[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 727 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 727

To amend the Internal Revenue Code of 1986 and the Social Security Act 
    to provide for health insurance coverage for pregnant women and 
 children through employment-based insurance and through a State-based 
                              health plan.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 2, 1993

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

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 and the Social Security Act 
    to provide for health insurance coverage for pregnant women and 
 children through employment-based insurance and through a State-based 
                              health plan.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.
 TITLE I--REQUIRING EMPLOYERS TO PROVIDE HEALTH INSURANCE COVERAGE FOR 
                      PREGNANT WOMEN AND CHILDREN

Sec. 101. ``Pay-or-play'' requirement.
Sec. 102. Meeting requirement through enrollment of employees and 
                            families under qualified employer health 
                            plans.
``TITLE XXI--REQUIREMENT FOR ENROLLMENT OF EMPLOYEES UNDER A QUALIFIED 
                          EMPLOYER HEALTH PLAN

        ``Sec. 2100. Relation to `pay-or-play' requirement.
 ``Part A--Employer Requirement to Enroll Employees and Families in a 
                     Qualified Employer Health Plan

        ``Sec. 2101. Application to full-time employees.
        ``Sec. 2102. Application to part-time employees.
        ``Sec. 2103. Application to seasonal and temporary employees.
        ``Sec. 2104. Treatment of all family members as a unit; uniform 
                            treatment of full-time employees and of 
                            part-time employees.
        ``Sec. 2105. Application of requirement to employers of 
                            different sizes.
        ``Sec. 2106. Timing of enrollment; period of coverage.
       ``Part B--Requirements for Qualified Employer Health Plans

        ``Sec. 2121. Qualified employer health plan defined.
        ``Sec. 2122. Requirements relating to employee premiums and 
                            cost-sharing.
             ``Part C--Standards for Qualified Health Plans

        ``Sec. 2151. Certification of qualified health plans.
        ``Sec. 2152. Treatment of family as a unit; coverage period; 
                            health plan cards.
        ``Sec. 2153. Requirement respecting required health services.
        ``Sec. 2154. Requirements respecting limits on pre-existing 
                            condition exclusions and coverage standards 
                            for required health services.
        ``Sec. 2155. Requirements respecting limits on cost-sharing.
        ``Sec. 2156. Payment rates.
        ``Sec. 2157. Coordination and portability of health coverage 
                            under qualified health plans.
        ``Sec. 2158. Consumer protections.
        ``Sec. 2159. Preemption of certain State and Federal 
                            requirements.
        ``Sec. 2160. Use of uniform claims forms.
                ``Part D--Definitions and Miscellaneous

        ``Sec. 2181. Definitions.
        ``Sec. 2182. Nonapplication to residents of Puerto Rico and 
                            territories.
TITLE II--PROVISION OF HEALTH INSURANCE FOR PREGNANT WOMEN AND CHILDREN 
         THROUGH STATE CHILDREN AND PREGNANT WOMEN HEALTH PLANS

Sec. 201. State children and pregnant women health plans.
      ``TITLE XXII--STATE CHILDREN AND PREGNANT WOMEN HEALTH PLANS

        ``Sec. 2200. Establishment of State children and pregnant women 
                            health plans.
   ``Part A--Plan Requirements Relating to Eligibility and Enrollment

        ``Sec. 2201. General requirements; application process.
        ``Sec. 2202. Coverage period; termination of enrollment.
        ``Sec. 2203. Requirement of health insurance coverage.
                           ``Part B--Benefits

        ``Sec. 2211. Covered health services.
        ``Sec. 2212. Preventive care services.
        ``Sec. 2213. Major medical services.
        ``Sec. 2214. Extended medical services.
        ``Sec. 2215. Scope of coverage.
``Part C--Payments for Benefits; Deductible, Coinsurance, and Stop-loss 
                Protection for Required Health Services

        ``Sec. 2221. Payment rates.
        ``Sec. 2222. Application of deductible.
        ``Sec. 2223. Coinsurance for major medical services and 
                            extended medical services.
        ``Sec. 2224. Limit on cost-sharing for required health 
                            services.
        ``Sec. 2225. Exclusions. 
        ``Sec. 2226. Application of particular qualified health plan 
                            requirements.
    ``Part D--Premiums; Federal Children and Pregnant Women Health 
                          Insurance Trust Fund

        ``Sec. 2231. Premiums.
        ``Sec. 2232. Collection of premiums.
        ``Sec. 2233. Federal Children and Pregnant Women Health 
                            Insurance Trust Fund.
        ``Sec. 2234. Transfer payments in the case of multiple 
                            employers.
        ``Sec. 2235. Use of uniform claims forms.
        ``Sec. 2236. Payments to States.
            ``Part E--Assistance for Low-Income Individuals

        ``Sec. 2241. Assistance for individuals enrolled on a non-
                            employment basis.
        ``Sec. 2242. Assistance for individuals covered under qualified 
                            employer health plans.
        ``Sec. 2243. Applications for assistance.
        ``Sec. 2244. Reconciliation of premium assistance through use 
                            of income statements.
        ``Sec. 2245. Treatment of certain cash assistance recipients.
        ``Sec. 2246. Computation of family adjusted total income.
                  ``Part F--Administrative Provisions

        ``Sec. 2261. General administration through insurance 
                            companies.
        ``Sec. 2262. Quality assurance.
        ``Sec. 2263. Beneficiary claims safeguards.
        ``Sec. 2264. Administrative efficiency standards.
        ``Sec. 2265. Health maintenance organizations.
        ``Sec. 2266. Program integrity; miscellaneous provisions.
        ``Sec. 2267. Demonstration project authority.
                ``Part G--Definitions and Miscellaneous

        ``Sec. 2281. Incorporation of certain definitions used in other 
                            health-related titles.
        ``Sec. 2282. Other definitions.
        ``Sec. 2283. Nonapplication to residents of Puerto Rico and 
                            territories.

Sec. 202. Coordination between State children and pregnant women health 
                            plans and medicaid plans.
         TITLE III--HEALTH INSURANCE REFORM FOR SMALL EMPLOYERS

Sec. 301. Excise tax on premiums received on health insurance policies 
                            which do not meet certain requirements.
Sec. 302. Group health insurance standards.
          ``TITLE XXIII--INSURANCE REFORM FOR SMALL EMPLOYERS

        ``Sec. 2301. Application of requirements to insured small 
                            employer health plans.
        ``Sec. 2302. Establishment of standards.
        ``Sec. 2303. Enrollment practice and guaranteed renewability 
                            requirements for small employer health 
                            plans.
        ``Sec. 2304. Rating practices for small employer health plans.
        ``Sec. 2305. Basic benefit package for small employer health 
                            plans.
        ``Sec. 2306. Miscellaneous disclosure and record-keeping 
                            requirements for small employer health 
                            plans.
        ``Sec. 2307. Nonapplication in Puerto Rico and the territories.
        ``Sec. 2308. Definitions.

 TITLE I--REQUIRING EMPLOYERS TO PROVIDE HEALTH INSURANCE COVERAGE FOR 
                      PREGNANT WOMEN AND CHILDREN

SEC. 101. ``PAY-OR-PLAY'' REQUIREMENT.

    (a) Premium Taxes.--
            (1) In general.--Subtitle C of the Internal Revenue Code of 
        1986 (relating to employment taxes) is amended by inserting 
        after chapter 21 the following new chapter:

      ``CHAPTER 21A--CHILDREN AND PREGNANT WOMEN HEALTH PLAN TAXES

                              ``Sec. 3151. Imposition of tax.
                              ``Sec. 3152. Definitions and special 
                                        rules.

``SEC. 3151. IMPOSITION OF TAX.

    ``(a) Imposition of Tax.--In addition to other taxes, if an 
employee of any employer is not covered under a qualified employer 
health plan of such employer--
            ``(1) Tax on employers.--There is hereby imposed on such 
        employer, with respect to having such employee in his employ, a 
        tax equal to 3.2 percent of the wages paid by such employer to 
        such employee.
            ``(2) Tax on employees.--There is hereby imposed on the 
        income of such employee a tax equal to 1 percent of the wages 
        received by such employee from such employer.
            ``(3) Wages taken into account.--Wages shall be taken into 
        account under this subsection only to the extent attributable 
        to the period during which such employee is not covered under a 
        qualified employer health plan of such employer.
    ``(b) Exceptions.--
            ``(1) Transition.--The taxes imposed by this section shall 
        not take effect before the date on which the requirements of 
        part A of title XXI of the Social Security Act apply with 
        respect to the employer under section 2105(a) of such Act.
            ``(2) Employees covered by another employer's plan.--The 
        taxes imposed by subsection (a)(2) of this section shall not 
        apply to wages paid to any employee of an employer for any 
        period such employee is covered by a qualified employer health 
        plan of another employer (whether as an employee or family 
        member of an employee).
            ``(3) Employees covered by federal health plan.--The taxes 
        imposed by this section shall not apply to wages paid to any 
        employee of the United States if, by reason of such employment 
        (or the employment of a family member), the employee--
                    ``(A) is enrolled in a health benefits plan under 
                chapter 89 of title 5, United States Code, or
                    ``(B) is provided medical and dental benefits under 
                chapter 55 of title 10 of such Code.

``SEC. 3152. DEFINITIONS AND SPECIAL RULES.

    ``(a) Wages.--For purposes of this chapter, the term `wages' has 
the meaning given such term by section 3121(a) except that--
            ``(1) the modifications of subsection (b) shall apply in 
        determining whether any service is employment, and
            ``(2) the applicable contribution base under section 
        3121(x)(2) (relating to hospital insurance) shall be used under 
        section 3121(a)(1) for purposes of this chapter.
    ``(b) Employment.--For purposes of this chapter--
            ``(1) In general.--Except as modified in paragraph (2), the 
        term `employment' has the meaning given such term by section 
        3121(b).
            ``(2) Modifications.--The modifications referred to in this 
        paragraph are that--
                    ``(A) paragraphs (5), (6), (7), (8), and (9) of 
                section 3121(b) shall not apply, and
                    ``(B) subsections (r) and (w) of section 3121 shall 
                not apply.
    ``(c) Employee; employer.--For purposes of this chapter, the terms 
`employee' and `employer' have the same meanings as such terms have for 
purposes of chapter 21.
    ``(d) Qualified Employer Health Plan.--For purposes of this 
chapter, the term `qualified employer health plan' has the meaning 
given such term in section 2121(a) of the Social Security Act.
    ``(e) Deduction From Wages.--Rules similar to the rules of section 
3102 shall apply to the tax imposed by section 3151(a)(2).
    ``(f) Other Rules.--
            ``(1) In general.--Rules similar to the rules of sections 
        3123, 3125, and 3126, and subsections (q) and (s) of section 
        3121, shall apply for purposes of this chapter.
            ``(2) Deposits.--The deposit requirements under section 
        6302 applicable to the taxes imposed by chapter 21 shall apply 
        to the taxes imposed by this chapter.
            ``(3) Multiple employers.--
                    ``(A) In general.--Except to the extent 
                inconsistent with subparagraph (B), rules similar to 
                the rules of section 6413 shall apply to the tax 
                imposed by section 3151(a)(2).
                    ``(B) Contribution base to apply to wages of entire 
                family.--In applying section 6413(c)(1) for purposes of 
                subparagraph (A), the employee and the employee's 
                spouse and children (as defined in section 2282 of the 
                Social Security Act) shall be treated as 1 employee. 
                The credit or refund allowable by reason of the 
                preceding sentence shall be allocated among such 
                individuals in such manner as the Secretary may by 
                regulations prescribe.''
            (2) Clerical amendment.--The table of chapters for such 
        subtitle C is amended by inserting after the item relating to 
        chapter 21 the following new item:

                              ``Chapter 21A. Children and pregnant 
                                        women health plan taxes.''
    (b) Penalty Taxes.--
            (1) In general.--Chapter 47 of such Code is amended by 
        adding at the end thereof the following new section:

``SEC. 5000A. FAILURE TO ENROLL EMPLOYEES AND DEPENDENTS UNDER STATE 
              CHILDREN AND PREGNANT WOMEN HEALTH PLAN.

    ``(a) In General.--If the tax imposed by section 3151 applies to 
wages (as defined in section 3152) paid by an employer to any 
individual, there is hereby imposed a tax on the failure by the 
employer to provide to the State in which the individual resides (in 
such form and manner as such Secretary may specify and no later than 
the date enrollment under a qualified employer health plan is required 
under section 2105(a) of the Social Security Act) completed application 
forms for enrollment with the State children and pregnant women health 
plan (under title XXII of such Act) of employees (and family members) 
required to be enrolled under such section and not enrolled under a 
qualified employer health plan.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to an employee shall 
        be $100 for each day in the noncompliance period with respect 
        to such failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period--
                    ``(A) beginning on the date such failure 1st 
                occurs, and
                    ``(B) ending on the date such failure is corrected.
    ``(c) Liability for Tax.--The employer shall be liable for the tax 
imposed by subsection (a).
    ``(d) Exceptions.--
            ``(1) Tax not to apply where failure not discovered 
        exercising reasonable diligence.--No tax shall be imposed by 
        subsection (a) on any failure during any period for which it is 
        established to the satisfaction of the Secretary that the 
        employer did not know, and exercising reasonable diligence 
        would not have known, that such failure existed.
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 1st 30 
                days of the noncompliance period with respect to such 
                failure.
            ``(3) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be unduly burdensome relative to the failure involved.''
    (c) Deficiency Procedures to Apply to Chapter 47.--
            (1) The following provisions of the Internal Revenue Code 
        of 1986 are each amended by striking ``or 44'' each place it 
        appears and inserting ``44, or 47'':
                    (A) Subsections (a) and (b)(2) of section 6211.
                    (B) Section 6212(a).
                    (C) Subsections (a) and (g) of section 6213.
                    (D) Subsections (c) and (d) of section 6214.
                    (E) Section 6161(b)(1).
                    (F) Section 6344(a)(1).
                    (G) Subsections (a) and (b)(1) of section 6512.
                    (H) Section 7422(e).
            (2) Sections 6211(a) and 6862(a) of such Code are each 
        amended by striking ``and 44'' and inserting ``44, and 47''.
            (3) Paragraph (1) of section 6212(b) of such Code is 
        amended--
                    (A) by striking ``or chapter 44'' and inserting 
                ``chapter 44, or chapter 47'', and
                    (B) by striking ``chapter 44, and this chapter'' 
                and inserting ``chapter 44, chapter 47, and this 
                chapter''.
            (4) Paragraph (1) of section 6212(c) of such Code is 
        amended by striking ``or of chapter 44 tax for the same taxable 
        period'' and inserting ``, of chapter 44 tax for the same 
        taxable period, or of chapter 47 for each act or failure to act 
        to which the petition relates''.
    (d) Clerical Amendments.--
            (1) So much of chapter 47 of such Code as precedes 
        subsection (a) of section 5000 is amended to read as follows:

           ``CHAPTER 47--TAXES RELATING TO GROUP HEALTH PLANS

                              ``Sec. 5000. Contributions to 
                                        nonconforming large group 
                                        health plans.
                              ``Sec. 5000A. Failure to enroll employees 
                                        under State children and 
                                        pregnant women health plan.

``SEC. 5000. CONTRIBUTIONS TO NONCONFORMING LARGE GROUP HEALTH PLANS.''

            (2) The table of chapters for subtitle D of such Code is 
        amended by striking the item relating to chapter 47 and 
        inserting the following:

                              ``Chapter 47. Taxes relating to group 
                                        health plans.''
    (e) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 1994.

SEC. 102. MEETING REQUIREMENT THROUGH ENROLLMENT OF EMPLOYEES AND 
              FAMILIES UNDER QUALIFIED EMPLOYER HEALTH PLANS.

    The Social Security Act is amended by adding at the end the 
following new title:

``TITLE XXI--REQUIREMENT FOR ENROLLMENT OF EMPLOYEES UNDER A QUALIFIED 
                          EMPLOYER HEALTH PLAN

``SEC. 2100. RELATION TO `PAY-OR-PLAY' REQUIREMENT.

    ``If an employer fails to enroll employees (and family members) 
under a qualified employer health plan in accordance with this title--
            ``(1) the employer and employee are each liable for payment 
        of an excise tax under section 3151(a) of the Internal Revenue 
        Code of 1986, and
            ``(2) the employer is required, under section 5000A of such 
        Code, to provide information necessary to enroll such employees 
        and family members under the State children and pregnant women 
        health plan under title XXII for the State in which the 
        employee resides.

 ``Part A--Employer Requirement to Enroll Employees and Families in a 
                     Qualified Employer Health Plan

``SEC. 2101. APPLICATION TO FULL-TIME EMPLOYEES.

    ``(a) Unmarried Employees.--
            ``(1) In general.--Except as provided in this part, each 
        employer shall, in accordance with this title, enroll each of 
        its full-time employees who is unmarried in a qualified 
        employer health plan.
            ``(2) Multiple full-time employment.--
                    ``(A) Each offers qualified plan.--In the case of 
                an unmarried individual who is a full-time employee of 
                more than 1 employer, if more than 1 such employer 
                offers the employee enrollment under a qualified 
                employer health plan--
                            ``(i) the individual shall elect (in a 
                        manner specified by the Secretary) the 
                        qualified employer health plan under which the 
                        individual (and family members) will be 
                        enrolled;
                            ``(ii) a nonenrolling employer--
                                    ``(I) is not obligated to enroll 
                                the employee (and family members) under 
                                its qualified employer health plan (if 
                                any) and may not charge the individual 
                                any premiums for required coverage 
                                under the qualified employer health 
                                plan, and
                                    ``(II) is not liable for any tax 
                                under section 3151(a)(1) of the 
                                Internal Revenue Code of 1986 but is 
                                liable for a nonenrolling employer 
                                premium under section 2234(a)(1)(A); 
                                and
                            ``(iii) the enrolling employer is eligible 
                        for a enrolling employer subsidy under section 
                        2234(a)(1)(B).
                    ``(B) Only 1 offers qualified plan.--In the case of 
                an unmarried individual who is a full-time employee of 
                more than 1 employer, if only 1 employer offers the 
                employee enrollment under a qualified employer health 
                plan--
                            ``(i) the individual shall be enrolled 
                        under such plan and, pursuant to subsection 
                        (b)(2) of section 3151 of the Internal Revenue 
                        Code of 1986, is not subject to taxes under 
                        subsection (a)(2) of such section with respect 
                        to employment with nonenrolling employers, and
                            ``(ii) the enrolling employer is eligible 
                        for a enrolling employer subsidy under section 
                        2234(a)(1)(B).
    ``(b) Married Employees.--
            ``(1) In general.--Except as provided in this part, each 
        employer shall, in accordance with this title, enroll each of 
        its full-time employees who is married in a qualified employer 
        health plan.
            ``(2) Both full-time employees.--In the case of married 
        individuals, if both are full-time employees of 1 or more 
        employers, rules established by the Secretary based on the 
        rules under subsection (a)(2) for multiple employment of 
        unmarried individuals shall apply.
    ``(c) Construction.--Nothing in this section shall be construed as 
preventing the nonenrolling plan from supplementing the benefits of the 
enrolling plan.
    ``(d) Definitions.--In this section, the terms `enrolling employer' 
and `enrolling plan' mean, with respect to an individual or a married 
couple, the employer that offers the qualified employer health plan in 
which the individual or couple is enrolled under subsection 
(a)(2)(A)(i) or (b)(2) and such plan, respectively, and the terms 
`nonenrolling employer' and `nonenrolling plan' mean the other employer 
and other qualified employer health plan, respectively.

