[Congressional Record Volume 144, Number 106 (Friday, July 31, 1998)]
[Senate]
[Pages S9561-S9596]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      THE OLD JICARILLA ADMINISTRATIVE SITE CONVEYANCE ACT OF 1998

  Mr. DOMENICI. Mr. President, today I am introducing a bill to direct 
the Secretary of Agriculture to convey a ten acre parcel of land, known 
as the old Jicarilla administrative site, to San Juan College. This 
legislation will provide long-term benefits for the people of San Juan 
County, New Mexico, and especially the students and faculty of San Juan 
College.
  This legislation allows for transfer by the Secretary of Agriculture 
real property and improvements at an abandoned and surplus 
administrative site of the Carson National Forest to San Juan College. 
The site is known as the old Jicarilla Ranger District Station, near 
the village of Gobanador, New Mexico. The Jicarilla Station will 
continue to be used for public purposes, including educational and 
recreational purposes of the college.
  Mr. President, the Forest Service has determined that this site is of 
no further use to them, since the Jicarilla District Ranger moved into 
a new administrative facility in the town of Bloomfield, New Mexico. 
The facility has had no occupants for several years, and it is my 
understanding that the Forest Service reported to the General Services 
Administration that the improvements on the site were considered 
surplus, and would be available for disposal under their administrative 
procedures.
  This legislation is patterned after S. 1510, approved by the Senate 
earlier this month, by which the property and improvements of a 
similarly abandoned Forest Service facility in New Mexico will be 
transferred to Rio Arriba County. The administration has indicated its 
support for the passage of that bill, and I hope that this bill will 
gain their support, as well.
  Mr. President, since the Forest Service has no interest in 
maintaining Federal ownership of this land and the surplus facilities, 
and San Juan College could put this small tract to good use, this 
legislation is a win-win situation for the federal government and 
northwestern New Mexico. I look the Senate's rapid consideration of 
this legislation, and urge my colleagues to support its passage.
  Mr. President, I ask unanimous consent that the text of the bill and 
a letter of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2402

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. OLD JICARILLA ADMINISTRATIVE SITE.

       (a) Conveyance of Property.--Not later than one year after 
     the date of enactment of this Act, the Secretary of 
     Agriculture (herein ``the Secretary'') shall convey to San 
     Juan College, in Farmington, New Mexico, subject to the terms 
     and conditions under subsection (c), all right, title, and 
     interest of the United States in and to a parcel of real 
     property (including any improvements on the land) consisting 
     of approximately ten acres known as the ``Old Jicarilla 
     Administrative Site'' located in San Juan County, New Mexico 
     (T29N; R5W; Section 29 Southwest of Southwest \1/4\).
       (b) Description of Property.--The exact acreage and legal 
     description of the real property conveyed under subsection 
     (a) shall be determined by a survey satisfactory to the 
     Secretary and the President of San Juan College. The cost of 
     the survey shall be borne by San Juan College.
       (c) Terms and Conditions.--
       (1) Notwithstanding exceptions of application under the 
     Recreation and Public Purposes Act (43 U.S.C. 869(c)), 
     consideration for the conveyance described in subsection (a) 
     shall be--
       (A) an amount that is consistent with the Bureau of Land 
     Management special pricing program for Governmental entities 
     under the Recreation and Public Purposes Act; and,
       (B) an agreement between the Secretary and San Juan College 
     indemnifying the Government of the United States from all 
     liability of the Government that arises from the property.
       (2) The lands conveyed by this Act shall be used for 
     educational and recreational purposes. If such lands cease to 
     be used for such purposes, at the option of the United 
     States, such lands will revert to the United States.
                                  ____

                                                 San Juan College,


                                      Office of the President,

                                  Farmington, NM, August 21, 1997.
     Hon. Pete V. Domenici,
     U.S. Senate,
     Washington, DC.
       Dear Senator Domenici: The United States Forest Service has 
     indicated a willingness to turn some property over to San 
     Juan College. The property was formerly the Carson National 
     Forest Jicarilla District Visitor Center Site. It is located 
     in Gobernador and was formerly the headquarters for the 
     Forest Service for this area. The office has subsequently 
     moved into Bloomfield, and the property has had no occupants 
     for several years.
       At the suggestion of Phil Settles, the Forest Service 
     Director, I would like to request that some legislation be 
     introduced that would allow for the transfer of the property 
     from the Forest Service to San Juan College. The College 
     would use the area for educational and recreational purposes. 
     A description of the property is attached.
       Please let me know what additional steps must be taken in 
     order to expedite the transfer. Thank you very much.
           Sincerely,
                                         James C. Henderson, Ed.D.
                                 ______
                                 
      By Mr. SANTORUM:
  S. 2403. A bill to prohibit discrimination against health care 
entities that refuse to provide, provide coverage for, pay for, or 
provide referrals for abortions; to the Committee on Labor and Human 
Resources.


                 THE HEALTH CARE ENTITY PROTECTION ACT

  Mr. SANTORUM. Mr. President, I am introducing legislation 
today that will offer protection from government discrimination to 
health care providers who have religious or moral objections to 
performing abortions.
  As HCFA prepares to implement the Medicare+Choice program, the need 
for this bill has become evident. Congress created Medicare+Choice to 
give beneficiaries more options in their health plans. The Balanced 
Budget Act of 1997 (BBA) requires all health care providers who 
participate in the program to provide all services covered under 
Medicare Parts A and B, except hospice care. HCFA is interpreting this 
mandate to require coverage for abortion, consistent with the Hyde 
restrictions. The problem is that many religious health care systems--
and even some secular providers--have strong misgivings about 
performing, providing coverage for, or paying for any elective 
abortions. Absent specific legislative clarification, these providers 
will be shut out of the Medicare+Choice program.
  HCFA's interpretation of the BBA has come as a surprise to many 
health systems wishing to participate in the Medicare+Choice program. 
The issue of whether providers would have to cover abortion services 
was never addressed during last summer's extensive debate. Instead, 
this Congress focused on designing a program which would give seniors 
the broadest possible range of health care choices, so they could

[[Page S9562]]

choose a provider based on their own individual needs.
  In 1996, Congress prohibited government discrimination against health 
care providers who choose not to teach abortion procedures in their 
graduate medical programs. The Senate approved this legislation as an 
amendment to the Omnibus Consolidated Rescissions and Appropriations 
Act by a vote of 63-37. The Health Care Entity Protection Act merely 
clarifies that these protections extend to all providers who have 
religious or moral objections to performing, providing coverage of, or 
paying for induced abortions. I would emphasise that nothing in this 
bill prevents providers from voluntarily offering abortion services; it 
simply gives them a right to choose whether they will so do.
  I believe that my colleagues on both sides of the abortion debate can 
support the Health Care Entity Protection Act. I would like to 
reiterate that this bill simply clarifies protections that already 
exist under current law. I hope the Senate will recognize the moral 
gravity of the abortion issue and forge a consensus across party and 
ideological lines to protect institutions, doctors, and health systems 
who, as a matter of conscience, cannot perform or provide for 
abortions.
                                 ______
                                 
      By Mr. MACK (for himself and Mr. Graham):
  S. 2404. A bill to establish designations for United States Postal 
Service buildings located in Coconut Grove, Opa Locka, Carol City, and 
Miami, Florida; to the Committee on Governmental Affairs.


                United States postal service legislation

  Mr. GRAHAM. Mr. President, I rise today together with my friends and 
distinguished colleague, Senator Mack, to introduce legislation to name 
five United States Post Offices in Miami-Dade County, Florida after 
five prominent civic and community leaders. By doing so, we are joining 
the entire Florida delegation in the United States House of 
Representatives in honoring these individuals of great importance to 
our state.
  This legislation honors these five individuals service, commitment, 
and dedication to their communities. Athalie Range is a multi-faceted 
local community leader and humanitarian Garth Reeves, Sr. is a 
publisher, banker, and entrepreneur. William R. ``Billy'' Rolle was a 
teacher, coach, and community education leader. Essie Silva was a 
leader and proponent of business development for South Florida's 
Africa-American community. Helen Miller was the first African-American 
female Mayor in Dade County, Florida.
  While these five individuals come from different backgrounds and 
professions they have one similar quality: dedication to their 
communities. Through their service, they have made immeasurable 
contributions to South Florida and our entire state. Mr. President, let 
me say a few words about each of these outstanding individuals:
   Athalie Range has been a leader in South Florida for over 30 years. 
She was the first African-American and second woman to be elected to 
the Miami City Commission. Governor Reubin Askew appointed her the 
first African-American department head in the state of Florida. Ms. 
Range has also been the recipient of over 160 awards and honors. I have 
had the pleasure of knowing and learning from Ms. Range for many years. 
Her commitment to improving the quality of life for all citizens has 
been constant and meaningful.
  Garth Reeves has been committed to excellence and achievement in 
South Florida for over 50 years. As the owner and publisher of the 
Miami Times, he has covered many of the important news stories of the 
last half-century. He has also been an exemplary civic leader who 
served on the Boards of Trustees of Miami-Dade Community College, Barry 
University, Bethune-Cookman College, and Florida Memorial College.
  Essie D. Silva was a proponent of South Florida economic development 
her whole life. She chaired the Government Affairs Department of the 
Miami-Dade Chamber of Commerce and led groups to lobby in Tallahassee 
and Washington. In addition to her business activities, Ms. Silva was 
instrumental in establishing the Sunstreet Carnival, a popular family 
festival held in Miami.
  Helen Miller became the first African-American female Mayor elected 
in Miami-Dade County when Opa Locka residents chose her as their Mayor 
in 1982. She has served on over forty different community boards 
dedicated to improving the quality of life in South Florida. She was a 
woman of tremendous vigor and leadership who was recognized as the 
elder stateswoman of Opa Locka, Florida. She passed away on October 2, 
1996, in Opa Locka, Florida.
  William R. ``Billy'' Rolle dedicated his life in one of our most 
important professions--teaching. He spent over thirty five years as a 
teacher, coach, band instructor, and assistant principal. In all these 
different roles he continued to inspire young people to reach their 
full potential. Also, Mr. Rolle helped organize the First Annual 
Goombay Festival, a popular Caribbean event held in Miami. He passed 
away on January 20, 1998, in Miami, Florida.
  Mr. President, the accomplishments of these five individuals are 
worthy of having a post office designation. All of these post offices 
that will bear the names of the individuals will be located in the 
communities where they lived. It is appropriate that we grant this 
honor to salute their life long commitment to their community. I urge 
all my colleagues to join Senator Mack and me in supporting this 
important legislation.
                                 ______
                                 
      By Mr. FAIRCLOTH:
  S. 2405. A bill to amend the Fair Labor Standards Act of 1938 to 
exempt licensed funeral directors from the minimum wage and overtime 
compensation requirements of that Act; to the Committee on Labor and 
Human Resources.


                  fair labor standards act amendments

 Mr. FAIRCLOTH. Mr. President, today I am introducing 
legislation together with my good friend, Senator DeWine, to exempt 
licensed funeral directors from the overtime provisions of the Fair 
Labor Standards Act.
  Under current law, licensed funeral directors do not meet the test 
for the ``professionals'' exemption under the Wage and Hour regulations 
of the Fair Labor Standards Act. Consequently, they are not exempt from 
minimum wage and overtime requirements. Given the nature of their 
work--on-duty or on-call 24 hours a day, 7 days a week, 365 days a 
year--this requirement places an economic hardship on small funeral 
homes and the families of licensed funeral directors. With erratic and 
unpredictable work hours, most licensed funeral directors would prefer 
the option of comp time in lieu of overtime pay in order to spend more 
time with their families.
  Requiring licensed funeral directors to be paid for overtime work 
forces small business owners to allocate revenues for that purpose, 
thereby inhibiting salaries and bonuses. To avoid the financial strain, 
some even resort to using only part-time funeral directors.
  Over the years, Congress has provided 17 exemptions to the Act. 
Included are such diverse exemptions as employees of amusement or 
recreational establishments, outside salespeople, seasonal agricultural 
workers, apprentices, employees of newspapers with a circulation of 
less than 4,000, switchboard operators of independently-owned telephone 
companies with fewer than 750 stations, and the more recent amendments 
related to criminal investigators, computer analysts, programmers, and 
software engineers.
  Mr. President, I strongly believe that small businesses, such as 
funeral homes, must be given flexibility to provide their key employees 
with the options for alternative overtime compensation in order for 
them to survive, grow, and remain the premier source of employment in 
our communities.
  In that regard and on behalf of your local funeral homes and their 
licensed funeral directors, I urge my colleagues to support this 
legislation.
                                 ______
                                 
      By Mr. BOND (for himself, Mr. Coverdell, Mr. Domenici, Mr. 
        Kempthorne, and Ms. Snowe):
  S. 2407. A bill to amend the Small Business Act and the Small 
Business Investment Act of 1958 to improve the programs of the Small 
Business Administration; to the Committee on Small Business.

[[Page S9563]]

      small business programs restructuring and reform act of 1998

 Mr. BOND. Mr. President, today, I have been joined by Senators 
Coverdell, Domenici, Kempthorne, and Snowe to introduce ``The Small 
Business Programs Restructuring and Reform Act of 1998'' to restructure 
and refine Small Business Administration programs that are designed to 
help small businesses succeed. In drafting this legislation, I followed 
one key principle--will the change help small businesses? Many of SBA's 
programs are dependent upon the private sector to make loans and 
investments or to provide services to small businesses. ``The Small 
Business Programs Restructuring and Reform Act of 1998'' is intended to 
make Federal small business programs work more effectively while 
stimulating greater interest in the private sector to support small 
business owners and their employees.
  The small business sector is the fastest growing segment of our 
economy. Its sustained growth throughout this decade has enabled our 
Nation to experience one of its greatest periods of prosperity. During 
this time span, small businesses have been responsible for the net 
increase of new jobs in the United States. Today, small businesses 
employ over \1/2\ of all American workers. Small businesses produce 55 
percent of our Nation's gross domestic product. Our Nation's sustained 
economic growth would not be possible were it not for the strength of 
the small business sector. One would hate to imagine where we would be 
without a robust small business community.
  The Committee on Small Business opened the 105th Congress with a 
hearing on Homebased and Women-owned businesses. We received testimony 
on the significant economic contribution being made by the 8 million 
women-owned businesses and on the importance of business education, 
training, and financial assistance to this growing segment of our 
economy.
  To assist the rapid growth of small businesses owned by women, 
Section 2 of ``The Small Business Programs Restructuring and Reform Act 
of 1998'' would increase the authorization level to $12 million from $8 
million per year for the Women's Business Center program. This increase 
would ensure that new Center sites will be opened without jeopardizing 
the currently funded Centers from receiving funds for five years.
  To verify the SBA provides the Women's Business Center program with 
the staff and administrative support required to support a $12 million 
program, the bill directs the General Accounting Office to undertake a 
baseline and follow-up study of the SBA's administration of the 
program. These independent audits will assist Congress in its oversight 
of SBA's supervision and administration of the program. Knowing that 
the Administration has previously recommended a budget that would have 
shut down the program, we want to make sure it is receiving the 
appropriate level of staffing and agency resources.
  Last year, Congress passed the ``Small Business Reauthorization Act 
of 1997,'' which increased the authorization for the Women Business 
Center Program to $8 million from $4 million and extended the number of 
years grantees can receive grants to five years from three years. The 
goal was to have a Women's Business Center operating in every state and 
additional sites in states where there is sufficient demand. Consistent 
with our view, the Administration's budget request for Fiscal Year 1999 
recommended an increase in the authorization level to $9 million. 
Senators Kerry  and Cleland introduced S. 2157 which would authorize 
the Administration's request and would go one step further by 
increasing the authorization level to $10.5 million in FY 2000, and $12 
million in FY 2001. I am encouraged to see such a strong show of 
support for the program--only two years after Congress killed the 
Administration's recommendation to strike all funding for the program.
  Section 2 of the bill includes a new provision to provide parity 
between Centers operating under three-year agreements with SBA when the 
Reauthorization Act was enacted and those Centers awarded five-year 
grants since that time. Section 2 amends the law to provide the same 
matching requirement in year four for all Centers receiving SBA grants. 
Under the 1997 Act, Centers that receive a two-year extension at the 
conclusion of a three-year grant have to raise two non-federal dollars 
for every federal dollar awarded; under Section 2, they will have to 
raise one non-federal dollar for each federal dollar--which is the 
fourth year matching requirement for Centers receiving newly awarded 
five year grants. The 2 non-federal dollars to one federal dollar 
matching requirement will remain in force for the fifth year of all 
awardees.
  Section 3 of ``The Small Business Programs Restructuring and Reform 
Act of 1998'' would make the SBIR Program permanent. Testimony before 
the Committee on Small Business and the findings of the General 
Accounting Office clearly support this Congressional action. The bill 
would also increase the set aside from 2.5 percent to 3.5 percent. 
Beginning in FY 2001, the program would be increased by \1/4\ of 1 
percent in each of the next four fiscal years.
  Congress established the SBIR Program in 1982 because small 
businesses are a principal source of innovation in the United States. 
Under this program, Federal agencies with extramural research and 
development budgets of $100 million or more are required to set aside 
no less than 2.5 percent of that amount for small businesses. The SBIR 
Program was last re-authorized in 1992 and will terminate in FY 2000 
unless Congress acts first.
  In April 1998, the General Accounting Office issued its comprehensive 
report on the state of the SBIR Program, and in June 1998, GAO 
addressed that report in testimony before the Committee on Small 
Business. The unmistakable message was very clear--this is a good 
program that is running well. There are ten Federal agencies that 
participate in the program, and GAO concluded they are all adhering to 
the program's funding requirements. Competition has been intense among 
small business R&D firms in response to solicitations from the ten 
agencies. GAO found, however, it was very rare for an agency to make an 
award when the agency received only one proposal in response to a 
solicitation was received.

  The bill would make a significant change in the program to encourage 
better outreach to states that receive few awards each year. GAO 
reported in FY 1996 that California received a total of 904 awards for 
a total of $207 million and Massachusetts received 628 awards for a 
total of $148 million. On the other hand, there were a great number of 
states receiving 11 or fewer awards. The bill would permit each of the 
ten participating agencies to spend up to 2% of the SBIR set aside pool 
of funds to support an outreach program, to promote better 
commercialization of the R&D awards, and to offset some administrative 
expenses. At least one-third of these non-award funds must be spent on 
outreach in those states that receive 25 or fewer awards each year.
  Earlier this year, I introduced S. 2173, the ``Assistive and 
Universally Designed Technology Improvement Act,'' to encourage the 
development and production of actual products for the marketplace for 
assistive technology end-users. As part of my effort to reach that 
goal, the ``Small Business Programs Restructuring and Reform Act of 
1998'' includes a provision encouraging all ten Federal agencies 
participating in the SBIR Program to solicit proposals to advance 
research and development in this critical area.
  In 1958, Congress created the SBIC Program to assist small business 
owners obtain investment capital. Forty years later, small businesses 
continue to experience difficulty in obtaining investment capital from 
banks and traditional investment sources. SBICs are frequently their 
only sources of investment capital. In 1992 and 1996, the Committee on 
Small Business worked closely with SBA to correct earlier deficiencies 
in the law in order to ensure the future of the program. Today, the 
SBIC Program is booming. Its performance since 1994 has been 
astounding.
  Section 4 of ``The Small Business Programs Restructuring and Reform 
Act of 1998'' would make a relatively small change in the operation of 
the program. This change, however, would help smaller, small businesses 
to be more attractive to investors. The bill would permit SBICs to 
accept royalty payments contingent on future performance from companies 
in which they invest as a form of equity return for their investment.

[[Page S9564]]

  SBA already permits SBICs to receive warrants from small businesses, 
which give the investing SBIC the right to acquire a portion of the 
equity of the small business. By pledging royalties or warrants, the 
small business is able to reduce the interest that would otherwise be 
payable by the small business to the SBIC. Importantly, the royalty 
feature provides the smaller, small business with an incentive to 
attract SBIC investments when the return may otherwise be insufficient 
to attract venture capital.
  Section 5 of ``The Small Business Programs Restructuring and Reform 
Act of 1998'' would require the SBA to make permanent a pilot program 
initiated two years ago to permit certain Certified Development 
Companies (CDCs) to foreclose and liquidate defaulted loans that they 
have originated under the 504 Loan Program. This is a necessary step to 
ensure the 504 program remains viable.
  Currently, SBA liquidates and forecloses almost every loan made under 
the 504 Loan Program. SBA has been performing this task poorly. The 
Administration's FY 1999 budget submission estimates that recoveries on 
defaulted loans under the 504 Loan Program will decline from 34.27% in 
FY 1998 to 30.67% in FY 1999. It is important to note that all loans 
made under the 504 loan program are fully secured by real estate. It is 
inconceivable that SBA recovers only thirty cents on the dollar on 
fully-secured real estate loans.
  Because the 504 Program is self-funded through user fees, with no 
appropriation required by Congress, borrowers must pay higher fees to 
compensate for the SBA's inability to recover a reasonable portion of 
defaulted loans. As borrower fees have increased, the 504 Loan Program 
has been priced out of the reach of certain small businesses. The 504 
Loan Program was enacted to provide larger loans to small businesses 
for plant acquisition, construction or expansion. Such loans create 
jobs and improve the economic health of communities. Congress should 
not allow such opportunities to be limited because the SBA has been 
unable to recover funds on defaulted loans effectively.
  In 1996, Congress passed, at my urging, the Small Business Programs 
Improvement Act, which established a pilot program that allowed 
approximately 20 CDCs to liquidate loans that they had originated. 
Reports on this pilot program indicate it has been a success--CDCs are 
obtaining higher recoveries than the SBA. This bill makes the pilot 
program permanent and permits CDCs that have the ability to manage loan 
liquidations to do so. This change in the law is designed to increase 
the recoveries on defaulted loans thereby decreasing borrower fees. 
Consequently, more small businesses will have access to 504 loans, 
which will create more jobs and will help sustain the economic growth 
this country has been experiencing.
  The ``Small Business Reauthorization Act of 1997'' included the 
creation of the HUBZone Program, which raised the goal to 23% from 20% 
for prime contracts being awarded by the Federal government to small 
business. This increase was advocated by the SBA Administrator and was 
embraced by the Clinton Administration.
  It has been brought to the attention of the Committee on Small 
Business that some Federal agencies may be using bookkeeping ploys to 
reduce the amount of contract dollars going into the pool of contracts 
used for calculating the older 20% small business set aside goal. By 
reducing the overall dollar volume of contracts, the value of contracts 
counted under the older 20% set aside goal is also reduced. Now that 
Congress has increased the goal to 23%, I am concerned there may be 
greater pressure on the agencies to ``juggle the books.''

  In order for the Committee on Small Business to conduct its oversight 
of the small business contract set aside goal, Section 6 of the bill 
directs the SBA to send a report to the Committee on Small Business 
each year highlighting any Federal agency that alters its statistical 
methodology in tracking its efforts to meet the 23% goal. The bill also 
directs the Administrator of SBA to notify the Committee and the SBA 
Chief Counsel for Advocacy prior to approving any request from an 
agency to change how it reports its small business contracting efforts.
  Last year, when Congress approved the ``Small Business 
Reauthorization Act of 1997,'' it included a separate title to improve 
business opportunities for service-disabled veterans. The Senate and 
House Committees on Small Business believed strongly that these 
individuals deserve better support from the Federal agencies than they 
have received historically. Last year's bill included a provision 
requiring the SBA to complete a comprehensive report containing the 
findings and recommendations of the SBA Administrator on the needs of 
small businesses owned and controlled by service-disabled veterans. 
Although this report should be received by the Congress no later than 
the first week of September, SBA's efforts to date to complete this 
report within the statutory deadline are disappointing.
  Section 7 of ``The Small Business Programs Restructuring and Reform 
Act of 1998'' would go one step further to strengthen the mandate that 
SBA's programs be more responsive to all veteran small business owners. 
The bill would direct that veterans receive comprehensive help at SBA. 
The bill elevates the Office of Veterans Affairs at SBA to the Office 
of Veterans Business Development, which would be headed by an Associate 
Administrator, who would report directly to the SBA Administrator.
  In addition, the bill would establish an Advisory Committee on 
Veterans' Business Affairs composed of 15 members. Eight members would 
be veterans who own small businesses, and seven members will be 
representatives of national veterans service organizations. Further, 
the bill would create the position of National Veterans' Business 
Coordinator within the Service Corps of Retired Executives (SCORE) 
Program. This new position would work in the SBA headquarters to ensure 
that SCORE's programs nationwide include entrepreneurial counseling and 
training for veterans.
  Section 7 of the bill would make veteran small business owners 
eligible to apply for small, start-up loans under SBA's Microloan 
Program. And the SBA Office of Advocacy would be directed to evaluate 
annually efforts by Federal agencies, business and industry to help 
business that are owned and controlled by veterans.
  The ``Small Business Programs Restructuring and Reform Act of 1998'' 
is a sound bill that will help small business owners, particularly 
those who are struggling or in the business start-up phase to compete 
more effectively. I urge my colleagues to support this legislation.
  Mr. President, I ask unanimous consent 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. 2407

       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 ``Small Business Programs 
     Restructuring and Reform Act of 1998''.

     SEC. 2. WOMEN'S BUSINESS CENTER PROGRAM.

       (a) Findings.--Congress finds that--
       (1) with small business concerns owned and controlled by 
     women being created at a rapid rate in the United States, 
     there is a need to increase the authorization level for the 
     women's business center program under section 29 of the Small 
     Business Act (15 U.S.C. 656) in order to establish additional 
     women's business center sites throughout the Nation that 
     focus on entrepreneurial training programs for women; and
       (2) increased funding for the women's business center 
     program will ensure that--
       (A) new women's business center sites can be established to 
     reach women located in geographic areas not presently served 
     by an existing women's business center without jeopardizing 
     the full funding of existing women's business centers for the 
     term prescribed by law; and
       (B) the Small Business Administration achieves the goal of 
     establishing at least 1 sustainable women's business center 
     in each State.
       (b) Authorization of Appropriations.--
       (1) In general.--Section 29(k)(1) of the Small Business Act 
     (15 U.S.C. 656(k)(1)) is amended to read as follows:
       ``(1) Authorization.--There is authorized to be 
     appropriated to carry out this section, $12,000,000 for 
     fiscal year 1999 and each fiscal year thereafter.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect on October 1, 1998.
       (c) Terms of Assistance.--
       (1) In general.--Section 308(b) of the Small Business 
     Reauthorization Act of 1997 (15 U.S.C. 656 note) is amended--

[[Page S9565]]

       (A) by striking ``(b)'' and all that follows through 
     ``paragraph (2), any organization'' and inserting the 
     following:
       ``(b) Applicability.--Any organization''; and
       (B) by striking paragraph (2).
       (2) Effective date.--The amendment made by this subsection 
     shall take effect as if included in the enactment of the 
     Small Business Reauthorization Act of 1997.
       (d) General Accounting Office Reporting Requirements.--
       (1) Baseline report.--Not later than October 31, 1999, the 
     Comptroller General of the United States shall--
       (A) conduct a review of the administration of the women's 
     business center program under section 29 of the Small 
     Business Act (15 U.S.C. 656) by the Office of Women's 
     Business Ownership of the Small Business Administration, 
     which shall include an analysis of--
       (i) the operation of the women's business center program by 
     the Administration;
       (ii) the efforts of the Administration to meet the 
     legislative objectives established for the program;
       (iii) the oversight role of the Administration of the 
     operations of women's business centers;
       (iv) the manner in which the women's business centers 
     operate;
       (v) the benefits provided by the women's business centers 
     to small business concerns owned and controlled by women; and
       (vi) any other matters that the Comptroller General 
     determines to be appropriate; and
       (B) submit to the Committees on Small Business of the 
     Senate and House of Representatives a report describing the 
     results of the review under subparagraph (A).
       (2) Followup report.--Not later than October 31, 2002, the 
     Comptroller General of the United States shall--
       (A) conduct a review of any changes, during the period 
     beginning on the date on which the report is submitted under 
     paragraph (1)(B) and ending on the date on which the report 
     is submitted under subparagraph (B) of this paragraph, in the 
     administration of the women's business center program under 
     section 29 of the Small Business Act (15 U.S.C. 656) by the 
     Office of Women's Business Ownership of the Small Business 
     Administration, which shall include an analysis of any 
     changes during that period in--
       (i) the operation of the women's business center program by 
     the Administration;
       (ii) the efforts of the Administration to meet the 
     legislative objectives established for the program;
       (iii) the oversight role of the Administration of the 
     operations of women's business centers;
       (iv) the manner in which the women's business centers 
     operate;
       (v) the benefits provided by the women's business centers 
     to small business concerns owned and controlled by women; and
       (vi) any other matters that the Comptroller General 
     determines to be appropriate; and
       (B) submit to the Committees on Small Business of the 
     Senate and House of Representatives a report describing the 
     results of the review under subparagraph (A).

     SEC. 3. SBIR PROGRAM.

       (a) Assistive Technology.--Section 9(c) of the Small 
     Business Act (15 U.S.C. 638(c)) is amended by adding at the 
     end the following: ``In order to carry out the purposes of 
     this section, the Administration shall, to the maximum extent 
     practicable, encourage Federal agencies to fund programs for 
     the research and development of assistive and universally 
     designed technology that is designed to result in the 
     availability of new products for individuals with 
     disabilities (as defined in section 3 of the Americans with 
     Disabilities Act of 1990 (42 U.S.C. 12102)).''.
       (b) Federal Agency Expenditures for the SBIR Program.--
       (1) Required expenditure amounts; definition of extramural 
     budget.--Section 9(f)(1) of the Small Business Act (15 U.S.C. 
     638(f)(1)) is amended--
       (A) by striking subparagraphs (A) through (C) and inserting 
     the following:
       ``(A) not less than 2.5 percent of that budget in each of 
     fiscal years 1999 and 2000;
       ``(B) not less than 2.75 percent of that budget in fiscal 
     year 2001;
       ``(C) not less than 3 percent of that budget in fiscal year 
     2002;
       ``(D) not less than 3.25 percent of that budget in fiscal 
     year 2003; and
       ``(E) not less than 3.5 percent of that budget in each 
     fiscal year thereafter;''; and
       (B) by adding at the end the following: ``Notwithstanding 
     any other provision of law, any rule, regulation, or order 
     promulgated by the Director of the Office of Management and 
     Budget relating to the definition of the term `extramural 
     budget' in subsection (e)(1) shall, except with respect to 
     the Federal agencies specifically identified in that 
     subsection, apply uniformly to all departments and agencies 
     of the Federal Government that are subject to the 
     requirements of this section.''.
       (2) Limitations relating to administrative costs.--Section 
     9(f)(2) of the Small Business Act (15 U.S.C. 638(f)(2)(A)) is 
     amended--
       (1) in the matter preceding subparagraph (A), by striking 
     ``A Federal agency'' and inserting ``In any fiscal year, a 
     Federal agency''; and
       (2) in subparagraph (A)--
       (A) by striking ``any of'' and inserting ``more than the 
     lesser of $2,000,000 or 2 percent of''; and
       (B) by inserting ``, funding program outreach for States 
     receiving 25 or fewer awards in that fiscal year, and funding 
     increased activities to promote commercialization of SBIR 
     awards, of which not less than one-third shall be used to 
     support program outreach'' before the semicolon.
       (d) Repeal of Termination Provision.--Section 9 of the 
     Small Business Act (15 U.S.C. 638) is amended by striking 
     subsection (m) and inserting the following:
       ``(m) [Reserved].''.

     SEC. 4. SBIC PROGRAM.

       Section 308(i)(2) of the Small Business Investment Act of 
     1958 (15 U.S.C. 687(i)(2)) is amended by adding at the end 
     the following: ``In this paragraph, the term `interest' 
     includes only the maximum mandatory sum, expressed in dollars 
     or as a percentage rate, that is payable with respect to the 
     business loan amount received by the small business concern, 
     and does not include the value, if any, of contingent 
     obligations, including warrants, royalty, or conversion 
     rights, granting the small business investment company an 
     ownership interest in the equity or future revenue of the 
     small business concern receiving the business loan.''.

     SEC. 5. CERTIFIED DEVELOPMENT COMPANY PROGRAM.

       (a) In General.--Title V of the Small Business Investment 
     Act of 1958 (15 U.S.C. 695 et seq.) is amended by adding at 
     the end the following:

     ``SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS.

