§ 300e. Requirements of health maintenance organizations

Footnotes

1. 1 See References in Text note below.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1944

   Health Maintenance Organization Act of 1973

   Pub. L. 93–222 § 2 · 87 Stat. 914

   Enacted · 42 U.S.C. § 300e

   July 1, 1944, ch. 373, title XIII, § 1301, as added Pub. L. 93–222, § 2, Dec. 29, 1973, 87 Stat. 914

   Source evidence

   Code source credit
   July 1, 1944, ch. 373, title XIII, § 1301, as added Pub. L. 93–222, § 2, Dec. 29, 1973, 87 Stat. 914

   Enacted provision · exact public law section
   Sec. 2. health maintenance organizations The Public Health Service Act is amended by adding after title XII the following new title: “TITLE XIII— HEALTH MAINTENANCE ORGANIZATIONS “Sec. 1301. “requirements for health maintenance organizations (a) For purposes of this title, the term ‘health maintenance organization’ means a legal entity which (1) provides basic and supplemental health services to its members in the manner prescribed by subsection (b), and (2) is organized and operated in the manner prescribed by subsection (c). “(b) A health maintenance organization shall provide, without Basic health services, limitations as to time or cost other than those prescribed by or under this title, basic and supplemental health services to its members in the following manner: “(1) Each member is to be provided basic health services for a basic health services payment which (A) is to be paid on a periodic, basis without regard to the, dates health services (within the basic health services) are provided; (B) is fixed without regard to the frequency, extent, or kind of health service (within the basic health services) actually furnished; (C) is fixed under a community rating system; and (D) may be supplemented by additional nominal payments which may be required for the provision of specific services (within the basic health services), except that such payments may not be required where or in such a manner that they serve (as determined under regulations of the Secretary) as a barrier to the delivery of health services. Such additional nominal payments shall be fixed in accordance with the regulations of the Secretary, “(2) For such payment or payments (hereinafter in this title referred to as Supplemental health services payments’) as the health maintenance organization may require in addition to the basic health services payment, the organization shall provide to each of its member each health service (A) which is included in supplemental health services (as defined in section 1302(2)), (B) for which the required health manpower are available, in the area served by the organization, and (C) for the provision of which the member has contracted with the organization. Supplemental health services payments which are fixed on a prepayment basis shall be fixed under a community rating system, “(3) The services of health professionals which are provided as basic health services shall be provided through health professionals who are members of the staff of the health maintenance organization or through a medical group (or groups) or individual practice association (or associations), except that this paragraph shall not apply in the ease of (A) health professionals’ services which the organization determines, in conformity with regulations of the Secretary, are unusual or infrequently used, or (B) any basic health service provided a member of the health maintenance organization other than by such a health professional because it was medically necessary that the service be provided to the member before he could have it provided by such a health professional. For purposes of this paragraph, the term ‘health “Health professionals” professionals’ means physicians, dentists, nurses, podiatrists, optometrists, and such other individuals engaged in the delivery of health services as the Secretary may by regulation designate. “(4) Basic health services (and supplemental health services in the case of the members who have, contracted therefor) shall within the area served by the health maintenance organization be available and accessible to each of its members promptly as appropriate and in a manner which assures continuity, and when medically necessary be available and accessible twenty-four hours a day and seven days a week. A member of a health maintenance organization shall be reimbursed by the organization for his expenses in securing basic or supplemental health services other than through the organization if it was medically necessary that the services be provided before he could secure them through the organization. “(c) Each health maintenance organization shall— “(1) have a fiscally sound operation and adequate provision against the risk of insolvency which is satisfactory to the Secretary; “(2) assume full financial risk on a prospective basis for the provision of basic health services, except that a health maintenance organization may obtain insurance or make other arrangements (A) for the cost of providing to any member basic health services the aggregate value of which exceeds $5,000 in any year, (13) for the cost of basic health services provided to its members other than through the organization because medical necessity required their provision lie fore they could be secured through the organization, and (C) for not more than 90 per centum of the amount by which its costs for any of its fiscal years exceed 115 per centum of its income for such fiscal year; “(3) enroll persons who are broadly representative of the various age, social, and income groups within the area it serves, except that in the ease of a health maintenance organization which has a medically underserved population located (in whole or in part) in the area, it serves, not more than 75 per centum of the members of that organization may be enrolled from the medically under-served population unless the area in which such population insides is also a rural area (as designated by the Secretary); “(4) have an open enrollment period of not less than thirty days at. least once, during each consecutive twelve-month period during which enrollment period it accepts, up to its capacity, individuals in the order in which they apply for enrollment, except that if the organization demonstrates to the satisfaction of the Secretary that— “(A) it has enrolled, or will be compelled to enroll, a disproportionate, number of individuals who are likely to utilize its services more often than an actuarially determined average (as determined under regulations of the Secretary) and enrollment during an open enrollment period of an additional number of such individuals will jeopardize its economic viability, or “(B) if it maintained an open enrollment period it would not be able to comply with the requirements of paragraph (3), Waiver. the Secretary may waive compliance by the organization with the open enrollment, requirement of this paragraph for not more than three consecutive twelve-month periods and may provide additional waivers to that organization if it makes the demonstration required by subparagraph (A) or (B); “(5) not expel or refuse to re-enroll any member because of his health status or his requirements for health services; “(6) be organized in such a manner that, assures that (A) at least one-third of the membership of the policymaking body of the health maintenance organization will be members of the organization, and (B) there will be equitable representation on such body of members from medically underserved populations served by the organization; “(7) be organized in such a manner that provides meaningful procedures for hearing and resolving grievances between the health maintenance organization (including the medical group or groups and other health delivery entities providing health services for the organization) and the members of the organization; “(8) have organizational arrangements, established in accordance with regulations of the Secretary, for an ongoing quality assurance program for its health services which program (A) stresses health outcomes, and (B) provides review by physicians and other health professionals of the process followed in the provision of health services; “(9) provide medical social services for its members and encourage and actively provide for its members health education services, education in the appropriate use of health services, and education in the contribution each member can make to the maintenance of his own health : “(10) provide, or make arrangements for, continuing education for its health professional staff; and “(11) provide, in accordance with regulations of the Secretary (including safeguards concerning the confidentiality of the doctor-patient relationship), an effective procedure for developing, compiling. evaluating, and reporting to the Secretary, statistics and other information (which the Secretary shall publish and disseminate on an annual basis and which the health maintenance organization shall disclose, in a manner acceptable to the Secretary, to its members and the general public) relating to (A) the cost of its operations. (B) the patterns of utilization of its services, (C) the availability, accessibility, and acceptability of its services. (D) to the extent practical, developments in the health status of its members, and (E) such other matters as the Secretary may require. “Sec. 1302. “definitions For purposes of this title: “(1) The term ‘basic health services’ means— “(A) physician services (including consultant and referral services by a physician); “(B) inpatient and outpatient hospital services; “(C) medically necessary emergency health services; “(D) short-term (not to exceed twenty visits), outpatient evaluative and crisis intervention mental health services; “(E) medical treatment and referral services (including referral services to appropriate, ancillary services) for the abuse of or addiction to alcohol and drugs; “(F) diagnostic laboratory and diagnostic and therapeutic radiologic services; “(G) home health services; and “(H) preventive health services (including voluntary family planning services, infertility services, preventive dental care for children, and children’s eye examinations conducted to determine the need for vision correction). If a service of a physician described in the preceding sentence may also be provided under applicable State law by a dentist, optometrist, or podiatrist, a health maintenance organization may provide such service through a dentist, optometrist, or podiatrist (as the case may be) licensed to provide such service. For purposes of this paragraph, the term ‘home health services’ means health services provided at a member’s home by health care personnel, as prescribed or directed by the responsible physician or other authority designated by the health maintenance organization. A health maintenance organization is authorized, in connection with the prescription of drugs, to maintain, review, and evaluate (in accordance with regulations of the Secretary) a drug use profile of its members receiving such service, evaluate patterns of drug utilization to assure optimum drug therapy, and provide for instruction of its members and of health professionals in the use of prescription and nonprescription drugs. “(2) The term “supplemental health services’ means— “(A) services of facilities for intermediate and long-term care; “(B) vision care not included as a basic health service under paragraph (1)(A) or (1)(H); “(C) dental services not included as a basic health service under paragraph (1)(A) or (1) (H); “(D) mental health services not included as a basic health service under paragraph (1) (D); “(E) long-term physical medicine and rehabilitative services (including physical therapy); and “(F) the provision of prescription drugs prescribed in the course of the provision by the health maintenance organization of a basic health service or a service, described in the preceding subparagraphs of this paragraph. If a service of a physician described in the preceding sentence may also be provided under applicable State law by a dentist, optometrist, or podiatrist, a health maintenance organization may provide such service through an optometrist, dentist, or podiatrist (as the case may be) licensed to provide such service. A health maintenance organization is authorized, in connection with the prescription or provision of prescription drugs, to maintain, review, and evaluate (in accordance with regulations of the Secretary) a drug use profile of its members receiving such services, evaluate patterns of drug utilization to assure optimum drug therapy, and provide for instruction of its members and of health professionals in the use of prescription and nonprescription drugs. “(3) The term ‘member’ when used in connection with a health maintenance organization means an individual who has entered into a contractual arrangement, or on whose behalf a contractual arrangement has been entered into, with the organization under which the organization assumes the responsibility for the provision to such individual of basic health services and of such supplemental health services as may be contracted for. “(4) The term ‘medical group’ means a partnership, association, or other group— “(A) which is composed of health professionals licensed to practice medicine or osteopathy and of such other licensed health professionals (including dentists, optometrists, and podiatrists) as are necessary for the provision of health services for which the group is responsible; “(B) a majority of the members of which are licensed to practice medicine or osteopathy; and “(C) the members of which (i) as their principal professional activity and as a group responsibility engage in the coordinated practice of their profession for a health maintenance organization : (ii) pool their income from practice as members of the group and distribute it among themselves according to a prearranged salary or drawing account or other plan; (iii) share medical and other records and substantial portions of major equipment and of professional, technical, and administrative staff; (iv) utilize such additional professional personnel, allied health professions personnel, and other health personnel (as specified in regulations of the Secretary) as are available and appropriate for the effective and efficient delivery of the services of the members of the group: and (v) arrange for and encourage continuing education in the field of clinical medicine and related areas for the members of the group. “(5) The term ‘individual practice association’ means a partnership, corporation, association, or other legal entity which has entered into a services arrangement (or arrangements) with persons who are licensed to practice medicine, osteopathy, dentistry, podiatry, optome-try, or other health profession in a State and a majority of whom are licensed to practice medicine or osteopathy. Such an arrangement shall provide— “(A) that such persons shall provide their professional services in accordance with a compensation arrangement established by the entity; and “(B) to the extent feasible (i) that such persons shall utilize such additional professional personnel, allied health professions personnel, and other health personnel (as specified in regulations of the Secretary) as are available and appropriate for the effective and efficient delivery of the services of the persons who are parties to the arrangement, (ii) for the sharing by such persons of medical and other records, equipment, and professional, technical, and administrative staff, and (iii) for the arrangement and encouragement of the continuing education of such persons in the field of clinical medicine and related areas. “(6) The term ‘section 314(a) State health planning agency’ means the agency of a State which administers or supervises the administration of a State’s health planning functions under a State plan approved under section 314(a) (hereinafter in this title referred to as a ‘section 80 Stat. 1181; 84 Stat. 1304. 42 USC 246. 314(a) plan’); and the term ‘section 314(b) area wide health planning agency’ means a public or nonprofit private agency or organization which has developed a comprehensive regional, metropolitan, or other local area plan or plans referred to in section 314(b) (hereinafter in this title referred to as a ‘section 314(b) plan’). “(7) The term ‘medically underserved population’ means the population of an urban or rural area designated by the Secretary as an area with a shortage of personal health services or a population group designated by the Secretary as having a shortage of such services. Such a designation may be made by the Secretary only after consideration of the comments (if any) of (A) each section 314(a) State health planning agency whose section 314(a) plan covers (in whole or in part) such urban or rural area or the area in which such population group resides, and (B) each section 314(b) areawide health planning agency whose section 314(b) plan covers (in whole or in part) such urban or rural area or the area in which such population group resides. “(8) The term ‘community rating system’ means a system of fixing rates of payments for health services. Under such a system rates of payments may be determined on a per-person or per-family basis and may vary with the number of persons in a family, but except as other-wise authorized in the next sentence, such rates must be. equivalent for all individuals and for all families of similar composition. The following differentials in rates of payments may be established under such system: “(A) Nominal differentials in such rates may be established to reflect the different administrative, costs of collecting payments from the following categories of members: “(i) Individual members (including their families). “(ii) Small groups of members (as determined under regulations of the Secretary). “(iii) Large groups of members (as determined under regulations of the Secretary). “(B) Differentials in such rates may be established for members enrolled in a health maintenance organization pursuant to a contract with a governmental 80 Stat. 863. authority under section 1079 or 1086 of title 10. United States Code, or under any other governmental program (other than the health benefits program authorized by chapter 89 of title 5, United States Code) or any health 80 Stat. 600. 5 USC 8901. benefits program for employees of States, political subdivisions of States, and other public entities. “(9) The term ‘non-metropolitan area’ means an area no part of which is within an area designated as a standard metropolitan statistical area by the Office of Management and Budget and which does not contain a city whose population exceeds fifty thousand individuals. “Sec. 1303. “grants and contracts for feasibility surveys (a) The Secretary may make grants to and enter into contracts with public or nonprofit private entities for projects for surveys or other activities to determine the feasibility of developing and operating or expanding the operation of health maintenance organizations. “(b) An application for a grant or contract under this section shall contain— “(1) assurances satisfactory to the Secretary that, in conducting surveys or other activities with assistance under a grant or contract under this section, the applicant will (A) cooperate with 80 Stat, 1181; 84 Stat. 1304. 