II 

113TH CONGRESS 

1ST SESSION S. 1851 

To provide for incentives to encourage health insurance coverage, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 18, 2013 

Mr. MCCAIN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To provide for incentives to encourage health insurance 

coverage, and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Empowering Patients First Act of 2013’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Repeal of PPACA and health care-related HCERA provisions. 

Sec. 3. No mandate of guaranteed issue or community rating. 

TITLE I—TAX INCENTIVES FOR MAINTAINING HEALTH 

INSURANCE COVERAGE 


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Sec. 101. Refundable tax credit for health insurance costs of low-income individuals. 

Sec. 102. Advance payment of credit as premium payment for qualified health 

insurance. 

Sec. 103. Election of tax credit instead of alternative government or group plan 

benefits. 

Sec. 104. Deduction for qualified health insurance costs of individuals. 

Sec. 105. Limitation on abortion funding. 

Sec. 106. No government discrimination against certain health care entities. 

Sec. 107. Equal employer contribution rule to promote choice. 

Sec. 108. Limitations on State restrictions on employer auto-enrollment. 

Sec. 109. Credit for small employers adopting auto-enrollment and defined contribution options. 

Sec. 110. HSA modifications and clarifications. 

TITLE II—HEALTH INSURANCE POOLING MECHANISMS FOR 

INDIVIDUALS 

Subtitle A—Federal Grants for State Insurance Expenditures 

Sec. 201. Federal grants for State insurance expenditures. 

Subtitle B—Health Care Access and Availability 

Sec. 211. Expansion of access and choice through individual and small employer membership associations (IMAs). 

Subtitle C—Small Business Health Fairness 

Sec. 221. Short title. 

Sec. 222. Rules governing association health plans. 

Sec. 223. Clarification of treatment of single employer arrangements. 

Sec. 224. Enforcement provisions relating to association health plans. 

Sec. 225. Cooperation between Federal and State authorities. 

Sec. 226. Effective date and transitional and other rules. 

TITLE III—INTERSTATE MARKET FOR HEALTH INSURANCE 

Sec. 301. Cooperative governing of individual health insurance coverage. 

TITLE IV—SAFETY NET REFORMS 

Sec. 401. Requiring outreach and coverage before expansion of eligibility. 

Sec. 402. Easing administrative barriers to State cooperation with employersponsored insurance coverage. 

Sec. 403. Improving beneficiary choice in SCHIP. 

TITLE V—LAWSUIT ABUSE REFORMS 

Sec. 501. Change in burden of proof based on compliance with best practice 

guidelines. 

Sec. 502. State grants to create administrative health care tribunals. 

Sec. 503. Authorization of payment of future damages to claimants in health 

care lawsuits. 

Sec. 504. Definitions. 

Sec. 505. Effect on other laws. 

Sec. 506. Applicability; effective date. 


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TITLE VI—WELLNESS AND PREVENTION 

Sec. 601. Providing financial incentives for treatment compliance. 

TITLE VII—TRANSPARENCY AND INSURANCE REFORM MEASURES 

Sec. 701. Receipt and response to requests for claim information. 

TITLE VIII—QUALITY 

Sec. 801. Prohibition on certain uses of data obtained from comparative effectiveness research or from patient-centered outcomes research; 

accounting for personalized medicine and differences in patient 

treatment response. 

Sec. 802. Establishment of performance-based quality measures. 

TITLE IX—STATE TRANSPARENCY PLAN PORTAL 

Sec. 901. Providing information on health coverage options and health care 

providers. 

TITLE X—PATIENT FREEDOM OF CHOICE 

Sec. 1001. Guaranteeing freedom of choice and contracting for patients under 

Medicare. 

Sec. 1002. Preemption of State laws limiting charges for eligible professional 

services. 

Sec. 1003. Health care provider licensure cannot be conditioned on participation in a health plan. 

Sec. 1004. Bad debt deduction for doctors to partially offset the cost of providing uncompensated care required to be provided under 

amendments made by the Emergency Medical Treatment and 

Labor Act. 

