I 

112TH CONGRESS 

1ST SESSION H. R. 364 

To repeal the Patient Protection and Affordable Care Act and to take meaningful steps to lower health care costs and increase access to health 

insurance coverage without raising taxes, cutting Medicare benefits for 

seniors, adding to the national deficit, intervening in the doctor-patient 

relationship, or instituting a government takeover of health care. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 20, 2011 

Mr. LATHAM introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on 

Education and the Workforce, Ways and Means, the Judiciary, House 

Administration, Natural Resources, Rules, and Appropriations, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To repeal the Patient Protection and Affordable Care Act 

and to take meaningful steps to lower health care costs 

and increase access to health insurance coverage without 

raising taxes, cutting Medicare benefits for seniors, adding to the national deficit, intervening in the doctorpatient relationship, or instituting a government takeover 

of health care. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE; PURPOSE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Common Sense Health Reform Americans Actually Want 

4 Act’’. 

5 (b) PURPOSE.—The purpose of this Act is to take 

6 meaningful steps to lower health care costs and increase 

7 access to health insurance coverage (especially for individ8 uals with preexisting conditions) without— 

9 (1) raising taxes; 

10 (2) cutting Medicare benefits for seniors; 

11 (3) adding to the national deficit; 

12 (4) intervening in the doctor-patient relation13 ship; or 

14 (5) instituting a government takeover of health 

15 care. 

16 (c) TABLE OF CONTENTS.—The table of contents of 

17 this Act is as follows: 

Sec. 1. Short title; purpose; table of contents. 

Sec. 2. Repeal of the Patient Protection and Affordable Care Act and the 

Health Care and Education Reconciliation Act of 2010. 

DIVISION A—ENSURING COVERAGE FOR INDIVIDUALS WITH PREEXISTING CONDITIONS AND MULTIPLE HEALTH CARE NEEDS 

Sec. 101. Establish universal access programs to improve high risk pools and 

reinsurance markets. 

Sec. 102. No annual or lifetime spending caps. 

Sec. 103. Preventing unjust cancellation of insurance coverage. 

DIVISION B—REDUCING HEALTH CARE PREMIUMS AND THE 

NUMBER OF UNINSURED AMERICANS 

TITLE I—EXPANDING ACCESS AND LOWERING COSTS FOR SMALL 

BUSINESSES 

Subtitle A—Enhanced Marketplace Pools 


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Sec. 201. Rules governing enhanced marketplace pools. 

Sec. 202. Cooperation between Federal and State authorities. 

Sec. 203. Effective date and transitional and other rules. 

Subtitle B—Market Relief 

Sec. 204. Market relief. 

TITLE II—TARGETED EFFORTS TO EXPAND ACCESS 

Sec. 211. Extending coverage of dependents. 

Sec. 212. Prohibiting preexisting condition exclusions for enrollees under age 

19. 

Sec. 213. Health plan finders. 

TITLE III—EXPANDING CHOICES BY ALLOWING AMERICANS TO 

BUY HEALTH CARE COVERAGE ACROSS STATE LINES 

Sec. 221. Interstate purchasing of health insurance. 

TITLE IV—IMPROVING HEALTH SAVINGS ACCOUNTS 

Sec. 231. HSA funds for premiums for high deductible health plans. 

Sec. 232. Requiring greater coordination between HDHP administrators and 

HSA account administrators so that enrollees can enroll in 

both at the same time. 

Sec. 233. Special rule for certain medical expenses incurred before establishment of account. 

TITLE V—TAX–RELATED HEALTH INCENTIVES 

Sec. 241. SECA tax deduction for health insurance costs. 

Sec. 242. Deduction for qualified health insurance costs of individuals. 

DIVISION C—ENACTING REAL MEDICAL LIABILITY REFORM 

Sec. 301. Cap on non-economic damages against health care practitioners. 

Sec. 302. Cap on non-economic damages against health care institutions. 

Sec. 303. Cap, in wrongful death cases, on total damages against any single 

health care practitioner. 

Sec. 304. Limitation of insurer liability when insurer rejects certain settlement 

offers. 

Sec. 305. Mandatory jury instruction on cap on damages. 

Sec. 306. Determination of negligence; mandatory jury instruction. 

Sec. 307. Expert reports required to be served in civil actions. 

Sec. 308. Expert opinions relating to physicians may be provided only by actively practicing physicians. 

Sec. 309. Payment of future damages on periodic or accrual basis. 

Sec. 310. Unanimous jury required for punitive or exemplary damages. 

Sec. 311. Proportionate liability. 

Sec. 312. Defense-initiated settlement process. 

Sec. 313. Statute of limitations; statute of repose. 

Sec. 314. Limitation on liability for Good Samaritans providing emergency 

health care. 

Sec. 315. Definitions. 

DIVISION D—PROTECTING THE DOCTOR-PATIENT RELATIONSHIP 


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Sec. 401. Rule of construction. 

Sec. 402. Repeal of Federal Coordinating Council for Comparative Effectiveness Research. 

DIVISION E—INCENTIVIZING WELLNESS AND QUALITY 

IMPROVEMENTS 

Sec. 501. Incentives for prevention and wellness programs. 

DIVISION F—PROTECTING TAXPAYERS 

Sec. 601. Permanently prohibiting taxpayer funded abortions and ensuring conscience protections. 

Sec. 602. Improved enforcement of the Medicare and Medicaid secondary payer 

provisions. 

Sec. 603. Strengthen Medicare provider enrollment standards and safeguards. 

Sec. 604. Tracking banned providers across State lines. 

1 SEC. 2. REPEAL OF THE PATIENT PROTECTION AND AF2 FORDABLE CARE ACT AND THE HEALTH 

3 CARE AND EDUCATION RECONCILIATION ACT 

4 OF 2010. 

5 (a) PATIENT PROTECTION AND AFFORDABLE CARE

6 ACT.—The Patient Protection and Affordable Care Act 

7 (Public Law 111–148) is repealed and the provisions of 

8 law amended or repealed by such Act are restored or re9 vived as if such Act had not been enacted. 

10 (b) HEALTH CARE AND EDUCATION RECONCILI11 ATION ACT OF 2010.—The Health Care and Education 

12 Reconciliation Act of 2010 (Public Law 111–152) is re13 pealed and the provisions of law amended or repealed by 

14 such Act are restored or revived as if such Act had not 

15 been enacted. 


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1 DIVISION A—ENSURING COV2 ERAGE FOR INDIVIDUALS 

3 WITH PREEXISTING CONDI4 TIONS AND MULTIPLE 

5 HEALTH CARE NEEDS 

6 SEC. 101. ESTABLISH UNIVERSAL ACCESS PROGRAMS TO 

7 IMPROVE HIGH RISK POOLS AND REINSUR8 ANCE MARKETS. 

9 (a) STATE REQUIREMENT.— 

10 (1) IN GENERAL.—Not later than 90 days after 

11 the date of the enactment of this Act, each State 

12 shall— 

13 (A) subject to paragraph (3), operate a 

14 qualifying State high risk pool described in sub15 section (b)(1); and 

16 (B) subject to paragraph (3), apply to the 

17 operation of such a program from State funds 

18 an amount equivalent to the portion of State 

19 funds derived from State premium assessments 

20 (as defined by the Secretary) that are not oth21 erwise used on State health care programs. 

22 (2) RELATION TO CURRENT QUALIFIED HIGH

23 RISK POOL PROGRAM.— 

24 (A) STATES NOT OPERATING A QUALIFIED

25 HIGH RISK POOL.—In the case of a State that 


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1 is not operating a current section 2745 quali2 fied high risk pool as of the date of the enact3 ment of this Act, the State’s operation of a 

4 qualifying State high risk pool described in sub5 section (b)(1) shall be treated, for purposes of 

6 section 2745 of the Public Health Service Act, 

7 as the operation of a qualified high risk pool de8 scribed in such section. 

9 (B) STATE OPERATING A QUALIFIED HIGH

10 RISK POOL.—In the case of a State that is op11 erating a current section 2745 qualified high 

12 risk pool as of the date of the enactment of this 

13 Act, as of the date that is 90 days after the 

14 date of the enactment of this Act, such a pool 

15 shall not be treated as a qualified high risk pool 

16 under section 2745 of the Public Health Service 

17 Act unless the pool is a qualifying State high 

18 risk pool described in subsection (b)(1). 

19 (3) APPLICATION OF FUNDS.—If the pool oper20 ated under paragraph (1)(A) is in strong fiscal 

21 health, as determined in accordance with standards 

22 established by the National Association of Insurance 

23 Commissioners and as approved by the State Insur24 ance Commissioner involved, the requirement of 

25 paragraph (1)(B) shall be deemed to be met. 


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1 (b) QUALIFYING STATE HIGH RISK POOL.— 

2 (1) IN GENERAL.—A qualifying State high risk 

3 pool described in this subsection means a current 

4 section 2745 qualified high risk pool that meets the 

5 following requirements: 

6 (A) The pool must be funded with a stable 

7 funding source. 

8 (B) The pool must eliminate any waiting 

9 lists so that all eligible residents who are seek10 ing coverage through the pool should be allowed 

11 to receive coverage through the pool. 

12 (C) The pool must allow for coverage of in13 dividuals who, but for the 24-month disability 

14 waiting period under section 226(b) of the So15 cial Security Act, would be eligible for Medicare 

16 during the period of such waiting period. 

17 (D) The pool must limit the pool premiums 

18 to no more than 150 percent of the average 

19 premium for applicable standard risk rates in 

20 that State. 

21 (E) The pool must conduct education and 

22 outreach initiatives so that residents and bro23 kers understand that the pool is available to eli24 gible residents. 


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1 (F) The pool must provide coverage for 

2 preventive services and disease management for 

3 chronic diseases. 

4 (G) Subject to subparagraph (C), an indi5 vidual may only be eligible for coverage through 

6 the pool if the individual has a pre-existing con7 dition, as determined in a manner consistent 

8 with guidance ussed by the Secretary of Health 

9 and Human Services and— 

10 (i) was denied health insurance cov11 erage in the individual market because of 

12 a pre-existing condition or health status; or 

13 (ii) was offered such coverage— 

14 (I) under terms that limit the 

15 coverage for such a pre-existing condi16 tion; or 

17 (II) at a premium rate that is 

18 above the premium rate for coverage 

19 through the pool pursuant to this sec20 tion. 

21 (H) No pre-existing condition exclusion pe22 riod may be imposed on coverage through the 

23 pool. 

24 (I) The pool shall not require an individual 

25 to be uninsured for any period as a condition 


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1 of eligibility to receive coverage through the 

2 pool. 

3 (2) VERIFICATION OF CITIZENSHIP OR ALIEN

4 QUALIFICATION.— 

5 (A) IN GENERAL.—Notwithstanding any 

6 other provision of law, only citizens and nation7 als of the United States shall be eligible to par8 ticipate in a qualifying State high risk pool that 

9 receives funds under section 2745 of the Public 

10 Health Service Act or this section. 

11 (B) CONDITION OF PARTICIPATION.—As a 

12 condition of a State receiving such funds, the 

13 Secretary shall require the State to certify, to 

14 the satisfaction of the Secretary, that such 

15 State requires all applicants for coverage in the 

16 qualifying State high risk pool to provide satis17 factory documentation of citizenship or nation18 ality in a manner consistent with section 

19 1903(x) of the Social Security Act. 

20 (C) RECORDS.—The Secretary shall keep 

21 sufficient records such that a determination of 

22 citizenship or nationality only has to be made 

23 once for any individual under this paragraph. 

24 (3) RELATION TO SECTION 2745.—As of Janu25 ary 1, 2012, a pool shall not qualify as qualified 


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1 high risk pool under section 2745 of the Public 

2 Health Service Act unless the pool is a qualifying 

3 State high risk pool described in paragraph (1). 

4 (c) WAIVERS.—In order to accommodate new and in5 novative programs, the Secretary may waive such require6 ments of this section for qualifying State high risk pools 

7 as the Secretary deems appropriate. 

8 (d) FUNDING.—In addition to any other amounts ap9 propriated, there is appropriated to carry out section 2745 

10 of the Public Health Service Act (including through a pool 

11 described in subsection (a)(1))— 

12 (1) $15,000,000,000 for the period of fiscal 

13 years 2011 through 2021; and 

14 (2) an additional $10,000,000,000 for the pe15 riod of fiscal years 2017 through 2021. 

16 (e) DEFINITIONS.—In this section: 

17 (1) HEALTH INSURANCE COVERAGE; HEALTH

18 INSURANCE ISSUER.—The terms ‘‘health insurance 

19 coverage’’ and ‘‘health insurance issuer’’ have the 

20 meanings given such terms in section 2791 of the 

21 Public Health Service Act. 

22 (2) CURRENT SECTION 2745 QUALIFIED HIGH

23 RISK POOL.—The term ‘‘current section 2745 quali24 fied high risk pool’’ has the meaning given the term 

25 ‘‘qualified high risk pool’’ under section 2745(g) of 


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1 the Public Health Service Act as in effect as of the 

2 date of the enactment of this Act. 

3 (3) SECRETARY.—The term ‘‘Secretary’’ means 

4 Secretary of Health and Human Services. 

5 (4) STANDARD RISK RATE.—The term ‘‘stand6 ard risk rate’’ means a rate that— 

7 (A) is determined under the State high 

8 risk pool by considering the premium rates 

9 charged by other health insurance issuers offer10 ing health insurance coverage to individuals in 

11 the insurance market served; 

12 (B) is established using reasonable actu13 arial techniques; and 

14 (C) reflects anticipated claims experience 

15 and expenses for the coverage involved. 

16 (5) STATE.—The term ‘‘State’’ means any of 

17 the 50 States or the District of Columbia. 

18 SEC. 102. NO ANNUAL OR LIFETIME SPENDING CAPS. 

19 Notwithstanding any other provision of law, a health 

20 insurance issuer (including an entity licensed to sell insur21 ance with respect to a State or group health plan) may 

22 not apply an annual or lifetime aggregate spending cap 

23 on any health insurance coverage or plan offered by such 

24 issuer. 


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1 SEC. 103. PREVENTING UNJUST CANCELLATION OF INSUR2 ANCE COVERAGE. 

3 (a) CLARIFICATION REGARDING APPLICATION OF

4 GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH

5 INSURANCE COVERAGE.—Section 2742 of the Public 

6 Health Service Act (42 U.S.C. 300gg–42), as restored by 

7 section 2, is amended— 

8 (1) in its heading, by inserting ‘‘, CONTINU9 ATION IN FORCE, INCLUDING PROHIBITION OF

10 RESCISSION,’’ after ‘‘GUARANTEED RENEW11 ABILITY’’; 

12 (2) in subsection (a), by inserting ‘‘, including 

13 without rescission,’’ after ‘‘continue in force’’; and 

14 (3) in subsection (b)(2), by inserting before the 

15 period at the end the following: ‘‘, including inten16 tional concealment of material facts regarding a 

17 health condition related to the condition for which 

18 coverage is being claimed’’. 

19 (b) OPPORTUNITY FOR INDEPENDENT, EXTERNAL

20 THIRD PARTY REVIEW IN CERTAIN CASES.—Subpart 1 

21 of part B of title XXVII of the Public Health Service Act, 

22 as restored by section 2, is amended by adding at the end 

23 the following new section: 


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1 ‘‘SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL 

2 THIRD PARTY REVIEW IN CERTAIN CASES. 

3 ‘‘(a) NOTICE AND REVIEW RIGHT.—If a health in4 surance issuer determines to nonrenew or not continue in 

5 force, including rescind, health insurance coverage for an 

6 individual in the individual market on the basis described 

7 in section 2742(b)(2) before such nonrenewal, discontinu8 ation, or rescission, may take effect the issuer shall pro9 vide the individual with notice of such proposed non10 renewal, discontinuation, or rescission and an opportunity 

11 for a review of such determination by an independent, ex12 ternal third party under procedures specified by the Sec13 retary. 

14 ‘‘(b) INDEPENDENT DETERMINATION.—If the indi15 vidual requests such review by an independent, external 

16 third party of a nonrenewal, discontinuation, or rescission 

17 of health insurance coverage, the coverage shall remain in 

18 effect until such third party determines that the coverage 

19 may be nonrenewed, discontinued, or rescinded under sec20 tion 2742(b)(2).’’. 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply after the date of the enactment 

23 of this Act with respect to health insurance coverage 

24 issued before, on, or after such date. 


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1 DIVISION B—REDUCING HEALTH 

2 CARE PREMIUMS AND THE 

3 NUMBER OF UNINSURED 

4 AMERICANS 

5 TITLE I—EXPANDING ACCESS 

6 AND LOWERING COSTS FOR 

7 SMALL BUSINESSES 

8 Subtitle A—Enhanced Marketplace 

9 Pools 

10 SEC. 201. RULES GOVERNING ENHANCED MARKETPLACE 

11 POOLS. 

12 (a) IN GENERAL.—Subtitle B of title I of the Em13 ployee Retirement Income Security Act of 1974, as re14 stored by section 2, is amended by adding after part 7 

15 the following new part: 

16 ‘‘PART 8—RULES GOVERNING ENHANCED 

17 MARKETPLACE POOLS 

18 ‘‘SEC. 801. SMALL BUSINESS HEALTH PLANS. 

19 ‘‘(a) IN GENERAL.—For purposes of this part, the 

20 term ‘small business health plan’ means a fully insured 

21 group health plan whose sponsor is (or is deemed under 

22 this part to be) described in subsection (b). 

23 ‘‘(b) SPONSORSHIP.—The sponsor of a group health 

24 plan is described in this subsection if such sponsor— 


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1 ‘‘(1) is organized and maintained in good faith, 

2 with a constitution and bylaws specifically stating its 

3 purpose and providing for periodic meetings on at 

4 least an annual basis, as a bona fide trade associa5 tion, a bona fide industry association (including a 

6 rural electric cooperative association or a rural tele7 phone cooperative association), a bona fide profes8 sional association, or a bona fide chamber of com9 merce (or similar bona fide business association, in10 cluding a corporation or similar organization that 

11 operates on a cooperative basis (within the meaning 

12 of section 1381 of the Internal Revenue Code of 

13 1986)), for substantial purposes other than that of 

14 obtaining medical care; 

15 ‘‘(2) is established as a permanent entity which 

16 receives the active support of its members and re17 quires for membership payment on a periodic basis 

18 of dues or payments necessary to maintain eligibility 

19 for membership; 

20 ‘‘(3) does not condition membership, such dues 

21 or payments, or coverage under the plan on the 

22 basis of health status-related factors with respect to 

23 the employees of its members (or affiliated mem24 bers), or the dependents of such employees, and does 


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1 not condition such dues or payments on the basis of 

2 group health plan participation; and 

3 ‘‘(4) does not condition membership on the 

4 basis of a minimum group size. 

5 Any sponsor consisting of an association of entities which 

6 meet the requirements of paragraphs (1), (2), (3), and (4) 

7 shall be deemed to be a sponsor described in this sub8 section. 

9 ‘‘SEC. 802. ALTERNATIVE MARKET POOLING ORGANIZA10 TIONS. 

11 ‘‘(a) IN GENERAL.—The Secretary, not later than 1 

12 year after the date of enactment of this part, shall promul13 gate regulations that apply the rules and standards of this 

14 part, as necessary, to circumstances in which a pooling 

15 entity other (hereinafter ‘Alternative Market Pooling Or16 ganizations’) is not made up principally of employers and 

17 their employees, or not a professional organization or such 

18 small business health plan entity identified in section 801. 

19 ‘‘(b) ADAPTION OF STANDARDS.—In developing and 

20 promulgating regulations pursuant to subsection (a), the 

21 Secretary, in consultation with the Secretary of Health 

22 and Human Services, small business health plans, small 

23 and large employers, large and small insurance issuers, 

24 consumer representatives, and State insurance commis25 sioners, shall— 


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1 ‘‘(1) adapt the standards of this part, to the 

2 maximum degree practicable, to assure balanced and 

3 comparable oversight standards for both small busi4 ness health plans and alternative market pooling or5 ganizations; 

6 ‘‘(2) permit the participation as alternative 

7 market pooling organizations unions, churches and 

8 other faith-based organizations, or other organiza9 tions composed of individuals and groups which may 

10 have little or no association with employment, pro11 vided however, that such alternative market pooling 

12 organizations meet, and continue meeting on an on13 going basis, to satisfy standards, rules, and require14 ments materially equivalent to those set forth in this 

15 part with respect to small business health plans; 

16 ‘‘(3) conduct periodic verification of such com17 pliance by alternative market pooling organizations, 

18 in consultation with the Secretary of Health and 

19 Human Services and the National Association of In20 surance Commissioners, except that such periodic 

21 verification shall not materially impede market entry 

22 or participation as pooling entities comparable to 

23 that of small business health plans; 

24 ‘‘(4) assure that consistent, clear, and regularly 

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1 ternative market pooling organizations to avert ma2 terial risk-selection within or among the composition 

3 of such organizations; 

4 ‘‘(5) the expedited and deemed certification pro5 cedures provided in section 805(d) shall not apply to 

6 alternative market pooling organizations until sooner 

7 of the promulgation of regulations under this sub8 section or the expiration of one year following enact9 ment of this Act; and 

10 ‘‘(6) make such other appropriate adjustments 

11 to the requirements of this part as the Secretary 

12 may reasonably deem appropriate to fit the cir13 cumstances of an individual alternative market pool14 ing organization or category of such organization, 

15 including but not limited to the application of the 

16 membership payment requirements of section 

17 801(b)(2) to alternative market pooling organiza18 tions composed primarily of church- or faith-based 

19 membership. 

