL DEFINED.-In
25
paragraph (1), the term 'eligible individual' means,
.S 1227 IS
78
1
with respect to a health benefit plan, an individual
2
who, but for a waiting period, would be eligible for
3
immediate coverage under the plan.
4 "SEC. 2744. DEFINITIONS.
5
"(a) HEALTH BENEFIT PLAN AND OTHER DEFINI-
6 TIONS RELATING TO HEALTH PLANS.-As used in this
7 part:
8
"(1) HEALTH BENEFIT PLAN.-The term
9
'health benefit plan' means any hospital or medical
10
expense incurred policy or certificate, hospital or
11
medical service plan contract, health maintenance
12
subscriber contract, other employee welfare plan (as
13
defined in the Employee Retirement Income Security
14
Act of 1964), or any other health insurance arrange-
15
ment, and includes an employment-related reinsur-
16
ance plan (as defined in paragraph (3)), but does
17
not include-
18
"(A) accident-only, credit, dental, or dis-
19
ability income insurance,
20
"(B) coverage issued as a supplement to li-
21
ability insurance,
22
"(C) worker's compensation or similar in-
23
surance, or
24
"(D) automobile medical-payment insur-
25
ance;
.S 1227 IS
79
1
that is offered by a carrier.
2
"(2) SMALL EMPLOYER.-The term 'small em-
3
ployer' means, with respect to a calendar year, an
4
employer that normally employs fewer than 100 em-
5
ployees on during the calendar year.
6
"(3) MANAGED CARE PLAN.-The term 'man-
7
aged care plan' has the same meaning given such
8
term by section 2713(7).
9
"(4) REINSURANCE PLAN.-The term 'reinsur-
10
ance plan' means any reinsurance or similar mecha-
11
nism that underwrites a portion of the risk for a
12
health benefit plan, if the mechanism is offered di-
13
rectly to a small employer.
14
"(5) SELF-INSURED HEALTH BENEFIT PLAN.-
15
The term 'self-insured health benefit plan' means a
16
health benefit plan in which the small employer or
17
employment-related group assumes the underwriting
18
risk for the plan (whether or not there is any rein-
19
surance or similar mechanism to underwrite a por-
20
tion of that risk).
21
"(b) CARRIER; HEALTH MAINTENANCE ORGANIZA-
22 TION; AND OTHER DEFINITIONS RELATING TO CARRI-
23 ERS.-As used in this part:
24
"(1) CARRIER.-The term 'carrier' means any
25
person that offers a health benefit plan, whether
.S 1227 IS
80
1
through insurance or otherwise, including a licensed
2
insurance company, a prepaid hospital or medical
3
service plan, a health maintenance organization, a
4
self-insurer carrier, a reinsurance carrier, and a
5
multiple small employer welfare arrangement (a
6
combination of small employers associated for the
7
purpose of providing health benefit plan coverage for
8
their employees).
9
"(2) EMPLOYER CARRIER.-The term 'employer
10
carrier'-
11
"(A) means any carrier which offers health
12
benefit plans, and
13
"(B) includes (unless the context otherwise
14
requires)-
15
"(i) a self-insurer carrier offering
16
such a plan, or
17
"(ii) a reinsurance carrier offering an
18
health benefit plan that is an reinsurance
19
plan.
20
"(3) HEALTH MAINTENANCE ORGANIZATION.
21
The term 'health maintenance organization' has the
22
meaning given the term 'eligible organization' in sec-
23
tion 1876(b) of the Social Security Act.
24
"(4) REINSURANCE CARRIER.-The term 'rein-
25
surance carrier' means the entity assuming responsi-
.S 1227 IS
81
1
bility for underwriting under an employment-related
2
reinsurance plan, but does not include a carrier inso-
3
far as it directly offers a health benefit plan.
4
"(5) SELF-INSURER CARRIER.-The term 'self-
5
insurer carrier' means a carrier that is not a li-
6
censed insurance company, a prepaid hospital or
7
medical service plan, or a health maintenance orga-
8
nization, that offers a health benefit plan directly
9
with respect to an employment-related group.
10
"(c) GENERAL DEFINITIONS.-As used in this part:
11
"(1) APPLICABLE REGULATORY AUTHORITY.-
12
The term 'applicable regulatory authority' means,
13
with respect to a health benefit plan offered in a
14
State, the State commissioner or superintendent of
15
insurance or other State authority responsible for
16
regulation of health insurance, or, if the Secretary is
17
exercising authority under section 2741(a)(1)(B) in
18
the State, the Secretary.
19
"(2) BLOCK OF BUSINESS.-The term 'block of
20
business' means all, or a distinct grouping of, small
21
employers as shown on the records of the small em-
22
ployer carrier, if established consistent with section
23
2752(b)(3).
.S 1227 IS
82
1
"(3) COMMUNITY.-The term 'community'
2
means a geographic area designated by the Secre-
3
tary as-
4
"(A) encompassing one or more adjacent
5
metropolitan statistical areas; or
6
"(B) the remaining area within each State
7
(that is not designated within any community
8
under subparagraph (A));
9
except that the Secretary may designate an entire
10
State as a community if such a designation would
11
better carry out the purposes of this part. The Sec-
12
retary from time to time may change the boundaries
13
of communities designated under subparagraph (A)
14
or (B) for such purposes. There shall be no adminis-
15
trative or judicial review of the designation of com-
16
munities under this subsection.
17
"(4) FULL-TIME EMPLOYEE.-The term 'full-
18
time employee' means, with respect to an employer,
19
an employee who normally performs on a monthly
20
basis at least 25 hours of service per week for that
21
employer.
22
"(5) NAIC.-The term 'NAIC' means the Na-
23
tional Association of Insurance Commissioners.
24
"(6) REFERENCE PREMIUM RATE.-The term
25
'reference premium rate' means, for each block of
.S 1227 IS
83
1
business for a rating period in a community, the
2
lowest premium rate charged or which could have
3
been charged by the small employer carrier to small
4
employers in that block under a rating system for
5
that block of business in the community for health
6
benefit plans with the same or similar coverage. The
7
reference premium rate is determined without regard
8
to any adjustment for age or sex described in section
9
2752(c) and without regard to any adjustment ef-
10
fected under section 2752(d).
11
"(7) STATE.-The term 'State' means the 50
12
States and the District of Columbia.
13
"Subpart 2-Small Employer Health Insurance
14
Reform
15 "SEC. 2751. ENROLLMENT PRACTICE AND GUARANTEED RE-
16
NEWABILITY REQUIREMENTS FOR HEALTH
17
BENEFIT PLANS ISSUED TO SMALL EMPLOY-
18
ERS.
19
"(a) REGISTRATION WITH APPLICABLE REGULATORY
20 AUTHORITY.-
21
"(1) IN GENERAL.-Each carrier (as defined in
22
section 2744(b)(1)) shall register with the applicable
23
regulatory authority for each State in which it issues
24
or offers a health benefit plans to small employers.
.S 1227 IS
84
1
"(2) No PREEMPTION OF STATE INFORMATION
2
REQUIREMENTS.-Nothing in paragraph (1) shall be
3
construed as preventing the applicable regulatory
4
authority from requiring, in the case of carriers that
5
are not self-insurance carriers, such additional infor-
6
mation in conjunction with, or apart from, the regis-
7
tration required under paragraph (1) as the applica-
8
ble regulatory authority may be authorized to re-
9
quire under State law.
10
"(b) GUARANTEED ISSUE.-
11
"(1) IN GENERAL.-Subject to the succeeding
12
provisions of this subsection, a carrier that offers a
13
health benefit plan (including a reinsurance plan) to
14
small employers located in a community must offer
15
the same plan to any other small employer located
16
in the community.
17
"(2) TREATMENT OF HEALTH MAINTENANCE
18
ORGANIZATIONS.
19
"(A)
GEOGRAPHIC
LIMITATIONS.-A
20
health maintenance organization may deny cov-
21
erage under a health benefit plan to a small
22
employer whose employees are located outside
23
the service area of the organization, but only if
24
such denial is applied uniformly without regard
25
to health status or insurability.
.S 1227 IS
85
1
"(B) SIZE LIMITS.-A health maintenance
2
organization may apply to the applicable regula-
3
tory authority to cease enrolling new small em-
4
ployer groups in its health benefit plan (or in
5
a geographic area served by the plan) if it can
6
demonstrate that its financial or administrative
7
capacity to serve previously enrolled groups and
8
individuals (and additional individuals who will
9
be expected to enroll because of affiliation with
10
such previously enrolled groups) will be im-
11
paired if it is required to enroll new groups.
12
"(3) GROUNDS FOR REFUSAL TO ISSUE OR
13
RENEW.-
14
"(A) IN GENERAL.-A carrier may refuse
15
to issue or renew or terminate a health benefit
16
plan under this part only for-
17
"(i) nonpayment of premiums,
18
"(ii) fraud or misrepresentation, and
19
"(iii) failure to meet minimum partici-
20
pation rates (consistent with subparagraph
21
(B)).
22
"(B) MINIMUM PARTICIPATION RATES.-A
23
carrier may require, within the transition period
24
described in section 2743(a), with respect to a
25
health benefit plan, that a minimum percentage
.S 1227 IS
86
1
of full-time, permanent employees eligible to en-
2
roll under the plan be enrolled, so long as such
3
percentage is enforced uniformly for all employ-
4
ment groups of comparable size.
5
"(c) MINIMUM PLAN PERIOD.-A carrier may not
6 offer to, or issue with respect to, a small employer a health
7 benefit plan with a term of less than 12 months.
8
"(d) GUARANTEED RENEWABILITY.-
9
"(1) IN GENERAL.-
10
"(A) GENERAL RULE.-Subject to the suc-
11
ceeding provisions of this subsection, a carrier
12
shall ensure that a health benefit plan issued to
13
a small employer be renewed, at the option of
14
the small employer, unless the plan is terminat-
15
ed for the reasons specified in subsection
16
(a)(3)(A) or under subparagraph (B).
17
"(B) TERMINATION OF BLOCK OF BUSI-
18
NESS.-A carrier need not renew a health bene-
19
fit plan with respect to such a small employer
20
if the carrier-
21
"(i) is terminating the block of busi-
22
ness that includes the plan; and
23
"(ii) provides notice to the small em-
24
ployer covered under the plan of such ter-
.S 1227 IS
87
1
mination at least 90 days before the date
2
of expiration of the plan.
3
In the case of such a termination, the carrier
4
may not provide for issuance of any health ben-
5
efit plan in any block of business during the 5-
6
year period beginning on the date of termina-
7
tion of such block of business.
8
"(C) CONSTRUCTION RESPECTING ADDI-
9
TIONAL STATE DISCLOSURE REQUIREMENTS.-
10
Subparagraph (B) (ii) shall not be construed as
11
preventing the applicable regulatory authority
12
from specifying the information to be included
13
in the notice under such subparagraph or in re-
14
quiring such notice to be provided at an earlier
15
date.
16
"(2) NOTICE AND SPECIFICATION OF RATES
17
AND ADMINISTRATIVE CHANGES.-
18
"(A) NOTICE.-A carrier offering health
19
benefit plans to small employers shall provide
20
for notice, at least 30 days before the date of
21
expiration of the health benefit plan, of the
22
terms for renewal of the plan. Except with re-
23
spect to rates and administrative changes, the
24
terms of renewal (including benefits) shall be
25
the same as the terms of issuance.
.S 1227 IS
88
1
"(B) RENEWAL RATES SAME AS ISSUANCE
2
RATES.-The carrier may change the terms for
3
such renewal, but the premium rates charged
4
with respect to such renewal shall be the same
5
as that for a new issue.
6
"(C) RATES CANNOT CHANGE MORE
7
OFTEN THAN MONTHLY.-
8
"(i) IN GENERAL.-A carrier may not
9
change the premium rates established with
10
respect to health benefit plans offered for
11
any block of business more often than
12
monthly.
13
"(ii) APPLICATION OF NEW RATES.-
14
A carrier that offers health benefit plans to
15
small employers which becomes effective in
16
a month, shall ensure that the premium
17
rates established under clause (i) for that
18
month shall apply to all months during the
19
12-month period beginning with that
20
month. In the case of a plan renewal which
21
is effective for a 12-month period begin-
22
ning with a month, the premium rates es-
23
tablished under clause (i) with respect to
24
that month shall apply to all months dur-
25
ing 12-month renewal period.
.S 1227 IS
89
1
"(3) PERIOD OF RENEWAL.-The period of re-
2
newal of each health benefit plan offered by a carrier
3
to a small employer shall be for a period of not less
4
than 12 months.
5 "SEC. 2752. RATING PRACTICES FOR HEALTH BENEFIT
6
PLANS OFFERED TO SMALL EMPLOYERS.
7
"(a) COHESIVE RATING SYSTEM AND ACTURIAL
8 CERTIFICATION.-
9
"(1) IN GENERAL.-The premiums (including
10
reference premium rate, as defined in section
11
2744(c)(6), age adjustments under subsection (c),
12
and reductions provided under subsection (d)) for all
13
health benefit plans offered to small employers by
14
carriers shall-
15
"(A) be established based on a single cohe-
16
sive rating system which is applied consistently
17
for all small employer groups and is designed
18
not to treat groups, after the second effective
19
year (as defined in subsection (f)), differently
20
based on health status or risk status; and
21
"(B) be actuarially certified annually.
22
"(2) ACTUARIAL CERTIFIED DEFINED.-For
23
purposes of paragraph (1)(B), a health benefit plan
24
is considered to be 'actuarially certified' if there is
25
a written statement, by a member of the American
.S 1227 IS
90
1
Academy of Actuaries or other individual acceptable
2
to the applicable regulatory authority that a carrier
3
is in compliance with this section, based upon the in-
4
dividual's examination, including a review of the ap-
5
propriate records and of the actuarial assumptions
6
and methods utilized by the carrier in establishing
7
premium rates for applicable health benefit plans.
8
"(b) USE OF COMMUNITY-RATING.-
9
"(1) IN GENERAL.-Except as provided in para-
10
graph (2) and subsection (c):
11
"(A) COMMUNITY RATING WITHIN A
12
BLOCK OF BUSINESS.-The reference premium
13
rate charged for health benefit plans offered
14
with similar benefits to small employers in a
15
community within a block of business for a type
16
of family enrollment (described in subsection
17
(e)) shall be the same for all small employers.
18
"(B) LIMITING VARIATION ON REFERENCE
19
PREMIUM RATES AMONG BLOCKS OF BUSI-
20
NESS.-
21
"(i) IN GENERAL.-Except as provid-
22
ed in clause (iii), the reference premium
23
rate charged for health benefit plans of-
24
fered with similar benefits to small employ-
25
ers in any community for a type of family
.S 1227 IS
91
1
enrollment for the most expensive block of
2
business shall not exceed 120 percent of
3
such rate charged for such plan for the
4
same type of family enrollment for the
5
least expensive block of business.
6
"(ii) ROLE OF REGULATORY AUTHOR-
7
ITY.-An applicable regulatory authority
8
that is a State may reduce or eliminate the
9
percent variation otherwise permitted
10
under clause (i).
11
"(iii) EXCEPTION.-Clause (i) shall
12
not apply to health benefit plans offered by
13
carriers to small employers in a block of
14
business-
15
"(I) if the block is one for which
16
the carrier does not reject, and never
17
has rejected, small employers included
18
within the definition of small employ-
19
ers eligible for the block of business or
20
otherwise eligible employees and de-
21
pendents who enroll on a timely basis,
22
"(II) the carrier does not invol-
23
untarily transfer, and never has invol-
24
untarily transferred, a health benefit
.S 1227 IS
92
1
plan into or out of the block of busi-
2
ness, and
3
"(III) that block of business was
4
available for purchase as of the date
5
of the enactment of this part.
6
"(2) TRANSITION.-Notwithstanding paragraph
7
(1)-
8
"(A) during the first effective year (as de-
9
fined in subsection (f)), the premium rate under
10
a health benefit plan issued by a carrier to any
11
small employer may be as much as, but may
12
not exceed, 150 percent of the reference premi-
13
um rate for such plans in the same community
14
for similar benefits in the same block of busi-
15
ness; or
16
"(B) during the second effective year, the
17
premium rate under such a policy for any small
18
employer may be as much as, but may not ex-
19
ceed, 122 percent of the reference premium rate
20
for such plans in the same community for simi-
21
lar benefits in the same block of business.
22
"(3) ESTABLISHMENT OF BLOCKS OF BUSI-
23
NESS.-For the purpose of establishing premiums
24
for small employer health benefit plans with similar
25
coverage, the carrier may establish blocks of busi-
.S 1227 IS
93
1
ness based only on one or more of the following
2
characteristics:
3
"(A) Plans that are marketed by clearly
4
different sales forces.
5
"(B) Plans that have been acquired from
6
another carrier as a distinct group.
7
"(C) Plans that are managed care plans.
8
"(D) Plans within another distinct group,
9
if the applicable regulatory authority finds that
10
establishment of such a group will enhance the
11
efficiency and fairness of the small employer in-
12
surance marketplace.
13
"(c) ADJUSTMENTS TO COMMUNITY-RATING.
14
"(1) IN GENERAL.-Subject to paragraph (2), a
15
health benefit plan offered by a carrier to a small
16
employer may provide for an adjustment to the ref-
17
erence premium rate based on the age and gender
18
of covered individuals. Any such adjustment shall be
19
applied by the carrier consistently to all small em-
20
ployers, except that gender adjustments may only be
21
made during the transition period.
22
"(2) LIMITATION ON ADJUSTMENT.-
23
"(A) IN GENERAL.-The adjustment under
24
paragraph (1) may not result, with respect to
25
health benefit plans with similar benefits of-
.S 1227 IS
94
1
fered by carriers to small employers in the same
2
block of business in a community, in a premium
3
rate for the most expensive age group exceeding
4
the applicable percent (as defined in subpara-
5
graph (B)) of the premium rate for the least
6
expensive age group.
7
"(B) APPLICABLE PERCENT DEFINED.-In
8
subparagraph (A) but subject to subparagraph
9
(C), the term 'applicable percent' means—
10
"(i) for the first effective year (as de-
11
fined in subsection (f)), 200 percent,
12
"(ii) for the second effective year, 150
13
percent, and
14
"(iii) for any subsequent year, 110
15
percent.
16
"(C) ROLE OF REGULATORY AUTHOR-
17
ITY.-An applicable regulatory authority that is
18
a State may reduce or eliminate the applicable
19
percent otherwise applied.
20
"(d) ADJUSTMENT IN RATES PERMITTED IN CASE
21 OF MEDICARE REIMBURSEMENT ELECTION.-A health
22 benefit plan offered by a carrier to a small employer may
23 compute premiums based upon a percentage of the refer-
24 ence premium rate otherwise applicable if the small em-
25 ployer to which the plan is being offered makes the reim-
.S 1227 IS
95
1 bursement election described in section 2744. Any such
2 adjustment shall be applied consistently to all small em-
3 ployers.
4
"(e) TYPES OF FAMILY ENROLLMENT-Each health
5 benefit plan offered by a carrier to a small employer shall
6 permit enrollment of (and shall compute premiums sepa-
7 rately for) individuals based on each of the following bene-
8 ficiary classes:
9
"(1) 1 adult.
10
"(2) A married couple without children.
11
"(3) 1 adult and 1 child.
12
"(4) A married couple with 1 or more children,
13
or 1 adult with 2 or more children.
14
"(f) EFFECTIVE YEARS DEFINED.-In this section,
15 the terms 'first effective year' and 'second effective year'
16 mean the third and fourth full years beginning after the
17 date of the enactment of this part.
18
"(g) EXCEPTION FOR SELF-INSURED CARRIERS.-
19 The requirements of this section shall apply to reinsurance
20 carriers and health benefit plans offered by such carriers
21 to small employers.
22 "SEC. 2753. BASIC BENEFIT PACKAGE FOR HEALTH BENE-
23
FIT PLANS OFFERED TO SMALL EMPLOYERS.
24
"(a) IN GENERAL.-
.S 1227 IS
96
1
"(1) BENEFITS AND COST-SHARING IN HEALTH
2
BENEFIT PLANS.-Except as provided in paragraph
3
(2) and in section 2743(a), no health benefit plan of-
4
fered by carriers to small employers may be issued
5
to a small employer unless—
6
"(A) the plan provides for benefits for all
7
basic health services as defined in part B;
8
"(B) the plan does not impose cost-sharing
9
with respect to basic health services in excess of
10
the deductibles and coinsurance permitted
11
under part B respect to such services; and
12
"(C) the carrier makes available to the
13
small employer a health benefit plan that, sub-
14
ject to paragraph (2)(C), only provides the ben-
15
efits for basic health services and the maximum
16
cost-sharing consistent with subparagraphs (A)
17
and (B).
18
"(2) EXCEPTIONS.-
19
"(A) REQUIRED OFFERING DOES NOT
20
APPLY TO HMO'S.-Paragraph (1)(C) shall not
21
apply to a health maintenance organization.
22
"(B) ADDITIONAL, OPTIONAL MINIMUM
23
SERVICES.-In meeting the requirement of
24
paragraph (1)(C), a health benefit plan offered
25
by a carrier to a small employer may include
S 1227 IS
97
1
such additional items and services as the carrier
2
can demonstrate to the satisfaction of the appli-
3
cable regulatory authority that inclusion of such
4
items and services will facilitate appropriate
5
hospital discharges or avoid unnecessary hospi-
6
talization.
7
"(b) MANAGED CARE OPTION.-If a carrier (other
8 than a health maintenance organization or reinsurance
9 carrier) offers health benefit plans to an employer that
10 is not a small employer, in a community a health benefit
11 plan that is a managed care plan, the carrier must make
12 available to small employers in the community a health
13 benefit plan that is such a managed care plan.
14
"(c) EXCEPTION FOR REINSURANCE CARRIERS AND
15 PLANS.-The requirements of this section shall not apply
16 to reinsurance carriers and reinsurance plans.
17
"(d) STANDARDIZATION OF BENEFIT PACKAGES.-
18 The NAIC shall develop a model to standardize benefits
19 to be made available under health benefit plans offered
20 by carriers to small employers in order to promote
21 consumer understanding and comparison among such
22 plans.
.S 1227 IS
98
1
"SEC. 2754. TIME-LIMITED MEDICARE REIMBURSEMENT OP-
2
TION FOR HEALTH BENEFIT PLANS OFFERED
3
TO SMALL EMPLOYERS NOT PREVIOUSLY OF-
4
FERING INSURANCE COVERAGE.
5
"(a) OPTION MUST BE OFFERED.-Each carrier of-
6 fering a health benefit plan to small employers meeting
7 the requirements of section 351(a) of the HealthAmerica
8 Act shall offer the small employer the option of having
9 payment under the plan made for basic health benefits at
10 rates no higher than the payment rates established under
11 part B for such services. The provisions of section
12 1848(g)(3) of the Social Security Act shall not be consid-
13 ered to apply under this subsection.
14
"(b) APPLICATION OF MEDICARE BILLING LIMITA-
15 TIONS.-In the case of a small employer that elects the
16 option offered under subsection (a) with respect to a
17 health benefit plan, the limitations on charges that may
18 be made under medicare shall apply to individuals receiv-
19 ing benefits under the plan.
20
"(c) EXCEPTION FOR REINSURANCE PLAN.-Subsec-
21 tion (a) shall not apply to reinsurance plans.
22 "SEC. 2755. MISCELLANEOUS DISCLOSURE AND RECORD-
23
KEEPING REQUIREMENTS FOR HEALTH BEN-
24
EFIT PLANS OFFERED TO SMALL EMPLOY-
25
ERS.
26
"(a) DISCLOSURE.-
.S 1227 IS
99
1
"(1) GENERAL DISCLOSURE.-Each carrier of-
2
fering health benefit plans to small employers shall
3
disclose to each small employer before issuing such
4
a plan the following:
5
"(A) The availability (pursuant to the re-
6
quirement of section 2753(a)(1)(C)) of a plan
7
including only basic benefits.
8
"(B) Whether any plan that is a managed
9
care plan or provides for a utilization review
10
program, or both, is available, as required
11
under section 2753(b).
12
"(C) The option of electing the reimburse-
13
ment rules, as required under section 2754.
14
"(D) The limits, imposed under section
15
2752, on the premiums permitted to be charged
16
for such plans.
17
"(E) The rights of guaranteed issue and
18
renewability provided under section 2751.
19
Such disclosure shall be in addition to any disclosure
20
required generally of health benefit plans under part
21
B.
22
"(2) SPECIFIC DISCLOSURE UPON REQUEST.-
23
Each carrier offering health benefit plans to small
24
employers shall disclose to small employer, upon re-
25
quest, information concerning the blocks of business
S 1227 IS---4
100
1
established with respect to such plans and the appli-
2
cable premiums for such plans.
3
"(3) STANDARD FORMAT.-The disclosure
4
under paragraph (1) shall be made in a uniform for-
5
mat established by the Secretary, after consultation
6
with the NAIC.
7
"(4) EXCEPTIONS.-Paragraph (1) (other than
8
subparagraphs (D) and (E)) shall not apply to a re-
9
insurance carrier with respect to a reinsurance plan.
10
"(b) INFORMATION FILED WITH APPLICABLE REGU-
11 LATORY AUTHORITY.-
12
"(1) IN GENERAL.-Each carrier offering
13
health benefit plans to small employers shall disclose
14
to the applicable regulatory authority, in a manner
15
specified by the Secretary, information concerning-
16
"(A) blocks of business established; and
17
"(B) applicable premiums for health bene-
18
fit plans.
19
"(2) ADDITIONAL INFORMATION.-Nothing in
20
this subsection shall be construed as limiting the in-
21
formation which an applicable regulatory authority
22
may require to be reported by carriers.
.S 1227 IS
101
1 "SEC. 2756. NONAPPLICATION IN PUERTO RICO AND THE
2
TERRITORIES.
3
"This subpart shall not apply outside the 50 States
4 or the District of Columbia.
5
"Subpart 3-Encouraging Development of
6
Reinsurance Systems
7 "SEC. 2758. ENCOURAGING DEVELOPMENT OF REINSUR-
8
ANCE SYSTEMS.
9
"(a) DEVELOPMENT OF MODELS.-
10
"(1) IN GENERAL.-Not later than October 1 of
11
the year following the year in which this part is en-
12
acted, the NAIC shall develop several models of leg-
13
islation for the enactment of reinsurance systems
14
that may be used by States with respect to health
15
insurance policies (including health benefit plans of-
16
fered to small employers).
17
"(2) SPECIFIC MODELS.-Such models shall in-
18
clude at least 1 of each of the following 3 models:
19
"(A) A model providing for voluntary par-
20
ticipation by insurers.
21
"(B) A model providing for insurer partici-
22
pation on a retrospective basis.
23
"(C) A model providing for the case man-
24
agement of services for individual claims or
25
groups which are reinsured through the system.
.S 1227 IS
102
1
"(3) TERMS OF MODELS.-Each of the
2
models—
3
"(A) shall be consistent with the provisions
4
of this part (including those relating to commu-
5
nity-rated premiums), and
6
"(B) shall include deductibles and coinsur-
7
ance which-
8
"(i) limit the amount of risk ceded to
9
the reinsurance system; and
10
"(ii) encourage insurers to manage
11
health care costs.
12
"(b) PROTECTION OF HEALTH MAINTENANCE ORGA-
13 NIZATIONS UNDER REINSURANCE SYSTEMS.-No State
14 may establish or enforce a reinsurance system with respect
15 to health insurance policies unless the system provides for
16 an adjustment in reinsurance premiums (or, in the event
17 of losses to the system, assessments) charged to health
18 maintenance organizations that takes into account-
19
"(1) the higher premiums charged by such or-
20
ganizations due to the greater coverage provided by
21
such organizations as required by law,
22
"(2) the limitations under title XIII on the
23
amount of risk which such an organization can rein-
24
sure, and
.S 1227 IS
103
1
"(3) the ability of such organizations to manage
2
risk internally.
3
"(c) EFFECTIVE DATE.-This section shall take ef-
4 fect on the date of the enactment of this part.".
5
(b) SOCIAL SECURITY Аст.-The Social Security Act
6 is amended by inserting after title XII the following new
7 title:
8
"TITLE XIII-GROUP HEALTH
9
INSURANCE STANDARDS
10
"PART A-GENERAL STANDARDS; DEFINITIONS
11
"APPLICATION OF REQUIREMENTS TO HEALTH BENEFIT
12
PLANS
13
"SEC. 1301. (a) PLAN UNDER STATE REGULATORY
14 PROGRAM OR CERTIFIED BY THE SECRETARY.-
15
"(1) IN GENERAL.-No health benefit plan may
16
be issued in a State on or after the effective date
17
specified in subsection (c) (and no new contract may
18
be offered under such plan with respect to any small
19
employer beginning on or after such effective date)
20
unless-
21
"(A) the Secretary determines that the
22
State has established a regulatory program that
23
provides for the application and enforcement of
24
the applicable standards established under sec-
25
tion 1302 (to carry out the requirements of this
1227 IS
104
1
title) and that meets the requirements of sec-
2
tion 1302(b) by such effective date, or
3
"(B) if the State has not established such
4
a program, the plan has been certified by the
5
Secretary (in accordance with such procedures
6
as the Secretary establishes) as meeting the ap-
7
plicable standards established under section
8
1302 by such effective date.
9
"(2) PLAN DISAPPROVED UNDER LOOK-BEHIND
10
AUTHORITY.-If the Secretary determines, under
11
section 1302(c), that a health benefit plan does not
12
meet the applicable requirements of this title on or
13
after such effective date, regardless of whether or
14
not the State has taken any action with respect to
15
such noncompliance, no new contracts may be of-
16
fered to small employers under the plan on or after
17
the date of the determination.
18
"(b) SANCTIONS.-
19
"(1) COMPLAINTS AND INVESTIGATIONS.-The
20
Secretary shall establish procedures—
21
"(A) for individuals and entities to file
22
written, signed complaints with the Secretary
23
respecting potential violations of the require-
24
ments of this title;
.S 1227 IS
105
1
"(B) for the investigation of those com-
2
plaints which have a substantial probability of
3
validity; and
4
"(C) for the investigation of such other
5
violations of the requirements of this title as
6
the Secretary determines to be appropriate.
7
"(2) AUTHORITY IN INVESTIGATIONS.-In con-
8
ducting investigations and hearings under this
9
subsection-
10
"(A) agents of the Secretary and adminis-
11
trative law judges shall have reasonable access
12
to examine evidence of any person or entity
13
being investigated; and
14
"(B) administrative law judges, may, if
15
necessary, compel by subpoena the attendance
16
of witnesses and the production of evidence at
17
any designated place or hearing.
18
In case of contumacy or refusal to obey a subpoena
19
lawfully issued under this subsection and upon appli-
20
cation of the Secretary, an appropriate district court
21
of the United States may issue an order requiring
22
compliance with such subpoena and any failure to
23
obey such order may be punished by such court as
24
a contempt thereof.
25
"(3) HEARING.-
.S 1227 IS
106
1
"(A) IN GENERAL.-Before imposing an
2
order described in paragraph (4) against a car-
3
rier under this subsection for a violation of the
4
requirements of this title, the Secretary shall
5
provide the carrier with notice and, upon re-
6
quest made within a reasonable time (of not
7
less than 30 days, as established by the Secre-
8
tary) of the date of the notice, a hearing re-
9
specting the violation.
10
"(B) CONDUCT OF HEARING.-Any hear-
11
ing so requested shall be conducted before an
12
administrative law judge under section 201. If
13
no hearing is SO requested, the Secretary's im-
14
position of the order shall constitute a final and
15
unappealable order.
16
"(C) ISSUANCE OF ORDERS.-If the ad-
17
ministrative law judge determines, upon the
18
preponderance of the evidence received, that a
19
carrier named in the complaint has violated the
20
requirements of this title, the administrative
21
law judge shall state the findings of fact and
22
issue and cause to be served on such carrier an
23
order described in paragraph (4).
24
"(4) ENFORCEMENT AND CIVIL MONEY PENAL-
25
TY.-
.S 1227 IS
107
1
"(A) ENFORCEMENT.-Subject to the pro-
2
visions of this paragraph, an order issued under
3
this subsection-
4
"(i) shall require the carrier-
5
"(I) to cease and desist from
6
such violations; and
7
"(II) to pay a civil penalty as re-
8
quired in paragraph (9); and
9
"(ii) may require the carrier to take
10
such other corrective action as is appropri-
11
ate.
12
"(B) CORRECTIONS WITHIN 30 DAYS.-No
13
order shall be imposed under this subsection by
14
reason of any violation if the carrier establishes
15
to the satisfaction of the Secretary that-
16
"(i) such violation was due to reason-
17
able cause and not to willful neglect; and
18
"(ii) such violation is corrected within
19
the 30-day period beginning on earliest
20
date the carrier knew, or exercising reason-
21
able diligence could have known, that such
22
a violation was occurring.
23
"(C) WAIVER BY SECRETARY.-In the case
24
of a violation which is due to reasonable cause
25
and not to willful neglect, the Secretary may
.S 1227 IS
108
1
waive part or all of the civil money penalty im-
2
posed by paragraph (9) to the extent that pay-
3
ment of such penalty would be grossly excessive
4
relative to the violation involved and to the need
5
for deterrence of violations.
6
"(5) ADMINISTRATIVE APPELLATE REVIEW.-
7
The decision and order of an administrative law
8
judge under this subsection shall become the final
9
agency decision and order of the Secretary unless,
10
within 30 days, the Secretary modifies or vacates the
11
decision and order, in which case the decision and
12
order of the Secretary shall become a final order
13
under this subsection.
14
"(6) JUDICIAL REVIEW.-A carrier adversely
15
affected by a final order issued under this subsection
16
may, within 45 days after the date the final order
17
is issued, file a petition in the Court of Appeals for
18
the appropriate circuit for review of the order.
19
"(7) ENFORCEMENT OF ORDERS.-If a carrier
20
fails to comply with a final order issued under this
21
section against the carrier, the Secretary shall file a
22
suit to seek compliance with the order in any appro-
23
priate district court of the United States. In any
24
such suit, the validity and appropriateness of the
25
final order shall not be subject to review.
.S 1227 IS
109
1
"(8) USE OF AMOUNTS COLLECTED.-Civil
2
money penalties collected under this subsection shall
3
be credited to the AmeriCare Trust Fund.
4
"(9) AMOUNT OF CIVIL MONEY PENALTY.-The
5
amount of any civil money penalty imposed under
6
this subsection shall not exceed $25,000 for each
7
carrier with respect to which a violation occurs.
8
Such amount may take into account the penalties
9
imposed by a State with respect to the same such
10
violation.
11
(10) NOTICE TO CARRIER IN THE CASE OF IN-
12
SURED PLANS.-As part of any order issued under
13
this subsection in the case of a health benefit plan,
14
the order shall require that notice be provided to the
15
carrier of the findings in the order.
16
"(11) Loss OF STATUS AS A HEALTH BENEFIT
17
PLAN.-If a carrier is not in compliance with subsec-
18
tion (a) and is not determined to have come into
19
compliance with the applicable standards within 6
20
months after the date of the initial determination of
21
such a violation, such carrier shall be subject to the
22
provision of this subsection.
23
"(12) EXCISE TAX.-A carrier that is not in
24
compliance with subsection (a) shall be subject to
.S 1227 IS
110
1
the tax described in section 4980C of the Internal
2
Revenue Code of 1986.
3
"(c) EFFECTIVE DATE.-The effective date specified
4 in this subsection is January 1 of the third full year that
5 begins after the date of the enactment of this part.
6
"ESTABLISHMENT OF STANDARDS
7
"SEC. 1302. (a) ESTABLISHMENT OF STANDARDS.-
8
"(1) NAIC.-The Secretary shall request the
9
NAIC-
10
"(A) to develop specific standards, in the
11
form of a model Act and model regulations, to
12
implement the requirements of this title; and
13
"(B) to report to the Secretary on such de-
14
velopment;
15
by not later than October 1 of the year following the
16
year in which this title is enacted. If the NAIC de-
17
velops such standards within such period and the
18
Secretary finds that such standards implement the
19
requirements of this title, such standards shall be
20
the standards applied under section 1301.
21
"(2) SECRETARY.-If the NAIC fails to develop
22
and report on such standards by such date or the
23
Secretary finds that such standards do not imple-
24
ment the requirements of this title, the Secretary
25
shall develop and publish, by not later than Novem-
26
ber 15 of the year following the year in which this
.S 1227 IS
111
1
title is enacted, such standards. Such standards
2
shall then be the standards applied under section
3
1301.
4
"(b) ADDITIONAL ELEMENTS OF REGULATORY PRO-
5
GRAMS.-
6
"(1) IN GENERAL.-A State regulatory pro-
7
gram shall include the following:
8
"(A) The enforcement under the
9
program-
10
"(i) shall be designed in a manner so
11
as to secure compliance with the standards
12
within 30 days after the date of a finding
13
of noncompliance with such standards; and
14
"(ii) shall provide for notice to the
15
Secretary in cases where such compliance
16
is not secured within such 30-day period.
17
"(B) A toll-free telephone number which
18
provides-
19
"(i) for a system for the receipt and
20
disposition of consumer complaints or in-
21
quiries regarding compliance of health ben-
22
efit plans with the requirements of this
23
title; and
24
"(ii) information to small employers
25
and consumers about carriers that offer
.S 1227 IS
112
1
health benefit plans in the area covered by
2
the regulatory authority.
3
Such system shall provide for the recording of
4
consumer complaints in accordance with a uni-
5
form methodology developed by the NAIC and
6
recognized by the Secretary.
7
"(2) SECRETARIAL AUTHORITY.-In the case of
8
a State without a regulatory program approved
9
under subsection (a), the Secretary shall provide for
10
the establishment of the toll-free telephone informa-
11
tion and complaint system described in paragraph
12
(1).
13
"(c) SECRETARIAL REVIEW.-
14
"(1) PERIODIC REVIEW OF STATE REGULATORY
15
PROGRAMS.-The Secretary periodically shall review
16
State regulatory programs to determine if they con-
17
tinue to meet the standards referred to in subsection
18
(a) and the requirements of subsection (b). If the
19
Secretary finds that a State regulatory program no
20
longer meets such standards and requirements, be-
21
fore making a final determination, the Secretary
22
shall provide the State an opportunity to adopt such
23
a plan of correction as would permit the program to
24
continue to meet such standards and requirements.
25
If the Secretary makes a final determination that
.S 1227 IS
113
1
the State regulatory program, after such an oppor-
2
tunity, fails to meet such standards and require-
3
ments, the Secretary shall assume responsibility
4
under section 1301(a)(1)(B) with respect to plans in
5
the State.
6
"(2) LOOK-BEHIND AUTHORITY.-In the case
7
of a State with a regulatory program found by the
8
Secretary to meet the standards and requirements
9
under this title, the Secretary nonetheless is author-
10
ized to determine whether or not health benefit
11
plans offered by carriers in the State have failed to
12
comply with the applicable requirements of this title.
13
"(d) GAO AUDITS.-The Comptroller General shall
14 conduct periodic audits on a sample of State regulatory
15 programs to determine their compliance with the require-
16 ments of this section. The Comptroller General shall re-
17 port to the Secretary and Congress on the findings in such
18 audits.
19
"TRANSITIONAL REQUIREMENTS APPLICABLE TO ALL
20 HEALTH BENEFIT PLANS ISSUED TO SMALL EMPLOYERS
21
"SEC. 1303. (a) APPLICATION.-The requirements of
22 this section shall apply only to health benefit plans offered
23 to small employers during the period that begins on the
24 effective date of this title and ends in the case of a small
25 employer, on the date that begins the fifth full year after
26 the date of enactment of this title.
.S 1227 IS
114
1
"(b) No DISCRIMINATION BASED ON HEALTH Sta-
2 TUS FOR CERTAIN SERVICES.-
3
"(1) IN GENERAL.-Except as provided under
4
paragraph (2), health benefit plans offered to small
5
employers by carriers may not deny, limit, or condi-
6
tion the coverage under (or benefits of) the plan
7
with respect to basic health services based on the
8
health status, claims experience, receipt of health
9
care, medical history, or lack of evidence of insur-
10
ability, of an individual.
11
"(2) TREATMENT OF PREEXISTING CONDITION
12
EXCLUSIONS FOR ALL SERVICES.-
13
"(A) IN GENERAL.-Subject to the suc-
14
ceeding provisions of this paragraph, health
15
benefit plans provided to small employers by
16
carriers may exclude coverage with respect to
17
services related to treatment of a preexisting
18
condition, but the period of such exclusion may
19
not exceed 6 months.
20
"(B) NONAPPLICATION TO NEWBORNS AND
21
SUNSET OF PREEXISTING CONDITION EXCLU-
22
SIONS FOR BASIC HEALTH SERVICES.-The ex-
23
clusion of coverage permitted under subpara-
24
graph (A) shall not apply to-
25
"(i) services furnished to newborns, or
.S 1227 IS
115
1
"(ii) basic health services furnished on
2
or after July 1 of the sixth full year begin-
3
ning after the date of the enactment of
4
this title.
5
"(C) CREDITING OF PREVIOUS COVER-
6
AGE.-
7
"(i) IN GENERAL.-A health benefit
8
plan issued to a small employer by a carri-
9
er shall provide that if an individual under
10
such plan is in a period of continuous cov-
11
erage (as defined in clause (ii)(I)) with re-
12
spect to particular services as of the date
13
of initial coverage under such plan, any pe-
14
riod of exclusion of coverage with respect
15
to a preexisting condition for such services
16
or type of services shall be reduced by 1
17
month for each month in the period of con-
18
tinuous coverage.
19
"(ii) DEFINITIONS.-As used in this
..20
subparagraph:
21
"(I) PERIOD OF CONTINUOUS
22
COVERAGE.-The term 'period of con-
23
tinuous coverage' means, with respect
24
to particular services, the period be-
25
ginning on the date an individual is
.S 1227 IS
116
1
enrolled under a health benefit plan
2
issued to a small employer by a carri-
3
er which provides the same or sub-
4
stantially similar benefits with respect
5
to such services and ends on the date
6
the individual is not so enrolled for a
7
continuous period of more than 3
8
months.
9
"(II)
PREEXISTING
CONDI-
10
TION.-The term 'preexisting condi-
11
tion' means, with respect to coverage
12
under a health benefit plan issued to
13
a small employer by a carrier, a condi-
14
tion which has been diagnosed or
15
treated during the 3-month period
16
ending on the day before the first date
17
of such coverage, except that such
18
term does not include a condition
19
which was first diagnosed or treated
20
during a period of continuous cover-
21
age.
22
"(iii) STANDARDS FOR SIMILAR BENE-
23
FITS.-The standards established under
24
section 1302 shall establish such criteria
25
for determining if benefits are substantial-
.S 1227 IS
117
1
ly similar as may be necessary to carry out
2
this subparagraph.
3
"(c) PERMITTING COVERAGE DURING WAITING PE-
4 RIOD.-
5
"(1) IN GENERAL.-If a health benefit plan is-
6
sued to a small employer by a carrier imposes a
7
waiting period before an eligible individual may be
8
covered under the plan, the plan-
9
"(A) must make available to the individual
10
coverage (including coverage of dependents)
11
equivalent to the coverage available to the em-
12
ployee upon the completion of any applicable
13
waiting period; and
14
"(B) may not impose for such coverage
15
charges that exceed the cost under the plan of
16
providing such coverage with respect to the em-
17
ployee if such waiting period did not apply.
18
Nothing in this paragraph shall be construed as re-
19
quiring a health benefit plan issued to a small em-
20
ployer by a carrier to make coverage available to an
21
individual who no longer has an employment rela-
22
tionship (or who is the spouse or dependent of such
23
an individual) with respect to the plan.
24
"(2) ELIGIBLE INDIVIDUAL DEFINED.-In
25
paragraph (1), the term 'eligible individual' means,
.S 1227 IS
118
1
with respect to a health benefit plan, an individual
2
who, but for a waiting period, would be eligible for
3
immediate coverage under the plan.
4
"DEFINITIONS
5
"SEC. 1304. (a) HEALTH PLAN AND OTHER DEFINI-
6 TIONS RELATING TO HEALTH PLANS.-As used in this
7 title:
8
"(1) HEALTH BENEFIT PLAN.-The term
9
'health benefit plan' means any hospital or medical
10
expense incurred policy or certificate, hospital or
11
medical service plan contract, health maintenance
12
subscriber contract, other employee welfare plan (as
13
defined in the Employee Retirement Income Security
14
Act of 1964), or any other health insurance arrange-
15
ment, and includes an employment-related reinsur-
16
ance plan (as defined in paragraph (3)), but does
17
not include-
18
"(A) accident-only, credit, dental, or dis-
19
ability income insurance,
20
"(B) coverage issued as a supplement to li-
21
ability insurance,
22
"(C) worker's compensation or similar in-
23
surance, or
24
"(D) automobile medical-payment insur-
25
ance;
26
that is offered by a carrier.
as 1997 IS
119
1
"(2) SMALL EMPLOYER.-The term 'small em-
2
ployer' means, with respect to a calendar year, an
3
employer that normally employs fewer than 100 em-
4
ployees on during the calendar year.
5
"(3) MANAGED CARE PLAN.-The term 'man-
6
aged care plan' has the same meaning given such
7
term by section 2108(a)(6).
8
"(4) REINSURANCE PLAN.-The term 'reinsur-
9
ance plan' means any reinsurance or similar mecha-
10
nism that underwrites a portion of the risk for a
11
health benefit plan, if the mechanism is offered di-
12
rectly to a small employer.
13
"(5) SELF-INSURED HEALTH BENEFIT PLAN.-
14
The term 'self-insured health benefit plan' means a
15
health benefit plan in which the small employer or
16
employment-related group assumes the underwriting
17
risk for the plan (whether or not there is any rein-
18
surance or similar mechanism to underwrite a por-
19
tion of that risk).
20
"(b) CARRIER; HEALTH MAINTENANCE ORGANIZA-
21 TION; AND OTHER DEFINITIONS RELATING TO CARRI-
22 ERS.-As used in this title:
23
"(1) CARRIER.-The term 'carrier' means any
24
person that offers a health benefit plan, whether
25
through insurance or otherwise, including a licensed
.S 1227 IS
120
1
insurance company, a prepaid hospital or medical
2
service plan, a health maintenance organization, a
3
self-insurer carrier, a reinsurance carrier, and a
4
multiple small employer welfare arrangement (a
5
combination of small employers associated for the
6
purpose of providing health benefit plan coverage for
7
their employees).
8
"(2) EMPLOYER CARRIER.-The term 'employer
9
carrier'-
10
"(A) means any carrier which offers health
11
benefit plans, and
12
"(B) includes (unless the context otherwise
13
requires)-
14
"(i) a self-insurer carrier offering
15
such a plan, or
16
"(ii) a reinsurance carrier offering an
17
health benefit plan that is an reinsurance
18
plan.
19
"(3) HEALTH MAINTENANCE ORGANIZATION.
20
The term 'health maintenance organization' has the
21
meaning given the term 'eligible organization' in sec-
22
tion 1876(b).
23
"(4) REINSURANCE CARRIER.-The term 'rein-
24
surance carrier' means the entity assuming responsi-
25
bility for underwriting under an employment-related
.S 1227 IS
121
1
reinsurance plan, but does not include a carrier inso-
2
far as it directly offers a health benefit plan.
3
"(5) SELF-INSURER CARRIER.-The term 'self-
4
insurer carrier' means a carrier that is not a li-
5
censed insurance company, a prepaid hospital or
6
medical service plan, or a health maintenance orga-
7
nization, that offers a health benefit plan directly
8
with respect to an employment-related group.
9
"(c) GENERAL DEFINITIONS.-As used in this title:
10
"(1) APPLICABLE REGULATORY AUTHORITY.-
11
The term 'applicable regulatory authority' means,
12
with respect to a health benefit plan offered in a
13
State, the State commissioner or superintendent of
14
insurance or other State authority responsible for
15
regulation of health insurance, or, if the Secretary is
16
exercising authority under section 1301(a)(1)(B) in
17
the State, the Secretary.
18
"(2) BLOCK OF BUSINESS.-The term 'block of
19
business' means all, or a distinct grouping of, small
20
employers as shown on the records of the small em-
21
ployer carrier, if established consistent with section
22
1312(b)(3).
23
"(3) COMMUNITY.-The term 'community'
24
means a geographic area designated by the Secre-
25
tary as-
.S 1227 IS
122
1
"(A) encompassing one or more adjacent
2
metropolitan statistical areas; or
3
"(B) the remaining area within each State
4
(that is not designated within any community
5
under subparagraph (A));
6
except that the Secretary may designate an entire
7
State as a community if such a designation would
8
better carry out the purposes of this title. The Sec-
9
retary from time to time may change the boundaries
10
of communities designated under subparagraph (A)
11
or (B) for such purposes. There shall be no adminis-
12
trative or judicial review of the designation of com-
13
munities under this subsection.
14
"(4) FULL-TIME EMPLOYEE.-The term 'full-
15
time employee' means, with respect to an employer,
16
an employee who normally performs on a monthly
17
basis at least 25 hours of service per week for that
18
employer.
19
"(5) NAIC.-The term 'NAIC' means the Na-
20
tional Association of Insurance Commissioners.
21
"(6) REFERENCE PREMIUM RATE.-The term
22
'reference premium rate' means, for each block of
23
business for a rating period in a community, the
24
lowest premium rate charged or which could have
25
been charged by the small employer carrier to small
.S 1227 IS
123
1
employers in that block under a rating system for
2
that block of business in the community for health
3
benefit plans with the same or similar coverage. The
4
reference premium rate is determined without regard
5
to any adjustment for age or sex described in section
6
1312(c) and without regard to any adjustment ef-
7
fected under section 1312(d).
8
"(7) STATE.-The term 'State' means the 50
9
States and the District of Columbia.
10
"PART B-SMALL EMPLOYER HEALTH INSURANCE
11
REFORM
12 "ENROLLMENT PRACTICE AND GUARANTEED RENEW-
13
ABILITY REQUIREMENTS FOR HEALTH BENEFIT
14
PLANS ISSUED TO SMALL EMPLOYERS
15
"SEC. 1311. (a) REGISTRATION WITH APPLICABLE
16 REGULATORY AUTHORITY.-
17
"(1) IN GENERAL.-Each carrier (as defined in
18
section 1304(b)(1)) shall register with the applicable
19
regulatory authority for each State in which it issues
20
or offers a health benefit plan to small employers.
21
"(2) No PREEMPTION OF STATE INFORMATION
22
REQUIREMENTS.-Nothing in paragraph (1) shall be
23
construed as preventing the applicable regulatory
24
authority from requiring, in the case of carriers that
25
are not self-insurance carriers, such additional infor-
.S 1227 IS
124
1
mation in conjunction with, or apart from, the regis-
2
tration required under paragraph (1) as the applica-
3
ble regulatory authority may be authorized to re-
4
quire under State law.
5
"(b) GUARANTEED ISSUE.-
6
"(1) IN GENERAL.-Subject to the succeeding
7
provisions of this subsection, a carrier that offers a
8
health benefit plan (including a reinsurance plan) to
9
small employers located in a community must offer
10
the same plan to any other small employer located
11
in the community.
12
"(2) TREATMENT OF HEALTH MAINTENANCE
13
ORGANIZATIONS.-
14
"(A)
GEOGRAPHIC
LIMITATIONS.-A
15
health maintenance organization may deny cov-
16
erage under a health benefit plan to a small
17
employer whose employees are located outside
18
the service area of the organization, but only if
19
such denial is applied uniformly without regard
20
to health status or insurability.
21
"(B) SIZE LIMITS.-A health maintenance
22
organization may apply to the applicable regula-
23
tory authority to cease enrolling new small em-
24
ployer groups in its health benefit plan (or in
25
a geographic area served by the plan) if it can
.S 1227 IS
125
1
demonstrate that its financial or administrative
2
capacity to serve previously enrolled groups and
3
individuals (and additional individuals who will
4
be expected to enroll because of affiliation with
5
such previously enrolled groups) will be im-
6
paired if it is required to enroll new groups.
7
"(3) GROUNDS FOR REFUSAL TO ISSUE OR
8
RENEW.-
9
"(A) IN GENERAL.-A carrier may refuse
10
to issue or renew or terminate a health benefit
11
plan under this part only for-
12
"(i) nonpayment of premiums,
13
"(ii) fraud or misrepresentation, and
14
"(iii) failure to meet minimum partici-
15
pation rates (consistent with subparagraph
16
(B)).
17
"(B) MINIMUM PARTICIPATION RATES.-A
18
carrier may require, within the transition period
19
described in section 1303(a), with respect to a
20
health benefit plan, that a minimum percentage
21
of full-time, permanent employees eligible to en-
22
roll under the plan be enrolled, so long as such
23
percentage is enforced uniformly for all employ-
24
ment groups of comparable size.
126
1
"(c) MINIMUM PLAN PERIOD.-A carrier may not
2 offer to, or issue with respect to, a small employer a health
3 benefit plan with a term of less than 12 months.
4
"(d) GUARANTEED RENEWABILITY.-
5
"(1) IN GENERAL.-
6
"(A) GENERAL RULE.-Subject to the suc-
7
ceeding provisions of this subsection, a carrier
8
shall ensure that a health benefit plan issued to
9
a small employer be renewed, at the option of
10
the small employer, unless the plan is terminat-
11
ed for the reasons specified in subsection
12
(a)(3)(A) or under subparagraph (B).
13
"(B) TERMINATION OF BLOCK OF BUSI-
14
NESS.-A carrier need not renew a health bene-
15
fit plan with respect to such a small employer
16
if the carrier-
17
"(i) is terminating the block of busi-
18
ness that includes the plan; and
19
"(ii) provides notice to the small em-
20
ployer covered under the plan of such ter-
21
mination at least 90 days before the date
22
of expiration of the plan.
23
In the case of such a termination, the carrier
24
may not provide for issuance of any health ben-
25
efit plan in any block of business during the 5-
TO
127
1
year period beginning on the date of termina-
2
tion of such block of business.
3
"(C) CONSTRUCTION RESPECTING ADDI-
4
TIONAL STATE DISCLOSURE REQUIREMENTS.-
5
Subparagraph (B) (ii) shall not be construed as
6
preventing the applicable regulatory authority
7
from specifying the information to be included
8
in the notice under such subparagraph or in re-
9
quiring such notice to be provided at an earlier
10
date.
11
"(2) NOTICE AND SPECIFICATION OF RATES
12
AND ADMINISTRATIVE CHANGES.-
13
"(A) NOTICE.-A carrier offering health
14
benefit plans to small employers shall provide
15
for notice, at least 30 days before the date of
16
expiration of the health benefit plan, of the
17
terms for renewal of the plan. Except with re-
18
spect to rates and administrative changes, the
19
terms of renewal (including benefits) shall be
20
the same as the terms of issuance.
21
"(B) RENEWAL RATES SAME AS ISSUANCE
22
RATES.-The carrier may change the terms for
23
such renewal, but the premium rates charged
24
with respect to such renewal shall be the same
25
as that for a new issue.
.S 1227 IS
128
1
"(C) RATES CANNOT CHANGE MORE
2
OFTEN THAN MONTHLY.-
3
"(i) IN GENERAL.-A carrier may not
4
change the premium rates established with
5
respect to health benefit plans offered for
6
any block of business more often than
7
monthly.
8
"(ii) APPLICATION OF NEW RATES.-
9
A carrier that offers health benefit plans to
10
small employers which becomes effective in
11
a month, shall ensure that the premium
12
rates established under clause (i) for that
13
month shall apply to all months during the
14
12-month period beginning with that
15
month. In the case of a plan renewal which
16
is effective for a 12-month period begin-
17
ning with a month, the premium rates es-
18
tablished under clause (i) with respect to
19
that month shall apply to all months dur-
20
ing 12-month renewal period.
21
"(3) PERIOD OF RENEWAL.-The period of re-
22
newal of each health benefit plan offered by a carrier
23
to a small employer shall be for a period of not less
24
than 12 months.
.S 1227 IS
129
1
"RATING PRACTICES FOR HEALTH BENEFIT PLANS
2
OFFERED TO SMALL EMPLOYERS
3
"SEC. 1312. (a) COHESIVE RATING SYSTEM AND
4 ACTURIAL CERTIFICATION.-
5
"(1) IN GENERAL.-The premiums (including
6
reference premium rate, as defined in section
7
1304(c)(6), age adjustments under subsection (c),
8
and reductions provided under subsection (d)) for all
9
health benefit plans offered to small employers by
10
carriers shall-
11
"(A) be established based on a single cohe-
12
sive rating system which is applied consistently
13
for all small employer groups and is designed
14
not to treat groups, after the second effective
15
year (as defined in subsection (f)), differently
16
based on health status or risk status; and
17
"(B) be actuarially certified annually.
18
"(2) ACTUARIAL CERTIFIED DEFINED.-For
19
purposes of paragraph (1)(B), a health benefit plan
20
is considered to be 'actuarially certified' if there is
21
a written statement, by a member of the American
22
Academy of Actuaries or other individual acceptable
23
to the applicable regulatory authority that a carrier
24
is in compliance with this section, based upon the in-
25
dividual's examination, including a review of the ap-
.S 1227 IS
130
1
propriate records and of the actuarial assumptions
2
and methods utilized by the carrier in establishing
3
premium rates for applicable health benefit plans.
4
"(b) USE OF COMMUNITY-RATING.-
5
"(1) IN GENERAL.-Except as provided in para-
6
graph (2) and subsection (c):
7
"(A) COMMUNITY RATING WITHIN A
8
BLOCK OF BUSINESS.-The reference premium
9
rate charged for health benefit plans offered
10
with similar benefits to small employers in a
11
community within a block of business for a type
12
of family enrollment (described in subsection
13
(e)) shall be the same for all small employers.
14
"(B) LIMITING VARIATION ON REFERENCE
15
PREMIUM RATES AMONG BLOCKS OF BUSI-
16
NESS.-
17
"(i) IN GENERAL.-Except as provid-
18
ed in clause (iii), the reference premium
19
rate charged for health benefit plans of-
20
fered with similar benefits to small employ-
21
ers in any community for a type of family
22
enrollment for the most expensive block of
23
business shall not exceed 120 percent of
24
such rate charged for such plan for the
.S 1227 IS
131
1
same type of family enrollment for the
2
least expensive block of .business.
3
"(ii) ROLE OF REGULATORY AUTHOR-
4
ITY.-An applicable regulatory authority
5
that is a State may reduce or eliminate the
6
percent variation otherwise permitted
7
under clause (i).
8
"(iii) EXCEPTION.-Clause (i) shall
9
not apply to health benefit plans offered by
10
carriers to small employers in a block of
11
business-
12
"(I) if the block is one for which
13
the carrier does not reject, and never
14
has rejected, small employers included
15
within the definition of small employ-
16
ers eligible for the block of business or
17
otherwise eligible employees and de-
18
pendents who enroll on a timely basis,
19
"(II) the carrier does not invol-
20
untarily transfer, and never has invol-
21
untarily transferred, a health benefit
22
plan into or out of the block of busi-
23
ness, and
S 1227 IS---5
132
1
(III) that block of business was
2
available for purchase as of the date
3
of the enactment of this title.
4
"(2) TRANSITION-Notwithstanding paragraph
5
(1)-
6
"(A) during the first effective year (as de-
7
fined in subsection (f)), the premium rate under
8
a health benefit plan issued by a carrier to any
9
small employer may be as much as, but may
10
not exceed, 150 percent of the reference premi-
11
um rate for such plans in the same community
12
for similar benefits in the same block of busi-
13
ness; or
14
"(B) during the second effective year, the
15
premium rate under such a policy for any small
16
employer may be as much as, but may not ex-
17
ceed, 122 percent of the reference premium rate
18
for such plans in the same community for simi-
19
lar benefits in the same block of business.
20
"(3) ESTABLISHMENT OF BLOCKS OF BUSI-
21
NESS.-For the purpose of establishing premiums
22
for small employer health benefit plans with similar
23
coverage, the carrier may establish blocks of busi-
24
ness based only on one or more of the following
25
characteristics:
.S 1227 IS
133
1
"(A) Plans that are marketed by clearly
2
different sales forces.
3
"(B) Plans that have been acquired from
4
another carrier as a distinct group.
5
"(C) Plans that are managed care plans.
6
"(D) Plans within another distinct group,
7
if the applicable regulatory authority finds that
8
establishment of such a group will enhance the
9
efficiency and fairness of the small employer in-
10
surance marketplace.
11
"(c) ADJUSTMENTS TO COMMUNITY-RATING.
12
"(1) IN GENERAL.-Subject to paragraph (2), a
13
health benefit plan offered by a carrier to a small
14
employer may provide for an adjustment to the ref-
15
erence premium rate based on the age and gender
16
of covered individuals. Any such adjustment shall be
17
applied by the carrier consistently to all small em-
18
ployers, except that adjustment based on gender
19
may only be made during the transition period.
20
"(2) LIMITATION ON ADJUSTMENT.-
21
"(A) IN GENERAL.-The adjustment under
22
paragraph (1) may not result, with respect to
23
health benefit plans with similar benefits of-
24
fered by carriers to small employers in the same
25
block of business in a community, in a premium
.S 1227 IS
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1
rate for the most expensive age group exceeding
2
the applicable percent (as defined in subpara-
3
graph (B)) of the premium rate for the least
4
expensive age group.
5
"(B) APPLICABLE PERCENT DEFINED.-In
6
subparagraph (A) but subject to subparagraph
7
(C), the term 'applicable percent' means—
8
"(i) for the first effective year (as de-
9
fined in subsection (f)) 200 percent,
10
"(ii) for the second effective year, 150
11
percent, and
12
"(iii) for any subsequent year, 110
13
percent.
14
"(C) ROLE OF REGULATORY AUTHOR-
15
ITY.-An applicable regulatory authority that is
16
a State may reduce or eliminate the applicable
17
percent otherwise applied.
18
"(d) ADJUSTMENT IN RATES PERMITTED IN CASE
19 OF MEDICARE REIMBURSEMENT ELECTION.-A health
20 benefit plan offered by a carrier to a small employer may
21 compute premiums based upon a percentage of the refer-
22 ence premium rate otherwise applicable if the small em-
23 ployer to which the plan is being offered makes the reim-
24 bursement election described in section 1314. Any such
.S 1227 IS
135
1 adjustment shall be applied consistently to all small em-
2 ployers.
3
"(e) TYPES OF FAMILY ENROLLMENT.-Each health
4 benefit plan offered by a carrier to a small employer shall
5 permit enrollment of (and shall compute premiums sepa-
6 rately for) individuals based on each of the following bene-
7 ficiary classes:
8
"(1) 1 adult.
9
"(2) A married couple without children.
10
"(3) 1 adult and 1 child.
11
"(4) A married couple with 1 or more children,
12
or 1 adult with 2 or more children.
13
"(f) EFFECTIVE YEARS DEFINED.-In this section,
14 the terms 'first effective year' and 'second effective year'
15 mean the third and fourth full years beginning after the
16 date of the enactment of this part.
17
"(g) EXCEPTION FOR SELF-INSURED CARRIERS.-
18 The requirements of this section shall apply to reinsurance
19 carriers and health benefit plans offered by such carriers
20 to small employers.
