SUMMARY OF AMENDMENTS TO NATIONAL HEALTH INSURANCE PARTNERSHIP ACT OF 1971 ON REGULATION OF CARRIERS, SELF-INSURED EMPLOYERS AND PROVIDERS

The amendments would make a number of clarifying changes in title I of the bill which amends the Social Security Act by the addition of a new part A of title VI-the National Health Insurance Standards Act. The proposed sections 602 through 604 of the Social Security Act would be amended, and the proposed sections 605 through 607 would be replaced with eight new sections (605 through 612). In addition three new titles would be added to the bill.

The proposed sections 602 through 604 of the Social Security Act would be amended to clarify the distinction between basic health care plans and health maintenance organization enrollment plans. This clarification is included in large part in recognition of the different considerations involved in the regulation of basic health care plans and health maintenance organization enrollment plans. In addition, section 603 would be amended to make it a plan requirement that carriers adopt utilization review procedures and uniform reporting methods and statistical procedures prescribed by the Secretary.

The new section 605 would assure that a plan, offering the same benefits as are available to employees under basic health care plans, would be available to

(1) any small employer (fewer than 100 employees) and any other employer unable to obtain a plan for the purpose of offering it to his employees, and

(2) other individuals (including the self-employed) not eligible for Medicare or the Family Health Insurance Plan, and their families. As a condition to the approval of a basic health care plan provided to an employer by a carrier, the carrier would be required to make a basic health care plan available to the employers and individuals described above in each State in which the carrier provides a basic health care plan to other employers, unless the State, at its option, adopted a different program for making a basic health care plan available to these small employers and individuals. Also, carriers would be free to offer, other than pursuant to provisions of this section, basic health care plans to these employers and individuals.

The new section 606 would provide for State approval of basic health care plans and health maintenance organization enrollment plans in any State which—

(1) required that all plans available to employees within the State be filed with it, and that it be kept advised of all employees to whom the plan was available,

(1)

(2) reviewed such plans and determined on a continuing basis whether they met the requirements for approval under NHISA, and

(3) provided information to the Secretary concerning its plan approval activities.

Subsection (c) would permit the Secretary, upon complaint by any aggrieved person, to review any State determination, and to accept or reverse its decision.

Subsection (d) would authorize the Secretary to make the necessary determinations with respect to employees in any State to the extent that he determined, after reasonable notice and an opportunity for a hearing, that the State was not meeting the requirements just described.

Subsection (e) would give the carriers and self-insured employers a right to a hearing before the Secretary with respect to any determination (by him or by a State) that a plan did not meet the requirements for approval.

The new section 607 would provide for State regulation of basic health care plan carriers, self-insured employers who provided such plans themselves, and providers of health services for which reimbursement could be made pursuant to such plans, in any State which met the following minimum requirements:

(1) The State would have to require each carrier or self-insured employer which provided a basic health care plan within the State to file the rates or rating plans or formulas applicable to the plan.

(2) The State would have to provide for the review of these rates and rating plans and formulas and for the disapproval and suspension of any found to be unreasonable in relation to the benefits provided. (3) The State would have to require that there be an annual audit by an independent certified public accountant of each such carrier and self-insured employer and that a report of such audits be available to the public.

(4) The State would have to require each carrier which offered or provided a basic health care plan within the State to make available to the employers or individuals to whom the plan was provided or offered information concerning the benefits and exclusions under the plan, the premium rates for the plan, whether the carrier offered a health maintenance organization enrollment plan and, if so, the terms and conditions under which it was available, and the percentage of the premium rate expected to be paid out as benefits.

(5) The State would have to require a provider of health services within the State supplying services directly to individuals covered by basic health care plans to make available information concerning the provider's charges for commonly provided services, his hours of operation and other patient access matters, and the extent to which he met recognized licensure, accreditation and certification standards.

(6) The State would have to require that the premium rates at which coverage was provided under section 605 be reasonable in relation to the benefits provided and be the same for all individuals, except that there would have to be separate rate determinations for the coverage of individuals only and individuals and their families, and separate rate determinations for employers, for self-employed individuals, and for other individuals. In addition, at the option of

the State, there could be separate rate determinations based upon geographical variances in the cost of health care services and service utilization rates.

(7) The State would have to assure, directly or through arrangements by others, that any claim or obligation arising under a required benefit of a basic health care plan provided within the State would be paid, guaranteed, assumed, or reinsured in the event of the insolvency or impairment of the carrier or self-insured employer which provided the plan.

(8) The State would have to provide any aggrieved person an opportunity to institute a State court proceeding to compel any State official, carrier, self-insured employer or provider to comply with its obligation under the requirements just described.

