[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 743 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 743
To establish a medical education trust fund, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 6, 2001
Mr. Reed (for himself, Mrs. Clinton, and Mr. Schumer) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To establish a medical education trust fund, 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 ``Medical Education
Trust Fund Act of 2001''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Medical Education Trust Fund.
Sec. 3. Amendments to medicare program.
Sec. 4. Amendments to medicaid program.
Sec. 5. Assessments on insured and self-insured health plans.
Sec. 6. Medical Education Advisory Commission.
Sec. 7. Demonstration projects.
SEC. 2. MEDICAL EDUCATION TRUST FUND.
The Social Security Act (42 U.S.C. 300 et seq.) is amended by
adding after title XXI the following new title:
``TITLE XXII--MEDICAL EDUCATION TRUST FUND
``table of contents of title
``Sec. 2201. Establishment of Trust Fund.
``Sec. 2202. Payments to medical schools.
``Sec. 2203. Payments to teaching hospitals.
``SEC. 2201. ESTABLISHMENT OF TRUST FUND.
``(a) In General.--There is established in the Treasury of the
United States a fund to be known as the Medical Education Trust Fund
(in this title referred to as the `Trust Fund'), consisting of the
following accounts:
``(1) The Medical School Account.
``(2) The Medicare Teaching Hospital Indirect Account.
``(3) The Medicare Teaching Hospital Direct Account.
``(4) The Non-Medicare Teaching Hospital Indirect Account.
``(5) The Non-Medicare Teaching Hospital Direct Account.
Each such account shall consist of such amounts as are allocated and
transferred to such account under this section, sections 1886(m) and
1936, and section 4503 of the Internal Revenue Code of 1986. Amounts in
the accounts of the Trust Fund shall remain available until expended.
``(b) Expenditures From Trust Fund.--Amounts in the accounts of the
Trust Fund are available to the Secretary for making payments under
sections 2202 and 2203.
``(c) Investment.--
``(1) In general.--The Secretary of the Treasury shall
invest amounts in the accounts of the Trust Fund which the
Secretary determines are not required to meet current
withdrawals from the Trust Fund. Such investments may be made
only in interest-bearing obligations of the United States. For
such purpose, such obligations may be acquired on original
issue at the issue price, or by purchase of outstanding
obligations at the market price.
``(2) Sale of obligations.--The Secretary of the Treasury
may sell at market price any obligation acquired under
paragraph (1).
``(3) Availability of income.--Any interest derived from
obligations held in each such account, and proceeds from any
sale or redemption of such obligations, are hereby appropriated
to such account.
``(d) Monetary Gifts to Trust Fund.--There are appropriated to the
Trust Fund such amounts as may be unconditionally donated to the
Federal Government as gifts to the Trust Fund. Such amounts shall be
allocated and transferred to the accounts described in subsection (a)
in the same proportion as the amounts in each of the accounts bears to
the total amount in all the accounts of the Trust Fund.
``(e) Administrator of Programs.--The Secretary shall carry out
responsibility under this title by acting through the Administrator of
the Health Care Financing Administration.
``SEC. 2202. PAYMENTS TO MEDICAL SCHOOLS.
``(a) Federal Payments to Medical Schools for Certain Costs.--
``(1) In general.--In the case of a medical school that in
accordance with paragraph (2) submits to the Secretary an
application for fiscal year 2002 or any subsequent fiscal year,
the Secretary shall make payments for such year to the medical
school for the purpose specified in paragraph (3). The
Secretary shall make such payments from the Medical School
Account in an amount determined in accordance with subsection
(b), and may administer the payments as a contract, grant, or
cooperative agreement.
``(2) Application for payments.--For purposes of paragraph
(1), an application for payments under such paragraph for a
fiscal year is in accordance with this paragraph if--
``(A) the medical school involved submits the
application not later than the date specified by the
Secretary; and
``(B) the application is in such form, is made in
such manner, and contains such agreements, assurances,
and information as the Secretary determines to be
necessary to carry out this section.
``(3) Purpose of payments.--The purpose of payments under
paragraph (1) is to assist medical schools in maintaining and
developing quality educational programs.
