[Congressional Record Volume 141, Number 18 (Monday, January 30, 1995)]
[Senate]
[Pages S1758-S1789]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. CONRAD (for himself, Mr. Daschle, Mr. Dorgan, Mr. Pell,
Mr. Akaka, Mr. Jeffords, and Mr. Graham):
S. 293. A bill to amend title 38, United States Code, to authorize
the payment to States of per diem for veterans receiving adult day
health care, and for other purposes; to the Committee on Veterans'
Affairs.
state veterans home act
Mr. CONRAD. Mr. President, today I rise to introduce the State
Veterans Home Act of 1995. The bill extends discretionary authority to
the Department of Veterans Affairs to provide a per diem payment for
adult day health care for veterans. The bill also authorizes the use of
funds from the Extended Care Facilities Grants Program, section 8131,
to construct or renovate existing facilities to provide adult day care
for veterans.
The legislation I am introducing today is similar to S. 852
introduced at the beginning of the 103d Congress. In the last Congress,
S. 852 was reported to the Senate as section 205 of S. 1030--Veterans
Health Programs Improvement Act of 1993--and passed by the Senate on
May 25, 1994. Regrettably due to the legislative log-jam at the end of
the 103d Congress, it was not incorporated into the veterans health
benefits measure, H.R. 3313, that passed the House in the closing days
of the 103d Congress.
[[Page S1759]] I am very pleased that the bill I am introducing
today is cosponsored by Senators Daschle, Dorgan, Akaka, Jeffords,
Pell, and Graham.
This legislation received support in the 103d Congress from veterans
and their families in North Dakota, and from all major national
veterans organizations during a hearing by the Senate Committee on
Veterans' Affairs on June 23, 1993. I am hoping the 104th Congress will
act expeditiously to pass this important health care measure for
veterans. I am enclosing a letter of support from the National
Association of State Veterans Homes.
Currently, under section 1741, the Department of Veterans Affairs is
required to pay a per diem to States for each veteran that is assisted
through the State Home Facilities Program with hospital, nursing home,
or domiciliary care. The per diem payment is $15.11 for domiciliary
care, and $35.37 for nursing home and hospital care. Under section
8131, State home facilities, the Department of Veterans Affairs is also
authorized to provide matching grant assistance for the construction,
expansion, or remodeling of existing facilities for domiciliary,
nursing home, or hospital care for veterans who are eligible to reside
in State veterans facilities.
Under the legislation that I am introducing today, the State Veterans
Home Program would be amended to authorize a per diem payment for
veterans that are assisted by States who provide adult day care
including health care as needed. States would also be authorized to
apply for matching grant assistance to provide facilities for adult day
care. In fiscal year 1995, Congress appropriated $47.3 million under
the State Home Facilities Program for the construction or expansion of
State extended care facilities for veterans.
Mr. President, I have discussed the proposed legislation to amend the
State Veterans Home Program relating to adult day care health care with
State veterans officials in North Dakota and representatives of the
National Association of State Veterans Homes. The arguments in support
of amending the State Veterans Home Program to authorize adult day
health care are compelling.
The opportunity for adult day health care services for veterans
during the daytime hours in a community setting would enable many
veterans to remain at home with their families in a supportive
environment as an alternative to nursing home placement.
I ask my colleagues, how many people do each of us know who are in
this circumstance? If the family could get relief during the day for a
veteran who is ill or who is starting to fail, and would have a chance
to have a place to go during the day, the family could take care of
that individual at night, thereby preventing nursing home placement.
For a veteran who may be in the early stages of Alzheimer's disease
or require limited supervision in a post-operative period, the
opportunity for adult day health care would meet the requirements of a
growing number of our veterans population, and at less cost than
nursing and residential home care. Equally important, adult day health
care would provide respite for the primary care givers of veterans.
People have often said to me: Senator, if we just had a chance to
have a break, if we just had a chance to be able to go to work and have
our loved one be able to be at home with us in the evening, we would be
able to take care of him. We would be able to save a lot of money for
the Government. There is no sense putting all these people in nursing
homes. Our family would love to be able to take care of our grandfather
or our father. We would love to have him at home but we work during the
day, both spouses work during the day. The kids are at school. Nobody
is home.
If we had a chance to have that veteran in a setting where he could
be cared for during the day we would take care of him at night and save
lots of money--save money for the families, save money for the
Government.
Mr. President, as the health care requirements of our veterans
population change, and the demands on limited Department of Veterans
Affairs resources increase, I believe it important that States have the
flexibility to provide adult day health care services for veterans.
We have heard a lot in the last 24 hours about State flexibility. Why
should they not have flexibility with respect to a program like this?
They are asking for it. Why do we not give it to them?
The 71 State veterans homes across the country have a proven record
of providing excellent domiciliary, nursing home, and hospital care.
They also have the expertise in geriatrics, and specialized health care
that is required to provide the adult day health care services.
I urge the Senate Committee on Veterans' Affairs to support these
amendments to the State Veterans Home Program, and to report
legislation to authorize adult day health care services for veterans as
soon as possible.
I ask unanimous consent Mr. President, that the full text of my bill
along with a letter in support of this initiative from the National
Association of State Veterans Homes be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 293
Be it enacted by the Senate and House of
Representatives of the United States of America in
Congress assembled,
SECTION 1. PAYMENT TO STATES OF PER DIEM FOR VETERANS
RECEIVING ADULT DAY HEALTH CARE.
(a) Payment of Per Diem for Veterans Receiving Adult Day
Care.--Section 1741 of title 38, United States Code, is
amended--
(1) by inserting ``(1)'' after ``(a)'';
(2) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively; and
(3) by adding at the end the following new paragraph (2):
``(2) The Secretary may pay each State per diem at a rate
determined by the Secretary for each veteran receiving adult
day health care in a State home, if such veteran is eligible
for such care under laws administered by the Secretary.''.
(b) Assistance to States for Construction of Adult Day Care
Facilities.--(1) Section 8131(3) of title 38, United States
Code, is amended by inserting ``adult day health,'' before
``or hospital care''.
(2) Section 8132 of such title is amended by inserting
``adult day health,'' before ``or hospital care''.
(3) Section 8135(b) of such title is amended--
(A) in paragraph (2)(C), by inserting ``or adult day health
care facilities'' after ``domiciliary beds''; and
(B) in paragraph (3)(A), by inserting ``or construction
(other than new construction) of adult day health care
buildings'' before the semicolon.
____
National Association of
State Veterans Homes,
Marquette, MI, December 16, 1994.
Hon. Kent Conrad,
U.S. Senator, Hart Senate Office Building,Washington, DC.
Dear Senator Conrad: This letter is in response to your
recent inquiry regarding the National Association of State
Veterans Homes (NASVH) position on re-introduction of
proposed legislation to allow State Homes to develop an Adult
Day Health Program.
As noted in Mr. Jack Dack's previous letter dated April 26,
1993, a 1993 survey had 38 State Homes respond positively out
of 48 responses from 52 homes surveyed. We again recommend
that Section 1741 be amended to authorize State Homes Adult
Day Health Care. The section should be amended to provide for
a per diem payment for Adult Day Health Care and additional
construction grant monies to support expansion/remodeling to
permit States to provide Adult Day Health Care.
This letter is offered as a reaffirmation of the NASVH
commitment to providing this needed service to veterans
pursuant to the aforementioned changes in Title 38 United
States Code, Section 1741.
If you have any questions, please let me know.
Sincerely,
Clifford A. Kinney, II, MPA, NHA,
Chairperson, NASVH,
Legislative Committee.
____
National Association of
State Veterans Homes,
Marshalltown, IA, April 26, 1993.
Hon. Kent Conrad,
U.S. Senate, Hart Office Building,
Washington, DC.
Dear Senator Conrad. This is to express the views of the
National Association of State Veterans Homes pertinent to
proposed legislation to improve (3) the State Home Program.
(A) Title 38 United States Code, Section 1741, authorizes
per diem to State Homes for domiciliary, nursing home care
and hospital care. We endorse legislation to provide
authority to the Secretary, Department of Veterans Affairs,
to provide a per diem payment for adult day health care and
construction grant support for expansion, remodeling or
alteration of existing buildings to permit provision of adult
day health care.
A survey conducted by the National Association of State
Veterans Homes in 1984 overwhelmingly supported an adult day
health
[[Page S1760]] care initiative if an appropriate
reimbursement system through the Veterans Administration
could be developed for State Homes. Of the 48 responses from
52 Homes surveyed, 38 responded positively.
It is recommended that Section 1741 be amended to include
authorization for State Home Adult Day Health Care.
Often times, family and loved ones are the primary
caregivers for adult persons. Trying to maintain adults in
the home can be very stressful and care can be difficult to
provide both physically and psychologically. Resources can be
extremely limited, especially in rural communities and
families may not be aware of what resources are available.
Adult ``day care'' has been one concept implemented to
address dependent adult care.
The seventy-one State Veterans Homes in forty-one states
being long-term care facilities employ clinicians with
expertise in geriatrics and staff with years of experience in
working with dependent, infirm, and/or handicapped
individuals. The Homes have the potential to offer adult day
health care in a safe,
structured environment with trained, caring staff. There
could be provisions for meals and nutritious snacks,
medication dispensing, exercise programming and the
offering of health assessment and patient/family teaching.
There could be planned activities and social interactions
for adult participation.
Such a program would be an ideal option for the elderly
veterans who are: in need of social stimulation to combat
depression; in need of supervision and/or personal care;
post-operative in need of supervision or medication; victims
of early Alzheimer's Disease.
Involvement in adult day health care would provide a peace
of mind and respite for the working and non-working
caregivers.
The provisions of these services during daytime hours in a
congregate setting would enable veterans to be maintained at
home in a supportive environment and be an alternative to a
nursing home placement. Participation in an Adult Day Health
Care Program could possibly prolong the ability of the
veteran to stay in his home thereby lowering the demands on
the Department of Veterans Affairs system.
Besides providing respite for the primary caregivers,
veterans could be screened and referred for medical and/or
community resources, including Department of Veteran's
Affairs medical care facilities. Pre-assessment for admission
could take place if the veteran desires to make application
for permanent living in the State Home. Other advantages to
the individuals and family members are networking with family
members and professionals, participation in support groups,
gaining knowledge about community resources and how to access
the system.
The National Association of State Veterans Homes supports
that provisions in United States Code 38, Section 1741, be
amended to authorize State Home Adult Day Health Care; per
diem payments to states for providing same; and to permit the
Department of Veterans Affairs to provide grants for
expansion, remodeling or alteration of existing buildings to
permit provision of such care.
We in the State Home Program do not know the level of
participation by the states at this time; however, it is
anticipated there would be activity initially by five to ten
Homes in this area. Since the Department of Veterans is
unable to approve requests for construction grants totaling
more
than the amount specifically appropriated by the Congress
for that fiscal year, any additional grant requests for
construction for adult day health care over the specified
funding allowed would probably require a waiting period.
This waiting period would allow an opportunity for the
Department of Veterans Affairs and State Home Program to
bring the increased need for additional construction funds
to the attention of the Veterans Affairs' Committees for
consideration.
The State Home Program has a proven track record of being
able to blend Federal, State and private resources to
maximize the resources available for providing care for the
veterans of this Nation. Because of this track record, it is
always wise to look for opportunities to expand the
relationship, so as to further enhance the efficient use of
the Department of Veterans Affairs' resources in its
provision of care for veterans. The establishment of a per
diem for these services is an expansion of the already
successful State Home Program with the Department of Veterans
Affairs. With this per diem as a starting point, the State
Home Program in partnership with the Department of Veterans
Affairs has the potential to move towards an efficient,
effective means of providing this necessary service for its
constituents.
(B) Sharing: While the United States Congress has been
generous in providing for its veterans, and the Department of
Veterans Affairs has done a commendable job within the
confines of the budgeted amounts in taking care of the
Nation's veterans, the resources to do so are becoming more
limited. We must continue to work closer together, share
ideas, stretch and share resources and assist one another if
we are going to fulfill our mutual obligation to provide the
necessary health care services for the Nation's veterans.
This sharing proposal is an initiative to formalize a closer-
working relationship between the Department of Veterans
Affairs Medical Centers in states where State Veterans Homes
presently exist. It will strengthen the long and successful
partnership between the Department of Veterans Affairs and
State Homes which has long been recognized as a vital
resource for the Department of Veterans Affairs in providing
care for the chronically ill, elderly veterans.
Since many State Homes are located within a radius of one
hundred miles of a Department of Veterans Affairs medical
facility, it is felt that sharing of services would result in
service, efficiency and economy in provision of care. The
ability to have Department of Veterans Affairs clinics, such
as Urology, Psychiatric Consultation, Physical Medicine/
Rehabilitation Consultation, etc., located within a State
Veterans Home, would enhance continuity of care for the
benefit of the veterans in State Homes. Chronically ill,
debilitated, infirm veterans would not have to experience
traveling to and from the medical centers for some clinics if
such a sharing was possible. Other areas of sharing could be
in non-clinical services such as laundry, Life/Safety,
Quality Assurance programming, housekeeping, etc.
It is felt that by permitting the Department of Veterans'
Affairs and the State Home Program to expand, their sharing
will result in greater efficiencies and enhance care for
veterans. The National Association of State Veterans Homes
supports enactment of the concept of sharing in this proposed
legislation and believes it to be a benefit to veterans, the
Department of Veterans Affairs and the State Home Program.
On behalf of the National Association of State Veterans
Homes, thank you for the opportunity to support legislation
to improve the State Veterans Home Program.
Sincerely,
Jack J. Dack,
Chairperson, Legislative Committee.
______
By Mr. COHEN:
S. 294. A bill to increase the availability and affordability of
health care coverage for individuals and their families, to reduce
paperwork and simplify the administration of health care claims, to
increase access to care in rural and underserved areas, to improve
quality and protect consumers from health care fraud and abuse, to
promote preventive care, to make long-term care more affordable, and
for other purposes; to the Committee on Finance.
access to affordable health care act
Mr. COHEN. Mr. President, as the 104th Congress opened, it did so
with a great deal of fanfare this month. Much of the discussion has
been devoted to congressional reform, tax cuts, the balanced budget
amendment, unfunded mandates, and welfare reform, but on one issue our
colleagues have been notably silent.
I say that with one notable exception, my colleague from Illinois,
who has just spoken rather eloquently on the whole subject of health
care reform, which is what I would like to talk about this afternoon.
Health care reform was a dominant topic on everyone's mind during the
last Congress. As I mentioned just a moment ago, today it is barely a
whisper. I believe that this is a mistake. I think it is time for the
Senate to put the issue back on the front burner of the public agenda.
Health care reform may not be a major clause in the House
Republican's Contract With America, but rising health care costs and
expanding gaps in coverage are still very much on the minds of the
American people. In fact, postelection polls conducted for the Health
Care Leadership Council and by the Washington Post and ABC News show
that health care remains a top priority--as important even as cutting
taxes, passing a balanced budget amendment, or enacting welfare reform.
Abraham Lincoln once observed that ``with public sentiment nothing
can fail, and without it nothing can succeed.''
I think the American people wisely rejected the big-government
approach advocated last year by the administration. More Government is
clearly not the way to lower health care costs.
And when I say they rejected big government, this is a copy of the
bill that in fact was being debated last year, some 1,443 pages long.
The public did not understand it. They felt also that we were moving
toward, if I can use that Tofflerian phrase, demasification of the
centralized health care system. The fact is, they rejected it.
The fact is that Government spending on health care, with all of its
bureaucratic endeavors and controls, has risen much faster than private
health care spending. In fact, between 1970 and 1991 Medicare and
Medicaid grew 427 percent, more than double the amount of 165 percent
in the private sector. So we have seen a real disparity in terms of
Government sponsored and funded
[[Page S1761]] programs versus that of the private sector.
But the public rejection of the Clinton health care plan does not
mean that American people do not want health care reform.
As my colleague from California, Senator Diane Feinstein, observed,
the main reason the President's health care reform efforts collapsed
was that the ``Democrats listened to the 15 percent of the public who
had no coverage, while the Republicans listened to the 85 percent who
did.'' What some Democrats in Washington derided as merely incremental
was, to the American public, essential.
Susan Sontag wrote:
Illness is the night-side of life, a more onerous
citizenship. Everyone who is born holds dual citizenship, in
the kingdom of the well and the kingdom of the sick. Although
we all prefer to use only the good passport, sooner or later
each of us is obliged, at least for a spell, to identify
ourselves as citizens of that other place.
As such, the flaws in our health care system are ones that will--
sooner or later--touch every American family.
The American people want health care reform, but they want something
they can understand and afford. They want a program that gives them
some reassurance against their growing sense of financial insecurity
against potential illness--a program that gives them some protection
should they cross over into that kingdom of the sick.
When the American people say they want reform, they mean: ``If I lose
my job or get sick, I want to keep my health insurance and I do not
want it to cost so much.'' They want Congress to enact targeted reforms
to contain health care costs and to ensure that they do not lose the
health care coverage that they have.
Health care reform, I think, as my colleague from Illinois has
pointed out, is pretty familiar to most of us now. We have spent over 4
years studying the problem, countless hours of staff researching the
issue, debating the issue, drafting legislation, negotiating
compromise. We have something, I think, very valuable to show for that
effort.
Despite the partisan and sometimes bitter debate in the last
Congress, there is broad-based, bipartisan agreement on some key steps
that can and should be taken to contain health care costs and increase
access for millions of Americans. In fact, I believe that action could
have been taken on these changes 3 years ago if some had not insisted
that there be comprehensive reform, or no reform at all.
Today I am introducing legislation outlining a blueprint for reform
that is based on principles upon which I believe a bipartisan majority
in Congress could agree. The plan takes significant strides toward the
goal of universal coverage by bringing millions more Americans into the
system. While some might characterize these reforms as incremental,
they are by no means insignificant.
They would include insurance market reforms to make insurance
portable and prohibit insurers from denying, canceling, or limiting
coverage or otherwise discriminating against individuals on the basis
of their health status.
They would include refundable tax credits for low-income families and
full tax deductibility for the self-employed to make insurance coverage
more affordable.
They would include voluntary purchasing cooperatives to give
individuals and small businesses access to more affordable coverage;
administrative reforms to reduce costs and paperwork and make the
system more efficient.
They would include malpractice reforms to reduce the costly practice
of defensive medicine; expanded access to care in rural areas; more
affordable long-term care; and, finally, stronger efforts to combat
fraud and abuse, which currently rob our system of as much as $100
billion every year.
Many of my colleagues have heard me take the floor time and time
again to complain about health care fraud in this country. In fact,
just last week I introduced separate legislation dealing with health
care fraud, because we are losing $100 billion every year to health
care fraud. It amounts to $275 million a day, $11.5 million every
single hour.
We could have taken action last year. We did not take action last
year. The said wait until health care reform comes. Health care reform
did not come. So by the time this legislation or some variation of this
legislation is finally adopted, we will lost another $100 billion to
health care fraud and abuse.
Many of the principles involved in this legislation--and, by the way,
Mr. President, this contains about 200 typewritten pages--could have
been adopted more than 4\1/2\ years ago when I first introduced it. In
fact, it could have been adopted when Senator Lloyd Bentsen passed his
version of the bill back in 1992.
Although action on health care reform has been deferred in the past.
It simply cannot be deferred any longer.
The new Republican-controlled Congress has both the obligation and
the political opportunity to enact health care reform, but the window
of opportunity will not be open long. We simply cannot afford to repeat
past mistakes and allow the issue to become complicated or obfuscated
by election-year politics.
I listened with great interest to my colleagues from Illinois outline
some of the letters he has received from constituents and others
pointing out it is not a Republican or Democratic issue, it is an
American problem.
Last month, one of my constituents, Leslie Mansfield, of Bar Harbor,
testified before the Maine Health Care Reform Commission about the
importance of health care reform for her family. Since her son was
diagnosed with juvenile diabetes 6 years ago, the family has faced
mounting insurance and medical bills. Even though the rest of the
family is healthy, in 3 short years they have seen their insurance
premiums jump from $190 to $600 a month, and they fear that they will
soon be either dropped by their insurer or priced out of the market
entirely.
If the new Congress does not move quickly on health care reform,
millions of Americans like Leslie Mansfield and her family will be
worse off, not better off.
Health care costs, which last year topped $1 trillion, will continue
to rise, placing an increasing strain on families, employers, and
governments alike, and pricing millions more Americans out of the
market. Insurers and businesses will be able to continue to cut costs
by avoiding customers at greater risk. People with preexisting medical
conditions like heart disease and diabetes will face even steeper
premiums or could lose their coverage entirely. And we will continue to
lose an estimated $275 million a day--that is $11.5 million every
hour--to health care fraud.
Health care reform does not have to be an all-or-nothing proposition.
That mistake was made both in 1992 and in 1994 and should not be
repeated. By building upon our areas of agreement, we can take major
steps to contain costs, expand choice and extend access to care to
millions more Americans.
We have come a long way to reach this point in the health care debate
and we should move forward. While to do nothing may not be a breach of
the Contract With America, it most certainly would be a
breach of trust with the American people.
I urge my colleagues to join me in cosponsoring the Access to
Affordable Health Care Act and ask unanimous consent that a section-by-
section summary as well as the full text of the bill be printed in the
Congressional Record.
Mr. SIMON. Mr. President, will the Senator yield for 30 seconds? I
want to commend the Senator for his statement.
Mr. COHEN. I yield to the Senator.
Mr. SIMON. I, obviously, have not read the bill. But if we recognize
the problem and work together, we can do something for the American
people in this session of Congress. I commend him for his leadership.
Mr. COHEN. Mr. President, I thank my friend for his comments. Let me
conclude with a few observations.
There has been so much partisanship discussed in the House and the
Senate on various other issues. There was a great deal of partisanship
on the health care debate as well. I remember when Senator Dole asked
the committee to put together a task force headed up by John Chafee to
meet with our Democratic counterpart; we ran into a stonewall.
[[Page S1762]] It was not open to negotiation. There was no
compromise. It was all-or-nothing, comprehensive or nothing at all. As
a result, we had nothing at all. One of the members of the Democratic
task force came to me just a couple of days ago and said, ``You know,
if we had done what you had suggested 2 years ago, it would have been a
great step forward.'' We did not do it then. We ought to do it now.
Let Senators put aside the partisanship and reach across the aisle
and do something the American people will support--Republican,
Democrat, independent, it does not matter. We need the relief. We need
the reform. We ought not to defer this any longer. I yield the floor.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 294
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Access to
Affordable Health Care Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title and table of contents.
TITLE I--HEALTH INSURANCE MARKET REFORM
Subtitle A--Insurance Market Standards
Sec. 1001. Nondiscrimination based on health status.
Sec. 1002. Guaranteed issue and renewal
Sec. 1003. Rating limitations.
Sec. 1004. Delivery system quality standards.
Sec. 1005. Risk adjustment.
Sec. 1006. Effective dates.
Subtitle B--Establishment and Application of Standards
Sec. 1011. General rules.
Sec. 1012. Encouragement of State reforms.
Sec. 1013. Enforcement of standards.
Subtitle C--Definitions
Sec. 1021. Definitions.
TITLE II--GRANTS TO STATES FOR SMALL GROUP HEALTH INSURANCE PURCHASING
ARRANGEMENTS
Sec. 2001. Grants to States for small group health insurance purchasing
arrangements.
TITLE III--TAX INCENTIVES TO ENCOURAGE THE PURCHASE OF HEALTH INSURANCE
Sec. 3001. Permanent extension and increase of deduction for health
insurance costs of self-employed individuals.
Sec. 3002. Credit for health insurance expenses.
TITLE IV--INCENTIVES TO INCREASE THE ACCESS OF RURAL AND UNDERSERVED
AREAS TO HEALTH CARE
Sec. 4001. Nonrefundable credit for certain primary health services
providers.
Sec. 4002. Expensing of medical equipment.
Sec. 4003. Expanded services for medically underserved individuals.
Sec. 4004. Increase in National Health Service Corps and area health
education center funding.
Sec. 4005. Assistant Secretary for Rural Health.
Sec. 4006. Study on transitional measures to ensure access.
TITLE V--QUALITY AND CONSUMER PROTECTION
Subtitle A--Quality Improvement Foundations
Sec. 5001. Quality improvement foundations.
Subtitle B--Administrative Simplification
Part 1--Purpose and Definitions
Sec. 5101. Purpose.
Sec. 5102. Definitions.
Part 2--Standards for Data Elements and Information Transactions
Sec. 5111. General requirements on secretary.
Sec. 5112. Standards for transactions and data elements.
Sec. 5113. Timetables for adoption of standards.
Part 3--Requirements With Respect to Certain Transactions and
Information
Sec. 5121. Requirements on health plans.
Sec. 5122. Timetables for compliance with requirements.
Part 4--Accessing Health Information
Sec. 5131. Access for authorized purposes.
Sec. 5132. Responding to access requests.
Sec. 5133. Timetables for adoption of standards and compliance.
Part 5--Standards and Certification for Health Information Network
Sec. 5141. Standards and certification for health information network
services.
Sec. 5142. Ensuring availability of information.
Part 6--Penalties
Sec. 5151. General penalty for failure to comply with requirements and
standards.
Part 7--Miscellaneous Provisions
Sec. 5161. Effect on State law.
Sec. 5162. Health information continuity.
Sec. 5163. Health Information Advisory Committee.
Sec. 5164. Authorization of appropriations.
Subtitle C--Privacy of Health Information
Part 1--Definitions
Sec. 5201. Definitions.
Part 2--Authorized Disclosures
SUBPART A--GENERAL PROVISIONS
Sec. 5206. General rules regarding disclosure.
Sec. 5207. Authorizations for disclosure of protected health
information.
Sec. 5208. Certified health information network services.
SUBPART B--SPECIFIC DISCLOSURES RELATING TO PATIENT
Sec. 5211. Disclosures for treatment and financial and administrative
transactions.
Sec. 5212. Next of kin and directory information.
Sec. 5213. Emergency circumstances.
SUBPART C--DISCLOSURE FOR OVERSIGHT, PUBLIC HEALTH, AND RESEARCH
PURPOSES
Sec. 5216. Oversight.
Sec. 5217. Public health.
Sec. 5218. Health research.
SUBPART D--DISCLOSURE FOR JUDICIAL, ADMINISTRATIVE, AND LAW ENFORCEMENT
PURPOSES
Sec. 5221. Judicial and administrative purposes.
Sec. 5222. Law enforcement.
SUBPART E--DISCLOSURE PURSUANT TO GOVERNMENT SUBPOENA OR WARRANT
Sec. 5226. Government subpoenas and warrants.
Sec. 5227. Access procedures for law enforcement subpoenas and
warrants.
Sec. 5228. Challenge procedures for law enforcement warrants,
subpoenas, and summons.
SUBPART F--DISCLOSURE PURSUANT TO PARTY SUBPOENA
Sec. 5231. Party subpoenas.
Sec. 5232. Access procedures for party subpoenas.
Sec. 5233. Challenge procedures for party subpoenas.
Part 3--Procedures for Ensuring Security of Protected Health
Information
SUBPART A--ESTABLISHMENT OF SAFEGUARDS
Sec. 5236. Establishment of safeguards.
Sec. 5237. Accounting for disclosures.
SUBPART B--REVIEW OF PROTECTED HEALTH INFORMATION BY SUBJECTS OF THE
INFORMATION
Sec. 5241. Inspection of protected health information.
Sec. 5242. Amendment of protected health information.
Sec. 5243. Notice of information practices.
SUBPART C--STANDARDS FOR ELECTRONIC DISCLOSURES
Sec. 5246. Standards for electronic disclosures.
Part 4--Sanctions
SUBPART A--NO SANCTIONS FOR PERMISSIBLE ACTIONS
Sec. 5251. No liability for permissible disclosures.
SUBPART B--CIVIL SANCTIONS
Sec. 5256. Civil penalty.
Sec. 5257. Civil action.
SUBPART C--CRIMINAL SANCTIONS
Sec. 5261. Wrongful disclosure of protected health information.
Part 5--Administrative Provisions
Sec. 5266. Relationship to other laws.
Sec. 5267. Rights of incompetents.
Sec. 5268. Exercise of rights.
Subtitle D--Health Care Fraud Prevention
Sec. 5301. Short title; table of contents.
Part A--All-Payer Fraud and Abuse Control Program
Sec. 5311. All-payer fraud and abuse control program.
Sec. 5312. Application of certain Federal health anti-fraud and abuse
sanctions to fraud and abuse against any health plan.
Sec. 5313. Health care fraud and abuse guidance.
Sec. 5314. Reporting of fraudulent actions under medicare.
Part B--Revisions to Current Sanctions for Fraud and Abuse
Sec. 5321. Mandatory exclusion from participation in medicare and State
health care programs.
Sec. 5322. Establishment of minimum period of exclusion for certain
individuals and entities subject to permissive exclusion
from medicare and State health care programs.
Sec. 5323. Permissive exclusion of individuals with ownership or
control interest in sanctioned entities.
Sec. 5324. Sanctions against practitioners and persons for failure to
comply with statutory obligations.
Sec. 5325. Intermediate sanctions for medicare health maintenance
organizations.
Sec. 5326. Effective date.
Part C--Administrative and Miscellaneous Provisions
Sec. 5331. Establishment of the health care fraud and abuse data
collection program.
Part D--Civil Monetary Penalties
Sec. 5341. Civil monetary penalties.
Part E--Amendments to Criminal Law
Sec. 5351. Health care fraud.
[[Page S1763]] Sec. 5352. Forfeitures for Federal health care offenses.
Sec. 5353. Injunctive relief relating to Federal health care offenses.
Sec. 5354. Grand jury disclosure.
Sec. 5355. False Statements.
Sec. 5356. Voluntary disclosure program.
Sec. 5357. Obstruction of criminal investigations of Federal health
care offenses.
Sec. 5358. Theft or embezzlement.
Sec. 5359. Laundering of monetary instruments.
Part F--Payments for State Health Care Fraud Control Units
Sec. 5361. Establishment of State fraud units.
Sec. 5362. Requirements for State fraud units.
Sec. 5363. Scope and purpose.
Sec. 5364. Payments to States.