Sec. 1005. Right of contract with health care providers. 

TITLE XI—INCENTIVES TO REDUCE PHYSICIAN SHORTAGES 

Subtitle A—Federally Supported Student Loan Funds for Medical Students 

Sec. 1101. Federally supported student loan funds for medical students. 

Subtitle B—Loan Forgiveness for Primary Care Providers 

Sec. 1111. Loan forgiveness for primary care providers. 

TITLE XII—QUALITY HEALTH CARE COALITION 

Sec. 1201. Quality Health Care Coalition. 

TITLE XIII—OFFSETS 

Subtitle A—Discretionary Spending Limits 

Sec. 1301. Discretionary spending limits. 

Subtitle B—Savings From Health Care Efficiencies 

Sec. 1311. Medicare DSH report and payment adjustments in response to coverage expansion. 

Sec. 1312. Reduction in Medicaid DSH. 


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Subtitle C—Fraud, Waste, and Abuse 

Sec. 1321. Provide adequate funding to HHS OIG and HCFAC. 

Sec. 1322. Improved enforcement of the Medicare secondary payor provisions. 

Sec. 1323. Strengthen Medicare provider enrollment standards and safeguards. 

Sec. 1324. Tracking banned providers across State lines. 

1 SEC. 2. REPEAL OF PPACA AND HEALTH CARE-RELATED 

2 HCERA PROVISIONS. 

3 (a) PPACA.—Effective as of the enactment of the 

4 Patient Protection and Affordable Care Act (Public Law 

5 111–148), such Act is repealed, and the provisions of law 

6 amended or repealed by such Act are restored or revived 

7 as if such Act had not been enacted. 

8 (b) HEALTH CARE-RELATED PROVISIONS IN THE

9 HEALTH CARE AND EDUCATION RECONCILIATION ACT OF

10 2010.—Effective as of the enactment of the Health Care 

11 and Education Reconciliation Act of 2010 (Public Law 

12 111–152), title I and subtitle B of title II of such Act 

13 are repealed, and the provisions of law amended or re14 pealed by such title or subtitle, respectively, are restored 

15 or revived as if such title and subtitle had not been en16 acted. 

17 SEC. 3. NO MANDATE OF GUARANTEED ISSUE OR COMMU18 NITY RATING. 

19 Nothing in this Act shall be construed to provide a 

20 mandate for guaranteed issue or community rating in the 

21 private insurance market. 


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1 TITLE I—TAX INCENTIVES FOR 

2 MAINTAINING HEALTH IN3 SURANCE COVERAGE 

4 SEC. 101. REFUNDABLE TAX CREDIT FOR HEALTH INSUR5 ANCE COSTS OF LOW-INCOME INDIVIDUALS. 

6 (a) IN GENERAL.—Subpart C of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986, as amended by section 2, is amended by inserting 

9 after section 36A the following new section: 

10 ‘‘SEC. 36B. HEALTH INSURANCE COSTS OF LOW-INCOME IN11 DIVIDUALS. 

12 ‘‘(a) IN GENERAL.—In the case of an individual, 

13 there shall be allowed as a credit against the tax imposed 

14 by subtitle A the aggregate amount paid by the taxpayer 

15 for coverage of the taxpayer and the taxpayer’s qualifying 

16 family members under qualified health insurance for eligi17 ble coverage months beginning in the taxable year. 

18 ‘‘(b) LIMITATIONS.— 

19 ‘‘(1) IN GENERAL.—The amount allowable as a 

20 credit under subsection (a) for the taxable year shall 

21 not exceed the lesser of— 

22 ‘‘(A) the sum of the monthly limitations 

23 for months during such taxable year that the 

24 taxpayer or the taxpayer’s qualifying family 

25 members is an eligible individual, and 


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1 ‘‘(B) the aggregate premiums paid by the 

2 taxpayer for the taxable year for coverage de3 scribed in subsection (a). 

