# H.R. 3200/Division A/Title I/Subtitle G
## SUBTITLE G — EARLY INVESTMENTS
### Sec. 161. Ensuring Value and Lower Premiums.

    (a) Group Health Insurance Coverage.—
       Title XXVII of the Public Health Service Act is amended by inserting after section 2713 the following new section:
             ``SEC. 2714. Ensuring Value and Lower Premiums.
                ``(a) In general.—Each health insurance issuer that offers health insurance coverage in the small or large group market shall provide that for any plan year in which the coverage has a medical loss ratio below a level specified by the Secretary, the issuer shall provide in a manner specified by the Secretary for rebates to enrollees of payment sufficient to meet such loss ratio. Such methodology shall be set at the highest level medical loss ratio possible that is designed to ensure adequate participation by issuers, competition in the health insurance market, and value for consumers so that their premiums are used for services.
                ``(b) Uniform definitions.—The Secretary shall establish a uniform definition of medical loss ratio and methodology for determining how to calculate the medical loss ratio. Such methodology shall be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans.´´.
    (b) Individual Health Insurance Coverage.—
       Such title is further amended by inserting after section 2753 the following new section:
             ``SEC. 2754. Ensuring Value and Lower Premiums.
                ``The provisions of section 2714 shall apply to health insurance coverage offered in the individual market in the same manner as such provisions apply to health insurance coverage offered in the small or large group market.´´.
    (c) Immediate Implementation.—
       The amendments made by this section shall apply in the group and individual market for plan years beginning on or after January 1, 2011.

### Sec. 162. Ending Health Insurance Rescission Abuse.

    (a) Clarification Regarding Application of Guaranteed Renewability of Individual Health Insurance Coverage.—
       Section 2742 of the Public Health Service Act (42 U.S.C. 300gg–42) is amended—
          (1) in its heading, by inserting ``and continuation in force, including prohibition of rescission,´´ after ``guaranteed renewability´´; and
          (2) in subsection (a), by inserting ``, including without rescission,´´ after ``continue in force´´.
    (b) Secretarial Guidance Regarding Rescissions.—
       Section 2742 of such Act (42 U.S.C. 300gg–42) is amended by adding at the end the following:
          ``(f) Rescission.—A health insurance issuer may rescind health insurance coverage only upon clear and convincing evidence of fraud described in subsection (b)(2). The Secretary, no later than July 1, 2010, shall issue guidance implementing this requirement, including procedures for independent, external third party review.´´.
    (c) Opportunity for Independent, External Third Party Review in Certain Cases.—
       Subpart 1 of part B of title XXVII of such Act (42 U.S.C. 300gg–41 et seq.) is amended by adding at the end the following:
          ``SEC. 2746. Opportunity for independent, external third party review in cases of rescission.
             ``(a) Notice and review right.—If a health insurance issuer determines to rescind health insurance coverage for an individual in the individual market, before such rescission may take effect the issuer shall provide the individual with notice of such proposed rescission and an opportunity for a review of such determination by an independent, external third party under procedures specified by the Secretary under section 2742(f).
             ``(b) Independent determination.—If the individual requests such review by an independent, external third party of a rescission of health insurance coverage, the coverage shall remain in effect until such third party determines that the coverage may be rescinded under the guidance issued by the Secretary under section 2742(f).´´.
    (d) Effective Date.—
       The amendments made by this section shall apply on and after October 1, 2010, with respect to health insurance coverage issued before, on, or after such date.

