# Patient Protection and Affordable Care Act/Title I/Subtitle D/Part III
## PART III--STATE FLEXIBILITY RELATING TO EXCHANGES
### SEC. 1321. STATE FLEXIBILITY IN OPERATION AND ENFORCEMENT OF EXCHANGES AND RELATED REQUIREMENTS.

    (a) Establishment of Standards-
       (1) IN GENERAL- The Secretary shall, as soon as practicable after the date of enactment of this Act, issue regulations setting standards for meeting the requirements under this title, and the amendments made by this title, with respect to--
          (A) the establishment and operation of Exchanges (including SHOP Exchanges);
          (B) the offering of qualified health plans through such Exchanges;
          (C) the establishment of the reinsurance and risk adjustment programs under part V; and
          (D) such other requirements as the Secretary determines appropriate.
    The preceding sentence shall not apply to standards for requirements under subtitles A and C (and the amendments made by such subtitles) for which the Secretary issues regulations under the Public Health Service Act.
       (2) CONSULTATION- In issuing the regulations under paragraph (1), the Secretary shall consult with the National Association of Insurance Commissioners and its members and with health insurance issuers, consumer organizations, and such other individuals as the Secretary selects in a manner designed to ensure balanced representation among interested parties.
    (b) State Action- Each State that elects, at such time and in such manner as the Secretary may prescribe, to apply the requirements described in subsection (a) shall, not later than January 1, 2014, adopt and have in effect--
       (1) the Federal standards established under subsection (a); or
       (2) a State law or regulation that the Secretary determines implements the standards within the State.
    (c) Failure To Establish Exchange or Implement Requirements-
       (1) IN GENERAL- If--
          (A) a State is not an electing State under subsection (b); or
          (B) the Secretary determines, on or before January 1, 2013, that an electing State--
             (i) will not have any required Exchange operational by January 1, 2014; or
             (ii) has not taken the actions the Secretary determines necessary to implement--
                (I) the other requirements set forth in the standards under subsection (a); or
                (II) the requirements set forth in subtitles A and C and the amendments made by such subtitles;
    the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.
       (2) ENFORCEMENT AUTHORITY- The provisions of section 2736(b) of the Public Health Services Act shall apply to the enforcement under paragraph (1) of requirements of subsection (a)(1) (without regard to any limitation on the application of those provisions to group health plans).
    (d) No Interference With State Regulatory Authority- Nothing in this title shall be construed to preempt any State law that does not prevent the application of the provisions of this title.
    (e) Presumption for Certain State-Operated Exchanges-
       (1) IN GENERAL- In the case of a State operating an Exchange before January 1, 2010, and which has insured a percentage of its population not less than the percentage of the population projected to be covered nationally after the implementation of this Act, that seeks to operate an Exchange under this section, the Secretary shall presume that such Exchange meets the standards under this section unless the Secretary determines, after completion of the process established under paragraph (2), that the Exchange does not comply with such standards.
       (2) PROCESS- The Secretary shall establish a process to work with a State described in paragraph (1) to provide assistance necessary to assist the State's Exchange in coming into compliance with the standards for approval under this section.

### SEC. 1322. FEDERAL PROGRAM TO ASSIST ESTABLISHMENT AND OPERATION OF NONPROFIT, MEMBER-RUN HEALTH INSURANCE ISSUERS.

    (a) Establishment of Program-
       (1) IN GENERAL- The Secretary shall establish a program to carry out the purposes of this section to be known as the Consumer Operated and Oriented Plan (CO-OP) program.
       (2) PURPOSE- It is the purpose of the CO-OP program to foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small group markets in the States in which the issuers are licensed to offer such plans.
    (b) Loans and Grants Under the CO-OP Program-
       (1) IN GENERAL- The Secretary shall provide through the CO-OP program for the awarding to persons applying to become qualified nonprofit health insurance issuers of--
          (A) loans to provide assistance to such person in meeting its start-up costs; and
          (B) grants to provide assistance to such person in meeting any solvency requirements of States in which the person seeks to be licensed to issue qualified health plans.
