[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1976 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 1976

To guarantee access to affordable health care coverage, to provide for 
 equality with respect to the provision of service in rural areas, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 5, 1993

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

_______________________________________________________________________

                                 A BILL


 
To guarantee access to affordable health care coverage, to provide for 
 equality with respect to the provision of service in rural areas, 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.

    (a) Short Title.--This Act may be cited as the ``Comprehensive 
Health and Rural Equality Act of 1993''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
     TITLE I--GUARANTEED ACCESS TO AFFORDABLE HEALTH CARE COVERAGE

Sec. 101. Requirement of health insurance coverage.
Sec. 102. Registration of eligible uninsured individuals.
Sec. 103. Eligibility for credit certificates.
Sec. 104. Requirement for offering of MedEquality plans.
Sec. 105. Definitions.
               TITLE II--SMALL EMPLOYER INSURANCE REFORM

Sec. 201. Establishment and enforcement of standards for small employer 
                            health insurance plans.
Sec. 202. Preemption of State benefits mandates for plans that meet 
                            consumer protection standards.
Sec. 203. Requirement for offering of basic, low cost plan (MedEquality 
                            plan).
Sec. 204. Requirements relating to initial writing of policies.
Sec. 205. Requirements relating to renewal.
Sec. 206. Establishment of reinsurance mechanisms for high risk 
                            individuals.
Sec. 207. Registration of all health benefit plans required.
Sec. 208. Definitions.
Sec. 209. Preemption from insurance mandates for qualified small 
                            employer purchasing groups.
Sec. 210. Equalization of tax benefits for self-employed persons.
Sec. 211. Managed care rights.
                TITLE III--HEALTH CARE COST CONTAINMENT

 Subtitle A--Denial of Certain Tax Deductions and Exclusion for Excess 
                                Benefits

Sec. 301. Denial of employer tax deduction for providing health care 
                            coverage in excess of minimum benefits; 
                            denial of employee exclusion for such 
                            excess coverage.
                 Subtitle B--Medical Malpractice Reform

                       Part 1--General Provisions

Sec. 311. Federal reform of medical malpractice liability actions.
Sec. 312. Definitions.
Sec. 313. Effective date.
      Part 2--Uniform Standards for Medical Malpractice Liability

Sec. 321. Statute of limitations.
Sec. 322. Requirement for initial resolution of action through 
                            alternative dispute resolution.
Sec. 323. Relation to alternative dispute resolution of Federal 
                            agencies.
Sec. 324. Mandatory pretrial settlement conference.
Sec. 325. Calculation and payment of damages.
Sec. 326. Treatment of attorney's fees and other costs.
Sec. 327. Joint and several liability.
Sec. 328. Uniform standard for determining negligence.
Sec. 329. Application of medical practice guidelines in malpractice 
                            liability actions.
Sec. 330. Special provision for certain obstetric services.
Sec. 331. Preemption.
 Part 3--Requirements for State Alternative Dispute Resolution Systems

Sec. 341. Basic requirements for ADR.
Sec. 342. Certification of State systems.
Sec. 343. Reports on implementation and effectiveness of alternative 
                            dispute resolution systems.
                Part 4--Other Requirements and Programs

Sec. 351. Permitting State professional societies to participate in 
                            disciplinary activities.
                Subtitle C--Administrative Cost Savings

                 Part 1--Standardized Claims Processing

Sec. 361. Adoption of data elements, uniform claims, and uniform 
                            electronic transmission standards.
Sec. 362. Application of standards.
Sec. 363. Periodic review and revision of standards.
Sec. 364. Health benefit plan defined.
               Part 2--Electronic Medical Data Standards

Sec. 371. Medical data standards for hospitals and other providers.
Sec. 372. Application of electronic data standards to certain 
                            hospitals.
Sec. 373. Electronic transmission to Federal agencies.
Sec. 374. Limitation on data requirements where standards are in 
                            effect.
Sec. 375. Advisory commission.
             Part 3--Additional Standards and Requirements

Sec. 381. Standards relating to use of medicare and medicaid magnetized 
                            health benefit cards; secondary payor data 
                            bank.
Sec. 382. Preemption of State quill pen laws.
Sec. 383. Use of standard identification numbers.
Sec. 384. Coordination of benefit standards.
          Subtitle C--Estimates of Expenses Prior to Treatment

Sec. 391. Requirement.
                    Subtitle D--Antitrust Exemptions

Sec. 395. Permitting cooperative arrangements between hospitals.
                        TITLE IV--LONG-TERM CARE

        Subtitle A--Treatment of Long-Term Care Insurance Plans

Sec. 401. Qualified long-term care insurance treated as accident and 
                            health insurance for purposes of taxation 
                            of life insurance companies.
Sec. 402. 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. 403. Exclusion from gross income for amounts withdrawn from 
                            individual retirement plans or 401(k) plans 
                            for qualified long-term care insurance.
Sec. 404. Exchange of life insurance policy for qualified long-term 
                            care policy not taxable.
          Subtitle B--Treatment of Accelerated Death Benefits

Sec. 411. Tax treatment of accelerated death benefits under life 
                            insurance contracts.
Sec. 412. Tax treatment of companies issuing qualified accelerated 
                            death benefit riders.
      TITLE V--INCENTIVES FOR PROVISION OF SERVICES IN RURAL AREAS

Sec. 501. Deduction for medical school education loan interest incurred 
                            by doctors serving in medically underserved 
                            rural areas.
Sec. 502. Requiring development of comprehensive plans for medically 
                            underserved rural populations.
Sec. 503. Inclusion of transportation costs for physicians in 
                            underserved rural areas in the practice 
                            index under the medicare physician payment 
                            schedule.

     TITLE I--GUARANTEED ACCESS TO AFFORDABLE HEALTH CARE COVERAGE

SEC. 101. REQUIREMENT OF HEALTH INSURANCE COVERAGE.

    (a) In General.--Each eligible individual who does not establish 
(in a manner specified by the Secretary) coverage under a health 
insurance program (as defined in section 105(2)) shall--
            (1) register with the Secretary under section 102, and
            (2) be enrolled under a MedEquality plan in accordance with 
        this title.
    (b) Enforcement Through Information Concerning Health Coverage 
Shown on Tax Return.--Section 6012 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (e) as subsection (f) and by 
inserting after subsection (d) the following new subsection:
    ``(e) Health Care Coverage.--Every person required to file a return 
under this section for the taxable year shall include on such return a 
statement declaring whether or not the taxpayer and dependents of the 
taxpayer are covered under an accident or health plan as of the time 
such return is filed.''

SEC. 102. REGISTRATION OF ELIGIBLE UNINSURED INDIVIDUALS.

    (a) By Mail.--Each eligible individual who is not insured under a 
MedEquality plan or other health care plan shall register under this 
title, either as an individual or as a member of a family, by mailing a 
registration form to the Secretary.
    (b) Availability of Forms.--The Secretary shall make registration 
forms readily available at post offices and other suitable locations.

SEC. 103. CREDIT CERTIFICATES.

    (a) Credit Certificates.--
            (1) In general.--Each individual, in a State with an 
        agreement described in subsection (d)(2), determined to be a 
        credit eligible individual (as defined in subsection (b)) shall 
        receive a credit certificate the value of which may be applied 
        towards purchase of a MedEquality plan through an employer or 
        an insurer.
            (2) Value of certificate.--
                    (A) Scaled to income.--The value of a credit 
                certificate for an individual shall be scaled according 
                to the income of the individual, in a manner specified 
                by the Secretary so that--
                            (i) for individuals and families with 
                        income below the poverty level, the value 
                        equals the maximum value, and
                            (ii) for individuals and families with 
                        income more than 150 percent of the poverty 
                        level, there is no value to the credit 
                        certificate.
                    (B) Limit to lowest premium charged.--The value of 
                the credit certificate under this section shall not 
                exceed the cost of coverage under the least expensive 
                MedEquality plan available for the type of coverage 
                under which the individual is enrolled.
            (3) Application of credit certificate.--In accordance with 
        regulations of the Secretary, upon presentation of a credit 
        certificate of an individual to a MedEquality plan, the plan 
        shall reduce the value of the premium otherwise imposed and 
        shall transmit to the State electronically such information as 
        may be required in order for the State to provide for payment 
        to the plan (in accordance with subsection (c)(1)(C)).
    (b) Credit Eligible Individual Defined.--In this title, the term 
``credit eligible individual'' means a eligible individual--
            (1) whose income (as determined under section 1612 of the 
        Social Security Act for purposes of the supplemental security 
        income program) does not exceed 150 percent of the poverty 
        level; and
            (2) whose resources (as determined under section 1613 of 
        such Act for purposes of the supplemental security income 
        program) do not exceed the maximum amount of resources that an 
        individual may have and obtain benefits under that program.
    (c) Eligibility Determination.--
            (1) State responsibility.--States are responsible--
                    (A) for determining if individuals are credit 
                eligible individuals;
                    (B) in the case of credit eligible individuals, for 
                determining the value of the credit certificate and for 
                the issues of certificates to such individuals; and
                    (C) for making payment to MedEquality plans for the 
                value of certificates presented to them.
            (2) Application.--
                    (A) In general.--States shall provide that 
                individuals seeking a determination that they are 
                credit eligible individuals may apply for, and obtain, 
                such a determination (and if found eligible, for a 
                credit certificate under subsection (a)) in conjunction 
                with--
                            (i) applying for public welfare assistance 
                        (including assistance under title IV, or 
                        supplemental security income benefits under 
                        title XVI, of the Social Security Act), and
                            (ii) receiving medical services at a 
                        hospital emergency room.
                    (B) Periodic reapplications.--Individuals who are 
                determined to be credit eligible individuals are 
                required to reapply for such determination (and the 
                determination of the amount of the credit certificate) 
                not less often than once every 6 months.
            (3) Use of social security administration.--At the request 
        of a State, the Secretary may enter into an agreement with a 
        State under which eligibility determinations under this section 
        are conducted by the Social Security Administration on behalf 
        of the State.
    (d) Payment to States.--
            (1) In general.--From the amounts in the Treasury not 
        otherwise appropriated, the Secretary shall provide for 
        payments to States with an agreement in effect under paragraph 
        (2) (on a quarterly basis in the same manner as payments are 
        made to States under section 1903(d) of the Social Security 
        Act) of amounts equal to the sum of--
                    (A) the Federal medical assistance percentage (as 
                defined in section 1905(a)(2) of such Act) amounts paid 
                by the States for credit certificates issued under 
                subsection (c), and
                    (B) 60 percent of the reasonable administrative 
                expenses of the State in administering the certificate 
                program under this title.
            (2) Agreements.--An agreement under this paragraph is an 
        agreement between the Secretary and a State which provides--
                    (A) for the State--
                            (i) to carry out this title in the State 
                        (including implementing section 104(b)), and
                            (ii) to comply with the applicable 
                        requirements of section 502 (relating to 
                        comprehensive plans for medically underserved 
                        rural populations); and
                    (B) for the Secretary to make payments to the State 
                under paragraph (1).
            (3) Relation to medicaid program.--
                    (A) Duplication.--Notwithstanding any other 
                provision of law, such a State plan is not required to 
                provide for benefits for services under such State plan 
                to the extent the individual is entitled to benefits 
                for such services under a MedEquality plan.
                    (B) Medicaid as secondary payor.--State plans for 
                medical assistance under title XIX of the Social 
                Security Act shall, under section 1902(a)(25) of such 
                Act, not make payment for services to the extent that 
                payment may be made for such services under a 
                MedEquality plan.
    (e) Notice.--Whenever a credit certificate is issued under this 
section, the issuer shall notify the Commissioner of Internal Revenue 
concerning such issuance.

SEC. 104. REQUIREMENT FOR OFFERING OF MEDEQUALITY PLANS.

    (a) In General.--Each licensed insurance carrier in a State shall 
make available a MedEquality plan to all individuals residing in the 
State.
    (b) Enforcement.--If a carrier in a State fails to comply with 
development of a MedEquality plan, the Insurance Commissioner of the 
State shall revoke the carrier's license to offer health insurance in 
the State.

SEC. 105. DEFINITIONS.

