[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3222 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 3222

To contain health care costs and improve access to health care through 
    accountable health plans and managed competition, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 6, 1993

 Mr. Cooper (for himself, Mr. Andrews of Texas, Mr. Grandy, Mr. Klug, 
 Mr. Stenholm, Mrs. Johnson of Connecticut, Mr. Payne of Virginia, Mr. 
 Gunderson, Mr. Peterson of Florida, Mr. Hobson, Mr. Carr of Michigan, 
  Mr. Houghton, Mr. McCurdy, Mr. Quillen, Mr. Barcia of Michigan, Mr. 
   Boehlert, Mr. Browder, Mr. Clement, Mr. Clinger, Mr. Dooley, Mr. 
Edwards of Texas, Mr. Emerson, Mrs. Fowler, Mr. Gilchrest, Mr. Gordon, 
  Mr. Goss, Mr. Hayes, Mr. Horn, Mr. Hughes, Mr. Hutto, Mr. Laughlin, 
   Mrs. Lloyd, Ms. Long, Mr. McHale, Mr. McMillan, Mr. Machtley, Mr. 
    Miller of Florida, Mr. Montgomery, Mr. Moran, Mr. Neal of North 
Carolina, Mr. Nussle, Mr. Orton, Mr. Parker, Mr. Petri, Mr. Porter, Mr. 
Shays, Ms. Snowe, Mr. Tanner, and Mr. Tauzin) introduced the following 
   bill; which was referred jointly to the Committees on Energy and 
    Commerce, Ways and Means, Education and Labor, and the Judiciary

                            October 27, 1993

                      Additional sponsor: Mr. Sabo

                            January 27, 1994

 Additional sponsors: Mr. Synar, Mr. Kolbe, Mr. Minge, Mr. Regula, Ms. 
              English of Arizona, Mr. Camp, and Mr. Walsh

_______________________________________________________________________

                                 A BILL


 
To contain health care costs and improve access to health care through 
    accountable health plans and managed competition, 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 ``Managed 
Competition Act of 1993''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

                                                                   Page
Sec. 2. Findings; purposes..................................          7
Sec. 3. Glossary of certain terms used in titles I and II...         10
TITLE I--MANAGED COMPETITION IN EMPLOYER-BASED HEALTH PLANS: INCENTIVES 
                            TO CONTROL COSTS

   Subtitle A--Use of Tax Incentives to Purchase Cost-Effective Plans

Sec. 1001. Uniform tax disincentive to effectively limit             15
                            deductibility of excess employer 
                            health plan expenses.
Sec. 1002. Increase in deduction for health plan premium             21
                            expenses of self-employed 
                            individuals.
Sec. 1003. Deduction for health plan premium expenses of             22
                            individuals.
Sec. 1004. Exclusion from gross income for contributions by          24
                            a partnership or S corporation 
                            to a health plan covering its 
                            partners or shareholders.
Sec. 1005. Employer obligations.............................         25
Sec. 1006. Encouraging group purchasing for large employer           31
                            by eliminating commonality of 
                            interest or geographic location 
                            requirement for tax exempt trust 
                            status.
Sec. 1007. Simplifying filing of reports by permitting               32
                            single annual filing for all 
                            employers covered under an 
                            insured multiple employer health 
                            plan.
        Subtitle B--Health Plan Purchasing Cooperatives (HPPCs)

Sec. 1101. Establishment and organization; HPPC areas.......         33
Sec. 1102. Agreements with accountable health plans (AHPs)..         40
Sec. 1103. Agreements with small employers..................         46
Sec. 1104. Enrolling individuals in accountable health plans         49
                            through a HPPC.
Sec. 1105. Receipt of premiums..............................         54
Sec. 1106. Coordination among HPPCs.........................         56
Sec. 1107. Complaint process; ombudsman.....................         58
Sec. 1108. Enrollee satisfaction surveys; monitoring                 59
                            enrollee disenrollment.
              Subtitle C--Accountable Health Plans (AHPs)

           Part 1--Requirements for Accountable Health Plans

Sec. 1201. Registration process; qualifications.............         61
Sec. 1202. Specified uniform set of effective benefits;              63
                            reduction in cost-sharing for 
                            low-income individuals; quality 
                            standards.
Sec. 1203. Collection and provision of standardized                  67
                            information.
Sec. 1204. Prohibition of discrimination based on health             69
                            status for certain conditions; 
                            limitation on pre-existing 
                            condition exclusions.
Sec. 1205. Use of standard premiums.........................         72
Sec. 1206. Financial solvency requirements..................         78
Sec. 1207. Grievance mechanisms; enrollee protections;               79
                            written policies and procedures 
                            respecting advance directives; 
                            agent commissions.
Sec. 1208. Additional requirements of open AHPs.............         81
Sec. 1209. Coordination of benefits with low-income                  86
                            assistance.
Sec. 1210. Additional requirement of certain AHPs...........         87
Sec. 1211. Funding for approved medical residency training           88
                            programs and physician 
                            retraining programs.
     Part 2--Preemption of State Laws for Accountable Health Plans

Sec. 1221. Preemption from State benefit mandates...........         89
Sec. 1222. Preemption of State law restrictions on network           89
                            plans.
Sec. 1223. Preemption of State laws restricting utilization          92
                            review programs.
                      Part 3--Antitrust Provisions
Sec. 1231. Publication of guidelines for accountable health          92
                            plans.
Sec. 1232. Issuance of health care certificates of public            93
                            advantage..
              Subtitle D--Health Care Standards Commission

Sec. 1301. Establishment of Health Care Standards Commission        101
Sec. 1302. Specification of uniform set of effective                104
                            benefits.
Sec. 1303. Benefits, Evaluations, and Data Standards Board..        119
Sec. 1304. Health Plan Standards Board......................        122
Sec. 1305. Registration of accountable health plans.........        124
Sec. 1306. Specification of risk-adjustment factors.........        126
Sec. 1307. National health data system......................        128
Sec. 1308. Measures of quality of care of specialized               130
                            centers of care.
Sec. 1309. Agency for Clinical Evaluations..................        132
Sec. 1310. Report and recommendations on achieving universal        136
                            coverage.
Sec. 1311. No authority to impose controls relating to              137
                            health care spending.
Sec. 1312. Monitoring reinsurance market....................        138
Sec. 1313. Authorization of appropriations; sunset..........        138
  Subtitle E--Managed Competition in Rural and Urban Underserved Areas

       Part 1--Special Treatment of Designated Underserved Areas

Sec. 1401. Designation of underserved areas.................        138
Sec. 1402. Special treatment................................        140
  Part 2--Transitional Support for Development of Accountable Health 
                       Plans in Underserved Areas

Sec. 1411. Technical assistance funding.....................        141
Sec. 1412. Rural development grants.........................        142
Sec. 1413. Migrant health centers...........................        145
Sec. 1414. Community health centers.........................        146
     Part 3--Establishment of Rural Emergency Access Care Hospitals

Sec. 1421. Rural emergency access care hospitals described..        147
Sec. 1422. Coverage of and payment for services.............        150
Sec. 1423. Effective date...................................        152
        Part 4--Transitional Assistance for Safety Net Hospitals

Sec. 1431. Payments to hospitals............................        152
Sec. 1432. Application for assistance.......................        155
Sec. 1433. Public service responsibilities..................        156
Sec. 1434. Authorization of appropriations..................        157
         Subtitle F--Treatment of Chronically Underserved Areas

Sec. 1501. Promoting State action...........................        157
         Subtitle G--Repeal of COBRA Continuation Requirements

Sec. 1601. Repeal of COBRA continuation requirements........        159
                        Subtitle H--Definitions

Sec. 1701. Definitions......................................        160
          TITLE II--LOW-INCOME ASSISTANCE FOR HEALTH COVERAGE
                   Subtitle A--Low-Income Assistance

Sec. 2001. Eligibility......................................        170
Sec. 2002. Premium assistance...............................        171
Sec. 2003. Cost-sharing assistance..........................        172
Sec. 2004. Assistance for certain items and services........        175
Sec. 2005. Computation of base Federal premium amount.......        177
Sec. 2006. Applications for assistance......................        182
Sec. 2007. Reconciliation of premium assistance through use         187
                            of income statements.
Sec. 2008. Treatment of certain cash assistance recipients..        190
Sec. 2009. Definitions......................................        190
       Subtitle B--Long-Term Care Phase-Down Assistance to States

Sec. 2101. Long-term care phase-down assistance.............        196
                         Subtitle C--Financing

                        Part 1--Medicare Savings

Sec. 2201. Reduction in update for inpatient hospital               199
                            services.
Sec. 2202. Reduction in conversion factor for physician fee         200
                            schedule for non-primary care 
                            services.
Sec. 2203. Reduction in hospital outpatient services through        201
                            establishment of prospective 
                            payment system.
Sec. 2204. Increase in medicare part B premium for                  202
                            individuals with high income.
Sec. 2205. Phased-in elimination of medicare hospital               206
                            disproportionate share 
                            adjustment payments.
Sec. 2206. Reduction in routine cost limits for home health         207
                            services.
Sec. 2207. Reduction in routine cost limits for extended            207
                            care services.
Sec. 2208. Reductions in payments for hospice services......        208
                         Part 2--Other Savings

Sec. 2211. Requirement that certain agencies prefund                209
                            government health benefits 
                            contributions for their 
                            annuitants.
                 Subtitle D--Repeal of Medicaid Program

Sec. 2301. Repeal of medicaid program.......................        212
     TITLE III--TRAINING AND EDUCATION OF HEALTH CARE PROFESSIONALS

  Subtitle A--Reform of Federal Funding for Medical Residency Training

Sec. 3001. Definitions......................................        213
Sec. 3002. Approval of medical residency training positions.        215
Sec. 3003. Funding for approved medical residency training          218
                            programs and physician 
                            retraining programs.
Sec. 3004. Financing........................................        222
Sec. 3005. National Medical Education Fund..................        223
Sec. 3006. Repeal of separate medical education payments            224
                            under medicare.
        Subtitle B--Other Medical Education Grants and Programs

Sec. 3101. Scholarship and loan repayment programs of               226
                            National Health Service Corps.
Sec. 3102. Area health education centers....................        227
Sec. 3103. Public health and preventive medicine............        227
Sec. 3104. Family medicine..................................        227
Sec. 3105. General internal medicine and pediatrics.........        227
Sec. 3106. Physician assistants.............................        227
Sec. 3107. Allied health project grants and contracts.......        228
Sec. 3108. Nurse allied health project grants and contracts.        228
Sec. 3109. Nurse practitioner and nurse midwife programs....        228
Sec. 3110. Use of health care policy and research funds for         228
                            primary care.
       TITLE IV--PREVENTIVE HEALTH AND INDIVIDUAL RESPONSIBILITY

            Subtitle A--Expansion of Public Health Programs

Sec. 4001. Immunizations against vaccine-preventable                229
                            diseases.
Sec. 4002. Prevention, control, and elimination of                  229
                            tuberculosis.
Sec. 4003. Lead poisoning prevention........................        229
Sec. 4004. Preventive health measures with respect to breast        229
                            and cervical cancers.
Sec. 4005. Office of Disease Prevention and Health Promotion        230
Sec. 4006. Preventive health and health services block grant        231
Sec. 4007. Categorical grants for early intervention                231
                            regarding acquired immune 
                            deficiency syndrome.
Sec. 4008. Programs of Office of Smoking and Health.........        231
                          Subtitle B--Medicare

                Part 1--Coverage of Preventive Services

Sec. 4101. Coverage of colorectal screening.................        232
Sec. 4102. Coverage of certain immunizations................        238
Sec. 4103. Coverage of well-child care......................        239
Sec. 4104. Annual screening mammography.....................        242
Sec. 4105. Financing of additional benefits.................        242
               Part 2--Notice of Advance Directive Rights

Sec. 4111. Providing notice of rights regarding medical care 
                                    to individuals entering 
medicare.                                                           243
                      TITLE V--MALPRACTICE REFORM

               Subtitle A--Findings; Purpose; Definitions

Sec. 5001. Findings; purpose................................        244
Sec. 5002. Definitions......................................        245
          Subtitle B--Uniform Standards for Malpractice Claims

Sec. 5101. Applicability....................................        250
Sec. 5102. Requirement for initial resolution of action             250
                            through alternative dispute 
                            resolution.
Sec. 5103. Procedural requirements for filing of actions....        254
Sec. 5104. Treatment of noneconomic and punitive damages....        258
Sec. 5105. Periodic payments for future losses..............        263
Sec. 5106. Treatment of attorney's fees and other costs.....        264
Sec. 5107. Uniform statute of limitations...................        268
Sec. 5108. Special provision for certain obstetric services.        268
Sec. 5109. Uniform standard for determining liability in            269
                            actions based on negligence.
Sec. 5110. Jurisdiction of Federal courts...................        270
Sec. 5111. Preemption.......................................        270
   Subtitle C--Requirements for State Alternative Dispute Resolution 
                             Systems (ADR)

Sec. 5201. Basic requirements...............................        271
Sec. 5202. Certification of State systems; applicability of         273
                            alternative Federal system.
Sec. 5203. Grants to States.................................        276
Sec. 5204. Reports on implementation and effectiveness of           276
                            alternative dispute resolution 
                            systems.
  Subtitle D--Grants to States for Development of Practice Guidelines

Sec. 5301. Grants to States.................................        277
    TITLE VI--PAPERWORK REDUCTION AND ADMINISTRATIVE SIMPLIFICATION

Sec. 6001. Preemption of State quill pen laws...............        279
Sec. 6002. Confidentiality of electronic health care                279
                            information.
Sec. 6003. Standardization for the electronic receipt and           283
                            transmission of health plan 
                            information.
Sec. 6004. Use of uniform health claims forms and                   284
                            identification numbers.
Sec. 6005. Priority among insurers..........................        285
Sec. 6006. Furnishing of information among health plans.....        286
Sec. 6007. Failure to satisfy certain health plan                   287
                            requirements.
Sec. 6008. Definitions......................................        290
        TITLE VII--ADDITIONAL BENEFITS ON A PAY-AS-YOU-GO BASIS

Sec. 7001. Sense of Congress................................        291

SEC. 2. FINDINGS; PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Need for cost containment incentives.--The current 
        health insurance marketplace is unable to provide efficient and 
        effective health care coverage because--
                    (A) there is no organized method for price-based 
                competition among health plans offering standardized 
                benefits;
                    (B) there is no method by which health plans are 
                held accountable for their performance in effectively 
                and efficiently improving the health and well-being of 
                their enrollees;
                    (C) the Internal Revenue Code not only provides no 
                incentives for employees to select carefully among 
                competing health plans on the basis of cost, but also 
                provides incentives for employers and employees to 
                select plans with greater expenses;
                    (D) health plans frequently manage costs through 
                underwriting practices and favorable selection rather 
                than through increased efficiencies in the provision of 
                health care; and
                    (E) underwriting practices discriminate unfairly 
                against individuals in need of health care.
            (2) Managed competition.--
                    (A) The economy of the United States has been based 
                on a model of competitive markets and the United States 
                has successfully relied on this model in order to 
                promote efficiencies and innovation in nearly every 
                economic area.
                    (B) However, in order to provide for such a market 
                in health care, there is a need to provide proper 
                incentives to providers and purchasers in the market 
                for health care.
                    (C) Only through such a reform will the country 
                achieve the dual goals of maintaining high quality 
                care, innovation, and consumer choice and of providing 
                real incentives for cost containment.
    (b) Purpose.--
            (1) General objective.--It is the general objective of this 
        Act to reform the health care marketplace to provide universal 
        access to high quality, cost-effective care through competitive 
        health plans.
            (2) Cost containment objective.--It is also a specific 
        objective of this Act to bring the rate of increase in health 
        care costs by the year 2000 down to the rate of increase in 
        costs in the economy as a whole.
            (3) Specific measures to achieve objectives.--In order to--
                    (A) control costs through enhanced price 
                competition, the Act extends tax benefits for employer 
                contributions only to the lowest price of a qualifying 
                plan in an area;
                    (B) promote competition based on cost-effective 
                care instead of through risk selection, the Act 
                standardizes benefits, prohibits experience rating, and 
                adjusts premium payments to plans based on the risk 
                characteristics of individuals enrolled in the plan;
                    (C) provide access to coverage, the Act makes 
                available to all individuals competitively priced 
                accountable health plans regardless of their employment 
                status;
                    (D) to promote competition based on quality, the 
                Act provides for the systematic reporting and public 
                dissemination of information on the performance of 
                plans in meeting the clinical health requirements, 
                functional needs, well-being, and personal satisfaction 
                of its enrollees; and
                    (E) improve health care coverage of low-income 
                individuals, the Act offers financial assistance in 
                purchasing accountable health plans and meeting cost-
                sharing requirements.

SEC. 3. GLOSSARY OF CERTAIN TERMS USED IN TITLES I AND II.

    The following specialized, defined terms are used in titles I and 
II of this Act:
            Accountable health plan; ahp.--The terms ``accountable 
        health plan'' and ``AHP'' are defined in section 1701(b)(1).
            Applicable federal assistance amount.--The term 
        ``applicable Federal assistance amount'' is defined in section 
        2009(c)(1).
            Applicable low-income premium amount.--The term 
        ``applicable low-income premium amount'' is defined in section 
        2009(c)(2).
            Base federal premium amount.--The ``base Federal premium 
        amount'' is defined in section 2005(a)(1).
            Base individual premium.--The term ``base individual 
        premium'' is defined in section 2009(c)(3).
            Benefits, evaluations, and data standards board.--The term 
        ``Benefits, Evaluations, and Data Standards Board'' refers to 
        the Board established under section 1303.
            Closed and open plans.--The terms ``closed'' and ``open'' 
        are defined, with respect to a health plan, under section 
        1701(b)(4).
            Commission.--The term ``Commission'' is defined in section 
        1701(b)(2).
            Eligible employee.--The term ``eligible employee'' is 
        defined in section 1701(a)(2).
            Eligible family member.--The term ``eligible family 
        member'' is defined in section 1701(a)(3).
            Eligible individual.--The term ``eligible individual'' is 
        defined in section 1701(a)(1).
            Eligible resident.--The term ``eligible resident'' is 
        defined in section 1701(a)(4).
            Enrollee unit.--The term ``enrollee unit'' is defined in 
        section 1701(a)(5).
            Family adjusted total income.--The term ``family adjusted 
        total income'' is defined in section 2009(b)(1).
            Health care joint venture.--The term ``health care joint 
        venture'' is defined in section 1232(i)(3).
            Health outcome.--The term ``health outcome'' is defined in 
        section 1302(b)(5)(B).
            Health plan standards board.--The term ``Health Plan 
        Standards Board'' refers to the Board established under section 
        1304.
            Health plan.--The term ``health plan'' is defined in 
        section 1701(c)(1).
            HPPC; health plan purchasing cooperative.--The terms 
        ``health plan purchasing cooperative'' and ``HPPC'' are defined 
        in section 1701(b)(3).
            Individual responsibility percentage.--The term 
        ``individual responsibility percentage'' is defined in section 
        2009(c)(5).
            Investigational treatment.--The term ``investigational 
        treatment'' is defined in section 1302(b)(4)(B).
            Low-income individual.--The term ``low-income individual'' 
        is defined in section 2009(a)(1).
            Medically appropriate.--The term ``medically appropriate'' 
        is defined in section 1302(b)(1).
            Medicare beneficiary.--The term ``medicare beneficiary'' is 
        defined in section 1701(a)(6).
            Medicare-eligible individual.--The term ``medicare-eligible 
        individual'' is defined in section 1701(a)(6).
            Moderately low-income individual.--The term ``moderately 
        low-income individual'' is defined in section 2009(a)(2).
            Modified family income.--The term ``modified family 
        income'' is defined in section 2009(b)(2).
            Network plan.--The term ``network plan'' is defined in 
        section 1208(b)(3)(D) and in section 1222(b)(1).
            Participating provider.--The term ``participating 
        provider'' is defined in section 1222(b)(2).
            Physician incentive plan.--The term ``physician incentive 
        plan'' is defined in section 1207(b)(2).
            Poverty line.--The term ``poverty line'' is defined in 
        section 2009(c)(4).
            Pre-existing condition.--The term ``pre-existing 
        condition'' is defined in section 1204(b)(2)(B)(ii).
            Premium class.--The term ``premium class'' is defined in 
        section 1701(c)(3).
            Reference premium rate.--The term ``reference premium 
        rate'' is defined in section 2009(c)(4).
            Secretary.--The term ``Secretary'' is defined in section 
        1701(c)(4).
            Small employer; large employer.--The terms ``small 
        employer'' and ``large employer'' are defined in section 
        1701(c)(2).
            Specialized center of care.--The term ``specialized center 
        of care'' is defined in section 1308(d).
            State-adjusted poverty level defined.--The term ``State-
        adjusted poverty level'' is defined in section 2009(b)(3)(A).
            State.--The term ``State'' is defined in section 
        1701(c)(5).
            Treatment.--The term ``treatment'' is defined in section 
        1302(b)(5)(A).
            Type of enrollment.--The term ``type of enrollment'' is 
        defined in section 1701(c)(6).
            Uniform set of effective benefits.--The term ``uniform set 
        of effective benefits'' is defined in section 1701(c)(7).
            Utilization review program.--The term ``utilization review 
        program'' is defined in section 1223(b).
            Very low-income individual.--The term ``very low-income 
        individual'' is defined in section 2009(a)(3).

TITLE I--MANAGED COMPETITION IN EMPLOYER-BASED HEALTH PLANS: INCENTIVES 
                            TO CONTROL COSTS

   Subtitle A--Use of Tax Incentives to Purchase Cost-Effective Plans

SEC. 1001. UNIFORM TAX DISINCENTIVE TO EFFECTIVELY LIMIT DEDUCTIBILITY 
              OF EXCESS EMPLOYER HEALTH PLAN EXPENSES.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 
(relating to qualified pension plans, etc.) is amended by adding at the 
end thereof the following new section:

``SEC. 4980C. EMPLOYER HEALTH PLAN EXPENSES IN EXCESS OF ACCOUNTABLE 
              HEALTH PLAN COSTS.

    ``(a) General Rule.--There is hereby imposed a tax equal to the 
product of the rate of tax specified in section 11(b)(1)(C) and the 
amount of the excess health plan expenses of any employer.
    ``(b) Excess Health Plan Expenses.--For purposes of this section--
            ``(1) In general.--The term `excess health plan expenses' 
        means health plan expenses paid or incurred by the employer for 
        any month with respect to any covered individual to the extent 
        such expenses do not meet the requirements of paragraphs (2), 
        (3), and (4).
            ``(2) Limit to accountable health plans.--Health plan 
        expenses meet the requirements of this paragraph only if--
                    ``(A) the expenses are attributable to coverage of 
                the covered individual under an accountable health 
                plan, and
                    ``(B) in the case of a small employer, the expenses 
                are attributable to payment to a health plan purchasing 
                cooperative for coverage under an accountable health 
                plan.
            ``(3) Limit on per individual contribution.--
                    ``(A) In general.--Health plan expenses with 
                respect to any covered individual meet the requirements 
                of this paragraph for any month only to the extent that 
                the amount of such expenses does not exceed the 
                reference premium rate (as defined in section 
                2009(c)(4) of the Managed Competition Act of 1993) for 
                the month.
                    ``(B) Use of community rate within type of 
                enrollment or across hppc areas in place of reference 
                premium rate for large employers.--In the case of an 
                employer that is not a small employer and which 
                maintains a closed AHP (as defined in section 
                1701(b)(4)(A)) that elects certain rules to apply under 
                section 1205(b)(3) of the Managed Competition Act of 
                1993, the reference premium rate amount for a covered 
                individual shall be computed based on the weighted 
                average of such amounts within the type of enrollment 
                or across HPPC areas, as elected under such section.
                    ``(C) Treatment of health plans outside the united 
                states.--For purposes of subparagraph (A), in the case 
                of a covered individual residing outside the United 
                States, there shall be substituted for the reference 
                premium rate such reasonable amounts as the Health Care 
                Standards Commission determines to be comparable to the 
                limit imposed under subparagraph (A) or subparagraph 
                (B) (if applicable).
            ``(4) Requirement of level contribution.--Health plan 
        expenses meet the requirements of this paragraph for any month 
        only if the amount of the employer contribution (for a premium 
        class) does not vary based on the accountable health plan 
        selected.
    ``(c) Exception for Medicare-Eligible Retirees.--Subsections (a) 
and (b) shall not apply to health plan expenses with respect to an 
individual who is eligible for benefits under part A of title XVIII of 
the Social Security Act if such expenses are for a health plan that is 
not a primary payor under section 1862(b) of such Act.
    ``(d) Special Rules.--
            ``(1) Treatment of self-insured plans.--In the case of a 
        self-insured health plan, the amount of contributions per 
        employee shall be determined for purposes of subsection (b)(3) 
        in accordance with rules established by the Health Care 
        Standards Commission which are based on the principles of 
        section 4980B(f)(4)(B) (as in effect before the date of the 
        enactment of this Act).
            ``(2) Contributions to cafeteria plans.--Contributions 
        under a cafeteria plan on behalf of an employee that are used 
        for a group health plan coverage shall be treated for purposes 
        of this section as health plan expenses paid or incurred by the 
        employer.
    ``(e) Employees Held Harmless.--Nothing in this section shall be 
construed as affecting the exclusion from gross income of an employee 
under section 106.
    ``(f) Other Definitions.--For purposes of this section--
            ``(1) Covered individual.--The term `covered individual' 
        means any beneficiary of a group health plan.
            ``(2) Group health plan.--The term `group health plan' has 
        the meaning given such term by section 5000(b)(1), but does not 
        include, as defined by the Health Care Standards Commission, 
        health coverage under a disability or accident policy or under 
        a workers' compensation plan.
            ``(3) Health plan expenses.--
                    ``(A)  In general.--The term `health plan expenses' 
                means employer expenses for any group health plan, 
                including expenses for premiums as well as payment of 
                deductibles and coinsurance that would otherwise be 
                applicable.
                    ``(B) Exclusion of certain direct expenses.--Such 
                term does not include expenses for direct services 
                which are determined by the Health Care Standards 
                Commission to be primarily aimed at workplace health 
                care and health promotion or related population-based 
                preventive health activities.
            ``(4) Small employer.--The term `small employer' means, for 
        a taxable year, an employer that is a small employer (within 
        the meaning of section 1701(c)(2) of the Managed Competition 
        Act of 1993) for the most recent calendar year ending before 
        the end of the taxable year.
            ``(5) Type of enrollment.--The term `type of enrollment' is 
        described in section 1701(c)(6) of the Managed Competition Act 
        of 1993.''
    (b) Clerical Amendment.--The table of sections for such chapter 43 
is amended by adding at the end thereof the following new section:

                              ``Sec. 4980C. Employer health plan 
                                        expenses in excess of 
                                        accountable health plan 
                                        costs.''
    (c) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        expenses incurred for the provision of health services for 
        periods after December 31, 1994.
            (2) Transition for collective bargaining agreements.--The 
        amendments made by this section shall not apply to employers 
        with respect to their employees, insofar as such employees are 
        covered under a collective bargaining agreement ratified before 
        the date of the enactment of this Act, earlier than the date of 
        termination of such agreement (determined without regard to any 
        extension thereof agreed to after the date of the enactment of 
        this Act), or January 1, 1997, whichever is earlier.

SEC. 1002. INCREASE IN DEDUCTION FOR HEALTH PLAN PREMIUM EXPENSES OF 
              SELF-EMPLOYED INDIVIDUALS.

    (a) Increasing Deduction to 100 Percent.--Paragraph (1) of section 
162(l) of the Internal Revenue Code of 1986 is amended by striking ``25 
percent of''.
    (b) Making Provision Permanent.--Subsection (l) of section 162 of 
such Code (relating to special rules for health insurance costs of 
self-employed individuals) is amended by striking paragraph (6).
    (c) Limitation to Accountable Health Plans.--Paragraph (2) of 
section 162(l) of such Code is amended by adding at the end thereof the 
following new paragraph:
            ``(3) Deduction limited to accountable health plan costs.--
        No deduction shall be allowed under this section for any amount 
        which would be excess health plan expenses (as defined in 
        section 4980C(b), determined without regard to paragraph (4) 
        thereof) if the taxpayer were a small employer.''
    (d) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 1994.
            (2) Exception.--The amendment made by subsection (c) shall 
        apply to expenses for periods of coverage beginning on or after 
        January 1, 1995.

SEC. 1003. DEDUCTION FOR HEALTH PLAN PREMIUM EXPENSES OF INDIVIDUALS.

    (a) In General.--Section 213 of the Internal Revenue Code of 1986 
(relating to medical, dental, etc., expenses) is amended by adding at 
the end the following new subsection:
    ``(g) Special Rules for Health Plan Premium Expenses.--
            ``(1) In general.--The deduction under subsection (a) shall 
        be determined without regard to the limitation based on 
        adjusted gross income with respect to amounts paid for premiums 
        for coverage under an accountable health plan.
            ``(2) Limits.--
                    ``(A) Limit in amount.--The amount allowed as a 
                deduction under paragraph (1) with respect to the cost 
                of providing coverage for any individual shall not 
                exceed the applicable limit specified in section 
                4980C(b)(3) reduced by the aggregate amount paid by all 
                other entities (including any employer or any level of 
                government) for coverage of such individual under any 
                health plan.
                    ``(B) Limit to hppc plans.--
                            ``(i) In general.--The deduction under this 
                        subsection shall be allowed only in the case of 
                        an individual who obtains coverage under an 
                        accountable health plan through a health plan 
                        purchasing cooperative.
                            ``(ii) Exception for employees of large 
                        employers.--Clause (i) shall not apply to an 
                        individual who obtains coverage in an 
                        accountable health plan by virtue of the 
                        individual's (or other person's) employment by 
                        a large employer.
            ``(3) Deduction allowed against gross income.--The 
        deduction under this subsection shall be taken into account in 
        determining adjusted gross income under section 62(a).
            ``(4) Treatment of medicare program.--Coverage under part A 
        or part B of title XVIII of the Social Security Act shall not 
        be considered for purposes of this subsection to be coverage 
        under an accountable health plan.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts paid after December 31, 1994, and taxable years ending 
after such date.

SEC. 1004. EXCLUSION FROM GROSS INCOME FOR CONTRIBUTIONS BY A 
              PARTNERSHIP OR S CORPORATION TO A HEALTH PLAN COVERING 
              ITS PARTNERS OR SHAREHOLDERS.

    (a) S Corporations.--Section 1372 of the Internal Revenue Code of 
1986 (relating to partnership rules to apply for fringe benefit 
purposes) is amended by adding at the end thereof the following new 
subsection:
    ``(c) Exception for Coverage Provided Under Subsidized Accident or 
Health Plan.--This section shall not apply to coverage under a 
subsidized accident or health plan maintained by the S corporation for 
its employees.''
    (b) Partnerships.--Section 707 of such Code (relating to 
transactions between partner and partnership) is amended by adding at 
the end thereof the following new subsection:
    ``(d) Exclusion for Coverage Provided Under Subsidized Accident or 
Health Plan.--In the case of coverage under a subsidized accident or 
health plan maintained by a partnership for its partners, for purposes 
of sections 104, 105, 106, and 162(l)(2)(B), the partnership shall be 
treated as the employer of each partner who is an employee within the 
meaning of section 401(c)(1).''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

SEC. 1005. EMPLOYER OBLIGATIONS.

    (a) Small Employers.--Each small employer (as defined in section 
1701(c)(2)) shall--
            (1) have in effect an agreement described in section 1103 
        with the health plan purchasing cooperative (requiring the 
        offering to employees of coverage through accountable health 
        plans) for the HPPC area in which the employer has its 
        principal place of business, and
            (2) comply with such agreement.
    (b) Other Employers.--
            (1) In general.--Each employer that is not a small employer 
        shall--
                    (A) offer to each employee (in a time and manner 
                specified by the Health Care Standards Commission) 
                enrollment in a qualifying accountable health plan (as 
                defined in paragraph (3)) both on an individual basis, 
                and, if applicable and at the employee's option, on a 
                family basis; and
                    (B) provide, at the option of the employee, for 
                deduction from wages or other compensation (in the 
                manner specified in section 1103(c)) of amount of any 
                premiums due for such enrollment (taking into account 
                the amount of any employer contribution).
            (2) Open enrollment periods.--For purposes of paragraph 
        (1)(A), the Commission shall provide for--
                    (A) initial enrollment periods (of not less than 30 
                days) during which newly employed individuals are 
                offered enrollment under a qualifying accountable 
                health plan;
                    (B) an annual open enrollment period (of not less 
                than 30 days) in which employees are offered enrollment 
                under a qualifying accountable health plan (and, if 
                there is a choice among such plans, the opportunity to 
                change the plan in which the employee is enrolled); and
                    (C) special enrollment periods during which, 
                because of a change in family situation (such as 
                marriage, birth or adoption of a child, divorce, 
                separation, or death), the employee is offered the 
                opportunity to change the type of enrollment provided.
            (3) Qualifying accountable health plan.--For purposes of 
        this subsection, the term ``qualifying accountable health 
        plan'' means, with respect to an employee, an accountable 
        health plan--
                    (A) that serves the area in which the employee 
                resides, and
                    (B) for which the premium charged to the employee 
                for a premium class does not exceed (except as provided 
                in paragraph (4)) the premium of the least expensive 
                accountable health plan offered to individuals by a 
                health plan purchasing cooperative in the HPPC area in 
                which the employee resides for that premium class.
        Nothing in this subsection shall be construed as preventing an 
        employer from offering, or an employee from electing enrollment 
        in, a health plan that serves the area in which the employee is 
        employed, rather than the area in which the employee resides.
            (4) Special rule for certain closed ahps electing special 
        community rating.--In the case of a closed AHP offered to an 
        employee, if the plan has made an election described in section 
        1205(b)(3), paragraph (3)(B) shall be applied to the plan based 
        on the weighted average of premiums determined without regard 
        to age, HPPC area, or both (as elected under such section), 
        rather than on the basis of premium class.
    (c) Nondiscrimination Under Group Health Plans.--
            (1) Application of rules similar to medicare 
        nondiscrimination rules.--Subject to paragraph (2), the 
        provisions of paragraphs (1)(A), (1)(D), (1)(E), (3)(A), and 
        (3)(C) of section 1862(b) of the Social Security Act shall 
        apply to an individual eligible for low-income assistance under 
        subtitle A of title II in the same manner as such provisions 
        apply to an individual age 65 or over who is entitled to 
        benefits under title XVIII of such Act under section 226(a) of 
        such Act.
            (2) Rules of application.--In applying paragraph (1) under 
        this Act--
                    (A) in applying clauses (ii) and (iii) of section 
                1862(b)(1)(A) of the Social Security Act, any reference 
                to ``20 or more employees'' is deemed a reference to 
                ``5 or more employees'';
                    (B) clause (iv) of section 1862(b)(1)(A) of such 
                Act shall not apply; and
                    (C) any reference to title XVIII of such Act is 
                deemed a reference to assistance under subtitle A of 
                title II of this Act.
    (d) Enforcement.--
            (1) Civil money penalties.--
                    (A) Small employer agreements.--Failure to have in 
                effect or comply with an agreement under subsection 
                (a)(1)(A) is subject to a civil monetary penalty (not 
                to exceed $500) for each day in which the violation 
                continues.
                    (B) Failure to offer coverage or provide for wage 
                deduction.--Failure to offer coverage or provide for 
                deduction from wages required under subsection (b)(1) 
                is subject to a civil monetary penalty (not to exceed 
                $500) for each day in which the violation continues.
                    (C) Violation of nondiscrimination requirements.--
                Failure to comply with the requirement of subsection 
                (c) is subject to a civil monetary penalty (not to 
                exceed $500) for each day for each individual with 
                respect to which the failure occurs.
            (2) Direct enforcement.--
                    (A) HPPC agreement.--An agreement in effect between 
                a small employer and a HPPC is directly enforceable by 
                civil action by the HPPC or by an employee (as a third-
                party beneficiary of the agreement). In any such 
                action, if the HPPC or employee substantially prevails, 
                the HPPC or employee is entitled to reasonable 
                attorneys' fees.
                    (B) Offer.--The obligation to offer coverage under 
                subsection (b) with respect to an employee is directly 
                enforceable by civil action by the employee. In any 
                such action, if the employee substantially prevails, 
                the employee is entitled to reasonable attorneys' fees.

