[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1398 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 1398

To amend the Internal Revenue Code of 1986 and the Social Security Act 
to provide for health insurance coverage for workers and the public in 
 a manner that contains the costs of health care in the United States.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 18, 1993

Mr. Cardin introduced the following bill; which was referred jointly to 
 the Committees on Energy and Commerce, Ways and Means, and Education 
                               and Labor

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 and the Social Security Act 
to provide for health insurance coverage for workers and the public in 
 a manner that contains the costs of health care in the United States.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Flexible Medical 
Access and Cost Containment Act of 1993''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
 TITLE I--REQUIRING EMPLOYERS TO PROVIDE HEALTH INSURANCE COVERAGE FOR 
                        EMPLOYEES AND DEPENDENTS

Sec. 101. Requirement.
Sec. 102. Meeting requirement through enrollment of employees and 
                            families under qualified employer health 
                            plans.
``TITLE XXI--REQUIREMENT FOR ENROLLMENT OF EMPLOYEES UNDER A QUALIFIED 
                          EMPLOYER HEALTH PLAN

        ``Sec. 2100. Relation to Internal Revenue Code requirement.
 ``Part A--Employer Requirement to Enroll Employees and Families in a 
                     Qualified Employer Health Plan

        ``Sec. 2101. Application to full-time employees.
        ``Sec. 2102. Application to part-time employees.
        ``Sec. 2103. Application to seasonal and temporary employees.
        ``Sec. 2104. Treatment of all family members as a unit; uniform 
                            treatment of full-time employees and of 
                            part-time employees.
        ``Sec. 2105. Application of requirement to employers of 
                            different sizes.
        ``Sec. 2106. Timing of enrollment; period of coverage.
       ``Part B--Requirements for Qualified Employer Health Plans

        ``Sec. 2121. Qualified employer health plan defined.
        ``Sec. 2122. Requirements relating to employee premiums and 
                            cost-sharing.
             ``Part C--Standards for Qualified Health Plans

        ``Sec. 2151. Certification of qualified health plans.
        ``Sec. 2152. Treatment of family as a unit; coverage period; 
                            health plan cards.
        ``Sec. 2153. Requirements respecting basic benefits.
        ``Sec. 2154. Requirements respecting limits on pre-existing 
                            condition exclusions and coverage standards 
                            for basic health services.
        ``Sec. 2155. Requirements respecting limits on cost-sharing.
        ``Sec. 2156. Use of payment rates.
        ``Sec. 2157. Coordination and portability of health coverage 
                            under qualified health plans.
        ``Sec. 2158. Consumer protections.
        ``Sec. 2159. Preemption of certain state and federal 
                            requirements.
        ``Sec. 2160. Use of uniform claims forms; uniform information 
                            reporting.
                ``Part D--Definitions and Miscellaneous

        ``Sec. 2181. Definitions.
        ``Sec. 2182. Nonapplication to residents of Puerto Rico and 
                            territories.
Sec. 103. Repeal of COBRA continuation requirements.
  TITLE II--PROVISION OF HEALTH INSURANCE THROUGH A PUBLIC HEALTH PLAN

Sec. 201. Public health plan.
                    ``TITLE XXII--PUBLIC HEALTH PLAN

                  ``Part A--Eligibility and Enrollment

        ``Sec. 2201. Eligibility to enroll for health insurance 
                            benefits and to apply for low-income 
                            assistance.
        ``Sec. 2202. Application for enrollment.
        ``Sec. 2203. Coverage period; termination of enrollment.
        ``Sec. 2204. Requirement of health insurance coverage.
                  ``Part B--Health Insurance Benefits

        ``Sec. 2211. Required health services.
  ``Part C--Payments for Benefits; Deductibles, Coinsurance, and Stop-
              loss Protection for Required Health Services

        ``Sec. 2221. Payments for benefits.
        ``Sec. 2222. Deductible for required health services.
        ``Sec. 2223. Coinsurance for required health services.
        ``Sec. 2224. Limit on cost-sharing for required health 
                            services.
        ``Sec. 2225. Exclusions; coordination. 
        ``Sec. 2226. Application of particular qualified health plan 
                            requirements.
              ``Part D--Premiums, Public Health Trust Fund

        ``Sec. 2231. Premiums.
        ``Sec. 2232. Collection of premiums.
        ``Sec. 2233. Public Health Trust Fund.
        ``Sec. 2234. Transfer payments in the case of multiple 
                            employers.
        ``Sec. 2235. Use of uniform claims forms; uniform information 
                            reporting.
            ``Part E--Assistance for Low-Income Individuals

        ``Sec. 2241. Assistance for individuals with income below the 
                            poverty line enrolled on a non-employment 
                            basis.
        ``Sec. 2242. Assistance for individuals with income below twice 
                            the poverty line enrolled on a non-
                            employment basis.
        ``Sec. 2243. Assistance for individuals covered under qualified 
                            employer health plans.
        ``Sec. 2244. Applications for assistance.
        ``Sec. 2245. Reconciliation of premium assistance through use 
                            of income statements.
        ``Sec. 2246. Treatment of certain cash assistance recipients.
        ``Sec. 2247. Computation of family adjusted total income.
                  ``Part F--Administrative Provisions

        ``Sec. 2261. Agreements with hospitals; participating 
                            physicians; treatment of Indian Health 
                            Service facilities.
        ``Sec. 2262. Health maintenance organizations.
        ``Sec. 2263. Use of fiscal agents.
        ``Sec. 2264. General administration.
        ``Sec. 2265. Determinations; appeals; Provider Reimbursement 
                            Review Board.
        ``Sec. 2266. Program integrity; miscellaneous provisions.
        ``Sec. 2267. Information by telephone.
        ``Sec. 2268. Demonstration project authority.
        ``Sec. 2269. Incorporation of miscellaneous medicare 
                            provisions.
                          ``Part G--[Reserved]

                ``Part H--Definitions and Miscellaneous

        ``Sec. 2281. Incorporation of certain definitions used in other 
                            health-related titles.
        ``Sec. 2282. Definitions relating to families.
        ``Sec. 2283. Other definitions.
        ``Sec. 2284. Authorizing reciprocal coverage of foreign 
                            nationals.
        ``Sec. 2285. Nonapplication to residents of Puerto Rico and 
                            territories.
                      TITLE III--COST CONTAINMENT

                Subtitle A--Health Care Spending Amounts

Sec. 301. Specification of overall health care spending amounts.
Sec. 302. Establishment of Federal Health Care Cost Containment 
                            Commission.
Sec. 303. State Health Rate Commissions.
Sec. 304. Standard for payment rates.
Sec. 305. Application of rates under medicare and public programs.
               Subtitle B--Administrative Simplification

Sec. 321. Requirement for uniform health claims cards.
Sec. 322. Requirement for entitlement verification system.
Sec. 323. Requirements for uniform claims and electronic claims data 
                            set.
Sec. 324. Electronic medical records and reporting.
Sec. 325. Uniform hospital cost reporting.
Sec. 326. Definitions.
                     Subtitle C--Malpractice Reform

Sec. 331. Malpractice reform.
                TITLE IV--GROUP HEALTH INSURANCE REFORM

Sec. 401. Excise tax on premiums received on health insurance policies 
                            which do not meet certain requirements.
Sec. 402. Group health insurance standards.
            ``TITLE XXIII--GROUP HEALTH INSURANCE STANDARDS

                ``Part 1--General Standards; Definitions

        ``Sec. 2301. Application of requirements to employment-related 
                            health plans.
        ``Sec. 2302. Establishment of standards.
        ``Sec. 2303. Requirements applicable to all employment-related 
                            health plans.
        ``Sec. 2304. Definitions.
        ``Sec. 2305. Notice of plans meetings requirements.
            ``Part 2--Small Employer Health Insurance Reform

        ``Sec. 2311. Enrollment practice and guaranteed renewability 
                            requirements for small employer health 
                            plans.
        ``Sec. 2312. Rating practices for small employer health plans.
        ``Sec. 2313. Basic benefit package for small employer health 
                            plans.
        ``Sec. 2314. Miscellaneous disclosure and record-keeping 
                            requirements for small employer health 
                            plans.
        ``Sec. 2315. Payment of commissions.
        ``Sec. 2316. Nonapplication in Puerto Rico and the territories.
                  TITLE V--CHANGES IN MEDICARE PROGRAM

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.
Sec. 507. Phased-in requirement of part B enrollment.
Sec. 508. Changes in participation agreements.
Sec. 509. Assuring coordination of enrollment with qualified health 
                            plans.
                     TITLE VI--FINANCING PROVISIONS

                     Subtitle A--General Provisions

Sec. 601. Increase in wage base for hospital insurance tax.
      Subtitle B--Deductibility of Certain Health Insurance Costs

Sec. 611. Indefinite extension of deduction for health insurance costs 
                            of self-employed individuals.
Sec. 612. Increase in amount of deduction for self-employed 
                            individuals.
Sec. 613. Deduction for premiums paid by small employers for insurance 
                            providing qualified health coverage.
                Subtitle C--State Maintenance of Effort

Sec. 621. State maintenance of effort.
                     TITLE VII--MEDICAID PROVISIONS

Sec. 701. Coordination with public health plan.

 TITLE I--REQUIRING EMPLOYERS TO PROVIDE HEALTH INSURANCE COVERAGE FOR 
                        EMPLOYEES AND DEPENDENTS

SEC. 101. REQUIREMENT.

    (a) In General.--Chapter 47 of the Internal Revenue Code of 1986 is 
amended by adding at the end thereof the following new section:

``SEC. 5000A. FAILURE TO COVER EMPLOYEES AND DEPENDENTS UNDER A 
              QUALIFIED EMPLOYER HEALTH PLAN.

    ``(a) Imposition of Tax.--In addition to other taxes, if an 
employee of any employer is not covered under a qualified employer 
health plan of such employer, there is hereby imposed on such employer 
a tax.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to an employee shall 
        be $100 for each day in the noncompliance period with respect 
        to such failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period--
                    ``(A) beginning on the date such failure first 
                occurs, and
                    ``(B) ending on the date such failure is corrected.
    ``(c) Liability for Tax.--The employer shall be liable for the tax 
imposed by subsection (a).
    ``(d) Exceptions.--
            ``(1) Transition.--The taxes imposed by this section shall 
        not take effect before the date on which the requirements of 
        part A of title XXI of the Social Security Act apply with 
        respect to the employer under section 2105(a) of such Act.
            ``(2) Employees covered by federal health plan.--The taxes 
        imposed by this section shall not apply to any employee of the 
        United States if, by reason of such employment (or the 
        employment of a family member), the employee--
                    ``(A) is enrolled in a health benefits plan under 
                chapter 89 of title 5, United States Code, or
                    ``(B) is provided medical and dental benefits under 
                chapter 55 of title 10 of such Code.
            ``(3) Tax not to apply where failure not discovered 
        exercising reasonable diligence.--No tax shall be imposed by 
        subsection (a) on any failure during any period for which it is 
        established to the satisfaction of the Secretary that the 
        employer did not know, and exercising reasonable diligence 
        would not have known, that such failure existed.
            ``(4) Tax not to apply to failure corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the first 30 
                days of the noncompliance period with respect to such 
                failure.
            ``(5) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part of all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be unduly burdensome relative to the failure involved.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Employee; employer.--The terms `employee' and 
        `employer' have the same meanings as such terms have for 
        purposes of chapter 21.
            ``(2) Qualified employer health plan.--The term `qualified 
        employer health plan' means a plan meeting the requirements of 
        title XXI of the Social Security Act.
            ``(3) Covered.--An employee is not considered to be 
        `covered' under a qualified employer health plan if a dependent 
        of the employee, whose coverage is provided for under title XXI 
        of the Social Security Act, is not covered under such plan.''.
    (b) Deficiency Procedures to Apply to Chapter 47.--
            (1) The following provisions of the Internal Revenue Code 
        of 1986 are each amended by striking ``or 44'' each place it 
        appears and inserting ``44, or 47''.
                    (A) Subsections (a) and (b)(2) of section 6211.
                    (B) Section 6212(a).
                    (C) Subsections (a) and (g) of section 6213.
                    (D) Subsections (c) and (d) of section 6214.
                    (E) Section 6161(b)(1).
                    (F) Section 6344(a)(1).
                    (G) Subsections (a) and (b)(1) of section 6512.
                    (H) Section 7422(e).
            (2) Sections 6211(a) and 6862(a) of such Code are each 
        amended by striking ``and 44'' and inserting ``44, and 47''.
            (3) Paragraph (1) of section 6212(b) of such Code is 
        amended--
                    (A) by striking ``or chapter 44'' and inserting 
                ``chapter 44, or chapter 47'', and
                    (B) by striking ``chapter 44, and this chapter'' 
                and inserting ``chapter 44, chapter 47, and this 
                chapter''.
            (4) Paragraph (1) of section 6212(c) of such Code is 
        amended by striking ``or of chapter 44 tax for the same taxable 
        period'' and inserting ``, of chapter 44 tax for the same 
        taxable period, or of chapter 47 for each act or failure to act 
        to which the petition relates''.
    (c) Clerical Amendments.--
            (1) So much of chapter 47 of such Code as precedes 
        subsection (a) of section 5000 is amended to read as follows:

           ``CHAPTER 47--TAXES RELATING TO GROUP HEALTH PLANS

                              ``Sec. 5000. Contributions to 
                                        nonconforming large group 
                                        health plans.
                              ``Sec. 5000A. Failure to cover employees 
                                        and dependents under a 
                                        qualified employer health plan.

``SEC. 5000. CONTRIBUTIONS TO NONCONFORMING LARGE GROUP HEALTH PLANS.''

            (2) The table of chapters for subtitle D of such Code is 
        amended by striking the item relating to chapter 47 and 
        inserting the following:

                              ``Chapter 47. Taxes relating to group 
                                        health plans.''
    (d) Effective Date.--The amendments made by this section shall 
apply to failures occurring after December 31, 1993.

SEC. 102. MEETING REQUIREMENT THROUGH ENROLLMENT OF EMPLOYEES AND 
              FAMILIES UNDER QUALIFIED EMPLOYER HEALTH PLANS.

    The Social Security Act is amended by adding at the end the 
following new title:

``TITLE XXI--REQUIREMENT FOR ENROLLMENT OF EMPLOYEES UNDER A QUALIFIED 
                          EMPLOYER HEALTH PLAN

``SEC. 2100. RELATION TO INTERNAL REVENUE CODE REQUIREMENT.

    ``(a) In General.--If an employer fails to enroll employees (and 
family members) under a qualified employer health plan in accordance 
with this title, the employer is liable for payment of an excise tax 
under section 5000A(a) of the Internal Revenue Code of 1986.
    ``(b) Treatment of Small Employers.--A small employer may meet such 
requirements through purchase of coverage under the public plan 
provided under title XXII.

 ``Part A--Employer Requirement to Enroll Employees and Families in a 
                     Qualified Employer Health Plan

``SEC. 2101. APPLICATION TO FULL-TIME EMPLOYEES.

    ``(a) Unmarried Employees.--
            ``(1) In general.--Except as provided in this part, each 
        employer shall, in accordance with this title, enroll each of 
        its full-time employees who is unmarried in a qualified 
        employer health plan.
            ``(2) Multiple full-time employment.--
                    ``(A) Each offers qualified plan.--In the case of 
                an unmarried individual who is a full-time employee of 
                more than 1 employer, if more than 1 such employer 
                offers the employee enrollment under a qualified 
                employer health plan--
                            ``(i) the individual shall elect (in a 
                        manner specified by the Secretary) the 
                        qualified employer health plan under which the 
                        individual (and family members) will be 
                        enrolled;
                            ``(ii) a nonenrolling employer--
                                    ``(I) is not obligated to enroll 
                                the employee (and family members) under 
                                its qualified employer health plan (if 
                                any) and may not charge the individual 
                                any premiums for required coverage 
                                under the qualified employer health 
                                plan, and
                                    ``(II) is not liable for any tax 
                                under section 3151(a)(1) of the 
                                Internal Revenue Code of 1986 but is 
                                liable for a nonenrolling employer 
                                premium under section 2234(a)(1)(A); 
                                and
                            ``(iii) the enrolling employer is eligible 
                        for an enrolling employer subsidy under section 
                        2234(a)(1)(B).
                    ``(B) Only 1 offers qualified plan.--In the case of 
                an unmarried individual who is a full-time employee of 
                more than 1 employer, if only 1 employer offers the 
                employee enrollment under a qualified employer health 
                plan--
                            ``(i) the individual shall be enrolled 
                        under such plan and, pursuant to subsection 
                        (c)(2) of section 3151 of the Internal Revenue 
                        Code of 1986, is not subject to taxes under 
                        subsection (a)(2) of such section with respect 
                        to employment with nonenrolling employers, and
                            ``(ii) the enrolling employer is eligible 
                        for an enrolling employer subsidy under section 
                        2234(a)(1)(B).
    ``(b) Married Employees.--
            ``(1) In general.--Except as provided in this part, each 
        employer shall, in accordance with this title, enroll each of 
        its full-time employees who is married in a qualified employer 
        health plan.
            ``(2) Both full-time employees.--In the case of married 
        individuals, if both are full-time employees of 1 or more 
        employers, rules established by the Secretary based on the 
        rules under subsection (a)(2) for multiple employment of 
        unmarried individuals shall apply.
    ``(c) Construction.--Nothing in this section shall be construed as 
preventing the nonenrolling plan from supplementing the benefits of the 
enrolling plan.
    ``(d) Definitions.--In this section, the terms `enrolling employer' 
and `enrolling plan' mean, with respect to an individual or a married 
couple, the employer that offers the qualified employer health plan in 
which the individual or couple is enrolled under subsection 
(a)(2)(A)(i) or (b)(2)(A)(i) and such plan, respectively, and the terms 
`nonenrolling employer' and `nonenrolling plan' mean the other employer 
and other qualified employer health plan, respectively.

``SEC. 2102. APPLICATION TO PART-TIME EMPLOYEES.

    ``(a) Application of Full-Time Employee Rules.--Subject to 
subsection (b), the provisions of section 2101 shall apply to part-time 
employees in the same manner as they apply to full-time employees.
    ``(b) Separate Treatment of Part-Time and Full-Time Employees Under 
Qualified Employer Health Plans.--For rule regarding separate, but 
uniform, treatment of full-time and part-time employees (and family 
members), see section 2104(b).

``SEC. 2103. APPLICATION TO SEASONAL AND TEMPORARY EMPLOYEES.

    ``(a) Enrollment Under Qualified Employer Health Plan Not Affecting 
Application of Excise Tax.--The enrolling by an employer of an employee 
designated under subsection (b) as a seasonal or temporary employee (as 
defined in section 2181(b)(3)), whether a part-time or full-time 
employee, under the qualified employer health plan of the employer 
shall not be considered, for purposes of section 3151 of the Internal 
Revenue Code of 1986, coverage of the employee under a qualified 
employer health plan.
    ``(b) Designation of Seasonal or Temporary Employees.--Each 
employer shall designate, at the time of initial employment and in a 
manner specified by the Secretary, if the individual is to be treated 
under this title and title XXII as a seasonal or temporary employee.

``SEC. 2104. TREATMENT OF ALL FAMILY MEMBERS AS A UNIT; UNIFORM 
              TREATMENT OF FULL-TIME EMPLOYEES AND OF PART-TIME 
              EMPLOYEES.

    ``(a) Treatment of All Family Members as a Unit.--
            ``(1) In general.--In accordance with section 2152(a), 
        enrollment of an employee in a qualified employer health plan 
        shall include enrollment of the other family members of the 
        employee.
            ``(2) Treatment of children.--In the case of an individual 
        who is a child, the employer of the child is not required to 
        enroll the child in a qualified employer health plan by virtue 
        of the part-time or full-time employment of the child (whether 
        or not the parent of the child is a full-time or part-time 
        employee). However, the employer is liable for taxes under 
        section 3151(a)(1) of the Internal Revenue Code of 1986 (or 
        payment of a nonenrolling employer premium under section 
        2234(a)(1)(A)) with respect to such employment, and the child 
        is, subject to section 3151(c)(2) of such Code, liable for 
        taxes under section 3151(a)(2) of such Code.
    ``(b) Uniform Treatment of Full-Time Employees and of Part-Time 
Employees.--Except as authorized under sections 2101 and 2102 (with 
respect to permitting certain multiple-employed individuals to elect 
coverage under qualified employer health plans) and as provided under 
section 2103 and subsection (a)(2) of this section, an employer health 
plan is not a qualified employer health plan if the plan--
            ``(1) enrolls some (but not all) full-time employees (and 
        family members) required to be enrolled under this part, or
            ``(2) enrolls some (but not all) part-time employees (and 
        family members) required to be enrolled under this part.
However, a plan may be a qualified employer health plan and enroll only 
full-time employees (and family members), but not part-time employees 
(and family members).

``SEC. 2105. APPLICATION OF REQUIREMENT TO EMPLOYERS OF DIFFERENT 
              SIZES.

    ``(a) In General.--Except as provided in subsection (b), the 
requirements of this part apply--
            ``(1) as of January 1, 1994, to very large employers;
            ``(2) as of January 1, 1995, to large employers;
            ``(3) as of January 1, 1996, to medium-size employers; and
            ``(4) as of January 1, 1997, to small employers.
    ``(b) Transition for Collective Bargaining Agreements.--The 
requirements of this part shall not apply to employers with respect to 
their employees, insofar as such employees are covered under a 
collective bargaining agreement ratified before the date of the 
enactment of this title, earlier than the date of termination of such 
agreement (determined without regard to any extension thereof agreed to 
after the date of the enactment of this title).

``SEC. 2106. TIMING OF ENROLLMENT; PERIOD OF COVERAGE.

    ``(a) Timing of Enrollment; Notices.--
            ``(1) In general.--Enrollment under this part shall occur 
        not later than the date on which the employment, for which such 
        enrollment is required under this part, commences.
            ``(2) Reference to disclosure requirement.--For requirement 
        for disclosure to employees of information respecting the 
        availability of low-income assistance under part E of title 
        XXII, see section 2158(a)(1).
    ``(b) Period of Coverage.--
            ``(1) Beginning of coverage.--Coverage under a qualified 
        employer health plan shall begin in accordance with section 
        2152(b).
            ``(2) Termination of coverage.--
                    ``(A) In general.--If an enrollment is effected 
                under this part on the basis of employment, coverage 
                under such enrollment may be terminated, subject to 
                subparagraph (B), on the last day of the month (or of 
                any subsequent month) during which such employment is 
                terminated.
                    ``(B) Notice required.--Effective on the date 
                specified in section 2157(b)(2), coverage under a 
                qualified employer health plan shall not be terminated 
                unless notice has been provided to the Secretary, as 
                required in section 2157(b)(1), of such termination at 
                least 7 days before the last day of the month in which 
                employment is terminated (or any subsequent month).
            ``(3) Treatment of family members.--Subject to section 
        2152, the period of coverage for family members of an employee 
        shall be the same as the period of coverage for the employee.

       ``Part B--Requirements for Qualified Employer Health Plans

``SEC. 2121. QUALIFIED EMPLOYER HEALTH PLAN DEFINED.

    ``(a) In General.--In this title and title XXII, subject to 
subsection (b), the term `qualified employer health plan' means an 
employment-related health plan (as defined in section 2304(a)(2)) 
that--
            ``(1) is a qualified health plan (as defined in section 
        2151(a)),
            ``(2) except as provided in section 2122, does not impose 
        premiums, deductibles, or copayments on employees (and family 
        members) required to be enrolled in a qualified employer health 
        plan under part A, and
            ``(3) meets the requirements of section 2243(c)(3) 
        (relating to coordination of low-income assistance for 
        deductibles).
    ``(b) Types of Qualified Employer Health Plans.--
            ``(1) Large employers.--A very large or large employer may 
        meet the requirements of this title through a qualified 
        employer health plan that is an insured plan or that is a self-
        insured plan.
            ``(2) Medium-size and small employers.--A medium-size or 
        small employer may meet the requirements of this title only 
        through a qualified employer health plan that is an insured 
        plan or through the public health plan under title XXII.
            ``(3) Insured plan defined.--The term `insured plan' has 
        the meaning given the term `applicable accident and health 
        insurance contract' in section 5000B(e)(1) of the Internal 
        Revenue Code of 1986.

``SEC. 2122. REQUIREMENTS RELATING TO EMPLOYEE PREMIUMS AND COST-
              SHARING.

