[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4469 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 4469
To restrain health care costs and ensure adequate medical care for all
Americans by providing for a State and market-based system of choice
among qualified health plans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 20, 1994
Mr. Petri introduced the following bill; which was referred jointly to
the Committees on Energy and Commerce, Ways and Means, the Judiciary,
and Education and Labor
_______________________________________________________________________
A BILL
To restrain health care costs and ensure adequate medical care for all
Americans by providing for a State and market-based system of choice
among qualified health plans, 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 TITLES; TABLE OF CONTENTS.
(a) Short Titles.--This Act may be cited as the ``Multiple Choice
Health Care Act of 1994'' or the ``Multicare Act of 1994''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Goals and strategies.
Sec. 3. General definitions.
TITLE I--ESTABLISHMENT OF STATE MULTICARE PROGRAMS; TAX CHANGES
Subtitle A--Establishment of State Multicare Programs
Sec. 101. Grants to States for State multicare programs.
Sec. 102. Requirement for certification of multicare plans.
Sec. 103. Requirement for enrollment process.
Sec. 104. Suggestive list of multicare services; limits on cost-
sharing; treatment practice guidelines.
Sec. 105. Continuity of coverage.
Sec. 106. Contribution toward premium costs for eligible individuals.
Sec. 107. Additional subsidies for poor and near poor individuals.
Sec. 108. Establishment of reinsurance mechanism.
Sec. 109. Consumer education and assistance.
Sec. 110. Consumer rights enforcement.
Sec. 111. Compliance of State income tax laws.
Sec. 112. Distribution of information on average prices of common
health care services.
Subtitle B--Federal Contribution Toward Multicare Plan Premiums; Tax
Law Changes
Sec. 121. Computation of amount of Federal contribution.
Sec. 122. Termination of exclusion for employer-provided health care
coverage and of deduction for health
insurance costs of self-employed.
Sec. 123. Termination of deduction for medical care.
TITLE II--REQUIREMENTS FOR MULTICARE PLANS
Subtitle A--General Requirements
Sec. 201. Enrollment and continuity of coverage.
Sec. 202. Covered services.
Sec. 203. Premiums and cost-sharing; catastrophic protection.
Sec. 204. Participation in reinsurance system.
Sec. 205. Data requirement.
Sec. 206. Medical malpractice reform and administrative cost savings.
Sec. 207. Consumer rights.
Subtitle B--Multiple Employer Health Benefits Protections
Sec. 211. Limited exemption under preemption rules for multiple
employer plans providing health benefits
subject to certain Federal standards.
``Part 7--Multiple Employer Health Plans
``Sec. 701. Definitions.
``Sec. 702. Exempted multiple employer plans providing benefits
in the form of medical care relieved of
certain restrictions on preemption of State
law and treated as employee welfare benefit
plans.
``Sec. 703. Exemption procedure.
``Sec. 704. Eligibility requirements.
``Sec. 705. Additional requirements applicable to exempted
arrangements.
``Sec. 706. Disclosure to participating employers by
arrangements providing medical care.
``Sec. 707. Maintenance of reserves.
``Sec. 708. Corrective actions.
``Sec. 709. Expiration, suspension, or revocation of exemption.
``Sec. 710. Review of actions of the Secretary.
Sec. 212. Clarification of scope of preemption rules.
Sec. 213. Clarification of treatment of single employer arrangements.
Sec. 214. Clarification of treatment of certain collectively bargained
arrangements.
Sec. 215. Employee leasing healthcare arrangements.
Sec. 216. Enforcement provisions relating to multiple employer welfare
arrangements and employee leasing
healthcare arrangements.
Sec. 217. Filing requirements for health benefit multiple employer
welfare arrangements.
Sec. 218. Cooperation between Federal and State authorities.
Sec. 219. Effective date; transitional rules.
Subtitle C--Repeal of COBRA Continuation Requirements
Sec. 221. Repeal of requirements of the Internal Revenue Code of 1954.
Sec. 222. Repeal of requirements of Employee Retirement Income Security
Act of 1974.
Sec. 223. Repeal of requirements of Public Health Service Act.
TITLE III--STATES WITHOUT STATE MULTICARE PROGRAMS; FEDERAL HEALTH CARE
PROGRAMS; NATIONAL REINSURANCE POOL
Subtitle A--Multicare Plans in States without State Multicare Programs
Sec. 301. General provisions.
Subtitle B--Federal Health Care Programs
Sec. 321. Medicare program.
Sec. 322. Federal Employees Health Benefit Program.
Sec. 323. Report recommending integration of CHAMPUS, Veterans health,
and Indian Health Services.
Sec. 324. Consumer rights for individuals in Federal programs.
Subtitle C--National Reinsurance Mechanism
Sec. 331. National reinsurance mechanism.
TITLE IV--MEDICAL MALPRACTICE LIABILITY REFORM
Subtitle A--Medical Malpractice Liability Reform
Part 1--General Provisions
Sec. 401. Federal reform of medical malpractice liability actions.
Sec. 402. Definitions.
Sec. 403. Effective date.
Part 2--Uniform Standards for Medical Malpractice Liability Actions
Sec. 411. Statute of limitations.
Sec. 412. Requirement for initial resolution of action through
alternative dispute resolution.
Sec. 413. Relation to alternative dispute resolution of Federal
agencies.
Sec. 414. Mandatory pre-trial settlement conference.
Sec. 415. Calculation and payment of damages.
Sec. 416. Treatment of attorney's fees and other costs.
Sec. 417. Joint and several liability.
Sec. 418. Uniform standard for determining negligence.
Sec. 419. Application of medical practice guidelines in malpractice
liability actions.
Sec. 420. Special provision for certain obstetric services.
Sec. 421. Preemption.
Part 3--Requirements for State Alternative Dispute Resolution Systems
(ADR)
Sec. 431. Basic requirements for ADR.
Sec. 432. Certification of State systems.
Sec. 433. Reports on implementation and effectiveness of alternative
dispute resolution systems.
Subtitle B--Other Requirements and Programs
Sec. 441. Facilitating development and use of medical practice
guidelines.
Sec. 442. Permitting State professional societies to participate in
disciplinary activities.
TITLE V--ADMINISTRATIVE COST SAVINGS
Subtitle A--Standardization of Claims Processing
Sec. 501. Adoption of data elements, uniform claims, and uniform
electronic transmission standards.
Sec. 502. Application of standards.
Sec. 503. Periodic review and revision of standards.
Sec. 504. Health benefit plan defined.
Subtitle B--Electronic Medical Data Standards
Sec. 511. Medical data standards for hospitals and other providers.
Sec. 512. Application of electronic data standards to certain
hospitals.
Sec. 513. Electronic transmission to Federal agencies.
Sec. 514. Limitation on data requirements where standards in effect.
Sec. 515. Advisory commission.
TITLE VI--REMOVING RESTRICTIONS ON MANAGED CARE
Sec. 601. Removing restrictions on managed care.
TITLE VII--MODIFICATION OF THE OPERATION OF THE ANTITRUST LAWS TO
HOSPITALS
Sec. 701. Purpose.
Sec. 702. Exemptions from the operation of the antitrust laws.
Sec. 703. Reports.
Sec. 704. Definitions.
SEC. 2. GOALS AND STRATEGIES.
(a) Goals.--The goals of this Act are--
(1) to restrain health care price inflation through market
incentives and competition,
(2) to ensure adequate medical care for all Americans,
(3) to distribute Federal health subsidies more fairly
across the population,
(4) to allow meaningful consumer choice among health care
plans and providers,
(5) to allow States flexibility to tailor health programs
to local needs, and
(6) to accomplish these goals at no added cost to
taxpayers.
(b) Strategies.--The strategies to be used in this Act to achieve
these goals are--
(1) to increase the role and flexibility of State and local
governments in providing health care information to consumers,
in ensuring health care for the needy, and in promoting
competition among health plans,
(2) to replace the current tax exemption for employer-paid
insurance with a payment towards health care premiums for all
Americans,
(3) to increase public-private partnership by allowing
individuals in public programs to meet their health care needs
through the purchase of private health insurance,
(4) to reduce the amount of direct regulation of health
care providers, and
(5) to allow individuals to participate in open enrollment
health plans.
SEC. 3. GENERAL DEFINITIONS.
In this Act:
(1) The term ``acute care services'' means such services,
identified by the Secretary, of the type covered under
multicare plans.
(2) The term ``eligible individual'' means, with respect to
a State, an individual--
(A) who is a citizen or national of the United
States, an alien lawfully admitted for permanent
residence, or an alien otherwise lawfully residing
permanently in the United States under color of law,
and
(B) who is a resident of the State (as defined by
the Secretary).
(3) The term ``exempt individual'' means an individual
who--
(A) is entitled to benefits under part A or part B
of title XVIII of the Social Security Act);
(B) is entitled to medicare and dental care under
section 1074(a) of title 10, United States Code; or
(C) is a member on active duty (as defined in
section 101(22) of such title) of the armed forces of
the United States.
(4) The term ``family income'' means the total value of
income of the individual and the individual's family members
(as defined by the Secretary), as defined by the State in which
the individual resides and includes at least--
(A) cash income,
(B) aid under title IV of the Social Security Act
(relating to the aid to families with dependent
children program) and assistance received under title
XVI of such Act,
(C) the value of State or Federal housing
assistance (as determined by the State),
(D) the cash value of food stamps,
(E) general relief, and
(F) other State and local cash welfare payment.
(5) The term ``Federal official poverty level'' means the
income official poverty line 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.
(6) The term ``medicaid eligible individual'' means an
individual who is entitled to medical assistance under a State
medicaid plan, or would be so eligible but for the election of
a State under section 101(c)(1)(A).
(7) The terms ``medicaid opt-out State'' and ``medicaid
opt-in State'' mean a State that in its multicare program has
elected the option described in section 101(c)(1)(A) or in
section 101(c)(1)(B), respectively.
(8) The term ``multicare plan'' means a health benefits
plan which is determined to meet the requirements of title II,
and includes a health benefit plan in which an individual is
enrolled under chapter 89 of title 5, United States Code, if
the plan participates in a reinsurance system that meets the
requirements of section 108.
(9) The term ``near poor individual'' means an individual
whose family income is greater than 100 percent, but does not
exceed 150 percent, of the Federal official poverty level
applicable to a family of the size involved.
(10) The term ``open enrollment multicare plan'' means a
multicare plan offered in an area of a State that permits all
eligible residents of the area to enroll under the plan.
(11) The term ``poor individual'' means an individual whose
family income does not exceed the Federal official poverty
level applicable to a family of the size involved.
(12) The term ``Secretary'' means the Secretary of Health
and Human Services.
(13) The term ``State'' includes the District of Columbia,
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the
Northern Mariana Islands.
(14) The term ``State medicaid plan'' means the plan of a
State approved under title XIX of the Social Security Act, and
includes a statewide medical assistance plan operating under
section 1115 of such Act.
(15) The term ``State multicare program'' means such a
program that the Secretary finds meets the requirements of
title I.
TITLE I--ESTABLISHMENT OF STATE MULTICARE PROGRAMS; TAX CHANGES
Subtitle A--Establishment of State Multicare Programs
SEC. 101. GRANTS TO STATES FOR STATE MULTICARE PROGRAMS.
(a) In General.--The Secretary of Health and Human Services shall
provide grants to each State to establish a State multicare program for
the offering of competing multicare plans in the State.
(b) Grant Application.--No grant may be made under this section to
a State unless--
(1) the State has submitted an application in such form and
manner as the Secretary shall specify, and
(2) the Secretary determines that the application provides
for the operation of a State multicare program that meets the
requirements of the succeeding sections of this title.
(c) Amount of Grant.--
(1) Base amount.--For any State, subject to the succeeding
provisions of this subsection, the amount of a grant under this
section, with respect to each eligible individual (other than
an exempt individual) enrolled in a multicare plan, is equal to
the Federal contribution amount (determined under section 121)
for the class of enrollment involved.
(2) Supplemental payment to states.--The amount of such a
grant shall be increased, with respect to each eligible
individual (other than an exempt individual) who is not
enrolled in a multicare plan, by an amount equal to the amount
that would have been paid under paragraph (1) if the individual
were enrolled in a multicare plan.
(3) Additional amounts.--The amount of such a grant shall
be further increased by the sum of the following:
(A) Medicaid savings.--
(i) In general.--The amount described in
clause (ii) for the State, increased (for each
year after the last full year referred to in
clause (ii)(I), up to the year involved) by the
applicable inflator (specified in section
107(b)(2)(D)) for the year, and subject to any
adjustment for changes in population under
section 107(b)(4).
(ii) Amount described.--The amount
described in this clause for a State is--
(I) the total amount of Federal
payments made to the State under
section 1903(a) of the Social Security
Act for acute care services during the
last full year prior to the
implementation of a State multicare
program in the State, reduced by
(II) the product of $400 and the
average number of individuals entitled
to assistance for such services under
the medicaid program in the State
during that year.
(B) Cash assistance savings.--The total amount of
the reductions in Federal payments under title IV or
XVI of the Social Security Act, the Food Stamp Act, and
other Federal welfare programs for residents of a State
resulting directly from the implementation of the
financial assistance provided under section 107 as a
substitute for medical assistance for acute care
services under the State medicaid plan.
(d) Use of Funds.--
(1) Use of base amounts.--At least 97 percent of the funds
provided to a State under subsection (c)(1) with respect to
enrollment of an eligible individual shall be used only, in
accordance with section 106, for payment of all or a portion of
the premium for enrollment of such an eligible individual in a
multicare plan under the multicare program.
(2) Use of federal supplemental amounts.--At least 97
percent of the funds provided to the State under subsection
(c)(2) shall be used only towards--
(A) financing the State reinsurance mechanism under
section 108, or
(B) providing additional subsidies for poor and
near poor individuals under section 107.
(3) Use of additional amounts for financial assistance.--At
least 97 percent of the funds provided to the State under
subsection (c)(3) shall be used only for additional financial
assistance for poor and near poor individuals under section
107.
(4) Application toward administrative costs.--
(A) In general.--Except as provided in the previous
paragraphs, Federal grant funds may only be used to
finance administrative costs.
(B) Administrative costs.--In this paragraph, the
term ``administrative costs'' includes costs associated
with--
(i) soliciting bids and negotiating with
multicare plans and certifying compliance of
plans with the requirements of title II,
(ii) preparing and disseminating
comparative value information on multicare
plans,
(iii) planning, developing, and
implementing the process for enrollment of
eligible individuals in multicare plans, and
(iv) establishing and administering the
reinsurance mechanism under section 108 (not
including reinsurance payments made under such
a mechanism).
(5) Required use of state supplemental funds.--
(A) In general.--Each State multicare program shall
assure that--
(i) at least 97 percent of the funds
described in subparagraph (C) are used
towards--
(I) financing the State reinsurance
mechanism under section 108, or
(II) providing additional subsidies
for poor and near poor individuals
under section 107, and
(ii) at least 97 percent of the funds
described in section 107(b)(5) (relating to
State welfare savings) are used towards
providing additional subsidies for poor and
near poor individuals under section 107.
(B) State supplemental funds described.--The funds
described in this subparagraph are the amount by which
(i) the State aggregate contribution amount (described
in section 106(b)(2)), exceeds (ii) the aggregate
amounts of the contributions paid by the State under
section 106(b)(1)(B) (determined as if the reference to
``97 percent'' in such section were a reference to
``100 percent'').
(e) Special Rules for Territories.--The Secretary may establish
such special rules as may be appropriate to adapt the provisions of
this title (and titles II and III) in the case of Puerto Rico, the
Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
SEC. 102. REQUIREMENT FOR CERTIFICATION OF MULTICARE PLANS.
(a) Process.--
(1) In general.--Each State multicare program shall provide
a mechanism for certifying at least 2 competing open enrollment
multicare plans in all areas of the State.
(2) Waiver authority.--The Secretary may waive the
requirement of paragraph (1) that a State multicare program
offer more than 1 open enrollment multicare plan in all areas
of a State if the Secretary finds that a single, coordinated
open enrollment multicare plan would be more cost-effective.
(b) Requirements for Certification.--A program shall not certify a
multicare plan for purposes of subsection (a) unless the program
determines that the plan--
(1) is in compliance with the requirements of title II
(including requirements relating to consumer education and
assistance and consumer rights) and other Federal health care
regulations, and
(2) meets such standards as the program or the Secretary
may establish relating to financial solvency and quality of
care.
(c) Treatment of Multi-State Regions.--The State multicare programs
of one or more adjacent States may establish agreements, consistent
with the requirements of this Act, governing the certification and
operation of multicare plans that enroll individuals residing in an
area that includes portions of such States.
(d) General Authority of States.--Nothing in this Act shall be
construed as preventing a State--
(1) from sponsoring a multicare plan,
(2) from requiring individuals to select enrollment under
the plan,
(3) from providing additional subsidies for individuals
selecting such a plan, or
(4) from requiring employers to provide for payment of
multicare premiums of employees through automatic payroll
deductions.
(e) Treatment of FEHBP Plans.--Nothing in this title (other than
section 108) shall be construed as authorizing a State to regulate
health plans offered under the Federal Employees Health Benefits
Program, under chapter 89, of title 5, United States Code.
SEC. 103. REQUIREMENT FOR ENROLLMENT PROCESS.
(a) Requirement.--
(1) In general.--Each State multicare program--
(A) shall provide a mechanism for the enrollment,
during open season periods, of eligible individuals
(other than exempt individuals) who are residents of
the State in multicare plans, and
(B) may require each eligible individual (other
than such an exempt individual or an individual
described in paragraph (2)) residing in the State to be
enrolled in a multicare plan and may require that such
a plan be a multicare plan operated directly by the
program.
(2) Exception.--A State may, at its option, except from the
requirement described in paragraph (1)(B) any of the following:
(A) An individual who is within a class of
individuals eligible for health care benefits from the
Department of Veterans Affairs.
(B) An individual who is incarcerated.
(C) An individual who is within any other class of
individuals with respect to whom the State determines
that members of the class are likely to have health
care coverage reasonably comparable to the coverage
available through enrollment in a multicare plan.