       ``(a) In General.--The Administration shall authorize 
     qualified State and local development companies (as defined 
     in section 503(e)) that meet the requirements of subsection 
     (b) to foreclose and liquidate loans in the portfolios of 
     those companies that are funded with the proceeds of 
     debentures guaranteed by the Administration under section 
     503.
       ``(b) Requirements.--The requirements of this subsection 
     are that--
       ``(1) the qualified State or local development company--
       ``(A) participated in the loan liquidation pilot program 
     established by section 204 of the Small Business Programs 
     Improvement Act of 1996 (15 U.S.C. 695 note), as in effect on 
     the day before the promulgation of final regulations by the 
     Administration implementing this section; or
       ``(B) is participating in the Accredited Lenders Program 
     under section 507 or the Premier Certified Lenders Program 
     under section 508; or
       ``(2)(A) during the 3 most recent fiscal years, the 
     qualified State or local development company has made an 
     average of not less than 10 loans per year that are funded 
     with the proceeds of debentures guaranteed under section 503; 
     and
       ``(B) 1 or more of the employees of the qualified State or 
     local development company have--
       ``(i) not less than 1 year of experience in administering 
     the liquidation and workout of problem loans secured in a 
     manner substantially similar to loans funded with the 
     proceeds of debentures guaranteed under section 503; or
       ``(ii) completed a training program on loan liquidation 
     developed by the Administration in conjunction with qualified 
     State and local development companies that meet the 
     requirements of this subsection.
       ``(c) Authority of Development Companies.--
       ``(1) In general.--Each qualified State or local 
     development company authorized to foreclose and liquidate 
     loans under this section shall, with respect to any loan 
     described in subsection (a) in the portfolio of the 
     development company that is in default--
       ``(A) perform all liquidation and foreclosure functions, 
     including the purchase of any other indebtedness secured by 
     the property securing the loan, in a reasonable and sound 
     manner and according to commercially accepted practices, 
     pursuant to a liquidation plan, which shall be approved in 
     advance by the Administration in accordance with paragraph 
     (2)(A);
       ``(B) litigate any matter relating to the performance of 
     the functions described in subparagraph (A), except that the 
     Administration may monitor the conduct of any such litigation 
     to which the qualified State or local development company is 
     a party; and
       ``(C) take other appropriate actions to mitigate loan 
     losses in lieu of total liquidation or foreclosure, including 
     restructuring the loan, which such actions shall be in 
     accordance with prudent loan servicing practices and pursuant 
     to a workout plan, which shall be approved in advance by the 
     Administration in accordance with paragraph (2)(C).
       ``(2) Administration approval.--
       ``(A) Liquidation plan.--In carrying out paragraph (1), a 
     qualified State or local development company shall submit to 
     the Administration a proposed liquidation plan. Any request 
     under this subparagraph shall be approved or denied by the 
     Administration not later than 10 business days after the date 
     on which the request is submitted. If the Administration does 
     not approve or deny a request for approval of a liquidation 
     plan before the expiration of the 10-business day period 
     beginning on the date on which the request is submitted, the 
     request shall be considered to be approved.
       ``(B) Purchase of indebtedness.--In carrying out paragraph 
     (1)(A), a qualified State or local development company shall 
     submit

[[Page S9566]]

     to the Administration a request for written approval from the 
     Administration before committing the Administration to 
     purchase any other indebtedness secured by the property 
     securing the loan at issue. Any request under this 
     subparagraph shall be approved or denied by the 
     Administration not later than 10 business days after the date 
     on which the request is submitted.
       ``(C) Workout plan.--In carrying out paragraph (1)(C), a 
     qualified State or local development company may submit to 
     the Administration a proposed workout plan. Any request under 
     this subparagraph shall be approved or denied by the 
     Administration not later than 20 business days after the date 
     on which the request is submitted. If the Administration does 
     not approve or deny a request for approval of a workout plan 
     before expiration of the 20-business day period beginning on 
     the date on which the request is submitted, the request shall 
     be considered to be approved.
       ``(3) Conflict of interest.--A qualified State or local 
     development company that is liquidating or foreclosing a loan 
     under this section shall not take any action that would 
     result in an actual or apparent conflict of interest between 
     the qualified State or local development company, or any 
     employee thereof, and any third party lender, associate of a 
     third party lender, or any other person participating in any 
     manner in the liquidation or foreclosure of the loan.
       ``(d) Suspension or Revocation of Authority.--The authority 
     of a qualified State or local development company to 
     foreclose and liquidate loans under this section may be 
     suspended or revoked by the Administration, if the 
     Administration determines that the qualified State or local 
     development company--
       ``(1) does not meet the requirements of subsection (b); or
       ``(2) has failed to comply with any requirement of this 
     section or any applicable rule or regulation of the 
     Administration regarding the foreclosure and liquidation of 
     loans under this section, or has violated any other 
     applicable provision of law.
       ``(e) Report.--
       ``(1) In general.--The Administration shall annually submit 
     to the Committees on Small Business of the House of 
     Representatives and the Senate a report on the results of the 
     delegation of authority to qualified State and local 
     development companies to liquidate and foreclose loans under 
     this section.
       ``(2) Information included.--Each report under this 
     paragraph shall include information, with respect to each 
     qualified State or local development company authorized to 
     foreclose and liquidate loans under this section, and in the 
     aggregate, relating to--
       ``(A) the total dollar amount of each loan liquidated and 
     the total cost of each project financed with that loan;
       ``(B) the total dollar amount guaranteed by the 
     Administration;
       ``(C) total dollar losses;
       ``(D) total recoveries both as a percentage of the amount 
     guaranteed and the total cost of the project financed; and
       ``(E) a comparison between--
       ``(i) the information described in subparagraphs (A) 
     through (D) with respect to loans foreclosed and liquidated 
     by qualified State and local development companies under this 
     section during the 3-year period preceding the date on which 
     the report is submitted; and
       ``(ii) the same information with respect to loans 
     foreclosed and liquidated by the Administration during that 
     period.''.
       (b) Regulations.--
       (1) In general.--Not later than 120 days after the date of 
     enactment of this Act, the Administrator of the Small 
     Business Administration shall promulgate such regulations as 
     may be necessary to carry out section 510 of the Small 
     Business Investment Act of 1958, as added by subsection (a) 
     of this section.
       (2) Elimination of pilot program.--Effective on the date on 
     which final regulations are promulgated under paragraph (1), 
     section 204 of the Small Business Programs Improvement Act of 
     1996 (15 U.S.C. 695 note) is repealed.

     SEC. 6. SMALL BUSINESS FEDERAL CONTRACT SET-ASIDES.

       Section 15(h) of the Small Business Act (15 U.S.C. 644(h)) 
     is amended--
       (1) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively;
       (2) by inserting after paragraph (1) the following:
       ``(2)(A) Not later than 180 days after the last day of each 
     fiscal year, based on the reports submitted under paragraph 
     (1) for that fiscal year, the Administration shall submit to 
     the Committees on Small Business of the House of 
     Representatives and the Senate a report, which shall 
     include--
       ``(i) the information required by paragraph (3);
       ``(ii) a detailed description of the procurement data that 
     is included in the reports submitted under paragraph (1) for 
     that fiscal year, which shall identify--
       ``(I) any data on contracts from Federal agencies that is 
     excluded from those reports, accompanied by an explanation 
     for such exclusion; and
       ``(II) each Federal agency that has submitted a report that 
     deviates from the requirements of paragraphs (3) and (4), 
     accompanied by an explanation of the reasons for each such 
     deviation;
       ``(iii) a detailed description of any change in statistical 
     methodology used by any Federal agency that is reflected in 
     any statistic in the report submitted under paragraph (1) for 
     that fiscal year, including any inclusion or exclusion of the 
     value of any contracts or types of contracts in any statistic 
     represented by the Federal agency in the report submitted 
     under paragraph (1) as the total value of contracts or 
     subcontracts awarded by the Federal agency or as the total 
     value of contracts or subcontracts awarded to small business 
     concerns; and
       ``(iv) with respect to each change in statistical 
     methodology by a Federal agency described in clause (iii), a 
     separate calculation (which shall be provided to the 
     Administration by the Federal agency) of the total value of 
     contracts for that fiscal year, using the statistical 
     methodology used by the Federal agency during each of the 2 
     preceding fiscal years.
       ``(B)(i) Not less than 45 days before issuing any waiver or 
     permissive letter allowing any Federal agency or group of 
     agencies to make any change in statistical methodology 
     described in subparagraph (A)(iii), the Administration shall 
     submit to the Committees on Small Business of the House of 
     Representatives and the Senate, and to the Chief Counsel for 
     Advocacy of the Administration, a copy of that waiver or 
     letter.
       ``(ii) Not later than 30 days after the submission of a 
     waiver or letter under clause (i), the Chief Counsel for 
     Advocacy of the Administration shall submit to the Committees 
     on Small Business of the House of Representatives and the 
     Senate, and to each affected Federal agency, the written 
     comments of the Chief Counsel regarding the appropriateness 
     of the decision of the Administration to issue the waiver or 
     letter.''; and
       (3) in paragraph (4), as redesignated, by striking 
     ``paragraph (2)'' and inserting ``paragraphs (2) and (3)''.

     SEC. 7. ASSISTANCE FOR VETERANS.

       (a) Definitions.--Section 3 of the Small Business Act (15 
     U.S.C. 632) is amended by adding at the end the following:
       ``(q) Definitions Relating to Veterans.--In this Act:
       ``(1) Service-disabled veteran.--The term `service-disabled 
     veteran' means a veteran with a disability that is service-
     connected (as defined in section 101(16) of title 38, United 
     States Code).
       ``(2) Small business concern owned and controlled by 
     service-disabled veterans.--The term `small business concern 
     owned and controlled by service-disabled veterans' means a 
     small business concern--
       ``(A) not less than 51 percent of which is owned by 1 or 
     more service-disabled veterans or, in the case of any 
     publicly owned business, not less than 51 percent of the 
     stock of which is owned by 1 or more service-disabled 
     veterans; and
       ``(B) the management and daily business operations of which 
     are controlled by 1 or more service-disabled veterans.
       ``(3) Small business concern owned and controlled by 
     veterans.--The term `small business concern owned and 
     controlled by veterans' means a small business concern--
       ``(A) not less than 51 percent of which is owned by 1 or 
     more veterans or, in the case of any publicly owned business, 
     not less than 51 percent of the stock of which is owned by 1 
     or more veterans; and
       ``(B) the management and daily business operations of which 
     are controlled by 1 or more veterans.
       ``(4) Veteran.--The term `veteran' has the meaning given 
     the term in section 101(2) of title 38, United States 
     Code.''.
       (b) Office of Veterans Business Development.--
       (1) Associate Administrator for Veterans Business 
     Development.--Section 4(b)(1) of the Small Business Act (15 
     U.S.C. 633(b)(1)) is amended--
       (A) in the fifth sentence, by striking ``four'' and 
     inserting ``5''; and
       (B) by inserting after the fifth sentence the following: 
     ``One shall be the Associate Administrator for Veterans 
     Business Development, who shall administer the Office of 
     Veterans Business Development established under section 
     32.''.
       (2) Establishment of office.--The Small Business Act (15 
     U.S.C. 631 et seq.) is amended--
       (A) by redesignating section 32 as section 33; and
       (B) by inserting after section 31 the following:

     ``SEC. 32. VETERANS PROGRAMS.

       ``(a) Office of Veterans Business Development.--
       ``(1) Establishment.--There is established in the 
     Administration an Office of Veterans Business Development, 
     which shall be administered by the Associate Administrator 
     for Veterans Business Development (in this section referred 
     to as the `Associate Administrator') appointed under section 
     4(b)(1).
       ``(2) Associate administrator for veterans business 
     development.--The Associate Administrator shall be--
       ``(A) a career appointee in the competitive service or in 
     the Senior Executive Service; and
       ``(B) responsible for the formulation and execution of the 
     policies and programs of the Administration that provide 
     assistance to small business concerns owned and controlled by 
     veterans and small business concerns owned and controlled by 
     service-disabled veterans.
       ``(b) Advisory Committee on Veterans Business Affairs.--

[[Page S9567]]

       ``(1) In general.--There is established an advisory 
     committee to be known as the Advisory Committee on Veterans 
     Business Affairs (in this subsection referred to as the 
     `Committee'), which shall serve as an independent source of 
     advice and policy recommendations to the Administrator 
     (through the Associate Administrator), to Congress, and to 
     the President.
       ``(2) Membership.--
       ``(A) In general.--The Committee shall be composed of 15 
     members, each of whom shall be appointed by the 
     Administrator, of whom--
       ``(i) 8 shall be veterans who are owners of small business 
     concerns; and
       ``(ii) 7 shall be representatives of national veterans 
     service organizations.
       ``(B) Political affiliation.--Not more than 8 members of 
     the Committee shall be of the same political party as the 
     President.
       ``(C) Prohibition on federal employment.--No member of the 
     Committee may be an officer or employee of the Federal 
     Government. If any member of the Committee commences 
     employment as an officer or employee of the Federal 
     Government after the date on which the member is appointed to 
     the Committee, the member may continue to serve as a member 
     of the Committee for not more than 30 days after the date on 
     which the member commences employment as such an officer or 
     employee.
       ``(D) Service term.--Each member of the Committee shall 
     serve for a term of 3 years.
       ``(E) Vacancies.--Not later than 30 days after the date on 
     which a vacancy in the membership of the Committee occurs, 
     the vacancy be filled in the same manner as the original 
     appointment.
       ``(F) Chairperson.--The Committee shall select a 
     Chairperson from among the members of the Committee. Any 
     vacancy in the office of the Chairperson of the Committee 
     shall be filled by the Committee at the first meeting of the 
     Committee following the date on which the vacancy occurs.
       ``(G) Initial appointments.--Not later than 60 days after 
     the date of enactment of this Act, the Administrator shall 
     appoint the initial members of the Committee.
       ``(3) Duties.--The Committee shall--
       ``(A) review, coordinate, and monitor plans and programs 
     developed in the public and private sectors, that affect the 
     ability of veteran-owned business enterprises to obtain 
     capital and credit;
       ``(B) promote and assist in the development of business 
     information and surveys relating to veterans;
       ``(C) monitor and promote the plans, programs, and 
     operations of the departments and agencies of the Federal 
     Government that may contribute to the establishment and 
     growth of veteran's business enterprises;
       ``(D) develop and promote new initiatives, policies, 
     programs, and plans designed to foster veteran's business 
     enterprises; and
       ``(E) advise and assist in the design of a comprehensive 
     plan, which shall be updated annually, for joint public-
     private sector efforts to facilitate growth and development 
     of veteran's business enterprises.
       ``(4) Powers.--
       ``(A) Hearings.--The Committee may hold such hearings, sit 
     and act at such times and places, take such testimony, and 
     receive such evidence as the Committee considers advisable to 
     carry out the duties of the Committee under this subsection.
       ``(B) Information from federal agencies.--The Committee may 
     secure directly from any department or agency of the Federal 
     Government such information as the Committee considers to be 
     necessary to carry out the duties of the Committee under this 
     subsection. Upon request of the Chairperson of the Committee, 
     the head of such department or agency shall furnish such 
     information to the Committee.
       ``(C) Postal services.--The Committee may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       ``(D) Gifts.--The Committee may accept, use, and dispose of 
     gifts or donations of services or property.
       ``(5) Meetings.--
       ``(A) In general.--The Committee shall meet not less than 
     biannually at the call of the Chairperson, and otherwise upon 
     the request of the Administrator.
       ``(B) Location.--Each meeting of the full Committee shall 
     be held at the headquarters of the Administration located in 
     Washington, District of Columbia. The Administrator shall 
     provide suitable meeting facilities and such administrative 
     support as may be necessary for each meeting of the 
     Committee.
       ``(6) Personnel matters.--
       ``(A) No compensation.--Members of the Committee shall 
     serve without compensation for their services to the 
     Committee.
       ``(B) Travel expenses.--The members of the Committee shall 
     be reimbursed for travel and subsistence expenses in the same 
     manner and to the same extent as members of advisory boards 
     and committees under section 8(b)(13).
       ``(c) Score Program.--The Administrator shall enter into a 
     memorandum of understanding with the Service Core of Retired 
     Executives (in this subsection referred to as `SCORE') 
     participating in the program under section 8(b)(1)(B) for--
       ``(1) the appointment by SCORE in its national office of a 
     National Veterans Business Coordinator, whose exclusive 
     duties shall be those relating to veterans' business matters, 
     and who shall be responsible for the establishment and 
     administration of a program to provide entrepreneurial 
     counseling and training to veterans through the chapters of 
     SCORE throughout the United States;
       ``(2) the establishment and maintenance of a toll-free 
     telephone number and an Internet website to provide access 
     for veterans to information about the entrepreneurial 
     services available to veterans through SCORE; and
       ``(3) the collection of statistics concerning services 
     provided by SCORE to veterans and service-disabled veterans 
     and the inclusion of those statistics in each annual report 
     published by the Administrator under section 4(b)(2)(B).
       ``(d) Annual Report.--The Administrator shall annually 
     submit to the Committees on Small Business of the House of 
     Representative and the Senate a report on the needs of small 
     business concerns owned by controlled by veterans and small 
     business concerns owned and controlled by service-disabled 
     veterans, which shall include--
       ``(1) the availability of programs of the Administration 
     for and the degree of utilization of those programs by those 
     small business concerns during the preceding 12-month period;
       ``(2) the percentage and dollar value of Federal contracts 
     awarded to those small business concerns during the preceding 
     12-month period; and
       ``(3) proposed methods to improve delivery of all Federal 
     programs and services that could benefit those small business 
     concerns.''.
       (c) Office of Advocacy.--Section 202 of Public Law 94-305 
     (15 U.S.C. 634b) is amended--
       (1) in paragraph (10), by striking ``and'' at the end;
       (2) in paragraph (11), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(12) evaluate the efforts of each Federal agency and of 
     private industry to assist small business concerns owned and 
     controlled by veterans and small business concerns owned and 
     controlled by service-disabled veterans, and make appropriate 
     recommendations to the Administrator and to Congress in order 
     to promote the establishment and growth of those small 
     business concerns.''.
       (d) Microloan Program.--Section 7(m)(1)(A)(i) of the Small 
     Business Act (15 U.S.C. 636(m)(1)(A)(i)) is amended by 
     striking ``low-income, and'' and inserting ``low-income 
     individuals, veterans,''.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Rockefeller, Mr. DeWine, Mr. 
        Levin, Mr. Bond, Mr. Moynihan, Mr. Kerrey, Ms. Landrieu, and 
        Mr. Dorgan):
  S. 2408. A bill to promote the adoption of children with special 
needs; to the Committee on Finance.


                   THE ADOPTION EQUALITY ACT OF 1998

 Mr. CHAFEE. Mr. President, I am pleased today to introduce the 
Adoption Equality Act of 1998, legislation that will make it easier for 
children with special needs to find permanent, adoptive homes. I want 
to extend my sincere thanks to Senator Rockefeller for his commitment 
to this legislation and to foster and adoptive children generally. 
Senator Rockefeller joins me as an original cosponsor, as do Senators 
DeWine, Kerrey, Bond, Levin, Landrieu, Dorgan and Moynihan.
  Nationwide there are 500,000 children in foster care. In Rhode Island 
there are approximately 1,600 children in foster care. On average, 
these children will spend more than two years in out-of-home care 
before they are either returned home to their biological families or 
freed for adoption.
  The majority of the children who have been legally freed for 
adoption--95 percent--have special-needs, which in the world of child 
welfare means that they are children who are hard to place. They may be 
older children, they may be children in sibling groups that the state 
does not want to separate, they may have physical disabilities or 
mental or emotional problems, or they may belong to a minority group.
  The federal government provides an incentive to families wishing to 
open their homes to these children by offering some of them a monthly 
subsidy to help defray the cost of adopting these children. It is 
expensive to care for children, and even more expensive if the child 
has special needs. The monthly subsidy, which is less than the monthly 
payment for the child to be in foster care, is used to defray some of 
these additional costs.
  What makes no sense about the current system is that the federal 
government only makes these subsidies available to special-needs 
children who are being adopted whose biological families were poor. If 
the child is being adopted by a low-income family, but their biological 
family was not low-income, that child will not receive a federal 
adoption subsidy.

[[Page S9568]]

  This system makes no sense to me, and that is why we are introducing 
the Adoption Equality Act today. This measure would make all special-
needs children eligible for a modest federal adoption subsidy, 
regardless of the income of their biological parents. The income of the 
prospective adoptive parents would be taken into account when 
calculating the amount of the subsidy, as it is under current law.
  Mr. President, I believe this is a simply issue of fairness to these 
children and the families who adopt them. We should be doing everything 
we can to help these children find permanent homes. The Adoption 
Equality Act builds upon the critical reforms we made last year in the 
enactment of the Adoption and Safe Families Act. I urge my colleagues 
to join me in cosponsoring and passing this bill. Thank you Mr. 
President. I ask unanimous consent that the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2408

       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 ``Adoption Equality Act of 
     1998''.

     SEC. 2. PROMOTION OF ADOPTION OF CHILDREN WITH SPECIAL NEEDS.

       (a) In General.--Section 473(a) of the Social Security Act 
     (42 U.S.C. 673(a)) is amended by striking paragraph (2) and 
     inserting the following:
       ``(2)(A) For purposes of paragraph (1)(B)(ii), a child 
     meets the requirements of this paragraph if such child--
       ``(i) prior to termination of parental rights and the 
     initiation of adoption proceedings was in the care of a 
     public or licensed private child care agency or Indian tribal 
     organization either pursuant to a voluntary placement 
     agreement (provided the child was in care for not more than 
     180 days) or as a result of a judicial determination to the 
     effect that continuation in the home would be contrary to the 
     safety and welfare of such child, or was residing in a foster 
     family home or child care institution with the child's minor 
     parent (either pursuant to such a voluntary placement 
     agreement or as a result of such a judicial determination); 
     and
       ``(ii) has been determined by the State pursuant to 
     subsection (c) to be a child with special needs, which needs 
     shall be considered by the State, together with the 
     circumstances of the adopting parents, in determining the 
     amount of any payments to be made to the adopting parents.
       ``(B) Notwithstanding any other provision of law, and 
     except as provided in paragraph (7), a child who is not a 
     citizen or resident of the United States and who meets the 
     requirements of subparagraph (A) shall be treated as meeting 
     the requirements of this paragraph for purposes of paragraph 
     (1)(B)(ii).
       ``(C) A child who meets the requirements of subparagraph 
     (A), who was determined eligible for adoption assistance 
     payments under this part with respect to a prior adoption (or 
     who would have been determined eligible for such payments had 
     the Adoption and Safe Families Act of 1997 been in effect at 
     the time that such determination would have been made), and 
     who is available for adoption because the prior adoption has 
     been dissolved and the parental rights of the adoptive 
     parents have been terminated or because the child's adoptive 
     parents have died, shall be treated as meeting the 
     requirements of this paragraph for purposes of paragraph 
     (1)(B)(ii).''.
       (b) Exception.--Section 473(a) of the Social Security Act 
     (42 U.S.C. 673(a)) is amended by adding at the end the 
     following:
       ``(7)(A) Notwithstanding any other provision of this 
     subsection, no payment may be made to parents with respect to 
     any child that--
       ``(i) would be considered a child with special needs under 
     subsection (c);
       ``(ii) is not a citizen or resident of the United States; 
     and
       ``(iii) was adopted outside of the United States or was 
     brought into the United States for the purpose of being 
     adopted.
       ``(B) Subparagraph (A) shall not be construed as 
     prohibiting payments under this part for a child described in 
     subparagraph (A) that is placed in foster care subsequent to 
     the failure, as determined by the State, of the initial 
     adoption of such child by the parents described in such 
     subparagraph.''.
       (c) Requirement for Use of State Savings.--Section 473(a) 
     of the Social Security Act (42 U.S.C. 673(a)), as amended by 
     subsection (b), is amended by adding at the end the 
     following:
       ``(8) A State shall spend an amount equal to the amount of 
     savings (if any) in State expenditures under this part 
     resulting from the application of paragraph (2) on and after 
     the effective date of the amendment to such paragraph made by 
     section 2(a) of the Adoption Equality Act of 1998 to provide 
     to children or families any service (including post-adoption 
     services) that may be provided under this part or part B.''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on October 1, 1998.

     SEC. 3. REDUCTIONS IN PAYMENTS FOR ADMINISTRATIVE COSTS.

       (a) In General.--Section 1903 of the Social Security Act 
     (42 U.S.C. 1396b) is amended--
       (1) in subsection (a)(7), by striking ``section 
     1919(g)(3)(B)'' and inserting ``subsection (x) and section 
     1919(g)(3)(C)''; and
       (2) by adding at the end the following:
       ``(x) Adjustments to Payments for Administrative Costs.--
       ``(1) Reductions in payments for administrative costs based 
     on determinations of amounts attributable to benefiting 
     programs.--
       ``(A) In general.--Subject to paragraph (2), effective for 
     each of fiscal years 1999 through 2002, the Secretary shall 
     reduce, for each such fiscal year, the amount paid under 
     subsection (a)(7) to each State by an amount equal to the 
     amount determined for the medicaid program under section 
     16(k)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C. 
     2025(k)(2)(B)). The Secretary shall, to the extent 
     practicable, make the reductions required by this paragraph 
     on a quarterly basis.
       ``(B) Application.--If the Secretary does not make the 
     determinations required by section 16(k)(2)(B) of the Food 
     Stamp Act of 1977 (7 U.S.C. 2025(k)(2)(B)) by September 30, 
     1999--
       ``(i) during the fiscal year in which the determinations 
     are made, the Secretary shall reduce the amount paid under 
     subsection (a)(7) to each State by an amount equal to the sum 
     of the amounts determined for the medicaid program under 
     section 16(k)(2)(B) of the Food Stamp Act of 1977 for fiscal 
     year 1999 through the fiscal year during which the 
     determinations are made; and
       ``(ii) for each subsequent fiscal year through fiscal year 
     2002, subparagraph (A) applies.
       ``(C) Application of appeal of determinations.--The 
     provisions of section 16(k)(4) of the Food Stamp Act of 1977 
     (7 U.S.C. 20205(k)(4)) apply to reductions in payments under 
     this subsection in the same manner as they apply to 
     reductions under section 16(k) of that Act.
       ``(2) Bonus payment for program alignment.--
       ``(A) In general.--
       ``(i) Amount.--In addition to any other payment made under 
     this title to a State for a fiscal year, the Secretary shall 
     pay to each State that satisfies the requirements of clause 
     (ii) a portion of the amount by which--

       ``(I) any decrease in Federal outlays for amounts paid 
     under subsection (a)(7) with respect to the State for the 
     fiscal year as a result of the application of paragraph (1), 
     as determined by the Congressional Budget Office, exceeds
       ``(II) any increase in Federal outlays with respect to the 
     State for the fiscal year as a result of the application of 
     section 473(a), as amended by section 2 of the Adoption 
     Equality Act of 1998, as determined by the Congressional 
     Budget Office.

       ``(ii) Requirements.--A State satisfies the requirements of 
     this clause if the Secretary determines that--

       ``(I) the State's income and resource eligibility rules 
     under section 1931, taking into account the income standards 
     and methodologies applied by the State, are not more 
     restrictive than the income and resource eligibility rules 
     applied by the State for the temporary assistance to needy 
     families program funded under part A of title IV (other than 
     for a welfare-to-work program funded under section 
     403(a)(5)); and
       ``(II) the State assures the Secretary that families 
     applying for assistance under the temporary assistance to 
     needy families program funded under part A of title IV (other 
     than families applying solely for assistance under a welfare-
     to-work program funded under section 403(a)(5)) may apply for 
     medical assistance under the State plan under this title 
     without having to submit a separate application for such 
     medical assistance.

       ``(B) Construction.--Nothing in subparagraph (A) shall be 
     construed as--
       ``(i) affecting the application of section 1931;
       ``(ii) affecting any application requirements established 
     under this title or by regulation promulgated under the 
     authority of this title, including the requirements 
     established under section 1902(a)(8); or
       ``(iii) conditioning the right of an individual to apply 
     for medical assistance under the State plan under this title 
     upon an application for assistance under any State program 
     funded under part A of title IV.
       ``(3) Allocation of administrative costs.--
       ``(A) In general.--No funds or expenditures described in 
     subparagraph (B) may be used to pay for costs--
       ``(i) eligible for reimbursement under subsection (a)(7) 
     (or costs that would have been eligible for reimbursement but 
     for this subsection); and
       ``(ii) allocated for reimbursement to the medicaid program 
     under a plan submitted by a State to the Secretary to 
     allocate administrative costs for public assistance programs.
       ``(B) Funds and expenditures.--Subparagraph (A) applies 
     to--
       ``(i) funds made available to carry out part A of title IV 
     or title XX;
       ``(ii) expenditures made as qualified State expenditures 
     (as defined in section 409(a)(7)(B);
       ``(iii) any other Federal funds (except funds provided 
     under subsection (a)(7)); and
       ``(iv) any other State funds that are--

[[Page S9569]]

       ``(I) expended as a condition of receiving Federal funds; 
     or
       ``(II) used to match Federal funds under a Federal program 
     other than the medicaid program.''.

       (b) Copies of Report on Review of Methodology Used to Make 
     Certain Determinations.--Section 502(b)(2) of the 
     Agricultural Research, Extension, and Education Reform Act of 
     1998 (Public Law 105-185; 112 Stat. 523) is amended by 
     inserting ``, the Committee on Commerce of the House of 
     Representatives, the Committee on Finance of the Senate,'' 
     after ``Representatives''.

 Mr. ROCKEFELLER. Mr. President, I support the introduction of 
The Adoption Equality Act of 1998.
  I am proud to be a co-sponsor of The Adoption Equality Act of 1998, 
part of a continuing effort to improve the lives of abused and 
neglected children in my state of West Virginia and across the nation.
  I would like to begin by sharing my special thanks with my colleague 
and good friend, Senator Chafee, not only for his work on this 
important legislation, but for his ongoing commitment to bringing about 
meaningful change for America's most vulnerable children. I also want 
to express my sincere gratitude to the other cosponsors of this bill, 
Senators DeWine, Kerrey, Bond, Levin, Landrieu, Dorgan, and Moynihan. I 
am so pleased to see that the strong and unique bipartisan coalition 
forged during the adoption debate last fall is continuing the job yet 
to be done on behalf of abused and neglected children.
  Last fall, our bipartisan coalition introduced--and the Senate 
unanimously passed--The Adoption and Safe Families Act. That 
legislation, signed into law on November 19, 1997, fundamentally 
shifted the focus of the American foster system by insisting for the 
first time that health and safety should be the paramount consideration 
when a State makes any decision regarding the well-being of an abused 
and neglected child. That legislation is designed to move children out 
of foster care and into adoptive homes more quickly than ever before.
  I am also proud to report that West Virginia is launching its own 
special initiative to promote adoption. This June, state officials 
reported that there were 3003 children in the custody of West Virginia. 
870 of these children have adoption as the goal of their permanency 
plans, and 95% of these children have special needs. The State has 
committed to hiring additional specialists to provide adoption services 
and is seeking federal support to enhance these efforts. It is 
wonderful to know that West Virginia and other states are so 
enthusiastic about moving forward to promote adoptions and to help 
children find safe and stable homes.
  The Adoption and Safe Families Act took into account the unique 
circumstances of ``special needs'' children--those children who, for 
whatever reason, are difficult to place in adoptive homes. States now 
receive a special bonus for each special needs adoption. Most 
significantly, the Adoption and Safe Families Act took the first 
essential step in ensuring ongoing health coverage for all special 
needs children who are adopted into new families.
  While I am satisfied that The Adoption and Safe Families Act will 
strengthen the American foster care system, I made it clear that it was 
only the first step in many to make things significantly better for 
abused and neglected children.
  The Adoption Equality Act is an essential second step in this ongoing 
process. This important legislation will promote and increase adoptions 
by making all special needs children eligible for Federal adoption 
subsidies. This bill is designed to ``level the playing field'' by 
ensuring that all loving adoptive families have the support they need 
to address the fundamental needs of the children they raise.
  Federal adoption subsidies, already authorized under section IV-E of 
the Social Security Act, usually take the form of monthly payments 
provided to families who adopt special needs children. These payments 
provide essential income support to help families finance the daily 
costs of raising these children and to cover the expense of special 
services. Federal adoption subsidies play a vital role in the lives of 
thousands of special needs children. Many families that I have visited 
in West Virginia and across the country have told me that without this 
essential support, they would not have been able to afford to take in 
the children who have become such an important part of their family.
  This bill will fix the one remaining barrier that keeps many adoptive 
families from accessing precious Federal adoption subsidies. Under 
current law, a special needs child is only eligible for Federal 
adoption subsidies if his biological family was poor enough to qualify 
for welfare benefits under the now-defunct Aid to Families with 
Dependent Children Program (AFDC). If his family doesn't qualify under 
1994 AFDC standards, even the hardest to place child cannot receive 
federal adoption subsidies.
  In other words, a special needs child's eligibility for federal 
adoption subsidies is dependent on the income of the parents that 
abused or neglected him. This is simply wrong.
  The Adoption Equality Act will eliminate this tragic anomaly in 
Federal law by making all special needs children eligible for Federal 
adoption subsidies. This is a responsible way to make sure that willing 
adoptive families have the support that they need to take care of all 
the needs of their new child, whether those include food and clothing, 
therapy, tutoring, or a new addition to their home.
  Throughout my travels as the Chair of the National Commission on 
Children and my meetings with families in West Virginia, I have 
observed a recurring theme. I have come to understand that in many 
cases, a family wants to adopt a child more than anything. And yet, 
there is often a barrier that stands in its way. The lack of adequate 
financial resources is at the top of that list. This legislation help 
alleviate this unnecessary burden.
  In closing, I want to reiterate a point that I made during the debate 
over the Adoption and Safe Families Act. At the heart of the ongoing 
discussions about what is the best policy for abused and neglected 
children, there have been many complex questions raised about how 
Federal taxpayer dollars should be spent and who is worthy of receiving 
them. As we struggle with these difficult issues--which often pit 
social against fiscal responsibility--I keep returning to the same 
fundamental lesson I have learned from the families I have met: if we 
cannot build social policy that not only protects our children, but 
gives them the best possible chance to succeed in life, we have failed 
to do our job as a government and a society.
  The Adoption Equality Act is designed to make sure that all abused 
and neglected children, even the most vulnerable special needs kids, 
have this real chance for security and happiness.
                                 ______
                                 
      By Mr. DODD (for himself and Mr. Bennett):
  S. 2409. A bill to amend the Internal Revenue Code of 1986 to allow a 
tax credit for business-provided student education and training; to the 
Committee on Finance.