    ``(a) Enrollee Premiums and Cost-Sharing Permitted.--
            ``(1) In general.--A qualified employer health plan may 
        require an enrollee to pay for--
                    ``(A) premiums for coverage under the plan, but 
                only if the premiums do not exceed the limitations 
                imposed under this section, and
                    ``(B) cost-sharing amounts for coverage under the 
                plan, but only if the cost-sharing does not exceed the 
                limitations on deductibles, copayments, and coinsurance 
                imposed with respect to qualified health plans under 
                section 2155.
            ``(2) Treatment of additional, required coverage.--If a 
        qualified employer health plan provides benefits in addition to 
        the benefits required under this title and the employee is not 
        permitted the option of not accepting such additional benefits, 
        the plan--
                    ``(A) may not impose a premium, for such required 
                and additional benefits, that exceeds the premiums that 
                may be imposed for the basic benefits, and
                    ``(B) shall assure that cost-sharing is not imposed 
                with respect to required health services once the cost-
                sharing limit has been reached in a year with respect 
                to benefits for such services.
            ``(3) Nondiscrimination in premium amounts.--Under a 
        qualified employer health plan, no employee may be charged a 
        different premium for similar benefits in the same employer 
        health plan for the same beneficiary class based on the age or 
        sex of the employee.
    ``(b) Limitation on Premiums.--
            ``(1) Monthly premium limited to 20 percent of actuarial 
        rate.--
                    ``(A) In general.--A qualified employer health plan 
                may not require an employee to pay a premium--
                            ``(i) for coverage for a period of longer 
                        than one month, or
                            ``(ii) the amount of which on a monthly 
                        basis exceeds 20 percent of the monthly 
                        actuarial rate (as defined under subparagraph 
                        (B)).
                    ``(B) Monthly actuarial rate defined.--For purposes 
                of this subsection, the term `monthly actuarial rate' 
                means, with respect to a qualified employer health plan 
                in a plan year, the average monthly per enrollee amount 
                that the plan estimates, for enrollees under the plan 
                during the year, would be necessary to pay for the 
                total benefits required during the year under the plan 
                (with respect to required health services), including 
                administrative costs for the provision of such benefits 
                and an appropriate amount for a contingency margin.
                    ``(C) Application on basis of family status.--For 
                purposes of subparagraph (B), a qualified employer 
                health plan may provide for the premium to be applied, 
                and the monthly actuarial rate described in such 
                subparagraph to be estimated, for required health 
                services based on the beneficiary classes described in 
                section 2231(d)(1) or on such other beneficiary 
                classifications, consistent with subsection (a), as the 
                employer or plan may specify.
            ``(3) Liability for payment of premiums.--An employee 
        enrolled under a qualified employer health plan is liable for 
        payment of premiums required under that plan in accordance with 
        this subsection. In no case shall an employee be liable for 
        premiums with respect to a qualified employer health plan, 
        other than the portion of the premium which may be imposed on 
        the employee consistent with this section.
            ``(4) Withholding permitted.--No provision of State law 
        shall prevent an employer of an employee enrolled under a 
        qualified employer health plan from withholding the amount of 
        any premium due by the employee under this subsection from the 
        wages paid the employee.
            ``(5) Construction.--Nothing in this section shall be 
        construed--
                    ``(A) as preventing an employer from paying part or 
                all of the employee premium for required health 
                services or other health services, or
                    ``(B) subject to subsection (a), from requiring an 
                employee to pay for all or part of the premium for 
                benefits for services other than required health 
                services.

             ``Part C--Standards for Qualified Health Plans

``SEC. 2151. CERTIFICATION OF QUALIFIED HEALTH PLANS.

    ``(a) Qualified Health Plan Defined.--For purposes of this title, 
the term `qualified health plan' means a health plan that the Secretary 
certifies, upon application by the plan, to meet the requirements of 
this part.
    ``(b) Review and Recertification.--The Secretary shall establish 
procedures for the periodic review and recertification of plans as 
qualified health plans.
    ``(c) Termination of Certification.--The Secretary shall terminate 
the certification of a qualified health plan if the Secretary 
determines that the plan no longer meets the requirements for 
certification. Before effecting a termination, the Secretary shall 
provide the plan notice and opportunity for a hearing on the proposed 
termination.

``SEC. 2152. TREATMENT OF FAMILY AS A UNIT; COVERAGE PERIOD; HEALTH 
              PLAN CARDS.

    ``(a) Treatment of Family as a Unit.--
            ``(1) In general.--Subject to paragraph (2), enrollment of 
        an individual in a qualified health plan shall include 
        enrollment of the other family members (as defined in section 
        2282(1)) of the individual.
            ``(2) Treatment of ineligible individuals.--Nothing in 
        paragraph (1) shall be construed as requiring a qualified 
        health plan (or permitting the public health plan) to enroll 
        individuals who are not eligible individuals (as defined in 
        section 2201(d)).
    ``(b) Beginning of Coverage.--
            ``(1) In general.--In the case of an individual enrolled 
        under any qualified health plan, subject to subsection (c), the 
        benefits under the plan shall first become available for 
        services furnished beginning on the first day of the month 
        following the month of enrollment.
            ``(2) Special rules.--The Secretary shall provide for such 
        standards as may be necessary to provide for the allocation of 
        responsibility among qualified health plans (including the 
        public health plan under title XXII) in the case of an 
        inpatient hospital stay, or in the case in which a single 
        payment amount if made for other services provided over a 
        period of time, that begins during the period of coverage under 
        one qualified health plan and ends during a period of coverage 
        under another qualified health plan.
    ``(c) Standards to Reflect Changes in Family and Employment 
Status.--
            ``(1) In general.--Under standards established by the 
        Secretary consistent with this subsection, qualified health 
        plans shall provide for appropriate changes in the coverage of 
        family members to take into account--
                    ``(A) changes in family composition or status, 
                including marriage, divorce (or legal separation), 
                birth or adoption of children, and the aging of 
                children into adulthood, and
                    ``(B) changes in employment status.
            ``(2) Monthly changes.--Except as specifically provided in 
        this subsection, such standards shall be designed--
                    ``(A) to effect a change in enrollment (or status 
                of enrollment) as of the first day of the first month 
                (or, in order to provide for notice and an opportunity 
                for coordination among plans, a later month) following 
                the date of the event causing the change,
                    ``(B) to prevent any periods of noncoverage under 
                any qualified health plans, and
                    ``(C) to provide, in the case of a change of family 
                status such as marriage, divorce, or legal separation, 
                for accounting and crediting of cost-sharing among 
                family members (described in section 2157(c)) in an 
                equitable and administrable manner.
            ``(3) Treatment of newborns.--
                    ``(A) Birth to woman during period of coverage.--
                Any child born to a woman during the period of coverage 
                under a qualified health plan shall, as of the date of 
                birth, be automatically enrolled and covered for 
                benefits under the plan.
                    ``(B) Birth to woman without coverage.--Any child 
                born in the United States to a woman who is not, at the 
                time of birth, enrolled under a qualified health plan 
                shall be automatically enrolled and covered for 
                benefits under this title as of the date of birth if an 
                application for such enrollment is made not later than 
                60 days after the date of birth or, if later, the end 
                of the year in which the child is born.
            ``(4) Adoption.--
                    ``(i)  Treatment of voluntary relinquishment.--Any 
                child who is voluntarily relinquished to a public or 
                private agency shall, upon the application by the 
                agency, be enrolled under this title and covered as of 
                the date of the relinquishment, until the date of the 
                child's placement for adoption.
                    ``(ii) Treatment of adopted children.--Any child 
                who is placed for adoption with an individual during 
                the period the individual is enrolled and covered under 
                a qualified health plan shall, as of the date of the 
                placement for adoption, be treated as the child of the 
                individual and be automatically enrolled and covered 
                under such plan.
            ``(5) Placement in custody of public agency pursuant to 
        court order or otherwise.--Any child who is removed from the 
        family and placed in the temporary custody of a public agency 
        pursuant to a court order or otherwise shall, upon application 
        by the public agency on or after the date of the removal and 
        placement with the public agency, be deemed to be automatically 
        enrolled and covered for benefits under this title as of the 
        date of the application, until the child is returned to the 
        family or placed for adoption.
            ``(6) Treatment of legal wards, foster children, etc.--In 
        cases not described in paragraphs (4) or (5), the Secretary 
        shall establish standards relating to the time an individual 
        described in section 2282(5)(B)(ii) is treated as the child of 
        the person with custody and such other standards as may be 
        necessary to assure the proper coordination of enrollment of 
        children and other individuals among qualified health plans.
    ``(d) Health Plan Cards.--In conjunction with enrollment of 
individuals under a qualified health plan, the plan shall provide for 
the issuance of a card which may be used for purposes of identification 
of such enrollment and the processing of claims for benefits under the 
plan. Such card shall--
            ``(1) identify (as appropriate) the types of benefits to 
        which the individual is entitled under the plan, and
            ``(2) contain such other information as the Secretary (and 
        the plan) shall specify.

``SEC. 2153. REQUIREMENTS RESPECTING BASIC BENEFITS.

    ``(a) In General.--Each qualified health plan must provide for 
benefits for at least all required health services (as defined in 
section 2211(a)(2)).
    ``(b) Treatment of Additional Benefits.--Nothing in this section 
shall be construed as preventing a qualified health plan from including 
benefits in addition to benefits for required health services.

``SEC. 2154. REQUIREMENTS RESPECTING LIMITS ON PRE-EXISTING CONDITION 
              EXCLUSIONS AND COVERAGE STANDARDS FOR BASIC HEALTH 
              SERVICES.

    ``(a) In General.--Except as provided under subsection (b), a 
qualified health plan--
            ``(1) may not deny, limit, or condition the coverage under 
        (or benefits of) the plan with respect to basic health services 
        based on the health status, claims experience, receipt of 
        health care, medical history, or lack of evidence of 
        insurability, of an individual, and
            ``(2) may not provide for exclusions from coverage for 
        basic health services that are more restrictive than the 
        exclusions for such services under this title.
    ``(b) Treatment of Pre-existing Condition Exclusions for All 
Services.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, a qualified health plan (other than the public 
        health plan) may exclude coverage with respect to services 
        related to treatment of a pre-existing condition, but the 
        period of such exclusion may not exceed 6 months.
            ``(2) Nonapplication to newborns and sunset of pre-existing 
        condition exclusions for basic health services.--The exclusion 
        of coverage permitted under paragraph (1) shall not apply to--
                    ``(A) services furnished to newborns, or
                    ``(B) basic health services furnished on or after 
                July 1 of the 4th year beginning after the date of the 
                enactment of this title.
            ``(3)  Crediting of previous coverage.--
                    ``(A) In general.--If an individual is in a period 
                of continuous coverage (as defined in subparagraph 
                (B)(i)) with respect to particular services as of the 
                date of initial coverage under a plan, any period of 
                exclusion of coverage with respect to a pre-existing 
                condition for such services or type of services shall 
                be reduced by 1 month for each month in the period of 
                continuous coverage.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Period of continuous coverage.--The 
                        term `period of continuous coverage' means, 
                        with respect to particular services, the period 
                        beginning on the date an individual is enrolled 
                        under a health plan or program (including a 
                        qualified health plan, a Federal health plan, 
                        the medicare program, a State plan under title 
                        XIX, or a State general medical assistance 
                        program) which provides the same or 
                        substantially similar benefits with respect to 
                        such services and ends on the date the 
                        individual is not so enrolled for a continuous 
                        period of more than 3 months.
                            ``(ii) Pre-existing condition.--The term 
                        `pre-existing condition' means, with respect to 
                        coverage under a plan, a condition which has 
                        been diagnosed or treated during the 3-month 
                        period ending on the day before the first date 
                        of such coverage, except that such term does 
                        not include a condition which was first 
                        diagnosed or treated during a period of 
                        continuous coverage.
                    ``(C) Standards for similar benefits.--The 
                Secretary shall establish such criteria for determining 
                if benefits are substantially similar as may be 
                necessary to carry out this subsection.

``SEC. 2155. REQUIREMENTS RESPECTING LIMITS ON COST-SHARING.

    ``(a) In General.--A qualified health plan may not impose 
deductibles, copayments, or coinsurance with respect to required health 
services in excess of the deductible and coinsurance permitted under 
part C of title XXII with respect to such services (not taking into 
account any low-income assistance provided under part E of title XXII).
    ``(b) Construction.--Nothing in this section shall be construed as 
preventing a qualified health plan from providing for deductibles, 
coinsurance, and copayments or other restrictions with respect to 
services other than required health services that are different from 
those permitted with respect to required health services.

``SEC. 2156. USE OF PAYMENT RATES.

    ``A qualified health plan shall establish adequate payment rates 
for required health services using the payment rates approved under 
title III of the Health Insurance Coverage and Cost Containment Act of 
1993.

``SEC. 2157. COORDINATION AND PORTABILITY OF HEALTH COVERAGE UNDER 
              QUALIFIED HEALTH PLANS.

    ``(a) In General.--Each qualified health plan shall provide for 
coordination of--
            ``(1) enrollment and termination of enrollment among the 
        qualified health plans, the public health plan, and title 
        XVIII, and
            ``(2) application of deductibles and limitations on cost-
        sharing among such plans,
in accordance with standards established by the Secretary consistent 
with this section.
    ``(b) Requirement of Notices With Respect to Coverage.--
            ``(1) In general.--Each qualified health plan shall provide 
        notice at the time an individual's coverage under the plan 
        begins or is terminated. Such notice shall be provided (in a 
        form and manner and at a time specified by the Secretary)--
                    ``(A) to the individual (or in the case of 
                enrollment only of a child or children, to the parent 
                enrolling the child or children), and
                    ``(B) effective (on the date specified in paragraph 
                (2)) to the Secretary.
        The notice under this paragraph shall include the names and 
        other identifying information of family members whose coverage 
        is affected by the change.
            ``(2) Date of requirement for notice to public health 
        plan.--The date specified in this paragraph is January 1, 1994, 
        or, with respect to a qualified employer health plan of an 
        employer, the date the requirements of part A apply with 
        respect to the employer under section 2105(a).
            ``(3) Notice to beneficiary and other qualified health 
        plans upon obtaining coverage.--In the case of an individual 
        who begins coverage under a qualified employer health plan (or 
        under this title on an employment basis), when the Secretary 
        receives notice under paragraph (1)(B)--
                    ``(A) if, at the time of obtaining such coverage, 
                the individual is enrolled on a non-employment basis in 
                the public health plan, the Secretary shall notify the 
                individual that coverage for such services on such a 
                basis or for such benefits shall be terminated 
                effective on the date of coverage under such a plan, 
                and
                    ``(B) the Secretary shall provide for notice to any 
                other qualified health plan in which the Secretary 
                knows the individual is enrolled of the fact of such 
                new coverage.
            ``(4) Notices of termination.--Each notice of termination 
        under paragraph (1) shall include--
                    ``(A) the effective date of the termination,
                    ``(B) in the case of notice to the Secretary, 
                sufficient information to permit enrollment of the 
                individuals affected under the public health plan, and
                    ``(C) in the case of an individual whose coverage 
                under the plan is terminated other than at the end of a 
                calendar year, the accounting statement produced under 
                subsection (c)(2).
    ``(c) Accounting for Cost-Sharing.--
            ``(1) In general.--Each qualified health plan shall provide 
        for an ongoing accounting, for each enrollee (and enrolled 
        family members) on a calendar year basis, of expenses incurred 
        for required health services that are counted towards the 
        deductible established under section 2222 and that are counted 
        towards the cost-sharing limit established under section 2224. 
        The amount credited for each account shall be determined in 
        accordance with standards established by the Secretary in order 
        to provide consistency among qualified health plans and to 
        promote portability of benefits across qualified health plans.
            ``(2) Statement of account balance.--In the case of an 
        individual whose coverage under the plan is terminated other 
        than at the end of a calendar year, the qualified health plan 
        shall produce an accounting statement (in a uniform manner 
        established by the Secretary) of the amounts that are credited 
        under the plan towards such deductible and cost-sharing 
        limitations for the year for each enrollee (and family members) 
        involved, in accordance with the accounting under paragraph 
        (1).
            ``(3) Crediting of previous expenses towards deductibles 
        and coinsurance.--Each qualified health plan shall, in the case 
        of an individual who is enrolled under the plan after the 
        beginning of a year, credit, against the deductible and cost-
        sharing limit for required health services under its plan, the 
        amounts previously accounted against the deductible and cost-
        sharing limit under another qualified health plan for the 
        calendar year. The credit under this subparagraph shall be 
        based on the accounting statement produced under paragraph (2).
    ``(d) Coverage Under Public Health Plan.--
            ``(1) In general.--Except as provided in this subsection, 
        the public health plan under title XXII shall enroll each 
        eligible individual whose coverage under another qualified 
        health plan or under title XVIII is terminated, effective on 
        the date following the effective date of termination of 
        coverage under such plan.
            ``(2) Treatment of medicare-eligible individuals.--Except 
        as provided in paragraphs (3) and (4), in the case of an 
        individual who--
                    ``(A) is eligible for enrollment under part B of 
                title XVIII,
                    ``(B) is not so enrolled because of enrollment 
                under a qualified health plan, but
                    ``(C) whose enrollment under such a plan is 
                terminated,
        the Secretary shall provide, upon the effective date of such 
        termination, for enrollment of the individual under such part.
            ``(3) Obtaining alternate coverage.--Paragraphs (1) and (2) 
        shall not apply if the individual provides satisfactory 
        evidence that the individual has obtained coverage through 
        another qualified health plan or is a medicare beneficiary 
        enrolled under part B of title XVIII.
            ``(4) No automatic enrollment during transition.--
        Paragraphs (1) and (2) shall not apply to terminations 
        occurring before January 1, 1997. During the period before 
        January 1, 1997, before an individual described in paragraph 
        (1) enrolls under this title, the Secretary shall provide the 
        individual with a notice of the minimum enrollment period 
        required under section 2202(a)(3).
    ``(e) Provision of Information on Enrollees.--Each qualified health 
plan shall provide the Secretary with such information as the Secretary 
may require in order to ascertain whether (and the amount of) any 
transfer payments to be made under section 2234.

``SEC. 2158. CONSUMER PROTECTIONS.

    ``(a) Disclosure Requirements for Employer Plans.--
            ``(1) Notice of availability of low-income assistance.--At 
        the time of enrollment of an employee under a qualified 
        employer health plan, the plan (directly or through the 
        employer) shall provide the employee with a notice (in a form 
        specified by the Secretary) of the low-income assistance 
        available under part E of title XXII with respect to enrollment 
        under the plan.
            ``(2) For small employer plans.--In the case of a qualified 
        employer health plan that is offered to a small employer, the 
        plan may not be issued or sold to the employer unless the 
        employer has been provided, in addition to any information 
        required to be disclosed under paragraph (1), the following 
        information:
                    ``(A) A description of the benefits covered in the 
                plan and cost-sharing required with respect to such 
                benefits.
                    ``(B) A comparison of the benefits and cost-sharing 
                described in subparagraph (A) with the benefits and 
                cost-sharing available under the public health plan 
                (not taking into account any low-income assistance 
                under part E of title XXII).
            ``(3) Standard format.--The disclosures under paragraphs 
        (1) and (2) shall be made in a uniform format established by 
        the Secretary.
            ``(4)  Violations.--Any entity that issues or sells a 
        qualified health plan in violation of paragraph (1) or (2) is 
        subject to a civil money penalty of an amount not to exceed 
        $5,000 with respect to each such issuance or sale. The 
        provisions of section 1128A (other than the first sentence of 
        subsection (a) and other than subsection (b)) shall apply to a 
        civil money penalty under the previous sentence in the same 
        manner as such provisions apply to a penalty or proceeding 
        under section 1128A(a).
    ``(b) Effective Grievance Procedures.--Each qualified health plan 
shall provide for effective procedures for hearing and resolving 
grievances between the plan and individuals enrolled under the plan.
    ``(c) Restriction on Certain Physician Incentive Plans.--
            ``(1) In general.--A health plan is not a qualified health 
        plan if it operates a physician incentive plan (as defined in 
        paragraph (2)) unless the requirements specified in clauses (i) 
        through (iii) of section 1876(i)(8)(A) are met (in the same 
        manner as they apply to eligible organizations under section 
        1876).
            ``(2) Physician incentive plan defined.--In this 
        subsection, the term `physician incentive plan' means any 
        compensation or other financial arrangement between the 
        qualified health plan and a physician or physician group that 
        may directly or indirectly have the effect of reducing or 
        limiting services provided with respect to individuals enrolled 
        under the plan.
    ``(d) Enrollee Financial Protection.--
            ``(1) Solvency protection for insured plans.--In the case 
        of a qualified health plan that is an insured plan (as defined 
        by the Secretary) and is issued in a State, in order for the 
        plan to be certified under this part the Secretary must find 
        that the State has established satisfactory protection of 
        enrollees with respect to potential insolvency.
            ``(2) Protection against provider claims.--In the case of a 
        failure of a qualified health plan to make payments with 
        respect to required health services, under standards 
        established by the Secretary, an individual who is enrolled 
        under the plan is not liable to any health care provider or 
        practitioner with respect to the provision of required health 
        services for payments in excess of the amount for which the 
        enrollee would have been liable if the plan were to have made 
        payments in a timely manner.

``SEC. 2159. PREEMPTION OF CERTAIN STATE AND FEDERAL REQUIREMENTS.

    ``(a) Benefit and Coverage Rules.--Effective as of January 1, 1994, 
no State shall establish or enforce any law or regulation that--
            ``(1) requires the offering, as part of a qualified 
        employer health plan, of any services, category of care, or 
        services of any class or type of provider that is different 
        from the benefits required to be provided under section 2153,
            ``(2) specifies the individuals to be covered under a 
        qualified employer health plan or the duration of such 
        coverage, or
            ``(3) requires a right of conversion from a qualified 
        employer health plan to an individual qualified health plan.
    ``(b) State Defined.--In this section, the term `State' means the 
50 States and the District of Columbia.

``SEC. 2160. USE OF UNIFORM CLAIMS FORMS; UNIFORM INFORMATION 
              REPORTING.

    ``Each qualified health plan shall provide for--
            ``(1) submission of claims in accordance with section 323 
        of the Health Insurance Coverage and Cost Containment Act of 
        1993, and
            ``(2) reporting to the Commission of information on 
        required health services provided under the plan pursuant to 
        standards promulgated under section 324 of such Act.

                ``Part D--Definitions and Miscellaneous

``SEC. 2181. DEFINITIONS.

    ``(a) Wages, Employment, Etc.--In this title--
            ``(1) Wages.--The term `wages' has the meaning given such 
        term by section 3121(a) of the Internal Revenue Code of 1986 
        except that--
                    ``(A) the modifications of subsection (b) shall 
                apply in determining whether any service is employment, 
                and
                    ``(B) the applicable contribution base under 
                section 3121(x)(2) of such Code (relating to hospital 
                insurance) shall be used under section 3121(a)(1) for 
                purposes of this title.
            ``(2) Employment.--
                    ``(A) In general.--Except as modified in 
                subparagraph (B), the term `employment' has the meaning 
                given such term by section 3121(b) of the Internal 
                Revenue Code of 1986.
                    ``(B) Modifications.--The modifications referred to 
                in this paragraph are that--
                            ``(i) paragraphs (5), (6), (7), (8), and 
                        (9) of section 3121(b) of such Code shall not 
                        apply, and
                            ``(ii) subsections (r) and (w) of section 
                        3121 of such Code shall not apply.
                    ``(C) Treatment of federal employment.--In applying 
                subparagraph (A), the term `employment' shall not be 
                considered to include service performed in the employ 
                of the United States if, in connection with the 
                performance of such service (or the service of a family 
                member), the individual--
                            ``(i) is enrolled in a health benefits plan 
                        under chapter 89 of title 5, United States 
                        Code, or
                            ``(ii) is provided medical and dental 
                        benefits under chapter 55 of title 10, United 
                        States Code.
            ``(3) Employee; employer.--The terms `employee' and 
        `employer' have the same meanings as such terms have for 
        purposes of chapter 21 of the Internal Revenue Code of 1986.
    ``(b) Definitions Relating to Employees.--In this title:
            ``(1) Full-time employee.--The term `full-time employee' 
        means, with respect to an employer, an employee who normally 
        performs on a monthly basis at least 17\1/2\ hours of service 
        per week for that employer.
            ``(2) Part-time employee.--The term `part-time employee' 
        means, with respect to an employer, an employee who is not a 
        full-time employee.
            ``(3) Seasonal or temporary employee.--The term `seasonal 
        or temporary employee' means, with respect to an employer, an 
        employee who is employed by the employer for not more than 4 
        months in any 12 month period; except that the Secretary may 
        extend such period for up to 6 months in any 12 month period in 
        the case of employment that is sporadic, irregular, and 
        seasonal in nature.
            ``(4) Treatment of consultants and contractors.--The term 
        `employee' includes an individual who is a consultant or 
        contractor of an employer if the Secretary determines that the 
        consulting arrangement or contract was entered into to avoid 
        the requirements of this title.
            ``(5) Exclusion of foreign employment.--The term `employee' 
        does not include an individual--
                    ``(A) who is not a citizen or resident of the 
                United States with respect to service performed outside 
                the United States, or
                    ``(B) who is a citizen or resident of the United 
                States with respect to services performed outside the 
                United States for an employer other than an American 
                employer (as defined in section 3121(h) of the Internal 
                Revenue Code of 1986).
    ``(c) Definitions Relating to Size of Employer.--In this title:
            ``(1) Small employer.--The term `small employer' means, 
        with respect to a calendar year, an employer that normally 
        employs fewer than 50 employees on a typical business day 
        during the calendar year.
            ``(2) Medium-size employer.--The term `medium-size 
        employer' means, with respect to a calendar year, an employer 
        that normally employs at least 50, but fewer than 101, 
        employees on a typical business day during the calendar year.
            ``(3) Large employer.--The term `large employer' means, 
        with respect to a calendar year, an employer that normally 
        employs at least 100, but fewer than 250, employees on a 
        typical business day during the calendar year.
            ``(4) Very large employer.--The term `very large employer' 
        means, with respect to a calendar year, an employer that 
        normally employs at least 250 employees on a typical business 
        day during the calendar year.
            ``(4) Application of controlled group rules.--For purposes 
        of determining if an employer is a small, medium-size, large, 
        or very large employer or the number of hours an individual is 
        normally employed with respect to an employer, rules similar to 
        the rules of subsection (b) and (c) of section 414 of the 
        Internal Revenue Code of 1986 shall apply.
    ``(d) Incorporation of Definitions.--Except as otherwise provided 
in this title, the terms defined in section 2282 and 2283 shall apply 
under this title in the same manner as they apply under title XXII.