(b) Permitting Closed Enrollment Plans.--
(1) In general.--A State multicare program may not deny
approval of a plan (such as an employer self-insured plan or a
plan based on an association with or membership in a group) as
a multicare plan because the plan is not an open enrollment
multicare plan and limits enrollment to individuals associated
with an employer or association.
(2) Construction.--Nothing in this subsection shall be
construed as waiving the requirement under section 204 that a
multicare plan participate in a reinsurance system (established
under the State multicare program under section 108 or by the
Secretary under section 301 or 331).
(c) Distribution of Comparative Value Information.--
(1) In general.--Each State multicare program shall provide
for the distribution to eligible individuals of comparative
value information. Such program may require that the
information conform to the national standards established under
paragraph (3).
(2) Contents.--The comparative value information shall
include, with respect to each multicare plan offered,
information on--
(A) benefits, premiums costs, and patient cost-
sharing arrangements (including projected annual costs
for medium-risk individuals), and
(B) indicators of the quality of health care
offered under the plan.
(3) Standards.--The Secretary shall establish national
standards for the collection and distribution of comparative
value information.
(d) Use of Employers.--A State multicare program may require
employers to distribute the comparative value information concerning
multicare plans to employees and to require automatic payroll
deductions for payment of premiums for such plans by such employees.
SEC. 104. SUGGESTIVE LIST OF MULTICARE SERVICES; LIMITS ON COST-
SHARING; TREATMENT PRACTICE GUIDELINES.
(a) Multicare Services.--
(1) National suggested list.--The Secretary shall develop a
national list of services which may be covered by a multicare
plan. Such list shall include those services identified as
cost-effective by the Secretary.
(2) State suggested list.--
(A) Establishment.--Each State multicare program
shall establish a State-specific list of covered health
care services. Such list may, but need not, include the
services included in the national standard list
developed under paragraph (1).
(B) Limitations.--A State multicare program may,
with respect to a covered service, limit the amount,
duration, or scope of the service to be included in the
list of services.
(b) Catastrophic Protection.--A State multicare program may
decrease, under section 203(e)(2)(C) or otherwise, the amount of the
cost-sharing limit otherwise permitted under multicare plans.
(c) Suggested Treatment Practice Guidelines.--The Secretary shall
publish and distribute treatment practice guidelines for use by
multicare plans under State multicare programs.
SEC. 105. CONTINUITY OF COVERAGE.
(a) Process.--Each State multicare program shall establish
procedures, including procedures for administering changes in
enrollment in cases of changes in area of residence, employment, and
family status, to ensure for eligible individuals residing in each
State continuity of coverage under a multicare plan.
(b) Guaranteed Issuance and Prohibition of Preexisting Condition
Exclusions.--In addition, each State multicare program shall establish
procedures to ensure--
(1) the multicare plans do not deny coverage to any
eligible individual, and
(2) multicare plans do not exclude coverage on the basis of
preexisting conditions.
SEC. 106. CONTRIBUTION TOWARD PREMIUM COSTS FOR ELIGIBLE INDIVIDUALS.
(a) In General.--Each State multicare program shall provide, for
each eligible individual (other than an exempt individual) enrolled in
a multicare plan under the program for a contribution toward the
premium cost of such enrollment.
(b) Amount of Contribution.--
(1) In general.--The amount of the contribution under
subsection (a) with respect to an eligible individual is equal
to the sum of--
(A) not less than 97 percent of the funds provided
to a State under section 101(d)(1) with respect to
enrollment of the eligible individual, and
(B) not less than 97 percent of the amount
specified under paragraph (2) with respect to the
enrollment of the individual.
Except as the Secretary may otherwise permit, such contribution
shall be provided on a monthly basis.
(2) State contribution amount.--
(A) Initial amount.--
(i) In general.--Subject to subparagraph
(C), the State aggregate contribution amount
for a year is equal to--
(I) the total amount of available
funds (determined under clause (ii))
for the year, divided by
(II) the average number of
individuals described in clause (iii)
for the year.
(ii) Funds available.--The total amount of
available funds for a year is equal to the
increase in all State revenues (including
employment-related excise taxes) effected as a
result of section 111 and the amendment made by
section 123.
(iii) Individuals described.--The number of
individuals described in this clause for a year
is the estimated total average population of
the State in the year, less the sum of the
average number of exempt individuals (as
defined in section 121(d)) in the State in the
year.
(B) Application by enrollment class.--The State
shall adjust the State aggregate contribution amount
determined under this section among enrollment classes
established under section 121(c)(1) in the same manner
as the Secretary provides for adjustment of the Federal
contribution amount among such classes under section
121(c)(2).
SEC. 107. ADDITIONAL SUBSIDIES FOR POOR AND NEAR POOR INDIVIDUALS.
(a) Requirement.--
(1) In general.--Each State multicare program shall include
a mechanism for providing additional financial assistance,
consistent with this section, to poor individuals and near poor
individuals (as defined in section 3) to assist them in
purchasing coverage under multicare plans.
(2) Income determinations.--Each such program is
responsible for making income determinations necessary to
determine if individuals are poor or near poor individuals.
(b) Maintenance of Effort Required.--
(1) In general.--The financial assistance provided under
this section shall not be less than the maintenance-of-effort
level described in paragraph (2).
(2) Maintenance-of-effort level.--Subject to paragraphs (4)
and (5), for a State for a year, the ``maintenance-of-effort
level'' described in this subparagraph is equal to--
(A) the total amount of expenditures made under the
State medicaid plan (net of any Federal payments under
section 1903(a) of the Social Security Act) during the
last full year prior to the implementation of a State
multicare program in the State for acute care services,
increased
(B) for each subsequent year (up to the year
involved) by the applicable inflator (specified in
paragraph (3)) for the year.
Expenditures under paragraph (A) shall include payments to
disproportionate share hospitals under section 1923 of the
Social Security Act.
(3) Applicable inflator.--For purposes of paragraph (1)(B),
the applicable inflator for a year is the lesser of--
(A) the rate of health care inflation for the year,
as determined by the Secretary, or
(B) the percentage increase in the consumer price
index for all urban consumers (all items; U.S. city
average) for the year (as specified by the Secretary),
plus--
(i) for the first year in which the State
multicare program is implemented, 3 percentage
points,
(ii) for the second such year, 2.5
percentage points,
(iii) for the third such year, 2.0
percentage points,
(iv) for the fourth such year, 1.5
percentage points,
(v) for the fifth such year, 1.0 percentage
points,
(vi) for the sixth such year 0.5 percentage
points, and
(vii) for any subsequent year, 0 percentage
points.
(4) Adjustment to reflect changes in population.--The
Secretary may adjust the maintenance-of-effort level of a State
to reflect changes in the population of poor and near poor
individuals in the State between the year described in
paragraph (2)(A) and the year involved.
(5) State savings from welfare programs.--The maintenance-
of-effort level for a State shall be increased by the total
amount of the reductions in State payments under title IV or
XVI of the Social Security Act, the Food Stamp Act, and other
Federal welfare programs (net of any Federal payments) for
residents of a State resulting directly from the implementation
of the financial assistance provided under this section as a
substitute for medical assistance for acute care services under
the State medicaid plan.
(c) Medicaid Revisions.--Notwithstanding any other provision of
law--
(1) a State may deny medical assistance for acute care
services under its State medicaid plan to any poor or near poor
individual who is eligible to enroll under a multicare plan and
for whom additional financial assistance is made available
under this section; and
(2) no Federal financial participation is allowable under
section 1903(a) of the Social Security Act for expenditures
relating to acute care services to any poor or near poor
individual who is eligible to enroll under a multicare plan and
for whom additional financial assistance is made available
under this section.
Expenditures under paragraph (2) shall include payments to
disproportionate share hospitals under section 1923 of the Social
Security Act.
(d) Specific Limitations on Cost-Sharing.--
(1) Sliding scale.--The premiums and cost-sharing imposed
under the lowest cost multicare plans for poor and near poor
individuals shall be determined on a sliding scale based on the
family income of an individual.
(2) Maximum level.--Such premiums and cost-sharing may not
exceed--
(A) in the case of a poor individual, 5 percent of
the individual's family income, and
(B) in the case of a near-poor individual, 5
percent of the Federal official poverty level
(applicable to a family of the size involved) plus 10
percent of the amount by which the individual's family
income exceeds such poverty level.
SEC. 108. ESTABLISHMENT OF REINSURANCE MECHANISM.
(a) Establishment.--
(1) In general.--Each State multicare program shall include
a reinsurance mechanism for high risk individuals enrolled (or
enrolling) in multicare plans offered in the State.
(2) Governance.--The mechanism shall be governed by a
commission appointed by the chief executive officer of the
State. The membership of the commission shall include such
officer (or the officer's designee) and representatives of plan
sponsors, major providers, labor, consumers, State governments,
and the business community.
(b) Requirements.--The mechanism under this section shall require
all multicare plans--
(1) to pay into a common fund for each below-average-risk
individual an amount related to the degree to which the
individual's risk is below the average risk, and
(2) to receive from the common fund for each above-average-
risk individual an amount related to the degree to which the
individual's risk is above the average risk.
The mechanism may not use the fact that a plan is a below-average-cost
plan as an indicator that the plan serves below-average-risk
individuals.
(c) Options.--
(1) Stop-loss.--The mechanism also may provide for
additional payments from the common fund to multicare plans for
individuals whose costs exceed a particular threshold, and may
require all plans (including plans participating in the Federal
Employees Health Benefits program under chapter 89 of title 5,
United States Code) to make contributions to the fund to offset
such additional payments.
(2) Continuous coverage incentives.--The mechanism may
provide for appropriate incentives to encourage continuous
coverage of individuals and groups.
(3) Cost-sharing limit.--The mechanism may provide for
limits on the non-premium cost-sharing of enrollees.
(4) Multi-state option.--State multicare programs may
cooperate and establish multistate reinsurance mechanisms to
carry out this section.
(d) Treatment of Self-Insured Plans.--
(1) In general.--In the case of a multicare plan that is a
self-insured plan (as defined by the Secretary), except as
provided in paragraph (2), the plan is subject to the
requirements of this section, notwithstanding any provision of
the Employee Retirement Income Security Act of 1974 to the
contrary.
(2) Exception.--Paragraph (1) and the provisions of
subsections (a) through (c) shall not apply to a self-insured
plan that operates in at least 3 States and that has elected,
under section 331(c), to participate in the national
reinsurance mechanism (under section 331) rather than in State
reinsurance mechanisms under this section.
SEC. 109. CONSUMER EDUCATION AND ASSISTANCE.
(a) In General.--Each State multicare program shall establish
procedures--
(1) for collecting, publishing, and distributing
comparative value information (described in section 103(c)) on
multicare plans to consumers, and
(2) for educating individuals eligible for State health
care subsidies regarding their health care options and the
requirements under section 107 to qualify for reduced cost-
sharing.
(b) Distribution of Plan Information Through Employers.--A State
multicare program may require employers to supply basic information on
multicare plans in the State (whether prepared by the program or the
plans) to their employees.
SEC. 110. CONSUMER RIGHTS ENFORCEMENT.
Each State multicare program shall assure compliance of multicare
plans with the consumer rights under section 203.
SEC. 111. COMPLIANCE OF STATE INCOME TAX LAWS.
Each State multicare program shall provide for assurances that any
income tax laws of the State, insofar as they provide for the
determination of tax based upon income as determined under the Federal
income tax laws, treat employer payments for health care premiums and
expenses of employees or dependents as payment of wages to such
employees and dependents.
SEC. 112. DISTRIBUTION OF INFORMATION ON AVERAGE PRICES OF COMMON
HEALTH CARE SERVICES.
Each State multicare program shall provide for the distribution, on
both a State and local level, of information on the average prices of
common health care services, including such services as the Secretary
may specify.
Subtitle B--Federal Contribution Toward Multicare Plan Premiums; Tax
Law Changes
SEC. 121. COMPUTATION OF AMOUNT OF FEDERAL CONTRIBUTION.
(a) Determination of Amount.--The Secretary shall determine for
each year (beginning with 1996) an annual Federal contribution amount
in accordance with this section.
(b) Amount.--Subject to subsection (c):
(1) Amount for years before 2002.--
(A) In general.--The Federal contribution amount
for a year before 2002 is equal to--
(i) the total amount of available funds
(determined under subparagraph (B)) for the
year, divided by
(ii) the average number of individuals
described in subparagraph (C) for the year.
(B) Funds available.--The total amount of available
funds for a year is equal to the sum of the following:
(i) Additional net federal revenues.--The
amount described in this subparagraph is the
amount by which--
(I) the increase in all Federal
revenues (including employment-related
excise taxes) resulting from the
amendments made by sections 122 and
123, exceeds
(II) the increase in appropriations
resulting from the increase in
authorization of appropriations
provided under section 441(a) (relating
to facilitating development and use of
medical practice guidelines).
(ii) Additional medicaid-related amount.--
The product described in section
101(c)(3)(A)(ii)(II) for the State, increased
(for each year after the last full year
referred to in section 101(c)(3)(A)(ii)(I), up
to the year involved) by the applicable
inflator (specified in section 107(b)(2)(D))
for the year, and subject to any adjustment for
changes in population under section 107(b)(4).
(C) Individuals described.--
(i) In general.--The number of individuals
described in this subparagraph for a year is--
(I) the estimated total average
population of the United States in the
year, less
(II) the sum of the average number
of exempt individuals in the year.
(2) Years beginning with 2002.--The Federal contribution
amount for a year after 2001 is equal to the Federal
contribution amount determined under this subsection for the
previous year increased by the applicable inflator for the year
involved (as specified under section 107(b)(3)).
(c) Application by Enrollment Class.--
(1) Establishment of enrollment classes.--
(A) In general.--The Secretary shall establish one
or more sets of enrollment classes based on both--
(i) family composition, and
(ii) ages of family members.
(B) Use of common classifications for family
enrollment.--The family classifications under
subparagraph (A)(i) shall be based on common family
enrollment categories, such as individual only,
individual with children, married couple without
children, and a married couple with children.
(2) Adjustment of federal contribution based on enrollment
class.--The Secretary shall adjust the Federal contribution
amount determined under this section for each of the enrollment
classes so that, without changing the total amount of the
Federal contribution, the ratio of the Federal contribution
amount for enrollees in the different classes is equal to the
ratio of average costs under multicare plans for enrollees in
the respective classes.
SEC. 122. TERMINATION OF EXCLUSION FOR EMPLOYER-PROVIDED HEALTH CARE
COVERAGE AND OF DEDUCTION FOR HEALTH INSURANCE COSTS OF
SELF-EMPLOYED.
(a) Termination of Exclusion for Employer-Provided Health Care
Coverage.--
(1) In general.--The text of section 106 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(a) In General.--Gross income of an employee does not include
employer-provided coverage under an accident or health plan.
``(b) Termination.--
``(1) In general.--This section shall not apply to any
taxable year beginning on or after the first day of the second
calendar year beginning after the date of the enactment of this
subsection.
``(2) Exception.--Paragraph (1) shall not apply to a
medical or dental care plan provided under section 1074(a) of
title 10, United States Code.
``(c) Special Rules for Determining Amount of Inclusion.--
``(1) In general.--For purposes of this section, the value
of any coverage shall be determined on the basis of the average
cost of providing such coverage to the beneficiaries receiving
such coverage.
``(2) Special rule.--To the extent provided by the
Secretary, cost determinations under paragraph (1) may be made
on the basis of reasonable estimates but shall not vary based
on the age of employees or their dependents.''
(2) Reporting on w-2 form.--Subsection (a) of section 6051
of such Code (relating to receipts for employees) is amended by
striking ``and'' at the end of paragraph (8), by striking the
period at the end of paragraph (9) and inserting ``, and'', and
by inserting after paragraph (9) the following new paragraph:
``(10) the value of the employer-provided coverage under
any accident or health plan (determined in accordance with
section 106(c)) which is not excludable from gross income under
section 106 by reason of section 106(b) and the number of
months during such calendar year that such coverage was
provided.''
(b) Termination of Deduction for Health Insurance Costs of Self-
Employed.--Subsection (l) of section 162 of such Code is amended by
adding at the end thereof the following new paragraph:
``(7) Termination on implementation of multicare.--In no
event shall this subsection apply to any taxable year beginning
on or after the first day of the second calendar year beginning
after the date of the enactment of this paragraph.''
(c) Application of FICA Taxes and Income Tax Withholding.--
(1) FICA taxes.--Subsection (a) of section 3121 of such
Code is amended by adding at the end thereof the following new
flush sentence:
``Paragraphs (2) and (4) shall not apply to any amount paid for
coverage of an employee or any of his dependents under an accident or
health plan.''
(2) Wage withholding.--Subsection (a) of section 3401 of
such Code is amended by adding at the end thereof the following
new flush sentence:
``The term `wages' shall include amounts paid for coverage of an
employee or any of his dependents under an accident or health plan.''
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning on or after the first
day of the second calendar year beginning after the date of the
enactment of this Act.
SEC. 123. TERMINATION OF DEDUCTION FOR MEDICAL CARE.
Section 213 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new subsection:
``(f) Termination on Implementation of Multicare.--In no event
shall this section apply to any taxable year beginning on or after the
first day of the second calendar year beginning after the date of the
enactment of this subsection.''
TITLE II--REQUIREMENTS FOR MULTICARE PLANS
Subtitle A--General Requirements
SEC. 201. ENROLLMENT AND CONTINUITY OF COVERAGE.
(a) In General.--Each multicare plan shall--
(1) accept for enrollment (except to the extent the
Secretary may provide) all individuals eligible for enrollment,
except as provided in section 103(b); and
(2) not condition or limit the provision or payment for
services based on any pre-existing condition.
(b) Certification of Enrollment for Purposes of Receipt of Federal
Contribution.--Each multicare plan shall provide for notice to the
Secretary or the State multicare program of such information as the
Secretary may require in order to establish the entitlement of the plan
to payment from a State multicare program under section 106.
SEC. 202. COVERED SERVICES.
A multicare plan must--
(1) clearly disclose to each enrollee (in a manner
specified by the State multicare program) the differences
between the services covered under the plan and the list of
services established under section 104(a)(2)(A), and
(2) include, for purposes of applying the catastrophic
protection under section 203(e), hospital, professional, and
other services specified by the Secretary.