         Businesses Educating Students in Technology (BEST) Act

 Mr. DODD. Mr. President, today I introduce legislation, along 
with my distinguished colleague from Utah, Senator Bennett, to help 
alleviate a serious shortage of students graduating from our nation's 
colleges and universities with technology-based education and skills.
  Technology is reshaping our world at a rapid pace. Competition to 
meet the needs, wants, and expectations of consumers has accelerated 
the rate of technological progress to a level inconceivable even just a 
few decades ago. Today, technology is playing an increasingly important 
role in the lives of every American and is a key ingredient to 
sustaining America's economic growth. It is the wellspring from which 
new businesses, high-wage jobs, and a rising quality of life will flow 
in the 21st century.
  Today, we are fortunate that our economy is strong. We have created 
more than 16 million new jobs since 1993. We have the lowest 
unemployment in 28 years, the smallest welfare rolls in 27 years, and 
the lowest inflation in 32 years. If we want to build on this progress, 
we must encourage our people to develop and use emerging technologies.
  Technological progress is the single most important determining 
factor in sustaining growth in our economy. It is estimated that 
technological innovation has accounted for as much as half

[[Page S9570]]

the nation's long-term economic growth over the past 50 years and is 
expected to account for an even higher percentage in the next 50 years.
  And yet, there is mounting evidence that we are not doing enough to 
help our people make the most of technological change. Our businesses 
are practically desperate for workers with skills in computers and 
other technologically advanced systems. More than 350,000 information 
technology positions are currently unfilled throughout the United 
States. The number of students graduating from colleges with computer 
science degrees has declined dramatically. In my home state of 
Connecticut, public and private colleges combined produced only 299 
computer science graduates in 1997, a 50 percent decline from 1987. We 
are not alone. Nationwide, the number of graduates with bachelor's 
degrees in computer science dropped 43 percent between 1986 and 1994.
  The Department of Commerce estimates that 1.3 million new jobs will 
be created over the next decade for systems analysts, computer 
engineers and computer scientists. Yet, at a time when our nation is 
struggling to fill these positions, our colleges are graduating fewer 
skilled information technology students.
  At large and mid-sized companies there is one vacancy for every 10 
information technology jobs, and eight out of 10 companies expect to 
hire information technology workers in the year ahead. According to the 
U.S. Bureau of Labor Statistics, this trend will only continue through 
2006.
  This shortage of skilled and knowledgeable workers is perhaps the 
most significant threat to our continued economic expansion. Clearly, 
we must do more as a country to eliminate this shortage.
  We need to turn our attention to our work force and focus on it as a 
critical part of our economic development. We must put more emphasis on 
human capital, and we need to educate more students in the diverse 
areas of technology.
  In Connecticut, many businesses are taking initiatives to do so. They 
are establishing scholarships, donating lab equipment, planning 
curricula, and sending employees into schools to instruct and help 
prepare students for technology-based jobs.
  One Connecticut company, The Pfizer Corporation, recently announced 
that it will spend $19 million to build an animal vaccine research 
laboratory at The University of Connecticut. This partnership will not 
only lead to advancements in gene technology and animal health, but it 
will also promote joint research projects in which company scientists 
will work alongside professors and students.
  Another example in Connecticut is the support provided to the 
biotechnology program at Middlesex Community-Technical College by The 
Bristol Myers Squibb Pharmaceutical Research Institute and the CuraGen 
Corporation. These companies have established scholarships, donated lab 
equipment, and encouraged their research scientists to give lectures to 
the students.
  And yet, Mr. President, businesses and academic institutions 
shouldn't have to tackle alone the challenge of helping students obtain 
the learning and skills they need to succeed in the coming century. The 
federal government can and should work with our technology-based 
businesses and places of learning to encourage innovation and education 
that will create jobs and prosperity for our people.
  That is why I am pleased to introduce legislation today that will 
encourage businesses to work in and with educational institutions in 
order to improve technology-based learning--so that more of our 
students will be able to win the best jobs of the 21st century economy.
  This bill will give a tax credit to any business that goes into a 
university, college, or community-technical school and engages in 
technology-based educational activities which are directly related to 
the business of that company.
  Businesses could claim a tax credit for 40 percent of these 
educational expenses, up to a maximum of $100,000 for any one company.
  It is my hope, Mr. President, that this tax credit will provide the 
incentive for more of our nation's companies to play an active role in 
the education, training, and skill development of our nation's most 
valuable resource--its students.
  If businesses take advantage of this credit, not only will they have 
a larger pool of skilled workers to draw from, but our nation will have 
a better-educated population that possesses the knowledge to succeed in 
the information-based economy of the future.
  I urge my colleagues to join me in supporting this legislation. I ask 
unanimous consent that a copy of this legislation be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2409

       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 ``Businesses Educating 
     Students in Technology (BEST) Act''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Technological progress is the single most important 
     determining factor in sustaining growth in the Nation's 
     economy. It is estimated that technological innovation has 
     accounted for as much as half the Nation's long-term economic 
     growth over the past 50 years and will account for an even 
     higher percentage in the next 50 years.
       (2) The number of jobs requiring technological expertise is 
     growing rapidly. For example, it is estimated that 1,300,000 
     new computer engineers, programmers, and systems analysts 
     will be needed over the next decade in the United States 
     economy. Yet, our Nation's computer science programs are only 
     graduating 25,000 students with bachelor's degrees yearly.
       (3) There are more than 350,000 information technology 
     positions currently unfilled throughout the United States, 
     and the number of students graduating from colleges with 
     computer science degrees has declined dramatically.
       (4) In order to help alleviate the shortage of graduates 
     with technology-based education and skills, businesses in a 
     number of States have formed partnerships with colleges, 
     universities, community-technical schools, and other 
     institutions of higher learning to give lectures, donate 
     equipment, plan curricula, and perform other activities 
     designed to help students acquire the skills and knowledge 
     needed to fill jobs in technology-based industries.
       (5) Congress should encourage these partnerships by 
     providing a tax credit to businesses that enter into them. 
     Such a tax credit will help students obtain the knowledge and 
     skills they need to obtain jobs in technology-based 
     industries which are among the best paying jobs being created 
     in the economy. The credit will also assist businesses in 
     their efforts to develop a more highly-skilled, better 
     trained workforce that can fill the technology jobs such 
     businesses are creating.

     SEC. 3. ALLOWANCE OF CREDIT FOR BUSINESS-PROVIDED STUDENT 
                   EDUCATION AND TRAINING.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business related credits) is amended by adding at the end the 
     following:

     ``SEC. 45D. BUSINESS-PROVIDED STUDENT EDUCATION AND TRAINING.

       ``(a) Allowance of Credit.--For purposes of section 38, the 
     business-provided student education and training credit 
     determined under this section for the taxable year is an 
     amount equal to 40 percent of the qualified student education 
     and training expenditures of the taxpayer for such taxable 
     year.
       ``(b) Dollar Limitation.--The credit allowable under 
     subsection (a) for any taxable year shall not exceed 
     $100,000.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified student education and training 
     expenditure.--
       ``(A) In general.--The term `qualified student education 
     and training expenditure' means--
       ``(i) any amount paid or incurred by the taxpayer for the 
     qualified student education and training services provided by 
     any employee of the taxpayer, and
       ``(ii) the basis of the taxpayer in any tangible personal 
     property contributed by the taxpayer and used in connection 
     with the provision of such services.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified student education and training expenditure' 
     shall not include any amount to the extent such amount is 
     funded by any grant, contract, or otherwise by another person 
     (or any governmental entity).
       ``(2) Qualified student education and training services.--
       ``(A) In general.--The term `qualified student education 
     and training services' means technology-based education and 
     training of students in any eligible educational institution 
     in employment skills related to the trade or business of the 
     taxpayer.
       ``(B) Eligible educational institution.--The term `eligible 
     educational institution' has the meaning given such term by 
     section 529(e)(5).
       ``(d) Special Rules.--For purposes of this section--

[[Page S9571]]

       ``(1) Aggregation rules.--All persons which are treated as 
     a single employer under subsections (a) and (b) of section 52 
     shall be treated as a single taxpayer.
       ``(2) Pass-thru in the case of estates and trusts.--Under 
     regulations prescribed by the Secretary, rules similar to the 
     rules of subsection (d) of section 52 shall apply.
       ``(3) Allocation in the case of partnerships.--In the case 
     of partnerships, the credit shall be allocated among partners 
     under regulations prescribed by the Secretary.
       ``(f) No Double Benefit.--No deduction or credit shall be 
     allowed under any other provision of this chapter with 
     respect to any expenditure taken into account in computing 
     the amount of the credit determined under this section.''
       (b) Conforming Amendments.--
       (1) Section 38(b) of the Internal Revenue Code of 1986 is 
     amended--
       (A) by striking out ``plus'' at the end of paragraph (11),
       (B) by striking out the period at the end of paragraph 
     (12), and inserting a comma and ``plus'', and
       (C) by adding at the end the following:
       ``(13) the business-provided student education and training 
     credit determined under section 45D.''
       (2) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1 of such Code is amended by adding 
     at the end the following:

``Sec. 45D. Business-provided student education and training credit.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______
                                 
      By Mr. GRAHAM (for himself, Mr. Moynihan, and Mr. D'Amato):
  S. 2410. A bill to amend titles XIX and XXI of the Social Security 
Act to give States the options of providing medical assistance to 
certain legal immigrant children and to increase allotments to 
territories under the State Children's Health Insurance Program; to the 
Committee on Finance.


       Medicaid Children's Health Improvement Amendments of 1998

   Mr. GRAHAM. Mr. President, today, along with Senators 
Moynihan and D'Amato, I introduce the Medicaid Children's Health 
Improvement Amendments of 1998. This legislation, which was introduced 
in the House of Representatives last week, would attempt to correct a 
situation currently jeopardizing the health of many of the children 
living in our territories.
  Last year Congress passed what was the single largest investment in 
health care for children since the passage of Medicaid in 1965.'' As a 
result, the United States will invest an additional $24 billion in 
children's health care over the next five years. However, not all of 
our nation's poor children are celebrating this victory.
  In the negotiations over the budget reconciliation, the initial 
proposal providing 1.5 percent of the funding to our nation's 
territories, which represented a fair distribution, was reduced to a 
mere 0.25 percent. The children's health care program ultimately 
included in the Balanced Budget Act of 1997 provides Puerto Rico with 
approximately 0.22 percent of the overall national funding for the 
program and 0.03 percent for Guam, the U.S. Virgin Islands, American 
Samoa and the Northern Mariana Islands. For Puerto Rico alone this 
would mean less than $11 million per year for a jurisdiction with close 
to four million U.S. citizens.
  It is absolutely outrageous that the United States would continue to 
endorse a discriminatory policy that denies equal health care to the 
children of its territories. If this legislation was enacted most of 
Guam's 5,000 uninsured children would finally receive the coverage that 
they rightfully deserve. It would also approximately multiply the 
number of children covered in the U.S. Virgin Islands by six.
  In addition to providing additional funding for the children's health 
insurance program in our territories, this legislation includes a 
provision that would grant states the option to provide health care 
coverage to legal immigrant children who entered the United States on 
or after August 22, 1996. Welfare reform prohibits states from covering 
these immigrant children.
  As we know, children without health insurance do not get important 
care for preventable diseases. Many uninsured children are hospitalized 
for acute asthma attacks that could have been prevented, or suffer from 
permanent hearing loss from untreated ear infections. Without adequate 
health care, common illnesses can turn into life-long crippling 
diseases, whereas appropriate treatment and care can help children with 
diseases like diabetes live relatively normal lives. A lack of adequate 
medical care will also hinder the social and educational development of 
children, as children who are sick and left untreated are less able to 
learn.
  I hope that with the help of my colleagues in Congress we will be 
able to rectify the discrimination against the children of our 
territories and afford them the same treatment as the other children in 
the nation. They deserve no less. Programs created to protect our 
nation's children should represent the highest and most pure ideals of 
our society.
  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. 2410

       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 ``Medical and Children's 
     Health Improvement Amendments of 1998''.

     SEC. 2. STATE OPTION TO COVER LEGAL IMMIGRANT CHILDREN UNDER 
                   MEDICAID AND THE CHILDREN'S HEALTH INSURANCE 
                   PROGRAM.

       (a) Medicaid.--Section 1902(a)(10(A)(ii) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended--
       (1) by strike ``or'' at the end of subclause (XIII);
       (2) by adding ``or'' at the end of subclause (XIV); and
       (3) by adding after subclause (XIV) the following new 
     subclause:
       ``(XV) who are described in section 1905(a)(i) and who 
     would be eligible for medical assistance (or for a greater 
     amount of medical assistance) under the State plan under this 
     title but for the provisions of section 403 or section 421 of 
     Public Law 104-193, but the State may not exercise the option 
     of providing medical assistance under this subclause with 
     respect to a subcategory of individuals described in this 
     subclause;''.
       (b) Children's Health Insurance Program.--Section 2110(b) 
     of the Social Security Act (42 U.S.C. 1397jj(b)) is amended--
       (1) in paragraph (1)(A), by inserting before the semicolon 
     ``(including, at the option of the State, a child described 
     in paragraph (3)(B))''; and
       (2) in paragraph (3)--
       (A) by striking ``Special Rule.--'' and inserting ``Special 
     Rules.--
       ``(A) Health insurance coverage.--'';
       (B) by intending the remainder of the text accordingly; and
       (C) by adding at the end the following new subparagraph:
       ``(B) Eligibility for legal immigrant children.--For 
     purposes of paragraph (1)(A), a child is described in this 
     subparagraph if--
       ``(i) the child would be determined eligible for child 
     health assistance under this title but for provisions of 
     sections 403 and section 421 of Public Law 104-193; and
       ``(ii) the State exercises the option to provide medical 
     assistance to the category of individuals described in 
     section 1902(a)(10)(A)(ii)(XV).''.

     SEC. 3. INCREASED ALLOTMENTS UNDER CHILDREN'S HEALTH 
                   INSURANCE PROGRAM FOR TERRITORIES.

       (a) In General.--Section 2104(c) of the Social Security Act 
     (42 U.S.C. 1397dd(c)) is amended by adding at the end the 
     following new paragraph:
       ``(4) Additional allotment.--
       ``(A) In general.--In addition to the allotment under 
     paragraph (1), the Secretary shall allot each commonwealth 
     and territory described in paragraph (3) the applicable 
     percentage specified in paragraph (2) of the amount 
     appropriated under subparagraph (B).
       ``(B) Appropriation.--For purposes of providing allotments 
     pursuant to subparagraph (A), there is appropriated, out of 
     any money in the Treasury not otherwise appropriated--
       ``(i) $34,200,000 for each of fiscal years 1999 through 
     2001;
       ``(ii) $25,200,000 for each of fiscal years 2002 through 
     2004;
       ``(iii) $32,400,000 for each of fiscal years 2005 and 2006; 
     and
       ``(iv) $40,000,000 for fiscal year 2007.''.
       (b) Conforming Amendment.--Section 2104(b)(1) of such Act 
     (42 U.S.C. 1397dd(b)(1)) is amended by inserting 
     ``(determined without regard to paragraph (4) thereof)'' 
     after ``subsection (c)''.
                                 ______
                                 
      By Mr. BURNS (for himself and Mr. Hollings):
  S. 2412. A bill to create employment opportunities and to promote 
economic growth establishing a public-private partnership between the 
United States travel and tourism industry and every level of government 
to work to make the United States the premiere travel and tourism 
destination in the world, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.


                           the visit usa act

 Mr. BURNS. Mr. President, today I introduce legislation to 
strengthen

[[Page S9572]]

America's tourism and travel related industry--the Value In Supporting 
International Tourism Act of 1998 (Visit USA Act). This legislation is 
a follow-on to the National Tourism Act, Public Law 104-288, enacted 
two years ago.
  In the National Tourism Act, Congress created the U.S. National 
Tourism Organization (USNTO) in order to re-establish the United States 
as the premiere destination for tourists throughout the world. While 
international travel and tourism remains the United States largest 
service export, its third largest industry, and a major producer of 
jobs and tax revenue for federal, state and local governments, our 
share of the international tourism market is threatened unless action 
is taken now.
  Public Law 104-288 authorized a public-private partnership, including 
a broad cross-section of the U.S. travel and tourism industry, charged 
with working with government to (1) promote and increase the U.S. share 
of the international tourism market, (2) develop and implement a 
national travel and tourism strategy, (3) advise the President and 
Congress on how to implement this strategy and on other critical 
matters affecting the travel and tourism industry, (4) conduct travel 
and tourism market research, and (5) promote the interests of the U.S. 
travel and tourism industry at international trade shows. The USNTO was 
authorized to conduct activities necessary to advance these national 
interests.
  The USNTO was also charged with developing a long-term financing plan 
for the organization. On January 14, 1998, the Board of the USNTO 
fulfilled its statutory mandate by submitting a report to Congress 
outlining, among other things, a long-term marketing plan to promote 
the United States as the premiere international travel destination. The 
Board is firmly committed to work with Congress to secure appropriate 
funding for an international marketing effort.
  Private sector and state support for the promotion of the United 
States as an international tourist destination exceeds $1 billion 
annually. This support, together with the commitment of the USNTO Board 
of Directors to use only non-governmental sources of funding for all 
USNTO general and administrative costs, provides a substantial 
commitment from the ``private'' side of the partnership and a 
foundation for a successful public-private partnership.
  The Visit USA Act establishes an international visitor assistance 
task force. This interagency body will support the creation of a toll-
free telephone line to assist foreign tourists visiting the United 
States. It will also work to improve signage at airports and other key 
travel facilities, and facilitate distribution of multilingual travel 
and tourism materials. Each of these activities is intended to be 
conducted at minimal or zero cost to the federal government.
  This legislation also requires the Secretary of Commerce to report to 
Congress on how federal lands are used and on how they may have 
influenced the tourism market, on any changes in the international 
tourist commerce, on the impact tourism has on the U.S. economy, and on 
our balance of trade.
  The facts concerning the increasingly competitive international 
tourism justify this legislative approach. While competition for the 
international tourism dollar has become one among national governments, 
the U.S. government is the only major industrialized nation that does 
not promote its tourism market abroad. Other governments spend millions 
on tourism marketing. In 1995, for example, Australia spent $88 
million, the UK and Spain each spent $79 million, and France spent $73 
million to promote tourism.
  Tourism is a significant element of the U.S. economy. The industry 
that depends on spending by foreign tourists is diverse, and includes 
restaurants, hotels, travel agencies, shops, tour bus services, rental 
car agencies, theaters, airlines, and theme parks. In particular, small 
businesses depend on revenues from international tourism.
  I encourage all Senators to join in supporting this important effort 
to strengthen our tourism-related economy. The dividends to be realized 
as a result of this modest investment will benefit every state and 
every congressional district.
 Mr. HOLLINGS. Mr. President, today Senator Burns and I are 
introducing a bill, the Visit USA Act, which will further the 
international standing of the U.S. travel and tourism industry. As co-
chairman of the United States Senate Tourism Caucus along with Senator 
Burns, I know that the tourism industry is a winner for the United 
States. The Visit USA Act would improve U.S. international marketing 
and services to travelers in the United States by: creating a toll-free 
number for international travelers to call for assistance in their 
native language; improving signs in transportation facilities; and 
authorizing appropriations for the marketing program of the U.S. 
National Tourism Organization (NTO).
  Tourism is more than cameras and Bermuda shorts. Travel and tourism 
is a big business. Last year it produced a record $26 billion trade 
surplus, and the industry continues to grow. In my state of South 
Carolina, tourism generates over $6.5 billion and is responsible for 
113,000 jobs. Over 46 million international visitors came to the United 
States and spent over $90 billion in 1997. These visitors generated 
more than $5 billion in Federal taxes alone. To compete with other 
nations for a larger share of international tourism over the next 
decade, we must support an international tourism marketing effort. The 
Visit USA Act would do just that by providing for international 
promotion of the United States while making travel to this country 
simpler and more understandable for our foreign guests.
                                 ______
                                 
      By Mr. McCAIN (for himself and Mr. Kyl):
  S. 2413. A bill to provide for the development of a management plan 
for the Woodland Lake Park tract in Apache-Sitgreaves National Forest 
in the State of Arizona reflecting the current use of the tract as a 
public park; to the Committee on Energy and Natural Resources.


             apache-sitgreaves national forest legislation

 Mr. McCAIN. Mr. President, I am proud to introduce 
legislation, along with my colleague, Senator Jon Kyl, that will 
preserve a valuable tract of park land for future public enjoyment in 
the Apache-Sitgreaves National Forest in Pinetop-Lakeside, Arizona. 
This proposal authorizes the U.S. Forest Service to develop a 
management plan to maintain the current recreational use of 583 acres 
known as Woodland Lake Park.
  Mr. President, I want to laud the cooperation forged between the U.S. 
Forest Service and the town of Pinetop-Lakeside. The initiative 
requires the acting supervisor of the Apache-Sitgreaves National 
Forest, under the direction of the Secretary of Agriculture, to work 
with the town to ensure Woodland Lake Park remains open and accessible 
to the public. The parties will have 180 days to draft a management 
plan for the park.
  Although the town of Pinetop-Lakeside seeks to one day acquire 
Woodland Lake Park, the management of this land by the Forest Service 
is crucial to preserving this resource in the interim. Federal 
oversight will ensure that the estimated 50,000 residents every year 
who take pleasure in the lake and along the beautiful wooded trails 
will continue to do so for years to come.
  I look forward to continued constructive collaboration between the 
Forest Service and the town of Pinetop-Lakeside. I ask unanimous 
consent that the legislation be entered into the Record.
  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. 2413

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. MANAGEMENT OF WOODLAND LAKE PARK TRACT, APACHE-
                   SITGREAVES NATIONAL FOREST, ARIZONA, FOR 
                   RECREATIONAL PURPOSES.

       (a) Management Plan Required.--Not later than 180 days 
     after the date of the enactment of this Act, the Secretary of 
     Agriculture, acting through the supervisor of Apache-
     Sitgreaves National Forest in the State of Arizona, shall 
     prepare a management plan for the Woodland Lake Park tract 
     that is designed to ensure that the tract is managed by the 
     Forest Service for recreational purposes consistent with the 
     use of the tract as a public park by the town of Pinetop-
     Lakeside, Arizona. The forest supervisor shall prepare the 
     management plan in consultation with the town of Pinetop-
     Lakeside.

[[Page S9573]]

       (b) Prohibition on Conveyance.--The Secretary of 
     Agriculture may not convey any right, title, or interest of 
     the United States in and to the Woodland Lake Park tract 
     unless the conveyance of the tract--
       (1) is made to the town of Pinetop-Lakeside; or
       (2) is specifically authorized by a law enacted after the 
     date of the enactment of this Act.
       (c) Definition.--The terms ``Woodland Lake Park tract'' and 
     ``tract'' mean the parcel of land in Apache-Sitgreaves 
     National Forest in the State of Arizona that consists of 
     approximately 583 acres and is known as the Woodland Lake 
     Park tract.

 Mr. KYL. Mr. President, the U.S. Forest Service owns a large 
parcel of land within the boundaries of the town of Pinetop-Lakeside 
which has historically been used as a park, not only by the town 
residents, but also by the thousands of tourists who vacation in this 
bucolic area of Eastern Arizona each year. The town wants to maintain 
this land as a park. However, the Forest Service has refused to renew 
the town's special use permit for the largest section of this park, 
possibly paving the way for the land to be sold to private investors. 
The bill that Senator McCain and I are introducing, and Representative 
Hayworth is introducing in the House, prevents the Forest Service from 
selling the land to any entity other than the town, and requires the 
Forest Service, in conjunction with the town, to develop a management 
plan ``designed to ensure that the tract is managed by the Forest 
Service for recreational purposes.''
  Mr. President, the town of Pinetop-Lakeside has been trying to find a 
way to acquire this parcel from the Forest Service for over 10 years, 
to no avail. This bill will satisfy the town's goal of preserving this 
land as a park, while being fair to the American taxpayer. However, the 
legislation will not solve the problems of communities that seek to 
acquire Forest Service lands to preserve open space, or to fulfill 
other essential governmental functions. I intend to continue to seek a 
long-term solution to those problems.
                                 ______
                                 
      By Mr. BURNS.
  S. 2414. A bill to establish terms and conditions under which the 
Secretary of the Interior shall convey leaseholds in certain Properties 
around Canyon Ferry Reservoir, Montana; to the Committee on Energy and 
Natural Resources.


                   canyon ferry reservoir legislation

   Mr. BURNS. Mr. President, today I introduce a companion bill 
to one recently introduced in the House by Congressman Rick Hill, of 
Montana. This is a bill that will authorize the Bureau of Reclamation 
to convey certain properties around Canyon Ferry Reservoir in Montana 
to leaseholders. This bill has the support of a number of 
organizations, groups and communities in the area of Canyon Ferry and 
in Montana in general.

  The purpose of my bill today, is to get the ball rolling on this 
legislation. I am aware that currently there is legislation in the 
Environment and Public Works Committee of a similar nature. But it 
appears stalled, and does not address the concerns of a number of the 
groups and communities in the area around Canyon Ferry. The bills 
basically address the conveyance of this land in the same way, but it 
is the disposal of the funds received that changes these two bills. So 
I come here today to propose this legislation to accelerate the process 
and get Congress involved and moving on this very issue.
  I have made a pledge to the people in this area of Montana that I 
will do all I can to assist them in getting something done on this bill 
this session before we leave for the year. These people have attempted 
to work with the Bureau of Reclamation to clear up a number of issues 
which have come up over the past five or more years. The result of 
their work has been continued stalling by the Bureau of Reclamation in 
working with the citizens. As a result then we have been forced to work 
on legislation that will remove the stumbling blocks and rectify and 
clarify the situation.
  Senator Baucus, Congressman Hill and I have worked for the past year 
developing legislation to address the concerns of these people. We have 
come ninety percent of the way and now it is necessary for us to move 
that extra ten percent and get something done to the benefit of the 
general public and the citizens of Montana.
  Canyon Ferry is a man-made reservoir on the Missouri River in Central 
Montana right outside of our capital Helena. It is a wonderful area for 
outdoor recreation and draws people from all over the state and in many 
cases all across the nation. There are a number of people who have 
built cabin sites on the lake both for the purpose of weekend living 
but also there are a number of year around residences.
  This legislation will work to continue to provide opportunities for 
all people to enjoy the splendor of Canyon Ferry. In addition there 
will be ample opportunity for the surrounding communities to develop 
new ways for the public to enjoy the lake and the various recreational 
facilities around the lake. The citizens of Montana expect and deserve 
an opportunity to enjoy this wonderful area. The funds derived from the 
conveyance of these properties will allow for the continued 
construction of facilities that will allow more Montanans a chance to 
enjoy Canyon Ferry.
  I give my pledge to the people of Montana that I will continue to 
work this issue with the members of the Montana delegation, Senator 
Baucus and Congressman Hill to clear this bill and get something done. 
I know the majority of people in the area want to see something done, 
and this is the vehicle to do that. I look forward to working with the 
Chairman of the Energy and Natural Resources Committee to get this done 
and out as soon as possible.
                                 ______
                                 
      By Mr. SANTORUM:
  S. 2415. A bill to amend the Internal Revenue Code of 1986 to reduce 
the tax on beer to its pre-1991 level; to the Committee on Finance.


                         REPEALING THE BEER TAX

  Mr. SANTORUM. Mr. President, I today introduce legislation pertaining 
to the federal excise tax on beer.
  The federal excise tax on beer was doubled as part of the 1991 
Omnibus Budget Reconciliation Act. Today, it remain as the only 
``luxury tax'' enacted as part of OBRA '91. While taxes on furs, 
jewelry, and yachts were repealed through subsequent legislation, the 
federal beer tax remains in place with continued and far reaching 
negative effects.
  The excise tax on beer is among the more regressive federal taxes. 
Since the 100 percent tax was levied in 1991, it has cost the industry 
as many as 50,000 jobs. Beer in particular continues to suffer under a 
disproportionate burden of taxation. Forty-three percent of the cost of 
beer is comprised of both state and federal taxes. This legislation 
seeks to correct this inequity and will restore the level of federal 
excise tax to the pre-1991 tax rate.
  Mr. President, this bill represents companion legislation to H.R. 
158, introduced by Representative Phil English. The House bill 
currently carries 95 cosponsors. I commend this Senate legislation to 
my colleagues for their consideration.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Graham, Mr. Lieberman, Mr. 
        Specter, and Mr. Baucus):
  S. 2416. A bill to amend the Public Health Service Act, the Employee 
Retirement Income Security Act of 1974, and the Internal Revenue Code 
of 1986 to protect consumers in managed care plans and other health 
coverage; to the Committee on Finance.


             Promoting Responsible Managed Care Act of 1998

 Mr. CHAFEE. Mr. President, today, I am pleased to join with 
Senators Bob Graham, Joe Lieberman, Arlen Specter and Max Baucus in 
introducing a bipartisan managed care reform bill--the Promoting 
Responsible Managed Care Act of 1998.
  In November 1997, a number of us formed the bipartisan, bicameral 
Congressional Task Force on Health Care Quality to better understand 
the mounting public frustration over managed care. The task force heard 
from numerous consumer and provider groups, and received presentations 
from the sponsors of all of the major managed care reform bills now 
pending in Congress. The bill we are introducing today, the Promoting 
Responsible Managed Care Act of 1998, has benefited greatly from the 
efforts of the task force, and we wish to thank all participants, on 
both sides of the aisle, for their attentiveness and diligence.
  This legislation was developed in accordance with the following 
principles:
  Bipartisan legislation which can be enacted this year.

[[Page S9574]]

  Provides all Americans in privately insured health plans with basic 
federal protections.
  Meaningful enforcement which holds managed care plans accountable, 
and provides individuals harmed by such plans with just compensation.
  Report cards to enable consumers to make informed health care choices 
based on plan performance.
  As my colleagues well know, next month the Senate is headed for a 
polarized debate on managed care reform, which may well result in 
gridlock. Each party has put forward a plan which contains features 
unacceptable to the other side--such as exposing insurers to lawsuits 
in state court in the case of the Daschle plan, and the broad expansion 
of medical savings accounts (MSAs) in the case of the Nickles plan.
  It is for this very reason that we have put forward a bipartisan 
plan--one which blends the best features of both the Democratic and 
Republican plans, but omits the so-called poison pills. When it comes 
to restoring public confidence in managed care and ensuring a basic 
floor of federal patient protections, gridlock simply will not be an 
acceptable outcome.
  We believe Congress has the responsibility to step up to the plate in 
the remaining weeks of this session and to enact legislation which the 
President can sign into law to address the outstanding concerns 
Americans have about their managed care. Indeed, despite continuing 
opposition from the insurance industry to the enactment of any reform 
legislation, many of the managed care industry's own leaders have 
privately expressed concern about the future of managed care if 
legislative action is not taken soon to strengthen public confidence.
  In our estimation, given the hardened positions of both parties, the 
only way Congress can succeed in that endeavor this year is for a 
bipartisan centrist plan to emerge once it becomes clear that neither 
the Daschle or Nickles plan has the requisite support to cross the 
finish line.
  What we would like to do now is to take a few minutes to lay out the 
key components of our proposal. First, I will talk about the scope of 
the bill--a topic which you will be hearing a lot about in the coming 
weeks. Then, Senator Graham will outline our patient protection 
provisions, and Senator Lieberman will discuss the importance of arming 
consumers with meaningful Report Card information, and a credible 
enforcement regime to ensure that managed care plans play by the rules.
  In 1996, Congress passed significant reforms of the private health 
insurance marketplace with respect to the issue of portability. The 
Health Insurance Portability and Accountability Act, also known as the 
Kassebaum-Kennedy bill, established a federal floor of portability 
protections for all 161 million privately insured Americans.
  We see no reason for narrowing the scope of the patient protections 
in this next and far more consequential area of reform. Thus, like the 
Daschle plan and the House-passed GOP bill, the Promoting Responsible 
Managed Care Act would apply to all privately insured Americans.
  This approach preserves state prerogatives to enact more stringent 
standards, while assuring a minimum floor of federal protections for 
all Americans in private health plans--whether those plans are 
regulated at the state or federal level. In contrast, the Senate 
Republican plan proposes to provide a more limited range of patient 
protections to a much narrower band of the American population--
primarily those 48 million enrollees in self-funded ERISA plans.
  While it is true that individuals in these plans have fewer 
protections than those in state-regulated plans, that alone is 
insufficient reason for denying these basic quality improvements and 
safeguards to all 161 million Americans in privately insured managed 
care plans. Such a bifurcation would, in our judgment, create many 
unnecessary and inequitable circumstances for consumers, and exacerbate 
the already unlevel playing field which exists in the health insurance 
marketplace.
  Mr. President, I ask unanimous consent that the bill, a summary of 
the bill, and excerpts of what organizations are saying about the 
Promoting Responsible Managed Care Act be printed in the Record.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                S. 2416

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Promoting 
     Responsible Managed Care Act of 1998''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Preemption; State flexibility; construction.
Sec. 4. Regulations.

              TITLE I--PROMOTING RESPONSIBLE MANAGED CARE

                   Subtitle A--Grievance and Appeals

Sec. 101. Definitions and general provisions relating to grievance and 
              appeals.
Sec. 102. Utilization review activities.
Sec. 103. Establishment of process for grievances.
Sec. 104. Coverage determinations.
Sec. 105. Internal appeals (reconsiderations).
Sec. 106. External appeals (reviews).

                    Subtitle B--Consumer Information

Sec. 111. Health plan information.
Sec. 112. Health care quality information.
Sec. 113. Confidentiality and accuracy of enrollee records.
Sec. 114. Quality assurance.

                Subtitle C--Patient Protection Standards

Sec. 121. Emergency services.
Sec. 122. Enrollee choice of health professionals and providers.
Sec. 123. Access to approved services.
Sec. 124. Nondiscrimination in delivery of services.
Sec. 125. Prohibition of interference with certain medical 
              communications.
Sec. 126. Provider incentive plans.
Sec. 127. Provider participation.
Sec. 128. Required coverage for appropriate hospital stay for 
              mastectomies and lymph node dissections for the treatment 
              of breast cancer; required coverage for reconstructive 
              surgery following mastectomies.

               Subtitle D--Enhanced Enforcement Authority

Sec. 141. Investigations and reporting authority, injunctive relief 
              authority, and increased civil money penalty authority 
              for Secretary of Health and Human Services for violations 
              of patient protection standards.
Sec. 142. Authority for Secretary of Labor to impose civil penalties 
              for violations of patient protection standards.

TITLE II--PATIENT PROTECTION STANDARDS UNDER THE PUBLIC HEALTH SERVICE 
                                  ACT

Sec. 201. Application to group health plans and group health insurance 
              coverage.
Sec. 202. Application to individual health insurance coverage.

 TITLE III--PATIENT PROTECTION STANDARDS UNDER THE EMPLOYEE RETIREMENT 
                      INCOME SECURITY ACT OF 1974

Sec. 301. Application of patient protection standards to group health 
              plans and group health insurance coverage under the 
              Employee Retirement Income Security Act of 1974.
Sec. 302. Enforcement for economic loss caused by coverage 
              determinations.

TITLE IV--PATIENT PROTECTION STANDARDS UNDER THE INTERNAL REVENUE CODE 
                                OF 1986

Sec. 401. Amendments to the Internal Revenue Code of 1986.

        TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 501. Effective dates.
Sec. 502. Coordination in implementation.

     SEC. 2. DEFINITIONS.

       (a) Incorporation of General Definitions.--The provisions 
     of section 2971 of the Public Health Service Act shall apply 
     for purposes of this section, section 3, and title I in the 
     same manner as they apply for purposes of title XXVII of such 
     Act.
       (b) Secretary.--Except as otherwise provided, for purposes 
     of this section and title I, the term ``Secretary'' means the 
     Secretary of Health and Human Services, in consultation with 
     the Secretary of Labor and the Secretary of the Treasury, and 
     the term ``appropriate Secretary'' means the Secretary of 
     Health and Human Services in relation to carrying out title I 
     under sections 2706 and 2751 of the Public Health Service 
     Act, the Secretary of Labor in relation to carrying out title 
     I under section 713 of the Employee Retirement Income 
     Security Act of 1974, and the Secretary of the Treasury in 
     relation to carrying out title I under chapter 100 and 
     section 4980D of the Internal Revenue Code of 1986.
       (c) Additional Definitions.--For purposes of this section 
     and title I:
       (1) Applicable authority.--The term ``applicable 
     authority'' means--

[[Page S9575]]

       (A) in the case of a group health plan, the Secretary of 
     Health and Human Services and the Secretary of Labor; and
       (B) in the case of a health insurance issuer with respect 
     to a specific provision of title I, the applicable State 
     authority (as defined in section 2791(d) of the Public Health 
     Service Act), or the Secretary of Health and Human Services, 
     if such Secretary is enforcing such specific provision under 
     section 2722(a)(2) or 2761(a)(2) of the Public Health Service 
     Act.
       (2) Clinical peer.--The term ``clinical peer'' means, with 
     respect to a review or appeal, a physician (allopathic or 
     osteopathic) or other health care professional who holds a 
     non-restricted license in a State and who is appropriately 
     credentialed, licensed, certified, or accredited in the same 
     or similar specialty as manages (or typically manages) the 
     medical condition, procedure, or treatment under review or 
     appeal and includes a pediatric specialist where appropriate; 
     except that only a physician may be a clinical peer with 
     respect to the review or appeal of treatment rendered by a 
     physician.
       (3) Health care provider.--The term ``health care 
     provider'' includes a physician or other health care 
     professional, as well as an institutional provider of health 
     care services.
       (4) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a health care provider that provides health 
     care items and services to a participant, beneficiary, or 
     enrollee under a group health plan or health insurance 
     coverage, a health care provider that is not a participating 
     health care provider with respect to such items and services.
       (5) Participating.--The term ``participating'' mean, with 
     respect to a health care provider that provides health care 
     items and services to a participant, beneficiary, or enrollee 
     under a group health plan or health insurance coverage 
     offered by a health insurance issuer, a health care provider 
     that furnishes such items and services under a contract or 
     other arrangement with the plan or issuer.

