[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1200 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 1200

 To provide for health care for every American and to control the cost 
           and enhance the quality of the health care system.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 11, 2003

  Mr. McDermott (for himself, Mr. Rangel, Mr. Stark, Mr. Serrano, Ms. 
Baldwin, Mr. Weiner, Mr. Kucinich, Mr. Conyers, Ms. Lee, Mr. Farr, Mr. 
   Delahunt, Ms. Woolsey, Mr. Hinchey, Mr. Nadler, Mr. Sanders, Mrs. 
    Christensen, Mr. Waxman, and Ms. Roybal-Allard) introduced the 
   following bill; which was referred to the Committee on Energy and 
    Commerce, and in addition to the Committees on Ways and Means, 
Government Reform, and Armed Services, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To provide for health care for every American and to control the cost 
           and enhance the quality of the health care system.

    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 ``American Health 
Security Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
   TITLE I--ESTABLISHMENT OF A STATE-BASED AMERICAN HEALTH SECURITY 
               PROGRAM; UNIVERSAL ENTITLEMENT; ENROLLMENT

Sec. 101. Establishment of a State-based American Health Security 
                            Program.
Sec. 102. Universal entitlement.
Sec. 103. Enrollment.
Sec. 104. Portability of benefits.
Sec. 105. Effective date of benefits.
Sec. 106. Relationship to existing Federal health programs.
  TITLE II--COMPREHENSIVE BENEFITS, INCLUDING PREVENTIVE BENEFITS AND 
                      BENEFITS FOR LONG-TERM CARE

Sec. 201. Comprehensive benefits.
Sec. 202. Definitions relating to services.
Sec. 203. Special rules for home and community-based long-term care 
                            services.
Sec. 204. Exclusions and limitations.
Sec. 205. Certification; quality review; plans of care.
                   TITLE III--PROVIDER PARTICIPATION

Sec. 301. Provider participation and standards.
Sec. 302. Qualifications for providers.
Sec. 303. Qualifications for comprehensive health service 
                            organizations.
Sec. 304. Limitation on certain physician referrals.
                        TITLE IV--ADMINISTRATION

             Subtitle A--General Administrative Provisions

Sec. 401. American Health Security Standards Board.
Sec. 402. American Health Security Advisory Council.
Sec. 403. Consultation with private entities.
Sec. 404. State health security programs.
Sec. 405. Complementary conduct of related health programs.
                Subtitle B--Control Over Fraud and Abuse

Sec. 411. Application of Federal sanctions to all fraud and abuse under 
                            American Health Security Program.
Sec. 412. Requirements for operation of State health care fraud and 
                            abuse control units.
                      TITLE V--QUALITY ASSESSMENT

Sec. 501. American Health Security Quality Council.
Sec. 502. Development of certain methodologies, guidelines, and 
                            standards.
Sec. 503. State quality review programs.
Sec. 504. Elimination of utilization review programs; transition.
 TITLE VI--HEALTH SECURITY BUDGET; PAYMENTS; COST CONTAINMENT MEASURES

              Subtitle A--Budgeting and Payments to States

Sec. 601. National health security budget.
Sec. 602. Computation of individual and State capitation amounts.
Sec. 603. State health security budgets.
Sec. 604. Federal payments to States.
Sec. 605. Account for health professional education expenditures.
              Subtitle B--Payments by States to Providers

Sec. 611. Payments to hospitals and other facility-based services for 
                            operating expenses on the basis of approved 
                            global budgets.
Sec. 612. Payments to health care practitioners based on prospective 
                            fee schedule.
Sec. 613. Payments to comprehensive health service organizations.
Sec. 614. Payments for community-based primary health services.
Sec. 615. Payments for prescription drugs.
Sec. 616. Payments for approved devices and equipment.
Sec. 617. Payments for other items and services.
Sec. 618. Payment incentives for medically underserved areas.
Sec. 619. Authority for alternative payment methodologies.
     Subtitle C--Mandatory Assignment and Administrative Provisions

Sec. 631. Mandatory assignment.
Sec. 632. Procedures for reimbursement; appeals.
  TITLE VII--PROMOTION OF PRIMARY HEALTH CARE; DEVELOPMENT OF HEALTH 
     SERVICE CAPACITY; PROGRAMS TO ASSIST THE MEDICALLY UNDERSERVED

   Subtitle A--Promotion and Expansion of Primary Care Professional 
                                Training

Sec. 701. Role of Board; establishment of primary care professional 
                            output goals.
Sec. 702. Establishment of Advisory Committee on Health Professional 
                            Education.
Sec. 703. Grants for health professions education, nurse education, and 
                            the National Health Service Corps.
                Subtitle B--Direct Health Care Delivery

Sec. 711. Setaside for public health.
Sec. 712. Setaside for primary health care delivery.
Sec. 713. Primary care service expansion grants.
             Subtitle C--Primary Care and Outcomes Research

Sec. 721. Set-aside for outcomes research.
Sec. 722. Office of Primary Care and Prevention Research.
               Subtitle D--School-Related Health Services

Sec. 731. Authorizations of appropriations.
Sec. 732. Eligibility for development and operation grants.
Sec. 733. Preferences.
Sec. 734. Grants for development of projects.
Sec. 735. Grants for operation of projects.
Sec. 736. Federal administrative costs.
Sec. 737. Definitions.
 TITLE VIII--FINANCING PROVISIONS; AMERICAN HEALTH SECURITY TRUST FUND

Sec. 800. Amendment of 1986 code; section 15 not to apply.
            Subtitle A--American Health Security Trust Fund

Sec. 801. American Health Security Trust Fund.
              Subtitle B--Taxes Based on Income and Wages

Sec. 811. Payroll tax on employers.
Sec. 812. Health care income tax.
        Subtitle C--Increase in Excise Taxes on Tobacco Products

Sec. 821. Increase in excise taxes on tobacco products.
   TITLE IX--CONFORMING AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME 
                          SECURITY ACT OF 1974

Sec. 901. ERISA inapplicable to health coverage arrangements under 
                            State health security programs.
Sec. 902. Exemption of State health security programs from ERISA 
                            preemption.
Sec. 903. Prohibition of employee benefits duplicative of benefits 
                            under State health security programs; 
                            coordination in case of workers' 
                            compensation.
Sec. 904. Repeal of continuation coverage requirements under ERISA and 
                            certain other requirements relating to 
                            group health plans.
Sec. 905. Effective date of title.
               TITLE X--ADDITIONAL CONFORMING AMENDMENTS

Sec. 1001. Repeal of certain provisions in Internal Revenue Code of 
                            1986.
Sec. 1002. Repeal of certain provisions in the Employee Retirement 
                            Income Security Act of 1974.
Sec. 1003. Repeal of certain provisions in the Public Health Service 
                            Act and related provisions.
Sec. 1004. Effective date of title.

   TITLE I--ESTABLISHMENT OF A STATE-BASED AMERICAN HEALTH SECURITY 
               PROGRAM; UNIVERSAL ENTITLEMENT; ENROLLMENT

SEC. 101. ESTABLISHMENT OF A STATE-BASED AMERICAN HEALTH SECURITY 
              PROGRAM.

    (a) In General.--There is hereby established in the United States a 
State-Based American Health Security  Program to be administered by the 
individual States in accordance with Federal standards specified in, or 
established under, this Act.
    (b) State Health Security Programs.--In order for a State to be 
eligible to receive payment under section 604, a State must establish a 
State health security program in accordance with this Act.
    (c) State Defined.--
            (1) In general.--In this Act, subject to paragraph (2), the 
        term ``State'' means each of the 50 States and the District of 
        Columbia.
            (2) Election.--If the Governor of Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, or the Northern Mariana Islands 
        certifies to the President that the legislature of the 
        Commonwealth or territory has enacted legislation desiring that 
        the Commonwealth or territory be included as a State under the 
        provisions of this Act, such Commonwealth or territory shall be 
        included as a ``State'' under this Act beginning January 1 of 
        the first year beginning 90 days after the President receives 
        the notification.

SEC. 102. UNIVERSAL ENTITLEMENT.

    (a) In General.--Every individual who is a resident of the United 
States and is a citizen or national of the United States or lawful 
resident alien (as defined in subsection (d) is entitled to benefits 
for health care services under this Act under the appropriate State 
health security program. In this section, the term ``appropriate State 
health security program'' means, with respect to an individual, the 
State health security program for the State in which the individual 
maintains a primary residence.
    (b) Treatment of Certain Nonimmigrants.--
            (1) In general.--The American Health Security Standards 
        Board (in this Act referred to as the ``Board'') may make 
        eligible for benefits for health care services under the 
        appropriate State health security program under this Act such 
        classes of aliens admitted to the United States as 
        nonimmigrants as the Board may provide.
            (2) Consideration.--In providing for eligibility under 
        paragraph (1), the Board shall consider reciprocity in health 
        care services offered to United States citizens who are 
        nonimmigrants in other foreign states, and such other factors 
        as the Board determines to be appropriate.
    (c) Treatment of Other Individuals.--
            (1) By board.--The Board also may make eligible for 
        benefits for health care services under the appropriate State 
        health security program under this Act other individuals not 
        described in subsection (a) or (b), and regulate the nature of 
        the eligibility of such individuals, in order--
                    (A) to preserve the public health of communities;
                    (B) to compensate States for the additional health 
                care financing burdens created by such individuals; and
                    (C) to prevent adverse financial and medical 
                consequences of uncompensated care,
        while inhibiting travel and immigration to the United States 
        for the sole purpose of obtaining health care services.
            (2) By states.--Any State health security program may make 
        individuals described in paragraph (1) eligible for benefits at 
        the expense of the State.
    (d) Lawful Resident Alien Defined.--For purposes of this section, 
the term ``lawful resident alien'' means an alien lawfully admitted for 
permanent residence and any other alien lawfully residing permanently 
in the United States under color of law, including an alien with lawful 
temporary resident status under section 210, 210A, or 234A of the 
Immigration and Nationality Act (8 U.S.C. 1160, 1161, or 1255a).

SEC. 103. ENROLLMENT.

    (a) In General.--Each State health security program shall provide a 
mechanism for the enrollment of individuals entitled or eligible for 
benefits under this Act. The mechanism shall--
            (1) include a process for the automatic enrollment of 
        individuals at the time of birth in the United States and at 
        the time of immigration into the United States or other 
        acquisition of lawful resident status in the United States;
            (2) provide for the enrollment, as of January 1, 2003, of 
        all individuals who are eligible to be enrolled as of such 
        date; and
            (3) include a process for the enrollment of individuals 
        made eligible for health care services under subsections (b) 
        and (c) of section 102.
    (b) Availability of Applications.--Each State health security 
program shall make applications for enrollment under the program 
available--
            (1) at employment and payroll offices of employers located 
        in the State;
            (2) at local offices of the Social Security Administration;
            (3) at social services locations;
            (4) at out-reach sites (such as provider and practitioner 
        locations); and
            (5) at other locations (including post offices and schools) 
        accessible to a broad cross-section of individuals eligible to 
        enroll.
    (c) Issuance of Health Security Cards.--In conjunction with an 
individual's enrollment for benefits under this Act, the State health 
security program shall provide for the issuance of a health security 
card that shall be used for purposes of identification and processing 
of claims for benefits under the program. The State health security 
program may provide for issuance of such cards by employers for 
purposes of carrying out enrollment pursuant to subsection (a)(2).

SEC. 104. PORTABILITY OF BENEFITS.

    (a) In General.--To ensure continuous access to benefits for health 
care services covered under this Act, each State health security 
program--
            (1) shall not impose any minimum period of residence in the 
        State, or waiting period, in excess of 3 months before 
        residents of the State are entitled to, or eligible for, such 
        benefits under the program;
            (2) shall provide continuation of payment for covered 
        health care services to individuals who have terminated their 
        residence in the State and established their residence in 
        another State, for the duration of any waiting period imposed 
        in the State of new residency for establishing entitlement to, 
        or eligibility for, such services; and
            (3) shall provide for the payment for health care services 
        covered under this Act provided to individuals while 
        temporarily absent from the State based on the following 
        principles:
                    (A) Payment for such health care services is at the 
                rate that is approved by the State health security 
                program in the State in which the services are 
                provided, unless the States concerned agree to 
                apportion the cost between them in a different manner.
                    (B) Payment for such health care services provided 
                outside the United States is made on the basis of the 
                amount that would have been paid by the State health 
                security program for similar services rendered in the 
                State, with due regard, in the case of hospital 
                services, to the size of the hospital, standards of 
                service, and other relevant factors.
    (b) Cross-Border Arrangements.--A State health security program for 
a State may negotiate with such a program in an adjacent State a 
reciprocal arrangement for the coverage under such other program of 
health care services to enrollees residing in the border region.

SEC. 105. EFFECTIVE DATE OF BENEFITS.

    Benefits shall first be available under this Act for items and 
services furnished on or after January 1, 2005.

SEC. 106. RELATIONSHIP TO EXISTING FEDERAL HEALTH PROGRAMS.

    (a) Medicare, Medicaid and State Children's Health Insurance 
Program (SCHIP).--
            (1) In general.--Notwithstanding any other provision of 
        law, subject to paragraph (2)--
                    (A) no benefits shall be available under title 
                XVIII of the Social Security Act for any item or 
                service furnished after December 31, 2004;
                    (B) no individual is entitled to medical assistance 
                under a State plan approved under title XIX of such Act 
                for any item or service furnished after such date;
                    (C) no individual is entitled to medical assistance 
                under an SCHIP plan under title XXI of such Act for any 
                item or service furnished after such date; and
                    (D) no payment shall be made to a State under 
                section 1903(a) or 2105(a) of such Act with respect to 
                medical assistance or child health assistance for any 
                item or service furnished after such date.
            (2) Transition.--In the case of inpatient hospital services 
        and extended care services during a continuous period of stay 
        which began before January 1, 2005, and which had not ended as 
        of such date, for which benefits are provided under title 
        XVIII, under a State plan under title XIX, or a State child 
        health plan under title XXI, of the Social Security Act, the 
        Secretary of Health and Human Services and each State plan, 
        respectively, shall provide for continuation of benefits under 
        such title or plan until the end of the period of stay.
    (b) Federal Employees Health Benefits Program.--No benefits shall 
be made available under chapter 89 of title 5, United States Code, for 
any part of a coverage period occurring after December 31, 2004.
    (c) CHAMPUS.--No benefits shall be made available under sections 
1079 and 1086 of title 10, United States Code, for items or services 
furnished after December 31, 2004.
    (d) Treatment of Benefits for Veterans and Native Americans.--
Nothing in this Act shall affect the eligibility of veterans for the 
medical benefits and services provided under title 38, United States 
Code, or of Indians for the medical benefits and services provided by 
or through the Indian Health Service.

  TITLE II--COMPREHENSIVE BENEFITS, INCLUDING PREVENTIVE BENEFITS AND 
                      BENEFITS FOR LONG-TERM CARE

SEC. 201. COMPREHENSIVE BENEFITS.

    (a) In General.--Subject to the succeeding provisions of this 
title, individuals enrolled for benefits under this Act are entitled to 
have payment made under a State health security program for the 
following items and services if medically necessary or appropriate for 
the maintenance of health or for the diagnosis, treatment, or 
rehabilitation of a health condition:
            (1) Hospital services.--Inpatient and outpatient hospital 
        care, including 24-hour-a-day emergency services.
            (2) Professional services.--Professional services of health 
        care practitioners authorized to provide health care services 
        under State law, including patient education and training in 
        self-management techniques.
            (3) Community-based primary health services.--Community-
        based primary health services (as defined in section 202(a)).
            (4) Preventive services.--Preventive services (as defined 
        in section 202(b)).
            (5) Long-term, acute, and chronic care services.--
                    (A) Nursing facility services.
                    (B) Home health services.
                    (C) Home and community-based long-term care 
                services (as defined in section 202(c)) for individuals 
                described in section 203(a).
                    (D) Hospice care.
                    (E) Services in intermediate care facilities for 
                individuals with mental retardation.
            (6) Prescription drugs, biologicals, insulin, medical 
        foods.--
                    (A) Outpatient prescription drugs and biologics, as 
                specified by the Board consistent with section 615.
                    (B) Insulin.
                    (C) Medical foods (as defined in section 202(e)).
            (7) Dental services.--Dental services (as defined in 
        section 202(h)).
            (8) Mental health and substance abuse treatment services.--
        Mental health and substance abuse treatment services (as 
        defined in section 202(f)).
            (9) Diagnostic tests.--Diagnostic tests.
            (10) Other items and services.--
                    (A) Outpatient therapy.--Outpatient physical 
                therapy services, outpatient speech pathology services, 
                and outpatient occupational therapy services in all 
                settings.
                    (B) Durable medical equipment.--Durable medical 
                equipment.
                    (C) Home dialysis.--Home dialysis supplies and 
                equipment.
                    (D) Ambulance.--Emergency ambulance service.
                    (E) Prosthetic devices.--Prosthetic devices, 
                including replacements of such devices.
                    (F) Additional items and services.--Such other 
                medical or health care items or services as the Board 
                may specify.
    (b) Cost-Sharing.--
            (1) In general.--Except as provided in this subsection, 
        there are no deductibles, coinsurance, or copayments applicable 
        to acute care and preventive benefits provided under this 
        title.
            (2) Cost-sharing for long-term care services.--
                    (A) In general.--
                            (i) payments for home and community-based 
                        long-term care services are subject to 
                        coinsurance of 20 percent; and
                            (ii) payments for nursing facility services 
                        are subject to coinsurance of 35 percent.
                    (B) Exception.--With respect to the coinsurance 
                established under subparagraph (A)--
                            (i) such coinsurance shall not apply to an 
                        individual with income (as defined by the 
                        Secretary) of not more than 100 percent of the 
                        income official poverty line applicable to a 
                        family of the size involved; and
                            (ii) in the case of an individual with such 
                        income that exceeds 100 percent, but is less 
                        than 200 percent, of such applicable poverty 
                        line, the coinsurance shall be reduced in the 
                        same proportion as the proportion of such 
income is less than 200 percent of such applicable poverty line.
    (c) Prohibition of Balance Billing.--As provided in section 531, no 
person may impose a charge for covered services for which benefits are 
provided under this Act.
    (d) No Duplicate Health Insurance.--Each State health security 
program shall prohibit the sale of health insurance in the State if 
payment under the insurance duplicates payment for any items or 
services for which payment may be made under such a program.
    (e) State Program May Provide Additional Benefits.--Nothing in this 
Act shall be construed as limiting the benefits that may be made 
available under a State health security program to residents of the 
State at the expense of the State.
    (f) Employers May Provide Additional Benefits.--Nothing in this Act 
shall be construed as limiting the additional benefits that an employer 
may provide to employees or their dependents, or to former employees or 
their dependents.

SEC. 202. DEFINITIONS RELATING TO SERVICES.

