[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 24 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 24

To provide improved access to health care, enhance informed individual 
choice regarding health care services, lower health care costs through 
 the use of appropriate providers, improve the quality of health care, 
       improve access to long-term care, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 22, 2001

  Mr. Lott (for Mr. Specter) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To provide improved access to health care, enhance informed individual 
choice regarding health care services, lower health care costs through 
 the use of appropriate providers, improve the quality of health care, 
       improve access to long-term care, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Care 
Assurance Act of 2001''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
     TITLE I--EXPANDED MEDICAID COVERAGE FOR LOW-INCOME INDIVIDUALS

Sec. 101. Expanded medicaid coverage for low-income individuals.
  TITLE II--EXPANSION OF THE STATE CHILDREN'S HEALTH INSURANCE PROGRAM

Sec. 201. Increase in income eligibility.
      TITLE III--EXPANDED HEALTH SERVICES FOR DISABLED INDIVIDUALS

Sec. 301. Coverage of community-based attendant services and supports 
                            under the medicaid program.
Sec. 302. Grants to develop and establish real choice systems change 
                            initiatives.
Sec. 303. State option for eligibility for individuals.
Sec. 304. Studies and reports.
Sec. 305. Task force on financing of long-term care services.
                TITLE IV--HEALTH CARE INSURANCE COVERAGE

                     Subtitle A--General Provisions

Sec. 401. Amendments to the Employee Retirement Income Security Act of 
                            1974.
Sec. 402. Amendments to the Public Health Service Act relating to the 
                            group market.
Sec. 403. Amendment to the Public Health Service Act relating to the 
                            individual market.
Sec. 404. Effective date.
                       Subtitle B--Tax Provisions

Sec. 411. Enforcement with respect to health insurance issuers.
Sec. 412. Enforcement with respect to small employers.
Sec. 413. Enforcement by excise tax on qualified associations.
Sec. 414. Deduction for health insurance costs of self-employed 
                            individuals.
Sec. 415. Amendments to COBRA.
             TITLE V--PRIMARY AND PREVENTIVE CARE SERVICES

Sec. 501. Improvement of medicare preventive care services.
Sec. 502. Authorization of appropriations for healthy start program.
Sec. 503. Reauthorization of certain programs providing primary and 
                            preventive care.
Sec. 504. Comprehensive school health education program.
Sec. 505. Comprehensive early childhood health education program.
Sec. 506. Adolescent family life and abstinence.
         TITLE VI--PATIENT'S RIGHT TO DECLINE MEDICAL TREATMENT

Sec. 601. Patient's right to decline medical treatment.
            TITLE VII--PRIMARY AND PREVENTIVE CARE PROVIDERS

Sec. 701. Increased medicare reimbursement for physician assistants, 
                            nurse practitioners, and clinical nurse 
                            specialists.
Sec. 702. Requiring coverage of certain nonphysician providers under 
                            the medicaid program.
Sec. 703. Medical student tutorial program grants.
Sec. 704. General medical practice grants.
         TITLE VIII--SAFE AND COST-EFFECTIVE MEDICAL TREATMENT

Sec. 801. Enhancing investment in cost-effective methods of health 
                            care.
Sec. 802. Medical Errors Reduction.
   TITLE IX--TAX INCENTIVES FOR PURCHASE OF QUALIFIED LONG-TERM CARE 
                               INSURANCE

Sec. 901. Credit for qualified long-term care premiums.
Sec. 902. Inclusion of qualified long-term care insurance in cafeteria 
                            plans and flexible spending arrangements.
Sec. 903. Exclusion from gross income for amounts received on 
                            cancellation of life insurance policies and 
                            used for qualified long-term care insurance 
                            contracts.
Sec. 904. Use of gain from sale of principal residence for purchase of 
                            qualified long-term health care insurance.
               TITLE X--NATIONAL FUND FOR HEALTH RESEARCH

Sec. 1001. Establishment of Fund.

     TITLE I--EXPANDED MEDICAID COVERAGE FOR LOW-INCOME INDIVIDUALS

SEC. 101. EXPANDED MEDICAID COVERAGE FOR LOW-INCOME INDIVIDUALS.

    (a) Required Coverage of Individuals up to 133 Percent of 
Poverty.--Section 1902(a)(10)(A)(i) of the Social Security Act (42 
U.S.C. 1396a(a)(10)(A)(i)) is amended--
            (1) by striking ``or'' at the end of subclause (VI);
            (2) by inserting ``or'' after the semicolon at the end of 
        subclause (VII); and
            (3) by adding at the end the following:
                                    ``(VIII) whose family income does 
                                not exceed 133 percent of the income 
                                official poverty line (as defined by 
                                the Office of Management and Budget, 
                                and revised annually in accordance with 
                                section 673(2) of the Omnibus Budget 
                                Reconciliation Act of 1981) applicable 
                                to a family of the size involved;''.
    (b) Optional Coverage of Individuals up to 200 Percent of 
Poverty.--Section 1902(a)(10)(A)(i)(VIII) of the Social Security Act, 
as added by subsection (a)(3), is amended by inserting ``(200 percent, 
at State option)'' after ``133 percent''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section take 
        effect on October 1, 2001.
            (2) Extension if state law amendment required.--In the case 
        of a State plan under title XIX of the Social Security Act 
        which the Secretary of Health and Human Services determines 
        requires State legislation in order for the plan to meet the 
        additional requirements imposed by the amendments made by this 
        section, the State plan shall not be regarded as failing to 
        comply with the requirements of such title solely on the basis 
        of its failure to meet these additional requirements before the 
        first day of the first calendar quarter beginning after the 
        close of the first regular session of the State legislature 
        that begins after the date of the enactment of this Act. For 
        purposes of the previous sentence, in the case of a State that 
        has a 2-year legislative session, each year of the session is 
        considered to be a separate regular session of the State 
        legislature.

  TITLE II--EXPANSION OF THE STATE CHILDREN'S HEALTH INSURANCE PROGRAM

SEC. 201. INCREASE IN INCOME ELIGIBILITY.

    (a) Definition of Low-Income Child.--Section 2110(c)(4) of the 
Social Security Act (42 U.S.C. 42 U.S.C. 1397jj(c)(4)) is amended by 
striking ``200'' and inserting ``235''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on October 1, 2001.

      TITLE III--EXPANDED HEALTH SERVICES FOR DISABLED INDIVIDUALS

SEC. 301. COVERAGE OF COMMUNITY ATTENDANT SERVICES AND SUPPORTS UNDER 
              THE MEDICAID PROGRAM.

    (a) Required Coverage for Individuals Entitled to Nursing Facility 
Services or Eligible for Intermediate Care Facility Services for the 
Mentally Retarded.--Section 1902(a)(10)(D) of the Social Security Act 
(42 U.S.C. 1396a(a)(10)(D)) is amended--
            (1) by inserting ``(i)'' after ``(D)'';
            (2) by adding ``and'' after the semicolon; and
            (3) by adding at the end the following:
                    ``(ii) subject to section 1935, for the inclusion 
                of community attendant services and supports for any 
                individual who is eligible for medical assistance under 
                the State plan and with respect to whom there has been 
                a determination that the individual requires the level 
                of care provided in a nursing facility or an 
                intermediate care facility for the mentally retarded 
                (whether or not coverage of such intermediate care 
                facility is provided under the State plan) and who 
                requires such community attendant services and supports 
                based on functional need and without regard to age or 
                disability;''.
    (b) Medicaid Coverage of Community Attendant Services and 
Supports.--
            (1) In general.--Title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.) is amended--
                    (A) by redesignating section 1935 as section 1936; 
                and
                    (B) by inserting after section 1934 the following:

              ``community attendant services and supports

    ``Sec. 1935. (a) Definitions.--In this title:
            ``(1) Community attendant services and supports.--
                    ``(A) In general.--The term `community attendant 
                services and supports' means attendant services and 
                supports furnished to an individual, as needed, to 
                assist in accomplishing activities of daily living, 
                instrumental activities of daily living, and health-
                related functions through hands-on assistance, 
                supervision, or cueing--
                            ``(i) under a plan of services and supports 
                        that is based on an assessment of functional 
                        need and that is agreed to by the individual 
                        or, as appropriate, the individual's 
                        representative;
                            ``(ii) in a home or community setting, 
                        which may include a school, workplace, or 
                        recreation or religious facility, but does not 
                        include a nursing facility, an intermediate 
                        care facility for the mentally retarded, or 
                        other congregate facility;
                            ``(iii) under an agency-provider model or 
                        other model (as defined in paragraph (2)(C)); 
                        and
                            ``(iv) the furnishing of which is selected, 
                        managed, and dismissed by the individual, or, 
                        as appropriate, with assistance from the 
                        individual's representative.
                    ``(B) Included services and supports.--Such term 
                includes--
                            ``(i) tasks necessary to assist an 
                        individual in accomplishing activities of daily 
                        living, instrumental activities of daily 
                        living, and health-related functions;
                            ``(ii) acquisition, maintenance, and 
                        enhancement of skills necessary for the 
                        individual to accomplish activities of daily 
                        living, instrumental activities of daily 
                        living, and health-related functions;
                            ``(iii) backup systems or mechanisms (such 
                        as the use of beepers) to ensure continuity of 
                        services and supports; and
                            ``(iv) voluntary training on how to select, 
                        manage, and dismiss attendants.
                    ``(C) Excluded services and supports.--Subject to 
                subparagraph (D), such term does not include--
                            ``(i) provision of room and board for the 
                        individual;
                            ``(ii) special education and related 
                        services provided under the Individuals with 
                        Disabilities Education Act and vocational 
                        rehabilitation services provided under the 
                        Rehabilitation Act of 1973;
                            ``(iii) assistive technology devices and 
                        assistive technology services;
                            ``(iv) durable medical equipment; or
                            ``(v) home modifications.
                    ``(D) Flexibility in transition to community-based 
                home setting.--Such term may include expenditures for 
                transitional costs, such as rent and utility deposits, 
                first months's rent and utilities, bedding, basic 
                kitchen supplies, and other necessities required for an 
                individual to make the transition from a nursing 
                facility or intermediate care facility for the mentally 
                retarded to a community-based home setting where the 
                individual resides.
            ``(2) Additional definitions.--
                    ``(A) Activities of daily living.--The term 
                `activities of daily living' includes eating, 
                toileting, grooming, dressing, bathing, and 
                transferring.
                    ``(B) Consumer directed.--The term `consumer 
                directed' means a method of providing services and 
                supports that allow the individual, or where 
                appropriate, the individual's representative, maximum 
                control of the community attendant services and 
                supports, regardless of who acts as the employer of 
                record.
                    ``(C) Delivery models.--
                            ``(i) Agency-provider model.--The term 
                        `agency-provider model' means, with respect to 
                        the provision of community attendant services 
                        and supports for an individual, a method of 
                        providing consumer-directed services and 
                        supports under which entities contract for the 
provision of such services and supports.
                            ``(ii) Other models.--The term `other 
                        models' means methods, other than an agency-
                        provider model, for the provision of consumer-
                        directed services and supports. Such models may 
                        include the provision of vouchers, direct cash 
                        payments, or use of a fiscal agent to assist in 
                        obtaining services.
                    ``(D) Health-related functions.--The term `health-
                related functions' means functions that can be 
                delegated or assigned by licensed health-care 
                professionals under State law to be performed by an 
                attendant.
                    ``(E) Instrumental activities of daily living.--The 
                term `instrumental activities of daily living' includes 
                meal planning and preparation, managing finances, 
                shopping for food, clothing and other essential items, 
                performing essential household chores, communicating by 
                phone and other media, and getting around and 
                participating in the community.
                    ``(F) Individual's representative.--The term 
                `individual's representative' means a parent, a family 
                member, a guardian, an advocate, or an authorized 
                representative of an individual.
    ``(b) Limitation on Amounts of Expenditures Under This Title.--In 
carrying out section 1902(a)(10)(D)(ii), a State shall permit an 
individual who has a level of severity of physical or mental impairment 
that entitles such individual to medical assistance with respect to 
nursing facility services or qualifies the individual for intermediate 
care facility services for the mentally retarded to choose to receive 
medical assistance for community attendant services and supports 
(rather than medical assistance for such institutional services and 
supports), in the most integrated setting appropriate to the needs of 
the individual, so long as the aggregate amount of the Federal 
expenditures for community attendant services and supports for all such 
individuals in a fiscal year does not exceed the total that would have 
been expended for such individuals to receive such institutional 
services and supports in the year.
    ``(c) Maintenance of Effort.--With respect to a fiscal year 
quarter, no Federal funds may be paid to a State for medical assistance 
provided to individuals described in section 1902(a)(10)(D)(ii) for 
such fiscal year quarter if the Secretary determines that the total of 
the State expenditures for programs to enable such individuals with 
disabilities to receive community attendant services and supports (or 
services and supports that are similar to such services and supports) 
under other provisions of this title for the preceding fiscal year 
quarter is less than the total of such expenditures for the same fiscal 
year quarter for the preceding fiscal year.
    ``(d) State Quality Assurance Program.--In order to continue to 
receive Federal financial participation for providing community 
attendant services and supports under this section, a State shall, at a 
minimum, establish and maintain a quality assurance program that 
provides for the following:
            ``(1) The State shall establish requirements, as 
        appropriate, for agency-based and other models that include--
                    ``(A) minimum qualifications and training 
                requirements, as appropriate for agency-based and other 
                models;
                    ``(B) financial operating standards; and
                    ``(C) an appeals procedure for eligibility denials 
                and a procedure for resolving disagreements over the 
                terms of an individualized plan.
            ``(2) The State shall modify the quality assurance program, 
        where appropriate, to maximize consumer independence and 
        consumer direction in both agency-provided and other models.
            ``(3) The State shall provide a system that allows for the 
        external monitoring of the quality of services by entities 
        consisting of consumers and their representatives, disability 
        organizations, providers, family, members of the community, and 
        others.
            ``(4) The State provides ongoing monitoring of the health 
        and well-being of each recipient.
            ``(5) The State shall require that quality assurance 
        mechanisms appropriate for the individual should be included in 
        the individual's written plan.
            ``(6) The State shall establish a process for mandatory 
        reporting, investigation, and resolution of allegations of 
        neglect, abuse, or exploitation.
            ``(7) The State shall obtain meaningful consumer input, 
        including consumer surveys, that measure the extent to which a 
        participant receives the services and supports described in the 
        individual's plan and the participant's satisfaction with such 
        services and supports.
            ``(8) The State shall make available to the public the 
        findings of the quality assurance program.
            ``(9) The State shall establish an on-going public process 
        for the development, implementation, and review of the State's 
        quality assurance program.
            ``(10) The State shall develop and implement a program of 
        sanctions.
    ``(e) Federal Role in Quality Assurance.--The Secretary shall 
conduct a periodic sample review of outcomes for individuals based upon 
the individual's plan of support and based upon the quality assurance 
program of the State. The Secretary may conduct targeted reviews upon 
receipt of allegations of neglect, abuse, or exploitation. The 
Secretary shall develop guidelines for States to use in developing 
sanctions.
    ``(f) Requirement To Expand Eligibility.--Effective October 1, 
2002, a State may not exercise the option of coverage of individuals 
under section 1902(a)(10)(A)(ii)(V) without providing coverage under 
section 1902(a)(10)(A)(ii)(VI).
    ``(g) Report on Impact of Section.--The Secretary shall submit to 
Congress periodic reports on the impact of this section on 
beneficiaries, States, and the Federal Government.''.
    (c) Inclusion in Optional Eligibility Classification.--Section 
1902(a)(10)(A)(ii)(VI) of the Social Security Act (42 U.S.C. 
1396a(a)(10)(A)(ii)(VI)) is amended by inserting ``or community 
attendant services and supports described in section 1935'' after 
``section 1915'' each place such term appears.
    (d) Coverage as Medical Assistance.--
            (1) In general.--Section 1905(a) of the Social Security Act 
        (42 U.S.C. 1396d) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (26);
                    (B) by redesignating paragraph (27) as paragraph 
                (28); and
                    (C) by inserting after paragraph (26) the 
                following:
            ``(27) community attendant services and supports (to the 
        extent allowed and as defined in section 1935); and''.
            (2) Conforming amendment.--Section 1902(a)(10)(C)(iv) of 
        the Social Security Act (42 U.S.C. 1396a(a)(10)(C)(iv)) is 
        amended by inserting ``and (27)'' after ``(24)''.
    (e) Effective Date.--The amendments made by this section take 
effect on October 1, 2001, and apply to medical assistance provided 
under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) on 
or after that date.

SEC. 302. GRANTS TO DEVELOP AND ESTABLISH REAL CHOICE SYSTEMS CHANGE 
              INITIATIVES.

