[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3652 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 3652

  To improve the competitiveness, efficiency, and fairness of health 
  coverage for individuals and small employers through promoting the 
     development of voluntary Health Plan Purchasing Cooperatives.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 22, 1993

Mrs. Johnson of Connecticut (for herself, Mr. Thomas of California, Mr. 
 McMillan, and Mr. Gunderson) introduced the following bill; which was 
referred jointly to the Committees on Energy and Commerce and Ways and 
                                 Means

_______________________________________________________________________

                                 A BILL


 
  To improve the competitiveness, efficiency, and fairness of health 
  coverage for individuals and small employers through promoting the 
     development of voluntary Health Plan Purchasing Cooperatives.

    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 ``Health Plan 
Purchasing Cooperative Act of 1993''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Establishment of standards; application in States.
Sec. 3. Specification of health plan purchasing cooperative areas.
Sec. 4. Establishment of health plan purchasing cooperatives.
Sec. 5. Functions of health plan purchasing cooperatives.
Sec. 6. Accountable Health Plans.
Sec. 7. Qualifications for qualified health insurance plans.
Sec. 8. Marketing qualified health benefit plans.
Sec. 9. Collection and submission of data.
Sec. 10. Risk adjustment mechanism.
Sec. 11. Role of State; oversight; evaluation.
Sec. 12. Description of medisave coverage.
Sec. 13. Tax treatment of medisave coverage.
Sec. 14. Definitions.

SEC. 2. ESTABLISHMENT OF STANDARDS; APPLICATION IN STATES.

    (a) Establishment of Standards.--
            (1) In general.--The Secretary of Health and Human Services 
        shall establish standards under this Act to carry out the 
        requirements of this Act, including standards relating to--
                    (A) the establishment of Health Plan Purchasing 
                Cooperatives,
                    (B) qualifications for Accountable Health Plans,
                    (C) the roles of States under this Act, and
                    (D) standard benefit package for small employers.
            (2) Deadline.--The Secretary shall establish and publish 
        such standards by not later than 6 months after the date of the 
        enactment of this Act.
            (3) Revision.--The Secretary from time to time may revise 
        standards established under this subsection. Such revisions 
        shall only become effective in a manner that permits States 
        sufficient time to change laws and regulations in order to 
        implement such revisions.
    (b) Application of Standards Through States.--
            (1) Application of standards.--
                    (A) In general.--Subject to subsection (c), each 
                State shall submit to the Secretary, by the deadline 
                specified in subparagraph (B), a report on steps the 
                State is taking to establish and operate Health Plan 
                Purchasing Cooperatives in accordance with the 
                standards established under subsection (a) in all parts 
                of the State, and to conform its insurance laws to meet 
                the requirements of this Act, not later than such 
                deadline.
                    (B) Deadline for report.--
                            (i) 1 year after standards established.--
                        Subject to clause (ii), the deadline under this 
                        subparagraph is 1 year after the date the 
                        standards are established under subsection (a).
                            (ii) Exception for legislation.--In the 
                        case of a State which the Secretary identifies, 
                        in consultation with the National Association 
                        of Insurance Commissioners, as--
                                    (I) requiring State legislation 
                                (other than legislation appropriating 
                                funds) in order for insurers and health 
                                plans offered to meet the standards 
                                established under subsection (a), but
                                    (II) having a legislature which is 
                                not scheduled to meet in 1995 in a 
                                legislative session in which such 
                                legislation may be considered,
                        the date specified in this subparagraph is the 
                        first day of the first calendar quarter 
                        beginning after the close of the first 
                        legislative session of the State legislature 
                        that begins on or after January 1, 1996. For 
                        purposes of the previous sentence, in the case 
                        of a State that has a 2-year legislative 
                        session, each year of such session shall be 
                        deemed to be a separate regular session of the 
                        State legislature.
            (2) Federal role.--If the Secretary determines that a State 
        has failed to submit a report by the deadline specified under 
        paragraph (1) or finds that the State has not established and 
        have in operation Health Plan Purchasing Cooperatives in 
        accordance with the standards established under subsection (a), 
        the Secretary shall notify the State and provide the State a 
        period of 60 days in which to submit such report or to comply 
        with such standards under such paragraph. If, after such 60-day 
        period, the Secretary finds that such a failure has not been 
        corrected, the Secretary shall provide for such mechanism for 
        the establishment and operation of Health Plan Purchasing 
        Cooperatives in accordance with such standards in the State as 
        the Secretary determines to be appropriate. Such implementation 
        shall take effect with respect to insurers, and health plans 
        offered or renewed, on or after 3 months after the date of the 
        Secretary's finding under the previous sentence, and until the 
        date the Secretary finds that such a failure has been 
        corrected.
    (c) Waiver of Application in a State.--Subsection (b) shall not 
apply in a State if the State demonstrates to the satisfaction of the 
Secretary that the State has established an alternative method for 
assuring access of every eligible individual and eligible employee to 
health coverage.
    (d) Implementation.--The report under subsection (b) shall specify 
the State official (or officials), or State board, commission, or 
department, responsible for carrying out the standards under subsection 
(a).

SEC. 3. SPECIFICATION OF HEALTH PLAN PURCHASING COOPERATIVE AREAS.

    (a) In General.--Each State shall establish boundaries for health 
plan purchasing cooperative areas in the State.
    (b) Standards.--Each part of the State shall be in one, and only 
one, health plan purchasing cooperative area. Each such area shall 
include a sufficient number of potential enrollees, health care 
providers, and Accountable Health Plans to carry out the purposes of 
this Act.
    (c) Revisions.--A State may revise the boundaries of health plan 
purchasing cooperative areas not more frequently than annually.