    (a) Community-Based Primary Health Services.--In this title, the 
term ``community-based primary health services'' means ambulatory 
health services furnished--
            (1) by a rural health clinic;
            (2) by a federally qualified health center (as defined in 
        section 1905(l)(2)(B) of the Social Security Act), and which, 
        for purposes of this Act, include services furnished by State 
        and local health agencies;
            (3) in a school-based setting;
            (4) by public educational agencies and other providers of 
        services to children entitled to assistance under the 
        Individuals with Disabilities Education Act for services 
        furnished pursuant to a written Individualized Family Services 
        Plan or Individual Education Plan under such Act; and
            (5) public and private nonprofit entities receiving Federal 
        assistance under the Public Health Service Act.
    (b) Preventive Services.--
            (1) In general.--In this title, the term ``preventive 
        services'' means items and services--
                    (A) which--
                            (i) are specified in paragraph (2); or
                            (ii) the Board determines to be effective 
                        in the maintenance and promotion of health or 
                        minimizing the effect of illness, disease, or 
                        medical condition; and
                    (B) which are provided consistent with the 
                periodicity schedule established under paragraph (3).
            (2) Specified preventive services.--The services specified 
        in this paragraph are as follows:
                    (A) Basic immunizations.
                    (B) Prenatal and well-baby care (for infants under 
                1 year of age).
                    (C) Well-child care (including periodic physical 
                examinations, hearing and vision screening, and 
                developmental screening and examinations) for 
                individuals under 18 years of age.
                    (D) Periodic screening mammography, Pap smears, and 
                colorectal examinations and examinations for prostate 
                cancer.
                    (E) Physical examinations.
                    (F) Family planning services.
                    (G) Routine eye examinations, eyeglasses, and 
                contact lenses.
                    (H) Hearing aids, but only upon a determination of 
                a certified audiologist or physician that a hearing 
                problem exists and is caused by a condition that can be 
                corrected by use of a hearing aid.
            (3) Schedule.--The Board shall establish, in consultation 
        with experts in preventive medicine and public health and 
        taking into consideration those preventive services recommended 
        by the Preventive Services Task Force and published as the 
        Guide to Clinical Preventive Services, a periodicity schedule 
        for the coverage of preventive services under paragraph (1). 
        Such schedule shall take into consideration the cost-
        effectiveness of appropriate preventive care and shall be 
        revised not less frequently than once every 5 years, in 
        consultation with experts in preventive medicine and public 
        health.
    (c) Home and Community-Based Long-Term Care Services.--In this 
title, the term ``home and community-based long-term care services'' 
means the following services provided to an individual to enable the 
individual to remain in such individual's place of residence within the 
community:
            (1) Home health aide services.
            (2) Adult day health care, social day care or psychiatric 
        day care.
            (3) Medical social work services.
            (4) Care coordination services, as defined in subsection 
        (g)(1).
            (5) Respite care, including training for informal 
        caregivers.
            (6) Personal assistance services, and homemaker services 
        (including meals) incidental to the provision of personal 
        assistance services.
    (d) Home Health Services.--
            (1) In general.--The term ``home health services'' means 
        items and services described in section 1861(m) of the Social 
        Security Act and includes home infusion services.
            (2) Home infusion services.--The term ``home infusion 
        services'' includes the nursing, pharmacy, and related services 
        that are necessary to conduct the home infusion of a drug 
        regimen safely and effectively under a plan established and 
        periodically reviewed by a physician and that are provided in 
        compliance with quality assurance requirements established by 
        the Secretary.
    (e) Medical Foods.--In this title, the term ``medical foods'' means 
foods which are formulated to be consumed or administered enterally 
under the supervision of a physician and which are intended for the 
specific dietary management of a disease or condition for which 
distinctive nutritional requirements, based on recognized scientific 
principles, are established by medical evaluation.
    (f) Mental Health and Substance Abuse Treatment Services.--
            (1) Services described.--In this title, the term ``mental 
        health and substance abuse treatment services'' means the 
        following services related to the prevention, diagnosis, 
        treatment, and rehabilitation of mental illness and promotion 
        of mental health:
                    (A) Inpatient hospital services.--Inpatient 
                hospital services furnished primarily for the diagnosis 
                or treatment of mental illness or substance abuse for 
                up to 60 days during a year, reduced by a number of 
                days determined by the Secretary so that the actuarial 
                value of providing such number of days of services 
                under this paragraph to the individual is equal to the 
                actuarial value of the days of inpatient residential 
                services furnished to the individual under subparagraph 
                (B) during the year after such services have been 
                furnished to the individual for 120 days during the 
                year (rounded to the nearest day), but only if (with 
                respect to services furnished to an individual 
                described in section 204(b)(1)) such services are 
                furnished in conformity with the plan of an organized 
                system of care for mental health and substance abuse 
                services in accordance with section 204(b)(2).
                    (B) Intensive residential services.--Intensive 
                residential services (as defined in paragraph (2)) 
                furnished to an individual for up to 120 days during 
                any calendar year, except that--
                            (i) such services may be furnished to the 
                        individual for additional days during the year 
                        if necessary for the individual to complete a 
                        course of treatment to the extent that the 
                        number of days of inpatient hospital services 
                        described in subparagraph (A) that may be 
                        furnished to the individual during the year (as 
                        reduced under such subparagraph) is not less 
                        than 15; and
                            (ii) reduced by a number of days determined 
                        by the Secretary so that the actuarial value of 
                        providing such number of days of services under 
                        this paragraph to the individual is equal to 
                        the actuarial value of the days of intensive 
                        community-based services furnished to the 
                        individual under subparagraph (D) during the 
                        year after such services have been furnished to 
                        the individual for 90 days (or, in the case of 
                        services described in subparagraph (D)(ii), for 
                        180 days) during the year (rounded to the 
                        nearest day).
                    (C) Outpatient services.--Outpatient treatment 
                services of mental illness or substance abuse (other 
                than intensive community-based services under 
                subparagraph (D)) for an unlimited number of days 
                during any calendar year furnished in accordance with 
                standards established by the Secretary for the 
                management of such services, and, in the case of 
                services furnished to an individual described in 
                section 204(b)(1) who is not an inpatient of a 
                hospital, in conformity with the plan of an organized 
                system of care for mental health and substance abuse 
                services in accordance with section 204(b)(2).
                    (D) Intensive community-based services.--Intensive 
                community-based services (as described in paragraph 
                (3))--
                            (i) for an unlimited number of days during 
                        any calendar year, in the case of services 
                        described in section 1861(ff)(2)(E) that are 
                        furnished to an individual who is a seriously 
                        mentally ill adult, a seriously emotionally 
                        disturbed child, or an adult or child with 
                        serious substance abuse disorder (as determined 
                        in accordance with criteria established by the 
                        Secretary);
                            (ii) in the case of services described in 
                        section 1861(ff)(2)(C), for up to 180 days 
                        during any calendar year, except that such 
                        services may be furnished to the individual for 
                        a number of additional days during the year 
                        equal to the difference between the total 
                        number of days of intensive residential 
                        services which the individual may receive 
                        during the year under part A (as determined 
                        under subparagraph (B)) and the number of days 
                        of such services which the individual has 
                        received during the year; or
                            (iii) in the case of any other such 
                        services, for up to 90 days during any calendar 
                        year, except that such services may be 
                        furnished to the individual for the number of 
                        additional days during the year described in 
                        clause (ii).
            (2) Intensive residential services defined.--
                    (A) In general.--Subject to subparagraphs (B) and 
                (C), the term ``intensive residential services'' means 
                inpatient services provided in any of the following 
                facilities:
                            (i) Residential detoxification centers.
                            (ii) Crisis residential programs or mental 
                        illness residential treatment programs.
                            (iii) Therapeutic family or group treatment 
                        homes.
                            (iv) Residential centers for substance 
                        abuse treatment.
                    (B) Requirements for facilities.--No service may be 
                treated as an intensive residential service under 
                subparagraph (A) unless the facility at which the 
                service is provided--
                            (i) is legally authorized to provide such 
                        service under the law of the State (or under a 
                        State regulatory mechanism provided by State 
                        law) in which the facility is located or is 
                        certified to provide such service by an 
                        appropriate accreditation entity  approved by 
the State in consultation with the Secretary; and
                            (ii) meets such other requirements as the 
                        Secretary may impose to assure the quality of 
                        the intensive residential services provided.
                    (C) Services furnished to at-risk children.--In the 
                case of services furnished to an individual described 
                in section 204(b)(1), no service may be treated as an 
                intensive residential service under this subsection 
                unless the service is furnished in conformity with the 
                plan of an organized system of care for mental health 
                and substance abuse services in accordance with section 
                204(b)(2).
                    (D) Management standards.--No service may be 
                treated as an intensive residential service under 
                subparagraph (A) unless the service is furnished in 
                accordance with standards established by the Secretary 
                for the management of such services.
            (3) Intensive community-based services defined.--
                    (A) In general.--The term ``intensive community-
                based services'' means the items and services described 
                in subparagraph (B) prescribed by a physician (or, in 
                the case of services furnished to an individual 
                described in section 204(b)(1), by an organized system 
                of care for mental health and substance abuse services 
                in accordance with such section) and provided under a 
                program described in subparagraph (D) under the 
                supervision of a physician (or, to the extent permitted 
                under the law of the State in which the services are 
                furnished, a non-physician mental health professional) 
                pursuant to an individualized, written plan of 
                treatment established and periodically reviewed by a 
                physician (in consultation with appropriate staff 
                participating in such program) which sets forth the 
                physician's diagnosis, the type, amount, frequency, and 
                duration of the items and services provided under the 
                plan, and the goals for treatment under the plan, but 
                does not include any item or service that is not 
                furnished in accordance with standards established by 
                the Secretary for the management of such services.
                    (B) Items and services described.--The items and 
                services described in this subparagraph are--
                            (i) partial hospitalization services 
                        consisting of the items and services described 
                        in subparagraph (C);
                            (ii) psychiatric rehabilitation services;
                            (iii) day treatment services for 
                        individuals under 19 years of age;
                            (iv) in-home services;
                            (v) case management services, including 
                        collateral services designated as such case 
                        management services by the Secretary;
                            (vi) ambulatory detoxification services; 
                        and
                            (vii) such other items and services as the 
                        Secretary may provide (but in no event to 
                        include meals and transportation),
                that are reasonable and necessary for the diagnosis or 
                active treatment of the individual's condition, 
                reasonably expected to improve or maintain the 
                individual's condition and functional level and to 
                prevent relapse or hospitalization, and furnished 
                pursuant to such guidelines relating to frequency and 
                duration of services as the Secretary shall by 
                regulation establish (taking into account accepted 
                norms of medical practice and the reasonable 
                expectation of patient improvement).
                    (C) Items and services included as partial 
                hospitalization services.--For purposes of subparagraph 
                (B)(i), partial hospitalization services consist of the 
                following:
                            (i) Individual and group therapy with 
                        physicians or psychologists (or other mental 
                        health professionals to the extent authorized 
                        under State law).
                            (ii) Occupational therapy requiring the 
                        skills of a qualified occupational therapist.
                            (iii) Services of social workers, trained 
                        psychiatric nurses, behavioral aides, and other 
                        staff trained to work with psychiatric patients 
                        (to the extent authorized under State law).
                            (iv) Drugs and biologicals furnished for 
                        therapeutic purposes (which cannot, as 
                        determined in accordance with regulations, be 
                        self-administered).
                            (v) Individualized activity therapies that 
                        are not primarily recreational or diversionary.
                            (vi) Family counseling (the primary purpose 
                        of which is treatment of the individual's 
                        condition).
                            (vii) Patient training and education (to 
                        the extent that training and educational 
                        activities are closely and clearly related to 
                        the individual's care and treatment).
                            (viii) Diagnostic services.
                    (D) Programs described.--A program described in 
                this subparagraph is a program (whether facility-based 
                or freestanding) which is furnished by an entity--
                            (i) legally authorized to furnish such a 
                        program under State law (or the State 
                        regulatory mechanism provided by State law) or 
                        certified to furnish such a program by an 
                        appropriate accreditation entity approved by 
                        the State in consultation with the Secretary; 
                        and
                            (ii) meeting such other requirements as the 
                        Secretary may impose to assure the quality of 
                        the intensive community-based services 
                        provided.
    (g) Care Coordination Services.--
            (1) In general.--In this title, the term ``care 
        coordination services'' means services provided by care 
        coordinators (as defined in paragraph (2)) to individuals 
        described in paragraph (3) for the coordination and monitoring 
        of home and community-based long term care services to ensure 
        appropriate, cost-effective utilization of such services in a 
        comprehensive and continuous manner, and includes--
                    (A) transition management between inpatient 
                facilities and community-based services, including 
                assisting patients in identifying and gaining access to 
                appropriate ancillary services; and
                    (B) evaluating and recommending appropriate 
                treatment services, in cooperation with patients and 
                other providers and in conjunction with any quality 
                review program or plan of care under section 205.
            (2) Care coordinator.--
                    (A) In general.--In this title, the term ``care 
                coordinator'' means an individual or nonprofit or 
                public agency or organization which the State health 
                security program determines--
                            (i) is capable of performing directly, 
                        efficiently, and effectively the duties of 
a care coordinator described in paragraph (1); and
                            (ii) demonstrates capability in 
                        establishing and periodically reviewing and 
                        revising plans of care, and in arranging for 
                        and monitoring the provision and quality of 
                        services under any plan.
                    (B) Independence.--State health security programs 
                shall establish safeguards to assure that care 
                coordinators have no financial interest in treatment 
                decisions or placements. Care coordination may not be 
                provided through any structure or mechanism through 
                which quality review is performed.
            (3) Eligible individuals.--An individual described in this 
        paragraph is an individual described in section 203 (relating 
        to individuals qualifying for long term and chronic care 
        services).
    (h) Dental Services.--
            (1) In general.--In this title, subject to subsection (b), 
        the term ``dental services'' means the following:
                    (A) Emergency dental treatment, including 
                extractions, for bleeding, pain, acute infections, and 
                injuries to the maxillofacial region.
                    (B) Prevention and diagnosis of dental disease, 
                including examinations of the hard and soft tissues of 
                the oral cavity and related structures, radiographs, 
                dental sealants, fluorides, and dental prophylaxis.
                    (C) Treatment of dental disease, including non-cast 
                fillings, periodontal maintenance services, and 
                endodontic services.
                    (D) Space maintenance procedures to prevent 
                orthodontic complications.
                    (E) Orthodontic treatment to prevent severe 
                malocclusions.
                    (F) Full dentures.
                    (G) Medically necessary oral health care.
                    (H) Any items and services for special needs 
                patients that are not described in subparagraphs (A) 
                through (G) and that--
                            (i) are required to provide such patients 
                        the items and services described in 
                        subparagraphs (A) through (G);
                            (ii) are required to establish oral 
                        function (including general anesthesia for 
                        individuals with physical or emotional 
                        limitations that prevent the provision of 
                        dental care without such anesthesia);
                            (iii) consist of orthodontic care for 
                        severe dentofacial abnormalities; or
                            (iv) consist of prosthetic dental devices 
                        for genetic or birth defects or fitting for 
                        such devices.
                    (I) Any dental care for individuals with a seizure 
                disorder that is not described in subparagraphs (A) 
                through (H) and that is required because of an illness, 
                injury, disorder, or other health condition that 
                results from such seizure disorder.
            (2) Limitations.--Dental services are subject to the 
        following limitations:
                    (A) Prevention and diagnosis.--
                            (i) Examinations and prophylaxis.--The 
                        examinations and prophylaxis described in 
                        paragraph (1)(B) are covered only consistent 
                        with a periodicity schedule established by the 
                        Board, which schedule may provide for special 
                        treatment of individuals less than 18 years of 
                        age and of special needs patients.
                            (ii) Dental sealants.--The dental sealants 
                        described in such paragraph are not covered for 
                        individuals 18 years of age or older. Such 
                        sealants are covered for individuals less than 
                        10 years of age for protection of the 1st 
                        permanent molars. Such sealants are covered for 
                        individuals 10 years of age or older for 
                        protection of the 2d permanent molars.
                    (B) Treatment of dental disease.--Prior to January 
                1, 2010, the items and services described in paragraph 
                (1)(C) are covered only for individuals less than 18 
                years of age and special needs patients. On or after 
                such date, such items and services are covered for all 
                individuals enrolled for benefits under this Act, 
                except that endodontic services are not covered for 
                individuals 18 years of age or older.
                    (C) Space maintenance.--The items and services 
                described in paragraph (1)(D) are covered only for 
                individuals at least 3 years of age, but less than 13 
                years of age and--
                            (i) are limited to posterior teeth;
                            (ii) involve maintenance of a space or 
                        spaces for permanent posterior teeth that would 
                        otherwise be prevented from normal eruption if 
                        the space were not maintained; and
                            (iii) do not include a space maintainer 
                        that is placed within 6 months of the expected 
                        eruption of the permanent posterior tooth 
                        concerned.
                    (D) Orthodontic treatment.--Prior to January 1, 
                2010, the items and services described in paragraph 
                (1)(E) are covered only for individuals at least 6 
                years of age, but less than 12 years of age, who have 
                severe dentofacial abnormalities. On or after such 
                date, such items and services are covered only for 
                individuals at least 6 years of age, but less than 12 
                years of age.
                    (E) Dentures.--Prior to January 1, 2010, the 
                dentures described in paragraph (1)(F) are not covered, 
                except for special needs patients. On or after such 
                date, dentures are covered for an individual consistent 
                with a periodicity schedule established by the Board, 
                except that the limitation of periodicity provided in 
                such schedule shall not apply to a special needs 
                patient.
            (3) Definitions.--For purposes of this title:
                    (A) Medically necessary oral health care.--The term 
                ``medically necessary oral health care'' means oral 
                health care that is required as a direct result of, or 
                would have a direct impact on, an underlying medical 
                condition. Such term includes oral health care directed 
                toward control or elimination of pain, infection, or 
                reestablishment of oral function.
                    (B) Special needs patient.--The term ``special 
                needs patient'' includes an individual with a genetic 
                or birth defect, a developmental disability, or an 
                acquired medical disability.
    (i) Nursing Facility; Nursing Facility Services.--Except as may be 
provided by the Board, the terms ``nursing facility'' and ``nursing 
facility services'' have the meanings given such terms in sections 
1919(a) and 1905(f), respectively, of the Social Security Act.
    (j) Services in Intermediate Care Facilities for Individuals With 
Mental Retardation.--Except as may be provided by the Board--
            (1) the term ``intermediate care facility for individuals 
        with mental retardation'' has the meaning specified in section 
        1905(d) of the Social Security Act (as in effect before the 
        enactment of this Act); and
            (2) the term ``services in intermediate care facilities for 
        individuals with mental retardation'' means services described 
in section 1905(a)(15) of such Act (as so in effect) in an intermediate 
care facility for individuals with mental retardation to an individual 
determined to require such services in accordance with standards 
specified by the Board and comparable to the standards described in 
section 1902(a)(31)(A) of such Act (as so in effect).
    (k) Other Terms.--Except as may be provided by the Board, the 
definitions contained in section 1861 of the Social Security Act shall 
apply.

SEC. 203. SPECIAL RULES FOR HOME AND COMMUNITY-BASED LONG-TERM CARE 
              SERVICES.

    (a) Qualifying Individuals.--For purposes of section 201(a)(5)(C), 
individuals described in this subsection are the following individuals:
            (1) Adults.--Individuals 18 years of age or older 
        determined (in a manner specified by the Board)--
                    (A) to be unable to perform, without the assistance 
                of an individual, at least 2 of the following 5 
                activities of daily living (or who has a similar level 
                of disability due to cognitive impairment)--
                            (i) bathing;
                            (ii) eating;
                            (iii) dressing;
                            (iv) toileting; and
                            (v) transferring in and out of a bed or in 
                        and out of a chair;
                    (B) due to cognitive or mental impairments, to 
                require supervision because the individual behaves in a 
                manner that poses health or safety hazards to himself 
                or herself or others; or
                    (C) due to cognitive or mental impairments, to 
                require queuing to perform activities of daily living.
            (2) Children.--Individuals under 18 years of age determined 
        (in a manner specified by the Board) to meet such alternative 
        standard of disability for children as the Board develops. Such 
        alternative standard shall be comparable to the standard for 
        adults and appropriate for children.
    (b) Limit on Services.--
            (1) In general.--The aggregate expenditures by a State 
        health security program with respect to home and community-
        based long-term care services in a period (specified by the 
        Board) may not exceed 65 percent (or such alternative ratio as 
        the Board establishes under paragraph (2)) of the average of 
        the amount of payment that would have been made under the 
        program during the period if all the home-based long-term care 
        beneficiaries had been residents of nursing facilities in the 
        same area in which the services were provided.
            (2) Alternative ratio.--The Board may establish for 
        purposes of paragraph (1) an alternative ratio (of payments for 
        home and community-based long term care services to payments 
        for nursing facility services) as the Board determines to be 
        more consistent with the goal of providing cost-effective long-
        term care in the most appropriate and least restrictive 
        setting.

SEC. 204. EXCLUSIONS AND LIMITATIONS.