21 "BASIC BENEFIT PACKAGE FOR HEALTH BENEFIT PLANS
22
OFFERED TO SMALL EMPLOYERS
23
"SEC. 1313. (a) IN GENERAL.-
24
"(1) BENEFITS AND COST-SHARING IN HEALTH
25
BENEFIT PLANS.-Except as provided in paragraph
26
(2) and in section 1303(a), no health benefit plan of-
.S 1227 IS
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1
fered by carriers to small employers may be issued
2
to a small employer unless—
3
"(A) the plan provides for benefits for all
4
basic health services as defined in section
5
1182(1);
6
"(B) the plan does not impose cost-sharing
7
with respect to basic health services in excess of
8
the deductibles and coinsurance permitted
9
under section 2103 with respect to such serv-
10
ices; and
11
"(C) the carrier makes available to the
12
small employer a health benefit plan that, sub-
13
ject to paragraph (2)(C), only provides the ben-
14
efits for basic health services and the maximum
15
cost-sharing consistent with subparagraphs (A)
16
and (B).
17
"(2) EXCEPTIONS.-
18
"(A) REQUIRED OFFERING DOES NOT
19
APPLY TO HMO'S.-Paragraph (1)(C) shall not
20
apply to a health maintenance organization.
21
"(B) ADDITIONAL, OPTIONAL MINIMUM
22
SERVICES.-In meeting the requirement of
23
paragraph (1)(C), a health benefit plan offered
24
by a carrier to a small employer may include
25
such additional items and services as the carrier
.S 1227 IS
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1
can demonstrate to the satisfaction of the appli-
2
cable regulatory authority that inclusion of such
3
items and services will facilitate appropriate
4
hospital discharges or avoid unnecessary hospi-
5
talization.
6
"(b) MANAGED CARE OPTION.-If a carrier (other
7 than a health maintenance organization or reinsurance
8 carrier) offers health benefit plans to employers that are
9 not small employers, in a community a health benefit plan
10 that is a managed care plan, the carrier must make avail-
11 able to small employers in the community a health benefit
12 plan that is such a managed care plan.
13
"(c) EXCEPTION FOR REINSURANCE CARRIERS AND
14 PLANS.-The requirements of this section shall not apply
15 to reinsurance carriers and reinsurance plans.
16
"(d) STANDARDIZATION OF BENEFIT PACKAGES.-
17 The NAIC shall develop a model to standardize benefits
18 to be made available under health benefit plans offered
19 by carriers to small employers in order to promote
20 consumer understanding and comparison among such
21 plans.
.S 1227 IS
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1 "TIME-LIMITED MEDICARE REIMBURSEMENT OPTION FOR
2
HEALTH BENEFIT PLANS OFFERED TO SMALL
3
EMPLOYERS NOT PREVIOUSLY OFFERING INSUR-
4
ANCE COVERAGE
5
"SEC. 1314. (a) OPTION MUST BE OFFERED.-Each
6 carrier offering a health benefit plan to small employers
7 meeting the requirements of section 351(a) of the
8 HealthAmerica Act shall offer the small employer the op-
9 tion of having payment under the plan made for basic
10 health services at rates no higher than the payment rates
11 established under title XVIII for such benefits. The provi-
12 sions of section 1848(g)(3) shall not be considered to
13 apply under this subsection.
14
"(b) APPLICATION OF MEDICARE BILLING LIMITA-
15 TIONS.-In the case of a small employer that elects the
16 option offered under subsection (a) with respect to a
17 health benefit plan, the limitations on charges that may
18 be made under medicare shall apply to individuals receiv-
19 ing benefits under the plan. The sanctions imposed under
20 the medicare program (and title XI), including exclusion
21 under such program and the imposition of civil money pen-
22 alties for violations of such limitations, apply to violations
23 of the limitations imposed under this subsection.
24
"(c) EXCEPTION FOR REINSURANCE PLAN.-Subsec-
25 tion (a) shall not apply to reinsurance plans.
.S 1227 IS
139
1 "MISCELLANEOUS DISCLOSURE AND RECORD-KEEPING
2
REQUIREMENTS FOR HEALTH BENEFIT PLANS
3
OFFERED TO SMALL EMPLOYERS
4
"SEC. 1315. (a) DISCLOSURE.-
5
"(1) GENERAL DISCLOSURE.-Each carrier of-
6
fering health benefit plans to small employers shall
7
disclose to each small employer before issuing such
8
a plan the following:
9
"(A) The availability (pursuant to the re-
10
quirement of section 1313(a)(1)(C)) of a plan
11
including only basic benefits.
12
"(B) Whether any plan that is a managed
13
care plan or provides for a utilization review
14
program, or both, is available, as required
15
under section 1313(b).
16
"(C) The option of electing the reimburse-
17
ment rules, as required under section 1314.
18
"(D) The limits, imposed under section
19
1312, on the premiums permitted to be charged
20
for such plans.
21
"(E) The rights of guaranteed issue and
22
renewability provided under section 1311.
23
Such disclosure shall be in addition to any disclosure
24
required generally of health benefit plans under sec-
25
tion 2725 of the Public Health Service Act.
oS 1227 IS
140
1
"(2) SPECIFIC DISCLOSURE UPON REQUEST.-
2
Each carrier offering health benefit plans to small
3
employers shall disclose to small employer, upon re-
4
quest, information concerning the blocks of business
5
established with respect to such plans and the appli-
6
cable premiums for such plans.
7
"(3) STANDARD FORMAT.-The disclosure
8
under paragraph (1) shall be made in a uniform for-
9
mat established by the Secretary, after consultation
10
with the NAIC.
11
"(4) EXCEPTIONS.-Paragraph (1) (other than
12
subparagraphs (D) and (E)) shall not apply to a re-
13
insurance carrier with respect to a reinsurance plan.
14
"(b) INFORMATION FILED WITH APPLICABLE REGU-
15 LATORY AUTHORITY.-
16
"(1) IN GENERAL.-Each carrier offering
17
health benefit plans to small employers shall disclose
18
to the applicable regulatory authority, in a manner
19
specified by the Secretary, information concerning-
20
"(A) blocks of business established; and
21
"(B) applicable premiums for health benefit
22
plans.
23
"(2) ADDITIONAL INFORMATION.-Nothing in
24
this subsection shall be construed as limiting the in-
.S 1227 IS
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1
formation which an applicable regulatory authority
2
may require to be reported by carriers.
3
"NONAPPLICATION IN PUERTO RICO AND THE
4
TERRITORIES
5
"SEC. 1316. This part shall not apply outside the 50
6 States or the District of Columbia.
7
"PART C-ENCOURAGING DEVELOPMENT OF
8
REINSURANCE SYSTEMS
9
"ENCOURAGING DEVELOPMENT OF REINSURANCE
10
SYSTEMS
11
"SEC. 1321. (a) DEVELOPMENT OF MODELS.-
12
"(1) IN GENERAL.-Not later than October 1 of
13
the year following the year in which this title is en-
14
acted, the NAIC shall develop several models of leg-
15
islation for the enactment of reinsurance systems
16
that may be used by States with respect to health
17
insurance policies (including health benefit plans of-
18
fered to small employers).
19
"(2) SPECIFIC MODELS.-Such models shall in-
20
clude at least 1 of each of the following 3 models:
21
"(A) A model providing for voluntary par-
22
ticipation by insurers.
23
"(B) A model providing for insurer partici-
24
pation on a retrospective basis.
.S 1227 IS
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1
"(C) A model providing for the case man-
2
agement of services for individual claims or
3
groups which are reinsured through the system.
4
"(3) TERMS OF MODELS.-Each of the
5
models-
6
"(A) shall be consistent with the provisions
7
of this title (including those relating to commu-
8
nity-rated premiums), and
9
"(B) shall include deductibles and coinsur-
10
ance which-
11
"(i) limit the amount of risk ceded to
12
the reinsurance system; and
13
"(ii) encourage insurers to manage
14
health care costs.
15
"(b) PROTECTION OF HEALTH MAINTENANCE ORGA-
16 NIZATIONS UNDER REINSURANCE SYSTEMS.-No State
17 may establish or enforce a reinsurance system with respect
18 to health insurance policies unless the system provides for
19 an adjustment in reinsurance premiums (or, in the event
20 of losses to the system, assessments) charged to health
21 maintenance organizations that takes into account-
22
"(1) the higher premiums charged by such or-
23
ganizations due to the greater coverage provided by
24
such organizations as required by law,
.S 1227 IS
143
1
"(2) the limitations under title XIII of the Pub-
2
lic Health Service Act on the amount of risk which
3
such an organization can reinsure, and
4
"(3) the ability of such organizations to manage
5
risk internally.
6
"(c) EFFECTIVE DATE.-This section shall take ef-
7 fect on the date of the enactment of this title.".
8
Subtitle B-Tax Equity for Small
9
and Medium-Sized Business
10 SEC. 321. DEDUCTIBLE HEALTH COVERAGE PROVISIONS.
11
(a) INCREASE IN DEDUCTIBLE HEALTH INSURANCE
12 COSTS FOR SELF-EMPLOYED INDIVIDUALS WITHOUT EM-
13 PLOYEES.-
14
(1) IN GENERAL.-Paragraph (1) of section
15
162(1) of the Internal Revenue Code of 1986 (relat-
16
ing to special rules for health insurance costs of self-
17
employed individuals) is amended by striking out
18
"25 percent" and all that follows and inserting in
19
lieu thereof "100 percent of-
20
"(A) the cost of the lowest cost plan meet-
21
ing the requirements of the subtitle A of title
22
III of the HealthAmerica Act available in the
23
geographic area in which the individual resides
24
or conducts business, or
.S 1227 IS
144
1
"(B) if such individual is enrolled in
2
AmeriCare, the cost of AmeriCare,
3
paid during the taxable year for the taxpayer, his
4
spouse, and dependents.".
5
(2) EFFECTIVE DATE.-The amendment made
6
by this subsection shall apply to taxable years begin-
7
ning in the third full calendar year after the date of
8
enactment of this Act.
9
(b) DEDUCTION ALLOWABLE FOR CERTAIN GROUP
10 HEALTH PLAN CONTRIBUTIONS BY SELF-EMPLOYED IN-
11 DIVIDUALS.-
12
(1) IN GENERAL.-Section 162 of the Internal
13
Revenue Code of 1986 (relating to trade or business
14
expenses) is amended by redesignating subsection
15
(m) as subsection (n) and by inserting after subsec-
16
tion (1) (relating to special rules for health insurance
17
costs of self-employed individuals) the following new
18
subsection:
19
"(m) DEDUCTION ALLOWABLE FOR CERTAIN GROUP
20 HEALTH PLAN CONTRIBUTIONS FOR THE BENEFIT OF
21 SELF-EMPLOYED INDIVIDUALS.-
22
"(1) IN GENERAL.-For purposes of this sec-
23
tion and sections 212, 104, 105, and 106, in the
24
case of a qualified group health plan which provides
.S 1227 IS
145
1
medical care benefits for any self-employed
2
individual-
3
"(A) such individual shall be treated as an
4
employee,
5
"(B) the employer of such individual shall
6
be the person treated as the employer under
7
section 301(c)(4), and
8
"(C) contributions to such plan for medical
9
benefits for such individual shall be treated as
10
meeting the requirements of subsection (a) and
11
section 212 to the extent such contributions
12
during the taxable year do not exceed the low-
13
est per employee contribution for employees
14
working 25 hours a week or more to the plan
15
made by the employer during such year.
16
"(2) DEDUCTION CANNOT EXCEED TAXABLE
17
INCOME FROM ACTIVITY.-The deduction allowed to
18
any individual by reason of this subsection for any
19
taxable year shall not exceed the portion of the tax-
20
able income of such individual (determined without
21
regard to this subsection) for such year which is al-
22
locable or apportionable to such individual's interest
23
in the employer.
24
"(3) QUALIFIED GROUP HEALTH PLAN.-
.S 1227 IS
146
1
"(A) IN GENERAL.-For purposes of this
2
subsection, the term 'qualified group health
3
plan' means, with respect to any self-employed
4
individual, any group health plan (as defined in
5
section 5000(b)(1)) of an employer if-
6
"(i) such plan is not a self-insured
7
plan, and
8
"(ii) such plan meets the require-
9
ments of subparagraphs (B) and (C).
10
"(B) ONE-HALF OF PARTICIPANTS MUST
11
BE EMPLOYEES WHO ARE NOT SELF-EMPLOYED
12
INDIVIDUALS OR EMPLOYEE FAMILY MEMBERS
13
OF SUCH INDIVIDUALS.-
14
"(i) IN GENERAL.-A plan meets the
15
requirements of this subparagraph with re-
16
spect to any self-employed individual only
17
if at least half of the participants in the
18
plan (on each day of the taxable year of
19
such individual) are employees who are
20
not-
21
"(I) self-employed individuals to
22
whom a deduction is allowable by rea-
23
son of this subsection with respect to
24
contributions to such plan, or
.S 1227 IS
147
1
"(II) family members of any self-
2
employed individual described in
3
subclause (I).
4
"(ii) FAMILY MEMBER.-For purposes
5
of clause (i), the term 'family member'
6
means, with respect to an individual, such
7
individual's brothers and sisters (whether
8
by the whole or half blood), spouse, ances-
9
tors, and lineal descendants.
10
"(C) SELF-INSURED PLAN.-The term
11
'self-insured plan' means any plan under which
12
medical care benefits are not provided under a
13
policy of accident and health insurance.
14
"(4) LOWEST PER EMPLOYEE CONTRIBU-
15
TION.-
16
"(A) IN GENERAL.-For purposes of this
17
subsection, the term 'lowest per employee con-
18
tribution' means, with respect to any taxable
19
year of a self-employed individual, the smallest
20
contribution made by the employer during such
21
taxable year to the plan with respect to any
22
employee-
23
"(i) who is not a self-employed
24
individual,
.S 1227 IS
148
1
"(ii) with respect to whom a contribu-
2
tion to the plan was made during such
3
year, and
4
"(iii) who is in the same category of
5
coverage as the self-employed individual.
6
"(B) CATEGORIES OF COVERAGE.-For
7
purposes of subparagraph (A), the categories of
8
coverage are-
9
"(i) self only, and
10
"(ii) self and family.
11
"(C) SELF-EMPLOYED INDIVIDUALS WHO
12
ARE PARTICIPANTS FOR LESS THAN ENTIRE
13
TAXABLE YEAR.-In the case of a self-employed
14
individual who is a participant in the plan for
15
less than the entire taxable year, the lowest per
16
employee contribution applicable to such indi-
17
vidual shall be the same portion of amount de-
18
termined under subparagraph (A) as the por-
19
tion of the taxable year during which such indi-
20
vidual was a participant in the plan bears to
21
the entire taxable year.
22
"(D) SPECIAL RULES.-For purposes of
23
subparagraph (A)-
S 1227 IS
149
1
"(i) only contributions for coverage
2
during the taxable year shall be taken into
3
account, and
4
"(ii) the contributions with respect to
5
any employee who is not a participant in
6
the plan for the entire taxable year shall be
7
determined on an annualized basis.
8
"(5) OTHER DEFINITIONS.-For purposes of
9
this subsection-
10
"(A) SELF-EMPLOYED INDIVIDUAL.-The
11
term 'self-employed individual' has the meaning
12
given such term by section 301(c)(1)(B).
13
"(B) MEDICAL CARE BENEFITS.-The
14
term 'medical care benefits' means, with respect
15
to any self-employed individual, compensation
16
for the medical care (as defined in section
17
213(d)) of such individual, the spouse of such
18
individual, and dependents of such individual.
19
"(C) DEPENDENT.-The term 'dependent'
20
has the meaning given such term by section
21
152. Any child to whom section 152(e) applies
22
shall be treated as a dependent of both parents.
23
"(6) SPECIAL RULES.-
24
"(A) COORDINATION WITH SECTION 213.-
25
Any amount allowed as a deduction by reason
.S 1227 IS
150
1
of this subsection shall not be treated as an
2
amount paid for medical care under section
3
213.
4
"(B)
AGGREGATION
OF
EMPLOYER
5
PLANS.-If any self-employed individual is a
6
participant in 2 or more qualified group health
7
plans of the employer, all such plans shall be
8
treated as 1 plan for purposes of this subsec-
9
tion.".
10
(2) TECHNICAL AMENDMENT.-Subsection (g)
11
of section 105 of the Internal Revenue Code of 1986
12
(relating to self-employed individual not considered
13
an employee) is amended by striking out "For pur-
14
poses of this section" and inserting in lieu thereof
15
"Except as provided in section 162(m)(1), for pur-
16
poses of this section".
17
(3) EFFECTIVE DATE.-The amendments made
18
by this subsection shall apply to taxable years begin-
19
ning in the third full year after the date of enact-
20
ment of this Act.
21 SEC. 322. EXCISE TAX FOR VIOLATION OF HEALTH BENEFIT
22
PLAN REQUIREMENTS.
23
(a) IN GENERAL.-
24
(1) IN GENERAL.-Chapter 43 of the Internal
25
Revenue Code of 1986 (relating to qualified pension,
.S 1227 IS
151
1
etc., plans) is amended by adding at the end thereof
2
the following new section:
3 "SEC. 4980C. VIOLATION OF HEALTH BENEFIT PLAN RE-
4
QUIREMENTS.
5
"(a) IMPOSITION OF TAx.-There is hereby imposed
6 a tax on an entity's violation of subsection (a) of section
7 1301 of the Social Security Act. The determination of
8 whether there has been such a violation shall be made by
9 the Secretary of Health and Human Services under such
10 section.
11
"(b) AMOUNT OF TAx.-The tax imposed by subsec-
12 tion (a) shall be equal to 25 percent of the amounts re-
13 ceived by the entity (during the period such a violation
14 persists) for providing any health plan for all blocks of
15 business in all communities.
16
"(c) LIABILITY FOR TAx-The tax imposed by this
17 section shall be paid by the entity.
18
"(d) EXCEPTIONS.-
19
"(1) CORRECTIONS WITHIN 30 DAYS.-No tax
20
shall be imposed by subsection (a) by reason of any
21
violation if-
22
"(A) such violation was due to reasonable
23
cause and not to willful neglect, and
24
"(B) such violation is corrected within the
25
30-day period beginning on earliest date the en-
.S 1227 IS
152
1
tity knew, or exercising reasonable diligence
2
could have known, that such a violation was
3
occurring.
4
"(2) WAIVER BY SECRETARY.-In the case of a
5
violation which is due to reasonable cause and not
6
to willful neglect, the Secretary may waive part or
7
all of the tax imposed by subsection (a) to the extent
8
that payment of such tax would be excessive relative
9
to the violation involved.
10
"(e) DEFINITIONS.-For purposes of this section, the
11 definitions in title XXIII of the Social Security Act shall
12 apply under this section.".
13
(2) CLERICAL AMENDMENT.-The table of sec-
14
tions for chapter 43 of such Code is amended by
15
adding at the end thereof the following new item:
"Sec. 4980C. Violation of health plan requirements.".
16
(b) EFFECTIVE DATE.-The amendments made by
17 subsection (a) shall become effective on January 1 of the
18 4th year beginning after the date of the enactment of this
19 Act.
20
Subtitle C-Opportunity for
21
Voluntary Provision of Coverage
22 SEC. 331. MEDIUM-SIZED EMPLOYERS.
23
(a) EMPLOYERS WITH BETWEEN 25 AND 100 EM-
24 PLOYEES.-
.S 1227 IS
153
1
(1) IN GENERAL.-No medium-sized employer
2
shall be required to provide a health benefit plan
3
under section 2701 of the Public Health Service Act
4
or make a contribution in lieu of coverage under title
5
V of this Act until the fifth calendar year after the
6
date of enactment of this Act.
7
(2) APPLICATION OF REQUIREMENTS.-If, dur-
8
ing the fourth calendar year after the date of enact-
9
ment of this Act, the Secretary finds that the total
10
number of employees, excluding part-time employees,
11
of all such employers that have no employment-
12
based health insurance coverage provided through
13
the employers of such employees has been reduced to
14
25 percent or less of the number of such uninsured
15
employees that existed during the calendar year in
16
which this Act was enacted, the requirement to pro-
17
vide coverage or make a contribution under title V
18
shall apply to employers described in paragraph (1).
19
(3) PERCENTAGES DURING SUBSEQUENT
20
YEARS.-An employer described in paragraph (1)
21
shall provide the health benefits coverage under this
22
Act, or an amendment made by this Act, or make
23
a contribution under title V if the percentage of the
24
uninsured employees during the fifth calendar year
25
or any subsequent calendar year after the date of
.S 1227 IS
154
1
the enactment of this Act is more than the 25 per-
2
cent level described in paragraph (2).
3
(b) UNINSURED EMPLOYEES.-
4
(1) YEAR OF ENACTMENT.-For purposes of
5
subsection (a), employees shall be considered unin-
6
sured during the calendar year in which this Act is
7
enacted if such employees are not covered under any
8
employment-based health insurance coverage provid-
9
ed through their employer.
10
(2) FOURTH YEAR.-For purposes of subsection
11
(a), employees shall be considered uninsured during
12
the fourth calendar year after the date of the enact-
13
ment of this Act if such employees are not covered
14
under any employment-based health insurance cover-
15
age provided through their employer that meets the
16
requirements of this Act and the amendments made
17
by this Act.
18 SEC. 332. MEASUREMENT SURVEYS.
19
(a) ANNOUNCEMENT.-Not later than 6 months after
20 the date of enactment of this Act, the Secretary shall pub-
21 lish in the Federal Register an announcement of the sur-
22 vey or surveys to be used by such Secretary in the cover-
23 age level of employees described in section 331, and the
24 criteria that will be used to determine such level.
.S 1227 IS
155
1
(b) CRITERIA.-The announcement of criteria under
2 subsection (a) shall include a determination, based on the
3 availability of the most reliable survey data available, as
4 to whether the determination of the coverage level shall
5 be based on a measurement of insurance coverage at a
6 point in time or during the course of all or part of a calen-
7 dar year.
8
(c) APPLICATION OF ACT.-If the percentage of unin-
9 sured employees in the fourth calendar year after the date
10 of the enactment of this Act is equal to or less than the
11 25 percent level described in section 331(a), the Secretary
12 shall repeat the measurement of such coverage level annu-
13 ally and if, in any calendar year, the Secretary does not
14 find that the number of employees who do not have em-
15 ployer provided health insurance coverage is equal to or
16 less than such 25 percent level, the requirements of this
17 Act or section 2701 of the Public Health Service Act shall
18 apply to all employers described in section 331(a).
19 SEC. 333. SMALL EMPLOYERS.
20
Sections 331 and 332 shall apply to small employers,
21 except that the requirement to provide coverage or make
22 a contribution in lieu of coverage under title V shall not
23 be applied until the sixth calendar year after the date of
24 enactment of this Act, and the Secretary shall make the
25 determinations required under such sections to be made
.S 1227 IS
156
1 in the fourth calendar year, in the fifth calendar year after
2 the date of enactment of this Act.
3 SEC. 334. FAILURE TO MAKE SURVEYS.
4
The failure of the Secretary to make the surveys re-
5 quired under this subtitle shall not relieve an employer of
6 the obligation of such employer to provide coverage or
7 make a contribution in lieu of coverage absent a finding
8 by the Secretary that the coverage target has been met.
9
Subtitle D-Small Business Tax
10
Credit
11 SEC. 341. ALLOWANCE OF A CREDIT FOR SMALL AND MEDI-
12
UM-SIZED BUSINESS GROUP HEALTH PLAN
13
EXPENDITURES.
14
(a) IN GENERAL.-Subpart D of part IV of subchap-
15 ter A of chapter 1 of the Internal Revenue Code of 1986
16 (relating to business related credits) is amended by insert-
17 ing at the end thereof the following new section:
18 "SEC. 45. SMALL BUSINESS GROUP HEALTH PLAN EXPENDI-
19
TURES.
20
"(a) ALLOWANCE OF CREDIT.-
21
"(1) IN GENERAL.-For purposes of section 38,
22
in the case of an eligible small business, the amount
23
of the qualified group health plan credit for the tax-
24
able year shall be an amount equal to the applicable
.S 1227 IS
157
1
percentage of the qualified group health plan ex-
2
penditures for such taxable year.
3
"(2) APPLICABLE PERCENTAGE DEFINED.-
4
"(A) IN GENERAL.-For purposes of para-
5
graph (1), the term 'applicable percentage'
6
means 25 percent reduced (but not below 0 per-
7
cent) by 5 percent for-
8
"(i) each employee of the eligible
9
small business in excess of 40, or
10
"(ii) each .1 by which the expanded
11
profit ratio of such business exceeds 1.
12
"(B) COORDINATION OF MULTIPLE PHASE-
13
OUTS.-If an eligible small business is subject
14
to subparagraphs (A)(i) and (A)(ii), the appli-
15
cable percentage shall be determined by multi-
16
plying the resulting applicable percentage under
17
subparagraph (A)(i) (expressed as a percentage
18
of the credit remaining) by such applicable per-
19
centage under subparagraph (A)(ii).
20
"(C) EXPANDED PROFIT RATIO.-
21
"(i) IN GENERAL.-For purposes of
22
this paragraph, the term 'expanded profit
23
ratio' means the expanded profit of the eli-
24
gible small business for the taxable year di-
25
vided by the qualified group health plan
.S 1227 IS
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1
expenditures of such business for such
2
year.
3
"(ii) EXPANDED PROFIT.-For pur-
4
poses of clause (i), the term 'expanded
5
profit' means the sum of-
6
"(I) the taxable income of the eli-
7
gible small business,
8
"(II) the amount of earned in-
9
come exceeding the applicable contri-
10
bution base (as defined in section
11
3121(x)(1)) for each 5-percent owner
12
of such business, plus
13
"(III) the total amount of inter-
14
est and dividends distributed to all
15
owners of such business.
16
"(b) QUALIFIED GROUP HEALTH PLAN EXPENDI-
17 TURES; ELIGIBLE SMALL BUSINESS.-For purposes of
18 this section-
19
"(1) QUALIFIED GROUP HEALTH PLAN EX-
20
PENDITURES.-
21
"(A) IN GENERAL.-The term 'qualified
22
group health plan expenditures' means the ag-
23
gregate amount of expenditures paid or in-
24
curred by the eligible small business for the tax-
25
able year for coverage of its employees under a
.S 1227 IS
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1
group health plan (as defined in section
2
5000(b)(1)) which is a health benefit plan (as
3
defined in section 2713(a)(5)) of the Public
4
Health Service Act to the extent such expendi-
5
tures do not exceed $3,000 for each employee,
6
reduced (but not below zero) by 5 percent for
7
each $250 (or fraction thereof) by which the
8
amount of wages paid to such employee by the
9
eligible small business in such taxable year ex-
10
ceeds $15,000.
11
"(B) LIMIT INDEXED.-In the case of any
12
taxable year beginning in a calendar year after
13
the effective date of this section, the $3,000
14
amount in subparagraph (A) shall be increased
15
by an amount equal to
16
"(i) such amount, multiplied by
17
"(ii) the increase (if any) in the wage
18
index for such calendar year.
19
"(2) ELIGIBLE SMALL BUSINESS.-
20
"(A) IN GENERAL.-The term 'eligible
21
small business' means any person which, on an
22
average business day during the preceding tax-
23
able year, had no more than 60 employees.
24
"(B) AGGREGATION RULES.-All members
25
of the same controlled group of corporations
.S 1227 IS
160
1
(within the meaning of section 52(a)) and all
2
persons under common control (within the
3
meaning of section 52(b)) shall be treated as 1
4
person.
5
"(C) EMPLOYEE.-The term 'employee'-
6
"(i) shall include a self-employed indi-
7
vidual as defined in section 401(c)(1), but
8
"(ii) shall not include an employee
9
who works less than 25 hours per week.
10
"(c) COORDINATION WITH DEDUCTION.-Any deduc-
11 tion allowable under this chapter for any qualified group
12 health plan expenditures shall be in addition to any credit
13 under section 38 attributable to such expenditures.".
14
(b) CONFORMING AMENDMENTS.-
15
(1) Section 38(b) of such Code is amended-
16
(A) by striking "plus" at the end of para-
17
graph (6),
18
(B) by striking "plus" at the end of para-
19
graph (7), and inserting a comma and "plus",
20
and
21
(C) by adding at the end thereof the fol-
22
lowing new paragraph:
23
"(8) the small business group health plan ex-
24
penditures credit determined under section 45.".
.S 1227 IS
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1
(2) The table of sections for subpart D of part
2
IV of subchapter A of chapter 1 of such Code is
3
amended by inserting after the item relating to sec-
4
tion 44 the following new item:
"Sec. 45. Small business group health plan expenditures."
5
(c) EFFECTIVE DATE.-The amendments made by
6 this section shall apply to taxable years beginning in the
7 third full calendar year after the date of the enactment
8 of this Act.
9 Subtitle E-Additional Assistance
10
to Small and Medium-Sized
11
Businesses
12 SEC. 351. OPPORTUNITY TO BUY COVERAGE AT MEDICARE
13
RATES.
14
(a) ELIGIBILITY.-Businesses with fewer than 100
15 employees that have not provided coverage to their em-
16 ployees in the calendar year preceding the date of enact-
17 ment of this Act shall be eligible to buy private health
18 insurance coverage from a small or medium-sized business
19 insurer under which providers of health care services are
20 paid at rules based on Medicare rates as provided for in
21 part C of title XXVII of the Public Health Service Act
22 and title XIII of the Social Security Act, for a period of
23 not to exceed 5 years.
24
(b) DEFINITION.-As used in this section the term
25 "not provided coverage in the calendar year preceding the
.S 1227 IS
162
1 date of enactment of this Act" means, with respect to a
2 business, that less than 25 percent of employees working
3 more than 17.5 hours per week for the business received
4 coverage from the business in each of the years.
5 SEC. 352. SPECIAL PROVISION FOR NEW SMALL BUSI-
6
NESSES.
7
In the case of a small employer that normally employs
8 24 or fewer employees during a year, and that has been
9 an employer for not more than 3 years, such employer
10 shall not be required to provide coverage under this Act
11 or the amendment made by this Act or make a contribu-
12 tion in lieu of coverage under title V for the first two years
13 in which the employer has been an employer. Such employ-
14 er shall be permitted to meet the requirements of part B
15 of title XXVII of the Public Health Service Act by making
16 a contribution at a rate that is 1/2 of the rate that would
17 otherwise be required to be paid under this Act.
18 SEC. 353. SMALL AND MEDIUM-SIZED BUSINESS ADVISORY
19
COMMITTEE.
20
(a) ESTABLISHMENT.-The Secretary shall establish
21 a small and medium-sized business advisory committee
22 (hereafter referred to in this section as the "committee")
23 that shall provide advice to such Secretary and to the ap-
24 propriate committees of Congress concerning all provisions
.S 1227 IS
163
1 of this Act that relate to small and medium-sized busi-
2 nesses.
3
(b) MEMBERSHIP.-
4
(1) IN GENERAL.-The Secretary shall jointly
5
appoint individuals to serve on the committee, of
6
which-
7
(A) seven individuals shall be representa-
8
tives of small or medium-sized businesses;
9
(B) two individuals shall be representatives
10
of employees of small or medium-sized business-
11
es;
12
(C) two individuals shall be knowledgeable
13
concerning the small and medium-sized business
14
insurance market; and
15
(D) two individuals shall be members of
16
the general public.
17
(2) SMALL AND MEDIUM-SIZED BUSINESS REP-
18
RESENTATIVES.-Individuals appointed under para-
19
graph (1) (A) shall-
20
(A) be selected from geographically diverse
21
regions of the country;
22
(B) include at least one representative of
23
small or medium-sized businesses that are lo-
24
cated in rural areas and one representative of
S 1227 IS---6
164
1
small or medium-sized businesses located in
2
urban areas;
3
(C) include at least one individual who rep-
4
resents the concerns of minority businesses; and
5
(D) represent a diversity of businesses.
6
(3) CHAIRPERSON.-The members of the com-
7
mittee shall elect an individual to serve as chairper-
8
son.
9
(4) COMPENSATION AND REIMBURSEMENT OF
10
EXPENSES.-Members of the committee appointed
11
under paragraph (1) shall receive compensation for
12
each day (including travel time) engaged in carrying
13
out the duties of the committee. Such compensation
14
may not be in an amount in excess of the maximum
15
rate of basic pay payable for GS-18 of the General
16
Schedule.
17
(5) STAFF.-The Secretary shall provide to the
18
committee such staff, information, and other assist-
19
ance as may be necessary to carry out the duties of
20
the committee.
21
(6) REGULATIONS.-The Secretary shall pro-
22
mulgate regulations that prescribe the terms to be
23
served by the members of the committee, the proce-
24
dure for filling vacancies on the committee, and the
25
procedure for holding and administering meetings.
.S 1227 IS
165
1
(c) DUTIES.-The committee shall-
2
(1) perform the advisory functions as described
3
in subsection (a);
4
(2) analyze the impact of the implementation of
5
this Act and the amendments made by this Act on
6
small and medium-sized businesses and make recom-
7
mendations to the Secretary and the appropriate
8
committees of Congress concerning appropriate
9
modifications to such Act;
10
(3) review and provide comments concerning
11
the regulations promulgated pursuant to this Act
12
that impact on small and medium-sized businesses;
13
(4) monitor the effectiveness of the small insur-
14
er reform program established under subtitle A, and
15
make recommendations to the Secretary and the ap-
16
propriate committees of Congress concerning appro-
17
priate modifications in such program;
18
(5) serve as a channel of communication be-
19
tween the Secretary and the small and medium-sized
20
business communities; and
21
(6) perform such other functions as the Secre-
22
tary considers appropriate.
23
(d) AUTHORIZATION OF APPROPRIATIONS.-There
24 are authorized to be appropriated such sums as may be
25 necessary to carry out this section.
.S 1227 IS
166
1
TITLE IV-REDUCING HEALTH
2
CARE COST INFLATION
3 Subtitle A-Outcomes Research
4
and Practice Guideline Devel-
5
opment and Dissemination
6 SEC. 401. INITIAL GUIDELINES AND STANDARDS.
7
Subsection (d) of section 912 of the Public Health
8 Service Act (as added by section 6103(a) of Public Law
9 101-239) is amended to read as follows:
10
"(d) INITIAL GUIDELINES AND STANDARDS.-
11
"(1) IN GENERAL.-Not later than January 1,
12
1992, the Administrator shall assure the develop-
13
ment of an initial set of guidelines as described in
14
subsection (a)(1) that shall include not less than
15
three clinical treatments or conditions that-
16
"(A) account for a significant portion of
17
national health expenditures;
18
"(B) have a significant variation in the
19
frequency or the type of treatment provided; or
20
"(C) otherwise meet the needs and prior-
21
ities described in this section.
22
"(2) MENTAL HEALTH SERVICES.-The Admin-
23
istrator, in consultation with the National Institute
24
of Mental Health and mental health providers, shall
25
develop outcomes research and practice parameters
.S 1227 IS
167
1
for mental health services, including at least the di-
2
agnosis and treatment of childhood attention deficit
3
disorders and manic depression."
4 SEC. 402. AMENDMENTS TO THE SOCIAL SECURITY ACT.
5
Section 1142(i) of the Social Security Act (as added
6 by section 6103(b) of Public Law 101-239) is amended-
7
(1) in paragraph (1), to read as follows:
8
"(1) IN GENERAL.-There are authorized to be
9
appropriated to carry out this section-
10
"(A) $125,000,000 for fiscal year 1991;
11
"(B) $175,000,000 for fiscal year 1992;
12
"(C) $225,000,000 for fiscal year 1993;
13
and
14
"(D) $275,000,000 for fiscal year 1994.";
15
and
16
(2) in paragraph (2), by striking out "75 per-
17
cent" and inserting in lieu thereof "50 percent".
18
Subtitle B-Federal Health
19
Expenditure Board
20 SEC. 411. FEDERAL HEALTH EXPENDITURE BOARD.
21
(a) PUBLIC HEALTH SERVICE ACT.-Title XXVII of
22 the Public Health Service Act (as added under section 101
23 and amended by section 201 and 311) is further amended
24 by adding at the end thereof the following new part:
.S 1227 IS
168
1
"PART D-FEDERAL HEALTH EXPENDITURE BOARD
2 "SEC. 2761. ESTABLISHMENT AND MEMBERSHIP.
3
"(a) ESTABLISHMENT.-There is established as an
4 independent agency in the executive branch a Federal
5 Health Expenditure Board (hereafter referred to in this
6 part as the 'Board').
7
"(b) MEMBERSHIP.-
8
"(1) IN GENERAL.-
9
"(A) APPOINTMENT.-The Board shall be
10
composed of 11 members to be appointed by the
11
President, by and with the advice and consent
12
of the Senate.
13
"(B) Ex OFFICIO MEMBERS.-The Secre-
14
tary, the Chairman of the Prospective Payment
15
Assessment Commission and the Chairman of
16
the Physician Payment Review Commission
17
shall serve as ex officio members of the Board.
18
"(2) REPRESENTATION.-In appointing mem-
19
bers to the Board under paragraph (1)(A), the
20
President shall ensure that-
21
"(A) the interests of health care providers
22
and purchasers are fairly represented; and
23
"(B) a majority of the members of the
24
Board are experts in health care issues and
25
fairly represent the interests of the general pub-
.S 1227 IS
169
1
lic in having access to quality and affordable
2
health care.
3
"(3) CHAIRPERSON.-The President shall ap-
4
point a member appointed under paragraph (1)(A)
5
to serve as the Chairperson of the Board.
6
"(4) TERMS.-
7
"(A) IN GENERAL.-Except as provided in
8
subparagraph (B), the members of the Board
9
appointed under paragraph (1)(A) shall serve
10
for terms of 7 years. Such members may be
11
reappointed.
12
"(B) INITIAL MEMBERS.-Of the initial
13
members of the Board appointed under para-
14
graph (1)(A)-
15
"(i) three shall be appointed for a
16
term of 2 years;
17
"(ii) three shall be appointed for a
18
term of 4 years;
19
"(iii) three shall be appointed for a
20
term of 6 years; and
21
"(iv) two shall be appointed for a
22
term of 7 years;
23
as designated by the President at the time of
24
appointment.
.S 1227 IS
170
1
"(5) VACANCIES.-Any vacancy in the member-
2
ship of the Board shall be filled in the same manner
3
in which the original appointment was made. Any
4
member appointed to fill a vacancy occurring before
5
the expiration of the term of office for which such
6
member's predecessor was appointed shall be ap-
7
pointed only for the remainder of such term.
8
"(6) QUORUM.-Six members of the Board ap-
9
pointed under paragraph (1)(A) shall constitute a
10
quorum for purposes of conducting the business of
11
the Board, but a lesser number may meet to hold
12
hearings.
13
"(7) MEETINGS.-The Board shall meet at the
14
call of the Chairperson, or upon motion by not less
15
than six of the members of the Board appointed
16
under paragraph (1)(A), to conduct the business of
17
the Board.
18 "SEC. 2762. FUNCTIONS AND DUTIES OF THE BOARD.
19
"(a) IN GENERAL.-The Board shall-
20
"(1) develop national health care expenditure,
21
access and quality goals;
22
"(2) convene and oversee negotiations between
23
health care providers and purchasers to develop pay-
24
ment rates and perform other activities necessary to
.S 1227 IS
171
1
achieve expenditure goals developed under paragraph
2
(1);
3
"(3) establish recommended payment levels and
4
other recommended measures that may include in-
5
creased utilization of managed care, increased utili-
6
zation of alternatives to institutionalization, and pro-
7
cedures for the allocation and limitation of capital
8
investment necessary to achieve health care expendi-
9
ture, quality and access targets subsequent to the
10
conclusion of required negotiations;
11
"(4) develop goals for States and regions that
12
are consistent with national goals established under
13
paragraph (1);
14
"(5) prepare and submit, to the President, the
15
appropriate committees of Congress and to the gen-
16
eral public, an annual report concerning the success
17
in achieving the goals established under paragraph
18
(1), together with such recommendations as the
19
Board considers appropriate to further the objectives
20
of providing access to affordable, quality health care;
21
"(6) establish uniform billing and claim forms
22
and mandatory reporting requirements to-
23
"(A) measure the success in meeting the
24
goals established under paragraph (1);
.S 1227 IS
172
1
"(B) permit the Board, to the extent prac-
2
ticable, to analyze data acquired under such re-
3
porting requirements for individual providers to
4
assist purchasers and consumers in evaluating
5
the quality and cost of care offered by different
6
providers; and
7
"(C) reduce the administrative cost of the
8
health care system;
9
"(7) recommend rates, budgets and such other
10
measures as may be appropriate and consistent with
11
expenditure goals developed by negotiators or the
12
Board under this part to assure access to quality af-
13
fordable health care under Federal health insurance
14
programs and programs under which the Federal
15
Government enters into contracts for the delivery of
16
health care;
17
"(8) conduct studies, issue reports, and gather
18
and disseminate data to the Congress, the President
19
and the general public, to contribute to the objective
20
of providing access to high-quality affordable health
21
care;
22
"(9) cooperate with State-based consortium es-
23
tablished under section 2781; and
24
"(10) carry out any other activities determined
25
by the Board to be necessary to further the goal of
.S 1227 IS
173
1
making available affordable, accessible, high quality
2
health care in the United States.
3
"(b) PERSONNEL, SERVICES, REGULATIONS.-The
4 Board may, for the purpose of performing its duties and
5 carrying out its functions under this part-
6
"(1) employ such personnel as it considers nec-
7
essary to perform administrative, clerical, technical
8
and other duties;
9
"(2) procure the temporary and intermittent
10
services of experts and consultants to the extent au-
11
thorized by section 3109(b) of title 5, United States
12
Code, at rates the Board determines to be reasona-
13
ble; and
14
"(3) prescribe regulations necessary to carry
15
out the functions and duties of the Board under this
16
part.
17 "SEC. 2763. DEVELOPMENT OF NATIONAL HEALTH CARE
18
EXPENDITURE, ACCESS, AND QUALITY
19
GOALS.
20
"(a) EXPENDITURE GOALS.-
21
"(1) IN GENERAL.-The Board shall, to the ex-
22
tent practicable, develop national expenditure goals
23
under section 2762(a)(1) applicable to the total
24
amount to be expended in the United States for
25
health care. To the extent practicable, such goals
.S 1227 IS
174
1
shall contain a separate expenditure breakdown
2
for-
3
"(A) hospital services;
4
"(B) physician services;
5
"(C) laboratory services;
6
"(D) pharmaceutical products;
7
"(E) durable medical equipment; and
8
"(F) such other health services or sectors,
9
including subdivisions of the sectors described
10
in this paragraph, other than long-term care
11
services, as the Board determines appropriate.
12
"(2) CONSIDERATIONS.-In developing expendi-
13
ture goals under paragraph (1), the Board shall take
14
into consideration-
15
"(A) the aging of the population and such
16
other factors as may affect the demand for
17
health care in the future;
18
"(B) general inflation factors and the costs
19
related to inflation in labor and other inputs
20
used to produce health services;
21
"(C) technological advances that may in-
22
crease or decrease health care costs;
23
"(D) appropriate improvements in health
24
care productivity;
.S 1227 IS
175
1
"(E) feasible reductions in unnecessary
2
health care;
3
"(F) the need to assure that all sectors of
4
the population have adequate access to health
5
care services;
6
"(G) the impact and availability of such
7
goals on the quality of health care; and
8
"(H) such other factors as the Board de-
9
termines appropriate.
10
"(b) QUALITY GOALS.-
11
"(1) DEVELOPMENT.-The Board shall, to the
12
extent practicable, develop national goals under sec-
13
tion 2762(a)(1) for improving the quality of the
14
health care system of the United States. Such goals
15
shall include recommendations for improving the
16
quality of health care provided in the United States
17
and establish a system of measuring the progress
18
made in achieving such goals.
19
"(2) DATA AND STUDIES.-The Board shall
20
collect such data and conduct such studies as may
21
be necessary to carry out paragraph (1).
22
"(c) ACCESS GOALS.-
23
"(1) DEVELOPMENT.-The Board shall, to the
24
extent practicable, develop national goals under sec-
25
tion 2762(a)(1) for improving access to the health
.S 1227 IS
176
1
care system for all Americans. Such goals shall in-
2
clude recommendations for achieving such goals and
3
establish a system of measuring progress made in
4
achieving such goals.
5
"(2) DATA AND STUDIES.-The Board shall
6
collect such data and conduct such studies as may
7
be necessary to carry out paragraph (1).
8
"(d) STATE AND REGIONAL GOALS.-In carrying out
9 its functions under this section, the Board shall develop
10 separate goals for each State and region, based on an ad-
11 justment of the national goals, to reflect the demographic
12 characteristics and other relevant characteristics of such
13 States and regions.
14
"(e) TIMING.-The Board shall, not later than June
15 30 of each year, develop preliminary goals under this sec-
16 tion and, not later than December 1 of each year, develop
17 final goals and the recommended payment rates and other
18 measures necessary to achieve such goals.
19 "SEC. 2764. HEALTH CARE PROVIDER AND PURCHASER NE-
20
GOTIATIONS.
21
"(a) REQUIREMENT OF NEGOTIATIONS TO ACHIEVE
22 GOALS.-The Board shall convene appropriate representa-
23 tives of health care providers and purchasers recognized
24 or appointed as negotiators under section 2765 to negoti-
25 ate concerning terms and conditions related to the provi-
.S 1227 IS
177
1 sion of health care to achieve the expenditure goals devel-
2 oped under section 2763(a). The Board shall adopt a ne-
3 gotiating process that shall be followed by such negotia-
4 tors.
5
"(b) OBLIGATION TO BARGAIN IN GOOD FAITH.-It
6 shall be the obligation of negotiators participating in nego-
7 tiations under subsection (a) to bargain in good faith and
8 consistent with the processes established by the Board.
9
"(c) TIME FOR NEGOTIATIONS.-The negotiations
10 required under subsection (a) shall be commenced not
11 later than July 1, and shall be completed not later than
12 September 31, of each year unless such time period is ex-
13 tended by the Board.
14
"(d) SECTORS FOR NEGOTIATIONS.-The Board
15 shall require negotiations under subsection (a) for the
16 achievement of the expenditure goals for physician and
17 hospital care. The Board may require that negotiations
18 also be convened under such subsection concerning other
19 health care sectors of the type referred to in section
20 2763(a)(1), including subdivisions of sectors, to the extent
21 determined to be appropriate and feasible by the Board.
22
"(e) CONTENT OF NEGOTIATIONS.-
23
"(1) IN GENERAL.-Negotiators participating
24
in negotiations under subsection (a) shall attempt to
25
agree on recommendations to be submitted to the
.S 1227 IS
178
1
Board concerning a health care payment system and
2
uniform payment rates, together with other appro-
3
priate recommendations for achieving the expendi-
4
ture goals developed under section 2763(a).
5
"(2) ACHIEVEMENT OF GOALS.-In developing
6
recommendations under paragraph (1), the negotia-
7
tors shall attempt to ensure that such recommended
8
payment system, payment rates, and other recom-
9
mended measures will, if implemented, will result in
10
the achievement of the expenditure goals developed
11
under section 2763(a).
12 "SEC. 2765. NEGOTIATION REQUIREMENTS.
13
"(a) NEGOTIATION BY SECTOR.-In each sector se-
14 lected by the Board under section 2764(d) as a sector in
15 which negotiations shall be conducted, negotiators repre-
16 senting providers of health care and purchasers of health
17 care shall be selected in accordance with this section. The
18 Board shall determine which individuals, organizations,
19 and institutions are eligible for representation as providers
20 or purchasers in each sector.
21
"(b) HEALTH CARE PROVIDERS.-
22
"(1) IN GENERAL.-
23
"(A)
PETITION.-An
organization
24
(through a representative of such organization)
25
or an individual that desires to be a negotiator
.S 1227 IS
179
1
on behalf of health care providers under this
2
section shall submit a petition requesting such
3
to the Board. Such petition shall include any
4
authorizations of representation that such orga-
5
nization or individual has received on behalf of
6
health care providers, in such form and meeting
7
such requirements as the Board may require.
8
"(B) GENERAL APPROVAL.-An organiza-
9
tion or individual submitting a petition under
10
subparagraph (A) that contains authorizations
11
of representation from not less than 25 percent
12
of the health care providers in a sector, as de-
13
termined by the Board, shall be approved by
14
the Board as a negotiator for providers with re-
15
spect to that sector.
16
"(C) EXCLUSIVE NEGOTIATOR.-An orga-
17
nization or individual submitting a petition
18
under subparagraph (A) that contains author-
19
izations of representation from not less than 50
20
percent of the health care providers in a sector,
21
as determined by the Board, shall be approved
22
by the Board as the exclusive negotiator for
23
providers with respect to that sector.
24
"(D) APPOINTMENT.-If no organization
25
or individual submits a petition under subpara-
.S 1227 IS
180
1
graph (A) that contains authorizations of repre-
2
sentation from 25 percent or more of the health
3
care providers in a sector, as determined by the
4
Board, the Board shall-
5
"(i) appoint a negotiator or negotia-
6
tors to represent such providers; or
7
"(ii) establish an election procedure
8
for the election of a negotiator or negotia-
9
tors for such providers.
10
"(2) INSTITUTIONAL SECTORS.-In the case of
11
a health care sector in which health care services are
12
delivered primarily through institutions or organiza-
13
tions, the Board shall establish a procedure to select
14
negotiators to represent such institutions and orga-
15
nizations that is based on a weighted designation of
16
all such institutions and organizations after consid-
17
eration of the revenues or number of patients served
18
by such institutions or organizations or based on
19
such other measure as the Board determines appro-
20
priate.
21
"(c) PURCHASERS.-
22
"(1) IN GENERAL.-
23
"(A) PETITION.-An organization
24
(through a representative of such organization)
25
or an individual that desires to be a negotiator
S 1227 IS
181
1
on behalf of health care purchasers under this
2
section shall submit a petition requesting such
3
to the Board. Such petition shall include any
4
authorizations of representation that such orga-
5
nization or individual has received on behalf of
6
health care purchasers.
7
"(B) GENERAL APPROVAL.-An organiza-
8
tion or individual submitting a petition under
9
subparagraph (A) that contains authorizations
10
of representation from not less than 25 percent
11
of the health care purchasers in a sector, as de-
12
termined by the Board, shall be approved by
13
the Board as a negotiator for purchasers with
14
respect to that sector.
15
"(C) EXCLUSIVE NEGOTIATOR.-An orga-
16
nization or individual submitting a petition
17
under subparagraph (A) that contains author-
18
izations of representation from not less than 50
19
percent of the health care purchasers in a sec-
20
tor, as determined by the Board, shall be ap-
21
proved by the Board as the exclusive negotiator
22
for purchasers with respect to that sector.
23
"(D) APPOINTMENT.-If no organization
24
or individual submits a petition under subpara-
25
graph (A) that contains authorizations of repre-
1227 IS
182
1
sentation from 25 percent or more of the health
2
care purchasers in a sector, as determined by
3
the Board, the Board shall-
4
"(i) appoint a negotiator or negotia-
5
tors to represent such purchasers; or
6
"(ii) establish an election procedure
7
for the election of a negotiator or negotia-
8
tors for such purchasers.
9
"(2) DETERMINATIONS.-If the Board desig-
10
nates employment-based health benefit plans as all
11
or some of the purchasers entitled to be represented
12
in negotiations for a sector, the Board shall establish
13
a procedure for determining whether the 25 percent
14
or 50 percent requirements are met for purposes of
15
subparagraphs (B) and (C) of paragraph (1), based
16
on a weighted designation that considers the number
17
of individuals covered by the health benefits plan of
18
the purchaser, the total expenditures under such
19
plans, or such other measure as the Board deter-
20
mines appropriate. In the case of health benefit
21
plans provided pursuant to a collective bargaining
22
agreement, for purposes of the weighted designation,
23
50 percent of the costs of or individuals covered
24
under such plan shall be assigned to the union and
25
50 percent to the appropriate employer or employ-
S 1227 IS
183
1
ers. If the Board designates other categories of pur-
2
chasers, a similar procedure shall be utilized.
3
"(d) CONTINUED APPROVAL AS NEGOTIATORS, LIMI-
4 TATION.-
5
"(1) ESTABLISHMENT OF PROCEDURES.-The
6
Board shall establish procedures for the withdrawal
7
of approvals granted to organizations or individuals
8
under subsections (b)(1) or (c)(1).
9
"(2) EXCLUSIVE NEGOTIATORS.-
10
"(A) PETITION FOR INITIATION OF PROCE-
11
DURES.-The Board may initiate procedures
12
under paragraph (1) to withdraw the approval
13
of an exclusive negotiator under subsection
14
(b)(1)(C) or (c)(1)(C), if not less than 30 per-
15
cent of the health care providers or purchasers
16
in the appropriate sector file a petition with the
17
Board for such withdrawal.
18
"(B) VOTE ON WITHDRAWAL.-If the
19
Board determines that a petition received under
20
subparagraph (A) is valid, the Board shall ar-
21
range for a vote to take place among the appro-
22
priate purchasers or providers to determine
23
whether to withdraw the approval that is the
24
subject of such petition. If in excess of 50 per-
25
cent of such providers or purchasers vote to
.S 1227 IS
184
1
withdraw such approval, the Board shall certify
2
that such approval is withdrawn and initiate
3
procedures to select a new negotiator or nego-
4
tiators.
5
"(3) LIMITATION AND ELECTION.-
6
"(A) LIMITATION.-With respect to a sec-
7
tor in which no exclusive negotiator has been
8
approved under subsection (b)(1)(C) or
9
(c)(1)(C), the Board may not grant approvals
10
to organizations and individuals under para-
11
graph (1)(B) of each such subsection, as appli-
12
cable, in a manner that would result in the ap-
13
proval of individuals and organizations repre-
14
senting in excess of 100 percent of the purchas-
15
ers or providers.
16
"(B) ELECTION.-In the event that peti-
17
tions are received (whether or not approvals
18
have previously been granted) under subsection
19
(b)(1)(B) or (c)(1)(C), from organizations or
20
individuals cumulatively representing in excess
21
of 100 percent of the purchasers or providers in
22
a sector the Board shall conduct an election
23
among such qualified organizations or individ-
24
uals to determine which such organizations and
.S 1227 IS
185
1
individuals will be approved or have their ap-
2
proval continued.
3
"(4) PERIOD OF DESIGNATION.-No organiza-
4
tion or individual shall be a negotiator or an exclu-
5
sive negotiator for more than a 5-year period with-
6
out being recertified as a negotiator or exclusive ne-
7
gotiator in the same manner as the original designa-
8
tion was made under this section.
9
"(5) TIMING.-Any vote or election held under
10
this subsection to determine the negotiators for a
11
particular year, shall be completed prior to June 30
12
of that year. Votes or elections completed after such
13
date shall apply to the negotiations for the following
14
year.
15 "SEC. 2766. REQUIREMENTS FOR RECOMMENDED PAYMENT
16
SYSTEMS AND RATES.
17
"(a) HOSPITALS.-
18
"(1) NEGOTIATED AGREEMENT.-A payment
19
system for hospitals that is recommended in an
20
agreement negotiated pursuant to section 2767 shall
21
be based on the hospital payment system established
22
under title XVIII of the Social Security Act, except
23
that the Board may approve or adopt an alternative
24
payment system.
.S 1227 IS
186
1
"(2) ALTERNATIVE PAYMENT SYSTEM.-An al-
2
ternative payment system approved or adopted
3
under paragraph (1) shall provide for the adjust-
4
ment of payment rates to reflect the differences in
5
costs between different types of hospitals to the ex-
6
tent that such costs represent appropriate differ-
7
ences in the costs of delivering care efficiently and
8
effectively in different types of hospitals or are nec-
9
essary to achieve other public policy objectives, as
10
determined by the Board. Such a payment system
11
shall reflect geographic differences in labor and to
12
the extent feasible, other input costs, capital and
13
other needs to maintain adequate access to care and
14
quality of care. To the extent desirable and feasible,
15
the negotiators shall recommend, and the Board
16
shall approve, special treatment for managed care
17
programs.
18
"(b) PHYSICIANS.-
19
"(1) NEGOTIATED AGREEMENT.-A payment
20
system for physicians that is recommended in an
21
agreement negotiated pursuant to section 2767 shall
22
be based on the physician payment system estab-
23
lished under title XVIII of the Social Security Act,
24
except that the Board may approve or adopt an al-
25
ternative payment system.
.S 1227 IS
187
1
"(2) ALTERNATIVE PAYMENT SYSTEM.-An al-
2
ternative payment system approved or adopted
3
under paragraph (1) shall reflect geographic differ-
4
ences in practice costs insofar as those differences
5
reflect the cost of economical and efficient provision
6
of quality care, and shall promote an appropriate
7
distribution of primary and specialty care. To the
8
extent desirable and feasible, the negotiators shall
9
recommend, and the Board shall approve, special
10
treatment for managed care programs.
11 "SEC. 2767. OUTCOME OF NEGOTIATIONS, AGREEMENTS.
12
"(a) AGREEMENT.-If a majority of the negotiators
13 (in the case of multiple negotiators) for the providers and
14 a majority of the negotiators (in the case of multiple nego-
15 tiators) for the purchasers, for a particular sector, agree
16 to recommend a proposal under this part to the Board,
17 such proposal shall be considered to have been agreed to
18 by the negotiators.
19
"(b) BINDING NATURE OF AGREEMENTS.-If a nego-
20 tiated agreement is reached, pursuant to subsection (a),
21 concerning a health services rate structure, or concerning
22 any other matter that would lead to the achievement of
23 the goals developed by the Board under section 2763, or
24 an alternative goal accepted by the Board under subsec-
25 tion (c), and such agreement, in the judgment of the
.S 1227 IS
188
1 Board, will lead to the achievement of such goals, the
2 Board shall promulgate regulations implementing such
3 rates and other matters and such rates and other matters
4 shall be binding on providers and purchasers in the sector
5 to which such agreement applies.
6
"(c) AGREEMENT ON DIFFERENT GOAL.-If the ne-
7 gotiators reach an agreement, pursuant to subsection (a),
8 concerning a goal that is different than a goal that has
9 been developed by the Board under section 2763, the
10 Board shall adopt such agreed upon goal if the Board de-
11 termines that it would be in the best interest of the general
12 public to adopt such goal. The Board, on a rejection of
13 such alternative agreed upon goal, may request that the
14 negotiators attempt to reach a negotiated agreement con-
15 cerning the original goal under section 2763, and such
16 other measures to achieve such original goal, and may pro-
17 mulgate regulations recommending rates and other mat-
18 ters to achieve the original goal.
19
"(d) EFFECT OF NO AGREEMENT.-
20
"(1) IN GENERAL.-If the negotiators for a
21
particular sector fail to reach a negotiated agree-
22
ment, pursuant to subsection (a), concerning a goal
23
established under section 2763, the Board shall pro-
24
mulgate regulations recommending advisory rates
25
and other matters necessary to achieve such goals.
.S 1227 IS
189
1
Such advisory rates and other matters shall not be
2
binding on health care providers and purchasers.
3
"(2) CONSTRUCTION.-Notwithstanding any
4
other provision of law, health care purchasers may
5
combine for the purpose of agreeing to pay health
6
care providers for services at rates recommended
7
pursuant to paragraph (1). Notwithstanding any
8
other provision of law, health care providers may
9
combine for the purpose of agreeing to charge for
10
services at rates recommended pursuant to para-
11
graph (1).
12
"(e) TECHNICAL ASSISTANCE.-The Board shall pro-
13 vide technical assistance to negotiators, including esti-
14 mates of the effect on expenditure goals of alternative pro-
15 posals and estimates of utilization changes that can be ex-
16 pected under different proposals. The Board may recom-
17 mend a proposal to achieve expenditure goals for the con-
18 sideration of the negotiators. The Board may make avail-
19 able professional mediation and conciliation services to the
20 negotiators.
21 "SEC. 2768. ENFORCEMENT.
22
"(a) IN GENERAL.-A health care provider assessing
23 rates other than those required under regulations promul-
24 gated by the Board under this part, or failing to comply
25 in any other manner with such regulations, or a health
.S 1227 IS
190
1 care purchaser paying rates other than those required
2 under such regulations, except in the case of an alternative
3 rate or method established under subsections (a)(2) and
4 (b)(2) of section 2766, shall-
5
"(1) be ineligible for any assistance under this
6
Act; and
7
"(2) be liable to the United States for a civil
8
penalty for such failure in an amount not to exceed
9
$50,000 in the case of an individual and $500,000
10
in the case of an organization, as provided for in
11
subsection (b).
12
"(b) CIVIL ACTIONS.-
13
"(1) IN GENERAL.-A civil penalty under sub-
14
section (a)(2) shall be assessed by the Board on a
15
health care provider or purchaser by an order made
16
on the record after an opportunity for a hearing on
17
any disputed issues of material fact and the amount
18
of the penalty. In the course of any investigation or
19
hearing under this paragraph, the Board or its des-
20
ignees may administer oaths and affirmations, exam-
21
ine witnesses, receive evidence, and issue subpoenas
22
requiring the attendance and testimony of witnesses
23
and the production of evidence that relates to the
24
matter under investigation.
.S 1227 IS
191
1
"(2) AMOUNT.-In determining the amount of
2
a civil penalty under paragraph (1), the Board shall
3
take into account the nature, circumstances, extent,
4
and gravity of the act subject to penalty, the ability
5
to pay, the effect on the ability to continue to do
6
business, any history of prior, similar acts, and such
7
other matters as the Board determines appropriate.
8
"(3) LIMITATION ON ACTIONS.-The Board
9
may not initiate an action under this subsection with
10
respect to any noncompliance described in subsection
11
(a) that occurred before the date of the enactment
12
of this section.
13
"(c) INJUNCTIVE RELIEF.-The Board shall have the
14 power, upon the initiation of an action regarding noncom-
15 pliance with a provision of this part, to petition any United
16 States district court, within any district wherein such non-
17 compliance is alleged to have occurred, for appropriate
18 temporary injunctive relief. Upon the filing of any such
19 petition, the court shall cause notice thereof to be served
20 upon such person, and thereupon shall have jurisdiction
21 to grant the Board such temporary injunctive relief as the
22 court determines to be appropriate.
23
"(d) JUDICIAL REVIEW.-Any health care provider or
24 purchaser that is the subject of an adverse decision under
25 subsection (b)(1) or subsection (c) may obtain a review
.S 1227 IS
192
1 of such decision by the United States Court of Appeals
2 for the District of Columbia or for the circuit in which
3 the provider or purchaser resides, by filing in such court
4 (within 60 days following the date the purchaser or provid-
5 er is notified of the decision of the Board) a petition re-
6 questing that the decision be modified or set aside.
7 "SEC. 2769. OTHER GOVERNMENT PROGRAMS.
8
"The Board shall promulgate regulations recom-
9 mending advisory rates and other matters necessary to
10 achieve the goals established under section 1172 for all
11 Federal programs (other than the program under titles
12 XVIII, XIX and XXI of the Social Security Act) that re-
13 imburse providers on a fee, charge, or cost basis or charge
14 third-party providers on such basis. Such nonbinding rates
15 shall be consistent with the rates promulgated by the
16 Board under sections 1176 and 1178, except that Federal
17 payments resulting from such rates shall be no greater
18 than such payments would have been if determined with-
19 out regard to this section through the fifth full fiscal year
20 after the date of enactment of this section.
21 "SEC. 2770. ROLE OF STATES.