TITLE VI--MALPRACTICE REFORM
Sec. 6001. Alternative dispute resolution.
Sec. 6002. Basic requirements.
Sec. 6003. Alternative dispute resolution advisory board.
Sec. 6004. Certification of State systems; applicability of alternative
Federal system.
Sec. 6005. Reports on implementation and effectiveness of alternative
dispute resolution systems.
Sec. 6006. Optional application of practice guidelines.
TITLE VII--HEALTH PROMOTION AND DISEASE PREVENTION
Sec. 7001. Disease prevention and health promotion programs treated as
medical care.
Sec. 7002. Worksite wellness grant program.
Sec. 7003. Expanding and improving school health education.
TITLE VIII--TAX INCENTIVES FOR LONG-TERM CARE
Sec. 8001. Short title.
Sec. 8002. Amendment of 1986 Code.
Subtitle A--Tax Treatment of Long-Term Care Insurance
Sec. 8101. Qualified long-term care services treated as medical care.
Sec. 8102. Treatment of long-term care insurance.
Sec. 8103. Treatment of qualified long-term care plans.
Sec. 8104. Tax reserves for qualified long-term care insurance
policies.
Sec. 8105. Tax treatment of accelerated death benefits under life
insurance contracts.
Sec. 8106. Tax treatment of companies issuing qualified accelerated
death benefit riders.
Subtitle B--Standards For Long-Term Care Insurance
Sec. 8201. National Long-Term Care Insurance Advisory Council.
Sec. 8202. Additional requirements for issuers of long-term care
insurance policies.
Sec. 8203. Coordination with State requirements.
Sec. 8204. Uniform language and definitions.
Subtitle C--Incentives to Encourage the Purchase of Private Insurance
Sec. 8301. Assets or resources disregarded under the medicaid program.
Sec. 8302. Distributions from individual retirement accounts for the
purchase of long-term care insurance coverage.
Subtitle D--Effective Date
Sec. 8401. Effective date of tax provisions.
TITLE IX--BUDGET NEUTRALITY
Sec. 9001. Assurance of budget neutrality.
TITLE I--HEALTH INSURANCE MARKET REFORM
Subtitle A--Insurance Market Standards
SEC. 1001. NONDISCRIMINATION BASED ON HEALTH STATUS.
(a) In General.--Except as provided in subsection (b) and
section 1003(d), a health plan may not deny, limit, or
condition the coverage under (or benefits of) the plan, or
vary the premium, for an individual based on the health
status, medical condition, claims experience, receipt of
health care, medical history, anticipated need for health
care services, disability, or lack of evidence of
insurability.
(b) Treatment of Preexisting Condition Exclusions for All
Services.--
(1) In general.--A health plan may impose a limitation or
exclusion of benefits relating to treatment of a condition
based on the fact that the condition preexisted the effective
date of the plan with respect to an individual only if--
(A) the condition was diagnosed or treated during the 3-
month period ending on the day before the date of enrollment
under the plan;
(B) the limitation or exclusion extends for a period not
more than 6 months after the date of enrollment under the
plan;
(C) the limitation or exclusion does not apply to an
individual who, as of the date of birth, was covered under
the plan; or
(D) the limitation or exclusion does not apply to
pregnancy.
(2) Crediting of previous coverage.--A health plan shall
provide that if an individual under such plan is in a period
of continuous coverage as of the date of enrollment under
such plan, any period of exclusion of coverage with respect
to a preexisting condition shall be reduced by 1 month for
each month in the period of continuous coverage.
(3) Definitions.--For purposes of this subsection:
(A) Period of continuous coverage.--
(i) In general.--The term ``period of continuous coverage''
means the period beginning on the date an individual is
enrolled under a health plan or an equivalent health care
program and ends on the date the individual is not so
enrolled for a continuous period of more than 3 months.
(ii) Equivalent health care program.--The term ``equivalent
health care program'' means--
(I) part A or part B of the medicare program under title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.),
(II) the medicaid program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.),
(III) the health care program for active military personnel
under title 10, United States Code,
(IV) the veterans health care program under chapter 17 of
title 38, United States Code,
(V) the Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), as defined in section 1073(4)
of title 10, United States Code, and
(VI) the Indian health service program under the Indian
Health Care Improvement Act (25 U.S.C. 1601 et seq.).
(B) Preexisting condition.--The term ``preexisting
condition'' means, with respect to coverage under a health
plan, a condition which was diagnosed, or which was treated,
within the 3-month period ending on the day before the date
of enrollment (without regard to any waiting period).
(c) Limitations Prohibited.--
(1) In general.--A health plan may not impose a lifetime
limitation on the provision of benefits under the plan.
(2) Rule of construction.--The prohibition contained in
paragraph (1) shall not be construed as prohibiting
limitations on the scope or duration of particular items or
services covered by a health plan.
SEC. 1002. GUARANTEED ISSUE AND RENEWAL
(a) Small Group Market.--Each health plan offering coverage
in the small group market shall guarantee each individual
purchaser and small employer (and each eligible employee of
such small employer) applying for coverage in such market the
opportunity to enroll in the plan.
(b) Large Employer Market.--Each health plan offering
coverage in the large employer market shall guarantee any
individual eligible for coverage under the plan the
opportunity to enroll in such plan.
(c) Capacity Limits.--Notwithstanding this section, a
health plan may apply a capacity limit based on limited
financial or provider capacity if the plan enrolls
individuals in a manner that provides prospective enrollees
with a fair chance of enrollment regardless of the method by
which the individual seeks enrollment.
(d) Renewal of Policy.--
(1) Small group market.--A health plan issued to a small
employer or an individual purchaser in the small group market
shall be renewed at the option of the employer or individual,
if such employer or individual purchaser remains eligible for
coverage under the plan.
(2) Large employer market.--A health plan issued to an
individual eligible for coverage under a large employer plan
shall be renewed at the option of the individual, if such
individual remains eligible for coverage under the plan.
(e) Grounds for Refusal to Renew.--A health plan may refuse
to renew a policy only in the case of--
(1) the nonpayment of premiums;
(2) fraud on the part of the employer or individual
relating to such plan; or
(3) the misrepresentation by the employer or individual of
material facts relating to an application for coverage of a
claim or benefit.
(f) Notification of Availability.--Each health plan sponsor
shall publicly disclose the availability of each health plan
that such sponsor provides or offers in a small group market.
Such disclosure shall be accompanied by information
describing the method by which eligible employers and
individuals may enroll in such plans.
SEC. 1003. RATING LIMITATIONS.
(a) In General.--A health plan offering coverage in the
small group market shall comply with the standards developed
under this section.
(b) Role of NAIC.--The Secretary shall request that the
NAIC--
(1) develop specific standards in the form of a model Act
and model regulations that provide for the implementation of
the rating limitations described in subsection (d); and
(2) report to the Secretary concerning such standards
within 6 months after the date of enactment of this Act.
(c) Role of the Secretary.--The Secretary, upon review of
the report received under subsection (b)(2), shall not later
than January 1, 1997, promulgate final standards implementing
this section. Such standards shall be the applicable health
plan standards under this section.
(d) Rating Standards.--The standards described in this
section shall provide for the following:
(1) A determination of factors that health plans may use to
vary the premium rates of such plans. Such factors--
(A) shall be applied in a uniform fashion to all enrollees
covered by a plan;
(B) shall include age (as specified in paragraph (3)),
family type, and geography; and
[[Page S1764]] (C) except as provided in paragraph (2)(A),
shall not include gender, health status, or health
expenditures.
(2)(A) Factors prohibited under paragraph (1)(C) shall be
phased out over a period not to exceed 3 years after the
effective date of this section.
(B) Other rating factors (other than age) may be phased out
to the extent necessary to minimize market disruption and
maximize coverage rates.
(3) Uniform age categories and age adjustment factors that
reflect the relative actuarial costs of benefit packages
among enrollees. By the end of the 3-year period beginning on
the effective date of this section, for individuals who have
attained age 18 but not age 65, the highest age adjustment
factor may not exceed 3 times the lowest age adjustment
factor.
(e) Discounts.--Standards developed under this section
shall permit health plans to provide premium discounts based
on workplace health promoting activities.
SEC. 1004. DELIVERY SYSTEM QUALITY STANDARDS.
(a) In General.--Each health plan shall comply with the
standards developed under this section.
(b) Role of the Secretary.--Not later than 9 months after
the date of enactment of this Act, the Secretary, in
consultation with the NAIC and other organizations with
expertise in the areas of quality assurance (including the
Joint Commission on Accreditation of Health Care
Organizations, the National Committee for Quality Assurance,
and peer review organizations), shall establish minimum
guidelines specified in subsection (c) for the issuance by
each State of delivery system quality standards. Such
standards shall be the applicable health plan standards under
this section.
(c) Minimum Guidelines.--The minimum guidelines specified
in this subsection are as follows:
(1) Establishing and maintaining health plan quality
assurance, including--
(A) quality management;
(B) credentialing;
(C) utilization management;
(D) health care provider selection and due process in
selection; and
(E) practice guidelines and protocols.
(2) Providing consumer protection for health plan
enrollees, including--
(A) comparative standardized consumer information with
respect to health plan premiums and quality measures,
including health care report cards;
(B) nondiscrimination in plan enrollment, disenrollment,
and service provision;
(C) continuation of treatment with respect to health plans
that become insolvent; and
(D) grievance procedures.
(3) Ensuring reasonable access to health care services,
including access for vulnerable populations in underserved
areas.
SEC. 1005. RISK ADJUSTMENT.
Each health plan offering coverage in the small group
market in a State shall participate in a risk adjustment
program developed by such State under standards established
by the Secretary.
SEC. 1006. EFFECTIVE DATES.
(a) In General.--Except as provided in subsection (b), this
title shall take effect on January 1, 1996.
(b) Rating Limitations and Risk Adjustments.--The standards
promulgated under sections 1003 and 1005 shall apply to plans
that are issued or renewed after December 31, 1996.
Subtitle B--Establishment and Application of Standards
SEC. 1011. GENERAL RULES.
(a) Construction.--
(1) In general.--A requirement or standard imposed on a
health plan under this Act shall be deemed to be a
requirement or standard imposed on the insurer or sponsor of
such plan.
(2) Preemption of state law.--
(A) In general.--No requirement of this title shall be
construed as preempting any State law unless such State law
directly conflicts with such requirement. The provision of
additional consumer protections under State law as described
in subparagraph (B) shall not be considered to directly
conflict with any such requirement.
(B) Consumer protection laws.--State laws referred to in
subparagraph (A) that are not preempted by this title
include--
(i) laws that limit the exclusions or limitations for
preexisting medical conditions to periods that are less than
those provided for under section 1001;
(ii) laws that limit variations in premium rates beyond the
variations permitted under section 1003; and
(iii) laws that would expand the small group market in
excess of that provided for under this title.
(C) Limited preemption of state mandated benefits.--No
State law or regulation in effect in a State that requires
health plans offered to small employers in the State to
include specified items and services other than those
described in section 1005(b)(2)(B) shall apply with respect
to a health plan offered by an insurer to a small employer.
(b) Regulations.--The Secretary, in consultation with NAIC,
and the Secretary of Labor are each authorized to issue
regulations as are necessary to implement this Act.
SEC. 1012. ENCOURAGEMENT OF STATE REFORMS.
Nothing in this Act shall be construed as prohibiting
States from enacting health care reform measures that exceed
the measures established under this Act, including reforms
that expand access to health care services, control health
care costs, and enhance quality of care.
SEC. 1013. ENFORCEMENT OF STANDARDS.
(a) In General.--Except as provided in subsection (b), each
State shall require that each health plan issued, sold,
offered for sale, or operated in such State meets the
insurance reform standards established under this title
pursuant to an enforcement plan filed by the State with, and
approved by, the Secretary. If the State does not file an
acceptable plan, the Secretary shall enforce such standards
until a plan is filed and approved.
(b) Secretary of Labor.--With respect to any health plan
for which the application of State insurance laws are
preempted under section 514 of Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1144), the enforcement of the
insurance reform standards established under this title shall
be by the Secretary of Labor.
Subtitle C--Definitions
SEC. 1021. DEFINITIONS.
(a) Health Plan.--For purposes of this title and title II,
the term ``health plan'' means a plan that provides, or pays
the cost of, health benefits. Such term does not include the
following, or any combination thereof:
(1) Coverage only for accidental death, dismemberment,
dental, or vision.
(2) Coverage providing wages or payments in lieu of wages
for any period during which the employee is absent from work
on account of sickness or injury.
(3) A medicare supplemental policy (as defined in section
1882(g)(1) of the Social Security Act (42 U.S.C.
1395ss(g)(1)).
(4) Coverage issued as a supplement to liability insurance.
(5) Worker's compensation or similar insurance.
(6) Automobile medical-payment insurance.
(7) A long-term care insurance policy, including a nursing
home fixed indemnity policy (unless the Secretary determines
that such a policy provides sufficiently comprehensive
coverage of a benefit so that it should be treated as a
health plan).
(8) Any plan or arrangement not described in any preceding
subparagraph which provides for benefit payments, on a
periodic basis, for a specified disease or illness or period
of hospitalization without regard to the costs incurred or
services rendered during the period to which the payments
relate.
(9) Such other plan or arrangement as the Secretary
determines is not a health plan.
(b) Terms and Rules Relating to the Small Group and Large
Employer Markets.--For purposes of this title and title II:
(1) Small group market.--The term ``small group market''
means the market for health plans which is composed of small
employers and individual purchasers.
(2) Small employer.--The term ``small employer'' means,
with respect to any calendar year, any employer if, on each
of 20 days during the preceding calendar year (each day being
in a different week), such employer (or any predecessor)
employed less than 51 employees for some portion of the day.
(3) Individual purchaser.--The term ``individual
purchaser'' means an individual who is not eligible to enroll
in a health plan sponsored by a large or small employer.
(4) Large employer market.--The term ``large employer
market'' means the market for health plans which is composed
of large employers.
(5) Large employer.--The term ``large employer''--
(A) means an employer that is not a small employer; and
(B) includes a multiemployer plan as defined in section
3(37) of the Employment Retirement Income Security Act of
1974 (29 U.S.C. 1002(37)) and a plan which is maintained by a
rural electric cooperative or a rural telephone cooperative
association (within the meaning of section 3(40) of such Act
(29 U.S.C. 1002(40)).
(c) Additional Definitions.--For purposes of this title and
title II:
(1) NAIC.--The term ``NAIC'' means the National Association
of Insurance Commissioners.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
TITLE II--GRANTS TO STATES FOR SMALL GROUP HEALTH INSURANCE PURCHASING
ARRANGEMENTS
SEC. 2001. GRANTS TO STATES FOR SMALL GROUP HEALTH INSURANCE
PURCHASING ARRANGEMENTS.
(a) In General.--The Secretary shall make grants to States
that submit applications meeting the requirements of this
section for the establishment and operation of small group
health insurance purchasing arrangements.
(b) Use of Funds.--Grant funds awarded under this section
to a State may be used to finance administrative costs
associated with developing and operating a small group health
insurance purchasing arrangement, including the costs
associated with--
(1) engaging in marketing and outreach efforts to inform
individuals and small employers about the small group health
insurance purchasing arrangement, which may include the
payment of sales commissions;
(2) negotiating with insurers to provide health insurance
through the small group health insurance purchasing
arrangement; or
[[Page S1765]] (3) providing administrative functions, such
as eligibility screening, claims administration, and customer
service.
(c) Application Requirements.--An application submitted by
a State to the Secretary shall describe--
(1) whether the program will be operated directly by the
State or through 1 or more State-sponsored private
organizations and the details of such operation;
(2) program goals for reducing the cost of health insurance
for, and increasing insurance coverage in, the small group
market;
(3) the approaches proposed for enlisting participation by
insurers and small employers, including any plans to use
State funds to subsidize the cost of insurance for
participating individuals and employers; and
(4) the methods proposed for evaluating the effectiveness
of the program in reducing the number of uninsured in the
State and on lowering the cost of health insurance for the
small group market in the State.
(d) Grant Criteria.--In awarding grants, the Secretary
shall consider the potential impact of the State's proposal
on the cost of health insurance for the small group market
and on the number of uninsured, and the need for regional
variation in the awarding of grants. To the extent the
Secretary deems appropriate, grants shall be awarded to fund
programs employing a variety of approaches for establishing
small group health insurance purchasing arrangements.
(e) Prohibition on Grants.--No grant funds shall be paid to
States that do not meet the requirements of this title with
respect to small group health plans, or to States with group
purchasing programs involving small group health plans that
do not meet the requirements of this title.
(f) Annual Report by States.--States receiving grants under
this section shall report to the Secretary annually on the
numbers and rates of participation by eligible insurers and
small employers, on the estimated impact of the program on
reducing the number of uninsured, and on the cost of
insurance available to the small group market in the State.
(g) Authorization of Appropriations.--There are authorized
to be appropriated for each of the fiscal years 1996, 1997,
and 1998, such sums as may be necessary to carry out this
section.
(h) Secretarial Report.--The Secretary shall report to
Congress by not later than January 1, 1997, on the number and
amount of grants awarded under this section, and include with
such report an evaluation of the impact of the grant program
on the number of uninsured and cost of health insurance to
small group markets in participating States.
TITLE III--TAX INCENTIVES TO ENCOURAGE THE PURCHASE OF HEALTH INSURANCE
SEC. 3001. PERMANENT EXTENSION AND INCREASE OF DEDUCTION FOR
HEALTH INSURANCE COSTS OF SELF-EMPLOYED
INDIVIDUALS.
(a) Deduction Made Permanent.--Section 162(l) of the
Internal Revenue Code of 1986 (relating to special rules for
health insurance costs of self-employed individuals) is
amended by striking paragraph (6).
(b) Increase in Deduction.--Section 162(l) of such Code, as
amended by subsection (a), is amended--
(1) by striking ``25 percent'' in paragraph (1) and
inserting ``the applicable percentage'', and
(2) by adding at the end the following new paragraph:
``(6) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage shall be determined as
follows:
The applicable percentage is:n:
2594, 1995 and 1996....................................................
5097...................................................................
7598 and 1999..........................................................
100.''nd thereafter....................................................
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1993.
SEC. 3002. CREDIT FOR HEALTH INSURANCE EXPENSES.
(a) In General.--Subpart C of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
refundable personal credits) is amended by inserting after
section 34 the following new section:
``SEC. 34A. HEALTH INSURANCE EXPENSES.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed by
this subtitle for the taxable year an amount equal to the
applicable percentage of the qualified health insurance
expenses paid by such individual during the taxable year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the term `applicable percentage' means 60 percent
reduced (but not below zero) by 10 percentage points for each
$1,000 (or fraction thereof) by which the taxpayer's adjusted
gross income for the taxable year exceeds the applicable
dollar amount.
``(3) Applicable dollar amount.--For purposes of this
subsection, the term `applicable dollar amount' means--
``(A) in the case of a taxpayer filing a joint return,
$28,000,
``(B) in the case of any other taxpayer (other than a
married individual filing a separate return), $18,000, and
``(C) in the case of a married individual filing a separate
return, zero.
For purposes of this subsection, the rule of section
219(g)(4) shall apply.
``(b) Qualified Health Insurance Expenses.--For purposes of
this section--
``(1) In general.--The term `qualified health insurance
expenses' means amounts paid during the taxable year for
insurance which constitutes medical care (within the meaning
of section 213(d)(1)(C)). For purposes of the preceding
sentence, the rules of section 213(d)(6) shall apply.
``(2) Dollar limit on qualified health insurance
expenses.--The amount of the qualified health insurance
expenses paid during any taxable year which may be taken into
account under subsection (a)(1) shall not exceed $1,200
($2,400 in the case of a taxpayer filing a joint return).
``(3) Election not to take credit.--A taxpayer may elect
for any taxable year to have amounts described in paragraph
(1) not treated as qualified health insurance expenses.
``(c) Eligible Individual.--For purposes of this section,
the term `eligible individual' means, with respect to any
period, an individual who is not covered during such period
by a health plan maintained by an employer of such individual
or such individual's spouse.
``(d) Special Rules.--For purposes of this section--
``(1) Coordination with advance payment and minimum tax.--
Rules similar to the rules of subsections (g) and (h) of
section 32 shall apply to any credit to which this section
applies.
``(2) Medicare-eligible individuals.--No expense shall be
treated as a qualified health insurance expense if it is an
amount paid for insurance for an individual for any period
with respect to which such individual is entitled (or, on
application without the payment of an additional premium,
would be entitled to) benefits under part A of title XVIII of
the Social Security Act.
``(3) Subsidized expenses.--No expense shall be treated as
a qualified health insurance expense to the extent--
``(A) such expense is paid, reimbursed, or subsidized
(whether by being disregarded for purposes of another program
or otherwise) by the Federal Government, a State or local
government, or any agency or instrumentality thereof, and
``(B) the payment, reimbursement, or subsidy of such
expense is not includible in the gross income of the
recipient.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this section.''.
(b) Advance Payment of Credit.--
(1) In general.--Chapter 25 of the Internal Revenue Code of
1986 is amended by inserting after section 3507 the following
new section:
``SEC. 3507A. ADVANCE PAYMENT OF HEALTH INSURANCE EXPENSES
CREDIT.
``(a) General Rule.--Except as otherwise provided in this
section, every employer making payment of wages with respect
to whom a health insurance expenses eligibility certificate
is in effect shall, at the time of paying such wages, make an
additional payment equal to such employee's dependent care
advance amount.
``(b) Health Insurance Expenses Eligibility Certificate.--
For purposes of this title, a health insurance expenses
eligibility certificate is a statement furnished by an
employee to the employer which--
``(1) certifies that the employee will be eligible to
receive the credit provided by section 34A for the taxable
year,
``(2) certifies that the employee does not have a health
insurance expenses eligibility certificate in effect for the
calendar year with respect to the payment of wages by another
employer,
``(3) states whether or not the employee's spouse has a
health insurance expenses eligibility certificate in effect,
and
``(4) estimates the amount of qualified health insurance
expenses (as defined in section 34A(b)) for the calendar
year.
For purposes of this section, a certificate shall be treated
as being in effect with respect to a spouse if such a
certificate will be in effect on the first status
determination date following the date on which the employee
furnishes the statement in question.
``(c) Health Insurance Expenses Advance Amount.--
``(1) In general.--For purposes of this title, the term
`health insurance expenses advance amount' means, with
respect to any payroll period, the amount determined--
``(A) on the basis of the employee's wages from the
employer for such period,
``(B) on the basis of the employee's estimated qualified
health insurance expenses included in the health insurance
expenses eligibility certificate, and
``(C) in accordance with tables provided by the Secretary.
``(2) Advance amount tables.--The tables referred to in
paragraph (1)(C) shall be similar in form to the tables
prescribed under section 3402(a) and, to the maximum extent
feasible, shall be coordinated with such tables and the
tables prescribed under section 3507(c).
``(d) Other Rules.--For purposes of this section, rules
similar to the rules of subsections (d) and (e) of section
3507 shall apply.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this section.''.
(2) Conforming amendment.--The table of sections for
chapter 25 of such Code is
[[Page S1766]] amended by adding after the item relating to
section 3507 the following new item:
``Sec. 3507A. Advance payment of health insurance expenses credit.''.
(c) Coordination With Deductions for Health Insurance
Expenses.--
(1) Self-employed individuals.--Section 162(l) of the
Internal Revenue Code of 1986, as amended by section 8001, is
further amended by adding after paragraph (6) the following
new paragraph:
``(7) Coordination with health insurance premium credit.--
Paragraph (1) shall not apply to any amount taken into
account in computing the amount of the credit allowed under
section 34A.''.
(2) Medical, dental, etc., expenses.--Subsection (e) of
section 213 of such Code is amended by inserting ``or section
34A'' after ``section 21''.
(d) Clerical Amendment.--The table of sections for subpart
A of part IV of subchapter A of chapter 1 of the Internal
Revenue Code of 1986 is amended by inserting after the item
relating to section 34 the following new item:
``Sec. 34A. Health insurance expenses.''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1995.
TITLE IV--INCENTIVES TO INCREASE THE ACCESS OF RURAL AND UNDERSERVED
AREAS TO HEALTH CARE
SEC. 4001. NONREFUNDABLE CREDIT FOR CERTAIN PRIMARY HEALTH
SERVICES PROVIDERS.
(a) In General.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
nonrefundable personal credits) is amended by inserting after
section 22 the following new section:
``SEC. 23. PRIMARY HEALTH SERVICES PROVIDERS.
``(a) Allowance of Credit.--There shall be allowed as a
credit against the tax imposed by this chapter for the
taxable year an amount equal to the product of--
``(1) the number of months during such taxable year--
``(A) during which the taxpayer is a qualified primary
health services provider, and
``(B) which are within the taxpayer's mandatory service
period, and
``(2) $1,000 ($500 in the case of a qualified practitioner
who is not a physician).
``(b) Qualified Primary Health Services Provider.--For
purposes of this section, the term `qualified primary health
services provider' means, with respect to any month, any
qualified practitioner who--
``(1) has in effect a certification by the Bureau as a
provider of primary health services and such certification
is, when issued, for a health professional shortage area in
which the qualified practitioner is commencing the providing
of primary health services,
``(2) is providing primary health services full time in the
health professional shortage area identified in such
certification, and
``(3) has not received a scholarship under the National
Health Service Corps Scholarship Program or any loan
repayments under the National Health Service Corps Loan
Repayment Program.
For purposes of paragraph (2) and subsection (e)(3), a
provider shall be treated as providing services in a health
professional shortage area when such area ceases to be such
an area if it was such an area when the provider commenced
providing services in the area.
``(c) Mandatory Service Period.--For purposes of this
section, the term `mandatory service period' means the period
of 60 consecutive calendar months beginning with the first
month the taxpayer is a qualified primary health services
provider. A taxpayer shall not have more than 1 mandatory
service period.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Bureau.--The term `Bureau' means the Bureau of
Primary Health Care, Health Resources and Services
Administration of the United States Public Health Service.
``(2) Qualified practitioner.--The term `qualified
practitioner' means a physician, a physician assistant, a
nurse practitioner, or a certified nurse-midwife.
``(3) Physician.--The term `physician' has the meaning
given to such term by section 1861(r) of the Social Security
Act.
``(4) Physician assistant; nurse practitioner.--The terms
`physician assistant' and `nurse practitioner' have the
meanings given to such terms by section 1861(aa)(5) of the
Social Security Act.
``(5) Certified nurse-midwife.--The term `certified nurse-
midwife' has the meaning given to such term by section
1861(gg)(2) of the Social Security Act.
``(6) Primary health services.--The term `primary health
services' has the meaning given such term by section
330(b)(1) of the Public Health Service Act.
``(7) Health professional shortage area.--The term `health
professional shortage area' has the meaning given such term
by section 332(a)(1)(A) of the Public Health Service Act.
``(e) Recapture of Credit.--
``(1) In general.--If there is a recapture event during any
taxable year, then--
``(A) no credit shall be allowed under subsection (a) for
such taxable year and any succeeding taxable year, and
``(B) the tax of the taxpayer under this chapter for such
taxable year shall be increased by an amount equal to the
product of--
``(i) the applicable percentage, and
``(ii) the aggregate unrecaptured credits allowed to such
taxpayer under this section for all prior taxable years.
``(2) Applicable recapture percentage.--
``(A) In general.--For purposes of this subsection, the
applicable recapture percentage shall be determined from the
following table:
``If the recapture The applicable recap-
event occurs during: ture percentage is:
Months 1-24...............................................100
Months 25-36...............................................75
Months 37-48...............................................50
Months 49-60...............................................25
Month 61 or thereafter.....................................0.
``(B) Timing.--For purposes of subparagraph (A), month 1
shall begin on the first day of the mandatory service period.
``(3) Recapture event defined.--
``(A) In general.--For purposes of this subsection, the
term `recapture event' means the failure of the taxpayer to
be a qualified primary health services provider for any month
during the taxpayer's mandatory service period.
``(B) Secretarial waiver.--The Secretary, in consultation
with the Secretary of Health and Human Services, may waive
any recapture event caused by extraordinary circumstances.
``(4) No credits against tax; minimum tax.--Any increase in
tax under this subsection shall not be treated as a tax
imposed by this chapter for purposes of determining the
amount of any credit under subpart A, B, or D of this part or
for purposes of section 55.''
(b) Clerical Amendment.--The table of sections for subpart
A of part IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to section 22
the following new item:
``Sec. 23. Primary health services providers.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
1994.
SEC. 4002. EXPENSING OF MEDICAL EQUIPMENT.
(a) In General.--Paragraph (1) of section 179(b) of the
Internal Revenue Code of 1986 (relating to dollar limitation
on expensing of certain depreciable business assets) is
amended to read as follows:
``(1) Dollar limitation.--
``(A) General rule.--The aggregate cost which may be taken
into account under subsection (a) for any taxable year shall
not exceed $17,500.
``(B) Health care property.--The aggregate cost which may
be taken into account under subsection (a) shall be increased
by the lesser of--
``(i) the cost of section 179 property which is health care
property placed in service during the taxable year, or
``(ii) $10,000.''
(b) Definition.--Section 179(d) of such Code (relating to
definitions) is amended by adding at the end the following
new paragraph:
``(11) Health care property.--For purposes of this section,
the term `health care property' means section 179 property--
``(A) which is medical equipment used in the screening,
monitoring, observation, diagnosis, or treatment of patients
in a laboratory, medical, or hospital environment,
``(B) which is owned (directly or indirectly) and used by a
physician (as defined in section 1861(r) of the Social
Security Act) in the active conduct of such physician's full-
time trade or business of providing primary health services
(as defined in section 330(b)(1) of the Public Health Service
Act) in a health professional shortage area (as defined in
section 332(a)(1)(A) of the Public Health Service Act), and
``(C) substantially all the use of which is in such area.''
(c) Recapture.--Paragraph (10) of section 179(d) of such
Code is amended by inserting before the period ``and with
respect to any health care property which ceases (other than
by an area failing to be treated as a health professional
shortage area) to be health care property at any time''.
(d) Effective Date.--The amendments made by this section
shall apply to property placed in service in taxable years
beginning after December 31, 1994.
