H.R. 3955 (103rd): Health Reform Consensus Act of 1994

103rd Congress, 1993–1994. Text as of Jul 20, 1994 (Introduced).

Status & Summary | PDF | Source: GPO

103d CONGRESS
  2d Session
                                H. R. 3955

  To increase the availability and continuity of health coverage for 
employees and their families, to prevent fraud and abuse in the health 
     care delivery system, to reform medical malpractice liability 
 standards, to reduce paperwork and simplify administration of health 
    care claims, to promote preventive care, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 3, 1994

 Mr. Rowland (for himself, Mr. Bilirakis, Mr. Spratt, Mr. Bliley, Mr. 
Tauzin, Mr. Duncan, Mr. Parker, Mr. Hastert, Mr. Montgomery, Mr. Barton 
    of Texas, Mr. Pete Geren of Texas, Mr. Upton, Mr. Sisisky, Mr. 
  Moorhead, Mr. Tanner, Mrs. Vucanovich, Mr. Laughlin, Mr. Goss, Mr. 
   Pickett, Mr. Crapo, Mr. Lancaster, Mr. Goodlatte, Mr. Hayes, Mr. 
Zeliff, Mrs. Lloyd, Mr. Linder, Mr. Browder, Mr. Castle, Mr. Orton, and 
Mr. Young of Florida) introduced the following bill; which was referred 
jointly to the Committees on Energy and Commerce, Education and Labor, 
                   the Judiciary, and Ways and Means

                             April 5, 1994

 Additional sponsors: Mr. Brewster, Mr. Lewis of Florida, Mr. Darden, 
  Mr. Fields of Texas, Mr. Neal of North Carolina, Mr. Greenwood, Mr. 
 Moran, Mr. Kyl, Mr. Clement, Mr. Ewing, Mr. Glickman, Mr. Ballenger, 
                      Mr. Stenholm, and Mr. Canady

                             July 20, 1994

Additional sponsors: Mr. Bishop, Mr. Bunning, Mr. Penny, Mr. Paxon, Mr. 
  Hefner, Mr. Livingston, Mr. Barlow, Mr. Boehner, Mr. Valentine, Mr. 
 Collins of Georgia, Mr. Cramer, Mr. Thomas of Wyoming, Mr. Johnson of 
  Georgia, Mr. Sundquist, Mr. Peterson of Minnesota, Mr. Stearns, Mr. 
 Deal, Mr. Herger, Mr. Murphy, Mr. Hutchinson, Mr. Hutto, Mr. Gillmor, 
Mr. Ortiz, Mrs. Fowler, Mr. Jacobs, Mr. Gilchrest, Mr. Baesler, and Mr. 
                                 Dickey

_______________________________________________________________________

                                 A BILL


 
  To increase the availability and continuity of health coverage for 
employees and their families, to prevent fraud and abuse in the health 
     care delivery system, to reform medical malpractice liability 
 standards, to reduce paperwork and simplify administration of health 
    care claims, to promote preventive care, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Reform 
Consensus Act of 1994''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                       TITLE I--INSURANCE REFORM

 Subtitle A--Increased Availability and Continuity of Health Coverage 
                    for Employees and Their Families

Part 1--Required Coverage Options for Eligible Employees, Spouses, and 
                               Dependents

Sec. 1001. Requiring employers to offer option of coverage for eligible 
                            individuals.
            Part 2--Assuring Portability of Health Coverage

Sec. 1011. Limitation on preexisting condition clauses.
Sec. 1012. Assurance of continuity of coverage through previous 
                            satisfaction of preexisting condition 
                            requirement.
Sec. 1013. Requirements relating to renewability generally.
           Part 3--Enforcement; Effective Dates; Definitions

Sec. 1021. Enforcement.
Sec. 1022. Effective dates.
Sec. 1023. Definitions and special rules.
 Subtitle B--Reform of Health Insurance Marketplace for Small Business

Sec. 1101. Requirement for insurers to offer standard and catastrophic 
                            plans.
Sec. 1102. Health plan, standard plan, and catastrophic plan defined.
Sec. 1103. Establishment of health plan standards.
Sec. 1104. Limits on premiums and miscellaneous consumer protections.
Sec. 1105. Limitation on variation in annual premium increases among 
                            covered small employers.
Sec. 1106. Establishment of reinsurance or allocation of risk 
                            mechanisms for high risk individuals in 
                            marketplace for small business.
Sec. 1107. Definitions.
Sec. 1108. Office of Private Health Care Coverage; annual reports on 
                            evaluation of health care coverage reform.
Sec. 1109. Research and demonstration projects; development of a health 
                            risk pooling model.
                         Subtitle C--Preemption

                   Part 1--Scope of State Regulation

Sec. 1201. Prohibition of State benefit mandates for group health 
                            plans.
Sec. 1202. Prohibition of provisions prohibiting employer groups from 
                            purchasing health insurance.
Sec. 1203. Restrictions on managed care.
Sec. 1204. Definitions.
         Part 2--Multiple Employer Health Benefits Protections

Sec. 1211. Limited exemption under preemption rules for multiple 
                            employer plans providing health benefits 
                            subject to certain Federal standards.
                ``Part 7--Multiple Employer Health Plans

        ``Sec. 701. Definitions.
        ``Sec. 702. Exempted multiple employer plans providing benefits 
                            in the form of medical care relieved of 
                            certain restrictions on preemption of State 
                            law and treated as employee welfare benefit 
                            plans.
        ``Sec. 703. Exemption procedure.
        ``Sec. 704. Eligibility requirements.
        ``Sec. 705. Additional requirements applicable to exempted 
                            arrangements.
        ``Sec. 706. Disclosure to participating employers by 
                            arrangements providing medical care.
        ``Sec. 707. Maintenance of reserves.
        ``Sec. 708. Corrective actions.
        ``Sec. 709. Expiration, suspension, or revocation of exemption.
        ``Sec. 710. Review of actions of the secretary.''
Sec. 1212. Clarification of scope of preemption rules.
Sec. 1213. Clarification of treatment of single employer arrangements.
Sec. 1214. Clarification of treatment of certain collectively bargained 
                            arrangements.
Sec. 1215. Employee leasing health care arrangements.
Sec. 1216. Enforcement provisions relating to multiple employer welfare 
                            arrangements and employee leasing health 
                            care arrangements.
Sec. 1217. Filing requirements for health benefit multiple employer 
                            welfare arrangements.
Sec. 1218. Cooperation between Federal and State authorities.
Sec. 1219. Effective date; transitional rules.
Part 3--Encouragement of Multiple Employer Arrangements Providing Basic 
                            Health Benefits

Sec. 1221. Eliminating commonality of interest or geographic location 
                            requirement for tax exempt trust status.
   Part 4--Simplifying Filing of Reports for Employers Covered Under 
                 Insured Multiple Employer Health Plans

Sec. 1231. Single annual filing for all employers covered under an 
                            insured multiple employer health plan.
          Part 5--Compliance With Coverage Option Requirements

Sec. 1241. Compliance with coverage requirements through multiple 
                            employer health arrangements.
                 Subtitle D--Health Deduction Fairness

Sec. 1301. Permanent extension and increase in health insurance tax 
                            deduction for self-employed individuals.
                  TITLE II--PREVENTING FRAUD AND ABUSE

  Subtitle A--Establishment of All-Payer Health Care Fraud and Abuse 
                            Control Program

Sec. 2001. All-payer health care fraud and abuse control program.
Sec. 2002. Authorization of additional appropriations for investigators 
                            and other personnel.
Sec. 2003. Establishment of Anti-fraud and Abuse Trust Fund.
     Subtitle B--Revisions to Current Sanctions for Fraud and Abuse

Sec. 2101. Mandatory exclusion from participation in medicare and State 
                            health care programs.
Sec. 2102. Establishment of minimum period of exclusion for certain 
                            individuals and entities subject to 
                            permissive exclusion from medicare and 
                            State health care programs.
Sec. 2103. Civil monetary penalties.
Sec. 2104. Intermediate sanctions for medicare health maintenance 
                            organizations.
Sec. 2105. Effective date.
        Subtitle C--Administrative and Miscellaneous Provisions

Sec. 2201. Establishment of the health care fraud and abuse data 
                            collection program.
Sec. 2202. Quarterly publication of final adverse actions taken.
                 Subtitle D--Amendments to Criminal Law

Sec. 2301. Penalties for health care fraud.
Sec. 2302. Rewards for information leading to prosecution and 
                            conviction.
                     TITLE III--MALPRACTICE REFORM

               Subtitle A--Findings; Purpose; Definitions

Sec. 3001. Findings; purpose.
Sec. 3002. Definitions.
          Subtitle B--Uniform Standards for Malpractice Claims

Sec. 3101. Applicability.
Sec. 3102. Requirement for initial resolution of action through 
                            alternative dispute resolution.
Sec. 3103. Procedural requirements for filing of actions.
Sec. 3104. Treatment of noneconomic and punitive damages.
Sec. 3105. Periodic payments for future losses.
Sec. 3106. Treatment of attorney's fees and other costs.
Sec. 3107. Uniform statute of limitations.
Sec. 3108. Special provision for certain obstetric services.
Sec. 3109. Application of medical practice parameters in malpractice 
                            liability actions.
Sec. 3110. Jurisdiction of Federal courts.
Sec. 3111. Preemption.
   Subtitle C--Requirements for State Alternative Dispute Resolution 
                             Systems (ADR)

Sec. 3201. Basic requirements.
Sec. 3202. Alternative Dispute Resolution Advisory Board.
Sec. 3203. Certification of State systems; applicability of alternative 
                            Federal system.
Sec. 3204. Reports on implementation and effectiveness of alternative 
                            dispute resolution systems.
    TITLE IV--PAPERWORK REDUCTION AND ADMINISTRATIVE SIMPLIFICATION

Sec. 4001. Preemption of State quill pen laws.
Sec. 4002. Confidentiality of electronic health care information.
Sec. 4003. Standardization for the electronic receipt and transmission 
                            of health plan information.
Sec. 4004. Use of uniform health claims forms and identification 
                            numbers.
Sec. 4005. Priority among insurers.
Sec. 4006. Furnishing of information among health plans.
Sec. 4007. Definitions.
               TITLE V--EXPANDING ACCESS/PREVENTIVE CARE

   Subtitle A--Expanding Access Through Community Health Authorities

Sec. 5001. Community health authorities demonstration projects.
Sec. 5002. Health center program amendments.
  Subtitle B--Expansion of Public Health Programs on Preventive Health

Sec. 5101. Immunizations against vaccine-preventable diseases.
Sec. 5102. Prevention, control, and elimination of tuberculosis.
Sec. 5103. Lead poisoning prevention.-
Sec. 5104. Preventive health measures with respect to breast and 
                            cervical cancers.
Sec. 5105. Office of Disease Prevention and Health Promotion.
Sec. 5106. Preventive health and health services block grant.
                     TITLE VI--ANTITRUST PROVISIONS

Sec. 6001. Publication of antitrust guidelines on activities of health 
                            plans.
Sec. 6002. Issuance of health care certificates of public advantage.
TITLE VII--PREFUNDING GOVERNMENT HEALTH BENEFITS FOR CERTAIN ANNUITANTS

Sec. 7001. Requirement that certain agencies prefund government health 
                            benefits contributions for their 
                            annuitants.

                       TITLE I--INSURANCE REFORM

 Subtitle A--Increased Availability and Continuity of Health Coverage 
                    for Employees and Their Families

PART 1--REQUIRED COVERAGE OPTIONS FOR ELIGIBLE EMPLOYEES, SPOUSES, AND 
                               DEPENDENTS

SEC. 1001. REQUIRING EMPLOYERS TO OFFER OPTION OF COVERAGE FOR ELIGIBLE 
              INDIVIDUALS.

    (a) In General.--Each employer shall make available with respect to 
each eligible employee a group health plan under which--
            (1) coverage of each eligible individual with respect to 
        such an eligible employee may be elected on an annual basis for 
        each plan year,
            (2) subject to subsection (d), coverage is provided for at 
        least the required coverage specified in subsection (c), and
            (3) each eligible employee electing such coverage may elect 
        to have any premiums owed by the employee collected through 
        payroll deduction.
An employer is not required under this subsection to make any 
contribution to the cost of coverage under such a plan.
    (b) Special Rules.--
            (1) Exclusion of new employers and certain small 
        employers.--Subsection (a) shall not apply to any employer for 
        any plan year if, as of the beginning of such plan year--
                    (A) such employer (including any predecessor 
                thereof) has been an employer for less than 2 years,
                    (B) such employer has no more than 2 eligible 
                employees, or
                    (C) no more than 2 eligible employees are not 
                covered under any group health plan.
            (2) Exclusion of family members.--Under such procedures as 
        the Secretary may prescribe, any relative of an employer may 
        be, at the election of the employer, excluded from 
        consideration as an eligible employee for purposes of applying 
        the requirements of subsection (a). In the case of an employer 
        that is not an individual, an employee who is a relative of a 
        key employee (as defined in section 416(i)(1) of the Internal 
        Revenue Code of 1986) of the employer may, at the election of 
        the key employee, be considered a relative excludable under 
        this paragraph.
            (3) Optional application of waiting period.--A group health 
        plan shall not be treated as failing to meet the requirements 
        of subsection (a) solely because a period of service by an 
        eligible employee of not more than 60 days is required under 
        the plan for coverage under the plan of eligible individuals 
        with respect to such employee.
    (c) Required Coverage.--
            (1) In general.--Except as provided in paragraph (2), the 
        required coverage specified in this subsection is standard 
        coverage (consistent with section 1102(b)).
            (2) Special treatment of small employers not contributing 
        to employee coverage.--In the case of a small employer (as 
        defined in section 1107(9)) that has not contributed during the 
        previous plan year to the cost of coverage for any eligible 
        employee under any group health plan, the required coverage 
        specified in this subsection for the plan year (with respect to 
        each eligible employee) is--
                    (A) coverage under a standard plan, and
                    (B) coverage under a catastrophic plan,
        as such terms are defined in section 1102(a)(2).
            (3) Construction.--Nothing in this section shall be 
        construed as limiting the group health plans, or types of 
        coverage under such a plan, that an employer may offer to an 
        employee.
    (d) 5-Year Transition for Existing Group Health Plans.--
            (1) In general.--The requirement of subsection (a)(2), and 
        section 1002(c)(2), shall not apply to a group health plan for 
        a plan year if--
                    (A) the group health plan is in effect in the plan 
                year in which September 1, 1993, occurs, and
                    (B) the employer makes (or offers to make), in such 
                plan year and the plan year involved, a contribution to 
                the plan on behalf of each employee who is eligible to 
                participate in the plan.
            (2) Sunset.--Paragraph (1) shall only apply to a group 
        health plan for each of the 5 plan years beginning with the 
        first plan year to which the requirement of subsection (a) 
        applies.

            PART 2--ASSURING PORTABILITY OF HEALTH COVERAGE

SEC. 1011. LIMITATION ON PREEXISTING CONDITION CLAUSES.

    (a) In General.--A group health plan may not impose (and an insurer 
may not require an employer under a group health plan to impose through 
a waiting period for coverage under a plan or similar requirement) a 
limitation or exclusion of benefits relating to treatment of a 
condition based on the fact that the condition preexisted the effective 
date of the plan with respect to an individual if--
            (1) the condition relates to a condition that was not 
        diagnosed or treated within 3 months before the date of 
        coverage under the plan;
            (2) the limitation or exclusion extends over more than 6 
        months after the date of coverage under the plan;
            (3) the limitation or exclusion applies to an individual 
        who, as of the date of birth, was covered under the plan; or
            (4) the limitation or exclusion relates to pregnancy.
    (b) Treatment of Waiting Periods.--In the case of an individual who 
is eligible for coverage under a plan but for a waiting period imposed 
by the employer, in applying paragraphs (1) and (2) of subsection (a), 
the individual shall be treated as having been covered under the plan 
as of the earliest date of the beginning of the waiting period.

SEC. 1012. ASSURANCE OF CONTINUITY OF COVERAGE THROUGH PREVIOUS 
              SATISFACTION OF PREEXISTING CONDITION REQUIREMENT.

    (a) In General.--Each group health plan shall waive any period 
applicable to a preexisting condition for similar benefits with respect 
to an individual to the extent that the individual, prior to the date 
of such individual's enrollment in such plan, was covered for the 
condition under any other health plan that was in effect before such 
date.
    (b) Continuous Coverage Required.--
            (1) In general.--Subsection (a) shall no longer apply if 
        there is a continuous period of more than 60 days (or, in the 
        case of an individual described in paragraph (3), 6 months) on 
        which the individual was not covered under a group health plan.
            (2) Treatment of waiting periods.--In applying paragraph 
        (1), any waiting period imposed by an employer before an 
        employee is eligible to be covered under a plan shall be 
        treated as a period in which the employee was covered under a 
        group health plan.
            (3) Job termination.--An individual is described in this 
        paragraph if the individual loses coverage under a group health 
        plan due to termination of employment.
            (4) Exclusion of cash-only and dread disease plans.--In 
        this subsection, the term ``group health plan'' does not 
        include any group health plan which is offered primarily to 
        provide--
                    (A) coverage for a specified disease or illness, or
                    (B) a hospital or fixed indemnity policy, unless 
                the Secretary determines that such a plan provides 
                sufficiently comprehensive coverage of a benefit so 
                that it should be treated as a group health plan under 
                this subsection.

SEC. 1013. REQUIREMENTS RELATING TO RENEWABILITY GENERALLY.

    (a) Multiemployer Plans and Exempted Multiple Employer Health 
Plans.--A multiemployer plan and an exempted multiple employer health 
plan may not cancel coverage or deny renewal of coverage under such a 
plan with respect to an employer other than--
            (1) for nonpayment of contributions,
            (2) for fraud or other misrepresentation by the employer,
            (3) for noncompliance with plan provisions,
            (4) for misuse of a provider network provision, or
            (5) because the plan is ceasing to provide any coverage in 
        a geographic area.
    (b) Insurers.--
            (1) In general.--An insurer may not cancel a health 
        insurance plan or deny renewal of coverage under such a plan 
        other than--
                    (A) for nonpayment of premiums,
                    (B) for fraud or other misrepresentation by the 
                insured,
                    (C) for noncompliance with plan provisions,
                    (D) in the case of a plan issued to a small 
                employer, for failure to maintain minimum participation 
                rates (consistent with paragraph (3)),
                    (E) for misuse of a provider network provision, or
                    (F) because the insurer is ceasing to provide any 
                health insurance plan in a State, or, in the case of a 
                health maintenance organization, in a geographic area.
            (2) Limitation on market reentry.--If an insurer terminates 
        the offering of health insurance plans in an area, the insurer 
        may not offer such a health insurance plan to any employer in 
        the area until 5 years after the date of the termination.
            (3) Minimum participation rates.--An insurer may require, 
        with respect to a health insurance plan issued to a small 
        employer, that a minimum percentage of eligible employees who 
        do not otherwise have health insurance are enrolled in such 
        plan if such percentage is applied uniformly to all plans 
        offered to employers of comparable size.

           PART 3--ENFORCEMENT; EFFECTIVE DATES; DEFINITIONS

SEC. 1021. ENFORCEMENT.

    (a) Enforcement by Department of Labor for Employers and Group 
Health Plans.--
            (1) In general.--For purposes of part 5 of subtitle B of 
        title I of the Employee Retirement Income Security Act of 1974, 
        the provisions of parts 1 and 2 of this subtitle shall be 
        deemed to be provisions of title I of such Act irrespective of 
        exclusions under section 4(b) of such Act.
            (2) Regulatory authority.--With respect to the regulatory 
        authority of the Secretary of Labor under this subtitle 
        pursuant to subsection (a), section 505 of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1135) shall 
        apply.
    (b) Enforcement Through Civil Money Penalties for Insurers.--
            (1) In general.--Subject to paragraph (2), an insurer that 
        fails to comply with the requirements applicable to the insurer 
        under part 2 of this subtitle is subject to a civil money 
        penalty under this subsection.
            (2) Exception.--Paragraph (1) shall not apply to a failure 
        by an insurer in a State if the Secretary determines that the 
        State has in effect a regulatory enforcement mechanism that 
        provides adequate sanctions with respect to such a failure by 
        such an insurer.
            (3) Amount of penalty.--
                    (A)  In general.--Subject to subparagraph (B), the 
                amount of the civil money penalty imposed under this 
                subsection shall be $100 for each day during which such 
                failure persists for each individual to which such 
                failure relates.
                    (B) Limitation.--The amount of the penalty imposed 
                by this subsection for an insurer with respect to a 
                health insurance plan shall not exceed 25 percent of 
                the amounts received under the plan for coverage during 
                the period such failure persists.
            (4) Exceptions.--
                    (A) Corrections within 30 days.--No civil money 
                penalty be imposed under this subsection by reason of 
                any failure if--
                            (i) such failure was due to reasonable 
                        cause and not to willful neglect, and
                            (ii) such failure is corrected within the 
                        30-day period beginning on the earliest date 
                        the insurer knew, or exercising reasonable 
                        diligence would have known, that such failure 
                        existed.
                    (B) Waiver by secretary.--In the case of a failure 
                which is due to reasonable cause and not to willful 
                neglect, the Secretary may waive part or all of the 
                penalty imposed by this subsection to the extent that 
                payment of such penalty would be excessive relative to 
                the failure involved.
            (5) Procedures.--The Secretary by regulation shall provide 
        for procedures for the imposition of civil money penalties 
        under this subsection. Such procedures shall assure written 
        notice and opportunity for a determination to be made on the 
        record after a hearing at which the insurer is entitled to be 
        represented by counsel, to present witnesses, and to cross-
        examine witnesses against the insurer.The provisions of 
        subsections (e), (f), (j), and (k) of section 1128A of the 
        Social Security Act shall apply to determinations and civil 
        money penalties under this section in the same manner as they 
        apply to determinations and civil money penalties under such 
        section.

SEC. 1022. EFFECTIVE DATES.

    (a) Part 1.--The requirements of part 1 shall apply to plans years 
beginning after December 31, 1996.
    (b) Part 2.--The requirements of part 2 with respect to--
            (1) group health plans and employers shall apply to plans 
        years beginning after December 31, 1996, and
            (2) insurers shall take effect on January 1, 1997.

SEC. 1023. DEFINITIONS AND SPECIAL RULES.

    (a) In General.--For purposes of this subtitle:
            (1) Dependent.--The term ``dependent'' means, with respect 
        to any individual, any person who is--
                    (A) the spouse or surviving spouse of the 
                individual, or
                    (B) under regulations of the Secretary, a child 
                (including an adopted child) of such individual and--
                            (i) under 19 years of age, or
                            (ii) under 25 years of age and a full-time 
                        student.
            (2) Eligible employee.--The term ``eligible employee'' 
        means, with respect to an employer, an employee who normally 
        performs on a monthly basis at least 30 hours of service per 
        week for that employer.
            (3) Eligible individual.--The term ``eligible individual'' 
        means, with respect to an eligible employee, such employee, and 
        any dependent of such employee.
            (4) Employer.--The term ``employer'' shall have the meaning 
        applicable under section 3(5) of the Employee Retirement Income 
        Security Act of 1974.
            (5) Exempted multiple employer health plan.--The term 
        ``exempted multiple employer health plan'' means a multiple 
        employer welfare arrangement treated as an employee welfare 
        benefit plan by reason of an exemption under part 7 of subtitle 
        B of title I of the Employee Retirement Income Security Act of 
        1974 (as added by part 2 of subtitle C of this title).
            (6) Group health plan; plan.--(A) The term ``group health 
        plan'' means an employee welfare benefit plan providing medical 
        care (as defined in section 213(d) of the Internal Revenue Code 
        of 1986) to participants or beneficiaries directly or through 
        insurance, reimbursement, or otherwise, but does not include 
        any type of coverage excluded from the definition of a health 
        insurance plan under section 1107(4)(B).
            (B) The term ``plan'' means, unless used with a modifying 
        term or the context specifically indicates otherwise, a group 
        health plan (including any such plan which is a multiemployer 
        plan), an exempted multiple employer health plan, or an insured 
        multiple employer health plan.
            (7) Health insurance plan.--The term ``health insurance 
        plan'' has the meaning given such term in section 1107(4).
            (8) Insured multiple employer health plan.--The term 
        ``insured multiple employer health plan'' has the meaning given 
        such term in section 701(11) of Employee Retirement Income 
        Security Act of 1974 (as added by section 1211 of this title).
            (9) Insurer.--The term ``insurer'' has the meaning given 
        such term in section 1107(6).
    (b) Special Rules.--
            (1) General rule.--Except as otherwise provided in this 
        subtitle, for definitions of terms used in this subtitle, see 
        section 3 of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1002).
            (2) Secretary.--Except with respect to references 
        specifically to the Secretary of Labor, the term ``Secretary'' 
        means the Secretary of Health and Human Services.

 Subtitle B--Reform of Health Insurance Marketplace for Small Business

SEC. 1101. REQUIREMENT FOR INSURERS TO OFFER STANDARD AND CATASTROPHIC 
              PLANS.

    (a) Requirement.--
            (1) In general.--Each insurer (as defined in section 
        1107(6)) that makes available any health insurance plan (as 
        defined in section 1107(4)) to a small employer (as defined in 
        section 1107(9)) in a State shall make available to each small 
        employer in the State--
                    (A) a standard plan (as defined in section 
                1102(a)(2)), and
                    (B) a catastrophic plan (as defined in such 
                section).
            (2) Special rule for health maintenance organizations.--The 
        requirements of paragraph (1)(B) shall not apply with respect 
        to a health insurance plan that--
                    (A) is a federally qualified health maintenance 
                organization (as defined in section 1301(a) of the 
                Public Health Service Act), or
                    (B) is not such an organization but is recognized 
                under State law as a health maintenance organization or 
                managed care organization or a similar organization 
                regulated under State law for solvency.
            (3) Exception if state provides for guaranteed availability 
        (rather than guaranteed issue).--Paragraph (1) shall not apply 
        to an insurer in a State if the State is providing--
                    (A) access to each small employer in the State to a 
                standard plan and to a catastrophic plan, and
                    (B) a risk allocation mechanism described in 
                subsection (c).
    (b) Guaranteed Issue of Standard and Catastrophic Plans.--Subject 
to subsection (c)--
            (1) In general.--Subject to paragraph (2), each insurer 
        that offers a standard or catastrophic plan to a small employer 
        in a State--
                    (A) must accept every small employer in the State 
                that applies for coverage under the plan; and
                    (B) must accept for enrollment under the plan every 
                eligible individual (as defined in paragraph (4)) who 
                applies for enrollment on a timely basis (consistent 
                with paragraph (3)) and may not place any restriction 
                on the eligibility of an individual to enroll so long 
                as such individual is an eligible individual.
            (2) Special rules for health maintenance organizations.--In 
        the case of a plan offered by a health maintenance 
        organization, the plan may--
                    (A) limit the employers that may apply for coverage 
                to those with eligible individuals residing in the 
                service area of the plan;
                    (B) limit the individuals who may be enrolled under 
                the plan to those who reside in the service area of the 
                plan; and
                    (C) within the service area of the plan, deny 
                coverage to such employers if the plan demonstrates 
                that--
                            (i) it will not have the capacity to 
                        deliver services adequately to enrollees of any 
                        additional groups because of its obligations to 
                        existing group contract holders and enrollees, 
                        and
                            (ii) it is applying this subparagraph 
                        uniformly to all employers without regard to 
                        the health status, claims experience, or 
                        duration of coverage of those employers and 
                        their employees.
        In this paragraph, the term ``health maintenance organization'' 
        includes an organization recognized under State law as a health 
        maintenance organization or managed care organization or a 
        similar organization regulated under State law for solvency.
            (3) Clarification of timely enrollment.--
                    (A) General initial enrollment requirement.--Except 
                as provided in this paragraph, a standard or 
                catastrophic plan may consider enrollment of an 
                eligible individual not to be timely if the eligible 
                employee or dependent fails to enroll in the plan 
                during an initial enrollment period, if such period is 
                at least 30 days long.
                    (B) Enrollment due to loss of previous employer 
                coverage.--Enrollment in a standard or catastrophic 
                plan is considered to be timely in the case of an 
                eligible individual who--
                            (i) was covered under another health 
                        insurance plan or group health plan at the time 
                        of the individual's initial enrollment period,
                            (ii) stated at the time of the initial 
                        enrollment period that coverage under a health 
                        insurance plan or a group health plan was the 
                        reason for declining enrollment,
                            (iii) lost coverage under another health 
                        insurance plan or group health plan (as a 
                        result of the termination of the other plan's 
                        coverage, termination or reduction of 
                        employment, or other reason), and
                            (iv) requests enrollment within 30 days 
                        after termination of such coverage.
                    (C) Requirement applies during open enrollment 
                periods.--Each standard or catastrophic plan shall 
                provide for at least one period (of not less than 30 
                days) each year during which enrollment under the plan 
                shall be considered to be timely.
                    (D) Exception for court orders.--Enrollment of a 
                spouse or minor child of an employee shall be 
                considered to be timely if--
                            (i) a court has ordered that coverage be 
                        provided for the spouse or child under a 
                        covered employee's group health plan, and
                            (ii) a request for enrollment is made 
                        within 30 days after the date the court issues 
                        the order.
                    (E) Enrollment of spouses and dependents.--
                            (i) In general.--Enrollment of the spouse 
                        (including a child of the spouse) and any 
                        dependent child of an eligible employee shall 
                        be considered to be timely if a request for 
                        enrollment is made either--
                                    (I) within 30 days of the date of 
                                the marriage or of the date of the 
                                birth or adoption of a child, if family 
                                coverage is available as of such date, 
                                or
                                    (II) within 30 days of the date 
                                family coverage is first made 
                                available.
                            (ii) Coverage.--If a plan makes family 
                        coverage available and enrollment is made under 
                        the plan on a timely basis under clause (i)(I), 
                        the coverage shall become effective not later 
                        than the first day of the first month beginning 
                        after the date of the marriage or the date of 
                        birth or adoption of the child (as the case may 
                        be).
            (4) Definitions.--In this subsection, the terms ``eligible 
        individual'' and ``group health plan'' have the meanings given 
        such terms in section 1023(a).
    (c) State Option of Guaranteed Availability Through Allocation of 
Risk (Rather than Through Guaranteed Issue).--The requirements of 
subsection (b) shall not apply in a State if the State has provided (in 
accordance with standards established under this subtitle) a mechanism 
under which--
            (1) each insurer offering a health insurance plan to a 
        small employer in the State must participate in a program for 
        assigning high-risk small employer groups (or individuals 
        within such a group) among some or all such insurers, and
            (2) the insurers to which such high-risk small employer 
        groups or individuals are so assigned comply with the 
        requirements of subsection (b).

