[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3130 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3130

   To assure availability and continuity of health insurance and to 
            simplify the administration of health coverage.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 20, 1996

    Mr. Peterson of Florida (for himself, Mr. Moran, Mr. Dooley of 
California, Mr. Baesler, Mr. Berman, Ms. Brown of Florida, Mr. Clement, 
     Mr. Coleman, Mr. Dellums, Mr. Dixon, Mr. Fattah, Mr. Fazio of 
   California, Mr. Frazer, Mr. Hastings of Florida, Mr. Hefner, Mr. 
Hilliard, Mr. Hinchey, Ms. Kaptur, Mr. LaFalce, Mrs. Lincoln, Mr. Lewis 
of Georgia, Ms. Lofgren, Ms. McKinney, Mrs. Meek of Florida, Mr. Minge, 
  Mr. Nadler, Ms. Norton, Mr. Oberstar, Ms. Pelosi, Mr. Poshard, Ms. 
Roybal-Allard, Mr. Sabo, Mr. Sanders, Mrs. Schroeder, Mr. Stenholm, Mr. 
    Stupak, Mr. Torres, Ms. Velazquez, Mr. Yates, Mr. Clyburn, Mr. 
Jefferson, Mr. Pastor, Mr. Cramer, Mr. Rose, Mrs. Thurman, Mr. Payne of 
  Virginia, Ms. Jackson-Lee of Texas, and Mr. Pallone) introduced the 
following bill; which was referred to the Committee on Commerce, and in 
    addition to the Committee on Ways and Means, the Judiciary, and 
Economic and Educational Opportunities, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To assure availability and continuity of health insurance and to 
            simplify the administration of health coverage.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Insurance 
Affordability Act of 1996''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
    TITLE I--ASSURING AVAILABILITY AND CONTINUITY OF HEALTH COVERAGE

            Subtitle A--Guaranteed Access to Health Coverage

Sec. 101. Guaranteed offer by carriers.
Sec. 102. Guaranteed issue by carriers.
Sec. 103. Guaranteed renewal.
Sec. 104. Restricting preexisting condition exclusions.
Sec. 105. Enrollment periods.
                   Subtitle B--Provision of Benefits

Sec. 111. Standards for managed care arrangements.
Sec. 112. Report on utilization review standards.
                   Subtitle C--Fair Rating Practices

Sec. 121. Use of fair rating practices.
Sec. 122. Establishment of risk adjustment mechanisms.
                    Subtitle D--Consumer Protections

Sec. 131. Requirement for provision of information.
Sec. 132. Prohibition of improper incentives.
Sec. 133. Written policies and procedures respecting advance 
                            directives.
                          Subtitle E--Benefits

Sec. 141. Qualified health coverage.
Sec. 142. Standard coverage.
Sec. 143. High-deductible coverage.
Sec. 144. Actuarial valuation of benefits.
Sec. 145. Limitation on offering supplemental benefits.
Sec. 146. Family coverage option; supplemental coverage.
Sec. 147. Level playing field for providers.
   Subtitle F--Standards and Certification; Enforcement; Preemption; 
                           General Provisions

Sec. 151. Establishment of standards.
Sec. 152. Application of standards to carriers through States.
Sec. 153. Application to group health plans.
Sec. 154. Enforcement.
Sec. 155. Limitation on self insurance for small employers.
              Subtitle G--Definitions; General Provisions

Sec. 191. General definitions.
Sec. 192. Definitions relating to employment.
Sec. 193. Definitions relating to health coverage, plans, and carriers.
Sec. 194. Definitions relating to residence and immigration status.
Sec. 195. Effective dates.
                TITLE II--ADMINISTRATIVE SIMPLIFICATION

Sec. 200. Purpose.
Sec. 201. Definitions.
        Subtitle A--Standards for Data Elements and Transactions

Sec. 211. General requirements on Secretary.
Sec. 212. Standards for data elements of health information.
Sec. 213. Information transaction standards.
Sec. 214. Health information network privacy standards.
Sec. 215. Timetables for adoption of standards.
   Subtitle B--Requirements with Respect to Certain Transactions and 
                              Information

Sec. 221. Standard transactions and information.
Sec. 222. Accessing health information for authorized purposes.
Sec. 223. Ensuring availability of information.
Sec. 224. Timetables for compliance with requirements.
                  Subtitle C--Miscellaneous Provisions

Sec. 231. Standards and certification for health information network 
                            services.
Sec. 232. Imposition of additional requirements.
Sec. 233. Effect on State law.
                          TITLE III--ANTITRUST

Sec. 301. Publication of antitrust guidelines on activities of health 
                            plans.

    TITLE I--ASSURING AVAILABILITY AND CONTINUITY OF HEALTH COVERAGE

            Subtitle A--Guaranteed Access to Health Coverage

SEC. 101. GUARANTEED OFFER BY CARRIERS.

    (a) In General.--Each carrier that offers health insurance coverage 
in the individual/small group market in a fair rating area (as defined 
in section 193) shall make available, to each qualifying individual (as 
defined in section 194(3)) or small employer (covered in such market) 
in such fair rating area--
            (1) qualified standard coverage consistent with section 
        142, and
            (2) subject to subsection (b), qualified high-deductible 
        coverage consistent with section 143.
    (b) High-Deductible Coverage.--
            (1) Exception for health maintenance organizations.--The 
        requirement of subsection (a)(2) shall not apply with respect 
        to health insurance coverage that--
                    (A) is provided by a Federally qualified health 
                maintenance organization (as defined in section 1301(a) 
                of the Public Health Service Act), or
                    (B) is not provided by such an organization but is 
                provided by an organization recognized under State law 
                as a health maintenance organization or managed care 
                organization or a similar organization regulated under 
                State law for solvency.
            (2) Limitation on offer of high-deductible coverage.--
        Qualified high-deductible coverage may not be made available by 
        a carrier to a qualifying individual (or to a small employer 
        with respect to an employee) unless the carrier also makes 
        available qualified standard coverage that has identical 
        benefits (other than the amount of the deductible) and the 
        individual or employee demonstrates to the carrier that the 
        individual or employee has available assets (as defined by the 
        Secretary) equal to at least the deductible amount established 
        under section 144(b)(1) applicable to the high-deductible 
        coverage. A carrier may not make available to an individual 
        health coverage (other than coverage for supplemental benefits) 
        the actuarial value of which is less than the actuarial value 
        of qualified high-deductible coverage, unless the individual 
        has available assets (as defined by the Secretary) equal to at 
        least the deductible amount of the coverage offered.
    (c) Coverage of Entire Rating Area.--
            (1) In general.--With respect to each fair rating area for 
        which a carrier offers health insurance coverage, the carrier 
        shall provide for coverage of benefits for items and services 
        furnished throughout the fair rating area.
            (2) Special rule for carriers offering coverage in multi-
        state metropolitan statistical areas.--In the case of a carrier 
        that offers qualified health insurance coverage in the 
        individual/small employer market in a portion of a State that 
        is located in an interstate metropolitan statistical area, the 
        carrier may not provide such coverage with respect to an 
        individual or employer in such metropolitan statistical area 
        unless the carrier also offers such coverage in other portions 
        of the area located in other States.
            (3) Special rule for coverage through managed care 
        arrangement.--In the case of coverage offered by a carrier or 
        under a group health plan to the extent that it provides 
        benefits through a managed care arrangement in a fair rating 
        area, this subsection shall not be construed as requiring the 
        establishment of facilities throughout the area, if the 
        facilities are located consistent with section 102(b)(1).
    (d) Family Coverage Option.--The offer of coverage under this 
section with respect to an individual shall include the option of 
coverage of family members of the individual.
    (e) Limitation on Carriers.--A carrier may not require an employer 
under a group health plan to impose through a waiting period for health 
coverage under a plan or similarly require a limitation or condition on 
health coverage or benefits based on--
            (1) the health status of an individual,
            (2) claims experience of an individual,
            (3) receipt of health care by an individual,
            (4) medical history of an individual,
            (5) receipt of public subsidies by an individual, or
            (6) lack of evidence of insurability of an individual.
    (f) Construction for MEWAs.--Nothing in this section shall be 
construed as requiring a multiple employer welfare arrangement that 
provides health coverage other than through a carrier to meet the 
requirements of this section.

SEC. 102. GUARANTEED ISSUE BY CARRIERS.

    (a) In General.--Subject to subsections (b) and (c) and section 
103, each carrier that offers health insurance coverage in the 
individual/small group market in a fair rating area--
            (1) must accept every small employer in the area that 
        applies for such coverage during an enrollment period provided 
        under section 105; and
            (2) must accept for enrollment under such coverage every 
        qualifying individual (and family member of such an individual) 
        who applies for enrollment during an enrollment period provided 
        under section 105 and may not place any restriction on the 
        eligibility of an individual to enroll so long as such 
        individual is a qualifying individual.
    (b) Special Rules for Managed Care Arrangements.--In the case of 
coverage offered by a carrier or under a group health plan that 
provides benefits through a managed care arrangement in a fair rating 
area, the carrier or plan--
            (1) need not establish facilities for the delivery of 
        health care services throughout the area so long as such 
        facilities are located in a manner that does not discriminate 
        on the basis of health status of individuals residing in 
        proximity to such facilities, and
            (2) may deny such coverage in a fair rating area to 
        employers or individuals if the organization demonstrates to 
        the applicable regulatory authority that--
                    (A) it will not have the capacity to deliver 
                services adequately to enrollees of any additional 
                groups or additional enrollees because of its 
                obligations to existing group contract holders and 
                enrollees, and
                    (B) it is applying this paragraph uniformly to all 
                employers and individuals without regard to the health 
                status, claims experience, or duration of coverage of 
                those employers and their employees.
Coverage may be denied under paragraph (2) only if the denial is 
applied during a consecutive period of at least 180 days.
    (c) Special Rule for Financial Capacity Limits.--In addition to the 
authority provided under subsection (b)(2), in the case of coverage 
offered by any carrier, the carrier may deny coverage to a small 
employer or individual if the carrier demonstrates to the applicable 
regulatory authority that--
            (1) it does not have the financial reserves necessary to 
        underwrite additional coverage, and
            (2) it is applying this subsection uniformly to all 
        employers and individuals without regard to the health status, 
        claims experience, or duration of coverage of those employers 
        and their employees.
Coverage may be denied under this subsection only if the denial is 
applied during a consecutive period of at least 180 days.
    (d) Treatment of Certain MEWAs.--Subsection (a) shall not apply to 
a carrier if the only coverage offered by the carrier in the 
individual/small group market is through one or more multiple employer 
welfare arrangements. In the case of coverage offered by a carrier in 
the individual/small group market through a multiple employer welfare 
arrangement and to which the previous sentence does not apply, the 
requirements of subsection (a) shall apply to the carrier and not to 
the arrangement.

SEC. 103. GUARANTEED RENEWAL.