``SEC. 2182. NONAPPLICATION TO RESIDENTS OF PUERTO RICO AND 
              TERRITORIES.

    ``The provisions of this title shall not apply with respect to an 
employee who is not a resident of one of the 50 States or the District 
of Columbia.''.

SEC. 103. REPEAL OF COBRA CONTINUATION REQUIREMENTS.

    (a) Internal Revenue Code Provisions.--
            (1) In general.--Section 4980B of the Internal Revenue Code 
        of 1986 is repealed.
            (2) Conforming amendments.--Section 414 of such Code is 
        amended--
                    (A) in subsection (n)(3)(C), by striking ``505, and 
                4980B'' and inserting ``and 505'', and
                    (B) in subsection (t)(2), by striking ``505, or 
                4980B'' and inserting ``or 505''.
    (b) ERISA.--
            (1) In general.--Part 6 of subtitle B of title I of the 
        Employee Retirement Income Security Act of 1974 is repealed.
            (2) Conforming amendment.--Section 502(c)(1) of such Act 
        (29 U.S.C. 1132(c)(1)) is amended by striking ``paragraph (1) 
        or (4) of section 606 or''.
    (c) Public Health Service Act.--Title XXII of the Public Health 
Service Act is repealed.
    (d) Effective Date.--The repeals and amendments made by this 
section shall apply to health plans of employers as of the date 
specified with respect to employers of that size under section 2105 of 
the Social Security Act.
    (e) Notice of Benefits Under Public Health Plan.--In the case of 
continuation coverage which is in effect on the date of a repeal under 
this section but which is to be discontinued after such date (and 
before the date required under law in effect before the date of the 
enactment of this Act) such continuation may not be discontinued 
without 30-days notice to the individual of such discontinuation. Such 
notice shall include such information respecting continuation of 
coverage through enrollment under the public health plan under title 
XXII of the Social Security Act as the Secretary of Health and Human 
Services shall specify.

  TITLE II--PROVISION OF HEALTH INSURANCE THROUGH A PUBLIC HEALTH PLAN

SEC. 201. PUBLIC HEALTH PLAN.

    The Social Security Act is amended by adding after the title added 
by section 101 the following new title:

                    ``TITLE XXII--PUBLIC HEALTH PLAN

                  ``Part A--Eligibility and Enrollment

``SEC. 2201. ELIGIBILITY TO ENROLL FOR HEALTH INSURANCE BENEFITS AND TO 
              APPLY FOR LOW-INCOME ASSISTANCE.

    ``(a) Eligibility to Enroll for Health Insurance Benefits.--
            ``(1) In general.--Subject to paragraph (2), each eligible 
        individual (as defined in subsection (d)) who is not a medicare 
        beneficiary and who is not enrolled under a qualified employer 
        health plan pursuant to title XXI or under a Federal health 
        plan (as defined in section 2204(f)) is eligible to enroll 
        under this title for health insurance benefits.
            ``(2) Enrollment by electing small or medium-size 
        employers.--In order to meet the requirements of title XXI, a 
        small or medium-size employer may provide for the enrollment of 
        full-time employees (and family members) in the plan under this 
        title in a manner specified by the Secretary, but only if--
                    ``(A) the employer complies with the requirements 
                of section 2122 with respect to the plan under this 
                title as if the plan under this title were a qualified 
                employer health plan; and
                    ``(B) provides for payment of premiums (in the 
                amounts specified in section 2231) in a manner 
                specified by the Secretary.
            ``(3) Effective date.--No health insurance benefits are 
        available under this title for items and services furnished 
        before January 1, 1994, or, for individuals enrolled under this 
        title as employees (or dependents) of medium-size or small 
        employers, before January 1, 1996, or 1997, respectively.
    ``(b) Eligibility to Apply for Low-Income Assistance.--
            ``(1) In general.--Subject to paragraph (2), each eligible 
        individual who--
                    ``(A) is enrolled in the public health plan under 
                this title, whether on a non-employment basis or on an 
                employment basis,
                    ``(B) is enrolled under a qualified employer health 
                plan, or
                    ``(C) is a medicare beneficiary,
        is eligible to apply for low-income assistance under part E.
            ``(2) Effective date.--No low-income assistance is 
        available for premiums for months before January 1997 or for 
        expenses incurred for any items or services furnished before 
        January 1, 1997.
    ``(c) Enrollment Terms.--
            ``(1) Enrollment under title on an employment and non-
        employment basis defined.--An eligible individual is 
        considered, for purposes of this title, to be enrolled under 
        this title--
                    ``(A) on an `employment basis' only if the 
                individual is enrolled by a small employer pursuant to 
                the requirement of section 5000A of the Internal 
                Revenue Code of 1986, or
                    ``(B) on a `non-employment basis' in any other 
                case.
            ``(2) Enrollment under a qualified employer health plan 
        defined.--An individual is considered, for purposes of this 
        title, to be `enrolled under a qualified employer health plan' 
        if--
                    ``(A) the individual is enrolled under a qualified 
                employer health plan (as defined in section 2281(b)(8)) 
                as an employee (or family member of an employee),
                    ``(B) the employer is required to provide for such 
                enrollment under part A of title XXI, and
                    ``(C) the amount of the employee share of the 
                premium is limited under section 2122(b).
    ``(d) Eligible Individual Defined.--In this section, the term 
`eligible individual' means an individual who is--
            ``(1)(A) a citizen or national of the United States, (B) an 
        alien lawfully admitted for permanent residence, or (C) an 
        alien otherwise residing permanently in the United States under 
        color of law, and
            ``(2) a resident of the United States.

``SEC. 2202. APPLICATION FOR ENROLLMENT.

    ``(a)  Period of Application.--Individuals eligible to enroll under 
this title may apply to enroll at any time at which they are so 
eligible.
    ``(b) Application Process.--
            ``(1) In general.--The filing of an application for 
        enrollment under this title shall (except as the Secretary may 
        provide) constitute enrollment under this title. Such an 
        application may be filed with the Secretary by mail or at such 
        locations as the Secretary may specify.
            ``(2) Availability of applications.--The Secretary shall 
        make applications for enrollment under this title available--
                    ``(A) at local offices of the Social Security 
                Administration,
                    ``(B) at out-reach sites (such as provider and 
                practitioner locations), and
                    ``(C) at other locations (including post offices) 
                accessible to a broad cross-section of individuals 
                eligible to enroll.
            ``(3) Application for low-income assistance.--An 
        application for enrollment under this section may (but need 
        not) be accompanied by an application for low-income assistance 
        under part E.
            ``(4) Restriction on use of agents.--The Secretary may not 
        provide for receipt or processing of applications for 
        enrollment under this title--
                    ``(A) by any non-Federal entity which is directly 
                or indirectly involved in the administration of title 
                IV, XVI, or XIX of this Act, or
                    ``(B) by any entity which does not meet such 
                standards as the Secretary establishes to assure the 
                confidentiality of information collected in the 
                enrollment process.

``SEC. 2203. COVERAGE PERIOD; TERMINATION OF ENROLLMENT.

    ``(a) Beginning of Coverage.--The provisions of section 2152(b) 
shall apply to the public health plan in the same manner as they apply 
to qualified health plans.
    ``(b) Termination of Enrollment During Transition Period.--
            ``(1) In general.--Before January 1, 1997, except as 
        provided in paragraph (3)--
                    ``(A) an individual enrolled under this title may 
                terminate enrollment on a non-employment basis by 
                providing written notice to the Secretary that the 
                individual--
                            ``(i) no longer wishes to be enrolled in 
                        the public health plan, or
                            ``(ii) is enrolled under a qualified 
                        employer health plan or is a medicare 
                        beneficiary; and
                    ``(B) the Secretary may terminate enrollment on a 
                non-employment basis of an individual, after providing 
                the individual (or the individual's representative) 
                with written notice, for failure to pay premiums 
                required with respect to such enrollment.
        The termination of enrollment of an individual (other than due 
        to the individual becoming a medicare beneficiary) shall 
        terminate the enrollment of other family members enrolled with 
        the individual.
            ``(2) Effective date of termination.--A termination of 
        enrollment under paragraph (1)(A) shall take effect at the 
        close of the month following the month in which the notice is 
        filed. A termination of enrollment under paragraph (1)(B) shall 
        take effect on a date (determined under regulations) after the 
        date written notice of such termination has been provided to 
        the enrollee (or the enrollee's representative). Such 
        regulations shall provide a grace period of at least 1 month 
        after the date of written notice in which overdue premiums may 
        be paid and coverage continued.
            ``(3) Minimum period of enrollment during transition.--
        Subject to paragraph (4), before January 1, 1997--
                    ``(A) In general.--An individual (other than a 
                pregnant woman or newborn) who is enrolled under this 
                title on a non-employment basis may not terminate 
                enrollment less than 12 months after the date of the 
                enrollment.
                    ``(B) Pregnant women and newborns.--In the case of 
                a pregnant woman who is enrolled under this title on a 
                non-employment basis--
                            ``(i) the enrollment of the woman may not 
                        be terminated earlier than the end of the month 
                        in which the 60-day period, beginning on the 
                        last day of the pregnancy, ends; and
                            ``(ii) the newborn child shall be deemed 
                        enrolled under this title as of the date of 
                        birth, and such enrollment may not be 
                        terminated earlier than the end of the month in 
                        which the child's first birthday occurs.
            ``(4) Termination permitted if covered under qualified 
        employer health plan.--The minimum period of enrollment under 
        paragraph (3) shall not apply if, at the time of termination of 
        enrollment, the individual is immediately covered under a 
        qualified employer health plan which will provide coverage 
        during the minimum period for which enrollment is otherwise 
        required under such paragraph.
    ``(c) Termination of Enrollment After Transition Period.--For 
limitations on termination of enrollment under this title on or after 
January 1, 1997, see section 2204(c).

``SEC. 2204. REQUIREMENT OF HEALTH INSURANCE COVERAGE.

    ``(a) Requirement for All Eligible Individuals.--
            ``(1) In general.--Effective on and after the date 
        specified in subsection (e), each eligible individual (as 
        defined in section 2201(d)) who is not an excepted individual 
        (as defined in paragraph (2)), is deemed to have enrolled under 
        this title on the date before such date or as soon thereafter 
        as the individual is not an excepted individual. If such an 
        individual has not filed an application for enrollment under 
        this title by such date, the Secretary shall provide a means to 
        collect information sufficient to effect such enrollment as 
        soon as possible after such date.
            ``(2) Excepted individuals.--For purposes of paragraph (1), 
        the term `excepted individual' means an individual who--
                    ``(A) is a medicare beneficiary,
                    ``(B) is enrolled under a qualified employer health 
                plan, or
                    ``(C) demonstrates (in a manner specified by the 
                Secretary) enrollment under a Federal health plan (as 
                defined in subsection (f)).
    ``(b) Automatic Continuing Enrollment.--For provisions relating to 
coordination of enrollment among qualified health plans and assuring 
continuous coverage for required health services (and portability of 
health insurance benefits among such plans), see section 2157.
    ``(c) Limitation on Termination of Enrollment.--Effective on the 
date specified in subsection (e)--
            ``(1) Employment-based enrollment.--An individual enrolled 
        under this title on an employment basis may not elect to 
        terminate such enrollment.
            ``(2) Non-employment basis.--An individual enrolled under 
        this title on a non-employment basis may not terminate such 
        enrollment unless--
                    ``(A) the individual is no longer eligible to be 
                enrolled under this title because of a change of 
                immigration or residency status, or
                    ``(B) the individual demonstrates to the 
                satisfaction of the Secretary that the individual is a 
                medicare beneficiary or is enrolled under a qualified 
                employer health plan.
    ``(d) Enforcement.--
            ``(1) Monitoring of individual tax returns.--The Secretary 
        of the Treasury shall require the filing of such information as 
        may be necessary to establish compliance with subsection (a).
            ``(2) Retroactive enrollment.--If such an individual has 
        not provided evidence of enrollment in a qualified employer 
        health plan or Federal health plan, the Secretary--
                    ``(A) shall enroll the individual pursuant to the 
                filing of such return, and
                    ``(B) shall require the payment of twice the 
                amounts of premiums that would have been paid if the 
                person had been enrolled on a timely basis, unless the 
                individual has established to the satisfaction of the 
                Secretary good cause for the failure to enroll on a 
                timely basis.
    ``(e) Effective Date of Requirement.--The date specified in this 
subsection is January 1, 1997.
    ``(f) Federal Health Plan Defined.--In this section, the term 
`Federal health plan' means a health plan of, or contributed to by, the 
Federal Government on behalf of its employees, retirees, and their 
family members, and includes--
            ``(1) the Federal employees health insurance program under 
        chapter 89 of title 5, United States Code,
            ``(2) the program for the provision of medical and dental 
        benefits under chapter 55 of title 10, United States Code, and
            ``(3) the program for the provision of hospital care and 
        medical services by the Department of Veterans' Affairs under 
        chapter 17 of title 38, United States Code.

                  ``Part B--Health Insurance Benefits

``SEC. 2211. REQUIRED HEALTH SERVICES.

    ``(a) Medicare Benefits.--
            ``(1) In general.--Except as provided in the succeeding 
        provisions of this part and part C, the health insurance 
        benefits provided to an individual enrolled under this title 
        (whether on an employment basis or a non-employment basis) 
        shall consist of entitlement to the same benefits as are 
        provided under title XVIII to individuals entitled to benefits 
        under part A, and enrolled under part B, of title XVIII.
            ``(2) Required health services defined.--In this title and 
        title XXI, the term `required health services' means the 
        services provided under this title (including services 
        described in subsections (b) and (c)).
    ``(b) Unlimited Inpatient Hospital Services for Children.--For 
children, required health benefits also shall include payment for 
inpatient hospital services without regard to any day limitations under 
subsections (a)(1) and (b)(1) of section 1812.
    ``(c) Pregnancy-Related Services.--
            ``(1) In general.--In the case of a pregnant woman (as 
        defined in section 2283(3)), benefits under this title shall 
        include entitlement to have payment made for the following, 
        subject to the periodicity schedule established with respect to 
        the services under paragraph (2) and prior authorization of 
        certain services under paragraph (3):
                    ``(A) Prenatal care, including care for all 
                complications of pregnancy.
                    ``(B) Inpatient labor and delivery services.
                    ``(C) Postnatal care.
                    ``(D) Postnatal family planning services.
            ``(2) Periodicity schedule.--The Secretary, in consultation 
        with the American College of Obstetrics and Gynecology, shall 
        establish a schedule of periodicity which reflects the general, 
        appropriate frequency with which services listed in paragraph 
        (1) should be provided to pregnant women without complications 
        of pregnancy.
            ``(3) Prior authorization required for certain services.--
                    ``(A) In general.--Except in the case of items and 
                services specified under subparagraph (B), benefits are 
                not available with respect to an item or service under 
                paragraph (1) unless the provision of the item or 
                service has been approved by a utilization and quality 
                control peer review organization before the provision 
                of the item or service.
                    ``(B) Exception for routine or common items and 
                services.--Subparagraph (A) shall not apply to items 
                and services which the Secretary has specified on a 
                list as being either--
                            ``(i) related to normal pregnancy, or
                            ``(ii) related to a highly prevalent 
                        complication of pregnancy,
                or in the case of emergency services.
    ``(d) Preventive Services Defined.--In this title, the term 
`preventive services' means the following items and services furnished 
in accordance with any applicable periodicity schedules:
            ``(1) Pregnancy-related services (described in subsection 
        (c)(1)).
            ``(2) Well-child care (as defined in section 1861(ll)(1)).
            ``(3) Screening mammography (as defined in section 
        1861(jj)).
            ``(4) Screening pap smear (as defined in section 1861(nn)).
            ``(5) Colorectal cancer screening services.
            ``(6) Immunization services described in section 
        1862(a)(1)(H).
The services referred to in paragraph (5) are screening fecal-occult 
blood tests and screening flexible sigmoidoscopies provided for the 
purpose of early detection of colon cancer.

  ``Part C--Payments for Benefits; Deductibles, Coinsurance, and Stop-
              loss Protection for Required Health Services

``SEC. 2221. PAYMENTS FOR BENEFITS.

    ``(a) Use of Medicare Payment Rules.--
            ``(1) In general.--Except as otherwise provided in this 
        title--
                    ``(A) payment of benefits under this title with 
                respect to services shall be made, subject to 
                adjustment in payment rates under subsection (b), in 
                the same amounts and on the same basis as payment may 
                be made with respect to such services under title 
                XVIII, and
                    ``(B) the provisions of sections 1814, 1815, 1833, 
                1834, 1835, 1842, 1848, 1886, 1887 shall apply to 
                payment of benefits (and provision of services and 
                charges thereon) under this title in the same manner as 
                they apply to benefits, services, and charges under 
                title XVIII.
            ``(2) Identification of comparable payment methods for new 
        services.--In the case of services for which there is not a 
        payment basis established under title XVIII, the Secretary 
        shall establish payment rules that are similar to the payment 
        rules for similar services under such title.
            ``(3) No judicial or administration review.--There shall be 
        no administrative or judicial review of the payment rates or 
        rules under this section (including adjustments made under 
        subsection (b)).
    ``(b) Payment Based on Approved Rates.--
            ``(1) In general.--Payments for services under this title 
        shall be based on rates approved by the Federal Health Care 
        Cost Containment Commission under title III of the Health 
        Insurance Coverage and Cost Containment Act of 1993.
            ``(2) Payment for obstetrical services.--
                    ``(A) Global fee.--In making payment under this 
                title with respect to the group of obstetrical services 
                typical of treatment throughout a course of pregnancy, 
                the Secretary shall establish a global fee schedule 
                with respect to such group of services.
                    ``(B) Disincentive for cesarean sections.--The fee 
                schedule amount otherwise established with respect to a 
                cesarean section shall be 95 percent of the fee 
                schedule amount otherwise established.
    ``(c) Use of Trust Fund.--In applying the provisions described in 
subsection (a)(1)(B) in carrying out this section, any reference in 
title XVIII to a trust fund shall be treated as a reference to the 
Public Health Trust Fund established under section 2233.
    ``(d) Withholding of Payments for Certain Medicare and Medicaid 
Providers.--The provisions of section 1885 (relating to withholding of 
payments for certain medicaid providers) shall apply under this title 
in the same manner as they apply under title XVIII, except that for 
this purpose any reference in such section to title XIX shall be deemed 
to include a reference to title XVIII.

``SEC. 2222. DEDUCTIBLE FOR REQUIRED HEALTH SERVICES.

    ``(a) Deductible.--
            ``(1) In general.--Except as provided in this section and 
        part E, the amount of expenses for required health services 
        with respect to which an individual is entitled to have payment 
        made under this title for any year shall first be reduced by a 
        deductible of $250.
            ``(2) Family limit of $500.--In the case of a family, the 
        deductible under paragraph (1) shall not apply in a year after 
        members of the family (who are not medicare beneficiaries) have 
        collectively had expended $500 towards such deductible.
            ``(3) Application of deductible in place of medicare 
        deductibles.--Under this title, the deductible established 
        under this subsection shall be applied instead of applying the 
        deductible for inpatient hospital services under the first 
        sentence of section 1813(a)(1) and the deductible under section 
        1833(b).
            ``(4) Indexing of dollar amounts of deductible.--The dollar 
        amounts specified in paragraphs (1) and (2) shall each be 
        increased each year (beginning with second year after the year 
        in which this title is enacted) by a percentage equal to the 
        percentage increase in the contribution and benefit base 
        (determined under section 230) from the year before the year in 
        which this title is enacted to the year before the year 
        involved. Any such increase shall be rounded to the nearest 
        multiple of $5.
    ``(b) Deductible Does Not Apply to Preventive Services.--The 
deductible established under subsection (a) does not apply to 
preventive services provided consistent with any applicable periodicity 
schedules.

``SEC. 2223. COINSURANCE FOR REQUIRED HEALTH SERVICES.

    ``(a) Coinsurance Rates.--Subject to subsections (b) and (c) and 
part E, the coinsurance rates applicable to required health services 
under title XVIII shall apply in the administration of this title.
    ``(b) No Coinsurance for Preventive Services.--There shall be no 
coinsurance under this title in the case of preventive services 
provided consistent with any applicable periodicity schedules.
    ``(c) No Coinsurance for Inpatient Hospital Services for 
Children.--There shall be no coinsurance under this title in the case 
of inpatient hospital services furnished to children.

``SEC. 2224. LIMIT ON COST-SHARING FOR REQUIRED HEALTH SERVICES.

    ``(a) Limitation.--
            ``(1) In general.--Whenever in a calendar year an 
        individual's or family's expenses for the deductible and 
        coinsurance with respect to required health services covered 
        under this title and furnished during the year equals $2,500 or 
        $3,000, respectively, payment of benefits under this title for 
        the individual or family for required health services furnished 
        during the remainder of the year shall be paid without the 
        application of any coinsurance.
            ``(2) Indexing of dollar amount of limit.--The dollar 
        amounts specified in paragraph (1) shall be increased each year 
        (beginning with the second year after the year in which this 
        title is enacted) by a percentage equal to the percentage 
        increase in the contribution and benefit base (determined under 
        section 230) from the year before the year in which this title 
        is enacted to the year before the year involved. Any such 
        increase shall be rounded to the nearest multiple of $5.
    ``(b) Crediting for Expenses Incurred under Qualified Employer 
Health Plans.--Cost sharing incurred under a qualified employer health 
plan for required health services shall be credited under this section 
against the limits contained in subsection (a).

``SEC. 2225. EXCLUSIONS; COORDINATION.

    ``(a) Exclusions.--
            ``(1) In general.--Except as provided in this section, 
        section 1862 shall apply to expenses incurred for items and 
        services provided under this title the same manner as such 
        section applies to items and services provided under title 
        XVIII.
            ``(2) Preventive services.--In the case of preventive 
        services provided consistent with the applicable periodicity 
        schedule--
                    ``(A) such services shall be considered to be 
                reasonable and medically necessary, and
                    ``(B) shall not be subject to exclusion through the 
                operation of paragraph (1), (7), or (12) of section 
                1862(a) (as incorporated under paragraph (1)).
            ``(3) Use of same national coverage decision review 
        process.--The provisions of section 1869(b)(3) shall apply 
        under this title in the same manner as they apply under title 
        XVIII. Any determination under such title that, under paragraph 
        (1), would apply under this title shall not be subject to 
        review under this paragraph.
    ``(b) Relationship to Medicare in Case of Employment-Based 
Enrollment.--In the case of enrollment of a medicare beneficiary on an 
employment basis under this title, in applying section 1862(b) 
(pursuant to subsection (a)(2) of this section), the public health plan 
shall be treated as a large group health plan (described in section 
1862(b)).

``SEC. 2226. APPLICATION OF PARTICULAR QUALIFIED HEALTH PLAN 
              REQUIREMENTS.

    ``Section 2152 (relating treatment of family members as a unit; 
coverage period; and health plan cards) and section 2157 (relating to 
coordination and portability of health coverage under qualified health 
plans) shall apply to the public health plan in the same manner as they 
apply to a qualified health plan.

              ``Part D--Premiums, Public Health Trust Fund

``SEC. 2231. PREMIUMS.

    ``(a) Amount of Premiums.--
            ``(1) In general.--Except as provided in this section (and 
        section 2234 with respect to nonenrolling employer premiums), 
        the premium to be charged for enrollment under this title of 
        any individual in a beneficiary class (as defined in subsection 
        (d)) in any community (as defined in subsection (e)) is the 
        actuarial rate established under paragraph (2) with respect to 
        such class and community.
            ``(2) Credit for employment taxes paid for part-time and 
        seasonal or temporary employees.--
                    ``(A) In general.--Subject to subparagraph (C), in 
                the case of an individual who is a covered employee (as 
                defined in subparagraph (B)), the premium to be charged 
                for enrollment under this title on a non-employment 
                basis is--
                            ``(i) the actuarial rate otherwise 
                        applicable under paragraph (1), less the amount 
                        of the taxes paid by the individual and all 
                        employers with respect to the employee (and 
                        family members of the employee) under section 
                        3151(a) of the Internal Revenue Code of 1986, 
                        or
                            ``(ii) 20 percent of such actuarial rate,
                whichever is greater.
                    ``(B) Covered employee defined.--In subparagraph 
                (A), the term `covered employee' means an individual--
                            ``(i) who is employed by one or more 
                        employers as a part-time employee or as a 
                        seasonal or temporary employee, and
                            ``(ii) none of whose employers is enrolling 
                        part-time employees or seasonal or temporary 
                        employees, respectively, under a qualified 
                        employer health plan, but all of which are 
                        required to pay a tax with respect to such 
                        employees under section 3151(a)(1) of the 
                        Internal Revenue Code of 1986,
                and includes the family members of such an employee.
                    ``(C) Limit on premium where premium subsidy.--In 
                no case shall the premium under subparagraph (A) 
                exceed--
                            ``(i) the beneficiary actuarial rate 
                        otherwise applicable under paragraph (1), 
                        reduced by
                            ``(ii) the amount of any premium subsidy 
                        under part E.
    ``(b) Determination of Actuarial Rates.--
            ``(1) In general.--In September of each year, beginning 
        with 1993, the Secretary shall determine and publish the 
        actuarial rate for each beneficiary class (as specified in 
        subsection (d)) for each community (designated under subsection 
        (e)) for health insurance benefits in the following year.
            ``(2) Basis for actuarial rates.--Each such actuarial rate 
        shall be established in a manner so that if all eligible 
        individuals in the class were enrolled under this title for the 
        benefit package in the community, the aggregate of the rates 
        would be equal to the total expenditures (including 
        administrative expenses) with respect to that class and 
        community under this title in that following year. Each such 
        actuarial rate shall be uniform within each beneficiary class 
        and community, and shall not vary among such individuals by 
        age, sex, health, or other risk characteristics.
            ``(3) Public statement.--Whenever the Secretary publishes 
        actuarial rates under this subsection, the Secretary shall, at 
        the time of such publication, include a public statement 
        setting forth the actuarial assumptions and bases employed in 
        arriving at the amount of the actuarial rates.
    ``(c) No Judicial or Administration Review.--There shall be no 
administrative or judicial review of the actuarial rates determined 
under this section.
    ``(d) Beneficiary Classes.--For purposes of this section, the 
beneficiary classes are as follows:
            ``(1) 1 adult.
            ``(2) A married couple without children.
            ``(3) A married couple with 1 or more children, or 1 adult 
        with 1 or more children.
    ``(e) Community.--For purposes of this section, the term 
`community' means a geographic area designated by the Secretary as--
            ``(1) encompassing one or more adjacent metropolitan 
        statistical areas, or
            ``(2) the remaining area within each State (that is not 
        designated within any community under paragraph (1));
except that the Secretary may designate an entire State as a community 
if such a designation would better carry out the purposes of this title 
and title XXIII. The Secretary from time to time may change the 
boundaries of communities designated under paragraph (1) or (2) for 
such purposes. There shall be no administrative or judicial review of 
the designation of communities under this subsection.