20 ‘‘SEC. 803. CERTIFICATION OF SMALL BUSINESS HEALTH 

21 PLANS. 

22 ‘‘(a) IN GENERAL.—Not later than 6 months after 

23 the date of enactment of this part, the applicable authority 

24 shall prescribe by interim final rule a procedure under 

25 which the applicable authority shall certify small business 


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1 health plans which apply for certification as meeting the 

2 requirements of this part. 

3 ‘‘(b) REQUIREMENTS APPLICABLE TO CERTIFIED

4 PLANS.—A small business health plan with respect to 

5 which certification under this part is in effect shall meet 

6 the applicable requirements of this part, effective on the 

7 date of certification (or, if later, on the date on which the 

8 plan is to commence operations). 

9 ‘‘(c) REQUIREMENTS FOR CONTINUED CERTIFI10 CATION.—The applicable authority may provide by regula11 tion for continued certification of small business health 

12 plans under this part. Such regulation shall provide for 

13 the revocation of a certification if the applicable authority 

14 finds that the small business health plan involved is failing 

15 to comply with the requirements of this part. 

16 ‘‘(d) EXPEDITED AND DEEMED CERTIFICATION.— 

17 ‘‘(1) IN GENERAL.—If the Secretary fails to act 

18 on an application for certification under this section 

19 within 90 days of receipt of such application, the ap20 plying small business health plan shall be deemed 

21 certified until such time as the Secretary may deny 

22 for cause the application for certification. 

23 ‘‘(2) CIVIL PENALTY.—The Secretary may as24 sess a civil penalty against the board of trustees and 

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1 ness health plan that is deemed certified under para2 graph (1) of up to $500,000 in the event the Sec3 retary determines that the application for certifi4 cation of such small business health plan was will5 fully or with gross negligence incomplete or inac6 curate. 

7 ‘‘SEC. 804. REQUIREMENTS RELATING TO SPONSORS AND 

8 BOARDS OF TRUSTEES. 

9 ‘‘(a) SPONSOR.—The requirements of this subsection 

10 are met with respect to a small business health plan if 

11 the sponsor has met (or is deemed under this part to have 

12 met) the requirements of section 801(b) for a continuous 

13 period of not less than 3 years ending with the date of 

14 the application for certification under this part. 

15 ‘‘(b) BOARD OF TRUSTEES.—The requirements of 

16 this subsection are met with respect to a small business 

17 health plan if the following requirements are met: 

18 ‘‘(1) FISCAL CONTROL.—The plan is operated, 

19 pursuant to a plan document, by a board of trustees 

20 which pursuant to a trust agreement has complete 

21 fiscal control over the plan and which is responsible 

22 for all operations of the plan. 

23 ‘‘(2) RULES OF OPERATION AND FINANCIAL

24 CONTROLS.—The board of trustees has in effect 

25 rules of operation and financial controls, based on a 


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1 3-year plan of operation, adequate to carry out the 

2 terms of the plan and to meet all requirements of 

3 this title applicable to the plan. 

4 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

5 PARTICIPATING EMPLOYERS AND TO CONTRAC6 TORS.— 

7 ‘‘(A) BOARD MEMBERSHIP.— 

8 ‘‘(i) IN GENERAL.—Except as pro9 vided in clauses (ii) and (iii), the members 

10 of the board of trustees are individuals se11 lected from individuals who are the owners, 

12 officers, directors, or employees of the par13 ticipating employers or who are partners in 

14 the participating employers and actively 

15 participate in the business. 

16 ‘‘(ii) LIMITATION.— 

17 ‘‘(I) GENERAL RULE.—Except as 

18 provided in subclauses (II) and (III), 

19 no such member is an owner, officer, 

20 director, or employee of, or partner in, 

21 a contract administrator or other 

22 service provider to the plan. 

23 ‘‘(II) LIMITED EXCEPTION FOR

24 PROVIDERS OF SERVICES SOLELY ON

25 BEHALF OF THE SPONSOR.—Officers 


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1 or employees of a sponsor which is a 

2 service provider (other than a contract 

3 administrator) to the plan may be 

4 members of the board if they con5 stitute not more than 25 percent of 

6 the membership of the board and they 

7 do not provide services to the plan 

8 other than on behalf of the sponsor. 

9 ‘‘(III) TREATMENT OF PRO10 VIDERS OF MEDICAL CARE.—In the 

11 case of a sponsor which is an associa12 tion whose membership consists pri13 marily of providers of medical care, 

14 subclause (I) shall not apply in the 

15 case of any service provider described 

16 in subclause (I) who is a provider of 

17 medical care under the plan. 

18 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

19 Clause (i) shall not apply to a small busi20 ness health plan which is in existence on 

21 the date of the enactment of this part. 

22 ‘‘(B) SOLE AUTHORITY.—The board has 

23 sole authority under the plan to approve appli24 cations for participation in the plan and to con25 tract with insurers. 


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1 ‘‘(c) TREATMENT OF FRANCHISES.—In the case of 

2 a group health plan which is established and maintained 

3 by a franchiser for a franchisor or for its franchisees— 

4 ‘‘(1) the requirements of subsection (a) and sec5 tion 801(a) shall be deemed met if such require6 ments would otherwise be met if the franchisor were 

7 deemed to be the sponsor referred to in section 

8 801(b) and each franchisee were deemed to be a 

9 member (of the sponsor) referred to in section 

10 801(b); and 

11 ‘‘(2) the requirements of section 804(a)(1) shall 

12 be deemed met. 

13 For purposes of this subsection the terms ‘franchisor’ and 

14 ‘franchisee’ shall have the meanings given such terms for 

15 purposes of sections 436.2(a) through 436.2(c) of title 16, 

16 Code of Federal Regulations (including any such amend17 ments to such regulation after the date of enactment of 

18 this part). 

19 ‘‘SEC. 805. PARTICIPATION AND COVERAGE REQUIRE20 MENTS. 

21 ‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 

22 requirements of this subsection are met with respect to 

23 a small business health plan if, under the terms of the 

24 plan— 

25 ‘‘(1) each participating employer must be— 


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1 ‘‘(A) a member of the sponsor; 

2 ‘‘(B) the sponsor; or 

3 ‘‘(C) an affiliated member of the sponsor, 

4 except that, in the case of a sponsor which is 

5 a professional association or other individual6 based association, if at least one of the officers, 

7 directors, or employees of an employer, or at 

8 least one of the individuals who are partners in 

9 an employer and who actively participates in 

10 the business, is a member or such an affiliated 

11 member of the sponsor, participating employers 

12 may also include such employer; and 

13 ‘‘(2) all individuals commencing coverage under 

14 the plan after certification under this part must 

15 be— 

16 ‘‘(A) active or retired owners (including 

17 self-employed individuals), officers, directors, or 

18 employees of, or partners in, participating em19 ployers; or 

20 ‘‘(B) the dependents of individuals de21 scribed in subparagraph (A). 

22 ‘‘(b) INDIVIDUAL MARKET UNAFFECTED.—The re23 quirements of this subsection are met with respect to a 

24 small business health plan if, under the terms of the plan, 

25 no participating employer may provide health insurance 


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1 coverage in the individual market for any employee not 

2 covered under the plan which is similar to the coverage 

3 contemporaneously provided to employees of the employer 

4 under the plan, if such exclusion of the employee from cov5 erage under the plan is based on a health status-related 

6 factor with respect to the employee and such employee 

7 would, but for such exclusion on such basis, be eligible 

8 for coverage under the plan. 

9 ‘‘(c) PROHIBITION OF DISCRIMINATION AGAINST EM10 PLOYERS AND EMPLOYEES ELIGIBLE TO PARTICIPATE.— 

11 The requirements of this subsection are met with respect 

12 to a small business health plan if— 

13 ‘‘(1) under the terms of the plan, all employers 

14 meeting the preceding requirements of this section 

15 are eligible to qualify as participating employers for 

16 all geographically available coverage options, unless, 

17 in the case of any such employer, participation or 

18 contribution requirements of the type referred to in 

19 section 2711 of the Public Health Service Act are 

20 not met; 

21 ‘‘(2) information regarding all coverage options 

22 available under the plan is made readily available to 

23 any employer eligible to participate; and 

24 ‘‘(3) the applicable requirements of sections 

25 701, 702, and 703 are met with respect to the plan. 


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1 ‘‘SEC. 806. OTHER REQUIREMENTS RELATING TO PLAN 

2 DOCUMENTS, CONTRIBUTION RATES, AND 

3 BENEFIT OPTIONS. 

4 ‘‘(a) IN GENERAL.—The requirements of this section 

5 are met with respect to a small business health plan if 

6 the following requirements are met: 

7 ‘‘(1) CONTENTS OF GOVERNING INSTRU8 MENTS.— 

9 ‘‘(A) IN GENERAL.—The instruments gov10 erning the plan include a written instrument, 

11 meeting the requirements of an instrument re12 quired under section 402(a)(1), which— 

13 ‘‘(i) provides that the board of trust14 ees serves as the named fiduciary required 

15 for plans under section 402(a)(1) and 

16 serves in the capacity of a plan adminis17 trator (referred to in section 3(16)(A)); 

18 and 

19 ‘‘(ii) provides that the sponsor of the 

20 plan is to serve as plan sponsor (referred 

21 to in section 3(16)(B)). 

22 ‘‘(B) DESCRIPTION OF MATERIAL PROVI23 SIONS.—The terms of the health insurance cov24 erage (including the terms of any individual 

25 certificates that may be offered to individuals in 

26 connection with such coverage) describe the maVerDate Mar 15 2010 04:27 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H364.IH H364

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1 terial benefit and rating, and other provisions 

2 set forth in this section and such material pro3 visions are included in the summary plan de4 scription. 

5 ‘‘(2) CONTRIBUTION RATES MUST BE NON6 DISCRIMINATORY.— 

7 ‘‘(A) IN GENERAL.—The contribution rates 

8 for any participating small employer shall not 

9 vary on the basis of any health status-related 

10 factor in relation to employees of such employer 

11 or their beneficiaries and shall not vary on the 

12 basis of the type of business or industry in 

13 which such employer is engaged, subject to sub14 paragraph (B) and the terms of this title. 

15 ‘‘(B) EFFECT OF TITLE.—Nothing in this 

16 title or any other provision of law shall be con17 strued to preclude a health insurance issuer of18 fering health insurance coverage in connection 

19 with a small business health plan that meets 

20 the requirements of this part, and at the re21 quest of such small business health plan, 

22 from— 

23 ‘‘(i) setting contribution rates for the 

24 small business health plan based on the 

25 claims experience of the small business 


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1 health plan so long as any variation in 

2 such rates for participating small employ3 ers complies with the requirements of 

4 clause (ii), except that small business 

5 health plans shall not be subject, in non6 adopting States, to subparagraphs (A)(ii) 

7 and (C) of section 2912(a)(2) of the Public 

8 Health Service Act, and in adopting 

9 States, to any State law that would have 

10 the effect of imposing requirements as out11 lined in such subparagraphs (A)(ii) and 

12 (C); or 

13 ‘‘(ii) varying contribution rates for 

14 participating small employers in a small 

15 business health plan in a State to the ex16 tent that such rates could vary using the 

17 same methodology employed in such State 

18 for regulating small group premium rates, 

19 subject to the terms of part I of subtitle A 

20 of title XXXI of the Public Health Service 

21 Act (relating to rating requirements), as 

22 added by subtitle B of title II of the 

23 Health Security for All Americans Act of 

24 2010. 


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1 ‘‘(3) EXCEPTIONS REGARDING SELF-EMPLOYED

2 AND LARGE EMPLOYERS.— 

3 ‘‘(A) SELF-EMPLOYED.— 

4 ‘‘(i) IN GENERAL.—Small business 

5 health plans with participating employers 

6 who are self-employed individuals (and 

7 their dependents) shall enroll such self-em8 ployed participating employers in accord9 ance with rating rules that do not violate 

10 the rating rules for self-employed individ11 uals in the State in which such self-em12 ployed participating employers are located. 

13 ‘‘(ii) GUARANTEE ISSUE.—Small busi14 ness health plans with participating em15 ployers who are self-employed individuals 

16 (and their dependents) may decline to 

17 guarantee issue to such participating em18 ployers in States in which guarantee issue 

19 is not otherwise required for the self-em20 ployed in that State. 

21 ‘‘(B) LARGE EMPLOYERS.—Small business 

22 health plans with participating employers that 

23 are larger than small employers (as defined in 

24 section 808(a)(10)) shall enroll such large par25 ticipating employers in accordance with rating 


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1 rules that do not violate the rating rules for 

2 large employers in the State in which such large 

3 participating employers are located. 

4 ‘‘(4) REGULATORY REQUIREMENTS.—Such 

5 other requirements as the applicable authority deter6 mines are necessary to carry out the purposes of this 

7 part, which shall be prescribed by the applicable au8 thority by regulation. 

9 ‘‘(b) ABILITY OF SMALL BUSINESS HEALTH PLANS

10 TO DESIGN BENEFIT OPTIONS.—Nothing in this part or 

11 any provision of State law (as defined in section 

12 514(c)(1)) shall be construed to preclude a small business 

13 health plan or a health insurance issuer offering health 

14 insurance coverage in connection with a small business 

15 health plan from exercising its sole discretion in selecting 

16 the specific benefits and services consisting of medical care 

17 to be included as benefits under such plan or coverage, 

18 except that such benefits and services must meet the terms 

19 and specifications of part II of subtitle A of title XXXI 

20 of the Public Health Service Act (relating to lower cost 

21 plans), as added by subtitle B of title II of the Health 

22 Security for All Americans Act of 2010. 

23 ‘‘(c) DOMICILE AND NON-DOMICILE STATES.— 

24 ‘‘(1) DOMICILE STATE.—Coverage shall be 

25 issued to a small business health plan in the State 


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1 in which the sponsor’s principal place of business is 

2 located. 

3 ‘‘(2) NON-DOMICILE STATES.—With respect to 

4 a State (other than the domicile State) in which par5 ticipating employers of a small business health plan 

6 are located but in which the insurer of the small 

7 business health plan in the domicile State is not yet 

8 licensed, the following shall apply: 

9 ‘‘(A) TEMPORARY PREEMPTION.—If, upon 

10 the expiration of the 90-day period following 

11 the submission of a licensure application by 

12 such insurer (that includes a certified copy of 

13 an approved licensure application as submitted 

14 by such insurer in the domicile State) to such 

15 State, such State has not approved or denied 

16 such application, such State’s health insurance 

17 licensure laws shall be temporarily preempted 

18 and the insurer shall be permitted to operate in 

19 such State, subject to the following terms: 

20 ‘‘(i) APPLICATION OF NON-DOMICILE

21 STATE LAW.—Except with respect to licen22 sure and with respect to the terms of sub23 title A of title XXXI of the Public Health 

24 Service Act (relating to rating and benefits 

25 as added by subtitle B of title II of the 


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1 Health Security for All Americans Act of 

2 2010), the laws and authority of the non3 domicile State shall remain in full force 

4 and effect. 

5 ‘‘(ii) REVOCATION OF PREEMPTION.— 

6 The preemption of a non-domicile State’s 

7 health insurance licensure laws pursuant to 

8 this subparagraph, shall be terminated 

9 upon the occurrence of either of the fol10 lowing: 

11 ‘‘(I) APPROVAL OR DENIAL OF

12 APPLICATION.—The approval of denial 

13 of an insurer’s licensure application, 

14 following the laws and regulations of 

15 the non-domicile State with respect to 

16 licensure. 

17 ‘‘(II) DETERMINATION OF MATE18 RIAL VIOLATION.—A determination by 

19 a non-domicile State that an insurer 

20 operating in a non-domicile State pur21 suant to the preemption provided for 

22 in this subparagraph is in material 

23 violation of the insurance laws (other 

24 than licensure and with respect to the 

25 terms of subtitle A of title XXXI of 


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1 the Public Health Service Act (relat2 ing to rating and benefits added by 

3 subtitle B of title II of the Health Se4 curity for All Americans Act of 2010)) 

5 of such State. 

6 ‘‘(B) NO PROHIBITION ON PROMOTION.— 

7 Nothing in this paragraph shall be construed to 

8 prohibit a small business health plan or an in9 surer from promoting coverage prior to the ex10 piration of the 90-day period provided for in 

11 subparagraph (A), except that no enrollment or 

12 collection of contributions shall occur before the 

13 expiration of such 90-day period. 

14 ‘‘(C) LICENSURE.—Except with respect to 

15 the application of the temporary preemption 

16 provision of this paragraph, nothing in this part 

17 shall be construed to limit the requirement that 

18 insurers issuing coverage to small business 

19 health plans shall be licensed in each State in 

20 which the small business health plans operate. 

21 ‘‘(D) SERVICING BY LICENSED INSUR22 ERS.—Notwithstanding subparagraph (C), the 

23 requirements of this subsection may also be sat24 isfied if the participating employers of a small 

25 business health plan are serviced by a licensed 


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1 insurer in that State, even where such insurer 

2 is not the insurer of such small business health 

3 plan in the State in which such small business 

4 health plan is domiciled. 

5 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE6 LATED REQUIREMENTS. 

7 ‘‘(a) FILING FEE.—Under the procedure prescribed 

8 pursuant to section 802(a), a small business health plan 

9 shall pay to the applicable authority at the time of filing 

10 an application for certification under this part a filing fee 

11 in the amount of $5,000, which shall be available in the 

12 case of the Secretary, to the extent provided in appropria13 tion Acts, for the sole purpose of administering the certifi14 cation procedures applicable with respect to small business 

15 health plans. 

16 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA17 TION FOR CERTIFICATION.—An application for certifi18 cation under this part meets the requirements of this sec19 tion only if it includes, in a manner and form which shall 

20 be prescribed by the applicable authority by regulation, at 

21 least the following information: 

22 ‘‘(1) IDENTIFYING INFORMATION.—The names 

23 and addresses of— 

24 ‘‘(A) the sponsor; and 


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1 ‘‘(B) the members of the board of trustees 

2 of the plan. 

3 ‘‘(2) STATES IN WHICH PLAN INTENDS TO DO

4 BUSINESS.—The States in which participants and 

5 beneficiaries under the plan are to be located and 

6 the number of them expected to be located in each 

7 such State. 

8 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro9 vided by the board of trustees that the bonding re10 quirements of section 412 will be met as of the date 

11 of the application or (if later) commencement of op12 erations. 

13 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu14 ments governing the plan (including any bylaws and 

15 trust agreements), the summary plan description, 

16 and other material describing the benefits that will 

17 be provided to participants and beneficiaries under 

18 the plan. 

19 ‘‘(5) AGREEMENTS WITH SERVICE PRO20 VIDERS.—A copy of any agreements between the 

21 plan, health insurance issuer, and contract adminis22 trators and other service providers. 

23 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

24 STATES.—A certification granted under this part to a 

25 small business health plan shall not be effective unless 


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1 written notice of such certification is filed with the appli2 cable State authority of each State in which the small 

3 business health plans operate. 

4 ‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 

5 of any small business health plan certified under this part, 

6 descriptions of material changes in any information which 

7 was required to be submitted with the application for the 

8 certification under this part shall be filed in such form 

9 and manner as shall be prescribed by the applicable au10 thority by regulation. The applicable authority may re11 quire by regulation prior notice of material changes with 

12 respect to specified matters which might serve as the basis 

13 for suspension or revocation of the certification. 

14 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER15 MINATION. 

16 ‘‘A small business health plan which is or has been 

17 certified under this part may terminate (upon or at any 

18 time after cessation of accruals in benefit liabilities) only 

19 if the board of trustees, not less than 60 days before the 

20 proposed termination date— 

21 ‘‘(1) provides to the participants and bene22 ficiaries a written notice of intent to terminate stat23 ing that such termination is intended and the pro24 posed termination date; 


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1 ‘‘(2) develops a plan for winding up the affairs 

2 of the plan in connection with such termination in 

3 a manner which will result in timely payment of all 

4 benefits for which the plan is obligated; and 

5 ‘‘(3) submits such plan in writing to the appli6 cable authority. 

7 Actions required under this section shall be taken in such 

8 form and manner as may be prescribed by the applicable 

9 authority by regulation. 

10 ‘‘SEC. 809. IMPLEMENTATION AND APPLICATION AUTHOR11 ITY BY SECRETARY. 

12 ‘‘The Secretary shall, through promulgation and im13 plementation of such regulations as the Secretary may 

14 reasonably determine necessary or appropriate, and in 

15 consultation with a balanced spectrum of effected entities 

16 and persons, modify the implementation and application 

17 of this part to accommodate with minimum disruption 

18 such changes to State or Federal law provided in this part 

19 and the (and the amendments made by such Act) or in 

20 regulations issued thereto. 

21 ‘‘SEC. 810. DEFINITIONS AND RULES OF CONSTRUCTION. 

22 ‘‘(a) DEFINITIONS.—For purposes of this part— 

23 ‘‘(1) AFFILIATED MEMBER.—The term ‘affili24 ated member’ means, in connection with a sponsor— 


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1 ‘‘(A) a person who is otherwise eligible to 

2 be a member of the sponsor but who elects an 

3 affiliated status with the sponsor, or 

4 ‘‘(B) in the case of a sponsor with mem5 bers which consist of associations, a person who 

6 is a member or employee of any such associa7 tion and elects an affiliated status with the 

8 sponsor. 

9 ‘‘(2) APPLICABLE AUTHORITY.—The term ‘ap10 plicable authority’ means the Secretary of Labor, ex11 cept that, in connection with any exercise of the Sec12 retary’s authority with respect to which the Sec13 retary is required under section 506(d) to consult 

14 with a State, such term means the Secretary, in con15 sultation with such State. 

16 ‘‘(3) APPLICABLE STATE AUTHORITY.—The 

17 term ‘applicable State authority’ means, with respect 

18 to a health insurance issuer in a State, the State in19 surance commissioner or official or officials des20 ignated by the State to enforce the requirements of 

21 title XXVII of the Public Health Service Act for the 

22 State involved with respect to such issuer. 

23 ‘‘(4) GROUP HEALTH PLAN.—The term ‘group 

24 health plan’ has the meaning provided in section 


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1 733(a)(1) (after applying subsection (b) of this sec2 tion). 

