[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 196 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 196

   To provide improved access to health care, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 5, 1993

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

_______________________________________________________________________

                                 A BILL


 
   To provide improved access to health care, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    This Act may be cited as the ``Health Equity and Access Improvement 
Act of 1992''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
             TITLE I--TAX INCENTIVES FOR HEALTH CARE ACCESS

Sec. 101. Refundable health expenses tax credit.
Sec. 102. Individual tax deduction for health insurance costs.
Sec. 103. Credit for employers to provide health insurance.
Sec. 104. Deductibility for self-employed individuals.
Sec. 105. Revenue incentives for practice in rural areas.
                TITLE II--HEALTH CARE REFORM PROVISIONS

         Subtitle A--Model Health Care Insurance Benefits Plan

Sec. 201. Model health care insurance benefits plan.
Sec. 202. Definitions.
                        Subtitle B--Managed Care

Sec. 211. Development of standards for managed care plans.
Sec. 212. Preemption of provisions relating to managed care.
              Subtitle C--Small Employer Purchasing Groups

Sec. 221. Qualified small employer purchasing groups.
Sec. 222. Preemption from insurance mandates for small employer 
                            purchasing groups.
                  Subtitle D--Insurance Market Reform

Sec. 231. Failure to satisfy certain standards for health care 
                            insurance provided to small employers.
  Subtitle E--Uniform Standards for Reporting Services and Processing 
                                 Claims

Sec. 241. Application and establishment of uniform standards.
Sec. 242. Effective date.
                  TITLE III--MEDICAL LIABILITY REFORM

                  Subtitle A--Definitions and Findings

Sec. 301. Definitions.
Sec. 302. Effect on interstate commerce.
         Subtitle B--Expedited Medical Malpractice Settlements

Sec. 311. Expedited medical malpractice settlements.
         Subtitle C--Alternative Dispute Resolution Procedures

Sec. 321. Establishment of board of advisors.
Sec. 322. Development of State voluntary dispute resolution procedures.
Sec. 323. Application of existing procedures, rebuttable presumption.
      Subtitle D--Uniform Standards for Medical Malpractice Cases

Sec. 331. Application to civil actions.
Sec. 332. Damages.
Sec. 333. Joint and several liability for noneconomic damages.
Sec. 334. Uniform statute of limitations.
Sec. 335. Special protection for obstetricians and gynecologists.
                Subtitle E--Uniform Disciplinary Reforms

Sec. 341. Requirement of compliance.
Sec. 342. Funds for State disciplinary activities.
Sec. 343. Membership of State health care practitioner boards.
Sec. 344. Immunity for members of State health care practitioner 
                            boards.
Sec. 345. Risk management programs.
Sec. 346. Punitive damages.
                      Subtitle F--Medical Products

Sec. 351. Limitation on award of punitive damages in product liability 
                            actions involving drugs and devices.
                  Subtitle G--Community Health Centers

Sec. 361. Community and migrant health centers risk retention group.
                  Subtitle H--Miscellaneous Provisions

Sec. 371. Severability.
Sec. 372. Compliance.
                   TITLE IV--PUBLIC HEALTH PROVISIONS

               Subtitle A--New Basic Health Care Program

Sec. 401. Establishment of BasiCare program.
Sec. 402. GAO study of payments under BasiCare.
                    Subtitle B--Medicaid Provisions

Sec. 411. Expansion of medicaid waiver authority.
Sec. 412. Establishment of Federal Medical Waiver Demonstration Board.
                  TITLE V--MEDICALLY UNDERSERVED AREAS

            Subtitle A--Public Health Service Act Provisions

Sec. 501. National Health Service Corps.
Sec. 502. Establishment of grant program.
Sec. 503. Establishment of new program to provide funds to allow 
                            federally qualified health centers and 
                            other entities or organizations to provide 
                            expanded services to medically underserved 
                            individuals.
Sec. 504. Rural mental health outreach grants.
Sec. 505. Health professions training.
Sec. 506. Area health education centers.
Sec. 507. Rural health extension networks.
Sec. 508. Rural managed care cooperatives.
           Subtitle B--Provision Relating to Social Security

Sec. 511. Rural health care transition grant program.
Sec. 512. Essential access community hospital program.
         TITLE VI--INCENTIVES TO ENCOURAGE PREVENTIVE SERVICES

Sec. 601. Preventive services tax credit.
Sec. 602. Increase in authorization for childhood immunizations.
     TITLE VII--TAX TREATMENT OF LONG-TERM CARE INSURANCE AND PLANS

           Subtitle A--Treatment of Long-Term Care Insurance

Sec. 701. Qualified long-term care insurance treated as accident and 
                            health insurance for purposes of taxation 
                            of life insurance companies.
Sec. 702. Qualified long-term care insurance treated as accident and 
                            health insurance for purposes of exclusion 
                            for benefits received under such insurance 
                            and for employer contributions for such 
                            insurance.
Sec. 703. Exclusion from gross income for amounts withdrawn from 
                            individual retirement plans or 401(k) plans 
                            for qualified long-term care insurance.
Sec. 704. Exchange of life insurance policy for qualified long-term 
                            care policy not taxable.
            Subtitle B--Employer Funding of Medical Benefits

Sec. 711. Medical benefits for retired employees and their spouses and 
                            dependents.
Sec. 712. Treatment of health benefits accounts.
      Subtitle C--Reverse Mortgage Insurance for Older Americans.

Sec. 721. Maximum amount insured.
                     Subtitle D--Income Tax Credits

Sec. 731. Refundable credit for custodial care of certain dependents in 
                            taxpayer's home.
Sec. 732. Credit for expenses for long-term care services provided to 
                            certain independent persons requiring such 
                            care.
          Subtitle E--Treatment of Accelerated Death Benefits

Sec. 741. Tax treatment of accelerated death benefits under life 
                            insurance contracts.
Sec. 742. Tax treatment of companies issuing qualified accelerated 
                            death benefit riders.
  Subtitle F--Federal National Long-Term Care Reinsurance Corporation

Sec. 751. Authorization for establishment of corporation.
Sec. 752. Board of directors and officers.
Sec. 753. Purpose and authority of corporation.
Sec. 754. Capitalization.
Sec. 755. Exemption from state regulation and taxation.
Sec. 756. Audit and annual report.
Sec. 757. Protection of name.
  TITLE VIII--IMPROVEMENTS IN PORTABILITY OF PRIVATE HEALTH INSURANCE

Sec. 801. Excise tax imposed on failure to provide for preexisting 
                            condition.

             TITLE I--TAX INCENTIVES FOR HEALTH CARE ACCESS

SEC. 101. REFUNDABLE HEALTH EXPENSES TAX CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable personal 
credits) is amended by inserting after section 34 the following new 
section:

``SEC. 34A. HEALTH EXPENSES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year an amount equal to the qualified health expenses 
paid by such individual during the taxable year.
    ``(b) Qualified Health Expenses.--For purposes of this section--
            ``(1) In general.--The term `qualified health expenses' 
        means amounts paid during the taxable year for medical care 
        (within the meaning of section 213(d)(1)).
            ``(2) Dollar limit on qualified health expenses.--The 
        amount of the qualified health expenses paid during any taxable 
        year which may be taken into account under subsection (a) shall 
        not exceed--
                    ``(A) $600, in the case of a taxpayer described in 
                section 1(c) or 1(d), and
                    ``(B) $1,200, in the case of any other taxpayer.
        For purposes of this paragraph, the rule of section 219(g)(4) 
        shall apply.
            ``(3) Phaseout.--In the case of any taxpayer whose adjusted 
        gross income exceeds $10,000 ($20,000, in the case of a 
        taxpayer described in paragraph (2)(B)), the dollar amounts 
        under paragraph (2) shall be reduced (but not below zero) by an 
        amount equal to 10 percent of such excess.
            ``(4) Election not to take credit.--A taxpayer may elect 
        for any taxable year to have amounts described in paragraph (1) 
        not treated as qualified health expenses.
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Coordination with advance payment and minimum tax.--
        Rules similar to the rules of subsections (g) and (h) of 
        section 32 shall apply to any credit to which this section 
        applies.
            ``(2) Subsidized expenses.--No expense shall be treated as 
        a qualified health expense if--
                    ``(A) such expense is paid, reimbursed, or 
                subsidized (whether by being disregarded for purposes 
                of another program or otherwise) by the Federal 
                Government, a State or local government, or any agency 
                or instrumentality thereof, and
                    ``(B) the payment, reimbursement, or subsidy of 
                such expense is not includable in the gross income of 
                the recipient.
    ``(d) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
    (b) Advance Payment of Credit.--Chapter 25 of the Internal Revenue 
Code of 1986 (relating to general provisions relating to employment 
taxes) is amended by inserting after section 3507 the following new 
section:

``SEC. 3507A. ADVANCE PAYMENT OF HEALTH EXPENSES CREDIT.

    ``(a) General Rule.--Except as otherwise provided in this section, 
every employer making payment of wages with respect to whom a health 
expenses eligibility certificate is in effect shall, at the time of 
paying such wages, make an additional payment equal to such employee's 
health expenses advance amount.
    ``(b) Health Expenses Eligibility Certificate.--For purposes of 
this title, a health expenses eligibility certificate is a statement 
furnished by an employee to the employer which--
            ``(1) certifies that the employee will be eligible to 
        receive the credit provided by section 34A for the taxable 
        year,
            ``(2) certifies that the employee does not have a health 
        expenses eligibility certificate in effect for the calendar 
        year with respect to the payment of wages by another employer,
            ``(3) states whether or not the employee's spouse has a 
        health expenses eligibility certificate in effect, and
            ``(4) estimates the amount of qualified health expenses (as 
        defined in section 34A(b)) for the calendar year.
For purposes of this section, a certificate shall be treated as being 
in effect with respect to a spouse if such a certificate will be in 
effect on the first status determination date following the date on 
which the employee furnishes the statement in question.
    ``(c) Health Expenses Advance Amount.--
            ``(1) In general.--For purposes of this title, the term 
        `health expenses advance amount' means, with respect to any 
        payroll period, the amount determined--
                    ``(A) on the basis of the employee's wages from the 
                employer for such period,
                    ``(B) on the basis of the employee's estimated 
                qualified health expenses included in the health 
                expenses eligibility certificate, and
                    ``(C) in accordance with tables provided by the 
                Secretary.
            ``(2) Advance amount tables.--The tables referred to in 
        paragraph (1)(C) shall be similar in form to the tables 
        prescribed under section 3402 and, to the maximum extent 
        feasible, shall be coordinated with such tables and the tables 
        prescribed under section 3507(c).
    ``(d) Other Rules.--For purposes of this section, rules similar to 
the rules of subsections (d) and (e) of section 3507 shall apply.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
    (c) Termination of Health Insurance Credit.--Section 32 of the 
Internal Revenue Code of 1986 (relating to earned income credit) is 
amended by adding at the end thereof the following new subsection:
    ``(d) Termination of Health Insurance Credit.--In the case of 
taxable years beginning after December 31, 1992, the health insurance 
credit percentage shall be equal to 0 percent.''.
    (d) Conforming Amendment.--Section 213 of the Internal Revenue Code 
of 1986 (relating to deduction for medical, dental, etc., expenses) is 
amended by striking subsections (e) and (f) and by inserting the 
following new subsection:
    ``(e) Coordination With Health Expenses Credit Under Section 34A.--
The amount otherwise taken into account under subsection (a) as 
expenses paid for medical care shall be reduced by the amount (if any) 
of the health expenses credit allowable to the taxpayer for the taxable 
year under section 34A.''.
    (e) Clerical Amendments.--
            (1) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 34 
        the following new item:

                              ``Sec. 34A. Health expenses.''.
            (2) The table of sections for chapter 25 of such Code is 
        amended by adding after the item relating to section 3507 the 
        following new item:

                              ``Sec. 3507A. Advance payment of health 
                                        expenses credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

SEC. 102. INDIVIDUAL TAX DEDUCTION FOR HEALTH INSURANCE COSTS.

    (a) Full Deduction Allowed.--Subsection (a) of section 213 of the 
Internal Revenue Code of 1986 (relating to deduction for medical, 
dental, etc., expenses) is amended to read as follows:
    ``(a) Allowance of Deduction.--
            ``(1) In general.--Except as provided in paragraph (2), 
        there shall be allowed as a deduction the expenses paid during 
        the taxable year, not compensated for by insurance or 
        otherwise, for medical care of the taxpayer, the taxpayer's 
        spouse, or a dependent (as defined in section 152).
            ``(2) Special dollar limitation.--Expenses for medical care 
        described in subparagraphs (A) and (B) of subsection (d)(1) 
        shall be taken into account under subsection (a) only to the 
        extent that such expenses exceed 7.5 percent of the taxpayer's 
        adjusted gross income for the taxable year.''.
    (b) Deduction Available for Nonitemizers.--
            (1) In general.--Section 213 of the Internal Revenue Code 
        of 1986, as amended by section 101(d), is further amended by 
        adding at the end thereof the following new subsection:
    ``(f) Rule for Nonitemization of Deductions.--In the case of an 
individual who does not itemize his deductions for the taxable year, 
the amount allowable under subsection (a) for the taxable year with 
respect to expenses described in subsection (d)(1)(C) shall be taken 
into account as a direct health insurance deduction under section 
63.''.
            (2) Definition of taxable income.--
                    (A) In general.--Section 63(b) of such Code 
                (relating to individuals who do not itemize their 
                deductions) is amended--
                            (i) by striking ``and'' at the end of 
                        paragraph (1),
                            (ii) by striking the period at the end of 
                        paragraph (2) and inserting ``, and'', and
                            (iii) by adding at the end thereof the 
                        following new paragraph:
            ``(3) the direct health insurance deduction.''.
                    (B) Direct health insurance deduction defined.--
                Section 63 of such Code (defining taxable income) is 
                amended by adding at the end thereof the following new 
                subsection:
    ``(h) Direct Health Insurance Deduction.--For purposes of this 
section, the term `direct health insurance deduction' means that 
portion of the amount allowable under section 213(a) which is taken as 
a direct health insurance deduction for the taxable year under section 
213(f).''.
                    (C) Conforming amendment.--Section 63(d) of such 
                Code (defining itemized deductions) is amended--
                            (i) by striking ``and'' at the end of 
                        paragraph (1),
                            (ii) by striking the period at the end of 
                        paragraph (2) and inserting ``, and'', and
                            (iii) by adding at the end thereof the 
                        following new paragraph:
            ``(3) the direct health insurance deduction.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

SEC. 103. CREDIT FOR EMPLOYERS TO PROVIDE HEALTH INSURANCE.

    (a) Allowance of Credit.--Section 38(b) of the Internal Revenue 
Code of 1986 (defining general business credit) is amended by striking 
``plus'' at the end of paragraph (6), by striking the period at the end 
of paragraph (7) and inserting ``, plus'', and by adding at the end 
thereof the following new paragraph:
            ``(8) the employer health insurance credit.''
    (b) Employer Health Insurance Credit.--Subpart D of part IV of 
subchapter A of chapter 1 of such Code (relating to business related 
credits) is amended by adding at the end thereof the following new 
section:

``SEC. 45. EMPLOYER HEALTH INSURANCE CREDIT.

    ``(a) General Rule.--For purposes of section 38, the amount of the 
employer health insurance credit determined under this section for the 
taxable year is an amount equal to the sum of--
            ``(1) the small employer basic health insurance credit,
            ``(2) the managed care credit,
            ``(3) the dependent coverage credit, and
            ``(4) the small employer purchasing group health insurance 
        credit.
    ``(b) Definition of Small Employer Basic Health Insurance Credit, 
Managed Care Credit, Dependent Coverage Credit, and Small Employer 
Purchasing Group Health Insurance Credit.--
            ``(1) Small employer basic health insurance credit.--The 
        small employer basic health insurance credit of any eligible 
        employer which is an eligible small employer is 25 percent of 
        the qualified health care costs of such employer beginning with 
        the first full taxable year in which such employer offers 
        health-care coverage to employees of such employer, reduced 
        (but not below zero percentage) by 5 percentage points for each 
        taxable year thereafter.
            ``(2) Managed care credit.--The managed care credit of any 
        eligible employer is 25 percent of the approved managed care 
        plan costs of such employer beginning with the first full 
        taxable year in which such employer offers an approved managed 
        care plan (within the meaning of section 162(m)(3)(B)) to 
        employees of such employer for the taxable year, reduced (but 
        not below zero percent) by 5 percentage points for each taxable 
        year thereafter.
            ``(3) Dependent coverage credit.--The dependent coverage 
        credit of any eligible employer is 25 percent of the qualified 
        dependent coverage costs of such employer beginning with the 
        first full taxable year in which such employer offers health-
        care coverage to dependents of employees of such employer for 
        the taxable year, reduced (but not below zero percent) by 5 
        percentage points for each taxable year thereafter.
            ``(4) Small employer purchasing group health insurance 
        credit.--The small employer purchasing group health insurance 
        credit of any eligible small employer which is a member of a 
        qualified small employer purchasing group is 20 percent of the 
        qualified health care costs of such employer for the taxable 
        year.
    ``(c) Eligible Employer.--An employer is eligible for a small 
employer basic health insurance credit, managed care credit, and 
dependent coverage credit under this section if such employer (or any 
predecessor employer) has never provided health-care coverage, an 
approved managed care plan, or dependent coverage for its employees (as 
the case may be) at any time before the calendar year in which occurs 
the first full taxable year described in paragraphs (1), (2), or (3) of 
subsection (b), respectively.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified health care costs.--The term `qualified 
        health care costs' means the amounts paid by the employer for 
        health-care coverage of its employees.
            ``(2) Approved managed care plan costs.--
                    ``(A) In general.--The term `approved managed care 
                plan costs' means the amounts paid by the employer for 
                an approved managed care plan for the employees of such 
                employer.
                    ``(B) Approved managed care plan.--The term 
                `approved managed care plan' means a managed care plan 
                meeting the requirements of section 202(2) of the 
                Health Equity and Access Improvement Act of 1992.
            ``(3) Qualified dependent coverage costs.--The term 
        `qualified dependent coverage costs' means the amounts paid by 
        the employer for health-care coverage of the dependents of 
        employees of such employer.
            ``(4) Eligible small employer.--
                    ``(A) In general.--The term `eligible small 
                employer' means any person--
                            ``(i) which, on an average business day 
                        during the preceding taxable year, had more 
                        than 2 but less than 100 employees, and
                            ``(ii) at least 60 percent of the employees 
                        of which during the taxable year received 
                        health-care coverage described in paragraph 
                        (1).
                    ``(B) Aggregation rules.--All members of the same 
                controlled group of corporations (within the meaning of 
                section 52(a)) and all persons under common control 
                (within the meaning of section 52(b)) shall be treated 
                as 1 person.
                    ``(C) Employee.--The term `employee' shall not 
                include--
                            ``(i) a self-employed individual as defined 
                        in section 401(c)(1), or
                            ``(ii) an employee who works less than 20 
                        hours per week.
            ``(5) Qualified small employer purchasing group.--The term 
        `qualified small employer purchasing group' has the meaning 
        given such term by section 221(a) of the Health Equity and 
        Access Improvement Act of 1992.
    ``(e) Coordination With Deduction.--No deduction shall be allowable 
under this chapter for any qualified health care costs taken into 
account in computing the amount of the credit under section 38.''.
    (c) Conforming Amendment.--Section 39(d) of such Code is amended by 
adding at the end thereof the following new paragraph:
            ``(3) No carryback of employer health insurance credit 
        before 1993.--No portion of the unused business credit for any 
        taxable year which is attributable to the credit determined 
        under section 45(a) (relating to employer health insurance 
        credit) may be carried to a taxable year beginning before 
        January 1, 1992.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

SEC. 104. DEDUCTIBILITY FOR SELF-EMPLOYED INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 (relating to special rules for health insurance 
costs of self-employed individuals) is amended by striking ``25 percent 
of''.
    (b) Deduction Made Permanent.--Section 162(l) of the Internal 
Revenue Code of 1986 is amended by striking paragraph (6).
    (c) Conforming Amendment.--Subparagraph (B) of section 162(l)(3) of 
the Internal Revenue Code of 1986 (relating to coordination with 
medical deduction, etc.) is amended--
            (1) by striking ``health insurance credit'' and inserting 
        ``health expenses credit and employer health insurance 
        credit'',
            (2) by striking ``section 32'' and inserting ``section 34A 
        with respect to such insurance and section 38, respectively'', 
        and
            (3) by striking ``credit'' in the heading thereof and 
        inserting ``credits''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

SEC. 105. REVENUE INCENTIVES FOR PRACTICE IN RURAL AREAS.

    (a) Nonrefundable Credit for Certain Primary Health Services 
Providers.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        nonrefundable personal credits) is amended by inserting after 
        section 25 the following new section:

``SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

    ``(a) Allowance of Credit.--In the case of a qualified primary 
health services provider, there is allowed as a credit against the tax 
imposed by this chapter for any taxable year in a mandatory service 
period an amount equal to the product of--
            ``(1) the lesser of--
                    ``(A) the number of months of such period occurring 
                in such taxable year, or
                    ``(B) 36 months, reduced by the number of months 
                taken into account under this paragraph with respect to 
                such provider for all preceding taxable years (whether 
                or not in the same mandatory service period), 
                multiplied by
            ``(2) $1,000 ($500 in the case of a qualified health 
        services provider who is a physician assistant or a nurse 
        practitioner).
    ``(b) Qualified Primary Health Services Provider.--For purposes of 
this section, the term `qualified primary health services provider' 
means any physician, physician assistant, or nurse practitioner who for 
any month during a mandatory service period is certified by the Bureau 
to be a primary health services provider who--
            ``(1) is providing primary health services--
                    ``(A) full time, and
                    ``(B) to individuals at least 80 percent of whom 
                reside in a rural health professional shortage area,
            ``(2) is not receiving during such year a scholarship under 
        the National Health Service Corps Scholarship Program or a loan 
        repayment under the National Health Service Corps Loan 
        Repayment Program,
            ``(3) is not fulfilling service obligations under such 
        Programs, and
            ``(4) has not defaulted on such obligations.
    ``(c) Mandatory Service Period.--For purposes of this section, the 
term `mandatory service period' means the period of 60 consecutive 
calendar months beginning with the first month the taxpayer is a 
qualified primary health services provider.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bureau.--The term `Bureau' means the Bureau of Health 
        Care Delivery and Assistance, Health Resources and Services 
        Administration of the United States Public Health Service.
            ``(2) Physician.--The term `physician' has the meaning 
        given to such term by section 1861(r) of the Social Security 
        Act.
            ``(3) Physician assistant; nurse practitioner.--The terms 
        `physician assistant' and `nurse practitioner' have the 
        meanings given to such terms by section 1861(aa)(3) of the 
        Social Security Act.
            ``(4) Primary health services provider.--The term `primary 
        health services provider' means a provider of primary health 
        services (as defined in section 330(b)(1) of the Public Health 
        Service Act).
            ``(5) Rural health professional shortage area.--The term 
        `rural health professional shortage area' means--
                    ``(A) a class 1 or class 2 health professional 
                shortage area (as defined in section 332(a)(1)(A) of 
                the Public Health Service Act) in a rural area (as 
                determined under section 1886(d)(2)(D) of the Social 
                Security Act), or
                    ``(B) an area which is determined by the Secretary 
                of Health and Human Services as equivalent to an area 
                described in subparagraph (A) and which is designated 
                by the Bureau of the Census as not urbanized.
    ``(e) Recapture of Credit.--
            ``(1) In general.--If, during any taxable year, there is a 
        recapture event, then the tax of the taxpayer under this 
        chapter for such taxable year shall be increased by an amount 
        equal to the product of--
                    ``(A) the applicable percentage, and
                    ``(B) the aggregate unrecaptured credits allowed to 
                such taxpayer under this section for all prior taxable 
                years.
            ``(2) Applicable recapture percentage.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable recapture percentage shall be determined 
                from the following table:

                    ``If the recapture
                                                  The applicable recap-
                      event occurs during:
                                                    ture percentage is:
                            Months 1-24..............           100    
                            Months 25-36.............            75    
                            Months 37-48.............            50    
                            Months 49-60.............            25    
                            Months 61 and thereafter.            0.    
                    ``(B) Timing.--For purposes of subparagraph (A), 
                month 1 shall begin on the first day of the mandatory 
                service period.
            ``(3) Recapture event defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `recapture event' means the failure of the 
                taxpayer to be a qualified primary health services 
                provider for any month during any mandatory service 
                period.
                    ``(B) Cessation of designation.--The cessation of 
                the designation of any area as a rural health 
                professional shortage area after the beginning of the 
                mandatory service period for any taxpayer shall not 
                constitute a recapture event.
                    ``(C) Secretarial waiver.--The Secretary may waive 
                any recapture event caused by extraordinary 
                circumstances.
            ``(4) No credits against tax.--Any increase in tax under 
        this subsection shall not be treated as a tax imposed by this 
        chapter for purposes of determining the amount of any credit 
        under subpart A, B, or D of this part.''.
            (2) Clerical amendment.--The table of sections for subpart 
        A of part IV of subchapter A of chapter 1 of such Code is 
        amended by inserting after the item relating to section 25 the 
        following new item:

                              ``Sec. 25A. Primary health services 
                                        providers.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1992.
    (b) National Health Service Corps Loan Repayments Excluded From 
Gross Income.--
            (1) In general.--Part III of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to items 
        specifically excluded from gross income) is amended by 
        redesignating section 136 as section 137 and by inserting after 
        section 135 the following new section:

``SEC. 136. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS.