    (a) In General.--Subject to section 201(e), benefits for service 
are not available under this Act unless the services meet the standards 
specified in section 201(a).
    (b) Special Delivery Requirements for Mental Health and Substance 
Abuse Treatment Services Provided to At-Risk Children.--
            (1) Requiring services to be provided through organized 
        systems of care.--A State health security program shall ensure 
        that mental health services and substance abuse treatment 
        services are furnished through an organized system of care, as 
        described in paragraph (2), if--
                    (A) the services are provided to an individual less 
                than 22 years of age;
                    (B) the individual has a serious emotional 
                disturbance or a substance abuse disorder; and
                    (C) the individual is, or is at imminent risk of 
                being, subject to the authority of, or in need of the 
                services of, at least 1 public agency that serves the 
                needs of children, including an agency involved with 
                child welfare, special education, juvenile justice, or 
                criminal justice.
            (2) Requirements for system of care.--In this subsection, 
        an ``organized system of care'' is a community-based service 
        delivery network, which may consist of public and private 
        providers, that meets the following requirements:
                    (A) The system has established linkages with 
                existing mental health services and substance abuse 
                treatment service delivery programs in the plan service 
                area (or is in the process of developing or operating a 
                system with appropriate public agencies in the area to 
                coordinate the delivery of such services to individuals 
                in the area).
                    (B) The system provides for the participation and 
                coordination of multiple agencies and providers that 
                serve the needs of children in the area, including 
                agencies and providers involved with child welfare, 
                education, juvenile justice, criminal justice, health 
                care, mental health, and substance abuse prevention and 
                treatment.
                    (C) The system provides for the involvement of the 
                families of children to whom mental health services and 
                substance abuse treatment services are provided in the 
                planning of treatment and the delivery of services.
                    (D) The system provides for the development and 
                implementation of individualized treatment plans by 
                multidisciplinary and multiagency teams, which are 
                recognized and followed by the applicable agencies and 
                providers in the area.
                    (E) The system ensures the delivery and 
                coordination of the range of mental health services and 
                substance abuse treatment services required by 
                individuals under 22 years of age who have a serious 
                emotional disturbance or a substance abuse disorder.
                    (F) The system provides for the management of the 
                individualized treatment plans described in 
                subparagraph (D) and for a flexible response to changes 
                in treatment needs over time.
    (c) Treatment of Experimental Services.--In applying subsection 
(a), the Board shall make national coverage determinations with respect 
to those services that are experimental in nature. Such determinations 
shall be made consistent with a process that provides for input from 
representatives of health care professionals and patients and public 
comment.
    (d) Application of Practice Guidelines.--In the case of services 
for which the American Health Security Quality Council (established 
under section 501) has recognized a national practice guideline, the 
services are considered to meet the standards specified in section 
201(a) if they have been provided in accordance with such guideline or 
in accordance with such guidelines as are provided by the State health 
security program consistent with title V. For purposes of this 
subsection, a service shall be considered to have been provided in 
accordance with a practice guideline if the health care provider 
providing the service exercised appropriate professional discretion to 
deviate from the guideline in a manner authorized or anticipated by the 
guideline.
    (e) Specific Limitations.--
            (1) Limitations on eyeglasses, contact lenses, hearing 
        aids, and durable medical equipment.--Subject to section 
        201(e), the Board may impose such limits relating to the costs 
        and frequency of replacement of eyeglasses, contact lenses, 
        hearing aids, and durable medical equipment to which 
        individuals enrolled for benefits under this Act are entitled 
        to have payment made under a State health security program as 
        the Board deems appropriate.
            (2) Overlap with preventive services.--The coverage of 
        services described in section 201(a) (other than paragraph (3)) 
        which also are preventive services are required to be covered 
        only to the extent that they are required to be covered as 
        preventive services.
            (3) Miscellaneous exclusions from covered services.--
        Covered services under this Act do not include the following:
                    (A) Surgery and other procedures (such as 
                orthodontia) performed solely for cosmetic purposes (as 
                defined in regulations) and hospital or other services 
                incident thereto, unless--
                            (i) required to correct a congenital 
                        anomaly;
                            (ii) required to restore or correct a part 
                        of the body which has been altered as a result 
                        of accidental injury, disease, or surgery; or
                            (iii) otherwise determined to be medically 
                        necessary and appropriate under section 201(a).
                    (B) Personal comfort items or private rooms in 
                inpatient facilities, unless determined to be medically 
                necessary and appropriate under section 201(a).
                    (C) The services of a professional practitioner if 
                they are furnished in a hospital or other facility 
                which is not a participating provider.
    (f) Nursing Facility Services and Home Health Services.--Nursing 
facility services and home health services (other than post-hospital 
services, as defined by the Board) furnished to an individual who is 
not described in section 203(a) are not covered services unless the 
services are determined to meet the standards specified in section 
201(a) and, with respect to nursing facility services, to be provided 
in the least restrictive and most appropriate setting.

SEC. 205. CERTIFICATION; QUALITY REVIEW; PLANS OF CARE.

    (a) Certifications.--State health security programs may require, as 
a condition of payment for institutional health care services and other 
services of the type described in such sections 1814(a) and 1835(a) of 
the Social Security Act, periodic professional certifications of the 
kind described in such sections.
    (b) Quality Review.--For requirement that each State health 
security program establish a quality review program that meets the 
requirements for such a program under title V, see section 
404(b)(1)(H).
    (c) Plan of Care Requirements.--A State health security program may 
require, consistent with standards established by the Board, that 
payment for services exceeding specified levels or duration be provided 
only as consistent with a plan of care or treatment formulated by one 
or more providers of the services or other qualified professionals. 
Such a plan may include, consistent with subsection (b), case 
management at specified intervals as a further condition of payment for 
services.

                   TITLE III--PROVIDER PARTICIPATION

SEC. 301. PROVIDER PARTICIPATION AND STANDARDS.

    (a) In General.--An individual or other entity furnishing any 
covered service under a State health security program under this Act is 
not a qualified provider unless the individual or entity--
            (1) is a qualified provider of the services under section 
        302;
            (2) has filed with the State health security program a 
        participation agreement described in subsection (b); and
            (3) meets such other qualifications and conditions as are 
        established by the Board or the State health security program 
        under this Act.
    (b) Requirements in Participation Agreement.--
            (1) In general.--A participation agreement described in 
        this subsection between a State health security program and a 
        provider shall provide at least for the following:
                    (A) Services to eligible persons will be furnished 
                by the provider without discrimination on the ground of 
                race, national origin, income, religion, age, sex or 
                sexual orientation, disability, handicapping condition, 
                or (subject to the professional qualifications of the 
                provider) illness. Nothing in this subparagraph shall 
                be construed as requiring the provision of a type or 
                class of services which services are outside the scope 
                of the provider's normal practice.
                    (B) No charge will be made for any covered services 
                other than for payment authorized by this Act.
                    (C) The provider agrees to furnish such information 
                as may be reasonably required by the Board or a State 
                health security program, in accordance with uniform 
                reporting standards established under section 
                401(g)(1), for--
                            (i) quality review by designated entities;
                            (ii) the making of payments under this Act 
                        (including the examination of records as may be 
                        necessary for the verification of information 
                        on which payments are based);
                            (iii) statistical or other studies required 
                        for the implementation of this Act; and
                            (iv) such other purposes as the Board or 
                        State may specify.
                    (D) The provider agrees not to bill the program for 
                any services for which benefits are not available 
                because of section 204(d).
                    (E) In the case of a provider that is not an 
                individual, the provider agrees not to employ or use 
                for the provision of health services any individual or 
                other provider who or which has had a participation 
                agreement under this subsection terminated for cause.
                    (F) In the case of a provider paid under a fee-for-
                service basis under section 612, the provider agrees to 
                submit bills and any required supporting documentation 
                relating to the provision of covered services within 30 
                days (or such shorter period as a State health security 
                program may require) after the date of providing such 
                services.
            (2) Termination of participation agreements.--
                    (A) In general.--Participation agreements may be 
                terminated, with appropriate notice--
                            (i) by the Board or a State health security 
                        program for failure to meet the requirements of 
                        this title; or
                            (ii) by a provider.
                    (B) Termination process.--Providers shall be 
                provided notice and a reasonable opportunity to correct 
                deficiencies before the Board or a State health 
                security program terminates an agreement unless a more 
                immediate termination is required for public safety or 
                similar reasons.

SEC. 302. QUALIFICATIONS FOR PROVIDERS.

    (a) In General.--A health care provider is considered to be 
qualified to provide covered services if the provider is licensed or 
certified and meets--
            (1) all the requirements of State law to provide such 
        services;
            (2) applicable requirements of Federal law to provide such 
        services; and
            (3) any applicable standards established under subsection 
        (b).
    (b) Minimum Provider Standards.--
            (1) In general.--The Board shall establish, evaluate, and 
        update national minimum standards to assure the quality of 
        services provided under this Act and to monitor efforts by 
        State health security programs to assure the quality of such 
        services. A State health security program may also establish 
        additional minimum standards which providers must meet.
            (2) National minimum standards.--The national minimum 
        standards under paragraph (1) shall be established for 
        institutional providers of services, individual health care 
        practitioners, and comprehensive health service organizations. 
        Except as the Board may specify in order to carry out this 
        title, a hospital, nursing facility, or other institutional 
        provider of services shall meet standards for such a facility 
        under the medicare program under title XVIII of the Social 
        Security Act. Such standards also may include, where 
        appropriate, elements relating to--
                    (A) adequacy and quality of facilities;
                    (B) training and competence of personnel (including 
                continuing education requirements);
                    (C) comprehensiveness of service;
                    (D) continuity of service;
                    (E) patient satisfaction (including waiting time 
                and access to services); and
                    (F) performance standards (including organization, 
                facilities, structure of services, efficiency of 
                operation, and outcome in palliation, improvement of 
                health, stabilization, cure, or rehabilitation).
            (3) Transition in application.--If the Board provides for 
        additional requirements for providers under this subsection, 
        any such additional requirement shall be implemented in a 
        manner that provides for a reasonable period during which a 
        previously qualified provider is permitted to meet such an 
        additional requirement.
            (4) Exchange of information.--The Board shall provide for 
        an exchange, at least annually, among State health security 
        programs of information with respect to quality assurance and 
        cost containment.

SEC. 303. QUALIFICATIONS FOR COMPREHENSIVE HEALTH SERVICE 
              ORGANIZATIONS.

    (a) In General.--For purposes of this Act, a comprehensive health 
service organization (in this section referred to as a ``CHSO'') is a 
public or private organization which, in return for a capitated payment 
amount, undertakes to furnish, arrange for the provision of, or provide 
payment with respect to--
            (1) a full range of health services (as identified by the 
        Board), including at least hospital services and physicians 
        services; and
            (2) out-of-area coverage in the case of urgently needed 
        services;
to an identified population which is living in or near a specified 
service area and which enrolls voluntarily in the organization.
    (b) Enrollment.--
            (1) In general.--All eligible persons living in or near the 
        specified service area of a CHSO are eligible to enroll in the 
        organization; except that the number of enrollees may be 
        limited to avoid overtaxing the resources of the organization.
            (2) Minimum enrollment period.--Subject to paragraph (3), 
        the minimum period of enrollment with a CHSO shall be twelve 
        months, unless the enrolled individual becomes ineligible to 
        enroll with the organization.
            (3) Withdrawal for cause.--Each CHSO shall permit an 
        enrolled individual to disenroll from the organization for 
        cause at any time.
    (c) Requirements for CHSOs.--
            (1) Accessible services.--Each CHSO, to the maximum extent 
        feasible, shall make all services readily and promptly 
accessible to enrollees who live in the specified service area.
            (2) Continuity of care.--Each CHSO shall furnish services 
        in such manner as to provide continuity of care and (when 
        services are furnished by different providers) shall provide 
        ready referral of patients to such services and at such times 
        as may be medically appropriate.
            (3) Board of directors.--In the case of a CHSO that is a 
        private organization--
                    (A) Consumer representation.--At least one-third of 
                the members of the CHSO's board of directors must be 
                consumer members with no direct or indirect, personal 
                or family financial relationship to the organization.
                    (B) Provider representation.--The CHSO's board of 
                directors must include at least one member who 
                represents health care providers.
            (4) Patient grievance program.--Each CHSO must have in 
        effect a patient grievance program and must conduct regularly 
        surveys of the satisfaction of members with services provided 
        by or through the organization.
            (5) Medical standards.--Each CHSO must provide that a 
        committee or committees of health care practitioners associated 
        with the organization will promulgate medical standards, 
        oversee the professional aspects of the delivery of care, 
        perform the functions of a pharmacy and drug therapeutics 
        committee, and monitor and review the quality of all health 
        services (including drugs, education, and preventive services).
            (6) Premiums.--Premiums or other charges by a CHSO for any 
        services not paid for under this Act must be reasonable.
            (7) Utilization and bonus information.--Each CHSO must--
                    (A) comply with the requirements of section 
                1876(i)(8) of the Social Security Act (relating to 
                prohibiting physician incentive plans that provide 
                specific inducements to reduce or limit medically 
                necessary services); and
                    (B) make available to its membership utilization 
                information and data regarding financial performance, 
                including bonus or incentive payment arrangements to 
                practitioners.
            (8) Provision of services to enrollees at institutions 
        operating under global budgets.--The organization shall arrange 
        to reimburse for hospital services and other facility-based 
        services (as identified by the Board) for services provided to 
        members of the organization in accordance with the global 
        operating budget of the hospital or facility approved under 
        section 611.
            (9) Broad marketing.--Each CHSO must provide for the 
        marketing of its services (including dissemination of marketing 
        materials) to potential enrollees in a manner that is designed 
        to enroll individuals representative of the different 
        population groups and geographic areas included within its 
        service area and meets such requirements as the Board or a 
        State health security program may specify.
            (10) Additional requirements.--Each CHSO must meet--
                    (A) such requirements relating to minimum 
                enrollment;
                    (B) such requirements relating to financial 
                solvency;
                    (C) such requirements relating to quality and 
                availability of care; and
                    (D) such other requirements,
        as the Board or a State health security program may specify.
    (d) Provision of Emergency Services to Nonenrollees.--A CHSO may 
furnish emergency services to persons who are not enrolled in the 
organization. Payment for such services, if they are covered services 
to eligible persons, shall be made to the organization unless the 
organization requests that it be made to the individual provider who 
furnished the services.

SEC. 304. LIMITATION ON CERTAIN PHYSICIAN REFERRALS.

    (a) Application to American Health Security Program.--Section 1877 
of the Social Security Act, as amended by subsections (b) and (c), 
shall apply under this Act in the same manner as it applies under title 
XVIII of the Social Security Act; except that in applying such section 
under this Act any references in such section to the Secretary or title 
XVIII of the Social Security Act are deemed references to the Board and 
the American Health Security Program under this Act, respectively.
    (b) Expansion of Prohibition to Certain Additional Designated 
Services.--Section 1877(h)(6) of the Social Security Act (42 U.S.C. 
1395nn(h)(6)) is amended by adding at the end the following:
                    ``(L) Ambulance services.
                    ``(M) Home infusion therapy services.''.
    (c) Conforming Amendments.--Section 1877 of such Act is further 
amended--
            (1) in subsection (a)(1)(A), by striking ``for which 
        payment otherwise may be made under this title'' and inserting 
        ``for which a charge is imposed'';
            (2) in subsection (a)(1)(B), by striking ``under this 
        title'';
            (3) by amending paragraph (1) of subsection (g) to read as 
        follows:
            ``(1) Denial of payment.--No payment may be made under a 
        State health security program for a designated health service 
        for which a claim is presented in violation of subsection 
        (a)(1)(B). No individual, third party payor, or other entity is 
        liable for payment for designated health services for which a 
        claim is presented in violation of such subsection.''; and
            (4) in subsection (g)(3), by striking ``for which payment 
        may not be made under paragraph (1)'' and inserting ``for which 
        such a claim may not be presented under subsection (a)(1)''.

                        TITLE IV--ADMINISTRATION

             Subtitle A--General Administrative Provisions

SEC. 401. AMERICAN HEALTH SECURITY STANDARDS BOARD.

    (a) Establishment.--There is hereby established an American Health 
Security Standards Board.
    (b) Appointment and Terms of Members.--
            (1) In general.--The Board shall be composed of--
                    (A) the Secretary of Health and Human Services; and
                    (B) 6 other individuals (described in paragraph 
                (2)) appointed by the President with the advice and 
                consent of the Senate.
        The President shall first nominate individuals under 
        subparagraph (B) on a timely basis so as to provide for the 
        operation of the Board by not later than January 1, 2004.
            (2) Selection of appointed members.--With respect to the 
        individuals appointed under paragraph (1)(B):
                    (A) They shall be chosen on the basis of 
                backgrounds in health policy, health economics, the 
                healing professions, and the administration of health 
                care institutions.
                    (B) They shall provide a balanced point of view 
                with respect to the various health care interests and 
                at least 2 of them shall represent the interests of 
                individual consumers.
                    (C) Not more than 3 of them shall be from the same 
                political party.
                    (D) To the greatest extent feasible, they shall 
                represent the various geographic regions of the United 
                States and shall reflect the racial, ethnic, and gender 
                composition of the population of the United States.
            (3) Terms of appointed members.--Individuals appointed 
        under paragraph (1)(B) shall serve for a term of 6 years, 
        except that the terms of 5 of the individuals initially 
        appointed shall be, as designated by the President at the time 
        of their appointment, for 1, 2, 3, 4, and 5 years. During a 
        term of membership on the Board, no member shall engage in any 
        other business, vocation or employment.
    (c) Vacancies.--
            (1) In general.--The President shall fill any vacancy in 
        the membership of the Board in the same manner as the original 
        appointment. The vacancy shall not affect the power of the 
        remaining members to execute the duties of the Board.
            (2) Vacancy appointments.--Any member appointed to fill a 
        vacancy shall serve for the remainder of the term for which the 
        predecessor of the member was appointed.
            (3) Reappointment.--The President may reappoint an 
        appointed member of the Board for a second term in the same 
        manner as the original appointment. A member who has served for 
        2 consecutive 6-year terms shall not be eligible for 
        reappointment until 2 years after the member has ceased to 
        serve.
            (4) Removal for cause.--Upon confirmation, members of the 
        Board may not be removed except by the President for cause.
    (d) Chair.--The President shall designate 1 of the members of the 
Board, other than the Secretary, to serve at the will of the President 
as Chair of the Board.
    (e) Compensation.--Members of the Board (other than the Secretary) 
shall be entitled to compensation at a level equivalent to level II of 
the Executive Schedule, in accordance with section 5313 of title 5, 
United States Code.
    (f) General Duties of the Board.--
            (1) In general.--The Board shall develop policies, 
        procedures, guidelines, and requirements to carry out this Act, 
        including those related to--
                    (A) eligibility;
                    (B) enrollment;
                    (C) benefits;
                    (D) provider participation standards and 
                qualifications, as defined in title III;
                    (E) national and State funding levels;
                    (F) methods for determining amounts of payments to 
                providers of covered services, consistent with subtitle 
                B of title VI;
                    (G) the determination of medical necessity and 
                appropriateness with respect to coverage of certain 
                services;
                    (H) assisting State health security programs with 
                planning for capital expenditures and service delivery;
                    (I) planning for health professional education 
                funding (as specified in title VI);
                    (J) allocating funds provided under title VII; and
                    (K) encouraging States to develop regional planning 
                mechanisms (described in section 404(a)(3)).
            (2) Regulations.--Regulations authorized by this Act shall 
        be issued by the Board in accordance with the provisions of 
        section 553 of title 5, United States Code.
    (g) Uniform Reporting Standards; Annual Report; Studies.--
            (1) Uniform reporting standards.--
                    (A) In general.--The Board shall establish uniform 
                reporting requirements and standards to ensure an 
                adequate national data base regarding health services 
                practitioners, services and finances of State health 
                security programs, approved plans, providers, and the 
                costs of facilities and practitioners providing 
                services. Such standards shall include, to the maximum 
                extent feasible, health outcome measures.
                    (B) Reports.--The Board shall analyze regularly 
                information reported to it, and to State health 
                security programs pursuant to such requirements and 
                standards.
            (2) Annual report.--Beginning January 1, of the second year 
        beginning after the date of the enactment of this Act, the 
        Board shall annually report to Congress on the following:
                    (A) The status of implementation of the Act.
                    (B) Enrollment under this Act.
                    (C) Benefits under this Act.
                    (D) Expenditures and financing under this Act.
                    (E) Cost-containment measures and achievements 
                under this Act.
                    (F) Quality assurance.
                    (G) Health care utilization patterns, including any 
                changes attributable to the program.
                    (H) Long-range plans and goals for the delivery of 
                health services.
                    (I) Differences in the health status of the 
                populations of the different States, including income 
                and racial characteristics.
                    (J) Necessary changes in the education of health 
                personnel.
                    (K) Plans for improving service to medically 
                underserved populations.
                    (L) Transition problems as a result of 
                implementation of this Act.
                    (M) Opportunities for improvements under this Act.
            (3) Statistical analyses and other studies.--The Board may, 
        either directly or by contract--
                    (A) make statistical and other studies, on a 
                nationwide, regional, state, or local basis, of any 
                aspect of the operation of this Act, including studies 
                of the effect of the Act upon the health of the people 
                of the United States and the effect of comprehensive 
                health services upon the health of persons receiving 
                such services;
                    (B) develop and test methods of providing through 
                payment for services or otherwise, additional 
                incentives for adherence by providers to standards of 
                adequacy, access, and quality; methods of consumer and 
                peer review and peer control of the utilization of 
                drugs, of laboratory services, and of other services; 
                and methods of consumer and peer review of the quality 
                of services;
                    (C) develop and test, for use by the Board, records 
                and information retrieval systems and budget systems 
                for health services administration, and develop and 
                test model systems for use by providers of services;
                    (D) develop and test, for use by providers of 
                services, records and information retrieval systems 
                useful in the furnishing of preventive or diagnostic 
                services;
                    (E) develop, in collaboration with the 
                pharmaceutical profession, and test, improved 
                administrative practices or improved methods for the 
                reimbursement of independent pharmacies for the cost of 
                furnishing drugs as a covered service; and
                    (F) make such other studies as it may consider 
                necessary or promising for the evaluation, or for the 
                improvement, of the operation of this Act.
            (4) Report on use of existing federal health care 
        facilities.--Not later than 1 year after the date of the 
        enactment of this Act, the Board shall recommend to the 
        Congress one or more proposals for the treatment of health care 
        facilities of the Federal Government.
    (h) Executive Director.--
            (1) Appointment.--There is hereby established the position 
        of Executive Director of the Board. The Director shall be 
        appointed by the Board and shall serve as secretary to the 
        Board and perform such duties in the administration of this 
        title as the Board may assign.
            (2) Delegation.--The Board is authorized to delegate to the 
        Director or to any other officer or employee of the Board or, 
        with the approval of the Secretary of Health and Human Services 
        (and subject to reimbursement of identifiable costs), to any 
        other officer or employee of the Department of Health and Human 
        Services, any of its functions or duties under this Act other 
        than--
                    (A) the issuance of regulations; or
                    (B) the determination of the availability of funds 
                and their allocation to implement this Act.
            (3) Compensation.--The Executive Director of the Board 
        shall be entitled to compensation at a level equivalent to 
        level III of the Executive Schedule, in accordance with section 
        5314 of title 5, United States Code.
    (i) Inspector General.--The Inspector General Act of 1978 (5 U.S.C. 
App.) is amended--
            (1) in section 11(1), by inserting after ``Corporation;'' 
        the first place it appears the following: ``the Chair of the 
American Health Security Standards Board;'';
            (2) in section 11(2), by inserting after ``Resolution Trust 
        Corporation,'' the following: ``the American Health Security 
        Standards Board,''; and
            (3) by inserting before section 9 the following:

  ``special provisions concerning american health security standards 
                                 board

    ``Sec. 8J. The Inspector General of the American Health Security 
Standards Board, in addition to the other authorities vested by this 
Act, shall have the same authority, with respect to the Board and the 
American Health Security Program under this Act, as the Inspector 
General for the Department of Health and Human Services has with 
respect to the Secretary of Health and Human Services and the medicare 
and medicaid programs, respectively.''.
    (j) Staff.--The Board shall employ such staff as the Board may deem 
necessary.
    (k) Access to Information.--The Secretary of Health and Human 
Services shall make available to the Board all information available 
from sources within the Department or from other sources, pertaining to 
the duties of the Board.