    In this title:
            (1) Eligible individual.--The term ``eligible individual'' 
        means an individual who (A) is a citizen or national of the 
        United States, an alien lawfully admitted for permanent 
        residence, or an alien otherwise permanently residing in the 
        United States under color of law and (B) is residing in the 
        United States.
            (2) Health insurance program.--The term ``health insurance 
        program'' means any private or public program, other than a 
        MedEquality plan, that provides for benefits (through insurance 
        or otherwise) that are not less than the benefits provided 
        under a MedEquality plan, and includes the medicare and 
        medicaid programs (under titles XVIII and XIX of the Social 
        Security Act), the Federal employees health insurance program 
        (under chapter 89 of title 5, United States Code), the program 
        for the provision of medical and dental benefits under chapter 
        55 of title 10, United States Code, and the program for the 
        provision of hospital care and medical services by the 
        Department of Veterans Affairs under chapter 17 of title 38, 
        United States Code.
            (3) MedEquality plan.--The term ``MedEquality plan'' has 
        the meaning given such term in section 203(b).
            (4) Poverty level.--The term ``poverty level'' means 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.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (6) State.--The term ``State'' includes the District of 
        Columbia, Puerto Rico, the Virgin Islands, Guam, and American 
        Samoa.

               TITLE II--SMALL EMPLOYER INSURANCE REFORM

SEC. 201. ESTABLISHMENT AND ENFORCEMENT OF STANDARDS FOR SMALL EMPLOYER 
              HEALTH INSURANCE PLANS.

    (a) Establishment of General Standards.--
            (1) Role of naic.--The Secretary of Health and Human 
        Services shall request the National Association of Insurance 
        Commissioners to develop, within 1 year after the date of the 
        enactment of this Act, model regulations that specify standards 
        with respect to each of the following:
                    (A) The requirement, under section 203(a), that 
                small employer carriers offer MedEquality plans.
                    (B) The basic benefits to be included in 
                MedEquality plans under section 203(b).
                    (C) The requirements of guaranteed issue of 
                MedEquality plans under section 203(c).
                    (D) The requirements of sections 204 and 205(b).
                    (E) The requirements of subsections (a) and (c) of 
                section 205.
        If the NAIC develops such regulations specifying such standards 
        within such period, the Secretary shall review such standards 
        to determine if they meet such requirements. Such review shall 
        be completed within 6 months after the date the regulations are 
        developed. Unless the Secretary determines within such period 
        that the standards do not meet the requirements, such standards 
        shall serve as the standards under this section.
            (2) Contingency.--If the NAIC does not develop such model 
        regulations within such period or the Secretary determines that 
        such regulations do not meet the requirements described in 
        paragraph (1), the Secretary shall inform the NAIC of the 
        specific deficiencies and request the NAIC to develop such 
        model regulations in conformity with paragraph (1).
            (3) Effective date.--The standards provided under this 
        subsection--
                    (A) shall apply to small employer health benefit 
                plans offered in a State on or after the date the 
                standards are implemented in the State under subsection 
                (b)(1), and
                    (B) with respect to the requirements referred to in 
                paragraph (1)(D), shall apply to small employer health 
                benefit plans renewed on or after 3 years after the 
                date such standards are implemented in the State under 
                subsection (b)(1).
    (b) Application of Standards Through States.--
            (1) Application of all standards to new plans.--
                    (A) In general.--Each State shall submit to the 
                Secretary, by the deadline specified in subparagraph 
                (B), a report on the implementation and enforcement of 
                the standards established under subsection (a) with 
                respect to small employer health benefit plans offered 
                not later than such deadline.
                    (B) Deadline for report.--
                            (i) 1 year after standards established.--
                        Subject to clause (ii), the deadline under this 
                        subparagraph is 1 year after the date standards 
                        are established under subsection (a).
                            (ii) Exception for legislation.--In the 
                        case of a State which the Secretary identifies, 
                        in consultation with the NAIC, as--
                                    (I) requiring State legislation 
                                (other than legislation appropriating 
                                funds) in order for carriers and health 
                                benefit plans offered to small 
                                employers to meet the standards 
                                established under subsection (a), but
                                    (II) having a legislature which is 
                                not scheduled to meet in 1994 in a 
                                legislative session in which such 
                                legislation may be considered,
                        the date specified in this subparagraph is the 
                        first day of the first calendar quarter 
                        beginning after the close of the first 
                        legislative session of the State legislature 
                        that begins on or after January 1, 1994. For 
                        purposes of the previous sentence, in the case 
                        of a State that has a 2-year legislative 
                        session, each year of such session shall be 
                        deemed to be a separate regular session of the 
                        State legislature.
            (2) Application of consumer protection to all plans.--Each 
        State shall submit to the Secretary, by not later than 4 years 
        after the date standards are established under subsection (a), 
        a report on the implementation and enforcement of the standards 
        established under subparagraphs (D) and (E) subsection (a)(1) 
        with respect to small employer health benefit plans renewed not 
        later than 4 years after the date such standards were 
        established.
            (3) More stringent state standards permitted.--A State may 
        implement standards that are more stringent than the standards 
        established under subsection (a).
            (4) Enforcement.--If the Secretary determines that a State 
        has failed to submit a report by the deadline under paragraph 
        (1) or (2) or finds that the State no longer is carrying out 
        its responsibility under the respective paragraph, the 
        Secretary shall notify the State and provide the State a period 
        of 30 days in which to submit such report or to carry out its 
        responsibilities under the respective paragraph. If, after such 
        30-day period, the Secretary finds that such a failure has not 
        been corrected, the Secretary shall provide for such mechanism 
        for the implementation and enforcement of the standards 
        established under subsection (a) in the State as the Secretary 
        determines to be appropriate. Such standards shall apply to 
        health benefit plans offered or renewed on or after 3 months 
        after the applicable deadlines established under subparagraphs 
        (A) through (C) of subsection (a)(3).

SEC. 202. PREEMPTION OF STATE BENEFITS MANDATES FOR PLANS THAT MEET 
              CONSUMER PROTECTION STANDARDS.

    (a) Finding.--Congress finds that health benefit plans offered with 
respect to small employers affect interstate commerce.
    (b) Preemption.--In the case of a small employer health benefit 
plan that meets the standards with respect to the requirements referred 
to in subparagraphs (D) and (E) of section 201(a)(1), no provision of 
State law shall apply that requires the offering, as part of the health 
benefit plan with respect to such an employer, of any services, 
category of care, or services of any class or type of provider.

SEC. 203. REQUIREMENT FOR OFFERING OF BASIC, LOW COST PLAN (MEDEQUALITY 
              PLAN).

    (a) In General.--Each small employer carrier which makes available 
in a State any small employer health benefit plan shall make available 
to each small employer in the State a MedEquality plan (as defined in 
subsection (b)).
    (b) MedEquality Plan Defined.--
            (1) In general.--In this title, except as provided in 
        paragraph (2), the term ``MedEquality plan'' means a health 
        benefits plan that--
                    (A) is designed to provide only basic hospital, 
                medical, surgical, preventive, and diagnostic benefits, 
                specified under standards under section 201(a)(1)(B), 
                so as to make it affordable to small employers;
                    (B) includes cost-sharing that provides an 
                appropriate incentive to avoid unnecessary care while 
                avoiding excessive cost-sharing by individuals with 
                catastrophic illnesses;
                    (C) is guaranteed issue (as described in subsection 
                (c));
                    (D) meets the standards established under 
                subparagraphs (D) and (E) of section 201(a)(1) 
                (relating to the requirements of sections 204 and 205); 
                and
                    (E) provides for cost-containment in accordance 
                with the model made applicable under subsection (d) in 
                the State in which the plan is issued.
            (2) Special rules for health maintenance organizations.--
        With respect to a carrier that is a Federally-qualified health 
        maintenance organization (as defined in section 1301(a) of the 
        Public Health Service Act), the term ``MedEquality plan'' means 
        a plan of the type described in paragraph (1) but with benefits 
        that are consistent with the requirements for the plans of such 
        an organization under title XIII of such Act. With respect to a 
        carrier that is not such a Federally-qualified health 
        maintenance organization but which is recognized under State 
        law as a health maintenance organization, the term 
        ``MedEquality plan'' means a plan of the type described in 
        paragraph (1) but with benefits that are consistent with the 
        requirements of State law for the plans of such an 
        organization.
            (3) Review of minimum benefit standards.--The NAIC is 
        requested to periodically review the standards for minimum 
        benefits described in paragraph (1)(A). The NAIC is requested 
        to submit to the Secretary and the Congress its recommendations 
        on changes that should be made in such standards.
    (c) Guaranteed Issue for MedEquality Plans.--
            (1) In general.--Each MedEquality plan in a State--
                    (A) subject to paragraph (2), must accept every 
                small employer in the State that applies for coverage 
                under the plan;
                    (B) subject to paragraphs (2) and (3), must accept 
                for enrollment every individual who is a full-time 
                employee (or, in the case of family enrollment with 
                respect to such an employee, the employee's spouse and 
                the employee's dependents who are under 19 years of age 
                or who are full-time students and under 21 years of 
                age) who applies for enrollment on a timely basis; and
                    (C) subject to paragraphs (2) and (3), may not 
                place any restriction on the eligibility of an 
                individual to enroll, so long as such an individual is 
                a full-time employee or the employee's spouse or 
                dependent described in subparagraph (B).
            (2) Special rules for health maintenance organizations.--In 
        the case of a MedEquality plan offered by a health maintenance 
        organization, the plan shall--
                    (A) limit the employers that may apply for coverage 
                to those with eligible individuals residing in the 
                service area of the plan,
                    (B) limit the individuals who may be enrolled under 
                the plan to those who reside in the service area of the 
                plan, and
                    (C) within the service area of the plan, deny 
                coverage to such employers if the plan demonstrates 
                that--
                            (i) it will not have the capacity to 
                        deliver services adequately to enrollees of any 
                        additional groups because of its obligations to 
                        existing group contract holders and enrollees, 
                        and
                            (ii) it is applying this subparagraph 
                        uniformly to all employers without regard to 
                        the health status, claims experience, or 
                        duration of coverage of those employers and 
                        their employees.
            (3) Exception for certain late enrollees.--
                    (A) In general.--Except as provided in this 
                paragraph, paragraph (1)(B) shall not apply to an 
                eligible employee or dependent who fails to enroll in a 
                health benefit plan during an initial enrollment 
                period, if such period is at least 30 days long.
                    (B) Exception for those with previous employer 
                coverage.--Subparagraph (A) shall not apply to an 
                individual who--
                            (i) was covered under another employer 
                        health benefit plan at the time of the 
                        individual's initial enrollment period,
                            (ii) stated at the time of initial 
                        enrollment period that coverage under another 
                        employer health benefit plan was the reason for 
                        declining enrollment,
                            (iii) lost coverage under another employer 
                        health benefit plan as a result of termination 
                        of employment, the termination of the other 
                        plan's coverage, death of a spouse, or divorce, 
                        and
                            (iv) requests enrollment within 30 days 
                        after termination of coverage under another 
                        employer health benefit plan.
                    (C) Exception for open enrollment.--Subparagraph 
                (A) shall not apply to an individual who--
                            (i) is employed by an employer which offers 
                        multiple health benefit plans, and
                            (ii) elects a different plan during an open 
                        enrollment period.
                    (D) Exception for court orders.--Subparagraph (A) 
                shall not apply to a spouse or minor child if a court 
                has ordered coverage be provided for the spouse or 
                child under a covered employee's health benefit plan 
                and request for such coverage is made within 30 days 
                after issuance of such court order.
    (d) Cost Containment Standards.--
            (1) Development of models.--
                    (A) Role of naic.--The Secretary shall request the 
                NAIC to develop, within 1 year after the date of the 
                enactment of this Act, models for cost-containment 
                features in MedEquality plans. Such models shall 
                include a managed care plan (described in paragraph 
                (3)) and any combination of such models the NAIC finds 
                appropriate. If the NAIC develops such models within 
                such period, the Secretary shall review such models to 
                determine if they provide for effective cost-
                containment. Such review shall be completed within 6 
                months after the date the models are developed. Unless 
                the Secretary determines within such period that such a 
                model does not provide effective cost-containment, such 
                remaining models shall serve as the models under this 
                subsection.
                    (B) Contingency.--If the NAIC does not develop such 
                models within such period or the Secretary determines 
                that all such models do not provide for effective cost-
                containment, the Secretary shall inform the NAIC of the 
                specific deficiencies and request the NAIC to develop 
                such models in conformity with paragraph (1).
            (2) Selection of cost-containment model by state.--By not 
        later than 2 years after the date of the enactment of this Act, 
        each State shall specify the cost-containment model (developed 
        under paragraph (1)) that will be applied under subsection (a) 
        to MedEquality plans issued in the State.
            (3) Managed care plan defined.--For purposes of paragraph 
        (1), the term ``managed care plan'' includes (but is not 
        limited to) any plan that--
                    (A) arranges with selected providers for the 
                furnishing of health care services,
                    (B) provides explicit standards for the selection 
                of such providers,
                    (C) has formal programs for ongoing quality 
                assurance and utilization review, and
                    (D) provides significant financial incentives for 
                beneficiaries to use providers and procedures 
                associated with the plan.
    (d) Role of State Insurance Commissioner.--The commissioner or 
superintendent of insurance of each State shall be responsible for 
determining that the premium charged for each MedEquality plan is 
reasonable and not excessive in relation to the benefits.

