Table Of Content

WF* fobHi, Ui*>* I thust / Vefor*} I ///• 104th CSeosnsgironess1} HOUSE OF REPRESENTATIVES |f 1R0e4p_o7r3t6 HEALTH INSURANCE PORTABILITYAND ACCOUNTABILITY ACT OF 1996 July31, 1996.—Orderedtobeprinted Mr. Hastert, from the committee ofconference, submitted the following CONFERENCE REPORT [ToaccompanyH.R. 3103] The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 3103), to amend the Internal Revenue Code of 1986 to improve portability and continuity ofhealth insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes, having met, after full and free conference, and agreed to recommend and do recommend to their re- spective Houses as follows: That the House recede from its disagreement to the amendment of the Senate and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate amendment, insert the following: SECTION1. SHORTTIT—LE;TABLEOFCONTENTS. (a) Short Title. This Act may be cited as the "Health Insur- ance Portability andAccountabilityAct of1996". (b) Table of Contents.—The table of contents of this Act is asfollows: Sec. 1. Shorttitle; tableofcontents. TITLEI—HEALTHCAREACCESS, PORTABILITY,ANDRENEWABILITY — SubtitleA GroupMarketRules Part1—Portability,Access,andRenewabiutyRequirements Sec. 101. Through theEmployeeRetirementIncomeSecurityActof1974. 26-252 2 "Part7—GroupHealthPlanPortability,Access, andRenewability Requirements "Sec. 701. Increased portability through limitation on preexisting condition ex- clusions. "Sec. 702. Prohibiting discrimination against individualparticipants and beneficiaries basedon health status. "Sec. 703. Guaranteed renewability in multiemployer plans and multiple employer welfarearrangements. "Sec. 704. Preemption; Stateflexibility; construction. "Sec. 705. Special rules relating togrouphealthplans. "Sec. 706. Definitions. "Sec. 707. Regulations. Sec. 102. Through thePublicHealth ServiceAct. "TITLEXXVII—ASSURINGPORTABILITY,AVAILABILITY, AND RENEWABILITYOFHEALTHINSURANCE COVERAGE — "PartA GroupMarketReforms "Subpart1—Portability, Access, andRenewabilityRequirements "Sec. 2701. Increasedportability through limitation onpreexisting condition ex- clusions. "Sec. 2702. Prohibiting discrimination against individual participants and beneficiaries basedon healthstatus. "Subpart2—ProvisionsApplicable OnlytoHealthInsuranceIssuers "Sec. 2711. Guaranteed availabilityofcoverageforemployers in thegroup market. "Sec. 2712. Guaranteed renewability of coverage for employers in the group market. "Sec. 2713. Disclosure ofinformation. "Subpart3—ExclusionofPlans;Enforcement;Preemption "Sec. 2721. Exclusionofcertainplans. "Sec. 2722. Enforcement. "Sec. 2723. Preemption; Stateflexibility; construction. "PartC—Definitions; MiscellaneousProvisions "Sec. 2791. Definitions. "Sec. 2792. Regulations. Sec. 103. Reference to implementation through the Internal Revenue Code of1986. Sec. 104. Assuringcoordination. — SubtitleB IndividualMarketRules Sec. 111. AmendmenttoPublicHealth ServiceAct. "PartB—IndividualMarketRules "Sec. 2741. Guaranteed availability ofindividual health insurance coverage to certain individuals withpriorgroupcoverage. "Sec. 2742. Guaranteedrenewabilityofindividualhealth insurancecoverage. "Sec. 2743. Certification ofcoverage. "Sec. 2744. Stateflexibility in individual marketreforms. "Sec. 2745. Enforcement. "Sec. 2746. Preemption. "Sec. 2747. Generalexceptions. — SubtitleC GeneralandMiscellaneousProvisions Sec. 191. Health coverageavailabilitystudies. Sec. 192. Reporton medicare reimbursementoftelemedicine. Sec. 193. AllowingFederally-qualifiedHMOs toofferhigh deductibleplans. Sec. 194. Volunteerservicesprovidedbyhealthprofessionals atfreeclinics. Sec. 195. Findings; severability. TITLEII—PREVENTINGHEALTHCAREFRAUDANDABUSE; ADMINISTRATIVESIMPLIFICATION; MEDICALLIABILITYREFORM Sec. 200. References in title. 3 — SubtitleA FraudandAbuse ControlProgram Sec. 201. Fraudandabusecontrolprogram. Sec. 202. Medicareintegrityprogram. Sec. 203. Beneficiary incentiveprograms. Sec. 204. Application ofcertain health anti-fraud and abuse sanctions tofraud and abuseagainstFederalhealth careprograms. Sec. 205. Guidance regarding application ofhealth care fraud and abuse sanctions. — SubtitleB Revisions to CurrentSanctionsforFraudandAbuse Sec. 211. Mandatoryexclusionfromparticipation in medicare andState health care programs. Sec. 212. Establishment ofminimumperiodofexclusionforcertain individuals and entities subject topermissive exclusion from medicare and State health careprograms. Sec. 213. Permissive exclusion ofindividuals with ownership or control interest in sanctionedentities. Sec. 214. Sanctions against practitioners and persons for failure to comply with statutoryobligations. Sec. 215. Intermediatesanctionsformedicarehealth maintenance organizations. Sec. 216. Additional exception to anti-kickback penalties