[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 354 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 354

  To amend the Internal Revenue Code of 1986 to allow a deduction for 
  contributions to a medical savings account, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 4, 1995

  Mr. Porter introduced the following bill; which was referred to the 
   Committee on Ways and Means and, in addition, to the Committee on 
Commerce 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 amend the Internal Revenue Code of 1986 to allow a deduction for 
  contributions to a medical savings account, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Care Savings Plan Act of 
1995''.

                   TITLE I--MEDICAL SAVINGS ACCOUNTS

SEC. 101. MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 220 as 
section 221 and by inserting after section 219 the following new 
section:

``SEC. 220. MEDICAL SAVINGS ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an eligible individual, 
there shall be allowed as a deduction amounts paid in cash during the 
taxable year by or on behalf of such individual to a medical savings 
account.
    ``(b) Limitation.--
            ``(1) In general.--The amount allowable as a deduction 
        under subsection (a) to an individual for the taxable year 
        shall not exceed the excess (if any) of--
                    ``(A) the lesser of--
                            ``(i) the applicable limit, or
                            ``(ii) the compensation (as defined in 
                        section 219(f)) includible in the individual's 
                        gross income for the taxable year, over
                    ``(B) the sum of--
                            ``(i) the value of employer-provided 
                        coverage for the medical expenses of such 
                        individual,
                            ``(ii) the amount paid by the individual 
                        (other than from amounts distributed from a 
                        medical savings account) for coverage under 
                        qualified catastrophic coverage health plan for 
                        coverage for such individual, the spouse of 
                        such individual, and dependents (as defined in 
                        section 152) of such individual, plus
                            ``(iii) the aggregate amount contributed to 
                        such account during the taxable year pursuant 
                        to section 125(d)(3).
            ``(2) Applicable limit.--For purposes of paragraph (1), the 
        applicable limit is the sum of--
                    ``(A) $4,800, plus
                    ``(B) $600 for each individual who is a dependent 
                (as defined in section 152) of the individual for whose 
                benefit the account is established.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Medical savings account.--The term `medical savings 
        account' means a trust created or organized in the United 
        States exclusively for the purpose of paying the qualified 
        medical expenses of the individual for whose benefit the trust 
        is established, but only if the written governing instrument 
        creating the trust meets the following requirements:
                    ``(A) No contribution will be accepted unless it is 
                in cash and contributions will not be accepted for any 
                taxable year in excess of the applicable limit (as 
                defined in subsection (b)(2)).
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
            ``(2) Eligible individual.--The term `eligible individual' 
        means any individual if--
                    ``(A) such individual is not covered by any 
                employer-provided group health plan, or
                    ``(B) such individual is covered by an employer-
                provided group health plan which is a qualified 
                catastrophic coverage health plan and is not covered by 
                any other health plan.
            ``(3) Qualified medical expenses.--
                    ``(A) In general.--The term `qualified medical 
                expenses' means medical expenses other than amounts 
                paid for a health plan which is not a qualified 
                catastrophic coverage health plan.
                    ``(B) Medical expenses.--The term `medical 
                expenses' means amounts paid by the individual for 
                whose benefit the account was established for medical 
                care (as defined in section 213) of such individual, 
                the spouse of such individual, and any dependent (as 
                defined in section 152) of such individual, but only to 
                the extent such amounts are not compensated for by 
                insurance or otherwise.
            ``(4) Qualified catastrophic coverage health plan.--The 
        term `qualified catastrophic coverage health plan' means any 
        health plan which is certified by the Secretary of Health and 
        Human Services as a plan which provides no compensation for 
        medical expenses not exceeding $1,500 during any year.
            ``(5) Time when contributions deemed made.--A taxpayer 
        shall be deemed to have made a contribution on the last day of 
