# H.R. 3962/Division A/Title I
## TITLE I — IMMEDIATE REFORMS
### Sec. 101. National high-risk pool program.

    (a) In General.—
       The Secretary of Health and Human Services (in this section referred to as the “Secretary”) shall establish a temporary national high-risk pool program (in this section referred to as the “program”) to provide health benefits to eligible individuals during the period beginning on January 1, 2010, and, subject to subsection (h)(3)(B), ending on the date on which the Health Insurance Exchange is established.
    (b) Administration.—
       The Secretary may carry out this section directly or, pursuant to agreements, grants, or contracts with States, through State high-risk pool programs provided that the requirements of this section are met. For a State without a high-risk pool program, the Secretary may work with the State to coordinate with other forms of coverage expansions, such as State public-private partnerships.
    (c) Eligibility.—
       For purposes of this section, the term “eligible individual” means an individual who meets the requirements of subsection (i)(1)—
          (1) who—
                (A) is not eligible for—
                      (i) benefits under title XVIII, XIX, or XXI of the Social Security Act; or
                      (ii) coverage under an employment-based health plan (not including coverage under a COBRA continuation provision, as defined in section 107(d)(1)); and
                (B) who—
                      (i) is an eligible individual under section 2741(b) of the Public Health Service Act; or
                      (ii) is medically eligible for the program by virtue of being an individual described in subsection (d) at any time during the 6-month period ending on the date the individual applies for high-risk pool coverage under this section;
          (2) who is the spouse or dependent of an individual who is described in paragraph (1);
          (3) who has not had health insurance coverage or coverage under an employment-based health plan for at least the 6-month period immediately preceding the date of the individual’s application for high-risk pool coverage under this section; or
          (4) who on or after October 29, 2009, had employment-based retiree health coverage (as defined in subsection (i)) and the annual increase in premiums for such individual under such coverage (for any coverage period beginning on or after such date) exceeds such excessive percentage as the Secretary shall specify.
       For purposes of paragraph (1)(A)(ii), a person who is in a waiting period as defined in section 2701(b)(4) of the Public Health Service Act shall not be considered to be eligible for coverage under an employment-based health plan.
    (d) Medically Eligible Requirements.—
       For purposes of subsection (c)(1)(B)(ii), an individual described in this subsection is an individual—
          (1) who, during the 6-month period ending on the date the individual applies for high-risk pool coverage under this section applied for individual health insurance coverage and—
                (A) was denied such coverage because of a preexisting condition or health status; or
                (B) was offered such coverage—
                      (i) under terms that limit the coverage for such a preexisting condition; or
                      (ii) at a premium rate that is above the premium rate for high risk pool coverage under this section; or
          (2) who has an eligible medical condition as defined by the Secretary.
       In making a determination under paragraph (1) of whether an individual was offered individual coverage at a premium rate above the premium rate for high risk pool coverage, the Secretary shall make adjustments to offset differences in premium rating that are attributable solely to differences in age rating.
    (e) Enrollment.—
       To enroll in coverage in the program, an individual shall—
          (1) 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;
          (2) attest, consistent with subsection (i)(2), that the individual is an eligible individual and is a resident of one of the 50 States or the District of Columbia; and
          (3) if the individual had other prior health insurance coverage or coverage under an employment-based health plan during the previous 6 months, provide information as to the nature and source of such coverage and reasons for its discontinuance.
    (f) Protection Against Dumping Risks by Insurers.—
          (1) IN GENERAL.—
             The Secretary shall establish criteria for determining whether health insurance issuers and employment-based health plans have discouraged an individual from remaining enrolled in prior coverage based on that individual’s health status.
          (2) SANCTIONS.—
             An issuer or employment-based health plan shall be responsible for reimbursing the program for the medical expenses incurred by the program for an individual who, based on criteria established by the Secretary, the Secretary finds was encouraged by the issuer to disenroll from health benefits coverage prior to enrolling in the program. The criteria shall include at least the following circumstances:
                (A) In the case of prior coverage obtained through an employer, the provision by the employer, group health plan, or the issuer of money or other financial consideration for disenrolling from the coverage.
                (B) In the case of prior coverage obtained directly from an issuer or under an employment-based health plan—
                      (i) the provision by the issuer or plan of money or other financial consideration for disenrolling from the coverage; or
                      (ii) in the case of an individual whose premium for the prior coverage exceeded the premium required by the program (adjusted based on the age factors applied to the prior coverage)—
                            (I) the prior coverage is a policy that is no longer being actively marketed (as defined by the Secretary) by the issuer; or
                            (II) the prior coverage is a policy for which duration of coverage form issue or health status are factors that can be considered in determining premiums at renewal.
          (3) CONSTRUCTION.—
             Nothing in this subsection shall be construed as constituting exclusive remedies for violations of criteria established under paragraph (1) or as preventing States from applying or enforcing such paragraph or other provisions under law with respect to health insurance issuers.
    (g) Covered Benefits, Cost-Sharing, Premiums, and Consumer Protections.—
          (1) PREMIUM.—
             The monthly premium charged to eligible individuals for coverage under the program—
                (A) may vary by age so long as the ratio of the highest such premium to the lowest such premium does not exceed the ratio of 2 to 1;
                (B) shall be set at a level that does not exceed 125 percent of the prevailing standard rate for comparable coverage in the individual market; and
                (C) shall be adjusted for geographic variation in costs.
       Health insurance issuers shall provide such information as the Secretary may require to determine prevailing standard rates under this paragraph. The Secretary shall establish standard rates in consultation with the National Association of Insurance Commissioners.
          (2) COVERED BENEFITS.—
             Covered benefits under the program shall be determined by the Secretary and shall be consistent with the basic categories in the essential benefits package described in section 222. Under such benefits package—
                (A) the annual deductible for such benefits may not be higher than $1,500 for an individual or such higher amount for a family as determined by the Secretary;
                (B) there may not be annual or lifetime limits; and
                (C) the maximum cost-sharing with respect to an individual (or family) for a year shall not exceed $5,000 for an individual (or $10,000 for a family).
          (3) NO PREEXISTING CONDITION EXCLUSION PERIODS.—
             No preexisting condition exclusion period shall be imposed on coverage under the program.
          (4) APPEALS.—
             The Secretary shall establish an appeals process for individuals to appeal a determination of the Secretary—
                (A) with respect to claims submitted under this section; and
                (B) with respect to eligibility determinations made by the Secretary under this section.
          (5) STATE CONTRIBUTION, MAINTENANCE OF EFFORT.—
             As a condition of providing health benefits under this section to eligible individual residing in a State—
                (A) in the case of a State in which a qualified high-risk pool (as defined under section 2744(c)(2) of the Public Health Service Act) was in effect as of July 1, 2009, the Secretary shall require the State make a maintenance of effort payment each year that the high-risk pool is in effect equal to an amount not less than the amount of all sources of funding for high-risk pool coverage made by that State in the year ending July 1, 2009; and
                (B) in the case of a State which required health insurance issuers to contribute to a State high-risk pool or similar arrangement for the assessment against such issuers for pool losses, the State shall maintain such a contribution arrangement among such issuers.
          (6) LIMITING PROGRAM EXPENDITURES.—
             The Secretary shall, with respect to the program—
                (A) establish procedures to protect against fraud, waste, and abuse under the program; and
                (B) provide for other program integrity methods.
          (7) TREATMENT AS CREDITABLE COVERAGE.—
             Coverage under the program shall be treated, for purposes of applying the definition of “creditable coverage” under the provisions of title XXVII of the Public Health Service Act, part 6 of subtitle B of title I of Employee Retirement Income Security Act of 1974, and chapter 100 of the Internal Revenue Code of 1986 (and any other provision of law that references such provisions) in the same manner as if it were coverage under a State health benefits risk pool described in section 2701(c)(1)(G) of the Public Health Service Act.
    (h) Funding; Termination of Authority.—
          (1) IN GENERAL.—
             There is appropriated to the Secretary, out of any moneys in the Treasury not otherwise appropriated, $5,000,000,000 to pay claims against (and administrative costs of) the high-risk pool under this section in excess of the premiums collected with respect to eligible individuals enrolled in the high-risk pool. Such funds shall be available without fiscal year limitation.
          (2) INSUFFICIENT FUNDS.—
             If the Secretary estimates for any fiscal year that the aggregate amounts available for payment of expenses of the high-risk pool will be less than the amount of the expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit, including reducing benefits, increasing premiums, or establishing waiting lists.
          (3) TERMINATION OF AUTHORITY.—
                (A) IN GENERAL.—
                   Except as provided in subparagraph (B), coverage of eligible individuals under a high-risk pool shall terminate as of the date on which the Health Insurance Exchange is established.
                (B) TRANSITION TO EXCHANGE.—
                   The Secretary shall develop procedures to provide for the transition of eligible individuals who are enrolled in health insurance coverage offered through a high-risk pool established under this section to be enrolled in acceptable coverage. Such procedures shall ensure that there is no lapse in coverage with respect to the individual and may extend coverage offered through such a high-risk pool beyond 2012 if the Secretary determines necessary to avoid such a lapse.
    (i) Application and verification of requirement of citizenship or lawful presence in the United States.—
          (1) REQUIREMENT.—
             No individual shall be an eligible individual under this section unless the individual is a citizen or national of the United States or is lawfully present in a State in the United States (other than as a nonimmigrant described in a subparagraph (excluding subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) of the Immigration and Nationality Act).
          (2) APPLICATION OF VERIFICATION PROCESS FOR AFFORDABILITY CREDITS.—
             The provisions of paragraphs (4) (other than subparagraphs (F) and (H)(i)) and (5)(A) of section 341(b), and of subsections (v) (other than paragraph (3)) and (x) of section 205 of the Social Security Act, shall apply to the verification of eligibility of an eligible individual by the Secretary (or by a State agency approved by the Secretary) for benefits under this section in the same manner as such provisions apply to the verification of eligibility of an affordable credit eligible individual for affordability credits by the Commissioner under section 341(b). The agreement referred to in section 205(v)(2)(A) of the Social Security Act (as applied under this paragraph) shall also provide for funding, to be payable from the amount made available under subsection (h)(1), to the Commissioner of Social Security in such amount as is agreed to by such Commissioner and the Secretary.
    (j) Employment-Based Retiree Health Coverage.—
       In this section, the term “employment-based retiree health coverage” means health insurance or other coverage of health care costs (whether provided by voluntary insurance coverage or pursuant to statutory or contractual obligation) for individuals (or for such individuals and their spouses and dependents) under a group health plan based on their status as retired participants in such plan.