SEC. 1102. HEALTH PLAN, STANDARD PLAN, AND CATASTROPHIC PLAN DEFINED.

    (a) Health Plan Defined.--In this subtitle:
            (1) In general.--The term ``health plan'' means a health 
        insurance plan (whether a managed-care plan, indemnity plan, or 
        other plan) that meets the following requirements:
                    (A) The plan--
                            (i) is designed to provide standard 
                        coverage (consistent with subsection (b) or 
                        (d)) with substantial cost-sharing, or
                            (ii) is designed to provide only 
                        catastrophic coverage (consistent with 
                        subsection (c) or (d)).
                    (B) The plan meets the applicable requirements of 
                section 1101(b) (relating to guaranteed issue).
                    (C) The plan meets the consumer protection 
                standards established under section 1103(a)(1)(B).
                    (D) The plan meets any participation requirements 
                with respect to an applicable reinsurance or allocation 
                of risk mechanism established by a State or the 
                Secretary under section 1106.
            (2) Standard and catastrophic plans.--The terms ``standard 
        plan'' and ``catastrophic plan'' mean a health plan that 
        provides for at least standard coverage (referred to in 
        paragraph (1)(A)(i)) or for only catastrophic coverage 
        (referred to in paragraph (1)(A)(ii)), respectively.
    (b) Standard Benefit Package.--
            (1) In general.--Subject to the succeeding provisions of 
        this subsection, subsection (d) (permitting variation of 
        benefits among actuarially equivalent plans), and subsection 
        (e) (permitting plans not to cover specific treatments, 
        procedures, or classes), a health insurance plan is considered 
        to provide standard coverage consistent with this subsection if 
        the benefits are limited to payment for--
                    (A) inpatient and outpatient hospital care, except 
                that treatment for a mental disorder is subject to the 
                special limitations described in subparagraph (E)(i);
                    (B) inpatient and outpatient physicians' services, 
                except that psychotherapy or counseling for a mental 
                disorder is subject to the special limitations 
                described in subparagraph (E)(ii);
                    (C) diagnostic tests;
                    (D) preventive services limited to--
                            (i) prenatal care and well-baby care 
                        provided to children who are 1 year of age or 
                        younger;
                            (ii) well child care;
                            (iii) Pap smears;
                            (iv) mammograms; and
                            (v) colorectal screening services; and
                    (E)(i) inpatient hospital care for a mental 
                disorder for not less than 45 days per year, except 
                that days of partial hospitalization or residential 
                care may be substituted for days of inpatient care; and
                    (ii) outpatient psychotherapy and counseling for a 
                mental disorder for not less than 20 visits per year 
                provided by a provider who is acting within the scope 
                of State law and who--
                            (I) is a physician; or
                            (II) is a duly licensed or certified 
                        clinical psychologist or a duly licensed or 
                        certified clinical social worker, a duly 
                        licensed or certified equivalent mental health 
                        professional, or a clinic or center providing 
                        duly licensed or certified mental health 
                        services.
            (2) Amount, scope, and duration of certain benefits.--
                    (A) In general.--Except as provided in subparagraph 
                (B) and in paragraph (3), a health insurance plan 
                providing for standard coverage shall place no limits 
                on the amount, scope, or duration of benefits described 
                in subparagraphs (A) through (C) of paragraph (1).
                    (B) Preventive services.--A health insurance plan 
                providing for standard coverage may limit the amount, 
                scope, and duration of preventive services described in 
                subparagraph (D) of paragraph (1) provided that the 
                amount, scope, and duration of such services are 
                reasonably consistent with recommendations and 
                periodicity schedules developed by appropriate medical 
                experts.
            (3) Exceptions.--Paragraph (1) shall not be construed as 
        requiring a plan to include payment for--
                    (A) items and services that are not essential and 
                medically necessary;
                    (B) routine physical examinations or preventive 
                care (other than care and services described in 
                subparagraph (D) of paragraph (1)); or
                    (C) experimental services and procedures.
            (4) Limitation on deductibles.--
                    (A) In general.--Except as permitted under 
                subparagraph (B), a health insurance plan providing 
                standard coverage shall not provide a deductible amount 
                for benefits provided in any plan year that exceeds--
                            (i) with respect to benefits payable for 
                        items and services furnished to any employee 
                        with no family member enrolled under the plan, 
                        for a plan year beginning in--
                                    (I) a calendar year prior to 1996, 
                                $450; or
                                    (II) for a subsequent calendar 
                                year, the limitation specified in this 
                                clause for the previous calendar year 
                                increased by the percentage increase in 
                                the consumer price index for all urban 
                                consumers (United States city average, 
                                as published by the Bureau of Labor 
                                Statistics) for the 12-month period 
                                ending on September 30 of the preceding 
                                calendar year; and
                            (ii) with respect to benefits payable for 
                        items and services furnished to any employee 
                        with a family member enrolled under the 
                        standard benefit package plan, for a plan year 
                        beginning in--
                                    (I) a calendar year prior to 1996, 
                                $450 per family member and $780 per 
                                family; or
                                    (II) for a subsequent calendar 
                                year, the limitation specified in this 
                                clause for the previous calendar year 
                                increased by the percentage increase in 
                                the consumer price index for all urban 
                                consumers (United States city average, 
                                as published by the Bureau of Labor 
                                Statistics) for the 12-month period 
                                ending on September 30 of the preceding 
                                calendar year.
                If the limitation computed under clause (i)(II) or 
                (ii)(II) is not a multiple of $10, it shall be rounded 
                to the next highest multiple of $10.
                    (B) Wage-related deductible.--A health insurance 
                plan may provide for any other deductible amount 
                instead of the limitations under--
                            (i) subparagraph (A)(i), if such amount 
                        does not exceed (on an annualized basis) 1 
                        percent of the total wages paid to the employee 
                        in the plan year; or
                            (ii) subparagraph (A)(ii), if such amount 
                        does not exceed (on an annualized basis) 1 
                        percent per family member or 2 percent per 
                        family of the total wages paid to the employee 
                        in the plan year.
            (5) Limitation on copayments and coinsurance.--
                    (A) In general.--Subject to subparagraphs (B) 
                through (D), a health insurance plan providing standard 
                coverage may not require the payment of any copayment 
                or coinsurance for an item or service for which 
                coverage is required under this section--
                            (i) in an amount that exceeds 20 percent of 
                        the amount payable for the item or service 
                        under the plan; or
                            (ii) after an employee and family covered 
                        under the plan have incurred out-of-pocket 
                        expenses under the plan that are equal to the 
                        out-of-pocket limit (as defined in subparagraph 
                        (E)(ii)) for a plan year.
                    (B) Exception for managed care plans.--A health 
                insurance plan that is a managed care plan may require 
                payments in excess of the amount permitted under 
                subparagraph (A) in the case of items and services 
                furnished by nonparticipating providers.
                    (C) Exception for improper utilization.--A health 
                insurance plan may provide for copayment or coinsurance 
                in excess of the amount permitted under subparagraph 
                (A) for any item or service that an individual obtains 
                without complying with procedures established by a 
                managed care plan or under a utilization program to 
                ensure the efficient and appropriate utilization of 
                covered services.
                    (D) Exceptions for mental health care.--In the case 
                of care described in paragraph (1)(E)(ii), a health 
                insurance plan shall not require payment of any 
                copayment or coinsurance for an item or service for 
                which coverage is required by this subtitle in an 
                amount that exceeds 50 percent of the amount payable 
                for the item or service.
            (6) Limit on out-of-pocket expenses.--
                    (A) Out-of-pocket expenses defined.--As used in 
                this section, the term ``out-of-pocket expenses'' 
                means, with respect to an employee in a plan year, 
                amounts payable under the plan as deductibles and 
                coinsurance with respect to items and services provided 
                under the plan and furnished in the plan year on behalf 
                of the employee and family covered under the plan.
                    (B) Out-of-pocket limit defined.--As used in this 
                section and except as provided in subparagraph (C), the 
                term ``out-of-pocket limit'' means for a plan year 
                beginning in--
                            (i) a calendar year prior to 1996, $3,400; 
                        or
                            (ii) for a subsequent calendar year, the 
                        limit specified in this subparagraph for the 
                        previous calendar year increased by the 
                        percentage increase in the consumer price index 
                        for all urban consumers (United States city 
                        average, as published by the Bureau of Labor 
                        Statistics) for the 12-month period ending on 
                        September 30 of the preceding calendar year.
                If the limit computed under clause (ii) is not a 
                multiple of $10, it shall be rounded to the next 
                highest multiple of $10.
                    (C) Alternative out-of-pocket limit.--A health 
                insurance plan may provide for an out-of-pocket limit 
                other than that defined in subparagraph (B) if, for a 
                plan year with respect to an employee and the family of 
                the employee, the limit does not exceed (on an 
                annualized basis) 10 percent of the total wages paid to 
                the employee in the plan year.
            (7) Limited preemption of state mandated benefits.--No 
        State law or regulation in effect in a State that requires 
        health insurance plans offered to small employers in the State 
        to include specified items and services other than those 
        specified by this subsection shall apply with respect to a 
        health insurance plan providing standard coverage offered by an 
        insurer to a small employer.
    (c) Catastrophic Benefits Package.--
            (1) In general.--Subject to the succeeding provisions of 
        this subsection, subsection (d) (permitting variation of 
        benefits among actuarially equivalent plans), and subsection 
        (e) (permitting plans not to cover specific treatments, 
        procedures, or classes), a health insurance plan is considered 
        to provide catastrophic coverage consistent with this 
        subsection if benefits are limited to payment for--
                    (A) inpatient and outpatient hospital care, 
                including emergency services;
                    (B) inpatient and outpatient physicians' services;
                    (C) diagnostic tests; and
                    (D) preventive services (which may include one or 
                more of the following services)--
                            (i) prenatal care and well-baby care 
                        provided to children who are 1 year of age or 
                        younger;
                            (ii) well-child care;
                            (iii) Pap smears;
                            (iv) mammograms; and
                            (v) colorectal screening services.
            (2) Cost-sharing.--Each health insurance plan providing 
        catastrophic coverage issued to a small employer by an insurer 
        may impose premiums, deductibles, copayments, or other cost-
        sharing on enrollees of such plan.
            (3) Out-of-pocket limit.--Each health insurance plan 
        providing catastrophic coverage shall provide for a limit on 
        out-of-pocket expenses.
            (4) Limited preemption of state mandated benefits.--No 
        State law or regulation in effect in a State that requires 
        health insurance plans offered to small employers in the State 
        to include specified items and services other than those 
        described in this subsection shall apply with respect to a 
        health insurance plan providing catastrophic coverage offered 
        by an insurer to a small employer.
    (d) Actuarial Equivalence in Benefits Permitted.--
            (1) Standard benefit package.--A health insurance plan also 
        is considered to provide standard coverage consistent with 
        subsection (b) if the benefits are determined, in accordance 
        with the set of actuarial equivalence rules certified under 
        paragraph (3), to have a value that is within 5 percentage 
        points of the target actuarial value for standard coverage 
        established under paragraph (4).
            (2) Catastrophic benefit package.--A health insurance plan 
        also is considered to provide catastrophic coverage consistent 
        with subsection (c) if the benefits are determined, in 
        accordance with the set of actuarial equivalence rules 
        certified under paragraph (3), to have a value that is within 5 
        percentage points of the target actuarial value for 
        catastrophic coverage established under paragraph (5).
            (3) Rules of actuarial equivalence.--
                    (A) Initial determination.--The NAIC is requested 
                to submit to the Secretary, within 6 months after the 
                date of the enactment of this Act, a set of rules which 
                the NAIC determines is sufficient for determining, in 
                the case of any health insurance plan and for purposes 
                of this subsection, the actuarial value of the coverage 
                offered by the plan.
                    (B) Certification.--If the Secretary determines 
                that the NAIC has submitted a set of rules that comply 
                with the requirements of subparagraph (A), the 
                Secretary shall certify such set of rules for use under 
                this subsection. If the Secretary determines that such 
                a set of rules has not been submitted or does not 
                comply with such requirements, the Secretary shall 
                promptly establish a set of rules that meets such 
                requirements.
            (4) Determination of target actuarial value for standard 
        coverage.--
                    (A) Initial determination.--The NAIC is requested 
                to submit to the Secretary, within 6 months after the 
                date of the enactment of this Act, a target actuarial 
                value for standard coverage equal to the average 
                actuarial value of the standard coverage described in 
                subsection (b). No specific procedure or treatment, or 
                classes thereof, is required to be considered in such 
                determination by this Act or through regulations. The 
                determination of such value shall be based on a 
                representative distribution of the population of 
                eligible employees to be offered standard coverage and 
                a single set of standardized utilization and cost 
                factors.
                    (B) Certification.--If the Secretary determines 
                that the NAIC has submitted a target actuarial value 
                for standard coverage that complies with the 
                requirements of subparagraph (A), the Secretary shall 
                certify such value for use under this subsection. If 
                the Secretary determines that such a value has not been 
                submitted or does not comply with such requirements, 
                the Secretary shall promptly determine such a target 
                actuarial value that meets such requirements.
            (5) Determination of target actuarial value for 
        catastrophic coverage.--
                    (A) Initial determination.--The NAIC is requested 
                to submit to the Secretary, within 6 months after the 
                date of the enactment of this Act, a target actuarial 
                value for catastrophic coverage equal to the average 
                actuarial value of the catastrophic coverage described 
                in subsection (c). No specific procedure or treatment, 
                or classes thereof, is required to be considered in 
                such determination by this Act or through regulations. 
                The determination of such value shall be based on a 
                representative distribution of the population of 
                eligible employees to be offered catastrophic coverage 
                and a single set of standardized utilization and cost 
                factors.
                    (B) Certification.--If the Secretary determines 
                that the NAIC has submitted a target actuarial value 
                for catastrophic coverage that complies with the 
                requirements of subparagraph (A), the Secretary shall 
                certify such value for use under this subsection. If 
                the Secretary determines that such a value has not been 
                submitted or does not comply with such requirements, 
                the Secretary shall promptly determine such a target 
                actuarial value that meets such requirements.
            (6) Subsequent revisions of rules and target values.--
                    (A) NAIC.--The NAIC may submit from time to time to 
                the Secretary revisions of the set of rules of 
                actuarial equivalence and target actuarial values 
                previously established or determined under this 
                subsection if the NAIC determines such revision 
                necessary to take into account changes in the relevant 
                types of health benefits provisions, in deductible 
                levels for catastrophic coverage, or in demographic 
                conditions which form the basis for such set of rules 
                or values. The provisions of paragraph (3)(B) shall 
                apply to such a revision in the same manner as they 
                apply to the initial determination of the set of rules.
                    (B) Secretary.--The Secretary may by regulation 
                revise such set or rules and values from time to time 
                if the Secretary determines such revision necessary to 
                take into account changes described in subparagraph 
                (A).
    (e) No Coverage of Specific Treatment, Procedures, or Classes 
Required.--Nothing in this section may be construed to require the 
coverage of any specific procedure, treatment, or class of service in a 
health plan under this Act or through regulations.

SEC. 1103. ESTABLISHMENT OF HEALTH PLAN STANDARDS.

    (a) Establishment of General Standards.--
            (1) Role of naic.--The Secretary shall request the NAIC to 
        develop, within 9 months after the date of the enactment of 
        this Act, model regulations that specify standards with respect 
        to each of the following:
                    (A)(i) The requirement, under section 1101(a), that 
                insurers make available health plans.
                    (ii) The requirements of guaranteed availability of 
                health plans to small employers under section 1101(b).
                    (iii) The requirements for standard and 
                catastrophic coverage under subsections (b) and (c) of 
                section 1102.
                    (B)(i) The requirements of section 1104 (relating 
                to limits on premiums and miscellaneous consumer 
                protections).
                    (ii) The requirement of section 1105 (relating to 
                limitation on annual premium increases).
        If the NAIC develops recommended regulations specifying such 
        standards within such period, the Secretary shall review the 
        standards. Such review shall be completed within 60 days after 
        the date the regulations are developed. Unless the Secretary 
        determines within such period that the standards do not meet 
        the requirements, such standards shall serve as the standards 
        under this section, with such amendments as the Secretary deems 
        necessary.
            (2) Contingency.--If the NAIC does not develop such model 
        regulations within such period or the Secretary determines that 
        such regulations do not specify standards that meet the 
        requirements described in paragraph (1), the Secretary shall 
        specify, within 15 months after the date of the enactment of 
        this Act, standards to carry out those requirements.
            (3) Effective date.--The health plan standards and consumer 
        protection standards (as defined in paragraph (5)) shall apply 
        to health plans and health insurance plans in a State on or 
        after the respective date the standards are implemented in the 
        State under subsections (b) and (c).
            (4) Definitions.--In this section:
                    (A) Consumer protection standards.--The term 
                ``consumer protection standards'' means the standards 
                established under paragraph (1)(B).
                    (B) Health plan standards.--The term ``health plan 
                standards'' means the standards established under 
                paragraph (1)(A) (relating to the requirements of 
                sections 1101 and 1102), and includes the consumer 
                protection standards insofar as they relate to health 
                plans.
    (b) Application of Standards Through States.--
            (1) Application of health plan standards.--
                    (A) In general.--Each State shall submit to the 
                Secretary, by the deadline specified in subparagraph 
                (B), a report on steps the State is taking to implement 
                and enforce the consumer protection standards with 
                respect to insurers, and health plans offered, not 
                later than such deadline.
                    (B) Deadline for report.--
                            (i) 1 year after standards established.--
                        Subject to clause (ii), the deadline under this 
                        subparagraph is 1 year after the date the 
                        health plan standards are established under 
                        subsection (a).
                            (ii) Exception for legislation.--In the 
                        case of a State which the Secretary identifies, 
                        in consultation with the NAIC, as--
                                    (I) requiring State legislation 
                                (other than legislation appropriating 
                                funds) in order for insurers and health 
                                plans offered to meet the health plan 
                                standards established under subsection 
                                (a), but
                                    (II) having a legislature which is 
                                not scheduled to meet in 1995 in a 
                                legislative session in which such 
                                legislation may be considered,
                        the date specified in this subparagraph is the 
                        first day of the first calendar quarter 
                        beginning after the close of the first 
                        legislative session of the State legislature 
                        that begins on or after January 1, 1997. For 
                        purposes of the previous sentence, in the case 
                        of a State that has a 2-year legislative 
                        session, each year of such session shall be 
                        deemed to be a separate regular session of the 
                        State legislature.
            (2) Federal role.--If the Secretary determines that a State 
        has failed to submit a report by the deadline specified under 
        paragraph (1) or finds that the State has not implemented and 
        provided adequate enforcement of the health plan standards 
        under such paragraph, the Secretary shall notify the State and 
        provide the State a period of 60 days in which to submit such 
        report or to implement and enforce such standards under such 
        paragraph. If, after such 60-day period, the Secretary finds 
        that such a failure has not been corrected, the Secretary shall 
        provide for such mechanism for the implementation and 
        enforcement of such standards in the State as the Secretary 
        determines to be appropriate. Such implementation and 
        enforcement shall take effect with respect to insurers, and 
        health plans offered or renewed, on or after 3 months after the 
        date of the Secretary's finding under the previous sentence, 
        and until the date the Secretary finds that such a failure has 
        been corrected. In exercising authority under this 
        subparagraph, the Secretary shall determine whether the use of 
        a risk-allocation mechanism, described in section 1101(c), 
        would be more consistent with the small employer group health 
        coverage market in the State than the guaranteed availability 
        provisions of section 1101(b).
            (3) Application of consumer protection standards.--
                    (A) In general.--Each State shall submit to the 
                Secretary, by the deadline specified in subparagraph 
                (B), a report on steps the State is taking to implement 
                and enforce the health plan standards with respect to 
                insurers, and health insurance plans (other than health 
                plans) offered, not later than such deadline.
                    (B) Deadline for report.--
                            (i) 1 year after standards established.--
                        Subject to clause (ii), the deadline under this 
                        subparagraph is 1 year after the date the 
                        consumer protection standards are established 
                        under subsection (a).
                            (ii) Exception for legislation.--In the 
                        case of a State which the Secretary identifies, 
                        in consultation with the NAIC, as--
                                    (I) requiring State legislation 
                                (other than legislation appropriating 
                                funds) in order for insurers and health 
                                insurance plans offered to meet the 
                                consumer protection standards 
                                established under subsection (a), but
                                    (II) having a legislature which is 
                                not scheduled to meet in 1994 in a 
                                legislative session in which such 
                                legislation may be considered,
                        the date specified in this subparagraph is the 
                        first day of the first calendar quarter 
                        beginning after the close of the first 
                        legislative session of the State legislature 
                        that begins on or after January 1, 1996. For 
                        purposes of the previous sentence, in the case 
                        of a State that has a 2-year legislative 
                        session, each year of such session shall be 
                        deemed to be a separate regular session of the 
                        State legislature.
            (4) Federal role.--If the Secretary determines that a State 
        has failed to submit a report by the deadline specified under 
        paragraph (1) or finds that the State has not implemented and 
        provided adequate enforcement of the consumer protection 
        standards under such paragraph, the Secretary shall notify the 
        State and provide the State a period of 60 days in which to 
        submit such report or to implement and enforce such standards 
        under such paragraph. If, after such 60-day period, the 
        Secretary finds that such a failure has not been corrected, the 
        Secretary shall provide for such mechanism for the 
        implementation and enforcement of such standards in the State 
        as the Secretary determines to be appropriate. Such 
        implementation and enforcement shall take effect with respect 
        to insurers, and health insurance plans (other than health 
        plans) offered or renewed, on or after 3 months after the date 
        of the Secretary's finding under the previous sentence, and 
        until the date the Secretary finds that such a failure has been 
        corrected.

SEC. 1104. LIMITS ON PREMIUMS AND MISCELLANEOUS CONSUMER PROTECTIONS.

    (a) Limits on Premiums.--
            (1) Limit on variation of index rates between classes of 
        business.--
                    (A) In general.--As a standard under section 
                1103(a)(1)(B)(i), the index rate for a rating period 
                for any class of business of an insurer may not exceed 
                by more than 20 percent the index rate for any other 
                class of business.
                    (B) Exception.--The limitation of subparagraph (A) 
                shall not apply to a class of business if--
                            (i) the class is one for which the insurer 
                        does not reject, and never has rejected, small 
                        employers included within the definition of 
                        employers eligible for the class of business or 
                        otherwise eligible employees and dependents who 
                        enroll on a timely basis, based upon their 
                        claim experience or health status,
                            (ii) the insurer does not involuntarily 
                        transfer, and never has involuntarily 
                        transferred, a health insurance plan into or 
                        out of the class of business, and
                            (iii) the class of business is currently 
                        available for purchase.
            (2) Limit on variation of premium rates within a class of 
        business.--For a class of business of an insurer, as a standard 
        under section 1103(a)(1)(B)(i), the highest premium rates 
        charged during a rating period to small employers with similar 
        demographic and other similar objective characteristics (and 
        not relating to claims experience, health status, industry, 
        occupation, or duration of coverage since issue) for the same 
        or similar coverage, or the highest rates which could be 
        charged to such employers under the rating system for that 
        class of business, shall not exceed an amount that is 1.5 times 
        the base premium rate for the class of business for a rating 
        period (or portion thereof) that occurs in the first 3 years in 
        which this section is in effect, and 1.35 times the base 
        premium rate thereafter.
            (3) Objective basis for differences in premiums for 
        standard and catastrophic plans.--The difference between the 
        index rates for catastrophic plans and the index rates for 
        standard plans shall be reasonable and shall reflect the 
        difference in plan design and shall not take into account 
        differences due to the nature of the groups assumed to select 
        particular health plans.
            (4) Limit on transfer of employers among classes of 
        business.--As a standard under section 1103(a)(1)(B)(i), an 
        insurer may not involuntarily transfer a small employer into or 
        out of a class of business. An insurer may not offer to 
        transfer a small employer into or out of a class of business 
        unless such offer is made to transfer all small employers in 
        the class of business without regard to demographic 
        characteristics, claim experience, health status, industry, 
        occupation, or duration since issue.
            (5) Definitions.--In this subsection:
                    (A) Base premium rate.--The term ``base premium 
                rate'' means, for each class of business for each 
                rating period, the lowest premium rate charged or which 
                could have been charged under a rating system for that 
                class of business by the insurer to small employers 
                with similar demographic characteristics and other 
                similar objective characteristics (not relating to 
                claims experience, health status, industry, occupation, 
                or duration of coverage since issue) for health 
                insurance plans with the same or similar coverage.
                    (B) Class of business.--The term ``class of 
                business'' means, with respect to an insurer, all (or a 
                distinct group of) small employers as shown on the 
                records of the insurer.
                    (C) Rules for establishing classes of business.--
                For purposes of subparagraph (B)--
                            (i) an insurer may establish, subject to 
                        clause (ii), a distinct group of small 
                        employers on the basis that the applicable 
                        health insurance plans either--
                                    (I) are marketed and sold through 
                                individuals and organizations which are 
                                not participating in the marketing or 
                                sale of other distinct groups of small 
                                employers for the insurer,
                                    (II) have been acquired from 
                                another insurer as a distinct group, or
                                    (III) are provided through an 
                                association that has a membership of 
                                not less than 100 small employers and 
                                that has been formed for purposes other 
                                than obtaining health coverage;
                            (ii) an insurer may not establish more than 
                        2 groupings under each class of business based 
                        on the insurer's use of managed-care techniques 
                        if the techniques are expected to produce 
                        substantial variation in health care costs; and
                            (iii) notwithstanding clauses (i) and (ii), 
                        a State commissioner of insurance, upon 
                        application and if authorized under State law, 
                        may approve additional distinct groups upon a 
                        finding that such approval would enhance the 
                        efficiency and fairness of the small employer 
                        marketplace.
                    (D) Index rate.--The term ``index rate'' means, 
                with respect to a class of business, the arithmetic 
                average of the applicable base premium rate and the 
                corresponding highest premium rate for the class.
                    (E) Demographic characteristics.--Except as 
                otherwise permitted under the standard under section 
                1103(b)(1)(B)(i), the term ``demographic 
                characteristics'' means age, gender, geographic area, 
                family composition, and group size.
    (b) Full Disclosure of Rating Practices.--At the time an insurer 
offers a health insurance plan to a small employer, the insurer shall 
fully disclose to the employer rating practices for health insurance 
plans, including rating practices for different populations and benefit 
designs.
    (c) Actuarial Certification.--Each insurer that offers a health 
insurance plan to a small employer in a State shall file annually with 
the State commissioner of insurance a written statement by a member of 
the American Academy of Actuaries (or other individual acceptable to 
the commissioner) that, based upon an examination by the individual 
which includes a review of the appropriate records and of the actuarial 
assumptions of the insurer and methods used by the insurer in 
establishing premium rates for applicable health insurance plans--
            (1) the insurer is in compliance with the applicable 
        provisions of this section, and
            (2) the rating methods are actuarially sound.
Each such insurer shall retain a copy of such statement for examination 
at its principal place of business.
    (d) Registration and Reporting.--Each insurer that issues any 
health insurance plan to a small employer in a State shall be 
registered or licensed with the State commissioner of insurance and 
shall comply with any reporting requirements of the commissioner 
relating to such a plan.

SEC. 1105. LIMITATION ON VARIATION IN ANNUAL PREMIUM INCREASES AMONG 
              COVERED SMALL EMPLOYERS.

    An insurer may not provide for an increase in the premium charged a 
small employer for a health insurance plan in a percentage that exceeds 
the percentage change in the premium charged under the plan for a newly 
covered small employer within the same class of business rate plus 10 
percentage points.

SEC. 1106. ESTABLISHMENT OF REINSURANCE OR ALLOCATION OF RISK 
              MECHANISMS FOR HIGH RISK INDIVIDUALS IN MARKETPLACE FOR 
              SMALL BUSINESS.