``(b) Availability of Trust Fund for Payments; Annual Amount of
Payments.--
``(1) Availability of trust fund for payments.--For making
payments under subsection (a) from the amount allocated and
transferred to the Medical School Account under sections
1886(m), 1936, 2201(c)(3), and 2201(d), and section 4503 of the
Internal Revenue Code of 1986, amounts for a fiscal year shall
be available as follows:
``(A) In the case of fiscal year 2003,
$200,000,000.
``(B) In the case of fiscal year 2004,
$300,000,000.
``(C) In the case of fiscal year 2005,
$400,000,000.
``(D) In the case of fiscal year 2006,
$500,000,000.
``(E) In the case of fiscal year 2007,
$600,000,000.
``(F) In the case of each subsequent fiscal year,
the amount determined under this paragraph for the
previous fiscal year updated through the midpoint of
such previous fiscal year by the estimated percentage
change in the general health care inflation factor (as
defined in subsection (d)) during the 12-month period
ending at that midpoint, with appropriate adjustments
to reflect previous underestimations or overestimations
under this subparagraph in the projected health care
inflation factor.
``(2) Amount of payments for medical schools.--
``(A) In general.--Subject to the annual amount
available under paragraph (1) for a fiscal year, the
amount of payments required under subsection (a) to be
made to a medical school that submits to the Secretary
an application for such year in accordance with
subsection (a)(2) is an amount equal to an amount
determined by the Secretary in accordance with
subparagraph (B).
``(B) Development of formula.--The Secretary shall
develop a formula for allocation of funds to medical
schools under this section consistent with the purpose
described in subsection (a)(3).
``(c) Medical School Defined.--For purposes of this section, the
term `medical school' means a school of medicine (as defined in section
799B of the Public Health Service Act) or a school of osteopathic
medicine (as defined in such section).
``(d) General Health Care Inflation Factor.--The term `general
health care inflation factor' means the Consumer Price Index for
Medical Services as determined by the Bureau of Labor Statistics.
``SEC. 2203. PAYMENTS TO TEACHING HOSPITALS.
``(a) Formula Payments to Eligible Entities.--
``(1) In general.--In the case of any fiscal year beginning
after September 30, 2002, the Secretary shall make payments to
each eligible entity that, in accordance with paragraph (2),
submits to the Secretary an application for such fiscal year.
Such payments shall be made from the Trust Fund, and the total
of the payments to the eligible entity for the fiscal year
shall equal the sum of the amounts determined under subsections
(b), (c), (d), and (e) with respect to such entity.
``(2) Application.--For purposes of paragraph (1), an
application shall contain such information as may be necessary
for the Secretary to make payments under such paragraph to an
eligible entity during a fiscal year. An application shall be
treated as submitted in accordance with this paragraph if it is
submitted not later than the date specified by the Secretary,
and is made in such form and manner as the Secretary may
require.
``(3) Periodic payments.--Payments under paragraph (1) to
an eligible entity for a fiscal year shall be made
periodically, at such intervals and in such amounts as the
Secretary determines to be appropriate (subject to applicable
Federal law regarding Federal payments).
``(4) Eligible entity.--For purposes of this title, the
term `eligible entity', with respect to any fiscal year,
means--
``(A) for payment under subsections (b) and (c), an
entity which would be eligible to receive payments for
such fiscal year under--
``(i) section 1886(d)(5)(B), if such
payments had not been terminated for discharges
occurring after September 30, 2002;
``(ii) section 1886(h), if such payments
had not been terminated for cost reporting
periods beginning after September 30, 2002; or
``(iii) both sections; or
``(B) for payment under subsections (d) and (e)--
``(i) an entity which meets the requirement
of subparagraph (A); or
``(ii) an entity which the Secretary
determines should be considered an eligible
entity.
``(b) Determination of Amount From Medicare Teaching Hospital
Indirect Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Medicare Teaching Hospital
Indirect Account under section 1886(m)(1), and subsections
(c)(3) and (d) of section 2201 for such fiscal year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year is equal to
the percentage of the total payments which would have been made
to the eligible entity in such fiscal year under section
1886(d)(5)(B) if such payments had not been terminated for
discharges occurring after September 30, 2002.
