[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 795 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                 S. 795

To improve the quality of health plans and health care that is provided 
  through the Federal Government and to protect health care consumers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 22, 1997

 Mr. Lieberman (for himself, Mr. Jeffords, Mr. Chafee, Mr. Breaux, Ms. 
Collins, and Mr. Rockefeller) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To improve the quality of health plans and health care that is provided 
  through the Federal Government and to protect health care consumers.

    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 ``Federal Health 
Care Quality, Consumer Information and Protection Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
              TITLE I--FEDERAL HEALTH PLAN QUALITY COUNCIL

Sec. 101. Establishment.
Sec. 102. Members of the Council.
Sec. 103. Personnel and expenses.
Sec. 104. Quality Advisory Institute.
Sec. 105. Powers.
Sec. 106. Duties.
Sec. 107. Authorization of appropriations.
           TITLE II--COVERAGE OF FEDERAL HEALTH CARE PROGRAMS

Sec. 201. Compliance.
Sec. 202. Payments for value.
       TITLE III--CERTIFICATION OF FEDERAL HEALTH PLAN CONTRACTS

Sec. 301. Requirement.
Sec. 302. Licensing of certification entities.
Sec. 303. Certification criteria.
Sec. 304. Grievance and appeals.
           TITLE IV--FEDERAL HEALTH PLAN CONTRACT PERFORMANCE

Sec. 401. Uniform performance criteria.
          TITLE V--EXPANSION OF HEALTH CARE QUALITY ACTIVITIES

Sec. 501. Expanded role for the Agency for Health Care Policy and 
                            Research.
Sec. 502. Increase in funding for Outcomes Research.
                  TITLE VI--MISCELLANEOUS PROVISIONS.

Sec. 601. Effective date.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) the Federal Government has unique influence in the 
        health care marketplace due to its role as the largest 
        purchaser of health care services;
            (2) there are wide variations in the quality of care as 
        well as concern with the minimum level of care offered to 
        participants and beneficiaries in programs of the Federal 
        Government;
            (3) participants and beneficiaries lack information on the 
        quality of health care services provided by health care plans 
        to guide them in selecting a health plan and to support, 
        maintain, and improve their health; and
            (4) providing information about the quality of health care 
        would assist competition based on quality that will increase 
        the quality of health care services for all.
    (b) Purposes.--It is the purpose of this Act--
            (1) to use the purchasing power of the Federal Government 
        to continually improve the quality of health care services for 
        participants and beneficiaries in Federal health care programs 
        by empowering health care professionals and participants and 
        beneficiaries through the provision of better information for 
        use in making health care decisions;
            (2) to provide a mechanism for the development of health 
        care benchmarks to be used to compare one Federal health plan 
        contract with another;
            (3) to provide for the dissemination of comparative 
        information to participants and beneficiaries to assist them in 
        their selection of health plans;
            (4) to provide for the establishment of a Federal Health 
        Plan Quality Council to develop certification criteria for 
        Federal health plan contractors and to otherwise promote the 
        protection of participants and beneficiaries in Federal health 
        care programs;
            (5) to provide for ongoing research into better health care 
        measurement systems;
            (6) to provide uniformity across Federal agencies and 
        health plans for participants and beneficiaries in Federal 
        health care programs with respect to minimum criteria and 
        comparative benchmarks used to evaluate health care quality;
            (7) to provide a basis for valuing health care services 
        provided by different health plans for participants and 
        beneficiaries in Federal health care programs; and
            (8) to increase coordination among private and public 
        purchasers of health care services and patient and consumer 
        representatives to develop an increased level of public 
        involvement in improving the quality of health care and health 
        status.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Council.--The term ``Council'' means the Federal Health 
        Plan Quality Council established under section 101.
            (2) Federal health plan contractor.--The term ``Federal 
        health plan contractor'' means any entity that contracts with a 
        Federal agency (or a State or local entity in the case of 
        contracts under title XIX of the Social Security Act), as 
        authorized under any Federal program, to provide or pay the 
        cost of medical care, or to otherwise provide health insurance 
        coverage through such program (referred to as a ``Federal 
        health plan contract''), including--
                    (A) health insurance coverage under the Federal 
                Employee Health Benefit Program under title 5, United 
                States Code;
                    (B) coverage provided by an eligible organization 
                under section 1876 of the Social Security Act (42 
                U.S.C. 1395mm) or an entity operating under a waiver 
                from the provisions of the medicare program under title 
                XVIII of such Act and providing items and services to 
                individuals eligible for such program on a capitated 
                basis;
                    (C) coverage through a health maintenance 
                organization or other entity that contracts with the 
                State to provide medical assistance to individuals 
                under the medicaid program under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.);
                    (D) coverage through a health maintenance 
                organization or other entity that contracts with the 
                Secretary of Defense to provide medical assistance to 
                individuals under the TRICARE program established under 
                the authority of chapter 55 of title 10, United States 
                Code; and
                    (E) coverage through a health maintenance 
                organization or other entity that contracts with the 
                Secretary of Veterans Affairs to provide medical 
                assistance to individuals under a veterans health care 
                program under chapter 17 of title 38, United States 
                Code.
            (3) Health care provider.--The term ``health care 
        provider'' means anyone licensed or certified under State law 
        to provide health care services who is operating within the 
        scope of such license.
            (4) Institute.--The term ``Institute'' means the Quality 
        Advisory Institute established under section 104.
            (5) Licensed certifying entity.--The term ``licensed 
        certifying entity'' means an entity licensed by the Council to 
        provide certification services under title III.
            (6) Medical care.--The term ``medical care'' means amounts 
        paid for--
                    (A) the diagnosis, cure, mitigation, treatment, or 
                prevention of disease, or for the purpose of affecting 
                any structure or function of the body;
                    (B) transportation primarily for and essential to 
                medical care referred to in subparagraph (A); and
                    (C) insurance covering medical care referred to in 
                subparagraphs (A) and (B).
            (7) State.--The term ``State'' means each of the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, and the Northern Mariana 
        Islands.