43 USC 246. the section 314(b) areawide health planning agency (if any) whose section 314(b) plan covers (in whole or in part) the area for which the survey or other activity will be conducted, and (B) notify the medical society serving such area of such surveys or other activities; and “(2) such other information as the Secretary may by regulation prescribe. “(c) In considering applications for grants and contracts under this section, the Secretary shall give priority to an application which contains or is supported by assn ranees satisfactory to the Secretary that at the time the health maintenance organization for which such application or proposal is submitted first becomes operational not less than 30 per centum of its members will be members of a medically underserved population. “(d) (1) Except as provided in paragraph (2), the following limitations apply with respect to grunts and contracts made under this section: “(A) If a project has been assisted with a grant or contract under subsection (a), the Secretary may not make any other grant or enter into any other contract under this section for such project. “(B) Any project for which a grant is made or contract entered into must be completed within twelve months from the date the grant is made or contract entered into. “(2) The Secretary may make not more than one additional grant or enter into not more than one additional contract for u project for which a grant has previously been made or a contract previously entered into, and he may permit additional time (up to twelve months) for completion of the’project if he determines that the additional grant or contract (as the ease may be), or additional time, or both, is needed to adequately complete the project. “(e) The amount to be paid by the United States under a grant made, or contract entered into, under subsection (a) shall be deter-mined by the Secretary, except that (1) the amount, to be paid by the United States under any single, grant or contract for any project may not exceed $50,000, and (2) the aggregate of the amounts to be paid by the United States for any project under such subsection under grants or contracts, or both, may not exceed the greater of (A) 90 per centum of the cost of such project (as determined under regulations of the Secretary), or (B) in the case of a project for a health maintenance organization which will serve a medically underserved population, such greater percentage (up to 100 per centum) of such cost as the Secretary may prescribe if he determines that the ceiling on the grants and contracts for such project should be determined by such greater percentage. “(f) Payments under grants under this section may be made in Payments. advance or by way of reimbursement, and at such intervals and on such conditions as the Secretary finds necessary. “(g) Contracts may be entered into under this section without regard to sections 3648 and 3709 of the Revised Statutes (31 U.S.C. 529;41 U.S. C. 5). “(h) Payments under grants and contracts under this section shall be made from appropriations made under section 1309(a). “(i) Of the sums appropriated for any fiscal year under section 1309(a) for grants and contracts under this section, not. less than 20 per centum shall be set aside and obligated in such fiscal year for projects (1) to determine the feasibility of developing and operating or expanding the operation of health maintenance organizations which the Secretary determines may reasonably be expected to have after their development or expansion not less than 66 per centum of their membership drawn from residents of non-metropolitan areas, and (2) the applications for which meet the requirements of this title for approval. Sums set aside in the fiscal year ending June 30, 1974, or June 30, 1975, for projects described in the preceding sentence but not obligated in such fiscal year for grants and contracts under this section because of a lack of applicants for projects meeting the requirements of such sentence shall remain available for obligation under this section in the succeeding fiscal year for projects other than those described in clause (1) of such sentence. Sec. 1304. “bants, contracts, and loan guarantees for planning and for initial development costs (a) The Secretary may— “(1) make grants to and enter into contracts with public or nonprofit private entities for planning projects for the establishment of health maintenance organizations or for the. significant expansion of the membership of, or areas served by, health maintenance organizations; and “(2) guarantee, to non-Federal lenders payment of the principal of and the interest, on loans made to private entities (other than nonprofit, private entities) for planning projects for the establishment or expansion of health maintenance organizations to servo medically underserved populations. Planning projects assisted under this subsection shall include development of plans for the marketing of the services of the health maintenance organization. “(b) (1) The Secretary may— “(A) make grants to and enter into contracts with public or nonprofit private entities for projects for the initial development of health maintenance organizations; and “(B) guarantee to non-Federal lenders payment, of the principal of and the interest on loans made to any private entity (other than a nonprofit private entity) for a project for the initial development of a health maintenance organization which will serve a medically iinderserved population. “(2) For purposes of this section, the term ‘initial development’ “Initial development.” when used to describe a project for which assistance is authorized by this subsection includes significant expansion of the membership of, or the area served by. a health maintenance organization. Funds under grants and contracts under this subsection and under loans guaranteed under this subsection may only be utilized for such purposes as the Secretary may prescribe in regulations. Such purposes may include (A) the implementation of an enrollment campaign for such an organization, (B) the detailed design of and arrangements for the health services to be provided by such an organization, (C) the development of administrative and internal organizational arrangements, including fiscal control and fund accounting procedures, and the development of a capital financing program, (D) the recruitment of personnel for such an organization and the conduct of training activities for such personnel, and (E) the payment of architects’ and engineers’ fees. “(3) A grant or contract under this subsection may only be made or entered into for initial development, costs in the one-year period beginning on the first day of the first month in which such grant or contract is made or entered into. The number of grants made for any initial development project under this subsection when added to the number of contracts entered into for such project under this subsection may not exceed three. A loan guarantee under this subsection may only he made for a loan (or loans) for such costs incurred in a period not to exceed three years. “(c) “(1) An application for a grant, contract, or loan guarantee under subsection (a) for a planning project shall contain assurances satisfactory to the Secretary that in carrying out the planning project for which the grant, contract, or loan guarantee is sought, the 80 Stat. 1181; 84 Stat. 1304. 42 USC 246. applicant will (A) cooperate with the section 311(b) area wide health planning agency (if any) whose section 314(b) plan covers (in whole or in part) the area proposed to be served by the health maintenance organization for which the planning project will be conducted, and (B) notify the medical society serving such area of the planning project. “(2) If the Secretary makes a grant or loan guarantee or enters into a contract under subsection (a) for a planning project for a health maintenance organization, he may, within the period in which the planning project must be completed, make a grant or loan guarantee or enter into a contract under subsection (b) for the initial development of that health maintenance organization; but no grant or loan guarantee may be made or contract entered into under subsection (b) for initial development of a health maintenance organization unless the Secretary determines that (A) sufficient planning for its establishment or expansion (as the case, may be) has been conducted by the applicant for the grant, contract, or loan guarantee, and (B) the feasibility of establishing and operating, or of expanding, the health maintenance organization has been established by the applicant. “(d) Tn considering applications for grants and contracts under this section, the Secretary shall give priority to an application which contains or is supported by assurances satisfactory to the Secretary that at the time the health maintenance organization for which such application is submitted first becomes operational not less than 30 per centum of its members will be members of a medically underserved population. “(e) (1) Except as provided in paragraph (2), the following limitations apply with respect to grants, loan guarantees, and contracts made mid er subsection (a) of this section: “(A) If a planning project has been assisted with grant, loan guarantee, or contract under subsection (a), the Secretary may not make any other planning grant or loan guarantee or enter into any other planning contract for such project under this section. “(B) Any project for which a grant or loan guarantee is made or contract entered into must be completed within twelve months from die date the grant or loan guarantee is made or contract entered into. “(2) The Secretary may not make more than one additional grant or loan guarantee or enter into not more than one additional contract for a planning project for which a grant or loan guarantee has previously been made or a contract, previously entered into, and he may permit, additional time (up to twelve months) for completion of the project if he determines that the additional grant, loan guarantee, or contract (as the case may be), or additional time, or both, is needed to adequately complete the project. “(f) (1) The amount to be paid by the United Slates under a grant made, or contract entered into, under subsection (a) for a planning project, and (except as provided in paragraph (3) of this subsection) the amount of principal of a loan for a planning project, which may be guaranteed under such subsection, shall be determined by the Secretary, except that (A) the amount to be paid by the United States under any single grant or contract, and the amount of principal of any single loan guaranteed under such subsection, may not exceed $125,000, and (B) the aggregate of the amounts to Ire paid for any project by the United States under grants or contracts, or both, under such sub-section, and the aggregate amount of principal of loans guaranteed under such subsection for any project, may not exceed the greater of (i) 90 per centum of the cost of such project (as determined under regulations of the. Secretary), or (ii) in the ease of a project for a health maintenance organization which will serve a medically underserved population, such greater percentage (up to 100 per centum) of such cost as the Secretary may prescri!w if he determines that the ceiling on the grants, contracts, and loan guarantees (or any combination thereof) for such project should be determined by such greater percentage. “(2) The amount to be paid by the United States under a grant made, or contract entered into, under subsection (b) for an initial development project, and (except as provided in paragraph (3) of this subsection) the amount of principal of a loan for an initial development project which may be guaranteed under such subsection, shall be determined by the Secretary; except that the amounts to be paid by the United States for any initial development project under grants or contracts, or both, under such subsection, and the aggregate amount of principal of loans guaranteed under such subsection for any project, may not exceed the lesser of— “(A) $1,000,000, or “(B) an amount equal to the greater of (i) 90 per centum of the cost of such project (as determined under regulations of the Secretary), or (ii) in the ease of a project for a health maintenance organization which will serve a medically underserved population, such greater percentage (up to 100 per centum) of such cost as the Secretary may prescribe if he determines that the ceiling on the grants, contracts, and loan guarantees (or any combination thereof) for such project should be determined by such greater percentage. “(3) The cumulative total of the principal of the loans outstanding at any time with respect to which guarantees have been issued under this section may not exceed such limitations as may be specified in appropriation Acts. “(g) Payments under grants under this section may be made in Payments. advance or by way of reimbursement and at such intervals and on such conditions as the Secretary finds necessary. “(h) Contracts may be entered into under this section without regard to sections 3648 and 3709 of the Revised Statutes (31 U.S.C. 529; 41 U.S.C. 5). “(i) Payments under grants and contracts under this section shall be made from appropriations under section 1309(a). “(j) Loan guarantees under subsection (a)(2) for planning projects may be made through the fiscal year ending June 30, 1976; and loan guarantees under subsection (b) (1) (B) for initial development projects may be made through the fiscal year ending June 30, 1977. “(k) (1) Of the sums appropriated for any fiscal year under section 1309(a) for grants and contracts under subsection (a) of this section, not less than 20 per centum shall be set aside and obligated in such fiscal year for projects (A) to plan the establishment or expansion of health maintenance organizations which the Secretary determines may reasonably be expected to have after their establishment or expansion not less than 66 per centum of their membership drawn from residents of non-metropolitan areas, and (B) the applications for which meet the requirements of this title for approval. Sums set aside in the fiscal year ending June 30, 1974, or June 30, 1975, for projects described in the preceding sentence but not obligated in such fiscal year for grants and contracts under subsection (a) of this section because of a lack of applicants for projects meeting the requirements of such sentence shall remain available for obligation under such sub-section in the succeeding fiscal year for projects other than those described in clause (A) of such sentence. “(2) Of the sums appropriated for any fiscal year under section 13d9(a) for grants and contracts under subsection (b) of this section, not less than 20 per centum shall be set aside and obligated in such fiscal year for projects (A) for the initial development of health maintenance organizations which the Secretary determines may reasonably be expected to have after their initial development not less than 66 per centum of their membership drawn from residents of non-metropolitan areas, and (B) the applications for which meet the requirements of this title for approval. Sums set aside in the fiscal year ending June 30, 1974, or in either of the next two fiscal years for projects described in the preceding sentence but not obligated in such fiscal year for grants and contracts under subsection (b) of this section because of a lack of applicants for projects meeting the requirements of such sentence shall remain available for obligation under such subsection in the succeeding fiscal year for projects other than those described in clause (A) of such sentence. “Sec. 1305. “loans and loan guarantees for initial operation costs (a) The Secretary may— “(1) make loans to public or nonprofit private health maintenance organizations to assist them in meeting the amount by which their operating costs in the period of the first thirty-six months of their operation exceed their revenues in that period; “(2) make loans to public or nonprofit private health maintenance organizations to assist them in meeting the amount by which (heir operating costs, which the Secretary determines are attributable to significant expansion in their membership or area served and which are incurred in the period of the first thirty-six months of their operation after such expansion, exceed their revenues in that period which the Secretary determines are attributable to such expansion; and “(3) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to any private health maintenance organization (other than a private nonprofit health maintenance organization) for the amounts referred to in paragraph (1) or (2), but only if such health maintenance organization will serve a medically under served population. No loan or loan guarantee may be made under this subsection for the operating costs of a health maintenance organization unless the Secretary determines that the organization has made all reasonable attempts to meet such costs. “(b) (1) Except as provided in paragraph (2), the principal amount Limitations. of any loan made or guaranteed under subsection (a) in any fiscal year for a health maintenance organization may not exceed $1,000,000 and the aggregate amount of principal of loans made or guaranteed, or both, under this section for a health maintenance organization may not exceed $2,500,000. “(2) The cumulative total of the principal of the loans outstanding at any time which have been directly made, or with respect to which guarantees have been issued, under subsection (a) may not exceed such limitations as may be specified in appropriation Acts. “(c) Loans under this section shall be made from the fund established under section 1308(e). “(d) A loan or loan guarantee may be made under this section through the fiscal year ending June 30, 1978. “(e) Of the sums used for loans under this section in any fiscal year from the loan fund established under section 1308(e), not less than 20 per centum shall be used for loans for projects (1) for the initial operation of health maintenance organizations Which the Secretary determines have not less than GO per centum of their membership drawn from residents of nonmetropolitan areas, and (2) the applications for which meet the requirements of this title for approval. “Sec. 1306. “apflicati on requirements (a) No grant, contract, loan, or loan guarantee may be made under this title unless an application therefor has been submitted to, and approved by, the Secretary. “(b) The Secretary may not approve an application for a grant, contract, loan, or loan guarantee under this title unless— “(1) in the case of an application for assistance under section 1303 or 1304, such application meets the application requirements of such section and in the case of an application for a loan or loan guarantee, such application meets the requirements of section 1308; “(2) he determines that the applicant making the application would not be able to complete the project or undertaking for which the application is submitted without the assistance applied for; “(3) the application contains satisfactory specification of the existing or anticipated (A) population group or groups to be served by the proposed or existing health maintenance organization described in the application. (B) membership of such organization. (C) methods, terms, and periods of the enrollment of members of such organization, (D) estimated costs per member of the health and educational services to be provided by such organization and the nature of such costs, (E) sources of professional services for such organization, and organizational arrangements of such organization for providing health and educational services. (F) organizational arrangements of such organization for an ongoing quality assurance program in conformity with the requirements of section 1301(c), (G) sources of prepayment and other forms of payment for the services tn be provided by such organization. (II) facilities, and additional capital investments and sources of financing therefor, available to such organization to provide the level and scope of services proposed. (I) administrative, managerial, and financial arrangements and capabilities of such organization, (J) role for members in the planning and policymaking for such organization, (K) grievance procedures for members of such organization, and (L) evaluations of the support for and acceptance of such organization by the population to be served, the sources of operating support, and the professional groups to be involved or affected thereby; “(4) contains or is supported by assurances satisfactory to the Secretary that the applicant making the application will, in accordance with such criteria as the Secretary shall by regulation prescribe, enroll, and maintain an enrollment of the maximum number of members that its available and potential resources (as determined under regulations of the Secretary) will enable it to effectively serve; “(5) the section 314(b) areawide health planning agency whose section 314(b) plan covers (in whole or in pa it) the area to be served by the health maintenance organization for which such application is submitted, or if there is no such agency, the section 314(a) State health planning agency whose section 314(a) plan covers (in whole or in part) such area, has, in accordance with regulations of the Secretary under subsection (c) of this section, been provided an opportunity to review the application and to submit to the Secretary for his consideration its recommendations respecting approval of the application or if under applicable State law such an application may not be submitted without the approval of the section 314(b) area wide health planning agency or the section 314(a) State health planning agency, the required approval has been obtained; “(6) in the, case of an application made for a project which previously received a grant, contract, loan, or loan guarantee under this title, such application contains or is supported by assurances satisfactory to the Secretary that the applicant making the application has the financial capability to adequately carry out the purposes of such project and has developed and operated such project in accordance with the requirements of this title and with the plans contained in previous applications for such assistance; and “(7) the application is submitted in such form and manner, and contains such additional information, as the Secretary shall prescribe in regulations. Multiple applications. An organization making multiple applications for more than one grant, contract, loan, or loan guarantee under this title, simultaneously or over the course of time, shall not be required to submit duplicate or redundant information but shall be required to update the specifications (required by paragraph (3)) respecting the existing or proposed health maintenance organization in such manner and with such frequency as the Secretary may by regulation prescribe. “(c) The Secretary shall by regulation establish standards and procedures for section 314(b) areawide health planning agencies and section 314(a) State health planning agencies to follow in reviewing and commenting on applications for grants, contracts, loans, and loan guarantees under this title. “Sec. 1307. “administration of assistance programs (a) (1) Each recipient of a grant, contract, loan, or loan guarantee under this title shall keep such records as the Secretary shall prescribe, including records which fully disclose the amount and disposition by such recipient of the proceeds of the grant, contract, or loan (directly made or guaranteed), the total cost of the undertaking in connection with which such assistance was given or used, the amount of that portion of the cost of the undertaking supplied by other sources, and such other records as will facilitate an effective audit. “(2) The Secretary, or any of his duly authorized representatives, shall have access for the purpose of audit and examination to any books, documents, papers, and records of the recipients of a grant, contract, loan, or loan guarantee under this title which relate to such assistance. “(b) Upon expiration of the period for which a grant, contract, Report to Secretary of HEW. loan, or loan guarantee was provided an entity under this title, such entity shall make a full and complete report, to the Secretary in such manner as he may by regulation prescribe. Mach such report shall contain, among such other matters as the Secretary may by regulation require, descriptions of plans, developments, and operations relating to the matters referred to in section 1306(b) (3). “(c) If in any fiscal year the funds appropriated under section 1309 are insufficient to fund all applications approved under this title for that fiscal year, the Secretary shall, after applying the applicable priorities under sections 1303 and 1304, give priority to the funding of applications for projects which the Secretary determines are the most likely to be economically viable. “(d) An entity which provides health services to a defined population on a prepaid basis and which has members who are entitled to insurance benefits under title Will of the Social Security Act or to 79 Stat. 291; 86 Stat. 1370. 