        the preceding taxable year if the contribution is made on 
        account of such taxable year and is made not later than the 
        time prescribed by law for filing the return for such taxable 
        year (not including extensions thereof).
    ``(d) Tax Treatment of Distributions.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, any amount paid or distributed out of a medical 
        savings account shall be included in the gross income of the 
        individual for whose benefit such account was established 
        unless such amount is used exclusively to pay the qualified 
        medical expenses of such individual.
            ``(2) Excess contributions returned before due date of 
        return.--Paragraph (1) shall not apply to the distribution of 
        any contribution paid during a taxable year to a medical 
        savings account to the extent that such contribution exceeds 
        the amount allowable as a deduction under subsection (a) if--
                    ``(A) such distribution is received on or before 
                the day prescribed by law (including extensions of 
                time) for filing such individual's return for such 
                taxable year,
                    ``(B) no deduction is allowed under subsection (a) 
                with respect to such excess contribution, and
                    ``(C) such distribution is accompanied by the 
                amount of net income attributable to such excess 
                contribution.
        Any net income described in subparagraph (C) shall be included 
        in the gross income of the individual for the taxable year in 
        which it is received.
    ``(e) Tax Treatment of Accounts.--
            ``(1) Account taxed as grantor trust.--
                    ``(A) In general.--The individual for whose benefit 
                a medical savings account is established shall be 
                treated for purposes of this title as the owner thereof 
                and shall be subject to tax thereon in accordance with 
                subpart E of part I of subchapter J of this chapter 
                (relating to grantors and others treated as substantial 
                owners).
                    ``(B) Exclusion from gross income for $300 of 
                earnings.--Notwithstanding subparagraph (A), an amount 
                shall be includible in the gross income of an 
                individual for a taxable year by reason of subparagraph 
                (A) only to the extent such amount exceeds $300.
            ``(2) Loss of exemption of account where individual engages 
        in prohibited transaction.--
                    ``(A) In general.--If, during any taxable year of 
                the individual for whose benefit the medical savings 
                account was established, such individual engages in any 
                transaction prohibited by section 4975 with respect to 
                the account, the account ceases to be a medical savings 
                account as of the first day of that taxable year.
                    ``(B) Account treated as distributing all its 
                assets.--In any case in which any account ceases to be 
                a medical savings account by reason of subparagraph (A) 
                on the first day of any taxable year, paragraph (1) of 
                subsection (d) applies as if there were a distribution 
                on such first day in an amount equal to the fair market 
                value (on such first day) of all assets in the account 
                (on such first day).
            ``(3) Effect of pledging account as security.--If, during 
        any taxable year, the individual for whose benefit a medical 
        savings account was established uses the account or any portion 
        thereof as security for a loan, the portion so used is treated 
        as distributed to that individual.
    ``(f) Additional Tax on Certain Amounts Included in Gross Income.--
            ``(1) Distribution not used for qualified medical 
        expenses.--If a distribution from a medical savings account is 
        made, and not used to pay the qualified medical expenses of the 
        individual for whose benefit the account was established, the 
        tax liability of such individual for the taxable year in which 
        such distribution is received shall be increased by an amount 
        equal to 10 percent of the amount of the distribution which is 
        includible in gross income for such taxable year.
            ``(2) Disqualification cases.--If an amount is includible 
        in the gross income of an individual for a taxable year under 
        subsection (e), his tax under this chapter for such taxable 
        year shall be increased by an amount equal to 10 percent of 
        such amount includible in his gross income.
            ``(3) Penalty-free withdrawals to extent amounts in account 
        exceed $15,000.--
                    ``(A) In general.--Paragraph (1), and paragraph (2) 
                to the extent it relates to subsection (e)(3), shall 
                not apply to the extent that the sum of--
                            ``(i) the amount remaining in the medical 
                        savings accounts of such individual immediately 
                        after the distribution, plus