``SEC. 2232. COLLECTION OF PREMIUMS.

    ``(a) Individual Enrollment.--
            ``(1) In general.--In the case of individuals enrolled on a 
        non-employment basis under this title, the Secretary shall 
        provide for the payment of premiums on a monthly or quarterly 
        basis. To the maximum extent feasible, the Secretary shall 
        arrange for payment of such premiums through automatic 
        withholding from income sources or accounts with financial 
        institutions. In the case of a part-time employee or seasonal 
        or temporary worker, the amount of the premiums owed under this 
        section shall be reduced by the amount of excise taxes paid 
        under section 3151(a) of the Internal Revenue Code of 1986 with 
        respect to such employment.
            ``(2) Collection of unpaid premiums.--
                    ``(A) Transmission of information to secretary of 
                the treasury.--In the case of premium amounts owing and 
                unpaid under this subsection, the Secretary shall 
                inform the Secretary of the Treasury of individuals or 
                individuals owing such amounts and the amounts owed.
                    ``(B) Collection.--The Secretary of the Treasury 
                shall assess and collect the amounts referred to in 
                subparagraph (A) in the same manner as taxes imposed by 
                subtitle C of the Internal Revenue Code of 1986.
    ``(b) Nonenrolling Employer Premiums.--
            ``(1) Employer premiums.--In the case of an individual 
        enrolled under this title on an employment basis, the employer 
        shall provide for payment of premiums on a monthly or quarterly 
        basis.
            ``(2) Nonenrolling employer premiums.--In the case of 
        nonenrolling employer premiums owed under section 2234, the 
        Secretary shall require payment of premiums on a monthly or 
        quarterly basis.
            ``(3) Collection of unpaid premiums.--
                    ``(A) Transmission of information to secretary of 
                the treasury.--In the case of premium amounts owing and 
                unpaid under this subsection, the Secretary shall 
                inform the Secretary of the Treasury of the employers 
                owing such amounts and the amounts owed.
                    ``(B) Collection.--The Secretary of the Treasury 
                shall assess and collect the amounts referred to in 
                subparagraph (A) in the same manner as taxes imposed by 
                subtitle C of the Internal Revenue Code of 1986.
    ``(c) Deposit.--Premiums collected under this section shall be 
deposited to the credit of the Public Health Trust Fund (established 
under section 2233).

``SEC. 2233. PUBLIC HEALTH TRUST FUND.

    ``(a) Establishment.--
            ``(1) In general.--There is hereby created on the books of 
        the Treasury of the United States a trust fund to be known as 
        the `Public Health Trust Fund' (in this section referred to as 
        the `Trust Fund'). The Trust Fund shall consist of such gifts 
        and bequests as may be made as provided in paragraph (3) and 
        such amounts as may be deposited in, or appropriated to, such 
        Trust Fund as provided in this part.
            ``(2) Deposit of taxes.--There are hereby appropriated to 
        the Trust Fund amounts equivalent to 100 percent of the taxes 
        imposed by--
                    ``(A) part VIII of subchapter A of chapter 1 of the 
                Internal Revenue Code of 1986, and
                    ``(B) sections 3151, 5000A, and 5000B of such Code.
        The amounts appropriated by the preceding sentence shall be 
        transferred from time to time from the general fund in the 
        Treasury to the Trust Fund, such amounts to be determined on 
        the basis of estimates by the Secretary of the Treasury of the 
        taxes, paid to or deposited into the Treasury; and proper 
        adjustments shall be made in amounts subsequently transferred 
        to the extent prior estimates were in excess of or were less 
        than the taxes specified in such sentence.
            ``(3) Authorization to accept gifts.--The Managing Trustee 
        of the Trust Fund is authorized to accept on behalf of the 
        United States money gifts and bequests made unconditionally to 
        the Trust Fund, for the benefit of the Trust Fund, or any 
        activity financed through the Trust Fund.
    ``(b) Incorporation of Provisions.--
            ``(1) In general.--Subject to paragraph (2), the provisions 
        of subsections (b) through (j) of section 1817 shall apply to 
        the Trust Fund in the same manner as they apply to the Federal 
        Hospital Insurance Trust Fund.
            ``(2) Exceptions.--In applying paragraph (1)--
                    ``(A) the Board of Trustees and Managing Trustee of 
                the Trust Fund shall be composed of the members of the 
                Board of Trustees and the Managing Trustee, 
                respectively, of the Federal Hospital Insurance Trust 
                Fund; and
                    ``(B) any reference in section 1817 to the Federal 
                Hospital Insurance Trust Fund, to title XVIII (or part 
                A thereof), or (in subsection (f)(1)) to section 
                3102(b) of the Internal Revenue Code of 1986 is deemed 
                a reference to the Trust Fund under this section, this 
                title, and to section 3151(a)(2) of such Code, 
                respectively.
            ``(3) Transfers to hospital insurance trust fund.--There 
        shall be transferred periodically (but not less often than 
        monthly) from the Trust Fund to the Federal Hospital Insurance 
        Trust Fund, amounts equivalent to the premium, deductible, and 
        coinsurance subsidies provided under part E of this title with 
        respect to premiums, deductibles, and coinsurance under part A 
        of title XVIII.
            ``(4) Transfers to smi trust fund.--There shall be 
        transferred periodically (but not less often than monthly) from 
        the Trust Fund to the Federal Supplementary Medical Insurance 
        Trust Fund, amounts equivalent to the sum of--
                    ``(A) to the premium, deductible, and coinsurance 
                subsidies provided under part E of this title with 
                respect to premiums, deductibles, and coinsurance under 
                part B of title XVIII;
                    ``(B) the net additional expenditures under part B 
                of such title resulting from the amendments made by 
                sections 501 through 504 and 507 of the Health 
                Insurance Coverage and Cost Containment Act of 1993.

``SEC. 2234. TRANSFER PAYMENTS IN THE CASE OF MULTIPLE EMPLOYERS.

    ``(a) Treatment of Multiple Employment Where Employee Covered Under 
a Qualified Employer Health Plan.--
            ``(1) In general.--In the case of a multiple-employed 
        individual (as defined in subsection (d)(1)) who is covered 
        under a qualified employer health plan of an employer--
                    ``(A) each nonenrolling employer (as defined in 
                subsection (d)(2)) that offers coverage under a 
                qualified employer health plan shall pay to the Public 
                Insurance Trust Fund the nonenrolling employer premium 
                specified in subsection (b);
                    ``(B) the enrolling employer is entitled to receive 
                from such Trust Fund the enrolling employer subsidy 
                specified in subsection (c); and
                    ``(C) there will be no tax imposed on the wages of 
                the individual under section 3151(a)(2) of the Internal 
                Revenue Code of 1986 with respect to wages paid during 
                the period of such coverage.
            ``(2) Application on a monthly basis.--The premiums and 
        subsidies provided under this subsection shall be paid with 
        respect to a monthly period of coverage.
    ``(b) Amount of Nonenrolling Employer Premium.--
            ``(1) In general.--The amount of the nonenrolling employer 
        premium described in this subsection is the applicable percent 
        of the actuarial rate (specified in section 2226(b)) for the 
        beneficiary class in the community in which the employee is 
        enrolled.
            ``(2) Applicable percent defined.--For purposes of 
        paragraph (1), the term `applicable percent' means, with 
        respect to an employee who is--
                    ``(A) a full-time employee of the employer, 40 
                percent, or
                    ``(B) a part-time employee of the employer, 20 
                percent.
    ``(c) Amount of Enrolling Employer Subsidy.--
            ``(1) In general.--The amount of the enrolling employer 
        subsidy described in this subsection is the applicable percent 
        of the actuarial rate (specified in section 2226(b)) for the 
        beneficiary class in the community in which the employee is 
        enrolled.
            ``(2) Applicable percent defined.--For purposes of 
        paragraph (1), the term `applicable percent' means, with 
        respect to a multiple-employee who (or whose spouse) is--
                    ``(A) a full-time employee of a nonenrolling 
                employer, 40 percent, or
                    ``(B) not a full-time employee of a nonenrolling 
                employer, but is a part-time employee of a nonenrolling 
                employer, 20 percent.
        In no case shall the applicable percent with respect to a 
        multiple-employed employee (including the employee's spouse) 
        exceed 40 percent.
    ``(d) Definitions.--In this section:
            ``(1) Multiple-employed individual.--The term `multiple-
        employed individual' means an individual who in a month is an 
        employee (whether part-time or full-time) and--
                    ``(A) who is also employed (whether part-time or 
                full-time) by 1 or more other employer, or
                    ``(B) whose spouse or parent is also an employee 
                (whether part-time or full-time) of 1 or more 
                employers.
            ``(2) Nonenrolling employer.--The term `nonenrolling 
        employer' means, with respect to a multiple-employed individual 
        who is enrolled under a qualified employer health plan of an 
        employer, any employer of such individual other than such 
        employer.

``SEC. 2235. USE OF UNIFORM CLAIMS FORMS; UNIFORM INFORMATION 
              REPORTING.

    ``The Secretary shall provide for--
            ``(1) submission of claims under this title (and title 
        XVIII) in accordance with section 323 of the Health Insurance 
        Coverage and Cost Containment Act of 1993, and
            ``(2) reporting to the Commission of information on 
        required health services provided under this title (or title 
        XVIII) pursuant to standards promulgated under section 324 of 
        such Act.

            ``Part E--Assistance for Low-Income Individuals

``SEC. 2241. ASSISTANCE FOR INDIVIDUALS WITH INCOME BELOW THE POVERTY 
              LINE ENROLLED ON A NON-EMPLOYMENT BASIS.

    ``In the case of an individual--
            ``(1) who is enrolled under this title on a non-employment 
        basis,
            ``(2) who is not a medicare beneficiary, and
            ``(3) whose family adjusted total income (as defined in 
        section 2247) does not exceed 100 percent of the official 
        poverty line (as defined in section 2283(2)),
the low-income assistance under this part shall consist of waiver of 
the premiums imposed under section 2231(a) and of any deductibles or 
coinsurance under this title for the individual and the individual's 
family.

``SEC. 2242. ASSISTANCE FOR INDIVIDUALS WITH INCOME BELOW TWICE THE 
              POVERTY LINE ENROLLED ON A NON-EMPLOYMENT BASIS.

    ``(a) Non-Medicare Population.--In the case of an individual who is 
not a medicare beneficiary, who is enrolled under this title on a non-
employment basis, and whose family adjusted total income exceeds 100 
percent but is less than 200 percent, of the official poverty line, the 
low-income assistance under this part shall consist of the following:
            ``(1) Premiums.--The premium amount under section 2231(a) 
        shall be reduced by the subsidy percentage (as defined in 
        subsection (b)) of the premium amount otherwise applied. Any 
        reduction in premium under this paragraph shall be rounded to 
        the nearest multiple of $5.
            ``(2) Deductible.--The deductibles under section 2222 shall 
        be reduced by the subsidy percentage of the deductibles 
        otherwise applied. Any reduction in a deductible under this 
        paragraph shall be rounded to the nearest multiple of $10.
            ``(3) Coinsurance.--The percentage coinsurance applied 
        under section 2223 shall be reduced by the subsidy percentage 
        multiplied by the percentage coinsurance otherwise applied.
    ``(b) Subsidy Percentage Defined.--
            ``(1) In general.--In this section and section 2243, the 
        term `subsidy percentage' means the number of percentage points 
        by which the family's adjusted total income (expressed as a 
        percent of the applicable official poverty line) is less than 
        200 percent.
            ``(2) Rounding for coinsurance.--For purposes of subsection 
        (a)(3), the subsidy percentage (as applied to the coinsurance 
        percentage) shall be rounded to the nearest multiple of 5 
        percent.

``SEC. 2243. ASSISTANCE FOR INDIVIDUALS COVERED UNDER QUALIFIED 
              EMPLOYER HEALTH PLANS.

    ``(a) In General.--In the case of an eligible individual who is 
enrolled under a qualified employer health plan or is enrolled under 
this title on an employment basis, low-income assistance under this 
part shall consist of--
            ``(1) payment (in a manner specified by the Secretary) of 
        the amount of the premium subsidy under subsection (b) to the 
        individual or another family member, or, in the case described 
        in subsection (b)(4), the employer, and
            ``(2) payment to the plan of the amount of the deductible 
        and coinsurance subsidy under subsection (c).
Such subsidies shall apply to premiums, deductibles, and coinsurance 
for the individual and family member covered on an employment basis 
under the plan or under this title.
    ``(b) Premium Subsidy.--In the case of an eligible individual who 
is enrolled under a qualified employer health plan--
            ``(1) Treatment under qualified employer health plan.--
                    ``(A)  Amount.--The amount of the premium subsidy 
                under this subsection is the subsidy percentage (as 
                defined in section 2242(c)) of the employee share of 
                the premium. Any premium subsidy under this paragraph 
                which is not a multiple of $5 shall be rounded to the 
                nearest multiple of $5.
                    ``(B) Use of least expensive qualified plan.--In 
                applying subparagraph (A), the amount of the premium 
                subsidy shall be based on the qualified employer health 
                plan available to the employee with the smallest 
                premium payment required of the employee (for the type 
                of individual or family enrollment with which the 
                employee is enrolled).
                    ``(C) Frequency of payment.--Except as provided in 
                subparagraph (D), the premium subsidy under this 
                subsection shall be paid not less frequently than 
                quarterly or, if the amount of the premium subsidy on a 
                monthly basis exceeds $20, monthly.
                    ``(D) Optional, direct coordination with 
                employers.--In the case of an employee--
                            ``(i) who is enrolled under a covered 
                        employer health plan,
                            ``(ii) who is entitled to assistance under 
                        this part,
                            ``(iii) whose employer agrees to enter into 
                        an arrangement with the Secretary under this 
                        subparagraph, and
                            ``(iv) who assigns (in the manner specified 
                        by the Secretary) rights to premium subsidies 
                        under this paragraph to the employer,
                the Secretary shall enter into an arrangement with the 
                employer under which (I) the employer agrees to reduce 
                premiums otherwise imposed with respect to the 
                individual by the amount of the subsidy, and (II) the 
                Secretary agrees to make payment (not less often than 
                monthly) to the employer of the amount of such premium 
                subsidy.
            ``(2) Treatment under public health plan.--In the case of 
        an eligible individual who is enrolled on an employment basis 
        under this title--
                    ``(A) Amount.--The amount of the premium subsidy 
                under this subsection is the subsidy percentage (as 
                defined in section 2242(c)) of the taxes paid under 
                section 3151(a)(2) of the Internal Revenue Code of 
                1986.
                    ``(B) Frequency of payment.--The premium subsidy 
                under this subsection shall be paid not less frequently 
                than quarterly or, if the amount of the premium subsidy 
                on a monthly basis exceeds $20, monthly.
    ``(c) Deductible and Coinsurance Subsidy.--
            ``(1) Deductible subsidy amount.--The amount of the 
        deductible subsidy under this subsection is the subsidy 
        percentage of the deductible otherwise applied. Any deductible 
        subsidy under this paragraph that is not a multiple of $10 
        shall be rounded to the nearest multiple of $10.
            ``(2) Coinsurance subsidy amount.--The amount of the 
        coinsurance subsidy under this subsection is the product of the 
        subsidy percentage, the percentage coinsurance otherwise 
        applied, and the payment amount permitted for required health 
        services.
            ``(3) Direct coordination by qualified employer health plan 
        required.--In the case of an individual enrolled under a 
        qualified employer health plan, the plan shall provide for--
                    ``(A) acceptance of information, electronically, 
                from the Secretary on the amount of the deductible and 
                coinsurance subsidy for individuals (and family 
                members),
                    ``(B) a reduction in the deductibles and 
                coinsurance otherwise imposed to reflect the deductible 
                and coinsurance subsidies to which the individual and 
                family members are entitled,
                    ``(C) reasonably prompt payment of bills for which 
                such charges have been made, and
                    ``(D) transmission of such information as is 
                necessary to indicate the amount of subsidy provided 
                under the plan for specified individuals.
        In return, the Secretary shall provide for payment, not less 
        often than monthly, to the plan of the amount of payments made 
        by such a plan for deductible and coinsurance subsidies under 
        this subsection.

``SEC. 2244. APPLICATIONS FOR ASSISTANCE.

    ``(a) In General.--Subject to section 2245, any individual who 
seeks assistance under this part (with respect to himself or herself or 
a family member) shall submit a written application, by person or mail, 
to the Secretary. The application may be submitted with an application 
to enroll under this title or separately.
    ``(b) Basis for Determination.--Subject to section 2245 and 
reconciliation under such section, eligibility for assistance under 
this part shall be based on 4 times the family adjusted total income 
(as defined in section 2247) during the 3 months preceding the month in 
which the application is filed.
    ``(c) Form and Contents.--An application for assistance under this 
part shall be in a form and manner specified by the Secretary and shall 
require--
            ``(1) the provision of information necessary to make the 
        determinations described in subsection (b),
            ``(2) the provision of information respecting any covered 
        employer health plan in which the individual is enrolled, and
            ``(3) the individual (if enrolled under such a plan) to 
        assign rights for deductible subsidies under this part to such 
        plan.
Such form also shall include an option to execute, as part of 
completing the form and in order to meet the condition described in 
section 2243(b)(4)(D), an assignment of an individual's right for 
premium subsidies under this part to an employer.
    ``(d) Frequency of Applications.--
            ``(1) In general.--An application for assistance under this 
        part may be filed at any time during the year and may be 
        resubmitted (but, except as provided in paragraph (3), not more 
        frequently than once every 3 months) based upon a change of 
        income or family composition.
            ``(2) Need to reapply.--In the case of an individual who--
                    ``(A) is entitled to assistance under this section 
                in September of a year, and
                    ``(B) wishes to remain eligible for benefits for 
                months beginning with January of the following year,
        the individual (or a family member) must file with the 
        Secretary in October of that preceding year a new application 
        for assistance. If an individual fails to file a new 
        application under this paragraph, an application for such 
        assistance with respect to any family member may not be filed 
        during November or December of that preceding year.
            ``(3) Correction of income.--Nothing in paragraph (1) shall 
        be construed as preventing an individual or family from, at any 
        time, submitting an application to reduce the amount of 
        assistance under this part based upon an increase in income 
        from that stated in the previous application.
    ``(e) Timing of Assistance.--
            ``(1) In general.--If an application for assistance under 
        this part is filed--
                    ``(A) on or before the 15th day of a month, 
                assistance under this part shall be available for 
                premiums for months after such month and, with respect 
                to the deductible, for expenses incurred after such 
                month; or
                    ``(B) after the 15th day of a month, assistance 
                under this part shall be available for premiums for 
                months after the month following such month and, with 
                respect to the deductible, for expenses incurred after 
                such following month.
            ``(2) Welfare recipients.--In the case of an individual or 
        family with respect to whom an application for assistance is 
        not required because of section 2246, in applying paragraph 
        (1), the date of approval of aid or benefits described in such 
        section shall be considered the date of filing of an 
        application for assistance under this part.
    ``(f) Verification.--The Secretary shall provide for verification, 
on a sample basis or other basis, of the information supplied in 
applications under this part. This verification shall be separate from 
the reconciliation provided under section 2245.
    ``(g) Help in Completing Applications.--The Secretary shall 
provide, from funds appropriated to carry out this title, for grants to 
public or private nonprofit entities that will make available 
assistance to individuals and families in filing applications for 
assistance under this part. The Secretary shall make grants in a manner 
that provides such assistance at a variety of sites (such as low-income 
housing projects and shelters for homeless individuals) that are 
readily accessible to individuals and families eligible for assistance 
under this part.
    ``(h) Penalties for Inaccurate Information.--
            ``(1) Interest for understatements.--Each individual who 
        knowingly understates income reported in an application for 
        assistance under this part or otherwise makes a material 
        misrepresentation of information in such an application shall 
        be liable to the Federal Government for excess payments made 
        based on such understatement or misrepresentation, and for 
        interest on such excess payments at a rate specified by the 
        Secretary.
            ``(2) Penalties for misrepresentation.--Each individual who 
        knowingly misrepresents material information in an application 
        for assistance under this part shall be liable to the Federal 
        Government for $1,000 or, if greater, three times the excess 
        payments made based on such misrepresentation.
    ``(i) Filing of Application Defined.--Except as provided in 
subsection (e)(2), for purposes of this part, an application under this 
part is considered to be `filed' on the date on which the complete 
application, including all documentation required to act on the 
application, has been filed with the Secretary.

``SEC. 2245. RECONCILIATION OF PREMIUM ASSISTANCE THROUGH USE OF INCOME 
              STATEMENTS.

    ``(a) Requirement for Filing of Income Statement.--Subject to 
section 2246, in the case of a family which is receiving low-income 
assistance under this part for any month in a year, a member of the 
family shall file with the Secretary, by not later than April 15 of the 
following year, a statement that verifies the family's total adjusted 
family income for the taxable year ending during the previous year. 
Such a statement shall provide information necessary to determine the 
family adjusted total income during the year and the number of family 
members in the family as of the last day of the year.
    ``(b) Reconciliation of Premium Assistance Based on Actual 
Income.--Based on and using the income reported in the statement filed 
under subsection (a) with respect to a family or individual, subject to 
section 2246, the Secretary shall compute the amount of assistance that 
should have been provided under this part with respect to premiums for 
the family in the year involved. If the amount of such assistance 
computed is--
            ``(1) greater than the amount of premium assistance 
        provided, the Secretary shall provide for payment (directly or 
        through a credit against future premiums owed) to the family or 
        individual involved of an amount equal to the amount of the 
        deficit, or
            ``(2) less than the amount of assistance provided, the 
        Secretary shall require the family or individual to pay 
        (directly or through an increase in future premiums owed) to 
        the Secretary (to the credit of the program under this title) 
        an amount equal to the amount of the excess payment.
    ``(c) Disqualification for Failure to File.-- Subject to section 
2246, in the case of any family that is required to file an information 
statement under subsection (a) in a year and that fails to file such a 
statement by the deadline specified in such subsection, no member of 
the family shall be eligible for assistance under this part after May 1 
of such year. The Secretary shall waive the application of this 
subsection if the family establishes, to the satisfaction of the 
Secretary, good cause for the failure to file the statement on a timely 
basis.
    ``(d) Penalties for False Information.--Any individual that 
provides false information in a statement under subsection (a) is 
subject to a criminal penalty to the same extent as a criminal penalty 
may be imposed under section 1128B(a) with respect to a person 
described in clause (ii) of such section.
    ``(e) Notice of Requirement.--The Secretary shall provide for 
written notice, in March of each year, of the requirement of subsection 
(a) to each family which received assistance under this part in any 
month during the preceding year and to which such requirement applies.
    ``(f) Transmittal of Information.--The Secretary of the Treasury 
shall transmit annually to the Secretary such information relating to 
the adjusted total income of individuals for the taxable year ending in 
the previous year as may be necessary to verify the reconciliation of 
assistance under this section.
    ``(g) Construction.--Nothing in this section shall be construed as 
authorizing reconciliation of assistance provided with respect to 
deductibles and coinsurance.

``SEC. 2246. TREATMENT OF CERTAIN CASH ASSISTANCE RECIPIENTS.

    ``In the case of a family that has been determined to be eligible 
for aid under part A or E of title IV or an individual who has been 
determined to be eligible for supplemental security income benefits 
under title XVI--
            ``(1) the family or individual is deemed, without the need 
        to file an application for assistance under section 2244, to 
        have adjusted total income below 100 percent of the official 
        poverty line applicable to a family of the size involved,
            ``(2) the family or individual need not file a statement 
        under section 2245(a), and
            ``(3) the assistance received by the family is not subject 
        to reconciliation under section 2245(b).