       (2) REQUIREMENTS FOR AWARDING LOANS AND GRANTS-
          (A) IN GENERAL- In awarding loans and grants under the CO-OP program, the Secretary shall--
             (i) take into account the recommendations of the advisory board established under paragraph (3);
             (ii) give priority to applicants that will offer qualified health plans on a Statewide basis, will utilize integrated care models, and have significant private support; and
             (iii) ensure that there is sufficient funding to establish at least 1 qualified nonprofit health insurance issuer in each State, except that nothing in this clause shall prohibit the Secretary from funding the establishment of multiple qualified nonprofit health insurance issuers in any State if the funding is sufficient to do so.
          (B) STATES WITHOUT ISSUERS IN PROGRAM- If no health insurance issuer applies to be a qualified nonprofit health insurance issuer within a State, the Secretary may use amounts appropriated under this section for the awarding of grants to encourage the establishment of a qualified nonprofit health insurance issuer within the State or the expansion of a qualified nonprofit health insurance issuer from another State to the State.
          (C) AGREEMENT-
             (i) IN GENERAL- The Secretary shall require any person receiving a loan or grant under the CO-OP program to enter into an agreement with the Secretary which requires such person to meet (and to continue to meet)--
                (I) any requirement under this section for such person to be treated as a qualified nonprofit health insurance issuer; and
                (II) any requirements contained in the agreement for such person to receive such loan or grant.
             (ii) RESTRICTIONS ON USE OF FEDERAL FUNDS- The agreement shall include a requirement that no portion of the funds made available by any loan or grant under this section may be used--
                (I) for carrying on propaganda, or otherwise attempting, to influence legislation; or
                (II) for marketing.
    Nothing in this clause shall be construed to allow a person to take any action prohibited by section 501(c)(29) of the Internal Revenue Code of 1986.
             (iii) FAILURE TO MEET REQUIREMENTS- If the Secretary determines that a person has failed to meet any requirement described in clause (i) or (ii) and has failed to correct such failure within a reasonable period of time of when the person first knows (or reasonably should have known) of such failure, such person shall repay to the Secretary an amount equal to the sum of--
                (I) 110 percent of the aggregate amount of loans and grants received under this section; plus
                (II) interest on the aggregate amount of loans and grants received under this section for the period the loans or grants were outstanding.
    The Secretary shall notify the Secretary of the Treasury of any determination under this section of a failure that results in the termination of an issuer's tax-exempt status under section 501(c)(29) of such Code.
          (D) TIME FOR AWARDING LOANS AND GRANTS- The Secretary shall not later than July 1, 2013, award the loans and grants under the CO-OP program and begin the distribution of amounts awarded under such loans and grants.
       (3) ADVISORY BOARD-
          (A) IN GENERAL- The advisory board under this paragraph shall consist of 15 members appointed by the Comptroller General of the United States from among individuals with qualifications described in section 1805(c)(2) of the Social Security Act.
          (B) RULES RELATING TO APPOINTMENTS-
             (i) STANDARDS- Any individual appointed under subparagraph (A) shall meet ethics and conflict of interest standards protecting against insurance industry involvement and interference.
             (ii) ORIGINAL APPOINTMENTS- The original appointment of board members under subparagraph (A)(ii) shall be made no later than 3 months after the date of enactment of this Act.
          (C) VACANCY- Any vacancy on the advisory board shall be filled in the same manner as the original appointment.
          (D) PAY AND REIMBURSEMENT-
             (i) NO COMPENSATION FOR MEMBERS OF ADVISORY BOARD- Except as provided in clause (ii), a member of the advisory board may not receive pay, allowances, or benefits by reason of their service on the board.
             (ii) TRAVEL EXPENSES- Each member shall receive travel expenses, including per diem in lieu of subsistence under subchapter I of chapter 57 of title 5, United States Code.
          (E) APPLICATION OF FACA- The Federal Advisory Committee Act (5 U.S.C. App.) shall apply to the advisory board, except that section 14 of such Act shall not apply.
          (F) TERMINATION- The advisory board shall terminate on the earlier of the date that it completes its duties under this section or December 31, 2015.
    (c) Qualified Nonprofit Health Insurance Issuer- For purposes of this section--
       (1) IN GENERAL- The term `qualified nonprofit health insurance issuer' means a health insurance issuer that is an organization--
          (A) that is organized under State law as a nonprofit, member corporation;
          (B) substantially all of the activities of which consist of the issuance of qualified health plans in the individual and small group markets in each State in which it is licensed to issue such plans; and
          (C) that meets the other requirements of this subsection.
