n 103d congress 1579 S. 1st Session To contain health care costs and improve access to health care through accountable health plans and managed competition, and for other purposes. IN THE SENATE OF THE UNITED STATES October 21 (legislative day, October 13), 1993 Mr. Breaux (for himself, Mr, Durenberger, Mr. Lieberman, and Mr, NuNX) introduced the folloAving bill; which was read twice and referred to the Committee on Finance A BILL To contain health care costs and improve access to health care through accountable health plans and managed com- petition, and for other purposes. 1 Be it enacted hy the Senate and House ofRepresenta- 2 tives ofthe United States ofAmerica in Congress assembled, 3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. — 4 (a) Short Title. This Act may be cited as the 5 ^'Managed^Competition Actof 1993^'. — 6 (b) Table of Contents. The table of contents of 7 this Act is as follows: Section 1. Short title; table ofcontents. Sec. 2. landings; purposes. Sec. 3. Glossary ofcertain terms used in titles I and 11. —— — 2 TITLE I—MANAGED COMPETITION IN EMPLOYER-BASED HEALTH PLANS: INCENTIVES TO CONTROL COSTS — Subtitle A Use of Tax Incentives to Purchase Cost-Effective Plans Sec. 1001. Uniform tax disincentive to effectively limit deductibility of excess employer health plan expenses. Sec. 1002. Increase in deduction for health plan premium expenses of self-em- ployed individuals. Sec. 1003. Deduction for health plan premium expenses ofindividuals. Sec. 1004. Exclusion from gross income for contributions by a partnership or S corporation to a health plan covering its partners or share- holders. Sec. 1005. Employer obligations. — Subtitle B Health Plan Purchasing Cooperatives (HPPCs) Sec. 1101. Establishment and organization; HPPC areas. Sec. 1102. Agreements with accountable health plans (AHPs). Sec. 1103. Agreements with small employers. Sec. 1104. Enrolling individuals in accountable health plans through a HPPC. Sec. 1105. Receipt ofpremiums. Sec. 1106. Coordination among HPPCs. Sec. 1107. Complaint process; ombudsman. Sec. 1108. Enrollee satisfaction surveys; monitoring enrollee disenrollment. C— Subtitle Accountable Health Plans (AHPs) Part 1 Requirements for Accountable Health Plans Sec. 1201. Registration process; qualifications. Sec. 1202. Specified uniform set of effective benefits; reduction in cost-sharing for low-income individuals; quality standards. Sec. 1203. Collection and provision of standardized information. Sec. 1204. Prohibition of discrimination based on health status for certain con- ditions; limitation on pre-existing condition exclusions. Sec. 1205. Use ofstandard premiums. Sec. 1206. Financial solvency requirements. Sec. 1207. Grievance mechanisms; enrollee protections; wTitten policies and pro- cedures respecting advance directives; agent commissions. Sec. 1208. Additional requirements ofopen AHPs. Sec. 1209. Coordination ofbenefits with low-income assistance. Sec. 1210. Additional requirement ofcertain AHPs. Sec. 1211. Funding for approved medical residency training programs and phy- sician retraining programs. Part 2 Preemption of State Laws for Accountable Health Plans Sec. 1221. Preemption from State benefit mandates. Sec. 1222. Preemption of State law restrictions on network plans. Sec. 1223. Preemption of State laws restricting utilization review programs. Part 3 Clarifying Application of Federal Antitrust Laws to Accountable Health Plans Sec. 1231. Publication ofguidelines. — Subtitle D National Health Board >S 1579 IS ———— 3 Sec. 1301. Establishment of National Health Board. Sec. 1302. Specification ofuniform set ofeffective benefits. Sec. 1303. Benefits, Evaluations, and Data Standards Board. Sec. 1304. Health Plan Standards Board. Sec. 1305. Registration ofaccountable health plans. Sec. 1306. Specification