``SEC. 2247. COMPUTATION OF FAMILY ADJUSTED TOTAL INCOME.

    ``In this part:
            ``(1) Adjusted total income.--The term `adjusted total 
        income' means--
                    ``(A) adjusted gross income (as defined in section 
                62(a) of the Internal Revenue Code of 1986), determined 
                without the application of paragraphs (6) and (7) of 
                such section and without the application of section 
                162(l) of such Code, plus
                    ``(B) the amount of social security benefits 
                (described in section 86(d) of such Code) which is not 
                includable in gross income under section 86 of such 
                Code.
            ``(2) Family adjusted total income.--The term `family 
        adjusted total income' means, with respect to an individual, 
        the sum of the adjusted total income for the individual and all 
        the other family members.
            ``(3) Family size.--The family size to be applied under 
        this part, with respect to family adjusted total income, is the 
        number of individuals included in the family for purposes of 
        coverage of health insurance benefits under this title or under 
        a qualified employer health plan (as the case may be).

                  ``Part F--Administrative Provisions

``SEC. 2261. AGREEMENTS WITH HOSPITALS; PARTICIPATING PHYSICIANS; 
              TREATMENT OF INDIAN HEALTH SERVICE FACILITIES.

    ``(a) Requirement.--
            ``(1) In general.--Any hospital shall be qualified to 
        participate under this title and shall be eligible for payments 
        under this title if--
                    ``(A) it has in effect a participation agreement 
                under section 1866(a)(1), and
                    ``(B) it files with the Secretary a participation 
                agreement meeting the requirements of subsection (b).
    ``(b) Elements of Agreement.--
            ``(1) In general.--Except as provided in this subsection, a 
        participation agreement under this subsection shall provide 
        terms, specified by the Secretary, that are the same terms as 
        those required of hospital participation agreements under 
        section 1866(a)(1).
            ``(2) Modified copayments.--Instead of the limitation on 
        charges specified under paragraphs (1)(A) and (2) of section 
        1866(a), the agreement shall not permit the hospital to charge 
        more than the applicable deductible and coinsurance permitted 
        under this title.
            ``(3) Acceptance of payment limits.--Each agreement shall 
        require the hospital not to impose charges that exceed the 
        payment rates approved under title III of the Health Insurance 
        Coverage and Cost Containment Act of 1993. The previous 
        sentence shall not be construed as prohibiting a qualified 
        employer health plan from negotiating or otherwise providing 
        payment rates that are less than such reference rates.
    ``(c) Physician Participation Agreements.--
            ``(1) In general.--Except as provided in this subsection, 
        the Secretary shall provide for participating physician 
        agreements under this title in the same manner as such 
        agreements are provided for under title part B of title XVIII 
        pursuant to section 1842(h).
            ``(2) Limitation on charges to other entities.--A 
        participating physician agreement under this subsection shall 
        provide that the physician agrees not to impose charges with 
        respect to required health services that exceed the payment 
        rates approved with respect to such services under title III of 
        the Health Insurance Coverage and Cost Containment Act of 1993. 
        The previous sentence shall not be construed as prohibiting a 
        qualified employer health plan from negotiating or otherwise 
        providing payment rates that are less than such reference 
        rates.
    ``(d) Indian Health Service Facilities.--The provisions of section 
1880 (relating to Indian health service facilities) shall apply to this 
title in the same manner as they apply under title XVIII.

``SEC. 2262. HEALTH MAINTENANCE ORGANIZATIONS.

    ``(a) In General.--Except as provided in this section, section 1876 
shall apply to individuals entitled to benefits under this title in the 
same manner as such section applies to individuals entitled to benefits 
under part A, and enrolled under part B, of title XVIII.
    ``(b) Application.--In applying section 1876 under this section--
            ``(1) the provisions of such section relating only to 
        individuals enrolled under part B of title XVIII shall not 
        apply;
            ``(2) any reference to a Trust Fund established under title 
        XVIII and to benefits with respect to any services under such 
        title is deemed a reference to the Public Health Trust Fund and 
        to health insurance benefits with respect to required health 
        services under this title;
            ``(3) the adjusted average per capita cost shall be 
        determined on the basis of benefits under this title;
            ``(4) subsections (f) and (h) shall not apply; and
            ``(5) in applying subsection (c)(3)(B), an eligible 
        organization may require a minimum period of enrollment (of not 
        greater than 6 months) during which an individual may not 
        disenroll other than for cause or unless enrollment under this 
        title is terminated.

``SEC. 2263. USE OF FISCAL AGENTS.

    ``(a) Use of Fiscal Agents.--
            ``(1) In general.--Except as provided in this section, the 
        Secretary shall provide for the administration of this title 
        through the use of fiscal agents in the same manner as title 
        XVIII is carried out through the use of such fiscal 
        intermediaries and carriers.
            ``(2) Special rules.--In the administration of this title, 
        the Secretary--
                    ``(A) may use a single carrier with respect to all 
                required health services in an area, and
                    ``(B) shall establish performance standards at 
                least as rigorous as the performance standards applied 
                in the administration of title XVIII.
            ``(3) Separate contracts.--Contracts with fiscal agents 
        entered into pursuant to this subsection for an area need not 
        be with the same fiscal intermediary or carrier with an 
        agreement under section 1816 or a contract under section 1842 
        for the area. However, nothing in this section shall be 
        construed as preventing such an organization with such an 
        agreement or contract under such section from entering into a 
        contract under this section.
    ``(b) Requiring Use of Electronic Billing.--Effective for claims 
submitted on or after January 1, 1997, payment shall only be made under 
this title on the basis of bills or charges that are submitted 
electronically in a manner specified by the Secretary.

``SEC. 2264. GENERAL ADMINISTRATION.

    ``(a) Through Health Care Financing Administration.--Except as 
otherwise provided in this title, this title shall be administered by 
the Health Care Financing Administration.
    ``(b) Regulations; Title II Provisions; Administration.--The 
provisions of sections 1871, 1872, and 1874 (relating to regulations, 
application of certain provisions of title II, and administration) 
shall apply to this title in the same manner as they apply to title 
XVIII.
    ``(c) Treatment of Amounts Due.--In bankruptcy and reorganization 
proceedings, amounts owed to the public health plan under this title 
shall be treated in the same manner as amounts owed to the Federal 
Government under the Federal Insurance Contributions Act.

``SEC. 2265. DETERMINATIONS; APPEALS; PROVIDER REIMBURSEMENT REVIEW 
              BOARD.

    ``(a) Determinations.--The determination of whether an individual 
is entitled to benefits under this title and the determination of the 
amount of benefits under this title shall be made by the Secretary in 
accordance with regulations prescribed by the Secretary.
    ``(b) Hearings.--
            ``(1) In general.--Any individual dissatisfied with any 
        determination under subsection (a) shall be entitled to a 
        hearing thereon by the Secretary to the same extent as is 
        provided in section 205(b) and to judicial review of the 
        Secretary's final decision after such hearing as is provided in 
        section 205(g). Sections 206(a), 1102, and 1871 (as 
        incorporated by reference by section 2264) shall not be 
        construed as authorizing the Secretary to prohibit an 
        individual from being represented under this subsection by a 
        person that furnishes the individual, directly or indirectly, 
        with services solely on the basis that the person furnishes the 
        individual with such a service. Any person that furnishes 
        services to an individual may not represent an individual under 
        this subsection with respect to the issue described in section 
        1879(a)(2) unless the person has waived any rights for payment 
        from the beneficiary with respect to the services involved in 
        the appeal. If a person furnishes services to an individual and 
        represents the individual under this subsection, the person may 
        not impose any financial liability on such individual in 
        connection with such representation.
            ``(2) Limitation.--Notwithstanding paragraph (1), a hearing 
        shall not be available to an individual if the amount in 
        controversy is less than $500 and judicial review shall not be 
        available to the individual if the amount in controversy is 
        less than $1,000. In determining the amount in controversy, the 
        Secretary, under regulations, shall allow two or more claims to 
        be aggregated if the claims involve the delivery of similar or 
        involve related services to the same individual or involve 
        common issues of law and fact arising from services furnished 
        to two or more individuals.
            ``(3) Expedited review.--In an administrative hearing 
        pursuant to paragraph (1), where the moving party alleges that 
        there are no material issues of fact in dispute, the 
        administrative law judge shall make an expedited determination 
        as to whether any such facts are in dispute and, if not, shall 
        determine the case expeditiously.
    ``(c) Provider Reimbursement Review Board.--The provisions of 
section 1878 (relating to the Provider Reimbursement Review Board) 
shall apply under this title in the same manner as they apply under 
title XVIII.

``SEC. 2266. PROGRAM INTEGRITY; MISCELLANEOUS PROVISIONS.

    ``(a) Program Integrity.--Sections 1124, 1124A, 1126, and 1128 
through 1128B (relating to fraud and abuse) shall apply to this title 
in the same manner as they apply to title XVIII.
    ``(b) Title XI Provisions.--The following provisions shall apply to 
this title in the same manner as they apply to title XVIII:
            ``(1) Section 1134 (relating to nonprofit hospital 
        philanthropy).
            ``(2) Section 1138 (relating to hospital protocols for 
        organ procurement and standards for organ procurement 
        agencies).
    ``(c) Withholding of Payments From Certain Providers.--Subsections 
(a) through (c) of section 1885 shall apply to this title, the 
Secretary, and the Public Health Trust Fund in the same manner as such 
subsections apply to title XIX, the State agency, and the appropriate 
State agency paid funds under subsection (c), respectively.

``SEC. 2267. INFORMATION BY TELEPHONE.

    ``The Secretary shall provide information via a toll-free telephone 
number on the public health plan, including information concerning--
            ``(1) the requirement of section 2204, and
            ``(2) low-income assistance under part E.

``SEC. 2268. DEMONSTRATION PROJECT AUTHORITY.

    ``(a) Demonstration Project Authority.--
            ``(1) In general.--The Secretary is authorized to conduct 
        demonstration projects--
                    ``(A) to improve the delivery and quality of health 
                care services under this title, and
                    ``(B) to increase the efficiency and effectiveness 
                of methods of payment for such services.
        Subject to paragraph (2), the Secretary may waive such 
        requirements of this title as may be necessary to carry out 
        such demonstration projects.
            ``(2) Limitation.--The Secretary does not have the 
        authority under paragraph (1)--
                    ``(A) to reduce the benefits available under part 
                B, or
                    ``(B) to increase the deductibles or coinsurance 
                under part C.
            ``(3) Funding.--Grants, payments under contracts, and other 
        expenditures made for demonstration projects under this 
        subsection--
                    ``(A) shall be made from the Public Health Trust 
                Fund,
                    ``(B) may be made either in advance or by way of 
                reimbursement, as may be determined by the Secretary, 
                and
                    ``(C) shall be made in such installments and on 
                such conditions as the Secretary finds necessary to 
                carry out the purpose of this subsection.
    ``(b) Construction.--Except as provided in subsection (a), the 
Secretary is not authorized to waive any requirement of this title.

``SEC. 2269. INCORPORATION OF MISCELLANEOUS MEDICARE PROVISIONS.

    ``(a) Overpayments on Behalf of Individuals and Settlement of 
Claims for Benefits on Behalf of Deceased Individuals.--The provisions 
of section 1870 (relating to overpayments on behalf of individuals and 
settlement of claims for benefits on behalf of deceased individuals), 
other than subsection (b), shall apply under this title in the same 
manner as they apply under title XVIII.
    ``(b) Limitation on Certain Physician Referrals.--The provisions of 
section 1877 (relating to limitation on certain physician referrals) 
shall apply under this title in the same manner as they apply under 
title XVIII.

                          ``Part G--[Reserved]

                ``Part H--Definitions and Miscellaneous

``SEC. 2281. INCORPORATION OF CERTAIN DEFINITIONS USED IN OTHER HEALTH-
              RELATED TITLES.

    ``(a) Incorporation of Medicare Definitions.--In this title, the 
definitions contained in section 1861 apply for purposes of this title 
in the same manner as they apply for purposes of title XVIII.
    ``(b) Incorporation of Certain Employment-Related Definitions in 
Title XXI.--In this title, except as otherwise provided, the 
definitions of the following terms contained in title XXI apply for 
purposes of this title:
            ``(1) Covered employer health plan.--The term `covered 
        employer health plan' as defined in section 2121(b).
            ``(2) Employee.--The term `employee' as defined in section 
        2181(a)(3).
            ``(3) Full-time employee.--The term `full-time employee' as 
        defined in section 2181(b)(1).
            ``(4) Large employer.--The term `large employer' as defined 
        in section 2181(c)(3).
            ``(5) Medium-size employer.--The term `medium-size 
        employer' as defined in section 2181(c)(2).
            ``(6) Part-time employee.--The term `part-time employee' as 
        defined in section 2181(b)(2).
            ``(7) Qualified employer health plan.--The term `qualified 
        employer health plan' as defined in section 2121(a).
            ``(8) Seasonal or temporary employee.--The term `seasonal 
        or temporary employee' as defined in section 2181(b)(3).
            ``(9) Small employer.--The term `small employer' as defined 
        in section 2181(c)(1).
            ``(10) Very large employer.--The term `very large employer' 
        as defined in section 2181(c)(4).
            ``(11) Wages.--The term `wages' as defined in section 
        2181(a)(1).

``SEC. 2282. DEFINITIONS RELATING TO FAMILIES.

    ``In this title:
            ``(1) In general.--Except as provided in paragraph (2), the 
        terms `family' and `family member' mean an individual and the 
        individual's spouse, and includes all the individual's 
        children.
            ``(2) Treatment of families with medicare beneficiaries for 
        coverage purposes.--In the case of a family with a medicare 
        beneficiary, if coverage is provided to family members other 
        than on the basis of employment of a family member, the 
        beneficiary shall not be treated under this title as a member 
        of the family for purposes of determining eligibility for 
        coverage but shall be treated as a separate individual. 
        However, except as provided in section 2242(b)(2), for purposes 
        of applying part E, a medicare beneficiary shall continue to be 
        treated as a member of the beneficiary's family.
            ``(3) Spouse.--The term `spouse' means, with respect to an 
        individual, the individual to which the individual is married.
            ``(4) Married; unmarried.--Marital status shall be 
        determined in accordance with section 7703 of the Internal 
        Revenue Code of 1986.
            ``(5) Child.--The term `child' means, with respect to a 
        person who is not a child, an individual--
                    ``(A) who (i) is unmarried and under 18 years of 
                age, (ii) is unmarried and under 23 years of age and a 
                full-time student, or (iii) is an unmarried, dependent 
                child, regardless of age, who is incapable of self-
                support because of mental or physical disability which 
                existed before age 22;
                    ``(B)(i) who is the child of the person or the 
                person's spouse, or
                    ``(ii) who is the legal ward of the person or the 
                person's spouse; and
                    ``(C) who is not in the legal custody of another 
                individual.
        The Secretary shall establish, by regulation, such rules as are 
        appropriate with respect to the treatment of foster children, 
        emancipated minors, children in the process of adoption, and 
        other unmarried individuals under 23 years of age under similar 
        circumstances as children for purposes of this title.
            ``(6) Adult.--The term `adult' means an individual who is 
        not a child.

``SEC. 2283. OTHER DEFINITIONS.

    ``In this title:
            ``(1) Medicare beneficiary; low-income medicare 
        beneficiary.--
                    ``(A) The term `medicare beneficiary' means an 
                individual entitled to benefits under part A of title 
                XVIII.
                    ``(B) The term `low-income medicare beneficiary' 
                means a medicare beneficiary whose family adjusted 
                total income (as defined in section 2247(2)), as 
                determined based upon an application under part E, is 
                less than 200 percent of the official poverty line 
                applicable to a family of the size involved.
            ``(2) Official poverty line.--The term `official poverty 
        line' means, for an individual in a family, the official 
        poverty line (as defined by the Office of Management and 
        Budget, and revised annually in accordance with section 673(2) 
        of the Omnibus Budget Reconciliation Act of 1981) applicable to 
        a family of the size involved.
            ``(3) Pregnant woman.--The term `pregnant woman' means a 
        woman who has been certified by a physician (in a manner 
        specified by the Secretary) as being pregnant, until the last 
        day of the month in which the 60-day period (beginning on the 
        date of termination of the pregnancy) ends.
            ``(4) Public health plan.--The term `public health plan' 
        means the program of health insurance provided under this 
        title.

``SEC. 2284. AUTHORIZING RECIPROCAL COVERAGE OF FOREIGN NATIONALS.

    ``Effective January 1, 1997, the Secretary may make benefits 
available under this title with respect to required health services for 
individuals who--
            ``(1) are not eligible individuals described in section 
        2201(d),
            ``(2) are in the United States, and
            ``(3) are nationals of a foreign state which provides 
        health benefits to nationals of the United States who are in 
        that state,
if the Secretary determines that such benefits with respect to such 
services would be available to nationals of the United States under 
comparable circumstances in the foreign state.

``SEC. 2285. NONAPPLICATION TO RESIDENTS OF PUERTO RICO AND 
              TERRITORIES.

    ``The provisions of this title shall not apply to an individual who 
is not a resident of one of the 50 States or the District of 
Columbia.''.

                      TITLE III--COST CONTAINMENT

                Subtitle A--Health Care Spending Amounts

SEC. 301. SPECIFICATION OF OVERALL HEALTH CARE SPENDING AMOUNTS.

    (a) Amount.--For purposes of this title, with respect to each year 
(beginning with 1994), the overall health care spending amount 
(specified under this section) is the product of--
            (1) the average per capita health care expenditures 
        (identified in subsection (c)) in previous year, as estimated 
        by the Secretary, multiplied by the applicable adjustment 
        factor for the year involved specified in subsection (b), and
            (2) the population of the United States (excluding medicare 
        beneficiaries), as projected by the Secretary of Commerce as of 
        July 1 of the year involved.
    (b) Applicable Adjustment Factor.--The applicable adjustment factor 
under this subsection for each year is 1 plus the sum (expressed as a 
fraction) of--
            (1) the average annual percentage increase in the gross 
        domestic product (in current dollars, as published by the 
        Secretary of Commerce) during the 3-year period ending with the 
        second previous year; plus
            (2)(A) for 1995, 3.5 percentage points,
            (B) for 1996, 2.5 percentage points,
            (C) for 1997, 1.5 percentage points,
            (D) for 1998, 0.5 percentage point, and
            (E) for each year thereafter, 0 percentage points.
    (c) Services Covered.--The average per capita health care 
expenditures shall be based on the expenditures (including expenditures 
for deductibles and coinsurance) for required and other health services 
(as defined in subsection (d)) expended in the United States, other 
than with respect to individuals entitled to benefits under part A or B 
of title XVIII of the Social Security Act.
    (d) Required and Other Health Services Defined.--In this subtitle, 
the term ``required and other health services'' means required health 
services, specified in section 2211(a)(2) of the Social Security Act, 
and also includes prescription drugs, biologicals, and insulin.

SEC. 302. ESTABLISHMENT OF FEDERAL HEALTH CARE COST CONTAINMENT 
              COMMISSION.

    (a) In General.--There is hereby established a Federal Health Care 
Cost Containment Commission (in this subtitle referred to as the 
``FHCC''). The FHCC shall be composed of 11 members, appointed by the 
President by and with the advice and consent of the Senate. The 
membership of the FHCC shall include individuals with national 
recognition for their expertise in health economics, health insurance, 
provider reimbursement, and related fields. In appointing individuals, 
the President shall assure representation of labor organizations, 
employers, health care providers, and consumers of health services.
    (b) Terms.--Members of the FHCC shall be appointed to serve for 
terms of 3 years, except that the terms of the members first appointed 
shall be staggered so that the terms of no more than 4 members expire 
in any year. Individuals appointed to fill a vacancy created in the 
FHCC shall be appointed for the remainder of the term.
    (c) Duties Relating to Establishment of Payment Rates.--
            (1) Allocation of overall spending by state.--
                    (A) In general.--Each year the FHCC shall apportion 
                the overall health care spending amount specified under 
                section 301 for required and other health services 
                among the States. Subject to subparagraph (B), such 
                apportionment shall be based on the populations of the 
                States, adjusted to reflect differences in age and 
                health status of the population and the cost-of-living 
                among the States and such other considerations as the 
                FHCC deems appropriate, including such adjustment as 
                will encourage the provision of necessary services in 
                underserved areas.
                    (B) Phase-in.--During the 10-year period beginning 
                in 1994--
                            (i) initially the apportionment shall 
                        reflect the current variations in per capita 
                        health care expenditures among the States,
                            (ii) gradually the apportionment shall 
                        reflect to a lesser degree such current 
                        variations, and
                            (iii) at the end of the period the 
                        apportionment shall reflect only the factors 
                        and considerations described in subparagraph 
                        (A).
            (2) Monitoring state expenditures.--The FHCC shall monitor 
        the compliance of each State with the overall health care 
        spending amount apportioned under paragraph (1) for each year 
        and over each 3-year period.
            (3) Approval of payment rates in certain states without a 
        state health commission or unable to control health care 
        expenditures.--
                    (A) In general.--In the case of a State described 
                in subparagraph (B)--
                            (i) the FHCC shall conduct negotiations 
                        with professional and other associations 
                        representing the types of health care providers 
                        in order to apportion the overall health care 
                        spending apportioned to the States under 
                        paragraph (1) among the different classes of 
                        providers (as defined in subsection (f));
                            (ii) the Secretary shall establish, for 
                        each class of provider for the year involved 
                        and subject to approval by the FHCC under 
                        clause (iii), payment rates for required and 
                        other health services consistent with the 
                        limitation on overall health care spending for 
                        such services specified in subparagraph (B)(ii) 
                        and reflecting such reduction in payment rates 
                        as may be necessary to reduce spending by an 
                        amount equal to the amount by which the State 
                        has exceeded such spending limitation; and
                            (iii) the FHCC shall review and, if they 
                        meet the standards described in section 304(a), 
                        approve the payment rates established by the 
                        Secretary under clause (ii) or, if they do not, 
                        disapprove such rates.
                    (B) States covered.--A State is described in this 
                subparagraph if the FHCC determines that the State--
                            (i) has failed to establish a State Health 
                        Commission in accordance with section 303(a), 
                        or
                            (ii) has permitted over a 3-consecutive-
                        year period overall health care spending for 
                        required and other health services in the State 
                        to exceed the sum of--
                                    (I) the cumulative overall health 
                                care spending amount apportioned to the 
                                State under paragraph (1) for that 
                                period and
                                    (II) any cumulative difference 
                                between a State's overall health care 
                                spending for required and other health 
                                services in previous periods and 
                                spending amounts apportioned to the 
                                State under paragraph (1) for those 
                                periods,
                until such time as the FHCC determines that such a 
                State Health Commission has been established and that 
                the State has provided the FHCC with satisfactory 
                assurances that overall health care spending for 
                required and other health services in the State will 
                not exceed the overall health care spending amount 
                apportioned to the State under paragraph (1).
                    (C) Payment basis.--The payment rates established 
                under subparagraph (A)(ii) shall be based on payment 
                methodologies (including payment for inpatient hospital 
                services on the basis of per discharge payments 
                relating to diagnosis-related groups and payment for 
                physicians' services based on a resource-based relative 
                value scale) used under title XVIII of the Social 
                Security Act. In establishing such rates, the Secretary 
                shall consult with the Prospective Payment Assessment 
                Commission and with the Physician Payment Review 
                Commission, as appropriate.
                    (D) Application of rates.--
                            (i) In general.--Except as provided in 
                        clause (ii), the rates established under 
                        subparagraph (B)(ii) shall be the rate that may 
                        be charged by providers under qualified 
                        employer health plans or under the public 
                        health plan.
                            (ii) Special treatment of physicians' 
                        services.--In applying subparagraph (E) in the 
                        case of physicians' services, the rate 
                        specified under this paragraph shall be the 
                        same percentage above the rate otherwise 
                        computed under this paragraph as the percentage 
                        by which the limiting charge under section 
                        1848(g) of the Social Security Act exceeds the 
                        recognized payment amount (as defined in 
                        section 1848(g)(2)(D) of such Act).
                    (E) Enforcement.--Any health care provider that 
                imposes a charge in excess of the rate specified under 
                this paragraph shall be ineligible for a period 
                (specified by the Secretary) of not more than 5 years 
                to provide services for which payment may be made under 
                title XVIII, XIX, or XXII of the Social Security Act.
            (4) Appeals of payment rates established by state health 
        commissions.--
                    (A) Process.--The FHCC shall establish a process 
                for receipt of, and action upon, grievances concerning 
                payment rates established by a State Health Commission 
                under section 303. Such process shall provide for 
                disapproval of such a rate if the rate fails to meet 
                the standards for approval of such a rate under section 
                304(a).
                    (B) Rate adjustments.--In the case of such a 
                disapproval, the SHC shall revise rates consistent with 
                such standards.
    (d) Periodic Reports.--The FHCC shall report to the Congress and 
the public periodically (not less often than annually) on the effect of 
this title on the delivery of required health care services.
    (e) Miscellaneous.--
            (1) Authority.--The FHCC shall have the authority specified 
        in clauses (i) through (vi) of section 1886(e)(6)(C) of the 
        Social Security Act, but (under such clause (i)) not subject to 
        the approval of the Director of the Office.
            (2) Compensation.--While serving on the business of the 
        FHCC (including traveltime), a member of the FHCC shall be 
        entitled to compensation at the per diem equivalent of the rate 
        provided for level IV of the Executive Schedule under section 
        5315 of title 5, United States Code; and while so serving away 
        from home and his regular place of business, a member may be 
        allowed travel expenses, as authorized by the Chairman of the 
        FHCC. Physicians serving as personnel of the FHCC may be 
        provided a physician comparability allowance by the FHCC in the 
        same manner as Government physicians may be provided such an 
        allowance by an agency under section 5948 of title 5, United 
        States Code, and for such purpose subsection (i) of such 
        section shall apply to the FHCC in the same manner as it 
        applies to the Tennessee Valley Authority.
            (3) Access to information, etc.--The provisions of 
        subparagraphs (F) and (H) of section 1886(e)(6) of the Social 
        Security Act shall apply to the FHCC in the same manner as they 
        apply to the Prospective Payment Assessment Commission.
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated, from the Public Health Trust Fund 
        (established under section 2233 of the Social Security Act) 
        such sums as may be necessary to carry out this section.
    (f) Class of Provider Defined.--In this subtitle, the term ``class 
of provider'' means hospitals, physicians, and such other classes of 
health care providers (which may include a prepaid system of health 
care delivery) as the FHCC specifies in regulations.
    (g) Secretary.--In this subtitle, the term ``Secretary'' means the 
Secretary of Health and Human Services.