SEC. 1006. ENCOURAGING GROUP PURCHASING FOR LARGE EMPLOYER BY 
              ELIMINATING COMMONALITY OF INTEREST OR GEOGRAPHIC 
              LOCATION REQUIREMENT FOR TAX EXEMPT TRUST STATUS.

    (a) In General.--Paragraph (9) of section 501(c) of the Internal 
Revenue Code of 1986 (relating to exempt organizations) is amended--
            (1) by inserting ``(A)'' after ``(9)''; and
            (2) by adding at the end the following:
            ``(B) Any determination of whether a health plan maintained 
        by one or more large employers (within the meaning of section 
        1701(c)(2) of the Managed Competition Act of 1993) is a 
        voluntary employees' beneficiary association meeting the 
        requirements of this paragraph shall be made without regard to 
        any determination of commonality of interest or geographic 
        location if the plan is an accountable health plan (as defined 
        in section 1701(b)(1) of such Act).''
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to determinations made on or after January 1, 1994.

SEC. 1007. SIMPLIFYING FILING OF REPORTS BY PERMITTING SINGLE ANNUAL 
              FILING FOR ALL EMPLOYERS COVERED UNDER AN INSURED 
              MULTIPLE EMPLOYER HEALTH PLAN.

    (a) In General.--Section 110 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1030) is amended by adding at the end 
the following new subsection:
    ``(c) The Secretary shall prescribe by regulation or otherwise an 
alternative method providing for the filing of a single annual report 
(as referred to in section 104(a)(1)(A)) with respect to all employers 
who are covered under the same fully insured multiple employer welfare 
arrangement under which benefits consist solely of medical care 
described in section 607(1) (disregarding such incidental benefits as 
the Secretary shall specify by regulations).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act. The Secretary of 
Labor shall prescribe the alternative method referred to in section 
110(c) of the Employee Retirement Income Security Act of 1974, as added 
by such amendment, within 90 days after the date of the enactment of 
this Act.

        Subtitle B--Health Plan Purchasing Cooperatives (HPPCs)

SEC. 1101. ESTABLISHMENT AND ORGANIZATION; HPPC AREAS.

    (a) HPPC Areas.--
            (1) In general.--For purposes of carrying out this title, 
        subject to paragraphs (2) and (3), each State shall be 
        considered a HPPC area.
            (2) Alternative, intrastate areas.--Each State may provide 
        for the division of the State into HPPC areas so long as--
                    (A) all portions of each metropolitan statistical 
                area in a State are within the same HPPC area, and
                    (B) the number of eligible individuals residing 
                within a HPPC area is not less than 250,000.
            (3) Alternative, interstate areas.--In accordance with 
        rules established by the Health Care Standards Commission, one 
        or more contiguous States may provide for the establishment of 
        a HPPC area that includes adjoining portions of the States so 
        long as such area, if it includes any part of a metropolitan 
        statistical area, includes all of such area. In the case of a 
        HPPC serving a multi-state area, section 1701(c)(2)(C) shall 
        only apply to the area if all the States encompassed in the 
        area by law agree to the number to be substituted.
    (b) Establishment of HPPCs.--
            (1) In general.--Each State shall provide, by legislation 
        or otherwise, for the establishment by not later than July 1, 
        1994, as a not-for-profit corporation, with respect to each 
        HPPC area (specified under subsection (a)) of a health plan 
        purchasing cooperative (each in this title referred to as a 
        ``HPPC'').
            (2) Interstate hppc areas.--HPPCs with respect to 
        interstate areas specified under subsection (a)(3) shall be 
        established in accordance with rules of the Health Care 
        Standards Commission.
    (c) Cooperative Board.--
            (1) Establishment.--Each HPPC shall be governed by a 
        Cooperative Board which shall be initially appointed by the 
        Governor or other chief executive officer of the State (or as 
        otherwise provided under State law or by the Health Care 
        Standards Commission in the case of a HPPC described in 
        subsection (b)(2)). The Cooperative Board for a HPPC shall be 
        responsible for ensuring the performance of the duties of the 
        HPPC under subsection (d).
            (2) Election.--By not later than January 1, 1996, each HPPC 
        shall provide under State law (or in the case of a HPPC 
        described in subsection (b)(2), under rules established by the 
        Health Care Standards Commission) for the election of members 
        to the Cooperative Board from among eligible individuals who 
        are enrolled in an accountable health plan offered by the HPPC 
        and who do not receive remuneration from the HPPC or any such 
        accountable health plan for any services provided.
            (3) Limitation on compensation.--A HPPC shall not provide 
        compensation to members of the Cooperative Board other than 
        reimbursement for reasonable and necessary expenses incurred in 
        the performance of their duties as members of the Cooperative 
        Board.
    (d) Duties of HPPCs.--
            (1) In general.--Subject to paragraph (2), each HPPC 
        shall--
                    (A) enter into agreements with accountable health 
                plans under section 1102;
                    (B) enter into agreements with small employers 
                under section 1103;
                    (C) offer enrollment and enroll individuals under 
                accountable health plans, in accordance with section 
                1104;
                    (D) charge, receive, and forward adjusted premiums, 
                in accordance with section 1105, including reconciling 
                low-income assistance among accountable health plans;
                    (E) provide for coordination with other HPPCs, in 
                accordance with section 1106;
                    (F) provide for establishment of a complaint 
                process and appointment of an ombudsman, in accordance 
                with section 1107;
                    (G) conduct and analyze surveys of enrollee 
                satisfaction and monitor enrollee disenrollment, in 
                accordance with section 1108; and
                    (H) carry out other functions provided for under 
                this title.
            (2) Limitation on activities.--A HPPC shall not--
                    (A) perform any activity (including review, 
                approval, or enforcement) relating to payment rates for 
                providers;
                    (B) except as specifically provided under sections 
                1102, 1105, or 1106(c), perform any activity (including 
                review, approval, or enforcement) relating to premium 
                rates for health plans;
                    (C) perform any activity (including registration or 
                enforcement) relating to compliance of accountable 
                health plans with the requirements of part 1 of 
                subtitle C (other than as required to carry out its 
                specific duties under this subtitle or under section 
                1305(c)(2));
                    (D) discriminate among such plans, other than on 
                the basis of the performance of such plans under this 
                title, as determined in accordance with standards 
                established by the Health Care Standards Commission 
                under this title;
                    (E) assume financial risk in relation to any such 
                plan; or
                    (F) perform other activities identified by the 
                Health Care Standards Commission as being inconsistent 
                with the performance of its duties under paragraph (1).
    (e) Performance of Duties.--
            (1) In general.--If the Health Care Standards Commission 
        finds that a HPPC is not carrying out its duties as required 
        under subsection (d), the Commission shall notify the 
        Cooperative Board of the HPPC, and the Governor (or other chief 
        executive officer) of each State in which the HPPC operates, of 
        such finding and permit the Board an opportunity to take such 
        action as may be necessary for the HPPC to carry out such 
        duties.
            (2) Corrective action.--If, after such an opportunity, the 
        deficiency has not been corrected, the Health Care Standards 
        Commission may--
                    (A) order the HPPC to hold a new election for 
                members of the Cooperative Board, and
                    (B) take such other action as may be appropriate in 
                order to assure the performance of such duties.
            (3) Performance criteria.--
                    (A) Development.--The Health Care Standards 
                Commission shall develop criteria relating to HPPC 
                performance of duties. Such criteria shall include 
                criteria relating to the following:
                            (i) Overhead.--The HPPC overhead percentage 
                        (computed under section 1105(b)(2)) for the 
                        HPPC.
                            (ii) Float.--The average period (described 
                        in section 1102(d)(2)) between the HPPC's 
                        receipt and payment of funds received.
                            (iii) Satisfaction of eligible 
                        individuals.--The satisfaction of eligible 
                        individuals with the performance of the HPPC 
                        (as measured under surveys under section 1108).
                            (iv) Enrollment of at risk individuals.--
                        The effectiveness of the HPPC's activities 
                        under section 1102(b)(3) in enrolling 
                        individuals who are eligible for low-income 
                        assistance or who reside in medically 
                        underserved areas.
                    (B) Report.--Each HPPC shall report to the Health 
                Care Standards Commission, at such time and in such 
                manner as the Commission specifies, such information as 
                the Commission may require in order to evaluate the 
                performance of the HPPC in accordance with the criteria 
                developed under subparagraph (A).
                    (C) Publication.--The Health Care Standards 
                Commission shall publish annually a report that 
                provides a comparison of the relative performance of 
                each HPPC, based on such criteria.
    (f) Education and Development Grants.--There are authorized to be 
appropriated $25,000,000 for fiscal year 1994 for grants to assist 
States in the development of HPPCs.

SEC. 1102. AGREEMENTS WITH ACCOUNTABLE HEALTH PLANS (AHPS).

    (a) Agreements.--
            (1) Open ahps.--Each HPPC for a HPPC area shall enter into 
        an agreement under this section with each open accountable 
        health plan (described in section 1701(b)(4)(B)) that serves 
        residents of the area. Each such agreement under this section 
        shall include (as specified by the Health Care Standards 
        Commission) provisions consistent with the requirements of the 
        succeeding subsections of this section. A HPPC may not 
        terminate such an agreement except as provided in paragraph 
        (3)(A).
            (2) Closed ahps.--Each HPPC for a HPPC area shall enter 
        into a special agreement under this paragraph with each closed 
        AHP that serves residents of the area, in order to carry out 
        subsection (e). Except as otherwise specifically provided, any 
        reference in this Act to an agreement under this section shall 
        not be considered to be a reference to an agreement under this 
        paragraph.
            (3) Termination of agreement.--In accordance with 
        regulations of the Health Care Standards Commission--
                    (A) the HPPC may terminate an agreement under 
                paragraph (1) or (2) if--
                            (i) the AHP's registration under part 1 of 
                        subtitle C is revoked, or
                            (ii) the AHP is determined (in accordance 
                        with rules established by the Commission) 
                        substantially to have violated the conditions 
                        of such agreement; and
                    (B) the AHP may terminate either such agreement 
                only upon sufficient notice in order to provide for the 
                orderly enrollment of enrollees under other AHPs.
        The Commission shall establish a process for the termination of 
        agreements under this paragraph.
    (b) Offer of Enrollment of Individuals.--
            (1) In general.--Under an agreement under this section 
        between an AHP and a HPPC, the HPPC shall offer, on behalf of 
        the AHP, enrollment in the AHP to eligible individuals (as 
        defined in section 1701(a)(1)) at the applicable monthly 
        premium rates (specified under section 1105(a)).
            (2) Timing of offer.--The offer of enrollment shall be 
        available--
                    (A) to eligible individuals who are employees of 
                small employers, during the 30-day period beginning on 
                the date of commencement of employment, and
                    (B) to other eligible individuals, at such time 
                (including an annual open enrollment period specified 
                by the Health Care Standards Commission) as the HPPC 
                shall specify, consistent with section 1104(b).
            (3) Outreach.--In carrying out the responsibilities under 
        paragraph (1), a HPPC shall perform such activities, including 
        outreach, as may be necessary to seek actively the enrollment 
        of eligible individuals, including individuals who are eligible 
        for low-income assistance or who reside in medically 
        underserved areas.
    (c) Receipt of Gross Premiums.--
            (1) In general.--Under an agreement under this section 
        between a HPPC and an AHP, payment of premiums shall be made, 
        by individuals or employers on their behalf, directly to the 
        HPPC for the benefit of the AHP.
            (2) Timing of payment of premiums.--Premiums shall be 
        payable on a monthly basis (or, at the option of an eligible 
        individual described in paragraph (2)(B), on a quarterly 
        basis). The HPPC may provide for penalties and grace periods 
        for late payment.
            (3) AHPs retain risk of nonpayment.--Nothing in this 
        subsection shall be construed as placing upon a HPPC any risk 
        associated with failure to make prompt payment of premiums 
        (other than the portion of the premium representing the HPPC 
        overhead amount). Each eligible individual who enrolls with an 
        AHP through the HPPC is liable to the AHP for premiums.
    (d) Forwarding of Adjusted Premiums.--
            (1) In general.--Under an agreement under this section 
        between an AHP and a HPPC, subject to section 1205(c), the HPPC 
        shall forward to each AHP in which an eligible individual in an 
        enrollee unit has been enrolled an amount equal to the sum of--
                    (A) the standard premium rate (established under 
                section 1205) received for the premium class, and
                    (B) the product of (i) the lowest standard premium 
                rate offered by an open AHP for the premium class, and 
                (ii) a risk-adjustment factor (determined and adjusted 
                in accordance with section 1306(b)) for the enrollee 
                unit.
            (2) Payments.--Payments shall be made by the HPPC under 
        this subsection within a period (specified by the Health Care 
        Standards Commission and not to exceed 3 business days) after 
        the time of receipt of the premium from the employer of the 
        eligible individual or the eligible individual, as the case may 
        be, based on estimates of applicable risk-adjustment factors. 
        Subsequent payments shall be adjusted as appropriate to reflect 
        differences between the payments that were made based on 
        estimates and the payments that should have been made based on 
        reported (and audited) information.
            (3) Adjustments for differences in nonpayment rates.--In 
        accordance with rules established by the Health Care Standards 
        Commission, each agreement between an AHP and a HPPC under this 
        section shall provide that, if a HPPC determines that the rates 
        of nonpayment of premiums during grace periods established 
        under subsection (c)(2) vary appreciably among AHPs, the HPPC 
        shall provide for such adjustments in the payments made under 
        this subsection as will place each AHP in the same position as 
        if the rates of nonpayment were the same.
    (e) Reconciliation of Low-Income Assistance Among Accountable 
Health Plans.--
            (1) In general.--Each agreement between an AHP and a HPPC 
        under this section (including a special agreement entered into 
        under subsection (a)(2)) shall provide for such payments from 
        the AHP to the HPPC, and such payments from the HPPC to the 
        AHP, as the Health Care Standards Commission determines is 
        necessary in order to assure the equitable distribution among 
        all AHPs, nationwide, of reductions in premiums and cost-
        sharing under section 1205(c) and section 1202(c), 
        respectively.
            (2) Inter-hppc coordination.--For inter-HPPC coordination 
        of reconciliation processes under paragraph (1), see section 
        1106(c).
    (f) Notice of Disenrollment.--Within 3 business days after 
receiving a notice of disenrollment of an individual from an AHP 
offered by a HPPC, the HPPC shall notify the AHP of such notice.
    (g) Limitation on Employment.--An AHP agrees not to employ (or 
enter into a consulting or similar contract with) any individual who 
was, within the previous 2 years, an employee of the HPPC with which 
the AHP has an agreement in effect under this section.
    (h) Standards for Operational Software.--The Health Care Standards 
Commission shall establish standards for operational software that may 
be used by HPPCs and AHPs in carrying out agreements under this 
section.

SEC. 1103. AGREEMENTS WITH SMALL EMPLOYERS.

    (a) In General.--Each HPPC for a HPPC area shall enter into an 
agreement under this section with each small employer that employs 
individuals in the area. Each agreement under this section, between a 
small employer and a HPPC shall include (as specified by the Health 
Care Standards Commission) provisions consistent with the requirements 
specified in the succeeding subsections of this section.
    (b) Forwarding Information on Eligible Employees.--
            (1) In general.--Under an agreement under this section 
        between a small employer and a HPPC, the employer must forward 
        to the appropriate HPPC the name and address (and other 
        identifying information required by the HPPC) of each employee 
        (including part-time and seasonal employees).
            (2) Appropriate hppc.--In this subsection, the term 
        ``appropriate HPPC'' means the HPPC for the principal place of 
        business of the employer or (at the option of an employee) the 
        HPPC serving the place of residence of the employee.
    (c) Payroll Deduction.--
            (1) In general.--Under an agreement under this section 
        between a small employer and a HPPC, if the HPPC notifies the 
        employer that an eligible employee is enrolled in an AHP 
        through the HPPC, the employer shall provide for--
                    (A) the deduction, from the employee's wages or 
                other compensation, of the amount of the premium due 
                (less the amount of any employer contribution), and
                    (B) payment of such amount (including any such 
                contribution) to the HPPC.
        In the case of an employee who is paid wages or other 
        compensation on a monthly or more frequent basis, an employer 
        shall not be required to provide for payment of amounts to a 
        HPPC other than at the same time at which the amounts are 
        deducted from wages or other compensation. In the case of an 
        employee who is paid wages or other compensation less 
        frequently than monthly, an employer may be required to provide 
        for payment of amounts to a HPPC on a monthly basis.
            (2) Additional premiums.--If the sum of the amount of the 
        employer contribution and the amount withheld under paragraph 
        (1) is not sufficient to cover the entire cost of the premiums, 
        the employee shall be responsible for paying directly to the 
        HPPC the difference between the amount of such premiums and 
        such sum.
    (d) Limited Employer Obligations.--Nothing in this section shall be 
construed as--
            (1) requiring an employer to provide directly for 
        enrollment of eligible employees under an accountable health 
        plan or other health plan,
            (2) requiring an employer to make, or preventing an 
        employer from making, information about such plans available to 
        such employees, or
            (3) requiring an employer to make, or preventing an 
        employer from making, an employer contribution for coverage of 
        such individuals under such a plan.

SEC. 1104. ENROLLING INDIVIDUALS IN ACCOUNTABLE HEALTH PLANS THROUGH A 
              HPPC.

    (a) Offer of Enrollment.--
            (1) In general.--Each HPPC shall offer in accordance with 
        this section eligible individuals the opportunity to enroll in 
        an AHP for the HPPC area in which the individual resides.
            (2) Freezing enrollment in insolvent plans.--If a State 
        superintendent of insurance, State insurance commissioner, or 
        other State official with regulatory authority over an AHP has 
        determined that the AHP is insolvent, a HPPC may discontinue 
        offering enrollment in the AHP to individuals not previously 
        enrolled in the plan.
    (b) Enrollment Process.--
            (1) In general.--Each HPPC shall establish an enrollment 
        (and disenrollment) process in accordance with rules 
        established by the Health Care Standards Commission consistent 
        with this subsection.
            (2) Initial enrollment period.--For each eligible 
        individual, at the time the individual first becomes an 
        eligible individual in a HPPC area of a HPPC, there shall be an 
        initial enrollment period (of not less than 30 days) during 
        which the individual may enroll in an AHP.
            (3) General enrollment period.--Each HPPC shall establish 
        an annual period, of not less than 30 days, during which 
        eligible individuals may enroll in an AHP or change the AHP in 
        which the individual is enrolled.
            (4) Special enrollment periods.--In the case of individuals 
        who--
                    (A) through marriage, divorce, birth or adoption of 
                a child, or similar circumstances, experience a change 
                in family composition, or
                    (B) experience a change in employment status 
                (including a significant change in the terms and 
                conditions of employment),
        each HPPC shall provide for a special enrollment period in 
        which the individual is permitted to change the individual or 
        family basis of coverage or the AHP in which the individual is 
        enrolled. The circumstances under which such special enrollment 
        periods are required and the duration of such periods shall be 
        specified by the Health Care Standards Commission.
            (5) Transitional enrollment period.--Each HPPC shall 
        provide for a special transitional enrollment period (during a 
        period beginning in the Fall of 1994 specified by the Health 
        Care Standards Commission) during which eligible individuals 
        may first enroll.
            (6) No duplicate enrollment.--No HPPC shall permit an 
        individual to be enrolled in more than one AHP at a time.
            (7) Individual enrollment of family members permitted.--
        Nothing in this section shall be construed as preventing an 
        eligible individual who is an eligible family member of an 
        eligible employee or other principal enrollee from electing to 
        enroll on an individual basis in a plan.
    (c) Analysis and Distribution of Comparative Information.--
            (1) Analysis of information.--Each HPPC shall analyze the 
        information reported under section 1203(a) on AHPs for which 
        the HPPC is offering enrollment (and may analyze such 
        information on closed AHPs serving residents of the HPPC area) 
        in order to distribute the information under paragraph (2) in a 
        form, consistent with section 1307(a)(2), that permits the 
        direct comparison of different AHPs on the basis of the ability 
        of the AHPs--
                    (A) to maintain and improve clinical health, 
                functional status, and well-being, and
                    (B) to satisfy enrolled individuals.
        Such comparison may also be made to show changes in the 
        performance of AHPs over time.
            (2) Distribution of information.--
                    (A) In general.--Each HPPC shall distribute, to 
                eligible individuals and employers, information, in 
                comparative form, on the prices, health outcomes, and 
                enrollee satisfaction of the different AHPs for which 
                it is offering enrollment and may provide other 
                information pertaining to the quality of such AHPs. 
                Such distribution shall occur at least annually before 
                each general enrollment period. Each HPPC also shall 
                make such information available to other interested 
                persons.
                    (B) Additional information.--Such information shall 
                include--
                            (i) a summary of the analysis of 
                        information collected under paragraph (1) and 
                        information collected under section 1108(a)(2), 
                        and
                            (ii) a breakdown of the portion of AHP 
                        premiums attributable to the HPPC overhead 
                        amount (specified under section 1105(b)(3)).
    (d) Period of Coverage.--
            (1) Initial enrollment period.--In the case of an eligible 
        individual who enrolls with an AHP through a HPPC during an 
        initial enrollment period, coverage under the plan shall begin 
        on such date (not later than the first day of the first month 
        that begins at least 15 days after the date of enrollment) as 
        the Health Care Standards Commission shall specify.
            (2) General enrollment periods.--In the case of an eligible 
        individual who enrolls with an AHP through a HPPC during a 
        general enrollment period, coverage under the plan shall begin 
        on the first day of the first month beginning at least 15 days 
        after the end of such period.
            (3) Special enrollment periods.--
                    (A) In general.--In the case of an eligible 
                individual who enrolls with an AHP during a special 
                enrollment period described in subsection (b)(4), 
                coverage under the plan shall begin on such date (not 
                later than the first day of the first month that begins 
                at least 15 days after the date of enrollment) as the 
                Commission shall specify, except that coverage of 
                family members shall begin as soon as possible on or 
                after the date of the event that gives rise to the 
                special enrollment period.
                    (B) Transitional special enrollment period.--In the 
                case of an eligible individual who enrolls with an AHP 
                during the transitional special enrollment period 
                described in subsection (b)(5), coverage under the plan 
                shall begin on January 1, 1995.
            (4) Minimum period of enrollment.--In order to avoid 
        adverse selection, each HPPC may require, consistent with rules 
        of the Health Care Standards Commission, that enrollments with 
        AHPs be for not less than a specified minimum enrollment period 
        (with exceptions permitted for such exceptional circumstances 
        as the Commission may recognize).

SEC. 1105. RECEIPT OF PREMIUMS.

    (a) Enrollment Charge.--The amount charged by a HPPC for coverage 
under an AHP in a HPPC area is equal to the sum of--
            (1) the amount of the premium applicable to the individual 
        under section 1205(a)(1)(B) for such coverage, and
            (2) the HPPC overhead amount established under subsection 
        (b)(3) for enrollment of individuals in the HPPC area.
    (b) HPPC Overhead Amount.--
            (1) HPPC budget.--Each HPPC shall establish a budget for 
        each year for each HPPC area in accordance with regulations 
        established by the Health Care Standards Commission.
            (2) HPPC overhead percentage.--The HPPC shall compute for 
        each HPPC area an overhead percentage which, when applied for 
        each enrollee unit (whether enrolled on a family or individual 
        basis) to the weighted average of the standard premium amounts 
        for premium classes for enrollment on an individual basis 
        (taking into account any reduction in premiums attributable to 
        low-income assistance under section 2002), will provide for 
        revenues equal to the budget for the HPPC area for the year. 
        Such percentage may in no case exceed 1 percentage point.
            (3) HPPC overhead amount.--The HPPC overhead amount for 
        enrollment, whether on an individual or family basis, in an AHP 
        for a HPPC area for a month is equal to the applicable HPPC 
        overhead percentage (computed under paragraph (2)) multiplied 
        by the weighted average of the standard premium amounts for 
        premium classes for enrollment on an individual basis under the 
        AHP for the month (taking into account any reduction in 
        premiums attributable to low-income assistance under section 
        2002).

SEC. 1106. COORDINATION AMONG HPPCS.

    (a) In General.--The Health Care Standards Commission shall 
establish rules consistent with this section for--
            (1) coordination among HPPCs in cases where small employers 
        are located in one HPPC area and their employees reside in a 
        different HPPC area (and are eligible for enrollment with AHPs 
        located in the other area), and
            (2) coordination among HPPCs in the low-income assistance 
        reconciliation processes under section 1102(e)(1).
The Commission shall establish standards for operational software in 
order to promote coordination among HPPCs under this title.
    (b) Coordination Rules.--Under the rules established under 
subsection (a)(1)--
            (1) HPPC for employer.--The HPPC for the principal place of 
        business of a small employer shall be responsible--
                    (A) for providing information to the employer's 
                employees on AHPs for areas in which employees reside;
                    (B)(i) for enrolling employees under the AHP 
                selected (even if the AHP selected is not in the same 
                HPPC area as the HPPC) and (ii) if the AHP chosen is 
                not in the same HPPC area as the HPPC, for forwarding 
                the enrollment information to the HPPC for the area in 
                which the AHP selected is located; and
                    (C) in the case of premiums to be paid through 
                payroll deduction, or employer contribution, or both, 
                to receive such premiums and forward them to the HPPC 
                for the area in which the AHP selected is located.
            (2) HPPC for employee residence.--The HPPC for the HPPC 
        area in which an employee resides shall be responsible for 
        providing other HPPCs with information concerning AHPs being 
        offered in such HPPC area.
    (c) Coordination of Reconciliation of Low-Income Assistance.--Under 
the rules established under subsection (a)(2), the Commission shall 
provide for such payments among the different HPPCs as the Commission 
determines is necessary in order to assure the equitable distribution 
among AHPs in different HPPC areas of adjustments in premiums and cost-
sharing under section 1205(c) and section 1202(c), respectively.

SEC. 1107. COMPLAINT PROCESS; OMBUDSMAN.

    (a) Complaint Process.--Each HPPC shall establish a process for the 
receipt and disposition of complaints regarding the performance of its 
duties.
    (b) Ombudsman.--
            (1) In general.--Each HPPC shall provide--
                    (A) for the appointment of an ombudsman, and
                    (B) for a reasonable salary and staff for the 
                ombudsman.
            (2) Duties and authorities.--Each ombudsman shall have the 
        duty and authority to do the following:
                    (A) Relating to hppcs.--(i) To investigate 
                complaints regarding the failure of a HPPC to perform 
                its duties.
                    (ii) To assist AHPs and eligible individuals in 
                resolving grievances with the HPPC.
                    (iii) To issue public reports and reports to the 
                Health Care Standards Commission on the HPPC's 
                performance of such duties.
                    (B) Relating to ahps.--(i) To investigate 
                complaints concerning the failure of an AHP to meet the 
                applicable requirements of part 1 of subtitle C.
                    (ii) To assist enrollees in AHPs in resolving 
                grievances with such plans.
                    (iii) To issue public reports and reports to the 
                Health Care Standards Commission on any finding that an 
                AHP has failed to meet the applicable requirements of 
                part 1 of subtitle C.
            (3) Access to information.--The HPPC shall provide the 
        ombudsman and the ombudsman's staff with access to such 
        information as may be necessary to carry out such duties.

SEC. 1108. ENROLLEE SATISFACTION SURVEYS; MONITORING ENROLLEE 
              DISENROLLMENT.

    (a) Enrollee Satisfaction Surveys.--
            (1) In general.--Each HPPC, using a standard survey 
        instrument prescribed by the Health Care Standards Commission, 
        shall collect information on the satisfaction of eligible 
        individuals with--
                    (A) the performance of the HPPC, and
                    (B) the performance of the AHP in which they are 
                enrolled.
            (2) Analysis.--Each HPPC shall--
                    (A) analyze the information collected under 
                paragraph (1),
                    (B) submit to the Health Care Standards Commission 
                an annual report that summarizes such analysis, and
                    (C) make a summary of such analysis available to 
                enrollees under section 1104(c)(2).
    (b) Monitoring Enrollee Disenrollment.--Each HPPC shall monitor 
enrollee disenrollment from AHPs in order to determine whether there is 
a pattern of disenrollment which does not reflect the distribution of 
age, income, health condition, place of residence, and other potential 
risk characteristics of their enrollees. If a HPPC determines that such 
a pattern exists, the HPPC shall provide the Health Care Standards 
Commission with such information on such pattern as the Commission may 
specify and may petition under section 1305(c)(2) for the revocation of 
the registration of the AHP.

              Subtitle C--Accountable Health Plans (AHPs)

           PART 1--REQUIREMENTS FOR ACCOUNTABLE HEALTH PLANS

SEC. 1201. REGISTRATION PROCESS; QUALIFICATIONS.

    (a) In General.--The Health Care Standards Commission shall provide 
a process whereby a health plan (as defined in section 1701(c)(1)) may 
be registered with the Commission by its sponsor as an accountable 
health plan. Such a registered AHP is authorized to allocate its 
resources (except as otherwise specifically required under this 
subtitle) to maximize the health of its enrollees.
    (b) Qualifications.--In order to be eligible to be registered, a 
plan must--
            (1) provide, in accordance with section 1202, for coverage 
        of the uniform set of effective benefits specified by the 
        Commission, for adjustments in cost-sharing in the case of low-
        income individuals, and for meeting quality standards 
        established by the Commission;
            (2) provide, in accordance with section 1203, for the 
        collection and provision to the Commission and HPPCs of certain 
        information regarding its enrollees and provision of services;
            (3) not discriminate in enrollment or benefits, as required 
        under section 1204;
            (4) establish standard premiums for the uniform set of 
        effective benefits, in accordance with section 1205;
            (5) meet financial solvency requirements, in accordance 
        with section 1206;
            (6) meet requirements relating to grievance procedures, 
        physician incentive plans, advance directives, and agent 
        commissions, in accordance with section 1207;
            (7) in the case of an open plan (as defined in section 
        1701(b)(4)(B)), meet certain additional requirements under 
        section 1208 (relating to offering of plans, acceptance of 
        enrollees, and participation as a plan under the medicare 
        program and under the Federal employees health benefits 
        program);
            (8) provide for coordination of benefits with low-income 
        assistance under subtitle A of title II, in accordance with 
        section 1209;
            (9) provide for any required medicare adjustment payments, 
        in accordance with section 1210;
            (10) pay certain premiums to the National Medical Education 
        Fund, in accordance with section 1211; and
            (11) pay registration fees imposed under sections 
        1303(d)(1) and 1304(d).
    (c) Minimum Size for Closed Plans.--No plan may be registered as a 
closed AHP under this section unless the plan covers at least a number 
of employees greater than the applicable number of employees specified 
in or under section 1701(c)(2).

SEC. 1202. SPECIFIED UNIFORM SET OF EFFECTIVE BENEFITS; REDUCTION IN 
              COST-SHARING FOR LOW-INCOME INDIVIDUALS; QUALITY 
              STANDARDS.

    (a) Benefits.--The Health Care Standards Commission shall not 
accept the registration of a health plan as an AHP unless, subject to 
subsection (b), the plan--
            (1) offers only the uniform set of effective benefits, 
        established under section 1302(a)(1);
            (2) has entered into arrangements with a sufficient number, 
        distribution, and variety of providers to assure that the 
        uniform set of effective benefits is--
                    (A) available and accessible to each enrollee, 
                within the area served by the plan, with reasonable 
                promptness and in a manner which assures continuity, 
                and
                    (B) when medically necessary, available and 
                accessible twenty-four hours a day and seven days a 
                week,
        without imposing cost-sharing in excess of the cost-sharing 
        described in paragraph (4);
            (3) provides for the application of coverage standards, 
        with respect to the uniform set of effective benefits, which 
        are disclosed by the plan to plan enrollees (in a manner 
        specified by the Commission) and which are consistent with 
        coverage criteria under section 1302(b) (as interpreted by the 
        Commission);
            (4) if it is a network plan (as defined in section 
        1222(b)(1)), (A) selects providers of each type of good or 
        service offered by the plan based on a competitive criteria, 
        including price, quality, and services offered, and (B) 
        publicizes and makes available, upon request, before the 
        selection of participating providers such competitiive 
        criteria;
            (5)(A) provides, subject to subsection (c), for imposition 
        of uniform cost-sharing, specified under such section as part 
        of such set of benefits; and
            (B) does not permit providers participating in the plan 
        under paragraph (2) to charge for services included in the 
        uniform set of effective benefits services amounts in excess of 
        such cost-sharing; and
            (6) does not accept enrollment of an individual who is 
        enrolled under another AHP unless, as of the effective date of 
        the enrollment, the enrollment under the other plan will be 
        terminated.
    (b) Treatment of Additional Benefits.--
            (1) In general.--Subject to paragraphs (2) and (3), 
        subsection (a) shall not be construed as preventing an AHP from 
        offering benefits in addition to the uniform set of effective 
        benefits, if such additional benefits are offered, and priced, 
        separately from the benefits described in subsection (a).
            (2) No duplicative benefits or coverage of cost-sharing.--
        An AHP or other entity may not offer under paragraph (1) or 
        otherwise any additional benefits or plan that has the effect--
                    (A) of duplicating the benefits required under 
                subsection (a), or
                    (B) of reducing the cost-sharing below the uniform 
                cost-sharing.
        The Health Care Standards Commission may file an action, in any 
        appropriate court, to enjoin an entity (other than an AHP) that 
        violates this paragraph.
    (c) Reduction in Cost-Sharing for Low-Income Individuals.--In the 
case of a low-income individual (as defined in section 2009(a)(1)) 
eligible for cost-sharing assistance under section 2003(a) and enrolled 
with an AHP, the AHP shall reduce the cost-sharing otherwise applicable 
to amounts that are nominal (as specified for purposes of section 
2003(a)(1)).
    (d) Limitation on Imposition of Cost-Sharing.--In order to assure 
that providers of services for which benefits are available through an 
AHP do not impose cost-sharing in excess of that permitted under 
subsection (a)(5), each AHP may not provide payment for services (other 
than emergency services) furnished by a provider with an arrangement 
described in subsection (a)(2) to meet the uniform set of effective 
benefits unless the provider has agreed (in a manner specified by the 
Health Care Standards Commission) not to impose cost-sharing in excess 
of that so specified.
    (e) Quality Standards.--The Health Care Standards Commission shall 
establish standards relating to the minimum level of acceptable quality 
for an AHP's provision of the uniform set of effective benefits. In 
order for a plan to be registered under this subtitle, the plan must 
agree to provide benefits in a manner that complies with such 
standards.