              TITLE I--FEDERAL HEALTH PLAN QUALITY COUNCIL

SEC. 101. ESTABLISHMENT.

    (a) In General.--There is established an independent council to be 
known as the ``Federal Health Plan Quality Council''.
    (b) General Duties.--The Council shall--
            (1)(A) monitor, oversee, and ensure the effective 
        evaluation of health care programs financed under the authority 
        of the Federal Government, to the extent authorized under this 
        Act, through the development of--
                    (i) health plan or health system certification 
                criteria;
                    (ii) comparative information concerning the quality 
                of care and the dissemination of this information in 
                accordance with this Act; and
                    (iii) payments for performance based or explicit 
                quality standards; and
            (B) endorse and direct the participation of the Federal 
        Government in regional health care accountability initiatives 
        that develop comparative information concerning the quality of 
        care, disseminate quality information, and support quality 
        initiatives;
            (2) provide advice to the President and Congress concerning 
        the protection and quality of the health of all participants 
        and beneficiaries under Federal health plan contracts; and
            (3) perform any other duties necessary to carry out this 
        Act.

SEC. 102. MEMBERS OF THE COUNCIL.

    (a) Appointment.--The Council shall be composed of at least 9 
members of which--
            (1) at least 4 members shall be the Federal trustees 
        described in subsection (b)(1); and
            (2) 5 members shall be public trustees appointed under 
        subsection (b)(2) (in this section referred to as the ``public 
        trustees'').
    (b) Membership.--
            (1) Federal trustees.--The agency administrator of each of 
        the health care programs described in section 3(2)(C) (or their 
        designees) shall serve on the Council as a permanent Federal 
        trustee. Such trustees shall include--
                    (A) the Secretary of Health and Human Service;
                    (B) the Secretary of Defense;
                    (C) the Secretary of Veterans Affairs; and
                    (D) the Director of the Office of Personnel 
                Management.
            (2) Public trustees.--The public trustees shall be 
        appointed by the President by and with the advice and consent 
        of the Senate, and shall have expertise pertaining to--
                    (A) the measurement of the quality of health care;
                    (B) the purchase of health care in the private 
                market;
                    (C) medical ethics;
                    (D) the delivery and provision of health care; and
                    (E) the needs of participants and beneficiaries in 
                health care plans described in section 3(2).
            (3) Terms and vacancies.--
                    (A) Terms.--Except as otherwise provided in this 
                paragraph, the public trustees shall be appointed for a 
                term of 3 years.
                    (B) Initial trustees.--Of the public trustees first 
                appointed to the Council--
                            (i) 2 trustees shall be appointed for a 
                        term of 1 year;
                            (ii) 2 trustees shall be appointed for a 
                        term of 2 years; and
                            (iii) 1 trustee shall be appointed for a 
                        term of 3 years;
                as designated by the President at the time of 
                nomination of each such trustee.
                    (C) Limitation.--At the expiration of the term of 
                office of a public trustee, that trustee shall continue 
                to hold office until a successor for such trustee is 
                appointed and has qualified, except that such trustee 
                shall not continue to serve beyond the expiration of 
                the next session of Congress subsequent to the 
                expiration of the fixed term of office.
                    (D) Vacancies.--A vacancy in the membership of the 
                Council shall not affect the powers of the Council and 
                shall be filled in the same manner as the original 
                appointment, except that any trustee appointed to fill 
                a vacancy that occurs prior to the expiration of the 
                term for which the predecessor of the trustee was 
                appointed shall be appointed for the remainder of such 
                term.
    (c) Chairperson and Vice Chairperson.--The Majority Leader of the 
Senate and the Speaker of the House of Representatives, in consultation 
with the Minority Leader of the Senate and the Minority Leader of the 
House of Representatives, shall select a Chairperson and Vice 
Chairperson from among the public trustees of the Council. A public 
trustee may not serve as Chairperson for more than 6 years.
    (d) Meetings.--
            (1) Initial meeting.--Not later than 90 days after the date 
        on which all public trustees of the Council have been 
        appointed, the Council shall hold its first meeting.
            (2) Meetings.--The Council shall meet at the call of the 
        Chairperson but in no case less than quarterly.
            (3) Quorum.--A majority of the trustees of the Council 
        shall constitute a quorum, but a lesser number of trustees may 
        hold hearings.
    (e) Compensation of Public Trustees.--Section 5315 of title 5, 
United States Code, is amended by adding at the end the following:
            ``Public Trustee, Federal Health Plan Quality Council''.
    (f) Conflict of Interest.--No public trustee of the Council shall 
engage in any other business, vocation, or employment than that of 
serving as a public trustee of the Council, nor shall any such trustee 
participate, directly or indirectly, in any operations or transactions 
of a character subject to regulation by the Council pursuant to this 
Act.