SEC. 204. REQUIREMENTS RELATING TO INITIAL WRITING OF POLICIES.

    (a) Limitations on Treatment of Pre-Existing Conditions.--
            (1) In general.--A carrier may not impose (or require an 
        employer to impose through a waiting period for coverage under 
        a health benefit policy or similar requirement) a limitation or 
        exclusion of benefits under a small employer health benefit 
        plan relating to treatment of a condition based on the fact 
        that the condition preexisted the effectiveness of the policy 
        if--
                    (A) the condition relates to a condition that did 
                not exist within 6 months before the date of coverage 
                under the plan, or
                    (B) the limitation or exclusion extends over more 
                than 12 months after the date of coverage under the 
                plan.
            (2) Previous satisfaction of preexisting condition 
        requirement.--
                    (A) In general.--In addition, each carrier shall 
                waive any period applicable to a preexisting condition 
                for similar benefits with respect to an individual to 
                the extent that the individual was covered for the 
                condition under a small employer health benefit plan 
                that was in effect before the date of the enrollment 
                under the carrier's plan.
                    (B) Continuous coverage required.--Subparagraph (A) 
                shall no longer apply if there is a continuous period 
                of more than 60 days on which the individual was not 
                covered under an employer health benefit plan.
    (b) Limits on Premiums.--
            (1) Limit on variation of index rates between blocks of 
        business.--
                    (A) In general.--As a standard under section 202, 
                the index rate for a rating period for any block of 
                business of a small employer carrier may not exceed the 
                index rate for any other block of business by more than 
                20 percent.
                    (B) Exceptions.--Subparagraph (A) shall not apply 
                to a block of business if--
                            (i) the block is one for which the carrier 
                        does not reject, and never has rejected, small 
                        employers included within the definition of 
                        employers eligible for the block of business or 
                        otherwise eligible employees and dependents who 
                        enroll on a timely basis, based upon their 
                        claim experience or health status,
                            (ii) the carrier does not involuntarily 
                        transfer, and never has involuntarily 
                        transferred, a health benefit plan into or out 
                        of the block of business, and
                            (iii) the block of business is currently 
                        available for purchase.
            (2) Limit on variation of premium rates within a block of 
        business.--For a block of business of a small employer carrier, 
        as a standard under section 202 the premium rates charged 
        during a rating period to small employers with similar 
        demographic or other relevant characteristics (not relating to 
        claims experience, health status, or duration of coverage) for 
        the same or similar coverage, or the rates which could be 
        charged to such employers under the rating system for that 
        block of business, shall not vary from the index rate by more 
        than 25 percent of the index rate.
            (3) Limit on permissible rate variations.--Subject to 
        paragraphs (1) and (2), as a standard under section 202, a 
        carrier may establish rate variations based on factors such as 
        geography, demography, and industry and plan design.
            (4) Limit on transfer of employers among blocks of 
        business.--As a standard under section 202, a small employer 
        carrier may not involuntarily transfer a small employer into or 
        out of a block of business. A small employer carrier may not 
        offer to transfer a small employer into or out of a block of 
        business unless such offer is made to transfer all small 
        employers in the block of business without regard to 
        demographic characteristics, claim experience, health status, 
        or duration since issue.
            (5) Definitions.--In this subsection:
                    (A) Base premium rate.--The term ``base premium 
                rate'' means, for each block of business for each 
                rating period, the lowest premium rate charged or which 
                could have been charged under a rating system for that 
                block of business by the small employer carrier to 
                small employers with similar demographic or other 
                relevant characteristics (not relating to claims 
                experience, health status, or duration of coverage) for 
                health benefit plans with the same or similar coverage.
                    (B) Block of business.--The term ``block of 
                business'' means, with respect to a carrier, all (or a 
                distinct group of) small employers as shown on the 
                records of the carrier.
                    (C) Rules for establishing blocks of business.--For 
                purposes of subparagraph (B)--
                            (i) a carrier may establish, subject to 
                        clause (ii), a distinct group of small 
                        employers on the basis that the applicable 
                        health benefit plans either--
                                    (I) are marketed and sold through 
                                individuals and organizations which are 
                                not participating in the marketing or 
                                sale of other distinct groups of small 
                                employers for the carrier,
                                    (II) have been acquired from 
                                another carrier as a distinct group, or
                                    (III) are provided through an 
                                association with membership of not less 
                                than 100 small employers which has been 
                                formed for purposes other than 
                                obtaining insurance;
                            (ii) a carrier may not establish more than 
                        2 groupings under each block of business 
                        because the carrier uses managed-care 
                        techniques which are expected to produce 
                        substantial variation in health care costs; and
                            (iii) notwithstanding clauses (i) and (ii), 
                        a Commissioner of Insurance of a State may, 
                        upon application, approve additional distinct 
                        groups upon a finding that such approval would 
                        enhance the efficiency and fairness of the 
                        small employer marketplace.
                    (D) Index rate.--The term ``index rate'' means, 
                with respect to a block of business, the arithmetic 
                average of the applicable base premium rate and the 
                corresponding highest premium rate for the block.
    (c) Full Disclosure of Rating Practices.--At the time a carrier 
offers a health benefit plan to a small employer, the carrier shall 
fully disclose to the employer rating practices for small employer 
health benefit plans, including rating practices for different 
industries, populations, and benefit designs.
    (d) Actuarial Certification.--Each carrier shall file annually with 
the State commissioner of insurance a written statement by a member of 
the American Academy of Actuaries (or other individual acceptable to 
the commissioner) that, based upon an examination by the individual 
which includes a review of the appropriate records and of the actuarial 
assumptions of the carrier and methods used by the carrier in 
establishing premium rates for applicable small employer health benefit 
plans--
            (1) the carrier is in compliance with the applicable 
        provisions of this section, and
            (2) the rating methods are actuarially sound.
Each carrier shall retain a copy of such statement for examination at 
its principal place of business.
    (e) Registration and Reporting.--Each carrier that issues any small 
employer health benefit plan in a State shall be registered or licensed 
with the State commissioner of insurance and shall comply with any 
reporting requirements of the commissioner relating to such a plan.
    (f) Use of Minimum Participation Requirement.--A carrier may 
condition issuance, or renewal, of a health benefit plan to a small 
employer on the enrollment of a minimum number (or percentage) of its 
full-time employees, in accordance with standards established to carry 
out this section. Such standards shall require that any such conditions 
be imposed uniformly on employers of the same size.

SEC. 205. REQUIREMENTS RELATING TO RENEWAL.

    (a) Renewability.--A carrier may not cancel a small employer health 
benefit plan or deny renewal of coverage under such a plan other than--
            (1) for nonpayment of premiums,
            (2) for fraud or other misrepresentation by the insured,
            (3) for noncompliance with plan provisions,
            (4) for failure to maintain (in accordance with standards 
        established under section 204(f)) the number of enrollees under 
        the plan at the number (or percentage) required under the plan,
            (5) for misuse of a provider network provision, or
            (6) because the carrier is ceasing to provide any small 
        employer health benefit plan in a State, or, in the case of a 
        health maintenance organization, in a geographic area.
    (b) Limitation on Premium Increases.--A carrier may not provide for 
an increase in the premium charged a small employer for a small 
employer health benefit plan in a percentage greater than such 
percentage as shall be specified in standards referred to in section 
201(a)(1)(E). Such standards shall take into account increases in 
premiums charged for new coverage of small employers under the plan.
    (c) Limitation on Market Reentry.--If a carrier terminates the 
offering of health benefit plans to small employers in an area, the 
carrier may not offer such a health benefit plan to any small employer 
in the area until 5 years have elapsed since the date of the 
termination.

SEC. 206. ESTABLISHMENT OF REINSURANCE MECHANISMS FOR HIGH RISK 
              INDIVIDUALS.

    (a) Establishment of Standards.--
            (1) Role of naic.--The Secretary shall request the NAIC to 
        develop, within 1 year after the date of the enactment of this 
        Act, models for reinsurance mechanisms (each in this section 
        referred to as the ``reinsurance mechanism'') for individuals 
        and small employers who are enrolled under a small employer 
        health benefit plan that meets the standards with respect to 
        the requirements referred to in subparagraphs (D) and (E) of 
        section 201(a)(1) and for whom a carrier is at risk of 
        incurring high costs under the plan. Such models shall include 
        models based on each of the following:
                    (A) A voluntary prospective reinsurance option.
                    (B) A retrospective reinsurance option.
                    (C) An allocation option.
                    (D) A pooled employee option.
                    (E) A designated carrier option.
                    (F) A mandatory reinsurance option.
        If the NAIC develops such models within such period, the 
        Secretary shall review such models to determine if they provide 
        for an effective reinsurance mechanism. Such review shall be 
        completed within 6 months after the date the models are 
        developed. Unless the Secretary determines within such period 
        that such a model is not an effective reinsurance mechanism, 
        such remaining models shall serve as the models under this 
        section.
            (2) Contingency.--If the NAIC does not develop such models 
        within such period or the Secretary determines that all such 
        models do not provide for an effective reinsurance mechanism, 
        the Secretary shall inform the NAIC of the specific 
        deficiencies and request the NAIC to develop such models in 
        conformity with paragraph (1).
    (b) Requirement of Implementation of Reinsurance Mechanisms.--
            (1) In general.--By not later than 2 years after the date 
        of the enactment of this Act, each State shall establish one or 
        more reinsurance mechanisms by not later than the deadline 
        specified in section 201(b)(1)(B) of this Act.
            (2) Default.--If the Secretary determines that a State has 
        failed to establish any reinsurance mechanism under paragraph 
        (1), the Secretary shall establish one or more such mechanisms 
        with respect to that State. The authority provided under the 
        previous sentence shall expire upon the Secretary's 
        determination that the State has provided, by law, for 
        establishment of a reinsurance mechanism that meets the 
        requirement of paragraph (1).
    (c) Construction.--Nothing in this section shall be construed as to 
prohibit reinsurance arrangements, whether on a State or regional 
basis, not required under this section.

SEC. 207. REGISTRATION OF ALL HEALTH BENEFIT PLANS REQUIRED.

    Notwithstanding any other provision of law, each State commissioner 
or superintendent of insurance may, under State law, require each 
employer health benefit plan (including a self-insured plan) to be 
registered with such official, if the plan is not otherwise required to 
be registered or licensed with the official under section 204(e), and 
to provide the official with such information on the plan as may be 
necessary to carry out section 206.

SEC. 208. DEFINITIONS.

    In this subtitle:
            (1)(A) The term ``carrier'' means any entity which provides 
        health insurance or health benefits in a State, and includes a 
        licensed insurance company, a prepaid hospital or medical 
        service plan, a health maintenance organization, a multiple 
        employer welfare arrangement or employee benefits plan (as 
        defined under the Employee Retirement Income Security Act of 
        1974), or any other entity providing a plan of health insurance 
        subject to State insurance regulation.
            (B) The term ``small employer carrier'' means a carrier 
        with respect to the issuance of a small employer health benefit 
        plan.
            (2) The term ``health benefit plan'' means any hospital or 
        medical expense incurred policy or certificate, hospital or 
        medical service plan contract, or health maintenance subscriber 
        contract, but does not include--
                    (A) accident-only, credit, dental, or disability 
                income insurance,
                    (B) coverage issued as a supplement to liability 
                insurance,
                    (C) worker's compensation or similar insurance, or
                    (D) automobile medical-payment insurance.
            (3) The term ``NAIC'' means the National Association of 
        Insurance Commissioners.
            (4) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
            (5)(A) The term ``small employer'' means an entity actively 
        engaged in business which, on at least 50 percent of its 
        working days during the preceding year, employed at least 3, 
        but fewer than 50, full-time employees. For purposes of 
        determining if an employer is a small employer, rules similar 
        to the rules of subsections (b) and (c) of section 414 of the 
        Internal Revenue Code of 1986 shall apply.
            (B) The term ``full-time employee'' means, with respect to 
        an employer, an individual who normally is employed for at 
        least 30 hours per week by the employer.
            (6) The term ``small employer health benefit plan'' means a 
        health benefit plan which provides coverage to one or more 
        full-time employees of a small employer.
            (7) The term ``State'' means the 50 States, the District of 
        Columbia, and Puerto Rico.
            (8) The term ``State commissioner of insurance'' includes a 
        State superintendent of insurance.