    (a) Limitation on Termination by Carriers.--A carrier may not deny, 
cancel, or refuse to renew health coverage of a qualifying individual 
or eligible employer within a type of coverage option described in 
section 193(13) except--
            (1) on the basis of nonpayment of premiums,
            (2) on the basis of fraud or misrepresentation, or
            (3) subject to subsection (b), in a fair rating area 
        because the carrier is ceasing to provide any health insurance 
        coverage in the individual/small group market within such type 
        of coverage option in the area.
    (b) Limitations on Market Exit by Carriers.--
            (1) Notice, etc.--Subsection (a)(3) shall not apply to a 
        carrier ceasing to provide health insurance coverage unless--
                    (A) such termination of coverage takes effect at 
                the end of a contract year, and
                    (B) the carrier provides notice of such termination 
                to employers and individuals covered at least 30 days 
                before the date of an annual open enrollment period 
established with respect to the employer or individual under section 
105.
            (2) Limitation on reentry in individual/small group 
        market.--If a carrier ceases to offer or provide health 
        insurance coverage in an area with respect to the individual/
        small group market for a type of coverage option, the insurer 
        may not offer health insurance coverage in the area in such 
        market within such type of coverage option until 5 years after 
        the date of the termination.
    (c) Rule for Multiemployer Plans and Multiple Employer Health.--A 
multiemployer plan and a multiple employer health plan may not cancel 
coverage or deny renewal of coverage under such a plan with respect to 
an employer other than--
            (1) for nonpayment of contributions,
            (2) for fraud or other misrepresentation by the employer, 
        or
            (3) because the plan is ceasing to provide any coverage in 
        a geographic area.

SEC. 104. RESTRICTING PREEXISTING CONDITION EXCLUSIONS.

    (a) In General.--Except as provided in this section, a carrier or 
group health plan providing health coverage may not exclude health 
coverage with respect to services related to treatment of a condition 
based on the fact that the condition of an individual existed before 
the effective date of coverage of the individual.
    (b) Limited 6-Month Exclusion Permitted.--
            (1) In general.--Subject to paragraph (2) and subsections 
        (c) through (e), a carrier or group health plan providing 
        health coverage may exclude health coverage with respect to 
        services related to treatment of a condition of an individual 
        based on the fact that the condition existed before the 
        effective date of coverage of the individual only if the period 
        of the exclusion does not exceed 6 months beginning on the date 
        of coverage.
            (2) Crediting of previous coverage.--
                    (A) In general.--A carrier or group health plan 
                providing health coverage shall provide that if a 
                covered individual is in a period of continuous 
                coverage (as defined in subparagraph (C)) as of a date 
                upon which coverage is initiated or reinitiated, any 
                period of exclusion of coverage with respect to a 
                preexisting condition (as defined in subparagraph (B)) 
                for such services or type of services shall be reduced 
                by 1 month for each month in the period of continuous 
                coverage.
                    (B) Preexisting condition defined.--In this 
                paragraph, the term ``preexisting condition'' means, 
                with respect to health coverage, a condition which has 
                been diagnosed or treated during the 6-month period 
                ending on the day before the first date of such 
                coverage (without regard to any waiting period).
                    (C) Period of continuous coverage.--In this part, 
                the term ``period of continuous coverage'' means the 
                period beginning on the date an individual has health 
                coverage (or coverage under a public plan providing 
                medical benefits) and ends on the date the individual 
                does not have such coverage for a continuous period of 
                more than 3 months (or 6 months in the case of an 
                individual who loses coverage due to involuntary 
                termination of employment, other than by reason of an 
                employee's gross misconduct).
    (c) Exclusion Not Applicable to Pregnancy.--Any exclusion of 
coverage under subsection (b)(1) shall not apply if the exclusion 
relates to pregnancy.
    (d) Exclusion Not Applicable to Newborns and Adopted Children.--
            (1) Newborns.--Any exclusion of coverage under subsection 
        (b)(1) shall not apply to a child who is covered at the time of 
        birth and remains in a period of continuous coverage after such 
        time.
            (2) Adopted children.--Any exclusion of coverage under 
        subsection (b)(1) shall not apply (beginning on the date of 
        adoption) to an adopted child who is covered at the time of 
        adoption and remains in a period of continuous coverage after 
        such time.
    (e) Exclusion Not Applicable to Individuals Enrolled or Enrolling 
During Certain Open Enrollment Periods.--
            (1) Individuals enrolling during period.--In the case of an 
        individual who enrolls and obtains coverage during an open 
        enrollment period described in section 105(b), any exclusion of 
        coverage under subsection (b)(1) shall not apply so long as the 
        individual remains in a period of continuous coverage.
            (2) Individuals enrolled at beginning of period.--In the 
        case of an individual who has health coverage as of the first 
        day of the initial open enrollment period described in section 
        105(b)(1), any exclusion of coverage under subsection (b)(1) 
        shall not apply as of such date and so long as the individual 
        is in a period of continuous coverage.
    (f) Application of Rules by Certain Health Maintenance 
Organizations.--A health maintenance organization that provides health 
insurance coverage shall not be considered as failing to meet the 
requirements of section 1301 of the Public Health Service Act 
notwithstanding that it provides for an exclusion of the coverage based 
on a preexisting condition consistent with the provisions of this 
subtitle so long as such exclusion is applied consistent with the 
provisions of this part.

SEC. 105. ENROLLMENT PERIODS.

    (a) In General.--Each carrier and each group health plan providing 
health coverage in the individual/small group market shall permit 
qualifying individuals and eligible employers to obtain health coverage 
from the carrier or group health plan during each enrollment period 
provided under this section.
    (b) Open Enrollment Periods for Which Preexisting Condition 
Exclusions Waived.--
            (1) Initial period.--There shall be an initial open 
        enrollment period, with respect to individuals and employees 
        who are residents of a State, during the 60-day period 
        beginning on January 1, 1997.
            (2) Individuals eligible for subsidies.--There shall be an 
        individual open enrollment period with respect to an individual 
        at the time the individual first becomes eligible for any 
        premium assistance under part A of title XXI of the Social 
        Security Act, during the 60-day period beginning on the first 
        date the individual meets eligibility criteria within any 12-
        month period.
            (3) Court orders.--If a court has ordered that coverage be 
        provided for a spouse or child of an employee or individual 
        under health coverage of the employee or individual, there 
        shall be an open enrollment period during the 30-day period 
        beginning on the date of issuance of the court order.
            (4) Enrollment of newborns and newly adopted children.--
        There shall be an open enrollment period with respect to a 
        newborn child and a newly adopted child during the 30-day 
        period beginning on the date of the birth or adoption of a 
        child, if family coverage is available as of such date.
    (c) Annual Open Enrollment Periods for Which Preexisting Condition 
Exclusions May Apply.--
            (1) In general.--Each carrier and each group health plan 
        providing health coverage in the individual/small group market 
        shall provide for at least one annual open enrollment period 
        (of not less than 30 days) each year. Such period shall be in 
        addition to the open enrollment periods described in subsection 
        (b).
            (2) Coordination.--
                    (A) Carriers in individual/small group market.--
                Such annual open enrollment periods with respect to 
                carriers in the individual/small group market are 
                subject to coordination by States.
    (d) Other Open Enrollment Periods for Which Preexisting Condition 
Exclusions May Apply.--
            (1) Termination of residence area.--For each qualifying 
        individual, at the time the individual terminates residence in 
        the service area of coverage provided by a carrier to the 
        individual, there shall be an open enrollment period (of not 
        less than 30 days) during which the individual may enroll in 
        health coverage.
            (2) Family or employment changes.--In the case of a 
        qualifying individual who--
                    (A) through divorce or death of a family member 
                experiences a change in family composition, or
                    (B) experiences a change in employment status 
                (including a significant change in the terms and 
                conditions of employment or the terms and conditions of 
                employment of a spouse),
        there shall be an open enrollment period (of at least 30 days) 
        in which the individual is permitted to change the individual 
        or family basis of coverage or the health coverage in which the 
        individual is enrolled. The circumstances under which such 
        enrollment periods are required and the duration of such 
        periods shall be specified by the Secretary.
            (3) Enrollment due to loss of previous coverage.--In the 
        case of a qualifying individual who--
                    (A) had health coverage at the time of an 
                individual's enrollment period,
                    (B) stated at the time of such period that having 
                other health coverage was the reason for declining 
                enrollment, and
                    (C) lost the other health coverage as a result of 
                the termination of the coverage, termination or 
                reduction of employment, or other reason, except 
                termination at the option of the individual,
        there shall be an open enrollment period during the 30-day 
        period beginning on the date of termination of the other 
        coverage.
            (4) Enrollment at time of marriage.--There shall be an open 
        enrollment period with respect to the spouse of an individual 
        (including children of the spouse) during the 30-day period 
        beginning on the date of the marriage, if family coverage is 
        available as of such date.
            (5) No effect on cobra continuation benefits.--Nothing in 
        this subsection shall be construed as affecting rights of 
        individuals to continuation coverage under section 4980B of the 
        Internal Revenue Code of 1986, part 6 of subtitle B of title I 
        of the Employee Retirement Income Security Act of 1974, or 
        title XXII of the Public Health Service Act.
    (e) Period of Coverage.--
            (1) In general.--In the case of a qualifying individual who 
        enrolls under health coverage during an open enrollment period 
        under this section, coverage shall begin on such date (not 
        later than the first day of the first month that begins at 
        least 15 days after the date of enrollment) as the Secretary 
        shall specify, consistent with this subsection.
            (2) Coverage of family members.--In the case of an open 
        enrollment period described in subsection (b)(3), (b)(4), or 
        (d)(4), the Secretary shall provide for coverage of family 
        members to begin as soon as possible on or after the date of 
        the event that gives rise to the special enrollment period (or, 
        in the case of birth or adoption, as of the date of birth or 
        adoption).

                   Subtitle B--Provision of Benefits

SEC. 111. STANDARDS FOR MANAGED CARE ARRANGEMENTS.