4 ‘‘(2) MONTHLY LIMITATION.—The monthly limitation for any month is the credit percentage of 1 5 ⁄12

6 of the sum of— 

7 ‘‘(A) $2,000 for coverage of the taxpayer 

8 ($4,000 in the case of a joint return for cov9 erage of the taxpayer and the taxpayer’s 

10 spouse), and 

11 ‘‘(B) $500 for coverage of each dependent 

12 of the taxpayer. 

13 ‘‘(3) CREDIT PERCENTAGE.— 

14 ‘‘(A) IN GENERAL.—For purposes of this 

15 section, the term ‘credit percentage’ means 100 

16 percent reduced by 1 percentage point for each 

17 $1,000 (or fraction thereof) by which the tax18 payer’s adjusted gross income for the taxable 

19 year exceeds the threshold amount. 

20 ‘‘(B) THRESHOLD AMOUNT.—For purposes 

21 of this paragraph, the term ‘threshold amount’ 

22 means, with respect to any taxpayer for any 

23 taxable year, 200 percent of the Federal pov24 erty guideline (as determined by the Secretary 


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1 of Health and Human Services for the taxable 

2 year) applicable to the taxpayer. 

3 ‘‘(4) ONLY 2 DEPENDENTS TAKEN INTO AC4 COUNT.—Not more than 2 dependents of the tax5 payer may be taken into account under paragraphs 

6 (2)(C) and (3)(B). 

7 ‘‘(5) INFLATION ADJUSTMENT.—In the case of 

8 any taxable year beginning in a calendar year after 

9 2013, each dollar amount contained in paragraph 

10 (2) shall be increased by an amount equal to— 

11 ‘‘(A) such dollar amount, multiplied by 

12 ‘‘(B) the cost-of-living adjustment deter13 mined under section 1(f)(3) for the calendar 

14 year in which the taxable year begins, deter15 mined by substituting ‘calendar year 2012’ for 

16 ‘calendar year 1992’ in subparagraph (B) 

17 thereof. 

18 Any increase determined under the preceding sen19 tence shall be rounded to the nearest multiple of 

20 $50. 

21 ‘‘(c) ELIGIBLE COVERAGE MONTH.—For purposes of 

22 this section, the term ‘eligible coverage month’ means, 

23 with respect to any individual, any month if, as of the first 

24 day of such month, the individual— 

25 ‘‘(1) is covered by qualified health insurance, 


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1 ‘‘(2) does not have other specified coverage, and 

2 ‘‘(3) is not imprisoned under Federal, State, or 

3 local authority. 

4 ‘‘(d) QUALIFYING FAMILY MEMBER.—For purposes 

5 of this section, the term ‘qualifying family member’ 

6 means— 

7 ‘‘(1) in the case of a joint return, the taxpayer’s 

8 spouse, and 

9 ‘‘(2) any dependent of the taxpayer. 

10 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur11 poses of this section, the term ‘qualified health insurance’ 

12 means health insurance coverage (other than excepted 

13 benefits as defined in section 9832(c)) which constitutes 

14 medical care. 

15 ‘‘(f) OTHER SPECIFIED COVERAGE.—For purposes of 

16 this section, an individual has other specified coverage for 

17 any month if, as of the first day of such month— 

18 ‘‘(1) COVERAGE UNDER MEDICARE, MEDICAID, 

19 OR SCHIP.—Such individual— 

20 ‘‘(A) is entitled to benefits under part A of 

21 title XVIII of the Social Security Act or is en22 rolled under part B of such title, or 

23 ‘‘(B) is enrolled in the program under title 

24 XIX or XXI of such Act (other than under sec25 tion 1928 of such Act). 


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1 ‘‘(2) CERTAIN OTHER COVERAGE.—Such indi2 vidual— 

3 ‘‘(A) is enrolled in a health benefits plan 

4 under chapter 89 of title 5, United States Code, 

5 ‘‘(B) is entitled to receive benefits under 

6 chapter 55 of title 10, United States Code, 

7 ‘‘(C) is entitled to receive benefits under 

8 chapter 17 of title 38, United States Code, 

9 ‘‘(D) is enrolled in a group health plan 

10 (within the meaning of section 5000(b)(1)) 

11 which is subsidized by the employer, or 

12 ‘‘(E) is a member of a health care sharing 

13 ministry. 