22
"(a) ALTERNATIVE SYSTEMS, ETc.-A State consor-
23 tia established under section 2781 may, with the approval
24 of the Board, establish an alternative payment system,
.S 1227 IS
193
1 rates, and methods for achieving goals developed by the
2 Board under section 2763.
3
"(b) APPROVAL.-The Board shall approve alterna-
4 tive payment systems, rates, and methods under subsec-
5 tion (a) if Board determines that such alternative systems,
6 rates, or methods would result in a level of health care
7 expenditures in the State that achieves the national goals
8 developed under section 2763, adjusted to the State level.
9 If the Board determines that such national goals would
10 not be achieved through the proposed alternative systems,
11 rates or methods, the rates or other matters that apply
12 to the State under regulations promulgated by the Board
13 shall remain binding in the State. Such Board approval
14 is only necessary where binding payment systems, rates
15 and methods are not promulgated under a negotiated
16 agreement.
17
"(c) STANDARD FOR DETERMINATION.- making a
18 determination under subsection (b), the Board shall con-
19 sider the effect of the alternative systems, rates or meth-
20 ods, with respect to the goals established under section
21 2763, on the State as a whole rather than on particular
22 health care sectors in the State.
$ 1227 IS
194
1 "SEC. 2771. UNIFORM BILLING AND MANDATORY REPORT-
2
ING.
3
"(a) IN GENERAL.-The Board shall establish a sys-
4 tem of uniform billing and reporting, as required under
5 subsection (c), that will enable the Board to determine the
6 progress made in meeting the goals established under sec-
7 tion 2763, to provide information for health care providers
8 and purchasers to assist such providers and purchasers
9 in providing and obtaining efficiently provided quality
10 health care, and to reduce administrative costs of the
11 health care system.
12
"(b) GENERAL REPORTING AND DATA REQUIRE-
13 MENTS.-The Board shall-
14
"(1) develop a computerized system for the col-
15
lection, analysis, and dissemination of data required
16
to be collected under this part;
17
"(2) establish one or more uniform claims and
18
billing form as required in subsection (c)(2) to be
19
utilized by all data sources and providers;
20
"(3) audit information provided by health care
21
providers on a sample basis or in situations where
22
there exists reasonable cause for such an audit; and
23
"(4) issue public reports concerning health care
24
costs and the effectiveness of the health care provid-
25
ed by health care providers.
26
"(c) DATA COLLECTION.-
S 1227 IS
195
1
"(1) IN GENERAL.-Data sources shall submit
2
to the Board, on the request of the Board, all data
3
required to be submitted under this part in accord-
4
ance with the uniform submission formats, coding
5
systems, and other technical specifications estab-
6
lished by the Board to assure that such incoming
7
data is substantially valid, consistent, compatible
8
and manageable.
9
"(2) UNIFORM CLAIMS AND BILLING FORMS.-
10
Data shall be collected by the Board through the use
11
of one or more Federal Uniform Claims and Billing
12
Forms developed by the Board and utilized by pro-
13
viders and purchasers of health care that shall, at a
14
minimum, include-
15
"(A) a uniform patient identifier;
16
"(B) the date of birth of the patient;
17
"(C) the gender of the patient;
18
"(D) the ZIP Code of the patient;
19
"(E) the date of admission of the patient
20
for inpatient hospital services;
21
"(F) the date of discharge of the patient
22
referred to in subparagraph (E);
23
"(G) the principal and secondary diagnoses
24
of the patient;
S 1227 IS---7
196
1
"(H) the principal and secondary proce-
2
dures to be followed in treating the patient;
3
"(I) a uniform health care facility identi-
4
fier;
5
"(J) uniform identifiers of physicians and
6
treating the patient;
7
"(K) for services provided in an inpatient
8
setting, the total charges of the health care fa-
9
cility treating the patient, segregated into major
10
categories determined appropriate by the
11
Board;
12
"(L) the amounts of actual payments
13
made to the treating health care facility;
14
"(M) the amounts of the charges of each
15
physician or professional rendering service to
16
the patient;
17
"(N) the services provided in an inpatient
18
setting;
19
"(O) the amounts of actual payments
20
made to each physician or professional render-
21
ing service to the patient;
22
"(P) a uniform identifier of the primary
23
payor;
24
"(Q) the ZIP Code of the facility where
25
service is rendered to the patient;
.S 1227 IS
197
1
"(R) the patient discharge status; and
2
"(S) such other material as the Board de-
3
termines necessary or useful to carry out the
4
duties of the Board or to provide adequate in-
5
formation to purchasers of health care to assist
6
such purchasers in appropriately paying for
7
services.
8
"(3) MEASURE OF SERVICE EFFECTIVENESS.-
9
"(A) DEVELOPMENT OF METHODOLOGY.-
10
To the extent practical and as rapidly as feasi-
11
ble, the Secretary shall develop and implement
12
a methodology or methodologies that will meas-
13
ure the effectiveness of the health care service
14
provided by health care providers.
15
"(B) INCLUSION IN UNIFORM BILLING
16
FORM.-To the extent practical and as rapidly
17
as feasible, the Secretary shall include in the
18
uniform claims and billing forms or in other
19
data collection instruments established under
20
subsection (b) data necessary to provide the
21
Secretary with information concerning each
22
service provided by health care providers that is
23
sufficient to enable the Secretary to analyze the
24
quality, cost, and service effectiveness of the
25
provider.
.S 1227 IS
198
1
"(4) ADDITIONAL DATA.-The Board may col-
2
lect additional data, including audited annual finan-
3
cial reports of all hospitals and ambulatory service
4
facilities, medicare cost reports, information on cap-
5
ital expenditures, and any other data that the Board
6
determines necessary to carry out its responsibilities
7
under this part.
8
"(5) RECOMMENDATIONS.-The Board shall
9
make recommendations to the committees of Con-
10
gress, the President, and the insurance industry con-
11
cerning methods to reduce the cost and burden of
12
duplication or excessive reporting requirements im-
13
posed on health care providers.
14
"(d) REPORTS.-
15
"(1) IN GENERAL.-The Board, not less than
16
once each calendar year, shall for every health care
17
provider for which sufficient data is available, pre-
18
pare and make available reports that shall, to the
19
extent practicable and scientifically valid, contain
20
data in a form that will provide the most useful in-
21
formation to purchasers of health care services re-
22
garding such providers to enable such purchasers to
23
compare providers on the basis of cost and quality.
24
"(2) AVAILABILITY.-The Secretary shall ad-
25
vertise and make available all reports prepared
.S 1227 IS
199
1
under paragraph (1) to the general public, including
2
any dissents submitted by health care providers.
3
"(3) RECOMMENDATIONS.-The Board shall
4
make recommendations to the appropriate commit-
5
tees of Congress, the President, and the insurance
6
industry concerning methods to reduce the cost and
7
burden of duplicative or excessive reporting require-
8
ments imposed on health care providers.
9
"(e) DEFINITION.-As used in this section, the term
10 'data sources' means classes of entities and individuals
11 that the Board designates as data sources.
12 "SEC. 2772. ANNUAL REPORTS.
13
"Not later than June 30 of each year, the Board shall
14 prepare and submit to the President, the appropriate com-
15 mittees of Congress and the general public, a report con-
16 cerning the success in attaining expenditure, access, and
17 quality goals developed under section 2763, and contain-
18 ing recommendations for additional measures, if any, that
19 the Board determines are necessary to achieve such goals.
20 "SEC. 2773. DEFINITIONS.
21
"As used in this part:
22
"(1) PROVIDER.-The term 'provider' means a
23
physician, hospital, health maintenance organization,
24
pharmacy, laboratory, or other provider of health
25
care services or supplies, that has entered into an
.S 1227 IS
200
1
agreement with a managed care entity to provide
2
such services or supplies to a patient enrolled in a
3
managed care plan.
4
"(2) PURCHASER.-The term 'purchaser'
5
means an entity the pays for the services of provid-
6
ers, including in the case of a health benefit plan
7
provided pursuant to a collective bargaining agree-
8
ment, the labor union that has negotiated for such
9
plan on behalf of employees shall be considered to be
10
a purchaser.
11 "SEC. 2774. EFFECTIVE DATES.
12
"The Board shall develop the goals under section
13 2763 for each calendar year beginning not later than the
14 second full calendar year after the date of enactment of
15 this part. The Board shall establish the negotiating proce-
16 dures required under section 2714(a) for each calendar
17 year beginning not later than the third calendar year after
18 the date of enactment of this part.".
19
(b) SOCIAL SECURITY AcT.-Title XI of the Social
20 Security Act (42 U.S.C. 1301 et seq.) is amended by add-
21 ing at the end thereof the following new part:
.S 1227 IS
201
1
"PART C-FEDERAL HEALTH EXPENDITURE BOARD
2
"FUNCTIONS AND DUTIES OF THE FEDERAL HEALTH
3
EXPENDITURE BOARD
4
"SEC. 1171. (a) IN GENERAL.-The Federal Health
5 Expenditure Board (hereafter in this part referred to as
6 the 'Board') shall-
7
"(1) develop national health care expenditure,
8
access and quality goals;
9
"(2) convene and oversee negotiations between
10
health care providers and purchasers to develop pay-
11
ment rates and perform other activities necessary to
12
achieve expenditure goals developed under paragraph
13
(1);
14
"(3) establish recommended payment levels and
15
other recommended measures that may include in-
16
creased utilization of managed care, increased utili-
17
zation of alternatives to institutionalization, and pro-
18
cedures for the allocation and limitation of capital
19
investment necessary to achieve health care expendi-
20
ture, quality, and access targets subsequent to the
21
conclusion of required negotiations;
22
"(4) develop goals for States and regions that
23
are consistent with national goals established under
24
paragraph (1);
.S 1227 IS
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1
"(5) prepare and submit, to the President, the
2
appropriate committees of Congress and to the gen-
3
eral public, an annual report concerning the success
4
in achieving the goals established under paragraph
5
(1), together with such recommendations as the
6
Board considers appropriate to further the objectives
7
of providing access to affordable, quality health care;
8
"(6) establish uniform billing and claims forms
9
and mandatory reporting requirements to-
10
"(A) measure the success in meeting the
11
goals established under paragraph (1);
12
"(B) permit the Board, to the extent prac-
13
ticable, to analyze data acquired under such re-
14
porting requirements for individual providers to
15
assist purchasers and consumers in evaluating
16
the quality and cost of care offered by different
17
providers; and
18
"(C) reduce the administrative cost of the
19
health care system;
20
"(7) recommend rates, budgets, and such other
21
measures as may be appropriate and consistent with
22
expenditure goals developed by negotiators or the
23
Board under this part to assure access to quality af-
24
fordable health care under Federal health insurance
25
programs and programs under which the Federal
.S 1227 IS
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1
Government enters into contracts for the delivery of
2
health care;
3
"(8) conduct studies, issue reports, and gather
4
and disseminate data to the Congress, the President,
5
and the general public, to contribute to the objective
6
of providing access to high-quality affordable health
7
care;
8
"(9) cooperate with State-based consortium de-
9
scribed under part D of this title; and
10
"(10) carry out any other activities determined
11
by the Board to be necessary to further the goal of
12
making available affordable, accessible, high quality
13
health care in the United States.
14
"(b) PERSONNEL, SERVICES, REGULATIONS.-The
15 Board may, for the purpose of performing its duties and
16 carrying out its functions under this part-
17
"(1) employ such personnel as it considers nec-
18
essary to perform administrative, clerical, technical
19
and other duties;
20
"(2) procure the temporary and intermittent
21
services of experts and consultants to the extent au-
22
thorized by section 3109(b) of title 5, United States
23
Code, at rates the Board determines to be reasona-
24
ble; and
.S 1227 IS
204
1
"(3) prescribe regulations necessary to carry
2
out the functions and duties of the Board under this
3
part.
4
"DEVELOPMENT OF NATIONAL HEALTH CARE
5
EXPENDITURE, ACCESS, AND QUALITY GOALS
6
"SEC. 1172. (a) EXPENDITURE GOALS.-
7
"(1) IN GENERAL.-The Board shall, to the ex-
8
tent practicable, develop national expenditure goals
9
under section 1171(a)(1) applicable to the total
10
amount to be expended in the United States for
11
health care. To the extent practicable, such goals
12
shall contain a separate expenditure breakdown
13
for-
14
"(A) hospital services;
15
"(B) physician services;
16
"(C) laboratory services;
17
"(D) pharmaceutical products;
18
"(E) durable medical equipment; and
19
"(F) such other health services or sectors,
20
including subdivisions of the sectors described
21
in this paragraph, other than long-term care
22
services, as the Board determines appropriate.
23
"(2) CONSIDERATIONS.-In developing expendi-
24
ture goals under paragraph (1), the Board shall take
25
into consideration-
.S 1227 IS
205
1
"(A) the aging of the population and such
2
other factors as may affect the demand for
3
health care in the future;
4
"(B) general inflation factors and the costs
5
related to inflation in labor and other inputs
6
used to produce health services;
7
"(C) technological advances that may in-
8
crease or decrease health care costs;
9
"(D) appropriate improvements in health
10
care productivity;
11
"(E) feasible reductions in unnecessary
12
health care;
13
"(F) the need to assure that all sectors of
14
the population have adequate access to health
15
care services;
16
"(G) the impact of such goals on the qual-
17
ity and availability of health care; and
18
"(E) such other factors as the Board de-
19
termines appropriate.
20
"(b) QUALITY GOALS.-
21
"(1) DEVELOPMENT.-The Board shall, to the
22
extent practicable, develop national goals under sec-
23
tion 1171(a)(1) for improving the quality of the
24
health care system of the United States. Such goals
25
shall include recommendations for improving the
.S 1227 IS
206
1
quality of health care provided in the United States
2
and establish a system of measuring the progress
3
made in achieving such goals.
4
"(2) DATA AND STUDIES.-The Board shall
5
collect such data and conduct such studies as may
6
be necessary to carry out paragraph (1).
7
"(c) ACCESS GOALS.-
8
"(1) DEVELOPMENT.-The Board shall, to the
9
extent practicable, develop national goals under sec-
10
tion 1171(a)(1) for improving access to the health
11
care system for all Americans. Such goals shall in-
12
clude recommendations for achieving such goals and
13
establish a system of measuring progress made in
14
achieving such goals.
15
"(2) DATA AND STUDIES.-The Board shall
16
collect such data and conduct such studies as may
17
be necessary to carry out paragraph (1).
18
"(d) STATE AND REGIONAL GOALS.-In carrying out
19 its functions under this section, the Board shall develop
20 separate goals for each State and region, based on an ad-
21 justment of the national goals, to reflect the demographic
22 characteristics and other relevant characteristics of such
23 States and regions.
24
"(e) TIMING.-The Board shall, not later than June
25 30 of each year, develop preliminary goals under this sec-
.S 1227 IS
207
1 tion and, not later than December 1 of each year, develop
2 final goals and the recommended payment rates and other
3 measures necessary to achieve such goals.
4
"HEALTH CARE PROVIDER AND PURCHASER
5
NEGOTIATIONS
6
"SEC. 1173. (a) REQUIREMENT OF NEGOTIATIONS
7 TO ACHIEVE GOALS.-The Board shall convene appropri-
8 ate representatives of health care providers and purchas-
9 ers recognized or appointed as negotiators under section
10 1174 to negotiate concerning terms and conditions related
11 to the provision of health care to achieve the expenditure
12 goals developed under section 1172(a). The Board shall
13 adopt a negotiating process that shall be followed by such
14 negotiators.
15
"(b) OBLIGATION TO BARGAIN IN GOOD FAITH.-It
16 shall be the obligation of negotiators participating in nego-
17 tiations under subsection (a) to bargain in good faith and
18 consistent with the processes established by the Board.
19
"(c) TIME FOR NEGOTIATIONS.-The negotiations
20 required under subsection (a) shall be commenced not
21 later than July 1, and shall be completed not later than
22 September 31, of each year unless such time period is ex-
23 tended by the Board.
24
"(d) SECTORS FOR NEGOTIATIONS.-The Board
25 shall require negotiations under subsection (a) for the
26 achievement of the expenditure goals for physician and
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208
1 hospital care. The Board may require that negotiations
2 also be convened under such subsection concerning other
3 health care sectors of the type referred to in section
4 1172(a)(1), including subdivisions of sectors, to the extent
5 determined to be appropriate and feasible by the Board.
6
"(e) CONTENT OF NEGOTIATIONS.-
7
"(1) IN GENERAL.-Negotiators participating
8
in negotiations under subsection (a) shall attempt to
9
agree on recommendations to be submitted to the
10
Board concerning a health care payment system and
11
uniform payment rates, together with other appro-
12
priate recommendations for achieving the expendi-
13
ture goals developed under section 1172(a).
14
"(2) ACHIEVEMENT OF GOALS.-In developing
15
recommendations under paragraph (1), the negotia-
16
tors shall attempt to ensure that such recommended
17
payment system, payment rates, and other recom-
18
mended measures will, if implemented, result in the
19
achievement of the expenditure goals developed
20
under section 1172(a).
21
"NEGOTIATION REQUIREMENTS
22
"SEC. 1174. (a) NEGOTIATION BY SECTOR.-In each
23 sector selected by the Board under section 1173(d) as a
24 sector in which negotiations shall be conducted, negotia-
25 tors representing providers of health care and purchasers
26 of health care shall be selected in accordance with this sec-
.S 1227 IS
209
1 tion. The Board shall determine which individuals, organi-
2 zations, and institutions are eligible for representation as
3 providers or purchasers in each sector.
4
"(b) HEALTH CARE PROVIDERS.-
5
"(1) IN GENERAL.-
6
"(A)
PETITION.-An
organization
7
(through a representative of such organization)
8
or an individual that desires to be a negotiator
9
on behalf of health care providers under this
10
section shall submit a petition requesting such
11
to the Board. Such petition shall include any
12
authorizations of representation that such orga-
13
nization or individual has received on behalf of
14
health care providers, in such form and meeting
15
such requirements as the Board may require.
16
"(B) GENERAL APPROVAL.-An organiza-
17
tion or individual submitting a petition under
18
subparagraph (A) that contains authorizations
19
of representation from not less than 25 percent
20
of the health care providers in a sector, as de-
21
termined by the Board, shall be approved by
22
the Board as a negotiator for providers with re-
23
spect to that sector.
24
"(C) EXCLUSIVE NEGOTIATOR.-An orga-
25
nization or individual submitting a petition
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210
1
under subparagraph (A) that contains author-
2
izations of representation from not less than 50
3
percent of the health care providers in a sector,
4
as determined by the Board, shall be approved
5
by the Board as the exclusive negotiator for
6
providers with respect to that sector.
7
"(D) APPOINTMENT.-If no organization
8
or individual submits a petition under subpara-
9
graph (A) that contains authorizations of repre-
10
sentation from 25 percent or more of the health
11
care providers in a sector, as determined by the
12
Board, the Board shall-
13
"(i) appoint a negotiator or negotia-
14
tors to represent such providers; or
15
"(ii) establish an election procedure
16
for the election of a negotiator or negotia-
17
tors for such providers.
18
(2) INSTITUTIONAL SECTORS.-In the case of
19
a health care sector in which health care services are
20
delivered primarily through institutions or organiza-
21
tions, the Board shall establish a procedure to select
22
negotiators to represent such institutions and orga-
23
nizations that is based on a weighted designation of
24
all such institutions and organizations after consid-
25
eration of the revenues or number of patients served
.S 1227 IS
211
1
by such institutions or organizations or based on
2
such other measure as the Board determines appro-
3
priate.
4
"(c) PURCHASERS.-
5
"(1) IN GENERAL.-
6
"(A)
PETITION.-An
organization
7
(through a representative of such organization)
8
or an individual that desires to be a negotiator
9
on behalf of health care purchasers under this
10
section shall submit a petition requesting such
11
to the Board. Such petition shall include any
12
authorizations of representation that such orga-
13
nization or individual has received on behalf of
14
health care purchasers.
15
"(B) GENERAL APPROVAL.-An organiza-
16
tion or individual submitting a petition under
17
subparagraph (A) that contains authorizations
18
of representation from not less than 25 percent
19
of the health care purchasers in a sector, as de-
20
termined by the Board, shall be approved by
21
the Board as a negotiator for purchasers with
22
respect to that sector.
23
"(C) EXCLUSIVE NEGOTIATOR.-An orga-
24
nization or individual submitting a petition
25
under subparagraph (A) that contains author-
.S 1227 IS
212
1
izations of representation from not less than 50
2
percent of the health care purchasers in a sec-
3
tor, as determined by the Board, shall be ap-
4
proved by the Board as the exclusive negotiator
5
for purchasers with respect to that sector.
6
"(D) APPOINTMENT.-If no organization
7
or individual submits a petition under subpara-
8
graph (A) that contains authorizations of repre-
9
sentation from 25 percent or more of the health
10
care purchasers in a sector, as determined by
11
the Board, the Board shall-
12
"(i) appoint a negotiator or negotia-
13
tors to represent such purchasers; or
14
"(ii) establish an election procedure
15
for the election of a negotiator or negotia-
16
tors for such purchasers.
17
"(2) DETERMINATIONS.-If the Board desig-
18
nates employment-based health benefit plans as all
19
or some of the purchasers entitled to be represented
20
in negotiations for a sector, the Board shall establish
21
a procedure for determining whether the 25 percent
22
or 50 percent requirements are met for purposes of
23
subparagraphs (B) and (C) of paragraph (1), based
24
on a weighted designation that considers the number
25
of individuals covered by the health benefits plan of
.S 1227 IS
213
1
the purchaser, the total expenditures under such
2
plans, or such other measure as the Boards deter-
3
mines appropriate. In the case of health benefit
4
plans provided pursuant to a collective bargaining
5
agreement, for purposes of the weighted designation,
6
50 percent of the costs of or individuals covered
7
under such plan shall be assigned to the union and
8
50 percent to the appropriate employer or employ-
9
ers. If the Board designates other categories of pur-
10
chasers, a similar procedure shall be utilized.
11
"(d) CONTINUED APPROVAL AS NEGOTIATORS, LIMI-
12 TATION.-
13
"(1) ESTABLISHMENT OF PROCEDURES.-The
14
Board shall establish procedures for the withdrawal
15
of approvals granted to organizations or individuals
16
under subsections (b)(1) or (c)(1).
17
"(2) EXCLUSIVE NEGOTIATORS.-
18
"(A) PETITION FOR INITIATION OF PROCE-
19
DURES.-The Board may initiate procedures
20
under paragraph (1) to withdraw the approval
21
of an exclusive negotiator under subsection
22
(b)(1)(C) or (c)(1)(C), if not less than 30 per-
23
cent of the health care providers or purchasers
24
in the appropriate sector file a petition with the
25
Board for such withdrawal.
.S 1227 IS
214
1
"(B) VOTE ON WITHDRAWAL.-If the
2
Board determines that a petition received under
3
subparagraph (A) is valid, the Board shall ar-
4
range for a vote to take place among the appro-
5
priate purchasers or providers to determine
6
whether to withdraw the approval that is the
7
subject of such petition. If in excess of 50 per-
8
cent of such providers or purchasers vote to
9
withdraw such approval, the Board shall certify
10
that such approval is withdrawn and initiate
11
procedures to select a new negotiator or nego-
12
tiators.
13
"(3) LIMITATION AND ELECTION.-
14
"(A) LIMITATION.-With respect to a sec-
15
tor in which no exclusive negotiator has been
16
approved under subsection (b)(1)(C) or
17
(c)(1)(C), the Board may not grant approvals
18
to organizations and individuals under para-
19
graph (1)(B) of each such subsection, as appli-
20
cable, in a manner that would result in the ap-
21
proval of individuals and organizations repre-
22
senting in excess of 100 percent of the purchas-
23
ers or providers.
24
"(B) ELECTION.-In the event that peti-
25
tions are received (whether or not approvals
.S 1227 IS
215
1
have previously been granted) under subsection
2
(b)(1)(B) or (c)(1)(C), from organizations or
3
individuals cumulatively representing in excess
4
of 100 percent of the purchasers or providers in
5
a sector the Board shall conduct an election
6
among such qualified organizations or individ-
7
uals to determine which such organizations and
8
individuals will be approved or have their ap-
9
proval continued.
10
"(4) PERIOD OF DESIGNATION.-No organiza-
11
tion or individual shall be a negotiator or an exclu-
12
sive negotiator for more than a 5-year period with-
13
out being recertified as a negotiator or exclusive ne-
14
gotiator in the same manner as the original designa-
15
tion was made under this section.
16
"(5) TIMING.-Any vote or election held under
17
this subsection to determine the negotiators for a
18
particular year, shall be completed prior to June 30
19
of that year. Votes or elections completed after such
20
date shall apply to the negotiations for the following
21
year.
22 "REQUIREMENTS FOR RECOMMENDED PAYMENT SYSTEMS
23
AND RATES
24
"SEC. 1175. (a) HOSPITALS.-
25
"(1) NEGOTIATED AGREEMENT.-A payment
26
system for hospitals that is recommended in an
.S 1227 IS
216
1
agreement negotiated pursuant to section 1176 shall
2
be based on the hospital payment system established
3
under title XVIII of this Act, except that the Board
4
may approve or adopt an alternative payment sys-
5
tem.
6
"(2) ALTERNATIVE PAYMENT SYSTEM.-An al-
7
ternative payment system approved or adopted
8
under paragraph (1) shall provide for the adjust-
9
ment of payment rates to reflect the differences in
10
costs between different types of hospitals to the ex-
11
tent that such costs represent appropriate differ-
12
ences in the costs of delivering care efficiently and
13
effectively in different types of hospitals or are nec-
14
essary to achieve other public policy objectives, as
15
determined by the Board. Such a payment system
16
shall reflect geographic differences in labor and to
17
the extent feasible, other input costs, capital and
18
other needs to maintain adequate access to care and
19
quality of care. To the extent desirable and feasible,
20
the negotiators shall recommend, and the Board
21
shall approve, special treatment for managed care
22
programs.
23
"(b) PHYSICIANS.-
24
"(1) NEGOTIATED AGREEMENT.-A payment
25
system for physicians that is recommended in an
.S 1227 IS
217
1
agreement negotiated pursuant to section 1176 shall
2
be based on the physician payment system estab-
3
lished under title XVIII of this Act, except that the
4
Board may approve or adopt an alternative payment
5
system.
6
"(2) ALTERNATIVE PAYMENT SYSTEM.-An al-
7
ternative payment system approved or adopted
8
under paragraph (1) shall reflect geographic differ-
9
ences in practice costs insofar as those differences
10
reflect the cost of economical and efficient provision
11
of quality care, and shall promote an appropriate
12
distribution of primary and specialty care. To the
13
extent desirable and feasible, the negotiators shall
14
recommend, and the Board shall approve, special
15
treatment for managed care programs.
16
"OUTCOME OF NEGOTIATIONS, AGREEMENTS
17
"SEC. 1176. (a) AGREEMENT.-If a majority of the
18 negotiators (in the case of multiple negotiators) for the
19 providers and a majority of the negotiators (in the case
20 of multiple negotiators) for the purchasers, for a particu-
21 lar sector, agree to recommend a proposal under this part
22 to the Board, such proposal shall be considered to have
23 been agreed to by the negotiators.
24
"(b) BINDING NATURE OF AGREEMENTS.-If a nego-
25 tiated agreement is reached, pursuant to subsection (a),
26 concerning a health services rate structure, or concerning
.S 1227 IS
218
1 any other matter that would lead to the achievement of
2 the goals developed by the Board under section 1172, or
3 an alternative goal accepted by the Board under subsec-
4 tion (c), and such agreement, in the judgment of the
5 Board, will lead to the achievement of such goals, the
6 Board shall promulgate regulations implementing such
7 rates and other matters and such rates and other matters
8 shall be binding on providers and purchasers in the sector
9 to which such agreement applies.
10
"(c) AGREEMENT ON DIFFERENT GOAL.-If the ne-
11 gotiators reach an agreement, pursuant to subsection (a),
12 concerning a goal that is different than a goal that has
13 been developed by the Board under section 1172, the
14 Board shall adopt such agreed upon goal if the Board de-
15 termines that it would be in the best interest of the general
16 public to adopt such goal. The Board, on a rejection of
17 such alternative agreed upon goal, may request that the
18 negotiators attempt to reach a negotiated agreement con-
19 cerning the original goal under section 1172, and such
20 other measures to achieve such original goal, and may pro-
21 mulgate regulations recommending rates and other mat-
22 ters to achieve the original goal.
23
"(d) EFFECT OF NO AGREEMENT.-
24
"(1) IN GENERAL.-If the negotiators for a
25
particular sector fail to reach a negotiated agree-
.S 1227 IS
219
1
ment, pursuant to subsection (a), concerning a goal
2
established under section 1172, the Board shall pro-
3
mulgate regulations recommending advisory rates
4
and other matters necessary to achieve such goals.
5
Such advisory rates and other matters shall not be
6
binding on health care providers and purchasers.
7
"(2) CONSTRUCTION.-Notwithstanding any
8
other provision of law, health care purchasers may
9
combine for the purpose of agreeing to pay health
10
care providers for services at rates recommended
11
pursuant to paragraph (1).
12
"(e) TECHNICAL ASSISTANCE.-The Board shall pro-
13 vide technical assistance to negotiators, including esti-
14 mates of the effect on expenditure goals of alternative pro-
15 posals and estimates of utilization changes that can be ex-
16 pected under different proposals. The Board may recom-
17 mend a proposal to achieve expenditure goals for the con-
18 sideration of the negotiators. The Board may make avail-
19 able professional mediation and conciliation services to the
20 negotiators.
21
"ENFORCEMENT
22
"SEC. 1177. (a) IN GENERAL.-A health care provid-
23 er assessing rates other than those required under regula-
24 tions promulgated by the Board under this part, or failing
25 to comply in any other manner with such regulations, or
26 a health care purchaser paying rates other than those re-
.S 1227 IS
220
1 quired under such regulations, except in the case of an
2 alternative rate or method established under subsections
3 (a)(2) and (b)(2) of section 1175, shall-
4
"(1) be ineligible for any assistance under this
5
Act; and
6
"(2) be liable to the United States for a civil
7
penalty for such failure in an amount not to exceed
8
$50,000 in the case of an individual and $500,000
9
in the case of an organization, as provided for in
10
subsection (b).
11
"(b) CIVIL ACTIONS.-
12
"(1) IN GENERAL.-A civil penalty under sub-
13
section (a)(2) shall be assessed by the Board on a
14
health care provider or purchaser by an order made
15
on the record after an opportunity for a Board hear-
16
ing on any disputed issues of material fact and the
17
amount of the penalty. In the course of any investi-
18
gation or hearing under this paragraph, the Board
19
or its designees may administer oaths and affirma-
20
tions, examine witnesses, receive evidence, and issue
21
subpoenas requiring the attendance and testimony of
22
witnesses and the production of evidence that relates
23
to the matter under investigation.
24
"(2) AMOUNT.-In determining the amount of
25
a civil penalty under paragraph (1), the Board shall
.S 1227 IS
221
1
take into account the nature, circumstances, extent,
2
and gravity of the act subject to penalty, the ability
3
to pay, the effect on the ability to continue to do
4
business, any history of prior, similar acts, and such
5
other matters as the Board determines appropriate.
6
"(3) LIMITATION ON ACTIONS.-The Board
7
may not initiate an action under this subsection with
8
respect to any noncompliance described in subsection
9
(a) that occurred before the date of the enactment
10
of this section.
11
"(c) INJUNCTIVE RELIEF.-The Board shall have the
12 power, upon the initiation of an action regarding noncom-
13 pliance with a provision of this part, to petition any United
14 States district court, within any district wherein such non-
15 compliance is alleged to have occurred, for appropriate
16 temporary injunctive relief. Upon the filing of any such
17 petition, the court shall cause notice thereof to be served
18 upon such person, and thereupon shall have jurisdiction
19 to grant the Board such temporary injunctive relief as the
20 court determines to be appropriate.
21
"(d) JUDICIAL REVIEW.-Any health care provider or
22 purchaser that is the subject of an adverse decision under
23 subsection (b)(1) or subsection (c) may obtain a review
24 of such decision by the United States Court of Appeals
25 for the District of Columbia or for the circuit in which
.S 1227 IS
222
1 the provider or purchaser resides, by filing in such court
2 (within 60 days following the date the purchaser or provid-
3 er is notified of the decision of the Board) a petition re-
4 questing that the decision be modified or set aside.
5
"ROLE OF STATES
6
"SEC. 1178. (a) ALTERNATIVE SYSTEMS, ETC.-A
7 State consortia described in part D of this title may, with
8 the approval of the Board, establish an alternative pay-
9 ment system, rates, and methods for achieving goals devel-
10 oped by the Board under section 1172.
11
"(b) APPROVAL.-The Board shall approve alterna-
12 tive payment systems, rates, and methods under subsec-
13 tion (a) if Board determines that such alternative systems,
14 rates, or methods would result in a level of health care
15 expenditures in the State that achieves the national goals
16 developed under section 1172, adjusted to the State level.
17 If the Board determines that such national goals would
18 not be achieved through the proposed alternative systems,
19 rates or methods, the rates or other matters that apply
20 to the State under regulations promulgated by the Board
21 shall remain binding in the State. Such Board approval
22 is only necessary where binding payment systems, rates
23 and methods are not promulgated under a negotiated
24 agreement.
25
"(c) STANDARD FOR DETERMINATION.-In making a
26 determination under subsection (b), the Board shall con-
.S 1227 IS
223
1 sider the effect of the alternative systems, rates or meth-
2 ods, with respect to the goals established under section
3 1172, on the State as a whole rather than on particular
4 health care sectors in the State.
5
"OTHER GOVERNMENT PROGRAMS
6
"SEC. 1179. The Board shall promulgate regulations
7 recommending advisory rates and other matters necessary
8 to achieve the goals established under section 1172 for all
9 Federal programs (other than the program under title
10 XVIII of this Act) that reimburse providers on a fee,
11 charge, or cost basis or charge third-party providers on
12 such basis. Such nonbinding rates shall be consistent with
13 the rates promulgated by the Board under sections 1176
14 and 1178, except that Federal payments resulting from
15 such rates shall be no greater than such payments would
16 have been if determined without regard to this section
17 through the fifth full fiscal year after the date of enact-
18 ment of this section.
19
"UNIFORM BILLING AND MANDATORY REPORTING
20
"SEC. 1180. (a) IN GENERAL.-The Board shall es-
21 tablish a system of uniform billing and reporting, as re-
22 quired under subsection (c), that will enable the Board
23 to determine the progress made in meeting the goals es-
24 tablished under section 1172, to provide information for
25 health care providers and purchasers to assist such provid-
26 ers and purchasers in providing and obtaining efficiently
.S 1227 IS
224
1 provided quality health care, and to reduce administrative
2 costs of the health care system.
3
"(b) GENERAL REPORTING AND DATA REQUIRE-
4 MENTS.-The Board shall-
5
"(1) develop a computerized system for the col-
6
lection, analysis, and dissemination of data required
7
to be collected under this part;
8
"(2) establish one or more uniform claims and
9
billing form as required in subsection (c) (2) to be
10
utilized by all data sources and providers;
11
"(3) audit information provided by health care
12
providers on a sample basis or in situations where
13
there exists reasonable cause for such an audit; and
14
"(4) issue public reports concerning health care
15
costs and the effectiveness of the health care provid-
16
ed by health care providers.
17
"(c) DATA COLLECTION.-
18
"(1) IN GENERAL.-Data sources shall submit
19
to the Board, on the request of the Board, all data
20
required to be submitted under this part in accord-
21
ance with the uniform submission formats, coding
22
systems, and other technical specifications estab-
23
lished by the Board to assure that such incoming
24
data is substantially valid, consistent, compatible
25
and manageable.
.S 1227 IS
225
1
"(2) UNIFORM CLAIMS AND BILLING FORMS.-
2
Data shall be collected by the Board through the use
3
of one or more Federal Uniform Claims and Billing
4
Forms developed by the Board and utilized by pro-
5
viders and purchasers of health care that shall, at a
6
minimum, include-
7
"(A) a uniform patient identifier;
8
"(B) the date of birth of the patient;
9
"(C) the gender of the patient;
10
"(D) the ZIP Code of the patient;
11
"(E) the date of admission of the patient
12
for inpatient hospital services;
13
"(F) the date of discharge of the patient
14
referred to in subparagraph (E);
15
"(G) the principal and secondary diagnoses
16
of the patient;
17
"(H) the principal and secondary proce-
18
dures to be followed in treating the patient;
19
"(I) a uniform health care facility identifi-
20
er;
21
"(J) uniform identifiers of physicians
22
treating the patient;
23
"(K) for services provided in an inpatient
24
setting, the total charges of the health care fa-
25
cility treating the patient, segregated into major
.S 1227 IS
226
1
categories determined appropriate by the
2
Board;
3
"(L) the amounts of actual payments
4
made to the treating health care facility;
5
"(M) the amounts of the charges of each
6
physician or professional rendering service to
7
the patient;
8
(N) the services provided in an inpatient
9
setting;
10
"(O) the amounts of actual payments
11
made to each physician or professional render-
12
ing service to the patient;
13
"(P) a uniform identifier of the primary
14
payor;
15
"(Q) the ZIP Code of the facility where
16
service is rendered to the patient;
17
"(R) the patient discharge status; and
18
"(S) such other material as the Board de-
19
termines necessary or useful to carry out the
20
duties of the Board or to provide adequate in-
21
formation to purchasers of health care to assist
22
such purchasers in appropriately paying for
23
services.
24
"(3) MEASURE OF SERVICE EFFECTIVENESS.
oS 1227 IS
227
1
"(A) DEVELOPMENT OF METHODOLOGY.-
2
To the extent practical and as rapidly as feasi-
3
ble, the Secretary shall develop and implement
4
a methodology or methodologies that will meas-
5
ure the effectiveness of the health care service
6
provided by health care providers.
7
"(B) INCLUSION IN UNIFORM BILLING
8
FORM.-To the extent practical and as rapidly
9
as feasible, the Secretary shall include in the
10
uniform claims and billing forms or in other
11
data collection instruments established under
12
subsection (b) data necessary to provide the
13
Secretary with information concerning each
14
service provided by health care providers that is
15
sufficient to enable the Secretary to analyze the
16
quality, cost, and service effectiveness of the
17
provider.
18
"(4) ADDITIONAL DATA.-The Board may col-
19
lect additional data, including audited annual finan-
20
cial reports of all hospitals and ambulatory service
21
facilities, medicare cost reports, information on cap-
22
ital expenditures, and any other data that the Board
23
determines necessary to carry out its responsibilities
24
under this part.
S 1227 IS---8
228
1
"(5) RECOMMENDATIONS.-The Board shall
2
make recommendations to the committees of Con-
3
gress, the President, and the insurance industry con-
4
cerning methods to reduce the cost and burden of
5
duplication or excessive reporting requirements im-
6
posed on health care providers.
7
"(d) REPORTS.-
8
"(1) IN GENERAL.-The Board, not less than
9
once each calendar year, shall for every health care
10
provider for which sufficient data is available, pre-
11
pare and make available reports that shall, to the
12
extent practicable and scientifically valid, contain
13
data in a form that will provide the most useful in-
14
formation to purchasers of health care services re-
15
garding such providers to enable such purchasers to
16
compare providers on the basis of cost and quality.
17
"(2) AVAILABILITY.-The Secretary shall ad-
18
vertise and make available all reports prepared
19
under paragraph (1) to the general public, including
20
any dissents submitted by health care providers.
21
"(3) RECOMMENDATIONS.-The Board shall
22
make recommendations to the appropriate commit-
23
tees of Congress, the President, and the insurance
24
industry concerning methods to reduce the cost and
.S 1227 IS
229
1
burden of duplicative or excessive reporting require-
2
ments imposed on health care providers.
3
"(e) DEFINITION.-As used in this section, the term
4 'data sources' means classes of entities and individuals
5 that the Board designates as data sources.
6
"ANNUAL REPORTS
7
"SEC. 1181. Not later than June 30 of each year,
8 the Board shall prepare and submit to the President, the
9 appropriate committees of Congress and the general pub-
10 lic, a report concerning the success in attaining expendi-
11 ture, access, and quality goals developed under section
12 1172, and containing recommendations for additional
13 measures, if any, that the Board determines are necessary
14 to achieve such goals.
15
"DEFINITIONS
16
"SEC. 1182. As used in this part:
17
"(1) HEALTH BENEFIT PLAN.-The term
18
'health benefit plan' means an employee welfare ben-
19
efit plan (as defined in section 3(1) of the Employee
20
Retirement Income Security Act of 1974 (29 U.S.C.
21
1002(1)) that-
22
"(A) provides medical care to participants
23
or beneficiaries directly or through insurance,
24
reimbursement, or otherwise; and
25
"(B) meets the requirements of section
26
2721 of the Public Health Service Act.
.S 1227 IS
230
1
Such term shall include a small business health ben-
2
efits plan, as defined in section 2713(11) of such
3
Act.
4
"(2) MANAGED CARE PLAN.-The term 'man-
5
aged care plan' has the meaning given such term by
6
section 2108(a)(6).
7
"(3) PROVIDER.-The term 'provider' means a
8
physician, hospital, health maintenance organization,
9
pharmacy, laboratory, or other appropriately licensed
10
provider of health care services or supplies, that has
11
entered into an agreement with a managed care enti-
12
ty to provide such services or supplies to a patient
13
enrolled in a managed care plan.
14
"(4) PURCHASER.-The term 'purchaser'
15
means an entity that pays for services of providers,
16
including in the case of a health benefit plan provid-
17
ed pursuant to a collective bargaining agreement,
18
the labor union that has negotiated for such plan on
19
behalf of employees shall be considered to be a pur-
20
chaser.
21
"EFFECTIVE DATES
22
"SEC. 1183. The Board shall develop the goals under
23 section 1172 for each calendar year beginning not later
24 than the second full calendar year after the date of the
25 enactment of this part. The Board shall establish the ne-
26 gotiating procedures required under section 1173(a) for
.S 1227 IS
231
1 each calendar year beginning not later than the third cal-
2 endar year after the date of the enactment of this part.".
3
(c) CONFORMING AMENDMENTS.-
4
(1) COMPENSATION, LEVEL III.Section 5314
5
of title 5, United States Code, is amended by adding
6
at the end thereof the following:
7
"Members, Federal Health Expenditure
8
Board.".
9
(2) COMPENSATION, LEVEL IV.-Section 5315
10
of title 5, United States Code, is amended by adding
11
at the end thereof the following:
12
"Members, Federal Health Expenditure
13
Board.".
14
(d) MEDICARE.-Title XVIII of the Social Security
15 Act (42 U.S.C. 1395 et seq.) is amended by adding at
16 the end the following new section:
17
"FEDERAL HEALTH EXPENDITURE BOARD
18
"SEC. 1893. (a) HOSPITAL SERVICES.-Notwith-
19 standing any other provision of this title, in the second
20 full fiscal year after the date of enactment of this section
21 and annually thereafter, the Federal Health Expenditure
22 Board (hereafter in this section referred to as the 'Board')
23 shall, with due regard to the recommendations of the Pro-
24 spective Payment Assessment Commission, recommend-
25
"(1) the update factor for the DRG prospective
26
payment rates provided in section 1886(d);
.S 1227 IS
232
1
"(2) the DRG recalibration;
2
"(3) the update factor for excluded hospitals;
3
and
4
"(4) such other matters relating to reimburse-
5
ment under this title as the Board shall elect.
6 In making such recommendations to the Congress, the
7 Board shall also make recommendations for modifications
8 of the prospective payment system under this title. In rec-
9 ommending the update factor for DRG prospective pay-
10 ment rates and for excluded hospitals, the Board shall
11 seek to maintain parity in increases in payment rates with
12 other purchasers of health care services, and, shall over
13 time, seek to achieve comparability in such rates. Such
14 recommendations shall not result in Federal payments
15 greater than such payments would have been if determined
16 without regard to this section through the fifth full fiscal
17 year after the date of enactment of this section.
18
"(b) PHYSICIAN SERVICES.-Notwithstanding any
19 other provision of this title, in the second full fiscal year
20 after the date of enactment of this section and annually
21 thereafter, the Board shall, with due regard to the recom-
22 mendations of the Physician Payment Review Commis-
23 sion, recommend-
.S 1227 IS
233
1
"(1) appropriate modifications of the resource
2
based relative value schedule provided for in section
3
1848;
4
"(2) volume performance standards provided
5
for in section 1848(f);
6
"(3) updates in the conversion factor, consist-
7
ent with the volume performance standards, provid-
8
ed in section 1848(d);
9
"(4) revisions of the geographical adjustment
10
factors provided in section 1848(e); and
11
"(5) such other matters relating to reimburse-
12
ment under this title as the Board shall elect.
13
In making such recommendations to the Congress,
14 the Board shall also make recommendations for modifica-
15 tions of the physician payment system under this title. In
16 making the recommendations described in paragraphs (1),
17 (2), (3), and (4), the Board shall seek to maintain parity
18 in increases in payment rates with other purchasers of
19 health care services, and shall, over time, seek to achieve
20 comparability in such rates. Such recommendations shall
21 not result in Federal payments greater than such pay-
22 ments would have been if determined without regard to
23 this section through the fifth full fiscal year after the date
24 of enactment of this section."
.S 1227 IS
234
1
Subtitle C-State Purchasing
2
Consortia
3 SEC. 421. STATE PURCHASING CONSORTIA
4
(a) PUBLIC HEALTH SERVICE ACT.-Title XXVII of
5 the Public Health Service Act (as added by section 101
6 and amended by sections 201, 311 and 411) is further
7 amended by adding at the end thereof the following new
8 part:
9
"PART E-STATE PURCHASING CONSORTIA
10 "SEC. 2781. STATE PURCHASING CONSORTIA.
11
"(a) REQUIREMENT.-
12
"(1) ESTABLISHMENT BY STATE.-Not later
13
than 1 year after the date of enactment of this part,
14
or the first day of the first calendar year beginning
15
after the close of the first regular session of the
16
State legislature that begins after the date of enact-
17
ment of this part, whichever is later, the State shall
18
establish a State Consortium (hereafter referred to
19
in this section as the 'consortium') which may be a
20
public or nonprofit private entity, or be a member of
21
a Regional Consortium in accordance with subsec-
22
tion (f), that shall carry out the activities described
23
in subsection (d).
24
"(2) ESTABLISHMENT BY SECRETARY.-If a
25
State fails to establish a State consortium as re-
.S 1227 IS
235
1
quired under paragraph (1), the Secretary shall de-
2
velop and implement a State consortium for such
3
State.
4
"(b) BOARD OF DIRECTORS AND MEMBERSHIP.-
5
"(1) BOARD OF DIRECTORS.-
6
"(A) IN GENERAL.-A consortium shall be
7
managed by a board of directors who shall be
8
appointed and serve in accordance with guide-
9
lines and regulations developed by the State.
10
"(B) MANDATORY FUNCTIONS.-The
11
guidelines and regulations developed under sub-
12
paragraph (A) shall ensure that, for purposes of
13
carrying out the mandatory functions under
14
subsection (d)(1), the board of directors will be
15
composed of insurers, providers and consumers.
16
"(C) OPTIONAL FUNCTIONS.-The guide-
17
lines and regulations developed under subpara-
18
graph (A) shall ensure that, for purposes of
19
carrying out the optional functions under sub-
20
section (d)(2), the board of directors will be
21
composed of individuals who represent the bal-
22
anced interests of all interested parties.
23
"(2) MEMBERSHIP IN CONSORTIUM.-All pro-
24
viders and purchasers of health insurance and health
25
care in the State, including business, labor, and
.S 1227 IS
236
1
consumer organizations, shall be eligible to become
2
members of the consortium in such State.
3
"(c) APPLICATION AND PLAN, GRANTS AND TECHNI-
4 CAL ASSISTANCE.-
5
"(1) APPLICATION AND PLAN.-
6
"(A) REQUIREMENT.-Prior to the estab-
7
lishment of the State consortium, the State
8
shall prepare and submit to the Secretary for
9
approval, an application in such form and con-
10
taining such information as the Secretary may
11
require, including the plan described in sub-
12
paragraph (B).
13
"(B) PLAN.-As part of the application
14
submitted under subparagraph (A), the State
15
shall prepare a plan that shall outline the form
16
of the State consortium and that shall include
17
a description-
18
"(i) of the guidelines applicable to the
19
appointment and service of the board of di-
20
rectors of the consortium;
21
"(ii) of the manner in which the State
22
will solicit membership for the consortium;
23
"(iii) of the manner in which the con-
24
sortium will perform the mandatory func-
25
tions under subsection (d)(1);
.S 1227 IS
237
1
"(iv) of the optional functions that the
2
consortium will perform under subsection
3
(d) (2); and
4
"(v) of any other information that the
5
Secretary determines appropriate.
6
"(2) GRANTS.-
7
"(A) IN GENERAL.-The Secretary shall
8
award a grant to each State to assist the State
9
in paying the costs associated with the estab-
10
lishment and initial operation of the State con-
11
sortium.
12
"(B) AMOUNTS.-Not less than $150,000
13
shall be provided to each State under a grant
14
awarded under this subparagraph (A), except
15
that additional amounts may be provided to a
16
State if the Secretary determines, based on an
17
application that is submitted by the State for
18
such amounts, that such amounts are needed to
19
help defray the costs associated with optional
20
functions provided by the consortium under the
21
State plan submitted under paragraph (1)(B).
22
"(C) PLANNING FUNCTIONS.-Except as
23
provided in subparagraph (B), amounts provid-
24
ed under grants awarded under this paragraph
25
shall be utilized for planning functions only.
.S 1227 IS
238
1
"(3) TECHNICAL ASSISTANCE.-The Secretary
2
shall provide technical assistance to States in setting
3
up the State consortia.
4
"(d) FUNCTIONS OF CONSORTIUM.-
5
"(1) MANDATORY FUNCTIONS.-The State con-
6
sortium shall-
7
"(A) enroll all small share health insurance
8
companies in the State as members of the con-
9
sortium for insurers, purchasers and providers;
10
"(B) establish a claim payment fund and
11
procedures for the payment, by the consortium
12
on behalf of its enrollees, of valid claims sub-
13
mitted by providers or enrollees to the consorti-
14
um, such fund to be capitalized through public
15
and private contributions and assessments
16
made by the consortium on such enrollees to re-
17
flect amounts paid from such fund on behalf of
18
each such enrollee;
19
"(C) develop, in consultation and with the
20
assistance of the Secretary and consistent with
21
the program established under part D, and em-
22
ploy uniform billing and claim form and proce-
23
dures for providers of health services covered by
24
enrollees, and for individuals submitting claims
25
directly to the consortium;
.S 1227 IS
239
1
"(D) further attempt to reduce administra-
2
tive costs and burdens on enrollees and provid-
3
ers of health services, through-
4
"(i) the maintenance of a staff to ex-
5
plain claims procedures (that shall be con-
6
sistent with claims procedures adopted
7
under title XVIII of the Social Security
8
Act) to providers and enrollees and to pro-
9
vide such other services as may assist pro-
10
viders in receiving reimbursement promptly
11
and at the lowest possible cost;
12
"(ii) establish, to the maximum extent
13
practicable, a paperless processing system
14
to permit providers to submit claims elec-
15
tronically to the consortium;
16
"(iii) establish, to the maximum ex-
17
tent practicable, the use of 'smart cards' or
18
other electronic methods for immediate
19
verification by providers of an individuals's
20
health insurance coverage;
21
"(iv) encouraging providers to submit
22
claims directly to the consortium on behalf
23
of enrollees; and
24
"(v) the conduct of appropriate utili-
25
zation reviews;
.S 1227 IS
240
1
"(E) carry out any other activities deter-
2
mined appropriate by the Secretary; and
3
"(F) cooperate with the Federal Health
4
Expenditure Board established under part D.
5
"(2) OPTIONAL FUNCTIONS.-The State con-
6
sortium may-
7
"(A) permit insurers with a large share of
8
the market in a State to participate in the con-
9
sortium;
10
"(B) convene negotiations with health care
11
providers and purchasers and others, as appro-
12
priate, concerning the availability of health care
13
services, coverage and reimbursement levels for
14
such services, and claim submission and pay-
15
ment procedures (activities undertaken as a re-
16
sult of such negotiations shall be exempt from
17
Federal anti-trust laws if such activities are au-
18
thorized by the State);
19
"(C) develop procedures for-
20
"(i) the allocation of capital among
21
health care providers to encourage an ade-
22
quate and efficient level and distribution of
23
health care resources;
24
"(ii) encouraging a rational distribu-
25
tion of health care providers; and
.S 1227 IS
241
1
"(iii) encouraging the development of
2
managed care;
3
"(D) the collection and dissemination of
4
data through a Statewide data organization
5
that is accessible to all interested parties in the
6
State in order to facilitate appropriate decisions
7
by consumers and to encourage efficient behav-
8
ior by providers;
9
"(E) coordinate with entities responsible
10
for assuring the quality of health care provided
11
within the State; and
12
"(F) carry out any other activities that are
13
contained within the State plan and approved
14
by the Secretary and that are designed to im-
15
prove the quality of health care, access to such
16
care, and to control the costs of such care.
17
"(3) APPLICABILITY OF CONSUMER PROTEC-
18
TION LAWS-Notwithstanding any other provision
19
of law, the provisions of the Consumer Product Safe-
20
ty Act and other Federal consumer protection laws
21
shall apply to the functions carried out under para-
22
graph (1).
23
"(4) MANAGED CARE.-This subsection shall
24
not be construed as limiting the ability of a managed
25
care plan to select providers eligible to perform serv-
.S 1227 IS
242
1
ices under the plan, or to establish reasonable proce-
2
dures to be followed by providers participating in the
3
plan, to assure the provision of cost-effective, quality
4
services.
5
"(5) SMALL SHARE HEALTH INSURANCE COM-
6
PANIES.-As used in this subsection, the term 'small
7
share health insurance companies' shall include enti-
8
ties determined appropriate by the Secretary. In
9
making such determination, the Secretary shall seek
10
to minimize the number of sources reimbursing pro-
11
viders directly in the State but shall permit insurers
12
with a market share that is large enough to suffi-
13
ciently achieve the economies of scale sought
14
through the consortium, to remain independent of
15
the consortium, to the extent that permitting such
16
separate payment sources would not dilute the pur-
17
pose of the consortium.
18
"(e) DATA AND INFORMATION.-A State consortium
19 shall collect or provide for the collection of data and infor-
20 mation concerning the operations of the consortium and
21 shall provide such data and information to the Secretary
22 on an annual basis.
23
"(f) REGIONAL CONSORTIUM.-States may enter into
24 an agreement for the establishment of a regional consorti-
25 um that shall have jurisdiction over all States that are
.S 1227 IS
243
1 parties to such agreement and that shall be subject to the
2 provisions of this section as if such consortium were estab-
3 lished by a single State.
4
"(g) ENFORCEMENT.-A State that fails to comply
5 with the requirements of this section shall be ineligible to
6 receive assistance made available under this Act.
7
"(h) STUDY.-Not later than 3 years after the date
8 of enactment of this part, the Secretary shall prepare and
9 submit to the appropriate committees of Congress, a re-
10 port that shall contain the results of a study conducted
11 by the Secretary concerning the State consortia system es-
12 tablished under this section, and whether such consortia
13 are effective in containing health care costs, in expanding
14 the availability of access to such care, and in protecting
15 and enhancing the quality of such care.
16
"(i) AUTHORIZATION OF APPROPRIATIONS.-There
17 are authorized to be appropriated such sums as may be
18 necessary to carry out this section.".
19
(b) SOCIAL SECURITY ACT.-Title XI of the Social
20 Security Act (as amended by section 411) is further
21 amended by adding at the end thereof the following new
22 part:
23
"PART D-STATE PURCHASING CONSORTIA
24
"STATE PURCHASING CONSORTIA
25
"SEC. 1191. (a) MEMBERSHIP IN CONSORTIUM.-
.S 1227 IS
244
1
"(1) IN GENERAL.-A State may, with the ap-
2
proval of the Secretary, require that the providers
3
operating under the programs conducted under titles
4
XVIII, XIX, and XXI of this Act in the State, par-
5
ticipate in the State consortium for purposes of
6
claims processing and for such other purposes as the
7
Secretary may approve, in the least restrictive man-
8
ner practicable.
9
"(2) WAIVERS.-With respect to a State re-
10
quirement under paragraph (1) that providers under
11
titles XVIII, XIX, and XXI of this Act participate
12
in the consortium, the Secretary may waive such re-
13
quirement on the request of such a provider, if the
14
Secretary determines, on a budget neutral basis,
15
that such waiver is necessary to protect the access
16
of the beneficiaries of such provider to care provided
17
by such provider, and that such waiver will promote
18
the cost effective delivery of services.
19
"(b) FUNCTIONS OF CONSORTIUM.-
20
"(1) MANDATORY FUNCTIONS.-The State con-
21
sortium shall-
22
"(A) enroll all small share health insurance
23
companies in the State as members of the con-
24
sortium for insurers, purchasers and providers;
.S 1227 IS
245
1
"(B) establish a claim payment fund and
2
procedures for the payment, by the consortium
3
on behalf of it's enrollees, of valid claims sub-
4
mitted by providers or enrollees to the consorti-
5
um, such fund to be capitalized through public
6
and private contributions and assessments
7
made by the consortium on such enrollees to re-
8
flect amounts paid from such fund on behalf of
9
each such enrollee;
10
"(C) develop, in consultation and with the
11
assistance of the Secretary and consistent with
12
the program established under part C, and em-
13
ploy uniform billing claim forms and procedures
14
for providers of health services covered by en-
15
rollees, and for individuals submitting claims di-
16
rectly to the consortium;
17
"(D) further attempt to reduce administra-
18
tive costs and burdens on enrollees and provid-
19
ers of health services, through-
20
"(i) the maintenance of a staff to ex-
21
plain claims procedures (that shall be con-
22
sistent with claims procedures adopted
23
under title XVIII of this Act) to providers
24
and enrollees and to provide such other
25
services as may assist providers in receiv-
.S 1227 IS
246
1
ing reimbursement promptly and at the
2
lowest possible cost;
3
"(ii) establish, to the maximum extent
4
practicable, a paperless processing system
5
to permit providers to submit claims elec-
6
tronically to the consortium;
7
"(iii) establish, to the maximum ex-
8
tent practicable, the use of 'smart cards' or
9
other electronic methods for immediate
10
verification by providers of an individuals's
11
health insurance coverage;
12
"(iv) encouraging providers to submit
13
claims directly to the consortium on behalf
14
of enrollees; and
15
"(v) the conduct of appropriate utili-
16
zation reviews;
17
"(E) carry out any other activities deter-
18
mined appropriate by the Secretary; and
19
"(F) cooperate with the Federal Health
20
Expenditure Board.
21
"(2) OPTIONAL FUNCTIONS.-The State con-
22
sortium may-
23
"(A) permit insurers with a large share of
24
the market in a State to participate in the con-
25
sortium;
.S 1227 IS
247
1
"(B) convene negotiations with health care
2
providers and purchasers and others, as appro-
3
priate, concerning the availability of health care
4
services, coverage and reimbursement levels for
5
such services, and claim submission and pay-
6
ment procedures (activities undertaken as a re-
7
sult of such negotiations shall be exempt from
8
Federal anti-trust laws if such activities are au-
9
thorized by the State);
10
"(C) develop procedures for-
11
"(i) the allocation of capital among
12
health care providers to encourage an ade-
13
quate and efficient level and distribution of
14
health care resources;
15
"(ii) encouraging a rational distribu-
16
tion of health care providers; and
17
"(iii) encouraging the development of
18
managed care;
19
"(D) the collection and dissemination of
20
data through a Statewide data organization
21
that is accessible to all interested parties in the
22
State in order to facilitate appropriate decisions
23
by consumers and to encourage efficient behav-
24
ior by providers;
.S 1227 IS
248
1
"(E) coordinate with entities responsible
2
for assuring the quality of health care provided
3
within the State; and
4
"(F) carry out any other activities that are
5
contained within the State plan and approved
6
by the Secretary and that are designed to im-
7
prove the quality of health care, access to such
8
care, and to control the costs of such care.
9
"(3) APPLICABILITY OF CONSUMER PROTEC-
10
TION LAWS.-Notwithstanding any other provision
11
of law, the provisions of the Consumer Product Safe-
12
ty Act and other Federal consumer protection laws
13
shall apply to the functions carried out under para-
14
graph (1).
15
"(4) MANAGED CARE.-This subsection shall
16
not be construed as limiting the ability of a managed
17
care plan to select providers eligible to perform serv-
18
ices under the plan, or to establish reasonable proce-
19
dures to be followed by providers participating in the
20
plan, to assure the provision of cost-effective, quality
21
services.
22
"(5) SMALL SHARE HEALTH INSURANCE COM-
23
PANIES.-As used in this subsection, the term 'small
24
share health insurance companies' shall include enti-
25
ties determined appropriate by the Secretary. In
.S 1227 IS
249
1
making such determination, the Secretary shall seek
2
to minimize the number of sources reimbursing pro-
3
viders directly in the State but shall permit insurers
4
with a market share that is large enough to suffi-
5
ciently achieve the economies of scale sought
6
through the consortium, to remain independent of
7
the consortium, to the extent that permitting such
8
separate payment sources would not dilute the pur-
9
pose of the consortium.
10
"(c) DATA AND INFORMATION.-A State consortium
11 shall collect or provide for the collection of data and infor-
12 mation concerning the operations of the consortium and
13 shall provide such data and information to the Secretary
14 on an annual basis.
15
"(d) REGIONAL CONSORTIUM.-States may enter
16 into an agreement for the establishment of a regional con-
17 sortium that shall have jurisdiction over all States that
18 are parties to such agreement and that shall be subject
19 to the provisions of this section as if such consortium were
20 established by a single State.
21
"(e) ENFORCEMENT.-A State that fails to comply
22 with the requirements of this section shall be ineligible to
23 receive payments under section 2109 of this Act.".
.S 1227 IS
250
1
Subtitle D-Cost Control Grant
2
Program
3 SEC. 431. COST CONTROL GRANT PROGRAM.
4
Part A of title IX of the Public Health Service Act
5 (42 U.S.C. 299 et seq.) is amended by adding at the end
6 thereof the following new section:
7 "SEC. 905. COST CONTROL GRANT PROGRAM.
8
"(a) IN GENERAL.-The Administrator may award
9 grants and enter into contracts with States, public enti-
10 ties, insurers, health plan administrators, businesses,
11 labor unions, non-profit organizations, and researchers for
12 the development, demonstration, and evaluation of innova-
13 tive methods for reducing health care costs.
14
"(b) APPLICATION.-To be eligible for a grant or
15 contract under subsection (a), an entity of the type de-
16 scribed in such subsection shall prepare and submit, to
17 the Administrator, an application at such time, in such
18 form, and containing such information as the Administra-
19 tor shall require.
20
"(c) PREFERENCES.-In awarding grants or entering
21 into contracts under subsection (a), the Administrator
22 shall give a preference to entities submitting applications
23 under subsection (b) that propose to implement projects,
24 with assistance provided under this section, with the po-
.S 1227 IS
251
1 tential to develop programs that could have a significant
2 impact on overall national health care costs.
3
"(d) CLEARINGHOUSE.-
4
"(1) ESTABLISHMENT.-The Administrator
5
shall establish a clearinghouse, and undertake such
6
other activities as may be necessary, to disseminate
7
information concerning successful health care cost
8
control methods and to provide technical assistance
9
in the implementation of such methods.