    (a) Application of Requirements.--Each group health plan, and each 
carrier providing health insurance coverage, that provides for health 
care through a managed care arrangement (as defined in section 
193(10)(A)) shall comply with the applicable requirements of this 
section.
    (b) Consumer Disclosure.--
            (1) In general.--The group health plan, or carrier 
        providing health insurance coverage, that provides for health 
        care shall assure that, before an individual is enrolled with 
        the plan or carrier, the individual is provided with 
        information about the arrangements between the entity providing 
        for the managed care arrangement and health care providers for 
        the provision of covered benefits, including the following:
                    (A) Emergency services.--Arrangements for access to 
                emergency care services inside and outside the provider 
                network (including designated trauma centers), 
                including any requirements for prior authorization.
                    (B) Specialized treatment.--Arrangements for access 
                to specialized treatment providers (such as centers of 
                excellence).
                    (C) Choice of personal physician.--Ability of 
                enrollees to choose (and change the selection of) a 
                personal physician from among available participating 
                physicians and change that selection as appropriate.
                    (D) Essential community providers.--Arrangements 
                for access to essential community providers, including 
                disproportionate share hospitals, sole community 
                hospitals, medicare-dependent, small rural hospitals, 
                Federally qualified health centers, rural health 
                clinics, local health departments, and children's 
                hospitals.
            (2) Designation of centers of excellence.--The Secretary 
        shall establish a process for the designation of facilities, 
        including children's hospitals and other pediatric facilities, 
        as centers of excellence for purposes of this subsection. A 
        facility may not be designated unless the facility is 
        determined--
                    (A) to provide specialty care,
                    (B) to deliver care for complex cases requiring 
                specialized treatment and for individuals with chronic 
                diseases, and
                    (C) to meet other requirements that may be 
                established by the Secretary relating to specialized 
                education and training of health professionals, 
                participation in peer-reviewed research, or treatment 
                of patients from outside the geographic area of the 
                facility.
    (c) Provider Disclosure and Due Process Relating to Provider 
Networks.--
            (1) Disclosure.--The entity providing for a managed care 
        arrangement under which health coverage shall provide that 
        before entering into a contract with health care providers with 
        respect to the entity's provider network, the provider is given 
        information concerning the terms and conditions of the 
        provider's involvement with the network, including the 
        following:
                    (A) Standards for selection of providers for 
                network.--Information concerning the standards 
                (including criteria for quality, efficiency, 
                credentialing, and services) to be used by the entity 
                for contracting with health care providers with respect 
                to the entity's provider network.
                    (B) Review process.--Information concerning the 
                process under which a provider may request a review of 
                the entity's decision to terminate or refuse to renew 
                the provider's participation agreement.
            (2) Written notice of denials.--The entity providing for 
        the managed care arrangement shall provide written notice to 
        the provider of any denial of an application to participate in 
        the provider network.
            (3) Termination process.--
                    (A) In general.--The entity may not terminate or 
                refuse to renew a participation agreement with a 
                provider in the entity's provider network unless the 
                entity provides written notification to the provider of 
                the entity's decision to terminate or refuse to renew 
                the agreement. The notification shall include a 
                statement of the reasons for the entity's decision, 
                consistent with any standards described in paragraph 
                (1)(A).
                    (B) Timing of notification.--The entity shall 
                provide the notification required under subparagraph 
                (A) at least 30 days prior to the effective date of the 
                termination or expiration of the agreement (whichever 
                is applicable). The previous sentence shall not apply 
                if failure to terminate the agreement prior to the 
                deadline would adversely affect the health or safety of 
                a covered individual.
    (d) No Referral Required for Obstetrics and Gynecology.--A carrier 
or group health plan may not require an individual to obtain a referral 
from a physician in order to obtain covered items and services from a 
physician who specializes in obstetrics and gynecology.
    (e) Preemption of State Law Restrictions on Managed Care 
Arrangements.--
            (1) Limitation on restrictions on network plans.--Effective 
        as of January 1, 1997--
                    (A) a State may not prohibit or limit a carrier or 
                group health plan providing health coverage from 
                including incentives for enrollees to use the services 
                of participating providers;
                    (B) a State may not prohibit or limit such a 
                carrier or plan from limiting coverage of services to 
                those provided by a participating provider;
                    (C) a State may not prohibit or limit the 
                negotiation of rates and forms of payments for 
                providers by such a carrier or plan with respect to 
                health coverage;
                    (D) a State may not prohibit or limit such a 
                carrier or plan from limiting the number of 
                participating providers;
                    (E) a State may not prohibit or limit such a 
                carrier or plan from requiring that services be 
                provided (or authorized) by a practitioner selected by 
                the enrollee from a list of available participating 
                providers or, except as provided in subsection 111(d), 
                from requiring enrollees to obtain referral in order to 
                have coverage for treatment by a specialist or health 
                institution; and
                    (F) a State may not prohibit or limit the corporate 
                practice of medicine.
            (2) Definitions.--In this subsection:
                    (A) Managed care coverage.--The term ``manageds 
                care coverage'' means health coverage to the extent the 
                coverage is provided through a managed care arrangement 
                (as defined in section 193(10)(A)) that meets the 
                applicable requirements of this section.
                    (B) Participating provider.--The term 
                ``participating provider'' means an entity or 
                individual which provides, sells, or leases health care 
                services as part of a provider network (as defined in 
                section 193(10)(B)).

SEC. 112. REPORT ON UTILIZATION REVIEW STANDARDS.

    (a) Study.--The Secretary shall provide for a study on the 
feasibility and appropriateness of--
            (1) establishing standards for utilization review programs, 
        and
            (2) prohibiting group health plans and carriers providing 
        health insurance coverage from denying coverage of or payment 
        for items and services on the basis of a utilization review 
        program unless the program meets such standards.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Secretary shall submit to Congress a report 
on the study under subsection (a). The Secretary shall include the 
report recommendations regarding the application of standards for 
utilization review programs to group health plans and carriers 
providing health insurance coverage.
    (c) Preemption.--For provision preempting State laws relating to 
utilization review, see section 6103.

                   Subtitle C--Fair Rating Practices

SEC. 121. USE OF FAIR RATING PRACTICES.

    (a) Use of Fair Rating Practices.--The premium rate established by 
a carrier for health insurance coverage in the individual/small group 
market (including the premium rate for coverage for a small employer 
through a multiple employer welfare arrangement that is fully-insured) 
may not vary except by the following:
            (1) Age.--By age, based on classes of age established by 
        the Secretary, in consultation with the NAIC, consistent with 
        subsection (b).
            (2) Geographic area.--By geographic area, as identified by 
        a State consistent with subsection (c).
            (3) Family class.--By family class, based on the following 
        4 classes of family coverage: individual, individual with one 
        or more children, married couple without a child, and married 
        couple with one or more children.
            (4) Benefit design.--By benefit design of coverage, 
        including by type of coverage, such as standard coverage and 
        high-deductible coverage, and by type of coverage option 
        (described in section 193(13)) with respect to standard 
        coverage.
            (5) Administrative categories.--By permitted expense 
        category, based on differences in expenses among such 
        categories, consistent with subsection (d).
The premiums shall be established for the different benefit designs 
(including standard coverage and high-deductible coverage) based on the 
actuarial value of the coverage for the population of the individual/
small group market in the fair rating area, without regard to the 
distribution of such population among the types of coverage or type of 
coverage options.
    (b) Limitation on Variation by Age.--
            (1) In general.--Any variation in premium rates by age 
        under subsection (a)(1) for age classes of individuals under 65 
        years of age may not result in the ratio of the highest age 
        rate to the lowest age rate exceeding the limiting ratio 
        described in paragraph (2).
            (2) Limiting ratio.--For purposes of paragraph (1), the 
        limiting ratio described in this paragraph is--
                    (A) 4-to-1, for premiums for months in 1997,
                    (B) 3.67-to-1, for premiums for months in 1998,
                    (C) 3.33-to-1, for premiums for months in 1999, and
                    (D) 3-to-1, for premiums for months in 2000 and any 
                succeeding year.
            (3) Separate age classes for individuals 65 years of age or 
        older.--The Secretary shall establish one or more separate age 
        classes for individuals 65 years of age or older.
    (c) Geographic Area Variations.--For purposes of subsection (a)(2), 
a State--
            (1) may not identify an area that divides a 3-digit zip 
        code, a county, or all portions of a metropolitan statistical 
        area,
            (2) shall not permit premium rates for coverage offered in 
        a portion of an interstate metropolitan statistical area to 
        vary based on the State in which the coverage is offered, and
            (3) may, upon agreement with one or more adjacent States, 
        identify multi-state geographic areas consistent with 
        paragraphs (1) and (2).
    (d) Administrative Variations.--
            (1) Expense categories.--Expense categories shall be 
        established under subsection (a)(5) by a carrier in a manner 
        that only reflects differences based on marketing, commissions, 
        and similar expenses. Such categories shall take into account 
        health plan purchasing organizations.
            (2) Limitation on variations.--The variation provided among 
        expense categories under subsection (a)(5) may not result in a 
        premium for the highest expense category exceeding 120 percent 
        of the premium for the lowest expense category.
    (e) Premium Rating in Group Health Plans.--The premium rate 
established under a group health plan for health insurance coverage may 
not vary within a benefit design except by the factors described in 
subsection (a) and subject to the limitation specified in subsection 
(b).
    (f) Actuarial Certification.--Each carrier that offers health 
insurance coverage in a State shall file annually with the State 
commissioner of insurance a written statement by a member of the 
American Academy of Actuaries (or other individual acceptable to the 
commissioner) that, based upon an examination by the individual which 
includes a review of the appropriate records and of the actuarial 
assumptions of the carrier and methods used by the carrier in 
establishing premium rates for applicable health insurance coverage--
            (1) the carrier is in compliance with the applicable 
        provisions of this section, and
            (2) the rating methods are actuarially sound.
Each such carrier shall retain a copy of such statement for examination 
at its principal place of business.
    (g) Construction.--The provisions of this section shall apply to 
premium rates established by carriers for multiple employer welfare 
arrangements that are fully insured or for fully-insured coverage 
offered with respect to individuals and small employers in the 
individual/small group market. Such premium rates shall apply based on 
the fair rating area in which the covered individual or employee 
resides to reflect the population in the individual/small group market.

SEC. 122. ESTABLISHMENT OF RISK ADJUSTMENT MECHANISMS.

    (a) Establishment of Standards.--
            (1) Development of models.--
                    (A) In general.--The Secretary shall request the 
                NAIC to develop, within 9 months after the date of the 
                enactment of this Act and in consultation with the 
                American Academy of Actuaries, a model risk adjustment 
                system composed of one or more risk adjustment 
                mechanisms under which premiums applicable to health 
                insurance coverage in the individual/small group market 
                and coverage under multiple employer welfare 
                arrangements that are fully insured (without regard to 
                whether such an arrangement is offered through an 
                association) would be adjusted to take into account 
                such factors as may be appropriate to predict the 
                future need and the efficient use of services by 
                covered individuals in the market. Such factors may 
                include the age, gender, geographic residence, health 
                status, or other demographic characteristics of 
                individuals enrolled in such plans and shall include 
                consideration of enrollment of a disproportionate share 
                of individuals who enroll during the initial open 
                enrollment period under section 105(b)(1).
                    (B) Promulgation as proposed rule.--If the NAIC 
                develops such model within such period, the Secretary 
                shall publish the model as a proposed rule under 
                section 553 of title 5, United States Code. If the NAIC 
has not developed such model within such period, the Secretary shall 
publish (not later than 60 days after the end of such period) a 
proposed rule that specifies a proposed model that provides for 
effective risk adjustment mechanisms.
            (2) Rule making process.--The Secretary shall provide for a 
        period (described in section 553(c) of title 5, United States 
        Code) of not less than 30 days for public comment on a proposed 
        rule published under paragraph (1)(B). The Secretary shall 
        publish a final rule, by not later than January 1, 1996, that 
        specifies risk adjustment mechanisms that the Secretary finds 
        are effective for purposes of carrying out this section. Such 
        rule shall include models developed by the NAIC if the 
        Secretary finds that such models provide for effective risk 
        adjustment mechanisms.
            (3) Modification.--The Secretary, at the request of the 
        NAIC or otherwise, may by regulation modify the model risk 
        adjustment system established under this subsection.
    (b) Implementation of Risk Adjustment System.--Each State shall 
establish and maintain a risk adjustment system that conforms with the 
model established under this section by not later than January 1, 1997. 
A State may establish and maintain such a system jointly with one or 
more other States.