The States would be given two years from the date of enactment of title I to meet these eight requirements. Thereafter, if the Secretary determined, after reasonable notice and an opportunity for a hearing, that a State did not meet one of the first seven of these requirements, he would be required to carry out the provisions of that requirement to the extent that the State was failing to do so. If the Secretary determined that a State was failing to meet the eighth requirement, he would be required to carry out such of the provisions of the first seven requirements as he considered necessary to assure proper regulation of carriers, self-insured employers, and providers of health care services within the State.

As to the seventh requirement, the new section 608 would establish the means by which the Secretary would provide protection against the insolvency of a carrier in States which failed to do so. If the Secretary learned of the insolvency or impairment of a carrier, he would use funds borrowed from the Secretary of the Treasury to assure that all claims and obligations arising under the required minimum benefits of basic health care plans provided in the State by the insolvent carrier would be paid, guaranteed, assumed, or reinsured. The Secretary would repay the loan by assessing other carriers providing basic health care plans within the State an amount equal to the payments he had made, the interest owed to the Secretary of the Treasury, and the expenses of administering the program. Each carrier would be assessed in proportion to its share of the total premiums written in the State during the last calendar year for the required minimum benefits of basic health care plans.

The new section 609 would authorize the Secretary to provide similar protection with regard to the insolvency of a self-insured employer if the State did not.

The new section 610 would provide judicial review of determinations of the Secretary under sections 606 and 607.

The new section 611 would provide the judicial remedies and criminal sanctions for noncompliance with the provisions of title I. First, the Attorney General would be authorized to bring a suit in Federal court to compel an employer to make an approved basic health care plan and health maintenance organization enrollment plan available to his employees. Second, any employee would be authorized to bring a suit in Federal court to compel his employer to make such plans available to him and to recover any damages resulting from his

failure to do so. Third, wilfull failure of an employer to comply with the requirement that he make such plans available to his employees would be a misdemeanor. It would also be a misdemeanor to knowingly violate any regulation issued by the Secretary pursuant to section 607, 608, 609, or 612, or to knowingly submit false information. to the Secretary in connection with any such regulation.

The new section 612 would authorize the Secretary to delegate his duties under this title to other Federal officials or agencies and grant him authority to obtain information from employers concerning compliance with title I.

Title V of the bill would amend section 314 (a) of the Public Health Service Act to require the State comprehensive health planning agency to report to the Secretary concerning areas of over- and under-supply of health care personnel and facilities within the State as an additional condition of Federal funding of the agency's planning activities.

Title VI of the bill would amend title XI of the Social Security Act to assure that funds paid pursuant to titles V, XVIII, XIX, and the Family Health Insurance Plan, and payments under basic health care plans would not be used to support unnecessary capital expenditures by health care facilities or health maintenance organizations. Under this new title of the bill, the Secretary would make arrangements with each State under which a State planning agency would make recommendations regarding proposed capital construction in the State and would forward to the Secretary similar recommendations from certain other planning agencies within the State.

The State would be required to grant a fair hearing in any case in which it found a proposed capital expenditure to be inconsistent with standards, criteria, or plans developed to meet the health care needs of the area in which the capital expenditure was to be made.

If the planning agency, using proper procedures, disapproved a proposed capital expenditure, and the expenditure was nevertheless made, the Secretary would, in determining the amount of the Federal payments to be made under titles V, XVIII, and XIX of the Social Security Act and the Family Health Insurance Plan exclude (for a designated period) payments for services furnished in the facility for which the expenditure was made or, in the case of an organization reimbursed on a per capita basis, reduce the reimbursement by an equivalent amount. The Secretary would also direct carriers and self-insured employers which provided basic health care plans to individuals who could reasonably be expected to seek the services of the facility or organization to impose a similar exclusion or reduction. However, during the first five years after enactment of this title, the exclusion or reduction would not be imposed as to any payments if the Secretary found that its imposition (1) would discourage the operation or expansion of a comprehensive health care facility and that allowance of such payments would not adversely affect the delivery of health services, (2) would be inconsistent with the effective administration of title V, VI, XVIII, or XIX of the Social Security Act and that allowance of such payments would not adversely affect the delivery of health services, or (3) would be inconsistent with the effective delivery of health services.

74-997 O 72 pt. 14 2

Any person dissatisfied with a determination of the Secretary would be entitled to request reconsideration of the determination within six months after it was made.

The Secretary would establish or designate a national advisory council to assist him in carrying out his responsibilities in this area and to arrange for coordination of the work of this council with the work of various other national councils concerned with the provision of adequate health care services.

The new title VII of the bill would amend section 402 (a) of the Social Security Amendments of 1967 to expand the authority of the Secretary, directly or through grants to other agencies and institutions, to conduct cost and quality control experiments and demonstration projects under the health care programs established by the Social Security Act.