10
"(2) OPERATION.-The Administrator may re-
11
serve not to exceed 10 percent of the amount appro-
12
priated under subsection (g) in each fiscal year for
13
the operation of the clearinghouse, the dissemination
14
of information, and the provision of technical assist-
15
ance under paragraph (1).
16
"(e) CONSULTATION.-In developing the procedures
17 for awarding grants under this section, the Secretary shall
18 consult with the Federal Health Expenditure Board estab-
19 lished under part D of title XXVII.
20
"(f) MATCHING REQUIREMENT.-In the case of a
21 grant awarded for the conduct of a demonstration pro-
22 gram that will provide a direct benefit to the grantee, the
23 Administrator shall not award such grant unless the
24 grantee agrees to provide additional amounts for such pro-
25 gram equal to not less than 25 percent of the amount of
.S 1227 IS
252
1 the grant. Such additional amounts may be in cash or in
2 kind.
3
"(g) AUTHORIZATION OF APPROPRIATIONS.-There
4 are authorized to be appropriated to carry out this section,
5 such sums as may be necessary in each of the fiscal years
6 1992 through 1994."
7
Subtitle E-Malpractice Reform
8 SEC. 441. MALPRACTICE REFORM.
9
Part A of title IX of the Public Health Service Act
10 (42 U.S.C. 299 et seq.) as amended by section 431 is fur-
11 ther amended by adding at the end thereof the following
12 new section:
13 "SEC. 906. MALPRACTICE REFORM.
14
"(a) IN GENERAL.-The Administrator may award
15 grants to States for the development and implementation
16 of programs for medical malpractice reforms. Programs
17 receiving such grants shall include efforts to develop alter-
18 native methods to resolve liability disputes that fairly pro-
19 tect the interests of all parties involved and may include
20 an appropriate role for the use of medical practice guide-
21 lines. No grant shall be awarded that is inconsistent with
22 the goal of-
23
"(1) reducing excessive health care costs;
24
"(2) reducing unnecessary or ineffective medical
25
care;
.S 1227 IS
253
1
"(3) improving access to quality health care;
2
"(4) ensuring fair and adequate compensation
3
for and review of injuries arising from medical negli-
4
gence;
5
"(5) ensuring reasonable insurance rating and
6
premium setting practices; and
7
"(6) improving patient protections, disciplinary
8
standards for health care professionals, and the ef-
9
fectiveness of State medical boards.
10
"(b) TYPES OF GRANTS.-A grant awarded under
11 subsection (a) shall be either-
12
"(1) a planning grant, to assist the grantee in
13
the development of a program under this section
14
that shall be for a period of not to exceed two years;
15
or
16
"(2) an operational grant, to assist the grantee
17
in operation and evaluation of the new program re-
18
ferred to in paragraph (1), that shall be for a period
19
of not to exceed five years.
20
"(c) REQUIREMENT.-An operational grant under
21 subsection (b)(2) shall include a requirement that an eval-
22 uation, approved by the Administrator as being adequate,
23 is conducted to determine the effectiveness of the program
24 for which the grant is utilized. A final report on the results
.S 1227 IS
254
1 of the evaluation shall be prepared and submitted to the
2 Administrator.
3
"(d) AUTHORIZATION OF APPROPRIATIONS.-There
4 are authorized to be appropriated such sums as may be
5 necessary to carry out this section."
6 SEC. 442. STUDY OF MEDICAL MALPRACTICE.
7
(a) CONTRACT.-The Secretary shall enter into a
8 contract with the Institute of Medicine, or with a similar
9 independent entity, for the collection and analysis of data
10 and issues, by a group of representatives of interested par-
11 ties and experts, related to-
12
(1) ineffective or unnecessary medical testing
13
and practices;
14
(2) the occurrence of malpractice and malprac-
15
tice awards (including the number of claims filed
16
and the number of findings of negligence);
17
(3) the adequacy of existing health care provid-
18
er licensing and disciplining procedures in prevent-
19
ing malpractice;
20
(4) the reasonableness of malpractice insurance
21
premiums and rate-setting practices; and
22
(5) any other issues relevant to the adequacy of
23
current medical practices, of compensation for inju-
24
ries resulting from medical malpractice, and the im-
25
pact of legal liability on medical practices.
.S 1227 IS
255
1
(b) RECOMMENDATIONS.-Not later than 1 year
2 after the date of enactment of this Act, the Institute or
3 entity referred to in subsection (a) shall make available
4 to the Secretary, the appropriate committees of Congress,
5 the appropriate State officials, and to the general public,
6 a report containing the recommendations of the Institute
7 or entity for any desirable medical malpractice reforms.
8
(c) AUTHORIZATION OF APPROPRIATIONS.-There
9 are authorized to be appropriated such sums as may be
10 necessary to carry out this section.
11 Subtitle F-Reducing the Adminis-
12
trative Cost of Assuring Ap-
13
propriate
Utilization
of
14
Health Care Services and Im-
15
proving the Quality of Health
16
Care Services
17 SEC. 451. ESTABLISHMENT OF A QUALITY IMPROVEMENT
18
BOARD.
19
(a) PUBLIC HEALTH SERVICE ACT.-Title XXVII of
20 the Public Health Service Act (as added by section 101
21 and amended by sections 201, 311, 411, and 421) is fur-
22 ther amended by adding at the end thereof the following
23 new part:
.S 1227 IS
256
1
"PART F-ESTABLISHMENT OF A QUALITY
2
IMPROVEMENT BOARD
3 "SEC. 2785. ESTABLISHMENT OF A QUALITY IMPROVEMENT
4
BOARD.
5
"(a) CONTRACT.-The Secretary shall enter into a
6 contract with an entity in each State (such entity shall
7 hereafter be referred to in this section as the 'quality im-
8 provement board') to review the quality of health care pro-
9 vided by health care professionals and institutions in each
10 such State and to establish mechanisms to encourage con-
11 tinuous quality improvement.
12
"(b) BOARD OF DIRECTORS.-
13
"(1) REQUIREMENT.-The quality improvement
14
board shall, in accordance with Federal guidelines
15
and regulations and in accordance with the require-
16
ments of the contract entered into under subsection
17
(a), be managed by a board of directors.
18
"(2) MEMBERSHIP.-The board of directors re-
19
quired under paragraph (1) shall consist of 15 mem-
20
bers, of whom-
21
"(A) seven members shall be representa-
22
tives of health care providers, including individ-
23
uals of recognized excellence in the develop-
24
ment, application, and evaluation of health care
25
services, procedures, and technologies;
.S 1227 IS
257
1
"(B) four members shall be representatives
2
of insurers and purchasers of health care serv-
3
ices; and
4
"(C) four members shall be health care
5
service researchers and consumers.
6
"(3) DUTIES.-The board of directors shall
7
adopt policies for the quality improvement board,
8
approve the budget of the quality improvement
9
board, appoint the executive director of the quality
10
improvement board, and shall assume such other du-
11
ties as the Secretary may prescribe or the board of
12
directors shall determine to be necessary to the
13
proper functioning of the quality improvement
14
board.
15
"(c) DUTIES OF THE QUALITY IMPROVEMENT
16 BOARD.-
17
"(1) GUIDELINES.-
18
"(A) REQUIREMENT.-The quality im-
19
provement board shall adopt guidelines for ap-
20
propriate medical practice and for recommend-
21
ed measures to be taken by providers to im-
22
prove the quality of care.
23
"(B) CONTENTS.-Guidelines adopted
24
under subparagraph (A) shall include those of
25
the type developed under the authority of sec-
.S 1227 IS
258
1
tion 912 and such guidelines as the Secretary
2
may specify, and may include additional guide-
3
lines developed by professional societies or other
4
appropriately qualified bodies or individuals.
5
"(2) RECOMMENDED MEASURES.-In coopera-
6
tion with appropriate professional bodies, associa-
7
tions, and the Joint Commission on Accreditation of
8
Hospitals, the quality improvement board shall rec-
9
ommend measures for continuous quality improve-
10
ment to be adopted by health care professionals and
11
institutions. Such measures shall include measures
12
specified by the Secretary, appropriate continuing
13
medical education and, for health care institutions,
14
internal quality improvement procedures.
15
"(3) CERTIFICATION OF PROVIDERS.-The
16
quality improvement board shall periodically review
17
the performance of health care service providers and,
18
based on-
19
"(A) the conformity of the practice of the
20
provider with the guidelines developed by the
21
board;
22
"(B) such measures of health care out-
23
comes as may be scientifically valid and adopted
24
by the board;
S 1227 IS
259
1
"(C) adoption by the provider of the meas-
2
ures for continuous quality improvement recom-
3
mended by the board; and
4
"(D) such other factors as the board or
5
the Secretary may prescribe; and
6
may certify a health care provider as an outstanding
7
provider for the purpose of this section.
8
"(4) LIMITATION ON CERTIFICATION.-A certi-
9
fication under paragraph (3) shall be examined peri-
10
odically by the quality improvement board to deter-
11
mine if continued certification is appropriate. The
12
quality improvement board may suspend the certifi-
13
cation of a provider at any time. At the request of
14
a health plan, insurance company or State agency,
15
the board must reconsider the certification of a pro-
16
vider.
17
"(5) DATA COLLECTION.-The quality improve-
18
ment board shall collect and review such data and
19
conduct such inspections and evaluations as are nec-
20
essary to enable the board to carry out its duties. At
21
the request of the board, insurers shall provide the
22
board with any data collected in the normal course
23
of business as the board determines necessary to
24
perform its duties. The data collected by the Federal
25
Health Expenditure Board under part D and the
S 1227 IS---9
260
1
data collected by the State consortia under part E
2
shall be made available to the board.
3
"(d) RESTRICTION ON LIMITATION OF PAYMENT FOR
4 SERVICES PERFORMED BY OUTSTANDING PROVIDERS.-
5 A health benefit plan may not deny payment for any serv-
6 ice performed or ordered by a provider certified as out-
7 standing under subsection (c)(3) during the period of such
8 certification for any reason other than noncoverage of the
9 provided service under the plan. The plan may not deny
10 coverage on the basis that the service is not medically nec-
11 essary. Nothing in this subsection shall be construed to
12 prohibit a plan from paying for services performed or or-
13 dered by such provider at its normal reimbursement rates.
14
"(e) RECERTIFICATION AND SUSPENSION OF CERTI-
15 FICATION.-A provider certified as outstanding under sub-
16 section (c)(3) shall be recertified periodically by the qual-
17 ity improvement board unless the board acts to suspend
18 such certification. Such suspensions, at the request of the
19 provider shall be reconsidered.
20
"(f) EXCEPTION FOR MANAGED CARE PLANS.-
21 Nothing in this section shall be construed to limit the abil-
22 ity of a managed care plan to choose providers eligible to
23 perform services under the plan or to establish reasonable
24 procedures to be followed by providers participating in the
25 plan in order to assure cost-effective, quality services.
.S 1227 IS
261
1
"(g) PLANNING GRANTS.-To facilitate the establish-
2 ment of a quality improvement board in each State, the
3 Secretary may award planning grants, in amounts that
4 shall not exceed $200,000 for each State, to private, non-
5 profit or public entities, for the planning, development and
6 implementation of the board and the programs undertaken
7 by the board.
8
"(h) AUTHORIZATION OF APPROPRIATIONS.-There
9 are authorized to be appropriated, such sums as may be
10 necessary to carry out this section.".
11
(b) SOCIAL SECURITY ACT.-Title XI of the Social
12 Security Act (42 U.S.C. 1301 et seq.) as amended by sec-
13 tions 411 and 421, is further amended by adding at the
14 end thereof the following new part:
15
"PART E-ESTABLISHMENT OF A QUALITY
16
IMPROVEMENT BOARD
17
"ESTABLISHMENT OF A QUALITY IMPROVEMENT BOARD
18
"SEC. 1195. (a) DUTIES OF THE QUALITY IMPROVE-
19 MENT BOARD.-
20
"(1) GUIDELINES.-
21
"(A) REQUIREMENT.-The quality im-
22
provement board for a State established under
23
section 451(a) of the HealthAmerica Act (here-
24
after referred to as the 'quality improvement
25
board') shall adopt guidelines for appropriate
S 1227 IS
262
1
medical practice and for recommended meas-
2
ures to be taken by providers to improve the
3
quality of care.
4
"(B) CONTENTS.-Guidelines adopted
5
under subparagraph (A) shall include such
6
guidelines as the Secretary may specify, and
7
may include additional guidelines developed by
8
professional societies or other appropriately
9
qualified bodies or individuals.
10
"(2) RECOMMENDED MEASURES.-In coopera-
11
tion with appropriate professional bodies, associa-
12
tions, and the Joint Commission on Accreditation of
13
Hospitals, the quality improvement board shall rec-
14
ommend measures for continuous quality improve-
15
ment to be adopted by health care professionals and
16
institutions. Such measures shall include measures
17
specified by the Secretary, appropriate continuing
18
medical education and, for health care institutions,
19
internal quality improvement procedures.
20
"(3) CERTIFICATION OF PROVIDERS.-The
21
quality improvement board shall periodically review
22
the performance of health care service providers and,
23
based on-
.S 1227 IS
263
1
"(A) the conformity of the practice of the
2
provider with the guidelines developed by the
3
board;
4
"(B) such measures of health care out-
5
comes as may be scientifically valid and adopted
6
by the board;
7
"(C) adoption by the provider of the meas-
8
ures for continuous quality improvement recom-
9
mended by the board; and
10
"(D) such other factors as the board or
11
the Secretary may prescribe; and
12
may certify a health care provider as an outstanding
13
provider for the purpose of this section.
14
"(4) LIMITATION ON CERTIFICATION.-A certi-
15
fication under paragraph (3) shall be examined peri-
16
odically by the quality improvement board to deter-
17
mine if continued certification is appropriate. The
18
quality improvement board may suspend the certifi-
19
cation of a provider at any time. At the request of
20
a health plan, insurance company or State agency,
21
the board must reconsider the certification of a pro-
22
vider.
23
"(5) DATA COLLECTION.-The quality improve-
24
ment board shall collect and review such data and
25
conduct such inspections and evaluations as are nec-
.S 1227 IS
264
1
essary to enable the board to carry out its duties. At
2
the request of the board, insurers shall provide the
3
board with any data collected in the normal course
4
of business as the board determines necessary to
5
perform its duties. The data collected by the Federal
6
Health Expenditure Board under part C and the
7
data collected by the State consortium under part D
8
of title XI shall be made available to the board.
9
"(b) RESTRICTION ON LIMITATION OF PAYMENT FOR
10 SERVICES PERFORMED BY OUTSTANDING PROVIDERS.-
11 A health benefit plan may not deny payment for any serv-
12 ice performed or ordered by a provider certified as out-
13 standing under subsection (a) (3) during the period of such
14 certification for any reason other than noncoverage of the
15 provided service under the plan. The plan may not deny
16 coverage on the basis that the service is not medically nec-
17 essary. Nothing in this subsection shall be construed to
18 prohibit a plan from paying for services performed or or-
19 dered by such provider at its normal reimbursement rates.
20
"(c) RECERTIFICATION AND SUSPENSION OF CERTI-
21 FICATION.- provider certified as outstanding under sub-
22 section (a)(3) shall be recertified periodically by the qual-
23 ity improvement board unless the board acts to suspend
24 such certification. Such suspensions, at the request of a
25 provider, shall be reconsidered.
.S 1227 IS
265
1
"(d) EXCEPTION FOR MANAGED CARE PLANS.-
2 Nothing in this section shall be construed to limit the abil-
3 ity of a managed care plan to choose providers eligible to
4 perform services under the plan or to establish reasonable
5 procedures to be followed by providers participating in the
6 plan in order to assure cost-effective, quality services.
7
"(e) PLANNING GRANTS.-To facilitate the establish-
8 ment of a quality improvement board in each State, the
9 Secretary may award planning grants, in amounts that
10 shall not exceed $200,000 for each State, to private, non-
11 profit or public entities, for the planning, development and
12 implementation of the board and the programs undertaken
13 by the board.
14
"(f) AUTHORIZATION OF APPROPRIATIONS.-There
15 are authorized to be appropriated, such sums as may be
16 necessary to carry out this section."
17 Subtitle G-Use of Practice Guide-
18
lines in Federal Health Insur-
19
ance and Service Programs
20 SEC. 461. USE OF PRACTICE GUIDELINES IN FEDERAL
21
HEALTH INSURANCE AND SERVICE PRO-
22
GRAMS.
23
Guidelines developed under the authority of section
24 912 of the Public Health Service Act (42 U.S.C. 299b-
25 1) shall, to the extent practical and effective, be utilized
.S 1227 IS
266
1 in Federal health insurance programs as utilization review
2 screens and as practice guidelines in Federal programs
3 providing health care services either directly or through
4 grantees.
5 Subtitle H-National Standards for
6
the Promotion of Managed Care
7 SEC. 471. NATIONAL STANDARDS FOR THE PROMOTION OF
8
MANAGED CARE.
9
Title XXVII of the Public Health Service Act (as
10 added by section 101 and amended by sections 201, 311,
11 411, 421 and 451) is further amended by adding at the
12 end thereof the following new part:
13 "PART G-NATIONAL STANDARDS FOR THE PROMOTION
14
OF MANAGED CARE
15 "SEC. 2791. NATIONAL STANDARDS.
16
"(a) PROHIBITIONS.-No requirement of any State
17 insurance, health care or any other law or regulation
18 shall-
19
"(1) prohibit a managed care plan from freely
20
selecting the health care providers, or the type of
21
health care providers in a locale, as the participating
22
providers; or
23
"(2) limit the ability of a managed care entity
24
to negotiate, enter into contracts or establish alter-
25
native rates or forms of payment for participating
.S 1227 IS
267
1
providers, or to require or provide incentives that
2
promote the use of participating providers.
3
"(b) UTILIZATION REVIEW SERVICES.-Notwith-
4 standing any State law, an insurer or other person or enti-
5 ty may offer utilization review services in any State if such
6 insurer, person or entity has established-
7
"(1) a procedure that adequately evaluates the
8
necessity and appropriateness of the proposed or de-
9
livered health care services;
10
"(2) a procedure that permits patients and pro-
11
viders to appeal any adverse decisions by the person
12
or entity performing the utilization review services,
13
as provided for in section 2725;
14
"(3) a procedure that ensures that the person
15
or entity providing the utilization review services is
16
reasonably accessible (five days each week during
17
normal business hours and, where necessary, at
18
other appropriate times) to patients and providers;
19
and
20
"(4) a procedure that ensures that all applica-
21
ble Federal and State laws that are designed to pro-
22
tect the confidentiality of individual medical records
23
are followed.
.S 1227 IS
268
1 "SEC. 2792. FAVORABLE TREATMENT OF MANAGED CARE
2
PLANS.
3
"(a) MANAGED CARE PLAN DEFINED.-
4
"(1) DEFINED.-As used in this part, the term
5
'managed care plan' has the same meaning given
6
such term in section 2713(7).
7
"(2) DETERMINATION OF MANAGED CARE
8
PLANS.-In the case of a health benefit plan that is
9
offered by an entity, that is not a self-insured entity,
10
that is subject to regulation by an applicable regula-
11
tory authority (as defined in section 2744(c)), con-
12
sistent with procedures established by the Secretary
13
in consultation with such authorities, such authori-
14
ties shall be responsible for certifying for purposes
15
of this part and the Social Security Act whether the
16
health benefit plan is a managed care plan. In the
17
case of self-insured entities, the Secretary shall be
18
responsible for providing such certification.
19
"(b) CONDITION OF STATE FUNDING.-
20
"(1) IN GENERAL.-No amounts shall be made
21
available under this Act to a State in any fiscal year
22
(beginning with the first fiscal year beginning after
23
the date of the enactment of this section) unless the
24
State is in compliance with subsection (a).
25
"(2) DEEMED ELECTION; IMPLIED PREEMP-
26
TION.-
.S 1227 IS
269
1
"(A) IN GENERAL.-A State is deemed to
2
have elected subsection (a) to be in effect in the
3
State as of the beginning of a fiscal year, unless
4
the chief executive officer of a State indicates in
5
writing that the State will not comply with this
6
section. Such an election shall have the effect of
7
preempting the establishment or enforcement of
8
any State law that is in violation of subsection
9
(a).
10
"(B) CHANGES.-A State is deemed not to
11
have such an election in effect as of the date
12
the Secretary determines that the State is en-
13
forcing any law or regulation in violation of
14
subsection (a).
15
"(c) LIMITATION ON RESTRICTIONS ON MANAGED
16 CARE PLANS.-In order to comply with the requirements
17 of this subsection, a State may not by law or regulation
18 prohibit or unreasonably limit any of the following:
19
"(1) A State may not prohibit or limit a man-
20
aged care plan from including incentives for enroll-
21
ees to use the services of participating providers.
22
"(2) A State may not prohibit or limit a man-
23
aged care plan from limiting coverage of services to
24
those provided by a participating provider.
.S 1227 IS
270
1
"(3) (A) Subject to subparagraph (B), a State
2
may not prohibit or limit the negotiation of rates
3
and forms of payments for providers under a man-
4
aged care plan.
5
"(B) Subparagraph (A) shall not apply where
6
the amount of payments with respect to a block of
7
services or providers is established under a State-
8
wide system applicable to all non-Federal payors
9
with respect to such services or providers.
10
"(4) A State may not prohibit or limit a man-
11
aged care plan from limiting the number of partici-
12
pating providers.
13
"(5) A State may not prohibit or limit a man-
14
aged care plan from requiring that services be pro-
15
vided (or authorized) by a primary care physician se-
16
lected by the enrollee from a list of available partici-
17
pating providers.
18
"(d) ADDITIONAL DEFINITIONS.-In this part, the
19 definitions contained in section 2713 shall also apply.
20 "SEC. 2793. FAVORABLE TREATMENT OF UTILIZATION RE-
21
VIEW PROGRAMS.
22
"(a) PREEMPTION OF STATE LAWS RESTRICTING
23 UTILIZATION REVIEW PROGRAMS THAT MEET FEDERAL
24 STANDARDS.-In the case of a health benefit plan that
25 includes a utilization review program, no State law or reg-
.S 1227 IS
271
1 ulation shall prohibit or regulate activities under such pro-
2 gram, except insofar as such law or regulation is consist-
3 ent with the standards established under subsection (b).
4
"(b) ESTABLISHMENT OF STANDARDS FOR UTILIZA-
5 TION REVIEW PROGRAMS.-
6
"(1) IN GENERAL.-The Secretary shall pro-
7
vide, by regulation, for the establishment of Federal
8
standards for utilization review programs of health
9
benefit plans. Such standards shall be designed to
10
assure, within a plan, the cost-effective and medical-
11
ly appropriate use of services.
12
"(2) CONTENTS OF STANDARDS.-Such stand-
13
ards shall be established with respect to at least
14
each of the following aspects of utilization review
15
programs:
16
"(A) The qualification of those who may
17
perform utilization review activities.
18
"(B) The standards to be applied in per-
19
forming utilization review.
20
"(C) The timeliness in which utilization re-
21
view determinations are to be made.
22
"(D) An appeals process which provides a
23
fair opportunity for individuals adversely affect-
24
ed by a utilization review determination to have
25
such a determination reviewed.
.S 1227 IS
272
1
"(E) Protection for the confidentiality of
2
individually-identifiable information used in the
3
process.
4
"(3) USE OF GUIDELINES.-Such standards
5
shall, to the maximum extent feasible, be consistent
6
with practice guidelines developed by the Agency for
7
Health Care Policy and Research.
8
"(4) DEADLINE.-Standards shall first be es-
9
tablished under this subsection by not later than 2
10
years after the date of the enactment of this part.
11
The Secretary may revise the standards from time
12
to time as required to assure, within health benefit
13
plans, the cost-effective and medically appropriate
14
use of services.
15
"(c) UTILIZATION REVIEW PROGRAM DEFINED.-In
16 this section, the term 'utilization review program' means
17 a system of reviewing the medical necessity and appropri-
18 ateness of patient services (which may include inpatient
19 and outpatient services) using specified guidelines. Such
20 a system may include preadmission certification, the appli-
21 cation of practice guidelines, continued stay review, dis-
22 charge planning, preauthorization of ambulatory proce-
23 dures, and retrospective review.".
.S 1227 IS
273
1
Subtitle I-Expansion of
2
Technology Assessment
3 SEC. 481. EXPANSION OF TECHNOLOGY ASSESSMENT.
4
Section 904 of the Public Health Service Act (42
5 U.S.C. 299a-2) is amended by adding at the end thereof
6 the following new subsections:
7
"(e) EXPANSION OF EFFORTS.-In carrying out sec-
8 tion 901(b) through subsection (a), the Administrator
9 shall focus on expanding and applying appropriate assess-
10 ments of existing health care technologies. Such expansion
11 shall be achieved in part, through an evaluation of health
12 services provided to individuals through publicly and pri-
13 vately funded sources.
14
"(f) PUBLIC-PRIVATE PARTNERSHIPS.-
15
"(1) ESTABLISHMENT OF PROGRAM.-The Ad-
16
ministrator shall establish a program under which
17
the Administrator shall enter into contracts or coop-
18
erative agreements with eligible entities for the es-
19
tablishment of public-private partnerships to under-
20
take technology assessment and related activities in
21
the private sector.
22
"(2) ELIGIBLE ENTITIES.-Entities eligible to
23
receive a contract or agreement under paragraph
24
(1), shall include academic medical centers, research
25
institutions, or a consortia of appropriate entities es-
.S 1227 IS
274
1
tablished for the purposes of conducting technology
2
assessment.
3
"(3) APPLICATION.-To be eligible to receive a
4
contract or agreement under paragraph (1), an enti-
5
ty shall prepare and submit to the Administrator an
6
application, at such time, in such form, and contain-
7
ing such information as the Administrator may re-
8
quire.".
9 TITLE VCONTRIBUTION BY EM-
10
PLOYERS NOT PROVIDING
11
PRIVATE HEALTH COVER-
12
AGE
13 SEC. 501. CONTRIBUTION BY EMPLOYERS NOT PROVIDING
14
PRIVATE HEALTH BENEFIT PLANS.
15
(a) IN GENERAL-Subtitle C of the Internal Reve-
16 nue Code of 1986 is amended by adding at the end thereof
17 the following new chapter:
18 "CHAPTER 26-CONTRIBUTION BY EM-
19
PLOYERS NOT PROVIDING PRIVATE
20
HEALTH BENEFIT PLANS
"Sec. 3601. Contribution by employers not providing private
health benefit plans.
21 "SEC. 3601. CONTRIBUTION BY EMPLOYERS NOT PROVID-
22
ING PRIVATE HEALTH BENEFIT PLANS.
23
"(a) CONTRIBUTION.-If an employer to whom part
24 B of title XXVII or section 2701(a) of the Public Health
.S 1227 IS
275
1 Service Act applies elects to have this chapter apply, there
2 is hereby imposed on such employer for each payroll period
3 a contribution requirement in the amount determined
4 under subsection (b).
5
"(b) AMOUNT OF CONTRIBUTION.-
6
"(1) IN GENERAL.-The amount of the contri-
7
bution required by subsection (a) for any payroll pe-
8
riod shall be equal to the applicable percentage of
9
wages (50 percent of wages in the case of an em-
10
ployer described in section 352 of the
11
HealthAmerica Act) paid during such period to em-
12
ployees with respect to whom the employer is re-
13
quired (without regard to the election under this sec-
14
tion) to provide health insurance coverage under
15
part B of title XXVII of the Public Health Service
16
Act.
17
"(2) APPLICABLE PERCENTAGE.-For purposes
18
of paragraph (1)-
19
"(A) IN GENERAL.-The applicable per-
20
centage for any calendar year shall be the per-
21
centage established under this paragraph for
22
such calendar year by the Secretary of Health
23
and Human Services at the lowest level consist-
24
ent with maintaining a fair balance between
25
public and private health insurance coverage for
oS 1227 IS
276
1
employees employed by employers not currently
2
offering health insurance coverage.
3
"(B) FAIR BALANCE.-For purposes of
4
subparagraph (A), the term 'fair balance'
5
means, with respect to a year, a balance calcu-
6
lated based on the estimated cost of a fully im-
7
plemented health insurance plan in that year,
8
and would, if such plan were fully implemented
9
and in effect, result in a ratio between coverage
10
of such employees under the public health in-
11
surance plan under title XXI of the Social Se-
12
curity Act and under a health benefit plan
13
under part B of title II of the Public Health
14
Service Act that is not disproportionate.
15
"(C) NOT DISPROPORTIONATE.-For pur-
16
poses of subparagraph (B), the term 'not dis-
17
proportionate' means a ratio of not greater
18
than 65 percent to 35 percent in comparing
19
coverage under such public health insurance
20
plan to such health benefit plans for a year.
21
"(3) WAGES.-For purposes of this subsection,
22
the term 'wages' has the meaning given such term
23
by section 3121(a), without regard to any limitation
24
by reference to the contribution and benefit base
25
under section 230 of the Social Security Act.
.S 1227 IS
277
1
"(c) PAYROLL PERIOD.-For purposes of this sec-
2 tion, the term 'payroll period' has the meaning given such
3 term by section 3401(b).
4
"(d) ADMINISTRATION.-For purposes of this title,
5 the contribution required by subsection (a) shall be treated
6 in the same manner as the tax imposed by section
7 3111(a).".
8
(b) CONFORMING AMENDMENTS.-The table of chap-
9 ters for subtitle C of the Internal Revenue Code of 1986
10 is amended by adding at the end thereof the following new
11 item:
"Chapter 26. Contribution in lieu of employer coverage.".
12
(c) EFFECTIVE DATE.-The amendments made by
13 this section shall apply to payroll periods beginning on or
14 after the effective date of this Act.
15 TITLE VI-ASSURING PROVISION
16
OF HEALTH BENEFITS TO
17
ALL AMERICANS
18 SEC. 601. ESTABLISHMENT OF AMERICARE.
19
(a) IN GENERAL.-The Social Security Act (42
20 U.S.C. 301 et seq.) is amended by adding at the end there-
21 of the following new title:
22
"TITLE XXI-AMERICARE
"TABLE OF CONTENTS OF TITLE
"Sec. 2101. State requirements for participation in AmeriCare.
"Sec. 2102. Basic health benefits.
"Sec. 2103. Cost-sharing provisions.
.S 1227 IS
278
"Sec. 2104. Supplemental payments.
"Sec. 2105. Health care providers.
"Sec. 2106. Quality and cost-effective care measures.
"Sec. 2107. Administration.
"Sec. 2108. Definitions and special rules.
"Sec. 2109. Payments to States.
"Sec. 2110. AmeriCare trust fund.
1
"STATE REQUIREMENTS FOR PARTICIPATION IN
2
AMERICARE
3
"SEC. 2101. (a) IN GENERAL.-A State must-
4
"(1) provide either for the establishment or des-
5
ignation of a single State agency (other than the
6
agency established or designated under section 1902
7
of this Act) to administer or supervise the adminis-
8
tration of AmeriCare;
9
"(2) provide basic health benefits described in
10
section 2102, subject to cost-sharing provisions
11
under section 2103-
12
"(A) to any child or pregnant woman who
13
is not otherwise covered under a nongovernmen-
14
tal health insurance policy, plan, or program
15
beginning on the first day of the second full cal-
16
endar year after the date of the enactment of
17
this title;
18
"(B) to any employee or family member
19
with respect to whom an employer makes a con-
20
tribution under title V of the HealthAmerica
21
Act beginning on the first day of the second full
.S 1227 IS
279
1
calendar year after the date of the enactment of
2
this title; and
3
"(C) to any individual not covered under a
4
health benefit plan under title II of such Act,
5
beginning on the first day of the fifth full calen-
6
dar year after the effective date described in
7
subparagraph (A);
8
"(3) provide at least monthly supplemental pay-
9
ments for premiums, deductibles, and other cost-
10
sharing charged to individuals and families as pro-
11
vided under section 2104;
12
"(4) provide a clear, simple explanation of the
13
basic health benefits and supplemental payments
14
available under AmeriCare through public announce-
15
ments, mailings, and any other suitable means;
16
"(5) provide enrollment in AmeriCare as de-
17
scribed in subsection (b);
18
"(6) to the extent required by the Secretary,
19
provide basic health benefits or supplemental pay-
20
ments under AmeriCare to individuals who are-
21
"(A) residents of the State but are absent
22
therefrom,
23
"(B) temporarily located in the State but
24
are not permanent residents of any State; or
.S 1227 IS
280
1
"(C) formerly residents of the State but
2
are currently United States citizens permanent-
3
ly residing in a country which has reciprocity
4
agreements with the United States;
5
"(7) provide to any individual covered under a
6
health benefit plan under title II of the
7
HealthAmerica Act, or any employer of such individ-
8
ual, the opportunity to purchase (or have purchased
9
for such individual by the individual's employer)
10
AmeriCare benefits described in section 2102(a)(7)
11
at a separate actuarial premium rate determined by
12
the State and subject to such other cost-sharing pro-
13
visions as the plan under such title II provides for
14
other benefits under such plan;
15
"(8) provide for granting an opportunity for a
16
fair hearing before the State agency to any individ-
17
ual whose claim for coverage under AmeriCare is de-
18
nied or is not acted upon with reasonable prompt-
19
ness, under rules described in section 2107(b);
20
"(9) meet the requirements of-
21
"(A) paragraphs (4), (6), (7), (11), (19),
22
(27), (45), (46), (48), and (49) of section
23
1902(a),
24
"(B) subsections (b) and (g) of section
25
1902, and
.S 1227 IS
281
1
"(C) section 1907,
2
in the same manner as they apply to title XIX of
3
this Act;
4
"(10) meet the requirements of section 2105
5
and 2106(c);
6
"(11) provide that AmeriCare shall be in effect
7
in all political subdivisions of the State, and if ad-
8
ministered by such subdivisions, be mandatory upon
9
such subdivisions;
10
"(12) provide for financial participation by the
11
State equal to the non-Federal share of the expendi-
12
tures under AmeriCare with respect to which pay-
13
ments under section 2109 are authorized by this
14
title;
15
"(13) meet any other requirements of this title;
16
and
17
"(14) in order to insure compliance with this
18
title and to receive the Federal share under section
19
2109, submit to the Secretary a plan that meets the
20
requirements of this subsection and is subject to
21
rules similar to the rules of section 1904.
22
"(b) ELIGIBILITY FOR BASIC HEALTH BENEFITS.-
23
"(1) IN GENERAL.-Subject to the provisions of
24
paragraphs (2) and (6) of subsection (a), each indi-
25
vidual not otherwise covered under a health benefit
.S 1227 IS
282
1
plan under title II of the HealthAmerica Act is enti-
2
tled to basic health benefits under AmeriCare.
3
"(2) PERIOD OF COVERAGE.-
4
"(A) GENERAL RULE.-Upon notification
5
of the approval of an application submitted by
6
any individual (or a guardian or representative
7
of such individual), AmeriCare coverage of the
8
applicant begins on the date of such applica-
9
tion.
10
"(B) FAILURE TO MAKE TIMELY NOTIFI-
11
CATION.-If the State fails to notify the appli-
12
cant of the applicant's ineligibility within 1
13
month of the date of the application, AmeriCare
14
coverage shall apply during the period begin-
15
ning on the date the individual submitted the
16
application and ending on the date the State
17
notifies such individual of such ineligibility.
18
"(C) EMPLOYER'S CONTINUATION COVER-
19
AGE.-Coverage under AmeriCare shall not
20
apply for services provided during a period of
21
hospitalization that begins prior to the date
22
specified in subparagraph (A) or (B) with re-
23
spect to an individual whose enrollment in an
24
employer-based health plan terminated during
25
such period of hospitalization.
.S 1227 IS
283
1
"(D) GUARANTEED MINIMUM ELIGIBILITY
2
PERIOD.-An individual who is determined in a
3
month to be eligible for benefits under
4
AmeriCare shall remain eligible for coverage for
5
a period of not less than 1 year, unless other-
6
wise covered under a health benefit plan under
7
title II of the HealthAmerica Act.
8
"(3) APPLICATION FORMS.-Each State plan
9
shall use a standard Federal application which shall
10
be as simple in form as possible and understandable
11
to the average individual and require attachment of
12
such documentation as deemed necessary by the Sec-
13
retary in order to insure eligibility.
14
"(4) ENROLLMENT PROCESS.-
15
"(A) IN GENERAL.-Each State shall pro-
16
vide for the receipt of AmeriCare applications—
17
"(i) by mail; and
18
"(ii) at locations broadly available to
19
the general public, including locations that
20
serve large numbers of indigent individuals
21
(as defined and determined by the Secre-
22
tary).
23
"(B) EMPLOYER ASSISTANCE.-
24
"(i) IN GENERAL.-Any employer who
25
contributes under title V of the
.S 1227 IS
284
1
HealthAmerica Act in lieu of providing a
2
health benefit plan under title II of such
3
Act shall notify the State of the identities
4
of all employees of that State and shall
5
provide such employees with AmeriCare
6
applications.
7
"(ii) CHANGE IN STATUS NOTIFICA-
8
TION.-Any employer shall notify the State
9
of-
10
"(I) the identities of any employ-
11
ees of that State who become eligible
12
for AmeriCare as the result of
13
changes in employment status; and
14
"(II) the identities of any individ-
15
uals (including members of the fami-
16
lies of such individuals) who become
17
covered under a health benefit plan
18
under title II of the HealthAmerica
19
Act and who were covered under
20
AmeriCare in such State.
21
Each employer shall provide employees de-
22
scribed in subclause (I) with AmeriCare
23
applications.
24
"(iii) COLLECTION OF PREMIUMS.-
.S 1227 IS
285
1
"(I) IN GENERAL.-Each State
2
may require that employers collect
3
AmeriCare premiums on behalf of the
4
employees of such employer.
5
"(II) FAILURE TO PAY PREMI-
6
UMS.-If a State plan includes the re-
7
quirement described in subclause (I),
8
the State shall notify the employee
9
and the Secretary of the failure of the
10
employer to make timely premium
11
payments on behalf of the employee
12
and the employee's family members as
13
required under such plan. Such notifi-
14
cation shall be provided not less than
15
30 days prior to any termination of
16
coverage by the State as the result of
17
such nonpayment of premiums.
18
"(5) ENROLLMENT PERIODS.-
19
"(A) IN GENERAL.-Except as provided in
20
this paragraph, any individual may enroll in
21
AmeriCare-
22
"(i) during an annual open enrollment
23
period (of not less than 1 month) estab-
24
lished by the Secretary; and
.S 1227 IS
286
1
"(ii) during such other periods (in-
2
cluding upon loss of coverage under a
3
health benefit plan under title II of the
4
HealthAmerica Act) as the Secretary shall
5
require in regulations.
6
"(B) FOR UNDER-POVERTY FAMILIES.-In
7
the case of an individual who is determined to
8
be a member of an under-poverty family, the in-
9
dividual may enroll in AmeriCare at any time.
10
"(C) PHASE-IN PERIODS.-In the case of
11
any individual who first becomes eligible for
12
benefits under AmeriCare in a calendar year
13
described in subsection (a) (2), the period of en-
14
rollment shall continue for the entire calendar
15
year.
16
"(6) AMERICARE CARD.-The State shall issue
17
an AmeriCare card which may be used for purposes
18
of identification and processing of claims under
19
AmeriCare. AmeriCare cards shall identify (as ap-
20
propriate) if the individual is eligible for special eli-
21
gibility benefits.
22
"BASIC HEALTH BENEFITS
23
"SEC. 2102. (a) GENERAL BENEFITS.-Benefits
24 under this section with respect to all individuals shall
25 include-
.S 1227 IS
287
1
"(1) inpatient and outpatient hospital care, ex-
2
cept that treatment for a mental disorder is subject
3
to the special limitations described in paragraph
4
(6)(A);
5
"(2) inpatient and outpatient physician serv-
6
ices, except that psychotherapy or counseling for a
7
mental disorder is subject to the special limitations
8
described in paragraph (6)(B);
9
"(3) diagnostic tests;
10
"(4) prenatal care and well-baby care provided
11
to children who are 1 year of age or younger;
12
"(5) preventive services, limited to-
13
"(A) well child care;
14
"(B) pap smears; and
15
"(C) mammograms; and
16
"(6) (A) inpatient hospital care for a mental dis-
17
order for not less than 45 days per year, except that
18
days of partial hospitalization or residential care
19
may be substituted for days of inpatient care accord-
20
ing to a ratio established by the Secretary; and
21
"(B) outpatient psychotherapy and counseling
22
for a mental disorder for not less than 20 visits per
23
year provided by a provider who is acting within the
24
scope of State law and who-
25
"(i) is a physician; or
.S 1227 IS
288
1
"(ii) meets the standards of subsection
2
(e) (2) and is a duly licensed or certified clinical
3
psychologist or a duly licensed or certified clini-
4
cal social worker, a duly licensed or certified
5
equivalent mental health professional, or a clin-
6
ic or center providing duly licensed or certified
7
mental health services; and
8
"(7) items and services described in section
9
1905(a)(4)(B) (relating to early and periodic screen-
10
ing, diagnosis, and treatment for children under the
11
age of 21).
12
(b) EXCEPTIONS-Subsection (a) shall not be con-
13 strued as requiring a plan for AmeriCare to include pay-
14 ment for-
15
(1) items and services that are not medically
16
necessary as determined under rules similar to rules
17
under title XVIII of this Act;
18
(2) routine physical examinations or preventive
19
care (other than care and services described in para-
20
graphs (4), (5), and (7) of subsection (a); or
21
(3) experimental services and procedures as de-
22
termined under rules similar to rules under title
23
XVIII of this Act.
24
(c) AMOUNT, SCOPE, AND DURATION OF CERTAIN
25 BENEFITS.-Except as provided in subsection (b),
.S 1227 IS
289
1 AmeriCare shall place no limits on the amount, scope, or
2 duration of benefits described in paragraphs (1) through
3 (3) of subsection (a).
4
(d) AMOUNT, SCOPE, AND DURATION OF PREVEN-
5 TIVE SERVICES.-AmeriCare may limit the preventive
6 services described in subsection (a)(5) pursuant to regula-
7 tions of the Secretary specifying the content and periodici-
8 ty of such care. The Secretary shall develop such regula-
9 tions after consultation with appropriate medical experts.
10
(e) MENTAL HEALTH CARE.-
11
(1) INPATIENT CARE.-Inpatient hospital care
12
described in subsection (a)(6)(A) shall include reim-
13
bursement for professional care provided to the indi-
14
vidual while the individual is receiving such inpatient
15
care, by a physician or duly licensed or certified clin-
16
ical psychologist operating within the scope of prac-
17
tice of the physician or psychologist, as determined
18
appropriate under State law. Nothing in this subsec-
19
tion shall be construed to modify hospital practices
20
with regard to scope of practice, admitting privi-
21
leges, or billing arrangements.
22
(2) STANDARDS FOR CERTAIN PROVIDERS OF
23
OUTPATIENT CARE.-The Secretary shall establish
24
standards that providers referred to in subsection
.S 1227 IS
290
1
(a)(6)(B)(ii) must meet to be eligible for payment
2
under AmeriCare.
3
"(f) ENHANCED BENEFITS.-Basic health benefits
4 under this section with respect to special eligibility individ-
5 uals shall include medical assistance, not otherwise de-
6 scribed in subsection (a), in the State's plan under title
7 XIX of this Act, other than medical assistance described
8 in paragraphs (4)(A), (7), (14), and (18) of section
9 1905(a).
10
"(g) ADDITIONAL BENEFITS.-As part of
11 AmeriCare, a State may provide for the coverage of health
12 benefits in addition to the basic health benefits described
13 in the preceding subsections of this section, on the condi-
14 tion that the State shall not receive any Federal payment
15 for such additional coverage.
16
"COST-SHARING PROVISIONS
17
"SEC. 2103. (a) IN GENERAL.-Except as provided
18 in subsection (b), each State that provides AmeriCare
19 shall provide for cost-sharing as follows:
20
"(1) UNDER-POVERTY FAMILIES.-With respect
21
to an individual who is a member of an under-pover-
22
ty family, AmeriCare may not impose any premiums,
23
deductibles or other cost-sharing on such individual.
24
"(2) NEAR-POVERTY FAMILIES.-
25
"(A) IN GENERAL.-Subject to subpara-
26
graph (C), with respect to an individual who is
.S 1227 IS
291
1
a member of a near-poverty family that receives
2
benefits under AmeriCare, the amount of the
3
monthly AmeriCare premium for such individ-
4
ual shall be the applicable percentage of the
5
monthly actuarial rate of such State.
6
"(B) APPLICABLE PERCENTAGE.-For the
7
purposes of this paragraph, the term 'applicable
8
percentage' means 2 percentage points for each
9
10 percentage point bracket (or any portion
10
thereof) such family's income equals or exceeds
11
the income official poverty line (as defined by
12
the Office of Management and Budget, and re-
13
vised annually in accordance with section
14
673(2) of the Omnibus Budget Reconciliation
15
Act of 1981) applicable to a family of the size
16
involved.
17
"(C) LIMITATION.-The aggregate amount
18
of any AmeriCare premiums imposed on the
19
family of the individual under this paragraph
20
for any calendar year shall not exceed an
21
amount equal to 3 percent of the family income.
22
"(D) ADDITIONAL COST SHARING LIMITA-
23
TION.-
24
"(i) IN GENERAL.-With respect to
25
any individual who is a member of a near-
S 1227 IS---10
292
1
poverty family that receives benefits under
2
AmeriCare, such individual shall, in addi-
3
tion to the AmeriCare premium described
4
in this paragraph, pay the applicable per-
5
centage of any AmeriCare deductible or
6
other cost-sharing.
7
"(ii) APPLICABLE PERCENTAGE.-For
8
purposes of this subparagraph, the term
9
'applicable percentage' means 10 percent-
10
age points for each 10 percentage point
11
bracket (or any portion thereof) such fami-
12
ly's income equals or exceeds 110 percent
13
of such income official poverty line.
14
"(3) OTHER FAMILIES.-
15
"(A) IN GENERAL.-Subject to subpara-
16
graph (C), with respect to an individual who is
17
a member of a family that receives benefits
18
under AmeriCare and whose income equals or
19
exceeds an income level that is 200 percent of
20
the income official poverty line (as described in
21
paragraph (2)(B)), the amount of the monthly
22
AmeriCare premium for such individual shall be
23
the monthly actuarial rate of such State.
24
"(B) LIMITATION.-The aggregate amount
25
of any AmeriCare premiums imposed on the
.S 1227 IS
293
1
family of the individual under this paragraph
2
for any calendar year shall not exceed an
3
amount equal to
4
"(i) in the case of a family whose in-
5
come equals or exceeds 200 percent of
6
such income official poverty line but is less
7
than 250 percent of such income official
8
poverty line, 3.5 percent of the family in-
9
come,
10
"(ii) in the case of a family whose in-
11
come equals or exceeds. 250 percent of
12
such income official poverty line but is less
13
than 325 percent of such income official
14
poverty line, 4 percent of the family in-
15
come, and
16
"(ii) in the case of a family whose in-
17
come equals or exceeds 325 percent of
18
such income official poverty line but is less
19
than 400 percent of such income official
20
poverty line, 5 percent of the family in-
21
come.
22
"(C) With respect to any individual who is
23
a member of a family described in this para-
24
graph that receives benefits under AmeriCare,
25
such individual shall, in addition to the
S 1227 IS
294
1
AmeriCare premium described in this para-
2
graph, pay 100 percent of any AmeriCare de-
3
ductible or other cost-sharing.
4
"(4) PHASE-IN COVERAGE FOR CHILDREN.-
5
With respect to any family described in this subsec-
6
tion, the children of which are the only individuals
7
eligible for coverage under AmeriCare, the percent-
8
ages described in paragraphs (2)(C) and (3)(B) shall
9
be reduced by two-thirds.
10
"(b) MONTHLY AMERICARE PREMIUM FOR EM-
11 PLOYED INDIVIDUALS.-
12
"(1) IN GENERAL.-Except as provided in para-
13
graph (2), a State plan for AmeriCare shall require
14
an individual whose employer makes a contribution
15
under title V of the HealthAmerica Act in lieu of
16
providing a health benefit plan under title II of such
17
Act to pay an AmeriCare premium equal to the less-
18
er of-
19
"(A) coverage under AmeriCare for such
20
individual for a period of one month; or
21
"(B) 20 percent of the monthly actuarial
22
rate of such State.
23
"(2) With respect to any part-time employee
24
who is a member of a family that receives benefits
25
under AmeriCare and whose income equals or ex-
.S 1227 IS
295
1
ceeds an income level that is 200 percent of the in-
2
come official poverty line (as described in subsection
3
(a)(2)(B)) and whose employer makes a contribution
4
under title V of the HealthAmerica Act, the amount
5
of any AmeriCare premium imposed on such employ-
6
ee shall be 50 percent of the amount determined
7
under paragraph (1).
8
"(c) DEFINITIONS AND SPECIAL RULES.-
9
"(1) MONTHLY ACTUARIAL RATE DEFINED.-
10
"(A) IN GENERAL.-For purposes of this
11
section, the term 'monthly actuarial rate'
12
means, with respect to AmeriCare in a plan
13
year, the average monthly per enrollee amount
14
that the State estimates, based on actuarial cal-
15
culations conducted in conformity with require-
16
ments established by the Secretary, for enroll-
17
ees under AmeriCare during the year, would be
18
necessary to pay for the total benefits required
19
under the State plan for AmeriCare (including
20
administrative costs for the provision of such
21
benefits and an appropriate amount for a con-
22
tingency margin) during the year.
23
"(B) SPECIAL RULE.-With respect to any
24
State plan for AmeriCare, for any period end-
25
ing before the date described in section
.S 1227 IS
296
1
2101(a)(2)(C), the monthly actuarial rate shall
2
be calculated as if all eligible children in such
3
State participate in such plan.
4
"(2) APPLICATION ON BASIS OF FAMILY STA-
5
TUS.-For purposes of this section, a State plan for
6
AmeriCare may provide for the AmeriCare premium
7
to be applied, and the monthly actuarial rate to be
8
computed-
9
"(A) separately for individuals who have
10
family members covered under AmeriCare and
11
for individuals who do not have family members
12
covered under the AmeriCare; and
13
"(B) with respect to individuals with such
14
covered family members, separately-
15
"(i) for individuals who have a cov-
16
ered spouse and one or more covered chil-
17
dren;
18
"(ii) for individuals who have a cov-
19
ered spouse but no covered children; and
20
"(iii) for individuals who do not have
21
a covered spouse but have one or more cov-
22
ered children.
23
"(3) ADJUSTMENT FOR COVERED SPOUSE WITH
24
OTHER COVERAGE.-For purposes of this section, if
25
a State plan for AmeriCare charges an individual for
.S 1227 IS
297
1
a share of the AmeriCare premium, the plan shall
2
establish a separate AmeriCare premium category
3
(or categories) for family coverage in the case of a
4
covered spouse who is receiving primary health in-
5
surance coverage from another health benefit plan.
6
The AmeriCare premium for such categories shall be
7
established based on actual or projected plan experi-
8
ence or according to a formula established by the
9
Secretary, and shall take into account the reduction
10
in health insurance costs resulting from such cover-
11
age.
12
"(d) AMERICARE DEDUCTIBLE OR OTHER COST-
13 SHARING.-
14
"(1) IN GENERAL.-For purposes of this title,
15
the term 'AmeriCare deductible or other cost-shar-
16
ing' means any deductible, copayment, or coinsur-
17
ance established by the State plan for AmeriCare as
18
determined under paragraphs (2) and (3) of this
19
subsection.
20
"(2) LIMITATION ON DEDUCTIBLES.-A State
21
plan for AmeriCare shall not provide, for benefits
22
provided in any plan year, for a deductible amount
23
that exceeds—
24
"(A) with respect to benefits payable for
25
items and services furnished to any individual
.S 1227 IS
298
1
with no family member enrolled under
2
AmeriCare, for a plan year beginning in-
3
"(i) the first calendar year that begins
4
more than 1 year after the effective date of
5
this title, $250; or
6
"(ii) for a subsequent calendar year,
7
the limitation of deductions specified in
8
clause (i) for the previous calendar year in-
9
creased by the percentage increase in the
10
consumer price index for all urban consum-
11
ers (United States city average, as pub-
12
lished by the Bureau of Labor Statistics)
13
for the 12-month period ending on Septem-
14
ber 30 of the preceding calendar year; and
15
"(B) with respect to benefits payable for
16
items and services furnished to any individual
17
with a family member enrolled under
18
AmeriCare, for a plan year beginning in-
19
"(i) the first calendar year that begins
20
more than 1 year after the effective date of
21
this title, $250 per family member and
22
$500 per family; or
23
"(ii) for a subsequent calendar year,
24
the limitation of deductions specified in
25
clause (i) for the previous calendar year in-
.S 1227 IS
299
1
creased by the percentage increase in the
2
consumer price index for all urban consum-
3
ers (United States city average, as pub-
4
lished by the Bureau of Labor Statistics)
5
for the 12-month period ending on Septem-
6
ber 30 of the preceding calendar year.
7
If the limitation of deductions computed under sub-
8
paragraph (A)(ii) or (B)(ii) is not a multiple of $10,
9
it shall be rounded to the next highest multiple of
10
$10.
11
"(3) LIMITATION ON COPAYMENTS AND COIN-
12
SURANCE.-
13
"(A) IN GENERAL.-Subject to subpara-
14
graphs (B) through (D), a State plan for
15
AmeriCare shall not-
16
"(i) require the payment of any
17
copayment or coinsurance for an item or
18
service for which coverage is provided
19
under section 2102(g) in an amount that
20
exceeds 20 percent of the cost of the item
21
or service; or
22
"(ii) require the payment of any
23
copayment or coinsurance for items and
24
services required under section 2102 (other
25
than subsection (g)) to be furnished in a
S 1227 IS
300
1
plan year for an individual after the indi-
2
vidual has incurred out-of-pocket expenses
3
under the plan that are equal to the out-
4
of-pocket limit (as defined in subparagraph
5
(E)(ii)).
6
"(B) EXCEPTION FOR PREFERRED PRO-
7
VIDERS.-If a State plan for AmeriCare estab-
8
lishes reasonable classifications of participating
9
and nonparticipating providers of items and
10
services, the plan may require payments in ex-
11
cess of the amount permitted under subpara-
12
graph (A) in the case of items and services fur-
13
nished by nonparticipating providers.
14
"(C) EXCEPTION FOR IMPROPER UTILIZA-
15
TION.-A State plan for AmeriCare may pro-
16
vide for copayment or coinsurance in excess of
17
the amount permitted under subparagraph (A)
18
for any item or service that an individual ob-
19
tains without complying with any reasonable
20
procedures established by the plan to ensure the
21
efficient and appropriate utilization of covered
22
services.
23
"(D) MENTAL HEALTH CARE.-In the case
24
of care provided under section 2102(a)(6)(B), a
25
State plan for AmeriCare shall not require pay-
.S 1227 IS
301
1
ment of any copayment or coinsurance for an
2
item or service for which coverage is required
3
by this title in an amount that exceeds 50 per-
4
cent of the cost of the item or service.
5
"(E) LIMIT ON OUT-OF-POCKET EX-
6
PENSES.-
7
"(i) OUT-OF-POCKET EXPENSES DE-
8
FINED.-For purposes of this paragraph,
9
the term 'out-of-pocket expenses' means,
10
with respect to an individual in a plan
11
year, amounts payable under AmeriCare as
12
deductibles and coinsurance with respect to
13
items and services provided under
14
AmeriCare and furnished in the plan year
15
on behalf of the individual and family cov-
16
ered under AmeriCare.
17
"(ii) OUT-OF-POCKET LIMIT DE-
18
FINED.-For purposes of this paragraph,
19
the term 'out-of-pocket limit' means for a
20
plan year beginning in-
21
"(I) the first calendar year that
22
begins more than 1 year after the ef-
23
fective date of this title, $3,000; or
24
"(II) for a subsequent calendar
25
year, the out-of-pocket limit specified
.S 1227 IS
302
1
in subclause (I) for the previous cal-
2
endar year increased by the percent-
3
age increase in the consumer price
4
index for all urban consumers (United
5
States city average, as published by
6
the Bureau of Labor Statistics) for
7
the 12-month period ending on Sep-
8
tember 30 of the preceding calendar
9
year.
10
If the out-of-pocket limit computed under
11
subclause (II) is not a multiple of $10, it
12
shall be rounded to the next highest multi-
13
ple of $10.
14
"SUPPLEMENTAL PAYMENTS
15
"SEC. 2104. (a) IN GENERAL.-Except as provided
16 in this section, an individual who is enrolled in a health
17 benefit plan under title II of the HealthAmerica Act is
18 not entitled to benefits under AmeriCare.
19
"(b) ASSISTANCE FOR UNDER-POVERTY FAMI-
20 LIES.-In the case of an individual described in subsection
21 (a) or an individual whose employer makes a contribution
22 under title V of the HealthAmerica Act in lieu of providing
23 a health benefit plan under title II of such Act, who is
24 a member of an under-poverty family, AmeriCare shall
25 provide for payment of-
.S 1227 IS
303
1
"(1) any premiums charged the individual for
2
the applicable category of coverage under the em-
3
ployer's health benefit plan or AmeriCare in which
4
the individual is enrolled, except that AmeriCare is
5
not required to pay for such amount of a premium
6
as exceeds the lowest premium which would be
7
charged the individual for the applicable category of
8
coverage under any health benefit plan offered the
9
individual under title II of the HealthAmerica Act or
10
AmeriCare, as the case may be; and
11
"(2) deductibles and other cost-sharing imposed
12
on the individual under the employer's health benefit
13
plan or AmeriCare, but only with respect to the
14
basic benefits required under such a plan under such
15
title II or AmeriCare, as the case may be.
16
"(c) ASSISTANCE FOR NEAR-POVERTY FAMILIES.-
17
"(1) IN GENERAL.-In the case of an individual
18
described in subsection (a) or an individual whose
19
employer makes a contribution under title V of the
20
HealthAmerica Act in lieu of providing a health ben-
21
efit plan under title II of such Act, who is a member
22
of a near-poverty family, AmeriCare shall provide for
23
payment of the applicable premium percentage of
24
any premiums charged the individual for the applica-
25
ble category of coverage under the employer's health
.S 1227 IS
304
1
benefit plan or AmeriCare in which the individual is
2
enrolled, except that AmeriCare is not required to
3
pay for such amount of a premium as exceeds the
4
lowest premium which would be charged the individ-
5
ual for the applicable category of coverage under any
6
health benefit plan offered the individual under title
7
II of the HealthAmerica Act or AmeriCare, as the
8
case may be.
9
"(2) APPLICABLE PREMIUM PERCENTAGE.-
10
For purposes of paragraph (1)(A), the term 'applica-
11
ble premium percentage' means 20 percent reduced
12
(but not below 2 percent) by 2 percentage points for
13
each 10 percentage point bracket (or portion there-
14
of) such family's income equals or exceeds 110 per-
15
cent of the income official poverty line (as defined
16
by the Office of Management and Budget, and re-
17
vised annually in accordance with section 673(2) of
18
the Omnibus Budget Reconciliation Act of 1981) ap-
19
plicable to a family of the size involved.
20
"(d) APPLICATION FOR ASSISTANCE.-The State
21 plan for AmeriCare shall use a standard Federal applica-
22 tion which shall be as simple in form as possible and un-
23 derstandable to the average individual and require attach-
24 ment of such documentation as deemed necessary by the
25 Secretary in order to insure eligibility. Such application
.S 1227 IS
305
1 shall be available to any employee as provided in section
2 2107(b), may by filed at any time, and shall initiate cover-
3 age under the rules similar to the rules of subparagraphs
4 (A) and (B) of section 2101(b)(2).
5
"(e) PAYMENT OF PREMIUMS.-
6
"(1) IN GENERAL.-The State plan shall pro-
7
vide that upon the initiation of coverage under this
8
section, an individual shall receive advanced payment
9
of supplemental premium payments for the calendar
10
year from AmeriCare, or in the case of an individual
11
enrolled in AmeriCare, a reduction in the annual
12
AmeriCare premium.
13
"(2) REQUIREMENT FOR FILING OF INCOME
14
STATEMENT.-In the case of a family which is re-
15
ceiving supplemental premium payments (or a reduc-
16
tion in AmeriCare premiums) under this section for
17
any month in a year, a member of the family shall
18
file with the State, by not later than April 15 of the
19
following year, a statement that verifies the family's
20
total family income for the taxable year ending dur-
21
ing the previous year. Such a statement shall pro-
22
vide information necessary to determine the family
23
income during the year and the number of family
24
members in the family as of the last day of the year.
.S 1227 IS
306
1
"(3) RECONCILIATION OF PREMIUM ASSIST-
2
ANCE BASED ON ACTUAL INCOME.-Based on and
3
using the income reported in the statement filed
4
under paragraph (2) with respect to a family or indi-
5
vidual, the State shall compute the amount of assist-
6
ance that should have been provided under this sec-
7
tion with respect to premiums for the family in the
8
year involved. If the amount of such assistance com-
9
puted is-
10
"(A) greater than the amount of premium
11
assistance provided, the State shall provide for
12
payment (directly or through a credit against
13
future premiums owed) to the family or individ-
14
ual involved of an amount equal to the amount
15
of the deficit, or
16
"(B) less than the amount of assistance
17
provided, the State shall require the family or
18
individual to pay (directly or through an in-
19
crease in future premiums owed) to the State
20
(to the credit of the program under this title)
21
an amount equal to the amount of the excess
22
payment.
23
"(4) DISQUALIFICATION FOR FAILURE TO
24
FILE.-In the case of any family that is required to
25
file an information statement under paragraph (2)
.S 1227 IS
307
1
in a year and that fails to file such a statement by
2
the deadline specified in such paragraph, no member
3
of the family shall be eligible for assistance under
4
this section after May 1 of such year. The State
5
shall waive the application of this paragraph if the
6
family establishes, to the satisfaction of the State,
7
good cause for the failure to file the statement on
8
a timely basis.
9
"(5) PENALTIES FOR FALSE INFORMATION.
10
Any individual that provides false information in a
11
statement under paragraph (2) is subject to a crimi-
12
nal penalty to the same extent as a criminal penalty
13
may be imposed under section 1128B(a) with re-
14
spect to a person described in clause (ii) of such sec-
15
tion.
16
"(6) NOTICE OF REQUIREMENT.-The State
17
shall provide for written notice, in March of each
18
year, of the requirement of paragraph (2) to each
19
family which received assistance under this section
20
in any month during the preceding year and to
21
which such requirement applies.
22
"(7) TRANSMITTAL OF INFORMATION.-The
23
Secretary of the Treasury shall transmit annually to
24
the State such information relating to the total in-
25
come of individuals for the taxable year ending in
.S 1227 IS
308
1
the previous year as may be necessary to verify the
2
reconciliation of assistance under this subsection.
3
"(f) PAYMENT OF OTHER COST-SHARING CLAIMS.-
4 The State plan shall provide that each individual subject
5 to coverage under this section or the health care provider
6 rendering the service shall file claims for the supplemental
7 payment of deductibles and other cost-sharing imposed on
8 such individual under the employer's health benefit plan
9 or Americare, and the State shall make such payments
10 at the option of the individual, to such individual or the
11 health care provider.