ofrisk-a<^ustment factors. Sec. 1307. National health data system. Sec. 1308. Measures ofquality ofcare of specialized centers ofcare. Sec. 1309. Agency for Clinical Evaluations. Sec. 1310. Report and recommendations on achievinguniversal coverage. Sec. 1311. Monitoring reinsurance market. Sec. 1312. Authorization ofappropriations; sunset. — Subtitle E Managed Competition in Rural and Urban Underserved Areas Part 1 Special Treatment of Designated Underser\^d Areas Sec. 1401. Designation ofunderserved areas. Sec. 1402. Special treatment. Part 2 Transitional Support for Dea'elopment of Accountable Health Plans in U^T)ERSER^'ED Areas Sec. 1411. Technical assistance funding. Sec. 1412. Rural development grants. Sec. 1413. Migrant health centers. Sec. 1414. Community health centers. , Part 3 Establishment of Rural Emergency Access Care Hospitals Sec. 1421. Rural emergency access care hospitals described. Sec. 1422. Coverage ofand payment for services. Sec. 1423. Effective date. Part 4 Transitional Assistance for Safety Net Hospitals Sec. 1431. Payments to hospitals. Sec. 1432. Application for assistance. . • . Sec. 1433. Public service responsibilities. Sec. 1434. Authorization ofappropriations. — Subtitle F Treatment of Chronically Underserved Areas Sec. 1501. Promoting State action. — Subtitle G Repeal of COBRA Continuation Requirements Sec. 1601. Repeal ofCOBRA continuation requirements. — H Subtitle Definitions Sec. 1701. Definitions. TITLE II—LOW-INCOME ASSISTANCE FOR HEALTH COVERAGE — Subtitle A Low-Income Assistance Sec. 2001. Eligibility. . : ,i . ^ Sec. 2002. Premium assistance. r : - t •S 1679 IS r iv, c ;v —— 4 Sec. 2003. Cost-sharing assistance. ' '^ Sec. 2004. Assistance for certain items and services. Sec. 2005. Computation ofbase Federal premium amount. Sec. 2006. Applications for assistance. Sec. 2007. Reconciliation of premium assistance through use of income state- ments. Sec. 2008. Treatment ofcertain cash assistance recipients. Sec. 2009. Definitions. — Subtitle B Long-Term Care Phase-Down Assistance to States Sec. 2101. Long-term care phase-down assistance. , , — Subtitle C Financing . u. Part 1 Medicare Samngs - -. . ^ Sec. 2201. Reduction in update for inpatient hospital services. Sec. 2202. Reduction in conversion factor for phj'sician fee schedule for non- primary care services. Sec. 2203. Reduction in hospital outpatient services through establishment of prospective payment sj'stem. Sec. 2204. Increase in medicare part B premium for individuals with high in- come. Sec. 2205. Phased-in elimination of medicare hospital disproportionate share adjustment payments. Sec. 2206. Reduction in routine cost limits for home health services. Sec. 2207. Reduction in routine cost limits for extended care services. Sec. 2208. Reductions in payments for hospice services. Part 2 Other SA^^^'GS Sec. 2211. Requirement that certain agencies prefimd government health bene- fits contributions for their annuitants. — Subtitle D Repeal of IMedicaid Program Sec. 2301. Repeal ofmedicaid program. ' TITLE ni—TRAINING AND EDUCATION OF HEALTH CARE PROFESSIONAI^S — Subtitle A Reform of Federal Funding for Medical Residency Training Sec. 3001. Definitions. See. 3002. Approval ofmedical residency training positions. Sec. 3003. Funding for approved medical residency training programs and phy- sician retraining programs. Sec. 3004. Financing. Sec. 3005. National Medical Education Fund. Sec. 3006. Repeal ofseparate medical education pajTuents under medicare. — Subtitle B Other Medical Education Grants and Programs Sec. 3101. Scholarship and loan repajTiient programs of National Health Serv- ice Corps. . Sec. 3102. Area health education centei-s. Sec. 3103. Public health and preventive medicine. •S 1579 IS —— 5 Sec. 3104. Family medicine. Sec. 3105. Greneral