                            ``(ii) the amount remaining at such time in 
                        the medical savings accounts of the spouse (if 
                        any) of such individual,
                has a value at such time is at least $15,000.
                    ``(B) Lower limit for individuals attaining social 
                security retirement age.--The $15,000 amount in 
                subparagraph (A) shall be reduced by $1,000 for each 
                year by which the age (as of the close of the taxable 
                year) of the individual for whose benefit the account 
                was established exceeds retirement age (as defined in 
                section 216(l) of the Social Security Act).
            ``(4) Disability or death cases.--Paragraphs (1) and (2) do 
        not apply if the payment or distribution is made after the 
        individual for whose benefit the medical savings account was 
        established becomes disabled within the meaning of section 
        72(m)(7) or dies.
    ``(g) Special Rules.--
            ``(1) Community property laws.--This section shall be 
        applied without regard to any community property laws.
            ``(2) Custodial accounts.--For purposes of this section, a 
        custodial account shall be treated as a trust if--
                    ``(A) the assets of such account are held by a bank 
                (as defined in section 408(n)) or another person who 
                demonstrates to the satisfaction of the Secretary that 
                the manner in which he will administer the account will 
                be consistent with the requirements of this section, 
                and
                    ``(B) the custodial account would, except for the 
                fact that it is not a trust, constitute a medical 
                savings account described in subsection (c).
        For purposes of this title, in the case of a custodial account 
        treated as a trust by reason of the preceding sentence, the 
        custodian of such account shall be treated as the trustee 
        thereof.
            ``(3) Denial of deductions.--No amount paid or distributed 
        from a medical savings account shall be taken into account in 
        determining the deduction provided by section 213.
    ``(h) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 1995, each applicable dollar 
        amount shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment for the 
                calendar year in which the taxable year begins.
            ``(2) Cost-of-living adjustment.--For purposes of paragraph 
        (1), the cost-of-living adjustment for any calendar year is the 
        percentage (if any) by which--
                    ``(A) the deemed average total wages (as defined in 
                section 209(k) of the Social Security Act) for the 
                preceding calendar year, exceeds
                    ``(B) the deemed average total wages (as so 
                defined) for calendar year 1994.
            ``(3) Applicable dollar amount.--For purposes of paragraph 
        (1), the term `applicable dollar amount' means--
                    ``(A) the $4,800 and $600 amounts in subsection 
                (b),
                    ``(B) the $1,500 amount in subsection (c)(4),
                    ``(C) the $300 amount in subsection (e)(1), and
                    ``(D) the $15,000 amount in subsection (f)(3).
            ``(4) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $10, such amount shall be rounded to 
        the nearest multiple of $10 (or, if such amount is a multiple 
        of $5 and not of $10, such amount shall be rounded to the next 
        highest multiple of $10).
    ``(i) Reports.--The trustee of a medical savings account shall make 
such reports regarding such account to the Secretary and to the 
individual for whose benefit the account is maintained with respect to 
contributions, distributions, and such other matters as the Secretary 
may require under regulations. The reports required by this subsection 
shall be filed at such time and in such manner and furnished to such 
individuals at such time and in such manner as may be required by those 
regulations.''
    (b) Deduction Allowed in Arriving at Adjusted Gross Income.--
Paragraph (7) of section 62(a) of such Code (relating to retirement 
savings) is amended--
            (1) by inserting ``or medical expense'' after 
        ``Retirement'' in the heading of such paragraph, and
            (2) by inserting before the period at the end thereof the 
        following: ``and the deduction allowed by section 220 (relating 
        to deduction of certain payments to medical savings 
        accounts)''.
    (c) Exclusion of Employer Contributions to Medical Savings Accounts 
From Employment Taxes.--
            (1) Social security taxes.--
                    (A) Subsection (a) of section 3121 of such Code is 
                amended by striking ``or'' at the end of paragraph 
                (20), by striking the period at the end of paragraph 
                (21) and inserting ``; or'', and by inserting after 
                paragraph (21) the following new paragraph:
                    ``(22) remuneration paid to or on behalf of an 
                employee if (and to the extent that) at the time of 
                payment of such remuneration it is reasonable to 