42 USC 1395. 42 USC 1396. medical assistance under a State plan approved under title XIX of such Act may be considered as a health maintenance organization for purposes of receiving assistance under this title if— “(1) with respect to its members who are entitled to such insurance benefits or to such medical assistance it (A) provides health services in accordance with section 1301(b), except that (i) it does not furnish to those members the health services (with-in the basic health services) for which it may not be compensated under such title XVIII or such State plan, and (ii) it does not fix the basic or supplemental health services payment for such members under a community rating system, and (B) is organized and operated in the manner prescribed by section 1301(c), except that it does not assume full financial risk on a prospective basis for the provision to such members of basic or supplemental health services with respect to which it. is not required under such title XVIII or such State plan to assume such financial risk; and “(2) with respect to its other members it provides health services in accordance with section 1301(b) and is organized and operated in the manner prescribed by section 1301(c). “(e) In any fiscal year no loan guarantee may be made under this title if the making of such guarantee would cause the cumulative total of the principal of the loans guaranteed under this title in such fiscal year to exceed the amount of grant and contract funds obligated under this title in such fiscal year; except that this subsection shall not apply if the amount of grant and contract funds obligated under this title in such fiscal year equals the sums appropriated under section 1309 for grants and contracts for such fiscal year. “Sec. 1308. “general provisions relating to wan guarantees and loans (a) (1) The Secretary may not approve an application for a loan guarantee under this title unless he determines, that. (A) the terms, conditions, security (if any), and schedule and amount of repayments with respect to the loan are sufficient, to protect the finan-cial interests of the United States and are otherwise reasonable, including a determination that the rate of interest does not exceed such per centum per annum on the principal obligation outstanding as the Secretary determines to be reasonable, taking into account the range of interest rates prevailing in the private market for similar loans and the risks assumed by the United States, and (B) the loan would not be available on reasonable terms and conditions without, the guarantee under this title. “(2) (A) The United States shall be entitled to recover from the applicant for a loan guarantee under this title the amount of any payment made pursuant to such guarantee, unless the Secretary for good cause waives such right of recovery; and, upon making any such payment, the United States shall be subrogated to all of the rights of the recipient of the payments with respect to which the guarantee was made. “(B) To the extent permitted by subparagraph (C), any terms and conditions applicable to a loan guarantee under this title (including terms and conditions imposed under subparagraph (D)) may be modified by the Secretary to the extent he determines it to be consistent with the financial interest of the United States. “(C) Any loan guarantee made by the Secretary under this title shall be incontestable (i) in the hands of an applicant on whose behalf such guarantee is made unless the, applicant engaged in fraud or misrepresentation in securing such guarantee, and (ii) as to any person (or his successor in interest) who makes or contracts to make a loan to such applicant in reliance thereon unless such person (or his successor in interest) engaged in fraud or misrepresentation in making or contracting to make such loan. “(D) Guarantees of loans under this title shall be subject to such further terms and conditions us the Secretary determines to be necessary to assure that the purposes of this title will be achieved. “(b) (1) The Secretary may not approve an application for a loan under this title unless— “(A) the Secretary is reasonably satisfied that the applicant therefor will be able to make payments of principal and interest thereon when due, and “(B) the applicant provides the Secretary with reasonable assurances that there will be available to it such additional funds as may be necessary to complete the project or undertaking with respect, to which such loan is requested. “(2) Any loan made under this title shall (A) have such security, (B) have such maturity date, (C) be repayable in such installments, (D) bear interest at a rate comparable to the current rate of interest prevailing, on the date the loan is made, with respect to loans guaranteed under this title, and (E) be subject to such other terms and conditions (including provisions for recovery in ease of default), as the Secretary determines to be necessary to carry out the purposes of this title while adequately protecting the financial interests of the United .States. “(3) The Secretary may, for good cause but with due regard to the financial interests of the United States, waive any right of recovery which he has by reason of the failure of a borrower to make payments of principal of and interest on a loan made under this title, except that if such loan is sold and guaranteed, any such waiver shall have no effect upon the Secretary’s guarantee of timely payment of principal and interest. “(c) (1) The Secretary may from time to time, but with due regard to the financial interests of the United States, sell loans made by him under this title. “(2) The Secretary may agree, prior to Ids sale of any such loan, to guarantee to the purchaser (and any successor in interest of the purchaser) compliance by the borrower with the terms and conditions of such loan. Any such agreement shall contain such terms and conditions as the Secretary considers necessary to protect the financial interests of the United States or as otherwise appropriate. Any such agreement may (A) provide that the Secretary shill act as agent of any such purchaser for the purpose of collecting from the borrower to which such loan was made and paying over to such purchaser, any payments of principal and interest payable by such organization under such loan; and ( B ) provide for the repurchase by the Secretary of any such loan on such terms and conditions as may be specified in the agreement. The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guarantee under this paragraph. “(3) After any loan under this title to a public health maintenance organization has been sold and guaranteed under this subsection, inter-est paid on such loan which is received by the purchaser thereof (or his successor in interest) shall be included in the gross income of the purchaser of the loan (or his successor in interest) for the purpose of chapter 1 of the Internal Revenue Code of 1954. 68A Stat. 3. 26 USC 1 et seq. “(4) Amounts received by the Secretary as proceeds from the sale of loans under this subsection shall be deposited in the loan fund established under subsection (e). “(d) (1) There is established in the Treasury a loan guarantee fund Loan guarantee fund, establishment. (hereinafter in this subsection referred to as the ‘fund’) which shall be available to the Secretary without fiscal year limitation., in such amounts as may be specified from time to time in appropriation Acts, to enable him to discharge his responsibilities under loan guarantees issued by him under this title. There are authorized to be appropriated from time to time such amounts as may be necessary to provide the sums required for the fund. To the extent authorized in appropriation Acts, there shall also be deposited in the fund amounts received by the Secretary in connection with loan guarantees under this title and other property or assets derived by him from his operations respecting such loan guarantees, including any money derived from the sale of assets. “(2) If at any time the sums in the funds are insufficient to enable the Secretary to discharge his responsibilities under guarantees issued by him under this title, lie is authorized to issue to the Secretary’ of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary with the approval of the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations. The Secretary of the Treasury shall purchase any notes and other obligations issued under this paragraph and for that purpose he may use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, and the purposes 10 Stat. 288. 31 USC 774. for which the securities may be issued under that Act are extended to include any purchase of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this paragraph. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Sums borrowed under this paragraph shall be deposited in the fund and redemption of swell notes and obligations shall be made by the Secretary from the fund, “(e) There is established in the Treasury a loan fund (hereinafter in this subsection referred to as the ‘fund’) which shall be available to the Secretary without fiscal year limitation, in such amounts as may be specified from time to time in appropriation Acts, to enable him to make loans under this title. There shall also be deposited in the fund amounts received by the Secretary as interest payments and repayment of principal on loans made under this title and other property or assets derived by him from his operations respecting such loans, from the sale of loans under subsection (c) of this section, or from the sale of assets. “Sec. 1309. “authorizations of appropriations (a) For the. purpose of making payments under grants and contracts under sections 1303, 1304(a), and 1304(b), there are authorized to be appropriated $25,000,000 for the fiscal year ending June 30, 1974, $55,000,000 for the fiscal year ending June 30, 1975, and $85,000,000 for the fiscal year ending June 30, 1976; and for the purpose of making payments “under grants and contracts under section 1304(b) for the fiscal year ending June 30, 1977, there is authorized to be appropriated $85,000,000. “(b) There is authorized to be appropriated to the loan fund established under section 1308(e) $75,000,000 in the aggregrate for the fiscal years ending June 30, 1974, and .1 line 30, 1975. “Sec. 1310. “employees’ health benefits plans (a) Each employer which is required during any calendar quarter to pay its employees the minimum wage specified by 52 Stat. 1062; 80 Stat. 838. 29 USC 206. 75 Stat. 71; 80 Stat. 833; 86 Stat. 375. 29 USC 213. section 6 of the Fair Labor Standards Act of 1938 (or would be required to pay his employees such wage but for section 13(a) of such Act), and which during such calendar quarter employed an average number of employees of not less than twenty-five, shall, in accordance with regulations which the Secretary shall prescribe, include in any health benefits plan offered to its employees in the calendar year beginning after such calendar quarter the option of membership in qualified health maintenance organizations which are engaged in the provision of basic and supplemental health services in the areas in which such employees reside. “(b) If there is more than one qualified health maintenance organization which is engaged in the provision of basic and supplemental health services in the area in which the employees of an employer subject to subsection (a) reside and if— “(1) one or more of such organizations provides basic health services through professionals who are members of the staff of the organization or a medical group (or groups), and “(2) one or more of such organizations provides such services through an individual practice association (or associations). then of the qualified health maintenance organizations included in a health benefits plan of such employer pursuant to subsection (a) at least one shall be an organization which provides basic health services as described in clause (1) and at least one shall be an organization which provides basic health services as described in clause (2). “(c) No employer shall be required to pay more for health benefits as a result of the application of this section than would otherwise be required by any prevailing collective bargaining agreement or other legally enforceable contract for the provision of health benefits between the employer and its employees. Failure of any employer to comply with the requirements of subsection (a) shall be considered a willful violation of section 15 of the Fair Labor Standards Act of 1938. 52 Stat. 1068, 53 Stat. 919. 29 USC 215. “Qualified health maintenance organization.” “(d) For purposes of this section, the term ‘qualified health maintenance organization’ means (1) a health maintenance organization which has provided assurances satisfactory to the Secretary that it provides basic and supplemental health services to its members in the manner prescribed by section 1301(b) and that it is organized and operated in the manner prescribed by section 1301(c), and (2) an entity which proposes to become a health maintenance organization and which the Secretary determines will when it becomes operational provide basic and supplemental health services to its members in the manner prescribed by section 1301(b) and will be organized and operated in the manner prescribed by section 1301 (c). “Sec. 1311. “restrictive state law’s and practices (a) In the case of any entity— “(1) which cannot do business as a health maintenance organization in a State in which it proposes to furnish basic and supplemental health services because that State by law, regulation, or otherwise— “(A) requires as a condition to doing business in that State that a medical society approve the furnishing of services by the entity, “(B) requires that physicians constitute all or a percentage of its governing body, “(C) requires that all physicians or a percentage of physicians in the locale participate or be permitted to participate in the provision of services for the entity, or “(D) requires that the entity meet requirements for insurers of health care services doing business in that State respecting initial capitalization and establishment of financial reserves against insolvency, and “(2) for which a grant, contract, loan, or loan guarantee was made under this title or which is a qualified health maintenance organization for purposes of section 1310 (relating to employees’ health benefits plans), such requirements shall not apply to that entity so as to prevent it from operating as a health maintenance organization in accordance with section 1301. “(b) No State may establish or enforce any law which prevents a health maintenance organization for which a grant, contract, loan, or loan guarantee was made under this title or which is a qualified health maintenance organization for purposes of section 1310 (relating to employees’ health benefits plans), from soliciting members through advertising its services, charges, or other nonprofessional aspects of its operation. This subsection does not authorize, any advertising which identifies, refers to. or makes any qualitative judgment concerning, any health professional who provides services for a health maintenance organization, “Sec. 1312. “continued regulation of health maintenance organizations (a) If the Secretary determines that an entity which received a grant, contract, loan, or loan guarantee under this title as a health maintenance organization or which was included in a health benefits plan offered to employees pursuant to section 1310— “(1) fails to provide basic and supplemental services to its members, “(2) fails to provide such services in the manner prescribed by section 1301(b), or “(3) is not organized or operated in the manner prescribed by section 1301(c), the Secretary may, in addition to any other remedies available to him, bring a civil action in the United States district court for the district in which such entity is located to enforce its compliance with any assurances it furnished him respecting the provision of basic and supplemental health services or its organization or operation, as the case may be, which assurances were made under section 1310 or when application was made under this title for a grant, contract, loan, or loan guarantee. “(b) The Secretary, through the Assistant Secretary for Health, shall administer subsection (a) in the Office of the Assistant Secretary for Health. “Sec. 1313. “limitation on source of funding for health maintenance organizatons No funds appropriated under any provision of this Act other than this title may be used— “(1) for grants or contracts for surveys or other activities to determine the feasibility of developing or expanding health maintenance organizations or other entities which provide, directly or indirectly, health services to a defined population on a prepaid basis; “(2) for grants or contracts, or for payments under loan guarantees, for planning projects for the establishment or expansion of such organizations or entities; “(3) for grants or contracts, or for payments under loan guarantees, for projects for the initial development or expansion of such organizations or entities; or “(4) for loans, or for payments under loan guarantees, to assist in meeting the costs of the initial operation after establishment or expansion of such organizations or entities. “Sec. 1314. “program evaluation (a) The Comptroller General shall evaluate the operations of at least fifty of the health maintenance organizations for which assistance was provided under section 1303, 1304, or 1305. The period of operation of such health maintenance organizations which shall be evaluated under this subsection shall be not less than thirty-six Report to Congress. months. The Comptroller General shall report to the Congress the results of the evaluation not later than ninety days after at least fifty of such health maintenance organizations have been in operation for at least thirty-six months. Such report shall contain findings— “(1) with respect to the ability of the organizations evaluated to operate on a fiscally sound basis without continued Federal financial assistance, “(2) with respect to the ability of such organizations to meet the requirements of section 1301(c) respecting their organization and operation, “(3) with respect to the ability of such organizations to provide basic and supplemental health services in the manner prescribed by section 1301(b), “(4) with respect to the ability of such organizations to include indigent and high-risk individuals in their membership, and “(5) with respect to the ability of such organizations to provide services to medically underserved populations. “(b) The Comptroller General shall also conduct a study of the Study. economic effects on employers resulting from their compliance with the requirements of section 1310. The Comptroller General shall report Report to Congress. to the Congress the results of such study not later than thirty-six months after the date of the enactment of this title, “(c) The Comptroller General shall evaluate (1) the operations of Evaluation. distinct categories of health maintenance organizations in comparison with each other, (2) health maintenance organizations as a group in comparison with alternative forms of health care delivery, and (3) the impact that health maintenance organizations, individually, by category, and as a group, have on the health of the public. The Comptroler Report to Congress. General shall report to the Congress the results of such evaluation not later than thirty-six months after the date of the enactment of this title. “Sec. 1315. “annual report (a) The Secretary shall periodically review the programs Review, report to Congress. of assistance authorized by this title and make an annual report to the Congress of a summary of the activities under each program. The Secretary shall include in such summary— “(1) a summary of each grant, contract, loan, or loan guarantee made under this title in the period covered by the report and a list of the health maintenance organizations which during such period became qualified health maintenance organizations for purposes of section 1,310; “(2) the statistics and other information reported in such period to the Secretary in accordance with section 1301(c) (11); “(3) findings with respect to the ability of the health maintenance organizations assisted under this title— “(A) to operate on a fiscally sound basis without continued Federal financial assistance, “(B) to meet the requirements of section 1301(c) respecting their organization and operation, “(C) to provide basic and supplemental health services in the manner prescribed by section 1301 (b), “(D) to include indigent and high-risk individuals in their membership, and “(E) to provide services to medically underserved populations; and “(4) findings with respect to— “(A) the operation of distinct categories of health maintenance organizations in comparison with each other, “(B) health maintenance organizations as a group in comparison with alternative forms of health care delivery, and “(C) the impact that health maintenance organizations, individually, by category, and as a group, have on the health of the public. “(b) The Office of Management and Budget may review the Secretary’s Review. report under subsection (a) before its submission to the Congress. but the Office may not revise the report or delay its submission, and it may submit to the Congress its comments (and those of other Comments, submittal to Congress. departments or agencies of the Government) respecting such report.”