internal medicine and pediatrics. Sec. 3106. Physician assistants. ^ Sec. 3107. Allied health project grants and contracts. - Sec. 3108. Nurse allied health project grants and contracts. Sec. 3109. Nurse practitioner and nurse mid\\ife programs. Sec. 3110. Use ofhealth care policy and research funds for primary care. TITLE IV—PREVENTIVE HEALTH AND INDIVIDUAL RESPONSIBILITY — Subtitle A Expansion of Public Health Programs Sec. 4001. Immunizations against vaccine-preventable diseases. Sec. 4002. Prevention, control, and ehmination oftuberculosis. Sec. 4003. Lead poisoningprevention. Sec. 4004. Preventive health measures ^\^th respect to breast and cervical can- cers. Sec. 4005. Office ofDisease Prevention and Health Promotion. Sec. 4006. Preventive health and health services block grant. Sec. 4007. Categorical grants for early intervention regarding acquired immune deficiency syndrome. Sec. 4008. Programs of Office of Smoking and Health. — Subtitle B Medicare - Part 1 Co\^rage of Pre\'ektr^ SER^^CES Sec. 4101. Coverage ofcolorectal screening. Sec. 4102. Coverage ofcertain immunizations. Sec. 4103. Coverage ofwell-child care. Sec. 4104. Annual screening mammography. See. 4105. Financing of additional benefits. Part 2 Notice of Advance Directr^ Rights Sec. 4111. Providing notice of rights regarding medical care to individuals en- tering medicare. TITLE V—MALPRACTICE REFORM — A Subtitle Findings; Purpose; Definitions Sec. 5001. Findings; purpose. Sec. 5002. Definitions. — Subtitle B Grants to States for Alternative Dispute Resolution Systems Sec. 5101. Grants to States. • v : Sec. 5102. Administration. — Subtitle C Uniform Standards for Malpractice Claims ^ ; \ v- Sec. 5201. Applicability. ' See. 5202. Treatment ofnoneconomic and punitive damages. Sec. 5203. Periodic payments for future losses. .J Sec. 5204. Uniform statute oflimitations. See. 5205. Special provision for certain obstetric services. . >S 1579 IS — 6 See. 5206. Uniform standard for determining liability in actions based on neg- ligence. Sec. 5207. Jurisdiction ofFederal courts. ' iv, ^ : . f Sec. 5208. Preemption. . i. — D Subtitle Grants to States for Development of Practice Guidelines Sec. 5301. Grants to States. TITLE VI—PAPERWORK REDUCTION AND ADMNISTRATIVE SIMPLIFICATION Sec. 6001. Preemption of State quill pen laws. Sec. 6002. Confidentiality ofelectronic health care information. Sec. 6003. Standardization for the electronic receipt and transmission of health plan information. Sec. 6004. Use ofuniform health claims forms and identification numbers. Sec. 6005. Priority among insurers. Sec. 6006. P\imishing ofinformation among health plans. Sec. 6007. Failure to satisfy certain health plan requirements. Sec. 6008. Definitions. 1 SEC. 2. FINDINGS; PURPOSES. — 2 (a) Findings. Congress finds the following: 3 (1) Need for cost containment incen- — 4 TIVES. The current health insurance marketplace is 5 unable to provide efficient and effective health care 6 coverage because 7 (A) there is no organized method for price- 8 based competition among health plans offering 9 standardized benefits; 10 (B) there is no method by which health 11 plans are held accountable for their perform- 12 ance in effectively and efficiently improving the 13 health and well-being of their enrollees; 14 (C) the Internal Revenue Code not only 15 provides no incentives for employees to select 16 carefully among competing health plans on the 'S 1579 IS 7 1 basis of cost, but also provides incentives for 2 employers and employees to select plans with 3 greater expenses; 4 (D) health plans frequently manage costs 5 through underwriting practices and favorable 6 selection rather than through increased effi- 7 ciencies in the provision of health care; and 8 (E) underwriting practices discriminate 9 unfairly against individuals in need of health 10 care. — 11 (2) Managed competition. 