### Sec. 102. 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 (but not less than 85 percent), the issuer shall provide in a manner specified by the Secretary for rebates to enrollees of the amount by which the issuer’s medical loss ratio is less than the level so specified.
“(b) Implementation.—The Secretary shall establish a uniform definition of medical loss ratio and methodology for determining how to calculate it based on the average medical loss ratio in a health insurance issuer’s book of business for the small and large group market. Such methodology shall be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans. In determining the medical loss ratio, the Secretary shall exclude State taxes and licensing or regulatory fees. Such methodology shall be designed and exceptions shall be established to ensure adequate participation by health insurance issuers, competition in the health insurance market, and value for consumers so that their premiums are used for services.
“(c) Sunset.—Subsections (a) and (b) shall not apply to health insurance coverage on and after the first date that health insurance coverage is offered through the Health Insurance Exchange.”.
    (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 except to the extent the Secretary determines that the application of such section may destabilize the existing individual 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, 2010, or as soon as practicable after such date.

### Sec. 103. Ending health insurance rescission abuse.

    (a) Clarification Regarding Application of Guaranteed Renewability of Individual and Group Health Insurance Coverage.—
       Sections 2712 and 2742 of the Public Health Service Act (42 U.S.C. 300gg–12, 300gg–42) are each 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.—
          (1) GROUP HEALTH INSURANCE MARKET.—
             Section 2712 of such Act (42 U.S.C. 300gg–12) is amended by adding at the end the following:
“(f) Rescission.—A health insurance issuer may rescind group health insurance coverage only upon clear and convincing evidence of fraud described in subsection (b)(2), under procedures that provide for independent, external third-party review.”.
          (2) INDIVIDUAL HEALTH MARKET.—
             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 individual health insurance coverage only upon clear and convincing evidence of fraud described in subsection (b)(2), under procedures that provide for independent, external third-party review.”.
          (3) GUIDANCE.—
             The Secretary of Health and Human Services, no later than 90 days after the date of the enactment of this Act, shall issue guidance implementing the amendments made by paragraphs (1) and (2), including procedures for independent, external third-party review.
    (c) Opportunity for Independent, External Third-Party Review in Certain Cases.—
          (1) INDIVIDUAL MARKET.—
             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).”.
          (2) APPLICATION TO GROUP HEALTH INSURANCE.—
             Such title is further amended by adding after section 2702 the following new section:
“SEC. 2703. Opportunity for independent, external third-party review in cases of rescission.
“The provisions of section 2746 shall apply to group health insurance coverage in the same manner as such provisions apply to individual health insurance coverage, except that any reference to section 2742(f) is deemed a reference to section 2712(f).”.
    (d) Effective Date.—
       The amendments made by this section shall take effect on the date of the enactment of this Act and shall apply to rescissions occurring on and after July 1, 2010, with respect to health insurance coverage issued before, on, or after such date.