14 ‘‘(3) HEALTH CARE SHARING MINISTRY.—For 

15 purposes of this subsection, the term ‘health care 

16 sharing ministry’ means an organization— 

17 ‘‘(A) which is described in section 

18 501(c)(3) and is exempt from taxation under 

19 section 501(a), 

20 ‘‘(B) members of which share a common 

21 set of ethical or religious beliefs and share med22 ical expenses among members in accordance 

23 with those beliefs and without regard to the 

24 State in which a member resides or is em25 ployed, 


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1 ‘‘(C) members of which retain membership 

2 even after they develop a medical condition, 

3 ‘‘(D) which (or a predecessor of which) has 

4 been in existence at all times since December 

5 31, 1999, and medical expenses of its members 

6 have been shared continuously and without 

7 interruption since at least December 31, 1999, 

8 and 

9 ‘‘(E) which conducts an annual audit 

10 which is performed by an independent certified 

11 public accounting firm in accordance with gen12 erally accepted accounting principles and which 

13 is made available to the public upon request. 

14 ‘‘(g) SPECIAL RULES.— 

15 ‘‘(1) COORDINATION WITH ADVANCE PAYMENTS

16 OF CREDIT; RECAPTURE OF EXCESS ADVANCE PAY17 MENTS.—With respect to any taxable year— 

18 ‘‘(A) the amount which would (but for this 

19 subsection) be allowed as a credit to the tax20 payer under subsection (a) shall be reduced 

21 (but not below zero) by the aggregate amount 

22 paid on behalf of such taxpayer under section 

23 7529 for months beginning in such taxable 

24 year, and 


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1 ‘‘(B) the tax imposed by section 1 for such 

2 taxable year shall be increased by the excess (if 

3 any) of— 

4 ‘‘(i) the aggregate amount paid on be5 half of such taxpayer under section 7529 

6 for months beginning in such taxable year, 

7 over 

8 ‘‘(ii) the amount which would (but for 

9 this subsection) be allowed as a credit to 

10 the taxpayer under subsection (a). 

11 ‘‘(2) COORDINATION WITH OTHER DEDUC12 TIONS.—Amounts taken into account under sub13 section (a) shall not be taken into account in deter14 mining— 

15 ‘‘(A) any deduction allowed under section 

16 162(l), 213, or 224, or 

17 ‘‘(B) any credit allowed under section 35. 

18 ‘‘(3) MEDICAL AND HEALTH SAVINGS AC19 COUNTS.—Amounts distributed from an Archer 

20 MSA (as defined in section 220(d)) or from a health 

21 savings account (as defined in section 223(d)) shall 

22 not be taken into account under subsection (a). 

23 ‘‘(4) DENIAL OF CREDIT TO DEPENDENTS AND

24 NONPERMANENT RESIDENT ALIEN INDIVIDUALS.— 


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1 No credit shall be allowed under this section to any 

2 individual who is— 

3 ‘‘(A) not a citizen or lawful permanent 

4 resident of the United States for the calendar 

5 year in which the taxable year begins, or 

6 ‘‘(B) a dependent with respect to another 

7 taxpayer for a taxable year beginning in the 

8 calendar year in which such individual’s taxable 

9 year begins. 

10 ‘‘(5) INSURANCE WHICH COVERS OTHER INDI11 VIDUALS.—For purposes of this section, rules simi12 lar to the rules of section 213(d)(6) shall apply with 

13 respect to any contract for qualified health insurance 

14 under which amounts are payable for coverage of an 

15 individual other than the taxpayer and qualifying 

16 family members. 

17 ‘‘(6) TREATMENT OF PAYMENTS.—For pur18 poses of this section— 

19 ‘‘(A) PAYMENTS BY SECRETARY.—Pay20 ments made by the Secretary on behalf of any 

21 individual under section 7529 (relating to ad22 vance payment of credit for health insurance 

23 costs of low-income individuals) shall be treated 

24 as having been made by the taxpayer on the 


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1 first day of the month for which such payment 

2 was made. 