2. 1976

   Health Maintenance Organization Amendments of 1976

   Pub. L. 94–460 title I · 90 Stat. 1945

   Changed · 42 U.S.C. § 300e(b)(1)

   Pub. L. 94–460, §§ 101(a), 105(a)(1), provided that a health maintenance organization may include a health service, defined as a supplemental health service by section 300e–1(2) of this title, in the basic health services provided its members for a basic health service payment described in the first sentence, and also provided that, in the case of an entity which before it became a qualified health maintenance organization (within the meaning of section 300e–9(d) of this title) provided comprehensive health services on a prepaid basis, the requirement of clause (C) would not apply to such entity until the expiration of the forty-eight month period beginning with the month following the month in which the entity became such a qualified health organization

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 94–460, §§ 101(a), 105(a)(1), provided that a health maintenance organization may include a health service, defined as a supplemental health service by section 300e–1(2) of this title, in the basic health services provided its members for a basic health service payment described in the first sentence, and also provided that, in the case of an entity which before it became a qualified health maintenance organization (within the meaning of section 300e–9(d) of this title) provided comprehensive health services on a prepaid basis, the requirement of clause (C) would not apply to such entity until the expiration of the forty-eight month period beginning with the month following the month in which the entity became such a qualified health organization.

   Enacted provision · exact public law
   TITLE I— AMENDMENTS TO TITLE XIII OF THE PUBLIC HEALTH SERVICE ACT Sec. 101. (a) Section 1301(b) (1) is amended by adding at the end 42 USC 300e. the following: “A health maintenance organization may include a health service, defined as a supplemental health service by section 1302(2), in the basic health services provided its members for a basic health services payment described in the first sentence.”. (b) The first sentence of section 1301(b) (2) is amended by striking out “the organization shall provide” and all that follows in that sentence and substituting “the organization may provide to each of its members any of the health services which are included in supplemental health services (as defined in section 1302(2)).”. 42 USC 300e–1. (c) Section 1301(b) (4) is amended by striking out “and supplemental health services in the case of the members who have contracted therefor” and substituting “and only such supplemental health services as members have contracted for”. Sec. 102. staffing (a) (1) The first sentence of section 1301(b) (3) is amended 42 USC 300e. (A) by stinking out “or through” and by substituting “, through”, (B) by striking out “(or groups) or” and substituting “(or groups), through an”, and (C) by inserting after “(or associations)” the following: “, through health professionals who have contracted with the health maintenance organization for the provision of such services, or through any combination of such staff, medical group (or groups), individual practice association (or associations), or health professionals under contract with the organization”. (2) Section 1301(b) (3) is amended by adding after the first sentence the following: “A health maintenance organization may also, during the thirty-six month period beginning with the month follow-ing the month in which the organization becomes a qualified health 42 USC 300e–9. maintenance organization (within the meaning of section 1310(d)), provide basic and supplemental health services through an entity 42 USC 300e–1. which but for the requirement of section 1302(4) (C) (i) would be a medical group for purposes of this title. After the expiration of such period, the organization may provide basic or supplemental health services through such an entity only if authorized by the Secretary in accordance with regulations which take into consideration the unusual circumstances of such entity. A health maintenance organization may not, in any of its fiscal years, enter into contracts with health professionals or entities other than medical groups or individual practice associations if the amounts paid under such contracts for basic and supplemental health services exceed fifteen percent of the total amount to be paid in such fiscal year by the health maintenance organization to physicians for the provision of basic and supplemental health services, or, if the health maintenance organization principally serves a rural area, thirty percent of such amount, except that this sentence does not apply to the entering into of contracts for the purchase of basic and supplemental health services through an entity which hut for the requirements of section 1302(4) (C) (i) would be a medical group for purposes of this title. Contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services shall include such provisions as the Secretary may require (including provisions requiring appropriate continuing education).”. (b) (1) Section 1302(4) (C) is amended (A) by striking out clause (iv), (B) by redesignating clause (v) as clause (iv), and (C) by inserting “and” at the end of clause (iii). (2) Section 1302(5) (B) is amended (A) by striking out clause (i), and (B) by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively. Sec. 103. open enrollment (a) Section 1301(c) is amended by amending paragraph (4) to read as follows: “(4) have an open enrollment period in accordance with the provisions of subsection (d);”. (b) Section 1301 is amended by adding at the end thereof the following: “(d) (1) (A) A health maintenance organization which— “(i) has for at least 5 years provided comprehensive health services on a prepaid basis, or “(ii) has an enrollment of at least 50,000 members, shall have at least once during each fiscal year next following a fiscal year in which it did not have a financial deficit an open enrollment period (determined under subparagraph (B)) during which it shall accept individuals for membership in the order in which they apply for enrollment and, except as provided in paragraph (2), without regard to preexisting illness, medical condition, or degree of disability. “(B) An open enrollment period for a health maintenance organization shall be the lesser of— “(i) 30 days, or “(ii) the number of days in which the organization enrolls a number of individuals at least equal to 3 percent of its total net increase in enrollment (if any) in the fiscal year preceding the fiscal year in which such period is held. For the purpose of determining the total net increase in enrollment in a health maintenance organization, there shall not be included any individual who is enrolled in the organization through a group which had a contract for health care services with the health maintenance organization at the time that such health maintenance organization was determined to be a qualified health maintenance organization under section 1310. 42 USC 300e–9. “(2) Notwithstanding the requirements of paragraph (1) a health maintenance organization shall not be required to enroll individuals who are confined to an institution because of chronic illness, permanent injury, or other infirmity which would cause economic impairment to the health maintenance organization if such individual were enrolled. “(3) A health maintenance organization may not be required to make the effective date of benefits for individuals enrolled under this subsection less than 90 days after the date of enrollment. “(4) The Secretary may waive the requirements of this subsection Waiver. for a health maintenance organization which demonstrates that compliance with the provisions of this subsection would jeopardize its economic viability in its service area.”. Sec. 104. definition of services (a) (1) Paragraph (1) (H) of section 1302 is amended to 42 USC 300e–1. read as follows: “(H) preventive health services (including (i) immunizations, (ii) well-child care from birth, (iii) periodic health evaluations or adults, (iv) voluntary family planning services, (v) infertility services, and (vi) children’s eye and ear examinations conducted to determine the need for vision and hearing correction).”. (2) Paragraph (1) of section 1302 is amended by striking out “or podiatrist” each place it occurs and substituting “podiatrist, or other health care personnel”. (b) Paragraph (2) of such section is amended— (1) by striking out “under paragraph (1) (A) or (1) (H)” in subparagraphs (B) and (C); (2) by striking out “and” at the end of subparagraph (E), by striking out the period at the end of subparagraph (F) and substituting “; and”, and by adding after subparagraph (F) the following: “(G) other health services which are not included as basic health services and which have been approved by the Secretary for delivery as supplemental health services.”; (3) by striking out “or podiatrist” each place it occurs and substituting “podiatrist, or other health care personnel”. Sec. 105. community rating (a) (1) Section 1301(b)(1) is amended by adding at the 42 USC 300e. end thereof the following new sentence: “In the case of an entity which before it became a qualified health maintenance organization (within the meaning of section 1310(d)) provided comprehensive health services on a prepaid basis, the requirement of clause (C) shall not apply to such entity until the expiration of the forty-eight month period beginning with the month following the month in which the entity became such a qualified health organization.”. (2) The last sentence of section 1301(b) (2) is amended by inserting before the period the following; “except that, in the case of an entity winch before it became a qualified health maintenance organization 42 USC 300e–9. (within the meaning of section 1310(d)) provided comprehensive health services on a prepaid basis, the requirement of this sentence shall not apply to such entity during the forty-eight month period beginning with the month following the month in which the entity became such a qualified health maintenance organization”. (3) Section 1306(b) is amended (A) by striking out “and” at the end of paragraph (6), (B) by redesignating paragraph (7) as paragraph (8), and (C) by inserting after paragraph (6) the following new paragraph: “(7) the application contains such assurances as the Secretary may require respecting the intent and the ability of the applicant to meet the requirements of paragraphs (1) and (2) of section 1301(b) respecting the fixing of basic health services payments and supplemental health services payments under a community rating system; and” (b) Section 1302(8) (A) is amended by inserting “differences in marketing costs and” after “reflect”. (c) Subparagraph (B) of section 1302(8) is redesignated as subparagraph (C) and the following new subparagraph is inserted after subparagraph (A): “(B) Nominal differentials in such rates may be established to reflect the compositing of the rates of payment in a systematic manner to accommodate group purchasing practices of the various employers.”. Sec. 106. medical group requirements (a) Section 1302(4) (C) is amended by striking out “(i) as their principal professional activity and as a group responsibility engage in the coordinated practice of their profession for a health maintenance organization” and substituting “(i) as their principal professional activity engage in the coordinated practice of their profession and as a group responsibility have substantial responsibility for the delivery of health services to members of a health maintenance organization”. (b) Section 1302(4) (C) (ii) is amended by striking out “plan” and substituting “similar plan unrelated to the provision of specific health services”. (c) 1302(4) (C) (as amended by section 102(b) (1)) is amended by— (1) striking “and” before “(iv)”, and (2) striking the period at the end of subparagraph (C) and substituting”; and (v) establish an arrangement whereby a member’s enrollment status is not known to the health professional who provides health services to the member.”. Sec. 107. increase in limits on assistance for feasibility surveys, planning, initial development, and initial operation (a) Section 1303(e) is amended by striking “$50,000” and substituting “$75,000”. (b) (1) Section 1304(f) (1) (A) is amended by striking “$125,000” and substituting “$200,000”. (2) Section 1304(f)(2)(A) is amended by inserting after “$1,000,000” the following: “or, in the case of a project for a health maintenance organization which will provide services to an additional service area (as defined by the Secretary) or which will provide services in one or more areas which are not contiguous, $1,600,000”. (c) Section 1305(a) is amended by striking out “first thirty-six 42 USC 300e–4. months” each place it occurs and substituting “first sixty months”. Sec. 108. loan guarantees for private entities (a) Section 1304(a) (2) is amended to read as follows: 42 USC 300e–3. “(2) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to— “(A) nonprofit private entities for planning projects for the establishment or expansion of health maintenance organizations, or “(B) other private entities for such projects for health maintenance organizations which will serve medically underserved populations.”. (b) Section 1304(b) (1) (B) is amended to read as follows: “(B) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to— “(i) nonprofit private entities for projects for the initial development of health maintenance organizations, or “(ii) other private entities for such projects for health maintenance organizations which will serve medically underserved populations.”. (c) Section 1305(a) (3) is amended to read as follows: 42 USC 300e–4. “(3) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to— “(A) nonprofit private health maintenance organizations for the amounts referred to in paragraph (1) or (2), or “(B) other private health maintenance organizations for such amounts but only if the health maintenance organization will serve a medically underserved population.”. (d) (1) Section 1304(d) is amended by adding at the end the following new sentence: “In considering applications for loan guarantees Special consideration. under this section, the Secretary shall give special consideration to applications for projects for health maintenance organizations which will serve medically underserved populations.”. (2) Section 1305 is amended by adding at the end thereof the following new subsection: “(f) In considering applications for loan guarantees under this section, the Secretary shall give special consideration to applications for health maintenance organizations which will serve medically underserved populations.”. Sec. 109. miscellaneous amendments (a) (1) Section 1305(a) is amended by striking out “in 42 USC 300e–4. the period of” in paragraphs (1) and (2) and substituting “during a period not to exceed”. (2) The last sentence of 1305(b) (1) is amended to read as follows: Limitation. “In any fiscal year the amount disbursed to a health maintenance organization under this section (either directly by the Secretary or by an escrow agent under the terms of an escrow agreement or by a lender under a loan guaranteed under this section) may not exceed $1,000,000.”. (b) (1) Section 1307(e) is amended— (A) by inserting “for a private health maintenance organization (other than a private nonprofit health maintenance organization)” after “may be made”, and (B) by inserting “for private health maintenance organizations (other than private nonprofit health maintenance organizations)” after “guaranteed”. (2) Section 1308(c) is amended by adding after paragraph (4) the following new paragraph: “(5) Any reference in this title (other than in this subsection and in subsection (d)) to a loan guarantee under this title does not include a loan guarantee made under this subsection.”. (c) (1) Section 1308(a)(1)(A) is amended by striking out “for similar loans” and substituting “for loans with similar maturities, terms, conditions, and security”. (2) Section 1308(b) (2) (D) is amended by striking out “loans guaranteed under this title” and substituting “marketable obligations of the United States of comparable maturities, adjusted to provide for appropriate administrative charges”. (d) (1) The last sentence of section 1303 (i) is amended— (A) by striking “the fiscal year ending June 30, 1974, or June 30, 1975,” and substituting “any fiscal year”; and (B) by striking “for projects other than those described in clause (1) of such sentence” and substituting “for any project, with priority being given to projects described in clause (1) of such sentence”. (2) The last sentence of section 1304(k)(l) is amended— (A) by striking “the fiscal year ending June 30, 1974, or June 30, 1975,” and substituting “any fiscal year”; and (B) by striking “for projects other than those described in clause (A) of such sentence” and substituting “for any project, with priority being given to projects described in clause (A) of such sentence”.‘ (3) The last sentence of section 1304(k) (2) is amended— (A) by striking “the fiscal year ending June 30, 1974, or in either of the next two fiscal years” and substituting “any fiscal year”; and (B) by striking “for projects other than those described in clause (A) of such sentence” and substituting “for any project, with priority being given to projects described in clause (A) of such sentence”. (e) Section 1304(b) (2)(D) is amended by striking out “for such an organization” and substituting “who will engage in practice principally for the health maintenance organization”. Sec. 110. employee health benefits plans (a) Section 1310 is amended— (1) by amending subsection (a) to read as follows: “Sec. 1310. (a) (1) In accordance with regulations which the Secretary shall prescribe— “(A) each employer— “(i) which is now or hereafter required during any calendar quarter to pay its employees the minimum wage prescribed by section 6 of the Fair Labor Standards Act of 29 USC 206. 29 USC 213. 1938 (or would be required to pay its employees such wage but for section 13(a) of such Act), and “(ii) which during such calendar quarter employed an average number of employees of not less than 25, shall include in any health benefits plan, and “(B) any State and each political subdivision thereof which during any calendar quarter employed an average number of employees of not less than 25, as a condition of the payment to the State of funds under section 314(d), 317, 318, 1002, 1525, or 1613, 42 USC 246, 247b, 247c, 300a, 300m–4, 300p–3. shall include in any health benefits plan, offered to such employees in the, calendar year beginning after such calendar quarter the option of membership in qualified health maintenance organizations which are engaged in the provision of basic health services in health maintenance organization service areas in which at least 25 of such employees reside. “(2) If any of the employees of an employer or State or political subdivision thereof described in paragraph (1) are represented by a collective bargaining representative or other employee representative designated or selected under any law’, offer of membership in a qualified health maintenance organization required by paragraph (1) to be made in a health benefits plan offered to such employees (A) shall first be made to such collective bargaining representative or other employee representative, and (B) if such offer is accepted by such representative, shall then be made to each such employee.”; (2) by amending paragraphs (1) and (2) of subsection (b) to read as follows: “(1) one or more of such organizations provides basic health services (A) without the use of an individual practice association and (B) without the use of contracts (except for contracts for unusual or infrequently used services) with health professionals, and “(2) one or more of such organizations provides basic health services through (A) an individual practice association (or associations), (B) health professionals who have contracted with the health maintenance organization for the provision of such services, or (C) a combination of such association (or associations) or health professionals under contract with the organization,”; (3) by striking out the last sentence of subsection (c); and (4) by adding after subsection (d) the following new subsections: “(e) (1) Any employer who knowingly does not comply with one or Civil penalty. more of the requirements of subsection (a) shall be subject to a civil penalty of not more than $10,000. If such noncompliance continues, a civil penalty may be assessed and collected under this subsection for each thirty-day period such noncompliance continues. Such penalty may be assessed by the Secretary and collected in a civil action brought by the United States in a United States district court. “(2) In any proceeding by the Secretary to assess a civil penalty Notice. under this subsection, no penalty shall be assessed until the employer charged shall have been given notice and an opportunity to present its views on such charge. In determining the amount of the penalty, or the amount agreed upon in compromise, the Secretary shall consider the gravity of the noncompliance and the demonstrated good faith of the employer charged in attempting to achieve rapid compliance after notification by the Secretary’ of a noncompliance. “(3) In any civil action brought to review the assessment of a civil penalty assessed under this subsection, the court shall, at the request of any party to such action, hold a trial de novo on the assessment of such civil penalty and in any civil action to collect such a civil penalty, the court shall, at the request of any party to such action, hold a trial de novo on the assessment of such civil penalty unless in a prior civil action to review the assessment of such penalty the court held a trial de novo on such assessment. “(f) For purposes of this section, the term ‘employer’ does not include (1) the Government of the United States, the government of the District of Columbia or any territory or possession of the United States, a State or any political subdivision thereof, or any agency or instrumentality (including the United States Postal Service, and Postal Rate Commission) of any of the foregoing; or (2) a church, convention or association of churches, or any organization operated, supervised or controlled by a church, convention or association of churches which organization (A) is an organization described in section 26 USC 501. 501(c)(3) of the Internal Revenue Code of 1954, and (B) does not discriminate (i) in the employment, compensation, promotion, or termination of employment of any personnel, or (ii) in the extension of staff or other privileges to any physician or other health personnel, because such persons seek to obtain or obtained health care, or participate in providing health care, through a health maintenance organization. “(g) If the Secretary, after reasonable notice and opportunity for hearing to a State, finds that it or any of its political subdivisions has failed to comply with one or more of the requirements of subsection (a), the Secretary shall terminate payments to such State 42 USC 246, 247b, 247c, 300a, 300m–4 300p–3. under sections 314(d), 317, 318, 1002, 1525, and 1613 and notify the Governor of such State that further payments under such sections will not be made to the State until the Secretary is satisfied that there will no longer be any such failure to comply. “(h) The duties and functions of the Secretary, insofar as they involve making determinations as to whether an organization is a qualified health maintenance organization within the meaning of subsection (d), shall be administered through the Assistant Secretary for Health and in the Office of the Assistant Secretary for Health, and the administration of such duties and functions shall be integrated 42 USC 300e–11. with the administration of section 1312(a).”. (b) Section 8902 of title 5, United States Code, relating to Federal employee health insurance, is amended by adding at the end thereof the following new subsection: “(l) The Commission shall contract under this chapter for a plan described in section 8903(4) of this title with any qualified health “Qualified health maintenance carrier.” 42 USC 300e–9. maintenance carrier which offers such a plan. For the purpose of this subsection, ‘qualified health maintenance carrier’ means any qualified carrier which is a qualified health maintenance organization within the meaning of section 1310(d) (1) of title XIII of the Public Health Service Act. (42 U.S.C. 300c–9)(d)).”. Sec. 111. enforcement requirements (a) Section 1312(a) is amended by striking out all of the section following paragraph (3) and substituting the following: “the Secretary may take the action authorized by subsection (b),” (b) Section 1312(b) is amended to read as follows: “(b) (1) If the Secretary makes, with respect to any entity which provided assurances to the Secretary under section 1310(d)(1), a determination described in subsection (a), the Secretary shall notify the entity in writing of the determination. Such notice shall specify the manner in which the entity has not complied with such assurances and direct that the entity initiate (within 30 days of the date the notice is issued by the Secretary or within such longer period as the Secretary determines is reasonable) such action as may be necessary to bring (within such period as the Secretary shall prescribe) the entity into compliance with the assurances. If the entity fails to initiate Notification. corrective action within the period prescribed by the notice or fails to comply with the assurances within such period as the Secretary prescribes (A) the entity shall not Ire a qualified health maintenance organization for purposes of section 1310 until such date as the Secretary 42 USC 300e–9. determines that it is in compliance with the assurances, and (B) each employer which has offered membership in the entity in compliance with section 1310, each lawfully recognized collective bargaining representative or other employee representative which represents the employees of each such employer, and the members of such entity shall be notified by the entity that the entity is not a qualified health maintenance organization for purposes of such section. The notice required by clause (B) of the preceding sentence shall contain, in readily understandable language, the reasons for the determination that the entity is not a qualified health maintenance organization. The Publication in Federal Register. Secretary shall publish in the Federal Register each determination referred to in this paragraph. “(2) If the Secretary makes, with respect to an entity which has received a grant, contract, loan, or loan guarantee under this title, a determination described in subsection (a), the Secretary mar, in addition to any other remedies available to him, bring a civil action in the United States district court for the district in which such entity is located to enforce its compliance with the assurances it furnished respecting the provision of basic and supplemental health services or its organization or operation, as the case may be, which assurances were made in connection with its application under this title for the grant, contract, loan, or loan guarantee.”. (c) Section 1312 is amended by adding at the end the following new 42 USC 300e–11. Administration. subsection: “(c) The Secretary, acting through the Assistant Secretary for Health, shall administer subsections (a) and (b) in the Office of the Assistant Secretary for Health.”. Sec. 112. Hmo’s and federal wealth benefits programs Section 1307(d) is amended by adding after and below 42 USC 300e–6. paragraph (2) the following new sentence: “An entity which provides health services to a defined population on a prepaid basis and which has members who are enrolled under the health benefits program authorized by chapter 89 of title 5, United States Code, may be considered 5 USC 8901 et seq. as a health maintenance organization for purposes of receiving assistance under this title if with respect to its other members it provides health services in accordance with section 1301(b) and is 42 USC 300e. organized and operated in the manner prescribed by section 1301(c).”. Sec. 113. extensions and authorizations (a) Section 1304 (j) is amended (1) by striking out 42 USC 300e–3. “September 30, 1976” and substituting “September 30, 1978”, and (2) by striking out “September 30, 1977” and substituting “September 30, 1979”. (b) Subsection (d) of section 1305 is amended to read as follows: 42 USC 300e–4. “(d) No loan may be made or guaranteed under this section after September 30, 1980.”. (c) Section 1309(a) is amended— (1) by striking out “and” after “1975,”, (2) by inserting after “1976” the following: “, $45,000,000 for the fiscal year ending September 30, 1977, and $45,000,000 for the fiscal year ending September 30, 1978”, (3) by striking out “ending June 30, 1977” and substituting “ending September 30, 1977”, and (4) by striking out “$85,000,000” the first time it occurs and substituting “$40,000,000”, and by striking out “$85,000,000” the second time it occurs and substituting “$50,000,000”. Sec. 114. restrictive state laws Section 1311 is amended by adding at the end the following new subsection: “(c) The Secretary shall, within 6 months after the date of the enactment of this subsection, develop a digest of State laws, regulations, and practices pertaining to development, establishment, and operation of health maintenance organizations which shall be updated at least quarterly and relevant sections of which shall be provided to the Governor of each State annually. Such digest shall indicate which State laws, regulations, and practices appear to be inconsistent with the operation of this section. The Secretary shall also insure that appropriate legal consultative assistance is available to the States for the purpose of complying with the provisions of this section.” Sec. 115. program evaluation by the comptroller general So much of section 1314(a) as precedes paragraph (1) thereof is amended to read as follows: “Sec. 1314. (a) The Comptroller General shall evaluate the operations of at least ten or one-half (whichever is greater) of the health maintenance organizations for which assistance was provided under 42 USC 300e–2–300e–4. Report to Congress. sections 1303, 1304, and 1305, and which, by December 31, 1976, have been designated by the Secretary under section 1310(d) as qualified health maintenance organizations. The Comptroller General shall report to the Congress the results of the evaluation by June 30, 1978. Such report shall contain findings—”. Sec. 116. administration of programs Title XIII is amended by adding after section 1315 the following new section: “Sec. 1316. “administration of program The Secretary shall administer this title (other than sections 1310 and 1312) through a single identifiable administrative unit of the Department.”. Sec. 117. conforming amendments (a) Section 1532(e) is amended by adding the following sentence at the end thereof: “The criteria established by any health systems agency or State Agency under paragraph (8) shall be consistent with the standards and procedures established by the Secretary 42 USC 300e–5. under section 1306 (c) of this Act.”. (b) (1) Paragraph (6) of section 1302 is amended to read as follows: 42 USC 300e–1. “Health systems agency.” 42 USC 300l–4. “(6) The term ‘health systems agency’ means an entity which, is designated in accordance with section 1515 of this Act.”. (2) Paragraph (7) of section 1302 is amended by— (A) striking “section 314(a) State health planning agency whose section 314(a) plan” and substituting “State health planning and development agency which”; and (B) striking “section 314(b) areawide health planning agency whose section 314(b) plan”, and substituting “health systems agency designated for a health service area which”. (3) Paragraph (1) of section 1303(b) is amended by striking “section 42 USC 300e–2. 314(b) area wide health planning agency (if any) whose section 314(b) plan” and substituting “each health systems agency designated for a health service area which”. (4) Paragraph (1) of section 1304(c) is amended by striking “section 42 USC 300e–3. 314(b) area wide health planning agency (if any) whose section 314(b) plan” and substituting “each health systems agency designated for a health service area which”. (5) Section (b) (5) of section 1306 is amended to read as follows: 42 USC 300e–5. “(5) each health systems agency designated for a health service area which covers (in whole or in part) the area to be served by the health maintenance organization for which such application is submitted:”. (6) Subsection (c) of section 1306 is amended by striking “section 314(b) area wide health planning agencies and section 314(a) State health planning agencies” and substituting “health systems agencies”. Sec. 118. effective dates (a) Except as provided in subsection (b), the amendments 42 USC 300e note. made by this title shall take effect on the date of the enactment of this Act. (b) (1) The amendments made by sections 101, 102, 103, 104, and 106 shall (A) apply with respect to grants, contracts, loans, and loan guarantees made under sections 1303, 1304, and 1305 of the Public Health Service Act for fiscal years beginning after September 30, 42 USC 300e–2–300e–4. 42 USC 300e–9. 42 USC 300e–11. 42 USC 300e. 1976, (B) apply with respect to health benefit plans offered under section 1310 of such Act after such date, and (C) for purposes of section 1312 take effect October 1, 1976. (2) Subsection (d) of section 1301 of the Public Health Service Act (added by section 103(b) of this Act) shall take effect with respect to fiscal years of health maintenance organizations beginning on or after the date of the enactment of this Act. (3) The amendments made by section 107 shall apply with respect to grants, contracts, loans, and loan guarantees made under sections 1303, 1304, and 1305 of the Public Health Service Act for fiscal years beginning after September 30, 1976. (4) The amendments made by sections 109(a) (1) and 109(c) shall apply with respect to loan guarantees made under section 1305 of the Public Health Service Act after September 30, 1976. (5) The amendment made by section 109(e) shall apply with respect to projects assisted under section 1304 of the Public Health Service Act after September 30, 1976. (6) The amendments made by paragraphs (1) and (2) of section 110(a) shall apply with respect to calendar quarters which begin after the date of the enactment of this Act. (7) The amendments made by paragraphs (3) and (4) of section 110 shall apply with respect to failures of employers to comply with 42 USC 300e–9. section 1310(a) of the Public Health Service Act after the date of the enactment of this Act. (8) The amendment made by section 111 shall apply with respect 42 USC 300e–11. to determinations of the Secretary of Health, Education, and Welfare described in section 1312(a) of the Public Health Service Act, and made after the date of the enactment of this Act.