                    Subtitle D--Consumer Protections

SEC. 131. REQUIREMENT FOR PROVISION OF INFORMATION.

    (a) Carriers.--
            (1) In general.--Each carrier that offers health insurance 
        coverage to small employers (or eligible employees of small 
        employers) or qualifying individuals must disclose to such 
        prospective enrollees, to brokers, and to health plan 
        purchasing organizations the information that the Secretary may 
        specify relating to the performance of the carrier in providing 
        such coverage and relating to differences between the coverage 
        provided and the most similar model benefit package established 
        under section 144(b)(2). If a carrier offers to individuals or 
        employers coverage the actuarial value of which is more than 
        the actuarial value for high-deductible coverage but less than 
        such value for standard coverage, the carrier must disclose to 
        such employers or individuals detailed information on how the 
        coverage offered compares to any standard and high-deductible 
        coverage offered by the carrier to such individuals and 
        employers.
            (2) Marketing material.--Each carrier that provides any 
        health insurance coverage in a State shall file with the State 
        those marketing materials relating to the offer and sale of 
        health insurance coverage to be used for distribution before 
        the materials are used. Such materials shall be in a uniform 
        format specified under the standards established under section 
        1301.
    (b) Group Health Plans.--Each group health plan that provides 
health coverage must disclose to enrollees and potential enrollees 
information, similar to the information described in subsection (a), 
relating to performance of the plan in providing such coverage and 
relating to differences between the coverage provided and the most 
similar model benefit package established under section 144(b)(2).
    (c) Information Relating to Risk Adjustment.--Each carrier or group 
health plan providing coverage in the individual/small group market 
(including multiple employer health plans that are fully insured, 
without regard to whether such an arrangement or plan is offered 
through an association) shall provide to the State such information as 
the State may require in order to carry out section 122 (relating to 
risk adjustment mechanisms).

SEC. 132. PROHIBITION OF IMPROPER INCENTIVES.

    (a) Limitation on Financial Incentives.--No carrier that provides 
health insurance coverage may vary the commission or financial or other 
remuneration to a person based on the claims experience or health 
status of individuals enrolled by or through the person.
    (b) Nondiscrimination in Agent Compensation.--A carrier--
            (1) may not vary or condition the compensation provided to 
        an agent or broker related to the sale or renewal of health 
        insurance coverage because of the health status or claims 
        experience of any individuals enrolled with the carrier through 
        the agent or broker; and
            (2) may not terminate, fail to renew, or limit its contract 
        or agreement of representation with an agent or broker for any 
        reason related to the health status or claims experience of any 
        individuals enrolled with the carrier through the agent or 
        broker.
    (c) Prohibition of Tie-in Arrangements.--No carrier that offers 
health insurance coverage may require the purchase of any other 
insurance or product as a condition for the purchase of such coverage.

SEC. 133. WRITTEN POLICIES AND PROCEDURES RESPECTING ADVANCE 
              DIRECTIVES.

    A carrier and a group health plan offering health coverage shall 
meet the requirements of section 1866(f) of the Social Security Act 
(relating to maintaining written policies and procedures respecting 
advance directives), insofar as such requirements would apply to the 
carrier or plan if the carrier or plan were an eligible organization.

                          Subtitle E--Benefits

SEC. 141. QUALIFIED HEALTH COVERAGE.

    In this Act, the term ``qualified health coverage'' means health 
coverage that--
            (1) provides--
                    (A) standard coverage consistent with section 
                142(a), or
                    (B) high-deductible coverage consistent with 
                section 143; and
            (2) meets other requirements of subtitles A through D 
        applicable to the coverage and the carrier or group health plan 
        providing the coverage.

SEC. 142. STANDARD COVERAGE.

    (a) In General.--Health insurance coverage is considered to provide 
standard coverage consistent with this subsection and for preventive 
benefits under subsection (b)(4) if--
            (1) benefits under such coverage are provided within at 
        least each of the required categories of benefits described in 
        paragraph (1) of subsection (b) and consistent with such 
        subsection;
            (2) the actuarial value of the benefits meets the 
        requirements of subsection (c), and
            (3) the benefits comply with the minimum requirements 
        specified in subsection (d).
    (b) Required Categories of Covered Benefits.--
            (1) In general.--The categories of covered benefits 
        described in this paragraph are the types of benefits specified 
        in each of subparagraphs (A), (B), (C), (D), (E), and (F) of 
        paragraph (1), and subparagraphs (E) and (F) of paragraph (2), 
        of section 8904(a) of title 5, United States Code (relating to 
        types of benefits required to be in health insurance offered to 
        Federal employees).
            (2) Coverage of treatments in approved research trials.--
                    (A) In general.--Coverage of the routine medical 
                costs (as defined in subparagraph (B)) associated with 
                the delivery of treatments shall be considered to be 
                medically appropriate if the treatment is part of an 
                approved research trial (as defined in subparagraph 
                (C)).
                    (B) Routine medical costs defined.--In subparagraph 
                (A), the term ``routine medical costs'' means the cost 
                of health services required to provide treatment 
                according to the design of the trial, except those 
                costs normally paid for by other funding sources (as 
                defined by the Secretary). Such costs do not include 
                the cost of the investigational agent, devices or 
                procedures themselves, the costs of any nonhealth 
                services that might be required for a person to receive 
                the treatment, or the costs of managing the research.
                    (C) Approved research trial defined.--In 
                subparagraph (A), the term ``approved research trial'' 
                means a trial--
                            (i) conducted for the primary purpose of 
                        determining the safety, effectiveness, 
                        efficacy, or health outcomes of a treatment, 
                        compared with the best available alternative 
                        treatment, and
                            (ii) approved by the Secretary.
                A trial is deemed to be approved under clause (ii) if 
                it is approved by the National Institutes of Health, 
                the Food and Drug Administration (through an 
                investigational new drug exemption), the Department of 
                Veterans Affairs, or by a qualified nongovernmental 
                research entity (as identified in guidelines issued by 
                one or more of the National Institutes of Health).
            (3) Coverage of off-label use.--An off-label use for a drug 
        that has been found to be safe and effective under section 505 
        of the Federal Food, Drug, and Cosmetic Act shall be covered if 
        the medical indication for which it is used is listed in one of 
        the following 3 compendia: the American Hospital Formulary 
        Service-Drug Information, the American Medical Association Drug 
        Evaluations, and the United States Pharmacopeia-Drug 
        Information.
            (4) Preventive benefits.--The following are preventive 
        benefits that shall be covered without any deductibles, 
        copayment, coinsurance, or other cost-sharing:
                    (A) Newborn, well-baby and well-child care.--
                Newborn care, well-baby care, and well-child care for 
                individuals under 19 years of age, including routine 
                physical examinations, routine immunizations, and 
                routine tests, as specified by the Secretary based on 
                the schedule recommended by the American Academy of 
Pediatricians.
                    (B) Mammograms.--Routine screening mammograms 
                (including their interpretation), limited to 1 
                mammogram for a woman who is at least 35 (but less than 
                40) years of age, 1 mammogram every 2 years for a woman 
                who is at least 40 (but less than 50) years of age, and 
                1 mammogram every year for a woman who is at least 50 
                years of age.
                    (C) Screening pap smears and pelvic exams.--
                Screening pap smears and pelvic exams for women over 17 
                years of age, limited to 1 each year.
                    (D) Colorectal screening.--Colorectal screening for 
                individuals over 18 years of age at high risk, 
                consisting of 1 fecal occult blood screening test every 
                year, 1 screening sigmoidoscopy every 5 years, and 1 
                screening colonoscopy every 4 years.
                    (E) Screening tuberculin tests.--Screening 
                tuberculin tests annually for individuals at risk of 
                contracting tuberculosis.
                    (F) Prenatal care.--Prenatal care.
                    (G) Adult immunizations.--Routine immunizations for 
                an individual over 17 years of age (including booster 
                immunizations against tetanus and diphtheria, but 
                limited to 1 such immunization every 10 years).
                    (H) Prostate cancer screening.--Routine cancer 
                screening for a man who is at least 40 years of age 
                through a prostate specific antigen test, limited to 1 
                test each year.
    (c) Standard Actuarial Value.--
            (1) In general.--The actuarial value of the benefits under 
        standard coverage in a fair rating area meets the requirements 
        of this subsection if such value is equivalent to the standard 
        actuarial value described in paragraph (2) for the area. The 
        actuarial value of benefits under standard coverage shall be 
        determined using the adjustment under paragraph (3) for a 
        standardized population and set of standardized utilization and 
        cost factors.
            (2) Standard actuarial value described.--The standard 
        actuarial value described in this paragraph for coverage in a 
        geographic area is the actuarial value of benchmark coverage 
        during 1994 in such area. Such actuarial value shall be 
        determined using the adjustment under paragraph (3) for a 
        standardized population and set of standardized utilization and 
        cost factors and updated annually in accordance with section 
        144(a).
            (3) Adjustments for standardized population, standardized 
        utilization and cost factors, and geographic area.--The 
        adjustment under this paragraph--
                    (A) for a standardized population shall be made by 
                not taking into account individuals 65 years of age or 
                older, employees of the United States Postal Service, 
                retirees, and annuitants; and
                    (B)(i) except as provided in clause (ii), for a 
                geographic area shall be made in a manner that reflects 
                the ratio of the actuarial value of benchmark coverage 
                in such geographic area (as adjusted under subparagraph 
                (A)) to such actuarial value for such benchmark 
                coverage for the United States as a whole, taking into 
                account standardized actuarial utilization and cost 
                factors, and
                    (ii) in the case of a group health plan operating 
                in more than one geographic area, the ratio described 
                in clause (i) shall be determined in accordance with 
                regulations promulgated by the Secretary.
        At the election of a group health plan under subparagraph 
        (B)(ii), the ratio under such subparagraph shall be 1.
    (d) Minimum Requirements Within a Category.--Benefits offered in 
any standard coverage within any category of benefits shall be not less 
than the narrowest scope and shortest duration of benefits within that 
category in any of the approved health benefits plans offered under 
chapter 89 of title 5, United States Code (relating to the Federal 
Employees Health Benefits Program) in 1994. Benefits offered in the 
standard plan within the category of preventive services shall not 
require payment of cost-sharing for covered items and services.
    (e) No Coverage of Specific Treatment, Procedures, or Classes 
Required.--Nothing in this section (or section 143) may be construed to 
require the coverage of any specific procedure or treatment or class of 
service in health coverage under this Act or through regulation.
    (f) Construction.--Nothing in this section (or section 143) shall 
be construed as requiring coverage to include benefits for items and 
services that are not medically necessary or appropriate.

SEC. 143. HIGH-DEDUCTIBLE COVERAGE.