    (a) Establishment.--
            (1) In general.--The Secretary of Health and Human Services 
        (referred to in this section as the ``Secretary'') shall award 
        grants described in subsection (b) to States for a fiscal year 
        to support real choice systems change initiatives that 
        establish specific action steps and specific timetables to 
        provide consumer-responsive long term services and supports to 
        eligible individuals in the most integrated setting appropriate 
        based on the unique strengths and needs of the individual and 
        the priorities and concerns of the individual (or, as 
        appropriate, the individual's representative).
            (2) Eligibility.--To be eligible for a grant under this 
        section, a State shall--
                    (A) establish the Consumer Task Force in accordance 
                with subsection (d); and
                    (B) submit an application at such time, in such 
                manner, and containing such information as the 
                Secretary may determine. The application shall be 
                jointly developed and signed by the designated State 
                official and the chairperson of such Task Force, acting 
                on behalf of and at the direction of the Task Force.
            (3) Definition of state.--In this section, the term 
        ``State'' means each of the 50 States, the District of 
        Columbia, Puerto Rico, Guam, the United States Virgin Islands, 
        American Samoa, and the Commonwealth of the Northern Mariana 
        Islands.
    (b) Grants for Real Choice Systems Change Initiatives.--
            (1) In general.--From funds appropriated under subsection 
        (g), the Secretary shall award grants to States for a fiscal 
        year to--
                    (A) support the establishment, implementation, and 
                operation of the State real choice systems change 
                initiatives described in subsection (a); and
                    (B) conduct outreach campaigns regarding the 
                existence of such initiatives.
            (2) Determination of awards; state allotments.--The 
        Secretary shall develop a formula for the distribution of funds 
        to States for each fiscal year under subsection (a). Such 
        formula shall give preference to States that have a relatively 
        higher proportion of long-term services and supports furnished 
        to individuals in an institutional setting but who have a plan 
        described in an application submitted under subsection (a)(2).
    (c) Authorized Activities.--A State that receives a grant under 
this section shall use the funds made available through the grant to 
accomplish the purposes described in subsection (a) and, in 
accomplishing such purposes, may carry out any of the following systems 
change activities:
            (1) Needs assessment and data gathering.--The State may use 
        funds to conduct a statewide needs assessment that may be based 
        on data in existence on the date on which the assessment is 
        initiated and may include information about the number of 
        individuals within the State who are receiving long-term 
        services and supports in unnecessarily segregated settings, the 
        nature and extent to which current programs respond to the 
        preferences of individuals with disabilities to receive 
        services in home and community-based settings as well as in 
        institutional settings, and the expected change in demand for 
        services provided in home and community settings as well as 
        institutional settings.
            (2) Institutional bias.--The State may use funds to 
        identify, develop, and implement strategies for modifying 
        policies, practices, and procedures that unnecessarily bias the 
        provision of long-term services and supports toward 
        institutional settings and away from home and community-based 
        settings, including policies, practices, and procedures 
        governing statewideness, comparability in amount, duration, and 
        scope of services, financial eligibility, individualized 
        functional assessments and screenings (including individual and 
        family involvement), and knowledge about service options.
            (3) Over medicalization of services.--The State may use 
        funds to identify, develop, and implement strategies for 
        modifying policies, practices, and procedures that 
        unnecessarily bias the provision of long-term services and 
        supports by health care professionals to the extent that 
        quality services and supports can be provided by other 
        qualified individuals, including policies, practices, and 
        procedures governing service authorization, case management, 
        and service coordination, service delivery options, quality 
        controls, and supervision and training.
            (4) Interagency coordination; single point of entry.--The 
        State may support activities to identify and coordinate Federal 
        and State policies, resources, and services, relating to the 
        provision of long-term services and supports, including 
the convening of interagency work groups and the entering into of 
interagency agreements that provide for a single point of entry and the 
design and implementation of a coordinated screening and assessment 
system for all persons eligible for long-term services and supports.
            (5) Training and technical assistance.--The State may carry 
        out directly, or may provide support to a public or private 
        entity to carry out training and technical assistance 
        activities that are provided for individuals with disabilities, 
        and, as appropriate, their representatives, attendants, and 
        other personnel (including professionals, paraprofessionals, 
        volunteers, and other members of the community).
            (6) Public awareness.--The State may support a public 
        awareness program that is designed to provide information 
        relating to the availability of choices available to 
        individuals with disabilities for receiving long-term services 
        and support in the most integrated setting appropriate.
            (7) Downsizing of large institutions.--The State may use 
        funds to support the per capita increased fixed costs in 
        institutional settings directly related to the movement of 
        individuals with disabilities out of specific facilities and 
        into community-based settings.
            (8) Transitional costs.--The State may use funds to provide 
        transitional costs described in section 1935(a)(1)(D) of the 
        Social Security Act, as added by section 301(b) of this Act.
            (9) Task force.--The State may use funds to support the 
        operation of the Consumer Task Force established under 
        subsection (d).
            (10) Demonstrations of new approaches.--The State may use 
        funds to conduct, on a time-limited basis, the demonstration of 
        new approaches to accomplishing the purposes described in 
        subsection (a).
            (11) Other activities.--The State may use funds for any 
        systems change activities that are not described in any of the 
        preceding paragraphs of this subsection and that are necessary 
        for developing, implementing, or evaluating the comprehensive 
        statewide system of long term services and supports.
    (d) Consumer Task Force.--
            (1) Establishment and duties.--To be eligible to receive a 
        grant under this section, each State shall establish a Consumer 
        Task Force (referred to in this section as the ``Task Force'') 
        to assist the State in the development, implementation, and 
        evaluation of real choice systems change initiatives.
            (2) Appointment.--Members of the Task Force shall be 
        appointed by the Chief Executive Officer of the State in 
        accordance with the requirements of paragraph (3), after the 
        solicitation of recommendations from representatives of 
        organizations representing a broad range of individuals with 
        disabilities and organizations interested in individuals with 
        disabilities.
            (3) Composition.--
                    (A) In general.--The Task Force shall represent a 
                broad range of individuals with disabilities from 
                diverse backgrounds and shall include representatives 
                from Developmental Disabilities Councils, State 
                Independent Living Councils, Commissions on Aging, 
                organizations that provide services to individuals with 
                disabilities and consumers of long-term services and 
                supports.
                    (B) Individuals with disabilities.--A majority of 
                the members of the Task Force shall be individuals with 
                disabilities or the representatives of such 
                individuals.
                    (C) Limitation.--The Task Force shall not include 
                employees of any State agency providing services to 
                individuals with disabilities other than employees of 
                agencies described in the Developmental Disabilities 
                Assistance and Bill of Rights Act (42 U.S.C. 6000 et 
                seq.).
    (e) Availability of Funds.--
            (1) Funds allotted to states.--Funds allotted to a State 
        under a grant made under this section for a fiscal year shall 
        remain available until expended.
            (2) Funds not allotted to states.--Funds not allotted to 
        States in the fiscal year for which they are appropriated shall 
        remain available in succeeding fiscal years for allotment by 
        the Secretary using the allotment formula established by the 
        Secretary under subsection (b)(2).
    (f) Annual Report.--A State that receives a grant under this 
section shall submit an annual report to the Secretary on the use of 
funds provided under the grant. Each report shall include the 
percentage increase in the number of eligible individuals in the State 
who receive long-term services and supports in the most integrated 
setting appropriate, including through community attendant services and 
supports and other community-based settings.
    (g) Appropriation.--Out of any funds in the Treasury not otherwise 
appropriated, there is authorized to be appropriated and there is 
appropriated to make grants under this section for--
            (1) fiscal year 2002, $25,000,000; and
            (2) for fiscal year 2003 and each fiscal year thereafter, 
        such sums as may be necessary to carry out this section.

SEC. 303. STATE OPTION FOR ELIGIBILITY FOR INDIVIDUALS.

    (a) In General.--Section 1903(f) of the Social Security Act (42 
U.S.C. 1396b(f)) is amended--
            (1) in paragraph (4)(C), by inserting ``subject to 
        paragraph (5),'' after ``does not exceed'', and
            (2) by adding at the end the following:
    ``(5)(A) A State may waive the income, resources, and deeming 
limitations described in paragraph (4)(C) in such cases as the State 
finds the potential for employment opportunities would be enhanced 
through the provision of medical assistance for community attendant 
services and supports in accordance with section 1935.
    ``(B) In the case of an individual who is eligible for medical 
assistance described in subparagraph (A) only as a result of the 
application of such subparagraph, the State may, notwithstanding 
section 1916(b), impose a premium based on a sliding scale related to 
income.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to medical assistance provided for community attendant services 
and supports described in section 1935 of the Social Security Act, as 
added by section 301(b) of this Act, furnished on or after October 1, 
2001.

SEC. 304. STUDIES AND REPORTS.

    (a) Review of, and Report on, Regulations.--The National Council on 
Disability established under title IV of the Rehabilitation Act of 1973 
(29 U.S.C. 780 et seq.) shall review regulations in existence under 
title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) on the 
date of enactment of this Act insofar as such regulations regulate the 
provision of home health services, personal care services, and other 
services in home and community-based settings and, not later than 1 
year after such date, submit a report to Congress on the results of 
such study, together with any recommendations for legislation that the 
Council determines to be appropriate as a result of the study.
    (b) Report on Reduced Title XIX Expenditures.--Not later than 1 
year after the date of enactment of this Act, the Secretary of Health 
and Human Services shall submit to Congress a report on how 
expenditures under the medicaid program under title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.) can be reduced by the furnishing 
of community attendant services and supports in accordance with section 
1935 of the Social Security Act (as added by section 301(b) of this 
Act).

SEC. 305. TASK FORCE ON FINANCING OF LONG-TERM CARE SERVICES.

    The Secretary of Health and Human Services shall establish a task 
force to examine appropriate methods for financing long-term services 
and supports. The task force shall include significant representation 
of individuals (and representatives of individuals) who receive such 
services and supports.

                TITLE IV--HEALTH CARE INSURANCE COVERAGE

                     Subtitle A--General Provisions

SEC. 401. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
              1974.

    (a) In General.--Part 7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1181 et seq.) is 
amended--
            (1) by redesignating subpart C as subpart D; and
            (2) by inserting after subpart B, the following:

            ``Subpart C--General Insurance Coverage Reforms

 ``CHAPTER 1--INCREASED AVAILABILITY AND CONTINUITY OF HEALTH COVERAGE

``SEC. 721. DEFINITION.

    ``As used in this subpart, the term `qualified group health plan' 
means a group health plan, and a health insurance issuer offering group 
health insurance coverage, that is designed to provide standard 
coverage (consistent with section 721A(b)).

``SEC. 721A. ACTUARIAL EQUIVALENCE IN BENEFITS PERMITTED.

    ``(a) Set of Rules of Actuarial Equivalence.--
            ``(1) Initial determination.--The NAIC is requested to 
        submit to the Secretary, within 6 months after the date of the 
        enactment of this subpart, a set of rules which the NAIC 
        determines is sufficient for determining, in the case of any 
        group health plan, or a health insurance issuer offering group 
        health insurance coverage, and for purposes of this section, 
        the actuarial value of the coverage offered by the plan or 
        coverage.
            ``(2) Certification.--If the Secretary determines that the 
        NAIC has submitted a set of rules that comply with the 
        requirements of paragraph (1), the Secretary shall certify such 
        set of rules for use under this subpart. If the Secretary 
        determines that such a set of rules has not been submitted or 
        does not comply with such requirements, the Secretary shall 
        promptly establish a set of rules that meets such requirements.
    ``(b) Standard Coverage.--
            ``(1) In general.--A group health plan, and a health 
        insurance issuer offering group health insurance coverage, 
        shall be considered to provide standard coverage consistent 
        with this subsection if the benefits are determined, in 
        accordance with the set of actuarial equivalence rules 
        certified under subsection (a), to have a value that is within 
        5 percentage points of the target actuarial value for standard 
        coverage established under paragraph (2).
            ``(2) Initial determination of target actuarial value for 
        standard coverage.--
                    ``(A) Initial determination.--
                            ``(i) In general.--The NAIC is requested to 
                        submit to the Secretary, within 6 months after 
                        the date of the enactment of this subpart, a 
                        target actuarial value for standard coverage 
                        equal to the average actuarial value of the 
                        coverage described in clause (ii). No specific 
                        procedure or treatment, or classes thereof, is 
                        required to be considered in such determination 
                        by this subpart or through regulations. The 
                        determination of such value shall be based on a 
                        representative distribution of the population 
                        of eligible employees offered such coverage and 
                        a single set of standardized utilization and 
                        cost factors.
                            ``(ii) Coverage described.--The coverage 
                        described in this clause is coverage for 
                        medically necessary and appropriate services 
                        consisting of medical and surgical services, 
                        medical equipment, preventive services, and 
                        emergency transportation in frontier areas. No 
                        specific procedure or treatment, or classes 
                        thereof, is required to be covered in such a 
                        plan, by this subpart or through regulations.
                    ``(B) Certification.--If the Secretary determines 
                that the NAIC has submitted a target actuarial value 
                for standard coverage that complies with the 
                requirements of subparagraph (A), the Secretary shall 
                certify such value for use under this chapter. If the 
Secretary determines that a target actuarial value has not been 
submitted or does not comply with the requirements of subparagraph (A), 
the Secretary shall promptly determine a target actuarial value that 
meets such requirements.
    ``(c) Subsequent Revisions.--
            ``(1) NAIC.--The NAIC may submit from time to time to the 
        Secretary revisions of the set of rules of actuarial 
        equivalence and target actuarial values previously established 
        or determined under this section if the NAIC determines that 
        revisions are necessary to take into account changes in the 
        relevant types of health benefits provisions or in demographic 
        conditions which form the basis for the set of rules of 
        actuarial equivalence or the target actuarial values. The 
        provisions of subsection (a)(2) shall apply to such a revision 
        in the same manner as they apply to the initial determination 
        of the set of rules.
            ``(2) Secretary.--The Secretary may by regulation revise 
        the set of rules of actuarial equivalence and target actuarial 
        values from time to time if the Secretary determines such 
        revisions are necessary to take into account changes described 
        in paragraph (1).

``SEC. 721B. ESTABLISHMENT OF PLAN STANDARDS.

    ``(a) Establishment of General Standards.--
            ``(1) Role of naic.--The NAIC is requested to submit to the 
        Secretary, within 9 months after the date of the enactment of 
        this subpart, model regulations that specify standards for 
        making qualified group health plans available to small 
        employers. 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. 
        Such standards shall serve as the standards under this section, 
        with such amendments as the Secretary deems necessary. Such 
        standards shall be nonbinding (except as provided in chapter 
        4).
            ``(2) Contingency.--If the NAIC does not develop such model 
        regulations within the period described in paragraph (1), the 
        Secretary shall specify, within 15 months after the date of the 
        enactment of this subpart, model regulations that specify 
        standards for insurers with regard to making qualified group 
        health plans available to small employers. Such standards shall 
        be nonbinding (except as provided in chapter 4).
            ``(3) Effective date.--The standards specified in the model 
        regulations shall apply to group health plans and health 
        insurance issuers offering group health insurance coverage in a 
        State on or after the respective date the standards are 
        implemented in the State.
    ``(b) No Preemption of State Law.--A State may implement standards 
for group health plans available, and health insurance issuers offering 
group health insurance coverage offered, to small employers that are 
more stringent than the standards under this section, except that a 
State may not implement standards that prevent the offering of at least 
one group health plan that provides standard coverage (as described in 
section 721A(b)).

``SEC. 721C. RATING LIMITATIONS FOR COMMUNITY-RATED MARKET.

    ``(a) Standard Premiums With Respect to Community-Rated Eligible 
Employees and Eligible Individuals.--
            ``(1) In general.--Each group health plan offered, and each 
        health insurance issuer offering group health insurance 
        coverage, to a small employer shall establish within each 
        community rating area in which the plan is to be offered, a 
        standard premium for enrollment of eligible employees and 
        eligible individuals for the standard coverage (as defined 
        under section 721A(b)).
            ``(2) Establishment of community rating area.--
                    ``(A) In general.--Not later than January 1, 2002, 
                each State shall, in accordance with subparagraph (B), 
                provide for the division of the State into 1 or more 
                community rating areas. The State may revise the 
                boundaries of such areas from time to time consistent 
                with this paragraph.
                    ``(B) Geographic area variations.--For purposes of 
                subparagraph (A), a State--
                            ``(i) may not identify an area that divides 
                        a 3-digit zip code, a county, or all portions 
                        of a metropolitan statistical area;
                            ``(ii) 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
                            ``(iii) may, upon agreement with one or 
                        more adjacent States, identify multi-State 
                        geographic areas consistent with clauses (i) 
                        and (ii).
            ``(3) Eligible individuals.--For purposes of this section, 
        the term `eligible individuals' includes certain uninsured 
        individuals (as described in section 721G).
    ``(b) Uniform Premiums Within Community Rating Areas.--
            ``(1) In general.--Subject to paragraphs (2) and (3), the 
        standard premium for each group health plan to which this 
        section applies shall be the same, but shall not include the 
        costs of premium processing and enrollment that may vary 
        depending on whether the method of enrollment is through a 
        qualified small employer purchasing group, through a small 
        employer, or through a broker.
            ``(2) Application to enrollees.--
                    ``(A) In general.--The premium charged for coverage 
                in a group health plan which covers eligible employees 
                and eligible individuals shall be the product of--
                            ``(i) the standard premium (established 
                        under paragraph (1));
                            ``(ii) in the case of enrollment other than 
                        individual enrollment, the family adjustment 
                        factor specified under subparagraph (B); and
                            ``(iii) the age adjustment factor 
                        (specified under subparagraph (C)).
                    ``(B) Family adjustment factor.--
                            ``(i) In general.--The standards 
                        established under section 721B shall specify 
                        family adjustment factors that reflect the 
                        relative actuarial costs of benefit packages 
                        based on family classes of enrollment (as 
                        compared with such costs for individual 
                        enrollment).
                            ``(ii) Classes of enrollment.--For purposes 
                        of this subpart, there are 4 classes of 
                        enrollment:
                                    ``(I) Coverage only of an 
                                individual (referred to in this subpart 
                                as the `individual' enrollment or class 
                                of enrollment).
                                    ``(II) Coverage of a married couple 
                                without children (referred to in this 
                                subpart as the `couple-only' enrollment 
                                or class of enrollment).
                                    ``(III) Coverage of an individual 
                                and one or more children (referred to 
                                in this subpart as the `single parent' 
                                enrollment or class of enrollment).
                                    ``(IV) Coverage of a married couple 
                                and one or more children (referred to 
                                in this subpart as the `dual parent' 
                                enrollment or class of enrollment).
                            ``(iii) References to family and couple 
                        classes of enrollment.--In this subpart:
                                    ``(I) Family.--The terms `family 
                                enrollment' and `family class of 
                                enrollment' refer to enrollment in a 
                                class of enrollment described in any 
                                subclause of clause (ii) (other than 
                                subclause (I)).
                                    ``(II) Couple.--The term `couple 
                                class of enrollment' refers to 
                                enrollment in a class of enrollment 
                                described in subclause (II) or (IV) of 
                                clause (ii).
                            ``(iv) Spouse; married; couple.--
                                    ``(I) In general.--In this subpart, 
                                the terms `spouse' and `married' mean, 
                                with respect to an individual, another 
                                individual who is the spouse of, or is 
                                married to, the individual, as 
                                determined under applicable State law.
                                    ``(II) Couple.--The term `couple' 
                                means an individual and the 
                                individual's spouse.
                    ``(C) Age adjustment factor.--The Secretary, in 
                consultation with the NAIC, shall specify uniform age 
                categories and maximum rating increments for age 
                adjustment factors that reflect the relative actuarial 
                costs of benefit packages among enrollees. For 
                individuals who have attained age 18 but not age 65, 
                the highest age adjustment factor may not exceed 3 
                times the lowest age adjustment factor.
            ``(3) Administrative charges.--
                    ``(A) In general.--In accordance with the standards 
                established under section 721B, a group health plan 
                which covers eligible employees and eligible 
                individuals may add a separately-stated administrative 
                charge which is based on identifiable differences in 
                legitimate administrative costs and which is applied 
                uniformly for individuals enrolling through the same 
                method of enrollment. Nothing in this subparagraph may 
                be construed as preventing a qualified small employer 
                purchasing group from negotiating a unique 
                administrative charge with an insurer for a group 
                health plan.
                    ``(B) Enrollment through a qualified small employer 
                purchasing group.--In the case of an administrative 
                charge under subparagraph (A) for enrollment through a 
                qualified small employer purchasing group, such charge 
                may not exceed the lowest charge of such plan for 
                enrollment other than through a qualified small 
employer purchasing group in such area.
    ``(c) Treatment of Negotiated Rate as Community Rate.--
Notwithstanding any other provision of this section, a group health 
plan and a health insurance issuer offering health insurance coverage 
that negotiates a premium rate (exclusive of any administrative charge 
described in subsection (b)(3)) with a qualified small employer 
purchasing group in a community rating area shall charge the same 
premium rate to all eligible employees and eligible individuals.

``SEC. 721D. RATING PRACTICES AND PAYMENT OF PREMIUMS.

    ``(a) Full Disclosure of Rating Practices.--
            ``(1) In general.--A group health plan and a health 
        insurance issuer offering health insurance coverage shall fully 
        disclose rating practices for the plan to the appropriate 
        certifying authority.
            ``(2) Notice on expiration.--A group health plan and a 
        health insurance issuer offering health insurance coverage 
        shall provide for notice of the terms for renewal of a plan at 
        the time of the offering of the plan and at least 90 days 
        before the date of expiration of the plan.
            ``(3) Actuarial certification.--Each group health plan and 
        health insurance issuer offering health insurance coverage 
        shall file annually with the appropriate certifying authority a 
        written statement by a member of the American Academy of 
        Actuaries (or other individual acceptable to such authority) 
        who is not an employee of the group health plan or issuer 
        certifying that, based upon an examination by the individual 
        which includes a review of the appropriate records and of the 
        actuarial assumptions of such plan or insurer and methods used 
        by the plan or insurer in establishing premium rates and 
        administrative charges for group health plans--
                    ``(A) such plan or insurer is in compliance with 
                the applicable provisions of this subpart; and
                    ``(B) the rating methods are actuarially sound.
        Each plan and insurer shall retain a copy of such statement at 
        its principal place of business for examination by any 
        individual.
    ``(b) Payment of Premiums.--
            ``(1) In general.--With respect to a new enrollee in a 
        group health plan, the plan may require advanced payment of an 
        amount equal to the monthly applicable premium for the plan at 
        the time such individual is enrolled.
            ``(2) Notification of failure to receive premium.--If a 
        group health plan or a health insurance issuer offering health 
        insurance coverage fails to receive payment on a premium due 
        with respect to an eligible employee or eligible individual 
        covered under the plan involved, the plan or issuer shall 
        provide notice of such failure to the employee or individual 
        within the 20-day period after the date on which such premium 
        payment was due. A plan or issuer may not terminate the 
        enrollment of an eligible employee or eligible individual 
        unless such employee or individual has been notified of any 
        overdue premiums and has been provided a reasonable opportunity 
        to respond to such notice.

``SEC. 721E. QUALIFIED SMALL EMPLOYER PURCHASING GROUPS.