``SEC. 2102. APPLICATION TO PART-TIME EMPLOYEES.

    ``(a) Application of Full-Time Employee Rules.--Subject to 
subsection (b), the provisions of section 2101 shall apply to part-time 
employees in the same manner as they apply to full-time employees.
    ``(b) Separate Treatment of Part-Time and Full-Time Employees Under 
Qualified Employer Health Plans.--For rule regarding separate, but 
uniform, treatment of full-time and part-time employees (and family 
members), see section 2104(b).

``SEC. 2103. APPLICATION TO SEASONAL AND TEMPORARY EMPLOYEES.

    ``(a) Enrollment Under Qualified Employer Health Plan Not Affecting 
Application of Excise Tax.--The enrolling by an employer of an employee 
designated under subsection (b) as a seasonal or temporary employee (as 
defined in section 2181(b)(3)), whether a part-time or full-time 
employee, under the qualified employer health plan of the employer 
shall not be considered, for purposes of section 3151 of the Internal 
Revenue Code of 1986, coverage of the employee under a qualified 
employer health plan.
    ``(b) Designation of Seasonal or Temporary Employees.--Each 
employer shall designate, at the time of initial employment and in a 
manner specified by the Secretary, if the individual is to be treated 
under this title and title XXII as a seasonal or temporary employee. 
The Secretary shall provide appropriate sanctions (that may include 
civil money penalties) for the knowing designation as seasonal or 
temporary employees of individuals who are not of seasonal or temporary 
employees.

``SEC. 2104. TREATMENT OF ALL FAMILY MEMBERS AS A UNIT; UNIFORM 
              TREATMENT OF FULL-TIME EMPLOYEES AND OF PART-TIME 
              EMPLOYEES.

    ``(a) Treatment of All Family Members as Unit.--
            ``(1) In general.--In accordance with section 2152(a), 
        enrollment of an employee in a qualified employer health plan 
        shall include enrollment of the other family members of the 
        employee. The fact that an employee is not a pregnant woman or 
        a child (or has any family members who are pregnant women or 
        children) does not permit or prevent the enrollment of the 
        employee under the qualified employer health plan in accordance 
        with this part.
            ``(2) Treatment of children.--In the case of an individual 
        who is a child, the employer of the child is not required to 
        enroll the child in a qualified employer health plan by virtue 
        of the part-time or full-time employment of the child (whether 
        or not the parent of the child is a full-time or part-time 
        employee). However, the employer is liable for taxes under 
        section 3151(a)(1) of the Internal Revenue Code of 1986 (or 
        payment of a nonenrolling employer premium under section 
        2234(a)(1)(A)) with respect to such employment, and the child 
        is, subject to section 3151(b)(2) of such Code, liable for 
        taxes under section 3151(a)(2) of such Code.
    ``(b) Uniform Treatment of Full-Time Employees and of Part-Time 
Employees.--Except as authorized under sections 2101 and 2102 (insofar 
as they permit certain multiple-employed individuals to elect coverage 
under qualified employer health plans) and as provided under section 
2103 and subsection (a)(2) of this section, an employer health plan is 
not a qualified employer health plan if the plan--
            ``(1) enrolls some (but not all) full-time employees (and 
        family members) required to be enrolled under this part, or
            ``(2) enrolls some (but not all) part-time employees (and 
        family members) required to be enrolled under this part.
However, a plan may be a qualified employer health plan and enroll only 
full-time employees (and family members), but not part-time employees 
(and family members).

``SEC. 2105. APPLICATION OF REQUIREMENT TO EMPLOYERS OF DIFFERENT 
              SIZES.

    ``(a) In General.--Except as provided in subsection (b), the 
requirements of this part apply--
            ``(1) as of January 1, 1995, to large employers (as defined 
        in section 2181(c)(3));
            ``(2) as of January 1, 1996, to medium-size employers (as 
        defined in section 2181(c)(2)) that normally employ at least 50 
        employees on a typical business day during the calendar year;
            ``(3) as of January 1, 1997, to medium-size employers not 
        described in paragraph (2); and
            ``(4) as of January 1, 1998, to small employers (as defined 
        in section 2181(c)(1)).
    ``(b) Transition for Collective Bargaining Agreements.--The 
requirements of this part shall not apply to employers with respect to 
their employees, insofar as such employees are covered under a 
collective bargaining agreement ratified before the date of the 
enactment of this title, earlier than the date of termination of such 
agreement (determined without regard to any extension thereof agreed to 
after such date of enactment).

``SEC. 2106. TIMING OF ENROLLMENT; PERIOD OF COVERAGE.

    ``(a) Timing of Enrollment; Notices.--
            ``(1) In general.--Enrollment under this part shall occur 
        not later than the date on which the employment, for which such 
        enrollment is required under this part, commences.
            ``(2) Reference to disclosure requirement.--For requirement 
        for disclosure to employees of information respecting the 
        availability of low-income assistance under part E of title 
        XXII, see section 2158(a)(1).
    ``(b) Period of Coverage.--
            ``(1) Beginning of coverage.--Coverage under a qualified 
        employer health plan shall begin in accordance with section 
        2152(b).
            ``(2) Termination of coverage.--
                    ``(A) In general.--If an enrollment is effected 
                under this part on the basis of employment, coverage 
                under such enrollment may be terminated, subject to 
                subparagraph (B), on the last day of the month (or of 
                any subsequent month) during which such employment is 
                terminated.
                    ``(B) Notice required.--Effective on the date 
                specified in section 2157(b)(2), coverage under a 
                qualified employer health plan shall not be terminated 
                unless notice has been provided to the Secretary, as 
                required in section 2157(b)(1), of such termination at 
                least 7 days before the last day of the month in which 
                employment is terminated (or, if later, 7 days before 
                the last day of the month in which the coverage is 
                terminated).
            ``(3) Treatment of family members.--Subject to section 
        2152, the period of coverage for family members of an employee 
        shall be the same as the period of coverage for the employee.

       ``Part B--Requirements for Qualified Employer Health Plans

``SEC. 2121. QUALIFIED EMPLOYER HEALTH PLAN DEFINED.

    ``(a) In General.--In this title and title XXII, subject to 
subsection (b), the term `qualified employer health plan' means an 
employment-related health plan (as defined in section 2308(a)(2)) 
that--
            ``(1) is a qualified health plan (as defined in section 
        2151(a)),
            ``(2) except as provided in section 2122, does not impose 
        premiums, deductibles, or copayments on employees (and family 
        members) required to be enrolled in a qualified employer health 
        plan under part A, and
            ``(3) meets the requirements of section 2242(c)(3) 
        (relating to coordination of low-income assistance for 
        deductibles).
    ``(b) Types of Qualified Employer Health Plans.--
            ``(1) Large employers.--A large employer may meet the 
        requirements of this title through a qualified employer health 
        plan that is an insured plan or that is a self-insured plan.
            ``(2) Medium-size and small employers.--A medium-size or 
        small employer may meet the requirements of this title only 
        through a qualified employer health plan that is an insured 
        plan that imposes premiums only in accordance with sections 
        2122 and 2304.
            ``(3) Insured plan defined.--The term `insured plan' has 
        the meaning given the term `applicable accident and health 
        insurance contract' in section 5000B(e)(1) of the Internal 
        Revenue Code of 1986.

``SEC. 2122. REQUIREMENTS RELATING TO EMPLOYEE PREMIUMS AND COST-
              SHARING.

    ``(a) Enrollee Premiums and Cost-Sharing Permitted.--
            ``(1) In general.--A qualified employer health plan may 
        require an enrollee to pay for--
                    ``(A) premiums for coverage under the plan, but 
                only if the premiums do not exceed the limitations 
                imposed under this section, and
                    ``(B) cost-sharing amounts for coverage under the 
                plan, but only if the cost-sharing does not exceed the 
                limitations on deductibles, copayments, and coinsurance 
                imposed with respect to qualified health plans under 
                section 2155.
            ``(2) Treatment of additional, required coverage.--If a 
        qualified employer health plan provides benefits in addition to 
        the benefits required under this title and the employee is not 
        permitted the option of not accepting such additional benefits, 
        the plan--
                    ``(A) may not impose a premium, for such required 
                and additional benefits, that exceeds the premiums that 
                may be imposed for the basic benefits, and
                    ``(B) shall assure that cost-sharing is not imposed 
                with respect to required health services once the cost-
                sharing limit has been reached in a year with respect 
                to benefits for such services.
            ``(3) Nondiscrimination in premium amounts.--Under a 
        qualified employer health plan, no employee may be charged a 
        different premium for similar benefits in the same employer 
        health plan for the same beneficiary class based on the age, 
        sex, or health status of the employee (or number, age, sex, or 
        health status of family members).
    ``(b) Limitation on Premiums.--
            ``(1) Monthly premium limited to 20 percent of actuarial 
        rate.--
                    ``(A) In general.--A qualified employer health plan 
                may not require an employee to pay a premium--
                            ``(i) for coverage for a period of longer 
                        than one month, or
                            ``(ii) the amount of which on a monthly 
                        basis exceeds 20 percent of the monthly 
                        actuarial rate (as defined under subparagraph 
                        (B)).
                    ``(B) Monthly actuarial rate defined.--For purposes 
                of this subsection, the term `monthly actuarial rate' 
                means, with respect to a qualified employer health plan 
                in a plan year, the average monthly per enrollee amount 
                that the plan estimates, for enrollees under the plan 
                during the year, would be necessary to pay for the 
                total benefits required during the year under the plan 
                (with respect to required health services), including 
                administrative costs for the provision of such benefits 
                and an appropriate amount for a contingency margin.
                    ``(C) Uniform application regardless of family 
                composition.--For purposes of subparagraph (B), a 
                qualified employer health plan shall provide for the 
                premium to be applied, and the monthly actuarial rate 
                described in such subparagraph to be estimated, for 
                required health services for all covered individuals 
                within a family (without regard to the age, sex, health 
                status, or number of such individuals covered within 
                the family).
            ``(3) Liability for payment of premiums.--An employee 
        enrolled under a qualified employer health plan is liable for 
        payment of premiums required under that plan in accordance with 
        this subsection. In no case shall an employee be liable for 
        premiums with respect to a qualified employer health plan, 
        other than the portion of the premium which may be imposed on 
        the employee consistent with this section.
            ``(4) Withholding permitted.--No provision of State law 
        shall prevent an employer of an employee enrolled under a 
        qualified employer health plan from withholding the amount of 
        any premium due by the employee under this subsection from the 
        wages paid the employee.
            ``(5) Construction.--Nothing in this section shall be 
        construed--
                    ``(A) as preventing an employer from paying part or 
                all of the employee premium for required health 
                services or other health services, or
                    ``(B) subject to subsection (a), from requiring an 
                employee to pay for all or part of the premium for 
                benefits for services other than required health 
                services.

             ``Part C--Standards for Qualified Health Plans

``SEC. 2151. CERTIFICATION OF QUALIFIED HEALTH PLANS.

    ``(a) Qualified Health Plan Defined.--For purposes of this title, 
the term `qualified health plan' means a health plan that the Secretary 
certifies, upon application by the plan, to meet the requirements of 
this part.
    ``(b) Review and Recertification.--The Secretary shall establish 
procedures for the periodic review and recertification of plans as 
qualified health plans.
    ``(c) Termination of Certification.--The Secretary shall terminate 
the certification of a qualified health plan if the Secretary 
determines that the plan no longer meets the requirements for 
certification. Before effecting a termination, the Secretary shall 
provide the plan notice and opportunity for a hearing on the proposed 
termination.

``SEC. 2152. TREATMENT OF FAMILY AS A UNIT; COVERAGE PERIOD; HEALTH 
              PLAN CARDS.

    ``(a) Treatment of Family as a Unit.--
            ``(1) In general.--Subject to paragraph (2), enrollment of 
        an individual in a qualified health plan shall include 
        enrollment of the other family members (as defined in section 
        2282(3)) of the individual.
            ``(2) Treatment of ineligible individuals.--Nothing in 
        paragraph (1) shall be construed as requiring a qualified 
        health plan (or permitting a State children and pregnant women 
        health plan) to enroll individuals who are not eligible 
        individuals (as defined in section 2282(2)).
    ``(b) Beginning of Coverage.--
            ``(1) In general.--In the case of an individual enrolled 
        under any qualified health plan, subject to subsection (c), the 
        benefits under the plan shall first become available for 
        required health services furnished beginning on the first day 
        of the month following the month of enrollment.
            ``(2) Special rules.--The Secretary shall provide for such 
        standards as may be necessary to provide for the allocation of 
        responsibility among qualified health plans (including State 
        children and pregnant women health plans) in the case of an 
        inpatient hospital stay, or in the case in which a single 
        payment amount is made for other services provided over a 
        period of time, that begins during the period of coverage under 
        one qualified health plan and ends during a period of coverage 
        under another qualified health plan.
    ``(c) Standards to Reflect Changes in Family and Employment 
Status.--
            ``(1) In general.--Under standards established by the 
        Secretary consistent with this subsection, qualified health 
        plans shall provide for appropriate changes in the coverage of 
        family members to take into account--
                    ``(A) changes in family composition or status, 
                including marriage, divorce (or legal separation), 
                birth or adoption of children, and the aging of 
                children into adulthood, and
                    ``(B) changes in employment status.
            ``(2) Monthly changes.--Except as specifically provided in 
        this subsection, such standards shall be designed--
                    ``(A) to effect a change in enrollment (or status 
                of enrollment) as of the first day of the first month 
                (or, in order to provide for notice and an opportunity 
                for coordination among plans, a later month) following 
                the date of the event causing the change,
                    ``(B) to prevent any periods of noncoverage under 
                any qualified health plans, and
                    ``(C) to provide, in the case of a change of family 
                status such as marriage, divorce, or legal separation, 
                for accounting and crediting of cost-sharing among 
                family members (described in section 2157(c)) in an 
                equitable and administrable manner.
            ``(3) Treatment of newborns.--
                    ``(A) Birth to woman during period of coverage.--
                Any child born to a woman during the period of coverage 
                under a qualified health plan shall, as of the date of 
                birth, be automatically enrolled and covered for 
                benefits under the plan.
                    ``(B) Birth to woman without coverage.--Any child 
                born in the United States to a woman who is not, at the 
                time of birth, enrolled under a qualified health plan 
                shall be automatically enrolled and covered for 
                benefits under the State children and pregnant women 
                health plan for the State in which the child is born as 
                of the date of birth if an application for such 
                enrollment is made not later than 60 days after the 
                date of birth or, if later, the end of the year in 
                which the child is born.
            ``(4) Adoption.--
                    ``(A) Treatment of voluntary relinquishment.--Any 
                child who is voluntarily relinquished to a public or 
                private agency shall, upon the application by the 
                agency, be enrolled and covered for benefits under the 
                State children and pregnant women health plan for the 
                State in which the child resides as of the date of the 
                relinquishment, until the date of the child's placement 
                for adoption.
                    ``(B) Treatment of adopted children.--Any child who 
                is placed for adoption with an individual during the 
                period the individual is enrolled and covered under a 
                qualified health plan shall, as of the date of the 
                placement for adoption, be treated as the child of the 
                individual and be automatically enrolled and covered 
                under such plan.
            ``(5) Placement in custody of public agency pursuant to 
        court order or otherwise.--Any child who is removed from the 
        family and placed in the temporary custody of a public agency 
        pursuant to a court order or otherwise shall, upon application 
        by the public agency on or after the date of the removal and 
        placement with the public agency, be deemed to be automatically 
        enrolled and covered for benefits under the State plan under 
        title XXII as of the date of the application, until the child 
        is returned to the family or placed for adoption.
            ``(6) Treatment of legal wards, foster children, etc.--In 
        cases not described in paragraph (4) or (5), the Secretary 
        shall establish standards relating to the time an individual 
        described in section 2282(1)(B)(ii) is treated as the child of 
        the person with custody and such other standards as may be 
        necessary to assure the proper coordination of enrollment of 
        children and other individuals among qualified health plans and 
        State children and pregnant women health plans.
    ``(d) Health Plan Cards.--In conjunction with enrollment of 
individuals under a qualified health plan, the plan shall provide for 
the issuance of a card which may be used for purposes of identification 
of such enrollment and the processing of claims for benefits under the 
plan. Such card shall--
            ``(1) identify (as appropriate) the types of benefits to 
        which the individual is entitled under the plan, and
            ``(2) contain such other information as the Secretary (and 
        the plan) shall specify.

``SEC. 2153. REQUIREMENT RESPECTING REQUIRED HEALTH SERVICES.

    ``(a) Requirement.--Each qualified health plan must provide for 
benefits for at least all required health services (as defined in 
section 2211(a)(2)), in accordance with standards established under 
section 2211(d).
    ``(b) Treatment of Additional Benefits.--Nothing in this section 
shall be construed as preventing a qualified health plan from including 
benefits in addition to benefits for required health services.

``SEC. 2154. REQUIREMENTS RESPECTING LIMITS ON PRE-EXISTING CONDITION 
              EXCLUSIONS AND COVERAGE STANDARDS FOR REQUIRED HEALTH 
              SERVICES.

    ``(a) In General.--Except as provided under subsection (b), a 
qualified health plan--
            ``(1) may not deny, limit, or condition the coverage under 
        (or benefits of) the plan with respect to required health 
        services based on the health status, claims experience, receipt 
        of health care, medical history, or lack of evidence of 
        insurability, of an individual, and
            ``(2) may not provide for exclusions from coverage for 
        required health services that are more restrictive than the 
        exclusions for such services under part C of title XXII.
    ``(b) Prohibition of Pre-existing Condition Exclusions.--A 
qualified health plan may not exclude coverage with respect to required 
health services related to treatment of a pre-existing condition.