SEC. 4003. EXPANDED SERVICES FOR MEDICALLY UNDERSERVED
INDIVIDUALS.
(a) In General.--Subpart I of part D of title III of the
Public Health Service Act (42 U.S.C. 254b et seq.) (as
amended by section 313) is amended by adding at the end the
following new section:
``SEC. 330B. EXPANDED SERVICES FOR MEDICALLY UNDERSERVED
INDIVIDUALS.
``(a) Establishment of Health Services Access Program.--
From amounts appropriated under this section, the Secretary
shall, acting through the Bureau of Health Care Delivery
Assistance, award grants under this section to federally
qualified health centers (hereinafter referred to in this
section as `FQHC's') and other entities and organizations
submitting applications under this section (as described in
subsection (c)) for the purpose of providing access to
services for medically underserved populations (as defined in
section 330(b)(3)) or in high impact areas (as defined in
section 329(a)(5)) not currently being served by a FQHC.
``(b) Eligibility for Grants.--
``(1) In general.--The Secretary shall award grants under
this section to entities or organizations described in this
paragraph and paragraph (2) which have submitted a proposal
to the Secretary to expand such entities or organizations
operations (including
[[Page S1767]] expansions to new sites (as determined
necessary by the Secretary)) to serve medically underserved
populations or high impact areas not currently served by a
FQHC and which--
``(A) have as of January 1, 1991, been certified by the
Secretary as a FQHC under section 1905(l)(2)(B) of the Social
Security Act; or
``(B) have submitted applications to the Secretary to
qualify as FQHC's under such section 1905(l)(2)(B); or
``(C) have submitted a plan to the Secretary which provides
that the entity will meet the requirements to qualify as a
FQHC when operational.
``(2) Non fqhc entities.--
``(A) Eligibility.--The Secretary shall also make grants
under this section to public or private nonprofit agencies,
health care entities or organizations which meet the
requirements necessary to qualify as a FQHC except, the
requirement that such entity have a consumer majority
governing board and which have submitted a proposal to the
Secretary to provide those services provided by a FQHC as
defined in section 1905(l)(2)(B) of the Social Security Act
and which are designed to promote access to primary care
services or to reduce reliance on hospital emergency rooms or
other high cost providers of primary health care services,
provided such proposal is developed by the entity or
organizations (or such entities or organizations acting in a
consortium in a community) with the review and approval of
the Governor of the State in which such entity or
organization is located.
``(B) Limitation.--The Secretary shall provide in making
grants to entities or organizations described in this
paragraph that no more than 10 percent of the funds provided
for grants under this section shall be made available for
grants to such entities or organizations.
``(c) Application Requirements.--
``(1) In general.--In order to be eligible to receive a
grant under this section, a FQHC or other entity or
organization must submit an application in such form and at
such time as the Secretary shall prescribe and which meets
the requirements of this subsection.
``(2) Requirements.--An application submitted under this
section must provide--
``(A)(i) for a schedule of fees or payments for the
provision of the services provided by the entity designed to
cover its reasonable costs of operations; and
``(ii) for a corresponding schedule of discounts to be
applied to such fees or payments, based upon the patient's
ability to pay (determined by using a sliding scale formula
based on the income of the patient);
``(B) assurances that the entity or organization provides
services to persons who are eligible for benefits under title
XVIII of the Social Security Act, for medical assistance
under title XIX of such Act or for assistance for medical
expenses under any other public assistance program or private
health insurance program; and
``(C) assurances that the entity or organization has made
and will continue to make every reasonable effort to collect
reimbursement for services--
``(i) from persons eligible for assistance under any of the
programs described in subparagraph (B); and
``(ii) from patients not entitled to benefits under any
such programs.
``(d) Limitations on Use of Funds.--
``(1) In general.--From the amounts awarded to an entity or
organization under this section, funds may be used for
purposes of planning but may only be expended for the costs
of--
``(A) assessing the needs of the populations or proposed
areas to be served;
``(B) preparing a description of how the needs identified
will be met; and
``(C) development of an implementation plan that
addresses--
``(i) recruitment and training of personnel; and
``(ii) activities necessary to achieve operational status
in order to meet FQHC requirements under 1905(l)(2)(B) of the
Social Security Act.
``(2) Recruiting, training and compensation of staff.--From
the amounts awarded to an entity or organization under this
section, funds may be used for the purposes of paying for the
costs of recruiting, training and compensating staff
(clinical and associated administrative personnel (to the
extent such costs are not already reimbursed under title XIX
of the Social Security Act or any other State or Federal
program)) to the extent necessary to allow the entity to
operate at new or expended existing sites.
``(3) Facilities and equipment.--From the amounts awarded
to an entity or organization under this section, funds may be
expended for the purposes of acquiring facilities and
equipment but only for the cost of--
``(A) construction of new buildings (to the extent that new
construction is found to be the most cost-efficient approach
by the Secretary);
``(B) acquiring, expanding, and modernizing of existing
facilities;
``(C) purchasing essential (as determined by the Secretary)
equipment; and
``(D) amortization of principal and payment of interest on
loans obtained for purposes of site construction,
acquisition, modernization, or expansion, as well as
necessary equipment.
``(4) Services.--From the amounts awarded to an entity or
organization under this section, funds may be expanded for
the payment of services but only for the costs of--
``(A) providing or arranging for the provision of all
services through the entity necessary to qualify such entity
as a FQHC under section 1905(l)(2)(B) of the Social Security
Act;
``(B) providing or arranging for any other service that a
FQHC may provide and be reimbursed for under title XIX of
such Act; and
``(C) providing any unreimbursed costs of providing
services as described in section 330(a) to patients.
``(e) Priorities in the Awarding of Grants.--
``(1) Certified fqhc's.--The Secretary shall give priority
in awarding grants under this section to entities which have,
as of January 1, 1991, been certified as a FQHC under section
1905(l)(2)(B) of the Social Security Act and which have
submitted a proposal to the Secretary to expand their
operations (including expansion to new sites) to serve
medically underserved populations for high impact areas not
currently served by a FQHC. The Secretary shall give first
priority in awarding grants under this section to those FQHCs
or other entities which propose to serve populations with the
highest degree of unmet need, and which can demonstrate the
ability to expand their operations in the most efficient
manner.
``(2) Qualified fqhc's.--The Secretary shall give second
priority in awarding grants to entities which have submitted
applications to the Secretary which demonstrate that the
entity will qualify as a FQHC under section 1905(l)(2)(B) of
the Social Security Act before it provides or arranges for
the provision of services supported by funds awarded under
this section, and which are serving or proposing to serve
medically underserved populations or high impact areas which
are not currently served (or proposed to be served) by a
FQHC.
``(3) Expanded services and projects.--The Secretary shall
give third priority in awarding grants in subsequent years to
those FQHCs or other entities which have provided for
expanded services and project and are able to demonstrate
that such entity will incur significant unreimbursed costs in
providing such expanded services.
``(f) Return of Funds to Secretary for Costs Reimbursed
From Other Sources.--To the extent that an entity or
organization receiving funds under this section is reimbursed
from another source for the provision of services to an
individual, and does not use such increased reimbursement to
expand services furnished, areas served, to compensate for
costs of unreimbursed services provided to patients, or to
promote recruitment, training, or retention of personnel,
such excess revenues shall be returned to the Secretary.
``(g) Termination of Grants.--
``(1) Failure to meet fqhc requirements.--
``(A) In general.--With respect to any entity that is
receiving funds awarded under this section and which
subsequently fails to meet the requirements to qualify as a
FQHC under section 1905(l)(2)(B) or is an entity that is not
required to meet the requirements to qualify as a FQHC under
section 1905(l)(2)(B) of the Social Security Act but fails to
meet the requirements of this section, the Secretary shall
terminate the award of funds under this section to such
entity.
``(B) Notice.--Prior to any termination of funds under this
section to an entity, the entities shall be entitled to 60
days prior notice of termination and, as provided by the
Secretary in regulations, an opportunity to correct any
deficiencies in order to allow the entity to continue to
receive funds under this section.
``(2) Requirements.--Upon any termination of funding under
this section, the Secretary may (to the extent practicable)--
``(A) sell any property (including equipment) acquired or
constructed by the entity using funds made available under
this section or transfer such property to another FQHC,
provided, that the Secretary shall reimburse any costs which
were incurred by the entity in acquiring or constructing such
property (including equipment) which were not supported by
grants under this section; and
``(B) recoup any funds provided to an entity terminated
under this section.
``(h) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
for each of the fiscal years 1996 through 1999 to carry out
this section.''.
(b) Effective Date.--The amendment made by subsection (a)
shall become effective with respect to services furnished by
a federally qualified health center or other qualifying
entity described in this section beginning on or after
October 1, 1996.
SEC. 4004. INCREASE IN NATIONAL HEALTH SERVICE CORPS AND AREA
HEALTH EDUCATION CENTER FUNDING.
(a) National Health Service Corps.--Section 338H(b)(1) of
the Public Health Service Act (42 U.S.C. 254q(b)(1)) is
amended--
(1) by striking ``1991, and'' and inserting ``1991,''; and
(2) by striking ``through 2000'' and inserting ``, 1994,
and 1995, and $20,000,000 for each of the fiscal years 1996
through 2000''.
(b) Area Health Education Centers.--Section 746(i)(1) of
such Act (42 U.S.C. 293j(i)(1)) is amended--
(1) in subparagraph (A), by striking ``1995'' and inserting
``1995, and $20,000,000 for each of the fiscal years 1996
through 2000''; and
[[Page S1768]] (2) in subparagraph (C), by striking ``and
1995'' and inserting ``1995, and $20,000,000 for each of the
fiscal years 1996 through 2000''.
SEC. 4005. ASSISTANT SECRETARY FOR RURAL HEALTH.
(a) Appointment of Assistant Secretary.--
(1) In general.--Section 711(a) of the Social Security Act
(42 U.S.C. 912(a)) is amended--
(A) by striking ``by a Director, who shall advise the
Secretary'' and inserting ``by an Assistant Secretary for
Rural Health (in this section referred to as the `Assistant
Secretary'), who shall report directly to the Secretary'';
and
(B) by adding at the end the following new sentence: ``The
Office shall not be a component of any other office, service,
or component of the Department.''.
(2) Conforming amendments.--(A) Section 711(b) of the
Social Security Act (42 U.S.C. 912(b)) is amended by striking
``the Director'' and inserting ``the Assistant Secretary''.
(B) Section 338J(a) of the Public Health Service Act (42
U.S.C. 254r(a)) is amended by striking ``Director of the
Office of Rural Health Policy'' and inserting ``Assistant
Secretary for Rural Health''.
(C) Section 464T(b) of the Public Health Service Act (42
U.S.C. 285p-2(b)) is amended in the matter preceding
paragraph (1) by striking ``Director of the Office of Rural
Health Policy'' and inserting ``Assistant Secretary for Rural
Health''.
(D) Section 6213 of the Omnibus Budget Reconciliation Act
of 1989 (42 U.S.C. 1395x note) is amended in subsection
(e)(1) by striking ``Director of the Office of Rural Health
Policy'' and inserting ``Assistant Secretary for Rural
Health''.
(E) Section 403 of the Ryan White Comprehensive AIDS
Resources Emergency Act of 1990 (42 U.S.C. 300ff-11 note) is
amended in the matter preceding paragraph (1) of subsection
(a) by striking ``Director of the Office of Rural Health
Policy'' and inserting ``Assistant Secretary for Rural
Health''.
(3) Amendment to the executive schedule.--Section 5315 of
title 5, United States Code, is amended by striking
``Assistant Secretaries of Health and Human Services (5)''
and inserting ``Assistant Secretaries of Health and Human
Services (6)''.
(b) Expansion of Duties.--Section 711(a) of the Social
Security Act (42 U.S.C. 912(a)) is amended by striking ``and
access to (and the quality of) health care in rural areas''
and inserting ``access to, and quality of, health care in
rural areas, and reforms to the health care system and the
implications of such reforms for rural areas''.
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 1996.
SEC. 4006. STUDY ON TRANSITIONAL MEASURES TO ENSURE ACCESS.
(a) In General.--The Prospective Payment Assessment
Commission shall conduct a study concerning the need for
legislation or regulations to ensure that vulnerable
populations have adequate access to health plans and health
care providers and services.
(b) Report.--Not later than 1 year after the date of
enactment of this Act, the Prospective Payment Assessment
Commission shall prepare and submit to Congress a report
concerning the findings and recommendations of the Commission
based on the study conducted under subsection (a).
TITLE V--QUALITY AND CONSUMER PROTECTION
Subtitle A--Quality Improvement Foundations
SEC. 5001. QUALITY IMPROVEMENT FOUNDATIONS.
(a) Establishment.--
(1) Grant process.--The Secretary shall, through a
competitive grantmaking process, award demonstration grants
for the establishment and operation of quality improvement
foundations. In awarding such grants the Secretary shall
consider geographic diversity, regional economics of scale,
population density, regional needs and other regional
differences.
(2) Eligible applicants.--To be eligible to receive a grant
for the establishment of a quality improvement foundation
under paragraph (1), and applicant entity shall--
(A) be a not-for-profit entity; and
(B) have a board that includes health care providers,
representatives from relevant institutions of higher
education in the region, consumers, purchasers of health
care, and other interested parties.
(b) Duties.--
(1) In general.--Each quality improvement foundation shall
carry out the duties described in paragraph (2). The
foundation shall establish a program of activities
incorporating such duties and shall be able to demonstrate
the involvement of a broad cross-section of the providers and
health care institutions throughout the State or region.
(2) Duties described.--The duties described in this
paragraph include the following:
(A) Collaboration with and technical assistance to
providers and health plans in ongoing efforts to improve the
quality of health care provided to individuals in the State.
(B) Population-based monitoring of practice patterns and
patient outcomes,on an other than a case-by-case basis.
(C) Developing programs in lifetime learning for health
professionals to improve the quality of health care by
ensuring that health professionals remain informed about new
knowledge, acquire new skills, and adopt new roles as
technology and societal demands change.
(D) Disseminating information about successful quality
improvement programs, practice guidelines, and research
findings, including information on innovative staffing of
health professionals.
(E) Assist in developing innovative patient education
systems that enhance patient involvement in decisions
relating to their health care, including an emphasis on
shared decisionmaking between patients and health care
providers.
(F) Issuing a report to the public regarding the
foundation's activities for the previous year including areas
of success during the previous year and areas for
opportunities in improving health outcomes for the community,
and the adoption of guidelines.
(c) Restrictions on Disclosure.--The restrictions on
disclosure of information under section 1160 of the Social
Security Act shall apply to quality improvement foundations
under this section, except that--
(1) such foundations shall make data available to qualified
organizations and individuals for research for public benefit
under the terms set forth in section 5218;
(2) individuals and qualified organizations shall meet
standards consistent with the Public Health Service Act and
policies regarding the conduct of scientific research,
including provisions related to confidentiality, privacy,
protection of humans and shall pay reasonable costs for data;
and
(3) such foundations may exchange information with other
quality improvement foundations.
(d) Authorization of Appropriations.--For the purpose of
carrying out this section, the are authorized to be
appropriated such sums as may be necessary for each of the
fiscal years 1996 through 2000.
Subtitle B--Administrative Simplification
PART 1--PURPOSE AND DEFINITIONS
SEC. 5101. PURPOSE.
It is the purpose of this subtitle to improve the
efficiency and effectiveness of the health care system,
including the medicare program under title XVIII of the
Social Security Act and the medicaid program under title XIX
of such Act, by encouraging the development of a health
information network through the establishment of standards
and requirements for the electronic transmission of certain
health information.
SEC. 5102. DEFINITIONS.
For purposes of this subtitle:
(1) Certified.--The term ``certified'' means, with respect
to a health information network service, that such service is
certified under section 5141.
(2) Code set.--The term ``code set'' means any set of codes
used for encoding data elements, such as tables of terms,
medical concepts, medical diagnostic codes, or medical
procedure codes.
(3) Coordination of benefits.--The term ``coordination of
benefits'' means determining and coordinating the financial
obligations of health plans when health care benefits are
payable under two or more health plans.
(4) Health care provider.--The term ``health care
provider'' includes a provider of services (as defined in
section 1861(u) of the Social Security Act), a provider of
medical or other health services (as defined in section
1861(s) of the Social Security Act), and any other person
furnishing health care services or supplies.
(5) Health information.--The term ``health information''
means any information, whether oral or recorded in any form
or medium that--
(A) is created or received by a health care provider,
health plan, health oversight agency (as defined in section
5202), health researcher, public health authority (as defined
in section 5202), employer, life insurer, school or
university, or certified health information network service;
and
(B) relates to the past, present, or future physical or
mental health or condition of an individual, the provision of
health care to an individual, or the past, present, or future
payment for the provision of health care to an individual.
(6) Health information network.--The term ``health
information network'' means the health information system
that is formed through the application of the requirements
and standards established under this subtitle.
(7) Health information protection organization.--The term
``health information protection organization'' means a
private entity or an entity operated by a State that accesses
standard data elements of health information through the
health information network and--
(A) processes such information into non-identifiable health
information and discloses such information;
(B) if such information is protected health information (as
defined in section 5202), discloses such information only in
accordance with subtitle C; and
(C) may store such information
(8) Health information network service.--The term ``health
information network service''--
(A) means a private entity or an entity operated by a State
that enters into contracts to--
(i) process or facilitate the processing of nonstandard
data elements of health information into standard data
elements;
(ii) provide the means by which persons are connected to
the health information network
[[Page S1769]] for purposes of meeting the requirements of
this subtitle, including the holding of standard data
elements of health information;
(iii) provide authorized access to health information
through the health information network; or
(iv) provide specific information processing services, such
as automated coordination of benefits and claims transaction
routing; and
(B) includes a health information protection organization.
(9) Health plan.--The term ``health plan'' has the meaning
given such term in section 1021(a).
(10) Non-identifiable health information.--The term ``non-
identifiable health information'' means health information
that is not protected health information as defined in
section 5202.
(11) Patient medical record information.--The term
``patient medical record information'' means health
information derived from a clinical encounter that relates to
the physical or mental condition of an individual.
(12) Standard.--The term ``standard'' when referring to an
information transaction or to data elements of health
information means the transaction or data elements meet any
standard adopted by the Secretary under part 2 that applies
to such information transaction or data elements.
PART 2--STANDARDS FOR DATA ELEMENTS AND INFORMATION TRANSACTIONS
SEC. 5111. GENERAL REQUIREMENTS ON SECRETARY.
(a) In General.--The Secretary shall adopt standards and
modifications to standards under this subtitle that are--
(1) consistent with the objective of reducing the costs of
providing and paying for health care;
(2) in use and generally accepted or developed or modified
by the standards setting organizations accredited by the
American National Standard Institute (ANSI); and
(3) consistent with the objective of protecting the privacy
of protected health information (as defined in section 5202).
(b) Initial Standards.--The Secretary may develop an
expedited process for the adoption of initial standards under
this subtitle.
(c) Failsafe.--If the Secretary is unable to adopt
standards or modified standards in accordance with subsection
(a) that meet the requirements of this subtitle--
(1) the Secretary may develop or modify such standards and,
after providing public notice and an adequate period for
public comment, adopt such standards; and
(2) if the Secretary adopts standards under paragraph (1),
the Secretary shall submit a report to the appropriate
committees of Congress on the actions taken by the Secretary
under this subsection.
(d) Assistance to the Secretary.--In complying with the
requirements of this subtitle, the Secretary shall rely on
recommendations of the Health Information Advisory Committee
established under section 5163 and shall consult with
appropriate Federal agencies.
SEC. 5112. STANDARDS FOR TRANSACTIONS AND DATA ELEMENTS.
(a) In General.--The Secretary shall adopt standards for
transactions and data elements to make uniform and able to be
exchanged electronically health information that is--
(1) appropriate for the following financial and
administrative transactions: claims (including coordination
of benefits) or equivalent encounter information, claims
attachments, enrollment and disenrollment, eligibility,
payment and remittance advice, premium payments, first report
of injury, claims status, and referral certification and
authorization;
(2) related to other transactions determined appropriate by
the Secretary consistent with the goals of improving the
health care system and reducing administrative costs; and
(3) related to research inquiries by a health researcher
with respect to information standardized under paragraph (1)
or (2).
(b) Unique Health Identifiers.--The Secretary shall adopt
standards providing for a standard unique health identifier
for each individual, employer, health plan, and health care
provider for use in the health care system.
(c) Code Sets.--
(1) In general.--The Secretary, in consultation with
experts from the private sector and Federal agencies, shall--
(A) select code sets for appropriate data elements from
among the code sets that have been developed by private and
public entities; or
(B) establish code sets for such data elements if no code
sets for the data elements have been developed.
(2) Distribution.--The Secretary shall establish efficient
and low-cost procedures for distribution of code sets and
modifications made to such code sets under section 5113(b).
(d) Electronic Signature.--The Secretary, in coordination
with the Secretary of Commerce, shall promulgate regulations
specifying procedures for the electronic transmission and
authentication of signatures, compliance with which will be
deemed to satisfy Federal and State statutory requirements
for written signatures with respect to information
transactions required by this subtitle and written signatures
on medical records and prescriptions.
(e) Special Rules--
(1) Coordination of benefits.--Any standards adopted under
subsection (a) that relate to coordination of benefits shall
provide that a claim for reimbursement for medical services
furnished is tested by an algorithm specified by the
Secretary against all records that are electronically
available through the health information network relating to
enrollment and eligibility for the individual who received
such services to determine any primary and secondary obligors
for payment.
(2) Clinical laboratory tests.--
(A) In general.--Except as provided in subparagraph (B),
any standards adopted under subsection (a) shall provide that
claims for clinical laboratory tests for which benefits are
payable by a plan sponsor shall be submitted directly by the
person or entity that performed (or supervised the
performance of) the tests to the sponsor in a manner
consistent with (and subject to such exceptions as are
provided under) the requirement for direct submission of such
claims under the medicare program.
(B) Exception.--Payment for a clinical laboratory test may
be made--
(i) to a physician with whom the physician who performed or
supervised the test shares a practice; or
(ii) on a pre-paid, at-risk basis to the person or entity
who performs or supervises the test.
SEC. 5113. TIMETABLES FOR ADOPTION OF STANDARDS.
(a) Initial Standards.--The Secretary shall adopt standards
relating to the data elements and transactions for the
information described in section 5112(a) not later than 9
months after the date of the enactment of this subtitle
(except in the case of standards for claims attachments which
shall be adopted not later than 24 months after the date of
the enactment of this subtitle).
(b) Additions and Modifications to Standards.--
(1) In general.--Except as provided in paragraph (2), the
Secretary shall review the standards adopted under this
subtitle and shall adopt additional or modified standards as
determined appropriate, but no more frequently than once
every 6 months. Any addition or modification to standards
shall be completed in a manner which minimizes the disruption
and cost of compliance.
(2) Special rules.--
(A) First 12-month period.--Except with respect to
additions and modifications to code sets under subparagraph
(B), the Secretary shall not adopt any modifications to
standards adopted under this subtitle during the 12-month
period beginning on the date such standards are adopted
unless the Secretary determines that a modification is
necessary in order to permit compliance with requirements
relating to the standards.
(B) Additions and modifications to code sets.--
(i) In general.--The Secretary shall ensure that procedures
exist for the routine maintenance, testing, enhancement, and
expansion of code sets.
(ii) Additional rules.--If a code set is modified under
this subsection, the modified code set shall include
instructions on how data elements that were encoded prior to
the modification are to be converted or translated so as to
preserve the value of the data elements. Any modification to
a code set under this subsection shall be implemented in a
manner that minimizes the disruption and cost of complying
with such modification.
(c) Evaluation of Standards.--The Secretary may establish a
process to measure or verify the consistency of standards
adopted or modified under this subtitle. Such process may
include demonstration projects and analysis of the cost of
implementing such standards and modifications.
PART 3--REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND
INFORMATION
SEC. 5121. REQUIREMENTS ON HEALTH PLANS.
(a) In General.--If a person desires to conduct any of the
transactions described in section 5112(a) with a health plan
as a standard transaction, the health plan shall conduct such
standard transaction in a timely manner and the information
transmitted or received in connection with such transaction
shall be in the form of standard data elements.
(b) Satisfaction of Requirements.--A health plan may
satisfy the requirement imposed on such plan under subsection
(a) by directly transmitting standard data elements or
submitting nonstandard data elements to a certified health
information network service for processing into standard data
elements and transmission.
SEC. 5122. TIMETABLES FOR COMPLIANCE WITH REQUIREMENTS.
(a) Initial Compliance.--Not later than 12 months after the
date on which standards are adopted under part 2 with respect
to any type of transaction or data elements, a health plan
shall comply with the requirements of this subtitle with
respect to such transaction or data elements.
(b) Compliance with Modified Standards.--
(1) In general.--If the Secretary adopts a modified
standard under part 2, a health plan shall be required to
comply with the modified standard at such time as the
Secretary determines appropriate taking into account the time
needed to comply due to the nature and extent of the
modification.
(2) Special rule.--In the case of modifications to
standards that do not occur within
[[Page S1770]] the 12-month period beginning on the date such
standards are adopted, the time determined appropriate by the
Secretary under paragraph (1) shall be no sooner than the
last day of the 90-day period beginning on the date such
modified standard is adopted and no later than the last day
of the 12 month period beginning on the date such modified
standard is adopted.
PART 4--ACCESSING HEALTH INFORMATION
SEC. 5131. ACCESS FOR AUTHORIZED PURPOSES.
(a) In General.--The Secretary shall adopt technical
standards for appropriate persons, including health plans,
health care providers, certified health information network
services, health researchers, and Federal and State agencies,
to locate and access the health information that is available
through the health information network due to the
requirements of this subtitle. Such technical standards shall
ensure that any request to locate or access information shall
be authorized under subtitle C.
(b) Government Agencies.--
(1) In general.--Certified Health information protection
organizations shall make available to a Federal or State
agency pursuant to a Federal Acquisition Regulation (or an
equivalent State system), any non-identifiable health
information that is requested by such agency.
(2) Certain information available at low cost.--If a health
information protection organization described in paragraph
(1) needs information from a health plan in order to comply
with a request of a Federal or State agency that is necessary
to comply with a requirement under this Act, such plan shall
make such information available to such organization for a
charge that does not exceed the reasonable cost of
transmitting the information. An organization that receives
information under the preceding sentence shall, upon request
from any certified health information protection
organization, make such information available to such an
organization for a charge that does not exceed the reasonable
cost of transmitting the information.
(c) Functional Separation.--The standards adopted by the
Secretary under subsection (a) shall ensure that any health
information disclosed under such subsection shall not, after
such disclosure, be used or released for an administrative,
regulatory, or law enforcement purpose unless such disclosure
was made for such purpose.
SEC. 5132. RESPONDING TO ACCESS REQUESTS.
(a) In General.--The Secretary shall adopt, and modify as
appropriate, standards under which a health plan shall
respond to requests for access to health information
consistent with this subtitle and subtitle C.
(b) Standards Described.--The standards under subsection
(a) shall provide--
(1) for a standard format under which a plan will respond
to each request either by satisfying the request or by
responding with a negative response, which may include an
explanation of the failure to satisfy the request; and
(2) that a plan shall respond to a request in a timely
manner taking into account the age and amount of the
information being requested.
(c) Length of Time Information Should be Accessible.--The
Secretary shall adopt standards with respect to the length of
time any standard data elements for a type of health
information should be accessible through the health
information network.
SEC. 5133. TIMETABLES FOR ADOPTION OF STANDARDS AND
COMPLIANCE.
(a) Initial Standards.--The Secretary shall adopt standards
under this part not later than 9 months after the date of the
enactment of this subtitle and such standards shall be
effective upon adoption.
(b) Modifications to Standards.--The provisions of
paragraphs (1) and (2)(A) of section 5114(b) shall apply to
modifications to standards under this part.
PART 5--STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION NETWORK
SEC. 5141. STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION
NETWORK SERVICES.
(a) Standards for Operation.--The Secretary shall establish
standards with respect to the operation of health information
network services ensuring that--
(1) such services have policies and security procedures
that are consistent with the privacy requirements under
subtitle C, including secure methods of access to and
transmission of data; and
(2) such services, if they are part of a larger
organization, have policies and procedures in place which
isolate their activities with respect to processing
information in a manner that prevents unauthorized access to
such information by such larger organization.
(b) Certification by the Secretary.--
(1) Establishment.--Not later than 12 months after the date
of the enactment of this subtitle, the Secretary shall
establish a certification procedure for health information
network services which ensures that certified services are
qualified to meet the requirements of this subtitle.
(2) Audits and reports.--The procedure established under
paragraph (1) shall provide for audits and reports as the
Secretary determines appropriate in order to monitor such
entity's compliance with the requirements of this subtitle.
(c) Loss of Certification.--
(1) Mandatory termination.--If a health information network
service violates a requirement imposed under subtitle C, its
certification under this section shall be terminated unless
the Secretary determines that appropriate corrective action
has been taken.
(2) Discretionary termination.--If a health information
network service violates a requirement or standard imposed
under this subtitle and a penalty has been imposed under
section 5151, the Secretary shall review the certification of
such service and may terminate such certification.
(d) Certification by Private Entities.--The Secretary may
designate private entities to conduct the certification
procedures established by the Secretary under this section. A
health information network service certified by such an
entity in accordance with such designation shall be
considered to be certified by the Secretary.
SEC. 5142. ENSURING AVAILABILITY OF INFORMATION.
The Secretary shall establish a procedure under which a
health plan which does not have the ability to transmit
standard data elements directly or does not have access to a
certified health information network service shall be able to
make health information available for disclosure as
authorized by this subtitle.
PART 6--PENALTIES
SEC. 5151. GENERAL PENALTY FOR FAILURE TO COMPLY WITH
REQUIREMENTS AND STANDARDS.
(a) In General.--Except as provided in subsection (b), the
Secretary shall impose on any person that violates a
requirement or standard imposed under this subtitle a penalty
of not more than $1,000 for each violation. The provisions of
section 1128A of the Social Security Act (other than
subsections (a) and (b) and the second sentence of subsection
(f)) shall apply to the imposition of a civil money penalty
under this subsection in the same manner as such provisions
apply to the imposition of a penalty under section 1128A of
the Social Security Act.