    ``(a) General Rule.--Gross income shall not include any qualified 
loan repayment.
    ``(b) Qualified Loan Repayment.--For purposes of this section, the 
term `qualified loan repayment' means any payment made on behalf of the 
taxpayer by the National Health Service Corps Loan Repayment Program 
under section 338B(g) of the Public Health Service Act.''.
            (2) Conforming amendment.--Paragraph (3) of section 338B(g) 
        of the Public Health Service Act is amended by striking 
        ``Federal, State, or local'' and inserting ``State or local''.
            (3) Clerical amendment.--The table of sections for part III 
        of subchapter B of chapter 1 of the Internal Revenue Code of 
        1986 is amended by striking the item relating to section 136 
        and inserting the following:

                              ``Sec. 136. National Health Service Corps 
                                        loan repayments.
                              ``Sec. 137. Cross references to other 
                                        Acts.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to payments made under section 338B(g) of the 
        Public Health Service Act after the date of the enactment of 
        this Act.
    (c) Expensing of Medical Equipment.--
            (1) In general.--Section 179 of the Internal Revenue Code 
        of 1986 (relating to election to expense of certain depreciable 
        business assets) is amended--
                    (A) by striking paragraph (1) of subsection (b) and 
                inserting the following:
            ``(1) Dollar limitation.--
                    ``(A) General rule.--The aggregate cost which may 
                be taken into account under subsection (a) for any 
                taxable year shall not exceed $10,000.
                    ``(B) Rural health care property.--In the case of 
                rural health care property, the aggregate cost which 
                may be taken into account under subsection (a) for any 
                taxable year shall not exceed $25,000, reduced by the 
                amount otherwise taken into account under subsection 
                (a) for such year.''; and
                    (B) by adding at the end of subsection (d) the 
                following new paragraph:
            ``(11) Rural health care property.--For purposes of this 
        section, the term `rural health care property' means section 
        179 property used by a physician (as defined in section 1861(r) 
        of the Social Security Act) in the active conduct of such 
        physician's full-time trade or business of providing primary 
        health services (as defined in section 330(b)(1) of the Public 
        Health Service Act) in a rural health professional shortage 
        area (as defined in section 25A(d)(5)).''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        1992, in taxable years ending after such date.
    (d) Deduction for Student Loan Payments by Medical Professionals 
Practicing in Rural Areas.--
            (1) Interest on student loans not treated as personal 
        interest.--Section 163(h)(2) of the Internal Revenue Code of 
        1986 (defining personal interest) is amended by striking 
        ``and'' at the end of subparagraph (D), by striking the period 
        at the end of subparagraph (E) and inserting ``, and'', and by 
        adding at the end thereof the following new subparagraph:
            ``(F) any qualified medical education interest (within the 
        meaning of subsection (k)).''.
            (2) Qualified medical education interest defined.--Section 
        163 of such Code (relating to interest expenses) is amended by 
        redesignating subsection (k) as subsection (l) and by inserting 
        after subsection (j) the following new subsection:
    ``(k) Qualified Medical Education Interest of Medical Professionals 
Practicing in Rural Areas.--
            ``(1) In general.--For purposes of subsection (h)(2)(F), 
        the term `qualified medical education interest' means an amount 
        which bears the same ratio to the interest paid on qualified 
        educational loans during the taxable year by an individual 
        performing services under a qualified rural medical practice 
        agreement as--
                    ``(A) the number of months during the taxable year 
                during which such services were performed, bears to
                    ``(B) the number of months in the taxable year.
            ``(2) Dollar limitation.--The aggregate amount which may be 
        treated as qualified medical education interest for any taxable 
        year with respect to any individual shall not exceed $5,000.
            ``(3) Qualified rural medical practice agreement.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `qualified rural 
                medical practice agreement' means a written agreement 
                between an individual and an applicable rural community 
                under which the individual agrees--
                            ``(i) in the case of a medical doctor, upon 
                        completion of the individual's residency (or 
                        internship if no residency is required), or
                            ``(ii) in the case of a registered nurse, 
                        nurse practitioner, or physician's assistant, 
                        upon completion of the education to which the 
                        qualified education loan relates,
                to perform full-time services as such a medical 
                professional in the applicable rural community for a 
                period of 24 consecutive months. An individual and an 
                applicable rural community may elect to have the 
                agreement apply for 36 consecutive months rather than 
                24 months.
                    ``(B) Special rule for computing periods.--An 
                individual shall be treated as meeting the 24 or 36 
                consecutive month requirement under subparagraph (A) 
                if, during each 12-consecutive month period within 
                either such period, the individual performs full-time 
                services as a medical doctor, registered nurse, nurse 
                practitioner, or physician's assistant, whichever 
                applies, in the applicable rural community during 9 of 
                the months in such 12-consecutive month period. For 
                purposes of this subsection, an individual meeting the 
                requirements of the preceding sentence shall be treated 
                as performing services during the entire 12-month 
                period.
                    ``(C) Applicable rural community.--The term 
                `applicable rural community' means--
                            ``(i) any political subdivision of a State 
                        which--
                                    ``(I) has a population of 5,000 or 
                                less, and
                                    ``(II) has a per capita income of 
                                $15,000 or less, or
                            ``(ii) an Indian reservation which has a 
                        per capita income of $15,000 or less.
            ``(4) Qualified educational loan.--The term `qualified 
        educational loan' means any indebtedness to pay qualified 
        tuition and related expenses (within the meaning of section 
        117(b)) and reasonable living expenses--
                    ``(A) which are paid or incurred--
                            ``(i) as a candidate for a degree as a 
                        medical doctor at an educational institution 
                        described in section 170(b)(1)(A)(ii), or
                            ``(ii) in connection with courses of 
                        instruction at such an institution necessary 
                        for certification as a registered nurse, nurse 
                        practitioner, or physician's assistant, and
                    ``(B) which are paid or incurred within a 
                reasonable time before or after such indebtedness is 
                incurred.
            ``(5) Recapture.--If an individual fails to carry out a 
        qualified rural medical practice agreement during any taxable 
        year, then--
                    ``(A) no deduction with respect to such agreement 
                shall be allowable by reason of subsection (h)(2)(F) 
                for such taxable year and any subsequent taxable year, 
                and
                    ``(B) there shall be included in gross income for 
                such taxable year the aggregate amount of the 
                deductions allowable under this section (by reason of 
                subsection (h)(2)(F)) for all preceding taxable years.
            ``(6) Definitions.--For purposes of this subsection, the 
        terms `registered nurse', `nurse practitioner', and 
        `physician's assistant' have the meaning given such terms by 
        section 1861 of the Social Security Act.''.
            (3) Deduction allowed in computing adjusted gross income.--
        Section 62(a) of such Code is amended by inserting after 
        paragraph (13) the following new paragraph:
            ``(14) Interest on student loans of rural health 
        professionals.--The deduction allowable by reason of section 
        163(h)(2)(F) (relating to student loan payments of medical 
        professionals practicing in rural areas).''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 1991.

                TITLE II--HEALTH CARE REFORM PROVISIONS

         Subtitle A--Model Health Care Insurance Benefits Plan

SEC. 201. MODEL HEALTH CARE INSURANCE BENEFITS PLAN.

    (a) In General.--The Secretary shall request that the NAIC--
            (1) develop a model health care insurance benefits plan 
        that shall contain standards that entities offering health care 
        insurance policies should meet with respect to the benefits and 
        coverage provided under such policies, and
            (2) report to the Secretary on such standards, not later 
        than 1 year after the date of enactment of this Act.
If the NAIC develops such a plan by such date and the Secretary finds 
that such plan implements the requirements of subsection (c), such plan 
shall be the model health care insurance benefits plan under this Act.
    (b) Role of the Secretary in Absence of NAIC Plan.--If the NAIC 
fails to develop and report a model health care insurance benefits plan 
by the date specified in subsection (a) or the Secretary finds that 
such plan does not implement the requirements of subsection (c), the 
Secretary shall develop and publish such a plan, by not later than 
eighteen months after the date of enactment of this Act. Such plan 
shall then be the plan under this Act.
    (c) Contents.--The standards under the model benefits plan should 
require--
            (1) that coverage be provided under health care insurance 
        policies for basic hospital, medical and surgical services, 
        including preventative care services determined appropriate by 
        the Secretary;
            (2) reasonable cost sharing by the beneficiaries under such 
        policies; and
            (3) appropriate copayments and deductibles.

SEC. 202. DEFINITIONS.

    As used in this title:
            (1) Health care insurance.--The term ``health care 
        insurance'' means any hospital or medical expense incurred 
        policy or certificate, hospital or medical service plan 
        contract, health maintenance subscriber contract, multiple 
        employer welfare arrangement, other employee welfare plan (as 
        defined in the Employee Retirement Income Security Act of 
        1974), or any other health insurance arrangement, and includes 
        an employment-related reinsurance plan, but does not include--
                    (A) a self-insured health care insurance plan; or
                    (B) any of the following offered by an insurer--
                            (i) accident only, dental only, or 
                        disability income only insurance,
                            (ii) coverage issued as a supplement to 
                        liability insurance,
                            (iii) worker's compensation or similar 
                        insurance, or
                            (iv) automobile medical-payment insurance.
            (2) Managed care plan.--The term ``managed care plan'' 
        means a health care insurance plan in which the insurer 
        offering such plan utilizes the standards recommended under 
        section 211 concerning the benefits and coverage under such 
        plan.
            (3) Model benefits plan.--The term ``model benefits plan'' 
        means the model health care insurance benefits plan developed 
        under section 201(a).
            (4) NAIC.--The term ``NAIC'' means the National Association 
        of Insurance Commissioners.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (6) Small employer.--
                    (A) In general.--The term ``small employer'' means 
                any employer which, on an average business day during 
                the preceding taxable year, had more than 2 but less 
                than 100 employees.
                    (B) Employee.--The term ``employee'' shall not 
                include--
                            (i) a self-employed individual as defined 
                        in section 401(c)(1) of the Internal Revenue 
                        Code of 1986, or
                            (ii) an employee who works less than 20 
                        hours per week.

                        Subtitle B--Managed Care

SEC. 211. DEVELOPMENT OF STANDARDS FOR MANAGED CARE PLANS.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary, taking into account recommendations of the 
Managed Care Advisory Committee, shall develop recommended standards 
that insurers offering managed care plans should meet with respect to 
the benefits, coverage, and delivery systems provided under such plans. 
Such standards shall encompass the standards by which managed care 
entities operate.
    (b) Managed Care Advisory Committee.--
            (1) Establishment.--There shall be established a Managed 
        Care Advisory Committee (hereinafter referred to as the 
        ``Committee'').
            (2) Membership.--The Committee shall be composed of 5 
        members appointed by the Secretary, each member representing 1 
        of the following areas:
                    (A) Health care professionals.
                    (B) Managed care industry.
                    (C) Academia (with specific expertise in managed 
                care plans).
                    (D) Business management.
                    (E) Organized labor.
            (3) Compensation.--
                    (A) In general.--Members of the Committee shall 
                serve without compensation.
                    (B) Expenses, etc., reimbursed.--While away from 
                their homes or regular places of business on the 
                business of the Committee, the members may be allowed 
                travel expenses, including per diem in lieu of 
                subsistence, as authorized by section 5703 of title 5, 
                United States Code, for persons employed intermittently 
                in Government service.
                    (C) Application of act.--The provisions of the 
                Federal Advisory Committee Act (5 U.S.C. App.) shall 
                not apply with respect to the Committee.
                    (D) Support.--The Secretary shall supply such 
                necessary office facilities, office supplies, support 
                services, and related expenses as necessary to carry 
                out the functions of the Committee.

SEC. 212. PREEMPTION OF PROVISIONS RELATING TO MANAGED CARE.

    In the case of a managed care plan meeting the recommended 
standards under section 211 that is offered by an insurer, the 
following provisions of State law are preempted and may not be enforced 
against the managed care plan with respect to an insurer offering such 
plan:
            (1) Restrictions on reimbursement rates or selective 
        contracting.--Any law that restricts the ability of the insurer 
        to negotiate reimbursement rates with health care providers or 
        to contract selectively with one provider or a limited number 
        of providers.
            (2) Restrictions on differential financial incentives.--Any 
        law that limits the financial incentives that the managed care 
        plan may require a beneficiary to pay when a non-plan provider 
        is used on a non-emergency basis.
            (3) Restrictions on utilization review methods.--
                    (A) In general.--Any law that--
                            (i) prohibits utilization review of any or 
                        all treatments and conditions;
                            (ii) requires that such review be made by a 
                        resident of the State in which the treatment is 
                        to be offered or by an individual licensed in 
                        such State, or by a physician in any particular 
                        specialty or with any board certified specialty 
                        of the same medical specialty as the provider 
                        whose services are being rendered;
                            (iii) requires the use of specified 
                        standards of health care practice in such 
                        review or requires the disclosure of the 
                        specific criteria used in such review;
                            (iv) requires payments to providers for the 
                        expenses of responding to utilization review 
                        requests; or
                            (v) imposes liability for delays in 
                        performing such review.
                    (B) Construction.--Nothing in subparagraph (A)(ii) 
                shall be construed as prohibiting a State from 
                requiring that utilization review be conducted by a 
                licensed health care professional, or requiring that 
                any appeal from such a review be made by a licensed 
                physician or by a licensed physician in any particular 
                specialty or with any board certified specialty of the 
                same medical specialty as the provider whose services 
                are being rendered.
            (4) Restrictions on benefits.--Any law that mandates 
        benefits under the managed care plan that are greater than the 
        benefits recommended under the standards developed under 
        section 211.

              Subtitle C--Small Employer Purchasing Groups

SEC. 221. QUALIFIED SMALL EMPLOYER PURCHASING GROUPS.

    (a) Defined.--For purposes of this title, an entity is a qualified 
small employer purchasing group if--
            (1) the entity submits an application to the Secretary at 
        such time, in such form and containing such information as the 
        Secretary may require; and
            (2) on the basis of information contained in the 
        application and any other information the Secretary may 
        require, the Secretary determines that--
                    (A) the entity is administered solely under the 
                authority and control of its member employers;
                    (B) the membership of the entity consists solely of 
                small employers (except that an employer member of the 
                group may retain its membership in the group if, after 
                the Secretary determines that the entity meets the 
                requirements of this subsection, the number of 
                employees of the employer member increases to more than 
                100);
                    (C) with respect to each State in which its members 
                are located, the entity consists of not fewer than 100 
                employers;
                    (D) at the time the entity submits its application, 
                the health care insurance plans with respect to the 
                employer members of the entity are in compliance with 
                applicable State laws and the model benefits plan 
                relating to such plans;
                    (E) the health care insurance plans of the entity 
                and the employer members of the entity are not self-
                insured plans;
                    (F) each enrollee in the program of the entity may 
                enroll with any participating carrier that offers 
                health care insurance coverage in the geographic area 
                in which the enrollee resides; and
                    (G) such entity will be a nonprofit entity; and
            (3) such entity has a board of directors as described in 
        subsection (b) with authority to act as described in subsection 
        (c).
    (b) Operations.--A small employer purchasing group shall be 
administered by a board of directors. The members of such board shall 
be elected by the employers that are members of the group, and such 
board members shall serve at the pleasure of the majority of such 
employers.
    (c) Duties of Board.--
            (1) In general.--The board shall have the authority to--
                    (A) enter into contracts with carriers to provide 
                health care insurance coverage to eligible employees 
                and their dependents;
                    (B) enter into other contracts as are necessary or 
                proper to carry out the provisions of this subtitle;
                    (C) employ necessary staff;
                    (D) appoint committees as necessary to provide 
                technical assistance in the operation of the entity's 
                program;
                    (E) assess participating employers a reasonable fee 
                for necessary costs in connection with the program;
                    (F) undertake activities necessary to administer 
                the program including marketing and publicizing the 
                program and assuring carrier, employer, and enrollee 
                compliance with program requirements;
                    (G) issue rules and regulations necessary to carry 
                out the purpose of this subtitle; and
                    (H) accept and expend funds received through fees, 
                grants, appropriations, or other appropriate and lawful 
                means.
            (2) Program management.--
                    (A) Geographic areas of coverage.--The board shall 
                establish geographic areas within which participating 
                carriers may offer health care insurance coverage to 
                eligible employees and dependents. The board shall 
                contract with sufficient numbers and types of carriers 
                in an area to assure that employees have a choice from 
                among a reasonable number and type of competing health 
                care insurance carriers.
                    (B) Contract requirements.--
                            (i) In general.--The board shall enter into 
                        contracts with qualified carriers for the 
                        purpose of providing health care insurance 
                        coverage to eligible employees and dependents, 
                        and shall pay qualified carriers on at least a 
                        monthly basis at the contracted rates.
                            (ii) General qualifications of carriers.--
                        Participating carriers shall be qualified if 
                        such carriers have--
                                    (I) adequate administrative 
                                management,
                                    (II) financial solvency, and
                                    (III) the ability to assume the 
                                risk of providing and paying for 
                                covered services.
                        A participating carrier may utilize 
                        reinsurance, provider risk sharing, and other 
                        appropriate mechanisms to share a portion of 
                        the risk described in subclause (III). The 
                        board may establish risk adjustment mechanisms 
                        that can be utilized to address circumstances 
                        where a participating carrier has a 
                        significantly disproportionate share of high 
                        risk or low risk enrollees based upon valid 
                        data provided by carrier. Any such risk 
                        adjustment mechanism may be developed and 
                        applied only after consultation with the 
                        participating carriers.
                    (C) Program standards.--The board shall require 
                that participating carriers that contract with or 
                employ health care providers shall have mechanisms to 
                accomplish at least the following, satisfactory to the 
                program:
                            (i) Review the quality of care covered.
                            (ii) Review the appropriateness of care 
                        covered.
                            (iii) Provide accessible health services.
                    (D) Uniformity of benefits.--The board shall assure 
                that participating carriers--
                            (i) shall offer substantially similar 
                        benefits to enrollees in the program, except 
                        that enrollees cost sharing required by 
                        participating carriers may vary according to 
                        the basic method of operation of the carrier, 
                        and
                            (ii) shall not vary rates to small 
                        employers or enrollees in the program on 
                        account of claim experience, health status or 
                        duration from issue.
                    (E) Payment mechanism.--The board shall establish a 
                mechanism to collect premiums from small employers, 
                including remittance of the enrollee's share of the 
                premium.
            (3) Notification of program benefits.--The board shall use 
        appropriate and efficient means to notify employers of the 
        availability of sponsored health care insurance coverage from 
        the program. The board shall make available marketing materials 
        which accurately summarize the carriers' insurance plans and 
        rates which are offered through the program. A participating 
        carrier may contract with an agent or broker to provide 
        marketing, advertising, or presentation proposals or otherwise 
        disseminate information regarding coverage or services or rates 
        offered in connection with the program.
            (4) Conditions of participation.--
                    (A) In general.--The board shall establish 
                conditions of participation for small employers and 
                enrollees that--
                            (i) assure that the entity is a valid small 
                        employer purchasing group and is not formed for 
                        the purpose of securing health care insurance 
                        coverage;
                            (ii) assure that individuals in the group 
                        are not added for the purpose of securing such 
                        coverage;
                            (iii) require that a specified percentage 
                        of employees and dependents obtain health care 
                        insurance coverage;
                            (iv) require minimum employer 
                        contributions; and
                            (v) require prepayment of premiums or other 
                        mechanisms to assure that payment will be made 
                        for coverage.
                    (B) Minimum participation.--The board may require 
                participating employers to agree to participate in the 
                program for a specified minimum period of time and may 
                include in any participation agreements with employers 
                a requirement for a financial deposit or provision for 
                a financial penalty, which would be invoked in the 
                event the employer violates the participation 
                agreement.
    (d) Grants.--
            (1) Authority.--The Secretary may award grants to qualified 
        small employer purchasing groups to assist such groups in 
        paying the expenditures associated with the formation and 
        initial operations of such groups.
            (2) Application.--To be eligible to receive a grant under 
        this subsection, a qualified small employer purchasing group 
        shall request such a grant as part of the application submitted 
        by such group under subsection (a)(1).
            (3) Authorization of appropriations.--There are authorized 
        to award grants under this subsection, such sums as may be 
        necessary.
    (e) Freedom of Contract.--Nothing in this subtitle shall be 
construed to prohibit a participating carrier from offering health care 
insurance coverage to small employers that are not participating in the 
program of a small employer purchasing group.

SEC. 222. PREEMPTION FROM INSURANCE MANDATES FOR SMALL EMPLOYER 
              PURCHASING GROUPS.

    (a) Finding.--Congress finds that qualified small employer 
purchasing groups organized for the purpose of obtaining health 
insurance for the employer members of such groups affect interstate 
commerce.
    (b) Preemption of State Mandates.--In the case of a qualified small 
employer purchasing group, no provision of State law shall apply that 
requires the offering, as part of the health care insurance plan with 
respect to an employer member of such a group, of any services, 
category of care, or services of any class or type of provider that is 
in excess of that recommended under the model benefit plan.

                  Subtitle D--Insurance Market Reform

SEC. 231. FAILURE TO SATISFY CERTAIN STANDARDS FOR HEALTH CARE 
              INSURANCE PROVIDED TO SMALL EMPLOYERS.

    (a) In General.--Subchapter L of chapter 1 of the Internal Revenue 
Code of 1986 (relating to insurance companies) is amended by adding at 
the end thereof the following new part:

      ``PART IV--HEALTH CARE INSURANCE PROVIDED TO SMALL EMPLOYERS

                              ``Sec. 850. Failure to satisfy standards 
                                        for health care insurance of 
                                        small employers.
                              ``Sec. 850A. General issuance 
                                        requirements.
                              ``Sec. 850B. Specific contractual 
                                        requirements.
                              ``Sec. 850C. State compliance agreements.
                              ``Sec. 850D. Definitions and other rules.

``SEC. 850. FAILURE TO SATISFY CERTAIN STANDARDS FOR HEALTH CARE 
              INSURANCE OF SMALL EMPLOYERS.

    ``(a) General Rule.--No health insurance contract issued to an 
eligible small employer shall be treated as a contract for purposes of 
section 807 or 832 if the issuer of such a contract fails to meet at 
any time during any taxable year--
            ``(1) the general issuance requirements of section 850A, or
            ``(2) the specific contractual requirements of section 
        850B.
    ``(b) Limitation.--
            ``(1) Section not to apply where failure not discovered 
        exercising reasonable diligence.--Subsection (a) shall not 
        apply with respect to any failure for which it is established 
        to the satisfaction of the Secretary that the person described 
        in such subsection did not know, or exercising reasonable 
        diligence would not have known, that such failure existed.
            ``(2) Section not to apply where failures corrected within 
        30 days.--Subsection (a) shall not apply 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 
                described in such subsection 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 the application of subsection (a).

``SEC. 850A. GENERAL ISSUANCE REQUIREMENTS.

    ``(a) General Rule.--The requirements of this section are met if a 
person meets--
            ``(1) the mandatory policy requirements of subsection (b),
            ``(2) the guaranteed issue requirements of subsection (c), 
        and
            ``(3) the mandatory registration and disclosure 
        requirements of subsection (d).
    ``(b) Mandatory Policy Requirements.--
            ``(1) In general.--The requirements of this subsection are 
        met if any person issuing a health care insurance contract to 
        any eligible small employer makes available to such employer a 
        health care insurance contract which--
                    ``(A) provides benefits and coverage consistent 
                with the model health care insurance benefits plan 
                developed under section 201 of the Health Equity and 
                Access Improvement Act of 1992, and
                    ``(B) is for a term of not less than 12 months.
            ``(2) Pricing and marketing requirements.--The requirements 
        of paragraph (1) are not met unless--
                    ``(A) the price at which the contract described in 
                paragraph (1) is made available is not greater than the 
                price for such contract determined on the same basis as 
                prices for other health care insurance contracts within 
                the same class of business made available by the person 
                to eligible small employers, and
                    ``(B) such contract is made available to eligible 
                small employers using at least the marketing methods 
                and other sales practices which are used in selling 
                such other contracts.
    ``(c) Guaranteed Issue.--
            ``(1) In general.--The requirements of this subsection are 
        met if the person offering health care insurance contracts to 
        eligible small employers issues such a contract to any eligible 
        small employer seeking to enter into such a contract.
            ``(2) Financial capacity exception.--Paragraph (1) shall 
        not require any person to issue a health care insurance 
        contract to the extent that the issuance of such contract would 
        result in such person violating the financial solvency 
        standards (if any) established by the State in which such 
        contract is to be issued.
            ``(3) Delivery capacity exception.--Paragraph (1) shall not 
        require any person to issue a health care insurance contract to 
        the extent that the issuance of such contract would result, 
        upon demonstration to the Secretary, in such person exceeding 
        its 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).
            ``(4) Exception for certain employers.--Paragraph (1) shall 
        not apply to a failure to issue a health care insurance 
        contract to an eligible small employer if--
                    ``(A) such employer is unable to pay the premium 
                for such contract, or
                    ``(B) in the case of an eligible small employer 
                with fewer than 15 employees, such employer fails to 
                enroll a minimum percentage of the employer's eligible 
                employees for coverage under such contract, so long as 
                such percentage is enforced uniformly for all eligible 
                small employers of comparable size.
            ``(5) Exception for alternative state programs.--
                    ``(A) In general.--Paragraph (1) shall not apply if 
                the State in which the health care insurance contract 
                is issued--
                            ``(i) has a program which--
                                    ``(I) assures the availability of 
                                health care insurance contracts to 
                                eligible small employers through the 
                                equitable distribution of high risk 
                                groups among all persons offering such 
                                contracts to such employers, and
                                    ``(II) is consistent with a model 
                                program developed by the NAIC;
                            ``(ii) has a qualified State-run 
                        reinsurance program, or
                            ``(iii) has a program which the Secretary 
                        of Health and Human Services has determined 
                        assures all eligible small employers in the 
                        State an opportunity to purchase a health care 
                        insurance contract without regard to any risk 
                        characteristic.
                    ``(B) Reinsurance program.--
                            ``(i) Program requirements.--For purposes 
                        of subparagraph (A)(ii), a State-run 
                        reinsurance program is qualified if such 
                        program is one of the NAIC reinsurance program 
                        models developed under clause (ii) or is a 
                        variation of one of such models, as approved by 
                        the Secretary of Health and Human Services.
                            ``(ii) Models.--Not later than the 120 days 
                        after the date of the enactment of the Health 
                        Equity and Access Improvement Act of 1992, the 
                        NAIC shall develop several models for a 
                        reinsurance program, including options for 
                        program funding.
    ``(d) Mandatory Registration and Disclosure Requirements.--The 
requirements of this subsection are met if the person offering health 
care insurance contracts to eligible small employers in any State--
            ``(1) registers with the State commissioner or 
        superintendent of insurance or other State authority 
        responsible for regulation of health insurance,
            ``(2) fully discloses the rating practices for small 
        employer health care insurance contracts at the time such 
        person offers a health care insurance contract to an eligible 
        small employer, and
            ``(3) fully discloses the terms for renewal of the contract 
        at the time of the offering of such contract and at least 90 
        days before the expiration of such contract.

