MEDICAL Group requirEMENTS

SEC. 106. (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 cooordinated 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

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(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.".

INCREASE IN LIMITS ON ASSISTANCE for FEASIBILITY SURVEYS, PLANNING, INITIAL DEVELOPMENT, AND INITIAL OPERATION

SEC. 107. (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 months" each place it occurs and substituting "first sixty months".

LOAN GUARANTEES FOR PRIVATE ENTITIES

SEC. 108. (a) Section 1304(a) (2) is amended to read as follows: "(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

"(i) 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: "(3) guarantee to non-Federal lenders payment of the princi of and the interest on loans made to

"(A) nonprofit private health maintenance organizati for the amounts referred to in paragraph (1) or (2), or "(B) other private health maintenance organizations such amounts but only if the health maintenance organi tion will serve a medically underserved population.". (d) (1) Section 1304(d) is amended by adding at the end the f lowing new sentence: "In considering applications for loan guar tees under this section, the Secretary shall give special considerat to applications for projects for health maintenance organizati which will serve medically underserved populations.".

(2) Section 1305 is amended by adding at the end thereof the f lowing new subsection:

"(f) In considering applications for loan guarantees under t section, the Secretary shall give special consideration to applicati for health maintenance organizations which will serve medically derserved populations.".

MISCELLANEOUS AMENDMENTS

SEC. 109. (a) (1) Section 1305(a) is amended by striking out the period of" in paragraphs (1) and (2) and substituting "during period not to exceed".

(2) The last sentence of 1305(b) (1) is amended to read as follow "In any fiscal year the amount disbursed to a health maintenan organization under this section (either directly by the Secretary by an escrow agent under the terms of an escrow agreement or by lender under a loan guaranteed under this section) may not exce $1,000,000.".

(b) (1) Section 1307 (e) is amended

(A) by inserting "for a private health maintenance organis tion (other than a private nonprofit health maintenance organis tion)" after "may be made", and

(B) by inserting "for private health maintenance organizatio (other than private nonprofit health maintenance organizations after "guaranteed".

(2) Section 1308 (c) is amended by adding after paragraph (4) 2 following new paragraph:

"(5) Any reference in this title (other than in this subsection a in subsection (d)) to a loan guarantee under this title does not inclu a loan guarantee made under this subsection.".

(c) (1) Section 1308(a)(1)(A) is amended by striking out ") similar loans" and substituting "for loans with similar maturiti terms, conditions, and security".

(2) Section 1308(b) (2) (D) is amended by striking out "loans gu anteed under this title" and substituting "marketable obligations the United States of comparable maturities, adjusted to provide f appropriate administrative charges".

(d) (1) The last sentence of section 1303 (i) is amended

(A) by striking "the fiscal year ending June 30, 1974, 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) (1) 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".

EMPLOYEE HEALTH BENEFITS PLANS

SEC. 110. (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 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, 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 made in a health benefits plan offered to such employees (A) sha first be made to such collective bargaining representative or othe employee representative, and (B) if such offer is accepted by suc 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 healt services (A) without the use of an individual practice associatio and (B) without the use of contracts (except for contracts fo unusual or infrequently used services) with health professional

and

"(2) one or more of such organizations provides basic healt services through (A) an individual practice association (or ass ciations), (B) health professionals who have contracted with th health maintenance organization for the provision of such ser ices, 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 sut

sections:

"(e) (1) Any employer who knowingly does not comply with one more of the requirements of subsection (a) shall be subject to a civ penalty of not more than $10,000. If such noncompliance continues, civil penalty may be assessed and collected under this subsection fo each thirty-day period such noncompliance continues. Such penal may be assessed by the Secretary and collected in a civil action brough by the United States in a United States district court.

"(2) In any proceeding by the Secretary to assess a civil penali under this subsection, no penalty shall be assessed until the employ charged shall have been given notice and an opportunity to preser its views on such charge. In determining the amount of the penalt or the amount agreed upon in compromise, the Secretary shall consid the gravity of the noncompliance and the demonstrated good faith the employer charged in attempting to achieve rapid compliance aft notification by the Secretary of a noncompliance.

"(3) In any civil action brought to review the assessment of a civ penalty assessed under this subsection, the court shall, at the reque of any party to such action, hold a trial de novo on the assessmer of such civil penalty and in any civil action to collect such a cir penalty, the court shall, at the request of any party to such actio hold a trial de novo on the assessment of such civil penalty unless a prior civil action to review the assessment of such penalty the cou held a trial de novo on such assessment.

"(f) For purposes of this section, the term 'employer' does not in clude (1) the Government of the United States, the government the District of Columbia or any territory or possession of the Unite States, a State or any political subdivision thereof, or any agency instrumentality (including the United States Postal Service an Postal Rate Commission) of any of the foregoing; or (2) a churc convention or association of churches, or any organization operate supervised or controlled by a church, convention or association

churches which organization (A) is an organization described in section 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 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 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:

"(1) The Commission shall contract under this chapter for a plan described in section 8903 (4) of this title with any qualified health 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)).".

ENFORCEMENT REQUIREMENTS

SEC. 111. (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 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 be a qualified health maintenance organization for purposes of section 1310 until such date as the Sec

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