SEC. 1203. COLLECTION AND PROVISION OF STANDARDIZED INFORMATION.

    (a) Provision of Information.--
            (1) In general.--Each AHP must provide the applicable HPPC 
        and the Health Care Standards Commission (at a time, not less 
        frequently than annually, and in an electronic, standardized 
        form and manner specified by the Commission) such information 
        as the Commission determines to be necessary, consistent with 
        this subsection and sections 1104(c) and 1307, to forward 
        payments to AHPs under section 1102(d) and to evaluate the 
        performance of the AHP in providing the uniform set of 
        effective benefits to enrollees in each HPPC area.
            (2) Information to be included.--Subject to paragraph (3), 
        information to be provided under this subsection shall include 
        at least the following:
                    (A) Information on the characteristics of enrollees 
                that may affect their need for or use of health 
                services and the determination of risk-adjustment 
                factors for enrollee units.
                    (B) Information on the types of treatments and 
                outcomes of treatments with respect to the clinical 
                health, functional status, and well-being of enrollees.
                    (C) Information on health care expenditures, volume 
                and prices of procedures, and use of specialized 
                centers of care (for which information is submitted 
                under section 1308).
                    (D) Information on the flexibility permitted by 
                plans to enrollees in their selection of providers.
            (3) Special treatment.--The Commission may waive the 
        provision of such information under paragraph (2), or require 
        such other information, as the Commission finds appropriate in 
        the case of a newly established AHP for which such information 
        is not available.
    (b) Conditioning Certain Provider Payments.--
            (1) In general.--In order to assure the collection of all 
        information required from the direct providers of services for 
        which benefits are available through an AHP, each AHP may not 
        provide payment for services (other than emergency services) 
        furnished by a provider to meet the uniform set of effective 
        benefits unless the provider has given the AHP (or has given 
        directly to the Health Care Standards Commission and the 
        applicable HPPC) standard information (specified by the 
        Commission) respecting the services.
            (2) Forwarding information.--If information under paragraph 
        (1) is given to the AHP, the AHP is responsible for forwarding 
        the information to the Commission and the applicable HPPC.
    (c) Auditing.--Each AHP shall provide, in accordance with standards 
established by the Commission, for the auditing of information provided 
under this section.

SEC. 1204. PROHIBITION OF DISCRIMINATION BASED ON HEALTH STATUS FOR 
              CERTAIN CONDITIONS; LIMITATION ON PRE-EXISTING CONDITION 
              EXCLUSIONS.

    (a) In General.--Except as provided under subsection (b), an AHP 
may not deny, limit, or condition the coverage under (or benefits of) 
the plan based on the health status of an individual, claims experience 
of an individual, receipt of health care by an individual, medical 
history of an individual, receipt of public subsidies by an individual, 
lack of evidence of insurability of an individual, or any other 
characteristic of the individual that may relate to the need for health 
care services.
    (b) Treatment of Preexisting Condition Exclusions for Services.--
            (1) In general.--Subject to the succeeding provisions of 
        this subsection, an AHP may exclude coverage with respect to 
        services related to treatment of a preexisting condition, but 
        the period of such exclusion may not exceed 6 months beginning 
        on the date of coverage under the plan. The exclusion of 
        coverage shall not apply to services furnished to newborns and 
        to pregnant women.
            (2)  Crediting of previous coverage.--
                    (A) In general.--An AHP shall provide that if an 
                enrollee is in a period of continuous coverage (as 
                defined in subparagraph (B)(i)) as of the date of 
                initial coverage under such plan, any period of 
                exclusion of coverage with respect to a preexisting 
                condition for such services or type of services shall 
                be reduced by 1 month for each month in the period of 
                continuous coverage.
                    (B) Definitions.--As used in this paragraph:
                            (i) Period of continuous coverage.--
                                    (I) In general.--The term ``period 
                                of continuous coverage'' means the 
                                period beginning on the date an 
                                individual is enrolled under an AHP and 
                                ends on the date the individual is not 
                                so enrolled for a continuous period of 
                                more than 3 months.
                                    (II) Transitional amnesty at time 
                                of initial enrollment.--For purposes of 
                                this clause, each individual who 
                                enrolls in an AHP before July 1, 1995, 
                                is considered to have had a period of 
                                continuous coverage during the 6 months 
                                ending January 1, 1995.
                            (ii) Preexisting condition.--The term 
                        ``preexisting condition'' means, with respect 
                        to coverage under an AHP, a condition which has 
                        been diagnosed or treated during the 3-month 
                        period ending on the day before the first date 
                        of such coverage (without regard to any waiting 
                        period).
            (3) Limitation to uniform set of effective benefits.--This 
        subsection shall not apply to treatment which is not within the 
        uniform set of effective benefits.
            (4) Special rule for certain health maintenance 
        organizations.--A health maintenance organization that is an 
        AHP shall not be considered as failing to meet the requirements 
        of section 1301 of the Public Health Service Act 
        notwithstanding that it provides for an exclusion of the type 
        described in paragraph (1) so long as such exclusion is applied 
        consistent with the previous provisions of this subsection.

SEC. 1205. USE OF STANDARD PREMIUMS.

    (a) Standard Premiums for Open AHPs.--
            (1) In general.--
                    (A) Establishment.--Subject to subsection (c), each 
                open AHP shall establish a standard premium for the 
                uniform set of effective benefits within each HPPC area 
                in which the plan is offered.
                    (B) Applicable premium.--The amount of premium 
                applicable for all individuals within a premium class 
                (established under paragraph (2)) is the standard 
                premium amount multiplied by the premium class factor 
                specified by the Commission for that class under 
                paragraph (2)(B).
                    (C) Uniformity within a year.--Within a HPPC area 
                for individuals within a premium class for months in a 
                calendar year, the standard premium for all individuals 
                in the class for each month shall be the same.
            (2) Premium classes.--
                    (A) In general.--The Health Care Standards 
                Commission shall establish premium classes--
                            (i) based on types of enrollment (described 
                        in section 1701(c)(6)), and
                            (ii) within each type of enrollment, based 
                        on the age of the principal enrollee (or based 
                        on the age of another family member of such 
                        enrollee in such cases as the Commission may 
                        provide).
                In carrying out clause (ii), the Commission shall 
                establish reasonable age bands within which premium 
                amounts will not vary for a type of enrollment.
                    (B) Premium class factors.--
                            (i) In general.--For each premium class 
                        established under subparagraph (A), the Health 
                        Care Standards Commission shall establish a 
                        premium class factor that reflects, subject to 
                        clause (ii), the relative actuarial value of 
                        benefits for that class compared to the 
                        actuarial value of benefits for an average 
                        class. The weighted average of the premium 
                        class factors shall be 1. Such premium class 
                        factors shall be computed based on the 
                        actuarial value of benefits for such population 
                        group within the class (which shall include the 
                        population eligible to enroll with open AHPs 
                        through HPPCs) as the Commission determines to 
                        be appropriate.
                            (ii) Limit on variation in premium class 
                        factors within a type of enrollment.--The 
                        highest premium class factor within a type of 
                        enrollment may not exceed twice the lowest 
                        premium class factor for that type of 
                        enrollment. The previous sentence shall not 
                        apply to premiums imposed pursuant to a risk-
                        sharing contract under section 1876 of the 
                        Social Security Act.
            (3) Methodology.--The amount of premiums forwarded to AHPs 
        is adjusted in accordance with section 1102(d)(1).
    (b) Standard Premiums for Closed AHPs.--
            (1) Establishment.--Subject to subsection (c) and paragraph 
        (3), each closed AHP shall establish a standard premium for the 
        uniform set of effective benefits within each HPPC area in 
        which the plan is offered.
            (2) Application by premium class.--Subject to paragraph 
        (3)--
                    (A) the amount of premium applicable for all 
                individuals within a premium class is the standard 
                premium amount multiplied by the premium class factor 
                specified by the Commission for that class under 
                subsection (a)(2)(B), and
                    (B) within a HPPC area for individuals within a 
                premium class, the standard premium for all individuals 
                in the premium class shall be the same.
            (3) Community rating permitted.--
                    (A) Same rates within type of enrollment without 
                regard to age.--A closed AHP may elect (in a manner 
                specified by the Health Care Standards Commission) to 
                apply this subsection on the basis of type of 
                enrollment rather than premium class. In such case, all 
                references in this subsection to premium class are 
                deemed a reference to type of enrollment and the 
                reference to premium class factor (for a type of 
                enrollment) is the weighted average of such factors for 
                the plan within the type of enrollment.
                    (B) Community rating across hppc areas.--A closed 
                AHP may elect (in a manner specified by the Commission) 
                to apply this subsection by treating two or more HPPC 
                areas as a single HPPC area. In such case, subject to 
                subparagraph (A), the premium class factor to be 
                applied shall be the weighted average of such factors 
                for the plan for the HPPC areas involved.
    (c) Adjustment of Premiums for Low-Income Individuals.--
            (1) Very low-income individuals.--In the case of a very 
        low-income individual (as defined in section 2009(a)(3)) 
        eligible for premium assistance under section 2002 and enrolled 
        with an AHP--
                    (A) the AHP shall adjust the premium otherwise 
                applicable so that the premium does not exceed the sum 
                of--
                            (i) the base Federal premium amount (as 
                        defined in section 2005(a)(1)) for enrollment 
                        under the plan, and
                            (ii) 10 percent of the amount (if any) by 
                        which (I) the premium for the AHP in which the 
                        individual is enrolled exceeds (II) the 
                        reference premium rate (as defined in section 
                        2009(c)(4)); and
                    (B) the AHP shall credit against the premium owed 
                the applicable Federal assistance amount (as defined in 
                section 2009(c)(1)) provided the plan under section 
                2002(a)(1)(B).
            (2) Moderately low-income individuals.--In the case of a 
        moderately low-income individual (as defined in section 
        2009(a)(2)) eligible for premium assistance under section 2002 
        and enrolled with an AHP--
                    (A) the AHP shall adjust the premium otherwise 
                applicable so that the premium does not exceed the sum 
                of--
                            (i) applicable low-income premium amount 
                        (as defined in section 2009(c)(2)) for 
                        enrollment under the plan, plus
                            (ii) the individual responsibility 
                        percentage (as defined in section 2009(c)(5), 
                        or 10 percentage points, whichever is greater) 
                        of the amount by which (I) the premium for the 
                        AHP in which the individual is enrolled exceeds 
                        (II) the reference premium rate (as defined in 
                        section 2009(c)(4)) for the individual; and
                    (B) the AHP shall credit against the premium owed 
                the applicable Federal assistance amount (as defined in 
                section 2009(c)(1)) provided the plan under section 
                2002(a)(2)(B).
        If the premium reduction under subparagraph (A) is not a 
        multiple of $1, the Commission may provide for the rounding of 
        such reduction to a multiple of $1.

SEC. 1206. FINANCIAL SOLVENCY REQUIREMENTS.

    (a) Solvency Protection.--
            (1) For insured plans.--In the case of an AHP that is an 
        insured plan (as defined by the Health Care Standards 
        Commission) and is issued in a State, in order for the plan to 
        be registered under this subtitle the Commission must find that 
        the State has established satisfactory protection of enrollees 
        with respect to potential insolvency of the plan.
            (2) For other plans.--In the case of an AHP that is not an 
        insured plan, the Commission may require the plan to provide 
        for such bond or provide other satisfactory assurances that 
        enrollees under the plan are protected with respect to 
        potential insolvency of the plan.
    (b) Protection Against Provider Claims.--In the case of a failure 
of an AHP to make payments with respect to the uniform set of effective 
benefits, under standards established by the Commission, an individual 
who is enrolled under the plan is not liable to any health care 
provider or practitioner with respect to the provision of health 
services within such uniform set for payments in excess of the amount 
for which the enrollee would have been liable if the plan were to have 
made payments in a timely manner.

SEC. 1207. GRIEVANCE MECHANISMS; ENROLLEE PROTECTIONS; WRITTEN POLICIES 
              AND PROCEDURES RESPECTING ADVANCE DIRECTIVES; AGENT 
              COMMISSIONS.

    (a) Effective Grievance Procedures.--
            (1) In general.--Each AHP shall provide for effective 
        procedures for hearing and resolving grievances between the 
        plan and individuals enrolled under the plan, which procedures 
        meet standards specified by the Health Care Standards 
        Commission.
            (2) Access of ombudsman to information.--Each AHP shall 
        provide the ombudsman, appointed under section 1107(b) for the 
        HPPC area in which the AHP operates, and the ombudsman's staff 
        with access to such information as may be necessary for the 
        ombudsman to carry out duties under such section.
    (b) Restriction on Certain Physician Incentive Plans.--
            (1) In general.--A health plan may not be registered as an 
        AHP if it operates a physician incentive plan (as defined in 
        paragraph (2)) unless the requirements specified in clauses (i) 
        through (iii) of section 1876(i)(8)(A) of the Social Security 
        Act are met (in the same manner as they apply to eligible 
        organizations under section 1876 of such Act).
            (2) Physician incentive plan defined.--In this subsection, 
        the term ``physician incentive plan'' means any compensation or 
        other financial arrangement between the AHP and a physician or 
        physician group that may directly or indirectly have the effect 
        of reducing or limiting services provided with respect to 
        individuals enrolled under the plan.
    (c) Written Policies and Procedures Respecting Advance 
Directives.--A health plan may not be registered as an AHP unless the 
plan meets the requirements of section 1866(f) of the Social Security 
Act (relating to maintaining written policies and procedures respecting 
advance directives), insofar as such requirements would apply to the 
plan if the plan were an eligible organization.
    (d) Payment of Agent Commissions.--An AHP--
            (1) may pay a commission or other remuneration to an agent 
        or broker in marketing the plan to individuals or groups, but
            (2) may not vary such remuneration based, directly or 
        indirectly, on the anticipated or actual claims experience 
        associated with the group or individuals to which the plan was 
        sold.

SEC. 1208. ADDITIONAL REQUIREMENTS OF OPEN AHPS.

    (a) Requirement of Agreement with HPPC.--In the case of a health 
plan which is an open plan (as defined in section 1701(b)(4)(B)), in 
order to be registered as an AHP the plan must have in effect an 
agreement (described in section 1102) with each HPPC for each HPPC area 
in which it is offered.
    (b) Requirement of Open Enrollment.--
            (1) In general.--In the case of a health plan which is an 
        open health plan, in order to be registered as an AHP the plan 
        must, subject to paragraph (3), not reject the enrollment of 
        any eligible individual whom a HPPC is authorized to enroll 
        under an agreement referred to in subsection (a) if the 
        individual applies for enrollment during an enrollment period.
            (2) Limitation on termination.--Subject to paragraph (3), 
        coverage of eligible individuals under an open AHP may not be 
        refused nor terminated except for--
                    (A) nonpayment of premiums,
                    (B) fraud or misrepresentation, or
                    (C) termination of the plan at the end of a year 
                (after notice and in accordance with standards 
                established by the Health Care Standards Commission).
            (3) Treatment of network plans.--
                    (A) Geographic limitations.--
                            (i) In general.--An AHP which is a network 
                        plan (as defined in subparagraph (D)) may deny 
                        coverage under the plan to an eligible 
                        individual who is located outside a service 
                        area of the plan, but only if such denial is 
                        applied uniformly, without regard to health 
                        status or insurability of individuals.
                            (ii) Service areas.--The Health Care 
                        Standards Commission shall establish standards 
                        for the designation by network plans of service 
                        areas in order to prevent discrimination based 
                        on health status of individuals or their need 
                        for health services.
                    (B) Size limits.--Subject to subparagraph (C), an 
                AHP which is a network plan may apply to the Commission 
                to cease enrolling eligible individuals under the AHP 
                (or in a service area of the plan) if--
                            (i) it ceases to enroll any new eligible 
                        individuals, and
                            (ii) it can demonstrate that its financial 
                        or administrative capacity to serve previously 
                        covered groups or individuals (and additional 
                        individuals who will be expected to enroll 
                        because of affiliation with such previously 
                        covered groups or individuals) will be impaired 
                        if it is required to enroll other eligible 
                        individuals.
                    (C) First-come-first-served.--A network plan is 
                only eligible to exercise the limitations provided for 
                in subparagraphs (A) and (B) if it provides for 
                enrollment of eligible individuals on a first-come-
                first-served basis, except that the plan, under rules 
                of the Commission, shall provide preference for 
                eligible individuals who are not eligible to enroll in 
                another network plan.
                    (D) Network plan.--In this paragraph, the term 
                ``network plan'' means an eligible organization (as 
                defined in section 1876(b) of the Social Security Act) 
                and includes a similar organization, specified in 
                regulations of the Commission, that requires a 
                limitation on enrollment of employer groups or 
                individuals due to the manner in which the organization 
                provides health care services.
    (c) Requirement of Participation in Medicare Risk-Based 
Contracting.--
            (1) In general.--In the case of a health plan which is an 
        open health plan and which is an eligible organization (as 
        defined in section 1876(b) of the Social Security Act), in 
        order to be registered as an AHP the plan must enter into a 
        risk-sharing contract under section 1876 of the Social Security 
        Act for the offering of benefits to medicare beneficiaries in 
        accordance with such section.
            (2) Expansion of medicare select program.--Subsection (c) 
        of section 4358 of the Omnibus Budget Reconciliation Act of 
        1990 (104 Stat. 1388-137) is amended by striking ``only apply 
        in 15 States'' and all that follows through the end and 
        inserting ``on and after January 1, 1992.''.
            (3) Eligibility for payment.--An AHP that meets the 
        requirement of paragraph (1) is eligible to receive adjustment 
        payments under section 1210(b).
    (d) Participation in FEHBP.--
            (1) In general.--In the case of a health plan which is an 
        open health plan, in order to be registered as an AHP the plan 
        must have entered into an agreement with the Office of 
        Personnel Management to offer a health plan to Federal 
        employees and annuitants, and family members, under the Federal 
        Employees Health Benefits Program under chapter 89 of title 5, 
        United States Code, under the same terms and conditions (other 
        than the amount of premiums) offered by the AHP for enrollment 
        of eligible individuals through HPPCs.
            (2) Change in contribution and other fehbp rules.--
        Notwithstanding any other provision of law, effective January 
        1, 1995--
                    (A) enrollment shall not be permitted under a 
                health benefits plan under chapter 89 of title 5, 
                United States Code, unless the plan is an AHP; and
                    (B) the amount of the Federal Government 
                contribution under such chapter--
                            (i) for any premium class shall be the same 
                        for all AHPs in a HPPC area,
                            (ii) for any individual in a premium class 
                        shall not exceed the base individual premium 
                        (as defined in section 2009(c)(3)), and
                            (iii) in the aggregate for any fiscal year 
                        shall be equal to the aggregate amount of 
                        Government contributions that would have been 
                        made but for this subsection.

SEC. 1209. COORDINATION OF BENEFITS WITH LOW-INCOME ASSISTANCE.

    (a) In General.--Each AHP shall provide for--
            (1) acceptance of information, electronically, from the 
        Health Care Standards Commission on the eligibility of 
        individuals (and family members) for low-income assistance 
        under subtitle A of title II,
            (2) an adjustment, in accordance with sections 1202(c) and 
        1205(c), in the cost-sharing or premium amounts otherwise 
        imposed to reflect the cost-sharing and premium assistance 
        provided under such subtitle, and
            (3) such reconciliation payments as may be required under 
        section 1102(e).
    (b) Requirement of Special Agreements for Non-Open Plans.--In the 
case of a health plan which is not an open health plan, in order to be 
registered as an AHP the plan must have in effect a special agreement 
(described in section 1102(a)(2)) with each HPPC for each HPPC area in 
which it is offered.

SEC. 1210. ADDITIONAL REQUIREMENT OF CERTAIN AHPS.

    (a) Medicare Adjustment Payment Required.--Each AHP which is not 
described in section 1208(c)(1) shall provide for payment to the Health 
Care Standards Commission of such amounts as may be required as to put 
the plan in the same financial position as the AHP would be in if it 
was required to meet the requirement of such section.
    (b) Redistribution of Payments to Plans.--The Commission shall 
provide for the distribution of amounts to be paid under subsection (a) 
among AHPs meeting the requirement of section 1208(c)(1) in such manner 
as reflects the relative financial impact of such requirement among 
such plans.

SEC. 1211. FUNDING FOR APPROVED MEDICAL RESIDENCY TRAINING PROGRAMS AND 
              PHYSICIAN RETRAINING PROGRAMS.

    (a) Requirement.--Each AHP shall provide for payment of 1 percent 
of gross premium receipts (as defined in subsection (c)) to the 
National Medical Education Fund established under section 3005.
    (b) Payment Method.--
            (1) Open ahps.--In the case of an open AHP, the payment 
        under subsection (a) shall be made through a reduction of 1 
        percent in the payments made by each HPPC to the AHP.
            (2) Closed ahps.--In the case of a closed AHP, the payment 
        under subsection (a) shall be made on a monthly (or other 
        basis) as specified by the Commission. Failure of a closed AHP 
        to make such a payment on a timely basis is grounds for 
        revocation of the registration of the AHP under this part.
    (c) Gross Premium Receipts Defined.--In this section, the term 
``gross premium receipts'' means, with respect to--
            (1) an open AHP, the payment amounts otherwise payable by a 
        HPPC to the AHP, or
            (2) a closed AHP, an actuarial equivalent value (as 
        established in accordance with rules of the Commission, similar 
        to the rules established for purposes of section 4980C(d)(1) of 
        the Internal Revenue Code of 1986).

     PART 2--PREEMPTION OF STATE LAWS FOR ACCOUNTABLE HEALTH PLANS

SEC. 1221. PREEMPTION FROM STATE BENEFIT MANDATES.

    Effective as of January 1, 1995, no State shall establish or 
enforce any law or regulation that--
            (1) requires the offering, as part of an AHP, of any 
        services, category of care, or services of any class or type of 
        provider that is different from the uniform set of effective 
        benefits;
            (2) specifies the individuals to be covered under an AHP or 
        the duration of such coverage; or
            (3) requires a right of conversion from a group health plan 
        that is an AHP to an individual health plan.

SEC. 1222. PREEMPTION OF STATE LAW RESTRICTIONS ON NETWORK PLANS.

    (a) Limitation on Restrictions on Network Plans.--Effective as of 
January 1, 1995--
            (1) a State may not prohibit or limit a network plan from 
        including incentives for enrollees to use the services of 
        participating providers;
            (2) a State may not prohibit or limit a network plan from 
        limiting coverage of services to those provided by a 
        participating provider;
            (3) a State may not prohibit or limit the negotiation of 
        rates and forms of payments for providers under a network plan;
            (4) a State may not prohibit or limit a network plan from 
        limiting the number of participating providers;
            (5) a State may not prohibit or limit a network plan from 
        requiring that services be provided (or authorized) by a 
        practitioner selected by the enrollee from a list of available 
        participating providers; and
            (6) a State may not prohibit or limit the corporate 
        practice of medicine.
    (b) Definitions.--In this section:
            (1) Network plan.--The term ``network plan'' means an AHP--
                    (A) which--
                            (i) limits coverage of the uniform set of 
                        effective benefits to those provided by 
                        participating providers, or
                            (ii) provides, with respect to such 
                        services provided by persons who are not 
                        participating providers, for cost-sharing which 
                        are in excess of those permitted under the 
                        uniform set of effective benefits for 
                        participating providers;
                    (B) which has a sufficient number and distribution 
                of participating providers to assure that the uniform 
                set of effective benefits (i) is available and 
                accessible to each enrollee, within the area served by 
                the plan, with reasonable promptness and in a manner 
                which assures continuity, and (ii) when medically 
                necessary, is available and accessible twenty-four 
                hours a day and seven days a week; and
                    (C) which provides benefits for the uniform set of 
                effective benefits not furnished by participating 
                providers if the services are medically necessary and 
                immediately required because of an unforeseen illness, 
                injury, or condition.
            (2) Participating provider.--The term ``participating 
        provider'' means an entity or individual which provides, sells, 
        or leases health care services under a contract with a network 
        plan, which contract does not permit--
                    (A) cost-sharing in excess of the cost-sharing 
                permitted under the uniform set of effective benefits, 
                and
                    (B) any enrollee charges (for such services covered 
                under such set) in excess of such cost-sharing.

SEC. 1223. PREEMPTION OF STATE LAWS RESTRICTING UTILIZATION REVIEW 
              PROGRAMS.

    (a) In General.--Effective January 1, 1995, no State law or 
regulation shall prohibit or regulate activities under a utilization 
review program (as defined in subsection (b)).
    (b) Utilization Review Program Defined.--In this section, the term 
``utilization review program'' means a system of reviewing the medical 
necessity and appropriateness of patient services (which may include 
inpatient and outpatient services) using specified guidelines. Such a 
system may include preadmission certification, the application of 
practice guidelines, continued stay review, discharge planning, 
preauthorization of ambulatory procedures, and retrospective review.

                      PART 3--ANTITRUST PROVISIONS

SEC. 1231. PUBLICATION OF GUIDELINES FOR ACCOUNTABLE HEALTH PLANS.

    (a) In General.--The President shall provide for the development 
and publication of explicit guidelines on the application of Federal 
antitrust laws to AHPs. The guidelines shall be designed to facilitate 
AHP development and operation, consistent with the Federal antitrust 
laws.
    (b) Review Process.--The Attorney General shall establish a review 
process under which an AHP (or organization that proposes to establish 
an AHP) may obtain a prompt opinion from the Department of Justice on 
the plan's conformity with the Federal antitrust laws.
    (c) Antitrust Laws Defined.--In this section, the term ``antitrust 
laws'' has the meaning given it in subsection (a) of the first section 
of the Clayton Act (15 U.S.C. 12(a)), except that such term includes 
section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the 
extent such section applies to unfair methods of competition.

SEC. 1232. ISSUANCE OF HEALTH CARE CERTIFICATES OF PUBLIC ADVANTAGE.

    (a) Issuance and Effect of Certificate.--The Attorney General, 
after consultation with the Secretary, shall issue in accordance with 
this section a certificate of public advantage to each eligible health 
care joint venture that complies with the requirements in effect under 
this section on or after the expiration of the 1-year period that 
begins on the date of the enactment of this Act (without regard to 
whether or not the Attorney General has promulgated regulations to 
carry out this section by such date). Such venture, and the parties to 
such venture, shall not be liable under any of the antitrust laws for 
conduct described in such certificate and engaged in by such venture if 
such conduct occurs while such certificate is in effect.
    (b) Requirements Applicable to Issuance of Certificates.--
            (1) Standards to be met.--The Attorney General shall issue 
        a certificate to an eligible health care joint venture if the 
        Attorney General finds that--
                    (A) the benefits that are likely to result from 
                carrying out the venture outweigh the reduction in 
                competition (if any) that is likely to result from the 
                venture, and
                    (B) such reduction in competition is reasonably 
                necessary to obtain such benefits.
            (2) Factors to be considered.--
                    (A) Weighing of benefits against reduction in 
                competition.--For purposes of making the finding 
                described in paragraph (1)(A), the Attorney General 
                shall consider whether the venture is likely --
                            (i) to maintain or to increase the quality 
                        of health care,
                            (ii) to increase access to health care,
                            (iii) to achieve cost efficiencies that 
                        will be passed on to health care consumers, 
                        such as economies of scale, reduced transaction 
                        costs, and reduced administrative costs,
                            (iv) to preserve the operation of health 
                        care facilities located in underserved 
                        geographical areas,
                            (v) to improve utilization of health care 
                        resources, and
                            (vi) to reduce inefficient health care 
                        resource duplication.
                    (B) Necessity of reduction in competition.--For 
                purposes of making the finding described in paragraph 
                (1)(B), the Attorney General shall consider--
                            (i) the ability of the providers of health 
                        care services that are (or likely to be) 
                        affected by the health care joint venture and 
                        the entities responsible for making payments to 
                        such providers to negotiate societally optimal 
                        payment and service arrangements,
                            (ii) the effects of the health care joint 
                        venture on premiums and other charges imposed 
                        by the entities described in clause (i), and
                            (iii) the availability of equally 
                        efficient, less restrictive alternatives to 
                        achieve the benefits that are intended to be 
                        achieved by carrying out the venture.
    (c) Establishment of Criteria and Procedures.--Subject to 
subsections (d) and (e), not later than 1 year after the date of the 
enactment of this Act, the Attorney General and the Secretary shall 
establish jointly by rule the criteria and procedures applicable to the 
issuance of certificates under subsection (a). The rules shall specify 
the form and content of the application to be submitted to the Attorney 
General to request a certificate, the information required to be 
submitted in support of such application, the procedures applicable to 
denying and to revoking a certificate, and the procedures applicable to 
the administrative appeal (if such appeal is authorized by rule) of the 
denial and the revocation of a certificate. Such information may 
include the terms of the health care joint venture (in the case of a 
venture in existence as of the time of the application) and 
implementation plan for the joint venture.
    (d) Eligible Health Care Joint Venture.--To be an eligible health 
care joint venture for purposes of this section, a health care joint 
venture shall submit to the Attorney General an application that 
complies with the rules in effect under subsection (c) and that 
includes--
            (1) an agreement by the parties to the venture that the 
        venture will not foreclose competition by entering into 
        contracts that prevent health care providers from providing 
        health care in competition with the venture,
            (2) an agreement that the venture will submit to the 
        Attorney General annually a report that describes the 
        operations of the venture and information regarding the impact 
        of the venture on health care and on competition in health 
        care, and
            (3) an agreement that the parties to the venture will 
        notify the Attorney General and the Secretary of the 
        termination of the venture not later than 30 days after such 
        termination occurs.
    (e) Review of Applications for Certificates.--Not later than 30 
days after an eligible health care joint venture submits to the 
Attorney General an application that complies with the rules in effect 
under subsection (c) and with subsection (d), the Attorney General 
shall issue or deny the issuance of such certificate. If, before the 
expiration of such 30-day period, the Attorney General fails to issue 
or deny the issuance of such certificate, the Attorney General shall be 
deemed to have issued such certificate.
    (f) Revocation of Certificate.--Whenever the Attorney General finds 
that a health care joint venture with respect to which a certificate is 
in effect does not meet the standards specified in subsection (b), the 
Attorney General shall revoke such certificate.
    (g) Written Reasons; Judicial Review.--
            (1) Denial and revocation of certificates.--If the Attorney 
        General denies an application for a certificate or revokes a 
        certificate, the Attorney General shall include in the notice 
        of denial or revocation a statement of the reasons relied upon 
        for the denial or revocation of such certificate.
            (2) Judicial review.--
                    (A) After administrative proceeding.--(i) If the 
                Attorney General denies an application submitted or 
                revokes a certificate issued under this section after 
                an opportunity for hearing on the record, then any 
                party to the health care joint venture involved may 
                commence a civil action, not later than 60 days after 
                receiving notice of the denial or revocation, in an 
                appropriate district court of the United States for 
                review of the record of such denial or revocation.
                    (ii) As part of the Attorney General's answer, the 
                Attorney General shall file in such court a certified 
                copy of the record on which such denial or revocation 
                is based. The findings of fact of the Attorney General 
                may be set aside only if found to be unsupported by 
                substantial evidence in such record taken as a whole.
                    (B) Denial or revocation without administrative 
                proceeding.--If the Attorney General denies an 
                application submitted or revokes a certificate issued 
                under this section without an opportunity for hearing 
                on the record, then any party to the health care joint 
                venture involved may commence a civil action, not later 
                than 60 days after receiving notice of the denial or 
                revocation, in an appropriate district court of the 
                United States for de novo review of such denial or 
                revocation.
    (h) Exemption.--A person shall not be liable under any of the 
antitrust laws for conduct necessary--
            (1) to prepare, agree to prepare, or attempt to agree to 
        prepare an application to request a certificate under this 
        section, or
            (2) to attempt to enter into any health care joint venture 
        with respect to which such a certificate is in effect.
    (i) Definitions.--In this section:
            (1) The term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition; and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A).
            (2) The term ``certificate'' means a certificate of public 
        advantage authorized to be issued under subsection (a).
            (3) The term ``health care joint venture'' means an 
        agreement (whether existing or proposed) between 2 or more 
        providers of health care services that is entered into solely 
        for the purpose of sharing in the provision of health care 
        services and that involves substantial integration or financial 
        risk-sharing between the parties, but does not include the 
        exchanging of information, the entering into of any agreement, 
        or the engagement in any other conduct that is not reasonably 
        required to carry out such agreement.
            (4) The term ``health care services'' includes services 
        related to the delivery or administration of health care 
        services.
            (5) The term ``liable'' means liable for any civil or 
        criminal violation of the antitrust laws.
            (6) The term ``provider of health care services'' means any 
        individual or entity 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.

              Subtitle D--Health Care Standards Commission

SEC. 1301. ESTABLISHMENT OF HEALTH CARE STANDARDS COMMISSION.

