Health Cost Restraint Act of 1979

Health Cost Restraint Act of 1979 - Title I: Health Cost Restraint Tax Act - Health Cost Restraint Tax Act of 1979 - Amends the Internal Revenue Code to limit the tax exclusion for employer contributions to employee health plans.

Requires employee health plans with options whose costs exceed certain specified levels (trigger points) to provide: (1) a low cost option or an option to enroll in a qualified health maintenance organization (HMO); (2) specified minimum coverage; and (3) approximately equal employer contributions to different options. Imposes a $2,000 limitation on deductibles and copayments. Includes in the gross income of employees any employer contributions to health plans which do not meet such requirements.

Requires employers to rebate to employees the difference between contributions to health plans whose costs exceed permissible levels and the cost of a lower option plan selected by the employee.

Title II: Health Maintenance Organizations - Amends title XIII of the Public Health Service Act (Health Maintenance Organizations) to modify the dual choice provision to require an employer to offer either two individual practice associations (IPA) or two closed plan HMOs if: (1) the current requirement that one of each type of HMO be offered is inapplicable; (2) at least two HMOs are providing services in the employees' area of residency, which have agreed to be included in the employer's health benefits plan; and (3) such HMOs are not controlled by the same legal entity.

Redefines "qualified health maintenance organization" to include those: (1) offering the basic and supplemental health services currently required, except for the requirement that mental health services and alcohol and drug abuse treatment be provided; and (2) meeting the current organizational requirements, except for the requirement that at least one-third of the membership of the policymaking body of the plan be members of the HMO. Permits an HMO to differentiate between members on the basis of age and sex in determining its basic and supplemental health services payments.

Title III: Payments to Health Maintenance Organizations Under the Medicare Program - Health Maintenance Organizations Medicare Reimbursement Amendments of 1979 - Amends title XVIII of the Social Security Act (Medicare) to revise the method of reimbursement to HMOs providing Medicare services. Defines an HMO for the purposes of this title as an entity which: (1) provides all covered Medicare benefits to Medicare enrollees; and (2) is organized in accordance with the provisions of title XIII of the Public Health Service Act. Provides that only the HMO shall be entitled to receive payments from the Secretary of Health and Human Services (formerly Health, Education, and Welfare) for services furnished to an individual who is enrolled with such HMO under this title.

Directs the Secretary to determine annually for each class of individuals (based on factors such as age, sex, institutional status, disability status, and residency) who are enrolled with an HMO and who are: (1) entitled to benefits under part A and enrolled under part B; and (2) only enrolled under part B, a per capita rate of payment which is equal to 95 percent of the "adjusted average per capita cost" for that class (basically, prospective estimate of the average per capita amount that would be payable for services covered under parts A and B furnished by other than HMOs). Directs the Secretary to also estimate annually an "adjusted community rate" for covered services (basically, the rate of payment for a service which would apply to an individual enrolled with an HMO if such rate were determined under a "community rating system," adjusted for utilization characteristics).

Requires the Secretary to make monthly payments to an HMO on the basis of the computed per capita rate for each individual enrolled, but stipulates that where the "adjusted community rate" is less than the average of the per capita rates of payment at the beginning of an annual period, the HMO must provide additional benefits at least equal in value to the difference between the two rates (unless the HMO elects to receive a lesser payment equal to such difference).

Requires at least one-half of an HMO's enrolled membership to consist of individuals who are not entitled to Medicare or Medicaid benefits, but authorizes the Secretary to modify such requirement in special circumstances.

Directs the Secretary to conduct a study evaluating the termination by Medicare beneficiaries of their membership in HMOs and submit to Congress an interim report within two years of enactment and a final report within five years of such date.

Title IV: Medicaid Demonstration Projects - Directs the Secretary of Health and Human Services to conduct at selected locations in the United States demonstration projects to determine the effect of marketplace competition on the Medicaid program. Requires such projects to allow the Secretary to evaluate: (1) use of a central broker concept to assist beneficiaries in selecting among competitive health plans; (2) different methods of incentives to encourage alternative delivery systems; (3) the feasibility of equal dollar contributions from Medicaid to competing delivery systems; and (4) the effectiveness of incentives to Medicaid beneficiaries to enroll in alternative delivery systems. Requires the Secretary to report to Congress preliminary findings within 30 months of enactment and final findings within 63 months of such date.