``SEC. 2155. REQUIREMENTS RESPECTING LIMITS ON COST-SHARING.

    ``(a) In General.--Subject to subsection (b), a qualified health 
plan may not impose premiums, deductibles, copayments, or coinsurance 
with respect to required health services in excess of the premiums 
permitted under this title and the deductible and coinsurance permitted 
under part C of title XXII with respect to such services (not taking 
into account any low-income assistance provided under part E of title 
XXII).
    ``(b) Actuarially Equivalence Permitted for Extended Medical 
Services.--
            ``(1) In general.--A plan may provide for different 
        premiums, deductibles, and copayments with respect to extended 
        medical services if the actuarial value of such benefits (as 
        defined in paragraph (3)) is not less than the equivalent of 
        the actuarial value of such benefits provided under the plan if 
        this subsection did not apply. The previous sentence shall not 
        be construed as permitting a plan to provide for a limit on 
        cost-sharing in excess of the limit provided under section 
        2224.
            ``(2) Guidelines.--The Secretary shall establish guidelines 
        for the application of paragraph (1). Each State shall provide 
        standards (consistent with such guidelines) for the application 
        of paragraph (1) to plans offered in the State.
            ``(3) Actuarial value of benefits defined.--In paragraph 
        (1), the `actuarial value of benefits' of a plan is the amount 
        by which the total of the amounts payable as benefits under the 
        plan for extended medical services exceeds the amount of the 
        premiums, deductibles, copayments, and coinsurance payable by 
        the employee under the plan that are attributable to such 
        services, as determined on an actuarial basis per enrollee for 
        a plan year.
            (4) Extended medical services defined.--In this subsection, 
        the term `extended medical services' has the meaning given such 
        term in section 2214(a).
    ``(c) Construction for Other Than Required Health Services.--
Nothing in this section shall be construed as preventing a qualified 
health plan from providing for deductibles, coinsurance, and copayments 
or other restrictions with respect to services other than required 
health services that are different from those permitted with respect to 
required health services.

``SEC. 2156. PAYMENT RATES.

    ``(a) In General.--A qualified health plan shall make payment for 
required health services based on the payment rates established under 
part C of title XXII.
    ``(b) Treatment of Health Maintenance Organizations.--Subsection 
(a) shall not apply to a plan of an eligible organization (as defined 
in section 1876(b)) which provides for enrollee protections which are 
at least as great as the enrollee protections provided under section 
2265 (but without the application of section 2265(b)(5) or 
1876(c)(3)(B)).

``SEC. 2157. COORDINATION AND PORTABILITY OF HEALTH COVERAGE UNDER 
              QUALIFIED HEALTH PLANS.

    ``(a) In General.--Each qualified health plan shall provide for 
coordination of--
            ``(1) enrollment and termination of enrollment among the 
        qualified health plans and State children and pregnant women 
        health plans, and
            ``(2) application of deductibles and limitations on cost-
        sharing among such plans,
in accordance with standards established by the Secretary consistent 
with this section.
    ``(b) Requirement of Notices With Respect to Coverage.--
            ``(1) In general.--Each qualified health plan shall provide 
        notice at the time an individual's coverage under the plan 
        begins or is terminated. Such notice shall be provided (in a 
        form and manner and at a time specified by the Secretary)--
                    ``(A) to the individual (or in the case of 
                enrollment only of a child or children, to the parent 
                enrolling the child or children), and
                    ``(B) effective (on the date specified in paragraph 
                (2)) to the Secretary.
        The notice under this paragraph shall include the names and 
        other identifying information of family members whose coverage 
        is affected by the change.
            ``(2) Date of requirement for notice to state children and 
        pregnant women health plans.--The date specified in this 
        paragraph is January 1, 1995, or, with respect to a qualified 
        employer health plan of an employer, the date the requirements 
        of part A apply with respect to the employer under section 
        2105(a).
            ``(3) Notice to beneficiary and other qualified health 
        plans upon obtaining coverage.--In the case of an individual 
        who begins coverage under a qualified employer health plan (or 
        under a State children and pregnant women health plan on an 
        employment basis), when the Secretary receives notice under 
        paragraph (1)(B)--
                    ``(A) if, at the time of obtaining such coverage, 
                the individual is enrolled on a non-employment basis in 
                a State children and pregnant women health plan, the 
                Secretary shall notify the individual that coverage for 
                such services on such a basis or for such benefits 
                shall be terminated effective on the date of coverage 
                under such a plan, and
                    ``(B) the Secretary shall provide for notice to any 
                other qualified health plan in which the Secretary 
                knows the individual is enrolled of the fact of such 
                new coverage.
            ``(4) Notices of termination.--Each notice of termination 
        under paragraph (1) shall include--
                    ``(A) the effective date of the termination,
                    ``(B) in the case of notice to the Secretary, 
                sufficient information to permit enrollment of the 
                individuals affected under a State children and 
                pregnant women health plan, and
                    ``(C) in the case of an individual whose coverage 
                under the plan is terminated other than at the end of a 
                calendar year, the accounting statement produced under 
                subsection (c)(2).
    ``(c) Accounting for Cost-Sharing.--
            ``(1) In general.--Each qualified health plan shall provide 
        for an ongoing accounting, for each enrollee (and enrolled 
        family members) on a calendar year basis, of expenses incurred 
        for required health services that are counted towards the 
        deductible established under section 2222 and that are counted 
        towards the cost-sharing limit established under section 2224. 
        The amount credited for each account shall be determined in 
        accordance with standards established by the Secretary in order 
        to provide consistency among qualified health plans and to 
        promote portability of benefits across qualified health plans.
            ``(2) Statement of account balance.--In the case of an 
        individual whose coverage under the plan is terminated other 
        than at the end of a calendar year, the qualified health plan 
        shall produce an accounting statement (in a uniform manner 
        established by the Secretary) of the amounts that are credited 
        under the plan towards such deductible and cost-sharing 
        limitations for the year for each enrollee (and family members) 
        involved, in accordance with the accounting under paragraph 
        (1).
            ``(3) Crediting of previous expenses towards deductibles 
        and coinsurance.--Each qualified health plan shall, in the case 
        of an individual who is enrolled under the plan after the 
        beginning of a year, credit, against the deductible and cost-
        sharing limit for required health services under its plan, the 
        amounts previously accounted against the deductible and cost-
        sharing limit under another qualified health plan for the 
        calendar year. The credit under this subparagraph shall be 
        based on the accounting statement produced under paragraph (2).
    ``(d) Coverage Under a State Children and Pregnant Women Health 
Plan.--
            ``(1) In general.--Except as provided in this subsection, 
        each State children and pregnant women health plan shall enroll 
        each eligible individual (as defined in section 2282(2)) who 
        resides in the State and whose coverage under a qualified 
        health plan or under title XVIII is terminated, effective on 
        the date following the effective date of termination of 
        coverage under such plan.
            ``(2) Obtaining alternate coverage.--Paragraph (1) shall 
        not apply if the individual provides satisfactory evidence that 
        the individual has obtained coverage through another qualified 
        health plan or is a medicare beneficiary enrolled under part B 
        of title XVIII.
            ``(3) No automatic enrollment during transition.--
        Paragraphs (1) and (2) shall not apply to terminations 
        occurring before January 1, 1998. During the period before 
        January 1, 1998, before an individual described in paragraph 
        (1) enrolls under a State children and pregnant women health 
        plan, the State shall provide the individual with a notice of 
        the minimum enrollment period required under section 
        2202(b)(3).
            ``(4) Reference to additional requirements.--For addition 
        enrollment requirements for State children and pregnant women 
        health plans, see sections 2152(c)(3)(B), 2152(c)(4)(A), and 
        2152(c)(5).
    ``(e) Provision of Information on Enrollees.--Each qualfied health 
plan shall provide the Secretary and applicable State children and 
pregnant women health plans with such information as the Secretary may 
require in order to ascertain whether (and the amount of) any transfer 
payments to be made under section 2234.

``SEC. 2158. CONSUMER PROTECTIONS.

    ``(a) Disclosure Requirements for Employer Plans.--
            ``(1) Notice of availability of low-income assistance.--At 
        the time of enrollment of an employee under a qualified 
        employer health plan, the plan (directly or through the 
        employer) shall provide the employee with a notice (in a form 
        specified by the Secretary) of the low-income assistance 
        available under part E of title XXII with respect to enrollment 
        under the plan.
            ``(2) For small employer plans.--In the case of a qualified 
        employer health plan that is offered to a small employer, the 
        plan may not be issued or sold to the employer unless the 
        employer has been provided the following information:
                    ``(A) A description of the benefits covered in the 
                plan and cost-sharing required with respect to such 
                benefits.
                    ``(B) A comparison of the benefits and cost-sharing 
                described in subparagraph (A) with required health 
                services.
            ``(3) Standard format.--The disclosures under paragraphs 
        (1) and (2) shall be made in a uniform format established by 
        the Secretary.
            ``(4)  Violations.--Any entity that violates paragraph (1) 
        or (2) is subject to a civil money penalty of an amount not to 
        exceed $5,000 with respect to each such violation. The 
        provisions of section 1128A (other than the first sentence of 
        subsection (a) and other than subsection (b)) shall apply to a 
        civil money penalty under the previous sentence in the same 
        manner as such provisions apply to a penalty or proceeding 
        under section 1128A(a).
    ``(b) Effective Grievance Procedures.--Each qualified health plan 
shall provide for effective procedures for hearing and resolving 
grievances between the plan and individuals enrolled under the plan.
    ``(c) Restriction on Certain Physician Incentive Plans.--
            ``(1) In general.--A health plan is not a qualified health 
        plan if it operates a physician incentive plan (as defined in 
        paragraph (2)) unless the requirements specified in clauses (i) 
        through (iii) of section 1876(i)(8)(A) are met (in the same 
        manner as they apply to eligible organizations under section 
        1876).
            ``(2) Physician incentive plan defined.--In this 
        subsection, the term `physician incentive plan' means any 
        compensation or other financial arrangement between the 
        qualified health plan and a physician or physician group that 
        may directly or indirectly have the effect of reducing or 
        limiting services provided with respect to individuals enrolled 
        under the plan.
    ``(d) Enrollee Financial Protection.--
            ``(1) Solvency protection for insured plans.--In the case 
        of a qualified health plan that is an insured plan (as defined 
        by the Secretary) and is issued in a State, in order for the 
        plan to be certified under this part the Secretary must find 
        that the State has established satisfactory protection of 
        enrollees with respect to potential insolvency of the plan.
            ``(2) Protection against provider claims.--In the case of a 
        failure of a qualified health plan to make payments with 
        respect to required health services, under standards 
        established by the Secretary, an individual who is enrolled 
        under the plan is not liable to any health care provider or 
        practitioner with respect to the provision of required health 
        services for payments in excess of the amount for which the 
        enrollee would have been liable if the plan were to have made 
        payments in a timely manner.

``SEC. 2159. PREEMPTION OF CERTAIN STATE AND FEDERAL REQUIREMENTS.

    ``(a) Benefit and Coverage Rules.--Effective as of January 1, 1995, 
no State shall establish or enforce any law or regulation that--
            ``(1) requires the offering, as part of a qualified 
        employer health plan with respect to any pregnant woman or 
        child, of any services, category of care, or services of any 
        class or type of provider that is different from the benefits 
        required to be provided under section 2153,
            ``(2) specifies the individuals to be covered under a 
        qualified employer health plan or the duration of such 
        coverage, or
            ``(3) requires a right of conversion from a qualified 
        employer health plan to an individual qualified health plan.
    ``(b) State Defined.--In subsection (a), the term `State' means the 
50 States and the District of Columbia.

``SEC. 2160. USE OF UNIFORM CLAIMS FORMS.

    ``Each qualified health plan shall provide for submission of claims 
using uniform claims forms developed by the Secretary.

                ``Part D--Definitions and Miscellaneous

``SEC. 2181. DEFINITIONS.

    ``(a) Wages, Employment, Etc.--In this title--
            ``(1) Wages.--The term `wages' has the meaning given such 
        term by section 3121(a) of the Internal Revenue Code of 1986, 
        except that--
                    ``(A) the modifications of subsection (b) shall 
                apply in determining whether any service is employment, 
                and
                    ``(B) the applicable contribution base under 
                section 3121(x)(2) of such Code (relating to hospital 
                insurance) shall be used under section 3121(a)(1) for 
                purposes of this title.
            ``(2) Employment.--
                    ``(A) In general.--Except as modified in 
                subparagraph (B), the term `employment' has the meaning 
                given such term by section 3121(b) of the Internal 
                Revenue Code of 1986.
                    ``(B) Modifications.--The modifications referred to 
                in this paragraph are that--
                            ``(i) paragraphs (5), (6), (7), (8), and 
                        (9) of section 3121(b) of such Code shall not 
                        apply, and
                            ``(ii) subsections (r) and (w) of section 
                        3121 of such Code shall not apply.
                    ``(C) Treatment of federal employment.--In applying 
                subparagraph (A), the term `employment' shall not be 
                considered to include service performed in the employ 
                of the United States if, in connection with the 
                performance of such service (or the service of a family 
                member), the individual--
                            ``(i) is enrolled in a health benefits plan 
                        under chapter 89 of title 5, United States 
                        Code, or
                            ``(ii) is provided medical and dental 
                        benefits under chapter 55 of title 10, United 
                        States Code.
            ``(3) Employee; employer.--The terms `employee' and 
        `employer' have the same meanings as such terms have for 
        purposes of chapter 21 of the Internal Revenue Code of 1986.
    ``(b) Definitions Relating to Employees.--In this title:
            ``(1) Full-time employee.--The term `full-time employee' 
        means, with respect to an employer, an employee who normally 
        performs on a monthly basis at least 25 hours of service per 
        week for that employer.
            ``(2) Part-time employee.--The term `part-time employee' 
        means, with respect to an employer, an employee who is not a 
        full-time employee.
            ``(3) Seasonal or temporary employee.--The term `seasonal 
        or temporary employee' means, with respect to an employer, an 
        employee who is employed by the employer for not more than 4 
        months in any 12-month period; except that the Secretary may 
        extend such period to up to 6 months in any 12-month period in 
        the case of employment that is sporadic, irregular, and 
        seasonal in nature.
            ``(4) Treatment of consultants and contractors.--The term 
        `employee' includes an individual who is a consultant or 
        contractor of an employer if the Secretary determines that the 
        consulting arrangement or contract was entered into to avoid 
        the requirements of this title.
            ``(5) Exclusion of foreign employment.--The term `employee' 
        does not include an individual--
                    ``(A) who is not a citizen or resident of the 
                United States with respect to service performed outside 
                the United States, or
                    ``(B) who is a citizen or resident of the United 
                States with respect to services performed outside the 
                United States for an employer other than an American 
                employer (as defined in section 3121(h) of the Internal 
                Revenue Code of 1986).
    ``(c) Definitions Relating to Size of Employer.--In this title:
            ``(1) Small employer.--The term `small employer' means, 
        with respect to a calendar year, an employer that normally 
        employs fewer than 25 employees on a typical business day 
        during the calendar year.
            ``(2) Medium-size employer.--The term `medium-size 
        employer' means, with respect to a calendar year, an employer 
        that normally employs at least 25, but fewer than 101, 
        employees on a typical business day during the calendar year.
            ``(3) Large employer.--The term `large employer' means an 
        employer that is not a small employer or a medium-size 
        employer.
            ``(4) Application of controlled group rules.-- For purposes 
        of determining if an employer is a small, medium-size, or large 
        employer or the number of hours an individual is normally 
        employed with respect to an employer, rules similar to the 
        rules of subsection (b) and (c) of section 414 of the Internal 
        Revenue Code of 1986 shall apply.
    ``(d) State Children and Pregnant Women Health Plan.--The term 
`State children and pregnant women health plan' has the meaning of the 
term `State plan' under section 2200(c).
    ``(e) Incorporation of Definitions.--Except as otherwise provided 
in this title, the terms defined in section 2282 shall apply under this 
title in the same manner as they apply under title XXII.

``SEC. 2182. NONAPPLICATION TO RESIDENTS OF PUERTO RICO AND 
              TERRITORIES.

    ``The provisions of this title shall not apply with respect to an 
employee who is not a resident of one of the 50 States or the District 
of Columbia.''.

TITLE II--PROVISION OF HEALTH INSURANCE FOR PREGNANT WOMEN AND CHILDREN 
         THROUGH STATE CHILDREN AND PREGNANT WOMEN HEALTH PLANS

SEC. 201. STATE CHILDREN AND PREGNANT WOMEN HEALTH PLANS.

    The Social Security Act is amended by adding after the title added 
by section 102 the following new title:

      ``TITLE XXII--STATE CHILDREN AND PREGNANT WOMEN HEALTH PLANS

``SEC. 2200. ESTABLISHMENT OF STATE CHILDREN AND PREGNANT WOMEN HEALTH 
              PLANS.

    ``(a) In General.--By not later than January 1, 1995, each State 
shall establish and maintain a program--
            ``(1) to assure the provision in accordance with this title 
        of health insurance for pregnant women and children lawfully 
        residing in the State who are not covered under a qualified 
        employer health plan or under a Federal health plan, and
            ``(2) to provide low-income assistance under part E for 
        eligible individuals enrolled under a qualified employer health 
        plan or under a Federal health plan.
    ``(b) Federal Backup.--If a State fails to establish and maintain a 
State plan, the Secretary shall establish and maintain such a plan for 
the State and the State shall be liable to the Secretary for 105 
percent of the minimum amount the Secretary determines the State would 
have been required to expend (net of payments to the State under 
section 2236) to establish and maintain a State plan under this title.
    ``(c) State Plan Defined.--In this title, the term `State plan' 
means a program established and maintained by a State under this 
section, and includes a plan established by the Secretary under 
subsection (b).

   ``Part A--Plan Requirements Relating to Eligibility and Enrollment

``SEC. 2201. GENERAL REQUIREMENTS; APPLICATION PROCESS.