                believe that a corresponding deduction is allowable 
                under section 220.''
                    (B) Subsection (a) of section 209 of the Social 
                Security Act is amended by striking ``or'' at the end 
                of paragraph (17), by striking the period at the end of 
                paragraph (18) and inserting ``; or'', and by inserting 
                after paragraph (18) the following new paragraph:
            ``(19) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 220 of the Internal 
        Revenue Code of 1986.''
            (2) Railroad retirement tax.--Subsection (e) of section 
        3231 of such Code is amended by adding at the end thereof the 
        following new paragraph:
            ``(10) Employer contributions to medical savings 
        accounts.--The term `compensation' shall not include any 
        payment made to or on behalf of an employee if (and to the 
        extent that) at the time of payment of such remuneration it is 
        reasonable to believe that a corresponding deduction is 
        allowable under section 220.''
            (3) Unemployment tax.--Subsection (b) of section 3306 of 
        such Code is amended by striking ``or'' at the end of paragraph 
        (15), by striking the period at the end of paragraph (16) and 
        inserting ``; or'', and by inserting after paragraph (16) the 
        following new paragraph:
                    ``(17) remuneration paid to or on behalf of an 
                employee if (and to the extent that) at the time of 
                payment of such remuneration it is reasonable to 
                believe that a corresponding deduction is allowable 
                under section 220.''
            (4) Withholding tax.--Subsection (a) of section 3401 of 
        such Code is amended by striking ``or'' at the end of paragraph 
        (19), by striking the period at the end of paragraph (20) and 
        inserting ``; or'', and by inserting after paragraph (20) the 
        following new paragraph:
                    ``(21) remuneration paid to or on behalf of an 
                employee if (and to the extent that) at the time of 
                payment of such remuneration it is reasonable to 
                believe that a corresponding deduction is allowable 
                under section 220.''
    (d) Tax on Excess Contributions.--Section 4973 of such Code 
(relating to tax on excess contributions to individual retirement 
accounts, certain section 403(b) contracts, and certain individual 
retirement annuities) is amended--
            (1) by inserting ``medical savings accounts,'' after 
        ``accounts,'' in the heading of such section,
            (2) by redesignating paragraph (2) of subsection (a) as 
        paragraph (3) and by inserting after paragraph (1) the 
        following:
            ``(2) a medical savings account (within the meaning of 
        section 220(c)),'',
            (3) by striking ``or'' at the end of paragraph (1) of 
        subsection (a), and
            (4) by adding at the end thereof the following new 
        subsection:
    ``(d) Excess Contributions to Medical Savings Accounts.--For 
purposes of this section, in the case of a medical savings account, the 
term `excess contributions' means the amount by which the amount 
contributed for the taxable year to the account exceeds the amount 
allowable as a deduction under section 220 for such taxable year. For 
purposes of this subsection, any contribution which is distributed out 
of the medical savings account and a distribution to which section 
220(d)(2) applies shall be treated as an amount not contributed.''
    (e) Tax on Prohibited Transactions.--Section 4975 of such Code 
(relating to prohibited transactions) is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(4) Special rule for medical savings accounts.--An 
        individual for whose benefit a medical savings account is 
        established shall be exempt from the tax imposed by this 
        section with respect to any transaction concerning such account 
        (which would otherwise be taxable under this section) if, with 
        respect to such transaction, the account ceases to be a medical 
        savings account by reason of the application of section 
        220(e)(2)(A) to such account.'', and
            (2) by inserting ``or a medical savings account described 
        in section 220(c)'' in subsection (e)(1) after ``described in 
        section 408(a)''.
    (f) Failure To Provide Reports on Medical Savings Accounts.--
Section 6693 of such Code (relating to failure to provide reports on 
individual retirement account or annuities) is amended--
            (1) by inserting ``or on medical savings accounts'' after 
        ``annuities'' in the heading of such section, and
            (2) by adding at the end of subsection (a) the following: 
        ``The person required by section 220(i) to file a report 
        regarding a medical savings account at the time and in the 
        manner required by such section shall pay a penalty of $50 for 
        each failure unless it is shown that such failure is due to 
        reasonable cause.''
    (g) Clerical Amendments.--
            (1) The table of sections for part VII of subchapter B of 
        chapter 1 of such Code is amended by striking the item relating 
        to section 220 and inserting the following:

                              ``Sec. 220. Medical savings accounts.
                              ``Sec. 221. Cross reference.''
            (2) The table of sections for chapter 43 of such Code is 
        amended by striking the item relating to section 4973 and 
        inserting the following:

                              ``Sec. 4973. Tax on excess contributions 
                                        to individual retirement 
                                        accounts, medical savings 
                                        accounts, certain 403(b) 
                                        contracts, and certain 
                                        individual retirement 
                                        annuities.''
            (3) The table of sections for subchapter B of chapter 68 of 
        such Code is amended by inserting ``or on medical savings 
        accounts'' after ``annuities'' in the item relating to section 
        6693.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

SEC. 102. UNUSED AMOUNTS IN FLEXIBLE SPENDING ACCOUNTS TRANSFERABLE TO 
              MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Subsection (d) of section 125 of the Internal 
Revenue Code of 1986 (relating to cafeteria plans) is amended by adding 
at the end thereof the following new paragraph:
            ``(3) Unused amounts transferable to medical savings 
        accounts.--
                    ``(A) In general.--Subsection (a) shall not fail to 
                apply to a participant in a plan, and a plan shall not 
                fail to be treated as a cafeteria plan, solely because 
                under the plan amounts not paid out as reimbursements 
                under a flexible spending arrangement for health and 
                disability for the benefit of an individual are 
                contributed to a medical savings account (as defined in 
                section 220(c)) for the benefit of such individual.
                    ``(B) Special rules.--
                            ``(i) Timing of contributions.--
                        Contributions made under this paragraph shall 
                        be made on the last day of the plan year of the 
                        cafeteria plan.
                            ``(ii) Availability requirement.--
                        Subparagraph (A) shall apply only if the plan 
                        is available to at least 80 percent of the 
                        employees of the employer. For purposes of the 
                        preceding sentence, there shall be excluded 
                        employees who are excluded under section 
                        414(q)(8) or who would be so excluded if `30' 
                        were substituted for `17\1/2\' in subparagraph 
                        (B) thereof.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1994.

SEC. 103. DEDUCTION FOR AMOUNTS PAID FOR QUALIFIED CATASTROPHIC 
              COVERAGE HEALTH PLAN.

    (a) In General.--Section 213 of the Internal Revenue Code of 1986 
(relating to medical, dental, etc., expenses) is amended by adding at 
the end thereof the following new subsection:
    ``(f) Full Deduction for Amounts Paid for Qualified Catastrophic 
Coverage Health Plans.--In the case of amounts paid for coverage under 
a qualified catastrophic coverage health plan (as defined in section 
220(c))--
            ``(1) subsection (a) shall be applied without regard to the 
        limitation based on adjusted gross income, and
            ``(2) such amounts shall not be taken into account in 
        determining whether any other amounts are allowable as a 
        deduction under this section.''
    (b) Technical Amendment.--Paragraph (2) of section 162(l) of such 
Code is amended by adding at the end thereof the following new 
subparagraph:
                    ``(C) Qualified catastrophic coverage.--Paragraph 
                (1) shall not apply to any amount allowed as a 
                deduction under section 213 for amounts paid for 
                coverage under a qualified catastrophic coverage health 
                plan (as defined in section 220(c)).''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

TITLE II--DEVELOPMENT AND DISTRIBUTION OF COMPARATIVE VALUE INFORMATION

SEC. 201. STATE COMPARATIVE VALUE INFORMATION PROGRAMS FOR HEALTH CARE 
              PURCHASING.