    (a) In General.--There is hereby established, as an independent 
agency in the Executive Branch, a Health Care Standards Commission (in 
this title referred to as the ``Commission'').
    (b) Composition and Terms.--
            (1) Appointment.--The Commission shall be composed of 5 
        members appointed by the President by and with the advice and 
        consent of the Senate. In appointing members to the Commission, 
        the President shall provide that all members shall demonstrate 
        experience with and knowledge of the health care system.
            (2) Chairman.--The President shall designate one of the 
        members to be Chairman of the Commission.
            (3) Terms.--Each member of the Commission shall be 
        appointed for a term of 7 years, except that, of the members 
        first appointed, 1 shall each be appointed for terms of 3, 4, 
        5, 6, and 7 years, as designated by the President at the time 
        of appointment. Members appointed to fill vacancies shall serve 
        for the remainder of the terms of the vacating members.
            (4) Party affiliation.--Not more than 3 members of the 
        Commission shall be of the same political party.
            (5) Other employment prohibited.--A member of the 
        Commission may not, during the term as a member, engage in any 
        other business, vocation, profession, or employment.
            (6) Quorum.--Three members of the Commission shall 
        constitute a quorum, except that 2 members may hold hearings.
            (7) Meetings.--The Commission shall meet at the call of the 
        Chairman or 3 members of the Commission.
            (8) Compensation.--Each member of the Commission shall be 
        entitled to compensation at the rate provided for level II of 
        the Executive Schedule, subject to such amounts as are provided 
        in advance in appropriation Acts.
    (c) Personnel.--
            (1) In general.--The Commission shall appoint an Executive 
        Director and such additional officers and employees as it 
        considers necessary to carry out its functions under this Act. 
        Except as otherwise provided in any other provision of law, 
        such officers and employees shall be appointed, and their 
        compensation shall be fixed, in accordance with title 5, United 
        States Code.
            (2) Experts and consultants.--The Commission may procure 
        the services of experts and consultants in accordance with the 
        provisions of section 3109 of title 5, United States Code.
    (d) Use of U.S. Mail.--The Commission may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the United States.

SEC. 1302. SPECIFICATION OF UNIFORM SET OF EFFECTIVE BENEFITS.

    (a) Specification of Uniform Set of Effective Benefits; 
Congressional Consideration.--
            (1) Transmittal of recommendations to congress.--
                    (A) For 1995.--The Commission shall transmit to 
                Congress, by not later than July 1, 1994, 
                recommendations for the uniform set of effective 
                benefits to apply under this title for 1995 and, 
                subject to subparagraph (B), subsequent years.
                    (B) Later years.--The Commission may transmit to 
                Congress, by not later than July 1 of a subsequent 
                year, recommendations for changes in the uniform set of 
                effective benefits to apply under this title for the 
                following year (and, subject to this subparagraph, 
                subsequent years).
                    (C) Congressional consideration.--
                            (i) In general.--Recommendations 
                        transmitted under subparagraph (A) or (B) shall 
                        apply under this title unless a joint 
                        resolution (described in clause (ii)) 
                        disapproving such recommendations is enacted, 
                        in accordance with the provisions of clause 
                        (iii), before the end of the 44-day period 
                        beginning on the date on which such 
                        recommendations were transmitted. For purposes 
                        of applying the preceding sentence and clauses 
                        (ii) and (iii), the days on which either House 
                        of Congress is not in session because of an 
                        adjournment of more than three days to a day 
                        certain shall be excluded in the computation of 
                        a period.
                            (ii) Joint resolution of disapproval.--A 
                        joint resolution described in this clause means 
                        only a joint resolution which is introduced 
                        within the 10-day period beginning on the date 
                        on which the Commission transmits 
                        recommendations under subparagraph (A) or (B) 
                        and--
                                    (I) which does not have a preamble;
                                    (II) the matter after the resolving 
                                clause of which is as follows: ``That 
                                Congress disapproves the 
                                recommendations of the Health Care 
                                Standards Commission concerning the 
                                uniform set of effective benefits as 
                                transmitted by the Commission on 
                                ______________.'', the blank space 
                                being filled in with the appropriate 
                                date; and
                                    (III) the title of which is as 
                                follows: ``Joint resolution 
                                disapproving the recommendations of the 
                                Health Care Standards Commission 
                                concerning the uniform set of effective 
                                benefits as transmitted by the 
                                Commission on ______________.'', the 
                                blank space being filled in with the 
                                appropriate date.
                            (iii) Procedures for consideration of 
                        resolution of disapproval.--Subject to clause 
                        (iv), the provisions of section 2908 (other 
                        than subsection (a)) of the Defense Base 
                        Closure and Realignment Act of 1990 shall apply 
                        to the consideration of a joint resolution 
                        described in clause (ii) in the same manner as 
                        such provisions apply to a joint resolution 
                        described in section 2908(a) of such Act.
                            (iv) Special rules.--For purposes of 
                        applying clause (iii) with respect to such 
                        provisions--
                                    (I) any reference to the Committee 
                                on Armed Services of the House of 
                                Representatives shall be deemed a 
                                reference to the Committee on Energy 
                                and Commerce of the House of 
                                Representatives and any reference to 
                                the Committee on Armed Services of the 
                                Senate shall be deemed a reference to 
                                the Committee on Finance of the Senate; 
                                and
                                    (II) any reference to the date on 
                                which the President transmits a report 
                                shall be deemed a reference to the date 
                                on which the Commission transmits a 
                                recommendation under subparagraph (A) 
                                or (B).
                    (D) Treatment of disapproval.--
                            (i) For 1995.--If recommendations 
                        transmitted under subparagraph (A) are 
                        disapproved by joint resolution under 
                        subparagraph (C), then the Commission shall 
                        transmit to Congress, by not later than 15 days 
                        after the date of adoption of the resolution, 
                        recommendations for the uniform set of 
                        effective benefits to apply under this title 
                        for 1995 and, subject to subparagraph (B), 
                        subsequent years. The provisions of 
                        subparagraph (C) shall apply to such new 
                        recommendations in the same manner as they 
                        applied to the recommendations previously 
                        transmitted under subparagraph (A), except that 
                        any time period specified in such subparagraph 
                        shall be half the period otherwise provided.
                            (ii) For subsequent years.--If 
                        recommendations transmitted under subparagraph 
                        (B) are disapproved by joint resolution under 
                        subparagraph (C), then such recommendations 
                        shall not take effect and the recommendations 
                        not previously disapproved under this paragraph 
                        shall continue in effect until otherwise 
                        changed.
            (2) Specification of all medically appropriate 
        treatments.--
                    (A) Medically appropriate treatments.--The uniform 
                set of effective benefits submitted under paragraph (1) 
                shall include such categories of health care services 
                that the Commission determines will provide for the 
                delivery of medically appropriate treatment by AHPs.
                    (B) Coverage of clinical preventive services.--Such 
                benefits shall include the full range of effective 
                clinical preventive services (including appropriate 
                screening, counseling, and immunization and 
                chemoprophylaxis), specified by the Commission, 
                appropriate to age and other risk factors.
                    (C) Coverage of diagnostic services.--Such benefits 
                shall include a full range of diagnostic services not 
                covered under subparagraph (B).
                    (D) Guidelines.--Nothing in this paragraph shall 
                prohibit the Commission from developing guidelines that 
                would specify the appropriate uses of treatment in 
                greater detail.
                    (D) Additional coverage.--Nothing in this paragraph 
                shall be construed as preventing a plan from providing 
                coverage of treatment that has not been determined 
                (under subsection (b)) by the Commission to be 
                medically appropriate for purposes of this paragraph.
            (3) Cost-sharing.--
                    (A) In general.--Subject to subparagraph (B), such 
                set shall include uniform cost-sharing associated with 
                such benefits consistent with subsection (c).
                    (B) Treatment of network plans.--In the case of a 
                network plan (as defined in section 1222(b)), the plan 
                may provide for charging cost-sharing in excess of the 
                uniform cost-sharing under subparagraph (A) in the case 
                of services provided by providers that are not 
                participating providers (as defined in such section).
    (b) Criteria for Determination of Medically Appropriateness for 
Benefit Coverage.--
            (1) In general.--An AHP is required to provide for coverage 
        of the uniform set of effective benefits only for treatments 
        and diagnostic procedures that are medically appropriate. 
        Subject to the succeeding provision of this subsection, for 
        purposes of this section, a treatment (as defined in paragraph 
        (6)(A)) or diagnostic procedure is considered to be ``medically 
        appropriate'' if the following criteria are met (as interpreted 
        by the Commission):
                    (A) Treatment or diagnosis of medical condition.--
                            (i) In general.--The treatment or 
                        diagnostic procedure is for a medical 
                        condition.
                            (ii) Medical condition defined.--The term 
                        ``medical condition'' means a disease, illness, 
                        injury, or biological or psychological 
                        condition or status for which treatment is 
                        indicated to improve, maintain, or stabilize a 
                        health outcome (as defined in paragraph (6)(B)) 
                        or which, in the absence of treatment, could 
                        lead to an adverse change in a health outcome.
                            (iii) Adverse change in health outcome 
                        defined.--In clause (ii), an adverse change in 
                        a health outcome occurs if there is a 
                        biological or psychological decremental change 
                        in a health status or if the original endowment 
                        for a feature lies outside the normal range.
                    (B) Not investigational.--There must be sufficient 
                evidence on which to base conclusions about the 
                existence and magnitude of the change in health outcome 
                resulting from the treatment or diagnostic procedure 
                compared with the best available alternative (or with 
                no treatment or diagnostic procedure if no alternative 
                treatment or procedure is available).
                    (C) Effective and safe.--The evidence must 
                demonstrate that the treatment or diagnostic procedure 
                can reasonably be expected to produce the intended 
                health result or provide intended health information 
                and is safe and the treatment or diagnostic procedure 
                provides a clinically meaningful benefit with respect 
                to safety and effectiveness in comparison to other 
                available alternatives.
            (2) Treatment or diagnostic procedure consistent with 
        practice guidelines.--A treatment or diagnostic procedure that 
        is provided consistent with a practice guideline established by 
        the Agency for Clinical Evaluations, established under section 
        1309, (or its predecessor) is deemed to be medically 
        appropriate.
            (3) Relationship to fda review.--
                    (A) Approved drugs, biologicals, and medical 
                devices.--
                            (i) Drugs.--A drug that has been found to 
                        be safe and effective under section 505 of the 
                        Federal Food, Drug, and Cosmetic Act is deemed 
                        to meet the requirements of paragraphs (1)(B) 
                        and (1)(C) (relating to not investigational and 
                        safety and effectiveness).
                            (ii) Biologicals.--A biological that has 
                        been found to be safe and effective under 
                        section 351 of the Public Health Service Act is 
                        deemed to meet the requirements of paragraphs 
                        (1)(B) and (1)(C) (relating to not 
                        investigational and safety and effectiveness).
                            (iii) Medical devices.--A medical device 
                        that is marketed after the provision of a 
                        notice under section 510(k) of the Federal 
                        Food, Drug, and Cosmetic Act or that has an 
                        application for premarket approval approved 
                        under section 515 of such Act is deemed to meet 
                        the requirements of paragraphs (1)(B) and 
                        (1)(C) (relating to not investigational and 
                        safety and effectiveness).
                    (B) Other drugs, biologicals, and devices.--A drug, 
                biological, or medical device not described in 
                subparagraph (A) shall be considered to be 
                investigational. Nothing shall prohibit a AHP from 
                covering such drugs, biologicals, and medical devices, 
                including treatment investigational new drugs (IND).
                    (C) Off-label use.--An off-label use for a drug 
                described in subparagraph (A)(i) is presumed to meet 
                the requirements of paragraph (1)(C) if the medical 
                indication for which it is used is listed in one of the 
                following 3 compendia: the American Hospital Formulary 
                Service-Drug Information, the American Medical 
                Association Drug Evaluations, and the United States 
                Pharmacopeia-Drug Information.
            (4) Coverage of investigational treatments in approved 
        research trials.--
                    (A) In general.--Coverage of the routine medical 
                costs (as defined in subparagraph (C)) associated with 
                the delivery of investigational treatments (as defined 
                in subparagraph (B)) shall be considered to be 
                medically appropriate only if the treatment is part of 
                an approved research trial (as defined in subparagraph 
                (D)).
                    (B) Investigational treatment defined.--In 
                subparagraph (A), the term ``investigational 
                treatment'' means a treatment for which there is not 
                sufficient evidence to determine the health outcome of 
                the treatment compared with the best available 
                alternative treatment (or with no treatment if there is 
                no alternative treatment).
                    (C) Routine medical costs defined.--In subparagraph 
                (A), the term ``routine medical costs'' means the cost 
                of health services required to provide treatment 
                according to the design of the trial, except those 
                costs normally paid for by other funding sources (as 
                defined by the Commission). Such costs do not include 
                the cost of the investigational agent, devices or 
                procedures themselves, the costs of any nonhealth 
                services that might be required for a person to receive 
                the treatment, or the costs of managing the research.
                    (D) Approved research trial defined.--In 
                subparagraph (A), the term ``approved research trial'' 
                means a trial--
                            (i) conducted for the primary purpose of 
                        determining the safety, effectiveness, 
                        efficacy, or health outcomes of a treatment, 
                        compared with the best available alternative 
                        treatment, and
                            (ii) approved by the Secretary of Health 
                        and Human Services.
                A trial is deemed to be approved under clause (ii) if 
                it is approved by the National Institutes of Health, 
                the Food and Drug Administration (through an 
                investigational new drug exemption), the Department of 
                Veterans Affairs, or by a qualified nongovernmental 
                research entity (as identified in guidelines issued by 
                one or more of the National Institutes of Health).
            (5) Documentation.--
                    (A) In general.--Each AHP is responsible for 
                maintaining documentary evidence supporting the plan's 
                decisions to cover or to deny coverage based on the 
                criteria specified in this subsection.
                    (B) References.--The evidence that may be used in 
                making such coverage decisions includes--
                            (i) published peer-reviewed literature,
                            (ii) opinions of medical specialty groups 
                        and other medical experts,
                            (iii) evidence of general acceptance by the 
                        medical community, and
                            (iv) recommendations of the Commission.
                    (C) Disclosure.--Each AHP shall disclose to its 
                members, in a manner specified by the Commission, its 
                coverage decisions and must submit information on such 
                decisions to the Benefits, Evaluations, and Data 
                Standards Board.
            (6) Treatment and health outcome defined.--In this 
        subsection (and subsection (a)(2)):
                    (A) In general.--The term ``treatment'' means any 
                health care intervention undertaken, with respect to a 
                specific indication, to improve, maintain, or stabilize 
                a health outcome or to prevent or mitigate an adverse 
                change in a health outcome.
                    (B) Health outcome defined.--The term ``health 
                outcome'' means an outcome that affects the length or 
                quality of an enrollee's life.
    (c) Basis for Cost-Sharing.--In establishing cost-sharing that is 
part of the uniform set of effective benefits, the Commission shall--
            (1) include only such cost-sharing as will restrain 
        consumers from seeking unnecessary services,
            (2) not impose cost-sharing for covered clinical preventive 
        services,
            (3) balance the effect of the cost-sharing in reducing 
        premiums and in affecting utilization of appropriate services,
            (4) establish a limit on the total cost-sharing that may be 
        incurred by an individual (or enrollee unit) in a year, and
            (5) incorporate, consistent with the previous provisions, 
        incentives for individuals to control their utilization of 
        health care services and shall (for this purpose) consider 
        incorporating the concepts of medical savings accounts and 
        wellness dividends.
To the extent consistent with the previous provisions, the Commission 
shall design such cost-sharing in a manner so to maintain overall 
utilization levels at a level no higher than current overall 
utilization levels.
    (d) Authority Respecting Providers.--
            (1) No authority to restrict use of providers.--In the case 
        of treatment included in the uniform set of effective benefits, 
        the Commission is not authorized--
                    (A) to restrict the coverage of such treatment only 
                to, or
                    (B) to require an AHP to provide coverage of such 
                treatment by,
        a particular class (or classes) of providers, among the 
        providers that are legally authorized to provide such 
        treatment.
            (2) Authority with respect to scope of practice of 
        qualified providers.--A State may not prohibit or limit the 
        scope of practice of a provider of health services, with 
        respect to the provision of the uniform set of effective 
        benefits by an AHP, to the extent that the Commission finds 
        that such prohibition or limitation restricts the utilization 
        of qualified providers.

SEC. 1303. BENEFITS, EVALUATIONS, AND DATA STANDARDS BOARD.

    (a) Establishment.--The Commission shall provide for the initial 
organization, as a nonprofit corporation in the District of Columbia, 
of the Benefits, Evaluations, and Data Standards Board (in this section 
referred to as the ``BEDS Board''), under the direction of a board of 
directors consisting of 5 directors.
    (b) Appointment of Directors.--
            (1) Solicitation.--The Commission shall solicit nominations 
        for the initial board of directors of the BEDS Board from 
        organizations that represent the various groups with an 
        interest in the health care system and the functions of the 
        Board.
            (2) Continuation.--The by-laws of the BEDS Board shall 
        provide for the board of directors subsequently to be appointed 
        by the board in a manner that ensures a broad range of 
        representation of through groups with an interest in providing 
        and purchasing health care.
            (3) Terms of directors.--The term of each member of the 
        board of directors shall be for 7 years, except that in order 
        to provide for staggered terms, the terms of the members 
        initially appointed shall be for 3, 4, 5, 6, and 7 years. In 
        the case of a vacancy by death or resignation, the replacement 
        shall be appointed for the remainder of the term. No individual 
        may serve as a director of the board for more than 14 years.
    (c) Functions.--
            (1) In general.--The BEDS Board shall make recommendations 
        to the Commission concerning each of the following:
                    (A) The uniform set of effective benefits.
                    (B) The standards for information to be provided by 
                AHPs.
                    (C) Auditing standards to ensure the accuracy of 
                such information.
                    (D) Aggregate data on coverage decisions made by 
                AHPs and recommendations for evaluations of particular 
                technologies.
        Before making recommendations described in subparagraphs (B) 
        and (D), the BEDS Board shall consult with the Agency for 
        Clinical Evaluations regarding the need for information in 
        performing its activities.
            (2) Evaluations.--The BEDS Board shall advise the 
        Commission on--
                    (A) matters related to the evaluation of health 
                care services, including information from clinical and 
                epidemiological studies, and
                    (B) information provided by AHPs, including AHP-
                specific information on clinical health, functional 
                status, well-being, and plan satisfaction of enrolled 
                individuals.
            (3) National health data system.--The BEDS Board shall 
        provide the Commission with its assistance in the development 
        of the standards for the national health data system under 
        section 1307.
    (d) Funding.--
            (1) In general.--In order to provide funding for the BEDS 
        Board, the Health Care Standards Commission shall establish an 
        annual registration fee for AHPs which is imposed on a per-
        covered-individual-basis and is sufficient, in the aggregate, 
        to provide each year for not more than the amount specified in 
        paragraph (2) for the operation of the BEDS Board.
            (2) Amount of funds.--The amount specified in this 
        paragraph for each of fiscal years 1994 and 1995, is 
        $50,000,000, and, for each succeeding fiscal year, is 
        $25,000,000.

SEC. 1304. HEALTH PLAN STANDARDS BOARD.

    (a) Establishment.--The Commission shall provide for the initial 
organization, as a nonprofit corporation in the District of Columbia, 
of the Health Plan Standards Board (in this section referred to as the 
``Plan Standards Board''), under the direction of a board of directors 
consisting of 5 directors.
    (b) Appointment of Directors.--
            (1) Solicitation.--The Commission shall solicit nominations 
        for the initial board of directors of the Plan Standards Board 
        from organizations that represent the various groups with an 
        interest in the health care system and the functions of the 
        Board.
            (2) Continuation.--The by-laws of the Plan Standards Board 
        shall provide for the board of directors subsequently to be 
        appointed by the board in a manner that ensures a broad range 
        of representation of through groups with an interest in 
        providing and purchasing health care.
            (3) Terms of directors.--The term of each member of the 
        board of directors shall be for 7 years, except that in order 
        to provide for staggered terms, the terms of the members 
        initially appointed shall be for 3, 4, 5, 6, and 7 years. In 
        the case of a vacancy by death or resignation, the replacement 
        shall be appointed for the remainder of the term. No individual 
        may serve as a director of the board for more than 12 years.
    (c) Functions.--
            (1) In general.--The Plan Standards Board shall make 
        recommendations to the Commission concerning the standards for 
        AHPs (other than standards relating to the uniform set of 
        effective benefits and the national health data system) and for 
        HPPCs.
            (2) Assessment of risk-adjustment factors.--The Plan 
        Standards Board shall provide the Commission with its 
        assessment of the risk-adjustment factors under section 1306.
    (d) Funding.--In order to provide funding for the Plan Standards 
Board, the Health Care Standards Commission shall establish an annual 
registration fee for AHPs which is imposed on a per-covered-individual-
basis and is sufficient, in the aggregate, to provide each year for not 
more than 60 percent of the amount specified in section 1303(d)(2) for 
the operation of the Plan Standards Board.

SEC. 1305. REGISTRATION OF ACCOUNTABLE HEALTH PLANS.

    (a) In General.--The Commission shall register those health plans 
that meet the standards under part 1 of subtitle C.
    (b) Treatment of State Certification.--If (and so long as) the 
Commission determines that a State superintendent of insurance, State 
insurance commissioner, or other State official provides for the 
imposition of standards that the Commission finds are equivalent to the 
standards established under part 1 of subtitle C for registration of a 
health plan as an AHP, the Commission may provide for registration as 
AHPs of health plans that such official certifies as meeting the 
standards for registration. Nothing in this subsection shall require a 
health plan to be certified by such an official in order to be 
registered by the Commission.
    (c) Revocation of Registration.--
            (1) In general.--The Commission shall provide for a process 
        for revocation of such registration in cases where the 
        Commission finds, after notice to the plan and appropriate due 
        process specified by the Commission, that a health plan no 
        longer substantially meets the standards for such registration 
        or has failed to comply with a requirement under section 
        1402(a).
            (2) Initiation of process.--Such process may be initiated 
        upon the petition of a HPPC, the ombudsman for a HPPC, or by 
        the Commission itself. If the process is not initiated by a 
        HPPC or ombudsman, the Commission shall notify each HPPC 
        involved that such a process has been initiated. A HPPC may 
        provide notice to enrollees of an AHP at the time such a 
        process is initiated with respect to the AHP.
            (3) Notice to hppc and enrollees.--No registration of an 
        AHP may be revoked unless the Commission has provided for 
        appropriate notice to the HPPC and enrollees involved.

SEC. 1306. SPECIFICATION OF RISK-ADJUSTMENT FACTORS.

    (a) In General.--The Commission shall establish rules for the 
process of risk-adjustment of premiums among AHPs by HPPCs under 
section 1102(d)(1).
    (b) Process.--
            (1) Identification of relative risk.--The Commission shall 
        determine risk-adjustment factors for types of enrollment that 
        are correlated with increased or diminished risk for 
        consumption of the type of health services included in the 
        uniform set of effective benefits, taking into account 
        differences in utilization resulting from low-income cost-
        sharing assistance provided under section 2003. To the maximum 
        extent practicable, such factors shall be determined without 
        regard to the methodology used by individual AHPs in the 
        provision of such benefits. In determining such factors, with 
        respect to an individual (in an enrollee unit) identified as 
        having--
                    (A) a lower-than-average risk for consumption of 
                the services, the factor shall be a number, less than 
                zero, reflecting the degree of such lower risk;
                    (B) an average risk for consumption of the 
                services, the factor shall be zero; or
                    (C) a higher-than-average risk for consumption of 
                the services, the factor shall be a number, greater 
                than zero, reflecting the degree of such higher risk.
        For an enrollee unit, the factor to be applied (pursuant to 
        section 1402(b)) shall reflect the factors applicable to all 
        covered individuals in the unit.
            (2) Adjustment of factors.--In applying under section 
        1102(d)(1)(B) the risk-adjustment factors determined under 
        paragraphs (1) and (3), each HPPC shall adjust such factors, in 
        accordance with a methodology established by the Commission, so 
        that the sum of such factors is zero for all enrollee units in 
        each HPPC area for which a premium payment is forwarded under 
        section 1102(d) for each premium payment period.
            (3) Special risk-adjustment factors for underserved 
        areas.--The Commission shall determine the special risk-
        adjustment factors that may be applied in the case of 
        individuals residing in areas designated as rural or urban 
        underserved areas under section 1401.

SEC. 1307. NATIONAL HEALTH DATA SYSTEM.

    (a) Standardization of Information.--
            (1) In general.--The Commission shall establish standards 
        for the periodic provision by AHPs of information under section 
        1203(a) and the auditing of the information so provided.
            (2) Patient confidentiality.--The standards shall be 
        established in a manner that protects the confidentiality of 
        individual enrollees, but may provide for the disclosure of 
        information which discloses particular providers within an AHP.
    (b) Analysis of Information.--
            (1) In general.--The Commission shall analyze the 
        information provided to the Commission under section 1203(a) 
        with respect to AHPs for which a HPPC is not performing an 
        analysis under section 1104(c)(1).
            (2) Central access.--The Commission shall make available, 
        in a central location and consistent with subsection (a)(2), 
        all of such analyses.
            (3) Distribution of analyses.--The Commission shall 
        distribute the analyses in a form, consistent with subsection 
        (a)(2), that reports, on a national, State, and community 
        basis, the levels and trends of health care expenditures, the 
        rates and trends in the provision of individual procedures, and 
        (to the extent such procedures are priced separately) the price 
        levels and rates of price change for such procedures. The 
        reports shall include both aggregate and per capita measures 
        for areas and shall include comparative data for different 
        areas.
    (c) Distribution of Information.--
            (1) Annual report on expenditures.--The Commission shall 
        publish annually (beginning with 1996) a report on expenditures 
        on procedures, volumes of procedures, and, to the extent such 
        procedures are priced separately, the prices of procedures. 
        Such report shall be distributed to each AHP, each HPPC, each 
        Governor, and each State legislature.
            (2) Annual reports.--The Commission shall also publish an 
        annual report, based on analyses under this section, that 
        identifies--
                    (A) procedures for which, as reflected in 
                variations in use or rates of increase, there appear to 
                be the greatest need to develop valid clinical 
                protocols for clinical decision-making and review,
                    (B) procedures for which, as reflected in price 
                variations and price inflation, there appear to be the 
                greatest need for strengthening competitive purchasing, 
                and
                    (C) States and localities for which, as reflected 
                in expenditure levels and rates of increase, there 
                appear to be the greatest need for additional cost 
                control measures.
            (3) Special distributions.--The Commission may, whenever it 
        deems appropriate, provide for the distribution--
                    (A) to an AHP of such information relating to the 
                plan as may be appropriate in order to encourage the 
                plan to improve its delivery of care, and
                    (B) to business, consumer, and other groups and 
                individuals of such information as may improve their 
                ability to effect improvements in the outcomes, 
                quality, and efficiency of health services.
            (4) Access by agency for health care policy and research.--
        The Commission shall make available to the Agency for Clinical 
        Evaluations information obtained under section 1203(a) in a 
        manner consistent with subsection (a)(2).

SEC. 1308. MEASURES OF QUALITY OF CARE OF SPECIALIZED CENTERS OF CARE.

    (a) Collection of Information.--The Commission shall provide a 
process whereby a specialized center of care (as defined in subsection 
(d)) may submit to the Commission such clinical and other information 
bearing on the quality of care provided with respect to the uniform set 
of effective benefits at the center as the Commission may specify. Such 
information shall include sufficient information to take into account 
outcomes and the risk factors associated with individuals receiving 
care through the center. Such information shall be provided at such 
frequency (not less often than annually) as the Commission specifies.
    (b) Measures of Quality.--Using information submitted under 
subsection (a) and information reported under section 1307, the 
Commission shall--
            (1) analyze the performance of such centers with respect to 
        the quality of care provided,
            (2) rate the performance of such a center with respect to a 
        class of services relative to the performance of other 
        specialized centers of care and relative to the performance of 
        AHPs generally, and
            (3) publish such ratings.
    (c) Use of Service Mark for Specialized Centers of Care.--The 
Commission may establish a service mark for specialized centers of care 
the performance of which has been rated under subsection (b). Such 
service mark shall be registrable under the Trademark Act of 1946, and 
the Commission shall apply for the registration of such service mark 
under such Act. For purposes of such Act, such service mark shall be 
deemed to be used in commerce. For purposes of this subsection, the 
``Trademark Act of 1946'' refers to the Act entitled ``An Act to 
provide for the registration and protection of trademarks used in 
commerce, to carry out the provisions of international conventions, and 
for other purposes'', approved July 5, 1946 (15 U.S.C. 1051 and 
following).
    (d) Specialized Center of Care Defined.--In this section, the term 
``specialized center of care'' means an institution or other organized 
system for the provision of specific services, which need not be multi-
disciplinary, and does not include (except as the Commission may 
provide) individual practitioners.

SEC. 1309. AGENCY FOR CLINICAL EVALUATIONS.

    (a) Establishment.--There is established within the Department of 
Health and Human Services an agency to be known as the Agency for 
Clinical Evaluations (in this section referred to as the ``Agency'').
    (b) Appointment of Administrator.--There shall be at the head of 
the Agency an official to be known as the Administrator for Clinical 
Evaluations (in this section referred to as the ``Administrator''). The 
Administrator shall be appointed by the President, by and with the 
advice and consent of the Senate.
    (c) Duties.--
            (1) In general.--The Administrator shall assume the 
        following responsibilities:
                    (A) Responsibilities of the Administrator for 
                Health Care Policy and Research, under title IX of the 
                Public Health Service Act and under section 1142 of the 
                Social Security Act.
                    (B) Responsibilities of the Director of the 
                National Center for Health Statistics (under section 
                306 of the Public Health Service Act).
                    (C) Responsibilities of the Director of the Office 
                of Medical Applications of Research at the National 
                Institutes of Health.
                    (D) Responsibilities of the Director of the Office 
                of Research and Demonstrations of the Health Care 
                Financing Administration, insofar as such 
                responsibilities relate to clinical evaluations.
            (2) Specific duties.--In carrying out responsibilities 
        under paragraph (1), the Administrator shall--
                    (A) set priorities for the research community to 
                strengthen the research base;
                    (B) support research and evaluation (both on a 
                contract and investigator-initiated basis) on medical 
                effectiveness through technology assessment, consensus 
                development, outcomes research practice guidelines, and 
                other appropriate activities;
                    (C) conduct effectiveness trials in collaboration 
                with medical specialty societies, medical educators, 
                and AHPs;
                    (D) maintain a clearinghouse and other registries 
                on clinical trials and outcomes research data;
                    (E) assure the systematic evaluation of existing as 
                well as new treatments and diagnostic technologies in a 
                constant, continuous effort to upgrade the knowledge 
                base for clinical decisionmaking and policy choice; and
                    (F) design a computerized dissemination system for 
                providers to provide an interactive system of 
                information on outcomes research, practice guidelines, 
                and other information.
            (3) Assistance.--The Administrator shall provide the 
        Benefits, Evaluations, and Data Standards Board with such 
        information, on evaluations related to the uniform set of 
        effective benefits and any other information developed in the 
        scope of carrying out the Administrator's responsibilities, as 
        may be appropriate.
            (4) Cooperation with other agencies.--In carrying out 
        responsibilities under this subsection, the Administrator shall 
        cooperate and consult with the Director of the National 
        Institutes of Health, the Commissioner of Food and Drugs, the 
        Secretary of Veterans Affairs, and the heads of any other 
        interested Federal department or agency.
    (d) References.--Any reference in any law to the Administrator for 
Health Care Policy and Research or to the Agency for Health Care Policy 
and Research is deemed a reference to the Administrator and Agency, 
respectively, under this section.
    (e) Transfers.--There are hereby transferred to the Agency the 
staff, funds, and other assets of the agencies for which the Agency is 
assuming responsibilities under subsection (c)(1).
    (f) Additional Authorization of Appropriations.--In addition to the 
amounts transferred under subsection (e), there are authorized to be 
appropriated to the Agency $250,000 for each fiscal year (beginning 
with fiscal year 1995).

SEC. 1310. REPORT AND RECOMMENDATIONS ON ACHIEVING UNIVERSAL COVERAGE.

    (a) Factors Affecting Coverage.--
            (1) Collection of information.--The Commission, on a 
        continuing basis, shall collect information concerning and 
        analyze the number and characteristics of eligible individuals 
        (as defined in subsection (c)) who are not enrolled with AHPs 
        compared to such number and characteristics of individuals 
        enrolled. Such characteristics shall include age, sex, race, 
        ethnicity, family status, employment status, whether the 
        individual is an eligible employee, income, health status, 
        health risk factors, geography, whether the individual resides 
        in a rural or medically underserved area, and such other 
        factors as may affect the election of an eligible individual to 
        obtain health coverage.
            (2) Report.--By not later than April 1 of each year 
        (beginning with 1996), the Commission shall submit to Congress 
        a report analyzing the information collected under paragraph 
        (1). Such report shall include a description of the primary 
        factors contributing to lack of coverage of identifiable groups 
        of eligible individuals.
    (b) Recommendations for Increasing Coverage.--
            (1) In general.--By not later than January 1, 1997, the 
        Commission shall submit to Congress recommendations on the 
        feasibility, cost-effectiveness, and the economic impact of 
        using different voluntary and other methods for increasing the 
        coverage of eligible individuals.
            (2) Individual mandate.--The Commission shall specifically 
        make recommendations under paragraph (1) regarding establishing 
        a requirement that all eligible individuals obtain health 
        coverage through enrollment with an AHP.
    (c) Eligible Individual Defined.--In this section, the term 
``eligible individual''--
            (1) includes individuals who would be eligible individuals 
        but for section 1701(a)(4)(B), but
            (2) does not include individuals eligible to enroll for 
        benefits under part B of title XVIII of the Social Security 
        Act.

SEC. 1311. NO AUTHORITY TO IMPOSE CONTROLS RELATING TO HEALTH CARE 
              SPENDING.

    The Commission is not authorized to establish or enforce any 
controls (such as global budgets, price controls, or premium 
limitations) on health care spending.

SEC. 1312. MONITORING REINSURANCE MARKET.

    (a) In General.--The Commission shall monitor the reinsurance 
market for AHPs.
    (b) Periodic Reports.--The Commission shall periodically report to 
Congress respecting the availability of reinsurance for AHPs at 
reasonable rates and the impact of such availability on the 
establishment of new plans and on the financial solvency of current 
plans.

SEC. 1313. AUTHORIZATION OF APPROPRIATIONS; SUNSET.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Health Care Standards Commission for each of fiscal 
years 1994 through 2000 such sums as may be necessary to carry out 
activities under this Act.
    (b) Sunset.--Unless otherwise provided by law, the Health Care 
Standards Commission shall terminate on December 31, 1999.

  Subtitle E--Managed Competition in Rural and Urban Underserved Areas

       PART 1--SPECIAL TREATMENT OF DESIGNATED UNDERSERVED AREAS

SEC. 1401. DESIGNATION OF UNDERSERVED AREAS.