(b) Limitations.--
(1) Noncompliance not discovered.--A penalty may not be
imposed under subsection (a) if it is established to the
satisfaction of the Secretary that the person liable for the
penalty did not know, and by exercising reasonable diligence
would not have known, that such person failed to comply with
the requirement or standard described in subsection (a).
(2) Failures due to reasonable cause.--
(A) In general.--Except as provided in subparagraph (B), a
penalty may not be imposed under subsection (a) if--
(i) the failure to comply was due to reasonable cause and
not to willful neglect; and
(ii) the failure to comply is corrected during the 30-day
period beginning on the 1st date the person liable for the
penalty knew, or by exercising reasonable diligence would
have known, that the failure to comply occurred.
(B) Extension of period.--
(i) No penalty.--The period referred to in subparagraph
(A)(ii) may be extended as determined appropriate by the
Secretary based on the nature and extent of the failure to
comply.
(ii) Assistance.--If the Secretary determines that a health
plan failed to comply because such plan was unable to comply,
the Secretary may provide technical assistance to such plan
during the period described in clause (i). Such assistance
shall be provided in any manner determined appropriate by the
Secretary.
(3) Reduction.--In the case of a failure to comply which is
due to reasonable cause and not to willful neglect, any
penalty under subsection (a) that is not entirely waived
under paragraph (2) may be waived to the extent that the
payment of such penalty would be excessive relative to the
compliance failure involved.
PART 7--MISCELLANEOUS PROVISIONS
SEC. 5161. EFFECT ON STATE LAW.
(a) In General.--Except as provided in subsection (b), a
provision, requirement, or standard under this subtitle shall
supersede any contrary provision of State law, including--
(1) a provision of State law that requires medical or
health plan records (including billing information) to be
maintained or transmitted in written rather than electronic
form, and
(2) a provision of State law which provides for
requirements or standards that are more stringent than the
requirements or standards under this subtitle;
except where the Secretary determines that the provision is
necessary to prevent fraud and abuse, with respect to
controlled substances, or for other purposes.
(b) Public Health Reporting.--Nothing in this subtitle
shall be construed to invalidate or limit the authority,
power, or procedures established under any law providing for
the reporting of disease or injury, child abuse, birth, or
death, public health surveillance, or public health
investigation or intervention.
SEC. 5162. HEALTH INFORMATION CONTINUITY.
(a) Health Plans.--If a health plan takes any action that
would threaten the continued availability of standard data
elements of health information held by such plan, such data
elements shall be transferred to a health plan in accordance
with procedures established by the Secretary.
(b) Health Information Network Services.--If a certified
health information network service loses its certified status
or takes any action that would threaten the
[[Page S1771]] continued availability of the standard data
elements of health information held by such service, such
data elements shall be transferred to another such service,
as designated by the Secretary.
SEC. 5163. HEALTH INFORMATION ADVISORY COMMITTEE.
(a) Establishment.--There is established a committee to be
known as the Health Information Advisory Committee.
(b) Duties.--The committee shall--
(1) provide assistance to the Secretary in complying with
the requirements imposed on the Secretary under this subtitle
and subtitle C; and
(2) be generally responsible for advising the Secretary and
the Congress on the status and the future of the health
information network.
(c) Membership.--
(1) In general.--The committee shall consist of 15 members
to be appointed by the President not later than 60 days after
the date of the enactment of this subtitle. The President
shall designate 1 member as the Chair.
(2) Expertise.--The membership of the committee shall
consist of individuals who are of recognized standing and
distinction in the areas of information systems, consumer
health, or privacy, and who possess the demonstrated capacity
to discharge the duties imposed on the committee.
(3) Terms.--Each member of the committee shall be appointed
for a term of 5 years, except that the members first
appointed shall serve staggered terms such that the terms of
no more than 3 members expire at one time.
SEC. 5164. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be
necessary to carry out the purposes of this subtitle.
Subtitle C--Privacy of Health Information
PART 1--DEFINITIONS
SEC. 5201. DEFINITIONS.
For purposes of this subtitle:
(1) Protected health information.--The term ``protected
health information'' means any information, including
demographic information collected from an individual, whether
oral or recorded in any form or medium, that--
(A) is created or received by a health care provider,
health plan, health oversight agency, health researcher,
public health authority, employer, life insurer, school or
university, or certified health information network service;
and
(B) relates to the past, present, or future physical or
mental health or condition of an individual, the provision of
health care to an individual, or the past, present, or future
payment for the provision of health care to an individual,
and--
(i) identifies an individual; or
(ii) with respect to which there is a reasonable basis to
believe that the information can be used to identify an
individual.
(2) Disclose.--The term ``disclose'', when used with
respect to protected health information, means to provide
access to the information, but only if such access is
provided to a person other than the individual who is the
subject of the information.
(3) Health information trustee.--The term ``health
information trustee'' means--
(A) a health care provider, health plan, health oversight
agency, certified health information network service,
employer, life insurer, or school or university insofar as it
creates, receives, maintains, uses, or transmits protected
health information;
(B) any person who obtains protected health information
under section 5213, 5217, 5218, 5221, 5222, 5226, or 5231;
and
(C) any employee or agent of a person covered under
subparagraphs (A) or (B).
(4) Health oversight agency.--The term ``health oversight
agency'' means a person who--
(A) performs or oversees the performance of an assessment,
evaluation, determination, or investigation relating to the
licensing, accreditation, or certification of health care
providers; or
(B)(i) performs or oversees the performance of an
assessment, evaluation, determination, investigation, or
prosecution relating to the effectiveness of, compliance
with, or applicability of legal, fiscal, medical, or
scientific standards or aspects of performance related to the
delivery of, or payment for health care, health services,
equipment, or research or relating to health care fraud or
fraudulent claims regarding health care, health services or
equipment, or related activities and items; and
(ii) is a public agency, acting on behalf of a public
agency, acting pursuant to a requirement of a public agency,
or carrying out activities under a Federal or State law
governing the assessment, evaluation, determination,
investigation, or prosecution described in clause (i).
(5) Public health authority.--The term ``public health
authority'' means an authority or instrumentality of the
United States, a State, or a political subdivision of a State
that is (A) responsible for public health matters; and (B)
engaged in such activities as injury reporting, public health
surveillance, and public health investigation or
intervention.
(6) Individual representative.--The term ``individual
representative'' means any individual legally empowered to
make decisions concerning the provision of health care to an
individual (where the individual lacks the legal capacity
under State law to make such decisions) or the administrator
or executor of the estate of a deceased individual.
(7) Person.--The term ``person'' includes an authority of
the United States, a State, or a political subdivision of a
State.
PART 2--AUTHORIZED DISCLOSURES
Subpart A--General Provisions
SEC. 5206. GENERAL RULES REGARDING DISCLOSURE.
(a) General Rule.--A health information trustee may
disclose protected health information only for a purpose that
is authorized under this subtitle.
(b) Disclosure Within a Trustee.--A health information
trustee may disclose protected health information to an
officer, employee, or agent of the trustee for a purpose that
is compatible with and related to the purpose for which the
information was collected or received by that trustee.
(c) Scope of Disclosure.--Every disclosure of protected
health information by a health information trustee shall be
limited to the minimum amount of information necessary to
accomplish the purpose for which the information is
disclosed.
(d) No General Requirement to Disclose.--Nothing in this
subtitle that permits a disclosure of health information
shall be construed to require such disclosure.
(e) Use and Redisclosure of Information.--Protected health
information about an individual that is disclosed under this
subtitle may not be used in, or disclosed to any person for
use in, any administrative, civil, or criminal action or
investigation directed against the individual unless the
action or investigation arises out of or is directly related
to the law enforcement inquiry for which the information was
obtained.
(f) Identification of Disclosed Information as Protected
Information.--Except as provided in this subtitle, a health
information trustee may not disclose protected health
information unless such information is clearly identified as
protected health information that is subject to this
subtitle.
(g) Information in Which Providers are Identified.--The
Secretary may issue regulations protecting information
identifying providers in order to promote the availability of
health care services.
SEC. 5207. AUTHORIZATIONS FOR DISCLOSURE OF PROTECTED HEALTH
INFORMATION.
A health information trustee may disclose protected health
information pursuant to an authorization executed by the
individual who is the subject of the information pursuant to
regulations issued by the Secretary with regard to the form
of such authorization, the information that must be provided
to the individual for authorization, and the scope of the
authorization.
SEC. 5208. CERTIFIED HEALTH INFORMATION NETWORK SERVICES.
A health information trustee may disclose protected health
information to a certified health information protection
organization for the purpose of creating non-identifiable
health information.
Subpart B--Specific Disclosures Relating to Patient
SEC. 5211. DISCLOSURES FOR TREATMENT AND FINANCIAL AND
ADMINISTRATIVE TRANSACTIONS.
(a) Health Care Treatment.--A health care provider, health
plan, employer, or person who receives protected health
information under section 5213, may disclose protected health
information to a health care provider for the purpose of
providing health care to an individual if the individual who
is the subject of the information has been notified of the
individual's right to object and has not previously objected
in writing to the disclosure.
(b) Disclosure for Financial and Administrative Purposes.--
A health care provider or employer may disclose protected
health information to a health care provider or health plan
for the purpose of providing for the payment for, or
reviewing the payment of, health care furnished to an
individual.
SEC. 5212. NEXT OF KIN AND DIRECTORY INFORMATION.
(a) Next of Kin.--A health care provider or person who
receives protected health information under section 5213 may
disclose protected health information to the next of kin, an
individual representative of the individual who is the
subject of the information, or an individual with whom that
individual has a close personal relationship if--
(1) the individual who is the subject of the information--
(A) has been notified of the individual's right to object
and has not objected to the disclosure;
(B) is not competent to be notified about the right to
object; or
(C) exigent circumstances exist such that it would not be
practicable to notify the individual of the right to object;
and
(2) the information disclosed relates to health care
currently being provided to that individual.
(b) Directory Information.--A health care provider and a
person receiving protected health information under section
5213 may disclose protected health information to any person
if--
(1) the information does not reveal specific information
about the physical or mental condition of the individual who
is the subject of the information or health care provided to
that person;
(2) the individual who is the subject of the information--
[[Page S1772]] (A) has been notified of the individual's
right to object and has not objected to the disclosure;
(B) is not competent to be notified about the right to
object; or
(C) exigent circumstances exist such that it would not be
practicable to notify the individual of the right to object;
and
(3) the information consists only of 1 or more of the
following items:
(A) The name of the individual who is the subject of the
information.
(B) If the individual who is the subject of the information
is receiving health care from a health care provider on a
premises controlled by the provider--
(i) the location of the individual on the premises; and
(ii) the general health status of the individual, described
as critical, poor, fair, stable, or satisfactory or in terms
denoting similar conditions.
(c) Identification of Deceased Individual.--A health care
provider, health plan, employer, or life insurer, may
disclose protected health information if necessary to assist
in the identification of a deceased individual.
SEC. 5213. EMERGENCY CIRCUMSTANCES.
A health care provider, health plan, employer, or person
who receives protected health information under this section
may disclose protected health information in emergency
circumstances where there is a reasonable belief that such
information is needed to protect the health or safety of an
individual from imminent harm.
Subpart C--Disclosure for Oversight, Public Health, and Research
Purposes
SEC. 5216. OVERSIGHT.
(a) In General.--A health information trustee may disclose
protected health information to a health oversight agency for
an oversight function authorized by law.
(b) Use in Action Against Individuals.--Notwithstanding
section 5206(e), protected health information about an
individual that is disclosed under this section may be used
in, or disclosed in, an administrative, civil, or criminal
action or investigation directed against the individual who
is the subject of the information if the action or
investigation arises out of or is directly related to--
(1) receipt of health care or payment for health care;
(2) an action involving a fraudulent claim related to
health; or
(3) an action involving a misrepresentation of the health
of the individual who is the subject of the information.
SEC. 5217. PUBLIC HEALTH.
A health care provider, health plan, public health
authority, employer, or person who receives protected health
information under section 5213 may disclose protected health
information to a public health authority or other person
authorized by law for use in a legally authorized--
(1) disease or injury reporting;
(2) public health surveillance; or
(3) public health investigation or intervention.
SEC. 5218. HEALTH RESEARCH.
(a) In General.--A health information trustee may disclose
protected health information to a health researcher if an
institutional review board determines that the research
project engaged in by the health researcher--
(1) requires use of the protected health information for
the effectiveness of the project; and
(2) is of sufficient importance to outweigh the intrusion
into the privacy of the individual who is the subject of the
information that would result from the disclosure.
(b) Research Requiring Direct Contact.--A health care
provider or health plan may disclose protected health
information to a health researcher for a research project
that includes direct contact with an individual who is the
subject of protected health information if an institutional
review board determines that direct contact is necessary and
will be made in a manner that minimizes the risk of harm,
embarrassment, or other adverse consequences to the
individual.
(c) Special Rule for Trustees other than Academic Centers
or Health Care Facilities.--If a health researcher described
in subsection (a) or (b) is not an academic center or a
health care facility, the determinations required by an
institutional review board shall be made by such a board that
is certified by the Secretary.
(d) Use of Health Information Network.--A health
information trustee may disclose protected health information
to a health researcher using the health information network
only if the research project satisfies requirements
established by the Secretary for protecting the
confidentiality of information in the health information
network.
Subpart D--Disclosure For Judicial, Administrative, and Law Enforcement
Purposes
SEC. 5221. JUDICIAL AND ADMINISTRATIVE PURPOSES.
A health care provider, health plan, health oversight
agency, employer, or life insurer may disclose protected
health information in connection with litigation or
proceedings to which the individual who is the subject of the
information--
(1) is a party and in which the individual has placed the
individual's physical or mental condition in issue; or
(2) is deceased and in which the individual's physical or
mental condition is in issue.
SEC. 5222. LAW ENFORCEMENT.
A health care provider, health plan, health oversight
agency, employer, life insurer, or person who receives
protected health information under section 5213 may disclose
protected health information to a law enforcement agency
(other than a health oversight agency governed by section
5216) if the information is requested for use--
(1) in an investigation or prosecution of a health
information trustee;
(2) in the identification of a victim or witness in a law
enforcement inquiry;
(3) in connection with the investigation of criminal
activity committed against the trustee or on premises
controlled by the trustee; or
(4) in the investigation or prosecution of criminal
activity relating to or arising from the provision of health
care or payment for health care.
Subpart E--Disclosure Pursuant to Government Subpoena or Warrant
SEC. 5226. GOVERNMENT SUBPOENAS AND WARRANTS.
A health care provider, health plan, health oversight
agency, employer, life insurer, or person who receives
protected health information under section 5213 shall
disclose protected health information under this section if
the disclosure is pursuant to--
(1) a subpoena issued under the authority of a grand jury;
(2) an administrative subpoena or summons or a judicial
subpoena or warrant; or
(3) an administrative subpoena or summons, a judicial
subpoena or warrant, or a grand jury subpoena, and the
disclosure otherwise meets the conditions of section 5216,
5217, 5218, 5221, or 5222.
SEC. 5227. ACCESS PROCEDURES FOR LAW ENFORCEMENT SUBPOENAS
AND WARRANTS.
(a) Probable Cause Requirement.--A government authority may
not obtain protected health information about an individual
under paragraph (1) or (2) of section 5226 for use in a law
enforcement inquiry unless there is probable cause to believe
that the information is relevant to a legitimate law
enforcement inquiry being conducted by the government
authority.
(b) Warrants.--A government authority that obtains
protected health information about an individual under
circumstances described in subsection (a) and pursuant to a
warrant shall, not later than 30 days after the date the
warrant was executed, serve the individual with, or mail to
the last known address of the individual, a notice that
protected health information about the individual was so
obtained, together with a notice of the individual's right to
challenge the warrant.
(c) Subpoena or Summons.--Except as provided in subsection
(d), a government authority may not obtain protected health
information about an individual under circumstances described
in subsection (a) and pursuant to a subpoena or summons
unless a copy of the subpoena or summons has been served on
the individual, if the identity of the individual is known,
on or before the date of return of the subpoena or summons,
together with notice of the individual's right to challenge
the subpoena or summons. If the identity of the individual is
not known at the time the subpoena or summons is served, the
individual shall be served not later than 30 days thereafter,
with notice that protected health information about the
individual was so obtained together with notice of the
individual's right to challenge the subpoena or summons.
(d) Application for Delay.--
(1) In general.--A government authority may apply ex parte
and under seal to an appropriate court to delay serving a
notice or copy of a warrant, subpoena, or summons required
under subsection (b) or (c).
(2) Ex parte order.--The court shall enter an ex parte
order delaying or extending the delay of notice, an order
prohibiting the disclosure of the request for, or disclosure
of, the protected health information, and an order requiring
the disclosure of the protected health information if the
court finds that--
(A) the inquiry being conducted is within the lawful
jurisdiction of the government authority seeking the
protected health information;
(B) there is probable cause to believe that the protected
health information being sought is relevant to a legitimate
law enforcement inquiry;
(C) the government authority's need for the information
outweighs the privacy interest of the individual who is the
subject of the information; and
(D) there is reasonable ground to believe that receipt of
notice by the individual will result in--
(i) endangering the life or physical safety of any
individual;
(ii) flight from prosecution;
(iii) destruction of or tampering with evidence or the
information being sought;
(iv) intimidation of potential witnesses; or
(v) disclosure of the existence or nature of a confidential
law enforcement investigation or grand jury investigation is
likely to seriously jeopardize such investigation.
SEC. 5228. CHALLENGE PROCEDURES FOR LAW ENFORCEMENT WARRANTS,
SUBPOENAS, AND SUMMONS.
(a) Motion To Quash.--Within 15 days after the date of
service of a notice of execution or
[[Page S1773]] a copy of a warrant, subpoena, or summons of a
government authority seeking protected health information
about an individual under paragraph (1) or (2) of section
5226, the individual may file a motion to quash.
(b) Standard for Decision.--The court shall grant a motion
under subsection (a) unless the government demonstrates that
there is probable cause to believe the protected health
information is relevant to a legitimate law enforcement
inquiry being conducted by the government authority and the
government authority's need for the information outweighs the
privacy interest of the individual.
(c) Attorney's Fees.--In the case of a motion brought under
subsection (a) in which the individual has substantially
prevailed, the court may assess against the government
authority a reasonable attorney's fee and other litigation
costs (including expert's fees) reasonably incurred.
(d) No Interlocutory Appeal.--A ruling denying a motion to
quash under this section shall not be deemed to be a final
order, and no interlocutory appeal may be taken therefrom by
the individual.
Subpart F--Disclosure Pursuant to Party Subpoena
SEC. 5231. PARTY SUBPOENAS.
A health care provider, health plan, employer, life
insurer, or person who receives protected health information
under section 5213 may disclose protected health information
under this section if the disclosure is pursuant to a
subpoena issued on behalf of a party who has complied with
the access provisions of section 5232.
SEC. 5232. ACCESS PROCEDURES FOR PARTY SUBPOENAS.
A party may not obtain protected health information about
an individual pursuant to a subpoena unless a copy of the
subpoena together with a notice of the individual's right to
challenge the subpoena in accordance with section 5233 has
been served upon the individual on or before the date of
return of the subpoena.
SEC. 5233. CHALLENGE PROCEDURES FOR PARTY SUBPOENAS.
(a) Motion To Quash Subpoena.--After service of a copy of
the subpoena seeking protected health information under
section 5231, the individual who is the subject of the
protected health information may file in any court of
competent jurisdiction a motion to quash the subpoena.
(b) Standard for Decision.--The court shall grant a motion
under subsection (a) unless the respondent demonstrates
that--
(1) there is reasonable ground to believe the information
is relevant to a lawsuit or other judicial or administrative
proceeding; and
(2) the need of the respondent for the information
outweighs the privacy interest of the individual.
(c) Attorney's Fees.--In the case of a motion brought under
subsection (a) in which the individual has substantially
prevailed, the court may assess against the respondent a
reasonable attorney's fee and other litigation costs and
expenses (including expert's fees) reasonably incurred.
PART 3--PROCEDURES FOR ENSURING SECURITY OF PROTECTED HEALTH
INFORMATION
Subpart A--Establishment of Safeguards
SEC. 5236. ESTABLISHMENT OF SAFEGUARDS.
A health information trustee shall establish and maintain
appropriate administrative, technical, and physical
safeguards to ensure the integrity and confidentiality of
protected health information created or received by the
trustee.
SEC. 5237. ACCOUNTING FOR DISCLOSURES.
A health information trustee shall create and maintain,
with respect to any protected health information disclosed in
exceptional circumstances, a record of the disclosure in
accordance with regulations issued by the Secretary.
Subpart B--Review of Protected Health Information By Subjects of the
Information
SEC. 5241. INSPECTION OF PROTECTED HEALTH INFORMATION.
(a) In General.--Except as provided in subsection (b), a
health care provider or health plan shall permit an
individual who is the subject of protected health information
or the individual's designee to inspect any such information
that the provider or plan maintains. A health care provider
or health plan may require an individual to reimburse the
provider or plan for the cost of such inspection.
(b) Exceptions.--A health care provider or health plan is
not required by this section to permit inspection or copying
of protected health information if any of the following
conditions apply:
(1) Mental health treatment notes.--The information
consists of psychiatric, psychological, or mental health
treatment notes, and the provider or plan determines, based
on reasonable medical judgment, that inspection or copying of
the notes would cause sufficient harm.
(2) Endangerment to life or safety.--The provider or plan
determines that disclosure of the information could
reasonably be expected to endanger the life or physical
safety of any individual.
(3) Confidential source.--The information identifies or
could reasonably lead to the identification of a person
(other than a health care provider) who provided information
under a promise of confidentiality to a health care provider
concerning the individual who is the subject of the
information.
(4) Administrative purposes.--The information is used by
the provider or plan solely for administrative purposes and
not in the provision of health care to the individual who is
the subject of the information.
(c) Deadline.--A health care provider or health plan shall
comply with or deny (with a statement of the reasons for such
denial) a request for inspection or copying of protected
health information under this section within the 30-day
period beginning on the date on which the provider or plan
receives the request.
SEC. 5242. AMENDMENT OF PROTECTED HEALTH INFORMATION.
A health care provider or health plan shall, within 45 days
after receiving a written request to correct or amend
protected health information from the individual who is the
subject of the information--
(1) correct or amend such information; or
(2) provide the individual with a statement of the reasons
for refusing to correct or amend such information and include
a copy of such statement in the provider's or plan's records.
SEC. 5243. NOTICE OF INFORMATION PRACTICES.
A health care provider or health plan shall provide written
notice of the provider's or plan's information practices,
including notice of individual rights with respect to
protected health information.
Subpart C--Standards for Electronic Disclosures
SEC. 5246. STANDARDS FOR ELECTRONIC DISCLOSURES.
The Secretary shall promulgate standards for disclosing
protected health information in accordance with this subtitle
in electronic form.
PART 4--SANCTIONS
Subpart A--No Sanctions for Permissible Actions
SEC. 5251. NO LIABILITY FOR PERMISSIBLE DISCLOSURES.
A health information trustee who makes a disclosure of
protected health information about an individual that is
permitted by this subtitle shall not be liable to the
individual for the disclosure under common law and shall not
be subject to criminal prosecution under this subtitle.
Subpart B--Civil Sanctions
SEC. 5256. CIVIL PENALTY.
(a) Violation.--Any health information trustee who the
Secretary determines has substantially and materially failed
to comply with this subtitle shall be subject, in addition to
any other penalties that may be prescribed by law, to a civil
penalty of not more than $10,000 for each such violation.
(b) Procedures for Imposition of Penalties.--Section 1128A
of the Social Security Act, other than subsections (a) and
(b) and the second sentence of subsection (f) of that
section, shall apply to the imposition of a civil monetary
penalty under this section in the same manner as such
provisions apply with respect to the imposition of a penalty
under section 1128A of such Act.
SEC. 5257. CIVIL ACTION.
(a) In General.--An individual who is aggrieved by
negligent conduct in violation of this subtitle may bring a
civil action to recover--
(1) the greater of actual damages or liquidated damages of
$5,000, not to exceed $50,000;
(2) punitive damages;
(3) a reasonable attorney's fee and expenses of litigation;
(4) costs of litigation; and
(5) such preliminary and equitable relief as the court
determines to be appropriate.
(b) Limitation.--No action may be commenced under this
section more than 3 years after the date on which the
violation was or should reasonably have been discovered.
Subpart C--Criminal Sanctions
SEC. 5261. WRONGFUL DISCLOSURE OF PROTECTED HEALTH
INFORMATION.
(a) Offense.--A person who knowingly--
(1) obtains protected health information relating to an
individual in violation of this subtitle; or
(2) discloses protected health information to another
person in violation of this subtitle,
shall be punished as provided in subsection (b).
(b) Penalties.--A person described in subsection (a)
shall--
(1) be fined not more than $50,000, imprisoned not more
than 1 year, or both;
(2) if the offense is committed under false pretenses, be
fined not more than $100,000, imprisoned not more than 5
years, or both; and
(3) if the offense is committed with intent to sell,
transfer, or use protected health information for commercial
advantage, personal gain, or malicious harm, fined not more
than $250,000, imprisoned not more than 10 years, or both.
PART 5--ADMINISTRATIVE PROVISIONS
SEC. 5266. RELATIONSHIP TO OTHER LAWS.
(a) State Law.--Except as provided in subsections (b), (c),
and (d), this subtitle preempts State law.
(b) Laws Relating to Public or Mental Health.--Nothing in
this subtitle shall be construed to preempt or operate to the
exclusion of any State law relating to public
[[Page S1774]] health or mental health that prevents or
regulates disclosure of protected health information
otherwise allowed under this subtitle.
(c) Privileges.--Nothing in this subtitle is intended to
preempt or modify State common or statutory law to the extent
such law concerns a privilege of a witness or person in a
court of the State. This subtitle does not supersede or
modify Federal common or statutory law to the extent such law
concerns a privilege of a witness or person in a court of the
United States. Authorizations pursuant to section 5207 shall
not be construed as a waiver of any such privilege.
(d) Certain Duties Under State or Federal Law.--This
subtitle shall not be construed to preempt, supersede, or
modify the operation of--
(1) any law that provides for the reporting of vital
statistics such as birth or death information;
(2) any law requiring the reporting of abuse or neglect
information about any individual;
(3) subpart II of part E of title XXVI of the Public Health
Service Act (relating to notifications of emergency response
employees of possible exposure to infectious diseases); or
(4) any Federal law or regulation governing confidentiality
of alcohol and drug patient records.
SEC. 5267. RIGHTS OF INCOMPETENTS.
(a) Effect of Declaration of Incompetence.--Except as
provided in section 5268, if an individual has been declared
to be incompetent by a court of competent jurisdiction, the
rights of the individual under this subtitle shall be
exercised and discharged in the best interests of the
individual through the individual's representative.
(b) No Court Declaration.--Except as provided in section
5268, if a health care provider determines that an
individual, who has not been declared to be incompetent by a
court of competent jurisdiction, suffers from a medical
condition that prevents the individual from acting knowingly
or effectively on the individual's own behalf, the right of
the individual to authorize disclosure may be exercised and
discharged in the best interest of the individual by the
individual's representative.
SEC. 5268. EXERCISE OF RIGHTS.
(a) Individuals Who Are 18 or Legally Capable.--In the case
of an individual--
(1) who is 18 years of age or older, all rights of the
individual shall be exercised by the individual; or
(2) who, acting alone, has the legal right, as determined
by State law, to apply for and obtain a type of medical
examination, care, or treatment and who has sought such
examination, care, or treatment, the individual shall
exercise all rights of an individual under this subtitle with
respect to protected health information relating to such
examination, care, or treatment.
(b) Individuals Under 18.--Except as provided in subsection
(a)(2), in the case of an individual who is--
(1) under 14 years of age, all the individual's rights
under this subtitle shall be exercised through the parent or
legal guardian of the individual; or
(2) 14, 15, 16, or 17 years of age, the rights of
inspection and amendment, and the right to authorize
disclosure of protected health information of the individual
may be exercised either by the individual or by the parent or
legal guardian of the individual.
Subtitle D--Health Care Fraud Prevention
SEC. 5301. SHORT TITLE.
This title may be cited as the ``Health Care Fraud
Prevention Act of 1995''.
PART A--ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM
SEC. 5311. ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM.
(a) Establishment of Program.--
(1) In general.--Not later than January 1, 1996, the
Secretary of Health and Human Services (in this title
referred to as the ``Secretary''), acting through the Office
of the Inspector General of the Department of Health and
Human Services, and the Attorney General shall establish a
program--
(A) to coordinate Federal, State, and local law enforcement
programs to control fraud and abuse with respect to the
delivery of and payment for health care in the United States,
(B) to conduct investigations, audits, evaluations, and
inspections relating to the delivery of and payment for
health care in the United States,
(C) to facilitate the enforcement of the provisions of
sections 1128, 1128A, and 1128B of the Social Security Act
and other statutes applicable to health care fraud and abuse,
and
(D) to provide for the modification and establishment of
safe harbors and to issue interpretative rulings and special
fraud alerts pursuant to section 5313.
(2) Coordination with health plans.--In carrying out the
program established under paragraph (1), the Secretary and
the Attorney General shall consult with, and arrange for the
sharing of data with representatives of health plans.
(3) Regulations.--
(A) In general.--The Secretary and the Attorney General
shall by regulation establish standards to carry out the
program under paragraph (1).
(B) Information standards.--
(i) In general.--Such standards shall include standards
relating to the furnishing of information by health plans,
providers, and others to enable the Secretary and the
Attorney General to carry out the program (including
coordination with health plans under paragraph (2)).
(ii) Confidentiality.--Such standards shall include
procedures to assure that such information is provided and
utilized in a manner that appropriately protects the
confidentiality of the information and the privacy of
individuals receiving health care services and items.
(iii) Qualified immunity for providing information.--The
provisions of section 1157(a) of the Social Security Act
(relating to limitation on liability) shall apply to a person
providing information to the Secretary or the Attorney
General in conjunction with their performance of duties under
this section.