### Sec. 104. Sunshine on price gouging by health insurance issuers.

    (a) Initial premium review process.—
          (1) IN GENERAL.—
             The Secretary of Health and Human Services, in conjunction with States, shall establish a process for the annual review, beginning with 2010 and subject to subsection (c)(3)(A), of increases in premiums for health insurance coverage.
          (2) JUSTIFICATION AND DISCLOSURE.—
             Such process shall require health insurance issuers to submit a justification for any premium increase prior to implementation of the increase. Such issuers shall prominently post such information on their websites. The Secretary shall ensure the public disclosure of information on such increases and justifications for all health insurance issuers.
    (b) Continuing premium review process.—
          (1) INFORMING COMMISSIONER OF PREMIUM INCREASE PATTERNS.—
             As a condition of receiving a grant under subsection (c)(1), a State, through its Commissioner of Insurance, shall—
                (A) provide the Health Choices Commissioner with information about trends in premium increases in health insurance coverage in premium rating areas in the State; and
                (B) make recommendations, as appropriate, to such Commissioner about whether particular health insurance issuers should be excluded from participation in the Health Insurance Exchange based on a pattern of excessive or unjustified premium increases.
          (2) COMMISSIONER AUTHORITY REGARDING EXCHANGE PARTICIPATION.—
             In making determinations concerning entering into contracts with QHBP offering entities for the offering of Exchange-participating health plans under section 304, the Commissioner shall take into account the information and recommendations provided under paragraph (1).
          (3) MONITORING BY COMMISSIONER OF PREMIUM INCREASES.—
                (A) IN GENERAL.—
                   Beginning in 2014, the Commissioner, in conjunction with the States and in place of the monitoring by the Secretary under subsection (a)(1) and consistent with the provisions of subsection (a)(2), shall monitor premium increases of health insurance coverage offered inside the Health Insurance Exchange under section 304 and outside of the Exchange.
                (B) CONSIDERATION IN OPENING EXCHANGE.—
                   In determining under section 302(e)(4) whether to make additional larger employers eligible to participate in the Health Insurance Exchange, the Commissioner shall take into account any excess of premium growth outside the Exchange as compared to the rate of such growth inside the Exchange, including information reported by the States.
    (c) Grants in support of process.—
          (1) PREMIUM REVIEW GRANTS DURING 2010 THROUGH 2014.—
             The Secretary shall carry out a program of grants to States during the 5-year period beginning with 2010 to assist them in carrying out subsection (a), including—
                (A) in reviewing and, if appropriate under State law, approving premium increases for health insurance coverage; and
                (B) in providing information and recommendations to the Commissioner under subsection (b)(1).
          (2) FUNDING.—
                (A) IN GENERAL.—
                   Out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary $1,000,000,000, to be available for expenditure for grants under paragraph (1) and subparagraph (B).
                (B) FURTHER AVAILABILITY FOR INSURANCE REFORM AND CONSUMER PROTECTION GRANTS.—
                   If the amounts appropriated under subparagraph (A) are not fully obligated under grants under paragraph (1) by the end of 2014, any remaining funds shall remain available to the Secretary for grants to States for planning and implementing the insurance reforms and consumer protections under title II.
                (C) ALLOCATION.—
                   The Secretary shall establish a formula for determining the amount of any grant to a State under this subsection. Under such formula—
                      (i) the Secretary shall consider the number of plans of health insurance coverage offered in each State and the population of the State; and
                      (ii) no State qualifying for a grant under paragraph (1) shall receive less than $1,000,000, or more than $5,000,000 for a grant year.

### Sec. 105. Requiring the option of extension of dependent coverage for uninsured young adults.

    (a) Under group health plans.—
          (1) PHSA.—
             Title XXVII of the Public Health Service Act is amended by inserting after section 2702 the following new section:
“SEC. 2703. Requiring the option of extension of dependent coverage for uninsured young adults.
“(a) In general.—A group health plan and a health insurance issuer offering health insurance coverage in connection with a group health plan that provides coverage for dependent children shall make available such coverage, at the option of the participant involved, for one or more qualified children (as defined in subsection (b)) of the participant.
“(b) Qualified child defined.—In this section, the term ‘qualified child’ means, with respect to a participant in a group health plan or group health insurance coverage, an individual who (but for age) would be treated as a dependent child of the participant under such plan or coverage and who—
“(1) is under 27 years of age; and
“(2) is not enrolled as a participant, beneficiary, or enrollee (other than under this section, section 2746, or section 704 of the Employee Retirement Income Security Act of 1974) under any health insurance coverage or group health plan.
“(c) Premiums.—Nothing in this section shall be construed as preventing a group health plan or health insurance issuer with respect to group health insurance coverage from increasing the premiums otherwise required for coverage provided under this section consistent with standards established by the Secretary based upon family size.”.
          (2) EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.—
                (A) IN GENERAL.—
                   Part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by inserting after section 703 the following new section:
“SEC. 704. Requiring the option of extension of dependent coverage for uninsured young adults.
“(a) In general.—A group health plan and a health insurance issuer offering health insurance coverage in connection with a group health plan that provides coverage for dependent children shall make available such coverage, at the option of the participant involved, for one or more qualified children (as defined in subsection (b)) of the participant.
“(b) Qualified child defined.—In this section, the term ‘qualified child’ means, with respect to a participant in a group health plan or group health insurance coverage, an individual who (but for age) would be treated as a dependent child of the participant under such plan or coverage and who—
“(1) is under 27 years of age; and
“(2) is not enrolled as a participant, beneficiary, or enrollee (other than under this section) under any health insurance coverage or group health plan.
“(c) Premiums.—Nothing in this section shall be construed as preventing a group health plan or health insurance issuer with respect to group health insurance coverage from increasing the premiums otherwise required for coverage provided under this section consistent with standards established by the Secretary based upon family size.”.
                (B) CLERICAL AMENDMENT.—
                   The table of contents of such Act is amended by inserting after the item relating to section 703 the following new item:
“Sec. 704. Requiring the option of extension of dependent coverage for uninsured young adults.”.
          (3) IRC.—
                (A) IN GENERAL.—
                   Subchapter A of chapter 100 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
“SEC. 9804. Requiring the option of extension of dependent coverage for uninsured young adults.
“(a) In general.—A group health plan that provides coverage for dependent children shall make available such coverage, at the option of the participant involved, for one or more qualified children (as defined in subsection (b)) of the participant.
“(b) Qualified child defined.—In this section, the term ‘qualified child’ means, with respect to a participant in a group health plan, an individual who (but for age) would be treated as a dependent child of the participant under such plan and who—
“(1) is under 27 years of age; and
“(2) is not enrolled as a participant, beneficiary, or enrollee (other than under this section, section 704 of the Employee Retirement Income Security Act of 1974, or section 2704 or 2746 of the Public Health Service Act) under any health insurance coverage or group health plan.
“(c) Premiums.—Nothing in this section shall be construed as preventing a group health plan from increasing the premiums otherwise required for coverage provided under this section consistent with standards established by the Secretary based upon family size.”.
                (B) CLERICAL AMENDMENT.—
                   The table of sections of such chapter is amended by inserting after the item relating to section 9803 the following:
“Sec. 9804. Requiring the option of extension of dependent coverage for uninsured young adults.”.
    (b) Individual health insurance coverage.—
       Title XXVII of the Public Health Service Act is amended by inserting after section 2745 the following new section:
“SEC. 2746. Requiring the option of extension of dependent coverage for uninsured young adults.
“The provisions of section 2703 shall apply to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as they apply to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the small or large group market.”.
    (c) Effective dates.—
          (1) GROUP HEALTH PLANS.—
             The amendments made by subsection (a) shall apply to group health plans for plan years beginning on or after January 1, 2010.
          (2) INDIVIDUAL HEALTH INSURANCE COVERAGE.—
             Section 2746 of the Public Health Service Act, as inserted by subsection (b), shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after January 1, 2010.