    (a) In General.--The Governor of any State may, subject to 
subsection (b), designate rural and urban areas of a State as 
underserved areas for purposes of this part. In designating such areas, 
the Governor shall take into account--
            (1) financial and geographic access to AHPs by residents of 
        such areas, and
            (2) the availability, adequacy, and quality of qualified 
        providers and health care facilities in such areas.
    (b) Review by Commission.--No designation under subsection (a) 
shall take effect under this subsection unless the Commission--
            (1) has been notified of the proposed designation, and
            (2) has not, within 60 days after the date of receipt of 
        the notice, disapproved the designation.
    (c) Construction.--An area need not be designated as a medically 
underserved area (under section 330(b)(3) of the Public Health Service 
Act) or as a health professional shortage area (under section 332(a) of 
such Act) in order to be designated as an underserved area under this 
section.
    (d) Period of Designation.--A designation under this section shall 
be effective for a period, specified by the Governor, of not longer 
than 3 years, except that such designation may be extended for 
additional 3-year periods.

SEC. 1402. SPECIAL TREATMENT.

    (a) Inclusion in Plan Service Area.--The HPPC serving an area 
designated under section 1401 may require AHPs, offered by the HPPC and 
with a service area adjoining such area, to include the area as part of 
their service area. The Commission may revoke under section 1305(c) 
registration of an AHP that fails to comply with such requirement.
    (b) Application of Special Risk Adjustment Factors.--In accordance 
with rules established by the Commission, for eligible individuals 
residing in an area designated under section 1401 and enrolled with an 
AHP, the HPPC may apply special risk-adjustment factors (determined 
under section 1306(b)(3)) in order to increase the compensation 
available to AHPs serving such individuals.
    (c) Direct State Subsidies.--The HPPC shall increase the amount of 
the payments made to AHPs serving individuals residing in an area 
designated under section 1401 by such amounts as the State makes 
available for this purpose.
    (d) Technical Assistance in Antitrust Matters.--The Department of 
Justice shall provide ongoing technical assistance to organizations in 
relation to the application of the Federal antitrust laws to the 
establishment of an AHP in an area designated under section 1401. Such 
assistance shall be in addition to the review process provided under 
section 1231(b).

  PART 2--TRANSITIONAL SUPPORT FOR DEVELOPMENT OF ACCOUNTABLE HEALTH 
                       PLANS IN UNDERSERVED AREAS

SEC. 1411. TECHNICAL ASSISTANCE FUNDING.

    (a) In General.--The Secretary of Health and Human Services shall 
make funds available under this section to provide technical assistance 
and advice for entities (including Federally qualified health centers 
and rural health clinics) seeking to establish a network plan (as 
defined in section 1222(b)(1)) in an underserved rural or urban area.
    (b) Use of Funds.--Funds made available under this section may be 
used for--
            (1) assistance in network development, utilizing existing 
        local providers and facilities where appropriate;
            (2) advice on obtaining the proper balance of primary and 
        secondary facilities for the local population;
            (3) assistance in coordinating arrangements for tertiary 
        care;
            (4) assistance in recruitment and retention of health care 
        professionals; and
            (5) assistance in coordinating the delivery of emergency 
        services with the provision of services by an AHP.
    (c) Use of Rural Health Offices.--In carrying out this section with 
respect to entities in rural areas--
            (1) the Secretary shall make funds available through the 
        Office of Rural Health Policy, and
            (2) priority shall be given to making funds available to 
        State Offices of Rural Health.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated $5,000,000 for each of fiscal years 1995 through 1999 to 
carry out this section. Of the amounts appropriated to carry out this 
section, one-half of such amounts shall be made available to entities 
for the establishment of network plans in rural areas and one-half of 
such amounts shall be made available to entities for the establishment 
of network plans in urban areas. Amounts appropriated under this 
section shall be available until expended.

SEC. 1412. RURAL DEVELOPMENT GRANTS.

    (a) In General.--The Secretary of Health and Human Services shall 
provide financial assistance to eligible entities in order to provide 
for the development and implementation of AHPs in rural areas.
    (b) Eligible Entities.--
            (1) In general.--An entity is eligible to receive financial 
        assistance under this section only if the entity--
                    (A) is based in a rural area, and
                    (B) is undertaking to develop and implement an AHP 
                in a rural area with the active participation of at 
                least 3 health care providers or facilities in the 
                area.
            (2) Federally qualified health centers and rural health 
        clinics.--Nothing in this section shall be construed as 
        preventing a Federally qualified health center or rural health 
        clinic from qualifying for financial assistance under this 
        section.
    (c) Use of Funds.--
            (1) In general.--Financial assistance made available to 
        eligible entities under this section may only be used for the 
        following:
                    (A) For development and implementation.
                    (B) For information systems, including 
                telecommunications.
                    (C) For meeting solvency requirements for an AHP.
                    (D) For recruiting health care providers.
            (2) Limitations.--Financial assistance made available under 
        this section may not be used for any of the following:
                    (A) For a telecommunications system unless such 
                system is coordinated with, and does not duplicate, 
                such a system existing in the area.
                    (B) For construction or remodeling of health care 
                facilities.
    (d) Application.--
            (1) In general.--No financial assistance shall be provided 
        under this section to an entity unless the entity has submitted 
        to the Secretary, in a time and manner specified by the 
        Secretary, and had approved by the Secretary an application.
            (2) Information to be included.--Each such application 
        shall include--
                    (A) a description of the proposed AHP, including 
                service area and capacity,
                    (B) a plan for providing the continuum of services 
                included in the uniform set of effective benefits, and
                    (C) a description of how the proposed AHP will 
                utilize existing health care facilities in a manner 
                that avoids unnecessary duplication.
    (e) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated 
        $75,000,000 for each of fiscal years 1995 through 1999 to carry 
        out this section. Amounts appropriated under this section shall 
        be available until expended.
            (2) Integration of other authorizations.--In order to 
        provide for the authorization of appropriations under paragraph 
        (1), notwithstanding any other provision of law, no funds are 
        authorized to be appropriated to carry out the following 
        programs in fiscal years after fiscal year 1994:
                    (A) The rural health transition grant program 
                (under section 4005(e) of the Omnibus Budget 
                Reconciliation Act of 1987).
                    (B) The rural health outreach program (for which 
                appropriations were annually provided under the 
                Departments of Labor, Health and Human Services, and 
                Education, and Related Agencies Appropriation Acts).

SEC. 1413. MIGRANT HEALTH CENTERS.

    Section 329(h) of the Public Health Service Act (42 U.S.C. 254b(h)) 
is amended--
            (1) in paragraph (1)(A), by striking ``through 1994'' and 
        inserting ``through 1999'',
            (2) in paragraph (2)(A), by striking ``through 1994'' and 
        inserting ``through 1999'', and
            (3) by redesignating paragraph (3) as paragraph (4) and by 
        inserting after paragraph (2) the following new paragraph:
    ``(3)(A) For the purpose of carrying out subparagraph (B), there 
are authorized to be appropriated $11,500,000 for each of the fiscal 
years 1995 through 1999.
    ``(B) The Secretary may make grants to migrant health centers for 
the purpose of assisting such centers in integrating with AHPs and in 
providing (and coordinating the provision of) the uniform set of 
effective benefits under such a plan.''.

SEC. 1414. COMMUNITY HEALTH CENTERS.

    Section 330(g) of the Public Health Service Act (42 U.S.C. 254c(g)) 
is amended--
            (1) in paragraph (1)(A), by striking ``through 1994'' and 
        inserting ``through 1999'',
            (2) in paragraph (2)(A), by striking ``through 1994'' and 
        inserting ``through 1999'', and
            (3) by redesignating paragraph (3) as paragraph (4) and by 
        inserting after paragraph (2) the following new paragraph:
    ``(3)(A) For the purpose of carrying out subparagraph (B), there 
are authorized to be appropriated $88,500,000 for each of the fiscal 
years 1995 through 1999.
    ``(B) The Secretary may make grants to community health centers for 
the purpose of assisting such centers in developing and integrating 
with accountable health plans and in providing (and coordinating the 
provision of) the uniform set of effective benefits under such a 
plan.''.

     PART 3--ESTABLISHMENT OF RURAL EMERGENCY ACCESS CARE HOSPITALS

SEC. 1421. RURAL EMERGENCY ACCESS CARE HOSPITALS DESCRIBED.

    Section 1861 of the Social Security Act (42 U.S.C. 1395x) is 
amended by adding at the end the following new subsection:

  ``Rural Emergency Access Care Hospital; Rural Emergency Access Care 
                           Hospital Services

    ``(oo)(1) The term `rural emergency access care hospital' means, 
for a fiscal year, a facility with respect to which the Secretary finds 
the following:
            ``(A) The facility is located in a rural area (as defined 
        in section 1886(d)(2)(D)).
            ``(B) The facility was a hospital under this title at any 
        time during the 5-year period that ends on the date of the 
        enactment of this subsection.
            ``(C) The facility is in danger of closing due to low 
        inpatient utilization rates and negative operating losses, and 
        the closure of the facility would limit the access of 
        individuals residing in the facility's service area to 
        emergency services.
            ``(D) The facility has entered into (or plans to enter 
        into) an agreement with a hospital with a participation 
        agreement in effect under section 1866(a), and under such 
        agreement the hospital shall accept patients transferred to the 
        hospital from the facility and receive data from and transmit 
        data to the facility.
            ``(E) There is a practitioner who is qualified to provide 
        advanced cardiac life support services (as determined by the 
        State in which the facility is located) on-site at the facility 
        on a 24-hour basis.
            ``(F) A physician is available on-call to provide emergency 
        medical services on a 24-hour basis.
            ``(G) The facility meets such staffing requirements as 
        would apply under section 1861(e) to a hospital located in a 
        rural area, except that--
                    ``(i) the facility need not meet hospital standards 
                relating to the number of hours during a day, or days 
                during a week, in which the facility must be open, 
                except insofar as the facility is required to provide 
                emergency care on a 24-hour basis under subparagraphs 
                (E) and (F) of this paragraph; and
                    ``(ii) the facility may provide any services 
                otherwise required to be provided by a full-time, on-
                site dietician, pharmacist, laboratory technician, 
                medical technologist, or radiological technologist on a 
                part-time, off-site basis.
            ``(H) The facility meets the requirements applicable to 
        clinics and facilities under subparagraphs (C) through (J) of 
        paragraph (2) of section 1861(aa) and of clauses (ii) and (iv) 
        of the second sentence of such paragraph (or, in the case of 
        the requirements of subparagraph (E), (F), or (J) of such 
        paragraph, would meet the requirements if any reference in such 
        subparagraph to a `nurse practitioner' or to `nurse 
        practitioners' was deemed to be a reference to a `nurse 
        practitioner or nurse' or to `nurse practitioners or nurses'); 
        except that in determining whether a facility meets the 
        requirements of this subparagraph, subparagraphs (E) and (F) of 
        that paragraph shall be applied as if any reference to a 
        `physician' is a reference to a physician as defined in section 
        1861(r)(1).
    ``(2) The term `rural emergency access care hospital services' 
means medical and other health services furnished by a rural emergency 
access care hospital.''.

SEC. 1422. COVERAGE OF AND PAYMENT FOR SERVICES.

    (a) Coverage Under Part B.--Section 1832(a)(2) of the Social 
Security Act (42 U.S.C. 1395k(a)(2)) is amended--
            (1) by striking ``and'' at the end of subparagraph (I);
            (2) by striking the period at the end of subparagraph (J) 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(K) rural emergency access care hospital services 
                (as defined in section 1861(oo)(2)).''.
    (b) Payment Based on Payment for Outpatient Rural Primary Care 
Hospital Services.--
            (1) In general.--Section 1833(a)(6) of the Social Security 
        Act (42 U.S.C. 1395l(a)(6)) is amended by striking 
        ``services,'' and inserting ``services and rural emergency 
        access care hospital services,''.
            (2) Payment methodology described.--Section 1834(g) of such 
        Act (42 U.S.C. 1395m(g)) is amended--
                    (A) in the heading, by striking ``Services'' and 
                inserting ``Services and Rural Emergency Access Care 
                Hospital Services'';
                    (B) in paragraph (1), by striking ``during a year 
                before 1993'' and inserting ``during a year before the 
                prospective payment system described in paragraph (2) 
                is in effect'';
                    (C) in paragraph (1), by adding at the end the 
                following:
        ``The amount of payment shall be determined under either method 
        without regard to the amount of the customary or other 
        charge.'';
                    (D) in paragraph (2), by striking ``January 1, 
                1993,'' and inserting ``January 1, 1996,''; and
                    (E) by adding at the end the following new 
                paragraph:
            ``(3) Application of methods to payment for rural emergency 
        access care hospital services.--The amount of payment for rural 
        emergency access care hospital services provided during a year 
        shall be determined using the applicable method provided under 
        this subsection for determining payment for outpatient rural 
        primary care hospital services during the year.''.

SEC. 1423. EFFECTIVE DATE.

    The amendments made by this part shall apply to fiscal years 
beginning on or after October 1, 1994.

        PART 4--TRANSITIONAL ASSISTANCE FOR SAFETY NET HOSPITALS

SEC. 1431. PAYMENTS TO HOSPITALS.

    (a) In General.--The Secretary of Health and Human Services shall 
make payments for transitional assistance to eligible hospitals whose 
applications for assistance have been approved under this part.
    (b) General Eligibility Requirements for Assistance.--
            (1) Hospitals described.--
                    (A) In general.--A hospital shall be generally 
                eligible for assistance under this part if the 
                hospital--
                            (i) receives an additional payment under 
                        section 1886(d)(5)(F) of the Social Security 
                        Act and is described in clause (i)(II) or 
                        clause (vii)(I) of such section, or is deemed a 
                        disproportionate share hospital under a State 
                        plan for medical assistance under title XIX of 
                        such Act on the basis described in section 
                        1923(b)(1) of such Act; or
                            (ii) is a hospital that the Secretary 
                        otherwise determines to be an appropriate 
                        recipient of assistance under this part on the 
                        basis of the existence of a patient care 
                        operating deficit, a demonstrated inability to 
                        secure or repay financing for a qualifying 
                        project on reasonable terms, or such other 
                        criteria as the Secretary considers 
                        appropriate.
                    (B) Development of criteria.--For purposes of 
                subparagraph (A)(ii), with respect to rural hospitals 
                which are at risk or critical to health care access, 
                the Prospective Payment Review Commission, not later 
                than 6 months after the date of the enactment of this 
                Act, shall develop criteria to assist the Secretary in 
                deciding which such hospitals deserve assistance.
            (2) Ownership requirements.--In order to qualify for 
        assistance under this part, a hospital must--
                    (A) be owned or operated by a unit of State or 
                local government;
                    (B) be a quasi-public corporation, defined as a 
                private, nonprofit corporation or public benefit 
                corporation which is formally granted one or more 
                governmental powers by legislative action through (or 
                is otherwise partially funded by) the State 
                legislature, city or county council; or
                    (C) be a private nonprofit hospital which has 
                contracted with, or is otherwise funded by, a 
                governmental agency to provide health care services to 
                low income individuals not eligible for benefits under 
                title XVIII or title XIX of the Social Security Act, 
                where revenue from such contracts constitute at least 
                10 percent of the hospital's operating revenues over 
                the prior 3 fiscal years.
    (c) Meeting Additional Specific Criteria.--Hospitals that are 
generally eligible for assistance under this part under subsection (b) 
may apply for the specific programs described in this part and must 
meet any additional criteria for participation in such programs.

SEC. 1432. APPLICATION FOR ASSISTANCE.

    (a) In General.--No hospital may receive assistance for a project 
under this part unless the hospital--
            (1) has filed with the Secretary, in a form and manner 
        specified by the Secretary an application for assistance under 
        this part;
            (2) establishes in its application (for its most recent 
        cost reporting period) that it meets the criteria for general 
        eligibility under this part;
            (3) includes a description of the project, including the 
        community in which it is located, and describes utilization and 
        services characteristics of the project and the hospital, and 
        the patient population that is to be served;
            (4) describes the extent to which the project will include 
        the financial participation of State and local governments, and 
        all other sources of financing sought for the project; and
            (5) establishes, to the satisfaction of the Secretary, that 
        the project meets the additional criteria for assistance under 
        this part.
    (b) Criteria for Approval.--The Secretary shall determine for each 
application for assistance under this part--
            (1) whether the hospital meets the general eligibility 
        criteria under section 1431(b);
            (2) whether the hospital meets any additional eligibility 
        criteria;
            (3) whether the project for which assistance is being 
        requested meets the requirements of this part; and
            (4) whether funds are available, pursuant to the 
        limitations of each program, to fully fund the request for 
        assistance.

SEC. 1433. PUBLIC SERVICE RESPONSIBILITIES.

    (a) In General.--Any hospital accepting assistance under this part 
shall agree--
            (1) to make the services of the facility or portion thereof 
        to be constructed, acquired, or modernized available to all 
        persons residing in the territorial area of the applicant; and
            (2) to provide a significant volume of services to persons 
        unable to pay therefore, consistent with other provisions of 
        this Act.
    (b) Enforcement.--The Director of the Office of Civil Rights of the 
Department of Health and Human Services shall be given the power to 
enforce the public service responsibilities described in this section.

SEC. 1434. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated $50,000,000 for each of the 
fiscal years 1995 through 1999 to carry out this part.

         Subtitle F--Treatment of Chronically Underserved Areas

SEC. 1501. PROMOTING STATE ACTION.

    (a) Standards for Identification of Chronically Underserved 
Areas.--The Health Care Standards Commission shall develop, not later 
than 2 years after the date of the enactment of this Act, standards for 
the identification of chronically underserved areas in which the 
special treatment provided under subsection (b) may be appropriate. 
Such standards shall be based on--
            (1) inadequate access in an area to services included 
        within the uniform set of effective benefits,
            (2) insufficient price competition for such services in an 
        area, and
            (3) poor quality of such services in an area.
    (b) State Identification of Areas and Plan.--On and after 3 years 
after the date of the enactment of this Act, a State may submit to the 
Commission--
            (1) a finding that an area within the State meets the 
        standards developed under subsection (a) to be identified as a 
        chronically underserved area, and
            (2) a plan for addressing the problem of health care 
        delivery in such area.
No plan may be submitted under paragraph (2) for an area unless the 
plan has been developed in cooperation with each HPPC serving any 
portion of the area.
    (c) Contents of Plan.--A plan under subsection (b)(2) for a 
chronically underserved area may provide for the limitation of 
agreements under section 1102 to a single AHP, with such contract 
awarded on a competitive basis.
    (d) Review.--With respect to submissions under subsection (b), the 
Commission shall review--
            (1) each finding described in subsection (b)(1), and
            (2) each plan submitted under subsection (b)(2).
The Commission shall approve or disapprove such a finding and such a 
plan within 60 days of the date of its submission and shall notify the 
State of its decision. If the Commission disapproves the finding or the 
plan, the Commission shall provide the State with the reasons for the 
disapproval. If the Commission does not act within such period, the 
Commission is deemed to have approved the finding and the plan.

         Subtitle G--Repeal of COBRA Continuation Requirements

SEC. 1601. REPEAL OF COBRA CONTINUATION REQUIREMENTS.

    (a) Internal Revenue Code Provisions.--
            (1) In general.--Section 4980B of the Internal Revenue Code 
        of 1986 is repealed.
            (2) Conforming amendments.--Section 414 of such Code is 
        amended--
                    (A) in subsection (n)(3)(C), by striking ``505, and 
                4980B'' and inserting ``and 505'', and
                    (B) in subsection (t)(2), by striking ``505, or 
                4980B'' and inserting ``or 505''.
    (b) ERISA.--
            (1) In general.--Part 6 of subtitle B of title I of the 
        Employee Retirement Income Security Act of 1974 is amended--
                    (A) by striking sections 601 through 606, and
                    (B) in section 609, as added by section 4301 of the 
                Omnibus Budget Reconciliation Act of 1993, by striking 
                subsection (d).
            (2) Conforming amendment.--Section 502(c)(1) of such Act 
        (29 U.S.C. 1132(c)(1)) is amended by striking ``paragraph (1) 
        or (4) of section 606 or''.
    (c) Public Health Service Act.--Title XXII of the Public Health 
Service Act is repealed.
    (d) Effective Date.--The repeals and amendments made by this 
section shall apply to health plans of employers as of the January 1, 
1995.
    (e) Notice of Benefits.--In the case of continuation coverage which 
is in effect on January 1, 1995, under a provision of law repealed by 
this section, such continuation may not be discontinued without 30-day 
notice to the individual of such discontinuation. Such notice shall 
include such information with respect to continuation of coverage 
through a health plan purchasing cooperative as the Health Care 
Standards Commission shall specify.

                        Subtitle H--Definitions

SEC. 1701. DEFINITIONS.

    (a) Eligibility.--In this title and title II:
            (1) Eligible individual.--The term ``eligible individual'' 
        means, with respect to a HPPC area, an individual who--
                    (A) is an eligible employee,
                    (B) is an eligible resident, or
                    (C) an eligible family member of an eligible 
                employee or eligible resident.
            (2) Eligible employee.--The term ``eligible employee'' 
        means, with respect to a HPPC area, an individual residing in 
        the area who is the employee of a small employer.
            (3) Eligible family member.--The term ``eligible family 
        member'' means, with respect to an eligible employee or other 
        principal enrollee, an individual who--
                    (A)(i) is the spouse of the employee or principal 
                enrollee, or
                    (ii) is an unmarried dependent child under 22 years 
                of age, including--
                            (I) an adopted child or recognized natural 
                        child, and
                            (II) a stepchild or foster child but only 
                        if the child lives with the employee or 
                        principal enrollee in a regular parent-child 
                        relationship,
                or such an unmarried dependent child regardless of age 
                who is incapable of self-support because of mental or 
                physical disability which existed before age 22;
                    (B) is a citizen or national of the United States, 
                an alien lawfully admitted to the United States for 
                permanent residence, or an alien otherwise lawfully 
                residing permanently in the United States under color 
                of law; and
                    (C) with respect to an eligible resident, is not a 
                medicare-eligible individual.
            (4) Eligible resident.--
                    (A) In general.--The term ``eligible resident'' 
                means, with respect to a HPPC area, an individual who 
                is not an eligible employee, is residing in the area, 
                and is a citizen or national of the United States, an 
                alien lawfully admitted for permanent residence, and an 
                alien granted asylum, admitted as a refugee, or whose 
                deportation has been withheld.
                    (B) Exclusion of certain individuals offered 
                coverage through a large employer.--
                            (i) In general.--The term ``eligible 
                        resident'' does not include an individual who--
                                    (I) is covered under an AHP 
                                pursuant to an offer made under section 
                                1005(b)(1)(A), or
                                    (II) subject to clause (ii), could 
                                be covered under an AHP as the 
                                principal enrollee pursuant to such an 
                                offer if such offer had been accepted.
                            (ii) Exception for part-time, seasonal, and 
                        temporary employees.--Subclause (II) of clause 
                        (i) shall not apply to an individual who is 
                        offered coverage under an AHP by an employer 
                        and who is only a part-time, seasonal, or 
                        temporary employee of that employer. For 
                        purposes of the previous sentence, the term 
                        ``part-time'' means employment for an average 
                        of less than 25 hours a week on a monthly basis 
                        and an employee who is employed for more than 8 
                        weeks in a 12-month period for an employer 
                        shall not be considered to be seasonal or 
                        temporary employee.
                    (C) Treatment of medicare beneficiaries.--The term 
                ``eligible resident'' does not include a medicare-
                eligible beneficiary.
            (5) Enrollee unit.--The term ``enrollee unit'' means one 
        unit in the case of coverage on an individual basis or in the 
        case of coverage on a family basis.
            (6) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means an individual who is entitled to benefits 
        under part A of title XVIII of the Social Security Act, 
        including an individual who is entitled to such benefits 
        pursuant to an enrollment under section 1818 or 1818A of such 
        Act.
            (7) Medicare-eligible individual.--The term ``medicare-
        eligible individual'' means an individual who--
                    (A) is a medicare beneficiary, or
                    (B) is not a medicare beneficiary but is eligible 
                to enroll under part A or part B of title XVIII of the 
                Social Security Act.
    (b) Abbreviations.--In this Act, except as otherwise provided:
            (1) AHP; accountable health plan.--The terms ``accountable 
        health plan'' and ``AHP'' mean a health plan registered with 
        the Commission under section 1201(a).
            (2) Commission.--The term ``Commission'' means the Health 
        Care Standards Commission established under subtitle D.
            (3) HPPC; health plan purchasing cooperative.--The terms 
        ``health plan purchasing cooperative'' and ``HPPC'' mean a 
        health plan purchasing cooperative established under subtitle 
        B.
            (4) Closed and open plans.--
                    (A) Closed.--
                            (i) In general.--A plan is ``closed'' if 
                        the plan is limited by structure or law to one 
                        or more large employers.
                            (ii) Grandfather for taft-hartley plans.--A 
                        plan not described in clause (i) that is 
                        maintained pursuant to one or more collective 
                        bargaining agreements between one or more 
                        employee organizations and one or more 
                        employers and that was established as of 
                        September 7, 1993, shall be considered to be a 
                        closed plan.
                            (iii) University plans.--Nothing in this 
                        subparagraph shall be construed as preventing a 
                        university from offering enrollment, in a 
                        closed plan maintained by a university, to 
                        students matriculating at the university.
                            (iv) Small employers.--Subject to clause 
                        (ii), a plan is not a ``closed'' plan if the 
                        plan was formed by one or more small employers 
                        or for the benefit of employees of such an 
                        employer.
                    (B) Open.--A plan is ``open'' if the plan is not 
                closed (within the meaning of subparagraph (A)).
    (c) Other Terms.--In this title and titles II and VI:
            (1) Health plan.--The term ``health plan'' means a plan 
        that provides health benefits, whether through directly, 
        through insurance, or otherwise, and includes a policy of 
        health insurance, a contract of a service benefit organization, 
        or a membership agreement with a health maintenance 
        organization or other prepaid health plan, and also includes an 
        employee welfare benefit plan or a multiple employer welfare 
        plan (as such terms are defined in section 3 of the Employee 
        Retirement Income Security Act of 1974).
            (2) Small employer; large employer.--
                    (A) In general.--Subject to subparagraph (B), the 
                term ``small employer'' means an employer that normally 
                employed fewer than 101 employees during a typical 
                business day in the previous year and the term ``large 
                employer'' means an employer that is not a small 
                employer.
                    (B) Special rule for large employers.--Subject to 
                subparagraph (C), the Commission shall provide a 
                procedure by which, in the case of an employer that is 
                not a small employer but normally employs fewer than 
                101 employees (or, in the case of a State making an 
                election described in subparagraph (C)(i), the number 
                of employees specified under the State law) in a HPPC 
                area (or other locality identified by the Commission) 
                during a typical business day, the employer, upon 
                application, would be considered to be a small employer 
                with respect to such employees in the HPPC area (or 
                other locality). Such procedure shall be designed so as 
                to prevent the adverse selection of employees with 
                respect to which the previous sentence is applied.
                    (C) State election.--
                            (i) In general.--Subject to section 
                        1101(a)(3) and clause (ii), a State may by law, 
                        with respect to employers in the State, 
                        substitute for ``101'' in subparagraphs (A) and 
                        (B) any greater number, so long as--
                                    (I) such number is applied 
                                uniformly to all employers (other than 
                                employers described in clause (ii)) in 
                                a State, and
                                    (II) the State demonstrates, to the 
                                satisfaction of the Commission, that as 
                                of the time of enactment of the State 
                                law not more than 50 percent of all 
                                employees in the State are employees of 
                                small employers (as determined based 
                                upon such substitution).
                            (ii) Exception for certain large multi-
                        state employers.--Clause (i) shall not apply to 
                        an employer that normally employed at least 500 
                        employees during a typical business day in the 
                        previous year in each of at least 2 different 
                        States.
            (3) Premium class.--The term ``premium class'' means a 
        class established under section 1205(a)(2).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (5) State.--The term ``State'' includes the District of 
        Columbia, Puerto Rico, the Virgin Islands, Guam, American 
        Samoa, and the Northern Mariana Islands.
            (6) Type of enrollment.--There are 4 ``types of 
        enrollment'':
                    (A) Coverage only of an individual (referred to in 
                this title as enrollment ``on an individual basis'').
                    (B) Coverage of an individual and the individual's 
                spouse.
                    (C) Coverage of an individual and one child.
                    (D) Coverage of an individual and more than one 
                eligible family member.
        The types of coverage described in subparagraphs (B) through 
        (D) are collectively referred to in this title as enrollment 
        ``on a family basis''.
            (7) Uniform set of effective benefits.--The term ``uniform 
        set of effective benefits'' means, for a year, such set of 
        benefits as recommended by the Commission under section 
        1302(a), if not disapproved under such section.

          TITLE II--LOW-INCOME ASSISTANCE FOR HEALTH COVERAGE

                   Subtitle A--Low-Income Assistance

SEC. 2001. ELIGIBILITY.

    (a) Enrollees Under Accountable Health Plans.--Each low-income 
individual (as defined in section 2009(a)(1)(A)) who is not a medicare-
eligible individual is eligible--
            (1) for assistance under section 2002(a) with respect to 
        premiums,
            (2) for assistance under section 2003(a) with respect to 
        cost-sharing otherwise imposed by the plan, and
            (3) in the case of a very low-income individual, for 
        assistance under section 2004 with respect to certain items and 
        services.
    (b) Medicare-Eligible Individuals.--Each medicare-eligible 
individual who is a low-income individual is eligible--
            (1) for assistance under section 2002(b) with premiums 
        under the medicare program, and
            (2) in the case of a very low-income individual, for 
        assistance under section 2003(b) with respect to other medicare 
        cost-sharing and for assistance under section 2004 with respect 
        to certain items and services.

SEC. 2002. PREMIUM ASSISTANCE.

    (a) In General.--
            (1) Very low-income individuals.--In the case of a very 
        low-income individual (as defined in section 2009(a)(3)) who is 
        enrolled in an AHP, the premium assistance under this section 
        consists of--
                    (A) an adjustment in premiums charged the 
                individual under the plan, in accordance with section 
                1205(c)(1); and
                    (B) payment to the accountable health plan (on 
                behalf of the individual and family members) of the 
                applicable Federal assistance amount (as defined in 
                section 2009(c)(1)) for enrollment under the plan.
            (2) Moderately low-income individuals.--In the case of a 
        moderately low-income individual (as defined in section 
        2009(a)(2)) who is enrolled in an AHP, the premium assistance 
        under this section consists of--
                    (A) an adjustment in premiums charged the 
                individual under the plan, in accordance with section 
                1205(c)(2); and
                    (B) payment to the accountable health plan (on 
                behalf of the individual and family members) of the 
                applicable Federal assistance amount (as defined in 
                section 2009(c)(1)) for enrollment under the plan.
    (b) Medicare-Eligible Individuals.--In the case of a medicare-
eligible individual described in section 2001(b), the premium 
assistance under this subsection shall consist of payment for premiums 
imposed under part A (if any) or part B of title XVIII of the Social 
Security Act. Such assistance shall be provided in a manner so that no 
such premium amount is deducted from monthly benefits or transfers 
under section 1818 or 1840 of such Act.

SEC. 2003. COST-SHARING ASSISTANCE.

    (a) Nominal Cost-Sharing for Low-Income Individuals.--
            (1) In general.--In the case of a low-income individual 
        described in section 2001(a) who is enrolled in an AHP in an 
        enrollee unit, the cost-sharing assistance under this 
        subsection shall consist of--
                    (A) an accountable health plan's reduction, in 
                accordance with section 1202(c), in the cost-sharing 
                otherwise imposed to amounts that are nominal (as 
                specified by the Commission, consistent with paragraph 
                (2)); and
                    (B) payment to the accountable health plan (on 
                behalf of the individual and family members) by the 
                Commission of the adjusted per enrollee cost-sharing 
                assistance amount determined under paragraph (3).
            (2) Nominal.--In establishing what is ``nominal'' for 
        purposes of paragraph (1), the Commission shall consider 
        regulations established to carry out section 1916(a)(3) of the 
        Social Security Act (as in effect before the date of the 
        enactment of this Act).
            (3) Adjusted per enrollee cost-sharing assistance amount.--
                    (A) In general.--For purposes of this section, the 
                term ``adjusted per enrollee cost-sharing assistance 
                amount'' means, for a year, the product of--
                            (i) the amount determined under 
                        subparagraph (B)(i), divided by the number 
                        determined under subparagraph (B)(ii); and
                            (ii) the premium class assistance factor 
                        established under subparagraph (C).
                    (B) Determination of average per enrollee cost-
                sharing amount.--Before the beginning of each year the 
                Commission shall estimate--
                            (i) the total amount of cost-sharing 
                        assistance to be provided under this section to 
                        enrollee units in the year, and
                            (ii) the average number of enrollee units 
                        (as defined in section 1701(a)(5)) to be 
                        provided such assistance in the year.
                    (C) Premium class assistance factor.--The 
                Commission shall establish a factor, for each premium 
                class, that reflects the ratio of the--
                            (i) the average value of the cost-sharing 
                        assistance furnished under this section to 
                        individuals within the premium class, to
                            (ii) the average value of the cost-sharing 
                        assistance furnished under this subsection to 
                        individuals within all the premium classes.
    (b) Certain Medicare-Eligible Individuals.--In the case of a very 
low-income individual described in section 2001(b), the cost-sharing 
assistance under this subsection shall consist of payment being made 
under title XVIII of the Social Security Act--
            (1) without regard to coinsurance under such title 
        (including coinsurance described in section 1813 of such 
        title);
            (2) without regard to deductibles established under such 
        title (including those described in section 1813 and section 
        1833(b) of such title); and
            (3) as though any reference to ``80 percent'' in section 
        1833(a) of such title were a reference to ``100 percent''.
    (c) Appropriation To Cover Part A Assistance.--Section 1817(a) of 
the Social Security Act (42 U.S.C. 1395i(a)) is amended by adding at 
the end the following new sentence: ``In addition to the amounts 
appropriated under this subsection, there are hereby appropriated to 
the Trust Fund, out of any moneys in the Treasury not otherwise 
appropriated, amounts equivalent to the reductions in the deductibles 
and coinsurance established under section 1813 effected under section 
2003(b) of the Managed Competition Act of 1993.''.

SEC. 2004. ASSISTANCE FOR CERTAIN ITEMS AND SERVICES.