    ``(a) Qualified Small Employer Purchasing Groups Described.--
            ``(1) In general.--A qualified small employer purchasing 
        group is an entity that--
                    ``(A) is a nonprofit entity certified under State 
                law;
                    ``(B) has a membership consisting solely of small 
                employers;
                    ``(C) is administered solely under the authority 
                and control of its member employers;
                    ``(D) with respect to each State in which its 
                members are located, consists of not fewer than the 
                number of small employers established by the State as 
                appropriate for such a group;
                    ``(E) offers a program under which qualified group 
                health plans are offered to eligible employees and 
                eligible individuals through its member employers and 
                to certain uninsured individuals in accordance with 
                section 721D; and
                    ``(F) an insurer, agent, broker, or any other 
                individual or entity engaged in the sale of insurance--
                            ``(i) does not form or underwrite; and
                            ``(ii) does not hold or control any right 
                        to vote with respect to.
            ``(2) State certification.--A qualified small employer 
        purchasing group formed under this section shall submit an 
        application to the State for certification. The State shall 
        determine whether to issue a certification and otherwise ensure 
        compliance with the requirements of this subpart.
            ``(3) Special rule.--Notwithstanding paragraph (1)(B), an 
        employer member of a small employer purchasing group that has 
        been certified by the State as meeting the requirements of 
        paragraph (1) may retain its membership in the group if the 
        number of employees of the employer increases such that the 
        employer is no longer a small employer.
    ``(b) Board of Directors.--Each qualified small employer purchasing 
group established under this section shall be governed by a board of 
directors or have active input from an advisory board consisting of 
individuals and businesses participating in the group.
    ``(c) Domiciliary State.--For purposes of this section, a qualified 
small employer purchasing group operating in more than one State shall 
be certified by the State in which the group is domiciled.
    ``(d) Membership.--
            ``(1) In general.--A qualified small employer purchasing 
        group shall accept all small employers and certain uninsured 
        individuals residing within the area served by the group as 
        members if such employers or individuals request such 
        membership.
            ``(2) Voting.--Members of a qualified small employer 
        purchasing group shall have voting rights consistent with the 
        rules established by the State.
    ``(e) Duties of Qualified Small Employer Purchasing Groups.--Each 
qualified small employer purchasing group shall--
            ``(1) enter into agreements with insurers offering 
        qualified group health plans;
            ``(2) enter into agreements with small employers under 
        section 721F;
            ``(3) enroll only eligible employees, eligible individuals, 
        and certain uninsured individuals in qualified group health 
        plans, in accordance with section 721G;
            ``(4) provide enrollee information to the State;
            ``(5) meet the marketing requirements under section 721I; 
        and
            ``(6) carry out other functions provided for under this 
        subpart.
    ``(f) Limitation on Activities.--A qualified small employer 
purchasing group shall not--
            ``(1) perform any activity involving approval or 
        enforcement of payment rates for providers;
            ``(2) perform any activity (other than the reporting of 
        noncompliance) relating to compliance of qualified group health 
        plans with the requirements of this subpart;
            ``(3) assume financial risk in relation to any such health 
        plan; or
            ``(4) perform other activities identified by the State as 
        being inconsistent with the performance of its duties under 
        this subpart.
    ``(g) Rules of Construction.--
            ``(1) Establishment not required.--Nothing in this section 
        shall be construed as requiring--
                    ``(A) that a State organize, operate or otherwise 
                establish a qualified small employer purchasing group, 
                or otherwise require the establishment of purchasing 
                groups; and
                    ``(B) that there be only one qualified small 
                employer purchasing group established with respect to a 
                community rating area.
            ``(2) Single organization serving multiple areas and 
        states.--Nothing in this section shall be construed as 
        preventing a single entity from being a qualified small 
        employer purchasing group in more than one community rating 
        area or in more than one State.
            ``(3) Voluntary participation.--Nothing in this section 
        shall be construed as requiring any individual or small 
        employer to purchase a qualified group health plan exclusively 
        through a qualified small employer purchasing group.

``SEC. 721F. AGREEMENTS WITH SMALL EMPLOYERS.

    ``(a) In General.--A qualified small employer purchasing group 
shall offer to enter into an agreement under this section with each 
small employer that employs eligible employees in the area served by 
the group.
    ``(b) Payroll Deduction.--
            ``(1) In general.--Under an agreement under this section 
        between a small employer and a qualified small employer 
        purchasing group, the small employer shall deduct premiums from 
        an eligible employee's wages.
            ``(2) Additional premiums.--If the amount withheld under 
        paragraph (1) is not sufficient to cover the entire cost of the 
        premiums, the eligible employee shall be responsible for paying 
        directly to the qualified small employer purchasing group the 
        difference between the amount of such premiums and the amount 
        withheld.

``SEC. 721G. ENROLLING ELIGIBLE EMPLOYEES, ELIGIBLE INDIVIDUALS, AND 
              CERTAIN UNINSURED INDIVIDUALS IN QUALIFIED GROUP HEALTH 
              PLANS.

    ``(a) In General.--Each qualified small employer purchasing group 
shall offer--
            ``(1) eligible employees,
            ``(2) eligible individuals, and
            ``(3) certain uninsured individuals,
the opportunity to enroll in any qualified group health plan which has 
an agreement with the qualified small employer purchasing group for the 
community rating area in which such employees and individuals reside.
    ``(b) Uninsured Individuals.--For purposes of this section, an 
individual is described in subsection (a)(3) if such individual is an 
uninsured individual who is not an eligible employee of a small 
employer that is a member of a qualified small employer purchasing 
group or a dependent of such individual.

``SEC. 721H. RECEIPT OF PREMIUMS.

    ``(a) Enrollment Charge.--The amount charged by a qualified small 
employer purchasing group for coverage under a qualified group health 
plan shall be equal to the sum of--
            ``(1) the premium rate offered by such health plan;
            ``(2) the administrative charge for such health plan; and
            ``(3) the purchasing group administrative charge for 
        enrollment of eligible employees, eligible individuals and 
        certain uninsured individuals through the group.
    ``(b) Disclosure of Premium Rates and Administrative Charges.--Each 
qualified small employer purchasing group shall, prior to the time of 
enrollment, disclose to enrollees and other interested parties the 
premium rate for a qualified group health plan, the administrative 
charge for such plan, and the administrative charge of the group, 
separately.

``SEC. 721I. MARKETING ACTIVITIES.

    ``Each qualified small employer purchasing group shall market 
qualified group health plans to members through the entire community 
rating area served by the purchasing group.

``SEC. 721J. GRANTS TO STATES AND QUALIFIED SMALL EMPLOYER PURCHASING 
              GROUPS.

    ``(a) In General.--The Secretary shall award grants to States and 
small employer purchasing groups to assist such States and groups in 
planning, developing, and operating qualified small employer purchasing 
groups.
    ``(b) Application Requirements.--To be eligible to receive a grant 
under this section, a State or small employer purchasing group shall 
prepare and submit to the Secretary an application in such form, at 
such time, and containing such information, certifications, and 
assurances as the Secretary shall reasonably require.
    ``(c) Use of Funds.--Amounts awarded under this section may be used 
to finance the costs associated with planning, developing, and 
operating a qualified small employer purchasing group. Such costs may 
include the costs associated with--
            ``(1) engaging in education and outreach efforts to inform 
        small employers, insurers, and the public about the small 
        employer purchasing group;
            ``(2) soliciting bids and negotiating with insurers to make 
        available group health plans;
            ``(3) preparing the documentation required to receive 
        certification by the Secretary as a qualified small employer 
        purchasing group; and
            ``(4) such other activities determined appropriate by the 
        Secretary.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated for awarding grants under this section such sums as may be 
necessary.

``SEC. 721K. QUALIFIED SMALL EMPLOYER PURCHASING GROUPS ESTABLISHED BY 
              A STATE.

    ``A State may establish a system in all or part of the State under 
which qualified small employer purchasing groups are the sole mechanism 
through which health care coverage for the eligible employees of small 
employers shall be purchased or provided.

``SEC. 721L. EFFECTIVE DATES.

    ``(a) In General.--Except as provided in this chapter, the 
provisions of this chapter are effective on the date of the enactment 
of this subpart.
    ``(b) Exception.--The provisions of section 721C(b) shall apply to 
contracts which are issued, or renewed, after the date which is 18 
months after the date of the enactment of this subpart.

   ``CHAPTER 2--REQUIRED COVERAGE OPTIONS FOR ELIGIBLE EMPLOYEES AND 
                     DEPENDENTS OF SMALL EMPLOYERS

``SEC. 722. REQUIRING SMALL EMPLOYERS TO OFFER COVERAGE FOR ELIGIBLE 
              INDIVIDUALS.

    ``(a) Requirement To Offer.--Each small employer shall make 
available with respect to each eligible employee a group health plan 
under which--
            ``(1) coverage of each eligible individual with respect to 
        such an eligible employee may be elected on an annual basis for 
        each plan year;
            ``(2) coverage is provided for at least the standard 
        coverage specified in section 721A(b); and
            ``(3) each eligible employee electing such coverage may 
        elect to have any premiums owed by the employee collected 
        through payroll deduction.
    ``(b) No Employer Contribution Required.--An employer is not 
required under subsection (a) to make any contribution to the cost of 
coverage under a group health plan described in such subsection.
    ``(c) Special Rules.--
            ``(1) Exclusion of new employers and certain very small 
        employers.--Subsection (a) shall not apply to any small 
        employer for any plan year if, as of the beginning of such plan 
        year--
                    ``(A) such employer (including any predecessor 
                thereof) has been an employer for less than 2 years;
                    ``(B) such employer has no more than 2 eligible 
                employees; or
                    ``(C) no more than 2 eligible employees are not 
                covered under any group health plan.
            ``(2) Exclusion of family members.--Under such procedures 
        as the Secretary may prescribe, any relative of a small 
        employer may be, at the election of the employer, excluded from 
        consideration as an eligible employee for purposes of applying 
        the requirements of subsection (a). In the case of a small 
        employer that is not an individual, an employee who is a 
        relative of a key employee (as defined in section 416(i)(1) of 
        the Internal Revenue Code of 1986) of the employer may, at the 
        election of the key employee, be considered a relative 
        excludable under this paragraph.
            ``(3) Optional application of waiting period.--A group 
        health plan and a health insurance issuer offering group health 
        insurance coverage shall not be treated as failing to meet the 
        requirements of subsection (a) solely because a period of 
        service by an eligible employee of not more than 60 days is 
        required under the plan for coverage under the plan of eligible 
        individuals with respect to such employee.
    ``(d) Construction.--Nothing in this section shall be construed as 
limiting the group health plans, or types of coverage under such a 
plan, that an employer may offer to an employee.

``SEC. 722A. COMPLIANCE WITH APPLICABLE REQUIREMENTS THROUGH MULTIPLE 
              EMPLOYER HEALTH ARRANGEMENTS.

    ``(a) In General.--In any case in which an eligible employee is, 
for any plan year, a participant in a group health plan which is a 
multiemployer plan, the requirements of section 722(a) shall be deemed 
to be met with respect to such employee for such plan year if the 
employer requirements of subsection (b) are met with respect to the 
eligible employee, irrespective of whether, or to what extent, the 
employer makes employer contributions on behalf of the eligible 
employee.
    ``(b) Employer Requirements.--The employer requirements of this 
subsection are met under a group health plan with respect to an 
eligible employee if--
            ``(1) the employee is eligible under the plan to elect 
        coverage on an annual basis and is provided a reasonable 
        opportunity to make the election in such form and manner and at 
        such times as are provided by the plan;
            ``(2) coverage is provided for at least the standard 
        coverage specified in section 721A(b);
            ``(3) the employer facilitates collection of any employee 
        contributions under the plan and permits the employee to elect 
        to have employee contributions under the plan collected through 
        payroll deduction; and
            ``(4) in the case of a plan to which part 1 does not 
        otherwise apply, the employer provides to the employee a 
        summary plan description described in section 102(a)(1) in the 
        form and manner and at such times as are required under such 
        part 1 with respect to employee welfare benefit plans.

``CHAPTER 3--REQUIRED COVERAGE OPTIONS FOR INDIVIDUALS INSURED THROUGH 
                           ASSOCIATION PLANS

              ``Subchapter A--Qualified Association Plans

``SEC. 723. TREATMENT OF QUALIFIED ASSOCIATION PLANS.

    ``(a) General Rule.--For purposes of this chapter, in the case of a 
qualified association plan--
            ``(1) except as otherwise provided in this subchapter, the 
        plan shall meet all applicable requirements of chapter 1 and 
        chapter 2 for group health plans offered to and by small 
        employers;
            ``(2) if such plan is certified as meeting such 
        requirements and the requirements of this subchapter, such plan 
        shall be treated as a plan established and maintained by a 
        small employer, and individuals enrolled in such plan shall be 
        treated as eligible employees; and
            ``(3) any individual who is a member of the association not 
        enrolling in the plan shall not be treated as an eligible 
        employee solely by reason of membership in such association.
    ``(b) Election To Be Treated as Purchasing Cooperative.--Subsection 
(a) shall not apply to a qualified association plan if--
            ``(1) the health insurance issuer makes an irrevocable 
        election to be treated as a qualified small employer purchasing 
        group for purposes of section 721D; and
            ``(2) such sponsor meets all requirements of this subpart 
        applicable to a purchasing cooperative.

``SEC. 723A. QUALIFIED ASSOCIATION PLAN DEFINED.

    ``(a) General Rule.--For purposes of this chapter, a plan is a 
qualified association plan if the plan is a multiple employer welfare 
arrangement or similar arrangement--
            ``(1) which is maintained by a qualified association;
            ``(2) which has at least 500 participants in the United 
        States;
            ``(3) under which the benefits provided consist solely of 
        medical care (as defined in section 213(d) of the Internal 
        Revenue Code of 1986);
            ``(4) which may not condition participation in the plan, or 
        terminate coverage under the plan, on the basis of the health 
        status or health claims experience of any employee or member or 
        dependent of either;
            ``(5) which provides for bonding, in accordance with 
        regulations providing rules similar to the rules under section 
        412, of all persons operating or administering the plan or 
        involved in the financial affairs of the plan; and
            ``(6) which notifies each participant or provider that it 
        is certified as meeting the requirements of this chapter 
        applicable to it.
    ``(b) Self-Insured Plans.--In the case of a plan which is not fully 
insured (within the meaning of section 514(b)(6)(D)), the plan shall be 
treated as a qualified association plan only if--
            ``(1) the plan meets minimum financial solvency and cash 
        reserve requirements for claims which are established by the 
        Secretary and which shall be in lieu of any other such 
        requirements under this chapter;
            ``(2) the plan provides an annual funding report (certified 
        by an independent actuary) and annual financial statements to 
        the Secretary and other interested parties; and
            ``(3) the plan appoints a plan sponsor who is responsible 
        for operating the plan and ensuring compliance with applicable 
        Federal and State laws.
    ``(c) Certification.--
            ``(1) In general.--A plan shall not be treated as a 
        qualified association plan for any period unless there is in 
        effect a certification by the Secretary that the plan meets the 
        requirements of this subchapter. For purposes of this chapter, 
        the Secretary shall be the appropriate certifying authority 
        with respect to the plan.
            ``(2) Fee.--The Secretary shall require a $5,000 fee for 
        the original certification under paragraph (1) and may charge a 
        reasonable annual fee to cover the costs of processing and 
        reviewing the annual statements of the plan.
            ``(3) Expedited procedures.--The Secretary may by 
        regulation provide for expedited registration, certification, 
        and comment procedures.
            ``(4) Agreements.--The Secretary of Labor may enter into 
        agreements with the States to carry out the Secretary's 
        responsibilities under this subchapter.
    ``(d) Availability.--Notwithstanding any other provision of this 
chapter, a qualified association plan may limit coverage to individuals 
who are members of the qualified association establishing or 
maintaining the plan, an employee of such member, or a dependent of 
either.
    ``(e) Special Rules for Existing Plans.--In the case of a plan in 
existence on January 1, 2001--
            ``(1) the requirements of subsection (a) (other than 
        paragraphs (4), (5), and (6) thereof) shall not apply;
            ``(2) no original certification shall be required under 
        this subchapter; and
            ``(3) no annual report or funding statement shall be 
        required before January 1, 2003, but the plan shall file with 
        the Secretary a description of the plan and the name of the 
        health insurance issuer.

``SEC. 723B. DEFINITIONS AND SPECIAL RULES.

    ``(a) Qualified Association.--For purposes of this subchapter, the 
term `qualified association' means any organization which--
            ``(1) is organized and maintained in good faith by a trade 
        association, an industry association, a professional 
        association, a chamber of commerce, a religious organization, a 
        public entity association, or other business association 
        serving a common or similar industry;
            ``(2) is organized and maintained for substantial purposes 
        other than to provide a health plan;
            ``(3) has a constitution, bylaws, or other similar 
        governing document which states its purpose; and
            ``(4) receives a substantial portion of its financial 
        support from its active, affiliated, or federation members.
    ``(b) Coordination.--The term `qualified association plan' shall 
not include a plan to which subchapter B applies.

``Subchapter B--Special Rule for Church, Multiemployer, and Cooperative 
                                 Plans

``SEC. 723F. SPECIAL RULE FOR CHURCH, MULTIEMPLOYER, AND COOPERATIVE 
              PLANS.

    ``(a) General Rule.--For purposes of this chapter, in the case of a 
group health plan to which this section applies--
            ``(1) except as otherwise provided in this subchapter, the 
        plan shall be required to meet all applicable requirements of 
        chapter 1 and chapter 2 for group health plans offered to and 
        by small employers;
            ``(2) if such plan is certified as meeting such 
        requirements, such plan shall be treated as a plan established 
        and maintained by a small employer and individuals enrolled in 
        such plan shall be treated as eligible employees; and
            ``(3) any individual eligible to enroll in the plan who 
        does not enroll in the plan shall not be treated as an eligible 
        employee solely by reason of being eligible to enroll in the 
        plan.
    ``(b) Modified Standards.--
            ``(1) Certifying authority.--For purposes of this chapter, 
        the Secretary shall be the appropriate certifying authority 
        with respect to a plan to which this section applies.
            ``(2) Availability.--Rules similar to the rules of 
        subsection (e) of section 723A shall apply to a plan to which 
        this section applies.
            ``(3) Access.--An employer which, pursuant to a collective 
        bargaining agreement, offers an employee the opportunity to 
        enroll in a plan described in subsection (c)(2) shall not be 
        required to make any other plan available to the employee.
            ``(4) Treatment under state laws.--A church plan described 
        in subsection (c)(1) which is certified as meeting the 
        requirements of this section shall not be deemed to be a 
        multiple employer welfare arrangement or an insurance company 
        or other insurer, or to be engaged in the business of 
        insurance, for purposes of any State law purporting to regulate 
        insurance companies or insurance contracts.
    ``(c) Plans to Which Section Applies.--This section shall apply to 
a health plan which--
            ``(1) is a church plan (as defined in section 414(e) of the 
        Internal Revenue Code of 1986) which has at least 100 
        participants in the United States;
            ``(2) is a multiemployer plan which is maintained by a 
        health plan sponsor described in section 3(16)(B)(iii) and 
        which has at least 500 participants in the United States; or
            ``(3) is a plan which is maintained by a rural electric 
        cooperative or a rural telephone cooperative association and 
        which has at least 500 participants in the United States.''.
    (b) Conforming Amendments.--Section 731(d) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1186(d)) is amended 
by adding at the end the following:
            ``(3) Eligible employee.--The term `eligible employee' 
        means, with respect to an employer, an employee who normally 
        performs on a monthly basis at least 30 hours of service per 
        week for that employer.
            ``(4) Eligible individual.--The term `eligible individual' 
        means, with respect to an eligible employee, such employee, and 
        any dependent of such employee.
            ``(5) NAIC.--The term `NAIC' means the National Association 
        of Insurance Commissioners.
            ``(6) Qualified group health plan.--The term `qualified 
        group health plan' shall have the meaning given the term in 
        section 721.''.

SEC. 402. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE 
              GROUP MARKET.

    (a) In General.--Subpart 2 of part A of title XXVII of the Public 
Health Service Act (42 U.S.C. 300gg-4 et seq.) is amended--
            (1) by inserting after the subpart heading the following:

               ``CHAPTER 1--MISCELLANEOUS REQUIREMENTS'';

        and
            (2) by adding at the end the following:

            ``CHAPTER 2--GENERAL INSURANCE COVERAGE REFORMS

    ``Subchapter A--Increased Availability and Continuity of Health 
                                Coverage

``SEC. 2707. DEFINITION.