for risk-sharing arrange- ments. Sec. 217. Criminal penalty for fraudulent disposition ofassets in order to obtain medicaid benefits. Sec. 218. Effectivedate. — Subtitle C Data Collection Sec. 221. Establishmentofthehealth carefraudandabusedata collectionprogram. — SubtitleD CivilMonetaryPenalties Sec. 231. Socialsecurityactcivil monetarypenalties. Sec. 232. Penaltyforfalsecertificationforhomehealth services. — SubtitleE Revisions to CriminalLaw Sec. 241. Definitions relating toFederalhealth careoffense. Sec. 242. Health carefraud. Sec. 243. Theft orembezzlement. Sec. 244. FalseStatements. Sec. 245. Obstruction ofcriminalinvestigations ofhealth careoffenses. Sec. 246. Launderingofmonetaryinstruments. Sec. 247. Injunctive reliefrelating tohealth careoffenses. Sec. 248. Authorized investigativedemandprocedures. Sec. 249. ForfeituresforFederalhealth careoffenses. Sec. 250. Relation toERISAauthority. — SubtitleF AdministrativeSimplification Sec. 261. Purpose. Sec. 262. Administrativesimplification. C— "Part AdministrativeSimplification "Sec. 1171. Definitions. "Sec. 1172. Generalrequirementsforadoptionofstandards. "Sec. 1173. Standardsforinformation transactionsanddataelements. "Sec. 1174. Timetablesforadoption ofstandards. "Sec. 1175. Requirements. "Sec. 1176. Generalpenalty for failure to comply with requirements and stand- ards. "Sec. 1177. Wrongful disclosure ofindividually identifiable health information. "Sec. 1178. Effect on Statelaw. "Sec. 1179. Processingpayment transactions. Sec. 263. Changes in membership and duties ofNational Committee on Vital and Health Statistics. Sec. 264. Recommendations with respecttoprivacyofcertain health information. — Subtitle G Duplicationand CoordinationofMedicare-RelatedPlans Sec. 271. Duplication andcoordination ofmedicare-relatedplans. 4 H— Subtitle PatentExtension Sec. 281. Patentextension. TITLEIII—TAX-RELATEDHEALTHPROVISIONS Sec. 300. Amendmentof1986Code. — SubtitleA MedicalSavingsAccounts Sec. 301. Medicalsavingsaccounts. B— Subtitle Increase inDeductionforHealthInsuranceCostsofSelf-Employed Individuals Sec. 311. Increase in deduction for health insurance costs ofself-employed individuals. — Subtitle C Long-Term CareServicesandContracts PartI—GeneralProvisions Sec. 321. Treatmentoflong-termcare insurance. Sec. 322. Qualifiedlong-termcareservices treatedas medicalcare. Sec. 323. Reportingrequirements. — PartII ConsumerProtectionProvisions Sec. 325. Policyrequirements. Sec. 326. Requirements for issuers ofqualified long-term care insurance contracts. Sec. 327. Effectivedates. — D Subtitle TreatmentofAcceleratedDeathBenefits Sec. 331. Treatmentofaccelerateddeath benefits by recipient. Sec. 332. Tax treatmentofcompanies issuingqualifiedaccelerateddeath benefit rid- ers. — SubtitleE StateInsurancePools Sec. 341. Exemption from income tax for State-sponsored organizations providing health coverageforhigh-risk individuals. Sec. 342. Exemption from income tax for State-sponsored workmen's compensation reinsuranceorganizations. — SubtitleF OrganizationsSubjecttoSection 833 Sec. 351. Organizations subject tosection 833. — Subtitle G IRADistributions to the Unemployed Sec. 361. Distributions from certain plans may be used without additional tax to payfinanciallydevastating medicalexpenses. H— Subtitle Organand TissueDonationInformationIncluded WithIncome Tax RefundPayments Sec. 371. Organ and tissue donation information included with income tax refund payments. TITLEPV—APPLICATIONANDENFORCEMENTOFGROUPHEALTHPLAN REQUIREMENTS — SubtitleA Application andEnforcementofGroupHealthPlanRequirements Sec. 401. Grouphealthplanportability, access, andrenewabilityrequirements. Sec. 402. Penaltyonfailure to meetcertaingrouphealthplan requirements. — SubtitleB Clarification ofCertain Continuation CoverageRequirements Sec. 421. COBRAclarifications. TITLE V—REVENUEOFFSETS Sec. 500. Amendmentof1986Code. — SubtitleA Company-OwnedLifeInsurance Sec. 50i. Denial ofdeduction for interest on loans with respect to company-owned lifeinsurance. 5 — SubtitleB TreatmentofIndividuals WhoLose UnitedStates Citizenship Sec. 511. Revision ofincome, estate, andgift taxes on individuals who lose United States citizenship. Sec. 512. Informationon individuals losing UnitedStatescitizenship. Sec. 513. Report on tax compliance by United States citizens and residents living abroad. — Subtitle C RepealofFinancialInstitution TransitionRule toInterestAllocation Rules Sec. 521. Repeal offinancial institution transition rule to interest allocation rules. TITLE I—HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY — Subtitle A Group Market Rules Part 1—Portability, Access, and RenewabilityRequirements SEC. 101. THROUGH THE EMPLOYEE RETIREMENT INCOME SECURITY ACTOF197—4. (a) In General. Subtitle B of title I of the Employee Retire- ment Income Security Act of1974 is amended by adding at the end the following new part: — "Part 7 Group HealthPlanPortability, Access, and renewabilityrequirements <(SEC. 701. INCREASED PORTABILITY THROUGH LIMITATION ON PRE- EXISTING CONDITIONEXCLUSIONS. "(a) Limitation on Preexisting Condition Exclusion Pe- riod; Crediting for Periods of Previous Coverage.