    (a) Establishment of Standards.--
            (1) Role of naic.--The Secretary shall request the NAIC to 
        develop, within 9 months after the date of the enactment of 
        this Act, models for reinsurance or allocation of risk 
        mechanisms (each in this section referred to as a ``reinsurance 
        or allocation of risk mechanism'') for health insurance plans 
        made available to small employers and for whom an insurer is at 
        risk of incurring high costs under the plan. If the NAIC 
        develops such models within such period, the Secretary shall 
        review such models to determine if they provide for an 
        effective reinsurance or allocation of risk mechanism. Such 
        review shall be completed within 30 days after the date the 
        models are developed. Unless the Secretary determines within 
        such period that such a model is not an effective reinsurance 
        or allocation of risk mechanism, such remaining models shall 
        serve as the models under this section, with such amendments as 
        the Secretary deems necessary.
            (2) Contingency.--If the NAIC does not develop such models 
        within such period or the Secretary determines that all such 
        models do not provide for an effective reinsurance or 
        allocation of risk mechanism, the Secretary shall specify, 
        within 15 months after the date of the enactment of this Act, 
        models to carry out this section.
    (b) Implementation of Reinsurance or Allocation of Risk 
Mechanisms.--
            (1) By states.--Each State shall establish and maintain one 
        or more reinsurance or allocation of risk mechanisms that are 
        consistent with a model established under subsection (a) by not 
        later than the deadline specified in section 1103(b)(1)(B). A 
        State may establish and maintain such a mechanism jointly with 
        one or more other States.
            (2) Federal role.--
                    (A) In general.--If the Secretary determines that a 
                State has failed to establish or maintain a reinsurance 
                or allocation of risk mechanism in accordance with 
                paragraph (1), the Secretary shall establish and 
                maintain such a reinsurance or allocation of risk 
                mechanism meeting the requirements of this paragraph.
                    (B) Reinsurance mechanism.--Unless the Secretary 
                determines under subparagraph (C) that an allocation of 
                risk mechanism is the appropriate mechanism to use in a 
                State under this paragraph, the Secretary shall 
                establish and maintain for use under this section for 
                each State an appropriate reinsurance mechanism. Such 
                mechanism may require insurers to make contributions in 
                proportion to the amounts received by the insurers for 
                providing health insurance plans in the State.
                    (C) Allocation of risk mechanism.--If the Secretary 
                determines that, due to the nature of the health 
                coverage market in the State (including a relatively 
                small number of health insurance plans offered or a 
                relatively small number of uninsurable small 
                employers), an allocation of risk mechanism would be a 
                better mechanism than a reinsurance mechanism, the 
                Secretary shall establish and maintain for use under 
                this section for a State an allocation of risk 
                mechanism under which uninsurable small employers would 
                be equitably assigned among insurers offering health 
                insurance plans to small employers.
    (c) Construction.--Nothing in this section shall be construed to 
prohibit reinsurance or allocation of risk arrangements relating to 
health insurance plans, whether on a State or multi-State basis, not 
required under this section.

SEC. 1107. DEFINITIONS.

    Except as otherwise specifically provided, for purposes of this 
subtitle:
            (1) Dependent child.--The term ``dependent child'' means a 
        child (including an adopted child) who is under 19 years of age 
        or who is a full-time student and under 25 years of age.
            (2) Eligible employee.--The term ``eligible employee'' 
        means, with respect to an employer, an employee who normally 
        performs on a monthly basis at least 30 hours of service per 
        week for that employer.
            (3) Employer.--The term ``employer'' shall have the meaning 
        applicable under section 3(5) of the Employee Retirement Income 
        Security Act of 1974.
            (4) Health insurance plan.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the term ``health insurance plan'' means any 
                hospital or medical service policy or certificate, 
                hospital or medical service plan contract, or health 
                maintenance organization group contract offered by an 
                insurer.
                    (B) Exception.--Such term does not include any of 
                the following--
                            (i) coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof,
                            (ii) medicare supplemental health 
                        insurance,
                            (iii) coverage issued as a supplement to 
                        liability insurance,
                            (iv) worker's compensation or similar 
                        insurance, or
                            (v) automobile medical-payment insurance,
                or any combination thereof.
            (5) Health maintenance organization.--The term ``health 
        maintenance organization'' includes, as defined in standards 
        established under section 1103, a health insurance plan that 
        meets specified standards and that offers to provide health 
        services on a prepaid, at-risk basis primarily through a 
        defined set of providers.
            (6) Insurer.--The term ``insurer'' means a licensed 
        insurance company, a prepaid hospital or medical service plan, 
        and a health maintenance organization offering such a plan to 
        an employer, and includes a similar organization regulated 
        under State law for solvency.
            (7) NAIC.--The term ``NAIC'' means the National Association 
        of Insurance Commissioners.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (9) Small employer.--The term ``small employer'' means, 
        with respect to a calendar year, an employer that normally 
        employs more than 1 but less than 51 eligible employees on a 
        typical business day. For the purposes of this paragraph, the 
        term ``employee'' includes a self-employed individual. For 
        purposes of determining if an employer is a small employer, 
        rules similar to the rules of subsection (b) and (c) of section 
        414 of the Internal Revenue Code of 1986 shall apply.
            (10) State.--The term ``State'' means the 50 States, the 
        District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
        and American Samoa.
            (11) State commissioner of insurance.--The term ``State 
        commissioner of insurance'' includes a State superintendent of 
        insurance.

SEC. 1108. OFFICE OF PRIVATE HEALTH CARE COVERAGE; ANNUAL REPORTS ON 
              EVALUATION OF HEALTH CARE COVERAGE REFORM.

    (a) In General.--In order to carry out the responsibilities of the 
Secretary under this subtitle, the Secretary shall establish an Office 
of Private Health Care Coverage, to be headed by a Director (in this 
section and section 1109 referred to as the ``Director'') appointed by 
the Secretary.
    (b) Annual Report.--
            (1) In general.--The Director shall submit to Congress an 
        annual report on the implementation of this subtitle.
            (2) Information to be included.--Each annual report shall 
        include information concerning at least the following:
                    (A) Implementation and enforcement of the 
                applicable health plan standards and consumer 
                protection standards under this subtitle by the States 
                and by the Secretary.
                    (B) An evaluation of the impact of the reforms 
                under this subtitle on the availability of affordable 
                health coverage for small employers that purchase group 
                health coverage and for their employees, and, in 
                particular, the impact of--
                            (i) guaranteed availability of health 
                        coverage,
                            (ii) limitations of restrictions from 
                        coverage of preexisting conditions,
                            (iii) requirement for continuity of 
                        coverage,
                            (iv) risk-management mechanisms for health 
                        coverage,
                            (v) limits on premium variations,
                            (vi) limits on annual premium increases, 
                        and
                            (vii) preemption of State benefit mandates.
                In performing such evaluation, the Secretary shall seek 
                to discount the effect of the insurance cycle on health 
                insurance premiums.
                    (C) An assessment of the implications of the 
                reforms on adverse selection among health insurance 
                plans and the distribution of risk among health 
                insurance plans.
    (c) Advisory Committee.--The Secretary shall provide for 
appointment of an advisory committee to advise the Director concerning 
activities of the Office under this subtitle. Membership on the 
committee shall consist of 17 individuals and shall include individuals 
from the general public, small and large business, labor, insurance and 
other group health plans, and health care providers, and shall include 
individuals who are experts in the fields of the actuarial science, 
health economics, and health services research. The Secretary may 
include, as additional, ex officio members of the committee, such 
representatives of government agencies as the Secretary deems 
appropriate. The chairperson of the committee shall not be a health 
care provider or receive any direct or indirect compensation from an 
insurer, health insurance plan, or a health care provider.

SEC. 1109. RESEARCH AND DEMONSTRATION PROJECTS; DEVELOPMENT OF A HEALTH 
              RISK POOLING MODEL.

    (a) Research and Demonstrations.--The Director is authorized, 
directly, by contract, and through grants and cooperative agreements 
within the Department of Health and Human Services and outside the 
Department--
            (1) to conduct research on the impact of this subtitle on 
        the availability of affordable health coverage for employees 
        and dependents in the small employers group health care 
        coverage market and other topics described in section 1108(b), 
        and
            (2) to conduct demonstration projects relating to such 
        topics.
    (b) Development of Methods of Measuring Relative Health Risk.--
            (1) In general.--The Director shall develop methods for 
        measuring, in terms of the expected costs of providing benefits 
        under health insurance plans and, in particular, health plans, 
        the relative health risks of eligible individuals.
            (2) Methodology.--The methods--
                    (A) shall rely on diagnosis or other health-related 
                information that is predictive of individual health 
                care needs,
                    (B) may rely upon information routinely collected 
                in the process of making payments under group health 
                plans, and
                    (C) may provide for such random, sample audits of 
                records as may be necessary to verify the accuracy of 
                measurements.
    (c) Development of a Health Risk Pooling Model.--
            (1) In general.--The Director shall develop a model, based 
        on the methods of measuring risks under subsection (b), for 
        equitably distributing health risks among insurers in the small 
        employer health care coverage market.
            (2) Redistribution of risk.--Under such model, insurers 
        with below average health risks would be required to contribute 
        to a common fund for payment to insurers with above average 
        health risks, each in relation to the degree of their favorable 
        or adverse risk selection.
            (3) Incentives.--Such model shall include incentives to 
        encourage continuous coverage of eligible individuals and small 
        employers.
    (d) Consultation.--The methods and model under this section shall 
be developed in consultation with the NAIC and the advisory committee 
established under section 1108(c).
    (e) Report.--By not later than January 1, 1996, the Director shall 
submit to Congress a report on the methods and model developed under 
this section (as well as on research and demonstration projects 
conducted under subsection (a)). The Director shall include in the 
report such recommendations respecting the application of the model to 
insurers (and, in particular, to health plans) under this subtitle as 
the Director deems appropriate.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, such sums as may be necessary 
in each of fiscal years 1995 through 1999.

                         Subtitle C--Preemption

                   PART 1--SCOPE OF STATE REGULATION

SEC. 1201. PROHIBITION OF STATE BENEFIT MANDATES FOR GROUP HEALTH 
              PLANS.

    In the case of a group health plan, no provision of State or local 
law shall apply that requires the coverage of one or more specific 
benefits, services, or categories of health care, or services of any 
class or type of provider of health care.

SEC. 1202. PROHIBITION OF PROVISIONS PROHIBITING EMPLOYER GROUPS FROM 
              PURCHASING HEALTH INSURANCE.

    No provision of State or local law shall apply that prohibits 2 or 
more employers from obtaining coverage under an insured multiple 
employer health plan.

SEC. 1203. RESTRICTIONS ON MANAGED CARE.

    (a) Preemption of State Law Provisions.--Subject to subsection (c), 
the following provisions of State law are preempted and may not be 
enforced:
            (1) Restrictions on reimbursement rates or selective 
        contracting.--Any law that restricts the ability of a group 
        health plan to negotiate reimbursement rates with providers or 
        to contract selectively with one provider or a limited number 
        of providers.
            (2) Restrictions on differential financial incentives.--Any 
        law that limits the financial incentives that a group health 
        plan may require a beneficiary to pay when a non-plan provider 
        is used on a non-emergency basis.
            (3) Restrictions on utilization review methods.--Any law 
        that--
                    (A) prohibits utilization review of any or all 
                treatments and conditions,
                    (B) requires that such review be made (i) by a 
                resident of the State in which the treatment is to be 
                offered or by an individual licensed in such State, or 
                (ii) by a physician in any particular specialty or with 
                any board certified specialty of the same medical 
                specialty as the provider whose services are being 
                reviewed,
                    (C) requires the use of specified standards of 
                health care practice in such reviews or requires the 
                disclosure of the specific criteria used in such 
                reviews,
                    (D) requires payments to providers for the expenses 
                of responding to utilization review requests, or
                    (E) imposes liability for delays in performing such 
                review.
        Nothing in subparagraph (B) shall be construed as prohibiting a 
        State from (i) requiring a licensed physician or other health 
        care professional be available at some time in the review or 
        appeal process, or (ii) requiring that any decision in an 
        appeal from such a review be made by a licensed physician.
    (b) GAO Study.--
            (1) In general.--The Comptroller General shall conduct a 
        study of the benefits and cost effectiveness of the use of 
        managed care in the delivery of health services.
            (2) Report.--By not later than 4 years after the date of 
        the enactment of this Act, the Comptroller General shall submit 
        a report to Congress on the study conducted under paragraph (1) 
        and shall include in the report such recommendations (including 
        whether the provisions of subsection (a) should be extended) as 
        may be appropriate.
    (c) Sunset.--Unless otherwise provided, subsection (a) shall not 
apply 5 years after the date of the enactment of this Act.

SEC. 1204. DEFINITIONS.

    For purposes of this part, the terms ``dependent'', ``employee'', 
``employer'', ``group health plan'', ``health insurance plan'', 
``insured multiple employer health plan'', and ``State'' have the 
meanings given such terms in section 1023(a).

         PART 2--MULTIPLE EMPLOYER HEALTH BENEFITS PROTECTIONS

SEC. 1211. LIMITED EXEMPTION UNDER PREEMPTION RULES FOR MULTIPLE 
              EMPLOYER PLANS PROVIDING HEALTH BENEFITS SUBJECT TO 
              CERTAIN FEDERAL STANDARDS.

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

                ``Part 7--Multiple Employer Health Plans

``SEC. 701. DEFINITIONS.

    ``For purposes of this part--
            ``(1) Insurer.--The term `insurer' means an insurance 
        company, insurance service, or insurance organization, licensed 
        to engage in the business of insurance by a State.
            ``(2) Participating employer.--The term `participating 
        employer' means, in connection with a multiple employer welfare 
        arrangement, any employer if any of its employees, or any of 
        the dependents of its employees, are or were covered under such 
        arrangement in connection with the employment of the employees.
            ``(3) Excess/stop loss coverage.--The term `excess/stop 
        loss coverage' means, in connection with a multiple employer 
        welfare arrangement, a contract under which an insurer provides 
        for payment with respect to claims under the arrangement, 
        relating to participants or beneficiaries individually or 
        otherwise, in excess of an amount or amounts specified in such 
        contract.
            ``(4) Qualified actuary.--The term `qualified actuary' 
        means an individual who is a member of the American Academy of 
        Actuaries or meets such reasonable standards and qualifications 
        as the Secretary may provide by regulation.
            ``(5) Sponsor.--The term `sponsor' means, in connection 
        with a multiple employer welfare arrangement, the association 
        or other entity which establishes or maintains the arrangement.
            ``(6) State location of covered individuals.--
                    ``(A) In general.--A multiple employer welfare 
                arrangement shall be treated as covering individuals 
                located in a State only if the minimum required number 
                of individuals who are covered under the arrangement 
                are located in such State, except that if the minimum 
                required number of individuals are not located in any 
                State, such arrangement shall be treated as covering 
                individuals in any State in which any covered 
                individual is located.
                    ``(B) Minimum required number.--For purposes of 
                subparagraph (A), the minimum required number is the 
                greater of--
                            ``(i) 5 percent of the total number of 
                        individuals described in subparagraph (A), or
                            ``(ii) 50.
                    ``(C) Location of individuals in state.--For 
                purposes of subparagraph (A), an individual shall be 
                treated as located in a State if such individual is 
                employed in such State or the address of such 
                individual last known by the arrangement is located in 
                such State.
            ``(7) State insurance commissioner.--The term `State 
        insurance commissioner' means the insurance commissioner (or 
        similar official) of a State.
            ``(8) Domicile state.--The term `domicile State' means, in 
        connection with a multiple employer welfare arrangement, the 
        State in which, according to the application for an exemption 
        under this part, most individuals to be covered under the 
        arrangement are located, except that, in any case in which 
        information contained in the latest annual report of the 
        arrangement filed under this part indicates that most 
        individuals covered under the arrangement are located in a 
        different State, such term means such different State.
            ``(9) Fully insured arrangement.--A multiple employer 
        welfare arrangement shall be treated as fully insured only if 
        one or more insurers, health maintenance organizations, similar 
        organizations regulated under State law for solvency, or any 
        combination thereof are liable under one or more insurance 
        policies or contracts for all benefits under the arrangement 
        (irrespective of any recourse they may have against other 
        parties).
            ``(10) Multiple employer health plan.--The term `multiple 
        employer health plan' means a multiple employer welfare 
        arrangement treated as an employee welfare benefit plan by 
        reason of an exemption under this part.
            ``(11) Insured multiple employer health plan.--The term 
        `insured multiple employer health plan' means a fully insured 
        multiple employer welfare arrangement under which benefits 
        consist solely of medical care described in section 607(1) 
        (disregarding such incidental benefits as the Secretary shall 
        specify by regulations).
            ``(12) Prepaid health care arrangement.--The term `prepaid 
        health care arrangement' means a nonprofit entity which--
                    ``(A) offers benefits consisting of medical care 
                described in section 607(1) on a prepaid basis, and
                    ``(B) is established and controlled by a group 
                medical practice or similar group, by a hospital, or by 
                such a practice (or group) and a hospital.

``SEC. 702. EXEMPTED MULTIPLE EMPLOYER PLANS PROVIDING BENEFITS IN THE 
              FORM OF MEDICAL CARE RELIEVED OF CERTAIN RESTRICTIONS ON 
              PREEMPTION OF STATE LAW AND TREATED AS EMPLOYEE WELFARE 
              BENEFIT PLANS.

    ``(a) In General.--Subject to subsection (b), a multiple employer 
welfare arrangement which is not fully insured and with respect to 
which there is in effect an exemption granted by the Secretary under 
this part (or with respect to which there is pending a complete 
application for such an exemption and the Secretary determines that 
provisional protection under this part is appropriate)--
            ``(1) shall be treated for purposes of subtitle A and the 
        preceding parts of this subtitle as an employee welfare benefit 
        plan, irrespective of whether such arrangement is an employee 
        welfare benefit plan, and
            ``(2) shall be exempt from section 514(b)(6)(A)(ii).
    ``(b) Benefits Must Consist of Medical Care.--Subsection (a) shall 
apply to a multiple employer welfare arrangement only if the benefits 
provided thereunder consist solely of medical care described in section 
607(1) (disregarding such incidental benefits as the Secretary shall 
specify by regulation).
    ``(c) Restriction on Commencement of New Arrangements.--A multiple 
employer welfare arrangement providing benefits which consist of 
medical care described in section 607(1) which has not commenced 
operations as of January 1, 1995, may commence operations only if an 
exemption granted to the arrangement under this part is in effect (or 
there is pending with respect to the arrangement a complete application 
for such an exemption and the Secretary determines that provisional 
protection under this part is appropriate).

``SEC. 703. EXEMPTION PROCEDURE.

    ``(a) In General.--The Secretary shall grant an exemption described 
in section 702(a) to a multiple employer welfare arrangement if--
            ``(1) an application for such exemption with respect to 
        such arrangement, identified individually or by class, has been 
        duly filed in complete form with the Secretary in accordance 
        with this part,
            ``(2) such application demonstrates compliance with the 
        requirements of section 704 with respect to such arrangement, 
        and
            ``(3) the Secretary finds that such exemption is--
                    ``(A) administratively feasible,
                    ``(B) not adverse to the interests of the 
                individuals covered under the arrangement, and
                    ``(C) protective of the rights and benefits of the 
                individuals covered under the arrangement.
    ``(b) Notice and Hearing.--Before granting an exemption under this 
section, the Secretary shall publish notice in the Federal Register of 
the pendency of the exemption, shall require that adequate notice be 
given to interested persons, including the State insurance commissioner 
of each State in which covered individuals under the arrangement are, 
or are expected to be, located, and shall afford interested persons 
opportunity to present views. The Secretary may not grant an exemption 
under this section unless the Secretary affords an opportunity for a 
hearing and makes a determination on the record with respect to the 
findings required under subsection (a)(3). The Secretary shall, to the 
maximum extent practicable, make a final determination with respect to 
any application filed under this section in the case of a newly 
established arrangement within 90 days after the date which the 
Secretary determines is the date on which such application is filed in 
complete form.

``SEC. 704. ELIGIBILITY REQUIREMENTS.

    ``(a) Application for Exemption.--
            ``(1) In general.--An exemption may be granted by the 
        Secretary under this part only on the basis of an application 
        filed with the Secretary in such form and manner as shall be 
        prescribed in regulations of the Secretary. Any such 
        application shall be signed by the operating committee and the 
        sponsor of the arrangement.
            ``(2) Filing fee.--The arrangement shall pay to the 
        Secretary at the time of filing an application under this 
        section a filing fee in the amount of $5,000, which shall be 
        available, to the extent provided in appropriation Acts, to the 
        Secretary for the sole purpose of administering the exemption 
        procedures under this part.
            ``(3) Information included.--An application filed under 
        this section shall include, in a manner and form prescribed in 
        regulations of the Secretary, at least the following 
        information:
                    ``(A) Identifying information.--The names and 
                addresses of--
                            ``(i) the sponsor, and
                            ``(ii) the members of the operating 
                        committee of the arrangement.
                    ``(B) States in which arrangement intends to do 
                business.--The States in which individuals covered 
                under the arrangement are to be located and the number 
                of such individuals expected to be located in each such 
                State.
                    ``(C) Bonding requirements.--Evidence provided by 
                the operating committee that the bonding requirements 
                of section 412 will be met as of the date of the 
                application.
                    ``(D) Plan documents.--A copy of the documents 
                governing the arrangement (including any bylaws and 
                trust agreements), the summary plan description, and 
                other material describing the benefits and coverage 
                that will be provided to individuals covered under the 
                arrangement.
                    ``(E) Agreements with service providers.--A copy of 
                any agreements between the arrangement and contract 
                administrators and other service providers.
                    ``(F) Funding report.--A report setting forth 
                information determined as of a date within the 120-day 
                period ending with the date of the application, 
                including the following:
                            ``(i) Reserves.--A statement, certified by 
                        the operating committee of the arrangement, and 
                        a statement of actuarial opinion, signed by a 
                        qualified actuary, that all applicable 
                        requirements of section 707 are or will be met 
                        in accordance with regulations which the 
                        Secretary shall prescribe.
                            ``(ii) Adequacy of contribution rates.--A 
                        statement of actuarial opinion, signed by a 
                        qualified actuary, which sets forth a 
                        description of the extent to which contribution 
                        rates are adequate to provide for the payment 
                        of all obligations and the maintenance of 
                        required reserves under the arrangement for the 
                        12-month period beginning with such date within 
                        such 120-day period, taking into account the 
                        expected coverage and experience of the 
                        arrangement. If the contribution rates are not 
                        fully adequate, the statement of actuarial 
                        opinion shall indicate the extent to which the 
                        rates are inadequate and the changes needed to 
                        ensure adequacy.
                            ``(iii) Current and projected value of 
                        assets and liabilities.--A statement of 
                        actuarial opinion signed by a qualified 
                        actuary, which sets forth the current value of 
                        the assets and liabilities accumulated under 
                        the arrangement and a projection of the assets, 
                        liabilities, income, and expenses of the 
                        arrangement for the 12-month period referred to 
                        in clause (ii). The income statement shall 
                        identify separately the arrangement's 
                        administrative expenses and claims.
                            ``(iv) Costs of coverage to be charged and 
                        other expenses.--A statement of the costs of 
                        coverage to be charged, including an 
                        itemization of amounts for administration, 
                        reserves, and other expenses associated with 
                        the operation of the arrangement.
                            ``(v) Other information.--Any other 
                        information which may be prescribed in 
                        regulations of the Secretary as necessary to 
                        carry out the purposes of this part.
    ``(b) Other Requirements.--A complete application for an exemption 
under this part shall include information which the Secretary 
determines to be complete and accurate and sufficient to demonstrate 
that the following requirements are met with respect to the 
arrangement:
            ``(1) Sponsor.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the sponsor is, and has been 
                (together with its immediate predecessor, if any) for a 
                continuous period of not less than 3 years before the 
                date of the application, organized and maintained in 
                good faith, with a constitution and bylaws specifically 
                stating its purpose, as a trade association, an 
                industry association, a professional association, or a 
                chamber of commerce or other business group, for 
                substantial purposes other than that of obtaining or 
                providing medical care described in section 607(1), and 
                the applicant demonstrates to the satisfaction of the 
                Secretary that the sponsor is established as a 
                permanent entity which receives the active support of 
                its members.
                    ``(B) Special rule for prepaid health care 
                arrangements.--In the case of an arrangement that is a 
                prepaid health care arrangement (as defined in section 
                701(12)), the sponsor is the operating committee of the 
                arrangement.
            ``(2) Operating committee.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the arrangement is operated, pursuant 
                to a trust agreement, by an operating committee which 
                has complete fiscal control over the arrangement and 
                which is responsible for all operations of the 
                arrangement, and the operating committee has in effect 
                rules of operation and financial controls, based on a 
                3-year plan of operation, adequate to carry out the 
                terms of the arrangement and to meet all requirements 
                of this title applicable to the arrangement. The 
                members of the committee are individuals selected from 
                individuals who are the owners, officers, directors, or 
                employees of the participating employers or who are 
                partners in the participating employers and actively 
                participate in the business. No such member is an 
                owner, officer, director, or employee of, or partner 
                in, a contract administrator or other service provider 
                to the arrangement, except that officers or employees 
                of a sponsor which is a service provider (other than a 
                contract administrator) to the arrangement may be 
                members of the committee if they constitute not more 
                than 25 percent of the membership of the committee and 
                they do not provide services to the arrangement other 
                than on behalf of the sponsor. The committee has sole 
                authority to approve applications for participation in 
                the arrangement and to contract with a service provider 
                to administer the day-to-day affairs of the 
                arrangement.
                    ``(B) Special rule for prepaid health care 
                arrangements.--In the case of an arrangement that is a 
                prepaid health care arrangement (as defined in section 
                701(12)), the operating committee is the board of the 
                entity that is the arrangement.
            ``(3) Contents of governing instruments.--The instruments 
        governing the arrangement include a written instrument, meeting 
        the requirements of an instrument required under section 
        1212(a)(1), which--
                    ``(A) provides that the committee serves as the 
                named fiduciary required for plans under section 
                1212(a)(1) and serves in the capacity of a plan 
                administrator (referred to in section 3(16)(A)),
                    ``(B) provides that the sponsor is to serve as plan 
                sponsor (referred to in section 3(16)(B)),
                    ``(C) incorporates the requirements of section 707, 
                and
                    ``(D) provides that, effective upon the granting of 
                an exemption under this part--
                            ``(i) all participating employers must be 
                        members or affiliated members of the sponsor, 
                        except that, in the case of a sponsor which is 
                        a professional association or other individual-
                        based association, if at least one of the 
                        officers, directors, or employees of an 
                        employer, or at least one of the individuals 
                        who are partners in an employer and who 
                        actively participates in the business, is a 
                        member or affiliated member of the sponsor, 
                        participating employers may also include such 
                        employer, and
                            ``(ii) all individuals thereafter 
                        commencing coverage under the arrangement must 
                        be--
                                    ``(I) active or retired owners, 
                                officers, directors, or employees of, 
                                or partners in, participating 
                                employers, or
                                    ``(II) the beneficiaries of 
                                individuals described in subclause (I).
            ``(4) Contribution rates.--The contribution rates referred 
        to in subsection (a)(3)(F)(ii) are adequate.
            ``(5) Regulatory requirements.--Such other requirements as 
        the Secretary may prescribe by regulation as necessary to carry 
        out the purposes of this part.
    ``(c) Treatment of Party Seeking Exemption Where Party is Subject 
to Disqualification.--
            ``(1) In general.--In the case of any application for an 
        exemption under this part with respect to a multiple employer 
        welfare arrangement, if the Secretary determines that the 
        sponsor of the arrangement or any other person associated with 
        the arrangement is subject to disqualification under paragraph 
        (2), the Secretary may deny the exemption with respect to such 
        arrangement.
            ``(2) Disqualification.--A person is subject to 
        disqualification under this paragraph if such person--
                    ``(A) has intentionally made a material 
                misstatement in the application for exemption;
                    ``(B) has obtained or attempted to obtain an 
                exemption under this part through misrepresentation or 
                fraud;
                    ``(C) has misappropriated or converted to such 
                person's own use, or improperly withheld, money held 
                under a plan or any multiple employer welfare 
                arrangement;
                    ``(D) is prohibited (or would be prohibited if the 
                arrangement were a plan) from serving in any capacity 
                in connection with the arrangement under section 411;
                    ``(E) has failed to appear without reasonable cause 
                or excuse in response to a subpoena, examination, 
                warrant, or any other order lawfully issued by the 
                Secretary compelling such response;
                    ``(F) has previously been subject to a 
                determination under this part resulting in the denial, 
                suspension, or revocation of an exemption under this 
                part on similar grounds; or
                    ``(G) has otherwise violated any provision of this 
                title with respect to a matter which the Secretary 
                determines of sufficient consequence to merit 
                disqualification for purposes of this part.
    ``(d) Franchise Networks.--In the case of a multiple employer 
welfare arrangement established and maintained by a franchisor for a 
franchise network consisting of its franchisees, such franchisor shall 
be treated as the sponsor referred to in the preceding provisions of 
this section, such network shall be treated as an association referred 
to in such provisions, and each franchisee shall be treated as a member 
(of the association and the sponsor) referred to in such provisions, if 
all participating employers are such franchisees and the requirements 
of subsection (b)(1) with respect to a sponsor are met with respect to 
the network.
    ``(e) Certain Collectively Bargained Arrangements.--In applying the 
preceding provisions of this section in the case of a multiple employer 
welfare arrangement which would be described in section 3(40)(A)(i) but 
for the failure to meet any requirement of section 3(40)(C)--
            ``(1) paragraphs (1) and (2) of subsection (b) and 
        subparagraphs (A), (B), and (D) of paragraph (3) of subsection 
        (b) shall be disregarded, and
            ``(2) the joint board of trustees shall be considered the 
        operating committee of the arrangement.
    ``(f) Certain Arrangements Not Meeting Single Employer 
Requirement.--
            ``(1) In general.--In any case in which the majority of the 
        employees covered under a multiple employer welfare arrangement 
        are employees of a single employer (within the meaning of 
        clauses (i) and (ii) of section 3(40)(B)), if all other 
        employees covered under the arrangement are employed by 
        employers who are related to such single employer, subsection 
        (b)(3)(D) shall be disregarded.
            ``(2) Related employers.--For purposes of paragraph (1), 
        employers are `related' if there is among all such employers a 
        common ownership interest or a substantial commonality of 
        business operations based on common suppliers or customers.