    ``As used in this chapter, the term `qualified group health plan' 
means a group health plan, and a health insurance issuer offering group 
health insurance coverage, that is designed to provide standard 
coverage (consistent with section 2707A(b)).

``SEC. 2707A. ACTUARIAL EQUIVALENCE IN BENEFITS PERMITTED.

    ``(a) Set of Rules of Actuarial Equivalence.--
            ``(1) Initial determination.--The NAIC is requested to 
        submit to the Secretary, within 6 months after the date of the 
        enactment of this chapter, a set of rules which the NAIC 
        determines is sufficient for determining, in the case of any 
        group health plan, or a health insurance issuer offering group 
        health insurance coverage, and for purposes of this section, 
        the actuarial value of the coverage offered by the plan or 
        coverage.
            ``(2) Certification.--If the Secretary determines that the 
        NAIC has submitted a set of rules that comply with the 
        requirements of paragraph (1), the Secretary shall certify such 
        set of rules for use under this chapter. If the Secretary 
        determines that such a set of rules has not been submitted or 
        does not comply with such requirements, the Secretary shall 
        promptly establish a set of rules that meets such requirements.
    ``(b) Standard Coverage.--
            ``(1) In general.--A a group health plan, and a health 
        insurance issuer offering group health insurance coverage, 
        shall be considered to provide standard coverage consistent 
        with this subsection if the benefits are determined, in 
        accordance with the set of actuarial equivalence rules 
        certified under subsection (a), to have a value that is within 
        5 percentage points of the target actuarial value for standard 
        coverage established under paragraph (2).
            ``(2) Initial determination of target actuarial value for 
        standard coverage.--
                    ``(A) Initial determination.--
                            ``(i) In general.--The NAIC is requested to 
                        submit to the Secretary, within 6 months after 
                        the date of the enactment of this chapter, a 
                        target actuarial value for standard coverage 
                        equal to the average actuarial value of the 
                        coverage described in clause (ii). No specific 
                        procedure or treatment, or classes thereof, is 
                        required to be considered in such determination 
                        by this chapter or through regulations. The 
                        determination of such value shall be based on a 
                        representative distribution of the population 
                        of eligible employees offered such coverage and 
                        a single set of standardized utilization and 
                        cost factors.
                            ``(ii) Coverage described.--The coverage 
                        described in this clause is coverage for 
                        medically necessary and appropriate services 
                        consisting of medical and surgical services, 
                        medical equipment, preventive services, and 
                        emergency transportation in frontier areas. No 
                        specific procedure or treatment, or classes 
                        thereof, is required to be covered in such a 
                        plan, by this chapter or through regulations.
                    ``(B) Certification.--If the Secretary determines 
                that the NAIC has submitted a target actuarial value 
                for standard coverage that complies with the 
                requirements of subparagraph (A), the Secretary shall 
                certify such value for use under this chapter. If the 
                Secretary determines that a target actuarial value has 
                not been submitted or does not comply with the 
                requirements of subparagraph (A), the Secretary shall 
                promptly determine a target actuarial value that meets 
                such requirements.
    ``(c) Subsequent Revisions.--
            ``(1) NAIC.--The NAIC may submit from time to time to the 
        Secretary revisions of the set of rules of actuarial 
        equivalence and target actuarial values previously established 
        or determined under this section if the NAIC determines that 
        revisions are necessary to take into account changes in the 
        relevant types of health benefits provisions or in demographic 
        conditions which form the basis for the set of rules of 
        actuarial equivalence or the target actuarial values. The 
        provisions of subsection (a)(2) shall apply to such a revision 
in the same manner as they apply to the initial determination of the 
set of rules.
            ``(2) Secretary.--The Secretary may by regulation revise 
        the set of rules of actuarial equivalence and target actuarial 
        values from time to time if the Secretary determines such 
        revisions are necessary to take into account changes described 
        in paragraph (1).

``SEC. 2707B. ESTABLISHMENT OF PLAN STANDARDS.

    ``(a) Establishment of General Standards.--
            ``(1) Role of naic.--The NAIC is requested to submit to the 
        Secretary, within 9 months after the date of the enactment of 
        this chapter, model regulations that specify standards for 
        making qualified group health plans available to small 
        employers. 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. 
        Such standards shall serve as the standards under this section, 
        with such amendments as the Secretary deems necessary. Such 
        standards shall be nonbinding (except as provided in chapter 
        4).
            ``(2) Contingency.--If the NAIC does not develop such model 
        regulations within the period described in paragraph (1), the 
        Secretary shall specify, within 15 months after the date of the 
        enactment of this chapter, model regulations that specify 
        standards for insurers with regard to making qualified group 
        health plans available to small employers. Such standards shall 
        be nonbinding (except as provided in chapter 4).
            ``(3) Effective date.--The standards specified in the model 
        regulations shall apply to group health plans and health 
        insurance issuers offering group health insurance coverage in a 
        State on or after the respective date the standards are 
        implemented in the State.
    ``(b) No Preemption of State Law.--A State may implement standards 
for group health plans available, and health insurance issuers offering 
group health insurance coverage offered, to small employers that are 
more stringent than the standards under this section, except that a 
State may not implement standards that prevent the offering of at least 
one group health plan that provides standard coverage (as described in 
section 2707A(b)).

``SEC. 2707C. RATING LIMITATIONS FOR COMMUNITY-RATED MARKET.

    ``(a) Standard Premiums With Respect to Community-Rated Eligible 
Employees and Eligible Individuals.--
            ``(1) In general.--Each group health plan offered, and each 
        health insurance issuer offering group health insurance 
        coverage, to a small employer shall establish within each 
        community rating area in which the plan is to be offered, a 
        standard premium for enrollment of eligible employees and 
        eligible individuals for the standard coverage (as defined 
        under section 2707A(b)).
            ``(2) Establishment of community rating area.--
                    ``(A) In general.--Not later than January 1, 2002, 
                each State shall, in accordance with subparagraph (B), 
                provide for the division of the State into 1 or more 
                community rating areas. The State may revise the 
                boundaries of such areas from time to time consistent 
                with this paragraph.
                    ``(B) Geographic area variations.--For purposes of 
                subparagraph (A), a State--
                            ``(i) may not identify an area that divides 
                        a 3-digit zip code, a county, or all portions 
                        of a metropolitan statistical area;
                            ``(ii) 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
                            ``(iii) may, upon agreement with one or 
                        more adjacent States, identify multi-State 
                        geographic areas consistent with clauses (i) 
                        and (ii).
            ``(3) Eligible individuals.--For purposes of this section, 
        the term `eligible individuals' includes certain uninsured 
        individuals (as described in section 2707G).
    ``(b) Uniform Premiums Within Community Rating Areas.--
            ``(1) In general.--Subject to paragraphs (2) and (3), the 
        standard premium for each group health plan to which this 
        section applies shall be the same, but shall not include the 
        costs of premium processing and enrollment that may vary 
        depending on whether the method of enrollment is through a 
        qualified small employer purchasing group, through a small 
        employer, or through a broker.
            ``(2) Application to enrollees.--
                    ``(A) In general.--The premium charged for coverage 
                in a group health plan which covers eligible employees 
                and eligible individuals shall be the product of--
                            ``(i) the standard premium (established 
                        under paragraph (1));
                            ``(ii) in the case of enrollment other than 
                        individual enrollment, the family adjustment 
                        factor specified under subparagraph (B); and
                            ``(iii) the age adjustment factor 
                        (specified under subparagraph (C)).
                    ``(B) Family adjustment factor.--
                            ``(i) In general.--The standards 
                        established under section 2707B shall specify 
                        family adjustment factors that reflect the 
                        relative actuarial costs of benefit packages 
                        based on family classes of enrollment (as 
                        compared with such costs for individual 
                        enrollment).
                            ``(ii) Classes of enrollment.--For purposes 
                        of this chapter, there are 4 classes of 
                        enrollment:
                                    ``(I) Coverage only of an 
                                individual (referred to in this chapter 
                                as the `individual' enrollment or class 
                                of enrollment).
                                    ``(II) Coverage of a married couple 
                                without children (referred to in this 
                                chapter as the `couple-only' enrollment 
                                or class of enrollment).
                                    ``(III) Coverage of an individual 
                                and one or more children (referred to 
                                in this chapter as the `single parent' 
                                enrollment or class of enrollment).
                                    ``(IV) Coverage of a married couple 
                                and one or more children (referred to 
                                in this chapter as the `dual parent' 
                                enrollment or class of enrollment).
                            ``(iii) References to family and couple 
                        classes of enrollment.--In this chapter:
                                    ``(I) Family.--The terms `family 
                                enrollment' and `family class of 
                                enrollment' refer to enrollment in a 
                                class of enrollment described in any 
                                subclause of clause (ii) (other than 
                                subclause (I)).
                                    ``(II) Couple.--The term `couple 
                                class of enrollment' refers to 
                                enrollment in a class of enrollment 
                                described in subclause (II) or (IV) of 
                                clause (ii).
                            ``(iv) Spouse; married; couple.--
                                    ``(I) In general.--In this chapter, 
                                the terms `spouse' and `married' mean, 
                                with respect to an individual, another 
                                individual who is the spouse of, or is 
                                married to, the individual, as 
                                determined under applicable State law.
                                    ``(II) Couple.--The term `couple' 
                                means an individual and the 
                                individual's spouse.
                    ``(C) Age adjustment factor.--The Secretary, in 
                consultation with the NAIC, shall specify uniform age 
                categories and maximum rating increments for age 
                adjustment factors that reflect the relative actuarial 
                costs of benefit packages among enrollees. For 
                individuals who have attained age 18 but not age 65, 
                the highest age adjustment factor may not exceed 3 
                times the lowest age adjustment factor.
            ``(3) Administrative charges.--
                    ``(A) In general.--In accordance with the standards 
                established under section 2707B, a group health plan 
                which covers eligible employees and eligible 
                individuals may add a separately-stated administrative 
                charge which is based on identifiable differences in 
                legitimate administrative costs and which is applied 
                uniformly for individuals enrolling through the same 
                method of enrollment. Nothing in this subparagraph may 
                be construed as preventing a qualified small employer 
                purchasing group from negotiating a unique 
                administrative charge with an insurer for a group 
                health plan.
                    ``(B) Enrollment through a qualified small employer 
                purchasing group.--In the case of an administrative 
                charge under subparagraph (A) for enrollment through a 
                qualified small employer purchasing group, such charge 
                may not exceed the lowest charge of such plan for 
                enrollment other than through a qualified small 
                employer purchasing group in such area.
    ``(c) Treatment of Negotiated Rate as Community Rate.--
Notwithstanding any other provision of this section, a group health 
plan and a health insurance issuer offering health insurance coverage 
that negotiates a premium rate (exclusive of any administrative charge 
described in subsection (b)(3)) with a qualified small employer 
purchasing group in a community rating area shall charge the same 
premium rate to all eligible employees and eligible individuals.

``SEC. 2707D. RATING PRACTICES AND PAYMENT OF PREMIUMS.

    ``(a) Full Disclosure of Rating Practices.--
            ``(1) In general.--A group health plan and a health 
        insurance issuer offering health insurance coverage shall fully 
        disclose rating practices for the plan to the appropriate 
        certifying authority.
            ``(2) Notice on expiration.--A group health plan and a 
        health insurance issuer offering health insurance coverage 
        shall provide for notice of the terms for renewal of a plan at 
        the time of the offering of the plan and at least 90 days 
        before the date of expiration of the plan.
            ``(3) Actuarial certification.--Each group health plan and 
        health insurance issuer offering health insurance coverage 
        shall file annually with the appropriate certifying authority a 
        written statement by a member of the American Academy of 
        Actuaries (or other individual acceptable to such authority) 
        who is not an employee of the group health plan or issuer 
        certifying that, based upon an examination by the individual 
        which includes a review of the appropriate records and of the 
        actuarial assumptions of such plan or insurer and methods used 
        by the plan or insurer in establishing premium rates and 
        administrative charges for group health plans--
                    ``(A) such plan or insurer is in compliance with 
                the applicable provisions of this chapter; and
                    ``(B) the rating methods are actuarially sound.
        Each plan and insurer shall retain a copy of such statement at 
        its principal place of business for examination by any 
        individual.
    ``(b) Payment of Premiums.--
            ``(1) In general.--With respect to a new enrollee in a 
        group health plan, the plan may require advanced payment of an 
        amount equal to the monthly applicable premium for the plan at 
        the time such individual is enrolled.
            ``(2) Notification of failure to receive premium.--If a 
        group health plan or a health insurance issuer offering health 
        insurance coverage fails to receive payment on a premium due 
        with respect to an eligible employee or eligible individual 
        covered under the plan involved, the plan or issuer shall 
        provide notice of such failure to the employee or individual 
        within the 20-day period after the date on which such premium 
        payment was due. A plan or issuer may not terminate the 
        enrollment of an eligible employee or eligible individual 
        unless such employee or individual has been notified of any 
        overdue premiums and has been provided a reasonable opportunity 
        to respond to such notice.

``SEC. 2707E. QUALIFIED SMALL EMPLOYER PURCHASING GROUPS.

    ``(a) Qualified Small Employer Purchasing Groups Described.--
            ``(1) In general.--A qualified small employer purchasing 
        group is an entity that--
                    ``(A) is a nonprofit entity certified under State 
                law;
                    ``(B) has a membership consisting solely of small 
                employers;
                    ``(C) is administered solely under the authority 
                and control of its member employers;
                    ``(D) with respect to each State in which its 
                members are located, consists of not fewer than the 
                number of small employers established by the State as 
                appropriate for such a group;
                    ``(E) offers a program under which qualified group 
                health plans are offered to eligible employees and 
                eligible individuals through its member employers and 
                to certain uninsured individuals in accordance with 
                section 2707D; and
                    ``(F) an insurer, agent, broker, or any other 
                individual or entity engaged in the sale of insurance--
                            ``(i) does not form or underwrite; and
                            ``(ii) does not hold or control any right 
                        to vote with respect to.
            ``(2) State certification.--A qualified small employer 
        purchasing group formed under this section shall submit an 
        application to the State for certification. The State shall 
        determine whether to issue a certification and otherwise ensure 
        compliance with the requirements of this chapter.
            ``(3) Special rule.--Notwithstanding paragraph (1)(B), an 
        employer member of a small employer purchasing group that has 
        been certified by the State as meeting the requirements of 
        paragraph (1) may retain its membership in the group if the 
        number of employees of the employer increases such that the 
        employer is no longer a small employer.
    ``(b) Board of Directors.--Each qualified small employer purchasing 
group established under this section shall be governed by a board of 
directors or have active input from an advisory board consisting of 
individuals and businesses participating in the group.
    ``(c) Domiciliary State.--For purposes of this section, a qualified 
small employer purchasing group operating in more than one State shall 
be certified by the State in which the group is domiciled.
    ``(d) Membership.--
            ``(1) In general.--A qualified small employer purchasing 
        group shall accept all small employers and certain uninsured 
        individuals residing within the area served by the group as 
        members if such employers or individuals request such 
        membership.
            ``(2) Voting.--Members of a qualified small employer 
        purchasing group shall have voting rights consistent with the 
        rules established by the State.
    ``(e) Duties of Qualified Small Employer Purchasing Groups.--Each 
qualified small employer purchasing group shall--
            ``(1) enter into agreements with insurers offering 
        qualified group health plans;
            ``(2) enter into agreements with small employers under 
        section 2707F;
            ``(3) enroll only eligible employees, eligible individuals, 
        and certain uninsured individuals in qualified group health 
        plans, in accordance with section 2707G;
            ``(4) provide enrollee information to the State;
            ``(5) meet the marketing requirements under section 2707I; 
        and
            ``(6) carry out other functions provided for under this 
        chapter.
    ``(f) Limitation on Activities.--A qualified small employer 
purchasing group shall not--
            ``(1) perform any activity involving approval or 
        enforcement of payment rates for providers;
            ``(2) perform any activity (other than the reporting of 
        noncompliance) relating to compliance of qualified group health 
plans with the requirements of this chapter;
            ``(3) assume financial risk in relation to any such health 
        plan; or
            ``(4) perform other activities identified by the State as 
        being inconsistent with the performance of its duties under 
        this chapter.
    ``(g) Rules of Construction.--
            ``(1) Establishment not required.--Nothing in this section 
        shall be construed as requiring--
                    ``(A) that a State organize, operate or otherwise 
                establish a qualified small employer purchasing group, 
                or otherwise require the establishment of purchasing 
                groups; and
                    ``(B) that there be only one qualified small 
                employer purchasing group established with respect to a 
                community rating area.
            ``(2) Single organization serving multiple areas and 
        states.--Nothing in this section shall be construed as 
        preventing a single entity from being a qualified small 
        employer purchasing group in more than one community rating 
        area or in more than one State.
            ``(3) Voluntary participation.--Nothing in this section 
        shall be construed as requiring any individual or small 
        employer to purchase a qualified group health plan exclusively 
        through a qualified small employer purchasing group.

``SEC. 2707F. AGREEMENTS WITH SMALL EMPLOYERS.

    ``(a) In General.--A qualified small employer purchasing group 
shall offer to enter into an agreement under this section with each 
small employer that employs eligible employees in the area served by 
the group.
    ``(b) Payroll Deduction.--
            ``(1) In general.--Under an agreement under this section 
        between a small employer and a qualified small employer 
        purchasing group, the small employer shall deduct premiums from 
        an eligible employee's wages.
            ``(2) Additional premiums.--If the amount withheld under 
        paragraph (1) is not sufficient to cover the entire cost of the 
        premiums, the eligible employee shall be responsible for paying 
        directly to the qualified small employer purchasing group the 
        difference between the amount of such premiums and the amount 
        withheld.

``SEC. 2707G. ENROLLING ELIGIBLE EMPLOYEES, ELIGIBLE INDIVIDUALS, AND 
              CERTAIN UNINSURED INDIVIDUALS IN QUALIFIED GROUP HEALTH 
              PLANS.

    ``(a) In General.--Each qualified small employer purchasing group 
shall offer--
            ``(1) eligible employees,
            ``(2) eligible individuals, and
            ``(3) certain uninsured individuals,
the opportunity to enroll in any qualified group health plan which has 
an agreement with the qualified small employer purchasing group for the 
community rating area in which such employees and individuals reside.
    ``(b) Uninsured Individuals.--For purposes of this section, an 
individual is described in subsection (a)(3) if such individual is an 
uninsured individual who is not an eligible employee of a small 
employer that is a member of a qualified small employer purchasing 
group or a dependent of such individual.

``SEC. 2707H. RECEIPT OF PREMIUMS.

    ``(a) Enrollment Charge.--The amount charged by a qualified small 
employer purchasing group for coverage under a qualified group health 
plan shall be equal to the sum of--
            ``(1) the premium rate offered by such health plan;
            ``(2) the administrative charge for such health plan; and
            ``(3) the purchasing group administrative charge for 
        enrollment of eligible employees, eligible individuals and 
        certain uninsured individuals through the group.
    ``(b) Disclosure of Premium Rates and Administrative Charges.--Each 
qualified small employer purchasing group shall, prior to the time of 
enrollment, disclose to enrollees and other interested parties the 
premium rate for a qualified group health plan, the administrative 
charge for such plan, and the administrative charge of the group, 
separately.

``SEC. 2707I. MARKETING ACTIVITIES.

    ``Each qualified small employer purchasing group shall market 
qualified group health plans to members through the entire community 
rating area served by the purchasing group.

``SEC. 2707J. GRANTS TO STATES AND QUALIFIED SMALL EMPLOYER PURCHASING 
              GROUPS.

    ``(a) In General.--The Secretary shall award grants to States and 
small employer purchasing groups to assist such States and groups in 
planning, developing, and operating qualified small employer purchasing 
groups.
    ``(b) Application Requirements.--To be eligible to receive a grant 
under this section, a State or small employer purchasing group shall 
prepare and submit to the Secretary an application in such form, at 
such time, and containing such information, certifications, and 
assurances as the Secretary shall reasonably require.
    ``(c) Use of Funds.--Amounts awarded under this section may be used 
to finance the costs associated with planning, developing, and 
operating a qualified small employer purchasing group. Such costs may 
include the costs associated with--
            ``(1) engaging in education and outreach efforts to inform 
        small employers, insurers, and the public about the small 
        employer purchasing group;
            ``(2) soliciting bids and negotiating with insurers to make 
        available group health plans;
            ``(3) preparing the documentation required to receive 
        certification by the Secretary as a qualified small employer 
        purchasing group; and
            ``(4) such other activities determined appropriate by the 
        Secretary.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated for awarding grants under this section such sums as may be 
necessary.