``(c) Determination of Amount From Medicare Teaching Hospital
Direct Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Medicare Teaching Hospital
Direct Account under section 1886(m)(2), and subsections (c)(3)
and (d) of section 2201 for such fiscal year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year is equal to
the percentage of the total payments which would have been made
to the eligible entity in such fiscal year under section
1886(h) if such payments had not been terminated for cost
reporting periods beginning after September 30, 2002.
``(d) Determination of Amount From Non-Medicare Teaching Hospital
Indirect Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Non-Medicare Teaching Hospital
Indirect Account for such fiscal year under section 1936,
subsections (c)(3) and (d) of section 2201, and section 4503 of
the Internal Revenue Code of 1986.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year for an
eligible entity is equal to the percentage of the total
payments which, as determined by the Secretary, would have been
made in such fiscal year under section 1886(d)(5)(B) if--
``(A) such payments had not been terminated for
discharges occurring after September 30, 2002; and
``(B) such payments were computed in a manner that
treated each patient not eligible for benefits under
title XVIII as if such patient were eligible for such
benefits.
``(e) Determination of Amount From Non-Medicare Teaching Hospital
Direct Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Non-Medicare Teaching Hospital
Direct Account for such fiscal year under section 1936,
subsections (c)(3) and (d) of section 2201, and section 4503 of
the Internal Revenue Code of 1986.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year for an
eligible entity is equal to the percentage of the total
payments which, as determined by the Secretary, would have been
made in such fiscal year under section 1886(h) if--
``(A) such payments had not been terminated for
cost reporting periods beginning after September 30,
2002; and
``(B) such payments were computed in a manner that
treated each patient not eligible for benefits under
part A of title XVIII as if such patient were eligible
for such benefits.''.
SEC. 3. AMENDMENTS TO MEDICARE PROGRAM.
Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is
amended--
(1) in subsection (d)(5)(B), in the matter preceding clause
(i), by striking ``The Secretary shall provide'' and inserting
the following: ``For discharges occurring before October 1,
2002, the Secretary shall provide'';
(2) in subsection (d)(11)(C), by inserting after
``paragraph (5)(B)'' the following: ``(notwithstanding that
payments under paragraph (5)(B) are terminated for discharges
occurring after September 30, 2002)'';
(3) in subsection (h)--
(A) in paragraph (1), in the first sentence, by
striking ``the Secretary shall provide'' and inserting
``the Secretary shall, subject to paragraph (7),
provide''; and
(B) by adding at the end the following:
``(7) Limitation.--
``(A) In general.--The authority to make payments
under this subsection (other than payments made under
paragraphs (3)(D) and (6)) shall not apply with respect
to--
``(i) cost reporting periods beginning
after September 30, 2002; and
``(ii) any portion of a cost reporting
period beginning on or before such date which
occurs after such date.
``(B) Rule of construction.--This paragraph may not
be construed as authorizing any payment under section
1861(v) with respect to graduate medical education.'';
and
(4) by adding at the end the following:
``(m) Transfers to Medical Education Trust Fund.--
``(1) Indirect costs of medical education.--
``(A) Transfer.--
``(i) In general.--From the Federal
Hospital Insurance Trust Fund, the Secretary
shall, for fiscal year 2002 and each subsequent
fiscal year, transfer to the Medical Education
Trust Fund an amount equal to the amount
estimated by the Secretary under subparagraph (B).
``(ii) Allocation.--Of the amount
transferred under clause (i)--
``(I) there shall be allocated and
transferred to the Medical School
Account of such Trust Fund an amount
which bears the same ratio to the total
amount available under section
2202(b)(1) for the fiscal year (reduced
by the balance in such account at the
end of the preceding fiscal year) as
the amount transferred under clause (i)
bears to the total amounts transferred
to such Trust Fund under title XXII
(excluding amounts transferred under
subsections (c)(3) and (d) of section
2201) for such fiscal year; and
``(II) the remainder shall be
allocated and transferred to the
Medicare Teaching Hospital Indirect
Account of such Trust Fund.
``(B) Determination of amounts.--The Secretary
shall make an estimate for each fiscal year involved in
the nationwide total of the amounts that would have
been paid under subsection (d)(5)(B) to hospitals
during the fiscal year if such payments had not been
terminated for discharges occurring after September 30,
2002.