SEC. 402. AMERICAN HEALTH SECURITY ADVISORY COUNCIL.

    (a) In General.--The Board shall provide for an American Health 
Security Advisory Council (in this section referred to as the 
``Council'') to advise the Board on its activities.
    (b) Membership.--The Council shall be composed of--
            (1) the Chair of the Board, who shall serve as Chair of the 
        Council; and
            (2) twenty members, not otherwise in the employ of the 
        United States, appointed by the Board without regard to the 
        provisions of title 5, United States Code, governing 
        appointments in the competitive service.
The appointed members shall include, in accordance with subsection (e), 
individuals who are representative of State health security programs, 
public health professionals, providers of health services, and of 
individuals (who shall constitute a majority of the Council) who are 
representative of consumers of such services, including a balanced 
representation of employers, unions, consumer organizations, and 
population groups with special health care needs. To the greatest 
extent feasible, the membership of the Council shall represent the 
various geographic regions of the United States and shall reflect the 
racial, ethnic, and gender composition of the population of the United 
States.
    (c) Terms of Members.--Each appointed member shall hold office for 
a term of 4 years, except that--
            (1) any member appointed to fill a vacancy occurring during 
        the term for which the member's predecessor was appointed shall 
        be appointed for the remainder of that term; and
            (2) the terms of the members first taking office shall 
        expire, as designated by the Board at the time of appointment, 
        5 at the end of the first year, 5 at the end of the second 
        year, 5 at the end of the third year, and 5 at the end of the 
        fourth year after the date of enactment of this Act.
    (d) Vacancies.--
            (1) In general.--The Board shall fill any vacancy in the 
        membership of the Council in the same manner as the original 
        appointment. The vacancy shall not affect the power of the 
        remaining members to execute the duties of the Council.
            (2) Vacancy appointments.--Any member appointed to fill a 
        vacancy shall serve for the remainder of the term for which the 
        predecessor of the member was appointed.
            (3) Reappointment.--The Board may reappoint an appointed 
        member of the Council for a second term in the same manner as 
        the original appointment.
    (e) Qualifications.--
            (1) Public health representatives.--Members of the Council 
        who are representative of State health security programs and 
        public health professionals shall be individuals who have 
        extensive experience in the financing and delivery of care 
        under public health programs.
            (2) Providers.--Members of the Council who are 
        representative of providers of health care shall be individuals 
        who are outstanding in fields related to medical, hospital, or 
        other health activities, or who are representative of 
        organizations or associations of professional health 
        practitioners.
            (3) Consumers.--Members who are representative of consumers 
        of such care shall be individuals, not engaged in and having no 
        financial interest in the furnishing of health services, who 
        are familiar with the needs of various segments of the 
        population for personal health services and are experienced in 
        dealing with problems associated with the consumption of such 
        services.
    (f) Duties.--
            (1) In general.--It shall be the duty of the Council--
                    (A) to advise the Board on matters of general 
                policy in the administration of this Act, in the 
                formulation of regulations, and in the performance of 
                the Board's duties under section 401; and
                    (B) to study the operation of this Act and the 
                utilization of health services under it, with a view to 
                recommending any changes in the administration of the 
                Act or in its provisions which may appear desirable.
            (2) Report.--The Council shall make an annual report to the 
        Board on the performance of its functions, including any 
        recommendations it may have with respect thereto, and the Board 
        shall promptly transmit the report to the Congress, together 
        with a report by the Board on any recommendations of the 
        Council that have not been followed.
    (g) Staff.--The Council, its members, and any committees of the 
Council shall be provided with such secretarial, clerical, or other 
assistance as may be authorized by the Board for carrying out their 
respective functions.
    (h) Meetings.--The Council shall meet as frequently as the Board 
deems necessary, but not less than 4 times each year. Upon request by 7 
or more members it shall be the duty of the Chair to call a meeting of 
the Council.
    (i) Compensation.--Members of the Council shall be reimbursed by 
the Board for travel and per diem in lieu of subsistence expenses 
during the performance of duties of the Board in accordance with 
subchapter I of chapter 57 of title 5, United States Code.
    (j) FACA Not Applicable.--The provisions of the Federal Advisory 
Committee Act shall not apply to the Council.

SEC. 403. CONSULTATION WITH PRIVATE ENTITIES.

    The Secretary and the Board shall consult with private entities, 
such as professional societies, national associations, nationally 
recognized associations of experts, medical schools and academic health 
centers, consumer groups, and labor and business organizations in the 
formulation of guidelines, regulations, policy initiatives, and 
information gathering to assure the broadest and most informed input in 
the administration of this Act. Nothing in this Act shall prevent the 
Secretary from adopting guidelines developed by such a private entity 
if, in the Secretary's and Board's judgment, such guidelines are 
generally accepted as reasonable and prudent and consistent with this 
Act.

SEC. 404. STATE HEALTH SECURITY PROGRAMS.

    (a) Submission of Plans.--
            (1) In general.--Each State shall submit to the Board a 
        plan for a State health security program for providing for 
        health care services to the residents of the State in 
        accordance with this Act.
            (2) Regional programs.--A State may join with 1 or more 
        neighboring States to submit to the Board a plan for a regional 
        health security program instead of separate State health 
        security programs.
            (3) Regional planning mechanisms.--The Board shall provide 
        incentives for States to develop regional planning mechanisms 
        to promote the rational distribution of, adequate access to, 
        and efficient use of, tertiary care facilities, equipment, and 
        services.
    (b) Review and Approval of Plans.--
            (1) In general.--The Board shall review plans submitted 
        under subsection (a) and determine whether such plans meet the 
        requirements for approval. The Board shall not approve such a 
        plan unless it finds that the plan (or State law) provides, 
        consistent with the provisions of this Act, for the following:
                    (A) Payment for required health services for 
                eligible individuals in the State in accordance with 
                this Act.
                    (B) Adequate administration, including the 
                designation of a single State agency responsible for 
                the administration (or supervision of the 
                administration) of the program.
                    (C) The establishment of a State health security 
                budget.
                    (D) Establishment of payment methodologies 
                (consistent with subtitle B of title VII).
                    (E) Assurances that individuals have the freedom to 
                choose practitioners and other health care providers 
                for services covered under this Act.
                    (F) A procedure for carrying out long-term regional 
                management and planning functions with respect to the 
                delivery and distribution of health care services 
                that--
                            (i) ensures participation of consumers of 
                        health services and providers of health 
                        services; and
                            (ii) gives priority to the most acute 
                        shortages and maldistributions of health 
                        personnel and facilities and the most serious 
                        deficiencies in the delivery of covered 
                        services and to the means for the speedy 
                        alleviation of these shortcomings.
                    (G) The licensure and regulation of all health 
                providers and facilities to ensure compliance with 
                Federal and State laws and to promote quality of care.
                    (H) Establishment of a quality review system in 
                accordance with section 503.
                    (I) Establishment of an independent ombudsman for 
                consumers to register complaints about the organization 
                and administration of the State health security program 
                and to help resolve complaints and disputes between 
                consumers and providers.
                    (J) Publication of an annual report on the 
                operation of the State health security program, which 
                report shall include information on cost, progress 
                towards achieving full enrollment, public access to 
                health services, quality review, health outcomes, 
                health professional training, and the needs of 
                medically underserved populations.
                    (K) Provision of a fraud and abuse prevention and 
                control unit that the Inspector General determines 
                meets the requirements of section 412(a).
                    (L) Prohibit payment in cases of prohibited 
                physician referrals under section 304.
            (2) Consequences of failure to comply.--If the Board finds 
        that a State plan submitted under paragraph (1) does not meet 
        the requirements for approval under this section or that a 
        State health security program or specific portion of such 
        program, the plan for which was previously approved, no longer 
        meets such requirements, the Board shall provide notice to the 
        State of such failure and that unless corrective action is 
        taken within a period specified by the Board, the Board shall 
        place the State health security program (or specific portions 
        of such program) in receivership under the jurisdiction of the 
        Board.
    (c) State Health Security Advisory Councils.--
            (1) In general.--For each State, the Governor shall provide 
        for appointment of a State Health Security Advisory Council to 
        advise and make recommendations to the Governor and State with 
        respect to the implementation of the State health security 
        program in the State.
            (2) Membership.--Each State Health Security Advisory 
        Council shall be composed of at least 11 individuals. The 
        appointed members shall include individuals who are 
        representative of the State health security program, public 
        health professionals, providers of health services, and of 
        individuals (who shall constitute a majority) who are 
        representative of consumers of such services, including a 
        balanced representation of employers, unions and consumer 
        organizations. To the greatest extent feasible, the membership 
        of each State Health Security Advisory Council shall represent 
        the various geographic regions of the State and shall reflect 
        the racial, ethnic, and gender composition of the population of 
        the State.
            (3) Duties.--
                    (A) In general.--Each State Health Security 
                Advisory Council shall review, and submit comments to 
                the Governor concerning the implementation of the State 
                health security program in the State.
                    (B) Assistance.--Each State Health Security 
                Advisory Council shall provide assistance and technical 
                support to community organizations and public and 
                private non-profit agencies submitting applications for 
                funding under appropriate State and Federal public 
                health programs, with particular emphasis placed on 
                assisting those applicants with broad consumer 
                representation.
    (d) State Use of Fiscal Agents.--
            (1) In general.--Each State health security program, using 
        competitive bidding procedures, may enter into such contracts 
        with qualified entities, such as voluntary associations, as the 
        State determines to be appropriate to process claims and to 
        perform other related functions of fiscal agents under the 
        State health security program.
            (2) Restriction.--Except as the Board may provide for good 
        cause shown, in no case may more than 1 contract described in 
        paragraph (1) be entered into under a State health security 
        program.

SEC. 405. COMPLEMENTARY CONDUCT OF RELATED HEALTH PROGRAMS.

    In performing functions with respect to health personnel education 
and training, health research, environmental health, disability 
insurance, vocational rehabilitation, the regulation of food and drugs, 
and all other matters pertaining to health, the Secretary of Health and 
Human Services shall direct all activities of the Department of Health 
and Human Services toward contributions to the health of the people 
complementary to this Act.

                Subtitle B--Control Over Fraud and Abuse

SEC. 411. APPLICATION OF FEDERAL SANCTIONS TO ALL FRAUD AND ABUSE UNDER 
              AMERICAN HEALTH SECURITY PROGRAM.

    The following sections of the Social Security Act shall apply to 
State health security programs in the same manner as they apply to 
State medical assistance plans under title XIX of such Act (except that 
in applying such provisions any reference to the Secretary is deemed a 
reference to the Board):
            (1) Section 1128 (relating to exclusion of individuals and 
        entities).
            (2) Section 1128A (civil monetary penalties).
            (3) Section 1128B (criminal penalties).
            (4) Section 1124 (relating to disclosure of ownership and 
        related information).
            (5) Section 1126 (relating to disclosure of certain 
        owners).

SEC. 412. REQUIREMENTS FOR OPERATION OF STATE HEALTH CARE FRAUD AND 
              ABUSE CONTROL UNITS.

    (a) Requirement.--In order to meet the requirement of section 
404(b)(1)(K), each State health security program must establish and 
maintain a health care fraud and abuse control unit (in this section 
referred to as a ``fraud unit'') that meets requirements of this 
section and other requirements of the Board. Such a unit may be a State 
medicaid fraud control unit (described in section 1903(q) of the Social 
Security Act).
    (b) Structure of Unit.--The fraud unit must--
            (1) be a single identifiable entity of the State 
        government;
            (2) be separate and distinct from the State agency with 
        principal responsibility for the administration of the State 
        health security program; and
            (3) meet 1 of the following requirements:
                    (A) It must be a unit of the office of the State 
                Attorney General or of another department of State 
                government which possesses statewide authority to 
                prosecute individuals for criminal violations.
                    (B) If it is in a State the constitution of which 
                does not provide for the criminal prosecution of 
                individuals by a statewide authority and has formal 
                procedures, approved by the Board, that--
                            (i) assure its referral of suspected 
                        criminal violations relating to the State 
                        health insurance plan to the appropriate 
                        authority or authorities in the States for 
                        prosecution; and
                            (ii) assure its assistance of, and 
                        coordination with, such authority or 
                        authorities in such prosecutions.
                    (C) It must have a formal working relationship with 
                the office of the State Attorney General and have 
                formal procedures (including procedures for its 
                referral of suspected criminal violations to such 
                office) which are approved by the Board and which 
                provide effective coordination of activities between 
                the fraud unit and such office with respect to the 
                detection, investigation, and prosecution of suspected 
                criminal violations relating to the State health 
                insurance plan.
    (c) Functions.--The fraud unit must--
            (1) have the function of conducting a statewide program for 
        the investigation and prosecution of violations of all 
        applicable State laws regarding any and all aspects of fraud in 
        connection with any aspect of the provision of health care 
        services and activities of providers of such services under the 
        State health security program;
            (2) have procedures for reviewing complaints of the abuse 
        and neglect of patients of providers and facilities that 
        receive payments under the State health security program, and, 
        where appropriate, for acting upon such complaints under the 
        criminal laws of the State or for referring them to other State 
        agencies for action; and
            (3) provide for the collection, or referral for collection 
        to a single State agency, of overpayments that are made under 
        the State health security program to providers and that are 
        discovered by the fraud unit in carrying out its activities.
    (d) Resources.--The fraud unit must--
            (1) employ such auditors, attorneys, investigators, and 
        other necessary personnel;
            (2) be organized in such a manner; and
            (3) provide sufficient resources (as specified by the 
        Board),
as is necessary to promote the effective and efficient conduct of the 
unit's activities.
    (e) Cooperative Agreements.--The fraud unit must have cooperative 
agreements (as specified by the Board) with--
            (1) similar fraud units in other States;
            (2) the Inspector General; and
            (3) the Attorney General of the United States.
    (f) Reports.--The fraud unit must submit to the Inspector General 
an application and annual reports containing such information as the 
Inspector General determines to be necessary to determine whether the 
unit meets the previous requirements of this section.

                      TITLE V--QUALITY ASSESSMENT

SEC. 501. AMERICAN HEALTH SECURITY QUALITY COUNCIL.

    (a) Establishment.--There is hereby established an American Health 
Security Quality Council (in this title referred to as the 
``Council'').
    (b) Duties of the Council.--The Council shall perform the following 
duties:
            (1) Practice guidelines.--The Council shall review and 
        evaluate each practice guideline developed under part B of 
        title IX of the Public Health Service Act. The Council shall 
        determine whether the guideline should be recognized as a 
        national practice guideline to be used under section 204(d) for 
        purposes of determining payments under a State health security 
        program.
            (2) Standards of quality, performance measures, and medical 
        review criteria.--The Council shall review and evaluate each 
        standard of quality, performance measure, and medical review 
        criterion developed under part B of title IX of the Public 
        Health Service Act. The Council shall determine whether the 
        standard, measure, or criterion is appropriate for use in 
        assessing or reviewing the quality of services provided by 
        State health security programs, health care institutions, or 
        health care professionals.
            (3) Criteria for entities conducting quality reviews.--The 
        Council shall develop minimum criteria for competence for 
        entities that can qualify to conduct ongoing and continuous 
        external quality review for State quality review programs under 
        section 503. Such criteria shall require such an entity to be 
        administratively independent of the individual or board that 
        administers the State health security program and shall ensure 
        that such entities do not provide financial incentives to 
        reviewers to favor one pattern of practice over another. The 
        Council shall ensure coordination and reporting by such 
        entities to assure national consistency in quality standards.
            (4) Reporting.--The Council shall report to the Board 
        annually on the conduct of activities under such title and 
        shall report to the Board annually specifically on findings 
        from outcomes research and development of practice guidelines 
        that may affect the Board's determination of coverage of 
        services under section 401(f)(1)(G).
            (5) Other functions.--The Council shall perform the 
        functions of the Council described in section 502.
    (c) Appointment and Terms of Members.--
            (1) In general.--The Council shall be composed of 10 
        members appointed by the President. The President shall first 
        appoint individuals on a timely basis so as to provide for the 
        operation of the Council by not later than January 1, 2004.
            (2) Selection of members.--Each member of the Council shall 
        be a member of a health profession. Five members of the Council 
        shall be physicians. Individuals shall be appointed to the 
        Council on the basis of national reputations for clinical and 
        academic excellence. To the greatest extent feasible, the 
        membership of the Council shall represent the various 
        geographic regions of the United States and shall reflect the 
        racial, ethnic, and gender composition of the population of the 
        United States.
            (3) Terms of members.--Individuals appointed to the Council 
        shall serve for a term of 5 years, except that the terms of 4 
        of the individuals initially appointed shall be, as designated 
        by the President at the time of their appointment, for 1, 2, 3, 
        and 4 years.
    (d) Vacancies.--
            (1) In general.--The President shall fill any vacancy in 
        the membership of the Council in the same manner as the 
        original appointment. The vacancy shall not affect the power of 
        the remaining members to execute the duties of the Council.
            (2) Vacancy appointments.--Any member appointed to fill a 
        vacancy shall serve for the remainder of the term for which the 
        predecessor of the member was appointed.
            (3) Reappointment.--The President may reappoint a member of 
        the Council for a second term in the same manner as the 
        original appointment. A member who has served for 2 consecutive 
        5-year terms shall not be eligible for reappointment until 2 
        years after the member has ceased to serve.
    (e) Chair.--The President shall designate 1 of the members of the 
Council to serve at the will of the President as Chair of the Council.
    (f) Compensation.--Members of the Council who are not employees of 
the Federal Government shall be entitled to compensation at a level 
equivalent to level II of the Executive Schedule, in accordance with 
section 5313 of title 5, United States Code.

