Health Insurance Portability and Accountability Act of 1996

TABLE OF CONTENTS: Title I: Health Care Access, Portability, and Renewability Subtitle A: Group Market Rules Subtitle B: Individual Market Rules Subtitle C: COBRA Clarifications Subtitle D: Private Health Plan Purchasing Cooperatives Title II: Application and Enforcement of Standards Title III: Miscellaneous Provisions Title IV: Tax-Related Health Provisions Subtitle A: Increase in Deduction for Health Insurance Costs of Self-Employed Individuals Subtitle B: Long-Term Care Provisions Subtitle C: High-Risk Pools Subtitle D: Penalty-Free IRA Distributions Subtitle E: Revenue Offsets Title V: Health Care Fraud and Abuse Prevention Subtitle A: Fraud and Abuse Control Program Subtitle B: Revisions to Current Sanctions for Fraud and Abuse Subtitle C: Data Collection and Miscellaneous Provisions Subtitle D: Civil Monetary Penalties Subtitle E: Amendments to Criminal Law Title VI: Internal Revenue Code and Other Provisions Subtitle A: Foreign Trust Tax Compliance Subtitle B: Repeal of Bad Debt Reserve Method for Thrift Savings Associations Subtitle C: Other Provisions Health Insurance Reform Act of 1996 - Title I: Health Care Access, Portability, and Renewability - Subtitle A: Group Market Rules - Prohibits insurers from declining to offer whole group coverage to a group purchaser. Allows plans to establish eligibility, continuation, enrollment, or premium requirements, provided the requirements are not based on health status, medical condition, genetic information, or other factors. (Sec. 102) Mandates plan renewability, except for premium nonpayment, material misrepresentation, plan termination, or other specified reasons. (Sec. 103) Regulates the circumstances in which a plan may impose a benefit limitation or exclusion because of a preexisting condition. Mandates crediting of previous qualifying coverage. Allows State laws (unless preempted by specified provisions of the Employee Retirement Income Security Act of 1974 (ERISA)) that: (1) limit preexisting conditions to shorter periods than the provisions of this paragraph; (2) recognize previous qualifying coverage with a lapse period longer than provided for by the provisions of this paragraph; or (3) require issuers to have a lookback period shorter than under this Act. (Sec. 104) Mandates special enrollment periods for individuals who have certain types of changes in family composition or employment status. (Sec. 105) Regulates disclosures an insurer must make to a small employer (as defined in State law or, if not defined in State law, employers with not more than 50 employees). Amends ERISA to modify requirements regarding disclosures to plan participants and beneficiaries. Subtitle B: Individual Market Rules - Prohibits an insurer from declining to offer individual coverage or denying individual enrollment based on health status, medical condition, or other factors if the individual meets specified requirements, including having had previous group coverage and not being currently eligible for group coverage. (Sec. 111) Mandates renewability of coverage for individuals, except for nonpayment of premiums, material misrepresentation, or plan termination. (Sec. 112) Allows a State to adopt alternative public or private mechanisms designed to provide access to affordable health benefits for individuals unless the Secretary of Health and Human Services finds that the State alternative mechanism fails to meet specified requirements of this Act. Deems a State to have met those requirements if it adopts a National Association of Insurance Commissioners (NAIC) model found by the Secretary to meet the requirements. Sets forth the circumstances in which a State high risk pool will be deemed in compliance. Subtitle C: COBRA Clarifications - Amends the Public Health Service Act, the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code to modify continuation coverage requirements. Subtitle D: Private Health Plan Purchasing Cooperatives - Requires a State to certify health plan purchasing cooperatives (HPPCs) meeting the requirements of this section. Provides for Federal certification if a State fails to do so, but prohibits Federal certification in a State where the Secretary finds that, under State law, all small employers have a means readily available that ensures that: (1) individuals and employees have a choice of multiple, unaffiliated health plan issuers; and (2) other requirements of this Act are met. Regulates HPPC organization, duties, and activities. Preempts, for a HPPC meeting these requirements, State fictitious group laws. Specifies the circumstances in which HPPCs are required to comply with State premium rating and mandated benefit laws. Applies to HPPCs, for enforcement purposes only, the requirements of ERISA provisions relating to fiduciary responsibility and administration and enforcement. Title II: Application and Enforcement