SEC. 209. PREEMPTION FROM INSURANCE MANDATES FOR QUALIFIED SMALL 
              EMPLOYER PURCHASING GROUPS.

    (a) Qualified Small Employer Purchasing Group Defined.--For 
purposes of this section, an association is a qualified small employer 
purchasing group if--
            (1) the association submits an application to the Secretary 
        of Health and Human Services at such time and in such form 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 association is administered solely under 
                the authority and control of its member employers,
                    (B) the association's membership consists solely of 
                employers with not more than 100 employees (except that 
                an employer member of the group may retain its 
                membership in the group if, after the Secretary 
                determines that the association meets the requirements 
                of this paragraph, 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 association consists of not fewer than 
                100 employers, and
                    (D) at the time the association submits its 
                application, the health benefit plans with respect to 
                the employer members of the association are in 
                compliance with applicable State laws relating to 
                health benefit plans.
    (b) Preemption From Insurance Mandates.--
            (1) Finding.--Congress finds that employer purchasing 
        groups organized for the purpose of obtaining health insurance 
        for employer members affect interstate commerce.
            (2) Preemption of state mandates.--In the case of a 
        qualified small employer purchasing group described in 
        subsection (a), no provision of State law shall apply that 
        requires the offering, as part of the health benefit 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.
            (3) Preemption of taxes on premiums.--In the case of a 
        qualified small employer purchasing group described in 
        subsection (a), no provision of State or local law shall apply 
        that requires a provider of insurance to pay a tax on premiums 
        received from employer members of the group under a health 
        benefit plan obtained by the group from the insurer for its 
        employer members.
            (4) Preemption of provisions relating to managed care.--In 
        the case of a qualified small employer purchasing group 
        described in subsection (a), the following provisions of State 
        law are preempted and may not be enforced against the health 
        benefit plan with respect to an employer member of such a 
        group:
                    (A) Restrictions on reimbursement rates or 
                selective contracting.--Any law that restricts the 
                ability of a carrier to negotiate reimbursement rates 
                with providers or to contract selectively with one 
                provider or a limited number of providers.
                    (B) Restrictions on differential financial 
                incentives.--Any law that limits the financial 
                incentives that a health benefit plan may require a 
                beneficiary to pay when a nonplan provider is used on a 
                nonemergency basis.
                    (C) Restrictions on utilization review methods.--
                (i) 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 
                        reviews or requires the disclosure of the 
                        specific criteria used in such reviews;
                            (IV) requires payments to providers for the 
                        expenses of responding to utilization review 
                        requests; or
                            (V) imposes liability for delays in 
                        performing such review.
                    (ii) Nothing in clause (i)(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.
    (c) Effective Date.--This section shall take effect 60 days after 
the date of the enactment of this Act.

SEC. 210. EQUALIZATION OF TAX BENEFITS FOR SELF-EMPLOYED PERSONS.

    (a) Increase in Deduction.--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--
            (1) by striking ``25 percent'' and inserting ``the 
        applicable percentage (determined in accordance with the 
        following table)'',
            (2) by striking the period at the end and inserting a 
        colon, and
            (3) by adding at the end thereof the following table:

        ``In the case of taxable
                                                         The applicable
          years beginning in:
                                                         percentage is:
                1994.................................            25    
                1995 or 1996.........................            50    
                1997 or thereafter...................        100.''    
    (b) Deduction Made Permanent.--Subsection (l) of section 162 of 
such Code is amended by striking paragraph (6).
    (c) Deduction Limited to MedEquality Plans or Equivalent Plans.--
Subsection (l) of section 162 of such Code is amended by adding at the 
end thereof the following new paragraph:
            ``(6) Deduction limited to medequality plans or equivalent 
        plans.--No deduction shall be allowed under paragraph (1) for 
        insurance which is not a MedEquality plan (within the meaning 
        of section 203(b) of the Comprehensive Health and Rural 
        Equality Act of 1993 or an equivalent plan (as defined by the 
        Secretary).''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 211. MANAGED CARE RIGHTS.

    (a) Preemption of State Law Provisions.--The following provisions 
of State law are preempted and may not be enforced:
            (1) Restrictions on reimbursement rates or selective 
        contracting.--Any law that restricts the ability of a carrier 
        to negotiate reimbursement rates with 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 a health benefit 
        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.--Any law 
        that--
                    (A) prohibits utilization review of any or all 
                treatments and conditions,
                    (B) requires that such review be made (i) by a 
                resident of the State in which the treatment is to be 
                offered or by an individual licensed in such State, or 
                (ii) 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,
                    (C) requires the use of specified standards of 
                health care practice in such reviews or requires the 
                disclosure of the specific criteria used in such 
                reviews,
                    (D) requires payments to providers for the expenses 
                of responding to utilization review requests, or
                    (E) imposes liability for delays in performing such 
                review.
        Nothing in subparagraph (B) shall be construed as prohibiting a 
        State from (i) requiring that utilization review be conducted 
        by a licensed health care professional or (ii) 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.
    (b) GAO Study.--
            (1) In general.--The Comptroller General shall conduct a 
        study of the benefits and cost effectiveness of the use of 
        managed care in the delivery of health services.
            (2) Report.--By not later than 4 years after the date of 
        the enactment of this Act, the Comptroller General shall submit 
        a report to Congress on the study conducted under paragraph (1) 
        and shall include in the report such recommendations as may be 
        appropriate.

                TITLE III--HEALTH CARE COST CONTAINMENT

 Subtitle A--Denial of Certain Tax Deductions and Exclusion for Excess 
                                Benefits

SEC. 301. DENIAL OF EMPLOYER TAX DEDUCTION FOR PROVIDING HEALTH CARE 
              COVERAGE IN EXCESS OF MINIMUM BENEFITS; DENIAL OF 
              EMPLOYEE EXCLUSION FOR SUCH EXCESS COVERAGE.

    (a) Denial of Deduction.--Section 162 of the Internal Revenue Code 
of 1986 (relating to trade or business expenses) is amended by 
redesignating subsection (m) as subsection (n) and by inserting after 
subsection (l) the following new subsection:
    ``(m) Expenses for Providing Health Care in Excess of Minimum 
Benefits.--No deduction shall be allowed under this chapter for 
expenses incurred to provide health care for any employee of the 
taxpayer (or any beneficiary of such employee) to the extent such 
expenses are attributable to benefits that are not within the basic 
benefits included in MedEquality plans under section 203(b) of the 
Comprehensive Health and Rural Equality Act of 1993.''
    (b) Denial of Exclusion.--The text of section 106 of such Code is 
amended to read as follows:
    ``(a) In General.--Gross income of an employee does not include 
employer-provided coverage under an accident or health plan.
    ``(b) No Exclusion for Health Care Coverage in Excess of Minimum 
Benefits.--Subsection (a) shall not apply to the extent coverage is 
provided for benefits that are not within the basic benefits included 
in MedEquality plans under section 203(b) of the Comprehensive Health 
and Rural Equality Act of 1993.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning on or after the first day of the 
second calendar year beginning after the date of the enactment of this 
Act, but shall not apply to taxable years beginning before the date the 
basic benefits, to be included in MedEquality plans under section 
203(b) of this Act, have become effective under section 203(a)(3) of 
this Act.

                 Subtitle B--Medical Malpractice Reform

                       PART 1--GENERAL PROVISIONS

SEC. 311. FEDERAL REFORM OF MEDICAL MALPRACTICE LIABILITY ACTIONS.

    (a) Congressional Findings.--
            (1) 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 affect interstate 
        commerce by contributing to the high cost of health care and 
        premiums for malpractice insurance purchased by health care 
        providers.
            (2) Effect on federal spending.--Congress finds that the 
        medical malpractice litigation systems existing throughout the 
        United States have a significant effect on the amount, 
        distribution, and use of Federal funds because of--
                    (A) the large number of individuals who receive 
                health care benefits under programs operated or 
                financed by the Federal Government;
                    (B) the large number of individuals who benefit 
                because of the exclusion from Federal taxes of the 
                amounts spent by their employers to provide them with 
                health insurance benefits;
                    (C) the large number of health care providers and 
                health care professionals who provide items or services 
                for which the Federal Government makes payments; and
                    (D) the large number of such providers and 
                professionals who have received direct or indirect 
                financial assistance from the Federal Government 
                because of their status as such professionals or 
                providers.
    (b) Applicability.--This subtitle shall apply with respect to any 
medical malpractice liability claim and to any medical malpractice 
liability action brought in any State or Federal court, except that 
this subtitle shall not apply to--
            (1) a claim or action for damages arising from a vaccine-
        related injury or death to the extent that title XXI of the 
        Public Health Service Act applies to the action; or
            (2) a claim or action in which the plaintiff's sole 
        allegation is an allegation of an injury arising from the use 
        of a medical product.
    (c) Preemption of State Law.--Subject to section 331, this subtitle 
supersedes State law only to the extent that State law differs from any 
provision of law established by or under this subtitle. Any issue that 
is not governed by any provision of law established by or under this 
subtitle shall be governed by otherwise applicable State or Federal 
law.
    (d) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this subtitle shall be construed to establish any 
jurisdiction in the district courts of the United States over medical 
malpractice liability actions on the basis of sections 1331 or 1337 of 
title 28, United States Code.

SEC. 312. DEFINITIONS.

    As used in this subtitle:
            (1) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system established by a State that provides for the resolution 
        of medical malpractice liability claims in a manner other than 
        through medical malpractice liability actions.
            (2) Claimant.--The term ``claimant'' means any person who 
        alleges a medical malpractice liability claim, or, in the case 
        of an individual who is deceased, incompetent, or a minor, the 
        person on whose behalf such a claim is alleged.
            (3) Economic damages.--The term ``economic damages'' means 
        damages paid to compensate an individual for losses for 
        hospital and other medical expenses, lost wages, lost 
        employment, and other pecuniary losses.
            (4) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by State law or 
        regulation to be licensed or certified by the State to provide 
        such services in the State.
            (5) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by State law or regulation to be licensed or 
        certified by the State to engage in the delivery of such 
        services in the State.
            (6) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or claim.
            (7) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means a civil action 
        (other than an action in which the plaintiff's sole allegation 
        is an allegation of an intentional tort) brought in a State or 
        Federal court against a health care provider or health care 
        professional (regardless of the theory of liability on which 
        the action is based) in which the plaintiff alleges a medical 
        malpractice liability claim.
            (8) Medical malpractice liability claim.--The term 
        ``medical malpractice liability claim'' means a claim in which 
        the claimant alleges that injury was caused by the provision of 
        (or the failure to provide) health care services.
            (9) Medical product.--The term ``medical product'' means a 
        device (as defined in section 201(h) of the Federal Food, Drug, 
        and Cosmetic Act) or a drug (as defined in section 201(g)(1) of 
        the Federal Food, Drug, and Cosmetic Act).
            (10) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to compensate an individual for losses for 
        physical and emotional pain, suffering, inconvenience, physical 
        impairment, mental anguish, disfigurement, loss of enjoyment of 
        life, loss of consortium, and other nonpecuniary losses, but 
        does not include punitive damages.
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (12) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, and American Samoa.