     SEC. 3. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

       (a) Continued Applicability of State Law With Respect to 
     Health Insurance Issuers.--
       (1) In general.--Subject to paragraphs (2) and (3), title I 
     shall not be construed to supersede any provision of State 
     law which establishes, implements, or continues in effect any 
     standard or requirement solely relating to health insurance 
     issuers in connection with group health insurance coverage 
     except to the extent that such standard or requirement 
     prevents the application of a requirement of such title.
       (2) Continued preemption with respect to group health 
     plans.--Nothing in title I shall be construed to affect or 
     modify the provisions of section 514 of the Employee 
     Retirement Income Security Act of 1974 with respect to group 
     health plans.
       (3) Construction with respect to time periods.--Subject to 
     paragraph (2), nothing in title I shall be construed to 
     prohibit a State from establishing, implementing, or 
     continuing in effect any requirement or standard that uses a 
     shorter period of time, than that provided under such title, 
     for any internal or external appeals process to be used by 
     health insurance issuers.
       (b) Rules of Construction.--Nothing in title I (other than 
     section 128) shall be construed as requiring a group health 
     plan or health insurance coverage to provide specific 
     benefits under the terms of such plan or coverage.
       (c) Definitions.--For purposes of this section:
       (1) State law.--The term ``State law'' includes all laws, 
     decisions, rules, regulations, or other State action having 
     the effect of law, of any State. A law of the United States 
     applicable only to the District of Columbia shall be treated 
     as a State law rather than a law of the United States.
       (2) Inclusion of political subdivisions of a state.--The 
     term ``State'' also includes any political subdivisions of a 
     State or any agency or instrumentality thereof.
       (d) Treatment of Religious Nonmedical Providers.--
       (1) In general.--Nothing in this Act (or the amendments 
     made thereby) shall be construed to--
       (A) restrict or limit the right of group health plans, and 
     of health insurance issuers offering health insurance 
     coverage in connection with group health plans, to include as 
     providers religious nonmedical providers;
       (B) require such plans or issuers to--
       (i) utilize medically based eligibility standards or 
     criteria in deciding provider status of religious nonmedical 
     providers;
       (ii) use medical professionals or criteria to decide 
     patient access to religious nonmedical providers;
       (iii) utilize medical professionals or criteria in making 
     decisions in internal or external appeals from decisions 
     denying or limiting coverage for care by religious nonmedical 
     providers; or
       (iv) compel a participant or beneficiary to undergo a 
     medical examination or test as a condition of receiving 
     health insurance coverage for treatment by a religious 
     nonmedical provider; or
       (C) require such plans or issuers to exclude religious 
     nonmedical providers because they do not provide medical or 
     other data otherwise required, if such data is inconsistent 
     with the religious nonmedical treatment or nursing care 
     provided by the provider.
       (2) Religious nonmedical provider.--For purposes of this 
     subsection, the term ``religious nonmedical provider'' means 
     a provider who provides no medical care but who provides only 
     religious nonmedical treatment or religious nonmedical 
     nursing care.

     SEC. 4. REGULATIONS.

       The Secretaries of Health and Human Services, Labor, and 
     the Treasury shall issue such regulations as may be necessary 
     or appropriate to carry out this Act. Such regulations shall 
     be issued consistent with section 104 of Health Insurance 
     Portability and Accountability Act of 1996. Such Secretaries 
     may promulgate any interim final rules as the Secretaries 
     determine are appropriate to carry out this Act.

              TITLE I--PROMOTING RESPONSIBLE MANAGED CARE

                   Subtitle A--Grievance and Appeals

     SEC. 101. DEFINITIONS AND GENERAL PROVISIONS RELATING TO 
                   GRIEVANCE AND APPEALS.

       (a) Definitions.--In this subtitle:
       (1) Authorized representative.--The term ``authorized 
     representative'' means, with respect to a covered individual, 
     an individual who--
       (A) is--
       (i) any treating health care professional of the covered 
     individual (acting within the scope of the professional's 
     license or certification under applicable State law), or
       (ii) any legal representative of the covered individual 
     (or, in the case of a deceased individual, the legal 
     representative of the estate of the individual),

     regardless of whether such professional or representative is 
     affiliated with the plan or issuer involved; and
       (B) is acting on behalf of the covered individual with the 
     individual's consent.
       (2) Coverage determination.--The term ``coverage 
     determination'' means a determination by a group health plan 
     or a health insurance issuer with respect to any of the 
     following:
       (A) A decision whether to pay for emergency services (as 
     defined in section 121(a)(2)(B)).
       (B) A decision whether to pay for health care services not 
     described in subparagraph (A) that are furnished by a 
     provider that is a participating health care provider with 
     the plan or issuer.
       (C) A decision whether to provide benefits or payment for 
     such benefits.
       (D) A decision whether to discontinue a benefit.
       (E) A decision resulting from the application of 
     utilization review (as defined in section 102(a)(1)(C)).

     Such term includes, pursuant to section 104(d)(2), the 
     failure to provide timely notice under section 104(d).
       (3) Covered individual.--The term ``covered individual'' 
     means an individual who is a participant or beneficiary in a 
     group health plan or an enrollee in health insurance coverage 
     offered by a health insurance issuer.
       (4) Grievance.--The term ``grievance'' means any complaint 
     or dispute other than one involving a coverage determination.
       (5) Reconsideration.--The term ``reconsideration'' is 
     defined in section 105(a)(7).
       (6) Utilization review.--The term ``utilization review'' is 
     defined in section 102(a)(1)(C).
       (b) Summary of Rights of Individuals.--In accordance with 
     the provisions of this subtitle, a covered individual has the 
     following rights with respect to a group health plan and with 
     respect to a health insurance issuer in connection with the 
     provision of health insurance coverage:
       (1) The right to have grievances between the covered 
     individual and the plan or issuer heard and resolved as 
     provided in section 103.
       (2) The right to a timely coverage determination as 
     provided in section 104.
       (3) The right to request expedited treatment of a coverage 
     determination as provided in section 104(c).
       (4) If dissatisfied with any part of a coverage 
     determination, the following appeal rights:
       (A) The right to a timely reconsideration of an adverse 
     coverage determination as provided in section 105.
       (B) The right to request expedited treatment of such a 
     reconsideration as provided in section 105(c).
       (C) If, as a result of a reconsideration of the adverse 
     coverage determination, the plan or issuer affirms, in whole 
     or in part, its adverse coverage determination, the right to 
     request and receive a review of, and decision on, such 
     determination by a qualified external appeal entity as 
     provided in section 106.
       (c) Requirements.--
       (1) Procedures.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage shall, with respect to the provision of 
     benefits under such plan or coverage--
       (A) establish and maintain--
       (i) grievance procedures in accordance with section 103;
       (ii) procedures for coverage determinations consistent with 
     section 104; and
       (iii) appeals procedures for adverse coverage 
     determinations in accordance with sections 105 and 106; and
       (B) provide for utilization review consistent with section 
     102.
       (2) Delegation.--A group health plan or a health insurance 
     issuer in connection with the provision of health insurance 
     coverage

[[Page S9576]]

     that delegates any of its responsibilities under this 
     subtitle to another entity or individual through which the 
     plan or issuer provides health care services shall ultimately 
     be responsible for ensuring that such entity or individual 
     satisfies the relevant requirements of this subtitle.

     SEC. 102. UTILIZATION REVIEW ACTIVITIES.

       (a) In General.--
       (1) Compliance with requirements.--
       (A) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall conduct utilization review 
     activities in connection with the provision of benefits under 
     such plan or coverage only in accordance with a utilization 
     review program that meets the requirements of this section.
       (B) Use of outside agents.--Nothing in this section shall 
     be construed as preventing a group health plan or health 
     insurance issuer from arranging through a contract or 
     otherwise for persons or entities to conduct utilization 
     review activities on behalf of the plan or issuer, so long as 
     such activities are conducted in accordance with a 
     utilization review program that meets the requirements of 
     this section.
       (C) Utilization review defined.--For purposes of this 
     section, the terms ``utilization review'' and ``utilization 
     review activities'' mean procedures used to monitor or 
     evaluate the clinical necessity, appropriateness, efficacy, 
     or efficiency of health care services, procedures or 
     settings, and includes prospective review, concurrent review, 
     second opinions, case management, discharge planning, or 
     retrospective review.
       (2) Written policies and criteria.--
       (A) Written policies.--A utilization review program shall 
     be conducted consistent with written policies and procedures 
     that govern all aspects of the program.
       (B) Use of written criteria.--
       (i) In general.--Such a program shall utilize written 
     clinical review criteria developed pursuant to the program 
     with the input of appropriate physicians. Such criteria shall 
     include written clinical review criteria described in section 
     114(b)(4)(B).
       (ii) Continuing use of standards in retrospective review.--
     If a health care service has been specifically pre-authorized 
     or approved for a covered individual under such a program, 
     the program shall not, pursuant to retrospective review, 
     revise or modify the specific standards, criteria, or 
     procedures used for the utilization review for procedures, 
     treatment, and services delivered to the individual during 
     the same course of treatment.
       (3) Conduct of program activities.--
       (A) Administration by health care professionals.--
       (i) In general.--A utilization review program shall be 
     administered by qualified health care professionals who shall 
     oversee review decisions.
       (ii) Health care professional defined.--In this subsection, 
     the term ``health care professional'' means a physician or 
     other health care practitioner licensed, accredited, or 
     certified to perform specified health services consistent 
     with State law.
       (B) Use of qualified, independent personnel.--
       (i) In general.--A utilization review program shall provide 
     for the conduct of utilization review activities only through 
     personnel who are qualified and, to the extent required, who 
     have received appropriate training in the conduct of such 
     activities under the program.
       (ii) Peer review of sample of adverse clinical 
     determinations.--Such a program shall provide that clinical 
     peers (as defined in section 2(c)(2)) shall evaluate the 
     clinical appropriateness of at least a sample of adverse 
     clinical determinations.
       (iii) Prohibition of contingent compensation 
     arrangements.--Such a program shall not, with respect to 
     utilization review activities, permit or provide compensation 
     or anything of value to its employees, agents, or contractors 
     in a manner that--

       (I) provides direct or indirect incentives for such persons 
     to make inappropriate review decisions; or
       (II) is based, directly or indirectly, on the quantity or 
     type of adverse determinations rendered.

       (iv) Prohibition of conflicts.--Such a program shall not 
     permit a health care professional who provides health care 
     services to a covered individual to perform utilization 
     review activities in connection with the health care services 
     being provided to the individual. A group health plan, or a 
     health insurance issuer in connection with the provision of 
     health insurance coverage, may not retaliate against a 
     covered individual or health care provider based on such 
     individual's or provider's use of, or participation in, the 
     utilization review program under this section.
       (C) Accessibility of review.--Such a program shall provide 
     that appropriate personnel performing utilization review 
     activities under the program are reasonably accessible by 
     toll-free telephone during normal business hours to discuss 
     patient care and allow response to telephone requests, and 
     that appropriate provision is made to receive and respond 
     promptly to calls received during other hours.
       (D) Limits on frequency.--Such a program shall not provide 
     for the performance of utilization review activities with 
     respect to a class of services furnished to a covered 
     individual more frequently than is reasonably required to 
     assess whether the services under review are medically 
     necessary or appropriate.
       (E) Limitation on information requests.--Such a program 
     shall provide that information shall be required to be 
     provided by health care providers only to the extent it is 
     necessary to perform the utilization review activity 
     involved.
       (F) Review of preliminary utilization review decision.--
     Such a program shall provide that a covered individual who is 
     dissatisfied with a preliminary utilization review decision 
     has the opportunity to discuss the decision with, and have 
     such decision reviewed by, the medical director of the plan 
     or issuer involved (or the director's designee) who has the 
     authority to reverse the decision.
       (b) Standards Relating to Medical Decision Making.--
       (1) In general.--In providing for a coverage determination 
     in the process of carrying out utilization review, a group 
     health plan, and a health insurance issuer in connection with 
     the provision of health insurance coverage, may not 
     arbitrarily interfere with or alter the decision of the 
     treating physician if the services are medically necessary or 
     appropriate for treatment or diagnosis to the extent that 
     such treatment or diagnosis is otherwise a covered benefit.
       (2) Construction.--Paragraph (1) shall not be construed as 
     prohibiting a plan or issuer from limiting the delivery of 
     services to one or more health care providers within a 
     network of such providers.
       (3) No change in coverage.--Paragraph (1) shall not be 
     construed as requiring coverage of particular services the 
     coverage of which is otherwise not covered under the terms of 
     the plan or coverage or from conducting utilization review 
     activities consistent with this section.
       (4) Medical necessity or appropriateness defined.--In 
     paragraph (1), the term ``medically necessary or 
     appropriate'' means, with respect to a service or benefit, a 
     service or benefit which is consistent with generally 
     accepted principles of professional medical practice.

     SEC. 103. ESTABLISHMENT OF PROCESS FOR GRIEVANCES.

       (a) Establishment.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall provide meaningful procedures for 
     timely hearing and resolution of grievances brought by 
     covered individuals regarding any aspect of the plan's or 
     issuer's services, including a decision not to expedite a 
     coverage determination or reconsideration under section 
     104(c)(4)(B)(ii)(II) or 105(c)(4)(B)(ii)(II).
       (b) Guidelines.--The grievance procedures required under 
     subsection (a) shall meet all guidelines established by the 
     appropriate Secretary.
       (c)  Distinguished from Coverage Determinations and 
     Appeals.--The grievance procedures required under subsection 
     (a) shall be separate and distinct from procedures regarding 
     coverage determinations under section 104 and 
     reconsiderations under section 105 and external reviews by a 
     qualified external appeal entity under section 106 (which 
     address appeals of coverage determinations).

     SEC. 104. COVERAGE DETERMINATIONS.

       (a) Requirement.--
       (1) Responsibilities.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall establish and maintain procedures 
     for making timely coverage determinations (in accordance with 
     the requirements of this section) regarding the benefits a 
     covered individual is entitled to receive from the plan or 
     issuer, including the amount of any copayments, deductibles, 
     or other cost sharing applicable to such benefits. Under this 
     section, the plan or issuer shall have a standard procedure 
     for making such determinations, and procedures for expediting 
     such determinations in cases in which application of the 
     standard deadlines could seriously jeopardize the covered 
     individual's life, health, or ability to regain or maintain 
     maximum function or (in the case of a child under the age of 
     6) development.
       (2) Parties who may request coverage determinations.--Any 
     of the following may request a coverage determination 
     relating to a covered individual and are parties to such 
     determination:
       (A) The covered individual and an authorized representative 
     of the individual.
       (B) A health care provider who has furnished an item or 
     service to the individual and formally agrees to waive any 
     right to payment directly from the individual for that item 
     or service.
       (C) Any other provider or entity (other than the group 
     health plan or health insurance issuer) determined by the 
     appropriate Secretary to have an appealable interest in the 
     determination.
       (3) Effect of coverage determination.--A coverage 
     determination is binding on all parties unless it is 
     reconsidered pursuant to section 105 or reviewed pursuant to 
     section 106.
       (b) Determination by Deadline.--
       (1) In general.--In the case of a request for a coverage 
     determination, the group health plan or health insurance 
     issuer shall provide notice pursuant to subsection (d) to the 
     person submitting the request of its determination as 
     expeditiously as the health condition of the covered 
     individual involved requires, but in no case later than 
     deadline established under paragraph (2) or, if a request for 
     expedited treatment of a coverage

[[Page S9577]]

     determination is granted under subsection (c), the deadline 
     established under paragraph (3).
       (2) Standard deadline.--
       (A) In general.--The deadline established under this 
     paragraph is, subject to subparagraph (B), 14 calendar days 
     after the date the plan or issuer receives the request for 
     the coverage determination.
       (B) Extension.--The plan or issuer may extend the deadline 
     under subparagraph (A) by up to 14 calendar days if--
       (i) the covered individual (or an authorized representative 
     of the individual) requests the extension; or
       (ii) the plan or issuer justifies to the applicable 
     authority a need for additional information to make the 
     coverage determination and how the delay is in the interest 
     of the covered individual.
       (3) Expedited treatment deadline.--
       (A) In general.--The deadline established under this 
     paragraph is, subject to subparagraphs (B) and (C), 72 hours 
     after the date the plan or issuer receives the request for 
     the expedited treatment under subsection (c).
       (B) Extension.--The plan or issuer may extend the deadline 
     under subparagraph (A) by up to 5 calendar days if--
       (i) the covered individual (or an authorized representative 
     of the individual) requests the extension; or
       (ii) the plan or issuer justifies to the applicable 
     authority a need for additional information to make the 
     coverage determination and how the delay is in the interest 
     of the covered individual.
       (C)  How information from nonparticipating providers 
     affects deadlines for expedited coverage determinations.--In 
     the case of a group health plan or health insurance issuer 
     that requires medical information from nonparticipating 
     providers in order to make a coverage determination, the 
     deadline specified under subparagraph (A) shall begin when 
     the plan or issuer receives such information. 
     Nonparticipating providers shall make reasonable and diligent 
     efforts to expeditiously gather and forward all necessary 
     information to the plan or issuer in order to receive timely 
     payment.
       (c) Expedited Treatment.--
       (1) Request for expedited treatment.--A covered individual 
     (or an authorized representative of the individual) may 
     request that the plan or issuer expedite a coverage 
     determination involving the issues described in subparagraphs 
     (C), (D), or (E) of section 101(a)(2).
       (2) Who may request.--To request expedited treatment of a 
     coverage determination, a covered individual (or authorized 
     representative of the individual) shall submit an oral or 
     written request directly to the plan or issuer (or, if 
     applicable, to the entity that the plan or issuer has 
     designated as responsible for making the determination).
       (3) Provider support.--
       (A) In general.--A physician or other health care provider 
     may provide oral or written support for a request for 
     expedited treatment under this subsection.
       (B)  Prohibition of punitive action.--A group health plan 
     and a health insurance issuer in connection with the 
     provision of health insurance coverage shall not take or 
     threaten to take any punitive action against a physician or 
     other health care provider acting on behalf or in support of 
     a covered individual seeking expedited treatment under this 
     subsection.
       (4) Processing of requests.--A group health plan and a 
     health insurance issuer in connection with the provision of 
     health insurance coverage shall establish and maintain the 
     following procedures for processing requests for expedited 
     treatment of coverage determinations:
       (A) An efficient and convenient means for the submission of 
     oral and written requests for expedited treatment. The plan 
     or issuer shall document all oral requests in writing and 
     maintain the documentation in the case file of the covered 
     individual involved.
       (B) A means for deciding promptly whether to expedite a 
     determination, based on the following requirements:
       (i) For a request made or supported by a physician, the 
     plan or issuer shall expedite the coverage determination if 
     the physician indicates that applying the standard deadline 
     under subsection (b)(2) for making the determination could 
     seriously jeopardize the covered individual's life, health, 
     or ability to regain or maintain maximum function or (in the 
     case of a child under the age of 6) development.
       (ii) For another request, the plan or issuer shall expedite 
     the coverage determination if the plan or issuer determines 
     that applying such standard deadline for making the 
     determination could seriously jeopardize the covered 
     individual's life, health, or ability to regain or maintain 
     maximum function or (in the case of a child under the age of 
     6) development.
       (5) Actions following denial of request for expedited 
     treatment.--If a group health plan or a health insurance 
     issuer in connection with the provision of health insurance 
     coverage denies a request for expedited treatment of a 
     coverage determination under this subsection, the plan or 
     issuer shall--
       (A) make the coverage determination within the standard 
     deadline otherwise applicable; and
       (B) provide the individual submitting the request with--
       (i) prompt oral notice of the denial of the request, and
       (ii) within 2 business days a written notice that--

       (I) explains that the plan or issuer will process the 
     coverage determination request within the standard deadlines;
       (II) informs the requester of the right to file a grievance 
     if the requester disagrees with the plan's or issuer's 
     decision not to expedite the determination; and
       (III) provides instructions about the grievance process and 
     its timeframes.

       (6) Action on accepted request for expedited treatment.--If 
     a group health plan or health insurance issuer grants a 
     request for expedited treatment of a coverage determination, 
     the plan or issuer shall make the determination and provide 
     the notice under subsection (d) within the deadlines 
     specified under subsection (b)(3).
       (d) Notice of Coverage Determinations.--
       (1) Requirement.--
       (A) In general.--A group health plan or health insurance 
     issuer that makes a coverage determination that--
       (i) is completely favorable to the covered individual shall 
     provide the party submitting the request for the coverage 
     determination with notice of such determination; or
       (ii) is adverse, in whole or in part, to the covered 
     individual shall provide such party with written notice of 
     the determination, including the information described in 
     subparagraph (B).
       (B)  Content of written notice.--A written notice under 
     subparagraph (A)(ii) shall--
       (i) provide the specific reasons for the determination 
     (including, in the case of a determination relating to 
     utilization review, the clinical rationale for the 
     determination) in clear and understandable language;
       (ii) include notice of the availability of the clinical 
     review criteria relied upon in making the coverage 
     determination;
       (iii) describe the reconsideration and review processes 
     established to carry out sections 105 and 106, including the 
     right to, and conditions for, obtaining expedited 
     consideration of requests for reconsideration or review;and
       (iv) comply with any other requirements specified by the 
     appropriate Secretary.
       (2) Failure to provide timely notice.--Any failure of a 
     group health plan or health insurance issuer to provide a 
     covered individual with timely notice of a coverage 
     determination as specified in this section shall constitute 
     an adverse coverage determination and a timely request for a 
     reconsideration with respect to such determination shall be 
     deemed to have been made pursuant to the section 105(a)(2).
       (3) Provision of oral notice with written confirmation in 
     case of expedited treatment.--If a group health plan or 
     health insurance issuer grants a request for expedited 
     treatment under subsection (c), the plan or issuer may first 
     provide notice of the coverage determination orally within 
     the deadlines established under subsection (b)(3) and then 
     shall mail written confirmation of the determination within 2 
     business days of the date of oral notification.

     SEC. 105. INTERNAL APPEALS (RECONSIDERATIONS).

       (a) Requirement.--
       (1) Responsibilities.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall establish and maintain procedures 
     for making timely reconsiderations of coverage determinations 
     in accordance with this section. Under this section, the plan 
     or issuer shall have a standard procedure for making such 
     determinations, and procedures for expediting such 
     determinations in cases in which application of the standard 
     deadlines could seriously jeopardize the covered individual's 
     life, health, or ability to regain or maintain maximum 
     function or (in the case of a child under the age of 6) 
     development.
       (2) Parties who may request reconsideration.--Any party to 
     a coverage determination may request a reconsideration of the 
     determination under this section. Such party shall submit an 
     oral or written request directly with the group health plan 
     or health insurance issuer that made the determination. The 
     party who files a request for reconsideration may withdraw it 
     by filing a written request for withdrawal with the group 
     health plan or health insurance issuer involved.
       (3) Deadline for filing request.--
       (A) In general.--Except as provided in subparagraph (B), a 
     party to a coverage determination shall submit the request 
     for a reconsideration within 60 calendar days from the date 
     of the written notice of the coverage determination.
       (B) Extending time for filing request.--Such a party may 
     submit a written request to the plan or issuer to extend the 
     deadline specified in subparagraph (A). If such a party 
     demonstrates in the request for the extension good cause for 
     such extension, the plan or issuer may extend the deadline.
       (4) Parties to the reconsideration.--
       (A) In general.--The parties to the reconsideration are the 
     parties to the coverage determination, as described in 
     section 104(a)(2), and any other provider or entity (other 
     than the plan or issuer) whose rights with respect to the 
     coverage determination may be affected by the reconsideration 
     (as determined by the entity that conducts the 
     reconsideration).
       (B) Opportunity to submit evidence.--A group health plan 
     and a health insurance issuer shall provide the parties to 
     the reconsideration with a reasonable opportunity to

[[Page S9578]]

     present evidence and allegations of fact or law, related to 
     the issue in dispute, in person as well as in writing. The 
     plan or issuer shall inform the parties of the conditions for 
     submitting the evidence, especially any time limitations.
       (5) Effect of reconsideration.--A decision of a plan or 
     issuer after reconsideration is binding on all parties unless 
     it is reviewed pursuant to section 106.
       (6) Limitation on conducting reconsideration.--In 
     conducting the reconsideration under this subsection, the 
     following rules shall apply:
       (A) The person or persons conducting the reconsideration 
     shall not have been involved in making the underlying 
     coverage determination that is the basis for such 
     reconsideration.
       (B) If the issuer involved in the reconsideration is the 
     plan's or issuer's denial of coverage based on a lack of 
     medical necessity, a clinical peer (as defined in section 
     2(c)(2)) shall make the reconsidered determination.
       (7) Reconsideration defined.--In this subtitle, the term 
     ``reconsideration'' means a review under this section of a 
     coverage determination that is adverse to the covered 
     individual involved, including a review of the evidence and 
     findings upon which it was based and any other evidence the 
     parties submit or the group health plan or health insurance 
     issuer obtains.
       (b) Determination by Deadline.--
       (1) In general.--In the case of a request for a 
     reconsideration, the group health plan or health insurance 
     issuer shall provide notice pursuant to subsection (d) to the 
     person submitting the request of its determination as 
     expeditiously as the health condition of the covered 
     individual involved requires, but in no case later than the 
     deadline established under paragraph (2) or, if a request for 
     expedited treatment of a reconsideration is granted under 
     subsection (c), the deadline established under paragraph (3).
       (2) Standard deadline.--
       (A) In general.--The deadline established under this 
     paragraph is, subject to subparagraph (B)--
       (i) in the case of a reconsideration regarding the coverage 
     of benefits, 30 calendar days after the date the plan or 
     issuer receives the request for the reconsideration, or
       (ii) in other cases, 60 days after such date.
       (B) Extension.--The plan or issuer may extend the deadline 
     under subparagraph (A) by up to 14 calendar days if--
       (i) the covered individual (or an authorized representative 
     of the individual) requests the extension; or
       (ii) the plan or issuer justifies to the applicable 
     authority a need for additional information to make the 
     reconsideration and how the delay is in the interest of the 
     covered individual.
       (3) Expedited treatment deadline.--
       (A) In general.--The deadline established under this 
     paragraph is, subject to subparagraphs (B) and (C), 72 hours 
     after the date the plan or issuer receives the request for 
     the expedited treatment under subsection (d).
       (B) Extension.--The plan or issuer may extend the deadline 
     under subparagraph (A) by up to 5 calendar days if--
       (i) the covered individual (or an authorized representative 
     of the individual) requests the extension; or
       (ii) the plan or issuer justifies to the applicable 
     authority a need for additional information to make the 
     reconsideration and how the delay is in the interest of the 
     covered individual.
       (C)  How information from nonparticipating providers 
     affects deadlines for expedited reconsiderations.--In the 
     case of a group health plan or health insurance issuer that 
     requires medical information from nonparticipating providers 
     in order to make a reconsideration, the deadline specified 
     under subparagraph (A) shall begin when the plan or issuer 
     receives such information. Nonparticipating providers shall 
     make reasonable and diligent efforts to expeditiously gather 
     and forward all necessary information to the plan or issuer 
     in order to receive timely payment.
       (c) Expedited Treatment.--
       (1) Request for expedited treatment.--A covered individual 
     (or an authorized representative of the individual) may 
     request that the plan or issuer expedite a reconsideration 
     involving the issues described in subparagraphs (C), (D), or 
     (E) of section 101(a)(2).
       (2) Who may request.--To request expedited treatment of a 
     reconsideration, a covered individual (or an authorized 
     representative of the individual) shall submit an oral or 
     written request directly to the plan or issuer (or, if 
     applicable, to the entity that the plan or issuer has 
     designated as responsible for making the decision relating to 
     the reconsideration).
       (3) Provider support.--
       (A) In general.--A physician or other health care provider 
     may provide oral or written support for a request for 
     expedited treatment under this subsection.
       (B)  Prohibition of punitive action.--A group health plan 
     and a health insurance issuer in connection with the 
     provision of health insurance coverage shall not take or 
     threaten to take any punitive action against a physician or 
     other health care provider acting on behalf or in support of 
     a covered individual seeking expedited treatment under this 
     subsection.
       (4) Processing of requests.--A group health plan and a 
     health insurance issuer in connection with the provision of 
     health insurance coverage shall establish and maintain the 
     following procedures for processing requests for expedited 
     treatment of reconsiderations:
       (A) An efficient and convenient means for the submission of 
     oral and written requests for expedited treatment. The plan 
     or issuer shall document all oral requests in writing and 
     maintain the documentation in the case file of the covered 
     individual involved.
       (B) A means for deciding promptly whether to expedite a 
     reconsideration, based on the following requirements:
       (i) For a request made or supported by a physician, the 
     plan or issuer shall expedite the reconsideration if the 
     physician indicates that applying the standard deadline under 
     subsection (b)(2) for making the reconsideration 
     determination could seriously jeopardize the covered 
     individual's life, health, or ability to regain or maintain 
     maximum function or (in the case of a child under the age of 
     6) development.
       (ii) For another request, the plan or issuer shall expedite 
     the reconsideration if the plan or issuer determines that 
     applying such standard deadline for making the 
     reconsideration determination could seriously jeopardize the 
     covered individual's life, health, or ability to regain or 
     maintain maximum function or (in the case of a child under 
     the age of 6) development.
       (5) Actions following denial of request for expedited 
     treatment.--If a group health plan or a health insurance 
     issuer in connection with the provision of health insurance 
     coverage denies a request for expedited treatment of a 
     reconsideration under this subsection, the plan or issuer 
     shall--
       (A) make the reconsideration determination within the 
     standard deadline otherwise applicable; and
       (B) provide the individual submitting the request with--
       (i) prompt oral notice of the denial of the request, and
       (ii) within 2 business days a written notice that--

       (I) explains that the plan or issuer will process the 
     reconsideration request within the standard deadlines;
       (II) informs the requester of the right to file a grievance 
     if the requester disagrees with the plan's or issuer's 
     decision not to expedite the reconsideration; and
       (III) provides instructions about the grievance process and 
     its timeframes.

       (6) Action on accepted request for expedited treatment.--If 
     a group health plan or health insurance issuer grants a 
     request for expedited treatment of a reconsideration, the 
     plan or issuer shall make the reconsideration determination 
     and provide the notice under subsection (d) within the 
     deadlines specified under subsection (b)(3).
       (d) Notice of Decision in Reconsiderations.--
       (1) Requirement.--
       (A) In general.--A group health plan or health insurance 
     issuer that makes a decision in the reconsideration that--
       (i) is completely favorable to the covered individual shall 
     provide the party submitting the request for the 
     reconsideration with notice of such decision; or
       (ii) is adverse, in whole or in part, to the covered 
     individual shall--

       (I) provide such party with written notice of the decision, 
     including the information described in subparagraph (B), and
       (II) prepare the case file (including such notice) for the 
     covered individual involved, to be available for submission 
     (if requested) under section 106(a).

       (B)  Content of written notice.--The written notice under 
     subparagraph (A)(ii)(I) shall--
       (i) provide the specific reasons for the decision in the 
     reconsideration (including, in the case of a decision 
     relating to utilization review, the clinical rationale for 
     the decision) in clear and understandable language;
       (ii) include notice of the availability of the clinical 
     review criteria relied upon in making the decision;
       (iii) describe the review processes established to carry 
     out sections 106, including the right to, and conditions for, 
     obtaining expedited consideration of requests for review 
     under such section; and
       (iv) comply with any other requirements specified by the 
     appropriate Secretary.
       (2) Failure to provide timely notice.--Any failure of a 
     group health plan or health insurance issuer to provide a 
     covered individual with timely notice of a decision in a 
     reconsideration as specified in this section shall constitute 
     an affirmation of the adverse coverage determination and the 
     plan or issuer shall submit the case file to the qualified 
     external appeal entity under section 106 within 24 hours of 
     expiration of the deadline otherwise applicable.
       (3) Provision of oral notice with written confirmation in 
     case of expedited treatment.--If a group health plan or 
     health insurance issuer grants a request for expedited 
     treatment under subsection (c), the plan or issuer may first 
     provide notice of the decision in the reconsideration orally 
     within the deadlines established under subsection (b)(3) and 
     then shall mail written confirmation of the decision within 2 
     business days of the date of oral notification.
       (4) Affirmation of an adverse coverage determination under 
     expedited treatment.--If, as a result of its reconsideration, 
     the plan or issuer affirms, in whole or in part, a coverage 
     determination that is adverse to the covered individual and 
     the reconsideration received expedited treatment under 
     subsection (c), the plan or issuer shall

[[Page S9579]]

     submit the case file (including the written notice of the 
     decision in the reconsideration) to the qualified external 
     appeal entity as expeditiously as the covered individual's 
     health condition requires, but in no case later than within 
     24 hours of its affirmation. The plan or issuer shall make 
     reasonable and diligent efforts to assist in gathering and 
     forwarding information to the qualified external appeal 
     entity.
       (5) Notification of individual.--If the plan or issuer 
     refers the matter to an qualified external appeal entity 
     under paragraph (2) or (4), it shall concurrently notify the 
     individual (or an authorized representative of the 
     individual) of that action.

     SEC. 106. EXTERNAL APPEALS (REVIEWS).