of Standards - Deems a requirement or standard under this Act imposed on a plan to be imposed on the issuer. (Sec. 202) Requires each State to enforce the standards under this Act pursuant to an enforcement plan filed by the State with the Secretary of Labor. Mandates enforcement of employee health benefit plans by the Secretary in the same manner as under specified ERISA provisions. Provides for Federal enforcement if a State fails to do so. Title III: Miscellaneous Provisions - Amends the Public Health Service Act to allow a health maintenance organization, if notified by a member that a medical savings account has been established for the member and if the member requests, to reduce the basic health services payment by requiring the payment of a deductible for basic health services. Declares that it is the sense of the: (1) Senate Labor and Human Resources Committee that the establishment of medical savings accounts should be encouraged as part of any health insurance reform legislation passed; and (2) Senate that the Congress should take steps to further the purposes of this Act. (Sec. 302) Mandates studies and reports to appropriate congressional committees on: (1) mechanisms to ensure the availability of reasonably priced health coverage to employers purchasing group and individuals purchasing non-group coverage; (2) whether standards limiting premium variation will further the purposes of this Act; (3) the effectiveness of this Act; and (4) patient access to and choice of providers inside and outside of networks, the cost to insurers and the feasibility of out-of-network access, and the percent of premium dollar used for medical care and administration of the types of coverage offered. (Sec. 303) Requires the Health Care Financing Administration to complete their ongoing study of reimbursement of all telemedicine services and report to the Congress with a proposal for reimbursement for fee-for-service medicine. (Sec. 304) Declares that the Senate Labor and Human Resources Committee finds that the Public Trustees of Medicare concluded in a specified report that: (1) the current Medicare program (title XVIII of the Social Security Act) is unsustainable; (2) the Hospital Insurance Trust Fund will be able to pay benefits for only about seven years and is severely out of long-range balance; and (3) the Trustees recommended that the Fund problems be comprehensively addressed. (Sec. 305) Prohibits an employee health benefit plan and a health plan issuer offering a group plan or an individual health plan from imposing treatment limits or financial requirements on the coverage of mental health services if similar limits or requirements are not imposed regarding other conditions. (Sec. 306) Amends the Immigration and Nationality Technical Corrections Act of 1994 to extend the termination date of and modify requirements regarding provisions relating to waivers of a requirement that aliens who came to the United States to receive graduate medical education or training return to their country of nationality for two years before applying for an immigrant visa, permanent residence, or a nonimmigrant visa. (Sec. 307) Mandates inclusion with any income tax refund of a document encouraging organ and tissue donation. (Sec. 308) Declares that it is the sense of the Senate that: (1) the issue of adequate health care for mothers and children is important to the future of the United States and the Senate should pass legislation ensuring coverage for all U.S. pregnant women and children; and (2) patients deserve to know the full range of available treatments and the Congress should examine these issues to ensure that all patients get the care they deserve. (Sec. 310) Medical Volunteer Act - Requires that a health care professional who provides a health care service to a medically underserved person without receiving compensation be regarded, for purposes of any medical malpractice claim arising in connection with the service, as a Federal employee for purposes of the Federal tort claims provisions of Federal law relating to the judiciary and judicial procedure. Deems the professional to have provided the service without compensation only if, prior to furnishing the care, the professional: (1) agrees to furnish the service without charge to any person, including any insurance or program covering the recipient; and (2) provides the recipient with notice of the limited liability. Preempts inconsistent State laws, but not State laws providing greater incentives or protections to the professional. Title IV: Tax-Related Health Provisions - Health Insurance and Long-term Care Affordability Act of 1996 - Subtitle A: Increase in Deduction for Insurance Costs of Self-Employed Individuals - Amends the Internal Revenue Code to increase annually, from 30 percent to 80 percent by the year 2006, the amount of health insurance costs for the self-employed which are deductible. Subtitle