``(2) Direct costs of medical education.--
``(A) Transfer.--
``(i) In general.--From the Federal
Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund, the
Secretary shall, for fiscal year 2002 and each
subsequent fiscal year, transfer to the Medical
Education Trust Fund an amount equal to the
amount estimated by the Secretary under
subparagraph (B).
``(ii) Allocation.--Of the amount
transferred under clause (i)--
``(I) there shall be allocated and
transferred to the Medical School
Account of such Trust Fund an amount
which bears the same ratio to the total
amount available under section
2202(b)(1) for the fiscal year (reduced
by the balance in such account at the
end of the preceding fiscal year) as
the amount transferred under clause (i)
bears to the total amounts transferred
to such Trust Fund under title XXII
(excluding amounts transferred under
subsections (c)(3) and (d) of section
2201) for such fiscal year; and
``(II) the remainder shall be
allocated and transferred to the
Medicare Teaching Hospital Direct
Account of such Trust Fund.
``(B) Determination of amounts.--For each hospital,
the Secretary shall make an estimate for the fiscal
year involved of the amount that would have been paid
under subsection (h) to the hospital during the fiscal
year if such payments had not been terminated for cost
reporting periods beginning after September 30, 2002.
``(C) Allocation between funds.--In providing for a
transfer under subparagraph (A) for a fiscal year, the
Secretary shall provide for an allocation of the
amounts involved between part A and part B (and the
trust funds established under the respective parts) as
reasonably reflects the proportion of direct graduate
medical education costs of hospitals associated with
the provision of services under each respective
part.''.
SEC. 4. AMENDMENTS TO MEDICAID PROGRAM.
(a) In General.--Title XIX of the Social Security Act (42 U.S.C.
1396 et seq.) is amended by adding at the end the following:
``transfer of funds to accounts
``Sec. 1936. (a) Transfer of Funds.--
``(1) In general.--For fiscal year 2002 and each subsequent
fiscal year, the Secretary shall transfer to the Medical
Education Trust Fund established under title XXII an amount
equal to the amount determined under subsection (b).
``(2) Allocation.--Of the amount transferred under
paragraph (1)--
``(A) there shall be allocated and transferred to
the Medical School Account of such Trust Fund an amount
which bears the same ratio to the total amount
available under section 2202(b)(1) for the fiscal year
(reduced by the balance in such account at the end of
the preceding fiscal year) as the amount transferred
under paragraph (1) bears to the total amounts
transferred to such Trust Fund (excluding amounts
transferred under subsections (c)(3) and (d) of section
2201) for such fiscal year; and
``(B) the remainder shall be allocated and
transferred to the Non-Medicare Teaching Hospital
Indirect Account and the Non-Medicare Teaching Hospital
Direct Account of such Trust Fund, in the same
proportion as the amounts transferred to each account
under section 1886(m) relate to the total amounts
transferred under such section for such fiscal year.
``(b) Amount Determined.--
``(1) Outlays for acute medical services during preceding
fiscal year.--Beginning with fiscal year 2002, the Secretary
shall determine 5 percent of the total amount of Federal
outlays made under this title for acute medical services, as
defined in paragraph (2), for the preceding fiscal year.
``(2) Acute medical services defined.--The term `acute
medical services' means items and services described in section
1905(a) other than the following:
``(A) Nursing facility services (as defined in
section 1905(f)).
``(B) Services provided by an intermediate care
facility for the mentally retarded (as defined in
section 1905(d)).
``(C) Personal care services described in section
1905(a)(24).
``(D) Private duty nursing services referred to in
section 1905(a)(8).
``(E) Home or community-based services and other
services furnished under a waiver granted under
subsection (c), (d), or (e) of section 1915.
``(F) Home and community care furnished to
functionally disabled elderly individuals under section
1929.
``(G) Community supported living arrangements
services under section 1930.
``(H) Case-management services described in section
1915(g)(2).
``(I) Home health care services referred to in
section 1905(a)(7), clinic services, and rehabilitation
services that are furnished to an individual who has a
condition or disability that qualifies the individual
to receive any of the services described in a previous
subparagraph.