       (a) Review by Qualified External Appeal Entity.--
       (1) In general.--If a qualified external appeal entity 
     obtains a case file under section 105(d) or under paragraph 
     (2) and determines that--
       (A) the individual's appeal is supported by the opinion of 
     the individual's treating physician; or
       (B) such appeal is not so supported but--
       (i) there is a significant financial amount in controversy 
     (as defined by the Secretary); or
       (ii) the appeal involves services for the diagnosis, 
     treatment, or management of an illness, disability, or 
     condition which the entity finds, in accordance with 
     standards established by the entity and approved by the 
     Secretary, constitutes a condition that could seriously 
     jeopardize the covered individual's life, health, or ability 
     to regain or maintain maximum function or (in the case of a 
     child under the age of 6) development;

     the entity shall review and resolve under this section any 
     remaining issues in dispute.
       (2) Request for review.--
       (A) In general.--A party to a reconsidered determination 
     under section 105 that receives notice of an unfavorable 
     determination under section 105(d) may request a review of 
     such determination by a qualified external appeal entity 
     under this section.
       (B) Time for request.--To request such a review, such party 
     shall submit an oral or written request directly to the plan 
     or issuer (or, if applicable, to the entity that the plan or 
     issuer has designated as responsible for making the 
     determination).
       (C) If review is requested.--If a party provides the plan 
     or issuer (or such an entity) with notice of a request for 
     such review, the plan or issuer (or such entity) shall submit 
     the case file to the qualified external appeal entity as 
     expeditiously as the covered individual's health condition 
     requires, but in no case later than 2 business days from the 
     date the plan or issuer (or entity) receives such request. 
     The plan or issuer (or entity) shall make reasonable and 
     diligent efforts to assist in gathering and forwarding 
     information to the qualified external appeal entity.
       (3) Notice and timing for review.--The qualified external 
     appeal entity shall establish and apply rules for the timing 
     and content of notices for reviews under this section 
     (including appropriate expedited treatment of reviews under 
     this section) that are similar to the applicable requirements 
     for timing and content of notices in the case of 
     reconsiderations under subsections (b), (c), and (d) of 
     section 105.
       (4) Parties.--The parties to the review by a qualified 
     external appeal entity under this section shall be the same 
     parties listed in section 105(a)(4) who qualified during the 
     plan's or issuer's reconsideration, with the addition of the 
     plan or issuer.
       (b) General Elements of External Appeals.--
       (1) Contract with qualified external appeal entity.--
       (A) Contract requirement.--Subject to subparagraph (B), the 
     external appeal review under this section of a determination 
     of a plan or issuer shall be conducted under a contract 
     between the plan or issuer and 1 or more qualified external 
     appeal entities.
       (B) Eligibility for designation as external review 
     entity.--Entities eligible to conduct reviews brought under 
     this subsection shall include--
       (i) any State licensed or credentialed external review 
     entity;
       (ii) a State agency established for the purpose of 
     conducting independent external reviews; and
       (iii) an independent, external entity that contracts with 
     the appropriate Secretary.
       (C) Licensing and credentialing.--
       (i) In general.--In licensing or credentialing entities 
     described in subparagraph (B)(i), the State agent shall use 
     licensing and certification procedures developed by the State 
     in consultation with the National Association of Insurance 
     Commissioners.
       (ii) Special rule.--In the case of a State that--

       (I) has not established such licensing or credentialing 
     procedures within 24 months of the date of enactment of this 
     Act, the State shall license or credential such entities in 
     accordance with procedures developed by the Secretary; or
       (II) refuses to designate such entities, the Secretary 
     shall license or credential such entities.

       (D) Qualifications.--An entity (which may be a governmental 
     entity) shall meet the following requirements in order to be 
     a qualified external appeal entity:
       (i) There is no real or apparent conflict of interest that 
     would impede the entity from conducting external appeal 
     activities independent of the plan or issuer.
       (ii) The entity conducts external appeal activities through 
     clinical peers (as defined in section 2(c)(2)).
       (iii) The entity has sufficient medical, legal, and other 
     expertise and sufficient staffing to conduct external appeal 
     activities for the plan or issuer on a timely basis 
     consistent with subsection (a)(3).
       (iv) The entity meets such other requirements as the 
     appropriate Secretary may impose.
       (E) Limitation on plan or issuer selection.--If an 
     applicable authority permits more than 1 entity to qualify as 
     a qualified external appeal entity with respect to a group 
     health plan or health insurance issuer and the plan or issuer 
     may select among such qualified entities, the applicable 
     authority--
       (i) shall assure that the selection process will not create 
     any incentives for qualified external appeal entities to make 
     a decision in a biased manner; and
       (ii) shall implement procedures for auditing a sample of 
     decisions by such entities to assure that no such decisions 
     are made in a biased manner.
       (F) Other terms and conditions.--The terms and conditions 
     of a contract under this paragraph shall be consistent with 
     the standards the appropriate Secretary shall establish to 
     assure that there is no real or apparent conflict of interest 
     in the conduct of external appeal activities. Such contract 
     shall provide that the direct costs of the process (not 
     including costs of representation of a covered individual or 
     other party) shall be paid by the plan or issuer, and not by 
     the covered individual.
       (2) Elements of process.--An external appeal process under 
     this section shall be conducted consistent with standards 
     established by the appropriate Secretary that include at 
     least the following:
       (A) Fair process; de novo determination.--The process shall 
     provide for a fair, de novo determination.
       (B) Opportunity to submit evidence, have representation, 
     and make oral presentation.--Any party to a review under this 
     section--
       (i) may submit and review evidence related to the issues in 
     dispute,
       (ii) may use the assistance or representation of 1 or more 
     individuals (any of whom may be an attorney), and
       (iii) may make an oral presentation.
       (C) Provision of information.--The plan or issuer involved 
     shall provide timely access to all its records relating to 
     the matter being reviewed under this section and to all 
     provisions of the plan or health insurance coverage 
     (including any coverage manual) relating to the matter.
       (3) Admissible evidence.--In addition to personal health 
     and medical information supplied with respect to an 
     individual whose claim for benefits has been appealed and the 
     opinion of the individual's treating physician or health care 
     professional, an external appeals entity shall take into 
     consideration the following evidence:
       (A) The results of studies that meet professionally 
     recognized standards of validity and replicability or that 
     have been published in peer-reviewed journals.
       (B) The results of professional consensus conferences 
     conducted or financed in whole or in part by one or more 
     government agencies.
       (C) Practice and treatment guidelines prepared or financed 
     in whole or in part by government agencies.
       (D) Government-issued coverage and treatment policies.
       (E) To the extent that the entity determines it to be free 
     of any conflict of interest--
       (i) the opinions of individuals who are qualified as 
     experts in one or more fields of health care which are 
     directly related to the matters under appeal, and
       (ii) the results of peer reviews conducted by the plan or 
     issuer involved.
       (c) Notice of Determination by External Appeal Entity.--
       (1) Responsibility for the notice.--After the qualified 
     external appeal entity has reviewed and resolved the 
     determination that has been appealed, such entity shall mail 
     a notice of its final decision to the parties.
       (2) Content of the notice.--The notice described in 
     paragraph (1) shall--
       (A) describe the specific reasons for the entity's 
     decisions; and
       (B) comply with any other requirements specified by the 
     appropriate Secretary.
       (d) Effect of Determination.--A final decision by the 
     qualified external appeal entity after a review of the 
     determination that has been appealed is final and binding on 
     the group health plan or the health insurance issuer.

                    Subtitle B--Consumer Information

     SEC. 111. HEALTH PLAN INFORMATION.

       (a) Disclosure Requirement.--
       (1) Group health plans.--A group health plan shall--
       (A) provide to participants and beneficiaries at the time 
     of initial coverage under the plan (or the effective date of 
     this section, in the case of individuals who are participants 
     or beneficiaries as of such date), at least annually 
     thereafter, and at the beginning of any open enrollment 
     period provided under the plan, the information described in 
     subsection (b) in printed form;
       (B) provide to participants and beneficiaries information 
     in printed form on material changes in the information 
     described in paragraphs (1), (2)(A), (2)(B), (3)(A), (6),

[[Page S9580]]

     and (7) of subsection (b), or a change in the health 
     insurance issuer through which coverage is provided, within a 
     reasonable period of (as specified by the Secretary, but not 
     later than 30 days after) the effective date of the changes; 
     and
       (C) upon request, make available to participants and 
     beneficiaries, the applicable authority, and prospective 
     participants and beneficiaries, the information described in 
     subsections (b) and (c) in printed form.
       (2) Health insurance issuers.--A health insurance issuer in 
     connection with the provision of health insurance coverage 
     shall--
       (A) provide to individuals enrolled under such coverage at 
     the time of enrollment, and at least annually thereafter, 
     (and to plan administrators of group health plans in 
     connection with which such coverage is offered) the 
     information described in subsection (b) in printed form;
       (B) provide to enrollees and such plan administrators 
     information in printed form on material changes in the 
     information described in paragraphs (1), (2)(A), (2)(B), 
     (3)(A), (6), and (7) of subsection (b), or a change in the 
     health insurance issuer through which coverage is provided, 
     within a reasonable period of (as specified by the Secretary, 
     but later than 30 days after) the effective date of the 
     changes; and
       (C) upon request, make available to the applicable 
     authority, to individuals who are prospective enrollees, to 
     plan administrators of group health plans that may obtain 
     such coverage, and to the public the information described in 
     subsections (b) and (c) in printed form.
       (3) Exemption authority.--Upon application of one or more 
     group health plans or health insurance issuers, the 
     appropriate Secretary, under procedures established by such 
     Secretary, may grant an exemption to one or more plans or 
     issuers from compliance with one or more of the requirements 
     of paragraph (1) or (2). Such an exemption may be granted for 
     plans and issuers as a class with similar characteristics, 
     such as private fee-for-service plans described in section 
     1859(b)(2) of the Social Security Act.
       (4) Establishment of internet site.--The appropriate 
     Secretaries shall provide for the establishment of 1 or more 
     sites on the Internet to provide technical support and 
     information concerning the rights of participants, 
     beneficiaries, and enrollees under this title.
       (b) Information Provided.--The information described in 
     this subsection with respect to a group health plan or health 
     insurance coverage offered by a health insurance issuer 
     includes the following:
       (1) Service area.--The service area of the plan or issuer.
       (2) Benefits.--Benefits offered under the plan or coverage, 
     including--
       (A) covered benefits, including benefits for preventive 
     services, benefit limits, and coverage exclusions, any 
     optional supplemental benefits under the plan or coverage and 
     the terms and conditions (including premiums or cost-sharing) 
     for such supplemental benefits, and any out-of-area coverage;
       (B) cost sharing, such as premiums, deductibles, 
     coinsurance, and copayment amounts, including any liability 
     for balance billing, any maximum limitations on out of pocket 
     expenses, and the maximum out of pocket costs for services 
     that are provided by nonparticipating providers or that are 
     furnished without meeting the applicable utilization review 
     requirements;
       (C) the extent to which benefits may be obtained from 
     nonparticipating providers, and any supplemental premium or 
     cost-sharing in so obtaining such benefits;
       (D) the extent to which a participant, beneficiary, or 
     enrollee may select from among participating providers and 
     the types of providers participating in the plan or issuer 
     network;
       (E) process for determining experimental coverage or 
     coverage in cases of investigational treatments and clinical 
     trials; and
       (F) use of a prescription drug formulary.
       (3) Access.--A description of the following:
       (A) The number, mix, and distribution of health care 
     providers under the plan or coverage.
       (B) The procedures for participants, beneficiaries, and 
     enrollees to select, access, and change participating primary 
     and specialty providers.
       (C) The rights and procedures for obtaining referrals 
     (including standing referrals) to participating and 
     nonparticipating providers.
       (D) Any limitations imposed on the selection of qualifying 
     participating health care providers, including any 
     limitations imposed under section 122(a)(2)(B).
       (E) How the plan or issuer addresses the needs of 
     participants, beneficiaries, and enrollees and others who do 
     not speak English or who have other special communications 
     needs in accessing providers under the plan or coverage, 
     including the provision of information described in this 
     subsection and subsection (c) to such individuals, including 
     the provision of information in a language other than English 
     if 5 percent of the number of participants, beneficiaries, 
     and enrollees communicate in that language instead of 
     English, and including the availability of interpreters, 
     audio tapes, and information in braille to meet the needs of 
     people with special communications needs.
       (4) Out-of-area coverage.--Out-of-area coverage provided by 
     the plan or issuer.
       (5) Emergency coverage.--Coverage of emergency services, 
     including--
       (A) the appropriate use of emergency services, including 
     use of the 911 telephone system or its local equivalent in 
     emergency situations and an explanation of what constitutes 
     an emergency situation;
       (B) the process and procedures of the plan or issuer for 
     obtaining emergency services; and
       (C) the locations of (i) emergency departments, and (ii) 
     other settings, in which plan physicians and hospitals 
     provide emergency services and post-stabilization care.
       (6) Prior authorization rules.--Rules regarding prior 
     authorization or other review requirements that could result 
     in noncoverage or nonpayment.
       (7) Grievance and appeals procedures.--All appeal or 
     grievance rights and procedures under the plan or coverage, 
     including the method for filing grievances and the time 
     frames and circumstances for acting on grievances and 
     appeals, the name, address, and telephone number of the 
     applicable authority with respect to the plan or issuer, and 
     the availability of assistance through an ombudsman to 
     individuals in relation to group health plans and health 
     insurance coverage.
       (8) Quality assurance.--A summary description of the data 
     on quality indicators and measures submitted under section 
     112(a) for the plan or issuer, including a summary 
     description of the data on process and outcome satisfaction 
     of participants, beneficiaries, and enrollees (including data 
     on individual voluntary disenrollment and grievances and 
     appeals) described in section 112(b)(3)(D), and notice that 
     information comparing such indicators and measures for 
     different plans and issuers is available through the Agency 
     for Health Care Policy and Research.
       (9) Summary of provider financial incentives.--A summary 
     description of the information on the types of financial 
     payment incentives (described in section 1852(j)(4) of the 
     Social Security Act) provided by the plan or issuer under the 
     coverage.
       (10) Information on issuer.--Notice of appropriate mailing 
     addresses and telephone numbers to be used by participants, 
     beneficiaries, and enrollees in seeking information or 
     authorization for treatment.
       (11) Information on licensure.--Information on the 
     licensure, certification, or accreditation status of the plan 
     or issuer.
       (12) Availability of technical support and information.--
     Notice that technical support and information concerning the 
     rights of participants, beneficiaries, and enrollees under 
     this title are available from the Secretary of Labor (in the 
     case of group health plans) or the Secretary of Health and 
     Human Services (in the case of health insurance issuers), 
     including the telephone numbers and mailing address of the 
     regional offices of the appropriate Secretary and the 
     Internet address to obtain such information and support.
       (13) Advance directives and organ donation decisions.--
     Information regarding the use of advance directives and organ 
     donation decisions under the plan or coverage.
       (14) Participating provider list.--A list of current 
     participating health care providers for the relevant 
     geographic area, including the name, address and telephone 
     number of each provider.
       (15) Availability of information on request.--Notice that 
     the information described in subsection (c) is available upon 
     request and how and where (such as the telephone number and 
     Internet website) such information may be obtained.
       (c) Information Made Available Upon Request.--The 
     information described in this subsection is the following:
       (1) Utilization review activities.--A description of 
     procedures used and requirements (including circumstances, 
     time frames, and appeal rights) under any utilization review 
     program under section 102(a), including under any drug 
     formulary program under section 123(b).
       (2) Grievance and appeals information.--Information on the 
     number of grievances and internal and external appeals and on 
     the disposition in the aggregate of such matters, including 
     information on the reasons for the disposition of external 
     appeal cases.
       (3) Method of compensation.--A summary description as to 
     the method of compensation of participating health care 
     professionals and health care facilities, including 
     information on the types of financial payment incentives 
     (described in section 1852(j)(4) of the Social Security Act) 
     provided by the plan or issuer under the coverage and on the 
     proportion of participating health care professionals who are 
     compensated under each type of incentive under the plan or 
     coverage.
       (4) Confidentiality policies and procedures.--A description 
     of the policies and procedures established to carry out 
     section 112.
       (5) Formulary restrictions.--A description of the nature of 
     any drug formula restrictions, including the specific 
     prescription medications included in any formulary and any 
     provisions for obtaining off-formulary medications.
       (6) Additional information on participating providers.--For 
     each current participating health care provider described in 
     subsection (b)(14)--
       (A) the licensure or accreditation status of the provider;
       (B) to the extent possible, an indication of whether the 
     provider is available to accept new patients;
       (C) in the case of medical personnel, the education, 
     training, speciality qualifications or certification, 
     speciality focus, affiliation

[[Page S9581]]

     arrangements, and specialty board certification (if any) of 
     the provider; and
       (D) any measures of consumer satisfaction and quality 
     indicators for the provider.
       (7) Percentage of premiums used for benefits (loss-
     ratios).--In the case of health insurance coverage only (and 
     not with respect to group health plans that do not provide 
     coverage through health insurance coverage), a description of 
     the overall loss-ratio for the coverage (as defined in 
     accordance with rules established or recognized by the 
     Secretary of Health and Human Services).
       (8) Quality information developed.--Quality information on 
     processes and outcomes developed as part of an accreditation 
     or licensure process for the plan or issuer to the extent the 
     information is publicly available.
       (d) Form of Disclosure.--
       (1) Uniformity.--Information required to be disclosed under 
     this section shall be provided in accordance with uniform, 
     national reporting standards specified by the Secretary, 
     after consultation with applicable State authorities, so that 
     prospective enrollees may compare the attributes of different 
     issuers and coverage offered within an area within a type of 
     coverage. Such information shall be provided in an accessible 
     format that is understandable to the average participant, 
     beneficiary, or enrollee involved.
       (2) Information into handbook.--Nothing in this section 
     shall be construed as preventing a group health plan or 
     health insurance issuer from making the information under 
     subsections (b) and (c) available to participants, 
     beneficiaries, and enrollees through an enrollee handbook or 
     similar publication.
       (3) Updating participating provider information.--The 
     information on participating health care providers described 
     in subsections (b)(14) and (c)(6) shall be updated within 
     such reasonable period as determined appropriate by the 
     Secretary. A group health plan or health insurance issuer 
     shall be considered to have complied with the provisions of 
     such subsection if the plan or issuer provides the directory 
     or listing of participating providers to participants and 
     beneficiaries or enrollees once a year and such directory or 
     listing is updated within such a reasonable period to reflect 
     any material changes in participating providers. Nothing in 
     this section shall prevent a plan or issuer from changing or 
     updating other information made available under this section.
       (4) Rule of mailing to last address.--For purposes of this 
     section, a plan or issuer, in reliance on records maintained 
     by the plan or issuer, shall be deemed to have met the 
     requirements of this section with respect to the disclosure 
     of information to a participant, beneficiary, or enrollee if 
     the plan or issuer transmits the information requested to the 
     participant, beneficiary, or enrollee at the address 
     contained in such records with respect to such participant, 
     beneficiary, or enrollee.
       (e) Enrollee Assistance.--
       (1) In general.--Each State that obtains a grant under 
     paragraph (3) shall provide for creation and operation of a 
     Health Insurance Ombudsman through a contract with a not-for-
     profit organization that operates independent of group health 
     plans and health insurance issuers. Such Ombudsman shall be 
     responsible for at least the following:
       (A) To provide consumers in the State with information 
     about health insurance coverage options or coverage options 
     offered within group health plan.
       (B) To provide counseling and assistance to enrollees 
     dissatisfied with their treatment by health insurance issuers 
     and group health plans in regard to such coverage or plans 
     and with respect to grievances and appeals regarding 
     determinations under such coverage or plans.
       (2) Federal role.--In the case of any State that does not 
     provide for such an Ombudsman under paragraph (1), the 
     Secretary may provide for the creation and operation of a 
     Health Insurance Ombudsman through a contract with a not-for-
     profit organization that operates independent of group health 
     plans and health insurance issuers and that is to provide 
     consumers in the State with information about health 
     insurance coverage options or coverage options offered within 
     group health plans.
       (3) Eligibility.--To be eligible to serve as a Health 
     Insurance Ombudsman under this section, a not-for-profit 
     organization shall provide assurances that--
       (A) the organization has no real or perceived conflict of 
     interest in providing advice and assistance to consumers 
     regarding health insurance coverage, and
       (B) the organization is independent of health insurance 
     issuers, health care providers, health care payors, and 
     regulators of health care or health insurance.
       (4) Authorization of appropriations.--There are authorized 
     to be appropriated to the Secretary of Health and Human 
     Services such amounts as may be necessary to provide for 
     grants to States for contracts for Health Insurance Ombudsmen 
     under paragraph (1) or contracts for such Ombudsmen under 
     paragraph (2).
       (5) Construction.--Nothing in this section shall be 
     construed to prevent the use of other forms of enrollee 
     assistance.
       (f) Construction.--Nothing in this section shall be 
     construed as requiring public disclosure of individual 
     contracts or financial arrangements between a group health 
     plan or health insurance issuer and any provider.

     SEC. 112. HEALTH CARE QUALITY INFORMATION.

       (a) Collection and Submission of Information on Quality 
     Indicators and Measures.--
       (1) In general.--A group health plan and a health insurance 
     issuer that offers health insurance coverage shall collect 
     and submit to the Director for the Agency for Health Care 
     Policy and Research (in this section referred to as the 
     ``Director'') aggregate data on quality indicators and 
     measures (as defined in subsection (g)) that includes the 
     minimum uniform data set specified under subsection (b). Such 
     data shall not include patient identifiers.
       (2) Data sampling methods.--The Director shall develop data 
     sampling methods for the collection of data under this 
     subsection.
       (3) Exemption authority.--The provisions of section 
     111(a)(3) shall apply to the requirements of paragraph (1) in 
     the same manner as they apply to the requirements referred to 
     in such section.
       (b) Minimum Uniform Data Set.--
       (1) In general.--The Secretary shall specify (and may from 
     time to time update) by rule the data required to be included 
     in the minimum uniform data set under subsection (a) and the 
     standard format for such data.
       (2) Design.--Such specification shall--
       (A) take into consideration the different populations 
     served (such as children and individuals with disabilities);
       (B) be consistent where appropriate with requirements 
     applicable to Medicare+Choice health plans under 
     1851(d)(4)(D) of the Social Security Act;
       (C) take into consideration such differences in the 
     delivery system among group health plans and health insurance 
     issuers as the Secretary deems appropriate;
       (D) be consistent with standards adopted to carry out part 
     C of title XI of the Social Security Act; and
       (E) be consistent where feasible with existing health plan 
     quality indicators and measures used by employers and 
     purchasers.
       (3) Minimum data.--The data in such set shall include, to 
     the extent determined feasible by the appropriate Secretary, 
     at least--
       (A) data on process measures of clinical performance for 
     health care services provided by health care professionals 
     and facilities;
       (B) data on outcomes measures of morbidity and mortality 
     including to the extent feasible and appropriate data for 
     pediatric and gender-specific measures; and
       (C) data on data on satisfaction of such individuals, 
     including data on voluntary disenrollment and grievances.

     The minimum data set under this paragraph shall be 
     established by the appropriate Secretaries using a negotiated 
     rulemaking process under subchapter III of chapter 5 of title 
     5, United States Code.
       (c) Dissemination of Information.--
       (1) In general.--The Director shall publicly disseminate 
     (through printed media and the Internet) information on the 
     aggregate data submitted under this section.
       (2) Formats.--The information shall be disseminated in a 
     manner that provides for a comparison of health care quality 
     among different group health plans and health insurance 
     issuers, with appropriate differentiation by delivery system. 
     In disseminating the information, the Director may reference 
     an appropriate benchmark (or benchmarks) for performance with 
     respect to specific quality indicators and measures (or 
     groups of such measures).
       (d) Health Care Quality Research and Information.--The 
     Secretary of Health and Human Services, acting through the 
     Director, shall conduct and support research demonstration 
     projects, evaluations, and the dissemination of information 
     with respect to measurement, status, improvement, and 
     presentation of quality indicators and measures and other 
     health care quality information.
       (e) National Reports on Health Care Quality.--
       (1) Report on national goals.--Not later than 18 months 
     after the date of enactment of this Act, and every 2 years 
     thereafter, the Secretary of Health and Human Services shall 
     prepare and submit to the appropriate committees of Congress 
     and the President a report that--
       (A) establishes national goals for the improvement of the 
     quality of health care; and
       (B) contains recommendations for achieving the national 
     goals established under paragraph (1).
       (2) Report on health related topics.--Not later than 30 
     months after the date of enactment of this Act and every 2 
     years thereafter, such Secretary shall prepare and submit to 
     Congress and the President a report that addresses at least 1 
     of the following (or a related matter):
       (A) The availability, applicability, and appropriateness of 
     information to consumers regarding the quality of their 
     health care.
       (B) The state of information systems and data collecting 
     capabilities for measuring and reporting on quality 
     indicators.
       (C) The impact of quality measurement on access to and the 
     cost of medical care.
       (D) Barriers to continuous quality improvement in medical 
     care.
       (E) The state of health care quality measurement research 
     and development.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated $25,000,000 for each fiscal year 
     (beginning with fiscal year 1999) to carry out this section. 
     Any such amounts appropriated for a fiscal year shall remain 
     available, without fiscal year limitation, until expended.

[[Page S9582]]

       (g) Quality Indicators and Measures Defined.--For purposes 
     of this section, the term ``quality indicators and measures'' 
     means structural characteristics, patient-encounter data, and 
     the subsequent health status change of a patient as a result 
     of health care services provided by health care professionals 
     and facilities.

     SEC. 113. CONFIDENTIALITY AND ACCURACY OF ENROLLEE RECORDS.

       A group health plan or a health insurance issuer shall 
     establish procedures with respect to medical records or other 
     health information maintained regarding participants, 
     beneficiaries, and enrollees to safeguard the privacy of any 
     individually identifiable information about them.

     SEC. 114. QUALITY ASSURANCE.

       (a) Requirement.--A group health plan, and a health 
     insurance issuer that offers health insurance coverage, shall 
     establish and maintain an ongoing, internal quality assurance 
     and continuous quality improvement program that meets the 
     requirements of subsection (b).
       (b) Program Requirements.--The requirements of this 
     subsection for a quality improvement program of a plan or 
     issuer are as follows:
       (1) Administration.--The plan or issuer has an identifiable 
     unit with responsibility for administration of the program.
       (2) Written plan.--The plan or issuer has a written plan 
     for the program that is updated annually and that specifies 
     at least the following:
       (A) The activities to be conducted.
       (B) The organizational structure.
       (C) The duties of the medical director.
       (D) Criteria and procedures for the assessment of quality.
       (3) Systematic review.--The program provides for systematic 
     review of the type of health services provided, consistency 
     of services provided with good medical practice, and patient 
     outcomes.
       (4) Quality criteria.--The program--
       (A) uses criteria that are based on performance and patient 
     outcomes where feasible and appropriate;
       (B) includes criteria that are directed specifically at 
     meeting the needs of at-risk populations and covered 
     individuals with chronic conditions or severe illnesses, 
     including gender-specific criteria and pediatric-specific 
     criteria where available and appropriate;
       (C) includes methods for informing covered individuals of 
     the benefit of preventive care and what specific benefits 
     with respect to preventive care are covered under the plan or 
     coverage; and
       (D) makes available to the public a description of the 
     criteria used under subparagraph (A).
       (5) System for identifying.--The program has procedures for 
     identifying possible quality concerns by providers and 
     enrollees and for remedial actions to correct quality 
     problems, including written procedures for responding to 
     concerns and taking appropriate corrective action.
       (6) Data analysis.--The program provides, using data that 
     include the data collected under section 112, for an analysis 
     of the plan's or issuer's performance on quality measures.
       (7) Drug utilization review.--The program provides for a 
     drug utilization review program which--
       (A) encourages appropriate use of prescription drugs by 
     participants, beneficiaries, and enrollees and providers, and
       (B) takes appropriate action to reduce the incidence of 
     improper drug use and adverse drug reactions and 
     interactions.
       (c) Deeming.--For purposes of subsection (a), the 
     requirements of--
       (1) subsection (b) (other than paragraph (5)) are deemed to 
     be met with respect to a health insurance issuer that is a 
     qualified health maintenance organization (as defined in 
     section 1310(c) of the Public Health Service Act); or
       (2) subsection (b) are deemed to be met with respect to a 
     health insurance issuer that is accredited by a national 
     accreditation organization that the Secretary certifies as 
     applying, as a condition of certification, standards at least 
     a stringent as those required for a quality improvement 
     program under subsection (b).
       (d) Variation Permitted.--The Secretary may provide for 
     variations in the application of the requirements of this 
     section to group health plans and health insurance issuers 
     based upon differences in the delivery system among such 
     plans and issuers as the Secretary deems appropriate.
       (e) Consultation in Medical Policies.--A group health plan, 
     and health insurance issuer that offers health insurance 
     coverage, shall consult with participating physicians (if 
     any) regarding the plan's or issuer's medical policy, 
     quality, and medical management procedures.

                Subtitle C--Patient Protection Standards

     SEC. 121. EMERGENCY SERVICES.

       (a) Coverage of Emergency Services.--
       (1) In general.--If a group health plan, or health 
     insurance coverage offered by a health insurance issuer, 
     provides any benefits with respect to emergency services (as 
     defined in paragraph (2)(B)), the plan or issuer shall cover 
     emergency services furnished under the plan or coverage--
       (A) without the need for any prior authorization 
     determination;
       (B) whether or not the health care provider furnishing such 
     services is a participating provider with respect to such 
     services;
       (C) in a manner so that, if such services are provided to a 
     participant, beneficiary, or enrollee by a nonparticipating 
     health care provider--
       (i) the participant, beneficiary, or enrollee is not liable 
     for amounts that exceed the amounts of liability that would 
     be incurred if the services were provided by a participating 
     health care provider, and
       (ii) the plan or issuer pays an amount that is not less 
     than the amount paid to a participating health care provider 
     for the same services; and
       (D) without regard to any other term or condition of such 
     plan or coverage (other than exclusion or coordination of 
     benefits, or an affiliation or waiting period, permitted 
     under section 2701 of the Public Health Service Act, section 
     701 of the Employee Retirement Income Security Act of 1974, 
     or section 9801 of the Internal Revenue Code of 1986, and 
     other than applicable cost-sharing).
       (2) Definitions.--In this section:
       (A) Emergency medical condition based on prudent layperson 
     standard.--The term ``emergency medical condition'' means a 
     medical condition manifesting itself by acute symptoms of 
     sufficient severity (including severe pain) such that a 
     prudent layperson, who possesses an average knowledge of 
     health and medicine, could reasonably expect the absence of 
     immediate medical attention to result in a condition 
     described in clause (i), (ii), or (iii) of section 
     1867(e)(1)(A) of the Social Security Act.
       (B) Emergency services.--The term ``emergency services'' 
     means--
       (i) a medical screening examination (as required under 
     section 1867 of the Social Security Act) that is within the 
     capability of the emergency department of a hospital, 
     including ancillary services routinely available to the 
     emergency department to evaluate an emergency medical 
     condition (as defined in subparagraph (A)), and
       (ii) within the capabilities of the staff and facilities 
     available at the hospital, such further medical examination 
     and treatment as are required under section 1867 of such Act 
     to stabilize the patient.
       (b) Reimbursement for Maintenance Care and Post-
     Stabilization Care.--In the case of services (other than 
     emergency services) for which benefits are available under a 
     group health plan, or under health insurance coverage offered 
     by a health insurance issuer, the plan or issuer shall 
     provide for reimbursement with respect to such services 
     provided to a participant, beneficiary, or enrollee other 
     than through a participating health care provider in a manner 
     consistent with subsection (a)(1)(C) if the services are 
     maintenance care or post-stabilization care covered under the 
     guidelines established under section 1852(d)(2) of the Social 
     Security Act (relating to promoting efficient and timely 
     coordination of appropriate maintenance and post-
     stabilization care of an enrollee after an enrollee has been 
     determined to be stable), in accordance with regulations 
     established to carry out such section.

     SEC. 122. ENROLLEE CHOICE OF HEALTH PROFESSIONALS AND 
                   PROVIDERS.

       (a) Choice of Personal Health Professional.--
       (1) Primary Care.--A group health plan, and a health 
     insurance issuer that offers health insurance coverage, shall 
     permit each participant, beneficiary, and enrollee--
       (A) to receive primary care from any participating primary 
     care provider who is available to accept such individual, and
       (B) in the case of a participant, beneficiary, or enrollee 
     who has a child who is also covered under the plan or 
     coverage, to designate a participating physician who 
     specializes in pediatrics as the child's primary care 
     provider.
       (2) Specialists.--
       (A) In general.--Subject to subparagraph (B), a group 
     health plan and a health insurance issuer that offers health 
     insurance coverage shall permit each participant, 
     beneficiary, or enrollee to receive medically necessary or 
     appropriate specialty care, pursuant to appropriate referral 
     procedures, from any qualified participating health care 
     provider who is available to accept such individual for such 
     care.
       (B) Limitation.--Subparagraph (A) shall not apply to 
     specialty care if the plan or issuer clearly informs 
     participants, beneficiaries, and enrollees of the limitations 
     on choice of participating providers with respect to such 
     care.
       (b) Specialized Services.--
       (1) Obstetrical and gynecological care.--
       (A) In general.--If a group health plan, or a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, requires or provides for a participant, 
     beneficiary, or enrollee to designate a participating primary 
     care provider, and an individual who is female has not 
     designated a participating physician specializing in 
     obstetrics and gynecology as a primary care provider, the 
     plan or issuer--
       (i) may not require authorization or a referral by the 
     individual's primary care provider or otherwise for coverage 
     of routine gynecological care (such as preventive women's 
     health examinations) and pregnancy-related services provided 
     by a participating health care professional who specializes 
     in obstetrics and gynecology to the extent such care is 
     otherwise covered, and
       (ii) may treat the ordering of other gynecological care by 
     such a participating physician as the authorization of the 
     primary care provider with respect to such care under the 
     plan or coverage.

[[Page S9583]]

       (B) Construction.--Nothing in subparagraph (A)(ii) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological care so ordered.
       (2) Specialty care.--
       (A) Specialty care for covered services.--
       (i) In general.--If--

       (I) an individual is a participant or beneficiary under a 
     group health plan or an enrollee who is covered under health 
     insurance coverage offered by a health insurance issuer,
       (II) the individual has a condition or disease of 
     sufficient seriousness and complexity to require treatment by 
     a specialist, and
       (III) benefits for such treatment are provided under the 
     plan or coverage,

     the plan or issuer shall make or provide for a referral to a 
     specialist who is available and accessible to provide the 
     treatment for such condition or disease.
       (ii) Specialist defined.--For purposes of this paragraph, 
     the term ``specialist'' means, with respect to a condition, a 
     health care practitioner, facility, or center (such as a 
     center of excellence) that has adequate expertise through 
     appropriate training and experience (including, in the case 
     of a child, appropriate pediatric expertise) to provide high 
     quality care in treating the condition.
       (iii) Care under referral.--A group health plan or health 
     insurance issuer may require that the care provided to an 
     individual pursuant to such referral under clause (i) be--

       (I) pursuant to a treatment plan, only if the treatment 
     plan is developed by the specialist and approved by the plan 
     or issuer, in consultation with the designated primary care 
     provider or specialist and the individual (or the 
     individual's designee), and
       (II) in accordance with applicable quality assurance and 
     utilization review standards of the plan or issuer.