``SEC. 850B. SPECIFIC CONTRACTUAL REQUIREMENTS.

    ``(a) General Rule.--The requirements of this section are met if 
the following requirements are met:
            ``(1) The coverage requirements of subsection (b).
            ``(2) The rating requirements of subsection (c).
    ``(b) Coverage Requirements.--
            ``(1) In general.--The requirements of this subsection are 
        met with respect to any health care insurance contract if, 
        under the terms and operation of the contract, the following 
        requirements are met:
                    ``(A) Guaranteed eligibility.--No eligible employee 
                (and the spouse or any dependent child of the employee 
                eligible for coverage) may be excluded from coverage 
                under the contract.
                    ``(B) Limitations on coverage of preexisting 
                conditions.--Any limitation under the contract on any 
                preexisting condition--
                            ``(i) may not extend beyond the 6-month 
                        period beginning with the date an insured is 
                        first covered by the contract, and
                            ``(ii) may only apply to preexisting 
                        conditions which manifested themselves, or for 
                        which medical care or advice was sought or 
                        recommended, during the 3-month period 
                        preceding the date an insured is first covered 
                        by the contract.
                    ``(C) Guaranteed renewability.--
                            ``(i) In general.--The contract must be 
                        renewed at the election of the eligible small 
                        employer unless the contract is terminated for 
                        cause.
                            ``(ii) Cause.--For purposes of this 
                        subparagraph, the term `cause' means--
                                    ``(I) nonpayment of the required 
                                premiums;
                                    ``(II) fraud or misrepresentation 
                                of the employer or, with respect to 
                                coverage of individual insureds, the 
                                insureds or their representatives;
                                    ``(III) noncompliance with the 
                                contract's minimum participation 
                                requirements;
                                    ``(IV) noncompliance with the 
                                contract's employer contribution 
                                requirements; or
                                    ``(V) repeated misuse of a provider 
                                network provision in the contract.
            ``(2) Waiting periods.--Paragraph (1)(A) shall not apply to 
        any period an employee is excluded from coverage under the 
        contract solely by reason of a requirement applicable to all 
        employees that a minimum period of service with the employer is 
        required before the employee is eligible for such coverage.
            ``(3) Determination of periods for rules relating to 
        preexisting conditions.--For purposes of paragraph (1)(B), the 
        date on which an insured is first covered by a contract shall 
        be the earlier of--
                    ``(A) the date on which coverage under such 
                contract begins, or
                    ``(B) the first day of any continuous period--
                            ``(i) during which the insured was covered 
                        under 1 or more other health insurance 
                        arrangements, and
                            ``(ii) which does not end more than 120 
                        days before the date employment with the 
                        employer begins.
            ``(4) Cessation of small employer health insurance 
        business.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, a person shall not be treated as 
                failing to meet the requirements of paragraph (1)(C) if 
                such person terminates the class of business which 
                includes the health care insurance contract.
                    ``(B) Notice requirement.--Subparagraph (A) shall 
                apply only if the person gives notice of the decision 
                to terminate at least 90 days before the expiration of 
                the contract.
                    ``(C) 5-year moratorium.--If, within 5 years of the 
                year in which a person terminates a class of business 
                under subparagraph (A), such person establishes a new 
                class of business, the issuance of such contracts in 
                that year shall be treated as a failure to which this 
                section applies.
                    ``(D) Transfers.--If, upon a failure to renew a 
                contract to which subparagraph (A) applies, a person 
                offers to transfer such contract to another class of 
                business, such transfer must be made without regard to 
                risk characteristics.
    ``(c) Rating Requirements.--
            ``(1) In general.--The requirements of this subsection are 
        met if--
                    ``(A) the requirements of paragraphs (2) and (3) 
                are met, and
                    ``(B) any increase in any premium rate under the 
                renewal contract over the corresponding rate under the 
                health care insurance contract being renewed does not 
                exceed the applicable annual adjusted increase.
            ``(2) Limit on variation of premiums between classes of 
        business.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the index rate for a rating period 
                for any class of business of the insurer does not 
                exceed the index rate for any other class of business 
                by more than 20 percent.
                    ``(B) Exceptions.--Subparagraph (A) shall not apply 
                to a class of business if--
                            ``(i) the class is one for which the 
                        insurer does not reject, and never has 
                        rejected, eligible small employers included 
                        within the class of business or otherwise 
                        eligible employees and dependents who enroll on 
                        a timely basis, based upon risk 
                        characteristics,
                            ``(ii) the insurer does not transfer, and 
                        never has transferred, a health care insurance 
                        contract involuntarily into or out of the class 
                        of business, and
                            ``(iii) the class of business is currently 
                        available for purchase.
            ``(3) Limit on variation in premium rates within a class of 
        business.--The requirements of this paragraph are met if the 
        premium rates charged during a rating period to eligible small 
        employers with similar case characteristics (other than risk 
        characteristics) for the same or similar coverage, or the rates 
        which could be charged to such employers under the rating 
        system for that class of business, do not vary from the index 
        rate by more than 20 percent of the index rate.
            ``(4) Applicable annual adjusted increase.--For purposes of 
        paragraph (1)(B)--
                    ``(A) In general.--The applicable annual adjusted 
                increase is an amount equal to the sum of--
                            ``(i) the applicable percentage of the 
                        premium rate under the health care insurance 
                        contract being renewed, plus
                            ``(ii) any increase in the rate under the 
                        renewal contract due to any change in coverage 
                        or to any change of case characteristics (other 
                        than risk characteristics), plus
                            ``(iii) 5 percentage points.
                    ``(B) Applicable percentage.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the applicable percentage is 
                        the percentage (if any) by which--
                                    ``(I) the premium rate for newly 
                                issued contracts for substantially 
                                similar coverage for an employer with 
                                similar case characteristics (other 
                                than risk characteristics) as the 
                                employer under the health care 
                                insurance contract (determined on the 
                                1st day of the rating period applicable 
                                to such contracts), exceeds
                                    ``(II) such rate on the 1st day of 
                                the rating period applicable to the 
                                contract being renewed.
                            ``(ii) Cases where no new business.--If no 
                        new contracts are being issued for a class of 
                        business during any rating period, the 
                        applicable percentage shall be the percentage 
                        (if any) by which the base premium rate 
                        determined under paragraph (5)(B) with respect 
                        to the renewal contract exceeds such rate for 
                        the contract to be renewed.
            ``(5) Definitions.--For purposes of this subsection--
                    ``(A) Index rate.--The term `index rate' means, 
                with respect to a class of business, the arithmetic 
                average of the applicable base premium rate and the 
                corresponding highest premium rate for that class.
                    ``(B) Base premium rate.--The term `base premium 
                rate' means, for each class of business for each rating 
                period, the lowest premium rate which could have been 
                charged under a rating system for that class of 
                business by the insurer to eligible small employers 
                with similar case characteristics (other than risk 
                characteristics) for health care insurance contracts 
                with the same or similar coverage.

``SEC. 850C. STATE COMPLIANCE AGREEMENTS.

    ``(a) Agreements.--The Secretary of Health and Human Services may 
enter into an agreement with any State--
            ``(1) to apply the standards set by the NAIC for health 
        care insurance contracts in lieu of the requirements of this 
        subchapter, and
            ``(2) to provide for the State to make the initial 
        determination as to whether a person is in compliance with such 
        standards for purposes of applying the sanctions under section 
        850.
    ``(b) Standards.--An agreement may be entered into under subsection 
(a)(1) only if--
            ``(1) the chief executive officer of the State requests 
        such agreement be entered into,
            ``(2) the Secretary of Health and Human Services determines 
        that the NAIC standards to be applied under the agreement will 
        carry out the purposes of this subchapter, and
            ``(3) the Secretary determines that the NAIC standards to 
        be applied under the agreement will apply to substantially all 
        health care insurance contracts issued in such State to 
        eligible small employers.
    ``(c) Termination.--The Secretary of Health and Human Services 
shall terminate any agreement if the Secretary determines that the 
application of NAIC standards by the State ceases to carry out the 
purposes of this subchapter.
    ``(d) NAIC Standards.--Not later than the 270 days after the date 
of the enactment of the Health Equity and Access Improvement Act of 
1992, the NAIC shall develop standards which provide for requirements 
substantially similar to the requirements of this subchapter.

``SEC. 850D. DEFINITIONS AND OTHER RULES.

    For purposes of this part--
            ``(1) Health care insurance.--The term `health care 
        insurance' means any hospital or medical expense incurred 
        policy or certificate, hospital or medical service plan 
        contract, health maintenance subscriber contract, multiple 
        employer welfare arrangement, other employee welfare plan (as 
        defined in the Employee Retirement Income Security Act of 
        1974), or any other health insurance arrangement, and includes 
        an employment-related reinsurance plan, but does not include--
                    ``(A) a self-insured health care insurance plan; or
                    ``(B) any of the following offered by an insurer--
                            ``(i) accident only, dental only, or 
                        disability income only insurance,
                            ``(ii) coverage issued as a supplement to 
                        liability insurance,
                            ``(iii) worker's compensation or similar 
                        insurance, or
                            ``(iv) automobile medical-payment 
                        insurance.
            ``(2) Class of business.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `class of business' means, 
                with respect to health care insurance provided to 
                eligible small employers, all health care insurance 
                provided to such employers.
                    ``(B) Establishment of groupings.--
                            ``(i) In general.--An issuer may establish 
                        separate classes of business with respect to 
                        health care insurance provided to eligible 
                        small employers but only if such classes are 
                        based on 1 or more of the following:
                                    ``(I) Business marketed and sold 
                                through persons not participating in 
                                the marketing and sale of such 
                                insurance to other eligible small 
                                employers.
                                    ``(II) Business acquired from other 
                                insurers as a distinct grouping.
                                    ``(III) Business provided through 
                                an association of not less than 20 
                                eligible small employers which was 
                                established for purposes other than 
                                obtaining insurance.
                                    ``(IV) Business related to managed 
                                care plans (as defined in section 
                                202(2) of the Health Equity and Access 
                                Improvement Act of 1992).
                                    ``(V) Any other business which the 
                                Secretary of Health and Human Services 
                                determines needs to be separately 
                                grouped to prevent a substantial threat 
                                to the solvency of the insurer.
                            ``(ii) Exception allowed.--Except as 
                        provided in subparagraph (C), an insurer may 
                        not establish more than one distinct group of 
                        eligible small employers for each category 
                        specified in clause (i).
                    ``(C) Special rule.--An insurer may establish up to 
                2 groups under each category in subparagraph (A) or (B) 
                to account for differences in characteristics (other 
                than differences in plan benefits) of health insurance 
                plans that are expected to produce substantial 
                variation in health care costs.
            ``(2) Characteristics.--
                    ``(A) In general.--The term `characteristics' 
                means, with respect to any insurance rating system, the 
                factors used in determining rates.
                    ``(B) Risk characteristics.--The term `risk 
                characteristics' means factors related to the health 
                risks of individuals, including health status, prior 
                claims experience, the duration since the date of issue 
                of a health insurance plan or arrangement, industry, 
                and occupation.
                    ``(C) Geographic factors.--
                            ``(i) In general.--In applying geographic 
                        location as a characteristic, an insurer may 
                        not use for purposes of this subchapter areas 
                        smaller than 3-digit postal zip code areas.
                            ``(ii) Study and report.--Not later than 
                        120 days after the date of the enactment of the 
                        Health Equity and Access Improvement Act of 
                        1992, the Comptroller General of the United 
                        States shall study and report to the Congress 
                        concerning--
                                    ``(I) insurance industry practices 
                                in determining the geographic 
                                boundaries of communities used for 
                                setting rates,
                                    ``(II) the feasibility and 
                                desirability of establishing 
                                standardized geographic communities for 
                                setting rates, and
                                    ``(III) the effect such 
                                standardized geographic communities 
                                would have on rates charged small 
                                employers.
            ``(3) Eligible small employer.--
                    ``(A) In general.--The term `eligible small 
                employer' means any person which, on an average 
                business day during the preceding taxable year, had 
                more than 2 but less than 50 employees.
                    ``(B) Aggregation rules.--All members of the same 
                controlled group of corporations (within the meaning of 
                section 52(a)) and all persons under common control 
                (within the meaning of section 52(b)) shall be treated 
                as 1 person.
                    ``(C) Employee.--The term `employee' shall not 
                include--
                            ``(i) a self-employed individual as defined 
                        in section 401(c)(1), or
                            ``(ii) an employee who works less than 20 
                        hours per week.
            ``(4) Naic.--The term `NAIC' means the National Association 
        of Insurance Commissioners.''
    (b) Conforming Amendment.--Subchapter L of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end thereof 
the following new item:

                              ``Part IV. Health care insurance provided 
                                        to small employers.''
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to contracts issued, or renewed, after the date of the 
        enactment of this Act.
            (2) Guaranteed issue.--The provisions of section 850A(c) of 
        the Internal Revenue Code of 1986, as added by this section, 
        shall apply to contracts which are issued, or renewed, after 
        the date which is 18 months after the date of the enactment of 
        this Act.
            (3) Premium range.--In the case of any contract in effect 
        on the date of the enactment of this Act, the provisions of 
        section 850B(c)(1)(A) of such Code, as added by this section, 
        shall not apply to the premiums under such contract or any 
        renewal contract for benefits provided during the period 
        beginning on such date and ending on the last day of the 2nd 
        plan year beginning after such date.

  Subtitle E--Uniform Standards for Reporting Services and Processing 
                                 Claims

SEC. 241. APPLICATION AND ESTABLISHMENT OF UNIFORM STANDARDS.

    (a) In General.--Each entity providing medical or other health care 
services shall comply with the uniform standards for reporting health 
care services and processing claims established by the National 
Association of Insurance Commissioners (hereafter in this section 
referred to as ``NAIC'') under subsection (b)(1) (or, if applicable, by 
the Secretary of Health and Human Services under subsection (b)(2)).
    (b) Establishment of Standards.--
            (1) Role of naic.--Not later than 18 months after the date 
        of the enactment of this Act, the NAIC shall establish and 
        submit to the Secretary of Health and Human Services (hereafter 
        in this section referred to as the ``Secretary'') uniform 
        standards for processing claims for medical or other health 
        services and for reporting the delivery of such services to a 
        national data collection entity.
            (2) Establishment by secretary.--If the NAIC fails to 
        establish standards under paragraph (1), or if the Secretary 
        finds that the standards established by the NAIC fail to 
        promote efficiency and cost-effectiveness in the delivery and 
        reporting of medically appropriate health care services, the 
        Secretary shall establish the uniform standards described under 
        paragraph (1).
            (3) Review and updating of standards.--The Secretary shall 
        periodically review the standards established under this 
        subsection, and may revise the standards to ensure that the 
        standards continue to promote efficiency and cost-effectiveness 
        in the delivery and reporting of medically appropriate health 
        care services.

SEC. 242. EFFECTIVE DATE.

    Section 241 shall apply with respect to medical or other health 
care services provided on or after the expiration of the 2-year period 
that begins on the date of the enactment of this Act.

                  TITLE III--MEDICAL LIABILITY REFORM

                  Subtitle A--Definitions and Findings

SEC. 301. DEFINITIONS.

    As used in this title:
            (1) Board of advisors.--The term ``Board of Advisors'' 
        means the Alternative Dispute Resolution Board of Advisors 
        established under section 321.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a civil action that is subject to the requirements of 
        this Act, and any person on whose behalf such an action is 
        brought. If such an action is brought through or on behalf of 
        an estate, such term includes the claimant's decedent, or if 
        such an action is brought through or on behalf of a minor or 
        incompetent, such term includes the claimant's parent or 
        guardian.
            (3) Clear and convincing evidence.--The term ``clear and 
        convincing evidence'' is that measure or degree of proof that 
        will produce in the mind of the trier of fact a firm belief or 
        conviction as to the truth of the allegations sought to be 
        established. The level of proof required to satisfy such 
        standard is more than that required under preponderance of the 
        evidence, but less than that required for proof beyond a 
        reasonable doubt.
            (4) Medical malpractice action.--The term ``medical 
        malpractice action'' includes any action involving a claim, 
        third-party claim, cross-claim, counterclaim, or contribution 
        claim in a civil action in which a health care provider is 
        alleged to be liable for harm caused by such health care 
        provider.
            (5) Noneconomic damages.--The term ``noneconomic damages'' 
        means subjective, nonmonetary losses including, pain, 
        suffering, inconvenience, mental suffering, emotional distress, 
        loss of society and companionship, loss of consortium, and 
        injury to reputation and humiliation. Such term does not 
        include objectively verifiable monetary losses including 
        medical expenses, loss of earnings, burial costs, loss of use 
        of property, costs of obtaining substitute domestic services, 
        rehabilitation and training expenses, loss of employment, or 
        loss of business or employment opportunities.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (7) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Commonwealth of the Northern Mariana Islands, the 
        Virgin Islands, Guam, American Samoa, and any other territory 
        or possession of the United States, or any political 
        subdivision thereof.

SEC. 302. EFFECT ON INTERSTATE COMMERCE.

    Congress finds that the health care and insurance industries are 
industries affecting interstate commerce and the medical malpractice 
litigation systems existing throughout the United States impact on 
interstate commerce by contributing to the high cost of health care and 
premiums for malpractice insurance purchased by health care providers.

         Subtitle B--Expedited Medical Malpractice Settlements

SEC. 311. EXPEDITED MEDICAL MALPRACTICE SETTLEMENTS.

    (a) Right to Bring Action.--Any claimant may bring a civil action 
for damages against a person for harm caused during the provision of 
medical care pursuant to applicable State law, except to the extent 
that such law is superseded by this subtitle.
    (b) Settlement Offers.--
            (1) By claimant.--Any claimant may, in addition to any 
        claim for relief made in accordance with State law as provided 
        for in subsection (a), include in the complaint filed by such 
        complainant an offer of settlement for a specific dollar 
        amount.
            (2) By defendant.--Within 60 days after service of the 
        complaint of a claimant of the type referred to in paragraph 
        (1), or within the time permitted pursuant to State law for a 
        responsive pleading, whichever is longer, the defendant may 
        make an offer of settlement for a specific dollar amount, 
        except that if such pleading includes a motion to dismiss in 
        accordance with applicable State law, the defendant may tender 
        such relief to the claimant within 10 days after the 
        determination of the court regarding such motion.
    (c) Extension of Time.--
            (1) Authority.--In any case in which an offer of settlement 
        is made pursuant to subsection (b), the court may, upon motion 
        made prior to the expiration of the applicable period for 
        response, enter an order extending such period.
            (2) Contents of extension order.--Any order extending the 
        period for response under paragraph (1) shall contain a 
        schedule for discovery of evidence material to the issue of the 
        appropriate amount of relief, and shall not extend such period 
        for more than 60 days. Any such motion shall be accompanied by 
        a supporting affidavit of the moving party setting forth the 
        reasons why such extension is necessary to promote the 
        interests of justice and stating that the information likely to 
        be discovered is material, and is not, after reasonable 
        inquiry, otherwise available to the moving party.
    (d) Rejection of Offer by Defendant Offeree.--If the defendant, as 
offeree, does not accept the offer of settlement made by a claimant in 
accordance with subsection (b)(1) within the time permitted pursuant to 
State law for a responsive pleading or, if such pleading includes a 
motion to dismiss in accordance with applicable law, within 30 days 
after the court's determination regarding such motion, and a verdict is 
entered in such action equal to or greater than the specific dollar 
amount of such offer of settlement, the court shall enter judgment 
against the defendant and shall include in such judgment an amount for 
the claimant's reasonable attorney's fees and costs. Such fees shall be 
offset against any fees owed by the claimant to the claimant's attorney 
by reason of the verdict.
    (e) Rejection of Offer by Claimant Offeree.--If the claimant, as 
offeree, does not accept the offer of settlement made by a defendant in 
accordance with subsection (b)(2) within 30 days after the date on 
which such offer is made and a verdict is entered in such action equal 
to or less than the specific dollar amount of such offer of settlement, 
the court shall reduce the amount of the verdict in such action by an 
amount equal to the reasonable attorney's fees and costs owed by the 
defendant to the defendant's attorney by reason of the verdict, except 
that the amount of such reduction shall not exceed that portion of the 
verdict which is allocable to noneconomic loss and economic loss for 
which the claimant has received or will receive collateral benefits.
    (f) Calculation of Attorney's Fees.--For purposes of this section, 
attorney's fees shall be calculated on the basis of an hourly rate that 
should not exceed that which is considered acceptable in the community 
in which the attorney practices, considering the attorney's 
qualifications and experience and the complexity of the case.

         Subtitle C--Alternative Dispute Resolution Procedures

SEC. 321. ESTABLISHMENT OF BOARD OF ADVISORS.

    (a) In General.--The Secretary shall establish an Alternative 
Dispute Resolution Board of Advisors to make recommendations to the 
Secretary concerning the establishment of a model voluntary alternative 
dispute resolution program.
    (b) Composition.--The Board of Advisors shall be composed of 
members to be appointed by the Secretary. Such members shall include 
representatives of--
            (1) patient advocacy groups;
            (2) State governments;
            (3) physicians groups;
            (4) hospitals;
            (5) health and medical malpractice insurers;
            (6) medical product manufacturers; and
            (7) other professions or industries determined appropriate 
        by the Secretary.
    (c) Duties of Board.--The Board of Advisors shall--
            (1) provide advice and assistance to representatives from 
        State governments concerning the establishment of alternative 
        dispute resolution systems; and
            (2) not later than 1 year after the date of enactment of 
        this Act, submit a recommendation to the Secretary for the 
        implementation of a model voluntary alternative dispute 
        resolution system.
    (d) Approval by Secretary.--The Secretary shall approve the model 
system submitted under subsection (c)(2) with any modifications that 
the Secretary determines appropriate.

SEC. 322. DEVELOPMENT OF STATE VOLUNTARY DISPUTE RESOLUTION PROCEDURES.

    (a) Program to Encourage Adoption.--The Secretary shall develop and 
implement a program to encourage States to develop and implement 
voluntary alternative dispute resolution procedures that meet the 
requirements of this title.
    (b) Failure to Adopt Procedures.--With respect to a State that has 
not adopted alternative dispute resolution procedures that meet the 
requirements of this title by the date that occurs 2 years after the 
date of enactment of this Act, such State shall be required to adopt 
the model voluntary dispute resolution procedure system approved by the 
Secretary under section 321(d).

SEC. 323. APPLICATION OF EXISTING PROCEDURES, REBUTTABLE PRESUMPTION.

    (a) Offer to Proceed.--With respect to a State that has an 
alternative dispute resolution system in effect that meets the 
requirements of this title, in lieu of or in addition to making an 
offer of settlement under section 311, a claimant or defendant may, 
within the time permitted for the making of such an offer under section 
311, offer to proceed pursuant to any voluntary alternative dispute 
resolution procedure established or recognized under the law of the 
State in which the civil action for damages for harm caused through a 
medical procedure is brought or under the rules of the court in which 
such action is maintained.
    (b) Refusal to Proceed.--If the recipient of an offer to proceed 
under subsection (a) refuses to proceed pursuant to an alternative 
dispute resolution procedure and the court determines that such refusal 
was unreasonable or not in good faith, the court shall assess 
reasonable attorney's fees and costs against the offeree.
    (c) Rebuttable Presumption.--For the purposes of this section, 
there shall be created a rebuttable presumption that a refusal by an 
offeree under subsection (b) to proceed pursuant to an alternative 
dispute resolution procedure was unreasonable or not in good faith, if 
a verdict is rendered in favor of the offeror.