### Sec. 163. Administrative Simplification.

    (a) Standardizing Electronic Administrative Transactions.—
          (1) In General.—
             Part C of Title XI of the Social Security Act (42 U.S.C. 1320d et seq.) is amended by inserting after Section 1173 the following new section:

##### ``SEC. 1173A. Standardize Electronic Administrative Transactions.

                   ``(a) Standards for financial and administrative transactions.—
                      ``(1) In general.—The Secretary shall adopt and regularly update standards consistent with the goals described in paragraph (2).
                      ``(2) Goals for financial and administrative transactions.—The goals for standards under paragraph (1) are that such standards shall—
                         ``(A) be unique with no conflicting or redundant standards;
                         ``(B) be authoritative, permitting no additions or constraints for electronic transactions, including companion guides;
                         ``(C) be comprehensive, efficient and robust, requiring minimal augmentation by paper transactions or clarification by further communications;
                         ``(D) enable the real-time (or near real-time) determination of an individual’s financial responsibility at the point of service and, to the extent possible, prior to service, including whether the individual is eligible for a specific service with a specific physician at a specific facility, which may include utilization of a machine-readable health plan beneficiary identification card;
                         ``(E) enable, where feasible, near real-time adjudication of claims;
                         ``(F) provide for timely acknowledgment, response, and status reporting applicable to any electronic transaction deemed appropriate by the Secretary;
                         ``(G) describe all data elements (such as reason and remark codes) in unambiguous terms, not permit optional fields, require that data elements be either required or conditioned upon set values in other fields, and prohibit additional conditions; and
                         ``(H) harmonize all common data elements across administrative and clinical transaction standards.
                      ``(3) Time for adoption.—Not later than 2 years after the date of implementation of the X12 Version 5010 transaction standards implemented under this part, the Secretary shall adopt standards under this section.
                      ``(4) Requirements for specific standards.—The standards under this section shall be developed, adopted and enforced so as to—
                         ``(A) clarify, refine, complete, and expand, as needed, the standards required under section 1173;
                         ``(B) require paper versions of standardized transactions to comply with the same standards as to data content such that a fully compliant, equivalent electronic transaction can be populated from the data from a paper version;
                         ``(C) enable electronic funds transfers, in order to allow automated reconciliation with the related health care payment and remittance advice;
                         ``(D) require timely and transparent claim and denial management processes, including tracking, adjudication, and appeal processing;
                         ``(E) require the use of a standard electronic transaction with which health care providers may quickly and efficiently enroll with a health plan to conduct the other electronic transactions provided for in this part; and
                         ``(F) provide for other requirements relating to administrative simplification as identified by the Secretary, in consultation with stakeholders.
                      ``(5) Building on existing standards.—In developing the standards under this section, the Secretary shall build upon existing and planned standards.
                      ``(6) Implementation and enforcement.—Not later than 6 months after the date of the enactment of this section, the Secretary shall submit to the appropriate committees of Congress a plan for the implementation and enforcement, by not later than 5 years after such date of enactment, of the standards under this section. Such plan shall include—
                         ``(A) a process and timeframe with milestones for developing the complete set of standards;
                         ``(B) an expedited upgrade program for continually developing and approving additions and modifications to the standards as often as annually to improve their quality and extend their functionality to meet evolving requirements in health care;