SEC. 4. ESTABLISHMENT OF HEALTH PLAN PURCHASING COOPERATIVES.

    (a) In General.--Each State shall establish in accordance with this 
section one or more State-chartered, nonprofit private organizations to 
serve as the Health Plan Purchasing Cooperatives for each health plan 
purchasing cooperative area specified under section 3 for the benefit 
of small employers and eligible individuals in the area.
    (b) Bylaws and Board of Directors.--
            (1) Bylaws.--Each Health Plan Purchasing Cooperative shall 
        establish bylaws, consistent with this section, for its 
        operation, including the election of members of its board of 
        directors.
            (2) Board of directors.--
                    (A) In general.--Each Health Plan Purchasing 
                Cooperative shall operate under the supervision of a 
                board of directors. A majority of the members of the 
                board shall be small employers or eligible individuals 
                that participate in the Cooperative.
                    (B) Appointment and election.--The State shall 
                provide for the appointment of initial members to the 
                board of directors of each Health Plan Purchasing 
                Cooperative. Subsequent members of the board of 
                directors of a Health Plan Purchasing Cooperative shall 
                be elected by small employer members and individual 
                members of the Cooperative in accordance with bylaws of 
                the Cooperative. Such elections shall occur not less 
                frequently than once every 2 years.
            (3) Limitation on liability.--There shall be no liability 
        on the part of, and no cause of action of any nature shall 
        arise against, any member of the board of directors of a Health 
        Plan Purchasing Cooperative, or its employees or agent, for any 
        action taken in good faith by them in the performance of duties 
        of plan purchasing cooperatives specified in this Act.
    (c) Officers and Employees.--Each Health Plan Purchasing 
Cooperative shall provide, consistent with its bylaws, for--
            (1) the appointment of officers from among its members, and
            (2) the appointment of an executive director to serve as 
        the chief operating officer of the Cooperative.
    (d) Advisory Committees.--Each Health Plan Purchasing Cooperative 
shall establish such advisory committees as may be necessary to assist 
in carrying out its duties under this Act. Such an advisory committee 
may include representation from Accountable Health Plans, agents, and 
health care providers.
    (e) Annual Report; Records; Audit.--Each Health Plan Purchasing 
Cooperative shall--
            (1) prepare, and submit to the State and the Secretary, an 
        annual report on its operations, including its program and 
        financial operations;
            (2) conduct such annual internal and independent audits as 
        it determines to be appropriate; and
            (3) maintain records on its operations.
    (f) General Authorities; Limitations on Authority.--
            (1) In general.--A Health Plan Purchasing Cooperative may--
                    (A) sue (or be sued), and
                    (B) subject to paragraph (2), accept and expend 
                grants or funds from any public or private agency.
            (2) Limitations.--A Health Plan Purchasing Cooperative may 
        not--
                    (A) purchase health care services;
                    (B) assume risk for the cost or provision of health 
                care services;
                    (C) contract directly with health care providers 
                (other than with Accountable Health Plans under section 
                5) for the provision of health care services for 
                members; or
                    (D) accept any funds from any private agency that 
                is (or is affiliated with) an Accountable Health Plan 
                or other party that would pose a conflict of interest 
                (as specified by the Secretary).

SEC. 5. FUNCTIONS OF HEALTH PLAN PURCHASING COOPERATIVES.