       (2) CERTAIN ORGANIZATIONS PROHIBITED- An organization shall not be treated as a qualified nonprofit health insurance issuer if--
          (A) the organization or a related entity (or any predecessor of either) was a health insurance issuer on July 16, 2009; or
          (B) the organization is sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.
       (3) GOVERNANCE REQUIREMENTS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless--
          (A) the governance of the organization is subject to a majority vote of its members;
          (B) its governing documents incorporate ethics and conflict of interest standards protecting against insurance industry involvement and interference; and
          (C) as provided in regulations promulgated by the Secretary, the organization is required to operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members.
       (4) PROFITS INURE TO BENEFIT OF MEMBERS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless any profits made by the organization are required to be used to lower premiums, to improve benefits, or for other programs intended to improve the quality of health care delivered to its members.
       (5) COMPLIANCE WITH STATE INSURANCE LAWS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless the organization meets all the requirements that other issuers of qualified health plans are required to meet in any State where the issuer offers a qualified health plan, including solvency and licensure requirements, rules on payments to providers, and compliance with network adequacy rules, rate and form filing rules, any applicable State premium assessments and any other State law described in section 1324(b).
       (6) COORDINATION WITH STATE INSURANCE REFORMS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless the organization does not offer a health plan in a State until that State has in effect (or the Secretary has implemented for the State) the market reforms required by part A of title XXVII of the Public Health Service Act (as amended by subtitles A and C of this Act).
    (d) Establishment of Private Purchasing Council-
       (1) IN GENERAL- Qualified nonprofit health insurance issuers participating in the CO-OP program under this section may establish a private purchasing council to enter into collective purchasing arrangements for items and services that increase administrative and other cost efficiencies, including claims administration, administrative services, health information technology, and actuarial services.
       (2) COUNCIL MAY NOT SET PAYMENT RATES- The private purchasing council established under paragraph (1) shall not set payment rates for health care facilities or providers participating in health insurance coverage provided by qualified nonprofit health insurance issuers.
       (3) CONTINUED APPLICATION OF ANTITRUST LAWS-
          (A) IN GENERAL- Nothing in this section shall be construed to limit the application of the antitrust laws to any private purchasing council (whether or not established under this subsection) or to any qualified nonprofit health insurance issuer participating in such a council.
          (B) ANTITRUST LAWS- For purposes of this subparagraph, the term `antitrust laws' has the meaning given the term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)). Such term also includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.
    (e) Limitation on Participation- No representative of any Federal, State, or local government (or of any political subdivision or instrumentality thereof), and no representative of a person described in subsection (c)(2)(A), may serve on the board of directors of a qualified nonprofit health insurance issuer or with a private purchasing council established under subsection (d).
    (f) Limitations on Secretary-
       (1) IN GENERAL- The Secretary shall not--
          (A) participate in any negotiations between 1 or more qualified nonprofit health insurance issuers (or a private purchasing council established under subsection (d)) and any health care facilities or providers, including any drug manufacturer, pharmacy, or hospital; and
          (B) establish or maintain a price structure for reimbursement of any health benefits covered by such issuers.
       (2) COMPETITION- Nothing in this section shall be construed as authorizing the Secretary to interfere with the competitive nature of providing health benefits through qualified nonprofit health insurance issuers.
    (g) Appropriations- There are hereby appropriated, out of any funds in the Treasury not otherwise appropriated, $6,000,000,000 to carry out this section.
    (h) Tax Exemption for Qualified Nonprofit Health Insurance Issuer-
       (1) IN GENERAL- Section 501(c) of the Internal Revenue Code of 1986 (relating to list of exempt organizations) is amended by adding at the end the following:
                `(29) CO-OP HEALTH INSURANCE ISSUERS-
                   `(A) IN GENERAL- A qualified nonprofit health insurance issuer (within the meaning of section 1322 of the Patient Protection and Affordable Care Act) which has received a loan or grant under the CO-OP program under such section, but only with respect to periods for which the issuer is in compliance with the requirements of such section and any agreement with respect to the loan or grant.