B: Long-Term Care Provisions - Chapter 1: Long-Term Care Services and Contracts - Subchapter A: General Provisions - Sets forth definitions and rules concerning the treatment of qualified long-term care insurance plans, including that: (1) a qualified long- term care insurance contract (including an employer provided plan) shall be treated as an accident and health insurance contract; (2) amounts received under such a contract shall be treated as amounts received for personal injuries and sickness; (3) subject to exception, per diem payments made under such a contract shall be treated as payments made for insurance covering medical care; and (4) such a contract shall be treated as a guaranteed renewable contract. Defines such a contract and the services it must provide. Provides for the treatment of such contract as part of a life insurance contract. Provides for the exclusion of such insurance under cafeteria plans and the inclusion of long-term care benefits provided through flexible spending arrangements. Defines a flexible spending arrangement as a benefit program which provides employees with coverage under which: (1) specified incurred expenses may be reimbursed, subject to exceptions; and (2) the maximum amount of reimbursement to a participant for such coverage is less than 500 percent of the value of such coverage. Makes the provision of continuation coverage optional. (Sec. 412) Treats qualified long-term care services as medical care for purposes of the medical expense deduction. (Sec. 413) Recognizes no gain or loss on the exchange of a life insurance contract or an endowment or annuity contract for a qualified long-term care insurance contract. (Sec. 414) Exempts from the early withdrawal penalty amounts withdrawn from a qualified retirement plan for qualified long-term care insurance. (Sec. 415) Sets forth reporting requirements for any person paying long-term care benefits. Subchapter B: Consumer Protection Provisions - Sets forth consumer protection provisions, including provisions pertaining to model regulations and penalties for any issuer of a long-term care insurance policy violating such regulations. Chapter 2: Treatment of Accelerated Death Benefits - Treats accelerated death benefits under a life insurance contract as being paid by reason of the death of the insured. (Sec. 432) Treats qualified accelerated death benefit riders as life insurance, but excepts long-term care insurance riders. Subtitle C: High-Risk Pools - Exempts from taxation a State- sponsored non-profit organization formed exclusively to provide medical coverage to high-risk individuals. Subtitle D: Penalty-Free IRA Distributions - Permits penalty-free withdrawals from qualified retirement plans to pay health insurance premiums for certain unemployed individuals. Subtitle E: Revenue Offsets - Chapter 1: Treatment of Individuals Who Expatriate - Sets forth the tax responsibilities of an expatriate: (1) who has had an average annual net income tax of more than $100,000 for the five year period ending before expatriation; (2) or whose net worth is $500,000 or more. Provides as a general rule that all property of a covered expatriate shall be treated as sold on the expatriation date for its fair market value. Allows an exclusion from gain of up to $600,000. Permits an expatriate to elect to continue to be taxed as a United States citizen, in which case the provisions applicable to other expatriates will not apply. Sets forth specified reporting requirements for all expatriates. Chapter 2: Company-Owned Insurance - Prohibits a deduction for any interest paid or accrued on any indebtedness with respect to life insurance policies owned by a taxpayer covering the life of any individual, or any endowment or annuity contracts owned by the taxpayer covering any individual, who is an officer or employee of, or is financially interested in, any business of the taxpayer to the extent that such indebtedness with respect to policies covering such individual exceeds $50,000. Permits an exception for contracts relating to key persons. Title V: Health Care Fraud and Abuse Prevention - Subtitle A: Fraud and Abuse Control Program - Amends title XI of the Social Security Act (SSA) to direct the Secretary of Health and Human Services (HHS), acting through the HHS Office of Inspector General (IG), and the Attorney General to establish a program to: (1) coordinate Federal, State, and local law enforcement programs to control health care fraud and abuse; (2) conduct investigations, audits, and inspections relating to the delivery of and payment for health care; (3) facilitate enforcement of certain provisions of that title and other Acts applicable to health care fraud and abuse; (4) provide for the modification and establishment of safe harbors and to issue interpretative rulings and special fraud alerts; and (5) provide for the reporting and disclosure of certain final