[House Report 105-643]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-643
_______________________________________________________________________


 
 PROVIDING FOR THE CONSIDERATION OF H.R. 4250, THE PATIENT PROTECTION 
                              ACT OF 1998

   July 24 (legislative day, July 23), 1998.--Referred to the House 
                   Calendar and ordered to be printed

                                _______
                                

     Mr. Goss, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 509]

    The Committee on Rules, having had under consideration 
House Resolution 509, by a non-record vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

               brief summary of provisions of resolution

    The resolution provides for the consideration of H.R. 4250, 
the ``Patient Protection Act of 1998'' under a modified closed 
rule. The rule provides one hour of debate divided equally 
between Representative Hastert and an opponent.
    The rule provides that the amendments accompanying this 
report shall be considered as adopted.
    The rules provides for an amendment printed in the 
Congressional Record and numbered 2 which shall be considered 
as read, and shall be debatable for one hour equally divided 
and controlled by the proponent and an opponent.
    Finally, the rule provides for one motion to recommit, with 
or without instructions.

 summary of amendments considered as adopted by the rule to h.r. 4250--
                     patient protection act of 1998

    Change to section 1001 and other corresponding sections. 
(Regarding Patient Access to Unrestricted Medical Advice): 
Change includes insertion of words ``or restriction.'' 
Provision originally said health plans may not impose ``any 
prohibition'' on physicians when communicating with patients. 
Under revised language, health plans may not impose ``any 
prohibition or restriction.''
    Change to section 1001 and other corresponding sections. 
(Regarding Availability of Health Plan Information): Change 
includes clarification that prospective enrollees in health 
plans can request information specified in the bill.
    Change to section 1001 and other corresponding sections. 
(Regarding Emergency Services): Change includes clarification 
that patients may, under certain circumstance, seek emergency 
room services from any emergency room provider.
    Change to section 1201 and other corresponding sections. 
(Regarding Disclosure): Change includes insertion of paragraph 
which requires health plans to provide information relating to 
the number of external reviews that have been completed and the 
modification and reversals of internal decisions.
    Change to section 1201. (Regarding External Appeals): 
Change includes raising the amount of penalties which may be 
assessed in court actions in connection with group health 
plans. Provision originally said civil penalty could be in the 
amount of up to $250 a day, up to a total amount not to exceed 
$100,000. New provisions would permit penalties up to $500 a 
day (or up to $1,000 a day in the case of bad faith), up to a 
total amount not to exceed $250,000.
    Change to section 1201 and section 3102. (Regarding Fraud 
and Abuse Enforcement Activities.): Change includes moving the 
location of provision to Title IV.
    Change to section 2102. (Regarding HealthMarts.) Change 
adds an effective date, January 1, 2000, for the implementation 
of HealthMarts.
    Change to section 5001. (Regarding Confidentiality of 
Medical Records.): Change includes prohibition on health care 
providers and health plans from selling protected health 
information as part of conducting health care operations.
    Addition of New Subtitle D--(Regarding Revenue Offsets for 
Medical Savings Account Provisions): Addition consists of six 
revenue offsets to cover the revenue cost of the Medical 
Savings Account provisions contained in H.R. 4250 as follows: 
(1) restrict 10-year net operating loss carryback rules for 
specified liability losses, (2) clarify the meaning of 
``subject to'' liabilities under IRC section 357(c), (3) limit 
the use of non-accrual experience method of accounting to 
amounts to be received for the performance of qualified 
professional services, (4) information returns relating to the 
discharge of July 23, 1998 indebtedness by certain entities, 
(5) clarify and expand the mathematical error procedures, and 
(6) add vaccines against rotavirus gastroenteritis to the list 
of taxable vaccines.
    Addition of New Section (Regarding Sense of the House): It 
is the sense of the House that patients are best served when 
they are empowered to make informed choices about their own 
healthcare. The same is true regarding an individuals choice of 
health insurance. A system that gives people the power to 
choose the coverage that best meets their needs, combined with 
insurance market reforms, offers great promise of increased 
choices and greater access to health insurance for Americans.
    Addition of New Section (Regarding Effective Date for 
Standards Governing Unique Health Identifiers For Individuals): 
Secretary of Health & Human Services shall not promulgate final 
standards to go into effect for unique health identifiers until 
legislation is enacted specifically approving the standard.
    Deletion of Subtitle VI (Regarding Medical Savings Accounts 
in the Federal Employee Health Benefits Program (FEHBP). Change 
deletes the Subtitle.