### Sec. 106. Limitations on preexisting condition exclusions in group health plans in advance of applicability of new prohibition of preexisting condition exclusions.

    (a) Amendments to the Employee Retirement Income Security Act of 1974.—
          (1) REDUCTION IN LOOK-BACK PERIOD.—
             Section 701(a)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181(a)(1)) is amended by striking “6-month period” and inserting “30-day period”.
          (2) REDUCTION IN PERMITTED PREEXISTING CONDITION LIMITATION PERIOD.—
             Section 701(a)(2) of such Act (29 U.S.C. 1181(a)(2)) is amended by striking “12 months” and inserting “3 months”, and by striking “18 months” and inserting “9 months”.
          (3) SUNSET OF INTERIM LIMITATION.—
             Section 701 of such Act (29 U.S.C. 1181) is amended by adding at the end the following new subsection:
“(h) Termination.—This section shall cease to apply to any group health plan as of the date that such plan becomes subject to the requirements of section 211 of the (relating to prohibiting preexisting condition exclusions).”.
    (b) Amendments to the Internal Revenue Code of 1986.—
          (1) REDUCTION IN LOOK-BACK PERIOD.—
             Section 9801(a)(1) of the Internal Revenue Code of 1986 is amended by striking “6-month period” and inserting “30-day period”.
          (2) REDUCTION IN PERMITTED PREEXISTING CONDITION LIMITATION PERIOD.—
             Section 9801(a)(2) of such Code is amended by striking “12 months” and inserting “3 months”, and by striking “18 months” and inserting “9 months”.
          (3) SUNSET OF INTERIM LIMITATION.—
             Section 9801 of such Code is amended by adding at the end the following new subsection:
“(g) Termination.—This section shall cease to apply to any group health plan as of the date that such plan becomes subject to the requirements of section 211 of the Affordable Health Care for America Act (relating to prohibiting preexisting condition exclusions).”.
    (c) Amendments to Public Health Service Act.—
          (1) REDUCTION IN LOOK-BACK PERIOD.—
             Section 2701(a)(1) of the Public Health Service Act (42 U.S.C. 300gg(a)(1)) is amended by striking “6-month period” and inserting “30-day period”.
          (2) REDUCTION IN PERMITTED PREEXISTING CONDITION LIMITATION PERIOD.—
             Section 2701(a)(2) of such Act (42 U.S.C. 300gg(a)(2)) is amended by striking “12 months” and inserting “3 months”, and by striking “18 months” and inserting “9 months”.
          (3) SUNSET OF INTERIM LIMITATION.—
             Section 2701 of such Act (42 U.S.C. 300gg) is amended by adding at the end the following new subsection:
“(h) Termination.—This section shall cease to apply to any group health plan as of the date that such plan becomes subject to the requirements of section 211 of the (relating to prohibiting preexisting condition exclusions).”.
          (4) MISCELLANEOUS TECHNICAL AMENDMENT.—
             Section 2702(a)(2) of such Act (42 U.S.C. 300gg–1) is amended by striking “701” and inserting “2701”.
    (d) Effective Date.—
          (1) IN GENERAL.—
             Except as provided in paragraph (2), the amendments made by this section shall apply with respect to group health plans for plan years beginning on or after January 1, 2010.
          (2) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.—
             In the case of a group health plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan years beginning before the earlier of—
                (A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act);
                (B) 3 years after the date of the enactment of this Act.

### Sec. 107. Prohibiting acts of domestic violence from being treated as preexisting conditions.

    (a) ERISA.—
       Section 701(d)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. ) is amended—
          (1) in the heading, by inserting “or domestic violence” after “pregnancy”; and
          (2) by inserting “or domestic violence” after “relating to pregnancy”.
    (b) PHSA.—
          (1) GROUP MARKET.—
             Section 2701(d)(3) of the Public Health Service Act (42 U.S.C. 300gg(d)(3)) is amended—
                (A) in the heading, by inserting “or domestic violence” after “pregnancy”; and
                (B) by inserting “or domestic violence” after “relating to pregnancy”.
          (2) INDIVIDUAL MARKET.—
             Title XXVII of such Act is amended by inserting after section 2753 the following new section:
“SEC. 2754. Prohibition on domestic violence as preexisting condition.
“A health insurance issuer offering health insurance coverage in the individual market may not, on the basis of domestic violence, impose any preexisting condition exclusion (as defined in section 2701(b)(1)(A)) with respect to such coverage.”.
    (c) IRC.—
       Section 9801(d)(3) of the Internal Revenue Code of 1986 is amended—
          (1) in the heading, by inserting “or domestic violence” after “pregnancy”; and
          (2) by inserting “or domestic violence” after “relating to pregnancy”.
    (d) Effective Dates.—
          (1) Except as otherwise provided in this subsection, the amendments made by this section shall apply with respect to group health plans (and health insurance issuers offering group health insurance coverage) for plan years beginning on or after January 1, 2010.
          (2) The amendment made by subsection (b)(2) shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after such date.