12
"HEALTH CARE PROVIDERS
13
"SEC. 2105. (a) USE OF MEDICARE PAYMENT
14 RULES.-
15
"(1) IN GENERAL.-Except as provided in sub-
16
sections (b) and (c)-
17
"(A) payment of benefits under the State
18
plan for AmeriCare shall be made in the same
19
amounts and on the same basis as payment
20
may be made with respect to such benefits
21
under title XVIII of this Act, and
22
"(B) the provisions of sections 1814, 1815,
23
1833, 1834(c) (other than paragraphs
24
(1)(A)(2)), 1835, 1842, 1848, 1886, 1887 shall
25
apply to payment of benefits (and provision of
26
services and charges thereon) under this title in
.S 1227 IS
309
1
the same manner as such provisions apply to
2
benefits, services, and charges under title XVIII
3
of this Act.
4
"(2) IDENTIFICATION OF COMPARABLE PAY-
5
MENT METHODS FOR NEW SERVICES.-In the case
6
of services for which there is not a payment basis es-
7
tablished under title XVIII of this Act, the Secretary
8
shall establish payment rules that are similar to the
9
payment rules for similar services under such title.
10
"(3) ADJUSTMENT OF MEDICARE PAYMENT
11
RATES.-
12
"(A) IN GENERAL.-For purposes of pay-
13
ment for inpatient hospital services, physicians'
14
services, and other services under this title for
15
which payment rates are established under title
16
XVIII of this Act, the Secretary shall adjust
17
the payment rates otherwise established under
18
such title XVIII to take into account differences
19
between the population served under that title
20
and the population served by the State plan or
21
enrolled under health benefit plans under title
22
II of the HealthAmerica Act and such other ap-
23
propriate factors (such as the special circum-
24
stances of hospitals the inpatients of which are
.S 1227 IS
310
1
predominantly children) as the Secretary deems
2
appropriate.
3
"(B) CONSULTATION.-In making adjust-
4
ments under subparagraph (A), the Secretary
5
shall consult with the Prospective Payment As-
6
sessment Commission with respect to inpatient
7
hospital services and with the Physician Pay-
8
ment Review Commission with respect to physi-
9
cians' services.
10
"(b) ALTERNATIVE METHODS.-In issuing regula-
11 tions to establish national reimbursement levels under this
12 section, a State may provide for alternative payment sys-
13 tems that apply rates and methodologies that are not em-
14 ployed in the Federal guidelines described in subsection
15 (a) if such State meets in the aggregate for all health care
16 providers in such State the requirements for national re-
17 imbursement levels described in this section.
18
"(c) PHASE-IN OF MEDICARE RATES.-In lieu of the
19 rates established under the rules described in subsection
20 (a) or (b), the payment of benefits under the State plan
21 for AmeriCare shall be made in the same amounts and
22 on the same basis as payment may be made with respect
23 to comparable medical assistance under title XIX of this
24 Act, and the provisions of such title shall apply to payment
25 of benefits (and provision of services and charges thereon)
.S 1227 IS
311
1 under this title in the same manner as such provisions
2 apply to payment of comparable medical assistance under
3 title XIX of this Act, except as follows:
4
"(1) With respect to prenatal and child delivery
5
benefits and infant care benefits-
6
"(A) 50 percent of the rate differential be-
7
ginning on the first day of the third full calen-
8
dar year after the date of the enactment of this
9
title.
10
"(B) 100 percent of the rate differential
11
beginning on the first day of the fourth full cal-
12
endar year after the date of the enactment of
13
this title.
14
"(2) With respect to benefits described in sec-
15
tion 2102(a)(7) and children outpatient and pediat-
16
ric hospitalization benefits-
17
"(A) 50 percent of the rate differential be-
18
ginning on the first day of the fifth full calen-
19
dar year after the date of the enactment of this
20
title.
21
"(B) 100 percent of the rate differential
22
beginning on the first day of the sixth full cal-
23
endar year after the date of the enactment of
24
this title.
.S 1227 IS
312
1
"(3) With respect to all other benefits described
2
in section 2102-
3
"(A) 50 percent of the rate differential be-
4
ginning on the first day of the seventh full cal-
5
endar year after the date of the enactment of
6
this title.
7
"(B) 100 percent of the rate differential
8
beginning on the first day of the eighth full cal-
9
endar year after the date of the enactment of
10
this title.
11 For purposes of this subsection, the term 'rate differential'
12 means with respect to each benefit the difference between
13 the reimbursement rate as determined under subsection
14 (a) or (b) and the reimbursement rate for comparable
15 medical assistance determined under subsection (c).
16
"(d) No JUDICIAL OR ADMINISTRATION REVIEW.-
17 There shall be no administrative or judicial review of the
18 payment rates or rules under this section (including ad-
19 justments made under this section).
20
"(e) UNIFORM CLAIMS AND BILLING FORM.-Each
21 State plan shall require the use of any Federal Uniform
22 Claims and Billing Form developed by the Federal Health
23 Expenditure Board under section 1180(b). Additional in-
24 formation may be required by the State plan if approved
25 by the Secretary.
S 1227 IS
313
1
"(f) UNIFORM IDENTIFICATION SYSTEM.-Each
2 State plan shall require each health care provider to use
3 the identification number (if any) such provider uses in
4 furnishing services for which payment is made under title
5 XVIII of this Act or such other identification number
6 specified by the Secretary.
7
"(g) MULTI-STATE PROVIDERS.-Each State plan
8 shall allow health care providers participating in
9 AmeriCare to participate under any other State plan for
10 AmeriCare.
11
"QUALITY AND COST-EFFECTIVE CARE MEASURES
12
"SEC. 2106. (a) APPLICATION OF PEER REVIEW OR-
13 GANIZATIONS.-
14
"(1) IN GENERAL.-The Secretary shall ensure
15
that the quality control and peer review activities de-
16
scribed in section 1165 are conducted in the manner
17
prescribed in such section.
18
"(2) ADDITIONAL CRITERIA.-The Administra-
19
tor of the Agency for Health Care Policy and Re-
20
search shall, on an annual basis, and as otherwise
21
determined by the Secretary, advise the Secretary
22
concerning the incorporation of patient outcome
23
measures and practice parameters with respect to
24
care and services furnished under this title in con-
25
junction with the quality control and peer review ac-
26
tivities described in paragraph (1) of this subsection.
.S 1227 IS
314
1
"(b) ALTERNATIVE DELIVERY AND ADMINISTRATIVE
2 SYSTEMS.-A State may enter into a contract with a pri-
3 vate entity or insurer or a State consortium (described
4 under part D of title XI of this Act) to design and imple-
5 ment innovative systems of health care delivery and ad-
6 ministrative systems that meet the standards of this title.
7
"(c) MANAGED CARE.-
8
"(1) IN GENERAL.-Each State plan shall, as
9
part of AmeriCare, provide for managed care plans
10
in accordance with the requirements of this subsec-
11
tion.
12
"(2) REQUIREMENTS.-In providing for man-
13
aged care plans under this subsection, a State shall
14
ensure that-
15
"(A) managed care plans are, to the extent
16
practicable, selected through a competitive se-
17
lection process;
18
"(B) an eligible individual under this title
19
has an option to enroll in any of the managed
20
care plans selected by the State offered by any
21
qualified health care provider (as defined and
22
determined by the Secretary);
23
"(C) an eligible individual who is receiving
24
benefits under a managed care plan, may, not
25
less often than annually, and without cause, ex-
.S 1227 IS
315
1
ercise the option to discontinue receiving bene-
2
fits under the managed care plan and receive
3
coverage under an alternative plan under
4
AmeriCare;
5
"(D) any arrangements for incentive pay-
6
ments for physicians under a managed care
7
plan must comply with requirements for the
8
provision of quality care that the Secretary
9
shall prescribe by regulation, taking into ac-
10
count, at a minimum, quality care guidelines
11
under title XVIII of this Act; and
12
"(E) a managed care plan shall provide for
13
a system of rate assessment and adjustment
14
that minimizes risk selection and segmentation
15
(as defined and determined by the Secretary).
16
"(3) REGULATIONS.-The Secretary shall, not
17
more than 180 days after the date of the enactment
18
of this title, develop and establish by regulation,
19
standards to ensure the quality of care under man-
20
aged care plans under AmeriCare.
21
"(e)
COST
CONTAINMENT
DEMONSTRATION
22 PROJECTS.-
23
"(1) IN GENERAL.-The Secretary shall estab-
24
lish various demonstration projects to enable the
25
States that submit an approved application, to im-
.S 1227 IS
316
1
plement cost management initiatives that promote
2
the effective furnishing of care under this title. Such
3
cost management initiatives shall include:
4
"(A) Programs for contracting with com-
5
munity-based providers (as defined by the Sec-
6
retary).
7
"(B) Financial incentives to encourage the
8
delivery of high quality, cost effective managed
9
care under subsection (d) of this section, includ-
10
ing enhanced payment rates to States with a
11
high percentage of individuals enrolled in man-
12
aged care plans, to the degree such enrollment
13
results in reduced Federal expenditures.
14
"(C) Case management, including case
15
finding and the coordination of social and sup-
16
port services.
17
"(D) Financial incentives to encourage
18
outreach programs.
19
"(E) Financial incentives to encourage the
20
use of cost-effective services.
21
"(F) Measures to encourage an awareness
22
of the costs associated with medical care, in-
23
cluding nominal copayments (as determined by
24
the Secretary) and the advantages of preventive
25
care and other cost-effective types of care.
.S 1227 IS
317
1
The Secretary shall require each State that submits
2
an approved application to develop plans for con-
3
ducting a demonstration project under this para-
4
graph, in accordance with requirements that the
5
Secretary shall establish by regulation.
6
"(2) ENHANCED COVERAGE DEMONSTRATION
7
PROJECTS.-The Secretary may by waiver provide
8
that a State plan for AmeriCare may include as ben-
9
efits under such plan payment for all or part of the
10
cost of services described in section 1915(c) (other
11
than paragraph (3) thereof).
12
"ADMINISTRATION
13
"SEC. 2107. (a) ADMINISTRATION.-
14
"(1) IN GENERAL.-Subject to paragraph (3),
15
each State shall provide for administration of this
16
title in the same manner as it provides for adminis-
17
tration of the plan established under section 1902(a)
18
of this Act. In the administration of this title, the
19
State agency designated under section 2101(a)(1)
20
may delegate or contract with other public or private
21
entities for the administration of the plan for
22
AmeriCare.
23
"(2) NOTIFICATION OF AMERICARE; APPLICA-
24
TION PROCESSING.-Any State that submits an ap-
25
plication approved by the Secretary may contract
26
with private entities or a State agency other than
.S 1227 IS
318
1
the agency designated under section 2101(a)(1) to
2
provide notification of AmeriCare to the residents of
3
the State and process and review applications as re-
4
quired under section 2101(a)(6), and sections
5
2101(b) and 2104(d), respectively.
6
"(3) ELECTION.-A State, with such notice to
7
the Secretary as the Secretary may require, may
8
elect to have this title (insofar as it provides benefits
9
with respect to individuals under section 2101(a)(2))
10
administered with respect to that State by the Secre-
11
tary (or by such agent as the Secretary may desig-
12
nate). The Secretary may not accept such an elec-
13
tion unless the State provides assurances satisfac-
14
tory to the Secretary that the State will make pay-
15
ments to the Secretary toward the cost of imple-
16
menting this title in the same amounts and at the
17
same time as the State would make payments under
18
this title but for the fact of such an election.
19
"(4) MULTI-STATE PROGRAMS.-Subject to the
20
approval of the Secretary, any State may submit a
21
joint plan for AmeriCare along with 1 or more other
22
States to implement a regional administration of 1
23
plan for AmeriCare.
24
"(5) DATA COLLECTION.-Each State shall
25
submit to the Secretary (in such form and manner
.S 1227 IS
319
1
as the Secretary determines) for collection and
2
analysis-
3
"(A) aggregate and per enrollee expendi-
4
tures for each benefit covered under AmeriCare,
5
including categorization by age, race, sex, and
6
income level; and
7
"(B) uniform claims collection (by comput-
8
er) that provide data to assist in the assessment
9
of the amount, type, quality, and location of
10
health care furnished through AmeriCare.
11
"(b) RIGHT To REVIEW DENIED CLAIMS.-
12
"(1) NOTICE.-Each State plan for AmeriCare
13
shall require that the State agency shall provide an
14
individual with written notice concerning the denial
15
of a claim submitted by such individual. Such notice
16
shall include the reasons for such denial.
17
"(2) PROCESS FOR REVIEW.-Each State plan
18
for AmeriCare shall utilize a fair process for the
19
timely review of claims denied under such plan.
20
"(3) CLAIM FOR CARE NEEDED FOR LIFE-
21
THREATENING ILLNESS.-In cases in which the fail-
22
ure to provide health care promptly would be life-
23
threatening or result in a risk of permanent disabil-
24
ity, the AmeriCare beneficiary shall be entitled to a
25
decision as to whether care will be provided under
.S 1227 IS
320
1
AmeriCare not later than 1 day after supplying the
2
State with all requested information. In the event of
3
a denial of coverage for such care, the beneficiary
4
shall be entitled to an expedited review of an appeal
5
of such denial within 5 days.
6
"(4) APPEALS.-Individuals shall be entitled to
7
appeal the denial of a claim submitted by such indi-
8
vidual to the State agency. The Secretary shall pro-
9
mulgate regulations establishing procedures to be
10
utilized for appealing denials of claims under
11
AmeriCare that are similar to the procedures estab-
12
lished under title XVIII of this Act for appealing de-
13
nials of claims under such title XVIII, including the
14
right to a trial de novo.
15
"(c) ADMINISTRATIVE REGULATIONS.-
16
"(1) INCOME DETERMINATION.-The Secretary
17
and the States shall develop and promulgate by reg-
18
ulation a system for the certifying of income and the
19
reporting of changes of income by individuals within
20
an appropriate period of time for the purposes of de-
21
termining the amount of any premiums and
22
copayments under section 2103 and the eligibility
23
for supplemental payments of deductibles and other
24
cost-sharing under section 2104, including the use of
25
the social security identification number in tracking
S 1227 IS
321
1
such changes and verifying the information at least
2
biannually. Such system shall include rules similar
3
to the rules described in paragraphs (2) through (7)
4
of section 2104(e), including a method for making
5
adjustments for any overpayments or underpay-
6
ments of such premiums, copayments, and supple-
7
mental payments.
8
"(2) NOTICE OF SUPPLEMENTAL PAYMENTS.-
9
"(A) IN GENERAL.-The Secretary, in con-
10
sultation with the Secretary of the Treasury,
11
shall, by regulation, require that eàch
12
employer-
13
"(i) provide written notification forms
14
to each employee outlining the availability
15
of
supplemental payments under
16
AmeriCare in the State in which such em-
17
ployee resides as described in section 2104;
18
"(ii) coordinate the distribution of
19
standard Federal application forms de-
20
scribed in section 2104(d) in conjunction
21
with the provision of written notification
22
under paragraph (1);
23
"(iii) carry out the requirements of
24
clauses (i) and (ii) without regard to the
25
level of income of any employee.
.S 1227 IS
322
1
"(B) CONTENTS OF NOTICE.-In promul-
2
gating the regulations described in subpara-
3
graph (A), the Secretary shall require the fol-
4
lowing information to be supplied in the written
5
notification:
6
"(i) Information relating to the avail-
7
ability of supplemental payments on the
8
basis of family income and size (prepared
9
to coordinate with tax filing units or cen-
10
sus information).
11
"(ii) Information concerning the
12
amount of monthly supplemental pay-
13
ments.
14
"(c) FAILURE To PRESCRIBE REGULATIONS.-The
15 failure of the Secretary to prescribe any regulations under
16 this title shall not relieve a State of any responsibility for
17 complying with this title.
18
"DEFINITIONS AND SPECIAL RULES
19
"SEC. 2108. (a) DEFINITIONS.-As used in this title:
20
"(1) CHILD.-The term 'child' means an indi-
21
vidual who-
22
"(A) is under 19 years of age;
23
"(B) is under 23 years of age and a full-
24
time student; or
25
"(C) is, regardless of age, unmarried, de-
26
pendent, and incapable of self-support as a re-
.S 1227 IS
323
1
sult of a mental or physical disability that exist-
2
ed prior to the individual reaching 22 years of
3
age.
4
"(2) EMPLOYEE.-The term 'employee' has the
5
meaning given such term under section 2713(a)(2)
6
of the Public Health Service Act.
7
"(3) EMPLOYER.-The term 'employer' has the
8
meaning given such term under section 2713(a)(3)
9
of the Public Health Service Act.
10
"(4) FAMILY.-The term 'family' means an in-
11
dividual, and any spouse or child of an individual. In
12
determining if any individual is a child of another
13
individual, rules similar to the rules of section
14
152(b)(2) of the Internal Revenue Code of 1986
15
shall apply.
16
"(5) HEALTH CARE PROVIDER.-The term
17
'health care provider' means any entity or person eli-
18
gible to receive payments under titles XVIII and
19
XIX of this Act.
20
"(6) MANAGED CARE PLAN.-
21
"(A) MANAGED CARE PLAN.-The term
22
'managed care plan' means a health benefit
23
plan (as defined in section 1182(1)-
24
"(i) in which the insurer-
S 1227 IS---11
324
1
"(I) utilizes explicit standards for
2
the selection and recertification of
3
participating providers;
4
"(II) has organizational arrange-
5
ments, established in accordance with
6
regulations of the Secretary, for an
7
ongoing quality assurance program
8
for its health services, which program
9
(aa) stresses health outcomes, and
10
(bb) provides review by physicians and
11
other health professionals of the proc-
12
ess followed in the provision of health
13
services; and
14
(III) contains significant incen-
15
tives to use the participating providers
16
and procedures provided for by the
17
plan; and
18
'(ii) which, if it limits coverage of
19
services to those provided by participating
20
providers or permits deductibles and coin-
21
surance with respect to basic health serv-
22
ices provided by persons who are not par-
23
ticipating providers which are in excess of
24
those permitted under health benefit
25
plans—
.S 1227 IS
325
1
"(I) has a sufficient number and
2
distribution of participating providers
3
to assure that all covered items and
4
services are (aa) available and accessi-
5
ble to each enrollee, within the area
6
served by the plan, with reasonable
7
promptness and in a manner which
8
assures continuity, and (bb) when
9
medically necessary, available and ac-
10
cessible twenty-four hours a day and
11
seven days a week; and
12
"(II) provides benefits for cov-
13
ered items and services not furnished
14
by participating providers if the items
15
and services are medically necessary
16
and immediately required because of
17
an unforeseen illness, injury, or condi-
18
tion.
19
"(B) MANAGED CARE ENTITY.-The term
20
'managed care entity' means an insurer, health
21
maintenance organization, preferred provider
22
organization, dental plan organization, or other
23
entity licensed to do business in a State, that
24
markets managed care plans to groups or indi-
25
viduals or an employer, labor union, or other
.S 1227 IS
326
1
State licensed entity that provides managed
2
care plans for its employees or members.
3
"(C) PARTICIPATING PROVIDER.-The
4
term 'participating provider' means a physician,
5
hospital, health maintenance organization,
6
pharmacy, laboratory, or other appropriately li-
7
censed provider of health care services or sup-
8
plies, that has entered into an agreement with
9
a managed care entity to provide such services
10
or supplies to a patient enrolled in a managed
11
care plan.
12
"(D) UTILIZATION REVIEW.-The term
13
'utilization review' means a program for review-
14
ing the necessity and appropriateness of health
15
care services provided or proposed to be provid-
16
ed to a patient.
17
"(7) MENTAL DISORDER.-The term 'mental
18
disorder' has the same meaning given such term in
19
the International Classification of Diseases, 9th Re-
20
vision, Clinical Modification.
21
"(8) NEAR-POVERTY FAMILY.-The term 'near-
22
poverty family' means a family whose income equals
23
or exceeds 100 percent of the income official poverty
24
line (as described in paragraph (1)), but is less than
25
200 percent of such income official poverty line.
.S 1227 IS
327
1
"(9) PART-TIME EMPLOYEE.-The term 'part-
2
time employee' has the meaning given such term
3
under section 2713(a)(2)(G) of the Public Health
4
Service Act.
5
"(10) SPECIAL ELIGIBILITY INDIVIDUALS.-The
6
term 'special eligibility individual' means an individ-
7
ual who on the date of application for benefits under
8
AmeriCare is-
9
"(A) a member of an under-poverty family;
10
or
11
"(B) would have qualified for assistance
12
under title IV of this Act or for medical assist-
13
ance in the State of the individual's residence
14
under title XIX of this Act (as in effect on the
15
date of the enactment of this title);
16
"(C) or both.
17
"(11) STATE.-The term 'State' means the 50
18
States and the District of Columbia.
19
"(12) UNDER-POVERTY FAMILY.-The term
20
'under-poverty family' means a family whose income
21
is less than 100 percent of the income official pover-
22
ty line (as defined by the Office of Management and
23
Budget, and revised annually in accordance with sec-
24
tion 673(2) of the Omnibus Budget Reconciliation
.S 1227 IS
328
1
Act of 1981) applicable to a family of the size in-
2
volved.
3
"(b) DETERMINATIONS OF INCOME.-For the pur-
4 poses of this title-
5
"(1) IN GENERAL.-The term 'income' means-
6
"(A) adjusted gross income (as defined in
7
section 62(a) of the Internal Revenue Code of
8
1986), determined without the application of
9
paragraphs (6) and (7) of such section and
10
without the application of section 162(1) of such
11
Code, plus
12
"(B) the amount of social security benefits
13
(described in section 86(d) of such Code) which
14
is not includable in gross income under section
15
86 of such Code.
16
"(2) FAMILY INCOME.-The term 'family in-
17
come' means, with respect to an individual, the sum
18
of the income for the individual and all the other
19
family members.
20
"(3) FAMILY SIZE.-The family size to be ap-
21
plied under this title, with respect to family income,
22
is the number of individuals included in the family
23
for purposes of coverage of basic health benefits
24
under AmeriCare or under a health benefit plan (as
25
the case may be).
oS 1227 IS
329
1
"(4) TIMING OF DETERMINATION.-Income
2
shall be determined in accordance with one of the
3
following methods, at the option of the applicant, for
4
coverage under this title:
5
"(A) Multiplying by a factor of 4 the fami-
6
ly income of the applicant for the 3-month peri-
7
od immediately preceding the month in which
8
the application for coverage under this title is
9
made.
10
"(B) Determining the family income of the
11
applicant for the month in which the applica-
12
tion for such coverage is made.
13
"PAYMENT TO STATES
14
"SEC. 2109. (a) IN GENERAL.-The Secretary shall
15 pay to each State which has a plan approved under this
16 title, for each quarter, beginning with the quarter com-
17 mencing January 1, 1992-
18
"(1) an amount equal to the Federal insurance
19
assistance percentage of the total amount expended
20
during such quarter for benefits and supplemental
21
payments under the State plan; plus
22
"(2) an amount equal to the administrative per-
23
centage of so much of the sums expended during
24
such quarter as found necessary by the Secretary for
25
the proper and efficient administration of the State
26
plan.
.S 1227 IS
330
1
"(b) FEDERAL INSURANCE ASSISTANCE PERCENT-
2 AGE.-
3
"(1) IN GENERAL.-For purposes of subsection
4
(a)(1), the Federal insurance assistance percentage
5
for any State shall be 100 percent less the State
6
percentage.
7
"(2) STATE PERCENTAGE.-The State percent-
8
age for any State shall be equal to-
9
"(A) the State percentage determined
10
under section 1905(b), minus
11
"(B) the applicable percentage of such
12
State percentage.
13
"(c) ADMINISTRATIVE PERCENTAGE.-For purposes
14 of subsection (a)(2), the administrative percentage for any
15 State shall be-
16
"(1) 50 percent, plus
17
"(2) the applicable percentage of 50 percent.
18
"(d) APPLICABLE PERCENTAGE.-For purposes of
19 this section, the term 'applicable percentage' means in the
20 case of each quarter in the following full calendar years
21 beginning after the date of the enactment of this title, the
22 following percentage:
Applicable
"Calendar year:
Percentage:
2nd
20
3rd
20
4th
15
5th
10
6th
5.
.S 1227 IS
331
1
"AMERICARE TRUST FUND
2
"SEC. 2110. (a) CREATION OF TRUST FUND.-There
3 is established in the Treasury of the United States a trust
4 fund to be known as the 'AmeriCare Trust Fund' (hereaf-
5 ter in this section referred to as the 'Fund'), consisting
6 of such gifts and bequests as may be made and such
7 amounts as may be credited to the Fund under this sec-
8 tion.
9
"(b) TRANSFERS TO FUND.-
10
"(1) IN GENERAL.-There are hereby appropri-
11
ated to the Fund amounts equivalent to the net rev-
12
enues received in the Treasury from-
13
"(A) contributions required by section
14
3601 of the Internal Revenue Code of 1986,
15
"(B) contributions made under section
16
2723(c)(2) of the Public Health Service Act,
17
"(C) AmeriCare premiums (as defined in
18
section 2104(6)) collected by employers on be-
19
half of employees, and
20
"(D) penalties collected under section 2732
21
of the Public Health Service Act.
22
"(2) TRANSFERS BASED ON ESTIMATES.-The
23
amounts appropriated by subparagraphs (A), (B),
24
and (C) shall be transferred from time to time (not
25
less frequently than monthly) from the general fund
.S 1227 IS
332
1
in the Treasury to the Fund, such amounts to be de-
2
termined on the basis of estimates by the Secretary
3
of the Treasury of the amounts, specified in such
4
subparagraphs, paid to or deposited into the Treas-
5
ury; and proper adjustments shall be made in
6
amounts subsequently transferred to the extent prior
7
estimates were in excess of or were less than the
8
amounts specified in such subparagraphs.
9
"(c) APPROPRIATION OF ADDITIONAL Sums.-There
10 are hereby authorized to be appropriated to the Fund such
11 additional sums as may be required to make expenditures
12 referred to in subsection (d).
13
"(d) EXPENDITURES FROM FUND.-
14
"(1) IN GENERAL.-For the purpose of estab-
15
lishing a public program to provide health insurance
16
coverage to be known as 'AmeriCare', there are au-
17
thorized and appropriated for each fiscal year from
18
the Fund a sum sufficient to carry out the purpose
19
of this title. The sums made available under this
20
paragraph shall be used for making payments under
21
section 2109 to States that have submitted, and had
22
approved by the Secretary, a State plan for
23
AmeriCare.
24
"(2) ALLOCATIONS.-Amounts described in
25
subsection (b)(1) shall be allotted to each State
.S 1227 IS
333
1
under paragraph (1) on the basis of amounts re-
2
ceived in the Fund with respect to employees resid-
3
ing in such State.
4
"(3) ADDITIONAL FUNDS FOR ADMINISTRATIVE
5
EXPENSES.-Amounts in the Fund shall be avail-
6
able, as provided in appropriation Acts, for the ex-
7
penses of the Health Care Financing Administration
8
or any other Federal agency designated by the Sec-
9
retary in administering the provisions of this title.
10
"(e) INCORPORATION OF TRUST FUND PROVI-
11 SIONS.-The provisions of subsections (b) through (i) of
12 section 1841, as in effect on the day before the date of
13 the enactment of this title, shall apply to the Fund in the
14 same manner as such provisions apply to the Federal Sup-
15 plemental Medical Insurance Trust Fund, except that any
16 reference to the Secretary of Health and Human Services
17 or the Administrator of the Health Care Financing Ad-
18 ministration shall be deemed a reference to the Secretary
19 of Health and Human Services.".
20
(b) ADMINISTRATIVE AND JUDICIAL REVIEW OF
21 CERTAIN ADMINISTRATIVE DETERMINATIONS.-Section
22 1116 of the Social Security Act (42 U.S.C. 1316) is
23 amended-
24
(1) by striking "or XIX" each place it appears
25
and inserting "XIX, or XXI", and
.S 1227 IS
334
1
(2) by striking "or 1904" in subsection (a)(3)
2
and inserting "1904, or 2101(a)(14)".
3
(c) UTILIZATION AND QUALITY CONTROL PEER RE-
4 VIEW ORGANIZATIONS.-Title XI of the Social Security
5 Act (42 U.S.C. 1301 et seq.) is amended by adding at
6 the end the following new section:
7
"REVIEW OF AMERICARE UNDER TITLE XXI
8
"SEC. 1165. (a) REVIEW OF AMERICARE UNDER
9 TITLE XXI.-The Secretary shall provide, by regulation,
10 for reviews of the programs under title XXI of this Act
11 by utilization and quality control peer review organizations
12 to be carried out in a similar manner as provided under
13 this part for review of programs under title XVIII of this
14 Act.
15
"(b) CLINICAL PRACTICE GUIDELINES.-In provid-
16 ing for the review of programs under title XXI of this Act
17 as described in subsection (a), the Secretary shall, in con-
18 sultation with recognized experts in the field of utilization
19 and quality control review, ensure that, to the extent prac-
20 ticable, the reviews conducted under this section take into
21 consideration clinical practice guidelines, (including guide-
22 lines for clinical practice and other standards developed
23 by the Advisory Council for Health Care Policy, Research,
24 and Evaluation pursuant to section 921 of the Public
25 Health Service Act (42 U.S.C. 299b-1)).".
oS 1227 IS
335
1
(d) CALCULATION OF FEDERAL INSURANCE ASSIST-
2 ANCE PERCENTAGE APPLICABLE TO TITLE XXI.-
3
(1) IN GENERAL.-The Secretary of Health and
4
Human Services (hereafter in this subsection re-
5
ferred to as the "Secretary"), in consultation with
6
the chief executives of the States, shall develop rec-
7
ommendations for the calculation of a specific Fed-
8
eral insurance assistance percentage applicable to
9
coverage furnished under title XXI of the Social Se-
10
curity Act (as added by this Act). In a recommended
11
formula for the determination of such Federal insur-
12
ance assistance percentage, the Secretary shall con-
13
sider factors related to the following:
14
(A) Levels of employment.
15
(B) The population of individuals covered
16
under AmeriCare under such title XXI.
17
(C) Poverty levels.
18
(D) Economic conditions.
19
(E) The distribution of urban and rural
20
populations.
21
(F) Health indicators, such as infant mor-
22
tality.
23
(2) EMERGENCY FUND.-The Secretary shall
24
develop recommendations for the creation of an
25
emergency fund to fund certain benefits under title
.S 1227 IS
336
1
XXI of the Social Security Act (as added by this
2
Act) in the event a State experiences changes in eco-
3
nomic conditions or other conditions that the Secre-
4
tary determines to necessitate emergency funding.
5
(3) REPORT.-Upon completion of the recom-
6
mendations described in paragraphs (1) and (2), the
7
Secretary shall submit a report to the appropriate
8
committees of the Congress that includes such rec-
9
ommendations.
10
(e) REDUCTION IN PAYMENT FOR HOSPITALS RE-
11 CEIVING A DISPROPORTIONATE SHARE ADJUSTMENT.-
12
(1) IN GENERAL.-Notwithstanding any other
13
provision of law, the Secretary of Health and
14
Human Services (hereafter in this subsection re-
15
ferred to as the "Secretary") shall for discharges oc-
16
curring on or after the first day of the second full
17
calendar year after the date of the enactment of this
18
Act provide for a reduction in the payment of the
19
disproportionate share adjustment percentage speci-
20
fied in section 1886(d)(5)(F) of the Social Security
21
Act by 1/4 (1/2, with respect to discharges occurring
22
on or after the first day of the seventh such full cal-
23
endar year) of what the payments to hospitals under
24
such provision would have been but for the enact-
25
ment of this subsection.
.S 1227 IS
337
1
(2) APPLICATION FOR EXCEPTION.-
2
(A) IN GENERAL.-The Secretary shall,
3
notwithstanding paragraph (1), provide for pay-
4
ment of the full disproportionate share adjust-
5
ment percentage specified in section
6
1886(d)(5)(F) of the Social Security Act in any
7
case in which a hospital applies to the Secretary
8
for an exception from the reduction specified in
9
paragraph (1) and it is determined by the Sec-
10
retary that such hospital shall receive payments
11
resulting from the enactment of title VI of this
12
Act that are less than 200 percent of the
13
amount of reduction of payments specified in
14
paragraph (1) to such hospital.
15
(B) DETERMINATION CRITERIA.-In mak-
16
ing a determination under subparagraph (A)
17
the Secretary shall consider-
18
(i) the number of patients served by a
19
hospital that are underinsured or unin-
20
sured and the costs to the hospital of pro-
21
viding services to such patients in the first
22
full calendar year after the date of the en-
23
actment of this Act; and
24
(ii) such other relevant factors as the
25
Secretary determines appropriate.
.S 1227 IS
338
1
(C) CONSIDERATION OF APPLICATION.-In
2
the case of a hospital that submits an applica-
3
tion to the Secretary under this subsection at
4
least 6 months before the first day of the sec-
5
ond full calendar year after the date of the en-
6
actment of this Act, the Secretary shall make a
7
determination with regard to such application
8
prior to such first day. With respect to all other
9
applications submitted to the Secretary under
10
this subsection the Secretary shall make a de-
11
termination with respect to such application no
12
later than 6 months after the date of receipt of
13
such application.
14
(D) APPEAL OF DETERMINATION.-A hos-
15
pital submitting an application to the Secretary
16
under this subsection may appeal a determina-
17
tion by the Secretary to the Provider Reim-
18
bursement Review Board established under sec-
19
tion 1878 of the Social Security Act and the
20
provisions of such section shall apply to any
21
such appeal.
22
(f) COORDINATION WITH TITLE XIX-Title XIX of
23 the Social Security Act (42 U.S.C. 1396 et seq.) is amend-
24 ed by adding at the end the following new section:
.S 1227 IS
339
1
"COORDINATION WITH TITLE XXI
2
"SEC. 1930. (a) The provision of medical assistance
3 under this title shall not apply to any individual eligible
4 for coverage under AmeriCare under title XXI of this Act.
5
"(b) The Secretary shall, by regulation, provide for
6 appropriate coordination of this title with title XXI of this
7 Act.".
8
(g) INCREASE IN TITLE XIX CAP FOR TERRITO-
9 RIES.-Subsection (c) of section 1108 of the Social Securi-
10 ty Act (42 U.S.C. 1308) is amended by adding at the end
11 thereof the following new flush sentence:
12 "Notwithstanding the preceding sentence, for each fiscal
13 year beginning after the date of the enactment of the
14 HealthAmerica Act each amount under subclause (C) of
15 each clause of such sentence shall be increased by the
16 AmeriCare percentage increase for the preceding fiscal
17 year. For purposes of the preceding sentence, the
18 AmeriCare percentage increase equals the percentage in-
19 crease (if any) in the total Federal program costs of title
20 XXI of this Act over such costs of title XIX of this Act
21 (as determined in the fiscal year preceding the effective
22 date of the HealthAmerica Act) for all States."
23
(h) EFFECTIVE DATE.-The amendments made by
24 this title shall take effect on the first day of the second
25 full calendar year beginning after the date of the enact-
.S 1227 IS
340
1 ment of this Act, without regard to whether regulations
2 to implement such amendments are promulgated by such
3 day.
4
TITLE VII-DEVELOPMENT OF
5
HEALTH SERVICE CAPACITY
6 SEC. 701. GRANTS FOR EXPANSION OF AVAILABILITY OF
7
PRIMARY CARE SERVICES.
8
Part D of title III of the Public Health Service Act
9 (42 U.S.C. 254b et seq.) is amended by adding at the end
10 thereof the following new subpart:
11
"Subpart V-Emergency Health Care Grant
12
Programs
13 "SEC. 340D. GRANTS FOR EXPANSION OF AVAILABILITY OF
14
PRIMARY CARE SERVICES.
15
"(a) IN GENERAL.-The Secretary shall award
16 grants to eligible entities to expand the availability of com-
17 prehensive primary health services (as defined in section
18 330(b)(1)) in medically underserved areas.
19
"(b) ELIGIBILITY.-To be eligible to receive a grant
20 under this section an entity shall-
21
"(1) be-
22
"(A) a migrant or community health cen-
23
ter that receives assistance under section 329
24
or 330;
.S 1227 IS
341
1
"(B) be an entity that meets the require-
2
ments of section 329(a) of 330(a) for being a
3
migrant or community health center, though
4
not a recipient of a grant under either of such
5
sections;
6
"(C) be an entity that does not meet the
7
requirements of section 329(a) or 330(a) for
8
being a migrant or community health center,
9
but that provides assurances satisfactory to the
10
Secretary, including subsequent demonstrable
11
evidence, that such entity will meet the require-
12
ments of either such section not later than 2
13
years after receiving a grant under this section;
14
or
15
"(D) be an entity that is eligible for a
16
planning grant under sections 329(c) or 330(c);
17
and
18
"(2) prepare and submit to the Secretary an
19
application at such time, in such manner, and con-
20
taining such information as the Secretary may re-
21
quire.
22
"(c) REVIEW OF APPLICATIONS; PRIORITY.-
23
"(1) REVIEW.-The Secretary shall develop a
24
process and timetable for reviewing applications sub-
25
mitted under subsection (b)(2) to assure that, to the
.S 1227 IS
342
1
extent practicable, all amounts appropriated under
2
this section are awarded not later than 180 days
3
after the beginning of each fiscal year.
4
"(2) PRIORITY.-In awarding grants under this
5
section, the Secretary shall give priority to-
6
"(A) applicants that will use amounts re-
7
ceived under such grant to provide services in
8
areas with the greatest need for such services
9
and in which the demand for such services can
10
be expected to increase after the implementa-
11
tion of the HealthAmerica Act;
12
"(B) applicants with a demonstrated abili-
13
ty to expand their operations in the most effi-
14
cient manner;
15
"(C) applicants that are migrant or com-
16
munity health centers receiving assistance
17
under section 329 or 330, that propose to use
18
amounts received under such grants to expand
19
their operations, including expansion to new
20
sites, to serve high impact areas (as defined in
21
section 329(a)(5)) or medically underserved
22
populations (as defined in section 330(b)(3)),
23
that are not currently being served;
24
"(D) applicants that do not receive assist-
25
ance under section 329 or section 330, but that
.S 1227 IS
343
1
meet all requirements to receive funds under ei-
2
ther of such sections, including, for the purpose
3
of planning the establishment of new centers in
4
areas of high need, entities eligible for planning
5
grants under sections 329(c) and 330(c).
6
"(3) SECONDARY PRIORITY.-The Secretary
7
shall give secondary priority in awarding grants
8
under this section to applicants that-
9
"(A) propose to meet the requirements of
10
section 329 or 330 within 2 years after the date
11
on which the application is submitted; and
12
"(B) are serving or propose to serve such
13
populations or areas that are not currently
14
being served or have a proposal for such service
15
pending.
16
"(d) USE OF AMOUNTS.-An entity receiving a grant
17 under this section shall use amounts received under such
18 grant to expand the availability of comprehensive primary
19 health services (as defined in section 330(b)(1)) in medi-
20 cally underserved or high impact areas.
21
"(e) REIMBURSEMENT FROM OTHER SOURCES.-
22
"(1) IN GENERAL.-An entity receiving a grant
23
under this section shall use any and all reimburse-
24
ments received from other sources for services pro-
25
vided by such entity to-
.S 1227 IS
344
1
"(A) compensate for the unreimbursed
2
costs of providing services to patients;
3
"(B) expand the amounts and types of
4
services furnished;
5
"(C) serve additional patients or areas; or
6
"(D) promote the recruitment, training, or
7
retention of personnel.
8
"(2) RETURN OF UNUSED AMOUNTS.-Any
9
amounts of the reimbursements referred to in para-
10
graph (1) that are not used for the purposes de-
11
scribed in such paragraph shall be returned to the
12
Secretary, either directly or through adjustments in
13
future grants, and shall be used by the Secretary to
14
make additional or expanded grants under this sec-
15
tion without regard to appropriations under subsec-
16
tion (h).
17
"(f) FAILURE TO COMPLY.-
18
"(1) TERMINATION OF PAYMENTS.-In the case
19
of an entity that receives a grant under this section
20
and fails to comply with the requirements of this
21
section, the Secretary shall, after providing such en-
22
tity with appropriate notice and an opportunity for
23
a hearing, terminate the payment of amounts under
24
such grant to such entity. The Secretary may termi-
.S 1227 IS
345
1
nate grants to entities that fail to demonstrate good
2
faith efforts to meet the requirements of this section.
3
"(2) ADDITIONAL POWERS OF THE SECRE-
4
TARY.-In addition to terminating payments under
5
paragraph (1), the Secretary may-
6
"(A) sell any property acquired by the en-
7
tity with amounts received under the grant, or
8
transfer such property to another entity receiv-
9
ing such a grant; and
10
"(B) recoup (to the extent practicable) as-
11
sistance previously provided to the entity under
12
this section.
13
"(3) INELIGIBILITY FOR FUTURE GRANTS.-If
14
an entity that is not in compliance with the require-
15
ments of this section may be granted a 2-year exten-
16
sion to meet such requirements. If at the end of
17
such 2-year period the entity has failed to comply
18
with such requirements, that entity shall be ineligi-
19
ble for further grants under this section.
20
"(g) ADMINISTRATION.-Not more than 10 percent
21 of the amounts made available under this section may be
22 used for administrative purposes. The costs of administra-
23 tion include-
24
"(1) the cost of providing, either directly or by
25
grant or contract to nonprofit private entities that
.S 1227 IS
346
1
represent the recipients of grants under this section,
2
for the identification of areas and populations eligi-
3
ble for assistance under this section; and
4
"(2) the provision of technical assistance to en-
5
tities for the planning, development and operation of
6
the service delivery systems supported under this
7
section.
8
"(h) AUTHORIZATION OF APPROPRIATIONS.-
9
"(1) IN GENERAL.-There are authorized to be
10
appropriated and there are appropriated to carry out
11
this section-
12
"(A) $58,000,000 for fiscal year 1992;
13
"(B) $166,000,000 for fiscal year 1993;
14
"(C) $266,000,000 for fiscal year 1994;
15
"(D) $350,000,000 for fiscal year 1995;
16
and
17
"(E) $426,000,000 for fiscal year 1996.
18
"(2) REPORT.-Not later than September 30,
19
1995, the Secretary shall prepare and submit to the
20
appropriate committees of Congress a report con-
21
cerning the need for further migrant and community
22
health center primary care service capacity develop-
23
ment and recommendations concerning the appropri-
24
ate level of support needed for activities to address
25
such capacity development.
.S 1227 IS
347
1
"(3) ADDITIONAL AMOUNTS.-Amounts provid-
2
ed under this section shall be in addition to any
3
amounts appropriated under sections 329 and 330.".
4
TITLE VIII-EFFECTIVE DATE
5 SEC. 801. EFFECTIVE DATE.
6
(a) GENERAL RULE.-Except as otherwise provided
7 in this section, titles I and II of this Act shall take effect
8 on January 1 of the second full year that begins after the
9 date of the enactment of this Act.
10
(b) EXISTING PLANS.-In the case of an employer
11 that, on the date of the enactment of this Act, has in effect
12 a health insurance plan covering the employees of such
13 employer, the amendments made by titles I and II shall
14 not apply to such employer until the date described in sub-
15 section (a) or the first day of the second full year after
16 the date of the enactment of this Act, whichever is later.
17
(c) STATE AND LOCAL GOVERNMENTS.-In the case
18 of an employer whose revenue is raised by a taxing author-
19 ity, a health insurance plan covering the employees of such
20 employer shall not be required to meet the requirements
21 of part B of title XXVII of the Public Health Service Act
22 until the first day of the third full year after the date of
23 the enactment of this Act. During the period beginning
24 on the effective date prescribed under subsections (a) and
25 (b) and ending on the first day of such third full plan
.S 1227 IS
348
1 year, employee participation in such plan shall be volun-
2 tary unless otherwise required by the plan.
3 SEC. 802. POLICY RESPECTING ADDITIONAL BENEFITS.
4
(a) IN GENERAL.-After the date of the enactment
5 of this Act, no employer shall be required under part B
6 of title XXVII of the Public Health Service Act to provide
7 any health benefit in addition to the benefits required to
8 be provided under section 2721(a) of such Act (as in effect
9 on the date of the enactment of this Act) unless-
10
(1) such additional health benefit is for a serv-
11
ice that the AmeriCare plans (under title XXI of the
12
Social Security Act) are required to cover; and
13
(2) before the enactment of such requirement,
14
the benefits and costs of requiring the provision of
15
such additional health benefit have been analyzed
16
and considered by Congress.
17
(b) REPORTS.-
18
(1) IN GENERAL.-In carrying out subsection
19
(a)(2) with respect to the consideration of a pro-
20
posed additional health benefit, Congress shall re-
21
quest a report from the Institute of Medicine of the
22
National Academy of Sciences or a public or non-
23
profit entity with expertise relating to health bene-
24
fits. Any such report shall-
.S 1227 IS
349
1
(A) analyze and summarize such proposed
2
additional health benefit; and
3
(B) contain an estimate of the economic
4
and health impacts of such proposed additional
5
health benefit.
6
(2) CONSULTATION.-Any such report shall be
7
prepared in consultation with interested members of
8
the public and with individuals and entities having
9
expertise with respect to such proposed additional
10
health benefit.
O
.S 1227 IS
II
102D CONGRESS
1ST SESSION
S.700
To amend the Internal Revenue Code of 1986 to impose an excise tax
on insurance companies not meeting certain requirements with respect
to health insurance provided to small employers.
IN THE SENATE OF THE UNITED STATES
MARCH 20 (legislative day, FEBRUARY 6), 1991
Mr. DURENBERGER (for himself, Mr. MCCAIN, Mr. WALLOP, and Mr. JEF-
FORDS) 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 impose
an excise tax on insurance companies not meeting certain
requirements with respect to health insurance provided
to small employers.
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 "American Health Secu-
5 rity Act of 1991".
2
1 SEC. 2. FAILURE TO SATISFY CERTAIN STANDARDS FOR
2
HEALTH INSURANCE PROVIDED TO SMALL
3
EMPLOYERS.
4
(a) IN GENERAL.-Chapter 47 of the Internal Reve-
5 nue Code of 1986 (relating to excise taxes on qualified
6 pension, etc. plans) is amended by adding at the end
7 thereof the following new subchapter:
8
"Subchapter B-Health Insurance Provided
9
to Small Employers
"Sec. 5000A. Failure to satisfy standards for health insurance of
small employers.
"Sec. 5000B. General issuance requirements.
"Sec. 5000C. Specific contractual requirements.
"Sec. 5000D. State compliance agreements.
"Sec. 5000E. Definitions and other rules.
10 "SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS
11
FOR HEALTH INSURANCE OF SMALL EMPLOY-
12
ERS.
13
"(a) GENERAL RULE.-In the case of any person is-
14 suing applicable accident and health insurance contracts,
15 there is hereby imposed a tax on the failure of such person
16 to meet at any time during any taxable year-
17
"(1) the general issuance requirements of sec-
18
tion 5000B, or
19
"(2) the specific contractual requirements of
20
section 5000C.
21
"(b) AMOUNT OF TAX.-
.S 700 IS
3
1
"(1) IN GENERAL.-The amount of tax imposed
2
by subsection (a) by reason of 1 or more failures
3
during a taxable year shall be equal to 20 percent
4
of the gross premiums received during such taxable
5
year with respect to all accident and health insur-
6
ance contracts issued by the person on whom such
7
tax is imposed.
8
"(2) GROSS PREMIUMS.-For purposes of para-
9
graph (1), gross premiums shall include any consid-
10
eration received with respect to any accident and
11
health insurance contract.
12
"(c) LIMITATION ON TAX.-
13
"(1) TAX NOT TO APPLY WHERE FAILURE NOT
14
DISCOVERED EXERCISING REASONABLE DILI-
15
GENCE.-No tax shall be imposed by subsection (a)
16
with respect to any failure for which it is established
17
to the satisfaction of the Secretary that the person
18
on whom the tax is imposed did not know, or exer-
19
cising reasonable diligence would not have known,
20
that such failure existed.
21
"(2) TAX NOT TO APPLY WHERE FAILURES
22
CORRECTED WITHIN 30 DAYS.-No tax shall be im-
23
posed by subsection (a) with respect to any failure
24
if-
.S 700 IS
4
1
"(A) such failure was due to reasonable
2
cause and not to willful neglect, and
3
"(B) such failure is corrected during the
4
30-day period beginning on the 1st date any of
5
the persons on whom the tax is imposed knew,
6
or exercising reasonable diligence would have
7
known, that such failure existed.
8
"(3) WAIVER BY SECRETARY.-In the case of a
9
failure which is due to reasonable cause and not to
10
willful neglect, the Secretary may waive part or all
11
of the tax imposed by subsection (a).
12
"(d) LIABILITY FOR TAx.-The person issuing the
13 applicable accident and health contract with respect to
14 which a failure occurs shall be liable for the tax imposed
15 by subsection (a).
16 "SEC. 5000B. GENERAL ISSUANCE REQUIREMENTS.
17
"(a) GENERAL RULE.-The requirements of this sec-
18 tion are met if a person meets-
19
"(1) the mandatory policy requirements of sub-
20
section (b), and
21
"(2) the guaranteed issue requirements of sub-
22
section (c).
23
"(b) MANDATORY POLICY REQUIREMENTS.-
24
"(1) IN GENERAL.-The requirements of this
25
subsection are met if any person issuing accident
.S 700 IS
5
1
and health contracts to any eligible small employers
2
makes available to such eligible small employers-
3
"(A) an accident and health contract which
4
provides benefits which are identical to the ben-
5
efits under the core Medplan described in sub-
6
section (d), and
7
"(B) an accident and health contract
8
which provides benefits which are identical to
9
the benefits under the standard Medplan de-
10
scribed in subsection (d).
11
A person shall not be treated as failing to meet the
12
requirements of this paragraph if the deductible and
13
copayment requirements are less than those in the
14
core or standard Medplan.
15
"(2) PRICING AND MARKETING REQUIRE-
16
MENTS.-The requirements of paragraph (1) are not
17
met unless-
18
"(A) the price at which the contract de-
19
scribed in paragraph (1) is made available is
20
not greater than the price for such contract de-
21
termined on the same basis as prices for other
22
accident and health contracts within the same
23
class of business made available by the person
24
to eligible small employers, and
.S 700 IS
6
1
"(B) such contract is made available to eli-
2
gible small employers using at least the market-
3
ing methods and other sales practices which are
4
used in selling such other contracts.
5
"(c) GUARANTEED ISSUE.-
6
"(1) IN GENERAL.-The requirements of this
7
subsection are met if the person offering applicable
8
accident and health insurance contracts to eligible
9
small employers issues such contracts to any eligible
10
small employer seeking to enter into such a contract.
11
"(2) FINANCIAL CAPACITY EXCEPTION.-Para-
12
graph (1) shall not require any person to issue a
13
contract to the extent that the issuance of such con-
14
tract would result in such person violating the finan-
15
cial solvency standards (if any) established by the
16
State in which such contract is to be issued.
17
"(3) EXCEPTIONS FOR CERTAIN EMPLOYERS.-
18
Paragraph (1) shall not apply to a failure to issue
19
a contract to an eligible small employer if-
20
"(A) such employer is unable to pay the
21
premium for such contract, or
22
"(B) in the case of an eligible employer
23
with fewer than 15 employees, such employer
24
fails to enroll at least 60 percent of the employ-
.S 700 IS
7
1
er's eligible employees for coverage under such
2
contract.
3
"(d) MEDPLAN.-For purposes of this section-
4
"(1) CORE MEDPLAN.-The term 'core
5
Medplan' means an accident and health plan which
6
provides the core benefits described in paragraph
7
(3).
8
"(2) STANDARD MEDPLAN.-The term 'stand-
9
ard Medplan' means an accident and health plan
10
which provides-
11
"(A) the core benefits described in para-
12
graph (3), and
13
"(B) the supplemental benefits described
14
in paragraph (4).
15
"(3) CORE BENEFITS.-The term 'core benefits'
16
means benefits for any of the following which are de-
17
termined to be medically necessary:
18
"(A) Inpatient and outpatient hospital
19
services.
20
"(B) Inpatient and outpatient surgical
21
services.
22
"(C) Inpatient and outpatient physicians'
23
services.
24
"(D) Diagnostic and screening services.
25
(E) Prenatal care.
.S 700 IS
8
1
"(F) Ambulance services.
2
"(G) Durable medical equipment.
3
Such term does not include a supplemental benefit.
4
"(4) SUPPLEMENTAL BENEFITS.-The term
5
'supplemental benefits' means benefits—
6
"(A) for inpatient or outpatient treatment
7
for a mental disorder, or
8
"(B) for inpatient and outpatient treat-
9
ment of a chemical dependency disorder.
10
"(5) DEDUCTIBLES AND COPAYMENTS.-A plan
11
shall not be treated as providing the benefits de-
12
scribed in paragraphs (3) and (4) unless the fol-
13
lowing requirements are met:
14
"(A) The plan does not require-
15
"(i) a deductible amount for any plan
16
year in excess of $500 per individual and
17
$1,000 per family, and
18
"(ii) a deductible amount for any plan
19
year for prenatal care.
20
"(B) The plan does not require out-of-
21
pocket expenses for any plan year in excess of
22
$3,000 per individual and $6,000 per family.
23
"(C) The amount of any copayment re-
24
quired to be paid by an employee for any core
25
benefits does not exceed-
.S 700 IS
9
1
"(i) 20 percent for core benefits de-
2
scribed in subparagraphs (A), (B), (C),
3
(D), and (E) of paragraph (2),
4
"(ii) 50 percent for core benefits de-
5
scribed in subparagraphs (F) and (G) of
6
paragraph (2).
7
"(D) The amount of any copayment re-
8
quired to be paid by an employee for supple-
9
mental benefits does not exceed 50 percent.
10
"(E) The plan provides benefits of not less
11
than 45 days for supplemental benefits which
12
are provided on an inpatient basis and not less
13
than 25 visits for supplemental benefits pro-
14
vided on an outpatient basis.
15 "SEC. 5000C. SPECIFIC CONTRACTUAL REQUIREMENTS.
16
"(a) GENERAL RULE.-The requirements of this sec-
17 tion are met if, with respect to any applicable accident
18 and health insurance contract, the following requirements
19 are met:
20
"(1) The coverage requirements of subsection
21
(b).
22
"(2) The rating requirements of subsection (c).
23
"(3) The disclosure and recordkeeping require-
24
ments of subsection (d).
25
"(b) COVERAGE REQUIREMENTS.-
S 700 IS-2
10
1
"(1) IN GENERAL.-The requirements of this
2
subsection are met with respect to any applicable ac-
3
cident and health contract if, under the terms and
4
operation of the contract, the following requirements
5
are met:
6
"(A) GUARANTEED ELIGIBILITY.-No eli-
7
gible employee (and the spouse or any depend-
8
ent child of the employee eligible for coverage)
9
may be excluded from coverage under the con-
10
tract.
11
"(B) LIMITATIONS ON COVERAGE OF PRE-
12
EXISTING CONDITIONS.-Any limitation under
13
the contract on any preexisting condition-
14
"(i) may not extend beyond the 6-
15
month period beginning with the date an
16
insured is first covered by the contract,
17
and
18
"(ii) may only apply to preexisting
19
conditions which manifested themselves, or
20
for which medical care or advice was
21
sought or recommended, during the 3-
22
month period preceding the date an in-
23
sured is first covered by the contract.
24
"(C) GUARANTEED RENEWABILITY.-
.S 700 IS
11
1
"(i) IN GENERAL.-The contract must
2
be renewed at the election of the eligible
3
small employer unless the contract is ter-
4
minated for cause.
5
"(ii) CAUSE.-For purposes of this
6
subparagraph, the term 'cause'-
7
"(I) includes nonpayment of pre-
8
miums, fraud or misrepresentation,
9
noncompliance with plan provisions
10
(including participation requirements),
11
or misuse of network provisions, but
12
"(II) does not include any reason
13
related to risk characteristics.
14
"(2) WAITING PERIODS.-Paragraph (1)(A)
15
shall not apply to any period an eligible employee is
16
excluded from coverage under the contract solely by
17
reason of a requirement applicable to all employees
18
that a minimum period of service with the employer
19
is required before the employee is eligible for such
20
coverage.
21
"(3) DETERMINATION OF PERIODS FOR RULES
22
RELATING TO PREEXISTING CONDITIONS.-For pur-
23
poses of paragraph (1)(B), the date on which an in-
24
sured is first covered by a contract shall be the ear-
25
lier of-
.S 700 IS
12
1
"(A) the date on which coverage under
2
such contract begins, or
3
"(B) the first day of any continuous pe-
4
riod—
5
"(i) during which the insured was cov-
6
ered under 1 or more other health insur-
7
ance arrangements, and
8
"(ii) which does not end more than
9
120 days before the date employment for
10
the employer begins.
11
"(4) CESSATION OF SMALL EMPLOYER HEALTH
12
INSURANCE BUSINESS.-
13
"(A) IN GENERAL.-Except as otherwise
14
provided in this paragraph, a person shall not
15
be treated as failing to meet the requirements
16
of paragraph (1)(C) if such person terminates
17
the class of business which includes the applica-
18
ble accident and health insurance contract.
19
"(B) NOTICE REQUIREMENT.-Subpara-
20
graph (A) shall apply only if the person gives
21
notice of the decision to terminate at least 90
22
days before the expiration of the contract.
23
"(C) 5-YEAR MORATORIUM.-If, within 5
24
years of the year in which a person terminates
25
a class of business under subparagraph (A),
.S 700 IS
13
1
such person establishes a new class of business
2
which includes contracts within the class of
3
business so terminated, the issuance of such
4
contracts in that year shall be treated as a fail-
5
ure to which this section applies.
6
"(D) TRANSFERS.-If, upon a failure to
7
renew a contract to which subparagraph (A)
8
applies, a person transfers such contract to an-
9
other class of business, such transfer must be
10
made without regard to any risk characteristic.
11
"(c) RATING REQUIREMENTS.-
12
"(1) IN GENERAL.-The requirements of this
13
subsection are met with respect to any applicable ac-
14
cident and health insurance contract if-
15
"(A) the premium rate or rates under the
16
contract are within the acceptable premium
17
range, and
18
"(B) any increase in any premium rate
19
under the renewal contract over the cor-
20
responding rate under the contract being re-
21
newed does not exceed the applicable annual ad-
22
justed increase.
23
"(2) ACCEPTABLE PREMIUM RANGE.-For pur-
24
poses of paragraph (1)(A)-
.S 700 IS
14
1
"(A) IN GENERAL.-The acceptable pre-
2
mium range includes premium rates which are
3
not more than 120 percent, or less than 80 per-
4
cent, of the lowest index rate for all classes of
5
business of the issuer which include applicable
6
accident and health insurance contracts.
7
"(B) INDEX RATE.-For purposes of sub-
8
paragraph (A), the term 'index rate' means,
9
with respect to any class of business, 50 per-
10
cent of the sum of-
11
"(i) the lowest premium rate, deter-
12
mined under the rating system for the rat-
13
ing period which covers the contract, which
14
may be charged by the person issuing the
15
contract for substantially similar coverage
16
to employers with similar case characteris-
17
tics (other than risk characteristics) as the
18
employer under the contract to which para-
19
graph (1) is being applied, plus
20
"(ii) the highest premium rate which
21
may be so charged.
22
"(C) RANGE MAY BE DETERMINED BY
23
SECRETARY.-In the case of any class of busi-
24
ness covering applicable accident and health in-
25
surance contracts—
.S 700 IS
15
1
"(i) with respect to which employers
2
who are eligible are not, and have never
3
been, rejected for coverage on the basis of
4
risk characteristics as defined under sec-
5
tion 5000C(b)(2)(B),
6
"(ii) to which business may not be in-
7
voluntarily transferred from another class
8
of business, and
9
"(iii) which is currently available for
10
purchase,
11
the acceptable premium range with respect to
12
such contracts shall be the range (if any) estab-
13
lished by the Secretary in accordance with the
14
principles of this subsection.
15
"(3) APPLICABLE ANNUAL ADJUSTED IN-
16
CREASE.-
17
For purposes of paragraph (1)(B)-
18
"(A) IN GENERAL.-The applicable annual
19
adjusted increase is an amount equal to the
20
sum of-
21
"(i) the applicable percentage of the
22
premium rate under the contract being re-
23
newed, plus
24
"(ii) any increase in the rate under
25
the renewal contract due to any change in
.S 700 IS
16
1
coverage or to any change of case charac-
2
teristics (other than risk characteristics).
3
"(B) APPLICABLE PERCENTAGE.-
4
"(i) IN GENERAL.-For purposes of
5
subparagraph (A), the applicable percent-
6
age is the percentage (if any) by which-
7
"(I) the premium rate for newly
8
issued contracts for substantially simi-
9
lar coverage for an employer with
10
similar case characteristics (other
11
than risk characteristics) as the em-
12
ployer under the applicable accident
13
and health contract (determined on
14
the 1st day of the rating period appli-
15
cable to such contracts), exceeds
16
"(II) such rate on the 1st day of
17
the rating period applicable to the
18
contract being renewed.
19
"(ii) CASES WHERE NO NEW BUSI-
20
NESS.-If no new contracts are being is-
21
sued for a class of business during any rat-
22
ing period, the applicable percentage shall
23
be the percentage (if any) by which the
24
lowest premium rate determined under
25
paragraph (2)(B)(i) with respect to the re-
.S 700 IS
17
1
newal contract exceeds such rate for the
2
contract to be renewed.
3
"(d) DISCLOSURE AND RECORDKEEPING, ETC. RE-
4 QUIREMENTS.-The requirements of this subsection are
5 met if-
6
"(1) DISCLOSURE.-Any person issuing an ap-
7
plicable accident and health insurance contract in-
8
cludes in any sales materials the following:
9
"(A) The extent to which premium rates
10
are based on risk characteristics and on factors
11
other than risk characteristics.
12
"(B) The extent to which the person may
13
change the premium rates.
14
"(C) The class of business within which
15
the contract falls, including a description of the
16
grouping of contracts within a class of business.
17
"(D) Provisions relating to renewability.
18
"(2) RECORDKEEPING, ETC.-Any person issu-
19
ing an applicable accident and health insurance
20
contract-
21
"(A) maintains at its principal place of
22
business a complete and detailed description of
23
its rating and renewal underwriting practices,
24
and the information on which such practices are
25
based, and
.S 700 IS
18
1
"(B) files with the Secretary each year an
2
opinion of a qualified health actuary, based on
3
a review of appropriate records, that the rating
4
practices of such person for the preceding year
5
are based upon commonly accepted actuarial as-
6
sumptions and in accordance with the provi-
7
sions of this section and sound actuarial prin-
8
ciples.
9
For purposes of paragraph (2), the term 'qualified
10
health actuary' means a member of the American
11
Academy of Actuaries who is qualified by reason of
12
prior and continuing education and relevant experi-
13
ence to render the actuarial opinion.
14 "SEC. 5000D. STATE COMPLIANCE AGREEMENTS.
15
"(a) AGREEMENTS.-The Secretary may, in his dis-
16 cretion, enter into an agreement with any State—
17
"(1) to apply the standards set by the laws of
18
such State for applicable accident and health insur-
19
ance contracts in lieu of the requirements of this
20
subchapter, or
21
"(2) to provide for the State to make the initial
22
determination as to whether a person is in compli-
23
ance with the provisions of this subchapter.