(C) Disclosure of ownership information.--
(i) In general.--Such standards shall include standards
relating to the disclosure of ownership information described
in clause (ii) by any entity providing health care services
and items.
(ii) Ownership information described.--The ownership
information described in this clause includes--
(I) a description of such items and services provided by
such entity;
(II) the names and unique physician identification numbers
of all physicians with a financial relationship (as defined
in section 1877(a)(2) of the Social Security Act) with such
entity;
(III) the names of all other individuals with such an
ownership or investment interest in such entity; and
(IV) any other ownership and related information required
to be disclosed by such entity under section 1124 or section
1124A of the Social Security Act, except that the Secretary
shall establish procedures under which the information
required to be submitted under this subclause will be reduced
with respect to health care provider entities that the
Secretary determines will be unduly burdened if such entities
are required to comply fully with this subclause.
(4) Authorization of appropriations for investigators and
other personnel.--In addition to any other amounts authorized
to be appropriated to the Secretary, the Attorney General,
the Director of the Federal Bureau of Investigation, and the
Inspectors General of the Departments of Defense, Labor, and
Veterans Affairs and of the Office of Personnel Management,
for health care anti-fraud and abuse activities for a fiscal
year, there are authorized to be appropriated additional
amounts, from the Health Care Fraud and Abuse Account
described in subsection (b), as may be necessary to enable
the Secretary, the Attorney General, and such Inspectors
General to conduct investigations and audits of allegations
of health care fraud and abuse and otherwise carry out the
program established under paragraph (1) in a fiscal year.
(5) Ensuring access to documentation.--The Inspector
General of the Department of Health and Human Services is
authorized to exercise the authority described in paragraphs
(4) and (5) of section 6 of the Inspector General Act of 1978
(relating to subpoenas and administration of oaths) with
respect to the activities under the all-payer fraud and abuse
control program established under this subsection to the same
extent as such Inspector General may exercise such
authorities to perform the functions assigned by such Act.
(6) Authority of inspector general.--Nothing in this Act
shall be construed to diminish the authority of any Inspector
General, including such authority as provided in the
Inspector General Act of 1978.
(7) Health plan defined.--For the purposes of this
subsection, the term ``health plan'' shall have the meaning
given such term in section 1128(i) of the Social Security
Act.
(b) Health Care Fraud and Abuse Control Account.--
(1) Establishment.--
(A) In general.--There is hereby established an account to
be known as the ``Health Care Fraud and Abuse Control
Account'' (in this section referred to as the ``Anti-Fraud
Account''). The Anti-Fraud Account shall consist of--
(i) such gifts and bequests as may be made as provided in
subparagraph (B);
(ii) such amounts as may be deposited in the Anti-Fraud
Account as provided in subsection (a)(4), sections 5311(b)
and 5312(b), and title XI of the Social Security Act; and
(iii) such amounts as are transferred to the Anti-Fraud
Account under subparagraph (C).
(B) Authorization to accept gifts.--The Anti-Fraud Account
is authorized to accept on behalf of the United States money
gifts and bequests made unconditionally to the Anti-Fraud
Account, for the benefit of the Anti-Fraud Account or any
activity financed through the Anti-Fraud Account.
(C) Transfer of amounts.--
(i) In general.--The Secretary of the Treasury shall
transfer to the Anti-Fraud Account an amount equal to the sum
of the following:
(I) Criminal fines imposed in cases involving a Federal
health care offense (as defined in section 982(a)(6)(B) of
title 18, United States Code).
(ii) Administrative penalties and assessments imposed under
titles XI, XVIII, and XIX of the Social Security Act (except
as otherwise provided by law).
[[Page S1775]] (iii) Amounts resulting from the forfeiture
of property by reason of a Federal health care offense.
(iv) Penalties and damages imposed under the False Claims
Act (31 U.S.C. 3729 et seq.), in cases involving claims
related to the provision of health care items and services
(other than funds awarded to a relator or for restitution).
(2) Use of funds.--
(A) In general.--Amounts in the Anti-Fraud Account shall be
available to carry out the health care fraud and abuse
control program established under subsection (a) (including
the administration of the program), and may be used to cover
costs incurred in operating the program, including costs
(including equipment, salaries and benefits, and travel and
training) of--
(i) prosecuting health care matters (through criminal,
civil, and administrative proceedings);
(ii) investigations;
(iii) financial and performance audits of health care
programs and operations;
(iv) inspections and other evaluations; and
(v) provider and consumer education regarding compliance
with the provisions of this part.
(B) Funds used to supplement agency appropriations.--It is
intended that disbursements made from the Anti-Fraud Account
to any Federal agency be used to increase and not supplant
the recipient agency's appropriated operating budget.
(3) Annual report.--The Secretary and the Attorney General
shall submit jointly an annual report to Congress on the
amount of revenue which is generated and disbursed by the
Anti-Fraud Account in each fiscal year.
(4) Use of funds by inspector general.--
(A) Reimbursements for Investigations.--The Inspector
General is authorized to receive and retain for current use
reimbursement for the costs of conducting investigations,
when such restitution is ordered by a court, voluntarily
agreed to by the payer, or otherwise.
(B) Crediting.--Funds received by the Inspector General or
the Inspectors General of the Departments of Defense, Labor,
and Veterans Affairs and of the Office of Personnel
Management, as reimbursement for costs of conducting
investigations shall be deposited to the credit of the
appropriation from which initially paid, or to appropriations
for similar purposes currently available at the time of
deposit, and shall remain available for obligation for 1 year
from the date of their deposit.
SEC. 5312. APPLICATION OF CERTAIN FEDERAL HEALTH ANTI-FRAUD
AND ABUSE SANCTIONS TO FRAUD AND ABUSE AGAINST
ANY HEALTH PLAN.
(a) Crimes.--
(1) Social security act.--Section 1128B of the Social
Security Act (42 U.S.C. 1320a-7b) is amended as follows:
(A) In the heading, by adding at the end the following:
``or health plans''.
(B) In subsection (a)(1)--
(i) by striking ``title XVIII or'' and inserting ``title
XVIII,'', and
(ii) by adding at the end the following: ``or a health plan
(as defined in section 1128(i)),''.
(C) In subsection (a)(5), by striking ``title XVIII or a
State health care program'' and inserting ``title XVIII, a
State health care program, or a health plan''.
(D) In the second sentence of subsection (a)--
(i) by inserting after ``title XIX'' the following: ``or a
health plan'', and
(ii) by inserting after ``the State'' the following: ``or
the plan''.
(2) Identification of community service opportunities.--
Section 1128B of such Act (42 U.S.C. 1320a-7b) is further
amended by adding at the end the following new subsection:
``(f) The Secretary may--
``(1) in consultation with State and local health care
officials, identify opportunities for the satisfaction of
community service obligations that a court may impose upon
the conviction of an offense under this section, and
``(2) make information concerning such opportunities
available to Federal and State law enforcement officers and
State and local health care officials.''.
(b) Health Plan Defined.--Section 1128 of the Social
Security Act (42 U.S.C. 1320a-7) is amended by redesignating
subsection (i) as subsection (j) and by inserting after
subsection (h) the following new subsection:
``(i) Health Plan Defined.--For purposes of sections 1128A
and 1128B, the term `health plan' means a plan that provides
health benefits, whether through directly, through insurance,
or otherwise, and includes a policy of health insurance, a
contract of a service benefit organization, or a membership
agreement with a health maintenance organization or other
prepaid health plan, and also includes an employee welfare
benefit plan or a multiple employer welfare plan (as such
terms are defined in section 3 of the Employee Retirement
Income Security Act of 1974).''.
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 1996.
SEC. 5313. HEALTH CARE FRAUD AND ABUSE GUIDANCE.
(a) Solicitation and Publication of Modifications to
Existing Safe Harbors and New Safe Harbors.--
(1) In general.--
(A) Solicitation of proposals for safe harbors.--Not later
than January 1, 1996, and not less than annually thereafter,
the Secretary shall publish a notice in the Federal Register
soliciting proposals, which will be accepted during a 60-day
period, for--
(i) modifications to existing safe harbors issued pursuant
to section 14(a) of the Medicare and Medicaid Patient and
Program Protection Act of 1987 (42 U.S.C. 1320a-7b note);
(ii) additional safe harbors specifying payment practices
that shall not be treated as a criminal offense under section
1128B(b) of the Social Security Act the (42 U.S.C. 1320a-
7b(b)) and shall not serve as the basis for an exclusion
under section 1128(b)(7) of such Act (42 U.S.C. 1320a-
7(b)(7));
(iii) interpretive rulings to be issued pursuant to
subsection (b); and
(iv) special fraud alerts to be issued pursuant to
subsection (c).
(B) Publication of proposed modifications and proposed
additional state harbors.--After considering the proposals
described in clauses (i) and (ii) of subparagraph (A), the
Secretary, in consultation with the Attorney General, shall
publish in the Federal Register proposed modifications to
existing safe harbors and proposed additional safe harbors,
if appropriate, with a 60-day comment period. After
considering any public comments received during this period,
the Secretary shall issue final rules modifying the existing
safe harbors and establishing new safe harbors, as
appropriate.
(C) Report.--The Inspector General of the Department of
Health and Human Services (hereafter in this section referred
to as the ``Inspector General'') shall, in an annual report
to Congress or as part of the year-end semiannual report
required by section 5 of the Inspector General Act of 1978 (5
U.S.C. App.), describe the proposals received under clauses
(i) and (ii) of subparagraph (A) and explain which proposals
were included in the publication described in subparagraph
(B), which proposals were not included in that publication,
and the reasons for the rejection of the proposals that were
not included.
(2) Criteria for modifying and establishing safe harbors.--
In modifying and establishing safe harbors under paragraph
(1)(B), the Secretary may consider the extent to which
providing a safe harbor for the specified payment practice
may result in any of the following:
(A) An increase or decrease in access to health care
services.
(B) An increase or decrease in the quality of health care
services.
(C) An increase or decrease in patient freedom of choice
among health care providers.
(D) An increase or decrease in competition among health
care providers.
(E) An increase or decrease in the ability of health care
facilities to provide services in medically underserved areas
or to medically underserved populations.
(F) An increase or decrease in the cost to Government
health care programs.
(G) An increase or decrease in the potential
overutilization of health care services.
(H) The existence or nonexistence of any potential
financial benefit to a health care professional or provider
which may vary based on their decisions of--
(i) whether to order a health care item or service; or
(ii) whether to arrange for a referral of health care items
or services to a particular practitioner or provider.
(I) Any other factors the Secretary deems appropriate in
the interest of preventing fraud and abuse in Government
health care programs.
(b) Interpretive Rulings.--
(1) In general.--
(A) Request for interpretive ruling.--Any person may
present, at any time, a request to the Inspector General for
a statement of the Inspector General's current interpretation
of the meaning of a specific aspect of the application of
sections 1128A and 1128B of the Social Security Act
(hereafter in this section referred to as an ``interpretive
ruling'').
(B) Issuance and effect of interpretive ruling.--
(i) In general.--If appropriate, the Inspector General
shall in consultation with the Attorney General, issue an
interpretive ruling in response to a request described in
subparagraph (A). Interpretive rulings shall not have the
force of law and shall be treated as an interpretive rule
within the meaning of section 553(b) of title 5, United
States Code. All interpretive rulings issued pursuant to this
provision shall be published in the Federal Register or
otherwise made available for public inspection.
(ii) Reasons for denial.--If the Inspector General does not
issue an interpretive ruling in response to a request
described in subparagraph (A), the Inspector General shall
notify the requesting party of such decision and shall
identify the reasons for such decision.
(2) Criteria for interpretive rulings.--
(A) In general.--In determining whether to issue an
interpretive ruling under paragraph (1)(B), the Inspector
General may consider--
(i) whether and to what extent the request identifies an
ambiguity within the language of the statute, the existing
safe harbors, or previous interpretive rulings; and
(ii) whether the subject of the requested interpretive
ruling can be adequately addressed by interpretation of the
language of the statute, the existing safe harbor rules, or
previous interpretive rulings, or whether the request would
require a substantive ruling not authorized under this
subsection.
[[Page S1776]] (B) No rulings on factual issues.--The
Inspector General shall not give an interpretive ruling on
any factual issue, including the intent of the parties or the
fair market value of particular leased space or equipment.
(c) Special Fraud Alerts.--
(1) In general.--
(A) Request for special fraud alerts.--Any person may
present, at any time, a request to the Inspector General for
a notice which informs the public of practices which the
Inspector General considers to be suspect or of particular
concern under section 1128B(b) of the Social Security Act (42
U.S.C. 1320a-7b(b)) (hereafter in this subsection referred to
as a ``special fraud alert'').
(B) Issuance and publication of special fraud alerts.--Upon
receipt of a request described in subparagraph (A), the
Inspector General shall investigate the subject matter of the
request to determine whether a special fraud alert should be
issued. If appropriate, the Inspector General shall in
consultation with the Attorney General, issue a special fraud
alert in response to the request. All special fraud alerts
issued pursuant to this subparagraph shall be published in
the Federal Register.
(2) Criteria for special fraud alerts.--In determining
whether to issue a special fraud alert upon a request
described in paragraph (1), the Inspector General may
consider--
(A) whether and to what extent the practices that would be
identified in the special fraud alert may result in any of
the consequences described in subsection (a)(2); and
(B) the volume and frequency of the conduct that would be
identified in the special fraud alert.
SEC. 5314. REPORTING OF FRAUDULENT ACTIONS UNDER MEDICARE.
Not later than 1 year after the date of the enactment of
this Act, the Secretary shall establish a program through
which individuals entitled to benefits under the medicare
program may report to the Secretary on a confidential basis
(at the individual's request) instances of suspected
fraudulent actions arising under the program by providers of
items and services under the program.
PART B--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE
SEC. 5321. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE
AND STATE HEALTH CARE PROGRAMS.
(a) Individual Convicted of Felony Relating to Fraud.--
(1) In general.--Section 1128(a) of the Social Security Act
(42 U.S.C. 1320a-7(a)) is amended by adding at the end the
following new paragraph:
``(3) Felony conviction relating to fraud.--Any individual
or entity that has been convicted after the date of the
enactment of the Health Care Fraud Prevention Act of 1995,
under Federal or State law, in connection with the delivery
of a health care item or service or with respect to any act
or omission in a program (other than those specifically
described in paragraph (1)) operated by or financed in whole
or in part by any Federal, State, or local government agency,
of a criminal offense consisting of a felony relating to
fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct.''.
(2) Conforming amendment.--Section 1128(b)(1) of such Act
(42 U.S.C. 1320a-7(b)(1)) is amended--
(A) in the heading, by striking ``Conviction'' and
inserting ``Misdemeanor conviction''; and
(B) by striking ``criminal offense'' and inserting
``criminal offense consisting of a misdemeanor''.
(b) Individual Convicted of Felony Relating to Controlled
Substance.--
(1) In general.--Section 1128(a) of the Social Security Act
(42 U.S.C. 1320a-7(a)), as amended by subsection (a), is
amended by adding at the end the following new paragraph:
``(4) Felony conviction relating to controlled substance.--
Any individual or entity that has been convicted after the
date of the enactment of the Health Care Fraud Prevention Act
of 1995, under Federal or State law, of a criminal offense
consisting of a felony relating to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled
substance.''.
(2) Conforming amendment.--Section 1128(b)(3) of such Act
(42 U.S.C. 1320a-7(b)(3)) is amended--
(A) in the heading, by striking ``Conviction'' and
inserting ``Misdemeanor conviction''; and
(B) by striking ``criminal offense'' and inserting
``criminal offense consisting of a misdemeanor''.
SEC. 5322. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR
CERTAIN INDIVIDUALS AND ENTITIES SUBJECT TO
PERMISSIVE EXCLUSION FROM MEDICARE AND STATE
HEALTH CARE PROGRAMS.
Section 1128(c)(3) of the Social Security Act (42 U.S.C.
1320a-7(c)(3)) is amended by adding at the end the following
new subparagraphs:
``(D) In the case of an exclusion of an individual or
entity under paragraph (1), (2), or (3) of subsection (b),
the period of the exclusion shall be 3 years, unless the
Secretary determines in accordance with published regulations
that a shorter period is appropriate because of mitigating
circumstances or that a longer period is appropriate because
of aggravating circumstances.
``(E) In the case of an exclusion of an individual or
entity under subsection (b)(4) or (b)(5), the period of the
exclusion shall not be less than the period during which the
individual's or entity's license to provide health care is
revoked, suspended, or surrendered, or the individual or the
entity is excluded or suspended from a Federal or State
health care program.
``(F) In the case of an exclusion of an individual or
entity under subsection (b)(6)(B), the period of the
exclusion shall be not less than 1 year.''.
SEC. 5323. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP
OR CONTROL INTEREST IN SANCTIONED ENTITIES.
Section 1128(b) of the Social Security Act (42 U.S.C.
1320a-7(b)) is amended by adding at the end the following new
paragraph:
``(15) Individuals controlling a sanctioned entity.--Any
individual who has a direct or indirect ownership or control
interest of 5 percent or more, or an ownership or control
interest (as defined in section 1124(a)(3)) in, or who is an
officer, director, agent, or managing employee (as defined in
section 1126(b)) of, an entity--
``(A) that has been convicted of any offense described in
subsection (a) or in paragraph (1), (2), or (3) of this
subsection;
``(B) against which a civil monetary penalty has been
assessed under section 1128A; or
``(C) that has been excluded from participation under a
program under title XVIII or under a State health care
program.''.
SEC. 5324. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR
FAILURE TO COMPLY WITH STATUTORY OBLIGATIONS.
(a) Minimum Period of Exclusion for Practitioners and
Persons Failing To Meet Statutory Obligations.--
(1) In general.--The second sentence of section 1156(b)(1)
of the Social Security Act (42 U.S.C. 1320c-5(b)(1)) is
amended by striking ``may prescribe)'' and inserting ``may
prescribe, except that such period may not be less than 1
year)''.
(2) Conforming amendment.--Section 1156(b)(2) of such Act
(42 U.S.C. 1320c-5(b)(2)) is amended by striking ``shall
remain'' and inserting ``shall (subject to the minimum period
specified in the second sentence of paragraph (1)) remain''.
(b) Repeal of ``Unwilling or Unable'' Condition for
Imposition of Sanction.--Section 1156(b)(1) of the Social
Security Act (42 U.S.C. 1320c-5(b)(1)) is amended--
(1) in the second sentence, by striking ``and determines''
and all that follows through ``such obligations,''; and
(2) by striking the third sentence.
SEC. 5325. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH
MAINTENANCE ORGANIZATIONS.
(a) Application of Intermediate Sanctions for Any Program
Violations.--
(1) In general.--Section 1876(i)(1) of the Social Security
Act (42 U.S.C. 1395mm(i)(1)) is amended by striking ``the
Secretary may terminate'' and all that follows and inserting
the following: ``in accordance with procedures established
under paragraph (9), the Secretary may at any time terminate
any such contract or may impose the intermediate sanctions
described in paragraph (6)(B) or (6)(C) (whichever is
applicable) on the eligible organization if the Secretary
determines that the organization--
``(A) has failed substantially to carry out the contract;
``(B) is carrying out the contract in a manner inconsistent
with the efficient and effective administration of this
section; or
``(C) no longer substantially meets the applicable
conditions of subsections (b), (c), (e), and (f).''.
(2) Other intermediate sanctions for miscellaneous program
violations.--Section 1876(i)(6) of such Act (42 U.S.C.
1395mm(i)(6)) is amended by adding at the end the following
new subparagraph:
``(C) In the case of an eligible organization for which the
Secretary makes a determination under paragraph (1) the basis
of which is not described in subparagraph (A), the Secretary
may apply the following intermediate sanctions:
``(i) Civil money penalties of not more than $25,000 for
each determination under paragraph (1) if the deficiency that
is the basis of the determination has directly adversely
affected (or has the substantial likelihood of adversely
affecting) an individual covered under the organization's
contract.
``(ii) Civil money penalties of not more than $10,000 for
each week beginning after the initiation of procedures by the
Secretary under paragraph (9) during which the deficiency
that is the basis of a determination under paragraph (1)
exists.
``(iii) Suspension of enrollment of individuals under this
section after the date the Secretary notifies the
organization of a determination under paragraph (1) and until
the Secretary is satisfied that the deficiency that is the
basis for the determination has been corrected and is not
likely to recur.''.
(3) Procedures for imposing sanctions.--Section 1876(i) of
such Act (42 U.S.C. 1395mm(i)) is amended by adding at the
end the following new paragraph:
``(9) The Secretary may terminate a contract with an
eligible organization under this section or may impose the
intermediate sanctions described in paragraph (6) on the
organization in accordance with formal investigation and
compliance procedures established by the Secretary under
which--
[[Page S1777]] ``(A) the Secretary provides the
organization with the opportunity to develop and implement a
corrective action plan to correct the deficiencies that were
the basis of the Secretary's determination under paragraph
(1);
``(B) in deciding whether to impose sanctions, the
Secretary considers aggravating factors such as whether an
entity has a history of deficiencies or has not taken action
to correct deficiencies the Secretary has brought to their
attention;
``(C) there are no unreasonable or unnecessary delays
between the finding of a deficiency and the imposition of
sanctions; and
``(D) the Secretary provides the organization with
reasonable notice and opportunity for hearing (including the
right to appeal an initial decision) before imposing any
sanction or terminating the contract.''.
(4) Conforming amendments.--Section 1876(i)(6)(B) of such
Act (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the
second sentence.
(b) Agreements With Peer Review Organizations.--
(1) Requirement for written agreement.--Section
1876(i)(7)(A) of the Social Security Act (42 U.S.C.
1395mm(i)(7)(A)) is amended by striking ``an agreement'' and
inserting ``a written agreement''.
(2) Development of model agreement.--Not later than July 1,
1996, the Secretary shall develop a model of the agreement
that an eligible organization with a risk-sharing contract
under section 1876 of the Social Security Act must enter into
with an entity providing peer review services with respect to
services provided by the organization under section
1876(i)(7)(A) of such Act.
(3) Report by gao.--
(A) Study.--The Comptroller General of the United States
shall conduct a study of the costs incurred by eligible
organizations with risk-sharing contracts under section
1876(b) of such Act of complying with the requirement of
entering into a written agreement with an entity providing
peer review services with respect to services provided by the
organization, together with an analysis of how information
generated by such entities is used by the Secretary to assess
the quality of services provided by such eligible
organizations.
(B) Report to congress.--Not later than July 1, 1998, the
Comptroller General shall submit a report to the Committee on
Ways and Means and the Committee on Energy and Commerce of
the House of Representatives and the Committee on Finance and
the Special Committee on Aging of the Senate on the study
conducted under subparagraph (A).
(c) Effective Date.--The amendments made by this section
shall apply with respect to contract years beginning on or
after January 1, 1996.
SEC. 5326. EFFECTIVE DATE.
The amendments made by this part shall take effect January
1, 1996.
PART C--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS
SEC. 5331. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE
DATA COLLECTION PROGRAM.
(a) General Purpose.--Not later than January 1, 1996, the
Secretary shall establish a national health care fraud and
abuse data collection program for the reporting of final
adverse actions (not including settlements in which no
findings of liability have been made) against health care
providers, suppliers, or practitioners as required by
subsection (b), with access as set forth in subsection (c).
(b) Reporting of Information.--
(1) In general.--Each government agency and health plan
shall report any final adverse action (not including
settlements in which no findings of liability have been made)
taken against a health care provider, supplier, or
practitioner.
(2) Information to be reported.--The information to be
reported under paragraph (1) includes:
(A) The name of any health care provider, supplier, or
practitioner who is the subject of a final adverse action.
(B) The name (if known) of any health care entity with
which a health care provider, supplier, or practitioner is
affiliated or associated.
(C) The nature of the final adverse action.
(D) A description of the acts or omissions and injuries
upon which the final adverse action was based, and such other
information as the Secretary determines by regulation is
required for appropriate interpretation of information
reported under this section.
(3) Confidentiality.--In determining what information is
required, the Secretary shall include procedures to assure
that the privacy of individuals receiving health care
services is appropriately protected.
(4) Timing and form of reporting.--The information required
to be reported under this subsection shall be reported
regularly (but not less often than monthly) and in such form
and manner as the Secretary prescribes. Such information
shall first be required to be reported on a date specified by
the Secretary.
(5) To whom reported.--The information required to be
reported under this subsection shall be reported to the
Secretary.
(c) Disclosure and Correction of Information.--
(1) Disclosure.--With respect to the information about
final adverse actions (not including settlements in which no
findings of liability have been made) reported to the
Secretary under this section respecting a health care
provider, supplier, or practitioner, the Secretary shall, by
regulation, provide for--
(A) disclosure of the information, upon request, to the
health care provider, supplier, or licensed practitioner, and
(B) procedures in the case of disputed accuracy of the
information.
(2) Corrections.--Each Government agency and health plan
shall report corrections of information already reported
about any final adverse action taken against a health care
provider, supplier, or practitioner, in such form and manner
that the Secretary prescribes by regulation.
(d) Access to Reported Information.--
(1) Availability.--The information in this database shall
be available to Federal and State government agencies and
health plans pursuant to procedures that the Secretary shall
provide by regulation.
(2) Fees for disclosure.--The Secretary may establish or
approve reasonable fees for the disclosure of information in
this database. The amount of such a fee may not exceed the
costs of processing the requests for disclosure and of
providing such information. Such fees shall be available to
the Secretary or, in the Secretary's discretion to the agency
designated under this section to cover such costs.
(e) Protection From Liability for Reporting.--No person or
entity, including the agency designated by the Secretary in
subsection (b)(5) shall be held liable in any civil action
with respect to any report made as required by this section,
without knowledge of the falsity of the information contained
in the report.
(f) Definitions and Special Rules.--For purposes of this
section:
(1) The term ``final adverse action'' includes:
(A) Civil judgments against a health care provider in
Federal or State court related to the delivery of a health
care item or service.
(B) Federal or State criminal convictions related to the
delivery of a health care item or service.
(C) Actions by Federal or State agencies responsible for
the licensing and certification of health care providers,
suppliers, and licensed health care practitioners,
including--
(i) formal or official actions, such as revocation or
suspension of a license (and the length of any such
suspension), reprimand, censure or probation,
(ii) any other loss of license of the provider, supplier,
or practitioner, by operation of law, or
(iii) any other negative action or finding by such Federal
or State agency that is publicly available information.
(D) Exclusion from participation in Federal or State health
care programs.
(E) Any other adjudicated actions or decisions that the
Secretary shall establish by regulation.
(2) The terms ``licensed health care practitioner'',
``licensed practitioner'', and ``practitioner'' mean, with
respect to a State, an individual who is licensed or
otherwise authorized by the State to provide health care
services (or any individual who, without authority holds
himself or herself out to be so licensed or authorized).
(3) The term ``health care provider'' means a provider of
services as defined in section 1861(u) of the Social Security
Act, and any entity, including a health maintenance
organization, group medical practice, or any other entity
listed by the Secretary in regulation, that provides health
care services.
(4) The term ``supplier'' means a supplier of health care
items and services described in section 1819(a) and (b), and
section 1861 of the Social Security Act.
(5) The term ``Government agency'' shall include:
(A) The Department of Justice.
(B) The Department of Health and Human Services.
(C) Any other Federal agency that either administers or
provides payment for the delivery of health care services,
including, but not limited to the Department of Defense and
the Veterans' Administration.
(D) State law enforcement agencies.
(E) State medicaid fraud and abuse units.
(F) Federal or State agencies responsible for the licensing
and certification of health care providers and licensed
health care practitioners.
(6) The term ``health plan'' has the meaning given to such
term by section 1128(i) of the Social Security Act.
(7) For purposes of paragraph (2), the existence of a
conviction shall be determined under paragraph (4) of section
1128(j) of the Social Security Act.
(g) Conforming Amendment.--Section 1921(d) of the Social
Security Act is amended by inserting ``and section 301 of the
Health Care Fraud Prevention Act of 1995'' after ``section
422 of the Health Care Quality Improvement Act of 1986''.
PART D--CIVIL MONETARY PENALTIES
SEC. 5341. CIVIL MONETARY PENALTIES.
(a) General Civil Monetary Penalties.--Section 1128A of the
Social Security Act (42 U.S.C. 1320a-7a) is amended as
follows:
(1) In subsection (a)(1), by inserting ``or of any health
plan (as defined in section 1128(i)),'' after ``subsection
(i)(1)),''.
(2) In subsection (f)--
(A) by redesignating paragraph (3) as paragraph (4); and
[[Page S1778]] (B) by inserting after paragraph (2) the
following new paragraphs:
``(3) With respect to amounts recovered arising out of a
claim under a health plan, the portion of such amounts as is
determined to have been paid by the plan shall be repaid to
the plan, and the portion of such amounts attributable to the
amounts recovered under this section by reason of the
amendments made by the Health Care Fraud Prevention Act of
1995 (as estimated by the Secretary) shall be deposited into
the Health Care Fraud and Abuse Control Account established
under section 101(b) of such Act.''.
(3) In subsection (i)--
(A) in paragraph (2), by inserting ``or under a health
plan'' before the period at the end, and
(B) in paragraph (5), by inserting ``or under a health
plan'' after ``or XX''.
(b) Excluded Individual Retaining Ownership or Control
Interest in Participating Entity.--Section 1128A(a) of the
Social Security Act (42 U.S.C. 1320a-7a(a)) is amended--
(1) by striking ``or'' at the end of paragraph (1)(D);
(2) by striking ``, or'' at the end of paragraph (2) and
inserting a semicolon;
(3) by striking the semicolon at the end of paragraph (3)
and inserting ``; or''; and
(4) by inserting after paragraph (3) the following new
paragraph:
``(4) in the case of a person who is not an organization,
agency, or other entity, is excluded from participating in a
program under title XVIII or a State health care program in
accordance with this subsection or under section 1128 and
who, at the time of a violation of this subsection, retains a
direct or indirect ownership or control interest of 5 percent
or more, or an ownership or control interest (as defined in
section 1124(a)(3)) in, or who is an officer, director,
agent, or managing employee (as defined in section 1126(b))
of, an entity that is participating in a program under title
XVIII or a State health care program;''.