SEC. 502. DEVELOPMENT OF CERTAIN METHODOLOGIES, GUIDELINES, AND 
              STANDARDS.

    (a) Profiling of Patterns of Practice; Identification of 
Outliers.--The Council shall adopt methodologies for profiling the 
patterns of practice of health care professionals and for identifying 
outliers (as defined in subsection (e)).
    (b) Centers of Excellence.--The Council shall develop guidelines 
for certain medical procedures designated by the Board to be performed 
only at tertiary care centers which can meet standards for frequency of 
procedure performance and intensity of support mechanisms that are 
consistent with the high probability of desired patient outcome. 
Reimbursement under this Act for such a designated procedure may only 
be provided if the procedure was performed at a center that meets such 
standards.
    (c) Remedial Actions.--The Council shall develop standards for 
education and sanctions with respect to outliers so as to assure the 
quality of health care services provided under this Act. The Council 
shall develop criteria for referral of providers to the State licensing 
board if education proves ineffective in correcting provider practice 
behavior.
    (d) Dissemination.--The Council shall disseminate to the State--
            (1) the methodologies adopted under subsection (a);
            (2) the guidelines developed under subsection (b); and
            (3) the standards developed under subsection (c);
for use by the States under section 503.
    (e) Outlier Defined.--In this title, the term ``outlier'' means a 
health care provider whose pattern of practice, relative to applicable 
practice guidelines, suggests deficiencies in the quality of health 
care services being provided.

SEC. 503. STATE QUALITY REVIEW PROGRAMS.

    (a) Requirement.--In order to meet the requirement of section 
404(b)(1)(H), each State health security program shall establish 1 or 
more qualified entities to conduct quality reviews of persons providing 
covered services under the program, in accordance with standards 
established under subsection (b)(1) (except as provided in subsection 
(b)(2)) and subsection (d).
    (b) Federal Standards.--
            (1) In general.--The Council shall establish standards with 
        respect to--
                    (A) the adoption of practice guidelines (whether 
                developed by the Federal Government or other entities);
                    (B) the identification of outliers (consistent with 
                methodologies adopted under section 502(a));
                    (C) the development of remedial programs and 
                monitoring for outliers; and
                    (D) the application of sanctions (consistent with 
                the standards developed under section 502(c)).
            (2) State discretion.--A State may apply under subsection 
        (a) standards other than those established under paragraph (1) 
        so long as the State demonstrates to the satisfaction of the 
        Council on an annual basis that the standards applied have been 
        as efficacious in promoting and achieving improved quality of 
        care as the application of the standards established under 
        paragraph (1). Positive improvements in quality shall be 
        documented by reductions in the variations of clinical care 
        process and improvement in patient outcomes.
    (c) Qualifications.--An entity is not qualified to conduct quality 
reviews under subsection (a) unless the entity satisfies the criteria 
for competence for such entities developed by the Council under section 
501(b)(3).
    (d) Internal Quality Review.--Nothing in this section shall 
preclude an institutional provider from establishing its own internal 
quality review and enhancement programs.

SEC. 504. ELIMINATION OF UTILIZATION REVIEW PROGRAMS; TRANSITION.

    (a) Intent.--It is the intention of this title to replace by 
January 1, 2007, random utilization controls with a systematic review 
of patterns of practice that compromise the quality of care.
    (b) Superseding Case Reviews.--
            (1) In general.--Subject to the succeeding provisions of 
        this subsection, the program of quality review provided under 
        the previous sections of this title supersede all existing 
        Federal requirements for utilization review programs, including 
        requirements for random case-by-case reviews and 
programs requiring pre-certification of medical procedures on a case-
by-case basis.
            (2) Transition.--Before January 1, 2007, the Board and the 
        States may employ existing utilization review standards and 
        mechanisms as may be necessary to effect the transition to 
        pattern of practice-based reviews.
            (3) Construction.--Nothing in this subsection shall be 
        construed--
                    (A) as precluding the case-by-case review of the 
                provision of care--
                            (i) in individual incidents where the 
                        quality of care has significantly deviated from 
                        acceptable standards of practice; and
                            (ii) with respect to a provider who has 
                        been determined to be an outlier; or
                    (B) as precluding the case management of 
                catastrophic, mental health, or substance abuse cases 
                or long-term care where such management is necessary to 
                achieve appropriate, cost-effective, and beneficial 
                comprehensive medical care, as provided for in section 
                204.

 TITLE VI--HEALTH SECURITY BUDGET; PAYMENTS; COST CONTAINMENT MEASURES

              Subtitle A--Budgeting and Payments to States

SEC. 601. NATIONAL HEALTH SECURITY BUDGET.

    (a) National Health Security Budget.--
            (1) In general.--By not later than September 1 before the 
        beginning of each year (beginning with 2004), the Board shall 
        establish a national health security budget, which--
                    (A) specifies the total expenditures (including 
                expenditures for administrative costs) to be made by 
                the Federal Government and the States for covered 
                health care services under this Act; and
                    (B) allocates those expenditures among the States 
                consistent with section 604.
        Pursuant to subsection (b), such budget for a year shall not 
        exceed the budget for the preceding year increased by the 
        percentage increase in gross domestic product.
            (2) Division of budget into components.--The national 
        health security budget shall consist of at least 4 components:
                    (A) A component for quality assessment activities 
                (described in title V).
                    (B) A component for health professional education 
                expenditures.
                    (C) A component for administrative costs.
                    (D) A component (in this title referred to as the 
                ``operating component'') for operating and other 
                expenditures not described in subparagraphs (A) through 
                (C), consisting of amounts not included in the other 
                components. A State may provide for the allocation of 
                this component between capital expenditures and other 
                expenditures.
            (3) Allocation among components.--Taking into account the 
        State health security budgets established and submitted under 
        section 603, the Board shall allocate the national health 
        security budget among the components in a manner that--
                    (A) assures a fair allocation for quality 
                assessment activities (consistent with the national 
                health security spending growth limit); and
                    (B) assures that the health professional education 
                expenditure component is sufficient to provide for the 
                amount of health professional education expenditures 
                sufficient to meet the need for covered health care 
                services (consistent with the national health security 
                spending growth limit under subsection (b)(2)).
    (b) Basis for Total Expenditures.--
            (1) In general.--The total expenditures specified in such 
        budget shall be the sum of the capitation amounts computed 
        under section 602(a) and the amount of Federal administrative 
        expenditures needed to carry out this Act.
            (2) National health security spending growth limit.--For 
        purposes of this subtitle, the national health security 
        spending growth limit described in this paragraph for a year is 
        (A) zero, or, if greater, (B) the average annual percentage 
        increase in the gross domestic product (in current dollars) 
        during the 3-year period beginning with the first quarter of 
        the fourth previous year to the first quarter of the previous 
        year minus the percentage increase (if any) in the number of 
        eligible individuals residing in any State the United States 
        from the first quarter of the second previous year to the first 
        quarter of the previous year.
    (c) Definitions.--In this title:
            (1) Capital expenditures.--The term ``capital 
        expenditures'' means expenses for the purchase, lease, 
construction, or renovation of capital facilities and for equipment and 
includes return on equity capital.
            (2) Health professional education expenditures.--The term 
        ``health professional education expenditures'' means 
        expenditures in hospitals and other health care facilities to 
        cover costs associated with teaching and related research 
        activities.

SEC. 602. COMPUTATION OF INDIVIDUAL AND STATE CAPITATION AMOUNTS.

    (a) Capitation Amounts.--
            (1) Individual capitation amounts.--In establishing the 
        national health security budget under section 601(a) and in 
        computing the national average per capita cost under subsection 
        (b) for each year, the Board shall establish a method for 
        computing the capitation amount for each eligible individual 
        residing in each State. The capitation amount for an eligible 
        individual in a State classified within a risk group 
        (established under subsection (d)(2)) is the product of--
                    (A) a national average per capita cost for all 
                covered health care services (computed under subsection 
                (b));
                    (B) the State adjustment factor (established under 
                subsection (c)) for the State; and
                    (C) the risk adjustment factor (established under 
                subsection (d)) for the risk group.
            (2) State capitation amount.--
                    (A) In general.--For purposes of this title, the 
                term ``State capitation amount'' means, for a State for 
                a year, the sum of the capitation amounts computed 
                under paragraph (1) for all the residents of the State 
                in the year, as estimated by the Board before the 
                beginning of the year involved.
                    (B) Use of statistical model.--The Board may 
                provide for the computation of State capitation amounts 
                based on statistical models that fairly reflect the 
                elements that comprise the State capitation amount 
                described in subparagraph (A).
                    (C) Population information.--The Bureau of the 
                Census shall assist the Board in determining the 
                number, place of residence, and risk group 
                classification of eligible individuals.
    (b) Computation of National Average Per Capita Cost.--
            (1) For 2004.--For 2004, the national average per capita 
        cost under this paragraph is equal to--
                    (A) the average per capita health care expenditures 
                in the United States in 2002 (as estimated by the 
                Board);
                    (B) increased to 2003 by the Board's estimate of 
                the actual amount of such per capita expenditures 
                during 2003; and
                    (C) updated to 2004 by the national health security 
                spending growth limit specified in section 601(b)(2) 
                for 2004.
            (2) For succeeding years.--For each succeeding year, the 
        national average per capita cost under this subsection is equal 
        to the national average per capita cost computed under this 
        subsection for the previous year increased by the national 
        health security spending growth limit (specified in section 
        601(b)(2)) for the year involved.
    (c) State Adjustment Factors.--
            (1) In general.--Subject to the succeeding paragraphs of 
        this subsection, the Board shall develop for each State a 
        factor to adjust the national average per capita costs to 
        reflect differences between the State and the United States 
        in--
                    (A) average labor and nonlabor costs that are 
                necessary to provide covered health services;
                    (B) any social, environmental, or geographic 
                condition affecting health status or the need for 
                health care services, to the extent such a condition is 
                not taken into account in the establishment of risk 
                groups under subsection (d);
                    (C) the geographic distribution of the State's 
                population, particularly the proportion of the 
                population residing in medically underserved areas, to 
                the extent such a condition is not taken into account 
                in the establishment of risk groups under subsection 
                (d); and
                    (D) any other factor relating to operating costs 
                required to assure equitable distribution of funds 
                among the States.
            (2) Modification of health professional education 
        component.--With respect to the portion of the national health 
        security budget allocated to expenditures for health 
        professional education, the Board shall modify the State 
        adjustment factors so as to take into account--
                    (A) differences among States in health professional 
                education programs in operation as of the date of the 
                enactment of this Act; and
                    (B) differences among States in their relative need 
                for expenditures for health professional education, 
                taking into account the health professional education 
                expenditures proposed in State health security budgets 
                under section 603(a).
            (3) Budget neutrality.--The State adjustment factors, as 
        modified under paragraph (2), shall be applied under this 
        subsection in a manner that results in neither an increase nor 
        a decrease in the total amount of the Federal contributions to 
        all State health security programs under subsection (b) as a 
        result of the application of such factors.
            (4) Phase-in.--In applying State adjustment factors under 
        this subsection during the 5-year period beginning with 2004, 
        the Board shall phase-in, over such period, the use of factors 
        described in paragraph (1) in a manner so that the adjustment 
        factor for a State is based on a blend of such factors and a 
        factor that reflects the relative actual average per capita 
        costs of health services of the different States as of the time 
        of enactment of this Act.
            (5) Periodic adjustment.--In establishing the national 
        health security budget before the beginning of each year, the 
        Board shall provide for appropriate adjustments in the State 
        adjustment factors under this subsection.
    (d) Adjustments for Risk Group Classification.--
            (1) In general.--The Board shall develop an adjustment 
        factor to the national average per capita costs computed under 
        subsection (b) for individuals classified in each risk group 
        (as designated under paragraph (2)) to reflect the difference 
        between the average national average per capita costs and the 
        national average per capita cost for individuals classified in 
        the risk group.
            (2) Risk groups.--The Board shall designate a series of 
        risk groups, determined by age, health indicators, and other 
        factors that represent distinct patterns of health care 
        services utilization and costs.
            (3) Periodic adjustment.--In establishing the national 
        health security budget before the beginning of each year, the 
        Board shall provide for appropriate adjustments in the risk 
        adjustment factors under this subsection.

SEC. 603. STATE HEALTH SECURITY BUDGETS.

    (a) Establishment and Submission of Budgets.--
            (1) In general.--Each State health security program shall 
        establish and submit to the Board for each year a proposed and 
        a final State health security budget, which specifies the 
        following:
                    (A) The total expenditures (including expenditures 
                for administrative costs) to be made under the program 
                in the State for covered health care services under 
                this Act, consistent with subsection (b), broken down 
                as follows:
                            (i) By the 4 components (described in 
                        section 601(a)(2)), consistent with subsection 
                        (b).
                            (ii) Within the operating component--
                                    (I) expenditures for operating 
                                costs of hospitals and other facility-
                                based services in the State;
                                    (II) expenditures for payment to 
                                comprehensive health service 
                                organizations;
                                    (III) expenditures for payment of 
                                services provided by health care 
                                practitioners; and
                                    (IV) expenditures for other covered 
                                items and services.
                        Amounts included in the operating component 
                        include amounts that may be used by providers 
                        for capital expenditures.
                    (B) The total revenues required to meet the State 
                health security expenditures.
            (2) Proposed budget deadline.--The proposed budget for a 
        year shall be submitted under paragraph (1) not later than June 
        1 before the year.
            (3) Final budget.--The final budget for a year shall--
                    (A) be established and submitted under paragraph 
                (1) not later than October 1 before the year, and
                    (B) take into account the amounts established under 
                the national health security budget under section 601 
                for the year.
            (4) Adjustment in allocations permitted.--
                    (A) In general.--Subject to subparagraphs (B) and 
                (C), in the case of a final budget, a State may change 
                the allocation of amounts among components.
                    (B) Notice.--No such change may be made unless the 
                State has provided prior notice of the change to the 
                Board.
                    (C) Denial.--Such a change may not be made if the 
                Board, within such time period as the Board specifies, 
                disapproves such change.
    (b) Expenditure Limits.--
            (1) In general.--The total expenditures specified in each 
        State health security budget under subsection (a)(1) shall take 
        into account Federal contributions made under section 604.
            (2) Limit on claims processing and billing expenditures.--
        Each State health security budget shall provide that State 
        administrative expenditures, including expenditures for claims 
        processing and billing, shall not exceed 3 percent of the total 
        expenditures under the State health security program, unless 
        the Board determines, on a case-by-case basis, that additional 
        administrative expenditures would improve health care quality 
        and cost effectiveness.
            (3) Worker assistance.--A State health security program may 
        provide that, for budgets for years before 2007, up to 1 
        percent of the budget may be used for purposes of programs 
        providing assistance to workers who are currently performing 
        functions in the administration of the health insurance system 
        and who may experience economic dislocation as a result of the 
        implementation of the program.
    (c) Approval Process for Capital Expenditures Permitted.--Nothing 
in this title shall be construed as preventing a State health security 
program from providing for a process for the approval of capital 
expenditures based on information derived from regional planning 
agencies.

SEC. 604. FEDERAL PAYMENTS TO STATES.

    (a) In General.--Each State with an approved State health security 
program is entitled to receive, from amounts in the American Health 
Security Trust Fund, on a monthly basis each year, of an amount equal 
to one-twelfth of the product of--
            (1) the State capitation amount (computed under section 
        602(a)(2)) for the State for the year; and
            (2) the Federal contribution percentage (established under 
        subsection (b)).
    (b) Federal Contribution Percentage.--The Board shall establish a 
formula for the establishment of a Federal contribution percentage for 
each State. Such formula shall take into consideration a State's per 
capita income and revenue capacity and such other relevant economic 
indicators as the Board determines to be appropriate. In addition, 
during the 5-year period beginning with 2004, the Board may provide for 
a transition adjustment to the formula in order to take into account 
current expenditures by the State (and local governments thereof) for 
health services covered under the State health security program. The 
weighted-average Federal contribution percentage for all States shall 
equal 86 percent and in no event shall such percentage be less than 81 
percent nor more than 91 percent.
    (c) Use of Payments.--All payments made under this section may only 
be used to carry out the State health security program.
    (d) Effect of Spending Excess or Surplus.--
            (1) Spending excess.--If a State exceeds it's budget in a 
        given year, the State shall continue to fund covered health 
        services from its own revenues.
            (2) Surplus.--If a State provides all covered health 
        services for less than the budgeted amount for a year, it may 
        retain its Federal payment for that year for uses consistent 
        with this Act.

SEC. 605. ACCOUNT FOR HEALTH PROFESSIONAL EDUCATION EXPENDITURES.

    (a) Separate Account.--Each State health security program shall--
            (1) include a separate account for health professional 
        education expenditures; and
            (2) specify the general manner, consistent with subsection 
        (b), in which such expenditures are to be distributed among 
        different types of institutions and the different areas of the 
        State.
    (b) Distribution Rules.--The distribution of funds to hospitals and 
other health care facilities from the account must conform to the 
following principles:
            (1) The disbursement of funds must be consistent with 
        achievement of the national and program goals (specified in 
        section 701(b)) within the State health security program and 
        the distribution of funds from the account must be conditioned 
        upon the receipt of such reports as the Board may require in 
        order to monitor compliance with such goals.
            (2) The distribution of funds from the account must take 
        into account the potentially higher costs of placing health 
        professional students in clinical education programs in health 
        professional shortage areas.

              Subtitle B--Payments by States to Providers

SEC. 611. PAYMENTS TO HOSPITALS AND OTHER FACILITY-BASED SERVICES FOR 
              OPERATING EXPENSES ON THE BASIS OF APPROVED GLOBAL 
              BUDGETS.

    (a) Direct Payment Under Global Budget.--Payment for operating 
expenses for institutional and facility-based care, including hospital 
services and nursing facility services, under State health security 
programs shall be made directly to each institution or facility by each 
State health security program under an annual prospective global budget 
approved under the program. Such a budget shall include payment for 
outpatient care and non-facility-based care that is furnished by or 
through the facility. In the case of a hospital that is wholly owned 
(or controlled) by a comprehensive health service organization that is 
paid under section 614 on the basis of a global budget, the global 
budget of the organization shall include the budget for the hospital.
    (b) Annual Negotiations; Budget Approval--
            (1) In general.--The prospective global budget for an 
        institution or facility shall--
                    (A) be developed through annual negotiations 
                between--
                            (i) a panel of individuals who are 
                        appointed by the Governor of the State and who 
                        represent consumers, labor, business, and the 
                        State government; and
                            (ii) the institution or facility; and
                    (B) be based on a nationally uniform system of cost 
                accounting established under standards of the Board.
            (2) Considerations.--In developing a budget through 
        negotiations, there shall be taken into account at least the 
        following:
                    (A) With respect to inpatient hospital services, 
                the number, and classification by diagnosis-related 
                group, of discharges.
                    (B) An institution's or facility's past 
                expenditures.
                    (C) The extent to which debt service for capital 
                expenditures has been included in the proposed 
                operating budget.
                    (D) The extent to which capital expenditures are 
                financed directly or indirectly through reductions in 
                direct care to patients, including (but not limited to) 
                reductions in registered nursing staffing patterns or 
                changes in emergency room or primary care services or 
                availability.
                    (E) Change in the consumer price index and other 
                price indices.
                    (F) The cost of reasonable compensation to health 
                care practitioners;
                    (G) The compensation level of the institution's or 
                facility's work force.
                    (H) The extent to which the institution or facility 
                is providing health care services to meet the needs of 
                residents in the area served by the institution or 
                facility, including the institution's or facility's 
                occupancy level.
                    (I) The institution's or facility's previous 
                financial and clinical performance, based on 
                utilization and outcomes data provided under this Act.
                    (J) The type of institution or facility, including 
                whether the institution or facility is part of a 
                clinical education program or serves a health 
                professional education, research or other training 
                purpose.
                    (K) Technological advances or changes.
                    (L) Costs of the institution or facility associated 
                with meeting Federal and State regulations.
                    (M) The costs associated with necessary public 
                outreach activities.
                    (N) In the case of a for-profit facility, a 
                reasonable rate of return on equity capital, 
                independent of those operating expenses necessary to 
                fulfill the objectives of this Act.
                    (O) Incentives to facilities that maintain costs 
                below previous reasonable budgeted levels without 
                reducing the care provided.
                    (P) With respect to facilities that provide mental 
                health services and substance abuse treatment services, 
                any additional costs involved in the treatment of 
                dually diagnosed individuals.
        The portion of such a budget that relates to expenditures for 
        health professional education shall be consistent with the 
        State health security budget for such expenditures.
            (3) Provision of required information; diagnosis-related 
        group.--No budget for an institution or facility for a year may 
        be approved unless the institution or facility has submitted on 
        a timely  basis to the State health security program such 
information as the program or the Board shall specify, including in the 
case of hospitals information on discharges classified by diagnosis-
related group.
    (c) Adjustments in Approved Budgets.--
            (1) Adjustments to global budgets that contract with 
        comprehensive health service organizations.--Each State health 
        security program shall develop an administrative mechanism for 
        reducing operating funds to institutions or facilities in 
        proportion to payments made to such institutions or facilities 
        for services contracted for by a comprehensive health service 
        organization.
            (2) Amendments.--In accordance with standards established 
        by the Board, an operating and capital budget approved under 
        this section for a year may be amended before, during, or after 
        the year if there is a substantial change in any of the factors 
        relevant to budget approval.
    (d) Donations Permissible.--The States health security programs may 
permit institutions and facilities to raise funds from private sources 
to pay for newly constructed facilities, major renovations, and 
equipment. The expenditure of such funds, whether for operating or 
capital expenditures, does not obligate the State health security 
program to provide for continued support for such expenditures unless 
included in an approved global budget.

