# H.R. 3200/Division A/Title II/Subtitle B
## SUBTITLE B — PUBLIC HEALTH INSURANCE OPTIONS
### Sec. 221. Establishment and Administration of a Public Health Insurance Option as an Exchange-Qualified Health Benefits Plan.

    (a) Establishment.—
       For years beginning with Y1, the Secretary of Health and Human Services (in this subtitle referred to as the “Secretary”) shall provide for the offering of an Exchange-participating health benefits plan (in this division referred to as the “public health insurance option”) that ensures choice, competition, and stability of affordable, high quality coverage throughout the United States in accordance with this subtitle. In designing the option, the Secretary’s primary responsibility is to create a low-cost plan without comprimising quality or access to care.
    (b) Offering as an Exchange-Participating Health Benefits Plan.—
          (1) Exclusive to the Exchange.—
             The public health insurance option shall only be made available through the Health Insurance Exchange.
          (2) Ensuring a Level Playing Field.—
             Consistent with this subtitle, the public health insurance option shall comply with requirements that are applicable under this title to an Exchange-participating health benefits plan, including requirements related to benefits, benefit levels, provider networks, notices, consumer protections, and cost sharing.
          (3) Provision of Benefit Levels.—
             The public health insurance option—
                (A) shall offer basic, enhanced, and premium plans; and
                (B) may offer premium-plus plans.
    (c) Administrative Contracting.—
       The Secretary may enter into contracts for the purpose of performing administrative functions (including functions described in subsection (a)(4) of section 1874A of the Social Security Act) with respect to the public health insurance option in the same manner as the Secretary may enter into contracts under subsection (a)(1) of such section. The Secretary has the same authority with respect to the public health insurance option as the Secretary has under subsections (a)(1) and (b) of section 1874A of the Social Security Act with respect to title XVIII of such Act. Contracts under this subsection shall not involve the transfer of insurance risk to such entity.
    (d) Ombudsman.—
       The Secretary shall establish an office of the ombudsman for the public health insurance option which shall have duties with respect to the public health insurance option similar to the duties of the Medicare Beneficiary Ombudsman under section 1808(c)(2) of the Social Security Act.
    (e) Data Collection.—
       The Secretary shall collect such data as may be required to establish premiums and payment rates for the public health insurance option and for other purposes under this subtitle, including to improve quality and to reduce racial, ethnic, and other disparities in health and health care.
    (f) Treatment of Public Health Insurance Option.—
       With respect to the public health insurance option, the Secretary shall be treated as a QHBP offering entity offering an Exchange-participating health benefits plan.
    (g) Access to Federal Courts.—
       The provisions of Medicare (and related provisions of title II of the Social Security Act) relating to access of Medicare beneficiaries to Federal courts for the enforcement of rights under Medicare, including with respect to amounts in controversy, shall apply to the public health insurance option and individuals enrolled under such option under this title in the same manner as such provisions apply to Medicare and Medicare beneficiaries.

### Sec. 222. Premiums and Financing.

    (a) Establishment of Premiums.—
          (1) In General.—
             The Secretary shall establish geographically-adjusted premium rates for the public health insurance option in a manner—
                (A) that complies with the premium rules established by the Commissioner under section 113 for Exchange-participating health benefit plans; and
                (B) at a level sufficient to fully finance the costs of—
                      (i) health benefits provided by the public health insurance option; and
                      (ii) administrative costs related to operating the public health insurance option.
          (2) Contingency <argin.—
             In establishing premium rates under paragraph (1), the Secretary shall include an appropriate amount for a contingency margin.
    (b) Account.—
          (1) Establishment.—
             There is established in the Treasury of the United States an Account for the receipts and disbursements attributable to the operation of the public health insurance option, including the start-up funding under paragraph (2). Section 1854(g) of the Social Security Act shall apply to receipts described in the previous sentence in the same manner as such section applies to payments or premiums described in such section.
          (2) Start-up Funding.—
                (A) In General.—
                   In order to provide for the establishment of the public health insurance option there is hereby appropriated to the Secretary, out of any funds in the Treasury not otherwise appropriated, $2,000,000,000. In order to provide for initial claims reserves before the collection of premiums, there is hereby appropriated to the Secretary, out of any funds in the Treasury not otherwise appropriated, such sums as necessary to cover 90 days worth of claims reserves based on projected enrollment.
                (B) Amortization of Start-up Funding.—
                   The Secretary shall provide for the repayment of the startup funding provided under subparagraph (A) to the Treasury in an amortized manner over the 10-year period beginning with Y1.
                (C) Limitation on Funding.—
                   Nothing in this section shall be construed as authorizing any additional appropriations to the Account, other than such amounts as are otherwise provided with respect to other Exchange-participating health benefits plans.