24
"(b) STANDARDS.-An agreement may be entered
25 into under subsection (a)(1) only if-
.S 700 IS
19
1
"(1) the chief executive officer of the State re-
2
quests such agreement be entered into,
3
"(2) the Secretary determines that the State
4
standards to be applied under the agreement will
5
apply to substantially all applicable accident and
6
health contracts issued in such State, and
7
"(3) the Secretary determines that the applica-
8
tion of the State standards will carry out the pur-
9
poses of this subchapter.
10
"(c) MEDPLAN REQUIREMENT MAY NOT BE
11 WAIVED.-Any agreement entered into under subsection
12 (a)(1) shall not waive the mandatory policy requirement
13 under section 5000B(a)(1) (relating to offering of
14 Medplan).
15
"(d) TERMINATION.-The Secretary shall terminate
16 any agreement if the Secretary determines that the appli-
17 cation of State standards ceases to carry out the purposes
18 of this subchapter.
19 "SEC. 5000E. DEFINITIONS AND OTHER RULES.
20
"(a) APPLICABLE ACCIDENT AND HEALTH INSUR-
21 ANCE CONTRACT.-For purposes of this subchapter-
22
"(1) IN GENERAL.-The term 'applicable acci-
23
dent and health insurance contract' means a con-
24
tract under which a person authorized under appli-
25
cable State insurance law provides a health insur-
.S 700 IS
20
1
ance plan or arrangement to an eligible small em-
2
ployer. Such term does not include any self-insured
3
plan of an employer.
4
"(2) CERTAIN CONTRACTS NOT COVERED.-The
5
term 'applicable accident and health insurance con-
6
tract' does not include any contract-
7
"(A) which provides for accident only, den-
8
tal only, or disability only coverage,
9
"(B) which provides coverage as a supple-
10
ment to liability insurance,
11
"(C) which provides insurance arising out
12
of a workmens' compensation or similar law, or
13
automobile medical-payment insurance, or
14
"(D) which provides insurance which is re-
15
quired by law to be contained under any self-
16
insured plan of an employer.
17
"(3) EXCEPTION FOR SMALL ISSUERS.-The
18
term 'applicable accident and health insurance con-
19
tract' shall not include any contract issued during a
20
taxable year by a person which had less than
21
$1,000,000 in gross premiums from accident and
22
health contracts during the preceding taxable year.
23
For purposes of the preceding sentence, the aggrega-
24
tion rules of section 448(c) shall apply.
.S 700 IS
21
1
"(b) OTHER DEFINITIONS.-For purposes of this
2 subchapter-
3
"(1) CLASS OF BUSINESS.-
4
"(A) IN GENERAL.-Except as provided in
5
subparagraph (B), the term 'class of business'
6
means, with respect to accident and health in-
7
surance provided to eligible small employers, all
8
accident and health insurance provided to such
9
employers.
10
"(B) ESTABLISHMENT OF GROUPINGS.-
11
An issuer may establish separate classes of
12
business with respect to accident and health in-
13
surance provided to eligible small employers but
14
only if such classes are based on 1 or more of
15
the following:
16
"(i) Business marketed and sold
17
through persons not participating in the
18
marketing and sale of such insurance to
19
other eligible small employers.
20
"(ii) Business acquired from other in-
21
surers as a distinct grouping.
22
"(iii) Business provided through an
23
association of not less than 20 eligible
24
small employers which was established for
25
purposes other than obtaining insurance.
.S 700 IS
22
1
"(iv) Business related to managed
2
health care arrangements.
3
"(v) Business within groupings under
4
clauses (i) through (iv) which is based on
5
risk selection or underwriting criteria ex-
6
pected to produce substantial variations in
7
claims costs.
8
"(vi) Any other business which the
9
Secretary determines needs to be sepa-
10
rately grouped to prevent a substantial
11
threat to the solvency of the insurer.
12
"(C) MANAGED HEALTH CARE ARRANGE-
13
MENT.-For purposes of subparagraph (B) (iv),
14
the term 'managed health care arrangement'
15
means an arrangement which integrates the fi-
16
nancing and delivery of health care services to
17
covered individuals by employing the following:
18
"(i) Contracts with selected health
19
care providers to furnish health care serv-
20
ices to members.
21
"(ii) The adoption of explicit stand-
22
ards for the selection and recertification of
23
providers.
.S 700 IS
23
1
"(iii) An explicit, formal program for
2
ongoing quality assurance and utilization
3
review.
4
"(iv) Significant financial incentives
5
for members to use the providers and pro-
6
cedures associated with the arrangement.
7
"(2) CHARACTERISTICS.-
8
"(A) IN GENERAL.-The term 'characteris-
9
tics' means, with respect to any insurance rat-
10
ing system, the factors used in determining
11
rates.
12
"(B) RISK CHARACTERISTICS.-The term
13
'risk characteristics' means factors related to
14
the health risks of individuals, including health
15
status, prior claims experience, the duration
16
since the date of issue of a health insurance
17
plan or arrangement, industry, and occupation.
18
"(C) GEOGRAPHIC FACTORS.-In applying
19
geographic location as a characteristic, an in-
20
surer may not use for purposes of this sub-
21
chapter areas smaller than Census Bureau des-
22
ignations of metropolitan statistical areas and
23
nonmetropolitan statistical areas.
24
"(3) ELIGIBLE EMPLOYEE.-The term 'eligible
25
employee' means any employee other than an em-
.S 700 IS
24
1
ployee who works less than 30 hours per week. For
2
purposes of this paragraph, the term 'employee' in-
3
cludes a self-employed individual as defined in sec-
4
tion 401(c)(1).
5
"(4) ELIGIBLE SMALL EMPLOYER.-The term
6
'eligible small employer' means an employer who
7
normally employed more than 1 but not more than
8
50 eligible employees on a normal business day. For
9
purposes of the preceding sentence, all employers
10
covered under the same health insurance plan or ar-
11
rangement covered by a contract shall be treated as
12
1 employer."
13
(b) CONFORMING AMENDMENT.-So much of chapter
14 47 of the Internal Revenue Code of 1986 as precedes sec-
15 tion 5000 is amended to read as follows:
"CHAPTER 47-CERTAIN GROUP HEALTH PLANS
"SUBCHAPTER A. Nonconforming group health plans.
"SUBCHAPTER B. Health insurance provided to small employers.
16
"Subchapter A-Nonconforming Group
17
Health Plans
"Sec. 5000. Certain group health plans."
18
(c) EFFECTIVE DATE.-
19
(1) IN GENERAL.-The amendments made by
20
this section shall apply to contracts issued, or re-
21
newed, after the date of the enactment of this Act.
.S 700 IS
25
1
(2) GUARANTEED ISSUE.-The provisions of
2
section 5000B(c) of the Internal Revenue Code of
3
1986 shall apply to contracts which are issued, or
4
renewed, after the date which is 18 months after the
5
date of the enactment of this Act.
6
(3) PREMIUM RANGE.-In the case of any con-
7
tract in effect on the date of the enactment of this
8
Act, the provisions of section 5000C(c)(1)(A) of
9
such Code shall not apply to the premiums under
10
such contract or any renewal contract for benefits
11
provided during the period beginning on such date
12
and ending on the last day of the 2nd plan year be-
13
ginning after such date.
O
.S 700 IS
I
102D CONGRESS
1ST SESSION
H.R.2121
To amend the Internal Revenue Code of 1986 to impose an excise tax
on premiums received on health insurance policies which do not meet
certain requirements.
IN THE HOUSE OF REPRESENTATIVES
APRIL 29, 1991
Mr. STARK introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to impose
an excise tax on premiums received on health insurance
policies which do not meet certain requirements.
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 "Health Insurance Re-
5 form Act of 1991".
2
1 SEC. 2. EXCISE TAX ON PREMIUMS RECEIVED ON HEALTH
2
INSURANCE POLICIES WHICH DO NOT MEET
3
CERTAIN REQUIREMENTS.
4
(a) IN GENERAL.-Chapter 47 of the Internal Reve-
5 nue Code of 1986 (relating to excise taxes on qualified
6 pension, etc. plans) is amended by adding at the end
7 thereof the following new subchapter:
8 "Subchapter B-Health Insurance Standards
"Sec. 5000A. Failure to satisfy standards for health insurance.
"Sec. 5000B. General issuance requirements.
"Sec. 5000C. Specific contractual requirements.
"Sec. 5000D. Definitions.
9 "SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS
10
FOR HEALTH INSURANCE.
11
"(a) GENERAL RULE.-In the case of any person is-
12 suing applicable accident and health insurance contracts,
13 there is hereby imposed a tax on the failure of such person
14 to meet at any time during any taxable year-
15
"(1) the general issuance requirements of sec-
16
tion 5000B, or
17
"(2) the specific contractual requirements of
18
section 5000C.
19 The Secretary of Health and Human Services shall deter-
20 mine whether any contract meets the requirements of such
21 sections.
22
"(b) AMOUNT OF TAX.-
HR 2121 IH
3
1
"(1) IN GENERAL.-The amount of tax imposed
2
by subsection (a) by reason of 1 or more failures
3
during a taxable year shall be equal to 100 percent
4
of the gross premiums received during such taxable
5
year with respect to all accident and health insur-
6
ance contracts issued by the person on whom such
7
tax is imposed.
8
"(2) GROSS PREMIUMS.-For purposes of para-
9
graph (1), gross premiums shall include any consid-
10
eration received with respect to any accident and
11
health insurance contract.
12
"(c) LIMITATION ON TAX.-
13
"(1) TAX NOT TO APPLY WHERE FAILURE NOT
14
DISCOVERED EXERCISING REASONABLE DILI-
15
GENCE.-No tax shall be imposed by subsection (a)
16
with respect to any failure for which it is established
17
to the satisfaction of the Secretary that the person
18
on whom the tax is imposed did not know, or exer-
19
cising reasonable diligence would not have known,
20
that such failure existed.
21
"(2) TAX NOT TO APPLY WHERE FAILURES
22
CORRECTED WITHIN 30 DAYS.-No tax shall be im-
23
posed by subsection (a) with respect to any failure
24
if-
HR 2121 IH
4
1
"(A) such failure was due to reasonable
2
cause and not to willful neglect, and
3
"(B) such failure is corrected during the
4
30-day period beginning on the 1st date any of
5
the persons on whom the tax is imposed knew,
6
or exercising reasonable diligence would have
7
known, that such failure existed.
8
"(3) WAIVER BY SECRETARY.-In the case of a
9
failure which is due to reasonable cause and not to
10
willful neglect, the Secretary may waive part or all
11
of the tax imposed by subsection (a).
12
"(d) LIABILITY FOR Tax-The person issuing the
13 applicable accident and health contract with respect to
14 which a failure occurs shall be liable for the tax imposed
15 by subsection (a).
16 "SEC. 5000B. GENERAL ISSUANCE REQUIREMENTS.
17
"(a) GENERAL RULE.-The requirements of this sec-
18 tion are met if a person meets—
19
"(1) the mandatory policy requirements of sub-
20
section (b), and
21
"(2) the guaranteed issue requirements of sub-
22
section (c).
23
"(b) MANDATORY POLICY REQUIREMENTS.-
24
"(1) IN GENERAL.-The requirements of this
25
subsection are met if any person issuing accident
HR 2121 IH
5
1
and health contracts to any employer makes avail-
2
able to such employer an accident and health con-
3
tract which provides benefits which are identical to
4
the core benefits described in subsection (d). A per-
5
son shall not be treated as failing to meet the re-
6
quirements of this paragraph if the deductible and
7
copayment requirements are less than those in the
8
core benefits.
9
"(2) OTHER REQUIREMENTS.-The require-
10
ments of paragraph (1) are not met unless-
11
"(A) the contract provides continuous full-
12
year open enrollment (including conversions),
13
"(B) the premiums for coverage under the
14
contract are determined on the basis of the av-
15
erage per capita cost of providing coverage to
16
all individuals covered under applicable accident
17
and health insurance contracts issued by the
18
person issuing such contract, and
19
"(C) individuals leaving the group covered
20
by the contract are offered the option to convert
21
to individual coverage at not more than 150
22
percent of the usually applicable community
23
rate for the State in which the contract was is-
24
sued, without any waiting period, without re-
HR 2121 IH
6
1
gard to health, and without regard to the size
2
of the group.
3
"(c) GUARANTEED ISSUE.-
4
"(1) IN GENERAL.-The requirements of this
5
subsection are met if the person offering applicable
6
accident and health insurance contracts issues such
7
contracts to any employer seeking to enter into such
8
a contract.
9
"(2) EXCEPTIONS FOR CERTAIN EMPLOYERS.
10
Paragraph (1) shall not apply to a failure to issue
11
a contract to an eligible employer if such employer
12
is unable to pay the premium for such contract.
13
"(d) BENEFITS.-For purposes of this section-
14
"(1) CORE BENEFITS.-The term 'core benefits'
15
means benefits which are the same benefits as are
16
provided under title XVIII of the Social Security Act
17
to individuals entitled to benefits under part A, and
18
enrolled under part B, of such title.
19
"(2) DEDUCTIBLES AND COPAYMENTS.-A plan
20
shall not be treated as providing the core benefits
21
described in paragraph (1) unless the following re-
22
quirements are met:
23
"(A) $500 DEDUCTIBLE PER INDIVID-
24
UAL.-The plan does not require a deductible
HR 2121 IH
7
1
amount for any plan year in excess of $500 per
2
individual with respect to such benefits.
3
"(B) LIMIT ON OUT-OF-POCKET EX-
4
PENSES.-The plan does not require out-of-
5
pocket expenses for any plan year in excess of
6
$2,500 per individual for such benefits.
7
"(C) CHILDREN.-
8
"(i) No DEDUCTIBLES OR COINSUR-
9
ANCE.-In the case of children, there shall
10
be
no coinsurance, deductibles, or
11
copayments applicable to covered benefits
12
described in clause (ii).
13
"(ii) ADDITIONAL PREVENTIVE BENE-
14
FITS.-Subject to the periodicity schedule
15
established with respect to the services
16
under this clause, for children benefits
17
shall be available under the plan for the
18
following items and services:
19
"(I) Newborn and well-baby care,
20
including normal newborn care and
21
pediatrician services for high-risk de-
22
liveries.
23
"(II) Well-child care, including
24
routine office visits, routine immuni-
25
zations (including the vaccine itself),
HR 2121 IH
8
1
routine laboratory tests, and preven-
2
tive dental care.
3
The Secretary of Health and Human
4
Services, in consultation with the American
5
Academy of Pediatrics, shall establish a
6
schedule of periodicity which reflects the
7
general, appropriate frequency with which
8
services listed in the preceding sentence
9
should be provided to healthy children.
10
"(iii) CHILD DEFINED.-For purposes
11
of this subparagraph, the term 'child'
12
means an individual who has not attained
13
age 23.
14
"(D) PREGNANCY-RELATED SERVICES.-
15
"(i) IN GENERAL.-In the case of a
16
pregnant woman, benefits under the plan
17
shall include entitlement to have payment
18
made for the following, without the appli-
19
cation of deductibles, coinsurance, or
20
copayments, subject to the periodicity
21
schedule established with respect to the
22
services under clause (ii):
23
"(I) Prenatal care, including care
24
for all complications of pregnancy.
HR 2121 IH
9
1
"(II) Inpatient labor and delivery
2
services.
3
"(III) Postnatal care.
4
"(IV) Postnatal family planning
5
services.
6
"(ii) PERIODICITY SCHEDULE.-The
7
Secretary of Health and Human Services,
8
in consultation with the American College
9
of Obstetrics and Gynecology, shall estab-
10
lish a schedule of periodicity which reflects
11
the general, appropriate frequency with
12
which services listed in clause (i) should be
13
provided to pregnant women without com-
14
plications of pregnancy.
15
"(iii) PREGNANT WOMAN.-For pur-
16
poses of this subparagraph, the term 'preg-
17
nant woman' means a woman who has
18
been certified by a physician (in a manner
19
specified by the Secretary) as being preg-
20
nant, until the last day of the month in
21
which the 60-day period (beginning on the
22
date of termination of the pregnancy)
23
ends.
24
"(3) PREEMPTION.-No provision of State law
25
shall apply that requires the offering, as part of an
HR 2121 IH-2
10
1
applicable accident and health insurance contract
2
that only provides for core benefits, of any services,
3
category of care, or services of any class or type of
4
provider other than core benefits.
5
"(4) TREATMENT OF MANAGED CARE.-Noth-
6
ing in this section shall be construed as preventing
7
an applicable accident and health insurance contract
8
from-
9
"(A) providing benefits through a selected
10
set of providers,
11
"(B) providing financial incentives for
12
beneficiaries to use particular providers, or
13
"(C) providing for utilization review and
14
controls over benefits.
15 "SEC. 5000C. SPECIFIC CONTRACTUAL REQUIREMENTS.
16
"(a) GENERAL RULE.-The requirements of this sec-
17 tion are met if, with respect to any applicable accident
18 and health insurance contract, the coverage requirements
19 of subsection (b) are met.
20
"(b) COVERAGE REQUIREMENTS.-
21
"(1) IN GENERAL.-The requirements of this
22
subsection are met with respect to any applicable ac-
23
cident and health contract if, under the terms and
24
operation of the contract, the following requirements
25
are met:
HR 2121 IH
11
1
"(A) GUARANTEED ELIGIBILITY.-No eli-
2
gible employee (and the spouse or any depend-
3
ent child of the employee eligible for coverage)
4
may be excluded from coverage under the con-
5
tract.
6
"(B) LIMITATIONS ON COVERAGE OF PRE-
7
EXISTING CONDITIONS.-
8
"(i) Any limitation under the contract
9
on any preexisting condition may not ex-
10
tend beyond the 6-month period beginning
11
with the date an insured is first covered by
12
the contract.
13
"(ii) The contract offers full coverage
14
for preexisting conditions of high-risk indi-
15
viduals without a price differential within a
16
community, with reasonable waiting peri-
17
ods as determined or approved under State
18
law or regulation, without cancellation of
19
coverage for heavy usage, and without re-
20
gard to age, income, or employment status
21
of individuals under age 65.
22
"(C) GUARANTEED RENEWABILITY.-
23
"(i) IN GENERAL.-The contract must
24
be renewed at the election of the employer
25
unless the contract is terminated for cause.
HR 2121 IH
12
1
"(ii) CAUSE.-For purposes of this
2
subparagraph, the term 'cause'-
3
"(I) includes nonpayment of pre-
4
miums, fraud or misrepresentation,
5
noncompliance with plan provisions
6
(including participation requirements),
7
or misuse of network provisions, but
8
"(II) does not include any reason
9
related to risk characteristics.
10
"(2) WAITING PERIODS.-Paragraph (1)(A)
11
shall not apply to any period an eligible employee is
12
excluded from coverage under the contract solely by
13
reason of a requirement applicable to all employees
14
that a minimum period of service with the employer
15
is required before the employee is eligible for such
16
coverage.
17 "SEC. 5000D. DEFINITIONS.
18
"(a) APPLICABLE ACCIDENT AND HEALTH INSUR-
19 ANCE CONTRACT.-For purposes of this subchapter-
20
"(1) IN GENERAL.-The term 'applicable acci-
21
dent and health insurance contract' means a con-
22
tract under which a person authorized under appli-
23
cable State insurance law provides a health insur-
24
ance plan or arrangement to any group consisting of
25
more than 3 individuals. Such term does not include
HR 2121 IH
13
1
any self-insured plan of an employer and does not
2
include a qualified health maintenance organization
3
(as defined in section 1310(d) of the Public Health
4
Service Act).
5
"(2) CERTAIN CONTRACTS NOT COVERED.-The
6
term 'applicable accident and health insurance con-
7
tract' does not include any contract-
8
"(A) which provides for accident only, den-
9
tal only, or disability only coverage,
10
"(B) which provides coverage as a supple-
11
ment to liability insurance,
12
"(C) which provides insurance arising out
13
of a workmens' compensation or similar law, or
14
automobile medical-payment insurance, or
15
"(D) which provides insurance which is re-
16
quired by law to be contained under any self-
17
insured plan of an employer.
18
"(b) ELIGIBLE EMPLOYEE.-For purposes of this
19 subchapter, the term 'eligible employee' means any em-
20 ployee other than an employee who works less than 30
21 hours per week. For purposes of this paragraph, the term
22 'employee' includes a self-employed individual as defined
23 in section 401(c)(1)."
HR 2121 IH
14
1
(b) CONFORMING AMENDMENT.-So much of chapter
2 47 of the Internal Revenue Code of 1986 as precedes sec-
3 tion 5000 is amended to read as follows:
"CHAPTER 47-CERTAIN GROUP HEALTH PLANS
"SUBCHAPTER A. Nonconforming group health plans.
"SUBCHAPTER B. Health insurance standards.
4
"Subchapter A-Nonconforming Group
5
Health Plans
"Sec. 5000. Certain group health plans."
6
(c) EFFECTIVE DATE.-
7
(1) IN GENERAL.-The amendments made by
8
this section shall apply to contracts issued, or re-
9
newed, after the date of the enactment of this Act.
10
(2) GUARANTEED ISSUE.-The provisions of
11
section 5000B(c) of the Internal Revenue Code of
12
1986 shall apply to contracts which are issued, or
13
renewed, after the date which is 18 months after the
14
date of the enactment of this Act.
15 SEC. 3. HEALTH REINSURANCE TRUST FUND.
16
(a) IN GENERAL-Subchapter A of chapter 98 of the
17 Internal Revenue Code of 1986 (relating to trust fund
18 code) is amended by adding at the end thereof the follow-
19 ing new section:
20 "SEC. 9511. HEALTH REINSURANCE TRUST FUND.
21
"(a) ESTABLISHMENT.-There is hereby created in
22 the Treasury of the United States a trust fund to be
HR 2121 IH
15
1 known as the 'Health Reinsurance Trust Fund', consisting
2 of such amounts as may be appropriated or credited to
3 such Trust Fund as provided in this section or section
4 9602(b).
5
"(b) TRANSFERS TO TRUST FUND.-There are here-
6 by appropriated to the Health Reinsurance Trust Fund
7 amounts equivalent to-
8
"(1) the taxes received in the Treasury under
9
section 5000A (relating to failure to satisfy certain
10
standards for health insurance), and
11
"(2) the taxes received in the Treasury under
12
section 5000F (relating to health insurance stop-loss
13
excise tax).
14
"(c) EXPENDITURES FROM TRUST FUND.-
15
"(1) IN GENERAL.-Amounts in the Health Re-
16
insurance Trust Fund shall be available-
17
"(A) to provide reimbursement to qualified
18
plans for payments under the plan for core ben-
19
efits for any individual after the plan has ex-
20
pended $25,000 in any year for such benefits
21
for the individual, and
22
"(B) for the payment of all expenses of ad-
23
ministration incurred by the Department of
24
Health and Human Services in carrying out
25
subparagraph (A).
HR 2121 IH
16
1
The Secretary of Health and Human Services shall
2
provide a procedure for qualified plans obtaining
3
benefits under subparagraph (A).
4
"(2) QUALIFIED PLAN DEFINED.-For pur-
5
poses of this section-
6
"(A) IN GENERAL.-The term 'qualified
7
plan' means an accident and health insurance
8
contract that-
9
"(i) is issued by a person in compli-
10
ance with section 5000B,
11
"(ii) meets the specific contractual re-
12
quirements of section 5000C, and
13
"(iii) has applied to the Secretary of
14
Health and Human Services, in a form
15
and manner specified by the Secretary, to
16
obtain benefits under this subsection.
17
"(B) INCLUSION OF SELF-INSURED PLANS
18
AND QUALIFIED HMOS.-The term 'qualified
19
plan' also includes—
20
"(i) any self-insured plan of an em-
21
ployer, and
22
"(ii) any qualified health maintenance
23
organization (as defined in section 1310(d)
24
of the Public Health Service Act),
HR 2121 IH
17
1
if the plan or organization provides benefits
2
which include at least the core benefits (as de-
3
fined in section 5000B(d)) for every individual
4
covered under the plan."
5
(b) CLERICAL AMENDMENT.-The table of sections
6 for such subchapter is amended by adding at the end
7 thereof the following new item:
"Sec. 9511. Health Reinsurance Trust Fund."
8 SEC. 4. HEALTH INSURANCE STOP-LOSS EXCISE TAX.
9
(a) IN GENERAL.-Chapter 47 of the Internal Reve-
10 nue Code of 1986 (relating to certain group health plans)
11 is amended by adding at the end thereof the following new
12 subchapter:
13 "Subchapter C-Health Insurance Stop-Loss
14
Tax
"Sec. 5000F. Imposition of tax.
15 "SEC. 5000F. IMPOSITION OF TAX.
16
"(a) GENERAL RULE.-There is hereby imposed on
17 the providing of coverage by any qualified plan (as defined
18 in section 9511(c)(2)) during the calendar year a tax equal
19 to the prescribed amount with respect to each individual
20 who is covered by such plan at any time during such year.
21
"(b) PRESCRIBED AMOUNT.-For purposes of subsec-
22 tion (a), the prescribed amount for any calendar year is
23 the amount estimated by the Secretary to be minimum
24 amount necessary to generate revenues to the Treasury
HR 2121 IH
18
1 under this section which, when added to the revenues to
2 the Treasury under section 5000A, will be equal to the
3 estimated expenditures (as determined by the Secretary
4 of Health and Human Services) of the Health Reinsurance
5 Trust Fund during the following calendar year.
6
"(c) LIABILITY FOR TAx-The qualified plan shall
7 pay the tax imposed by this section."
8
(b) CLERICAL AMENDMENT.-The table of subchap-
9 ters for such chapter 47 is amended by adding at the end
10 thereof the following new item:
"Subchapter C. Health insurance stop-loss tax."
11
(c) EFFECTIVE DATE.-The amendments made by
12 this section shall apply to calendar years ending after the
13 date of the enactment of this Act.
O
HR 2121 IH
COMPARISON OF SMALL GROUP INSURANCE REFORM PROPOSALS
Prepared by HCFA/OLP - December 10, 1991
ROSTKNKOWSKI (H.R.3626)
BENTSKN (8.1872)
CHAFKE (8.1936)
Eligibility
2 - 50 employees, plus
- 50 employees, plus
3 - 49 employees, plus
dependents; includes self-
dependents; includes self-
dependents; includes
employed
employed
small employer purchasing
group
Pooling Incentives
No provision
$10 M grant for each of 15
Grants to small employers
States
meeting certain
requirements
Employer Requirements
None
None
None
Pre-Existing Conditions
3 month look-back
3 month look-back
3 month look-back
6 month waiting period; does
6 month waiting period;
6 month waiting period
not apply to newborns
does not apply to newborns
Availability
If carrier issues a plan to
State options: guarantee
Guaranteed issue standard
one small firm in an area, it
issue same plan to all
plan developed by NAIC and
must guarantee to issue that
small firms & reinsurance,
approved by Sec.; or state
plan, (min. 12-month term) to
or no guaranteed issue but
opts to assure
all small firms in that area,
mandatory allocation of
availability by NAIC model
year-round
high risk groups
or state program approved
by Sec.
Must cover whole group
Must cover whole group
Must cover whole group
Each insurer may set minimum
Each insurer may set
Insurer may require firm
participation standards, if
minimum participation
with 15 employees or less
uniform for employers of same
standards, if uniform for
to enroll a minimum
size
firms of same size
percentage of eligible
employees, if uniformly
applied to same size
employer
Renewability
Guaranteed renewable for at
Guaranteed renewable
Guaranteed renewable
least 12 month period,
except: not pay premium,
except: not pay premium,
except: not pay premium,
fraud, not comply with
fraud, failure to comply
fraud, not comply with
participation, or insurer
with participation or
participation, or insurer
is ceasing all small firm
employer contribution
ceases all small employer
health in state
requirements, misuse of
health business in state
provider network, or
insurer ceases that class
of business
Minimum Benefits
If an insurer offers health
Insurers in small firm
NAIC to develop model plan
insurance to a small
market must offer both
1 year after enactment;
employer, it must offer a
basic and standard plans;
Sec. approves (or develops
standard plan consisting of
basic: inpt. and outpt.
plan) within 18 mos.;
same benefits as Medicare
hospital, physician,
plan includes: basic
Parts A and B plus unlimited
diagnostic, and preventive
hospital, medical, and
inpatient hospital services
SVCS.; standard: basic
surgical services
for children, pregnancy, and
plus limited mental health;
(including preventive),
preventive services, cost-
standard specifies limits
"reasonable" beneficiary
sharing requirements
on deductibles, co-pays,
cost-sharing
specified in bill
and out-of-pocket; basic
requires limits but lets
insurer set them
ROSTENKOWSKI (H.R.3626)
BENTSEN (8.1872)
CHAFEE (8.1936)
State Provider /
Pre-empts mandates only for
Pre-empts mandates only for
Pre-empts mandates only
Service Mandates
standard plan offered to
standard and basic plans
for qualified small
small employers
offered to small firms
employer purchasing groups
for plans meeting
requirements of model plan
State Anti-Managed Care
No provision
Voluntary Federal
Federal advisory committee
Legislation
certification of managed
develops standards for
care/utilization review; if
managed care plans; if
certified, State anti-
plan meets standards,
managed care laws do not
State anti-managed care
apply
laws are pre-empted
Effects Outside Small
None
None for mandates; anti-
None for mandates; anti-
Group Market (Relating
managed care exception for
managed care plan pre-
to Small Group Reform)
certified managed care/UR
emption applies to larger
applies to larger firms
firms also
also
Initial Premiums in
Community rating; may vary
Maximum of 20% + or -
Maximum of 20% + or
Same Class of Business
no more than 25% + or -
average rate (after 3
average rate for health,
average rate for
years, max. of 15% + or -
experience, occupation,
age/gender/geography (not
average) for
industry, duration of
smaller than MSA); no
age/gender/geography; no
COV., and geographic area;
variation permitted for
variation permitted for
no limits for age/gender
health, experience,
health, experience,
occupation, industry, and
occupation, industry, and
duration of coverage
duration of coverage
Initial Premiums
May vary up to 20% for age,
Up to 20% for age, gender,
Maximum of 20% + or -
Between Different
gender, geography (not
geography; no variation for
average rate for health,
Classes
smaller than MSA); no
health, experience,
experience, occupation,
variation for health,
occupation, industry, and
industry, duration of
experience, occupation,
duration of coverage
COV., and geographic area;
industry, and duration of
no limits for age/gender
coverage
Renewal Premiums
Trend plus 5%
Trend plus 5%
Trend, plus 5%, plus
increase for changes in
coverage or (non-risk)
case characteristic
Reinsurance
No explicit provision
State options: mandatory
NAIC to develop several
(appears to be permissible
prospective reinsurance,
models (including funding
under state authority)
voluntary prospective
options) 120 days after
reinsurance, or mandatory
enactment; states can
allocation of high risk
choose NAIC model or
groups among insurers
variation approved by Sec
Enforcement
Standards set by Sec.; state
NAIC develops standards by
State may apply to Sec. to
regulatory program approved
9/30/92; Sec. approval (or
enter into an agreement
by Sec., with Sec. and GAO
standards by 12/31/92),
where state will determine
review; insurer registers
state regulatory program
compliance of insurers
with Sec. and each state;
subject to GAO and Sec.
with requirements; insurer
approved state (or Sec.)
review and Sec. compliance
may not use existing tax
certifies insurer plans for
cert.; insurer registers
deduction for insurance
small firms; excise tax for
with each state; excise tax
contracts that do not meet
non-complying plans
for non-complying plans
requirements of bill
COMPARISON OF SMALL GROUP INSURANCE RKFORM PROPOSALS
Prepared by HCFA/OLP -- December 10, 1991
MAIC (BC/BS, HIAA)
JOHNSON (H.R. 1565)
DUREMBERGER (8. 700)
MITCHELL (8. 1227)
STARK (H.R. 2121)
Eligibility
3 - 25 employees, plus
3 - 25 employees, plus
2 - 50 employees, plus
1 - 99 employees, plus
3 employees or more,
dependents (states may
dependents
dependents
dependents
plus dependents (no
vary numbers)
upper limit)
Pooling Incentives
(Considering)
(No provision)
(No provision)
State purchasing
(No Provision)
consortia; State plan
and grants from Sec.
Employer Requirements
None (if employers
After 1 year,
None (insurers must
"Play or pay"
None
offer coverage,
employers must offer
make MEDPLANs
provisions are
insurer can set
MEDACCESS plan but
available, but
triggered after 5 - 6
employee participation
need not contribute
employers do not have
years for small firms
and employer
anything to cost
to either offer or pay
if more than 25% of
contribution standards
for insurance)
employees who were
if state law permits)
uninsured at enactment
still are
Pre-Existing
6 month look-back
6 month look-back
3 month look-back
3 month look-back
No look-back
Conditions
specified
12 month waiting
12 month waiting
6 month waiting period
6 month waiting period
"Reasonable" waiting
period (Some Blues
period
(Neither applies to
period under state
plans have no limits)
newborns or to anyone
law or regulation,
6 years after
but not more than 6
enactment; employee
months
buy-in during waiting
period required)
Availability
Support guaranteed
If offer small group
If offer small group
If offer insurance to
If offer health
availability, not
insurance must
insurance must
1 small firm in a
insurance to groups
necessarily guaranteed
guarantee to issue
guarantee to issue
community must offer
of 3 or more
issue by all carriers
MEDACCESS plan
core and standard
same plan to all small
individuals, must
MEDPLANs unless would
employers in same
guarantee to issue a
violate state solvency
community; term of at
plan with continuous
standards
least 12 months
open enrollment and
core benefits to all
Must cover whole group
Must cover whole group
Must cover whole group
(No provision)
Must cover whole
(cannot exclude high
group
cost individuals)
Each insurer may set
NAIC to set standards;
Insurer may require
Insurer participation
Permits insurer
own minimum
may include minimum
firm with 15 employees
requirements only
participation
participation
participation if
or less to enroll at
permitted during first
requirements
standards, with some
uniformly applied to
least 60% of eligible
5 years after
limits
firms of same size
employees
enactment
Renewability
Guaranteed renewable
Guaranteed renewable
Guaranteed renewable
Guaranteed renewable
Guaranteed renewable
except: not pay
except: not pay
except: not pay
for at least 12 month
except: not pay
premium, fraud, not
premium, fraud, not
premium, fraud, not
term, except: not pay
premium, fraud, not
comply with plan or
comply with plan or
comply with plan or
premium, fraud, fail
comply with plan or
participation, or
participation, misuse
participation, or
to meet participation
participation, or
employer no longer in
provider network, or
misuse network
requirements (lst 5
misuse network
same business
insurer is ceasing all
years after enactment
small firm health
only)
business in state
NAIC (BC/BS, HIAA)
JOHNSON (H.R. 1565)
DUREMBERGER (8. 700)
MITCHELL (8. 1227)
STARK (H.R. 2121)
Minimum Benefits
Supports concept that
Insurers in small firm
Insurers in small firm
5 years after
Insurers' employer
all insurers would
market must offer a
market must offer both
enactment, insurers
group health
have to offer both a
MEDACCESS plan:
core and standard
may only issue plans
contracts must
basic (minimum) plan
managed care,
MEDPLANs; core:
to small firms that
provide: same
and a standard plan;
indemnity, or other,
prenatal, inpt. and
include: inpt. and
benefits as Medicare
insurance industry may
with only basic
outpt. hospital,
outpt. hospital and
Parts A and B, with
design optional
hospital, medical,
surgical, physician,
physician services
specified deductibles
prototypes
surgical, and
and diagnostic and
(limits days/visits
and out-of-pocket
preventive benefits
screening; standard:
for mental),
limits; plus
meeting requirements
core plus limited
diagnostic, prenatal
prenatal, maternal,
in bill
mental and substance
and well-baby, pap
newborn and well-
abuse; both limit
smears, and
child care without
deductibles, co-pays,
mammograms; limits
any coinsurance or
and out-of-pocket
deductibles, co-pays,
co-pays, and not
and out-of-pocket
subject to deductible
State Provider /
Advocates pre-emption
Pre-empts mandates for
Pre-empts mandates for
Pre-empts mandates for
Pre-empts mandates
Service Mandates
of mandates
small firm plans
MEDPLANs but not for
all health insurance
for core benefit
meeting consumer
other insurance
plans meeting bill
plans but not for
protection standards
products marketed to
requirements, for all
other employer health
in bill
small firms
size firms
insurance
State Anti-Managed
No provision
Pre-exempts state
No provision
Sets national
No provision
Care Legislation
restrictions on
standards for managed
managed
care and pre-empts
care/utilization
state anti-managed
review
care laws for plans
meetings standards
unless state opts out
of all funding under
bill
Effects Outside Small
Unclear
None for mandates;
None
Also pre-empts
Also pre-empts
Group Market
also pre-empts state
mandates for large
mandates for core
(Relating to Small
anti-managed care laws
firm plans meeting
plans for large firms
Group Reform)
for large firms
bill requirements;
also pre-empts anti-
managed care laws for
large firm plans
unless state opts out
Initial Premiums in
May vary no more than
Maximum of 25% + or -
Maximum of 20% + or -
Maximum of 150% of
Core plan: community
Same Class of
25% + or average
average rate
average rate
lowest rate 1st year
rating required
Business
rate (HIAA wants 35%)
after enactment; 122%
(average per capita
2nd year; 0% 3rd year
cost of all employer
+
group health by that
insurer); no
restrictions for
other plans
Initial Premiums
May vary up to 20% for
Up to 20% for health;
Up to 20% (total) for,
Up to 20% total;
(No limits specified
Between Different
health; plus 15% for
unlimited for
health, and industry
phases out health and
except for general
Classes
industry or
geography, age,
occupation; no limits
gender after 2 years;
community rating
occupation; unlimited
gender, and
for age, gender, and
phases age down to
requirement defined
for geography, age,
industry/occupation
geography (MSA or
110% over 3 years
above)
gender
NMSA)
Renewal Premiums
Trend (insurer's
Standard to be set by
Equal to trend
Equal to trend
(No limits specified
lowest new small group
NAIC
except for community
rate) plus 15%
rating)
NAIC (BC/BS, HIAA)
JOHNSON (H.R. 1565)
DURENBERGER (8. 700)
MITCHELL (8. 1227)
STARK (H.R. 2121)
Reinsurance
Working on 2 model
NAIC to develop
(No provision - leave
NAIC to develop models
All insurers must pay
laws: prospective
several models; each
it up to the states to
for: voluntary,
per capita federal
(voluntary or
state must establish
decide whether and how
retrospective, and
tax into federal
mandatory), and
and fund one or more;
to do)
case management for
reinsurance trust
allocation; (HIAA
Secretary of HHS to
reinsured individuals
fund and may request
likes mandatory, not
establish one for each
and groups; each must
reimbursement above
voluntary or
state that fails to do
include insurer
$25,000/person/year
allocation; Blues
so
deductibles/co-pay
position opposite)
Enforcement
(No provision -
Secretary approves
20% federal tax on
Secretary determines
100% federal tax on
expects model laws to
state program; in
insurer on gross
violations of state's
insurer's gross
be adopted and
states not approved,
premium income from
or Secretary's
premiums from all
enforced by states)
25% federal tax on
all accident and
requirements; 25%
accident and health
insurer's premiums
health policies if
federal tax on amounts
policies if fail to
from small group
fail to meet
insurer received
meet requirements
health if fail to meet
requirements in bill
during period
(limited exceptions
Secretary's standards;
violation persists -
and Secretarial
federal tax for
all blocks of business
waiver authority)
employer that fails to
in all communities
offer MEDACCESS plan
THE WHITE HOUSE
WASHINGTON
November 15, 1991
MEMORANDUM FOR ROGER B. PORTER
FROM:
HANNS KUTTNER
STEPHANIE FOSSAN
SUBJECT:
S.1872, Senator Bentsen's Health Care Proposal
and H.R.3626, Representative Rostenkowski's
Companion Bill.
Both Senator Bentsen and Representative Rostenkowski have
broken ranks with their Democratic leadership's commitment to
"comprehensive" health care reform in favor of more incremental
approaches. This memorandum reviews the details of their
proposals. Bentsen proposal, S.1872, "Better Access to
Affordable Health Care Act of 1991," introduced on October 24,
1991, has the following goals and means of achieving them:
To improve health insurance affordability for small employers,
it:
1.
Permanently increases deductible health insurance costs
(from 25 percent to 100 percent) for self-employed persons.
2.
Sets up grants to states ($150 million per year for the
next 3 years) to establish group purchasing programs for
small business insurance.
3.
Requires HHS to evaluate impact of these programs on the
numbers of uninsured and the price of insurance available
to small businesses.
4.
Requires HHS to study feasibility and impact of requiring
insurers to pay providers based on Medicare rates.
[Rostenkowski differs significantly in this regard; he
would make these government monopsony prices available to
everyone.]
To reform health insurance for small employers, it:
1.
Sets up standards and requirements prohibiting insurers
from excluding workers or their dependents from group
coverage or renewal of coverage for factors involving
health status, claims experience, industry or occupation
and duration of insurance coverage. An insurer may
-2-
terminate or refuse to renew a plan only for:
(i)
Nonpayment of premiums;
(ii)
fraud or misrepresentation; or
(iii) failure to maintain minimum participation
rates.
2.
Limits the variation of premiums between blocks of
business to 20 percent. "Blocks of business" are defined,
with some exceptions, as all of the small employers with a
health insurance plan issued by the insurer.
3.
Limits variation in premium rates within a block of
business such that a rate will not exceed an amount that
is 1.5 times the base rate for the block in the first
three years and 1.35 times the base rate thereafter.
4.
Restricts the insurer from transferring employers among
blocks of business without the consent of the employer.
5.
Requires insurers to fully disclose their rating practices.
6.
Limits annual premium increases to the underlying trend
in health care costs plus 5 percent, thus precluding
insurers from using large price hikes to induce a firm to
drop that insurer if an individual in the group becomes
very sick.
7.
Requires GAO to report to the Congress on the impact of
the rating restrictions on the price and availability of
insurance to small employers.
8.
Allows states to choose among several options for
guaranteeing availability of insurance to all small
employers in the state.
9.
Requires insurers offering coverage to small employers
to offer at least two different packages which are
defined as "standard benefit packages."
(i) The first standard package includes:
Inpatient and outpatient hospital care (with
limits on treatment for mental disorders);
Inpatient and outpatient physicians'
services (with limits on treatment of mental
disorders);
Diagnostic tests;
Preventive services limited to:
-prenatal care
-well child care
-3-
-pap smears
-mammograms
-colorectal services;
Limiting the portion of premiums that
employers can pass on to the employee to a
maximum of 20 percent of the total monthly
premium (For part-time employees this
percentage can reach 50 percent);
Limiting deductibles to $400 per person or
$700 per family (plus the percentage
increase in the Consumer Price Index (CPI)
for all urban consumers after 1993) ;
Limiting copayments and coinsurance for
services which are required in the package;
Limiting out-of-pocket payments to $3000
year (plus the percentage increase in CPI
after 1993).
(ii) The second standard package allows more
flexibility for dollar thresholds for cost-
sharing and includes:
Inpatient and outpatient hospital care,
including emergency services;
Inpatient and outpatient physicians'
services;
Diagnostic tests;
Preventive services (same as above);
Allowing insurer to impose premiums,
deductibles, or copayments on employees;
Insurer must provide limit for out-of-
pocket expenses.
10. Levies an excise tax equal to 25 percent on premiums
received on health insurance policies for small businesses
which do not meet requirements if requirements not met
within 30 days.
[This excise tax is the enforcement stick and serves as an
alternative to pre-empting state insurance laws.]
To improve health insurance portability, it:
1.
Prohibits all group health insurance and self-insured
employer plans from excluding coverage for preexisting
conditions for individuals who were covered under policies
in their previous jobs. And, for individuals who had not
previously been insured, a one-time preexisting condition
exclusion could not last for more than six months.
-4-
2.
Requires insurers not in compliance with requirements to
retroactively cover any illegally excluded services and
pay a tax penalty of $100 a day for each violation.
To contain health care costs, it:
1.
Establishes a Health Care Cost Commission to advise the
President and Congress on how to contain rising health
care costs.
2.
Establishes a voluntary Federal certification program for
managed care plans and utilization review programs. Those
plans that meet standards would receive special protection
from laws that would otherwise restrict their development.
3.
Grants additional funding to outcomes research to identify
the most effective treatment patterns.
To expand Medicare benefits to improve the package of
preventative services, it:
1.
Covers colorectal cancer screening, annual mammography
screening, influenza immunizations, and well-child care.
Representative Rostenkowski's "Health Insurance Reform and Cost
Control Act of 1991, " introduced on October 24, 1991, differs from
Senator Bentsen's proposal in the following ways:
Under the heading, "To improve affordability of health insurance
for small employers:"
1.
The deductible for self-insured individuals would be phased
in, increasing to 50 percent in 1993, to 75 percent in 1994
and then to 100 percent in 1995.
2.
Rostenkowski's bill does not include the grants to states
to establish group purchasing programs found in Bentsen's
bill.
Under the heading, "To reform health insurance for small
employers:"
1.
The limit on variation of premium rates within a block of
business would be 25 percent.
2.
The standard benefit package is different. It would
-5-
include:
The benefits provided in Medicare;
Unlimited inpatient hospital services for children;
Pregnancy related services that include:
-prenatal care
-inpatient labor and delivery services
-postnatal care
-postnatal family planning services;
A deductible of $250 or $500 plus inflation per
family. This does not apply to preventive services;
No coinsurance allowed for preventive services or for
inpatient hospital services for children;
A limit on cost-sharing of $2500 a year for
deductibles and $3000 for coinsurance with respect
to covered services;
Some immunization services.
3.
The establishment of a telephone information system to
instruct small employment with regard to health insurance.
Under the heading, "To improve health insurance portability:"
1.
An excise tax on insurers for failure to provide for a
preexisting condition as an alternative to the tax penalty
of $100 a day in Senator Bentsen's bill.
Under the heading, "To contain health care cost:"
1.
Requires development of uniform claims forms and uniform
reporting standards by the Secretary and the new Health
Care Cost Commission.
2.
The establishment of optional provider payment rates by the
Secretary by October 1994. After January 1, 1994, the
health care provider must accept such rates as payment in
full or be subject to a civil money penalty. A provider
may still choose to accept payments for services that are
less than the rates established by the Secretary.
3.
Rostenkowski's bill does not include the additional funding
for outcomes research. In other words, all providers would
be required to accept Medicare payment rates for all
patients.
Neither bill specifies a revenue source to pay for the new
spending.
SUBJECT:
I
102D CONGRESS
1ST SESSION
H. R. 3626
To amend the Social Security Act and the Internal Revenue Code of 1986
to provide for improvements in health insurance coverage through em-
ployer health insurance reform, for health care cost containment, for
improvements in medicare prevention benefits, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 24, 1991
Mr. ROSTENKOWSKI introduced the following bill; which was referred jointly
to the Committees on Ways and Means and Energy and Commerce
A BILL
To amend the Social Security Act and the Internal Revenue
Code of 1986 to provide for improvements in health
insurance coverage through employer health insurance
reform, for health care cost containment, for improve-
ments in medicare prevention benefits, 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
5 "Health Insurance Reform and Cost Control Act of
6 1991".
2
1
(b) TABLE OF CONTENTS.-The table of contents of
2 this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I-INCREASE IN DEDUCTION FOR HEALTH INSURANCE
FOR SELF-EMPLOYED INDIVIDUALS
Sec. 101. Indefinite extension of deduction for health insurance costs of self-
employed individuals.
Sec. 102. Increase in amount of deduction for years after 1992.
TITLE II-IMPROVEMENTS IN HEALTH INSURANCE FOR SMALL
EMPLOYERS
SUBTITLE A-STANDARDS AND REQUIREMENTS OF SMALL EMPLOYER
HEALTH INSURANCE REFORM
Sec. 201. Standards and requirements of small employer health insurance.
"TITLE XXI-HEALTH INSURANCE STANDARDS
"PART A-SMALL EMPLOYER HEALTH INSURANCE STANDARDS
"Subpart 1-General Standards; Definitions
"Sec. 2101. Standards and requirements of small employer health insur-
ance.
"Sec. 2102. Establishment of standards.
"Sec. 2103. Definitions.
"Subpart 2-Small Employer Health Insurance Reform
"Sec. 2111. General requirements for health insurance plans issued to
small employers.
"Sec. 2112. Requirements related to restrictions on rating practices.
"Sec. 2113. Requirements for small employer health insurance benefit
package offerings.
SUBTITLE B-TAX PENALTY ON NONCOMPLYING INSURERS
Sec. 211. Excise tax on premiums received on health insurance policies which
do not meet certain requirements.
SUBTITLE C-STUDIES AND REPORTS
Sec. 221. GAO study and report on rating requirements for small group health
insurance.
TITLE III-IMPROVEMENTS IN PORTABILITY OF PRIVATE
HEALTH INSURANCE
Sec. 301. Excise tax imposed on failure to provide for preexisting condition.
Sec. 302. Prohibition of discrimination based on health status for certain serv-
ices.
"PART B-PROHIBITION OF DISCRIMINATION BASED ON HEALTH STATUS
FOR CERTAIN SERVICES
HR 3626 IH
3
"Sec. 2131. In general.
"Sec. 2132. Treatment of preexisting condition exclusions for all services.
"Sec. 2133. Definitions.
TITLE IV-HEALTH CARE COST CONTAINMENT
Sec. 401. Establishment of National Health Care Cost Commission.
Sec. 402. Establishment of optional provider payment rates.
TITLE V-MEDICARE PREVENTION BENEFITS
Sec. 501. Coverage of colorectal screening.
Sec. 502. Coverage of certain immunizations.
Sec. 503. Coverage of well-child care.
Sec. 504. Annual screening mammography.
Sec. 505. Demonstration projects for coverage of other preventive services.
Sec. 506. OTA study of process for review of medicare coverage of preventive
services.
1 TITLE I-INCREASE IN DEDUC-
2
TION FOR HEALTH INSUR-
3
ANCE FOR SELF-EMPLOYED
4
INDIVIDUALS
5 SEC. 101. INDEFINITE EXTENSION OF DEDUCTION FOR
6
HEALTH INSURANCE COSTS OF SELF-EM-
7
PLOYED INDIVIDUALS.
8
Subsection (1) of section 162 of the Internal Revenue
9 Code of 1986 (relating to special rules for health insur-
10 ance costs of self-employed individuals) is amended by
11 striking paragraph (6).
12 SEC. 102. INCREASE IN AMOUNT OF DEDUCTION FOR
13
YEARS AFTER 1992.
14
(a) GENERAL RULE.-Section 162(1) of the Internal
15 Revenue Code of 1986 is amended-
HR 3626 IH
4
1
(1) in paragraph (1), by striking "25 percent
2
of" and inserting "the applicable percentage of",
3
and
4
(2) by adding at the end of paragraph (2) the
5
following new subparagraph:
6
"(C) APPLICABLE PERCENTAGE.-For
7
purposes of paragraph (1)-
"In the case of any taxable
year beginning in
calendar year:
The applicable percentage is:
1993
50
1994
75
1995 or thereafter
100."
8
(b) EFFECTIVE DATE.-The amendment made by
9 subsection (a) shall apply to taxable years beginning after
10 December 31, 1992.
11 TITLE II-IMPROVEMENTS IN
12
HEALTH INSURANCE FOR
13
SMALL EMPLOYERS
14 Subtitle A-Standards And Re-
15
quirements of Small Em-
16
ployer Health Insurance Re-
17
form
18 SEC. 201. STANDARDS AND REQUIREMENTS OF SMALL EM-
19
PLOYER HEALTH INSURANCE.
20
The Social Security Act is amended by adding at the
21 end the following new title:
HR 3626 IH
5
1
"TITLE XXI-HEALTH INSURANCE STANDARDS
2
"PART A-SMALL EMPLOYER HEALTH INSURANCE
3
STANDARDS
4
"Subpart 1-General Standards; Definitions
5
"SEC. 2101. STANDARDS AND REQUIREMENTS OF SMALL
6
EMPLOYER HEALTH INSURANCE.
7
"(a) APPROVAL REQUIRED.-
8
"(1) IN GENERAL.-No health insurance plan
9
(as defined in section 2103(a)) may be issued on or
10
after the effective date specified in subsection (d)
11
(and no new contract may be offered under such
12
plan with respect to any small employer beginning
13
on or after such effective date) unless the plan has
14
been certified by the Secretary (in accordance with
15
such procedures as the Secretary establishes) or ap-
16
proved by a State regulatory program (approved
17
under subsection (b)) as meeting the standards es-
18
tablished under section 2102 by such effective date.
19
"(2) PLAN DISAPPROVED.-If the Secretary de-
20
termines that a health insurance plan does not meet
21
the applicable requirements of this part on or after
22
such effective date, no coverage may be provided
23
under the plan to individuals not enrolled as of the
24
date of the determination and the plan may not be
25
continued for plan years beginning after the date of
HR 3626 IH
6
1
such determination until the Secretary determines
2
that such plan is in compliance with such require-
3
ments.
4
"(b) CERTIFIED BY STATE APPROVED PROGRAMS.-
5
"(1) IN GENERAL.-If the Secretary determines
6
that a State has in effect an effective regulatory pro-
7
gram for the application of the standards established
8
under section 2102 to health insurance plans, the
9
Secretary may approve such program for purposes of
10
certification of health insurance plans under this
11
part.
12
"(2) ANNUAL REPORTS.-As a condition for the
13
continued approval of such a regulatory program,
14
the State shall report to the Secretary annually such
15
information as the Secretary may require with re-
16
spect to the performance of the program. Such infor-
17
mation shall include the health insurance plans cer-
18
tified under the program, the compliance of such
19
plans with the standards established under section
20
2102, and enforcement actions taken to ensure such
21
compliance.
22
"(3) PERIODIC SECRETARIAL REVIEW OF STATE
23
REGULATORY PROGRAMS.-The Secretary annually
24
shall review State regulatory programs approved
25
under paragraph (1) to determine if they continue to
HR 3626 IH
7
1
meet and enforce the standards for approval. If the
2
Secretary initially determines that a State regulatory
3
program no longer meets such standards, the Sec-
4
retary shall provide the State an opportunity to
5
adopt such a plan of correction that would bring
6
such program into compliance with such standards.
7
If the Secretary makes a final determination that
8
the State regulatory program, fails to meet and en-
9
force such standards after such an opportunity, the
10
Secretary shall disapprove such program and
11
reassume responsibility for certification of all health
12
insurance plans in that State.
13
"(3) GAO AUDITS.-The Comptroller General
14
shall conduct periodic reviews on a sample of State
15
regulatory programs approved under paragraph (1)
16
to determine their compliance with the requirements
17
of such paragraph. The Comptroller General shall
18
report to the Secretary and Congress on the findings
19
of such reviews.
20
"(c) EXCISE TAX SANCTIONS.-For application of
21 excise tax in the case of a nonconforming plan, see section
22 5000A of the Internal Revenue Code of 1986.
23
"(d) EFFECTIVE DATE.-The effective date specified
24 in this subsection is January 1, 1993.
HR 3626 IH
8
1
"SEC. 2102. ESTABLISHMENT OF STANDARDS.
2
"(a) ESTABLISHMENT OF STANDARDS.-The Sec-
3 retary shall develop and publish, by not later than October
4 1, 1992, specific standards to implement the requirements
5 of this part and part B and to be applied under section
6 5000A of the Internal Revenue Code of 1986.
7
"(b) MORE STRINGENT STATE STANDARDS PER-
8 MITTED.-Except as provided in section 2113(g), a State
9 may implement standards that are more stringent than
10 the standards established under this section to meet the
11 requirements under subpart II of this part.
12
"(c) TELEPHONE INFORMATION SYSTEM.-The Sec-
13 retary shall provide for the establishment of a toll-free
14 telephone information and complaint system which pro-
15 vides for-
16
"(1) a system for the receipt and disposition of
17
consumer complaints or inquiries regarding compli-
18
ance of health plans with the requirements of this
19
title, and
20
"(2) information to small employers about in-
21
surers that offer health insurance plans that meet
22
the requirements of this title in the area of the em-
23
ployers.
24 "SEC. 2103. DEFINITIONS.
25
"(a) HEALTH INSURANCE PLAN.-As used in this
26 title, the term 'health insurance plan' means any hospital
HR 3626 IH
9
1 or medical service policy or certificate, hospital or medical
2 service plan contract, health maintenance organization
3 group contract, or a multiple employer welfare arrange-
4 ment, but does not include-
5
"(1) a qualified health maintenance organiza-
6
tion (as defined in section 1310(d) of the Public
7
Health Service Act); or
8
"(2) any of the following offered by an
9
insurer-
10
"(A) accident only, dental only, disability
11
only insurance, or long-term care only insur-
12
ance,
13
"(B) coverage issued as a supplement to li-
14
ability insurance,
15
"(C) workmen's compensation or similar
16
insurance, or
17
"(D) automobile medical-payment insur-
18
ance.
19
"(b) INSURER AND HEALTH MAINTENANCE ORGANI-
20 ZATION.-As used in this title:
21
"(1) INSURER.-The term 'insurer' means any
22
person that offers a health insurance plan to a small
23
employer.
24
"(2) HEALTH MAINTENANCE ORGANIZATION.-
25
The term 'health maintenance organization' has the
HR 3626IH-2
10
1
meaning given the term 'eligible organization' in sec-
2
tion 1876(b) of the Social Security Act.
3
"(c) GENERAL DEFINITIONS.-As used in this title:
4
"(1) APPLICABLE REGULATORY AUTHORITY.-
5
The term 'applicable regulatory authority' means,
6
with respect to a health insurance plan in a State
7
with a regulatory program approved under section
8
2101(b), the State commissioner or superintendent
9
of insurance or other State authority responsible for
10
regulation of health insurance.
11
"(2) SMALL EMPLOYER.-The term 'small em-
12
ployer' means, with respect to a calendar year, an
13
employer that normally employs more than 1 but
14
less than 51 eligible employees on a typical business
15
day. For the purposes of this paragraph, the term
16
'employee' includes a self-employed individual. Sec-
17
tion 5000A(b)(3) of the Internal Revenue Code of
18
1986 shall apply for purposes of the preceding sen-
19
tence.
20
"(3) ELIGIBLE EMPLOYEE.-The term 'eligible
21
employee' means, with respect to an employer, an
22
employee who normally performs on a monthly basis
23
at least 17½ hours of service per week for that em-
24
ployer.
HR 3626 IH
11
1
"Subpart 2-Small Employer Health Insurance Reform
2 "SEC. 2111. GENERAL REQUIREMENTS FOR HEALTH INSUR-
3
ANCE PLANS ISSUED TO SMALL EMPLOYERS.
4
"(a) REGISTRATION.-Each insurer shall register
5 with the Secretary and with any applicable regulatory au-
6 thority for each State in which it issues or offers a health
7 insurance plan to small employers.
8
"(b) GUARANTEED ELIGIBILITY.-
9
"(1) IN GENERAL.-No insurer may exclude
10
from coverage any eligible employee, the spouse or
11
any dependent child of the eligible employee to
12
whom coverage is made available by a small em-
13
ployer.
14
"(2) WAITING PERIODS.-Paragraph (1) shall
15
not apply to any period an eligible employee is ex-
16
cluded from coverage under the health insurance
17
plan solely by reason of a requirement applicable to
18
all employees that a minimum period of service with
19
the small employer is required before the employee
20
is eligible for such coverage.
21
"(c) GUARANTEED ISSUE.-
22
"(1) IN GENERAL.-Subject to the succeeding
23
provisions of this subsection, an insurer that offers
24
a health insurance plan to small employers in a geo-
25
graphic area in a community must offer the same
HR 3626 IH
12
1
plan to any other small employer located in the area.
2
Such requirement shall apply on a continuous, year-
3
round basis.
4
"(2) TREATMENT OF HEALTH MAINTENANCE
5
ORGANIZATIONS.-
6
"(A)
GEOGRAPHIC
LIMITATIONS.-A
7
health maintenance organization may deny en-
8
rollment to employees (and family members) of
9
a small employer if the employees are located
10
outside the service area of the organization, but
11
only if such denial is applied uniformly without
12
regard to health status or insurability.
13
"(B) SIZE LIMITS.-A health maintenance
14
organization may apply to the Secretary to
15
cease enrolling new small employer groups in its
16
health insurance plan (or in a geographic area
17
served by the plan) if-
18
"(i) it ceases to enroll any new em-
19
ployer groups, and
20
"(ii) it can demonstrate that its finan-
21
cial or administrative capacity to serve pre-
22
viously enrolled groups and individuals
23
(and additional individuals who will be ex-
24
pected to enroll because of affiliation with
25
such previously enrolled groups) will be im-
HR 3626 IH
13
1
paired if it is required to enroll new em-
2
ployer groups.
3
"(3) GROUNDS FOR REFUSAL TO RENEW.-
4
"(A) IN GENERAL.-An insurer may refuse
5
to renew, or may terminate, a health insurance
6
plan under this part only for-
7
"(i) nonpayment of premiums,
8
"(ii) fraud or misrepresentation, or
9
"(iii) failure to maintain minimum
10
participation rates (consistent with sub-
11
paragraph (B)).
12
(B) MINIMUM PARTICIPATION RATES.-
13
An insurer may require, with respect to a
14
health insurance plan issued to a small em-
15
ployer, that a minimum percentage of eligible
16
employees who do not otherwise have health in-
17
surance are enrolled in such plan, SO long as
18
such percentage is enforced uniformly for all
19
plans offered to employers of comparable size.
20
"(d) MINIMUM PLAN PERIOD.-An insurer may not
21 offer to, or issue with respect to, a small employer a health
22 insurance plan with a term of less than 12 months.
23
"(e) NOTICES AND RENEWAL PERIODS.-
24
"(1) NOTICE ON EXPIRATION.-An insurer pro-
25
viding health insurance plans to small employers
HR 3626 IH
14
1
shall provide for notice, at least 60 days before the
2
date of expiration of the health insurance plan, of
3
the terms for renewal of the plan. Except with re-
4
spect to rates and administrative changes, the terms
5
of renewal (including benefits) shall be the same as
6
the terms of issuance.
7
"(2) PERIOD OF RENEWAL.-The period of re-
8
newal of each small employer health plan shall be for
9
a period of not less than 12 months.
10
"(f) GUARANTEED RENEWABILITY.-
11
"(1) IN GENERAL.-
12
"(A) GENERAL RULE.-Subject to the suc-
13
ceeding provisions of this subsection, an insurer
14
shall ensure that a health insurance plan issued
15
to a small employer be renewed, at the option
16
of the small employer, unless the plan is termi-
17
nated for a reason specified in subparagraph
18
(B) or in subsection (c)(3)(A).
19
"(B) TERMINATION OF SMALL EMPLOYER
20
BUSINESS.-An insurer need not renew a health
21
insurance plan with respect to a small employer
22
if the insurer-
23
"(i) elects not to renew all of its
24
health insurance plans issued to small em-
25
ployers in a State; and
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1
"(ii) provides notice to the Secretary,
2
any applicable regulatory authority in the
3
State, and to each small employer covered
4
under the plan of such termination at least
5
180 days before the date of expiration of
6
the plan.
7
In the case of such a termination, the insurer
8
may not provide for issuance of any health in-
9
surance plan to a small employer in the State
10
during the 5-year period beginning on the date
11
of termination of the last plan not SO renewed.