—Subject to subsection (d), a group health plan, and a health insurance issuer offering group health insurance coverage, may, with respect to a participant or beneficiary, impose a preexisting condition exclusion only if— "(1) such exclusion relates to a condition (whether physical or mental), regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the enrollment date; "(2) such exclusion extends for a period ofnot more than 12 months (or 18 months in the case of a late enrollee) after the enrollment date; and "(3) the period of any such preexisting condition exclusion is reduced by the aggregate ofthe periods ofcreditable coverage (ifany, as defined in subsection (c)(1)) applicable to the participant or beneficiary as ofthe enrollment date. "(b) Definitions.—Forpurposes ofthispart—— "(1) Preexisting cond—itionexclusion. "(A) In general. The term 'preexisting condition exclusion' means, with respect to coverage, a limitation or exclusion ofbenefits relating to a condition based on the fact that the condition was present before the date ofenrollment for such coverage, whether or not any medical advice, diag- 6 nosis, care, or treatment was recommended or received before such date. — "(B) Treatment of genetic information. Genetic information shall not be treated as a condition described in subsection (a)(1) in the absence ofa diagnosis ofthe condition related to such informa—tion. "(2) ENROLLMENT DATE. The term 'enrollment date' means, with respect to an individual covered under a group health plan or health insurance coverage, the date ofenrollment ofthe individual in the plan or coverage or, ifearlier, the first day ofthe waitingperiod—for such enrollment. "(3) Late enrollee. The term 'late enrollee' means, with respect to coverage under a group health plan, a partici—pant or beneficiary who enrolls under the plan other than during "(A) the first period in which the individual is eligible to enroll under theplan, or "(B) a special enro—llmentperiod under subsection (f). "(4) Waiting period. The term 'waiting period' means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that mustpass with respect to the individual before the individual is eligible to be covered for benefits under the terms ofthe plan. — "(c) Rules Relating to Crediting Previous Coverage. "(1) Creditable coverage defined.—For purposes ofthis part, the term 'creditable coverage' means, with respect to an individual, coverage ofthe individual under any ofthe following: "(A) Agroup health plan. "(B) Health insurance coverage. "(C) Part A or part B oftitle XVIII ofthe Social Secu- rityAct. "(D) Title XIX of the Social Security Act, other than coverage consisting solely ofbenefits under section 1928. "(E) Chapter 55 oftitle 10, United States Code. "(F) A medical care program of the Indian Health Service or ofa tribal organization. A "(G) State health benefits risk pool. "(H) A health plan offered under chapter 89 of title 5, United States Code. A "(I) public healthplan (as defined in regulations). "(J) A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)). Such term does not include coverage consisting solely of coverage ofexcepted benefits (as defined in section 706(c)). "(2) Not—counting periods before significant breaks in coverage. — "(A) In general. Aperiod ofcreditable coverage shall not be counted, with respect to enrollment ofan individual under a group health plan, if, after such period and before the enrollment date, there was a 63-day period during all of which the individual was not covered under any creditable coverage. "(B—) Waiting period not treated as a breakin coverage. For purposes ofsubparagraph (A) and subsection 7 (d)(4), anyperiod that an individual is in a waitingperiod for any coverage under a group health plan (or for group health insurance coverage) or is in an affiliation period (as defined in subsection (g)(2)) shall not he taken into account in determining the continuous period under subparagraph (A). "(3) Method of crediting c—overage.— "(A) Standard method. Except as otherwiseprovided under subparagraph (B), for purposes of applying subsection (a)(3), a group health plan, and a health insurance issuer offeringgroup health insurance coverage, shall count a period of creditable coverage without regard to the spe- cific benefits covered during theperiod. "(B) Election of alternative method.