SEC. 203. PREMIUMS AND COST-SHARING; CATASTROPHIC PROTECTION.
(a) In General.--Except as a State multicare program otherwise
provides under title I and except as provided in this section, a
multicare plan--
(1) may impose cost-sharing in the form of premiums,
deductibles, coinsurance, and copayments, and
(2) shall disclose the portion of such a premium which is
met through the contribution provided under section 106.
(b) Limits on Premium Variations.--
(1) In general.--Except as provided in paragraph (2), the
premiums with respect to multicare plans offered in an area of
a State shall be established, and shall vary, based only on the
enrollment classes provided under section 121(c)(1). Each plan
shall fairly allocate the costs of such premiums among such
classes.
(2) Use of behavioral factors.--Premiums under a multicare
plan may vary based on factors (such as smoking, substance
abuse, and excessive weight) which are defined by the Secretary
and for which personal behavior is clearly related to receipt
of health care services.
(c) Limitation on Adjustment of Coinsurance and Copayments.--A
multicare plan--
(1) may adjust coinsurance or copayment rates to encourage
enrollees to use (A) preferred providers, (B) providers that
charge lower amounts, or (C) different procedures, but
(2) may not adjust coinsurance based on individual patient
characteristics, including the age, sex, wellness, or medical
history of the individual.
(d) Use of Medical Savings Accounts.--A multicare plan may
establish for its enrollees medical savings accounts--
(1) from which payments for services (below a catastrophic
limit) are made by the enrollees, and
(2) for which balances may be carried forward from year to
year and may be applied against future expenses, be rebated to
the enrollee, or used for retirement purposes.
(e) Catastrophic Protection.--
(1) In general.--A multicare plan shall include a maximum
limit on the annual amount of patient cost-sharing for premiums
and out-of-pocket expenses for covered services.
(2) Limit.--
(A) In general.--Subject to the succeeding
provisions of this paragraph, such annual maximum limit
shall not exceed--
(i) $5,000 for any individual, and
(ii) $10,000, in the aggregate, for all
members of a family.
(B) Indexing.--For any year, after the year in
which this Act is enacted, the dollar amounts specified
under subparagraph (A) shall be the dollar amounts
specified under this paragraph for the previous year
(taking into account any previous application of this
subparagraph) increased by the applicable inflator for
the year (as specified under section 107(b)(3)).
(C) Additional limits.--A State multicare program
may--
(i) impose dollar limits that are less than
the limits otherwise specified under this
paragraph; and
(ii) provide for the application of limits
for expenses over a multi-year period.
(D) State authority.--If a State multicare program
provides for a subsidy of stop-loss limits for
catastrophic coverage for lower income residents (under
its reinsurance mechanism under section 108), the
program may establish regulations designed to prevent
manipulation of household size and membership so as to
qualify for catastrophic protection benefits.
(f) Application of Excess Contribution Amount Towards Cost
Sharing.--If the amount of the State contribution under section 106(b)
toward the premium of an individual exceeds the individual's premium
for a multicare plan, the excess amount shall be counted by the plan
towards the cost sharing for the individual under the plan.
SEC. 204. PARTICIPATION IN REINSURANCE SYSTEM.
Each multicare plan shall participate in the applicable reinsurance
system (established by the State multicare program under section 108 or
by the Secretary pursuant to section 301 or 331).
SEC. 205. DATA REQUIREMENT.
(a) In General.--Each multicare plan (and health care providers
participating in the plan) shall collect and provide to the State
multicare program data on costs of health care, prices for services,
and patient outcomes, in accordance with standards established by the
Secretary by regulation.
(b) Pricing Information.--A multicare plan shall condition the
payment under the plan for services of a provider upon the provider
disclosing to the public, in a form, manner, and at a time specified by
the Secretary, such information on the provider's charges as the State
multicare program specifies, in accordance with guidelines of the
Secretary.
SEC. 206. MEDICAL MALPRACTICE REFORM AND ADMINISTRATIVE COST SAVINGS.
Each multicare plan (and health care providers participating in the
plan) shall comply with the applicable requirements of--
(1) title IV (relating to medical malpractice liability
reform),
(2) subtitle A of title V (relating to standardization of
claims processing), and
(3) subtitle B of title V (relating to electronic medical
data standards).
SEC. 207. CONSUMER RIGHTS.
(a) Notice of Rights; Enforcement.--
(1) Notice.--Each multicare plan shall notify enrollees of
their consumer rights under this section and of the procedures
established by the plan to ensure these rights.
(2) Development of regulations.--The Secretary shall
develop regulation to implement the consumer rights established
under this section.
(3) State enforcement.--States are responsible, under their
multicare programs, for assuring compliance of multicare plans
with the requirements of this section.
(b) Provision of Patient Cost-Sharing Information.--
(1) In general.--Each multicare plan which provides for
cost-sharing (other than premiums) shall ensure that enrollees
are provided, in advance of the receipt of treatment (except as
provided in paragraph (3)), with information on the expected
total costs of treatment and their expected share of the costs.
Such information may be based on the estimates for the average
cost for such treatment.
(2) Total cost.--For purposes of paragraph (1), the total
cost of treatment--
(A) in the case of a patient's initial visit, shall
consist of the initial visit only, and
(B) in the case of subsequent treatment, shall
include all expenses resulting from the treatment
procedure prescribed by the provider.
(3) Exception for emergencies.--In the case of emergency
treatment, the information under this subsection shall be
provided at the earliest reasonable time after such treatment
is initiated.
(c) Provision of Price Information by Health Care Providers.--
(1) In general.--Each health care provider is required to
make available information on the provider's prices for health
care services. Such information shall be made available to the
public and to individuals and organizations upon request.
(2) Standards.--Such information shall be made available in
accordance with standards and a common format established by
the Secretary.
(d) Patient Access to Medical Information.--Each individual has a
right to obtain, through the multicare plan in which the individual is
enrolled, information contained in the medical record of a provider
that has provided health care services for which payment may be made
under the plan.
Subtitle B--Multiple Employer Health Benefits Protections
SEC. 211. LIMITED EXEMPTION UNDER PREEMPTION RULES FOR MULTIPLE
EMPLOYER PLANS PROVIDING HEALTH BENEFITS SUBJECT TO
CERTAIN FEDERAL STANDARDS.
(a) In General.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding at the end the
following new part:
``Part 7--Multiple Employer Health Plans
``SEC. 701. DEFINITIONS.
``For purposes of this part:
``(1) Insurer.--The term `insurer' means an insurance
company, insurance service, or insurance organization, licensed
to engage in the business of insurance by a State.
``(2) Participating employer.--The term `participating
employer' means, in connection with a multiple employer welfare
arrangement, any employer if any of its employees, or any of
the dependents of its employees, are or were covered under such
arrangement during the employment of the employees.
``(3) Excess/stop loss coverage.--The term `excess/stop
loss coverage' means, in connection with a multiple employer
welfare arrangement, a contract under which an insurer provides
for payment with respect to claims under the arrangement,
relating to participants or beneficiaries individually or
otherwise, in excess of an amount or amounts specified in such
contract.
``(4) Qualified actuary.--The term `qualified actuary'
means an individual who is a member of the American Academy of
Actuaries or meets such reasonable standards and qualifications
as the Secretary may provide by regulation.
``(5) Sponsor.--The term `sponsor' means, in connection
with a multiple employer welfare arrangement, the association
or other entity which establishes or maintains the arrangement.
``(6) State location of covered individuals.--
``(A) In general.--A multiple employer welfare
arrangement shall be treated as covering individuals
located in a State only if the minimum required number
of individuals who are covered under the arrangement
are located in such State, except that if the minimum
required number of individuals are not located in any
State, such arrangement shall be treated as covering
individuals in any State in which any covered
individual is located.
``(B) Minimum required number.--For purposes of
subparagraph (A), the minimum required number is the
greater of--
``(i) 5 percent of the total number of
individuals described in subparagraph (A), or
``(ii) 50.
``(C) Location of individuals in state.--For
purposes of subparagraph (A), an individual shall be
treated as located in a State if such individual is
employed in such State or the address of such
individual last known by the arrangement is located in
such State.
``(7) State insurance commissioner.--The term `State
insurance commissioner' means the insurance commissioner (or
similar official) of a State.
``(8) Domicile state.--The term `domicile State' means, in
connection with a multiple employer welfare arrangement, the
State in which, according to the application for an exemption
under this part, most individuals to be covered under the
arrangement are located, except that, in any case in which
information contained in the latest annual report of the
arrangement filed under this part indicates that most
individuals covered under the arrangement are located in a
different State, such term means such different State.
``(9) Fully insured arrangement.--A multiple employer
welfare arrangement shall be treated as fully insured only if
one or more insurers, health maintenance organizations, similar
organizations regulated under State law for solvency, or any
combination thereof are liable under one or more insurance
policies or contracts for all benefits under the arrangement
(irrespective of any recourse they may have against other
parties).
``(10) Multiple employer health plan.--The term `multiple
employer health plan' means a multiple employer welfare
arrangement treated as an employee welfare benefit plan by
reason of an exemption under this part.
``SEC. 702. EXEMPTED MULTIPLE EMPLOYER PLANS PROVIDING BENEFITS IN THE
FORM OF MEDICAL CARE RELIEVED OF CERTAIN RESTRICTIONS ON
PREEMPTION OF STATE LAW AND TREATED AS EMPLOYEE WELFARE
BENEFIT PLANS.
``(a) In General.--Subject to subsection (b), a multiple employer
welfare arrangement which is not fully insured and with respect to
which there is in effect an exemption granted by the Secretary under
this part (or with respect to which there is pending a complete
application for such an exemption and the Secretary determines that
provisional protection under this part is appropriate)--
``(1) shall be treated for purposes of subtitle A and the
preceding parts of this subtitle as an employee welfare benefit
plan, irrespective of whether such arrangement is an employee
welfare benefit plan, and
``(2) shall be exempt from section 514(b)(6)(A)(ii).
``(b) Benefits Must Consist of Medical Care.--Subsection (a) shall
apply to a multiple employer welfare arrangement only if the benefits
provided thereunder consist solely of medical care described in section
607(1) (disregarding such incidental benefits as the Secretary shall
specify by regulation).
``(c) Restriction on Commencement of New Arrangements.--A multiple
employer welfare arrangement providing benefits which consist of
medical care described in section 607(1) which has not commenced
operations as of January 1, 1994, may commence operations only if an
exemption granted to the arrangement under this part is in effect (or
there is pending with respect to the arrangement a complete application
for such an exemption and the Secretary determines that provisional
protection under this part is appropriate).
``SEC. 703. EXEMPTION PROCEDURE.
``(a) In General.--The Secretary shall grant an exemption described
in section 702(a) to a multiple employer welfare arrangement if--
``(1) an application for such exemption with respect to
such arrangement, identified individually or by class, has been
duly filed in complete form with the Secretary in accordance
with this part,
``(2) such application demonstrates compliance with the
requirements of section 704 with respect to such arrangement,
and
``(3) the Secretary finds that such exemption is--
``(A) administratively feasible,
``(B) not adverse to the interests of the
individuals covered under the arrangement, and
``(C) protective of the rights and benefits of the
individuals covered under the arrangement.
``(b) Notice and Hearing.--Before granting an exemption under this
section, the Secretary shall publish notice in the Federal Register of
the pendency of the exemption, shall require that adequate notice be
given to interested persons, including the State insurance commissioner
of each State in which covered individuals under the arrangement are,
or are expected to be, located, and shall afford interested persons
opportunity to present views. The Secretary may not grant an exemption
under this section unless the Secretary affords an opportunity for a
hearing and makes a determination on the record with respect to the
findings required under subsection (a)(3). The Secretary shall, to the
maximum extent practicable, make a final determination with respect to
any application filed under this section in the case of a newly
established arrangement within 90 days after the date which the
Secretary determines is the date on which such application is filed in
complete form.
``SEC. 704. ELIGIBILITY REQUIREMENTS.
``(a) Application for Exemption.--
``(1) In general.--An exemption may be granted by the
Secretary under this part only on the basis of an application
filed with the Secretary in such form and manner as shall be
prescribed in regulations of the Secretary. Any such
application shall be signed by the operating committee and the
sponsor of the arrangement.
``(2) Filing fee.--The arrangement shall pay to the
Secretary at the time of filing an application under this
section a filing fee in the amount of $5,000, which shall be
available, to the extent provided in appropriation Acts, to the
Secretary for the sole purpose of administering the exemption
procedures under this part.
``(3) Information included.--An application filed under
this section shall include, in a manner and form prescribed in
regulations of the Secretary, at least the following
information:
``(A) Identifying information.--The names and
addresses of--
``(i) the sponsor, and
``(ii) the members of the operating
committee of the arrangement.
``(B) States in which arrangement intends to do
business.--The States in which individuals covered
under the arrangement are to be located and the number
of such individuals expected to be located in each such
State.
``(C) Bonding requirements.--Evidence provided by
the operating committee that the bonding requirements
of section 412 will be met as of the date of the
application.
``(D) Plan documents.--A copy of the documents
governing the arrangement (including any bylaws and
trust agreements), the summary plan description, and
other material describing the benefits and coverage
that will be provided to individuals covered under the
arrangement.
``(E) Agreements with service providers.--A copy of
any agreements between the arrangement and contract
administrators and other service providers.
``(F) Funding report.--A report setting forth
information determined as of a date within the 120-day
period ending with the date of the application,
including the following:
``(i) Reserves.--A statement, certified by
the operating committee of the arrangement, and
a statement of actuarial opinion, signed by a
qualified actuary, that all applicable
requirements of section 707 are or will be met
in accordance with regulations which the
Secretary shall prescribe.
``(ii) Adequacy of contribution rates.--A
statement of actuarial opinion, signed by a
qualified actuary, which sets forth a
description of the extent to which contribution
rates are adequate to provide for the payment
of all obligations and the maintenance of
required reserves under the arrangement for the
12-month period beginning with such date within
such 120-day period, taking into account the
expected coverage and experience of the
arrangement. If the contribution rates are not
fully adequate, the statement of actuarial
opinion shall indicate the extent to which the
rates are inadequate and the changes needed to
ensure adequacy.
``(iii) Current and projected value of
assets and liabilities.--A statement of
actuarial opinion signed by a qualified
actuary, which sets forth the current value of
the assets and liabilities accumulated under
the arrangement and a projection of the assets,
liabilities, income, and expenses of the
arrangement for the 12-month period referred to
in clause (ii). The income statement shall
identify separately the arrangement's
administrative expenses and claims.
``(iv) Costs of coverage to be charged and
other expenses.--A statement of the costs of
coverage to be charged, including an
itemization of amounts for administration,
reserves, and other expenses associated with
the operation of the arrangement.
``(v) Other information.--Any other
information which may be prescribed in
regulations of the Secretary as necessary to
carry out the purposes of this part.
``(b) Other Requirements.--A complete application for an exemption
under this part shall include information which the Secretary
determines to be complete and accurate and sufficient to demonstrate
that the following requirements are met with respect to the
arrangement:
``(1) Sponsor.--The sponsor is, and has been (together with
its immediate predecessor, if any) for a continuous period of
not less than 3 years before the date of the application,
organized and maintained in good faith, with a constitution and
bylaws specifically stating its purpose, as a trade
association, an industry association, a professional
association, or a chamber of commerce or other business group,
for substantial purposes other than that of obtaining or
providing medical care described in section 607(1), and the
applicant demonstrates to the satisfaction of the Secretary
that the sponsor is established as a permanent entity which
receives the active support of its members.
``(2) Operating committee.--The arrangement is operated,
pursuant to a trust agreement, by an operating committee which
has complete fiscal control over the arrangement and which is
responsible for all operations of the arrangement, and the
operating committee has in effect rules of operation and
financial controls, based on a 3-year plan of operation,
adequate to carry out the terms of the arrangement and to meet
all requirements of this title applicable to the arrangement.
The members of the committee are individuals selected from
individuals who are the owners, officers, directors, or
employees of the participating employers or who are partners in
the participating employers and actively participate in the
business. No such member is an owner, officer, director, or
employee of, or partner in, a contract administrator or other
service provider to the arrangement, except that officers or
employees of a sponsor which is a service provider (other than
a contract administrator) to the arrangement may be members of
the committee if they constitute not more than 25 percent of
the membership of the committee and they do not provide
services to the arrangement other than on behalf of the
sponsor. The committee has sole authority to approve
applications for participation in the arrangement and to
contract with a service provider to administer the day-to-day
affairs of the arrangement.
``(3) Contents of governing instruments.--The instruments
governing the arrangement include a written instrument, meeting
the requirements of an instrument required under section
402(a)(1), which--
``(A) provides that the committee serves as the
named fiduciary required for plans under section
402(a)(1) and serves in the capacity of a plan
administrator (referred to in section 3(16)(A)),
``(B) provides that the sponsor is to serve as plan
sponsor (referred to in section 3(16)(B)),
``(C) incorporates the requirements of section 707,
and
``(D) provides that, effective upon the granting of
an exemption under this part--
``(i) all participating employers must be
members or affiliated members of the sponsor,
except that, in the case of a sponsor which is
a professional association or other individual-
based association, if at least one of the
officers, directors, or employees of an
employer, or at least one of the individuals
who are partners in an employer and who
actively participates in the business, is a
member or affiliated member of the sponsor,
participating employers may also include such
employer, and
``(ii) all individuals thereafter
commencing coverage under the arrangement must
be--
``(I) active or retired owners,
officers, directors, or employees of,
or partners in, participating
employers, or
``(II) the beneficiaries of
individuals described in subclause (I).
``(4) Contribution rates.--The contribution rates referred
to in subsection (a)(3)(F)(ii) are adequate.
``(5) Regulatory requirements.--Such other requirements as
the Secretary may prescribe by regulation as necessary to carry
out the purposes of this part.
``(c) Treatment of Party Seeking Exemption Where Party is Subject
to Disqualification.--
``(1) In general.--In the case of any application for an
exemption under this part with respect to a multiple employer
welfare arrangement, if the Secretary determines that the
sponsor of the arrangement or any other person associated with
the arrangement is subject to disqualification under paragraph
(2), the Secretary may deny the exemption with respect to such
arrangement.