    Health insurance coverage is considered to provide high-deductible 
coverage consistent with this section if--
            (1) benefits under such coverage comply with--
                    (A) the requirements described in section 142(b) 
                (relating to required categories of covered benefits), 
                and
                    (B) the requirements described in section 142(d) 
                (relating to minimum requirements within a category);
            (2) the deductible amount is the amount established under 
        section 144(b)(1);
            (3) benefits under the coverage in any year (other than 
        preventive benefits described in section 142(b)(4)) are covered 
        only to the extent expenses incurred for items and services 
        included in the coverage for the year exceed the deductible 
        amount specified in paragraph (2); and
            (4) the actuarial value of the coverage (as determined 
        under rules consistent with section 142(c)) is equivalent to 80 
        percent of the actuarial value established under such section 
        for standard coverage.

SEC. 144. ACTUARIAL VALUATION OF BENEFITS.

    (a) In General.--The Secretary, in consultation with the NAIC and 
the American Academy of Actuaries, shall establish (and may from time 
to time modify) procedures by which health insurance benefits are 
valued for purposes of this subtitle.
    (b) Deductible; Model Benefit Packages.--The Secretary, in 
consultation with the NAIC and the American Academy of Actuaries, shall 
establish--
            (1) the deductible amount for high-deductible coverage for 
        the purposes of section 143(2) such that the actuarial value of 
        high-deductible coverage described in section 143 is 20 percent 
        less than the actuarial value of standard coverage described in 
        section 142(a); and
            (2) model benefit packages that may be treated, for 
        purposes of this title, as meeting the requirements for 
        standard or high-deductible coverage under sections 142(a) and 
        143, respectively, and which shall include model cost sharing 
        arrangements for fee-for-service options, managed care options, 
        and point-of-service options.

SEC. 145. LIMITATION ON OFFERING SUPPLEMENTAL BENEFITS.

    A carrier or group health plan offering qualified health coverage 
may offer coverage of items and services only in addition to the 
qualified standard coverage offered (whether in the form of coverage of 
additional items and services or a reduction in cost sharing) and only 
if--
            (1) such supplemental coverage is offered and priced 
        separately from the standard coverage offered and is only made 
        available to individuals who obtain qualified standard coverage 
        through the carrier or plan;
            (2) the purchase of the qualified health coverage is not 
        conditioned upon the purchase of such supplemental coverage; 
        and
            (3) in the case of supplemental coverage that consists of a 
        reduction in the cost-sharing otherwise applicable, the premium 
        for the supplemental coverage takes into account any expected 
        increase in utilization of items and services included in the 
        qualified health coverage resulting from obtaining the 
        supplemental coverage.

SEC. 146. FAMILY COVERAGE OPTION; SUPPLEMENTAL COVERAGE.

    (a) Family Coverage Option.--Each carrier and group health plan 
that offers health insurance coverage shall provide for an option under 
which children under 26 years of age (without regard to whether they 
are full-time students or disabled) will be treated (with respect to 
family coverage) as family members. The carrier or plan may impose an 
additional premium for such option.
    (b) Construction.--Nothing in this title shall be construed as 
limiting the benefits that may be offered as part of a group health 
plan or health insurance coverage.

SEC. 147. LEVEL PLAYING FIELD FOR PROVIDERS.

    Nothing in this subtitle may be construed to require or prohibit 
the use of a particular class of provider, among the providers that are 
legally authorized to provide such treatment.

   Subtitle F--Standards and Certification; Enforcement; Preemption; 
                           General Provisions

SEC. 151. ESTABLISHMENT OF STANDARDS.

    (a) Role of NAIC.--
            (1) In general.--The Secretary shall request the NAIC to 
        develop, within 9 months after the date of the enactment of 
        this Act, model regulations that specify standards with respect 
        to the requirements of this subtitle as applicable to carriers 
        and health insurance coverage.
            (2) Review of standards.--If the NAIC develops recommended 
        regulations specifying such standards within such period, the 
        Secretary shall review the standards. Such review shall be 
        completed within 60 days after the date the regulations are 
        developed. Unless the Secretary determines within such period 
        that the standards do not meet the requirements, such standards 
        shall serve as the standards under this subtitle, with such 
        amendments as the Secretary deems necessary.
    (b) Contingency.--If the NAIC does not develop such model 
regulations within such period or the Secretary determines that such 
regulations do not specify standards that meet the requirements 
described in subsection (a), the Secretary shall specify, within 15 
months after the date of the enactment of this Act, standards to carry 
out those requirements.

SEC. 152. APPLICATION OF STANDARDS TO CARRIERS THROUGH STATES.

    (a) Application of Standards.--
            (1) In general.--Each State shall submit to the Secretary, 
        by the deadline specified in paragraph (2), a report on steps 
        the State is taking to implement and enforce the standards 
        established under section 151 with respect to carriers and 
        health insurance coverage offered or renewed not later than 
        such deadline.
            (2) Deadline for report.--The deadline under this paragraph 
        is 1 year after the date the standards are established under 
        section 151.
    (b) Federal Role.--
            (1) Notice of deficiency.--If the Secretary determines that 
        a State has failed to submit a report by the deadline specified 
        under subsection (a)(2) or finds that the State has not 
        implemented and provided adequate enforcement of the standards 
        established under section 151, the Secretary shall notify the 
        State and provide the State a period of 60 days in which to 
        submit such report or to implement and enforce such standards.
            (2) Implementation of alternative.--
                    (A) In general.--If, after such 60-day period, the 
                Secretary finds that such a failure has not been 
                corrected, the Secretary shall provide for such 
                mechanism for the implementation and enforcement of 
                such standards in the State as the Secretary determines 
                to be appropriate.
                    (B) Effective period.--Such implementation and 
                enforcement shall take effect with respect to carriers, 
                and health insurance coverage offered or renewed, on or 
                after 3 months after the date of the Secretary's 
                finding under subparagraph (A), and until the date the 
                Secretary finds that such a failure has been corrected.

SEC. 153. APPLICATION TO GROUP HEALTH PLANS.

    (a) In General.--Subject to subsection (b), sections 151 and 152 
shall apply to group health plans providing health coverage in the same 
manner as they apply to carriers providing health insurance coverage.
    (b) Substitution of References.--For purposes of subsection (a), 
any reference in section 151 or 152 to--
            (1) a State or the Secretary of Health and Human Services 
        is deemed a reference to the Secretary of Labor, and
            (2) a carrier or health insurance coverage is deemed a 
        reference to a group health plan and health coverage, 
        respectively.

SEC. 154. ENFORCEMENT.

    (a) Enforcement by Department of Labor for Employers and Group 
Health Plans.--
            (1) In general.--For purposes of part 5 of subtitle B of 
        title I of the Employee Retirement Income Security Act of 1974, 
        the provisions of this title insofar as they relate to group 
        health plans or employers shall be deemed to be provisions of 
        title I of such Act irrespective of exclusions under section 
        4(b) of such Act.
            (2) Regulatory authority.--With respect to the regulatory 
        authority of the Secretary of Labor under this subtitle 
        pursuant to paragraph (1), section 505 of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1135) shall 
        apply.
    (b) Enforcement by Excise Tax for Carriers.--
            (1) In general.--Chapter 43 of the Internal Revenue Code of 
        1986 (relating to qualified pension plans, etc.) is amended by 
        adding at the end thereof the following new section:

``SEC. 4980C. FAILURE OF CARRIER TO COMPLY WITH HEALTH INSURANCE 
              STANDARDS.

    ``(a) Imposition of Tax.--
            ``(1) In general.--There is hereby imposed a tax on the 
        failure of a carrier to comply with the requirements applicable 
        to the carrier under parts 1 through 4 of subtitle A and 
        subtitle B of title I of the Health Insurance Affordability Act 
        of 1996.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        failure by a carrier in a State if the Secretary of Health and 
        Human Services determines that the State has in effect a 
        regulatory enforcement mechanism that provides adequate 
        sanctions with respect to such a failure by such a carrier.
    ``(b) Amount of Tax.--
            ``(1) In general.--Subject to paragraph (2), the amount of 
        the tax imposed by subsection (a) shall be $100 for each day 
        during which such failure persists for each individual to which 
        such failure relates. A rule similar to the rule of section 
        4980B(b)(3) shall apply for purposes of this section.
            ``(2) Limitation.--The amount of the tax imposed by 
        subsection (a) for a carrier with respect to health insurance 
        coverage shall not exceed 25 percent of the amounts received 
        for such coverage during the period such failure persists.
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid by the carrier.
    ``(d) Exceptions.--
            ``(1) Corrections within 30 days.--No tax shall be imposed 
        by subsection (a) by reason of any failure if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected within the 30-day 
                period beginning on the earliest date the carrier knew, 
                or exercising reasonable diligence would have known, 
                that such failure existed.
            ``(2) 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 payment of such tax would be 
        excessive relative to the failure involved.
    ``(e) Definitions.--For purposes of this section, the terms `health 
insurance coverage' and `carrier' have the respective meanings given 
such terms in section 193 of the Health Insurance Affordability Act of 
1996.''
            (2) Clerical amendment.--The table of sections for chapter 
        43 of such Code is amended by adding at the end thereof the 
        following new item:

                              ``Sec. 4980C. Failure of carrier to 
                                        comply with health insurance 
                                        standards.''

SEC. 155. LIMITATION ON SELF INSURANCE FOR SMALL EMPLOYERS.

    A single employer plan (as defined in section 3(40)(B) of the 
Employee Retirement Income Security Act of 1974) may not offer health 
coverage other than through a carrier unless the plan has at least 100 
eligible employees.

              Subtitle G--Definitions; General Provisions

SEC. 191. GENERAL DEFINITIONS.

    For purposes of this Act:
            (1) Applicable regulatory authority.--The term ``applicable 
        regulatory authority'' means, with respect to a carrier 
        operating in a State--
                    (A) the State insurance commissioner, or
                    (B) the Secretary, in the case described in section 
                152(b)(2).
            (2) Family member.--
                    (A) In general.--Individuals are considered to be 
                members of a family if--
                            (i) they are married, or
                            (ii) they have a legal parent-to-child 
                        relationship (whether by natural birth or 
                        adoption), if the child is--
                                    (I) under 19 years of age,
                                    (II) is under 25 years of age and a 
                                full-time student, or
                                    (III) an unmarried dependent 
                                regardless of age who is incapable of 
                                self-support because of mental or 
                                physical disability which existed 
                                before age 22.
                    (B) Special rules.--Family members--
                            (i) include an adopted child and a 
                        recognized natural child;
                            (ii) include a stepchild or foster child 
                        with respect to an individual but only if the 
                        child lives with the individual in a regular 
                        parent-child relationship; and
                            (iii) include such other children as the 
                        Secretary may specify, but shall not include an 
                        emancipated minor.
            (3) Prisoner.--The term ``prisoner'' means, as specified by 
        the Secretary, an individual during a period of imprisonment 
        under Federal, State, or local authority after conviction as an 
        adult.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (5) State.--The term ``State'' means the 50 States, the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        American Samoa, and the Northern Mariana Islands.

SEC. 192. DEFINITIONS RELATING TO EMPLOYMENT.