    (a) Purpose.--In order to assure the availability of comparative 
value information to purchasers of health care in each State, the 
Secretary shall determine whether each State is developing and 
implementing a health care value information program that meets the 
criteria and schedule set forth in subsection (b).
    (b) Criteria and Schedule for State Programs.--The criteria and 
schedule for a State health care value information program in this 
subsection shall be specified by the Secretary as follows:
            (1) The State begins promptly after enactment of this Act 
        to develop (directly or through contractual or other 
        arrangements with one or more States, coalitions of health 
        insurance purchasers, other entities, or any combination of 
        such arrangements) information systems regarding comparative 
        health values.
            (2) The information contained in such systems covers at 
        least the average prices of common health care services (as 
        defined in subsection (d)) and health insurance plans, and, 
        where available, measures of the variability of these prices 
        within a State or other market areas.
            (3) The information described in paragraph (2) is made 
        available within the State beginning not later than one year 
        after the date of the enactment of this Act, and is revised as 
        frequently as reasonably necessary, but at intervals of no 
        greater than one year.
            (4) Not later than 6 years after the date of the enactment 
        of this Act the State has developed information systems that 
        provide comparative costs, quality, and outcome data with 
        respect to health insurance plans and hospitals and made the 
        information broadly available within the relevant market areas.
Nothing in this section shall preclude a State from providing 
additional information, such as information on prices and benefits of 
different health benefit plans, available.
    (c) Grants to States for the Development of State Programs.--
            (1) Grant authority.--The Secretary may make grants to each 
        State to enable such State to plan the development of its 
        health care value information program and, if necessary, to 
        initiate the implementation of such program. Each State seeking 
        such a grant shall submit an application therefore, containing 
        such information as the Secretary finds necessary to assure 
        that the State is likely to develop and implement a program in 
        accordance with the criteria and schedule in subsection (b).
            (2) Offset authority.--If, at any time within the 3-year 
        period following the receipt by a State of a grant under this 
        subsection, the Secretary is required by section 202 to 
        implement a health care information program in the State, the 
        Secretary may recover the amount of the grant under this 
        subsection by offset against any other amount payable to the 
        State under the Social Security Act. The amount of the offset 
        shall be made available (from the appropriation account with 
        respect to which the offset was taken) to the Secretary to 
        carry out such section.
            (3) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as are necessary to make grants 
        under this subsection, to remain available until expended.
    (d) Common Health Care Services Defined.--In this section, the term 
``common health care services'' includes such procedures as the 
Secretary may specify and any additional health care services which a 
State may wish to include in its comparative value information program.
    (e) State Defined.--In this subtitle, the term ``State'' includes 
the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and 
American Samoa.

SEC. 202. FEDERAL IMPLEMENTATION.

    (a) In General.--If the Secretary finds, at any time, that a State 
has failed to develop or to continue to implement a health care value 
information program in accordance with the criteria and schedule in 
section 201(b), the Secretary shall take the actions necessary, 
directly or through grants or contract, to implement a comparable 
program in the State.
    (b) Fees.--Fees may be charged by the Secretary for the information 
materials provided pursuant to a program under this section. Any 
amounts so collected shall be deposited in the appropriation account 
from which the Secretary's costs of providing such materials were met, 
and shall remain available for such purposes until expended.

SEC. 203. COMPARATIVE VALUE INFORMATION CONCERNING FEDERAL PROGRAMS.

    (a) Development.--The head of each Federal agency with 
responsibility for the provision of health insurance or of health care 
services to individuals shall promptly develop health care value 
information relating to each program that such head administers and 
covering the same types of data that a State program meeting the 
criteria of section 201(b) would provide.
    (b) Dissemination of Information.--Such information shall be made 
generally available to States and to providers and consumers of health 
care services.

SEC. 204. DEVELOPMENT OF MODEL SYSTEMS.

    (a) In General.--The Secretary shall, directly or through grant or 
contract, develop model systems to facilitate--
            (1) the gathering of data on health care cost, quality, and 
        outcome described in section 201(b)(4), and
            (2) analyzing such data in a manner that will permit the 
        valid comparison of such data among providers and among health 
        plans.
    (b) Experimentation.--The Secretary shall support experimentation 
with different approaches to achieve the objectives of subsection (a) 
in the most cost-effective manner (relative to the accuracy and 
timeliness of the data secured) and shall evaluate the various methods 
to determine their relative success.
    (c) Standards.--When the Secretary considers it appropriate, the 
Secretary may establish standards for the collection and reporting of 
data on health care cost, quality and outcomes in order to facilitate 
analysis and comparisons among States and nationally.
    (d) Report.--By not later than 3 years after the date of the 
enactment of this Act, the Secretary shall report to the Congress and 
the States on the models developed, and experiments conducted, under 
this section.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary for each fiscal year beginning 
with fiscal year 1995 to enable the Secretary to carry out this 
section, including evaluation of the different approaches tested under 
subsection (b) and their relative cost effectiveness.
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 HR 354 IH----2