SEC. 313. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b) and sections 
330 and 351, this subtitle shall apply with respect to claims accruing 
or actions brought on or after the expiration of the 3-year period that 
begins on the date of the enactment of this Act.
    (b) Exception for States Requesting Earlier Implementation of 
Reforms.--
            (1) Application.--A State may submit an application to the 
        Secretary requesting the early implementation of this subtitle 
        with respect to claims or actions brought in the State.
            (2) Decision by secretary.--The Secretary shall issue a 
        response to a State's application under paragraph (1) not later 
        than 90 days after receiving the application. If the Secretary 
        determines that the State meets the requirements of this 
        subtitle at the time of submitting its application, the 
        Secretary shall approve the State's application, and this 
        subtitle shall apply with respect to actions brought in the 
        State on or after the expiration of the 90-day period that 
        begins on the date the Secretary issues the response. If the 
        Secretary denies the State's application, the Secretary shall 
        provide the State with a written explanation of the grounds for 
        the decision.

      PART 2--UNIFORM STANDARDS FOR MEDICAL MALPRACTICE LIABILITY

SEC. 321. STATUTE OF LIMITATIONS.

    (a) In General.--No medical malpractice liability claim may be 
brought after the expiration of the 2-year period that begins on the 
date the alleged injury that is the subject of the action should 
reasonably have been discovered, but in no event after the expiration 
of the 4-year period that begins on the date the alleged injury 
occurred.
    (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 liability claim may be brought after the expiration of the 
2-year period that begins on the date the alleged injury that is the 
subject of the action should reasonably have been discovered, but in no 
event after the date on which the minor attains 10 years of age.

SEC. 322. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH 
              ALTERNATIVE DISPUTE RESOLUTION.

    (a) In General.--No medical malpractice liability action may be 
brought in any State court unless the medical malpractice liability 
claim that is the subject of the action has been initially resolved 
under an alternative dispute resolution system certified by the 
Secretary under section 341(b).
    (b) Initial Resolution of Claims Under ADR.--For purposes of 
subsection (a), an action is ``initially resolved'' under an 
alternative dispute resolution system if--
            (1) the ADR reaches a decision on whether the defendant is 
        liable to the plaintiff for damages; and
            (2) if the ADR determines that the defendant is liable, the 
        ADR determines the amount of damages assessed against the 
        defendant.
    (c) Procedures for Filing Actions.--
            (1) Deadline.--No medical malpractice liability action may 
        be brought unless the action is filed in a court of competent 
        jurisdiction not later than 90 days after an opinion resolving 
        the medical malpractice liability claim that is the subject of 
        the action is issued under the applicable alternative dispute 
        resolution system.
            (2) Court of competent jurisdiction.--For purposes of 
        paragraph (1), the term ``court of competent jurisdiction'' 
        means--
                    (A) with respect to actions filed in a State court, 
                the appropriate State trial court; and
                    (B) with respect to actions filed in a Federal 
                court, the appropriate United States district court.
    (d) Status of ADR Decision.--The decision reached under an 
alternative dispute resolution system shall, for purposes of 
enforcement by a court of competent jurisdiction, have the same status 
in the court as the verdict of a medical malpractice liability action 
adjudicated in a State or Federal trial court.
    (e) Treatment of ADR Decision.--
            (1) Requirements for going forward with action.--In order 
        to bring a medical malpractice liability action to contest the 
        decision made under the previous alternative dispute resolution 
        system with respect to a medical malpractice liability claim, 
        the party contesting the decision must--
                    (A) show that--
                            (i) the decision was procured by 
                        corruption, fraud, or undue means,
                            (ii) there was partiality or corruption 
                        under the system,
                            (iii) there was other misconduct under the 
                        system that materially prejudiced the party's 
                        rights, or
                            (iv) the decision was based on an error of 
                        law; or
                    (B) present new evidence before the trier of fact 
                that was not available for presentation under the ADR 
                system.
            (2) Burden of proof.--In any medical malpractice liability 
        action, the trier of fact shall uphold the decision made under 
        the previous alternative dispute resolution system with respect 
        to the claim that is the subject of the action unless the party 
        contesting the decision proves by a preponderance of the 
        evidence that the decision was incorrect.

SEC. 323. RELATION TO ALTERNATIVE DISPUTE RESOLUTION OF FEDERAL 
              AGENCIES.

    (a) Mandatory Application of Federal ADR in Malpractice Claims 
Against United States.--Section 2672 of title 28, United States Code, 
is amended by striking the period at the end of the first paragraph and 
inserting the following: ``, except that each Federal agency shall use 
arbitration or such alternative means of dispute resolution to settle 
any tort claim against the United States consisting of a medical 
malpractice liability claim (as defined in section 312(8) of the 
Comprehensive Health and Rural Equality Act of 1993).''.
    (b) Transmittal of Information of Malpractice Claims Resolved Under 
Federal ADR.--Section 584 of title 5, United States Code, as added by 
section 4(b) of the Administrative Dispute Resolution Act (Public Law 
101-552), is amended by adding at the end the following new subsection:
    ``(k) Each agency shall transmit on a regular basis to the 
Administrator for Health Care Policy and Research information on issues 
in controversy consisting of medical malpractice liability claims (as 
defined in section 312(8) of the Comprehensive Health and Rural 
Equality Act of 1993) that are resolved under the agency's dispute 
resolution proceeding under this subchapter, in a manner that assures 
that the identity of the parties to such proceedings shall not be 
revealed.''.

SEC. 324. MANDATORY PRETRIAL SETTLEMENT CONFERENCE.

    (a) In General.--Before the beginning of the trial phase of any 
medical malpractice liability action, the parties shall attend a 
conference called by the court for purposes of determining whether 
grounds exist upon which the parties may negotiate a settlement for the 
action.
    (b) Requiring Parties to Submit Settlement Offers.--At the 
conference called pursuant to subsection (a), each party to a medical 
malpractice liability action shall present an offer of settlement for 
the action.

SEC. 325. CALCULATION AND PAYMENT OF DAMAGES.

    (a) Limitation on Noneconomic Damages.--The total amount of 
noneconomic damages that may be awarded to a plaintiff and the members 
of the plaintiff's family for losses resulting from the injury which is 
the subject of a medical malpractice liability action may not exceed 
$250,000, regardless of the number of parties against whom the action 
is brought or the number of actions brought with respect to the injury.
    (b) Treatment of Punitive Damages.--
            (1) Limitation on amount.--The total amount of punitive 
        damages that may be imposed under a medical malpractice 
        liability action may not exceed twice the total of the damages 
        awarded to the plaintiff and the members of the plaintiff's 
        family.
            (2) Payments to state for medical quality assurance 
        activities.--
                    (A) In general.--Any punitive damages imposed under 
                a medical malpractice liability action shall be paid to 
                the State in which the action is brought.
                    (B) Activities described.--A State shall use amount 
                paid pursuant to subparagraph (A) to carry out 
                activities to assure the safety and quality of health 
                care services provided in the State, including (but not 
                limited to)--
                            (i) licensing or certifying health care 
                        professionals and health care providers in the 
                        State;
                            (ii) operating alternative dispute 
                        resolution systems;
                            (iii) carrying out public education 
                        programs relating to medical malpractice and 
                        the availability of alternative dispute 
                        resolution systems in the State; and
                            (iv) carrying out programs to reduce 
                        malpractice-related costs for retired providers 
                        or other providers volunteering to provide 
                        services in medically underserved areas.
                    (C) Maintenance of effort.--A State shall use any 
                amounts paid pursuant to subparagraph (A) to supplement 
                and not to replace amounts spent by the State for the 
                activities described in subparagraph (B).
    (c) Periodic Payments for Future Losses.--If more than $100,000 in 
damages for expenses to be incurred in the future is awarded to the 
plaintiff in a medical malpractice liability action, the defendant 
shall provide for payment for such damages on a periodic basis 
determined appropriate by the court (based upon projections of when 
such expenses are likely to be incurred), unless the court determines 
that it is not in the plaintiff's best interests to receive payments 
for such damages on such a periodic basis.
    (d) Mandatory Offsets for Damages Paid by a Collateral Source.--
            (1) In general.--The total amount of damages received by a 
        plaintiff in a medical malpractice liability action shall be 
        reduced (in accordance with paragraph (2)) by any other payment 
        that has been or will be made to the individual to compensate 
        the plaintiff for the injury that was the subject of the 
        action, including payment under--
                    (A) Federal or State disability or sickness 
                programs;
                    (B) Federal, State, or private health insurance 
                programs;
                    (C) private disability insurance programs;
                    (D) employer wage continuation programs; and
                    (E) any other source of payment intended to 
                compensate the plaintiff for such injury.
            (2) Amount of reduction.--The amount by which an award of 
        damages to a plaintiff 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 
                the plaintiff to compensate the plaintiff for the 
                injury that was the subject of the action; minus
                    (B) the amount paid by the plaintiff (or by the 
                spouse, parent, or legal guardian of the plaintiff) to 
                secure the payments described in subparagraph (A).

SEC. 326. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.

    (a) Limitation on Attorney's Fees.--If the plaintiff in a medical 
malpractice liability action has entered into an agreement with the 
plaintiff's attorney to pay the attorney's fees on a contingency basis, 
the attorney's fees for the action may not exceed--
            (1) 25 percent of the first $150,000 of any award or 
        settlement paid to the plaintiff; or
            (2) 15 percent of any additional amounts paid to the 
        plaintiff.
    (b) Awarding Attorney's Fees and Other Costs to Winning Party.--
            (1) In general.--If the court in a medical malpractice 
        liability action upholds a ruling of the alternative dispute 
        resolution system with respect to whether or not a health care 
        professional or health care provider committed malpractice or 
        with respect to the amount of damages awarded, the court shall 
        require the party that contested the ruling to pay to the 
        opposing party the costs incurred by the opposing party under 
        the action, including attorney's fees, fees paid to expert 
        witnesses, and other litigation expenses (but not including 
        court costs, filing fees, or other expenses paid directly by 
        the party to the court, or any fees or costs associated with 
        the resolution of the claim that is the subject of the action 
        under the alternative dispute resolution system).
            (2) Permitting court to waive or modify imposition of 
        costs.--A court may issue a written order waiving or modifying 
        the application of paragraph (1) to a party if the court finds 
        that the application of such paragraph to the party would 
        constitute an undue hardship, or if the medical malpractice 
        liability action raised a novel issue of law. The order shall 
        specify the grounds for the court's decision to waive or modify 
        the application of such paragraph.

SEC. 327. JOINT AND SEVERAL LIABILITY.

    The liability of each defendant in a medical malpractice liability 
action shall be several only and shall not be joint, and each defendant 
shall be liable only for the amount of damages allocated to the 
defendant in direct proportion to the defendant's percentage of 
responsibility (as determined by the trier of fact).

SEC. 328. UNIFORM STANDARD FOR DETERMINING NEGLIGENCE.

    A defendant in a medical malpractice liability action may not be 
found to have acted negligently unless the defendant's conduct at the 
time of providing the health care services that are the subject of the 
action was not reasonable.

SEC. 329. APPLICATION OF MEDICAL PRACTICE GUIDELINES IN MALPRACTICE 
              LIABILITY ACTIONS.