``SEC. 2707K. QUALIFIED SMALL EMPLOYER PURCHASING GROUPS ESTABLISHED BY 
              A STATE.

    ``A State may establish a system in all or part of the State under 
which qualified small employer purchasing groups are the sole mechanism 
through which health care coverage for the eligible employees of small 
employers shall be purchased or provided.

``SEC. 2707L. EFFECTIVE DATES.

    ``(a) In General.--Except as provided in this chapter, the 
provisions of this chapter are effective on the date of the enactment 
of this chapter.
    ``(b) Exception.--The provisions of section 2707C(b) shall apply to 
contracts which are issued, or renewed, after the date which is 18 
months after the date of the enactment of this chapter.

 ``Subchapter B--Required Coverage Options for Eligible Employees and 
                     Dependents of Small Employers

``SEC. 2708. REQUIRING SMALL EMPLOYERS TO OFFER COVERAGE FOR ELIGIBLE 
              INDIVIDUALS.

    ``(a) Requirement To Offer.--Each small employer shall make 
available with respect to each eligible employee a group health plan 
under which--
            ``(1) coverage of each eligible individual with respect to 
        such an eligible employee may be elected on an annual basis for 
        each plan year;
            ``(2) coverage is provided for at least the standard 
        coverage specified in section 2707A(b); and
            ``(3) each eligible employee electing such coverage may 
        elect to have any premiums owed by the employee collected 
        through payroll deduction.
    ``(b) No Employer Contribution Required.--An employer is not 
required under subsection (a) to make any contribution to the cost of 
coverage under a group health plan described in such subsection.
    ``(c) Special Rules.--
            ``(1) Exclusion of new employers and certain very small 
        employers.--Subsection (a) shall not apply to any small 
        employer for any plan year if, as of the beginning of such plan 
        year--
                    ``(A) such employer (including any predecessor 
                thereof) has been an employer for less than 2 years;
                    ``(B) such employer has no more than 2 eligible 
                employees; or
                    ``(C) no more than 2 eligible employees are not 
                covered under any group health plan.
            ``(2) Exclusion of family members.--Under such procedures 
        as the Secretary may prescribe, any relative of a small 
        employer may be, at the election of the employer, excluded from 
        consideration as an eligible employee for purposes of applying 
        the requirements of subsection (a). In the case of a small 
        employer that is not an individual, an employee who is a 
        relative of a key employee (as defined in section 416(i)(1) of 
        the Internal Revenue Code of 1986) of the employer may, at the 
        election of the key employee, be considered a relative 
        excludable under this paragraph.
            ``(3) Optional application of waiting period.--A group 
        health plan and a health insurance issuer offering group health 
        insurance coverage shall not be treated as failing to meet the 
        requirements of subsection (a) solely because a period of 
        service by an eligible employee of not more than 60 days is 
        required under the plan for coverage under the plan of eligible 
        individuals with respect to such employee.
    ``(d) Construction.--Nothing in this section shall be construed as 
limiting the group health plans, or types of coverage under such a 
plan, that an employer may offer to an employee.

``SEC. 2708A. COMPLIANCE WITH APPLICABLE REQUIREMENTS THROUGH MULTIPLE 
              EMPLOYER HEALTH ARRANGEMENTS.

    ``(a) In General.--In any case in which an eligible employee is, 
for any plan year, a participant in a group health plan which is a 
multiemployer plan, the requirements of section 2722(a) shall be deemed 
to be met with respect to such employee for such plan year if the 
employer requirements of subsection (b) are met with respect to the 
eligible employee, irrespective of whether, or to what extent, the 
employer makes employer contributions on behalf of the eligible 
employee.
    ``(b) Employer Requirements.--The employer requirements of this 
subsection are met under a group health plan with respect to an 
eligible employee if--
            ``(1) the employee is eligible under the plan to elect 
        coverage on an annual basis and is provided a reasonable 
        opportunity to make the election in such form and manner and at 
        such times as are provided by the plan;
            ``(2) coverage is provided for at least the standard 
        coverage specified in section 2707A(b);
            ``(3) the employer facilitates collection of any employee 
        contributions under the plan and permits the employee to elect 
        to have employee contributions under the plan collected through 
        payroll deduction; and
            ``(4) in the case of a plan to which subchapter A does not 
        otherwise apply, the employer provides to the employee a 
        summary plan description described in section 102(a)(1) of the 
        Employee Retirement Income Security Act of 1974 in the form and 
        manner and at such times as are required under such subchapter 
        A with respect to employee welfare benefit plans.

   ``Subchapter C--Required Coverage Options for Individuals Insured 
                       Through Association Plans

``SEC. 2709. TREATMENT OF QUALIFIED ASSOCIATION PLANS.

    ``(a) General Rule.--For purposes of this chapter, in the case of a 
qualified association plan--
            ``(1) except as otherwise provided in this subchapter, the 
        plan shall meet all applicable requirements of chapter 1 and 
        chapter 2 for group health plans offered to and by small 
        employers;
            ``(2) if such plan is certified as meeting such 
        requirements and the requirements of this subchapter, such plan 
        shall be treated as a plan established and maintained by a 
        small employer, and individuals enrolled in such plan shall be 
        treated as eligible employees; and
            ``(3) any individual who is a member of the association not 
        enrolling in the plan shall not be treated as an eligible 
        employee solely by reason of membership in such association.
    ``(b) Election To Be Treated as Purchasing Cooperative.--Subsection 
(a) shall not apply to a qualified association plan if--
            ``(1) the health insurance issuer makes an irrevocable 
        election to be treated as a qualified small employer purchasing 
        group for purposes of section 2707D; and
            ``(2) such sponsor meets all requirements of this chapter 
        applicable to a purchasing cooperative.

``SEC. 2709A. QUALIFIED ASSOCIATION PLAN DEFINED.

    ``(a) General Rule.--For purposes of this chapter, a plan is a 
qualified association plan if the plan is a multiple employer welfare 
arrangement or similar arrangement--
            ``(1) which is maintained by a qualified association;
            ``(2) which has at least 500 participants in the United 
        States;
            ``(3) under which the benefits provided consist solely of 
        medical care (as defined in section 213(d) of the Internal 
        Revenue Code of 1986);
            ``(4) which may not condition participation in the plan, or 
        terminate coverage under the plan, on the basis of the health 
        status or health claims experience of any employee or member or 
        dependent of either;
            ``(5) which provides for bonding, in accordance with 
        regulations providing rules similar to the rules under section 
        412, of all persons operating or administering the plan or 
        involved in the financial affairs of the plan; and
            ``(6) which notifies each participant or provider that it 
        is certified as meeting the requirements of this chapter 
        applicable to it.
    ``(b) Self-Insured Plans.--In the case of a plan which is not fully 
insured (within the meaning of section 514(b)(6)(D)), the plan shall be 
treated as a qualified association plan only if--
            ``(1) the plan meets minimum financial solvency and cash 
        reserve requirements for claims which are established by the 
        Secretary and which shall be in lieu of any other such 
        requirements under this chapter;
            ``(2) the plan provides an annual funding report (certified 
        by an independent actuary) and annual financial statements to 
        the Secretary and other interested parties; and
            ``(3) the plan appoints a plan sponsor who is responsible 
        for operating the plan and ensuring compliance with applicable 
        Federal and State laws.
    ``(c) Certification.--
            ``(1) In general.--A plan shall not be treated as a 
        qualified association plan for any period unless there is in 
        effect a certification by the Secretary that the plan meets the 
        requirements of this subchapter. For purposes of this chapter, 
        the Secretary shall be the appropriate certifying authority 
        with respect to the plan.
            ``(2) Fee.--The Secretary shall require a $5,000 fee for 
        the original certification under paragraph (1) and may charge a 
        reasonable annual fee to cover the costs of processing and 
        reviewing the annual statements of the plan.
            ``(3) Expedited procedures.--The Secretary may by 
        regulation provide for expedited registration, certification, 
        and comment procedures.
            ``(4) Agreements.--The Secretary of Labor may enter into 
        agreements with the States to carry out the Secretary's 
        responsibilities under this subchapter.
    ``(d) Availability.--Notwithstanding any other provision of this 
chapter, a qualified association plan may limit coverage to individuals 
who are members of the qualified association establishing or 
maintaining the plan, an employee of such member, or a dependent of 
either.
    ``(e) Special Rules for Existing Plans.--In the case of a plan in 
existence on January 1, 2001--
            ``(1) the requirements of subsection (a) (other than 
        paragraphs (4), (5), and (6) thereof) shall not apply;
            ``(2) no original certification shall be required under 
        this subchapter; and
            ``(3) no annual report or funding statement shall be 
        required before January 1, 2003, but the plan shall file with 
        the Secretary a description of the plan and the name of the 
        health insurance issuer.

``SEC. 2709B. DEFINITIONS AND SPECIAL RULES.

    ``(a) Qualified Association.--For purposes of this subchapter, the 
term `qualified association' means any organization which--
            ``(1) is organized and maintained in good faith by a trade 
        association, an industry association, a professional 
        association, a chamber of commerce, a religious organization, a 
        public entity association, or other business association 
        serving a common or similar industry;
            ``(2) is organized and maintained for substantial purposes 
        other than to provide a health plan;
            ``(3) has a constitution, bylaws, or other similar 
        governing document which states its purpose; and
            ``(4) receives a substantial portion of its financial 
        support from its active, affiliated, or federation members.
    ``(b) Coordination.--The term `qualified association plan' shall 
not include a plan to which subchapter B applies.

``SEC. 2709C. SPECIAL RULE FOR CHURCH, MULTIEMPLOYER, AND COOPERATIVE 
              PLANS.

    ``(a) General Rule.--For purposes of this chapter, in the case of a 
group health plan to which this section applies--
            ``(1) except as otherwise provided in this subchapter, the 
        plan shall be required to meet all applicable requirements of 
        subchapter A and subchapter B for group health plans offered to 
        and by small employers;
            ``(2) if such plan is certified as meeting such 
        requirements, such plan shall be treated as a plan established 
        and maintained by a small employer and individuals enrolled in 
        such plan shall be treated as eligible employees; and
            ``(3) any individual eligible to enroll in the plan who 
        does not enroll in the plan shall not be treated as an eligible 
        employee solely by reason of being eligible to enroll in the 
        plan.
    ``(b) Modified Standards.--
            ``(1) Certifying authority.--For purposes of this chapter, 
        the Secretary shall be the appropriate certifying authority 
        with respect to a plan to which this section applies.
            ``(2) Availability.--Rules similar to the rules of 
        subsection (e) of section 2709A shall apply to a plan to which 
        this section applies.
            ``(3) Access.--An employer which, pursuant to a collective 
        bargaining agreement, offers an employee the opportunity to 
        enroll in a plan described in subsection (c)(2) shall not be 
        required to make any other plan available to the employee.
            ``(4) Treatment under state laws.--A church plan described 
        in subsection (c)(1) which is certified as meeting the 
        requirements of this section shall not be deemed to be a 
        multiple employer welfare arrangement or an insurance company 
        or other insurer, or to be engaged in the business of 
        insurance, for purposes of any State law purporting to regulate 
        insurance companies or insurance contracts.
    ``(c) Plans to Which Section Applies.--This section shall apply to 
a health plan which--
            ``(1) is a church plan (as defined in section 414(e) of the 
        Internal Revenue Code of 1986) which has at least 100 
        participants in the United States;
            ``(2) is a multiemployer plan which is maintained by a 
        health plan sponsor described in section 3(16)(B)(iii) of the 
        Employee Retirement Income Security Act of 1974 and which has 
        at least 500 participants in the United States; or
            ``(3) is a plan which is maintained by a rural electric 
        cooperative or a rural telephone cooperative association and 
        which has at least 500 participants in the United States.''.
    (b) Conforming Amendments.--Section 2791(d) of the Public Health 
Service Act (42 U.S.C. 300gg-91(d)) is amended by adding at the end the 
following:
            ``(15) Eligible employee.--The term `eligible employee' 
        means, with respect to an employer, an employee who normally 
        performs on a monthly basis at least 30 hours of service per 
        week for that employer.
            ``(16) Eligible individual.--The term `eligible individual' 
        means, with respect to an eligible employee, such employee, and 
        any dependent of such employee.
            ``(17) NAIC.--The term `NAIC' means the National 
        Association of Insurance Commissioners.
            ``(18) Qualified group health plan.--The term `qualified 
        group health plan' shall have the meaning given the term in 
        section 2707.''.

SEC. 403. AMENDMENT TO THE PUBLIC HEALTH SERVICE ACT RELATING TO THE 
              INDIVIDUAL MARKET.

    The first subpart 3 of part B of title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg-51 et seq.) is amended--
            (1) by redesignating such subpart as subpart 2; and
            (2) by adding at the end the following:

``SEC. 2753. APPLICABILITY OF GENERAL INSURANCE MARKET REFORMS.

    ``The provisions of chapter 2 of subpart 2 of part A shall apply to 
health insurance coverage offered by a health insurance issuer in the 
individual market in the same manner as they apply to health insurance 
coverage offered by a health insurance issuer in connection with a 
group health plan in the small or large group market.''.

SEC. 404. EFFECTIVE DATE.

    The amendments made by this subtitle shall apply with respect to 
health insurance coverage offered, sold, issued, renewed, in effect, or 
operated on or after January 1, 2002.

                       Subtitle B--Tax Provisions

SEC. 411. ENFORCEMENT WITH RESPECT TO HEALTH INSURANCE ISSUERS.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 
(relating to qualified pension, etc., plans) is amended by adding at 
the end the following:

``SEC. 4980F. FAILURE OF INSURER TO COMPLY WITH CERTAIN STANDARDS FOR 
              HEALTH INSURANCE COVERAGE.

    ``(a) Imposition of Tax.--
            ``(1) In general.--There is hereby imposed a tax on the 
        failure of a health insurance issuer to comply with the 
        requirements applicable to such issuer under--
                    ``(A) chapter 2 of subpart 2 of part A of title 
                XXVII of the Public Health Service Act;
                    ``(B) section 2753 of the Public Health Service 
                Act; and
                    ``(C) subpart C of part 7 of subtitle B of title I 
                of the Employee Retirement Income Security Act of 1974.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        failure by a health insurance issuer 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 an issuer.
    ``(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 person to which 
        such failure relates. A rule similar to the rule of section 
        4980D(b)(3) shall apply for purposes of this section.
            ``(2) Limitation.--The amount of the tax imposed by 
        subsection (a) for a health insurance issuer with respect to 
        health insurance coverage shall not exceed 25 percent of the 
        amounts received under the coverage for coverage during the 
        period such failure persists.
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid by the health insurance issuer.
    ``(d) Limitations on Amount of Tax.--
            ``(1) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period (or such period as the Secretary may determine 
                appropriate) beginning on the first date the health 
                insurance issuer knows, or exercising reasonable 
                diligence could 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 the 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 `health insurance issuer' have the meanings 
given such terms in section 2791 of the Public Health Service Act and 
section 733 of the Employee Retirement Income Security Act of 1974.''.
    (b) Conforming Amendment.--The table of sections for such chapter 
43 is amended by adding at the end the following new item:

                              ``Sec. 4980F. Failure of insurer to 
                                        comply with certain standards 
                                        for health insurance 
                                        coverage.''.

SEC. 412. ENFORCEMENT WITH RESPECT TO SMALL EMPLOYERS.

    (a) In General.--Chapter 47 of the Internal Revenue Code of 1986 
(relating to excise taxes on certain group health plans) is amended by 
inserting after section 5000 the following new section:

``SEC. 5000A. SMALL EMPLOYER REQUIREMENTS.

    ``(a) General Rule.--There is hereby imposed a tax on the failure 
of any small employer to comply with the requirements applicable to 
such employer under--
            ``(1) subchapter C of chapter 2 of subpart 2 of part A of 
        title XXVII of the Public Health Service Act;
            ``(2) section 2753 of the Public Health Service Act; and
            ``(3) chapter 2 of subpart C of part 7 of subtitle B of 
        title I of the Employee Retirement Income Security Act of 1974.
    ``(b) Amount of Tax.--The amount of tax imposed by subsection (a) 
shall be equal to $100 for each day for each individual for which such 
a failure occurs.
    ``(c) Limitation on Tax.--
            ``(1) Tax not to apply where failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) with respect 
        to any failure if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period (or such period as the Secretary may determine 
                appropriate) beginning on the 1st date any of the 
                individuals on whom the tax is imposed 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 the payment of such tax would 
        be excessive relative to the failure involved.''.
    (b) Conforming Amendment.--The table of sections for such chapter 
47 is amended by adding at the end the following new item:

                              ``Sec. 5000A. Small employer 
                                        requirements.''.

SEC. 413. ENFORCEMENT BY EXCISE TAX ON QUALIFIED ASSOCIATIONS.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 
(relating to qualified pension, etc., plans), as amended by section 
411, is amended by adding at the end the following new section:

``SEC. 4980G. FAILURE OF QUALIFIED ASSOCIATIONS, ETC., TO COMPLY WITH 
              CERTAIN STANDARDS FOR HEALTH INSURANCE COVERAGE.

    ``(a) Imposition of Tax.--
            ``(1) In general.--There is hereby imposed a tax on the 
        failure of a qualified association (as defined in section 2709A 
        of the Public Health Service Act and section 723A of the 
        Employee Retirement Income Security Act of 1974), church plan 
        (as defined in section 414(e)), multiemployer plan, or plan 
        maintained by a rural electric cooperative or a rural telephone 
        cooperative association (within the meaning of section 3(40) of 
        the Employee Retirement Income Security Act of 1974) to comply 
        with the requirements applicable to such association or plans 
        under--
                    ``(A) subchapter C of chapter 2 of subpart 2 of 
                part A of title XXVII of the Public Health Service Act;
                    ``(B) section 2753 of the Public Health Service 
                Act; and
                    ``(C) subchapters A and B of chapter 3 of subpart C 
                of part 7 of the Employee Retirement Income Security 
                Act of 1974.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        failure by a qualified association, church plan, multiemployer 
        plan, or plan maintained by a rural electric cooperative or a 
        rural telephone cooperative association 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 qualified association or plan.
    ``(b) Amount of Tax.--The amount of the tax imposed by subsection 
(a) shall be $100 for each day during which such failure persists for 
each person to which such failure relates. A rule similar to the rule 
of section 4980D(b)(3) shall apply for purposes of this section.
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid by the qualified association or plan.
    ``(d) Limitations on Amount of Tax.--
            ``(1) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) such failure was due to reasonable cause and 
                not to willful neglect, and
                    ``(B) such failure is corrected during the 30-day 
                period (or such period as the Secretary may determine 
                appropriate) beginning on the first date the qualified 
                association, church plan, multiemployer plan, or plan 
                maintained by a rural electric cooperative or a rural 
                telephone cooperative association knows, or exercising 
                reasonable diligence could 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 the payment of such tax would 
        be excessive relative to the failure involved.''.
    (b) Conforming Amendment.--The table of sections for such chapter 
43, as amended by section 411, is amended by adding at the end the 
following new item:

                              ``Sec. 4980G. Failure of qualified 
                                        associations, etc., to comply 
                                        with certain standards for 
                                        health insurance plans.''.

SEC. 414. DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED 
              INDIVIDUALS.

    (a) Full Deduction in 2002.--The table contained in section 
162(l)(1)(B) of the Internal Revenue Code of 1986 (relating to special 
rules for health insurance costs of self-employed individuals) is 
amended--
            (1) by striking ``2001'' and inserting ``2000'';
            (2) by striking ``2002'' and all that follows; and
            (3) by adding at the end the following:

                          ``2001.....................               70 
                          ``2002 and thereafter......           100.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 415. AMENDMENTS TO COBRA.