### Sec. 108. Ending health insurance denials and delays of necessary treatment for children with deformities.

    (a) Amendments to the Employee Retirement Income Security Act of 1974.—
          (1) IN GENERAL.—
             Subpart B of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the following new section:
“SEC. 715. Standards relating to benefits for minor child’s congenital or developmental deformity or disorder.
“(a) Requirements for treatment for children with deformities.—
“(1) IN GENERAL.—A group health plan, and a health insurance issuer offering group health insurance coverage, that provides coverage for surgical benefits shall provide coverage for outpatient and inpatient diagnosis and treatment of a minor child’s congenital or developmental deformity, disease, or injury. A minor child shall include any individual who is 21 years of age or younger.
“(2) TREATMENT DEFINED.—
“(A) IN GENERAL.—In this section, the term ‘treatment’ includes reconstructive surgical procedures (procedures that are generally performed to improve function, but may also be performed to approximate a normal appearance) that are performed on abnormal structures of the body caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease, including—
“(i) procedures that do not materially affect the function of the body part being treated; and
“(ii) procedures for secondary conditions and follow-up treatment.
“(B) EXCEPTION.—Such term does not include cosmetic surgery performed to reshape normal structures of the body to improve appearance or self-esteem.
“(b) Notice.—A group health plan under this part shall comply with the notice requirement under section 713(b) (other than paragraph (3)) with respect to the requirements of this section.”.
          (2) CONFORMING AMENDMENT.—
                (A) Subsection (c) of section 731 of such Act is amended by striking “section 711” and inserting “sections 711 and 715”.
                (B) The table of contents in section 1 of such Act is amended by inserting after the item relating to section 714 the following new item:
“Sec. 715. Standards relating to benefits for minor child’s congenital or developmental deformity or disorder.”.
    (b) Amendments to the Internal Revenue Code of 1986.—
          (1) IN GENERAL.—
             Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
“SEC. 9814. Standards relating to benefits for minor child’s congenital or developmental deformity or disorder.
“(a) Requirements for treatment for children with deformities.—A group health plan that provides coverage for surgical benefits shall provide coverage for outpatient and inpatient diagnosis and treatment of a minor child’s congenital or developmental deformity, disease, or injury. A minor child shall include any individual who is 21 years of age or younger.
“(b) Treatment defined.—
“(1) IN GENERAL.—In this section, the term ‘treatment’ includes reconstructive surgical procedures (procedures that are generally performed to improve function, but may also be performed to approximate a normal appearance) that are performed on abnormal structures of the body caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease, including—
“(A) procedures that do not materially affect the function of the body part being treated, and
“(B) procedures for secondary conditions and follow-up treatment.
“(2) EXCEPTION.—Such term does not include cosmetic surgery performed to reshape normal structures of the body to improve appearance or self-esteem.”.
          (2) CLERICAL AMENDMENT.—
             The table of sections for subchapter B of chapter 100 of such Code is amended by adding at the end the following new item:
“Sec. 9814. Standards relating to benefits for minor child’s congenital or developmental deformity or disorder.”.
    (c) Amendments to the Public Health Service Act.—
          (1) IN GENERAL.—
             Subpart 2 of part A of title XXVII of the Public Health Service Act is amended by adding at the end the following new section:
“SEC. 2708. Standards relating to benefits for minor child’s congenital or developmental deformity or disorder.
“(a) Requirements for treatment for children with deformities.—
“(1) IN GENERAL.—A group health plan, and a health insurance issuer offering group health insurance coverage, that provides coverage for surgical benefits shall provide coverage for outpatient and inpatient diagnosis and treatment of a minor child’s congenital or developmental deformity, disease, or injury. A minor child shall include any individual who is 21 years of age or younger.
“(2) TREATMENT DEFINED.—
“(A) IN GENERAL.—In this section, the term ‘treatment’ includes reconstructive surgical procedures (procedures that are generally performed to improve function, but may also be performed to approximate a normal appearance) that are performed on abnormal structures of the body caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease, including—
“(i) procedures that do not materially affect the function of the body part being treated; and
“(ii) procedures for secondary conditions and follow-up treatment.
“(B) EXCEPTION.—Such term does not include cosmetic surgery performed to reshape normal structures of the body to improve appearance or self-esteem.
“(b) Notice.—A group health plan under this part shall comply with the notice requirement under section 715(b) of the Employee Retirement Income Security Act of 1974 with respect to the requirements of this section as if such section applied to such plan.”.
          (2) INDIVIDUAL HEALTH INSURANCE.—
             Subpart 2 of part B of title XXVII of the Public Health Service Act, as amended by section 161(b), is further amended by adding at the end the following new section:
“SEC. 2755. Standards relating to benefits for minor child’s congenital or developmental deformity or disorder.
“The provisions of section 2708 shall apply to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as such provisions apply to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the small or large group market.”.
          (3) CONFORMING AMENDMENTS.—
                (A) Section 2723(c) of such Act (42 U.S.C. 300gg–23(c)) is amended by striking “section 2704” and inserting “sections 2704 and 2708”.
                (B) Section 2762(b)(2) of such Act (42 U.S.C. 300gg–62(b)(2)) is amended by striking “section 2751” and inserting “sections 2751 and 2755”.
    (d) Effective Dates.—
          (1) The amendments made by this section shall apply with respect to group health plans (and health insurance issuers offering group health insurance coverage) for plan years beginning on or after January 1, 2010.
          (2) The amendment made by subsection (c)(2) shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after such date.
    (e) Coordination.—Section 104(1) of the Health Insurance Portability and Accountability Act of 1996 is amended by striking “(and the amendments made by this subtitle and section 401)” and inserting “, part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, parts A and C of title XXVII of the Public Health Service Act, and chapter 100 of the Internal Revenue Code of 1986”.

### Sec. 109. Elimination of lifetime limits.

    (a) Amendments to the Employee Retirement Income Security Act of 1974.—
          (1) IN GENERAL.—
             Subpart B of part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1185 et seq.), as amended by section 108, is amended by adding at the end the following:
“SEC. 716. Elimination of lifetime aggregate limits.
“(a) In general.—A group health plan and a health insurance issuer providing health insurance coverage in connection with a group health plan, may not impose an aggregate dollar lifetime limit with respect to benefits payable under the plan or coverage.
“(b) Definition.—In this section, the term ‘aggregate dollar lifetime limit’ means, with respect to benefits under a group health plan or health insurance coverage offered in connection with a group health plan, a dollar limitation on the total amount that may be paid with respect to such benefits under the plan or health insurance coverage with respect to an individual or other coverage unit on a lifetime basis.”.
          (2) CLERICAL AMENDMENT.—
             The table of contents in section 1 of such Act, is amended by inserting after the item relating to section 715 the following new item:
“Sec. 716. Elimination of lifetime aggregate limits.”.
    (b) Amendments to the Internal Revenue Code of 1986.—
          (1) IN GENERAL.—
             Subchapter B of chapter 100 of the Internal Revenue Code of 1986, as amended by section 108(b), is amended by adding at the end the following new section:
“SEC. 9815. Elimination of lifetime aggregate limits.
“(a) In general.—A group health plan may not impose an aggregate dollar lifetime limit with respect to benefits payable under the plan.
“(b) Definition.—In this section, the term ‘aggregate dollar lifetime limit’ means, with respect to benefits under a group health plan a dollar limitation on the total amount that may be paid with respect to such benefits under the plan with respect to an individual or other coverage unit on a lifetime basis.”.
          (2) CLERICAL AMENDMENT.—
             The table of sections for subchapter B of chapter 100 of such Code, as amended by section 108(b), is amended by adding at the end the following new item:
“Sec. 9854. Standards relating to benefits for minor child’s congenital or developmental deformity or disorder.”.
    (c) Amendment to the Public Health Service Act relating to the group market.—
          (1) IN GENERAL.—
             Subpart 2 of part A of title XXVII of the Public Health Service Act (42 U.S.C. 300gg–4 et seq.) as amended by section 108(c)(1), is amended by adding at the end the following:
“SEC. 2709. Elimination of lifetime aggregate limits.
“(a) In General.—A group health plan and a health insurance issuer providing health insurance coverage in connection with a group health plan, may not impose an aggregate dollar lifetime limit with respect to benefits payable under the plan or coverage.
“(b) Definition.—In this section, the term ‘aggregate dollar lifetime limit’ means, with respect to benefits under a group health plan or health insurance coverage, a dollar limitation on the total amount that may be paid with respect to such benefits under the plan or health insurance coverage with respect to an individual or other coverage unit on a lifetime basis.”.
          (2) INDIVIDUAL MARKET.—
             Subpart 2 of part B of title XXVII of the Public Health Service Act (42 U.S.C. 300gg–51 et seq.), as amended by section 108(c)(2), is amended by adding at the end the following:
“SEC. 2756. Elimination of lifetime aggregate limits.
“The provisions of section 2709 shall apply to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as they apply to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the small or large group market.”.
    (d) Effective Dates.—
          (1) The amendments made by this section shall apply with respect to group health plans (and health insurance issuers offering group health insurance coverage) for plan years beginning on or after January 1, 2010.
          (2) The amendment made by subsection (c)(2) shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after such date.