3 ‘‘(5) HEALTH INSURANCE COVERAGE.—The 

4 term ‘health insurance coverage’ has the meaning 

5 provided in section 733(b)(1), except that such term 

6 shall not include excepted benefits (as defined in sec7 tion 733(c)). 

8 ‘‘(6) HEALTH INSURANCE ISSUER.—The term 

9 ‘health insurance issuer’ has the meaning provided 

10 in section 733(b)(2). 

11 ‘‘(7) INDIVIDUAL MARKET.— 

12 ‘‘(A) IN GENERAL.—The term ‘individual 

13 market’ means the market for health insurance 

14 coverage offered to individuals other than in 

15 connection with a group health plan. 

16 ‘‘(B) TREATMENT OF VERY SMALL

17 GROUPS.— 

18 ‘‘(i) IN GENERAL.—Subject to clause 

19 (ii), such term includes coverage offered in 

20 connection with a group health plan that 

21 has fewer than 2 participants as current 

22 employees or participants described in sec23 tion 732(d)(3) on the first day of the plan 

24 year. 


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1 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

2 shall not apply in the case of health insur3 ance coverage offered in a State if such 

4 State regulates the coverage described in 

5 such clause in the same manner and to the 

6 same extent as coverage in the small group 

7 market (as defined in section 2791(e)(5) of 

8 the Public Health Service Act) is regulated 

9 by such State. 

10 ‘‘(8) MEDICAL CARE.—The term ‘medical care’ 

11 has the meaning provided in section 733(a)(2). 

12 ‘‘(9) PARTICIPATING EMPLOYER.—The term 

13 ‘participating employer’ means, in connection with a 

14 small business health plan, any employer, if any in15 dividual who is an employee of such employer, a 

16 partner in such employer, or a self-employed indi17 vidual who is such employer (or any dependent, as 

18 defined under the terms of the plan, of such indi19 vidual) is or was covered under such plan in connec20 tion with the status of such individual as such an 

21 employee, partner, or self-employed individual in re22 lation to the plan. 

23 ‘‘(10) SMALL EMPLOYER.—The term ‘small em24 ployer’ means, in connection with a group health 


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1 plan with respect to a plan year, a small employer 

2 as defined in section 2791(e)(4). 

3 ‘‘(11) TRADE ASSOCIATION AND PROFESSIONAL

4 ASSOCIATION.—The terms ‘trade association’ and 

5 ‘professional association’ mean an entity that meets 

6 the requirements of section 1.501(c)(6)–1 of title 26, 

7 Code of Federal Regulations (as in effect on the 

8 date of enactment of this Act). 

9 ‘‘(b) RULE OF CONSTRUCTION.—For purposes of de10 termining whether a plan, fund, or program is an em11 ployee welfare benefit plan which is a small business 

12 health plan, and for purposes of applying this title in con13 nection with such plan, fund, or program so determined 

14 to be such an employee welfare benefit plan— 

15 ‘‘(1) in the case of a partnership, the term ‘em16 ployer’ (as defined in section 3(5)) includes the part17 nership in relation to the partners, and the term 

18 ‘employee’ (as defined in section 3(6)) includes any 

19 partner in relation to the partnership; and 

20 ‘‘(2) in the case of a self-employed individual, 

21 the term ‘employer’ (as defined in section 3(5)) and 

22 the term ‘employee’ (as defined in section 3(6)) shall 

23 include such individual. 

24 ‘‘(c) RENEWAL.—Notwithstanding any provision of 

25 law to the contrary, a participating employer in a small 


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1 business health plan shall not be deemed to be a plan 

2 sponsor in applying requirements relating to coverage re3 newal. 

4 ‘‘(d) HEALTH SAVINGS ACCOUNTS.—Nothing in this 

5 part shall be construed to create any mandates for cov6 erage of benefits for HSA-qualified health plans that 

7 would require reimbursements in violation of section 

8 223(c)(2) of the Internal Revenue Code of 1986.’’. 

9 (b) CONFORMING AMENDMENTS TO PREEMPTION

10 RULES.— 

11 (1) Section 514(b)(6) of such Act (29 U.S.C. 

12 1144(b)(6)), as restored by section 2, is amended by 

13 adding at the end the following new subparagraph: 

14 ‘‘(E) The preceding subparagraphs of this paragraph 

15 do not apply with respect to any State law in the case 

16 of a small business health plan which is certified under 

17 part 8.’’. 

18 (2) Section 514 of such Act (29 U.S.C. 1144), 

19 as restored by section 2, is amended— 

20 (A) in subsection (b)(4), by striking ‘‘Sub21 section (a)’’ and inserting ‘‘Subsections (a) and 

22 (d)’’; 

23 (B) in subsection (b)(5), by striking ‘‘sub24 section (a)’’ in subparagraph (A) and inserting 

25 ‘‘subsection (a) of this section and subsections 


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1 (a)(2)(B) and (b) of section 805’’, and by strik2 ing ‘‘subsection (a)’’ in subparagraph (B) and 

3 inserting ‘‘subsection (a) of this section or sub4 section (a)(2)(B) or (b) of section 805’’; 

5 (C) by redesignating subsection (d) as sub6 section (e); and 

7 (D) by inserting after subsection (c) the 

8 following new subsection: 

9 ‘‘(d)(1) Except as provided in subsection (b)(4), the 

10 provisions of this title shall supersede any and all State 

11 laws insofar as they may now or hereafter preclude a 

12 health insurance issuer from offering health insurance cov13 erage in connection with a small business health plan 

14 which is certified under part 8. 

15 ‘‘(2) In any case in which health insurance coverage 

16 of any policy type is offered under a small business health 

17 plan certified under part 8 to a participating employer op18 erating in such State, the provisions of this title shall su19 persede any and all laws of such State insofar as they may 

20 establish rating and benefit requirements that would oth21 erwise apply to such coverage, provided the requirements 

22 of subtitle A of title XXXI of the Public Health Service 

23 Act (as added by title II of the Health Security for All 

24 Americans Act of 2010) (concerning health plan rating 

25 and benefits) are met.’’. 


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1 (c) PLAN SPONSOR.—Section 3(16)(B) of such Act 

2 (29 U.S.C. 102(16)(B)), as restored by section 2, is 

3 amended by adding at the end the following new sentence: 

4 ‘‘Such term also includes a person serving as the sponsor 

5 of a small business health plan under part 8.’’. 

6 (d) SAVINGS CLAUSE.—Section 731(c) of such Act, 

7 as restored by section 2, is amended by inserting ‘‘or part 

8 8’’ after ‘‘this part’’. 

9 (e) CLERICAL AMENDMENT.—The table of contents 

10 in section 1 of the Employee Retirement Income Security 

11 Act of 1974, as restored by section 2, is amended by in12 serting after the item relating to section 734 the following 

13 new items: 

‘‘PART 8—RULES GOVERNING SMALL BUSINESS HEALTH PLANS

‘‘801. Small business health plans. 

‘‘802. Alternative market pooling organizations. 

‘‘803. Certification of small business health plans. 

‘‘804. Requirements relating to sponsors and boards of trustees. 

‘‘805. Participation and coverage requirements. 

‘‘806. Other requirements relating to plan documents, contribution rates, and 

benefit options. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Implementation and application authority by Secretary. 

‘‘810. Definitions and rules of construction.’’. 

14 SEC. 202. COOPERATION BETWEEN FEDERAL AND STATE 

15 AUTHORITIES. 

16 Section 506 of the Employee Retirement Income Se17 curity Act of 1974 (29 U.S.C. 1136), as restored by sec18 tion 2, is amended by adding at the end the following new 

19 subsection: 


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1 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

2 TO SMALL BUSINESS HEALTH PLANS.— 

3 ‘‘(1) AGREEMENTS WITH STATES.—The Sec4 retary shall consult with the State recognized under 

5 paragraph (2) with respect to a small business 

6 health plan regarding the exercise of— 

7 ‘‘(A) the Secretary’s authority under sec8 tions 502 and 504 to enforce the requirements 

9 for certification under part 8; and 

10 ‘‘(B) the Secretary’s authority to certify 

11 small business health plans under part 8 in ac12 cordance with regulations of the Secretary ap13 plicable to certification under part 8. 

14 ‘‘(2) RECOGNITION OF DOMICILE STATE.—In 

15 carrying out paragraph (1), the Secretary shall en16 sure that only one State will be recognized, with re17 spect to any particular small business health plan, 

18 as the State with which consultation is required. In 

19 carrying out this paragraph such State shall be the 

20 domicile State, as defined in section 805(c).’’. 

21 SEC. 203. EFFECTIVE DATE AND TRANSITIONAL AND 

22 OTHER RULES. 

23 (a) EFFECTIVE DATE.—The amendments made by 

24 this subtitle shall take effect 12 months after the date of 

25 the enactment of this Act. The Secretary of Labor shall 


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1 first issue all regulations necessary to carry out the 

2 amendments made by this subtitle within 6 months after 

3 the date of the enactment of this Act. 

4 (b) TREATMENT OF CERTAIN EXISTING HEALTH

5 BENEFITS PROGRAMS.— 

6 (1) IN GENERAL.—In any case in which, as of 

7 the date of the enactment of this Act, an arrange8 ment is maintained in a State for the purpose of 

9 providing benefits consisting of medical care for the 

10 employees and beneficiaries of its participating em11 ployers, at least 200 participating employers make 

12 contributions to such arrangement, such arrange13 ment has been in existence for at least 10 years, and 

14 such arrangement is licensed under the laws of one 

15 or more States to provide such benefits to its par16 ticipating employers, upon the filing with the appli17 cable authority (as defined in section 808(a)(2) of 

18 the Employee Retirement Income Security Act of 

19 1974 (as amended by this subtitle)) by the arrange20 ment of an application for certification of the ar21 rangement under part 8 of subtitle B of title I of 

22 such Act— 

23 (A) such arrangement shall be deemed to 

24 be a group health plan for purposes of title I 

25 of such Act; 


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1 (B) the requirements of sections 801(a) 

2 and 803(a) of the Employee Retirement Income 

3 Security Act of 1974 shall be deemed met with 

4 respect to such arrangement; 

5 (C) the requirements of section 803(b) of 

6 such Act shall be deemed met, if the arrange7 ment is operated by a board of trustees which 

8 has control over the arrangement; 

9 (D) the requirements of section 804(a) of 

10 such Act shall be deemed met with respect to 

11 such arrangement; and 

12 (E) the arrangement may be certified by 

13 any applicable authority with respect to its op14 erations in any State only if it operates in such 

15 State on the date of certification. 

16 The provisions of this subsection shall cease to apply 

17 with respect to any such arrangement at such time 

18 after the date of the enactment of this Act as the 

19 applicable requirements of this subsection are not 

20 met with respect to such arrangement or at such 

21 time that the arrangement provides coverage to par22 ticipants and beneficiaries in any State other than 

23 the States in which coverage is provided on such 

24 date of enactment. 


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1 (2) DEFINITIONS.—For purposes of this sub2 section, the terms ‘‘group health plan’’, ‘‘medical 

3 care’’, and ‘‘participating employer’’ shall have the 

4 meanings provided in section 808 of the Employee 

5 Retirement Income Security Act of 1974, except 

6 that the reference in paragraph (7) of such section 

7 to an ‘‘small business health plan’’ shall be deemed 

8 a reference to an arrangement referred to in this 

9 subsection. 

10 Subtitle B—Market Relief 

11 SEC. 204. MARKET RELIEF. 

12 The Public Health Service Act (42 U.S.C. 201 et 

13 seq.), as restored by section 2, is amended by inserting 

14 after title XXX the following: 

15 ‘‘TITLE XXXI—HEALTH CARE IN16 SURANCE MARKETPLACE 

17 MODERNIZATION 

18 ‘‘SEC. 3101. GENERAL INSURANCE DEFINITIONS. 

19 ‘‘In this title, the terms ‘health insurance coverage’, 

20 ‘health insurance issuer’, ‘group health plan’, and ‘indi21 vidual health insurance’ shall have the meanings given 

22 such terms in section 2791. 


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1 ‘‘SEC. 3102. IMPLEMENTATION AND APPLICATION AUTHOR2 ITY BY SECRETARY. 

3 ‘‘The Secretary shall, through promulgation and im4 plementation of such regulations as the Secretary may 

5 reasonably determine necessary or appropriate, and in 

6 consultation with a balanced spectrum of effected entities 

7 and persons, modify the implementation and application 

8 of this title to accommodate with minimum disruption 

9 such changes to State or Federal law provided in this title 

10 and the (and the amendments made by such Act) or in 

11 regulations issued thereto. 

12 ‘‘Subtitle A—Market Relief 

13 ‘‘PART I—RATING REQUIREMENTS 

14 ‘‘SEC. 3111. DEFINITIONS. 

15 ‘‘In this part: 

16 ‘‘(1) ADOPTING STATE.—The term ‘adopting 

17 State’ means a State that, with respect to the small 

18 group market, has enacted small group rating rules 

19 that meet the minimum standards set forth in sec20 tion 3112(a)(1) or, as applicable, transitional small 

21 group rating rules set forth in section 3112(b). 

22 ‘‘(2) APPLICABLE STATE AUTHORITY.—The 

23 term ‘applicable State authority’ means, with respect 

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1 ignated by the State to enforce the insurance laws 

2 of such State. 

3 ‘‘(3) BASE PREMIUM RATE.—The term ‘base 

4 premium rate’ means, for each class of business with 

5 respect to a rating period, the lowest premium rate 

6 charged or that could have been charged under a 

7 rating system for that class of business by the small 

8 employer carrier to small employers with similar 

9 case characteristics for health benefit plans with the 

10 same or similar coverage. 

11 ‘‘(4) ELIGIBLE INSURER.—The term ‘eligible 

12 insurer’ means a health insurance issuer that is li13 censed in a State and that— 

14 ‘‘(A) notifies the Secretary, not later than 

15 30 days prior to the offering of coverage de16 scribed in this subparagraph, that the issuer in17 tends to offer health insurance coverage con18 sistent with the Model Small Group Rating 

19 Rules or, as applicable, transitional small group 

20 rating rules in a State; 

21 ‘‘(B) notifies the insurance department of 

22 a nonadopting State (or other State agency), 

23 not later than 30 days prior to the offering of 

24 coverage described in this subparagraph, that 

25 the issuer intends to offer small group health 


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1 insurance coverage in that State consistent with 

2 the Model Small Group Rating Rules, and pro3 vides with such notice a copy of any insurance 

4 policy that it intends to offer in the State, its 

5 most recent annual and quarterly financial re6 ports, and any other information required to be 

7 filed with the insurance department of the State 

8 (or other State agency); and 

9 ‘‘(C) includes in the terms of the health in10 surance coverage offered in nonadopting States 

11 (including in the terms of any individual certifi12 cates that may be offered to individuals in con13 nection with such group health coverage) and 

14 filed with the State pursuant to subparagraph 

15 (B), a description in the insurer’s contract of 

16 the Model Small Group Rating Rules and an af17 firmation that such Rules are included in the 

18 terms of such contract. 

19 ‘‘(5) HEALTH INSURANCE COVERAGE.—The 

20 term ‘health insurance coverage’ means any coverage 

21 issued in the small group health insurance market, 

22 except that such term shall not include excepted 

23 benefits (as defined in section 2791(c)). 

24 ‘‘(6) INDEX RATE.—The term ‘index rate’ 

25 means for each class of business with respect to the 


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1 rating period for small employers with similar case 

2 characteristics, the arithmetic average of the appli3 cable base premium rate and the corresponding 

4 highest premium rate. 

5 ‘‘(7) MODEL SMALL GROUP RATING RULES.— 

6 The term ‘Model Small Group Rating Rules’ means 

7 the rules set forth in section 3112(a)(2). 

8 ‘‘(8) NONADOPTING STATE.—The term ‘non9 adopting State’ means a State that is not an adopt10 ing State. 

11 ‘‘(9) SMALL GROUP INSURANCE MARKET.—The 

12 term ‘small group insurance market’ shall have the 

13 meaning given the term ‘small group market’ in sec14 tion 2791(e)(5). 

15 ‘‘(10) STATE LAW.—The term ‘State law’ 

16 means all laws, decisions, rules, regulations, or other 

17 State actions (including actions by a State agency) 

18 having the effect of law, of any State. 

19 ‘‘(11) VARIATION LIMITS.— 

20 ‘‘(A) COMPOSITE VARIATION LIMIT.— 

21 ‘‘(i) IN GENERAL.—The term ‘com22 posite variation limit’ means the total vari23 ation in premium rates charged by a 

24 health insurance issuer in the small group 

25 market as permitted under applicable State 


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1 law based on the following factors or case 

2 characteristics: 

3 ‘‘(I) Age. 

4 ‘‘(II) Duration of coverage. 

5 ‘‘(III) Claims experience. 

6 ‘‘(IV) Health status. 

7 ‘‘(ii) USE OF FACTORS.—With respect 

8 to the use of the factors described in 

9 clause (i) in setting premium rates, a 

10 health insurance issuer shall use one or 

11 both of the factors described in subclauses 

12 (I) or (IV) of such clause and may use the 

13 factors described in subclauses (II) or (III) 

14 of such clause. 

15 ‘‘(B) TOTAL VARIATION LIMIT.—The term 

16 ‘total variation limit’ means the total variation 

17 in premium rates charged by a health insurance 

18 issuer in the small group market as permitted 

19 under applicable State law based on all factors 

20 and case characteristics (as described in section 

21 3112(a)(1)). 

22 ‘‘SEC. 3112. RATING RULES. 

23 ‘‘(a) ESTABLISHMENT OF MINIMUM STANDARDS FOR

24 PREMIUM VARIATIONS AND MODEL SMALL GROUP RAT25 ING RULES.—Not later than 6 months after the date of 


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1 enactment of this title, the Secretary shall promulgate reg2 ulations establishing the following Minimum Standards 

3 and Model Small Group Rating Rules: 

4 ‘‘(1) MINIMUM STANDARDS FOR PREMIUM VARI5 ATIONS.— 

6 ‘‘(A) COMPOSITE VARIATION LIMIT.—The 

7 composite variation limit shall not be less than 

8 3:1. 

9 ‘‘(B) TOTAL VARIATION LIMIT.—The total 

10 variation limit shall not be less than 5:1. 

11 ‘‘(C) PROHIBITION ON USE OF CERTAIN

12 CASE CHARACTERISTICS.—For purposes of this 

13 paragraph, in calculating the total variation 

14 limit, the State shall not use case characteris15 tics other than those used in calculating the 

16 composite variation limit and industry, geo17 graphic area, group size, participation rate, 

18 class of business, and participation in wellness 

19 programs. 

20 ‘‘(2) MODEL SMALL GROUP RATING RULES.— 

21 The following apply to an eligible insurer in a non22 adopting State: 

23 ‘‘(A) PREMIUM RATES.—Premium rates 

24 for small group health benefit plans to which 

25 this title applies shall comply with the following 


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1 provisions relating to premiums, except as pro2 vided for under subsection (b): 

3 ‘‘(i) VARIATION IN PREMIUM

4 RATES.—The plan may not vary premium 

5 rates by more than the minimum stand6 ards provided for under paragraph (1). 

7 ‘‘(ii) INDEX RATE.—The index rate 

8 for a rating period for any class of busi9 ness shall not exceed the index rate for any 

10 other class of business by more than 20 

11 percent, excluding those classes of business 

12 related to association groups under this 

13 title. 

14 ‘‘(iii) CLASS OF BUSINESSES.—With 

15 respect to a class of business, the premium 

16 rates charged during a rating period to 

17 small employers with similar case charac18 teristics for the same or similar coverage 

19 or the rates that could be charged to such 

20 employers under the rating system for that 

21 class of business, shall not vary from the 

22 index rate by more than 25 percent of the 

23 index rate under clause (ii). 

24 ‘‘(iv) INCREASES FOR NEW RATING

25 PERIODS.—The percentage increase in the 


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1 premium rate charged to a small employer 

2 for a new rating period may not exceed the 

3 sum of the following: 

4 ‘‘(I) The percentage change in 

5 the new business premium rate meas6 ured from the first day of the prior 

7 rating period to the first day of the 

8 new rating period. In the case of a 

9 health benefit plan into which the 

10 small employer carrier is no longer en11 rolling new small employers, the small 

12 employer carrier shall use the percent13 age change in the base premium rate, 

14 except that such change shall not ex15 ceed, on a percentage basis, the 

16 change in the new business premium 

17 rate for the most similar health ben18 efit plan into which the small em19 ployer carrier is actively enrolling new 

20 small employers. 

21 ‘‘(II) Any adjustment, not to ex22 ceed 15 percent annually and adjusted 

23 pro rata for rating periods of less 

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1 erage of the employees or dependents 

2 of the small employer as determined 

3 from the small employer carrier’s rate 

4 manual for the class of business in5 volved. 

6 ‘‘(III) Any adjustment due to 

7 change in coverage or change in the 

8 case characteristics of the small em9 ployer as determined from the small 

10 employer carrier’s rate manual for the 

11 class of business. 

12 ‘‘(v) UNIFORM APPLICATION OF AD13 JUSTMENTS.—Adjustments in premium 

14 rates for claim experience, health status, or 

15 duration of coverage shall not be charged 

16 to individual employees or dependents. Any 

17 such adjustment shall be applied uniformly 

18 to the rates charged for all employees and 

19 dependents of the small employer. 

20 ‘‘(vi) PROHIBITION ON USE OF CER21 TAIN CASE CHARACTERISTIC.—A small em22 ployer carrier shall not utilize case charac23 teristics, other than those permitted under 

24 paragraph (1)(C), without the prior ap25 proval of the applicable State authority. 