   Effective date note
   Pub. L. 94–460, title I, § 118, Oct. 8, 1976, 90 Stat. 1955, provided that:

3. 1976

   Health Maintenance Organization Amendments of 1976

   Pub. L. 94–460 title I · 90 Stat. 1945

   1. Substituted · 42 U.S.C. § 300e(b)(2)

      Pub. L. 94–460, §§ 101(b), 105(a)(2), substituted “the organization may provide to each of its members any of the health services which are included in supplemental health services (as defined in section 300e–1(2) of this title)” for “the organization shall provide to each of its members each health service (A) which is included in supplemental health services (as defined in section 300e–1(2) of this title), (B) for which the required health manpower are available in the area served by the organization, and (C) for the provision of which the member has contracted with the organization”

   2. Inserted · 42 U.S.C. § 300e(b)(2)

      Pub. L. 94–460, §§ 101(b), 105(a)(2), inserted “except that, in the case of an entity which before it became a qualified health maintenance organization (within the meaning of section 300e–9(d) of this title) provided comprehensive health services on a prepaid basis, the requirement of this sentence shall not apply to such entity during the forty-eight month period beginning with the month following the month in which the entity became such a qualified health maintenance organization” after “Supplemental health services payments which are fixed on a prepayment basis shall be fixed under a community rating system”

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 94–460, §§ 101(b), 105(a)(2), substituted “the organization may provide to each of its members any of the health services which are included in supplemental health services (as defined in section 300e–1(2) of this title)” for “the organization shall provide to each of its members each health service (A) which is included in supplemental health services (as defined in section 300e–1(2) of this title), (B) for which the required health manpower are available in the area served by the organization, and (C) for the provision of which the member has contracted with the organization” and inserted “except that, in the case of an entity which before it became a qualified health maintenance organization (within the meaning of section 300e–9(d) of this title) provided comprehensive health services on a prepaid basis, the requirement of this sentence shall not apply to such entity during the forty-eight month period beginning with the month following the month in which the entity became such a qualified health maintenance organization” after “Supplemental health services payments which are fixed on a prepayment basis shall be fixed under a community rating system”.