    Amendments considered as adopted by the rule:
  Page 2, after line 5, in the heading relating to subtitle A 
of title I, strike the period at the end.
  Page 5, line 12, strike ``sections'' and insert ``section''.
  Page 6, line 5, insert ``or restriction'' after 
``prohibition''.
  Page 7, line 15, insert ``and without regard to otherwise 
applicable network limitations'' after ``preauthorization''.
  Page 26, insert after line 24 the following:
                          ``(ix) Information relating to 
                        external reviews.--The number of 
                        external reviews under section 
                        503(b)(4) that have been completed 
                        during the prior plan year and the 
                        number of such reviews in which the 
                        recommendation reported under section 
                        503(b)(4)(C)(iii) includes a 
                        recommendation for modification or 
                        reversal of an internal review decision 
                        under the plan.
  Page 28, line 9, insert ``(and an employee who, under the 
terms of the plan, is eligible for coverage but not enrolled)'' 
after ``participant''.
  Page 61, line 14, strike ``$250'' and insert ``$500''.
  Page 61, line 14, insert ``(or up to $1,000 a day in the case 
of a bad faith failure)'' after ``a day''.
  Page 61, line 17, strike ``$100,000'' and insert 
``$250,000''.
  Page 63, strike line 23 and insert the following:
        amended by striking ``, or (6)'' and inserting ``, (6), 
        or (7)''.
  Page 136, line 14, strike ``Act'' and insert ``subtitle''.
  Page 142, line 5, insert ``or restriction'' after 
``prohibition''.
  Page 143, line 16, insert ``and without regard to otherwise 
applicable network limitations'' after ``preauthorization''.
  Page 165, insert after line 2 the following:
                          ``(ix) Information relating to 
                        external reviews.--The number of 
                        external reviews under section 
                        503(b)(4) of the Employee Retirement 
                        Income Security Act of 1974 that have 
                        been completed during the prior plan 
                        year and the number of such reviews in 
                        which the recommendation reported under 
                        section 503(b)(4)(C)(iii) of such Act 
                        includes a recommendation for 
                        modification or reversal of an internal 
                        review decision under the plan.
  Page 166, line 11, insert ``(and an employee who, under the 
terms of the plan, is eligible for coverage but not enrolled)'' 
after ``participant''.
  Page 167, strike line 14 and all that follows through line 13 
on page 168 (and make necessary conforming changes to the table 
of contents).
  Page 168, line 14, strike ``2103'' and insert ``2102'' (and 
make necessary conforming changes to the table of contents).
  Page 169, line 10, insert ``(a) In General.--'' before 
``The''.
  Page 194, after line 17, insert the following:
  (b) Effective Date.--The amendment made by subsection (a) 
shall take effect on January 1, 2000. The Secretary of Health 
and Human Services shall first issue all regulations necessary 
to carry out such amendment before such date.
  Page 205, line 3, insert ``or restriction'' after 
``prohibition''.
  Page 206, line 10, insert ``and without regard to otherwise 
applicable network limitations'' after ``preauthorization''.
  Page 222, insert after line 21 the following:
                          ``(ix) Information relating to 
                        external reviews.--The number of 
                        external reviews under section 
                        503(b)(4) of the Employee Retirement 
                        Income Security Act of 1974 that have 
                        been completed during the prior plan 
                        year and the number of such reviews in 
                        which the recommendation reported under 
                        section 503(b)(4)(C)(iii) of such Act 
                        includes a recommendation for 
                        modification or reversal of an internal 
                        review decision under the plan.
  Page 224, line 3, insert ``(and an employee who, under the 
terms of the plan, is eligible for coverage but not enrolled)'' 
after ``participant''.
  Page 225, strike line 8 and all that follows through line 9 
on page 226 (and make necessary conforming changes to the table 
of contents).
  Page 226, line 10, strike ``3103'' and insert ``3102'' (and 
make necessary conforming changes to the table of contents).
  Page 233, insert after line 3 the following (and make 
necessary conforming changes to the table of contents):

SEC. 3203. SENSE OF THE HOUSE OF REPRESENTATIVES.

  It is the sense of the House of Representatives that patients 
are best served when they are empowered to make informed 
choices about their own health care. The same is true regarding 
an individual's choice of health insurance. A system that gives 
people the power to choose the coverage that best meets their 
needs, combined with insurance market reforms, offers great 
promise of increased choices and greater access to health 
insurance for Americans.

                      Subtitle D--Revenue Offsets

SEC. 3301. CLARIFICATION OF DEFINITION OF SPECIFIED LIABILITY LOSS.