    (a) Contracts with Accountable Health Plans; Enrollment in Plans.--
            (1) Contracts with plans.--Each Health Plan Purchasing 
        Cooperative shall enter into contracts and hold policies with 
        Accountable Health Plans which elect to offer qualified health 
        benefit benefits to members, in accordance with subsection (d).
            (2) Enrollment.--
                    (A) In general.--Each Health Plan Purchasing 
                Cooperative shall provide for the enrollment of 
                eligible employees of small employers and eligible 
                individuals in qualified health benefit plans of 
                Accountable Health Plans offered by the Cooperative.
                    (B) Open enrollment periods.--Each Health Plan 
                Purchasing Cooperative shall provide for an annual open 
                enrollment period of 30 days to be available within 60 
                days before the anniversary date of each member's 
                coverage under a qualified health benefit plan.
            (3) Provision of information.--Each Health Plan Purchasing 
        Cooperative shall provide to its members and eligible employees 
        of small employer members comparison sheets, in accordance with 
        standards established by the Secretary, which provide clear 
        standardized information on each Accountable Health Plan and 
        each qualified health benefit plan offered by an Accountable 
        Health Plan, including information on price, consumer 
        satisfaction, and (if feasible) health outcomes and enrollment 
        and enrollee responsibilities and obligations.
    (b) Membership Requirements.--
            (1) In general.--Each Health Plan Purchasing Cooperative 
        shall establish requirements for participation of small 
        employers and eligible individuals as members of the 
        Cooperative consistent with any standards the Secretary 
        establishes consistent with this subsection. Each Cooperative 
        shall maintain eligibility records to carry out its functions.
            (2) Small employer standards.--Under such standards--
                    (A) each small employer in the area that meets 
                requirements for membership is permitted to become a 
                member;
                    (B) a small employer that is not a valid small 
                employer group and was formed for the purpose of 
                securing health benefits coverage shall be denied 
                membership;
                    (C) each small employer member shall offer to 
                eligible employees a choice of at least 3 different 
                health insurance plans, of which--
                            (i) at least one provides medisave coverage 
                        consistent with section 12,
                            (ii) at least one is a fee-for-service 
                        plan, and
                            (iii) at least one is a managed care plan;
                    (D) no small employer is required, as a condition 
                of membership, to make any contribution towards the 
                premium for coverage of any eligible employee; and
                    (E) if a small employer member terminates coverage 
                purchased through the Health Plan Purchasing 
                Cooperative, the former member shall be ineligible to 
                purchase a health insurance plan through the 
                Cooperative for a period of 12 months.
            (3) Individual members.--Under such standards, eligible 
        individuals residing in a health plan purchasing cooperative 
        area may become individual members of the Health Plan 
        Purchasing Cooperative for the area.
            (4) Payment of premiums.--
                    (A) In general.--A Health Plan Purchasing 
                Cooperative may condition membership upon prepayment of 
                a monthly premium (or compliance with other mechanisms) 
                to assure that payment will be made for coverage of 
                members on a timely basis.
                    (B) Notification of failure to receive premium.--If 
                a Health Plan Purchasing Cooperative fails to receive 
                payment on a premium due with respect to an individual 
                covered under an Accountable Health Plan offered by the 
                Cooperative, the Cooperative shall provide notice of 
                such failure to the individual within the 20-day period 
                after the date on which such premium payment was due.
                    (C) Direct payment allowed in case of employer 
                nonpayment.--In the case a small employer member of a 
                Cooperative fails to make payment of premiums due with 
                respect to an eligible employee covered under an 
                Accountable Health Plan offered through the 
                Cooperative, the Cooperative shall notify such employee 
                of such nonpayment and shall allow the employee to make 
                direct payments to the Cooperative effective with the 
                next succeeding payment period.
            (5) Dispute resolution procedures.--Each Health Plan 
        Purchasing Cooperative shall establish, in accordance with 
        standards established under this Act dispute resolution 
        procedures to resolve disputes between the Cooperative and its 
        members and disputes between the Cooperative and Accountable 
        Health Plans. Under such procedures, a member or Cooperative 
        may appeal the proposed resolution of such a dispute to the 
        State.
    (c) Contracts with Members.--
            (1) Premium payments.--
                    (A) In general.--Each contract between a member and 
                a Health Plan Purchasing Cooperative shall provide that 
                payment of all premiums shall be transmitted by the 
                member (which in the case of a small employer member 
                shall be on behalf of eligible employees) to (or on 
                behalf of) the Cooperative for the benefit of the 
                Accountable Health Plan in which the eligible employee 
                or individual is enrolled. The Cooperative shall 
                provide for procedures for the collection of premiums 
                from members (including, in the case of a small 
                employer member, eligible employees).
                    (B) At least bimonthly.--Such premiums are payable 
                not less often than bimonthly.
                    (C) Late charges.--A Health Plan Purchasing 
                Cooperative may provide for penalties for late payment.
                    (D) Nonpayment.--Nonpayment of premiums by a member 
                shall constitute a breach of the contract, a breach of 
                the health care policy, and a default on the member's 
                obligation.
            (2) Contract holder.--Such a contract shall provide that 
        the Health Plan Purchasing Cooperative may be the contract 
        holder of the health benefit policy on behalf of the member 
        (including eligible employees). Any such contract shall provide 
        that all eligible employees who obtain coverage under the 
        health benefit plan offered by a small employer must obtain 
        such coverage through any qualified health benefit plan offered 
        by an Accountable Health Plan through the Cooperative.
            (3) Premium amounts.--The amount of premiums imposed shall 
        include an amount that includes the fixed overhead allowance 
        percentage established by the Health Plan Purchasing 
        Cooperative under subsection (e).
    (d) Contracts with Plans.--
            (1) In general.--Each contract between an Accountable 
        Health Plan and a Health Plan Purchasing Cooperative shall 
        provide--
                    (A) that premiums of members shall be forwarded to 
                the plan in which they are enrolled, subject to any 
                adjustment under section 10, on the effective date of 
                coverage (if that occurs more than once a month), on a 
                monthly basis, or as agreed in the contract (but in no 
                event less frequently than monthly); and
                    (B) that the Cooperative shall transmit enrollment 
                and eligibility information to the plan on a timely 
                basis.
            (2) Termination.--An Accountable Health Plan may not 
        terminate such a contract unless the plan--
                    (A) provides advance notice to the Health Plan 
                Purchasing Cooperative, and
                    (B) provides notice at least 180 days before the 
                nonrenewal of any qualified health benefit plan to 
                enrollees.
        In the case of such a termination, the Accountable Health Plan 
        shall not write new business with the Health Plan Purchasing 
        Cooperative for a period of 3 years from the date of the notice 
        of termination.
    (e) Overhead Allowance.--Each Health Plan Purchasing Cooperative 
shall establish a fixed overhead allowance percentage that shall be--
            (1) applied as addition to the premiums charged for 
        enrollment in an Accountable Health Plan offered through the 
        Cooperative to its members, and
            (2) used to cover administrative costs of the Cooperative, 
        as well as defaults by members of premium payments.
    (f) Uniform Administrative and Accounting Procedures.--Each Health 
Plan Purchasing Cooperative shall establish with such uniform 
administrative and accounting procedures as needed to conform with 
applicable national standards identified by the Secretary.
    (g) Contracts for Administrative Services.--
            (1) In general.--Each Health Plan Purchasing Cooperative 
        shall contract with a qualified, independent third party for 
        any service necessary to carry out its duties under this Act. 
        Such contracts shall include--
                    (A) contracts with agents to assist in contracting 
                with Accountable Health Plans and small employer 
                members, and
                    (B) contracts to market and publicize the 
                availability of qualified health benefit plans through 
                the Cooperative.
            (2) Information.--Unless permission is specifically granted 
        by the Cooperative, such a third party may not release, 
        publish, or otherwise use any information to which the party 
        has access under its contract.
    (g) Construction.--Nothing in this Act shall be construed as 
requiring a small employer or eligible individual to obtain coverage 
from or through a Health Plan Purchasing Cooperative.