### Sec. 110. Prohibition against postretirement reductions of retiree health benefits by group health plans.

    (a) In General.—
       Part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, as amended by sections 108 and 109, is amended by inserting after section 716 the following new section:
“SEC. 717. Protection against postretirement reduction of retiree health benefits.
“(a) In general.—Every group health plan shall contain a provision which expressly bars the plan, or any fiduciary of the plan, from reducing the benefits provided under the plan to a retired participant, or beneficiary of such participant, if such reduction affects the benefits provided to the participant or beneficiary as of the date the participant retired for purposes of the plan and such reduction occurs after the participant’s retirement unless such reduction is also made with respect to active participants. Nothing in this section shall prohibit a plan from enforcing a total aggregate cap on amounts paid for retiree health coverage that is part of the plan at the time of retirement.
“(b) No reduction.—Notwithstanding that a group health plan may contain a provision reserving the general power to amend or terminate the plan or a provision specifically authorizing the plan to make post-retirement reductions in retiree health benefits, it shall be prohibited for any group health plan, whether through amendment or otherwise, to reduce the benefits provided to a retired participant or the participant’s beneficiary under the terms of the plan if such reduction of benefits occurs after the date the participant retired for purposes of the plan and reduces benefits that were provided to the participant, or the participant’s beneficiary, as of the date the participant retired unless such reduction is also made with respect to active participants.
“(c) Reduction described.— For purposes of this section, a reduction in benefits—
“(1) with respect to premiums occurs under a group health plan when a participant’s (or beneficiary’s) share of the total premium (or, in the case of a self-insured plan, the costs of coverage) of the plan substantially increases; or
“(2) with respect to other cost-sharing and benefits under a group health plan occurs when there is a substantial decrease in the actuarial value of the benefit package under the plan.
For purposes of this section, the term ‘substantial’ means an increase in the total premium share or a decrease in the actuarial value of the benefit package that is greater than 5 percent.”
    (b) Conforming Amendment.—
       The table of contents in section 1 of such Act, as amended by sections 108 and 109, is amended by inserting after the item relating to section 716 the following new item:
“Sec. 717. Protection against postretirement reduction of retiree health benefits.”.
    (c) Waiver.—
       An employer may, in a form and manner which shall be prescribed by the Secretary of Labor, apply for a waiver from this provision if the employer can reasonably demonstrate that meeting the requirements of this section would impose an undue hardship on the employer.
    (d) Effective Date.—
       The amendments made by this section shall take effect on the date of the enactment of this Act.

### Sec. 111. 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 plan or employment-based health plan that—
                      (i) is —
                            (I) maintained by one or more employers (including without limitation any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing), former employers or employee organizations or associations, or a voluntary employees’ beneficiary association, or a committee or board of individuals appointed to administer such plan; or
                            (II) a multiemployer plan (as defined in section 3(37) of the Employee Retirement Income Security Act of 1974); 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, copayments, and coinsurance 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 only be used to reduce the costs of health care provided by the plan by reducing premium costs for the employer or employee association maintaining the plan, and reducing premium contributions, deductibles, copayments, coinsurance, or other out-of-pocket costs for plan participants and beneficiaries. Where the benefits are provided by an employer to members of a represented bargaining unit, the allocation of payments among these purposes shall be subject to collective bargaining. Amounts paid to the plan under this subsection shall not be used as general revenues by the employer or employee association maintaining the plan or for any other purposes. 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) 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.

### Sec. 112. Wellness program grants.

    (a) Allowance of Grant.—
          (1) IN GENERAL.—For purposes of this section, the Secretaries of Health and Human Services and Labor shall jointly award wellness grants as determined under this section. Wellness program grants shall be awarded to small employers (as defined by the Secretary) for any plan year in an amount equal to 50 percent of the costs paid or incurred by such employers in connection with a qualified wellness program during the plan year. For purposes of the preceding sentence, in the case of any qualified wellness program offered as part of an employment-based health plan, only costs attributable to the qualified wellness program and not to the health plan, or health insurance coverage offered in connection with such a plan, may be taken into account.
          (2) LIMITATIONS.—
                (A) PERIOD.—A wellness grant awarded to an employer under this section shall be for up to 3 years.
                (B) AMOUNT.—The amount of the grant under paragraph (1) for an employer shall not exceed—
                      (i) the product of $150 and the number of employees of the employer for any plan year; and
                      (ii) $50,000 for the entire period of the grant.
    (b) Qualified wellness program.—For purposes of this section:
          (1) QUALIFIED WELLNESS PROGRAM.—The term “qualified wellness program” means a program that—
                (A) includes any 3 wellness components described in subsection (c); and
                (B) is to be certified jointly by the Secretary of Health and Human Services and the Secretary of Labor, in coordination with the Director of the Centers for Disease Control and Prevention, as a qualified wellness program under this section.
          (2) PROGRAMS MUST BE CONSISTENT WITH RESEARCH AND BEST PRACTICES.—
                (A) IN GENERAL.—The Secretary of Health and Human Services and the Secretary of Labor shall not certify a program as a qualified wellness program unless the program—
                      (i) is consistent with evidence-based research and best practices, as identified by persons with expertise in employer health promotion and wellness programs;
                      (ii) includes multiple, evidence-based strategies which are based on the existing and emerging research and careful scientific reviews, including the Guide to Community Preventative Services, the Guide to Clinical Preventative Services, and the National Registry for Effective Programs; and
                      (iii) includes strategies which focus on prevention and support for employee populations at risk of poor health outcomes.
                (B) PERIODIC UPDATING AND REVIEW.—The Secretaries of Health and Human Services and Labor, in consultation with other appropriate agencies shall jointly establish procedures for periodic review, evaluation, and update of the programs under this subsection.
          (3) HEALTH LITERACY AND ACCESSIBILITY.—The Secretaries of Health and Human Services and Labor shall jointly, as part of the certification process—
                (A) ensure that employers make the programs culturally competent, physically and programmatically accessible (including for individuals with disabilities), and appropriate to the health literacy needs of the employees covered by the programs;
                (B) require a health literacy component to provide special assistance and materials to employees with low literacy skills, limited English and from underserved populations; and
                (C) require the Secretaries to compile and disseminate to employer health plans information on model health literacy curricula, instructional programs, and effective intervention strategies.
    (c) Wellness Program Components.—For purposes of this section, the wellness program components described in this subsection are the following:
          (1) HEALTH AWARENESS COMPONENT.—A health awareness component which provides for the following:
                (A) HEALTH EDUCATION.—The dissemination of health information which addresses the specific needs and health risks of employees.
                (B) HEALTH SCREENINGS.—The opportunity for periodic screenings for health problems and referrals for appropriate follow-up measures.
          (2) EMPLOYEE ENGAGEMENT COMPONENT.—An employee engagement component which provides for the active engagement of employees in worksite wellness programs through worksite assessments and program planning, onsite delivery, evaluation, and improvement efforts.
          (3) BEHAVIORAL CHANGE COMPONENT.—A behavioral change component which encourages healthy living through counseling, seminars, on-line programs, self-help materials, or other programs which provide technical assistance and problem solving skills. Such component may include programs relating to—
                (A) tobacco use;
                (B) obesity;
                (C) stress management;
                (D) physical fitness;
                (E) nutrition;
                (F) substance abuse;
                (G) depression; and
                (H) mental health promotion.
          (4) SUPPORTIVE ENVIRONMENT COMPONENT.—A supportive environment component which includes the following:
                (A) ON-SITE POLICIES.—Policies and services at the worksite which promote a healthy lifestyle, including policies relating to—
                      (i) tobacco use at the worksite;
                      (ii) the nutrition of food available at the worksite through cafeterias and vending options;
                      (iii) minimizing stress and promoting positive mental health in the workplace; and
                      (iv) the encouragement of physical activity before, during, and after work hours.
    (d) Participation Requirement.—No grant shall be allowed under subsection (a) unless the Secretaries of Health and Human Services and Labor, in consultation with other appropriate agencies, jointly certify, as a part of any certification described in subsection (b), that each wellness program component of the qualified wellness program—
          (1) shall be available to all employees of the employer;
          (2) shall not mandate participation by employees; and
          (3) may provide a financial reward for participation of an individual in such program so long as such reward is not tied to the premium or cost-sharing of the individual under the health benefits plan.
    (e) Privacy Protections.—Data gathered for purposes of the employer wellness program may be used solely for the purposes of administering the program. The Secretaries of Health and Human Services and Labor shall develop standards to ensure such data remain confidential and are not used for purposes beyond those for administering the program.
    (f) Certain Costs Not Included.—For purposes of this section, costs paid or incurred by an employer for food or health insurance shall not be taken into account under subsection (a).
    (g) Outreach.—The Secretaries of Health and Human Services and Labor, in conjunction with other appropriate agencies and members of the business community, shall jointly institute an outreach program to inform businesses about the availability of the wellness program grant as well as to educate businesses on how to develop programs according to recognized and promising practices and on how to measure the success of implemented programs.
    (h) Effective Date.—This section shall take effect on July 1, 2010.
                      (i) Authorization of appropriations.—There are authorized to be appropriated such sums as are necessary to carry out this section.