``SEC. 705. ADDITIONAL REQUIREMENTS APPLICABLE TO EXEMPTED 
              ARRANGEMENTS.

    ``(a) Notice of Material Changes.--In the case of any multiple 
employer welfare arrangement with respect to which there is in effect 
an exemption granted under this part, descriptions of material changes 
in any information which was required to be submitted with the 
application for the exemption shall be filed in such form and manner as 
shall be prescribed in regulations of the Secretary. The Secretary may 
require by regulation prior notice of material changes with respect to 
specified matters which might serve as the basis for suspension or 
revocation of the exemption.
    ``(b) Reporting Requirements.--Under regulations of the Secretary, 
the requirements of sections 102, 103, and 104 shall apply with respect 
to any multiple employer welfare arrangement with respect to which 
there is or has been in effect an exemption granted under this part in 
the same manner and to the same extent as such requirements apply to 
employee welfare benefit plans, irrespective of whether such exemption 
continues in effect. The annual report required under section 103 for 
any plan year in the case of any such multiple employer welfare 
arrangement shall also include information described in section 
704(a)(3)(F) with respect to the plan year and, notwithstanding section 
104(a)(1)(A), shall be filed not later than 90 days after the close of 
the plan year.
    ``(c) Engagement of Qualified Actuary.--The operating committee of 
each multiple employer welfare arrangement with respect to which there 
is or has been in effect an exemption granted under this part shall 
engage, on behalf of all covered individuals, a qualified actuary who 
shall be responsible for the preparation of the materials comprising 
information necessary to be submitted by a qualified actuary under this 
part. The qualified actuary shall utilize such assumptions and 
techniques as are necessary to enable such actuary to form an opinion 
as to whether the contents of the matters reported under this part--
            ``(1) are in the aggregate reasonably related to the 
        experience of the arrangement and to reasonable expectations, 
        and
            ``(2) represent such actuary's best estimate of anticipated 
        experience under the arrangement.
The opinion by the qualified actuary shall be made with respect to, and 
shall be made a part of, the annual report.
    ``(d) Filing Notice of Exemption With States.--An exemption granted 
to a multiple employer welfare arrangement under this part shall not be 
effective unless written notice of such exemption is filed with the 
State insurance commissioner of each State in which at least 5 percent 
of the individuals covered under the arrangement are located. For 
purposes of this paragraph, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed. The Secretary may by 
regulation provide in specified cases for the application of the 
preceding sentence with lesser percentages in lieu of such 5 percent 
amount.

``SEC. 706. DISCLOSURE TO PARTICIPATING EMPLOYERS BY ARRANGEMENTS 
              PROVIDING MEDICAL CARE.

    ``(a) In General.--A multiple employer welfare arrangement 
providing benefits consisting of medical care described in section 
607(1) shall issue to each participating employer--
            ``(1) a document equivalent to the summary plan description 
        required of plans under part 1,
            ``(2) information describing the contribution rates 
        applicable to participating employers, and
            ``(3) a statement indicating--
                    ``(A) whether or not the arrangement is fully 
                insured,
                    ``(B) whether or not there is in effect with 
                respect to the arrangement an exemption granted under 
                this part and, if there is in effect such an exemption, 
                that the arrangement is (or is treated as) an employee 
                welfare benefit plan under this title, and
                    ``(C) that the arrangement is not a licensed 
                insurer under the laws of any State.
    ``(b) Time for Disclosure.--Such information shall be issued to 
employers within such reasonable period of time before becoming 
participating employers as may be prescribed in regulations of the 
Secretary.

``SEC. 707. MAINTENANCE OF RESERVES.

    ``(a) In General.--Each multiple employer welfare arrangement with 
respect to which there is or has been in effect an exemption granted 
under this part and which is not fully insured shall establish and 
maintain reserves, consisting of--
            ``(1) a reserve for unearned contributions,
            ``(2) a reserve for payment of claims reported and not yet 
        paid and claims incurred but not yet reported, and for expected 
        administrative costs with respect to such claims, and
            ``(3) a reserve, in an amount recommended by the qualified 
        actuary, for any other obligations of the arrangement.
    ``(b) Minimum Amount for Certain Reserves.--The total of the 
reserves described in subsection (a)(2) shall not be less than an 
amount equal to 25 percent of expected incurred claims and expenses for 
the plan year.
    ``(c) Required Margin.--In determining the amounts of reserves 
required under this section in connection with any multiple employer 
welfare arrangement, the qualified actuary shall include a margin for 
error and other fluctuations taking into account the specific 
circumstances of such arrangement.
    ``(d) Additional Requirements.--The Secretary may provide such 
additional requirements relating to reserves and excess/stop loss 
coverage as the Secretary considers appropriate. Such requirements may 
be provided, by regulation or otherwise, with respect to any 
arrangement or any class of arrangements.
    ``(e) Adjustments for Excess/Stop Loss Coverage.--The Secretary may 
provide for adjustments to the levels of reserves otherwise required 
under subsections (a) and (b) with respect to any arrangement or class 
of arrangements to take into account excess/stop loss coverage provided 
with respect to such arrangement or arrangements.
    ``(f) Alternative Means of Compliance.--The Secretary may permit an 
arrangement (including a prepaid health care arrangement) to 
substitute, for all or part of the reserves required under subsection 
(a), such security, guarantee, or other financial arrangement as the 
Secretary determines to be adequate to enable the arrangement to fully 
meet all its financial obligations on a timely basis.

``SEC. 708. CORRECTIVE ACTIONS.

    ``(a) Actions To Avoid Depletion of Reserves.--A multiple employer 
welfare arrangement with respect to which there is or has been in 
effect an exemption granted under this part shall continue to meet the 
requirements of section 707, irrespective of whether such exemption 
continues in effect. The operating committee of such arrangement shall 
determine semiannually whether the requirements of section 707 are met. 
In any case in which the committee determines that there is reason to 
believe that there is or will be a failure to meet such requirements, 
or the Secretary makes such a determination and so notifies the 
committee, the committee shall immediately notify the qualified actuary 
engaged by the arrangement, and such actuary shall, not later than the 
end of the next following month, make such recommendations to the 
committee for corrective action as the actuary determines necessary to 
ensure compliance with section 707. Not later than 10 days after 
receiving from the actuary recommendations for corrective actions, the 
committee shall notify the Secretary (in such form and manner as the 
Secretary may prescribe by regulation) of such recommendations of the 
actuary for corrective action, together with a description of the 
actions (if any) that the committee has taken or plans to take in 
response to such recommendations. The committee shall thereafter report 
to the Secretary, in such form and frequency as the Secretary may 
specify to the committee, regarding corrective action taken by the 
committee until the requirements of section 707 are met.
    ``(b) Termination.--
            ``(1) Notice of termination.--In any case in which the 
        operating committee of a multiple employer welfare arrangement 
        with respect to which there is or has been in effect an 
        exemption granted under this part determines that there is 
        reason to believe that the arrangement will terminate, the 
        committee shall so inform the Secretary, shall develop a plan 
        for winding up the affairs of the arrangement in connection 
        with such termination in a manner which will result in timely 
        payment of all benefits for which the arrangement is obligated, 
        and shall submit such plan in writing to the Secretary. Actions 
        required under this paragraph shall be taken in such form and 
        manner as may be prescribed in regulations of the Secretary.
            ``(2) Actions required in connection with termination.--In 
        any case in which--
                    ``(A) the Secretary has been notified under 
                subsection (a) of a failure of a multiple employer 
                welfare arrangement with respect to which there is or 
                has been in effect an exemption granted under this part 
                to meet the requirements of section 707 and has not 
                been notified by the operating committee of the 
                arrangement that corrective action has restored 
                compliance with such requirements, and
                    ``(B) the Secretary determines that the continuing 
                failure to meet the requirements of section 707 can be 
                reasonably expected to result in a continuing failure 
                to pay benefits for which the arrangement is obligated,
        the operating committee of the arrangement shall, at the 
        direction of the Secretary, terminate the arrangement and, in 
        the course of the termination, take such actions as the 
        Secretary may require as necessary to ensure that the affairs 
        of the arrangement will be, to the maximum extent possible, 
        wound up in a manner which will result in timely payment of all 
        benefits for which the arrangement is obligated.

``SEC. 709. EXPIRATION, SUSPENSION, OR REVOCATION OF EXEMPTION.

    ``(a) Expiration and Renewal of Exemption.--An exemption granted to 
a multiple employer welfare arrangement under this part shall expire 3 
years after the date on which the exemption is granted. An exemption 
which has expired may be renewed by means of application for an 
exemption in accordance with section 704.
    ``(b) Suspension or Revocation of Exemption by Secretary.--The 
Secretary may suspend or revoke an exemption granted to a multiple 
employer welfare arrangement under this part--
            ``(1) for any cause that may serve as the basis for the 
        denial of an initial application for such an exemption under 
        section 704, or
            ``(2) if the Secretary finds that--
                    ``(A) the arrangement, or the sponsor thereof, in 
                the transaction of business while under the exemption, 
                has used fraudulent, coercive, or dishonest practices, 
                or has demonstrated incompetence, untrustworthiness, or 
                financial irresponsibility,
                    ``(B) the arrangement, or the sponsor thereof, is 
                using such methods or practices in the conduct of its 
                operations, so as to render its further transaction of 
                operations hazardous or injurious to participating 
                employers, or covered individuals,
                    ``(C) the arrangement, or the sponsor thereof, has 
                refused to be examined in accordance with this part or 
                to produce its accounts, records, and files for 
                examination in accordance with this part, or
                    ``(D) any of the officers of the arrangement, or 
                the sponsor thereof, has refused to give information 
                with respect to the affairs of the arrangement or the 
                sponsor or to perform any other legal obligation 
                relating to such an examination when required by the 
                Secretary in accordance with this part.
Any such suspension or revocation under this subsection shall be 
effective only upon a final decision of the Secretary made after notice 
and opportunity for a hearing is provided in accordance with section 
710.
    ``(c) Suspension or Revocation of Exemption Under Court 
Proceedings.--An exemption granted to a multiple employer welfare 
arrangement under this part may be suspended or revoked by a court of 
competent jurisdiction in an action by the Secretary brought under 
paragraph (2), (5), or (6) of section 502(a), except that the 
suspension or revocation under this subsection shall be effective only 
upon notification of the Secretary of such suspension or revocation.
    ``(d) Notification of Participating Employers.--All participating 
employers in a multiple employer welfare arrangement shall be notified 
of the expiration, suspension, or revocation of an exemption granted to 
such arrangement under this part, by such persons and in such form and 
manner as shall be prescribed in regulations of the Secretary, not 
later than 20 days after such expiration or after receipt of notice of 
a final decision requiring such suspension or revocation.
    ``(e) Publication of Expirations, Suspensions, and Revocations.--
The Secretary shall publish all expirations of, and all final decisions 
to suspend or revoke, exemptions granted under this part.

``SEC. 710. REVIEW OF ACTIONS OF THE SECRETARY.

    ``(a) In General.--Any decision by the Secretary which involves the 
denial of an application by a multiple employer welfare arrangement for 
an exemption under this part or the suspension or revocation of such an 
exemption shall contain a statement of the specific reason or reasons 
supporting the Secretary's action, including reference to the specific 
terms of the exemption and the statutory provision or provisions 
relevant to the determination.
    ``(b) Denials of Applications.--In the case of the denial of an 
application for an exemption under this part, the Secretary shall send 
a copy of the decision to the applicant by certified or registered mail 
at the address specified in the records of the Secretary. Such decision 
shall constitute the final decision of the Secretary unless the 
arrangement, or any party that would be prejudiced by the decision, 
files a written appeal of the denial within 30 days after the mailing 
of such decision. The Secretary may affirm, modify, or reverse the 
initial decision. The decision on appeal shall become final upon the 
mailing of a copy by certified or registered mail to the arrangement or 
party that filed the appeal.
    ``(c) Suspensions or Revocations of Exemption.--In the case of the 
suspension or revocation of an exemption granted under this part, the 
Secretary shall send a copy of the decision to the arrangement by 
certified or registered mail at its address, as specified in the 
records of the Secretary. Upon the request of the arrangement, or any 
party that would be prejudiced by the suspension or revocation, filed 
within 15 days of the mailing of the Secretary's decision, the 
Secretary shall schedule a hearing on such decision by written notice, 
sent by certified or registered mail to the arrangement or party 
requesting such hearing. Such notice shall set forth--
            ``(1) a specific date and time for the hearing, which shall 
        be within the 10-day period commencing 20 days after the date 
        of the mailing of the notice, and
            ``(2) a specific place for the hearing, which shall be in 
        the District of Columbia or in the State and county thereof (or 
        parish or other similar political subdivision thereof) in which 
        is located the arrangement's principal place of business.
The decision as affirmed or modified in such hearing shall constitute 
the final decision of the Secretary, unless such decision is reversed 
in such hearing.''.
    (b) Conforming Amendment to Definition of Plan Sponsor.--Section 
3(16)(B) of such Act (29 U.S.C. 1002(16)(B)) is amended by adding at 
the end the following new sentence: ``Such term also includes the 
sponsor (as defined in section 701(5)) of a multiple employer welfare 
arrangement, or a multiple employer health plan (as defined in section 
701(10)), with respect to which there is or has been in effect an 
exemption granted under part 7.''.
    (c) Alternative Means of Distribution of Summary Plan 
Descriptions.--Section 110 of such Act (29 U.S.C. 1030) is amended by 
adding at the end the following new subsection:
    ``(c) The Secretary shall prescribe, as an alternative method for 
distributing summary plan descriptions in order to meet the 
requirements of section 104(b)(1) in the case of multiple employer 
welfare arrangements providing benefits consisting of medical care 
described in section 607(1), a means of distribution of such 
descriptions by participating employers.''.
    (d) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 608 the following new items:

                ``Part 7--Multiple Employer Health Plans

``Sec. 701. Definitions.
``Sec. 702. Exempted multiple employer welfare arrangements treated as 
                            employee welfare benefit plans and exempt 
                            from certain restrictions on preemption.
``Sec. 703. Exemption procedure.
``Sec. 704. Eligibility requirements.
``Sec. 705. Additional requirements applicable to exempted 
                            arrangements.
``Sec. 706. Disclosure to participating employers by arrangements 
                            providing medical care.
``Sec. 707. Maintenance of reserves.
``Sec. 708. Corrective actions.
``Sec. 709. Expiration, suspension, or revocation of exemption.
``Sec. 710. Review of actions of the Secretary.''.

SEC. 1212. CLARIFICATION OF SCOPE OF PREEMPTION RULES.

    (a) In General.--Section 514(b)(6)(A)(ii) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)(6)(A)(ii)) is 
amended by inserting ``, but only, in the case of an arrangement which 
provides medical care described in section 607(1) and with respect to 
which an exemption under part 7 is not in effect,'' before ``to the 
extent not inconsistent with the preceding sections of this title''.
    (b) Cross-Reference.--Section 514(b)(6) of such Act (29 U.S.C. 
1144(b)(6)) is amended by adding at the end the following new 
subparagraph:
    ``(E) For additional rules relating to exemption from subparagraph 
(A)(ii) of multiple employer welfare arrangements providing medical 
care, see part 7.''.

SEC. 1213. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.

    Section 3(40)(B) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(40)(B)) is amended--
            (1) in clause (i), by inserting ``for any plan year of any 
        such plan, or any fiscal year of any such other arrangement,'' 
        after ``single employer'', and by inserting ``during such year 
        or at any time during the preceding 1-year period'' after 
        ``common control'';
            (2) in clause (iii), by striking ``common control shall not 
        be based on an interest of less than 25 percent'' and inserting 
        ``an interest of greater than 25 percent may not be required as 
        the minimum interest necessary for common control'', and by 
        striking ``and'' at the end,
            (3) by redesignating clause (iv) as clause (v), and
            (4) by inserting after clause (iii) the following new 
        clause:
            ``(iv) in determining, after the application of clause (i), 
        whether benefits are provided to employees of two or more 
        employers, the arrangement shall be treated as having only 1 
        participating employer if, at the time the determination under 
        clause (i) is made, the number of individuals who are employees 
        and former employees of any one participating employer and who 
        are covered under the arrangement is greater than 95 percent of 
        the aggregate number of all individuals who are employees or 
        former employees of participating employers and who are covered 
        under the arrangement.''.

SEC. 1214. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED 
              ARRANGEMENTS.

    (a) In General.--Section 3(40)(A)(i) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to 
read as follows:
            ``(i) under or pursuant to one or more collective 
        bargaining agreements,''.
    (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is 
amended by adding at the end the following new subparagraphs:
                    ``(C) Clause (i) of subparagraph (A) shall apply 
                only if--
                            ``(i) the plan or other arrangement, and 
                        the employee organization or any other entity 
                        sponsoring the plan or other arrangement, do 
                        not--
                                    ``(I) utilize the services of any 
                                licensed insurance agent or broker for 
                                soliciting or enrolling employers or 
                                individuals as participating employers 
                                or covered individuals under the plan 
                                or other arrangement, or
                                    ``(II) pay a commission or any 
                                other type of compensation to a person 
                                that is related either to the volume or 
                                number of employers or individuals 
                                solicited or enrolled as participating 
                                employers or covered individuals under 
                                the plan or other arrangement, or to 
                                the dollar amount or size of the 
                                contributions made by participating 
                                employers or covered individuals to the 
                                plan or other arrangement,
                            ``(ii) not less than 85 percent of the 
                        covered individuals under the plan or other 
                        arrangement are individuals who--
                                    ``(I) are employed within a 
                                bargaining unit covered by at least one 
                                of the collective bargaining agreements 
                                with a participating employer (or are 
                                covered on the basis of an individual's 
                                employment in such a bargaining unit), 
                                or
                                    ``(II) are present or former 
                                employees of the sponsoring employee 
                                organization, of an employer who is or 
                                was a party to at least one of the 
                                collective bargaining agreements, or of 
                                the plan or other arrangement or a 
                                related plan or arrangement (or are 
                                covered on the basis of such present or 
                                former employment),
                            ``(iii) the plan or other arrangement does 
                        not provide benefits to individuals (other than 
                        individuals described in clause (ii)(II)) who 
                        work outside the standard metropolitan 
                        statistical area in which the sponsoring 
                        employee organization represents employees (or 
                        to individuals (other than individuals 
                        described in clause (ii)(II)) on the basis of 
                        such work by others), except that in the case 
                        of a sponsoring employee organization that 
                        represents employees who work outside of any 
                        standard metropolitan statistical area, this 
                        clause shall be applied by reference to the 
                        State in which the sponsoring organization 
                        represents employees,
                            ``(iv) the employee organization or other 
                        entity sponsoring the plan or other arrangement 
                        certifies to the Secretary each year, in a form 
                        and manner which shall be prescribed in 
                        regulations of the Secretary--
                                    ``(I) that the plan or other 
                                arrangement meets the requirements of 
                                clauses (i), (ii), and (iii), and
                                    ``(II) if, for any year, 10 percent 
                                or more of the covered individuals 
                                under the plan are individuals not 
                                described in subclause (I) or (II) of 
                                clause (ii), the total number of 
                                covered individuals and the total 
                                number of covered individuals not so 
                                described.
                    ``(D)(i) Clause (i) of subparagraph (A) shall not 
                apply to a plan or other arrangement that is 
                established or maintained pursuant to one or more 
                collective bargaining agreements which the National 
                Labor Relations Boards determines to have been 
                negotiated or otherwise agreed to in a manner or 
                through conduct which violates section 8(a)(2) of the 
                National Labor Relations Act (29 U.S.C. 158(a)(2)).
                    ``(ii)(I) Whenever a State insurance commissioner 
                has reason to believe that this subparagraph is 
                applicable to part or all of a plan or other 
                arrangement, the State insurance commissioner may file 
                a petition with the National Labor Relations Board for 
                a determination under clause (i), along with sworn 
                written testimony supporting the petition.
                    ``(II) The Board shall give any such petition 
                priority over all other petitions and cases, other than 
                other petitions under subclause (I) or cases given 
                priority under section 10 of the National Labor 
                Relations Act (29 U.S.C. 160).
                    ``(III) The Board shall determine, upon the 
                petition and any response, whether, on the facts before 
                it, the plan or other arrangement was negotiated, 
                created, or otherwise agreed to in a manner or through 
                conduct which violates section 8(a)(2) of the National 
                Labor Relations Act (29 U.S.C. 158(a)(2)). Such 
                determination shall constitute a final determination 
                for purposes of this subparagraph and shall be binding 
                in all Federal or State actions with respect to the 
                status of the plan or other arrangement under this 
                subparagraph.
                    ``(IV) A person aggrieved by the determination of 
                the Board under subclause (III) may obtain review of 
                the determination in any United States court of appeals 
                in the circuit in which the collective bargaining at 
                issue occurred. Commencement of proceedings under this 
                subclause shall not, unless specifically ordered by the 
                court, operate as a stay of any State administrative or 
                judicial action or proceeding related to the status of 
                the plan or other arrangement, except that in no case 
                may the court stay, before the completion of the 
                review, an order which prohibits the enrollment of new 
                individuals into coverage under a plan or 
                arrangement.''.

SEC. 1215. EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.

    (a) Employee Leasing Healthcare Arrangement Defined.--Section 3 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002) is 
amended by adding at the end the following new paragraph:
    ``(43) Employee Leasing Healthcare Arrangement.--
            ``(A) In general.--Subject to subparagraph (B), the term 
        `employee leasing healthcare arrangement' means any labor 
        leasing arrangement, staff leasing arrangement, extended 
        employee staffing or supply arrangement, or other arrangement 
        under which--
                    ``(i) one business or other entity (hereinafter in 
                this paragraph referred to as the `lessee'), under a 
                lease or other arrangement entered into with any other 
                business or other entity (hereinafter in this paragraph 
                referred to as the `lessor'), receives from the lessor 
                the services of individuals to be performed under such 
                lease or other arrangement, and
                    ``(ii) benefits consisting of medical care 
                described in section 607(1) are provided to such 
                individuals or such individuals and their dependents as 
                participants and beneficiaries.
            ``(B) Exception.--Such term does not include an arrangement 
        described in subparagraph (A) if, under such arrangement, the 
        lessor retains, both legally and in fact, a complete right of 
        direction and control within the scope of employment over the 
        individuals whose services are supplied under such lease or 
        other arrangement, and such individuals perform a specified 
        function for the lessee which is separate and divisible from 
        the primary business or operations of the lessee.''.
    (b) Treatment of Employee Leasing Healthcare Arrangements as 
Multiple Employer Welfare Arrangements.--Section 3(40) of such Act (29 
U.S.C. 1002(40)) (as amended by the preceding provisions of this title) 
is further amended by adding at the end the following new subparagraph:
    ``(E) The term `multiple employer welfare arrangement' includes any 
employee leasing healthcare arrangement, except that such term does not 
include any employee leasing healthcare arrangement which is a multiple 
employer health plan (as defined in section 701(10)).''.
    (c) Special Rules for Employee Leasing Healthcare Arrangements.--
            (1) In general.--Part 7 of subtitle B of title I of such 
        Act (as added by the preceding provisions of this Act) is 
        amended by adding at the end the following new section:

``SEC. 711. SPECIAL RULES FOR EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.

    ``(a) In General.--The requirements of paragraphs (1), (2), and (3) 
of section 704(b) shall be treated as satisfied in the case of a 
multiple employer welfare arrangement that is an employee leasing 
healthcare arrangement if the application for exemption includes 
information which the Secretary determines to be complete and accurate 
and sufficient to demonstrate that the following requirements are met 
with respect to the arrangement:
            ``(1) 3-year tenure.--The lessor has been in operation for 
        not less than 3 years.
            ``(2) Solicitation restrictions.--Employee leasing services 
        provided under the arrangement are not solicited, advertised, 
        or marketed through licensed insurance agents or brokers acting 
        in such capacity.
            ``(3) Creation of employment relationship.--
                    ``(A) Disclosure statement.--Written notice is 
                provided to each applicant for employment subject to 
                coverage under the arrangement, at the time of 
                application for employment and before commencing 
                coverage under the arrangement, stating that the 
                employer is the lessor under the arrangement.
                    ``(B) Informed consent.--Each such applicant signs 
                a written statement consenting to the employment 
                relationship with the lessor.
                    ``(C) Informed recruitment of lessee's employees.--
                In any case in which the lessor offers employment to an 
                employee of a lessee under the arrangement, the lessor 
                informs each employee in writing that his or her 
                acceptance of employment with the lessor is voluntary 
                and that refusal of such offer will not be deemed to be 
                resignation from or abandonment of current employment.
            ``(4) Requisite employer-employee relationship under 
        arrangement.--Under the employer-employee relationship with the 
        employees of the lessor--
                    ``(A) the lessor retains the ultimate authority to 
                hire, terminate, and reassign such employees,
                    ``(B) the lessor is responsible for the payment of 
                wages, payroll-related taxes, and employee benefits, 
                without regard to payment by the lessee to the lessor 
                for its services,
                    ``(C) the lessor maintains the right of direction 
                and control over its employees, except to the extent 
                that the lessee is responsible for supervision of the 
                work performed consistent with the lessee's 
                responsibility for its product or service,
                    ``(D) in accordance with section 301(a) of the 
                Labor Management Relations Act, 1947 (29 U.S.C. 
                185(a)), the lessor retains in the absence of an 
                applicable collective bargaining agreement, the right 
                to enter into arbitration and to decide employee 
                grievances, and
                    ``(E) no owner, officer, or director of, or partner 
                in, a lessee is an employee of the lessor, and not more 
                than 10 percent of the individuals covered under the 
                arrangement consist of owners, officers, or directors 
                of, or partners in, such a lessee (or any combination 
                thereof).
    ``(b) Definitions.--For purposes of this section--
            ``(1) Lessor.--The term `lessor' means the business or 
        other entity from which services of individuals are obtained 
        under an employee leasing healthcare arrangement.
            ``(2) Lessee.--The term `lessee' means a business or other 
        entity which receives the services of individuals provided 
        under an employee leasing healthcare arrangement.''.
            (2) Clerical amendment.--The table of contents in section 1 
        of such Act (as amended by the preceding provisions of this 
        title) is further amended by inserting after the item relating 
        to section 710 the following new item:

``Sec. 711. Employee leasing healthcare arrangements.''.

SEC. 1216. ENFORCEMENT PROVISIONS RELATING TO MULTIPLE EMPLOYER WELFARE 
              ARRANGEMENTS AND EMPLOYEE LEASING HEALTHCARE 
              ARRANGEMENTS.

    (a) Enforcement of Filing Requirements.--Section 502 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) is 
amended--
            (1) in subsection (a)(6), by striking ``subsection (c)(2) 
        or (i) or (l)'' and inserting ``paragraph (2) or (4) of 
        subsection (c) or subsection (i) or (l)''; and
            (2) by adding at the end of subsection (c) the following 
        new paragraph:
    ``(4) The Secretary may assess a civil penalty against any person 
of up to $1,000 a day from the date of such person's failure or refusal 
to file the information required to be filed with the Secretary under 
section 101(e).''.
    (b) Actions by States in Federal Court.--Section 502(a) of such Act 
(29 U.S.C. 1132(a)) is amended--
            (1) in paragraph (5), by striking ``or'' at the end;
            (2) in paragraph (6), by striking the period and inserting 
        ``, or''; and
            (3) by adding at the end the following:
            ``(7) by a State official having authority under the law of 
        such State to enforce the laws of such State regulating 
        insurance, to enjoin any act or practice which violates any 
        provision of part 7 which such State has the power to enforce 
        under part 7.''.
    (c) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of such Act (29 U.S.C. 1131) is amended--
            (1) by inserting ``(a)'' after ``Sec. 501.''; and
            (2) by adding at the end the following new subsection:
    ``(b) Any person who, either willfully or with willful blindness, 
falsely represents, to any employee, any employee's beneficiary, any 
employer, the Secretary, or any State, an arrangement established or 
maintained for the purpose of offering or providing any benefit 
described in section 3(1) to employees or their beneficiaries as being 
a multiple employer welfare arrangement granted an exemption under part 
7, as being an employee leasing healthcare arrangement under such an 
exemption, or as having been established or maintained under or 
pursuant to a collective bargaining agreement shall, upon conviction, 
be imprisoned not more than five years, be fined under title 18, United 
States Code, or both.''.
    (d) Cease Activities Orders.--Section 502 of such Act (29 U.S.C. 
1132) is amended by adding at the end the following new subsection:
    ``(m)(1) Subject to paragraph (2), upon application by the 
Secretary showing the operation, promotion, or marketing of a multiple 
employer welfare arrangement providing benefits consisting of medical 
care described in section 607(1) that--
            ``(A) is not licensed, registered, or otherwise approved 
        under the insurance laws of the States in which the arrangement 
        offers or provides benefits, or
            ``(B) is not operating in accordance with the terms of an 
        exemption granted by the Secretary under part 7,
a district court of the United States shall enter an order requiring 
that the arrangement cease activities.
    ``(2) Paragraph (1) shall not apply in the case of a multiple 
employer welfare arrangement if the arrangement shows that it--
            ``(A) is fully insured, within the meaning of section 
        701(9),
            ``(B) is licensed, registered, or otherwise approved in 
        each State in which it offers or provides benefits, except to 
        the extent that such State does not require licensing, 
        registration, or approval of fully insured multiple employer 
        welfare arrangements, and
            ``(C) with respect to each such State, is operating in 
        accordance with applicable State insurance laws that are not 
        superseded under section 514.
    ``(3) The court may grant such additional equitable or remedial 
relief, including any relief available under this title, as it deems 
necessary to protect the interests of the public and of persons having 
claims for benefits against the arrangement.''.
    (e) Responsibility for Claims Procedure.--Section 503 of such Act 
(29 U.S.C. 1133) is amended by adding at the end (after and below 
paragraph (2)) the following new sentence: ``The terms of each multiple 
employer welfare arrangement to which this section applies and which 
provides benefits consisting of medical care described in section 
607(1) shall require the operating committee or the named fiduciary (as 
applicable) to ensure that the requirements of this section are met in 
connection with claims filed under the arrangement.''.