12 (A) The economy of the United States has 13 been based on a model of competitive markets 14 and the United States has successfully rehed on 15 this model in order to promote efficiencies and 16 innovation in nearly e\ery economic area. 17 (B) However, in order to provide for such 18 a market in health care, there is a need to pro- 19 vide proper incentives to providers and pur- i/i 20 chasers in the market for health care. 21 "b (C) Only through such a reform will the 22 country achieve the dual goals of maintaining 23 high quality care, innovation, and consumer 24 choice and of providing real incentives for cost 25 containment. — 8 — 1 (b) Purpose. — 2 (1) General objectr^. It is the general ob- 3 jective of this Act to reform the health care market- 4 place to provide universal access to high quality, 5 cost-effective care through competitive health plans. — 6 (2) Cost containment objective. It is also 7 a specific objective of this Act to bring the rate of 8 increase in health care costs by the year 2000 down 9 to the rate of increase in costs in the economy as a 10 whole. 11 (3) Specific measures to achie\^ objec- — 12 TR^S. In order to 13 (A) control costs through enhanced price - 14 competition, the Act extends tax benefits for 15 employer contributions only to the lowest price 16 of a qualifying plan in an area; 17 (B) promote competition based on cost-ef- 18 fective care instead of through risk selection, 19 the Act standardizes benefits, prohibits experi- 20 ence rating, and adjusts premium payments to 21 plans based on the risk characteristics of indi- 22 viduals enrolled in the plan; - 23 (C) provide access to coverage, the Act 24 makes available to all individuals competitively S 1579 IS 9 1 priced accountable health plans regardless of 2 then* employment status; 3 (D) to promote competition based on qual- ^ 4 ity, the Act provides for the systematic report- 5 ing and public dissemination of information on 6 the performance of plans in meeting the clinical 7 health requirements, functional needs, well- . 8 being, and personal satisfaction of its enrollees; 9 and 10 (E) improve health care coverage of low-in- 1 1 come individuals, the Act offers financial assist- 12 ance in purchasing accountable health plans 13 and meeting cost-sharing requirements. 14 SEC. 3. GLOSSARY OF CERTAIN TERMS USED IN TITLES I AND 15 IL 16 The following specialized, defined terms are used in 17 titles I and II of this Act: — 18 Accountable health plan; ahp. The 19 terms "accountable health plan" and ''AHP" are de- 20 fined in section 1701(b)(1). — 21 Applicable federal assistance aiviount. 22 The term "applicable Federal assistance amount" is 23 defined in section 2009(c)(1). •S 1579 IS J , ^ 10 Applicable low-incoime premium 1 — 2 AMOUNT. The term "applicable low-income pre- 3 mium amount" is defined in section 2009(e)(2). — 4 Base federal premium amount. The "base 5 Federal premium amount" is defined in section 6 2005(a)(1). . — 7 Base individual premium. The term "base 8 individual premium" is defined in section 9 2009(c)(3). 10 Benefits, evaluations, and data stand- — 11 ARDS BOARD. The term "Benefits, Evaluations, 12 and Data Standards Board" refers to the Board es- 13 tablished under section 1303. — 14 Board. The term "Board" is defined in sec- 15 tion 1701(b)(2). — 16 Closed and open plans. The terms 17 "closed" and "open" are defined, A\dth respect to a 18 health plan, under section 1701(b)(4). < — 19 Eligible employee. The term "eli^ble em- 20 ployee" is defined in section 1701(a)(2). — 21 Eligible family member. The term "eligi- 22 ble family member" is defined in section 1701(a)(3). — 23 Eligible iNDmDUAij. The term "eligible in- 24 dividual" is defined in section 1701(a)(1). •S 1579 IS