  (a) In General.--Subparagraph (B) of section 172(f)(1) of the 
Internal Revenue Code of 1986 (defining specified liability 
loss) is amended to read as follows:
                  ``(B)(i) Any amount allowable as a deduction 
                under this chapter (other than section 
                468(a)(1) or 468A(a)) which is in satisfaction 
                of a liability under a Federal or State law 
                requiring--
                          ``(I) the reclamation of land,
                          ``(II) the decommissioning of a 
                        nuclear power plant (or any unit 
                        thereof),
                          ``(III) the dismantlement of a 
                        drilling platform,
                          ``(IV) the remediation of 
                        environmental contamination, or
                          ``(V) a payment under any workers 
                        compensation act (within the meaning of 
                        section 461(h)(2)(C)(i)).
                  ``(ii) A liability shall be taken into 
                account under this subparagraph only if--
                          ``(I) the act (or failure to act) 
                        giving rise to such liability occurs at 
                        least 3 years before the beginning of 
                        the taxable year, and
                          ``(II) the taxpayer used an accrual 
                        method of accounting throughout the 
                        period or periods during which such act 
                        (or failure to act) occurred.''
  (b) Effective Date.--The amendment made by this section shall 
apply to net operating losses arising in taxable years ending 
after the date of the enactment of this Act.

SEC. 3302. PROPERTY SUBJECT TO A LIABILITY TREATED IN SAME MANNER AS 
                    ASSUMPTION OF LIABILITY.

  (a) Repeal of Property Subject to a Liability Test.--
          (1) Section 357.--Section 357(a) of the Internal 
        Revenue Code of 1986 (relating to assumption of 
        liability) is amended by striking ``, or acquires from 
        the taxpayer property subject to a liability'' in 
        paragraph (2).
          (2) Section 358.--Section 358(d)(1) of such Code 
        (relating to assumption of liability) is amended by 
        striking ``or acquired from the taxpayer property 
        subject to a liability''.
          (3) Section 368.--
                  (A) Section 368(a)(1)(C) of such Code is 
                amended by striking ``, or the fact that 
                property acquired is subject to a liability,''.
                  (B) The last sentence of section 368(a)(2)(B) 
                of such Code is amended by striking ``, and the 
                amount of any liability to which any property 
                acquired from the acquiring corporation is 
                subject,''.
  (b) Clarification of Assumption of Liability.--
          (1) In general.--Section 357 of such Code is amended 
        by adding at the end the following new subsections:
  ``(d) Determination of Amount of Liability Assumed.--
          ``(1) In general.--For purposes of this section, 
        section 358(d), section 362(d), section 368(a)(1)(C), 
        and section 368(a)(2)(B), except as provided in 
        regulations--
                  ``(A) a recourse liability (or portion 
                thereof) shall be treated as having been 
                assumed if, as determined on the basis of all 
                facts and circumstances, the transferee has 
                agreed to, and is expected to, satisfy such 
                liability (or portion), whether or not the 
                transferor has been relieved of such liability, 
                and
                  ``(B) a nonrecourse liability shall be 
                treated as having been assumed by the 
                transferee of any asset subject to such 
                liability.
          ``(2) Regulations.--The Secretary shall prescribe 
        such regulations as may be necessary to carry out the 
        purposes of this subsection and section 362(d). The 
        Secretary may also prescribe regulations which provide 
        that the manner in which a liability is treated as 
        assumed under this subsection is applied, where 
        appropriate, elsewhere in this title.''
          (2) Limitation on basis increase attributable to 
        assumption of liability.--Section 362 of such Code is 
        amended by adding at the end the following new 
        subsection:
  ``(d) Limitation on Basis Increase Attributable to Assumption 
of Liability.--
          ``(1) In general.--In no event shall the basis of any 
        property be increased under subsection (a) or (b) above 
        fair market value (determined without regard to section 
        7701(g)) by reason of any gain recognized to the 
        transferor as a result of the assumption of a 
        liability.
          ``(2) Treatment of gain not subject to tax.--Except 
        as provided in regulations, if--
                  ``(A) gain is recognized to the transferor as 
                a result of an assumption of a nonrecourse 
                liability by a transferee which is also secured 
                by assets not transferred to such transferee, 
                and
                  ``(B) no person is subject to tax under this 
                title on such gain,
        then, for purposes of determining basis under 
        subsections (a) and (b), the amount of gain recognized 
        by the transferor as a result of the assumption of the 
        liability shall be determined as if the liability 
        assumed by the transferee equaled such transferee's 
        ratable portion of such liability determined on the 
        basis of the relative fair market values (determined 
        without regard to section 7701(g)) of all of the assets 
        subject to such liability.''
  (c) Application to Provisions Other Than Subchapter C.--
          (1) Section 584.--Section 584(h)(3) of such Code is 
        amended--
                  (A) by striking ``, and the fact that any 
                property transferred by the common trust fund 
                is subject to a liability,'' in subparagraph 
                (A),
                  (B) by striking clause (ii) of subparagraph 
                (B) and inserting:
                          ``(ii) Assumed liabilities.--For 
                        purposes of clause (i), the term 
                        `assumed liabilities' means any 
                        liability of the common trust fund 
                        assumed by any regulated investment 
                        company in connection with the transfer 
                        referred to in paragraph (1)(A).
                  ``(C) Assumption.--For purposes of this 
                paragraph, in determining the amount of any 
                liability assumed, the rules of section 357(d) 
                shall apply.''.
          (2) Section 1031.--The last sentence of section 
        1031(d) of such Code is amended--
                  (A) by striking ``assumed a liability of the 
                taxpayer or acquired from the taxpayer property 
                subject to a liability'' and inserting 
                ``assumed (as determined under section 357(d)) 
                a liability of the taxpayer'', and
                  (B) by striking ``or acquisition (in the 
                amount of the liability)''.
  (d) Conforming Amendments.--
          (1) Section 351(h)(1) of such Code is amended by 
        striking ``, or acquires property subject to a 
        liability,''.
          (2) Section 357 of such Code is amended by striking 
        ``or acquisition'' each place it appears in subsection 
        (a) or (b).
          (3) Section 357(b)(1) of such Code is amended by 
        striking ``or acquired''.
          (4) Section 357(c)(1) of such Code is amended by 
        striking ``, plus the amount of the liabilities to 
        which the property is subject,''.
          (5) Section 357(c)(3) of such Code is amended by 
        striking ``or to which the property transferred is 
        subject''.
          (6) Section 358(d)(1) of such Code is amended by 
        striking ``or acquisition (in the amount of the 
        liability)''.
  (e) Effective Date.--The amendments made by this section 
shall apply to transfers after the date of the enactment of 
this Act.