    ``(a) Coverage.--Each State plan shall provide payment for required 
health services (as defined in section 2211(a)) furnished to any 
eligible individual (as defined in section 2282(2)) who is enrolled 
under the plan.
    ``(b) Enrollment.--
            ``(1) In general.--Each State plan shall provide a process 
        for the enrollment of all eligible individuals residing in the 
        State who are not enrolled in a qualified employer health plan 
        or in a Federal health plan (as defined in section 2282(4)).
            ``(2) Uniform rules for residency.--The Secretary shall 
        establish uniform rules respecting the determination of the 
        residence of eligible individuals for purposes of this title.
    ``(c) Application Process.--
            ``(1) Open enrollment.--Eligible individuals residing in a 
        State may enroll under the State plan at any time.
            ``(2) Enrollment.--The filing by an eligible individual of 
        an application for enrollment under a State plan shall (except 
        as the Secretary may provide) constitute enrollment under the 
        plan. Such an application may be filed with the State by mail 
        or at such locations as the State may specify.
            ``(3) Availability of applications.--Each State shall make 
        applications for enrollment under the State plan available--
                    ``(A) at out-reach sites (such as provider and 
                practitioner locations), and
                    ``(B) at other locations (including post offices) 
                accessible to a broad cross-section of individuals 
                eligible to enroll.
        The Secretary, to the extent practicable, shall make 
        applications for enrollment under State plans available at 
        local offices of the Social Security Administration.
            ``(4) Application for low-income assistance.--An 
        application for enrollment under a State plan may (but need 
        not) be accompanied by an application for low-income assistance 
        under part E.
    ``(d) Enrollment Terms.--
            ``(1) Enrollment under title on an employment and non-
        employment basis defined.--An eligible individual is 
        considered, for purposes of this title, to be enrolled under a 
        State plan--
                    ``(A) on an `employment basis' only if the 
                individual is enrolled by an employer pursuant to the 
                requirement of section 5000A of the Internal Revenue 
                Code of 1986, or
                    ``(B) on a `non-employment basis' in any other 
                case.
            ``(2) Enrollment under a qualified employer health plan 
        defined.--An individual is considered, for purposes of this 
        title, to be `enrolled under a qualified employer health plan' 
        if--
                    ``(A) the individual is enrolled under a qualified 
                employer health plan (as defined in section 2281(b)(4)) 
                as an employee (or family member of an employee),
                    ``(B) the employer is required to provide for such 
                enrollment under part A of title XXI, and
                    ``(C) the amount of the employee share of the 
                premium is limited under section 2122(b).

``SEC. 2202. COVERAGE PERIOD; TERMINATION OF ENROLLMENT.

    ``(a) Beginning of Coverage.--Each State plan shall provide for a 
period of coverage for eligible individuals under the plan in the 
manner specified for qualified health plans under section 2152(b).
    ``(b) Termination of Enrollment During Transition Period.--
            ``(1) In general.--Before January 1, 1998, except as 
        provided in paragraph (3)--
                    ``(A) an individual enrolled under a State plan may 
                terminate enrollment on a non-employment basis by 
                providing written notice to the State that the 
                individual--
                            ``(i) no longer wishes to be enrolled in 
                        the plan, or
                            ``(ii) is enrolled under a qualified 
                        employer health plan or is a medicare 
                        beneficiary; and
                    ``(B) a State plan may terminate enrollment on a 
                non-employment basis of an individual, after providing 
                the individual (or the individual's representative) 
                written notice, for failure to pay premiums required 
                with respect to such enrollment.
        The termination of enrollment of an individual shall terminate 
        the enrollment of other family members enrolled with the 
        individual.
            ``(2) Effective date of termination.--A termination of 
        enrollment under paragraph (1)(A) shall take effect at the 
        close of the month following the month in which the notice is 
        filed. A termination of enrollment under paragraph (1)(B) shall 
        take effect on a date (determined under regulations of the 
        Secretary) after the date written notice of such termination 
        has been provided to the enrollee (or the enrollee's 
        representative). Such regulations shall provide a grace period 
        of at least 1 month after the date of written notice in which 
        overdue premiums may be paid and coverage continued.
            ``(3) Minimum period of enrollment during transition.--
        Subject to paragraph (4), before January 1, 1998--
                    ``(A) In general.--An individual (other than a 
                pregnant woman or newborn) who is enrolled under a 
                State plan on a non-employment basis may not terminate 
                enrollment less than 12 months after the date of the 
                enrollment.
                    ``(B) Pregnant women and newborns.--In the case of 
                a pregnant woman who is enrolled under a State plan on 
                a non-employment basis--
                            ``(i) the enrollment of the woman may not 
                        be terminated earlier than the end of the month 
                        in which the 60-day period, beginning on the 
                        last day of the pregnancy, ends; and
                            ``(ii) the newborn child shall be deemed 
                        enrolled for purposes of this title as of the 
                        date of birth, and such enrollment may not be 
                        terminated earlier than the end of the month in 
                        which the child's first birthday occurs.
            ``(4) Termination permitted if covered under qualified 
        employer health plan.--The minimum period of enrollment under 
        paragraph (3) shall not apply if, at the time of termination of 
        enrollment, the individual is immediately covered under a 
        qualified employer health plan which will provide coverage 
        during the minimum period for which enrollment is otherwise 
        required under such paragraph.
    ``(c) Termination of Enrollment After Transition Period.--For 
limitations on termination of enrollment under this title on or after 
January 1, 1998, see section 2203(c).

``SEC. 2203. REQUIREMENT OF HEALTH INSURANCE COVERAGE.

    ``(a) Requirement for All Eligible Individuals.--
            ``(1) In general.--Effective on and after the date 
        specified in subsection (e), each eligible individual (as 
        defined in section 2282(2)) who is not an excepted individual 
        (as defined in paragraph (2)), is deemed to have enrolled in 
        the State plan in which the individual resides as of such date 
        or as soon thereafter as the individual is not an excepted 
        individual. If such an individual has not filed an application 
        for enrollment under a State plan by such date, the Secretary 
        shall provide a means to collect information sufficient to 
        effect such enrollment as soon as possible after such date.
            ``(2) Excepted individuals.--For purposes of paragraph (1), 
        the term `excepted individual' means an individual who is 
        enrolled under a qualified employer health plan or under a 
        Federal health plan.
    ``(b) Automatic Continuing Enrollment.--For provisions relating to 
coordination of enrollment among qualified health plans and State plans 
and assuring continuous coverage for required health services (and 
portability of health insurance benefits among such plans), see section 
2157 (made applicable to State plans by section 2226).
    ``(c) Limitation on Termination of Enrollment.--Effective on the 
date specified in subsection (e)--
            ``(1) Employment-based enrollment.--An individual enrolled 
        under a State plan on an employment basis may not elect to 
        terminate such enrollment.
            ``(2) Non-employment basis.--An individual enrolled under a 
        State plan on a non-employment basis may not terminate such 
        enrollment unless--
                    ``(A) the individual is no longer an eligible 
                individual because of age or termination of pregnancy,
                    ``(B) the individual is no longer eligible to be 
                enrolled under the plan because of a change of 
                immigration or residency status, or
                    ``(C) the individual demonstrates to the 
                satisfaction of the Secretary that the individual is a 
                medicare beneficiary or is enrolled under a qualified 
                employer health plan or a Federal health plan.
    ``(d) Enforcement.--
            ``(1) Monitoring of individual tax returns.--The Secretary 
        of the Treasury shall require the filing of such information as 
        may be necessary to establish compliance with subsection (a).
            ``(2) Retroactive enrollment.--If such an individual has 
        not provided evidence of enrollment in a qualified employer 
        health plan or Federal health plan, the Secretary--
                    ``(A) shall instruct the State to enroll the 
                individual pursuant to the filing of such return, and
                    ``(B) shall instruct the State to require payment 
                of twice the amounts of premiums that would have been 
                paid if the person had been enrolled on a timely basis, 
                unless the individual has established to the 
                satisfaction of the State good cause for the failure to 
                enroll on a timely basis.
    ``(e) Effective Date of Requirement.--The date specified in this 
subsection is January 1, 1998.

                           ``Part B--Benefits

``SEC. 2211. COVERED HEALTH SERVICES.

    ``(a) Required Health Services.--
            ``(1) In general.--Except as provided in the succeeding 
        provisions of this part and part C, in the case of eligible 
        individuals enrolled under a State plan, the State plan shall 
        provide for payments in accordance with this title for the 
        following health services:
                    ``(A) Preventive care services (as defined in 
                section 2212(a)).
                    ``(B) Major medical services (as defined in section 
                2213(a)).
                    ``(C) Extended medical services (as defined in 
                section 2214(a)).
            ``(2) Required health services defined.--In this title and 
        title XXI, the term `required health services' means the health 
        services described in paragraph (1), subject to the deductible 
        and coinsurance permitted with respect to such services under 
        part C.
    ``(b) Required Outreach Services.--In addition to the required 
health services under subsection (a), each State plan shall provide (or 
make payment) for outreach services to link low-income enrolled 
individuals with needed required health services. Such outreach 
services shall include--
            ``(1) transportation,
            ``(2) child care at service sites,
            ``(3) translation services,
            ``(4) case/care coordination,
            ``(5) screening followups, and
            ``(6) health promotions.
    ``(c) Optional Additional Social Services.--In addition, each State 
plan may provide (or make payment) for social services (such as family 
psycho-social supports, therapeutic foster care, pediatric day 
treatment, parent training, and in-home crisis management) necessary to 
assure the health of enrolled individuals.
    ``(d) Standards.--The Secretary shall establish standards with 
respect to required health services. The standards shall be applied 
under this title and title XXI.

``SEC. 2212. PREVENTIVE CARE SERVICES.

    ``(a) Defined.--In this title, the term `preventive care services' 
means the following items and services furnished in accordance with any 
applicable periodicity schedule established under subsection (b):
            ``(1) Child preventive care, including--
                    ``(A) routine office visits,
                    ``(B) routine immunizations, and
                    ``(C) routine laboratory tests.
            ``(2) Prenatal care, including care of all complications of 
        pregnancy.
            ``(3) Care of newborn infants, including attendance at 
        high-risk deliveries and normal newborn care.
            ``(4) Family planning services.
            ``(5) Child abuse assessment.
            ``(6) Preventive dental care for children.
    ``(b) Periodicity Schedules.--
            ``(1)  Pediatric care.--With respect to preventive care 
        services furnished to children, the Secretary shall establish a 
        schedule of periodicity which reflects the general, appropriate 
        frequency with which such care should be provided routinely to 
        healthy children. Such schedule shall be established in 
        consultation with the American Academy of Pediatrics.
            ``(2) Prenatal care.--With respect to preventive care 
        services for pregnant women, the Secretary shall establish a 
        schedule of periodicity which reflects the appropriate 
        frequency with which such care should be provided to pregnant 
        women, taking into account age and other risk factors. Such 
        schedule shall be established in consultation with the American 
        College of Obstetricians and Gynecologists.
    ``(c) No Application of Deductible or Coinsurance.--In accordance 
with sections 2222(b) and 2223(b), a State plan may not impose 
deductibles or coinsurance with respect to preventive care services.

``SEC. 2213. MAJOR MEDICAL SERVICES.

    ``(a) Defined.--In this title, the term `major medical services' 
means the following items and services (to the extent they are not 
preventive care services and subject to subsection (b)):
            ``(1) Inpatient and outpatient hospital services.
            ``(2) Physicians' services.
            ``(3) Professional services of certified nurse midwives, 
        nurse practitioners, and other health professionals (to the 
        extent authorized under State law).
            ``(4) Diagnostic tests (including laboratory tests).
            ``(5) Ambulance.
            ``(6) Short-term home health services.
            ``(7) Medical and surgical supplies and durable medical 
        equipment.
            ``(8) Corrective eyeglasses and lenses and hearing aids.
            ``(9) Prescription drugs, insulin, and medically 
        recommended nutritional supplements.
            ``(10) Acute dental care.
    ``(b) Treatment of Mental Health Services, Substance Abuse 
Services, and Developmental and Learning Disability Services as 
Extended Medical Services.--Major medical services do not include items 
and services for the treatment of mental illness, for the treatment of 
substance abuse, or for the treatment of developmental and learning 
disabilities, but do include psychiatric services. However, such 
services for such treatment are included in the definition of extended 
medical services under section 2214(a).
    ``(c) Application of Deductible and Coinsurance.--In accordance 
with sections 2222 and 2223, a State plan may impose deductibles and 
coinsurance with respect to major medical services, subject to the 
limits specified in such sections.

``SEC. 2214. EXTENDED MEDICAL SERVICES.

    ``(a) Defined.--In this title, the term `extended medical services' 
means the following items and services (to the extent they are not 
preventive care services and subject to subsection (b)):
            ``(1) Items and services described in section 2213(a) for 
        the treatment of mental illness or substance abuse and 
        treatment of development and learning disabilities (other than 
        the educational component of such treatment).
            ``(2) Orthodontia (other than cosmetic orthodontia).
            ``(3) Substance abuse services.
            ``(4) Speech, occupational, and physical therapy.
            ``(5) Hospice care.
            ``(6) Respite care.
            ``(7) Short-term skilled nursing facility services.
            ``(8) Nutritional assessment and counseling.
    ``(b) Plan of Care Requirement.--A State plan shall provide for 
coverage of extended medical services only in accordance with a plan of 
care which--
            ``(1) is developed in cooperation with the attending 
        primary care physician, and
            ``(2) applies to all required health services.
    ``(c) Application of Deductible and Coinsurance.--In accordance 
with sections 2222 and 2223, a State plan may impose a deductible and 
coinsurance with respect to extended medical services, subject to the 
limits specified in such sections.

``SEC. 2215. SCOPE OF COVERAGE.

    ``(a) No Amount, Duration or Scope Limitations.--A State plan may 
not impose any limitation on the amount, duration, or scope for 
required health services.
    ``(b) Construction.--Subsection (a) shall not be construed as 
requiring coverage of--
            ``(1) preventive care services in a frequency greater than 
        the frequency specified in the appropriate periodicity schedule 
        established under section 2212(b),
            ``(2) extended medical services which are not specified in 
        a plan of care under section 2214(b), or
            ``(3) major medical services or extended medical services 
        which are not reasonable and medically necessary.
    ``(c) Freedom of Choice of Providers and Practitioners.--
            ``(1) In general.--Any individual entitled to benefits 
        under a State plan with respect to required health services may 
        obtain benefits for such services provided by any provider or 
        practitioner who is qualified to provide (and receive payment 
        with respect to) such services under the plan.
            ``(2) Treatment of enrollment with health maintenance 
        organizations and competitive medical plans.--Nothing in 
        paragraph (1) shall be construed to prohibit a health 
        maintenance organization or competitive medical plan from 
        limiting, under a contract entered into pursuant to section 
        2265, the number of providers or practitioners for which 
        benefits for services are paid.

``Part C--Payments for Benefits; Deductible, Coinsurance, and Stop-loss 
                Protection for Required Health Services

``SEC. 2221. PAYMENT RATES.

    ``(a) Use of Medicare Payment Rules; Etc.--Subject to adjustment in 
payment rates under this section and subject to differences in 
deductibles and coinsurance between a State plan and title XVIII--
            ``(1) in the case of physicians' services and inpatient 
        hospital services, the provisions of section 1848 and 1886 
        (relating to payment for physicians' services and to hospitals 
        for inpatient hospital services, respectively) shall apply 
        under a State plan to physicians' services and inpatient 
        hospital services in the same manner as they apply under title 
        XVIII;
            ``(2) in the case of other required health services for 
        which payment may be made under title XVIII, such title shall 
        apply to payment under a State plan in the same manner as they 
        apply to payment under title XVIII;
            ``(3) in the case of other required health services for 
        which payment may not be made under title XVIII, the Secretary 
        shall establish payment rules that shall apply under State 
        plans that are similar to the payment rules for similar 
        services under such title; and
            ``(4) in the case of services described in subsections (b) 
        and (c) of section 2211, each State shall establish adequate 
        payment rates (as defined by the Secretary).
There shall be no administrative or judicial review of the payment 
rates or rules established under this section (including adjustments 
made under subsections (b), (c), and (d)).
    ``(b) Adjustment of Medicare Payment Rates for Physicians' 
Services.--
            ``(1) In general.--For purposes of establishing payment 
        rates for physicians' services under State plans and qualified 
        employer health plans, the Secretary, by regulation and in 
        accordance with this subsection, shall adjust the payment rates 
        otherwise established under section 1848 to take into account--
                    ``(A) differences between the population served 
                under title XVIII and the population receiving benefits 
                under State plans or under qualified employer health 
                plans, and
                    ``(B) such other appropriate factors as the 
                Secretary deems appropriate to assure the availability 
                of quality health care under such plans.
            ``(2) Report by physician payment review commission.--The 
        Physician Payment Review Commission, in its recommendations to 
        Congress under section 1845(b) in the year before the first 
        year in which this title is effective, shall include 
        recommendations on--
                    ``(A) the relative value units that should be 
                applied (under paragraph (1)) with respect to 
                pediatric, obstetrical, and other physicians' services, 
                and
                    ``(B) data that should be collected in order to 
                evaluate the number of such units for such services.
        The Commission shall include, in its subsequent recommendations 
        under section 1845(b), such recommendations with respect to the 
        payment for physicians' services under State plans and 
        qualified employer health plans as it deems appropriate.
            ``(3) Secretarial publication.--The Secretary shall cause 
        to be published in the Federal Register--
                    ``(A) before June 1 before the first year in which 
                this title is effective, the relative value units 
                proposed to be applied during such first year under 
                State plans and qualified employer health plans, and
                    ``(B) after consideration of public comments 
                submitted pursuant to such proposal and before October 
                1 before such year, the relative value units to be 
                applied during such first year under such plans.
            ``(4) Secretarial review and revision.--The Secretary shall 
        provide for the periodic review and adjustment of the relative 
        value units to be applied under State plans and qualified 
        employer health plans in the same manner and frequency as 
        provided under section 1848(c)(2)(B), except that such review 
        shall first be conducted each year during the first 3 years and 
        not less often than every 5 years thereafter.
            ``(5) National advisory committee.--The Secretary shall 
        establish a national advisory committee, composed of 
        pediatricians, family physicians, and obstetricians, and 
        experts and advocates on maternal and child health--
                    ``(A) to review recommendations made by the 
                Physician Payment Review Commission under paragraph 
                (2), and
                    ``(B) to advise the Secretary respecting (i) the 
                appropriate payment amounts (including the conversion 
                factor) to be established under this section for 
                pediatric, obstetrical, and other physicians' services, 
                and (ii) factors that influence the adequacy of health 
                care expenditures for children and pregnant women (such 
                as quality of care and distribution of services).
    ``(c) Adjustment of Medicare Payment Rates for Inpatient Hospital 
Services.--
            ``(1) In general.--For purposes of payment for inpatient 
        hospital services, the Secretary, by regulation and in 
        accordance with this section, shall adjust the payment rates 
        otherwise established under title XVIII to take into account--
                    ``(A) differences between the population served 
                under that title and the population receiving benefits 
                under State plans or qualified employer health plans, 
                and
                    ``(B) such other appropriate factors (such as the 
                special circumstances of hospitals the inpatients of 
                which are predominantly children) as the Secretary 
                deems appropriate to assure the availability of quality 
                health care under such plans.
            ``(2) Report by prospective payment assessment 
        commission.--The Prospective Payment Assessment Commission, in 
        its report to Congress under section 1886(e)(3)(A) in the year 
        before the first year in which this title is effective, shall 
        include its recommendations on--
                    ``(A) the adjustments that should be made under 
                paragraph (1) in the payment methodology for inpatient 
                hospital services in order to take into account 
                differences and appropriate factors referred to in such 
                paragraph, and data that should be collected in order 
                to establish appropriate weighting factors for 
                diagnosis-related groups used under this section, and
                    ``(B) whether, and if so how, payment for inpatient 
                hospital services of childrens' hospitals (described in 
                section 1886(d)(1)(B)(iii)) may be made under State 
                plans and qualified employer health plans using the 
                prospective payment methodology described in section 
                1886(d).
        The Commission shall include, in its subsequent reports under 
        section 1886(e)(3)(A), such recommendations with respect to 
        payment for inpatient hospital services under State plans and 
        qualified employer health plans as it deems appropriate.
            ``(3) Secretarial publications.--The Secretary shall 
        provide for the publication, in the manner and time specified 
        under section 1886(e)(5), of adjustments proposed to be made 
        (and to be made) under this subsection for the calendar year 
        beginning in each fiscal year.
            ``(4) Report on use of prospective payment methodology.--By 
        not later than April 1 of the first year in which this title is 
        effective, the Secretary shall submit to Congress a report on 
        whether, and if so how, payment for inpatient hospital services 
        of childrens' hospitals (described in section 
        1886(d)(1)(B)(iii)) may be made under State plans and qualified 
        employer health plans using the prospective payment methodology 
        described in section 1886(d).
    ``(d) Adjustment of Medicare Payment Rates for Other Services.--For 
purposes of payment for services under subsection (a)(2), the Secretary 
by regulation shall adjust the payment rates otherwise established 
under title XVIII to take into account--
            ``(1) differences between the population served under that 
        title and the population receiving benefits under State plans 
        and qualified employer health plans, and
            ``(2) such other appropriate factors as the Secretary deems 
        appropriate to assure the availability of quality health care 
        under such plans.
    ``(e) Treatment of Health Maintenance Organizations.--Subsection 
(a) shall not apply to a plan of an eligible organization (as defined 
in section 1876(b)) which provides for enrollee protections which are 
at least as great as the enrollee protections provided under section 
2265 (but without the application of section 2265(b)(5) or 
1876(c)(3)(B)).