SEC. 6. ACCOUNTABLE HEALTH PLANS.

    (a) Designation.--Each State shall establish a process whereby a 
carrier that demonstrates to the satisfaction of the State insurance 
commissioner that it has the capability to fulfill the following 
requirements (directly or through subcontracts) is designated as an 
Accountable Health Plan for purposes of this Act:
            (1) Licensure.--The carrier is licensed and in good 
        standing with the State insurance commissioner (or other 
        comparable official for a State).
            (2) Administrative capacity.--The carrier has the capacity 
        to administer qualified health benefit plans.
            (3) Access.--In the case of a carrier with a contractual 
        obligation to provide or arrange for health services included 
        in the qualified health benefit plan, the ability to provide 
        enrollees with adequate access to these covered services within 
        the carrier's service area.
            (4) Grievance procedures.--The carrier has grievance 
        procedures, including the ability to respond to enrollees' 
        calls, questions, and complaints.
            (5) Utilization management procedures.--The carrier has 
        established utilization management procedures.
            (6) Quality.--The carrier has the ability to monitor and 
        evaluate the quality and cost-effectiveness of care.
            (7) Information.--The carrier has the ability to provide 
        information on enrollee satisfaction (based on standard surveys 
        described in section 9(b)(4)).
            (8) Data.--The carrier has the ability to provide standard 
        data elements (identified under section 9(b)).
    (b) Functions of Accountable Health Plans.--
            (1) In general.--In every Health Plan Purchasing 
        Cooperative with which it has a contract under section 5(d), 
        each Accountable Health Plan shall provide for activities 
        described in this subsection.
            (2) Offering plan.--Each such Accountable Health Plan shall 
        offer qualified health benefit plans. If such a Plan offers a 
        managed care plan in a State (or geographic area) to employers 
        that are not small employers, the Plan shall offer a similar 
        managed care plan to small employers in that State or 
        geographic area.
            (3) Performance information.--Each such Accountable Health 
        Plan shall provide for the collection and reporting to the 
        State and to the appropriate Health Plan Purchasing Cooperative 
        of information on the performance of the plan regarding the 
        effectiveness in providing services, identified under section 
        9(b).
            (4) Use of adjusted community rating.--Each such 
        Accountable Health Plan shall--
                    (A) establish premium rates for each qualified 
                health benefit plan pursuant to a method that spreads 
                financial risk across a large population and allows 
                adjustments only for benefit design and the following 
                demographic characteristics: age, gender, number of 
                family members, and the health plan purchasing 
                cooperative area in which coverage is provided; and
                    (B) file on a quarterly basis with the Health Plan 
                Purchasing Cooperative in which it is participating the 
                premium rates for qualified health benefit plans 
                offered by the Plan.
            (5) Rating, underwriting, etc.--Each such Accountable 
        Health Plan shall comply with all rules regarding rating, 
        underwriting, claims handling, sales, solicitation, licensing, 
        unfair trade practices, and other provision in this Act and 
        under the applicable insurance laws of the State.
            (6) Guaranteed issue and reissue.--Each such Accountable 
        Health Plan shall issue coverage under a qualified health 
        benefit plan to any eligible individual and any eligible 
        employee (of a small employer member) who elects to be covered 
        under a qualified health benefit plan offered by the plan in 
        the manner required under this Act.
            (7) Renewal.--Each such Accountable Health Plan shall renew 
        each qualified health benefit plan with respect to any member 
        (and any eligible employee of such a member) except in the case 
        of--
                    (A) nonpayment of the required premium,
                    (B) fraud or material misrepresentation of the 
                member (or employee) or the member's or employee's 
                dependents, and
                    (C) repeated misuse of a provider network provision 
                (including unreasonable refusal of the enrollee to 
                follow a prescribed course of treatment, excessive use 
                of emergency services for non-emergencies, or violation 
                of contractual provisions), as specified by the State 
                in which the plan is offered.
            (8) Notice of termination of cooperative contract.--Each 
        such Accountable Health Plan may only terminate its contract 
        with the Cooperative in accordance with section 5(d)(2).
            (9) Grievance procedures.--Each such Accountable Health 
        Plan shall provide a procedure for addressing grievances that 
        arise between the plan and the Health Plan Purchasing 
        Cooperative, members of the Health Plan Purchasing Cooperative 
        (and, in the case of small employer members, their eligible 
        employees) that requires both parties to fully exhaust the 
        remedies provided under the procedure to resolve grievance 
        before seeking any relief other than as provided in the 
        procedure.
            (10) Use of uniform claims forms.--Each Accountable Health 
        Plan shall use standardized forms, including uniform claims 
        forms, identified by the Secretary.
    (c) Coverage.--
            (1) In general.--Coverage under a qualified health benefit 
        plan offered by an Accountable Health Plan shall be available 
        to any member at the anniversary date of each member's coverage 
        under a qualified health benefit plan (or in the case of an 
        employer or individual who has applied to become a member of a 
        Health Plan Purchasing Cooperative when the member first joins 
        the Cooperative).
            (2) Exception.--An Accountable Health Plan is not required 
        to offer coverage or accept enrollment if--
                    (A) the eligible individual or employee (or 
                dependent) does not reside within the plan's service 
                area (as approved by the State insurance commissioner);
                    (B) the plan provides 90 days prior notice that it 
                will not have the capacity to deliver services 
                adequately in the health plan purchasing cooperative 
                area to additional enrollees because of its obligations 
                to existing groups and enrollees; or
                    (C) the State insurance commissioner determines 
                that the acceptance of an application or applications 
                would place the plan in a financially impaired 
                condition.
            (3) Conditions.--
                    (A) Insufficient capacity.--An Accountable Health 
                Plan that cannot offer coverage under paragraph (2)(B) 
                may not offer coverage to the employees of a new 
                employer group until the later of 90 days following 
                such refusal or the date on which the plan notifies the 
                Health Plan Purchasing Cooperative and the State 
                insurance commissioner that it has regained capacity to 
                deliver services to eligible employees and their 
                dependents in the service area.
                    (B) Financial impairment.--An Accountable Health 
                Plan that cannot offer coverage under paragraph (2)(C) 
                may not offer coverage or accept applications for any 
                individual or employer group until a determination by 
                the State insurance commissioner that acceptance of an 
                application will not put the plan in a financially 
                impaired condition.
    (d) Construction.--Nothing in this Act (or in State law) shall--
            (1) prohibit an Accountable Health Plan from providing a 
        qualified health benefit plan in a Health Plan Purchasing 
        Cooperative through a managed care system, and from contracting 
        with particular health care providers or types, classes, or 
        categories of health care providers;
            (2) prohibit such a plan from establishing its own levels 
        of payment and financial incentives for reimbursing health care 
        providers providing health care services to enrollees; or
            (3)(A) prohibit such a plan from performing utilization 
        review of any or all treatments and conditions, (B) require the 
        use of specified standards of health care practice in such 
        review, (C) impose residency or specialty restrictions on the 
        entities conducting such a review, or (D) require the 
        disclosure of the specific criteria used in such reviews.
State law is preempted to the extent it is inconsistent with the 
previous sentence.
    (e) Deemed Compliance.--Carriers which comply with any of the 
requirements of a paragraph of subsection (a) through a requirement of 
State law shall be deemed to be in compliance with the corresponding 
paragraph of such subsection. Carriers receiving accreditation by 
nationally recognized, health related accreditation organizations 
(including the National Committee on Quality Assurance, the Utilization 
Review Accreditation Commission, the Joint Commission on Accreditation 
of Health Care Organizations), or qualification by Federal agencies, 
shall be deemed in compliance with the requirements of subsection (a) 
as they pertain to the relevant accreditation activities of such 
organizations.
    (f) Determinations.--Each State shall provide for a determination 
of whether a carrier is an Accountable Health Plan within 30 days of a 
completed application being submitted to the State.
    (g) Termination.--After notice and hearing, a State may suspend or 
revoke the designation as an Accountable Health Plan of a carrier that 
files to maintain compliance with the requirements in subsections (a), 
(b), and (c).