SEC. 3303. LIMITATION ON REQUIRED ACCRUAL OF AMOUNTS RECEIVED FOR 
                    PERFORMANCE OF CERTAIN PERSONAL SERVICES.

  (a) In General.--Paragraph (5) of section 448(d) of the 
Internal Revenue Code of 1986 (relating to special rule for 
services) is amended by inserting ``in fields referred to in 
paragraph (2)(A)'' after ``services by such person''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 1998.
  (c) Coordination With Section 481.--In the case of any 
taxpayer required by this section to change its method of 
accounting for any taxable year--
          (1) such change shall be treated as initiated by the 
        taxpayer,
          (2) such change shall be treated as made with the 
        consent of the Secretary of the Treasury, and
          (3) the period for taking into account the 
        adjustments under section 481 by reason of such change 
        shall be 3 years.

SEC. 3304. RETURNS RELATING TO CANCELLATIONS OF INDEBTEDNESS BY 
                    ORGANIZATIONS LENDING MONEY.

  (a) In General.--Paragraph (2) of section 6050P(c) of the 
Internal Revenue Code of 1986 (relating to definitions and 
special rules) is amended by striking ``and'' at the end of 
subparagraph (B), by striking the period at the end of 
subparagraph (C) and inserting ``, and'', and by inserting 
after subparagraph (C) the following new subparagraph:
                  ``(D) any organization a significant trade or 
                business of which is the lending of money.''
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to discharges of indebtedness after December 31, 
1998.

SEC. 3305. CLARIFICATION AND EXPANSION OF MATHEMATICAL ERROR ASSESSMENT 
                    PROCEDURES.

  (a) TIN Deemed Incorrect if Information on Return Differs 
With Agency Records.--Section 6213(g)(2) of the Internal 
Revenue Code of 1986 (defining mathematical or clerical error) 
is amended by adding at the end the following flush sentence:
        ``A taxpayer shall be treated as having omitted a 
        correct TIN for purposes of the preceding sentence if 
        information provided by the taxpayer on the return with 
        respect to the individual whose TIN was provided 
        differs from the information the Secretary obtains from 
        the person issuing the TIN.''.
  (b) Expansion of Mathematical Error Procedures to Cases Where 
TIN Establishes Individual Not Eligible for Tax Credit.--
Section 6213(g)(2) of such Code is amended by striking ``and'' 
at the end of subparagraph (J), by striking the period at the 
end of the subparagraph (K) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
                  ``(L) the inclusion on a return of a TIN 
                required to be included on the return under 
                section 21, 24, or 32 if--
                          ``(i) such TIN is of an individual 
                        whose age affects the amount of the 
                        credit under such section, and
                          ``(ii) the computation of the credit 
                        on the return reflects the treatment of 
                        such individual as being of an age 
                        different from the individual's age 
                        based on such TIN.''.
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years ending after the date of the 
enactment of this Act.