3 ‘‘(B) PAYMENTS BY TAXPAYER.—Pay4 ments made by the taxpayer for eligible cov5 erage months shall be treated as having been 

6 made by the taxpayer on the first day of the 

7 month for which such payment was made. 

8 ‘‘(7) REGULATIONS.—The Secretary may pre9 scribe such regulations and other guidance as may 

10 be necessary or appropriate to carry out this section, 

11 section 6050W, and section 7529.’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) Paragraph (2) of section 1324(b) of title 

14 31, United States Code, as amended by section 2, is 

15 amended by inserting ‘‘36B,’’ after ‘‘36A,’’. 

16 (2) The table of sections for subpart C of part 

17 IV of subchapter A of chapter 1 of the Internal Rev18 enue Code of 1986, as amended by section 2, is 

19 amended by inserting after the item relating to sec20 tion 36A the following new item: 

‘‘Sec. 36B. Health insurance costs of low-income individuals.’’. 

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

22 this section shall apply to taxable years beginning after 

23 December 31, 2013. 

24 (d) SENSE OF CONGRESS.—It is the sense of Con25 gress that the cost of the advanceable refundable credit 


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1 under sections 36B and 7529 of the Internal Revenue 

2 Code of 1986, as added by this title, will be offset by sav3 ings derived from the provisions of title XIII. 

4 SEC. 102. ADVANCE PAYMENT OF CREDIT AS PREMIUM 

5 PAYMENT FOR QUALIFIED HEALTH INSUR6 ANCE. 

7 (a) IN GENERAL.—Chapter 77 of the Internal Rev8 enue Code of 1986 (relating to miscellaneous provisions) 

9 is amended by adding at the end the following: 

10 ‘‘SEC. 7529. ADVANCE PAYMENT OF CREDIT AS PREMIUM 

11 PAYMENT FOR QUALIFIED HEALTH INSUR12 ANCE. 

13 ‘‘(a) GENERAL RULE.—Not later than January 1, 

14 2014, the Secretary shall establish a program for making 

15 payments to providers of qualified health insurance (as de16 fined in section 36B(e)) on behalf of taxpayers eligible for 

17 the credit under section 36B. Except as otherwise pro18 vided by the Secretary, such payments shall be made on 

19 the basis of the adjusted gross income of the taxpayer for 

20 the preceding taxable year. 

21 ‘‘(b) CERTIFICATION PROCESS AND PROOF OF COV22 ERAGE.—For purposes of this section, payments may be 

23 made pursuant to subsection (a) only with respect to indi24 viduals for whom a qualified health insurance costs credit 

25 eligibility certificate is in effect.’’. 


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1 (b) DISCLOSURE OF RETURN INFORMATION FOR

2 PURPOSES OF ADVANCE PAYMENT OF CREDIT AS PRE3 MIUMS FOR QUALIFIED HEALTH INSURANCE.— 

4 (1) IN GENERAL.—Subsection (l) of section 

5 6103 of such Code, as amended by section 2, is 

6 amended by adding at the end the following new 

7 paragraph: 

8 ‘‘(21) DISCLOSURE OF RETURN INFORMATION

9 FOR PURPOSES OF ADVANCE PAYMENT OF CREDIT

10 AS PREMIUMS FOR QUALIFIED HEALTH INSUR11 ANCE.—The Secretary may, on behalf of taxpayers 

12 eligible for the credit under section 36B, disclose to 

13 a provider of qualified health insurance (as defined 

14 in section 36(e)), and persons acting on behalf of 

15 such provider, return information with respect to 

16 any such taxpayer only to the extent necessary (as 

17 prescribed by regulations issued by the Secretary) to 

18 carry out the program established by section 7529 

19 (relating to advance payment of credit as premium 

20 payment for qualified health insurance).’’. 

21 (2) CONFIDENTIALITY OF INFORMATION.— 

22 Paragraph (3) of section 6103(a) of such Code, as 

23 amended by section 2, is amended by striking ‘‘or 

24 (20)’’ and inserting ‘‘(20), or (21)’’. 


