To amend the Patient Protection and Affordable Care Act to provide State flexibility for the offering of health benefits through alternative health arrangements.

Summary: State Authorized Alternative Health Arrangement Act of 2011 - Amends the Patient Protection and Affordable Care Act (PPACA) to authorize a state to establish one or more alternative health arrangements that serve the beneficiaries of one or more qualified benefits programs if certain requirements are met. Defines "qualified benefit program" as an entity or arrangement that: (1) is established, authorized, and operating pursuant to state law to provide or administer health coverage for officials, employees, and retirees of a group of employers; and (2) the state finds satisfies criteria to be a qualified health plan, with exceptions.

Requires such a state to designate one or more qualified benefit programs to be offered through such an arrangement.

States that such an arrangement is in addition to an American Health Benefits Exchange (health insurance exchange) or a subsidiary Exchange.

Deems such an arrangement to be an Exchange under PPACA, except exempts the arrangement from requirements relating to offering coverage to all qualified individuals and Exchange certification.

Details how health plan rules apply to the alternative health arrangements provided for under this Act.

Treats a qualified benefits program offered through an alternative health arrangement as: (1) meeting the definition of a qualified health plan for purposes of the essential health benefits provisions in PPACA, and (2) a health plan offered in the individual market under the Internal Revenue Code.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State Authorized Alternative Health 
Arrangement Act of 2011''.

SEC. 2. ALTERNATIVE HEALTH ARRANGEMENTS FOR THE PROVISION OF HEALTH 
              BENEFITS.

    Section 1311(f) of the Patient Protection and Affordable Care Act 
(42 U.S.C. 18031(f); Public Law 111-148) is amended by adding at the 
end the following new paragraph:
            ``(4) Alternative health arrangements for the provision of 
        health benefits.--
                    ``(A) Establishment of alternative health 
                arrangements.--
                            ``(i) In general.--A State may establish 
                        one or more alternative health arrangements 
                        (each referred to in this subsection as an 
                        `alternative health arrangement') that serve 
                        the beneficiaries of one or more qualified 
                        benefits programs (as defined in subparagraph 
                        (B)(i)) if the number of participants served by 
                        each such arrangement is determined by the 
                        State to be adequate for purposes of carrying 
                        out the requirements of this title.
                            ``(ii) Designation of qualified benefits 
                        programs to be offered.--A State that 
                        establishes an alternative health arrangement 
                        shall designate one or more qualified benefits 
                        programs to be offered through such 
                        arrangement.
                            ``(iii) Treatment as separate exchange.--An 
                        alternative health arrangement shall be in 
                        addition to an Exchange or a subsidiary 
                        Exchange under this section.
                            ``(iv) Criteria applicable to alternative 
                        health arrangement.--An alternative health 
                        arrangement shall be deemed to be an Exchange 
                        under this title, except that--
                                    ``(I) the requirement of section 
                                1311(d)(2) (relating to the offering of 
                                coverage) shall only apply, with 
                                respect to such an arrangement, to the 
                                offering of qualified benefits programs 
                                and only to beneficiaries served by 
                                such programs; and
                                    ``(II) the requirements of section 
                                1311(e)(1) (relating to certification 
                                of health plans) shall be deemed to 
                                have been satisfied with respect to 
                                qualified benefits programs offered 
                                through the arrangement by the 
                                designation of such programs by the 
                                State under clause (ii).
                    ``(B) Qualified benefits programs.--
                            ``(i) Definition.--In this paragraph, the 
                        term `qualified benefits program' means an 
                        entity or arrangement (such as a program 
                        created by a group of government agencies, 
                        instrumentalities, or political subdivisions by 
                        interlocal agreement or other method authorized 
                        by State law) that--
                                    ``(I) is established, authorized, 
                                and operating pursuant to State law to 
                                provide or administer health coverage 
                                for officials, employees, and retirees 
                                (and dependents of such officials, 
                                employees, and retirees) of a group of 
                                employers; and
                                    ``(II) the State finds, subject to 
                                clause (ii), satisfies criteria under 
                                this title to be a qualified health 
                                plan.
                            ``(ii) Satisfaction of certain 
                        requirements.--In applying this title with 
                        respect to a qualified benefits program that is 
                        designated by a State under subparagraph 
                        (A)(ii) and offered through an alternative 
                        health arrangement, the following special rules 
                        apply:
                                    ``(I) The entity offering such 
                                coverage shall be deemed to meet the 
                                requirement of section 1301(a)(1)(C)(i) 
                                (relating to licensure as a health 
                                insurance issuer).
                                    ``(II) Section 1301(a)(1)(C)(iii) 
                                (relating to uniform premium rates) 
                                shall be applied separately to each 
                                different health benefits option 
                                offered under the qualified benefits 
                                program through the arrangement.
                                    ``(III) Section 1311(c)(1)(D) 
                                (relating to accreditation) shall be 
                                deemed to have been satisfied by virtue 
                                of the designation by the State under 
                                subparagraph (A)(ii).
                                    ``(IV) Section 1311(e)(1) (relating 
                                to certification of health plans) shall 
                                not apply insofar as it applies to 
                                accreditation under section 
                                1311(c)(1)(D).
                                    ``(V) Section 1311(e)(2) (relating 
                                to premium considerations) shall not 
                                apply insofar as it requires 
                                alternative health arrangements to 
                                display premium information to the 
                                general public or conduct an analysis 
                                of premium growth outside of the 
                                alternative health arrangement.
                            ``(iii) Treatment as a health plan, 
                        qualified health plan, and individual insurance 
                        coverage.--A qualified benefits program offered 
                        through an alternative health arrangement shall 
                        be treated--
                                    ``(I) subject to clause (ii), as 
                                meeting the definition of a health plan 
                                under section 1301(b) and as a 
                                qualified health plan under this title; 
                                and
                                    ``(II) as a health plan offered in 
                                the individual market for purposes of 
                                section 5000A(f)(1)(C) of the Internal 
                                Revenue Code.
                    ``(C) Construction.--Nothing in this paragraph 
                shall be construed--
                            ``(i) to authorize or require an 
                        alternative health arrangement to offer health 
                        benefits to any individual other than a 
                        beneficiary covered under such arrangement; or
                            ``(ii) to authorize the offering of such 
                        health benefits through an Exchange.''.