SEC. 103. PERSONNEL AND EXPENSES.

    (a) Staff.--The Council may appoint and fix the compensation of 
such officers and other experts and employees as may be necessary for 
carrying out the functions of the Council under this Act and shall fix 
the salaries of such officers, experts, and employees in accordance 
with chapter 51 and subchapter III of chapter 53 of title 5, United 
States Code.
    (b) Detail of Government Employees.--Any Federal Government 
employee may be detailed to the Council without reimbursement (other 
than the regular compensation of the employee), and such detail shall 
be without interruption or loss of civil service status or privilege.
    (c) Contracting Authority.--Notwithstanding any other provision of 
law, the Council may enter directly into contracts with entities as the 
Council determines necessary to carry out the functions of the Council 
under this Act.
    (d) Procurement of Temporary and Intermittent Services.--The 
Chairperson of the Council may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code, at rates 
for individuals which do not exceed the daily equivalent of the annual 
rate of basic pay prescribed for level V of the Executive Schedule 
under section 5316 of such title.
    (e) Leasing Authority.--Notwithstanding any other provision of law, 
the Council may enter directly into leases for real property for 
office, meeting, storage, and such other space as may be necessary to 
carry out the functions of the Council under this Act, and shall be 
exempt from any General Services Administration space management 
regulations or directives.
    (f) Acceptance of Payments.--
            (1) In general.--Notwithstanding any other provision of 
        law, in accordance with regulations which the Council shall 
        prescribe to prevent conflicts of interest, the Council may 
        accept payment and reimbursement, in cash or in kind, from non-
        Federal agencies, organizations, and individuals for travel, 
        subsistence, and other necessary expenses incurred by trustees 
        of the Council in attending meetings and conferences concerning 
        the functions or activities of the Council.
            (2) Credit of account.--Any payment or reimbursement 
        accepted shall be credited to the appropriated funds of the 
        Council.
            (3) Amount.--The amount of travel, subsistence, and other 
        necessary expenses for trustees and employees paid or 
        reimbursed under this subsection may exceed per diem amounts 
        established in official travel regulations, but the Council may 
        include in its regulations under this subsection a limitation 
        on such amounts.

SEC. 104. QUALITY ADVISORY INSTITUTE.

    (a) Establishment.--There is established an Institute to be known 
as the ``Quality Advisory Institute'' to make recommendations to the 
Council concerning licensing and certification criteria and comparative 
measurement methods under this Act.
    (b) Membership.--
            (1) Composition.--The Institute shall be composed of 5 
        members to be appointed by the Council from among individuals 
        who have demonstrable expertise in--
                    (A) health care quality measurement;
                    (B) health plan certification criteria setting;
                    (C) the analysis of information that is useful to 
                consumers in making choices regarding health coverage 
                options, health plans, health care providers, and 
                decisions regarding health treatments; and
                    (D) the analysis of health plan operations.
            (2) Terms and vacancies.--The members of the Institute 
        shall be appointed for 5 year terms with the terms of the 
        initial members staggered as determined appropriate by the 
        Council. Vacancies shall be filled in a manner provided for by 
        the Council.
    (c) Duties.--The Institute shall--
            (1) not later than 1 year after the date on which all 
        members of the Institute are appointed under subsection (b)(2), 
        provide advice to the Council concerning the initial set of 
        criteria for the certification of Federal health plan contracts 
        and for comparative measurements necessary to provide consumer 
        information concerning the quality of health care;
            (2) analyze the use of the criteria and comparative 
        measurements implemented by the Council under this Act and 
        recommend modifications in such criteria and measurements as 
        needed;
            (3) enter into contracts with other entities for the 
        development of such criteria and measurements and to otherwise 
        carry out its duties under this section;
            (4) recommend the implementation of comparative measurement 
        requirements under this Act at differing intervals throughout 
        the United States so as to account for regional differences and 
        to permit computability and coordination with private sector 
        purchasing efforts;
            (5) develop recommendations for making risk-adjustment 
        payments and risk-adjusted quality bonus payments to Federal 
        health plan contracts; and
            (6) carry out any other activities determined appropriate 
        by the Institute to carry out its duties under this section.