—A group health plan, or a health insurance issuer offering group health insurance coverage, may elect to apply subsection (a)(3) based on coverage of benefits within each of several classes or categories of benefits specified in regulations rather than as provided under subparagraph (A). Such election shall be made on a uniform basis for all participants and beneficiaries. Under such election a group health plan or issuer shall count a period of creditable coverage with respect to any class or category ofbenefits ifany level ofbenefits is covered wi—thin such class or category. "(C) Plan notice. In the case ofan election with respect to a group health plan under subparagraph (B) (whether or not health insurance coverag—e is provided in connection with such plan), theplan shall "(i) prominently state in any disclosure statements concerning the plan, and state to each enrollee at the time of enrollment under the plan, that the plan has made such election, and "(ii) include in such statements a description ofthe effect ofthis election. "(4) Establishment of period—Periods ofcreditable coverage with respect to an individual shall be established through presentation of certifications described in subsection (e) or in such other manne—r as may be specified in regulations, (d) Exceptions — "(1) Exclusion not applicable to certain newborns. Subject toparagraph (4), a group health plan, and a health insurance issuer offering group health insurance coverage, may not impose any preexisting condition exclusion in the case ofan individual who, as of the last day of the 30-day period beginning with the date of birth, is covered under creditable coverage. "(2) Exclusionnotapplicable to certainadopted chil- dren—Subject to paragraph (4), a group health plan, and a health insurance issuer offering group health insurance coverage, may not impose any preexisting condition exclusion in the case ofa child who is adopted orplaced for adoption before attaining 18 years ofage and who, as ofthe last day ofthe 30- day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. The previous 8 sentence shall not apply to coverage before the date of such adoption orplacementfor adoption. "(3) Exclusion not applicable to pregnancy—A group health plan, and health insurance issuer offering group health insurance coverage, may not impose any preexisting condition exclusion relating topregnancy as apreexisting condition. "(4) LOSS IF BREAK IN COVERAGE.—Paragraphs (1) and (2) shall no longer apply to an individual after the end ofthe first 63-day period during all of which the individual was not covered under any creditable coverage. — "(e) CertificationsandDisclosure of Coverage. "(I) Requirement for certification of period of creditable coverage.— — "(A) In general. A group health plan, and a health insurance issuer offering group health insurance coverage, shall provide the certification described in subparagraph (B)— "(i) at the time an individual ceases to be covered under the plan or otherwise becomes covered under a COBRA continuationprovision, "(ii) in the case ofan individual becoming covered under such a provision, at the time the individual ceases to be covered under suchprovision, and "(Hi) on the request on behalf of an individual made not later than 24 months after the date of ces- sation of the coverage described in clause (i) or (ii), whichever is later. The certification under clause (i) may be provided, to the extent practicable, at a time consistent with notices required under any applicable COBRA continuation provision. — "(B) Certification. The certification described in this subparagraph is a written certification of— "(i) theperiod ofcreditable coverage ofthe individual under such plan and the coverage (if any) under such COBRA continuationprovision, and "(ii) the waiting period (ifany) (and affiliation period, ifapplicable) imposed with respect to the individual for any coverage under—suchplan. "(C) Issuer compliance. To the extent that medical care under a group health plan consists ofgroup health insurance coverage, the plan is deemed to have satisfied the certification requirement under thisparagraph ifthe health insurance issuer offering the coverage provides for such certification in accordance with thisparagraph. "—(2) Disclosure of information on previous benefits. In the case ofan election described in subsection (c)(3)(B) by a group health plan or health insurance issuer, if the plan or issuer enrolls an individual for coverage under the plan and the individual provides a c—ertification of coverage of the individual underparagraph (1) "(A) upon request of such plan or issuer, the entity which issued the certification provided by the individual shallpromptly disclose to such requestingplan or issuer in- 9 formation on coverage of classes and categories of health benefits available under such entity's plan or coverage, and "(B) such entity may charge the requesting plan or issuer for the reasonable cost ofdisclosing such information. "(3) Regulations.