(c) Modifications of Amounts of Penalties and
Assessments.--Section 1128A(a) of the Social Security Act (42
U.S.C. 1320a-7a(a)), as amended by subsection (b), is amended
in the matter following paragraph (4)--
(1) by striking ``$2,000'' and inserting ``$10,000'';
(2) by inserting ``; in cases under paragraph (4), $10,000
for each day the prohibited relationship occurs'' after
``false or misleading information was given''; and
(3) by striking ``twice the amount'' and inserting ``3
times the amount''.
(d) Claim for Item or Service Based on Incorrect Coding or
Medically Unnecessary Services.--Section 1128A(a)(1) of the
Social Security Act (42 U.S.C. 1320a-7a(a)(1)) is amended--
(1) in subparagraph (A) by striking ``claimed,'' and
inserting the following: ``claimed, including any person who
repeatedly presents or causes to be presented a claim for an
item or service that is based on a code that the person knows
or should know will result in a greater payment to the person
than the code the person knows or should know is applicable
to the item or service actually provided,'';
(2) in subparagraph (C), by striking ``or'' at the end;
(3) in subparagraph (D), by striking ``; or'' and inserting
``, or''; and
(4) by inserting after subparagraph (D) the following new
subparagraph:
``(E) is for a medical or other item or service that a
person repeatedly knows or should know is not medically
necessary; or''.
(e) Permitting Secretary To Impose Civil Monetary
Penalty.--Section 1128A(b) of the Social Security Act (42
U.S.C. 1320a-7a(a)) is amended by adding the following new
paragraph:
``(3) Any person (including any organization, agency, or
other entity, but excluding a beneficiary as defined in
subsection (i)(5)) who the Secretary determines has violated
section 1128B(b) of this title shall be subject to a civil
monetary penalty of not more than $10,000 for each such
violation. In addition, such person shall be subject to an
assessment of not more than twice the total amount of the
remuneration offered, paid, solicited, or received in
violation of section 1128B(b). The total amount of
remuneration subject to an assessment shall be calculated
without regard to whether some portion thereof also may have
been intended to serve a purpose other than one proscribed by
section 1128B(b).''.
(f) Sanctions Against Practitioners and Persons for Failure
To Comply With Statutory Obligations.--Section 1156(b)(3) of
the Social Security Act (42 U.S.C. 1320c-5(b)(3)) is amended
by striking ``the actual or estimated cost'' and inserting
the following: ``up to $10,000 for each instance''.
(g) Procedural Provisions.--Section 1876(i)(6) of such Act
(42 U.S.C. 1395mm(i)(6)) is further amended by adding at the
end the following new subparagraph:
``(D) The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil money penalty
under subparagraph (A) or (B) in the same manner as they
apply to a civil money penalty or proceeding under section
1128A(a).''.
(h) Prohibition Against Offering Inducements to Individuals
Enrolled Under Programs or Plans.--
(1) Offer of remuneration.--Section 1128A(a) of the Social
Security Act (42 U.S.C. 1320a-7a(a)) is amended--
(A) by striking ``or'' at the end of paragraph (1)(D);
(B) by striking ``, or'' at the end of paragraph (2) and
inserting a semicolon;
(C) by striking the semicolon at the end of paragraph (3)
and inserting ``; or''; and
(D) by inserting after paragraph (3) the following new
paragraph:
``(4) offers to or transfers remuneration to any individual
eligible for benefits under title XVIII of this Act, or under
a State health care program (as defined in section 1128(h))
that such person knows or should know is likely to influence
such individual to order or receive from a particular
provider, practitioner, or supplier any item or service for
which payment may be made, in whole or in part, under title
XVIII, or a State health care program;''.
(2) Remuneration defined.--Section 1128A(i) of such Act (42
U.S.C. 1320a-7a(i)) is amended by adding the following new
paragraph:
``(6) The term `remuneration' includes the waiver of
coinsurance and deductible amounts (or any part thereof), and
transfers of items or services for free or for other than
fair market value. The term `remuneration' does not include--
``(A) the waiver of coinsurance and deductible amounts by a
person, if--
``(i) the waiver is not offered as part of any
advertisement or solicitation;
``(ii) the person does not routinely waive coinsurance or
deductible amounts; and
``(iii) the person--
``(I) waives the coinsurance and deductible amounts after
determining in good faith that the individual is in financial
need;
``(II) fails to collect coinsurance or deductible amounts
after making reasonable collection efforts; or
``(III) provides for any permissible waiver as specified in
section 1128B(b)(3) or in regulations issued by the
Secretary;
``(B) differentials in coinsurance and deductible amounts
as part of a benefit plan design as long as the differentials
have been disclosed in writing to all third party payors to
whom claims are presented and as long as the differentials
meet the standards as defined in regulations promulgated by
the Secretary; or
``(C) incentives given to individuals to promote the
delivery of preventive care as determined by the Secretary in
regulations.''.
(i) Effective Date.--The amendments made by this section
shall take effect January 1, 1996.
PART E--AMENDMENTS TO CRIMINAL LAW
SEC. 5351. HEALTH CARE FRAUD.
(a) In General.--
(1) Fines and imprisonment for health care fraud
violations.--Chapter 63 of title 18, United States Code, is
amended by adding at the end the following new section:
``Sec. 1347. Health care fraud
``(a) Whoever knowingly executes, or attempts to execute, a
scheme or artifice--
``(1) to defraud any health plan or other person, in
connection with the delivery of or payment for health care
benefits, items, or services; or
``(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property
owned by, or under the custody or control of, any health
plan, or person in connection with the delivery of or payment
for health care benefits, items, or services;
shall be fined under this title or imprisoned not more than
10 years, or both. If the violation results in serious bodily
injury (as defined in section 1365(g)(3) of this title), such
person shall be imprisoned for any term of years.
``(b) For purposes of this section, the term `health plan'
has the same meaning given such term in section 1128(i) of
the Social Security Act.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 63 of title 18, United States Code, is
amended by adding at the end the following:
``1347. Health care fraud.''.
(b) Criminal Fines Deposited in the Health Care Fraud and
Abuse Control Account.--The Secretary of the Treasury shall
deposit into the Health Care Fraud and Abuse Control Account
established under section 5311(b) an amount equal to the
criminal fines imposed under section 1347 of title 18, United
States Code (relating to health care fraud).
SEC. 5352. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.
(a) In General.--Section 982(a) of title 18, United States
Code, is amended by adding after paragraph (5) the following
new paragraph:
``(6)(A) The court, in imposing sentence on a person
convicted of a Federal health care offense, shall order the
person to forfeit property, real or personal, that--
``(i) is used in the commission of the offense if the
offense results in a financial loss or gain of $50,000 or
more; or
``(ii) constitutes or is derived from proceeds traceable to
the commission of the offense.
``(B) For purposes of this paragraph, the term `Federal
health care offense' means a violation of, or a criminal
conspiracy to violate--
``(i) section 1347 of this title;
``(ii) section 1128B of the Social Security Act;
``(iii) sections 287, 371, 664, 666, 1001, 1027, 1341,
1343, or 1954 of this title if the violation or conspiracy
relates to health care fraud; and
[[Page S1779]] ``(iv) section 501 or 511 of the Employee
Retirement Income Security Act of 1974, if the violation or
conspiracy relates to health care fraud.''.
(b) Property Forfeited Deposited in Health Care Fraud and
Abuse Control Account.--The Secretary of the Treasury shall
deposit into the Health Care Fraud and Abuse Control Account
established under section 5311(b) an amount equal to amounts
resulting from forfeiture of property by reason of a Federal
health care offense pursuant to section 982(a)(6) of title
18, United States Code.
SEC. 5353. INJUNCTIVE RELIEF RELATING TO FEDERAL HEALTH CARE
OFFENSES.
(a) In General.--Section 1345(a)(1) of title 18, United
States Code, is amended--
(1) by striking ``or'' at the end of subparagraph (A);
(2) by inserting ``or'' at the end of subparagraph (B); and
(3) by adding at the end the following:
``(C) committing or about to commit a Federal health care
offense (as defined in section 982(a)(6)(B) of this
title);''.
(b) Freezing of Assets.--Section 1345(a)(2) of title 18,
United States Code, is amended by inserting ``or a Federal
health care offense (as defined in section 982(a)(6)(B))''
after ``title)''.
SEC. 5354. GRAND JURY DISCLOSURE.
Section 3322 of title 18, United States Code, is amended--
(1) by redesignating subsections (c) and (d) as subsections
(d) and (e), respectively; and
(2) by inserting after subsection (b) the following:
``(c) A person who is privy to grand jury information
concerning a Federal health care offense (as defined in
section 982(a)(6)(B))--
``(1) received in the course of duty as an attorney for the
Government; or
``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal
Rules of Criminal Procedure;
may disclose that information to an attorney for the
Government to use in any investigation or civil proceeding
relating to health care fraud.''.
SEC. 5355. FALSE STATEMENTS.
(a) In General.--Chapter 47, of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 1033. False statements relating to health care matters
``Whoever, in any matter involving a health plan, knowingly
and willfully falsifies, conceals, or covers up by any trick,
scheme, or device a material fact, or makes any false,
fictitious, or fraudulent statements or representations, or
makes or uses any false writing or document knowing the same
to contain any false, fictitious, or fraudulent statement or
entry, shall be fined under this title or imprisoned not more
than 5 years, or both.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 47 of title 18, United State Code, in
amended by adding at the end the following:
``1033. False statements relating to health care matters.''.
SEC. 5356. VOLUNTARY DISCLOSURE PROGRAM.
In consultation with the Attorney General of the United
States, the Secretary of Health and Human Services shall
publish proposed regulations not later than 9 months after
the date of enactment of this Act, and final regulations not
later than 18 months after such date of enactment,
establishing a program of voluntary disclosure that would
facilitate the enforcement of sections 1128A and 1128B of the
Social Security Act (42 U.S.C. 1320a-7a and 1320a-7b) and
other relevant provisions of Federal law relating to health
care fraud and abuse. Such program should promote and provide
incentives for disclosures of potential violations of such
sections and provisions by providing that, under certain
circumstances, the voluntary disclosure of wrongdoing would
result in the imposition of penalties and punishments less
substantial than those that would be assessed for the same
wrongdoing if voluntary disclosure did not occur.
SEC. 5357. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF FEDERAL
HEALTH CARE OFFENSES.
(a) In General.--Chapter 73 of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 1518. Obstruction of Criminal Investigations of
Federal Health Care Offenses.
``(a) In General.--Whoever willfully prevents, obstructs,
misleads, delays or attempts to prevent, obstruct, mislead,
or delay the communication of information or records relating
to a Federal health care offense to a criminal investigator
shall be fined under this title or imprisoned not more than 5
years, or both.
``(b) Federal Health Care Offense.--As used in this section
the term `Federal health care offense' has the same meaning
given such term in section 982(a)(6)(B) of this title.
``(c) Criminal Investigator.--As used in this section the
term `criminal investigator' means any individual duly
authorized by a department, agency, or armed force of the
United States to conduct or engage in investigations for
prosecutions for violations of health care offenses.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 73 of title 18, United State Code, in
amended by adding at the end the following:
``1518. Obstruction of Criminal Investigations of Federal Health Care
Offenses.''.
SEC. 5358. THEFT OR EMBEZZLEMENT.
(a) In General.--Chapter 31 of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 669. Theft or Embezzlement in Connection with Health
Care.
``(a) In General.--Whoever willfully embezzles, steals, or
otherwise without authority willfully and unlawfully converts
to the use of any person other than the rightful owner, or
intentionally misapplies any of the moneys, funds,
securities, premiums, credits, property, or other assets of a
health care benefit program, shall be fined under this title
or imprisoned not more than 10 years, or both.
``(b) Federal Health Care Offense.--As used in this section
the term `Federal health care offense' has the same meaning
given such term in section 982(a)(6)(B) of this title.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 31 of title 18, United State Code, in
amended by adding at the end the following:
``669. Theft or Embezzlement in Connection with Health Care.''.
SEC. 5359. LAUNDERING OF MONETARY INSTRUMENTS.
Section 1956(c)(7) of title 18, United States Code, is
amended by adding at the end the following new subparagraph:
``(F) Any act or activity constituting an offense involving
a Federal health care offense as that term is defined in
section 982(a)(6)(B) of this title.''.
PART F--PAYMENTS FOR STATE HEALTH CARE FRAUD CONTROL UNITS
SEC. 5361. ESTABLISHMENT OF STATE FRAUD UNITS.
(a) Establishment of Health Care Fraud and Abuse Control
Unit.--The Governor of each State shall, consistent with
State law, establish and maintain in accordance with
subsection (b) a State agency to act as a Health Care Fraud
and Abuse Control Unit for purposes of this part.
(b) Definition.--In this section, a ``State Fraud Unit''
means a Health Care Fraud and Abuse Control Unit designated
under subsection (a) that the Secretary certifies meets the
requirements of this part.
SEC. 5362. REQUIREMENTS FOR STATE FRAUD UNITS.
(a) In General.--The State Fraud Unit must--
(1) be a single identifiable entity of the State
government;
(2) be separate and distinct from any State agency with
principal responsibility for the administration of any
Federally-funded or mandated health care program;
(3) meet the other requirements of this section.
(b) Specific Requirements Described.--The State Fraud Unit
shall--
(1) 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;
(2) 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, (A) assure its
referral of suspected criminal violations to the appropriate
authority or authorities in the State for prosecution, and
(B) assure its assistance of, and coordination with, such
authority or authorities in such prosecutions; or
(3) have a formal working relationship with the office of
the State Attorney General or the appropriate authority or
authorities for prosecution and have formal procedures
(including procedures for its referral of suspected criminal
violations to such office) 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 any
Federally-funded or mandated health care programs.
(c) Staffing Requirements.--The State Fraud Unit shall--
(1) employ attorneys, auditors, investigators and other
necessary personnel; and
(2) be organized in such a manner and provide sufficient
resources as is necessary to promote the effective and
efficient conduct of State Fraud Unit activities.
(d) Cooperative Agreements; Memoranda of Understanding.--
The State Fraud Unit shall have cooperative agreements with--
(1) Federally-funded or mandated health care programs;
(2) similar Fraud Units in other States, as exemplified
through membership and participation in the National
Association of Medicaid Fraud Control Units or its successor;
and
(3) the Secretary.
(e) Reports.--The State Fraud Unit shall submit to the
Secretary an application and an annual report containing such
information as the Secretary determines to be necessary to
determine whether the State Fraud Unit meets the requirements
of this section.
(f) Funding Source; Participation in All-Payer Program.--In
addition to those sums expended by a State under section
5364(a) for purposes of determining the amount of the
Secretary's payments, a State Fraud Unit may receive funding
for its activities from other sources, the identity of which
shall be reported to the Secretary in its application or
annual report. The State Fraud Unit shall participate in the
all-payer fraud and abuse control program established under
section 5311.
[[Page S1780]] SEC. 5363. SCOPE AND PURPOSE.
The State Fraud Unit shall carry out the following
activities:
(1) The State Fraud Unit shall conduct a statewide program
for the investigation and prosecution (or referring for
prosecution) of violations of all applicable state laws
regarding any and all aspects of fraud in connection with any
aspect of the administration and provision of health care
services and activities of providers of such services under
any Federally-funded or mandated health care programs;
(2) The State Fraud Unit shall have procedures for
reviewing complaints of the abuse or neglect of patients of
facilities (including patients in residential facilities and
home health care programs) that receive payments under any
Federally-funded or mandated health care programs, and, where
appropriate, to investigate and prosecute such complaints
under the criminal laws of the State or for referring the
complaints to other State agencies for action.
(3) The State Fraud Unit shall provide for the collection,
or referral for collection to the appropriate agency, of
overpayments that are made under any Federally-funded or
mandated health care program and that are discovered by the
State Fraud Unit in carrying out its activities.
SEC. 5364. PAYMENTS TO STATES.
(a) Matching Payments to States.--Subject to subsection
(c), for each year for which a State has a State Fraud Unit
approved under section 5362(b) in operation the Secretary
shall provide for a payment to the State for each quarter in
a fiscal year in an amount equal to the applicable percentage
of the sums expended during the quarter by the State Fraud
Unit.
(b) Applicable Percentage Defined.--
(1) In general.--In subsection (a), the ``applicable
percentage'' with respect to a State for a fiscal year is--
(A) 90 percent, for quarters occurring during the first 3
years for which the State Fraud Unit is in operation; or
(B) 75 percent, for any other quarters.
(2) Treatment of states with medicaid fraud control
units.--In the case of a State with a State medicaid fraud
control in operation prior to or as of the date of the
enactment of this Act, in determining the number of years for
which the State Fraud Unit under this part has been in
operation, there shall be included the number of years for
which such State medicaid fraud control unit was in
operation.
(c) Limit on Payment.--Notwithstanding subsection (a), the
total amount of payments made to a State under this section
for a fiscal year may not exceed the amounts as authorized
pursuant to section 1903(b)(3) of the Social Security Act.
TITLE VI--MALPRACTICE REFORM
SEC. 6001. ALTERNATIVE DISPUTE RESOLUTION.
(a) Establishment.--The Secretary of Health and Human
Services (hereafter referred to in this title as the
``Secretary'') shall establish a program of grants to assist
States in establishing alternative dispute resolution
systems.
(b) Use of Funds.--A State may use a grant awarded under
subsection (a) to establish alternative dispute resolution
systems that--
(1) identify claims of professional negligence that merit
compensation;
(2) encourage early resolution of meritorious claims prior
to commencement of a lawsuit; and
(3) encourage early withdrawal or dismissal of
nonmeritorious claims.
(c) Award of Grants.--The Secretary shall allocate grants
under this section in accordance with criteria issued by the
Secretary.
(d) Application.--To be eligible to receive a grant under
this section, a State, acting through the appropriate State
health authority, shall submit an application at such time,
in such manner, and containing such agreements, assurances,
and information as the Assistant Secretary determines to be
necessary to carry out this section, including an assurance
that the State system meets the requirements of section 6002.
(e) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section such sums as may
be necessary for each of the 1996 through 1999 fiscal years.
SEC. 6002. BASIC REQUIREMENTS.
A State's alternative dispute resolution system meets the
requirements of this section if the system--
(1) applies to all medical malpractice liability claims
under the jurisdiction of the courts of that State;
(2) requires that a written opinion resolving the dispute
be issued not later than 6 months after the date by which
each party against whom the claim is filed has received
notice of the claim (other than in exceptional cases for
which a longer period is required for the issuance of such an
opinion), and that the opinion contain--
(A) findings of fact relating to the dispute, and
(B) a description of the costs incurred in resolving the
dispute under the system (including any fees paid to the
individuals hearing and resolving the claim), together with
an appropriate assessment of the costs against any of the
parties;
(3) requires individuals who hear and resolve claims under
the system to meet such qualifications as the State may
require (in accordance with regulations of the Secretary);
(4) is approved by the State or by local governments in the
State;
(5) with respect to a State system that consists of
multiple dispute resolution procedures--
(A) permits the parties to a dispute to select the
procedure to be used for the resolution of the dispute under
the system, and
(B) if the parties do not agree on the procedure to be used
for the resolution of the dispute, assigns a particular
procedure to the parties;
(6) provides for the transmittal to the State agency
responsible for monitoring or disciplining health care
professionals and health care providers of any findings made
under the system that such a professional or provider
committed malpractice, unless, during the 90-day period
beginning on the date the system resolves the claim against
the professional or provider, the professional or provider
brings an action contesting the decision made under the
system; and
(7) provides for the regular transmittal to the
Administrator for Health Care Policy and Research of
information on disputes resolved under the system, in a
manner that assures that the identity of the parties to a
dispute shall not be revealed.
SEC. 6003. ALTERNATIVE DISPUTE RESOLUTION ADVISORY BOARD.
(a) Establishment.--Not later than 1 year after the date of
the enactment of this Act, the Secretary shall establish an
Alternative Dispute Resolution Advisory Board to advise the
Secretary regarding the establishment of alternative dispute
resolution systems at the State and Federal levels.
(b) Composition.--The ADR Advisory Board shall be composed
of members appointed by the Secretary from among
representatives of the following:
(1) Physicians.
(2) Hospitals.
(3) Patient advocacy groups.
(4) State governments.
(5) Academic experts from applicable disciplines (including
medicine, law, public health, and economics) and specialists
in arbitration and dispute resolution.
(6) Health insurers and medical malpractice insurers.
(7) Medical product manufacturers.
(8) Pharmaceutical companies.
(9) Other professions and groups determined appropriate by
the Secretary.
(c) Duties.--The ADR Advisory Board shall--
(1) examine various dispute resolution systems and provide
advice and assistance to States regarding the establishment
of such systems;
(2) not later than 1 year after the appointment of its
members, submit to the Secretary--
(A) a model alternative dispute resolution system that may
be used by a State for purposes of this title, and
(B) a model alternative Federal system that may be used by
the Secretary; and
(3) review the applications of States for certification of
State alternative dispute resolution systems and make
recommendations to the Secretary regarding whether the
systems should be certified under section 6004.
SEC. 6004. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF
ALTERNATIVE FEDERAL SYSTEM.
(a) Certification.--
(1) Application by state.--Each State shall submit an
application to the ADR Advisory Board describing its
alternative dispute resolution system and containing such
information as the ADR Advisory Board may require to make a
recommendation regarding whether the system meets the
requirements of this title.
(2) Basis for certification.--Not later than October 1 of
each year (beginning with 1995), the Secretary, taking into
consideration the recommendations of the ADR Advisory Board,
shall certify a State's alternative dispute resolution system
under this subsection for the following calendar year if the
Secretary determines that the system meets the requirements
of section 6002.
(b) Applicability of Alternative Federal System.--
(1) Establishment and applicability.--Not later than
October 1, 1995, the Secretary, taking into consideration the
model alternative Federal system submitted by the ADR
Advisory Board under section 6003(c)(2)(B), shall establish
by rule an alternative Federal ADR system for the resolution
of medical malpractice liability claims during a calendar
year in States that do not have in effect an alternative
dispute resolution system certified under subsection (a) for
the year.
(2) Requirements for system.--Under the alternative Federal
ADR system established under paragraph (1)--
(A) paragraphs (1), (2), (6), and (7) of section 6002(a)
shall apply to claims brought under the system;
(B) if the system provides for the resolution of claims
through arbitration, the claims brought under the system
shall be heard and resolved by arbitrators appointed by the
Secretary in consultation with the Attorney General; and
(C) with respect to a State in which the system is in
effect, the Secretary may (at the State's request) modify the
system to take into account the existence of dispute
resolution procedures in the State that affect the resolution
of medical malpractice liability claims.
(3) Treatment of states with alternative system in
effect.--If the alternative
[[Page S1781]] Federal ADR system established under this
subsection is applied with respect to a State for a calendar
year, the State shall make a payment to the United States (at
such time and in such manner as the Secretary may require) in
an amount equal to 110 percent of the costs incurred by the
United States during the year as a result of the application
of the system with respect to the State.
SEC. 6005. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF
ALTERNATIVE DISPUTE RESOLUTION SYSTEMS.
(a) In General.--Not later than 5 years after the date of
the enactment of this Act, the Secretary shall prepare and
submit to the Congress a report describing and evaluating
State alternative dispute resolution systems operated
pursuant to this title and the alternative Federal system
established under section 6004(b).
(b) Contents of Report.--The Secretary shall include in the
report prepared and submitted under subsection (a)--
(1) information on--
(A) the effect of the alternative dispute resolution
systems on the cost of health care within each State,
(B) the impact of such systems on the access of individuals
to health care within the State, and
(C) the effect of such systems on the quality of health
care provided within the State; and
(2) to the extent that such report does not provide
information on no-fault systems operated by States as
alternative dispute resolution systems pursuant to this part,
an analysis of the feasibility and desirability of
establishing a system under which medical malpractice
liability claims shall be resolved on a no-fault basis.
SEC. 6006. OPTIONAL APPLICATION OF PRACTICE GUIDELINES.
(a) Development and Certification of Guidelines.--Each
State may develop, for certification by the Secretary if the
Secretary determines appropriate, a set of specialty clinical
practice guidelines.
(b) Provision of Health Care Under Guidelines.--
Notwithstanding any other provision of law, in any medical
malpractice liability action arising from the conduct of a
health care provider or health care professional, if such
conduct was in accordance with a guideline developed by the
State in which the conduct occurred and certified by the
Secretary under subsection (a), the guideline--
(1) may be introduced by any party to the action (including
a health care provider, health care professional, or
patient); and
(2) if introduced, shall establish a rebuttable presumption
that the conduct was in accordance with the appropriate
standard of medical care, which may only be overcome by the
presentation of clear and convincing evidence on behalf of
the party against whom the presumption operates.
(c) Restriction on Parameters Considered Appropriate.--
(1) Parameters sanctioned by secretary.--For purposes of
subsection (a), a specialty clinical practice guideline may
not be considered appropriate with respect to actions brought
during a year unless the Secretary has sanctioned the use of
the guideline for purposes of an affirmative defense to
medical malpractice liability actions brought during the year
in accordance with paragraph (2).
(2) Process for sanctioning parameters.--Not less
frequently than October 1 of each year (beginning with 1996),
the Secretary shall review the practice guidelines and
standards submitted by the State under subsection (a), and
shall sanction those guidelines which the Secretary considers
appropriate for purposes of an affirmative defense to medical
malpractice liability actions brought during the next
calendar year as appropriate practice parameters for purposes
of subsection (a).
(d) Prohibiting Application of Failure to Follow Parameters
as Prima Facie Evidence of Negligence.--No plaintiff in a
medical malpractice liability action may be deemed to have
presented prima facie evidence that a defendant was negligent
solely by showing that the defendant failed to follow the
appropriate practice guidelines.
TITLE VII--HEALTH PROMOTION AND DISEASE PREVENTION
SEC. 7001. DISEASE PREVENTION AND HEALTH PROMOTION PROGRAMS
TREATED AS MEDICAL CARE.
(a) In General.--For purposes of section 213(d)(1) of the
Internal Revenue Code of 1986 (defining medical care),
qualified expenditures (as defined by the Secretary of Health
and Human Services) for disease prevention and health
promotion programs shall be considered amounts paid for
medical care.
(b) Effective Date.--Subsection (a) shall apply to amounts
paid in taxable years beginning after December 31, 1995.
SEC. 7002. WORKSITE WELLNESS GRANT PROGRAM.
(a) Grants.--The Secretary of Health and Human Services
(hereafter referred to in this title as the ``Secretary'')
shall award grants to States (through State health
departments or other State agencies working in consultation
with the State health agency) to enable such States to
provide assistance to businesses with not to exceed 100
employees for the establishment and operation of worksite
wellness programs for their employees.
(b) Application.--To be eligible for a grant under
subsection (a), a State shall prepare and submit to the
Secretary an application at such time, in such manner, and
containing such information as the Secretary may require,
including--
(1) a description of the manner in which the State intends
to use amounts received under the grant; and
(2) assurances that the State will only use amounts
provided under such grant to provide assistance to businesses
that can demonstrate that they are in compliance with minimum
program characteristics (relative to scope and regularity of
services offered) that are developed by the Secretary in
consultation with experts in public health and
representatives of small business.
Grants shall be distributed to States based on the population
of individuals employed by small businesses.
(c) Program Characteristics.--In developing minimum program
characteristics under subsection (b)(2), the Secretary shall
ensure that all activities established or enhanced under a
grant under this section have clearly defined goals and
objectives and demonstrate how receipt of such assistance
will help to achieve established State or local health
objectives based on the National Health Promotion and Disease
Prevention Objectives.
(d) Use of Funds.--Amounts received under a grant awarded
under subsection (a) shall be used by a State to provide
grants to businesses (as described in subsection (a)),
nonprofit organizations, or public authorities, or to operate
State-run worksite wellness programs.
(e) Special Emphasis.--In funding business worksite
wellness projects under this section, a State shall give
special emphasis to--
(1) the development of joint wellness programs between
employers;
(2) the development of employee assistance programs dealing
with substance abuse;
(3) maximizing the use and coordination with existing
community resources such as nonprofit health organizations;
and
(4) encourage participation of dependents of employees and
retirees in wellness programs.
(f) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section, such sums as
may be necessary in each of the fiscal years 1995 through
1999.
SEC. 7003. EXPANDING AND IMPROVING SCHOOL HEALTH EDUCATION.
(a) Authorization of Appropriations.--There are authorized
to be appropriated to carry out subsection (b), such sums as
may be necessary for each of the fiscal years 1995 through
1999.
(b) General Use of Funds.--The Secretary shall use amounts
appropriated under subsection (a) to expand comprehensive
school health education programs administered by the Centers
for Disease Control and Prevention under sections 301 and 311
of the Public Health Service Act (42 U.S.C. 241 and 243).
(c) Specific Use of Funds.--In meeting the requirement of
subsection (b), the Secretary shall expand the number of
children receiving planned, sequential kindergarten through
12th grade comprehensive school education as a component of
comprehensive programs of school health, including
(1) physical education programs that promote lifelong
physical activity;
(2) healthy school food service selections;
(3) programs that promote a healthy and safe school
environment;
(4) schoolsite health promotion for faculty and staff;
(5) integrated school and community health promotion
efforts; and
(6) school nursing disease prevention and health promotion
services.
(d) Coordination of Existing Programs.--The Secretary of
Health and Human Services, the Secretary of Education and the
Secretary of Agriculture shall work cooperatively to
coordinate existing school health education programs within
their Departments in a manner that maximized the efficiency
and effectiveness of Federal expenditures in this area.
TITLE VIII--TAX INCENTIVES FOR LONG-TERM CARE
SEC. 8001. SHORT TITLE.
This title may be cited as the ``Private Long-Term Care
Family Protection Act of 1995''.
SEC. 8002. 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.
Subtitle A--Tax Treatment of Long-Term Care Insurance
SEC. 8101. QUALIFIED LONG-TERM CARE SERVICES TREATED AS
MEDICAL CARE.