    (a) In General.--In the case of a very low-income individual, the 
special assistance under this section consists of payment under this 
section with respect to items and services described in subsection (b), 
subject to subsection (c).
    (b) Items and Services Covered.--
            (1) In general.--Subject to paragraph (2), the items and 
        services described in this subsection are--
                    (A) prescription drugs,
                    (B) eyeglasses and hearing aids, and
                    (C) such other items and services as the Commission 
                determines were commonly provided to individuals 
                described in section 1902(a)(10)(A)(i) of the Social 
                Security Act under State medicaid plans under title XIX 
                of such Act (as in effect as of the date of the 
                enactment of this Act).
            (2) Exclusions.--Items and services described in this 
        subsection shall not include--
                    (A) items and services included in the uniform set 
                of effective benefits, and
                    (B) services described in section 2101(c)(1)(A) and 
                similar services.
    (c) Nominal Copayments.--The Commission shall provide for cost-
sharing under this section in an amount that is nominal (within the 
meaning of section 1916(a)(3) of the Social Security Act, as in effect 
as of the date of the enactment of this Act).
    (d) Payment Rules.--The Commission shall provide for such rules 
relating to--
            (1) qualifications of providers of items and services, and
            (2) use of carriers in the administration of this section,
as may be appropriate to carry out this section.

SEC. 2005. COMPUTATION OF BASE FEDERAL PREMIUM AMOUNT.

    (a) Formula.--
            (1) In general.--For purposes of this Act, the ``base 
        Federal premium amount'' for an individual residing in a HPPC 
        area is equal to the product of--
                    (A) reference premium rate (as defined in section 
                2009(c)(4)) for the individual, and
                    (B) the national subsidy percentage (computed under 
                paragraph (2)).
            (2) National subsidy percentage.--In paragraph (1)(B), the 
        term ``national subsidy percentage'' means, for a year--
                    (A) the amount specified under subsection (b)(1), 
                divided by
                    (B) the total amount of low-income assistance that 
                would be provided if the national subsidy percentage 
                were equal to 100 percent;
        expressed as a percentage.
    (b) Computation of Total Federal Amount Available for Low-Income 
Assistance.--
            (1) In general.--The amount specified in this paragraph for 
        a year is--
                    (A) the sum determined under paragraph (2) for the 
                year, reduced by
                    (B) the total amount of reductions under paragraph 
                (3) for the year.
            (2) Available federal funds.--
                    (A) 1995 through 1999.--The Health Care Standards 
                Commission shall compute, in consultation with the 
                Secretary of Health and Human Services and the Director 
                of the Office of Management and Budget, before the 
                beginning of each of years 1995, 1996, 1997, 1998, and 
                1999, the sum of--
                            (i) the total dollar amount of Federal 
                        financial participation that would have been 
                        payable to States under section 1903 of the 
                        Social Security Act (including such a plan 
                        operating under a waiver under section 1115 of 
                        such Act) for calendar quarters during the 
                        year, based on their plans in effect as of the 
                        date of the enactment of this Act, taking into 
                        account changes scheduled to occur in such a 
                        plan as of such date; and
                            (ii) subject to paragraph (4)(A), the total 
                        net amount of additional revenues estimated by 
                        the Secretary of the Treasury to be received 
                        during the year due to the amendments made by 
                        subtitle A of title I and subtitle C of this 
                        title.
                    (B) After 1999.--The Health Care Standards 
                Commission shall compute, in consultation with the 
                Secretary of Health and Human Services and the Director 
                of the Office of Management and Budget, before the 
                beginning of 2000 and each subsequent year the sum of--
                            (i) the total dollar amount computed under 
                        subparagraph (A)(i) (or this clause) for the 
                        previous year, increased by the percentage 
                        increase in the gross domestic product (as 
                        determined by the Secretary of Commerce) for 
                        the 4-quarter period ending in June of the 
                        previous year; and
                            (ii) subject to paragraph (4)(A), the total 
                        net amount of additional revenues estimated by 
                        the Secretary of the Treasury to be received 
                        during the year due to the amendments made by 
                        subtitle A of title I and subtitle C of this 
                        title.
            (3) Reductions.--Subject to paragraph (4)(B), the total 
        amount of reductions described in this paragraph for a year are 
        the sum of the following:
                    (A) Long-term care phase-down assistance.--The 
                total amount of long-term care phase-down assistance to 
                which States are entitled under section 2101 for 
                calendar quarters during the year.
                    (B) Medicare low-income assistance.--The total 
                amount, estimated by the Commission, of the assistance 
                to be provided under sections 2002(b) and 2003(b) 
                during the year.
                    (C) Cost-sharing.--The total amount, estimated by 
                the Commission, of the cost-sharing assistance to be 
                provided under section 2003(a) during the year.
                    (D) Special low-income assistance.--The total 
                amount, estimated by the Commission, of the special 
                assistance to be provided under section 2004 during the 
                year.
                    (E) Grants and other expenditures.--In order to 
                provide for grants under section 2006(g) and additional 
                expenditures under subtitle E of title I, subtitle B of 
                title III, subtitle A of title IV, and title V, 
                $523,000,000.
            (4) Adjustment for over- and under-estimates.--
                    (A) Funds available.--The amounts determined under 
                subparagraphs (A)(ii) and (B)(ii) of paragraph (2) for 
                a year shall be increased or decreased by the amount by 
                which the amount estimated under such respective 
                subparagraph for the preceding year was below, or 
                above, the actual amount of revenues for such year.
                    (B) Reductions.--The amounts specified in 
                subparagraphs (A) through (D) of paragraph (3) for a 
                year shall be increased or decreased by the amount by 
                which the respective amount estimated under such 
                subparagraph for the preceding year was below, or 
                above, the actual amount described in such subparagraph 
                for such year.

SEC. 2006. APPLICATIONS FOR ASSISTANCE.

    (a) In General.--Subject to section 2008, any individual who seeks 
assistance under this subtitle (with respect to himself or herself or a 
family member) shall submit a written application, by person or mail, 
to the Commission.
    (b) Basis for Determination.--Subject to section 2008 and 
reconciliation under section 2007(b), eligibility for assistance under 
this subtitle shall be based on 4 times the family adjusted total 
income (as defined in section 2009(b)(1)) during the 3 months preceding 
the month in which the application is filed.
    (c) Form and Contents.--An application for assistance under this 
subtitle shall be in a form and manner specified by the Commission and 
shall require--
            (1) the provision of information necessary to make the 
        determinations described in subsection (b),
            (2) the provision of information respecting the AHP in 
        which the individual is enrolled (or is in the process of 
        enrolling), and
            (3) the individual to assign rights to assistance under 
        section 2003 to such plan.
Such form also shall include notice that the subsidies under this 
subtitle will be made as a direct reduction of premiums and cost-
sharing under the AHP involved.
    (d) Frequency of Applications.--
            (1) In general.--An application for assistance under this 
        subtitle may be filed at any time during the year and may be 
        resubmitted (but, except as provided in paragraph (3), not more 
        frequently than once every 3 months) based upon a change of 
        income or family composition.
            (2) Need to reapply.--In the case of an individual who--
                    (A) is entitled to assistance under this subtitle 
                in September of a year, and
                    (B) wishes to remain eligible for assistance for 
                months beginning with January of the following year,
        the individual (or a family member) must file with the 
        Commission in October of that preceding year a new application 
        for assistance. If a new application under this paragraph is 
        not filed with respect to an individual, an application for 
        such assistance with respect to the individual may not be filed 
        during November or December of that preceding year.
            (3) Correction of income.--Nothing in paragraph (1) shall 
        be construed as preventing an individual or family from, at any 
        time, submitting an application to reduce the amount of 
        assistance under this subtitle based upon an increase in income 
        from that stated in the previous application.
    (e) Timing of Assistance.--
            (1) In general.--If an application for assistance under 
        this subtitle is filed--
                    (A) on or before the 15th day of a month, 
                assistance under this subtitle shall be available for 
                premiums for months after such month and, with respect 
                to the cost-sharing, for expenses incurred after such 
                month, and, with respect to special assistance, for 
                items and services furnished after such month; or
                    (B) after the 15th day of a month, assistance under 
                this subtitle shall be available for premiums for 
                months after the month following such month and, with 
                respect to the cost-sharing, for expenses incurred 
                after such following month, and, with respect to 
                special assistance, for items and services furnished 
                after such following month.
            (2) Welfare recipients.--In the case of an individual or 
        family with respect to whom an application for assistance is 
        not required because of section 2008, in applying paragraph 
        (1), the date of approval of aid or benefits described in such 
        section shall be considered the date of filing of an 
        application for assistance under this subtitle.
    (f) Verification.--The Commission shall provide for verification, 
on a sample basis or other basis, of the information supplied in 
applications under this subtitle. This verification shall be separate 
from the reconciliation provided under section 2007.
    (g) Help in Completing Applications.--The Commission shall provide, 
from funds appropriated to carry out this subtitle, for grants to 
public or private nonprofit entities that will make available 
assistance to individuals and families in filing applications for 
assistance under this subtitle. The Commission shall make grants in a 
manner that provides such assistance at a variety of sites (such as 
low-income housing projects and shelters for homeless individuals) that 
are readily accessible to individuals and families eligible for 
assistance under this subtitle. The total amount of the funds provided 
in any fiscal year under grants under this subsection may not exceed 
$10,000,000.
    (h) Penalties for Inaccurate Information.--
            (1) Interest for understatements.--Each individual who 
        knowingly understates income reported in an application for 
        assistance under this subtitle or otherwise makes a material 
        misrepresentation of information in such an application shall 
        be liable to the Health Care Standards Commission for excess 
        payments made based on such understatement or 
        misrepresentation, and for interest on such excess payments at 
        a rate specified by the Commission.
            (2) Penalties for misrepresentation.--Each individual who 
        knowingly misrepresents material information in an application 
        for assistance under this subtitle shall be liable to the 
        Health Care Standards Commission for $1,000 or, if greater, 
        three times the excess payments made based on such 
        misrepresentation.
    (i) Filing of Application Defined.--Except as provided in 
subsection (e)(2), for purposes of this subtitle, an application under 
this subtitle is considered to be ``filed'' on the date on which the 
complete application, including all documentation required to act on 
the application, has been filed with the Commission.

SEC. 2007. RECONCILIATION OF PREMIUM ASSISTANCE THROUGH USE OF INCOME 
              STATEMENTS.

    (a) Requirement for Filing of Income Statement.--
            (1) In general.--Subject to section 2008, in the case of a 
        family which is receiving low-income assistance under this 
        subtitle for any month in a year, a member of the family shall 
        file with the Commission, by not later than April 15 of the 
        following year, a statement that verifies the family's total 
        adjusted family income for the taxable year ending during the 
        previous year. Such a statement shall provide information 
        necessary to determine the family adjusted total income during 
        the year and the number of family members in the family as of 
        the last day of the year.
            (2) Use of income tax return.--The Commission shall provide 
        a process under which the filing of a Federal income tax return 
        shall constitute the filing of a income statement under 
        paragraph (2).
            (3) Extension.--The Commission shall permit the extension 
        of the filing deadline under paragraph (1) in such cases as the 
        Commission determines to be appropriate. The Commission shall 
        take into account the extensions permitted for the filing of 
        Federal income tax returns.
    (b) Reconciliation of Premium Assistance Based on Actual Income.--
Based on and using the income reported in the statement filed under 
subsection (a) with respect to a family or individual, subject to 
section 2008, the Commission shall compute the amount of assistance 
that should have been provided under section 2002 with respect to 
premiums for the family in the year involved. If the amount of such 
assistance computed is--
            (1) greater than the amount of premium assistance provided, 
        the Commission shall provide for payment to the family or 
        individual involved of an amount equal to the amount of the 
        deficit, or
            (2) less than the amount of assistance provided, the 
        Commission shall require the family or individual to pay to the 
        Commission (to the credit of the program under this subtitle) 
        an amount equal to the amount of the excess payment.
    (c) Disqualification for Failure To File.-- Subject to section 
2008, in the case of any individual with respect to whom an information 
statement under subsection (a) is required to be filed in a year and 
that fails to file such a statement by the deadline specified in such 
subsection, the individual is not eligible for assistance under this 
subtitle after May 1 of such year. The Commission shall waive the 
application of this subsection if there is established, to the 
satisfaction of the Commission, good cause for the failure to file the 
statement on a timely basis.
    (d) Penalties for False Information.--Any individual that provides 
false information in a statement under subsection (a) is subject to a 
criminal penalty to the same extent as a criminal penalty may be 
imposed under section 1128B(a) of the Social Security Act with respect 
to a person described in clause (ii) of such section.
    (e) Notice of Requirement.--The Commission shall provide for 
written notice, in March of each year, of the requirement of subsection 
(a) to each family which received assistance under this subtitle in any 
month during the preceding year and to which such requirement applies.
    (f) Transmittal of Information.--The Commission of the Treasury 
shall transmit annually to the Commission such information relating to 
the adjusted total income of individuals for the taxable year ending in 
the previous year as may be necessary to verify the reconciliation of 
assistance under this section.
    (g) Construction.--Nothing in this section shall be construed as 
authorizing reconciliation of assistance provided with respect to cost-
sharing assistance under section 2003 or special assistance under 
section 2004.

SEC. 2008. TREATMENT OF CERTAIN CASH ASSISTANCE RECIPIENTS.

    In the case of a family that has been determined to be eligible for 
aid under part A or E of title IV of the Social Security Act or an 
individual who has been determined to be eligible for supplemental 
security income benefits under title XVI of such Act--
            (1) the family or individual is deemed, without the need to 
        file an application for assistance under section 2006, to have 
        adjusted total income below 100 percent of the State-adjusted 
        poverty level for the State,
            (2) the family or individual need not file a statement 
        under section 2007(a), and
            (3) the assistance received by the family is not subject to 
        reconciliation under section 2007(b).

SEC. 2009. DEFINITIONS.

    (a) Definitions Relating to Low-Income Individuals.--In this 
subtitle:
            (1) Low-income individual.--
                    (A) In general.--The term ``low-income individual'' 
                means, in the case of--
                            (i) a medicare-eligible individual residing 
                        in a State, such an individual whose family 
                        adjusted total income (as defined in subsection 
                        (b)(1)) is less than 120 percent of the State-
                        adjusted poverty level for the State; or
                            (ii) an individual who is not a medicare-
                        eligible individual and who resides in a State, 
                        an eligible individual (as defined in section 
                        1701(a)(1)) whose family adjusted total income 
                        is less than 200 percent of the State-adjusted 
                        poverty level for the State.
            (2) Moderately low-income individual.--The term 
        ``moderately low-income individual'' means a low-income 
        individual (as defined in paragraph (1)) who is not a very low-
        income individual (as defined in paragraph (3).
            (3) Very low-income individual.--The term ``very low-income 
        individual'' means, with respect to an individual residing in a 
        State, a low-income individual whose family adjusted total 
        income is less than 100 percent of the State-adjusted poverty 
        level for the State.
    (b) Definitions Relating to Income and Poverty Line.--In this 
subtitle:
            (1) Family adjusted total income.--The term ``family 
        adjusted total income'' means, with respect to an individual, 
        the sum of the modified total income for the individual and all 
        the other eligible family members.
            (2) Modified family income.--The term ``modified family 
        income'' means the sum of--
                    (A) the adjusted gross income (as defined in 
                section 62(a) of the Internal Revenue Code of 1986) of 
                the taxpayer and family members for the taxable year 
                determined without regard to sections 911, 931, and 933 
                of such Code, determined without the application of 
                paragraphs (6) and (7) of section 62(a) of such Code 
                and without the application of section 162(l) of such 
                Code, plus
                    (B) the interest received or accrued by the 
                taxpayer and family members during such taxable year 
                which is exempt from income, plus
                    (C) the amount of social security benefits 
                (described in section 86(d) of such Code) which is not 
                includable in gross income of the taxpayer and family 
                members under section 86 of such Code.
            (3) State-adjusted poverty level defined.--
                    (A) In general.--The term ``State-adjusted poverty 
                level'' means, with respect to an individual resident 
                in a State, the poverty line (as defined in paragraph 
                (4)) multiplied by the State adjustment factor 
                (established under subparagraph (B)) for the State.
                    (B) State adjustment factors.--The Health Care 
                Standards Commission shall establish, for each State, a 
                State adjustment factor that reflects the relative 
                cost-of-living in the State compared to the cost-of-
                living in the continental United States (including 
                Alaska) and Hawaii. The weighted average of such 
                factors shall be 1. Such factors shall be updated 
                annually.
            (4) Poverty line.--The term ``poverty line'' means the 
        income official poverty line as defined by the Office of 
        Management and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981.
            (5) Family size.--The family size to be applied under this 
        subtitle, with respect to family adjusted total income, is the 
        number of eligible family members (as defined in section 
        1701(a)(3)).
    (c) Definitions Relating to Assistance and Premium Amounts.--In 
this Act:
            (1) Applicable federal assistance amount.--The term 
        ``applicable Federal assistance amount'' means, with respect 
        to--
                    (A) a very low-income individual, the base Federal 
                premium amount (as determined under section 
                2005(a)(1)), or
                    (B) a moderately low-income individual, the amount 
                by which (i) the applicable low-income premium amount 
                (as defined in paragraph (2)), exceeds (ii) the base 
                individual premium (as defined in paragraph (3)),
        reduced by the amount of any contribution made by an employer 
        with respect to coverage of the individual.
            (2) Applicable low-income premium amount.--The term 
        ``applicable low-income premium amount'' means, with respect to 
        a low-income individual, the base Federal premium amount 
        (determined under section 2005(a)(1)) plus the product of--
                    (A) the individual responsibility percentage (as 
                defined in paragraph (5)), and
                    (B) the amount by which (i) the reference premium 
                rate (as defined in paragraph (4)), exceeds (ii) the 
                base Federal premium amount.
            (3) Base individual premium.--The term ``base individual 
        premium'' means, with respect to an individual, the product 
        of--
                    (A) the individual responsibility percentage (as 
                defined in paragraph (5)), and
                    (B) the reference premium rate (as defined in 
                paragraph (4)).
            (4) Reference premium rate.--The term ``reference premium 
        rate'' means, with respect to an individual residing in a HPPC 
        area, the lowest premium--
                    (A) established by an open AHP which enrolls at 
                least such proportion of eligible individuals in the 
                HPPC area as the Commission shall specify, and
                    (B) offered in the area for the premium class 
                applicable to such individual (including the HPPC 
                overhead amount established under section 1105(b)(3)).
            (5) Individual responsibility percentage.--The term 
        ``individual responsibility percentage'' means--
                    (A) with respect to a very low-income individual, 0 
                percentage points,
                    (B) with respect to a moderately low-income 
                individual, the number of percentage points by which 
                the family's family adjusted total income (expressed as 
                a percent of the applicable poverty line) exceeds 100 
                percentage points, and
                    (C) with respect to any other individual, 100 
                percentage points.

       Subtitle B--Long-Term Care Phase-Down Assistance to States

SEC. 2101. LONG-TERM CARE PHASE-DOWN ASSISTANCE.

    (a) In General.--Subject to subsection (b), if the excess 
percentage (as defined in subsection (c)(3)) for a State is greater 
than 0 percentage points, the State is entitled for each calendar 
quarter in 1995 through 1998 to payment equal to \1/4\ of the product 
of--
            (1) such excess percentage,
            (2) the applicable phase-down percentage for the year, 
        described in subsection (c)(4)), and
            (3) \1/2\ of the amount described in subsection (c)(1)(B).
    (b) Maintenance of Effort Required.--A State is not eligible for 
assistance under subsection (a) for a calendar quarter unless the State 
provides assurances satisfactory to the Commission that the State is 
incurring expenses (for services described in subsection (c)(1)(A)) in 
an amount not less than the sum of--
            (1) the amount of assistance under subsection (a), and
            (2) \1/4\ of the product of--
                    (A) the State's effective State medicaid percentage 
                (as defined in subsection (c)(2)), and
                    (B) \1/2\ of the amount described in subsection 
                (c)(1)(B).
    (c) Definitions.--For purposes of this section:
            (1) Long-term care percentage.--The ``long-term care 
        percentage'' for a State is--
                    (A) the portion of the amount described in 
                subparagraph (B) that is are attributable to medical 
                assistance for nursing facility services, intermediate 
                care facility services for the mentally retarded, home 
                health care services, and home and community-based 
                services, divided by
                    (B) the total amount of Federal and State 
                expenditures for medical assistance under the State 
                plan under title XIX of the Social Security Act for 
                calendar quarters during fiscal years 1992 and 1993;
        expressed as a percentage.
            (2) Effective state medicaid percentage.--The ``effective 
        State medicaid percentage'' for a State is--
                    (A)(i) the amount described in subparagraph (B), 
                reduced by (ii) the sum of the amount of the Federal 
                financial participation under section 1903(a) of the 
                Social Security Act paid to the State for calendar 
                quarters during fiscal years 1992 and 1993 and the 
                amount of health-care related taxes (as defined in 
                section 1903(w)(3)(A) of such Act) received by the 
                State during such fiscal years, divided by
                    (B) the total amount of the Federal and State 
                expenditures under its plan under title XIX of the 
                Social Security Act during calendar quarters in fiscal 
                years 1992 and 1993.
            (3) Excess percentage.--The term ``excess percentage'' 
        means, for a State, percentage by which (A) the long-term care 
        percentage (as defined in paragraph (1)) exceeds (B) 2 
        percentage points plus the effective State medicaid percentage 
        (as defined in paragraph (2)).
            (4) Applicable phase-down percentage.--The ``applicable 
        phase-down percentage'' for--
                    (A) 1995, is 80 percent,
                    (B) 1996, is 60 percent,
                    (C) 1997, is 40 percent, and
                    (D) 1998, is 20 percent.

                         Subtitle C--Financing

                        PART 1--MEDICARE SAVINGS

SEC. 2201. REDUCTION IN UPDATE FOR INPATIENT HOSPITAL SERVICES.

    (a) PPS Hospitals.--Section 1886(b)(3)(B)(i) of the Social Security 
Act (42 U.S.C. 1395ww(b)(3)(B)(i)), as amended by section 13501(a)(1) 
of the Omnibus Budget Reconciliation Act of 1993 (hereafter in this 
part referred to as ``OBRA-1993''), is amended--
            (1) in subclause (XII), by striking ``fiscal year 1997, the 
        market basket percentage increase minus 0.5 percentage point'' 
        and inserting ``each of the fiscal years 1997, 1998, and 1999, 
        the market basket percentage increase minus 2.5 percentage 
        points''; and
            (2) in subclause (XIII), by striking ``fiscal year 1998'' 
        and inserting ``fiscal year 2000''.
    (b) PPS-Exempt Hospitals.--Section 1886(b)(3)(B)(ii)(V) of such Act 
(42 U.S.C. 1395ww(b)(3)(B)(ii)(V)), as amended by section 13502(a)(1) 
of OBRA-1993, is amended by striking ``through 1997'' and inserting 
``through 1999''.

SEC. 2202. REDUCTION IN CONVERSION FACTOR FOR PHYSICIAN FEE SCHEDULE 
              FOR NON-PRIMARY CARE SERVICES.

    Section 1848(d)(3)(A) of the Social Security Act (42 U.S.C. 1395w-
4(d)(3)(A)), as amended by section 13511(a)(1) of OBRA-1993, is 
amended--
            (1) in clause (i), by striking ``through (v)'' and 
        inserting ``through (vi)'';
            (2) in clause (vi), by striking ``(iv) and (v)'' and 
        inserting ``(iv), (v), and (vi)'';
            (3) by redesignating clause (vi) as clause (vii); and
            (4) by inserting after clause (v) the following new clause:
                            ``(vi) Adjustment in percentage increase 
                        for years from 1996 through 1999.--In applying 
                        clause (i) for services furnished during the 
                        period beginning January 1, 1996, and ending 
                        December 31, 1999, the percentage increase in 
                        the appropriate update index shall be reduced 
                        by such percent as the Secretary determines 
                        will result in a reduction in aggregate 
                        payments for physicians' services under this 
                        part during such period of at least 
                        $6,300,000,000 from the amount of aggregate 
                        payments for such services that would otherwise 
                        have been made during the period.''.

SEC. 2203. REDUCTION IN HOSPITAL OUTPATIENT SERVICES THROUGH 
              ESTABLISHMENT OF PROSPECTIVE PAYMENT SYSTEM.

    (a) In General.--Section 1833(a)(2)(B) of the Social Security Act 
(42 U.S.C. 1395l(a)(2)(B)) is amended by striking ``section 1886)--'' 
and all that follows and inserting the following: ``section 1886), an 
amount equal to a prospectively determined payment rate established by 
the Secretary that provides for payments for such items and services to 
be based upon a national rate adjusted to take into account the 
relative costs of furnishing such items and services in various 
geographic areas, except that for items and services furnished during 
cost reporting periods (or portions thereof) in years beginning with 
1995, such amount shall be equal to 90 percent of the amount that would 
otherwise have been determined;''.
    (b) Establishment of Prospective Payment System.--Not later than 
July 1, 1994, the Secretary of Health and Human Services shall 
establish the prospective payment system for hospital outpatient 
services necessary to carry out section 1833(a)(2)(B) of the Social 
Security Act (as amended by subsection (a)).
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to items and services furnished on or after January 1, 1995.

SEC. 2204. INCREASE IN MEDICARE PART B PREMIUM FOR INDIVIDUALS WITH 
              HIGH INCOME.

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

   ``PART VIII--MEDICARE PART B PREMIUMS FOR HIGH-INCOME INDIVIDUALS

                              ``Sec. 59B. Medicare part B premium tax.

``SEC. 59B. MEDICARE PART B PREMIUM TAX.

    ``(a) Imposition of Tax.--In the case of an individual to whom this 
section applies for the taxable year, there is hereby imposed (in 
addition to any other tax imposed by this subtitle) a tax for such 
taxable year equal to the aggregate of the Medicare part B premium 
taxes for each of the months during such year that such individual is 
covered by Medicare part B.
    ``(b) Individuals to Whom Section Applies.--This section shall 
apply to any individual for any taxable year if--
            ``(1) such individual is covered under Medicare part B for 
        any month during such year, and
            ``(2) the modified adjusted gross income of the taxpayer 
        for such taxable year exceeds the threshold amount.
    ``(c) Medicare Part B Premium Tax for Month.--
            ``(1) In general.--The Medicare part B premium tax for any 
        month is the applicable percentage (as defined in paragraph 
        (2)) of the amount equal to the excess of--
                    ``(A) 150 percent of the monthly actuarial rate for 
                enrollees age 65 and over determined for that calendar 
                year under section 1839(b) of the Social Security Act, 
                over
                    ``(B) the total monthly premium under section 1839 
                of the Social Security Act (determined without regard 
                to subsections (b) and (f) of section 1839 of such 
                Act).
            ``(2) Phase-in of tax.--If the modified adjusted gross 
        income of the taxpayer for any taxable years exceeds the 
        threshold amount by--
                    ``(A) less than $25,000, the applicable percentage 
                under this paragraph is 33\1/3\ percent;
                    ``(B) at least $25,000, but less than $50,000, the 
                applicable percentage under this paragraph is 66\2/3\ 
                percent,
                    ``(C) at least $50,000, but less than $75,000, the 
                applicable percentage under this paragraph is 65/75 
                (expressed as a percent), or
                    ``(D) at least $75,000, the applicable percentage 
                under this paragraph is 100 percent.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Threshold amount.--The term `threshold amount' 
        means--
                    ``(A) except as otherwise provided in this 
                paragraph, $75,000,
                    ``(B) $100,000 in the case of a joint return, and
                    ``(C) zero in the case of a taxpayer who--
                            ``(i) is married at the close of the 
                        taxable year but does not file a joint return 
                        for such year, and
                            ``(ii) does not live apart from his spouse 
                        at all times during the taxable year.
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income--
                    ``(A) determined without regard to sections 135, 
                911, 931, and 933, and
                    ``(B) increased by the amount of interest received 
                or accrued by the taxpayer during the taxable year 
                which is exempt from tax.
            ``(3) Medicare part b coverage.--An individual shall be 
        treated as covered under Medicare part B for any month if a 
        premium is paid under part B of title XVIII of the Social 
        Security Act for the coverage of the individual under such part 
        for the month.
            ``(4) Married individual.--The determination of whether an 
        individual is married shall be made in accordance with section 
        7703.''.
    (b) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 of such Code is amended by adding at the end thereof the 
following new item:

                              ``Part VIII. Medicare Part B Premiums For 
                                        High-Income Individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to months after December 1993 in taxable years ending after 
December 31, 1993.

SEC. 2205. PHASED-IN ELIMINATION OF MEDICARE HOSPITAL DISPROPORTIONATE 
              SHARE ADJUSTMENT PAYMENTS.

    Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
1395ww(d)(5)(F)) is amended--
            (1) in clause (i), by inserting ``and before September 30, 
        1998,'' after ``1986,'';
            (2) in clause (ii), by striking ``The amount of such 
        payment'' and inserting ``Subject to clause (ix), the amount of 
        such payment''; and
            (3) by adding at the end the following new clause:
    ``(ix) The amount of the additional payment made under this 
paragraph for a discharge shall be equal to--
            ``(I) for discharges occurring during fiscal year 1995, 80 
        percent of the amount otherwise determined for the discharge 
        under clause (ii);
            ``(II) for discharges occurring during fiscal year 1996, 60 
        percent of the amount otherwise determined for the discharge 
        under clause (ii);
            ``(III) for discharges occurring during fiscal year 1997, 
        40 percent of the amount otherwise determined for the discharge 
        under clause (ii); and
            ``(IV) for discharges occurring during fiscal year 1998, 20 
        percent of the amount otherwise determined for the discharge 
        under clause (ii).''.

SEC. 2206. REDUCTION IN ROUTINE COST LIMITS FOR HOME HEALTH SERVICES.

    Section 1861(v)(1)(L)(i) of the Social Security Act (42 U.S.C. 
1395x(v)(1)(L)(i)) is amended--
            (1) in subclause (II), by striking ``or'' at the end;
            (2) in subclause (III)--
                    (A) by inserting ``and before July 1, 1995,'' after 
                ``1977,'', and
                    (B) by adding ``or'' at the end; and
            (3) by inserting after subclause (III) the following new 
        subclause:
            ``(IV) July 1, 1995, 103 percent,''.

SEC. 2207. REDUCTION IN ROUTINE COST LIMITS FOR EXTENDED CARE SERVICES.

    (a) In General.--Section 1888(a) of the Social Security Act (42 
U.S.C. 1395yy(a)) is amended--
            (1) by striking ``112 percent'' and inserting ``102 
        percent'' each place it appears.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to cost reporting periods beginning on or after October 1, 1994.

SEC. 2208. REDUCTIONS IN PAYMENTS FOR HOSPICE SERVICES.

    Section 1814(i)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
1395f(i)(1)(C)(ii)), as amended by section 13504 of OBRA-1993, is 
amended--
            (1) in subclause (III), by striking ``1.5 percentage 
        points'' and inserting ``2.5 percentage points'';
            (2) in subclause (IV), by striking ``1.5 percentage 
        points'' and inserting ``2.5 percentage points'';
            (3) in subclause (V), by striking ``0.5 percentage point'' 
        and inserting ``1.5 percentage points'' and by striking ``and'' 
        at the end;
            (4) by redesignating subclause (VI) as subclause (VIII) ; 
        and
            (5) by inserting after subclause (V) the following new 
        subclauses:
            ``(VI) for fiscal year 1998, the market basket percentage 
        increase for the fiscal year minus 1.0 percentage point;
            ``(VII) for fiscal year 1999, the market basket percentage 
        increase for the fiscal year minus 1.0 percentage point; and''.

                         PART 2--OTHER SAVINGS

SEC. 2211. REQUIREMENT THAT CERTAIN AGENCIES PREFUND GOVERNMENT HEALTH 
              BENEFITS CONTRIBUTIONS FOR THEIR ANNUITANTS.

    (a) Definitions.--For the purpose of this section--
            (1) the term ``agency'' means any agency or other 
        instrumentality within the executive branch of the Government, 
        the receipts and disbursements of which are not generally 
        included in the totals of the budget of the United States 
        Government submitted by the President;
            (2) the term ``health benefits plan'' means, with respect 
        to an agency, a health benefits plan, established by or under 
        Federal law, in which employees or annuitants of such agency 
        may participate;
            (3) the term ``health-benefits coverage'' means coverage 
        under a health benefits plan'';
            (4) an individual shall be considered to be an ``annuitant 
        of an agency'' if such individual is entitled to an annuity, 
        under a retirement system established by or under Federal law, 
        by virtue of--
                    (A) such individual's service with, and separation 
                from, such agency; or
                    (B) being the survivor of an annuitant under 
                subparagraph (A) or of an individual who died while 
                employed by such agency; and
            (5) the term ``Office'' means the Office of Personnel 
        Management.
    (b) Prefunding Requirement.--
            (1) In general.--Effective as of October 1, 1994, each 
        agency (or February 1, 1995, in the case of the agency with the 
        greatest number of employees, as determined by the Office) 
        shall be required to prepay the Government contributions which 
        are or will be required in connection with providing health-
        benefits coverage for annuitants of such agency.
            (2) Regulations.--The Office shall prescribe such 
        regulations as may be necessary to carry out this section. The 
        regulations shall be designed to ensure at least the following:
                    (A) Amounts paid by each agency shall be sufficient 
                to cover the amounts which would otherwise be payable 
                by such agency (on a ``pay-as-you-go'' basis), on or 
                after the applicable effective date under paragraph 
                (1), on behalf of--
                            (i) individuals who are annuitants of the 
                        agency as of such effective date; and
                            (ii) individuals who are employed by the 
                        agency as of such effective date, or who become 
                        employed by the agency after such effective 
                        date, after such individuals have become 
                        annuitants of the agency (including their 
                        survivors).
                    (B)(i) For purposes of determining any amounts 
                payable by an agency--
                            (I) this section shall be treated as if it 
                        had taken effect at the beginning of the 20-
                        year period which ends on the effective date 
                        applicable under paragraph (1) with respect to 
                        such agency; and
                            (II) in addition to any amounts payable 
                        under subparagraph (A), each agency shall also 
                        be responsible for paying any amounts for which 
                        it would have been responsible, with respect to 
                        the 20-year period described in subclause (I), 
                        in connection with any individuals who are 
                        annuitants or employees of the agency as of the 
                        applicable effective date under paragraph (1).
                    (ii) Any amounts payable under this subparagraph 
                for periods preceding the applicable effective date 
                under paragraph (1) shall be payable in equal 
                installments over the 20-year period beginning on such 
                effective date.
    (c) FASB Standards.--Regulations under subsection (b) shall be in 
conformance with the provisions of standard 106 of the Financial 
Accounting Standards Board, issued in December 1990.
    (d) Clarification.--Nothing in this section shall be considered to 
permit or require duplicative payments on behalf of any individuals.
    (e) Draft Legislation.--The Office shall prepare and submit to 
Congress any draft legislation which may be necessary in order to carry 
out this section.