SEC. 105. POWERS.

    (a) Hearings.--The Council may hold such hearings, sit and act at 
such times and places, take such testimony, and receive such evidence 
as the Council considers advisable to carry out the purposes of this 
Act.
    (b) Information From Federal Agencies.--The Council may secure 
directly from any Federal department or agency such information as the 
Council considers necessary to carry out the provisions of this Act. 
Upon request of the Chairperson of the Council, the head of such 
department or agency shall furnish such information to the Council.
    (c) Postal Services.--The Council may use the United States mails 
in the same manner and under the same conditions as other departments 
and agencies of the Federal Government.
    (d) Gifts.--The Council may accept, use, and dispose of gifts or 
donations of services or property.
    (e) Establishment of Committees.--The Council may establish such 
advisory committees as the Council determines are necessary to carry 
out its duties under this Act, including those intended to facilitate 
input and coordination with large private sector purchasers and 
purchasing coalitions.

SEC. 106. DUTIES.

    (a) In General.--The Council shall--
            (1) adopt, adapt, or develop criteria in accordance with 
        title III to be used in the licensing of certifying entities 
        and in the certification of Federal health plan contracts, 
        including any minimum criteria needed for the operation of 
        Federal health plan contracts during the transition period 
        described in section 301(c);
            (2) issue licenses to certifying entities that meet the 
        criteria developed under paragraph (1) for the purpose of 
        enabling such entities to certify Federal health plan contracts 
        in accordance with this Act;
            (3) select from existing comparative health care measures, 
        where such measures exist, and develop additional comparative 
        health care measures to guide consumer choice and to improve 
        the delivery of quality health care in accordance with title 
        IV;
            (4) develop procedures for the dissemination of 
        certification and comparative quality information provided to 
        the Council under this Act by Federal health plan contracts, 
        through the Agency for Health Care Policy and Research;
            (5) contract with an independent entity for the conduct of 
        audits concerning certification and quality measurement and 
        require that as part of the certification process performed by 
        licensed certification entities that there include an on-site 
        evaluation, using performance-based standards, of the providers 
        of clinical care under the health plans described in section 
        3(2);
            (6) at least quarterly, meet jointly with the Agency for 
        Health Care Policy and Research to review innovative health 
        outcomes measures, new measurement processes, and other matters 
        determined appropriate by the Council;
            (7) at least annually, meet with the Institute concerning 
        certification criteria and the collection and dissemination of 
        comparative information;
            (8) not later than January 1, 1999, and each January 1 
        thereafter, prepare and submit to the Federal officials 
        responsible for administering the health care programs 
        described in section 3(2) and to Congress, a report concerning 
        the activities of the Council for the previous year;
            (9) advise the President and Congress concerning health 
        insurance and health care provided under the authority of a 
        Federal program and make recommendations concerning measures 
        that may be implemented to protect the health of all 
        participants and beneficiaries in Federal health care programs; 
        and
            (10) carry out other activities determined appropriate by 
        the Council.
    (b) Rule of Construction.--Nothing in this section shall be 
construed to limit the authority of the Federal official responsible 
for administering each of the health care programs described in section 
3(2) with respect to requirements other than those applied under this 
Act with respect to Federal health plan contracts.

SEC. 107. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated to the 
Council such sums as may be necessary to carry out this Act.
    (b) Availability.--Any amounts appropriated under subsection (a) 
shall remain available, without fiscal year limitation, until expended.

           TITLE II--COVERAGE OF FEDERAL HEALTH CARE PROGRAMS

SEC. 201. COMPLIANCE.

    (a) In General.--Not later than the effective date of this Act, the 
Federal official responsible for administering each health care program 
described in section 3(2) shall ensure that--
            (1) health insurance coverage under any such program is 
        available and provided only through Federal health plan 
        contracts that have been certified in accordance with title 
        III; and
            (2) information concerning each such program is collected, 
        available and disseminated in accordance with title IV.
    (b) Contracts or Reimbursements.--In carrying out subsection (a), 
the Federal official involved--
            (1) may not enter into a contract with a Federal health 
        plan contractor for the provision of health care under the 
        program involved unless the Federal health plan contract 
        involved is certified and provides comparative information in 
        accordance with this Act;
            (2) may not reimburse a Federal health plan contract for 
        care provided under the program involved unless such Federal 
        health plan contract is certified and provides comparative 
        information in accordance with this Act; and
            (3) shall, after providing notice to the Federal health 
        plan contract and an opportunity for the Federal health plan 
        contract to be certified, and in accordance with any applicable 
        grievance and appeals procedures under section 304, terminate 
        any contract with a Federal health plan contractor under the 
        program if such contract is not certified in accordance with 
        this Act.