    (a) Use of Guidelines as Affirmative Defense.--In any medical 
malpractice liability action, it shall be a complete defense to any 
allegation that the defendant was negligent that, in the provision of 
(or the failure to provide) the services that are the subject of the 
action, the defendant followed the appropriate practice guideline.
    (b) Restriction on Guidelines Considered Appropriate.--
            (1) Guidelines sanctioned by secretary.--For purposes of 
        subsection (a), a practice guideline may not be considered 
        appropriate with respect to actions brought during a year 
        unless the Secretary has sanctioned the use of the guideline 
        for purposes of an affirmative defense to medical malpractice 
        liability actions brought during the year in accordance with 
        paragraph (2) or (3).
            (2) Annual process for sanctioning guidelines.--By not 
        later than October 1 of each year (beginning with 1994), the 
        Secretary shall review the practice guidelines and standards 
        developed by the Administrator for Health Care Policy and 
        Research pursuant to section 1142 of the Social Security Act, 
        and shall sanction those guidelines which the Secretary 
        considers appropriate for purposes of an affirmative defense to 
        medical malpractice liability actions brought during the next 
        year as appropriate practice guidelines for purposes of 
        subsection (a).
            (3) Use of state guidelines.--Upon the application of a 
        State, the Secretary may sanction practice guidelines selected 
        by the State for purposes of an affirmative defense to medical 
        malpractice liability actions brought in the State as 
        appropriate practice guidelines for purposes of subsection (a) 
        if the guidelines meet such requirements as the Secretary may 
        impose.
    (c) Prohibiting Application of Failure To Follow Guidelines as 
Prima Facie Evidence of Negligence.--No plaintiff in a medical 
malpractice liability action may be deemed to have presented prima 
facie evidence that a defendant was negligent solely by showing that 
the defendant failed to follow the appropriate practice guideline.
    (d) Promotion of Medical Practice Guidelines.--
            (1) Consideration of malpractice liability data in 
        developing and updating guidelines.--Section 1142(c)(5) of the 
        Social Security Act (42 U.S.C. 1320b-12(c)(5)) is amended by 
        striking ``claims data'' and all that follows through 
        ``patients'' and inserting the following: ``claims data, data 
        on clinical and functional status of patients, and data on 
        medical malpractice liability actions''.
            (2) Development of reporting forms for state adr systems.--
        The Secretary, in consultation with the Administrator for the 
        Health Care Policy and Research, shall develop a standard 
        reporting form to be used by State alternative dispute 
        resolution systems in transmitting information to the 
        Administrator pursuant to section 341(a)(7) of this Act on 
        disputes resolved under such systems.
    (e) Funding Establishment of Practice Guidelines.--
            (1) In general.--Each insurer or other entity that provides 
        individual or group health coverage (as defined by the 
        Secretary), including health insurance and coverage under an 
        employer group health plan, shall pay to the Secretary, at a 
        time and in a manner specified by the Secretary, \1/4\ of 1 
        percent of the gross premiums or other amounts paid for the 
        provision of such coverage.
            (2) Placement in a separate account.--Amounts paid to the 
        Secretary under paragraph (1) shall be placed in a separate 
        account in the Treasury.
            (3) Use of funds for practice guidelines.--Amounts in such 
        account shall only be available, pursuant to appropriations 
        Act, for purposes of establishing and sanctioning practice 
        guidelines to carry out this section.
            (4) Supplementation.--The funds in such account are 
        intended to supplement, and not to displace, amounts otherwise 
        appropriated for the establishment of such practice guidelines.

SEC. 330. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

    (a) Imposition of Higher Standard of Proof.--
            (1) In general.--In the case of a medical malpractice 
        liability action relating to services provided during labor or 
        the delivery of a baby, if the defendant health care 
        professional did not previously treat the plaintiff for the 
        pregnancy, the trier of fact may not find that the defendant 
        committed malpractice and may not assess damages against the 
        defendant unless the malpractice is proven by clear and 
        convincing evidence.
            (2) Applicability to group practices or agreements among 
        providers.--For purposes of paragraph (1), a health care 
        professional shall be considered to have previously treated an 
        individual for a pregnancy if the professional is a member of a 
        group practice whose members previously treated the individual 
        for the pregnancy or is providing services to the individual 
        during labor or the delivery of a baby pursuant to an agreement 
        with another professional.
    (b) Clear and Convincing Evidence Defined.--In subsection (a), 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, except that such measure or degree of proof is more than 
that required under preponderance of the evidence, but less than that 
required for proof beyond a reasonable doubt.
    (c) Effective Date.--This section shall apply to claims accruing or 
actions brought on or after the expiration of the 2-year period that 
begins on the date of the enactment of this Act.

SEC. 331. PREEMPTION.

    (a) In General.--This part supersedes any State law only to the 
extent that State law--
            (1) permits the recovery of a greater amount of damages by 
        a plaintiff;
            (2) permits the collection of a greater amount of 
        attorneys' fees by a plaintiff's attorney;
            (3) establishes a longer period during which a medical 
        malpractice liability claim may be initiated; or
            (4) establishes a stricter standard for determining whether 
        a defendant was negligent or for determining the liability of 
        defendants described in section 330(a) in actions described in 
        such section.
    (b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (a) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.

 PART 3--REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION SYSTEMS

SEC. 341. BASIC REQUIREMENTS FOR ADR.

    (a) In General.--A State's alternative dispute resolution system 
meets the requirements of this section if the system--
            (1) applies to all medical malpractice liability claims 
        under the jurisdiction of the State courts;
            (2) requires that a written opinion resolving the dispute 
        be issued that contains findings of fact relating to the 
        dispute;
            (3) requires individuals who hear and resolve claims under 
        the system to meet such qualifications as the State may require 
        (in accordance with regulations of the Secretary);
            (4) is approved by the State or by local governments in the 
        State;
            (5) with respect to a State system that consists of 
        multiple dispute resolution procedures--
                    (A) permits the parties to a dispute to select the 
                procedure to be used for the resolution of the dispute 
                under the system, and
                    (B) if the parties do not agree on the procedure to 
                be used for the resolution of the dispute, assigns a 
                particular procedure to the parties;
            (6) provides for the transmittal to the State agency 
        responsible for monitoring or disciplining health care 
        professionals and health care providers of any findings made 
        under the system that such a professional or provider committed 
        malpractice, unless, during the 90-day period beginning on the 
        date the system resolves the claim against the professional or 
        provider, the professional or provider brings a medical 
        malpractice liability action contesting the decision made under 
        the system; and
            (7) provides for the regular transmittal to the 
        Administrator for Health Care Policy and Research of 
        information on disputes resolved under the system, in a manner 
        that assures that the identity of the parties to a dispute 
        shall not be revealed.
    (b) Application of Malpractice Liability Standards to Alternative 
Dispute Resolution.--The provisions of part 2 shall apply with respect 
to claims brought under a State's alternative dispute resolution system 
in the same manner as such provisions apply with respect to medical 
malpractice liability actions brought in the State.

SEC. 342. CERTIFICATION OF STATE SYSTEMS.

    (a) In General.--Not later than October 1 of each year (beginning 
with 1994), the Secretary, in consultation with the Attorney General, 
shall determine whether a State's alternative dispute resolution system 
meets the requirements of this part for the following calendar year.
    (b) Basis for Certification.--The Secretary shall certify a State's 
alternative dispute resolution system under this subsection if the 
Secretary determines under subsection (a) that the system meets the 
requirements of section 341.

SEC. 343. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF ALTERNATIVE 
              DISPUTE RESOLUTION SYSTEMS.

    (a) In General.--Not later than 5 years after the date of the 
enactment of this Act, the Secretary shall prepare and submit to 
Congress a report describing and evaluating State alternative dispute 
resolution systems operated pursuant to this part.
    (b) Contents of Report.--The Secretary shall include in the report 
prepared and submitted under subsection (a)--
            (1) information on--
                    (A) the effect of such systems on the cost of 
                health care within the State,
                    (B) the impact of such systems on the access of 
                individuals to health care within the State, and
                    (C) the effect of such systems on the quality of 
                health care provided within such State; and
            (2) to the extent that such report does not provide 
        information on no-fault systems operated by States as 
        alternative dispute resolution systems pursuant to this part, 
        an analysis of the feasibility and desirability of establishing 
        a system under which medical malpractice liability claims shall 
        be resolved on a no-fault basis.

                PART 4--OTHER REQUIREMENTS AND PROGRAMS

SEC. 351. PERMITTING STATE PROFESSIONAL SOCIETIES TO PARTICIPATE IN 
              DISCIPLINARY ACTIVITIES.

    (a) Role of Professional Societies.--Notwithstanding any other 
provision of State or Federal law, a State agency responsible for the 
conduct of disciplinary actions for a type of health care practitioner 
may enter into agreements with State or county professional societies 
of such type of health care practitioner to permit such societies to 
participate in the licensing of such health care practitioner, and to 
review any health care malpractice action, health care malpractice 
claim or allegation, or other information concerning the practice 
patterns of any such health care practitioner. Any such agreement shall 
comply with subsection (b).
    (b) Requirements of Agreements.--Any agreement entered into under 
subsection (a) for licensing activities or the review of any health 
care malpractice action, health care malpractice claim or allegation, 
or other information concerning the practice patterns of a health care 
practitioner shall provide that--
            (1) the health care professional society conducts such 
        activities or review as expeditiously as possible;
            (2) after the completion of such review, such society shall 
        report its findings to the State agency with which it entered 
        into such agreement;
            (3) the conduct of such activities or review and the 
        reporting of such findings be conducted in a manner which 
        assures the preservation of confidentiality of health care 
        information and of the review process; and
            (4) no individual affiliated with such society is liable 
        for any damages or injury directly caused by the individual's 
        actions in conducting such activities or review.
    (c) Agreements Not Mandatory.--Nothing in this section may be 
construed to require a State to enter into agreements with societies 
described in subsection (a) to conduct the activities described in such 
subsection.
    (d) Effective Date.--This section shall take effect 2 years after 
the date of the enactment of this Act.

                Subtitle C--Administrative Cost Savings

                 PART 1--STANDARDIZED CLAIMS PROCESSING

SEC. 361. ADOPTION OF DATA ELEMENTS, UNIFORM CLAIMS, AND UNIFORM 
              ELECTRONIC TRANSMISSION STANDARDS.

    (a) In General.--The Secretary of Health and Human Services (in 
this subtitle referred to as the ``Secretary'') shall adopt standards 
relating to each of the following:
            (1) Data elements for use in paper and electronic claims 
        processing under health benefit plans, as well as for use in 
        utilization review and management of care (including data 
        fields, formats, and medical nomenclature, and including plan 
        benefit and insurance information).
            (2) Uniform claims forms (including uniform procedure and 
        billing codes for uses with such forms and including 
        information on other health benefit plans that may be liable 
        for benefits).
            (3) Uniform electronic transmission of the data elements 
        (for purposes of billing and utilization review).
Standards under paragraph (3) relating to electronic transmission of 
data elements for claims for services shall supersede (to the extent 
specified in such standards) the standards adopted under paragraph (2) 
relating to the submission of paper claims for such services. Standards 
under paragraph (3) shall include protections to assure the 
confidentiality of patient-specific information and to protect against 
the unauthorized use and disclosure of information.
    (b) Use of Task Forces.--In adopting standards under this section--
            (1) the Secretary shall take into account the 
        recommendations of current task forces, including at least the 
        Workgroup on Electronic Data Interchange, National Uniform 
        Billing Committee, the Uniform Claim Task Force, and the 
        Computer-based Patient Record Institute;
            (2) the Secretary shall consult with the National 
        Association of Insurance Commissioners (and, with respect to 
        standards under subsection (a)(3), the American National 
        Standards Institute); and
            (3) the Secretary shall, to the maximum extent practicable, 
        seek to make the standards consistent with any uniform clinical 
        data sets which have been adopted and are widely recognized.
    (c) Deadlines for Promulgation.--The Secretary shall promulgate the 
standards under--
            (1) subsection (a)(1) relating to claims processing data, 
        by not later than 12 months after the date of the enactment of 
        this Act;
            (2) subsection (a)(2) (relating to uniform claims forms) by 
        not later than 12 months after the date of the enactment of 
        this Act; and
            (3)(A) subsection (a)(3) relating to transmission of 
        information concerning hospital and physicians services, by not 
        later than 24 months after the date of the enactment of this 
        Act, and
            (B) subsection (a)(3) relating to transmission of 
        information on other services, by such later date as the 
        Secretary may determine it to be feasible.
    (d) Report to Congress.--Not later than 3 years after the date of 
the enactment of this Act, the Secretary shall report to Congress 
recommendations regarding restructuring the medicare peer review 
quality assurance program given the availability of hospital data in 
electronic form.

SEC. 362. APPLICATION OF STANDARDS.