                   `(B) CONDITIONS FOR EXEMPTION- Subparagraph (A) shall apply to an organization only if--
                      `(i) the organization has given notice to the Secretary, in such manner as the Secretary may by regulations prescribe, that it is applying for recognition of its status under this paragraph,
                      `(ii) except as provided in section 1322(c)(4) of the Patient Protection and Affordable Care Act, no part of the net earnings of which inures to the benefit of any private shareholder or individual,
                      `(iii) no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and
                      `(iv) the organization does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.'.
       (2) ADDITIONAL REPORTING REQUIREMENT- Section 6033 of such Code (relating to returns by exempt organizations) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following:
             `(m) Additional Information Required From CO-OP Insurers- An organization described in section 501(c)(29) shall include on the return required under subsection (a) the following information:
                `(1) The amount of the reserves required by each State in which the organization is licensed to issue qualified health plans.
                `(2) The amount of reserves on hand.'.
       (3) APPLICATION OF TAX ON EXCESS BENEFIT TRANSACTIONS- Section 4958(e)(1) of such Code (defining applicable tax-exempt organization) is amended by striking `paragraph (3) or (4)' and inserting `paragraph (3), (4), or (29)'.
    (i) GAO Study and Report-
       (1) STUDY- The Comptroller General of the General Accountability Office shall conduct an ongoing study on competition and market concentration in the health insurance market in the United States after the implementation of the reforms in such market under the provisions of, and the amendments made by, this Act. Such study shall include an analysis of new issuers of health insurance in such market.
       (2) REPORT- The Comptroller General shall, not later than December 31 of each even-numbered year (beginning with 2014), report to the appropriate committees of the Congress the results of the study conducted under paragraph (1), including any recommendations for administrative or legislative changes the Comptroller General determines necessary or appropriate to increase competition in the health insurance market.

### SEC. 1323. COMMUNITY HEALTH INSURANCE OPTION.

    (a) Voluntary Nature-
       (1) NO REQUIREMENT FOR HEALTH CARE PROVIDERS TO PARTICIPATE- Nothing in this section shall be construed to require a health care provider to participate in a community health insurance option, or to impose any penalty for non-participation.
       (2) NO REQUIREMENT FOR INDIVIDUALS TO JOIN- Nothing in this section shall be construed to require an individual to participate in a community health insurance option, or to impose any penalty for non-participation.
       (3) STATE OPT OUT-
          (A) IN GENERAL- A State may elect to prohibit Exchanges in such State from offering a community health insurance option if such State enacts a law to provide for such prohibition.
          (B) TERMINATION OF OPT OUT- A State may repeal a law described in subparagraph (A) and provide for the offering of such an option through the Exchange.
    (b) Establishment of Community Health Insurance Option-
       (1) ESTABLISHMENT- The Secretary shall establish a community health insurance option to offer, through the Exchanges established under this title (other than Exchanges in States that elect to opt out as provided for in subsection (a)(3)), health care coverage that provides value, choice, competition, and stability of affordable, high quality coverage throughout the United States.
       (2) COMMUNITY HEALTH INSURANCE OPTION- In this section, the term `community health insurance option' means health insurance coverage that--
          (A) except as specifically provided for in this section, complies with the requirements for being a qualified health plan;
          (B) provides high value for the premium charged;
          (C) reduces administrative costs and promotes administrative simplification for beneficiaries;
          (D) promotes high quality clinical care;
          (E) provides high quality customer service to beneficiaries;
          (F) offers a sufficient choice of providers; and
          (G) complies with State laws (if any), except as otherwise provided for in this title, relating to the laws described in section 1324(b).
       (3) ESSENTIAL HEALTH BENEFITS-
          (A) GENERAL RULE- Except as provided in subparagraph (B), a community health insurance option offered under this section shall provide coverage only for the essential health benefits described in section 1302(b).
          (B) STATES MAY OFFER ADDITIONAL BENEFITS- Nothing in this section shall preclude a State from requiring that benefits in addition to the essential health benefits required under subparagraph (A) be provided to enrollees of a community health insurance option offered in such State.
          (C) CREDITS-
             (i) IN GENERAL- An individual enrolled in a community health insurance option under this section shall be eligible for credits under section 36B of the Internal Revenue Code of 1986 in the same manner as an individual who is enrolled in a qualified health plan.
             (ii) NO ADDITIONAL FEDERAL COST- A requirement by a State under subparagraph (B) that benefits in addition to the essential health benefits required under subparagraph (A) be provided to enrollees of a community health insurance option shall not affect the amount of a premium tax credit provided under section 36B of the Internal Revenue Code of 1986 with respect to such plan.