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1 ‘‘(vii) CONSISTENT APPLICATION OF

2 FACTORS.—Small employer carriers shall 

3 apply rating factors, including case charac4 teristics, consistently with respect to all 

5 small employers in a class of business. 

6 Rating factors shall produce premiums for 

7 identical groups which differ only by the 

8 amounts attributable to plan design and do 

9 not reflect differences due to the nature of 

10 the groups assumed to select particular 

11 health benefit plans. 

12 ‘‘(viii) TREATMENT OF PLANS AS HAV13 ING SAME RATING PERIOD.—A small em14 ployer carrier shall treat all health benefit 

15 plans issued or renewed in the same cal16 endar month as having the same rating pe17 riod. 

18 ‘‘(ix) REQUIRE COMPLIANCE.—Pre19 mium rates for small business health ben20 efit plans shall comply with the require21 ments of this subsection notwithstanding 

22 any assessments paid or payable by a small 

23 employer carrier as required by a State’s 

24 small employer carrier reinsurance pro25 gram. 


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1 ‘‘(B) ESTABLISHMENT OF SEPARATE

2 CLASS OF BUSINESS.—Subject to subparagraph 

3 (C), a small employer carrier may establish a 

4 separate class of business only to reflect sub5 stantial differences in expected claims experi6 ence or administrative costs related to the fol7 lowing: 

8 ‘‘(i) The small employer carrier uses 

9 more than one type of system for the mar10 keting and sale of health benefit plans to 

11 small employers. 

12 ‘‘(ii) The small employer carrier has 

13 acquired a class of business from another 

14 small employer carrier. 

15 ‘‘(iii) The small employer carrier pro16 vides coverage to one or more association 

17 groups that meet the requirements of this 

18 title. 

19 ‘‘(C) LIMITATION.—A small employer car20 rier may establish up to 9 separate classes of 

21 business under subparagraph (B), excluding 

22 those classes of business related to association 

23 groups under this title. 

24 ‘‘(D) LIMITATION ON TRANSFERS.—A 

25 small employer carrier shall not transfer a 


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1 small employer involuntarily into or out of a 

2 class of business. A small employer carrier shall 

3 not offer to transfer a small employer into or 

4 out of a class of business unless such offer is 

5 made to transfer all small employers in the 

6 class of business without regard to case charac7 teristics, claim experience, health status or du8 ration of coverage since issue. 

9 ‘‘(b) TRANSITIONAL MODEL SMALL GROUP RATING

10 RULES.— 

11 ‘‘(1) IN GENERAL.—Not later than 6 months 

12 after the date of enactment of this title and to the 

13 extent necessary to provide for a graduated transi14 tion to the minimum standards for premium vari15 ation as provided for in subsection (a)(1), the Sec16 retary, in consultation with the National Association 

17 of Insurance Commissioners (NAIC), shall promul18 gate State-specific transitional small group rating 

19 rules in accordance with this subsection, which shall 

20 be applicable with respect to non-adopting States 

21 and eligible insurers operating in such States for a 

22 period of not to exceed 3 years from the date of the 

23 promulgation of the minimum standards for pre24 mium variation pursuant to subsection (a). 


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1 ‘‘(2) COMPLIANCE WITH TRANSITIONAL MODEL

2 SMALL GROUP RATING RULES.—During the transi3 tion period described in paragraph (1), a State that, 

4 on the date of enactment of this title, has in effect 

5 a small group rating rules methodology that allows 

6 for a variation that is less than the variation pro7 vided for under subsection (a)(1) (concerning min8 imum standards for premium variation), shall be 

9 deemed to be an adopting State if the State complies 

10 with the transitional small group rating rules as pro11 mulgated by the Secretary pursuant to paragraph 

12 (1). 

13 ‘‘(3) TRANSITIONING OF OLD BUSINESS.— 

14 ‘‘(A) IN GENERAL.—In developing the 

15 transitional small group rating rules under 

16 paragraph (1), the Secretary shall, after con17 sultation with the National Association of In18 surance Commissioners and representatives of 

19 insurers operating in the small group health in20 surance market in non-adopting States, promul21 gate special transition standards with respect to 

22 independent rating classes for old and new busi23 ness, to the extent reasonably necessary to pro24 tect health insurance consumers and to ensure 


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1 a stable and fair transition for old and new 

2 market entrants. 

3 ‘‘(B) PERIOD FOR OPERATION OF INDE4 PENDENT RATING CLASSES.—In developing the 

5 special transition standards pursuant to sub6 paragraph (A), the Secretary shall permit a 

7 carrier in a non-adopting State, at its option, to 

8 maintain independent rating classes for old and 

9 new business for a period of up to 5 years, with 

10 the commencement of such 5-year period to 

11 begin at such time, but not later than the date 

12 that is 3 years after the date of enactment of 

13 this title, as the carrier offers a book of busi14 ness meeting the minimum standards for pre15 mium variation provided for in subsection 

16 (a)(1) or the transitional small group rating 

17 rules under paragraph (1). 

18 ‘‘(4) OTHER TRANSITIONAL AUTHORITY.—In 

19 developing the transitional small group rating rules 

20 under paragraph (1), the Secretary shall provide for 

21 the application of the transitional small group rating 

22 rules in transition States as the Secretary may de23 termine necessary for an effective transition. 

24 ‘‘(c) MARKET RE-ENTRY.— 


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1 ‘‘(1) IN GENERAL.—Notwithstanding any other 

2 provision of law, a health insurance issuer that has 

3 voluntarily withdrawn from providing coverage in the 

4 small group market prior to the date of enactment 

5 of this title shall not be excluded from re-entering 

6 such market on a date that is more than 180 days 

7 after such date of enactment. 

8 ‘‘(2) TERMINATION.—The provision of this sub9 section shall terminate on the date that is 24 

10 months after the date of enactment of this title. 

11 ‘‘SEC. 3113. APPLICATION AND PREEMPTION. 

12 ‘‘(a) SUPERSEDING OF STATE LAW.— 

13 ‘‘(1) IN GENERAL.—This part shall supersede 

14 any and all State laws of a non-adopting State inso15 far as such State laws (whether enacted prior to or 

16 after the date of enactment of this subtitle) relate to 

17 rating in the small group insurance market as ap18 plied to an eligible insurer, or small group health in19 surance coverage issued by an eligible insurer, in20 cluding with respect to coverage issued to a small 

21 employer through a small business health plan, in a 

22 State. 

23 ‘‘(2) NONADOPTING STATES.—This part shall 

24 supersede any and all State laws of a nonadopting 

25 State insofar as such State laws (whether enacted 


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1 prior to or after the date of enactment of this sub2 title)— 

3 ‘‘(A) prohibit an eligible insurer from of4 fering, marketing, or implementing small group 

5 health insurance coverage consistent with the 

6 Model Small Group Rating Rules or transitional 

7 model small group rating rules; or 

8 ‘‘(B) have the effect of retaliating against 

9 or otherwise punishing in any respect an eligible 

10 insurer for offering, marketing, or imple11 menting small group health insurance coverage 

12 consistent with the Model Small Group Rating 

13 Rules or transitional model small group rating 

14 rules. 

15 ‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 

16 ‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 

17 Subsection (a) shall not apply with respect to adopt18 ing States. 

19 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR20 ERS.—Subsection (a) shall not apply with respect to 

21 insurers that do not qualify as eligible insurers that 

22 offer small group health insurance coverage in a 

23 nonadopting State. 

24 ‘‘(3) NONAPPLICATION WHERE OBTAINING RE25 LIEF UNDER STATE LAW.—Subsection (a)(1) shall 


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1 not supercede any State law in a nonadopting State 

2 to the extent necessary to permit individuals or the 

3 insurance department of the State (or other State 

4 agency) to obtain relief under State law to require 

5 an eligible insurer to comply with the Model Small 

6 Group Rating Rules or transitional model small 

7 group rating rules. 

8 ‘‘(4) NO EFFECT ON PREEMPTION.—In no case 

9 shall this part be construed to limit or affect in any 

10 manner the preemptive scope of sections 502 and 

11 514 of the Employee Retirement Income Security 

12 Act of 1974. In no case shall this part be construed 

13 to create any cause of action under Federal or State 

14 law or enlarge or affect any remedy available under 

15 the Employee Retirement Income Security Act of 

16 1974. 

17 ‘‘(5) PREEMPTION LIMITED TO RATING.—Sub18 section (a) shall not preempt any State law that 

19 does not have a reference to or a connection with 

20 State rating rules that would otherwise apply to eli21 gible insurers. 

22 ‘‘(c) EFFECTIVE DATE.—This section shall apply, at 

23 the election of the eligible insurer, beginning in the first 

24 plan year or the first calendar year following the issuance 

25 of the final rules by the Secretary under the Model Small 


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1 Group Rating Rules or, as applicable, the Transitional 

2 Model Small Group Rating Rules, but in no event earlier 

3 than the date that is 12 months after the date of enact4 ment of this title. 

5 ‘‘SEC. 3114. CIVIL ACTIONS AND JURISDICTION. 

6 ‘‘(a) IN GENERAL.—The courts of the United States 

7 shall have exclusive jurisdiction over civil actions involving 

8 the interpretation of this part. 

9 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac10 tion in the district courts of the United States for injunc11 tive or other equitable relief against any officials or agents 

12 of a nonadopting State in connection with any conduct or 

13 action, or proposed conduct or action, by such officials or 

14 agents which violates, or which would if undertaken vio15 late, section 3113. 

16 ‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 

17 election of the eligible insurer, an action may be brought 

18 under subsection (b) directly in the United States Court 

19 of Appeals for the circuit in which the nonadopting State 

20 is located by the filing of a petition for review in such 

21 Court. 

22 ‘‘(d) EXPEDITED REVIEW.— 

23 ‘‘(1) DISTRICT COURT.—In the case of an ac24 tion brought in a district court of the United States 

25 under subsection (b), such court shall complete such 


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1 action, including the issuance of a judgment, prior 

2 to the end of the 120-day period beginning on the 

3 date on which such action is filed, unless all parties 

4 to such proceeding agree to an extension of such pe5 riod. 

6 ‘‘(2) COURT OF APPEALS.—In the case of an 

7 action brought directly in a United States Court of 

8 Appeal under subsection (c), or in the case of an ap9 peal of an action brought in a district court under 

10 subsection (b), such Court shall complete all action 

11 on the petition, including the issuance of a judg12 ment, prior to the end of the 60-day period begin13 ning on the date on which such petition is filed with 

14 the Court, unless all parties to such proceeding 

15 agree to an extension of such period. 

16 ‘‘(e) STANDARD OF REVIEW.—A court in an action 

17 filed under this section, shall render a judgment based on 

18 a review of the merits of all questions presented in such 

19 action and shall not defer to any conduct or action, or 

20 proposed conduct or action, of a nonadopting State. 

21 ‘‘SEC. 3115. ONGOING REVIEW. 

22 ‘‘Not later than 5 years after the date on which the 

23 Model Small Group Rating Rules are issued under this 

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1 missioners, shall prepare and submit to the appropriate 

2 committees of Congress a report that assesses the effect 

3 of the Model Small Group Rating Rules on access, cost, 

4 and market functioning in the small group market. Such 

5 report may, if the Secretary, in consultation with the Na6 tional Association of Insurance Commissioners, deter7 mines such is appropriate for improving access, costs, and 

8 market functioning, contain legislative proposals for rec9 ommended modification to such Model Small Group Rat10 ing Rules. 

11 ‘‘PART II—AFFORDABLE PLANS 

12 ‘‘SEC. 3121. DEFINITIONS. 

13 ‘‘In this part: 

14 ‘‘(1) ADOPTING STATE.—The term ‘adopting 

15 State’ means a State that has enacted a law pro16 viding that small group, individual, and large group 

17 health insurers in such State may offer and sell 

18 products in accordance with the List of Required 

19 Benefits and the Terms of Application as provided 

20 for in section 3122(b). 

21 ‘‘(2) ELIGIBLE INSURER.—The term ‘eligible 

22 insurer’ means a health insurance issuer that is li23 censed in a nonadopting State and that— 

24 ‘‘(A) notifies the Secretary, not later than 

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1 scribed in this subparagraph, that the issuer in2 tends to offer health insurance coverage con3 sistent with the List of Required Benefits and 

4 Terms of Application in a nonadopting State; 

5 ‘‘(B) notifies the insurance department of 

6 a nonadopting State (or other applicable State 

7 agency), not later than 30 days prior to the of8 fering of coverage described in this subpara9 graph, that the issuer intends to offer health in10 surance coverage in that State consistent with 

11 the List of Required Benefits and Terms of Ap12 plication, and provides with such notice a copy 

13 of any insurance policy that it intends to offer 

14 in the State, its most recent annual and quar15 terly financial reports, and any other informa16 tion required to be filed with the insurance de17 partment of the State (or other State agency) 

18 by the Secretary in regulations; and 

19 ‘‘(C) includes in the terms of the health in20 surance coverage offered in nonadopting States 

21 (including in the terms of any individual certifi22 cates that may be offered to individuals in con23 nection with such group health coverage) and 

24 filed with the State pursuant to subparagraph 

25 (B), a description in the insurer’s contract of 


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1 the List of Required Benefits and a description 

2 of the Terms of Application, including a de3 scription of the benefits to be provided, and 

4 that adherence to such standards is included as 

5 a term of such contract. 

6 ‘‘(3) HEALTH INSURANCE COVERAGE.—The 

7 term ‘health insurance coverage’ means any coverage 

8 issued in the small group, individual, or large group 

9 health insurance markets, including with respect to 

10 small business health plans, except that such term 

11 shall not include excepted benefits (as defined in sec12 tion 2791(c)). 

13 ‘‘(4) LIST OF REQUIRED BENEFITS.—The term 

14 ‘List of Required Benefits’ means the List issued 

15 under section 3122(a). 

16 ‘‘(5) NONADOPTING STATE.—The term ‘non17 adopting State’ means a State that is not an adopt18 ing State. 

19 ‘‘(6) STATE LAW.—The term ‘State law’ means 

20 all laws, decisions, rules, regulations, or other State 

21 actions (including actions by a State agency) having 

22 the effect of law, of any State. 

23 ‘‘(7) STATE PROVIDER FREEDOM OF CHOICE

24 LAW.—The term ‘State Provider Freedom of Choice 

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1 surance issuer, with respect to health insurance cov2 erage, not discriminate with respect to participation, 

3 reimbursement, or indemnification as to any pro4 vider who is acting within the scope of the provider’s 

5 license or certification under applicable State law. 

6 ‘‘(8) TERMS OF APPLICATION.—The term 

7 ‘Terms of Application’ means terms provided under 

8 section 3122(a). 

9 ‘‘SEC. 3122. OFFERING AFFORDABLE PLANS. 

10 ‘‘(a) LIST OF REQUIRED BENEFITS.—Not later than 

11 3 months after the date of enactment of this title, the Sec12 retary, in consultation with the National Association of In13 surance Commissioners, shall issue by interim final rule 

14 a list (to be known as the ‘List of Required Benefits’) of 

15 covered benefits, services, or categories of providers that 

16 are required to be provided by health insurance issuers, 

17 in each of the small group, individual, and large group 

18 markets, in at least 26 States as a result of the application 

19 of State covered benefit, service, and category of provider 

20 mandate laws. With respect to plans sold to or through 

21 small business health plans, the List of Required Benefits 

22 applicable to the small group market shall apply. 

23 ‘‘(b) TERMS OF APPLICATION.— 

24 ‘‘(1) STATE WITH MANDATES.—With respect to 

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1 egory of provider mandate in effect that is covered 

2 under the List of Required Benefits under sub3 section (a), such State mandate shall, subject to 

4 paragraph (3) (concerning uniform application), 

5 apply to a coverage plan or plan in, as applicable, 

6 the small group, individual, or large group market or 

7 through a small business health plan in such State. 

8 ‘‘(2) STATES WITHOUT MANDATES.—With re9 spect to a State that does not have a covered ben10 efit, service, or category of provider mandate in ef11 fect that is covered under the List of Required Ben12 efits under subsection (a), such mandate shall not 

13 apply, as applicable, to a coverage plan or plan in 

14 the small group, individual, or large group market or 

15 through a small business health plan in such State. 

16 ‘‘(3) UNIFORM APPLICATION OF LAWS.— 

17 ‘‘(A) IN GENERAL.—With respect to a 

18 State described in paragraph (1), in applying a 

19 covered benefit, service, or category of provider 

20 mandate that is on the List of Required Bene21 fits under subsection (a) the State shall permit 

22 a coverage plan or plan offered in the small 

23 group, individual, or large group market or 

24 through a small business health plan in such 

25 State to apply such benefit, service, or category 


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1 of provider coverage in a manner consistent 

2 with the manner in which such coverage is ap3 plied under one of the three most heavily sub4 scribed national health plans offered under the 

5 Federal Employee Health Benefits Program 

6 under chapter 89 of title 5, United States Code 

7 (as determined by the Secretary in consultation 

8 with the Director of the Office of Personnel 

9 Management), and consistent with the Publica10 tion of Benefit Applications under subsection 

11 (c). In the event a covered benefit, service, or 

12 category of provider appearing in the List of 

13 Required Benefits is not offered in one of the 

14 three most heavily subscribed national health 

15 plans offered under the Federal Employees 

16 Health Benefits Program, such covered benefit, 

17 service, or category of provider requirement 

18 shall be applied in a manner consistent with the 

19 manner in which such coverage is offered in the 

20 remaining most heavily subscribed plan of the 

21 remaining Federal Employees Health Benefits 

22 Program plans, as determined by the Secretary, 

23 in consultation with the Director of the Office 

24 of Personnel Management. 


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1 ‘‘(B) EXCEPTION REGARDING STATE PRO2 VIDER FREEDOM OF CHOICE LAWS.—Notwith3 standing subparagraph (A), in the event a cat4 egory of provider mandate is included in the 

5 List of Covered Benefits, any State Provider 

6 Freedom of Choice Law (as defined in section 

7 3121(7)) that is in effect in any State in which 

8 such category of provider mandate is in effect 

9 shall not be preempted, with respect to that cat10 egory of provider, by this part. 

11 ‘‘(c) PUBLICATION OF BENEFIT APPLICATIONS.— 

12 Not later than 3 months after the date of enactment of 

13 this title, and on the first day of every calendar year there14 after, the Secretary, in consultation with the Director of 

15 the Office of Personnel Management, shall publish in the 

16 Federal Register a description of such covered benefits, 

17 services, and categories of providers covered in that cal18 endar year by each of the three most heavily subscribed 

19 nationally available Federal Employee Health Benefits 

20 Plan options which are also included on the List of Re21 quired Benefits. 

22 ‘‘(d) EFFECTIVE DATES.— 

23 ‘‘(1) SMALL BUSINESS HEALTH PLANS.—With 

24 respect to health insurance provided to participating 

25 employers of small business health plans, the reVerDate Mar 15 2010 04:27 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00074 Fmt 6652 Sfmt 6201 E:\BILLS\H364.IH H364

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1 quirements of this part (concerning lower cost plans) 

2 shall apply beginning on the date that is 12 months 

3 after the date of enactment of this title. 

4 ‘‘(2) NON-ASSOCIATION COVERAGE.—With re5 spect to health insurance provided to groups or indi6 viduals other than participating employers of small 

7 business health plans, the requirements of this part 

8 shall apply beginning on the date that is 15 months 

9 after the date of enactment of this title. 

10 ‘‘(e) UPDATING OF LIST OF REQUIRED BENEFITS.— 

11 Not later than 2 years after the date on which the list 

12 of required benefits is issued under subsection (a), and 

13 every 2 years thereafter, the Secretary, in consultation 

14 with the National Association of Insurance Commis15 sioners, shall update the list based on changes in the laws 

16 and regulations of the States. The Secretary shall issue 

17 the updated list by regulation, and such updated list shall 

18 be effective upon the first plan year following the issuance 

19 of such regulation. 

20 ‘‘SEC. 3123. APPLICATION AND PREEMPTION. 

21 ‘‘(a) SUPERCEDING OF STATE LAW.— 

22 ‘‘(1) IN GENERAL.—This part shall supersede 

23 any and all State laws insofar as such laws relate to 

24 mandates relating to covered benefits, services, or 

25 categories of provider in the health insurance market 


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1 as applied to an eligible insurer, or health insurance 

2 coverage issued by an eligible insurer, including with 

3 respect to coverage issued to a small business health 

4 plan, in a nonadopting State. 

5 ‘‘(2) NONADOPTING STATES.—This part shall 

6 supersede any and all State laws of a nonadopting 

7 State (whether enacted prior to or after the date of 

8 enactment of this title) insofar as such laws— 

9 ‘‘(A) prohibit an eligible insurer from of10 fering, marketing, or implementing health in11 surance coverage consistent with the Benefit 

12 Choice Standards, as provided for in section 

13 3122(a); or 

14 ‘‘(B) have the effect of retaliating against 

15 or otherwise punishing in any respect an eligible 

16 insurer for offering, marketing, or imple17 menting health insurance coverage consistent 

18 with the Benefit Choice Standards. 

19 ‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 

20 ‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 

21 Subsection (a) shall not apply with respect to adopt22 ing States. 

23 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR24 ERS.—Subsection (a) shall not apply with respect to 

25 insurers that do not qualify as eligible insurers who 


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1 offer health insurance coverage in a nonadopting 

2 State. 

3 ‘‘(3) NONAPPLICATION WHERE OBTAINING RE4 LIEF UNDER STATE LAW.—Subsection (a)(1) shall 

5 not supercede any State law of a nonadopting State 

6 to the extent necessary to permit individuals or the 

7 insurance department of the State (or other State 

8 agency) to obtain relief under State law to require 

9 an eligible insurer to comply with the Benefit Choice 

10 Standards. 

11 ‘‘(4) NO EFFECT ON PREEMPTION.—In no case 

12 shall this part be construed to limit or affect in any 

13 manner the preemptive scope of sections 502 and 

14 514 of the Employee Retirement Income Security 

15 Act of 1974. In no case shall this part be construed 

16 to create any cause of action under Federal or State 

17 law or enlarge or affect any remedy available under 

18 the Employee Retirement Income Security Act of 

19 1974. 