(a) General Rule.--Paragraph (1) of section 213(d)
(defining medical care) is amended by striking ``or'' at the
end of subparagraph (B), by striking subparagraph (C), and by
inserting after subparagraph (B) the following new
subparagraphs:
``(C) for qualified long-term care services (as defined in
subsection (f)),
``(D) for insurance covering medical care referred to in--
``(i) subparagraphs (A) and (B), or
``(ii) subparagraph (C), but only if such insurance is
provided under a qualified long-term care insurance policy
(as defined in section 7702B(b)) and the deduction under this
section for amounts paid for such insurance is not disallowed
under section 7702B(d)(4), or
``(E) for premiums under part B of title XVIII of the
Social Security Act, relating to
[[Page S1782]] supplementary medical insurance for the
aged.''.
(b) Qualified Long-Term Care Services Defined.--Section 213
(relating to the deduction for medical, dental, etc.,
expenses) is amended by adding at the end the following new
subsection:
``(f) Qualified Long-Term Care Services.--For purposes of
this section--
``(1) In general.--The term `qualified long-term care
services' means necessary diagnostic, curing, mitigating,
treating, preventive, therapeutic, and rehabilitative
services, and maintenance and personal care services (whether
performed in a residential or nonresidential setting),
which--
``(A) are required by an individual during any period the
individual is an incapacitated individual (as defined in
paragraph (2)),
``(B) have as their primary purpose--
``(i) the provision of needed assistance with 1 or more
activities of daily living (as defined in paragraph (3)), or
``(ii) protection from threats to health and safety due to
severe cognitive impairment, and
``(C) are provided pursuant to a continuing plan of care
prescribed by a licensed professional (as defined in
paragraph (4)).
``(2) Incapacitated individual.--The term `incapacitated
individual' means any individual who has been certified by a
licensed professional as--
``(A) being unable to perform, without substantial
assistance from another individual, at least 2 activities of
daily living (as defined in paragraph (3)),
``(B) having moderate cognitive impairment as defined by
the Secretary in consultation with the Secretary of Health
and Human Services, or
``(C) having a level of disability similar (as determined
by the Secretary in consultation with the Secretary of Health
and Human Services) to the level of disability described in
subparagraph (A).
``(3) Activities of daily living.--
``(A) In general.--Each of the following is an activity of
daily living:
``(i) Eating.
``(ii) Toileting.
``(iii) Transferring.
``(iv) Bathing.
``(v) Dressing.
``(vi) Continence.
``(B) Definitions.--For purposes of this paragraph:
``(i) Eating.--The term `eating' means the process of
getting food from a plate or its equivalent into the mouth.
``(ii) Toileting.--The term `toileting' means the act of
going to the toilet room for bowel and bladder function,
transferring on and off of the toilet, cleaning oneself after
elimination, and arranging clothes.
``(iii) Transferring.--The term `transferring' means the
process of getting in and out of bed or in and out of a chair
or wheelchair.
``(iv) Bathing.--The term `bathing' means the overall
complex behavior of using water for cleansing the whole body,
including cleansing as part of a bath, shower, or sponge
bath, getting to, in, and out of a tub or shower, and washing
and drying oneself.
``(v) Dressing.--The term `dressing' means the overall
complex behavior of getting clothes from closets and drawers
and then getting dressed.
``(vi) Continence.--The term `continence' means the ability
to voluntarily control bowel and bladder function and to
maintain a reasonable level of personal hygiene.
``(4) Licensed professional.--
``(A) In general.--The term `licensed professional' means--
``(i) a physician or registered professional nurse,
``(ii) a qualified community care case manager (as defined
in subparagraph (B)), or
``(iii) any other individual who meets such requirements as
may be prescribed by the Secretary after consultation with
the Secretary of Health and Human Services.
``(B) Qualified community care case manager.--The term
`qualified community care case manager' means an individual
or entity which--
``(i) has experience or has been trained in providing case
management services and in preparing individual care plans,
``(ii) has experience in assessing individuals to determine
their functional and cognitive impairment, and
``(iii) meets such requirements as may be prescribed by the
Secretary after consultation with the Secretary of Health and
Human Services.
``(5) Certain services not included.--The term `qualified
long-term care services' shall not include any services
provided to an individual--
``(A) by a relative (directly or through a partnership,
corporation, or other entity) unless the relative is a
licensed professional with respect to such services, or
``(B) by a corporation or partnership which is related
(within the meaning of section 267(b) or 707(b)) to the
individual.
For purposes of this paragraph, the term `relative' means an
individual bearing a relationship to the individual which is
described in paragraphs (1) through (8) of section 152(a).''.
(c) Technical Amendments.--Paragraph (6) of section 213(d)
is amended--
(1) by striking ``subparagraphs (A) and (B)'' and inserting
``subparagraphs (A), (B), and (C)'', and
(2) by striking ``paragraph (1)(C) applies'' in
subparagraph (A) and inserting ``subparagraphs (C) and (D) of
paragraph (1) apply''.
SEC. 8102. TREATMENT OF LONG-TERM CARE INSURANCE.
(a) General Rule.--Chapter 79 (relating to definitions) is
amended by inserting after section 7702A the following new
section:
``SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE.
``(a) In General.--For purposes of this subtitle--
``(1) a qualified long-term care insurance policy (as
defined in subsection (b)) shall be treated as an accident
and health insurance contract,
``(2) any plan of an employer providing coverage under a
qualified long-term care insurance policy shall be treated as
an accident and health plan with respect to such coverage,
``(3) amounts (other than policyholder dividends (as
defined in section 808) or premium refunds) received under a
qualified long-term care insurance policy (including
nonreimbursement payments described in subsection (b)(6))
shall be treated--
``(A) as amounts received for personal injuries and
sickness, and
``(B) as amounts received for the permanent loss of a
function of the body and as amounts computed with reference
to the nature of injury under section 105(c) to the extent
that such amounts do not exceed the dollar amount in effect
under subsection (f) for the taxable year,
``(4) amounts paid for a qualified long-term care insurance
policy described in subsection (b)(11) shall be treated as
payments made for insurance for purposes of section
213(d)(1)(D), and
``(5) a qualified long-term care insurance policy shall be
treated as a guaranteed renewable contract subject to the
rules of section 816(e).
``(b) Qualified Long-Term Care Insurance Policy.--For
purposes of this title--
``(1) In general.--The term `qualified long-term care
insurance policy' means any long-term care insurance policy
(as defined in paragraph (10)) that--
``(A) limits benefits under such policy to incapacitated
individuals (as defined in section 213(f)(2)), and
``(B) satisfies the requirements of paragraphs (2) through
(9).
``(2) Premium requirements.--The requirements of this
paragraph are met with respect to a long-term care insurance
policy if such policy provides that premium payments may not
be made earlier than the date such payments would have been
made if the policy provided for level annual payments over
the life expectancy of the insured or 20 years, whichever is
shorter. A policy shall not be treated as failing to meet the
requirements of the preceding sentence solely by reason of a
provision in the policy providing for a waiver of premiums if
the insured becomes an incapacitated individual (as defined
in section 213(f)(2)).
``(3) Prohibition of cash value.--The requirements of this
paragraph are met with respect to a long-term care insurance
policy if such policy does not provide for a cash value or
other money that can be paid, assigned, pledged as collateral
for a loan, or borrowed, other than as provided in paragraph
(4).
``(4) Refunds of premiums and dividends.--The requirements
of this paragraph are met with respect to a long-term care
insurance policy if such policy provides that--
``(A) policyholder dividends are required to be applied as
a reduction in future premiums or to increase benefits
described in subsection (a)(2),
``(B) refunds of premiums upon a partial surrender or a
partial cancellation are required to be applied as a
reduction in future premiums, and
``(C) any refund on the death of the insured, or on a
complete surrender or cancellation of the policy, cannot
exceed the aggregate premiums paid under the policy.
Any refund on a complete surrender or cancellation of the
policy shall be includable in gross income to the extent that
any deduction or exclusion was allowable with respect to the
premiums.
``(5) Coordination with other entitlements.--The
requirements of this paragraph are met with respect to a
long-term care insurance policy if such policy does not cover
expenses incurred to the extent that such expenses are also
covered under title XVIII of the Social Security Act. For
purposes of this paragraph, a long-term care insurance policy
which coordinates expenses incurred under such policy with
expenses incurred under title XVIII of such Act shall not be
considered to duplicate such expenses.
``(6) Requirements of model regulation and act.--
``(A) In general.--The requirements of this paragraph are
met with respect to a long-term care insurance policy if such
policy meets--
``(i) Model regulation.--The following requirements of the
model regulation:
``(I) Section 7A (relating to guaranteed renewal or
noncancellability), and the requirements of section 6B of the
model Act relating to such section 7A.
``(II) Section 7B (relating to prohibitions on limitations
and exclusions).
``(III) Section 7C (relating to extension of benefits).
``(IV) Section 7D (relating to continuation or conversion
of coverage).
``(V) Section 7E (relating to discontinuance and
replacement of policies).
``(VI) Section 8 (relating to unintentional lapse).
[[Page S1783]] ``(VII) Section 9 (relating to disclosure),
other than section 9F thereof.
``(VIII) Section 10 (relating to prohibitions against post-
claims underwriting).
``(IX) Section 11 (relating to minimum standards).
``(X) Section 12 (relating to requirement to offer
inflation protection), except that any requirement for a
signature on a rejection of inflation protection shall permit
the signature to be on an application or on a separate form.
``(XI) Section 23 (relating to prohibition against
preexisting conditions and probationary periods in
replacement policies or certificates).
``(ii) Model act.--The following requirements of the model
Act:
``(I) Section 6C (relating to preexisting conditions).
``(II) Section 6D (relating to prior hospitalization).
``(B) Definitions.--For purposes of this paragraph--
``(i) Model provisions.--The terms `model regulation' and
`model Act' mean the long-term care insurance model
regulation, and the long-term care insurance model Act,
respectively, promulgated by the National Association of
Insurance Commissioners (as adopted in January of 1993).
``(ii) Coordination.--Any provision of the model regulation
or model Act listed under clause (i) or (ii) of subparagraph
(A) shall be treated as including any other provision of such
regulation or Act necessary to implement the provision.
``(7) Tax disclosure requirement.--The requirement of this
paragraph is met with respect to a long-term care insurance
policy if such policy meets the requirements of section
4980C(d)(1).
``(8) Nonforfeiture requirements.--
``(A) In general.--The requirements of this paragraph are
met with respect to a long-term care insurance policy, if the
issuer of such policy offers to the policyholder, including
any group policyholder, a nonforfeiture provision meeting the
requirements specified in subparagraph (B).
``(B) Requirements of provision.--The requirements
specified in this subparagraph are as follows:
``(i) The nonforfeiture provision shall be appropriately
captioned.
``(ii) The nonforfeiture provision shall provide for a
benefit available in the event of a default in the payment of
any premiums and the amount of the benefit may be adjusted
subsequent to being initially granted only as necessary to
reflect changes in claims, persistency, and interest as
reflected in changes in rates for premium paying policies
approved by the Secretary for the same policy form.
``(iii) The nonforfeiture provision shall provide at least
1 of the following:
``(I) Reduced paid-up insurance.
``(II) Extended term insurance.
``(III) Shortened benefit period.
``(IV) Other similar offerings approved by the Secretary.
``(9) Rate stabilization.--
``(A) In general.--The requirements of this paragraph are
met with respect to a long-term care insurance policy,
including any group master policy, if--
``(i) such policy contains the minimum rate guarantees
specified in subparagraph (B), and
``(ii) the issuer of such policy meets the requirements
specified in subparagraph (C).
``(B) Minimum rate guarantees.--The minimum rate guarantees
specified in this subparagraph are as follows:
``(i) Rates under the policy shall be guaranteed for a
period of at least 3 years from the date of issue of the
policy.
``(ii) After the expiration of the 3-year period required
under clause (i), any rate increase shall be guaranteed for a
period of at least 2 years from the effective date of such
rate increase.
``(iii) In the case of any individual age 75 or older who
has maintained coverage under a long-term care insurance
policy for 10 years, rate increases under such policy shall
not exceed 10 percent in any 12-month period.
``(C) Increases in premiums.--The requirements specified in
this subparagraph are as follows:
``(i) In general.--If an issuer of a long-term care
insurance policy, including any group master policy, plans to
increase the premium rates for a policy, such issuer shall,
at least 90 days before the effective date of the rate
increase, offer to each individual policyholder under such
policy the option to remain insured under the policy at a
reduced level of benefits that maintains the premium rate at
the rate in effect on the day before the effective date of
the rate increase.
``(ii) Increases of more than 50 percent.--If an issuer of
a long-term care insurance policy, including any group master
policy, increases premium rates for a policy by more than 50
percent in any 3-year period--
``(I) in the case of an individual long-term care insurance
policy, the issuer shall discontinue issuing all individual
long-term care policies in any State in which the issuer
issues such policy for a period of 2 years from the effective
date of such premium increase, and
``(II) in the case of a group master long-term care
insurance policy, the issuer shall discontinue issuing all
group master long-term care insurance policies in any State
in which the issuer issues such policy for a period of 2
years from the effective date of such premium increase.
This clause shall apply to any issuer of long-term care
insurance policies or any other person that purchases or
otherwise acquires any long-term care insurance policies from
another issuer or person.
``(D) Modifications or waivers of requirements.--The
Secretary may modify or waive any of the requirements under
this paragraph if--
``(i) such requirements will adversely affect an issuer's
solvency,
``(ii) such modification or waiver is required for the
issuer to meet other State or Federal requirements,
``(iii) medical developments, new disabling diseases,
changes in long-term care delivery, or a new method of
financing long-term care will result in changes to mortality
and morbidity patterns or assumptions,
``(iv) judicial interpretation of a policy's benefit
features results in unintended claim liabilities, or
``(v) in the case of a purchase or other acquisition of
long-term care insurance policies of an issuer or other
person, the continued sale of other long-term care insurance
policies by the purchasing issuer or person is in the best
interests of individual consumers.
``(10) Long-term care insurance policy defined.--
``(A) In general.--For purposes of this section, the term
`long-term care insurance policy' means any product which is
advertised, marketed, or offered as long-term care insurance
(as defined in subparagraph (B)).
``(B) Long-term care insurance.--
``(i) In general.--The term `long-term care insurance'
means any insurance policy or rider--
``(I) advertised, marketed, offered, or designed to provide
coverage for not less than 12 consecutive months for each
covered person on an expense incurred, indemnity, prepaid or
other basis for 1 or more necessary or medically necessary
diagnostic, preventive, therapeutic, rehabilitative,
maintenance, or personal care services provided in a setting
other than an acute care unit of a hospital, and
``(II) issued by insurers, fraternal benefit societies,
nonprofit health, hospital, and medical service corporations,
prepaid health plans, health maintenance organizations or any
similar organization to the extent such organizations are
otherwise authorized to issue life or health insurance.
Such term includes group and individual annuities and life
insurance policies or riders which provide directly or which
supplement long-term care insurance and includes a policy or
rider which provides for payment of benefits based on
cognitive impairment or the loss of functional capacity.
``(ii) Exclusions.--The term `long-term care insurance'
shall not include--
``(I) any insurance policy which is offered primarily to
provide basic coverage to supplement coverage under the
medicare program under title XVIII of the Social Security
Act, basic hospital expense coverage, basic medical-surgical
expense coverage, hospital confinement coverage, major
medical expense coverage, disability income or related asset-
protection coverage, accident only coverage, specified
disease or specified accident coverage, or limited benefit
health coverage, or
``(II) life insurance policies--
``(aa) which accelerate the death benefit specifically for
1 or more of the qualifying events of terminal illness or
medical conditions requiring extraordinary medical
intervention or permanent institutional confinement,
``(bb) which provide the option of a lump-sum payment for
such benefits, and
``(cc) under which neither such benefits nor the
eligibility for the benefits is conditioned upon the receipt
of long-term care.
``(11) Nonreimbursement payments permitted.--For purposes
of subsection (a)(4), a policy is described in this paragraph
if, under the policy, payments are made to (or on behalf of)
an insured individual on a per diem or other periodic basis
without regard to the expenses incurred or services rendered
during the period to which the payments relate.
``(c) Treatment of Long-Term Care Insurance Policies.--For
purposes of this title, any amount received or coverage
provided under a long-term care insurance policy that is not
a qualified long-term care insurance policy shall not be
treated as an amount received for personal injuries or
sickness or provided under an accident and health plan and
shall not be treated as excludable from gross income under
any provision of this title.
``(d) Treatment of Coverage Provided as Part of a Life
Insurance Contract.--Except as otherwise provided in
regulations, in the case of any long-term care insurance
coverage provided by rider on a life insurance contract, the
following rules shall apply:
``(1) In general.--This section shall apply as if the
portion of the contract providing such coverage is a separate
contract or policy.
``(2) Premiums and charges for long-term care coverage.--
Premium payments for long-term care insurance policy coverage
and charges against the life insurance contract's cash
surrender value (within the meaning of section 7702(f)(2)(A))
for such coverage, shall be treated as premiums for purposes
of subsection (b)(2).
``(3) Application of 7702.--Section 7702(c)(2) (relating to
the guideline premium limitation) shall be applied by
increasing, as of any date, the guideline premium limitation
with
[[Page S1784]] respect to a life insurance contract by an
amount equal to--
``(A) the sum of any charges (but not premium payments)
described in paragraph (2) made to that date under the
contract, reduced by
``(B) any such charges the imposition of which reduces the
premiums paid for the contract (within the meaning of section
7702(f)(1)).
``(4) Application of section 213.--No deduction shall be
allowed under section 213(a) for charges against the life
insurance contract's cash surrender value described in
paragraph (2), unless such charges are includable in income
as a result of the application of section 72(e)(10) and the
coverage provided by the rider is a qualified long-term care
insurance policy under subsection (b).
For purposes of this subsection, the term `portion' means
only the terms and benefits under a life insurance contract
that are in addition to the terms and benefits under the
contract without regard to the coverage under a qualified
long-term care insurance policy.
``(e) Employer Plans Not Treated as Deferred Compensation
Plans.--For purposes of this title, a plan of an employer
providing coverage under a qualified long-term care insurance
policy shall not be treated as a plan which provides for
deferred compensation by reason of providing such coverage.
``(f) Dollar Amount for Purposes of Gross Income
Exclusion.--
``(1) Dollar amount.--
``(A) In general.--The dollar amount in effect under this
subsection shall be $200 per day.
``(B) Inflation adjustments.--In the case of any taxable
year beginning in a calendar year after 1996, the dollar
amount contained in subparagraph (A) shall be increased by an
amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting `calendar year 1995' for
`calendar year 1992' in subparagraph (B) thereof.
``(2) Aggregation rule.--For purposes of this subsection,
all policies issued with respect to the same taxpayer shall
be treated as 1 policy.
``(g) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the requirements
of this section, including regulations to prevent the
avoidance of this section by providing long-term care
insurance coverage under a life insurance contract and to
provide for the proper allocation of amounts between the
long-term care and life insurance portions of a contract.''.
(b) Clerical Amendment.--The table of sections for chapter
79 is amended by inserting after the item relating to section
7702A the following new item:
``Sec. 7702B. Treatment of long-term care insurance.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to policies issued after December 31, 1995. Solely for
purposes of the preceding sentence, a policy issued prior to
January 1, 1996, that satisfies the requirements of a
qualified long-term care insurance policy as set forth in
section 7702B(b) of the Internal Revenue Code of 1986 (as
added by this section) shall, on and after January 1, 1996,
be treated as having been issued after December 31, 1995.
(2) Transition rule.--If, after the date of enactment of
this Act and before January 1, 1996, a policy providing for
long-term care insurance coverage is exchanged solely for a
qualified long-term care insurance policy (as defined in such
section 7702B(b)), no gain or loss shall be recognized on the
exchange. If, in addition to a qualified long-term care
insurance policy, money or other property is received in the
exchange, then any gain shall be recognized to the extent of
the sum of the money and the fair market value of the other
property received. For purposes of this paragraph, the
cancellation of a policy providing for long-term care
insurance coverage and reinvestment of the cancellation
proceeds in a qualified long-term care insurance policy
within 60 days thereafter shall be treated as an exchange.
(3) Issuance of certain riders permitted.--For purposes of
determining whether section 7702 or 7702A of the Internal
Revenue Code of 1986 applies to any contract, the issuance,
whether before, on, or after December 31, 1995, of a rider on
a life insurance contract providing long-term care insurance
coverage shall not be treated as a modification or material
change of such contract.
SEC. 8103. TREATMENT OF QUALIFIED LONG-TERM CARE PLANS.
(a) Exclusion From COBRA Continuation Requirements.--
Subparagraph (A) of section 4980B(f)(2) (defining
continuation coverage) is amended by adding at the end the
following new sentence: ``The coverage shall not include
coverage for qualified long-term care services (as defined in
section 213(f)).''.
(b) Benefits Included in Cafeteria Plans.--Section 125(f)
(defining qualified benefits) is amended by adding at the end
the following new sentence: ``Such term includes coverage
under a qualified long-term care insurance policy (as defined
in section 7702B(b)) which is includible in gross income only
because it exceeds the dollar limitation of section
105(c)(2).''.
SEC. 8104. TAX RESERVES FOR QUALIFIED LONG-TERM CARE
INSURANCE POLICIES.
(a) In General.--Subparagraph (A) of section 807(d)(3)
(relating to tax reserve methods) is amended by redesignating
clause (iv) as clause (v) and by inserting after clause (iii)
the following new clause:
``(iv) Qualified long-term care insurance policies.--In the
case of any qualified long-term care insurance policy (as
defined in section 7702B(b)), a 1 year full preliminary term
method, as prescribed by the National Association of
Insurance Commissioners.''.
(b) Conforming Amendments.--Section 807(d)(3)(A) (relating
to tax reserve methods), is amended--
(1) in clause (v), as redesignated by subsection (a), by
striking ``or (iii)'' each place it appears and inserting
``(iii), or (iv)''; and
(2) in clause (iii), by inserting ``(other than a qualified
long-term care insurance policy)'' after ``insurance
contract''.
SEC. 8105. TAX TREATMENT OF ACCELERATED DEATH BENEFITS UNDER
LIFE INSURANCE CONTRACTS.
Section 101 (relating to certain death benefits) is amended
by adding at the end the following new subsection:
``(g) Treatment of Certain Accelerated Death Benefits.--
``(1) In general.--For purposes of this section, any amount
distributed to an individual under a life insurance contract
on the life of an insured who is a terminally ill individual
(as defined in paragraph (3)) shall be treated as an amount
paid by reason of the death of such insured.
``(2) Necessary conditions.--
``(A) In general.--Paragraph (1) shall not apply to any
distribution unless--
``(i) the distribution is not less than the present value
(determined under subparagraph (B)) of the reduction in the
death benefit otherwise payable in the event of the death of
the insured, and
``(ii) the percentage derived by dividing the cash
surrender value of the contract, if any, immediately after
the distribution by the cash surrender value of the contract
immediately before the distribution is equal to or greater
than the percentage derived by dividing the death benefit
immediately after the distribution by the death benefit
immediately before the distribution.
``(B) Reduction value.--The present value of the reduction
in the death benefit occurring by reason of the distribution
shall be determined by--
``(i) using as the discount rate a rate not in excess of
the highest rate set forth in subparagraph (C), and
``(ii) assuming that the death benefit (or the portion
thereof) would have been paid at the end of a period that is
no more than the insured's life expectancy from the date of
the distribution or 12 months, whichever is shorter.
``(C) Rates.--The rates set forth in this subparagraph are
the following:
``(i) the 90-day Treasury bill yield,
``(ii) the rate described as Moody's Corporate Bond Yield
Average-Monthly Average Corporates as published by Moody's
Investors Service, Inc., or any successor thereto, for the
calendar month ending 2 months before the date on which the
rate is determined,
``(iii) the rate used to compute the cash surrender values
under the contract during the applicable period plus 1
percent per annum, and
``(iv) the maximum permissible interest rate applicable to
policy loans under the contract.
``(3) Terminally ill individual.--For purposes of this
subsection, the term `terminally ill individual' means an
individual who, as determined by the insurer on the basis of
an acceptable certification by a licensed physician, has an
illness or physical condition which can reasonably be
expected to result in death within 12 months of the date of
certification.
``(4) Application of section 72(e)(10).--For purposes of
section 72(e)(10) (relating to the treatment of modified
endowment contracts), section 72(e)(4)(A)(i) shall not apply
to distributions described in paragraph (1).''.
SEC. 8106. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED
ACCELERATED DEATH BENEFIT RIDERS.
(a) Qualified Accelerated Death Benefit Riders Treated as
Life Insurance.--Section 818 (relating to other definitions
and special rules) is amended by adding at the end the
following new subsection:
``(g) Qualified Accelerated Death Benefit Riders Treated as
Life Insurance.--For purposes of this part--
``(1) In general.--Any reference to a life insurance
contract shall be treated as including a reference to a
qualified accelerated death benefit rider on such contract.
``(2) Qualified accelerated death benefit riders.--For
purposes of this subsection, the term `qualified accelerated
death benefit rider' means any rider on a life insurance
contract which provides for a distribution to an individual
upon the insured becoming a terminally ill individual (as
defined in section 101(g)(3)).''.
(b) Definitions of Life Insurance and Modified Endowment
Contracts.--Paragraph (5)(A) of section 7702(f) (defining
qualified additional benefits) is amended by striking ``or''
at the end of clause (iv), by redesignating clause (v) as
clause (vi), and by inserting after clause (iv) the following
new clause:
``(v) any qualified accelerated death benefit rider (as
defined in section 818(g)), or''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to contracts issued after December 31, 1995.
[[Page S1785]] (2) Transitional rule.--For purposes of
determining whether section 7702 or 7702A of the Internal
Revenue Code of 1986 applies to any contract, the issuance,
whether before, on, or after December 31, 1995, of a rider on
a life insurance contract permitting the acceleration of
death benefits (as described in section 101(g) of such Code
(as added by section 8105)) shall not be treated as a
modification or material change of such contract.
Subtitle B--Standards For Long-Term Care Insurance
SEC. 8201. NATIONAL LONG-TERM CARE INSURANCE ADVISORY
COUNCIL.
(a) In General.--Congress shall appoint an advisory board
to be known as the National Long-Term Care Insurance Advisory
Council (hereafter referred to in this subtitle as the
``Advisory Council'').
(b) Membership.--The Advisory Council shall consist of 5
members, each of whom has substantial expertise in matters
relating to the provision and regulation of long-term care
insurance or long-term care financing and delivery systems.
(c) Duties.--The Advisory Council shall--
(1) provide advice, recommendations on the implementation
of standards for long-term care insurance, and assistance to
Congress on matters relating to long-term care insurance as
specified in this section and as otherwise required by the
Secretary of Health and Human Services;
(2) collect, analyze, and disseminate information relating
to long-term care insurance in order to increase the
understanding of insurers, providers, consumers, and
regulatory bodies of the issues relating to, and to
facilitate improvements in, such insurance;
(3) develop educational models to inform the public on the
risks of incurring long-term care expenses and private
financing options available to them; and
(4) monitor the development of the long-term care insurance
market and advise Congress concerning the need for statutory
changes.
(d) Administration.--In order to carry out its
responsibilities under this section, the Advisory Council is
authorized to--
(1) consult individuals and public and private entities
with experience and expertise in matters relating to long-
term care insurance;
(2) conduct meetings and hold hearings;
(3) conduct research (either directly or under grant or
contract);
(4) collect, analyze, publish, and disseminate data and
information (either directly or under grant or contract); and
(5) develop model formats and procedures for insurance
products, and develop proposed standards, rules and
procedures for regulatory programs, as appropriate.
(e) Authorization of Appropriations.--There are authorized
to be appropriated, for activities of the Advisory Council,
$1,500,000 for fiscal year 1996, and each subsequent year.
SEC. 8202. ADDITIONAL REQUIREMENTS FOR ISSUERS OF LONG-TERM
CARE INSURANCE POLICIES.
(a) In General.--Chapter 43 is amended by adding at the end
the following new section:
``SEC. 4980C. FAILURE TO MEET REQUIREMENTS FOR QUALIFIED
LONG-TERM CARE INSURANCE POLICIES.
``(a) General Rule.--There is hereby imposed on the issuer
of any qualified long-term care insurance policy with respect
to which any requirement of subsection (c) or (d) is not met
a tax in the amount determined under subsection (b).
``(b) Amount of Tax.--
``(1) In general.--
``(A) Per policy.--The amount of the tax imposed by
subsection (a) shall be $100 per policy for each day any
requirement of subsection (c) or (d) is not met with respect
to the policy.
``(B) Limitations.--
``(i) Per carrier.--The amount of the tax imposed under
subparagraph (A) against any insurance carrier, association,
or any subsidiary thereof, shall not exceed $25,000 per
policy.
``(ii) Per agent.--The amount of the tax imposed under
subparagraph (A) against insurance agent or broker shall not
exceed $15,000 per policy.
``(2) Waiver.--In the case of a failure which is due to
reasonable cause and not to willful neglect, the Secretary
may waive part or all of the tax imposed by subsection (a) to
the extent that payment of the tax would be excessive
relative to the failure involved.
``(c) Additional Responsibilities.--The requirements of
this subsection with respect to any qualified long-term care
insurance policy are as follows:
``(1) Requirements of model provisions.--
``(A) Model regulation.--The following requirements of the
model regulation shall be met:
``(i) Section 13 (relating to application forms and
replacement coverage).
``(ii) Section 14 (relating to reporting requirements),
except that the issuer shall also report at least annually
the number of claims denied during the reporting period for
each class of business (expended as a percentage of claims
denied), other than claims denied for failure to meet the
waiting period or because of any applicable preexisting
condition.
``(iii) Section 20 (relating to filing requirements for
marketing).
``(iv) Section 21 (relating to standards for marketing),
including inaccurate completion of medical histories, other
than sections 21C(1) and 21C(6) thereof, except that--
``(I) in addition to such requirements, no person shall, in
selling or offering to sell a qualified long-term care
insurance policy, misrepresent a material fact; and
``(II) no such requirements shall include a requirement to
inquire or identify whether a prospective applicant or
enrollee for qualified long-term care insurance has accident
and sickness insurance.