``(2) Disqualification.--A person is subject to
disqualification under this paragraph if such person--
``(A) has intentionally made a material
misstatement in the application for exemption,
``(B) has obtained or attempted to obtain an
exemption under this part through misrepresentation or
fraud,
``(C) has misappropriated or converted to such
person's own use, or improperly withheld, money held
under a plan or any multiple employer welfare
arrangement,
``(D) is prohibited (or would be prohibited if the
arrangement were a plan) from serving in any capacity
in connection with the arrangement under section 411,
``(E) has failed to appear without reasonable cause
or excuse in response to a subpoena, examination,
warrant, or any other order lawfully issued by the
Secretary compelling such response,
``(F) has previously been subject to a
determination under this part resulting in the denial,
suspension, or revocation of an exemption under this
part on similar grounds, or
``(G) has otherwise violated any provision of this
title with respect to a matter which the Secretary
determines of sufficient consequence to merit
disqualification for purposes of this part.
``(d) Franchise Networks.--In the case of a multiple employer
welfare arrangement established and maintained by a franchisor for a
franchise network consisting of its franchisees, such franchisor shall
be treated as the sponsor referred to in the preceding provisions of
this section, such network shall be treated as an association referred
to in such provisions, and each franchisee shall be treated as a member
(of the association and the sponsor) referred to in such provisions, if
all participating employers are such franchisees and the requirements
of subsection (b)(1) with respect to a sponsor are met with respect to
the network.
``(e) Certain Collectively Bargained Arrangements.--In applying the
preceding provisions of this section in the case of a multiple employer
welfare arrangement which would be described in section 3(40)(A)(i) but
for the failure to meet any requirement of section 3(40)(C)--
``(1) paragraphs (1) and (2) of subsection (b) and
subparagraphs (A), (B), and (D) of paragraph (3) of subsection
(b) shall be disregarded, and
``(2) the joint board of trustees shall be considered the
operating committee of the arrangement.
``(f) Certain Arrangements Not Meeting Single Employer
Requirement.--
``(1) In general.--In any case in which the majority of the
employees covered under a multiple employer welfare arrangement
are employees of a single employer (within the meaning of
clauses (i) and (ii) of section 3(40)(B)), if all other
employees covered under the arrangement are employed by
employers who are related to such single employer, subsection
(b)(3)(D) shall be disregarded.
``(2) Related employers.--For purposes of paragraph (1),
employers are `related' if there is among all such employers a
common ownership interest or a substantial commonality of
business operations based on common suppliers or customers.
``SEC. 705. ADDITIONAL REQUIREMENTS APPLICABLE TO EXEMPTED
ARRANGEMENTS.
``(a) Notice of Material Changes.--In the case of any multiple
employer welfare arrangement with respect to which there is in effect
an exemption granted under this part, descriptions of material changes
in any information which was required to be submitted with the
application for the exemption shall be filed in such form and manner as
shall be prescribed in regulations of the Secretary. The Secretary may
require by regulation prior notice of material changes with respect to
specified matters which might serve as the basis for suspension or
revocation of the exemption.
``(b) Reporting Requirements.--Under regulations of the Secretary,
the requirements of sections 102, 103, and 104 shall apply with respect
to any multiple employer welfare arrangement with respect to which
there is or has been in effect an exemption granted under this part in
the same manner and to the same extent as such requirements apply to
employee welfare benefit plans, irrespective of whether such exemption
continues in effect. The annual report required under section 103 for
any plan year in the case of any such multiple employer welfare
arrangement shall also include information described in section
704(a)(3)(F) with respect to the plan year and, notwithstanding section
104(a)(1)(A), shall be filed not later than 90 days after the close of
the plan year.
``(c) Engagement of Qualified Actuary.--The operating committee of
each multiple employer welfare arrangement with respect to which there
is or has been in effect an exemption granted under this part shall
engage, on behalf of all covered individuals, a qualified actuary who
shall be responsible for the preparation of the materials comprising
information necessary to be submitted by a qualified actuary under this
part. The qualified actuary shall utilize such assumptions and
techniques as are necessary to enable such actuary to form an opinion
as to whether the contents of the matters reported under this part--
``(1) are in the aggregate reasonably related to the
experience of the arrangement and to reasonable expectations,
and
``(2) represent such actuary's best estimate of anticipated
experience under the arrangement.
The opinion by the qualified actuary shall be made with respect to, and
shall be made a part of, the annual report.
``(d) Filing Notice of Exemption With States.--An exemption granted
to a multiple employer welfare arrangement under this part shall not be
effective unless written notice of such exemption is filed with the
State insurance commissioner of each State in which at least 5 percent
of the individuals covered under the arrangement are located. For
purposes of this paragraph, an individual shall be considered to be
located in the State in which a known address of such individual is
located or in which such individual is employed. The Secretary may by
regulation provide in specified cases for the application of the
preceding sentence with lesser percentages in lieu of such 5 percent
amount.
``SEC. 706. DISCLOSURE TO PARTICIPATING EMPLOYERS BY ARRANGEMENTS
PROVIDING MEDICAL CARE.
``(a) In General.--A multiple employer welfare arrangement
providing benefits consisting of medical care described in section
607(1) shall issue to each participating employer--
``(1) a document equivalent to the summary plan description
required of plans under part 1,
``(2) information describing the contribution rates
applicable to participating employers, and
``(3) a statement indicating--
``(A) whether or not the arrangement is fully
insured,
``(B) whether or not there is in effect with
respect to the arrangement an exemption granted under
this part and, if there is in effect such an exemption,
that the arrangement is (or is treated as) an employee
welfare benefit plan under this title, and
``(C) that the arrangement is not a licensed
insurer under the laws of any State.
``(b) Time for Disclosure.--Such information shall be issued to
employers within such reasonable period of time before becoming
participating employers as may be prescribed in regulations of the
Secretary.
``SEC. 707. MAINTENANCE OF RESERVES.
``(a) In General.--Each multiple employer welfare arrangement with
respect to which there is or has been in effect an exemption granted
under this part and which is not fully insured shall establish and
maintain reserves, consisting of--
``(1) a reserve for unearned contributions,
``(2) a reserve for payment of claims reported and not yet
paid and claims incurred but not yet reported, and for expected
administrative costs with respect to such claims, and
``(3) a reserve, in an amount recommended by the qualified
actuary, for any other obligations of the arrangement.
``(b) Minimum Amount for Certain Reserves.--The total of the
reserves described in subsection (a)(2) shall not be less than an
amount equal to 25 percent of expected incurred claims and expenses for
the plan year.
``(c) Required Margin.--In determining the amounts of reserves
required under this section in connection with any multiple employer
welfare arrangement, the qualified actuary shall include a margin for
error and other fluctuations taking into account the specific
circumstances of such arrangement.
``(d) Additional Requirements.--The Secretary may provide such
additional requirements relating to reserves and excess/stop loss
coverage as the Secretary considers appropriate. Such requirements may
be provided, by regulation or otherwise, with respect to any
arrangement or any class of arrangements.
``(e) Adjustments for Excess/Stop Loss Coverage.--The Secretary may
provide for adjustments to the levels of reserves otherwise required
under subsections (a) and (b) with respect to any arrangement or class
of arrangements to take into account excess/stop loss coverage provided
with respect to such arrangement or arrangements.
``SEC. 708. CORRECTIVE ACTIONS.
``(a) Actions To Avoid Depletion of Reserves.--A multiple employer
welfare arrangement with respect to which there is or has been in
effect an exemption granted under this part shall continue to meet the
requirements of section 707, irrespective of whether such exemption
continues in effect. The operating committee of such arrangement shall
determine semiannually whether the requirements of section 707 are met.
In any case in which the committee determines that there is reason to
believe that there is or will be a failure to meet such requirements,
or the Secretary makes such a determination and so notifies the
committee, the committee shall immediately notify the qualified actuary
engaged by the arrangement, and such actuary shall, not later than the
end of the next following month, make such recommendations to the
committee for corrective action as the actuary determines necessary to
ensure compliance with section 707. Not later than 10 days after
receiving from the actuary recommendations for corrective actions, the
committee shall notify the Secretary (in such form and manner as the
Secretary may prescribe by regulation) of such recommendations of the
actuary for corrective action, together with a description of the
actions (if any) that the committee has taken or plans to take in
response to such recommendations. The committee shall thereafter report
to the Secretary, in such form and frequency as the Secretary may
specify to the committee, regarding corrective action taken by the
committee until the requirements of section 707 are met.
``(b) Termination.--
``(1) Notice of termination.--In any case in which the
operating committee of a multiple employer welfare arrangement
with respect to which there is or has been in effect an
exemption granted under this part determines that there is
reason to believe that the arrangement will terminate, the
committee shall so inform the Secretary, shall develop a plan
for winding up the affairs of the arrangement in connection
with such termination in a manner which will result in timely
payment of all benefits for which the arrangement is obligated,
and shall submit such plan in writing to the Secretary. Actions
required under this paragraph shall be taken in such form and
manner as may be prescribed in regulations of the Secretary.
``(2) Actions required in connection with termination.--In
any case in which--
``(A) the Secretary has been notified under
subsection (a) of a failure of a multiple employer
welfare arrangement with respect to which there is or
has been in effect an exemption granted under this part
to meet the requirements of section 707 and has not
been notified by the operating committee of the
arrangement that corrective action has restored
compliance with such requirements, and
``(B) the Secretary determines that the continuing
failure to meet the requirements of section 707 can be
reasonably expected to result in a continuing failure
to pay benefits for which the arrangement is obligated,
the operating committee of the arrangement shall, at the
direction of the Secretary, terminate the arrangement and, in
the course of the termination, take such actions as the
Secretary may require as necessary to ensure that the affairs
of the arrangement will be, to the maximum extent possible,
wound up in a manner which will result in timely payment of all
benefits for which the arrangement is obligated.
``SEC. 709. EXPIRATION, SUSPENSION, OR REVOCATION OF EXEMPTION.
``(a) Expiration and Renewal of Exemption.--An exemption granted to
a multiple employer welfare arrangement under this part shall expire 3
years after the date on which the exemption is granted. An exemption
which has expired may be renewed by means of application for an
exemption in accordance with section 704.
``(b) Suspension or Revocation of Exemption by Secretary.--The
Secretary may suspend or revoke an exemption granted to a multiple
employer welfare arrangement under this part--
``(1) for any cause that may serve as the basis for the
denial of an initial application for such an exemption under
section 704, or
``(2) if the Secretary finds that--
``(A) the arrangement, or the sponsor thereof, in
the transaction of business while under the exemption,
has used fraudulent, coercive, or dishonest practices,
or has demonstrated incompetence, untrustworthiness, or
financial irresponsibility,
``(B) the arrangement, or the sponsor thereof, is
using such methods or practices in the conduct of its
operations, so as to render its further transaction of
operations hazardous or injurious to participating
employers, or covered individuals,
``(C) the arrangement, or the sponsor thereof, has
refused to be examined in accordance with this part or
to produce its accounts, records, and files for
examination in accordance with this part, or
``(D) any of the officers of the arrangement, or
the sponsor thereof, has refused to give information
with respect to the affairs of the arrangement or the
sponsor or to perform any other legal obligation
relating to such an examination when required by the
Secretary in accordance with this part.
Any such suspension or revocation under this subsection shall be
effective only upon a final decision of the Secretary made after notice
and opportunity for a hearing is provided in accordance with section
710.
``(c) Suspension or Revocation of Exemption Under Court
Proceedings.--An exemption granted to a multiple employer welfare
arrangement under this part may be suspended or revoked by a court of
competent jurisdiction in an action by the Secretary brought under
paragraph (2), (5), or (6) of section 502(a), except that the
suspension or revocation under this subsection shall be effective only
upon notification of the Secretary of such suspension or revocation.
``(d) Notification of Participating Employers.--All participating
employers in a multiple employer welfare arrangement shall be notified
of the expiration, suspension, or revocation of an exemption granted to
such arrangement under this part, by such persons and in such form and
manner as shall be prescribed in regulations of the Secretary, not
later than 20 days after such expiration or after receipt of notice of
a final decision requiring such suspension or revocation.
``(e) Publication of Expirations, Suspensions, and Revocations.--
The Secretary shall publish all expirations of, and all final decisions
to suspend or revoke, exemptions granted under this part.
``SEC. 710. REVIEW OF ACTIONS OF THE SECRETARY.
``(a) In General.--Any decision by the Secretary which involves the
denial of an application by a multiple employer welfare arrangement for
an exemption under this part or the suspension or revocation of such an
exemption shall contain a statement of the specific reason or reasons
supporting the Secretary's action, including reference to the specific
terms of the exemption and the statutory provision or provisions
relevant to the determination.
``(b) Denials of Applications.--In the case of the denial of an
application for an exemption under this part, the Secretary shall send
a copy of the decision to the applicant by certified or registered mail
at the address specified in the records of the Secretary. Such decision
shall constitute the final decision of the Secretary unless the
arrangement, or any party that would be prejudiced by the decision,
files a written appeal of the denial within 30 days after the mailing
of such decision. The Secretary may affirm, modify, or reverse the
initial decision. The decision on appeal shall become final upon the
mailing of a copy by certified or registered mail to the arrangement or
party that filed the appeal.
``(c) Suspensions or Revocations of Exemption.--In the case of the
suspension or revocation of an exemption granted under this part, the
Secretary shall send a copy of the decision to the arrangement by
certified or registered mail at its address, as specified in the
records of the Secretary. Upon the request of the arrangement, or any
party that would be prejudiced by the suspension or revocation, filed
within 15 days of the mailing of the Secretary's decision, the
Secretary shall schedule a hearing on such decision by written notice,
sent by certified or registered mail to the arrangement or party
requesting such hearing. Such notice shall set forth--
``(1) a specific date and time for the hearing, which shall
be within the 10-day period commencing 20 days after the date
of the mailing of the notice, and
``(2) a specific place for the hearing, which shall be in
the District of Columbia or in the State and county thereof (or
parish or other similar political subdivision thereof) in which
is located the arrangement's principal place of business.
The decision as affirmed or modified in such hearing shall constitute
the final decision of the Secretary, unless such decision is reversed
in such hearing.''.
(b) Conforming Amendment to Definition of Plan Sponsor.--Section
3(16)(B) of such Act (29 U.S.C. 1002(16)(B)) is amended by adding at
the end the following new sentence: ``Such term also includes the
sponsor (as defined in section 701(5)) of a multiple employer welfare
arrangement, or a multiple employer health plan (as defined in section
701(10)), with respect to which there is or has been in effect an
exemption granted under part 7.''.
(c) Alternative Means of Distribution of Summary Plan
Descriptions.--Section 110 of such Act (29 U.S.C. 1030) is amended by
adding at the end the following new subsection:
``(c) The Secretary shall prescribe, as an alternative method for
distributing summary plan descriptions in order to meet the
requirements of section 104(b)(1) in the case of multiple employer
welfare arrangements providing benefits consisting of medical care
described in section 607(1), a means of distribution of such
descriptions by participating employers.''.
(d) Clerical Amendment.--The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974 is amended by inserting
after the item relating to section 608 the following new items:
``Part 7--Multiple Employer Health Plans
``Sec. 701. Definitions.
``Sec. 702. Exempted multiple employer welfare arrangements treated as
employee welfare benefit plans and exempt
from certain restrictions on preemption.
``Sec. 703. Exemption procedure.
``Sec. 704. Eligibility requirements.
``Sec. 705. Additional requirements applicable to exempted
arrangements.
``Sec. 706. Disclosure to participating employers by arrangements
providing medical care.
``Sec. 707. Maintenance of reserves.
``Sec. 708. Corrective actions.
``Sec. 709. Expiration, suspension, or revocation of exemption.
``Sec. 710. Review of actions of the Secretary.''.
SEC. 212. CLARIFICATION OF SCOPE OF PREEMPTION RULES.
(a) In General.--Section 514(b)(6)(A)(ii) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)(6)(A)(ii)) is
amended by inserting ``, but only, in the case of an arrangement which
provides medical care described in section 607(1) and with respect to
which an exemption under part 7 is not in effect,'' before ``to the
extent not inconsistent with the preceding sections of this title''.
(b) Cross-Reference.--Section 514(b)(6) of such Act (29 U.S.C.
1144(b)(6)) is amended by adding at the end the following new
subparagraph:
``(E) For additional rules relating to exemption from subparagraph
(A)(ii) of multiple employer welfare arrangements providing medical
care, see part 7.''.
SEC. 213. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002(40)(B)) is amended--
(1) in clause (i), by inserting ``for any plan year of any
such plan, or any fiscal year of any such other arrangement,''
after ``single employer'', and by inserting ``during such year
or at any time during the preceding 1-year period'' after
``common control'',
(2) in clause (iii), by striking ``common control shall not
be based on an interest of less than 25 percent'' and inserting
``an interest of greater than 25 percent may not be required as
the minimum interest necessary for common control'', and by
striking ``and'' at the end,
(3) by redesignating clause (iv) as clause (v), and
(4) by inserting after clause (iii) the following new
clause:
``(iv) in determining, after the application of clause (i),
whether benefits are provided to employees of two or more
employers, the arrangement shall be treated as having only 1
participating employer if, at the time the determination under
clause (i) is made, the number of individuals who are employees
and former employees of any one participating employer and who
are covered under the arrangement is greater than 95 percent of
the aggregate number of all individuals who are employees or
former employees of participating employers and who are covered
under the arrangement.''.
SEC. 214. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED
ARRANGEMENTS.
(a) In General.--Section 3(40)(A)(i) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to
read as follows:
``(i) under or pursuant to one or more collective
bargaining agreements,''.