   Enacted provision · exact public law
   TITLE I— AMENDMENTS TO TITLE XIII OF THE PUBLIC HEALTH SERVICE ACT Sec. 101. (a) Section 1301(b) (1) is amended by adding at the end 42 USC 300e. the following: “A health maintenance organization may include a health service, defined as a supplemental health service by section 1302(2), in the basic health services provided its members for a basic health services payment described in the first sentence.”. (b) The first sentence of section 1301(b) (2) is amended by striking out “the organization shall provide” and all that follows in that sentence and substituting “the organization may provide to each of its members any of the health services which are included in supplemental health services (as defined in section 1302(2)).”. 42 USC 300e–1. (c) Section 1301(b) (4) is amended by striking out “and supplemental health services in the case of the members who have contracted therefor” and substituting “and only such supplemental health services as members have contracted for”. Sec. 102. staffing (a) (1) The first sentence of section 1301(b) (3) is amended 42 USC 300e. (A) by stinking out “or through” and by substituting “, through”, (B) by striking out “(or groups) or” and substituting “(or groups), through an”, and (C) by inserting after “(or associations)” the following: “, through health professionals who have contracted with the health maintenance organization for the provision of such services, or through any combination of such staff, medical group (or groups), individual practice association (or associations), or health professionals under contract with the organization”. (2) Section 1301(b) (3) is amended by adding after the first sentence the following: “A health maintenance organization may also, during the thirty-six month period beginning with the month follow-ing the month in which the organization becomes a qualified health 42 USC 300e–9. maintenance organization (within the meaning of section 1310(d)), provide basic and supplemental health services through an entity 42 USC 300e–1. which but for the requirement of section 1302(4) (C) (i) would be a medical group for purposes of this title. After the expiration of such period, the organization may provide basic or supplemental health services through such an entity only if authorized by the Secretary in accordance with regulations which take into consideration the unusual circumstances of such entity. A health maintenance organization may not, in any of its fiscal years, enter into contracts with health professionals or entities other than medical groups or individual practice associations if the amounts paid under such contracts for basic and supplemental health services exceed fifteen percent of the total amount to be paid in such fiscal year by the health maintenance organization to physicians for the provision of basic and supplemental health services, or, if the health maintenance organization principally serves a rural area, thirty percent of such amount, except that this sentence does not apply to the entering into of contracts for the purchase of basic and supplemental health services through an entity which hut for the requirements of section 1302(4) (C) (i) would be a medical group for purposes of this title. Contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services shall include such provisions as the Secretary may require (including provisions requiring appropriate continuing education).”. (b) (1) Section 1302(4) (C) is amended (A) by striking out clause (iv), (B) by redesignating clause (v) as clause (iv), and (C) by inserting “and” at the end of clause (iii). (2) Section 1302(5) (B) is amended (A) by striking out clause (i), and (B) by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively. Sec. 103. open enrollment (a) Section 1301(c) is amended by amending paragraph (4) to read as follows: “(4) have an open enrollment period in accordance with the provisions of subsection (d);”. (b) Section 1301 is amended by adding at the end thereof the following: “(d) (1) (A) A health maintenance organization which— “(i) has for at least 5 years provided comprehensive health services on a prepaid basis, or “(ii) has an enrollment of at least 50,000 members, shall have at least once during each fiscal year next following a fiscal year in which it did not have a financial deficit an open enrollment period (determined under subparagraph (B)) during which it shall accept individuals for membership in the order in which they apply for enrollment and, except as provided in paragraph (2), without regard to preexisting illness, medical condition, or degree of disability. “(B) An open enrollment period for a health maintenance organization shall be the lesser of— “(i) 30 days, or “(ii) the number of days in which the organization enrolls a number of individuals at least equal to 3 percent of its total net increase in enrollment (if any) in the fiscal year preceding the fiscal year in which such period is held. For the purpose of determining the total net increase in enrollment in a health maintenance organization, there shall not be included any individual who is enrolled in the organization through a group which had a contract for health care services with the health maintenance organization at the time that such health maintenance organization was determined to be a qualified health maintenance organization under section 1310. 42 USC 300e–9. “(2) Notwithstanding the requirements of paragraph (1) a health maintenance organization shall not be required to enroll individuals who are confined to an institution because of chronic illness, permanent injury, or other infirmity which would cause economic impairment to the health maintenance organization if such individual were enrolled. “(3) A health maintenance organization may not be required to make the effective date of benefits for individuals enrolled under this subsection less than 90 days after the date of enrollment. “(4) The Secretary may waive the requirements of this subsection Waiver. for a health maintenance organization which demonstrates that compliance with the provisions of this subsection would jeopardize its economic viability in its service area.”. Sec. 104. definition of services (a) (1) Paragraph (1) (H) of section 1302 is amended to 42 USC 300e–1. read as follows: “(H) preventive health services (including (i) immunizations, (ii) well-child care from birth, (iii) periodic health evaluations or adults, (iv) voluntary family planning services, (v) infertility services, and (vi) children’s eye and ear examinations conducted to determine the need for vision and hearing correction).”. (2) Paragraph (1) of section 1302 is amended by striking out “or podiatrist” each place it occurs and substituting “podiatrist, or other health care personnel”. (b) Paragraph (2) of such section is amended— (1) by striking out “under paragraph (1) (A) or (1) (H)” in subparagraphs (B) and (C); (2) by striking out “and” at the end of subparagraph (E), by striking out the period at the end of subparagraph (F) and substituting “; and”, and by adding after subparagraph (F) the following: “(G) other health services which are not included as basic health services and which have been approved by the Secretary for delivery as supplemental health services.”; (3) by striking out “or podiatrist” each place it occurs and substituting “podiatrist, or other health care personnel”. Sec. 105. community rating (a) (1) Section 1301(b)(1) is amended by adding at the 42 USC 300e. end thereof the following new sentence: “In the case of an entity which before it became a qualified health maintenance organization (within the meaning of section 1310(d)) provided comprehensive health services on a prepaid basis, the requirement of clause (C) shall not apply to such entity until the expiration of the forty-eight month period beginning with the month following the month in which the entity became such a qualified health organization.”. (2) The last sentence of section 1301(b) (2) is amended by inserting before the period the following; “except that, in the case of an entity winch before it became a qualified health maintenance organization 42 USC 300e–9. (within the meaning of section 1310(d)) provided comprehensive health services on a prepaid basis, the requirement of this sentence shall not apply to such entity during the forty-eight month period beginning with the month following the month in which the entity became such a qualified health maintenance organization”. (3) Section 1306(b) is amended (A) by striking out “and” at the end of paragraph (6), (B) by redesignating paragraph (7) as paragraph (8), and (C) by inserting after paragraph (6) the following new paragraph: “(7) the application contains such assurances as the Secretary may require respecting the intent and the ability of the applicant to meet the requirements of paragraphs (1) and (2) of section 1301(b) respecting the fixing of basic health services payments and supplemental health services payments under a community rating system; and” (b) Section 1302(8) (A) is amended by inserting “differences in marketing costs and” after “reflect”. (c) Subparagraph (B) of section 1302(8) is redesignated as subparagraph (C) and the following new subparagraph is inserted after subparagraph (A): “(B) Nominal differentials in such rates may be established to reflect the compositing of the rates of payment in a systematic manner to accommodate group purchasing practices of the various employers.”. Sec. 106. medical group requirements (a) Section 1302(4) (C) is amended by striking out “(i) as their principal professional activity and as a group responsibility engage in the coordinated practice of their profession for a health maintenance organization” and substituting “(i) as their principal professional activity engage in the coordinated practice of their profession and as a group responsibility have substantial responsibility for the delivery of health services to members of a health maintenance organization”. (b) Section 1302(4) (C) (ii) is amended by striking out “plan” and substituting “similar plan unrelated to the provision of specific health services”. (c) 1302(4) (C) (as amended by section 102(b) (1)) is amended by— (1) striking “and” before “(iv)”, and (2) striking the period at the end of subparagraph (C) and substituting”; and (v) establish an arrangement whereby a member’s enrollment status is not known to the health professional who provides health services to the member.”. Sec. 107. increase in limits on assistance for feasibility surveys, planning, initial development, and initial operation (a) Section 1303(e) is amended by striking “$50,000” and substituting “$75,000”. (b) (1) Section 1304(f) (1) (A) is amended by striking “$125,000” and substituting “$200,000”. (2) Section 1304(f)(2)(A) is amended by inserting after “$1,000,000” the following: “or, in the case of a project for a health maintenance organization which will provide services to an additional service area (as defined by the Secretary) or which will provide services in one or more areas which are not contiguous, $1,600,000”. (c) Section 1305(a) is amended by striking out “first thirty-six 42 USC 300e–4. months” each place it occurs and substituting “first sixty months”. Sec. 108. loan guarantees for private entities (a) Section 1304(a) (2) is amended to read as follows: 42 USC 300e–3. “(2) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to— “(A) nonprofit private entities for planning projects for the establishment or expansion of health maintenance organizations, or “(B) other private entities for such projects for health maintenance organizations which will serve medically underserved populations.”. (b) Section 1304(b) (1) (B) is amended to read as follows: “(B) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to— “(i) nonprofit private entities for projects for the initial development of health maintenance organizations, or “(ii) other private entities for such projects for health maintenance organizations which will serve medically underserved populations.”. (c) Section 1305(a) (3) is amended to read as follows: 42 USC 300e–4. “(3) guarantee to non-Federal lenders payment of the principal of and the interest on loans made to— “(A) nonprofit private health maintenance organizations for the amounts referred to in paragraph (1) or (2), or “(B) other private health maintenance organizations for such amounts but only if the health maintenance organization will serve a medically underserved population.”. (d) (1) Section 1304(d) is amended by adding at the end the following new sentence: “In considering applications for loan guarantees Special consideration. under this section, the Secretary shall give special consideration to applications for projects for health maintenance organizations which will serve medically underserved populations.”. (2) Section 1305 is amended by adding at the end thereof the following new subsection: “(f) In considering applications for loan guarantees under this section, the Secretary shall give special consideration to applications for health maintenance organizations which will serve medically underserved populations.”. Sec. 109. miscellaneous amendments (a) (1) Section 1305(a) is amended by striking out “in 42 USC 300e–4. the period of” in paragraphs (1) and (2) and substituting “during a period not to exceed”. (2) The last sentence of 1305(b) (1) is amended to read as follows: Limitation. “In any fiscal year the amount disbursed to a health maintenance organization under this section (either directly by the Secretary or by an escrow agent under the terms of an escrow agreement or by a lender under a loan guaranteed under this section) may not exceed $1,000,000.”. (b) (1) Section 1307(e) is amended— (A) by inserting “for a private health maintenance organization (other than a private nonprofit health maintenance organization)” after “may be made”, and (B) by inserting “for private health maintenance organizations (other than private nonprofit health maintenance organizations)” after “guaranteed”. (2) Section 1308(c) is amended by adding after paragraph (4) the following new paragraph: “(5) Any reference in this title (other than in this subsection and in subsection (d)) to a loan guarantee under this title does not include a loan guarantee made under this subsection.”. (c) (1) Section 1308(a)(1)(A) is amended by striking out “for similar loans” and substituting “for loans with similar maturities, terms, conditions, and security”. (2) Section 1308(b) (2) (D) is amended by striking out “loans guaranteed under this title” and substituting “marketable obligations of the United States of comparable maturities, adjusted to provide for appropriate administrative charges”. (d) (1) The last sentence of section 1303 (i) is amended— (A) by striking “the fiscal year ending June 30, 1974, or June 30, 1975,” and substituting “any fiscal year”; and (B) by striking “for projects other than those described in clause (1) of such sentence” and substituting “for any project, with priority being given to projects described in clause (1) of such sentence”. (2) The last sentence of section 1304(k)(l) is amended— (A) by striking “the fiscal year ending June 30, 1974, or June 30, 1975,” and substituting “any fiscal year”; and (B) by striking “for projects other than those described in clause (A) of such sentence” and substituting “for any project, with priority being given to projects described in clause (A) of such sentence”.‘ (3) The last sentence of section 1304(k) (2) is amended— (A) by striking “the fiscal year ending June 30, 1974, or in either of the next two fiscal years” and substituting “any fiscal year”; and (B) by striking “for projects other than those described in clause (A) of such sentence” and substituting “for any project, with priority being given to projects described in clause (A) of such sentence”. (e) Section 1304(b) (2)(D) is amended by striking out “for such an organization” and substituting “who will engage in practice principally for the health maintenance organization”. Sec. 110. employee health benefits plans (a) Section 1310 is amended— (1) by amending subsection (a) to read as follows: “Sec. 1310. (a) (1) In accordance with regulations which the Secretary shall prescribe— “(A) each employer— “(i) which is now or hereafter required during any calendar quarter to pay its employees the minimum wage prescribed by section 6 of the Fair Labor Standards Act of 29 USC 206. 29 USC 213. 1938 (or would be required to pay its employees such wage but for section 13(a) of such Act), and “(ii) which during such calendar quarter employed an average number of employees of not less than 25, shall include in any health benefits plan, and “(B) any State and each political subdivision thereof which during any calendar quarter employed an average number of employees of not less than 25, as a condition of the payment to the State of funds under section 314(d), 317, 318, 1002, 1525, or 1613, 42 USC 246, 247b, 247c, 300a, 300m–4, 300p–3. shall include in any health benefits plan, offered to such employees in the, calendar year beginning after such calendar quarter the option of membership in qualified health maintenance organizations which are engaged in the provision of basic health services in health maintenance organization service areas in which at least 25 of such employees reside. “(2) If any of the employees of an employer or State or political subdivision thereof described in paragraph (1) are represented by a collective bargaining representative or other employee representative designated or selected under any law’, offer of membership in a qualified health maintenance organization required by paragraph (1) to be made in a health benefits plan offered to such employees (A) shall first be made to such collective bargaining representative or other employee representative, and (B) if such offer is accepted by such representative, shall then be made to each such employee.”; (2) by amending paragraphs (1) and (2) of subsection (b) to read as follows: “(1) one or more of such organizations provides basic health services (A) without the use of an individual practice association and (B) without the use of contracts (except for contracts for unusual or infrequently used services) with health professionals, and “(2) one or more of such organizations provides basic health services through (A) an individual practice association (or associations), (B) health professionals who have contracted with the health maintenance organization for the provision of such services, or (C) a combination of such association (or associations) or health professionals under contract with the organization,”; (3) by striking out the last sentence of subsection (c); and (4) by adding after subsection (d) the following new subsections: “(e) (1) Any employer who knowingly does not comply with one or Civil penalty. more of the requirements of subsection (a) shall be subject to a civil penalty of not more than $10,000. If such noncompliance continues, a civil penalty may be assessed and collected under this subsection for each thirty-day period such noncompliance continues. Such penalty may be assessed by the Secretary and collected in a civil action brought by the United States in a United States district court. “(2) In any proceeding by the Secretary to assess a civil penalty Notice. under this subsection, no penalty shall be assessed until the employer charged shall have been given notice and an opportunity to present its views on such charge. In determining the amount of the penalty, or the amount agreed upon in compromise, the Secretary shall consider the gravity of the noncompliance and the demonstrated good faith of the employer charged in attempting to achieve rapid compliance after notification by the Secretary’ of a noncompliance. “(3) In any civil action brought to review the assessment of a civil penalty assessed under this subsection, the court shall, at the request of any party to such action, hold a trial de novo on the assessment of such civil penalty and in any civil action to collect such a civil penalty, the court shall, at the request of any party to such action, hold a trial de novo on the assessment of such civil penalty unless in a prior civil action to review the assessment of such penalty the court held a trial de novo on such assessment. “(f) For purposes of this section, the term ‘employer’ does not include (1) the Government of the United States, the government of the District of Columbia or any territory or possession of the United States, a State or any political subdivision thereof, or any agency or instrumentality (including the United States Postal Service, and Postal Rate Commission) of any of the foregoing; or (2) a church, convention or association of churches, or any organization operated, supervised or controlled by a church, convention or association of churches which organization (A) is an organization described in section 26 USC 501. 501(c)(3) of the Internal Revenue Code of 1954, and (B) does not discriminate (i) in the employment, compensation, promotion, or termination of employment of any personnel, or (ii) in the extension of staff or other privileges to any physician or other health personnel, because such persons seek to obtain or obtained health care, or participate in providing health care, through a health maintenance organization. “(g) If the Secretary, after reasonable notice and opportunity for hearing to a State, finds that it or any of its political subdivisions has failed to comply with one or more of the requirements of subsection (a), the Secretary shall terminate payments to such State 42 USC 246, 247b, 247c, 300a, 300m–4 300p–3. under sections 314(d), 317, 318, 1002, 1525, and 1613 and notify the Governor of such State that further payments under such sections will not be made to the State until the Secretary is satisfied that there will no longer be any such failure to comply. “(h) The duties and functions of the Secretary, insofar as they involve making determinations as to whether an organization is a qualified health maintenance organization within the meaning of subsection (d), shall be administered through the Assistant Secretary for Health and in the Office of the Assistant Secretary for Health, and the administration of such duties and functions shall be integrated 42 USC 300e–11. with the administration of section 1312(a).”. (b) Section 8902 of title 5, United States Code, relating to Federal employee health insurance, is amended by adding at the end thereof the following new subsection: “(l) The Commission shall contract under this chapter for a plan described in section 8903(4) of this title with any qualified health “Qualified health maintenance carrier.” 42 USC 300e–9. maintenance carrier which offers such a plan. For the purpose of this subsection, ‘qualified health maintenance carrier’ means any qualified carrier which is a qualified health maintenance organization within the meaning of section 1310(d) (1) of title XIII of the Public Health Service Act. (42 U.S.C. 300c–9)(d)).”. Sec. 111. enforcement requirements (a) Section 1312(a) is amended by striking out all of the section following paragraph (3) and substituting the following: “the Secretary may take the action authorized by subsection (b),” (b) Section 1312(b) is amended to read as follows: “(b) (1) If the Secretary makes, with respect to any entity which provided assurances to the Secretary under section 1310(d)(1), a determination described in subsection (a), the Secretary shall notify the entity in writing of the determination. Such notice shall specify the manner in which the entity has not complied with such assurances and direct that the entity initiate (within 30 days of the date the notice is issued by the Secretary or within such longer period as the Secretary determines is reasonable) such action as may be necessary to bring (within such period as the Secretary shall prescribe) the entity into compliance with the assurances. If the entity fails to initiate Notification. corrective action within the period prescribed by the notice or fails to comply with the assurances within such period as the Secretary prescribes (A) the entity shall not Ire a qualified health maintenance organization for purposes of section 1310 until such date as the Secretary 42 USC 300e–9. determines that it is in compliance with the assurances, and (B) each employer which has offered membership in the entity in compliance with section 1310, each lawfully recognized collective bargaining representative or other employee representative which represents the employees of each such employer, and the members of such entity shall be notified by the entity that the entity is not a qualified health maintenance organization for purposes of such section. The notice required by clause (B) of the preceding sentence shall contain, in readily understandable language, the reasons for the determination that the entity is not a qualified health maintenance organization. The Publication in Federal Register. Secretary shall publish in the Federal Register each determination referred to in this paragraph. “(2) If the Secretary makes, with respect to an entity which has received a grant, contract, loan, or loan guarantee under this title, a determination described in subsection (a), the Secretary mar, in addition to any other remedies available to him, bring a civil action in the United States district court for the district in which such entity is located to enforce its compliance with the assurances it furnished respecting the provision of basic and supplemental health services or its organization or operation, as the case may be, which assurances were made in connection with its application under this title for the grant, contract, loan, or loan guarantee.”. (c) Section 1312 is amended by adding at the end the following new 42 USC 300e–11. Administration. subsection: “(c) The Secretary, acting through the Assistant Secretary for Health, shall administer subsections (a) and (b) in the Office of the Assistant Secretary for Health.”. Sec. 112. Hmo’s and federal wealth benefits programs Section 1307(d) is amended by adding after and below 42 USC 300e–6. paragraph (2) the following new sentence: “An entity which provides health services to a defined population on a prepaid basis and which has members who are enrolled under the health benefits program authorized by chapter 89 of title 5, United States Code, may be considered 5 USC 8901 et seq. as a health maintenance organization for purposes of receiving assistance under this title if with respect to its other members it provides health services in accordance with section 1301(b) and is 42 USC 300e. organized and operated in the manner prescribed by section 1301(c).”. Sec. 113. extensions and authorizations (a) Section 1304 (j) is amended (1) by striking out 42 USC 300e–3. “September 30, 1976” and substituting “September 30, 1978”, and (2) by striking out “September 30, 1977” and substituting “September 30, 1979”. (b) Subsection (d) of section 1305 is amended to read as follows: 42 USC 300e–4. “(d) No loan may be made or guaranteed under this section after September 30, 1980.”. (c) Section 1309(a) is amended— (1) by striking out “and” after “1975,”, (2) by inserting after “1976” the following: “, $45,000,000 for the fiscal year ending September 30, 1977, and $45,000,000 for the fiscal year ending September 30, 1978”, (3) by striking out “ending June 30, 1977” and substituting “ending September 30, 1977”, and (4) by striking out “$85,000,000” the first time it occurs and substituting “$40,000,000”, and by striking out “$85,000,000” the second time it occurs and substituting “$50,000,000”. Sec. 114. restrictive state laws Section 1311 is amended by adding at the end the following new subsection: “(c) The Secretary shall, within 6 months after the date of the enactment of this subsection, develop a digest of State laws, regulations, and practices pertaining to development, establishment, and operation of health maintenance organizations which shall be updated at least quarterly and relevant sections of which shall be provided to the Governor of each State annually. Such digest shall indicate which State laws, regulations, and practices appear to be inconsistent with the operation of this section. The Secretary shall also insure that appropriate legal consultative assistance is available to the States for the purpose of complying with the provisions of this section.” Sec. 115. program evaluation by the comptroller general So much of section 1314(a) as precedes paragraph (1) thereof is amended to read as follows: “Sec. 1314. (a) The Comptroller General shall evaluate the operations of at least ten or one-half (whichever is greater) of the health maintenance organizations for which assistance was provided under 42 USC 300e–2–300e–4. Report to Congress. sections 1303, 1304, and 1305, and which, by December 31, 1976, have been designated by the Secretary under section 1310(d) as qualified health maintenance organizations. The Comptroller General shall report to the Congress the results of the evaluation by June 30, 1978. Such report shall contain findings—”. Sec. 116. administration of programs Title XIII is amended by adding after section 1315 the following new section: “Sec. 1316. “administration of program The Secretary shall administer this title (other than sections 1310 and 1312) through a single identifiable administrative unit of the Department.”. Sec. 117. conforming amendments (a) Section 1532(e) is amended by adding the following sentence at the end thereof: “The criteria established by any health systems agency or State Agency under paragraph (8) shall be consistent with the standards and procedures established by the Secretary 42 USC 300e–5. under section 1306 (c) of this Act.”. (b) (1) Paragraph (6) of section 1302 is amended to read as follows: 42 USC 300e–1. “Health systems agency.” 42 USC 300l–4. “(6) The term ‘health systems agency’ means an entity which, is designated in accordance with section 1515 of this Act.”. (2) Paragraph (7) of section 1302 is amended by— (A) striking “section 314(a) State health planning agency whose section 314(a) plan” and substituting “State health planning and development agency which”; and (B) striking “section 314(b) areawide health planning agency whose section 314(b) plan”, and substituting “health systems agency designated for a health service area which”. (3) Paragraph (1) of section 1303(b) is amended by striking “section 42 USC 300e–2. 314(b) area wide health planning agency (if any) whose section 314(b) plan” and substituting “each health systems agency designated for a health service area which”. (4) Paragraph (1) of section 1304(c) is amended by striking “section 42 USC 300e–3. 314(b) area wide health planning agency (if any) whose section 314(b) plan” and substituting “each health systems agency designated for a health service area which”. (5) Section (b) (5) of section 1306 is amended to read as follows: 42 USC 300e–5. “(5) each health systems agency designated for a health service area which covers (in whole or in part) the area to be served by the health maintenance organization for which such application is submitted:”. (6) Subsection (c) of section 1306 is amended by striking “section 314(b) area wide health planning agencies and section 314(a) State health planning agencies” and substituting “health systems agencies”. Sec. 118. effective dates (a) Except as provided in subsection (b), the amendments 42 USC 300e note. made by this title shall take effect on the date of the enactment of this Act. (b) (1) The amendments made by sections 101, 102, 103, 104, and 106 shall (A) apply with respect to grants, contracts, loans, and loan guarantees made under sections 1303, 1304, and 1305 of the Public Health Service Act for fiscal years beginning after September 30, 42 USC 300e–2–300e–4. 42 USC 300e–9. 42 USC 300e–11. 42 USC 300e. 1976, (B) apply with respect to health benefit plans offered under section 1310 of such Act after such date, and (C) for purposes of section 1312 take effect October 1, 1976. (2) Subsection (d) of section 1301 of the Public Health Service Act (added by section 103(b) of this Act) shall take effect with respect to fiscal years of health maintenance organizations beginning on or after the date of the enactment of this Act. (3) The amendments made by section 107 shall apply with respect to grants, contracts, loans, and loan guarantees made under sections 1303, 1304, and 1305 of the Public Health Service Act for fiscal years beginning after September 30, 1976. (4) The amendments made by sections 109(a) (1) and 109(c) shall apply with respect to loan guarantees made under section 1305 of the Public Health Service Act after September 30, 1976. (5) The amendment made by section 109(e) shall apply with respect to projects assisted under section 1304 of the Public Health Service Act after September 30, 1976. (6) The amendments made by paragraphs (1) and (2) of section 110(a) shall apply with respect to calendar quarters which begin after the date of the enactment of this Act. (7) The amendments made by paragraphs (3) and (4) of section 110 shall apply with respect to failures of employers to comply with 42 USC 300e–9. section 1310(a) of the Public Health Service Act after the date of the enactment of this Act. (8) The amendment made by section 111 shall apply with respect 42 USC 300e–11. to determinations of the Secretary of Health, Education, and Welfare described in section 1312(a) of the Public Health Service Act, and made after the date of the enactment of this Act.

   Effective date note
   Pub. L. 94–460, title I, § 118, Oct. 8, 1976, 90 Stat. 1955, provided that:

4. 1976

   Health Maintenance Organization Amendments of 1976

   Pub. L. 94–460 § 102(a) · 90 Stat. 1945

   1. Inserted · 42 U.S.C. § 300e(b)(3)

      Pub. L. 94–460, § 102(a), inserted references to health professionals who have contracted with the health maintenance organization for the provision of such services and to the combination of staff, medical groups, individual practice associations, or health professionals under contract with the health maintenance organization

   2. Inserted · 42 U.S.C. § 300e(b)(3)

      Pub. L. 94–460, § 102(a), inserted provisions allowing a health maintenance organization, during the thirty-six month period beginning with the month following the month in which the organization becomes a qualified health maintenance organization (within the meaning of section 300e–9(d) of this title), to provide basic and supplemental health services through an entity which but for the requirement of section 300e–1(4)(C)(i) of this title would be a medical group for purposes of this subchapter, directing that after the expiration of such period, the organization may provide basic or supplemental health services through such an entity only if authorized by the Secretary in accordance with regulations which take into consideration the unusual circumstances of such entity, directing that a health maintenance organization may not, in any of its fiscal years, enter into contracts with health professionals or entities other than medical groups or individual practice associations if the amounts paid under such contracts for basic and supplemental health services exceed fifteen percent of the total amount to be paid in such fiscal year by the health maintenance organization to physicians for the provision of basic and supplemental health services, or, if the health maintenance organization principally serves a rural area, thirty percent of such amount, except that the sentence would not apply to the entering into of contracts for the purchase of basic and supplemental health services through an entity which but for the requirements of section 300e–1(4)(C)(i) of this title would be a medical group for purposes of this subchapter, and directing that contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services include such provisions as the Secretary may require (including provisions requiring appropriate continuing education)

   Source evidence

   Code amendment note
   Subsec. (b)(3). Pub. L. 94–460, § 102(a), inserted references to health professionals who have contracted with the health maintenance organization for the provision of such services and to the combination of staff, medical groups, individual practice associations, or health professionals under contract with the health maintenance organization, and inserted provisions allowing a health maintenance organization, during the thirty-six month period beginning with the month following the month in which the organization becomes a qualified health maintenance organization (within the meaning of section 300e–9(d) of this title), to provide basic and supplemental health services through an entity which but for the requirement of section 300e–1(4)(C)(i) of this title would be a medical group for purposes of this subchapter, directing that after the expiration of such period, the organization may provide basic or supplemental health services through such an entity only if authorized by the Secretary in accordance with regulations which take into consideration the unusual circumstances of such entity, directing that a health maintenance organization may not, in any of its fiscal years, enter into contracts with health professionals or entities other than medical groups or individual practice associations if the amounts paid under such contracts for basic and supplemental health services exceed fifteen percent of the total amount to be paid in such fiscal year by the health maintenance organization to physicians for the provision of basic and supplemental health services, or, if the health maintenance organization principally serves a rural area, thirty percent of such amount, except that the sentence would not apply to the entering into of contracts for the purchase of basic and supplemental health services through an entity which but for the requirements of section 300e–1(4)(C)(i) of this title would be a medical group for purposes of this subchapter, and directing that contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services include such provisions as the Secretary may require (including provisions requiring appropriate continuing education).