          (D) STATE MUST ASSUME COST- A State shall make payments to or on behalf of an eligible individual to defray the cost of any additional benefits described in subparagraph (B).
          (E) ENSURING ACCESS TO ALL SERVICES- Nothing in this Act shall prohibit an individual enrolled in a community health insurance option from paying out-of-pocket the full cost of any item or service not included as an essential health benefit or otherwise covered as a benefit by a health plan. Nothing in subparagraph (B) shall prohibit any type of medical provider from accepting an out-of-pocket payment from an individual enrolled in a community health insurance option for a service otherwise not included as an essential health benefit.
          (F) PROTECTING ACCESS TO END OF LIFE CARE- A community health insurance option offered under this section shall be prohibited from limiting access to end of life care.
       (4) COST SHARING- A community health insurance option shall offer coverage at each of the levels of coverage described in section 1302(d).
       (5) PREMIUMS-
          (A) PREMIUMS SUFFICIENT TO COVER COSTS- The Secretary shall establish geographically adjusted premium rates in an amount sufficient to cover expected costs (including claims and administrative costs) using methods in general use by qualified health plans.
          (B) APPLICABLE RULES- The provisions of title XXVII of the Public Health Service Act relating to premiums shall apply to community health insurance options under this section, including modified community rating provisions under section 2701 of such Act.
          (C) COLLECTION OF DATA- The Secretary shall collect data as necessary to set premium rates under subparagraph (A).
          (D) NATIONAL POOLING- Notwithstanding any other provision of law, the Secretary may treat all enrollees in community health insurance options as members of a single pool.
          (E) CONTINGENCY MARGIN- In establishing premium rates under subparagraph (A), the Secretary shall include an appropriate amount for a contingency margin.
       (6) REIMBURSEMENT RATES-
          (A) NEGOTIATED RATES- The Secretary shall negotiate rates for the reimbursement of health care providers for benefits covered under a community health insurance option.
          (B) LIMITATION- The rates described in subparagraph (A) shall not be higher, in aggregate, than the average reimbursement rates paid by health insurance issuers offering qualified health plans through the Exchange.
          (C) INNOVATION- Subject to the limits contained in subparagraph (A), a State Advisory Council established or designated under subsection (d) may develop or encourage the use of innovative payment policies that promote quality, efficiency and savings to consumers.
       (7) SOLVENCY AND CONSUMER PROTECTION-
          (A) SOLVENCY- The Secretary shall establish a Federal solvency standard to be applied with respect to a community health insurance option. A community health insurance option shall also be subject to the solvency standard of each State in which such community health insurance option is offered.
          (B) MINIMUM REQUIRED- In establishing the standard described under subparagraph (A), the Secretary shall require a reserve fund that shall be equal to at least the dollar value of the incurred but not reported claims of a community health insurance option.
          (C) CONSUMER PROTECTIONS- The consumer protection laws of a State shall apply to a community health insurance option.
       (8) REQUIREMENTS ESTABLISHED IN PARTNERSHIP WITH INSURANCE COMMISSIONERS-
          (A) IN GENERAL- The Secretary, in collaboration with the National Association of Insurance Commissioners (in this paragraph referred to as the `NAIC'), may promulgate regulations to establish additional requirements for a community health insurance option.
          (B) APPLICABILITY- Any requirement promulgated under subparagraph (A) shall be applicable to such option beginning 90 days after the date on which the regulation involved becomes final.
    (c) Start-up Fund-
       (1) ESTABLISHMENT OF FUND-
          (A) IN GENERAL- There is established in the Treasury of the United States a trust fund to be known as the `Health Benefit Plan Start-Up Fund' (referred to in this section as the `Start-Up Fund'), that shall consist of such amounts as may be appropriated or credited to the Start-Up Fund as provided for in this subsection to provide loans for the initial operations of a community health insurance option. Such amounts shall remain available until expended.
          (B) FUNDING- There is hereby appropriated to the Start-Up Fund, out of any moneys in the Treasury not otherwise appropriated an amount requested by the Secretary of Health and Human Services as necessary to--
             (i) pay the start-up costs associated with the initial operations of a community health insurance option; and
             (ii) pay the costs of making payments on claims submitted during the period that is not more than 90 days from the date on which such option is offered.