``SEC. 2222. APPLICATION OF DEDUCTIBLE.

    ``(a) In General.--Except as provided in this section and part E, a 
State plan may provide for an annual deductible with respect to 
expenses for required health services of members of a family, but the 
amount of such deductible may not exceed $200 with respect to any 
family.
    ``(b) Deductible Does Not Apply to Preventive Care Services or 
Outreach and Optional Services.--The deductible established under 
subsection (a) may not be applied to preventive health services or to 
services provided under subsection (b) or (c) of section 2211.

``SEC. 2223. COINSURANCE FOR MAJOR MEDICAL SERVICES AND EXTENDED 
              MEDICAL SERVICES.

    ``(a) Coinsurance Rates.--Subject to subsection (b), section 2224, 
and part E, a State plan may require coinsurance with respect to 
payment for required health services, but the coinsurance percentage 
may not exceed--
            ``(1) 20 percent for major medical services, and
            ``(2) 30 percent for extended medical services.
    ``(b) No Coinsurance for Preventive Care Services or Outreach and 
Optional Services.--There shall be no coinsurance under this title in 
the case of preventive care services provided consistent with any 
applicable periodicity schedule or to services provided under 
subsection (b) or (c) of section 2211.

``SEC. 2224. LIMIT ON COST-SHARING FOR REQUIRED HEALTH SERVICES.

    ``(a) Limitation.--Whenever in a calendar year the expenses of 
family members for the deductible and coinsurance with respect to 
required health services under a State plan and furnished during the 
year equals $3,000, payment of benefits under the plan for the family 
members for required health services furnished during the remainder of 
the year shall be paid without the application of any coinsurance.
    ``(b) Crediting for Expenses Incurred under Qualified Employer 
Health Plans.--For provision relating to the accounting of cost-sharing 
incurred for required health services furnished under this title and 
the crediting under this title of cost-sharing incurred for such 
services furnished under other qualified health plans, see section 
2157(c).

``SEC. 2225. EXCLUSIONS.

    ``(a) In General.--Except as provided in this section, section 1862 
shall apply to expenses incurred for items and services provided under 
this title in the same manner as such section applies to items and 
services provided under title XVIII.
    ``(b) Preventive Services.--In the case of preventive services 
provided consistent with the applicable periodicity schedule--
            ``(1) such services shall be considered to be reasonable 
        and medically necessary, and
            ``(2) shall not be subject to exclusion through the 
        operation of paragraph (1), (7), or (12) of section 1862(a) (as 
        incorporated under paragraph (1)).
    ``(c) Use of Same National Coverage Decision Review Process.--The 
provisions of section 1869(b)(3) shall apply under this title in the 
same manner as they apply under title XVIII. Any determination under 
such title that, under subsection (a), would apply under this title 
shall not be subject to review under this subsection.

``SEC. 2226. APPLICATION OF PARTICULAR QUALIFIED HEALTH PLAN 
              REQUIREMENTS.

    ``Section 2152 (relating to treatment of family members as a unit; 
coverage period; and health plan cards) and section 2157 (relating to 
coordination and portability of health coverage under qualified health 
plans) shall apply to a State plan in the same manner as they apply to 
a qualified health plan.

    ``Part D--Premiums; Federal Children and Pregnant Women Health 
                          Insurance Trust Fund

``SEC. 2231. PREMIUMS.

    ``(a) Amount of Premiums.--
            ``(1) In general.--Except as provided in this section (and 
        section 2234 with respect to nonenrolling employer premiums), 
        the premium to be charged for enrollment under a State plan on 
        a non-employment basis of all covered individuals in a family 
        is such rate as the plan may establish. Such rate shall not 
        vary based on the age, sex, health status, or number of covered 
        individuals within a family, but may vary based on the 
        community (as defined in subsection (b)) in the State in which 
        the family is residing.
            ``(2) Credit for employment taxes paid for part-time and 
        seasonal or temporary employees.--
                    ``(A) In general.--Subject to subparagraph (C), in 
                the case of an individual who is a covered employee (as 
                defined in subparagraph (B)), the premium to be charged 
                for enrollment under this title on a non-employment 
                basis is--
                            ``(i) the rate otherwise applicable under 
                        paragraph (1), less the amount of the taxes 
                        paid by the individual and all employers with 
                        respect to the employee (and family members of 
                        the employee) under section 3151(a) of the 
                        Internal Revenue Code of 1986, or
                            ``(ii) 20 percent of such actuarial rate,
                whichever is greater.
                    ``(B) Covered employee defined.--In subparagraph 
                (A), the term `covered employee' means an individual--
                            ``(i) who is employed by one or more 
                        employers as a part-time employee or as a 
                        seasonal or temporary employee, and
                            ``(ii) none of whose employers is enrolling 
                        part-time employees or seasonal or temporary 
                        employees, respectively, under a qualified 
                        employer health plan, but all of which are 
                        required to pay a tax with respect to such 
                        employees under section 3151(a)(1) of the 
                        Internal Revenue Code of 1986,
                and includes eligible individuals who are family 
                members of such an employee.
                    ``(C) Limit on premium where premium subsidy.--In 
                no case shall the premium under subparagraph (A) 
                exceed--
                            ``(i) the rate otherwise applicable under 
                        paragraph (1), reduced by
                            ``(ii) the amount of any premium subsidy 
                        under part E.
    ``(b) Community.--For purposes of this section, the term 
`community' means a geographic area designated by the Secretary as--
            ``(1) encompassing one or more adjacent metropolitan 
        statistical areas, or
            ``(2) the remaining area within each State (that is not 
        designated within any community under paragraph (1));
except that the Secretary may designate an entire State as a community 
if such a designation would better carry out the purposes of this title 
and title XXIII. The Secretary from time to time may change the 
boundaries of communities designated under paragraph (1) or (2) for 
such purposes. There shall be no administrative or judicial review of 
the designation of communities under this subsection.

``SEC. 2232. COLLECTION OF PREMIUMS.

    ``(a) Individual Enrollment.--
            ``(1) In general.--In the case of individuals enrolled on a 
        non-employment basis under a State plan, the State plan shall 
        require for the payment of premiums on a monthly or quarterly 
        basis. To the maximum extent feasible, the State plan shall 
        arrange for payment of such premiums through automatic 
        withholding from income sources or accounts with financial 
        institutions.
            ``(2) Collection of unpaid premiums.--
                    ``(A) Transmission of information to secretary of 
                the treasury.--In the case of premium amounts owing and 
                unpaid under this subsection, the State shall inform 
                the Secretary, who shall inform the Secretary of the 
                Treasury of the individuals owing such amounts and the 
                amounts owed.
                    ``(B) Collection.--The Secretary of the Treasury 
                shall assess and collect the amounts referred to in 
                subparagraph (A) in the same manner as taxes imposed by 
                subtitle C of the Internal Revenue Code of 1986.
    ``(b) Nonenrolling Employer Premiums.--
            ``(1) In general.--In the case of nonenrolling employer 
        premiums owed under section 2234, the applicable State plan 
        shall require the payment of premiums on a monthly or quarterly 
        basis.
            ``(2) Collection of unpaid premiums.--
                    ``(A) Transmission of information to secretary of 
                the treasury.--In the case of premium amounts owing and 
                unpaid under this subsection, the State shall inform 
                the Secretary, who shall inform the Secretary of the 
                Treasury of the employers owing such amounts and the 
                amounts owed.
                    ``(B) Collection.--The Secretary of the Treasury 
                shall assess and collect the amounts referred to in 
                subparagraph (A) in the same manner as taxes imposed by 
                subtitle C of the Internal Revenue Code of 1986.
    ``(c) Deposit.--Premiums collected under this section by the 
Secretary of the Treasury shall be credited to the State plan to which 
the premiums are owing.

``SEC. 2233. FEDERAL CHILDREN AND PREGNANT WOMEN HEALTH INSURANCE TRUST 
              FUND.

    ``(a) Establishment.--
            ``(1) In general.--There is hereby created on the books of 
        the Treasury of the United States a trust fund to be known as 
        the `Federal Children and Pregnant Women Health Insurance Trust 
        Fund' (in this section referred to as the `Trust Fund'). The 
        Trust Fund shall consist of such gifts and bequests as may be 
        made as provided in paragraph (3) and such amounts as may be 
        deposited in, or appropriated to, the Trust Fund as provided in 
        this part.
            ``(2) Deposit of taxes.--There are hereby appropriated to 
        the Trust Fund amounts equivalent to 100 percent of the taxes 
        imposed by--
                    ``(A) part VIII of subchapter A of chapter 1 of the 
                Internal Revenue Code of 1986, and
                    ``(B) sections 3151, 5000A, and 5000B of such Code.
        The amounts appropriated by the preceding sentence shall be 
        transferred from time to time from the general fund in the 
        Treasury to the Trust Fund, such amounts to be determined on 
        the basis of estimates by the Secretary of the Treasury of the 
        taxes, paid to or deposited into the Treasury; and proper 
        adjustments shall be made in amounts subsequently transferred 
        to the extent prior estimates were in excess of or were less 
        than the taxes specified in such sentence.
            ``(3) Authorization to accept gifts.--The Managing Trustee 
        of the Trust Fund is authorized to accept on behalf of the 
        United States money gifts and bequests made unconditionally to 
        the Trust Fund, for the benefit of the Trust Fund, or any 
        activity financed through the Trust Fund.
    ``(b) Incorporation of Provisions.--
            ``(1) In general.--Subject to paragraph (2), the provisions 
        of subsections (b) through (j) of section 1817 shall apply to 
        the Trust Fund in the same manner as they apply to the Federal 
        Hospital Insurance Trust Fund.
            ``(2) Exceptions.--In applying paragraph (1)--
                    ``(A) the Board of Trustees and Managing Trustee of 
                the Trust Fund shall be composed of the members of the 
                Board of Trustees and the Managing Trustee, 
                respectively, of the Federal Hospital Insurance Trust 
                Fund; and
                    ``(B) any reference in section 1817 to the Federal 
                Hospital Insurance Trust Fund, to title XVIII (or part 
                A thereof), or (in subsection (f)(1)) to section 
                3102(b) of the Internal Revenue Code of 1986 is deemed 
                a reference to the Trust Fund under this section, this 
                title, and to section 3151(a)(2) of such Code, 
                respectively.

``SEC. 2234. TRANSFER PAYMENTS IN THE CASE OF MULTIPLE EMPLOYERS.

    ``(a) Treatment of Multiple Employment Where Employee Covered Under 
a Qualified Employer Health Plan.--
            ``(1) In general.--In the case of a multiple-employed 
        individual (as defined in subsection (d)(1)) who is covered 
        under a qualified employer health plan of an employer--
                    ``(A) each nonenrolling employer (as defined in 
                subsection (d)(2)) that offers coverage under a 
                qualified employer health plan shall pay to the State 
                plan in which the individual resides the nonenrolling 
                employer premium specified in subsection (b);
                    ``(B) the enrolling employer is entitled to receive 
                from such State plan the enrolling employer subsidy 
                specified in subsection (c); and
                    ``(C) there will be no tax imposed on the wages of 
                the individual under section 3151(a)(2) of the Internal 
                Revenue Code of 1986 with respect to wages paid during 
                the period of such coverage.
            ``(2) Application on a monthly basis.--The premiums and 
        subsidies provided under this subsection shall be paid with 
        respect to a monthly period of coverage.
    ``(b) Amount of Nonenrolling Employer Premium.--
            ``(1) In general.--The amount of the nonenrolling employer 
        premium described in this subsection is the applicable percent 
        (as defined in paragraph (2)) of the rate (established under 
        section 2231(a)) applicable to the employee in the State in 
        which the employee resides.
            ``(2) Applicable percent defined.--For purposes of 
        paragraph (1), the term `applicable percent' means, with 
        respect to an employee who is--
                    ``(A) a full-time employee of the employer, 40 
                percent, or
                    ``(B) a part-time employee of the employer, 20 
                percent.
    ``(c) Amount of Enrolling Employer Subsidy.--
            ``(1) In general.--The amount of the enrolling employer 
        subsidy described in this subsection is the applicable percent 
        (as defined in paragraph (2)) of the rate (established under 
        section 2231(a)) applicable to the employee in the State in 
        which the employee resides.
            ``(2) Applicable percent defined.--For purposes of 
        paragraph (1), the term `applicable percent' means, with 
        respect to a multiple-employed employee who (or whose spouse) 
        is--
                    ``(A) a full-time employee of a nonenrolling 
                employer, 40 percent, or
                    ``(B) not a full-time employee of a nonenrolling 
                employer, but is a part-time employee of a nonenrolling 
                employer, 20 percent;
        except that in no case shall the applicable percent with 
        respect to a multiple-employed employee (including the 
        employee's spouse) exceed 40 percent.
    ``(d) Definitions.--In this section:
            ``(1) Multiple-employed individual.--The term `multiple-
        employed individual' means an individual who in a month is an 
        employee (whether part-time or full-time) and--
                    ``(A) who is also employed (whether part-time or 
                full-time) by 1 or more other employer, or
                    ``(B) whose spouse or parent is also an employee 
                (whether part-time or full-time) of 1 or more 
                employers.
            ``(2) Nonenrolling employer.--The term `nonenrolling 
        employer' means, with respect to a multiple-employed individual 
        who is enrolled under a qualified employer health plan of an 
        employer, any employer of such individual other than such 
        employer.

``SEC. 2235. USE OF UNIFORM CLAIMS FORMS.

    ``Each State plan shall provide for submission of claims under the 
plan based on uniform claims forms developed by the Secretary (after 
consultation with insurers and States).

``SEC. 2236. PAYMENTS TO STATES.

    ``(a) In General.--Each State which has in effect a State plan that 
meets the requirements of this title is entitled to receive from the 
Federal Children and Pregnant Women Health Insurance Trust Fund a 
quarterly amount equal to the sum of the amounts described in 
subsections (b)(1) and (c)(1).
    ``(b) Payment for Required Health Services.--
            ``(1) In general.--The amounts described in this 
        subparagraph is 100 percent of the amount expended during the 
        quarter under the State plan for required health services 
        (other than administrative expenses), less the amounts 
        specified in paragraphs (2) and (3).
            ``(2) State maintenance of effort amount.--The amount 
        specified in this paragraph for a State for a quarter in a 
        fiscal year is \1/4\ of the amount of expenditures (net of 
        Federal payments) that would have been made for required health 
        benefits for eligible individuals under title XIX during the 
        fiscal year if this title were not in effect in the year. The 
        Secretary shall annually determine, for each State, the amount 
        specified under the preceding sentence and shall take into 
        account inflation in the provision of required health services 
        that has occurred.
            ``(3) Premiums collected.--The amount specified in this 
        paragraph for a State for a quarter is the amount of premiums 
        collected under the State plan in the quarter.
    ``(c) Payment for Outreach and Optional Services and Administrative 
Costs.--
            ``(1) In general.--The amount described in this paragraph 
        is the percentage (specified in paragraph (2)) of the 
        expenditures under the plan for other than required health 
        services as found necessary by the Secretary to carry out the 
        provision of this title and for the proper and efficient 
        administration of the State plan.
            ``(2) Federal matching rate.--The percentage specified in 
        this paragraph for a State is the sum of--
                    ``(A) the percentage that would apply to the class 
                of expenses under section 1903(a) (as in effect on the 
                date of the enactment of this title), and
                    ``(B) for calendar quarters in--
                            ``(i) 1995 or 1996, 10 percent,
                            ``(ii) 1997, 7.5 percent,
                            ``(iii) 1998, 5 percent, or
                            ``(iv) 1999, 2.5 percent.
    ``(d) Payment Rules.--Payments to States under this section shall 
be made in accordance with rules similar to the rules provided under 
section 1903 for payments to States with plans under title XIX.