    (a) Application of ERISA Definitions.--Except as otherwise provided 
in this Act, terms used in this Act shall have the meanings applicable 
to such terms under section 3 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002).
    (b) Additional Definitions.--For purposes of this title:
            (1) Countable employee.--The term ``countable employee'' 
        means, with respect to an employer for a month, any employee 
        other than an employee whose normal work week is less than 10 
        hours.
            (2) Large employer.--The term ``large employer'' means an 
        employer that is not a small employer (as defined in paragraph 
        (4)).
            (3) Qualifying employee.--
                    (A) In general.--The term ``qualifying employee'' 
                means, with respect to an employer for a month, any 
                employee other than--
                            (i) a part-time, seasonal, or temporary 
                        employee (as defined in subparagraph (B)); or
                            (ii) an employee who is a child described 
                        in section 191(2)(A)(ii).
                    (B) Part-time, seasonal, or temporary employee 
                defined.--For purposes of subparagraph (A), the term 
                ``part-time, seasonal, or temporary employee'' means 
                any of the following employees with respect to a month:
                            (i) Certain part-time employees.--Any 
                        employee whose normal work week is reasonably 
                        expected as of the first day of such month to 
                        be less than 20 hours.
                            (ii) Seasonal or temporary employees.--Any 
                        employee who is not reasonably expected as of 
                        the first day of such month to be employed by 
                        the employer for a period of 120 consecutive 
                        days during any 365-day period that includes 
                        such first day.
                            (iii) Delay for certain part-time 
                        employees.--Any employee whose normal work week 
                        is reasonably expected as of the first day of 
                        such month to be at least 20 hours, but less 
                        than 35 hours, and the normal work week of the 
                        employee during the preceding 3 months was less 
                        than 20 hours.
            (4) Small employer.--The term ``small employer'' means, 
        with respect to a calendar year, an employer that normally 
        employs more than 1 but less than 100 countable employees on a 
        typical business day. For the purposes of this paragraph, the 
        term ``employee'' includes a self-employed individual. For 
        purposes of determining if an employer is a small employer, 
        rules similar to the rules of subsection (b) and (c) of section 
        414 of the Internal Revenue Code of 1986 shall apply.

SEC. 193. DEFINITIONS RELATING TO HEALTH COVERAGE, PLANS, AND CARRIERS.

    Except as otherwise provided, for purposes of this Act:
            (1) Benchmark coverage.--The term ``benchmark coverage'' 
        means the standard option of the Blue Cross-Blue Shield plan 
        offered under the Federal Employees Health Benefits Program 
        under chapter 89 of title 5, United States Code, as in effect 
        during 1994.
            (2) Carrier.--The term ``carrier'' means a licensed 
        insurance company, an entity offering prepaid hospital or 
        medical services, and a health maintenance organization, and 
        includes a similar organization regulated under State law for 
        solvency.
            (3) Class of family coverage.--The term ``class of family 
        coverage'' means the 4 classes described in section 121(a)(3).
            (4) Fair rating area.--The term ``fair rating area'' means 
        a geographic area identified by a State for purposes of section 
        121(a)(2).
            (5) Group health plan.--The term ``group health plan'' 
        means an employee welfare benefit plan providing medical care 
        (as defined in section 213(d) of the Internal Revenue Code of 
        1986) to participants or beneficiaries directly or through 
        insurance, reimbursement, or otherwise, but does not include 
        any type of coverage excluded from the definition of a health 
        insurance coverage under paragraph (7)(B).
            (6) Health coverage.--The term ``health coverage'' means 
        health insurance coverage provided by a carrier or medical care 
        provided under a group health plan.
            (7) Health insurance coverage.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``health insurance coverage'' means any 
                hospital or medical service policy or certificate, 
                hospital or medical service plan contract, or health 
                maintenance organization group contract offered by a 
                carrier.
                    (B) Exception.--Such term does not include any of 
                the following (or any combination of the following):
                            (i) Coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof.
                            (ii) Medicare supplemental health 
                        insurance.
                            (iii) Coverage issued as a supplement to 
                        liability insurance.
                            (iv) Liability insurance, including general 
                        liability insurance and automobile liability 
                        insurance.
                            (v) Workers' compensation or similar 
                        insurance.
                            (vi) Automobile medical-payment insurance.
                            (vii) Coverage for a specified disease or 
                        illness.
                            (viii) A hospital or fixed indemnity 
                        policy.
                            (ix) Coverage provided exclusively to 
                        individuals who are not eligible individuals.
            (8) Health maintenance organization.--The term ``health 
        maintenance organization'' includes, as defined in standards 
        established under section 143, an organization that provides 
        health insurance coverage which meets specified standards and 
        under which health services are offered to be provided on a 
        prepaid, at-risk basis primarily through a defined set of 
        providers.
            (9) Individual/small group market.--The term ``individual/
        small group market'' means the insurance market offered--
                    (A) to individuals seeking health insurance 
                coverage on behalf of themselves (and their dependents) 
                insofar as no employer is seeking such coverage on 
                behalf of the individual, and
                    (B) to small employers seeking health insurance 
                coverage on behalf of their employees (and their 
                dependents),
        regardless of whether or not such coverage is made available 
        directly or through a multiple employer welfare arrangement, 
        association, or otherwise.
            (10) Managed care arrangements.--
                    (A) Managed care arrangement.--The term ``managed 
                care arrangement'' means, with respect to a group 
                health plan or under health insurance coverage, an 
                arrangement under such plan or coverage under which 
                providers agree to provide items and services covered 
                under the arrangement to individuals covered under the 
                plan or who have such coverage.
                    (B) Provider network.--The term ``provider 
                network'' means, with respect to a group health plan or 
                health insurance coverage, providers who have entered 
                into an agreement described in subparagraph (A).
            (11) Multiple employer welfare arrangement.--The term 
        ``multiple employer welfare arrangement'' shall have the 
        meaning applicable under section 3(40) of the Employee 
        Retirement Income Security Act of 1974.
            (12) NAIC.--The term ``NAIC'' means the National 
        Association of Insurance Commissioners.
            (13) Options.--Each of the following is a ``type of 
        coverage option'' in relation to standard coverage:
                    (A) Fee-for-service option.--Standard coverage is 
                considered to provide a ``fee-for-service option'' if, 
                regardless of whether covered individuals may receive 
                benefits through a provider network, benefits with 
                respect to the covered items and services in the 
                coverage are made available for such items and services 
                provided through any lawful provider of such covered 
                items and services and payment is made to such a 
                provider whether or not there is a contractual 
                arrangement between the provider and the carrier or 
                plan.
                    (B) Managed care option.--Standard coverage is 
                considered to provide a ``managed care option'' if 
                benefits with respect to the covered items and services 
                in the coverage are made available exclusively through 
                a provider network, except in the case of emergency 
                services and as otherwise required under law.
                    (C) Point-of-service option.--Standard coverage is 
                considered to provide a ``point-of-service option'' if 
                the benefits with respect to covered items and services 
                in the coverage are made available principally through 
                a managed care arrangement, with the choice of the 
                enrollee to obtain such benefits for items and services 
                provided through any lawful provider of such covered 
                items and services. The coverage may provide for 
                different cost sharing schedules based on whether the 
                items and services are provided through such an 
                arrangement or outside such an arrangement.
            (14) Qualified health coverage.--The term ``qualified 
        health coverage'' has the meaning given such term in section 
        141.
            (15) Standard coverage.--The term ``standard coverage'' 
        means coverage provided consistent with section 142(a).
            (16) State commissioner of insurance.--The term ``State 
        commissioner of insurance'' includes a State superintendent of 
        insurance.

SEC. 194. DEFINITIONS RELATING TO RESIDENCE AND IMMIGRATION STATUS.

    Except as otherwise provided, for purposes of this Act:
            (1) Alien permanently residing in the united states under 
        color of law.--The term ``alien permanently residing in the 
        United States under color of law'' means an alien lawfully 
        admitted for permanent residence (within the meaning of section 
        101(a)(20) of the Immigration and Nationality Act), and 
        includes any of the following (such status not having changed):
                    (A) An alien who is admitted as a refugee under 
                section 207 of the Immigration and Nationality Act.
                    (B) An alien who is granted asylum under section 
                208 of such Act.
                    (C) An alien whose deportation is withheld under 
                section 243(h) of such Act.
                    (D) An alien whose deportation is suspended 
                pursuant to section 244 of such Act.
                    (E) An alien who is granted conditional entry 
                pursuant to section 203(a)(7) of such Act as in effect 
                before April 1, 1980.
                    (F) An alien who is admitted for temporary 
                residence under section 210, 210A, or 245A of such Act.
                    (G) An alien who is within a class of aliens 
                lawfully present in the United States pursuant to any 
                other provision of such Act, if (i) the Attorney 
                General determines that the continued presence of such 
                class of aliens serves a humanitarian or other 
                compelling public interest, and (ii) the Secretary 
                determines that such interest would be further served 
                by treating each such alien within such class as a 
                ``legal permanent resident'' for purposes of this Act 
                or who has been granted extended voluntary departure as 
                a member of a nationality group.
                    (H) An alien who is the spouse or unmarried child 
                under 21 years of age of a citizen of the United 
                States, or the parent of such a citizen if the citizen 
                is over 21 years of age, and with respect to whom an 
                application for adjustment to lawful permanent 
                residence is pending.
                    (I) An alien within such other classification of 
                permanent resident aliens as the Secretary may 
                establish by regulation.
            (2) Long-term nonimmigrant.--The term ``long-term 
        nonimmigrant'' means a nonimmigrant described in subparagraph 
        (E), (H), (I), (K), (L), (N), (O), (Q), or (R) of section 
        101(a)(15) of the Immigration and Nationality Act.
            (3) Qualifying individual.--The term ``qualifying 
        individual'' means, an individual who is a resident of the 
        United States, who is not a prisoner, and is--
                    (A) a citizen or national of the United States;
                    (B) an alien permanently residing in the United 
                States under color of law (as defined in paragraph 
                (1)); or
                    (C) a long-term nonimmigrant (as defined in 
                paragraph (2)).

SEC. 195. EFFECTIVE DATES.

    The requirements of this title shall apply with respect to--
            (1) group health plans for plan years beginning on or after 
        January 1, 1997, and
            (2) carriers (with respect to coverage other than under a 
        group health plan) as of January 1, 1997.

                TITLE II--ADMINISTRATIVE SIMPLIFICATION

SEC. 200. PURPOSE.

    It is the purpose of this title to improve the efficiency and 
effectiveness of the health care system, including the medicare program 
under title XVIII of the Social Security Act and the medicaid program 
under title XIX of such Act, by encouraging the development of a health 
information network through the adoption of standards and the 
establishment of requirements for the electronic transmission of 
certain health information.

SEC. 201. DEFINITIONS.