SEC. 7. QUALIFICATIONS FOR QUALIFIED HEALTH INSURANCE PLANS.

    (a) In General.--A health plan is not a qualified health benefit 
plan for purposes of this Act unless the plan--
            (1) meets applicable financial requirements established 
        under State law;
            (2) is marketed only in accordance with section 8; and
            (3) submits to the Health Plan Purchasing Cooperative data 
        in accordance with standards established under section 9.
    (b) Marketing Material; Agent Compensation.--
            (1) In general.--An Accountable Health Plan may provide, 
        directly or through an agent, broker, contractor, or producer, 
        marketing materials approved by the State insurance 
        commissioner. Such a plan does not require authorization by a 
        Health Plan Purchasing Cooperative for advertisement to the 
        public at large through the means of mass media.
            (2) Agent compensation.--An Accountable Health Plan may not 
        vary compensation or commissions to such an agent, broker, 
        contractor, or producer based, directly or indirectly, on the 
        anticipated or actual claims experience or health status 
        associated with particular small employers or eligible 
        individuals to which each plan is sold.
            (3) Limitations on broker activities.--No Accountable 
        Health Plan (or agent, broker, contractor, or producer for such 
        a plan) shall engage, directly, or indirectly, in any activity 
        or marketing practice that would encourage small employers or 
        eligible individuals to refrain from enrolling in the plan, or 
        seek coverage from another Accountable Health Plan, because of 
        the health status or claims experience of the employer or 
        individual.

SEC. 8. MARKETING QUALIFIED HEALTH BENEFIT PLANS.