20 ‘‘(5) PREEMPTION LIMITED TO BENEFITS.— 

21 Subsection (a) shall not preempt any State law that 

22 does not have a reference to or a connection with 

23 State mandates regarding covered benefits, services, 

24 or categories of providers that would otherwise apply 

25 to eligible insurers. 


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1 ‘‘SEC. 3124. CIVIL ACTIONS AND JURISDICTION. 

2 ‘‘(a) IN GENERAL.—The courts of the United States 

3 shall have exclusive jurisdiction over civil actions involving 

4 the interpretation of this part. 

5 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac6 tion in the district courts of the United States for injunc7 tive or other equitable relief against any officials or agents 

8 of a nonadopting State in connection with any conduct or 

9 action, or proposed conduct or action, by such officials or 

10 agents which violates, or which would if undertaken vio11 late, section 3123. 

12 ‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 

13 election of the eligible insurer, an action may be brought 

14 under subsection (b) directly in the United States Court 

15 of Appeals for the circuit in which the nonadopting State 

16 is located by the filing of a petition for review in such 

17 Court. 

18 ‘‘(d) EXPEDITED REVIEW.— 

19 ‘‘(1) DISTRICT COURT.—In the case of an ac20 tion brought in a district court of the United States 

21 under subsection (b), such court shall complete such 

22 action, including the issuance of a judgment, prior 

23 to the end of the 120-day period beginning on the 

24 date on which such action is filed, unless all parties 

25 to such proceeding agree to an extension of such pe26 riod. 


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1 ‘‘(2) COURT OF APPEALS.—In the case of an 

2 action brought directly in a United States Court of 

3 Appeal under subsection (c), or in the case of an ap4 peal of an action brought in a district court under 

5 subsection (b), such Court shall complete all action 

6 on the petition, including the issuance of a judg7 ment, prior to the end of the 60-day period begin8 ning on the date on which such petition is filed with 

9 the Court, unless all parties to such proceeding 

10 agree to an extension of such period. 

11 ‘‘(e) STANDARD OF REVIEW.—A court in an action 

12 filed under this section, shall render a judgment based on 

13 a review of the merits of all questions presented in such 

14 action and shall not defer to any conduct or action, or 

15 proposed conduct or action, of a nonadopting State. 

16 ‘‘SEC. 3125. RULES OF CONSTRUCTION. 

17 ‘‘(a) IN GENERAL.—Notwithstanding any other pro18 vision of Federal or State law, a health insurance issuer 

19 in an adopting State or an eligible insurer in a non-adopt20 ing State may amend its existing policies to be consistent 

21 with the terms of this subtitle (concerning rating and ben22 efits). 

23 ‘‘(b) HEALTH SAVINGS ACCOUNTS.—Nothing in this 

24 subtitle shall be construed to create any mandates for cov25 erage of benefits for HSA-qualified health plans that 


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1 would require reimbursements in violation of section 

2 223(c)(2) of the Internal Revenue Code of 1986.’’. 

3 TITLE II—TARGETED EFFORTS 

4 TO EXPAND ACCESS 

5 SEC. 211. EXTENDING COVERAGE OF DEPENDENTS. 

6 (a) EMPLOYEE RETIREMENT INCOME SECURITY ACT

7 OF 1974.— 

8 (1) IN GENERAL.—Part 7 of subtitle B of title 

9 I of the Employee Retirement Income Security Act 

10 of 1974 is amended by inserting after section 714 

11 the following new section: 

12 ‘‘SEC. 715. EXTENDING COVERAGE OF DEPENDENTS. 

13 ‘‘(a) IN GENERAL.—In the case of a group health 

14 plan, or health insurance coverage offered in connection 

15 with a group health plan, that treats as a beneficiary 

16 under the plan an individual who is a dependent child of 

17 a participant or beneficiary under the plan, the plan or 

18 coverage shall continue to treat the individual as a depend19 ent child without regard to the individual’s age until the 

20 individual turns 26 years of age. 

21 ‘‘(b) CONSTRUCTION.—Nothing in this section shall 

22 be construed as requiring a group health plan to provide 

23 benefits for dependent children as beneficiaries under the 

24 plan or to require a participant to elect coverage of de25 pendent children.’’. 


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1 (2) CLERICAL AMENDMENT.—The table of con2 tents of such Act is amended by inserting after the 

3 item relating to section 714 the following new item: 

‘‘Sec. 715. Extending coverage of dependents.’’. 

4 (b) PHSA.—Title XXVII of the Public Health Serv5 ice Act, as restored by section 2, is amended by inserting 

6 after section 2707 the following new section: 

7 ‘‘SEC. 2708. EXTENDING COVERAGE OF DEPENDENTS. 

8 ‘‘(a) IN GENERAL.—In the case of a group health 

9 plan, or health insurance coverage offered in connection 

10 with a group health plan, that treats as a beneficiary 

11 under the plan an individual who is a dependent child of 

12 a participant or beneficiary under the plan, the plan or 

13 coverage shall continue to treat the individual as a depend14 ent child without regard to the individual’s age until the 

15 individual turns 26 years of age. 

16 ‘‘(b) CONSTRUCTION.—Nothing in this section shall 

17 be construed as requiring a group health plan to provide 

18 benefits for dependent children as beneficiaries under the 

19 plan or to require a participant to elect coverage of de20 pendent children.’’. 

21 (c) IRC.— 

22 (1) IN GENERAL.—Subchapter B of chapter 

23 100 of the Internal Revenue Code of 1986 is amend24 ed by adding at the end the following new section: 


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1 ‘‘SEC. 9814. EXTENDING COVERAGE OF DEPENDENTS. 

2 ‘‘(a) IN GENERAL.—In the case of a group health 

3 plan that treats as a beneficiary under the plan an indi4 vidual who is a dependent child of a participant or bene5 ficiary under the plan, the plan shall continue to treat the 

6 individual as a dependent child without regard to the indi7 vidual’s age until the individual turns 26 years of age. 

8 ‘‘(b) CONSTRUCTION.—Nothing in this section shall 

9 be construed as requiring a group health plan to provide 

10 coverage for dependent children as beneficiaries under the 

11 plan or to require a participant to elect coverage of de12 pendent children.’’. 

13 (2) CLERICAL AMENDMENT.—The table of sec14 tions in such subchapter is amended by adding at 

15 the end the following new item: 

‘‘Sec. 9814. Extending coverage of dependents.’’. 

16 (d) EFFECTIVE DATE.—The amendments made by 

17 subsections (a), (b), and (c) shall apply to group health 

18 plans for plan years beginning more than 3 months after 

19 the date of the enactment of this Act and shall apply to 

20 individuals who are dependent children under a group 

21 health plan, or health insurance coverage offered in con22 nection with such a plan, on or after such date. 

23 (e) ADULT DEPENDENTS.— 

24 (1) EXCLUSION OF AMOUNTS EXPENDED FOR

25 MEDICAL CARE.—The first sentence of section 


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1 105(b) of the Internal Revenue Code of 1986 (relat2 ing to amounts expended for medical care) is amend3 ed— 

4 (A) by striking ‘‘and his dependents’’ and 

5 inserting ‘‘his dependents’’; and 

6 (B) by inserting before the period the fol7 lowing: ‘‘, and any child (as defined in section 

8 152(f)(1)) of the taxpayer who as of the end of 

9 the taxable year has not attained age 27’’. 

10 (2) SELF-EMPLOYED HEALTH INSURANCE DE11 DUCTION.—Section 162(l)(1) of such Code is 

12 amended to read as follows: 

13 ‘‘(1) ALLOWANCE OF DEDUCTION.—In the case 

14 of a taxpayer who is an employee within the mean15 ing of section 401(c)(1), there shall be allowed as a 

16 deduction under this section an amount equal to the 

17 amount paid during the taxable year for insurance 

18 which constitutes medical care for 

19 ‘‘(A) the taxpayer, 

20 ‘‘(B) the taxpayer’s spouse, 

21 ‘‘(C) the taxpayer’s dependents, and 

22 ‘‘(D) any child (as defined in section 

23 152(f)(1)) of the taxpayer who as of the end of 

24 the taxable year has not attained age 27.’’. 


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1 (3) COVERAGE UNDER SELF-EMPLOYED DEDUC2 TION.—Section 162(l)(2)(B) of such Code is amend3 ed by inserting ‘‘, or any dependent, or individual 

4 described in subparagraph (D) of paragraph (1) 

5 with respect to,’’ after ‘‘spouse of’’. 

6 (4) SICK AND ACCIDENT BENEFITS PROVIDED

7 TO MEMBERS OF A VOLUNTARY EMPLOYEES’ BENE8 FICIARY ASSOCIATION AND THEIR DEPENDENTS.— 

9 Section 501(c)(9) of such Code is amended by add10 ing at the end the following new sentence: ‘‘For pur11 poses of providing for the payment of sick and acci12 dent benefits to members of such an association and 

13 their dependents, the term ‘dependent’ shall include 

14 any individual who is a child (as defined in section 

15 152(f)(1)) of a member who as of the end of the cal16 endar year has not attained age 27.’’. 

17 (5) MEDICAL AND OTHER BENEFITS FOR RE18 TIRED EMPLOYEES.—Section 401(h) of such Code is 

19 amended by adding at the end the following: ‘‘For 

20 purposes of this subsection, the term ‘dependent’ 

21 shall include any individual who is a child (as de22 fined in section 152(f)(1)) of a retired employee who 

23 as of the end of the calendar year has not attained 

24 age 27.’’. 


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1 SEC. 212. PROHIBITING PREEXISTING CONDITION EXCLU2 SIONS FOR ENROLLEES UNDER AGE 19. 

3 (a) PHSA.—Section 2701(a) of the Public Health 

4 Service Act (42 U.S.C. 300gg(a)), as restored by section 

5 2, is amended— 

6 (1) in the matter preceding paragraph (1), by 

7 inserting ‘‘and the last sentence of this subsection’’ 

8 after ‘‘subsection (d)’’; and 

9 (2) by adding at the end the following new sen10 tence: 

11 ‘‘In the case of a participant or beneficiary who is under 

12 19 years of age, a group health plan and a health insur13 ance issuer offering group or individual health insurance 

14 coverage may not impose any preexisting condition exclu15 sion with respect to such plan or coverage.’’. 

16 (b) ERISA.—Section 701(a) of the Employee Retire17 ment Income Security Act of 1974, as restored by section 

18 2, is amended— 

19 (1) in the matter preceding paragraph (1), by 

20 inserting ‘‘and the last sentence of this subsection’’ 

21 after ‘‘subsection (d)’’; and 

22 (2) by adding at the end the following new sen23 tence: 

24 ‘‘In the case of a participant or beneficiary who is under 

25 19 years of age, a group health plan and a health insur26 ance issuer offering group or individual health insurance 


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1 coverage may not impose any preexisting condition exclu2 sion with respect to such plan or coverage.’’. 

3 (c) IRC.—Section 9801 of the Internal Revenue Code 

4 of 1986, as restored by section 2, is amended— 

5 (1) in the matter preceding paragraph (1), by 

6 inserting ‘‘and the last sentence of this subsection’’ 

7 after ‘‘subsection (d)’’; and 

8 (2) by adding at the end the following new sen9 tence: 

10 ‘‘In the case of a participant or beneficiary who is under 

11 19 years of age, a group health plan may not impose any 

12 preexisting condition exclusion with respect to such plan.’’. 

13 SEC. 213. HEALTH PLAN FINDERS. 

14 (a) STATE PLAN FINDERS.—Not later than 12 

15 months after the date of the enactment of this Act, each 

16 State may contract with a private entity to develop and 

17 operate a plan finder website (referred to in this section 

18 as a ‘‘State plan finder’’) which shall provide information 

19 to individuals in such State on plans of health insurance 

20 coverage that are available to individuals in such State (in 

21 this section referred to as a ‘‘health insurance plan’’). 

22 Such State may not operate a plan finder itself. 

23 (b) MULTI-STATE PLAN FINDERS.— 

24 (1) IN GENERAL.—A private entity may operate 

25 a multi-State finder that operates under this section 


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1 in the States involved in the same manner as a State 

2 plan finder would operate in a single State. 

3 (2) SHARING OF INFORMATION.—States shall 

4 regulate the manner in which data is shared between 

5 plan finders to ensure consistency and accuracy in 

6 the information about health insurance plans con7 tained in such finders. 

8 (c) REQUIREMENTS FOR PLAN FINDERS.—Each plan 

9 finder shall meet the following requirements: 

10 (1) The plan finder shall ensure that each 

11 health insurance plan in the plan finder meets the 

12 requirements for such plans under subsection (d). 

13 (2) The plan finder shall present complete in14 formation on the costs and benefits of health insur15 ance plans (including information on monthly pre16 mium, copayments, and deductibles) in a uniform 

17 manner that— 

18 (A) uses the standard definitions developed 

19 under paragraph (3); and 

20 (B) is designed to allow consumers to eas21 ily compare such plans. 

22 (3) The plan finder shall be available on the 

23 Internet and accessible to all individuals in the State 

24 or, in the case of a multi-State plan finder, in all 

25 States covered by the multi-State plan finder. 


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1 (4) The plan finder shall allow consumers to 

2 search and sort data on the health insurance plans 

3 in the plan finder on criteria such as coverage of 

4 specific benefits (such as coverage of disease man5 agement services or pediatric care services), as well 

6 as data available on quality. 

7 (5) The plan finder shall meet all relevant State 

8 laws and regulations, including laws and regulations 

9 related to the marketing of insurance products. In 

10 the case of a multi-State plan finder, the finder shall 

11 meet such laws and regulations for all of the States 

12 involved. 

13 (6) The plan finder shall meet solvency, finan14 cial, and privacy requirements established by the 

15 State or States in which the plan finder operates or 

16 the Secretary for multi-State finders. 

17 (7) The plan finder and the employees of the 

18 plan finder shall be appropriately licensed in the 

19 State or States in which the plan finder operates, if 

20 such licensure is required by such State or States. 

21 (8) Notwithstanding subsection (f)(1), the plan 

22 finder shall assist individuals who are eligible for the 

23 Medicaid program under title XIX of the Social Se24 curity Act or State Children’s Health Insurance Pro25 gram under title XXI of such Act by including inforVerDate Mar 15 2010 04:27 Jan 21, 2011 Jkt 099200 PO 00000 Frm 00088 Fmt 6652 Sfmt 6201 E:\BILLS\H364.IH H364

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1 mation on Medicaid options, eligibility, and how to 

2 enroll. 

3 (d) REQUIREMENTS FOR PLANS PARTICIPATING IN

4 A PLAN FINDER.— 

5 (1) IN GENERAL.—Each State shall ensure that 

6 health insurance plans participating in the State 

7 plan finder or in a multi-State plan finder meet the 

8 requirements of paragraph (2) (relating to adequacy 

9 of insurance coverage, consumer protection, and fi10 nancial strength). 

11 (2) SPECIFIC REQUIREMENTS.—In order to 

12 participate in a plan finder, a health insurance plan 

13 must meet all of the following requirements, as de14 termined by each State in which such plan operates: 

15 (A) The health insurance plan shall be ac16 tuarially sound. 

17 (B) The health insurance plan may not 

18 have a history of abusive policy rescissions. 

19 (C) The health insurance plan shall meet 

20 financial and solvency requirements. 

21 (D) The health insurance plan shall dis22 close— 

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1 ance, such as the payment of fees and 

2 commissions; and 

3 (ii) such arrangements may not be 

4 abusive. 

5 (E) The health insurance plan shall main6 tain electronic health records that comply with 

7 the requirements of the American Recovery and 

8 Reinvestment Act of 2009 (Public Law 111–5) 

9 related to electronic health records. 

10 (F) The health insurance plan shall make 

11 available to plan enrollees via the finder, wheth12 er by information provided to the finder or by 

13 a Web site link directing the enrollee from the 

14 finder to the health insurance plan Web site, 

15 data that includes the price and cost to the in16 dividual of services offered by a provider ac17 cording to the terms and conditions of the 

18 health plan. Data described in this paragraph is 

19 not made public by the finder, only made avail20 able to the individual once enrolled in the 

21 health plan. 

22 (e) PROHIBITIONS.— 

23 (1) DIRECT ENROLLMENT.—The State plan 

24 finder may not directly enroll individuals in health 

25 insurance plans. 


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1 (2) CONFLICTS OF INTEREST.— 

2 (A) COMPANIES.—A health insurance 

3 issuer offering a health insurance plan through 

4 a plan finder may not— 

5 (i) be the private entity developing 

6 and maintaining a plan finder under sub7 sections (a) and (b); or 

8 (ii) have an ownership interest in such 

9 private entity or in the plan finder. 

10 (B) INDIVIDUALS.—An individual em11 ployed by a health insurance issuer offering a 

12 health insurance plan through a plan finder 

13 may not serve as a director or officer for— 

14 (i) the private entity developing and 

15 maintaining a plan finder under sub16 sections (a) and (b); or 

17 (ii) the plan finder. 

18 (f) CONSTRUCTION.—Nothing in this section shall be 

19 construed to allow the Secretary authority to regulate ben20 efit packages or to prohibit health insurance brokers and 

21 agents from— 

22 (1) utilizing the plan finder for any purpose; or 

23 (2) marketing or offering health insurance 

24 products. 


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1 (g) PLAN FINDER DEFINED.—For purposes of this 

2 section, the term ‘‘plan finder’’ means a State plan finder 

3 under subsection (a) or a multi-State plan finder under 

4 subsection (b). 

5 (h) STATE DEFINED.—In this section, the term 

6 ‘‘State’’ has the meaning given such term for purposes of 

7 title XIX of the Social Security Act. 

8 TITLE III—EXPANDING CHOICES 

9 BY ALLOWING AMERICANS TO 

10 BUY HEALTH CARE COV11 ERAGE ACROSS STATE LINES 

12 SEC. 221. INTERSTATE PURCHASING OF HEALTH INSUR13 ANCE. 

14 (a) IN GENERAL.—Title XXVII of the Public Health 

15 Service Act (42 U.S.C. 300gg et seq.), as restored by sec16 tion 2, is amended by adding at the end the following new 

17 part: 

18 ‘‘PART D—COOPERATIVE GOVERNING OF 

19 INDIVIDUAL HEALTH INSURANCE COVERAGE 

20 ‘‘SEC. 2795. DEFINITIONS. 

21 ‘‘In this part: 

22 ‘‘(1) PRIMARY STATE.—The term ‘primary 

23 State’ means, with respect to individual health insur24 ance coverage offered by a health insurance issuer, 

25 the State designated by the issuer as the State 


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1 whose covered laws shall govern the health insurance 

2 issuer in the sale of such coverage under this part. 

3 An issuer, with respect to a particular policy, may 

4 only designate one such State as its primary State 

5 with respect to all such coverage it offers. Such an 

6 issuer may not change the designated primary State 

7 with respect to individual health insurance coverage 

8 once the policy is issued, except that such a change 

9 may be made upon renewal of the policy. With re10 spect to such designated State, the issuer is deemed 

11 to be doing business in that State. 

12 ‘‘(2) SECONDARY STATE.—The term ‘secondary 

13 State’ means, with respect to individual health insur14 ance coverage offered by a health insurance issuer, 

15 any State that is not the primary State. In the case 

16 of a health insurance issuer that is selling a policy 

17 in, or to a resident of, a secondary State, the issuer 

18 is deemed to be doing business in that secondary 

19 State. 

20 ‘‘(3) HEALTH INSURANCE ISSUER.—The term 

21 ‘health insurance issuer’ has the meaning given such 

22 term in section 2791(b)(2), except that such an 

23 issuer must be licensed in the primary State and be 

24 qualified to sell individual health insurance coverage 

25 in that State. 


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1 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV2 ERAGE.—The term ‘individual health insurance cov3 erage’ means health insurance coverage offered in 

4 the individual market, as defined in section 

5 2791(e)(1). 

6 ‘‘(5) APPLICABLE STATE AUTHORITY.—The 

7 term ‘applicable State authority’ means, with respect 

8 to a health insurance issuer in a State, the State in9 surance commissioner or official or officials des10 ignated by the State to enforce the requirements of 

11 this title for the State with respect to the issuer. 

12 ‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 

13 term ‘hazardous financial condition’ means that, 

14 based on its present or reasonably anticipated finan15 cial condition, a health insurance issuer is unlikely 

16 to be able— 

17 ‘‘(A) to meet obligations to policyholders 

18 with respect to known claims and reasonably 

19 anticipated claims; or 

20 ‘‘(B) to pay other obligations in the normal 

21 course of business. 

22 ‘‘(7) COVERED LAWS.— 

23 ‘‘(A) IN GENERAL.—The term ‘covered 

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1 ments, and orders governing the insurance busi2 ness pertaining to— 

3 ‘‘(i) individual health insurance cov4 erage issued by a health insurance issuer; 

5 ‘‘(ii) the offer, sale, rating (including 

6 medical underwriting), renewal, and 

7 issuance of individual health insurance cov8 erage to an individual; 

9 ‘‘(iii) the provision to an individual in 

10 relation to individual health insurance cov11 erage of health care and insurance related 

12 services; 

13 ‘‘(iv) the provision to an individual in 

14 relation to individual health insurance cov15 erage of management, operations, and in16 vestment activities of a health insurance 

17 issuer; and 

18 ‘‘(v) the provision to an individual in 

19 relation to individual health insurance cov20 erage of loss control and claims adminis21 tration for a health insurance issuer with 

22 respect to liability for which the issuer pro23 vides insurance. 