SEC. 202. PAYMENTS FOR VALUE.

    (a) Establishment of Program.--The Council shall establish a 
program under which payments are made to various Federal health plan 
contracts to reward such contracts for meeting or exceeding quality 
targets.
    (b) Performance Measures.--In carrying out the program under 
subsection (a), the Council shall establish broad categories of quality 
targets and performance measures. Such targets and measures shall be 
designed to permit the Council to determine whether a Federal health 
plan contract is being operated in a manner consistent with this Act.
    (c) Use of Funds.--The Council shall use amounts allocated under 
subsection (e) (or an amendment made by such subsection) to make annual 
payments to those Federal health plan contracts that have been 
determined by the Council to meet or exceed the quality targets and 
performance measures established under subsection (b). Any amounts 
allocated under subsection (e) (or an amendment made by such 
subsection) for a fiscal year and remaining available after payments 
are made under subsection (d), shall be used for deficit reduction.
    (d) Amount of Payment.--
            (1) Formula.--The amount of any payment made to a Federal 
        health plan contract under this section shall be determined in 
        accordance with a formula to be developed by the Council. The 
        formula shall ensure that a payment made to a Federal health 
        plan contract under this section be in an amount equal to--
                    (A) with respect to a contract that is determined 
                to be in the first quintile, 1 percent of the amount 
                allocated by the contract under subsection (e) (or an 
                amendment made by such subsection);
                    (B) with respect to a contract that is determined 
                to be in the second quintile, .75 percent of the amount 
                allocated by the contract under subsection (e) (or an 
amendment made by such subsection);
                    (C) with respect to a contract that is determined 
                to be in the third quintile, .50 percent of the amount 
                allocated by the contract under subsection (e) (or an 
                amendment made by such subsection); and
                    (D) with respect to a contract that determined to 
                be in the fourth quintile, .25 percent of the amount 
                allocated by the contract under subsection (e) (or an 
                amendment made by such subsection).
            (2) No payment.--A Federal health plan contract that is 
        determined by the Council to be in the fifth quintile shall not 
        be eligible to receive a payment under this section.
            (3) Determination of quintiles.--Not later than April 30 of 
        each calendar year, the Council shall rank each Federal health 
        plan contract based on the performance of the contract during 
        the preceding year as determined using the quality targets and 
        performance measures established under subsection (b). Such 
        rankings shall be divided into quintiles with the first 
        quintile containing the highest ranking contracts and the fifth 
        quintile containing the lowest ranking contracts. Each such 
        quintile shall contain contracts that in the aggregate cover an 
        equal number of participants and beneficiaries as compared to 
        another quintile.
            (4) Limitation.--
                    (A) In general.--In no case shall the formula 
                developed by the Council under paragraph (1) permit the 
                Council to make payments under this section to a class 
                of Federal health plan contracts in an amount that 
                exceeds the total amount allocated by such class of 
                contracts under subsection (e) for the year involved.
                    (B) Class of contracts.--For purposes of 
                subparagraph (A), the Federal health plan contracts 
                described in each of subparagraphs (A) through (E) of 
                section 3(2) shall be considered to be in a separate 
                class of Federal health plan contracts.
    (e) Allocation of Premium Amounts.--
            (1) Federal health plan contracts.--A Federal health plan 
        contract not covered under paragraphs (2) through (5) (or an 
        amendment made by such paragraph) that is certified under title 
        III shall annually allocate an amount equal to .50 percent of 
        all Federally-related health plan contract premium amounts 
        received during the year involved to the Council.
            (2) Medicare Managed Care Plans.--Section 1876 of the 
        Social Security Act (42 U.S.C. 1395mm) is amended--
                    (A) in subsection (a)(1)(C), by striking ``The 
                annual'' and inserting ``Subject to subsection (k), the 
                annual''; and
                    (B) by adding at the end the following:
    ``(k) Withholding of Payments To Encourage Quality Performance.--
            ``(1) Withholding.--The Secretary shall withhold .50 
        percent from any payment that an eligible organization under 
        this section receives with respect to an individual enrolled 
        under this section with the organization.
            ``(2) Disbursement.--From the total amount withheld under 
        paragraph (1), the Secretary shall make payments to eligible 
        organizations under this section in accordance with the formula 
        established by the Federal Health Plan Quality Council under 
        section 202(d) of the Federal Health Insurance Quality, 
        Consumer Information and Protection Act. Any payments that an 
        eligible organization receives under this paragraph shall be 
        taken into account in determining the average payment amount of 
        the organization as part of the organization's adjusted 
        community rate calculation.''.
            (3) Medicaid.--
                    (A) In general.--Section 1902(a) of the Social 
                Security Act (42 U.S.C. 1396a(a)) is amended--
                            (i) by striking ``and'' at the end of 
                        paragraph (62);
                            (ii) by striking the period at the end of 
                        paragraph (63) and inserting ``; and''; and
                            (iii) by inserting after paragraph (63) the 
                        following new paragraph:
            ``(64) provide for the withholding of .50 percent from any 
        payment that any health maintenance organization or other 
        entity that contracts with the State to provide medical 
        assistance to individuals under this title receives with 
        respect to such medical assistance and that, from the total 
        amount withheld, the State shall make payments to such 
        organizations or entities in accordance with the formula 
        established by the Federal Health Plan Quality Council under 
        section 202(d) of the Federal Health Insurance Quality, 
        Consumer Information and Protection Act.''.
                    (B) Applicability.--The amendments made by 
                subparagraph (A) shall apply to contracts entered into 
                under title XIX of the Social Security Act (42 U.S.C. 
                1396 et seq.) or under a waiver of such title of such 
                Act.
            (4) Tricare.--The Secretary of Defense shall provide for 
        the withholding of .50 percent from any payment that any health 
        maintenance organization or other entity that contracts with 
        the Secretary of Defense to provide medical assistance to 
        individuals under the authority of chapter 55 of title 10, 
        United States Code, principally section 1097 of such title, and 
        from the total amount withheld, the Secretary of Defense shall 
        make payments to such organizations or entities in accordance 
        with the formula established by the Council under section 
        202(d).
            (5) Veterans affairs.--The Secretary of Veterans Affairs 
        shall provide for the withholding of .50 percent from any 
        payment that any health maintenance organization or other 
        entity that contracts with the Secretary of Veterans Affairs to 
        provide medical assistance to individuals under the authority 
        of title 38, United States Code, and from the total amount 
withheld, the Secretary of Veterans Affairs shall make payments to such 
organizations or entities in accordance with the formula established by 
the Council under section 202(d).