    For purposes of this title:
            (1) Code set.--The term ``code set'' means any set of codes 
        used for encoding data elements, such as tables of terms, 
        medical concepts, medical diagnostic codes, or medical 
        procedure codes.
            (2) Coordination of benefits.--The term ``coordination of 
        benefits'' means determining and coordinating the financial 
        obligations of plan sponsors when health care benefits are 
        payable by more than one such sponsor.
            (3) Health information.--The term ``health information'' 
        means any information that relates to the past, present, or 
        future physical or mental health or condition or functional 
        status of an individual, the provision of health care to an 
        individual, or payment for the provision of health care to an 
        individual.
            (4) Health information network.--The term ``health 
        information network'' means the health information system that 
        is formed through the application of the requirements and 
        standards established under this title.
            (5) Health information network service.--The term ``health 
        information network service''--
                    (A) means a private entity or an entity operated by 
                a State that enters into contracts--
                            (i) to process or facilitate the processing 
                        of nonstandard data elements of health 
                        information into standard data elements;
                            (ii) to provide the means by which persons 
                        are connected to the health information network 
                        for purposes of meeting the requirements of 
                        this title, including the holding of standard 
data elements of health information;
                            (iii) to provide authorized access to 
                        health information through the health 
                        information network; or
                            (iv) to provide specific information 
                        processing services, such as automated 
                        coordination of benefits and claims transaction 
                        routing; and
                    (B) includes a health information security 
                organization.
            (6) Health information security organization.--The term 
        ``health information security organization'' means a private 
        entity or an entity operated by a State that accesses standard 
        data elements of health information through the health 
        information network, processes such information into non-
        identifiable health information, and may store such 
        information.
            (7) Health provider.--The term ``health provider'' includes 
        a provider of services (as defined in section 1861(u) of the 
        Social Security Act), a provider of medical or other health 
        services (as defined in section 1861(s) of such Act), and any 
        other person (other than a plan sponsor) furnishing health care 
        items or services.
            (8) Individually identifiable health information.--The term 
        ``individually identifiable health information'' means health 
        information in the health information network--
                    (A) that identifies an individual who is the 
                subject of the information; or
                    (B) with respect to which there is a reasonable 
                basis to believe that the information can be used to 
                identify such an individual.
            (9) Nonidentifiable health information.--The term 
        ``nonidentifiable health information'' means health information 
        that is not individually identifiable health information.
            (10) Plan sponsor.--The term ``plan sponsor'' means--
                    (A) a carrier (as defined in section 193(2)) 
                providing health insurance coverage (as defined in 
                section 193(7));
                    (B) a group health plan;
                    (C) an association or other entity which 
                establishes or maintains a multiple employer welfare 
                arrangement (as defined in section 193(11)) providing 
                benefits consisting of medical care described in 
                section 607(1) of the Employee Retirement Income 
                Security Act of 1974; and
                    (D) a State, or the Federal Government, acting in a 
                capacity as a provider of health benefits to eligible 
                individuals that is equivalent to that of a carrier.
            (11) Standard.--The term ``standard'', when used with 
        reference to a transaction or to data elements of health 
        information, means that the transaction or data elements meet 
        any standard adopted by the Secretary under subtitle A that 
        applies to the transaction or data elements.

        Subtitle A--Standards for Data Elements and Transactions

SEC. 211. GENERAL REQUIREMENTS ON SECRETARY.

    (a) In General.--The Secretary shall adopt standards and 
modifications to standards under this subtitle that are--
            (1) consistent with the objective of reducing the costs of 
        providing and paying for health care; and
            (2) in use and generally accepted, developed, or modified 
        by the standard-setting organizations accredited by the 
        American National Standard Institute.
    (b) Initial Standards.--The Secretary may develop an expedited 
process for the adoption of initial standards under this part.
    (c) Protection of Commercial Information.--In adopting standards 
under this part, the Secretary may not require disclosure of trade 
secrets or confidential commercial information by any person.

SEC. 212. STANDARDS FOR DATA ELEMENTS OF HEALTH INFORMATION.

    (a) In General.--The Secretary shall adopt standards necessary to 
make uniform and compatible for electronic transmission through the 
health information network the data elements of any health information 
that the Secretary determines is appropriate for transmission in 
connection with a transaction described in section 221.
    (b) Additions.--The Secretary may make additions to any set of data 
elements adopted under subsection (a) as the Secretary determines 
appropriate in a manner that minimizes the disruption and cost of 
compliance with such additions.
    (c) Certain Data Elements.--
            (1) Unique health identifiers.--The Secretary shall 
        establish a system to provide for a standard unique health 
        identifier for each individual, employer, plan sponsor, and 
        health provider for use in the health care system.
            (2) Code sets.--
                    (A) In general.--The Secretary, in consultation 
                with experts from the private sector and Federal 
                agencies, shall--
                            (i) select code sets for appropriate data 
                        elements from among the code sets that have 
                        been developed by private and public entities; 
                        or
                            (ii) establish code sets for such data 
                        elements if no code sets for the data elements 
                        have been developed.
                    (B) Distribution.--The Secretary shall establish 
                efficient and low-cost procedures for distribution of 
                code sets and modifications to code sets.

SEC. 213. INFORMATION TRANSACTION STANDARDS.

    (a) In General.--The Secretary shall adopt technical standards that 
are consistent with the health information network privacy standards 
adopted under section 214 relating to the method by which standard data 
elements of health information may be transmitted electronically, 
including standards with respect to the format in which such data 
elements may be transmitted.
    (b) Special Rule for Coordination of Benefits.--Any standard 
adopted by the Secretary under paragraph (1) that relates to 
coordination of benefits shall provide that a claim for reimbursement 
for health services furnished shall be tested, by an algorithm 
specified by the Secretary, against all records of enrollment and 
eligibility for the individual who received such services that are 
available to the recipient of the claim through the health information 
network to determine any primary and secondary obligors for payment.
    (c) Electronic Signature.--The Secretary, in coordination with the 
Secretary of Commerce, shall promulgate regulations specifying 
procedures for the electronic transmission and authentication of 
signatures, compliance with which shall be deemed to satisfy State and 
Federal statutory requirements for written signatures with respect to 
transactions described in section 221 and written signatures on health 
records and prescriptions.
    (d) Standards for Claims for Clinical Laboratory Tests.--The 
standards under this section shall provide that claims for clinical 
laboratory tests for which benefits are payable by a plan sponsor shall 
be submitted directly by the person or entity that performed (or 
supervised the performance of) the tests to the sponsor in a manner 
consistent with (and subject to such exceptions as are provided under) 
the requirement for direct submission of such claims under the medicare 
program.

SEC. 214. HEALTH INFORMATION NETWORK PRIVACY STANDARDS.

    The Secretary shall adopt standards respecting the privacy of 
individually identifiable health information that is in the health 
information network. Such standards shall include standards concerning 
at least the following:
            (1) The rights of an individual who is the subject of such 
        information.
            (2) The procedures to be established for the exercise of 
        such rights.
            (3) The uses and disclosures of such information that are 
        authorized or required.
            (4) Safeguards for the security of such information and 
        adequate security practices.

SEC. 215. TIMETABLES FOR ADOPTION OF STANDARDS.

    (a) Initial Standards for Data Elements.--The Secretary shall adopt 
standards relating to--
            (1) the data elements for the information described in 
        section 212(a) not later than 9 months after the date of the 
        enactment of this Act (except in the case of standards with 
        respect to data elements for claims attachments, which shall be 
        adopted not later than 24 months after the date of the 
        enactment of this Act); and
            (2) any addition to a set of data elements, in conjunction 
        with making such an addition.
    (b) Initial Privacy Standards.--The Secretary shall adopt standards 
relating to the privacy of individually identifiable health information 
in the health information network under section 214 not later than 12 
months after the date of the enactment of this Act.
    (c) Initial Standards for Information Transactions.--The Secretary 
shall adopt standards relating to information transactions under 
section 213 not later than 18 months after the date of the enactment of 
this Act (except in the case of standards for claims attachments, which 
shall be adopted not later than 24 months after the date of the 
enactment of this Act).
    (d) Modifications to Standards.--
            (1) In general.--Except as provided in paragraph (2), the 
        Secretary shall review the standards adopted under this 
        subtitle and shall adopt modified standards as determined 
        appropriate, but not more frequently than once every 6 months. 
        Any modification to standards shall be completed in a manner 
        which minimizes the disruption to, and costs of compliance 
        incurred by, a plan sponsor, health provider, or health plan 
        purchasing organization that is required to comply with 
        subtitle B.
            (2) Special rules.--
                    (A) Modifications during first 12-month period.--
                Except with respect to additions and modifications to 
                code sets under subparagraph (B), the Secretary may not 
                adopt any modification to a standard adopted under this 
                subtitle during the 12-month period beginning on the 
                date the standard is adopted, unless the Secretary 
                determines that the modification is necessary in order 
                to permit a plan sponsor, a health provider, or a 
                health plan purchasing organization to comply with 
                subtitle B.
                    (B) Additions and modifications to code sets.--
                            (i) In general.--The Secretary shall ensure 
                        that procedures exist for the routine 
                        maintenance, testing, enhancement, and 
                        expansion of code sets.
                            (ii) Additional rules.--If a code set is 
                        modified under this subsection, the modified 
                        code set shall include instructions on how data 
                        elements that were encoded prior to the 
                        modification are to be converted or translated 
                        so as to preserve the value of the data 
                        elements. Any modification to a code set under 
                        this subsection shall be implemented in a 
                        manner that minimizes the disruption to, and 
                        costs of compliance incurred by, a plan 
                        sponsor, health provider, or health plan 
                        purchasing organization that is required to 
                        comply with subtitle B.
    (e) Evaluation of Standards.--The Secretary may establish a process 
to measure or verify the consistency of standards adopted or modified 
under this part. Such process may include demonstration projects and 
analyses of the cost of implementing such standards and modifications.

   Subtitle B--Requirements with Respect to Certain Transactions and 
                              Information

SEC. 221. STANDARD TRANSACTIONS AND INFORMATION.

    (a) Transactions by Sponsors.--
            (1) Transactions with providers.--If a plan sponsor 
        conducts any of the transactions described in paragraph (3) 
        with a health provider--
                    (A) the transaction shall be a standard 
                transaction; and
                    (B) the health information transmitted by the 
                sponsor to the provider or by the provider to the 
                sponsor in connection with the transaction shall be in 
                the form of standard data elements.
            (2) Transactions with sponsors.--If a plan sponsor conducts 
        any of the transactions described in paragraph (3) with another 
        plan sponsor--
                    (A) the transaction shall be a standard 
                transaction; and
                    (B) the health information transmitted by either 
                sponsor in connection with the transaction shall be in 
                the form of standard data elements.
            (3) Transactions.--The transactions referred to in 
        paragraphs (1) and (2) are the following:
                    (A) Verification of eligibility for benefits.
                    (B) Coordination of benefits.
                    (C) Claim submission.
                    (D) Claim attachment submission.
                    (E) Claim status notification.
                    (F) Claim status verification.
                    (G) Claim adjudication.
                    (H) Payment and remittance advice.
                    (I) Certification or authorization of a referral to 
                a health provider who is not part of a provider 
                network.
    (b) Use of Health Information Network Services.--A plan sponsor, a 
health provider, or a health plan purchasing organization may comply 
with any provision of this section by entering into an agreement or 
other arrangement with a health information network service certified 
under section 231 pursuant to which the service undertakes the duties 
applicable to the sponsor, provider, or organization under the 
provision.