### Sec. 223. Payment Rates for Items and Services.

    (a) Rates Established by Secretary.—
          (1) In General.—
             The Secretary shall establish payment rates for the public health insurance option for services and health care providers consistent with this section and may change such payment rates in accordance with section 224.
          (2) Initial Payment Rules.—
                (A) In General.—
                   Except as provided in subparagraph (B) and subsection (b)(1), during Y1, Y2, and Y3, the Secretary shall base the payment rates under this section for services and providers described in paragraph (1) on the payment rates for similar services and providers under parts A and B of Medicare.
                (B) Exceptions.—
                      (i) Practitioners’ Services.—
                         Payment rates for practitioners’ services otherwise established under the fee schedule under section 1848 of the Social Security Act shall be applied without regard to the provisions under subsection (f) of such section and the update under subsection (d)(4) under such section for a year as applied under this paragraph shall be not less than 1 percent.
                      (ii) Adjustments.—
                         The Secretary may determine the extent to which Medicare adjustments applicable to base payment rates under parts A and B of Medicare shall apply under this subtitle.
          (3) For New Services.—
             The Secretary shall modify payment rates described in paragraph (2) in order to accommodate payments for services, such as well-child visits, that are not otherwise covered under Medicare.
          (4) Prescription Drugs.—
             Payment rates under this section for prescription drugs that are not paid for under part A or part B of Medicare shall be at rates negotiated by the Secretary.
    (b) Incentives for Participating Providers.—
          (1) Initial Incentive Period.—
                (A) In General.—
                   The Secretary shall provide, in the case of services described in subparagraph (B) furnished during Y1, Y2, and Y3, for payment rates that are 5 percent greater than the rates established under subsection (a).
                (B) Services Described.—
                   The services described in this subparagraph are items and professional services, under the public health insurance option by a physician or other health care practitioner who participates in both Medicare and the public health insurance option.
                (C) Special Rules.—
                   A pediatrician and any other health care practitioner who is a type of practitioner that does not typically participate in Medicare (as determined by the Secretary) shall also be eligible for the increased payment rates under subparagraph (A).
          (2) Subsequent Periods.—
             Beginning with Y4 and for subsequent years, the Secretary shall continue to use an administrative process to set such rates in order to promote payment accuracy, to ensure adequate beneficiary access to providers, and to promote affordablility and the efficient delivery of medical care consistent with section 221(a). Such rates shall not be set at levels expected to increase overall medical costs under the option beyond what would be expected if the process under subsection (a)(2) and paragraph (1) of this subsection were continued.
          (3) Establishment of a Provider Network.—
             Health care providers participating under Medicare are participating providers in the public health insurance option unless they opt out in a process established by the Secretary.
    (c) Administrative Process for Setting Rates.—
       Chapter 5 of title 5, United States Code shall apply to the process for the initial establishment of payment rates under this section but not to the specific methodology for establishing such rates or the calculation of such rates.
    (d) Construction.—
       Nothing in this subtitle shall be construed as limiting the Secretary’s authority to correct for payments that are excessive or deficient, taking into account the provisions of section 221(a) and the amounts paid for similar health care providers and services under other Exchange-participating health benefits plans.
    (e) Construction.—
       Nothing in this subtitle shall be construed as affecting the authority of the Secretary to establish payment rates, including payments to provide for the more efficient delivery of services, such as the initiatives provided for under section 224.
    (f) Limitations on Review.—
       There shall be no administrative or judicial review of a payment rate or methodology established under this section or under section 224.

### Sec. 224. Modernized Payment Initiatives and Delivery System Reform.

    (a) In General.—
       For plan years beginning with Y1, the Secretary may utilize innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option. The payment mechanisms and policies under this section may include patient-centered medical home and other care management payments, accountable care organizations, value-based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers.
    (b) Requirements for Innovative Payments.—
       The Secretary shall design and implement the payment mechanisms and policies under this section in a manner that—
          (1) seeks to—
                (A) improve health outcomes;
                (B) reduce health disparities (including racial, ethnic, and other disparities);
                (C) provide efficent and affordable care;
                (D) address geographic variation in the provision of health services; or
                (E) prevent or manage chronic illness; and
          (2) promotes care that is integrated, patient-centered, quality, and efficient.
    (c) Encouraging the Use of High Value Services.—
       To the extent allowed by the benefit standards applied to all Exchange-participating health benefits plans, the public health insurance option may modify cost sharing and payment rates to encourage the use of services that promote health and value.
    (d) Non-uniformity Permitted.—
       Nothing in this subtitle shall prevent the Secretary from varying payments based on different payment structure models (such as accountable care organizations and medical homes) under the public health insurance option for different geographic areas.

### Sec. 225. Provider Participation.

    (a) In General.—
       The Secretary shall establish conditions of participation for health care providers under the public health insurance option.
    (b) Licensure or Certification.—
       The Secretary shall not allow a health care provider to participate in the public health insurance option unless such provider is appropriately licensed or certified under State law.
    (c) Payment Terms for Providers.—
          (1) Physicians.—
             The Secretary shall provide for the annual participation of physicians under the public health insurance option, for which payment may be made for services furnished during the year, in one of 2 classes:
                (A) Preferred physicians.—
                   Those physicians who agree to accept the payment rate established under section 223 (without regard to cost-sharing) as the payment in full.
                (B) Participating, non-preferred physicians.—
                   Those physicians who agree not to impose charges (in relation to the payment rate described in section 223 for such physicians) that exceed the ratio permitted under section 1848(g)(2)(C) of the Social Security Act.
          (2) Other providers.—
             The Secretary shall provide for the participation (on an annual or other basis specified by the Secretary) of health care providers (other than physicians) under the public health insurance option under which payment shall only be available if the provider agrees to accept the payment rate established under section 223 (without regard to cost-sharing) as the payment in full.
    (d) Exclusion of Certain Providers.—
       The Secretary shall exclude from participation under the public health insurance option a health care provider that is excluded from participation in a Federal health care program (as defined in section 1128B(f) of the Social Security Act).

### Sec. 226. Application of Fraud and Abuse Provisions.

    Provisions of law (other than criminal law provisions) identified by the Secretary by regulation, in consultation with the Inspector General of the Department of Health and Human Services, that impose sanctions with respect to waste, fraud, and abuse under Medicare, such as the False Claims Act (31 U.S.C. 3729 et seq.), shall also apply to the public health insurance option.