            ``Part E--Assistance for Low-Income Individuals

``SEC. 2241. ASSISTANCE FOR INDIVIDUALS ENROLLED ON A NON-EMPLOYMENT 
              BASIS.

    ``(a) Individuals with Income Below 133 Percent of Poverty Level 
.--Except as otherwise provided in this section, in the case of an 
individual--
            ``(1) who is enrolled under a State plan on a non-
        employment basis, and
            ``(2) whose family adjusted total income (as defined in 
        section 2246(2)) does not exceed 133 percent of the official 
        poverty line (as defined in section 2282(5)),
the State plan shall waive the premiums imposed under section 2231(a) 
and any deductible or coinsurance under the plan for the individual and 
the individual's family.
    ``(b) Pregnant Women and Infants Below 185 Percent of Poverty 
Level.--In the case of a pregnant woman or child under 1 year of age--
            ``(1) who is enrolled under a State plan on a non-
        employment basis, and
            ``(2) whose family adjusted total income (as defined in 
        section 2246(2)) does not exceed the percentage (established by 
        the State under section 1902(l)(2)(A)(i) as of the date of the 
        enactment of this title) of the official poverty line (as 
        defined in section 2282(5)),
the State plan shall waive any deductible or coinsurance under the plan 
for such individual. In addition, in the case of individuals described 
in the previous sentence, a State plan may provide for a reduction in 
the premium otherwise established (taking into account the reduction 
required under subsection (c)).
    ``(c) Individuals with Income Below 400 Percent of Poverty.--In the 
case of an individual not described in subsection (a), who is enrolled 
under this title on a non-employment basis, and whose family adjusted 
total income is less than 400 percent of the official poverty line, the 
State plan shall provide for reductions in premiums, deductibles, and 
coinsurance as follows:
            ``(1) Premiums reduction for individuals with income below 
        400 percent of poverty.--The premium amount under section 
        2231(a) shall be reduced by the premium subsidy percentage (as 
        defined in subsection (c)(1)(B)) of the premium amount 
        otherwise applied. Any reduction in premium under this 
        paragraph shall be rounded to the nearest multiple of $5.
            ``(2) Reduction in deductible for individuals with income 
        below 200 percent of poverty.--If the individual is not 
        described in subsection (b), the deductible under section 2222 
        shall be reduced by the general subsidy percentage (as defined 
        in subsection (d)(2)) of the deductible otherwise applied. Any 
        reduction in a deductible under this paragraph shall be rounded 
        to the nearest multiple of $10.
            ``(3) Reduction in coinsurance for individuals with income 
        below 200 percent of poverty.--If the individual is not 
        described in subsection (b), the percentage coinsurance applied 
        under section 2223 shall be reduced by the general subsidy 
        percentage multiplied by the percentage coinsurance otherwise 
        applied. In applying this paragraph, the general subsidy 
        percentage shall be rounded to the nearest multiple of 5 
        percent.
    ``(d) Definitions.--In this section and section 2242--
            ``(1) General subsidy percentage.--The term `general 
        subsidy percentage' means the number of percentage points by 
        which the family's adjusted total income (expressed as a 
        percent of the applicable official poverty line) is less than 
        200 percent. If such income is equal to or greater than 200 
        percent of the applicable official poverty line, the general 
        subsidy percentage shall be 0.
            ``(2) Premium subsidy percentage.--The term `premium 
        subsidy percentage' means the ratio (expressed as a percentage) 
        of--
                    ``(A) 400 percent minus the family's adjusted total 
                income (expressed as a percent of the applicable 
                official poverty line), to
                    ``(B) 267 percent.

``SEC. 2242. ASSISTANCE FOR INDIVIDUALS COVERED UNDER QUALIFIED 
              EMPLOYER HEALTH PLANS.

    ``(a) In General.--In the case of an eligible individual who is 
enrolled under a qualified employer health plan or under a State plan 
on an employment basis, the State plan shall provide for--
            ``(1) payment (in a manner specified by the Secretary) of 
        the amount of the premium subsidy under subsection (b) to the 
        individual or another family member, or, in the case described 
        in subsection (b)(1)(D), the employer, and
            ``(2) in the case of a qualified employer health plan, 
        payment to the qualified employer health plan of the amount of 
        the deductible and coinsurance subsidy under subsection (c) or, 
        in the case of the State plan, a reduction in the deductible 
        and coinsurance amounts otherwise established in the amount 
        specified under section 2241.
Such subsidies shall apply to premiums, deductibles, and coinsurance 
for the individual and family member covered on an employment basis 
under the employer plan or under the State plan.
    ``(b) Premium Subsidy.--
            ``(1) Treatment under qualified employer health plan.--In 
        the case of an eligible individual who is enrolled under a 
        qualified employer health plan--
                    ``(A)  Amount.--The amount of the premium subsidy 
                under this subsection is the premium subsidy percentage 
                (as defined in section 2241(d)(2)) of the employee 
                share of the premium. Any premium subsidy under this 
                paragraph which is not a multiple of $5 shall be 
                rounded to the nearest multiple of $5.
                    ``(B) Use of least expensive qualified plan.--In 
                applying subparagraph (A), the amount of the premium 
                subsidy shall be based on the qualified employer health 
                plan available to the employee with the smallest 
                premium payment required of the employee.
                    ``(C) Frequency of payment.--Except as provided in 
                subparagraph (D), the premium subsidy under this 
                subsection shall be paid not less frequently than 
                quarterly or, if the amount of the premium subsidy on a 
                monthly basis exceeds $20, monthly.
                    ``(D) Optional, direct coordination with 
                employers.--In the case of an employee--
                            ``(i) who is enrolled under a qualified 
                        employer health plan,
                            ``(ii) who is entitled to assistance under 
                        this part,
                            ``(iii) whose employer agrees to enter into 
                        an arrangement with the State plan under this 
                        subparagraph, and
                            ``(iv) who assigns (in the manner specified 
                        by the Secretary) rights to premium subsidies 
                        under this subsection to the employer,
                the State shall enter into an arrangement with the 
                employer under which (I) the employer agrees to reduce 
                premiums otherwise imposed with respect to the 
                individual by the amount of the subsidy, and (II) the 
                State agrees to make payment (not less often than 
                monthly) to the employer of the amount of such premium 
                subsidy.
            ``(2) Treatment under state plan.--In the case of an 
        eligible individual who is enrolled on an employment basis 
        under a State plan--
                    ``(A) Amount.--The amount of the premium subsidy 
                under this subsection is the premium subsidy percentage 
                (as defined in section 2241(d)(2)) of the taxes paid 
                under section 3151(a)(2) of the Internal Revenue Code 
                of 1986.
                    ``(B) Frequency of payment.--The premium subsidy 
                under this subsection shall be paid not less frequently 
                than quarterly or, if the amount of the premium subsidy 
                on a monthly basis exceeds $20, monthly.
    ``(c) Deductible and Coinsurance Subsidy.--
            ``(1) Deductible subsidy amount.--The amount of the 
        deductible subsidy under this subsection is the general subsidy 
        percentage (as defined in section 2241(d)(1)) of the deductible 
        otherwise applied. Any deductible subsidy under this paragraph 
        that is not a multiple of $10 shall be rounded to the nearest 
        multiple of $10.
            ``(2) Coinsurance subsidy amount.--The amount of the 
        coinsurance subsidy under this subsection is the product of the 
        general subsidy percentage, the percentage coinsurance 
        otherwise applied, and the payment amount permitted for 
        required health services. In applying this paragraph, the 
        general subsidy percentage shall be rounded to the nearest 
        multiple of 5 percent.
            ``(3) Direct coordination by qualified employer health plan 
        required.--In the case of an individual enrolled under a 
        qualified employer health plan, the plan shall provide for--
                    ``(A) acceptance of information, electronically, 
                from the State on the amount of the deductible and 
                coinsurance subsidy for individuals (and family 
                members),
                    ``(B) a reduction in the deductibles and 
                coinsurance otherwise imposed to reflect the deductible 
                and coinsurance subsidies to which the individual and 
                family members are entitled,
                    ``(C) reasonably prompt payment of bills for which 
                such charges have been made, and
                    ``(D) transmission of such information as is 
                necessary to indicate the amount of the deductible and 
                coinsurance subsidies provided under the plan for 
                specified individuals.
        In return, the State plan shall provide for payment, not less 
        often than monthly, to the qualified employer health plan of 
        the amount of payments made by the qualified employer health 
        plan for deductible and coinsurance subsidies under this 
        subsection.

``SEC. 2243. APPLICATIONS FOR ASSISTANCE.

    ``(a) In General.--Subject to section 2245, any individual who 
seeks assistance under this part (with respect to himself or herself or 
a family member) shall submit a written application, by person or mail, 
to the State plan in the State in which the individual (for whom the 
assistance is sought) is residing. The application may be submitted 
with an application to enroll under the State plan or separately.
    ``(b) Basis for Determination.--Subject to section 2245 and 
reconciliation under section 2244, eligibility for assistance under 
this part shall be based on 4 times the family adjusted total income 
(as defined in section 2246(2)) during the 3 months preceding the month 
in which the application is filed.
    ``(c) Form and Contents.--An application for assistance under this 
part shall be in a form and manner specified under the State plan 
(consistent with guidelines established by the Secretary) and shall 
require--
            ``(1) the provision of information necessary to make the 
        determinations described in subsection (b),
            ``(2) the provision of information respecting any qualified 
        employer health plan in which the individual is enrolled, and
            ``(3) the individual (if enrolled under such a plan) to 
        assign rights for deductible and coinsurance subsidies under 
        this part to such plan.
Such form also shall include an option to execute, as part of 
completing the form and in order to meet the condition described in 
section 2242(b)(1)(D)(iv), an assignment of an individual's right for 
premium subsidies under this part to an employer.
    ``(d) Frequency of Applications.--
            ``(1) In general.--An application for assistance under this 
        part may be filed at any time during the year and may be 
        resubmitted (but, except as provided in paragraph (3), not more 
        frequently than once every 3 months) based upon a change of 
        income or family composition.
            ``(2) Need to reapply.--In the case of an individual who--
                    ``(A) is entitled to assistance under this section 
                in September of a year, and
                    ``(B) wishes to remain eligible for benefits for 
                months beginning with January of the following year,
        the individual (or a family member) must file with the State 
        plan in October of that preceding year a new application for 
        assistance. If an individual fails to file a new application 
        under this paragraph, an application for such assistance with 
        respect to any family member may not be filed during November 
        or December of that preceding year.
            ``(3) Correction of income.--Nothing in paragraph (1) shall 
        be construed as preventing an individual or family from, at any 
        time, submitting an application to reduce the amount of 
        assistance under this part based upon an increase in income 
        from that stated in the previous application.
    ``(e) Timing of Assistance.--
            ``(1) In general.--If an application for assistance under 
        this part is filed--
                    ``(A) on or before the 15th day of a month, 
                assistance under this part shall be available for 
                premiums for months after such month and, with respect 
                to the deductible and coinsurance, for expenses 
                incurred after such month; or
                    ``(B) after the 15th day of a month, assistance 
                under this part shall be available for premiums for 
                months after the month following such month and, with 
                respect to the deductible and coinsurance, for expenses 
                incurred after such following month.
            ``(2) Welfare recipients.--In the case of an individual or 
        family with respect to whom an application for assistance is 
        not required because of section 2245, in applying paragraph 
        (1), the date of approval of aid or benefits described in such 
        section shall be considered the date of filing of an 
        application for assistance under this part.
    ``(f) Verification.--Each State plan shall provide (consistent with 
guidelines of the Secretary) for verification, on a sample basis or 
other basis, of the information supplied in applications under this 
part. This verification shall be separate from the reconciliation 
provided under section 2244.
    ``(g) Help in Completing Applications.--Each State plan shall 
provide for grants to public or private nonprofit entities that will 
make available assistance to individuals and families in filing 
applications for assistance under this part. Each plan shall make 
grants in a manner that provides such assistance at a variety of sites 
(such as low-income housing projects and shelters for homeless 
individuals) that are readily accessible to individuals and families 
eligible for assistance under this part. The amounts paid under such 
grants shall be considered, for purposes of section 2236(c)(1), to be 
expenses reasonably required in the administration of this title.
    ``(h) Penalties for Inaccurate Information.--
            ``(1) Interest for understatements.--Each individual who 
        knowingly understates income reported in an application for 
        assistance under this part or otherwise makes a material 
        misrepresentation of information in such an application shall 
        be liable to the State plan for excess payments made based on 
        such understatement or misrepresentation, and for interest on 
        such excess payments at a rate specified by the Secretary.
            ``(2) Penalties for misrepresentation.--In addition to any 
        penalty under paragraph (1), each individual who knowingly 
        misrepresents material information in an application for 
        assistance under this part shall be liable to the State plan 
        for $1,000 or, if greater, three times the excess payments made 
        based on such misrepresentation.
    ``(i) Filing of Application Defined.--Except as provided in 
subsection (e)(2), for purposes of this part, an application under this 
part is considered to be `filed' on the date on which the complete 
application, including all documentation required to act on the 
application, has been filed with the State plan.

``SEC. 2244. RECONCILIATION OF PREMIUM ASSISTANCE THROUGH USE OF INCOME 
              STATEMENTS.

    ``(a) Requirement for Filing of Income Statement.--Subject to 
section 2245, in the case of a family which is receiving low-income 
assistance under this part for any month in a year, a member of the 
family shall file with the State plan, by not later than April 15 of 
the following year, a statement that verifies the family's total 
adjusted family income for the taxable year ending during the previous 
year. Such a statement shall provide information necessary to determine 
the family adjusted total income during the year and the number of 
family members in the family as of the last day of the year.
    ``(b) Reconciliation of Premium Assistance Based on Actual 
Income.--Based on and using the income reported in the statement filed 
under subsection (a) with respect to a family or individual, subject to 
section 2245, each State plan shall compute the amount of assistance 
that should have been provided under this part with respect to premiums 
for the family in the year involved. If the amount of such assistance 
computed is--
            ``(1) greater than the amount of premium assistance 
        provided, the State plan shall provide for payment (directly or 
        through a credit against future premiums owed) to the family or 
        individual involved of an amount equal to the amount of the 
        deficit, or
            ``(2) less than the amount of assistance provided, the 
        State plan shall require the family or individual to pay 
        (directly or through an increase in future premiums owed) to 
        the plan an amount equal to the amount of the excess payment.
    ``(c) Disqualification for Failure to File.-- Subject to section 
2245, in the case of any family that is required to file an information 
statement under subsection (a) in a year and that fails to file such a 
statement by the deadline specified in such subsection, no member of 
the family shall be eligible for assistance under this part after May 1 
of such year. A State plan shall waive the application of this 
subsection if the family establishes, to the satisfaction of the State, 
good cause for the failure to file the statement on a timely basis.
    ``(d) Penalties for False Information.--Any individual that 
provides false information in a statement under subsection (a) is 
subject to a criminal penalty to the same extent as a criminal penalty 
may be imposed under section 1128B(a) with respect to a person 
described in clause (ii) of such section.
    ``(e) Notice of Requirement.--Each State plan shall provide for 
written notice, in March of each year, of the requirement of subsection 
(a) to each family which received assistance under this part in any 
month during the preceding year and to which such requirement applies.
    ``(f) Transmittal of Information.--The Secretary of the Treasury 
shall transmit annually to the Secretary such information relating to 
the adjusted total income of individuals for the taxable year ending in 
the previous year as may be necessary for State plans to verify the 
reconciliation of assistance under this section. The Secretary shall 
provide for transmission of such information to State plans for their 
use in performing such reconciliation.
    ``(g) Construction.--Nothing in this section shall be construed as 
authorizing reconciliation of assistance provided with respect to 
deductibles and coinsurance.

``SEC. 2245. TREATMENT OF CERTAIN CASH ASSISTANCE RECIPIENTS.

    ``In the case of a family that has been determined to be eligible 
for aid under part A or E of title IV or an individual who has been 
determined to be eligible for supplemental security income benefits 
under title XVI--
            ``(1) the family or individual is deemed, without the need 
        to file an application for assistance under section 2243, to 
        have adjusted total income below 100 percent of the official 
        poverty line applicable to a family of the size involved,
            ``(2) the family or individual need not file a statement 
        under section 2244(a), and
            ``(3) the assistance received by the family or individual 
        is not subject to reconciliation under section 2244(b).

``SEC. 2246. COMPUTATION OF FAMILY ADJUSTED TOTAL INCOME.

    ``In this part:
            ``(1) Adjusted total income.--The term `adjusted total 
        income' means--
                    ``(A) adjusted gross income (as defined in section 
                62(a) of the Internal Revenue Code of 1986), determined 
                without the application of paragraphs (6) and (7) of 
                such section and without the application of section 
                162(l) of such Code, plus
                    ``(B) the amount of social security benefits 
                (described in section 86(d) of such Code) which is not 
                includable in gross income under section 86 of such 
                Code.
            ``(2) Family adjusted total income.--The term `family 
        adjusted total income' means, with respect to an individual, 
        the sum of the adjusted total income for the individual and all 
        the other family members.

                  ``Part F--Administrative Provisions

``SEC. 2261. GENERAL ADMINISTRATION THROUGH INSURANCE COMPANIES.

    ``(a) In General.--Except as otherwise provided in this part, each 
State shall provide, to the maximum extent practicable, for the 
administration of the State plan under this title through arrangements 
with at least 2 insurance companies, or, if there are not 2 qualified 
insurance companies able to administer the plan in the State, 1 such 
insurance company. Nothing in this section shall be construed as 
preventing or prohibiting States in a region from jointly contracting 
with 2 or more insurance companies to administer the State plans of the 
several States in the region.
    ``(b) Outreach and Optional Services.--Each State shall provide 
directly for the administration of the State plan with respect to--
            ``(1) the provision of, or payment for, outreach services 
        under section 2212(b), and
            ``(2) the provision of, or payment for, optional services 
        under section 2212(c).
    ``(c) Low Income Assistance.--Each State shall provide for the 
determination of low-income assistance under part E to be made by 
entities, specifically designated by the State, that are independent of 
such insurance companies and that will assure the confidentiality of 
information provided in conjunction with obtaining such assistance.

``SEC. 2262. QUALITY ASSURANCE.

    ``(a) In General.--Each State plan shall provide for the 
application of methods that assure the quality of the services provided 
under the plan.
    ``(b) Peer Review.--Such methods shall include--
            ``(1) peer review of professional services, and
            ``(2) such other methods as the Secretary finds cost-
        effective in order to reduce unnecessary tests and procedures.