SEC. 222. ACCESSING HEALTH INFORMATION FOR AUTHORIZED PURPOSES.

    (a) Procurement Rule for Government Agencies.--
            (1) In general.--A health information security organization 
        that is certified under section 231 shall make available to a 
        Federal or State agency, pursuant to a cost-type contract (as 
        defined under the Federal Acquisition Regulation), any non-
        identifiable health information, including non-identifiable 
        health information that is derived from individually 
        identifiable health information, that--
                    (A) is held by the service or may be obtained by 
                the service under paragraph (2) or subsection (b);
                    (B) consists of data elements that are subject to a 
                standard under subtitle A; and
                    (C) is requested by the agency to fulfill a 
                requirement under this Act.
            (2) Certain information available at low cost.--If a health 
        information security organization requires health information 
        consisting of data elements that are subject to a standard 
        under subtitle A from a plan sponsor or a health provider in 
        order to comply with a request made by a Federal or State 
        agency under paragraph (1), the sponsor or provider shall make 
        such information available to such organization for a charge 
        that does not exceed the reasonable cost of transmitting the 
        information.
    (b) Procurement Rule for Information Security Organizations.--A 
health information security organization that makes non-identifiable 
health information available to a Federal or State agency under 
subsection (a) shall make such non-identifiable information available, 
for a charge that does not exceed the reasonable cost of transmitting 
the information, to any other health information security organization 
that--
            (A) is certified under section 231; and
            (B) requests the information.

SEC. 223. ENSURING AVAILABILITY OF INFORMATION.

    The Secretary shall establish a procedure under which a plan 
sponsor or health provider that does not have the ability to transmit 
standard data elements directly, and does not have access to a health 
information network service certified under section 231, may comply 
with the provisions of this part.

SEC. 224. TIMETABLES FOR COMPLIANCE WITH REQUIREMENTS.

    (a) Initial Compliance.--
            (1) In general.--Not later than 12 months after the date on 
        which standards are adopted under subtitle A with respect to a 
        type of transaction, or data elements for a type of health 
        information, a plan sponsor, health provider, or health plan 
        purchasing organization shall comply with the requirements of 
        this subtitle with respect to such transaction or information.
            (2) Additional data elements.--Not later than 12 months 
        after the date on which the Secretary adopts an addition to a 
        set of data elements for health information under section 212, 
        a plan sponsor, health provider, or health plan purchasing 
        organization shall comply with the requirements of this 
        subtitle using such data elements.
    (b) Compliance With Modified Standards.--
            (1) In general.--If the Secretary adopts a modified 
        standard under section 215(c), a plan sponsor, health provider, 
        or health plan purchasing organization shall comply with the 
        modified standard at such time as the Secretary determines 
        appropriate, taking into account the time needed to comply due 
        to the nature and extent of the modification.
            (2) Special rule.--In the case of a modification to a 
        standard that does not occur within the 12-month period 
        beginning on the date the standard is adopted, the time 
        determined appropriate by the Secretary under paragraph (1) may 
        not be--
                    (A) earlier than the last day of the 90-day period 
                beginning on the date the modified standard is adopted; 
                or
                    (B) later than the last day of the 12-month period 
                beginning on the date the modified standard is adopted.

                  Subtitle C--Miscellaneous Provisions

SEC. 231. STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION NETWORK 
              SERVICES.

    (a) Standards for Operation.--The Secretary shall establish 
standards with respect to the operation of health information network 
services, including standards ensuring that such services--
            (1) develop, operate, and cooperate with one another to 
        form the health information network;
            (2) meet all of the standards adopted under subtitle A that 
        are applicable to the services;
            (3) make public information concerning their performance, 
        as measured by uniform indicators such as accessibility, 
        transaction responsiveness, administrative efficiency, 
        reliability, dependability, and any other indicator determined 
        appropriate by the Secretary; and
            (4) if they are part of a larger organization, have 
        policies and procedures in place which isolate their activities 
        with respect to processing information in a manner that 
        prevents access to such information by such larger 
        organization.
    (b) Certification by the Secretary.--
            (1) Establishment.--Not later than 18 months after the date 
        of the enactment of this Act, the Secretary shall establish a 
        certification procedure for health information network services 
        which ensures that certified services are qualified to meet the 
        requirements of this title and the standards established by the 
        Secretary under this section. Such certification procedure 
        shall be implemented in a manner that minimizes the costs and 
        delays of operations for such services.
            (2) Application.--Each entity desiring to be certified as a 
        health information network service shall apply to the Secretary 
        for certification in a form and manner determined appropriate 
        by the Secretary.
            (3) Audits and reports.--The procedure established under 
        paragraph (1) shall provide for audits by the Secretary and 
        reports by an entity certified under this section as the 
        Secretary determines appropriate in order to monitor such 
        entity's compliance with the requirements of this title and the 
        standards established by the Secretary under this section.
            (4) Recertification.--A health information network service 
        shall be recertified under this subsection at least every 3 
        years.
    (c) Loss of Certification.--
            (1) Mandatory termination.--Except as provided in paragraph 
        (2), if a health information network service violates a health 
        information network privacy standard adopted under section 214 
        that is applicable to the service, its certification under this 
        section shall be terminated unless the Secretary determines 
        that appropriate corrective action has been taken.
            (2) Conditional certification--The Secretary may establish 
        a procedure under which a health information network service 
        may remain certified on a conditional basis if the service is 
        operating consistently with a plan intended to correct any 
        violations described in paragraph (1). Such procedure may 
        provide for the appointment of a trustee to continue operation 
        of the service until the requirements for full certification 
        are met.
    (d) Certification by Private Entities.--The Secretary may designate 
private entities to conduct the certification procedures established by 
the Secretary under this section. A health information network service 
certified by such an entity in accordance with such designation shall 
be considered to be certified by the Secretary.
    (e) Information Held by Health Information Network Services.--If a 
health information network service certified under this section loses 
its certified status or takes any action that would threaten the 
continued availability of the standard data elements of health 
information held by such service, such data elements shall be 
transferred to another health information network service certified 
under this section that has been designated by the Secretary.

SEC. 232. IMPOSITION OF ADDITIONAL REQUIREMENTS.

    (a) In General.--Except as provided in subsection (c), after the 
Secretary has established standards under section 212 that are 
necessary to make uniform and compatible for electronic transmission 
the data elements that the Secretary determines are appropriate for 
transmission in connection with a transaction described in subtitle B, 
an individual or entity may not require an individual or entity, to 
provide in any manner any additional data element in connection with--
            (1) the transaction; or
            (2) an inquiry with respect to the transaction.
    (b) Transmission Method.--Except as provided in subsection (c), 
after the Secretary has established standards under section 213 
relating to the method by which data elements that the Secretary 
determines are appropriate for transmission in connection with a 
transaction described in subtitle B may be transmitted electronically, 
an individual or entity may not require an individual or entity to 
transmit any data element in a manner inconsistent with the standards 
in connection with--
            (1) the transaction; or
            (2) an inquiry with respect to the transaction.
    (c) Exception.--Subsections (a) and (b) do not apply if--
            (1) an individual or entity voluntarily agrees to provide 
        the additional data element; or
            (2) a waiver is granted under subsection (d) to permit the 
        requirement to be imposed.
    (d) Conditions for Waivers.--
            (1) In general.--An individual or entity may request a 
        waiver from the Secretary in order to impose on an individual 
        or entity a requirement otherwise prohibited under subsection 
        (a) or (b). Subject to paragraph (2), the Secretary may grant 
        such a waiver.
            (2) Consideration of waiver requests.--A waiver may not be 
        granted under this subsection to impose an otherwise prohibited 
        requirement unless the Secretary determines that the value of 
any additional information to be provided under the requirement for 
research or other purposes significantly outweighs the administrative 
cost of the imposition of the requirement, taking into account the 
burden of the timing of the imposition of the requirement.
    (e) Anonymous Reporting.--If an individual or entity attempts to 
impose on an individual or entity a requirement prohibited under 
subsection (a) or (b), the individual or entity on whom the requirement 
is being imposed may contact the Secretary. The Secretary shall develop 
a procedure under which an individual or entity that contacts the 
Secretary under the preceding sentence shall remain anonymous. The 
Secretary shall notify the individual or entity imposing the 
requirement that the requirement may not be imposed unless the other 
individual or entity voluntarily agrees to such requirement or a waiver 
is obtained under subsection (d).

SEC. 233. EFFECT ON STATE LAW.

    (a) In General.--Except as otherwise provided in this section, a 
provision, requirement, or standard under this title shall supersede 
any contrary provision of State law.
    (b) State ``Quill and Pen'' Laws.--A State may not establish, 
continue in effect, or enforce any provision of State law that requires 
medical or health plan records (including billing information) to be 
maintained or transmitted in written rather than electronic form, 
except where the Secretary determines that the provision is necessary 
to prevent fraud and abuse, with respect to controlled substances, or 
for other purposes.
    (c) Public Health Reporting.--Nothing in this title shall be 
construed to invalidate or limit the authority, power, or procedures 
established under any law providing for the reporting of disease or 
injury, child abuse, birth, or death, public health surveillance, or 
public health investigation or intervention.
    (d) Public Use Functions.--Nothing in this title shall be construed 
to limit the authority of a Federal or State agency to make non-
identifiable health information available for public use.
    (e) Payment for Health Care Services or Premiums.--Nothing in this 
title shall be construed to prohibit a consumer from paying for health 
care items or services, or plan or health insurance coverage premiums, 
by debit, credit, or other payment cards or numbers or other electronic 
payment means.

                          TITLE III--ANTITRUST

SEC. 301. PUBLICATION OF ANTITRUST GUIDELINES ON ACTIVITIES OF HEALTH 
              PLANS.

    (a) In General.--The Attorney General shall provide for the 
development and publication of explicit guidelines on the application 
of antitrust laws to the activities of health plans. The guidelines 
shall be designed to facilitate development and operation of plans, 
consistent with the antitrust laws.
    (b) Review Process.--The Attorney General shall establish a review 
process under which the administrator or sponsor of a health plan (or 
organization that proposes to administer or sponsor a health plan) may 
submit a request to the Attorney General to obtain a prompt opinion 
(but in no event later than 90 days after the Attorney General receives 
the request) from the Department of Justice on the plan's conformity 
with the Federal antitrust laws.
    (c) Definitions.--In this section--
            (1) the term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition, and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A); and
            (2) the term ``health plan'' means any contract or 
        arrangement under which an entity bears all or part of the cost 
        of providing health care items and services, including a 
        hospital or medical expense incurred policy or certificate, 
        hospital or medical service plan contract, or health 
        maintenance subscriber contract, but does not include--
                    (A) coverage only for accident, dental, vision, 
                disability, or long term care, medicare supplemental 
                health insurance, or any combination thereof,
                    (B) coverage issued as a supplement to liability 
                insurance,
                    (C) workers' compensation or similar insurance, or
                    (D) automobile medical-payment insurance.
                                 <all>