       TITLE III--CERTIFICATION OF FEDERAL HEALTH PLAN CONTRACTS

SEC. 301. REQUIREMENT.

    (a) In General.--To be eligible to enter into a contract with the 
Federal Government to enroll individuals for health insurance coverage 
provided under a Federal program, an entity shall participate in the 
certification process and be certified in accordance with this title.
    (b) Effect of Mergers or Purchase.--
            (1) Certified contracts.--Where two or more Federal health 
        plan contractors offering certified Federal health plan 
        contracts are merged or where one such contractor is purchased 
        by another contractor, the resulting contractor may continue to 
        operate and enroll individuals for coverage under the Federal 
        health plan contract as if the Federal health plan contract 
        involved were certified. The certification of any resulting 
        Federal health plan contract shall be reviewed by the 
        applicable certifying entity to ensure the continued compliance 
        of the contract with the certification criteria.
            (2) Noncertified contracts.--The certification of a Federal 
        health plan contract shall be terminated upon the merger of the 
        Federal health plan contractor involved or the purchase of the 
        contractor by another entity that does not offer any certified 
        Federal health plans. Any Federal health plan contracts offered 
        through the resulting contractor may reapply for certification 
        after the completion of the merger or purchase.
    (c) Transition for New Contracts.--
            (1) In general.--A Federal health plan contract that has 
        not provided health insurance coverage to individuals prior to 
        the effective date of this Act shall be permitted to contract 
        with the Federal Government and operate and enroll individuals 
        under the contract without being certified for the 2-year 
        period beginning on the date on which such contract enrolls the 
        first individual under the contract. The contract must be 
        certified in order to continue to provide coverage under the 
        contract after such period.
            (2) Limitation.--A new contract described in paragraph (1) 
        shall, during the period referred to in paragraph (1) prior to 
        certification, comply with the following requirements.
                    (A) The minimum criteria developed by the Council 
                under section 106(1).
                    (B) The information collection and dissemination 
                requirements described in section 303(b)(3).

SEC. 302. LICENSING OF CERTIFICATION ENTITIES.

    (a) In General.--The Council shall develop procedures for the 
licensing of entities to certify Federal health plan contracts under 
this Act.
    (b) Requirements.--The procedures developed under subsection (a) 
shall ensure that--
            (1) to be licensed under this section a certification 
        entity shall apply the requirements of this Act to Federal 
        health plan contracts seeking certification;
            (2) a certification entity has procedures in place to 
        suspend or revoke the certification of a Federal health plan 
        contract that is failing to comply with the certification 
        requirements; and
            (3) the Council will give priority to licensing entities 
        that are accrediting health plans that contract with the 
        Federal Government on the date of enactment of this Act.