     Nothing in this paragraph shall be construed as preventing 
     such a treatment plan for an individual from requiring a 
     specialist to provide the primary care provider with regular 
     updates on the specialty care provided, as well as all 
     necessary medical information.
       (iv) Referrals to participating providers.--A group health 
     plan or health insurance issuer is not required under clause 
     (i) to provide for a referral to a specialist that is not a 
     participating provider, unless the plan or issuer does not 
     have an appropriate specialist that is available and 
     accessible to treat the individual's condition and that is a 
     participating provider with respect to such treatment.
       (v) Treatment of nonparticipating providers.--If a plan or 
     issuer refers an individual to a nonparticipating specialist 
     pursuant to clause (i), services provided pursuant to the 
     approved treatment plan (if any) shall be provided at no 
     additional cost to the individual beyond what the individual 
     would otherwise pay for services received by such a 
     specialist that is a participating provider.
       (B) Specialists as primary care providers.--
       (i) In general.--A group health plan, or a health insurance 
     issuer, in connection with the provision of health insurance 
     coverage, shall have a procedure by which an individual who 
     is a participant, beneficiary, or enrollee and who has an 
     ongoing special condition (as defined in clause (iii)) may 
     receive a referral to a specialist for such condition who 
     shall be responsible for and capable of providing and 
     coordinating the individual's primary and specialty care. If 
     such an individual's care would most appropriately be 
     coordinated by such a specialist, such plan or issuer shall 
     refer the individual to such specialist.
       (ii) Treatment as primary care provider.--Such specialist 
     shall be permitted to treat the individual without a referral 
     from the individual's primary care provider and may authorize 
     such referrals, procedures, tests, and other medical services 
     as the individual's primary care provider would otherwise be 
     permitted to provide or authorize, subject to the terms of 
     the treatment plan (referred to in subparagraph (A)(iii)(I)).
       (iii) Ongoing special condition defined.--In this 
     subparagraph, the term ``special condition'' means a 
     condition or disease that--

       (I) is life-threatening, degenerative, or disabling, and
       (II) requires specialized medical care over a prolonged 
     period of time.

       (iv) Terms of referral.--The provisions of clauses (iii) 
     through (v) of subparagraph (A) apply with respect to 
     referrals under clause (i) of this subparagraph in the same 
     manner as they apply to referrals under subparagraph (A)(i).
       (C) Standing referrals.--
       (i) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall have a procedure by which an 
     individual who is a participant, beneficiary, or enrollee and 
     who has a condition that requires ongoing care from a 
     specialist may receive a standing referral to such specialist 
     for treatment of such condition. If the plan or issuer, or if 
     the primary care provider in consultation with the medical 
     director of the plan or issuer and the specialist (if any), 
     determines that such a standing referral is appropriate, the 
     plan or issuer shall make such a referral to such a 
     specialist.
       (ii) Terms of referral.--The provisions of clauses (iii) 
     through (v) of subparagraph (A) apply with respect to 
     referrals under clause (i) of this subparagraph in the same 
     manner as they apply to referrals under subparagraph (A)(i).
       (c) Continuity of Care.--
       (1) In general.--
       (A) Termination of provider.--If a contract between a group 
     health plan, or a health insurance issuer in connection with 
     the provision of health insurance coverage, and a health care 
     provider is terminated (as defined in subparagraph (C)), or 
     benefits or coverage provided by a health care provider are 
     terminated because of a change in the terms of provider 
     participation in a group health plan, and an individual who 
     is a participant, beneficiary, or enrollee in the plan or 
     coverage is undergoing a course of treatment from the 
     provider at the time of such termination, the plan or issuer 
     shall--
       (i) notify the individual on a timely basis of such 
     termination, and
       (ii) subject to paragraph (3), permit the individual to 
     continue or be covered with respect to the course of 
     treatment with the provider during a transitional period 
     (provided under paragraph (2)) if the plan or issuer is 
     notified orally or in writing of the facts and circumstances 
     concerning the course of treatment.
       (B) Treatment of termination of contract with health 
     insurance issuer.--If a contract for the provision of health 
     insurance coverage between a group health plan and a health 
     insurance issuer is terminated and, as a result of such 
     termination, coverage of services of a health care provider 
     is terminated with respect to an individual, the provisions 
     of subparagraph (A) (and the succeeding provisions of this 
     section) shall apply under the group health plan in the same 
     manner as if there had been a direct contract between the 
     group health plan and the provider that had been terminated, 
     but only with respect to benefits that are covered under the 
     group health plan after the contract termination.
       (C) Termination.--In this section, the term ``terminated'' 
     includes, with respect to a contract, the expiration or 
     nonrenewal of the contract, but does not include a 
     termination of the contract by the plan or issuer for failure 
     to meet applicable quality standards or for fraud.
       (2) Transitional period.--
       (A) In general.--Except as provided in subparagraphs (B) 
     through (D), the transitional period under this subsection 
     shall extend for at least 90 days from the date of the notice 
     described in paragraph (1)(A)(i) of the provider's 
     termination.
       (B) Institutional care.--The transitional period under this 
     subsection for institutional or inpatient care from a 
     provider shall extend until the discharge or termination of 
     the period of institutionalization and also shall include 
     institutional care provided within a reasonable time of the 
     date of termination of the provider status.
       (C) Pregnancy.--If--
       (i) a participant, beneficiary, or enrollee has entered the 
     second trimester of pregnancy at the time of a provider's 
     termination of participation, and
       (ii) the provider was treating the pregnancy before date of 
     the termination,

     the transitional period under this subsection with respect to 
     provider's treatment of the pregnancy shall extend through 
     the provision of post-partum care directly related to the 
     delivery.
       (D) Terminal illness.--If--
       (i) a participant, beneficiary, or enrollee was determined 
     to be terminally ill (as determined under section 
     1861(dd)(3)(A) of the Social Security Act) at the time of a 
     provider's termination of participation, and
       (ii) the provider was treating the terminal illness before 
     the date of termination,
     the transitional period under this subsection shall extend 
     for the remainder of the individual's life for care directly 
     related to the treatment of the terminal illness, but in no 
     case is the transitional period required to extend for longer 
     than 180 days.
       (3) Permissible terms and conditions.--A group health plan 
     or health insurance issuer may condition coverage of 
     continued treatment by a provider under paragraph (1)(A)(ii) 
     upon the provider agreeing to the following terms and 
     conditions:
       (A) The provider agrees to accept reimbursement from the 
     plan or issuer and individual involved (with respect to cost-
     sharing) at the rates applicable prior to the start of the 
     transitional period as payment in full (or, in the case 
     described in paragraph (1)(B), at the rates applicable under 
     the replacement plan or issuer after the date of the 
     termination of the contract with the health insurance issuer) 
     and not to impose cost-sharing with respect to the individual 
     in an amount that would exceed the cost-sharing that could 
     have been imposed if the contract referred to in paragraph 
     (1)(A) had not been terminated.
       (B) The provider agrees to adhere to the quality assurance 
     standards of the plan or issuer responsible for payment under 
     subparagraph (A) and to provide to such plan or issuer 
     necessary medical information related to the care provided.
       (C) The provider agrees otherwise to adhere to such plan's 
     or issuer's policies and procedures, including procedures 
     regarding utilization review and referrals, and obtaining 
     prior authorization and providing services pursuant to a 
     treatment plan (if any) approved by the plan or issuer.
       (4) Construction.--Nothing in this subsection shall be 
     construed to require the coverage of benefits which would not 
     have been covered if the provider involved remained a 
     participating provider.

[[Page S9584]]

       (d) Protection Against Involuntary Disenrollment Based on 
     Certain Conditions.--
       (1) In general.--Subject to paragraph (2), a group health 
     plan and a health insurance issuer in connection with the 
     provision of health insurance coverage may not disenroll an 
     individual under the plan or coverage because the 
     individual's behavior is considered disruptive, unruly, 
     abusive, or uncooperative to the extent that the individual's 
     continued enrollment under the coverage seriously impairs the 
     plan's or issuer's ability to furnish covered services if the 
     circumstances for the individual's behavior is directly 
     related to diminished mental capacity, severe and persistent 
     mental illness, or a serious childhood mental and emotional 
     disorder.
       (2) Exception.--Paragraph (1) shall not apply if the 
     behavior engaged in directly threatens bodily injury to any 
     person.
       (e) General Access.--
       (1) In general.--Each group health plan, and each health 
     insurance issuer offering health insurance coverage, that 
     provides benefits, in whole or in part, through participating 
     health care providers shall have (in relation to the 
     coverage) a sufficient number, distribution, and variety of 
     qualified participating health care providers to ensure that 
     all covered health care services, including specialty 
     services, will be available and accessible in a timely manner 
     to all participants, beneficiaries, and enrollees under the 
     plan or coverage.
       (2) Treatment of Certain Providers.--The qualified health 
     care providers under paragraph (1) may include Federally 
     qualified health centers, rural health clinics, migrant 
     health centers, high-volume, disproportionate share 
     hospitals, and other essential community providers located in 
     the service area of the plan or issuer and shall include such 
     providers if necessary to meet the standards established to 
     carry out such subsection.

     SEC. 123. ACCESS TO APPROVED SERVICES.

       (a) Coverage for Individuals Participating in Approved 
     Clinical Trials.--
       (1) Coverage.--
       (A) In general.--If a group health plan, or health 
     insurance issuer that is providing health insurance coverage, 
     provides coverage to a qualified individual (as defined in 
     paragraph (2)), the plan or issuer--
       (i) may not deny the individual participation in the 
     clinical trial referred to in paragraph (2)(B);
       (ii) subject to paragraph (3), may not deny (or limit or 
     impose additional conditions on) the coverage of routine 
     patient costs for items and services furnished in connection 
     with participation in the trial; and
       (iii) may not discriminate against the individual on the 
     basis of the enrollee's participation in such trial.
       (B) Exclusion of certain costs.--For purposes of 
     subparagraph (A)(ii), routine patient costs do not include 
     the cost of the tests or measurements conducted primarily for 
     the purpose of the clinical trial involved.
       (C) Use of in-network providers.--If one or more 
     participating providers is participating in a clinical trial, 
     nothing in subparagraph (A) shall be construed as preventing 
     a plan or issuer from requiring that a qualified individual 
     participate in the trial through such a participating 
     provider if the provider will accept the individual as a 
     participant in the trial.
       (2) Qualified individual defined.--For purposes of 
     paragraph (1), the term ``qualified individual'' means an 
     individual who is a participant or beneficiary in a group 
     health plan, or who is an enrollee under health insurance 
     coverage, and who meets the following conditions:
       (A)(i) The individual has a life-threatening or serious 
     illness for which no standard treatment is effective.
       (ii) The individual is eligible to participate in an 
     approved clinical trial according to the trial protocol with 
     respect to treatment of such illness.
       (iii) The individual's participation in the trial offers 
     meaningful potential for significant clinical benefit for the 
     individual.
       (B) Either--
       (i) the referring physician is a participating health care 
     professional and has concluded that the individual's 
     participation in such trial would be appropriate based upon 
     the individual meeting the conditions described in 
     subparagraph (A); or
       (ii) the participant, beneficiary, or enrollee provides 
     medical and scientific information establishing that the 
     individual's participation in such trial would be appropriate 
     based upon the individual meeting the conditions described in 
     subparagraph (A).
       (3) Payment.--
       (A) In general.--Under this subsection a group health plan 
     or health insurance issuer shall provide for payment for 
     routine patient costs described in paragraph (1)(A) but is 
     not required to pay for costs of items and services that are 
     reasonably expected (as determined by the Secretary) to be 
     paid for by the sponsors of an approved clinical trial.
       (B) Payment rate.--In the case of covered items and 
     services provided by--
       (i) a participating provider, the payment rate shall be at 
     the agreed upon rate, or
       (ii) a nonparticipating provider, the payment rate shall be 
     at the rate the plan or issuer would normally pay for 
     comparable services under subparagraph (A).
       (4) Approved clinical trial defined.--
       (A) In general.--In this subsection, the term ``approved 
     clinical trial'' means a clinical research study or clinical 
     investigation approved and funded (which may include funding 
     through in-kind contributions) by one or more of the 
     following:
       (i) The National Institutes of Health.
       (ii) A cooperative group or center of the National 
     Institutes of Health.
       (iii) Either of the following if the conditions described 
     in subparagraph (B) are met:

       (I) The Department of Veterans Affairs.
       (II) The Department of Defense.

       (B) Conditions for departments.--The conditions described 
     in this subparagraph, for a study or investigation conducted 
     by a Department, are that the study or investigation has been 
     reviewed and approved through a system of peer review that 
     the Secretary determines--
       (i) to be comparable to the system of peer review of 
     studies and investigations used by the National Institutes of 
     Health, and
       (ii) assures unbiased review of the highest scientific 
     standards by qualified individuals who have no interest in 
     the outcome of the review.
       (5) Construction.--Nothing in this subsection shall be 
     construed to limit a plan's or issuer's coverage with respect 
     to clinical trials.
       (b) Access to Prescription Drugs.--
       (1) In General.--If a group health plan, or health 
     insurance issuer that offers health insurance coverage, 
     provides benefits with respect to prescription drugs but the 
     coverage limits such benefits to drugs included in a 
     formulary, the plan or issuer shall--
       (A) ensure participation of participating physicians and 
     pharmacists in the development of the formulary; and
       (B) disclose to providers and, disclose upon request under 
     section 111(c)(5) to participants, beneficiaries, and 
     enrollees, the nature of the formulary restrictions; and
       (C) consistent with the standards for a utilization review 
     program under section 102(a), provide for exceptions from the 
     formulary limitation when a non-formulary alternative is 
     medically indicated.
       (2) Construction.--Nothing in this subsection shall be 
     construed as requiring a group health plan (or health 
     insurance issuer in connection with health insurance 
     coverage) to provide any coverage of prescription drugs or as 
     preventing such a plan or issuer from negotiating higher 
     cost-sharing in the case a non-formulary alternative is 
     provided under paragraph (1)(C).

     SEC. 124. NONDISCRIMINATION IN DELIVERY OF SERVICES.

       (a) Application to Delivery of Services.--Subject to 
     subsection (b), a group health plan, and health insurance 
     issuer in relation to health insurance coverage, may not 
     discriminate against a participant, beneficiary, or enrollee 
     in the delivery of health care services consistent with the 
     benefits covered under the plan or coverage or as required by 
     law based on race, color, ethnicity, national origin, 
     religion, sex, age, mental or physical disability, sexual 
     orientation, genetic information, or source of payment.
       (b) Construction.--Nothing in subsection (a) shall be 
     construed as relating to the eligibility to be covered, or 
     the offering (or guaranteeing the offer) of coverage, under a 
     plan or health insurance coverage, the application of any 
     pre-existing condition exclusion consistent with applicable 
     law, or premiums charged under such plan or coverage. To the 
     extent that health care providers are permitted under State 
     and Federal law to prioritize the admission or treatment of 
     patients based on such patients' individual religious 
     affiliation, group health plans and health insurance issuers 
     may reflect those priorities in referring patients to such 
     providers.

     SEC. 125. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL 
                   COMMUNICATIONS.

       (a) In General.--An organization on behalf of a group 
     health plan (as described in subsection (a)(2)) or a health 
     insurance issuer shall not penalize (financially or 
     otherwise) a health care professional for advocating on 
     behalf of his or her patient or for providing information or 
     referral for medical care (as defined in section 2791(a)(2) 
     of the Public Health Service Act) consistent with the health 
     care needs of the patient and with the code of ethical 
     conduct, professional responsibility, conscience, medical 
     knowledge, and license of the health care professional.
       (b) Construction.--Nothing in subsection (a) shall be 
     construed as requiring a health insurance issuer or a group 
     health plan to pay for medical care not otherwise paid for or 
     covered by the plan provided by nonparticipating health care 
     professionals, except in those instances and to the extent 
     that the issuer or plan would normally pay for such medical 
     care.
       (c) Assistance and Support.--A group health plan or a 
     health insurance issuer shall not prohibit or otherwise 
     restrict a health care professional from providing letters of 
     support to, or in any way assisting, enrollees who are 
     appealing a denial, termination, or reduction of service in 
     accordance with the procedures under subtitle A.

     SEC. 126. PROVIDER INCENTIVE PLANS.

       (a) Prohibition of Transfer of Indemnification.--
       (1) In general.--No contract or agreement between a group 
     health plan or health insurance issuer (or any agent acting 
     on behalf of such a plan or issuer) and a health care 
     provider shall contain any provision purporting to transfer 
     to the health care provider by indemnification or otherwise 
     any liability relating to activities, actions, or omissions 
     of the plan, issuer, or agent (as opposed to the provider).

[[Page S9585]]

       (2) Nullification.--Any contract or agreement provision 
     described in paragraph (1) shall be null and void.
       (b) Prohibition of Improper Physician Incentive Plans.--
       (1) In general.--A group health plan and a health insurance 
     issuer offering health insurance coverage may not operate any 
     physician incentive plan (as defined in subparagraph (B) of 
     section 1876(i)(8) of the Social Security Act) unless the 
     requirements described in subparagraph (A) of such section 
     are met with respect to such a plan.
       (2) Application.--For purposes of carrying out paragraph 
     (1), any reference in section 1876(i)(8) of the Social 
     Security Act to the Secretary, an eligible organization, or 
     an individual enrolled with the organization shall be treated 
     as a reference to the applicable authority, a group health 
     plan or health insurance issuer, respectively, and a 
     participant, beneficiary, or enrollee with the plan or 
     organization, respectively.

     SEC. 127. PROVIDER PARTICIPATION.

       (a) In General.--A group health plan and a health insurance 
     issuer that offers health insurance coverage shall, if it 
     provides benefits through participating health care 
     professionals, have a written process for the selection of 
     participating health care professionals under the plan or 
     coverage. Such process shall include--
       (1) minimum professional requirements;
       (2) providing notice of the rules regarding participation;
       (3) providing written notice of participation decisions 
     that are adverse to professionals; and
       (4) providing a process within the plan or issuer for 
     appealing such adverse decisions, including the presentation 
     of information and views of the professional regarding such 
     decision.
       (b) Verification of Background.--Such process shall include 
     verification of a health care provider's license and a 
     history of suspension or revocation.
       (c) Restriction.--Such process shall not use a high-risk 
     patient base or location of a provider in an area with 
     residents with poorer health status as a basis for excluding 
     providers from participation.
       (d) General Nondiscrimination.--
       (1) In general.--Subject to paragraph (2), such process 
     shall not discriminate with respect to selection of a health 
     care professional to be a participating health care provider, 
     or with respect to the terms and conditions of such 
     participation, based on the professional's race, color, 
     religion, sex, national origin, age, sexual orientation, or 
     disability (consistent with the Americans with Disabilities 
     Act of 1990).
       (2) Rules.--The appropriate Secretary may establish such 
     definitions, rules, and exceptions as may be appropriate to 
     carry out paragraph (1), taking into account comparable 
     definitions, rules, and exceptions in effect under 
     employment-based nondiscrimination laws and regulations that 
     relate to each of the particular bases for discrimination 
     described in such paragraph.

     SEC. 128. REQUIRED COVERAGE FOR APPROPRIATE HOSPITAL STAY FOR 
                   MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE 
                   TREATMENT OF BREAST CANCER; REQUIRED COVERAGE 
                   FOR RECONSTRUCTIVE SURGERY FOLLOWING 
                   MASTECTOMIES.

       (a) Coverage of Inpatient Care for Surgical Treatment of 
     Breast Cancer.--
       (1) In general.--A group health plan, and a health 
     insurance issuer providing health insurance coverage, that 
     provides medical and surgical benefits shall ensure that 
     inpatient coverage with respect to the surgical treatment of 
     breast cancer (including a mastectomy, lumpectomy, or lymph 
     node dissection for the treatment of breast cancer) is 
     provided for a period of time as is determined by the 
     attending physician, in his or her professional judgment 
     consistent with generally accepted principles of professional 
     medical practice, in consultation with the patient, to be 
     medically necessary or appropriate.
       (2) Exception.--Nothing in this section shall be construed 
     as requiring the provision of inpatient coverage if the 
     attending physician in consultation with the patient 
     determine that a shorter period of hospital stay is medically 
     necessary or appropriate.
       (b) Coverage of Reconstructive Surgery Following 
     Mastectomies.--A group health plan, and a health insurance 
     issuer providing health insurance coverage, that provides 
     medical and surgical benefits with respect to a mastectomy 
     shall ensure that, in a case in which a mastectomy patient 
     elects breast reconstruction, coverage is provided for--
       (1) all stages of reconstruction of the breast on which the 
     mastectomy has been performed;
       (2) surgery and reconstruction of the other breast to 
     produce a symmetrical appearance; and
       (3) the costs of prostheses and complications of mastectomy 
     including lymphedemas;

     in the manner determined by the attending physician and the 
     patient to be appropriate. Such coverage may be subject to 
     annual deductibles and coinsurance provisions as may be 
     deemed appropriate and as are consistent with those 
     established for other benefits under the plan or coverage. 
     Written notice of the availability of such coverage shall be 
     delivered to the participant or enrollee upon enrollment and 
     annually thereafter.
       (c) No Authorization Required.--
       (1) In general.--An attending physician shall not be 
     required to obtain authorization from the plan or issuer for 
     prescribing any length of stay in connection with a 
     mastectomy, a lumpectomy, or a lymph node dissection for the 
     treatment of breast cancer.
       (2) Prenotification.--Nothing in this section shall be 
     construed as preventing a group health plan or health 
     insurance issuer from requiring prenotification of an 
     inpatient stay referred to in this section if such 
     requirement is consistent with terms and conditions 
     applicable to other inpatient benefits under the plan or 
     health insurance coverage, except that the provision of such 
     inpatient stay benefits shall not be contingent upon such 
     notification.
       (d) Prohibitions.--A group health plan and a health 
     insurance issuer offering health insurance coverage may not--
       (1) deny to a patient eligibility, or continued 
     eligibility, to enroll or to renew coverage under the terms 
     of the plan or coverage, solely for the purpose of avoiding 
     the requirements of this section;
       (2) provide monetary payments or rebates to individuals to 
     encourage such individuals to accept less than the minimum 
     protections available under this section;
       (3) penalize or otherwise reduce or limit the reimbursement 
     of an attending provider because such provider provided care 
     to an individual participant, beneficiary, or enrollee in 
     accordance with this section;
       (4) provide incentives (monetary or otherwise) to an 
     attending provider to induce such provider to provide care to 
     an individual participant, beneficiary, or enrollee in a 
     manner inconsistent with this section; and
       (5) subject to subsection (e)(2), restrict benefits for any 
     portion of a period within a hospital length of stay required 
     under subsection (a) in a manner which is less favorable than 
     the benefits provided for any preceding portion of such stay.
       (e) Rules of Construction.--
       (1) In general.--Nothing in this section shall be construed 
     to require a patient who is a participant, beneficiary, or 
     enrollee--
       (A) to undergo a mastectomy or lymph node dissection in a 
     hospital; or
       (B) to stay in the hospital for a fixed period of time 
     following a mastectomy or lymph node dissection.
       (2) Cost sharing.--Nothing in this section shall be 
     construed as preventing a group health plan or issuer from 
     imposing deductibles, coinsurance, or other cost-sharing in 
     relation to benefits for hospital lengths of stay in 
     connection with a mastectomy or lymph node dissection for the 
     treatment of breast cancer under the plan or health insurance 
     coverage, except that such coinsurance or other cost-sharing 
     for any portion of a period within a hospital length of stay 
     required under subsection (a) may not be greater than such 
     coinsurance or cost-sharing for any preceding portion of such 
     stay.
       (3) Level and type of reimbursements.--Nothing in this 
     section shall be construed to prevent a group health plan or 
     a health insurance issuer from negotiating the level and type 
     of reimbursement with a provider for care provided in 
     accordance with this section.

               Subtitle D--Enhanced Enforcement Authority

     SEC. 141. INVESTIGATIONS AND REPORTING AUTHORITY, INJUNCTIVE 
                   RELIEF AUTHORITY, AND INCREASED CIVIL MONEY 
                   PENALTY AUTHORITY FOR SECRETARY OF HEALTH AND 
                   HUMAN SERVICES FOR VIOLATIONS OF PATIENT 
                   PROTECTION STANDARDS.

       (a) Investigations and Reporting Authority.--
       (1) In general.--For purposes of carrying out sections 
     2722(b) and 2761(b) of the Public Health Service Act with 
     respect to enforcement of the provisions of sections 2706 and 
     2752, respectively, of such Act (as added by title II of this 
     Act)--
       (A) the Secretary of Health and Human Services shall have 
     the same authorities with respect to compelling health 
     insurance issuers to produce information and to conducting 
     investigations in cases of violations of such provisions as 
     the Secretary of Labor has under section 504 of the Employee 
     Retirement Income Security Act of 1974 with respect to 
     violations of title I of such Act; and
       (B) section 504(c) of the Employee Retirement Income 
     Security Act of 1974 shall apply to investigations conducted 
     under paragraph (1) in the same manner as it applies to 
     investigations conducted under title I of such Act.
       (2) Reporting authority.--In exercising authority under 
     paragraph (1), the Secretary may require--
       (A) States that have indicated an intention to assume 
     authority under section 2722(a)(1) or 2761(a) of the Public 
     Health Service Act to report to the Secretary on enforcement 
     efforts undertaken to assure compliance with the requirements 
     of sections 2706 and 2752, respectively, of such Act; and
       (B) health insurance issuers to submit reports to assure 
     compliance with such requirements.
       (b) Authority for Injunctive Relief.--In addition to the 
     authority referred to in subsection (a), the Secretary of 
     Health and Human Services has the same authority with respect 
     to enforcement of the provisions of this title as the 
     Secretary of Labor has under subsection (a)(5) of section 502 
     of the Employee Retirement Income Security Act of 1974 (as 
     applied without regard to subsection (b) of that section) and 
     the related provisions of part 5 of subtitle B of title I of

[[Page S9586]]

     such Act with respect to enforcement of such title I of such 
     Act.
       (c) Increase in Civil Money Penalties.--
       (1) In general.--In the case of a civil money penalty that 
     may be imposed under section 2722(b)(2) or 2761(b) of the 
     Public Health Service Act with respect to a failure to meet 
     the provisions of sections 2706 and 2752, respectively, of 
     such Act, the maximum amount of penalty otherwise provided 
     under section 2722(b)(2)(C)(i) of such Act may, 
     notwithstanding the amounts specified in such section, and 
     subject to paragraph (2), be up to the greatest of the 
     following:
       (A) Failures involving unreasonable denial or delay in 
     benefits impacting on life or health.--In the case of a 
     failure that results in an unreasonable denial or delay in 
     benefits that has seriously jeopardized (or has substantial 
     likelihood of seriously jeopardizing) the individual's life, 
     health, or ability to regain or maintain maximum function or 
     (in the case of a child under the age of 6) development, the 
     greater of the following:--
       (i) Pattern or practice failure.--If the failure reflects a 
     pattern or practice of wrongful conduct, $250,000, plus the 
     amount (if any) determined under paragraph (2).
       (ii) Other failures.--In the case of a failure that does 
     not reflect a pattern or practice of wrongful conduct, 
     $50,000 for each individual involved, plus the amount (if 
     any) determined under paragraph (2).
       (B) Other failures.--In the case of a failure not described 
     in subparagraph (A), the greater of the following:
       (i) Pattern and practice failures.--In the case of a 
     failure that reflects a pattern or practice of wrongful 
     conduct $50,000, plus the amount (if any) determined under 
     paragraph (2).
       (ii) Other failures.--In the case of a failure that does 
     not reflect a pattern or practice of wrongful conduct, 
     $10,000 for each individual involved, plus the amount (if 
     any) determined under paragraph (2).
       (2) Continuing failure without correction.--In the case of 
     a failure which is not corrected within the first week 
     beginning with the date on which the failure is established, 
     the maximum amount of the penalty under paragraph (1) shall 
     be increased by $10,000 for each full succeeding week in 
     which the failure is not so corrected.
       (d) Authorization of Appropriations.--In addition to any 
     other amounts authorized to be appropriated, there are 
     authorized to be appropriated to the Secretary of Health and 
     Human Services such sums as may be necessary to carry out 
     this section.

     SEC. 142. AUTHORITY FOR SECRETARY OF LABOR TO IMPOSE CIVIL 
                   PENALTIES FOR VIOLATIONS OF PATIENT PROTECTION 
                   STANDARDS.

       (a) In General.--Section 502(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132(c)) is amended by 
     redesignating paragraphs (6) and (7) as paragraphs (7) and 
     (8), respectively, and by inserting after paragraph (5) the 
     following new paragraph:
       ``(6)(A) The Secretary may assess a civil penalty against a 
     person acting in the capacity of a fiduciary of a group 
     health plan (as defined in 733(a)) so as to cause a violation 
     of section 713.
       ``(B) Subject to subparagraph (C), the maximum amount which 
     may be assessed under subparagraph (A) is the greatest of the 
     following:
       ``(i) In the case of a failure that results in an 
     unreasonable denial or delay in benefits that seriously 
     jeopardized (or has substantial likelihood of seriously 
     jeopardizing) the individual's life, health, or ability to 
     regain or maintain maximum function or (in the case of a 
     child under the age of 6) development, the greater of the 
     following:--
       ``(I) If the failure reflects a pattern or practice of 
     wrongful conduct, $250,000, plus the amount (if any) 
     determined under subparagraph (C).
       ``(II) In the case of a failure that does not reflect a 
     pattern or practice of wrongful conduct, $50,000 for each 
     individual involved, plus the amount (if any) determined 
     under subparagraph (C).
       ``(ii) In the case of a failure not described in clause 
     (i), the greater of the following:
       ``(I) In the case of a failure that reflects a pattern or 
     practice of wrongful conduct $50,000, plus the amount (if 
     any) determined under subparagraph (C).
       ``(II) In the case of a failure that does not reflect a 
     pattern or practice of wrongful conduct, $10,000 for each 
     individual involved, plus the amount (if any) determined 
     under subparagraph (C).
       ``(C) In the case of a failure which is not corrected 
     within the first week beginning with the date on which the 
     failure is established, the maximum amount of the penalty 
     under subparagraph (B) shall be increased by $10,000 for each 
     full succeeding week in which the failure is not so 
     corrected.''.
       (b) Conforming Amendment.--Section 502(a)(6) of such Act 
     (29 U.S.C. 1132(a)(6)) is amended by striking ``paragraph 
     (2), (4), (5), or (6)'' and inserting ``paragraph (2), (4), 
     (5), (6), or (7)''.
       (c) Authorization of Appropriations.--In addition to any 
     other amounts authorized to be appropriated, there are 
     authorized to be appropriated to the Secretary of Labor such 
     sums as may be necessary to carry out the amendments made by 
     this section.

 TITLE II--PATIENT PROTECTION STANDARDS UNDER PUBLIC HEALTH SERVICE ACT

     SEC. 201. APPLICATION TO GROUP HEALTH PLANS AND GROUP HEALTH 
                   INSURANCE COVERAGE.

       (a) In General.--Subpart 2 of part A of title XXVII of the 
     Public Health Service Act is amended by adding at the end the 
     following new section:

     ``SEC. 2706. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Each group health plan shall comply with 
     patient protection requirements under title I of the 
     Promoting Responsible Managed Care Act of 1998, and each 
     health insurance issuer shall comply with patient protection 
     requirements under such title with respect to group health 
     insurance coverage it offers, and such requirements shall be 
     deemed to be incorporated into this subsection.
       ``(b) Notice.--A group health plan shall comply with the 
     notice requirement under section 711(d) of the Employee 
     Retirement Income Security Act of 1974 with respect to the 
     requirements referred to in subsection (a) and a health 
     insurance issuer shall comply with such notice requirement as 
     if such section applied to such issuer and such issuer were a 
     group health plan.''.
       (b) Conforming Amendment.--Section 2721(b)(2)(A) of such 
     Act (42 U.S.C. 300gg-21(b)(2)(A)) is amended by inserting 
     ``(other than section 2706)'' after ``requirements of such 
     subparts''.
       (c) Reference to Enhanced Enforcement Authority.--For 
     provisions providing for enhanced authority to enforce the 
     patient protection requirements of title I under the Public 
     Health Service Act, see section 141.

     SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE 
                   COVERAGE.

       Part B of title XXVII of the Public Health Service Act is 
     amended by inserting after section 2751 the following new 
     section:

     ``SEC. 2752. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Each health insurance issuer shall 
     comply with patient protection requirements under title I of 
     the Promoting Responsible Managed Care Act of 1998 with 
     respect to individual health insurance coverage it offers, 
     and such requirements shall be deemed to be incorporated into 
     this subsection.
       ``(b) Notice.--A health insurance issuer under this part 
     shall comply with the notice requirement under section 711(d) 
     of the Employee Retirement Income Security Act of 1974 with 
     respect to the requirements of such title as if such section 
     applied to such issuer and such issuer were a group health 
     plan.''.

 TITLE III--PATIENT PROTECTION STANDARDS UNDER THE EMPLOYEE RETIREMENT 
                      INCOME SECURITY ACT OF 1974

     SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE 
                   COVERAGE UNDER THE EMPLOYEE RETIREMENT INCOME 
                   SECURITY ACT OF 1974.