SEC. 1217. FILING REQUIREMENTS FOR HEALTH BENEFIT MULTIPLE EMPLOYER 
              WELFARE ARRANGEMENTS.

    Section 101 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1021) is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e)(1) Each multiple employer welfare arrangement shall file with 
the Secretary a registration statement described in paragraph (2) 
within 60 days before commencing operations (in the case of an 
arrangement commencing operations on or after January 1, 1995) and no 
later than February 15 of each year (in the case of an arrangement in 
operation since the beginning of such year), unless, as of the date by 
which such filing otherwise must be made, such arrangement provides no 
benefits consisting of medical care described in section 607(1).
    ``(2) Each registration statement--
            ``(A) shall be filed in such form, and contain such 
        information concerning the multiple employer welfare 
        arrangement and any persons involved in its operation 
        (including whether the arrangement is fully insured), as shall 
        be provided in regulations which shall be prescribed by the 
        Secretary, and
            ``(B) if the arrangement is not fully insured, shall 
        contain a certification that copies of such registration 
        statement have been transmitted by certified mail to--
                    ``(i) in the case of an arrangement with respect to 
                which an exemption under part 7 is in effect, the State 
                insurance commissioner of the domicile State of such 
                arrangement, or
                    ``(ii) in the case of an arrangement which is not 
                so exempt, the State insurance commissioner of each 
                State in which the arrangement is located.
    ``(3) The person or persons responsible for filing the annual 
registration statement are--
            ``(A) the trustee or trustees so designated by the terms of 
        the instrument under which the multiple employer welfare 
        arrangement is established or maintained, or
            ``(B) in the case of a multiple employer welfare 
        arrangement for which the trustee or trustees cannot be 
        identified, or upon the failure of the trustee or trustees of 
        an arrangement to file, the person or persons actually 
        responsible for the acquisition, disposition, control, or 
        management of the cash or property of the arrangement, 
        irrespective of whether such acquisition, disposition, control, 
        or management is exercised directly by such person or persons 
        or through an agent designated by such person or persons.
    ``(4) Any agreement entered into under section 506(c) with a State 
as the primary domicile State with respect to any multiple employer 
welfare arrangement shall provide for simultaneous filings of reports 
required under this subsection with the Secretary and with the State 
insurance commissioner of such State.''.

SEC. 1218. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(c) Responsibility With Respect To Multiple Employer Welfare 
Arrangements.--
            ``(1) State enforcement.--
                    ``(A) Agreements with states.--A State may enter 
                into an agreement with the Secretary for delegation to 
                the State of some or all of the Secretary's authority 
                under sections 502 and 504 to enforce the provisions of 
                this title applicable to multiple employer welfare 
                arrangements with respect to which an exemption under 
                part 7 is or has been in effect. The Secretary shall 
                enter into the agreement if the Secretary determines 
                that the delegation provided for therein would not 
                result in a lower level or quality of enforcement of 
                the provisions of this title.
                    ``(B) Delegations.--Any department, agency, or 
                instrumentality of a State to which authority is 
                delegated pursuant to an agreement entered into under 
                this paragraph may, if authorized under State law and 
                to the extent consistent with such agreement, exercise 
                the powers of the Secretary under this title which 
                relate to such authority.
                    ``(C) Concurrent authority of the secretary.--If 
                the Secretary delegates authority to a State in an 
                agreement entered into under subparagraph (A), the 
                Secretary may continue to exercise such authority 
                concurrently with the State.
                    ``(D) Recognition of primary domicile state.--In 
                entering into any agreement with a State under 
                subparagraph (A), the Secretary shall ensure that, as a 
                result of such agreement and all other agreements 
                entered into under subparagraph (A), only one State 
                will be recognized, with respect to any particular 
                multiple employer welfare arrangement, as the primary 
                domicile State to which authority has been delegated 
                pursuant to such agreements.
            ``(2) Assistance to states.--The Secretary shall--
                    ``(A) provide enforcement assistance to the States 
                with respect to multiple employer welfare arrangements, 
                including, but not limited to, coordinating Federal and 
                State efforts through the establishment of cooperative 
                agreements with appropriate State agencies under which 
                the Pension and Welfare Benefits Administration keeps 
                the States informed of the status of its cases and 
                makes available to the States information obtained by 
                it,
                    ``(B) provide continuing technical assistance to 
                the States with respect to issues involving multiple 
                employer welfare arrangements and this Act,
                    ``(C) assist the States in obtaining from the 
                Office of Regulations and Interpretations timely and 
                complete responses to requests for advisory opinions on 
                issues described in subparagraph (B), and
                    ``(D) distribute copies of all advisory opinions 
                described in subparagraph (C) to the State insurance 
                commissioner of each State.''.

SEC. 1219. EFFECTIVE DATE; TRANSITIONAL RULES.

    (a) Effective Date.--The amendments made by this part shall take 
effect January 1, 1995, except that the Secretary of Labor may issue 
regulations before such date under such amendments. The Secretary shall 
issue all regulations necessary to carry out the amendments made by 
this title before the effective date thereof.
    (b) Transitional Rules.--If the sponsor of a multiple employer 
welfare arrangement which, as of January 1, 1995, provides benefits 
consisting of medical care described in section 607(1) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1167(1)) files with 
the Secretary of Labor an application for an exemption under part 7 of 
subtitle B of title I of such Act within 180 days after such date and 
the Secretary has not, as of 90 days after receipt of such application, 
found such application to be materially deficient, section 514(b)(6)(A) 
of such Act (29 U.S.C. 1144(b)(6)(A)) shall not apply with respect to 
such arrangement during the 18-month period following such date. If the 
Secretary determines, at any time after the date of enactment of this 
Act, that any such exclusion from coverage under the provisions of such 
section 514(b)(6)(A) of such Act of a multiple employer welfare 
arrangement would be detrimental to the interests of individuals 
covered under such arrangement, such exclusion shall cease as of the 
date of the determination. Any determination made by the Secretary 
under this subsection shall be in the Secretary's sole discretion.

PART 3--ENCOURAGEMENT OF MULTIPLE EMPLOYER ARRANGEMENTS PROVIDING BASIC 
                            HEALTH BENEFITS

SEC. 1221. ELIMINATING COMMONALITY OF INTEREST OR GEOGRAPHIC LOCATION 
              REQUIREMENT FOR TAX EXEMPT TRUST STATUS.

    (a) In General.--Paragraph (9) of section 501(c) of the Internal 
Revenue Code of 1986 (relating to exempt organizations) is amended--
            (1) by inserting ``(A)'' after ``(9)''; and
            (2) by adding at the end the following:
            ``(B) Any determination of whether a multiple employer 
        health plan (as defined in section 701(10) of the Employee 
        Retirement Income Security Act of 1974) or an insured multiple 
        employer health plan (as defined in section 701(11) of such 
        Act) is a voluntary employees' beneficiary association meeting 
        the requirements of this paragraph shall be made without regard 
        to any determination of commonality of interest or geographic 
        location if--
                    ``(i) such plan provides at least standard coverage 
                (consistent with section 1102(b) of the Health Reform 
                Consensus Act of 1994), and
                    ``(ii) in the case of an insured multiple employer 
                health plan, it meets the requirements enforceable 
                under section 514(b)(6)(B)(i) of the Employee 
                Retirement Income Security Act of 1974 to the extent 
                not preempted by section 1202 of the Health Reform 
                Consensus Act of 1994.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to determinations made on or after January 1, 1995.

   PART 4--SIMPLIFYING FILING OF REPORTS FOR EMPLOYERS COVERED UNDER 
                 INSURED MULTIPLE EMPLOYER HEALTH PLANS

SEC. 1231. SINGLE ANNUAL FILING FOR ALL EMPLOYERS COVERED UNDER AN 
              INSURED MULTIPLE EMPLOYER HEALTH PLAN.

    (a) In General.--Section 110 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1030), as amended by section 1211(c) of 
this subtitle, is amended by adding at the end the following new 
subsection:
    ``(d) The Secretary shall prescribe by regulation or otherwise an 
alternative method providing for the filing of a single annual report 
(as referred to in section 104(a)(1)(A)) with respect to all employers 
who are covered under the same insured multiple employer health plan 
(as defined in section 701(11)).''
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act. The Secretary of 
Labor shall prescribe the alternative method referred to in section 
110(d) of the Employee Retirement Income Security Act of 1974, as added 
by such amendment, within 90 days after the date of the enactment of 
this Act.

          PART 5--COMPLIANCE WITH COVERAGE OPTION REQUIREMENTS

SEC. 1241. COMPLIANCE WITH COVERAGE REQUIREMENTS THROUGH MULTIPLE 
              EMPLOYER HEALTH ARRANGEMENTS.

    (a) Compliance With Applicable Requirements Through Multiemployer 
Plans.--In any case in which an eligible employee is, for any plan 
year, a participant in a group health plan which is a multiemployer 
plan, the requirements of section 1001(a) shall be deemed to be met 
with respect to such employee for such plan year if the employer 
requirements of subsection (c) are met with respect to the eligible 
employee, irrespective of whether, or to what extent, the employer 
makes employer contributions on behalf of the eligible employee.
    (b) Compliance With Applicable Requirements Through Other Multiple 
Employer Health Arrangements.--
            (1) In general.--In any case in which an employer is, for 
        any plan year, a participating employer (as defined in 
        paragraph (3)) in an exempted multiple employer health plan or 
        an insured multiple employer health plan, the requirements of 
        section 1001(a) shall be deemed to be met (and the ERISA 
        requirements of paragraph (2) shall be deemed to be met by the 
        employer) with respect to an eligible employee of the employer 
        if--
                    (A) the employer requirements of subsection (c) are 
                met with respect to the eligible employee, and
                    (B) the applicable ERISA requirements of paragraph 
                (2) are met by the plan with respect to the plan,
        irrespective of whether, or to what extent, the employer makes 
        employer contributions on behalf of the eligible employee.
            (2) Applicable erisa requirements.--The applicable ERISA 
        requirements of this paragraph are the requirements of--
                    (A) part 1 of subtitle B of title I of the Employee 
                Retirement Income Security Act of 1974 (relating to 
                reporting and disclosure),
                    (B) section 503 of such Act (relating to claims 
                procedure), and
                    (C) part 6 of subtitle B of such title I (relating 
                to group health plans),
        to the extent that such requirements relate to employers as 
        plan sponsors or plan administrators.
            (3) Participating employer.--In this subsection, the term 
        ``participating employer'' means, in connection with an 
        exempted multiple employer health plan or an insured multiple 
        employer health plan, any employer if any of its employees, or 
        any of the dependents of its employees, are or were covered 
        under such plan in connection with the employment of the 
        employees.
    (c) Employer Requirements.--The employer requirements of this 
subsection are met under a plan with respect to an eligible employee 
if--
            (1) the employee is eligible under the plan to elect 
        coverage on an annual basis and is provided a reasonable 
        opportunity to make the election in such form and manner and at 
        such times as are provided by the plan,
            (2) subject to section 1001(c), such coverage includes at 
        least the standard coverage (consistent with section 1102(c)),
            (3) the employer facilitates collection of any employee 
        contributions under the plan and permits the employee to elect 
        to have employee contributions under the plan collected through 
        payroll deduction, and
            (4) in the case of a plan to which part 1 of subtitle B of 
        title I of the Employee Retirement Income Security Act of 1974 
        does not otherwise apply, the employer provides to the employee 
        a summary plan description described in section 102(a)(1) of 
        such Act in the form and manner and at such times as are 
        required under such part 1 with respect to employee welfare 
        benefit plans.

                 Subtitle D--Health Deduction Fairness

SEC. 1301. PERMANENT EXTENSION AND INCREASE IN HEALTH INSURANCE TAX 
              DEDUCTION FOR SELF-EMPLOYED INDIVIDUALS.

    (a) Permanent Extension of Deduction.--
            (1) In general.--Subsection (l) of section 162 of the 
        Internal Revenue Code of 1986 (relating to special rules for 
        health insurance costs of self-employed individuals) is amended 
        by striking paragraph (6).
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after December 31, 1995.
    (b) Increase in Amount of Deduction.--
            (1) In general.--Paragraph (1) of section 162(l) of such 
        Code is amended by striking ``25 percent of'' and inserting 
        ``100 percent (50 percent in the case of taxable years 
        beginning in 1996 or 1997) of''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after December 31, 1995.

                  TITLE II--PREVENTING FRAUD AND ABUSE

  Subtitle A--Establishment of All-Payer Health Care Fraud and Abuse 
                            Control Program

SEC. 2001. ALL-PAYER HEALTH CARE FRAUD AND ABUSE CONTROL PROGRAM.

    (a) In General.--Not later than January 1, 1996, the Attorney 
General shall establish a program--
            (1) to coordinate Federal, State, and local law enforcement 
        programs to control fraud and abuse with respect to the 
        delivery of and payment for health care in the United States,
            (2) to conduct investigations, audits, evaluations, and 
        inspections relating to the delivery of and payment for health 
        care in the United States, and
            (3) in consultation with the Inspector General of the 
        Department of Health and Human Services, to facilitate the 
        enforcement of the provisions of sections 1128, 1128A, and 
        1128B of the Social Security Act and other statutes applicable 
        to health care fraud and abuse.
    (b) Coordination With Law Enforcement Agencies.--In carrying out 
the program under subsection (a), the Attorney General shall consult 
with, and arrange for the sharing of data and resources with Federal, 
State and local law enforcement agencies, State Medicaid Fraud Control 
Units, and State agencies responsible for the licensing and 
certification of health care providers.
    (c) Coordination With Third Party Insurers.--In carrying out the 
program established under subsection (a), the Attorney General shall 
consult with, and arrange for the sharing of data with representatives 
of private sponsors of health benefit plans and other providers of 
health insurance.
    (d) Regulations.--
            (1) In general.--The Attorney General shall by regulation 
        establish standards to carry out the program under subsection 
        (a).
            (2) Information standards.--
                    (A) In general.--Such standards shall include 
                standards relating to the furnishing of information by 
                health insurers (including self-insured health benefit 
                plans), providers, and others to enable the Attorney 
                General to carry out the program (including 
                coordination with law enforcement agencies under 
                subsection (b) and third party insurers under 
                subsection (c)).
                    (B) Confidentiality.--Such standards shall include 
                procedures to assure that such information is provided 
                and utilized in a manner that protects the 
                confidentiality of the information and the privacy of 
                individuals receiving health care services.
                    (C) Qualified immunity for providing information.--
                The provisions of section 1157(a) of the Social 
                Security Act (relating to limitation on liability) 
                shall apply to a person providing information to the 
                Attorney General under the program under this section, 
                with respect to the Attorney General's performance of 
                duties under the program, in the same manner as such 
                section applies to information provided to 
                organizations with a contract under part B of title XI 
                of such Act, with respect to the performance of such a 
                contract.

SEC. 2002. AUTHORIZATION OF ADDITIONAL APPROPRIATIONS FOR INVESTIGATORS 
              AND OTHER PERSONNEL.

    In addition to any other amounts authorized to be appropriated to 
the Attorney General for health care anti-fraud and abuse activities 
for a fiscal year, there are authorized to be appropriated such sums as 
may be necessary to enable the Attorney General to conduct 
investigations of allegations of health care fraud and otherwise carry 
out the program established under section 2001 in a fiscal year.

SEC. 2003. ESTABLISHMENT OF ANTI-FRAUD AND ABUSE TRUST FUND.

    (a) Establishment.--There is hereby created on the books of the 
Treasury of the United States a trust fund to be known as the ``Anti-
Fraud and Abuse Trust Fund'' (in this section referred to as the 
``Trust Fund''). The Trust Fund shall consist of such amounts as may be 
deposited in, or appropriated to, such Trust Fund as provided in this 
subtitle and section 1128A(f)(3) of the Social Security Act.
    (b) Management.--
            (1) In general.--The Trust Fund shall be managed by the 
        Attorney General through a Managing Trustee designated by the 
        Attorney General.
            (2) Investment of funds.--It shall be the duty of the 
        Managing Trustee to invest such portion of the Trust Fund as is 
        not, in the trustee's judgment, required to meet current 
        withdrawals. Such investments may be made only in interest-
        bearing obligations of the United States or in obligations 
        guaranteed as to both principal and interest by the United 
        States. For such purpose such obligations may be acquired on 
        original issue at the issue price, or by purchase of 
        outstanding obligations at market price. The purposes for which 
        obligations of the United States may be issued under chapter 31 
        of title 31, United States Code, are hereby extended to 
        authorize the issuance at par of public-debt obligations for 
        purchase by the Trust Fund. Such obligations issued for 
        purchase by the Trust Fund shall have maturities fixed with due 
        regard for the needs of the Trust Fund and shall bear interest 
        at a rate equal to the average market yield (computed by the 
        Managing Trustee on the basis of market quotations as of the 
        end of the calendar month next preceding the date of such 
        issue) on all marketable interest-bearing obligations of the 
        United States then forming a part of the public debt which are 
        not due or callable until after the expiration of 4 years from 
        the end of such calendar month, except that where such average 
        is not a multiple of \1/8\ of 1 percent, the rate of interest 
        on such obligations shall be the multiple of \1/8\ of 1 percent 
        nearest such market yield. The Managing Trustee may purchase 
        other interest-bearing obligations of the United States or 
        obligations guaranteed as to both principal and interest by the 
        United States, on original issue or at the market price, only 
        where the Trustee determines that the purchase of such other 
        obligations is in the public interest.
            (3) Any obligations acquired by the Trust Fund (except 
        public-debt obligations issued exclusively to the Trust Fund) 
        may be sold by the Managing Trustee at the market price, and 
        such public-debt obligations may be redeemed at par plus 
        accrued interest.
            (4) The interest on, and the proceeds from the sale or 
        redemption of, any obligations held in the Trust Fund shall be 
        credited to and form a part of the Trust Fund.
            (5) The receipts and disbursements of the Attorney General 
        in the discharge of the functions of the Attorney General shall 
        not be included in the totals of the budget of the United 
        States Government. For purposes of part C of the Balanced 
        Budget and Emergency Deficit Control Act of 1985, the Attorney 
        General and the Trust Fund shall be treated in the same manner 
        as the Federal Retirement Thrift Investment Board and the 
        Thrift Savings Fund, respectively. The United States is not 
        liable for any obligation or liability incurred by the Trust 
        Fund.
    (c) Use of Funds.--Amounts in the Trust Fund shall be used to 
assist the Attorney General in carrying out the all-payor fraud and 
abuse control program established under section 2001(a) in the fiscal 
year involved.
    (d) Deposit of Federal Health Anti-Fraud and Abuse Penalties Into 
Trust Fund.--Section 1128A(f)(3) of the Social Security Act (42 U.S.C. 
1320a-7a(f)(3)) is amended by striking ``as miscellaneous receipts of 
the Treasury of the United States'' and inserting ``in the Anti-Fraud 
and Abuse Trust Fund established under section 2003(a) of the Health 
Reform Consensus Act of 1994''.
    (e) Use of Federal Health Anti-Fraud and Abuse Penalties to Repay 
Beneficiaries for Cost-Sharing.--Section 1128A(f) of the Social 
Security Act (42 U.S.C. 1320a-7a(f)) is amended in the matter preceding 
paragraph (1) by striking ``Secretary and disposed of as follows:'' and 
inserting the following: ``Secretary. If the person against whom such a 
penalty or assessment was assessed collected a payment from an 
individual for providing to the individual the service that is the 
subject of the penalty or assessment, the Secretary shall pay a portion 
of the amount recovered to the individual in the nature of restitution 
in an amount equal to the payment so collected. The Secretary shall 
dispose of any remaining amounts recovered under this section as 
follows:''.

     Subtitle B--Revisions to Current Sanctions for Fraud and Abuse

SEC. 2101. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE AND STATE 
              HEALTH CARE PROGRAMS.

    (a) Individual Convicted of Felony Relating to Fraud.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)) is amended by adding at the end the 
        following new paragraph:
            ``(3) Felony conviction relating to fraud.--Any individual 
        or entity that has been convicted, under Federal or State law, 
        in connection with the delivery of a health care item or 
        service or with respect to any act or omission in a program 
        (other than those specifically described in paragraph (1)) 
        operated by or financed in whole or in part by any Federal, 
        State, or local government agency, of a criminal offense 
        consisting of a felony relating to fraud, theft, embezzlement, 
        breach of fiduciary responsibility, or other financial 
        misconduct.''.
            (2) Conforming amendment.--Section 1128(b)(1) of such Act 
        (42 U.S.C. 1320a-7(b)(1)) is amended--
                    (A) in the heading, by striking ``Conviction'' and 
                inserting ``Misdemeanor conviction''; and
                    (B) by striking ``criminal offense'' and inserting 
                ``criminal offense consisting of a misdemeanor''.
    (b) Individual Convicted of Felony Relating to Controlled 
Substance.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)), as amended by subsection (a), is 
        amended by adding at the end the following new paragraph:
            ``(4) Felony conviction relating to controlled substance.--
        Any individual or entity that has been convicted, under Federal 
        or State law, of a criminal offense consisting of a felony 
        relating to the unlawful manufacture, distribution, 
        prescription, or dispensing of a controlled substance.''.
            (2) Conforming amendment.--Section 1128(b)(3) of such Act 
        (42 U.S.C. 1320a-7(b)(3)) is amended--
                    (A) in the heading, by striking ``Conviction'' and 
                inserting ``Misdemeanor conviction''; and
                    (B) by striking ``criminal offense'' and inserting 
                ``criminal offense consisting of a misdemeanor''.

SEC. 2102. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR CERTAIN 
              INDIVIDUALS AND ENTITIES SUBJECT TO PERMISSIVE EXCLUSION 
              FROM MEDICARE AND STATE HEALTH CARE PROGRAMS.

    Section 1128(c)(3) of the Social Security Act (42 U.S.C. 1320a-
7(c)(3)) is amended by adding at the end the following new 
subparagraphs:
    ``(D) In the case of an exclusion of an individual or entity under 
paragraph (1), (2), or (3) of subsection (b), the period of the 
exclusion shall be 3 years, unless the Secretary determines in 
accordance with published regulations that a shorter period is 
appropriate because of mitigating circumstances or that a longer period 
is appropriate because of aggravating circumstances.
    ``(E) In the case of an exclusion of an individual or entity under 
subsection (b)(4) or (b)(5), the period of the exclusion shall not be 
less than the period during which the individual's or entity's license 
to provide health care is revoked, suspended, or surrendered, or the 
individual or the entity is excluded or suspended from a Federal or 
State health care program.
    ``(F) In the case of an exclusion of an individual or entity under 
subsection (b)(6)(B), the period of the exclusion shall be not less 
than 1 year.''.

SEC. 2103. CIVIL MONETARY PENALTIES.

    (a) Prohibition Against Offering Inducements to Individuals 
Enrolled Under or Employed By Programs or Plans.--
            (1) Inducements to individuals enrolled under medicare.--
                    (A) Offer of remuneration.--Section 1128A(a) of the 
                Social Security Act (42 U.S.C. 1320a-7a(a)) is 
                amended--
                            (i) by striking ``or'' at the end of 
                        paragraph (1)(D);
                            (ii) by striking ``, or'' at the end of 
                        paragraph (2) and inserting a semicolon;
                            (iii) by striking the semicolon at the end 
                        of paragraph (3) and inserting ``; or''; and
                            (iv) by inserting after paragraph (3) the 
                        following new paragraph:
            ``(4) offers to or transfers remuneration to any individual 
        eligible for benefits under title XVIII of this Act, or under a 
        State health care program (as defined in section 1128(h)) that 
        such person knows or should know is likely to significantly 
        influence such individual to order or receive from a particular 
        provider, practitioner, or supplier any item or service for 
        which payment may be made, in whole or in part, under title 
        XVIII, or a State health care program;''.
                    (B) Remuneration defined.--Section 1128A(i) is 
                amended by adding the following new paragraph:
            ``(6) The term `remuneration' includes the waiver of 
        coinsurance and deductible amounts (or any part thereof), and 
        transfers of items or services for free or for other than fair 
        market value. The term `remuneration' does not include the 
        waiver of coinsurance and deductible amounts by a person, if--
                    ``(A) the waiver is not offered as part of any 
                advertisement or solicitation;
                    ``(B) the person does not routinely waive 
                coinsurance or deductible amounts; and
                    ``(C) the person--
                            ``(i) waives the coinsurance and deductible 
                        amounts after determining in good faith that 
                        the individual is in financial need;
                            ``(ii) fails to collect coinsurance or 
                        deductible amounts after making reasonable 
                        collection efforts; or
                            ``(iii) provides for any permissible waiver 
                        as specified in section 1128B(b)(3) or in 
                        regulations issued by the Secretary.''.
            (2) Inducements to employees.--Section 1128A(a) of such Act 
        (42 U.S.C. 1320a-7a(a)), as amended by paragraph (1), is 
        further amended--
                    (A) by striking ``or'' at the end of paragraph (3);
                    (B) by striking the semicolon at the end of 
                paragraph (4) and inserting ``; or''; and
                    (C) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) pays a bonus, reward, or any other remuneration, 
        directly or indirectly, to an employee to induce the employee 
        to encourage individuals to seek or obtain covered items or 
        services for which payment may be made under the medicare 
        program, or a State health care program where the amount of the 
        remuneration is determined in a manner that takes into account 
        (directly or indirectly) the value or volume of any referrals 
        by the employee to the employer for covered items or 
        services;''.
    (b) Claim for Item or Service Based on Incorrect Coding.--Section 
1128A(a)(1)(A) of such Act (42 U.S.C. 1320a-7a(a)(1)) is amended by 
striking ``claimed,'' and inserting the following: ``claimed, including 
any person who presents or causes to be presented a claim for an item 
or service that is based on a code that the person knows or should know 
will result in a greater payment to the person than the code the person 
knows or should know is applicable to the item or service actually 
provided,''.

SEC. 2104. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE 
              ORGANIZATIONS.

    (a) Application of Intermediate Sanctions for Any Program 
Violations.--
            (1) In general.--Section 1876(i)(1) of the Social Security 
        Act (42 U.S.C. 1395mm(i)(1)) is amended by striking ``the 
        Secretary may terminate'' and all that follows and inserting 
        the following: ``in accordance with procedures established 
        under paragraph (9), the Secretary may at any time terminate 
        any such contract or may impose the intermediate sanctions 
        described in paragraph (6)(B) or (6)(C) (whichever is 
        applicable) on the eligible organization if the Secretary 
        determines that the organization--
                    (A) has failed substantially to carry out the 
                contract;
                    (B) is carrying out the contract in a manner 
                inconsistent with the efficient and effective 
                administration of this section;
                    (C) is operating in a manner that is not in the 
                best interests of the individuals covered under the 
                contract; or
                    (D) no longer substantially meets the applicable 
                conditions of subsections (b), (c), (e), and (f).''
            (2) Other intermediate sanctions for miscellaneous program 
        violations.--Section 1876(i)(6) of such Act (42 U.S.C. 
        1395mm(i)(6)) is amended by adding at the end the following new 
        subparagraph:
    ``(C) In the case of an eligible organization for which the 
Secretary makes a determination under paragraph (1) the basis of which 
is not described in subparagraph (A), the Secretary may apply the 
following intermediate sanctions:
            ``(i) Civil money penalties of not more than $25,000 for 
        each determination under paragraph (1) if the deficiency that 
        is the basis of the determination has directly adversely 
        affected (or has the substantial likelihood of adversely 
        affecting) an individual covered under the organization's 
        contract.
            ``(ii) Civil money penalties of not more than $10,000 for 
        each week beginning after the initiation of procedures by the 
        Secretary under paragraph (9) during which the deficiency that 
        is the basis of a determination under paragraph (1) exists.
            ``(iii) Suspension of enrollment of individuals under this 
        section after the date the Secretary notifies the organization 
        of a determination under paragraph (1) and until the Secretary 
        is satisfied that the deficiency that is the basis for the 
        determination has been corrected and is not likely to recur.''.
            (3) Procedures for imposing sanctions.--Section 1876(i) of 
        such Act (42 U.S.C. 1395mm(i)) is amended by adding at the end 
        the following new paragraph:
    ``(9) The Secretary may terminate a contract with an eligible 
organization under this section or may impose the intermediate 
sanctions described in paragraph (6) on the organization in accordance 
with formal investigation and compliance procedures established by the 
Secretary under which--
            ``(A) the Secretary provides the organization with the 
        opportunity to develop and implement a corrective action plan 
        to correct the deficiencies that were the basis of the 
        Secretary's determination under paragraph (1);
            ``(B) in deciding whether to impose sanctions, the 
        Secretary considers aggravating factors such as whether an 
        entity has a history of deficiencies or has not taken action to 
        correct deficiencies the Secretary has brought to their 
        attention;
            ``(C) there are no unreasonable or unnecessary delays 
        between the finding of a deficiency and the imposition of 
        sanctions; and
            ``(D) the Secretary provides the organization with 
        reasonable notice and opportunity for hearing (including the 
        right to appeal an initial decision) before imposing any 
        sanction or terminating the contract.''.
            (4) Conforming amendments.--
                    (A) In general.--Section 1876(i)(6)(B) of such Act 
                (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the 
                second sentence.
                    (B) Procedural provisions.--Section 1876(i)(6) of 
                such Act (42 U.S.C. 1395mm(i)(6)) is further amended by 
                adding at the end the following new subparagraph:
    ``(D) The provisions of section 1128A (other than subsections (a) 
and (b)) shall apply to a civil money penalty under subparagraph (A) or 
(B) in the same manner as they apply to a civil money penalty or 
proceeding under section 1128A(a).''.
    (b) Agreements With Peer Review Organizations.--
            (1) Requirement for written agreement.--Section 
        1876(i)(7)(A) of the Social Security Act (42 U.S.C. 
        1395mm(i)(7)(A)) is amended by striking ``an agreement'' and 
        inserting ``a written agreement''.
            (2) Development of model agreement.--Not later than July 1, 
        1995, the Secretary shall develop a model of the agreement that 
        an eligible organization with a risk-sharing contract under 
        section 1876 of the Social Security Act must enter into with an 
        entity providing peer review services with respect to services 
        provided by the organization under section 1876(i)(7)(A) of 
        such Act.
            (3) Report by gao.--
                    (A) Study.--The Comptroller General shall conduct a 
                study of the costs incurred by eligible organizations 
                with risk-sharing contracts under section 1876(b) of 
                such Act of complying with the requirement of entering 
                into a written agreement with an entity providing peer 
                review services with respect to services provided by 
                the organization, together with an analysis of how 
                information generated by such entities is used by the 
                Secretary to assess the quality of services provided by 
                such eligible organizations.
                    (B) Report to congress.--Not later than July 1, 
                1997, the Comptroller General shall submit a report to 
                the Committee on Ways and Means and the Committee on 
                Energy and Commerce of the House of Representatives and 
                the Committee on Finance and the Special Committee on 
                Aging of the Senate on the study conducted under 
                subparagraph (A).
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to contract years beginning on or after January 1, 
1995.