### Sec. 113. Extension of COBRA continuation coverage.

    (a) Extension of current periods of continuation coverage.—
          (1) IN GENERAL.—In the case of any individual who is, under a COBRA continuation coverage provision, covered under COBRA continuation coverage on or after the date of the enactment of this Act, the required period of any such coverage which has not subsequently terminated under the terms of such provision for any reason other than the expiration of a period of a specified number of months shall, notwithstanding such provision and subject to subsection (b), extend to the earlier of the date on which such individual becomes eligible for acceptable coverage or the date on which such individual becomes eligible for health insurance coverage through the Health Insurance Exchange (or a State-based Health Insurance Exchange operating in a State or group of States).
          (2) NOTICE.—As soon as practicable after the date of the enactment of this Act, the Secretary of Labor, in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services, shall, in consultation with administrators of the group health plans (or other entities) that provide or administer the COBRA continuation coverage involved, provide rules setting forth the form and manner in which prompt notice to individuals of the continued availability of COBRA continuation coverage to such individuals under paragraph (1).
    (b) Continued effect of other terminating events.—Notwithstanding subsection (a), any required period of COBRA continuation coverage which is extended under such subsection shall terminate upon the occurrence, prior to the date of termination otherwise provided in such subsection, of any terminating event specified in the applicable continuation coverage provision other than the expiration of a period of a specified number of months.
    (c) Access to State health benefits risk pools.—This section shall supersede any provision of the law of a State or political subdivision thereof to the extent that such provision has the effect of limiting or precluding access by a qualified beneficiary whose COBRA continuation coverage has been extended under this section to a State health benefits risk pool recognized by the Commissioner for purposes of this section solely by reason of the extension of such coverage beyond the date on which such coverage otherwise would have expired.
    (d) Definitions.—For purposes of this section—
          (1) COBRA CONTINUATION COVERAGE.—The term “COBRA continuation coverage” means continuation coverage provided pursuant to part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (other than under section 609), title XXII of the Public Health Service Act, section 4980B of the Internal Revenue Code of 1986 (other than subsection (f)(1) of such section insofar as it relates to pediatric vaccines), or section 8905a of title 5, United States Code, or under a State program that provides comparable continuation coverage. Such term does not include coverage under a health flexible spending arrangement under a cafeteria plan within the meaning of section 125 of the Internal Revenue Code of 1986.
          (2) COBRA CONTINUATION PROVISION.—The term “COBRA continuation provision” means the provisions of law described in paragraph (1).

### Sec. 114. State Health Access Program grants.

    (a) In general.—The Secretary of Health and Human Services (in this section referred to as the “Secretary”) shall provide grants to States (as defined for purposes of title XIX of the Social Security Act) to establish programs to expand access to affordable health care coverage for the uninsured populations in that State in a manner consistent with reforms to take effect under this division in Y1.
    (b) Types of programs.—The types of programs for which grants are available under subsection (a) include the following:
          (1) STATE INSURANCE EXCHANGES.—State insurance exchanges that develop new, less expensive, portable benefit packages for small employers and part-time and seasonal workers.
          (2) COMMUNITY COVERAGE PROGRAM.—Community coverage with shared responsibility between employers, governmental or nonprofit entity, and the individual.
          (3) REINSURANCE PLAN PROGRAM.—Reinsurance plans that subsidize a certain share of carrier losses within a certain risk corridor health insurance premium assistance.
          (4) TRANSPARENT MARKETPLACE PROGRAM.—Transparent marketplace that provides an organized structure for the sale of insurance products such as a Web exchange or portal.
          (5) AUTOMATED ENROLLMENT PROGRAM.—Statewide or automated enrollment systems for public assistance programs.
          (6) INNOVATIVE STRATEGIES.—Innovative strategies to insure low-income childless adults.
          (7) PURCHASING COLLABORATIVES.—Not-for-profit business/consumer collaborative that provides direct contract health care service purchasing options for group plan sponsors.
    (c) Eligibility and administration.—
          (1) IMPLEMENTATION OF KEY STATUTORY OR REGULATORY CHANGES.—In order to be awarded a grant under this section for a program, a State shall demonstrate that—
                (A) it has achieved the key State and local statutory or regulatory changes required to begin implementing the new program within 1 year after the initiation of funding under the grant; and
                (B) it will be able to sustain the program without Federal funding after the end of the period of the grant.
          (2) INELIGIBILITY.—A State that has already developed a comprehensive health insurance access program is not eligible for a grant under this section.
          (3) APPLICATION REQUIRED.—No State shall receive a grant under this section unless the State has approved by the Secretary such an application, in such form and manner as the Secretary specifies.
          (4) ADMINISTRATION BASED ON CURRENT PROGRAM.—The program under this section is intended to build on the State Health Access Program funded under the Omnibus Appropriations Act, 2009 (Public Law 111–8).
    (d) Funding limitations.—
          (1) IN GENERAL.—A grant under this section shall—
                (A) only be available for expenditures before Y1; and
                (B) only be used to supplement, and not supplant, funds otherwise provided.
          (2) MATCHING FUND REQUIREMENT.—
                (A) IN GENERAL.—Subject to subparagraph (B), no grant may be awarded to a State unless the State demonstrates the seriousness of its effort by matching at least 20 percent of the grant amount through non-Federal resources, which may be a combination of State, local, private dollars from insurers, providers, and other private organizations.
                (B) WAIVER.—The Secretary may waive the requirement of subparagraph (A) if the State demonstrates to the Secretary financial hardship in complying with such requirement.
    (e) Study.—The Secretary shall review, study, and benchmark the progress and results of the programs funded under this section.
    (f) Report.—Each State receiving a grant under this section shall submit to the Secretary a report on best practices and lessons learned through the grant to inform the health reform coverage expansions under this division beginning in Y1.
    (g) Funding.—There are authorized to be appropriated such sums as may be necessary to carry out this section.