``(J) Services furnished in an institution for
mental diseases (as defined in section 1905(i)).
``(c) Entitlement.--This section constitutes budget authority in
advance of appropriations Acts and represents the obligation of the
Federal Government to provide for the payment to the Non-Medicare
Teaching Hospital Indirect Account, the Non-Medicare Teaching Hospital
Direct Account, and the Medical School Account of amounts determined in
accordance with subsections (a) and (b).''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on October 1, 2002.
SEC. 5. ASSESSMENTS ON INSURED AND SELF-INSURED HEALTH PLANS.
(a) General Rule.--Subtitle D of the Internal Revenue Code of 1986
(relating to miscellaneous excise taxes) is amended by adding after
chapter 36 the following new chapter:
``CHAPTER 37--HEALTH RELATED ASSESSMENTS
``Subchapter A. Insured and self-insured
health plans.
``Subchapter A--Insured and Self-Insured Health Plans
``Sec. 4501. Health insurance and health-
related administrative
services.
``Sec. 4502. Self-insured health plans.
``Sec. 4503. Transfer to accounts.
``Sec. 4504. Definitions and special
rules.
``SEC. 4501. HEALTH INSURANCE AND HEALTH-RELATED ADMINISTRATIVE
SERVICES.
``(a) Imposition of Tax.--There is hereby imposed--
``(1) on each taxable health insurance policy, a tax equal
to 1.5 percent of the premiums received under such policy, and
``(2) on each amount received for health-related
administrative services, a tax equal to 1.5 percent of the
amount so received.
``(b) Liability for Tax.--
``(1) Health insurance.--The tax imposed by subsection
(a)(1) shall be paid by the issuer of the policy.
``(2) Health-related administrative services.--The tax
imposed by subsection (a)(2) shall be paid by the person
providing the health-related administrative services.
``(c) Taxable Health Insurance Policy.--For purposes of this
section--
``(1) In general.--Except as otherwise provided in this
section, the term `taxable health insurance policy' means any
insurance policy providing accident or health insurance with
respect to individuals residing in the United States.
``(2) Exemption of certain policies.--The term `taxable
health insurance policy' does not include any insurance policy
if substantially all of the coverage provided under such policy
relates to--
``(A) liabilities incurred under workers'
compensation laws,
``(B) tort liabilities,
``(C) liabilities relating to ownership or use of
property,
``(D) credit insurance, or
``(E) such other similar liabilities as the
Secretary may specify by regulations.
``(3) Special rule where policy provides other coverage.--
In the case of any taxable health insurance policy under which
amounts are payable other than for accident or health coverage,
in determining the amount of the tax imposed by subsection
(a)(1) on any premium paid under such policy, there shall be
excluded the amount of the charge for the nonaccident or
nonhealth coverage if--
``(A) the charge for such nonaccident or nonhealth
coverage is either separately stated in the policy, or
furnished to the policyholder in a separate statement,
and
``(B) such charge is reasonable in relation to the
total charges under the policy.
In any other case, the entire amount of the premium paid under
such policy shall be subject to tax under subsection (a)(1).
``(4) Treatment of prepaid health coverage arrangements.--
``(A) In general.--In the case of any arrangement
described in subparagraph (B)--
``(i) such arrangement shall be treated as
a taxable health insurance policy,
``(ii) the payments or premiums referred to
in subparagraph (B)(i) shall be treated as
premiums received for a taxable health
insurance policy, and
``(iii) the person referred to in
subparagraph (B)(i) shall be treated as the
issuer.
``(B) Description of arrangements.--An arrangement
is described in this subparagraph if under such
arrangement--
``(i) fixed payments or premiums are
received as consideration for any person's
agreement to provide or arrange for the
provision of accident or health coverage to
residents of the United States, regardless of
how such coverage is provided or arranged to be
provided, and
``(ii) substantially all of the risks of
the rates of utilization of services is assumed
by such person or the provider of such
services.