SEC. 303. CERTIFICATION CRITERIA.

    (a) Establishment.--The Council shall establish minimum criteria 
under this section (as may be appropriate with respect to each type of 
health plan arrangement involved) to be used by licensed certifying 
entities in the certification of Federal health plan contracts under 
this title.
    (b) Requirements.--Criteria established by the Council under 
subsection (a) shall require that, in order to be certified, a Federal 
health plan contract shall comply at a minimum with the following:
            (1) Quality improvement plan.--The Federal health plan 
        contract shall implement a total quality improvement plan that 
        is designed to improve the clinical and administrative 
        processes of the contract on an ongoing basis and demonstrate 
        that improvements in the quality of contract services have 
        occurred as a result of such plan.
            (2) Provider credentials.--The Federal health plan contract 
        shall compile and annually provide to the licensed certifying 
        entity documentation concerning the credentials of the 
        hospitals and health care providers reimbursed under the 
        contract.
            (3) Access to information.--
                    (A) Comparative information.--The Federal health 
                plan contract, using data supplied by the Council and 
                in accordance with section 401(c), shall implement a 
                program to provide participants and beneficiaries with 
                access to appropriate comparative information in a 
                manner that enables such participants and beneficiaries 
                to make informed health care decisions by comparing the 
                various health plans that participants and 
                beneficiaries are eligible to enroll in. Such 
                comparative information shall be in a standardized form 
                that is adopted by the Council and is understandable to 
                a reasonable layperson and shall include participant, 
                beneficiary, and provider satisfaction data that is 
                derived from the conduct of a period (not less than 
                annually) survey by an independent organization of 
                those enrolled in the plan and those who have 
                disenrolled during the preceding 12-month period.
                    (B) Plan specific information.--As part of the 
                program implemented under subparagraph (A), the Federal 
                health plan contract shall provide specific information 
                concerning the contract that shall include--
                            (i) information concerning the quality of 
                        health care providers that may be reimbursed 
                        under, or that are employed by the contract, 
                        and the existence of any condition of 
                        employment that prohibits providers and other 
                        health professionals from fully informing the 
                        patient of all treatment options;
                            (ii) information concerning the service 
                        area of the contract and the qualifications and 
                        availability within the service area of health 
                        care providers under the contract;
                            (iii) information on procedures for filing 
                        grievances and appealing the denial of 
                        services;
                            (iv) information concerning the rights and 
                        responsibilities of participants and 
                        beneficiaries under the contract;
                            (v) information concerning the benefits 
                        offered under the contract, including any 
                        limitations or cost-sharing applicable, and the 
                        premiums, co-payments or other out-of-pocket 
                        costs that participants and beneficiaries may 
                        be liable for;
                            (vi) information concerning the 
                        availability and location of benefit counseling 
                        services and contract-specific disenrollment 
                        statistics presented as a percentage of the 
                        total number of participants and beneficiaries 
                        who are disenrolled from the contract and 
                        information about physician disenrollment--
                                    (I) during the 90-day period 
                                beginning on the date of their 
                                enrollment in the contract; and
                                    (II) during the most recent 12-
                                month period;
                            (vii) information concerning the procedures 
                        through which the contract monitors and 
                        improves the quality of services provided by 
                        the contract and services provided by health 
                        care providers under the contract;
                            (viii) information to assist health care 
                        professionals in delivering better health care 
                        and methods to assess health care 
                        professionals' perceptions on issues regarding 
                        quality of care; and
                            (ix) information concerning selection 
                        standards for participating providers.
            (4) Other requirements.--The Federal health plan contract 
        shall comply with other requirements authorized under this Act 
        and implemented by the Council.
            (5) Availability.--A Federal health plan contract shall at 
        least annually provide notice to participants and beneficiaries 
        of the availability of comparative information and the manner 
        by which such individuals may obtain such information.

SEC. 304. GRIEVANCE AND APPEALS.

    The Council shall develop grievance and appeals procedures under 
which a Federal health plan contract that is denied certification under 
this title may appeal such denial to the Council.

           TITLE IV--FEDERAL HEALTH PLAN CONTRACT PERFORMANCE

SEC. 401. UNIFORM PERFORMANCE CRITERIA.