   Enacted provision · exact public law section
   (a) (1) The first sentence of section 1301(b) (3) is amended 42 USC 300e. (A) by stinking out “or through” and by substituting “, through”, (B) by striking out “(or groups) or” and substituting “(or groups), through an”, and (C) by inserting after “(or associations)” the following: “, through health professionals who have contracted with the health maintenance organization for the provision of such services, or through any combination of such staff, medical group (or groups), individual practice association (or associations), or health professionals under contract with the organization”. (2) Section 1301(b) (3) is amended by adding after the first sentence the following: “A health maintenance organization may also, during the thirty-six month period beginning with the month follow-ing the month in which the organization becomes a qualified health 42 USC 300e–9. maintenance organization (within the meaning of section 1310(d)), provide basic and supplemental health services through an entity 42 USC 300e–1. which but for the requirement of section 1302(4) (C) (i) would be a medical group for purposes of this title. After the expiration of such period, the organization may provide basic or supplemental health services through such an entity only if authorized by the Secretary in accordance with regulations which take into consideration the unusual circumstances of such entity. A health maintenance organization may not, in any of its fiscal years, enter into contracts with health professionals or entities other than medical groups or individual practice associations if the amounts paid under such contracts for basic and supplemental health services exceed fifteen percent of the total amount to be paid in such fiscal year by the health maintenance organization to physicians for the provision of basic and supplemental health services, or, if the health maintenance organization principally serves a rural area, thirty percent of such amount, except that this sentence does not apply to the entering into of contracts for the purchase of basic and supplemental health services through an entity which hut for the requirements of section 1302(4) (C) (i) would be a medical group for purposes of this title. Contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services shall include such provisions as the Secretary may require (including provisions requiring appropriate continuing education).”.

   Effective date note
   Pub. L. 94–460, title I, § 118, Oct. 8, 1976, 90 Stat. 1955, provided that:

5. 1976

   Health Maintenance Organization Amendments of 1976

   Pub. L. 94–460 § 101(c) · 90 Stat. 1945

   Substituted · 42 U.S.C. § 300e(b)(4)

   Pub. L. 94–460, § 101(c), substituted “and only such supplemental health services as members have contracted for” for “and supplemental health services in the case of the members who have contracted therefor”

   Source evidence

   Code amendment note
   Subsec. (b)(4). Pub. L. 94–460, § 101(c), substituted “and only such supplemental health services as members have contracted for” for “and supplemental health services in the case of the members who have contracted therefor”.

   Enacted provision · exact public law section
   (c) Section 1301(b) (4) is amended by striking out “and supplemental health services in the case of the members who have contracted therefor” and substituting “and only such supplemental health services as members have contracted for”.

   Effective date note
   Pub. L. 94–460, title I, § 118, Oct. 8, 1976, 90 Stat. 1955, provided that:

6. 1976

   Health Maintenance Organization Amendments of 1976

   Pub. L. 94–460 § 103(a) · 90 Stat. 1945

   Substituted · 42 U.S.C. § 300e(c)(4)

   Pub. L. 94–460, § 103(a), substituted provisions making a simple reference to an open enrollment period in accordance with the provisions of subsec. (d) of this section for provisions spelling out in detail the requirements for a health maintenance organization with regard to an open enrollment period

   Source evidence

   Code amendment note
   Subsec. (c)(4). Pub. L. 94–460, § 103(a), substituted provisions making a simple reference to an open enrollment period in accordance with the provisions of subsec. (d) of this section for provisions spelling out in detail the requirements for a health maintenance organization with regard to an open enrollment period.

   Enacted provision · exact public law section
   (a) Section 1301(c) is amended by amending paragraph (4) to read as follows: “(4) have an open enrollment period in accordance with the provisions of subsection (d);”.

   Effective date note
   Pub. L. 94–460, title I, § 118, Oct. 8, 1976, 90 Stat. 1955, provided that:

7. 1976

   Health Maintenance Organization Amendments of 1976

   Pub. L. 94–460 § 103(b) · 90 Stat. 1945

   Added · 42 U.S.C. § 300e(d)

   Pub. L. 94–460, § 103(b), added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 94–460, § 103(b), added subsec. (d).

   Enacted provision · exact public law section
   (b) Section 1301 is amended by adding at the end thereof the following: “(d) (1) (A) A health maintenance organization which— “(i) has for at least 5 years provided comprehensive health services on a prepaid basis, or “(ii) has an enrollment of at least 50,000 members, shall have at least once during each fiscal year next following a fiscal year in which it did not have a financial deficit an open enrollment period (determined under subparagraph (B)) during which it shall accept individuals for membership in the order in which they apply for enrollment and, except as provided in paragraph (2), without regard to preexisting illness, medical condition, or degree of disability. “(B) An open enrollment period for a health maintenance organization shall be the lesser of— “(i) 30 days, or “(ii) the number of days in which the organization enrolls a number of individuals at least equal to 3 percent of its total net increase in enrollment (if any) in the fiscal year preceding the fiscal year in which such period is held. For the purpose of determining the total net increase in enrollment in a health maintenance organization, there shall not be included any individual who is enrolled in the organization through a group which had a contract for health care services with the health maintenance organization at the time that such health maintenance organization was determined to be a qualified health maintenance organization under section 1310. 42 USC 300e–9. “(2) Notwithstanding the requirements of paragraph (1) a health maintenance organization shall not be required to enroll individuals who are confined to an institution because of chronic illness, permanent injury, or other infirmity which would cause economic impairment to the health maintenance organization if such individual were enrolled. “(3) A health maintenance organization may not be required to make the effective date of benefits for individuals enrolled under this subsection less than 90 days after the date of enrollment. “(4) The Secretary may waive the requirements of this subsection Waiver. for a health maintenance organization which demonstrates that compliance with the provisions of this subsection would jeopardize its economic viability in its service area.”.

   Effective date note
   Pub. L. 94–460, title I, § 118, Oct. 8, 1976, 90 Stat. 1955, provided that:

8. 1978

   Health Maintenance Organization Amendments of 1978

   Pub. L. 95–559 · 92 Stat. 2131

   1. Inserted · 42 U.S.C. § 300e(b)(1)

      Pub. L. 95–559, §§ 10(a), 11(b), inserted “except in the case of basic health services provided a member who is a full-time student (as defined by the Secretary) at an accredited institution of higher education,” after “the requirement of clause (C)”

   2. Inserted · 42 U.S.C. § 300e(b)(1)

      Pub. L. 95–559, §§ 10(a), 11(b), inserted provisions permitting the health maintenance organization to seek reimbursement for the cost of services provided to a member who is entitled to benefits under a workmen’s compensation law or insurance policy

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 95–559, §§ 10(a), 11(b), inserted “except in the case of basic health services provided a member who is a full-time student (as defined by the Secretary) at an accredited institution of higher education,” after “the requirement of clause (C)” and inserted provisions permitting the health maintenance organization to seek reimbursement for the cost of services provided to a member who is entitled to benefits under a workmen’s compensation law or insurance policy.

9. 1978

   Health Maintenance Organization Amendments of 1978

   Pub. L. 95–559 § 10(a) · 92 Stat. 2131

   Inserted · 42 U.S.C. § 300e(b)(2)

   Pub. L. 95–559, § 10(a), inserted “unless the supplemental health services payment is for a supplemental health service provided a member who is a full-time student (as defined by the Secretary) at an accredited institution of higher education,” after “community rating system”

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 95–559, § 10(a), inserted “unless the supplemental health services payment is for a supplemental health service provided a member who is a full-time student (as defined by the Secretary) at an accredited institution of higher education,” after “community rating system”.

   Enacted provision · exact public law section
   (a) Section 1301(b) is amended (1) by inserting 42 USC 300e. “except, in the case of basic health services provided a member who is a fulltime student (as defined by the Secretary) at an accredited institution of higher education,” after “(C)” in paragraph (1), and (2) by inserting “unless the supplemental health services payment is for a supplemental health service provided a member who is a fulltime student (as defined by the Secretary) at an accredited institution of higher education,” after “community rating system” in the second sentence of paragraph (2).

10. 1978

    Health Maintenance Organization Amendments of 1978

    Pub. L. 95–559 § 11(a) · 92 Stat. 2131

    1. Amended · 42 U.S.C. § 300e(b)(3)

       Pub. L. 95–559, § 11(a), as amended by Pub. L. 96–32

    2. Inserted · 42 U.S.C. § 300e(b)(3)

       Pub. L. 95–559, § 11(a), as inserted provisions limiting the health maintenance organization from entering into contracts for health services with physicians other than members of the staff of the health maintenance organization, medical groups, or individual practice associations

    Source evidence

    Code amendment note
    Subsec. (b)(3). Pub. L. 95–559, § 11(a), as amended by Pub. L. 96–32, inserted provisions limiting the health maintenance organization from entering into contracts for health services with physicians other than members of the staff of the health maintenance organization, medical groups, or individual practice associations.

    Enacted provision · exact public law section
    (a) 42 USC 300e. Paragraph (3) of section 1310(b) is amended to read as follows: “(3) (A) Except as provided in subparagraph (B), the services of a physician which are provided as basic health services shall be provided through— “(i) members of the staff of the health maintenance organization, “(ii) a medical group (or groups), “(iii) an individual practice association (or associations), “(iv) subject to subparagraph (C), physicians or other health professionals who have contracted with the health maintenance organization for the provision of such services, or “(v) any combination of such staff, medical group (or groups), individual practice association (or associations) or physicians or other health professionals under contract with the organization. “(B) (i) Subparagraph (A) does not apply to the provision of the services of a physician— “(I) which the health maintenance organization determines, in conformity with regulations of the Secretary, are unusual or infrequently used, or “(II) which are provided a member of the organization in a manner other than that prescribed by subparagraph (A) because of an emergency which made it medically necessary that the service be provided to the member before it could be provided in a manner prescribed by subparagraph (A). “(ii) In a forty-eight-month period beginning after the month in which a health maintenance organization becomes a qualified health maintenance organization (within the meaning of section 1310(d)), the organization may provide the services of physicians 42 USC 300e–1. through an entity which but for the requirement of section 1302 (4)(C)(i) would be a medical group for the purposes of this title. After the expiration of such period, the organization may provide physician services through such an entity only if authorized by the Secretary in accordance with regulations which take into consideration the unusual circumstances of such entity. “(C) Contracts with other than staff physicians, prohibition. After the expiration of the first four fiscal years of a health maintenance organization beginning after the month in which it became a qualified health maintenance organization (within the meaning of section 1310(d)), the organization may not enter into contracts with physicians other than members of staff, medical groups, or individual practice associations if the amounts paid under such contracts for basic and supplemental health services provided by physicians exceed 15 per centum of the total estimated amount to be paid in such fiscal year by the health maintenance organization to physicians for the provision of basic and supplemental health services by physicians, or, if the health maintenance organization principally serves a rural area, 30 per centum of such amount, except that this subparagraph does not apply to the entering into contracts for the purchase of physician services through an entity which, but for the requirements of section 1302 (4) (C) 42 USC 300e–1. (i), would be a medical group for the purposes of this title. “(D) Contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services shall include such provisions as the Secretary may require (including provisions requiring appropriate continuing education). “(E) For purposes of this paragraph the term ‘health “Health professional.” professional' means physicians, dentists, nurses, podiatrists, optometrists, and such other individuals engaged in the delivery of health services as the Secretary may by regulation designate.”.

11. 1978

    Health Maintenance Organization Amendments of 1978

    Pub. L. 95–559 § 11(c) · 92 Stat. 2131

    1. Substituted · 42 U.S.C. § 300e(b)(4)

       Pub. L. 95–559, § 11(c), substituted “basic and supplemental” for “basic or supplemental”

    2. Substituted · 42 U.S.C. § 300e(b)(4)

       Pub. L. 95–559, § 11(c), substituted “if the services were medically necessary and immediately required because of an unforeseen illness, injury, or condition” for “if it was medically necessary that the services be provided before it could secure them through the organization”

    Source evidence

    Code amendment note
    Subsec. (b)(4). Pub. L. 95–559, § 11(c), substituted “basic and supplemental” for “basic or supplemental” and “if the services were medically necessary and immediately required because of an unforeseen illness, injury, or condition” for “if it was medically necessary that the services be provided before it could secure them through the organization”.

    Enacted provision · exact public law section
    (c) The second sentence of section 1301(b) (4) is amended to read as follows: “A member of a health maintenance organization shall Reimbursement. be reimbursed by the organization for his expenses in securing basic and supplemental health services other than through the organization if the services were medically necessary and immediately required because of an unforeseen illness, injury, or condition.”.

12. 1978

    Health Maintenance Organization Amendments of 1978

    Pub. L. 95–559 § 11(d) · 92 Stat. 2131

    Added · 42 U.S.C. § 300e(b)(5)

    Pub. L. 95–559, § 11(d), added par. (5)

    Source evidence

    Code amendment note
    Subsec. (b)(5). Pub. L. 95–559, § 11(d), added par. (5).

    Enacted provision · exact public law section
    (d) Section 1301(b) is amended by adding at the end the following new paragraph: “(5) To the extent that a natural disaster, war, riot, civil Natural disaster, war, riot, or other similar event. insurrection, or any other similar event not within the control of a health maintenance organization (as determined under regulations of the Secretary) results in the facilities, personnel, or financial resources of a health maintenance organization not being available to provide or arrange for the provision of a basic or supplemental health service in accordance with the requirements of paragraphs (1) through (4) of this subsection, such requirements only require the organization to make a good-faith effort to provide or arrange for the provision of such service within such limitation on its facilities, personnel, or resources.”.

13. 1978

    Health Maintenance Organization Amendments of 1978

    Pub. L. 95–559 § 10(b) · 92 Stat. 2131

    1. Amended · 42 U.S.C. § 300e(c)(1)

       Pub. L. 95–559, § 10(b), designated existing provisions as subpar. (A)

    2. Added · 42 U.S.C. § 300e(c)(1)

       Pub. L. 95–559, § 10(b), added subpar. (B)

    Source evidence

    Code amendment note
    Subsec. (c)(1). Pub. L. 95–559, § 10(b), designated existing provisions as subpar. (A) and added subpar. (B).

    Enacted provision · exact public law section
    (b) Section 1301(c)(1) is amended (1) by inserting “(A)” after “(1)”, and (2) by inserting before the semicolon a comma and the following: “and (B) have administrative and managerial arrangements satisfactory to the Secretary”.

14. 1978

    Health Maintenance Organization Amendments of 1978

    Pub. L. 95–559 § 9(b) · 92 Stat. 2131

    1. Amended · 42 U.S.C. § 300e(c)(3)

       Pub. L. 95–559, § 9(b), designated existing provisions as subpar. (A)

    2. Added · 42 U.S.C. § 300e(c)(3)

       Pub. L. 95–559, § 9(b), added subpar. (B)

    Source evidence

    Code amendment note
    Subsec. (c)(3). Pub. L. 95–559, § 9(b), designated existing provisions as subpar. (A) and added subpar. (B).

    Enacted provision · exact public law section
    (b) Section 1301(c)(3) is amended (1) by inserting “(A)” after 42 USC 300e. “(3)”, and (2) by inserting before the semicolon a comma and the following: “and (B) carry out enrollment of members who are entitled to medical assistance under a State plan approved under title XIX of the Social Security Act in accordance with 42 USC 1396. procedures approved under regulations promulgated by the Secretary”.

15. 1978

    Health Maintenance Organization Amendments of 1978

    Pub. L. 95–559 § 10(c) · 92 Stat. 2131

    1. Amended · 42 U.S.C. § 300e(c)(6)

       Pub. L. 95–559, § 10(c), designated existing provisions as subpar. (A)

    2. Inserted · 42 U.S.C. § 300e(c)(6)

       Pub. L. 95–559, § 10(c), inserted “in the case of a private health maintenance organization,” before “be organized in such”

    3. Substituted · 42 U.S.C. § 300e(c)(6)

       Pub. L. 95–559, § 10(c), substituted “(i)” for “(A)”

    4. Substituted · 42 U.S.C. § 300e(c)(6)

       Pub. L. 95–559, § 10(c), substituted “(ii)” for “(B)”

    5. Added · 42 U.S.C. § 300e(c)(6)

       Pub. L. 95–559, § 10(c), added subpar. (B)

    Source evidence

    Code amendment note
    Subsec. (c)(6). Pub. L. 95–559, § 10(c), designated existing provisions as subpar. (A), inserted “in the case of a private health maintenance organization,” before “be organized in such”, and substituted “(i)” for “(A)” and “(ii)” for “(B)”, and added subpar. (B).

    Enacted provision · exact public law section
    (c) Section 1301(c) (6) is amended (1) by striking out “(6)” and inserting in lieu thereof “(6)(A) in the case of a private health maintenance organization,”, (2) by redesignating clauses (A) and (B) as subclauses (i) and (ii), respectively, and (3) by inserting before the semicolon a comma and the following: “and (B) in the case of a public health maintenance organization, have an advisory board to the policymaking body of the public entity operating the organization which board meets the requirements of clause (A) of this paragraph and to which may be delegated policymaking authority for the organization.”

16. 1979

    Pub. L. 96–32 § 2(b) · 93 Stat. 82

    Substituted · 42 U.S.C. § 300e(b)(3)

    Pub. L. 96–32 amended directory language of section 11(a) of Pub. L. 95–559 by substituting reference to section “1301” for “1310” of the Public Health Service Act, as section to be amended, and required no change in text because amendment made by Pub. L. 95–559 had been executed to this section as the probable intent of Congress

    Source evidence

    Code amendment note
    Subsec. (b)(3). Pub. L. 96–32 amended directory language of section 11(a) of Pub. L. 95–559 by substituting reference to section “1301” for “1310” of the Public Health Service Act, as section to be amended, and required no change in text because amendment made by Pub. L. 95–559 had been executed to this section as the probable intent of Congress.