(b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is
amended by adding at the end the following new subparagraphs:
``(C) Clause (i) of subparagraph (A) shall apply
only if--
``(i) the plan or other arrangement, and
the employee organization or any other entity
sponsoring the plan or other arrangement, do
not--
``(I) utilize the services of any
licensed insurance agent or broker for
soliciting or enrolling employers or
individuals as participating employers
or covered individuals under the plan
or other arrangement, or
``(II) pay a commission or any
other type of compensation to a person
that is related either to the volume or
number of employers or individuals
solicited or enrolled as participating
employers or covered individuals under
the plan or other arrangement, or to
the dollar amount or size of the
contributions made by participating
employers or covered individuals to the
plan or other arrangement,
``(ii) not less than 85 percent of the
covered individuals under the plan or other
arrangement are individuals who--
``(I) are employed within a
bargaining unit covered by at least one
of the collective bargaining agreements
with a participating employer (or are
covered on the basis of an individual's
employment in such a bargaining unit),
or
``(II) are present or former
employees of the sponsoring employee
organization, of an employer who is or
was a party to at least one of the
collective bargaining agreements, or of
the plan or other arrangement or a
related plan or arrangement (or are
covered on the basis of such present or
former employment),
``(iii) the plan or other arrangement does
not provide benefits to individuals (other than
individuals described in clause (ii)(II)) who
work outside the standard metropolitan
statistical area in which the sponsoring
employee organization represents employees (or
to individuals (other than individuals
described in clause (ii)(II)) on the basis of
such work by others), except that in the case
of a sponsoring employee organization that
represents employees who work outside of any
standard metropolitan statistical area, this
clause shall be applied by reference to the
State in which the sponsoring organization
represents employees, and
``(iv) the employee organization or other
entity sponsoring the plan or other arrangement
certifies to the Secretary each year, in a form
and manner which shall
be prescribed in regulations of the Secretary--
``(I) that the plan or other
arrangement meets the requirements of
clauses (i), (ii), and (iii), and
``(II) if, for any year, 10 percent
or more of the covered individuals
under the plan are individuals not
described in subclause (I) or (II) of
clause (ii), the total number of
covered individuals and the total
number of covered individuals not so
described.
``(D)(i) Clause (i) of subparagraph (A) shall not
apply to a plan or other arrangement that is
established or maintained pursuant to one or more
collective bargaining agreements which the National
Labor Relations Boards determines to have been
negotiated or otherwise agreed to in a manner or
through conduct which violates section 8(a)(2) of the
National Labor Relations Act (29 U.S.C. 158(a)(2)).
``(ii)(I) Whenever a State insurance commissioner
has reason to believe that this subparagraph is
applicable to part or all of a plan or other
arrangement, the State insurance commissioner may file
a petition with the National Labor Relations Board for
a determination under clause (i), along with sworn
written testimony supporting the petition.
``(II) The Board shall give any such petition
priority over all other petitions and cases, other than
other petitions under subclause (I) or cases given
priority under section 10 of the National Labor
Relations Act (29 U.S.C. 160).
``(III) The Board shall determine, upon the
petition and any response, whether, on the facts before
it, the plan or other arrangement was negotiated,
created, or otherwise agreed to in a manner or through
conduct which violates section 8(a)(2) of the National
Labor Relations Act (29 U.S.C. 158(a)(2)). Such
determination shall constitute a final determination
for purposes of this subparagraph and shall be binding
in all Federal or State actions with respect to the
status of the plan or other arrangement under this
subparagraph.
``(IV) A person aggrieved by the determination of
the Board under subclause (III) may obtain review of
the determination in any United States court of appeals
in the circuit in which the collective bargaining at
issue occurred. Commencement of proceedings under this
subclause shall not, unless specifically ordered by the
court, operate as a stay of any State administrative or
judicial action or proceeding related to the status of
the plan or other arrangement, except that in no case
may the court stay, before the completion of the
review, an order which prohibits the enrollment of new
individuals into coverage under a plan or
arrangement.''.
SEC. 215. EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.
(a) Employee Leasing Healthcare Arrangement Defined.--Section 3 of
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002) is
amended by adding at the end the following new paragraph:
``(43) Employee Leasing Healthcare Arrangement.--
``(A) In general.--Subject to subparagraph (B), the term
`employee leasing healthcare arrangement' means any labor
leasing arrangement, staff leasing arrangement, extended
employee staffing or supply arrangement, or other arrangement
under which--
``(i) one business or other entity (hereinafter in
this paragraph referred to as the `lessee'), under a
lease or other arrangement entered into with any other
business or other entity (hereinafter in this paragraph
referred to as the `lessor'), receives from the lessor
the services of individuals to be performed under such
lease or other arrangement, and
``(ii) benefits consisting of medical care
described in section 607(1) are provided to such
individuals or such individuals and their dependents as
participants and beneficiaries.
``(B) Exception.--Such term does not include an arrangement
described in subparagraph (A) if, under such arrangement, the
lessor retains, both legally and in fact, a complete right of
direction and control within the scope of employment over the
individuals whose services are supplied under such lease or
other arrangement, and such individuals perform a specified
function for the lessee which is separate and divisible from
the primary business or operations of the lessee.''.
(b) Treatment of Employee Leasing Healthcare Arrangements as
Multiple Employer Welfare Arrangements.--Section 3(40) of such Act (29
U.S.C. 1002(40)) (as amended by the preceding provisions of this
subtitle) is further amended by adding at the end the following new
subparagraph:
``(E) The term `multiple employer welfare arrangement' includes any
employee leasing healthcare arrangement, except that such term does not
include any employee leasing healthcare arrangement which is a multiple
employer health plan (as defined in section 701(10)).''.
(c) Special Rules for Employee Leasing Healthcare Arrangements.--
(1) In general.--Part 7 of subtitle B of title I of such
Act (as added by the preceding provisions of this subtitle) is
amended by adding at the end the following new section:
``SEC. 711. SPECIAL RULES FOR EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.
``(a) In General.--The requirements of paragraphs (1), (2), and (3)
of section 704(b) shall be treated as satisfied in the case of a
multiple employer welfare arrangement that is an employee leasing
healthcare arrangement if the application for exemption includes
information which the Secretary determines to be complete and accurate
and sufficient to demonstrate that the following requirements are met
with respect to the arrangement:
``(1) 3-year tenure.--The lessor has been in operation for
not less than 3 years.
``(2) Solicitation restrictions.--Employee leasing services
provided under the arrangement are not solicited, advertised,
or marketed through licensed insurance agents or brokers acting
in such capacity.
``(3) Creation of employment relationship.--
``(A) Disclosure statement.--Written notice is
provided to each applicant for employment subject to
coverage under the arrangement, at the time of
application for employment and before commencing
coverage under the arrangement, stating that the
employer is the lessor under the arrangement.
``(B) Informed consent.--Each such applicant signs
a written statement consenting to the employment
relationship with the lessor.
``(C) Informed recruitment of lessee's employees.--
In any case in which the lessor offers employment to an
employee of a lessee under the arrangement, the lessor
informs each employee in writing that his or her
acceptance of employment with the lessor is voluntary
and that refusal of such offer will not be deemed to be
resignation from or abandonment of current employment.
``(4) Requisite employer-employee relationship under
arrangement.--Under the employer-employee relationship with the
employees of the lessor--
``(A) the lessor retains the ultimate authority to
hire, terminate, and reassign such employees,
``(B) the lessor is responsible for the payment of
wages, payroll-related taxes, and employee benefits,
without regard to payment by the lessee to the lessor
for its services,
``(C) the lessor maintains the right of direction
and control over its employees, except to the extent
that the lessee is responsible for supervision of the
work performed consistent with the lessee's
responsibility for its product or service,
``(D) in accordance with section 301(a) of the
Labor Management Relations Act, 1947 (29 U.S.C.
185(a)), the lessor retains in the absence of an
applicable collective bargaining agreement, the right
to enter into arbitration and to decide employee
grievances, and
``(E) no owner, officer, or director of, or partner
in, a lessee is an employee of the lessor, and not more
than 10 percent of the individuals covered under the
arrangement consist of owners, officers, or directors
of, or partners in, such a lessee (or any combination
thereof).
``(b) Definitions.--For purposes of this section:
``(1) Lessor.--The term `lessor' means the business or
other entity from which services of individuals are obtained
under an employee leasing healthcare arrangement.
``(2) Lessee.--The term `lessee' means a business or other
entity which receives the services of individuals provided
under an employee leasing healthcare arrangement.''.
(2) Clerical amendment.--The table of contents in section 1
of such Act (as amended by the preceding provisions of this
subtitle) is further amended by inserting after the item
relating to section 710 the following new item:
``Sec. 711. Employee leasing healthcare arrangements.''.
SEC. 216. ENFORCEMENT PROVISIONS RELATING TO MULTIPLE EMPLOYER WELFARE
ARRANGEMENTS AND EMPLOYEE LEASING HEALTHCARE
ARRANGEMENTS.
(a) Enforcement of Filing Requirements.--Section 502 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) is
amended--
(1) in subsection (a)(6), by striking ``subsection (c)(2)
or (i) or (l)'' and inserting ``paragraph (2) or (4) of
subsection (c) or subsection (i) or (l)''; and
(2) by adding at the end of subsection (c) the following
new paragraph:
``(4) The Secretary may assess a civil penalty against any person
of up to $1,000 a day from the date of such person's failure or refusal
to file the information required to be filed with the Secretary under
section 101(d).''.
(b) Actions by States in Federal Court.--Section 502(a) of such Act
(29 U.S.C. 1132(a)) is amended--
(1) in paragraph (5), by striking ``or'' at the end;
(2) in paragraph (6), by striking the period and inserting
``, or''; and
(3) by adding at the end the following:
``(7) by a State official having authority under the law of
such State to enforce the laws of such State regulating
insurance, to enjoin any act or practice which violates any
provision of part 7 which such State has the power to enforce
under part 7.''.
(c) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of such Act (29 U.S.C. 1131) is amended--
(1) by inserting ``(a)'' after ``Sec. 501.''; and
(2) by adding at the end the following new subsection:
``(b) Any person who, either willfully or with willful blindness,
falsely represents, to any employee, any employee's beneficiary, any
employer, the Secretary, or any State, an arrangement established or
maintained for the purpose of offering or providing any benefit
described in section 3(1) to employees or their beneficiaries as being
a multiple employer welfare arrangement granted an exemption under part
7, as being an employee leasing healthcare arrangement under such an
exemption, or as having been established or maintained under or
pursuant to a collective bargaining agreement shall, upon conviction,
be imprisoned not more than five years, be fined under title 18, United
States Code, or both.''.
(d) Cease Activities Orders.--Section 502 of such Act (29 U.S.C.
1132) is amended by adding at the end the following new subsection:
``(m)(1) Subject to paragraph (2), upon application by the
Secretary showing the operation, promotion, or marketing of a multiple
employer welfare arrangement providing benefits consisting of medical
care described in section 607(1) that--
``(A) is not licensed, registered, or otherwise approved
under the insurance laws of the States in which the arrangement
offers or provides benefits, or
``(B) is not operating in accordance with the terms of an
exemption granted by the Secretary under part 7,
a district court of the United States shall enter an order requiring
that the arrangement cease activities.
``(2) Paragraph (1) shall not apply in the case of a multiple
employer welfare arrangement if the arrangement shows that it--
``(A) is fully insured, within the meaning of section
701(9),
``(B) is licensed, registered, or otherwise approved in
each State in which it offers or provides benefits, except to
the extent that such State does not require licensing,
registration, or approval of fully insured multiple employer
welfare arrangements, and
``(C) with respect to each such State, is operating in
accordance with applicable State insurance laws that are not
superseded under section 514.
``(3) The court may grant such additional equitable or remedial
relief, including any relief available under this title, as it deems
necessary to protect the interests of the public and of persons having
claims for benefits against the arrangement.''.
(e) Responsibility for Claims Procedure.--Section 503 of such Act
(29 U.S.C. 1133) is amended by adding at the end (after and below
paragraph (2)) the following new sentence: ``The terms of each multiple
employer welfare arrangement to which this section applies and which
provides benefits consisting of medical care described in section
607(1) shall require the operating committee or the named fiduciary (as
applicable) to ensure that the requirements of this section are met in
connection with claims filed under the arrangement.''.
SEC. 217. FILING REQUIREMENTS FOR HEALTH BENEFIT MULTIPLE EMPLOYER
WELFARE ARRANGEMENTS.
Section 101 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1021) is amended--
(1) by redesignating subsection (e) as subsection (f); and
(2) by inserting after subsection (d) the following new
subsection:
``(e)(1) Each multiple employer welfare arrangement shall file with
the Secretary a registration statement described in paragraph (2)
within 60 days before commencing operations (in the case of an
arrangement commencing operations on or after January 1, 1994) and no
later than February 15 of each year (in the case of an arrangement in
operation since the beginning of such year), unless, as of the date by
which such filing otherwise must be made, such arrangement provides no
benefits consisting of medical care described in section 607(1).
``(2) Each registration statement--
``(A) shall be filed in such form, and contain such
information concerning the multiple employer welfare
arrangement and any persons involved in its operation
(including whether the arrangement is fully insured), as shall
be provided in regulations which shall be prescribed by the
Secretary, and
``(B) if the arrangement is not fully insured, shall
contain a certification that copies of such registration
statement have been transmitted by certified mail to--
``(i) in the case of an arrangement with respect to
which an exemption under part 7 is in effect, the State
insurance commissioner of the domicile State of such
arrangement, or
``(ii) in the case of an arrangement which is not
so exempt, the State insurance commissioner of each
State in which the arrangement is located.
``(3) The person or persons responsible for filing the annual
registration statement are--
``(A) the trustee or trustees so designated by the terms of
the instrument under which the multiple employer welfare
arrangement is established or maintained, or
``(B) in the case of a multiple employer welfare
arrangement for which the trustee or trustees cannot be
identified, or upon the failure of the trustee or trustees of
an arrangement to file, the person or persons actually
responsible for the acquisition, disposition, control, or
management of the cash or property of the arrangement,
irrespective of whether such acquisition, disposition, control,
or management is exercised directly by such person or persons
or through an agent designated by such person or persons.
``(4) Any agreement entered into under section 506(c) with a State
as the primary domicile State with respect to any multiple employer
welfare arrangement shall provide for simultaneous filings of reports
required under this subsection with the Secretary and with the State
insurance commissioner of such State.''.
SEC. 218. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1136) is amended by adding at the end the following new
subsection:
``(c) Responsibility With Respect to Multiple Employer Welfare
Arrangements.--
``(1) State enforcement.--
``(A) Agreements with states.--A State may enter
into an agreement with the Secretary for delegation to
the State of some or all of the Secretary's authority
under sections 502 and 504 to enforce the provisions of
this title applicable to multiple employer welfare
arrangements with respect to which an exemption under
part 7 is or has been in effect. The Secretary shall
enter into the agreement if the Secretary determines
that the delegation provided for therein would not
result in a lower level or quality of enforcement of
the provisions of this title.
``(B) Delegations.--Any department, agency, or
instrumentality of a State to which authority is
delegated pursuant to an agreement entered into under
this paragraph may, if authorized under State law and
to the extent consistent with such agreement, exercise
the powers of the Secretary under this title which
relate to such authority.
``(C) Concurrent authority of the secretary.--If
the Secretary delegates authority to a State in an
agreement entered into under subparagraph (A), the
Secretary may continue to exercise such authority
concurrently with the State.
``(D) Recognition of primary domicile state.--In
entering into any agreement with a State under
subparagraph (A), the Secretary shall ensure that, as a
result of such agreement and all other agreements
entered into under subparagraph (A), only one State
will be recognized, with respect to any particular
multiple employer welfare arrangement, as the primary
domicile State to which authority has been delegated
pursuant to such agreements.
``(2) Assistance to states.--The Secretary shall--
``(A) provide enforcement assistance to the States
with respect to multiple employer welfare arrangements,
including, but not limited to, coordinating Federal and
State efforts through the establishment of cooperative
agreements with appropriate State agencies under which
the Pension and Welfare Benefits Administration keeps
the States informed of the status of its cases and
makes available to the States information obtained by
it,
``(B) provide continuing technical assistance to
the States with respect to issues involving multiple
employer welfare arrangements and this Act,
``(C) assist the States in obtaining from the
Office of Regulations and Interpretations timely and
complete responses to requests for advisory opinions on
issues described in subparagraph (B), and
``(D) distribute copies of all advisory opinions
described in subparagraph (C) to the State insurance
commissioner of each State.''.
SEC. 219. EFFECTIVE DATE; TRANSITIONAL RULES.
(a) Effective Date.--The amendments made by this subtitle shall
take effect January 1, 1994, except that the Secretary of Labor may
issue regulations before such date under such amendments. The Secretary
shall issue all regulations necessary to carry out the amendments made
by this subtitle before the effective date thereof.
(b) Transitional Rules.--If the sponsor of a multiple employer
welfare arrangement which, as of January 1, 1994, provides benefits
consisting of medical care described in section 607(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1167(1)) files with
the Secretary of Labor an application for an exemption under part 7 of
subtitle B of title I of such Act within 180 days after such date and
the Secretary has not, as of 90 days after receipt of such application,
found such application to be materially deficient, section 514(b)(6)(A)
of such Act (29 U.S.C. 1144(b)(6)(A)) shall not apply with respect to
such arrangement during the 18-month period following such date. If the
Secretary determines, at any time after the date of enactment of this
Act, that any such exclusion from coverage under the provisions of such
section 514(b)(6)(A) of a multiple employer welfare arrangement would
be detrimental to the interests of individuals covered under such
arrangement, such exclusion shall cease as of the date of the
determination. Any determination made by the Secretary under this
subsection shall be in the Secretary's sole discretion.
Subtitle C--Repeal of COBRA Continuation Requirements
SEC. 221. REPEAL OF REQUIREMENTS OF THE INTERNAL REVENUE CODE OF 1954.
(a) In General.--Section 4980B of the Internal Revenue Code of 1986
is repealed.
(b) Conforming Amendments.--Section 414 of such Code is amended--
(1) in subsection (n)(3)(C), by striking ``505, and 4980B''
and inserting ``and 505'', and
(2) in subsection (t)(2), by striking ``505, or 4980B'' and
inserting ``or 505''.
(c) Effective Date.--The repeal effected by subsection (a) shall
apply to health plans offered in a State by an employer as of the first
date that a State multicare program is in effect in the State.
SEC. 222. REPEAL OF REQUIREMENTS OF EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.
(a) In General.--Part 6 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 is repealed.
(b) 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) Effective Date.--The repeal effected by subsection (a) shall
apply to health plans offered in a State by an employer as of the first
date that a State multicare program is in effect in the State.