24 ‘‘(B) EXCEPTION.—Such term does not in25 clude any law, rule, regulation, agreement, or 


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1 order governing the use of care or cost manage2 ment techniques, including any requirement re3 lated to provider contracting, network access or 

4 adequacy, health care data collection, or quality 

5 assurance. 

6 ‘‘(8) STATE.—The term ‘State’ means the 50 

7 States and includes the District of Columbia, Puerto 

8 Rico, the Virgin Islands, Guam, American Samoa, 

9 and the Northern Mariana Islands. 

10 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC11 TICES.—The term ‘unfair claims settlement prac12 tices’ means only the following practices: 

13 ‘‘(A) Knowingly misrepresenting to claim14 ants and insured individuals relevant facts or 

15 policy provisions relating to coverage at issue. 

16 ‘‘(B) Failing to acknowledge with reason17 able promptness pertinent communications with 

18 respect to claims arising under policies. 

19 ‘‘(C) Failing to adopt and implement rea20 sonable standards for the prompt investigation 

21 and settlement of claims arising under policies. 

22 ‘‘(D) Failing to effectuate prompt, fair, 

23 and equitable settlement of claims submitted in 

24 which liability has become reasonably clear. 


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1 ‘‘(E) Refusing to pay claims without con2 ducting a reasonable investigation. 

3 ‘‘(F) Failing to affirm or deny coverage of 

4 claims within a reasonable period of time after 

5 having completed an investigation related to 

6 those claims. 

7 ‘‘(G) A pattern or practice of compelling 

8 insured individuals or their beneficiaries to in9 stitute suits to recover amounts due under its 

10 policies by offering substantially less than the 

11 amounts ultimately recovered in suits brought 

12 by them. 

13 ‘‘(H) A pattern or practice of attempting 

14 to settle or settling claims for less than the 

15 amount that a reasonable person would believe 

16 the insured individual or his or her beneficiary 

17 was entitled by reference to written or printed 

18 advertising material accompanying or made 

19 part of an application. 

20 ‘‘(I) Attempting to settle or settling claims 

21 on the basis of an application that was materi22 ally altered without notice to, or knowledge or 

23 consent of, the insured. 

24 ‘‘(J) Failing to provide forms necessary to 

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1 quests with reasonable explanations regarding 

2 their use. 

3 ‘‘(K) Attempting to cancel a policy in less 

4 time than that prescribed in the policy or by the 

5 law of the primary State. 

6 ‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 

7 and abuse’ means an act or omission committed by 

8 a person who, knowingly and with intent to defraud, 

9 commits, or conceals any material information con10 cerning, one or more of the following: 

11 ‘‘(A) Presenting, causing to be presented 

12 or preparing with knowledge or belief that it 

13 will be presented to or by an insurer, a rein14 surer, broker or its agent, false information as 

15 part of, in support of or concerning a fact ma16 terial to one or more of the following: 

17 ‘‘(i) An application for the issuance or 

18 renewal of an insurance policy or reinsur19 ance contract. 

20 ‘‘(ii) The rating of an insurance policy 

21 or reinsurance contract. 

22 ‘‘(iii) A claim for payment or benefit 

23 pursuant to an insurance policy or reinsur24 ance contract. 


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1 ‘‘(iv) Premiums paid on an insurance 

2 policy or reinsurance contract. 

3 ‘‘(v) Payments made in accordance 

4 with the terms of an insurance policy or 

5 reinsurance contract. 

6 ‘‘(vi) A document filed with the com7 missioner or the chief insurance regulatory 

8 official of another jurisdiction. 

9 ‘‘(vii) The financial condition of an in10 surer or reinsurer. 

11 ‘‘(viii) The formation, acquisition, 

12 merger, reconsolidation, dissolution or 

13 withdrawal from one or more lines of in14 surance or reinsurance in all or part of a 

15 State by an insurer or reinsurer. 

16 ‘‘(ix) The issuance of written evidence 

17 of insurance. 

18 ‘‘(x) The reinstatement of an insur19 ance policy. 

20 ‘‘(B) Solicitation or acceptance of new or 

21 renewal insurance risks on behalf of an insurer 

22 reinsurer or other person engaged in the busi23 ness of insurance by a person who knows or 

24 should know that the insurer or other person 


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1 responsible for the risk is insolvent at the time 

2 of the transaction. 

3 ‘‘(C) Transaction of the business of insur4 ance in violation of laws requiring a license, cer5 tificate of authority or other legal authority for 

6 the transaction of the business of insurance. 

7 ‘‘(D) Attempt to commit, aiding or abet8 ting in the commission of, or conspiracy to com9 mit the acts or omissions specified in this para10 graph. 

11 ‘‘SEC. 2796. APPLICATION OF LAW. 

12 ‘‘(a) IN GENERAL.—The covered laws of the primary 

13 State shall apply to individual health insurance coverage 

14 offered by a health insurance issuer in the primary State 

15 and in any secondary State, but only if the coverage and 

16 issuer comply with the conditions of this section with re17 spect to the offering of coverage in any secondary State. 

18 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC19 ONDARY STATE.—Except as provided in this section, a 

20 health insurance issuer with respect to its offer, sale, rat21 ing (including medical underwriting), renewal, and 

22 issuance of individual health insurance coverage in any 

23 secondary State is exempt from any covered laws of the 

24 secondary State (and any rules, regulations, agreements, 


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1 or orders sought or issued by such State under or related 

2 to such covered laws) to the extent that such laws would— 

3 ‘‘(1) make unlawful, or regulate, directly or in4 directly, the operation of the health insurance issuer 

5 operating in the secondary State, except that any 

6 secondary State may require such an issuer— 

7 ‘‘(A) to pay, on a nondiscriminatory basis, 

8 applicable premium and other taxes (including 

9 high risk pool assessments) which are levied on 

10 insurers and surplus lines insurers, brokers, or 

11 policyholders under the laws of the State; 

12 ‘‘(B) to register with and designate the 

13 State insurance commissioner as its agent solely 

14 for the purpose of receiving service of legal doc15 uments or process; 

16 ‘‘(C) to submit to an examination of its fi17 nancial condition by the State insurance com18 missioner in any State in which the issuer is 

19 doing business to determine the issuer’s finan20 cial condition, if— 

21 ‘‘(i) the State insurance commissioner 

22 of the primary State has not done an ex23 amination within the period recommended 

24 by the National Association of Insurance 

25 Commissioners; and 


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1 ‘‘(ii) any such examination is con2 ducted in accordance with the examiners’ 

3 handbook of the National Association of 

4 Insurance Commissioners and is coordi5 nated to avoid unjustified duplication and 

6 unjustified repetition; 

7 ‘‘(D) to comply with a lawful order 

8 issued— 

9 ‘‘(i) in a delinquency proceeding com10 menced by the State insurance commis11 sioner if there has been a finding of finan12 cial impairment under subparagraph (C); 

13 or 

14 ‘‘(ii) in a voluntary dissolution pro15 ceeding; 

16 ‘‘(E) to comply with an injunction issued 

17 by a court of competent jurisdiction, upon a pe18 tition by the State insurance commissioner al19 leging that the issuer is in hazardous financial 

20 condition; 

21 ‘‘(F) to participate, on a nondiscriminatory 

22 basis, in any insurance insolvency guaranty as23 sociation or similar association to which a 

24 health insurance issuer in the State is required 

25 to belong; 


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1 ‘‘(G) to comply with any State law regard2 ing fraud and abuse (as defined in section 

3 2795(10)), except that if the State seeks an in4 junction regarding the conduct described in this 

5 subparagraph, such injunction must be obtained 

6 from a court of competent jurisdiction; 

7 ‘‘(H) to comply with any State law regard8 ing unfair claims settlement practices (as de9 fined in section 2795(9)); or 

10 ‘‘(I) to comply with the applicable require11 ments for independent review under section 

12 2798 with respect to coverage offered in the 

13 State; 

14 ‘‘(2) require any individual health insurance 

15 coverage issued by the issuer to be countersigned by 

16 an insurance agent or broker residing in that Sec17 ondary State; or 

18 ‘‘(3) otherwise discriminate against the issuer 

19 issuing insurance in both the primary State and in 

20 any secondary State. 

21 ‘‘(c) CLEAR AND CONSPICUOUS DISCLOSURE.—A 

22 health insurance issuer shall provide the following notice, 

23 in 12-point bold type, in any insurance coverage offered 

24 in a secondary State under this part by such a health in25 surance issuer and at renewal of the policy, with the 5 


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1 blank spaces therein being appropriately filled with the 

2 name of the health insurance issuer, the name of primary 

3 State, the name of the secondary State, the name of the 

4 secondary State, and the name of the secondary State, re5 spectively, for the coverage concerned: 

6 THIS POLICY IS ISSUED BY lllll AND 

7 IS GOVERNED BY THE LAWS AND REGULA8 TIONS OF THE STATE OF lllll, AND IT 

9 HAS MET ALL THE LAWS OF THAT STATE 

10 AS DETERMINED BY THAT STATE’S DE11 PARTMENT OF INSURANCE. THIS POLICY 

12 MAY BE LESS EXPENSIVE THAN OTHERS 

13 BECAUSE IT IS NOT SUBJECT TO ALL OF 

14 THE INSURANCE LAWS AND REGULATIONS 

15 OF THE STATE OF lllll, INCLUDING 

16 COVERAGE OF SOME SERVICES OR BENE17 FITS MANDATED BY THE LAW OF THE 

18 STATE OF lllll. ADDITIONALLY, THIS 

19 POLICY IS NOT SUBJECT TO ALL OF THE 

20 CONSUMER PROTECTION LAWS OR RE21 STRICTIONS ON RATE CHANGES OF THE 

22 STATE OF lllll. AS WITH ALL INSUR23 ANCE PRODUCTS, BEFORE PURCHASING 

24 THIS POLICY, YOU SHOULD CAREFULLY 

25 REVIEW THE POLICY AND DETERMINE 


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1 WHAT HEALTH CARE SERVICES THE POL2 ICY COVERS AND WHAT BENEFITS IT PRO3 VIDES, INCLUDING ANY EXCLUSIONS, LIM4 ITATIONS, OR CONDITIONS FOR SUCH 

5 SERVICES OR BENEFITS.’’. 

6 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

7 AND PREMIUM INCREASES.— 

8 ‘‘(1) IN GENERAL.—For purposes of this sec9 tion, a health insurance issuer that provides indi10 vidual health insurance coverage to an individual 

11 under this part in a primary or secondary State may 

12 not upon renewal— 

13 ‘‘(A) move or reclassify the individual in14 sured under the health insurance coverage from 

15 the class such individual is in at the time of 

16 issue of the contract based on the health-status 

17 related factors of the individual; or 

18 ‘‘(B) increase the premiums assessed the 

19 individual for such coverage based on a health 

20 status-related factor or change of a health sta21 tus-related factor or the past or prospective 

22 claim experience of the insured individual. 

23 ‘‘(2) CONSTRUCTION.—Nothing in paragraph 

24 (1) shall be construed to prohibit a health insurance 

25 issuer— 


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1 ‘‘(A) from terminating or discontinuing 

2 coverage or a class of coverage in accordance 

3 with subsections (b) and (c) of section 2742; 

4 ‘‘(B) from raising premium rates for all 

5 policy holders within a class based on claims ex6 perience; 

7 ‘‘(C) from changing premiums or offering 

8 discounted premiums to individuals who engage 

9 in wellness activities at intervals prescribed by 

10 the issuer, if such premium changes or incen11 tives— 

12 ‘‘(i) are disclosed to the consumer in 

13 the insurance contract; 

14 ‘‘(ii) are based on specific wellness ac15 tivities that are not applicable to all indi16 viduals; and 

17 ‘‘(iii) are not obtainable by all individ18 uals to whom coverage is offered; 

19 ‘‘(D) from reinstating lapsed coverage; or 

20 ‘‘(E) from retroactively adjusting the rates 

21 charged an insured individual if the initial rates 

22 were set based on material misrepresentation by 

23 the individual at the time of issue. 

24 ‘‘(e) PRIOR OFFERING OF POLICY IN PRIMARY

25 STATE.—A health insurance issuer may not offer for sale 


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1 individual health insurance coverage in a secondary State 

2 unless that coverage is currently offered for sale in the 

3 primary State. 

4 ‘‘(f) LICENSING OF AGENTS OR BROKERS FOR

5 HEALTH INSURANCE ISSUERS.—Any State may require 

6 that a person acting, or offering to act, as an agent or 

7 broker for a health insurance issuer with respect to the 

8 offering of individual health insurance coverage obtain a 

9 license from that State, with commissions or other com10 pensation subject to the provisions of the laws of that 

11 State, except that a State may not impose any qualifica12 tion or requirement which discriminates against a non13 resident agent or broker. 

14 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN15 SURANCE COMMISSIONER.—Each health insurance issuer 

16 issuing individual health insurance coverage in both pri17 mary and secondary States shall submit— 

18 ‘‘(1) to the insurance commissioner of each 

19 State in which it intends to offer such coverage, be20 fore it may offer individual health insurance cov21 erage in such State— 

22 ‘‘(A) a copy of the plan of operation or fea23 sibility study or any similar statement of the 

24 policy being offered and its coverage (which 


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1 shall include the name of its primary State and 

2 its principal place of business); 

3 ‘‘(B) written notice of any change in its 

4 designation of its primary State; and 

5 ‘‘(C) written notice from the issuer of the 

6 issuer’s compliance with all the laws of the pri7 mary State; and 

8 ‘‘(2) to the insurance commissioner of each sec9 ondary State in which it offers individual health in10 surance coverage, a copy of the issuer’s quarterly fi11 nancial statement submitted to the primary State, 

12 which statement shall be certified by an independent 

13 public accountant and contain a statement of opin14 ion on loss and loss adjustment expense reserves 

15 made by— 

16 ‘‘(A) a member of the American Academy 

17 of Actuaries; or 

18 ‘‘(B) a qualified loss reserve specialist. 

19 ‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 

20 Nothing in this section shall be construed to affect the 

21 authority of any Federal or State court to enjoin— 

22 ‘‘(1) the solicitation or sale of individual health 

23 insurance coverage by a health insurance issuer to 

24 any person or group who is not eligible for such in25 surance; or 


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1 ‘‘(2) the solicitation or sale of individual health 

2 insurance coverage that violates the requirements of 

3 the law of a secondary State which are described in 

4 subparagraphs (A) through (H) of section 

5 2796(b)(1). 

6 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD7 MINISTRATIVE ACTION.—Nothing in this section shall be 

8 construed to affect the authority of any State to enjoin 

9 conduct in violation of that State’s laws described in sec10 tion 2796(b)(1). 

11 ‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 

12 ‘‘(1) IN GENERAL.—Subject to the provisions of 

13 subsection (b)(1)(G) (relating to injunctions) and 

14 paragraph (2), nothing in this section shall be con15 strued to affect the authority of any State to make 

16 use of any of its powers to enforce the laws of such 

17 State with respect to which a health insurance issuer 

18 is not exempt under subsection (b). 

19 ‘‘(2) COURTS OF COMPETENT JURISDICTION.— 

20 If a State seeks an injunction regarding the conduct 

21 described in paragraphs (1) and (2) of subsection 

22 (h), such injunction must be obtained from a Fed23 eral or State court of competent jurisdiction. 


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1 ‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 

2 section shall affect the authority of any State to bring ac3 tion in any Federal or State court. 

4 ‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 

5 this section shall be construed to affect the applicability 

6 of State laws generally applicable to persons or corpora7 tions. 

8 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

9 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

10 health insurance issuer is offering coverage in a primary 

11 State that does not accommodate residents of secondary 

12 States or does not provide a working mechanism for resi13 dents of a secondary State, and the issuer is offering cov14 erage under this part in such secondary State which has 

15 not adopted a qualified high risk pool as its acceptable 

16 alternative mechanism (as defined in section 2744(c)(2)), 

17 the issuer shall, with respect to any individual health in18 surance coverage offered in a secondary State under this 

19 part, comply with the guaranteed availability requirements 

20 for eligible individuals in section 2741. 

21 ‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 

22 BEFORE ISSUER MAY SELL INTO SECONDARY 

23 STATES. 

24 ‘‘A health insurance issuer may not offer, sell, or 

25 issue individual health insurance coverage in a secondary 


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1 State if the State insurance commissioner does not use 

2 a risk-based capital formula for the determination of cap3 ital and surplus requirements for all health insurance 

4 issuers. 

5 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE6 DURES. 

7 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur8 ance issuer may not offer, sell, or issue individual health 

9 insurance coverage in a secondary State under the provi10 sions of this title unless— 

11 ‘‘(1) both the secondary State and the primary 

12 State have legislation or regulations in place estab13 lishing an independent review process for individuals 

14 who are covered by individual health insurance cov15 erage, or 

16 ‘‘(2) in any case in which the requirements of 

17 subparagraph (A) are not met with respect to the ei18 ther of such States, the issuer provides an inde19 pendent review mechanism substantially identical (as 

20 determined by the applicable State authority of such 

21 State) to that prescribed in the ‘Health Carrier Ex22 ternal Review Model Act’ of the National Association 

23 of Insurance Commissioners for all individuals who 

24 purchase insurance coverage under the terms of this 

25 part, except that, under such mechanism, the review 


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1 is conducted by an independent medical reviewer, or 

2 a panel of such reviewers, with respect to whom the 

3 requirements of subsection (b) are met. 

4 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

5 REVIEWERS.—In the case of any independent review 

6 mechanism referred to in subsection (a)(2)— 

7 ‘‘(1) IN GENERAL.—In referring a denial of a 

8 claim to an independent medical reviewer, or to any 

9 panel of such reviewers, to conduct independent 

10 medical review, the issuer shall ensure that— 

11 ‘‘(A) each independent medical reviewer 

12 meets the qualifications described in paragraphs 

13 (2) and (3); 

14 ‘‘(B) with respect to each review, each re15 viewer meets the requirements of paragraph (4) 

16 and the reviewer, or at least 1 reviewer on the 

17 panel, meets the requirements described in 

18 paragraph (5); and 

19 ‘‘(C) compensation provided by the issuer 

20 to each reviewer is consistent with paragraph 

21 (6). 

22 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde23 pendent medical reviewer shall be a physician 

24 (allopathic or osteopathic) or health care profes25 sional who— 


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1 ‘‘(A) is appropriately credentialed or li2 censed in 1 or more States to deliver health 

3 care services; and 

4 ‘‘(B) typically treats the condition, makes 

5 the diagnosis, or provides the type of treatment 

6 under review. 

7 ‘‘(3) INDEPENDENCE.— 

8 ‘‘(A) IN GENERAL.—Subject to subpara9 graph (B), each independent medical reviewer 

10 in a case shall— 

11 ‘‘(i) not be a related party (as defined 

12 in paragraph (7)); 

13 ‘‘(ii) not have a material familial, fi14 nancial, or professional relationship with 

15 such a party; and 

16 ‘‘(iii) not otherwise have a conflict of 

17 interest with such a party (as determined 

18 under regulations). 

19 ‘‘(B) EXCEPTION.—Nothing in subpara20 graph (A) shall be construed to— 

21 ‘‘(i) prohibit an individual, solely on 

22 the basis of affiliation with the issuer, 

23 from serving as an independent medical re24 viewer if— 


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1 ‘‘(I) a non-affiliated individual is 

2 not reasonably available; 

3 ‘‘(II) the affiliated individual is 

4 not involved in the provision of items 

5 or services in the case under review; 

6 ‘‘(III) the fact of such an affili7 ation is disclosed to the issuer and the 

8 enrollee (or authorized representative) 

9 and neither party objects; and 

10 ‘‘(IV) the affiliated individual is 

11 not an employee of the issuer and 

12 does not provide services exclusively or 

13 primarily to or on behalf of the issuer; 

14 ‘‘(ii) prohibit an individual who has 

15 staff privileges at the institution where the 

16 treatment involved takes place from serv17 ing as an independent medical reviewer 

18 merely on the basis of such affiliation if 

19 the affiliation is disclosed to the issuer and 

20 the enrollee (or authorized representative), 

21 and neither party objects; or 

22 ‘‘(iii) prohibit receipt of compensation 

23 by an independent medical reviewer from 

24 an entity if the compensation is provided 

25 consistent with paragraph (6). 


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1 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

2 IN SAME FIELD.— 

3 ‘‘(A) IN GENERAL.—In a case involving 

4 treatment, or the provision of items or serv5 ices— 

6 ‘‘(i) by a physician, a reviewer shall be 

7 a practicing physician (allopathic or osteo8 pathic) of the same or similar specialty, as 

9 a physician who, acting within the appro10 priate scope of practice within the State in 

11 which the service is provided or rendered, 

12 typically treats the condition, makes the 

13 diagnosis, or provides the type of treat14 ment under review; or 

15 ‘‘(ii) by a non-physician health care 

16 professional, the reviewer, or at least 1 

17 member of the review panel, shall be a 

18 practicing non-physician health care pro19 fessional of the same or similar specialty 

20 as the non-physician health care profes21 sional who, acting within the appropriate 

22 scope of practice within the State in which 

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1 nosis, or provides the type of treatment 

2 under review. 

3 ‘‘(B) PRACTICING DEFINED.—For pur4 poses of this paragraph, the term ‘practicing’ 

5 means, with respect to an individual who is a 

6 physician or other health care professional, that 

7 the individual provides health care services to 

8 individual patients on average at least 2 days 

9 per week. 

10 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 

11 external review relating to a child, a reviewer shall 

12 have expertise under paragraph (2) in pediatrics. 

13 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA14 TION.—Compensation provided by the issuer to an 

15 independent medical reviewer in connection with a 

16 review under this section shall— 

17 ‘‘(A) not exceed a reasonable level; and 

18 ‘‘(B) not be contingent on the decision ren19 dered by the reviewer. 