    (a) In General.--If the Secretary determines, at the end of the 2-
year period beginning on the date that standards are adopted under 
section 361 with respect to classes of services, that a significant 
number of claims for benefits for such services under health benefit 
plans are not being submitted in accordance with such standards, the 
Secretary may require, after notice in the Federal Register of not less 
than 6 months, that all providers of such services must submit claims 
to health benefit plans in accordance with such standards. The 
Secretary may waive the application of such a requirement in such cases 
as the Secretary finds that the imposition of the requirement would not 
be economically practicable.
    (b) Significant Number.--The Secretary shall make an affirmative 
determination described in subsection (a) for a class of services only 
if the Secretary finds that there would be a significant, measurable 
additional gain in efficiencies in the health care system that would be 
obtained by imposing the requirement described in such paragraph with 
respect to such services.
    (c) Application of Requirement.--
            (1) In general.--If the Secretary imposes the requirement 
        under subsection (a)--
                    (A) in the case of a requirement that imposes the 
                standards relating to electronic transmission of claims 
                for a class of services, each health care provider that 
                furnishes such services for which benefits are payable 
                under a health benefit plan shall transmit 
                electronically and directly to the plan on behalf of 
                the beneficiary involved a claim for such services in 
                accordance with such standards;
                    (B) any health benefit plan may reject any claim 
                subject to the standards adopted under section 361 but 
                which is not submitted in accordance with such 
                standards;
                    (C) it is unlawful for a health benefit plan (i) to 
                reject any such claim on the basis of the form in which 
                it is submitted if it is submitted in accordance with 
                such standards or (ii) to require, for the purpose of 
                utilization review or as a condition of providing 
                benefits under the plan, a provider to transmit medical 
                data elements that are inconsistent with the standards 
                established under section 361(a)(1); and
                    (D) the Secretary may impose a civil money penalty 
                on any provider that knowingly and repeatedly submits 
                claims in violation of such standards or on any health 
                benefit plan (other than a health benefit plan 
                described in paragraph (2)) that knowingly and 
                repeatedly rejects claims in violation of subparagraph 
                (B), in an amount not to exceed $100 for each such 
                claim.
        The provisions of section 1128A of the Social Security Act 
        (other than the first sentence of subsection (a) and other than 
        subsection (b)) shall apply to a civil money penalty under 
        subparagraph (D) in the same manner as such provisions apply to 
        a penalty or proceeding under section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan--
                    (A) that is subject to regulation by a State, and
                    (B) with respect to which the Secretary finds 
                that--
                            (i) the State provides for application of 
                        the standards established under section 361, 
                        and
                            (ii) the State regulatory program provides 
                        for the appropriate and effective enforcement 
                        of such standards.
    (d) Treatment of Rejections.--If a plan rejects a claim pursuant to 
subsection (c)(1), the plan shall permit the person submitting the 
claim a reasonable opportunity to resubmit the claim on a form or in an 
electronic manner that meets the requirements for acceptance of the 
claim under such subsection.

SEC. 363. PERIODIC REVIEW AND REVISION OF STANDARDS.

    (a) In General.--The Secretary shall--
            (1) provide for the ongoing receipt and review of comments 
        and suggestions for changes in the standards adopted and 
        promulgated under section 361;
            (2) establish a schedule for the periodic review of such 
        standards; and
            (3) based upon such comments, suggestions, and review, 
        revise such standards and promulgate such revisions.
    (b) Application of Revised Standards.--If the Secretary under 
subsection (a) revises the standards described in 501, then, in the 
case of any claim for benefits submitted under a health benefit plan 
more than the minimum period (of not less than 6 months specified by 
the Secretary) after the date the revision is promulgated under 
subsection (a)(3), such standards shall apply under section 362 instead 
of the standards previously promulgated.

SEC. 364. HEALTH BENEFIT PLAN DEFINED.

    In this subtitle, the term ``health benefit plan'' has the meaning 
given such term in section 208(2) and includes--
            (1) the medicare program (under title XVIII of the Social 
        Security Act) and medicare supplemental health insurance, and
            (2) a State medicaid plan (approved under title XIX of such 
        Act).

               PART 2--ELECTRONIC MEDICAL DATA STANDARDS

SEC. 371. MEDICAL DATA STANDARDS FOR HOSPITALS AND OTHER PROVIDERS.

    (a) Promulgation of Hospital Data Standards.--
            (1) In general.--Between July 1, 1995, and January 1, 1996, 
        the Secretary shall promulgate standards described in 
        subsection (b) for hospitals concerning electronic medical 
        data.
            (2) Revision.--The Secretary may from time to time revise 
        the standards promulgated under this subsection.
    (b) Contents of Data Standards.--The standards promulgated under 
subsection (a) shall include at least the following:
            (1) A definition of a standard set of data elements for use 
        by utilization and quality control peer review organizations.
            (2) A definition of the set of comprehensive data elements, 
        which set shall include for hospitals the standard set of data 
        elements defined under paragraph (1).
            (3) Standards for an electronic patient care information 
        system with data obtained at the point of care, including 
        standards to protect against the unauthorized use and 
        disclosure of information.
            (4) A specification of, and manner of presentation of, the 
        individual data elements of the sets and system under this 
        subsection.
            (5) Standards concerning the transmission of electronic 
        medical data.
            (6) Standards relating to confidentiality of patient-
        specific information.
The standards under this section shall be consistent with standards for 
data elements established under section 361.
    (c) Optional Data Standards for Other Providers.--
            (1) In general.--The Secretary may promulgate standards 
        described in paragraph (2) concerning electronic medical data 
        for providers that are not hospitals. The Secretary may from 
        time to time revise the standards promulgated under this 
        subsection.
            (2) Contents of data standards.--The standards promulgated 
        under paragraph (1) for non-hospital providers may include 
        standards comparable to the standards described in paragraphs 
        (2), (4), and (5) of subsection (b) for hospitals.
    (d) Consultation.--In promulgating and revising standards under 
this section, the Secretary shall--
            (1) consult with the American National Standards Institute, 
        hospitals, with the advisory commission established under 
        section 375, and with other affected providers, health benefit 
        plans, and other interested parties, and
            (2) take into consideration, in developing standards under 
        subsection (b)(1), the data set used by the utilization and 
        quality control peer review program under part B of title XI of 
        the Social Security Act.

SEC. 372. APPLICATION OF ELECTRONIC DATA STANDARDS TO CERTAIN 
              HOSPITALS.

    (a) Medicare Requirement for Sharing of Hospital Information.--As 
of January 1, 1997, subject to paragraph (2), each hospital, as a 
requirement of each participation agreement under section 1866 of the 
Social Security Act, shall--
            (1) maintain clinical data included in the set of 
        comprehensive data elements under section 371(b)(2) in 
        electronic form on all inpatients,
            (2) upon request of the Secretary or of a utilization and 
        quality control peer review organization (with which the 
        Secretary has entered into a contract under part B of title XI 
        of such Act), transmit electronically the data set, and
            (3) upon request of the Secretary, or of a fiscal 
        intermediary or carrier, transmit electronically any data (with 
        respect to a claim) from such data set,
in accordance with the standards promulgated under section 371(a).
    (b) Waiver Authority.--Until January 1, 2000:
            (1) The Secretary may waive the application of the 
        requirements of subsection (a) for a hospital that is a small 
        rural hospital, for such period as the hospital demonstrates 
        compliance with such requirements would constitute an undue 
        financial hardship.
            (2) The Secretary may waive the application of the 
        requirements of subsection (a) for a hospital that is in the 
        process of developing a system to provide the required data set 
        and executes agreements with its fiscal intermediary and its 
        utilization and quality control peer review organization that 
        the hospital will meet the requirements of subsection (a) by a 
        specified date (not later than January 1, 2000).
            (3) The Secretary may waive the application of the 
        requirement of subsection (a)(1) for a hospital that agrees to 
        obtain from its records the data elements that are needed to 
        meet the requirements of paragraphs (2) and (3) of subsection 
        (a) and agrees to subject its data transfer process to a 
        quality assurance program specified by the Secretary.
    (c) Application to Hospitals of the Department of Veterans 
Affairs.--
            (1) In general.--The Secretary of Veterans Affairs shall 
        provide that each hospital of the Department of Veterans 
        Affairs shall comply with the requirements of subsection (a) in 
        the same manner as such requirements would apply to the 
        hospital if it were participating in the medicare program.
            (2) Waiver.--Such Secretary may waive the application of 
        such requirements to a hospital in the same manner as the 
        Secretary of Health and Human Services may waive under 
        subsection (b) the application of the requirements of 
        subsection (a).

SEC. 373. ELECTRONIC TRANSMISSION TO FEDERAL AGENCIES.

    (a) In General.--Effective January 1, 2000, if a provider is 
required under a Federal program to transmit a data element that is 
subject to a presentation or transmission standard (as defined in 
subsection (b)), the head of the Federal agency responsible for such 
program (if not otherwise authorized) is authorized to require the 
provider to present and transmit the data element electronically in 
accordance with such a standard.
    (b) Presentation or Transmission Standard Defined.--In subsection 
(a), the term ``presentation or transmission standard'' means a 
standard, promulgated under subsection (b) or (c) of section 371, 
described in paragraph (4) or (5) of section 371(b).

SEC. 374. LIMITATION ON DATA REQUIREMENTS WHERE STANDARDS ARE IN 
              EFFECT.

    (a) In General.--If standards with respect to data elements are 
promulgated under section 371 with respect to a class of provider, a 
health benefit plan may not require, for the purpose of utilization 
review or as a condition of providing benefits under the plan, that a 
provider in the class--
            (1) provide any data element not in the set of 
        comprehensive data elements specified under such standards, or
            (2) transmit or present any such data element in a manner 
        inconsistent with the applicable standards for such 
        transmission or presentation.
    (b) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health benefit plan (other than a health benefit 
        plan described in paragraph (2)) that fails to comply with 
        subsection (a) in an amount not to exceed $100 for each such 
        failure. The provisions of section 1128A of the Social Security 
        Act (other than the first sentence of subsection (a) and other 
        than subsection (b)) shall apply to a civil money penalty under 
        this paragraph in the same manner as such provisions apply to a 
        penalty or proceeding under section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan that is 
        subject to regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                requirement of subsection (a), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such 
                requirement with respect to such plans.

SEC. 375. ADVISORY COMMISSION.

    (a) In General.--The Secretary shall establish an advisory 
commission including hospital executives, hospital data base managers, 
physicians, health services researchers, and technical experts in 
collection and use of data and operation of data systems. Such 
commission shall include, as ex officio members, a representative of 
the Director of the National Institutes of Health, the Administrator 
for Health Care Policy and Research, the Secretary of Veterans Affairs, 
and the Director of the Centers for Disease Control.
    (b) Functions.--The advisory commission shall monitor and advise 
the Secretary concerning--
            (1) the standards established under this part, and
            (2) operational concerns about the implementation of such 
        standards under this part.
    (c) Staff.--From the amounts appropriated under subsection (d), the 
Secretary shall provide sufficient staff to assist the advisory 
commission in its activities under this section.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

             PART 3--ADDITIONAL STANDARDS AND REQUIREMENTS

SEC. 381. STANDARDS RELATING TO USE OF MEDICARE AND MEDICAID MAGNETIZED 
              HEALTH BENEFIT CARDS; SECONDARY PAYOR DATA BANK.

    (a) Magnetized Identification Cards Under Medicare Program.--The 
Secretary shall adopt standards relating to the design and use of 
magnetized medicare identification cards in order to assist health care 
providers providing medicare covered services to individuals--
            (1) in determining whether individuals are eligible for 
        benefits under the medicare program, and
            (2) in billing the medicare program for such services 
        provided to eligible individuals.
Such cards shall be designed to be compatible with machines currently 
employed to transmit information on credit cards. Such cards also shall 
be designed to be able to be used with respect to the provision of 
benefits under medicare supplemental policies.
    (b) Adoption Under Medicaid Plans.--
            (1) In general.--The Secretary shall take such steps as may 
        be necessary to encourage and assist States to design and use 
        magnetized medicaid identification cards that meet such 
        standards, for use under their medicaid plans.
            (2) Limitation on mmis funds.--In applying section 
        1903(a)(3) of the Social Security Act, the Secretary may 
        determine that Federal financial participation is not available 
        under that section to a State which has provided for a 
        magnetized card system that is inconsistent with the standards 
        adopted under subsection (a).
    (c) Medicare and Medicaid Secondary Payor Data Bank.--The Secretary 
shall establish a medicare and medicaid information system which is 
designed to provide information on those group health plans and other 
health benefit plans that are primary payors to the medicare program 
and medicaid program under section 1862(b) or section 1905(a)(25) of 
the Social Security Act.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated, in equal proportions from the Federal Hospital Insurance 
Trust Fund and from the Federal Supplementary Medical Insurance Trust 
Fund, a total of $25,000,000 to carry out subsections (a) and (c), 
including the issuance of magnetized cards to medicare beneficiaries.

SEC. 382. PREEMPTION OF STATE QUILL PEN LAWS.