``(v) Section 22 (relating to appropriateness of
recommended purchase).
``(vi) Section 24 (relating to standard format outline of
coverage).
``(vii) Section 25 (relating to requirement to deliver
shopper's guide).
``(B) Model act.--The following requirements of the model
Act must be met:
``(i) Section 6F (relating to right to return), except that
such section shall also apply to denials of applications and
any refund shall be made within 30 days of the return or
denial.
``(ii) Section 6G (relating to outline of coverage).
``(iii) Section 6H (relating to requirements for
certificates under group plans).
``(iv) Section 6I (relating to policy summary).
``(v) Section 6J (relating to monthly reports on
accelerated death benefits).
``(vi) Section 7 (relating to incontestability period).
``(C) Definitions.--For purposes of this paragraph, the
terms `model regulation' and `model Act' have the meanings
given such terms by section 7702B(b)(6)(B).
``(2) Delivery of policy.--If an application for a
qualified long-term care insurance policy (or for a
certificate under a group qualified long-term care insurance
policy) is approved, the issuer shall deliver to the
applicant (or policyholder or certificate-holder) the policy
(or certificate) of insurance not later than 30 days after
the date of the approval.
``(3) Information on denials of claims.--If a claim under a
qualified long-term care insurance policy is denied, the
issuer shall, within 60 days of the date of a written request
by the policyholder or certificate-holder (or
representative)--
``(A) provide a written explanation of the reasons for the
denial, and
``(B) make available all information directly relating to
such denial.
``(d) Disclosure.--The requirements of this subsection are
met with respect to any qualified long-term care insurance
policy if the following statement is prominently displayed on
the front page of the policy and in the outline of coverage
required under subsection (c)(1)(B)(ii):
```This is a federally qualified long-term care insurance
contract. The policy meets all the Federal consumer
protection standards necessary to receive favorable tax
treatment under section 7702B(b) of the Internal Revenue Code
of 1986.'.
``(e) Qualified Long-Term Care Insurance Policy Defined.--
For purposes of this section, the term `qualified long-term
care insurance policy' has the meaning given such term by
section 7702B(b).''.
(b) Conforming Amendment.--The table of sections for
chapter 43 is amended by adding at the end the following new
item:
``Sec. 4980C. Failure to meet requirements for long-term care insurance
policies.''.
SEC. 8203. COORDINATION WITH STATE REQUIREMENTS.
Nothing in this subtitle shall be construed as preventing a
State from applying standards that provide greater protection
of policyholders of qualified long-term care insurance
policies (as defined in section 7702B(b) of the Internal
Revenue Code of 1986 (as added by section 8102)).
SEC. 8204. UNIFORM LANGUAGE AND DEFINITIONS.
(a) In General.--Not later than June 30, 1996, the Advisory
Council shall promulgate standards for the use of uniform
language and definitions in qualified long-term care
insurance policies (as defined in section 7702B(b) of the
Internal Revenue Code of 1986 (as added by section 8102)).
(b) Variations.--Standards under subsection (a) may permit
the use of nonuniform language to the extent required to take
into account differences among States in the licensing of
nursing facilities and other providers of long-term care.
Subtitle C--Incentives to Encourage the Purchase of Private Insurance
SEC. 8301. ASSETS OR RESOURCES DISREGARDED UNDER THE MEDICAID
PROGRAM.
(a) Medicaid Estate Recoveries.--
(1) In general.--Section 1917(b) of the Social Security Act
(42 U.S.C. 1396p(b)) is amended--
(A) in paragraph (1), by striking subparagraph (C);
(B) in paragraph (3), by striking ``(other than paragraph
(1)(C))''; and
(C) in paragraph (4)(B), by striking ``(and shall include,
in the case of an individual to whom paragraph (1)(C)(i)
applies)''.
(2) Effective date.--Section 1917(b) of the Social Security
Act (42 U.S.C. 1396p(b)) shall be applied and administered as
if the provisions stricken by paragraph (1) had not been
enacted.
(b) Reporting Requirements for Certain Asset Protection
Programs.--Section 1902 of the Social Security Act (42 U.S.C.
1396a) is amended by adding at the end the following new
subsection:
``(aa)(1) The Secretary shall not approve any State plan
amendment providing for an
[[Page S1786]] asset protection program (as described in
paragraph (2)) unless the State requires all insurers
participating in such program to submit reports to the State
and the Secretary at such times, and containing such
information, as the Secretary determines appropriate. The
information included in the reports required to be submitted
under the preceding sentence shall be submitted in accordance
with the data standards established by the Secretary under
paragraph (3).
``(2) An asset protection program described in this
paragraph is a program under which an individual's assets and
resources are disregarded for purposes of the program under
this subtitle--
``(A) to the extent that payments are made under a
qualified long-term care insurance policy (as defined in
section 7702B(b) of the Internal Revenue Code of 1986); or
``(B) because an individual has received (or is entitled to
receive) benefits under a qualified long-term care insurance
policy (as defined in section 7702B(b) of such Code).
``(3)(A) Not later than 90 days after the date of the
enactment of the Private Long-Term Care Family Protection Act
of 1995, the Secretary shall select data standards for the
information required to be included in reports submitted in
accordance with paragraph (1). Such data standards shall be
selected from the data standards included in the Long-Term
Care Insurance Uniform Data Set developed by the University
of Maryland Center on Aging and Laguna Research Associates,
and used by the States of California, Connecticut, Indiana,
and New York for reports submitted by insurers under the
asset protection programs conducted by such States.
``(B) The Secretary shall modify the standards selected
under subparagraph (A) as the Secretary determines
appropriate.''.
SEC. 8302. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS
FOR THE PURCHASE OF LONG-TERM CARE INSURANCE
COVERAGE.
(a) Exclusion From Gross Income for Certain Individuals.--
Subsection (d) of section 408 (relating to tax treatment of
distributions from individual retirement accounts) is amended
by adding at the end the following new paragraph:
``(8) Distributions to purchase long-term care insurance.--
Paragraph (1) shall not apply to any amount paid or
distributed out of an individual retirement account or
individual retirement annuity to the individual for whose
benefit the account or annuity is maintained if--
``(A) the individual has attained age 59\1/2\ by the date
of the payment or distribution, and
``(B) the entire amount received (including money and any
other property) is used within 90 days to purchase a
qualified long-term care insurance policy (as defined in
section 7702B(b)) for the benefit of the individual or the
spouse of the individual (if the spouse has attained age
59\1/2\ by the date of the payment or distribution).''.
(b) No Penalty for Distributions.--
(1) In general.--Subparagraph (B) of section 72(t)(2)
(relating to distributions from qualified retirement plans
not subject to 10 percent additional tax) is amended to read
as follows:
``(B) Medical expenses.--
``(i) In general.--Distributions made to the employee
(other than distributions described in clause (ii) or
subparagraph (A) or (C)) to the extent such distributions do
not exceed the amount allowable as a deduction under section
213 to the employee for amounts paid during the taxable year
for medical care (determined without regard to whether the
employee itemizes deductions for such taxable year).
``(ii) Certain distributions to purchase long-term care
insurance.--Distributions made to the taxpayer out of an
individual retirement plan if the entire amount received
(including money and any other property) is used within 90
days to purchase a qualified long-term care insurance policy
(as defined in section 7702B(b)) for the benefit of the
individual or the spouse of the individual.''.
(2) Conforming amendment.--Subparagraph (A) of section
72(t)(3) is amended by striking ``(B)'' and inserting
``(B)(i)''.
(c) Deduction for Expenses To Purchase a Qualified Long-
Term Care Insurance Policy.--
(1) In general.--Paragraph (8) of section 408(d) (relating
to distributions from individual retirement accounts to
purchase long-term care insurance), as added by subsection
(a), is amended by adding at the end the following new
subparagraph:
``(D) Application of section 213.--No deduction shall be
allowed under section 213(a) for expenses incurred to
purchase a qualified long-term care insurance policy (as
defined in section 7702B(b)) using amounts paid or
distributed out of an individual retirement account or
individual retirement annuity in accordance with this
paragraph.''.
(2) Conforming amendment.--Clause (ii) of section
213(d)(1)(D) (relating to definition of medical care), as
added by section 8101(a), is amended by striking ``section
7702(d)(4)'' and inserting ``section 408(d)(8)(D) or section
7702(d)(4)''.
Subtitle D--Effective Date
SEC. 8401. EFFECTIVE DATE OF TAX PROVISIONS.
Except as otherwise provided in this title, the amendments
made by this title to the Internal Revenue Code of 1986 shall
apply to taxable years beginning after December 31, 1995.
TITLE IX--BUDGET NEUTRALITY
SEC. 9001. ASSURANCE OF BUDGET NEUTRALITY.
Notwithstanding any other provision of law, this Act and
the amendments made by this Act shall not become effective
until the date of the enactment of a provision of law,
specifically referring to this section, that by its terms
provides for the Federal budget neutrality of this Act.
____
The Access to Affordable Health Care Act of 1995--Section-by-Section
A bill to increase the availability and affordability of
health care coverage for individuals and their families, to
reduce paperwork and simplify the administration of health
care claims, to increase access to care in rural and
underserved areas, to improve quality and protect consumers
from health care fraud and abuse, to promote preventive care,
to make long-term care more affordable, and for other
purposes.
title i--health insurance market reform
a. Non-discrimination based on health status
In general, a health plan may not deny, limit, or condition
the coverage under the plan (or vary the premium) for an
individual on the basis of their health status, medical
condition, claims experience, receipt of health care, medical
history, anticipated need for services, disability, or lack
of insurability.
The plan may limit or exclude benefits relating to a pre-
existing condition that was diagnosed or treated during the
3-month period prior to enrollment in that plan for up to 6
months. However, if the individual had been in a period of
continuous coverage under another health plan prior to
enrollment, the exclusion period would be reduced by 1 month
for each month of continuous coverage.
b. Guaranteed issue and renewal
Health plans offering coverage in the small group market
shall guarantee each individual purchaser and small employer
(and each employee of that small employer) access to the
plan. In addition, health plans must be renewed at the option
of the employer or individual if they remain eligible for
coverage under the plan. Plans may refuse to renew a policy
in the case of: nonpayment of premiums; fraud on the part of
the employer or individual related to the plan; or
misrepresentation by the employer or individual of material
facts relating to an application for coverage of a claim or
benefit.
c. Rating limitations
The Secretary of HHS shall request that the National
Association of Insurance Commissioners develop specific
standards in the form of a model Act and model regulations to
implement rating stands for the small group market. Factors
that health plans may use to vary premium rates include age
(not to exceed a 3:1 ratio), family type and geography.
Health plans would be prohibited from using gender, health
status or health expenditures to vary rates. These factors
would be phased out within three years in order to minimize
market disruption and
maximize coverage rates. The standards developed would also
permit health plans to provide premium discounts based on workplace
health promotion activities.
d. Encouragement of State efforts
None of the provisions of the bill shall be construed as
preempting State law unless that State law directly conflicts
with the bills' requirements. In addition, the following
state consumer protection laws shall not be considered to
directly conflict with any such requirement and are
specifically not preempted: laws that limit the exclusions or
limitations for preexisting medical conditions to periods
that are less than those provided in this title; laws that
limit variations in premium rates beyond the variations
permitted in this title; and laws that would expand the small
group market in excess of that provided for under this title.
In addition, nothing in this bill shall be construed as
prohibiting States from enacting health care reform measures
that exceed the measures established in the bill, including
reforms that expand access to health care services, control
health care costs, and enhance quality of care.
title ii--grants to states for small group health insurance purchasing
arrangements
Authorizes the Secretary of Health and Human Services to
make grants to States for the establishment and operation of
small group health insurance purchasing arrangements to
increase access to more affordable coverage for small
businesses and individuals.
title iii--tax incentives to encourage the purchase of health insurance
Insurance would be made more affordable for low and middle-
income individuals (individuals with incomes up to $23,000
and families with incomes up to $33,000) by providing a
refundable tax credit to those without employer-provided
insurance. A credit of 60 percent would apply to premiums of
up to $1,200 a year for individuals and $2,400 for families.
Individuals with adjusted gross incomes of less than $18,000
and families with adjusted gross incomes of less than $28,000
would be eligible for the full credit. The credit would be
phased out for individuals with incomes between $18,000 and
$23,000 and families with incomes between $28,000 and
$33,000.
[[Page S1787]] Also makes the tax deduction for health
insurance costs for self-employed individuals permanent
(retroactive to 1994) and phases it up from the current 25%
level to 100% by 2000.
title vi--incentives to increase the access of rural and underserved
areas to health care
Provides a special tax credit and other incentives for
physicians and other primary care providers serving in rural
and other underserved areas. Increased funding is also
provided to expand the National Health Service Corps and Area
Health Education Centers, which will also help to increase
the number of health care professionals in medically
underserved areas. Increased grant funding would also be
available to expand the number of community health centers,
which provide comprehensive health services in rural and
inner-city neighborhoods to millions of Americans who need
care regardless of their ability to pay.
title v--quality and consumer protection
Authorizes the Secretary of Health and Human Services to
award demonstration grants for the establishment and
operation of regional Quality Improvement Foundations.
Improves the efficiency and effectiveness of the health
care system by encouraging the development of a national
health information network to reduce administrative
complexity, paperwork, and costs; to provide information on
cost and quality; and to provide information tools that allow
improved fraud detection, outcomes research, and quality of
care.
Establishes a stronger, better coordinated federal effort
to combat fraud and abuse in our health care system. This
section expands criminal and civil penalties for health care
fraud to provide a stronger deterrent to the billing of
fraudulent claims and to deter fraudulent utilization of
health care services.
title vi--malpractice reform
Encourages states to establish alternative dispute
resolution mechanisms like prelitigation screening panels,
which have had great success in a number of states in
reducing medical malpractice costs. Also allows health care
providers to use practice guidelines approved by the
Secretary of HHS as a rebuttable defense in medical liability
cases.
title vii--health promotion and disease prevention
Encourages participation in qualified health promotion and
prevention programs by clarifying that expenditures for these
programs are considered amounts paid for medical care for tax
purposes. Also establishes a new grant program for states to
provide assistance to small businesses in the establishment
and operation of worksite wellness programs for their
employees. And finally, expands the comprehensive school
health education programs administered by the Centers for
Disease Control.
title viii--access to affordable long-term care
Removes tax barriers and creates incentives for individuals
and their families to finance their future long-term care
needs. Long-term care policies that meet federal consumer
protection standards would receive favorable tax treatment.
Like health insurance, business expenditures on premiums
would be deductible as a business expense and employer-
provided long-term care insurance would be excluded from an
employee's taxable income. Also allows States to develop
programs under which individuals can keep more of their
assets and still qualify for Medicaid if they take steps to
finance their own long-term care needs. And finally, provides
various incentives, such as tax-free withdrawals from IRAs,
401(k) plans, and other qualified pension plans to promote
the purchase of private long-term care insurance.
title ix--assurance of budget neutrality
No amendment or provision made by the bill will take effect
until legislation is enacted which provides for budget
neutrality.
______
By Mrs. KASSEBAUM (for herself, Mr. Jeffords, Mr. Gregg, and Mr.
Gorton):
S. 295. A bill to permit labor management cooperative efforts that
improve America's economic competitiveness to continue to thrive, and
for other purposes; to the Committee on Labor and Human Resources.
TEAMWORK FOR EMPLOYEES AND MANAGEMENT ACT
Mrs. KASSEBAUM. Mr. President, I rise today to introduce, along with
Senators Jeffords, Gregg, and Gorton, the Teamwork for Employees And
Management [TEAM] Act, a bill to encourage worker-management
cooperation.
Mr. President, when I served many years ago on the school board in
Maize, KS, we frequently met on an informal basis with teachers to
discuss problems the teachers faced in the classroom. The teachers had
an important perspective to share, and we addressed their concerns.
Sometimes we agreed with them and implemented their recommendations,
and sometimes we agreed to disagree. But the important thing was that
we felt free to exchange information.
School boards and teachers are governed by State law and not Federal
law, so we did not face the problems on the school board that private
sector workers and supervisors face today. We had the benefit of being
able to work cooperatively with our teachers, and I continue to believe
that we improved the quality of education for our students and enhanced
the quality of work life for our teachers.
Mr. President, our current Federal labor laws do not allow this sort
of cooperative effort, because our labor laws assume that labor and
management have an adversarial relationship. This may have been true 50
years ago, but today, employers recognize that productivity and
efficiency improve when workers operate in partnership with management,
and that partnership occurs best in a cooperative rather than an
adversarial environment. Yet our labor laws currently prohibit these
cooperative efforts.
Mr. President, the TEAM Act responds to a National Labor Relations
Board [NLRB] decision in 1992 called Electromation that has had
significant consequences for attempts to improve cooperation between
workers and employers. Specifically, the NLRB held that employer-
employee committees, where workers met with management to discuss
attendance, compensation and no-smoking policies, violated the National
Labor Relations Act's [NLRA] prohibition against ``employer-dominated''
labor organizations.
The TEAM Act amends our Federal labor laws to permit these types of
voluntary programs to continue. The legislation allows employers and
employees to meet together to address issues of mutual interest,
including issues related to quality, productivity, and efficiency, as
long as the committees or other joint programs do not engage in
collective bargaining.
I believe that our Federal labor laws should not stand in the way of
work place cooperative efforts, such as quality circles and employee
involvement programs. Our workers like to have input on their working
conditions and our international competitors use employee involvement
to improve plant productivity.
I urge my colleagues to support the TEAM Act.
I ask unanimous consent that the full text of the bill be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 295
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Teamwork for Employees And
Management Act of 1995''.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds that--
(1) the escalating demands of global competition have
compelled an increasing number of American employers to make
dramatic changes in workplace and employer-employee
relationships;
(2) these changes involve an enhanced role for the employee
in workplace decisionmaking, often referred to as ``employee
involvement'', which has taken many forms, including self-
managed work teams, quality-of-worklife, quality circles, and
joint labor-management committees;
(3) employee involvement structures, which operate
successfully in both unionized and non-unionized settings,
have been established by over 80 percent of the largest
employers of the United States and exist in an estimated
30,000 workplaces;
(4) in addition to enhancing the productivity and
competitiveness of American businesses, employee involvement
structures have had a positive impact on the lives of those
employees, better enabling them to reach their potential in
their working lives;
(5) recognizing that foreign competitors have successfully
utilized employee involvement techniques, Congress has
consistently joined business, labor and academic leaders in
encouraging and recognizing successful employee involvement
structures in the workplace through such incentives as the
Malcolm Baldridge National Quality Award;
(6) employers who have instituted legitimate employee
involvement structures have not done so to interfere with the
collective bargaining rights guaranteed by the labor laws, as
was the case in the 1930s when employers established
deceptive sham ``company unions'' to avoid unionization; and
(7) employee involvement is currently threatened by
interpretations of the prohibition against employer-dominated
``company unions''.
[[Page S1788]] (b) Purposes.--It is the purpose of this
Act to--
(1) protect legitimate employee involvement structures
against governmental interference;
(2) preserve existing protections against deceptive,
coercive employer practices; and
(3) permit legitimate employee involvement structures where
workers may discuss issues involving terms and conditions of
employment, to continue to evolve and proliferate.
SEC. 3. AMENDMENT TO SECTION 8(a)(2) OF THE NATIONAL LABOR
RELATIONS ACT.
Section 8(a)(2) of the National Labor Relations Act (29
U.S.C. 158(a)(2)) is amended by adding at the end thereof the
following: ``Provided further, That it shall not constitute
or be evidence of an unfair labor practice under this
paragraph for an employer to establish, assist, maintain or
participate in any organization or entity of any kind, in
which employees participate to address matters of mutual
interest (including issues of quality, productivity and
efficiency) and which does not have, claim or seek authority
to negotiate or enter into collective bargaining agreements
under this Act with the employer or to amend existing
collective bargaining agreements between the employer and any
labor organization;''.
SEC. 4. CONSTRUCTION CLAUSE LIMITING EFFECT OF ACT.
Nothing in the amendment made by section 3 shall be
construed as affecting employee rights and responsibilities
under the National Labor Relations Act other than those
contained in section 8(a)(2) of such Act.
______
By Mr. KENNEDY (for himself, Mr. Akaka, Mr. Bingaman, Mrs. Boxer,
Mr. Bradley, Mr. Campbell, Mr. Dodd, Mr. Feingold, Mr. Harkin,
Mr. Inouye, Mr. Lautenberg, Mr. Leahy, Ms. Mikulski, Ms.
Moseley-Braun, Mr. Moynihan, Mrs. Murray, Mr. Packwood, Mr.
Pell, Mr. Robb, Mr. Simon, and Mr. Wellstone):
S. 296. A bill to amend section 1977A of the Revised Statutes to
equalize the remedies available to all victims of intentional
employment discrimination, and for other purposes; to the Committee on
Labor and Human Resources.
equal remedies act
Mr. KENNEDY. Mr. President, on behalf of myself and 20 other
Senators, it is an honor to reintroduce the Equal Remedies Act to
repeal the caps on the amount of damages available in employment
discrimination cases brought under the Civil Rights Act of 1991.
The Civil Rights Act of 1991 for the first time gave women, religious
minorities, and the disabled the right to recover compensatory and
punitive damages when they suffer intentional discrimination on the
job--but only up to specified limits. Victims of discrimination on the
basis of race or national origin, by contrast, can recover such damages
without such limits. No similar caps on damages exist in other civil
rights laws, and they are not appropriate in this instance.
The Equal Remedies Act will end this double standard by removing the
caps on damages for victims of intentional discrimination on the basis
of sex, religion, or disability.
The caps on damages deny an adequate remedy to the most severely
injured victims of discrimination. For example, if a woman proves that
as a result of discrimination or sexual harassment she needs extensive
medical treatment exceeding the caps, she will be limited to receiving
only partial compensation for her injury.
In addition, the caps on punitive damages limit the extent to which
employers who intentionally discriminate--particularly the worst
violators--are punished for their discriminatory acts and deterred from
engaging in such conduct in the future. The more offensive the conduct
and the greater the damages inflicted, the more the employer benefits
from the caps.
The caps on damages in the Civil Rights Act of 1991 were a compromise
necessitated by concern about passing a bill that President Bush would
sign. The issue was only one of the important issues covered in that
piece of legislation, which also reversed a series of Supreme Court
decisions that had made it far more difficult for working Americans to
challenge discrimination.
The bill as a whole represented a significant advance in the ongoing
battle to overcome discrimination in the workplace. In order to
guarantee that the bill would become law, the unfortunate compromise on
damages was included. However, many of us made clear that we intended
to work for enactment of separate legislation to remove the caps. By
reintroducing the Equal Remedies Act today, we reaffirm our commitment.
We must end the double standard that relegates women, religious
minorities, and the disabled to second-class remedies under the civil
rights laws.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 296
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Equal Remedies Act of
1995''.
SEC. 2. EQUALIZATION OF REMEDIES.
Section 1977A of the Revised Statutes (42 U.S.C. 1981a), as
added by section 102 of the Civil Rights Act of 1991, is
amended--
(1) in subsection (b)--
(A) by striking paragraph (3), and
(B) by redesignating paragraph (4) as paragraph (3), and
(2) in subsection (c), by striking ``section--'' and all
that follows through the period and inserting ``section, any
party may demand a jury trial.''.
______
By Mr. ROCKEFELLER (for himself, Mr. Daschle, Mr. Graham, Mr.
Akaka, Mr. Campbell, Mr. Jeffords, Mr. Leahy, and Mr.
Bingaman):
S. 297. A bill to amend the Internal Revenue Code of 1986 to clarify
the exclusion from gross income for veterans' benefits; to the
Committee on Finance.
veterans' tax fairness act
Mr. ROCKEFELLER. Mr. President, as the ranking minority member
of the Committee on Veterans' Affairs, I am introducing today the
proposed Veterans' Tax Fairness Act of 1995. I am enormously pleased
that a number of my colleagues, both members of the committee and
others, have joined me as original cosponsors of this important
measure--Senators Tom Daschle, Bob Graham, Daniel Akaka, Ben Nighthorse
Campbell, Jim Jeffords, Pat Leahy, and Jeff Bingaman. This bill would
clarify and reiterate the longstanding rule that veterans benefits are
not taxable--a rule that, until action taken in 1992 by the Internal
Revenue Service, had never been questioned.
On February 27, 1992, the Internal Revenue Service, in a letter to
the general counsel of the Department of Veterans Affairs,
reinterpreted a 1986 law and reached a conclusion that could jeopardize
the historical tax-exempt status of many veterans benefits, including
various benefits provided to service-disabled veterans, dependency and
indemnity compensation for survivors, veterans and survivors pensions,
education benefits under the Montgomery GI bill, and veterans medical
care.
The IRS ruling addressed a narrow issue of whether veterans must pay
taxes when VA forgives a debt the veteran owes to the Federal
Government after VA pays a guaranty on the Veteran's home loan.
Congress liberalized the criteria for VA debt waivers in 1989. In the
February 1992 opinion, IRS interpreted a 1986 tax code provision as
requiring taxation of any debt waiver granted under the 1989 law that
would not have been granted under the old law. IRS concluded that any
modification or adjustment of a veterans benefit would make the benefit
taxable.
Mr. President, our committee strongly disagreed with the IRS
interpretation, for reasons stated in a May 13, 1992, letter from then-
Chairman Alan Cranston to then-Secretary of the Treasury Nicholas F.
Brady.
Mr. President, although the IRS opinion attempts to address only the
narrow question of the taxability of VA debt waivers, its conclusions
could support IRS assessing taxes for many other veterans benefits that
have been modified or adjusted after September 9, 1986.
Since 1986, for example, Congress has expanded and increased
education benefits paid under the GI bill on rehabilitation benefits
provided to disabled veterans; adjusted the categories of eligibility
for VA medical care; overhauled the survivors Dependency and Indemnity
Compensation [DIC] Program and made several adjustments in the rates of
DIC; expanded various health care services; and increased other
benefits, such as housing and
[[Page S1789]] automobile grants for certain veterans with every severe
service-connected disabilities. The IRS interpretation would exempt
adjustment based on an inflation index, but fails to protect the many
VA benefits that are adjusted without reference to an index. Under the
February 27, 1992 IRS opinion, any of these modifications or
adjustments might have made the benefits involved taxable.
Section 5301 of title 38, United States Code, explicitly exempts
veterans benefits and services from taxation. The provision of the tax
code interpreted by IRS concerns military benefits, and it seems clear
to me that Congress did not intend to make veterans benefits taxable
for the first time in our Nation's history through enactment of a tax
code provision addressing military benefits. Veterans benefits,
provided to veterans and their survivors under laws administered by VA,
always have been distinct from military pay and benefits provided to
active-duty or retired servicemembers under laws administered by the
Department of Defense.
In fact, Mr. President, another tax code provision, section 136,
explicitly references the title 38 provision exempting veterans
benefits from taxation. I am not aware of any previous suggestion that
the tax code section that IRS has interpreted was intended to make
veterans benefits taxable. If Congress had wanted to make such a
radical change in the tax-exempt status of veterans benefits, it
certainly would have done so much more explicitly than through an
ambiguously worded provision that does not even mention veterans or the
Department of Veterans Affairs.
Mr. President, it is clear that, before February 1992, in previous
administration had interpreted this tax code provision to require
taxation of veterans benefits. During the almost 7 years since the
provision took effect, IRS has not collected or attempted to collect
any taxes based on the receipt of VA-administered benefits--even in
connection with VA debt waivers, which the IRS opinion had concluded
could be subject to taxation in certain circumstances.
In fact, every official IRS publication of which I am aware that
mentions veterans benefits, including ``Publication 17--Your Income
Taxes'' and a 1988 IRS private letter ruling, explicitly states that
veterans benefits are not taxable. Many IRS publications even list all
available veterans benefits to indicate that each is nontaxable.
Mr. President, in 1992, the committee found a very receptive ally in
then-Senator Lloyd Bentsen, who chaired the Finance Committee. Senator
Bentsen successfully inserted a version of our clarifying legislation
into 1992's tax bill, H.R. 11. Unfortunately, President Bush vetoed
H.R. 11.
Mr. President, during the last Congress, efforts were made, both by
the administration--where Senator Bentsen was then serving as Secretary
of Treasury--which submitted proposed legislation substantively
identical to H.R. 11, and by me in the introduction of such legislation
in S. 1083, to replicate the success we had with H.R. 11.
Unfortunately, no action was taken on that legislation during the 103d
Congress.
The legislation I am introducing today is substantively identical to
H.R. 11, the legislation recommended by the administration last
Congress, and to S. 1083, and I am hopeful that action will be taken on
it in the first appropriate tax legislation.
I believe it is vitally important to reiterate and clarify by statute
the tax-exempt status of all veterans benefits and services, in order
to preclude any future tinkering with these most fundamental benefits,
particularly in the current climate of anything goes in the name of
deficit reduction.
Mr. President, it is obvious that, since IRS previously has not
collected or attempted to collect taxes on veterans benefits, this
legislation will not affect Federal revenues.
Mr. President, in closing, I acknowledge and thank Senator Moynihan
and the fine Finance Committee staff for the technical assistance
provided in connection with the development of this measure. I urge my
colleagues to support this bill and pledge to do all I can to see it
enacted quickly.
Mr. President, I ask unanimous consent that a copy of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 297
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Veterans' Tax Fairness Act
of 1995''.
SEC. 2. CLARIFICATION OF TREATMENT OF VETERANS' BENEFITS.
(a) In General.--Subsection (a) of section 134 of the
Internal Revenue Code of 1986 (relating to certain military
benefits) is amended to read as follows:
``(a) General Rule.--Gross income shall not include--
``(1) any qualified military benefit, and
``(2) any allowance or benefit administered by the
Secretary of Veterans Affairs which is received by a veteran
(as defined in section 101 of title 38, United States Code)
or a dependent or survivor of a veteran.''
(b) Technical Amendment.--Paragraph (3) of section 137(a)
of such Code is amended to read as follows:
``(3) Benefits under laws administered by the Secretary of
Veterans Affairs, see section 5301 of title 38, United States
Code.''
(c) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
1984.
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