``(d) Health-Related Administrative Services.--For purposes of this
section, the term `health-related administrative services' means--
``(1) the processing of claims or performance of other
administrative services in connection with accident or health
coverage under a taxable health insurance policy if the charge
for such services is not included in the premiums under such
policy, and
``(2) processing claims, arranging for provision of
accident or health coverage, or performing other administrative
services in connection with an applicable self-insured health
plan (as defined in section 4502(c)) established or maintained
by a person other than the person performing the services.
For purposes of paragraph (1), rules similar to the rules of subsection
(c)(3) shall apply.
``SEC. 4502. SELF-INSURED HEALTH PLANS.
``(a) Imposition of Tax.--In the case of any applicable self-
insured health plan, there is hereby imposed a tax for each month equal
to 1.5 percent of the sum of--
``(1) the accident or health coverage expenditures for such
month under such plan, and
``(2) the administrative expenditures for such month under
such plan to the extent such expenditures are not subject to
tax under section 4501.
In determining the amount of expenditures under paragraph (2), rules
similar to the rules of subsection (d)(3) apply.
``(b) Liability for Tax.--
``(1) In general.--The tax imposed by subsection (a) shall
be paid by the plan sponsor.
``(2) Plan sponsor.--For purposes of paragraph (1), the
term `plan sponsor' means--
``(A) the employer in the case of a plan
established or maintained by a single employer,
``(B) the employee organization in the case of a
plan established or maintained by an employee
organization, or
``(C) in the case of--
``(i) a plan established or maintained by 2
or more employers or jointly by 1 or more
employers and 1 or more employee organizations,
``(ii) a voluntary employees' beneficiary
association under section 501(c)(9), or
``(iii) any other association plan,
the association, committee, joint board of trustees, or
other similar group of representatives of the parties
who establish or maintain the plan.
``(c) Applicable Self-Insured Health Plan.--For purposes of this
section, the term `applicable self-insured health plan' means any plan
for providing accident or health coverage if any portion of such
coverage is provided other than through an insurance policy.
``(d) Accident or Health Coverage Expenditures.--For purposes of
this section--
``(1) In general.--The accident or health coverage
expenditures of any applicable self-insured health plan for any
month are the aggregate expenditures paid in such month for
accident or health coverage provided under such plan to the
extent such expenditures are not subject to tax under section
4501.
``(2) Treatment of reimbursements.--In determining accident
or health coverage expenditures during any month of any
applicable self-insured health plan, reimbursements (by
insurance or otherwise) received during such month shall be
taken into account as a reduction in accident or health
coverage expenditures.
``(3) Certain expenditures disregarded.--Paragraph (1)
shall not apply to any expenditure for the acquisition or
improvement of land or for the acquisition or improvement of
any property to be used in connection with the provision of
accident or health coverage which is subject to the allowance
under section 167, except that, for purposes of paragraph (1),
allowances under section 167 shall be considered as
expenditures.
``SEC. 4503. TRANSFER TO ACCOUNTS.
``For fiscal year 2002 and each subsequent fiscal year, there are
hereby appropriated and transferred to the Medical Education Trust Fund
under title XXII of the Social Security Act amounts equivalent to taxes
received in the Treasury under sections 4501 and 4502, of which--
``(1) there shall be allocated and transferred to the
Medical School Account of such Trust Fund an amount which bears
the same ratio to the total amount available under section
2202(b)(1) of such Act for the fiscal year (reduced by the
balance in such account at the end of the preceding fiscal
year) as the amount transferred to such Trust Fund under this
section bears to the total amounts transferred to such Trust
Fund (excluding amounts transferred under subsections (c)(3)
and (d) of section 2201 of such Act) for such fiscal year; and
``(2) the remainder shall be allocated and transferred to
the Non-Medicare Teaching Hospital Indirect Account and the
Non-Medicare Teaching Hospital Direct Account of such Trust
Fund, in the same proportion as the amounts transferred to such
account under section 1886(m) of such Act relate to the total
amounts transferred under such section for such fiscal year.
Such amounts shall be transferred in the same manner as under section
9601.
``SEC. 4504. DEFINITIONS AND SPECIAL RULES.
``(a) Definitions.--For purposes of this subchapter--
``(1) Accident or health coverage.--The term `accident or
health coverage' means any coverage which, if provided by an
insurance policy, would cause such policy to be a taxable
health insurance policy (as defined in section 4501(c)).