    (a) Comparative Health Measures.--The Council, based on the data 
and information provided by the Agency for Health Care Policy and 
Research under this section, shall develop or select measures to be 
used by individuals to compare the overall quality of Federal health 
plan contracts. In developing or selecting such measures, the Council 
shall provide for the publication and distribution of comparative 
materials for use by individuals seeking to enroll in a Federal health 
plan contract.
    (b) Submission of Data.--To be certified under this Act, a Federal 
health plan contract shall, at such intervals as determined appropriate 
by the Council, compile and submit to the Agency for Health Care Policy 
and Research data (in a manner that does not disclose the identity of 
patients) concerning the process and outcomes performance of the 
contract.
    (c) Data.--The data that a Federal health plan contract is required 
to submit under subsection (b) shall include--
            (1) outcomes and process data and information concerning 
        the effectiveness of care provided under the health plan 
        contract, including process and outcomes measures which reflect 
        the clinical health, well-being, and functional status of 
        participants and beneficiaries;
            (2) enrollment and disenrollment data (including short- and 
        long-term rates);
            (3) grievance and appeals data (including the average and 
        median lengths of time for the resolution of appeals); and
            (4) such other data or information as may be required by 
        the Council to carry out the role of the Council.
    (d) Provision of Data to Council.--The Agency for Health Care 
Policy and Research shall annually prepare and submit to the Council a 
summary of the data provided to the Agency by Federal health plan 
contracts under this section.
    (e) Reasonable Efforts.--Reasonable efforts shall be made to ensure 
that data under this section is valid, timely and standardized prior to 
making such data public.

          TITLE V--EXPANSION OF HEALTH CARE QUALITY ACTIVITIES

SEC. 501. EXPANDED ROLE FOR THE AGENCY FOR HEALTH CARE POLICY AND 
              RESEARCH.

    Part B of title IX of the Public Health Service Act (42 U.S.C. 299b 
et seq.) is amended by adding at the end the following:

``SEC. 915. NATIONAL HEALTH CARE QUALITY INFORMATION.

    ``(a) Purpose.--It is the purpose of this section to expand the 
duties and responsibilities of the Agency to include the collection, 
analysis, and dissemination of health care quality information both 
generally and with a focus on health plans.
    ``(b) Duties.--In carrying out this section, the Agency shall--
            ``(1) review measures of health care quality and other 
        measures of health care processes and outcomes;
            ``(2) coordinate activities under paragraph (1) with the 
        National Committee on Quality Assurance, the Joint Commission 
        on the Accreditation of Health Organizations, the Foundation 
        for Accountability, the Quality Advisory Institute established 
        under section 104 of the Federal Health Care Quality, Consumer 
        Information and Protection Act, the American Accreditation 
        Health Care Commission, the National Committee on Vital and 
        Health Statistics, State and local governments, and consumer 
        advocacy groups;
            ``(3) develop methods for integrating risk assessment and 
        risk adjustment methodology that are used to measure the 
        quality of health care into data information sets for purposes 
        of making quality of care comparisons and determinations under 
        the reimbursement formula under section 202(d);
            ``(4) ensure the comparability of process and outcome 
        measures through the development of data dictionaries and of 
        standardized data collection methods;
            ``(5) compile comparative quality data on health plans that 
        is designed to facilitate the purchase of health insurance by 
        participants and beneficiaries;
            ``(6) in consultation with the Council, disseminate data 
        under paragraph (4) to Federal, State, and local governmental 
        purchasers, employees, Federal, State, and local program 
        beneficiaries, health insurance issuers, and the general 
        public;
            ``(7) establish a directory of best operational practices 
        for use by systems of health care; and
            ``(8) coordinate with other Federal entities with 
        experience in health care and with State and local 
        governments.''.

SEC. 502. INCREASE IN FUNDING FOR OUTCOMES RESEARCH.

    (a) Health Plan Performance, Research, and Data.--Section 902(a) of 
the Public Health Service Act (42 U.S.C. 299a(a)) is amended--
            (1) in paragraph (7), by striking ``and'' at the end;
            (2) in paragraph (8), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(9) health plan performance, research, and data.''.
    (b) Funding.--Section 926 of the Public Health Service Act (42 
U.S.C. 299c-5) is amended by adding at the end the following:
    ``(f) Health Plan Performance, Research, and Data.--For the purpose 
of carrying out section 902(a)(9), there is authorized to be 
appropriated $20,000,000 for fiscal year 1998, and such sums as may be 
necessary for each of the fiscal years 1999 through 2002.''.

                  TITLE VI--MISCELLANEOUS PROVISIONS.

SEC. 601. EFFECTIVE DATE.

    (a) Federal Health Plan Contracts.--Except as provided in 
subsection (b), the provisions of this Act shall apply to Federal 
health plan contracts on January 1, 1999.
    (b) Amendments.--
            (1) In general.--The amendments made by section 202 shall 
        take effect on January 1, 1999.
            (2) Agency for health care policy and research.--The 
        amendments made by title V shall take effect on the date of 
        enactment of this Act.
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