       (a) In General.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 is 
     amended by adding at the end the following new section:

     ``SEC. 713. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Subject to subsection (b), a group 
     health plan (and a health insurance issuer offering group 
     health insurance coverage in connection with such a plan) 
     shall comply with the requirements of title I of the 
     Promoting Responsible Managed Care Act of 1998 (as in effect 
     as of the date of the enactment of such Act), and such 
     requirements shall be deemed to be incorporated into this 
     subsection.
       ``(b) Plan Satisfaction of Certain Requirements.--
       ``(1) Satisfaction of certain requirements through 
     insurance.--For purposes of subsection (a), insofar as a 
     group health plan provides benefits in the form of health 
     insurance coverage through a health insurance issuer, the 
     plan shall be treated as meeting the following requirements 
     of title I of the Promoting Responsible Managed Care Act of 
     1998 with respect to such benefits and not be considered as 
     failing to meet such requirements because of a failure of the 
     issuer to meet such requirements so long as the plan sponsor 
     or its representatives did not cause such failure by the 
     issuer:
       ``(A) Section 121 (relating to access to emergency care).
       ``(B) Section 122 (relating to choice of providers).
       ``(C) Section 122(b) (relating to specialized services).
       ``(D) Section 122(c)(1)(A) (relating to continuity in case 
     of termination of provider contract) and section 122(c)(1)(B) 
     (relating to continuity in case of termination of issuer 
     contract), but only insofar as a replacement issuer assumes 
     the obligation for continuity of care.
       ``(E) Section 123(a) (relating to coverage for individuals 
     participating in approved clinical trials.)
       ``(F) Section 123(b) (relating to access to needed 
     prescription drugs).
       ``(G) Section 122(e) (relating to adequacy of provider 
     network).
       ``(H) Subtitle B (relating to consumer information).
       ``(2) Information.--With respect to information required to 
     be provided or made available under section 111 of such Act, 
     in the case of a group health plan that provides benefits in 
     the form of health insurance coverage through a health 
     insurance issuer, the Secretary shall determine the 
     circumstances under which the plan is not required to provide 
     or make available the information (and is not liable for the 
     issuer's failure to provide or make available the 
     information), if the issuer is obligated to provide and make

[[Page S9587]]

     available (or provides and makes available) such information.
       ``(3) Grievance and internal appeals.--With respect to the 
     grievance system and internal appeals process required to be 
     established under sections 102 and 103 of such Act, in the 
     case of a group health plan that provides benefits in the 
     form of health insurance coverage through a health insurance 
     issuer, the Secretary shall determine the circumstances under 
     which the plan is not required to provide for such system and 
     process (and is not liable for the issuer's failure to 
     provide for such system and process), if the issuer is 
     obligated to provide for (and provides for) such system and 
     process.
       ``(4) External appeals.--Pursuant to rules of the 
     Secretary, insofar as a group health plan enters into a 
     contract with a qualified external appeal entity for the 
     conduct of external appeal activities in accordance with 
     section 106 of such Act, the plan shall be treated as meeting 
     the requirement of such section and is not liable for the 
     entity's failure to meet any requirements under such section.
       ``(5) Application to prohibitions.--Pursuant to rules of 
     the Secretary, if a health insurance issuer offers health 
     insurance coverage in connection with a group health plan and 
     takes an action in violation of any of the following sections 
     of such Act, the group health plan shall not be liable for 
     such violation unless the plan caused such violation:
       ``(A) Section 124 (relating to nondiscrimination in 
     delivery of services).
       ``(B) Section 125 (relating to prohibition of interference 
     with certain medical communications).
       ``(C) Section 126 (relating to provider incentive plans).
       ``(D) Section 102(b) (relating to providing medically 
     necessary care).
       ``(6) Construction.--Nothing in this subsection shall be 
     construed to affect or modify the responsibilities of the 
     fiduciaries of a group health plan under part 4 of subtitle 
     B.
       (b) Satisfaction of ERISA Claims Procedure Requirement.--
     Section 503 of such Act (29 U.S.C. 1133) is amended by 
     inserting ``(a)'' after ``Sec. 503.'' and by adding at the 
     end the following new subsection:
       ``(b) In the case of a group health plan (as defined in 
     section 733) compliance with the requirements of subtitle D 
     (and section 113) of title I of the Promoting Responsible 
     Managed Care Act of 1998 in the case of a claims denial shall 
     be deemed compliance with subsection (a) with respect to such 
     claims denial.''.
       (c) Conforming Amendments.--(1) Section 732(a) of such Act 
     (29 U.S.C. 1185(a)) is amended by striking ``section 711'' 
     and inserting ``sections 711 and 713''.
       (2) The table of contents in section 1 of such Act is 
     amended by inserting after the item relating to section 712 
     the following new item:

       ``Sec. 713. Patient protection standards.''.
       (3) Section 502(b)(3) of such Act (29 U.S.C. 1132(b)(3)) is 
     amended by inserting ``(other than section 144(b))'' after 
     ``part 7''.
       (d) Reference to Enhanced Enforcement Authority.--For 
     provisions providing for enhanced authority to enforce the 
     patient protection requirements of title I under the Employee 
     Retirement Income Security Act of 1974, see section 142.

     SEC. 302. ENFORCEMENT FOR ECONOMIC LOSS CAUSED BY COVERAGE 
                   DETERMINATIONS.

       (a) In General.--Section 502(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132), as amended by 
     section 142(a) of this Act, is amended by redesignating 
     paragraphs (7) and (8) as paragraphs (8) and (9), 
     respectively, and by inserting after paragraph (6) the 
     following new paragraph:
       ``(7)(A) In any case in which--
       ``(i) a coverage determination (as defined in section 
     101(a)(2) of the Promoting Responsible Managed Care Act of 
     1998) under a group health plan (as defined in section 
     503(b)(8)) is not made on a timely basis or is made on such a 
     basis but is not made in accordance with the terms of the 
     plan, this title, or title I of such Act, and
       ``(ii) a participant or beneficiary suffers injury 
     (including loss of life, health, or the ability to regain or 
     maintain maximum function or (in the case of a child under 
     the age of 6) development) as a result of such coverage 
     determination,
     any person or persons who are responsible under the terms of 
     the plan for the making of such coverage determination are 
     liable to the aggrieved participant or beneficiary for the 
     amount of the economic loss suffered by the participant or 
     beneficiary caused by such coverage determination. Any 
     question of fact in any cause of action under this paragraph 
     shall be based on the preponderance of the evidence after de 
     novo review.
       ``(B) For purposes of subparagraph (A), the term `economic 
     loss' means any pecuniary loss (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) caused by the coverage determination. Such 
     term does not include punitive damages or damages for pain 
     and suffering, inconvenience, emotional distress, mental 
     anguish, loss of consortium, injury to reputation, 
     humiliation, and other nonpecuniary losses.
       ``(C) Nothing in this paragraph shall be construed as 
     requiring exhaustion of administrative process in the case of 
     severe bodily injury or death.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     apply to coverage determinations made on or after the date of 
     the enactment of this Act.

TITLE IV--PATIENT PROTECTION STANDARDS UNDER THE INTERNAL REVENUE CODE 
                                OF 1986.

     SEC. 401. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

       Subchapter B of chapter 100 of the Internal Revenue Code of 
     1986 (as amended by section 1531(a) of the Taxpayer Relief 
     Act of 1997) is amended--
       (1) in the table of sections, by inserting after the item 
     relating to section 9812 the following new item:

             ``Sec. 9813. Standard relating to patient protection 
                                                 standards.''; and
       (2) by inserting after section 9812 the following:

     ``SEC. 9813. STANDARD RELATING TO PATIENT PROTECTION 
                   STANDARDS.

       ``A group health plan shall comply with the requirements of 
     title I of the Promoting Responsible Managed Care Act of 1998 
     (as in effect as of the date of the enactment of such Act), 
     and such requirements shall be deemed to be incorporated into 
     this section.''.

        TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

     SEC. 501. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2), the amendments 
     made by sections 201(a), 301, and 401 (and title I insofar as 
     it relates to such sections) shall apply with respect to 
     group health plans, and health insurance coverage offered in 
     connection with group health plans, for plan years beginning 
     on or after January 1, 1999 (in this section referred to as 
     the ``general effective date'') and also shall apply to 
     portions of plan years occurring on and after such date.
       (2) Treatment of collective bargaining agreements.--In the 
     case of a group health plan maintained pursuant to 1 or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers ratified before the 
     date of enactment of this Act, the amendments made by 
     sections 201(a), 301, and 401 (and title I insofar as it 
     relates to such sections) shall not apply to plan years 
     beginning before the later of--
       (A) the date on which the last collective bargaining 
     agreement relating to the plan terminates (determined without 
     regard to any extension thereof agreed to after the date of 
     enactment of this Act), or
       (B) the general effective date.

     For purposes of subparagraph (A), any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this Act shall not be treated as a 
     termination of such collective bargaining agreement.
       (b) Individual Health Insurance Coverage.--The amendments 
     made by section 202 shall apply with respect to individual 
     health insurance coverage offered, sold, issued, renewed, in 
     effect, or operated in the individual market on or after the 
     general effective date.

     SEC. 502. COORDINATION IN IMPLEMENTATION.

       Section 104(1) of Health Insurance Portability and 
     Accountability Act of 1996 is amended by striking ``this 
     subtitle (and the amendments made by this subtitle and 
     section 401)'' and inserting ``the provisions of part 7 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974, the provisions of parts A and C of 
     title XXVII of the Public Health Service Act, chapter 100 of 
     the Internal Revenue Code of 1986, and title I of the 
     Promoting Responsible Managed Care Act of 1998''.
                                  ____


             PROMOTING RESPONSIBLE MANAGED CARE ACT OF 1998


                               Principles

       Today, a majority of the U.S. population is enrolled in 
     some form of managed care--a system which has enabled 
     employers, insurers and taxpayers to achieve significant 
     savings in the delivery of health care services. However, 
     there is growing anxiety among many Americans that insurance 
     health plan accountants--not doctors--are determining what 
     services and treatments they receive. Congress has an 
     opportunity to enact legislation this year which will ensure 
     that patients receive the benefits and services to which they 
     are entitled, without compromising the savings and 
     coordination of care that can be achieved through managed 
     care. However, to ensure the most effective result, 
     legislation must embody the following principles:
       It must be bipartisan and balanced.
       It must offer all 161 million privately insured Americans--
     not just those in self-funded ERISA plans--a floor of basic 
     federal patient protections.
       It must establish credible federal enforcement remedies to 
     ensure that managed care plans play by the rules and that 
     individuals harmed by such entities are justly compensated.
       It should encourage managed care plans to compete on the 
     basis of quality--not just price. ``Report card'' information 
     will provide consumers with the information they need to make 
     informed choices based on plan performance.


                                Summary

       ``The Promoting Responsible Managed Care Act of 1998'' 
     blends the best features of both the Democratic and 
     Republican plans.

[[Page S9588]]

      The legislation would restore public confidence in managed 
     care through a comprehensive set of policy changes that would 
     apply to all private health plans in the country. These 
     include strengthened federal enforcement to ensure managed 
     care plans play by the rules; compensation for individuals 
     harmed by the decisions of managed care plans; an independent 
     external system for processing complaints and appealing 
     adverse decisions; information requirements to allow 
     competition based on quality; and, a reasonable set of 
     patient protection standards to ensure patients have access 
     to appropriate medical care.
     Scope of protection
       Basic protections for all privately insured Americans.--All 
     private insurance plans would be required to meet basic 
     federal patient protections regardless of whether they are 
     regulated at the state or federal level. This approach 
     follows the blueprint established with the enactment of the 
     Health Insurance Portability and Accountability Act of 1996, 
     which allows states to build upon a basic framework of 
     federal protections.
     Enforcement and compensation
       Strengthened federal enforcement to ensure managed care 
     plans play by the rules.--To ensure compliance with the 
     bill's provisions, current federal law would be strengthened 
     by giving the Secretaries of Labor and Health & Human 
     Services enhanced authorities to enjoin managed care plans 
     from denying medically necessary care and to levy fines (up 
     to $50,000 for individual cases and up to $250,000 for a 
     pattern of wrongful conduct). This provision would ensure 
     that enforcement of federal law is not dependent upon 
     individuals bringing court cases to enforce plan compliance. 
     Rather, it provides for real federal enforcement of new 
     federal protections.
       Compensation for individuals harmed by the decisions of 
     managed care plans.--All privately insured individuals would 
     have access to federal courts for economic loss resulting 
     from injury caused by the improper denial of care by managed 
     care plans. Economic loss would be defined as any pecuniary 
     loss caused by the decision of the managed care plan, and 
     would include lost earnings or other benefits related to 
     employment, medical expenses, and business or employment 
     opportunities. Awards for economic loss would be uncapped and 
     attorneys fees could be awarded at the discretion of the 
     court.
     Coverage determination, grievance and appeals
       Coverage determination based on medical necessity.--When 
     making determinations whether to provide a benefit (or where 
     or how that benefit should be provided) health plans would be 
     prohibited from arbitrarily interfering with the decision of 
     the treating physician if the services are medically 
     necessary and a covered benefit. Medically necessary services 
     would be defined by the treating physician in accordance with 
     generally accepted principles of professional medical 
     practice--not as defined by the plan. Plans would be required 
     to make coverage determinations in a timely manner, and have 
     a process for making expedited determinations.
       Internal appeals.--Patients would be assured the right to 
     appeal the following: failure to cover emergency services, 
     the denial, reduction or termination of benefits, or any 
     decision regarding the clinical necessity, appropriateness, 
     efficacy, or efficiency of health care services, procedures 
     or settings. The plan would be required to have a timely 
     internal review system, using health care professionals 
     independent of the case at hand, and procedures for 
     expediting decisions in cases in which the standard timeline 
     could seriously jeopardize the covered individual's life, 
     health, ability to regain or maintain maximum function, or 
     (in the case of a child under the age of 6) development.
       External appeals.--Individuals would be assured access to 
     an external, independent appeals process for cases of 
     sufficient seriousness or which exceed a certain monetary 
     threshold that were not resolved to the patient's 
     satisfaction through the internal appeals process. The 
     external appeal entity would have the authority to decide 
     whether a particular plan decision is in fact externally 
     appealable, not the plan. A reasonable medical practice 
     standard would be established against which to measure plan 
     conduct, and the range of evidence that is permissible in an 
     external review would include valid studies that have been 
     carried out by entities without a conflict of interest. The 
     external appeal process would require a fair, ``de novo'' 
     determination, the plan would pay the costs of the process, 
     and any decision would be binding on the plan.
     Consumer information
       Comparative information.--Consumers would be given uniform 
     comparative information on quality measures in order to make 
     informed choices. Data would include: patient satisfaction, 
     delivery of health care services such as immunizations, and 
     resulting changes in beneficiary health. Variations would be 
     allowed based on plan type.
       Plan information.--Patients would be provided with 
     information on benefits, cost-sharing, access to services, 
     grievance and appeals, etc. A grant program would be 
     authorized to provide enrollees with information about their 
     coverage options, and with grievance and appeals processes.
       Confidentiality of enrollee records.--Plans would be 
     required to have procedures to safeguard the privacy of 
     individually identifiable information.
       Quality assurance.--Plans would be required to establish an 
     internal quality assurance program. Accredited plans would be 
     deemed to have met this requirement, and variations would be 
     allowed based on plan type.
     Patient protection standards
       Emergency services.--Coverage of emergency services would 
     be based upon the ``prudent layperson'' standard, and, 
     importantly, would include reimbursement for post-
     stabilization and maintenance care. Prior authorization of 
     services would be prohibited.
       Enrollee choice of health professionals and providers.--
     Patients would be assured that plans would:
       allow women to obtain obstetrical/gynecological services 
     without a referral from a primary care provider;
       allow plan enrollees to choose pediatricians as the primary 
     care provider for their children;
       have a sufficient number, distribution and variety of 
     providers;
       allow enrollees to choose any provider within the plan's 
     network, who is available to accept such individual (unless 
     the plan informs enrollee of limitations on choice);
       provide access to specialists, pursuant to a treatment 
     plan;
       in the case of a contract termination, allow continuation 
     of care for a set period of time for chronic and terminal 
     illnesses, pregnancies, and institutional care.
       Access to approved services.--Plans would be required to 
     cover routine patient costs incurred through participation in 
     an approved clinical trial. In addition, they would be 
     required to use plan physicians and pharmacists in 
     development of formularies, disclose formulary restrictions, 
     and provide an exception process for non-formulary treatments 
     when medically necessary.
       Nondiscrimination in delivery of services.--Discrimination 
     on the basis of race, religion, sex, disability and other 
     characteristics would be prohibited.
       Prohibition of interference with certain medical 
     communications.--Plans would be prohibited from using ``gag 
     rules'' to restrict physicians from discussing health status 
     and legal treatment options with patients.
       Provider incentive plans.--Plans would be barred from using 
     financial incentives as an inducement to physicians for 
     reducing or limiting the provision of medically necessary 
     services.
       Provider participation.--Plans would be required to provide 
     a written description of their physician and provider 
     selection procedures. This process would include a 
     verification of a health care provider's license, and plans 
     would be barred from discriminating against providers based 
     on race, religion and other characteristics.
       Appropriate standards of care for mastectomy patients.--
     Plans would be required to cover the length of hospital stay 
     for a mastectomy, lumpectomy or lymph node dissection that is 
     determined by the physician to be appropriate for the patient 
     and consistent with generally accepted principles of 
     professional medical practice. Plans covering mastectomies 
     would also be required to cover breast reconstructive 
     surgery.
                                  ____


 What Organizations Are Saying About the Promoting Responsible Managed 
                            Care Act of 1998

       National Association of Children's Hospitals, Inc.: ``As 
     you have recognized, children have health and developmental 
     needs that are markedly different than the needs of the adult 
     population and require pediatric expertise to understand, 
     diagnose, and treat health problems correctly. . . . Again, 
     we applaud you for your important and bipartisan efforts to 
     address children's unique health care needs as part of your 
     legislation. . . .''
       National Mental Health Association: ``On behalf of the 
     National Mental Health Association and its 330 affiliates 
     nationwide, I am writing to express strong support for the 
     Promoting Responsible Managed Care Act of 1998. . . . NMHA 
     was particularly gratified to learn that you included 
     language in your important compromise legislation which 
     guarantees access to psychotropic medications. . . . 
     Finally--alone among all the managed care bills introduced in 
     this session of Congress--your legislation prohibits the 
     involuntary disenrollment of adults with severe and 
     persistent mental illnesses and children with serious mental 
     and emotional disturbances.''
       American Academy of Pediatrics: ``Children are not little 
     adults. Their care should be provided by physician 
     specialists who are appropriately educated in the unique 
     physical and developmental issues surrounding the care of 
     infants, children, adolescents, and young adults. We are 
     particularly pleased that you recognize this and have 
     included access to appropriate pediatric specialists, as well 
     as other protections for children, as key provisions of your 
     legislation.''
       National Alliance for the Mentally Ill: ``Thank you for 
     your efforts on behalf of people with severe mental 
     illnesses. Your bipartisan approach to this difficult issue 
     is an important step forward in placing the interests of 
     consumers and families ahead of politics. NAMI looks forward 
     to working with you to ensure passage of meaningful managed 
     care consumer protection legislation in 1998.''
       American Cancer Society: ``. . . I commend you on your 
     bipartisan effort to craft patient

[[Page S9589]]

     protection legislation that meets the needs of cancer 
     patients under managed care. . . . Your legislation grants 
     patients access to specialists, ensures continuity of care . 
     . . and permits for specialists to serve as the primary care 
     physician for a patient who is undergoing treatment for a 
     serious or life-threatening illness. Most critically, your 
     bill promotes access to clinical trials for patients for whom 
     standard care has not proven most effective.''
       American Protestant Health Alliance: ``Your proposal 
     strikes a balance which is most appropriate. As each of us is 
     aware, often we have missed the opportunity to enact health 
     policy changes, only to return later and achieve fewer gains 
     than we might have earlier. It would be tragic if we allowed 
     this year's opportunity to escape our grasp. We are pleased 
     to stand with you in support of your proposal.''
       American College of Physicians/American Society of Internal 
     Medicine: ``We believe your bill contains necessary patient 
     protections, as well as provisions designed to foster quality 
     improvement, and therefore has the potential to improve the 
     quality of care patients receive. The College is particularly 
     pleased that your proposal covers all Americans, rather than 
     only those individuals who are insured by large employers 
     under ERISA.''
       National Association of Public Hospitals & Health Systems: 
     ``This legislation provides consumers with the information to 
     make informed decisions about their managed care plans, 
     offers consumers protections from disincentives to provide 
     care, and provides consumers with meaningful claims review, 
     appeals and grievance procedures. We applaud your leadership 
     in this area and we look forward to working with you to shape 
     final legislation.''
       Mental Health Liaison Group (a coalition of 19 national 
     groups): ``By establishing a clear grievance and appeals 
     process, assuring access to mental health specialists, and 
     assuring the availability of emergency services, your bill 
     begins to establish the consumer protections necessary for 
     the delivery of quality mental health care to every 
     American.''
       Council of Jewish Federations: ``Your provisions on 
     continuity of care also provide landmark protections for 
     consumers in our community and in the broader community as 
     well. Overall, your legislation provides important safeguards 
     for consumers and providers that are involved in managed 
     care.''
       Families USA: ``We are pleased that your bill . . . would 
     establish many protections important to consumers, such as 
     access to specialists, prescription drugs and consumer 
     assistance. In addition, your external appeals language 
     addresses many consumer concerns in this area.''
       National Association of Chain Drug Stores: ``. . . we 
     applaud your efforts . . . in crafting a bipartisan managed 
     care proposal. . . . Your bill, ``Promoting Responsible 
     Managed Care Act'' takes a realistic step in improving the 
     health care system for all Americans.''
       Catholic Health Association: ``The Catholic Health 
     Association of the United States (CHA) applauds your 
     bipartisan leadership in Congress to help enact legislation 
     this year protecting consumers who receive health care 
     through managed care plans. The Chafee-Graham-Lieberman bill 
     is a sound piece of legislation.''
       National Association of Community Health Centers: ``We 
     appreciate the bipartisan efforts you have undertaken to 
     correct the deficiencies in the managed care system. . . . We 
     applaud your inclusion of standards for the determination of 
     medical necessity (Section 102) that are based on generally 
     accepted principles of medical practice. . . . We also 
     appreciate your inclusion of federally qualified health 
     centers (FQHCs) as providers that may be included in the 
     network.''

 Mr. GRAHAM. Mr. President, I want to commend Senator Chafee, 
Senator Lieberman, Senator Specter, and Senator Baucus for your 
outstanding leadership on an issue of vital importance to the country--
protecting patients from abuses by managed care organizations.
  Mr. President, what looms before the Senate is ominous. If nothing 
changes, when we return in September, we appear destined to be 
witnesses to the Senate's version of a massive train wreck in the form 
of managed care debate.
  The Republican train and the Democratic train are racing toward each 
other with ever-increasing speed and hostility, neither side willing to 
apply the brakes and switch tracks--neither side mindful of the havoc 
the wreck could cause.
  If we don't switch tracks, the wreck is inevitable. And the 
casualties will not be either political party. Instead, they will be 
the American public, who have asked us to provide them with basic 
federal protections.
  My colleagues and I are simply not willing to sacrifice the 
opportunity to pass meaningful managed care reform this year for the 
opportunity to score political points.
  Over the past few years, it has become increasingly clear that the 
American people are anxious about their health security as a 
consequence of managed care. Even managed care plans are nervous about 
the possibility of declining enrollment due to an increasing lack of 
consumer confidence.
  Our bill seeks to leave the decision-making to doctors and their 
patients, and to ensure that patients get what they are paying for with 
their hard-earned dollars.
  Our goal is to hold insurance companies accountable for the benefits 
and services they claim to be delivering. Patients want the right to 
see a specialist when they need one; our bill assures that. Patients 
want assurances they will get the medicines their doctors say they 
need, not just what's on a plan's formulary; our bill assures that. 
Patients want to know that plans are not providing financial incentives 
to their doctors to withhold medically necessary treatment; our bill 
assures that. Parents want to know that a pediatrician is available to 
serve as their child's primary care provider; our bill assures that.
  Women want to know that they can see their ob/gyn without first 
getting permission from the plan's gatekeeper; our plan assures that.
  However, having said all of that, it is vitally important to look at 
the fine print when comparing the patient protections contained in each 
of these proposals because, as the saying goes, the Devil is in the 
details.
  For example, all of the plans would require insurers to pay for 
emergency services. However, the GOP plan lacks a critical protection 
which was enacted into law for Medicare and Medicaid beneficiaries as 
part of the Balanced Budget Act of 1997--reimbursement for post-
stabilization care.
  Each bill contains an external appeals process to allow patients to 
appeal denials or limitations of care to an independent entity. 
However, the Republican proposal would prevent any complaint for a 
service valued at less than $1,000.00 from being referred to an 
external appeals body. Picture the situation where a woman is denied a 
mammogram which, had it been done, would have resulted in early 
detection of breast cancer and you begin to understand why this 
provision is problematic.
  In closing while the idea of playing the blame game up to the fall 
elections might be appealing to some, we are asking our colleagues, 
through this legislation, to take another course of action--to pass 
meaningful and effective patient protections for 161 million Americans 
this year.

 Mr. LIEBERMAN. Mr. President, I am delighted to join Senators 
Chafee, Graham, Specter, and Baucus to introduce the Promoting 
Responsible Managed Care Act of 1998. Our bill is a bipartisan effort 
that we believe can be enacted this year.
  Our effort is modest in authorship because we have chosen to draw 
from both Republican and Democratic bills, but bold in goal. We aim to 
bring protections to 161 million Americans without delay before this 
Congress adjourns. Included in those bold protections are new rights of 
access to specialists, access to independent grievance and appeals, 
quality report cards, and compensation if a plan's actions result in 
their injury. Excluded are those provisions, even some with appeal, 
that are likely to prevent any Congressional action on patients' rights 
this year.
  Over the last decade we have crossed over a turbulent river of change 
in health care. The raging cost escalation of the 80's and 90's 
buffeted families and tore away an ever increasing share of their 
paycheck to pay for health insurance coverage. Some couldn't afford the 
price, and lost their hold on health care--for themselves and their 
families.
  Today, the on flowing health care costs have slowed, but left behind 
permanent changes in the health care shoreline. We have a tool that has 
dammed up health care costs--managed care. Yet, after more than a 
decade of cost increases, we have over forty-one million uninsured 
among us that can't afford coverage. We need to be mindful of these 
uninsured and the millions close to losing their insurance whenever we 
intervene in the health care market in ways that raise costs.
  Managed care has calmed the rise in medical costs that buffeted us so 
badly and brought double-digit inflation under control. The average 
rate of increase of costs of medical plans

[[Page S9590]]

dropped 10 percent between 1991 and 1996. Without managed care, costs 
would be higher, millions more would be uninsured, and wages and 
salaries would be lower.
  Today over 75 percent of Americans who receive their health coverage 
through their employer are in some form of managed care. Consumers no 
longer have a family doctor--they have a gatekeeper. They don't pick a 
physician--they (or in most cases, their employer) pick a network. A 
family's access to care, to drugs, to specialists all can be limited by 
the managed care organization.
  Now that cost increases have slowed, it is also time to focus on 
health care quality. Many people are nervous about the quality of their 
managed care plans. They are concerned that the success of managed care 
in containing costs, has come at the expense of health care quality.
  People want to know that they can get health care for their children 
from pediatricians, go see a specialist if their condition warrants 
some special attention, even go the emergency room if they feel that it 
is necessary.
  They want to know that they aren't going to be locked out of medical 
care by an unresponsive managed care bureaucracy, vainly calling an 
unanswered phone to get approval for necessary medical care.
  The entry of managed care into the health care marketplace has 
created competition that has lowered prices, enabling better access for 
millions to health care. But we also need to introduce competition over 
quality into this marketplace.
  Our bill covers all 161 million Americans who are privately-insured. 
It includes patient protection standards to protect patient's access to 
the physician of their choice including women's access to obstetrical/
gynecological specialists, a childs to a pediatrician, and other 
patients to specialists such as oncologists pursuant to a treatment 
plan.
  It protects continuity of care, so that patients can continue to see 
their physician through an illness or pregnancy despite changes in the 
managed care network.
  Plans would be prohibited from using ``gag rules'' to restrict 
physicians communication with their patients.
  Visits to emergency rooms would be covered based on the ``prudent 
layperson'' standard and would include reimbursement for post 
stabilization and maintenance care.
  Most important, we have included strong enforcement to protect these 
rights and protect the health and lives of all 161 privately insured 
Americans.
  We have four important enforcement rights. We give consumers the 
right to obtain performance information so they don't get trapped in a 
bad health plan in the first place, establish a new grievance and 
appeals process so that consumers have a speedy process and fair 
setting to seek needed healthcare, give the U.S. Department of Labor 
and Health and Human Services the right to place heavy fines on health 
plans that don't protect patients, and finally, if all three fail, give 
the patient new rights to sue for compensation in federal courts if all 
the new protections fail and they are injured as the result of a 
decision by their managed care plan.
  Our first enforcement tool is to empower consumer choice based on 
accurate, comparable information with information about their health 
care options. Millions of American healthcare consumers can get more 
information about the quality of a toaster oven or a candy bar than 
about their health plan. Report cards on health care quality should be 
the rule not the exception. Consumers who choose between plans, 
employers who purchase them, and plans and providers who compete for 
business will all drive up quality if report cards on their performance 
become the rule not the exception.
  Some of the large employers in my state joined together years ago to 
hold health plans accountable. These companies stood up to say before 
they would even offer a health plan to their employees, that plan would 
have to agree to provide their record of performance and outcome on 
critical services such as breast cancer screening, prenatal care, 
asthma and diabetic treatment.
  Workers at these companies now choose the plan with the best 
performance for them. All workers in America should have that right. It 
drives up quality and drives down bad managed care plans.
  We require that all health plans be held accountable by reporting how 
well they are doing in providing the services that keep people healthy. 
We allow the Secretary to develop requirements that will work for 
different types of insurance, but get critical quality information to 
workers and purchasers. Although Senator Nickles' bill includes 
voluminous information requirements, nowhere does he ask for the most 
critical information--how good a job is a health plan doing in keeping 
members of that plan healthy and alive.
  Our second enforcement tool gives consumers in a health plan the 
right to appeal a denial of coverage to a independent, external panel 
of fair-minded experts under specific, quick deadlines.
  When consumers need health care services, delays and indecision can 
be critical. The appeals process protects patients health by getting 
decisions made quickly and services provided before their medical 
condition worsens. No longer will consumers and their doctors spend 
months or even years fighting through a morass of managed care 
bureaucrats none of whom seem accountable, and all of whom add their 
own dollop of delay to a final decision.
  We have adopted the ``gold standard'' set by the Medicare program 
which guarantees an answer in 72 hours or less for urgent care, and in 
less than one month for even the most routine decisions. Consumers have 
full rights to appeal any denial of care--both internally and to an 
external body for a completely independent review.
  Third, we fix ERISA--a law that was enacted in 1974--so that it no 
longer blunts enforcement of patient protections. Under current law 
there are no meaningful enforcement remedies available to Americans who 
get their insurance through their employers. The U.S. Departments of 
Labor and Health and Human Services can do little to carry out their 
enforcement responsibilities. Individuals can not seek compensation 
when their health care plan makes a decision that injures them. A 
person, grievously harmed by their plan, can only sue for the cost of 
the benefit wrongly denied. For example, under current ERISA law, a 
mother on death's bed with cancer wrongly denied. For example, under 
current ERISA law, a mother on death's bed with cancer because she 
didn't get a mammogram would only be able to sue her health plan for 
the cost of the mammogram.
  The Democrats have chosen to address this problem by allowing 
participants in ERISA plans to seek redress, including uncapped 
punitive damages, in state courts, an absolute nonstarter with the 
Republicans. The Republican plan simply extends the enforcement 
mechanism provided under current law, which is to say the cost of the 
benefit denied, and have thrown in a small additional fine of $100 a 
day in cases where a health plan refuses to comply with the decision of 
the external appeal entity. $100 is a cruel compensation for a family 
that has lost a breadwinner through the botched denial of coverage of a 
managed care plan.
  We believe it is vitally important for Congress to step up to the 
plate with a real federal patient rights enforcement. In order to 
ensure that plans abide by the new patient protections in our bill, we 
give new civil money penalty and injunctive relief authority to the 
Secretaries of Health and Human Services and Labor. Plans that violate 
the law can be compelled to pay for it--up to $250,000.
  Finally, there will be those tragic instances where our broad, new 
protections fail. A person is injured despite their new rights and 
powers and the managed care organization is at fault. Under our plan, 
people can take their plan to court, and sue that plan for the full 
amount of any damages equal to their economic loss plus attorney's 
fees. The injured person can get back the loss of earnings or other 
benefits related to employment, medical expense loss, replacement 
services loss, loss due to death, burial costs, and loss of business or 
employment opportunities, caused by the coverage determination of the 
managed care plan. For the injured person and their family, the dollars 
probably can never compensate for the loss of health, but we think that 
it is critical that at least their

[[Page S9591]]

economic losses by paid when a plan causes the injury.
  That is our plan, a stronghold of patient rights protected by four 
well-buttressed walls of individual and government enforcement. We have 
given patients the strongest tools at our disposal--information, appeal 
rights, agency enforcement, and access to the courts. Our proposal has 
these strengths, but not the baggage of provisions that partisans of 
either party I fear may use to prevent congressional action. I urge the 
passage of the Promoting Responsible Managed Care Act of 1998 so that 
161 million Americans can receive its protections without 
delay.

 Mr. BAUCUS. Mr. President, I rise today to join Senators 
Chafee, Graham, Lieberman, and Specter in introducing the Promoting 
Responsible Managed Care Act of 1998. This bill will provide needed 
protections for all patients, while omitting the most polarizing 
aspects of the two major managed care bills designed by Republican and 
Democratic leaders. This bill seeks to establish a middle ground so 
that patients can be guaranteed quality health care this year.
  Mr. President, this legislation provides improved quality health care 
for all 161 million Americans enrolled in private health insurance 
plans, including managed care plans. The measure will protect the 
doctor-patient relationship, make information readily available, create 
quality standards, insure a timely appeals process, and provide 
patients with better access to care.
  By offering report cards on health plans, patients will be given the 
opportunity to make informed choices when selecting a health plan. This 
bill will also guarantee patients access to their specialists, and 
ensure that people have needed emergency treatment available wherever 
they are. Patients will not just receive stabilization in the emergency 
room, but will be guaranteed care afterwards as well.
  The bipartisan bill gives women direct access to obstetrician-
gynecologists, and children direct access to pediatricians. 
Prescription drugs which doctors deem necessary to patient care, 
whether on provider formulary lists or not, will now be made available. 
Routine costs associated with plan-approved clinical trials will also 
be guaranteed. Gag clauses, which undermine the patient-doctor 
relationship by penalizing doctors for referring patients to 
specialists or discussing costly medical procedures, will be 
prohibited.
  Mr. President, under the bipartisan bill, independent parties would 
be given the authority to rule on managed care denials through an 
appeals process, guaranteeing that each patient has a chance to appeal 
HMO decisions. Enforcement laws will help guarantee these provisions. 
This legislation will allow the Department of Health and Human Services 
and the Department of Labor to levy civil monetary penalties to managed 
care plans which do not abide by the bill's provisions. Also, self and 
fully-insured patients will be granted access to federal courts to 
claim compensatory damages.
  Mr. President, in health care, quality patient care should be the 
bottom line. I believe that the bottom line is achieved by Democratic 
plan. But with a Democratic plan that is unlikely to pass in this 
Republican-controlled Senate, and a Republican measure which would 
likely be vetoed by the president, this proposal stands as a fresh 
start to significant managed care reform. This bipartisan and balanced 
measure will ensure that quality care prevails over political 
differences, and I urge the Senate to pass it.
                                 ______
                                 
      By Mr. SESSIONS:
  S. 2417. A bill to provide for allowable catch quota for red snapper 
in the Gulf of Mexico, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.


                 national marine fisheries legislation

 Mr. SESSIONS. Mr. President, I rise today to introduce 
legislation, which I have drafted to address a matter which is of 
growing concern in my state. In particular, my constituents who live 
and work in the coastal communities of Alabama have voiced serious and 
legitimate concerns about the validity of recently issued National 
Marine Fisheries Service regulations which threaten to reduce the total 
allowable catch of red snapper in the Gulf of Mexico this year. The red 
snapper stock in the Gulf of Mexico is a very important economic asset 
for my state and, in fact, serves as a major economic linchpin for many 
of these coastal communities. I believe that my bill presents a 
reasonable solution to ensuring the long-term viability of the snapper 
stocks while also ensuring continuity and economic stability for 
individuals and communities who are so reliant on the income that 
commercial and recreational snapper fishing provides. Additionally, I 
feel that this bill could provide relief for persons in the shrimp 
industry, who feel that they have been unduly and unfairly burdened by 
NMFS regulatory requirements. Mr. President, I would also like to 
stress that this bill would assist all Gulf Coast communities that rely 
on the red snapper as an asset and I would hope that my colleagues who 
are hearing the same concerns from their constituencies will join with 
me in support of this bill.
  Mr. President, I will have more to say about this bill in the future. 
For the sake of brevity, however, I would simply like to highlight some 
of the features in my legislation. To begin with, it maintains a total 
allowable catch of 9,120,000 pounds for each calendar year 1998 through 
2001 which is to be allocated according to the current 51% commercial 
and 49% recreational split. The intent of this language is to provide 
certainty to our coastal communities by establishing a total allowable 
catch quota for this time period which cannot be lowered. The bill also 
provides that release of this quota cannot be conditioned upon the 
performance of bycatch reduction devices over the 1998-2001 time 
period. Additionally, the legislation maintains the current minimum 
size limits, and maintains the National Marine Fisheries Service's 
recently established 4 bag limit. My bill also requires the Secretary 
of Commerce to immediately review existing turtle excluder devices to 
see if they can be certified as bycatch reduction devices in the hopes 
that, if they can be so certified, shrimpers will be spared the cutting 
of an additional hole in their nets. Finally, my bill will also require 
a future study of bycatch reduction efficiency to be undertaken by the 
Secretary so that snapper management techniques can be based on 
accurate, and scientifically sound, understanding of the role that 
bycatch reduction devices can play in our efforts to continue to 
strengthen the replenishing snapper stocks. In my view, this bill adds 
clarity and stability to a situation that has been needlessly 
complicated over the past several years, and will allow both the 
regulators and the regulated community an opportunity to ``catch their 
breath'' as we determine the proper steps to take in resolving this 
ongoing debate.
                                 ______
                                 
      By Mr. JEFFORDS (for himself, Mr. Leahy, and Mr. Warner):
  S. 2418. A bill to establish rural opportunity communities, and for 
other purposes; to the Committee on Finance.