—The Secretary shall establish rules to prevent an entity's failure to provide information under paragraph (1) or (2) with respect toprevious coverage ofan individual from adversely affecting any subsequent coverage ofthe individual under another group health plan or health insurance coverage. Special EnrollmentPeriods.— "(f) "(1) Individuals losing other coverage—A group health plan, and a health insurance issuer offering group health insurance coverage in connection with a group health plan, shallpermit an employee who is eligible, but not enrolled, for coverage under the terms oftheplan (or a dependent ofsuch an employee if the dependent is eligible, but not enrolled, for coverage under such terms) to enroll for coverage under the terms oftheplan ifeach ofthe following conditions is met: "(A) The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or dependent. "(B) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan sponsor or issuer (if applicable) required such a statement at such time and provided the employee with notice of such requirement (and the consequences of such requirement) at such time. "(C) The employe—e's or dependent's coverage described in subparagraph (A) "(i) was under a COBRA continuation provision and the coverage under such provision was exhausted; or "(ii) was not under such a provision and either the coverage was terminated as a result ofloss ofeligibility for the coverage (including as a result oflegal separa- tion, divorce, death, termination ofemployment, or re- duction in the number ofhours ofemployment) or employer contributions towards such coverage were terminated. "(D) Under the terms ofthe plan, the employee requests such enrollment not later than 30 days after the date ofex- haustion of coverage described in subparagraph (C)(i) or termination ofcoverage or employer contribution described in subparagraph (C)(ii). — "(2) For dependentbeneficiaries. "(A) In general.—If— (i) a group health plan makes coverage available with respect to a dependent ofan individual, "(ii) the individual is a participant under the plan (or has met any waiting period applicable to becoming a participant under the plan and is eligible to be en- 10 rolled under the plan but for a failure to enroll during aprevious enrollmentperiod), and "(Hi) a person becomes such a dependent ofthe individual through marriage, birth, or adoption orplacementfor adoption, the group health plan shall provide for a dependent special enrollment period described in subparagraph (B) during which the person (or, ifnot otherwise enrolled, the individual) may be enrolled under the plan as a dependent ofthe individual, and in the case of the birth or adoption of a child, the spouse ofthe individual may be enrolled as a dependent ofthe individual ifsuch spouse is otherwise eligible for coverage. "(B) Dependent special enrollment period.—A dependent special enrollmentperiod under this subparagraph shall be a period ofnot less than 30 days and shall begin on the later of— "(i) the date dependent coverage is made available, or "(ii) the date ofthe marriage, birth, or adoption or placement for adoption (as the case may be) described in subparagraph (A)(iii). — "(C) No WAITING PERIOD. Ifan individual seeks to enroll a dependent during the first 30 days ofsuch a dependent special enrollment—period, the coverage ofthe dependent shall become effective "(i) in the case ofmarriage, not later than the first day ofthe first month beginning after the date the com- pleted requestfor enrollment is received; "(ii) in the case of a dependent's birth, as of the date ofsuch birth; or "(Hi) in the case ofa dependent's adoption orplace- ment for adoption, the date ofsuch adoption or place- mentfor adoption. "(g) Use ofAffiliation Period byHMOs as Alternative to Preexisting ConditionE—xclusion.— "(1) In general. In the case ofa group health plan that offers medical care through health insurance coverage offered by a health maintenance organization, theplan mayprovide for an affiliation pe—riod with respect to coverage through the organization only if "(A) no preexisting condition exclusion is imposed with respect to coverage through the organization, "(B) the period is applied uniformly without regard to any health status-relatedfactors, and "(C) such period does not exceed 2 months (or 3 months in the case ofa late enrollee). "(2) Affiliationpe—riod.— "(A) Defined. For purposes ofthis part, the term 'affiliation period' means a period which, under the terms of the health insurance coverage offered by the health maintenance organization, must expire before the health insurance coverage becomes effective. The organization is not required to provide health care services or benefits during such pe-