text: 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.
target: 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.
feat_title: HMO Guaranty Act of 2000