              RURAL OPPORTUNITIES EMPOWERMENT ACT OF 1998

 Mr. JEFFORDS. Mr. President, today with my friend and 
colleague, Senator Leahy, I introduce the Rural Opportunities 
Empowerment Act of 1998--a bipartisan bill that will do a great deal to 
assist urban and rural areas develop communities in economic need.
  The legislation will do a number of things. It builds off the 
Taxpayer Relief Act of 1997, which authorized 20 rural and urban 
Empowerment Zones, and creates new opportunities for those communities 
desperately in need of federal assistance, but unable to access those 
funds.
  Our legislation will help scores of communities across the country 
seeking to improve their local economy through desperately needed 
federal funds. Within our legislation, monies are provided for the 20 
Empowerment Zones authorized last year. Also, new grants are created 
for communities that are not able or eligible to compete for the EZ 
Round II competition this fall. Additional points will be given to 
those Enterprise Communities who have met a high standard of 
performance and who are seeking to be designated as an Empowerment 
Zone. Finally, a small amount of money will be provided to the 
Secretary to reward so-called ``Top Performers,'' and allow

[[Page S9592]]

them to be able to continue their operations so additional goals of 
their strategic plan are met.
  Mr. President, the Department of Housing and Urban Development (HUD) 
and the U.S. Department of Agriculture's (USDA) Empowerment Zones and 
Enterprise Communities provide critical resources for those rural and 
urban areas in economic distress. Many of these communities intend to 
apply for a Round II Empowerment Zone designation. Vermont's old North 
End in Burlington, for example, has met numerous milestones in their 
strategic plan by successfully leveraging additional monies from the 
private sources. If Congress does not pass this legislation there will 
be no funding. Burlington's application for an Empowerment Zone 
designation under Round II this fall will be useless.
  Providing rehabilitation and tax breaks to businesses who are 
interested in investing in a depressed area has been an impressive 
success in Burlington and elsewhere and my legislation will not only 
allow Burlington to compete for Empowerment Zone status in Round II, 
but it will also require HUD to disseminate best EC practices to other 
ECs around the country who may not be performing as impressively. This 
legislation is not only good for rural and urban communities, it is 
good government.
  I ask my colleagues to work with me and with Senator Leahy to ensure 
that this legislation is passed in the short time we have left in the 
105th Congress. I will be working with the Finance Committee to ensure 
that this Congress does not forget those communities who look toward 
the federal government to provide incentives for the private sector to 
invest in economically depressed areas.
 Mr. LEAHY. Mr. President, I am pleased to join Senator 
Jeffords today in introducing the Rural Opportunity Communities Act of 
1998. This bill will greatly enhance the Empowerment Zone program by 
providing incentives to reward well performing Empowerment Zones and 
Enterprise Communities. The bill will also offer communities which face 
significant economic problems, but do not fit the strict definitions of 
the Empowerment Zone program with an alternative built on the same 
long-term, comprehensive, community-based planning.
  In 1995 the first round of Empowerment Zones and Enterprise 
Communities were designated. Those communities have well demonstrated 
the potential of the program to revitalize inner-city neighborhoods and 
poverty stricken rural areas. In Burlington's Old North End, Vermont's 
only Enterprise Community, the benefits of this program have been 
tremendous. What was once a decaying section of the city is now a vital 
neighborhood. Equally important, the ``New North End'' has become an 
integral part of the city through the network of organizations and 
community members that pulled together to develop a plan to revitalize 
the area.
  A new round of Empowerment Zone awards will allow additional 
communities to benefit from the program. This bill further enhances the 
Empowerment Zone program by recognizing those communities which have 
made the most progress in implementing their ten year plans and 
improving their neighborhoods. These model Empowerment Zones and 
Enterprise Communities will be eligible to compete for special 
incentive grants so that the successful programs they have initiated 
can continue to flourish. The success of well-performing Enterprise 
Communities will also be recognized by giving them additional points on 
their applications for empowerment zone status.
  FInally, the bill establishes a special demonstration program, the 
Rural Opportunity Communities. This demonstration is designed to test 
the Empowerment Zone model of long-term, community based planning, with 
communities which are facing economic problems different from those 
defined by the Empowerment Zone program. Among other factors, the ROC 
demonstration will recognize the very real problem of under-employment, 
a significant problem in Vermont. The northeastern corner of Vermont, 
known as the Northeast Kingdom, is regularly responsible for one of the 
highest unemployment rates in the state. This is a very rural area 
where many families also hold down multiple jobs to make ends meet.
  Last year I worked to bring together a group of economic development 
organizations and local officials to take a broader look at the 
problems facing the region, and work to find a common approach to 
addressing those problems. Since that time this group, known as the 
Northeast Kingdom Enterprise Collaborative, has continued to grow and 
has begun to lay the groundwork for a long-term plan for the three-
county area. The ROC demonstration will offer a perfect opportunity for 
areas like the Northeast Kingdom, that are interested in pursuing this 
Empowerment Zone model, to gain access to the resources they need.
                                 ______
                                 
      By Mr. D'AMATO:
  S. 2419. A bill to amend the Public Utility Regulatory Policies Act 
of 1978 to protect the nation's electricity ratepayers by ensuring that 
rates charged by qualifying small power producers and qualifying 
cogenerators do not exceed the incremental cost to the purchasing 
utility of alternative electric energy at the time of delivery, and for 
other purposes; to the Committee on Energy and Natural Resources.


          the electric power consumer rate relief act of 1998

  Mr. D'AMATO. Mr. President, I ask unanimous consent that the text of 
the bill, S. 2419, be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2419

       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 ``Electric Power Consumer Rate 
     Relief Act of 1998''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) certain courts have found that States are preempted 
     under the Public Utility Regulatory Policies Act of 1978 from 
     engaging in certain ratepayer protection activities critical 
     to ensuring reasonable rates for in-State ratepayers;
       (2) those courts have found that, although States have the 
     authority initially to establish rates charged by qualifying 
     small power producers and qualifying cogenerators to local 
     electric utilities, that such States thereafter are preempted 
     by that Act from ensuring over time that rates--
       (A) are just and reasonable to the retail electric 
     consumers of purchasing electric utilities and are in the 
     public interest; and
       (B) do not exceed the incremental cost to such purchasing 
     electric utilities of alternative electric energy at the time 
     of delivery;
       (3) other courts have found that States are preempted from 
     monitoring effectively the operating and efficiency 
     performance of in-State cogeneration and small power 
     production facilities for the purpose of determining whether 
     such facilities meet Federal Energy Regulatory Commission 
     standards for qualifying cogenerators; and
       (4) that Act should be amended to clarify the intent of 
     Congress that States have the authority--
       (A) to ensure that rates charged by qualifying small power 
     producers andqualifying cogenerators to purchasing electric 
     utilities--
       (i) are just and reasonable to the electric consumers of 
     such purchasing electric utilities and in the public 
     interest; and
       (ii) do not exceed the incremental cost to such purchasing 
     electric utilities of alternative electric energy at the time 
     of delivery; and
       (B) to establish effective programs for monitoring the 
     operating and efficiency performance of in-State cogeneration 
     and small power production facilities for the purpose of 
     determining whether such facilities meet Federal Energy 
     Regulatory Commission standards for qualifying cogenerators.

     SEC. 3. IMPLEMENTATION OF RULES.

       Section 210(f)(1) of the Public Utility Regulatory Policies 
     Act of 1978 (16 U.S.C. 824a-3(f)(1)) is amended--
       (1) by striking ``(1) Beginning'' and inserting the 
     following:
       ``(1) By state regulatory authorities.--
       ``(A) In general.--Beginning''; and
       (2) by adding at the end the following:
       ``(B) Requirements.--Notwithstanding any other provision of 
     this section, a State regulatory authority may ensure that 
     rates charged by qualifying small power producers and 
     qualifying cogenerators--
       ``(i) are just and reasonable to the electric consumers of 
     the purchasing electric utility and in the public interest; 
     and
       ``(ii) do not exceed the incremental cost at the time of 
     delivery to the purchasing utility of alternative electric 
     energy and capacity.
       ``(C) Monitoring.--A State regulatory authority may 
     establish programs for monitoring the operating and 
     efficiency performance of in-State cogeneration and small 
     power production facilities for the purpose of determining 
     whether the facilities meet standards established by the 
     Commission for qualifying facilities.
       ``(D) Amendment of contract.--A State regulatory authority 
     may require that any

[[Page S9593]]

     contract entered into before the date of enactment of this 
     paragraph be amended to conform to any requirements imposed 
     under subparagraph (B).''.
                                 ______
                                 
      By Mr. HARKIN (for himself, Mr. Hatch, Mr. Daschle, Mr. Craig, 
        Ms. Milkulski, Mr. D'Amato, Ms. Moseley-Braun, Mr. Grassley and 
        Mr. Wellstone):
  S. 2420. A bill to establish within the National Institutes of Health 
an agency to be known as the National Center for Complementary and 
Alternative Medicine; to the Committee on Labor and Human Resources.


          center for complementary and alternative legislation

 Mr. HARKIN. Mr. President, today I am introducing a bill, 
cosponsored by Senators Daschle, Hatch, Grassley, D'Amato, Wellstone, 
Mikulski, Craig, and Moseley-Braun to improve and expand rigorous 
scientific review of alternative and complementary therapies. This bill 
will elevate the NIH's Office of Alternative Medicine to Center status. 
It would be renamed the ``National Center for Complementary and 
Alternative Medicine.''

  Mr. President, the American public supports this bill. Increasingly, 
Americans are turning to complementary and alternative medicine. 
According to a recent study by Harvard University researchers, fully 
one third of Americans regularly use complementary and alternative 
medicine. This same study found that in 1990, American consumers spent 
more than $14 billion on these practices. In that year there were 425 
million visits to complementary and alternative practitioners--more 
than those to conventional primary care practitioners!
  These practices, which range from acupuncture, to chiropractic care, 
to naturopathic, herbal and homeopathic remedies, are not simply 
complementary and alternative, but are integral to how millions of 
Americans manage their health and treat their illnesses. Yet there is 
little scientific research being done to investigate and validate these 
therapies.
  We must reexamine our spending priorities. Approximately 90 million 
Americans suffer from chronic illnesses which cost society roughly $659 
billion in health care expenditures, lost productivity and premature 
death. According to the Centers for Disease Control, we spend $28.6 
billion Medicare dollars on diabetes alone--a disease which can be 
treated effectively with low-cost alternative therapies. A Robert Wood 
Johnson Foundation study recently published in the Journal of the 
American Medical Association (JAMA) revealed that the current health 
care delivery system is not meeting the needs of the chronically ill in 
the United States. The study also concluded that such trends reveal 
skyrocketing costs, increasing numbers of people in need and a 
dysfunctional system of care. Alternative medical therapies could offer 
a cost-saving alternative to this trend.
  We are in an era when we must take a closer look at ways to provide 
cost-effective, preventive health care, and as we do so, Congress must 
act to strengthen the mission of the Office of Alternative Medicine in 
finding safe and effective treatments and preventive methods for 
chronic conditions. Patients throughout our nation are suffering 
because there is a lack of available information on alternative 
medicine.
  In 1992, after finding that the National Institutes of Health (NIH) 
was largely ignoring this increasingly important area, at my urging 
Congress passed legislation creating the Office of Alternative Medicine 
(OAM) within NIH. At that time, Congress charged OAM with assuring 
objective, rigorous scientific review of alternative therapies. They 
were to investigate and validate therapies so that consumers would be 
better informed as to what treatments work and what treatments don't.
  It is now clear that without greater authority to initiate research 
projects and assure unbiased and rigorous peer review, alternative 
therapies will not be adequately reviewed. The main problem is that the 
Office has no authority to directly provide research funding to any 
medical professional seeking to study the safety and effectiveness of 
alternative treatments. And unlike all other major organizations within 
NIH, the OAM has no autonomy to oversee its mission and goals. Because 
the Office must work through other Institutes to carry out research 
projects, promising projects are blocked and considerable time and 
resources are wasted.
  The bill we are introducing would increase the status and authority 
of the Office of Alternative Medicine by creating in its place a 
National Center for Complementary and Alternative Medicine at NIH. The 
principal change in authority is granting the Center the ability to 
directly fund research proposals and other projects. This will not only 
assure that alternative therapies receive the review they need and 
deserve, it will improve efficiency by eliminating unnecessary 
bureaucratic steps required by the current set up.
  Our bill also addresses another shortcoming of the NIH's current 
handling of alternative medicine research. The hallmark of rigorous 
scientific review at NIH is the peer review process. However, when it 
comes to alternative and complementary therapies, there is no true peer 
review. There are no complementary or alternative medicine specialists 
on NIH peer review panels. That means, for example, that when a 
research proposal comes in on chiropractic care, it often is reviewed 
by peer review panels that include no chiropractors. Rather, these 
proposals may be reviewed by scientists who have little or no 
experience in or knowledge about chiropractic care.
  This has three negative results. First, these projects are not being 
reviewed by individuals with expertise in the fields contemplated by 
the research. This reduces the scientific quality of the review 
process. Second, because those reviewing these proposals have no 
expertise in this area, they may be less likely to support their 
approval. And, third, because those seeking NIH support of alternative 
medicine research know that their proposals will not receive true peer 
review, they may hesitate to apply, thereby reducing the number and 
quality of research proposals. Our proposal corrects this problem by 
requiring that projects are reviewed by scientists with expertise in 
the particular area of complementary and alternative medicine proposed 
to be studied.
  The federal government and state-of-the-art science must begin to 
catch up with the public's increasing demand for information and 
answers regarding alternative and complementary health care. The time 
is now. I urge you and my colleagues to support this important bill 
that will improve the quality of health care for Americans.
                                 ______
                                 
      By Mr. CONRAD:
  S. 2421. A bill to provide for the permanent extension of income 
averaging for farmers; to the Committee on Finance.


          permanent extension of income averaging for farmers

  Mr. CONRAD. Mr. President, I am taking the floor today to introduce a 
bill which will respond to a critical problem faced by farmers. This 
proposal would amend the provision in the Taxpayer Relief Act of 1997 
the temporarily reinstated income averaging for farmers.
  When income averaging was eliminated as part of the Tax Reform Act of 
1986, Congress acted primarily on the assumption that fewer tax 
brackets and dramatically lower marginal tax rates would substantially 
reduce the number of taxpayers whose fluctuating incomes could subject 
them to higher progressive rates. Congress was also concerned that 
income averaging, as it existed at that time, was effectively targeted 
on taxpayers who actually experienced wildly fluctuating incomes.
  Today, it is hard to imagine a group of taxpayers whose incomes 
fluctuate more wildly than farmers. There is no place where that kind 
of fluctuation is more vividly demonstrated than in my own state of 
North Dakota. In 1996, North Dakota farm income came in at $764 
million. A year later, it was $15 million. That is a 98 percent 
decrease, Mr. President! Fluctuations just don't come much wilder than 
that.
  Reflecting on the situation, I think Congress made a mistake 
eliminating income averaging altogether in 1986--at least with respect 
to farmers. Fluctuating income is a fact of life in agriculture, and to 
the extent that the Internal Revenue Code can respond to that reality, 
it should do so.

[[Page S9594]]

  The change we made in 1997 was a good one, but it did not go far 
enough to help many farmers who desperately need it. That reinstatement 
of income averaging for farmers should have made farmers' incomes in 
1997 eligible for averaging and the reinstatement should have been 
permanent. The bill I introduce today does both.
  This bill will provide modest, but much needed, assistance to farmers 
who were devastated in 1997, and provide it in a way that is consistent 
with the approach Congress took in the Taxpayer Relief Act last year.
  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. 2421

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PERMANENT EXTENSION OF INCOME AVERAGING FOR 
                   FARMERS.

       Section 933(c) of the Taxpayer Relief Act of 1997 is 
     amended by striking ``after December 31, 1997, and before 
     January 1, 2001'' and inserting ``after December 31, 1996''.
                                 ______
                                 
      By Mr. MACK (for himself, Mr. D'Amato, Mr. Coverdell, Mr. 
        McConnell, Mr. Murkowski, Mr. Gorton, and Mr. Nickles):
  S. 2422. A bill to provide incentives for states to establish and 
administer periodic teacher testing and merit pay programs for 
elementary school and secondary teachers; to the Committee on Labor and 
Human Resources.


          measure to encourage results in teaching act of 1998

  Mr. MACK. Mr. President, I rise today to introduce legislation with 
my friend and colleague, Senator D'Amato, to ensure that every 
classroom in America is staffed with a competent, qualified and caring 
teacher. During the past several months, Congress has debated a number 
of initiatives to further this goal, including an amendment that 
Senator D'Amato and I introduced and passed as part of the Education 
Savings Accounts package. Our amendment passed with bipartisan support, 
and we are here today to pursue this legislation in light of the 
President's veto of the ESA bill.
  As early as the 1890s, the United States was the world's premiere 
industrial power, boasting a manufacturing sector roughly equal to that 
of Great Britain, Germany and France combined. While relatively new, 
this industrial order grew at a remarkable pace, leading many to concur 
with Teddy Roosevelt's prediction that the Twentieth Century would be 
``America's Century.''
  As we stand at the edge of a new millennium, another economic 
revolution in underway. But unlike the industrial revolution of one 
hundred years ago, this new revolution is defined not by large 
factories and natural resources, but by something a little less 
tangible and a little more human. I believe the 21st Century will be 
known as the ``Century of Knowledge,'' where ingenuity and innovation 
will prove to be the most critical of resources. Now, if our children 
are to be prepared for the challenges ahead, educational excellence 
must become our first order of business.
  The President has placed education near the top of his domestic 
agenda. I am pleased that he, too, recognizes the importance of 
providing our children with an education second to none. This is an 
area where we can easily agree. However, I am discouraged that none of 
his proposals confronts the most basic, the most important, and the 
most neglected aspect of public education: the quality of instruction 
in the classroom. It cannot be overstated that the best teachers 
produce the best students. Unless the quality of teaching improves, all 
other very worthwhile reforms, from smaller classes and higher salaries 
to newer buildings and computers in the classroom--are meaningless.
  Good teachers are the backbone to a good education. Every student in 
America has a fundamental right to be taught by a skilled and well-
prepared teacher. Teachers make all the difference in the learning 
process. America's classrooms are staffed with many dedicated, 
knowledgeable, and hardworking teachers. Studies show again and again 
that teacher expertise is one of the most important factors in 
determining student achievement.
  Nevertheless, the case for sweeping reform is not difficult to make. 
The United States already spends more money per pupil than virtually 
any industrialized democracy in the world. Nonetheless, our children 
frequently score near the bottom in international exams in science and 
math. If the teacher-student relationship--which in my opinion is the 
most basic building-block in the educational process--is defective, no 
amount of resources will be able to turn bad schools into good schools. 
Throwing more money at the problem is no longer the answer. Again, real 
reforms are needed.
  Mr. President, real education reform begins in America's classrooms. 
Any reform must include measures to ensure that teachers are qualified 
to teach the subjects they are teaching. To my dismay, I have learned 
that all across the country, many teachers are being assigned to teach 
classes for which they have no formal training. Consider these 
statistics:
  One out of five English classes were taught by teachers who did not 
have at least a minor in English, literature, communications, speech, 
journalism, English education, or reading education.
  One out of four mathematics classes were taught by teachers without 
at least a minor in mathematics or mathematics education.
  Nearly 4 out of 10 life science or biology classes were taught by 
teachers without at least a minor in biology or life science.
  More than half of physical science classes were taught by teachers 
without at least a minor in physics, chemistry, geology or earth 
science.
  More than half of history or world civilization classes were taught 
by teachers who did not have at least a minor in history.
  Students in schools with the highest minority enrollments have less 
than a 50% chance of getting a science or mathematics teacher who holds 
a license and a degree in the field he or she teaches.
  Our schools and classrooms should be staffed with teachers who have 
the appropriate training and background. One way to determine this 
would be to test teachers on their knowledge of the subject areas they 
teach.
  Teacher testing is an important first step toward upgrading the 
quality of classroom instruction. Testing would identify teachers who 
are not making the grade, and would enable principals to help weaker 
teachers improve. Much has been made about social promotion, 
where students are often pushed on to the next grade with his or her 
peers despite the fact that the student has not met the criteria needed 
to advance. In my opinion, teachers face social promotion too. They are 
kept on staff regardless of performance. That is wrong. States should 
measure the expertise of their teachers through periodic teacher 
testing.

  Common sense also dictates that we should not concentrate all our 
attention on underperforming teachers. We must also recognize that 
there are many great teachers who are successfully challenging their 
students on a daily basis. Today, our public schools compensate 
teachers based almost solely on seniority, not on their performance 
inside the classroom. Merit-pay would differentiate between teachers 
who are hard-working and inspiring, and those who fall short.
  The legislation we are introducing today, known as the MERIT ACT--
which stands for Measures to Enhance Results in Teaching--is the same 
legislation that passed the Senate during debate on the Education 
Savings Accounts bill. It rewards states that test its teachers on 
their subject matter knowledge, and pays its teachers based on merit.
  Here is how it works: we will make half of any additional funding 
over the FY 1999 level for the Eisenhower Professional Development 
Program available to states that periodically test elementary and 
secondary school teachers, and reward teachers based on merit and 
proven performance. There will be NO reduction in current funding to 
states under this program based on this legislation. As funding 
increases for this program, so will the amount each state receives. 
Incentives will and should be provided to those states that take the 
initiative to establish teacher testing and merit pay programs.
  Again, I want to emphasize that all current money being spent on this 
program is unaffected by this legislation.

[[Page S9595]]

Only additional money will be used as an incentive for states to enact 
teacher testing and merit pay programs.
  Finally, this amendment enables states to also use federal education 
money to establish and administer teacher testing and merit pay 
programs. This broad approach will enable states to staff their schools 
with the best and most qualified teachers, thereby enhancing learning 
for all students. In turn, teachers can be certain that all of their 
energy, dedication and expertise will be rewarded. And it can be done 
without placing new mandates on states or increasing the federal 
bureaucracy.
  Mr. President, as I pointed out earlier, the Senate has already 
debated this innovative approach when we considered the Education 
Savings Accounts bill. I was impressed that we passed the amendment 
with bipartisan support by a vote of 63-35, and that it was included in 
the Conference report sent to the President for his signature. I was 
disappointed, however, when the President vetoed that important 
legislation on July 22, 1998, despite his own earlier involvement in 
developing a teacher testing program in his home state of Arkansas 
while he was Governor.
  As Governor, Bill Clinton enthusiastically supported teacher testing, 
and while Governor of South Carolina, Secretary of Education Richard 
Riley advocated a merit-pay plan. In fact, then-Governor Clinton in 
1984 said that he was more convinced than ever that competency tests 
were needed to take inventory of teacher' basic skills. He said, 
``Teachers who don't pass the test shouldn't be in the classroom''. 
Since coming to Washington, however, neither the President nor 
Secretary Riley has tried to do for the children of America what they 
as Governors fought to do for the children of their own states. Our 
nation's children deserve better.
  While Bill Clinton let an opportunity for true reform pass him by, I 
am encouraged by the recent action taken by the American Federation of 
Teachers. They, too, recognize that true reform begins in the classroom 
and that teacher quality must be at the heart of that reform. They 
recently passed a resolution affirming the need for improved teacher 
quality, which also states that they will take a more active role in 
reviewing teacher performance and dismissing teachers that cannot be 
helped. This same proposal was rejected two years ago by the 
Federation's membership. Again, I am encouraged by this change of 
heart. I am hopeful that we can work together with the AFT and any 
other organization interested in moving forward to improve teacher 
quality. While we may not agree on every approach, I would like to 
commence an ongoing dialogue on this important issue.
  Mr. President, I must also point out how timely this legislation is 
in light of the recent reports out of the state of Massachusetts, which 
tested prospective teachers with a tenth-grade level exam. Sadly, 60 
percent of those taking the test failed. It's unfortunate that the poor 
results of the test overshadow the positive contributions teachers make 
day in and day out to challenge the imagination of their students. 
That's why it's important to help teachers become the best they can be 
and to reward the outstanding teachers who are making a difference in 
the lives of our youth. Our children deserve nothing less. That's what 
this legislation does.
  The President's lack of support for merit pay and teacher testing has 
only temporarily set back the call for excellence in education. But I 
will continue to press forward with plans to ensure that our classrooms 
are led by capable teachers, and I will continue the fight to give 
dedicated professionals who teach our children a personal stake in the 
quality of the instruction they provide. If we accomplish these 
reforms, and place the interests of students above the preservation of 
the status quo, then the extraordinary dynamism of the American people 
will continue, and the 21st Century will, once again, be the ``American 
Century''.
  I hope there will again be broad, bipartisan support for this 
important initiative.
  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:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; FINDINGS; AND PURPOSES.

       (a) Short Title.--This Act may be cited as the ``Measures 
     to Encourage Results in Teaching Act of 1998''.
       (b) Findings.--Congress makes the following findings:
       (1) All students deserve to be taught by well-educated, 
     competent, and qualified teachers.
       (2) More than ever before, education has and will continue 
     to become the ticket not only to economic success but to 
     basic survival. Students will not succeed in meeting the 
     demands of a knowledge-based, 21st century society and 
     economy if the students do not encounter more challenging 
     work in school. For future generations to have the 
     opportunities to achieve success the future generations will 
     need to have an education and a teacher workforce second to 
     none.
       (3) No other intervention can make the difference that a 
     knowledgeable, skillful teacher can make in the learning 
     process. At the same time, nothing can fully compensate for 
     weak teaching that, despite good intentions, can result from 
     a teacher's lack of opportunity to acquire the knowledge and 
     skill needed to help students master the curriculum.
       (4) The Federal Government established the Dwight D. 
     Eisenhower Professional Development Program in 1985 to ensure 
     that teachers and other educational staff have access to 
     sustained and high-quality professional development. This 
     ongoing development must include the ability to demonstrate 
     and judge the performance of teachers and other instructional 
     staff.
       (5) States should evaluate their teachers on the basis of 
     demonstrated ability, including tests of subject matter 
     knowledge, teaching knowledge, and teaching skill. States 
     should develop a test for their teachers and other 
     instructional staff with respect to the subjects taught by 
     the teachers and staff, and should administer the test every 
     3 to 5 years.
       (6) Evaluating and rewarding teachers with a compensation 
     system that supports teachers who become increasingly expert 
     in a subject area, are proficient in meeting the needs of 
     students and schools, and demonstrate high levels of 
     performance measured against professional teaching standards, 
     will encourage teachers to continue to learn needed skills 
     and broaden teachers' expertise, thereby enhancing education 
     for all students.
       (c) Purposes.--The purposes of this Act are as follows:
       (1) To provide incentives for States to establish and 
     administer periodic teacher testing and merit pay programs 
     for elementary school and secondary school teachers.
       (2) To encourage States to establish merit pay programs 
     that have a significant impact on teacher salary scales.
       (3) To encourage programs that recognize and reward the 
     best teachers, and encourage those teachers that need to do 
     better.

     SEC. 2. STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY.

       (a) Amendments.--Title II of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 6601 et seq.) is amended--
       (1) by redesignating part D as part E;
       (2) by redesignating sections 2401 and 2402 as sections 
     2501 and 2502, respectively; and
       (3) by inserting after part C the following:

      ``PART D--STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY

     ``SEC. 2401. STATE INCENTIVES FOR TEACHER TESTING AND MERIT 
                   PAY.

       ``(a) State Awards.--Notwithstanding any other provision of 
     this title, from funds described in subsection (b) that are 
     made available for a fiscal year, the Secretary shall make an 
     award to each State that--
       ``(1) administers a test to each elementary school and 
     secondary school teacher in the State, with respect to the 
     subjects taught by the teacher, every 3 to 5 years; and
       ``(2) has an elementary school and secondary school teacher 
     compensation system that is based on merit.
       ``(b) Available Funding.--The amount of funds referred to 
     in subsection (a) that are available to carry out this 
     section for a fiscal year is 50 percent of the amount of 
     funds appropriated to carry out this title that are in excess 
     of the amount so appropriated for fiscal year 1999, except 
     that no funds shall be available to carry out this section 
     for any fiscal year for which--
       ``(1) the amount appropriated to carry out this title 
     exceeds $600,000,000; or
       ``(2) each of the several States is eligible to receive an 
     award under this section.
       ``(c) Award Amount.--A State shall receive an award under 
     this section in an amount that bears the same relation to the 
     total amount available for awards under this section for a 
     fiscal year as the number of States that are eligible to 
     receive such an award for the fiscal year bears to the total 
     number of all States so eligible for the fiscal year.
       ``(d) Use of Funds.--Funds provided under this section may 
     be used by States to carry out the activities described in 
     section 2207.
       ``(e) Definition of State.--For the purpose of this 
     section, the term `State' means each of the 50 States and the 
     District of Columbia.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on October 1, 1999.

[[Page S9596]]

     SEC. 3. TEACHER TESTING AND MERIT PAY.

       (a) In General.--Notwithstanding any other provision of 
     law, a State may use Federal education funds--
       (1) to carry out a test of each elementary school or 
     secondary school teacher in the State with respect to the 
     subjects taught by the teacher; or
       (2) to establish a merit pay program for the teachers.
       (b) Definitions.--In this section, the terms ``elementary 
     school'' and ``secondary school'' have the meanings given the 
     terms in section 14101 of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 8801).

  Mr. D'AMATO. Mr. President, I rise with my friend and colleague, 
Senator Mack, to introduce the MERIT Act. The MERIT Act seeks to reward 
those teachers who provide, day in and day out, magic in the 
classrooms, to reward them with a salary to match their importance. We 
should develop a methodology of rewarding those truly outstanding 
teachers and seeing to it that we keep them, retain them. Truly 
outstanding teachers are the unsung heroes of our communities. 
Unfortunately, however, great education does not take place for every 
child in every classroom, and that is sad. But it is something we can 
strive for and work to change.
  The bill that Senator Mack and I introduce comes on the heels of 
receiving some discouraging news, news from Massachusetts where a test 
of prospective teachers was given and nearly 60 percent of them failed. 
It was a test at the eighth-grade level. I firmly believe that most New 
York teachers are very good. But, nonetheless, I must ask the question, 
Why not have the best? Why not reach out to them? Why not attract them?
  The Massachusetts test was a good idea, but we should also give 
periodic competency tests to teachers who are already in the system. 
Most teachers are very dedicated and highly competent, but some are 
not. Some teachers who are highly skilled in one or two subject areas 
may be forced to teach other subjects in which they lack the 
competence. When that happens, our children are the ones who suffer.
  Another desperately needed reform is merit pay for outstanding 
teachers. We must reward the best teachers. In most of our Nation's 
schools there is no financial incentive for the truly outstanding 
teachers. Great teachers, who help our children achieve educational 
excellence, should be rewarded.
  The measure introduced today by Senator Mack and myself, the MERIT 
Act, is the same measure that passed the Senate on April 21 by a vote 
of 63 to 35. This legislation provides incentives for States to 
establish periodic teacher assessments and merit rewards. Incentives 
are provided through the Eisenhower Professional Development Program. 
The measure sets aside 50 percent of the funds appropriated over the 
fiscal year 1999 levels in the program, and then distributes them to 
States that have established teacher testing and merit pay. Last year, 
fiscal year 1998, Congress appropriated $335 million for this program 
to subsidize training for teachers. That is an increase of $25 million 
from the year before. Should we not be able to use this program to 
ensure that teachers are actually improving their teaching skills, as 
well as substantive knowledge? Teacher testing will help accomplish 
that goal.
  But let me be clear. As the Eisenhower Professional Development 
Program funding increases, so will each State and local government's 
share, with 50 percent of the increase reserved for those States that 
put in place a mechanism by which to periodically measure the ability, 
knowledge, and skills of teachers, and implement a pay scale to reward 
those determined and dedicated teachers. When we look at reforming our 
public schools, one thing must always be kept foremost in our efforts, 
and that is, we must put our children first. Our children are the best 
and the brightest. They are our most precious resource.
  So, when it comes to recruiting and retaining the best young 
professionals, I believe, in order to do that, we are going to have to 
pay them adequately. We are going to have to reward their 
accomplishments and see to it that the truly outstanding are rewarded 
with merit pay so we can assure our children get that opportunity. I 
hope our colleagues will join in this effort to improve America's 
schools and help prepare our children for the 21st century.
                                 ______
                                 
      By Mr. ABRAHAM:
  S. 2423. A bill to improve the accuracy of the budget and revenue 
estimates of the Congressional Budget Office by creating an independent 
CBO Economic Council and requiring full disclosures of the methodology 
and assumptions used by CBO in producing the estimates; to the 
Committee on the Budget and the Committee on Governmental Affairs, 
jointly, pursuant to the order of August 4, 1977, that if one Committee 
reports, the other Committee have thirty days to report or be 
discharged.

                          ____________________