    Enacted provision · exact public law section
    (b) Section 11(a) of such Amendments is amended by striking out “section 1310(b)” and inserting in lieu thereof “section 1301(b)”.

17. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(a)(2) · 95 Stat. 357

    Substituted · 42 U.S.C. § 300e(b)(3)(A)(iv)

    Pub. L. 97–35, § 942(a)(2), substituted “physicians” for “subject to subparagraph (C), physicians”

    Source evidence

    Code amendment note
    Subsec. (b)(3)(A)(iv). Pub. L. 97–35, § 942(a)(2), substituted “physicians” for “subject to subparagraph (C), physicians”.

    Enacted provision · exact public law section
    (2) Section 1301(b)(3)(A)(iv) is amended by striking out “subject to subparagraph (C),”.

18. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(b)(1) · 95 Stat. 357

    1. Substituted · 42 U.S.C. § 300e(b)(3)(B)

       Pub. L. 97–35, § 942(b)(1), substituted “(B)” for “(B)(i)”

    2. Substituted · 42 U.S.C. § 300e(b)(3)(B)

       Pub. L. 97–35, § 942(b)(1), substituted “(i)” for “(I)”

    3. Substituted · 42 U.S.C. § 300e(b)(3)(B)

       Pub. L. 97–35, § 942(b)(1), substituted “(ii)” for “(II)”

    4. Struck · 42 U.S.C. § 300e(b)(3)(B)

       Pub. L. 97–35, § 942(b)(1), struck out former cl. (ii) which related to the forty-eight-month period beginning after the month of qualification of a health maintenance organization

    Source evidence

    Code amendment note
    Subsec. (b)(3)(B). Pub. L. 97–35, § 942(b)(1), substituted “(B)” for “(B)(i)”, “(i)” for “(I)”, and “(ii)” for “(II)” and struck out former cl. (ii) which related to the forty-eight-month period beginning after the month of qualification of a health maintenance organization.

    Enacted provision · exact public law section
    (1) Section 1301(b)(3)(B) is amended by striking out “(i)”, by striking out clause (ii), and by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively.

19. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(a)(1) · 95 Stat. 357

    1. Redesignated · 42 U.S.C. § 300e(b)(3)(C)

       Pub. L. 97–35, § 942(a)(1), redesignated subpar. (D) as (C)

    2. Struck · 42 U.S.C. § 300e(b)(3)(C)

       Pub. L. 97–35, § 942(a)(1), struck out former subpar. (C) which related to the expiration of the first four fiscal years as a qualified organization

    Source evidence

    Code amendment note
    Subsec. (b)(3)(C). Pub. L. 97–35, § 942(a)(1), redesignated subpar. (D) as (C) and struck out former subpar. (C) which related to the expiration of the first four fiscal years as a qualified organization.

    Enacted provision · exact public law section
    (1) Section 1301(b)(3) is amended (A) by striking out 42 USC 300e. subparagraph (C), and (B) by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively.

20. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(b)(2) · 95 Stat. 357

    Amended · 42 U.S.C. § 300e(b)(3)(D)

    Pub. L. 97–35, § 942(b)(2), amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows: “Contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services shall include such provisions as the Secretary may require (including provisions requiring appropriate continuing education).” See Codification note above

    Source evidence

    Code amendment note
    Subsec. (b)(3)(D). Pub. L. 97–35, § 942(b)(2), amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows: “Contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services shall include such provisions as the Secretary may require (including provisions requiring appropriate continuing education).” See Codification note above.

    Enacted provision · exact public law section
    (2) Subparagraph (D) of section 1301(b)(3) is amended to read as follows: “(D) Contracts between a health maintenance organization and health professionals for the provision of basic and supplemental health services shall include such provisions as the Secretary may require, but only to the extent that such requirements are designed to insure the delivery of quality health care services and sound fiscal management”.

21. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(a)(1)(B) · 95 Stat. 357

    Redesignated · 42 U.S.C. § 300e(b)(3)(D)

    Pub. L. 97–35, § 942(a)(1)(B), redesignated subpar. (E) as (D). Former subpar. (D) redesignated (C)

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 97–35, § 942(a)(1)(B), redesignated subpar. (E) as (D). Former subpar. (D) redesignated (C).

    Enacted provision · exact public law section
    (1) Section 1301(b)(3) is amended (A) by striking out 42 USC 300e. subparagraph (C), and (B) by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively.

22. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(c) · 95 Stat. 357

    1. Substituted · 42 U.S.C. § 300e(b)(4)

       Pub. L. 97–35, § 942(c), substituted “with reasonable promptness” for “promptly as appropriate”

    2. Inserted · 42 U.S.C. § 300e(b)(4)

       Pub. L. 97–35, § 942(c), inserted “, except that a health maintenance organization which has a service area located wholly in a nonmetropolitan area may make a basic health service available outside its service area if that basic health service is not a primary care or emergency health care service and if there is an insufficient number of providers of that basic health service within the service area who will provide such service to members of the health maintenance organization” after “week”

    Source evidence

    Code amendment note
    Subsec. (b)(4). Pub. L. 97–35, § 942(c), substituted “with reasonable promptness” for “promptly as appropriate” and inserted “, except that a health maintenance organization which has a service area located wholly in a nonmetropolitan area may make a basic health service available outside its service area if that basic health service is not a primary care or emergency health care service and if there is an insufficient number of providers of that basic health service within the service area who will provide such service to members of the health maintenance organization” after “week”.

    Enacted provision · exact public law section
    (c) (1) The first sentence of section 1301(b)(4) (42 U.S.C. 300e(b)(4)) is amended by inserting before the period a comma and the following: “except that a health maintenance organization which has a service area located wholly in a nonmetropolitan area may make a basic health service available outside its service area if that basic health service is not a primary care or emergency health care service and if there is an insufficient number of providers of that basic health service within the service area who will provide such service to members of the health maintenance organization”. (2) The first sentence of section 1301(b)(4) is amended by striking out “promptly as appropriate” and inserting in lieu thereof “with reasonable promptness”.

23. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(d)(1) · 95 Stat. 357

    1. Substituted · 42 U.S.C. § 300e(c)

       Pub. L. 97–35, § 942(d)(1), (e), in par. (2) substituted provisions specifying requirements with respect to insurance, etc., for provisions generalizing such insurance, etc., requirements

    2. Added · 42 U.S.C. § 300e(c)

       Pub. L. 97–35, § 942(d)(1), (e), in par. (2) added cl. (D)

    3. Struck · 42 U.S.C. § 300e(c)

       Pub. L. 97–35, § 942(d)(1), (e), in par. (2) struck out par. (4) which related to open enrollment period

    4. Redesignated · 42 U.S.C. § 300e(c)

       Pub. L. 97–35, § 942(d)(1), (e), in par. (2) redesignated pars. (5) to (8) as (4) to (7), respectively

    5. Added · 42 U.S.C. § 300e(c)

       Pub. L. 97–35, § 942(d)(1), (e), in par. (2) added par. (8)

    6. Struck · 42 U.S.C. § 300e(c)

       Pub. L. 97–35, § 942(d)(1), (e), in par. (2) struck out pars. (9) and (10) which related to medical social and health education services, and continuing education, respectively

    7. Redesignated · 42 U.S.C. § 300e(c)

       Pub. L. 97–35, § 942(d)(1), (e), in par. (2) redesignated par. (11) as (9)

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 97–35, § 942(d)(1), (e), in par. (2) substituted provisions specifying requirements with respect to insurance, etc., for provisions generalizing such insurance, etc., requirements, and added cl. (D), struck out par. (4) which related to open enrollment period, redesignated pars. (5) to (8) as (4) to (7), respectively, added par. (8), struck out pars. (9) and (10) which related to medical social and health education services, and continuing education, respectively, and redesignated par. (11) as (9).

    Enacted provision · exact public law section
    (1) Section 1301(c) is amended by striking out paragraphs (4), (9), and (10), by redesignating paragraphs (5) through (8) as paragraphs (4) through (7), by redesignating paragraph (11) as paragraph (9), and by adding after paragraph (7) (as so redesignated) the following new paragraph: “(8) adopt at least one of the following arrangements to protect its members from incurring liability for payment of any fees which are the legal obligation of such organization— “(A) a contractual arrangement with any hospital that is regularly used by the members of such organization prohibiting such hospital from holding any such member liable for payment of any fees which are the legal obligation of such organization; “(B) insolvency insurance, acceptable to the Secretary; “(C) adequate financial reserve, acceptable to the Secretary; and “(D) other arrangements, acceptable to the Secretary, to protect members, except that the requirements of this paragraph shall not apply to a health maintenance organization if applicable State law provides the members of such organization with protection from liability for payment of any fees which are the legal obligation of such organization; and”.

24. 1981

    Health Maintenance Organization Amendments of 1981

    Pub. L. 97–35 § 942(d)(2) · 95 Stat. 357

    Struck · 42 U.S.C. § 300e(d)

    Pub. L. 97–35, § 942(d)(2), struck out subsec. (d) which related to requirements, etc., respecting open enrollment period

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 97–35, § 942(d)(2), struck out subsec. (d) which related to requirements, etc., respecting open enrollment period.

    Enacted provision · exact public law section
    (2) Subsection (d) of section 1301 is repealed.

25. 1988

    Health Maintenance Organization Amendments of 1988

    Pub. L. 100–517 § 2 · 102 Stat. 2578

    Substituted · 42 U.S.C. § 300e(a)

    Pub. L. 100–517, § 2, substituted “public or private entity which is organized under the laws of any State and” for “legal entity”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 100–517, § 2, substituted “public or private entity which is organized under the laws of any State and” for “legal entity”.

    Enacted provision · exact public law section
    SEC. 2. ORGANIZATIONAL STRUCTURE. Section 1301(a) (42 U.S.C. 300e(a)) is amended by striking out “legal entity” and inserting in lieu thereof “public or private entity which is organized under the laws of any State and”.

26. 1988

    Health Maintenance Organization Amendments of 1988

    Pub. L. 100–517 § 3 · 102 Stat. 2578

    Inserted · 42 U.S.C. § 300e(b)(1)

    Pub. L. 100–517, § 3, inserted after second sentence “If a health maintenance organization offers to its members the opportunity to obtain basic health services through a physician not described in subsection (b)(3)(A), the organization may require, in addition to payments described in clause (D) of this paragraph, a reasonable deductible to be paid by a member when obtaining a basic health service from such a physician.”

    Source evidence

    Code amendment note
    Subsec. (b)(1). Pub. L. 100–517, § 3, inserted after second sentence “If a health maintenance organization offers to its members the opportunity to obtain basic health services through a physician not described in subsection (b)(3)(A), the organization may require, in addition to payments described in clause (D) of this paragraph, a reasonable deductible to be paid by a member when obtaining a basic health service from such a physician.”

    Enacted provision · exact public law section
    SEC. 3. DEDUCTIBLES. Section 1301(b)(1) (42 U.S.C. 300e(b)(1)) is amended by adding after the second sentence the following: “If a health maintenance organization offers to its members the opportunity to obtain basic health services through a physician not described in subsection (b)(3)(A), the organization may require, in addition to payments described in clause (D) of this paragraph, a reasonable deductible to be paid by a member when obtaining a basic health service from such a physician.”.

27. 1988

    Health Maintenance Organization Amendments of 1988

    Pub. L. 100–517 § 4(a) · 102 Stat. 2578

    Substituted · 42 U.S.C. § 300e(b)(3)(A)

    Pub. L. 100–517, § 4(a), substituted “at least 90 percent of the services of a physician” for “the services of a physician”

    Source evidence

    Code amendment note
    Subsec. (b)(3)(A). Pub. L. 100–517, § 4(a), substituted “at least 90 percent of the services of a physician” for “the services of a physician”.

    Enacted provision · exact public law section
    (a) General Rule.— Section 1301(b)(3)(A) (42 U.S.C. 300e(b)(3)(A)) is amended by striking out “the services of a physician which are provided as basic health services shall be provided” and insert in lieu thereof “at least 90 percent of the services of a physician which are provided as basic health services shall be provided”.

28. 1988

    Health Maintenance Organization Amendments of 1988

    Pub. L. 100–517 § 5(a)(2) · 102 Stat. 2578

    Inserted · 42 U.S.C. § 300e(c)

    Pub. L. 100–517, § 5(a)(2), inserted at end “The Secretary shall issue regulations stating the circumstances under which the Secretary, in administering paragraph (1)(A), will consider the resources of an organization which owns or controls a health maintenance organization. Such regulations shall require as a condition to consideration of resources that an organization which owns or controls a health maintenance organization shall provide satisfactory assurances that it will assume the financial obligations of the health maintenance organization.”

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 100–517, § 5(a)(2), inserted at end “The Secretary shall issue regulations stating the circumstances under which the Secretary, in administering paragraph (1)(A), will consider the resources of an organization which owns or controls a health maintenance organization. Such regulations shall require as a condition to consideration of resources that an organization which owns or controls a health maintenance organization shall provide satisfactory assurances that it will assume the financial obligations of the health maintenance organization.”

    Enacted provision · exact public law section
    (2) Section 1301(c) (42 U.S.C. 300e(c)) is amended by adding Regulations. after and below paragraph (9) the following: “The Secretary shall issue regulations stating the circumstances under which the Secretary, in administering paragraph (1)(A), will consider the resources of an organization which owns or controls a health maintenance organization. Such regulations shall require as a condition to consideration of resources that an organization which owns or controls a health maintenance organization shall provide satisfactory assurances that it will assume the financial obligations of the health maintenance organization.”.

29. 1988

    Health Maintenance Organization Amendments of 1988

    Pub. L. 100–517 § 5(a)(1) · 102 Stat. 2578

    Amended · 42 U.S.C. § 300e(c)(1)(A)

    Pub. L. 100–517, § 5(a)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “have a fiscally sound operation and adequate provision against the risk of insolvency which is satisfactory to the Secretary, and”

    Source evidence

    Code amendment note
    Subsec. (c)(1)(A). Pub. L. 100–517, § 5(a)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “have a fiscally sound operation and adequate provision against the risk of insolvency which is satisfactory to the Secretary, and”.

    Enacted provision · exact public law section
    (1) Section 1301(c)(1)(A) (42 U.S.C. 300e(c)(1)(A)) is amended to read as follows: “(1) (A) have— “(i) a fiscally sound operation, and “(ii) adequate provision against the risk of insolvency, which is satisfactory to the Secretary, and”.

30. 1988

    Health Maintenance Organization Amendments of 1988

    Pub. L. 100–517 § 5(b) · 102 Stat. 2578

    1. Redesignated · 42 U.S.C. § 300e(c)(5)(9)

       Pub. L. 100–517, § 5(b), redesignated pars. (6) to (9) as (5) to (8), respectively

    2. Struck · 42 U.S.C. § 300e(c)(5)(9)

       Pub. L. 100–517, § 5(b), struck out former par. (5) which read as follows: “(A) in the case of a private health maintenance organization, be organized in such a manner that assures that (i) at least one-third of the membership of the policymaking body of the health maintenance organization will be members of the organization, and (ii) there will be equitable representation on such body of members from medically underserved populations served by the organization, and (B) in the case of a public health maintenance organization, have an advisory board to the policymaking body of the public entity operating the organization which board meets the requirements of clause (A) of this paragraph and to which may be delegated policymaking authority for the organization;”

    Source evidence

    Code amendment note
    Subsec. (c)(5) to (9). Pub. L. 100–517, § 5(b), redesignated pars. (6) to (9) as (5) to (8), respectively, and struck out former par. (5) which read as follows: “(A) in the case of a private health maintenance organization, be organized in such a manner that assures that (i) at least one-third of the membership of the policymaking body of the health maintenance organization will be members of the organization, and (ii) there will be equitable representation on such body of members from medically underserved populations served by the organization, and (B) in the case of a public health maintenance organization, have an advisory board to the policymaking body of the public entity operating the organization which board meets the requirements of clause (A) of this paragraph and to which may be delegated policymaking authority for the organization;”.

    Enacted provision · exact public law section
    (b) Board of Directors.— Paragraph (5) of section 1301(c) (42 U.S.C. 300e(c)) is repealed and paragraphs (6) through (9) are redesignated as paragraphs (5) through (8), respectively.

31. 1996

    Pub. L. 104–191 § 193 · 110 Stat. 1936

    Added · 42 U.S.C. § 300e(b)(6)

    Pub. L. 104–191, § 193, added par. (6)

    Source evidence

    Code amendment note
    Subsec. (b)(6). Pub. L. 104–191, § 193, added par. (6).

    Enacted provision · exact public law section
    SEC. 193. ALLOWING FEDERALLY-QUALIFIED HMOS TO OFFER HIGH DEDUCTIBLE PLANS. Section 1301(b) of the Public Health Service Act (42 U.S.C. 300e(b)) is amended by adding at the end the following new paragraph: “(6) A health maintenance organization that otherwise meets the requirements of this title may offer a high-deductible health plan (as defined in section 220(c)(2) of the Internal Revenue Code of 1986).”.

32. 1996

    Pub. L. 104–191 § 102(b) · 110 Stat. 1936

    Added · 42 U.S.C. § 300e(d)

    Pub. L. 104–191, § 102(b), added subsec. (d)

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 104–191, § 102(b), added subsec. (d).

    Enacted provision · exact public law section
    (b) Application of Rules by Certain Health Maintenance Organizations.— Section 1301 of such Act (42 U.S.C. 300e) is amended by adding at the end the following new subsection: “(d) An organization that offers health benefits coverage shall not be considered as failing to meet the requirements of this section notwithstanding that it provides, with respect to coverage offered in connection with a group health plan in the small or large group market (as defined in section 2791(e)), an affiliation period consistent with the provisions of section 2701(g).”.

50 of 55 references resolved to an enrolled provision · 5 partial