``(2) Insurance policy.--The term `insurance policy' means
any policy or other instrument whereby a contract of insurance
is issued, renewed, or extended.
``(3) Premium.--The term `premium' means the gross amount
of premiums and other consideration (including advance
premiums, deposits, fees, and assessments) arising from
policies issued by a person acting as the primary insurer,
adjusted for any return or additional premiums paid as a result
of endorsements, cancellations, audits, or retrospective
rating. Amounts returned where the amount is not fixed in the
contract but depends on the experience of the insurer or the
discretion of management shall not be included in return
premiums.
``(4) United states.--The term `United States' includes any
possession of the United States.
``(b) Treatment of Governmental Entities.--
``(1) In general.--For purposes of this subchapter--
``(A) the term `person' includes any governmental
entity, and
``(B) notwithstanding any other law or rule of law,
governmental entities shall not be exempt from the
taxes imposed by this subchapter except as provided in
paragraph (2).
``(2) Exempt governmental programs.--
``(A) In general.--In the case of an exempt
governmental program--
``(i) no tax shall be imposed under section
4501 on any premium received pursuant to such
program or on any amount received for health-
related administrative services pursuant to
such program, and
``(ii) no tax shall be imposed under
section 4502 on any expenditures pursuant to
such program.
``(B) Exempt governmental program.--For purposes of
this paragraph, the term `exempt governmental program'
means--
``(i) the insurance programs established by
parts A and B of title XVIII of the Social
Security Act,
``(ii) the medical assistance program
established by title XIX of the Social Security
Act,
``(iii) the State children's health
insurance plans established by title XXI of
such Act,
``(iv) any program established by Federal
law for providing medical care (other than
through insurance policies) to individuals (or
the spouses and dependents thereof) by reason
of such individuals being--
``(I) members of the Armed Forces
of the United States, or
``(II) veterans, and
``(iv) any program established by Federal
law for providing medical care (other than
through insurance policies) to members of
Indian tribes (as defined in section 4(d) of
the Indian Health Care Improvement Act).
``(c) No Cover Over to Possessions.--Notwithstanding any other
provision of law, no amount collected under this subchapter shall be
covered over to any possession of the United States.''.
(b) Clerical Amendment.--The table of chapters for subtitle D of
the Internal Revenue Code of 1986 is amended by inserting after the
item relating to chapter 36 the following new item:
``Chapter 37. Health related
assessments.''
(c) Effective Date.--The amendments made by this section shall
apply with respect to premiums received, and expenses incurred, with
respect to coverage for periods after September 30, 2002.
SEC. 6. MEDICAL EDUCATION ADVISORY COMMISSION.
(a) Establishment.--There is hereby established an advisory
commission to be known as the Medical Education Advisory Commission (in
this section referred to as the ``Advisory Commission'').
(b) Duties.--
(1) In general.--The Advisory Commission shall--
(A) conduct a thorough study of all matters
relating to--
(i) the operation of the Medical Education
Trust Fund established under section 2201 of
the Social Security Act (as added by section
2);
(ii) alternative and additional sources of
graduate medical education funding;
(iii) alternative methodologies for
compensating teaching hospitals for graduate
medical education;
(iv) policies designed to maintain superior
research and educational capacities;
(v) the role of medical schools in graduate
medical education;
(vi) policies designed to integrate
payments to children's hospitals that operate
graduate medical education programs into the
Medical Education Trust Fund;
(vii) policies designed to expand
eligibility for graduate medical education
payments to institutions other than teaching
hospitals; and
(viii) policies designed to expand
eligibility to other rallied health
professionals;
(B) develop recommendations, including the use of
demonstration projects, on the matters studied under
subparagraph (A) in consultation with the Secretary of
Health and Human Services and the entities described in
paragraph (2);
(C) not later than January 2003, submit an interim
report to the Committee on Finance of the Senate, the
Committee on Ways and Means of the House of Representatives, and the
Secretary of Health and Human Services; and
(D) not later than January 2005, submit a final
report to the Committee on Finance of the Senate, the
Committee on Ways and Means of the House of
Representatives, and the Secretary of Health and Human
Services.