SEC. 612. PAYMENTS TO HEALTH CARE PRACTITIONERS BASED ON PROSPECTIVE 
              FEE SCHEDULE.

    (a) Fee for Service.--
            (1) In general.--Every independent health care practitioner 
        is entitled to be paid, for the provision of covered health 
        services under the State health security program, a fee for 
        each billable covered service.
            (2) Global fee payment methodologies.--The Board shall 
        establish models and encourage State health security programs 
        to implement alternative payment methodologies that incorporate 
        global fees for related services (such as all outpatient 
        procedures for treatment of a condition) or for a basic group 
        of services (such as primary care services) furnished to an 
        individual over a period of time, in order to encourage 
        continuity and efficiency in the provision of services. Such 
        methodologies shall be designed to ensure a high quality of 
        care.
            (3) Billing deadlines; electronic billing.--A State health 
        security program may deny payment for any service of an 
        independent health care practitioner for which it did not 
        receive a bill and appropriate supporting documentation (which 
        had been previously specified) within 30 days after the date 
        the service was provided. Such a program may require that bills 
        for services for which payment may be made under this section, 
        or for any class of such services, be submitted electronically.
    (b) Payment Rates Based on Negotiated Prospective Fee Schedules.--
With respect to any payment method for a class of services of 
practitioners, the State health security program shall establish, on a 
prospective basis, a payment schedule. The State health security 
program may establish such a schedule after negotiations with 
organizations representing the practitioners involved. Such fee 
schedules shall be designed to provide incentives for practitioners to 
choose primary care medicine, including general internal medicine and 
pediatrics, over medical specialization. Nothing in this section shall 
be construed as preventing a State from adjusting the payment schedule 
amounts on a quarterly or other periodic basis depending on whether 
expenditures under the schedule will exceed the budgeted amount with 
respect to such expenditures.
    (c) Billable Covered Service Defined.--In this section, the term 
``billable covered service'' means a service covered under section 201 
for which a practitioner is entitled to compensation by payment of a 
fee determined under this section.

SEC. 613. PAYMENTS TO COMPREHENSIVE HEALTH SERVICE ORGANIZATIONS.

    (a) In General.--Payment under a State health security program to a 
comprehensive health service organization to its enrollees shall be 
determined by the State--
            (1) based on a global budget described in section 611; or
            (2) based on the basic capitation amount described in 
        subsection (b) for each of its enrollees.
    (b) Basic Capitation Amount.--
            (1) In general.--The basic capitation amount described in 
        this subsection for an enrollee shall be determined by the 
        State health security program on the basis of the average 
        amount of expenditures that is estimated would be made under 
        the State health security program for covered health care 
        services for an enrollee, based on actuarial characteristics 
        (as defined by the State health security program).
            (2) Adjustment for special health needs.--The State health 
        security program shall adjust such average amounts to take into 
        account the special health needs, including a 
disproportionate number of medically underserved individuals, of 
populations served by the organization.
            (3) Adjustment for services not provided.--The State health 
        security program shall adjust such average amounts to take into 
        account the cost of covered health care services that are not 
        provided by the comprehensive health service organization under 
        section 303(a).

SEC. 614. PAYMENTS FOR COMMUNITY-BASED PRIMARY HEALTH SERVICES.

    (a) In General.--In the case of community-based primary health 
services, subject to subsection (b), payments under a State health 
security program shall--
            (1) be based on a global budget described in section 611;
            (2) be based on the basic primary care capitation amount 
        described in subsection (c) for each individual enrolled with 
        the provider of such services; or
            (3) be made on a fee-for-service basis under section 612.
    (b) Payment Adjustment.--Payments under subsection (a) may include, 
consistent with the budgets developed under this title--
            (1) an additional amount, as set by the State health 
        security program, to cover the costs incurred by a provider 
        which serves persons not covered by this Act whose health care 
        is essential to overall community health and the control of 
        communicable disease, and for whom the cost of such care is 
        otherwise uncompensated;
            (2) an additional amount, as set by the State health 
        security program, to cover the reasonable costs incurred by a 
        provider that furnishes case management services (as defined in 
        section 1915(g)(2) of the Social Security Act), transportation 
        services, and translation services; and
            (3) an additional amount, as set by the State health 
        security program, to cover the costs incurred by a provider in 
        conducting health professional education programs in connection 
        with the provision of such services.
    (c) Basic Primary Care Capitation Amount.--
            (1) In general.--The basic primary care capitation amount 
        described in this subsection for an enrollee with a provider of 
        community-based primary health services shall be determined by 
        the State health security program on the basis of the average 
        amount of expenditures that is estimated would be made under 
        the State health security program for such an enrollee, based 
        on actuarial characteristics (as defined by the State health 
        security program).
            (2) Adjustment for special health needs.--The State health 
        security program shall adjust such average amounts to take into 
        account the special health needs, including a disproportionate 
        number of medically underserved individuals, of populations 
        served by the provider.
            (3) Adjustment for services not provided.--The State health 
        security program shall adjust such average amounts to take into 
        account the cost of community-based primary health services 
        that are not provided by the provider.
    (d) Community-Based Primary Health Services Defined.--In this 
section, the term ``community-based primary health services'' has the 
meaning given such term in section 202(a).

SEC. 615. PAYMENTS FOR PRESCRIPTION DRUGS.

    (a) Establishment of List.--
            (1) In general.--The Board shall establish a list of 
        approved prescription drugs and biologicals that the Board 
        determines are necessary for the maintenance or restoration of 
        health or of employability or self-management and eligible for 
        coverage under this Act.
            (2) Exclusions.--The Board may exclude reimbursement under 
        this Act for ineffective, unsafe, or over-priced products where 
        better alternatives are determined to be available.
    (b) Prices.--For each such listed prescription drug or biological 
covered under this Act, for insulin, and for medical foods, the Board 
shall from time to time determine a product price or prices which shall 
constitute the maximum to be recognized under this Act as the cost of a 
drug to a provider thereof. The Board may conduct negotiations, on 
behalf of State health security programs, with product manufacturers 
and distributors in determining the applicable product price or prices.
    (c) Charges by Independent Pharmacies.--Each State health security 
program shall provide for payment for a prescription drug or biological 
or insulin furnished by an independent pharmacy based on the drug's 
cost to the pharmacy (not in excess of the applicable product price 
established under subsection (b)) plus a dispensing fee. In accordance 
with standards established by the Board, each State health security 
program, after consultation with representatives of the pharmaceutical 
profession, shall establish schedules of dispensing fees, designed to 
afford reasonable compensation to independent pharmacies after taking 
into account variations in their cost of operation resulting from 
regional differences, differences in the volume of prescription drugs 
dispensed, differences in services provided, the need to maintain 
expenditures within the budgets established under this title, and other 
relevant factors.

SEC. 616. PAYMENTS FOR APPROVED DEVICES AND EQUIPMENT.

    (a) Establishment of List.--The Board shall establish a list of 
approved durable medical equipment and therapeutic devices and 
equipment (including eyeglasses, hearing aids, and prosthetic 
appliances), that the Board determines are necessary for the 
maintenance or restoration of health or of employability or self-
management and eligible for coverage under this Act.
    (b) Considerations and Conditions.--In establishing the list under 
subsection (a), the Board shall take into consideration the efficacy, 
safety, and cost of each item contained on such list, and shall attach 
to any item such conditions as the Board determines appropriate with 
respect to the circumstances under which, or the frequency with which, 
the item may be prescribed.
    (c) Prices.--For each such listed item covered under this Act, the 
Board shall from time to time determine a product price or prices which 
shall constitute the maximum to be recognized under this Act as the 
cost of the item to a provider thereof. The Board may conduct 
negotiations, on behalf of State health security programs, with 
equipment and device manufacturers and distributors in determining the 
applicable product price or prices.
    (d) Exclusions.--The Board may exclude from coverage under this Act 
ineffective, unsafe, or overpriced products where better alternatives 
are determined to be available.

SEC. 617. PAYMENTS FOR OTHER ITEMS AND SERVICES.

    In the case of payment for other covered health services, the 
amount of payment under a State health security program shall be 
established by the program--
            (1) in accordance with payment methodologies which are 
        specified by the Board, after consultation with the American 
        Health Security Advisory Council, or methodologies established 
        by the State under section 620; and
            (2) consistent with the State health security budget.

SEC. 618. PAYMENT INCENTIVES FOR MEDICALLY UNDERSERVED AREAS.

    (a) Model Payment Methodologies.--In addition to the payment 
amounts otherwise provided in this title, the Board shall establish 
model payment methodologies and other incentives that promote the 
provision of covered health care services in medically underserved 
areas, particularly in rural and inner-city underserved areas.
    (b) Construction.--Nothing in this title shall be construed as 
limiting the authority of State health security programs to increase 
payment amounts or otherwise provide additional incentives, consistent 
with the State health security budget, to encourage the provision of 
medically necessary and appropriate services in underserved areas.

SEC. 619. AUTHORITY FOR ALTERNATIVE PAYMENT METHODOLOGIES.

    A State health security program, as part of its plan under section 
404(a), may use a payment methodology other than a methodology required 
under this subtitle so long as--
            (1) such payment methodology does not affect the 
        entitlement of individuals to coverage, the weighting of fee 
        schedules to encourage an increase in the number of primary 
        care providers, the ability of individuals to choose among 
        qualified providers, the benefits covered under the program, or 
        the compliance of the program with the State health security 
        budget under subtitle A; and
            (2) the program submits periodic reports to the Board 
        showing the operation and effectiveness of the alternative 
        methodology, in order for the Board to evaluate the 
        appropriateness of applying the alternative methodology to 
        other States.

     Subtitle C--Mandatory Assignment and Administrative Provisions

SEC. 631. MANDATORY ASSIGNMENT.

    (a) No Balance Billing.--Payments for benefits under this Act shall 
constitute payment in full for such benefits and the entity furnishing 
an item or service for which payment is made under this Act shall 
accept such payment as payment in full for the item or service and may 
not accept any payment or impose any charge for any such item or 
service other than accepting payment from the State health security 
program in accordance with this Act.
    (b) Enforcement.--If an entity knowingly and willfully bills for an 
item or service or accepts payment in violation of subsection (a), the 
Board may apply sanctions against the entity in the same manner as 
sanctions could have been imposed under section 1842(j)(2) of the 
Social Security Act for a violation of section 1842(j)(1) of such Act. 
Such sanctions are in addition to any sanctions that a State may impose 
under its State health security program.

SEC. 632. PROCEDURES FOR REIMBURSEMENT; APPEALS.

    (a) Procedures for Reimbursement.--In accordance with standards 
issued by the Board, a State health security program shall establish a 
timely and administratively simple procedure to assure payment within 
60 days of the date of submission of clean claims by providers under 
this Act.
    (b) Appeals Process.--Each State health security program shall 
establish an appeals process to handle all grievances pertaining to 
payment to providers under this title.

  TITLE VII--PROMOTION OF PRIMARY HEALTH CARE; DEVELOPMENT OF HEALTH 
     SERVICE CAPACITY; PROGRAMS TO ASSIST THE MEDICALLY UNDERSERVED

   Subtitle A--Promotion and Expansion of Primary Care Professional 
                                Training

SEC. 701. ROLE OF BOARD; ESTABLISHMENT OF PRIMARY CARE PROFESSIONAL 
              OUTPUT GOALS.

    (a) In General.--The Board is responsible for--
            (1) coordinating health professional education policies and 
        goals, in consultation with the Secretary of Health and Human 
        Services (in this title referred to as the ``Secretary''), to 
        achieve the national goals specified in subsection (b);
            (2) overseeing the health professional education 
        expenditures of the State health security programs from the 
        account established under section 602(c);
            (3) developing and maintaining, in cooperation with the 
        Secretary, a system to monitor the number and specialties of 
        individuals through their health professional education, any 
        postgraduate training, and professional practice; and
            (4) developing, coordinating, and promoting other policies 
        that expand the number of primary care practitioners.
    (b) National Goals.--The national goals specified in this 
subsection are as follows:
            (1) Graduate medical education.--By not later than 5 years 
        after the date of the enactment of this Act, at least 50 
        percent of the residents in medical residency education 
        programs (as defined in subsection (e)(1)) are primary care 
        residents (as defined in subsection (e)(3)).
            (2) Midlevel primary care practitioners.--To assure an 
        adequate supply of primary care practitioners, there shall be a 
        number, specified by the Board, of midlevel primary care 
        practitioners (as defined in subsection (e)(2)) employed in the 
        health care system as of January 1, 2007.
    (c) Method for Attainment of National Goal for Graduate Medical 
Education; Program Goals.--
            (1) In general.--The Board shall establish a method of 
        applying the national goal in subsection (b)(1) to program 
        goals for each medical residency education program or to 
        medical residency education consortia.
            (2) Consideration.--The program goals under paragraph (1) 
        shall be based on the distribution of medical schools and other 
        teaching facilities within each State health security program, 
        and the number of positions for graduate medical education.
            (3) Medical residency education consortium.--In this 
        subsection, the term ``medical residency education consortium'' 
        means a consortium of medical residency education programs in a 
        contiguous geographic area (which may be an interstate area) if 
        the consortium--
                    (A) includes at least 1 medical school with a 
                teaching hospital and related teaching settings; and
                    (B) has an affiliation with qualified community-
                based primary health service providers described in 
                section 202(a) and with at least 1 comprehensive health 
                service organization established under section 303.
            (4) Enforcement through state health security budgets.--The 
        Board shall develop a formula for reducing payments to State 
        health security programs (that provide for payments to a 
        medical residency education program) that failed to meet the 
        goal for the program established under this subsection.
    (d) Method for Attainment of National Goal for Midlevel Primary 
Care Practitioners.--To assist in attaining the national goal 
identified in subsection (b)(2), the Board shall--
            (1) advise the Public Health Service on allocations of 
        funding under titles VII and VIII of the Public Health Service 
        Act, the National Health Service Corps, and other programs in 
        order to increase the supply of midlevel primary care 
        practitioners; and
            (2) commission a study of the potential benefits and 
        disadvantages of expanding the scope of practice authorized 
        under State laws for any class of midlevel primary care 
        practitioners.
    (e) Definitions.--In this title:
            (1) Medical residency education program.--The term 
        ``medical residency education program'' means a program that 
        provides education and training to graduates of medical schools 
        in order to meet requirements for licensing and certification 
        as a physician, and includes the medical school supervising the 
        program and includes the hospital or other facility in which 
        the program is operated.
            (2) Midlevel primary care practitioner.--The term 
        ``midlevel primary care practitioner'' means a clinical nurse 
        practitioner, certified nurse midwife, physician assistance, or 
        other nonphysician practitioner, specified by the Board, as 
        authorized to practice under State law.
            (3) Primary care resident.--The term ``primary care 
        resident'' means (in accordance with criteria established by 
        the Board) a resident being trained in a distinct program of 
        family practice medicine, general practice, general internal 
        medicine, or general pediatrics.

SEC. 702. ESTABLISHMENT OF ADVISORY COMMITTEE ON HEALTH PROFESSIONAL 
              EDUCATION.

    (a) In General.--The Board shall provide for an Advisory Committee 
on Health Professional Education (in this section referred to as the 
``Committee'') to advise the Board on its activities under section 701.
    (b) Membership.--The Committee shall be composed of--
            (1) the Chair of the Board, who shall serve as Chair of the 
        Committee; and
            (2) 12 members, not otherwise in the employ of the United 
        States, appointed by the Board without regard to the provisions 
        of title 5, United States Code, governing appointments in the 
        competitive service.
The appointed members shall provide a balanced point of view with 
respect to health professional education, primary care disciplines, and 
health care policy and shall include individuals who are representative 
of medical schools, other health professional schools, residency 
programs, primary care practitioners, teaching hospitals, professional 
associations, public health organizations, State health security 
programs, and consumers.
    (c) Terms of Members.--Each appointed member shall hold office for 
a term of 5 years, except that--
            (1) any member appointed to fill a vacancy occurring during 
        the term for which the member's predecessor was appointed shall 
        be appointed for the remainder of that term; and
            (2) the terms of the members first taking office shall 
        expire, as designated by the Board at the time of appointment, 
        2 at the end of the second year, 2 at the end of the third 
        year, 2 at the end of the fourth year, and 3 at the end of the 
        fifth year after the date of enactment of this Act.
    (d) Vacancies.--
            (1) In general.--The Board shall fill any vacancy in the 
        membership of the Committee in the same manner as the original 
        appointment. The vacancy shall not affect the power of the 
        remaining members to execute the duties of the Committee.
            (2) Vacancy appointments.--Any member appointed to fill a 
        vacancy shall serve for the remainder of the term for which the 
        predecessor of the member was appointed.
            (3) Reappointment.--The Board may reappoint an appointed 
        member of the Committee for a second term in the same manner as 
        the original appointment.
    (e) Duties.--It shall be the duty of the Committee to advise the 
Board concerning graduate medical education policies under this title.
    (f) Staff.--The Committee, its members, and any committees of the 
Committee shall be provided with such secretarial, clerical, or other 
assistance as may be authorized by the Board for carrying out their 
respective functions.
    (g) Meetings.--The Committee shall meet as frequently as the Board 
deems necessary, but not less than 4 times each year. Upon request by 4 
or more members it shall be the duty of the Chair to call a meeting of 
the Committee.
    (h) Compensation.--Members of the Committee shall be reimbursed by 
the Board for travel and per diem in lieu of subsistence expenses 
during the performance of duties of the Board in accordance with 
subchapter I of chapter 57 of title 5, United States Code.
    (i) FACA Not Applicable.--The provisions of the Federal Advisory 
Committee Act shall not apply to the Committee.

SEC. 703. GRANTS FOR HEALTH PROFESSIONS EDUCATION, NURSE EDUCATION, AND 
              THE NATIONAL HEALTH SERVICE CORPS.

    (a) Transfers to Public Health Service.--From the amounts provided 
under subsection (c), the Board shall make transfers from the American 
Health Security Trust Fund to the Public Health Service under subpart 
II of part D of title III, title VII, and title VIII of the Public 
Health Service Act for the support of the National Health Service 
Corps, health professions education, and nursing education, including 
education of clinical nurse practitioners, certified registered nurse 
anesthetists, certified nurse midwives, and physician assistants. Of 
the amounts so transferred in each year, not less than 50 percent shall 
be expended for the support of the National Health Service Corps.
    (b) Range of Funds.--The amount of transfers under subsection (a) 
for any fiscal year shall be an amount (specified by the Board each 
year) not less than \4/100\ percent and not to exceed \6/100\ percent 
of the amounts the Board estimates will be expended from the Trust Fund 
in the fiscal year.
    (c) Funds Supplemental to Other Funds.--The funds provided under 
this section with respect to provision of services are in addition to, 
and not in replacement of, funds made available under the provisions 
referred to in subsection (a) and shall be administered in accordance 
with the terms of such provisions. The Board shall make no transfer of 
funds under this section for any fiscal year for which the total 
appropriations for the programs authorized by such provisions are less 
than the total amount appropriated for such programs in fiscal year 
2002.