      Subtitle D--Uniform Standards for Medical Malpractice Cases

SEC. 331. APPLICATION TO CIVIL ACTIONS.

    This subtitle shall apply to any medical malpractice action brought 
in any Federal or State court and any medical malpractice claim 
resolved through an alternative dispute resolution system.

SEC. 332. DAMAGES.

    (a) Payments.--With respect to a civil action or claim of the type 
referred to in section 331, no person may be required to pay more than 
$100,000 in a single payment for future losses, but such person shall 
be permitted to make such payments on a periodic basis. The periods for 
such payments shall be determined by the court, based upon projections 
of such future losses. This subsection shall apply to awards of 
plaintiff's damages.
    (b) Limitation on Noneconomic Damages.--With respect to a civil 
action or claim of the type referred to in section 331, the total 
amount of damages that may be awarded to an individual and the family 
members of such individual for noneconomic losses resulting from an 
injury alleged under such action or claim may not exceed $250,000, 
regardless of the number of health care professionals and health care 
providers against whom the claim is brought or the number of claims 
brought with respect to the injury.
    (c) Mandatory Offsets for Damages Paid by a Collateral Source.--
            (1) In general.--With respect to a civil action or claim of 
        the type referred to in section 331, the total amount of 
        damages received by an individual under such action or claim 
        shall be reduced, in accordance with paragraph (2), by any 
        other payment that has been, or will be, made to an individual 
        to compensate such individual for the injury that was the 
        subject of such action or claim.
            (2) Amount of reduction.--The amount by which an award of 
        damages to an individual for an injury shall be reduced under 
        paragraph (1) shall be--
                    (A) the total amount of any payments (other than 
                such award) that have been made or that will be made to 
                such individual to compensate such individual for the 
                injury that was the subject of the action or claim; 
                minus
                    (B) the amount paid by such individual (or by the 
                spouse, parent, or legal guardian of such individual) 
                to secure the payments described in subparagraph (A).
    (d) Attorneys' Fees.--With respect to a civil action or claim of 
the type referred to in section 331, attorneys' fees may not exceed--
            (1) 25 percent of the first $150,000 of any award or 
        settlement under such action or claim; and
            (2) 15 percent of any additional amounts in excess of 
        $150,000.

SEC. 333. JOINT AND SEVERAL LIABILITY FOR NONECONOMIC DAMAGES.

    (a) In General.--With respect to a civil action or claim of the 
type referred to in section 331, the liability of each defendant for 
noneconomic damages shall be several only and shall not be joint. Each 
defendant shall be liable only for the amount of noneconomic damages 
allocated to such defendant in direct proportion to such defendant's 
percentage of responsibility as determined under subsection (b).
    (b) Proportion of Responsibility.--For purposes of this section, 
the trier of fact shall determine the proportion of responsibility of 
each party for the claimant's harm.

SEC. 334. UNIFORM STATUTE OF LIMITATIONS.

    (a) In General.--Except as provided in subsection (b), no medical 
malpractice civil action may be initiated after the expiration of the 
2-year period that begins on the date on which the alleged injury 
should reasonably have been discovered, but in no event later than 4 
years after the date of the alleged occurrence of the injury.
    (b) Exception for Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, no medical 
malpractice claim may be initiated after the expiration of the 2-year 
period that begins on the date on which the alleged injury should 
reasonably have been discovered, but in no event later than 4 years 
after the date of the alleged occurrence of the injury or the date on 
which the minor attains 8 years of age, whichever is later.

SEC. 335. PROVISION FOR DROP IN DELIVERIES

    With respect to a civil action of the type referred to in section 
331, for alleged medical malpractice related to services provided 
during the delivery of a baby, a court shall only find in favor of the 
claimant if such malpractice on the part of the defendant health care 
professional is proven by clear and convincing evidence, except that 
such evidentiary standard shall only apply if a defendant did not 
previously provide prenatal care to the claimant for this pregnancy, 
was not part of group practice that previously treated the claimant 
during the pregnancy resulting in this delivery, or was not providing 
coverage pursuant to an agreement with another health care professional 
for this delivery.

                Subtitle E--Uniform Disciplinary Reforms

SEC. 341. REQUIREMENT OF COMPLIANCE.

    Not later than 2 years after the date of enactment of this Act, a 
State shall comply with the requirements of this subtitle.

SEC. 342. FUNDS FOR STATE DISCIPLINARY ACTIVITIES.

    Each State shall allocate the total amount of fees paid to the 
State in each year for the licensing or certification of each type of 
health care practitioner, or an amount of State funds equal to such 
total amount, to the State agency or agencies responsible for the 
conduct of licensing and disciplinary actions with respect to such type 
of health care practitioner.

SEC. 343. MEMBERSHIP OF STATE HEALTH CARE PRACTITIONER BOARDS.

    Each State shall permit the general public to be represented on 
State health care practitioner disciplinary boards. Not less than 25 
percent of the membership of each such health care practitioner 
disciplinary board shall be appointed from among the general public.

SEC. 344. IMMUNITY FOR MEMBERS OF STATE HEALTH CARE PRACTITIONER 
              BOARDS.

    There shall be no monetary liability on the part of, and no cause 
of action for damages shall arise against, any current or former 
member, officer, administrator, staff member, committee member, 
examiner, representative, agent, employee, consultant, witness, or any 
other individual serving or having served on a State health care 
practitioner disciplinary board, either as a part of the board's 
operation or as an individual, as a result of any act, omission, 
proceeding, conduct or decision related to the duties of such 
individual undertaken or performed in good faith and within the scope 
of the function of the board.

SEC. 345. RISK MANAGEMENT PROGRAMS.

    Not later than 2 years after the date of enactment of this Act, 
each State shall have in effect a Statewide risk management program, to 
reduce the incidence of medical malpractice that meets any regulations 
promulgated by the Secretary for the establishment of such program.

SEC. 346. PUNITIVE DAMAGES.

    (a) Trust Fund.--Each State shall establish a health care 
disciplinary trust fund consisting of such amounts as are transferred 
to the trust fund under subsection (b).
    (b) Transfer of Amounts.--Each State shall require that all awards 
of punitive damages resulting from all medical malpractice and medical 
products civil actions in that State be transferred to the trust fund 
established under subsection (a) in the State.
    (c) Obligations From Trust Fund.--The chief executive officer of a 
State shall obligate such sums as are available in the trust fund 
established in that State under subsection (a) to provide additional 
resources to State health care practitioner disciplinary boards for the 
disciplining of health care practitioners and to provide additional 
resources for consumer protection activities of the State.

                      Subtitle F--Medical Products

SEC. 351. LIMITATION ON AWARD OF PUNITIVE DAMAGES IN PRODUCT LIABILITY 
              ACTIONS INVOLVING DRUGS AND DEVICES.

    (a) Definitions.--As used in this section:
            (1) Device.--The term ``device'' has the meaning given the 
        term in section 201(h) of the Federal Food, Drug, and Cosmetic 
        Act (21 U.S.C. 321(h)).
            (2) Drug.--The term ``drug'' has the meaning given the term 
        in section 201(g)(1) of the Federal Food, Drug, and Cosmetic 
        Act (21 U.S.C. 321(g)(1)).
            (3) Health care producer.--The term ``health care 
        producer'' means any firm or business enterprise that designs, 
        manufactures, produces, or sells a drug or device that is the 
        subject of a liability action.
    (b) Limitation.--
            (1) In general.--Punitive damages otherwise permitted by 
        applicable law shall not be awarded in an action under this Act 
        against a health care producer of a drug or device that caused 
        the harm complained of by the claimant if--
                    (A) the drug or device--
                            (i) was subject to approval under section 
                        505 (21 U.S.C. 355) or premarket approval under 
                        section 515 (21 U.S.C. 360e), respectively, of 
                        the Federal Food, Drug, and Cosmetic Act, by 
                        the Food and Drug Administration, with respect 
                        to--
                                    (I) the safety of the formulation 
                                or performance of the aspect of the 
                                drug or device that caused the harm; or
                                    (II) the adequacy of the packaging 
                                or labeling of the drug or device; and
                            (ii) was approved by the Food and Drug 
                        Administration; or
                    (B) the drug or device is generally recognized as 
                safe and effective pursuant to conditions established 
                by the Food and Drug Administration and applicable 
                regulations, including packaging and labeling 
                regulations.
            (2) Withheld information; misrepresentation; illegal 
        payment.--The provisions of paragraph (1) shall not apply in 
        any case in which the defendant--
                    (A) withheld from or misrepresented to the Food and 
                Drug Administration or any other agency or official of 
                the Federal Government information that is material and 
                relevant to the performance of the drug or device; or
                    (B) made an illegal payment to an official of the 
                Food and Drug Administration for the purpose of 
                securing approval of the drug or device.
    (c) Separate Proceeding.--
            (1) Considerations.--At the request of the health care 
        producer in an action described in subsection (b), the trier of 
        fact shall consider in a separate proceeding--
                    (A) whether punitive damages are to be awarded and 
                the amount of the award; or
                    (B) the amount of punitive damages following a 
                determination of punitive liability.
            (2) Evidence.--If a separate proceeding is requested in 
        accordance with paragraph (1), evidence relevant only to the 
        claim of punitive damages, as determined by applicable State 
        law, shall be inadmissible in any proceeding to determine 
        whether compensatory damages are to be awarded.
    (d) Amount of Punitive Damages.--In determining the amount of 
punitive damages in an action described in subsection (b) or (c), the 
trier of fact shall consider all relevant evidence, including--
            (1) the financial condition of the health care producer;
            (2) the severity of the harm caused by the conduct of the 
        health care producer;
            (3) the duration of the conduct or any concealment of the 
        conduct by the health care producer;
            (4) the profitability of the conduct to the health care 
        producer;
            (5) the number of products sold by the health care producer 
        of the kind causing the harm complained of by the claimant;
            (6) awards of punitive or exemplary damages to persons 
        similarly situated to the claimant;
            (7) prospective awards of compensatory damages to persons 
        similarly situated to the claimant;
            (8) any criminal penalties imposed on the health care 
        producer as a result of the conduct complained of by the 
        claimant; and
            (9) the amount of any civil fines assessed against the 
        defendant as a result of the conduct complained of by the 
        claimant.
    (e) Strict Liability Defense.--In a civil action brought by a 
claimant in a Federal or State court under which the claimant alleges 
that a health care producer of a drug or device is strictly liable to 
such claimant for injuries sustained from the use of such drug or 
device, a showing by the defendant that such drug or devices was 
subject to approval and was approved by the Food and Drug 
Administration as described in subsection (b)(1)(A) shall be an 
absolute defense to such strict liability claims.

                  Subtitle G--Community Health Centers

SEC. 361. COMMUNITY AND MIGRANT HEALTH CENTERS RISK RETENTION GROUP.

    (a) In General.--Subpart I of part D of title III of the Public 
Health Service Act (42 U.S.C. 254b et seq.) is amended by adding at the 
end thereof the following new section:

``SEC. 330A. RISK RETENTION GROUP.

    ``(a) Grant.--The Secretary shall make a grant to an entity that 
represents recipients of assistance under section 329 and 330 to enable 
such entity to develop a business plan as described in subsection 
(b)(2) and establish a nationwide risk retention group as provided for 
in Liability Risk Retention Act of 1986 (15 U.S.C. 3901 et seq.), and 
that meets the requirements of this section.
    ``(b) Business Plan and Formation.--
            ``(1) Development and establishment.--
                    ``(A) In general.--Not later than September 30, 
                1993, the grantee shall develop a business plan as 
                described in paragraph (2) and have established a risk 
                retention group that meets the requirements of section 
                2(4) of the Product Liability Risk Retention Act of 
                1981 (15 U.S.C. 3901(2)(4)).
                    ``(B) Establishment.--In establishing the risk 
                retention group under subparagraph (A), the grantee 
                shall take all steps, in accordance with this 
                subsection, necessary to enable such group to be 
                prepared to issue insurance policies under this 
                section.
            ``(2) Business plan.--The grantee shall develop a plan for 
        the operation of the risk retention group that shall include 
        all actuarial reports and studies conducted with respect to the 
        formation, capitalization, and operation of the group.
            ``(3) Structure, rights, and duties of the risk retention 
        group.--
                    ``(A) Board of directors.--
                            ``(i) Appointment.--The board of directors 
                        of the risk retention group shall consist of 12 
                        members to be appointed by the recipient of the 
                        grant under subsection (a), and approved as 
                        provided in clause (ii).
                            ``(ii) Approval.--The initial members 
                        appointed under clause (i) shall be approved by 
                        the Secretary, and shall serve for a term as 
                        provided in clause (iii). All subsequent 
                        members shall be subject to the approval of the 
                        members of the risk retention group.
                            ``(iii) Terms.--The recipient of the grant 
                        under subsection (a) shall appoint the members 
                        of the board under clause (i) as follows:
                                    ``(I) Four members shall be 
                                appointed for an initial term of 1 
                                year.
                                    ``(II) Four members shall be 
                                appointed for an initial term of 2 
                                years.
                                    ``(III) Four members shall be 
                                appointed for an initial term of 3 
                                years.
                        Members serving terms other than initial terms 
                        shall serve for 3 years. Members may serve 
                        successive terms.
                            ``(iv) Executive director.--The Executive 
                        Director of the board shall be elected by the 
                        members of the board, and shall serve at the 
                        pleasure of such members.
                            ``(v) Vacancies.--Vacancies on the board 
                        shall be filled through a vote of the remaining 
                        members of the board, subject to the approval 
                        of the members of the risk retention group.
                    ``(B) Bylaws.--The board shall develop the bylaws 
                of the risk retention group that shall be subject to 
                the disapproval of the Secretary. Any changes that the 
                board desires to make in such bylaws shall also be 
                subject to the disapproval of the Secretary. The 
                Secretary shall provide the board with 90 days notice 
                of the Secretary's intent to disapprove a bylaw.
                    ``(C) Administration.--The risk retention group may 
                negotiate with other entities for the purposes of 
                managing and administering the risk retention group, 
                and for purposes of obtaining reinsurance.
                    ``(D) Provision of insurance.--The risk retention 
                group shall provide professional liability insurance, 
                and other types of profitable insurance approved for 
                issuance by the Secretary, to migrant and community 
                health centers that receive assistance under sections 
                329 and 330 and that meet the requirements of 
                subparagraph (E).
                    ``(E) Participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), all community and migrant health 
                        centers that receive assistance under section 
                        329 and 330 shall become members in the risk 
                        retention group established under this section 
                        and shall purchase the professional liability 
                        insurance that is offered by such group for 
                        such centers and any health care staff or 
                        personnel employed by such centers or under 
                        contract with such centers. All professional 
                        staff members of such centers shall be eligible 
                        to obtain the insurance offered by such group.
                            ``(ii) Exceptions.--
                                    ``(I) Good cause.--The Secretary 
                                may, on a showing of good cause by the 
                                center, exempt such center from the 
                                requirements of clause (i).
                                    ``(II) Failure to meet 
                                conditions.--If the risk retention 
                                group determines that a center is not 
                                complying with the established 
                                underwriting standards, such group may 
                                decline to provide insurance to such 
                                center. The risk retention group shall 
                                provide a center with 60 days notice of 
                                a decision by the group not to provide 
                                insurance to such center.
                                    ``(III) Hearing.--Prior to the 
                                Secretary granting an exemption or 
                                severance as requested in an 
                                application submitted under subclause 
                                (I), the Secretary shall require that 
                                the applicant provide evidence 
                                concerning its application and shall 
                                afford the risk retention group an 
                                opportunity to address the allegations 
                                contained in such application. The 
                                Secretary may grant the center 
                                temporary relief under this 
                                subparagraph without a hearing in 
                                emergency situations.
                    ``(F) Applicability of insurance to claims.--
                Insurance provided by the risk retention group under 
                this section shall apply to all claims filed against a 
                covered community or migrant health center after the 
                initiation of insurance coverage by the risk retention 
                group, including acts that occur prior to coverage 
                under this section that are not covered by other 
                insurance.
    ``(c) Submission of Business Plan to Outside Experts.--After the 
development of the business plan and the establishment of the risk 
retention group as required under subsection (b), the risk retention 
group shall enter into a contract with individuals or entities who are 
insurance, financing, and business experts to require such individuals 
or entities to analyze and audit the group. Such individuals and 
entities shall provide the group with an evaluation of such plan and 
group.
    ``(d) Submission of Plan and Evaluation.--
            ``(1) In general.--The risk retention group shall submit to 
        the Secretary the business plan required under subsection (b) 
        and the evaluation completed under subsection (c) to the 
        Secretary.
            ``(2) Determination by secretary.--Not later than September 
        30, 1993, the Secretary shall make a determination, based on 
        the plan and evaluation submitted under paragraph (1), of 
        whether the operation of the risk retention group results in an 
        increase in the amount of funds available for use by community 
        and migrant health centers and other entities that receive 
        assistance under sections 329 and 330 in the 2-year period 
        ending on September 30, 1995.
            ``(3) Implementation.--If the Secretary makes an 
        affirmative determination under paragraph (1), the Secretary 
        shall permit the implementation of the plan and the operation 
        of the risk retention group as provided for in this section, 
        and shall capitalize such group as provided for in subsection 
        (e)(2).
    ``(e) Funding.--
            ``(1) Capitalization.--There are authorized to be 
        appropriated to carry out this section, $40,000,000 for each of 
        the fiscal years 1993 and 1994. Amounts appropriated under this 
        paragraph may only be made available if the Secretary makes an 
        affirmative determination under subsection (d)(2).
            ``(2) Remaining assets.--All assets of the risk retention 
        group that remain after the dissolution of such group shall 
        become the property of the Secretary who shall use such assets 
        to pay the remaining expenses of the group.
            ``(3) Savings.--Any amount saved by the grantees under 
        sections 329 and 330 as a result of the establishment of the 
        risk retention group shall be utilized--
                    ``(A) to provide additional services of the type 
                permitted under section 329 or 330, as appropriate; and
                    ``(B) to defend against medical malpractice claims 
                arising from services provided by such grantees.''.
    (b) Conforming Amendments.--
            (1) Section 329(h)(1)(A) of the Public Health Service Act 
        (42 U.S.C. 254b(h)(1)(A)) is amended by striking ``1991'' and 
        inserting ``1994''.
            (2) Section 330(g)(2)(A) of such Act (42 U.S.C. 
        254b(h)(1)(A)) is amended by inserting ``, and such sums as may 
        be necessary for fiscal year 1993'' after ``1991''.

                  Subtitle H--Miscellaneous Provisions

SEC. 371. SEVERABILITY.

    If any provision of this title, or an amendment made by this title, 
or the application of such provision to any person or circumstance is 
held to be unconstitutional, the remainder of this title and the 
amendments made by this title, and the application of the provisions of 
such to any person or circumstance shall not be affected thereby.

SEC. 372. COMPLIANCE.

    Except as otherwise specifically provided, not later than 2 years 
after the date of enactment of this Act, a State shall enact, adopt, or 
otherwise comply with the provisions of this title.

                   TITLE IV--PUBLIC HEALTH PROVISIONS

               Subtitle A--New Basic Health Care Program

SEC. 401. ESTABLISHMENT OF BASICARE PROGRAM.

    (a) In General.--The Social Security Act (42 U.S.C. 301 et seq.) is 
amended by adding at the end thereof the following new title:

                         ``TITLE XXI--BASICARE

                      ``table of contents of title

``Sec. 2101. Appropriation.
``Sec. 2102. State plans for BasiCare assistance.
``Sec. 2103. Payment to States.
``Sec. 2104. Quality assurance.
``Sec. 2105. Definitions.

                            ``appropriation

    ``Sec. 2101. For the purpose of providing basic health care 
benefits to low-income uninsured individuals not eligible for coverage 
under title XIX of this Act, there is hereby authorized to be 
appropriated for each fiscal year a sum sufficient to carry out the 
purposes of this title. The sums made available under this section 
shall be used for making payments to States which have submitted, and 
had approved by the Secretary, State plans for BasiCare assistance.

                 ``state plans for basicare assistance

    ``Sec. 2102. (a) In General.--A State plan for BasiCare assistance 
must--
            ``(1) provide either for the establishment or designation 
        of a single State agency to administer or supervise the 
        administration of the program established under this title;
            ``(2) provide for financial participation by the State 
        equal to the non-Federal share of the expenditures under the 
        plan with respect to which payments under section 2103 are 
        authorized by this title;
            ``(3) provide health assistance to all eligible individuals 
        described in subsection (b), and at the option of the State, 
        subsets of basic medical and social benefits to subgroups of 
        such eligible individuals;
            ``(4) meet the quality assurance requirements of section 
        2104;
            ``(5) provide that the State will not modify its State plan 
        under title XIX of this Act so as to result in individuals 
        eligible under the State's plan under such title becoming 
        eligible for enrollment under BasiCare;
            ``(6) meet the requirements of paragraphs (4), (6), (7), 
        (19), (45), (46), (48), and (49) of section 1902(a); and
            ``(7) meet such further requirements as the Secretary may 
        specify.
    ``(b) Eligibility for BasiCare.--An individual is eligible to 
receive benefits under this title if such individual--
            ``(1) has a family income below 200 percent of the income 
        official poverty line (as defined by the Office of Management 
        and Budget and revised annually in accordance with section 
        673(2) of the Omnibus Budget Reconciliation Act of 1981);
            ``(2) is not otherwise eligible for medical assistance 
        under a State plan under title XIX of this Act; and
            ``(3) is not otherwise covered under a health plan offered 
        by the individual's employer.

                          ``payment to states

    ``Sec. 2103. (a) In General.--From the sums appropriated therefor 
(subject to the expenditure limitation described in subsection (b)), 
the Secretary shall pay to each State which has a plan approved under 
this title, for each quarter, beginning with the quarter commencing 
January 1, 1993--
            ``(1) an amount equal to the Federal health assistance 
        percentage (as defined in section 2105(b)); plus
            ``(2) an amount equal to 3 percent of the average per 
        person expenditures under the plan for each individual under 
        the plan enrolled in a managed care setting (including health 
        maintenance organizations, community health centers and such 
        other types of providers as designated by the Secretary).
    ``(b) Limit on Federal Expenditures as Health Assistance.--Payments 
under this section to a State may not exceed an average of $10,000 per 
year, per enrolled individual.
    ``(c) Cost-Sharing.--(1) With respect to individuals eligible for 
health assistance under this title whose income is between 100 and 200 
percent of the income official poverty line (as defined by the Office 
of Management and Budget and revised annually in accordance with 
section 673(2) of the Omnibus Budget Reconciliation Act of 1981), the 
State may impose such deductibles, copayments or premiums with respect 
to such individual's coverage under this title as the State may deem 
appropriate, subject to the limitation in paragraph (2).
    ``(2) A State may not impose a deductible, copayment or premium 
with respect to an individual described in paragraph (1) that is in 
excess of 5 percent of such individual's gross income during a calendar 
year.

                          ``quality assurance

    ``Sec. 2104. The Secretary shall establish a program to assure the 
quality of services provided under this title. In establishing such 
program, the Secretary shall provide that Federal employees and 
contractors are utilized in ensuring compliance with the quality 
assurance provisions of this title and provide for criteria to disallow 
payment under section 2103 for services found not to meet the quality 
assurance provisions of this title established by the Secretary.

                             ``definitions

    ``Sec. 2105. (a) Health Assistance.--For purposes of this title, 
the term `health assistance' means a set of basic medical and social 
benefits as defined by the State, including services provided in 
skilled nursing facilities or in other long-term care settings for a 
period not to exceed 45 days in a calendar year.
    ``(b) Federal Health Assistance Percentage.--For purposes of this 
title, the term `Federal health assistance percentage' means the 
Federal medical assistance percentage as defined in section 1905(b).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective with respect to payments for health assistance 
beginning on or after January 1, 1993.

SEC. 402. GAO STUDY OF PAYMENTS UNDER BASICARE.

    The Comptroller General of the Government Accounting Office shall 
study and report to Congress by no later than January 1, 1995, on 
payments to providers of services under title XXI of the Social 
Security Act and shall include in such report recommendations on 
whether or not payments under such title to managed care programs need 
to be increased in order to encourage greater participation of such 
entities under such title.

SEC. 411. EXPANSION OF MEDICAID WAIVER AUTHORITY.

    (a) In General.--Section 1115 of the Social Security Act (42 U.S.C. 
1315) is amended by adding at the end the following new subsection:
    ``(e)(1) Notwithstanding any other provision of this title, with 
respect to any waiver granted by the Secretary under title XIX (except 
waivers under section 1915(c)) after such a waiver has been in effect 
for over a period of 3 years, the Secretary shall not require a State 
operating under such a waiver to conduct an independent assessment of 
such waiver unless the State proposes a substantial (as determined by 
the Secretary) amendment to the waiver agreement.
    ``(2) Any waiver granted under title XIX which has been in effect 
for over a period of 3 years shall be considered, at the option of a 
State, to be a permanent amendment to the State's plan for medical 
assistance in effect under section 1902.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective with respect to waivers granted under title XIX of the 
Social Security Act beginning before, on or after January 1, 1993.