    (a) In General.--Effective January 1, 1995, no effect shall be 
given to any provision of State law that requires medical or health 
insurance records (including billing information) to be maintained in 
written, rather than electronic, form.
    (b) Secretarial Authority.--The Secretary of Health and Human 
Services may issue regulations to carry out subsection (a). Such 
regulations may provide for such exceptions to subsection (a) as the 
Secretary determines to be necessary to prevent fraud and abuse, with 
respect to controlled substances, and in such other cases as the 
Secretary deems appropriate.

SEC. 383. USE OF STANDARD IDENTIFICATION NUMBERS.

    (a) In General.--Effective January 1, 1995, each health benefit 
plan shall--
            (1) for each of its beneficiaries that has a social 
        security account number, use that number as the personal 
        identifier for claims processing and related purposes, and
            (2) for each provider that has a unique identifier for 
        purposes of title XVIII of the Social Security Act and that 
        furnishes health care items or services to a beneficiary under 
        the plan, use that identifier as the identifier of that 
        provider for claims processing and related purposes.
    (b) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health benefit plan (other than a health benefit 
        plan described in paragraph (2)) that fails to comply with 
        standards established under subsection (a) in an amount not to 
        exceed $100 for each such failure. The provisions of section 
        1128A of the Social Security Act (other than the first sentence 
        of subsection (a) and other than subsection (b)) shall apply to 
        a civil money penalty under this paragraph in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan that is 
        subject to regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                requirement of subsection (a), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such 
                requirement with respect to such plans.

SEC. 384. COORDINATION OF BENEFIT STANDARDS.

    (a) Review of Coordination of Benefit Problems.--Between July 1, 
1995, and January 1, 1996, the Secretary shall determine whether 
problems relating to--
            (1) the rules for determining the liability of health 
        benefit plans when benefits are payable under two or more such 
        plans, or
            (2) the availability of information among such health 
        benefit plans when benefits are so payable,
cause significant administrative costs.
    (b) Contingent Promulgation of Standards.--
            (1) In general.--If the Secretary determines that such 
        problems do cause significant administrative costs that could 
        be significantly reduced through the implementation of 
        standards, the Secretary shall promulgate standards 
        concerning--
                    (A) the liability of health benefit plans when 
                benefits are payable under two or more such plans, and
                    (B) the transfer among health benefit plans of 
                appropriate information (which may include standards 
                for the use of unique identifiers, and for the listing 
                of all individuals covered under a health benefit plan) 
                in determining liability in cases when benefits are 
                payable under two or more such plans.
            (2) Effective date.--The standards promulgated under 
        paragraph (1) shall become effective on a date specified by the 
        Secretary, which date shall be not earlier than one year after 
        the date of promulgation of the standards.
    (c) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health benefit plan (other than a health benefit 
        plan described in paragraph (2)) that fails to comply with 
        standards promulgated under subsection (b) in an amount not to 
        exceed $100 for each such failure. The provisions of section 
        1128A of the Social Security Act (other than the first sentence 
        of subsection (a) and other than subsection (b)) shall apply to 
        a civil money penalty under this paragraph in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health benefit plan that is 
        subject to regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                standards established under subsection (b), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such standards 
                with respect to such plans.
    (d) Revision of Standards.--If the Secretary establishes standards 
under subsection (b), the Secretary may revise such standards from time 
to time and such revised standards shall be applied under subsection 
(c) on or after such date (not earlier than 6 months after the date the 
revision is promulgated) as the Secretary shall specify.

          Subtitle C--Estimates of Expenses Prior to Treatment

SEC. 391. REQUIREMENT.

    (a) In General.--If requested, except as provided in subsection 
(b), each hospital, physician, or other provider of a health care item 
or service, before providing any health care item or services to any 
individual in the United States shall disclose to the individual (in 
form and manner specified by the Secretary of Health and Human 
Services) a range of prices to be charged for the item or service. In 
the case of provision of items and services for which the particular 
services to be provided are not readily determinable in advance, the 
Secretary shall permit the use of such estimates as may be appropriate.
    (b) Exception for Emergencies.--Subsection (a) shall not apply in 
the case of emergency treatment and such other extenuating 
circumstances as the Secretary may provide by regulation.
    (c) Enforcement.--No individual shall be liable for payment for a 
health care item or service for which a disclosure is required under 
subsection (a), if the disclosure has not been substantially made in 
accordance with such subsection.
    (d) Effective Date.--This section shall apply to items and services 
furnished on or after 1 year after the date of the enactment of this 
Act.

                    Subtitle D--Antitrust Exemptions

SEC. 395. PERMITTING COOPERATIVE ARRANGEMENTS BETWEEN HOSPITALS.

    (a) Exemption.--Upon issuance of a certificate under subsection (c) 
with respect to an arrangement, the antitrust laws shall not apply with 
respect to--
            (1) an arrangement among hospitals providing for (or 
        attempting to provide for) the combination of two or more 
        hospitals, or
            (2) a cooperative arrangement entered into solely by two or 
        more hospitals with respect to sharing expensive capital-
        intensive medical technology or other highly resource-intensive 
        services.
    (b) Application.--In order to obtain the benefits of subsection (a) 
with respect to an arrangement, one or more licensed hospitals may 
submit to the Secretary of Health and Human Services an application, 
containing such information as the Secretary may require with respect 
to the arrangement, including--
            (1) a statement that such hospital desires to negotiate and 
        enter into a voluntary cooperative arrangement under which the 
        hospital is operating in one State or region for the sharing of 
        medical technology or services with another hospital;
            (2) a description of the nature and scope of the activities 
        contemplated under the arrangement that demonstrates that 
        consumer costs would not increase under the arrangement;
            (3) a description of the financial arrangement between the 
        hospital and other hospitals that are parties to the 
        arrangement; and
            (4) any other information determined appropriate by the 
        Secretary.
    (c) Evaluations of Applications.--Not later than 120 days after the 
date an application under subsection (b) is received, the Secretary, in 
consultation with the Administrator for the Health Care Financing 
Administration, shall issue a certificate approving the arrangement if 
the Secretary determines that under the arrangement--
            (1) Federal expenditures will be reduced;
            (2) hospital services in geographical proximity to the 
        communities traditionally served will be preserved; and
            (3) consumer costs would not increase.
    (d) Antitrust Laws Defined.--For purposes of this section, the term 
``antitrust laws'' has the meaning given such term in subsection (a) of 
the first section of the Clayton Act (15 U.S.C. 12), except that such 
term includes section 5 of the Federal Trade Commission Act (15 U.S.C. 
45) to the extent that such section 5 applies with respect to unfair 
methods of competition.

                        TITLE IV--LONG-TERM CARE

        Subtitle A--Treatment of Long-Term Care Insurance Plans

SEC. 401. 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 
                subparagraph (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, 1993.

SEC. 402. 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, 1993.

SEC. 403. 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) is amended by redesignating section 136 as section 
137 and by inserting after section 135 the following new section:

``SEC. 136. 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 136.''
            (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 136.''
            (3) The table of sections for such part III is amended by 
        striking the last item and inserting the following new items:

                              ``Sec. 136. Distributions from individual 
                                        retirement accounts and section 
                                        401(k) plans for qualified 
                                        long-term care insurance.
                              ``Sec. 137. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1993.

SEC. 404. 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, 1993.

          Subtitle B--Treatment of Accelerated Death Benefits

SEC. 411. 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, 1993.

SEC. 412. 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) is amended by adding at the end 
thereof the following new subsection:
    ``(g) Qualified Accelerated Death Benefit Riders Treated as Life 
Insurance.--For purposes of this part--
            ``(1) In general.--Any reference to a life insurance 
        contract shall be treated as including a reference to a 
        qualified accelerated death benefit rider on such contract.
            ``(2) Qualified accelerated death benefit riders.--For 
        purposes of this subsection, the term `qualified accelerated 
        death benefit rider' means any rider 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(g)(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, 
1993.

      TITLE V--INCENTIVES FOR PROVISION OF SERVICES IN RURAL AREAS

SEC. 501. DEDUCTION FOR MEDICAL SCHOOL EDUCATION LOAN INTEREST INCURRED 
              BY DOCTORS SERVING IN MEDICALLY UNDERSERVED RURAL AREAS.

    (a) In General.--Paragraph (2) of section 163(h) of the Internal 
Revenue Code of 1986 (relating to disallowance of deduction for 
personal interest) is amended by striking ``and'' at the end of 
subparagraph (D), by redesignating subparagraph (E) as subparagraph 
(F), and by inserting after subparagraph (D) the following new 
subparagraph:
                    ``(E) any qualified medical education loan interest 
                (within the meaning of paragraph (5)), and''.
    (b) Qualified Medical Education Loan Interest Defined.--Paragraph 
(5) of section 163(h) of such Code is amended to read as follows:
            ``(5) Qualified medical education loan interest.--
                    ``(A) In general.--The term `qualified medical 
                education loan interest' means interest--
                            ``(i) which is on a medical education loan 
                        of a physician,
                            ``(ii) which is paid or accrued by such 
                        physician, and
                            ``(iii) which accrues during the period--
                                    ``(I) such physician is providing 
                                primary care (including internal 
                                medicine, pediatrics, obstetrics/
                                gynecology, family medicine, and 
                                osteopathy) to residents of a medically 
                                underserved rural area, and
                                    ``(II) such physician's principal 
                                place of abode is in such area.
                    ``(B) Medical education loan.--The term `medical 
                education loan' means indebtedness incurred to pay the 
                individual's--
                            ``(i) qualified tuition and related 
                        expenses (as defined in section 117(b)) 
                        incurred for the medical education of such 
                        individual, or
                            ``(ii) reasonable living expenses while 
                        away from home in order to attend an 
                        educational institution described in section 
                        170(b)(1)(A)(ii) for the medical education of 
                        such individual.
                    ``(C) Physician.--For purposes of subparagraph (A), 
                the term `physician' has the meaning given such term by 
                section 1861(r)(1) of the Social Security Act.
                    ``(D) Medically underserved rural area.--The term 
                `medically underserved rural area' means any rural area 
                which is a medically underserved area (as defined in 
                section 330(b) or 1302(7) of the Public Health Service 
                Act).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 502. REQUIRING DEVELOPMENT OF COMPREHENSIVE PLANS FOR MEDICALLY 
              UNDERSERVED RURAL POPULATIONS.

    (a) State Comprehensive Plans for Medically Underserved Rural 
Areas.--As a requirement of an agreement between the Secretary of 
Health and Human Services and a State under section 103(d)(2) in the 
case of a State that has one or more rural areas that are medically 
underserved areas (as defined in section 330(b) or 1302(7) of the 
Public Health Service Act), the State shall develop and submit to the 
Secretary a comprehensive plan that addresses the health care needs of 
the populations in all such areas. The comprehensive plan shall 
utilize, in the most efficient manner possible and to the maximum 
extent possible, the current resources of Federal, State, and local 
governments, including public health clinics.
    (b) Response to Managed Competition.--
            (1) In general.--If a State is required to establish a 
        comprehensive plan under subsection (a), the State may not 
        operate a managed competition system (described in paragraph 
        (2)) unless, with respect to each medically underserved rural 
        area in the State, either--
                    (A) the system provides assurances with respect to 
                the timely and cost-effective delivery of appropriate 
                health care in that area, or
                    (B) the application of the system is waived with 
                respect to residents of such area and there is 
                established, in accordance with the plan, an 
                alternative method of assuring the timely and cost-
                effective delivery of appropriate health care in that 
                area.
            (2) Managed competition system described.--A managed 
        competition system described in this paragraph is a system 
        under which a State assures access to basic health care 
        services for all residents through the enrollment of such 
        residents under a certified health plan offered by a health 
        insurance purchasing cooperative or similar entity.

SEC. 503. INCLUSION OF TRANSPORTATION COSTS FOR PHYSICIANS IN 
              UNDERSERVED RURAL AREAS IN THE PRACTICE INDEX UNDER THE 
              MEDICARE PHYSICIAN PAYMENT SCHEDULE.

    (a) In General.--Section 1848(e) of the Social Security Act (42 
U.S.C. 1395w-4(e)) is amended--
            (1) by adding at the end of paragraph (1) the following new 
        subparagraph:
                    ``(D) Inclusion of transportation costs.--In 
                establishing the index under subparagraph (A)(i), the 
                Secretary shall take into account transportation costs 
                associated with providing health care services to 
                patients in rural health professional shortage areas 
                (as designated under section 332 of the Public Health 
                Service Act).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished on or after January 1, 1994.

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