article: SECTION 1. SHORT TITLE. This Act may be cited as the ``HMO Guaranty Act of 2000''. SEC. DEFINITIONS. In this Act: (1) Board.--The term ``Board'' means the Board of Directors appointed under section 3(d). (2) Contractual obligation.--The term ``contractual obligation'' means an obligation by a health maintenance organization, under an agreement, policy, certificate, or evidence of coverage involving a covered individual and the organization, to pay or reimburse the covered individual (or a health care provider who provided items or services to the individual) for services provided prior to the declaration of the insolvency of the health maintenance organization, that remains unpaid at the time of such insolvency. Such term does not include claims by former employees, including medical professional employees, for deferred compensation, severance, vacation, or other employment benefits. (3) Covered individual.--The term ``covered individual'' means an enrollee or member of a health maintenance organization. (4) Guaranty fund.--The term ``Guaranty Fund'' means the Federal HMO Guaranty Fund established under section 3. (5) Health care provider.--The term ``health care provider'' means a physician, hospital, or other person that is licensed or otherwise authorized by the State to provide health care services, and that provided health care services to an enrollee of a health maintenance organization. (6) Health maintenance organization.--The term ``health maintenance organization'' has the meaning given such term by section 2791(b)(3) of the Public Health Service Act (42 U.S.C. 300gg-91(b)(3)). (7) Health maintenance organization contract.--The term ``covered health maintenance organization contract'' means a policy, certificate, or other evidence of health care coverage that is issued by a health maintenance organization. (8) Insolvent organization.--The term ``insolvent organization'' means a health maintenance organization that is declared insolvent by court of competent jurisdiction and placed under the control of a State Commissioner of Insurance for the purpose of liquidation. (9) Secretary.--The term ``Secretary'' means the Secretary of Health and Human Services, in consultation with the Secretary of Labor and the Secretary of the Treasury. (10) State.--The term ``State'' includes each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, or any agency or instrumentality thereof. (11) Uncovered expenditures.--The term ``uncovered expenditures'' means the expenditures for the provision of health care services that are the obligation of a health maintenance organization that have not been paid by such organization and for which no alternative payment arrangements have been made. SEC. 3. ESTABLISHMENT OF HMO GUARANTY FUND. (a) In General.--There is established in the Treasury of the United States a fund to be known as the HMO Guaranty Fund to be used as provided for in this Act. (b) Amounts in Fund.-- (1) In general.--There shall be deposited into the Guaranty Fund-- (A) amounts collected under section 5(a); (B) penalties collected under section 5(b); and (C) earnings on investments of monies in the Guaranty Fund. (2) Investments.-- (A) In general.--The Secretary of the Treasury shall invest amounts in the Guaranty Fund that are not required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States. For such purpose, such obligations may be acquired on original issue at the issue price, or by purchase of outstanding obligations at the market price. (B) Availability of income.--Any interest derived from obligations held by the Guaranty Fund and the proceeds from any sale or redemption of such obligations, are hereby appropriated to the Fund. (c) Use of Guaranty Fund.--Subject to section 4, amounts in the Guaranty Fund shall be used to make payments to a State-- (1) to pay the outstanding health care provider claims for uncovered expenditures, and to fulfill contractual obligations to covered individuals, with respect to an insolvent health maintenance organization; and (2) to provide for a temporary continuation of health care coverage for covered individuals. (d) Board of Directors.-- (1) In general.--The Guaranty Fund shall be administered by a Board of Directors to be composed of 9 individuals of which-- (A) three directors shall be appointed by the National Association of Insurance Commissioners from among individuals who serve as insurance regulators of a State; (B) three directors shall be appointed by a national association which represents the health maintenance organization industry of all States (as determined by the Secretary) from among representatives of health maintenance organizations; and (C) three directors shall be-- (i) the Secretary of the Treasury, or the designee of the Secretary; (ii) the Secretary of Health and Human Services, or the designee of the Secretary; and (iii) the Secretary of Labor, or the designee of the Secretary. (2) Terms, vacancies.--The members of the Board shall establish the terms of service of the members of the Board appointed under subparagraphs (A) and (B) of paragraph (1). Any vacancy in the Board shall not affect its powers, and shall be filled in the same manner as the original appointment. (3) Compensation of members.-- (A) In general.--Except as provided in subparagraph (B), each member of the Board who is not an officer or employee of the Federal Government shall serve without compensation. All members of the Board who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States. (B) Travel expenses.--The members of the Board shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Board. Such expenses shall be paid from the Guaranty Fund. (4) Voting.--Each member of the Board shall have 1 vote. The Board shall set policy and decide all matters by a simple majority of the votes cast. (5) Chairperson.--The Board shall elect a chairperson from among its members. (6) Meetings.--The Board shall first meet not later than 30 days after the date on which all members are appointed under paragraph (1). Subsequent meetings shall be at the call of the chairperson. The Board may hold public hearings after giving proper notice. (7) Fiduciary duty.