       (2) USE OF START-UP FUND- The Secretary shall use amounts contained in the Start-Up Fund to make payments (subject to the repayment requirements in paragraph (4)) for the purposes described in paragraph (1)(B).
       (3) PASS THROUGH OF REBATES- The Secretary may establish procedures for reducing the amount of payments to a contracting administrator to take into account any rebates or price concessions.
       (4) REPAYMENT-
          (A) IN GENERAL- A community health insurance option shall be required to repay the Secretary of the Treasury (on such terms as the Secretary may require) for any payments made under paragraph (1)(B) by the date that is not later than 9 years after the date on which the payment is made. The Secretary may require the payment of interest with respect to such repayments at rates that do not exceed the market interest rate (as determined by the Secretary).
          (B) SANCTIONS IN CASE OF FOR-PROFIT CONVERSION- In any case in which the Secretary enters into a contract with a qualified entity for the offering of a community health insurance option and such entity is determined to be a for-profit entity by the Secretary, such entity shall be--
             (i) immediately liable to the Secretary for any payments received by such entity from the Start-Up Fund; and
             (ii) permanently ineligible to offer a qualified health plan.
    (d) State Advisory Council-
       (1) ESTABLISHMENT- A State (other than a State that elects to opt out as provided for in subsection (a)(3)) shall establish or designate a public or non-profit private entity to serve as the State Advisory Council to provide recommendations to the Secretary on the operations and policies of a community health insurance option in the State. Such Council shall provide recommendations on at least the following:
          (A) policies and procedures to integrate quality improvement and cost containment mechanisms into the health care delivery system;
          (B) mechanisms to facilitate public awareness of the availability of a community health insurance option; and
          (C) alternative payment structures under a community health insurance option for health care providers that encourage quality improvement and cost control.
       (2) MEMBERS- The members of the State Advisory Council shall be representatives of the public and shall include health care consumers and providers.
       (3) APPLICABILITY OF RECOMMENDATIONS- The Secretary may apply the recommendations of a State Advisory Council to a community health insurance option in that State, in any other State, or in all States.
    (e) Authority To Contract; Terms of Contract-
       (1) AUTHORITY-
          (A) IN GENERAL- The Secretary may enter into a contract or contracts with one or more qualified entities 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 a community health insurance option in the same manner as the Secretary may enter into contracts under subsection (a)(1) of such section. The Secretary shall have the same authority with respect to a community health insurance option under this section 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.
          (B) REQUIREMENTS APPLY- If the Secretary enters into a contract with a qualified entity to offer a community health insurance option, under such contract such entity--
             (i) shall meet the criteria established under paragraph (2); and
             (ii) shall receive an administrative fee under paragraph (7).
          (C) LIMITATION- Contracts under this subsection shall not involve the transfer of insurance risk to the contracting administrator.
          (D) REFERENCE- An entity with which the Secretary has entered into a contract under this paragraph shall be referred to as a `contracting administrator'.
       (2) QUALIFIED ENTITY- To be qualified to be selected by the Secretary to offer a community health insurance option, an entity shall--
          (A) meet the criteria established under section 1874A(a)(2) of the Social Security Act;
          (B) be a nonprofit entity for purposes of offering such option;
          (C) meet the solvency standards applicable under subsection (b)(7);
          (D) be eligible to offer health insurance or health benefits coverage;
          (E) meet quality standards specified by the Secretary;
          (F) have in place effective procedures to control fraud, abuse, and waste; and
          (G) meet such other requirements as the Secretary may impose.
    Procedures described under subparagraph (F) shall include the implementation of procedures to use beneficiary identifiers to identify individuals entitled to benefits so that such an individual's social security account number is not used, and shall also include procedures for the use of technology (including front-end, prepayment intelligent data-matching technology similar to that used by hedge funds, investment funds, and banks) to provide real-time data analysis of claims for payment under this title to identify and investigate unusual billing or order practices under this title that could indicate fraud or abuse.
       (3) TERM- A contract provided for under paragraph (1) shall be for a term of at least 5 years but not more than 10 years, as determined by the Secretary. At the end of each such term, the Secretary shall conduct a competitive bidding process for the purposes of renewing existing contracts or selecting new qualified entities with which to enter into contracts under such paragraph.