12
"(g) No DISCRIMINATION BASED ON HEALTH STA-
13 TUS FOR CERTAIN SERVICES.-A health insurance plan
14 offered to a small employer by an insurer shall meet the
15 requirements of part B (relating to prohibiting discrimina-
16 tion based on health status for certain services).
17 "SEC. 2112. REQUIREMENTS RELATED TO RESTRICTIONS
18
ON RATING PRACTICES.
19
"(a) LIMIT ON VARIATION OF REFERENCE PREMIUM
20 RATES BETWEEN BLOCKS OF BUSINESS.-
21
"(1) IN GENERAL.-The index rate for any
22
block of business of an insurer may not exceed the
23
index rate for any other block of business by more
24
than 20 percent.
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1
"(2) EXCEPTIONS.-Paragaph (1) shall not
2
apply to a block of business if-
3
"(A) the block is one for which the insurer
4
does not reject, and never has rejected, small
5
employers included within the definition of em-
6
ployers eligible for the block of business or oth-
7
erwise eligible employees and dependents who
8
enroll on a timely basis, based upon their claims
9
experience, health status, industry, or occupa-
10
tion,
11
"(B) the insurer does not transfer, and
12
never has transferred, a health insurance plan
13
involuntarily into or out of the block of busi-
14
ness, and
15
"(C) the block of business is currently
16
available for purchase at the time an exception
17
to paragraph (1) is sought by the insurer.
18
"(b) USE OF COMMUNITY RATING IN PREMIUM
19 RATES WITHIN A BLOCK OF BUSINESS.-
20
"(1) LIMITING VARIATIONS ON PREMIUM TO
21
AGE AND SEX.-The reference premium rate charged
22
for a health insurance plan offered to small employ-
23
ers within a community (as defined under the plan
24
consistent with paragraph (3)) with similar benefits
25
for a type of family enrollment (described in para-
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1
graph (4)) shall be the same for all small employers
2
in the same block of business in the community.
3
"(2) AGE AND SEX ADJUSTMENT TO COMMU-
4
NITY-RATING.-
5
"(A) IN GENERAL.-Subject to subpara-
6
graph (B), a health insurance plan offered to a
7
small employer may provide for an adjustment
8
to the reference premium rate based on age and
9
gender of covered individuals. Any such adjust-
10
ment shall be applied consistently to all small
11
employers.
12
"(B) LIMITATION ON ADJUSTMENT.-The
13
adjustment under subparagraph (A) may not
14
result, with respect to health insurance plans
15
with similar benefits in a community in a block
16
of business, in premium rates that vary from
17
the index rate by more than 25 percent of the
18
index rate.
19
"(3) SPECIFICATION OF COMMUNITY.-For pur-
20
poses of paragraph (1), no insurer may use a geo-
21
graphic area that is smaller than a metropolitan sta-
22
tistical area as a community.
23
"(4) TYPES OF FAMILY ENROLLMENT.-Each
24
health insurance plan offered to a small employer
25
shall permit enrollment of (and shall compute pre-
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18
1
miums separately for) individuals based on each of
2
the following beneficiary classes:
3
"(A) 1 adult.
4
"(B) A married couple without children.
5
"(C) A married couple with 1 or more chil-
6
dren, or 1 adult with 1 or more children.
7
"(c) LIMIT ON TRANSFER OF EMPLOYERS AMONG
8 BLOCKS OF BUSINESS.-
9
"(1) An insurer may not transfer a small em-
10
ployer from one block of business to another without
11
the consent of the employer.
12
"(2) An insurer may not offer to transfer a
13
small employer from one block of business to an-
14
other unless-
15
"(A) the offer is made without regard to
16
age, sex, geography, claims experience, health
17
status, industry, occupation or the date on
18
which the policy was issued, and
19
"(B) the same offer is made to all other
20
small employers in the same block of business.
21
"(d) LIMITS ON VARIATION IN PREMIUM IN-
22 CREASES.-The percentage increase in the premium rate
23 charged to a small employer for a new rating period (de-
24 termined on an annual basis) may not exceed the sum of
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1 the percentage change in the base premium rate plus 5
2 percentage points.
3
"(e) DEFINITIONS.-In this section:
4
"(1) BLOCK OF BUSINESS.-
5
"(A) IN GENERAL.-Except as provided in
6
subparagraph (B), the term 'block of business'
7
means, with respect to an insurer, all of the
8
small employers with a health insurance plan is-
9
sued by the insurer (as shown on the records of
10
the insurer).
11
"(B) DISTINCT GROUPS.-A distinct group
12
of small employers with health insurance plans
13
issued by an insurer may be treated as a block
14
of business by such insurer if all of the plans
15
in such group-
16
"(i) are marketed primarily by direct
17
mail or are not marketed primarily by di-
18
rect mail,
19
"(ii) have been acquired from another
20
insurer as a distinct group, or
21
"(iii) are provided through an associa-
22
tion with membership of not less than 25
23
small employers that has been formed for
24
purposes other than obtaining health in-
25
surance.
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1
"(2) INDEX RATE.-The term 'index rate'
2
means, with respect to a block of business, 1331/3
3
percent of the reference premium rate for the block
4
of business.
5
"(3) REFERENCE PREMIUM RATE.-The term
6
'reference premium rate' means, for each block of
7
business for each rating period in a community, the
8
lowest premium rate charged or which could have
9
been charged, for the most favorable actuarial class,
10
by the insurer under a rating system for that block
11
of business to small employers in the community for
12
health insurance plans with the same or similar cov-
13
erage.
14
"(f) FULL DISCLOSURE OF RATING PRACTICES.-
15
"(1) IN GENERAL.-At the time an insurer of-
16
fers a health insurance plan to a small employer, the
17
insurer shall fully disclose to the employer all of the
18
following:
19
"(A) Rating practices for small employer
20
health insurance plans, including rating prac-
21
tices for different populations and benefit de-
22
signs.
23
"(B) The extent to which premium rates
24
for the small employer are established or ad-
25
justed based upon the actual or expected vari-
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1
ation in claims costs or health condition of the
2
employees and of such small employer and their
3
dependents.
4
"(C) The provisions concerning the insur-
5
er's right to change premium rates, the extent
6
to which premiums can be modified, and the
7
factors which affect changes in premium rates.
8
"(2) NOTICE ON EXPIRATION.-An insurer pro-
9
viding health insurance plans to small employers
10
shall provide for notice, at least 60 days before the
11
date of expiration of the health insurance plan, of
12
the terms for renewal of the plan.
13
"(g) ACTUARIAL CERTIFICATION.-Each insurer
14 shall file annually with the Secretary and any applicable
15 regulatory authority a written statement by a member of
16 the American Academy of Actuaries (or other individual
17 acceptable to such authority) that, based upon an exam-
18 ination by the individual which includes a review of the
19 appropriate records and of the actuarial assumptions of
20 the insurer and methods used by the insurer in establish-
21 ing premium rates for small employer health insurance
22 plans-
23
"(1) the insurer is in compliance with the appli-
24
cable provisions of this section, and
25
"(2) the rating methods are actuarially sound.
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1 Each insurer shall retain a copy of such statement for ex-
2 amination at its principal place of business.
3 "SEC. 2113. REQUIREMENTS FOR SMALL EMPLOYER
4
HEALTH INSURANCE BENEFIT PACKAGE OF-
5
FERINGS.
6
"(a) STANDARD BENEFIT PACKAGES.-If an insurer
7 offers any health insurance plan to small employers in a
8 State, the insurer shall also offer a health insurance plan
9 providing for the standard benefit package defined in sub-
10 section (b).
11
"(b) STANDARD BENEFIT PACKAGE.-
12
"(1) IN GENERAL.-Except as otherwise pro-
13
vided in this subsection and subsections (c), (d), and
14
(e), a health insurance plan providing for a standard
15
benefit package shall be limited to payment for the
16
same benefits as are provided under title XVIII of
17
individuals entitled to benefits under part A, and en-
18
rolled under part B, of such title.
19
"(2) UNLIMITED INPATIENT HOSPITAL SERV-
20
ICES FOR CHILDREN.-For children, the standard
21
benefit package also shall include payment for inpa-
22
tient hospital services without regard to any day lim-
23
itations under subsections (a)(1) and (b)(1) of sec-
24
tion 1812.
25
"(3) PREGNANCY-RELATED SERVICES.-
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1
"(A) IN GENERAL.-In the case of a preg-
2
nant woman (as defined in subparagraph (C),
3
the standard benefit package shall include enti-
4
tlement to have payment made for the fol-
5
lowing, subject to the periodicity schedule estab-
6
lished with respect to the services under sub-
7
paragraph (B):
8
"(i) Prenatal care, including care for
9
all complications of pregnancy.
10
"(ii) Inpatient labor and delivery serv-
11
ices.
12
"(iii) Postnatal care.
13
"(iv) Postnatal family planning serv-
14
ices.
15
"(B) PERIODICITY SCHEDULE.-The Sec-
16
retary, in consultation with the American Col-
17
lege of Obstetrics and Gynecology, shall estab-
18
lish a schedule of periodicity which reflects the
19
general, appropriate frequency with which serv-
20
ices listed in subparagraph (A) should be pro-
21
vided to pregnant women without complications
22
of pregnancy.
23
"(C) PREGNANT WOMAN DEFINED.-In
24
this paragraph, the term 'pregnant woman'
25
means a woman during pregnancy and until the
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1
end of the month in which the 60-day period
2
(beginning on the date of termination of the
3
pregnancy) ends.
4
"(c) DEDUCTIBLE.-
5
"(1) IN GENERAL.-Except as provided in this
6
subsection, the standard benefit package the deduct-
7
ible described in paragraph (2) shall be applied in-
8
stead of applying the deductible for inpatient hos-
9
pital services under the first sentence of section
10
1813(a)(1) and the deductible under section
11
1833(b).
12
"(2) DEDUCTIBLE AMOUNT.-
13
"(A) IN GENERAL.-For purposes of this
14
subsection, the deductible described in this
15
paragraph is $250.
16
"(B) FAMILY LIMIT OF $500.-In the case
17
of a family, the deductible under subparagraph
18
(A) shall not apply in a year after members of
19
the family (who are not medicare beneficiaries)
20
have collectively had expended $500 towards
21
such deductible.
22
"(C) INDEXING OF DOLLAR AMOUNTS OF
23
DEDUCTIBLE.-The dollar amounts specified in
24
subparagraphs (A) and (B) shall each be in-
25
creased each year (beginning with second year
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1
after the year in which this title is enacted) by
2
a percentage equal to the percentage increase in
3
the contribution and benefit base (determined
4
under section 230) from the year before the
5
year in which this title is enacted to the year
6
before the year involved. Any such increase
7
shall be rounded to the nearest multiple of $5.
8
"(3) DEDUCTIBLE DOES NOT APPLY TO PRE-
9
VENTIVE SERVICES.-The deductible established
10
under this subsection does not apply to preventive
11
services provided consistent with any applicable peri-
12
odicity schedules.
13
"(d) COINSURANCE.-
14
"(1) No COINSURANCE FOR PREVENTIVE SERV-
15
ICES.-There shall be no coinsurance under the
16
standard benefit package in the case of preventive
17
services provided consistent with any applicable peri-
18
odicity schedules.
19
"(2) No COINSURANCE FOR INPATIENT HOS-
20
PITAL SERVICES FOR CHILDREN.-There shall be no
21
coinsurance under the standard benefit package in
22
the case of inpatient hospital services furnished to
23
children.
24
"(e) LIMITATION ON COST-SHARING.-
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26
1
"(1) IN GENERAL.-Under the standard benefit
2
package, whenever in a calendar year an individual's
3
or family's expenses for the deductible and coinsur-
4
ance with respect to required services covered under
5
the standard benefit package and furnished during
6
the year equals $2,500 or $3,000, respectively, pay-
7
ment of benefits under the package for the individ-
8
ual or family for required services furnished during
9
the remainder of the year shall be paid without the
10
application of any coinsurance.
11
"(2) INDEXING OF DOLLAR AMOUNT OF
12
LIMIT.-The dollar amounts specified in paragraph
13
(1) shall be increased each year (beginning with the
14
second year after the year in which this title is en-
15
acted) by a percentage equal to the percentage in-
16
crease in the contribution and benefit base (deter-
17
mined under section 230) from the year before the
18
year in which this title is enacted to the year before
19
the year involved. Any such increase shall be round-
20
ed to the nearest multiple of $5.
21
"(f) EXCLUSIONS.-
22
"(1) IN GENERAL.-Except as provided in para-
23
graph (2), section 1862(a) shall apply to expenses
24
incurred for items and services provided under the
25
standard benefit package in the same manner as
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1
such section applies to items and services provided
2
under title XVIII.
3
"(2) PREVENTIVE SERVICES-In applying para-
4
graph (1), in the case of preventive services provided
5
consistent with the applicable periodicity schedule-
6
"(A) such services shall be considered to be
7
reasonable and medically necessary, and
8
"(B) shall not be subject to exclusion
9
through the operation of paragraph (1), (7), or
10
(12) of section 1862(a) (as incorporated under
11
paragraph (1))).
12
"(3) USE OF SAME NATIONAL COVERAGE DECI-
13
SION REVIEW PROCESS.-The provisions of section
14
1869(b)(3) shall apply under the standard benefit
15
package in the same manner as they apply under
16
title XVIII.
17
"(g) LIMITED PREEMPTION OF STATE MANDATED
18 BENEFITS FOR THE STANDARD BENEFIT PACKAGE.-No
19 State may enforce any law or regulation that requires
20 health insurance plans which-
21
"(1) are offered to small employers in the
22
State, and
23
"(2) provide only the standard benefit package,
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1 to include any specified services, category of care, or serv-
2 ices of any class or type of provider that is different from
3 the standard benefit package under this section.
4
"(h) PREVENTIVE SERVICES DEFINED.-In this sec-
5 tion, the term 'preventive services' means the following
6 items and services furnished in accordance with any appli-
7 cable periodicity schedules:
8
"(1) Pregnancy-related services (described in
9
subsection (b)(3)(A))).
10
"(2) Well-child care (as defined in section
11
1861(II)(1)).
12
"(3) Screening mammography (as defined in
13
section 1861(jj)).
14
"(4) Screening pap smear (as defined in section
15
1861(nn)).
16
"(5) Colorectal cancer screening services.
17
"(6) Immunization services described in section
18
1862(a)(1)(H).
19 The services referred to in paragraph (5) are screening
20 fecal-occult blood tests and screening flexible
21 sigmoidoscopies provided for the purpose of early detection
22 of colon cancer.".
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29
1
Subtitle B-Tax Penalty on
2
Noncomplying Insurers
3 SEC. 211. EXCISE TAX ON PREMIUMS RECEIVED ON
4
HEALTH INSURANCE POLICIES WHICH DO
5
NOT MEET CERTAIN REQUIREMENTS.
6
(a) IN GENERAL.-Chapter 47 of the Internal Reve-
7 nue Code of 1986 (relating to taxes on group health plans)
8 is amended by adding at the end thereof the following new
9 section:
10 "SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS
11
FOR HEALTH INSURANCE.
12
"(a) GENERAL RULE.-
13
"(1) TITLE XXI STANDARDS.-
14
"(A) TAX.-In the case of any person issu-
15
ing a health insurance plan to a small employer,
16
there is hereby imposed a tax on the failure of
17
such person to meet at any time during any
18
taxable year the applicable requirements of title
19
XXI of the Social Security Act.
20
"(B) DETERMINATION OF VIOLATIONS.-
21
The Secretary of Health and Human Services
22
shall determine whether any person meets the
23
requirements of such title.
24
"(2) SMALL EMPLOYER SELF-INSURING FOR
25
HEALTH BENEFITS.-In the case of a small em-
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1
ployer, there is hereby imposed a tax on expendi-
2
tures for a health plan that is not an insured health
3
plan.
4
"(b) AMOUNT OF TAX.-
5
"(1) IN GENERAL.-
6
"(A) TITLE XXI STANDARDS.-The
7
amount of tax imposed by subsection (a)(1) by
8
reason of 1 or more failures during a taxable
9
year shall be equal to 25 percent of the gross
10
premiums received during such taxable year
11
with respect to all health insurance plans issued
12
to small employers by the person on whom such
13
tax is imposed.
14
"(B) SMALL EMPLOYER SELF-INSUR-
15
ANCE.-The amount of tax imposed by sub-
16
section (a)(2) by reason of 1 or more failures
17
during a taxable year shall be equal to 25 per-
18
cent of the expenditures under any uninsured
19
health plan during such taxable year.
20
"(2) GROSS PREMIUMS.-For purposes of para-
21
graph (1), gross premiums shall include any consid-
22
eration received with respect to any health insurance
23
plan.
24
"(3) CONTROLLED GROUPS.-For purposes of
25
paragraph (1)-
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1
"(A) CONTROLLED GROUP OF COR-
2
PORATIONS.-All corporations which are mem-
3
bers of the same controlled group of cor-
4
porations shall be treated as 1 person. For pur-
5
poses of the preceding sentence, the term 'con-
6
trolled group of corporations' has the meaning
7
given to such term by section 1563(a), except
8
that-
9
"(i) 'more than 50 percent' shall be
10
substituted for 'at least 80 percent' each
11
place it appears in section 1563(a)(1), and
12
"(ii) the determination shall be made
13
without regard to subsections (a) (4) and
14
(e)(3)(C) of section 1563.
15
"(B) PARTNERSHIPS, PROPRIETORSHIPS,
16
ETC., WHICH ARE UNDER COMMON CONTROL.-
17
Under regulations prescribed by the Secretary,
18
all trades or business (whether or not incor-
19
porated) which are under common control shall
20
be treated as 1 person. The regulations pre-
21
scribed under this subparagraph shall be based
22
on principles similar to the principles which
23
apply in the case of subparagraph (A).
24
"(c) LIMITATION ON TAX.-
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32
1
"(1) TAX NOT TO APPLY WHERE FAILURE NOT
2
DISCOVERED EXERCISING REASONABLE DILI-
3
GENCE.-No tax shall be imposed by subsection (a)
4
with respect to any failure for which it is established
5
to the satisfaction of the Secretary that the person
6
on whom the tax is imposed did not know, and exer-
7
cising reasonable diligence would not have known,
8
that such failure existed.
9
"(2) TAX NOT TO APPLY WHERE FAILURES
10
CORRECTED WITHIN 30 DAYS.-No tax shall be im-
11
posed by subsection (a) with respect to any failure
12
if-
13
"(A) such failure was due to reasonable
14
cause and not to willful neglect, and
15
"(B) such failure is corrected during the
16
30-day period beginning on the 1st date any of
17
the persons on whom the tax is imposed knew,
18
or exercising reasonable diligence would have
19
known, that such failure existed.
20
"(3) WAIVER BY SECRETARY.-In the case of a
21
failure which is due to reasonable cause and not to
22
willful neglect, the Secretary may waive part or all
23
of the tax imposed by subsection (a) to the extent
24
that the payment of such tax would be excessive rel-
25
ative to the failure involved.
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1
"(d) DEFINITIONS.-For purposes of this section:
2
"(1) HEALTH INSURANCE PLAN.-The term
3
'health insurance plan' has the meaning given such
4
term in section 2103 of the Social Security Act.
5
"(2) SMALL EMPLOYER.-The term 'small em-
6
ployer' means, with respect to a calendar year, an
7
employer that normally employs more than 1 but
8
less than 51 eligible employees on a typical business
9
day. For the purposes of this paragraph, the term
10
'employee' includes a self-employed individual. Sub-
11
section (b)(3) shall also apply for purposes of the
12
preceding sentence.
13
"(3) ELIGIBLE EMPLOYEE.-The term 'eligible
14
employee' means, with respect to an employer, an
15
employee who normally performs on a monthly basis
16
at least 17½ hours of service per week for that em-
17
ployer."
18
(b) NONDEDUCTIBILITY OF TAX.-Paragraph (6) of
19 section 275(a) of such Code (relating to nondeductibility
20 of certain taxes) is amended by inserting "47," after
21 "46,".
22
(c) CLERICAL AMENDMENTS.-The table of sections
23 for such chapter 47 is amended by adding at the end
24 thereof the following new item:
"Sec. 5000A. Failure to satisfy certain standards for health insur-
ance.".
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34
1
(d) EFFECTIVE DATES.-
2
(1) IN GENERAL.-The amendments made by
3
subsections (a) and (c) shall take effect on the date
4
of the enactment of this Act.
5
(2) NONDEDUCTIBILITY OF TAX.-The amend-
6
ment made by subsection (b) shall apply to taxable
7
years beginning after December 31, 1991.
8
Subtitle C-Studies and Reports
9 SEC. 221. GAO STUDY AND REPORT ON RATING REQUIRE-
10
MENTS FOR SMALL GROUP HEALTH INSUR-
11
ANCE.
12
The Comptroller General of the United States shall
13 study and report to the Congress by no later than January
14 1, 1995, on the impact of the standards for rating prac-
15 tices for small group health insurance established under
16 section 2112 of the Social Security Act on the availability
17 and price of insurance offered to small employers. The
18 study shall also include the Comptroller General's rec-
19 ommendations for adjusting the rating standards to elimi-
20 nate variation in premiums associated with demographic
21 factors.
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35
1 TITLE III-IMPROVEMENTS IN
2
PORTABILITY OF PRIVATE
3
HEALTH INSURANCE
4 SEC. 301. EXCISE TAX IMPOSED ON FAILURE TO PROVIDE
5
FOR PREEXISTING CONDITION.
6
Section 5000A of the Internal Revenue Code of 1986
7 (relating to taxes on group health plans), as added by sec-
8 tion 211(a) of this Act, is amended-
9
(1) in subsection (a)(1)(A), by inserting "or
10
any group health plan" after "to a small employer";
11
(2) in subsection (b)(1)(A), by inserting before
12
the period at the end the following: "or (in the case
13
of a violation of a requirement of part B of title XXI
14
of such Act) with respect to all group health plans
15
issued by the person on whom such tax is imposed";
16
(3) in subsection (b)(2), by inserting "or (in the
17
case of a violation of a requirement of part B of title
18
XXI of such Act) group health plans" after "health
19
insurance plans";
20
(4) in subsection (d)-
21
(A) in paragraph (4), by inserting before
22
the period at the end the following: "and
23
means, with respect to a violation of a require-
24
ment of part B of title XXI of the Social Secu-
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36
1
rity Act, an entity offering a group health
2
plan"; and
3
(B) by adding at the end the following new
4
paragraph:
5
"(5) GROUP HEALTH PLAN.-The term 'group
6
health plan' has the meaning given such term in sec-
7
tion 5000(b)(1).
8 SEC. 302. PROHIBITION OF DISCRIMINATION BASED ON
9
HEALTH STATUS FOR CERTAIN SERVICES.
10
(a) IN GENERAL.-Title XXI of the Social Security
11 Act, as added by section 211(a) of this Act, is amended
12 by adding at the end the following new part:
13 "PART B-PROHIBITION OF DISCRIMINATION BASED ON
14
HEALTH STATUS FOR CERTAIN SERVICES
15 "SEC. 2131. IN GENERAL.
16
"Except as provided under section 2132, group
17 health plans may not deny, limit, or condition the coverage
18 under (or benefits of) the plan with respect to standard
19 health services based on the health status, claims experi-
20 ence, receipt of health care, medical history, or lack of evi-
21 dence of insurability, of an individual.
22 "SEC. 2132. TREATMENT OF PREEXISTING CONDITION EX-
23
CLUSIONS FOR ALL SERVICES.
24
"(a) IN GENERAL.-Subject to the succeeding provi-
25 sions of this section, group health plans may exclude cov-
HR 3626 IH
37
1 erage with respect to standard health services related to
2 treatment of a preexisting condition, but the period of
3 such exclusion may not exceed 6 months. The exclusion
4 of coverage shall not apply to services furnished to
5 newborns.
6
"(b) CREDITING OF PREVIOUS COVERAGE.-
7
"(1) IN GENERAL.-A group health plan shall
8
provide that if an individual under such plan is in
9
a period of continuous coverage (as defined in para-
10
graph (2)(A)) with respect to particular services as
11
of the date of initial coverage under such plan (de-
12
termined without regard to any waiting period under
13
such plan), any period of exclusion of coverage with
14
respect to a preexisting condition for such services
15
or type of services shall be reduced by 1 month for
16
each month in the period of continuous coverage.
17
"(2) DEFINITIONS.-As used in this section:
18
"(A) PERIOD OF CONTINUOUS COV-
19
ERAGE.-The term 'period of continuous cov-
20
erage' means, with respect to particular serv-
21
ices, the period beginning on the date an indi-
22
vidual is enrolled under a health insurance plan,
23
title XVIII or XIX of the Social Security Act,
24
or other health benefit arrangement (including
25
a self-insured plan) which provides substantially
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1
the same or similar benefits with respect to
2
such services and ends on the date the individ-
3
ual is not SO enrolled for a continuous period of
4
more than 3 months.
5
"(B) PREEXISTING CONDITION.-The term
6
'preexisting condition' means, with respect to
7
coverage under a group health plan, a condition
8
which has been diagnosed or treated during the
9
3-month period ending on the day before the
10
first date of such coverage.
11
"SEC. 2133. DEFINITIONS.
12
"For purposes of this part:
13
"(1) COVERED INDIVIDUAL.-The term 'cov-
14
ered individual' means-
15
"(A) an individual who is (or will be) pro-
16
vided coverage under a group health plan by
17
virtue of the performance of services by the in-
18
dividual for 1 or more persons maintaining the
19
plan (including as an employee defined in sec-
20
tion 401(c)(1) of the Internal Revenue Code of
21
1986), and
22
"(B) the spouse or any dependent child of
23
such individual.
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1
"(2) GROUP HEALTH PLAN.-The term 'group
2
health plan' has the meaning given such term by
3
section 5000(b)(1).
4
"(3) STANDARD HEALTH SERVICES.-The term
5
'standard health services' means services for which
6
benefits are available under the standard benefit
7
package under section 2113(b).".
8
(b) EFFECTIVE DATE.-The amendments made by
9 this section shall apply to plan years beginning after De-
10 cember 31, 1992.
11
TITLE IV-HEALTH CARE COST
12
CONTAINMENT
13 SEC. 401. ESTABLISHMENT OF NATIONAL HEALTH CARE
14
COST COMMISSION.
15
(a) ESTABLISHMENT.-
16
(1) IN GENERAL.-There is hereby established
17
within the Department of Health and Human Serv-
18
ices a National Health Care Cost Commission (in
19
this title referred to as the "Commission").
20
(2) COMPOSITION.-
21
(A) IN GENERAL.-The Commission shall
22
be composed of 11 members, appointed by the
23
President by and with the advice and consent of
24
the Senate. The President shall first appoint
25
members to the Commission by not later than
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1
6 months after the date of the enactment of
2
this Act.
3
(B) REPRESENTATION.-The membership
4
of the Commission shall include individuals with
5
national recognition for their expertise in health
6
insurance, health economics, health care pro-
7
vider payment, and related fields. In appointing
8
individuals, the President shall assure rep-
9
resentation of consumers of health services,
10
large and small employers, labor organizations,
11
health care providers, and health care insurers.
12
(b) TERMS.-Members of the Commission shall be
13 appointed to serve for terms of 3 years, except that the
14 terms of the members first appointed shall be staggered
15 SO that the terms of no more than 4 members expire in
16 any year. The term of the Chairman shall be coincident
17 with the term of the President. Individuals appointed to
18 fill a vacancy created in the Commission shall be ap-
19 pointed for the remainder of the term.
20
(c) DUTIES.-
21
(1) ANNUAL REPORT.-The Commission shall
22
report annually to the President and the Congress
23
on national health care costs. Such report shall be
24
made by June 1 of each year and shall include infor-
25
mation on-
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1
(A) increases in public and private health
2
care spending by type of health care service, by
3
geographic region, and by source of payment;
4
(B) increases in the cost of private health
5
insurance coverage; and
6
(C) factors contributing to increases in
7
health care costs.
8
(2) REVIEW OF PAYMENT RATES.-The Com-
9
mission shall review payment rates established by
10
the Secretary under section 402(b) and make rec-
11
ommendations to the Secretary regarding the appro-
12
priateness of such rates.
13
(d) MISCELLANEOUS.-
14
(1) AUTHORITY.-The Commission may-
15
(A) employ and fix compensation of an Ex-
16
ecutive Director and such other personnel (not
17
to exceed 25) as may be necessary to carry out
18
its duties (without regard to the provisions of
19
title 5, United States Code, governing appoint-
20
ments in the competitive service);
21
(B) seek such assistance and support as
22
may be required in the performance of its du-
23
ties from appropriate Federal departments and
24
agencies;
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1
(C) enter into contracts or make other ar-
2
rangements, as may be necessary for the con-
3
duct of the work of the Commission (without
4
regard to section 3709 of the Revised Statutes
5
(41 U.S.C. 5)); and
6
(D) make advance, progress, and other
7
payments which relate to the work of the Com-
8
mission.
9
(2) COMPENSATION.-While serving on the
10
business of the Commission (including traveltime), a
11
member of the Commission shall be entitled to com-
12
pensation at the per diem equivalent of the rate pro-
13
vided for level IV of the Executive Schedule under
14
section 5315 of title 5, United States Code; and
15
while SO serving away from the member's home and
16
regular place of business, a member may be allowed
17
travel expenses, as authorized by the Chairman of
18
the Commission. Physicians serving as personnel of
19
the Commission may be provided a physician com-
20
parability allowance by the Commission in the same
21
manner as Government physicians may be provided
22
such an allowance by an agency under section 5948
23
of title 5, United States Code, and for such purpose
24
subsection (i) of such section shall apply to the Com-
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1
mission in the same manner as it applies to the Ten-
2
nessee Valley Authority.
3
(3) ACCESS TO INFORMATION, ETC.-The Com-
4
mission shall have access to such relevant informa-
5
tion and data as may be available from appropriate
6
Federal agencies and shall assure that its activities,
7
especially the conduct of original research and medi-
8
cal studies, are coordinated with the activities of
9
Federal agencies. The Commission shall be subject
10
to periodic audit by the General Accounting Office.
11
(4) AUTHORIZATION OF APPROPRIATIONS.-
12
There are authorized to be appropriated such sums
13
as may be necessary to carry out this section.
14 SEC. 402. ESTABLISHMENT OF OPTIONAL PROVIDER PAY-
15
MENT RATES.
16
(a) ESTABLISHMENT OF RATES.-
17
(1) IN GENERAL.-The Secretary shall estab-
18
lish, for each class of provider (as defined in sub-
19
section (f)) by not later than October 1 before the
20'
beginning of each year (beginning with 1994), op-
21
tional payment rates for hospital, physician, and
22
other health items and services furnished during the
23
year.
24
(2) REVIEW BEFORE PROMULGATION.-Before
25
promulgating such rates, the Secretary shall provide
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1
the Commission with the opportunity to review the
2
proposed rates and to make recommendations with
3
respect to such rates.
4
(b) PAYMENT BASIS.-The payment rates established
5 under subsection (a) shall be based on payment rates and
6 methodologies (including payment for inpatient hospital
7 services on the basis of per discharge payments relating
8 to diagnosis-related groups and payment for physicians'
9 services based on a resource-based relative value scale)
10 used under title XVIII of the Social Security Act, with
11 appropriate adjustment to reflect differences in the bene-
12 fits and populations served. Such methodologies for pay-
13 ment for inpatient and outpatient hospital services shall
14 provide for an adjustment to take into account the costs
15 incurred by hospitals in providing care for which no pay-
16 ment or only partial payment of the applicable payment
17 rate is made.
18
(c) OPTIONAL APPLICATION OF RATES.-In the case
19 of any purchaser (including a health insurance plan or an
20 individual) that incurs a liability for hospital, physician,
21 or other items and services furnished on or after January
22 1, 1994, and for which a payment rate is established
23 under subsection (a), if the purchaser-
24
(1) elects to make payment on the basis of such
25
rate, and
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1
(2) provides (directly, through insurance, or a
2
combination of both) for payment on a timely basis
3
for such items and services of the full amount pro-
4
vided under such rate (or, in the case of physicians'
5
services, a rate charged that does not exceed a maxi-
6
mum rate specified by the Secretary consistent with
7
the rules on limitations on charges for physicians'
8
services under section 1848(g) of the Social Security
9
Act),
10 the purchaser shall be considered to have discharged any
11 liability for payment for such items and services.
12
(d) ENFORCEMENT.-If a purchaser indicates to a
13 health care provider (in a manner specified by the Sec-
14 retary) that the purchaser is electing to make payment
15 on the basis of rates established under subsection (a) and
16 the provider (or another on the provider's behalf) seeks
17 to collect amounts in excess of such rates (or in the case
18 of physicians' services, the maximum rate referred to in
19 subsection (c)(2)), the provider is subject to civil money
20 penalty under section 1128A(a) of such Act in the same
21 manner as a civil money penalty may be imposed under
22 such section for a violation described in paragraph (2) of
23 such section.
24
(e) CONSTRUCTION.-Nothing in this section shall be
25 construed (1) as preventing a provider from charging or
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1 agreeing to accept payments for items and services at
2 rates less than the rates established under subsection (a),
3 or (2) as preventing a State from establishing uniform
4 payment rates (or maximum charge limits) for one or
5 more items and services.
6
(f) CLASS OF PROVIDER DEFINED.-In this title, the
7 term "class of provider" means hospitals, physicians, and
8 such other classes of health care providers as the Sec-
9 retary specifies in regulations.
10 SEC. 403. UNIFORM CLAIMS FORMS AND UNIFORM REPORT-
11
ING STANDARDS.
12
(a) UNIFORM CLAIMS FORMS.-
13
(1) DEVELOPMENT.-The Secretary, after con-
14
sultation with the Commission, entities offering
15
group health plans, and health care providers, shall
16
develop uniform claims forms for use by beneficiaries
17
and health care providers in submitting claims under
18
group health plans and the medicare and medicaid
19
programs.
20
(2) DEADLINE.-Such forms shall be developed
21
SO that their acceptance by group health plans and
22
the medicare and medicaid programs may be re-
23
quired for services furnished on or after January 1,
24
1994.
25
(b) UNIFORM REPORTING STANDARDS.
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1
(1) DEVELOPMENT.-In connection with the de-
2
velopment of rates under section 402, the Secretary
3
shall develop standards for the uniform reporting by
4
providers of health care services of information (in
5
a form that does not identify individual patients)
6
respecting-
7
(A) the types and amounts of health serv-
8
ices provided, and
9
(B) the costs of providing such services.
10
(2) DEADLINE.-Such standards shall be devel-
11
oped SO that their use by providers may be required
12
for periods beginning on or after January 1, 1993.
13
TITLE V-MEDICARE
14
PREVENTION BENEFITS
15 SEC. 501. COVERAGE OF COLORECTAL SCREENING.
16
(a) IN GENERAL.-Section 1834 of the Social Secu-
17 rity Act (42 U.S.C. 1395m) is amended by inserting after
18 subsection (c) the following new subsection:
19
"(d) FREQUENCY AND PAYMENT LIMITS FOR
20 SCREENING FECAL-OCCULT BLOOD TESTS AND SCREEN-
21 ING FLEXIBLE SIGMOIDOSCOPIES.-
22
"(1) SCREENING FECAL-OCCULT BLOOD
23
TESTS.-
24
"(A) PAYMENT LIMIT.-In establishing fee
25
schedules under section 1833(h) with respect to
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1
screening fecal-occult blood tests provided for
2
the purpose of early detection of colon cancer,
3
except as provided by the Secretary under para-
4
graph (3)(A), the payment amount established
5
for tests performed-
6
"(i) in 1992 shall not exceed $5; and
7
"(ii) in a subsequent year, shall not
8
exceed the limit on the payment amount
9
established under this subsection for such
10
tests for the preceding year, adjusted by
11
the applicable adjustment under section
12
1833(h) for tests performed in such year.
13
"(B) FREQUENCY LIMIT.-Subject to revi-
14
sion by the Secretary under paragraph (3)(B),
15
no payment may be made under this part for
16
a screening fecal-occult blood test provided to
17
an individual for the purpose of early detection
18
of colon cancer-
19
"(i) if the individual is under 50 years
20
of age; or
21
"(ii) if the test is performed within 11
22
months after a previous screening fecal-oc-
23
cult blood test.
24
"(2)
SCREENING
FLEXIBLE
SIGMOIDOS-
25
COPIES.-
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1
"(A) PAYMENT AMOUNT.-The Secretary
2
shall establish a payment amount under section
3
1848 with respect to screening flexible
4
sigmoidoscopies provided for the purpose of
5
early detection of colon cancer that is consistent
6
with payment amounts under such section for
7
similar or related services, except that such
8
payment amount shall be established without
9
regard to subsection (a)(2)(A) of such section.
10
"(B) FREQUENCY LIMIT.-Subject to revi-
11
sion by the Secretary under paragraph (3)(B),
12
no payment may be made under this part for
13
a screening flexible sigmoidoscopy provided to
14
an individual for the purpose of early detection
15
of colon cancer-
16
"(i) if the individual is under 50 years
17
of age; or
18
"(ii) if the procedure is performed
19
within 59 months after a previous screen-
20
ing flexible sigmoidoscopy.
21
"(3) REDUCTIONS IN PAYMENT LIMIT AND RE-
22
VISION OF FREQUENCY.-
23
"(A) REDUCTIONS IN PAYMENT LIMIT.-
24
The Secretary shall review from time to time
25
the appropriateness of the amount of the pay-
HR 3626 IH
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1
ment limit established for screening fecal-occult
2
blood tests under paragraph (1)(A). The Sec-
3
retary may, with respect to tests performed in
4
a year after 1994, reduce the amount of such
5
limit as it applies nationally or in any area to
6
the amount that the Secretary estimates is re-
7
quired to assure that such tests of an appro-
8
priate quality are readily and conveniently
9
available during the year.
10
"(B) REVISION OF FREQUENCY.-
11
"(i) REVIEW.-The Secretary, in con-
12
sultation with the Director of the National
13
Cancer Institute, shall review periodically
14
the appropriate frequency for performing
15
screening fecal-occult blood tests and
16
screening flexible sigmoidoscopies based on
17
age and such other factors as the Sec-
18
retary believes to be pertinent.
19
"(ii) REVISION OF FREQUENCY.-The
20
Secretary, taking into consideration the re-
21
view made under clause (i), may revise
22
from time to time the frequency with
23
which such tests and procedures may be
24
paid for under this subsection, but no such
HR 3626 IH
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1
revision shall apply to tests or procedures
2
performed before January 1, 1995.
3
"(4) LIMITING CHARGES OF NONPARTICIPATING
4
PHYSICIANS.-
5
"(A) IN GENERAL.-In the case of a
6
screening flexible sigmoidoscopy provided to an
7
individual for the purpose of early detection of
8
colon cancer for which payment may be made
9
under this part, if a nonparticipating physician
10
provides the procedure to an individual enrolled
11
under this part, the physician may not charge
12
the individual more than the limiting charge (as
13
defined in subparagraph (B), or, if less, as de-
14
fined in section 1848(g)(2)).
15
"(B) LIMITING CHARGE DEFINED.-In
16
subparagraph (A), the term 'limiting charge'
17
means, with respect to a procedure performed-
18
"(i) in 1992, 120 percent of the pay-
19
ment limit established under paragraph
20
(2)(A); or
21
"(ii) after 1992, 115 percent of such
22
applicable limit.
23
"(C) ENFORCEMENT.-If a physician or
24
supplier knowing and willfully imposes a charge
25
in violation of subparagraph (A), the Secretary
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1
may apply sanctions against such physician or
2
supplier in accordance with section
3
1842(j)(2).".
4
(b) CONFORMING AMENDMENTS.-(1) Paragraphs
5 (1)(D) and (2)(D) of section 1833(a) of such Act (42
6 U.S.C. 13951(a)) are each amended by striking "sub-
7 section (h)(1)," and inserting "subsection (h)(1) or section
8 1834(d)(1),".
9
(2) Section 1833(h)(1)(A) of such Act (42 U.S.C.
10 13951(h)(1)(A)) is amended by striking "The Secretary"
11 and inserting "Subject to paragraphs (1) and (3) (A) of
12 section 1834(d), the Secretary".
13
(3) Clauses (i) and (ii) of section 1848(a)(2)(A) of
14 such Act (42 U.S.C. 1395w-4(a)(2)(A)) are each amended
15 by striking "a service" and inserting "a service (other
16 than a screening flexible sigmoidoscopy provided to an in-
17 dividual for the purpose of early detection of colon can-
18 cer)".
19
(4) Section 1862(a) of such Act (42 U.S.C. 1395y(a))
20 is amended-
21
(A) in paragraph (1)-
22
(i) in subparagraph (E), by striking "and"
23
at the end,
24
(ii) in subparagraph (F), by striking the
25
semicolon at the end and inserting ", and", and
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1
(iii) by adding at the end the following new
2
subparagraph:
3
"(G) in the case of screening fecal-occult
4
blood tests and screening flexible
5
sigmoidoscopies provided for the purpose of
6
early detection of colon cancer, which are per-
7
formed more frequently than is covered under
8
section 1834(d);"; and
9
(B) in paragraph (7), by striking "paragraph
10
(1) (B) or under paragraph (1)(F)" and inserting
11
"subparagraphs (B), (F), or (G) of paragraph (1)".
12
(c) EFFECTIVE DATE.-The amendments made by
13 this section shall apply to screening fecal-occult blood tests
14 and screening flexible sigmoidoscopies performed on or
15 after January 1, 1992.
16 SEC. 502. COVERAGE OF CERTAIN IMMUNIZATIONS.
17
(a) IN GENERAL.-Section 1861(s)(10) of the Social
18 Security Act (42 U.S.C. 1395x(s)(10)) is amended-
19
(1) in subparagraph (A)-
20
(A) by striking ", subject to section
21
4071(b) of the Omnibus Budget Reconciliation
22
Act of 1987,", and
23
(B) by striking "; and" and inserting a
24
comma;
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1
(2) in subparagraph (B), by striking the semi-
2
colon at the end and inserting and"; and
3
(3) by adding at the end the following new sub-
4
paragraph:
5
"(C) tetanus-diphtheria booster and its ad-
6
ministration;".
7
(b)
LIMITATION
ON
FREQUENCY.-Section
8 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)), as
9 amended by section 502(b)(4)(A), is amended-
10
(1) in subparagraph (F), by striking "and" at
11
the end;
12
(2) in subparagraph (G), by striking the semi-
13
colon at the end and inserting ", and"; and
14
(3) by adding at the end the following new sub-
15
paragraph:
16
(H) in the case of an influenza vaccine,
17
which is administered within the 11 months
18
after a previous influenza vaccine, and, in the
19
case of a tetanus-diphtheria booster, which is
20
administered within the 119 months after a
21
previous tetanus-diphtheria booster;".
22
(c) CONFORMING AMENDMENT.-Section 1862(a)(7)
23 of such Act (42 U.S.C. 1395y(a)(7)), as amended by sec-
24 tion 502(b)(4)(B), is amended by striking "or (G)" and
25 inserting "(G), or (H)".
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1
(d) EFFECTIVE DATE.-The amendments made by
2 this section shall apply to influenza vaccines and tetanus-
3 diphtheria boosters administered on or after January 1,
4 1992.
5 SEC. 503. COVERAGE OF WELL-CHILD CARE.
6
(a) IN GENERAL.-Section 1861(s)(2) of the Social
7 Security Act (42 U.S.C. 1395x(s)(2)) is amended-
8
(1) by striking "and" at the end of subpara-
9
graph (O);
10
(2) by striking the semicolon at the end of sub-
11
paragraph (P) and inserting "; and"; and
12
(3) by adding at the end the following new sub-
13
paragraph:
14
"(Q) well-child services (as defined in sub-
15
section (II)(1)) provided to an individual entitled
16
to benefits under this title who is under 19
17
years of age;".
18
(b) SERVICES DEFINED.-Section 1861 of such Act
19, (42 U.S.C. 1395x) is amended-
20
(1) by redesignating the subsection (jj) added
21
by section 4163(a)(2) of the Omnibus Budget Rec-
22
onciliation Act of 1990 as subsection (kk); and
23
(2) by inserting after subsection (kk) (as SO re-
24
designated) the following new subsection:
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1
"Well-Child Services
2
"(II)(1) The term 'well-child services' means well-
3 child care, including routine office visits, routine immuni-
4 zations (including the vaccine itself), routine laboratory
5 tests, and preventive dental care, provided in accordance
6 with the periodicity schedule established with respect to
7 the services under paragraph (2).
8
"(2) The Secretary, in consultation with the Amer-
9 ican Academy of Pediatrics, the Advisory Committee on
10 Immunization Practices, and other entities considered ap-
11 propriate by the Secretary, shall establish a schedule of
12 periodicity which reflects the appropriate frequency with
13 which the services referred to in paragraph (1) should be
14 provided to healthy children.".
15
(c) CONFORMING AMENDMENTS.-(1) Section
16 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)), as
17 amended by sections 501(b)(4)(A) and 502(b), is
18 amended-
19
(A) in subparagraph (G), by striking "and" at
20
the end;
21
(B) in subparagraph (H), by striking the semi-
22
colon at the end and inserting ", and"; and
23
(C) by adding at the end the following new sub-
24
paragraph:
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1
"(I) in the case of well-child services,
2
which are provided more frequently than is pro-
3
vided under the schedule of periodicity estab-
4
lished by the Secretary under section
5
1861(II)(2) for such services;".
6
(2) Section 1862(a)(7) of such Act (42 U.S.C.
7 1395y(a)(7)), as amended by sections 502(b)(4)(B) and
8 503(c), is amended by striking "or (H)" and inserting
9 "(H), or (I)".
10
(d) EFFECTIVE DATE.-The amendments made by
11 this section shall apply to well-child services provided on
12 or after January 1, 1992.
13 SEC. 504. ANNUAL SCREENING MAMMOGRAPHY.
14
(a) ANNUAL SCREENING MAMMOGRAPHY FOR
15 WOMEN OVER AGE 64.-Section 1834(c)(2)(A) of the So-
16 cial Security Act (42 U.S.C. 1395m(b)(2)(A)) is
17 amended-
18
(1) in clause (iv), by striking "but under 65
19
years of age,"; and
20
(2) by striking clause (v).
21
(b) EFFECTIVE DATE.-The amendments made by
22 subsection (a) shall apply to screening mammography per-
23 formed on or after January 1, 1992.
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1 SEC. 505. DEMONSTRATION PROJECTS FOR COVERAGE OF
2
OTHER PREVENTIVE SERVICES.
3
(a) ESTABLISHMENT.-The Secretary of Health and
4 Human Services (in this section referred to as the "Sec-
5 retary") shall establish and provide for a series of ongoing
6 demonstration projects under which the Secretary shall
7 provide for coverage of the preventive services described
8 in subsection (c) under the medicare program in order to
9 determine-
10
(1) the feasibility and desirability of expanding
11
coverage of medical and other health services under
12
the medicare program to include coverage of such
13
services for all individuals enrolled under part B of
14
title XVIII of the Social Security Act; and
15
(2) appropriate methods for the delivery of
16
those services to medicare beneficiaries.
17
(b) SITES FOR PROJECT.-The Secretary shall pro-
18 vide for the conduct of the demonstration projects estab-
19 lished under subsection (a) at the sites at which the Sec-
20 retary conducts the demonstration program established
21 under section 9314 of the Consolidated Omnibus Budget
22 Reconciliation Act of 1985 and at such other sites as the
23 Secretary considers appropriate.
24
(c) SERVICES COVERED UNDER PROJECTS.-The
25 Secretary shall cover the following services under the se-
HR 3626 IH
59
1 ries of demonstration projects established under sub-
2 section (a):
3
(1) Glaucoma screening.
4
(2) Cholesterol screening and cholesterol-reduc-
5
ing drug therapies.
6
(3) Screening and treatment for osteoporosis,
7
including tests for bone-marrow density and hor-
8
mone replacement therapy.
9
(4) Screening services for pregnant women, in-
10
cluding ultra-sound and clamydial testing and ma-
11
ternal serum alfa-protein.
12
(5) One-time comprehensive assessment for in-
13
dividuals beginning at age 65 or 75.
14
(6) Other services considered appropriate by the
15
Secretary.
16
(d) REPORTS TO CONGRESS.-Not later than October
17 1, 1993, and every 2 years thereafter, the Secretary shall
18 submit a report to the Committee on Finance of the Sen-
19 ate and the Committee on Ways and Means and the Com-
20 mittee on Energy and Commerce of the House of Rep-
21 resentatives describing findings made under the dem-
22 onstration projects conducted pursuant to subsection (a)
23 during the preceding 2-year period and the Secretary's
24 plans for the demonstration projects during the succeeding
25 2-year period.
HR 3626 IH
60
1
(e) AUTHORIZATION OF APPROPRIATIONS.-There
2 are authorized to be appropriated from the Federal Sup-
3 plementary Medical Insurance Trust Fund for expenses
4 incurred in carrying out the series of demonstration
5 projects established under subsection (a) the following
6 amounts:
7
(1) $4,000,000 for fiscal year 1993.
8
(2) $4,000,000 for fiscal year 1994.
9
(3) $5,000,000 for fiscal year 1995.
10
(4) $5,000,000 for fiscal year 1996.
11
(5) $6,000,000 for fiscal year 1997.
12 SEC. 506. OTA STUDY OF PROCESS FOR REVIEW OF MEDI-
13
CARE COVERAGE OF PREVENTIVE SERVICES.
14
(a) STUDY.-The Director of the Office of Tech-
15 nology Assessment (in this section referred to as the "Di-
16 rector") shall, subject to the approval of the Technology
17 Assessment Board, conduct a study to develop a process
18 for the regular review for the consideration of coverage
19 of preventive services under the medicare program, and
20 shall include in such study a consideration of different
21 types of evaluations, the use of demonstration projects to
22 obtain data and experience, and the types of measures,
23 outcomes, and criteria that should be used in making cov-
24 erage decisions.
HR 3626 IH
61
1
(b) REPORT.-Not later than 2 years after the date
2 of the enactment of this title, the Director shall submit
3 a report to the Committee on Finance of the Senate and
4 the Committee on Ways and Means and the Committee
5 on Energy and Commerce of the House of Representatives
6 on the study conducted under subsection (a).
O
HR 3626 IH
October 24, 1991
CONGRESSIONAL RECORD - SENATE
S 15119
pillars of democracy on which our
where they fall on the political spec-
being made with representatives of the
country is founded and that we will
trum. No matter who they are, rich,
President and others, who are in dis-
uphold the responsibilities we have.
poor, connected or not. In America
cussion as we speak, trying to resolve
We will tell the Almighty that: You
every American can say: If my rights
some of the differences. I hope they
really have blessed us and given us
are trampled, I will go to the Supreme
can be resolved, but I think in a couple
benefits nobody else has. But we will
Court, if necessary. And it is a Court
hours we may know.
share that responsibly.
not already predisposed against me. It
So I thank the majority leader.
The Framers knew that the Su-
is a Court that welcomes me.
The PRESIDING OFFICER. With-
preme Court was central to the protec-
So, when we talk about changing the
out objection, it is so ordered.
tion of individuals against the excesses
process, let us remember that means
Mr. MITCHELL. Mr. President, I
of the majority. They understood
changing the Constitution. It is a Con-
thank my colleagues, and I anticipate
that, to protect the independence of
stitution that has served us all very
that those involved will be advising us
the Court, neither the executive nor
well for 200 years. If we have a sense
sometimes in the next several hours as
the legislature-nor the Senate-
of history and a love of the Constitu-
to what the status of the discussion is
should have the power to cast the
tion, we will be very, very careful
that time. I expect to be in a position
Court in its own image. They there-
when we start walking down that road
to make some announcement on how
fore made the Senate an equal partner
to change.
we intend to proceed, either prior to or
in appointments to the Supreme
Instead, every Senator, every one of
Court.
just following the three votes that are
us, should ask himself or herself what
not scheduled to commence at 3:30
If the White House were willing to
have we done and what are we doing
seek the Senate's advice rather than
to uphold the Constitution-not to
p.m.
simply demanding its consent; if nomi-
uphold politics; not to uphold a politi-
Mr. President, I suggest the absence
nees would come before the Senate
cal poll; not to uphold the political
of a quorum.
prepared to engage in an honest and
The PRESIDING OFFICER. The
fortunes of one side or the other. But
forthright discussion of the Constitu-
clerk will call the roll.
first and foremost, what are we doing
tion and the Bill of Rights; if Senators
every day to uphold the Constitution?
The legislative clerk proceeded to
would ask genuine questions instead of
call the roll.
Mr. President, I yield the floor.
indulging in political speeches-and
Mr. MITCHELL Mr. President, I
Mr. MITCHELL. Mr. President, I
would treat all witnesses with basic
ask unanimous consent that the order
ask unanimous consent that the order
fairness and common decency-the
for the quorum call be rescinded.
for the quorum call be rescinded.
advice and consent process would work
The PRESIDING OFFICER (Mr.
The PRESIDING OFFICER. With-
fine. Before trying to "fix something
LIEBERMAN). Without objection, it is so
out objection, it is so ordered.
that isn't broke," let this body and the
ordered.
White House, working together as the
Constitution contemplated, make the
HEALTH CARE
system work right.
CIVIL RIGHTS ACT OF 1991
Mr. MITCHELL. Mr. President, in
I have had many times in the Senate
Mr. MITCHELL. Mr. President, I
this period during which the civil
when I have disagreed with the Presi-
have just come from a meeting with
rights matter is before us for debate
dent. I have had many times when I
the distinguished Republican leader,
only, I want to take the opportunity to
have agreed with the President. I feel,
Senator DANFORTH, and Senator KEN-
discuss a subject, with which I have
as the President of this country, he de-
NEDY, regarding the pending civil
been deeply involved and about which
serves a great deal of respect, and he
rights bill.
I have been very much concerned for a
deserves a great deal of discretion. In
Senator DOLE and I were informed
long period of time, to encourage my
so many things, we give him that. In
that negotiations are continuing in an
colleagues and others in policymaking
so many things, Republicans and
effort to-reach agreement on some of
positions to consider, and that is the
Democrats alike in this body have
the more important and controversial
need for comprehensive reform of our
joined with President Bush for the
aspects of that bill. As a result of the
health care system.
good of the country.
information provided at the meeting, I
Prior to becoming majority leader, I
But let us not assume that because
have concluded, following consultation
served as chairman of the Senate
we follow our constitutional duty-not
with Senator DOLE, that it would be
Health Subcommittee, during which
our constitutional right, our constitu-
best to permit a brief period of time
time I conducted a series of hearings
tional duty-of advice and consent,
this afternoon for such discussions to
regarding the status of the health care
somehow this is disloyal to America,
continue.
system in our society. It was my con-
disloyal to the President, disloyal to
Under the previous order, at 2:30
clusion then-and this was in a period
this body. It is what every one of us
p.m., the Senate will turn to the Fed-
of 1987 and 1988-that major reform
has sworn to do. Each one of us, when
eral Facilities Compliance Act and
was needed in the American health
we take our oath of office when we
measures with respect thereto. That
care system, and my conviction in that
begin our term, we stand in this
will continue until 3:30 p.m., at which
regard has been strengthened by what
Chamber, we raise our hand and we
time there will be three rollcall votes.
I have learned since then.
swear before Almighty God we will
So as to permit those discussions to
I believe, Mr. President, and Mem-
uphold the Constitution of this land.
continue unimpeded, and not to re-
bers of the Senate, that, at its best,
Upholding it does not mean just
quire the presence of the bill's manag-
the American health care system de-
reading it. Upholding it means defend-
ers on the floor between now and ap-
livers the highest quality of health
ing it with every fiber of our body. Be-
proximately 4:30 p.m., I ask unani-
care in the world. The problem is that
cause if we do not, we do not deserve
mous consent that the time between
the system does not operate at its best
to be here-none of us do.
now and 2:30 p.m. be for purposes of
for all Americans. Right now, there
We have no greater duty than to
debate only on the civil rights bill.
are an estimated 37 million Americans
preserve our democracy. And that
The PRESIDING OFFICER. Is
who do not have health care insur-
means to preserve the checks and bal-
there objection?
ance, and that number is rising by an
ances of our democracy. And it means,
The Republican leader.
estimated 1 million people a year.
also, to preserve the institution not
Mr. DOLE. Mr. President, reserving
Contrary to what is a widespread
just of the Senate, not just of the
the right to object, and I shall not
belief in our country, most of those
Presidency, but-across the street-of
object, the majority leader has accu-
people are white and most of them are
the U.S. Supreme Court: and to be
rately stated the situation. There are
working or the dependents of persons
able to say, as Senators, we have done
discussions going on, and there is some
who are working. So a very large and
everything possible to have a Court
optimism. There has been optimism
growing proportion of Americans do
that is there for every man, woman,
before, so I will not want to say it will
not have ready access to health care,
and child in this country, no matter
happen. At least, there is an effort
because, with the tremendous and con-
15120
CONGRESSIONAL RECORD-SENATE
October 24, 1991
tinuing increase in health care costs,
health insurance policy in the spring
stances. These are tragically typical;
lack of health care insurance effective-
when they expected income to resume
these are, tragically, a few of the
ly means lack of access to good health
from their farming operations.
many examples of which we have all
care.
Tragically, just a short time before
heard-people we have all met, people
This is a most unfortunate result. I
they were going to resume paying the
we have all talked to in our town
believe that in our democracy it ought
premiums and reinstate their health
meetings, in our meetings with our
to be a fundamental right of every citi-
insurance policy their teenage son was
constituents, even in some cases
zen to have access to good and afford-
involved in a serious automobile acci-
within our own families and friends.
able health care-a fundamental right
dent. As a consequence the young boy
This is not an isolated problem.
of citizenship in a democracy; not a
is now seriously injured and possibly
That is not a problem that affects
privilege, not something to be limited
permanently paralyzed, and the
only a few Americans. This is not a
to a few, not something to be rationed
family faces already-incurred medical
problem that affects Americans only
in accordance with wealth or any
bills in the tens of thousands of dol-
in one region of the country. This is
other measure of status, but rather
lars that far exceed any possibility of
not a problem that affects Americans
something that every single American
the family ever being able to meet
of only one race. This is not a problem
citizen-man, woman, and child-
these payments.
that affects Americans in urban or
should have as a basic right.
I also met in the hospital a young,
rural areas. This is a problem that af-
What do we do about it? Well, first, I
2½-year-old girl and her young par-
believe we must recognize that the
ents. This young girl had been born
fects Americans everywhere and virtu-
problem in the American health care
with a serious infirmity and had never
ally every American family.
system is not that we need to spend
spent a single moment of her life out-
The situation simply cries out for
more money. In fact, the problem is
side of the hospital. The entire 2½
leadership, and for effort, and for
just the opposite. We need to spend
years of her life had been spent inside
meaningful and substantive reform of
less money. We are already spending
that hospital incurring medical ex-
the current system.
too much money on health care.
pense at a rate in excess of $1,500 a
Earlier this year I joined with some
The most recent estimate I have
day. Her parents also were a young
Senators in introducing comprehen-
seen is that in this year Americans will
couple who operated a farm in the
sive legislation. It is much too compli-
spend an estimated $670 billion on
area. And they now confront bills al-
cated and lengthy to describe in full
health care-$670 billion. More than
ready in the hundreds of thousands of
detail here. I do intend to make a
12 percent of our gross national prod-
dollars and which may go far beyond
series of statements on the Senate
uct. Both figures, the absolute dollars
that. Again, completely beyond their
floor on the subject because I think
and the percentage of gross national
income, completely beyond any pros-
the matter has not received the atten-
product, by far the highest in the
pect of their paying all or even a
tion of the Senate, which I believe it
world. No other country spends, either
major portion of this bill.
deserves. But the legislation has two
in absolute dollars or in percentage of
A few weeks after that in my office I
principal objectives which are, on
their gross national product, anything
met and talked with a young man in
their face, conflicting-but both of
near the amount that is spent in this
his midtwenties who works in a facto-
which require action.
society.
ry, a paper mill in Maine. He told me
On the one hand the legislation pro-
For that, as I said, we get the best
his story.
vides universal health care insurance.
care when the system operates at its
He and his wife had a child. The
Every American should be insured
best and when care is available and ac-
child was born with a serious infirmi-
against the costs of health care-every
cessible and affordable to Americans.
ty, and very extensive and very expen-
American.
Therefore, Mr. President, it is my
sive medical procedures were em-
Mr. WELLSTONE assumed the
conclusion that our system needs com-
ployed to try to save the child's life.
Chair.
prehensive reform. This is a problem
After a period of several months the
Mr. MITCHELL. Mr. President,
that affects every American family.
child died. The mother and father got
there should not be any exceptions.
The American family which is so well
the bill. It was $350,000. A young man
off that it need not fear the devastat-
There should not be anyone who con-
about 25-years-old, who works in a fac-
ing financial consequences of an unex-
fronts the possibility of not being able
tory. He told me he was lucky because
pected major illness or injury is very,
to deal with something-either injury,
he has a good job with health benefits
very rare indeed. Every family either
which will pay $200,000 of that bill. He
illness, accident, some other physical
ailment-to a member of their family
confronts the. problem immediately
being more fortunate than most in our
now or is filled with anxiety about
society.
because they do not have health insur-
what might happen if the problem
Yet even with that fortune he and
ance. There is not anybody who ought
strikes at them.
his wife are confronted with a bill of
to be denied the good care that every
Earlier this year I was in Fargo, ND,
$150,000. They have worked out an ar-
citizen ought to have, and the essen-
where I visited a superb institution, a
rangement with the health care pro-
tial first step in that must be health
regional children's hospital, one of the
viders that they will pay some portion
insurance.
finest medical facilities I have been in,
of their income for the rest of their
And so the first and fundamental
and I have been in many, many of
lives. They will never be able to repay
premise of our bill is to provide univer-
them. There I met and talked with the
the entire bill with interest. But they
sal health insurance for all Americans.
dedicated staff of health care profes-
feel that their infant child was given
That is absolutely essential, in my
sionals who asked me to tour the facil-
the best care; they have a moral obli-
judgment. It is the minimum first
ity and to talk with some of the pa-
gation to try to repay it and they are
step, the threshold, which any legisla-
tients and their families.
going to do the best they can. But for
tion must provide to be described as
I met a teenage boy and his parents.
the rest of their lives, already bur-
meaningful.
His parents operated a small farm
dened by the loss of their child, they
The other problem which is major is,
near Fargo. As we all know, farming is
will now be burdened by a bill that
How do we control costs? At first
a seasonal and unpredictable business,
they can never pay.
glance, one might say if you increase
and income is neither assured nor reg-
If these were isolated cases, if there
coverage, if you provide more persons
ular.
were only these three, or three other
with ready access to care, you inevita-
In the previous winter, this young
such cases in the country, we in the
bly drive up costs and, in fact, if you
couple, faced with a period in which
Senate could all fee enormous sympa-
do have any cost-containment provi-
their income was down, having to cut
thy with the parents and the children
sions, that is exactly what will happen.
expenses to the bone, decided to tem-
involved but not feel for national
We clearly are going to exceed $700
porarily discontinue their health in-
policy on the basis of just a few isolat-
billion next year. We are moving to 13
surance policy. They expected to
ed instances. But every Member of the
percent of our gross national product
resume paying the premiums on the
Senate knows these are not isolated in-
in health care costs.