``SEC. 2263. BENEFICIARY CLAIMS SAFEGUARDS.

    ``(a) Notice of Claims Denials.--Each State plan shall provide an 
individual with written notice concerning the denial of a claim 
submitted by the individual under the plan. Such notice shall include 
the reasons for the denial.
    ``(b) Process for Review.--Each State plan shall use a fair process 
for the timely review of claims denied under the plan.
    ``(c) Claim for Care Needed for Life-Threatening Illness.--In cases 
in which the failure to provide required health services promptly would 
be life-threatening or result in a risk of permanent disability of an 
individual enrolled under a State plan, the individual is entitled to a 
decision as to whether benefits are available under the plan with 
respect to such services not later than 1 day after supplying the State 
plan with all requested information. In the event of a denial of 
coverage for such services, the individual shall be entitled to an 
expedited review of an appeal of such denial within 5 days.
    ``(d) Appeals.--Each individual is entitled to appeal the denial of 
a claim submitted by the individual under the State plan. The Secretary 
shall promulgate regulations establishing procedures to be utilized for 
appealing denials of claims under this title that are similar to the 
procedures established under title XVIII for appealing denials of 
claims under such title.

``SEC. 2264. ADMINISTRATIVE EFFICIENCY STANDARDS.

    ``Each State plan shall be administered in a manner consistent with 
administrative efficiency and simplicity, in accordance with standards 
specified by the Secretary. Such standards shall incorporate goals for 
the reduction of administrative waste and duplication.

``SEC. 2265. HEALTH MAINTENANCE ORGANIZATIONS.

    ``(a) In General.--Except as provided in this section, section 1876 
shall apply to individuals enrolled under a State plan in the same 
manner as such section applies to individuals entitled to benefits 
under part A, and enrolled under part B, of title XVIII.
    ``(b) Application.--In applying section 1876 under this section--
            ``(1) the provisions of such section relating only to 
        individuals enrolled under part B of title XVIII shall not 
        apply;
            ``(2) any reference to a Trust Fund established under title 
        XVIII and to benefits with respect to any services under such 
        title is deemed a reference to the Federal Children and 
        Pregnant Women Health Insurance Trust Fund and to health 
        insurance benefits with respect to required health services 
        under this title;
            ``(3) the adjusted average per capita cost shall be 
        determined on the basis of benefits under this title;
            ``(4) subsections (f) and (h) of such section shall not 
        apply;
            ``(5) in applying subsection (c)(3)(B) of such section, an 
        eligible organization may require a minimum period of 
        enrollment (of not greater than 6 months) during which an 
        individual may not disenroll other than for cause or unless 
        enrollment under this title is terminated; and
            ``(6) the Secretary shall establish such rules as may be 
        necessary to apply such section to different State plans.

``SEC. 2266. PROGRAM INTEGRITY; MISCELLANEOUS PROVISIONS.

    ``Sections 1124, 1124A, 1126, and 1128 through 1128B (relating to 
fraud and abuse) shall apply to this title in the same manner as they 
apply to title XIX.

``SEC. 2267. DEMONSTRATION PROJECT AUTHORITY.

    ``(a) Demonstration Project Authority.--
            ``(1) In general.--Subject to the approval of the 
        Secretary, States are authorized to conduct demonstration 
        projects--
                    ``(A) to improve the delivery and quality of health 
                care services under this title, and
                    ``(B) to increase the efficiency and effectiveness 
                of methods of payment for such services.
        Subject to paragraph (2), the Secretary may waive such 
        requirements of this title as may be necessary to carry out 
        such demonstration projects.
            ``(2) Limitation.--The Secretary does not have the 
        authority under paragraph (1)--
                    ``(A) to reduce the benefits available under part 
                B, or
                    ``(B) to increase the deductible or coinsurance 
                under part C.
            ``(3) Funding.--Grants, payments under contracts, and other 
        expenditures made for demonstration projects under this 
        subsection--
                    ``(A) shall be made from the Federal Children and 
                Pregnant Women Health Insurance Trust Fund,
                    ``(B) may be made either in advance or by way of 
                reimbursement, as may be determined by the Secretary, 
                and
                    ``(C) shall be made in such installments and on 
                such conditions as the Secretary finds necessary to 
                carry out the purpose of this subsection.
    ``(b) Construction.--Except as provided in subsection (a), the 
Secretary is not authorized to waive any requirement of this title.

                ``Part G--Definitions and Miscellaneous

``SEC. 2281. INCORPORATION OF CERTAIN DEFINITIONS USED IN OTHER HEALTH-
              RELATED TITLES.

    ``(a) Incorporation of Medicare Definitions.--In this title, the 
definitions contained in section 1861 apply for purposes of this title 
in the same manner as they apply for purposes of title XVIII.
    ``(b) Incorporation of Certain Employment-Related Definitions in 
Title XXI.--In this title, except as otherwise provided, the 
definitions of the following terms contained in title XXI apply for 
purposes of this title:
            ``(1) Employee.--The term `employee' as defined in section 
        2181(a)(3).
            ``(2) Full-time employee.--The term `full-time employee' as 
        defined in section 2181(b)(1).
            ``(3) Part-time employee.--The term `part-time employee' as 
        defined in section 2181(b)(2).
            ``(4) Qualified employer health plan.--The term `qualified 
        employer health plan' as defined in section 2121(a).
            ``(5) Seasonal or temporary employee.--The term `seasonal 
        or temporary employee' as defined in section 2181(b)(3).
            ``(6) Wages.--The term `wages' as defined in section 
        2181(a)(1).

``SEC. 2282. OTHER DEFINITIONS.

    ``In this title:
            ``(1) Child.--The term `child' means, with respect to a 
        person who is not a child, an individual--
                    ``(A) who under 22 years of age;
                    ``(B)(i) who is the child of the person or the 
                person's spouse, or
                    ``(ii) who is the legal ward of the person or the 
                person's spouse; and
                    ``(C) who is not in the legal custody of another 
                individual.
        The Secretary shall establish, by regulation, such rules as are 
        appropriate with respect to the treatment of foster children, 
        emancipated minors, children in the process of adoption, and 
        other unmarried individuals under 22 years of age under similar 
        circumstances as children for purposes of this title.
            ``(2) Eligible individual.--The term `eligible individual' 
        means an individual who--
                    ``(A) is a pregnant woman or child, and
                    ``(B) is (i) a citizen or national of the United 
                States, (ii) an alien lawfully admitted for permanent 
                residence, or (iii) an alien otherwise residing 
                permanently in the United States under color of law.
            ``(3) Family; family member.--The terms `family' and 
        `family member' mean an individual and the individual's spouse, 
        and includes all the individual's children.
            ``(4) Federal health plan.--The term `Federal health plan' 
        means a health plan of, or contributed to by, the Federal 
        Government on behalf of its employees, retirees, and their 
        family members, and includes--
                    ``(A) the Federal employees health insurance 
                program under chapter 89 of title 5, United States 
                Code,
                    ``(B) the program for the provision of medical and 
                dental benefits under chapter 55 of title 10, United 
                States Code, and
                    ``(C) the program for the provision of hospital 
                care and medical services by the Department of Veterans 
                Affairs under chapter 17 of title 38, United States 
                Code.
            ``(5) Official poverty line.--The term `official poverty 
        line' means, for an individual in a family, the official 
        poverty line (as defined by the Office of Management and 
        Budget, and revised annually in accordance with section 673(2) 
        of the Omnibus Budget Reconciliation Act of 1981) applicable to 
        a family of the size involved.
            ``(6) Pregnant woman.--The term `pregnant woman' means a 
        woman--
                    ``(A) beginning on the date of verification of 
                pregnancy (as determined in a manner specified by the 
                Secretary), and
                    ``(B) ending on the last day of the month in which 
                the 60-day period (beginning on the date of the 
                termination of the pregnancy) ends.
            ``(7) Spouse.--The term `spouse' means, with respect to an 
        individual, the individual to which the individual is married. 
        Marital status shall be determined in accordance with section 
        7703 of the Internal Revenue Code of 1986.

``SEC. 2283. NONAPPLICATION TO RESIDENTS OF PUERTO RICO AND 
              TERRITORIES.

    ``The provisions of this title shall not apply to an individual who 
is not a resident of one of the 50 States or the District of 
Columbia.''.

SEC. 202. COORDINATION BETWEEN STATE CHILDREN AND PREGNANT WOMEN HEALTH 
              PLANS AND MEDICAID PLANS.

    (a) In General.--
            (1) Limiting federal financial participation for services 
        covered under state children and pregnant women health plans.--
        Section 1903(i) of the Social Security Act (42 U.S.C. 1396b(i)) 
        is amended--
                    (A) in the paragraph (10) inserted by section 
                4401(a)(1)(B) of Omnibus Budget Reconciliation Act of 
                1990, by striking all that follows ``1927(g)'' and 
                inserting a semicolon;
                    (B) by redesignating the paragraph (10) added by 
                section 4701(b)(2) as paragraph (11), by transferring 
                and inserting it after the paragraph (10) inserted by 
                section 4401(a)(1)(B) of Omnibus Budget Reconciliation 
                Act of 1990, and by striking all that follows ``with 
                respect to hospitals or facilities'' and inserting a 
                semicolon;
                    (C) by transferring and inserting the paragraph 
                (12) inserted by section 4752(a)(2) of Omnibus Budget 
                Reconciliation Act of 1990 after paragraph (11), as 
                redesignated by subparagraph (B), and by striking the 
                period at the end and inserting a semicolon;
                    (D) by redesignating the paragraph (14) inserted by 
                section 4752(e) of Omnibus Budget Reconciliation Act of 
                1990 as paragraph (13), by transferring and inserting 
                it after paragraph (12), and by striking the period at 
                the end and inserting a semicolon;
                    (E) by redesignating the paragraph (11) inserted by 
                section 4801(e)(16)(A) of Omnibus Budget Reconciliation 
                Act of 1990 as paragraph (14), by transferring and 
                inserting it after paragraph (13), and by striking the 
                period at the end and inserting ``; or''; and
                    (F) by inserting after paragraph (14), as so 
                redesignated, the following new paragraph:
            ``(15) with respect to items and services for which payment 
        is made under State children and pregnant women health plans 
        under title XXII.''.
            (2) Clarification of nonduplication of medical assistance 
        with benefits under state children and pregnant women health 
        plans.--Title XIX of such Act is amended by adding at the end 
        the following new section:

  ``nonduplication of benefits with state children and pregnant women 
                              health plans

    ``Sec. 1931. Notwithstanding any other provision of this title, a 
State is not required under its plan under section 1902(a) to provide 
medical assistance for items and services for which payment is made 
under its state children and pregnant women health plan under title 
XXII.''.
            (3) Clarification of application of third-party payor rules 
        to qualified health plans.--Section 1902(a)(25)(A) of such Act 
        (42 U.S.C. 1396a(a)(25)(A)) is amended by inserting ``and 
        qualified health plans certified under part C of title XXI'' 
        after ``health insurers''.
    (b) Continuation of Medicaid Benefits Not Covered Under State 
Children and Pregnant Women Health Plans.--Nothing in this Act shall be 
construed as--
            (1) changing the eligibility of individuals for medical 
        assistance under title XIX of the Social Security Act, or
            (2) subject to the amendments made by subsection (a), 
        changing the amount, duration, or scope of medical assistance 
        required (or permitted) to be provided under such title.

         TITLE III--HEALTH INSURANCE REFORM FOR SMALL EMPLOYERS

SEC. 301. EXCISE TAX ON PREMIUMS RECEIVED ON HEALTH INSURANCE POLICIES 
              WHICH DO NOT MEET CERTAIN REQUIREMENTS.

    (a) In General.--Chapter 47 of the Internal Revenue Code of 1986 
(relating to taxes on group health plans), as amended by section 101(b) 
of this Act, is further amended by adding at the end thereof the 
following new section:

``SEC. 5000B. FAILURE TO SATISFY CERTAIN STANDARDS FOR HEALTH 
              INSURANCE.

    ``(a) General Rule.--In the case of any person issuing applicable 
accident and health insurance contracts, there is hereby imposed a tax 
on the failure of such person to meet at any time during any taxable 
year the applicable requirements of title XXIII of the Social Security 
Act. The Secretary of Health and Human Services shall determine whether 
any contract meets the requirements of such title.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of tax imposed by subsection 
        (a) by reason of 1 or more failures during a taxable year shall 
        be equal to 50 percent of the gross premiums received during 
        such taxable year with respect to all accident and health 
        insurance contracts issued by the person on whom such tax is 
        imposed.
            ``(2) Gross premiums.--For purposes of paragraph (1), gross 
        premiums shall include any consideration received with respect 
        to any accident and health insurance contract.
    ``(c) Limitation on Tax.--
            ``(1) Tax not to apply where failure not discovered 
        exercising reasonable diligence.--No tax shall be imposed by 
        subsection (a) with respect to any failure for which it is 
        established to the satisfaction of the Secretary that the 
        person on whom the tax is imposed did not know, and exercising 
        reasonable diligence would not have known, that such failure 
        existed.
            ``(2) Tax not to apply where failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) with respect 
        to any failure if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period beginning on the 1st date any of the persons on 
                whom the tax is imposed knew, or exercising reasonable 
                diligence would have known, that such failure existed.
            ``(3) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a).
    ``(d) Liability for Tax.--The person issuing the applicable 
accident and health contract with respect to which a failure occurs 
shall be liable for the tax imposed by subsection (a).
    ``(e) Definitions.--For purposes of this section--
            ``(1) In general.--The term `applicable accident and health 
        insurance contract' means a contract under which a person 
        authorized under applicable State insurance law provides a 
        health insurance plan or arrangement to any group consisting of 
        more than 2 individuals. Such term does not include any self-
        insured plan of an employer and does not include a qualified 
        health maintenance organization (as defined in section 1310(d) 
        of the Public Health Service Act).
            ``(2) Certain contracts not covered.--The term `applicable 
        accident and health insurance contract' does not include any 
        contract--
                    ``(A) which provides for accident only, dental 
                only, or disability only coverage,
                    ``(B) which provides coverage as a supplement to 
                liability insurance,
                    ``(C) which provides insurance arising out of a 
                workmens' compensation or similar law, or automobile 
                medical-payment insurance, or
                    ``(D) which provides insurance which is required by 
                law to be contained under any self-insured plan of an 
                employer.''
    (b) Clerical Amendment.--The table of sections for such chapter 47 
is amended by adding at the end thereof the following new item:

                              ``Sec. 5000B. Failure to satisfy certain 
                                        standards for health 
                                        insurance.''

SEC. 302. GROUP HEALTH INSURANCE STANDARDS.

    The Social Security Act is amended by adding at the end the 
following new title:

          ``TITLE XXIII--INSURANCE REFORM FOR SMALL EMPLOYERS

``SEC. 2301. APPLICATION OF REQUIREMENTS TO INSURED SMALL EMPLOYER 
              HEALTH PLANS.

    ``(a) Plan Under State Regulatory Program or Certified by the 
Secretary.--No insured small employer health plan may be issued in a 
State on or after the effective date specified in subsection (c) (and 
no new contract may be offered under such plan with respect to any 
small employer beginning on or after such effective date) unless--
            ``(1) the Secretary determines that the State has 
        established a regulatory program that--
                    ``(A) provides for the application and enforcement 
                of the applicable standards established under section 
                2302 (to carry out the requirements of this title), and
                    ``(B) meets the requirements of section 2302(b),
        by such effective date, or
            ``(2) if the State has not established such a program, the 
        plan has been certified by the Secretary (in accordance with 
        such procedures as the Secretary establishes) as meeting the 
        applicable standards established under section 2302 by such 
        effective date.
    ``(b) Plan Disapproved under Look-behind Authority.--If the 
Secretary determines, under section 2302(c)(2), that small employer 
health plan does not meet the applicable requirements of this title on 
or after such effective date, regardless of whether or not the State 
has taken any action with respect to such noncompliance, no new 
contracts may be offered to small employers under the plan on or after 
the date of the determination.
    ``(c) Sanctions.--
            ``(1) Tax.--For application of excise tax in the case of a 
        nonconforming plan, see section 5000B of the Internal Revenue 
        Code of 1986.
            ``(2) Notice to employer in the case of insured plans.--If 
        tax is imposed under section 5000B of the Internal Revenue Code 
        of 1986, the Secretary of the Treasury shall provide for notice 
        to be provided to each employer which meets the requirement of 
        part A of title XXI through coverage under the plan of the 
        imposition of the tax.
            ``(3) Loss of status as qualified employer health plan.--
                    ``(A) In general.--If an employment-related health 
                plan is determined to be in violation of subsection (a) 
                and is not determined to have come into compliance with 
                the applicable standards within 6 months after the date 
                of the initial determination of such a violation, the 
                plan shall no longer be treated as a qualified employer 
                health plan under title XXI as of the end of such 6-
                month period.
                    ``(B) No enforcement of insurance contracts.--In 
                the case of an employer that is required, under part A 
                of title XXI, to provide enrollment under a qualified 
                employer health plan and that meets such requirement 
                through an insured plan that is determined to be in 
                violation of subsection (a)--
                            ``(i) if such plan is not brought into 
                        compliance within 30 days after the date of the 
                        violation, the employer may terminate by notice 
                        the contract with the plan and is not liable 
                        for payment of any additional amounts under the 
                        plan, and
                            ``(ii) if such plan no longer qualifies as 
                        a qualified employer health plan, such contract 
                        shall be terminated and the employer is not 
                        liable for payment of any amounts for periods 
                        in which the plan no longer qualifies as a 
                        qualified employer health plan.
            ``(4) Disqualification from state plan administration.--If 
        an employment-related health plan is determined to be in 
        violation of subsection (a) and is not determined to have come 
        into compliance with the applicable standards within 6 months 
        after the date of the initial determination of such a 
        violation, the plan shall no longer be eligible to administer a 
        State plan under title XXII as of the end of such 6-month 
        period.
    ``(d) Effective Date.--The effective date specified in this 
subsection is January 1, 1995.

``SEC. 2302. ESTABLISHMENT OF STANDARDS.