                 Subtitle D--Repeal of Medicaid Program

SEC. 2301. REPEAL OF MEDICAID PROGRAM.

    (a) In General.--Title XIX of the Social Security Act is repealed.
    (b) Report on Conforming Changes.--By not later than May 1, 1994, 
the Health Care Standards Commission shall submit to Congress a report 
on--
            (1) changes in laws that should be made in order to conform 
        those laws to the repeal in the medicaid program effected under 
        subsection (a), and
            (2) the need for any special or transitional provisions 
        that should be made in order to ensure continuous assistance 
        for the medical needs of the medicaid population.
    (c) Effective Date.--The repeal made by subsection (a) shall apply 
to items and service furnished on or after January 1, 1995.

     TITLE III--TRAINING AND EDUCATION OF HEALTH CARE PROFESSIONALS

  Subtitle A--Reform of Federal Funding for Medical Residency Training

SEC. 3001. DEFINITIONS.

    In this subtitle, the following definitions shall apply:
            (1) The term ``entry position'' means, with respect to a 
        medical residency training program, a position as a resident in 
        the initial year of study in the program.
            (2) The term ``Fund'' means the National Medical Education 
        Fund established under section 3005.
            (3) The term ``medical residency training program'' means a 
        residency or other postgraduate medical training program 
        participation in which may be counted toward certification in a 
        specialty or subspecialty and includes formal postgraduate 
        training programs in geriatric medicine approved by the Health 
        Care Standards Commission.
            (4) The term ``primary care resident'' means a resident 
        enrolled in a medical residency training program in family 
        medicine, general internal medicine, general pediatrics, 
        preventive medicine, geriatric medicine, or osteopathic general 
        practice.
            (5) The term ``resident'' includes any participant in a 
        medical residency training program (or, for purposes of section 
        3003, a physician retraining program).
            (6) The term ``United States medical graduate'' means a 
        resident who is a graduate of --
                    (A) a school of medicine accredited by the Liaison 
                Committee on Medical Education of the American Medical 
                Association (or approved by such Committee as meeting 
                the standards necessary for such accreditation); or
                    (B) a school of osteopathy accredited by the 
                American Osteopathic Association (or approved by such 
                Association as meeting the standards necessary for such 
                accreditation).

SEC. 3002. APPROVAL OF MEDICAL RESIDENCY TRAINING POSITIONS.

    (a) In General.--The Health Care Standards Commission shall approve 
a resident training position in a medical residency training program 
for purposes of funding under section 3003(a) if--
            (1) the program submits an application for approval of the 
        position to the Commission (at such time and in such manner as 
        the Commission may require); and
            (2) the Commission determines that the entry position 
        relating to such resident training position in the program has 
        been allocated to the program under subsection (b).
    (b) Allocation of Entry Positions Among Programs.--
            (1) In general.--For purposes of subsection (a)(2), the 
        Commission shall establish a process for the allocation of 
        entry positions among medical residency training programs 
        consistent with this subsection.
            (2) Total number of funded positions.--
                    (A) In general.--In consultation with accountable 
                health plans, medical societies, and medical specialty 
                societies, the Commission shall determine the 
                appropriate total number of entry positions that will 
                be allocated to medical residency training programs 
                under this subsection in the United States for each 
                residency year. In this subsection, the term 
                ``residency year'' means a 12-month period beginning 
                with July of the year in which the program begins.
                    (B) Basis for total number of entry positions.--
                Subject to subparagraph (C), such total number of entry 
                positions shall be based on the need for health care 
                professionals to provide cost effective health care 
                services in the United States. In determining such 
                number the Commission shall take into account the 
                population-to-physician ratio, consistent with demand 
                for health care services.
                    (C) Limit on total number of entry positions.--The 
                total number of entry positions determined under this 
                paragraph for any residency year shall not exceed 110 
                percent of the number of United States medical 
                graduates who complete undergraduate medical education 
                in the previous year.
                    (D) No application to residents who have completed 
                another training program.--The total number determined 
                under this paragraph shall only apply to residents who 
                may enroll in a program without having previously 
                completed another medical residency training program.
            (3) General distribution of positions among specialities.--
                    (A) In general.--In consultation with accountable 
                health plans, medical societies, and medical specialty 
                societies, the Commission shall determine the 
                appropriate distribution of the total number of entry 
                positions determined under paragraph (2) among the 
                various medical specialties.
                    (B) Basis for distribution.--Such distribution 
                shall be based on the need for health care 
                professionals in different medical specialities to 
                provide cost effective health care services in the 
                United States. In determining such distribution the 
                Commission shall take into account the population-to-
                physician ratio with respect to each medical specialty, 
                consistent with demand for health care services, and 
                the specific needs of accountable health plans.
            (4) Allocation among programs.--
                    (A) In general.--The Commission shall allocate 
                entry positions, distributed among medical specialties 
                under paragraph (3), among specific medical residency 
                training programs.
                    (B) Basis for allocation.--Such allocation shall be 
                based on the recommendations (if any) submitted by the 
                Accreditation Council for Graduate Medical Education 
                and the Residency Review Committees of such Council and 
                the following objectives:
                            (i) Allocating positions among programs on 
                        the basis of quality.
                            (ii) Allocating positions among programs to 
                        avoid an inappropriate geographic distribution 
                        of physicians.
                            (iii) Allocating positions among programs 
                        to assure a sufficient number of residents in 
                        outpatient settings.

SEC. 3003. FUNDING FOR APPROVED MEDICAL RESIDENCY TRAINING PROGRAMS AND 
              PHYSICIAN RETRAINING PROGRAMS.

    (a) In General.--In the case of an entry position in a medical 
residency training program that is approved by the Commission under 
section 3002(a) and in the case of an entry position in a physician 
retraining program described in subsection (d)(1) for a residency year, 
the Commission shall provide a payment to the program on the first day 
of each month of the year from the National Medical Education Fund 
established under section 3005 in the amount determined under 
subsection (b). This subsection constitutes budget authority in advance 
of appropriations Acts, and represents the obligation of the Federal 
Government to make payments to such programs in accordance with this 
subtitle. No payment shall be made under this subsection for a month 
before July 1995.
    (b) Payment Amount.--
            (1) In general.--Subject to subsection (e), the amount of 
        payment made to an approved medical residency training program 
        or a physician retraining program for each approved entry 
        position for a full-time equivalent resident, shall be equal to 
        the applicable percentage (as defined in paragraph (3)) of the 
        base per resident amount established by the Commission for the 
        year under paragraph (2) for that resident.
            (2) Base per resident amount.--The Commission shall 
        establish a base per resident amount for each year (beginning 
        with 1995) that reflects an appropriate measure of the salary 
        and benefits paid to residents in medical residency training 
        programs during the year. The Commission may vary such amount 
        for residents to take into account--
                    (A) increases provided in the salaries and benefits 
                of residents on the basis of the length of service in 
                the program; and
                    (B) the relative wages and other costs of goods and 
                services among the various geographic areas in which 
                such programs are operated.
            (3) Applicable percentage defined.--In paragraph (1), the 
        ``applicable percentage'' with respect to a resident is equal 
        to--
                    (A) 175 percent, in the case of a primary care 
                resident; and
                    (B) 150 percent, in the case of a resident who is 
                not a primary care resident.
    (c) Limit on Length of Service of Resident.--
            (1) In general.--No payment shall be made under subsection 
        (a) for any resident who has completed 4 years of medical 
        residency training in any program.
            (2) Exception.--Paragraph (1) shall not apply to a resident 
        enrolled in a physician retraining program described in 
        subsection (d)(1).
    (d) Funding of Physician Retraining Programs.--
            (1) Program Described.--A physician retraining program 
        described in this paragraph is a program that--
                    (A) provides training over a period of not to 
                exceed 2 years for primary care residents for 
                physicians who have completed training in a medical 
                residency training program (other than as a primary 
                care resident); and
                    (B) meets such other requirements as the Commission 
                (in consultation with the Accreditation Council for 
                Graduate Medical Education) may impose.
            (2) Funding for pilot programs.--The Health Care Standards 
        Commission shall make payments from the Fund to assist the 
        development of physician retraining programs described in 
        paragraph (1).
    (e) Limit on Expenditures for Programs.--The amounts otherwise 
payable under this section shall be reduced, in a pro rata manner, to 
the extent necessary to assure that the total amount expended by the 
Health Care Standards Commission during a year for payments under this 
section do not exceed the Commission's estimate of the amount of funds 
available for expenditure from the Fund in the year.

SEC. 3004. FINANCING.

    (a) Assessment Against Premiums of Accountable Health Plans.--For 
requirement of payment by accountable health plans to the National 
Medical Education Fund of 1 percent of gross premium receipts, see 
section 1211.
    (b) Payments From Medicare.--Title XVIII of the Social Security Act 
(42 U.S.C. 1395 et seq.) is amended by inserting after section 1889 the 
following new section:

             ``payments to national medical education fund

    ``Sec. 1890. (a) Annual Payment Required.--For each month 
(beginning with July 1995), the Secretary shall make a payment to the 
National Medical Education Fund established under section 3005 of the 
Managed Competition Act of 1993 in an amount that is equal, for a month 
in a fiscal year, to \1/12\ of 1 percent of the Secretary's estimate of 
the total expenditures made by the Secretary under this title during 
the preceding fiscal year, adjusted to the extent of any overpayment or 
underpayment which the Secretary determines was made under this section 
for any prior fiscal year and with respect to which adjustment has not 
already been made under this subsection.
    ``(b) Allocation Among Trust Funds.--The Secretary shall provide 
for an allocation of the payment made under subsection (a) between the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund in a proportion that reasonably reflects 
the proportion of medical education costs of hospitals for which 
payment was made under this title for cost reporting periods during 
fiscal year 1993 that are associated with the provision of services 
under part A and part B.''.

SEC. 3005. NATIONAL MEDICAL EDUCATION FUND.

    (a) Establishment.--There is hereby established in the Treasury of 
the United States a fund to be known as the ``National Medical 
Education Fund'', which shall consist of--
            (1) amounts paid into the Fund by (or on behalf of) 
        accountable health plans pursuant to section 1211;
            (2) amounts paid into the Fund by the Secretary of Health 
        and Human Services under section 1890 of the Social Security 
        Act (as added by section 3004(b)); and
            (3) such other amounts that may otherwise be deposited in 
        or appropriated to the Fund.
    (b) Use of Amounts in Fund.--Amounts in the Fund shall be used by 
the Health Care Standards Commission to make payments to medical 
residency training programs and physician retraining programs under 
section 3003(b).
    (c) Management of Fund.--
            (1) In general; reports on operation.-- The Secretary of 
        the Treasury shall, in consultation with the Health Care 
        Standards Commission, manage the Fund, and shall report to 
        Congress each year on the financial condition and the results 
        of the operation of the Fund during the preceding year and on 
        the expected condition and operations of the Fund during the 
        next 5 years.
            (2) Investment.--The Secretary of the Treasury shall invest 
        the portion of the Fund that is not, in the judgment of the 
        Secretary and of the Health Care Standards Commission, required 
        to meet current withdrawals. Any investments of monies in the 
        Fund may be made only in interest-bearing obligations of the 
        United States.

SEC. 3006. REPEAL OF SEPARATE MEDICAL EDUCATION PAYMENTS UNDER 
              MEDICARE.

    (a) Prohibiting Recognition of Medical Education Costs Under Part 
B.--Section 1861(v)(1) of the Social Security Act (42 U.S.C. 
1395x(v)(1)) is amended by adding at the end the following new 
subparagraph:
    ``(T) In determining such reasonable costs, the Secretary may not 
include any costs incurred by a provider for graduate medical 
education.''.
    (b) Repeal of Adjustment for Indirect Medical Education Costs.--
Section 1886(d)(5) of such Act (42 U.S.C. 1395ww(d)(5)) is amended by 
striking subparagraph (B).
    (c) Repeal of Payments for Direct Graduate Medical Education 
Costs.--Section 1886 of such Act (42 U.S.C. 1395ww) is amended by 
striking subsection (h) and redesignating subsection (i) as subsection 
(h).
    (d) Conforming Amendments.--Section 1886(d) of such Act (42 U.S.C. 
1395ww(d)) is amended--
            (1) in paragraph (3)(C)(ii)--
                    (A) by inserting ``and before October 1, 1994,'' 
                after ``September 30, 1986,''; and
                    (B) by inserting ``and on or before September 30, 
                1994,'' after ``October 1, 1986,''; and
            (2) in paragraph (9)(D), by striking clause (ii) and 
        redesignating clauses (iii) and (iv) as clauses (ii) and (iii).
    (e) Effective Dates.--
            (1) Reasonable costs.--The amendment made by subsection (a) 
        shall apply to costs incurred on or after July 1, 1995.
            (2) Indirect medical education adjustment.--The amendments 
        made by subsections (b) and (d) shall apply to discharges 
        occurring on or after July 1, 1995.
            (3) Direct medical education.--The amendment made by 
        subsection (c) shall apply to portions of cost reporting 
        periods beginning on or after July 1, 1995.

        Subtitle B--Other Medical Education Grants and Programs

SEC. 3101. SCHOLARSHIP AND LOAN REPAYMENT PROGRAMS OF NATIONAL HEALTH 
              SERVICE CORPS.

    Section 338H(b)(1) of the Public Health Service Act (42 U.S.C. 
254q(b)(1)) is amended--
            (1) by striking ``and'' after ``1991,''; and
            (2) by striking ``through 2000.'' and inserting ``through 
        1994, $150,000,000 for fiscal year 1995, $175,000,000 for 
        fiscal year 1996, $200,000,000 for fiscal year 1997, 
        $225,000,000 for fiscal year 1998, and $250,000,000 for fiscal 
        year 1999.''.

SEC. 3102. AREA HEALTH EDUCATION CENTERS.

    Section 746(i)(1)(A) of the Public Health Service Act (42 U.S.C. 
293j(i)(1)(A)) is amended by striking ``through 1995'' and inserting 
``through 1994 and $30,000,000 for each of the fiscal years 1995 
through 1999''.

SEC. 3103. PUBLIC HEALTH AND PREVENTIVE MEDICINE.

    Section 765(a) of the Public Health Service Act (42 U.S.C. 294c(a)) 
is amended by striking ``through 1995'' and inserting ``through 1999''.

SEC. 3104. FAMILY MEDICINE.

    Section 747(d)(1) of the Public Health Service Act (42 U.S.C. 
293k(d)(1)) is amended by striking ``through 1995'' and inserting 
``through 1999''.

SEC. 3105. GENERAL INTERNAL MEDICINE AND PEDIATRICS.

    Section 748(c) of the Public Health Service Act (42 U.S.C. 293l(c)) 
is amended by striking ``through 1995'' and inserting ``through 1999''.

SEC. 3106. PHYSICIAN ASSISTANTS.

    Section 750(d)(1) of the Public Health Service Act (42 U.S.C. 
293n(d)(1)) is amended by striking ``through 1995'' and inserting 
``through 1999''.

SEC. 3107. ALLIED HEALTH PROJECT GRANTS AND CONTRACTS.

    Section 767(d) of the Public Health Service Act (42 U.S.C. 294e(d)) 
is amended by striking ``through 1995'' and inserting ``through 1999''.

SEC. 3108. NURSE ALLIED HEALTH PROJECT GRANTS AND CONTRACTS.

    Section 767(d) of the Public Health Service Act (42 U.S.C. 294e(d)) 
is amended by striking ``through 1995'' and inserting ``through 1999''.

SEC. 3109. NURSE PRACTITIONER AND NURSE MIDWIFE PROGRAMS.

    Section 822(d) of the Public Health Service Act (42 U.S.C. 296m(d)) 
is amended by striking ``and 1994'' and inserting ``through 1999''.

SEC. 3110. USE OF HEALTH CARE POLICY AND RESEARCH FUNDS FOR PRIMARY 
              CARE.

    Section 926 of the Public Health Service Act (42 U.S.C. 299c-5), as 
amended by section 10 of Public Law 102-410 (106 Stat. 2101), is 
amended by adding at the end the following subsection:
    ``(f) Allocation Regarding Primary Care.--Of the amounts made 
available for a fiscal year for carrying out this title, the Secretary 
shall obligate not less than 15 percent for carrying out section 902 
with respect to primary care.''.

       TITLE IV--PREVENTIVE HEALTH AND INDIVIDUAL RESPONSIBILITY

            Subtitle A--Expansion of Public Health Programs

SEC. 4001. IMMUNIZATIONS AGAINST VACCINE-PREVENTABLE DISEASES.

    Section 317(j)(1)(A) of the Public Health Service Act (42 U.S.C. 
247b(j)(1)(A)) is amended by striking ``through 1995'' and inserting 
``through 1999''.

SEC. 4002. PREVENTION, CONTROL, AND ELIMINATION OF TUBERCULOSIS.

    Section 317(j)(2) of the Public Health Service Act (42 U.S.C. 
247b(j)(2)) is amended by striking ``through 1995'' and inserting 
``through 1999''.

SEC. 4003. LEAD POISONING PREVENTION.-

    Section 317A(l)(1) of the Public Health Service Act (42 U.S.C. 
247b-1(l)(1)) is amended by striking ``through 1997'' and inserting 
``through 1999''.

SEC. 4004. PREVENTIVE HEALTH MEASURES WITH RESPECT TO BREAST AND 
              CERVICAL CANCERS.

    Section 1509(a) of the Public Health Service Act (42 U.S.C. 300n-
5(a)) is amended--
            (1) by striking ``and'' after ``1991,'', and
            (2) by striking ``1993.'' and inserting ``1993, 
        $100,000,000 for each of the fiscal years 1994 through 1996, 
        and such sums as may be necessary for each of the fiscal years 
        1997 through 1999.''.

SEC. 4005. OFFICE OF DISEASE PREVENTION AND HEALTH PROMOTION.

    (a) In General.--Section 1701(b) of the Public Health Service Act 
(42 U.S.C. 300u(b)) is amended by striking ``through 1996'' and 
inserting ``through 1999''.
    (b) Promotion of Individual Responsibility.--Section 1701(a)(11) of 
such Act (42 U.S.C. 300u(a)(11)) is amended--
            (1) by striking ``and'' at the end of subparagraph (C),
            (2) by redesignating subparagraph (D) as subparagraph (E), 
        and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) promote individual responsibility in personal 
                health care and in the use of valuable health care 
                resources; and''.
    (c) Minority Health.--Section 1707(f) of such Act (42 U.S.C. 300u-
6(f)) is amended by striking ``1993.'' and inserting ``1993, 
$35,000,000 for each of the fiscal years 1994 through 1996, and such 
sums as may be necessary for each of the fiscal years 1997 through 
1999.''.

SEC. 4006. PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK GRANT.

    Section 1901(a) of the Public Health Service Act (42 U.S.C. 
300w(a)) is amended by striking ``through 1997'' and inserting 
``through 1999''.

SEC. 4007. CATEGORICAL GRANTS FOR EARLY INTERVENTION REGARDING ACQUIRED 
              IMMUNE DEFICIENCY SYNDROME.

    Section 2655 of the Public Health Service Act (42 U.S.C. 300ff-55) 
is amended by striking ``through 1995'' and inserting ``through 1999''.

SEC. 4008. PROGRAMS OF OFFICE OF SMOKING AND HEALTH.

    In addition to any other authorization of appropriations that is 
available for programs of the Centers for Disease Control regarding the 
smoking of tobacco products, there is authorized to be appropriated for 
such programs $10,000,000 for each of the fiscal years 1995 through 
1999.

                          Subtitle B--Medicare

                PART 1--COVERAGE OF PREVENTIVE SERVICES

SEC. 4101. COVERAGE OF COLORECTAL SCREENING.

    (a) In General.--Section 1834 of the Social Security Act (42 U.S.C. 
1395m) is amended by inserting after subsection (c) the following new 
subsection:
    ``(d) Frequency and Payment Limits for Screening Fecal-Occult Blood 
Tests and Screening Flexible Sigmoidoscopies.--
            ``(1) Screening fecal-occult blood tests.--
                    ``(A) Payment limit.--In establishing fee schedules 
                under section 1833(h) with respect to screening fecal-
                occult blood tests provided for the purpose of early 
                detection of colon cancer, except as provided by the 
                Secretary under paragraph (3)(A), the payment amount 
                established for tests performed--
                            ``(i) in 1995 shall not exceed $5; and
                            ``(ii) in a subsequent year, shall not 
                        exceed the limit on the payment amount 
                        established under this subsection for such 
                        tests for the preceding year, adjusted by the 
                        applicable adjustment under section 1833(h) for 
                        tests performed in such year.
                    ``(B) Frequency limit.--Subject to revision by the 
                Secretary under paragraph (3)(B), no payment may be 
                made under this part for a screening fecal-occult blood 
                test provided to an individual for the purpose of early 
                detection of colon cancer--
                            ``(i) if the individual is under 50 years 
                        of age; or
                            ``(ii) if the test is performed within the 
                        11 months after a previous screening fecal-
                        occult blood test.
            ``(2) Screening flexible sigmoidoscopies.--
                    ``(A) Payment amount.--The Secretary shall 
                establish a payment amount under section 1848 with 
                respect to screening flexible sigmoidoscopies provided 
                for the purpose of early detection of colon cancer that 
                is consistent with payment amounts under such section 
                for similar or related services, except that such 
                payment amount shall be established without regard to 
                subsection (a)(2)(A) of such section.
                    ``(B) Frequency limit.--Subject to revision by the 
                Secretary under paragraph (3)(B), no payment may be 
                made under this part for a screening flexible 
                sigmoidoscopy provided to an individual for the purpose 
                of early detection of colon cancer--
                            ``(i) if the individual is under 50 years 
                        of age; or
                            ``(ii) if the procedure is performed within 
                        the 59 months after a previous screening 
                        flexible sigmoidoscopy.
            ``(3) Reductions in payment limit and revision of 
        frequency.--
                    ``(A) Reductions in payment limit.--The Secretary 
                shall review from time to time the appropriateness of 
                the amount of the payment limit established for 
                screening fecal-occult blood tests under paragraph 
                (1)(A). The Secretary may, with respect to tests 
                performed in a year after 1997, reduce the amount of 
                such limit as it applies nationally or in any area to 
                the amount that the Secretary estimates is required to 
                assure that such tests of an appropriate quality are 
                readily and conveniently available during the year.
                    ``(B) Revision of frequency.--
                            ``(i) Review.--The Secretary, in 
                        consultation with the Director of the National 
                        Cancer Institute, shall review periodically the 
                        appropriate frequency for performing screening 
                        fecal-occult blood tests and screening flexible 
                        sigmoidoscopies based on age and such other 
                        factors as the Secretary believes to be 
                        pertinent.
                            ``(ii) Revision of frequency.--The 
                        Secretary, taking into consideration the review 
                        made under clause (i), may revise from time to 
                        time the frequency with which such tests and 
                        procedures may be paid for under this 
                        subsection, but no such revision shall apply to 
                        tests or procedures performed before January 1, 
                        1998.
            ``(4) Limiting charges of nonparticipating physicians.--
                    ``(A) In general.--In the case of a screening 
                flexible sigmoidoscopy provided to an individual for 
                the purpose of early detection of colon cancer for 
                which payment may be made under this part, if a 
                nonparticipating physician provides the procedure to an 
                individual enrolled under this part, the physician may 
                not charge the individual more than the limiting charge 
                (as defined in subparagraph (B), or, if less, as 
                defined in section 1848(g)(2)).
                    ``(B) Limiting charge defined.--In subparagraph 
                (A), the term `limiting charge' means 115 percent of 
                the payment limit established under paragraph (2)(A).
                    ``(C) Enforcement.--If a physician or supplier 
                knowing and willfully imposes a charge in violation of 
                subparagraph (A), the Secretary may apply sanctions 
                against such physician or supplier in accordance with 
                section 1842(j)(2).''.
    (b) Conforming Amendments.--(1) Paragraphs (1)(D) and (2)(D) of 
section 1833(a) of such Act (42 U.S.C. 1395l(a)) are each amended by 
striking ``subsection (h)(1),'' and inserting ``subsection (h)(1) or 
section 1834(d)(1),''.
    (2) Section 1833(h)(1)(A) of such Act (42 U.S.C. 1395l(h)(1)(A)) is 
amended by striking ``The Secretary'' and inserting ``Subject to 
paragraphs (1) and (3)(A) of section 1834(d), the Secretary''.
    (3) Clauses (i) and (ii) of section 1848(a)(2)(A) of such Act (42 
U.S.C. 1395w-4(a)(2)(A)) are each amended by striking ``a service'' and 
inserting ``a service (other than a screening flexible sigmoidoscopy 
provided to an individual for the purpose of early detection of colon 
cancer)''.
    (4) Section 1862(a) of such Act (42 U.S.C. 1395y(a)) is amended--
            (A) in paragraph (1)--
                    (i) in subparagraph (E), by striking ``and'' at the 
                end,
                    (ii) in subparagraph (F), by striking the semicolon 
                at the end and inserting ``, and'', and
                    (iii) by adding at the end the following new 
                subparagraph:
            ``(G) in the case of screening fecal-occult blood tests and 
        screening flexible sigmoidoscopies provided for the purpose of 
        early detection of colon cancer, which are performed more 
        frequently than is covered under section 1834(d);''; and
            (B) in paragraph (7), by striking ``paragraph (1)(B) or 
        under paragraph (1)(F)'' and inserting ``subparagraphs (B), 
        (F), or (G) of paragraph (1)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to screening fecal-occult blood tests and screening flexible 
sigmoidoscopies performed on or after January 1, 1995.

SEC. 4102. COVERAGE OF CERTAIN IMMUNIZATIONS.

    (a) In General.--Section 1861(s)(10) of the Social Security Act (42 
U.S.C. 1395x(s)(10)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``, subject to section 4071(b) of 
                the Omnibus Budget Reconciliation Act of 1987,'', and
                    (B) by striking ``; and'' and inserting a comma;
            (2) in subparagraph (B), by striking the semicolon at the 
        end and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(C) tetanus-diphtheria booster and its administration;''.
    (b) Limitation on Frequency.--Section 1862(a)(1) of such Act (42 
U.S.C. 1395y(a)(1)), as amended by section 4101(b)(4)(A) of this Act, 
is amended--
            (1) in subparagraph (F), by striking ``and'' at the end;
            (2) in subparagraph (G), by striking the semicolon at the 
        end and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(H) in the case of an influenza vaccine, which is 
        administered within the 11 months after a previous influenza 
        vaccine, and, in the case of a tetanus-diphtheria booster, 
        which is administered within the 119 months after a previous 
        tetanus-diphtheria booster;''.
    (c) Conforming Amendment.--Section 1862(a)(7) of such Act (42 
U.S.C. 1395y(a)(7)), as amended by section 4101(b)(4)(B) of this Act, 
is amended by striking ``or (G)'' and inserting ``(G), or (H)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to influenza vaccines and tetanus-diphtheria boosters 
administered on or after January 1, 1995.

SEC. 4103. COVERAGE OF WELL-CHILD CARE.

    (a) In General.--Section 1861(s)(2) of the Social Security Act (42 
U.S.C. 1395x(s)(2)), as amended by section 13553(a) of the Omnibus 
Budget Reconciliation Act of 1993, is amended--
            (1) by striking ``and'' at the end of subparagraph (P);
            (2) by striking the semicolon at the end of subparagraph 
        (Q) and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
            ``(R) well-child services (as defined in subsection 
        (ll)(1)) provided to an individual entitled to benefits under 
        this title who is under 7 years of age;''.
    (b) Services Defined.--Section 1861 of such Act (42 U.S.C. 1395x) 
is amended--
            (1) by redesignating the subsection (jj) added by section 
        4156(a)(2) of the Omnibus Budget Reconciliation Act of 1990 as 
        subsection (kk); and
            (2) by inserting after subsection (kk) (as so redesignated) 
        the following new subsection:

                         ``Well-Child Services

    ``(ll)(1) The term `well-child services' means well-child care, 
including routine office visits, routine immunizations (including the 
vaccine itself), routine laboratory tests, and preventive dental care, 
provided in accordance with the periodicity schedule established with 
respect to the services under paragraph (2).
    ``(2) The Secretary, in consultation with the American Academy of 
Pediatrics, the Advisory Committee on Immunization Practices, and other 
entities considered appropriate by the Secretary, shall establish a 
schedule of periodicity which reflects the appropriate frequency with 
which the services referred to in paragraph (1) should be provided to 
healthy children.''.
    (c) Conforming Amendments.--(1) Section 1861(s)(2)(O) of such Act 
(42 U.S.C. 1395x(s)(2)(O)) is amended by striking ``subsection (jj)'' 
and inserting ``subsection (kk)''.
    (2) Section 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(1)), as 
amended by sections 4101(b)(4)(A) and 4102(b) of this Act, is amended--
            (A) in subparagraph (G), by striking ``and'' at the end;
            (B) in subparagraph (H), by striking the semicolon at the 
        end and inserting ``, and''; and
            (C) by adding at the end the following new subparagraph:
            ``(I) in the case of well-child services, which are 
        provided more frequently than is provided under the schedule of 
        periodicity established by the Secretary under section 
        1861(ll)(2) for such services;''.
    (3) Section 1862(a)(7) of such Act (42 U.S.C. 1395y(a)(7)), as 
amended by sections 4101(b)(4)(B) and 4102(c) of this Act, is amended 
by striking ``or (H)'' and inserting ``(H), or (I)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to well-child services provided on or after January 1, 1995.

SEC. 4104. ANNUAL SCREENING MAMMOGRAPHY.

    (a) Annual Screening Mammography for Women Over Age 64.--Section 
1834(c)(2)(A) of the Social Security Act (42 U.S.C. 1395m(b)(2)(A)) is 
amended--
            (1) in clause (iv), by striking ``but under 65 years of 
        age,'', and
            (2) by striking clause (v).
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to screening mammography performed on or after January 1, 1995.

SEC. 4105. FINANCING OF ADDITIONAL BENEFITS.

    (a) Premium for 1995.--Section 1839(e)(1)(B)(v) of the Social 
Security Act (42 U.S.C. 1395r(e)(1)(B)(v)) is amended by striking 
``$46.10'' and inserting ``$47.50''.
    (b) Premiums for 1996-1998.--(1) Section 1839 of such Act (42 
U.S.C. 1395r) is amended by adding at the end the following new 
subsection:
    ``(g) Except as provided in subsections (b) and (f), the monthly 
premium otherwise determined, without regard to this subsection, for 
each individual enrolled under this part shall be increased by $1.40 
for each month in 1996, 1997, and 1998.''.
    (2) Section 1839 of such Act (42 U.S.C. 1395r) is amended--
            (A) in subsection (a)(2), by striking ``(b) and (e)'' and 
        inserting ``(b), (e), and (g)'',
            (B) in subsection (a)(3), by striking ``subsection (e)'' 
        and inserting ``subsections (e) and (g)'', and
            (C) in subsection (b), by striking ``determined under 
        subsection (a) or (e)'' and inserting ``otherwise determined 
        under this section (without regard to subsection (f))''.

               PART 2--NOTICE OF ADVANCE DIRECTIVE RIGHTS

SEC. 4111. PROVIDING NOTICE OF RIGHTS REGARDING MEDICAL CARE TO 
              INDIVIDUALS ENTERING MEDICARE.

    (a) In General.--Section 1804 of the Social Security Act (42 U.S.C. 
1395b-2) is amended--
            (1) in paragraph (2), by striking ``and'' at the end;
            (2) in paragraph (3), by striking the period at the end and 
        inserting ``, and''; and
            (3) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) a description of an individual's rights under State 
        law to make decisions concerning medical care, including the 
        right to accept or refuse medical or surgical treatment and the 
        right to formulate advance directives (as defined in section 
        1866(f)(3)).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to notices provided under section 1804 of the Social Security Act 
on or after January 1 of the first year beginning after the date of the 
enactment of this Act.

                      TITLE V--MALPRACTICE REFORM

               Subtitle A--Findings; Purpose; Definitions

SEC. 5001. FINDINGS; PURPOSE.

    (a) Findings.--Congress finds that--
            (1) 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; and
            (2) the Federal Government has a major interest in health 
        care as a direct provider of health care and as a source of 
        payment for health care, and has a demonstrated interest in 
        assessing the quality of care, access to care, and the costs of 
        care through the evaluative activities of several Federal 
        agencies.
    (b) Purpose.--It is the purpose of this title to--
            (1) provide grants to States to develop alternative dispute 
        resolution procedures to attain a more efficient, expeditious, 
        and equitable resolution of health care malpractice disputes;
            (2) enhance general knowledge concerning the benefits of 
        different forms of alternative dispute resolution mechanisms; 
        and
            (3) establish uniformity and curb excesses in the State-
        based medical liability systems through Federally-mandated 
        reforms.

SEC. 5002. DEFINITIONS.

    As used in this title:
            (1) Alternative dispute resolution system.--The term 
        ``alternative dispute resolution system'' means a system that 
        is enacted or adopted by a State to resolve medical malpractice 
        claims other than through a medical malpractice liability 
        action.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care liability action and, in the case of an 
        individual who is deceased, incompetent, or a minor, the person 
        on whose behalf such an action is brought.
            (3) Clear and convincing evidence.--The term ``clear and 
        convincing evidence'' is that measure or degree of proof that 
        will produce in the mind of the trier of fact a firm belief or 
        conviction as to the truth of the allegations sought to be 
        established, 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.
            (4) 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.
            (5) 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.
            (6) 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 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.
            (7) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice claim.
            (8) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means any civil action 
        brought pursuant to State law in which a plaintiff alleges a 
        medical malpractice claim against a health care provider or 
        health care professional, but does not include any action in 
        which the plaintiff's sole allegation is an allegation of an 
        intentional tort.
            (9) Medical malpractice claim.--The term ``medical 
        malpractice claim'' means any claim relating to the provision 
        of (or the failure to provide) health care services or the use 
        of a medical product, without regard to the theory of liability 
        asserted, and includes any third-party claim, cross-claim, 
        counterclaim, or contribution claim in a medical malpractice 
        liability action.
            (10) Medical product.--
                    (A) In general.--The term ``medical product'' 
                means, with respect to the allegation of a claimant, a 
                drug (as defined in section 201(g)(1) of the Federal 
                Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a 
                medical device (as defined in section 201(h) of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)) 
                if--
                            (i) such drug or device was subject to 
                        premarket approval under section 505, 507, or 
                        515 of the Federal Food, Drug, and Cosmetic Act 
                        (21 U.S.C. 355, 357, or 360e) or section 351 of 
                        the Public Health Service Act (42 U.S.C. 262) 
                        with respect to the safety of the formulation 
                        or performance of the aspect of such drug or 
                        device which is the subject of the claimant's 
                        allegation or the adequacy of the packaging or 
                        labeling of such drug or device, and such drug 
                        or device is approved by the Food and Drug 
                        Administration; or
                            (ii) the drug or device is generally 
                        recognized as safe and effective under 
                        regulations issued by the Secretary of Health 
                        and Human Services under section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        321(p)).
                    (B) Exception in case of misrepresentation or 
                fraud.--Notwithstanding subparagraph (A), the term 
                ``medical product'' shall not include any product 
                described in such subparagraph if the claimant shows 
                that the product is approved by the Food and Drug 
                Administration for marketing as a result of withheld 
                information, misrepresentation, or an illegal payment 
                by manufacturer of the product.
            (11) 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.
            (12) Punitive damages.--The term ``punitive damages'' means 
        compensation, in addition to compensation for actual harm 
        suffered, that is awarded for the purpose of punishing a person 
        for conduct deemed to be malicious, wanton, willful, or 
        excessively reckless.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (14) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, and Guam.