    (a) Amendments to Internal Revenue Code of 1986.--
            (1) Lower cost coverage options.--Subparagraph (A) of 
        section 4980B(f)(2) of the Internal Revenue Code of 1986 
        (relating to continuation coverage requirements of group health 
        plans) is amended to read as follows:
                    ``(A) Type of benefit coverage.--The coverage must 
                consist of coverage which, as of the time the coverage 
                is being provided--
                            ``(i) is identical to the coverage provided 
                        under the plan to similarly situated 
                        beneficiaries under the plan with respect to 
                        whom a qualifying event has not occurred,
                            ``(ii) is so identical, except such 
                        coverage is offered with an annual $1,000 
                        deductible, and
                            ``(iii) is so identical, except such 
                        coverage is offered with an annual $3,000 
                        deductible.
                If coverage under the plan is modified for any group of 
                similarly situated beneficiaries, the coverage shall 
                also be modified in the same manner for all individuals 
                who are qualified beneficiaries under the plan pursuant 
                to this subsection in connection with such group.''.
            (2) Termination of cobra coverage after eligible for 
        employer-based coverage for 90 days.--Clause (iv) of section 
        4980B(f)(2)(B) of the Internal Revenue Code of 1986 (relating 
        to period of coverage) is amended--
                    (A) by striking ``or'' at the end of subclause (I);
                    (B) by redesignating subclause (II) as subclause 
                (III); and
                    (C) by inserting after subclause (I) the following:
                                    ``(II) eligible for such employer-
                                based coverage for more than 90 days, 
                                or''.
            (3) Reduction of period of coverage.--Clause (i) of section 
        4980B(f)(2)(B) of the Internal Revenue Code of 1986 (relating 
        to period of coverage) is amended by striking ``18 months'' 
        each place it appears and inserting ``24 months''.
            (4) Continuation coverage for dependent child.--Clause (i) 
        of section 4980B(f)(2)(B) of the Internal Revenue Code of 1986 
        is amended by adding at the end the following:
                                    ``(VI) Special rule for dependent 
                                child.--In the case of a qualifying 
                                event described in paragraph (3)(E), 
                                the date that is 36 months after the 
                                date on which the dependent child of 
                                the covered employee ceases to be a 
                                dependent child under the plan.''.
    (b) Amendments to Employee Retirement Income Security Act of 
1974.--
            (1) Lower cost coverage options.--Paragraph (1) of section 
        602 of the Employee Retirement Income Security Act of 1974 (29 
        U.S.C. 1162(1)) (relating to continuation coverage requirements 
        of group health plans) is amended to read as follows:
            ``(1) Type of benefit coverage.--The coverage must consist 
        of coverage which, as of the time the coverage is being 
        provided--
                    ``(A) is identical to the coverage provided under 
                the plan to similarly situated beneficiaries under the 
                plan with respect to whom a qualifying event has not 
                occurred,
                    ``(B) is so identical, except such coverage is 
                offered with an annual $1,000 deductible, and
                    ``(C) is so identical, except such coverage is 
                offered with an annual $3,000 deductible.
        If coverage under the plan is modified for any group of 
        similarly situated beneficiaries, the coverage shall also be 
        modified in the same manner for all individuals who are 
        qualified beneficiaries under the plan pursuant to this 
        subsection in connection with such group.''.
            (2) Termination of cobra coverage after eligible for 
        employer-based coverage for 90 days.--Subparagraph (D) of 
        section 602(2) of the Employee Retirement Income Security Act 
        of 1974 (29 U.S.C. 1162(2)(D)) (relating to period of coverage) 
        is amended--
                    (A) by striking ``or'' at the end of clause (i);
                    (B) by redesignating clause (ii) as clause (iii); 
                and
                    (C) by inserting after clause (i) the following:
                            ``(ii) eligible for such employer-based 
                        coverage for more than 90 days, or''.
            (3) Reduction of period of coverage.--Subparagraph (A) of 
        section 602(2) of the Employee Retirement Income Security Act 
        of 1974 (29 U.S.C. 1162(2)(A)) (relating to period of coverage) 
        is amended by striking ``18 months'' each place it appears and 
        inserting ``24 months''.
            (4) Continuation coverage for dependent child.--
        Subparagraph (A) of section 602(2) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1162(2)(A)) is amended 
        by adding at the end the following:
                            ``(vi) Special rule for dependent child.--
                        In the case of a qualifying event described in 
                        section 603(5), the date that is 36 months 
                        after the date on which the dependent child of 
                        the covered employee ceases to be a dependent 
                        child under the plan.''.
    (c) Amendments to Public Health Service Act.--
            (1) Lower cost coverage options.--Paragraph (1) of section 
        2202 of the Public Health Service Act (42 U.S.C. 300bb-2(1)) 
        (relating to continuation coverage requirements of group health 
        plans) is amended to read as follows:
            ``(1) Type of benefit coverage.--The coverage must consist 
        of coverage which, as of the time the coverage is being 
        provided--
                    ``(A) is identical to the coverage provided under 
                the plan to similarly situated beneficiaries under the 
                plan with respect to whom a qualifying event has not 
                occurred,
                    ``(B) is so identical, except such coverage is 
                offered with an annual $1,000 deductible, and
                    ``(C) is so identical, except such coverage is 
                offered with an annual $3,000 deductible.
        If coverage under the plan is modified for any group of 
        similarly situated beneficiaries, the coverage shall also be 
        modified in the same manner for all individuals who are 
        qualified beneficiaries under the plan pursuant to this 
        subsection in connection with such group.''.
            (2) Termination of cobra coverage after eligible for 
        employer-based coverage for 90 days.--Subparagraph (D) of 
        section 2202(2) of the Public Health Service Act (42 U.S.C. 
        300bb-2(2)(D)) (relating to period of coverage) is amended--
                    (A) by striking ``or'' at the end of clause (i);
                    (B) by redesignating clause (ii) as clause (iii); 
                and
                    (C) by inserting after clause (i) the following:
                            ``(ii) eligible for such employer-based 
                        coverage for more than 90 days, or''.
            (3) Reduction of period of coverage.--Subparagraph (A) of 
        section 2202(2) of the Public Health Service Act (42 U.S.C. 
        300bb-2(2)(A)) (relating to period of coverage) is amended by 
        striking ``18 months'' each place it appears and inserting ``24 
        months''.
            (4) Continuation coverage for dependent child.--
        Subparagraph (A) of section 2202(2) of the Public Health 
        Service Act (42 U.S.C. 300bb-2(2)(A)) is amended by adding at 
        the end the following:
                            ``(vi) Special rule for dependent child.--
                        In the case of a qualifying event described in 
                        section 2203(5), the date that is 36 months 
                        after the date on which the dependent child of 
                        the covered employee ceases to be a dependent 
                        child under the plan.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to qualifying events occurring after the date of the enactment of 
this Act.

             TITLE V--PRIMARY AND PREVENTIVE CARE SERVICES

SEC. 501. IMPROVEMENT OF MEDICARE PREVENTIVE CARE SERVICES.

    (a) Waiver of Coinsurance for Screening and Diagnostic 
Mammography.--
            (1) In general.--Section 1833(a)(1) of the Social Security 
        Act (42 U.S.C. 1395l(a)(1)), as amended by section 223(c) of 
        the Medicare, Medicaid, and SCHIP Benefits Improvement and 
        Protection Act of 2000 (as enacted into law by section 1(a)(6) 
        of Public Law 106-554), is amended--
                    (A) by striking ``and (U)'' and inserting ``(U)''; 
                and
                    (B) by striking the semicolon at the end and 
                inserting the following: ``, and (V) with respect to 
                screening mammography (as defined in section 1861(jj)) 
                and diagnostic mammography, 100 percent of the payment 
                basis determined under section 1848;''.
            (2) Waiver of coinsurance in outpatient hospital 
        settings.--The third sentence of section 1866(a)(2)(A) of the 
        Social Security Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by 
        inserting after ``1861(s)(10)(A)'' the following: ``, with 
        respect to screening mammography (as defined in section 
        1861(jj)) and diagnostic mammography,''.
    (b) Coverage of Insulin Pumps.--
            (1) Inclusion as item of durable medical equipment.--
        Section 1861(n) of the Social Security Act (42 U.S.C. 1395x(n)) 
        is amended by inserting before the semicolon the following: ``, 
        and includes insulin infusion pumps (as defined in subsection 
        (ww)) prescribed by the physician of an individual with Type I 
        diabetes who is experiencing severe swings of high and low 
        blood glucose levels and has successfully completed a training 
        program that meets standards established by the Secretary or 
        who has used such a pump without interruption for at least 18 
        months immediately before enrollment under part B''.
            (2) Definition of insulin infusion pump.--Section 1861 of 
        the Social Security Act (42 U.S.C. 1395x), as amended by 
        section 105(b) of the Medicare, Medicaid, and SCHIP Benefits 
        Improvement and Protection Act of 2000 (as enacted into law by 
        section 1(a)(6) of Public Law 106-554), is amended by adding at 
        the end the following:

                        ``Insulin Infusion Pump

    ``(ww) The term `insulin infusion pump' means an infusion pump, 
approved by the Federal Food and Drug Administration, that provides for 
the computerized delivery of insulin for individuals with diabetes in 
lieu of multiple daily manual insulin injections.''.
            (3) Payment for supplies relating to infusion pumps.--
        Section 1834(a)(2)(A) of the Social Security Act (42 U.S.C. 
        1395m(a)(2)(A)) is amended--
                    (A) in clause (ii), by striking ``or'' at the end;
                    (B) in clause (iii), by inserting ``or'' at the 
                end; and
                    (C) by inserting after clause (iii) the following:
                            ``(iv) which is an accessory used in 
                        conjunction with an insulin infusion pump (as 
                        defined in section 1861(ww)),''.
    (c) Annual Screening Pap Smear and Pelvic Exams.--
            (1) In general.--Section 1861(nn) of the Social Security 
        Act (42 U.S.C. 1395x(nn), as amended by section 101(a) of the 
        Medicare, Medicaid, and SCHIP Benefits Improvement and 
        Protection Act of 2000 (as enacted into law by section 1(a)(6) 
        of Public Law 106-554), is amended to read as follows:

              ``Screening Pap Smear; Screening Pelvic Exam

    ``(nn)(1) The term `screening pap smear' means a diagnostic 
laboratory test consisting of a routine exfoliative cytology test 
(Papanicolaou test) provided to a woman for the purpose of early 
detection of cervical or vaginal cancer and includes a physician's 
interpretation of the results of the test, if the individual involved 
has not had such a test during the preceding year.
    ``(2) The term `screening pelvic exam' means a pelvic examination 
provided to a woman if the woman involved has not had such an 
examination during the preceding year, and includes a clinical breast 
examination, relevant history-taking, medical decision-making, and 
patient counseling.''.
            (2) Waiver of coinsurance for pelvic exams.--Section 
        1833(a)(1) of the Social Security Act (42 U.S.C. 1395l(a)(1)), 
        as amended by subsection (a)(1) and section 223(c) of the 
        Medicare, Medicaid, and SCHIP Benefits Improvement and 
        Protection Act of 2000 (as enacted into law by section 1(a)(6) 
        of Public Law 106-554), is amended--
                    (A) by striking ``and (V)'' and inserting ``(V)''; 
                and
                    (B) by striking the semicolon at the end and 
                inserting the following: ``, and (W) with respect to 
                services described in section 1861(nn)(2), 100 percent 
                of the payment basis determined under section 1848;''.
    (e) Effective Date.--The amendments made by this section shall 
apply to items and services furnished on or after the first day of the 
first calendar quarter beginning on or after the date that is 6 months 
after the date of enactment of this Act.

SEC. 502. AUTHORIZATION OF APPROPRIATIONS FOR HEALTHY START PROGRAM.

    (a) Authorization of Appropriations.--To enable the Secretary of 
Health and Human Services to carry out the healthy start program 
established under the authority of section 301 of the Public Health 
Service Act (42 U.S.C. 241), there are authorized to be appropriated 
$115,000,000 for fiscal year 2002, $150,000,000 for fiscal year 2003, 
$250,000,000 for fiscal year 2004, and $300,000,000 for each of the 
fiscal years 2005 through 2007.
    (b) Model Projects.--
            (1) In general.--Of the amount appropriated under 
        subsection (a) for a fiscal year, the Secretary of Health and 
        Human Services shall reserve $50,000,000 for such fiscal year 
        to be distributed to model projects determined to be eligible 
        under paragraph (2).
            (2) Eligibility.--To be eligible to receive funds under 
        paragraph (1), a model project shall--
                    (A) have been one of the original 15 Healthy Start 
                projects; and
                    (B) be determined by Secretary of Health and Human 
                Services to have been successful in serving needy areas 
                and reducing infant mortality.
            (3) Use of projects.--A model project that receives funding 
        under paragraph (1) shall be utilized as a resource center to 
        assist in the training of those individuals to be involved in 
        projects established under subsection (c). It shall be the goal 
        of such projects to become self-sustaining within the project 
        area.
            (4) Provision of matching funds.--In providing assistance 
        to a project under this subsection, the Secretary of Health and 
        Human Services shall ensure that--
                    (A) with respect to fiscal year 2002, the project 
                shall make non-Federal contributions (in cash or in-
                kind) towards the costs of such project in an amount 
                equal to not less than 20 percent of such costs;
                    (B) with respect to fiscal year 2003, the project 
                shall make non-Federal contributions (in cash or in-
                kind) towards the costs of such project in an amount 
                equal to not less than 30 percent of such costs;
                    (C) with respect to fiscal year 2004, the project 
                shall make non-Federal contributions (in cash or in-
                kind) towards the costs of such project in an amount 
                equal to not less than 40 percent of such costs; and
                    (D) with respect to each of the fiscal years 2005 
                through 2007, the project shall make non-Federal 
                contributions (in cash or in-kind) towards the costs of 
                such project in an amount equal to not less than 50 
                percent of such costs for each such fiscal year.
    (c) New Projects.--Of the amount appropriated under subsection (a) 
for a fiscal year, the Secretary of Health and Human Services shall 
allocate amounts remaining after the reservation under subsection (b) 
for such fiscal year among new demonstration projects and existing 
special projects that have proven to be successful as determined by the 
Secretary of Health and Human Services. Such projects shall be 
community-based and shall attempt to replicate healthy start model 
projects that have been determined by the Secretary of Health and Human 
Services to be successful.

SEC. 503. REAUTHORIZATION OF CERTAIN PROGRAMS PROVIDING PRIMARY AND 
              PREVENTIVE CARE.

    (a) Tuberculosis Prevention Grants.--Section 317(j)(1) of the 
Public Health Service Act (42 U.S.C. 247b(j)(1)), as amended by section 
1711 of the Children's Health Act of 2000 (Public Law 106-310), is 
amended by striking ``2005'' and inserting ``2007''.
    (b) Sexually Transmitted Diseases.--Section 318(e)(1) of the Public 
Health Service Act (42 U.S.C. 247c(e)(1)) is amended--
            (1) by striking ``and such sums'' and inserting ``such 
        sums'';
            (2) by striking ``1998'' and inserting ``2001''; and
            (3) by inserting before the period the following: ``, 
        $130,000,000 for each of the fiscal years 2002 and 2003, and 
        such sums as may be necessary for each of the fiscal years 2004 
        through 2006''.
    (c) Family Planning Project Grants.--Section 1001(d) of the Public 
Health Service Act (42 U.S.C. 300(d)) is amended--
            (1) by striking ``and $158,400,000'' and inserting 
        ``$158,400,000''; and
            (2) by inserting before the period the following: ``; 
        $430,000,000 for fiscal year 2002; and such sums as may be 
        necessary for each of the fiscal years 2003 through 2005''.
    (d) Breast and Cervical Cancer Prevention.--Section 1510(a) of the 
Public Health Service Act (42 U.S.C. 300n-5(a)) is amended--
            (1) by striking ``and such sums'' and inserting ``such 
        sums''; and
            (2) by inserting before the period the following: ``, 
        $200,000,000 for fiscal year 2002, and such sums as may be 
        necessary for each of the fiscal years 2003 through 2005''.
    (e) Preventive Health and Health Services Block Grant.--Section 
1901(a) of the Public Health Service Act (42 U.S.C. 300w(a)) is amended 
by striking ``$205,000,000'' and inserting ``$235,000,000''.
    (f) Maternal and Child Health Services Block Grant.--Section 501(a) 
of the Social Security Act (42 U.S.C. 701(a)) is amended by striking 
``fiscal year 2001 and each fiscal year thereafter'' and inserting 
``each of fiscal years 2001 and 2002, and such sums as may be necessary 
for each of the fiscal years 2003 through 2005''.

SEC. 504. COMPREHENSIVE SCHOOL HEALTH EDUCATION PROGRAM.

    (a) Purpose.--It is the purpose of this section to establish a 
comprehensive school health education and prevention program for 
elementary and secondary school students.
    (b) Program Authorized.--The Secretary of Education (referred to in 
this section as the ``Secretary''), through the Office of Comprehensive 
School Health Education established in subsection (e), shall award 
grants to States from allotments under subsection (c) to enable such 
States to--
            (1) award grants to local or intermediate educational 
        agencies, and consortia thereof, to enable such agencies or 
        consortia to establish, operate, and improve local programs of 
        comprehensive health education and prevention, early health 
        intervention, and health education, in elementary and secondary 
        schools (including preschool, kindergarten, intermediate, and 
        junior high schools); and
            (2) develop training, technical assistance, and 
        coordination activities for the programs assisted pursuant to 
        paragraph (1).
    (c) Reservations and State Allotments.--
            (1) Reservations.--From the sums appropriated pursuant to 
        the authority of subsection (f) for any fiscal year, the 
        Secretary shall reserve--
                    (A) 1 percent for payments to Guam, American Samoa, 
                the Virgin Islands, the Republic of the Marshall 
                Islands, the Federated States of Micronesia, the 
                Northern Mariana Islands, and the Republic of Palau, to 
                be allotted in accordance with their respective needs; 
                and
                    (B) 1 percent for payments to the Bureau of Indian 
                Affairs.
            (2) State allotments.--From the remainder of the sums not 
        reserved under paragraph (1), the Secretary shall allot to each 
        State an amount which bears the same ratio to the amount of 
        such remainder as the school-age population of the State bears 
        to the school-age population of all States, except that no 
        State shall be allotted less than an amount equal to 0.5 
        percent of such remainder.
            (3) Reallotment.--The Secretary may reallot any amount of 
        any allotment to a State to the extent that the Secretary 
        determines that the State will not be able to obligate such 
        amount within 2 years of allotment. Any such reallotment shall 
        be made on the same basis as an allotment under paragraph (2).
    (d) Use of Funds.--Grant funds provided to local or intermediate 
educational agencies, or consortia thereof, under this section may be 
used to improve elementary and secondary education in the areas of--
            (1) personal health and fitness;
            (2) prevention of chronic diseases;
            (3) prevention and control of communicable diseases;
            (4) nutrition;
            (5) substance use and abuse;
            (6) accident prevention and safety;
            (7) community and environmental health;
            (8) mental and emotional health;
            (9) parenting and the challenges of raising children; and
            (10) the effective use of the health services delivery 
        system.
    (e) Office of Comprehensive School Health Education.--The Secretary 
shall establish within the Office of the Secretary an Office of 
Comprehensive School Health Education which shall have the following 
responsibilities:
            (1) To recommend mechanisms for the coordination of school 
        health education programs conducted by the various departments 
        and agencies of the Federal Government.
            (2) To advise the Secretary on formulation of school health 
        education policy within the Department of Education.
            (3) To disseminate information on the benefits to health 
        education of utilizing a comprehensive health curriculum in 
        schools.
    (f) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated 
        $50,000,000 for fiscal year 2002 and such sums as may be 
        necessary for each of the fiscal years 2003 and 2004 to carry 
        out this section.
            (2) Availability.--Funds appropriated pursuant to the 
        authority of paragraph (1) in any fiscal year shall remain 
        available for obligation and expenditure until the end of the 
        fiscal year succeeding the fiscal year for which such funds 
        were appropriated.

SEC. 505. COMPREHENSIVE EARLY CHILDHOOD HEALTH EDUCATION PROGRAM.