SEC. 2105. EFFECTIVE DATE.

    The amendments made by this subtitle shall take effect January 1, 
1996.

        Subtitle C--Administrative and Miscellaneous Provisions

SEC. 2201. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE DATA 
              COLLECTION PROGRAM.

    (a) Findings.--The Congress finds the following:
            (1) Fraud and abuse with respect to the delivery of and 
        payment for health care services is a significant contributor 
        to the growing costs of the Nation's health care.
            (2) Control of fraud and abuse in health care services 
        warrants greater efforts of coordination than those that can be 
        undertaken by individual States or the various Federal, State, 
        and local law enforcement programs.
            (3) There is a national need to coordinate information 
        about health care providers and entities that have engaged in 
        fraud and abuse in the delivery of and payment for health care 
        services.
            (4) There is no comprehensive national data collection 
        program for the reporting of public information about final 
        adverse actions against health care providers, suppliers, or 
        licensed health care practitioners that have engaged in fraud 
        and abuse in the deliver of and payment for health care 
        services.
            (5) A comprehensive national data collection program for 
        the reporting of public information about final adverse actions 
        will facilitate the enforcement of the provisions of the Social 
        Security Act and other statutes applicable to health care fraud 
        and abuse.
    (b) General Purpose.--Not later than January 1, 1995, the Secretary 
shall establish a national health care fraud and abuse data collection 
program for the reporting of final adverse actions (not including 
settlements where no finding of liability has been made) against health 
care providers, suppliers, or practitioners as required by subsection 
(c), with access as set forth in subsection (d).
    (c) Reporting of Information.--
            (1) In general.--Each government agency and health care 
        plan shall report any final adverse action (not including 
        settlements where no finding of liability has been made) taken 
        against a health care provider, supplier, or practitioner.
            (2) Information to be reported.--The information to be 
        reported under paragraph (1) includes:
                    (A) The name of any health care provider, supplier, 
                or practitioner who is the subject of a final adverse 
                action.
                    (B) The name (if known) of any health care entity 
                with which a health care provider, supplier, or 
                practitioner is affiliated or associated.
                    (C) The nature of the final adverse action.
                    (D) A description of the acts or omissions and 
                injuries upon which the final adverse action was based, 
                and such other information as the Secretary determines 
                by regulation is required for appropriate 
                interpretation of information reported under this 
                section.
            (3) Confidentiality.--In determining what information is 
        required, the Secretary shall include procedures to assure that 
        the information is provided and utilized in a manner that 
        protects the confidentiality of the information and the privacy 
        of individuals receiving health care services.
            (4) Timing and form of reporting.--The information required 
        to be reported under this subsection shall be reported 
        regularly (but not less often than monthly) and in such form 
        and manner as the Secretary prescribes. Such information shall 
        first be required to be reported on a date specified by the 
        Secretary.
            (5) To whom reported.--The information required to be 
        reported under this subsection shall be reported to the 
        Secretary.
    (d) Disclosure and Correction of Information.--
            (1) Disclosure.--With respect to the information about 
        final adverse actions (not including settlements where no 
        findings of liability has been made) reported to the Secretary 
        under this section respecting a health care provider, supplier, 
        or practitioner, the Secretary shall, by regulation, provide 
        for--
                    (A) disclosure of the information, upon request, to 
                the health care provider, supplier, or licensed 
                practitioner, and
                    (B) procedures in the case of disputed accuracy of 
                the information.
            (2) Corrections.--Each Government agency and health care 
        plan shall report corrections of information already reported 
        about any final adverse action taken against a health care 
        provider, supplier, or practitioner, in such form and manner 
        that the Secretary prescribes by regulation.
    (e) Access to Reported Information.--
            (1) Availability.--The information in this database shall 
        be available to the public, Federal and State government 
        agencies, and health care plans pursuant to procedures that the 
        Secretary shall provide by regulation.
            (2) Fees for disclosure.--The Secretary may establish or 
        approve reasonable fees for the disclosure of information in 
        this database. The amount of such a fee may not exceed the 
        costs of processing the requests for disclosure and of 
        providing such information. Such fees shall be available to the 
        Secretary or, in the Secretary's discretion to the agency 
        designated under this section to cover such costs.
    (f) Protection From Liability for Reporting.--No person or entity, 
including the agency designated by the Secretary in subsection (c)(5) 
shall be held liable in any civil action with respect to any report 
made as required by this section, without knowledge of the falsity of 
the information contained in the report.
    (g) Definitions and Special Rules.--For purposes of this section:
            (1) The term ``final adverse action'' includes:
                    (A) Civil judgments against a health care provider 
                in Federal or State court related to the delivery of a 
                health care item or service.
                    (B) Federal or State criminal convictions related 
                to the delivery of a health care item or service, as 
                determined in accordance with section 1128(j) of the 
                Social Security Act.
                    (C) Actions by State or Federal agencies 
                responsible for the licensing and certification of 
                health care providers, suppliers, and licensed health 
                care practitioners, including--
                            (i) formal or official actions, such as 
                        revocation or suspension of a license (and the 
                        length of any such suspension), reprimand, 
                        censure or probation, or
                            (ii) any other loss of license of the 
                        provider, supplier, or practitioner, by 
                        operation of law.
                    (D) Exclusion from participation in Federal or 
                State health care programs.
            (2) The term ``Government agency'' includes:
                    (A) The Department of Justice.
                    (B) The Department of Health and Human Services.
                    (C) Any other Federal agency that either 
                administers or provides payment for the delivery of 
                health care services, including, but not limited to the 
                Department of Defense and the Department of Veterans 
                Affairs.
                    (D) State law enforcement agencies.
                    (E) State medicaid fraud and abuse units.
                    (F) State or Federal agencies responsible for the 
                licensing and certification of health care providers 
                and licensed health care practitioners.
            (3) The term ``health care plan'' means a public or private 
        program for the delivery of or payment for health care services 
        other than the medicare program or a State health care program 
        described in section 1128(h) of the Social Security Act.
            (4) The term ``health care provider'' means a provider of 
        services as defined in section 1861(u) of the Social Security 
        Act, and any entity, including a health maintenance 
        organization, group medical practice, or any other entity 
        listed by the Secretary in regulation, that provides health 
        care services.
            (5) The terms ``licensed health care practitioner'', 
        ``licensed practitioner'', and ``practitioner'' mean, with 
        respect to a State, an individual who is licensed or otherwise 
        authorized by the State to provide health care services (or any 
        individual who, without authority holds himself or herself out 
        to be so licensed or authorized).
            (6) The term ``supplier'' means a supplier of health care 
        items and services described in sections 1819 (a) and (b), and 
        section 1861 of the Social Security Act.
    (h) Conforming Amendment.--Section 1921(d) of the Social Security 
Act is amended by inserting ``and section 2201 of the Health Reform 
Consensus Act of 1994'' after ``section 422 of the Health Care Quality 
Improvement Act of 1986''.

SEC. 2202. QUARTERLY PUBLICATION OF FINAL ADVERSE ACTIONS TAKEN.

    (a) In General.--Part A of title XI of the Social Security Act (42 
U.S.C. 1301 et seq.) is amended by adding at the end the following new 
section:

         ``quarterly publication of final adverse actions taken

    ``Sec. 1144. (a) In General.--Not later than 30 days after the end 
of each calendar quarter, the Secretary shall publish in the Federal 
Register a listing of all final adverse actions taken during the 
quarter under this part (including penalties imposed under section 
1107, exclusions under section 1128, the imposition of civil monetary 
penalties under section 1128A, and the imposition of criminal penalties 
under section 1128B) and under section 1156.
    ``(b) Final Adverse Action Defined.--In subsection (a), the term 
`final adverse action' has the meaning given such term under section 
2201(g)(1) of the Health Reform Consensus Act of 1994.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to calendar quarters beginning on or after January 1, 1996.

                 Subtitle D--Amendments to Criminal Law

SEC. 2301. PENALTIES FOR HEALTH CARE FRAUD.

    (a) In General.--
            (1) Fines and imprisonment for health care fraud 
        violations.--Chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following:
``Sec. 1347. Health care fraud
    ``(a) Whoever knowingly executes, or attempts to execute, a scheme 
or artifice--
            ``(1) to defraud any health care plan or other person, in 
        connection with the delivery of or payment for health care 
        benefits, items, or services; or
            ``(2) to obtain, by means of false or fraudulent pretenses, 
        representations, or promises, any of the money or property 
        owned by, or under the custody or control of, any health care 
        plan, or person in connection with the delivery of or payment 
        for health care benefits, items, or services;
shall be guilty of a felony, and fined under this title or imprisoned 
not more than 5 years, or both.
    ``(b) In determining the amount or scope of any penalty or 
assessment, the court shall take into account:
            ``(1) the nature of the false or fraudulent claims and the 
        circumstances under which they are presented;
            ``(2) the degree of culpability and history of prior 
        offenses by the convicted health care provider;
            ``(3) the extent to which restitution is paid; and
            ``(4) such other matters as justice may require.
    ``(c) A principal is liable for penalties and assessments under 
this section for the acts of the principal's agents acting within the 
scope of the agency.
    ``(d) For purposes of this section, the term `health care plan' 
means a Federally-funded public program or private program for the 
delivery of or payment for health care items or services.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following:

``1347. Health care fraud.''.

SEC. 2302. REWARDS FOR INFORMATION LEADING TO PROSECUTION AND 
              CONVICTION.

    Section 3059 of title 18, United States Code, is amended by adding 
at the end the following new subsection:
    ``(c)(1) In special circumstances and in the Attorney General's 
sole discretion, the Attorney General may make a payment of up to 
$10,000 to a person who furnishes information unknown to the Government 
relating to a possible prosecution under section 1347.
    ``(2) A person is not eligible for a payment under paragraph (1) 
if--
            ``(A) the person is a current or former officer or employee 
        of a Federal or State government agency or instrumentality who 
        furnishes information discovered or gathered in the course of 
        government employment.
            ``(B) the person knowingly participated in the offense;
            ``(C) the information furnished by the person consists of 
        allegations or transactions that have been disclosed to the 
        public--
                    ``(i) in a criminal, civil, or administrative 
                proceeding;
                    ``(ii) in a congressional, administrative or 
                General Accounting Office report, hearing, audit or 
                investigation; or
                    ``(iii) by the news media, unless the person is the 
                original source of the information; or
            ``(D) when, in the judgment of the Attorney General, it 
        appears that a person whose illegal activities are being 
        prosecuted or investigated could benefit from the award.
    ``(3) For the purposes of paragraph (2)(C)(iii), the term `original 
source' means a person who has direct and independent knowledge of the 
information that is furnished and has voluntarily provided the 
information to the Government prior to disclosure by the news media.
    ``(4) Neither the failure of the Attorney General to authorize a 
payment under paragraph (1) nor the amount authorized shall be subject 
to judicial review.''.

                     TITLE III--MALPRACTICE REFORM

               Subtitle A--Findings; Purpose; Definitions

SEC. 3001. FINDINGS; PURPOSE.

    (a) Findings.--Congress finds that--
            (1) the costs of health care consume more than 14 percent 
        of the Gross Domestic Product of the United States, 
        significantly affecting interstate commerce and the budget of 
        the Federal Government;
            (2) claims for medical malpractice are a significant factor 
        in the cost of health care and cause physicians, hospitals, and 
        other health care providers to undertake diagnostic tests and 
        procedures partly as defensive measures against the possibility 
        of malpractice claims;
            (3) the health care and insurance industries are industries 
        affecting interstate commerce and the medical malpractice 
        litigation systems existing throughout the United States affect 
        interstate commerce by contributing to the high cost of health 
        care and premiums for malpractice insurance purchased by health 
        care providers; and
            (4) the Federal Government has a major interest in health 
        care as a direct provider of health care and as a source of 
        payment for health care, and has a demonstrated interest in 
        assessing the quality of care, access to care, and the costs of 
        care through the evaluative activities of several Federal 
        agencies.
    (b) Purpose.--It is the purpose of this title to--
            (1) provide grants to States to develop alternative dispute 
        resolution procedures to attain a more efficient, expeditious, 
        and equitable resolution of health care malpractice disputes;
            (2) enhance general knowledge concerning the benefits of 
        different forms of alternative dispute resolution mechanisms; 
        and
            (3) establish uniformity and curb excesses in the State-
        based medical liability systems through Federally mandated 
        reforms.

SEC. 3002. DEFINITIONS.

    As used in this title:
            (1) ADR Advisory Board.--The term ``ADR Advisory Board'' 
        means the Alternative Dispute Resolution Advisory Board 
        established by the Secretary of Health and Human Services under 
        section 3202(a).
            (2) Alternative dispute resolution system.--The term 
        ``alternative dispute resolution system'' means a system that 
        is enacted or adopted by a State to resolve medical malpractice 
        claims other than through a medical malpractice liability 
        action.
            (3) Claimant.--The term ``claimant'' means any person who 
        brings a medical malpractice liability claim and, in the case 
        of an individual who is deceased, incompetent, or a minor, the 
        person on whose behalf such a claim is brought.
            (4) Clear and convincing evidence.--The term ``clear and 
        convincing evidence'' is that measure or degree of proof that 
        will produce in the mind of the trier of fact a firm belief or 
        conviction as to the truth of the allegations sought to be 
        established, except that such measure or degree of proof is 
        more than that required under preponderance of the evidence, 
        but less than that required for proof beyond a reasonable 
        doubt.
            (5) Economic damages.--The term ``economic damages'' means 
        damages paid to compensate an individual for losses for 
        hospital and other medical expenses, lost wages, lost 
        employment, and other pecuniary losses.
            (6) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by State law or 
        regulation to be licensed or certified by the State to provide 
        such services in the State.
            (7) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State that 
        is required by State law or regulation to be licensed or 
        certified by the State to engage in the delivery of such 
        services in the State.
            (8) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice claim.
            (9) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means any civil action 
        brought pursuant to State law in which a plaintiff alleges a 
        medical malpractice claim against a health care provider or 
        health care professional, but does not include any action in 
        which the plaintiff's sole allegation is an allegation of an 
        intentional tort.
            (10) Medical malpractice claim.--The term ``medical 
        malpractice claim'' means any claim relating to the provision 
        of (or the failure to provide) health care services or the use 
        of a medical product, without regard to the theory of liability 
        asserted, and includes any third-party claim, cross-claim, 
        counterclaim, or contribution claim in a medical malpractice 
        liability action.
            (11) Medical product.--
                    (A) In general.--The term ``medical product'' 
                means, with respect to the allegation of a claimant, a 
                drug (as defined in section 201(g)(1) of the Federal 
                Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a 
                medical device (as defined in section 201(h) of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                321(h))) if--
                            (i) such drug or device was subject to 
                        premarket approval under section 505, 507, or 
                        515 of the Federal Food, Drug, and Cosmetic Act 
                        (21 U.S.C. 355, 357, or 360e) or section 351 of 
                        the Public Health Service Act (42 U.S.C. 262) 
                        with respect to the safety of the formulation 
                        or performance of the aspect of such drug or 
                        device which is the subject of the claimant's 
                        allegation or the adequacy of the packaging or 
                        labeling of such drug or device, and such drug 
                        or device is approved by the Food and Drug 
                        Administration; or
                            (ii) the drug or device is generally 
                        recognized as safe and effective under 
                        regulations issued by the Secretary of Health 
                        and Human Services under section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        321(p)).
                    (B) Exception in case of misrepresentation or 
                fraud.--Notwithstanding subparagraph (A), the term 
                ``medical product'' shall not include any product 
                described in such subparagraph if the claimant shows 
                that the product is approved by the Food and Drug 
                Administration for marketing as a result of withheld 
                information, misrepresentation, or an illegal payment 
                by manufacturer of the product.
            (12) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to compensate an individual for losses for 
        physical and emotional pain, suffering, inconvenience, physical 
        impairment, mental anguish, disfigurement, loss of enjoyment of 
        life, loss of consortium, and other nonpecuniary losses, but 
        does not include punitive damages.
            (13) Punitive damages.--The term ``punitive damages'' means 
        compensation, in addition to compensation for actual harm 
        suffered, that is awarded for the purpose of punishing a person 
        for conduct deemed to be malicious, wanton, willful, or 
        excessively reckless.
            (14) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (15) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, and Guam.

          Subtitle B--Uniform Standards for Malpractice Claims

SEC. 3101. APPLICABILITY.

    Except as provided in section 3111, this subtitle shall apply to 
any medical malpractice liability action brought in a Federal or State 
court, and to any medical malpractice claim subject to an alternative 
dispute resolution system, that is initiated on or after January 1, 
1996.

SEC. 3102. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH 
              ALTERNATIVE DISPUTE RESOLUTION.

    (a) In General.--
            (1) State cases.--A medical malpractice liability action 
        may not be brought in any State court during a calendar year 
        unless the medical malpractice liability claim that is the 
        subject of the action has been initially resolved under an 
        alternative dispute resolution system certified for the year by 
        the Secretary under section 3202(a), or, in the case of a State 
        in which such a system is not in effect for the year, under the 
        alternative Federal system established under section 3202(b).
            (2) Federal diversity actions.--A medical malpractice 
        liability action may not be brought in any Federal court under 
        section 1332 of title 28, United States Code, during a calendar 
        year unless the medical malpractice liability claim that is the 
        subject of the action has been initially resolved under the 
        alternative dispute resolution system referred to in paragraph 
        (1) that applied in the State whose law applies in such action.
            (3) Claims against united states.--
                    (A) Establishment of process for claims.--The 
                Attorney General shall establish an alternative dispute 
                resolution process for the resolution of tort claims 
                consisting of medical malpractice liability claims 
                brought against the United States under chapter 171 of 
                title 28, United States Code. Under such process, the 
                resolution of a claim shall occur after the completion 
                of the administrative claim process applicable to the 
                claim under section 2675 of such title.
                    (B) Requirement for initial resolution under 
                process.--A medical malpractice liability action based 
                on a medical malpractice liability claim described in 
                subparagraph (A) may not be brought in any Federal 
                court unless the claim has been initially resolved 
                under the alternative dispute resolution process 
                established by the Attorney General under such 
                subparagraph.
    (b) Initial Resolution of Claims Under ADR.--For purposes of 
subsection (a), an action is ``initially resolved'' under an 
alternative dispute resolution system if--
            (1) the ADR reaches a decision on whether the defendant is 
        liable to the plaintiff for damages; and
            (2) if the ADR determines that the defendant is liable, the 
        ADR reaches a decision on the amount of damages assessed 
        against the defendant.
    (c) Legal Effect of Uncontested ADR Decision.--If no party files a 
notice of intent to contest a decision reached under an alternative 
dispute resolution system pursuant to section 3103(a)(1), the decision 
shall be enforced by a court of competent jurisdiction in the same 
manner as the verdict of a medical malpractice liability action 
adjudicated in a State or Federal trial court.

SEC. 3103. PROCEDURAL REQUIREMENTS FOR FILING OF ACTIONS.

    (a) Procedures for Filing Actions After Decision.--
            (1) Notice of intent to contest decision.--Not later than 
        60 days after a decision is issued with respect to a medical 
        malpractice liability claim under an alternative dispute 
        resolution system, each party affected by the decision shall 
        submit a sealed statement to a court of competent jurisdiction 
        indicating whether or not the party intends to contest the 
        decision.
            (2) Deadline for filing action.--A medical malpractice 
        liability action may not be brought with respect to a medical 
        malpractice liability claim that is the subject of a decision 
        under an alternative dispute resolution system unless--
                    (A) a party has filed a notice of intent to contest 
                the decision under the alternative dispute resolution 
                system pursuant to paragraph (1); and
                    (B) the party files the action in a court of 
                competent jurisdiction not later than 60 days after the 
                notice of intent is filed pursuant to paragraph (1) 
                (or, if such notice of intent is filed by a party other 
                than the claimant, not later than 90 days after such 
                notice is filed).
            (3) Court of competent jurisdiction.--For purposes of this 
        subsection, the term ``court of competent jurisdiction'' 
        means--
                    (A) with respect to actions filed in a State court, 
                the appropriate State trial court; and
                    (B) with respect to actions filed in a Federal 
                court, the appropriate United States district court.
    (b) Certificate of Merit.--
            (1) In general.--Each individual who files a notice of 
        intent to contest a decision under the alternative dispute 
        resolution system pursuant to subsection (a)(1) shall, not 
        later than 90 days after the applicable medical malpractice 
        liability action is filed--
                    (A) submit a certificate of merit described in 
                subsection (b); or
                    (B) post a surety (or equivalent security) bond of 
                $4,000 (or, during the 45-day period that begins on the 
                date the action is filed, a cost bond of $2,000) with 
                the court.
            (2) Extension of deadline.--On the motion of any party to 
        the action or upon a written agreement of the parties filed 
        with the court, the court may extend the deadline specified in 
        paragraph (1) for a period not to exceed 30 days.
            (3) Waiver for good cause.--The court may waive the 
        application of paragraph (1) to a plaintiff if the plaintiff 
        shows good cause that such paragraph should not apply.
            (4) Certificate of merit described.--In this subsection, a 
        ``certificate of merit'' means--
                    (A) with respect to a plaintiff, an affidavit 
                declaring that the individual (or the individual's 
                attorney) has obtained a written opinion from a medical 
                expert who is knowledgeable of the relevant medical 
                issues involved in the action that the defendant was 
                negligent and the defendant's conduct was a proximate 
                cause of the alleged injury that is the subject of the 
                action; and
                    (B) with respect to a defendant, an affidavit 
                declaring that the individual (or the individual's 
                attorney) has obtained a written opinion from a medical 
                expert who is knowledgeable of the relevant medical 
                issues involved in the action that the defendant 
                followed the appropriate standards or procedures and 
                exercised due care, and that the defendant's conduct 
                was not the proximate cause of the alleged injury that 
                is the subject of the action.
    (c) Effect of Failure to Meet Requirement to File Certificate.--If 
an individual fails to file a certificate of merit with respect to a 
medical malpractice liability action under subsection (b)--
            (1) if the individual is a plaintiff, the court shall 
        dismiss the action without prejudice to the refiling of the 
        action by the individual;
            (2) if the individual is a defendant, the court shall award 
        judgment to the plaintiff based on the plaintiff's pleadings; 
        and
            (3) the court shall require the individual to pay any court 
        costs incurred by the opposing parties as a result of the 
        filing of the action.
    (d) Judicial Notice of Decision Under ADR System.--A medical 
malpractice liability action brought after a decision on the claim that 
is the subject of the action has been reached under an alternative 
dispute resolution system shall be tried de novo, except that the court 
shall take judicial notice of such decision and (in the case of an 
action tried by a jury) shall read the decision to the jury prior to 
any opening statements and make the decision available to the jury 
during the trial.

SEC. 3104. TREATMENT OF NONECONOMIC AND PUNITIVE DAMAGES.

    (a) Limitation on Noneconomic Damages.--The total amount of 
noneconomic damages that may be awarded to a claimant and the members 
of the claimant's family for losses resulting from the injury which is 
the subject of a medical malpractice liability action may not exceed 
$250,000, regardless of the number of parties against whom the action 
is brought or the number of actions brought with respect to the injury.
    (b) Treatment of Punitive Damages Awarded Against Manufacturer of 
Medical Product.--
            (1) Limitation on amount of award.--The total amount of 
        punitive or exemplary damages that may be awarded with respect 
        to an injury which is the subject of a medical malpractice 
        liability action may not exceed twice the total amount of other 
        damages awarded with respect to the injury.
            (2) Distribution of award.--Of the total amount of any 
        punitive damages awarded in a medical malpractice liability 
        action, 50 percent shall be paid to the claimant and 50 percent 
        shall be paid to the State in which the action is brought (or, 
        in a case brought in Federal court, in the State in which the 
        health care services that caused the injury that is the subject 
        of the action were provided) for the purposes of carrying out 
        the activities described in paragraph (3).
            (3) Activities described.--A State shall use amounts paid 
        pursuant to paragraph (2) to carry out activities to assure the 
        safety and quality of health care services provided in the 
        State, including (but not limited to)--
                    (A) implementing health care quality assurance 
                programs;
                    (B) carrying out programs to reduce malpractice-
                related costs for providers volunteering to provide 
                services in medically underserved areas; and
                    (C) implementing and operating a State alternative 
                dispute resolution system certified by the Secretary 
                under section 3203.
            (4) Maintenance of effort.--A State shall use any amounts 
        paid pursuant to paragraph (2) to supplement and not to replace 
        amounts spent by the State for the activities described in 
        paragraph (3).
    (c) Several Liability for Noneconomic Damages.--The liability of 
each defendant for noneconomic damages shall be several only and shall 
not be joint, and each defendant shall be liable only for the amount of 
noneconomic damages allocated to the defendant in direct proportion to 
the defendant's percentage of responsibility (as determined by the 
trier of fact).

SEC. 3105. PERIODIC PAYMENTS FOR FUTURE LOSSES.

    (a) Periodic Payments Permitted.--
            (1) In general.--In any medical malpractice liability 
        action in which the damages awarded for future economic loss 
        exceeds $100,000, a defendant may not be required to pay such 
        damages in a single, lump-sum payment, but may be permitted to 
        make such payments on a periodic basis if the court--
                    (A) determines that economic damages incurred 
                through the date of the award shall be paid;
                    (B) bases the periods for such payments upon 
                projections of when such expenses are likely to be 
                incurred; and
                    (C) determines that the periodic payments are 
                adequately secured.
    (b) Waiver.--A court may waive the application of subsection (a) 
with respect to a defendant if the court determines that it is not in 
the best interests of the plaintiff to receive payments for damages on 
such a periodic basis.

SEC. 3106. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.

    (a) Limitation on Amount of Contingency Fees.--
            (1) In general.--An attorney who represents, on a 
        contingency fee basis, a claimant in a medical malpractice 
        liability claim may not charge, demand, receive, or collect for 
        services rendered in connection with such claim in excess of 
        the following amount recovered by judgment or settlement under 
        such claim:
                    (A) 25 percent of the first $100,000 (or portion 
                thereof) recovered.
                    (B) 20 percent of the next $150,000 (or portion 
                thereof) recovered.
                    (C) 15 percent of the next $250,000 (or portion 
                thereof) recovered.
                    (D) 10 percent of any amount in excess of $500,000 
                recovered.
            (2) Calculation of periodic payments.--In the event that a 
        judgment or settlement includes periodic or future payments of 
        damages, the amount recovered for purposes of computing the 
        limitation on the contingency fee under paragraph (1) shall be 
        based on the cost of the annuity or trust established to make 
        the payments. In any case in which an annuity or trust is not 
        established to make such payments, such amount shall be based 
        on the present value of the payments.
    (b) Contingency Fee Defined.--As used in this section, the term 
``contingency fee'' means any fee for professional legal services which 
is, in whole or in part, contingent upon the recovery of any amount of 
damages, whether through judgment or settlement.

SEC. 3107. UNIFORM STATUTE OF LIMITATIONS.

    (a) In General.--No medical malpractice claim may be initiated 
after the expiration of the 2-year period that begins on the date on 
which the alleged injury that is the subject of such claim was 
discovered or the date on which such injury should reasonably have been 
discovered, whichever is earlier.
    (b) Exception for Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, a medical 
malpractice claim may be initiated after the expiration of the period 
described in subsection (a) if the claim is initiated before the minor 
attains 8 years of age.