    (a) In General.--Each Health Plan Purchasing Cooperative shall use 
efficient and standardized means to notify small employers of the 
availability of health coverage through the Cooperative.
    (b) Marketing Materials.--Each Health Plan Purchasing Cooperative 
shall make available to small employer and individual members marketing 
materials that accurately summarizes the benefit plans, cost and other 
relevant information concerning Accountable Health Plans offered by the 
Cooperative.
    (c) Use of Brokers.--Nothing in this Act shall be construed to 
prohibit a Health Plan Purchasing Cooperative or Accountable Health 
Plan from using the services of an agent, broker, contractor, or 
producer in order to assist in marketing.
    (d) Monitoring.--Each Health Plan Purchasing Cooperative shall 
notify the State insurance commissioner (or other official identified 
by the State) of any marking practices or materials that it finds 
contrary to the fair and affirmative marketing of Accountable Health 
Plans under this Act.
    (e) State Role.--Each State insurance commissioner shall monitor 
compliance with the marketing requirements of this Act, including the 
conduct of agents, brokers, contractors, and producers and investigate 
complaints of violations of such requirements.

SEC. 9. COLLECTION AND SUBMISSION OF DATA.

    (a) From Health Plan Purchasing Cooperatives to States.--Each 
Health Plan Purchasing Cooperative shall submit such data to the State, 
on a quarterly basis, as the Secretary may specify. Such data shall 
include the following:
            (1) With respect to small employer members--
                    (A) employer enrollment by employer size, industry 
                sector, previous insurance status, and number of 
                eligible employees within each small employer, and
                    (B) number of total eligible employers in the 
                health plan purchasing cooperative area.
            (2) With respect to eligible individuals, the demographic 
        characteristics of such individuals, including age, gender, 
        employment status and employment sector, and previous insurance 
        status.
            (3) Premium ranges for each qualified health benefit plan 
        for Health Plan Purchasing Cooperative member categories.
            (4) Cooperative overhead charges.
            (5) Cooperative financial statements.
    (b) Collection of Data by Health Plan Purchasing Cooperatives.--
            (1) In general.--The Secretary shall establish uniform 
        standards for data that a Health Plan Purchasing Cooperative 
        collects from Accountable Health Plans and providers and 
        disseminates.
            (2) Collection.--Under such standards, each Health Plan 
        Purchasing Cooperative shall collect only such data as are 
        necessary for evaluation of the performance of Accountable 
        Health Plans and their provider networks by consumers and 
        providers. The Secretary shall establish such standards 
        consistent with the method of operation of Accountable Health 
        Plans, consistent with national health care data collection 
        initiatives, consistent with not imposing an unreasonable cost 
        of compliance on Accountable Health Plans, and only after a 
        study of the feasibility and cost-effectiveness.
            (3) Dissemination.--Under such standards, each Health Plan 
        Purchasing Cooperative shall release such data in a uniform and 
        standardized format which compares all Accountable Health Plans 
        or providers (as the case may be).
            (4) Enrollee satisfaction surveys.--All enrollee 
        satisfaction surveys used by Accountable Health Plans in 
        reporting to Health Plan Purchasing Cooperatives shall be in a 
        standardized format promulgated by the Secretary.

SEC. 10. RISK ADJUSTMENT MECHANISM.

    (a) Monitoring Need.--Each State shall designate an entity to 
monitor adverse selection in enrollment among qualified health benefit 
plans offered through Health Plan Purchasing Cooperatives and the need 
for risk adjustment mechanisms to assure proper payment incentives to 
Accountable Health Plans.
    (b) Establishment.--If there is a need, a State shall provide for 
the use of risk adjustment mechanisms (consistent with a model among 
the models identified under standards established under section 2) to 
adjust payment amounts among Accountable Health Plans to reflect the 
risk covered by each qualified health benefit plan offered by such a 
plan. A State shall also apply such a mechanism to health benefit plans 
sold to small employers and eligible individuals, other than through a 
Health Plan Purchasing Cooperative, if necessary.

SEC. 11. ROLE OF STATE; OVERSIGHT; EVALUATION.

    (a) Oversight.--Each State shall--
            (1) assure compliance of Health Plan Purchasing 
        Cooperatives, small employers, and eligible employees and 
        individuals with the requirements of this Act, and
            (2) conduct reviews, not less frequently than annually, on 
        the performance of each Health Plan Purchasing Cooperative in 
        assuring access to health coverage to small employer and 
        eligible individuals in the health plan purchasing cooperative 
        area in accordance with this Act.
    (b) Dispute Resolution.--Each State shall receive, review, and act 
on appeals of disputes, between a Health Plan Purchasing Cooperative 
and a member, not resolved by the Cooperative under section 5(b)(5).
    (c) Assuring Availability of Coverage to Eligible Individuals and 
Comparable Treatment In and Out of Cooperatives.--Each State shall 
provide by law that no qualified health benefit plan may be offered 
with respect to a small employer, or to individuals, in the State 
unless--
            (1) it is offered to all small employers or eligible 
        individuals (as the case may be) who are located or reside in 
        the State in the service area of the plan;
            (2) it meets standards relating to guaranteed renewability 
        and limitations on the application of pre-existing condition 
        limitations; and
            (3) it--
                    (A) meets standards relating to rating practices, 
                consistent with section 6(b)(4)(A), and
                    (B) is offered to all small employers or eligible 
                individuals (as the case may be) at a premium rate that 
                is the same (regardless of whether offered inside or 
                outside a Health Plan Purchasing Cooperative), not 
                taking into account any broker's fees or commissions.
    (d) Analysis of Information.--Each State shall analyze information 
collected from Accountable Health Plans and other sources and report 
findings that assist consumers, Health Plan Purchasing Cooperatives, 
Accountable Health Plans, or health care providers in improving the 
delivery or purchase of cost-effective health care.
    (e) Dissemination of Information.--Each State shall prepare and 
make available to Health Plan Purchasing Cooperatives and employers 
located in the State (and to eligible individuals upon request) 
information, in comparative form, concerning the qualified health 
benefit plans in such State and Health Plan Purchasing Cooperatives 
operating in the State. Such information shall include a description of 
the following:
            (1) Such Cooperatives in the State and the qualified health 
        benefit plans of Accountable Health Plans available with 
        respect to each Cooperative.
            (2) The existence of Health Plan Purchasing Cooperatives 
        within each health plan purchasing cooperative area.
            (3) Any other information determined appropriate by the 
        State.
    (f) Annual Report.--Each State shall report to the Secretary, at 
such frequency (not more often than annually) as the Secretary may 
specify, on the impact of the reforms under this Act in expanding the 
availability and affordability of health coverage to eligible employees 
and eligible individuals.
    (g) Antitrust Protection.--Each State shall actively supervise 
Health Plan Purchasing Cooperatives to ensure that actions that affect 
market competition accomplish the objectives of this Act, so as to 
provide State and Federal protection to such Cooperatives and the board 
of directors of such Cooperatives against Federal and State laws 
intended to protect commerce from unlawful restraints, monopolies, and 
unfair business practices.