SEC. 303. STATE HEALTH RATE COMMISSIONS.

    (a) In General.--Each State shall establish a State Health 
Commission (each in this section referred to as a ``SHC'') to carry out 
duties under this section. If a State fails to establish such a SHC, 
the FHCC shall perform functions of such a Commission under section 
302(c)(3).
    (b) Composition and Terms.--
            (1) Composition.--Each SHC shall be composed of not to 
        exceed 11 members, appointed by the chief executive officer of 
        the State. The membership of each SHC shall include individuals 
        with recognition for their expertise in health economics, 
        health insurance, provider reimbursement, and related fields. 
        In appointing individuals, the chief executive officer shall 
        assure representation of labor organizations, employers, health 
        care providers, and consumers of health services.
            (2) Terms.--Members of each SHC shall be appointed to serve 
        for terms of 3 years, except that the terms of the members 
        first appointed shall be staggered so that the terms of no more 
        than 40 percent of the number of members expire in any year. 
        Individuals appointed to fill a vacancy created in an SHC shall 
        be appointed for the remainder of the term.
    (c) Duties.--
            (1) Allocation of overall spending by state.--Each year 
        each SHC shall apportion the portion of the health care 
        spending amount apportioned to the State under section 
        302(c)(1) among required and other health services furnished by 
        the different classes of providers.
            (2) Establishment of payment rates.--
                    (A) In general.--Each year each SHC shall establish 
                for each such class of provider payment rates for 
                required and other health services (as defined in 
                section 301(d)) furnished in that State in that year, 
                which meet the standards for approval under section 
                304(a).
                    (B) Revision of rates.--If the FHCC determines that 
                particular payment rates do not meet the standard 
                specified under section 304(a)(2) and must be increased 
                to meet such standard, the SHC--
                            (i) shall increase those payment rates so 
                        as to meet such standard, and
                            (ii) shall provide for such decrease in 
                        other payment rates as may be necessary to 
                        assure that the standard described in section 
                        304(a)(1) continues to be met (taking into 
                        account the increase provided under clause 
                        (i)).
            (3) Use of regional commissions in carrying out duties.--In 
        carrying out duties of an SHC under this subsection, a State 
        may establish regional commissions to carry out the functions 
        of the SHC on a local basis, within the allocation provided to 
        the region by the SHC.

SEC. 304. STANDARD FOR PAYMENT RATES.

    (a) In General.--The FHCC shall approve rates established by a 
State Health Commission (or regional commission) under section 
303(c)(2), or the Secretary under section 302(c)(3)(A)(ii), for a class 
of provider only if the FHCC determines that--
            (1) the rates, if applied in the aggregate by all qualified 
        employer health plans and by the public health plan during the 
        year in the State, would result in total expenditures for 
        required services furnished by that class of provider that are 
        consistent with the amount distributed under section 303(c)(1) 
        or 302(c)(3)(A)(i), as the case may be, for services of that 
        class of provider; and
            (2) the rates are reasonable and adequate, consistent with 
        subsection (b).
    (b) Test of Reasonableness and Adequacy.--For purposes of applying 
subsection (a)(2) with respect to payment rates for required and other 
health services furnished by a class of provider--
            (1) Access and quality.--Payment rates are not considered 
        to be reasonable and adequate if patients will not have 
        reasonable access to services of high quality.
            (2) Aggregate adequacy.--The determination of 
        reasonableness and adequacy of payment rates shall be made 
        based on the aggregate rates.
            (3) Equitable rate distribution.--Payment rates are not 
        considered to be reasonable unless they are set equitably among 
        all purchasers without undue discrimination.
            (4) Appropriate setting.--Payment rates are not considered 
        to be reasonable and adequate unless the rates--
                    (A) encourage services to be provided to patients 
                in the most cost effective environment that does not 
                endanger patients' well-being, and
                    (B) include incentives to contain health care 
                costs.
The payment rates may be designed to encourage the provision of 
necessary services in underserved areas.

SEC. 305. APPLICATION OF RATES UNDER MEDICARE AND PUBLIC PROGRAMS.

    Payment rates approved this subtitle shall apply both under the 
medicare program under title XVIII of the Social Security Act and under 
the public health plan under title XXII of such Act.

               Subtitle B--Administrative Simplification

SEC. 321. REQUIREMENT FOR UNIFORM HEALTH CLAIMS CARDS.

    (a) Uniform Health Claims Cards.--
            (1) Requirement.--Each health benefit plan (as defined in 
        section 326(a)) shall issue a health claims card that meets the 
        requirements of subsection (c) for each individual who is 
        entitled to benefits under the plan and who is residing in the 
        United States. Such card shall be issued to the individual 
        involved or, in the case of an individual enrolled as a 
        dependent of another individual, to that other individual.
            (2) Deadline for application of requirement.--The deadline 
        specified under this paragraph for the requirement under 
        paragraph (1) is 6 months after the date the standards are 
        established under subsection (c).
    (b) Enforcement Through Civil Money Penalties.--
            (1) In general.--In the case of a health benefit plan that 
        fails to issue a health claims card in accordance with 
        subsection (a)(1), the plan is subject to a civil money penalty 
        of not to exceed $100 for each such violation. The provisions 
        of section 1128A of the Social Security Act (other than 
        subsections (a) and (b)) shall apply to a civil money penalty 
        under this subsection in the same manner as such provisions 
        apply to a penalty or proceeding under section 1128A(a) of such 
        Act.
            (2) Effective date.--No penalty may be imposed under 
        paragraph (1) for any failure occurring before the deadline 
        specified in subsection (a)(2).
    (c) Uniform Health Claims Cards.--
            (1) In general.--The Secretary shall establish standards 
        consistent with this subsection respecting the form and 
        information to be contained on uniform health claims cards (for 
        purposes of subsection (a)).
            (2) Electronic.--
                    (A) In general.--Subject to subparagraph (B), the 
                card shall be in a form similar to that of a credit 
                card and shall have, encoded in electronic form--
                            (i) the identity of the individual,
                            (ii) the health benefit plan in which the 
                        individual is enrolled, and
                            (iii) the telephone number or numbers to be 
                        used for the verification electronically of 
                        entitlement to benefits under the plan under 
                        section 322 and for the submission 
                        electronically of claims under the plan under 
                        section 323.
                    (B) Use of electronic read-and-write cards.--The 
                Secretary may provide for cards in a electronic form 
                that permits information on the card to be readily 
                changed. Such information may include information 
                relating to the health coverage status of the 
                individual and the medical history of the individual.
                    (C) Personal identifier.--For purposes of 
                subparagraph (A) and for purposes of claims processing 
                and related purposes under section 323, the Social 
                Security account number of the individual or, in the 
                case of an infant or other individual to whom such a 
                number has not been issued, such a Social Security 
                account number of a parent or guardian or other number 
                as the Secretary shall specify, shall be used as the 
                personal identifier for the individual.
            (3) Additional information.--The card shall include such 
        additional information, in electronic or other form, as the 
        Secretary may require to carry out the purposes of this Act. In 
        addition, the health benefit plan issuing the card may include 
        such additional information on the card as the plan desires, 
        subject to such limitations as the Secretary may provide.
            (4) Deadline.--The Secretary shall first establish the 
        standards for uniform health claims cards under this subsection 
        by not later than 12 months after the date of the enactment of 
        this Act.
    (d) Application to Medicare and Medicaid Programs.--
            (1) Medicare program.--The Secretary shall provide, in 
        regulations promulgated to carry out the medicare program, that 
        identification cards issued under that program are modified to 
        the extent required to conform to the standards established 
        under subsection (c), by not later than the deadline specified 
        in subsection (a)(2).
            (2) State medicaid plans.--As a condition for the approval 
        of a State plan under the medicaid program, effective for 
        calendar quarters beginning on or after the deadline specified 
        in subsection (a)(2), each such plan shall provide, in 
        accordance with regulations of the Secretary, that 
        identification cards issued under the plan are modified to the 
        extent required to conform to the requirements of subsection 
        (c).

SEC. 322. REQUIREMENT FOR ENTITLEMENT VERIFICATION SYSTEM.

    (a) In General.--
            (1) Requirement.--Each health benefit plan shall provide 
        for an electronic system, that is certified by the Secretary as 
        meeting the standards established under subsection (c), for the 
        verification of an individual's entitlement to benefits under 
        such plan.
            (2) Deadline for application of requirement.--The deadline 
        specified under this paragraph for the requirement under 
        paragraph (1) is 6 months after the date the standards are 
        established under subsection (c).
    (b) Enforcement Through Civil Money Penalties.--
            (1) In general.--In the case of a health benefit plan that 
        fails to provide for an electronic verification system that is 
        certified by the Secretary as meeting the standards established 
        under subsection (c), the plan is subject to a civil money 
        penalty of not to exceed $100 for each day in which such 
        failure persists. The provisions of section 1128A of the Social 
        Security Act (other than subsections (a) and (b)) shall apply 
        to a civil money penalty under this subsection in the same 
        manner as such provisions apply to a penalty or proceeding 
        under section 1128A(a) of such Act.
            (2) Effective date.--No penalty may be imposed under 
        paragraph (1) for any failure occurring before the deadline 
        specified in subsection (a)(2).
    (c) Standards for Entitlement Verification Systems.--
            (1) In General.--The Secretary shall establish standards 
        consistent with this subsection respecting the requirements for 
        certification of entitlement verification systems.
            (2) Information available.--Such standards shall require a 
        system to provide information, with respect to individuals, 
        concerning the following:
                    (A) The specific benefits to which the individual 
                is entitled under the plan.
                    (B) Current status of the individual with respect 
                to fulfillment of deductibles, copayments, and out-of-
                pocket limits on cost-sharing.
                    (C) Restrictions on providers who may provide 
                covered services, including utilization controls (such 
                as preadmission certification).
            (3) Coordination of benefit information.--Such standards 
        shall require a system to provide for the transfer among health 
        benefit plans of appropriate information in determining 
        liability in cases in which benefits may be payable under two 
        or more such plans.
            (4) Form of inquiry.--Each verification system shall be 
        capable of accepting inquiries under this subsection from 
        health care providers (and, to the extent provided under 
        paragraph (3), from other health benefit plans) in a variety of 
        electronic and other forms, including--
                    (A) through electronic transmission of information 
                on the uniform health claims card (in a manner similar 
                to that for verification of credit card purchases),
                    (B) through the use of a touch-tone telephone line, 
                and
                    (C) through the use of a computer modem.
        The system shall also provide, for an additional fee, for the 
        acceptance of inquiries in a nonelectronic form.
            (5) Form of response.--Each such system shall be capable of 
        responding to such inquiries under this subsection in a variety 
        of electronic and other forms, including--
                    (A) through modem transmission of information,
                    (B) through computer synthesized voice 
                communication, and
                    (C) through transmission of information to a 
                facsimile (fax) machine.
        The system shall also provide, for an additional fee, for the 
        response to inquiries in a nonelectronic form.
            (6) Limitation on fees.--A health benefit plan may not 
        impose a fee for the acceptance or response to an inquiry under 
        this subsection except where the acceptance or response is in a 
        nonelectronic form.
            (7) Public domain software to providers.--The Secretary 
        shall provide for the development, and shall make available 
        without charge to health service providers and health benefit 
        plans, such computer software as will enable--
                    (A) such providers to make inquiries, and receive 
                responses, electronically respecting the eligibility 
                and benefits of an individual under health benefit 
                plans, and
                    (B) such plans to make inquiries, and receive 
                responses, electronically respecting liability of other 
                plans for the provision or payment of benefits.
            (8) Deadline.--The Secretary shall first establish the 
        standards under this subsection (and shall develop and make 
        available the software under paragraph (7)) by not later than 
        12 months after the date of the enactment of this Act.
    (d) Application to Medicare and Medicaid Programs.--
            (1) Medicare program.--The Secretary shall provide, in 
        regulations promulgated to carry out the medicare program, that 
        there is established an entitlement verification system that 
        meets the standards established under subsection (c), by not 
        later than the deadline specified in subsection (a)(2).
            (2) State medicaid plans.--As a condition for the approval 
        of a State plan under the medicaid program, effective for 
        calendar quarters beginning on or after the deadline specified 
        in subsection (a)(2), each such plan shall provide, in 
        accordance with regulations of the Secretary, that there is 
        established an entitlement verification system that meets the 
        standards established under subsection (c).

SEC. 323. REQUIREMENTS FOR UNIFORM CLAIMS AND ELECTRONIC CLAIMS DATA 
              SET.

    (a) Requirements.--
            (1) Submission of claims.--Each health service provider 
        that furnishes services in the United States for which payment 
        may be made under a health benefit plan shall submit any claim 
        for payment for such services only in a form and manner 
        consistent with standards established under subsection (c).
            (2) Acceptance of claims.--A health benefit plan may not 
        reject a claim for payment under the plan on the basis of the 
        form or manner in which the claim is submitted if the claim is 
        submitted in accordance with the standards established under 
        subsection (c).
            (3) Effective date.--This subsection shall apply to claims 
        for services furnished on or after the date that is 6 months 
        after the date standards are established under subsection (c).
    (b) Enforcement Through Civil Money Penalties.--
            (1) In general.--
                    (A) Providers.--In the case of a health service 
                provider that submits a claim in violation of 
                subsection (a)(1), the provider is subject to a civil 
                money penalty of not to exceed $100 (or, if greater, 
                the amount of the claim) for each such violation.
                    (B) Plans.--In the case of a health benefit plan 
                that rejects a claim in violation of subsection (a)(2), 
                the plan is subject to a civil money penalty of not to 
                exceed $100 (or, if greater, the amount of the claim) 
                for each such violation.
            (2) Process.--The provisions of section 1128A of the Social 
        Security Act (other than subsections (a) and (b)) shall apply 
        to a civil money penalty under paragraph (1) in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a) of such Act.
            (3) Sunset for penalty.--No civil money penalty may be 
        imposed under this subsection for submission (or rejection) of 
        any claim on or after the date that is 36 months after the 
        effective date specified in subsection (a)(3).
    (c) Standards Relating to Uniform Claims and Electronic Claims Data 
Set.--
            (1) Establishment of standards.--The Secretary shall 
        establish standards that--
                    (A) relate to the form and manner of submission of 
                claims for benefits under a health benefit plan, and
                    (B) define the data elements to be contained in a 
                uniform electronic claims data set to used with respect 
                to such claims.
            (2) Scope of information.--
                    (A) In general.--The standards under this 
                subsection are intended to cover substantially most 
                claims that are filed under health benefit plans. Such 
                information need not include all elements that may 
                potentially be required to be reported under 
                utilization review provisions of plans.
                    (B) Ensuring accountability for claims submitted 
                electronically.--In establishing such standards, the 
                Secretary, in consultation with appropriate agencies, 
                shall include such methods of ensuring provider 
                responsibility and accountability for claims submitted 
                electronically that are designed to control fraud and 
                abuse in the submission of such claims.
                    (C) Components.--In establishing such standards the 
                Secretary shall--
                            (i) with respect to data elements, define 
                        data fields, formats, and medical nomenclature, 
                        and plan benefit and insurance information;
                            (ii) develop a single, uniform coding 
                        system for diagnostic and procedure codes; and
                            (iii) provide for standards for the uniform 
                        electronic transmission of such elements.
            (3) Coordination with standards for electronic medical 
        records.--In establishing standards under this subsection, the 
        Secretary shall assure that--
                    (A) the development of such standards is 
                coordinated with the development of the standards for 
                electronic medical records under section 324, and
                    (B) the coding of data elements under the uniform 
                electronic claims data set and the coding of the same 
                elements in the uniform hospital clinical data set are 
                consistent.
            (4) Use of task forces.--In adopting standards under this 
        subsection--
                    (A) the Secretary shall take into account the 
                recommendations of current task forces, including at 
                least the Workgroup on Electronic Data Interchange, 
                National Uniform Billing Committee, the Uniform Claim 
                Task Force, and the Computer-based Patient Record 
                Institute, and
                    (B) the Secretary shall provide that the electronic 
                transmission standards are consistent, to the extent 
                practicable, with the applicable standards established 
                by the Accredited Standards Committee X-12 of the 
                American National Standards Institute.
            (5) Uniform, unique provider identification codes.--In 
        establishing standards under this subsection--
                    (A) the Secretary shall provide for a unique 
                identifier code for each health service provider that 
                furnishes services for which a claim may be submitted 
                under a health benefit plan, and
                    (B) in the case of a provider that has a unique 
                identifier issued for purposes of the medicare program, 
                the code provided under subparagraph (A) shall be the 
                same as such unique identifier.
            (6) Public domain software to providers.--The Secretary 
        shall provide for the development, and shall make available 
        without charge to health service providers, such computer 
        software as will enable the providers to submit claims and to 
        receive verification of claims status electronically.
            (7) Standards for paper claims.--The standards shall 
        provide for a uniform paper claims form which is consistent 
        with data elements required for the submission of claims 
        electronically.
            (8) Standards for claims for clinical laboratory tests.--
        The standards shall provide that claims for clinical laboratory 
        tests for which benefits are provided under a health benefit 
        plan shall be submitted directly by the person or entity that 
        performed (or supervised the performance of) the tests to the 
        plan in a manner consistent with (and subject to such 
        exceptions as are provided under) the requirement for direct 
        submission of such claims under the medicare program.
            (9) Deadline.--The Secretary shall first provide for the 
        standards for the uniform claims under this subsection (and 
        shall develop and make available the software under paragraph 
        (6)) by not later than 1 year after the date of the enactment 
        of this Act.
    (d) Use Under Medicare and Medicaid Programs.--
            (1) Requirement for providers.--In the case of a health 
        service provider that submits a claim for services furnished 
        under the medicare program or medicaid program in violation of 
        subsection (a)(1), no payment shall be made under such program 
        for such services.
            (2) Requirements of intermediaries and carriers under 
        medicare program.--The Secretary shall provide, in regulations 
        promulgated to carry out title XVIII of the Social Security 
        Act, that the claims process provided under that title is 
        modified to the extent required to conform to the standards 
        established under subsection (c).
            (3) Requirements of state medicaid plans.--As a condition 
        for the approval of State plans under the medicaid program, 
        effective as of the effective date specified in subsection 
        (a)(3), each such plan shall provide, in accordance with 
        regulations of the Secretary, that the claims process provided 
        under the plan is modified to the extent required to conform to 
        the standards established under subsection (c).

SEC. 324. ELECTRONIC MEDICAL RECORDS AND REPORTING.

    (a) Standards for Electronic Medical Records for Hospitals.--
            (1) Promulgation of standards.--
                    (A) In general.--Between July 1, 1994, and January 
                1, 1995, the Secretary shall promulgate standards 
                described in paragraph (2) for hospitals concerning 
                electronic medical records.
                    (B) Revision.--The Secretary may from time to time 
                revise the standards promulgated under this paragraph.
            (2) Contents of standards.--The standards promulgated under 
        paragraph (1) shall include at least the following:
                    (A) A definition of a uniform hospital clinical 
                data set, including a definition of the set of 
                comprehensive data elements, for use by utilization and 
                quality control peer review organizations.
                    (B) Standards for an electronic patient care 
                information system with data obtained at the point of 
                care.
                    (C) A specification of, and manner of presentation 
                of, the individual data elements of the set and system 
                under this paragraph.
                    (D) Standards concerning the transmission of 
                electronic medical data.
                    (E) Standards relating to confidentiality of 
                patient-specific information, which include the 
                physical security of electronic data and the use of 
                keys, passwords, encryption, and other means to ensure 
                the protection of the confidentiality and privacy of 
                electronic data.
            (3) Coordination with standards for uniform electronic 
        claims data set.--In establishing standards under this 
        subsection, the Secretary shall assure that--
                    (A) the development of such standards is 
                coordinated with the development of the standards for 
                the uniform electronic claims data set under section 
                323, and
                    (B) the coding of data elements under the uniform 
                hospital clinical data set and the coding of the same 
                elements under the uniform electronic claims data set 
                are consistent.
            (4) Consultation.--in establishing standards under this 
        subsection, the Secretary shall--
                    (A) consult with the American National Standards 
                Institute, hospitals, health benefit plans, and other 
                interested parties, and
                    (B) take into consideration, in developing 
                standards under paragraph (2)(A), the data set used by 
                the utilization and quality control peer review program 
                under part B of title XI of the Social Security Act.
    (b) Requirement for Application of Electronic Records Standards to 
Hospitals.--
            (1) As condition of medicare participation.--As of January 
        1, 1996, each hospital, as a requirement of each participation 
        agreement under section 1866 of the Social Security Act, shall, 
        in accordance with the standards promulgated under subsection 
        (a)(1)--
                    (A) maintain clinical data included in the uniform 
                hospital clinical data set under subsection (a)(2)(A) 
                in electronic form on all inpatients,
                    (B) upon request of the Secretary or of a 
                utilization and quality control peer review 
                organization (with which the Secretary has entered into 
                a contract under part B of title XI of such Act), 
                transmit electronically data requested from such data 
                set, and
                    (C) upon request of the Secretary, or of a fiscal 
                intermediary or carrier, transmit electronically any 
                data (with respect to a claim) from such data set.
            (2) Application of presentation and transmission standards 
        to electronic transmission to federal agencies.--Effective 
        January 1, 1996, if a hospital is required under a Federal 
        program to transmit a data element that is subject to a 
        standard, promulgated under subsection (a)(1), described in 
        subparagraph (C) or (D) of subsection (a)(2), the head of the 
        Federal agency responsible for such program (if not otherwise 
        authorized) is authorized to require the provider to present 
        and transmit the data element electronically in accordance with 
        such a standard.
    (c) Limitation on Data Requirements Where Standards In Effect.--
            (1) In general.--On or after January 1, 1996, a health 
        benefit plan may not require, for the purpose of utilization 
        review or as a condition of providing benefits or making 
        payments under the plan, that a hospital--
                    (A) provide any data element not in the uniform 
                hospital clinical data set specified under the 
                standards promulgated under subsection (a), or
                    (B) transmit or present any such data element in a 
                manner inconsistent with such standards applicable to 
                such transmission or presentation.
            (2) Compliance.--The Secretary may impose a civil money 
        penalty on any health benefit plan that fails to comply with 
        paragraph (1) in an amount not to exceed $100 for each such 
        failure. The provisions of section 1128A of the Social Security 
        Act (other than the first sentence of subsection (a) and other 
        than subsection (b)) shall apply to a civil money penalty under 
        this paragraph in the same manner as such provisions apply to a 
        penalty or proceeding under section 1128A(a) of such Act.
            (3) Application to medicare program.--Effective as of 
        January 1, 1996, neither the Secretary, nor any carrier or 
        fiscal intermediary, nor any utilization and quality control 
        peer review organization may require, for the purpose of 
        utilization review or as a condition of providing benefits or 
        making payments under the medicare program, that a hospital--
                    (A) provide any data element not in the uniform 
                hospital clinical data set specified under the 
                standards promulgated under subsection (a), or
                    (B) transmit or present any such data element in a 
                manner inconsistent with such standards applicable to 
                such transmission or presentation.
            (4) Application to medicaid program.--As a condition for 
        the approval of State plans under the medicaid program and in 
        accordance with regulations of the Secretary, effective as of 
        January 1, 1996, each such plan may not require that a 
        hospital, for the purpose of utilization review or as a 
        condition of providing benefits or making payments under the 
        plan--
                    (A) provide any data element not in the uniform 
                hospital clinical data set specified under the 
                standards promulgated under subsection (a), or
                    (B) transmit or present any such data element in a 
                manner inconsistent with such standards applicable to 
                such transmission or presentation.
    (d) Preemption of State Quill Pen Laws.--
            (1) In general.--Any provision of State law that requires 
        medical or health insurance records (including billing 
        information) to be maintained in written, rather than 
        electronic, form shall be deemed to be satisfied if the records 
        are maintained in an electronic form that meets standards 
        established by the Secretary under paragraph (2).
            (2) Secretarial authority.--Not later than 1 year after the 
        the date of the enactment of this Act, the Secretary shall 
        issue regulations to carry out paragraph (1). The regulations 
        shall provide for an electronic substitute that is in the form 
        of a unique identifier (assigned to each authorized individual) 
        that serves the functional equivalent of a signature. The 
        regulations may provide for such exceptions to paragraph (1) as 
        the Secretary determines to be necessary to prevent fraud and 
        abuse, to prevent the illegal distribution of controlled 
        substances, and in such other cases as the Secretary deems 
        appropriate.
            (3) Effective date.--Paragraph (1) shall take effect on the 
        first day of the first month that begins more than 30 days 
        after the date the Secretary issues the regulations referred to 
        in paragraph (2).