SEC. 223. REPEAL OF REQUIREMENTS OF PUBLIC HEALTH SERVICE ACT.
(a) In General.--Title XXII of the Public Health Service Act is
repealed.
(b) Effective Date.--The repeal effected by subsection (a) shall
apply to health plans offered in a State by an employer as of the first
date that a State multicare program is in effect in the State.
TITLE III--STATES WITHOUT STATE MULTICARE PROGRAMS; FEDERAL HEALTH CARE
PROGRAMS; NATIONAL REINSURANCE POOL
Subtitle A--Multicare Plans in States without State Multicare Programs
SEC. 301. GENERAL PROVISIONS.
(a) In General.--In the case of a State without a State multicare
program approved under title I, the Secretary may provide for--
(1) the operation (through the Department of Health and
Human Services) of such a program in the State, and
(2) the approval and offering of multistate plans in the
State,
in the same manner as such a program and plans would have been offered
if a State multicare program were in operation in the State.
(b) Application of All Requirements.--In the case of multicare
plans offered pursuant to subsection (a), such plans shall meet all the
same requirements of title II (including requirements relating to
consumer rights) that would have applied if the plans were offered
under a State multicare program.
(c) Consumer Education and Assistance.--In the case of a State
without a State multicare program approved under title I:
(1) Distribution of plan information.--The Secretary shall
provide, through local Social Security Administration offices
and State welfare offices, for assistance to medicare,
medicaid, and low-income beneficiaries in the selection of
multicare plans pursuant to this section. Such offices shall
provide eligible individuals with the information necessary to
qualify them for reduced cost-sharing and to explain their
available options.
(2) Distribution of plan information.--The Secretary shall
provide for distribution of information on approved multicare
plans.
Subtitle B--Federal Health Care Programs
SEC. 321. MEDICARE PROGRAM.
(a) Negotiation Authority.--The Secretary of Health and Human
Services is authorized to negotiate an agreement with a State multicare
program to provide medicare-eligible individuals with access to
multicare plans.
(b) Terms of Agreements.--
(1) In general.--Under an agreement under this section,
medicare-eligible individuals--
(A) are permitted to choose to enroll in multicare
plans, and
(B) are provided payment of an amount towards the
cost of enrolling in the plan.
(2) Other terms.--An agreement under this section--
(A) may not increase the total Federal cost of
care, and
(B) shall ensure that medicare-eligible individuals
can easily compare the benefits of enrollment under a
multicare plan to the benefits provided under the
medicare program.
(c) Special Rules.--
(1) No federal contribution.--No Federal contribution is
available to a State under section 101(c)(1) with respect to
enrollment of an individual with a multicare plan under an
agreement under this section.
(2) Construction.--Nothing in this section shall be
construed as--
(A) requiring a State multicare program to enter
into an agreement under this section as a condition of
approval of the program under this Act or otherwise, or
(B) as authorizing the Secretary or a State to
require a medicare-eligible individual to enroll with a
multicare plan under the agreement.
SEC. 322. FEDERAL EMPLOYEES HEALTH BENEFIT PROGRAM.
(a) Use of Federal Contribution Toward Purchase of Multicare
Plan.--In the case of an individual who is a Federal employee or
annuitant eligible to enroll in a health benefit plan under chapter 89
of title 5, United States Code and is residing in a State--
(1) with a State multicare program, instead of enrolling
under such a plan the individual is entitled to elect (in a
form and manner specified by the Director of the Office of
Personnel Management in consultation with the Secretary) to
have the amount of the Federal Government contribution toward
such plan under such chapter applied toward enrollment of the
individual (and qualified family members) under a multicare
plan; and
(2) without a State multicare program, instead of enrolling
under such a plan the individual is entitled to elect (in a
form and manner specified by the Director of the Office of
Personnel Management in consultation with the Secretary) to
have the amount of the Federal Government contribution toward
such plan under such chapter applied toward enrollment of the
individual (and qualified family members) under a Federally
approved multicare plan.
(b) Approval of FEHBP Plans.--The Secretary may approve a health
benefit plan offered under chapter 89 of title 5, United States Code,
as a multicare plan under this Act if the plan--
(1) participates in a reinsurance mechanism that meets the
requirements of section 107, and
(2) otherwise complies with the requirements for a
multicare plan under title II.
(c) Treatment of FEHBP Plans as Multicare Plans for Purposes of
Federal Contribution.--For purposes of section 121, a health benefit
plan in which an individual is enrolled under chapter 89 of title 5,
United States Code is treated as a multicare plan in which the
individual is enrolled.
(d) Construction.--Nothing in this section shall be construed as
authorizing the Office of Personnel Management to require any
individual to enroll with a multicare plan under this section.
SEC. 323. REPORT RECOMMENDING INTEGRATION OF CHAMPUS, VETERANS HEALTH,
AND INDIAN HEALTH SERVICES.
(a) In General.--The Secretary of Health and Human Services, in
coordination with the Secretary of Veterans Affairs, the Secretary of
Defense, and the Secretary of the Interior, shall submit to Congress a
report that includes recommendations on how (and the extent to which)
the Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS), the health care programs of the Department of Veterans
Affairs, and the Indian Health Service may be integrated with the
multicare program established under this Act.
(b) Deadline.--The report under subsection (a) shall be submitted
not later than 2 years after the date of the enactment of this Act to
the Committees on Armed Services, Energy and Commerce, Interior,
Veterans' Affairs, and Ways and Means of the House of Representatives
and to the Committees on Armed Services, Finance, Labor and Human
Resources, and Veterans' Affairs of the Senate.
SEC. 324. CONSUMER RIGHTS FOR INDIVIDUALS IN FEDERAL PROGRAMS.
(a) Notice of Rights; Enforcement.--
(1) Notice.--The Secretary shall notify individuals
provided health care services under a Federal health care
program of their consumer rights under this section and of the
procedures established by the Secretary to ensure these rights.
(2) Development of regulations.--The Secretary shall
develop regulation to implement the consumer rights established
under this section.
(3) State enforcement.--The Secretary is responsible,
through modification of requirements of Federal health care
programs, for assuring compliance of physicians with the
requirements of this section.
(b) Provision of Patient Cost-Sharing Information.--
(1) In general.--Each physician who furnishes professional
services for which payment may be made under a Federal health
care program shall provide, as a condition for the payment of
funds for such services under such program, that a patient is
provided, in advance of the receipt of the services (except as
provided by the Secretary in the case of emergency services),
with information on the expected total costs of the services
and an estimate of the patient's share of the costs. Such
information may be based on the estimates for the average cost
for such services.
(2) Total cost.--For purposes of paragraph (1), the total
cost of treatment--
(A) in the case of a patient's initial visit, shall
consist of the initial visit only, and
(B) in the case of subsequent treatment, shall
include all expenses resulting from the treatment
procedure prescribed by the physician.
(3) Exception for emergencies.--In the case of emergency
services, the information under this subsection shall be
provided at the earliest reasonable time after such services
are provided.
(c) Patient Access to Medical Information.--In the case of an
individual who receives professional services from a physician for
which payment may be made under a Federal health care program, the
individual has a right to obtain information contained in the
individual's medical record maintained by the physician.
(d) Federal Health Care Program.--In this section, the term
``Federal health care program'' includes the medicare program, the
medicaid program, and the Federal employees health benefits program.
Subtitle C--National Reinsurance Mechanism
SEC. 331. NATIONAL REINSURANCE MECHANISM.
(a) Establishment.--
(1) In general.--The Secretary shall establish a national
reinsurance mechanism for use by self-insured closed multicare
plans described in subsection (b) which have not made an
election described in subsection (c). Such a mechanism shall be
designed to meet the requirements described in section 107(b).
(2) Governance.--The mechanism shall be governed by a
commission appointed by the Secretary. The membership of the
commission shall include the Secretary (or the Secretary's
designee) and representatives of plan sponsors, major
providers, labor, State reinsurance mechanisms, consumers,
State governments, and the business community.
(b) Plans Covered.--The plans described in this subsection are
self-insured plans that operate in 3 or more States.
(c) Election.--A plan described in subsection (b) shall be
permitted to make a one-time election as to whether to participate in
the national reinsurance mechanism under this section or to participate
in State reinsurance mechanisms established under section 107 (or by
the Secretary under section 301).
TITLE IV--MEDICAL MALPRACTICE LIABILITY REFORM
Subtitle A--Medical Malpractice Liability Reform
Part 1--General Provisions
SEC. 401. FEDERAL REFORM OF MEDICAL MALPRACTICE LIABILITY ACTIONS.
(a) Congressional Findings.--
(1) Effect on interstate commerce.--Congress finds that the
health care and insurance industries are industries affecting
interstate commerce and the medical malpractice litigation
systems existing throughout the United States affect interstate
commerce by contributing to the high cost of health care and
premiums for malpractice insurance purchased by health care
providers.
(2) Effect on federal spending.--Congress finds that the
medical malpractice litigation systems existing throughout the
United States have a significant effect on the amount,
distribution, and use of Federal funds because of--
(A) the large number of individuals who receive
health care benefits under programs operated or
financed by the Federal Government;
(B) the large number of individuals who benefit
because of the exclusion from Federal taxes of the
amounts spent by their employers to provide them with
health insurance benefits;
(C) the large number of health care providers and
health care professionals who provide items or services
for which the Federal Government makes payments; and
(D) the large number of such providers and
professionals who have received direct or indirect
financial assistance from the Federal Government
because of their status as such professionals or
providers.
(b) Applicability.--This subtitle shall apply with respect to any
medical malpractice liability claim and to any medical malpractice
liability action brought in any State or Federal court, except that
this subtitle shall not apply to--
(1) a claim or action for damages arising from a vaccine-
related injury or death to the extent that title XXI of the
Public Health Service Act applies to the action; or
(2) a claim or action in which the plaintiff's sole
allegation is an allegation of an injury arising from the use
of a medical product.
(c) Preemption of State Law.--Subject to section 421, this subtitle
supersedes State law only to the extent that State law differs from any
provision of law established by or under this subtitle. Any issue that
is not governed by any provision of law established by or under this
subtitle shall be governed by otherwise applicable State or Federal
law.
(d) Federal Court Jurisdiction Not Established on Federal Question
Grounds.--Nothing in this subtitle shall be construed to establish any
jurisdiction in the district courts of the United States over medical
malpractice liability actions on the basis of sections 1331 or 1337 of
title 28, United States Code.
SEC. 402. DEFINITIONS.
As used in this subtitle:
(1) Alternative dispute resolution system; ADR.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system established by a State that provides for the resolution
of medical malpractice liability claims in a manner other than
through medical malpractice liability actions.
(2) Claimant.--The term ``claimant'' means any person who
alleges a medical malpractice liability claim, or, in the case
of an individual who is deceased, incompetent, or a minor, the
person on whose behalf such a claim is alleged.
(3) Economic damages.--The term ``economic damages'' means
damages paid to compensate an individual for losses for
hospital and other medical expenses, lost wages, lost
employment, and other pecuniary losses.
(4) Health care professional.--The term ``health care
professional'' means any individual who provides health care
services in a State and who is required by State law or
regulation to be licensed or certified by the State to provide
such services in the State.
(5) Health care provider.--The term ``health care
provider'' means any organization or institution that is
engaged in the delivery of health care services in a State and
that is required by State law or regulation to be licensed or
certified by the State to engage in the delivery of such
services in the State.
(6) Injury.--The term ``injury'' means any illness,
disease, or other harm that is the subject of a medical
malpractice liability action or claim.
(7) Medical malpractice liability action.--The term
``medical malpractice liability action'' means a civil action
(other than an action in which the plaintiff's sole allegation
is an allegation of an intentional tort) brought in a State or
Federal court against a health care provider or health care
professional (regardless of the theory of liability on which
the action is based) in which the plaintiff alleges a medical
malpractice liability claim.
(8) Medical malpractice liability claim.--The term
``medical malpractice liability claim'' means a claim in which
the claimant alleges that injury was caused by the provision of
(or the failure to provide) health care services.
(9) Medical product.--The term ``medical product'' means a
device (as defined in section 201(h) of the Federal Food, Drug,
and Cosmetic Act) or a drug (as defined in section 201(g)(1) of
the Federal Food, Drug, and Cosmetic Act).
(10) Noneconomic damages.--The term ``noneconomic damages''
means damages paid to compensate an individual for losses for
physical and emotional pain, suffering, inconvenience, physical
impairment, mental anguish, disfigurement, loss of enjoyment of
life, loss of consortium, and other nonpecuniary losses, but
does not include punitive damages.
(11) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(12) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, and American Samoa.
SEC. 403. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b) and sections
419 and 442, this subtitle shall apply with respect to claims accruing
or actions brought on or after the expiration of the 3-year period that
begins on the date of the enactment of this Act.
(b) Exception for States Requesting Earlier Implementation of
Reforms.--
(1) Application.--A State may submit an application to the
Secretary requesting the early implementation of this subtitle
with respect to claims or actions brought in the State.
(2) Decision by secretary.--The Secretary shall issue a
response to a State's application under paragraph (1) not later
than 90 days after receiving the application. If the Secretary
determines that the State meets the requirements of this
subtitle at the time of submitting its application, the
Secretary shall approve the State's application, and this
subtitle shall apply with respect to actions brought in the
State on or after the expiration of the 90-day period that
begins on the date the Secretary issues the response. If the
Secretary denies the State's application, the Secretary shall
provide the State with a written explanation of the grounds for
the decision.
Part 2--Uniform Standards For Medical Malpractice Liability Actions
SEC. 411. STATUTE OF LIMITATIONS.
(a) In General.--No medical malpractice liability claim may be
brought after the expiration of the 2-year period that begins on the
date the alleged injury that is the subject of the action should
reasonably have been discovered, but in no event after the expiration
of the 4-year period that begins on the date the alleged injury
occurred.
(b) Exception for Minors.--In the case of an alleged injury
suffered by a minor who has not attained 6 years of age, no medical
malpractice liability claim may be brought after the expiration of the
2-year period that begins on the date the alleged injury that is the
subject of the action should reasonably have been discovered, but in no
event after the date on which the minor attains 10 years of age.
SEC. 412. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH
ALTERNATIVE DISPUTE RESOLUTION.
(a) In General.--No medical malpractice liability action may be
brought in any State court unless the medical malpractice liability
claim that is the subject of the action has been initially resolved
under an alternative dispute resolution system certified by the
Secretary under section 432(b).
(b) Initial Resolution of Claims Under ADR.--For purposes of
subsection (a), an action is ``initially resolved'' under an
alternative dispute resolution system if--
(1) the ADR reaches a decision on whether the defendant is
liable to the plaintiff for damages; and
(2) if the ADR determines that the defendant is liable, the
ADR determines the amount of damages assessed against the
defendant.
(c) Procedures for Filing Actions.--
(1) Deadline.--No medical malpractice liability action may
be brought unless the action is filed in a court of competent
jurisdiction not later than 90 days after an opinion resolving
the medical malpractice liability claim that is the subject of
the action is issued under the applicable alternative dispute
resolution system.
(2) Court of competent jurisdiction.--For purposes of
paragraph (1), the term ``court of competent jurisdiction''
means--
(A) with respect to actions filed in a State court,
the appropriate State trial court; and
(B) with respect to actions filed in a Federal
court, the appropriate United States district court.
(d) Status of ADR Decision.--The decision reached under an
alternative dispute resolution system shall, for purposes of
enforcement by a court of competent jurisdiction, have the same status
in the court as the verdict of a medical malpractice liability action
adjudicated in a State or Federal trial court.
(e) Treatment of ADR Decision.--
(1) Requirements for going forward with action.--In order
to bring a medical malpractice liability action to contest the
decision made under the previous alternative dispute resolution
system with respect to a medical malpractice liability claim,
the party contesting the decision must--
(A) show that--
(i) the decision was procured by
corruption, fraud, or undue means,
(ii) there was partiality or corruption
under the system,
(iii) there was other misconduct under the
system that materially prejudiced the party's
rights, or
(iv) the decision was based on an error of
law; or
(B) present new evidence before the trier of fact
that was not available for presentation under the ADR
system.
(2) Burden of proof.--In any medical malpractice liability
action, the trier of fact shall uphold the decision made under
the previous alternative dispute resolution system with respect
to the claim that is the subject of the action unless the party
contesting the decision proves by a preponderance of the
evidence that the decision was incorrect.
SEC. 413. RELATION TO ALTERNATIVE DISPUTE RESOLUTION OF FEDERAL
AGENCIES.
(a) Mandatory Application of Federal ADR in Malpractice Claims
Against United States.--Section 2672 of title 28, United States Code,
is amended by striking the period at the end of the first paragraph and
inserting the following: ``, except that each Federal agency shall use
arbitration or such alternative means of dispute resolution to settle
any tort claim against the United States consisting of a medical
malpractice liability claim (as defined in section 402(8) of the
Multicare Act of 1994).''.
(b) Transmittal of Information of Malpractice Claims Resolved Under
Federal ADR.--Section 584 of title 5, United States Code, as added by
section 4(b) of the Administrative Dispute Resolution Act (Public Law
101-552), is amended by adding at the end the following new subsection:
``(k) Each agency shall transmit on a regular basis to the
Administrator for Health Care Policy and Research information on issues
in controversy consisting of medical malpractice liability claims (as
defined in section 402(8) of Multicare Act of 1994) that are resolved
under the agency's dispute resolution proceeding under this subchapter,
in a manner that assures that the identity of the parties to such
proceedings shall not be revealed.''.
SEC. 414. MANDATORY PRE-TRIAL SETTLEMENT CONFERENCE.
(a) In General.--Before the beginning of the trial phase of any
medical malpractice liability action, the parties shall attend a
conference called by the court for purposes of determining whether
grounds exist upon which the parties may negotiate a settlement for the
action.
(b) Requiring Parties to Submit Settlement Offers.--At the
conference called pursuant to subsection (a), each party to a medical
malpractice liability action shall present an offer of settlement for
the action.
SEC. 415. CALCULATION AND PAYMENT OF DAMAGES.
(a) Limitation on Noneconomic Damages.--The total amount of
noneconomic damages that may be awarded to a plaintiff and the members
of the plaintiff's family for losses resulting from the injury which is
the subject of a medical malpractice liability action may not exceed
$250,000, regardless of the number of parties against whom the action
is brought or the number of actions brought with respect to the injury.