--With respect to the members of the Board that are not appointed under paragraph (1)(A), in carrying out the duties of the Board such members shall have a fiduciary duty to the Guaranty Fund that shall supersede any duty to an employer or other special interest that the member may otherwise represent. (8) Limitations on liability.--A member of the Board shall not be liable, or in any way responsible, for the obligations of the Guaranty Fund. (e) Duties.--The Board shall-- (1) administer the Guaranty Fund; (2) adopt bylaws that permit the Board to enter into contracts to receive contributions and make distributions in accordance with this Act; (3) establish the application criteria and materials necessary to enable a State to submit an application to the Guaranty Fund; (4) review and make determination on applications received under section 4(b); and (5) carry out other activities in accordance with this Act. SEC. 4. EXPENDITURES FROM THE GUARANTY FUND. (a) In General.--The Guaranty Fund shall be used to make payments to a State to enable such State to pay the claims of health care providers for health care services provided to covered individuals prior to the declaration of insolvency of a health maintenance organization and to provide for a temporary continuation of health care coverage for such individuals. (b) Procedure.-- (1) In general.--Upon the declaration by a court of competent jurisdiction that a health maintenance organization is insolvent, the official responsible for regulating health insurance in the State in which the declaration is made may submit an application to the Guaranty Fund for payment under this Act. (2) Contents of application.--An application submitted by a State under paragraph (1) shall include the following: (A) Liquidation of assets and return of unused funds.--The application shall contain an accounting of amounts received (or expected to be received) as a result of the liquidation of the assets of the insolvent organization. (B) Fund amount.--The application shall contain a request for a specific amount of funds that will be used for the uncovered expenditures and contractual obligations of an insolvent organization. (C) Uncovered expenditures.--The application shall contain an estimate of the aggregate number of uncovered individuals and aggregate amount of uncovered expenditures with respect to the insolvent organization involved. (D) Continuation coverage.--The application shall contain an estimate of the aggregate amount of funds needed to provide continuation coverage to uncovered individuals. (c) Consideration by Board.--Not later than 30 days after the date on which the Guaranty Fund receives a completed application from a State under subsection (b), the Board shall make a determination with respect to payments to the States. (d) Limitation.--The aggregate amount that may be paid to a State under this section with respect to a single uncovered individual shall not exceed $300,000. (e) Use for Continuation Coverage.-- (1) In general.--A State may use amounts provided under this section to provide for the continuation of health care coverage for an uncovered individual through a health maintenance organization or other health care coverage that has been determined appropriate by the official responsible for regulating health insurance in the State in collaboration with the Board. (2) Limitation.--The period of continuation coverage with respect to an uncovered individual under paragraph (1) shall terminate on the earlier of-- (A) the date that is 1 year after the date on which the health maintenance organization was declared insolvent; or (B) or the date on which the contractual obligation of the health maintenance organization to the individual was to terminate. (f) Repayment of Funds.--The State shall repay to the Guaranty Fund an amount equal to-- (1) any amounts not utilized by the State on the date on which the liquidation of the insolvent organization is completed; and (2) any amounts recovered through liquidation that have not been accounted for in the application of the State under subsection (b)(2)(A). SEC. 5. CONTRIBUTIONS TO THE GUARANTY FUND. (a) Assessment on Health Maintenance Organizations.-- (1) In general.--Not later than January 1, 2001, and every 6 months thereafter, each health maintenance organization that is licensed by a State to provide health care coverage shall pay to the Guaranty Fund an amount to be determined in accordance with an assessment schedule to be established by the Secretary not later than 180 days after the date of enactment of this Act. (2) Deferment.--The Board, after consultation with the official responsible for regulating health insurance in the State involved may exempt, abate, or defer, in whole or in part, the assessment of a health maintenance organization under paragraph (1) if the organization demonstrates that the payment of the assessment would endanger the ability of the organization to fulfill its contractual obligations or place the organization in an unsound financial condition. (3) Prohibition.--A health maintenance organization shall not adjust the amount of premiums paid by enrollees to account for the assessment paid under paragraph (1). (b) Failure to Pay.--A health maintenance organization that fails to pay an assessment under subsection (a)(1) within 30 days after the date on which such assessment was to be paid shall be subject to a civil penalty in an amount not to exceed $1,000 per day. SEC. 6. STATE PREEMPTION. (a) In General.--Nothing in this Act shall be construed to preempt or supersede any provision of State law that establishes, implements, or continues in effect any standard or requirement relating to health maintenance organizations. (b) Definition.--In this section, the term ``State law'' means all laws, decisions, rules, regulations or other State actions that have the effect of law.
summary: Requires each HMO that is licensed by a State to provide health care coverage to make biannual payments to the Guaranty Fund in accordance with an assessment schedule to be established by the Secretary of Health and Human Services. Permits deferrals or exemptions if an HMO demonstrates that payment of the assessment would endanger its ability to fulfill contractual obligations or place it in an unsound financial condition. Prescribes a civil penalty for failure to pay.