SEC. 412. ESTABLISHMENT OF FEDERAL MEDICAL WAIVER DEMONSTRATION BOARD.

    (a) Establishment.--There is established a board to be known as the 
Federal Medical Waiver Demonstration Board (hereinafter referred to as 
the ``Board'').
    (b) Membership.--The Board shall be composed of--
            (1) the Secretary of Health and Human Services;
            (2) the Secretary of Labor; and
            (3) the Secretary of Veterans Affairs.
    (c) Duties and Powers of the Board.--
            (1) Review of state applications.--The Board shall review 
        applications submitted by States to conduct health care related 
        demonstration projects in the State and shall approve within 3 
        months of receiving such applications those applications which 
        meet the requirements of this section. The Board in reviewing 
        and approving the application of a State shall make a 
        determination whether such application provides for a 
        demonstration project which--
                    (A) would provide that at least 95 percent of the 
                residents of the State would have access to basic 
                health care services (as defined by the Board);
                    (B) would improve the delivery of and increase 
                access to health care services for a significant number 
                of individuals in the State; and
                    (C) would assure the quality of care of health care 
                services provided under such project.
            (2) Development of model state plans.--The Board shall 
        develop and publish in the Federal Register, no later than 6 
        months after the date of enactment of this Act, at least 3 
        different model health care delivery plans that provide for new 
        approaches that may be adopted by States in providing and 
        furnishing health care services to residents of the State.
            (3) Waiver of certain federal health related provisions.--
        The Board upon approving the application of a State to conduct 
        a demonstration project under this section shall waive to the 
        extent necessary to allow the State to conduct such a 
        demonstration project the following provisions of Federal law:
                    (A) The Public Health Service Act.
                    (B) Subject to paragraph (4), title XVIII of the 
                Social Security Act.
                    (C) Titles XIX and XXI of the Social Security Act.
                    (D) All health care programs operated under laws 
                administered by the Secretary of Veterans Affairs.
                    (E) The Employee Retirement Income Security Act of 
                1974.
            (4) Limited waiver of medicare.--The Board may waive the 
        provisions of title XVIII of the Social Security Act only if a 
        State provides that all individuals residing in the State 
        receiving benefits under the medicare program under such title 
        are eligible for health care benefits under the program 
        operated by the State under a waiver granted under this section 
        and that such health care benefits provided to such individuals 
        are equal in amount, duration, and scope to the benefits 
        provided under such title.
    (d) 3-Year Renewal of Waiver.--A waiver approved by the Board for a 
State shall be in effect in the State for a 36-month period commencing 
from the date of such approval. At the end of the 36-month period such 
waiver shall be renewed unless the Board determines that the State is 
not substantially in compliance with the requirements described in 
subparagraphs (A) through (C) of subsection (c)(1).
    (e) Budget Neutrality.--The Board in carrying out its duties under 
this section shall provide that total Federal expenditures under the 
programs for which waivers are granted under this section are no 
greater than what such expenditures would have been but for the waivers 
granted under this section.

                  TITLE V--MEDICALLY UNDERSERVED AREAS

            Subtitle A--Public Health Service Act Provisions

SEC. 501. NATIONAL HEALTH SERVICE CORPS.

    Section 338H(b) of the Public Health Service Act (42 U.S.C. 
254q(b)) is amended--
            (1) in paragraph (1), by striking ``and such sums'' and all 
        that follows through the end thereof and inserting 
        ``$118,900,000 for each of the fiscal years 1993 through 
        1997.''; and
            (2) in paragraph (2)--
                    (A) by redesignating subparagraphs (A) and (B) as 
                subparagraphs (B) and (C), respectively; and
                    (B) by inserting before subparagraph (B) (as so 
                redesignated) the following new subparagraph:
                    ``(A) In general.--Of the amount appropriated under 
                paragraph (1) for each fiscal year, the Secretary shall 
                utilize 25 percent of such amount to carry out section 
                338A and 75 percent of such amount to carry out section 
                338B.''.

SEC. 502. ESTABLISHMENT OF GRANT PROGRAM.

    Subpart I of part D of title III of the Public Health Service Act 
(42 U.S.C. 254b et seq.) is amended by adding at the end thereof the 
following new section:

``SEC. 330A. COMMUNITY BASED PRIMARY HEALTH CARE GRANT PROGRAM.

    ``(a) Establishment.--The Secretary shall establish and administer 
a program to provide allotments to States to enable such States to 
provide grants for the creation or enhancement of community based 
primary health care entities that provide services to pregnant women 
and children up to age three.
    ``(b) Allotments to States.--
            ``(1) In general.--From the amounts available for allotment 
        under subsection (h) for a fiscal year, the Secretary shall 
        allot to each State an amount equal to the product of the grant 
        share of the State (as determined under paragraph (2)) 
        multiplied by the amount available for allotment for such 
        fiscal year.
            ``(2) Grant share.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the grant share of a State shall be the product of the 
                need-adjusted population of the State (as determined 
                under subparagraph (B)) multiplied by the Federal 
                matching percentage of the State (as determined under 
                subparagraph (C)), expressed as a percentage of the sum 
                of the products of such factors for all States.
                    ``(B) Need-adjusted population.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the need-adjusted population 
                        of a State shall be the product of the total 
                        population of the State (as estimated by the 
                        Secretary of Commerce) multiplied by the need 
                        index of the State (as determined under clause 
                        (ii)).
                            ``(ii) Need index.--For purposes of clause 
                        (i), the need index of a State shall be the 
                        ratio of--
                                    ``(I) the weighted sum of the 
                                geographic percentage of the State (as 
                                determined under clause (iii)), the 
                                poverty percentage of the State (as 
                                determined under clause (iv)), and the 
                                multiple grant percentage of the State 
                                (as determined under clause (v)); to
                                    ``(II) the general population 
                                percentage of the State (as determined 
                                under clause (vi)).
                            ``(iii) Geographic percentage.--
                                    ``(I) In general.--For purposes of 
                                clause (ii)(I), the geographic 
                                percentage of the State shall be the 
                                estimated population of the State that 
                                is residing in nonurbanized areas (as 
                                determined under subclause (II)) 
                                expressed as a percentage of the total 
                                nonurbanized population of all States.
                                    ``(II) Nonurbanized population.--
                                For purposes of subclause (I), the 
                                estimated population of the State that 
                                is residing in non-urbanized areas 
                                shall be one minus the urbanized 
                                population of the State (as determined 
                                using the most recent decennial 
                                census), expressed as a percentage of 
                                the total population of the State (as 
                                determined using the most recent 
                                decennial census), multiplied by the 
                                current estimated population of the 
                                State.
                            ``(iv) Poverty percentage.--For purposes of 
                        clause (ii)(I), the poverty percentage of the 
                        State shall be the estimated number of people 
                        residing in the State with incomes below 200 
                        percent of the income official poverty line (as 
                        determined by the Office of Management and 
                        Budget) expressed as a percentage of the total 
                        number of such people residing in all States.
                            ``(v) Multiple grant percentage.--For 
                        purposes of clause (ii)(I), the multiple grant 
                        percentage of the State shall be the amount of 
                        Federal funding received by the State under 
                        grants awarded under sections 329, 330 and 340, 
                        expressed as a percentage of the total amounts 
                        received under such grants by all States. With 
                        respect to a State, such amount shall not 
                        exceed twice the general population percentage 
                        of the State under clause (vi) or be less than 
                        one half of the States general population 
                        percentage.
                            ``(vi) General population percentage.--For 
                        purposes of clause (ii)(II), the general 
                        population percentage of the State shall be the 
                        total population of the State (as determined by 
                        the Secretary of Commerce) expressed as a 
                        percentage of the total population of all 
                        States.
                    ``(C) Federal matching percentage.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the Federal matching 
                        percentage of the State shall be equal to one 
                        less the State matching percentage (as 
                        determined under clause (ii)).
                            ``(ii) State matching percentage.--For 
                        purposes of clause (ii), the State matching 
                        percentage of the State shall be 0.25 
                        multiplied by the ratio of the total taxable 
                        resource percentage (as determined under clause 
                        (iii)) to the need-adjusted population of the 
                        State (as determined under subparagraph (B)).
                            ``(iii) Total taxable resource 
                        percentage.--For purposes of clause (ii), the 
                        total taxable resources percentage of the State 
                        shall be the total taxable resources of a State 
                        (as determined by the Secretary of the 
                        Treasury) expressed as a percentage of the sum 
                        of the total taxable resources of all States.
            ``(3) Annual estimates.--
                    ``(A) In general.--If the Secretary of Commerce 
                does not produce the annual estimates required under 
                paragraph (2)(B)(iv), such estimates shall be 
                determined by multiplying the percentage of the 
                population of the State that is below 200 percent of 
                the income official poverty line as determined using 
                the most recent decennial census by the most recent 
                estimate of the total population of the State. Except 
                as provided in subparagraph (B), the calculations 
                required under this subparagraph shall be made based on 
                the most recent 3 year average of the total taxable 
                resources of individuals within the State.
                    ``(B) District of columbia.--Notwithstanding 
                subparagraph (A), the calculations required under such 
                subparagraph with respect to the District of Columbia 
                shall be based on the most recent 3 year average of the 
                personal income of individuals residing within the 
                District as a percentage of the personal income for all 
                individuals residing within the District, as determined 
                by the Secretary of Commerce.
            ``(4) Matching requirement.--A State that receives an 
        allotment under this section shall make available State 
        resources (either directly or indirectly) to carry out this 
        section in an amount that shall equal the State matching 
        percentage for the State (as determined under paragraph 
        (2)(C)(II)) divided by the Federal matching percentage (as 
        determined under paragraph (2)(C)).
    ``(c) Application.--
            ``(1) In general.--To be eligible to receive an allotment 
        under this section, a State shall prepare and submit an 
        application to the Secretary at such time, in such manner, and 
        containing such information as the Secretary may by regulation 
        require.
            ``(2) Assurances.--A State application submitted under 
        paragraph (1) shall contain an assurance that--
                    ``(A) the State will use amounts received under 
                it's allotment consistent with the requirements of this 
                section; and
                    ``(B) the State will provide, from non-Federal 
                sources, the amounts required under subsection (b)(4).
    ``(d) Use of Funds.--
            ``(1) In general.--The State shall use amounts received 
        under this section to award grants to eligible public and 
        nonprofit private entities, or consortia of such entities, 
        within the State to enable such entities or consortia to 
        provide services of the type described in paragraph (2) of 
        section 329(h) to pregnant women and children up to age three.
            ``(2) Eligibility.--To be eligible to receive a grant under 
        paragraph (1), an entity or consortium shall--
                    ``(A) prepare and submit to the administering 
                entity of the State, an application at such time, in 
                such manner and containing such information as such 
                administering entity may require, including a plan for 
                the provision of services;
                    ``(B) provide assurances that services will be 
                provided under the grant at fee rates established or 
                determined in accordance with section 330(e)(3)(F); and
                    ``(C) provide assurances that in the case of 
                services provided to individuals with health insurance, 
                such insurance shall be used as the primary source of 
                payment for such services.
            ``(3) Target populations.--Entities or consortia receiving 
        grants under paragraph (1) shall, in providing the services 
        described in paragraph (3), substantially target populations of 
        pregnant women and children within the State who--
                    ``(A) lack the health care coverage, or ability to 
                pay, for primary or supplemental health care services; 
                or
                    ``(B) reside in medically underserved or health 
                professional shortage areas, areas certified as 
                underserved under the rural health clinic program, or 
                other areas determined appropriate by the State, within 
                the State.
            ``(4) Priority.--In awarding grants under paragraph (1), 
        the State shall--
                    ``(A) give priority to entities or consortia that 
                can demonstrate through the plan submitted under 
                paragraph (2) that--
                            ``(i) the services provided under the grant 
                        will expand the availability of primary care 
                        services to the maximum number of pregnant 
                        women and children who have no access to such 
                        care on the date of the grant award; and
                            ``(ii) the delivery of services under the 
                        grant will be cost-effective; and
                    ``(B) ensure that an equitable distribution of 
                funds is achieved among urban and rural entities or 
                consortia.
    ``(e) Reports and Audits.--Each State shall prepare and submit to 
the Secretary annual reports concerning the State's activities under 
this section which shall be in such form and contain such information 
as the Secretary determines appropriate. Each such State shall 
establish fiscal control and fund accounting procedures as may be 
necessary to assure that amounts received under this section are being 
disbursed properly and are accounted for, and include the results of 
audits conducted under such procedures in the reports submitted under 
this subsection.
    ``(f) Payments.--
            ``(1) Entitlement.--Each State for which an application has 
        been approved by the Secretary under this section shall be 
        entitled to payments under this section for each fiscal year in 
        an amount not to exceed the State's allotment under subsection 
        (b) to be expended by the State in accordance with the terms of 
        the application for the fiscal year for which the allotment is 
        to be made.
            ``(2) Method of payments.--The Secretary may make payments 
        to a State in installments, and in advance or, by way of 
        reimbursement, with necessary adjustments on account of 
        overpayments or underpayments, as the Secretary may determine.
            ``(3) State spending of payments.--Payments to a State from 
        the allotment under subsection (b) for any fiscal year must be 
        expended by the State in that fiscal year or in the succeeding 
        fiscal year.
    ``(g) Definition.--As used in this section, the term `administering 
entity of the State' means the agency or official designated by the 
chief executive officer of the State to administer the amounts provided 
to the State under this section.
    ``(h) Funding.--Notwithstanding any other provision of law, the 
Secretary shall use 50 percent of the amounts that the Secretary is 
required to utilize under section 330B(h) in each fiscal year to carry 
out this section.''.

SEC. 503. ESTABLISHMENT OF NEW PROGRAM TO PROVIDE FUNDS TO ALLOW 
              FEDERALLY QUALIFIED HEALTH CENTERS AND OTHER ENTITIES OR 
              ORGANIZATIONS TO PROVIDE EXPANDED SERVICES TO MEDICALLY 
              UNDERSERVED INDIVIDUALS.

    (a) In General.--Subpart I of part D of title III of the Public 
Health Service Act (42 U.S.C. 254b et seq.) (as amended by section 502) 
is further amended by adding at the end thereof the following new 
section:

``SEC. 330B. ESTABLISHMENT OF NEW PROGRAM TO PROVIDE FUNDS TO ALLOW 
              FEDERALLY QUALIFIED HEALTH CENTERS AND OTHER ENTITIES OR 
              ORGANIZATIONS TO PROVIDE EXPANDED SERVICES TO MEDICALLY 
              UNDERSERVED INDIVIDUALS.

    ``(a) Establishment of Health Services Access Program.--From 
amounts appropriated under this section, the Secretary shall, acting 
through the Bureau of Health Care Delivery Assistance, award grants 
under this section to federally qualified health centers (hereinafter 
referred to in this section as `FQHC's') and other entities and 
organizations submitting applications under this section (as described 
in subsection (c)) for the purpose of providing access to services for 
medically underserved populations (as defined in section 330(b)(3)) or 
in high impact areas (as defined in section 329(a)(5)) not currently 
being served by a FQHC.
    ``(b) Eligibility for Grants.--
            ``(1) In general.--The Secretary shall award grants under 
        this section to entities or organizations described in this 
        paragraph and paragraph (2) which have submitted a proposal to 
        the Secretary to expand such entities or organizations 
        operations (including expansions to new sites (as determined 
        necessary by the Secretary)) to serve medically underserved 
        populations or high impact areas not currently served by a FQHC 
        and which--
                    ``(A) have as of January 1, 1992, been certified by 
                the Secretary as a FQHC under section 1905(l)(2)(B) of 
                the Social Security Act;
                    ``(B) have submitted applications to the Secretary 
                to qualify as FQHC's under such section 1905(l)(2)(B); 
                or
                    ``(C) have submitted a plan to the Secretary which 
                provides that the entity will meet the requirements to 
                qualify as a FQHC when operational.
            ``(2) Non fqhc entities.--
                    ``(A) Eligibility.--The Secretary shall also make 
                grants under this section to public or private 
                nonprofit agencies, health care entities or 
                organizations which meet the requirements necessary to 
                qualify as a FQHC except, the requirement that such 
                entity have a consumer majority governing board and 
                which have submitted a proposal to the Secretary to 
                provide those services provided by a FQHC as defined in 
                section 1905(l)(2)(B) of the Social Security Act and 
                which are designed to promote access to primary care 
                services or to reduce reliance on hospital emergency 
                rooms or other high cost providers of primary health 
                care services, provided such proposal is developed by 
                the entity or organizations (or such entities or 
                organizations acting in a consortium in a community) 
                with the review and approval of the Governor of the 
                State in which such entity or organization is located.
                    ``(B) Limitation.--The Secretary shall provide in 
                making grants to entities or organizations described in 
                this paragraph that no more than 10 percent of the 
                funds provided for grants under this section shall be 
                made available for grants to such entities or 
                organizations.
    ``(c) Application Requirements.--
            ``(1) In general.--In order to be eligible to receive a 
        grant under this section, a FQHC or other entity or 
        organization must submit an application in such form and at 
        such time as the Secretary shall prescribe and which meets the 
        requirements of this subsection.
            ``(2) Requirements.--An application submitted under this 
        section must provide--
                    ``(A)(i) for a schedule of fees or payments for the 
                provision of the services provided by the entity 
                designed to cover its reasonable costs of operations; 
                and
                    ``(ii) for a corresponding schedule of discounts to 
                be applied to such fees or payments, based upon the 
                patient's ability to pay (determined by using a sliding 
                scale formula based on the income of the patient);
                    ``(B) assurances that the entity or organization 
                provides services to persons who are eligible for 
                benefits under title XVIII of the Social Security Act, 
                for medical assistance under title XIX of such Act or 
                for assistance for medical expenses under any other 
                public assistance program or private health insurance 
                program; and
                    ``(C) assurances that the entity or organization 
                has made and will continue to make every reasonable 
                effort to collect reimbursement for services--
                            ``(i) from persons eligible for assistance 
                        under any of the programs described in 
                        subparagraph (B); and
                            ``(ii) from patients not entitled to 
                        benefits under any such programs.
    ``(d) Limitations on Use of Funds.--
            ``(1) In general.--From the amounts awarded to an entity or 
        organization under this section, funds may be used for purposes 
        of planning but may only be expended for the costs of--
                    ``(A) assessing the needs of the populations or 
                proposed areas to be served;
                    ``(B) preparing a description of how the needs 
                identified will be met;
                    ``(C) development of an implementation plan that 
                addresses--
                            ``(i) recruitment and training of 
                        personnel; and
                            ``(ii) activities necessary to achieve 
                        operational status in order to meet FQHC 
                        requirements under 1905(l)(2)(B) of the Social 
                        Security Act.
            ``(2) Recruiting, training and compensation of staff.--From 
        the amounts awarded to an entity or organization under this 
        section, funds may be used for the purposes of paying for the 
        costs of recruiting, training and compensating staff (clinical 
        and associated administrative personnel (to the extent such 
        costs are not already reimbursed under title XIX of the Social 
        Security Act or any other State or Federal program)) to the 
        extent necessary to allow the entity to operate at new or 
        expanded existing sites.
            ``(3) Facilities and equipment.--From the amounts awarded 
        to an entity or organization under this section, funds may be 
        expended for the purposes of acquiring facilities and equipment 
        but only for the costs of--
                    ``(A) construction of new buildings (to the extent 
                that new construction is found to be the most cost-
                efficient approach by the Secretary);
                    ``(B) acquiring, expanding, or modernizing of 
                existing facilities;
                    ``(C) purchasing essential (as determined by the 
                Secretary) equipment; and
                    ``(D) amortization of principal and payment of 
                interest on loans obtained for purposes of site 
                construction, acquisition, modernization, or expansion, 
                as well as necessary equipment.
            ``(4) Services.--From the amounts awarded to an entity or 
        organization under this section, funds may be expended for the 
        payment of services but only for the costs of--
                    ``(A) providing or arranging for the provision of 
                all services through the entity necessary to qualify 
                such entity as a FQHC under section 1905(l)(2)(B) of 
                the Social Security Act;
                    ``(B) providing or arranging for any other service 
                that a FQHC may provide and be reimbursed for under 
                title XIX of such Act; and
                    ``(C) providing any unreimbursed costs of providing 
                services as described in section 330(a) to patients.
    ``(e) Priorities in the Awarding of Grants.--
            ``(1) Certified fqhc's.--The Secretary shall give priority 
        in awarding grants under this section to entities which have, 
        as of January 1, 1992, been certified as a FQHC under section 
        1905(l)(2)(B) of the Social Security Act and which have 
        submitted a proposal to the Secretary to expand their 
        operations (including expansion to new sites) to serve 
        medically underserved populations for high impact areas not 
        currently served by a FQHC. The Secretary shall give first 
        priority in awarding grants under this section to those FQHCs 
        or other entities which propose to serve populations with the 
        highest degree of unmet need, and which can demonstrate the 
        ability to expand their operations in the most efficient 
        manner.
            ``(2) Qualified fqhc's.--The Secretary shall give second 
        priority in awarding grants to entities which have submitted 
        applications to the Secretary which demonstrate that the entity 
        will qualify as a FQHC under section 1905(l)(2)(B) of the 
        Social Security Act before it provides or arranges for the 
        provision of services supported by funds awarded under this 
        section, and which are serving or proposing to serve medically 
        underserved populations or high impact areas which are not 
        currently served (or proposed to be served) by a FQHC.
            ``(3) Expanded services and projects.--The Secretary shall 
        give third priority in awarding grants in subsequent years to 
        those FQHCs or other entities which have provided for expanded 
        services and project and are able to demonstrate that such 
        entity will incur significant unreimbursed costs in providing 
        such expanded services.
    ``(f) Return of Funds to Secretary for Costs Reimbursed From Other 
Sources.--To the extent that an entity or organization receiving funds 
under this section is reimbursed from another source for the provision 
of services to an individual, and does not use such increased 
reimbursement to expand services furnished, areas served, to compensate 
for costs of unreimbursed services provided to patients, or to promote 
recruitment, training, or retention of personnel, such excess revenues 
shall be returned to the Secretary.
    ``(g) Termination of Grants.--
            ``(1) Failure to meet fqhc requirements.--
                    ``(A) In general.--With respect to any entity that 
                is receiving funds awarded under this section and which 
                subsequently fails to meet the requirements to qualify 
                as a FQHC under section 1905(l)(2)(B) or is an entity 
                that is not required to meet the requirements to 
                qualify as a FQHC under section 1905(l)(2)(B) of the 
                Social Security Act but fails to meet the requirements 
                of this section, the Secretary shall terminate the 
                award of funds under this section to such entity.
                    ``(B) Notice.--Prior to any termination of funds 
                under this section to an entity, the entities shall be 
                entitled to 60 days prior notice of termination and, as 
                provided by the Secretary in regulations, an 
                opportunity to correct any deficiencies in order to 
                allow the entity to continue to receive funds under 
                this section.
            ``(2) Requirements.--Upon any termination of funding under 
        this section, the Secretary may (to the extent practicable)--
                    ``(A) sell any property (including equipment) 
                acquired or constructed by the entity using funds made 
                available under this section or transfer such property 
                to another FQHC, provided, that the Secretary shall 
                reimburse any costs which were incurred by the entity 
                in acquiring or constructing such property (including 
                equipment) which were not supported by grants under 
                this section; and
                    ``(B) recoup any funds provided to an entity 
                terminated under this section.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $400,000,000 for fiscal year 
1993, $800,000,000 for fiscal year 1994, $1,200,000,000 for fiscal year 
1995, $1,600,000,000 for fiscal year 1996, and $1,600,000,000 for 
fiscal year 1997.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
become effective with respect to services furnished by a federally 
qualified health center or other qualifying entity described in this 
section beginning on or after October 1, 1992.
    (c) Study and Report on Services Provided by Community Health 
Centers and Hospitals.--
            (1) In general.--The Secretary of Health and Human Services 
        (hereinafter referred to in this subsection as the 
        ``Secretary'') shall provide for a study to examine the 
        relationship and interaction between community health centers 
        and hospitals in providing services to individuals residing in 
        medically underserved areas. The Secretary shall ensure that 
        the National Rural Research Centers participate in such study.
            (2) Report.--The Secretary shall provide to the appropriate 
        committees of Congress a report summarizing the findings of the 
        study within 90 days of the end of each project year and shall 
        include in such report recommendations on methods to improve 
        the coordination of and provision of services in medically 
        underserved areas by community health centers and hospitals.
            (3) Authorization.--There are authorized to be appropriated 
        to carry out the study provided for in this subsection $150,000 
        for each of fiscal years 1993 and 1994.

SEC. 504. RURAL MENTAL HEALTH OUTREACH GRANTS.

    Subpart 3 of part B of title V of the Public Health Service Act (42 
U.S.C. 290cc-11 et seq.) is amended by adding at the end thereof the 
following new section:

``SEC. 520A. RURAL MENTAL HEALTH OUTREACH GRANTS.