(b) Treatment of Punitive Damages.--
(1) Limitation on amount.--The total amount of punitive
damages that may be imposed under a medical malpractice
liability action may not exceed twice the total of the damages
awarded to the plaintiff and the members of the plaintiff's
family.
(2) Payments to state for medical quality assurance
activities.--
(A) In general.--Any punitive damages imposed under
a medical malpractice liability action shall be paid to
the State in which the action is brought.
(B) Activities described.--A State shall use amount
paid pursuant to subparagraph (A) to carry out
activities to assure the safety and quality of health
care services provided in the State, including (but not
limited to)--
(i) licensing or certifying health care
professionals and health care providers in the
State;
(ii) operating alternative dispute
resolution systems;
(iii) carrying out public education
programs relating to medical malpractice and
the availability of alternative dispute
resolution systems in the State; and
(iv) carrying out programs to reduce
malpractice-related costs for retired providers
or other providers volunteering to provide
services in medically underserved areas.
(C) Maintenance of effort.--A State shall use any
amounts paid pursuant to subparagraph (A) to supplement
and not to replace amounts spent by the State for the
activities described in subparagraph (B).
(c) Periodic Payments for Future Losses.--If more than $100,000 in
damages for expenses to be incurred in the future is awarded to the
plaintiff in a medical malpractice liability action, the defendant
shall provide for payment for such damages on a periodic basis
determined appropriate by the court (based upon projections of when
such expenses are likely to be incurred), unless the court determines
that it is not in the plaintiff's best interests to receive payments
for such damages on such a periodic basis.
(d) Mandatory Offsets for Damages Paid by a Collateral Source.--
(1) In general.--The total amount of damages received by a
plaintiff in a medical malpractice liability action shall be
reduced (in accordance with paragraph (2)) by any other payment
that has been or will be made to the individual to compensate
the plaintiff for the injury that was the subject of the
action, including payment under--
(A) Federal or State disability or sickness
programs;
(B) Federal, State, or private health insurance
programs;
(C) private disability insurance programs;
(D) employer wage continuation programs; and
(E) any other source of payment intended to
compensate the plaintiff for such injury.
(2) Amount of reduction.--The amount by which an award of
damages to a plaintiff shall be reduced under paragraph (1)
shall be--
(A) the total amount of any payments (other than
such award) that have been made or that will be made to
the plaintiff to compensate the plaintiff for the
injury that was the subject of the action; minus
(B) the amount paid by the plaintiff (or by the
spouse, parent, or legal guardian of the plaintiff) to
secure the payments described in subparagraph (A).
SEC. 416. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.
(a) Limitation on Attorney's Fees.--If the plaintiff in a medical
malpractice liability action has entered into an agreement with the
plaintiff's attorney to pay the attorney's fees on a contingency basis,
the attorney's fees for the action may not exceed--
(1) 25 percent of the first $150,000 of any award or
settlement paid to the plaintiff; or
(2) 15 percent of any additional amounts paid to the
plaintiff.
(b) Awarding Attorney's Fees and Other Costs to Winning Party.--
(1) In general.--If the court in a medical malpractice
liability action upholds a ruling of the alternative dispute
resolution system with respect to whether or not a health care
professional or health care provider committed malpractice or
with respect to the amount of damages awarded, the court shall
require the party that contested the ruling to pay to the
opposing party the costs incurred by the opposing party under
the action, including attorney's fees, fees paid to expert
witnesses, and other litigation expenses (but not including
court costs, filing fees, or other expenses paid directly by
the party to the court, or any fees or costs associated with
the resolution of the claim that is the subject of the action
under the alternative dispute resolution system).
(2) Permitting court to waive or modify imposition of
costs.--A court may issue a written order waiving or modifying
the application of paragraph (1) to a party if the court finds
that the application of such paragraph to the party would
constitute an undue hardship, or if the medical malpractice
liability action raised a novel issue of law. The order shall
specify the grounds for the court's decision to waive or modify
the application of such paragraph.
SEC. 417. JOINT AND SEVERAL LIABILITY.
The liability of each defendant in a medical malpractice liability
action shall be several only and shall not be joint, and each defendant
shall be liable only for the amount of damages allocated to the
defendant in direct proportion to the defendant's percentage of
responsibility (as determined by the trier of fact).
SEC. 418. UNIFORM STANDARD FOR DETERMINING NEGLIGENCE.
Except as provided in subsection (b), a defendant in a medical
malpractice liability action may not be found to have acted negligently
unless the defendant's conduct at the time of providing the health care
services that are the subject of the action was not reasonable.
SEC. 419. APPLICATION OF MEDICAL PRACTICE GUIDELINES IN MALPRACTICE
LIABILITY ACTIONS.
(a) Use of Guidelines as Affirmative Defense.--In any medical
malpractice liability action, it shall be a complete defense to any
allegation that the defendant was negligent that, in the provision of
(or the failure to provide) the services that are the subject of the
action, the defendant followed the appropriate practice guideline.
(b) Restriction on Guidelines Considered Appropriate.--
(1) Guidelines sanctioned by secretary.--For purposes of
subsection (a), a practice guideline may not be considered
appropriate with respect to actions brought during a year
unless the Secretary has sanctioned the use of the guideline
for purposes of an affirmative defense to medical malpractice
liability actions brought during the year in accordance with
paragraph (2) or (3).
(2) Process for sanctioning guidelines.--Not less
frequently than October 1 of each year (beginning with 1995),
the Secretary, shall review the practice guidelines and
standards developed by the Administrator for Health Care Policy
and Research pursuant to section 1142 of the Social Security
Act, and shall sanction those guidelines which the Secretary
considers appropriate for purposes of an affirmative defense to
medical malpractice liability actions brought during the next
calendar year as appropriate practice guidelines for purposes
of subsection (a).
(3) Use of state guidelines.--Upon the application of a
State, the Secretary may sanction practice guidelines selected
by the State for purposes of an affirmative defense to medical
malpractice liability actions brought in the State as
appropriate practice guidelines for purposes of subsection (a)
if the guidelines meet such requirements as the Secretary may
impose.
(c) Prohibiting Application of Failure to Follow Guidelines as
Prima Facie Evidence of Negligence.--No plaintiff in a medical
malpractice liability action may be deemed to have presented prima
facie evidence that a defendant was negligent solely by showing that
the defendant failed to follow the appropriate practice guideline.
SEC. 420. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.
(a) Imposition of Higher Standard of Proof.--
(1) In general.--In the case of a medical malpractice
liability action relating to services provided during labor or
the delivery of a baby, if the defendant health care
professional did not previously treat the plaintiff for the
pregnancy, the trier of fact may not find that the defendant
committed malpractice and may not assess damages against the
defendant unless the malpractice is proven by clear and
convincing evidence.
(2) Applicability to group practices or agreements among
providers.--For purposes of paragraph (1), a health care
professional shall be considered to have previously treated an
individual for a pregnancy if the professional is a member of a
group practice whose members previously treated the individual
for the pregnancy or is providing services to the individual
during labor or the delivery of a baby pursuant to an agreement
with another professional.
(b) Clear and Convincing Evidence Defined.--In subsection (a), the
term ``clear and convincing evidence'' is that measure or degree of
proof that will produce in the mind of the trier of fact a firm belief
or conviction as to the truth of the allegations sought to be
established, except that such measure or degree of proof is more than
that required under preponderance of the evidence, but less than that
required for proof beyond a reasonable doubt.
(c) Effective Date.--This section shall apply to claims accruing or
actions brought on or after the expiration of the 2-year period that
begins on the date of the enactment of this Act.
SEC. 421. PREEMPTION.
(a) In General.--This part supersedes any State law only to the
extent that State law--
(1) permits the recovery of a greater amount of damages by
a plaintiff;
(2) permits the collection of a greater amount of
attorneys' fees by a plaintiff's attorney;
(3) establishes a longer period during which a medical
malpractice liability claim may be initiated; or
(4) establishes a stricter standard for determining whether
a defendant was negligent or for determining the liability of
defendants described in section 420(a) in actions described in
such section.
(b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (a) shall be construed to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any provision of law;
(2) waive or affect any defense of sovereign immunity
asserted by the United States;
(3) affect the applicability of any provision of the
Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation; or
(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum.
Part 3--Requirements For State Alternative Dispute Resolution Systems
(ADR)
SEC. 431. BASIC REQUIREMENTS FOR ADR.
(a) In General.--A State's alternative dispute resolution system
meets the requirements of this section if the system--
(1) applies to all medical malpractice liability claims
under the jurisdiction of the State courts;
(2) requires that a written opinion resolving the dispute
be issued that contains findings of fact relating to the
dispute;
(3) requires individuals who hear and resolve claims under
the system to meet such qualifications as the State may require
(in accordance with regulations of the Secretary);
(4) is approved by the State or by local governments in the
State;
(5) with respect to a State system that consists of
multiple dispute resolution procedures--
(A) permits the parties to a dispute to select the
procedure to be used for the resolution of the dispute
under the system, and
(B) if the parties do not agree on the procedure to
be used for the resolution of the dispute, assigns a
particular procedure to the parties;
(6) provides for the transmittal to the State agency
responsible for monitoring or disciplining health care
professionals and health care providers of any findings made
under the system that such a professional or provider committed
malpractice, unless, during the 90-day period beginning on the
date the system resolves the claim against the professional or
provider, the professional or provider brings a medical
malpractice liability action contesting the decision made under
the system; and
(7) provides for the regular transmittal to the
Administrator for Health Care Policy and Research of
information on disputes resolved under the system, in a manner
that assures that the identity of the parties to a dispute
shall not be revealed.
(b) Application of Malpractice Liability Standards to Alternative
Dispute Resolution.--The provisions of part 2 shall apply with respect
to claims brought under a State's alternative dispute resolution system
in the same manner as such provisions apply with respect to medical
malpractice liability actions brought in the State.
SEC. 432. CERTIFICATION OF STATE SYSTEMS.
(a) In General.--Not later than October 1 of each year (beginning
with 1995), the Secretary, in consultation with the Attorney General,
shall determine whether a State's alternative dispute resolution system
meets the requirements of this part for the following calendar year.
(b) Basis for Certification.--The Secretary shall certify a State's
alternative dispute resolution system under this subsection if the
Secretary determines under subsection (a) that the system meets the
requirements of section 431.
SEC. 433. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF ALTERNATIVE
DISPUTE RESOLUTION SYSTEMS.
(a) In General.--Not later than 5 years after the date of the
enactment of this Act, the Secretary shall prepare and submit to
Congress a report describing and evaluating State alternative dispute
resolution systems operated pursuant to this part.
(b) Contents of Report.--The Secretary shall include in the report
prepared and submitted under subsection (a)--
(1) information on--
(A) the effect of such systems on the cost of
health care within the State,
(B) the impact of such systems on the access of
individuals to health care within the State, and
(C) the effect of such systems on the quality of
health care provided within such State; and
(2) to the extent that such report does not provide
information on no-fault systems operated by States as
alternative dispute resolution systems pursuant to this part,
an analysis of the feasibility and desirability of establishing
a system under which medical malpractice liability claims shall
be resolved on a no-fault basis.
Subtitle B--Other Requirements and Programs
SEC. 441. FACILITATING DEVELOPMENT AND USE OF MEDICAL PRACTICE
GUIDELINES.
(a) Increase in Authorization of Appropriations.--Section
1142(i)(1) of the Social Security Act (42 U.S.C. 1320b-12(i)(1)) is
amended by striking subparagraphs (D) and (E) and inserting the
following:
``(D) $158,000,000 for fiscal year 1995 (of which
$10,000,000 shall be used for sanctioning practice
guidelines for purposes of an affirmative defense in
medical malpractice liability actions);
``(E) $200,000,000 for fiscal year 1996 (of which
$20,000,000 shall be used for sanctioning practice
guidelines for purposes of an affirmative defense in
medical malpractice liability actions); and
``(F) $20,000,000 for fiscal year 1997, to be used
for sanctioning practice guidelines for purposes of an
affirmative defense in medical malpractice liability
actions.''.
(b) Consideration of Malpractice Liability Data in Developing and
Updating Guidelines.--Section 1142(c)(5) of such Act (42 U.S.C. 1320b-
12(c)(5)) is amended by striking ``claims data'' and all that follows
through ``patients'' and inserting the following: ``claims data, data
on clinical and functional status of patients, and data on medical
malpractice liability actions''.
(c) Development of Reporting Forms for State ADR Systems.--The
Secretary, in consultation with the Administrator for Health Care
Policy and Research, shall develop a standard reporting form to be used
by State alternative dispute resolution systems in transmitting
information to the Administrator pursuant to section 431(a)(6) on
disputes resolved under such systems.
(d) Study of Effect of Guidelines on Medical Malpractice.--
(1) Study.--The Secretary shall conduct a study of the
effect of the use of the medical practice guidelines developed
by the Administrator for Health Care Policy and Research on the
incidence of and the costs associated with medical malpractice.
(2) Reports.--(A) Not later than 1 year after the date of
the enactment of this Act, the Secretary shall submit an
interim report to Congress describing the availability and use
of medical practice guidelines and the aggregate costs
associated with medical malpractice.
(B) Not later than 5 years after the date of the enactment
of this Act, the Secretary shall submit a report to Congress on
the study conducted under paragraph (1), together with
recommendations regarding expanding the use of medical practice
guidelines for determining the liability of health care
professionals and health care providers for medical
malpractice.
SEC. 442. PERMITTING STATE PROFESSIONAL SOCIETIES TO PARTICIPATE IN
DISCIPLINARY ACTIVITIES.
(a) Role of Professional Societies.--Notwithstanding any other
provision of State or Federal law, a State agency responsible for the
conduct of disciplinary actions for a type of health care practitioner
may enter into agreements with State or county professional societies
of such type of health care practitioner to permit such societies to
participate in the licensing of such health care practitioner, and to
review any health care malpractice action, health care malpractice
claim or allegation, or other information concerning the practice
patterns of any such health care practitioner. Any such agreement shall
comply with subsection (b).
(b) Requirements of Agreements.--Any agreement entered into under
subsection (a) for licensing activities or the review of any health
care malpractice action, health care malpractice claim or allegation,
or other information concerning the practice patterns of a health care
practitioner shall provide that--
(1) the health care professional society conducts such
activities or review as expeditiously as possible;
(2) after the completion of such review, such society shall
report its findings to the State agency with which it entered
into such agreement;
(3) the conduct of such activities or review and the
reporting of such findings be conducted in a manner which
assures the preservation of confidentiality of health care
information and of the review process; and
(4) no individual affiliated with such society is liable
for any damages or injury directly caused by the individual's
actions in conducting such activities or review.
(c) Agreements Not Mandatory.--Nothing in this section may be
construed to require a State to enter into agreements with societies
described in subsection (a) to conduct the activities described in such
subsection.
(d) Effective Date.--This section shall take effect 2 years after
the date of the enactment of this Act.
TITLE V--ADMINISTRATIVE COST SAVINGS
Subtitle A--Standardization of Claims Processing
SEC. 501. ADOPTION OF DATA ELEMENTS, UNIFORM CLAIMS, AND UNIFORM
ELECTRONIC TRANSMISSION STANDARDS.
(a) In General.--The Secretary of Health and Human Services (in
this title referred to as the ``Secretary'') shall adopt standards
relating to each of the following:
(1) Data elements for use in paper and electronic claims
processing under health benefit plans, as well as for use in
utilization review and management of care (including data
fields, formats, and medical nomenclature, and including plan
benefit and insurance information).
(2) Uniform claims forms (including uniform procedure and
billing codes for uses with such forms and including
information on other health benefit plans that may be liable
for benefits).
(3) Uniform electronic transmission of the data elements
(for purposes of billing and utilization review).
Standards under paragraph (3) relating to electronic transmission of
data elements for claims for services shall supersede (to the extent
specified in such standards) the standards adopted under paragraph (2)
relating to the submission of paper claims for such services.
(b) Use of Task Forces.--In adopting standards under this section--
(1) the Secretary shall take into account the
recommendations of current taskforces, including at least the
Workgroup on Electronic Data Interchange, National Uniform
Billing Committee, the Uniform Claim Task Force, and the
Computer-based Patient Record Institute;
(2) the Secretary shall consult with the National
Association of Insurance Commissioners (and, with respect to
standards under subsection (a)(3), the American National
Standards Institute); and
(3) the Secretary shall, to the maximum extent practicable,
seek to make the standards consistent with any uniform clinical
data sets which have been adopted and are widely recognized.
(c) Deadlines for Promulgation.--The Secretary shall promulgate the
standards under--
(1) subsection (a)(1) relating to claims processing data,
by not later than 12 months after the date of the enactment of
this Act;
(2) subsection (a)(2) (relating to uniform claims forms) by
not later than 12 months after the date of the enactment of
this Act; and
(3)(A) subsection (a)(3) relating to transmission of
information concerning hospital and physicians services, by not
later than 24 months after the date of the enactment of this
Act, and
(B) subsection (a)(3) relating to transmission of
information on other services, by such later date as the
Secretary may determine it to be feasible.
(d) Report to Congress.--Not later than 3 years after the date of
the enactment of this Act, the Secretary shall report to Congress
recommendations regarding restructuring the medicare peer review
quality assurance program given the availability of hospital data in
electronic form.
SEC. 502. APPLICATION OF STANDARDS.
(a) In General.--If the Secretary determines, at the end of the 2-
year period beginning on the date that standards are adopted under
section 501 with respect to classes of services, that a significant
number of claims for benefits for such services under health benefit
plans are not being submitted in accordance with such standards, the
Secretary may require, after notice in the Federal Register of not less
than 6 months, that all providers of such services must submit claims
to health benefit plans in accordance with such standards. The
Secretary may waive the application of such a requirement in such cases
as the Secretary finds that the imposition of the requirement would not
be economically practicable.
(b) Significant Number.--The Secretary shall make an affirmative
determination described in subsection (a) for a class of services only
if the Secretary finds that there would be a significant, measurable
additional gain in efficiencies in the health care system that would be
obtained by imposing the requirement described in such paragraph with
respect to such services.