(2) Entities described.--The entities described in this
paragraph are--
(A) other advisory groups, including the Council on
Graduate Medical Education and the Medicare Payment
Advisory Commission;
(B) interested parties, including the Association
of American Medical Colleges, the Association of
Academic Health Centers, the American Medical
Association, the National Association of Children's
Hospitals, American Medical Student Association, and
appropriate allied health associations;
(C) health care insurers, including managed care
entities; and
(D) other entities as determined by the Secretary
of Health and Human Services.
(c) Number and Appointment.--The membership of the Advisory
Commission shall include 9 individuals who are appointed to the
Advisory Commission from among individuals who are not officers or
employees of the United States. Such individuals shall be appointed by
the Secretary of Health and Human Services in consultation with the
Council on Graduate Medical Education, the Association of American
Medical Colleges, and the Association of Academic Health Centers, and
shall include individuals from each of the following categories:
(1) Physicians who are faculty members of medical schools.
(2) Officers or employees of teaching hospitals.
(3) Officers or employees of health plans.
(4) Deans of medical schools.
(5) Medical school students.
(6) Such other individuals as the Secretary determines to
be appropriate.
(d) Terms.--
(1) In general.--Except as provided in paragraph (2),
members of the Advisory Commission shall serve for the lesser
of the life of the Advisory Commission, or 4 years.
(2) Service beyond term.--A member of the Advisory
Commission may continue to serve after the expiration of the
term of the member until a successor is appointed.
(e) Vacancies.--If a member of the Advisory Commission does not
serve the full term applicable under subsection (d), the individual
appointed to fill the resulting vacancy shall be appointed for the
remainder of the term of the predecessor of the individual.
(f) Chair.--The Secretary of Health and Human Services shall
designate an individual to serve as the Chair of the Advisory
Commission.
(g) Meetings.--The Advisory Commission shall meet not less than
once during each 4-month period and shall otherwise meet at the call of
the Secretary of Health and Human Services or the Chair.
(h) Compensation and Reimbursement of Expenses.--Members of the
Advisory Commission shall receive compensation for each day (including
travel time) engaged in carrying out the duties of the Advisory
Commission. Such compensation may not be in an amount in excess of the
maximum rate of basic pay payable for level IV of the Executive
Schedule under section 5315 of title 5, United States Code.
(i) Staff.--
(1) Staff director.--The Advisory Commission shall, without
regard to the provisions of title 5, United States Code,
relating to competitive service, appoint a Staff Director who
shall be paid at a rate equivalent to a rate established for
the Senior Executive Service under 5382 of title 5, United
States Code.
(2) Additional staff.--The Secretary of Health and Human
Services shall provide to the Advisory Commission such
additional staff, information, and other assistance as may be
necessary to carry out the duties of the Advisory Commission.
(j) Termination of the Advisory Commission.--The Advisory
Commission shall terminate 180 days after the date on which the
Advisory Commission submits its final report under subsection
(b)(1)(D).
(k) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out the purposes of
this section.
SEC. 7. DEMONSTRATION PROJECTS.
(a) Establishment.--The Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') shall establish, by
regulation, guidelines for the establishment and operation of
demonstration projects which the Medical Education Advisory Commission
recommends under section 6(b)(1)(B).
(b) Funding.--
(1) In general.--For any fiscal year after 2002, amounts in
the Medical Education Trust Fund under title XXII of the Social
Security Act shall be available for use by the Secretary in the
establishment and operation of demonstration projects described
in subsection (a).
(2) Funds available.--
(A) Limitation.--Not more than \1/10\ of 1 percent
of the funds in such Trust Fund shall be available for
the purposes of paragraph (1).
(B) Allocation.--Amounts under paragraph (1) shall
be paid from the accounts established under paragraphs
(2) through (5) of section 2201(a) of the Social
Security Act, in the same proportion as the amounts
transferred to such accounts bears to the total of
amounts transferred to all 4 such accounts for such
fiscal year.
(c) Limitation.--Nothing in this section shall be construed to
authorize any change in the payment methodology for teaching hospitals
and medical schools established by the amendments made by this Act.
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