                Subtitle B--Direct Health Care Delivery

SEC. 711. SETASIDE FOR PUBLIC HEALTH.

    (a) Transfers to Public Health Service.--From the amounts provided 
under subsection (c), the Board shall make transfers from the American 
Health Security Trust Fund to the Public Health Service for the 
following purposes (other than payment for services covered under title 
II):
            (1) For payments to States under the maternal and child 
        health block grants under title V of the Social Security Act.
            (2) For prevention and treatment of tuberculosis under 
        section 317 of the Public Health Service Act.
            (3) For the prevention and treatment of sexually 
        transmitted diseases under section 318 of the Public Health 
        Service Act.
            (4) Preventive health block grants under part A of title 
        XIX of the Public Health Service Act.
            (5) Grants to States for community mental health services 
        under subpart I of part B of title XIX of the Public Health 
        Service Act.
            (6) Grants to States for prevention and treatment of 
        substance abuse under subpart II of part B of title XIX of the 
        Public Health Service Act.
            (7) Grants for HIV health care services under parts A, B, 
        and C of title XXVI of the Public Health Service Act.
            (8) Public health formula grants described in subsection 
        (d).
    (b) Range of Funds.--The amount of transfers under subsection (a) 
for any fiscal year shall be an amount (specified by the Board each 
year) not less than \1/10\ percent and not to exceed \14/100\ percent 
of the amounts the Board estimates will be expended from the Trust Fund 
in the fiscal year.
    (c) Funds Supplemental to Other Funds.--The funds provided under 
this section with respect to provision of services are in addition to, 
and not in replacement of, funds made available under the programs 
referred to in subsection (a) and shall be administered in accordance 
with the terms of such programs.
    (d) Required Reports on Health Status.--The Secretary shall require 
each State receiving funds under this section to submit annual reports 
to the Secretary on the health status of the population and measurable 
objectives for improving the health of the public in the State. Such 
reports shall include the following:
            (1) A comparison of the measures of the State and local 
        public health system compared to relevant objectives set forth 
        in ``Healthy People 2000'' or subsequent national objectives 
        set by the Secretary.
            (2) A description of health status measures to be improved 
        within the State (at the State and local levels) through 
        expanded public health functions and health promotion and 
        disease prevention programs.
            (3) Measurable outcomes and process objectives for 
        improving health status, and a report on outcomes from the 
        previous year.
            (4) Information regarding how Federal funding has improved 
        population-based prevention activities and programs.
            (5) A description of the core public health functions to be 
        carried out at the local level.
            (6) A description of the relationship between the State's 
        public health system, community-based health promotion and 
disease prevention providers, and the State health security program.
    (e) Limitation on Fund Transfers.--The Board shall make no transfer 
of funds under this section for any fiscal year for which the total 
appropriations for such programs are less than the total amount 
appropriated for such programs in fiscal year 2002.
    (f) Public Health Formula Grants.--The Secretary shall provide 
stable funds to States through formula grants for the purpose of 
carrying out core public health functions to monitor and protect the 
health of communities from communicable diseases and exposure to toxic 
environmental pollutants, occupational hazards, harmful products, and 
poor health outcomes. Such functions include the following:
            (1) Data collection, analysis, and assessment of public 
        health data, vital statistics, and personal health data to 
        assess community health status and outcomes reporting. This 
        function includes the acquisition and installation of hardware 
        and software, and personnel training and technical assistance 
        to operate and support automated and integrated information 
        systems.
            (2) Activities to protect the environment and to assure the 
        safety of housing, workplaces, food, and water.
            (3) Investigation and control of adverse health conditions, 
        and threats to the health status of individuals and the 
        community. This function includes the identification and 
        control of outbreaks of infectious disease, patterns of chronic 
        disease and injury, and cooperative activities to reduce the 
        levels of violence.
            (4) Health promotion and disease prevention activities for 
        which there is a significant need and a high priority of the 
        Public Health Service.
            (5) The provision of public health laboratory services to 
        complement private clinical laboratory services, including--
                    (A) screening tests for metabolic diseases in 
                newborns;
                    (B) toxicology assessments of blood lead levels and 
                other environmental toxins;
                    (C) tuberculosis and other diseases requiring 
                partner notification; and
                    (D) testing for infectious and food-borne diseases.
            (6) Training and education for the public health 
        professions.
            (7) Research on effective and cost-effective public health 
        practices. This function includes the development, testing, 
        evaluation, and publication of results of new prevention and 
        public health control interventions.
            (8) Integration and coordination of the prevention programs 
        and services of community-based providers, local and State 
        health departments, and other sectors of State and local 
        government that affect health.

SEC. 712. SETASIDE FOR PRIMARY HEALTH CARE DELIVERY.

    (a) Transfers to Public Health Service.--From the amounts provided 
under subsection (c), the Board shall make transfers from the American 
Health Security Trust Fund to the Public Health Service for the program 
of primary care service expansion grants under subpart V of part D of 
title III of the Public Health Service Act (as added by section 713 of 
this Act).
    (b) Range of Funds.--The amount of transfers under subsection (a) 
for any fiscal year shall be an amount (specified by the Board each 
year) not less than \6/100\ percent and not to exceed \1/10\ percent of 
the amounts the Board estimates will be expended from the Trust Fund in 
the fiscal year.
    (c) Funds Supplemental to Other Funds.--The funds provided under 
this section with respect to provision of services are in addition to, 
and not in replacement of, funds made available under the sections 329, 
330, 340, 340A, 1001, and 2655 of the Public Health Service Act. The 
Board shall make no transfer of funds under this section for any fiscal 
year for which the total appropriations for such sections are less than 
the total amount appropriated under such sections in fiscal year 2002.

SEC. 713. PRIMARY CARE SERVICE EXPANSION GRANTS.

    Part D of title III of the Public Health Service Act (42 U.S.C. 
254b et seq.) is amended by adding at the end thereof the following new 
subpart:

                  ``Subpart XI--Primary Care Expansion

``SEC. 340H. EXPANDING PRIMARY CARE DELIVERY CAPACITY IN URBAN AND 
              RURAL AREAS.

    ``(a) Grants for Primary Care Centers.--From the amounts described 
in subsection (c), the American Health Security Standards Board shall 
make grants to public and nonprofit private entities for projects to 
plan and develop primary care centers which will serve medically 
underserved populations (as defined in section 330(b)(3)) in urban and 
rural areas and to deliver primary  care services to such populations 
in such areas. The funds provided under such a grant may be used for 
the same purposes for which a grant may be made under subsection (c), 
(e), (f), (g), (h), or (i) of section 330.
    ``(b) Process of Awarding Grants.--The provisions of subsection 
(j)(1) of section 330 shall apply to a grant under this section in the 
same manner as they apply to a grant under the corresponding subsection 
of such section. The provisions of subsection (l)(2)(A) of such section 
shall apply to grants for projects to plan and develop primary care 
centers under this section in the same manner as they apply to grants 
under such section.
    ``(c) Funding as Set-Aside From Trust Fund.--Funding to carry out 
this section is provided from the American Health Security Trust Fund 
in accordance with section 912 of the American Health Security Act.
    ``(d) Primary Care Center Defined.--In this section, the term 
``primary care center'' means--
            ``(1) a health center (as defined in section 330(1));
            ``(2) an entity qualified to receive a grant under section 
        330, 1001 or 2655; or
            ``(3) a federally qualified health center (as defined in 
        section 1905(l)(2)(B) of the Social Security Act).''.

             Subtitle C--Primary Care and Outcomes Research

SEC. 721. SET-ASIDE FOR OUTCOMES RESEARCH.

    (a) Grants for Outcomes Research.--The Board shall make transfers 
from the American Health Security Trust Fund to the Agency for Health 
Care Policy and Research under title IX of the Public Health Service 
Act for the purpose of carrying out activities under such title. The 
Secretary shall assure that there is a special emphasis placed on 
pediatric outcomes research.
    (b) Range of Funds.--The amount of transfers under subsection (a) 
for any fiscal year shall be an amount (specified by the Board each 
year) not less than \1/100\ percent and not to exceed \2/100\ percent 
of the amounts the Board estimates will be expended from the Trust Fund 
in the fiscal year.
    (c) Funds supplemental to Other Funds.--The funds provided under 
this section with respect to provision of services are in addition to, 
and not in replacement of, funds made available to the Agency for 
Health Care Policy and Research under section 926 of the Public Health 
Service Act. The Board shall make no transfer of funds under this 
section for any fiscal year for which the total appropriations under 
such section are less than the total amount appropriated under such 
section and title in fiscal year 2002.
    (d) Conforming Amendment.--Section 927(b) of the Public Health 
Service Act (42 U.S.C. 299c-6(b)) is amended by striking ``of the 
fiscal years 2001 through 2005'' and inserting ``subsequent fiscal 
year''.

SEC. 722. OFFICE OF PRIMARY CARE AND PREVENTION RESEARCH.

    (a) In General.--Title IV of the Public Health Service Act is 
amended--
            (1) by redesignating parts G through I as parts H through 
        J, respectively; and
            (2) by inserting after part F the following new part:

           ``Part G--Research on Primary Care and Prevention

``SEC. 486E. OFFICE OF PRIMARY CARE AND PREVENTION RESEARCH.

    ``(a) Establishment.--There is established within the Office of the 
Director of NIH an office to be known as the Office of Primary Care and 
Prevention Research (in this part referred to as the `Office'). The 
Office shall be headed by a director, who shall be appointed by the 
Director of NIH.
    ``(b) Purpose.--The Director of the Office shall--
            ``(1) identify projects of research on primary care and 
        prevention, for children as well as adults, that should be 
        conducted or supported by the national research institutes, 
        with particular emphasis on--
                    ``(A) clinical patient care, with special emphasis 
                on pediatric clinical care and diagnosis;
                    ``(B) diagnostic effectiveness;
                    ``(C) primary care education;
                    ``(D) health and family planning services;
                    ``(E) medical effectiveness outcomes of primary 
                care procedures and interventions; and
                    ``(F) the use of multidisciplinary teams of health 
                care practitioners;
            ``(2) identify multidisciplinary research related to 
        primary care and prevention that should be so conducted;
            ``(3) promote coordination and collaboration among entities 
        conducting research identified under any of paragraphs (1) and 
        (2);
            ``(4) encourage the conduct of such research by entities 
        receiving funds from the national research institutes;
            ``(5) recommend an agenda for conducting and supporting 
        such research;
            ``(6) promote the sufficient allocation of the resources of 
        the national research institutes for conducting and supporting 
        such research; and
            ``(7) prepare the report required in section 486G.
    ``(c) Primary Care and Prevention Research Defined.--For purposes 
of this part, the term `primary care and prevention research' means 
research on improvement of the practice of family medicine, general 
internal medicine, and general pediatrics, and includes research 
relating to--
            ``(1) obstetrics and gynecology, dentistry, or mental 
        health or substance abuse treatment when provided by a primary 
        care physician or other primary care practitioner; and
            ``(2) primary care provided by multidisciplinary teams.

``SEC. 486F. NATIONAL DATA SYSTEM AND CLEARINGHOUSE ON PRIMARY CARE AND 
              PREVENTION RESEARCH.

    ``(a) Data System.--The Director of NIH, in consultation with the 
Director of the Office, shall establish a data system for the 
collection, storage, analysis, retrieval, and dissemination of 
information regarding primary care and prevention research that is 
conducted or supported by the national research institutes. Information 
from the data system shall be available through information systems 
available to health care professionals and providers, researchers, and 
members of the public.
    ``(b) Clearinghouse.--The Director of NIH, in consultation with the 
Director of the Office and with the National Library of Medicine, shall 
establish, maintain, and operate a program to provide, and encourage 
the use of, information on research and prevention activities of the 
national research institutes that relate to primary care and prevention 
research.

``SEC. 486G. BIENNIAL REPORT.

    ``(a) In General.--With respect to primary care and prevention 
research, the Director of the Office shall, not later than 1 year after 
the date of the enactment of this part, and biennially thereafter, 
prepare a report--
            ``(1) describing and evaluating the progress made during 
        the preceding 2 fiscal years in research and treatment 
        conducted or supported by the National Institutes of Health;
            ``(2) summarizing and analyzing expenditures made by the 
        agencies of such Institutes (and by such Office) during the 
        preceding 2 fiscal years; and
            ``(3) making such recommendations for legislative and 
        administrative initiatives as the Director of the Office 
        determines to be appropriate.
    ``(b) Inclusion in Biennial Report of Director of NIH.--The 
Director of the Office shall submit each report prepared under 
subsection (a) to the Director of NIH for inclusion in the report 
submitted to the President and the Congress under section 403.

``SEC. 486H. AUTHORIZATION OF APPROPRIATIONS.

    ``For the Office of Primary Care and Prevention Research, there are 
authorized to be appropriated $150,000,000 for fiscal year 2004, 
$180,000,000 for fiscal year 2005, and $216,000,000 for fiscal year 
2006.''.
    (b) Requirement of Sufficient Allocation of Resources of 
Institutes.--Section 402(b) of the Public Health Service Act (42 U.S.C. 
282(b)) is amended--
            (1) in paragraph (13), by striking ``and'' after the 
        semicolon at the end;
            (2) in paragraph (14), by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after paragraph (14) the following new 
        paragraph:
            ``(15) after consultation with the Director of the Office 
        of Primary Care and Prevention Research, shall ensure that 
        resources of the National Institutes of Health are sufficiently 
        allocated for projects on primary care and prevention research 
        that are identified under section 486E(b).''.

               Subtitle D--School-Related Health Services

SEC. 731. AUTHORIZATIONS OF APPROPRIATIONS.

    (a) Funding for School-Related Health Services.--For the purpose of 
carrying out this subtitle, there are authorized to be appropriated 
$100,000,000 for fiscal year 2006, $275,000,000 for fiscal year 2007, 
$350,000,000 for fiscal year 2008, and $400,000,000 for each of the 
fiscal years 2009 and 2010.
    (b) Relation to Other Funds.--The authorizations of appropriations 
established in subsection (a) are in addition to any other 
authorizations of appropriations that are available for the purpose 
described in such subsection.

SEC. 732. ELIGIBILITY FOR DEVELOPMENT AND OPERATION GRANTS.

    (a) In General.--Entities eligible to apply for and receive grants 
under section 734 or 735 are the following:
            (1) State health agencies that apply on behalf of local 
        community partnerships and other communities in need of health 
        services for school-aged children within the State.
            (2) Local community partnerships in States in which health 
        agencies have not applied.
    (b) Local Community Partnerships.--
            (1) In general.--A local community partnership under 
        subsection (a)(2) is an entity that, at a minimum, includes--
                    (A) a local health care provider with experience in 
                delivering services to school-aged children;
                    (B) 1 or more local public schools; and
                    (C) at least 1 community based organization located 
                in the community to be served that has a history of 
                providing services to school-aged children in the 
                community who are at-risk.
            (2) Participation.--A partnership described in paragraph 
        (1) shall, to the maximum extent feasible, involve broad based 
        community participation from parents and adolescent children to 
        be served, health and social service providers, teachers and 
        other public school and school board personnel, development and 
        service organizations for adolescent children, and interested 
        business leaders. Such participation may be evidenced through 
        an expanded partnership, or an advisory board to such 
        partnership.
    (c) Definitions Regarding Children.--For purposes of this subtitle:
            (1) The term ``adolescent children'' means school-aged 
        children who are adolescents.
            (2) The term ``school-aged children'' means individuals who 
        are between the ages of 4 and 19 (inclusive).

SEC. 733. PREFERENCES.

    (a) In General.--In making grants under sections 734 and 735, the 
Secretary shall give preference to applicants whose communities to be 
served show the most substantial level of need for such services among 
school-aged children, as measured by indicators of community health 
including the following:
            (1) High levels of poverty.
            (2) The presence of a medically underserved population.
            (3) The presence of a health professional shortage area.
            (4) High rates of indicators of health risk among school-
        aged children, including a high proportion of such children 
        receiving services through the Individuals with Disabilities 
        Education Act, adolescent pregnancy, sexually transmitted 
        disease (including infection with the human immunodeficiency 
        virus), preventable disease, communicable disease, intentional 
        and unintentional injuries, community and gang violence, 
        unemployment among adolescent children, juvenile justice 
        involvement, and high rates of drug and alcohol exposure.
    (b) Linkage to Community Health Centers.--In making grants under 
sections 734 and 735, the Secretary shall give preference to applicants 
that demonstrate a linkage to community health centers.

SEC. 734. GRANTS FOR DEVELOPMENT OF PROJECTS.

    (a) In General.--The Secretary may make grants to State health 
agencies or to local community partnerships to develop school health 
service sites.
    (b) Use of Funds.--A project for which a grant may be made under 
subsection (a) may include but not be limited to the cost of the 
following:
            (1) Planning for the provision of school health services.
            (2) Recruitment, compensation, and training of health and 
        administrative staff.
            (3) The development of agreements, and the acquisition and 
        development of equipment and information services, necessary to 
        support information exchange between school health service 
        sites and health plans, health providers, and other entities 
        authorized to collect information under this Act.
            (4) Other activities necessary to assume operational 
        status.
    (c) Application for Grant.--
            (1) In general.--Applicants shall submit applications in a 
        form and manner prescribed by the Secretary.
            (2) Applications by state health agencies.--
                    (A) In the case of applicants that are State health 
                agencies, the application shall contain assurances that 
                the State health agency is applying for funds--
                            (i) on behalf of at least 1 local community 
                        partnership; and
                            (ii) on behalf of at least 1 other 
                        community identified by the State as in need of 
                        the services funded under this subtitle but 
                        without a local community partnership.
                    (B) In the case of the communities identified in 
                applications submitted by State health agencies that do 
                not yet have local community partnerships (including 
                the community identified under subparagraph (A)(ii)), 
                the State shall describe the steps that will be taken 
to aid the communities in developing a local community partnership.
                    (C) A State applying on behalf of local community 
                partnerships and other communities may retain not more 
                than 10 percent of grants awarded under this subtitle 
                for administrative costs.
    (d) Contents of Application.--In order to receive a grant under 
this section, an applicant must include in the application the 
following information:
            (1) An assessment of the need for school health services in 
        the communities to be served, using the latest available health 
        data and health goals and objectives established by the 
        Secretary.
            (2) A description of how the applicant will design the 
        proposed school health services to reach the maximum number of 
        school-aged children who are at risk.
            (3) An explanation of how the applicant will integrate its 
        services with those of other health and social service programs 
        within the community.
            (4) A description of a quality assurance program which 
        complies with standards that the Secretary may prescribe.
    (e) Number of Grants.--Not more than 1 planning grant may be made 
to a single applicant. A planning grant may not exceed 2 years in 
duration.

SEC. 735. GRANTS FOR OPERATION OF PROJECTS.

    (a) In General.--The Secretary may make grants to State health 
agencies or to local community partnerships for the cost of operating 
school health service sites.
    (b) Use of Grant.--The costs for which a grant may be made under 
this section include but are not limited to the following:
            (1) The cost of furnishing health services that are not 
        otherwise covered under this Act or by any other public or 
        private insurer.
            (2) The cost of furnishing services whose purpose is to 
        increase the capacity of individuals to utilize available 
        health services, including transportation, community and 
        patient outreach, patient education, translation services, and 
        such other services as the Secretary determines to be 
        appropriate in carrying out such purpose.
            (3) Training, recruitment and compensation of health 
        professionals and other staff.
            (4) Outreach services to school-aged children who are at 
        risk and to the parents of such children.
            (5) Linkage of individuals to health plans, community 
        health services and social services.
            (6) Other activities deemed necessary by the Secretary.
    (c) Application for Grant.--Applicants shall submit applications in 
a form and manner prescribed by the Secretary. In order to receive a 
grant under this section, an applicant must include in the application 
the following information:
            (1) A description of the services to be furnished by the 
        applicant.
            (2) The amounts and sources of funding that the applicant 
        will expend, including estimates of the amount of payments the 
        applicant will receive from sources other than the grant.
            (3) Such other information as the Secretary determines to 
        be appropriate.
    (d) Additional Contents of Application.--In order to receive a 
grant under this section, an applicant must meet the following 
conditions:
            (1) The applicant furnishes the following services:
                    (A) Diagnosis and treatment of simple illnesses and 
                minor injuries.
                    (B) Preventive health services, including health 
                screenings.
                    (C) Services provided for the purpose described in 
                subsection (b)(2).
                    (D) Referrals and followups in situations involving 
                illness or injury.
                    (E) Health and social services, counseling 
                services, and necessary referrals, including referrals 
                regarding mental health and substance abuse.
                    (F) Such other services as the Secretary determines 
                to be appropriate.
            (2) The applicant is a participating provider in the 
        State's program for medical assistance under title XIX of the 
        Social Security Act.
            (3) The applicant does not impose charges on students or 
        their families for services (including collection of any cost-
        sharing for services under the comprehensive benefit package 
        that otherwise would be required).
            (4) The applicant has reviewed and will periodically review 
        the needs of the population served by the applicant in order to 
        ensure that its services are accessible to the maximum number 
        of school-aged children in the area, and that, to the 
maximum extent possible, barriers to access to services of the 
applicant are removed (including barriers resulting from the area's 
physical characteristics, its economic, social and cultural grouping, 
the health care utilization patterns of such children, and available 
transportation).
            (5) In the case of an applicant which serves a population 
        that includes a substantial proportion of individuals of 
        limited English speaking ability, the applicant has developed a 
        plan to meet the needs of such population to the extent 
        practicable in the language and cultural context most 
        appropriate to such individuals.
            (6) The applicant will provide non-Federal contributions 
        toward the cost of the project in an amount determined by the 
        Secretary.
            (7) The applicant will operate a quality assurance program 
        consistent with section 734(d).
    (e) Duration of Grant.--A grant under this section shall be for a 
period determined by the Secretary.
    (f) Reports.--A recipient of funding under this section shall 
provide such reports and information as are required in regulations of 
the Secretary.