    (a) Purpose.--It is the purpose of this section to establish a 
comprehensive early childhood health education program.
    (b) Program.--The Secretary of Health and Human Services (referred 
to in this section as the ``Secretary'') shall conduct a program of 
awarding grants to agencies conducting Head Start training to enable 
such agencies to provide training and technical assistance to Head 
Start teachers and other child care providers. Such program shall--
            (1) establish a training system through the Head Start 
        agencies and organizations conducting Head Start training for 
        the purpose of enhancing teacher skills and providing 
        comprehensive early childhood health education curriculum;
            (2) enable such agencies and organizations to provide 
        training to day care providers in order to strengthen the 
        skills of the early childhood workforce in providing health 
        education;
            (3) provide technical support for health education programs 
        and curricula; and
            (4) provide cooperation with other early childhood 
        providers to ensure coordination of such programs and the 
        transition of students into the public school environment.
    (c) Use of Funds.--Grant funds under this section may be used to 
provide training and technical assistance in the areas of--
            (1) personal health and fitness;
            (2) prevention of chronic diseases;
            (3) prevention and control of communicable diseases;
            (4) dental health;
            (5) nutrition;
            (6) substance use and abuse;
            (7) accident prevention and safety;
            (8) community and environmental health;
            (9) mental and emotional health; and
            (10) strengthening the role of parent involvement.
    (d) Reservation for Innovative Programs.--The Secretary shall 
reserve 5 percent of the funds appropriated pursuant to the authority 
of subsection (e) in each fiscal year for the development of innovative 
model health education programs or curricula.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated $40,000,000 for fiscal year 2002 and such sums as may be 
necessary for each of the fiscal years 2003 and 2004 to carry out this 
section.

SEC. 506. ADOLESCENT FAMILY LIFE AND ABSTINENCE.

    (a) Definitions.--Section 2002(a)(4)(G)(i) of the Public Health 
Service Act (42 U.S.C. 300z-1(a)(4)(G)(i)) is amended by inserting 
``and abstinence'' after ``adoption''.
    (b) Geographic Diversity.--Section 2005 of the Public Health 
Service Act (42 U.S.C. 300z-4) is amended--
            (1) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively; and
            (2) by inserting after subsection (a) the following:
    ``(b) In approving applications for grants for demonstration 
projects for services under this title, the Secretary shall, to the 
maximum extent practicable, ensure adequate representation of both 
urban and rural areas.''.
    (c) Simplified Application Process.--Section 2006 of the Public 
Health Service Act (42 U.S.C. 300z-5) is amended by adding at the end 
following:
    ``(g) The Secretary shall develop and implement a simplified and 
expedited application process for applicants seeking less than $15,000 
of funds available under this title for a demonstration project.''.
    (d) Authorization of Appropriations.--Section 2010(a) of the Public 
Health Service Act (42 U.S.C. 300z-9) is amended to read as follows:
    ``(a) For the purpose of carrying out this title, there are 
authorized to be appropriated $75,000,000 for each of the fiscal years 
2002 through 2006.''.

         TITLE VI--PATIENT'S RIGHT TO DECLINE MEDICAL TREATMENT

SEC. 601. PATIENT'S RIGHT TO DECLINE MEDICAL TREATMENT.

    (a) Right To Decline Medical Treatment.--
            (1) Rights of competent adults.--
                    (A) In general.--Except as provided in subparagraph 
                (B), a State may not restrict the right of a competent 
                adult to consent to, or to decline, medical treatment.
                    (B) Limitations.--
                            (i) Affect on third parties.--A State may 
                        impose limitations on the right of a competent 
                        adult to decline treatment if such limitations 
                        protect third parties (including minor 
                        children) from harm.
                            (ii) Treatment which is not medically 
                        indicated.--Nothing in this subsection shall be 
                        construed to require that any individual be 
                        offered, or to state that any individual may 
                        demand, medical treatment which the health care 
                        provider does not have available, or which is, 
                        under prevailing medical standards, either 
                        futile or otherwise not medically indicated.
            (2) Rights of incapacitated adults.--
                    (A) In general.--Except as provided in subparagraph 
                (B)(i) of paragraph (1), States may not restrict the 
                right of an incapacitated adult to consent to, or to 
                decline, medical treatment as exercised through the 
                documents specified in this paragraph, or through 
                similar documents or other written methods of directive 
                which evidence the adult's treatment choices.
                    (B) Advance directives and powers of attorney.--
                            (i) In general.--In order to facilitate the 
                        communication, despite incapacity, of an 
                        adult's treatment choices, the Secretary of 
                        Health and Human Services (referred to in this 
                        section as the ``Secretary''), in consultation 
                        with the Attorney General, shall develop a 
                        national advance directive form that--
                                    (I) shall not limit or otherwise 
                                restrict, except as provided in 
                                subparagraph (B)(i) of paragraph (1), 
                                an adult's right to consent to, or to 
                                decline, medical treatment; and
                                    (II) shall, at minimum--
                                            (aa) provide the means for 
                                        an adult to declare such 
                                        adult's own treatment choices 
                                        in the event of a terminal 
                                        condition;
                                            (bb) provide the means for 
                                        an adult to declare, at such 
                                        adult's option, treatment 
                                        choices in the event of other 
                                        conditions which are medically 
                                        incurable, and from which such 
                                        adult likely will not recover; 
                                        and
                                            (cc) provide the means by 
                                        which an adult may, at such 
                                        adult's option, declare such 
                                        adult's wishes with respect to 
                                        all forms of medical treatment, 
                                        including forms of medical 
                                        treatment such as the provision 
                                        of nutrition and hydration by 
                                        artificial means which may be, 
                                        in some circumstances, 
                                        relatively nonburdensome.
                            (ii)  National durable power of attorney 
                        form.--The Secretary, in consultation with the 
                        Attorney General, shall develop a national 
                        durable power of attorney form for health care 
                        decisionmaking. The form shall provide a means 
                        for any adult to designate another adult or 
                        adults to exercise the same decisionmaking 
                        powers which would otherwise be exercised by 
                        the patient if the patient were competent.
                            (iii) Honored by all health care 
                        providers.--The national advance directive and 
                        durable power of attorney forms developed by 
                        the Secretary shall be honored by all health 
                        care providers.
                            (iv) Limitations.--No individual shall be 
                        required to execute an advance directive. This 
                        section makes no presumption concerning the 
                        intention of an individual who has not executed 
                        an advance directive. An advance directive 
                        shall be sufficient, but not necessary, proof 
                        of an adult's treatment choices with respect to 
                        the circumstances addressed in the advance 
                        directive.
                    (C) Definition.--For purposes of this paragraph, 
                the term ``incapacity'' means the inability to 
                understand or to communicate concerning the nature and 
                consequences of a health care decision (including the 
                intended benefits and foreseeable risks of, and 
                alternatives to, proposed treatment options), and to 
                reach an informed decision concerning health care.
            (3) Health care providers.--
                    (A) In general.--No health care provider may 
                provide treatment to an adult contrary to the adult's 
                wishes as expressed personally, by an advance directive 
                as provided for in paragraph (2)(B), or by a similar 
                written advance directive form or another written 
                method of directive which clearly and convincingly 
                evidence the adult's treatment choices. A health care 
                provider who acts in good faith pursuant to the 
                preceding sentence shall be immune from criminal or 
                civil liability or discipline for professional 
                misconduct.
                    (B) Health care providers under the medicare and 
                medicaid programs.--Any health care provider who 
                knowingly provides services to an adult contrary to the 
                adult's wishes as expressed personally, by an advance 
                directive as provided for in paragraph (2)(B), or by a 
                similar written advance directive form or another 
written method of directive which clearly and convincingly evidence the 
adult's treatment choices, shall be denied payment for such services 
under titles XVIII and XIX of the Social Security Act.
                    (C) Transfers.--Health care providers who object to 
                the provision of medical care in accordance with an 
                adult's wishes shall transfer the adult to the care of 
                another health care provider.
            (4)  Definition.--For purposes of this subsection, the term 
        ``adult'' means--
                    (A) an individual who is 18 years of age or older; 
                or
                    (B) an emancipated minor.
    (b) Federal Right Enforceable in Federal Courts.--The rights 
recognized in this section may be enforced by filing a civil action in 
an appropriate district court of the United States.
    (c) Suicide and Homicide.--Nothing in this section shall be 
construed to permit, condone, authorize, or approve suicide or mercy 
killing, or any affirmative act to end a human life.
    (d) Rights Granted by States.--Nothing in this section shall impair 
or supersede rights granted by State law which exceed the rights 
recognized by this section.
    (e) Effect on Other Laws.--
            (1) In general.--Except as specified in paragraph (2), 
        written policies and written information adopted by health care 
        providers pursuant to sections 4206 and 4751 of the Omnibus 
        Budget Reconciliation Act of 1990 (Public Law 101-508), shall 
        be modified within 6 months after the enactment of this section 
        to conform to the provisions of this section.
            (2) Delay period for uniform forms.--Health care providers 
        shall modify any written forms distributed as written 
        information under sections 4206 and 4751 of the Omnibus Budget 
        Reconciliation Act of 1990 (Public Law 101-508) not later than 
        6 months after promulgation of the forms referred to in clauses 
        (i) and (ii) of subsection (a)(2)(B) by the Secretary.
    (f) Information Provided to Certain Individuals.--The Secretary 
shall provide on a periodic basis written information regarding an 
individual's right to consent to, or to decline, medical treatment as 
provided in this section to individuals who are beneficiaries under 
titles II, XVI, XVIII, and XIX of the Social Security Act.
    (g) Recommendations to Congress on Issues Relating to a Patient's 
Right of Self-Determination.--Not later than 180 days after the date of 
the enactment of this Act, and annually thereafter for a period of 3 
years, the Secretary shall provide recommendations to Congress 
concerning the medical, legal, ethical, social, and educational issues 
related to in this section. In developing recommendations under this 
subsection the Secretary shall address the following issues:
            (1) The contents of the forms referred to in clauses (i) 
        and (ii) of subsection (a)(2)(B).
            (2) Issues pertaining to the education and training of 
        health care professionals concerning patients' self-
        determination rights.
            (3) Issues pertaining to health care professionals' duties 
        with respect to patients' rights, and health care 
        professionals' roles in identifying, assessing, and presenting 
        for patient consideration medically indicated treatment 
        options.
            (4) Issues pertaining to the education of patients 
        concerning their rights to consent to, and decline, treatment, 
        including how individuals might best be informed of such rights 
        prior to hospitalization and how uninsured individuals, and 
        individuals not under the regular care of a physician or 
        another provider, might best be informed of their rights.
            (5) Issues relating to appropriate standards to be adopted 
        concerning decisionmaking by incapacitated adult patients whose 
        treatment choices are not known.
            (6) Such other issues as the Secretary may identify.
    (h) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), this 
        section shall take effect on the date that is 6 months after 
        the date of enactment of this Act.
            (2) Subsection (g).--The provisions of subsection (g) shall 
        take effect on the date of enactment of this Act.

            TITLE VII--PRIMARY AND PREVENTIVE CARE PROVIDERS

SEC. 701. INCREASED MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANTS, 
              NURSE PRACTITIONERS, AND CLINICAL NURSE SPECIALISTS.

    (a) Fee Schedule Amount.--Section 1833(a)(1)(O) of the Social 
Security Act (42 U.S.C. 1395l(a)(1)(O)) is amended by striking ``85 
percent'' and inserting ``90 percent'' each place it appears.
    (b) Technical Amendment.--Section 1833(a)(1)(O) of the Social 
Security Act (42 U.S.C. 1395l(a)(1)(O)) is amended by striking 
``clinic'' and inserting ``clinical''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to services furnished and supplies provided on and 
after January 1, 2002.

SEC. 702. REQUIRING COVERAGE OF CERTAIN NONPHYSICIAN PROVIDERS UNDER 
              THE MEDICAID PROGRAM.

    (a) In General.--Section 1905(a) of the Social Security Act (42 
U.S.C. 1396d(a)), as amended by section 301(c)(1), is amended--
            (1) in paragraph (27), by striking ``and'' at the end;
            (2) by redesignating paragraph (28) as paragraph (29); and
            (3) by inserting after paragraph (27) the following:
            ``(28) services furnished by a physician assistant, nurse 
        practitioner, clinical nurse specialist (as defined in section 
        1861(aa)(5)), or certified registered nurse anesthetist (as 
        defined in section 1861(bb)(2)); and''.
    (b) Conforming Amendment.--Section 1902(a)(10)(C)(iv) of the Social 
Security Act (42 U.S.C. 1396a(a)(10)(C)(iv)), as amended by section 
301(c)(3), is amended by striking ``and (27)'' and inserting ``, (27), 
and (28)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to medical assistance furnished under title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.) beginning with the first fiscal 
year quarter that begins after the date of enactment of this Act.

SEC. 703. MEDICAL STUDENT TUTORIAL PROGRAM GRANTS.

    Part C of title VII of the Public Health Service Act (42 U.S.C. 
293j et seq.) is amended by adding at the end thereof the following:

``SEC. 749. MEDICAL STUDENT TUTORIAL PROGRAM GRANTS.

    ``(a) Establishment.--The Secretary shall establish a program to 
award grants to eligible schools of medicine or osteopathic medicine to 
enable such schools to provide medical students for tutorial programs 
or as participants in clinics designed to interest high school or 
college students in careers in general medical practice.
    ``(b) Application.--To be eligible to receive a grant under this 
section, a school of medicine or osteopathic medicine shall prepare and 
submit to the Secretary an application at such time, in such manner, 
and containing such information as the Secretary may require, including 
assurances that the school will use amounts received under the grant in 
accordance with subsection (c).
    ``(c) Use of Funds.--
            ``(1) In general.--Amounts received under a grant awarded 
        under this section shall be used to--
                    ``(A) fund programs under which students of the 
                grantee are provided as tutors for high school and 
                college students in the areas of mathematics, science, 
                health promotion and prevention, first aid, nutrition 
                and prenatal care;
                    ``(B) fund programs under which students of the 
                grantee are provided as participants in clinics and 
                seminars in the areas described in paragraph (1); and
                    ``(C) conduct summer institutes for high school and 
                college students to promote careers in medicine.
            ``(2) Design of programs.--The programs, institutes, and 
        other activities conducted by grantees under paragraph (1) 
        shall be designed to--
                    ``(A) give medical students desiring to practice 
                general medicine access to the local community;
                    ``(B) provide information to high school and 
                college students concerning medical school and the 
                general practice of medicine; and
                    ``(C) promote careers in general medicine.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $5,000,000 for fiscal year 
2002, and such sums as may be necessary for fiscal year 2003.''.

SEC. 704. GENERAL MEDICAL PRACTICE GRANTS.

    Part C of title VII of the Public Health Service Act (as amended by 
section 703) is further amended by adding at the end thereof the 
following:

``SEC. 749A. GENERAL MEDICAL PRACTICE GRANTS.

    ``(a) Establishment.--The Secretary shall establish a program to 
award grants to eligible public or private nonprofit schools of 
medicine or osteopathic medicine, hospitals, residency programs in 
family medicine or pediatrics, or to a consortium of such entities, to 
enable such entities to develop effective strategies for recruiting 
medical students interested in the practice of general medicine and 
placing such students into general practice positions upon graduation.
    ``(b) Application.--To be eligible to receive a grant under this 
section, an entity of the type described in subsection (a) shall 
prepare and submit to the Secretary an application at such time, in 
such manner, and containing such information as the Secretary may 
require, including assurances that the entity will use amounts received 
under the grant in accordance with subsection (c).
    ``(c) Use of Funds.--Amounts received under a grant awarded under 
this section shall be used to fund programs under which effective 
strategies are developed and implemented for recruiting medical 
students interested in the practice of general medicine and placing 
such students into general practice positions upon graduation.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $25,000,000 for each of the 
fiscal years 2002 through 2004, and such sums as may be necessary for 
fiscal years thereafter.''.

         TITLE VIII--SAFE AND COST-EFFECTIVE MEDICAL TREATMENT

SEC. 801. ENHANCING INVESTMENT IN COST-EFFECTIVE METHODS OF HEALTH 
              CARE.

    (a) Establishment of Trust Fund for Medical Treatment Outcomes 
Research.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 (relating to trust fund code) is amended 
        by adding at the end the following:

``SEC. 9511. TRUST FUND FOR MEDICAL TREATMENT OUTCOMES RESEARCH.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Trust Fund for 
Medical Treatment Outcomes Research' (referred to in this section as 
the `Trust Fund'), consisting of such amounts as may be appropriated or 
credited to the Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--There is hereby appropriated to the 
Trust Fund an amount equivalent to the taxes received in the Treasury 
under section 4491 (relating to tax on health insurance policies).
    ``(c) Distribution of Amounts in Trust Fund.--On an annual basis 
and without further appropriation the Secretary shall distribute the 
amounts in the Trust Fund to the Secretary of Health and Human Services 
for use by the Agency for Healthcare Research and Quality. Such amounts 
shall be available to pay for research activities related to medical 
treatment outcomes and shall be in addition to any other amounts 
appropriated for such purposes.''.
            (2) Conforming amendment.--The table of sections for 
        subchapter A of chapter 98 of such Code is amended by adding at 
        the end the following:

                              ``Sec. 9511. Trust Fund for Medical 
                                        Treatment Outcomes Research.''.
    (b) Imposition of Tax on Health Insurance Policies.--
            (1) In general.--Chapter 36 of the Internal Revenue Code of 
        1986 (relating to certain other excise taxes) is amended by 
        adding at the end the following:

            ``Subchapter F--Tax on Health Insurance Policies

                              ``Sec. 4491. Imposition of tax.
                              ``Sec. 4492. Liability for tax.

``SEC. 4491. IMPOSITION OF TAX.

    ``(a) General Rule.--There is hereby imposed a tax equal to .001 
cent on each dollar, or fractional part thereof, of the premium paid on 
a policy of health insurance.
    ``(b) Definition.--For purposes of subsection (a), the term `policy 
of health insurance' means any policy or other instrument by whatever 
name called whereby a contract of insurance is made, continued, or 
renewed with respect to the health of an individual or group of 
individuals.

``SEC. 4492. LIABILITY FOR TAX.

    ``The tax imposed by this subchapter shall be paid, on the basis of 
a return, by any person who makes, signs, issues, or sells any of the 
documents and instruments subject to the tax, or for whose use or 
benefit the same are made, signed, issued, or sold. The United States 
or any agency or instrumentality thereof shall not be liable for the 
tax.''.
            (2) Conforming amendment.--The table of subchapters for 
        chapter 36 of such Code is amended by adding at the end the 
        following:

                              ``Subchapter F. Tax on health insurance 
                                        policies.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to policies issued after December 31, 2001.

SEC. 802. MEDICAL ERRORS REDUCTION.

    Title IX of the Public Health Service Act (42 U.S.C. 299 et seq.) 
is amended--
            (1) by redesignating part C as part D;
            (2) by redesignating sections 921 through 928, as sections 
        931 through 938, respectively;
            (3) in section 938(1) (as so redesignated), by striking 
        ``921'' and inserting ``931''; and
            (4) by inserting after part B the following:

                ``PART C--REDUCING ERRORS IN HEALTH CARE

``SEC. 921. DEFINITIONS.

    ``In this part:
            ``(1) Adverse event.--The term `adverse event' means an 
        injury resulting from medical management rather than the 
        underlying condition of the patient.
            ``(2) Error.--The term `error' means the failure of a 
        planned action to be completed as intended or the use of a 
        wrong plan to achieve the desired outcome.
            ``(3) Health care provider.--The term `health care 
        provider' means an individual or entity that provides medical 
        services and is a participant in a demonstration program under 
        this part.
            ``(4) Health care-related error.--The term ``health care-
        related error'' means a preventable adverse event related to a 
        health care intervention or a failure to intervene 
        appropriately.
            ``(5) Medication-related error.--The term `medication-
        related error' means a preventable adverse event related to the 
        administration of a medication.
            ``(6) Safety.--The term `safety' with respect to an 
        individual means that such individual has a right to be free 
        from preventable serious injury.
            ``(7) Sentinel event.--The term `sentinel event' means an 
        unexpected occurrence involving an individual that results in 
        death or serious physical injury that is unrelated to the 
        natural course of the individual's illness or underlying 
        condition.

``SEC. 922. ESTABLISHMENT OF STATE-BASED MEDICAL ERROR REPORTING 
              SYSTEMS.