October 24, 1991
CONGRESSIONAL RECORD SENATE
15121
So if we simply say we are gong to
own claims department, each with its
by addressing those concerns that are
expand health insurance, we are going
own claims process, each with its own
central to their lives.
to give everybody access to care and do
claims form. When you add on to that
I have traveled all over this country
nothing else, then we guarantee that
the forms under Medicare and Medic-
and I have traveled all over my State,
costs will rise even faster than they
aid, our health care community is
and I know everywhere I go the sub-
have been rising which, in the past
being drowned in a deluge of paper-
ject of health care is foremost in the
several years, has been more than
work.
minds of our citizens. People bring it
three times the rate of inflation, gen-
There is not any reason why we
up all the time, specific examples.
erally.
could not have and should not have
Most Senators, I know, hold town
So our measure takes as the second,
within each State one form-one
meetings. I know based on my own ex-
or really a first and coequal principle,
form-and one payment mechanism so
perience, I would guess that there is
that we must take dramatic action to
as to eliminate all of the duplication,
hardly a Senator who has not been
control costs at the national level. We
eliminate all of the additional paper-
confronted at a town meeting by some
must bring down the amount of
work, and eliminate the administrative
person or family getting up and
money that our society is spending on
cost of a large number of small compa-
saying, "Senator, this is what hap-
health care and we need not sacrifice
nies, each with its own claims and
pened to me and my family and my
quality. We need not sacrifice compre-
other administering staff duplicating
child. Here is the bill I have received.
hensiveness. We can do so at less cost.
that of others. We believe this is abso-
It is ten times what I make in a year,
The legislation which we have intro-
lutely essential to controlling costs.
50 times what I have in my savings.
duced will, according to one estimate,
When we are talking about $670 bil-
Impossible for me to pay. What are
reduce overall costs by an estimated
lion a year, a 2 percent saving is a
you going to do about it?"
$80 billion in the first 5 years in which
modest estimate of what can be saved
I believe it is time we did something
the bill is in operation-$80 billion.
by the elimination of duplication in
about it, and I hope, through this
That is not enough. And we are now
this regard.
series of statements which I have
receiving comments on our bill-a lot
So I am very deeply committed to
begun today and which I hope to make
of criticism and a lot of it constructive
trying to get this reform completed in
on a regular basis in the coming
criticism, suggestions which we are
a way that will enable us to bring costs
months, that I can somehow at least
taking seriously and considering as we
under control.
bring to the attention of the Senate,
hope this legislation moves through
As I said, Mr. President, there are a
focus our attention, the need for
the legislative process in an effort to
number of other measures in our bill
action on health care legislation and
come up with what we think will be
that seek to attain cost containment. I
the best approach.
think it is essential both in terms of
bring about action in this Congress.
The legislation seeks to control costs
the substantive approach we are
It is my intention, which I have
in a variety of ways. I will just touch
taking, that is, I do not think we can
stated publicly, and I repeat here
expand coverage and not try to con-
today, that we in the Senate will vote
briefly on a couple of them.
tain cost, but for the political purposes
on health care legislation in this Con-
I want to yield momentarily to my
friend from Arkansas who has been a
of trying to get a bill passed in the
gress. It is not going to happen in this
leader in this effort and who has been
first place, the reality is we could not
year. It has not progressed to the
involved in health care and costs, par-
pass a bill in the Senate and do not
point through the legislative process
ticularly in the area of prescription
think a bill could pass in the House if
that will permit us to act in this first
it had one or the other of these com-
session of this Congress. But I fully
drugs, which he may want to address.
But the principal area in which we be-
ponents without both. The conflicting
expect that we will reach that point
lieve reform is necessary in terms of
economic interests, the diverse social
next year. I am determined that we
controlling costs is, first, to create au-
interests, and a lot of others are such
will do so.
thority for States to impose dramatic
that we are going to have to have, in
There are many different views sin-
cost-control requirements.
my judgment, both full insurance cov-
cerely held and many strong differ-
Our legislation calls for administra-
erage and meaningful and very effec-
ences of opinion. But as I said when
tion of the program at the State level
tive cost containment in order to be in
we introduced our bill, we did not
because the health care problems of
a position to get legislation enacted.
offer it as the perfect solution. We did
rural Maine are not the same as the
Mr. President, as I said, this is a sub-
not offer it as the only solution. We
heath care problems of inner-city Los
ject which has deeply concerned me
did not offer it as necessarily the best
Angeles, and the problems of Arkansas
for many years with respect for which
solution. We offered it as a serious,
are not the same as New York. The
I have been very deeply involved. I in-
thoughtful effort, the product of
best place to do this is at the State
troduced legislation a short time ago.
nearly 2 years of work, to try to bring
level, and our legislation will authorize
We will be holding hearing around the
about a focus on the debate on this
the States, will create authority for
country in the near future to find out
subject as a first step toward getting
States to undertake a wide range of
more about the problem and to add to
legislative action.
cost control measures, including some
public knowledge and, I hope, interest
To those who disagree with any
which have been tried at the State
in the subject. I intend to make a
aspect of our bill, we invite their con-
level and including others that have
series of statements in the Senate on
structive comments. We invite their al-
not yet been included at the State
this subject because of the importance
ternative suggestions. We invite their
level.
which I attach to it in terms of our
criticism.
For example, we proposed to permit
agenda.
But it is not enough to simply say
States to create legal entities within.
The agenda of the Senate ought to
our approach is wrong and offer noth-
those States-for want of a better
be the agenda of the American family.
ing else. That is not leadership, and we
term, in the legislation it is called a
The problem now in our country is
are elected to be leaders in our society.
State consortium-to negotiate with
that many Americans perceive that we
To those who do not like this ap-
providers, to control the amount by
are not addressing the issues which
proach, to those who think this ap-
which health care costs increase each
are immediate concern to them and
proach fails in one or another way, I
year.
their families, and that we are ad-
invite and encourage their participa-
We also would require comprehen-
dressing issues that are peripheral to
tion. I especially invite and ask them
sive reform of the small insurance
or even unrelated to their daily lives
to offer their constructive alternatives.
company share of the health care
and their daily needs.
Out of that debate I think we can get
market. One of the problems we have
If we are to regain the confidence
a good product and a good result.
in our society now is that we have
and trust of the American people, if
Mr. President, I want to yield now to
thousands of different mechanisms by
we are to truly merit the title of repre-
the Senator from Arkansas and com-
which payment is made-many differ-
sentatives in a representative democra-
mend him for his action and involve-
ent companies operating, each with its
cy, then it seems to me we must bégin
ment in this area. I know he has a par-
15122
CONGRESSIONAL RECORD SENATE
October 24, 1991
ticular interest in the area of prescrip-
have not risen at 58 percent. They
also the issue of prescription drug
tion drugs that he may wish to ad-
have risen at 152 percent-a 152-per-
costs in our country.
dress.
cent increase in the cost of prescrip-
Mr. President, I think the time has
Mr. PRYOR addressed the Chair.
tion drugs in 10 years.
expired.
The PRESIDING OFFICER. The
What we see is that in 1980, just 11
Senator from Arkansas is recognized.
short years ago, a bottle of capsules
Mr. PRYOR. Mr. President, I thank
that cost $20, today is, on the average,
FEDERAL FACILITIES
the majority leader for yielding to me.
$58 a bottle. What we see also is a re-
COMPLIANCE ACT
I applaud the majority leader for his
sponse by the pharmaceutical manu-
The PRESIDING OFFICER. Under
statement on health care and some of
facturers. They come to the Congress
the previous order, the hour of 2:30
the aspects that his legislation is going
year after year and they say, well, we
p.m. having arrived, the Senate will
to address.
must be able to generate huge profits
now resume consideration of S. 596,
Mr. President, it has been my privi-
so that we can plow these profits back
which the clerk will report.
lege the last several years to have as
into research and development of new
The bill clerk read as follows:
my seat mate on the Senate Finance
drugs.
Committee the very able and, I must
A bill (S. 596) to provide that Federal fa-
What the pharmaceutical manufac-
cilities meet Federal and State environmen-
say, very committed Senator from
turers do not tell us, Mr. President-
tal laws and requirements and to clarify
Maine, Senator MITCHELL. On many
and the distinguished majority leader
that such facilities must comply with such
occasions I have seen him take this
knows this-is that for all those dol-
environmental laws and requirements.
issue of health care and attempt, in
lars which they plow into research to
The Senate resumed consideration
his very commanding way, to at least
find the cure for cancer, Alzheimer's,
of the bill.
focus the attention of this country and
Parkinson's, and the dreaded diseases
The PRESIDING OFFICER. Under
his colleagues on this issue, and to also
of our time, they are getting a tax
the previous order, the Senator from
attempt to get the attention and the
writeoff. This is a tax writeoff for the
California [Mr. SEYMOUR], is recog-
support and the cooperation of this
pharmaceutical manufacturers.
nized to offer an amendment.
administration in dealing with one of
What they are also not telling us,
the most critical issues of our times.
Mr. President, is that once a drug is
AMENDMENT NO. 1271
One of those issues, Mr. President,
sent to the market, they have a 17-
(Purpose: To determine the source of the
one of those great concerns that I see
year period of patent protection; they
unauthorized release of confidential infor-
in the overall arena of health care to
are protected from any other manu-
mation compiled by the FBI with respect
which we must address ourselves, is
facturer coming in to compete against
to Prof. Anita Hill and Judge Clarence
one that I have addressed on this floor
Thomas)
them.
on many occasions, also in the Senate
We see also, Mr. President, that once
Mr. SEYMOUR. Mr. President, I
Special Committee on Aging on sever-
they secure a patent from the U.S.
send an amendment to the desk and
al occasions, and recently before the
Patent Office, that same manufactur-
ask for its immediate consideration.
Senate Education and Labor Commit-
er, 9 times out of 10, will move to
The PRESIDING OFFICER. The
tee and, of course, on several occasions
Puerto Rico their plant, their oper-
clerk will report.
in the Senate Finance Committee.
ations, their manufacturing facilities,
The bill clerk read as follows:
That issue, Mr. President, is the issue
and they will manufacture these drugs
The Senator from California [Mr. SEY-
of prescription drugs.
there to become eligible for billions of
MOUR], for himself, Mr. DOMENICI, Mr. MUR-
We have had a great deal of discus-
dollars in tax credits from the section
KOWSKI, Mr. GRAMM, Mr. COATS, Mr. THUR-
sion in our country in recent years
MOND, Mr. SIMPSON, Mr. BROWN, Mr. BOND,
936 program of the Internal Revenue
Mr. BURNS, Mr. CRAIG, Mr. GRASSLEY, Mr.
about hospital costs and a way to con-
Service Code. Mr. President, we are
HATCH, Mr. KASTEN, Mr. MACK, Mr. McCoN-
tain the costs of hospitalization. We
seeing today that pharmaceutical
NELL, Mr. NICKLES, Mr. JEFFORDS, Mr. SMITH,
have gone to the American Medical
manufacturers are getting a $70,000
Mr. SYMMS, Mr. HATFIELD, AND Mr. LUGAR
Association. We have gone to the doc-
tax credit for each employer-whose
proposes an amendment numbered 1271.
tors and have said you have to contrib-
salaries average approximately $26,000
The Federal Bureau of Investigation is
ute to cost containment, and if you are
a year-they hire in Puerto Rico. The
hereby requested and authorized to obtain
not going to do it voluntarily, we are
manufacturers put them to work so
such subpoenas as are necessary to secure
going to do it by statute; we are going
the attendance of such witnesses and the
that the industry can have a free ride
production of such correspondence, books,
to set the prices that you can charge.
in Puerto Rico in manufacturing these
papers, documents, and other sources of in-
So we have seen hospitals and we
drugs.
formation, to take such sworn testimony
have seen doctors attempt through
Mr. President, I could go on and talk
and to make such expenditures out of any
voluntary and statutory activities to
about what the drug manufacturers
funds appropriated and not otherwise obli-
limit in some way the tremendous cost
are doing to the American public, but
gated to make an investigation into the
increases that we have in medical care
I can best summarize it in one human
matter of releasing of any confidential or se-
today.
experience. I received a letter just last
cretive information transmitted to the
Mr. President, there is one aspect of
week from a constituent. This constit-
Senate committee on the Judiciary regard-
the health care delivery system that
ing Professor Anita Hill of the University of
uent lives on a Social Security check
Oklahoma or Judge Clarence Thomas and
has not been cooperative, that in no
of $936 a month. But this individual
to report to the Congress the results of this
way has attempted to come forward
who sent me what his income is also
investigation not later than 30 days after
and say we are going to do our part;
sent me all of the bills for a month's
the date of enactment of this Act.
we are going to help control costs of
period for prescription drugs-over
prescription drugs in America.
$500 a month out of his $900 a month
To the contrary, Mr. President, the
income on Social Security is being
RESOLUTION RELATIVE TO THE
Pharmaceutical Manufacturers Asso-
used to pay the costs of the prescrip-
APPOINTMENT OF SPECIAL
ciation and their members that manu-
tion drugs this individual needs just to
COUNSEL-SENATE
RESOLU-
facture the prescription drugs we use
stay alive.
TION 202
today for our basic life support, those
I think we must address the issue of
The PRESIDING OFFICER. Under
particular companies today, most of
the fast escalating costs of prescrip-
the previous order, the Senate majori-
them-not all but most-are gouging
tion drugs.
ty leader is recognized.
the American public at an unprece-
Mr. President, I am very hopeful I
Mr. MITCHELL. Mr. President, I
dented rate.
can join with the majority leader in
send a resolution to the desk and ask
All we have to do, Mr. President, is
his legislation. I hope we will be joined
for its immediate consideration.
look back 10 years to see a general in-
by this administration and the Presi-
The PRESIDING OFFICER. The
flation rate of 58 percent. That has
dent of the United States to address
clerk will report.
been over the last decade. But pre-
not only those larger concerns ex-
The assistant legislative clerk read
scription drug costs, Mr. President,
pressed by the majority leader but
as follows:
C K
TALKING POINTS
A POLICY MAKER'S GUIDE TO
THE HEALTH CARE CRISIS
PART II:
THE HERITAGE CONSUMER
CHOICE HEALTH PLAN
By Stuart M. Butler, Ph.D.
The
C
Herîtage Foundation
March 5, 1992
A POLICY MAKER'S GUIDE TO THE HEALTH CARE CRISIS
PART II: THE HERITAGE CONSUMER CHOICE HEALTH PLAN
By Stuart M. Butler, Ph.D.
INTRODUCTION
Part I of this Talking Points series on health care explained that proposals to
reform America's health care system generally are based on one of three ap-
proaches. Each approach uses a different mechanism to allocate health care
resources and to determine what services a family receives. These three methods
are:
1) The Single-Payer (or "Canadian") Approach. The government be-
comes the monopoly provider of health care financing. It fixes a budget for
health care and allocates money to hospitals, and it sets physician fees.
2) The "Play or Pay" Approach. The government gives employers a choice:
either provide at least a specified health insurance plan to employees and
their families, or pay a payroll tax to finance a public program for their
health benefits, as well as for those Americans not currently insured. The
government runs the public program and employers are responsible for
financing and managing private insurance.
3) The Consumer Choice Approach. Americans are allowed to choose the
health care plan they want. Unlike today, where government help to obtain a
plan effectively is restricted to employer-sponsored plans, families would
receive the same amount of government help wherever they obtained
coverage. Further, there would be more help for the sick and the low-paid,
less for the healthy and the high-paid. No national budget for health care
would be set by the government, and efficient allocation and cost control
would be determined by consumer choice and competition among providers.
Many of the key features of a consumer-based system already exist in the
Federal Employee Health Benefits Program (FEHBP). This covers congressmen
and their staff, agency heads and employees, and judicial branch employees-in
all over nine million workers, their dependents, and retirees. Several proposals
are versions of a consumer-based system. The Bush Administration's recent
health proposal would establish such a system for today's uninsured.
1
way they can obtain a tax break for health care costs (for the implications of
this, see Talking Points, Part I: The Debate Over Reform, February 12, 1992). 3
Under the Heritage plan, the current exclusion for company-provided plans,
as well as other minor health tax deductions, would be replaced with a new tax
credit available to all non-elderly and non-Medicaid families for the purchase of
health insurance and out-of-pocket medical costs. The cost to the Treasury for
the credit would exactly equal the cost of current tax breaks. In Washington jar-
gon, this makes the plan "budget neutral."
Q:
What does that mean for employees who have a company plan?
Would they pay higher taxes?
A:
Generally no. It just means families would gain tax relief in a different
way. If they had a company-sponsored plan, the cash value of that plan now
would appear as a taxable item on their end-of-year W-2 tax form from the
employer. But the family then would be able to claim a credit for the cost of
employer-sponsored plan and for out-of-pocket costs, such as deductibles. Fur-
ther, if the family chose a plan from a source other than their employer, the
employer would be required to "cash out" their current benefits by adding the
value of those benefits to the worker's paycheck. As described below, the
Lewin/ICF analysis of the proposal indicates that most families would pay
slightly lower total taxes after this switch. And while some families would pay
higher taxes, it would be because they had found ways to cut their medical in-
surance costs and thus gained more (taxable) income for other purposes.
Q:
What about families without a company plan?
A:
They would receive a credit for buying insurance and out-of-pocket
medical care. Today these families normally receive no tax help or any other as-
sistance, unless they go on welfare.
What about the working poor, who pay little or no tax?
A:
The new credit would be refundable. This means that if the family's
credit exceeded its tax liability, it would receive the difference from the govern-
ment, in the form of a voucher that could be used only for health care.
3
Three smaller tax breaks are available for some Americans. The self-employed can deduct 25 percent of the cost
of insurance. Americans with high out-of-pocket medical costs can deduct the amount in excess of 7.5 percent
of their adjusted gross income if they itemize their tax return. And low-income working Americans can obtain a
credit for certain insurance to cover their children, through the earned income tax credit (EITC).
3
the transition, employers and employees would bargain for compensa-
tion packages as they do today.
2) Introduce a payroll deduction for health insurance and adjust
withholdings. Employers would be required to make a payroll deduc-
tion each pay period, at the direction of each employee, and send the
amount to the plan of the employee's choice. This would be like the
payroll deduction that many employees instruct their employers to
make for contributions to a 401(k) or similar savings plan. In the
federal employee health system, a worker's agency or congressional
office makes a similar payroll deduction to pay for premium costs.
Employers also would be required to adjust the employee's withholdings to
reflect their estimated health credit, just as they do now when, say, an employee
buys a house and becomes eligible for the mortgage deduction. This means that
employees would not have to wait until the end of the year to claim the credit.
Q:
What about a low-paid worker who does not have taxes withheld?
A:
Actually even the low-paid normally have Social Security taxes withheld.
In any case the employer would estimate the refundable credit available to the
employee and send this, plus any contribution by the employee, to the
employee's chosen plan. The employer would adjust the total withholdings sent
to the IRS to reflect refundable credits for any employees.
Q:
What about the unemployed?
A:
If an individual became unemployed, normally he or she would become
eligible for a larger credit, since family income would fall. For the unemployed,
the government would send the value of the credit to the individual's plan. In ad-
dition, the unemployment check could be adjusted to reflect the contribution, if
any, due to the plan by the individual. Further, since the paperwork for this
change in the payment method would take time, health plans would not be per-
mitted to drop coverage if a working family became unemployed. When the
paperwork is complete, the plan would receive premium payments due during
the interval.
ADVANTAGES OF THE HERITAGE PLAN
A consumer-based plan would have profound and beneficial effects on
America's health care system. Among the most important:
Every American family would have access to affordable and adequate
health care.
Under the Heritage plan, all Americans-most important, all Americans now
uninsured-would be enrolled in a health plan or covered by a public program
(chiefly Medicaid or Medicare programs).
5
Churches
In many communities the church easily could sponsor a group health plan.
This is especially true in the black community, where typically the church al-
ready functions as a social and economic development agency. Similarly, the
Church of Jesus Christ of Latter Day Saints (that is, the Mormon church) carries
out a sophisticated social welfare function for its members. Sponsoring a health
plan for members would be a natural development.
Farm bureaus
Some state farm bureaus, such as Virginia's, already have a health plan for
farm-based families. But often families receive limited or no tax breaks for join-
ing such plans. With the Heritage proposal as law, farm bureaus and similar or-
ganizations would have a natural market niche in rural areas, especially for
seasonal or casual workers.
Sickness groups
In some cases, a family might choose a plan offered by an organization of in-
dividuals suffering from a particular ailment. Many such organizations exist and
give advice on obtaining treatment. Making a plan available to members would
be a simple step. These plans, moreover, would structure medical services
around the particular needs of the member, say a diabetic. Today, a diabetic typi-
cally has to take a standard company-sponsored plan containing items he or she
does not use and then pay out-of-pocket for additional specialized services.
Costs would be controlled effectively and efficiently.
The Heritage plan uses the best device ever found to hold down costs without
sacrificing quality and efficiency: consumer choice within a competitive market.
This works well and simply in the huge Federal Employee Health Benefit Sys-
tem, where cost increases are running at about one-third to one-half less than in-
creases in company-sponsored plans. It also works well in non-company in-
sured markets, such as cosmetic surgery. It also works in every other private sec-
tor of the economy.
The Heritage plan would permit it to work in health care. Families would
"shop around," comparing the premium prices and benefits of rival plans and
making their choice accordingly, just as they do for life insurance, a car or a
house, or college education for their children-and as federal workers do for
health plans. Premium costs would be reduced by virtue of the tax credit, but
families would still save money by choosing the least expensive plan that met
their needs. In turn, plan organizers would have to compete aggressively for the
family's dollars by developing plans that combined attractive benefits with a
6 See Moffit, op. cit.
7
Table 1
Federal Tax Credit Alternatives
Tax Credit Version #1
80 of the cost of premiums up to $275 per family members, plus
18 percent of premiums over $275 per member, plus
18 percent of umreimbursed medical expenses.
Tax Credit Version #2
Premiums and
Unreimbursed Expenses
Percent Reimbursed
as a Percent of Gross
Under the Credit
Household Income
Below 10%
21%
10% - 20%
45%
20% or more
65%
Tax Credit Version #3
75 percent of premiums up to $275 per family member, plus
14 percent of premiums over $275, plus
Unreimbursed Expenses
Percent Reimbursed
as a Percent of Gross
Under the Credit
Household Income
Below 10%
21%
10% - 20%
45%
20% or more
65%
Note: The credits are refundable.
This structure of credits is budget neutral at the state and federal levels.
Source: Lewin/ICF estimates using the Health Benefits Simulation Model.
9
lower percentage for inpatient prescription drugs. A prepaid managed health
plan (such as a Health Maintenance Organization, or HMO) with at least the
same basic coverage would be permitted.
The legally-required basic
plan would limit deductibles for
a family to no more than $2,000
Table 3
and total unreimbursed costs (in-
The Employer's Responsibiliy
cluding the deductible) to no
more than $5,000, often known
as the "stop loss" amount or
amount above which there is
Employers have the option of:
"catastrophic" protection. A
Continuing to provide health benefits; or
family could choose a plan with
Discontinuing the health plan.
a lower deductible or
catastrophic protection, but nor-
mally that would mean a higher
For employers who continue to
premium. These unreimbursed
provide benefits:
medical costs would be offset
The average amount of the employer's
by a credit in each version of
contribution is counted as taxable
the Heritage plan (they are not
income to the employee.*
normally given tax relief today)
and so would be less costly to a
Employees may not take cash in lieu of
family than the same amounts
coverage.
included in a company-spon-
sored plan today.
For employers who discontinue
coverage:
The employer's respon-
sibility
Employers must maintain their current
level of effort by converting benefits to
Table 3 summarizes the
income.
responsibility of employers. In
Employers must deduct premiums for
essence employers act as book-
workers.
keepers for their employees,
handling premium payments
and tax adjustments on the
Employers will hold workers harmless
employee's behalf. One impor-
for the employer share of increased
tant assumption is made about
FICA tax payments due to taxation
Social Security (FICA) tax. If
of benefits.
employer-provided plans be-
come subject to tax (offset, of
course, by the new credit), the
value of those benefits also
would become subject to the
. Separate employer contribution amounts would
be used for persons with single and family cover-
"employer's share" of Social
age.
Security tax. Heritage analysts
instructed Lewin/ICF to assume
in modeling the plan that in con-
11
Third Requirement: Plans could not charge more than 25 percent above or
below the average charged for new enrollees with similar characteristics. This
means that sick families, who today often find the cost of coverage prohibitive,
could not be charged premiums more than 25 percent above those for similar
families of average health. If a family switched plans, moreover, the new carrier
could not charge them more than
25 percent above the average
premium charged for similar
Table 5
families.
Key Assumptions
Modelling assumptions made
by Lewin/ICF
Employers who now offer insurance:
Lewin/ICF had to make certain
All will discontinue coverage and convert
benefits to wages.
assumptions about consumer be-
havior and other features of the
Firms with over 1,000 workers establish
employee premium financed cafeteria plans,
basic Heritage plan to "run the
which will reduce administrative costs.
numbers." Some of these are cru-
cial; others simply were to ease
Workers now covered by
the process of modelling and
employer insurance:
could be changed in any final pro-
Those in poor/fair health will select plans
gram. These are contained in
that at least maintain their existing level of
Tables 5 and 6. Among the most
coverage.
important:
Those in good/excellent health will
downgrade to the standard package.
First Assumption: All
Health services utilization for persons who
employers are presumed to dis-
downgrade coverage will decline based
continue their existing plans and
upon price elasticities reported in the
convert their value into addition-
literature (a price elasticity of -0.2 was
selected).
al cash income for employees.
This makes the calculations
Persons now covered by
easier and more reliable, but is
non-group insurance:
not crucial to the plan. Some
Persons who now have coverage in excess
large companies might well con-
of the minuimum standard will maintain that
tinue to provide coverage.
coverage.
Second Assumption: Healthy
Others will upgrade to the minimum
standard.
families buy a basic plan and
pocket the savings, while current-
ly insured Americans in poor or
Currently uninsured persons:
fair health either maintain their
All will take the minimum standard package.
existing coverage or upgrade to
Utilization will adjust to levels reported by
better coverage. The model as-
insured persons with similar charactoeristics.
sumes all the uninsured buy the
basic package, which includes
No change is assumed in the number of
catastrophic protection (although
persons enrolled in Medicaid.
some doubtless would buy more
elaborate plans).
13
HOW TOTAL SPENDING WOULD BE AFFECTED
Effect #1: Total U.S. spending on health care would fall immediately by $10.8 bil-
lion. Families initially would save $18.8 billion.
Households would pay directly for their own coverage under the Heritage
plan, rather than have their employer paying for it as happens today. As a result,
total household health payments would, in the first instance, go up substantially.
But the cost would be more than offset by two items, as indicated in Table 7: the
tax credit (worth a total of $84.9 billion), and the increase in wages due to firms
cashing out existing benefits (for a total increase in cash wages of $148.7 bil-
lion). This would leave families as a whole ahead by $18.8 billion. Private
employers, as well as federal, state and local governments, would save on health
costs, but pay their employees more in cash income. The net effect on total
health spending, concludes Lewin/ICF, would be a reduction of $10.8 billion.
Q:
Would this one-time saving be all the cost reduction under the
Heritage plan?
A: No.
Table 7
Lewin/ICF does
Change in National Health Spending by
believe that the pat-
Source of Payment
(billions of dollars)
tern of spending
Subtotals
Change in
after these changes
Spending
would continue in
Impact on Payors
line with today's
Household Payments
$129.9ᵃ
trend. However,
Premium Payments
$88.2
Heritage analysts
Out-of-Pocket Spending
62.7
Tax Credits
(84.9)
believe the new in-
Eliminate Tax Exclusion
63.9
centives for
families to shop
Private Employersᵇ
(112.4)
around for the best
Federal Governmentᵇ
(5.1)
bargain would hold
State Governmentsᶜ
(23.2)
the annual growth
Net Change in Health Spending
of spending sig-
Changed in Health Spending
(10.8)
nificantly below
Utilization for Newly Insured
8.9
current trends. If
Utilization for Currently Insured
(21.8)
the general in-
Insurer Administrative Costs
2.1
crease were to be
Note: Figures indicate increase in spending. Reductions in spending are in
held to the rate in
parenthesis.
recent years of the
a
The increases in household health spending will be offset by increased
wages of $148.7 billion.
consumer-based
b
Reflects elimination of employee coverage. Employer savings in health
Federal Employee
spending will be offset by increases in wages not shown here.
c
Reflects elimination of employee coverage and savings to county
Health Benefits
hospitals.
Source: Lewin/ICF estimates using the Health Benefits Simulation Model.
Program, for in-
stance, American families would save tens of billions of dollars each year in
health costs, with bigger savings each year compared with current projections.
15
Q:
Could states introduce their own health credit?
A:
Yes. In fact a credit in a state's tax code would be a logical addition to the
basic federal plan. Several states, including Maryland and Minnesota, already
are considering a state health tax credit.
Q:
Could states add funds to the plan to give more help to the low-paid?
A:
Yes. In one version of the Heritage proposal, Lewin/ICF was asked to as-
sume that each state would supplement the federal program with a program to
cover the expenses of any family that, despite the federal credit, faced out-of-
pocket costs of more than 20 percent of its income. In modeling this version,
states were given discretion in how they would structure such additional assis-
tance. Taking together the various savings to states and local governments,
thanks to the federal credit and tax changes, Lewin/ICF calculated that the new
program would cost state and local governments $6.7 billion more than they
now spend on health care. In this variant of the plan, the states would not con-
tribute to the cost of the federal credit. Thus for federal budget neutrality, the
federal credits would have to be less generous.
Table 9
Sources and Uses of State Funds
Under the Tax Credit Program in 1991
(billions of dollars)
Changes in Revenues
Changes In Expenditures
Elimination of State Income
$8.3
Public Hospitals
($13.2)
Tax Exclusion
b
Premium Taxes
State and Local Worker Benefits
Current Revenues
(1.6)
Health Benefits
(23.8)
Revenues Under Policy
1.5
Wages
23.8
OASDI and HI Taxes
(0.1)
2.0
2.0
State Corporate
Contribution to
(0.6)
18.8
Income Tax Loss
Federal Tax Credit
Net Change In Revenues
$7.6
Net Change In Expenditures
$7.6
Note: Number in parenthesis represent negative amounts.
a
The increase in wages under the program will result in an increase in state income tax payments.
b
Premium tax revenues decline due to the reduction in the value of health insurance coverage
under the tax credit program.
Source: Lewin/ICF estimates using the Health Benefits Simulation Model.
17
would lose
Table 11
the tax ex-
clusion for
Change in Household Health Spending
Under the Tax Credit Program in 1991
any company-
(billions of dollars)
provided
benefits. Yet,
Health Spending
they would
Premium Payment
$88.2
also receive
Employee Contribution in Employer Plans
(45.2)
extra income,
Individual Premium Payments
133.4
because
Out-of Pocket Expenses
62.7
employers
Tax Credit
(84.9)
would be re-
quired to give
Eliminate Tax Expenditures
them cash in-
(individual share)
61.4
stead of
Federal
53.1
benefits and
State
8.3
they would
Eliminate Health Expense Deduction
2.5
receive a new
(over 7.5% AGI)
tax credit to
Net Change in Health Spending
129.9
replace the
tax exclusion.
Wage Effect
The net effect
Increased Wages
(148.7)
is that work-
(offset to change in health spending)
ing age
Net Impact on Households
($18.8)
households
would have a
Note: Number in parenthesis represent negative amounts.
total of $18.8
Source: Lewin/ICF estimates using the Health Benefits Simulation Model.
billion more
in their pock-
ets after all these changes. They would also be able to choose their own health
plan and keep it if they changed jobs.
Impact 2: A family with an annual income below $50,000 typically would
receive higher tax breaks for its health care plan.
Table 12 shows how the value of tax breaks for health coverage would be af-
fected for typical households. 8 Today the typical family earning less than
$10,000 gets just $50 a year in tax relief under the tax exclusion system. Under
version #1 of the Heritage plan, this family would receive $372 more in (refun-
dable) tax benefits and $684 more under version #2. A family earning over
$50,000, but less than $75,000, would lose just $13 in tax breaks under version
1, or just over $1 a month. Families as a whole would receive more federal tax
relief under the plan than they do because health cost savings to the states would
be added to the funds to finance the new credit.
8
All figures cited here from Tables 12 and 13 are averages for all families within income class.
19
Table 13
Average Net Impact of Alternative Tax Credit Options on Families by Income (1991)
Family Income
All
less than
$10,000
$15,000
$20,000
$30,000
$40,000
$50,000
$75,000
$100,000
Households
$10,000
- $14,999
- $19,999
- $29,999
- $39,999
- $49,999
- $74,999
- $99,999
or more
Household Health Spending
$1,841
$887
$1,223
$1,428
$1,638
$2,106
$1,954
$2,295
$2,400
$3,238
Under Current Law
Changes in Health Spending
Change In Premium
1,214
671
930
991
1,100
1,279
1,312
1,459
1,679
1,854
Payments®
Change In Out-of-Pocket
692
108
286
367
519
769
990
1,059
1,053
1,176
Payments for Care
Elimination of State and
745
35
154
283
500
736
875
1,330
1,397
1,492
Federal Tax Expenditures
Wage Effects
21
Increased Wages (counted as
(1,767)
(162)
(657)
(1,119)
(1,531)
(2,060)
(2,313)
(2,681)
(2,754)
(2,770)
an offset to health spending)
Tax Credits (Federal and State)
Version #1
(1,052)
(422)
(669)
(810)
(959)
(1,222)
(1,242)
(1,360)
(1,395)
(1,510)
Version #2
(1,052)
(734)
(871)
(978)
(1,045)
(1,258)
(1,168)
(1,141)
(1,082)
(1,178)
Version #3
(1,052)
(526)
(724)
(853)
(966)
(1,245)
(1,234)
(1,289)
(1,298)
(1,408)
Change in After-Tax Health Spending Net of After-Tax Change in Income
Version #1
(168)
210
44
(288)
(371)
(498)
(378)
(193)
(20)
242
Version #2
(168)
(82)
(158)
(456)
(457)
(534)
(304)
(26)
293
574
Version #3
(168)
126
(11)
(331)
(378)
(521)
(370)
(122)
77
344
Note: Figures in parenthesis represent negative numbers.
a
Includes individual premium payments less employee contributions to employer plans eliminated under the tax proposal.
b
Includes the additional taxes paid on employer benefits converted to income including: federal income taxes; the employee share of OASDI
and HI payroll taxes; and state income taxes.
Source: Lewin/ICF estimates using the Health Benefits Simulation Model (HBSM).
Case #2: A young single blue-collar worker in excellent health currently
works for a major industrial company and earns $21,000. The worker currently
has an employer-paid health plan with no deductible worth $3,000 per year.
Under the Heritage plan, the worker switches to a basic plan sponsored by
his union. For this plan he pays $850 and he pays out $450 in out-of-pock-
et costs. The employer adds $3,000 to his paychecks over the year and
makes a payroll deduction equal to the premium for his union plan and
sends the money to the union.
Under Heritage
Today
Proposal
Tax relief for health
$450
$ 404
Extra cash income
3,000
Taxes on extra Income
N/A
450
Net extra taxes paid under Heritage proposal
N/A
46
Change in disposable income after tax changes
+1,654*
and health spending under Heritage proposal
The change in disposable income is the additional income received by the family less the extra direct
payments for health care and the less the net extra taxes paid.
Case #3: An engineer, aged 50, with a manufacturing company has a non-
working spouse, two children, and a typical history of health problems. Current-
ly he earns $45,000 and has a company-paid plan. The company pays the
premium of $6,000 and the family pays out the full $600 each year in deduct-
ibles and copayments. This year, however, the company has decided to lay off
the worker. Although he fortunately has the offer of another job paying the same
total compensation of $51,000 ($45,000 + $6,000) with a small engineering
firm, that firm says it will not give part of the compensation in the form of
health benefits, because it cannot arrange affordable group coverage. So he
faces the prospect of being uninsured.
Under the Heritage proposal, he elects to continue his current plan, con-
verted to individual coverage for his family and paid for by himself. The
plan will cost the same premium with the same deductibles and copayments.
23
COMMONLY ASKED QUESTIONS ABOUT
THE HERITAGE CONSUMER CHOICE HEALTH PLAN
Q:
Are American families capable of choosing health plans?
A:
Yes. About 9 million federal workers and federal retirees do so every year
under the Federal Employee Health Benefits Program (FEHBP). 9 These
workers include mail room clerks, janitors, and messengers, as well as profes-
sional economists, congressmen and cabinet secretaries. In the Washington,
D.C., area they choose from among over thirty plans. They can make choices be-
cause consumer organizations, the local press, their family doctors, employee or-
ganizations, and other groups supply them with "user friendly" information on
which to base their choices. The same kinds of information would quickly mush-
room for 100 million American households choosing health plans as exists
today to help these households buy a car, a house, or a mutual fund.
Q:
How would costs be controlled?
A: In the same way as they are controlled in the automobile or com-
puter market-by cost-conscious consumers buying a product from among
competing suppliers. Critics of consumer-based cost control claim that families
cannot question the cost of specialized medical procedures. But this ignores the
way consumer choice would work. Most Americans know little about car-
buretors or steering systems in an automobile. If they bought a car by purchas-
ing all the components individually from different firms the car no doubt would
be very expensive, and would not run well. Instead they buy completed cars
from among rival assembly firms. In turn these firms bargain for quality and
price from component makers.
Essentially the same process would operate in a consumer-based health system
-and does so today in the FEHBP. Families would choose among competing
plans. The plan organizers, not the families, would bargain with doctors and
hospitals to keep costs down. That system of consumer choice and competition
has enabled the FEHBP to keep its premium increases well below those of
private employer-sponsored plans.
Q:
How would the obligation to buy insurance be enforced?
A: In two ways. Taxpayers would have to attach proof of insurance or en-
rollment in a public program to their tax return or face a fine. In addition,
employees would have to furnish their employers with proof of insurance,
which would be forwarded to the government. Those unable to show they had
9
See Moffit, op. cit.
25
poor by reducing the tax relief for middle and upper income families. Or if the
federal government decided to increase net spending (or tax help) for health, it
could make the credit more generous for the lower-paid. States could introduce
their own budget neutral credit, or they could add funds to assist the lower-paid.
Q:
What about those families on Medicaid?
A:
Medicaid would not be affected directly by the proposal. Today a
head of household on welfare typically has to give up thousands of dollars in
Medicaid health benefits if he or she leaves welfare and takes a job without
health benefits. But under the Heritage Plan, many families now on welfare (and
Medicaid) would choose to take a job because a refundable credit for health care
insurance would be available. This would reduce Medicaid and AFDC costs.
Q:
What about those now on Medicare?
A: The basic Heritage plan does not change Medicare. However, it would
be quite logical to allow working Americans to keep their health plans when
they retire, with the federal government making a financial contribution to these
plans in place of today's Medicare cumbersome reimbursement system. This
"voucherizing" of Medicare would encourage retirees to shop for the best plan
for their needs. The FEHBP operates in much this way for federal retirees.
Q:
How does the Heritage plan differ from the Bush Administration's
recent health reform proposal?
A:
For those now uninsured, both plans are quite similar, except that
the Bush plan gives a refundable credit only for the poor, and a deduction
for non-poor uninsured families. But it would, like the Heritage plan, cover
today's uninsured and enable them to obtain a "portable" plan. The Bush plan,
however, would have little or no effect on the costs of company-provided plans,
because it makes no changes at all in the tax treatment and so would not en-
courage 10 employees with company-sponsored plans to seek better value for
money.
There is also no explicit mechanism in the Bush plan to pay for its
new credit and deduction.
Q:
Does the Heritage plan have to be introduced all at once?
A:
No. It could be phased in gradually. One first step might be to limit the
tax exclusion for company-sponsored plans to, say, $4,000 per year for a family,
and use the tax revenue to fund a credit for out-of-pocket health expenses ex-
10 See Stuart M. Butler, "What's Right and Wrong with Bush's Health Plan," Heritage Foundation Executive
Memorandum No. 321, February 7, 1992.
27
SFP-15-92 THE 9:54
P.02
NEWS
American College of Physicians
Publisher of Annals of Internal Medicine
EMBARGOED FOR RELEASE UNTIL NOON, EDT, MONDAY, SEPT. 14, 1992
CONTACT: Kathleen Haddad (202) 393-1650 or (800) 633-9400
Susan Anderson (215) 351-2653 or (800) 523-1546, ext. 2653
DOCTORS TAKE ON MEDICAL COSTS TO HEAL U.S. HEALTH CARE SYSTEM
The nation's largest medical-specialty society on Monday called for a national
cap on health spending, with realistic limits on doctor and hospital fees, to finance a
reformed health care system that provides the same benefits to all Americans.
The American College of Physicians (ACP), which represents 77,000 doctors
practicing internal medicine, also called for a substantial restructuring of the nation's
insurance industry and consolidation of Medicaid, Medicare and other public programs.
The ACP's health care reform proposal, published in the Sept. 15, 1992, issue
of Annals of Internal Medicine, goes far beyond the incremental reforms backed by
most other sectors of organized medicine and contains several unique features that
resolve problems with the health care reforms proposed so far.
"This is a plan that can provide a basis for change, especially in this election
year with health care high on the political agenda," said Dr. Willis C. Maddrey,
President of the American College of Physicians.
The ACP proposal, titled "Universal Insurance for American Health Care," calls
for:
public and private sponsorship of health insurance;
--more--
News Bureau: Independence Mall West. Sixth Street at Race, Philadelphia. PA 19106-1572: 215-351-2651/800-523-1546
SEP-15-92 TUE 9:54
P.03
Doctors Take on Costs / 3 of 4
The ACP's detailed reform plan, released at a news conference at the National
Press Club, follows the 1990 publication of an ACP position paper supporting
universal access to comprehensive care, which was also a significant departure in
policy from much of organized medicine. The proposal released Monday transforms
the earlier principle into a working blueprint for change with a strong prescription to
contain health care costs. "The United States cannot afford, and will not achieve,
universal access to care without controlling costs, and costs cannot be controlled
without system-wide reform. We must limit total health care spending," the ACP
paper reads. "We recognize that these proposals raise politically and procedurally
difficult issues....but no plan for reform can succeed without substantial efforts to
control spending."
Apart from its commitment to cost control, the College reform agenda is
different from others in several important ways. First, it modifies the play-or-pay
reform approach by relieving employers of the responsibility for high-cost patients, so
that employers will choose to sponsor insurance rather than pay the tax. This answers
the criticism that play-or-pay will eventually result in a single-payer system because
the cost of employers' premiums could grow higher than the payroll tax.
Second, the ACP proposal consolidates public programs so that all public
beneficiaries receive equal care.
Third, it requires uniform benefits for all health plans, so that all publicly
sponsored patients receive the same level of care as those having private insurance,
yet retains a public-private mix of health coverage.
--more--
HOW THE ACP PLAN WORKS
Private and public sponsorship
Under the physicians' plan, employers could offer their own health coverage or
pay a tax to enroll their workers in publicly sponsored insurance. To make employer-
sponsored insurance affordable, the public system would cover workers over age 60
and people of any age needing high-cost care, along with the unemployed and
retirees. Employers would share the cost of private sector insurance with their
employees.
The public system would consolidate all current public programs, including
Medicaid and Medicare, and offer the same benefits as private plans. Because all
employers and individuals would benefit from the public plan, its constituency would
be broad enough to ensure its viability. This is not the case with Medicaid .. the
federal-state program for low-income people -- which excludes more than half the
nation's poor people. Funding for publicly sponsored insurance would come from
Medicare, Medicaid and other government health programs; payroll taxes from
companies not sponsoring insurance and their employees; income-related premiums
from retirees, collected through the tax system: and other tax revenue. A nationwide
poll commissioned recently by the ACP showed more than half of all Americans -- 56
percent -- support combining public programs.
The ACP plan would retain private sector insurance to foster a choice of
medical practice arrangements, including managed care. However, insurers would
have to accept all applicants regardless of pre-existing conditions and calculate
premiums based on the health status of the entire community, rather than an
individual employer. This would spread the risk and the cost of insurance, making it
more affordable to small employers.
The ACP proposal would significantly consolidate the insurance industry, ACP
leaders said. Remaining insurers would compete by offering lower premiums or better
value, not by avoiding risk or reducing reimbursement to providers.
Cost control
The College proposes to control spending through a national health care budget
and management of the price, supply and demand for health care services.
The budget would be developed by a national commission representing all
sectors of society and approved by Congress. It would cover public and private
spending and account for changing health needs of the population, new technology
and general inflation. The plan assumes that the current level of health care spending -
- $809 billion in 1992 -- is enough to provide health care to everyone with the
elimination of waste such as duplicative efforts of insurance companies in marketing
and billing, overuse of expensive procedures and technology, duplicative facilities and
equipment and overpriced care.
more
SEP-15-92 TUE 9:56
P.04
Some estimates of waste in health care are as high as $200 billion -- a quarter
of all spending. Even a savings of 5 percent would generate $40 billion -- enough to
extend coverage to all people under most estimates.
Under the ACP plan, physicians, hospitals and other health care providers would
negotiate fees with states, and all insurance plans would pay the same fees. Managed
care and other organized delivery systems would negotiate separate budgets with
insurers and develop their own compensation packages.
Payments could not exceed the allocation for each state. Payments to providers
could be reduced if excesses were not attributable to unanticipated illnesses.
Under the ACP plan, supply would be managed using community targets for the
numbers and distribution of physicians and other professionals, hospital beds and
capital investments. The targets would create an even balance of generalist and
specialty physicians, reducing the system's bias toward the use of costly procedures
and specialized care and expanding preventive care. Currently, there are two
specialists for every primary care physician. The personnel targets would be achieved
through improved reimbursement for generalists, financial and other incentives in
graduate medical education and limits on the number of specialty residencies. Capital
investment targets would be achieved through a requirement for regulatory approval.
Patient demand would be reduced through patient education on disease
prevention and reasonable expectations of medicine and through co-payments, except
for low-income patients.
Comprehensive, quality care
While expanding access to care, the ACP plan would also improve the quality
of care. Coverage under both the public and private systems would consist of all
medically effective and necessary health services based on patient need instead of a
pre-determined benefits package. Benefits would be determined by the national health
care commission based on medical effectiveness research and judgment of medical
value. In addition to improving quality, this approach provides an explicit mechanism
to address the question of rationing, which occurs tacitly under the present system.
Quality would also be improved by using a more efficient method of physician
oversight - pattern profiling - which identifies physicians whose performance
deviates significantly from peers. This would replace intrusive and costly case-by-case
utilization review.
"Case-by-case review is expensive -- a $7.4 billion industry -- and it has not
proven to be cost-effective. It has drawn the profession into a permanent game of
phone tag with consultants, whose permission must be granted for doctors to treat
their patients," Ball said. "Imagine the Internal Revenue Service auditing every
taxpayer. Well, physicians are under constant audit. There is a smarter, better, more
cost-effective way to perform quality assurance and contain costs."
--more--
SEP-15-92 TUE 9:57
P.05
The ACP plan would also improve quality with a more responsive malpractice
award system and an increase in health services research to reduce the variations in
medical practice using scientific data on the effectiveness of treatments and
procedures.
- 30 -
CONTACT: Kathleen Haddad (202) 393-1650 or (800) 633-9400
Susan Anderson (215) 351-2653 or (800) 523-1546
Summary of the American College of Physicians Health Reform Plan
Access
Employer-sponsored coverage
--
Employers either sponsor plan or pay tax to enroll
workers in public plan
--
Public system covers older workers and people of any
age needing high cost care
Publicly sponsored coverage
--
Everyone not enrolled in the employer plan, including:
-
unemployed and those not in job market
-
retirees
-
employees over age 60
-
those in need of more than $50,000 of medical care
annually
--
Consolidates all current public programs, including
Medicare and Medicaid
Financing
Private sector
--
Based on private insurance
--
No pre-existing condition clauses allowed
--
Community rating
--
Employers and employees share cost of private sector
insurance, with employers paying at least 50 percent
Public sector
--
Funding from:
-
Payroll taxes from companies not sponsoring
insurance and their employees
-
Income-related premiums from retirees, collected
through tax system
-2-
-
Funds now paying for Medicare, Medicaid, and other
government health programs
-
Increased alcohol and cigarette taxes
Cost Containment
National health care budget recommended by national health
care commission to Congress
Price
--
Individual practitioners, managed care organizations,
hospitals, and other providers negotiate fees with all
payers in a state
--
Fees based on system like RBRVS
--
All fees within a sub-state region are uniform
--
(Fee) X (Expected utilization) must not be greater than
state's budget allocation for year
--
If greater than state's allocation, adjustments made
Supply
--
Communities set targets for health resources including
supply and distribution of physicians and other
professionals, hospital beds, and capital investments
--
Targets linked to payment system
--
Mix of physicians changed from 65% specialist/35%
generalist to more even balance through improved
reimbursement for generalists and through financial and
other incentives in graduate medical education (GME),
including:
-
Weighting payments for GME to favor generalists
-
Reduced-interest or interest-free loans to
residents training to be generalists
-
Other regulatory approaches affecting number of
residency slots for specialists
-3-
Demand
--
To reduce demand:
-
Patient education on disease prevention and
reasonable expectations of medicine
-
Co-payments, except for low-income patients
-
Payment reform to reduce incentives to perform
unnecessary procedures
Quality of Care
All health plans provide same set of medically effective and
necessary health services, as determined by national health
care commission
Quality also improved by:
--
Practice profiling to identify physicians performing
below acceptable standards of care
--
More responsive malpractice award system
--
Increasing health services research
--
Improving supply and geographic distribution of primary
care physicians
Summary of the American College of Physicians Health Reform Plan
Access
Employer-sponsored coverage
--
Employers either sponsor plan or pay tax to enroll
workers in public plan
--
Public system covers older workers and people of any
age needing high cost care
Publicly sponsored coverage
--
Everyone not enrolled in the employer plan, including:
-
unemployed and those not in job market
-
retirees
-
employees over age 60
-
those in need of more than $50,000 of medical care
annually
--
Consolidates all current public programs, including
Medicare and Medicaid
Financing
Private sector
--
Based on private insurance
--
No pre-existing condition clauses allowed
--
Community rating
--
Employers and employees share cost of private sector
insurance, with employers paying at least 50 percent
Public sector
--
Funding from:
-
Payroll taxes from companies not sponsoring
insurance and their employees
-
Income-related premiums from retirees, collected
through tax system
-2-
-
Funds now paying for Medicare, Medicaid, and other
government health programs
-
Increased alcohol and cigarette taxes
Cost Containment
National health care budget recommended by national health
care commission to Congress
Price
--
Individual practitioners, managed care organizations,
hospitals, and other providers negotiate fees with all
payers in a state
--
Fees based on system like RBRVS
--
All fees within a sub-state region are uniform
--
(Fee) X (Expected utilization) must not be greater than
state's budget allocation for year
--
If greater than state's allocation, adjustments made
Supply
--
Communities set targets for health resources including
supply and distribution of physicians and other
professionals, hospital beds, and capital investments
--
Targets linked to payment system
--
Mix of physicians changed from 65% specialist/35%
generalist to more even balance through improved
reimbursement for generalists and through financial and
other incentives in graduate medical education (GME),
including:
-
Weighting payments for GME to favor generalists
-
Reduced-interest or interest-free loans to
residents training to be generalists
-
Other regulatory approaches affecting number of
residency slots for specialists
-3-
Demand
--
To reduce demand:
-
Patient education on disease prevention and
reasonable expectations of medicine
-
Co-payments, except for low-income patients
-
Payment reform to reduce incentives to perform
unnecessary procedures
Quality of Care
All health plans provide same set of medically effective and
necessary health services, as determined by national health
care commission
Quality also improved by:
--
Practice profiling to identify physicians performing
below acceptable standards of care
--
More responsive malpractice award system
--
Increasing health services research
--
Improving supply and geographic distribution of primary
care physicians
10/21/92
07:48
001
DEPARTMENT NYNAH OF: HEALTH
DEPARTMENT OF HEALTH & HUMAN SERVICES
Office of the Secretary
Office of the Assistant Secretary
THE
for Planning and Evaluation
(Program Systems)
ASPE FAX
TO
Name : Stephanie Forsium FAX NUMBER:
PHONE
Organization : WH-Office Policy
456-7739
Phone : 456-6563
MESSAGE
Here is what is available at
this time- F493 + F494
expiring authorites. F495 will
not be svailable for guite some time.
Hope this helps.
FROM
The following 9 pages were sent by:
ANDREW ROCK
(202) 690-7150
FAX: (202)-690-6518
Rm 447-D
200 Independence Ave., SW
Washington, DC 20201
10/21/92
07:19
002
ADMINISTRATION FOR CHILDREN AND PAMILIES
LEGISLATION EXPIRING ON 9/30/93
LAW
OCCTION
PROGRAM
RECOMMENDATION
child Abuse Prevention and
107a(e)
Authorizes appropriations for emergency
Reauthorized by
Treatment Aot
grants for child abuse prevention
child ADUSE,
services for children of substence
Domestic Violance,
abusers.
Adoption and Family
Services Act of 1992
(P.L. 102-275),
through FY 1995.
Comprehensive Child
670T(a)
Authorizes appropriations to eligible
Reauthorized by
Development Centers Act of
local entities for provision of a broad
Augustus F. Hawkins
1088
array of services to children beginning
Muman Resources
at birth through school age, and to
Reauthorization Aos
their families.
(P.L. 101-501),
through FY 1994.
Developmental Disabilities
130
Authorizes appropriations for state
Seek
Assistance and Bill of Righte
developmental disabilities grant
reauthorization,
Act
programs.
143
Authorizes appropriations for allotments
Sook
to states for State Protection and
reauthorization.
Advocacy Systems.
154
Authorizes appropriations for grants to
Seek
university affiliated programs and
reauthorization.
setellite centers and grants for
faasability studies.
163
Authorizes appropriations for projects
Seek
of national significance.
reauthorization.
Stewart B. McKinney Homelecs
753(b)
Authorizes appropriations for the
Do not seek
Assistance Act
establishment of the Emergency Community
reauthorization
Services Homeless Grant program.
779
Authorizes appropriations for grants to
Do not seek
Family Support Centers.
reauthorization.
Page 1
10/21/92 07:50
003
ACF
EXPIRE
9/30/94
Low-Income Home Energy Assistance Act of 1981
(title XXVI of P.L. 99-35
Sec. 2603 (b) : Authorize appropriations
Augustue F.Hawkins Human Services Reauthorization
Act of 1990
Sco. 934 (a) (1) : Authorize appropriations for
ADYCF Coordination; Supportive Services
Sco. 360 (a) : Authorizes appropriations for grants
for the establishment of National Center for
Family Resources and support Program.
Child Development Associate Scholarship Assistance
Act of 1985
Sec. 606: Authorize appropriations for grants
to states receiving a grant under title XX of
the SEA for scholarships for CDA credential
candidates.
Community Services Block Grant Act
Sec. 627 (b) : Authorizes appropriations
Sec. 681A: Appropriations authorizations
for community food and nutrition programs.
Head Start Act
Dec. 639: Authorizes appropriations
State Dependent Care Development Act
Sec. 670A: Authorizes appropriations
for grants to States for planning
and dovelopment of dependent care
programs.
001
10/21/92
07:50
HEALTH CARE FINANCING ADMINISTRATION
LEGISLATION EXPIRING ON 9/30/93
LAW
SECTION
PROGRAM
RECOMMENDATION
consolidated Dmnibus Budget
9215
Extends grant for Medicare municipal
Do not seek
Reconcillation Act of 1985
health service demonstration projects.
reauthorization.
Omnibus Reconcilaition Act of
6508(f)
Authorizer appropriations for
Do not seek
1989
demonstration projects on health
reauthorization.
insurance for medically uninsurable
children.
10/21/92
07:50
005
HCFA
EXPIRE
Title XI of the Social Security Act
Sec. 1142(i) : Appropriations authorization
for program of research on outcomes of health
care cervices and procedures.
9/30/94
10/21/92
07:51
006
PUBLIC HEALTH SERVICE
LEGISLATION EXPIRING ON 9/30/93
LAW
SECTION
PROGRAM
RECOMMENDATION
Anti-Drug Abuse Act of 1988
3521(g)
Authorizes appropriations for community
Do not seek
youth activity programs.
reauthorization.
3522
Authorizes appropriations for evaluation
Replaced by various
of drug abuse education and prevention
authorizationo under
efforts.
the ADAMHA
Revrganization.Act
(P.L. 102-321).
Disadvantaged Minority Health
10(f)
Authorizes appropriations for gronte for
Do not seek
Improvement Act of 1990
health services for Pacific Islanders.
reauthorization.
Indian Health Care Improvement
718(d)(1)
Makes grants for demonstration projects
Do not seek
Act
for tribal management of health care
reauthorization.
scrvices.
Omnibus Rudget Reconciliation
6509(b)
Authorizes appropriations for Maternal
Do not seek
ACT of 1989
and child Health Handbooks.
reauthorization.
Public Health Service Act,
306(0)
Authorize appropriations for statistical
Seek
title 111
and epidomiological activities under the
reauthorization.
National Center for Health Statisțica,
338(j)(1)
Authorizes
appropriations for grants to
Do not seek
states for operation of offices of Rural
reauthorizativn,
Mealth.
340(p)(1)
Authorizes appropriations for health
seek
care and preventive health services in
reauthorization.
or near public houring.
340(s)(8)
Authorizes appropríations for grants
Included in Health
regarding outreach and primary health
Care for the
services for homeless children.
Homicss,
378(c)
Authorises appropriations for organ
seek
procurement organizations.
reauthorization,
370(j)
Authorizes appropriations for grants for
seek
the establishment of a bone-merrow
reauthorization,
registry
394
Authorizes eppropriations to conduct and
Seek
provide assistance for injury research
reauthorization.
and to provide assistance to states and
localities for injury control.
399A(e)
Authorizes appropriations for
Do not seek
demonstration projects with regard to
roauthorization.
Page 1
007
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PUBLIC HEALTH SERVICE
LEGISLATION EXPIRING ON 9/30/93
LAW
SECTION
PROGRAM
RECOMMENDATION
Public Health Service Act,
399A(e)
Alzheimer's Discuse.
Public Health Service Act,
513(b)
Authorize appropriations for alcohol and
Included in ADAMHA
title V
drug abuse treatment for homeless
Reorganization Act
individuals.
(P.L. 102-321), new
PHS Act section 506,
through FY 1994.
520(A)(e)(1)
Authorize appropriations for the
Included in ADAMIIA
establishment of a grant program for
Reorganization Act
demonstration projects for mental health
(P.L. 102-321), new
services.
PHS Act section 116,
through FY 1994.
Public Health Service Act,
740(e)(c)(1)
Authorize appropriations for grants for
Do not Beck
títle VII
Federal capital contribition to certain
reauthorization.
student loan funds for purposes
regarding disadvantaged individuals.
760(g)(1)
Authorizes appropriations for grants for
DU not seek
scholarshíps for individuals from
reauthorization.
disadvantaged backgrounds to health
professions schools.
761(h)
Authorizes appropriations for loan
Do not seek
repayment program regarding on faculties
reauthorization,
of certain health professions schools.
782(h)(1)
Authorizea appropriations for grants for
DO not seek
programs of
excellence in health
reauthorization.
prefessions
education for minorities.
Public Health Service Act,
1232(a)
Authorizes appropriations for trauma
Do not cook
title XII
oore systems research, training,
reauthorization.
evaluations, and demonstration projects,
Note: ADAMHA
and other activities.
Reorganization Act
(P.L. 102-321) adds
new Part D to this
section, authorizing
eppropriations for
Trauma Care Centers
operating in areas
severely affected by
drug-related
violence, through FY
1994.
Public Health Service Act,
1509(e)
Authorizes appropriations for grents to
Sank
title XV
states for provention and control of
reauthorization.
Page 2
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008
PUBLIC HEALTH SERVICE
LEGISLATION EXPIRING ON 9/30/93
LAW
SECTION
PROGRAM
RECOMMENDATION
Public Health Corvice Aot,
1507(a)
breast and cervical concer.
Public Mealth Service ACT,
1707(f)(1)
Authorizes appropriations for the Office
Seek
title XVII
of Minority !lealth.
reauthorization.
Stewart B. McKinney Momeless
612(8)
Authorizes appropriations for community
included in ADAMHA
Assistance Aot
mental health services demonstrations
Reorganization ACT
projects for homeless individuals who
(P.I. 102-321), new
are chronically mentally 111.
PHS Act section
520A, through FY
1994.
Vaccine and Immunization
2(b)(2)
Authorizes oppropriations for
Do not Beek
Amendments of 1990
demonstration projects for vaccine and
reauthorization.
immunization outreach programs.
Page 3
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009
HEALTH
Expires
Title III of the PHS Act
9/30/94
Sec. 329 (h) (1) (A) (2) (A) : Authorizes
appropriations for grants and contracts
for migrant health centers.
Scc. 330 (g) (1) (A) (2) (A) : Authorizes appropriations
for community health centers
Scc. 340 (g) (1) : Authorizes appropriations
for health care for the homeless.
Sec. 399 (D) (p) (1) : Authorizes appropriations for
grants for services for children of substance
abusers.
Sec. 399 (r) : Authorize appropriations for projects
to improve maternal, infant, and child health
Title IV of the PHS Act
Sec 464 (H) (d) (1) : Authorize appropriations for
the National Institute on Alcohol Abuse and
Alcoholism
Sec. 464L (d) (1) : Authorize appropriations for the
National Institute on Drug Abuse
Sco. 464P (o) : Authorize appropriations for a
Medication Development Program.
Sec. 161R (£) (1) : Authorize appropriations for
the National Institute of Mental Health
Title V of the PHS Act
Dec. 501 (m) : Authorizes appropriations for grants
for cooperative agreement and contracts under the
substance Abuse and Mental Health Administration
Sec. 506 (e) : Authorize appropriations for grants
for the benefit of homeless individuals.
Sec. 508 (r) : Authorize appropriations for
residential treatment programs for pregnant
and postpartum women
Sec. 510 (e) ; Authorize appropriations for
demonstration projects of national significance.
Sec. 512 (d) : Authorize appropriations for
training in provisions of treatment services
10/21/92
07:52
010
Sec. 516 (c) : Authorize appropriations for
community programs.
Sec. 517 (h) : Authorize appropriations for
prevention, treatment, and rehabilitation
model projects for high risk youth.
sec. 561 (f) (1) : Authorizes appropriations for
comprehensive community mental health services
for children with serious emotional disturbances.
Sec. 535 (a) : Appropriation authorization for
grants to States for assistance regarding
transition from hopelessness.
Title XII of the PHS Act
Sco. 1245: Authorize appropriations for trauma
-centers operating in areas severely affected
by drug-related violence.
Title XIX of the PHS Act
Sec. 1920 (a) : Authorize appropriations for block
grants for community mental health services
Sec. 1935 (a) : Authorize appropriations for block
grants for prevention and treatment of substance
abuce.
Anti-Drug Abuse Act of 1988
Sec. 3505: Authorizes appropriation for grants
to prevent adolescents from joining youth gangs
and participating in drug-related activities.
Sec. 3513: Authorizes appropriations for grants
to public and private nonprofit agencies,
organizations and institutions to carry our research
demo and services for runaway and homeless youth.