adverse actions against health care providers, suppliers, or practitioners pursuant to the data collection system established by this title. (Sec. 501) Establishes the Health Care Fraud and Abuse Control Account (Account) in Medicare's Federal Hospital Insurance Trust Fund (Trust Fund) to hold the criminal fines and civil monetary penalties and assessments obtained from Federal health care cases, as well as property forfeiture proceeds resulting from such cases, and other specified amounts for financing the program above and the Medicare Integrity Program established below. Makes certain appropriations to the Trust Fund and Account, earmarking specified amounts for activities of the Department of Health and Human Services' (HHS) Office of the Inspector General (IG) with respect to the Medicare and Medicaid programs under SSA titles XVIII and XIX. (Sec. 502) Establishes under Medicare the Medicare Integrity Program under which the HHS Secretary shall promote the integrity of the Medicare program by entering into contracts with certain eligible private entities to: (1) review the activities of service providers under Medicare and audit cost reports to determine whether payment should not have been made; (2) educate service providers, beneficiaries, and other persons with respect to payment and benefit issues; and (3) develop and periodically update a list of items of durable medical equipment which are subject to prior authorization. Prohibits payment to fiscal intermediaries under Medicare part A (Hospital Insurance) and carriers under Medicare part B (Supplementary Medical Insurance) for carrying out certain activities to the extent such an activity is carried out pursuant to a contract under the Medicare Integrity Program. (Sec. 503) Directs the HHS Secretary to provide an explanation of benefits under the Medicare program with respect to each furnished item or service for which payment may be made, without regard to whether or not a deductible or coinsurance may be imposed against the individual with respect to such item or service. Directs the HHS Secretary to establish a program to encourage individuals to: (1) report information on fraud and abuse under Medicare; and (2) submit suggestions on methods to improve the efficiency of the Medicare program. Provides for the payment to such individuals of a portion of: (1) any amounts collected due to any reports of fraud or abuse; or (2) any savings resulting from any suggestions that are adopted. (Sec. 504) Amends SSA title XI to extend the application of criminal penalties for acts involving the Medicare program to similar violations of any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the Federal Government, except the Federal Employees' Health Benefits Program (Federal care health programs). (Sec. 505) Directs the HHS Secretary periodically to publish a notice in the Federal Register soliciting proposals for: (1) modifications to existing safe harbors issued under the Medicare and Medicaid Patient and Program Protection Act of 1987; (2) additional safe harbors specifying payment practices that shall not be treated as a criminal offense or exclusion; (3) interpretive rulings, upon request, by the HHS IG with regard to SSA title XI civil monetary and criminal penalty provisions; and (4) special fraud alerts by the HHS IG, upon request, with regard to suspect practices under the Medicare program or a State health care program. Requires subsequent issuance of any appropriate implementing regulations. Subtitle B: Revisions to Current Sanctions for Fraud and Abuse - Excludes from participation in Medicare and State health care programs any individual or entity convicted after the enactment of this Act of a felony related to: (1) fraud in connection with the delivery of a health care item or service; or (2) a controlled substance. (Sec. 512) Revises specified current sanctions involving exclusion for fraud and abuse under Medicare and State health care programs, among other changes specifying minimum periods of exclusion for: (1) certain individuals and entities subject to permissive exclusion from Medicare and State health care programs; and (2) practitioners and persons failing to meet certain statutory obligations with regard to services or items ordered or provided to the covered beneficiary or recipient. Repeals the prerequisite that a health care practitioner or person be determined "unwilling or unable" to comply substantially with a corrective action plan before sanctions may be imposed (thus permitting the Secretary to exclude such practitioner or person from eligibility to provide services for failure to comply with a corrective action plan, regardless of circumstances). (Sec. 515) Permits the imposition of intermediate sanctions on Medicare health maintenance organizations, in addition to the current option of termination. Provides additional intermediate sanctions, including civil