SEC. 3108. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

    (a) In General.--In the case of a medical malpractice claim 
relating to services provided during labor or the delivery of a baby, 
if the health care professional or health care provider against whom 
the claim is brought did not previously treat the claimant for the 
pregnancy, the trier of fact may not find that such professional or 
provider committed malpractice and may not assess damages against such 
professional or provider unless the malpractice is proven by clear and 
convincing evidence.
    (b) Applicability to Group Practices or Agreements Among 
Providers.--For purposes of subsection (a), a health care professional 
shall be considered to have previously treated an individual for a 
pregnancy if the professional is a member of a group practice whose 
members previously treated the individual for the pregnancy or is 
providing services to the individual during labor or the delivery of a 
baby pursuant to an agreement with another professional.

SEC. 3109. APPLICATION OF MEDICAL PRACTICE PARAMETERS IN MALPRACTICE 
              LIABILITY ACTIONS.

    (a) Use of Parameters as Affirmative Defense.--In any medical 
malpractice liability action, it shall be a complete defense to any 
allegation that the defendant was negligent that, in the provision of 
(or the failure to provide) the services that are the subject of the 
action, the defendant followed the appropriate practice parameter.
    (b) Restriction on Parameters Considered Appropriate.--
            (1) Parameters sanctioned by secretary.--For purposes of 
        subsection (a), a practice parameter may not be considered 
        appropriate with respect to actions brought during a year 
        unless the Secretary has sanctioned the use of the parameter 
        for purposes of an affirmative defense to medical malpractice 
        liability actions brought during the year in accordance with 
        paragraph (2) or (3).
            (2) Process for sanctioning parameters.--Not less 
        frequently than October 1 of each year (beginning with 1995), 
        the Secretary shall review the practice guidelines and 
        standards developed by the Administrator for Health Care Policy 
        and Research pursuant to section 1142 of the Social Security 
        Act, and shall sanction those guidelines which the Secretary 
        considers appropriate for purposes of an affirmative defense to 
        medical malpractice liability actions brought during the next 
        calendar year as appropriate practice parameters for purposes 
        of subsection (a).
            (3) Use of state parameters.--Upon the application of a 
        State, the Secretary may sanction practice parameters selected 
        by the State for purposes of an affirmative defense to medical 
        malpractice liability actions brought in the State as 
        appropriate practice parameters for purposes of subsection (a) 
        if the parameters meet such requirements as the Secretary may 
        impose.
    (c) Prohibiting Application of Failure to Follow Parameters as 
Prima Facie Evidence of Negligence.--No plaintiff in a medical 
malpractice liability action may be deemed to have presented prima 
facie evidence that a defendant was negligent solely by showing that 
the defendant failed to follow the appropriate practice parameter.

SEC. 3110. JURISDICTION OF FEDERAL COURTS.

    Nothing in this subtitle shall be construed to establish 
jurisdiction over any medical malpractice liability action in the 
district courts of the United States on the basis of sections 1331 or 
1337 of title 28, United States Code.

SEC. 3111. PREEMPTION.

    (a) In General.--This subtitle supersedes any State law only to the 
extent that the State law permits the recovery by a claimant or the 
assessment against a defendant of a greater amount of damages or 
establishes a less strict standard of proof for determining whether a 
defendant has committed malpractice, than the provisions of this 
subtitle.
    (b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in this subtitle shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground in inconvenient forum.

   Subtitle C--Requirements for State Alternative Dispute Resolution 
                             Systems (ADR)

SEC. 3201. BASIC REQUIREMENTS.

    (a) In General.--A State's alternative dispute resolution system 
meets the requirements of this section if the system--
            (1) applies to all medical malpractice liability claims 
        under the jurisdiction of the courts of that State;
            (2) requires that a written opinion resolving the dispute 
        be issued not later than 6 months after the date by which each 
        party against whom the claim is filed has received notice of 
        the claim (other than in exceptional cases for which a longer 
        period is required for the issuance of such an opinion), and 
        that the opinion contain--
                    (A) findings of fact relating to the dispute, and
                    (B) a description of the costs incurred in 
                resolving the dispute under the system (including any 
                fees paid to the individuals hearing and resolving the 
                claim), together with an appropriate assessment of the 
                costs against any of the parties;
            (3) requires individuals who hear and resolve claims under 
        the system to meet such qualifications as the State may require 
        (in accordance with regulations of the Secretary);
            (4) is approved by the State or by local governments in the 
        State;
            (5) with respect to a State system that consists of 
        multiple dispute resolution procedures--
                    (A) permits the parties to a dispute to select the 
                procedure to be used for the resolution of the dispute 
                under the system, and
                    (B) if the parties do not agree on the procedure to 
                be used for the resolution of the dispute, assigns a 
                particular procedure to the parties;
            (6) provides for the transmittal to the State agency 
        responsible for monitoring or disciplining health care 
        professionals and health care providers of any findings made 
        under the system that such a professional or provider committed 
        malpractice, unless, during the 90-day period beginning on the 
        date the system resolves the claim against the professional or 
        provider, the professional or provider brings an action 
        contesting the decision made under the system; and
            (7) provides for the regular transmittal to the 
        Administrator for Health Care Policy and Research of 
        information on disputes resolved under the system, in a manner 
        that assures that the identity of the parties to a dispute 
        shall not be revealed.
    (b) Application of Malpractice Liability Standards to Alternative 
Dispute Resolution.--The provisions of subtitle B (other than sections 
3102 and 3103) shall apply with respect to claims brought under a State 
alternative dispute resolution system or the alternative Federal system 
in the same manner as such provisions apply with respect to medical 
malpractice liability actions brought in the State.

SEC. 3202. ALTERNATIVE DISPUTE RESOLUTION ADVISORY BOARD.

    (a) Establishment.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary shall establish an Alternative 
Dispute Resolution Advisory Board to advise the Secretary regarding the 
establishment of alternative dispute resolution systems at the State 
and Federal levels.
    (b) Composition.--The ADR Advisory Board shall be composed of 
members appointed by the Secretary from among representatives of the 
following:
            (1) Physicians.
            (2) Hospitals.
            (3) Patient advocacy groups.
            (4) State governments.
            (5) Academic experts from applicable disciplines (including 
        medicine, law, public health, and economics) and specialists in 
        arbitration and dispute resolution.
            (6) Health insurers and medical malpractice insurers.
            (7) Medical product manufacturers.
            (8) Pharmaceutical companies.
            (9) Other professions and groups determined appropriate by 
        the Secretary.
    (c) Duties.--The ADR Advisory Board shall--
            (1) examine various dispute resolution systems and provide 
        advice and assistance to States regarding the establishment of 
        such systems;
            (2) not later than 1 year after the appointment of its 
        members, submit to the Secretary--
                    (A) a model alternative dispute resolution system 
                that may be used by a State for purposes of this 
                subtitle, and
                    (B) a model alternative Federal system that may be 
                used by the Secretary pursuant to section 3203(b)(1); 
                and
            (3) review the applications of States for certification of 
        State alternative dispute resolution systems and make 
        recommendations to the Secretary regarding whether the systems 
        should be certified under section 3203.

SEC. 3203. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF ALTERNATIVE 
              FEDERAL SYSTEM.

    (a) Certification.--
            (1) Application by state.--Each State shall submit an 
        application to the ADR Advisory Board describing its 
        alternative dispute resolution system and containing such 
        information as the ADR Advisory Board may require to make a 
        recommendation regarding whether the system meets the 
        requirements of this subtitle.
            (2) Basis for certification.--Not later than October 1 of 
        each year (beginning with 1995), the Secretary, taking into 
        consideration the recommendations of the ADR Advisory Board, 
        shall certify a State's alternative dispute resolution system 
        under this subsection for the following calendar year if the 
        Secretary determines that the system meets the requirements of 
        section 3201.
    (b) Applicability of Alternative Federal System.--
            (1) Establishment and applicability.--Not later than 
        October 1, 1995, the Secretary, taking into consideration the 
        model alternative Federal system submitted by the ADR Advisory 
        Board under section 3202(c)(2)(B), shall establish by rule an 
        alternative Federal ADR system for the resolution of medical 
        malpractice liability claims during a calendar year in States 
        that do not have in effect an alternative dispute resolution 
        system certified under subsection (a) for the year.
            (2) Requirements for system.--Under the alternative Federal 
        ADR system established under paragraph (1)--
                    (A) paragraphs (1), (2), (6), and (7) of section 
                3201(a) shall apply to claims brought under the system;
                    (B) if the system provides for the resolution of 
                claims through arbitration, the claims brought under 
                the system shall be heard and resolved by arbitrators 
                appointed by the Secretary in consultation with the 
                Attorney General; and
                    (C) with respect to a State in which the system is 
                in effect, the Secretary may (at the State's request) 
                modify the system to take into account the existence of 
                dispute resolution procedures in the State that affect 
                the resolution of medical malpractice liability claims.
            (3) Treatment of states with alternative system in 
        effect.--If the alternative Federal ADR system established 
        under this subsection is applied with respect to a State for a 
        calendar year, the State shall make a payment to the United 
        States (at such time and in such manner as the Secretary may 
        require) in an amount equal to 110 percent of the costs 
        incurred by the United States during the year as a result of 
        the application of the system with respect to the State.

SEC. 3204. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF ALTERNATIVE 
              DISPUTE RESOLUTION SYSTEMS.

    (a) In General.--Not later than 5 years after the date of the 
enactment of this Act, the Secretary shall prepare and submit to the 
Congress a report describing and evaluating State alternative dispute 
resolution systems operated pursuant to this subtitle and the 
alternative Federal system established under section 3203(b).
    (b) Contents of Report.--The Secretary shall include in the report 
prepared and submitted under subsection (a)--
            (1) information on--
                    (A) the effect of the alternative dispute 
                resolution systems on the cost of health care within 
                each State,
                    (B) the impact of such systems on the access of 
                individuals to health care within the State, and
                    (C) the effect of such systems on the quality of 
                health care provided within the State; and
            (2) to the extent that such report does not provide 
        information on no-fault systems operated by States as 
        alternative dispute resolution systems pursuant to this part, 
        an analysis of the feasibility and desirability of establishing 
        a system under which medical malpractice liability claims shall 
        be resolved on a no-fault basis.

    TITLE IV--PAPERWORK REDUCTION AND ADMINISTRATIVE SIMPLIFICATION

SEC. 4001. PREEMPTION OF STATE QUILL PEN LAWS.

    After 1995, no effect shall be given to any provision of State law 
that requires medical or health insurance records (including billing 
information) to be maintained in written, rather than electronic, form.

SEC. 4002. CONFIDENTIALITY OF ELECTRONIC HEALTH CARE INFORMATION.

    (a) Promulgation of Requirements.--
            (1) In general.--The Secretary of Health and Human Services 
        shall promulgate, and may modify from time to time, 
        requirements to facilitate and ensure the uniform, confidential 
        treatment of individually identifiable health care information 
        in electronic environments.
            (2) Items to be included.--The requirements under this 
        subsection shall--
                    (A) provide for the preservation of confidentiality 
                and privacy rights in electronic health care claims 
                processing and payment;
                    (B) apply to the collection, storage, handling, and 
                transmission of individually identifiable health care 
                data (including initial and subsequent disclosures) in 
                electronic form by all accountable health plans, public 
                and private third-party payers, providers of health 
                care, and all other entities involved in the 
                transactions;
                    (C) not apply to public health reporting required 
                under State or Federal law;
                    (D) delineate protocols for securing electronic 
                storage, processing, and transmission of health care 
                data;
                    (E) specify fair information practices that assure 
                a proper balance between required disclosures and use 
                of data, including--
                            (i) creating a proper balance between what 
                        an individual is expected to divulge to a 
                        record-keeping organization and what the 
                        individual seeks in return,
                            (ii) minimizing the extent to which 
                        information concerning an individual is itself 
                        a source of unfairness in any decision made on 
                        the basis of such information, and
                            (iii) creating and defining obligations 
                        respecting the uses and disclosures that will 
                        be made of recorded information about an 
                        individual;
                    (F) require publication of the existence of health 
                care data banks;
                    (G) establish appropriate protections for highly 
                sensitive data (such as data concerning mental health, 
                substance abuse, and communicable and genetic 
                diseases);
                    (H) encourage the use of alternative dispute 
                resolution mechanisms (where appropriate); and
                    (I) provide for the deletion of information that is 
                no longer needed to carry out the purpose for which it 
                was collected.
            (3) Consultation with working group.--In promulgating and 
        modifying requirements under this subsection, the Secretary 
        shall consult with a working group of knowledgeable individuals 
        representing all interested parties (including third-party 
        payers, providers, consumers, employers, information managers, 
        and technical experts).
            (4) Deadline.--The Secretary shall first promulgate 
        requirements under this subsection by not later than six months 
        after the date of the enactment of this Act.
    (b) Application of Requirements.--
            (1) State enforcement of similar requirements.--The 
        requirements promulgated under subsection (a) shall not apply 
        to health care information in a State if--
                    (A) the State has applied to the Secretary for a 
                determination that the State has in effect a law that 
                provides for the application of requirements with 
                respect to such information (and enforcement provisions 
                with respect to such requirements) consistent with such 
                requirements (and with the enforcement provisions of 
                subsection (c)), and
                    (B) the Secretary determines that the State has 
                such a law in effect.
            (2) Application to current information.--The Secretary 
        shall specify the extent to which (and manner in which) the 
        requirements promulgated under subsection (a) apply to 
        information collected before the effective date of the 
        requirements.
    (c) Defense for Proper Disclosures.--An entity that establishes 
that it has disclosed health care information in accordance with the 
requirements promulgated under subsection (a) has established a defense 
in an action brought for improper disclosure of such information.
    (d) Penalties for Violations.--An entity that collects, stores, 
handles, transmits, or discloses health care information in violation 
of the requirements promulgated under subsection (a) is liable for 
civil damages, equitable remedies, and attorneys' fees (if 
appropriate), in accordance with regulations of the Secretary.

SEC. 4003. STANDARDIZATION FOR THE ELECTRONIC RECEIPT AND TRANSMISSION 
              OF HEALTH PLAN INFORMATION.

    (a) Goals.--The Secretary shall establish national goals, and time 
frameworks, respecting the progress to be made by the health care 
industry in eliminating unnecessary paperwork and achieving appropriate 
standardization in the areas of electronic receipt and transmission of 
health care claims and health plan information and eligibility 
verification (consistent with the requirements promulgated under 
section 4002(a)).
    (b) Contingent Requirements.--If the Secretary determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Secretary under such 
subsection, the Secretary shall promulgate (and may, from time to time, 
modify) standards and requirements concerning the electronic receipt 
and transmission of health plan claims forms and other health plan 
information.
    (c) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health plan (other than a health plan described 
        in paragraph (2)) that fails to comply with standards and 
        requirements promulgated under subsection (b) in an amount not 
        to exceed $100 for each such failure. The provisions of section 
        1128A of the Social Security Act (other than the first sentence 
        of subsection (a) and other than subsection (b)) shall apply to 
        a civil money penalty under this paragraph in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health plan that is subject to 
        regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                standards and requirements promulgated under subsection 
                (b), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such standards 
                and requirements with respect to such plans.
    (d) Consultation.--The Secretary shall conduct activities under 
this section in consultation with the Accredited Standards Committee X-
12 of the American National Standards Institute, insurers, providers, 
and others.

SEC. 4004. USE OF UNIFORM HEALTH CLAIMS FORMS AND IDENTIFICATION 
              NUMBERS.

    (a) Goals.--The Secretary shall establish national goals, and time 
frameworks, respecting the progress to be made by the health care 
industry in achieving uniformity--
            (1) in the format and content of basic claims forms under 
        health plans, and
            (2) in the use of common identification numbers for 
        beneficiaries and providers of health care items or services 
        under health plans.
    (b) Contingent Requirements.--If the Secretary determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Secretary under such 
subsection, the Secretary shall promulgate (and may, from time to time, 
modify) standards and requirements concerning--
            (1) the format and content of basic claims forms under 
        health plans, and
            (2) the common identification numbers to be used by health 
        plans to identify health plan beneficiaries and health care 
        providers.
    (c) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health plan (other than a health plan described 
        in paragraph (2)) that fails to comply with standards and 
        requirements promulgated under subsection (b) in an amount not 
        to exceed $100 for each such failure. The provisions of section 
        1128A of the Social Security Act (other than the first sentence 
        of subsection (a) and other than subsection (b)) shall apply to 
        a civil money penalty under this paragraph in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health plan that is subject to 
        regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                standards and requirements promulgated under subsection 
                (b), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such standards 
                and requirements with respect to such plans.
    (d) Consultation.--The Secretary shall conduct activities under 
this section in consultation with the Workgroup for Electronic Data 
Interchange and with insurers, providers, and others.

SEC. 4005. PRIORITY AMONG INSURERS.

    (a) Goals.--The Secretary shall establish national goals, and time 
frameworks, respecting the progress to be made by the health care 
industry in achieving uniformity in the rules for determining the 
liability of insurers when benefits are payable under two or more 
health plans.
    (b) Contingent Requirements.--If the Secretary determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Secretary under such 
subsection, the Secretary shall promulgate (and may, from time to time, 
modify) rules for determining the liability of health plans when 
benefits are payable under two or more health plans.
    (c) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health plan (other than a health plan described 
        in paragraph (2)) that fails to comply with rules promulgated 
        under subsection (b) in an amount not to exceed $100 for each 
        such failure. The provisions of section 1128A of the Social 
        Security Act (other than the first sentence of subsection (a) 
        and other than subsection (b)) shall apply to a civil money 
        penalty under this paragraph in the same manner as such 
        provisions apply to a penalty or proceeding under section 
        1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health plan that is subject to 
        regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the rules 
                established under subsection (b), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such rules 
                with respect to such plans.
    (d) Consultation.--The Secretary shall conduct activities under 
this section in consultation with health plans.

SEC. 4006. FURNISHING OF INFORMATION AMONG HEALTH PLANS.

    (a) Goals.--The Secretary shall establish national goals, and time 
frameworks, respecting the progress to be made by the health care 
industry in achieving uniformity in the availability of information 
among health plans when benefits are payable under two or more health 
plans.
    (b) Contingent Requirements.--If the Secretary determines that the 
health care industry has failed to meet the goals established under 
subsection (a) by the deadlines established by the Secretary under such 
subsection, the Secretary shall promulgate (and may, from time to time, 
modify) requirements concerning the transfer among health plans (and 
annual updating) of appropriate information (which may include 
requirements for the use of unique identifiers, and for the listing of 
all individuals covered under a health plan).
    (c) Compliance.--
            (1) In general.--The Secretary may impose a civil money 
        penalty on any health plan (other than a health plan described 
        in paragraph (2)) that fails to comply with requirements 
        promulgated under subsection (b) in an amount not to exceed 
        $100 for each such failure. The provisions of section 1128A of 
        the Social Security Act (other than the first sentence of 
        subsection (a) and other than subsection (b)) shall apply to a 
        civil money penalty under this paragraph in the same manner as 
        such provisions apply to a penalty or proceeding under section 
        1128A(a) of such Act.
            (2) Plans subject to effective state regulation.--A plan 
        described in this paragraph is a health plan that is subject to 
        regulation by a State, if the Secretary finds that--
                    (A) the State provides for application of the 
                requirements promulgated under subsection (b), and
                    (B) the State regulatory program provides for the 
                appropriate and effective enforcement of such 
                requirements with respect to such plans.
    (d) Consultation.--The Secretary shall conduct activities under 
this section in consultation with health plans.

SEC. 4007. DEFINITIONS.

    For purposes of this title--
            (1) The term ``health plan'' means any contract or 
        arrangement under which an entity bears all or part of the cost 
        of providing health care items and services, including a 
        hospital or medical expense incurred policy or certificate, 
        hospital or medical service plan contract, or health 
        maintenance subscriber contract (including any closed 
        accountable health plan), but does not include (except for 
        purposes of sections 4005 and 4006)--
                    (A) coverage only for accident, dental, vision, 
                disability, or long term care, medicare supplemental 
                health insurance, or any combination thereof,
                    (B) coverage issued as a supplement to liability 
                insurance,
                    (C) workers' compensation or similar insurance, or
                    (D) automobile medical-payment insurance.
            (2) The term ``provider'' means a physician, hospital, 
        pharmacy, laboratory, or other person licensed or otherwise 
        authorized under applicable State laws to furnish health care 
        items or services.
            (3) The term ``Secretary'' means the Secretary of Health 
        and Human Services.

               TITLE V--EXPANDING ACCESS/PREVENTIVE CARE

   Subtitle A--Expanding Access Through Community Health Authorities

SEC. 5001. COMMUNITY HEALTH AUTHORITIES DEMONSTRATION PROJECTS.

    (a) In General.--Title XIX of the Social Security Act, as amended 
by section 13631(b) of the Omnibus Budget Reconciliation Act of 1993, 
is amended--
            (1) by redesignating section 1931 as section 1932; and
            (2) by inserting after section 1930 the following new 
        section:

         ``community health authorities demonstration projects

    ``Sec. 1931. (a) In General.--In order to test the effectiveness of 
various innovative health care delivery approaches through the 
operation of community health authorities, the Secretary shall operate 
a program under which States establish projects to demonstrate the 
effectiveness of such approaches in providing access to cost-effective 
preventive and primary care and related services for various areas and 
populations, including low-income residents of medically underserved 
areas or for medically underserved populations. A State may operate 
more than one such project.
    ``(b) Selection of State Projects.--
            ``(1) In general.--A State is eligible to participate in 
        the program, and establish a demonstration project, under this 
        section only if--
                    ``(A) the State submits to the Secretary an 
                application, at such time and in such form as the 
                Secretary may require, for participation in the 
                program; and
                    ``(B) the Secretary finds that--
                            ``(i) the application contains assurances 
                        that the State will support the development of 
                        a community health authority that meets the 
                        requirements of this section,
                            ``(ii) the community health authority will 
                        meet the requirements for such an authority 
                        under subsection (c),
                            ``(iii) the State provides sufficient 
                        assurances that the demonstration project of a 
                        community health authority meets (or, when 
                        operational, will meet) the requirements of 
                        subsection (d), and
                            ``(iv) the State will comply with the 
                        requirements of subsections (g) and (h).
            ``(2) Contents of application.--Each application submitted 
        under paragraph (1) for a demonstration project shall include 
        at least the following:
                    ``(A) A description of the proposed community 
                health authority and of the area or population that the 
                authority will serve.
                    ``(B) A demonstration that the CHA will serve at 
                least one geographic area or population group that is 
                designated as medically underserved under section 330 
                of the Public Health Service Act or as having a 
                shortage of health professionals under section 332 of 
                such Act.
                    ``(C) An assessment of the area's or population's 
                need for services and an assurance that the services of 
                the CHA will be responsive to those needs.
                    ``(D) A list of the items and services to be 
                furnished by the CHA under the project, broken down by 
                those items and services that are treated as medical 
                assistance under the State plan under this title and 
                other items and services that will be provided by the 
                CHA (either directly or through coordination with other 
                entities).
                    ``(E) An assurance that the CHA has entered into 
                (or plans to enter into) written participation 
                agreements with a sufficient number of providers to 
                enable the CHA to furnish all of such items and 
                services to enrolled individuals.
                    ``(F) An assurance that the State plan under this 
                title will provide payment to the authority in 
                accordance with subsection (e).
                    ``(G) Evidence of support and assistance from other 
                State agencies with responsibility for providing or 
                supporting the provision of preventive and primary care 
                services to underserved and at-risk populations.
                    ``(H) A proposed budget for the CHA.
            ``(3) Priority.--The Secretary shall give priority to those 
        applications proposing to support a CHA that includes as 
        participating providers all Federally-qualified health centers 
        serving the area or population or (in areas for which there are 
        no Federally-qualified health centers) all entities that would 
        be Federally-qualified health centers but for the failure to 
        meet the requirement described in section 329(f)(2)(G)(i) of 
        the Public Health Service Act or the requirement described in 
        section 330(e)(3)(G)(i) of such Act (relating to the 
        composition of the entity's governing board).
            ``(4) Period of approval.--Each project approved under this 
        section shall be approved for a period of not less than 5 
        years, subject to renewal for subsequent periods unless such 
        approval is withdrawn for cause by the Secretary or at the 
        request of the State.
    ``(c) Community Health Authority (CHA) Defined.--In this section, 
the terms `community health authority' and `CHA' mean a nonprofit 
entity that meets the following requirements:
            ``(1) The entity serves (or will serve at the time it 
        becomes operational under a project) a geographic area or 
        population group that includes those designated--
                    ``(A) under section 330 of the Public Health 
                Service Act as medically underserved, or
                    ``(B) under section 332 of such Act as a health 
                professions shortage area.
            ``(2) The entity enrolls--
                    ``(A) individuals and families who are medicaid-
                eligible;
                    ``(B) within the limits of its available resources 
                and capacity, other individuals who have incomes below 
                200 percent of the Federal official poverty level; and
                    ``(C) within the limits of its available resources 
                and capacity, other individuals and families who are 
                able to pay the costs of enrollment.
            ``(3) Through its participating providers, the entity 
        provides or, through contracts, arranges for the provision of 
        (or, by the time it become operational, will so provide or 
        arrange for the provision of) at least preventive services, 
        primary care services, inpatient and outpatient hospital 
        services, and any other service provided by a participating 
        provider for which payment may be made under the State plan 
        under this title to enrolled individuals.
            ``(4) The entity must include (to the maximum extent 
        practicable) as participating providers any of the following 
        providers that furnish services provided by (or arranged by) 
        the entity that are located in or serve the area or population 
        to be covered:
                    ``(A) Federally-qualified health centers.
                    ``(B) Rural health clinics.
                    ``(C) Local public health agencies that furnish 
                such services.
                    ``(D) A hospital (or other provider of inpatient or 
                outpatient hospital services) which has a participation 
                agreement in effect with the State under its plan under 
                this title, which is located in or serving the area or 
                population to be served.
            ``(5) The entity may include as participating providers 
        other providers (which may include private physicians or group 
        practice offices, other community clinics, limited service 
        providers (such as prenatal clinics), and health professionals 
        teaching programs (such as area health educational centers)) 
        and take other appropriate steps, to the extent needed to 
        assure that the network is reasonable in size and able to 
        provide (or arrange for the provision of) the services it 
        proposes to furnish to its enrollees.
            ``(6) The entity must maintain written agreements with each 
        participating provider under which the provider agrees to 
        participate in the CHA and agrees to accept payment from the 
        CHA as payment in full for services furnished to individuals 
        enrolled with the CHA (subject to the requirements of 
        subsection (g)(4), in the case of services furnished by a 
        provider that are described in subparagraph (B) or (C) of 
        section 1905(a)(2)).
            ``(7) Under the written agreements described in paragraph 
        (6), if a majority of the board of directors of the entity has 
        determined that a participating provider is failing to meet any 
        of the requirements of the participation agreement, the board 
        may terminate the provider's participation agreement in 
        accordance with the following requirements:
                    ``(A) Subject to subparagraph (B), prior to any 
                termination of a provider's participation agreement, 
                the provider shall be entitled to 30 days prior notice, 
                a reasonable opportunity to correct any deficiencies, 
                and an opportunity for a full and fair hearing 
                conducted by the entity to dispute the reasons for 
                termination. The provider shall be entitled to appeal 
                the board of directors' decision directly to a 
                committee consisting of representatives of all of the 
                entity's participating providers.
                    ``(B) If a majority of the board of directors of 
                the entity determines that the continued participation 
                of a provider presents an immediate threat to the 
                health and safety of patients or a substantial risk of 
                improper diversion of funds, the board may suspend the 
                provider's participation agreement (including the 
                receipt of funds under the agreement) for a period of 
                up to 60 days. During this period, the entity shall 
                take steps to ensure that patients who were assigned to 
                or cared for by the suspended provider are 
                appropriately assigned or referred to alternative 
                participating providers. The suspended provider shall 
                be entitled to a hearing within the period of the 
                suspension to show cause why the suspension should be 
                lifted and its participation agreement restored. If 
                dissatisfied with the board's decision, the provider 
                shall be entitled to appeal the decision directly to a 
                committee consisting of representatives of all of the 
                entity's participating providers.
                    ``(C) For all other disputes between the entity and 
                its participating providers (including disputes over 
                the amounts due or interim rates to be paid to a 
                provider), the entity shall provide an opportunity for 
                a full and fair hearing.
            ``(8) The entity must be governed by a board of directors 
        that includes representatives of the participating providers 
        and, as appropriate, other health professionals, civic or 
        business leaders, elected officials, and residents of the area 
        or population served. Not less than 51 percent of such board 
        shall be composed of individuals who are enrolled in the CHA 
        and who are representatives of the community served.
    ``(d) Demonstration Project Requirements.--The requirements of this 
subsection, with respect to a demonstration project of a CHA under this 
section, are as follows:
            ``(1)(A) All services furnished by the CHA under the 
        project shall be available and accessible to all enrolled 
        individuals and, except as provided in subparagraph (B), must 
        be available without regard to an individual's ability to pay 
        for such services.
            ``(B) A CHA shall prepare a schedule of discounts to be 
        applied to the payment of premiums by individuals who are not 
        medicaid-eligible individuals which shall be adjusted on the 
        basis of the individual's ability to pay.
            ``(2) The CHA shall take appropriate steps to emphasize the 
        provision of preventive and primary care services, and shall 
        ensure that each enrolled individual is assigned to a primary 
        care physician (to the greatest extent appropriate and 
        feasible), except that the CHA shall establish a process 
        through which an enrolled individual may be assigned to another 
        primary care physician for good cause shown.
            ``(3) The CHA must make reasonable efforts to reduce the 
        unnecessary or inappropriate use of hospital or other high-cost 
        services through an emphasis on preventive and primary care 
        services, the implementation of utilization review or other 
        appropriate methods.
            ``(4) The State must regularly provide the CHA with 
        information on other medical, health, and related benefits that 
        may be available to individuals enrolled with the CHA under 
        programs other than the State plan under this title, and the 
        CHA must provide its enrolled individuals with enrollment 
        information and other assistance to assist them in obtaining 
        such benefits.
            ``(5) The State and the CHA must meet such financial 
        standards and requirements and reporting requirements as the 
        Secretary specifies and must prepare and submit to the 
        Secretary an annual independent financial audit conducted in 
        accordance with requirements specified by the Secretary.
            ``(6) In collaboration with the State, the CHA must adopt 
        and use community-oriented, patient-responsive quality 
        assurance and control systems in accordance with requirements 
        specified by the Secretary. Such systems must include at least 
        an ongoing quality assurance program that measures consumer 
        satisfaction with the care provided under the network, stresses 
        improved health outcomes, and operates a community health 
        status improvement process that identifies and investigates 
        community health problems and implements measures designed to 
        remedy them.
    ``(e) Capitation Payments.--
            ``(1) In general.--Under a demonstration project under this 
        section, the State shall enter into an annual contract with the 
        CHA under which the State shall make monthly payments to the 
        CHA for covered services furnished through the CHA to 
        individuals entitled to medical assistance under this title in 
        the amount specified in paragraph (2). Payment shall be made at 
        the beginning of each month on the basis of estimates of the 
        amounts payable and amounts subsequently paid are subject to 
        adjustment to reflect the amounts by which previous payments 
        were greater or less than the amount of payments that should 
        have been made.
            ``(2) Amount of capitation payment.--The amount of a 
        monthly payment under paragraph (1) during a contract year, 
        shall be not less than \1/12\ of the product of--
                    ``(A)(i) the average per capita amounts expended 
                under this title under the State plan for covered 
                services to be furnished under the demonstration 
                project for similar Medicaid-eligible individuals for 
                the most recent 12-month period ending before the date 
                of the enactment of this section, increased by (ii) the 
                percentage change in the consumer price index for all 
                urban consumers (all items; U.S. city average) during 
                the period that begins upon the expiration of such 12-
                month period and ends upon the expiration of the most 
                recent 12-month period ending before the first month of 
                the contract year for which complete financial data on 
                such index is available, and
                    ``(B) the number of Medicaid-eligible individuals 
                enrolled under the project as of the 15th day of the 
                month prior to the first month of the contract year 
                (or, in the case of the first year for which a contract 
                is in effect under this subsection, the CHA's 
                reasonable estimate of the number of such individuals 
                who will be enrolled in the project as of the 15th day 
                of such month).
    ``(f) Additional State Assistance for Planning, Development, and 
Operations.--
            ``(1) In general.--Subject to paragraph (2), in addition to 
        the payments under subsection (e), demonstration projects 
        approved under this section are eligible to have approved 
        expenditures described in paragraph (3) treated, for purposes 
        of section 1903(a)(7), as expenditures found necessary by the 
        Secretary for the proper and efficient administration of the 
        State plan under this title.
            ``(2) Special rules.--
                    ``(A) Limitation with respect to any community 
                health authority.--The total amount of expenditures 
                with respect to any CHA that may be treated as 
                expenditures for medical assistance under paragraph (1) 
                for any 12-month period shall not exceed $250,000.
                    ``(B) Limitation on number of years.--The number of 
                12-month periods for which expenditures are treated as 
                expenditures for medical assistance under paragraph (1) 
                for a CHA shall not exceed--
                            ``(i) 2 for expenditures for planning and 
                        development assistance, described in paragraph 
                        (3)(A), and
                            ``(ii) 2 for expenditures for operational 
                        assistance, described in paragraph (3)(B).
                    ``(C) No resulting reduction in amounts provided 
                under phsa grants.--No grant to a CHA or one of its 
                participating providers under the Public Health Service 
                Act or this Act may be reduced on the ground that 
                activities of the CHA that are considered approved 
                expenditures under paragraph (3) are activities for 
                which the CHA or the participating providers received 
                funds under such Act.
            ``(3) Approved expenditures.--The approved expenditures 
        described in this paragraph are as follows:
                    ``(A) Planning and development.--Expenditures for 
                planning and development with respect to a CHA, 
                including--
                            ``(i) developing internal management, legal 
                        and financial and clinical, information, and 
                        reporting systems for the CHA, and carrying out 
                        other operating activities of the CHA;
                            ``(ii) recruiting, training and 
                        compensating management staff of the CHA and, 
                        as appropriate and necessary, management and 
                        clinical staff of any participating provider;
                            ``(iii) purchasing essential equipment and 
                        acquiring, modernizing, expanding, or (if cost-
                        effective) constructing facilities for the CHA 
                        and for participating providers (including 
                        amortization costs and payment of interest on 
                        loans); and
                            ``(iv) entering into arrangements to obtain 
                        or participate in emerging medical 
                        technologies, including telemedicine.
                    ``(B) Operations.--Expenditures in support of the 
                operations of a CHA, including--
                            ``(i) the ongoing management of the CHA, 
                        including daily program administration, 
                        recordkeeping and reporting, assurance of 
                        proper financial management (including billings 
                        and collections) and oversight of program 
                        quality;
                            ``(ii) developing and operating systems to 
                        enroll eligible individuals in the CHA;
                            ``(iii) data collection, in collaboration 
                        with the State medicaid agency and the State 
                        health department, designed to measure changes 
                        in patient access to care, the quality of care 
                        furnished, and patient health status, and 
                        health care outcomes;
                            ``(iv) ongoing community outreach and 
                        community education to all residents of the 
                        area or population served, to promote the 
                        enrollment of eligible individuals and the 
                        appropriate utilization of health services by 
                        such individuals;
                            ``(v) the establishment of necessary 
                        reserves or purchase of stop-loss coverage; and
                            ``(vi) activities relating to health 
                        professions training, including residency 
                        training at participating provider sites.
    ``(g) Additional Requirements.--
            ``(1) Mandatory enrollment of medicaid-eligible 
        individuals.--Notwithstanding any provision of section 1903(m), 
        a State participating in a demonstration project under this 
        section may require that each medicaid-eligible resident in the 
        service area of a CHA operating under the project is not 
        eligible to receive any medical assistance under the State plan 
        that may be obtained through enrollment with the CHA unless the 
        individual receives such assistance through enrollment with the 
        CHA.
            ``(2) Continued entitlement to additional benefits.--In the 
        case of a medicaid-eligible individual enrolled with a CHA 
        under a demonstration project under this section, the 
        individual shall remain entitled to medical assistance for 
        services which are not covered services under the project.
            ``(3) HMO-related requirements.--A CHA under this section 
        shall be deemed to meet the requirements of section 1903(m) 
        (subject to paragraph (1)) in the same manner as an entity 
        listed under section 1903(m)(2)(G).
            ``(4) Treatment of federally-qualified health centers and 
        rural health clinics.--Payments under a demonstration project 
        under this section to a Federally qualified health center or 
        rural health clinic which is a participating provider shall be 
        made consistent with section 1902(a)(13)(E) for all services 
        offered by the CHA which are provided by such a center or 
        clinic.
            ``(5) Outstationing eligibility workers.--Under the 
        project, the State may (in addition to meeting the requirements 
        of section 1902(a)(55)) provide for, or pay the reasonable 
        costs of, stationing eligibility workers at appropriate service 
        sites under the project, and may permit medicaid-eligible 
        individuals to be enrolled under the State plan at such a CHA 
        or at such a site.
            ``(6) Purchase of stop-loss coverage.--The State shall 
        ensure that the CHA has purchased stop-loss coverage to protect 
        against default on its obligations under the project. If an 
        entity otherwise qualified to serve as a CHA is prohibited 
        under State law from purchasing such coverage, the State shall 
        waive the application of such law to the extent necessary to 
        permit the entity to purchase such coverage.
    ``(h) Evaluation and Reporting.--
            ``(1) CHA.--Each CHA in a State with a demonstration 
        project approved under this section shall prepare and submit to 
        the State an annual report on its activities during the 
        previous year.
            ``(2) State.--Taking into account the reports submitted 
        pursuant to paragraph (1), each State with a demonstration 
        project approved under this section shall prepare and submit to 
        the Secretary an annual evaluation of its activities and 
        services under this section. Such evaluation shall include an 
        analysis of the effectiveness of the project in providing cost-
        effective health care to enrolled individuals.
            ``(3) Report to congress.--Not later than 3 years after the 
        date of the enactment of this section, the Secretary shall 
        submit to Congress a report on the demonstration projects 
        conducted under this section. Such report shall include an 
        analysis of the effectiveness of such projects in providing 
        cost-effective health care for the areas or populations served.
    ``(i) Collaboration in Administration.--In carrying out this 
section, the Secretary shall assure the highest possible level of 
collaboration between the Health Care Financing Administration and the 
Public Health Service. Such collaboration may include (if appropriate 
and feasible) any of the following:
            ``(1) The provision by the Public Health Service of new or 
        increased grant support to eligible entities participating in a 
        CHA, in order to expand the availability of services 
        (particularly preventive and primary care services).
            ``(2) The placement of health professionals at eligible 
        locations and collaboration with Federally-assisted health 
        professions training programs located in or near the areas 
        served by community health authorities.
            ``(3) The provision of technical and other nonfinancial 
        assistance.
    ``(j) Definitions.--In this section:
            ``(1) Medicaid-eligible individual.--The term `medicaid-
        eligible individual' means an individual described in section 
        1902(a)(10)(A) and entitled to medical assistance under the 
        State plan.
            ``(2) Participating provider.--The term `participating 
        provider' means, with respect to a CHA, a provider that has 
        entered into an agreement with the CHA for the provision of 
        covered services under a project under this section.
            ``(3) Preventive and primary care services.--`Preventive' 
        and `primary' services include those services described in 
        section 1905(l)(2)(A) and included as Federally-qualified 
        health center services.''.
    (b) Continued Medicaid Eligibility for up to 1 Year.--Section 
1902(e)(2) of such Act (42 U.S.C. 1396a(e)(2)) is amended--
            (1) in subparagraph (A)--
                    (A) by inserting ``or with a community health 
                authority under a demonstration project under section 
                1931'' after ``section 1876'', and
                    (B) by striking ``such organization or entity'' and 
                inserting ``such organization, entity, or authority''; 
                and
            (2) in subparagraph (B), by striking ``effective.'' and 
        inserting the following: ``effective (or, in the case of an 
        individual enrolled with a community health authority under a 
        demonstration project under section 1931, of not more than 1 
        year beginning on the date the individual's enrollment with the 
        authority becomes effective).''.
    (c) Exception to Anti-Kickback Law.--Section 1128B(b)(3) of such 
Act (42 U.S.C. 1320a-7b(b)(3)) is amended--
            (1) by striking ``and'' at the end of subparagraph (D),
            (2) by striking the period at the end of subparagraph (E) 
        and inserting ``; and'', and
            (3) by adding at the end the following new subparagraph:
            ``(F) any remuneration paid, or received, by a Federally 
        qualified health center, rural health clinic, or other entity 
        which is a participating provider under a demonstration project 
        under section 1931 as part of an arrangement for the 
        procurement of goods or services or the referral of patients or 
        the lease or purchase of space or equipment.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to calendar quarters beginning on or after October 1, 1994.

SEC. 5002. HEALTH CENTER PROGRAM AMENDMENTS.

    (a) Authorization of Grants for Network Development.--
            (1) Migrant health centers.--Section 329 of the Public 
        Health Service Act (42 U.S.C. 254b) is amended by adding at the 
        end the following:
    ``(j)(1) The Secretary may make a grant, to an entity receiving a 
grant under this section or to a group of such entities, to support the 
planning and development of health service networks (as defined in 
paragraph (3)) which will serve high impact areas, medically 
underserved areas, or medically underserved populations within the area 
they serve (or propose to serve).
    ``(2) A grant under this subsection for the planning and 
development of a health service network may be used for the following 
costs:
            ``(A) The costs of developing the network corporate entity, 
        including planning and needs assessment.
            ``(B) The costs of developing internal management for the 
        network, as well as costs of developing legal, financial, 
        clinical, information, billing, and reporting systems, and 
        other costs necessary to achieve operational status.
            ``(C) The costs of recruitment, training, and compensation 
        of management staff of the network and, as appropriate and 
        necessary, the management and clinical staff of any 
        participating provider.
            ``(D) The costs of developing additional primary health and 
        related service sites, including costs related to purchase of 
        essential equipment, acquisition, modernization, expansion, or, 
        if cost-effective, construction of facilities.
    ``(3) In this subsection, the term `health service network' means a 
nonprofit private entity that--
            ``(A) through its participating providers (which may 
        provide services directly or through contract) assures the 
        provision of primary health and related services and, as 
        appropriate, supplemental health services to residents of the 
        high impact area or medically underserved area or members of 
        the medically underserved population covered by the network,
            ``(B) includes, as participating providers, at least all 
        recipients of grants under this section or section 330, 340, or 
        340A that provide primary health and related services to the 
        residents of the area it serves (or proposes to serve), and 
        that may include, at the entity's option, any other providers 
        of primary health or supplemental health services to residents 
        of the high impact area or medically underserved area or 
        members of the medically underserved population covered by the 
        network, but only if such participating providers agree to 
        provide services without regard to an individual's ability to 
        pay, and
            ``(C) is governed by individuals a majority of whom are 
        patients, employees, or board members of its participating 
        providers that receive grants under this section or section 
        330, 340, or 340A.''.
            (2) Community health centers.--Section 330 of such Act (42 
        U.S.C. 254c) is amended by adding at the end the following:
    ``(l)(1) The Secretary may make a grant, to an entity receiving a 
grant under this section or to a group of such entities, to support the 
planning and development of health service networks (as defined in 
section 329(j)(3)) which will serve high impact areas, medically 
underserved areas, or medically underserved populations within the area 
they serve (or propose to serve).
    ``(2) A grant under this subsection for the planning and 
development of a health service network may be used for the costs 
described in section 329(j)(2).''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act.
    (b) Extension of Authorization of Appropriations.--
            (1) Migrant health centers.--Section 329(h)(1)(A) of such 
        Act (42 U.S.C. 254b(h)(1)(A)) is amended--
                    (A) by inserting ``and subsection (j)'' after 
                ``through (e)'', and
                    (B) by striking ``1994'' and inserting ``1999''.
            (2) Community health centers.--Section 330(g)(1)(A) of such 
        Act (42 U.S.C. 254c(g)(1)(A)) is amended by striking ``1994'' 
        and inserting ``1999''.

  Subtitle B--Expansion of Public Health Programs on Preventive Health

SEC. 5101. IMMUNIZATIONS AGAINST VACCINE-PREVENTABLE DISEASES.

    Section 317(j)(1) of the Public Health Service Act (42 U.S.C. 
247b(j)(1)), as redesignated by section 301(b)(1) of Public Law 103-183 
(107 Stat. 2235), is amended by striking ``through 1995'' and inserting 
``through 1999''.

SEC. 5102. PREVENTION, CONTROL, AND ELIMINATION OF TUBERCULOSIS.

    Section 317E(g) of the Public Health Service Act (42 U.S.C. 247b-
6(g)), as added by section 301(a) of Public Law 103-183 (107 Stat. 
2234), is amended--
            (1) in paragraph (1)(A), by striking ``through 1998'' and 
        inserting ``through 1999''; and
            (2) in paragraph (2), by striking ``through 1998'' and 
        inserting ``through 1999''.

SEC. 5103. LEAD POISONING PREVENTION.-

    Section 317A(l)(1) of the Public Health Service Act (42 U.S.C. 
247b-1(l)(1)) is amended by striking ``through 1997'' and inserting 
``through 1999''.

SEC. 5104. PREVENTIVE HEALTH MEASURES WITH RESPECT TO BREAST AND 
              CERVICAL CANCERS.

    Section 1510(a) of the Public Health Service Act (42 U.S.C. 300n-
5(a)), as redesignated by section 102(a)(1) of Public Law 103-183 (107 
Stat. 2229) and amended by section 103 of such Public Law (107 Stat. 
2230), is amended by striking ``through 1998'' and inserting ``through 
1999.''.

SEC. 5105. OFFICE OF DISEASE PREVENTION AND HEALTH PROMOTION.

    (a) In General.--Section 1701(b) of the Public Health Service Act 
(42 U.S.C. 300u(b)) is amended by striking ``through 1996'' and 
inserting ``through 1999''.
    (b) Promotion of Individual Responsibility.--Section 1701(a)(11) of 
such Act (42 U.S.C. 300u(a)(11)) is amended--
            (1) by striking ``and'' at the end of subparagraph (C),
            (2) by redesignating subparagraph (D) as subparagraph (E), 
        and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) promote individual responsibility in personal 
                health care and in the use of valuable health care 
                resources; and''.
    (c) Minority Health.--Section 1707(f) of such Act (42 U.S.C. 300u-
6(f)) is amended by striking ``1993.'' and inserting ``1993, 
$35,000,000 for each of the fiscal years 1994 through 1996, and such 
sums as may be necessary for each of the fiscal years 1997 through 
1999.''.

SEC. 5106. PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK GRANT.

    Section 1901(a) of the Public Health Service Act (42 U.S.C. 
300w(a)) is amended by striking ``through 1997'' and inserting 
``through 1999''.

                     TITLE VI--ANTITRUST PROVISIONS

SEC. 6001. PUBLICATION OF ANTITRUST GUIDELINES ON ACTIVITIES OF HEALTH 
              PLANS.

    (a) In General.--The Attorney General shall provide for the 
development and publication of explicit guidelines on the application 
of antitrust laws to the activities of health plans. The guidelines 
shall be designed to facilitate the development and operation of plans, 
consistent with the antitrust laws.
    (b) Review Process.--The Attorney General shall establish a review 
process under which the administrator or sponsor of a health plan (or 
organization that proposes to administer or sponsor a health plan) may 
submit a request to Attorney General to obtain a prompt opinion (but in 
no event later than 90 days after the Attorney General receives the 
request) from the Department of Justice on the plan's conformity with 
the Federal antitrust laws.
    (c) Definitions.--In this section--
            (1) the term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition, and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A); and
            (2) the term ``health plan'' means any contract or 
        arrangement under which an entity bears all or part of the cost 
        of providing health care items and services, including a 
        hospital or medical expense incurred policy or certificate, 
        hospital or medical service plan contract, or health 
        maintenance subscriber contract, but does not include--
                    (A) coverage only for accident, dental, vision, 
                disability, or long term care, medicare supplemental 
                health insurance, or any combination thereof,
                    (B) coverage issued as a supplement to liability 
                insurance,
                    (C) workers' compensation or similar insurance, or
                    (D) automobile medical-payment insurance.

SEC. 6002. ISSUANCE OF HEALTH CARE CERTIFICATES OF PUBLIC ADVANTAGE.

    (a) Issuance and Effect of Certificate.--The Attorney General, 
after consultation with the Secretary of Health and Human Services, 
shall issue in accordance with this section a certificate of public 
advantage to each eligible health care collaborative activity that 
complies with the requirements in effect under this section on or after 
the expiration of the 1-year period that begins on the date of the 
enactment of this Act (without regard to whether or not the Attorney 
General has promulgated regulations to carry out this section by such 
date). Such activity, and the parties to such activity, shall not be 
liable under any of the antitrust laws for conduct described in such 
certificate and engaged in by such activity if such conduct occurs 
while such certificate is in effect.
    (b) Requirements Applicable to Issuance of Certificates.--
            (1) Standards to be met.--The Attorney General shall issue 
        a certificate to an eligible health care collaborative activity 
        if the Attorney General finds that--
                    (A) the benefits that are likely to result from 
                carrying out the activity outweigh the reduction in 
                competition (if any) that is likely to result from the 
                activity, and
                    (B) such reduction in competition is reasonably 
                necessary to obtain such benefits.
            (2) Factors to be considered.--
                    (A) Weighing of benefits against reduction in 
                competition.--For purposes of making the finding 
                described in paragraph (1)(A), the Attorney General 
                shall consider whether the activity is likely--
                            (i) to maintain or to increase the quality 
                        of health care,
                            (ii) to increase access to health care,
                            (iii) to achieve cost efficiencies that 
                        will be passed on to health care consumers, 
                        such as economies of scale, reduced transaction 
                        costs, and reduced administrative costs,
                            (iv) to preserve the operation of health 
                        care facilities located in underserved 
                        geographical areas,
                            (v) to improve utilization of health care 
                        resources, and
                            (vi) to reduce inefficient health care 
                        resource duplication.
                    (B) Necessity of reduction in competition.--For 
                purposes of making the finding described in paragraph 
                (1)(B), the Attorney General shall consider--
                            (i) the ability of the providers of health 
                        care services that are (or likely to be) 
                        affected by the health care collaborative 
                        activity and the entities responsible for 
                        making payments to such providers to negotiate 
                        societally optimal payment and service 
                        arrangements,
                            (ii) the effects of the health care 
                        collaborative activity on premiums and other 
                        charges imposed by the entities described in 
                        clause (i), and
                            (iii) the availability of equally 
                        efficient, less restrictive alternatives to 
                        achieve the benefits that are intended to be 
                        achieved by carrying out the activity.
    (c) Establishment of Criteria and Procedures.--Subject to 
subsections (d) and (e), not later than 1 year after the date of the 
enactment of this Act, the Attorney General and the Secretary shall 
establish jointly by rule the criteria and procedures applicable to the 
issuance of certificates under subsection (a). The rules shall specify 
the form and content of the application to be submitted to the Attorney 
General to request a certificate, the information required to be 
submitted in support of such application, the procedures applicable to 
denying and to revoking a certificate, and the procedures applicable to 
the administrative appeal (if such appeal is authorized by rule) of the 
denial and the revocation of a certificate. Such information may 
include the terms of the health care collaborative activity (in the 
case of an activity in existence as of the time of the application) and 
implementation plan for the collaborative activity.
    (d) Eligible Health Care Collaborative Activity.--To be an eligible 
health care collaborative activity for purposes of this section, a 
health care collaborative activity shall submit to the Attorney General 
an application that complies with the rules in effect under subsection 
(c) and that includes--
            (1) an agreement by the parties to the activity that the 
        activity will not foreclose competition by entering into 
        contracts that prevent health care providers from providing 
        health care in competition with the activity,
            (2) an agreement that the activity will submit to the 
        Attorney General annually a report that describes the 
        operations of the activity and information regarding the impact 
        of the activity on health care and on competition in health 
        care, and
            (3) an agreement that the parties to the activity will 
        notify the Attorney General and the Secretary of the 
        termination of the activity not later than 30 days after such 
        termination occurs.
    (e) Review of Applications for Certificates.--Not later than 30 
days after an eligible health care collaborative activity submits to 
the Attorney General an application that complies with the rules in 
effect under subsection (c) and with subsection (d), the Attorney 
General shall issue or deny the issuance of such certificate. If, 
before the expiration of such 30-day period, the Attorney General fails 
to issue or deny the issuance of such certificate, the Attorney General 
shall be deemed to have issued such certificate.
    (f) Revocation of Certificate.--Whenever the Attorney General finds 
that a health care collaborative activity with respect to which a 
certificate is in effect does not meet the standards specified in 
subsection (b), the Attorney General shall revoke such certificate.
    (g) Written Reasons; Judicial Review.--
            (1) Denial and revocation of certificates.--If the Attorney 
        General denies an application for a certificate or revokes a 
        certificate, the Attorney General shall include in the notice 
        of denial or revocation a statement of the reasons relied upon 
        for the denial or revocation of such certificate.
            (2) Judicial review.--
                    (A) After administrative proceeding.--(i) If the 
                Attorney General denies an application submitted or 
                revokes a certificate issued under this section after 
                an opportunity for hearing on the record, then any 
                party to the health care collaborative activity 
                involved may commence a civil action, not later than 60 
                days after receiving notice of the denial or 
                revocation, in an appropriate district court of the 
                United States for review of the record of such denial 
                or revocation.
                    (ii) As part of the Attorney General's answer, the 
                Attorney General shall file in such court a certified 
                copy of the record on which such denial or revocation 
                is based. The findings of fact of the Attorney General 
                may be set aside only if found to be unsupported by 
                substantial evidence in such record taken as a whole.
                    (B) Denial or revocation without administrative 
                proceeding.--If the Attorney General denies an 
                application submitted or revokes a certificate issued 
                under this section without an opportunity for hearing 
                on the record, then any party to the health care 
                collaborative activity involved may commence a civil 
                action, not later than 60 days after receiving notice 
                of the denial or revocation, in an appropriate district 
                court of the United States for de novo review of such 
                denial or revocation.
    (h) Exemption.--A person shall not be liable under any of the 
antitrust laws for conduct necessary--
            (1) to prepare, agree to prepare, or attempt to agree to 
        prepare an application to request a certificate under this 
        section, or
            (2) to attempt to enter into any health care collaborative 
        activity with respect to which such a certificate is in effect.
    (i) Definitions.--In this section:
            (1) The term ``antitrust laws'' has the meaning given it in 
        section 6001(c)(1).
            (2) The term ``certificate'' means a certificate of public 
        advantage authorized to be issued under subsection (a).
            (3) The term ``health care collaborative activity'' means 
        an agreement (whether existing or proposed) between 2 or more 
        providers of health care services that is entered into solely 
        for the purpose of sharing in the provision of health care 
        services and that involves substantial integration or financial 
        risk-sharing between the parties, but does not include the 
        exchanging of information, the entering into of any agreement, 
        or the engagement in any other conduct that is not reasonably 
        required to carry out such agreement.
            (4) The term ``health care services'' includes services 
        related to the delivery or administration of health care 
        services.
            (5) The term ``liable'' means liable for any civil or 
        criminal violation of the antitrust laws.
            (6) The term ``provider of health care services'' means any 
        individual or entity that is engaged in the delivery of health 
        care services in a State and that is required by State law or 
        regulation to be licensed or certified by the State to engage 
        in the delivery of such services in the State.

TITLE VII--PREFUNDING GOVERNMENT HEALTH BENEFITS FOR CERTAIN ANNUITANTS

SEC. 7001. REQUIREMENT THAT CERTAIN AGENCIES PREFUND GOVERNMENT HEALTH 
              BENEFITS CONTRIBUTIONS FOR THEIR ANNUITANTS.

    (a) Definitions.--For the purpose of this section--
            (1) the term ``agency'' means any agency or other 
        instrumentality within the executive branch of the Government, 
        the receipts and disbursements of which are not generally 
        included in the totals of the budget of the United States 
        Government submitted by the President;
            (2) the term ``health benefits plan'' means, with respect 
        to an agency, a health benefits plan, established by or under 
        Federal law, in which employees or annuitants of such agency 
        may participate;
            (3) the term ``health-benefits coverage'' means coverage 
        under a health benefits plan'';
            (4) an individual shall be considered to be an ``annuitant 
        of an agency'' if such individual is entitled to an annuity, 
        under a retirement system established by or under Federal law, 
        by virtue of--
                    (A) such individual's service with, and separation 
                from, such agency; or
                    (B) being the survivor of an annuitant under 
                subparagraph (A) or of an individual who died while 
                employed by such agency; and
            (5) the term ``Office'' means the Office of Personnel 
        Management.
    (b) Prefunding Requirement.--
            (1) In general.--Effective as of October 1, 1994, each 
        agency (or February 1, 1995, in the case of the agency with the 
        greatest number of employees, as determined by the Office) 
        shall be required to prepay the Government contributions which 
        are or will be required in connection with providing health-
        benefits coverage for annuitants of such agency.
            (2) Regulations.--The Office shall prescribe such 
        regulations as may be necessary to carry out this section. The 
        regulations shall be designed to ensure at least the following:
                    (A) Amounts paid by each agency shall be sufficient 
                to cover the amounts which would otherwise be payable 
                by such agency (on a ``pay-as-you-go'' basis), on or 
                after the applicable effective date under paragraph 
                (1), on behalf of--
                            (i) individuals who are annuitants of the 
                        agency as of such effective date; and
                            (ii) individuals who are employed by the 
                        agency as of such effective date, or who become 
                        employed by the agency after such effective 
                        date, after such individuals have become 
                        annuitants of the agency (including their 
                        survivors).
                    (B)(i) For purposes of determining any amounts 
                payable by an agency--
                            (I) this section shall be treated as if it 
                        had taken effect at the beginning of the 20-
                        year period which ends on the effective date 
                        applicable under paragraph (1) with respect to 
                        such agency; and
                            (II) in addition to any amounts payable 
                        under subparagraph (A), each agency shall also 
                        be responsible for paying any amounts for which 
                        it would have been responsible, with respect to 
                        the 20-year period described in subclause (I), 
                        in connection with any individuals who are 
                        annuitants or employees of the agency as of the 
                        applicable effective date under paragraph (1).
                    (ii) Any amounts payable under this subparagraph 
                for periods preceding the applicable effective date 
                under paragraph (1) shall be payable in equal 
                installments over the 20-year period beginning on such 
                effective date.
    (c) FASB Standards.--Regulations under subsection (b) shall be in 
conformance with the provisions of Standard 106 of the Financial 
Accounting Standards Board, issued in December 1990.
    (d) Clarification.--Nothing in this section shall be considered to 
permit or require duplicative payments on behalf of any individuals.
    (e) Draft Legislation.--The Office shall prepare and submit to 
Congress any draft legislation which may be necessary in order to carry 
out this section.

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