SEC. 3306. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS A TAXABLE VACCINE.

  (a) In General.--Section 4132(1) of the Internal Revenue Code 
of 1986 (defining taxable vaccine) is amended by adding at the 
end the following new subparagraph:
                  ``(K) Any vaccine against rotavirus 
                gastroenteritis.''.
  (b) Effective Date.--
          (1) Sales.--The amendment made by this section shall 
        apply to sales after the date of the enactment of this 
        Act.
          (2) Deliveries.--For purposes of paragraph (1), in 
        the case of sales on or before the date of the 
        enactment of this Act for which delivery is made after 
        such date, the delivery date shall be considered the 
        sale date.
  Page 249, insert after line 22 the following (and make 
necessary conforming changes to the table of contents):

SEC. 4014. REPORTING ON FRAUD AND ABUSE ENFORCEMENT ACTIVITIES.

  The General Accounting Office shall--
          (1) monitor--
                  (A) the compliance of the Department of 
                Justice and all United States Attorneys with 
                the guideline entitled ``Guidance on the Use of 
                the False Claims Act in Civil Health Care 
                Matters'' issued by the Department on June 3, 
                1998, including any revisions to that 
                guideline, and
                  (B) the compliance of the Office of the 
                Inspector General of the Department of Health 
                and Human Services with the protocols and 
                guidelines entitled ``National Project 
                Protocols--Best Practice Guidelines'' issued by 
                the Inspector General on June 3, 1998, 
                including any revisions to such protocols and 
                guidelines, and
          (2) submit a report on such compliance to the 
        Committee on Commerce, the Committee on the Judiciary, 
        and the Committee on Ways and Means of the House of 
        Representatives and the Committee on the Judiciary and 
        the Committee on Finance of the Senate not later than 
        February 1, 1999, and every year thereafter for a 
        period of four years ending February 1, 2002.
  Page 259, line 9, insert ``(a)'' after ``Sec. 1185.''.
  Page 259, after line 16, insert the following:
  ``(c) Limitation on Sale or Barter.--Notwithstanding 
subsection (b), no health care provider or health plan may, as 
part of conducting health care operations, sell or barter 
protected health information.
  Page 280, line 12, strike ``thereof))'' and ``thereof)''.
  Page 287, beginning on line 4, strike ``the Federal Employees 
Health Care Freedom of Choice Act,'' and insert ``the Patient 
Protection Act of 1998,''.
  Page 287, beginning on line 9, strike ``the Federal Employees 
Health Care Freedom of Choice Act,'' and insert ``the Patient 
Protection Act of 1998,''.
  Page 289, strike lines 16 through 24 and insert the 
following:

SEC. 6002. EFFECTIVE DATE.

  (a) In General.--The amendments made by this title shall 
apply--
          (1) in the case of employees, with respect to 
        contract years beginning on or after January 1, 2000; 
        and
          (2) in the case of annuitants, with respect to 
        contract years beginning on or after January 1, 2001.
  (b) Availability of Coverage.--The Office of Personnel 
Management shall take appropriate measures to ensure that 
coverage under a high deductible health plan under chapter 89 
of title 5, United States Code (as amended by this title) shall 
be available--
          (1) in the case of employees, as of the beginning of 
        the first contract year referred to in subsection 
        (a)(1); and
          (2) in the case of annuitants, as of the beginning of 
        the first contract year referred to in subsection 
        (a)(2).
  (c) Definitions.--For purposes of this section, the terms 
``employee'' and ``annuitant'' have the meanings given them by 
section 8901 of title 5, United States Code.
  Page 278, after line 24, insert the following (and amend the 
table of contents accordingly):

SEC. 5005. EFFECTIVE DATE FOR STANDARDS GOVERNING UNIQUE HEALTH 
                    IDENTIFIERS FOR INDIVIDUALS.

  Section 1174 of the Social Security Act (42 U.S.C. 1320d-3) 
is amended by adding at the end the following:
  ``(c) Unique Health Identifiers.--Notwithstanding subsections 
(a) and (b), the Secretary may not promulgate or adopt a final 
standard under section 1173(b) providing for a unique health 
identifier for an individual (except in an individual's 
capacity as an employer or a health care provider), until 
legislation is enacted specifically approving the standard or 
containing provisions consistent with the standard.''.
  Strike title VI (page 279, line 1 through page 289, line 24) 
and conform the table of contents accordingly.

                                
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