20 ‘‘(7) RELATED PARTY DEFINED.—For purposes 

21 of this section, the term ‘related party’ means, with 

22 respect to a denial of a claim under a coverage relat23 ing to an enrollee, any of the following: 

24 ‘‘(A) The issuer involved, or any fiduciary, 

25 officer, director, or employee of the issuer. 


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1 ‘‘(B) The enrollee (or authorized represent2 ative). 

3 ‘‘(C) The health care professional that pro4 vides the items or services involved in the de5 nial. 

6 ‘‘(D) The institution at which the items or 

7 services (or treatment) involved in the denial 

8 are provided. 

9 ‘‘(E) The manufacturer of any drug or 

10 other item that is included in the items or serv11 ices involved in the denial. 

12 ‘‘(F) Any other party determined under 

13 any regulations to have a substantial interest in 

14 the denial involved. 

15 ‘‘(8) DEFINITIONS.—For purposes of this sub16 section: 

17 ‘‘(A) ENROLLEE.—The term ‘enrollee’ 

18 means, with respect to health insurance cov19 erage offered by a health insurance issuer, an 

20 individual enrolled with the issuer to receive 

21 such coverage. 

22 ‘‘(B) HEALTH CARE PROFESSIONAL.—The 

23 term ‘health care professional’ means an indi24 vidual who is licensed, accredited, or certified 

25 under State law to provide specified health care 


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1 services and who is operating within the scope 

2 of such licensure, accreditation, or certification. 

3 ‘‘SEC. 2799. ENFORCEMENT. 

4 ‘‘(a) IN GENERAL.—Subject to subsection (b), with 

5 respect to specific individual health insurance coverage the 

6 primary State for such coverage has sole jurisdiction to 

7 enforce the primary State’s covered laws in the primary 

8 State and any secondary State. 

9 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 

10 subsection (a) shall be construed to affect the authority 

11 of a secondary State to enforce its laws as set forth in 

12 the exception specified in section 2796(b)(1). 

13 ‘‘(c) COURT INTERPRETATION.—In reviewing action 

14 initiated by the applicable secondary State authority, the 

15 court of competent jurisdiction shall apply the covered 

16 laws of the primary State. 

17 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 

18 of individual health insurance coverage offered in a sec19 ondary State that fails to comply with the covered laws 

20 of the primary State, the applicable State authority of the 

21 secondary State may notify the applicable State authority 

22 of the primary State.’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 subsection (a) shall apply to individual health insurance 


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1 coverage offered, issued, or sold after the date that is one 

2 year after the date of the enactment of this Act. 

3 (c) GAO ONGOING STUDY AND REPORTS.— 

4 (1) STUDY.—The Comptroller General of the 

5 United States shall conduct an ongoing study con6 cerning the effect of the amendment made by sub7 section (a) on— 

8 (A) the number of uninsured and under-in9 sured; 

10 (B) the availability and cost of health in11 surance policies for individuals with preexisting 

12 medical conditions; 

13 (C) the availability and cost of health in14 surance policies generally; 

15 (D) the elimination or reduction of dif16 ferent types of benefits under health insurance 

17 policies offered in different States; and 

18 (E) cases of fraud or abuse relating to 

19 health insurance coverage offered under such 

20 amendment and the resolution of such cases. 

21 (2) ANNUAL REPORTS.—The Comptroller Gen22 eral shall submit to Congress an annual report, after 

23 the end of each of the 5 years following the effective 

24 date of the amendment made by subsection (a), on 

25 the ongoing study conducted under paragraph (1). 


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1 TITLE IV—IMPROVING HEALTH 

2 SAVINGS ACCOUNTS 

3 SEC. 231. HSA FUNDS FOR PREMIUMS FOR HIGH DEDUCT4 IBLE HEALTH PLANS. 

5 (a) IN GENERAL.—Subparagraph (C) of section 

6 223(d)(2) of the Internal Revenue Code of 1986, as re7 stored by section 2, is amended by striking ‘‘or’’ at the 

8 end of clause (iii), by striking the period at the end of 

9 clause (iv) and inserting ‘‘, or’’, and by adding at the end 

10 the following: 

11 ‘‘(v) a high deductible health plan if— 

12 ‘‘(I) such plan is not offered in 

13 connection with a group health plan, 

14 ‘‘(II) no portion of any premium 

15 (within the meaning of applicable pre16 mium under section 4980B(f)(4)) for 

17 such plan is excludable from gross in18 come under section 106, and 

19 ‘‘(III) the account beneficiary 

20 demonstrates, using procedures 

21 deemed appropriate by the Secretary, 

22 that after payment of the premium 

23 for such insurance the balance in the 

24 health savings account is at least 

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1 fect under subsection (c)(2)(A)(i) 

2 which is applicable to such plan.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 subsection (a) shall apply to premiums for a high deduct5 ible health plan for periods beginning after December 31, 

6 2011. 

7 SEC. 232. REQUIRING GREATER COORDINATION BETWEEN 

8 HDHP ADMINISTRATORS AND HSA ACCOUNT 

9 ADMINISTRATORS SO THAT ENROLLEES CAN 

10 ENROLL IN BOTH AT THE SAME TIME. 

11 The Secretary of the Treasury, through the issuance 

12 of regulations or other guidance, shall encourage adminis13 trators of health plans and trustees of health savings ac14 counts to provide for simultaneous enrollment in high de15 ductible health plans and setup of health savings accounts. 

16 SEC. 233. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

17 INCURRED BEFORE ESTABLISHMENT OF AC18 COUNT. 

19 (a) IN GENERAL.—Subsection (d) of section 223 of 

20 the Internal Revenue Code of 1986, as restored by section 

21 2, is amended by redesignating paragraph (4) as para22 graph (5) and by inserting after paragraph (3) the fol23 lowing new paragraph: 


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1 ‘‘(4) CERTAIN MEDICAL EXPENSES INCURRED

2 BEFORE ESTABLISHMENT OF ACCOUNT TREATED AS

3 QUALIFIED.— 

4 ‘‘(A) IN GENERAL.—For purposes of para5 graph (2), an expense shall not fail to be treat6 ed as a qualified medical expense solely because 

7 such expense was incurred before the establish8 ment of the health savings account if such ex9 pense was incurred during the 60-day period 

10 beginning on the date on which the high de11 ductible health plan is first effective. 

12 ‘‘(B) SPECIAL RULES.—For purposes of 

13 subparagraph (A)— 

14 ‘‘(i) an individual shall be treated as 

15 an eligible individual for any portion of a 

16 month for which the individual is described 

17 in subsection (c)(1), determined without 

18 regard to whether the individual is covered 

19 under a high deductible health plan on the 

20 1st day of such month, and 

21 ‘‘(ii) the effective date of the health 

22 savings account is deemed to be the date 

23 on which the high deductible health plan is 

24 first effective after the date of the enact25 ment of this paragraph.’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply with respect to insurance pur3 chased after the date of the enactment of this Act in tax4 able years beginning after such date. 

5 TITLE V—TAX–RELATED HEALTH 

6 INCENTIVES 

7 SEC. 241. SECA TAX DEDUCTION FOR HEALTH INSURANCE 

8 COSTS. 

9 (a) IN GENERAL.—Subsection (l) of section 162 of 

10 the Internal Revenue Code of 1986 (relating to special 

11 rules for health insurance costs of self-employed individ12 uals) is amended by striking paragraph (4) and by redes13 ignating paragraph (5) as paragraph (4). 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2010. 

17 SEC. 242. DEDUCTION FOR QUALIFIED HEALTH INSURANCE 

18 COSTS OF INDIVIDUALS. 

19 (a) IN GENERAL.—Part VII of subchapter B of chap20 ter 1 of the Internal Revenue Code of 1986 (relating to 

21 additional itemized deductions for individuals) is amended 

22 by redesignating section 224 as section 225 and by insert23 ing after section 223 the following new section: 


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1 ‘‘SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE. 

2 ‘‘(a) IN GENERAL.—In the case of an individual, 

3 there shall be allowed as a deduction an amount equal to 

4 the amount paid during the taxable year for coverage for 

5 the taxpayer, his spouse, and dependents under qualified 

6 health insurance. 

7 ‘‘(b) QUALIFIED HEALTH INSURANCE.—For pur8 poses of this section, the term ‘qualified health insurance’ 

9 means insurance which constitutes medical care, other 

10 than insurance substantially all of the coverage of which 

11 is of excepted benefits described in section 9832(c). 

12 ‘‘(c) SPECIAL RULES.— 

13 ‘‘(1) COORDINATION WITH MEDICAL DEDUC14 TION, ETC.—Any amount paid by a taxpayer for in15 surance to which subsection (a) applies shall not be 

16 taken into account in computing the amount allow17 able to the taxpayer as a deduction under section 

18 162(l) or 213(a). Any amount taken into account in 

19 determining the credit allowed under section 35 shall 

20 not be taken into account for purposes of this sec21 tion. 

22 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM23 PLOYMENT TAX PURPOSES.—The deduction allow24 able by reason of this section shall not be taken into 

25 account in determining an individual’s net earnings 


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1 from self-employment (within the meaning of section 

2 1402(a)) for purposes of chapter 2.’’. 

3 (b) DEDUCTION ALLOWED IN COMPUTING AD4 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 

5 such Code is amended by inserting before the last sentence 

6 the following new paragraph: 

7 ‘‘(22) COSTS OF QUALIFIED HEALTH INSUR8 ANCE.—The deduction allowed by section 224.’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

10 for part VII of subchapter B of chapter 1 of such Code 

11 is amended by redesignating the item relating to section 

12 224 as an item relating to section 225 and inserting before 

13 such item the following new item: 

‘‘Sec. 224. Costs of qualified health insurance.’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2010. 

17 DIVISION C—ENACTING REAL 

18 MEDICAL LIABILITY REFORM 

19 SEC. 301. CAP ON NON-ECONOMIC DAMAGES AGAINST 

20 HEALTH CARE PRACTITIONERS. 

21 When an individual is injured or dies as the result 

22 of health care, a person entitled to non-economic damages 

23 may not recover, from the class of liable health care practi24 tioners (regardless of the theory of liability), more than 

25 $250,000 such damages. 


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1 SEC. 302. CAP ON NON-ECONOMIC DAMAGES AGAINST 

2 HEALTH CARE INSTITUTIONS. 

3 When an individual is injured or dies as the result 

4 of health care, a person entitled to non-economic damages 

5 may not recover— 

6 (1) from any single liable health care institution 

7 (regardless of the theory of liability), more than 

8 $250,000 such damages; and 

9 (2) from the class of liable health care institu10 tions (regardless of the theory of liability), more 

11 than $500,000 such damages. 

12 SEC. 303. CAP, IN WRONGFUL DEATH CASES, ON TOTAL 

13 DAMAGES AGAINST ANY SINGLE HEALTH 

14 CARE PRACTITIONER. 

15 (a) IN GENERAL.—When an individual dies as the 

16 result of health care, a person entitled to damages may 

17 not recover, from any single liable health care practitioner 

18 (regardless of the theory of liability), more than 

19 $1,400,000 in total damages. 

20 (b) TOTAL DAMAGES DEFINED.—In this section, the 

21 term ‘‘total damages’’ includes compensatory damages, 

22 punitive damages, statutory damages, and any other type 

23 of damages. 

24 (c) ADJUSTMENT FOR INFLATION.—For each cal25 endar year after the calendar year of the enactment of 

26 this Act, the dollar amount referred to in subsection (a) 


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1 shall be adjusted to reflect changes in the Consumer Price 

2 Index of the Bureau of Labor Statistics of the Department 

3 of Labor. The adjustment shall be based on the relation4 ship between— 

5 (1) the Consumer Price Index data most re6 cently published as of January 1 of the calendar 

7 year of the enactment of this Act; and 

8 (2) the Consumer Price Index data most re9 cently published as of January 1 of the calendar 

10 year concerned. 

11 (d) APPLICABILITY OF ADJUSTMENT.—The dollar 

12 amount that applies to a recovery is the dollar amount 

13 for the calendar year during which the amount of the re14 covery is made final. 

15 SEC. 304. LIMITATION OF INSURER LIABILITY WHEN IN16 SURER REJECTS CERTAIN SETTLEMENT OF17 FERS. 

18 In a civil action, to the extent the civil action seeks 

19 damages for the injury or death of an individual as the 

20 result of health care, when the insurer of a health care 

21 practitioner or health care institution rejects a reasonable 

22 settlement offer within policy limits, the insurer is not, by 

23 reason of that rejection, liable for damages in an amount 

24 that exceeds the liability of the insured. 


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1 SEC. 305. MANDATORY JURY INSTRUCTION ON CAP ON 

2 DAMAGES. 

3 In a civil action tried to a jury, to the extent the civil 

4 action seeks damages for the injury or death of an indi5 vidual as the result of health care, the court shall instruct 

6 the jury that the jury is not to consider whether, or to 

7 what extent, a limitation on damages applies. 

8 SEC. 306. DETERMINATION OF NEGLIGENCE; MANDATORY 

9 JURY INSTRUCTION. 

10 (a) IN GENERAL.—When an individual is injured or 

11 dies as the result of health care, liability for negligence 

12 may not be based solely on a bad result. 

13 (b) MANDATORY JURY INSTRUCTION.—In a civil ac14 tion tried to a jury, to the extent the civil action seeks 

15 damages for the injury or death of an individual as the 

16 result of health care and alleges liability for negligence, 

17 the court shall instruct the jury as provided in subsection 

18 (a). 

19 SEC. 307. EXPERT REPORTS REQUIRED TO BE SERVED IN 

20 CIVIL ACTIONS. 

21 (a) SERVICE REQUIRED.—To the extent a pleading 

22 filed in a civil action seeks damages against a health care 

23 practitioner for the injury or death of an individual as the 

24 result of health care, the party filing the pleading shall, 

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1 ing was filed, serve on each party against whom such dam2 ages are sought a qualified expert report. 

3 (b) QUALIFIED EXPERT REPORT.—As used in sub4 section (a), a qualified expert report is a written report 

5 of a qualified health care expert that— 

6 (1) includes a curriculum vitae for that expert; 

7 and 

8 (2) sets forth a summary of the expert opinion 

9 of that expert as to— 

10 (A) the standard of care applicable to that 

11 practitioner; 

12 (B) how that practitioner failed to meet 

13 that standard of care; and 

14 (C) the causal relationship between that 

15 failure and the injury or death of the individual. 

16 (c) MOTION TO ENFORCE.—A party not served as 

17 required by subsection (a) may move the court to enforce 

18 that subsection. On such a motion, the court— 

19 (1) shall dismiss, with prejudice, the pleading 

20 as it relates to that party; and 

21 (2) shall award to that party the attorney fees 

22 reasonably incurred by that party to respond to that 

23 pleading. 

24 (d) USE OF EXPERT REPORT.— 


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1 (1) IN GENERAL.—Except as otherwise pro2 vided in this section, a qualified expert report served 

3 under subsection (a) may not, in that civil action— 

4 (A) be offered by any party as evidence; 

5 (B) be used by any party in discovery or 

6 any other pretrial proceeding; or 

7 (C) be referred to by any party at trial. 

8 (2) VIOLATIONS.— 

9 (A) BY OTHER PARTY.—If paragraph (1) 

10 is violated by a party other than the party who 

11 served the report, the court shall, on motion of 

12 any party or on its own motion, take such 

13 measures as the court considers appropriate, 

14 which may include the imposition of sanctions. 

15 (B) BY SERVING PARTY.—If paragraph (1) 

16 is violated by the party who served the report, 

17 paragraph (1) shall no longer apply to any 

18 party. 

19 SEC. 308. EXPERT OPINIONS RELATING TO PHYSICIANS 

20 MAY BE PROVIDED ONLY BY ACTIVELY PRAC21 TICING PHYSICIANS. 

22 (a) IN GENERAL.—A physician-related opinion may 

23 be provided only by an actively practicing physician who 

24 is determined by the court to be qualified on the basis 

25 of training and experience to render that opinion. 


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1 (b) CONSIDERATIONS REQUIRED.—In determining 

2 whether an actively practicing physician is qualified under 

3 subsection (a), the court shall, except on good cause 

4 shown, consider whether that physician is board-certified, 

5 or has other substantial training, in an area of medical 

6 practice relevant to the health care to which the opinion 

7 relates. 

8 (c) DEFINITIONS.—In this section: 

9 (1) The term ‘‘actively practicing physician’’ 

10 means an individual who— 

11 (A) is licensed to practice medicine in the 

12 United States or, if the individual is a defend13 ant providing a physician-related opinion with 

14 respect to the health care provided by that de15 fendant, is a graduate of a medical school ac16 credited by the Liaison Committee on Medical 

17 Education or the American Osteopathic Asso18 ciation; 

19 (B) is practicing medicine when the opin20 ion is rendered, or was practicing medicine 

21 when the health care was provided; and 

22 (C) has knowledge of the accepted stand23 ards of care for the health care to which the 

24 opinion relates. 


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1 (2) The term ‘‘physician-related opinion’’ means 

2 an expert opinion as to any one or more of the fol3 lowing: 

4 (A) The standard of care applicable to a 

5 physician. 

6 (B) Whether a physician failed to meet 

7 such a standard of care. 

8 (C) Whether there was a causal relation9 ship between such a failure by a physician and 

10 the injury or death of an individual. 

11 (3) The term ‘‘practicing medicine’’ includes 

12 training residents or students at an accredited 

13 school of medicine or osteopathy, and serving as a 

14 consulting physician to other physicians who provide 

15 direct patient care. 

16 SEC. 309. PAYMENT OF FUTURE DAMAGES ON PERIODIC OR 

17 ACCRUAL BASIS. 

18 (a) IN GENERAL.—When future damages are award19 ed against a health care practitioner to a person for the 

20 injury or death of an individual as a result of health care, 

21 and the present value of those future damages is $100,000 

22 or more, that health care practitioner may move that the 

23 court order payment on a periodic or accrual basis of those 

24 damages. On such a motion, the court— 


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1 (1) shall order that payment be made on an ac2 crual basis of future damages described in sub3 section (b)(1); and 

4 (2) may order that payment be made on a peri5 odic or accrual basis of any other future damages 

6 that the court considers appropriate. 

7 (b) FUTURE DAMAGES DEFINED.—In this section, 

8 the term ‘‘future damages’’ means— 

9 (1) the future costs of medical, health care, or 

10 custodial services; 

11 (2) noneconomic damages, such as pain and 

12 suffering or loss of consortium; 

13 (3) loss of future earnings; and 

14 (4) any other damages incurred after the award 

15 is made. 

16 SEC. 310. UNANIMOUS JURY REQUIRED FOR PUNITIVE OR 

17 EXEMPLARY DAMAGES. 

18 When an individual is injured or dies as the result 

19 of health care, a jury may not award punitive or exemplary 

20 damages against a health care practitioner or health care 

21 institution unless the jury is unanimous with regard to 

22 both the liability of that party for such damages and the 

23 amount of the award of such damages. 


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1 SEC. 311. PROPORTIONATE LIABILITY. 

2 When an individual is injured or dies as the result 

3 of health care and a person is entitled to damages for that 

4 injury or death, each person responsible is liable only for 

5 a proportionate share of the total damages that directly 

6 corresponds to that person’s proportionate share of the 

7 total responsibility. 

8 SEC. 312. DEFENSE-INITIATED SETTLEMENT PROCESS. 

9 (a) IN GENERAL.—In a civil action, to the extent the 

10 civil action seeks damages for the injury or death of an 

11 individual as the result of health care, a health care practi12 tioner or health care institution against which such dam13 ages are sought may serve one or more qualified settle14 ment offers under this section to a person seeking such 

15 damages. If the person seeking such damages does not ac16 cept such an offer, that person may thereafter serve one 

17 or more qualified settlement offers under this section to 

18 the party whose offer was not accepted. 

19 (b) QUALIFIED SETTLEMENT OFFER.—A qualified 

20 settlement offer under this section is an offer, in writing, 

21 to settle the matter as between the offeror and the offeree, 

22 which— 

23 (1) specifies that it is made under this section; 

24 (2) states the terms of settlement; and 

25 (3) states the deadline within which the offer 

26 must be accepted. 


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1 (c) EFFECT OF OFFER.—If the offeree of a qualified 

2 settlement offer does not accept that offer, and thereafter 

3 receives a judgment at trial that, as between the offeror 

4 and the offeree, is significantly less favorable than the 

5 terms of settlement in that offer, that offeree is respon6 sible for those litigation costs reasonably incurred, after 

7 the deadline stated in the offer, by the offeror to respond 

8 to the claims of the offeree. 

9 (d) LITIGATION COSTS DEFINED.—In this section, 

10 the term ‘‘litigation costs’’ include court costs, filing fees, 

11 expert witness fees, attorney fees, and any other costs di12 rectly related to carrying out the litigation. 

13 (e) SIGNIFICANTLY LESS FAVORABLE DEFINED.— 

14 For purposes of this section, a judgment is significantly 

15 less favorable than the terms of settlement if— 

16 (1) in the case of an offeree seeking damages, 

17 the offeree’s award at trial is less than 80 percent 

18 of the value of the terms of settlement; and 

19 (2) in the case of an offeree against whom dam20 ages are sought, the offeror’s award at trial is more 

21 than 120 percent of the value of the terms of settle22 ment. 


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1 SEC. 313. STATUTE OF LIMITATIONS; STATUTE OF REPOSE. 

2 (a) STATUTE OF LIMITATIONS.—When an individual 

3 is injured or dies as the result of health care, the statute 

4 of limitations shall be as follows: 

5 (1) INDIVIDUALS OF AGE 12 AND OVER.—If the 

6 individual has attained the age of 12 years, the 

7 claim must be brought either— 

8 (A) within 2 years after the negligence oc9 curred; or 

10 (B) within 2 years after the health care on 

11 which the claim is based is completed. 