    ``(a) In General.--The Secretary may award competitive grants to 
eligible entities to enable such entities to develop and implement a 
plan for mental health outreach programs in rural areas.
    ``(b) Eligible Entities.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) prepare and submit to the Secretary an application at 
        such time, in such form and containing such information as the 
        Secretary may require, including a description of the 
        activities that the entity intends to undertake using grant 
        funds; and
            ``(2) meet such other requirements as the Secretary 
        determines appropriate.
    ``(c) Priority.--In awarding grants under subsection (a), the 
Secretary shall give priority to applications that place emphasis on 
mental health services for the elderly or children. Priority shall also 
be given to applications that involve relationships between the 
applicant and rural managed care cooperatives.
    ``(d) Matching Requirement.--An entity that receives a grant under 
subsection (a) shall make available (directly or through donations from 
public or private entities), non-Federal contributions toward the costs 
of the operations of the network in an amount equal to the amount of 
the grant.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $5,000,000 for each of the 
fiscal years 1993 through 1997.''.

SEC. 505. HEALTH PROFESSIONS TRAINING.

    (a) Medically Underserved Area Training Incentives.--Part A of 
title VII of the Public Health Service Act (42 U.S.C. 292 et seq.) is 
amended by adding at the end thereof the following new section:

``SEC. 711. PRIORITIES IN AWARDING OF GRANTS.

    ``(a) Allocation of Competitive Grant Funds.--In awarding 
competitive grants under this title or title VIII, the Secretary shall, 
among applicants that meet the eligibility requirements under such 
titles, give priority to entities submitting applications that--
            ``(1) can demonstrate that such entities--
                    ``(A) have a high permanent rate for placing 
                graduates in practice settings which serve residents of 
                medically underserved communities; and
                    ``(B) have a curriculum that includes--
                            ``(i) the rotation of medical students and 
                        residents to clinical settings the focus of 
                        which is to serve medically underserved 
                        communities;
                            ``(ii) the appointment of health 
                        professionals whose practices serve medically 
                        underserved communities to act as preceptors to 
                        supervise training in such settings;
                            ``(iii) classroom instruction on practice 
                        opportunities involving medically underserved 
                        communities;
                            ``(iv) service contingent scholarship or 
                        loan repayment programs for students and 
                        residents to encourage practice in or service 
                        to underserved communities;
                            ``(v) the recruitment of students who are 
                        most likely to elect to practice in or provide 
                        service to medically underserved communities;
                            ``(vi) other training methodologies that 
                        demonstrate a significant commitment to the 
                        expansion of the proportion of graduates that 
                        elect to practice in or serve the needs of 
                        medically underserved communities; or
            ``(2) contain an organized plan for the expeditious 
        development of the placement rate and curriculum described in 
        paragraph (1).
    ``(b) Service in Medically Underserved Communities.--Not less than 
50 percent of the amounts appropriated for fiscal year 1996, and for 
each subsequent fiscal year, for competitive grants under this title or 
title VIII, shall be used to award grants to institutions that are 
otherwise eligible for grants under such titles, and that can 
demonstrate that--
            ``(1) not less than 15 percent of the graduates of such 
        institutions during the preceding 2-year period are engaged in 
        full-time practice serving the needs of medically underserved 
        communities; or
            ``(2) the number of the graduates of such institutions that 
        are practicing in a medically underserved community has 
        increased by not less than 50 percent over that proportion of 
        such graduates for the previous 2-year period.
    ``(c) Waivers.--A health professions school may petition the 
Secretary for a temporary waiver of the priorities of this section. 
Such waiver shall be approved if the health professions school 
demonstrates that the State in which such school is located is not 
suffering from a shortage of primary care providers, as determined by 
the Secretary. Such waiver shall not be for a period in excess of 2 
years.
    ``(d) Definitions.--As used in this section:
            ``(1) Graduate.--The term `graduate' means, unless 
        otherwise specified, an individual who has successfully 
        completed all training and residency requirements necessary for 
        full certification in the health professions discipline that 
        such individual has selected.
            ``(2) Medically underserved community.--The term `medically 
        underserved community' means--
                    ``(A) an area designated under section 332 as a 
                health professional shortage area;
                    ``(B) an area designated as a medically underserved 
                area under this Act;
                    ``(C) populations served by migrant health centers 
                under section 329, community health centers under 
                section 330, or Federally qualified health centers 
                under section 1905(l)(2)(B) of the Social Security Act;
                    ``(D) a community that is certified as underserved 
                by the Secretary for purposes of participation in the 
                rural health clinic program under title XVIII of the 
                Social Security Act; or
                    ``(E) a community that meets the criteria for the 
                designation described in subparagraph (A) or (B) but 
                that has not been so designated.''.
    (b) Medically Underserved Area Training Grants.--Part F of title 
VII (42 U.S.C. 295g et seq.) of such Act is amended by adding at the 
end thereof the following new section:

``SEC. 790B. MEDICALLY UNDERSERVED AREA TRAINING GRANT PROGRAM.

    ``(a) Grants.--The Secretary shall award grants to health 
professions institutions to expand training programs that are targeted 
at those individuals desiring to practice in or serve the needs of 
medically underserved communities.
    ``(b) Plan.--As part of an application submitted for a grant under 
this section, the applicant shall prepare and submit a plan that 
describes the proposed use of funds that may be provided to the 
applicant under the grant.
    ``(c) Priority.--In awarding grants under this section, the 
Secretary shall give priority to applicants that demonstrate the 
greatest likelihood of expanding the proportion of graduates who choose 
to practice in or serve the needs of medically underserved areas.
    ``(d) Use of Funds.--An institution that receives a grant under 
this section shall use amounts received under such grant to establish 
or enhance procedures or efforts to--
            ``(1) rotate health professions students from such 
        institution to clinical settings the focus of which is to serve 
        the residents of medically underserved communities;
            ``(2) appoint health professionals whose practices serve 
        medically underserved areas to serve as preceptors to supervise 
        training in such settings;
            ``(3) provide classroom instruction on practice 
        opportunities involving medically underserved communities;
            ``(4) provide service contingent scholarship or loan 
        repayment programs for students and residents to encourage 
        practice in or service to underserved communities;
            ``(5) recruit students who are most likely to elect to 
        practice in or provide service to medically underserved 
        communities; or
            ``(6) provide other training methodologies that demonstrate 
        a significant commitment to the expansion of the proportion of 
        graduates that elect to practice in or serve the needs of 
        medically underserved communities.
    ``(e) Administration.--
            ``(1) Required contribution.--An institution that receives 
        a grant under this section shall contribute, from non-Federal 
        sources, either in cash or in-kind, an amount equal to the 
        amount of the grant to the activities to be undertaken with the 
        grant funds.
            ``(2) Limitation.--An institution that receives a grant 
        under this section, shall use amounts received under such grant 
        to supplement, not supplant, amounts made available by such 
        institution for activities of the type described in subsection 
        (d) in the fiscal year preceding the year for which the grant 
        is received.
    ``(f) Definitions.--As used in this section:
            ``(1) Graduate.--The term `graduate' means, unless 
        otherwise specified, an individual who has successfully 
        completed all training and residency requirements necessary for 
        full certification in the health professions discipline that 
        such individual has selected.
            ``(2) Medically underserved community.--The term `medically 
        underserved community' means--
                    ``(A) an area designated under section 332 as a 
                health professional shortage area;
                    ``(B) an area designated as a medically underserved 
                area under this Act;
                    ``(C) populations served by migrant health centers 
                under section 329, community health centers under 
                section 330, or Federally qualified health centers 
                under section 1905(l)(2)(B) of the Social Security Act;
                    ``(D) a community that is certified as underserved 
                by the Secretary for purposes of participation in the 
                rural health clinic program under title XVIII of the 
                Social Security Act; or
                    ``(E) a community that meets the criteria for the 
                designation described in subparagraph (A) or (B) but 
                that has not been so designated.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $15,000,000 for each of the 
fiscal years 1993 and 1994, and such sums as may be necessary for each 
of the fiscal years 1995 through 1997.''.
    (c) Health Professions Training Grants.--Part F of title VII (42 
U.S.C. 295g et seq.) of such Act (as amended by subsection (b)) is 
further amended by adding at the end thereof the following new section:

``SEC. 790C. HEALTH PROFESSIONS INTEGRATION GRANT PROGRAM.

    ``(a) Grants.--The Secretary shall award grants to eligible 
regional consortia to enhance and expand coordination among various 
health professions programs, particularly in medically underserved 
rural areas.
    ``(b) Eligible Regional Consortium.--
            ``(1) In general.--To be eligible to receive a grant under 
        subsection (a), an entity must--
                    ``(A) be a regional consortium consisting of at 
                least one medical school and at least one other health 
                professions school that is not a medical school; and
                    ``(B) prepare and submit an application containing 
                a plan of the type described in paragraph (2).
            ``(2) Plan.--As part of the application submitted by a 
        consortium under paragraph (1)(B), the consortium shall prepare 
        and submit a plan that describes the proposed use of funds that 
        may be provided to the consortium under the grant.
    ``(c) Use of Funds.--A consortium that receives a grant under this 
section shall use amounts received under such grant to establish or 
enhance--
            ``(1) strategies for better clinical cooperation among 
        different types of health professionals;
            ``(2) classroom instruction on integrated practice 
        opportunities, particularly targeted toward rural areas;
            ``(3) integrated clinical clerkship programs that make use 
        of students in differing health professions schools; or
            ``(4) other training methodologies that demonstrate a 
        significant commitment to the expansion of clinical cooperation 
        among different types of health professionals, particularly in 
        underserved rural areas.
    ``(d) Limitation.--A consortium that receives a grant under this 
section, shall use amounts received under such grant to supplement, not 
supplant, amounts made available by such institution for activities of 
the type described in subsection (c) in the fiscal year preceding the 
year for which the grant is received.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $7,000,000 for each of the 
fiscal years 1993 and 1994, and such sums as may be necessary for each 
of the fiscal years 1995 through 1997.''.

SEC. 506. AREA HEALTH EDUCATION CENTERS.

    (a) Stipends for Personnel.--Section 781(a) of the Public Health 
Service Act (42 U.S.C. 295g-1(a)) is amended by adding at the end 
thereof the following new paragraph:
    ``(3)(A) The Secretary may award grants under this section to rural 
communities to enable such communities to provide stipends to 
physicians, nurses or other health professional trainees to encourage 
such individuals to continue to provide health care services in such 
rural communities.
    ``(B) A community that receives a grant under subparagraph (A) 
shall make available (directly or through donations from public or 
private entities), non-Federal contributions towards the costs of the 
operations of the network in an amount equal to the amount of the 
grant.''.
    (b) Reauthorization.--Section 781(h) of such Act (42 U.S.C. 295g-
1(h)) is amended to read as follows:
    ``(h)(1) For purposes of carrying out this section, other than 
subsection (f), there are authorized to be appropriated $40,000,000 for 
each of the fiscal years 1993 through 1997.
    ``(2) For purposes of carrying out subsection (f), there are 
authorized to be appropriated $12,000,000 for each of the fiscal years 
1993 through 1997.
    ``(3) A contract entered into under this section after the date of 
enactment of this subsection shall require that the entity awarded such 
contract make available (directly or through donations from public or 
private entities), during the fourth and remaining years of the 
contract, non-Federal contributions equal to--
            ``(A) for the fourth year for which such contract is in 
        effect, $3 for every $7 of Federal funds provided under the 
        contract in such year;
            ``(B) for the fifth year for which such contract is in 
        effect, $4 for every $6 of Federal funds provided under the 
        contract in such year; and
            ``(C) for the sixth and subsequent years for which such 
        contract is in effect, $1 for every $1 of Federal funds 
        provided under the contract in such year.''.

SEC. 507. RURAL HEALTH EXTENSION NETWORKS.

    Title XVII of the Public Health Service Act (42 U.S.C. 300u et 
seq.) is amended by adding at the end thereof the following new 
section:

``SEC. 1707. RURAL HEALTH EXTENSION NETWORKS.

    ``(a) Grants.--The Secretary, acting through the Health Resources 
and Services Administration, may award competitive grants to eligible 
entities to enable such entities to facilitate the development of 
networks among rural and urban health care providers to preserve and 
share health care resources and enhance the quality and availability of 
health care in rural areas. Such networks may be statewide or 
regionalized in focus.
    ``(b) Eligible Entities.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) be a rural health extension network that meets the 
        requirements of subsection (c);
            ``(2) prepare and submit to the Secretary an application at 
        such time, in such form and containing such information as the 
        Secretary may require; and
            ``(3) meets such other requirements as the Secretary 
        determines appropriate.
    ``(c) Networks.--For purposes of subsection (b)(1), a rural health 
extension network shall be an association or consortium of three or 
more rural health care providers, and may include one or more urban 
health care providers, for the purpose of applying for a grant under 
this section and using amounts received under such grant to provide the 
services described in subsection (d).
    ``(d) Services.--
            ``(1) In general.--An entity that receives a grant under 
        subsection (a) shall use amounts received under such grant to--
                    ``(A) provide education and community decision-
                making support for health care providers in the rural 
                areas served by the network;
                    ``(B) utilize existing health care provider 
                education programs, including but not limited to, the 
                program for area health education centers under section 
                781, to provide educational services to health care 
                providers in the areas served by the network;
                    ``(C) make appropriately trained facilitators 
                available to health care providers located in the areas 
                served by the network to assist such providers in 
                developing cooperative approaches to health care in 
                such area;
                    ``(D) facilitate linkage building through the 
                organization of discussion and planning groups and the 
                dissemination of information concerning the health care 
                resources where available, within the area served by 
                the network;
                    ``(E) support telecommunications and consultative 
                projects to link rural hospitals and other health care 
                providers, and urban or tertiary hospitals in the areas 
                served by the network; or
                    ``(F) carry out any other activity determined 
                appropriate by the Secretary.
            ``(2) Education.--In carrying out activities under 
        paragraph (1)(B), an entity shall support the development of an 
        information and resource sharing system, including elements 
        targeted towards high risk populations and focusing on health 
        promotion, to facilitate the ability of rural health care 
        providers to have access to needed health care information. 
        Such activities may include the provision of training to enable 
        individuals to serve as coordinators of health education 
        programs in rural areas.
            ``(3) Collection and dissemination of data.--The chief 
        executive officer of a State shall designate a State agency 
        that shall be responsible for collecting and regularly 
        disseminating information concerning the activities of the 
        rural health extension networks in that State.
    ``(e) Matching Requirement.--An entity that receives a grant under 
subsection (a) shall make available (directly or through donations from 
public or private entities), non-Federal contributions towards the 
costs of the operations of the network in an amount equal to the amount 
of the grant.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $10,000,000 for each of the 
fiscal years 1993 through 1997.
    ``(g) Definition.--As used in this section and section 1708, the 
term `rural health care providers' means health care professionals and 
hospitals located in rural areas. The Secretary shall ensure that for 
purposes of this definition, rural areas shall include any area that 
meets any applicable Federal or State definition of rural area.''.

SEC. 508. RURAL MANAGED CARE COOPERATIVES.

    Title XVII of the Public Health Service Act (42 U.S.C. 300u et 
seq.) as amended by section 507 is further amended by adding at the end 
thereof the following new section:

``SEC. 1708. RURAL MANAGED CARE COOPERATIVES.

    ``(a) Grants.--The Secretary, acting through the Health Resources 
and Services Administration, may award competitive grants to eligible 
entities to enable such entities to develop and administer cooperatives 
in rural areas that will establish an effective case management and 
reimbursement system designed to support the economic viability of 
essential public or private health services, facilities, health care 
systems and health care resources in such rural areas.
    ``(b) Eligible Entities.--To be eligible to receive a grant under 
subsection (a) an entity shall--
            ``(1) prepare and submit to the Secretary an application at 
        such time, in such form and containing such information as the 
        Secretary may require, including a description of the 
        cooperative that the entity intends to develop and operate 
        using grant funds; and
            ``(2) meet such other requirements as the Secretary 
        determines appropriate.
    ``(c) Cooperatives.--
            ``(1) In general.--Amounts provided under a grant awarded 
        under subsection (a) shall be used to establish and operate a 
        cooperative made up of all types of health care providers, 
        hospitals, primary access hospitals, other alternate rural 
        health care facilities, physicians, rural health clinics, rural 
        nurse practitioners and physician assistant practitioners, 
        public health departments and others located in, but not 
        restricted to, the rural areas to be served by the cooperative.
            ``(2) Board of directors.--A cooperative established under 
        paragraph (1) shall be administered by a board of directors 
        elected by the members of the cooperative, a majority of whom 
        shall represent rural providers from the local community and 
        include representatives from the local community. Such 
        directors shall serve at the pleasure of such members.
            ``(3) Executive director.--The members of a cooperative 
        established under paragraph (1) shall elect an executive 
        director who shall serve as the chief operating officer of the 
        cooperative. The executive director shall be responsible for 
        conducting the day to day operation of the cooperative 
        including--
                    ``(A) maintaining an accounting system for the 
                cooperative;
                    ``(B) maintaining the business records of the 
                cooperative;
                    ``(C) negotiating contracts with provider members 
                of the cooperative; and
                    ``(D) coordinating the membership and programs of 
                the cooperative.
            ``(4) Reimbursements.--
                    ``(A) Negotiations.--A cooperative established 
                under paragraph (1) shall facilitate negotiations among 
                member health care providers and third party payers 
                concerning the rates at which such providers will be 
                reimbursed for services provided to individuals for 
                which such payers may be liable.
                    ``(B) Agreements.--Agreements reached under 
                subparagraph (A) shall be binding on the members of the 
                cooperative.
                    ``(C) Employers.--Employer entities may become 
                members of a cooperative established under paragraph 
                (a) in order to provide, through a member third party 
                payer, health insurance coverage for employees of such 
                entities. Deductibles shall only be charged to 
                employees covered under such insurance if such 
                employees receive health care services from a provider 
                that is not a member of the cooperative if similar 
                services would have been available from a member 
                provider.
                    ``(D) Malpractice insurance.--A cooperative 
                established under subsection (a) shall be responsible 
                for identifying and implementing a malpractice 
                insurance program that shall include a requirement that 
                such cooperative assume responsibility for the payment 
                of a portion of the malpractice insurance premium of 
                providers members.
            ``(5) Managed care and practice standards.--A cooperative 
        established under paragraph (1) shall establish joint case 
        management and patient care practice standards programs that 
        health care providers that are members of such cooperative must 
        meet to be eligible to participate in agreements entered into 
        under paragraph (4). Such standards shall be developed by such 
        provider members and shall be subject to the approval of a 
        majority of the board of directors. Such programs shall include 
        cost and quality of care guidelines including a requirement 
        that such providers make available preadmission screening, 
        selective case management services, joint patient care practice 
        standards development and compliance and joint utilization 
        review.
            ``(6) Confidentiality.--Patients records, records of peer 
        review, utilization review, and quality assurance proceedings 
        conducted by the cooperative should be considered confidential 
        and protected from release outside of the cooperative. The 
        provider members of the cooperative shall be indemnified by the 
        cooperative for the good faith participation by such members in 
        such the required activities.
    ``(d) Linkages.--A cooperative shall create linkages among member 
health care providers, employers, and payers for the joint consultation 
and formulation of the types, rates, costs, and quality of health care 
provided in rural areas served by the cooperative.
    ``(e) Matching Requirement.--An entity that receives a grant under 
subsection (a) shall make available (directly or through donations from 
public or private entities), non-Federal contributions towards the 
costs of the operations of the network in an amount equal to the amount 
of the grant.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $15,000,000 for each of the 
fiscal years 1993 through 1997.''.

           Subtitle B--Provision Relating to Social Security

SEC. 511. RURAL HEALTH CARE TRANSITION GRANT PROGRAM.

    Section 4005(e)(9) of the Omnibus Budget Reconciliation Act of 1987 
(42 U.S.C. 1395ww note) is amended by striking ``$15,000,000'' and all 
that follows through the end thereof and inserting ``$50,000,000 for 
each of the fiscal years 1993 through 1997.''.

SEC. 512. ESSENTIAL ACCESS COMMUNITY HOSPITAL PROGRAM.

    Section 1820(k) of the Social Security Act (42 U.S.C. 1395i-4(k)) 
is amended to read as follows:
    ``(k) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $50,000,000 for each of the 
fiscal years 1993 through 1997.''.

         TITLE VI--INCENTIVES TO ENCOURAGE PREVENTIVE SERVICES

SEC. 601. PREVENTIVE SERVICES TAX CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits), 
as amended by section 101, is further amended by inserting after 
section 34A the following new section:

``SEC. 34B. PREVENTIVE SERVICES CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this subtitle for the taxable year 
expenditures paid or incurred during the taxable year for any qualified 
preventive services which are included in the list under subsection (c) 
and which are not compensated by insurance or otherwise, as follows:
            ``(1) Eligible individual.--In the case of an eligible 
        individual, the amount of the credit allowable under this 
        subsection shall not exceed--
                    ``(A) $250, or
                    ``(B) $200 in the case of a taxpayer with taxable 
                income for the taxable year in excess of the maximum 
                rate of taxable income to which the 15-percent rate 
                applies under the applicable table under section 1.
            ``(2) Qualified preventive services provider.--In the case 
        of a qualified preventive services provider, the amount of the 
        credit allowable under this subsection shall be an amount equal 
        to the product of--
                    ``(A) the lower of--
                            ``(i) the usual and customary charges for 
                        qualified preventive services, or
                            ``(ii) the rate of payment established by 
                        the Health Care Financing Administration for 
                        qualified preventive services,
                multiplied by--
                    ``(B) the number of qualified preventive services 
                provided without charge during the taxable year to 
                qualifying low-income individuals.
    ``(b) Definitions.--For purposes of subsection (a)--
            ``(1) Eligible individual.--The term `eligible individual' 
        means an individual who is--
                    ``(A) the taxpayer,
                    ``(B) the taxpayer's spouse, or
                    ``(C) any individual for whom the taxpayer is 
                allowed an exemption under section 151.
            ``(2) Qualified preventive services provider.--The term 
        `qualified preventive services provider' means a medical 
        practitioner, facility, hospital, laboratory, or similar 
        institution licensed under State law to provide 1 or more 
        qualified preventive services.
            ``(3) Qualifying low-income individual.--The term 
        `qualifying low-income individual' means an individual--
                    ``(A) whose income level does not exceed 150 
                percent of 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, and
                    ``(B) with respect to whom identifying information 
                is maintained.
    ``(c) Qualified Preventive Services.--
            ``(1) In general.--For purposes of this section, the 
        Secretary, after consultation with the Secretary of Health and 
        Human Services and cancer research and prevention 
        organizations, shall publish, not later than December 31, 1992, 
        and annually thereafter, a list of preventive services which 
        qualify for the credit allowable under this section.
            ``(2) Preventive services.--
                    ``(A) In general.--The list of preventive services 
                which qualify under this section shall include at least 
                the following:
                            ``(i) Cancer screening tests.
                            ``(ii) Childhood immunization.
                            ``(iii) Well child care.
                    ``(B) Cancer screening tests.--The term `cancer 
                screening tests' shall include at least the following:
                            ``(i) Physical breast examination and 
                        mammogram for female breast cancer.
                            ``(ii) Digital rectal examination, 
                        proctosigmoidoscopy, and blood stool test for 
                        colon and rectum cancer.
                            ``(iii) Rectal examination for prostate 
                        cancer.
                            ``(iv) Pap test for uterine cancer.
                            ``(v) Pelvic examination for ovarian 
                        cancer.
    ``(d) Identifying Information.--No credit shall be allowed under 
this section unless the qualified preventive services provider 
maintains, to the satisfaction of the Secretary, adequate records 
regarding the name and address, date of services, and type of services 
provided with respect to each qualifying low-income individual with 
respect to whom a credit is claimed.''.
    (b) Coordination With Deductions for Medical Expenses.--Section 
213(e) of such Code (relating to coordination with health expenses 
credit under section 34A), as added by section 101, is amended--
            (1) by inserting ``and the amount (if any) of the 
        preventive services credit allowable to the taxpayer for the 
        taxable year under section 34B(a)(1)'' before the end period; 
        and
            (2) by inserting ``and Preventive Services Credit Under 
        Section 34B'' in the heading after ``Section 34A''.
    (c) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of such Code, as amended by 
section 101, is further amended by inserting after the item relating to 
section 34A the following new item:

                              ``Sec. 34B. Preventive services 
                                        credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

SEC. 602. INCREASE IN AUTHORIZATION FOR CHILDHOOD IMMUNIZATIONS.

    Section 317(j)(1)(B) of the Public Health Service Act (42 U.S.C. 
247b(j)(1)(B)) is amended by striking ``such sums as may be necessary'' 
and inserting ``$238,865,000 for fiscal year 1993, and $240,000,000 for 
each of the fiscal years 1994 through 1997''.

                                 <all>

     TITLE VII--TAX TREATMENT OF LONG-TERM CARE INSURANCE AND PLANS

           Subtitle A--Treatment of Long-Term Care Insurance

SEC. 701. QUALIFIED LONG-TERM CARE INSURANCE TREATED AS ACCIDENT AND 
              HEALTH INSURANCE FOR PURPOSES OF TAXATION OF LIFE 
              INSURANCE COMPANIES.