(c) Application of Requirement.--
(1) In general.--If the Secretary imposes the requirement
under subsection (a)--
(A) in the case of a requirement that imposes the
standards relating to electronic transmission of claims
for a class of services, each health care provider that
furnishes such services for which benefits are payable
under a health benefit plan shall transmit
electronically and directly to the plan on behalf of
the beneficiary involved a claim for such services in
accordance with such standards;
(B) any health benefit plan may reject any claim
subject to the standards adopted under section 501 but
which is not submitted in accordance with such
standards;
(C) it is unlawful for a health benefit plan (i) to
reject any such claim on the basis of the form in which
it is submitted if it is submitted in accordance with
such standards or (ii) to require, for the purpose of
utilization review or as a condition of providing
benefits under the plan, a provider to transmit medical
data elements that are inconsistent with the standards
established under section 501(a)(1); and
(D) the Secretary may impose a civil money penalty
on any provider that knowingly and repeatedly submits
claims in violation of such standards or on any health
benefit plan (other than a health benefit plan
described in paragraph (2)) that knowingly and
repeatedly rejects claims in violation of subparagraph
(B), in an amount not to exceed $100 for each such
claim.
The provisions of section 1128A of the Social Security Act
(other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under
subparagraph (D) in the same manner as such provisions apply to
a penalty or proceeding under section 1128A(a) of such Act.
(2) Plans subject to effective state regulation.--A plan
described in this paragraph is a health benefit plan--
(A) that is subject to regulation by a State, and
(B) with respect to which the Secretary finds
that--
(i) the State provides for application of
the standards established under section 501,
and
(ii) the State regulatory program provides
for the appropriate and effective enforcement
of such standards.
(d) Treatment of Rejections.--If a plan rejects a claim pursuant to
subsection (c)(1), the plan shall permit the person submitting the
claim a reasonable opportunity to resubmit the claim on a form or in an
electronic manner that meets the requirements for acceptance of the
claim under such subsection.
SEC. 503. PERIODIC REVIEW AND REVISION OF STANDARDS.
(a) In General.--The Secretary shall--
(1) provide for the ongoing receipt and review of comments
and suggestions for changes in the standards adopted and
promulgated under section 501;
(2) establish a schedule for the periodic review of such
standards; and
(3) based upon such comments, suggestions, and review,
revise such standards and promulgate such revisions.
(b) Application of Revised Standards.--If the Secretary under
subsection (a) revises the standards described in 501, then, in the
case of any claim for benefits submitted under a health benefit plan
more than the minimum period (of not less than 6 months specified by
the Secretary) after the date the revision is promulgated under
subsection (a)(3), such standards shall apply under section 502 instead
of the standards previously promulgated.
SEC. 504. HEALTH BENEFIT PLAN DEFINED.
In this title, the term ``health benefit plan'' has the meaning
given such term in section 111(6) and includes--
(1) the medicare program (under title XVIII of the Social
Security Act), and
(2) a State medicaid plan (approved under title XIX of such
Act).
Subtitle B--Electronic Medical Data Standards
SEC. 511. MEDICAL DATA STANDARDS FOR HOSPITALS AND OTHER PROVIDERS.
(a) Promulgation of Hospital Data Standards.--
(1) In general.--Between July 1, 1996, and January 1, 1997,
the Secretary shall promulgate standards described in
subsection (b) for hospitals concerning electronic medical
data.
(2) Revision.--The Secretary may from time to time revise
the standards promulgated under this subsection.
(b) Contents of Data Standards.--The standards promulgated under
subsection (a) shall include at least the following:
(1) A definition of a standard set of data elements for use
by utilization and quality control peer review organizations.
(2) A definition of the set of comprehensive data elements,
which set shall include for hospitals the standard set of data
elements defined under paragraph (1).
(3) Standards for an electronic patient care information
system with data obtained at the point of care, including
standards to protect against the unauthorized use and
disclosure of information.
(4) A specification of, and manner of presentation of, the
individual data elements of the sets and system under this
subsection.
(5) Standards concerning the transmission of electronic
medical data.
(6) Standards relating to confidentiality of patient-
specific information.
The standards under this section shall be consistent with standards for
data elements established under section 501.
(c) Optional Data Standards for Other Providers.--
(1) In general.--The Secretary may promulgate standards
described in paragraph (2) concerning electronic medical data
for providers that are not hospitals. The Secretary may from
time to time revise the standards promulgated under this
subsection.
(2) Contents of data standards.--The standards promulgated
under paragraph (1) for non-hospital providers may include
standards comparable to the standards described in paragraphs
(2), (4), and (5) of subsection (b) for hospitals.
(d) Consultation.--In promulgating and revising standards under
this section, the Secretary shall--
(1) consult with the American National Standards Institute,
hospitals, with the advisory commission established under
section 515, and with other affected providers, health benefit
plans, and other interested parties, and
(2) take into consideration, in developing standards under
subsection (b)(1), the data set used by the utilization and
quality control peer review program under part B of title XI of
the Social Security Act.
SEC. 512. APPLICATION OF ELECTRONIC DATA STANDARDS TO CERTAIN
HOSPITALS.
(a) Medicare Requirement for Sharing of Hospital Information.--As
of January 1, 1998, subject to paragraph (2), each hospital, as a
requirement of each participation agreement under section 1866 of the
Social Security Act, shall--
(1) maintain clinical data included in the set of
comprehensive data elements under section 511(b)(2) in
electronic form on all inpatients,
(2) upon request of the Secretary or of a utilization and
quality control peer review organization (with which the
Secretary has entered into a contract under part B of title XI
of such Act), transmit electronically the data set, and
(3) upon request of the Secretary, or of a fiscal
intermediary or carrier, transmit electronically any data (with
respect to a claim) from such data set,
in accordance with the standards promulgated under section 511(a).
(b) Waiver Authority.--Until January 1, 2000:
(1) The Secretary may waive the application of the
requirements of subsection (a) for a hospital that is a small
rural hospital, for such period as the hospital demonstrates
compliance with such requirements would constitute an undue
financial hardship.
(2) The Secretary may waive the application of the
requirements of subsection (a) for a hospital that is in the
process of developing a system to provide the required data set
and executes agreements with its fiscal intermediary and its
utilization and quality control peer review organization that
the hospital will meet the requirements of subsection (a) by a
specified date (not later than January 1, 2000).
(3) The Secretary may waive the application of the
requirement of subsection (a)(1) for a hospital that agrees to
obtain from its records the data elements that are needed to
meet the requirements of paragraphs (2) and (3) of subsection
(a) and agrees to subject its data transfer process to a
quality assurance program specified by the Secretary.
(c) Application to Hospitals of the Department of Veterans
Affairs.--
(1) In general.--The Secretary of Veterans Affairs shall
provide that each hospital of the Department of Veterans
Affairs shall comply with the requirements of subsection (a) in
the same manner as such requirements would apply to the
hospital if it were participating in the medicare program.
(2) Waiver.--Such Secretary may waive the application of
such requirements to a hospital in the same manner as the
Secretary of Health and Human Services may waive under
subsection (b) the application of the requirements of
subsection (a).
SEC. 513. ELECTRONIC TRANSMISSION TO FEDERAL AGENCIES.
(a) In General.--Effective January 1, 2000, if a provider is
required under a Federal program to transmit a data element that is
subject to a presentation or transmission standard (as defined in
subsection (b)), the head of the Federal agency responsible for such
program (if not otherwise authorized) is authorized to require the
provider to present and transmit the data element electronically in
accordance with such a standard.
(b) Presentation or Transmission Standard Defined.--In subsection
(a), the term ``presentation or transmission standard'' means a
standard, promulgated under subsection (b) or (c) of section 511,
described in paragraph (4) or (5) of section 511(b).
SEC. 514. LIMITATION ON DATA REQUIREMENTS WHERE STANDARDS IN EFFECT.
(a) In General.--If standards with respect to data elements are
promulgated under section 511 with respect to a class of provider, a
health benefit plan may not require, for the purpose of utilization
review or as a condition of providing benefits under the plan, that a
provider in the class--
(1) provide any data element not in the set of
comprehensive data elements specified under such standards, or
(2) transmit or present any such data element in a manner
inconsistent with the applicable standards for such
transmission or presentation.
(b) Compliance.--
(1) In general.--The Secretary may impose a civil money
penalty on any health benefit plan (other than a health benefit
plan described in paragraph (2)) that fails to comply with
subsection (a) in an amount not to exceed $100 for each such
failure. The provisions of section 1128A of the Social Security
Act (other than the first sentence of subsection (a) and other
than subsection (b)) shall apply to a civil money penalty under
this paragraph in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a) of such Act.
(2) Plans subject to effective state regulation.--A plan
described in this paragraph is a health benefit plan that is
subject to regulation by a State, if the Secretary finds that--
(A) the State provides for application of the
requirement of subsection (a), and
(B) the State regulatory program provides for the
appropriate and effective enforcement of such
requirement with respect to such plans.
SEC. 515. ADVISORY COMMISSION.
(a) In General.--The Secretary shall establish an advisory
commission including hospital executives, hospital data base managers,
physicians, health services researchers, and technical experts in
collection and use of data and operation of data systems. Such
commission shall include, as ex officio members, a representative of
the Director of the National Institutes of Health, the Administrator
for Health Care Policy and Research, the Secretary of Veterans'
Affairs, and the Director of the Centers for Disease Control.
(b) Functions.--The advisory commission shall monitor and advise
the Secretary concerning--
(1) the standards established under this subtitle, and
(2) operational concerns about the implementation of such
standards under this subtitle.
(c) Staff.--From the amounts appropriated under subsection (d), the
Secretary shall provide sufficient staff to assist the advisory
commission in its activities under this section.
(d) Authorization of Appropriations.--There are authorized to be
appropriated $2,000,000 for each of fiscal years 1995 through 1999 to
carry out this section.
TITLE VI--REMOVING RESTRICTIONS ON MANAGED CARE
SEC. 601. REMOVING RESTRICTIONS ON MANAGED CARE.
(a) Preemption of State Law Provisions.--Subject to subsection (c),
the following provisions of State law are preempted and may not be
enforced:
(1) Restrictions on reimbursement rates or selective
contracting.--Any law that restricts the ability of a carrier
to negotiate reimbursement rates with providers or to contract
selectively with one provider or a limited number of providers.
(2) Restrictions on differential financial incentives.--Any
law that limits the financial incentives that a health benefit
plan may require a beneficiary to pay when a non-plan provider
is used on a non-emergency basis.
(3) Restrictions on utilization review methods.--Any law
that--
(A) prohibits utilization review of any or all
treatments and conditions,
(B) requires that such review be made (i) by a
resident of the State in which the treatment is to be
offered or by an individual licensed in such State, or
(ii) by a physician in any particular specialty or with
any board certified specialty of the same medical
specialty as the provider whose services are being
reviewed,
(C) requires the use of specified standards of
health care practice in such reviews or requires the
disclosure of the specific criteria used in such
reviews,
(D) requires payments to providers for the expenses
of responding to utilization review requests, or
(E) imposes liability for delays in performing such
review.
Nothing in subparagraph (B) shall be construed as prohibiting a
State from (i) requiring that utilization review be conducted
by a licensed health care professional or (ii) requiring that
any appeal from such a review be made by a licensed physician
or by a licensed physician in any particular specialty or with
any board certified specialty of the same medical specialty as
the provider whose services are being reviewed.
(b) GAO Study.--
(1) In general.--The Comptroller General shall conduct a
study of the benefits and cost effectiveness of the use of
managed care in the delivery of health services.
(2) Report.--By not later than 4 years after the date of
the enactment of this Act, the Comptroller General shall submit
a report to Congress on the study conducted under paragraph (1)
and shall include in the report such recommendations (including
whether the provisions of subsection (a) should be extended) as
may be appropriate.
(c) Sunset.--Unless otherwise provided, subsection (a) shall not
apply 5 years after the date of the enactment of this Act.
TITLE VII--MODIFICATION OF THE OPERATION OF THE ANTITRUST LAWS TO
HOSPITALS
SEC. 701. PURPOSE.
The purpose of this title is to encourage cooperation among
hospitals in order to contain costs and achieve a more efficient health
care delivery system through the elimination of unnecessary duplication
and proliferation of expensive medical services or expensive high
technology equipment.
SEC. 702. EXEMPTIONS FROM THE OPERATION OF THE ANTITRUST LAWS.
(a) General Exemption.--It shall not be unlawful under the
antitrust laws for 2 or more hospitals to engage in conduct solely for
the purpose of negotiating a proposed agreement, to be submitted under
subsection (b), to share expensive medical services or expensive high
technology equipment.
(b) Specific Exemptions.--
(1) Authority to grant waiver.--The Secretary of Health and
Human Services shall issue waivers in accordance with paragraph
(4) to exempt from the operation of the antitrust laws conduct
engaged in by hospitals to carry out agreements contained in
applications approved under paragraph (3).
(2) Eligibility.--To be eligible to receive a waiver under
paragraph (1), 2 or more hospitals shall submit to the
Secretary an application that contains (in accordance with
guidelines established by the Secretary)--
(A) a proposed agreement that only--
(i) provides that such hospitals shall
share the expensive medical services or
expensive high technology equipment identified
in such agreement,
(ii) specifies the period of time during
which such agreement shall be in effect,
(iii) describes the particular medical
services or high technology equipment to be
shared under such agreement, and
(iv) contains such other terms and
conditions as the Secretary may reasonably
require, and
(B) such information and assurances as the
Secretary may reasonably require.
(3) Approval.--For purposes of determining whether to
approve an application submitted under paragraph (2), the
Secretary shall consider whether--
(A) the proposed agreement contained in such
application satisfies the guidelines issued under
paragraph (6), and
(B) implementation of such agreement will result
in--
(i) enhancement of the quality of hospital
care or hospital-related care,
(ii) the preservation of hospital services
in geographical proximity to the communities
traditionally served by the applicants,
(iii) improvement in the cost-effectiveness
of high-technology services provided by the
applicants,
(iv) improvement in the efficient
utilization of hospital resources and capital
equipment,
(v) the provision of services that would
not otherwise be available, or
(vi) the avoidance of duplication of
hospital resources.
(4) Issuance and effect of waiver.--If--
(A) the Secretary approves under paragraph (3) an
application submitted under paragraph (2), and
(B) the applicants enter into the proposed
agreement contained in such application, modified as
the Secretary may require as a condition for approval,
then the Secretary shall issue a waiver with respect to the
agreement entered into. Except as provided in paragraph (5),
such waiver shall exempt the applicants from the operation of
the antitrust laws for conduct the applicants engage in during
the period specified in such waiver and solely to carry out the
agreement with respect to which such waiver is issued.
(5) Revocation of waiver.--(A) If the Secretary determines
that a hospital with respect to which a waiver is in effect
under paragraph (4) is not carrying out, or has not carried
out, fully the terms of the agreement with respect to which a
waiver is issued under paragraph (4), the Secretary may revoke
such waiver.
(B) If the Secretary revokes such waiver--
(i) the Secretary shall specify the period during
which such hospital did not carry out fully the terms
of such agreement, and
(ii) such waiver shall have no legal effect with
respect to such period.
(6) Issuance of guidelines.--Not later than 6 months after
the date of the enactment of this Act, the Secretary shall
establish the guidelines for applications under paragraph (2).
(c) Delegation of Authority.--The Secretary is authorized to
delegate the authority under this section with respect to a hospital in
a State to the State multicare program established under title I. To
the extent the Secretary delegates authority to a State under the
previous sentence with respect to hospitals in a State, any subsequent
in this title to the ``Secretary'' is deemed a reference to the State
multicare program.
SEC. 703. REPORTS.
(a) Reports to the Secretary.--Each hospital with respect to which
a waiver is issued under section 702(b)(4) shall submit to the
Secretary--
(1) during the period such waiver is in effect, an annual
report at such time, in such form, and containing such
information as the Secretary may require, including a detailed
description of the implementation of the agreement to which
such waiver applies, and
(2) such other information as the Secretary may require for
purposes of determining compliance with section 702.
(b) Report to Committees of the Congress.--
(1) Chairmen of committees.--Not later than 7 years after
the date of the enactment of this Act, the Secretary shall
submit the report described in paragraph (2) to--
(A) the chairman of the Committee on the Judiciary
of the House of Representatives,
(B) the chairman of the Committee on Ways and Means
of the House of Representatives,
(C) the chairman of the Committee on Energy and
Commerce of the House of Representatives,
(D) the chairman of the Committee on the Judiciary
of the Senate,
(E) the chairman of the Committee on Finance of the
Senate, and
(F) the chairman of the Committee on Labor and
Human Resources of the Senate.
(2) Contents of report.--The report required by paragraph
(1) shall contain a description of the nature of the agreements
with respect to which the Secretary issued waivers under
section 702(b)(4) and of the results of implementing such
agreements, including an assessment of whether such agreements
caused--
(A) a reduction in health care costs,
(B) an increase in access to medical services, and
(C) improvement in the quality of health care.
Such report shall also contain the recommendations of the
Secretary with respect to other arrangements to facilitate
cooperative activities to achieve the results specified in
subparagraphs (A), (B), and (C).
SEC. 704. DEFINITIONS.
For purposes of this title:
(1) 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--
(A) 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) any State law similar to the antitrust laws.
(2) The term ``high technology equipment'' includes drugs,
devices, equipment, and medical and surgical procedures
utilized in medical care, and the organizational and support
systems within which such care is provided, that--
(A) have high capital costs or extremely high
annual operating costs, and
(B) use technologies with respect to which there is
a reasonable expectation that shared ownership will
avoid a significant degree of the potential excess
capacity of service in the geographical area to be
served.
(3) The term ``medical services'' includes services that--
(A) either have high capital costs or extremely
high annual operating costs, and
(B) with respect to which there is a reasonable
expectation that shared ownership will avoid a
significant degree of the potential excess capacity of
such services in the geographical area to be served,
and may include mobile services.
(4) The term ``hospital'' means a hospital that--
(A) has entered into, and has in effect, a
participation agreement under section 1866(a) of the
Social Security Act, or
(B) which has in effect a participation agreement
under title XIX of such Act with the State in which the
hospital is located.
(5) The term ``Secretary'' means the Secretary of Health
and Human Services.
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