### Sec. 115. 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 sections:
“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, to the extent practicable—
“(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, on a specific date or range of dates, include utilization of a machine-readable health plan beneficiary identification card or similar mechanism;
“(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 except where required by (or to implement) State or Federal law or to protect against fraud and abuse; 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 the enactment of this section, the Secretary shall adopt standards under this section by interim, final rule.
“(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 uniform claim edits, uniform reason and remark denial codes, 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 adopting the standards under this section, the Secretary shall consider 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) a proposal for accommodating necessary changes between version changes and a process for upgrading standards as often as annually by interim, final rulemaking;
“(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 noncompliance consistent with existing laws and regulations, and a fair and reasonable appeals process building off of enforcement provisions under this part, and concurrent State enforcement jurisdiction.
The Secretary may promulgate an annual audit and certification process to ensure that all health plans and clearinghouses are both syntactically and functionally compliant with all the standard transactions mandated pursuant to the administrative simplification provisions of this part and the Health Insurance Portability and Accountability Act of 1996.
“(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 violate State or Federal law.
“(c) Protection of data.—The Secretary shall ensure (through the promulgation of regulations or otherwise) that all data collected pursuant to subsection (a) are 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.
“SEC. 1173B. Interim companion guides, including operating rules.
“(a) In general.—The Secretary shall adopt a single, binding, comprehensive companion guide, that includes operating rules for each X12 Version 5010 transaction described in section 1173(a)(2), to be effective until the new version of these transactions which comply with section 1173A are adopted and implemented.
“(b) Companion guide and operating rules development.—In adopting such interim companion guide and rules, the Secretary shall comply with section 1172, except that a nonprofit entity that meets the following criteria shall also be consulted:
“(1) The entity focuses its mission on administrative simplification.
“(2) The entity uses a multistakeholder process that creates consensus-based companion guides, including operating rules using a voting process that ensures balanced representation by the critical stakeholders (including health plans and health care providers) so that no one group dominates the entity and shall include others such as standards development organizations, and relevant Federal or State agencies.
“(3) The entity has in place a public set of guiding principles that ensure the companion guide and operating rules and process are open and transparent.
“(4) The entity coordinates its activities with the HIT Policy Committee, and the HIT Standards Committee (established under title XXX of the Public Health Service Act) and complements the efforts of the Office of the National Healthcare Coordinator and its related health information exchange goals.
“(5) The entity incorporates the standards issued under Health Insurance Portability and Accountability Act of 1996 and this part, and in developing the companion guide and operating rules does not change the definition, data condition or use of a data element or segment in a standard, add any elements or segments to the maximum defined data set, use any codes or data elements that are either marked ‘not used’ in the standard’s implementation specifications or are not in the standard’s implementation specifications, or change the meaning or intent of the standard’s implementation specifications.
“(6) The entity uses existing market research and proven best practices.
“(7) The entity has a set of measures that allow for the evaluation of their market impact and public reporting of aggregate stakeholder impact.
“(8) The entity supports nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair, and nondiscriminatory practices.
“(9) The entity allows for public reviews and comment on updates of the companion guide, including the operating rules.
“(c) Implementation.—The Secretary shall adopt a single, binding companion guide, including operating rules under this section, for each transaction, to become effective with the X12 Version 5010 transaction implementation, or as soon thereafter as feasible. The companion guide, including operating rules for the transactions for eligibility for health plan and health claims status under this section shall be adopted not later than October 1, 2011, in a manner such that such set of rules is effective beginning not later than January 1, 2013. The companion guide, including operating rules for the remainder of the transactions described in section 1173(a)(2) shall be adopted not later than October 1, 2012, in a manner such that such set of rules is effective beginning not later than January 1, 2014.”.
          (2) DEFINITIONS.—Section 1171 of such Act (42 U.S.C. 1320d) is amended—
                (A) in paragraph (1), by inserting “, and associated operational guidelines and instructions, as determined appropriate by the Secretary” after “medical procedure codes”; and
                (B) by adding at the end the following new paragraph:
“(10) OPERATING RULES.—The term ‘operating rules’ means business rules for using and processing transactions, such as service level requirements, which do not impact the implementation specifications or other data content requirements.”.
          (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 an interim, 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) COMPLIANCE DATE.—The amendments made by subparagraph (A) shall apply to transactions occurring on or after such date (not later than January 1, 2014) as the Secretary of Health and Human Services shall specify.
    (c) Standards for first report of injury.—Not later than January 1, 2014, the Secretary of Health and Human Services shall promulgate an interim final rule to establish a standard for the first report of injury transaction described in section 1173(a)(2)(G) of the Social Security Act (42 U.S.C. 1320d–2(a)(2)(G)).
    (d) Unique health plan identifier.—Not later October 1, 2012, the Secretary of Health and Human Services shall promulgate an interim final rule to establish a unique health plan identifier described in section 1173(b) of the Social Security Act (42 U.S.C. 1320d–2(b)) based on the input of the National Committee of Vital and Health Statistics and consultation with health plans, health care providers, and other interested parties.
    (e) Expansion of electronic transactions in medicare.—Section 1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended—
          (1) in paragraph (23), by striking “or” at the end;
          (2) in paragraph (24), by striking the period and inserting “; or”; and
          (3) by inserting after paragraph (24) the following new paragraph:
“(25) subject to subsection (h), not later than January 1, 2015, for which the payment is other than by electronic funds transfer (EFT) so long as the Secretary has adopted and implemented a standard for electronic funds transfer under section 1173A.”.
    (f) Expansion of penalties.—Section 1176 of such Act (42 U.S.C. 1320d–5) is amended by adding at the end the following new subsection:
“(c) Expansion of penalty authority.—The Secretary may, in addition to the penalties provided under subsections (a) and (b), provide for the imposition of penalties for violations of this part that are comparable—
“(1) in the case of health plans, to the sanctions the Secretary is authorized to impose under part C or D of title XVIII in the case of a plan that violates a provision of such part; or
“(2) in the case of a health care provider, to the sanctions the Secretary is authorized to impose under part A, B, or D of title XVIII in the case of a health care provider that violations a provision of such part with respect to that provider.”.