          Subtitle B--Uniform Standards for Malpractice Claims

SEC. 5101. APPLICABILITY.

    Except as provided in section 5111, this subtitle shall apply to 
any medical malpractice liability action brought in a Federal or State 
court, and to any medical malpractice claim subject to an alternative 
dispute resolution system, that is initiated on or after January 1, 
1995.

SEC. 5102. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH 
              ALTERNATIVE DISPUTE RESOLUTION.

    (a) In General.--
            (1) State cases.--A medical malpractice liability action 
        may not be brought in any State court during a calendar year 
        unless the medical malpractice liability claim that is the 
        subject of the action has been initially resolved under an 
        alternative dispute resolution system certified for the year by 
        the Secretary under section 5202(a), or, in the case of a State 
        in which such a system is not in effect for the year, under the 
        alternative Federal system established under section 5202(b).
            (2) Federal diversity actions.--A medical malpractice 
        liability action may not be brought in any Federal court under 
        section 1332 of title 28, United States Code, during a calendar 
        year unless the medical malpractice liability claim that is the 
        subject of the action has been initially resolved under the 
        alternative dispute resolution system referred to in paragraph 
        (1) that applied in the State whose law applies in such action.
            (3) Claims against united states.--
                    (A) Establishment of process for claims.--The 
                Attorney General shall establish an alternative dispute 
                resolution process for the resolution of tort claims 
                consisting of medical malpractice liability claims 
                brought against the United States under chapter 171 of 
                title 28, United States Code. Under such process, the 
                resolution of a claim shall occur after the completion 
                of the administrative claim process applicable to the 
                claim under section 2675 of such title.
                    (B) Requirement for initial resolution under 
                process.--A medical malpractice liability action based 
                on a medical malpractice liability claim described in 
                subparagraph (A) may not be brought in any Federal 
                court unless the claim has been initially resolved 
                under the alternative dispute resolution process 
                established by the Attorney General under such 
                subparagraph.
    (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 reaches a decision on the amount of damages assessed 
        against the defendant.
    (c) Procedures for Filing Actions.--
            (1) Notice of intent to contest decision.--Not later than 
        60 days after a decision is issued with respect to a medical 
        malpractice liability claim under an alternative dispute 
        resolution system, each party affected by the decision shall 
        submit a sealed statement to a court of competent jurisdiction 
        indicating whether or not the party intends to contest the 
        decision.
            (2) Deadline for filing action.--A medical malpractice 
        liability action may not be brought by a party unless--
                    (A) the party has filed the notice of intent 
                required by paragraph (1); and
                    (B) the party files the action in a court of 
                competent jurisdiction not later than 90 days after the 
                decision resolving the medical malpractice liability 
                claim that is the subject of the action is issued under 
                the applicable alternative dispute resolution system.
            (3) Court of competent jurisdiction.--For purposes of this 
        subsection, 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) Legal Effect of Uncontested 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. The previous sentence 
shall not apply to a decision that is contested by a party affected by 
the decision pursuant to subsection (c)(1).

SEC. 5103. PROCEDURAL REQUIREMENTS FOR FILING OF ACTIONS.

    (a) Certificate of Merit.--
            (1) In general.--Each individual who files a medical 
        malpractice liability action shall, not later than 90 days 
        after filing the action--
                    (A) submit a certificate of merit described in 
                subsection (b); or
                    (B) post a surety (or equivalent security) bond of 
                $4,000 (or, during the 45-day period that begins on the 
                date the action is filed, a cost bond of $2,000) with 
                the court.
            (2) Extension of deadline.--On the motion of any party to 
        the action or upon a written agreement of the parties filed 
        with the court, the court may extend the deadline specified in 
        paragraph (1) for a period not to exceed 30 days.
            (3) Dismissal for failure to meet requirement.--If an 
        individual filing a medical malpractice liability action fails 
        to meet the requirements of paragraph (1)--
                    (A) the court shall dismiss the action without 
                prejudice to the refiling of the action by the 
                individual; and
                    (B) require the individual to pay any court costs 
                incurred by the defendants as a result of the filing of 
                the action.
            (4) Waiver for good cause.--The court may waive the 
        application of paragraph (1) to a plaintiff if the plaintiff 
        shows good cause that such paragraph should not apply.
            (5) Certificate of merit described.--In paragraph (1), a 
        ``certificate of merit'' is, with respect to an individual 
        filing a medical malpractice liability action, an affidavit 
        declaring that the individual (or the individual's attorney) 
        has obtained a written opinion from a medical expert who is 
        knowledgeable of the relevant medical issues involved in the 
        action that the defendant was negligent and the defendant's 
        conduct was a proximate cause of the alleged injury that is the 
        subject of the action.
    (b) Response to Standard Interrogatories and Requests for 
Documents.--
            (1) Deadline.--Each party to a medical malpractice 
        liability action shall respond to the standard set of 
        interrogatories and requests for production of documents 
        developed pursuant to paragraph (4) as follows:
                    (A) In the case of a plaintiff, the party shall 
                provide the defendant (or the defendant's attorney) 
                with full and complete responses not later than 45 days 
                after filing the action.
                    (B) In the case of a defendant, the party shall 
                provide the plaintiff (or the plaintiff's attorney) 
                with full and complete responses not later than 45 days 
                after receiving the plaintiff's responses under 
                subparagraph (A).
                    (C) In the case of a party who is added to the 
                action after the action is filed, the party shall 
                provide all other parties (or such parties' attorneys) 
                with full and complete responses not later than 45 days 
                after the date of the filing of the pleading by which 
                the party is added to the action.
            (2) Extension of deadline.--On the motion of any party to 
        the action that is supported by good cause, or upon a written 
        agreement of the parties filed with the court, the court shall 
        extend the deadline specified in paragraph (1) for a period not 
        to exceed 30 days.
            (3) Imposition of sanctions for failure to respond.--If a 
        party to a medical malpractice liability action fails to 
        respond to the standard set of interrogatories and requests for 
        production of documents as required under paragraph (1), the 
        party shall be subject to sanctions by the court under any 
        applicable laws, rules, and regulations governing the 
        imposition of sanctions by the court.
            (4) Development of standard interrogatories and requests.--
                    (A) Appointment of expert panels.--The Governor of 
                each State shall appoint a panel to develop the 
                standard set of interrogatories and requests for 
                production of documents that will be used for purposes 
                of this subsection in the courts of the State. The set 
                shall be comprehensive and designed to expedite the 
                discovery process in the courts. The Attorney General 
                shall appoint a panel to develop such set that will be 
                used for purposes of this subsection in the Federal 
                courts.
                    (B) Composition.--Each panel appointed pursuant to 
                subparagraph (A) shall consist of not less than 6 and 
                not more than 12 members, of whom an equal number shall 
                be attorneys who customarily represent plaintiffs in 
                medical malpractice liability actions and attorneys who 
                customarily represent defendants in such actions.
                    (C) Deadlines.--Not later than October 1, 1994, 
                each panel appointed pursuant to subparagraph (A) shall 
                complete and publish the standard set of 
                interrogatories and requests for production of 
                documents.

SEC. 5104. TREATMENT OF NONECONOMIC AND PUNITIVE DAMAGES.

    (a) Limitation on Noneconomic Damages.--The total amount of 
noneconomic damages that may be awarded to a claimant and the members 
of the claimant'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) No Award of Punitive Damages Against Manufacturer of Medical 
Product.--In the case of a medical malpractice liability action in 
which the plaintiff alleges a claim against the manufacturer of a 
medical product, no punitive or exemplary damages may be awarded 
against such manufacturer.
    (c) Several Liability for Noneconomic Damages.--The liability of 
each defendant for noneconomic damages shall be several only and shall 
not be joint, and each defendant shall be liable only for the amount of 
noneconomic damages allocated to the defendant in direct proportion to 
the defendant's percentage of responsibility (as determined by the 
trier of fact).
    (d) Allocation of Punitive Damage Awards for Provider Licensing and 
Disciplinary Activities.--
            (1) In general.--The total amount of any punitive damages 
        awarded in a medical malpractice liability action shall be paid 
        to the State in which the action is brought (or, in a case 
        brought in Federal court, in the State in which the health care 
        services that caused the injury that is the subject of the 
        action were provided) for the purposes of carrying out the 
        activities described in paragraph (2).
            (2) Activities described.--A State shall use amounts paid 
        pursuant to paragraph (1) to carry out activities to assure the 
        safety and quality of health care services provided in the 
        State, including (but not limited to)--
                    (A) licensing or certifying health care 
                professionals and health care providers in the State;
                    (B) implementing health care quality assurance 
                programs;
                    (C) carrying out public education programs to 
                increase awareness of the availability of comparative 
                quality information on accountable health plans;
                    (D) carrying out programs to reduce malpractice-
                related costs for providers volunteering to provide 
                services in medically underserved areas; and
                    (E) implementing and operating a State alternative 
                dispute resolution system certified by the Secretary 
                under section 5202.
            (3) Maintenance of effort.--A State shall use any amounts 
        paid pursuant to paragraph (1) to supplement and not to replace 
        amounts spent by the State for the activities described in 
        paragraph (2).
    (e) Development of Alternative Limits on Noneconomic Damages.--
            (1) In general.--Not later than 1 year after the date of 
        the enactment of this Act, the Health Care Standards Commission 
        shall develop and transmit to Congress alternative limits on 
        the amount of noneconomic damages that may be awarded with 
        respect to medical malpractice liability claims, together with 
        legislative specifications necessary to replace the limit 
        imposed under subsection (a) on the amount of such damages with 
        such alternative limits. The purpose of the development of the 
        limits is to provide certainty and fairness in malpractice 
        awards and to avoid unwarranted disparities among health care 
        providers and health care professionals who have engaged in 
        similar conduct.
            (2) Establishment of separate limits for categories of 
        injuries.--In developing limits under paragraph (1), the 
        Commission shall establish separate limits for noneconomic 
        damages resulting from each of the following categories of 
        injuries:
                    (A) Non-physical injuries.
                    (B) Insignificant physical injuries.
                    (C) Temporary minor physical injuries.
                    (D) Temporary major physical injuries.
                    (E) Permanent minor physical injuries.
                    (F) Permanent substantial physical injuries.
                    (G) Permanent major physical injuries.
                    (H) Permanent grave physical injuries.
                    (I) Death.
            (3) Factors considered.--In developing limits under 
        paragraph (1) for each of the categories described in paragraph 
        (2), the Commission shall--
                    (A) examine the most recent available data on the 
                amount of damages awarded with respect to such claims; 
                and
                    (B) set specific limits that reasonably compensate 
                most injured parties at the level of compensation 
                currently provided, excluding those levels of 
                compensation that the Commission finds unreasonably 
                large.
            (4) Consultation.--In developing limits under this 
        subsection, the Commission shall consult with representatives 
        of each of the following:
                    (A) Attorneys who represent plaintiffs in medical 
                malpractice liability actions.
                    (B) Attorneys who represent health care 
                professionals and health care providers in medical 
                malpractice liability actions.
                    (C) Physicians and other health care professionals 
                and providers.
                    (D) Individuals who have suffered injury as a 
                result of medical malpractice.
                    (E) Judges who preside over medical malpractice 
                liability actions.
                    (F) Medical ethicists.
                    (G) Health care economists.
                    (H) Liability insurers.
            (5) Guidance to entities resolving claims.--If Congress 
        enacts legislation that imposes the limits developed by the 
        Commission under this subsection on the amount of noneconomic 
        damages that may be awarded with respect to medical malpractice 
        liability claims, the Commission shall prepare and disseminate 
        guidelines to assist courts and other entities resolving such 
        claims in the determination of the particular category of 
        injury specified in paragraph (2) to which a claimant's injury 
        shall be assigned for purposes of applying the appropriate 
        limit on such damages.

SEC. 5105. PERIODIC PAYMENTS FOR FUTURE LOSSES.

    (a) In General.--In any medical malpractice liability action in 
which the damages awarded for future economic loss exceeds $100,000, a 
defendant may not be required to pay such damages in a single, lump-sum 
payment, but may be permitted to make such payments on a periodic 
basis. The periods for such payments shall be determined by the court, 
based upon projections of when such expenses are likely to be incurred.
    (b) Waiver.--A court may waive the application of subsection (a) 
with respect to a defendant if the court determines that it is not in 
the best interests of the plaintiff to receive payments for damages on 
such a periodic basis.

SEC. 5106. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.

    (a) Limitation on Amount of Contingency Fees.--
            (1) In general.--An attorney who represents, on a 
        contingency fee basis, a claimant in a medical malpractice 
        liability claim may not charge, demand, receive, or collect for 
        services rendered in connection with such claim in excess of 
        the following amount recovered by judgment or settlement under 
        such claim:
                    (A) 25 percent of the first $150,000 (or portion 
                thereof) recovered, plus
                    (B) 10 percent of any amount in excess of $150,000 
                recovered.
            (2) Calculation of periodic payments.--In the event that a 
        judgment or settlement includes periodic or future payments of 
        damages, the amount recovered for purposes of computing the 
        limitation on the contingency fee under paragraph (1) shall be 
        based on the cost of the annuity or trust established to make 
        the payments. In any case in which an annuity or trust is not 
        established to make such payments, such amount shall be based 
        on the present value of the payments.
    (b) Requiring Party Contesting ADR Ruling To Pay Attorney's Fees 
and Other Costs.--
            (1) In general.--The court in a medical malpractice 
        liability action shall require the party that (pursuant to 
        section 5102(c)(1)) contested the ruling of the alternative 
        dispute resolution system with respect to the medical 
        malpractice liability claim that is the subject of the action 
        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 under the 
        alternative dispute resolution system), but only if--
                    (A) in the case of an action in which the party 
                that contested the ruling is the claimant, the amount 
                of damages awarded to the party under the action is not 
                greater than the amount of damages awarded to the party 
                under the ADR system; and
                    (B) in the case of an action in which the party 
                that contested the ruling is the defendant, the amount 
                of damages assessed against the party under the action 
                is not less than the amount of damages assessed under 
                the ADR system.
            (2) Exceptions.--Paragraph (1) shall not apply if--
                    (A) the party contesting the ruling made under the 
                previous alternative dispute resolution system shows 
                that--
                            (i) the ruling 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 ruling was based on an error of 
                        law;
                    (B) the party contesting the ruling made under the 
                alternative dispute resolution system presents new 
                evidence before the trier of fact that was not 
                available for presentation under the ADR system;
                    (C) the medical malpractice liability action raised 
                a novel issue of law; or
                    (D) the court finds that the application of such 
                paragraph to a party would constitute an undue 
                hardship, and issues an order waiving or modifying the 
                application of such paragraph that specifies the 
                grounds for the court's decision.
            (3) Limit on attorney's fees paid.--Attorneys' fees that 
        are required to be paid under paragraph (1) by the contesting 
        party shall not exceed the amount of the attorneys' fees 
        incurred by the contesting party in the action. If the 
        attorneys' fees of the contesting party are based on a 
        contingency fee agreement, the amount of attorneys' fees for 
        purposes of the preceding sentence shall not exceed the 
        reasonable value of those services.
            (4) Records.--In order to receive attorneys' fees under 
        paragraph (1), counsel of record in the medical malpractice 
        liability action involved shall maintain accurate, complete 
        records of hours worked on the action, regardless of the fee 
        arrangement with the client involved.
    (c) Contingency Fee Defined.--As used in this section, the term 
``contingency fee'' means any fee for professional legal services which 
is, in whole or in part, contingent upon the recovery of any amount of 
damages, whether through judgment or settlement.

SEC. 5107. UNIFORM STATUTE OF LIMITATIONS.

    (a) In General.--No medical malpractice claim may be initiated 
after the expiration of the 2-year period that begins on the date on 
which the alleged injury that is the subject of such claim was 
discovered or the date on which such injury should reasonably have been 
discovered, whichever is earlier.
    (b) Exception for Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, a medical 
malpractice claim may be initiated after the expiration of the period 
described in subsection (a) if the claim is initiated before the minor 
attains 8 years of age.

SEC. 5108. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

    (a) In General.--In the case of a medical malpractice claim 
relating to services provided during labor or the delivery of a baby, 
if the health care professional or health care provider against whom 
the claim is brought did not previously treat the claimant for the 
pregnancy, the trier of fact may not find that such professional or 
provider committed malpractice and may not assess damages against such 
professional or provider unless the malpractice is proven by clear and 
convincing evidence.
    (b) Applicability to Group Practices or Agreements Among 
Providers.--For purposes of subsection (a), 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.

SEC. 5109. UNIFORM STANDARD FOR DETERMINING LIABILITY IN ACTIONS BASED 
              ON NEGLIGENCE.

    (a) Standard of Reasonableness.--Except as provided in subsection 
(b), a defendant in a medical malpractice liability action may not be 
found to have committed malpractice unless the defendant's conduct at 
the time of providing the health care services that are the subject of 
the action was not reasonable.
    (b) Actions Brought Under Strict Liability.--Subsection (a) shall 
not apply with respect to a medical malpractice action if (in 
accordance with applicable State law) the theory of liability upon 
which the action is based is a theory of strict liability.

SEC. 5110. JURISDICTION OF FEDERAL COURTS.

    Nothing in this subtitle shall be construed to establish 
jurisdiction over any medical malpractice liability action in the 
district courts of the United States on the basis of sections 1331 or 
1337 of title 28, United States Code.

SEC. 5111. PREEMPTION.

    (a) In General.--This subtitle supersedes any State law only to the 
extent that the State law permits the recovery by a claimant or the 
assessment against a defendant of a greater amount of damages or 
establishes a less strict standard of proof for determining whether a 
defendant has committed malpractice, than the provisions of this 
subtitle.
    (b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in this subtitle 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 in inconvenient forum.

   Subtitle C--Requirements for State Alternative Dispute Resolution 
                             Systems (ADR)

SEC. 5201. BASIC REQUIREMENTS.

    (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 courts of that State;
            (2) requires that a written opinion resolving the dispute 
        be issued not later than 6 months after the date by which each 
        party against whom the claim is filed has received notice of 
        the claim (other than in exceptional cases for which a longer 
        period is required for the issuance of such an opinion), and 
        that the opinion contain--
                    (A) findings of fact relating to the dispute, and
                    (B) a description of the costs incurred in 
                resolving the dispute under the system (including any 
                fees paid to the individuals hearing and resolving the 
                claim), together with an appropriate assessment of the 
                costs against any of the parties;
            (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 an 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 subtitle B (other than sections 
5102 and 5103) shall apply with respect to claims brought under a State 
alternative dispute resolution system or the alternative Federal system 
in the same manner as such provisions apply with respect to medical 
malpractice liability actions brought in the State.

SEC. 5202. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF ALTERNATIVE 
              FEDERAL SYSTEM.

    (a) Certification.--
            (1) 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.
            (2) Basis for certification.--The Secretary shall certify a 
        State's alternative dispute resolution system under this 
        subsection for a calendar year if the Secretary determines 
        under paragraph (1) that the system meets the requirements of 
        section 5201.
    (b) Applicability of Alternative Federal System.--
            (1) Establishment and applicability.--Not later than 
        October 1, 1994, the Secretary, in consultation with the 
        Attorney General, shall establish by rule an alternative 
        Federal ADR system for the resolution of medical malpractice 
        liability claims during a calendar year in States that do not 
        have in effect an alternative dispute resolution system 
        certified under subsection (a) for the year.
            (2) Requirements for system.--Under the alternative Federal 
        ADR system established under paragraph (1)--
                    (A) paragraphs (1), (2), (6), and (7) of section 
                5201(a) shall apply to claims brought under the system;
                    (B) if the system provides for the resolution of 
                claims through arbitration, the claims brought under 
                the system shall be heard and resolved by arbitrators 
                appointed by the Secretary in consultation with the 
                Attorney General; and
                    (C) with respect to a State in which the system is 
                in effect, the Secretary may (at the State's request) 
                modify the system to take into account the existence of 
                dispute resolution procedures in the State that affect 
                the resolution of medical malpractice liability claims.
            (3) Treatment of States with alternative system in 
        effect.--If the alternative Federal ADR system established 
        under this subsection is applied with respect to a State for a 
        calendar year, the State shall make a payment to the United 
        States (at such time and in such manner as the Secretary may 
        require) in an amount equal to 110 percent of the costs 
        incurred by the United States during the year as a result of 
        the application of the system with respect to the State.

SEC. 5203. GRANTS TO STATES.

    (a) In General.--The Secretary shall make grants to States for a 2-
year period to assist States in implementing and operating alternative 
dispute resolution systems that meet the requirements of section 5201.
    (b) Eligibility.--A State is eligible to receive a grant under this 
section if the Secretary has certified the State's alternative dispute 
resolution system under section 5202(b).
    (c) Limitation on Amount of Grant.--The amount of funds provided to 
a State under a grant under this section may not exceed $5,000,000 
during the 2-year period of the grant.

SEC. 5204. 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 the 
Congress a report describing and evaluating State alternative dispute 
resolution systems operated pursuant to this subtitle and the 
alternative Federal system established under section 5202(b).
    (b) Contents of Report.--The Secretary shall include in the report 
prepared and submitted under subsection (a)--
            (1) information on--
                    (A) the effect of the alternative dispute 
                resolution systems on the cost of health care within 
                each 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 the 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.

  Subtitle D--Grants to States for Development of Practice Guidelines

SEC. 5301. GRANTS TO STATES.

    (a) In General.--The Secretary shall make grants to States for a 2-
year period for the development of medical practice guidelines for 
health care professionals (including mid-level practitioners) that may 
be applied to resolve medical malpractice liability claims and actions 
in the State.
    (b) Eligibility.--A State is eligible to receive a grant under this 
section if the State submits to the Secretary an application at such 
time, in such form, and containing such information and assurances as 
the Secretary may require, including assurances that the State will 
submit such periodic reports on the development and application of the 
State's medical practice guidelines as the Secretary may require.
    (c) Number of Grants.--
            (1) In general.--Except as provided in paragraph (2), the 
        Secretary shall award not less than 10 grants under this 
        section.
            (2) Exception.--Notwithstanding paragraph (1), the 
        Secretary may award less than 10 grants under this section if 
        the Secretary determines that there are an inadequate number of 
        applications submitted that meet the eligibility and approval 
        requirements of this section.
    (d) Limitation on Amount of Grant.--The amount of funds provided to 
a State under a grant under this section may not exceed $5,000,000 
during the 2-year period of the grant.

    TITLE VI--PAPERWORK REDUCTION AND ADMINISTRATIVE SIMPLIFICATION

SEC. 6001. PREEMPTION OF STATE QUILL PEN LAWS.

    After 1994, 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.

SEC. 6002. CONFIDENTIALITY OF ELECTRONIC HEALTH CARE INFORMATION.

    (a) Promulgation of Requirements.--
            (1) In general.--The Health Care Standards Commission shall 
        promulgate, and may modify from time to time, requirements to 
        facilitate and ensure the uniform, confidential treatment of 
        individually identifiable health care information in electronic 
        environments.
            (2) Items to be included.--The requirements under this 
        subsection shall--
                    (A) provide for the preservation of confidentiality 
                and privacy rights in electronic health care claims 
                processing and payment;
                    (B) apply to the collection, storage, handling, and 
                transmission of individually identifiable health care 
                data (including initial and subsequent disclosures) in 
                electronic form by all accountable health plans, public 
                and private third-party payers, providers of health 
                care, and all other entities involved in the 
                transactions;
                    (C) not apply to public health reporting required 
                under State or Federal law;
                    (D) delineate protocols for securing electronic 
                storage, processing, and transmission of health care 
                data;
                    (E) specify fair information practices that assure 
                a proper balance between required disclosures and use 
                of data, including--
                            (i) creating a proper balance between what 
                        an individual is expected to divulge to a 
                        record-keeping organization and what the 
                        individual seeks in return,
                            (ii) minimizing the extent to which 
                        information concerning an individual is itself 
                        a source of unfairness in any decision made on 
                        the basis of such information, and
                            (iii) creating and defining obligations 
                        respecting the uses and disclosures that will 
                        be made of recorded information about an 
                        individual;
                    (F) require publication of the existence of health 
                care data banks;
                    (G) establish appropriate protections for highly 
                sensitive data (such as data concerning mental health, 
                substance abuse, and communicable and genetic 
                diseases);
                    (H) encourage the use of alternative dispute 
                resolution mechanisms (where appropriate); and
                    (I) provide for the deletion of information that is 
                no longer needed to carry out the purpose for which it 
                was collected.
            (3) Consultation with working group.--In promulgating and 
        modifying requirements under this subsection, the Commission 
        shall consult with a working group of knowledgeable individuals 
        representing all interested parties (including third-party 
        payers, providers, consumers, employers, information managers, 
        and technical experts).
            (4) Deadline.--The Commission shall first promulgate 
        requirements under this subsection by not later than six months 
        after the date of the enactment of this Act.
    (b) Application of Requirements.--
            (1) State enforcement of similar requirements.--The 
        requirements promulgated under subsection (a) shall not apply 
        to health care information in a State if--
                    (A) the State has applied to the Health Care 
                Standards Commission for a determination that the State 
                has in effect a law that provides for the application 
                of requirements with respect to such information (and 
                enforcement provisions with respect to such 
                requirements) consistent with such requirements (and 
                with the enforcement provisions of subsection (c)), and
                    (B) the Commission determines that the State has 
                such a law in effect.
            (2) Application to current information.--The Health Care 
        Standards Commission shall specify the extent to which (and 
        manner in which) the requirements promulgated under subsection 
        (a) apply to information collected before the effective date of 
        the requirements.
    (c) Defense for Proper Disclosures.--An entity that establishes 
that is has disclosed health care information in accordance with the 
requirements promulgated under subsection (a) has established a defense 
in an action brought for improper disclosure of such information.
    (d) Penalties for Violations.--An entity that collects, stores, 
handles, transmits, or discloses health care information in violation 
of the requirements promulgated under subsection (a) is liable for 
civil damages, equitable remedies, and attorneys' fees (if 
appropriate), in accordance with regulations of the Health Care 
Standards Commission.

SEC. 6003. STANDARDIZATION FOR THE ELECTRONIC RECEIPT AND TRANSMISSION 
              OF HEALTH PLAN INFORMATION.

    (a) Goals.--The Health Care Standards Commission shall establish 
national goals, and time frameworks, respecting the progress to be made 
by the health care industry in eliminating unnecessary paperwork and 
achieving appropriate standardization in the areas of electronic 
receipt and transmission of health care claims and health plan 
information and eligibility verification (consistent with the 
requirements promulgated under section 6002(a)).
    (b) Contingent Requirements.--If the Commission determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Commission under 
such subsection, the Commission shall promulgate (and may, from time to 
time, modify) standards and requirements concerning the electronic 
receipt and transmission of health plan claims forms and other health 
plan information.
    (c) Consultation.--The Commission shall conduct activities under 
this section in consultation with the Accredited Standards Committee X-
12 of the American National Standards Institute, insurers, providers, 
and others.

SEC. 6004. USE OF UNIFORM HEALTH CLAIMS FORMS AND IDENTIFICATION 
              NUMBERS.

    (a) Goals.--The Health Care Standards Commission shall establish 
national goals, and time frameworks, respecting the progress to be made 
by the health care industry in achieving uniformity--
            (1) in the format and content of basic claims forms under 
        health plans, and
            (2) in the use of common identification numbers for 
        beneficiaries and providers of health care items or services 
        under health plans.
    (b) Contingent Requirements.--If the Commission determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Commission under 
such subsection, the Commission shall promulgate (and may, from time to 
time, modify) standards and requirements concerning--
            (1) the format and content of basic claims forms under 
        health plans, and
            (2) the common identification numbers to be used by health 
        plans to identify health plan beneficiaries and health care 
        providers.
    (c) Consultation.--The Commission shall conduct activities under 
this section in consultation with the Workgroup for Electronic Data 
Interchange and with insurers, providers, and others.

SEC. 6005. PRIORITY AMONG INSURERS.

    (a) Goals.--The Health Care Standards Commission shall establish 
national goals, and time frameworks, respecting the progress to be made 
by the health care industry in achieving uniformity in the rules for 
determining the liability of insurers when benefits are payable under 
two or more health plans.
    (b) Contingent Requirements.--If the Commission determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Commission under 
such subsection, the Commission shall promulgate (and may, from time to 
time, modify) rules for determining the liability of health plans when 
benefits are payable under two or more health plans.
    (c) Consultation.--The Commission shall conduct activities under 
this section in consultation with health plans.

SEC. 6006. FURNISHING OF INFORMATION AMONG HEALTH PLANS.

    (a) Goals.--The Health Care Standards Commission shall establish 
national goals, and time frameworks, respecting the progress to be made 
by the health care industry in achieving uniformity in the availability 
of information among health plans when benefits are payable under two 
or more health plans.
    (b) Contingent Requirements.--If the Commission determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Commission under 
such subsection, the Commission shall promulgate (and may, from time to 
time, modify) requirements concerning the transfer among health plans 
(and annual updating) of appropriate information (which may include 
requirements for the use of unique identifiers, and for the listing of 
all individuals covered under a health plan).
    (c) Consultation.--The Commission shall conduct activities under 
this section in consultation with health plans.

SEC. 6007. FAILURE TO SATISFY CERTAIN HEALTH PLAN REQUIREMENTS.

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

``SEC. 5000A. FAILURE TO SATISFY CERTAIN HEALTH PLAN REQUIREMENTS.

    ``(a) General Rule.--There is hereby imposed, on any administrator 
of a health plan, a tax on any failure to comply with an applicable 
requirement of sections 6003 through 6006 of the Managed Competition 
Act of 1993. The Health Care Standards Commission shall determine 
whether any such administrator meets the requirements of those 
sections.
    ``(b) Amount of Tax.--The amount of tax imposed by subsection (a) 
for a taxable year in which an administrator fails to comply with a 
requirement described in that subsection shall be equal to $100 for 
each such failure.
    ``(c) Controlled Groups.--
            ``(1) Employers.--In the case of an administrator that is 
        an employer, for purposes of this section all persons that are 
        treated as part of the same employer (within the meaning of 
        section 414) as the administrator shall be treated as the same 
        person.
            ``(2) Other administrators.--In the case of an 
        administrator that is not an employer, for purposes of this 
        section--
                    ``(A) Controlled group of corporations.--All 
                corporations which are members of the same controlled 
                group of corporations shall be treated as 1 person. For 
                purposes of the preceding sentence, the term 
                `controlled group of corporations' has the meaning 
                given to such term by section 1563(a), except that--
                            ``(i) `more than 50 percent' shall be 
                        substituted for `at least 80 percent' each 
                        place it appears in section 1563(a)(1), and
                            ``(ii) the determination shall be made 
                        without regard to subsections (a)(4) and 
                        (e)(3)(C) of section 1563.
                    ``(B) Partnerships, proprietorships, etc., which 
                are under common control.--Under regulations prescribed 
                by the Secretary, all trades or businesses (whether or 
                not incorporated) which are under common control shall 
                be treated as 1 person. The regulations prescribed 
                under this subparagraph shall be based on principles 
                similar to the principles which apply in the case of 
                subparagraph (A).
    ``(d) Limitations on Tax.--
            ``(1) Tax not to apply where failure not discovered 
        exercising reasonable diligence.--No tax shall be imposed by 
        subsection (a) with respect to any failure for which it is 
        established to the satisfaction of the Secretary that the 
        person liable for tax did not know, and by exercising 
        reasonable diligence would not have known, that the failure 
        existed.
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) the failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) the failure is corrected during the 30-day 
                period beginning on the 1st date the person liable for 
                the tax knew, or by exercising reasonable diligence 
                would have known, that the failure existed.
            ``(3) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of that tax would 
        be excessive relative to the failure involved.''
    (b) Nondeductibility of Tax.--Paragraph (6) of section 275(a) of 
that Code (relating to nondeductibility of certain taxes) is amended by 
inserting ``47,'' after ``46,''.
    (c) Clerical Amendments.--The table of sections for chapter 47 of 
that Code is amended by adding at the end the following new item:

                              ``5000A. Failure to satisfy certain 
                                        health plan requirements.''.

SEC. 6008. DEFINITIONS.

    For purposes of this title--
            (1) The term ``health plan'' means any contract or 
        arrangement under which an entity bears all or part of the cost 
        of providing health care items and services, including a 
        hospital or medical expense incurred policy or certificate, 
        hospital or medical service plan contract, or health 
        maintenance subscriber contract (including any closed 
        accountable health plan), but does not include (except for 
        purposes of sections 6005 and 6006)--
                    (A) coverage only for accident, dental, vision, 
                disability, or long term care, medicare supplemental 
                health insurance, or any combination thereof,
                    (B) coverage issued as a supplement to liability 
                insurance,
                    (C) workers' compensation or similar insurance, or
                    (D) automobile medical-payment insurance.
            (2) The term ``provider'' means a physician, hospital, 
        pharmacy, laboratory, or other person licensed or otherwise 
        authorized under applicable State laws to furnish health care 
        items or services.

        TITLE VII--ADDITIONAL BENEFITS ON A PAY-AS-YOU-GO BASIS

SEC. 7001. SENSE OF CONGRESS.

    It is the sense of Congress that additional benefits should be 
provided by the Federal Government to the extent that additional 
financing is made available for such benefits on a pay-as-you-go basis, 
including the following benefits:
            (1) Providing tax preferences for expenses for long-term 
        care, including tax deductibility of employer contributions for 
        long-term care insurance.
            (2) Providing direct Federal subsidies for expenses for 
        long-term care.
            (3) Expanding coverage under the medicare program, 
        including coverage of outpatient prescription drugs and 
        coverage of long-term care services.
            (4) Increasing the income threshold for eligibility for 
        premium assistance (under section 2002).

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