    ``(a) Establishment of Standards.--
            ``(1) NAIC.--The Secretary shall request the NAIC--
                    ``(A) to develop specific standards, in the form of 
                a model Act and model regulations, to implement the 
                requirements of this title, and
                    ``(B) to report to the Secretary on such 
                development,
        by not later than October 1 of the year following the year in 
        which this title is enacted. If the NAIC develops such 
        standards within such period and the Secretary finds that such 
        standards implement the requirements of this title, such 
        standards shall be the standards applied under section 2301.
            ``(2) Secretary.--If the NAIC fails to develop and report 
        on such standards by such date or the Secretary finds that such 
        standards do not implement the requirements of this title, the 
        Secretary shall develop and publish, by not later than November 
        15 of the year following the year in which this title is 
        enacted, such standards. Such standards shall then be the 
        standards applied under section 2301.
    ``(b) Additional Elements of Regulatory Programs.--
            ``(1) In general.--For purposes of section 2301(a)(1)(B), a 
        State regulatory program shall include the following:
                    ``(A) Enforcement under the program--
                            ``(i) shall be designed in a manner so as 
                        to secure compliance with the standards within 
                        30 days after the date of a finding of 
                        noncompliance with such standards, and
                            ``(ii) shall provide for notice to the 
                        Secretary in cases where such compliance is not 
                        secured within such 30-day period.
                    ``(B) A toll-free telephone which provides for--
                            ``(i) a system for the receipt and 
                        disposition of consumer and provider complaints 
                        or inquiries regarding compliance of health 
                        plans with the requirements of this title, and
                            ``(ii) information to small employers about 
                        carriers that offer small employer health plans 
                        in the area covered by the regulatory 
                        authority.
                Such system shall provide for the recording of consumer 
                and provider complaints in accordance with a uniform 
                methodology developed by the NAIC and recognized by the 
                Secretary.
            ``(2) Secretarial authority.--In the case of a State 
        without a regulatory program approved under subsection (a), the 
        Secretary shall provide for the establishment of the toll-free 
        telephone information and complaint system described in 
        paragraph (1)(B).
    ``(c) Secretarial Review.--
            ``(1) Periodic review of state regulatory programs.--The 
        Secretary periodically shall review State regulatory programs 
        to determine if they continue to meet the standards referred to 
        in subsection (a) and the requirements of subsection (b). If 
        the Secretary finds that a State regulatory program no longer 
        meets such standards and requirements, before making a final 
        determination, the Secretary shall provide the State an 
        opportunity to adopt such a plan of correction as would permit 
        the program to continue to meet such standards and 
        requirements. If the Secretary makes a final determination that 
        the State regulatory program, after such an opportunity, fails 
        to meet such standards and requirements, the Secretary shall 
        assume responsibility under section 2301(a)(2) with respect to 
        plans in the State.
            ``(2) Look-behind authority.--In the case of a State with a 
        regulatory program found by the Secretary to meet the standards 
        and requirements under this title, the Secretary nonetheless is 
        authorized to determine whether or not individual insured 
        employment-related health plans in the State have failed to 
        comply with the applicable requirements of this title.
    ``(d) GAO Audits.--The Comptroller General shall conduct periodic 
audits on a sample of State regulatory programs to determine their 
compliance with the requirements of this section. The Comptroller 
General shall report to the Secretary and Congress on the findings in 
such audits.

``SEC. 2303. ENROLLMENT PRACTICE AND GUARANTEED RENEWABILITY 
              REQUIREMENTS FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Registration with Applicable Regulatory Authority.--
            ``(1) In general.--Each small employer carrier (as defined 
        in section 2308(b)(3)) shall register with the applicable 
        regulatory authority for each State in which it issues or 
        offers a small employer health plan.
            ``(2) No preemption of state information requirements.--
        Nothing in paragraph (1) shall be construed as preventing the 
        applicable regulatory authority from requiring such additional 
        information in conjunction with, or apart from, the 
        registration required under paragraph (1) as the applicable 
        regulatory authority may be authorized to require under State 
        law.
    ``(b) Guaranteed Issue.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, a carrier that offers a health plan to small 
        employers located in a community must offer the same plan to 
        any other small employer located in the community.
            ``(2) Treatment of health maintenance organizations.--
                    ``(A) Geographic limitations.--A health maintenance 
                organization may deny coverage under a plan to a small 
                employer whose employees are located outside the 
                service area of the organization, but only if such 
                denial is applied uniformly without regard to health 
                status or insurability.
                    ``(B) Size limits.--A health maintenance 
                organization may apply to the applicable regulatory 
                authority to cease enrolling new small employer groups 
                in its small employer health plan (or in a geographic 
                area served by the plan) if it can demonstrate that its 
                financial or administrative capacity to serve 
                previously enrolled groups and individuals (and 
                additional individuals who will be expected to enroll 
                because of affiliation with such previously enrolled 
                groups) will be impaired if it is required to enroll 
                new groups.
            ``(3) Grounds for refusal to issue or renew.--
                    ``(A) In general.--A carrier may refuse to issue or 
                renew or terminate a plan only for--
                            ``(i) nonpayment of premiums,
                            ``(ii) fraud or misrepresentation, and
                            ``(iii) failure to meet minimum 
                        participation rates (consistent with 
                        subparagraph (B)).
                    ``(B) Minimum participation rates.--A carrier may 
                require, with respect to a small employer health plan, 
                that a minimum percentage of full-time, permanent 
                employees eligible to enroll under the plan be 
                enrolled, so long as such percentage is enforced 
                uniformly for all employment groups of comparable size.
    ``(c) Minimum Plan Period.--A carrier may not offer to, or issue 
with respect to, a small employer a small employer health plan with a 
term of less than 12 months.
    ``(d) Guaranteed Renewability.--
            ``(1) In general.--
                    ``(A) General rule.--Subject to the succeeding 
                provisions of this subsection, each small employer 
                health plan must be renewed, at the option of the 
                employer or employment-related organization described 
                in section 2308(a)(2), unless the plan is terminated 
                for the reasons specified in subsection (b)(3)(A) or 
                under subparagraph (B).
                    ``(B) Termination of block of business.--A carrier 
                need not renew a health plan with respect to such an 
                employer or employment-related organization if the 
                carrier--
                            ``(i) is terminating the block of business 
                        that includes the plan, and
                            ``(ii) provides notice to the employer or 
                        organization covered under the plan of such 
                        termination at least 90 days before the date of 
                        expiration of the plan.
                In the case of such a termination, the insurer may not 
                provide for issuance of any small employer health plan 
                in any block of business during the 5-year period 
                beginning on the date of termination of such block of 
                business.
                    ``(C) Construction respecting additional state 
                disclosure requirements.--Subparagraph (B)(ii) shall 
                not be construed as preventing the applicable 
                regulatory authority from specifying the information to 
                be included in the notice under such subparagraph or in 
                requiring such notice to be provided at an earlier 
                date.
            ``(2) Notice and specification of rates and administrative 
        changes.--
                    ``(A) Notice.--The small employer carrier of a 
                small employer health plan shall provide for notice, at 
                least 30 days before the date of expiration of the 
                health plan, of the terms for renewal of the plan. 
                Except with respect to rates and administrative 
                changes, the terms of renewal (including benefits) 
                shall be the same as the terms of issuance.
                    ``(B) Renewal rates same as issuance rates.--The 
                carrier may change the terms for such renewal, but the 
                premium rates charged with respect to such renewal 
                shall be the same as that for a new issue.
                    ``(C) Rates cannot change more often than 
                monthly.--
                            ``(i) In general.--A small employer carrier 
                        may not change the premium rates established 
                        with respect to any block of business for a 
                        small employer health plan more often than 
                        monthly.
                            ``(ii) Application of new rates.--In the 
                        case of a plan issued which becomes effective 
                        in a month, the premium rates established under 
                        clause (i) for that month shall apply to all 
                        months during the 12-month period beginning 
                        with that month. In the case of a plan renewal 
                        which is effective for a 12-month period 
                        beginning with a month, the premium rates 
                        established under clause (i) with respect to 
                        that month shall apply to all months during 12-
                        month renewal period.
            ``(3) Period of renewal.--The period of renewal of each 
        small employer health plan shall be for a period of not less 
        than 12 months.
    ``(e) No Discrimination Based on Health Status for Certain 
Services.--An small employer health plan may not deny, limit, or 
condition the coverage under (or benefits of) the plan with respect to 
required health services based on the health status, claims experience, 
receipt of health care, medical history, or lack of evidence of 
insurability, of an individual.

``SEC. 2304. RATING PRACTICES FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Cohesive Rating System and Actuarial Certification.--
            ``(1) In general.--The premiums (including reference 
        premium rate, as defined in section 2308(c)(6)) for all small 
        employer health plans of the same entity shall--
                    ``(A) be established based on a single cohesive 
                rating system which is applied consistently for all 
                employer groups and is designed not to treat groups, 
                after the second effective year (as defined in 
                subsection (c)), differently based on health status or 
                risk status; and
                    ``(B) be actuarially certified annually.
            ``(2) Actuarial certified defined.--For purposes of 
        paragraph (1)(B), a plan is considered to be `actuarially 
        certified' if there is a written statement, by a member of the 
        American Academy of Actuaries or other individual acceptable to 
        the applicable regulatory authority that a small employer 
        carrier is in compliance with this section, based upon the 
        individual's examination, including a review of the appropriate 
        records and of the actuarial assumptions and methods utilized 
        by the carrier in establishing premium rates for applicable 
        health plans.
    ``(b) Use of Community-Rating.--
            ``(1) In general.--Except as provided in paragraph (2):
                    ``(A) Community rating within a block of 
                business.--The reference premium rate charged for a 
                small employer health plan with similar benefits in a 
                community within a block of business shall be the same 
                for all small employers and shall be the same 
                regardless of the age, sex, health status, or number of 
                individuals in the family covered under the plan.
                    ``(B) Limiting variation on reference premium rates 
                among blocks of business.--
                            ``(i) In general.--Except as provided in 
                        clause (iii), the reference premium rate 
                        charged for small employer health plans with 
                        similar benefits in any community for the most 
                        expensive block of business shall not exceed 
                        120 percent of such rate charged for such plan 
                        for the least expensive block of business.
                            ``(ii) Role of regulatory authority.--An 
                        applicable regulatory authority that is a State 
                        may reduce or eliminate the percent variation 
                        otherwise permitted under clause (i).
                            ``(iii) Exception.--Clause (i) shall not 
                        apply to a block of business--
                                    ``(I) if the block is one for which 
                                the carrier does not reject, and never 
                                has rejected, small employers included 
                                within the definition of employers 
                                eligible for the block of business or 
                                otherwise eligible employees and 
                                dependents who enroll on a timely 
                                basis,
                                    ``(II) the carrier does not 
                                involuntarily transfer, and never has 
                                involuntarily transferred, a health 
                                plan into or out of the block of 
                                business, and
                                    ``(III) that block of business was 
                                available for purchase as of the date 
                                of the enactment of this title.
            ``(2) Transition.--Notwithstanding paragraph (1)--
                    ``(A) during the first effective year (as defined 
                in subsection (c)), the premium rate for any employer 
                may be as much as, but may not exceed, 150 percent of 
                the reference premium rate for such plans in the same 
                community for similar benefits in the same block of 
                business, or
                    ``(B) during the second effective year, the premium 
                rate for any employer may be as much as, but may not 
                exceed, 122 percent of the reference premium rate for 
                such plans in the same community for similar benefits 
                in the same block of business.
            ``(3) Establishment of blocks of business.--For the purpose 
        of establishing premiums for small employer health plans with 
        similar coverage, the small employer carrier may establish 
        blocks of business based only on one or more of the following 
        characteristics:
                    ``(A) Plans that are marketed by clearly different 
                sales forces.
                    ``(B) Plans that have been acquired from another 
                carrier as a distinct group.
                    ``(C) Plans that are managed care plans.
                    ``(D) Plans within another distinct group, if the 
                applicable regulatory authority finds that 
                establishment of such a group will enhance the 
                efficiency and fairness of the small employer insurance 
                marketplace.
    ``(c) Effective Years Defined.--In this section, the terms `first 
effective year' and `second effective year' mean 1995 and 1996, 
respectively.

``SEC. 2305. BASIC BENEFIT PACKAGE FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Benefits and Cost-Sharing in Qualified Health Plans.--Except 
as provided in subsection (b), no small employer health plan may be 
issued to a small employer by a carrier unless--
            ``(1) the plan provides for benefits for all required 
        health services (as defined in section 2211(a));
            ``(2) the plan does not impose cost-sharing with respect to 
        required health services in excess of the deductibles and 
        coinsurance permitted under title XXI with respect to such 
        services (not taking into account any low-income assistance 
        under part E of title XXII); and
            ``(3) the carrier makes available to the employer a small 
        employer health plan that, subject to subsection (b), only 
        provides the benefits for required health services and the 
        maximum cost-sharing consistent with paragraphs (1) and (2).
    ``(b) Additional, Optional Minimum Services.--In meeting the 
requirement of subsection (a)(3), a small employer health plan may 
include such additional items and services as the small employer 
carrier can demonstrate to the satisfaction of the applicable 
regulatory authority that inclusion of such items and services will 
facilitate appropriate hospital discharges or avoid unnecessary 
hospitalization.

``SEC. 2306. MISCELLANEOUS DISCLOSURE AND RECORD-KEEPING REQUIREMENTS 
              FOR SMALL EMPLOYER HEALTH PLANS.

    ``(a) Disclosure to Employers.--
            ``(1) General disclosure.--Each small employer carrier 
        shall disclose to each small employer before issuing a small 
        employer health plan the following:
                    ``(A) The availability (pursuant to the requirement 
                of section 2305(a)(3)) of a plan including only 
                required health services.
                    ``(B) The limits, imposed under section 2304, on 
                the premiums permitted to be charged for such plans.
                    ``(C) The rights of guaranteed issue and 
                renewability provided under section 2303.
        Such disclosure shall be in addition to any disclosure required 
        generally of qualified health plans under section 2158(a)(2).
            ``(2) Specific disclosure upon request.--Each small 
        employer carrier shall disclose to each small employer, upon 
        request, information concerning the blocks of business 
        established with respect to small employer health plans and the 
        applicable premiums for such plans.
            ``(3) Standard format.--The disclosure under paragraph (1) 
        shall be made in a uniform format established by the Secretary, 
        after consultation with the NAIC.
    ``(b) Information Filed with Applicable Regulatory Authority.--
            ``(1) In general.--Each small employer carrier shall 
        disclose to the applicable regulatory authority, in a manner 
        specified by the Secretary, information concerning--
            ``(1) blocks of business established, and
            ``(2) applicable premiums for small employer health plans.
            ``(2) Additional information.--Nothing in this subsection 
        shall be construed as limiting the information which an 
        applicable regulatory authority may require to be reported by 
        small employer carriers.

``SEC. 2307. NONAPPLICATION IN PUERTO RICO AND THE TERRITORIES.

    ``This title shall not apply outside the 50 States or the District 
of Columbia.

``SEC. 2308. DEFINITIONS.

    ``(a) Health Plan and Other Definitions Relating to Health Plans.--
In this title:
            ``(1) Health plan.--The term `health plan' means any 
        hospital or medical expense incurred policy or certificate, 
        hospital or medical service plan contract, health maintenance 
        subscriber contract, other employee welfare plan (as defined in 
        the Employee Retirement Income Security Act of 1964), or any 
        other health insurance arrangement, but does not include--
                    ``(A) accident-only, credit, dental, or disability 
                income insurance,
                    ``(B) coverage issued as a supplement to liability 
                insurance,
                    ``(C) worker's compensation or similar insurance, 
                or
                    ``(D) automobile medical-payment insurance.
            ``(2) Employment-related health plan.--The term 
        `employment-related health plan' means any health plan provided 
        or arranged for or contributed to by the employer or an 
        employment-related organization to provide health benefits 
        (directly or indirectly) for the employer's employees and 
        dependents, but only insofar as such benefits provide required 
        health care services for pregnant women and children.
            ``(3) Insured employment-related health plan.--The term 
        `insured employment-related health plan' means an employment-
        related health plan that has been provided by a person 
        authorized under applicable State insurance law, and does not 
        include any self-insured employment-related health plan.
            ``(4) Self-insured employment-related health plan.--The 
        term `self-insured employment-related health plan' means an 
        employment-related health plan which is an employee welfare 
        benefit plan (as defined in the Employee Retirement Income 
        Security Act of 1964) and in which the employer or employment-
        related group assumes the underwriting risk for the plan 
        (whether or not there is any reinsurance or similar mechanism 
        to underwrite a portion of that risk).
            ``(5) Small employer health plan.--The term `small employer 
        health plan' means an insured employment-related health plan 
        insofar as it offers benefits with respect to any small 
        employer, as defined in subsection (c)(8), or the employees of 
        a small employer.
    ``(b) Carrier; Health Maintenance Organization; and Other 
Definitions Relating to Carriers.--In this part:
            ``(1) Carrier.--The term `carrier' means any person that 
        offers a health plan, whether through insurance or otherwise, 
        including a licensed insurance company, a prepaid hospital or 
        medical service plan, a health maintenance organization, and a 
        multiple employer welfare arrangement.
            ``(2) Health maintenance organization.--The term `health 
        maintenance organization' has the meaning given the term 
        `eligible organization' in section 1876(b).
            ``(3) Small employer carrier.--The term `small employer 
        carrier' means any carrier which offers a small employer health 
        plan.
    ``(c) General Definitions.--In this part:
            ``(1) Applicable regulatory authority.--The term 
        `applicable regulatory authority' means, with respect to a 
        health plan offered in a State, the State commissioner or 
        superintendent of insurance or other State authority 
        responsible for regulation of health insurance, or, if the 
        Secretary is exercising authority under section 2301(a)(2) in 
        the State, the Secretary.
            ``(2) Block of business.--The term `block of business' 
        means all, or a distinct grouping of, small employers as shown 
        on the records of the small employer carrier, if established 
        consistent with section 2304(b)(3).
            ``(3) Community.--The term `community' has the meaning 
        given such term in section 2231(b).
            ``(4) Full-time employee.--The term `full-time employee' 
        has the meaning given such term in section 2181(b)(1).
            ``(5) NAIC.--The term `NAIC' means the National Association 
        of Insurance Commissioners.
            ``(6) Reference premium rate.--The term `reference premium 
        rate' means, for each block of business for a rating period in 
        a community, the lowest premium rate charged or which could 
        have been charged by the small employer carrier to small 
        employers in that block under a rating system for that block of 
        business in the community for health plans with the same or 
        similar coverage.
            ``(8) Small employer.--The term `small employer' has the 
        meaning given such term in section 2181(c)(1) and also includes 
        a medium-size employer (as defined in section 2181(c)(2)).
            ``(9) State.--The term `State' means the 50 States and the 
        District of Columbia.''.

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