money penalties and enrollment suspension, for miscellaneous program violations. (Sec. 516) Excepts from anti-kickback penalties for risk-sharing arrangements any remuneration between an organization and an item or service provider pursuant to a written agreement between them if: (1) the organization is a Medicare-eligible health maintenance organization or competitive medical plan; or (2) the written agreement places the item or service provider at substantial financial risk for the cost or utilization of such items or services which it is obligated to provide, whether through a withhold, capitation, or other similar risk arrangement which places such provider at substantial financial risk. Subtitle C: Data Collection and Miscellaneous Provisions - Directs the HHS Secretary to establish a national health care fraud and abuse data collection program for reporting final adverse actions taken against health care providers, suppliers, or practitioners. Requires each Government agency and health plan to report to the Secretary any such final adverse actions. Provides for the coordination of such program with the National Practitioner Data Bank. (Sec. 521) Allows the HHS Secretary, under the system for unique identifiers for Medicare physicians, to impose appropriate fees on such physicians to cover the costs of investigation and recertification activities with respect to the issuance of the identifiers. Subtitle D: Civil Monetary Penalties - Revises civil monetary penalty and other related SSA title XI provisions, among other things: (1) subjecting to civil penalties certain program-excluded individuals who retain an ownership or control interest in a participating entity if they know or should know of the action constituting the basis for the exclusion at the time they violated such provisions; (2) increasing the amounts of various specified penalties and assessments, including those against health care practitioners who fail to comply with their statutory obligations; and (3) prohibiting the offering of inducements to individuals enrolled under Medicare or a State health care program, including waiver of coinsurance and deductible amounts and transfers of items or services for free or for other than fair market value. Subtitle E: Amendments to Criminal Law - Amends the Federal criminal code to cover the commission of health care fraud, theft or embezzlement in connection with health care, obstruction of criminal investigations of Federal health care offenses, and other specified matters related to health care, such as the laundering of monetary instruments. (Sec. 543) Provides for injunctive relief relating to covered Federal health care offenses, as well as for property forfeitures. Title VI: Internal Revenue Code and Other Provisions - Subtitle A: Foreign Trust Tax Compliance - Revises the requirements regarding information that must be reported regarding certain foreign trusts. Modifies the circumstances (with regard to foreign trusts having one or more U.S. beneficiaries) in which a transferor is treated as the owner. Replaces provisions setting forth a special rule applicable to foreign grantors with provisions declaring that provisions relating to treating grantors and others as substantial owners shall apply only when that application results in an amount being currently taken into account in computing the income of a U.S. citizen or resident or a domestic corporation. Requires a United States person to report information regarding foreign gifts or bequests when the gifts' aggregate value during a taxable year exceeds $10,000. Modifies requirements regarding the interest charge on accumulation distributions from foreign trusts. Changes the circumstances in which an estate or trust is included in the definition of "United States person." Modifies the definition of "foreign estate or trust." Requires (for provisions relating to the imposition of a tax on transfers to avoid income tax) treating a trust which is not a foreign trust and which becomes a foreign trust as having transferred, immediately before becoming a foreign trust, all of its assets to a foreign trust. Subtitle B: Repeal of Bad Debt Reserve Method for Thrift Savings Associations - Repeals the bad debt reserve method, concerning reserves for losses on loans, for thrift savings associations. Subtitle C: Other Provisions - Amends title XVIII (Medicare) of the Social Security Act to extend the secondary payor provisions. Amends the United States Housing Act of 1937 to direct the Secretary of Housing and Urban Development, in specified circumstances, to modify rent adjustments using an operating costs factor that increases the rent to reflect increases in operating costs in the market area. Amends the National Housing Act to remove the provision which limits foreclosure avoidance and borrower assistance to those mortgages insured under such Act which originated before October 1, 1995.