       (4) LIMITATION- A contract may not be renewed under this subsection unless the Secretary determines that the contracting administrator has met performance requirements established by the Secretary in the areas described in paragraph (7)(B).
       (5) AUDITS- The Inspector General shall conduct periodic audits with respect to contracting administrators under this subsection to ensure that the administrator involved is in compliance with this section.
       (6) REVOCATION- A contract awarded under this subsection shall be revoked by the Secretary, upon the recommendation of the Inspector General, only after notice to the contracting administrator involved and an opportunity for a hearing. The Secretary may revoke such contract if the Secretary determines that such administrator has engaged in fraud, deception, waste, abuse of power, negligence, mismanagement of taxpayer dollars, or gross mismanagement. An entity that has had a contract revoked under this paragraph shall not be qualified to enter into a subsequent contract under this subsection.
       (7) FEE FOR ADMINISTRATION-
          (A) IN GENERAL- The Secretary shall pay the contracting administrator a fee for the management, administration, and delivery of the benefits under this section.
          (B) REQUIREMENT FOR HIGH QUALITY ADMINISTRATION- The Secretary may increase the fee described in subparagraph (A) by not more than 10 percent, or reduce the fee described in subparagraph (A) by not more than 50 percent, based on the extent to which the contracting administrator, in the determination of the Secretary, meets performance requirements established by the Secretary, in at least the following areas:
             (i) Maintaining low premium costs and low cost sharing requirements, provided that such requirements are consistent with section 1302.
             (ii) Reducing administrative costs and promoting administrative simplification for beneficiaries.
             (iii) Promoting high quality clinical care.
             (iv) Providing high quality customer service to beneficiaries.
          (C) NON-RENEWAL- The Secretary may not renew a contract to offer a community health insurance option under this section with any contracting entity that has been assessed more than one reduction under subparagraph (B) during the contract period.
       (8) LIMITATION- Notwithstanding the terms of a contract under this subsection, the Secretary shall negotiate the reimbursement rates for purposes of subsection (b)(6).
    (f) Report by HHS and Insolvency Warnings-
       (1) IN GENERAL- On an annual basis, the Secretary shall conduct a study on the solvency of a community health insurance option and submit to Congress a report describing the results of such study.
       (2) RESULT- If, in any year, the result of the study under paragraph (1) is that a community health insurance option is insolvent, such result shall be treated as a community health insurance option solvency warning.
       (3) SUBMISSION OF PLAN AND PROCEDURE-
          (A) IN GENERAL- If there is a community health insurance option solvency warning under paragraph (2) made in a year, the President shall submit to Congress, within the 15-day period beginning on the date of the budget submission to Congress under section 1105(a) of title 31, United States Code, for the succeeding year, proposed legislation to respond to such warning.
          (B) PROCEDURE- In the case of a legislative proposal submitted by the President pursuant to subparagraph (A), such proposal shall be considered by Congress using the same procedures described under sections 803 and 804 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that shall be used for a medicare funding warning.
    (g) Marketing Parity- In a facility controlled by the Federal Government, or by a State, where marketing or promotional materials related to a community health insurance option are made available to the public, making available marketing or promotional materials relating to private health insurance plans shall not be prohibited. Such materials include informational pamphlets, guidebooks, enrollment forms, or other materials determined reasonable for display.
    (h) Authorization of Appropriations- There is authorized to be appropriated such sums as may be necessary to carry out this section.

### SEC. 1324. LEVEL PLAYING FIELD.

    (a) In General- Notwithstanding any other provision of law, any health insurance coverage offered by a private health insurance issuer shall not be subject to any Federal or State law described in subsection (b) if a qualified health plan offered under the Consumer Operated and Oriented Plan program under section 1322, a community health insurance option under section 1323, or a nationwide qualified health plan under section 1333(b), is not subject to such law.
    (b) Laws Described- The Federal and State laws described in this subsection are those Federal and State laws relating to--
       (1) guaranteed renewal;
       (2) rating;
       (3) preexisting conditions;
       (4) non-discrimination;
       (5) quality improvement and reporting;
       (6) fraud and abuse;
       (7) solvency and financial requirements;
       (8) market conduct;
       (9) prompt payment;
       (10) appeals and grievances;
       (11) privacy and confidentiality;
       (12) licensure; and
       (13) benefit plan material or information.