SEC. 12. DESCRIPTION OF MEDISAVE COVERAGE.

    (a) In General.--For purposes of this Act, a health insurance plan 
is considered to provide medisave coverage consistent with this section 
if such plan consists of--
            (1) a qualified catastrophic health plan (as defined in 
        subsection (b)(1)), and
            (2)(A) there is a fixed dollar amount (in the form of a 
        cash-value annuity) of additional benefits under such plan 
        which does not exceed the plan's qualified catastrophic 
        deductible (as defined in subsection (b)(2));
            (B) the plan specifies the range of benefits to which the 
        beneficiary may elect to have the amount applied, which--
                    (i) includes, at a minimum, payment of expenses 
                countable towards the qualified catastrophic deductible 
                and payment of premiums towards a long-term care 
                insurance plan, and
                    (ii) does not include the purchase of any 
                supplemental insurance for acute care benefits;
            (C) any such amount of benefits not used shall be 
        accumulated (with a rate of return specified in the plan), 
        shall remain available to be applied against such range of 
        benefits, shall be nonforfeitable, and, upon the death of all 
        beneficiaries under the account, shall be payable in cash to 
        the estate of the beneficiary who dies last; and
            (D) the plan meets the portability rules established under 
        subsection (c).
    (b) Qualified Catastrophic Health Plan Defined.--In this section--
            (1) Qualified catastrophic health plan defined.--The term 
        ``qualified catastrophic health plan'' means any health plan 
        provided to an employee which is certified by the Secretary of 
        Health and Human Services as a plan--
                    (A) which provides no compensation for medical 
                expenses not exceeding the qualified catastrophic 
                deductible (as defined in paragraph (2)) in any year, 
                and
                    (B) which provides full reimbursement for medical 
                expenses exceeding the qualified catastrophic 
                deductible during any year.
            (2) Qualified catastrophic deductible defined.--The term 
        ``qualified catastrophic deductible'' means--
                    (A) $2,000, or
                    (B) $4,000 if the qualified catastrophic health 
                plan provides coverage for more than one individual.
        In the case of any calendar year after 1994, the dollar amounts 
        in subparagraphs (A) and (B) shall be increased by an amount 
        equal to such dollar amount, multiplied by the cost-of-living 
        adjustment determined under section 1(f)(3) of the Internal 
        Revenue Code of 1986 for such calendar year. If any increase 
        under the preceding sentence is not a multiple of $50, such 
        increase shall be rounded to the nearest multiple of $50.
            (3) Qualified medical expenses defined.--
                    (A) In general.--The term ``qualified medical 
                expenses'' means medical expenses of an employee other 
                than amounts paid for insurance or for a health plan.
                    (B) Medical expenses defined.--The term ``medical 
                expenses'' means amounts paid by the employee for 
                medical care (as defined in section 213 of the Internal 
                Revenue Code of 1986) of such individual, the spouse of 
                such individual, and any dependent (as defined in 
                section 152 of such Code) of such individual, but only 
                to the extent such amounts are not compensated for by 
                insurance or otherwise.
    (c) Portability Rules.--In the case of an individual who has 
medisave coverage described in subsection (a)(2) under a health 
insurance plan in a year, who terminates enrollment under the plan or 
terminates catastrophic coverage under the plan, and who has 
accumulated an amount of benefits under such coverage, the plan shall 
permit the individual (as elected by the individual) and in accordance 
with standards established under section 2--
            (1) to have the plan pay an amount equal to all or some of 
        the amount of benefits accumulated under such coverage towards 
        the payment of premiums under--
                    (A) any health insurance plan,
                    (B) any employee welfare benefit plan providing 
                medical care (as defined in section 213(d) of the 
                Internal Revenue Code of 1986) to participants or 
                beneficiaries directly or through insurance, 
                reimbursement, or otherwise, (other than such a plan 
                described in section 13(10)(B)), or
                    (C) a long-term care insurance plan,
        providing coverage for the individual; and
            (2) to have the plan transfer an amount equal to all or 
        some of the remaining balance to another health insurance plan 
        that will provide medisave coverage for that individual in 
        accordance with the requirements of this subsection (and such 
        other plan shall credit such amount transferred towards 
        medisave coverage under that plan).

SEC. 13. TAX TREATMENT OF MEDISAVE COVERAGE.