                         ``(C) programs to provide incentives for, and ease the burden of, implementation for certain health care providers, with special consideration given to such providers serving rural or underserved areas and ensure coordination with standards, implementation specifications, and certification criteria being adopted under the HITECH Act;
                         ``(D) programs to provide incentives for, and ease the burden of, health care providers who volunteer to participate in the process of setting standards for electronic transactions;
                         ``(E) an estimate of total funds needed to ensure timely completion of the implementation plan; and
                         ``(F) an enforcement process that includes timely investigation of complaints, random audits to ensure compliance, civil monetary and programmatic penalties for non-compliance consistent with existing laws and regulations, and a fair and reasonable appeals process building off of enforcement provisions under this part.
                   ``(b) Limitations on use of data.—Nothing in this section shall be construed to permit the use of information collected under this section in a manner that would adversely affect any individual.
                   ``(c) Protection of data.—The Secretary shall ensure (through the promulgation of regulations or otherwise) that all data collected pursuant to subsection (a) are—
                      ``(1) used and disclosed in a manner that meets the HIPAA privacy and security law (as defined in section 3009(a)(2) of the Public Health Service Act), including any privacy or security standard adopted under section 3004 of such Act; and
                      ``(2) protected from all inappropriate internal use by any entity that collects, stores, or receives the data, including use of such data in determinations of eligibility (or continued eligibility) in health plans, and from other inappropriate uses, as defined by the Secretary.´´.
          (2) Definitions.—
             Section 1171 of such Act (42 U.S.C. 1320d) is amended—
                (A) in paragraph (7), by striking ``with reference to´´ and all that follows and inserting ``with reference to a transaction or data element of health information in section 1173 means implementation specifications, certification criteria, operating rules, messaging formats, codes, and code sets adopted or established by the Secretary for the electronic exchange and use of information´´; and
                (B) by adding at the end the following new paragraph:
                   ``(9) Operating rules.—The term ‘operating rules’ means business rules for using and processing transactions. Operating rules should address the following:
                      ``(A) Requirements for data content using available and established national standards.
                      ``(B) Infrastructure requirements that establish best practices for streamlining data flow to yield timely execution of transactions.
                      ``(C) Policies defining the transaction related rights and responsibilities for entities that are transmitting or receiving data.´´.
          (3) Conforming Amendment.—
             Section 1179(a) of such Act (42 U.S.C. 1320d–8(a)) is amended, in the matter before paragraph (1)—
                (A) by inserting ``on behalf of an individual´´ after ``1978)´´; and
                (B) by inserting ``on behalf of an individual´´ after ``for a financial institution.´´
    (b) Standards for Claims Attachments and Coordination of Benefits .—
          (1) Standard for Health Claims Attachments.—
             Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate a final rule to establish a standard for health claims attachment transaction described in section 1173(a)(2)(B) of the Social Security Act (42 U.S.C. 1320d–2(a)(2)(B)) and coordination of benefits.
          (2) Revision in Processing Payment Transactions by Financial Institutions.—
                (A) In General.—
                   Section 1179 of the Social Security Act (42 U.S.C. 1320d–8) is amended, in the matter before paragraph (1)—
                      (i) by striking ``or is engaged´´ and inserting ``and is engaged´´; and
                      (ii) by inserting ``(other than as a business associate for a covered entity)´´ after ``for a financial institution´´.
                (B) Effective Date.—
                   The amendments made by paragraph (1) shall apply to transactions occurring on or after such date (not later than 6 months after the date of the enactment of this Act) as the Secretary of Health and Human Services shall specify.