    ``(a) In General.--The Secretary shall make grants available to 
States to enable such States to establish reporting systems designed to 
reduce medical errors and improve health care quality.
    ``(b) Requirement.--
            ``(1) In general.--To be eligible to receive a grant under 
        subsection (a), the State involved shall provide assurances to 
        the Secretary that amounts received under the grant will be 
        used to establish and implement a medical error reporting 
        system using guidelines (including guidelines relating to the 
        confidentiality of the reporting system) developed by the 
        Agency for Healthcare Research and Quality with input from 
        interested, non-governmental parties including patient, 
        consumer and health care provider groups.
            ``(2) Guidelines.--Not later than 90 days after the date of 
        enactment of this part, the Agency for Healthcare Research and 
        Quality shall develop and publish the guidelines described in 
        paragraph (1).
    ``(c) Data.--
            ``(1) Availability.--A State that receives a grant under 
        subsection (a) shall make the data provided to the medical 
        error reporting system involved available only to the Agency 
        for Healthcare Research and Quality and may not otherwise 
        disclose such information.
            ``(2) Confidentiality.--Nothing in this part shall be 
        construed to supersede any State law that is inconsistent with 
        this part.
    ``(d) Application.--To be eligible for a grant under this section, 
a State shall prepare and submit to the Secretary an application at 
such time, in such manner and containing, such information as the 
Secretary shall require.

``SEC. 923. DEMONSTRATION PROJECTS TO REDUCE MEDICAL ERRORS, IMPROVE 
              PATIENT SAFETY, AND EVALUATE REPORTING.

    ``(a) Establishment.--The Secretary, acting through the Director of 
the Agency for Healthcare Research and Quality and in conjunction with 
the Administrator of the Health Care Financing Administration, may 
establish a program under which funding will be provided for not less 
than 15 demonstration projects, to be competitively awarded, in health 
care facilities and organizations in geographically diverse locations, 
including rural and urban areas (as determined by the Secretary), to 
determine the causes of medical errors and to--
            ``(1) use technology, staff training, and other methods to 
        reduce such errors;
            ``(2) develop replicable models that minimize the frequency 
        and severity of medical errors;
            ``(3) develop mechanisms that encourage reporting, prompt 
        review, and corrective action with respect to medical errors; 
        and
            ``(4) develop methods to minimize any additional paperwork 
        burden on health care professionals.
    ``(b) Activities.--
            ``(1) In general.--A health care provider participating in 
        a demonstration project under subsection (a) shall--
                    ``(A) utilize all available and appropriate 
                technologies to reduce the probability of future 
                medical errors; and
                    ``(B) carry out other activities consistent with 
                subsection (a).
            ``(2) Reporting to patients.--In carrying out this section, 
        the Secretary shall ensure that--
                    ``(A) 5 of the demonstration projects permit the 
                voluntary reporting by participating health care 
                providers of any adverse events, sentinel events, 
                health care-related errors, or medication-related 
                errors to the Secretary;
                    ``(B) 5 of the demonstration projects require 
                participating health care providers to report any 
                adverse events, sentinel events, health care-related 
                errors, or medication-related errors to the Secretary; 
                and
                    ``(C) 5 of the demonstration projects require 
                participating health care providers to report any 
                adverse events, sentinel events, health care-related 
                errors, or medication-related errors to the Secretary 
                and to the patient involved and a family member or 
                guardian of the patient.
            ``(3) Confidentiality.--
                    ``(A) In general.--The Secretary and the 
                participating grantee organization shall ensure that 
                information reported under this section remains 
                confidential.
                    ``(B) Use.--The Secretary may use the information 
                reported under this section only for the purpose of 
                evaluating the ability to reduce errors in the delivery 
                of care. Such information shall not be used for 
                enforcement purposes.
                    ``(C) Disclosure.--The Secretary may not disclose 
                the information reported under this section.
                    ``(D) Nonadmissibility.--Information reported under 
                this section shall be privileged, confidential, shall 
                not be admissible as evidence or discoverable in any 
                civil or criminal action or proceeding or subject to 
                disclosure, and shall not be subject to the Freedom of 
                Information Act (5 U.S.C. App). This paragraph shall 
                apply to all information maintained by the reporting 
                entity and the entities who receive such reports.
    ``(c) Use of Technologies.--The Secretary shall encourage, as part 
of the demonstration projects conducted under subsection (a), the use 
of appropriate technologies to reduce medical errors, such as hand-held 
electronic prescription pads, training simulators for medical 
education, and bar-coding of prescription drugs and patient bracelets.
    ``(d) Database.--The Secretary shall provide for the establishment 
and operation of a national database of medical errors to be used as 
provided for by the Secretary. The information provided to the 
Secretary under subsection (b)(2) shall be contained in the database.
    ``(e) Evaluation.--The Secretary shall evaluate the progress of 
each demonstration project established under this section in reducing 
the incidence of medical errors and submit the results of such 
evaluations as part of the reports under section 926(b).
    ``(f) Reporting.--Prior to October 1, of the third fiscal year for 
which funds are made available under this section, the Secretary shall 
prepare and submit to the appropriate committees of Congress an interim 
report concerning the results of such demonstration projects.

``SEC. 924. PATIENT SAFETY IMPROVEMENT.

    ``(a) In General.--The Secretary shall provide information to 
educate patients and family members about their role in reducing 
medical errors. Such information shall be provided to all individuals 
who participate in Federally-funded health care programs.
    ``(b) Development of Programs.--The Secretary shall develop 
programs that encourage patients to take a more active role in their 
medical treatment, including encouraging patients to provide 
information to health care providers concerning pre-existing conditions 
and medications.

``SEC. 925. PRIVATE, NONPROFIT EFFORTS TO REDUCE MEDICAL ERRORS.

    ``(a) In General.--The Secretary shall make grants to health 
professional associations and other organizations to provide training 
in ways to reduce medical errors, including curriculum development, 
technology training, and continuing medical education.
    ``(b) Application.--To be eligible for a grant under this section, 
an entity shall prepare and submit to the Secretary an application at 
such time, in such manner and containing, such information as the 
Secretary shall require.

``SEC. 926. REPORT TO CONGRESS.

    ``(a) Initial Report.--Not later than 180 days after the date of 
enactment of this part, the Secretary shall prepare and submit to the 
appropriate committees of Congress a report concerning the costs 
associated with implementing a program that identifies factors that 
contribute to errors and which includes upgrading the health care 
computer systems and other technologies in the United States in order 
to reduce medical errors, including computerizing hospital systems for 
the coordination of prescription drugs and handling of laboratory 
specimens, and contains recommendation on ways in which to reduce those 
factors.
    ``(b) Other Reports.--Not later than 180 days after the completion 
of all demonstration projects under section 923, the Secretary shall 
prepare and submit to the appropriate committees of Congress a report 
concerning--
            ``(1) how successful each demonstration project was in 
        reducing medical errors;
            ``(2) the data submitted by States under section 922(c);
            ``(3) the best methods for reducing medical errors;
            ``(4) the costs associated with applying such best methods 
        on a nationwide basis; and
            ``(5) the manner in which other Federal agencies can share 
        information on best practices in order to reduce medical errors 
        in all Federal health care programs.

``SEC. 927. AUTHORIZATION OF APPROPRIATIONS.

    ``There is authorized to be appropriated such sums as may be 
necessary to carry out this part.''.

   TITLE IX--TAX INCENTIVES FOR PURCHASE OF QUALIFIED LONG-TERM CARE 
                               INSURANCE

SEC. 901. CREDIT FOR QUALIFIED LONG-TERM CARE PREMIUMS.

    (a) General Rule.--Subpart C of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following:

``SEC. 35. LONG-TERM CARE INSURANCE CREDIT.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to the applicable percentage of the 
premiums for a qualified long-term care insurance contract (as defined 
in section 7702B(b)) paid during such taxable year for such individual 
or the spouse of such individual.
    ``(b) Applicable Percentage.--
            ``(1) In general.--For purposes of this section, the term 
        `applicable percentage' means 28 percent reduced (but not below 
        zero) by 1 percentage point for each $1,000 (or fraction 
        thereof) by which the taxpayer's adjusted gross income for the 
        taxable year exceeds the base amount.
            ``(2) Base amount.--For purposes of paragraph (1) the term 
        `base amount' means--
                    ``(A) except as otherwise provided in this 
                paragraph, $25,000,
                    ``(B) $40,000 in the case of a joint return, and
                    ``(C) zero in the case of a taxpayer who--
                            ``(i) is married at the close of the 
                        taxable year (within the meaning of section 
                        7703) but does not file a joint return for such 
                        taxable year, and
                            ``(ii) does not live apart from the 
                        taxpayer's spouse at all times during the 
                        taxable year.
    ``(c) Coordination With Medical Expense Deduction.--Any amount 
allowed as a credit under this section shall not be taken into account 
under section 213.''.
    (b) Conforming Amendment.--The table of sections for such subpart C 
is amended by striking the item relating to section 35 and inserting 
the following:

                              ``Sec. 35. Long-term care insurance 
                                        credit.
                              ``Sec. 36. Overpayments of tax.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 902. INCLUSION OF QUALIFIED LONG-TERM CARE INSURANCE IN CAFETERIA 
              PLANS AND FLEXIBLE SPENDING ARRANGEMENTS.

    (a) Cafeteria Plans.--The last sentence of section 125(f) of the 
Internal Revenue Code of 1986 (defining qualified benefits) is amended 
by striking ``shall not'' and inserting ``shall''.
    (b) Flexible Spending Arrangements.--Section 106(c) of the Internal 
Revenue Code of 1986 (relating to contributions by employer to accident 
and health plans) is amended--
            (1) in paragraph (1), by striking ``include'' and inserting 
        ``shall not''; and
            (2) in the heading, by striking ``Inclusion'' and inserting 
        ``Exclusion''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 903. EXCLUSION FROM GROSS INCOME FOR AMOUNTS RECEIVED ON 
              CANCELLATION OF LIFE INSURANCE POLICIES AND USED FOR 
              QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS.

    (a) In General.--
            (1) Exclusion from gross income.--
                    (A) In general.--Part III of subchapter B of 
                chapter 1 of the Internal Revenue Code of 1986 
                (relating to items specifically excluded from gross 
                income) is amended by redesignating section 139 as 
                section 140 and by inserting after section 138 the 
                following new section:

``SEC. 139. AMOUNTS RECEIVED ON CANCELLATION, ETC. OF LIFE INSURANCE 
              CONTRACTS AND USED TO PAY PREMIUMS FOR QUALIFIED LONG-
              TERM CARE INSURANCE.

    ``No amount (which but for this section would be includible in the 
gross income of an individual) shall be included in gross income on the 
whole or partial surrender, cancellation, or exchange of any life 
insurance contract during the taxable year if--
            ``(1) such individual has attained age 59\1/2\ on or before 
        the date of the transaction, and
            ``(2) the amount otherwise includible in gross income is 
        used during such year to pay for any qualified long-term care 
        insurance contract (as defined in section 7702B(b)) which--
                    ``(A) is for the benefit of such individual or the 
                spouse of such individual if such spouse has attained 
                age 59\1/2\ on or before the date of the transaction, 
                and
                    ``(B) may not be surrendered for cash.''.
                    (B) Conforming amendment.--The table of sections 
                for such part III is amended by striking the item 
                relating to section 139 and inserting the following:

                              ``Sec. 139. Amounts received on 
                                        cancellation, etc. of life 
                                        insurance contracts and used to 
                                        pay premiums for qualified 
                                        long-term care insurance.
                              ``Sec. 140. Cross references to other 
                                        Acts.''.
            (2) Certain exchanges not taxable.--Section 1035(a) of such 
        Code (relating to certain exchanges of insurance contracts) is 
        amended by striking the period at the end of paragraph (3) and 
        inserting ``; or'', and by adding at the end the following:
            ``(4) in the case of an individual who has attained age 
        59\1/2\, a contract of life insurance or an endowment or 
        annuity contract for a qualified long-term care insurance 
        contract (as defined in section 7702B(b)), if the qualified 
        long-term care insurance contract may not be surrendered for 
        cash.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 904. USE OF GAIN FROM SALE OF PRINCIPAL RESIDENCE FOR PURCHASE OF 
              QUALIFIED LONG-TERM HEALTH CARE INSURANCE.

    (a) In General.--Subsection (d) of section 121 of the Internal 
Revenue Code of 1986 (relating to exclusion of gain from sale of 
principal) is amended by adding at the end the following:
            ``(9) Eligibility of home equity conversion sale-leaseback 
        transaction for exclusion.--
                    ``(A) In general.--For purposes of this section, 
                the term `sale or exchange' includes a home equity 
                conversion sale-leaseback transaction.
                    ``(B) Home equity conversion sale-leaseback 
                transaction.--For purposes of subparagraph (A), the 
                term `home equity conversion sale-leaseback' means a 
                transaction in which--
                            ``(i) the seller-lessee--
                                    ``(I) sells property which during 
                                the 5-year period ending on the date of 
                                the transaction has been owned and used 
                                as a principal residence by such 
                                seller-lessee for periods aggregating 2 
                                years or more,
                                    ``(II) uses a portion of the 
                                proceeds from such sale to purchase a 
                                qualified long-term care insurance 
                                contract (as defined in section 
                                7702B(b)), which contract may not be 
                                surrendered for cash,
                                    ``(III) obtains occupancy rights in 
                                such property pursuant to a written 
                                lease requiring a fair rental, and
                                    ``(IV) receives no option to 
                                repurchase the property at a price less 
                                than the fair market price of the 
                                property unencumbered by any leaseback 
                                at the time such option is exercised, 
                                and
                            ``(ii) the purchaser-lessor--
                                    ``(I) is a person,
                                    ``(II) is contractually responsible 
                                for the risks and burdens of ownership 
                                and receives the benefits of ownership 
                                (other than the seller-lessee's 
                                occupancy rights) after the date of 
                                such transaction, and
                                    ``(III) pays a purchase price for 
                                the property that is not less than the 
                                fair market price of such property 
                                encumbered by a leaseback, and taking 
                                into account the terms of the lease.
                    ``(C) Additional definitions.--For purposes of 
                subparagraph (B)--
                            ``(i) Occupancy rights.--The term 
                        `occupancy rights' means the right to occupy 
                        the property for any period of time, including 
                        a period of time measured by the life of the 
                        seller-lessee on the date of the sale-leaseback 
                        transaction (or the life of the surviving 
                        seller-lessee, in the case of jointly held 
                        occupancy rights), or a periodic term subject 
                        to a continuing right of renewal by the seller-
                        lessee (or by the surviving seller-lessee, in 
                        the case of jointly held occupancy rights).
                            ``(ii) Fair rental.--The term `fair rental' 
                        means a rental for any subsequent year which 
                        equals or exceeds the rental for the 1st year 
                        of a sale-leaseback transaction.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to sales after December 31, 2001, in taxable years beginning after such 
date.

               TITLE X--NATIONAL FUND FOR HEALTH RESEARCH

SEC. 1001. ESTABLISHMENT OF FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a fund, to be known as the ``National Fund for Health 
Research'' (in this section referred to as the ``Fund''), consisting of 
such amounts as are transferred to the Fund under subsection (b) and 
any interest earned on investment of amounts in the Fund.
    (b) Transfers to Fund.--
            (1) In general.--The Secretary of the Treasury shall 
        transfer to the Fund amounts equivalent to amounts designated 
        under paragraph (2) and received in the Treasury.
            (2) Amounts.--
                    (A) Health plan set aside.--With respect to each 
                calendar year beginning with the first full calendar 
                year after the date of enactment of this Act, each 
                health plan shall set aside and transfer to the 
Treasury of the United States an amount equal to--
                            (i) for the first full calendar year, 0.25 
                        percent of all health premiums received with 
                        respect to the plan for such year;
                            (ii) for the second full calendar year, 0.5 
                        percent of all health premiums received with 
                        respect to the plan for such year;
                            (iii) for the third full calendar year, 
                        0.75 percent of all health premiums received 
                        with respect to the plan for such year; and
                            (iv) for the fourth and each succeeding 
                        full calendar year, 1 percent of all health 
                        premiums received with respect to the plan for 
                        such year.
            (3) Transfers based on estimates.--The amounts transferred 
        by paragraph (1) shall annually be transferred to the Fund 
        within 30 days after the President signs an appropriations Act 
        for the Departments of Labor, Health and Human Services, and 
        Education, and related agencies, or by the end of the first 
        quarter of the fiscal year. Proper adjustment shall be made in 
        amounts subsequently transferred to the extent prior estimates 
        were in excess of or less than the amounts required to be 
        transferred.
            (4) Definition.--As used in this subsection, the term 
        ``health plan'' means a group health plan (as defined in 
        section 2791(a) of the Public Health Service Act and any 
        individual health insurance (as defined in section 2791(b)(5) 
        of such Act) operated by a health insurance issuer.
    (c) Obligations From Fund.--
            (1) In general.--Subject to the provisions of paragraph 
        (4), with respect to the amounts made available in the Fund in 
        a fiscal year, the Secretary of Health and Human Services shall 
        distribute--
                    (A) 2 percent of such amounts during any fiscal 
                year to the Office of the Director of the National 
                Institutes of Health to be allocated at the Director's 
                discretion for the following activities:
                            (i) for carrying out the responsibilities 
                        of the Office of the Director, including the 
                        Office of Research on Women's Health and the 
                        Office of Research on Minority Health, the 
                        Office of Rare Disease Research, the Office of 
                        Behavioral and Social Sciences Research (for 
                        use for efforts to reduce tobacco use), the 
                        Office of Dietary Supplements, and the Office 
                        for Disease Prevention; and
                            (ii) for construction and acquisition of 
                        equipment for or facilities of or used by the 
                        National Institutes of Health;
                    (B) 2 percent of such amounts for transfer to the 
                National Center for Research Resources to carry out 
                section 1502 of the National Institutes of Health 
                Revitalization Act of 1993 concerning Biomedical and 
                Behavioral Research Facilities;
                    (C) 1 percent of such amounts during any fiscal 
                year for carrying out section 301 and part D of title 
                IV of the Public Health Service Act with respect to 
                health information communications; and
                    (D) the remainder of such amounts during any fiscal 
                year to member institutes and centers, including the 
                Office of AIDS Research, of the National Institutes of 
                Health in the same proportion to the total amount 
                received under this section, as the amount of annual 
                appropriations under appropriations Acts for each 
                member institute and Centers for the fiscal year bears 
                to the total amount of appropriations under 
                appropriations Acts for all member institutes and 
                Centers of the National Institutes of Health for the 
                fiscal year.
            (2) Plans of allocation.--The amounts transferred under 
        paragraph (1)(D) shall be allocated by the Director of the 
        National Institutes of Health or the various directors of the 
        institutes and centers, as the case may be, pursuant to 
        allocation plans developed by the various advisory councils to 
        such directors, after consultation with such directors.
            (3) Grants and contracts fully funded in first year.--With 
        respect to any grant or contract funded by amounts distributed 
        under paragraph (1), the full amount of the total obligation of 
        such grant or contract shall be funded in the first year of 
        such grant or contract, and shall remain available until 
        expended.
            (4) Trigger and release of monies and phase-in.--
                    (A) Trigger and release.--No expenditure shall be 
                made under paragraph (1) during any fiscal year in 
                which the annual amount appropriated for the National 
                Institutes of Health is less than the amount so 
                appropriated for the prior fiscal year.
                    (B) Phase-in.--The Secretary of Health and Human 
                Services shall phase-in the distributions required 
                under paragraph (1) so that--
                            (i) 25 percent of the amount in the Fund is 
                        distributed in the first fiscal year for which 
                        funds are available;
                            (ii) 50 percent of the amount in the Fund 
                        is distributed in the second fiscal year for 
                        which funds are available;
                            (iii) 75 percent of the amount in the Fund 
                        is distributed in the third fiscal year for 
                        which funds are available; and
                            (iv) 100 percent of the amount in the Fund 
                        is distributed in the fourth and each 
                        succeeding fiscal year for which funds are 
                        available.
    (d) Budget Treatment of Amounts in Fund.--The amounts in the Fund 
shall be excluded from, and shall not be taken into account, for 
purposes of any budget enforcement procedure under the Congressional 
Budget Act of 1974 or the Balanced Budget and Emergency Deficit Control 
Act of 1985.
                                 <all>