SEC. 325. UNIFORM HOSPITAL COST REPORTING.

    Each hospital, as a requirement under a participation agreement 
under section 1866(a) of the Social Security Act for each cost 
reporting period beginning during or after fiscal year 1993, shall 
provide for the reporting of information to the Secretary with respect 
to any hospital care provided in a uniform manner consistent with 
standards established by the Secretary to carry out section 4007(c) of 
the Omnibus Budget Reconciliation Act of 1987 and in an electronic form 
consistent with standards established by Secretary.

SEC. 326. DEFINITIONS.

    (a) Health Benefit Plan.--In this subtitle:
            (1) In general.--The term ``health benefit plan'' means, 
        except as provided in paragraphs (2) through (4), any public or 
        private entity or program that provides for payments for health 
        care services, including--
                    (A) a group health plan (as defined in section 
                5000(b)(1) of the Internal Revenue Code of 1986), and
                    (B) any other health insurance arrangement, 
                including any arrangement consisting of a hospital or 
                medical expense incurred policy or certificate, 
                hospital or medical service plan contract, or health 
                maintenance organization subscriber contract.
        Such term includes a qualified health plan under title XXI of 
        the Social Security Act, the public health plan under title 
        XXII of such Act, and the medicare program under title XVIII of 
        such Act.
            (2) Plans excluded.--Such term does not include--
                    (A) accident-only, credit, or disability income 
                insurance;
                    (B) coverage issued as a supplement to liability 
                insurance;
                    (C) an individual making payment on the 
                individual's own behalf (or on behalf of a relative or 
                other individual) for deductibles, coinsurance, or 
                services not covered under a health benefit plan; and
                    (D) such other plans as the Secretary may 
                determine, because of the limitation of benefits to a 
                single type or kind of health care, such as dental 
                services, or other reasons should not be subject to the 
                requirements of this section.
            (3) Plans included.--Such term includes--
                    (A) worker's compensation or similar insurance, and
                    (B) automobile medical-payment insurance.
            (4) Treatment of direct federal provision of services.--
        Such term does not include a Federal program that provides 
        directly for the provision of health services to beneficiaries.
    (b) Health Service Provider.--In this subtitle, the term ``health 
service provider'' includes a provider of services (as defined in 
section 1861(u) of the Social Security Act), physician, supplier, and 
other person furnishing health care services.
    (c) Secretary.--In this subtitle, the term ``Secretary'' means 
Secretary of Health and Human Services.

                     Subtitle C--Malpractice Reform

SEC. 331. MALPRACTICE REFORM.

    (a) Study by Physician Payment Review Commission.--The Physician 
Payment Review Commission shall conduct a study of--
            (1) the need for reforms with respect to medical 
        malpractice liability claims, including the use of practice 
        guidelines developed by the Agency for Health Care Policy and 
        Research in such reforms, and
            (2) the impact of such reforms on--
                    (A) expenditures for health care services,
                    (B) access to such services,
                    (C) the quality of such services, and
                    (D) access of injured patients to the medical 
                malpractice system.
    (b) Report.--Not later than March 31, 1994, the Commission shall 
submit a report to Congress on the study conducted under subsection (a) 
and shall include in the report such recommendations as the Commission 
considers appropriate.

                TITLE IV--GROUP HEALTH INSURANCE REFORM

SEC. 401. EXCISE TAX ON PREMIUMS RECEIVED ON HEALTH INSURANCE POLICIES 
              WHICH DO NOT MEET CERTAIN REQUIREMENTS.

    (a) In General.--Chapter 47 of the Internal Revenue Code of 1986 
(relating to taxes on group health plans), as amended by section 101 of 
this Act, is further amended by adding at the end thereof the following 
new section:

``SEC. 5000B. FAILURE TO SATISFY CERTAIN STANDARDS FOR HEALTH 
              INSURANCE.

    ``(a) General Rule.--In the case of any person issuing applicable 
accident and health insurance contracts, there is hereby imposed a tax 
on the failure of such person to meet at any time during any taxable 
year the applicable requirements of title XXIII of the Social Security 
Act. The Secretary of Health and Human Services shall determine whether 
any contract meets the requirements of such title.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of tax imposed by subsection 
        (a) by reason of 1 or more failures during a taxable year shall 
        be equal to 50 percent of the gross premiums received during 
        such taxable year with respect to all accident and health 
        insurance contracts issued by the person on whom such tax is 
        imposed.
            ``(2) Gross premiums.--For purposes of paragraph (1), gross 
        premiums shall include any consideration received with respect 
        to any accident and health insurance contract.
    ``(c) Limitation on Tax.--
            ``(1) Tax not to apply where failure not discovered 
        exercising reasonable diligence.--No tax shall be imposed by 
        subsection (a) with respect to any failure for which it is 
        established to the satisfaction of the Secretary that the 
        person on whom the tax is imposed did not know, and exercising 
        reasonable diligence would not have known, that such failure 
        existed.
            ``(2) Tax not to apply where failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) with respect 
        to any failure if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period beginning on the 1st date any of the persons on 
                whom the tax is imposed knew, or exercising reasonable 
                diligence would have known, that such failure existed.
            ``(3) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a).
    ``(d) Liability for Tax.--The person issuing the applicable 
accident and health contract with respect to which a failure occurs 
shall be liable for the tax imposed by subsection (a).
    ``(e) Definitions.--For purposes of this section--
            ``(1) In general.--The term `applicable accident and health 
        insurance contract' means a contract under which a person 
        authorized under applicable State insurance law provides a 
        health insurance plan or arrangement to any group consisting of 
        more than 2 individuals. Such term does not include any self-
        insured plan of an employer and does not include a qualified 
        health maintenance organization (as defined in section 1310(d) 
        of the Public Health Service Act).
            ``(2) Certain contracts not covered.--The term `applicable 
        accident and health insurance contract' does not include any 
        contract--
                    ``(A) which provides for accident only, dental 
                only, or disability only coverage,
                    ``(B) which provides coverage as a supplement to 
                liability insurance,
                    ``(C) which provides insurance arising out of a 
                workmens' compensation or similar law, or automobile 
                medical-payment insurance, or
                    ``(D) which provides insurance which is required by 
                law to be contained under any self-insured plan of an 
                employer.''.
    (b) Clerical Amendments.--The table of sections for such chapter 47 
is amended by adding at the end thereof the following new item:

                              ``Sec. 5000B. Failure to satisfy certain 
                                        standards for health 
                                        insurance.''

SEC. 402. GROUP HEALTH INSURANCE STANDARDS.

    The Social Security Act is amended by adding at the end the 
following new title:

            ``TITLE XXIII--GROUP HEALTH INSURANCE STANDARDS

                ``Part 1--General Standards; Definitions

``SEC. 2301. APPLICATION OF REQUIREMENTS TO EMPLOYMENT-RELATED HEALTH 
              PLANS.

    ``(a) Approval By Secretary Required.--
            ``(1) In general.--No employment-related health plan may be 
        issued on or after the effective date specified in subsection 
        (d) (and no new contract may be offered under such plan with 
        respect to any employer beginning on or after such effective 
        date) unless the plan has been certified by the Secretary (in 
        accordance with such procedures as the Secretary establishes) 
        as meeting the applicable standards established under section 
        2302 by such effective date.
            ``(2) Plan disapproved.--If the Secretary determines that 
        an employment-related health plan does not meet the applicable 
        requirements of this title on or after such effective date, no 
        coverage may be provided under the plan to individuals not 
        enrolled as of the date of the determination and the plan may 
        not be continued for plan years beginning after the date of 
        such determination until the Secretary determines that such 
        plan is in compliance with such requirements.
    ``(b) Sanctions.--
            ``(1) Tax.--For application of excise tax in the case of a 
        nonconforming plan, see section 5000B of the Internal Revenue 
        Code of 1986.
            ``(2) Notice to employer in the case of insured plans.--If 
        tax is imposed under section 5000B of the Internal Revenue Code 
        of 1986, the Secretary of the Treasury shall provide for notice 
        to be provided to each employer which meets the requirement of 
        section 2101 through coverage under the plan of the imposition 
        of the tax.
            ``(3) Loss of status as qualified employer health plan.--
                    ``(A) In general.--If an employment-related health 
                plan is determined to be in violation of subsection (a) 
                and is not determined to have come into compliance with 
                the applicable standards within 6 months after the date 
                of the initial determination of such a violation, the 
                plan shall no longer be treated as a qualified employer 
                health plan under title XXI as of the end of such 6-
                month period.
                    ``(B) No enforcement of insurance contracts.--In 
                the case of an employer that is required, under part A 
                of title XXI, to provide enrollment under a qualified 
                employer health plan and that meets such requirement 
                through an insured plan that is determined to be in 
                violation of subsection (a)--
                            ``(i) if such plan is not brought into 
                        compliance within 30 days after the date of the 
                        violation, the employer may terminate by notice 
                        the contract with the plan and is not liable 
                        for payment of any additional amounts under the 
                        plan, and
                            ``(ii) if such plan no longer qualifies as 
                        a qualified employer health plan, such contract 
                        shall be terminated and the employer is not 
                        liable for payment of any amounts for periods 
                        in which the plan no longer qualifies as a 
                        qualified employer health plan.
    ``(d) Effective Date.--The effective date specified in this 
subsection is January 1, 1994.

``SEC. 2302. ESTABLISHMENT OF STANDARDS.

    ``(a) Establishment of Standards.--The Secretary shall develop and 
publish, by not later than October 1, 1993, specific standards to 
implement the requirements of this title and to be applied under 
section 5000B of the Internal Revenue Code of 1986.
    ``(b) Telephone Information System.--The Secretary shall provide 
for the establishment of a toll-free telephone information and 
complaint system which provides for--
            ``(1) a system for the receipt and disposition of consumer 
        complaints or inquiries regarding compliance of health plans 
        with the requirements of this title, and
            ``(2) information to small employers about carriers that 
        offer small employer health plans in the area covered by the 
        regulatory authority.
Such system shall provide for the recording of consumer complaints in 
accordance with a uniform methodology recognized by the Secretary.
    ``(c) Application to ERISA.--The Secretary shall consult with the 
Secretary of Labor concerning the application of the requirements of 
this part to employee welfare benefit plans under title I of the 
Employee Retirement Income Security Act of 1974.

``SEC. 2303. REQUIREMENTS APPLICABLE TO ALL EMPLOYMENT-RELATED HEALTH 
              PLANS.

    ``(a) No Discrimination Based on Health Status for Certain 
Services.--Except as provided under subsection (b), an employment-
related health plan may not deny, limit, or condition the coverage 
under (or benefits of) the plan with respect to required health 
services based on the health status, claims experience, receipt of 
health care, medical history, or lack of evidence of insurability, of 
an individual.
    ``(b) Treatment of Pre-existing Condition Exclusions for All 
Services.--The provisions of section 2154(b) (relating to treatment of 
pre-existing condition exclusion) shall apply to employer-related 
health plans under this section in the same manner as they apply to 
qualified health plans under that section.

``SEC. 2304. DEFINITIONS.

    ``(a) Health Plan and Other Definitions Relating to Health Plans.--
In this title:
            ``(1) Health plan.--
                    ``(A) In general.--The term `health plan' means--
                            ``(i) a group health plan (as defined in 
                        section 605 of the Employee Retirement Income 
                        Security Act of 1974), and
                            ``(ii) any other health insurance 
                        arrangement, including any arrangement (other 
                        than a group health plan) consisting of a 
                        hospital or medical expense incurred policy or 
                        certificate, hospital or medical service plan 
                        contract, health maintenance organization 
                        subscriber contract;
                but does not include a qualified health maintenance 
                organization (as defined in section 1310(d) of the 
                Public Health Service Act).
                    ``(B) Exclusions.--
                            ``(i) Certain types of insurance.--Such 
                        term does not include--
                                    ``(I) accident-only, credit, or 
                                disability income insurance,
                                    ``(II) coverage issued as a 
                                supplement to liability insurance,
                                    ``(III) worker's compensation or 
                                similar insurance, or
                                    ``(IV) automobile medical-payment 
                                insurance.
                            ``(ii) Public health plan.--Such term does 
                        not include the public health plan under title 
                        XXII.
            ``(2) Employment-related health plan.--The term 
        `employment-related health plan' means any employee welfare 
        benefit plan (as defined in section 3(1) of the Employee 
        Retirement Income Security Act of 1974) that is a health plan.
            ``(3) Insured employment-related health plan.--The term 
        `insured employment-related health plan' means an employment-
        related health plan that has been provided by a person 
        authorized under applicable State insurance law, and does not 
        include any self-insured employment-related health plan.
            ``(4) Self-insured employment-related health plan.--The 
        term `self-insured employment-related health plan' means an 
        employment-related health plan in which the employer or 
        employment-related group assumes the underwriting risk for the 
        plan (whether or not there is any reinsurance or similar 
        mechanism to underwrite a portion of that risk).
            ``(5) Small employer health plan.--The term `small employer 
        health plan' means an employment-related health plan insofar as 
        it offers benefits with respect to any small employer, as 
        defined in subsection (c)(4), or the employees of a small 
        employer.
    ``(b) Carrier; Health Maintenance Organization; and Other 
Definitions Relating to Carriers.--In this part:
            ``(1) Carrier.--The term `carrier' means any person that 
        offers a health plan, whether through insurance or otherwise, 
        including a licensed insurance company, a prepaid hospital or 
        medical service plan, a health maintenance organization, a 
        self-insurer carrier, and a multiple employer welfare 
        arrangement.
            ``(2) Health maintenance organization.--The term `health 
        maintenance organization' has the meaning given the term 
        `eligible organization' in section 1876(b).
            ``(3) Self-insurer carrier.--The term `self-insurer 
        carrier' means a carrier that is not a licensed insurance 
        company, a prepaid hospital or medical service plan, or a 
        health maintenance organization, that offers a health plan 
        directly with respect to an employment-related group.
            ``(4) Small employer carrier.--The term `small employer 
        carrier' means any carrier which offers small employer health 
        plans.
    ``(c) General Definitions.--In this part:
            ``(1) Community.--The term `community' has the meaning 
        given such term in section 2131(e).
            ``(2) Full-time employee.--The term `full-time employee' 
        has the meaning given such term in section 2181(b)(1).
            ``(3) Reference premium rate.--The term `reference premium 
        rate' means, for a rating period in a community, the lowest 
        premium rate charged or which could have been charged by the 
        small employer carrier to small employers under a rating system 
        in the community for health plans with the same or similar 
        coverage. The reference premium rate is determined without 
        regard to any adjustment for age or sex described in section 
        2312(c).
            ``(4) Small employer.--The term `small employer' has the 
        meaning given such term in section 2181(c)(1) and also includes 
        a medium-size employer (as defined in section 2181(c)(2)).
            ``(5) State.--The term `State' means the 50 States and the 
        District of Columbia.

``SEC. 2305. NOTICE OF PLANS MEETINGS REQUIREMENTS.

    ``The Secretary of Health and Human Services shall publish 
periodically the names and issuers of insured employment-related small 
employer health plans that have been found to meet the applicable 
requirements of this title.

            ``Part 2--Small Employer Health Insurance Reform

``SEC. 2311. ENROLLMENT PRACTICE AND GUARANTEED RENEWABILITY 
              REQUIREMENTS FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Registration.--
            ``(1) In general.--Each small employer carrier (as defined 
        in section 2304(b)(5)) shall register with the Secretary.
            ``(2) No preemption of state information requirements.--
        Nothing in paragraph (1) shall be construed as preventing the 
        applicable regulatory authority in a State from requiring, in 
        the case of carriers that are not self-insurance carriers, such 
        additional information in conjunction with, or apart from, the 
        registration required under paragraph (1) as the applicable 
        regulatory authority may be authorized to require under State 
        law.
    ``(b) Guaranteed Issue.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, a carrier that offers a health plan to small 
        employers located in a community must offer the same plan to 
        any other small employer located in the community. Such 
        requirement shall apply on a continuous, year-round basis.
            ``(2) Treatment of health maintenance organizations.--
                    ``(A) Geographic limitations.--A health maintenance 
                organization may deny enrollment to employees (and 
                family members) of a small employer if the employees 
                are located outside the service area of the 
                organization, but only if such denial is applied 
                uniformly without regard to health status or 
                insurability.
                    ``(B) Size limits.--A health maintenance 
                organization may apply to the Secretary to cease 
                enrolling new small employer groups in its small 
                employer health plan (or in a geographic area served by 
                the plan) if--
                            ``(i) it ceases to enroll any new employer 
                        groups, and
                            ``(ii) it can demonstrate that its 
                        financial or administrative capacity to serve 
                        previously enrolled groups and individuals (and 
                        additional individuals who will be expected to 
                        enroll because of affiliation with such 
                        previously enrolled groups) will be impaired if 
                        it is required to enroll new employer groups.
            ``(3) Grounds for refusal to issue or renew.--A carrier may 
        refuse to issue or renew or terminate a plan only for--
                    ``(A) nonpayment of premiums, and
                    ``(B) fraud or misrepresentation.
    ``(c) Minimum Plan Period.--A carrier may not offer to, or issue 
with respect to, a small employer a small employer health plan with a 
term of less than 12 months.
    ``(d) Notices and Renewal Periods.--
            ``(1) Notice and specification of rates and administrative 
        changes.--
                    ``(A) Notice.--The small employer carrier of a 
                small employer health plan shall provide for notice, at 
                least 30 days before the date of expiration of the 
                health plan, of the terms for renewal of the plan. 
                Except with respect to rates and administrative 
                changes, the terms of renewal (including benefits) 
                shall be the same as the terms of issuance.
                    ``(B) Renewal rates same as issuance rates.--The 
                carrier may change the terms for such renewal, but the 
                premium rates charged with respect to such renewal 
                shall be the same as that for a new issue.
            ``(2) Period of renewal.--The period of renewal of each 
        small employer health plan shall be for a period of not less 
        than 12 months.

``SEC. 2312. RATING PRACTICES FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Cohesive Rating System and Actuarial Certification.--
            ``(1) In general.--The premiums (including reference 
        premium rate, as defined in section 2304(c)(3)) and age-sex 
        adjustments under subsection (c) for all small employer health 
        plans of the same entity shall--
                    ``(A) be established based on a single cohesive 
                rating system which is applied consistently for all 
                employer groups and is designed not to treat groups, 
                after January 1, 1994, differently based on health 
                status or risk status; and
                    ``(B) be actuarially certified annually.
            ``(2) Actuarial certified defined.--For purposes of 
        paragraph (1)(B), a plan is considered to be `actuarially 
        certified' if there is a written statement, by a member of the 
        American Academy of Actuaries or other individual acceptable to 
        the Secretary that a small employer carrier is in compliance 
        with this section, based upon the individual's examination, 
        including a review of the appropriate records and of the 
        actuarial assumptions and methods utilized by the carrier in 
        establishing premium rates for applicable health plans.
    ``(b) Use of Community-Rated Reference Premium Rates.--The 
reference premium rate charged for a small employer health plan with 
similar benefits in a community for a type of family enrollment 
(described in subsection (d)) shall be the same for all small 
employers.
    ``(c) Age and Sex Adjustment to Community-Rating.--
            ``(1) In general.--Subject to paragraph (2), a small 
        employer health plan may provide for an adjustment to the 
        reference premium rate based on age and gender of covered 
        individuals. Any such adjustment shall be applied consistently 
        to all small employers.
            ``(2) Limitation on adjustment.--The adjustment under 
        paragraph (1) may not result, with respect to small employer 
        health plans with similar benefits in a community, in a premium 
        rate for the most expensive age-sex group exceeding 133 percent 
        of the premium rate for the least expensive age-sex group.
    ``(d) Types of Family Enrollment.--
            ``(1) In general.--Each small employer health plan shall 
        permit enrollment of (and shall compute premiums separately 
        for) individuals based on each of the following beneficiary 
        classes:
                    ``(A) 1 adult.
                    ``(B) A married couple without children.
                    ``(C) A married couple with 1 or more children, or 
                1 adult with 1 or more children.
            ``(2) Application of definitions.--The definitions in 
        section 2282 shall apply for purposes of this subsection.

``SEC. 2313. BASIC BENEFIT PACKAGE FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Benefits and Cost-sharing in Qualified Employer Health 
Plans.--Except as provided in subsection (b), no small employer health 
plan may be issued to a small employer by a carrier unless--
            ``(1) the plan provides for benefits for all required 
        health services (as defined in section 2211(a)(2));
            ``(2) the plan does not impose cost-sharing with respect to 
        required health services in excess of the deductibles and 
        coinsurance permitted under title XXII with respect to such 
        services (not taking into account any low-income assistance 
        under part E of such title); and
            ``(3) the carrier makes available to the employer a small 
        employer health plan that, subject to subsection (b), only 
        provides the benefits for required health services and the 
        maximum cost-sharing consistent with paragraphs (1) and (2).
    ``(b) Exceptions for HMO's.--Subsection (a)(3) shall not apply to 
the plan of a health maintenance organization.

``SEC. 2314. MISCELLANEOUS DISCLOSURE AND RECORD-KEEPING REQUIREMENTS 
              FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Disclosure to Employers.--
            ``(1) General disclosure.--Each small employer carrier 
        shall disclose to each small employer before issuing a small 
        employer health plan the following:
                    ``(A) The availability (pursuant to the requirement 
                of section 2313(a)(3) of a plan including only basic 
                benefits.
                    ``(B) The limits, imposed under section 2312, on 
                the premiums permitted to be charged for such plans.
                    ``(C) The rights of guaranteed issue provided under 
                section 2311.
        Such disclosure shall be in addition to any disclosure required 
        generally of qualified health plans under section 2158(a).
            ``(2) Standard format.--The disclosure under paragraph (1) 
        shall be made in a uniform format established by the Secretary.
    ``(b) Information Filed.--
            ``(1) In general.--Each small employer carrier shall 
        disclose to the Secretary, in a manner specified by the 
        Secretary, information concerning applicable premiums for small 
        employer health plans.
            ``(2) Additional information.--Nothing in this subsection 
        shall be construed as limiting the information which a State 
        may require to be reported by small employer carriers (other 
        than self-insured carriers).

``SEC. 2315. PAYMENT OF COMMISSIONS.

    ``A small employer carrier may not vary the remuneration paid a 
broker for the sale or renewal of any small employer health plan based, 
directly or indirectly, on the claims experience associated with the 
group to which the plan was sold.

``SEC. 2316. NONAPPLICATION IN PUERTO RICO AND THE TERRITORIES.

    ``This part shall not apply outside the 50 States or the District 
of Columbia.''.

                  TITLE V--CHANGES IN MEDICARE PROGRAM

SEC. 501. COVERAGE OF COLORECTAL SCREENING.