12 (2) INDIVIDUALS UNDER AGE 12.—If the indi13 vidual has not attained the age of 12 years, the 

14 claim must be brought before the individual attains 

15 the age of 14 years. 

16 (b) STATUTE OF REPOSE.—When an individual is in17 jured or dies as the result of health care, the statute of 

18 repose shall be as follows: The claim must be brought 

19 within 10 years after the act or omission on which the 

20 claim is based is completed. 

21 (c) TOLLING.— 

22 (1) STATUTE OF LIMITATIONS.—The statute of 

23 limitations required by subsection (a) may be tolled 

24 if applicable law so provides, except that it may not 

25 be tolled on the basis of minority. 


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1 (2) STATUTE OF REPOSE.—The statute of 

2 repose required by subsection (b) may not be tolled 

3 for any reason. 

4 SEC. 314. LIMITATION ON LIABILITY FOR GOOD SAMARI5 TANS PROVIDING EMERGENCY HEALTH 

6 CARE. 

7 (a) WILLFUL OR WANTON NEGLIGENCE RE8 QUIRED.—A health care practitioner or health care insti9 tution that provides emergency health care on a Good Sa10 maritan basis is not liable for damages caused by that care 

11 except for willful or wanton negligence or more culpable 

12 misconduct. 

13 (b) GOOD SAMARITAN BASIS.—For purposes of this 

14 section, care is provided on a Good Samaritan basis if it 

15 is not provided for or in expectation of remuneration. 

16 Being entitled to remuneration is relevant to, but is not 

17 determinative of, whether it is provided for or in expecta18 tion of remuneration. 

19 SEC. 315. DEFINITIONS. 

20 In this division: 

21 (1) HEALTH CARE INSTITUTION.—The term 

22 ‘‘health care institution’’ includes institutions such 

23 as— 

24 (A) an ambulatory surgical center; 

25 (B) an assisted living facility; 


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1 (C) an emergency medical services pro2 vider; 

3 (D) a home health agency; 

4 (E) a hospice; 

5 (F) a hospital; 

6 (G) a hospital system; 

7 (H) an intermediate care facility for the 

8 mentally retarded; 

9 (I) a nursing home; and 

10 (J) an end stage renal disease facility. 

11 (2) HEALTH CARE PRACTITIONER.—The term 

12 ‘‘health care practitioner’’ includes a physician and 

13 a physician entity. 

14 (3) PHYSICIAN ENTITY.—The term ‘‘physician 

15 entity’’ includes— 

16 (A) a partnership or limited liability part17 nership created by a group of physicians; 

18 (B) a company created by physicians; and 

19 (C) a nonprofit health corporation whose 

20 board is composed of physicians. 


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1 DIVISION D—PROTECTING THE 

2 DOCTOR-PATIENT RELATION3 SHIP 

4 SEC. 401. RULE OF CONSTRUCTION. 

5 Nothing in this Act shall be construed to interfere 

6 with the doctor-patient relationship or the practice of med7 icine. 

8 SEC. 402. REPEAL OF FEDERAL COORDINATING COUNCIL 

9 FOR COMPARATIVE EFFECTIVENESS RE10 SEARCH. 

11 Effective on the date of the enactment of this Act, 

12 section 804 of the American Recovery and Reinvestment 

13 Act of 2009 is repealed. 

14 DIVISION E—INCENTIVIZING 

15 WELLNESS AND QUALITY IM16 PROVEMENTS 

17 SEC. 501. INCENTIVES FOR PREVENTION AND WELLNESS 

18 PROGRAMS. 

19 (a) EMPLOYEE RETIREMENT INCOME SECURITY ACT

20 OF 1974 LIMITATION ON EXCEPTION FOR WELLNESS

21 PROGRAMS UNDER HIPAA DISCRIMINATION RULES.— 

22 (1) IN GENERAL.—Section 702(b)(2) of the 

23 Employee Retirement Income Security Act of 1974 

24 (29 U.S.C. 1182(b)(2)), as restored by section 2, is 


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1 amended by adding after and below subparagraph 

2 (B) the following: 

3 ‘‘In applying subparagraph (B), a group health plan 

4 (or a health insurance issuer with respect to health 

5 insurance coverage) may vary premiums and cost6 sharing by up to 50 percent of the value of the bene7 fits under the plan (or coverage) based on participa8 tion in a standards-based wellness program.’’. 

9 (2) EFFECTIVE DATE.—The amendment made 

10 by paragraph (1) shall apply to plan years beginning 

11 more than 1 year after the date of the enactment of 

12 this Act. 

13 (b) CONFORMING AMENDMENTS TO PHSA.— 

14 (1) GROUP MARKET RULES.— 

15 (A) IN GENERAL.—Section 2702(b)(2) of 

16 the Public Health Service Act (42 U.S.C. 

17 300gg–1(b)(2)), as restored by section 2, is 

18 amended by adding after and below subpara19 graph (B) the following: 

20 ‘‘In applying subparagraph (B), a group health plan 

21 (or a health insurance issuer with respect to health 

22 insurance coverage) may vary premiums and cost23 sharing by up to 50 percent of the value of the bene24 fits under the plan (or coverage) based on participa25 tion in a standards-based wellness program.’’. 


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1 (B) EFFECTIVE DATE.—The amendment 

2 made by subparagraph (A) shall apply to plan 

3 years beginning more than 1 year after the date 

4 of the enactment of this Act. 

5 (2) INDIVIDUAL MARKET RULES RELATING TO

6 GUARANTEED AVAILABILITY.— 

7 (A) IN GENERAL.—Section 2741(f) of the 

8 Public Health Service Act (42 U.S.C. 300gg– 

9 1(b)(2)), as restored by section 2, is amended 

10 by adding after and below paragraph (1) the 

11 following: 

12 ‘‘In applying paragraph (2), a health insurance issuer may 

13 vary premiums and cost-sharing under health insurance 

14 coverage by up to 50 percent of the value of the benefits 

15 under the coverage based on participation in a standards16 based wellness program.’’. 

17 (B) EFFECTIVE DATE.—The amendment 

18 made by paragraph (1) shall apply to health in19 surance coverage offered or renewed on and 

20 after the date that is 1 year after the date of 

21 the enactment of this Act. 

22 (c) CONFORMING AMENDMENTS TO IRC.— 

23 (1) IN GENERAL.—Section 9802(b)(2) of the 

24 Internal Revenue Code of 1986, as restored by secVerDate Mar 15 2010 00:57 Jan 22, 2011 Jkt 099200 PO 00000 Frm 00141 Fmt 6652 Sfmt 6201 E:\BILLS\H364.IH H364

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1 tion 2, is amended by adding after and below sub2 paragraph (B) the following: 

3 ‘‘In applying subparagraph (B), a group health plan 

4 (or a health insurance issuer with respect to health 

5 insurance coverage) may vary premiums and cost6 sharing by up to 50 percent of the value of the bene7 fits under the plan (or coverage) based on participa8 tion in a standards-based wellness program.’’. 

9 (2) EFFECTIVE DATE.—The amendment made 

10 by paragraph (1) shall apply to plan years beginning 

11 more than 1 year after the date of the enactment of 

12 this Act. 

13 DIVISION F—PROTECTING 

14 TAXPAYERS 

15 SEC. 601. PERMANENTLY PROHIBITING TAXPAYER FUNDED 

16 ABORTIONS AND ENSURING CONSCIENCE 

17 PROTECTIONS. 

18 Title 1 of the United States Code is amended by add19 ing at the end the following new chapter: 


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1 ‘‘CHAPTER 4—PERMANENTLY PROHIB2 ITING TAXPAYER FUNDED ABORTIONS 

3 AND ENSURING CONSCIENCE PROTEC4 TIONS 

5 ‘‘SEC. 301. PROHIBITION ON FUNDING FOR ABORTIONS. 

6 ‘‘No funds authorized or appropriated by Federal 

7 law, and none of the funds in any trust fund to which 

8 funds are authorized or appropriated by Federal law, shall 

9 be expended for any abortion. 

10 ‘‘SEC. 302. PROHIBITION ON FUNDING FOR HEALTH BENE11 FITS PLANS THAT COVER ABORTION. 

12 ‘‘None of the funds authorized or appropriated by 

13 Federal law, and none of the funds in any trust fund to 

14 which funds are authorized or appropriated by Federal 

15 law, shall be expended for a health benefits plan that in16 cludes coverage of abortion. 

17 ‘‘SEC. 303. TREATMENT OF ABORTIONS RELATED TO RAPE, 

18 INCEST, OR PRESERVING THE LIFE OF THE 

19 MOTHER. 

20 ‘‘The limitations established in sections 301 and 302 

21 shall not apply to an abortion— 

22 ‘‘(1) if the pregnancy is the result of an act of 

23 rape or incest; or 

24 ‘‘(2) in the case where a woman suffers from a 

25 physical disorder, physical injury, or physical illness 


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1 that would, as certified by a physician, place the 

2 woman in danger of death unless an abortion is per3 formed, including a life-endangering physical condi4 tion caused by or arising from the pregnancy itself. 

5 ‘‘SEC. 304. CONSTRUCTION RELATING TO SUPPLEMENTAL 

6 COVERAGE. 

7 ‘‘Nothing in this chapter shall be construed as pro8 hibiting any individual, entity, or State or locality from 

9 purchasing separate supplemental abortion plan or cov10 erage that includes abortion so long as such plan or cov11 erage is paid for entirely using only funds not authorized 

12 or appropriated by Federal law and such plan or coverage 

13 shall not be purchased using matching funds required for 

14 a federally subsidized program, including a State’s or lo15 cality’s contribution of Medicaid matching funds. 

16 ‘‘SEC. 305. CONSTRUCTION RELATING TO THE USE OF NON17 FEDERAL FUNDS FOR HEALTH COVERAGE. 

18 ‘‘Nothing in this chapter shall be construed as re19 stricting the ability of any managed care provider or other 

20 organization from offering abortion coverage or the ability 

21 of a State to contract separately with such a provider or 

22 organization for such coverage with funds not authorized 

23 or appropriated by Federal law and such plan or coverage 

24 shall not be purchased using matching funds required for 


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1 a federally subsidized program, including a State’s or lo2 cality’s contribution of Medicaid matching funds. 

3 ‘‘SEC. 306. NO GOVERNMENT DISCRIMINATION AGAINST 

4 CERTAIN HEALTH CARE ENTITIES. 

5 ‘‘(a) IN GENERAL.—No funds authorized or appro6 priated by Federal law may be made available to a Federal 

7 agency or program, or to a State or local government, if 

8 such agency, program, or government subjects any institu9 tional or individual health care entity to discrimination on 

10 the basis that the health care entity does not provide, pay 

11 for, provide coverage of, or refer for abortions. 

12 ‘‘(b) HEALTH CARE ENTITY DEFINED.—For pur13 poses of this section, the term ‘health care entity’ includes 

14 an individual physician or other health care professional, 

15 a hospital, a provider-sponsored organization, a health 

16 maintenance organization, a health insurance plan, or any 

17 other kind of health care facility, organization, or plan.’’. 

18 SEC. 602. IMPROVED ENFORCEMENT OF THE MEDICARE 

19 AND MEDICAID SECONDARY PAYER PROVI20 SIONS. 

21 (a) MEDICARE.— 

22 (1) IN GENERAL.—The Secretary of Health and 

23 Human Services, in coordination with the Inspector 

24 General of the Department of Health and Human 

25 Services, shall provide through the Coordination of 


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1 Benefits Contractor for the identification of in2 stances where the Medicare program should be, but 

3 is not, acting as a secondary payer to an individual’s 

4 private health benefits coverage under section 

5 1862(b) of the Social Security Act (42 U.S.C. 

6 1395y(b)). 

7 (2) UPDATING PROCEDURES.—The Secretary 

8 shall update procedures for identifying and resolving 

9 credit balance situations which occur under the 

10 Medicare program when payment under such title 

11 and from other health benefit plans exceed the pro12 viders’ charges or the allowed amount. 

13 (3) REPORT ON IMPROVED ENFORCEMENT.— 

14 Not later than 1 year after the date of the enact15 ment of this Act, the Secretary shall submit a report 

16 to Congress on progress made in improved enforce17 ment of the Medicare secondary payer provisions, in18 cluding recoupment of credit balances. 

19 (b) MEDICAID.—Section 1903 of the Social Security 

20 Act (42 U.S.C. 1396b) is amended by adding at the end 

21 the following new subsection: 

22 ‘‘(aa) ENFORCEMENT OF PAYER OF LAST RESORT

23 PROVISIONS.— 

24 ‘‘(1) SUBMISSION OF STATE PLAN AMEND25 MENT.—Each State shall submit, not later than 1 


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1 year after the date of the enactment of this sub2 section, a State plan amendment that details how 

3 the State will become fully compliant with the re4 quirements of section 1902(a)(25). 

5 ‘‘(2) BONUS FOR COMPLIANCE.—If a State sub6 mits a timely State plan amendment under para7 graph (1) that the Secretary determines provides for 

8 full compliance of the State with the requirements of 

9 section 1902(a)(25), the Secretary shall provide for 

10 an additional payment to the State of $1,000,000. If 

11 a State certifies, to the Secretary’s satisfaction, that 

12 it is already fully compliant with such requirements, 

13 such amount shall be increased to $2,000,000. 

14 ‘‘(3) REDUCTION FOR NONCOMPLIANCE.—If a 

15 State does not submit such an amendment, the Sec16 retary shall reduce the Federal medical assistance 

17 percentage otherwise applicable under this title by 1 

18 percentage point until the State submits such an 

19 amendment. 

20 ‘‘(4) ONGOING REDUCTION.—If at any time the 

21 Secretary determines that a State is not in compli22 ance with section 1902(a)(25), regardless of the sta23 tus of the State’s submission of a State plan amend24 ment under this subsection or previous determina25 tions of compliance such requirements, the Secretary 


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1 shall reduce the Federal medical assistance percent2 age otherwise applicable under this title for the 

3 State by 1 percentage point during the period of 

4 non-compliance as determined by the Secretary.’’. 

5 SEC. 603. STRENGTHEN MEDICARE PROVIDER ENROLL6 MENT STANDARDS AND SAFEGUARDS. 

7 (a) PROTECTING AGAINST THE FRAUDULENT USE

8 OF MEDICARE PROVIDER NUMBERS.—Subject to sub9 section (c)(2)— 

10 (1) SCREENING NEW PROVIDERS.—As a condi11 tion of a provider of services or a supplier, including 

12 durable medical equipment suppliers and home 

13 health agencies, applying for the first time for a pro14 vider number under the Medicare program under 

15 title XVIII of the Social Security Act and before 

16 granting billing privileges under such title, the Sec17 retary of Health and Human Services shall screen 

18 the provider or supplier for a criminal background 

19 or other financial or operational irregularities 

20 through fingerprinting, licensure checks, site-visits, 

21 other database checks. 

22 (2) APPLICATION FEES.—The Secretary shall 

23 impose an application charge on such a provider or 

24 supplier in order to cover the Secretary’s costs in 

25 performing the screening required under paragraph 


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1 (1) and that is revenue neutral to the Federal Gov2 ernment. 

3 (3) PROVISIONAL APPROVAL.—During an ini4 tial, provisional period (specified by the Secretary) 

5 in which such a provider or supplier has been issued 

6 such a number, the Secretary shall provide enhanced 

7 oversight of the activities of such provider or sup8 plier under the Medicare program, such as through 

9 prepayment review and payment limitations. 

10 (4) PENALTIES FOR FALSE STATEMENTS.—In 

11 the case of a provider or supplier that makes a false 

12 statement in an application for such a number, the 

13 Secretary may exclude the provider or supplier from 

14 participation under the Medicare program, or may 

15 impose a civil money penalty (in the amount de16 scribed in section 1128A(a)(4) of the Social Security 

17 Act), in the same manner as the Secretary may im18 pose such an exclusion or penalty under sections 

19 1128 and 1128A, respectively, of such Act in the 

20 case of knowing presentation of a false claim de21 scribed in section 1128A(a)(1)(A) of such Act. 

22 (5) DISCLOSURE REQUIREMENTS.—With re23 spect to approval of such an application, the Sec24 retary— 


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1 (A) shall require applicants to disclose pre2 vious affiliation with enrolled entities that have 

3 uncollected debt related to the Medicare or 

4 Medicaid programs; 

5 (B) may deny approval if the Secretary de6 termines that these affiliations pose undue risk 

7 to the Medicare or Medicaid program, subject 

8 to an appeals process for the applicant as deter9 mined by the Secretary; and 

10 (C) may implement enhanced safeguards 

11 (such as surety bonds). 

12 (b) MORATORIA.—The Secretary of Health and 

13 Human Services may impose moratoria on approval of 

14 provider and supplier numbers under the Medicare pro15 gram for new providers of services and suppliers as deter16 mined necessary to prevent or combat fraud a period of 

17 delay for any one applicant cannot exceed 30 days unless 

18 cause is shown by the Secretary. 

19 (c) FUNDING.— 

20 (1) IN GENERAL.—There are authorized to be 

21 appropriated to carry out this section such sums as 

22 may be necessary. 

23 (2) CONDITION.—The provisions of paragraphs 

24 (1) and (2) of subsection (a) shall not apply unless 


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1 and until funds are appropriated to carry out such 

2 provisions. 

3 SEC. 604. TRACKING BANNED PROVIDERS ACROSS STATE 

4 LINES. 

5 (a) GREATER COORDINATION.—The Secretary of 

6 Health and Human Services shall provide for increased 

7 coordination between the Administrator of the Centers for 

8 Medicare & Medicaid Services (in this section referred to 

9 as ‘‘CMS’’) and its regional offices to ensure that pro10 viders of services and suppliers that have operated in one 

11 State and are excluded from participation in the Medicare 

12 program are unable to begin operation and participation 

13 in the Medicare program in another State. 

14 (b) IMPROVED INFORMATION SYSTEMS.— 

15 (1) IN GENERAL.—The Secretary shall improve 

16 information systems to allow greater integration be17 tween databases under the Medicare program so 

18 that— 

19 (A) Medicare administrative contractors, 

20 fiscal intermediaries, and carriers have imme21 diate access to information identifying providers 

22 and suppliers excluded from participation in the 

23 Medicare and Medicaid program and other Fed24 eral health care programs; and 


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1 (B) such information can be shared across 

2 Federal health care programs and agencies, in3 cluding between the Departments of Health and 

4 Human Services, the Social Security Adminis5 tration, the Department of Veterans Affairs, 

6 the Department of Defense, the Department of 

7 Justice, and the Office of Personnel Manage8 ment. 

9 (c) MEDICARE/MEDICAID ‘‘ONE PI’’ DATABASE.— 

10 The Secretary shall implement a database that includes 

11 claims and payment data for all components of the Medi12 care program and the Medicaid program. 

13 (d) AUTHORIZING EXPANDED DATA MATCHING.— 

14 Notwithstanding any provision of the Computer Matching 

15 and Privacy Protection Act of 1988 to the contrary— 

16 (1) the Secretary and the Inspector General in 

17 the Department of Health and Human Services may 

18 perform data matching of data from the Medicare 

19 program with data from the Medicaid program; and 

20 (2) the Commissioner of Social Security and the 

21 Secretary may perform data matching of data of the 

22 Social Security Administration with data from the 

23 Medicare and Medicaid programs. 

24 (e) CONSOLIDATION OF DATABASES.—The Secretary 

25 shall consolidate and expand into a centralized database 


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1 for individuals and entities that have been excluded from 

2 Federal health care programs the Healthcare Integrity 

3 and Protection Data Bank, the National Practitioner 

4 Data Bank, the List of Excluded Individuals/Entities, and 

5 a national patient abuse/neglect registry. 

6 (f) COMPREHENSIVE PROVIDER DATABASE.— 

7 (1) ESTABLISHMENT.—The Secretary shall es8 tablish a comprehensive database that includes infor9 mation on providers of services, suppliers, and re10 lated entities participating in the Medicare program, 

11 the Medicaid program, or both. Such database shall 

12 include, information on ownership and business rela13 tionships, history of adverse actions, results of site 

14 visits or other monitoring by any program. 

15 (2) USE.—Prior to issuing a provider or sup16 plier number for an entity under the Medicare pro17 gram, the Secretary shall obtain information on the 

18 entity from such database to assure the entity quali19 fies for the issuance of such a number. 

20 (g) COMPREHENSIVE SANCTIONS DATABASE.—The 

21 Secretary shall establish a comprehensive sanctions data22 base on sanctions imposed on providers of services, sup23 pliers, and related entities. Such database shall be over24 seen by the Inspector General of the Department of 

25 Health and Human Services and shall be linked to related 


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1 databases maintained by State licensure boards and by 

2 Federal or State law enforcement agencies. 

3 (h) ACCESS TO CLAIMS AND PAYMENT DATA4 BASES.—The Secretary shall ensure that the Inspector 

5 General of the Department of Health and Human Services 

6 and Federal law enforcement agencies have direct access 

7 to all claims and payment databases of the Secretary 

8 under the Medicare or Medicaid programs. 

9 (i) CIVIL MONEY PENALTIES FOR SUBMISSION OF

10 ERRONEOUS INFORMATION.—In the case of a provider of 

11 services, supplier, or other entity that submits erroneous 

12 information that serves as a basis for payment of any enti13 ty under the Medicare or Medicaid program, the Secretary 

14 may impose a civil money penalty of not to exceed $50,000 

15 for each such erroneous submission. A civil money penalty 

16 under this subsection shall be imposed and collected in the 

17 same manner as a civil money penalty under subsection 

18 (a) of section 1128A of the Social Security Act is imposed 

19 and collected under that section. 

Æ 


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