    (a) In General.--Section 818 of the Internal Revenue Code of 1986 
(relating to other definitions and special rules) is amended by adding 
at the end the following new subsection:
    ``(g) Qualified Long-Term Care Insurance Treated as Accident or 
Health Insurance.--For purposes of this part--
            ``(1) In general.--Any reference to accident or health 
        insurance shall be treated as including a reference to 
        qualified long-term care insurance.
            ``(2) Qualified long-term care insurance.--For purposes of 
        this subsection--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the term `qualified long-term care insurance' 
                means insurance under a policy or rider, which is 
                issued by a qualified issuer, which meets standards at 
                least as stringent as those set forth in the January 
                1990 Long-Term Care Insurance Model Regulation of the 
                National Association of Insurance Commissioners, and 
                which is certified by the Secretary of Health and Human 
                Services (in accordance with procedures similar to the 
                procedures prescribed in section 1882 of the Social 
                Security Act (42 U.S.C. 1385ss) used in the 
                certification of medicare supplemental policies (as 
                defined in subsection (g)(1) of such section)) to be 
                advertised, marketed, offered, or designed to provide 
                coverage--
                            ``(i) for not less than 12 consecutive 
                        months for each covered person who has attained 
                        age 50,
                            ``(ii) on an expense incurred, indemnity, 
                        or prepaid basis,
                            ``(iii) for 1 or more medically necessary, 
                        diagnostic services, preventive services, 
                        therapeutic services, rehabilitation services, 
                        maintenance services, or personal care 
                        services, and
                            ``(iv) provided in a setting other than an 
                        acute care unit of a hospital.
                The requirement of clause (iv) shall be met only if at 
                least 1 of the settings in which such coverage is 
                provided is the patient's home.
                    ``(B) Coverage specifically excluded.--Such term 
                does not include any insurance under any policy or 
                rider which is offered primarily to provide any 
                combination of the following kinds of coverage:
                            ``(i) Basic Medicare supplement coverage.
                            ``(ii) Basic hospital-based acute care 
                        expense coverage.
                            ``(iii) Basic medical-surgical expense 
                        coverage.
                            ``(iv) Hospital confinement indemnity 
                        coverage.
                            ``(v) Major medical expense coverage.
                            ``(vi) Disability income protection 
                        coverage.
                            ``(vii) Accident only coverage.
                            ``(viii) Specified disease coverage.
                            ``(ix) Specified accident coverage.
                            ``(x) Limited benefit health coverage.
                    ``(C) Qualified issuer.--For purposes of 
                subparagragh (A), the term `qualified issuer' means any 
                of the following:
                            ``(i) Private insurance company.
                            ``(ii) Fraternal benefit society.
                            ``(iii) Nonprofit health corporation.
                            ``(iv) Nonprofit hospital corporation.
                            ``(v) Nonprofit medical service 
                        corporation.
                            ``(vi) Prepaid health plan.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1992.

SEC. 702. QUALIFIED LONG-TERM CARE INSURANCE TREATED AS ACCIDENT AND 
              HEALTH INSURANCE FOR PURPOSES OF EXCLUSION FOR BENEFITS 
              RECEIVED UNDER SUCH INSURANCE AND FOR EMPLOYER 
              CONTRIBUTIONS FOR SUCH INSURANCE.

    (a) In General.--Section 105 of the Internal Revenue Code of 1986 
(relating to amounts received under accident and health plans) is 
amended by adding at the end the following new subsection:
    ``(j) Special Rules Relating to Qualified Long-Term Care 
Insurance.--For purposes of section 104, this section, and section 
106--
            ``(1) Benefits treated as payable for sickness, etc.--Any 
        benefit received through qualified long-term care insurance (as 
        defined in section 818(g)) shall be treated as received for 
        personal injuries or sickness.
            ``(2) Expenses for which reimbursement provided under 
        qualified long-term care insurance treated as incurred for 
        medical care.--Expenses incurred by a taxpayer for which 
        reimbursement is paid through qualified long-term care 
        insurance (as so defined) shall be treated for purposes of 
        subsection (b) as incurred for medical care (as defined in 
        section 213(d)).
            ``(3) References to accident and health plans.--Any 
        reference to an accident or health plan shall be treated as 
        including a reference to a plan providing qualified long-term 
        care insurance.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1992.

SEC. 703. EXCLUSION FROM GROSS INCOME FOR AMOUNTS WITHDRAWN FROM 
              INDIVIDUAL RETIREMENT PLANS OR 401(k) PLANS FOR QUALIFIED 
              LONG-TERM CARE INSURANCE.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income), as amended by section 105(b), is amended by 
redesignating section 137 as section 138 and by inserting after section 
136 the following new section:

``SEC. 137. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS AND 
              SECTION 401(k) PLANS FOR QUALIFIED LONG-TERM CARE 
              INSURANCE.

    ``(a) General Rule.--The amount includible in the gross income of 
an individual for the taxable year by reason of qualified distributions 
during such taxable year shall not exceed the excess of--
            ``(1) the amount which would (but for this section) be so 
        includible by reason of such distributions, over
            ``(2) the aggregate premiums paid by such individual during 
        such taxable year for any policy of qualified long-term care 
        insurance (as defined in section 818(g)) for the benefit of 
        such individual or the spouse of such individual.
    ``(b) Qualified Distribution.--For purposes of this section, the 
term `qualified distribution' means any distribution to an individual 
from an individual retirement account or a section 401(k) plan if such 
individual has attained age 59\1/2\ on or before the date of the 
distribution (and, in the case of a distribution used to pay premiums 
for the benefit of the spouse of such individual, such spouse has 
attained age 59\1/2\ on or before the date of the distribution).
    ``(c) Definitions.--For purposes of this section--
            ``(1) Individual retirement account.--The term `individual 
        retirement account' has the meaning given such term by section 
        408(a).
            ``(2) Section 401(k) plan.--The term `section 401(k) plan' 
        means any employer plan which meets the requirements of section 
        401(a) and which includes a qualified cash or deferred 
        arrangement (as defined in section 401(k)).
    ``(d) Special Rules for Section 401(k) Plans.--
            ``(1) Withdrawals cannot exceed elective contributions 
        under qualified cash or deferred arrangement.--This section 
        shall not apply to any distribution from a section 401(k) plan 
        to the extent the aggregate amount of such distributions for 
        the use described in subsection (a) exceeds the aggregate 
        employer contributions made pursuant to the employee's election 
        under section 401(k)(2).
            ``(2) Withdrawals not to cause disqualification.--A plan 
        shall not be treated as failing to satisfy the requirements of 
        section 401, and an arrangement shall not be treated as failing 
        to be a qualified cash or deferred arrangement (as defined in 
        section 401(k)(2)), merely because under the plan or 
        arrangement distributions are permitted which are excludable 
        from gross income by reason of this section.''
    (b) Conforming Amendments.--
            (1) Section 401(k) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(11) Cross reference.--

                                ``For provision permitting tax-free 
withdrawals for payment of long-term care premiums, see section 137.''
            (2) Section 408(d) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(8) Cross reference.--

                                ``For provision permitting tax-free 
withdrawals from individual retirement accounts for payment of long-
term care premiums, see section 137.''
            (3) The table of sections for such part III is amended by 
        striking the last item and inserting the following new items:

                              ``Sec. 317. Distributions from individual 
                                        retirement accounts and section 
                                        401(k) plans for qualified 
                                        long-term care insurance.
                              ``Sec. 138. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1992.

SEC. 704. EXCHANGE OF LIFE INSURANCE POLICY FOR QUALIFIED LONG-TERM 
              CARE POLICY NOT TAXABLE.

    (a) In General.--Subsection (a) of section 1035 of the Internal 
Revenue Code of 1986 (relating to certain exchanges of insurance 
policies) is amended by striking the period at the end of paragraph (3) 
and inserting ``; or'' and by adding at the end the following new 
paragraph:
            ``(4) in the case of an individual who has attained age 
        59\1/2\, a contract of life insurance or a contract of 
        endowment insurance or an annuity contract for a contract of 
        qualified long-term care insurance (as defined in section 
        818(g)) for the benefit of such individual or the spouse of 
        such individual if such spouse has attained age 59\1/2\ on or 
        before the date of the exchange.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1992.

            Subtitle B--Employer Funding of Medical Benefits

SEC. 711. MEDICAL BENEFITS FOR RETIRED EMPLOYEES AND THEIR SPOUSES AND 
              DEPENDENTS.

    (a) In General.--Section 401(h) of the Internal Revenue Code of 
1986 (relating to medical, etc., benefits for retired employees and 
their spouses and dependents) is amended to read as follows:
    ``(h) Retiree Health Accounts.--
            ``(1) General rule.--Under regulations prescribed by the 
        Secretary, a defined benefit plan may establish and maintain a 
        separate health benefits account for the payment of medical 
        benefits of retired employees and their spouses and dependents.
            ``(2) Separate accounting required.--An employer 
        establishing a health benefits account shall maintain separate 
        accounts within the health benefits account for funded reserve 
        accounts established under section 420A.
            ``(3) Use of assets.--Subject to the provisions of part III 
        of this subchapter, the corpus or income of a health benefits 
        account shall not be used for, or diverted to, any purpose 
        other than providing medical benefits to retired employees and 
        their spouses and dependents.
            ``(4) Key employees.--
                    ``(A) In general.--In the case of an employee who 
                is a key employee--
                            ``(i) a separate account shall be 
                        established and maintained for medical benefits 
                        payable to such employee (and the employee's 
                        spouse or dependents), and
                            ``(ii) medical benefits of such employee, 
                        spouse, or dependents which are attributable to 
                        plan years beginning after March 31, 1984, for 
                        which the employee is a key employee may be 
                        payable only from such account.
                    ``(B) Key employee.--For purposes of subparagraph 
                (A), the term `key employee' means any employee who, at 
                any time during the plan year or any preceding plan 
                year during which contributions were made on behalf of 
                such employee, is or was a key employee (as defined in 
                section 416(i)).
            ``(5) Applicable rules.--For rules applicable to health 
        benefits accounts, see subpart F of this part (sec. 420A et 
        seq.).''
    (b) Conforming Amendment.--Section 415(l)(2) of such Code (relating 
to treatment of certain medical benefits) is amended by inserting ``by 
reason of section 401(h)(4)'' after ``dependents'' in subparagraph (B).
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to years beginning 
        after December 31, 1992.
            (2) Transition rule.--In the case of--
                    (A) a plan other than a defined benefit plan, or
                    (B) a defined benefit plan which elects, at such 
                time and in such manner as the Secretary of the 
                Treasury or his delegate may prescribe, to have this 
                paragraph apply,
        which on or before the date of the enactment of this Act 
        established an account to which section 401(h) of the Internal 
        Revenue Code of 1986 (as in effect before the amendments made 
        by this section) applied (and which is in existence on such 
        date), the amendments made by this section shall not apply to 
        such account.

SEC. 712. TREATMENT OF HEALTH BENEFITS ACCOUNTS.

    (a) In General.--Part I of subchapter D of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subpart:

           ``Subpart F--Treatment of Health Benefits Accounts

                              ``Sec. 420A. Deduction for employer 
                                        contributions to health 
                                        benefits accounts.
                              ``Sec. 420B. Funded reserve account.
                              ``Sec. 420C. Definitions; special rules.

``SEC. 420A. DEDUCTION FOR EMPLOYER CONTRIBUTIONS TO HEALTH BENEFITS 
              ACCOUNTS.

    ``(a) General Rule.--Amounts paid by an employer to a defined 
benefit plan which are allocated to a health benefits account--
            ``(1) shall not be allowed as a deduction under this 
        chapter, but
            ``(2) if they would otherwise be deductible, shall be 
        allowed as a deduction under this section for the taxable year 
        in which paid.
    ``(b) Limitation.--The amount of the deduction allowable under 
subsection (a)(2) for any taxable year shall not exceed the health 
benefits account's qualified cost for the taxable year.
    ``(c) Qualified Cost.--For purposes of this section--
            ``(1) In general.--The term `qualified cost' means, with 
        respect to any taxable year, the sum of--
                    ``(A) the qualified direct cost for such taxable 
                year, plus
                    ``(B) subject to the limitation of section 420B(b), 
                any addition to the funded reserve account established 
                under section 420B.
            ``(2) Qualified direct cost.--
                    ``(A) In general.--The term `qualified direct cost' 
                means, with respect to any taxable year, the aggregate 
                amount (including administrative expenses) which would 
                have been allowable as a deduction to the employer with 
                respect to the qualified section 401(h) medical 
                benefits provided through the health benefits account 
                during the taxable year if--
                            ``(i) such benefits were provided directly 
                        by the employer, and
                            ``(ii) the employer used the cash receipts 
                        and disbursements method of accounting.
                    ``(B) Time when benefits provided.--For purposes of 
                subparagraph (A), a benefit shall be treated as 
                provided when such benefit would be includible in the 
                gross income of the employee if provided directly by 
                the employer (or would be so includible but for any 
                provision of this chapter excluding such benefit from 
                gross income).

``SEC. 420B. FUNDED RESERVE ACCOUNT.

    ``(a) General Rule.--For purposes of this subpart and section 
401(h), the term `funded reserve account' means an account within a 
health benefits account--
            ``(1) to which contributions paid or accrued to a defined 
        benefit plan are allocated to provide a reserve for the payment 
        of qualified section 401(h) medical benefits of employees and 
        their spouses and dependents,
            ``(2) with respect to which the only contributions 
        allocated are employer contributions, and
            ``(3) with respect to which--
                    ``(A) the vesting requirements of subsection (c),
                    ``(B) the portability requirements of subsection 
                (d), and
                    ``(C) the availability requirements of subsection 
                (e),
        are met.
    ``(b) Limitation on Allocation to Account.--
            ``(1) In general.--No amount may be allocated to a funded 
        reserve account (and taken into account under section 
        420A(c)(1)(B)) to the extent such addition results in the 
        amount allocated to such account exceeding the account limit.
            ``(2) Account limit.--The account limit for any taxable 
        year is an amount equal to 125 percent of the termination 
        liability of the account as of the close of the last plan year 
        ending with or within the taxable year.
            ``(3) Termination liability.--For purposes of this 
        section--
                    ``(A) In general.--The term `termination liability' 
                means the present value of the qualified section 401(h) 
                medical benefits--
                            ``(i) which are to be provided to employees 
                        (and their spouses and dependents), and
                            ``(ii) any portion of which is to be 
                        provided through a funded reserve account.
                    ``(B) Determinations.--The termination liability 
                under subparagraph (A) shall be determined--
                            ``(i) on the basis of actuarial assumptions 
                        which are used in determining the full-funding 
                        limitation of the plan under section 412(c)(7),
                            ``(ii) as if the benefits under the plan 
                        commenced at Social Security retirement age, 
                        and
                            ``(iii) by not taking into account any 
                        portion of the maximum annual benefit under the 
                        plan for--
                                    ``(I) benefits (other than post-
                                retirement long-term health care 
                                benefits) in excess of $1,500, or
                                    ``(II) post-retirement long-term 
                                health care benefits in excess of 
                                $1,500.
                    ``(C) Adjustments to account.--The amount in the 
                account shall be adjusted at such time and in such 
                manner as the Secretary may prescribe to take into 
                account income, gains, deductions, or losses which are 
                properly allocable to amounts in the account.
                    ``(D) Actuarial adjustment.--For purposes of 
                determining termination liability, the benefits 
                provided to any participant under the plan shall be 
                actuarially adjusted to reflect any commencement of 
                benefits before or after Social Security retirement 
                age.
                    ``(E) Employee.--For purposes of this paragraph, 
                the term `employee' does not include a former employee.
                    ``(F) Cost-of-living adjustment.--In the case of 
                years beginning after 1995, the $1,500 amounts in 
                subparagraph (B) shall be adjusted annually at the same 
                time and in the same manner as under section 415(d).
    ``(c) Vesting Requirements.--
            ``(1) In general.--The requirements of this subsection are 
        met if the requirements of either subparagraph (A) or (B) of 
        section 411(a)(2) are met with respect to the accrued qualified 
        section 401(h) medical benefits derived from amounts which are 
        allocated to the funded reserve account.
            ``(2) Uniform rate of accrual of benefits.--
                    ``(A) In general.--Except as provided in this 
                paragraph, a plan shall not be treated as meeting the 
                requirements of this subsection unless the rate at 
                which benefits accrue during a plan year is the same 
                for all participants.
                    ``(B) Special rules for certain individuals age 55 
                and over.--A plan shall not be treated as failing to 
                meet the requirements of this subsection if the plan 
                provides that an employee who as of the close of the 
                plan year in which he attains age 55 has accrued less 
                than 30 percent of the maximum amount of benefits which 
                may be accrued under the plan may accrue benefits 
                during succeeding plan years at a greater rate than the 
                rate for other employees (but not in excess of 125 
                percent of such other rate).
                    ``(C) Minimum hours of service.--For purposes of 
                subparagraph (A), an employee shall not be treated as a 
                participant for any plan year unless such individual 
                completes more than 500 hours of service during such 
                year.
            ``(3) Certain rules made applicable.--Except to the extent 
        inconsistent with the provisions of this subpart, the rules of 
        section 411 shall apply for purposes of this subsection.
    ``(d) Portability Requirements.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        requirements of this subsection are met if, in accordance with 
        procedures determined by the Secretary, the plan provides 
        that--
                    ``(A) except as provided in regulations, the plan 
                shall transfer, within 120 days after an employee 
                separates from service with the employer or after the 
                termination of the plan, the present value of the 
                nonforfeitable accrued qualified section 401(h) medical 
                benefits of the employee attributable to amounts which 
                are allocated to the funded reserve account to--
                            ``(i) a plan which is maintained by an 
                        employer of such employee and which maintains a 
                        health benefits account, or
                            ``(ii) if the employer does not maintain a 
                        plan described in clause (i), an individual 
                        retirement account established for the benefit 
                        of such employee, and
                    ``(B) the plan accepts transfers under subparagraph 
                (A) from another plan or individual retirement account.
            ``(2) No transfers after employee is disabled or attains 
        retirement age.--Except in the case of a termination of a plan, 
        a plan shall not meet the requirements of this subsection if it 
        permits the transfer of a benefit after--
                    ``(A) an employee has attained Social Security 
                retirement age, or
                    ``(B) an employee has become disabled (within the 
                meaning of section 72(m)(7)).
            ``(3) Inclusion in income where more than 1 account.--
                    ``(A) In general.--If--
                            ``(i) an individual is a participant or 
                        beneficiary under 2 or more plans maintaining a 
                        funded reserve account or individual retirement 
                        account to which assets were transferred from 
                        such a plan, and
                            ``(ii) such individual does not (within a 
                        reasonable period) consolidate the present 
                        value of the individual's nonforfeitable 
                        accrued benefit in all such plans and the 
                        assets so transferred to all such accounts into 
                        1 such plan or into 1 such account,
                then an amount equal to the sum of the present value of 
                such benefits and the fair market value of such assets 
                shall be treated as distributed in cash to such 
                individual at the close of the plan year for the plan 
                or account involved and such distribution shall be 
                included in gross income.
                    ``(B) Special rules.--
                            ``(i) Employee must consolidate into plan 
                        of current employer.--In the case of an 
                        employee who is employed by an employer 
                        maintaining a plan described in subparagraph 
                        (A)(i), a consolidation satisfies subparagraph 
                        (A) only if such consolidation is into such a 
                        plan maintained by such employer.
                            ``(ii) More than 1 current employer.--If an 
                        individual is a participant in more than 1 plan 
                        described in subparagraph (A)(i) by reason of 
                        being currently employed by more than 1 
                        employer, such plans shall be treated as 1 plan 
                        for purposes of subparagraph (A).
                            ``(iii) Employee with no current employer 
                        maintaining plan.--In the case of an employee 
                        who is currently not employed by an employer 
                        maintaining a plan described in subparagraph 
                        (A)(i), a consolidation satisfies subparagraph 
                        (A) only if such consolidation is into--
                                    ``(I) a plan described in 
                                subparagraph (A)(i) maintained by his 
                                most recent employer maintaining such 
                                plan, or
                                    ``(II) an individual retirement 
                                account of the individual.
                    ``(C) Amount transferred not includible in 
                income.--No amount shall be includible in gross income 
                by reason of any transfer which is part of a 
                consolidation required under this paragraph.
    ``(e) Retired Employees Not Covered by Health Benefits Account May 
Elect Coverage.--
            ``(1) In general.--The requirements of this subsection are 
        met if the plan provides that a former employee who--
                    ``(A) is in pay status under the plan, but
                    ``(B) is not eligible to receive all or any portion 
                of qualified section 401(h) medical benefits provided 
                for any period through the funded reserve account,
        is entitled to elect such benefits for himself or his spouse 
        and dependents. A plan shall not be treated as failing to meet 
        the requirements of this subsection if an employee is required 
        to pay a premium for such benefits as long as such premium does 
        not exceed 102 percent of applicable premium for the period 
        such benefits are provided.
            ``(2) Applicable premium.--For purposes of paragraph (1), 
        the applicable premium for any period shall be determined in 
        the same manner as under section 4980B(f)(4).

SEC. 420C. DEFINITIONS; SPECIAL RULES.

    ``(a) Qualified Section 401(h) Medical Benefits.--For purposes of 
this subpart, the term `qualified section 401(h) medical benefits' 
means benefits--
            ``(1) which are--
                    ``(A) benefits for sickness, accident, 
                hospitalization, and medical expenses of former 
                employees who are in pay status under the plan (and 
                their spouse or dependents) after the former employee--
                            ``(i) has attained Social Security 
                        retirement age, or
                            ``(ii) is disabled (within the meaning of 
                        section 72(m)(7)), or
                    ``(B) post-retirement long-term health care 
                benefits, and
            ``(2) which are provided through 1 or more of the 
        following:
                    ``(A) insurance acquired by the plan, or
                    ``(B) self-insurance by the employer or the plan.
    ``(b) Post-Retirement Long-Term Health Care.--For purposes of this 
subpart--
            ``(1) In general.--The term `post-retirement long-term 
        health care' means long-term health care benefits provided to a 
        former employee (or the spouse of the former employee) who is 
        in pay status under the plan after the former employee--
                    ``(A) has attained Social Security retirement age, 
                or
                    ``(B) is disabled (within the meaning of section 
                72(m)(7)).
            ``(2) Spouse of deceased employee.--For purposes of 
        paragraph (1), the spouse of a deceased employee shall be 
        treated--
                    ``(A) as a former employee, and
                    ``(B) as satisfied the requirements of paragraph 
                (1) if such spouse was receiving benefits immediately 
                before the death of the employee.
            ``(3) Long-term health care benefit.--
                    ``(A) In general.--The term `long-term health care 
                benefit' means a benefit which consists of the 
                providing by a qualified provider in a qualified 
                facility of necessary diagnostic, preventive, 
                therapeutic, rehabilitative, and personal care 
                services, required by a chronically ill individual.
                    ``(B) Certain items not included.--The term `long-
                term health care benefits' does not include basic 
                medicare supplement coverage, basic hospital expense 
                coverage, basic medical-surgical expense coverage, 
                hospital confinement indemnity coverage, major medical 
                expense coverage, disability income protection 
                coverage, accident only coverage, specified disease or 
                specified accident coverage, or limited benefit health 
                coverage.
            ``(4) Qualified facility.--The term `qualified facility' 
        means--
                    ``(A) a rehabilitative, hospice, or adult day care 
                facility, including a hospital, retirement home, 
                skilled nursing facility (within the meaning of section 
                1919(a) of the Social Security Act), or other similar 
                facility determined by the plan administrator, or
                    ``(B) a home where the chronically ill individual 
                resides.
            ``(5) Chronically ill individual.--The term `chronically 
        ill individual' means an individual whose disability is such 
        that the individual has been certified as requiring assistance 
        with daily living (as defined by the plan administrator) for a 
        period of at least 90 days.
            ``(6) Qualified provider.--The term `qualified provider' 
        means a medical practitioner licensed under State law, 
        registered nurse, licensed vocational nurse, qualified 
        therapist, or trained home health aide (or any organization 
        employing such providers), but does not include a relative or 
        other person who ordinarily resides in the home where the 
        chronically ill individual resides.
    ``(c) Health Benefits Account.--For purposes of this subpart, the 
term `health benefits account' means an account established and 
maintained under section 401(h).
    ``(d) Social Security Retirement Age.--For purposes of this 
subpart, the term `Social Security retirement age' has the meaning 
given such term by section 415(b)(8).''
    (b) Individual Retirement Accounts.--
          (1) In general.--Section 408 of such Code is amended by 
        redesignating subsection (p) as subsection (q) and by inserting 
        after subsection (o) the following new subsection:
    ``(p) Special Rules for Funded Reserve Accounts.--
          ``(1) In general.--A trust shall not be treated as an 
        individual retirement account under subsection (a) unless the 
        trust instrument provides that the trust will accept transfers 
        of assets as provided in section 420B(d)(1).
            ``(2) Accounting.--The trustee of an individual retirement 
        account shall maintain separate accounting for assets 
        transferred to the account under section 420B(d)(1) (and any 
        income allocable thereto).''
            ``(2) Penalty for early distributions.--Section 72(t) of 
        such Code (relating to 10-percent additional tax on early 
        distributions) is amended by adding at the end the following 
        new paragraph:
            ``(6) Early distribution of medical benefits.--If--
                    ``(A) a taxpayer receives a distribution of amounts 
                transferred to an individual retirement account under 
                section 420B(d)(1) (or any income or gain allocable 
                thereto), and
                    ``(B) such distribution--
                            ``(i) is made before the individual attains 
                        Social Security retirement age (within the 
                        meaning of section 415(b)(8)) or becomes 
                        disabled (within the meaning of subsection 
                        (m)(7)), or
                            ``(ii) exceeds the amount of qualified 
                        section 401(h) medical expenses of the 
                        taxpayer, his spouse, or dependents for the 
                        taxable year, then paragraph (1) shall apply to 
                        such distribution or such excess, except that 
                        `50 percent' shall be substituted for `10 
                        percent'. Paragraph (2) shall not apply to a 
                        distribution to which this paragraph applies.''
    (c) Excise Tax on Allocated Assets Not Used To Provide Retiree 
Health Benefits.--Section 4980 of such Code (relating to tax on 
reversion of qualified plan assets to employers) is amended by adding 
at the end the following new subsection:
    ``(e) Assets Allocated to Retiree Health Benefits Accounts.--In the 
case of a plan which establishes a health benefits account described in 
section 401(h), if--
            ``(1) amounts are allocated to a funded reserve account 
        under section 420B, and
            ``(2) any amount in such account is paid or distributed 
        other than to pay for qualified section 401(h) medical benefits 
        (as defined in section 420C(a)) provided through such account,
the amount so paid or distributed shall be treated as an employer 
reversion for purposes of this section, except that subsection (a) 
shall be applied by substituting `100 percent' for `25 percent'.''
    (d) Conforming Amendments.--
            (1) Section 419(e) of such Code (defining welfare benefit 
        fund) is amended by adding at the end the following new 
        paragraph:
            ``(5) Health benefits accounts.--The term `welfare benefits 
        fund' does not include any health benefits account established 
        under section 401(h).''
            (2) The table of subparts for part I of subchapter D of 
        chapter 1 of such Code is amended by adding at the end the 
        following new item:

                              ``Subpart F. Treatment of health benefit 
                                        accounts.''
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to contributions 
        after December 31, 1992.
            (2) Individual retirement accounts.--The amendments made by 
        subsection (b) shall apply to accounts established after 
        December 31, 1992.