    (a) In General.--Section 1834 of the Social Security Act (42 U.S.C. 
1395m), as amended by section 4163(b)(2) of the Omnibus Budget 
Reconciliation Act of 1990 (in this title referred to as ``OBRA-
1990''), is amended by inserting after subsection (c) the following new 
subsection:
    ``(d) Frequency and Payment Limits for Screening Fecal-Occult Blood 
Tests and Screening Flexible Sigmoidoscopies.--
            ``(1) Screening fecal-occult blood tests.--
                    ``(A) Payment limit.--In establishing fee schedules 
                under section 1833(h) with respect to screening fecal-
                occult blood tests provided for the purpose of early 
                detection of colon cancer, except as provided by the 
                Secretary under paragraph (3)(A), the payment amount 
                established for tests performed--
                            ``(i) in 1994 shall not exceed $5; and
                            ``(ii) in a subsequent year, shall not 
                        exceed the limit on the payment amount 
                        established under this subsection for such 
                        tests for the preceding year, adjusted by the 
                        applicable adjustment under section 1833(h) for 
                        tests performed in such year.
                    ``(B) Frequency limit.--Subject to revision by the 
                Secretary under paragraph (3)(B), no payment may be 
                made under this part for a screening fecal-occult blood 
                test provided to an individual for the purpose of early 
                detection of colon cancer--
                            ``(i) if the individual is under 50 years 
                        of age; or
                            ``(ii) if the test is performed within the 
                        11 months after a previous screening fecal-
                        occult blood test.
            ``(2) Screening flexible sigmoidoscopies.--
                    ``(A) Payment amount.--The Secretary shall 
                establish a payment amount under section 1848 with 
                respect to screening flexible sigmoidoscopies provided 
                for the purpose of early detection of colon cancer that 
                is consistent with payment amounts under such section 
                for similar or related services, except that such 
                payment amount shall be established without regard to 
                subsection (a)(2)(A) of such section.
                    ``(B) Frequency limit.--Subject to revision by the 
                Secretary under paragraph (3)(B), no payment may be 
                made under this part for a screening flexible 
                sigmoidoscopy provided to an individual for the purpose 
                of early detection of colon cancer--
                            ``(i) if the individual is under 50 years 
                        of age; or
                            ``(ii) if the procedure is performed within 
                        the 59 months after a previous screening 
                        flexible sigmoidoscopy.
            ``(3) Reductions in payment limit and revision of 
        frequency.--
                    ``(A) Reductions in payment limit.--The Secretary 
                shall review from time to time the appropriateness of 
                the amount of the payment limit established for 
                screening fecal-occult blood tests under paragraph 
                (1)(A). The Secretary may, with respect to tests 
                performed in a year after 1996, reduce the amount of 
                such limit as it applies nationally or in any area to 
                the amount that the Secretary estimates is required to 
                assure that such tests of an appropriate quality are 
                readily and conveniently available during the year.
                    ``(B) Revision of frequency.--
                            ``(i) Review.--The Secretary, in 
                        consultation with the Director of the National 
                        Cancer Institute, shall review periodically the 
                        appropriate frequency for performing screening 
                        fecal-occult blood tests and screening flexible 
                        sigmoidoscopies based on age and such other 
                        factors as the Secretary believes to be 
                        pertinent.
                            ``(ii) Revision of frequency.--The 
                        Secretary, taking into consideration the review 
                        made under clause (i), may revise from time to 
                        time the frequency with which such tests and 
                        procedures may be paid for under this 
                        subsection, but no such revision shall apply to 
                        tests or procedures performed before January 1, 
                        1997.
            ``(4) Limiting charges of nonparticipating physicians.--
                    ``(A) In general.--In the case of a screening 
                flexible sigmoidoscopy provided to an individual for 
                the purpose of early detection of colon cancer for 
                which payment may be made under this part, if a 
                nonparticipating physician provides the procedure to an 
                individual enrolled under this part, the physician may 
                not charge the individual more than the limiting charge 
                (as defined in subparagraph (B), or, if less, as 
                defined in section 1848(g)(2)).
                    ``(B) Limiting charge defined.--In subparagraph 
                (A), the term `limiting charge' means, 115 percent of 
                the payment limit established under paragraph (2)(A).
                    ``(C) Enforcement.--If a physician or supplier 
                knowingly and willfully imposes a charge in violation 
                of subparagraph (A), the Secretary may apply sanctions 
                against such physician or supplier in accordance with 
                section 1842(j)(2).''.
    (b) Conforming Amendments.--(1) Paragraphs (1)(D) and (2)(D) of 
section 1833(a) of such Act (42 U.S.C. 1395l(a)) are each amended by 
striking ``subsection (h)(1),'' and inserting ``subsection (h)(1) or 
section 1834(d)(1),''.
    (2) Section 1833(h)(1)(A) of such Act (42 U.S.C. 1395l(h)(1)(A)) is 
amended by striking ``The Secretary'' and inserting ``Subject to 
paragraphs (1) and (3)(A) of section 1834(d), the Secretary''.
    (3) Clauses (i) and (ii) of section 1848(a)(2)(A) of such Act (42 
U.S.C. 1395w-4(a)(2)(A)) are each amended by striking ``a service'' and 
inserting ``a service (other than a screening flexible sigmoidoscopy 
provided to an individual for the purpose of early detection of colon 
cancer)''.
    (4) Section 1862(a) of such Act (42 U.S.C. 1395y(a)) is amended--
            (A) in paragraph (1)--
                    (i) in subparagraph (E), by striking ``and'' at the 
                end,
                    (ii) in subparagraph (F), by striking the semicolon 
                at the end and inserting ``, and'', and
                    (iii) by adding at the end the following new 
                subparagraph:
            ``(G) in the case of screening fecal-occult blood tests and 
        screening flexible sigmoidoscopies provided for the purpose of 
        early detection of colon cancer, which are performed more 
        frequently than is covered under section 1834(d);''; and
            (B) in paragraph (7), by striking ``paragraph (1)(B) or 
        under paragraph (1)(F)'' and inserting ``subparagraphs (B), 
        (F), or (G) of paragraph (1)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to screening fecal-occult blood tests and screening flexible 
sigmoidoscopies performed on or after January 1, 1994.

SEC. 502. COVERAGE OF CERTAIN IMMUNIZATIONS.

    (a) In General.--Section 1861(s)(10) of the Social Security Act (42 
U.S.C. 1395x(s)(10)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``, subject to section 4071(b) of 
                the Omnibus Budget Reconciliation Act of 1987,'', and
                    (B) by striking ``; and'' and inserting a comma;
            (2) in subparagraph (B), by striking the semicolon at the 
        end and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(C) tetanus-diphtheria booster and its administration;''.
    (b) Limitation on Frequency.--Section 1862(a)(1) of such Act (42 
U.S.C. 1395y(a)(1)), as amended by section 502(b)(4)(A), is amended--
            (1) in subparagraph (F), by striking ``and'' at the end;
            (2) in subparagraph (G), by striking the semicolon at the 
        end and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(H) in the case of an influenza vaccine, which is 
        administered within the 11 months after a previous influenza 
        vaccine, and, in the case of a tetanus-diphtheria booster, 
        which is administered within the 119 months after a previous 
        tetanus-diphtheria booster;''.
    (c) Conforming Amendment.--Section 1862(a)(7) of such Act (42 
U.S.C. 1395y(a)(7)), as amended by section 502(b)(4)(B), is amended by 
striking ``or (G)'' and inserting ``(G), or (H)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to influenza vaccines and tetanus-diphtheria boosters 
administered on or after January 1, 1994.

SEC. 503. COVERAGE OF WELL-CHILD CARE.

    (a) In General.--Section 1861(s)(2) of the Social Security Act (42 
U.S.C. 1395x(s)(2)), as amended by section 4201(d)(1) of OBRA-1990, is 
amended--
            (1) by striking ``and'' at the end of subparagraph (O);
            (2) by striking the semicolon at the end of subparagraph 
        (P) and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
            ``(Q) well-child services (as defined in subsection 
        (ll)(1)) provided to an individual entitled to benefits under 
        this title who is under 19 years of age;''.
    (b) Services Defined.--Section 1861 of such Act (42 U.S.C. 1395x) 
is amended--
            (1) by redesignating the subsection (jj) added by section 
        4163(a)(2) of OBRA-1990 as subsection (kk); and
            (2) by inserting after subsection (kk) (as so redesignated) 
        the following new subsection:

                         ``well-child services

    ``(ll)(1) The term `well-child services' means well-child care, 
including routine office visits, routine immunizations (including the 
vaccine itself), routine laboratory tests, and preventive dental care, 
provided in accordance with the periodicity schedule established with 
respect to the services under paragraph (2).
    ``(2) The Secretary, in consultation with the American Academy of 
Pediatrics, the Advisory Committee on Immunization Practices, and other 
entities considered appropriate by the Secretary, shall establish a 
schedule of periodicity which reflects the appropriate frequency with 
which the services referred to in paragraph (1) should be provided to 
healthy children.''.
    (c) Conforming Amendments.--(1) Section 1862(a)(1) of such Act (42 
U.S.C. 1395y(a)(1)), as amended by sections 502(b)(4)(A) and 503(b), is 
amended--
            (A) in subparagraph (G), by striking ``and'' at the end;
            (B) in subparagraph (H), by striking the semicolon at the 
        end and inserting ``, and''; and
            (C) by adding at the end the following new subparagraph:
            ``(I) in the case of well-child services, which are 
        provided more frequently than is provided under the schedule of 
        periodicity established by the Secretary under section 
        1861(ll)(2) for such services;''.
    (2) Section 1862(a)(7) of such Act (42 U.S.C. 1395y(a)(7)), as 
amended by sections 502(b)(4)(B) and 503(c), is amended by striking 
``or (H)'' and inserting ``(H), or (I)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to well-child services provided on or after January 1, 1994.

SEC. 504. ANNUAL SCREENING MAMMOGRAPHY.

    (a) Annual Screening Mammography for Women Over Age 64.--Section 
1834(c)(2)(A) of the Social Security Act (42 U.S.C. 1395m(b)(2)(A)), as 
added by section 4163(b)(2) of OBRA-1990, is amended--
            (1) in clause (iv), by striking ``but under 65 years of 
        age,''; and
            (2) by striking clause (v).
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to screening mammography performed on or after January 1, 1994.

SEC. 505. DEMONSTRATION PROJECTS FOR COVERAGE OF OTHER PREVENTIVE 
              SERVICES.

    (a) Establishment.--The Secretary of Health and Human Services (in 
this title referred to as the ``Secretary'') shall establish and 
provide for the conduct of a series of ongoing demonstration projects 
under which the Secretary shall provide for coverage of the preventive 
services described in subsection (c) under the medicare program in 
order to determine--
            (1) the feasibility and desirability of expanding coverage 
        of medical and other health services under the medicare program 
        to include coverage of such services for all individuals 
        enrolled under part B of title XVIII of the Social Security 
        Act; and
            (2) appropriate methods for the delivery of those services 
        to medicare beneficiaries.
    (b) Sites for Project.--The Secretary shall provide for the conduct 
of the demonstration projects established under subsection (a) at the 
sites at which the Secretary conducts the demonstration program 
established under section 9314 of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 and at such other sites as the Secretary 
considers appropriate.
    (c) Services Covered Under Projects.--The Secretary shall cover the 
following services under the series of demonstration projects 
established under subsection (a):
            (1) Glaucoma screening.
            (2) Cholesterol screening and cholesterol-reducing drug 
        therapies.
            (3) Screening and treatment for osteoporosis, including 
        tests for bone-marrow density and hormone replacement therapy.
            (4) Screening services for pregnant women, including ultra-
        sound and clamydial testing and maternal serum alfa-protein.
            (5) One-time comprehensive assessment for individuals 
        beginning at age 65 or 75.
            (6) Other services considered appropriate by the Secretary.
    (d) Reports to Congress.--Not later than October 1, 1995, and every 
2 years thereafter, the Secretary shall submit a report to the 
Committee on Finance of the Senate and the Committee on Ways and Means 
and the Committee on Energy and Commerce of the House of 
Representatives describing findings made under the demonstration 
projects conducted pursuant to subsection (a) during the preceding 2-
year period and the Secretary's plans for the demonstration projects 
during the succeeding 2-year period.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated from the Federal Supplementary Medical Insurance Trust 
Fund for expenses incurred in carrying out the series of demonstration 
projects established under subsection (a) the following amounts:
            (1) $4,000,000 for fiscal year 1994.
            (2) $4,000,000 for fiscal year 1995.
            (3) $5,000,000 for fiscal year 1996.
            (4) $5,000,000 for fiscal year 1997.
            (5) $6,000,000 for fiscal year 1998.

SEC. 506. OTA STUDY OF PROCESS FOR REVIEW OF MEDICARE COVERAGE OF 
              PREVENTIVE SERVICES.

    (a) Study.--The Director of the Office of Technology Assessment (in 
this section referred to as the ``Director'') shall, subject to the 
approval of the Technology Assessment Board, conduct a study to develop 
a process for the regular review for the consideration of coverage of 
preventive services under the medicare program, and shall include in 
such study a consideration of different types of evaluations, the use 
of demonstration projects to obtain data and experience, and the types 
of measures, outcomes, and criteria that should be used in making 
coverage decisions.
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Director shall submit a report to the Committee on 
Finance of the Senate and the Committee on Ways and Means and the 
Committee on Energy and Commerce of the House of Representatives on the 
study conducted under subsection (a).

SEC. 507. PHASED-IN REQUIREMENT OF PART B ENROLLMENT.

    (a) In General.--Section 1811 of the Social Security Act (42 U.S.C. 
1395c) is amended by inserting ``(a)'' after ``1811.'' and by adding at 
the end the following new subsection:
    ``(b) Notwithstanding sections 226 and 226A and any other provision 
of this title, effective for services furnished on or after January 1, 
1997, payment may not be made under this part for items and services 
during any period in which the individual is not enrolled under part B 
or under a qualified employer health plan (as defined in section 
2121(a)). For purposes of the previous sentence, entitlement to 
benefits under this part (but for this subsection) shall not be 
considered enrollment in a qualified health plan.''.
    (b) Clarification of Coverage Period.--Section 1838(b) of such Act 
(42 U.S.C. 1395q(b)) is amended to read as follows:
    ``(b)(1) An individual's coverage period shall continue until the 
individual's enrollment is terminated by the filing of notice that the 
individual--
            ``(A) no longer wishes to participate in the insurance 
        program established by this part,
            ``(B) is covered under a qualified health plan, and
            ``(C) has notified the plan that the individual is entitled 
        to benefits under part A of this title.
    ``(2) The termination of coverage under paragraph (1) shall take 
effect at the close of the month following the month in which the 
notice is filed.
    ``(3) Such termination shall no longer be effective at such time as 
the individual is eligible to be enrolled under this part and is no 
longer covered under a qualified health plan.''.
    (c) Elimination of Late Enrollment Penalties.--
            (1) In general.--Section 1839 of such Act (42 U.S.C. 1395r) 
        is amended by striking subsection (b).
            (2) Conforming amendments.--(A) Section 1839(a)(2) of such 
        Act (42 U.S.C. 1395r(a)(2)) is amended--
                    (i) in subsection (a)(2), by striking ``subsections 
                (b) and (e)'' and inserting ``subsection (e)'', and
                    (ii) by striking subsection (d).
            (B) Section 1843(d)(1) of such Act (42 U.S.C. 1395v(d)(1)) 
        is amended by striking ``(without any increase under subsection 
        (b) thereof)''.
    (d) Effective Date.--The amendments made by subsections (b) and (c) 
shall take effect January 1, 1997, and shall apply to premiums 
beginning with such January.

SEC. 508. CHANGES IN PARTICIPATION AGREEMENTS.

    (a) Providers of Services.--Section 1866(a)(1) of the Social 
Security Act (42 U.S.C. 1395cc(a)(1)) is amended--
            (1) by striking ``and'' at the end of subparagraph (P),
            (2) by striking the period at the end of subparagraph (Q) 
        and inserting ``, and'', and
            (3) by inserting after subparagraph (Q) the following new 
        subparagraph:
                    ``(R) effective January 1, 1994, to have entered 
                into a participation agreement under title XXII of this 
                Act and to report to the Federal Health Care Cost 
                Containment Commission information, described in 
                section 302(d)(2) of the Health Insurance Coverage and 
                Cost Containment Act of 1993, in accordance with 
                uniform standards developed under such section.''.
    (b) Physicians.--Section 1842(h)(1) of such Act (42 U.S.C. 
1395u(h)(1)) is amended by adding at the end the following: ``No such 
agreement with a physician shall be entered into and continued in 
effect on or after January 1, 1994, unless the physician has entered 
into a comparable agreement for purposes of title XXII and agrees to 
report to the Federal Health Care Cost Containment Commission 
information, described in section 302(d)(2) of the Health Insurance 
Coverage and Cost Containment Act of 1993, in accordance with uniform 
standards developed under such section.''

SEC. 509. ASSURING COORDINATION OF ENROLLMENT WITH QUALIFIED HEALTH 
              PLANS.

    (a) Notices.--Section 1837 of the Social Security Act (42 U.S.C. 
1395p) is amended by adding at the end the following new subsection:
    ``(j) The Secretary shall provide for notices of coverage under 
this part (and part A) in the same manner as qualified health plans are 
required to provide notices of coverage under section 2157(b).''.
    (b) Treatment of Secondary Payment in Case of Part-Time 
Employment.--Section 1862(b)(1)(A)(i)(I) of such Act (42 U.S.C. 
1395y(b)(1)(A)(i)(I)) is amended by inserting ``other than on a part-
time described in section 2181(b)(2)'' after ``individual's spouse)''.
    (c) Effective Dates.--(1) The amendment made by subsection (a) 
shall take effect on the date specified in section 2157(b)(2) of the 
Social Security Act.
    (2) The amendment made by subsection (b) shall apply to employment 
occurring on or after January 1, 1994.

                     TITLE VI--FINANCING PROVISIONS

                     Subtitle A--General Provisions

SEC. 601. INCREASE IN WAGE BASE FOR HOSPITAL INSURANCE TAX.

    (a) General Rule.--Paragraph (2) of section 3121(x) of the Internal 
Revenue Code of 1986 (defining applicable contribution base for 
hospital insurance tax) is amended--
            (1) in subparagraph (A), by striking ``and'' at the end,
            (2) in subparagraph (B), by striking ``for any calendar 
        year after 1991'' and inserting ``for calendar years 1992 and 
        1993'' and by striking the period at the end and inserting ``, 
        and'', and
            (3) by adding at the end the following new subparagraph:
                    ``(C) for any calendar year after 1993, an amount 
                without any limit.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to calendar year 1994 and following calendar years.

      Subtitle B--Deductibility of Certain Health Insurance Costs

SEC. 611. INDEFINITE EXTENSION OF DEDUCTION FOR HEALTH INSURANCE COSTS 
              OF SELF-EMPLOYED INDIVIDUALS.

    (a) In General.--Subsection (l) of section 162 of the Internal 
Revenue Code of 1986 (relating to special rules for health insurance 
costs of self-employed individuals) is amended by striking paragraph 
(6).
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1993.

SEC. 612. INCREASE IN AMOUNT OF DEDUCTION FOR SELF-EMPLOYED 
              INDIVIDUALS.

    (a) General Rule.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 is amended by striking ``25 percent of''.
    (b) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendment made by subsection (a) shall apply to 
        taxable years beginning after December 31, 1993.
            (2) Special rules for self-employed individuals and 
        personal corporations before ``pay-or-play provisions'' take 
        effect.--
                    (A) In general.--If the requirements of 
                subparagraph (B) are not met by any taxpayer to whom 
                this paragraph applies during any period before the 
                ``pay-or-play'' provisions take effect with respect to 
                such taxpayer--
                            (i) in the case of a taxpayer described in 
                        subparagraph (C)(i), the amount allowable as a 
                        deduction to such taxpayer under section 162(l) 
                        of the Internal Revenue Code of 1986 for 
                        amounts attributable to such period shall be 
                        determined without regard to the amendment made 
                        by subsection (a), and
                            (ii) in the case of a taxpayer described in 
                        subparagraph (C)(ii), the amount allowable as a 
                        deduction under such Code for amounts which are 
                        attributable to such period and which are paid 
                        or incurred for coverage provided to any 
                        employee-owner under an accident or health plan 
                        of such taxpayer shall be 25 percent of the 
                        amount which but for this clause would have 
                        been so allowable.
                For purposes of clause (ii), the term ``owner-
                employee'' has the meaning given such term by section 
                269A(b)(2) of such Code with the modifications provided 
                in section 441(i)(2) of such Code.
                    (B) Requirements.--The requirements of this 
                subparagraph are met by any taxpayer for any period if 
                such taxpayer makes available on the same terms and 
                conditions health coverage under a plan which would 
                qualify as a qualified employer health plan under title 
                XXI of the Social Security Act to all employees of such 
                taxpayer who normally work for 17\1/2\ hours or more 
                per week.
                    (C) Taxpayers to whom paragraph applies.--This 
                paragraph shall apply to--
                            (i) any individual who is an employee 
                        within the meaning of section 401(c)(1) of such 
                        Code, and
                            (ii) any personal service corporation (as 
                        defined in section 441(i)(2) of such Code).
                    (D) When ``pay-or-play'' provisions take effect.--
                For purposes of this paragraph, the ``pay-or-play'' 
                provisions take effect on January 1, 1997, or, if 
                earlier, the date on which the requirements of part A 
                of title XXI of the Social Security Act apply with 
                respect to the taxpayer under section 2105(a) of such 
                Act.

SEC. 613. DEDUCTION FOR PREMIUMS PAID BY SMALL EMPLOYERS FOR INSURANCE 
              PROVIDING QUALIFIED HEALTH COVERAGE.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by adding at the end thereof 
the following new section:

``SEC. 197. PREMIUMS PAID BY SMALL EMPLOYERS FOR INSURANCE PROVIDING 
              QUALIFIED HEALTH COVERAGE.

    ``(a) In General.--In the case of a small employer, there shall be 
allowed as a deduction (in addition to any amount otherwise allowable) 
an amount equal to 20 percent of the premiums paid during the taxable 
year for insurance providing coverage under a qualified health plan for 
employees of such employer.
    ``(b) Small Employer.--For purposes of this section--
            ``(1) In general.--The term `small employer' means, with 
        respect to the taxable year, an employer that normally employs 
        fewer than 100 employees on a typical business day during the 
        calendar year ending with or within such taxable year.
            ``(2) Controlled groups.--All employers treated as a single 
        employer under subsection (a) or (b) of section 52 shall be 
        treated as a single employer.
    ``(c) Qualified Health Plan.--For purposes of this section, the 
term `qualified health plan' means any plan which meets the 
requirements of title XXI of the Social Security Act and which provides 
only the minimum benefits required under such title.''
    (b) Clerical Amendment.--The table of sections for part IV of 
subchapter B of chapter 1 of such Code is amended by adding at the end 
thereof the following new item:

                              ``Sec. 197. Premiums paid by small 
                                        employers for insurance 
                                        providing qualified health 
                                        coverage.''
    (c) Effective Date.--The amendments made by this section shall 
apply to premiums for coverage provided after December 31, 1996.

                Subtitle C--State Maintenance of Effort

SEC. 621. STATE MAINTENANCE OF EFFORT.

    (a) Condition of Coverage.--Notwithstanding any other provision of 
this title, no individual who is a resident of a State is eligible for 
benefits under title XXII for a month in a calendar year beginning with 
1997, unless the State provides (in a manner and at a time specified by 
the Secretary) for payment to the Public Health Trust Fund of \1/12\ of 
the amount specified in subsection (b) for the year.
    (b) Maintenance of Effort Amount.--The amount of payment specified 
in this subsection for a State for a year is equal to the difference 
between--
            (1) the amount of payment (net of Federal payments) that 
        would have been made, for required health benefits (as defined 
        in section 2211(a)(2) of the Social Security Act), under its 
        State plan under title XIX of such Act for the year if--
                    (A) title XXII of such Act were not in effect in 
                the year, and
                    (B) the provisions of section 702(a) of this Act 
                (and section 1902(a)(13)(G) of the Social Security Act, 
                as added by section 702(b)) applied during the year as 
                in 1996 (except that in applying such provisions the 
                references in section 702(a)(1)(A)(iii) of this Act and 
                section 1902(a)(13)(G)(ii)(III) of the Social Security 
                Act to ``90 percent'' are deemed references to ``100 
                percent''), and
            (2) the amount of payment (net of Federal payments) that is 
        made, for required health benefits (as defined in section 
        2211(a)(2) of the Social Security Act), under its State plan 
        under title XIX of the Social Security Act for the year.
    (c) State Defined.--In this section, the term ``State'' means the 
50 States and the District of Columbia.

                     TITLE VII--MEDICAID PROVISIONS

SEC. 701. COORDINATION WITH PUBLIC HEALTH PLAN.

    (a) In General.--
            (1) Limiting federal financial participation for services 
        covered under public health plan.--Section 1903(i) of the 
        Social Security Act (42 U.S.C. 1396b(i)) is amended--
                    (A) in the paragraph (10) inserted by section 
                4401(a)(1)(B) of Omnibus Budget Reconciliation Act of 
                1990, by striking all that follows ``1927(g)'' and 
                inserting a semicolon;
                    (B) by redesignating the paragraph (10) added by 
                section 4701(b)(2) as paragraph (11), by transferring 
                and inserting it after the paragraph (10) inserted by 
                section 4401(a)(1)(B) of Omnibus Budget Reconciliation 
                Act of 1990, and by striking all that follows ``with 
                respect to hospitals or facilities'' and inserting a 
                semicolon;
                    (C) by transferring and inserting the paragraph 
                (12) inserted by section 4752(a)(2) of Omnibus Budget 
                Reconciliation Act of 1990 after paragraph (11), as 
                redesignated by subparagraph (B), and by striking the 
                period at the end and inserting a semicolon;
                    (D) by redesignating the paragraph (14) inserted by 
                section 4752(e) of Omnibus Budget Reconciliation Act of 
                1990 as paragraph (13), by transferring and inserting 
                it after paragraph (12), and by striking the period at 
                the end and inserting a semicolon;
                    (E) by redesignating the paragraph (11) inserted by 
                section 4801(e)(16)(A) of Omnibus Budget Reconciliation 
                Act of 1990 as paragraph (14), by transferring and 
                inserting it after paragraph (13), and by striking the 
                period at the end and inserting ``; or''; and
                    (F) by inserting after paragraph (14), as so 
                redesignated, the following new paragraph:
            ``(15) with respect to items and services (including 
        medicare cost-sharing) for which payment is made under the 
        public health plan under title XXII.''.
            (2) Clarification of nonduplication of medical assistance 
        with benefits under public health plan.--Title XIX of such Act 
        is amended by adding at the end the following new section:

          ``nonduplication of benefits with public health plan

    ``Sec. 1931. Notwithstanding any other provision of this title, a 
State is not required under its plan under section 1901(a) to provide 
medical assistance for items and services (including medicare cost-
sharing) for which payment is made under the public health plan under 
title XXII.''.
            (3) Clarification of application of third-party payor rules 
        to qualified health plans.--Section 1902(a)(25)(A) of such Act 
        (42 U.S.C. 1396a(a)(25)(A)) is amended by inserting ``and 
        qualified health plans certified under part F of title XXII'' 
        after ``health insurers''.
    (b) Continuation of Medicaid Benefits Not Covered Under Public 
Health Plan.--Nothing in this Act shall be construed as--
            (1) changing the eligibility of individuals for medical 
        assistance under title XIX of the Social Security Act, or
            (2) subject to the amendments made by subsection (a), 
        changing the amount, duration, or scope of medical assistance 
        required (or permitted) to be provided under such title.

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