### Sec. 164. Reinsurance Program for Retirees.

    (a) Establishment.—
          (1) In General.—
             Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services shall establish a temporary reinsurance program (in this section referred to as the ``reinsurance program´´) to provide reimbursement to assist participating employment-based plans with the cost of providing health benefits to retirees and to eligible spouses, surviving spouses and dependents of such retirees.
          (2) Definitions.—
             For purposes of this section:
                (A) The term ``eligible employment-based plan´´ means a group health benefits plan that—
                      (i) is maintained by one or more employers, former employers or employee associations, or a voluntary employees’ beneficiary association, or a committee or board of individuals appointed to administer such plan, and
                      (ii) provides health benefits to retirees.
                (B) The term ``health benefits´´ means medical, surgical, hospital, prescription drug, and such other benefits as shall be determined by the Secretary, whether self-funded or delivered through the purchase of insurance or otherwise.
                (C) The term ``participating employment-based plan´´ means an eligible employment-based plan that is participating in the reinsurance program.
                (D) The term ``retiree´´ means, with respect to a participating employment-benefit plan, an individual who—
                      (i) is 55 years of age or older;
                      (ii) is not eligible for coverage under title XVIII of the Social Security Act; and
                      (iii) is not an active employee of an employer maintaining the plan or of any employer that makes or has made substantial contributions to fund such plan.
                (E) The term ``Secretary´´ means Secretary of Health and Human Services.
    (b) Participation.—
       To be eligible to participate in the reinsurance program, an eligible employment-based plan shall submit to the Secretary an application for participation in the program, at such time, in such manner, and containing such information as the Secretary shall require.
    (c) Payment.—
          (1) Submission of Claims.—
                (A) In General.—
                   Under the reinsurance program, a participating employment-based plan shall submit claims for reimbursement to the Secretary which shall contain documentation of the actual costs of the items and services for which each claim is being submitted.
                (B) Basis for Claims.—
                   Each claim submitted under subparagraph (A) shall be based on the actual amount expended by the participating employment-based plan involved within the plan year for the appropriate employment based health benefits provided to a retiree or to the spouse, surviving spouse, or dependent of a retiree. In determining the amount of any claim for purposes of this subsection, the participating employment-based plan shall take into account any negotiated price concessions (such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations) obtained by such plan with respect to such health benefits. For purposes of calculating the amount of any claim, the costs paid by the retiree or by the spouse, surviving spouse, or dependent of the retiree in the form of deductibles, co-payments, and co-insurance shall be included along with the amounts paid by the participating employment-based plan.
          (2) Program Payments and Limit.—
             If the Secretary determines that a participating employment-based plan has submitted a valid claim under paragraph (1), the Secretary shall reimburse such plan for 80 percent of that portion of the costs attributable to such claim that exceeds $15,000, but is less than $90,000. Such amounts shall be adjusted each year based on the percentage increase in the medical care component of the Consumer Price Index (rounded to the nearest multiple of $1,000) for the year involved.
          (3) Use of Payments.—
             Amounts paid to a participating employment-based plan under this subsection shall be used to lower the costs borne directly by the participants and beneficiaries for health benefits provided under such plan in the form of premiums, co-payments, deductibles, co-insurance, or other out-of-pocket costs. Such payments shall not be used to reduce the costs of an employer maintaining the participating employment-based plan. The Secretary shall develop a mechanism to monitor the appropriate use of such payments by such plans.
          (4) Appeals and Program Protections.—
             The Secretary shall establish—
                (A) an appeals process to permit participating employment-based plans to appeal a determination of the Secretary with respect to claims submitted under this section; and
                (B) procedures to protect against fraud, waste, and abuse under the program.
          (5) Audits.—
             The Secretary shall conduct annual audits of claims data submitted by participating employment-based plans under this section to ensure that they are in compliance with the requirements of this section.
    (d) Retiree Reserve Trust Fund.—
          (1) Establishment.—
                (A) In General.—
                   There is established in the Treasury of the United States a trust fund to be known as the ``Retiree Reserve Trust Fund´´ (referred to in this section as the ``Trust Fund´´), that shall consist of such amounts as may be appropriated or credited to the Trust Fund as provided for in this subsection to enable the Secretary to carry out the reinsurance program. Such amounts shall remain available until expended.
                (B) Funding.—
                   There are hereby appropriated to the Trust Fund, out of any moneys in the Treasury not otherwise appropriated, an amount requested by the Secretary as necessary to carry out this section, except that the total of all such amounts requested shall not exceed $10,000,000,000.
                (C) Appropriations from the Trust Fund.—
                      (i) In General.—
                         Amounts in the Trust Fund are appropriated to provide funding to carry out the reinsurance program and shall be used to carry out such program.
                      (ii) Budgetary Implications.—
                         Amounts appropriated under clause (i), and outlays flowing from such appropriations, shall not be taken into account for purposes of any budget enforcement procedures including allocations under section 302(a) and (b) of the Balanced Budget and Emergency Deficit Control Act and budget resolutions for fiscal years during which appropriations are made from the Trust Fund.
                      (iii) Limitation to Available Funds.—
                         The Secretary has the authority to stop taking applications for participation in the program or take such other steps in reducing expenditures under the reinsurance program in order to ensure that expenditures under the reinsurance program do not exceed the funds available under this subsection.