       Subtitle C--Reverse Mortgage Insurance for Older Americans

SEC. 721. MAXIMUM AMOUNT INSURED.

    Section 255(g) of the National Housing Act (12 U.S.C. 1715z-20(g)) 
is amended by striking the third sentence and inserting the following 
new sentence: ``In no case may the benefits of insurance under this 
section exceed the greater of 95 percent of the median 1-family house 
price in the United States or 95 percent of the median 1-family house 
price in the area, as determined by the Secretary.''

                     Subtitle D--Income Tax Credits

SEC. 731. REFUNDABLE CREDIT FOR CUSTODIAL CARE OF CERTAIN DEPENDENTS IN 
              TAXPAYER'S HOME.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 37 and by inserting 
after section 34 the following new section:

``SEC. 35. CREDIT FOR TAXPAYERS WITH CERTAIN PERSONS REQUIRING 
              CUSTODIAL CARE IN THEIR HOUSEHOLDS.

    ``(a) Allowance of Credit.--In the case of an individual who 
maintains a household which includes as a member one or more qualified 
persons, there shall be allowed as a credit against the tax imposed by 
this chapter for the taxable year an amount equal to $2,000 for each 
such person.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified person.--The term `qualified person' means 
        any individual--
                    ``(A) who is a parent, grandparent, dependent (as 
                defined in section 152), or spouse of the taxpayer,
                    ``(B) who has been certified by a physician as--
                            ``(i) being unable to perform (without 
                        substantial assistance from another individual) 
                        at least 2 activities of daily living (as 
                        defined in paragraph (2)), or
                            ``(ii) having a similar level of disability 
                        due to cognitive impairment, and
                    ``(C) who has as his principal place of abode for 
                more than half of the taxable year the home of the 
                taxpayer.
            ``(2) Activities of daily living.--For purposes of 
        paragraph (1), each of the following is an activity of daily 
        living:
                    ``(A) Bathing.--The overall complex behavior of 
                getting water and cleansing the whole body, including 
                turning on the water for a bath, shower, or sponge 
                bath, getting to, in, and out of a tub or shower, and 
                washing and drying oneself.
                    ``(B) Dressing.--The overall complex behavior of 
                getting clothes from closets and drawers and then 
                getting dressed.
                    ``(C) Toileting.--The act of going to the toilet 
                room for bowel and bladder function, transferring on 
                and off the toilet, cleaning after elimination, and 
                arranging clothes.
                    ``(D) Transfer.--The process of getting in and out 
                of bed or in and out of a chair or wheelchair.
                    ``(E) Eating.--The process of getting food from a 
                plate or its equivalent into the mouth.
            ``(3) Physician.--The term `physician' means a doctor of 
        medicine or osteopathy legally authorized to practice medicine 
        or surgery in the jurisdiction in which he makes the 
        determination under paragraph (1).
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Maintaining a household.--An individual shall be 
        treated as maintaining a household for any period if over half 
        the cost of maintaining the household for such period is 
        furnished by such individual (or, is such individual is married 
        during such period, by such individual and his spouse).
            ``(2) Married couples must file joint return.--If the 
        taxpayer is married at the close of the taxable year, the 
        credit under subsection (a) shall be allowed only if the 
        taxpayer and his spouse file a joint return for the taxable 
        year.
            ``(3) Marital status.--An individual legally separated from 
        his spouse under a decree of divorce or separate maintenance 
        shall not be considered as married.
            ``(4) Certain married individuals living apart.--If--
                    ``(A) an individual who is married and who files a 
                separate return--
                            ``(i) maintains a household which includes 
                        as a member one or more qualified persons, and
                            ``(ii) furnishes over half of the cost of 
                        maintaining such household during such taxable 
                        year, and
                    ``(B) during the last 6 months of such taxable year 
                such individual's spouse is not a member of such 
                household,
        such individual shall not be considered as married.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''
    (b) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of such Code is amended by 
striking the item relating to section 35 and inserting the following:

                              ``Sec. 35. Credit for taxpayers with 
                                        certain persons requiring 
                                        custodial care in their 
                                        households.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

SEC. 732. CREDIT FOR EXPENSES FOR LONG-TERM CARE SERVICES PROVIDED TO 
              CERTAIN INDEPENDENT PERSONS REQUIRING SUCH CARE.

    (a) General Rule.--Subpart C of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by inserting after section 35 the following new section:

``SEC. 36. CREDIT FOR EXPENSES FOR LONG-TERM CARE SERVICES PROVIDED TO 
              CERTAIN INDEPENDENT PERSONS REQUIRING SUCH CARE.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to 25 percent of the qualified long-term 
care expenses paid during such taxable year.
    ``(b) Maximum Credit.--
            ``(1) In general.--The credit allowed by subsection (a) for 
        any taxable year shall not exceed $2,000 with respect to each 
        independent qualified person.
            ``(2) Phaseout of credit for taxpayers with incomes 
        exceeding 150 percent of the poverty level.--If the adjusted 
        gross income of the taxpayer for the taxable year exceeds the 
        base amount, the $2,000 amount in paragraph (1) shall be 
        reduced (but not below zero) by an amount which bears the same 
        ratio to $2,000 as--
                    ``(A) the excess of the taxpayer's adjusted gross 
                income for the taxable year over the base amount, bears 
                to
                    ``(B) $10,000.
        For purposes of the preceding sentence, the base amount is 150 
        percent of the poverty level applicable to the taxpayer.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified long-term care expenses.--
                    ``(A) In general.--The term `qualified long-term 
                care expenses' means the amount paid by the taxpayer 
                during the taxable year for 1 or more medically 
                necessary, diagnostic services, preventive services, 
                therapeutic services, rehabilitation services, 
                maintenance services, or personal care services which 
                are required by an independent qualified person and 
                which are provided in the household referred to in 
                paragraph (2)(C).
                    ``(B) Coverage specifically excluded.--Such term 
                does not include any combination of the following kinds 
                of coverage:
                            ``(i) Basic Medicare supplement coverage.
                            ``(ii) Basic hospital-based acute care 
                        expense coverage.
                            ``(iii) Basic medical-surgical expense 
                        coverage.
                            ``(iv) Hospital confinement indemnity 
                        coverage.
                            ``(v) Major medical expense coverage.
                            ``(vi) Disability income protection 
                        coverage.
                            ``(vii) Accident only coverage.
                            ``(viii) Specified disease coverage.
                            ``(ix) Specified accident coverage.
                            ``(x) Limited benefit health coverage.
            ``(2) Independent qualified person.--The term `independent 
        qualified person' means any individual--
                    ``(A) who is a parent, grandparent, or dependent 
                (as defined in section 152) of the taxpayer,
                    ``(B) who has been certified by a physician as--
                            ``(i) being unable to perform (without 
                        substantial assistance from another individual) 
                        at least 2 activities of daily living (as 
                        defined in section 35(b)(2)), or
                            ``(ii) having a similar level of disability 
                        due to cognitive impairment, and
                    ``(C) who maintains a household which is his 
                principal place of abode for more than half of the 
                taxable year of the taxpayer.
        Such term shall not include any qualified person as defined in 
        section 35(b).''
    (b) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following:

                              ``Sec. 36. Credit for expenses for long-
                                        term care services provided to 
                                        certain independent persons 
                                        requiring such care.''
                              ``Sec. 37. Overpayments of tax.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

          Subtitle E--Treatment of Accelerated Death Benefits

SEC. 741. TAX TREATMENT OF ACCELERATED DEATH BENEFITS UNDER LIFE 
              INSURANCE CONTRACTS.

    (a) General Rule.--Section 101 of the Internal Revenue Code of 1986 
(relating to certain death benefits) is amended by adding at the end 
thereof the following new subsection:
    ``(g) Treatment of Certain Accelerated Death Benefits.--
            ``(1) In general.--For purposes of this section, any amount 
        paid to an individual under a life insurance contract on the 
        life of an insured who is a terminally ill individual or who is 
        permanently confined to a nursing home shall be treated as an 
        amount paid by reason of the death of such insured.
            ``(2) Terminally ill individual.--For purposes of this 
        subsection, the term `terminally ill individual' means an 
        individual who has been certified by a physician, licensed 
        under State law, as having an illness or physical condition 
        which can reasonably be expected to result in death in 12 
        months or less.
            ``(3) Permanently confined to a nursing home.--For purposes 
        of this subsection, an individual has been permanently confined 
        to a nursing home if the individual is presently confined to a 
        nursing home and has been certified by a physician, licensed 
        under State law, as having an illness or physical condition 
        which can reasonably be expected to result in the individual 
        remaining in a nursing home for the rest of his life.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1992.

SEC. 742. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED ACCELERATED 
              DEATH BENEFIT RIDERS.

    (a) Qualified Accelerated Death Benefit Riders Treated as Life 
Insurance.--Section 818 of the Internal Revenue Code of 1986 (relating 
to other definitions and special rules), as amended by section 701(a), 
is amended by adding at the end thereof the following new subsection:
    ``(h) Qualified Accelerated Death Benefit Riders Treated as Life 
Insurance.--For purposes of this part--
            ``(1) In general.--Any reference to a life insurance 
        contract shall be treated as including a reference to a 
        qualified accelerated death benefit rider on such contract.
            ``(2) Qualified accelerated death benefit riders.--For 
        purposes of this subsection, the term `qualified accelerated 
        death benefit rider' means any rider or addendum on, or other 
        provision of, a life insurance contract which provides for 
        payments to an individual on the life of an insured upon such 
        insured becoming a terminally ill individual (as defined in 
        section 101(g)(2)) or being permanently confined to a nursing 
        home (as defined in section 101(g)(3)).''
    (b) Definitions of Life Insurance and Modified Endowment 
Contracts.--
            (1) Rider treated as qualified additional benefit.--
        Paragraph (5)(A) of section 7702(f) of such Code is amended by 
        striking ``or'' at the end of clause (iv), by redesignating 
        clause (v) as clause (vi), and by inserting after clause (iv) 
        the following new clause:
                            ``(v) any qualified accelerated death 
                        benefit rider (as defined in section 818(h)(2)) 
                        or any qualified long-term care insurance rider 
                        which reduces the death benefit, or''.
            (2) Transitional rule.--For purposes of applying section 
        7702 or 7702A of the Internal Revenue Code of 1986 to any 
        contract (or determining whether either such section applies to 
        such contract), the issuance of a rider or addendum on, or 
        other provision of, a life insurance contract permitting the 
        acceleration of death benefits (as described in section 101(g) 
        of such Code) or for qualified long-term care insurance (as 
        defined in section 849(b) of such Code) shall not be treated as 
        a modification or material change of such contract.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning before, on, or after December 31, 
1992.

  Subtitle F--Federal National Long-Term Care Reinsurance Corporation

SEC. 751. AUTHORIZATION FOR ESTABLISHMENT OF CORPORATION.

    The Secretary of Health and Human Services (in this subtitle 
referred to as the ``Secretary'') is authorized to provide, in 
accordance with this subtitle, for the incorporation of a corporation 
to be known as the Federal National Long-Term Care Reinsurance 
Corporation (in this subtitle referred to as the ``Corporation''), 
which shall not be an agency or establishment of the United States 
Government.

SEC. 752. BOARD OF DIRECTORS AND OFFICERS.

    (a) Board of Directors.--The Corporation shall have a Board of 
Directors (in this subtitle referred to as the ``Board'') consisting of 
9 members, of which--
            (1) 3 shall be appointed by the President of the United 
        States, of which one shall be representative of entities 
        providing long-term care, one shall be a representative from an 
        insurer, and one shall be a representative of consumers of 
        long-term care; and
            (2) 6 shall be elected annually by the stockholders of the 
        Corporation entitled to vote for such members.
Within the limitations of law and regulation, the Board shall determine 
the general policies which shall govern the operations of the 
Corporation, and shall have power to adopt, amend, and repeal bylaws 
governing the performance of the powers and duties granted to or 
imposed upon it by law.
    (b) Initial Board.--Notwithstanding subsection (a), the members 
described in subsection (a)(1) shall serve as incorporators and are 
authorized to assist the Secretary in taking whatever actions are 
necessary to incorporate the Corporation.
    (c) Terms of Office.--The terms of office of each member of the 
Board shall be one year, expiring on the date of the annual meeting of 
the stockholders of the Corporation, except that (1) in the case of a 
vacancy occurring prior to the expiration of the term of a member, the 
vacancy shall be filled by the President (for members described in 
subsection (a)(1)) or by the remaining members of the Board (for other 
members) for the remainder of such term, and (2) any member may be 
removed by the President for good cause. Any vacancy in the Board shall 
not affect its power.
    (d) Chairman.--The President shall designate one of the members 
described in subsection (a)(1) as the initial Chairman of the Board. 
Thereafter, the members of the Boards shall annually elect one of their 
number as Chairman.
    (e) Treatment of Members.--
            (1) The members of the Board shall not by reason of such 
        membership, be deemed to be employees of the United States 
        Government. Except as provided in paragraph (2), each member of 
        the Board shall be entitled to receive the daily equivalent of 
        the maximum annual rate of basic pay in effect for grade GS-18 
        of the General Schedule for each day (including travel time) 
        during which he is engaged in the actual performance of duties 
        vested in the Corporation.
            (2) Members of the Board who are full-time officers or 
        employees of the United States shall receive no additional pay 
        by reason of their service on the Board.
    (f) Officers.--The Corporation shall have a President and such 
other executive officers and employees as may be appointed by the Board 
at rates of compensation fixed by the Board, without regard to any 
provisions of title 5, United States Code. No such executive officer 
may receive any salary or other compensation from any source other than 
the Corporation during the period of his employment by the Corporation.

SEC. 753. PURPOSE AND AUTHORITY OF CORPORATION.

    (a) Purpose.--The Corporation shall confine its activities to 
providing for the reinsurance of insurance companies for extraordinary 
loss in the issuance or payment of benefits for qualified long-term 
care insurance (as defined in section 848(b) of the Internal Revenue 
Code of 1986). Except as may be provided by the Secretary in 
regulations, the Corporation may not refuse to provide for such 
reinsurance for any insurance meeting the requirements of such section 
(other than paragraph (4)(C)(iii) thereof).
    (b) Premiums.--The Corporation shall impose for such reinsurance 
reasonable premiums which--
            (1) are related to actuarial estimates of the type and 
        amount of financial risk assumed by the Corporation, and
            (2) in the aggregate (in conjunction with other income 
        which the Corporation may have) provide for all the expenses of 
        the Corporation.
    (c) No Political Contributions.--The Corporation shall not 
contribute or otherwise support any political party or candidate for 
elective public office.
    (d) General Powers.--Except as otherwise specifically provided in 
this subtitle, the Corporation and Board shall have the powers of a 
corporation and board of directors in the State in which incorporated.

SEC. 754. CAPITALIZATION.

    (a) Common Stock.--The Corporation shall have common stock, with 
such par value as the Board establishes, which shall be vested with all 
voting rights, each share being entitled to one vote with rights of 
cumulative voting at all elections of directors. The free 
transferability of the common stock at all times to any person, firm, 
corporation, or other entity shall not be restricted, except that, as 
to the Corporation, it shall be transferable only on the books of the 
Corporation. The Corporation shall only issue such common stock with 
the approval of the Secretary.
    (b) Debt.--
            (1) For purposes of carrying out this subtitle, the 
        Corporation may with the approval of the Secretary and 
        consistent with section 258, issue obligations having such 
        maturities and bearing such rate or rates and having such 
        conditions (including subordination to other such obligations) 
        as the Board determines to be appropriate.
            (2) The full faith and credit of the United States is not 
        pledged to the obligations and debts of the Corporation. The 
        Corporation shall insert appropriate language in all of its 
        obligations issued under this subsection clearly indicating 
        that such obligations, together with the interest thereon, are 
        not guaranteed by the United States and do not constitute debt 
        or obligation of the United States or of any agency or 
        instrumentality thereof. The Corporation may purchase in the 
        open market any of its obligations outstanding under the 
        subsection at any time and at any price.
            (3) All obligations, participations, or other instruments 
        issued by the Corporation shall be lawful investments, and may 
        be accepted as security for all fiduciary, trust, and public 
        funds, the investment or deposit of which shall be under the 
        authority and control of the United States or any officer or 
        officers thereof.

SEC. 755. EXEMPTION FROM STATE REGULATION AND TAXATION.

    (a) Taxation.--The Corporation, including its capital, reserves, 
surplus, security holdings, and income, shall be exempt from all 
taxation now or hereafter imposed by any State, district, Commonwealth, 
county, municipality, or local taxing authority, except that any real 
property of the Corporation shall be subject to such taxation to the 
same extent according to its value as other real property is taxed.
    (b) Insurance Regulation.--Except to the extent specified by the 
Secretary in regulations, the Corporation shall not be subject to any 
regulation under the insurance laws of any State, district, or 
Commonwealth.

SEC. 756. AUDIT AND ANNUAL REPORT.

    (a) Audit.--The Board shall provide for an annual audit of the 
operations of the Corporation. Such audit shall be conducted by a 
certified public accountant in accordance with generally accepted 
auditing principles (as recognized by the Comptroller General).
    (b) Annual Report.--The Board shall report annually to the 
President and the Congress on the activities of the Corporation. Such 
report shall include a presentation of the financial status of the 
Corporation, as certified under the audit described in subsection (a).

SEC. 757. PROTECTION OF NAME.

    No individual association, partnership, or corporation, except the 
Corporation, shall hereafter use the world ``Federal National Long-Term 
Care Reinsurance Corporation'', or any combination of such words, as 
the name or a part thereof under which he or it shall do business. 
Violations of the foregoing sentence may be enjoined by any court of 
general jurisdiction at the suit of the Corporation. In any such suit, 
the Corporation may recover any actual damages flowing from such 
violations, and, in addition, shall be entitled to punitive damages 
(regardless of the existence or nonexistence of actual damages) of not 
exceeding $10,000 for each day during which such violation is committed 
or repealed.

SEC. 758. TERMINATION.

    The Corporation shall terminate its activities not later than 10 
years after the date of the enactment of this Act.

  TITLE VIII--IMPROVEMENTS IN PORTABILITY OF PRIVATE HEALTH INSURANCE

SEC. 801. EXCISE TAX IMPOSED ON FAILURE TO PROVIDE FOR PREEXISTING 
              CONDITION.

    (a) In General.--Chapter 47 (relating to taxes on group health 
plans) is amended by adding at the end thereof the following new 
section:

``SEC. 5000A. FAILURE TO SATISFY PREEXISTING CONDITION REQUIREMENTS OF 
              GROUP HEALTH PLANS.

    ``(a) General Rule.--There is hereby imposed a tax on the failure 
of--
            ``(1) a group health plan to meet the requirements of 
        subsection (e), or
            ``(2) any person to meet the requirements of subsection 
        (f),
    with respect to any covered individual.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to a covered 
        individual 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.
            ``(3) Correction.--A failure of a group health plan to meet 
        the requirements of subsection (e) with respect to any covered 
        individual shall be treated as corrected if--
                    ``(A) such failure is retroactively undone to the 
                extent possible, and
                    ``(B) the covered individual is placed in a 
                financial position which is as good as such individual 
                would have been in had such failure not occurred.
        For purposes of applying subparagraph (B), the covered 
        individual shall be treated as if the individual had elected 
        the most favorable coverage in light of the expenses incurred 
        since the failure first occurred.
    ``(e) Limitations on Amount of Tax.--
            ``(1) 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 none of 
        the persons referred to in subsection (d) knew, or exercising 
        reasonable diligence would have known, that such failure 
        existed.
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) 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 first day any of the persons 
                referred to in subsection (d) 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) to the extent that the payment of such tax would 
        be excessive relative to the failure involved.
    ``(d) Liability for Tax.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the following shall be liable for the tax imposed 
        by subsection (a) on a failure:
                    ``(A) In the case of a group health plan other than 
                a self-insured group health plan, the issuer.
                    ``(B)(i) In the case of a self-insured group health 
                plan other than a multiemployer group health plan, the 
                employer.
                    ``(ii) In the case of a self-insured multiemployer 
                group health plan, the plan.
                    ``(C) Each person who is responsible (other than in 
                a capacity as an employee) for administering or 
                providing benefits under the group health plan, health 
                insurance plan, or other health benefit arrangement 
                (including a self-insured plan) and whose act or 
                failure to act caused (in whole or in part) the 
                failure.
            ``(2) Special rules for persons described in paragraph 
        (1)(c).--A person described in subparagraph (C) (and not in 
        subparagraphs (A) and (B)) of paragraph (1) shall be liable for 
        the tax imposed by subsection (a) on any failure only if such 
        person assumed (under a legally enforceable written agreement) 
        responsibility for the performance of the act to which the 
        failure relates.
    ``(e) No Discrimination Based on Health Status for Certain 
Services.--
            ``(1) In general.--Except as provided under paragraph (2), 
        group health plans may not deny, limit, or condition the 
        coverage under (or benefits of) the plan based on the health 
        status, claims experience, receipt of health care, medical 
        history, or lack of evidence of insurability, of an individual.
            ``(2) Treatment of preexisting condition exclusions for all 
        services.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this paragraph, group health plans may 
                exclude coverage with respect to services related to 
                treatment of a preexisting condition, but the period of 
                such exclusion may not exceed 6 months. The exclusion 
                of coverage shall not apply to services furnished to 
                newborns.
                    ``(B) Crediting of previous coverage.--
                            ``(i) In general.--A group health plan 
                        shall provide that if an individual under such 
                        plan is in a period of continuous coverage (as 
                        defined in clause (ii)(I)) with respect to 
                        particular services as of the date of initial 
                        coverage under such plan (determined without 
                        regard to any waiting period under such plan), 
                        any period of exclusion of coverage with 
                        respect to a preexisting condition for such 
                        services or type of services shall be reduced 
                        by 1 month for each month in the period of 
                        continuous coverage without regard to any 
                        waiting period.
                            ``(ii) Definitions.--As used in this 
                        subparagraph:
                                    ``(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 
                                insurance plan, title XVIII or XIX of 
                                the Social Security Act, or other 
                                health benefit arrangement (including a 
                                self-insured plan) which provides 
                                benefits with respect to such services 
                                and ends on the date the individual is 
                                not so enrolled for a continuous period 
                                of more than 3 months.
                                    ``(II) Preexisting condition.--The 
                                term `preexisting condition' means, 
                                with respect to coverage under a group 
                                health 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 without 
                                regard to any waiting period.
    ``(f) Disclosure of Coverage, Etc.--Any person who has provided 
coverage (other than under title XVIII or XIX of the Social Security 
Act) during a period of continuous coverage (as defined in subsection 
(e)(2)(B)(ii)(I)) with respect to a covered individual shall disclose, 
upon the request of a group health plan subject to the requirements of 
subsection (e), the coverage provided the covered individual, the 
period of such coverage, and the benefits provided under such coverage.
    ``(g) Definitions.--For purposes of this section--
            ``(1) Covered individual.--The term `covered individual' 
        means--
                    ``(A) an individual who is (or will be) provided 
                coverage under a group health plan by virtue of the 
                performance of services by the individual for 1 or more 
                persons maintaining the plan (including as an employee 
                defined in section 401(c)(1)), and
                    ``(B) the spouse or any dependent child of such 
                individual.
            ``(2) Group health plan.--The term `group health plan' has 
        the meaning given such term by section 5000(b)(1).''.
    (b) Clerical Amendment.--The table of sections for such chapter 47 
is amended by adding at the end thereof the following new item:

                              ``Sec. 5000A. Failure to satisfy 
                                        preexisting condition 
                                        requirements of group health 
                                        plans.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1992.

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