SEC. 736. FEDERAL ADMINISTRATIVE COSTS.

    Of the amounts made available under section 731, the Secretary may 
reserve not more than 5 percent for administrative expenses regarding 
this subtitle.

SEC. 737. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``adolescent children'' has the meaning given 
        such term in section 732(c).
            (2) The term ``at risk'' means at-risk with respect to 
        health.
            (3) The term ``community health center'' has the meaning 
        given such term in section 330 of the Public Health Service 
        Act.
            (4) The term ``health professional shortage area'' means a 
        health professional shortage area designated under section 332 
        of the Public Health Service Act.
            (5) The term ``medically underserved population'' has the 
        meaning given such term in section 330 of the Public Health 
        Service Act.
            (6) The term ``school-aged children'' has the meaning given 
        such term in section 732(c).

 TITLE VIII--FINANCING PROVISIONS; AMERICAN HEALTH SECURITY TRUST FUND

SEC. 800. AMENDMENT OF 1986 CODE; SECTION 15 NOT TO APPLY.

    (a) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (b) Section 15 Not To Apply.--The amendments made by subtitle B 
shall not be treated as a change in a rate of tax for purposes of 
section 15 of the Internal Revenue Code of 1986.

            Subtitle A--American Health Security Trust Fund

SEC. 801. AMERICAN HEALTH SECURITY TRUST FUND.

    (a) In General.--There is hereby created on the books of the 
Treasury of the United States a trust fund to be known as the American 
Health Security Trust Fund (in this section referred to as the ``Trust 
Fund''). The Trust Fund shall consist of such gifts and bequests as may 
be made and such amounts as may be deposited in, or appropriated to, 
such Trust Fund as provided in this Act.
    (b) Appropriations Into Trust Fund.--
            (1) Taxes.--There are hereby appropriated to the Trust Fund 
        for each fiscal year (beginning with fiscal year 2004), out of 
        any moneys in the Treasury not otherwise appropriated, amounts 
        equivalent to 100 percent of the aggregate increase in tax 
        liabilities under the Internal Revenue Code of 1986 which is 
        attributable to the application of the amendments made by this 
        title. The amounts appropriated by the preceding sentence shall 
        be transferred from time to time (but not less frequently than 
        monthly) from the general fund in the Treasury to the Trust 
        Fund, such amounts to be determined on the basis of estimates 
        by the Secretary of the Treasury of the taxes paid to or 
        deposited into the Treasury; and proper adjustments shall be 
        made in amounts subsequently transferred to the extent prior 
        estimates were in excess of or were less than the amounts that 
        should have been so transferred.
            (2) Current program receipts.--Notwithstanding any other 
        provision of law, there are hereby appropriated to the Trust 
        Fund for each fiscal year (beginning with fiscal year 2004) the 
        amounts that  would otherwise have been appropriated to carry 
out the following programs:
                    (A) The medicare program, under parts A and B of 
                title XVIII of the Social Security Act (other than 
                amounts attributable to any premiums under such parts).
                    (B) The medicaid program, under State plans 
                approved under title XIX of such Act.
                    (C) The Federal employees health benefit program, 
                under chapter 89 of title 5, United States Code.
                    (D) The TRICARE program (formerly known as the 
                CHAMPUS program), under chapter 55 of title 10, United 
                States Code.
                    (E) The maternal and child health program (under 
                title V of the Social Security Act), vocational 
                rehabilitation programs, programs for drug abuse and 
                mental health services under the Public Health Service 
                Act, programs providing general hospital or medical 
                assistance, and any other Federal program identified by 
                the Board, in consultation with the Secretary of the 
                Treasury, to the extent the programs provide for 
                payment for health services the payment of which may be 
                made under this Act.
    (c) Incorporation of Provisions.--The provisions of subsections (b) 
through (i) of section 1817 of the Social Security Act shall apply to 
the Trust Fund under this Act in the same manner as they applied to the 
Federal Hospital Insurance Trust Fund under part A of title XVIII of 
such Act, except that the American Health Security Standards Board 
shall constitute the Board of Trustees of the Trust Fund.
    (d) Transfer of Funds.--Any amounts remaining in the Federal 
Hospital Insurance Trust Fund or the Federal Supplementary Medical 
Insurance Trust Fund after the settlement of claims for payments under 
title XVIII have been completed, shall be transferred into the American 
Health Security Trust Fund.

              Subtitle B--Taxes Based on Income and Wages

SEC. 811. PAYROLL TAX ON EMPLOYERS.

    (a) In General.--Section 3111 (relating to tax on employers) is 
amended by redesignating subsection (c) as subsection (d) and inserting 
after subsection (b) the following new subsection:
    ``(c) Health Care.--In addition to other taxes, there is hereby 
imposed on every employer an excise tax, with respect to having 
individuals in his employ, equal to 8.7 percent of the wages (as 
defined in section 3121(a)) paid by him with respect to employment (as 
defined in section 3121(b)).''
    (b) Self-Employment Income.--Section 1401 (relating to rate of tax 
on self-employment income) is amended by redesignating subsection (c) 
as subsection (d) and inserting after subsection (b) the following new 
subsection:
    ``(c) Health Care.--In addition to other taxes, there shall be 
imposed for each taxable year, on the self-employment income of every 
individual, a tax equal to 8.7 percent of the amount of the self-
employment income for such taxable year.''
    (c) Comparable Taxes for Railroad Services.--
            (1) Tax on employers.--Section 3221 is amended by 
        redesignating subsection (c) as subsections (d) and inserting 
        after subsection (b) the following new subsection:
    ``(c) Health Care.--In addition to other taxes, there is hereby 
imposed on every employer an excise tax, with respect to having 
individuals in his employ, equal to 8.7 percent of the compensation 
paid by such employer for services rendered to such employer.''
            (2) Tax on employee representatives.--Section 3211 
        (relating to tax on employee representatives) is amended by 
        redesignating subsection (c) as subsection (d) and inserting 
        after subsection (b) the following new paragraph:
    ``(c) Health Care.--In addition to other taxes, there is hereby 
imposed on the income of each employee representative a tax equal to 
8.7 percent of the compensation received during the calendar year by 
such employee representative for services rendered by such employee 
representative.''
            (3) No applicable base.--Subparagraph (A) of section 
        3231(e)(2) is amended by adding at the end thereof the 
        following new clause:
                            ``(iv) Health care taxes.--Clause (i) shall 
                        not apply to the taxes imposed by sections 
                        3221(c) and 3211(c).''
            (4) Technical amendment.--
                    (A) Subsection (d) of section 3211, as redesignated 
                by paragraph (2), is amended by striking ``and (b)'' 
                and inserting ``, (b), and (c)''.
                    (B) Subsection (d) of section 3221, as redesignated 
                by paragraph (1), is amended by striking ``and (b)'' 
                and inserting ``, (b), and (c)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 2004.

SEC. 812. HEALTH CARE INCOME TAX.

    (a) General Rule.--Subchapter A of chapter 1 (relating to 
determination of tax liability) is amended by adding at the end thereof 
the following new part:

           ``Part VIII--Health Care Income Tax on Individuals

                              ``Sec. 59B. Health care income tax.

``SEC. 59B. HEALTH CARE INCOME TAX.

    ``(a) Imposition of Tax.--In the case of an individual, there is 
hereby imposed a tax (in addition to any other tax imposed by this 
subtitle) equal to 2.2 percent of the taxable income of the taxpayer 
for the taxable year.
    ``(b) No Credits Against Tax; No Effect on Minimum Tax.--The tax 
imposed by this section shall not be treated as a tax imposed by this 
chapter for purposes of determining--
            ``(1) the amount of any credit allowable under this 
        chapter, or
            ``(2) the amount of the minimum tax imposed by section 55.
    ``(c) Special Rules.--
            ``(1) Tax to be withheld, etc.--For purposes of this title, 
        the tax imposed by this section shall be treated as imposed by 
        section 1.
            ``(2) Reimbursement of tax by employer not includible in 
        gross income.--The gross income of an employee shall not 
        include any payment by his employer to reimburse the employee 
        for the tax paid by the employee under this section.
            ``(3) Other rules.--The rules of section 59A(d) shall apply 
        to the tax imposed by this section.''
    (b) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 is amended by adding at the end the following new item:

                              ``Part VIII. Health care income tax on 
                                        individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

        Subtitle C--Increase in Excise Taxes on Tobacco Products

SEC. 821. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS.

    (a) Cigarettes.--Subsection (b) of section 5701 is amended--
            (1) by striking ``$19.50 per thousand ($17 per thousand on 
        cigarettes removed during 2000 or 2001)'' in paragraph (1) and 
        inserting ``$22.50 per thousand'', and
            (2) by striking ``$40.95 per thousand ($35.70 per thousand 
        on cigarettes removed during 2000 or 2001)'' in paragraph (2) 
        and inserting ``$47.25 per thousand''.
    (b) Cigars.--Subsection (a) of section 5701 is amended--
            (1) in paragraph (1), by striking ``$1.828 cents per 
        thousand ($1.594 per thousand on cigars removed during 2000 or 
        2001)'' in paragraph (1) and inserting ``$2.11 per thousand'', 
        and
            (2) in paragraph (2) by striking ``equal to'' and all that 
        follows in such paragraph and inserting ``equal to 23.91 
        percent of the price for which sold but not more than $56.25 
        per thousand.''
    (c) Cigarette Papers.--Subsection (c) of section 5701 is amended by 
striking ``1.22 cents (1.06 cents on cigarette papers removed during 
2000 or 2001)'' and inserting ``1.41 cents''.
    (d) Cigarette Tubes.--Subsection (d) of section 5701 is amended by 
striking ``2.44 cents (2.13 cents on cigarette tubes removed during 
2000 or 2001)'' and inserting ``2.81 cents''.
    (e) Smokeless Tobacco.--Subsection (e) of section 5701 is amended--
            (1) by striking ``58.5 cents (51 cents on snuff removed 
        during 2000 or 2001)'' in paragraph (1) and inserting `67.5 
        cents', and
            (2) by striking ``19.5 cents (17 cents on chewing tobacco 
        removed during 2000 or 2001)'' in paragraph (2) and inserting 
        `22.5 cents'.
    (f) Pipe Tobacco.--Subsection (f) of section 5701 is amended by 
striking ``$1.0969 cents (95.67 cents on pipe tobacco removed during 
2000 or 2001)'' and inserting ``$1.27''.
    (g) Effective Date.--The amendments made by this section shall 
apply to articles removed (as defined in section 5702(k) of the 
Internal Revenue Code of 1986) after December 31, 2004.
    (h) Floor Stocks Taxes.--
            (1) Imposition of tax.--On tobacco products and cigarette 
        papers and tubes manufactured in or imported into the United 
        States which are removed before January 1, 2005, and held on 
        such date for sale by any person, there is hereby imposed a tax 
        in an amount equal to the excess of--
                    (A) the tax which would be imposed under section 
                5701 of the Internal Revenue Code of 1986 on the 
                article if the article had been removed on such date, 
                over
                    (B) the prior tax (if any) imposed under section 
                5701 or 7652 of such Code on such article.
            (2) Authority to exempt cigarettes held in vending 
        machines.--To the extent provided in regulations prescribed by 
        the Secretary, no tax shall be imposed by paragraph (1) on 
        cigarettes held for retail sale on January 1, 2005, by any 
        person in any vending machine. If the Secretary provides such a 
        benefit with respect to any person, the Secretary may reduce 
        the $500 amount in paragraph (3) with respect to such person.
            (3) Credit against tax.--Each person shall be allowed as a 
        credit against the taxes imposed by paragraph (1) an amount 
        equal to $500. Such credit shall not exceed the amount of taxes 
        imposed by paragraph (1) for which such person is liable.
            (4) Liability for tax and method of payment.--
                    (A) Liability for tax.--A person holding any 
                article on January 1, 2005, to which any tax imposed by 
                paragraph (1) applies shall be liable for such tax.
                    (B) Method of payment.--The tax imposed by 
                paragraph (1) shall be paid in such manner as the 
                Secretary shall prescribe by regulations.
                    (C) Time for payment.--The tax imposed by paragraph 
                (1) shall be paid on or before July 31, 2005.
            (5) Articles in foreign trade zones.--Notwithstanding the 
        Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any 
        other provision of law, any article which is located in a 
        foreign trade zone on January 1, 2005, shall be subject to the 
        tax imposed by paragraph (1) if--
                    (A) internal revenue taxes have been determined, or 
                customs duties liquidated, with respect to such article 
                before such date pursuant to a request made under the 
                1st proviso of section 3(a) of such Act, or
                    (B) such article is held on such date under the 
                supervision of a customs officer pursuant to the 2d 
                proviso of such section 3(a).
            (6) Definitions.--For purposes of this subsection--
                    (A) In general.--Terms used in this subsection 
                which are also used in section 5702 of the Internal 
                Revenue Code of 1986 shall have the respective meanings 
                such terms have in such section.
                    (B) Secretary.--The term ``Secretary'' means the 
                Secretary of the Treasury or his delegate.
            (7) Controlled groups.--Rules similar to the rules of 
        section 5061(e)(3) of such Code shall apply for purposes of 
        this subsection.
            (8) Other laws applicable.--All provisions of law, 
        including penalties, applicable with respect to the taxes 
        imposed by section 5701 of such Code shall, insofar as 
        applicable and not inconsistent with the provisions of this 
        subsection, apply to the floor stocks taxes imposed by 
        paragraph (1), to the same extent as if such taxes were imposed 
        by such section 5701. The Secretary may treat any person who 
        bore the ultimate burden of the tax imposed by paragraph (1) as 
        the person to whom a credit or refund under such provisions may 
        be allowed or made.

   TITLE IX--CONFORMING AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME 
                          SECURITY ACT OF 1974

SEC. 901. ERISA INAPPLICABLE TO HEALTH COVERAGE ARRANGEMENTS UNDER 
              STATE HEALTH SECURITY PROGRAMS.

    Section 4 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1003) is amended--
            (1) in subsection (a), by striking ``or (c)'' and inserting 
        ``(c), or (d)''; and
            (2) by adding at the end the following new subsection:
    ``(d) The provisions of this title shall not apply to any 
arrangement forming a part of a State health security program 
established pursuant to section 101(b) of the American Health Security 
Act of 2003.''.

SEC. 902. EXEMPTION OF STATE HEALTH SECURITY PROGRAMS FROM ERISA 
              PREEMPTION.

    Section 514(b) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1144(b)) is amended by adding at the end the following 
new paragraph:
            ``(10) Subsection (a) of this section shall not apply to 
        State health security programs established pursuant to section 
101(b) of the American Health Security Act of 2003.''.

SEC. 903. PROHIBITION OF EMPLOYEE BENEFITS DUPLICATIVE OF BENEFITS 
              UNDER STATE HEALTH SECURITY PROGRAMS; COORDINATION IN 
              CASE OF WORKERS' COMPENSATION.

    (a) In General.--Part 5 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 is amended by adding at the end 
the following new section:

``prohibition of employee benefits duplicative of state health security 
    program benefits; coordination in case of workers' compensation

    ``Sec. 519. (a) Subject to subsection (b), no employee benefit plan 
may provide benefits which duplicate payment for any items or services 
for which payment may be made under a State health security program 
established pursuant to section 101(b) of the American Health Security 
Act of 2003.
    ``(b)(1) Each workers compensation carrier that is liable (or would 
be liable but for the enactment of the American Health Security Act) 
for payment for workers compensation services furnished in a State 
shall reimburse the State health security plan for the State in which 
the services are furnished for the cost of such services.
    ``(2) In this subsection:
            ``(A) The term `workers compensation carrier' means an 
        insurance company that underwrites workers compensation medical 
        benefits with respect to 1 or more employers and includes an 
        employer or fund that is financially at risk for the provision 
        of workers compensation medical benefits.
            ``(B) The term `workers compensation medical benefits' 
        means, with respect to an enrollee who is an employee subject 
        to the workers compensation laws of a State, the comprehensive 
        medical benefits for work-related injuries and illnesses 
        provided for under such laws with respect to such an employee.
            ``(C) The term `workers compensation services' means items 
        and services included in workers compensation medical benefits 
        and includes items and services (including rehabilitation 
        services and long-term-care services) commonly used for 
        treatment of work-related injuries and illnesses.''.
    (b) Clerical Amendment.--The table of contents in section 1 of such 
Act is amended by inserting after the item relating to section 518 the 
following new items:

``Sec. 519. Prohibition of employee benefits duplicative of state 
                            health security program benefits; 
                            coordination in case of workers' 
                            compensation.''.

SEC. 904. REPEAL OF CONTINUATION COVERAGE REQUIREMENTS UNDER ERISA AND 
              CERTAIN OTHER REQUIREMENTS RELATING TO GROUP HEALTH 
              PLANS.

    (a) In General.--Part 6 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et seq.) is 
repealed.
    (b) Conforming Amendments.--
            (1) Section 502(a) of such Act (29 U.S.C. 1132(a)) is 
        amended--
                    (A) by striking paragraph (7); and
                    (B) by redesignating paragraphs (8) and (9) as 
                paragraphs (7) and (8), respectively.
            (2) Section 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is 
        amended by striking ``paragraph (1) or (4) of section 606 or''.
            (3) Section 4301(c)(4) of the Omnibus Budget Reconciliation 
        Act of 1993 (Public Law 103-66; 107 Stat. 377) and the 
        amendments made thereby are repealed.
            (4) The table of contents in section 1 of the Employee 
        Retirement Income Security Act of 1974 is amended by striking 
        the items relating to part 6 of subtitle B of title I of such 
        Act.

SEC. 905. EFFECTIVE DATE OF TITLE.

    The amendments made by this title shall take effect January 1, 
2005.

               TITLE X--ADDITIONAL CONFORMING AMENDMENTS

SEC. 1001. REPEAL OF CERTAIN PROVISIONS IN INTERNAL REVENUE CODE OF 
              1986.

    The provisions of titles III and IV of the Health Insurance 
Portability and Accountability Act of 1996, other than subtitles D and 
H of title III and section 342, are repealed and the provisions of law 
that were amended or repealed by such provisions are hereby restored as 
if such provisions had not been enacted.

SEC. 1002. REPEAL OF CERTAIN PROVISIONS IN 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 is repealed and the items 
relating to such part in the table of contents in section 1 of such Act 
are repealed.
    (b) Conforming Amendment.--Section 514(b) of such Act (29 U.S.C. 
1144(b)) is amended by striking paragraph (9).

SEC. 1003. REPEAL OF CERTAIN PROVISIONS IN THE PUBLIC HEALTH SERVICE 
              ACT AND RELATED PROVISIONS.

    (a) In General.--Titles XXII and XXVII of the Public Health Service 
Act are repealed.
    (b) Additional Amendments.--
            (1) Section 1301(b) of such Act (42 U.S.C. 300e(b)) is 
        amended by striking paragraph (6).
            (2) Sections 104 and 191 of the Health Insurance 
        Portability and Accountability Act of 1996 are repealed.

SEC. 1004. EFFECTIVE DATE OF TITLE.

    The amendments made by this title shall take effect January 1, 
2005.
                                 <all>