    (a) General Rule.--For purposes of the Internal Revenue Code of 
1986--
            (1) any health insurance plan which provides Medisave 
        coverage consistent with section 12 of this Act shall be 
        treated as an accident and health insurance contract,
            (2) amounts (other than policyholder dividends, premium 
        refunds, or amounts payable under section 12(a)(2)(C) of this 
        Act) received under such coverage shall be treated as amounts 
        received for personal injuries and sicknesses and shall be 
        treated as reimbursement for expenses actually incurred for 
        medical care (as defined in section 213(d) of such Code),
            (3) any plan of an employer providing Medisave coverage 
        consistent with section 12 of this Act shall be treated as an 
        accident and health plan, and
            (4) amounts paid for Medisave coverage consistent with 
        section 12 of this Act shall be treated as medical expenses for 
        purposes of section 213 of such Code.
    (b) Use of Flexible Spending Accounts.--The Secretary of the 
Treasury or his delegate shall revise the regulations prescribed under 
section 125 of the Internal Revenue Code of 1986 so as to permit the 
use of health-related flexible spending accounts under such section in 
a manner similar to that provided in subsection (a)(2) of section 12 of 
this Act.

SEC. 14. DEFINITIONS.

    In this Act:
            (1) Accountable health plan.--The term ``Accountable Health 
        Plan'' means a carrier is designated under section 6(a) by a 
        State insurance commissioner.
            (2) Carrier.--The term ``carrier'' means a licensed 
        insurance company, a prepaid hospital or medical service plan, 
        and a health maintenance organization offering such a plan, and 
        includes a similar organization regulated under State law for 
        solvency.
            (3) Dependent.--The term ``dependent'' means, with respect 
        to a person--
                    (A) the spouse of the person, and
                    (B) a child (including an adopted child) of the 
                person who--
                            (i) is under 19 years of age,
                            (ii) is under 25 years of age and a full-
                        time student, or
                            (iii) regardless of age is incapable of 
                        self-support because of mental or physical 
                        disability.
            (4) Eligible employee.--The term ``eligible employee'' 
        means, with respect to an employer, an employee who normally 
        performs on a monthly basis at least 30 hours of service per 
        week for that employer.
            (5) Eligible individual.--The term ``eligible individual'' 
        means an individual residing in the United States who is a 
        citizen or national of the United States or an alien lawfully 
        residing permanently in the United States, if the individual is 
        not an eligible employee or otherwise eligible for health 
        insurance coverage under an employment-based health insurance 
        or under a Federal or State health program.
            (6) Employer.--The term ``employer'' shall have the meaning 
        applicable under section 3(5) of the Employee Retirement Income 
        Security Act of 1974.
            (7) Health plan purchasing cooperative.--The term ``Health 
        Plan Purchasing Cooperative'' means a State-chartered, 
        nonprofit organization that provides health coverage purchasing 
        services to members in a health plan purchasing cooperative 
        area regarding qualified health benefit plans offered by 
        Accountable Health Plans and that is established under section 
        4.
            (8) Health plan purchasing cooperative area.--The term 
        ``health plan purchasing cooperative area'' means an area 
        designated under section 3.
            (9) Health plan purchasing cooperative board.--The term 
        ``Health Plan Purchasing Cooperative board'' means the board of 
        directors of a Health Plan Purchasing Cooperative.
            (10) Health insurance plan.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``health insurance plan'' means any 
                hospital or medical service policy or certificate, 
                hospital or medical service plan contract, or health 
                maintenance organization group or individual contract 
                offered by an insurer.
                    (B) Exception.--Such term does not include any of 
                the following--
                            (i) coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof,
                            (ii) medicare supplemental health 
                        insurance,
                            (iii) coverage issued as a supplement to 
                        liability insurance,
                            (iv) worker's compensation or similar 
                        insurance, or
                            (v) automobile medical-payment insurance,
                or any combination thereof.
            (11) Health maintenance organization.--The term ``health 
        maintenance organization'' includes, as determined under 
        standards established by the Secretary, a health insurance plan 
        that meets specified standards and that offers to provide 
        health services on a prepaid, at-risk basis primarily through a 
        defined set of providers.
            (12) Member.--The term ``member'' means, with respect to a 
        Health Care Purchasing Cooperative, a small employer or 
        eligible individual that meets membership requirements for the 
        Cooperative under section 5(b).
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (14) Service area.--The term ``service area'' means a 
        geographic region in which a carrier is licensed to operate.
            (15) Small employer.--The term ``small employer'' means, 
        with respect to a calendar year, an employer that normally 
        employs more than 1 but less than 101 eligible employees on a 
        typical business day in any 3-consecutive-month-period in the 
        year. For the purposes of this paragraph, the term ``employee'' 
        includes a self-employed individual. For purposes of 
        determining if an employer is a small employer, rules similar 
        to the rules of subsection (b) and (c) of section 414 of the 
        Internal Revenue Code of 1986 shall apply.
            (16) Small employer member.--The term ``small employer 
        member'' means, with respect to a Health Plan Purchasing 
        Cooperative, a small employer that is a member of the 
        Cooperative.
            (17) State.--The term ``State'' means the 50 States, the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        and American Samoa.
            (18) State insurance commissioner.--The term ``State 
        insurance commissioner'' includes a State superintendent of 
        insurance and includes, with respect to a health maintenance 
        organization or other carrier not regulated by such an 
        official, such State official as is responsible for regulation 
        of the organization or carrier.

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