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1 (3) UNAUTHORIZED DISCLOSURE.—Paragraph 

2 (2) of section 7213(a) of such Code, as amended by 

3 section 2, is amended by striking ‘‘or (20)’’ and in4 serting ‘‘(20), or (21)’’. 

5 (c) INFORMATION REPORTING.— 

6 (1) IN GENERAL.—Subpart B of part III of 

7 subchapter A of chapter 61 of such Code (relating 

8 to information concerning transactions with other 

9 persons) is amended by adding at the end the fol10 lowing new section: 

11 ‘‘SEC. 6050X. RETURNS RELATING TO CREDIT FOR HEALTH 

12 INSURANCE COSTS OF LOW-INCOME INDIVID13 UALS. 

14 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 

15 who is entitled to receive payments for any month of any 

16 calendar year under section 7529 (relating to advance pay17 ment of credit as premium payment for qualified health 

18 insurance) with respect to any individual shall, at such 

19 time as the Secretary may prescribe, make the return de20 scribed in subsection (b) with respect to each such indi21 vidual. 

22 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

23 is described in this subsection if such return— 

24 ‘‘(1) is in such form as the Secretary may pre25 scribe, and 


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1 ‘‘(2) contains— 

2 ‘‘(A) the name, address, and TIN of each 

3 individual referred to in subsection (a), 

4 ‘‘(B) the number of months for which 

5 amounts were entitled to be received with re6 spect to such individual under section 7529 (re7 lating to advance payment of credit as premium 

8 payment for qualified health insurance), 

9 ‘‘(C) the amount entitled to be received for 

10 each such month, and 

11 ‘‘(D) such other information as the Sec12 retary may prescribe. 

13 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID14 UALS WITH RESPECT TO WHOM INFORMATION IS RE15 QUIRED.—Every person required to make a return under 

16 subsection (a) shall furnish to each individual whose name 

17 is required to be set forth in such return a written state18 ment showing— 

19 ‘‘(1) the name and address of the person re20 quired to make such return and the phone number 

21 of the information contact for such person, and 

22 ‘‘(2) the information required to be shown on 

23 the return with respect to such individual. 

24 The written statement required under the preceding sen25 tence shall be furnished on or before January 31 of the 


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1 year following the calendar year for which the return 

2 under subsection (a) is required to be made.’’. 

3 (2) ASSESSABLE PENALTIES.— 

4 (A) Subparagraph (B) of section 

5 6724(d)(1) of such Code, as amended by sec6 tion 2, is amended by striking ‘‘or’’ at the end 

7 of clause (xxii), by striking ‘‘and’’ at the end of 

8 clause (xxiii) and inserting ‘‘or’’, and by insert9 ing after clause (xxiii) the following new clause: 

10 ‘‘(xxiv) section 6050X (relating to re11 turns relating to credit for health insur12 ance costs of low-income individuals), 

13 and’’. 

14 (B) Paragraph (2) of section 6724(d) of 

15 such Code, as amended by section 2, is amend16 ed by striking ‘‘or’’ at the end of subparagraph 

17 (EE), by striking the period at the end of sub18 paragraph (FF) and inserting ‘‘, or’’, and by 

19 adding after subparagraph (FF) the following 

20 new subparagraph: 

21 ‘‘(GG) section 6050X (relating to returns 

22 relating to credit for health insurance costs of 

23 low-income individuals).’’. 

24 (d) CLERICAL AMENDMENTS.— 


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1 (1) The table of sections for chapter 77 of such 

2 Code is amended by adding at the end the following 

3 new item: 

‘‘Sec. 7529. Advance payment of credit as premium payment for qualified 

health insurance.’’. 

4 (2) The table of sections for subpart B of part 

5 III of subchapter A of chapter 61 of such Code is 

6 amended by adding at the end the following new 

7 item: 

‘‘Sec. 6050X. Returns relating to credit for health insurance costs of low-income individuals.’’. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall take effect on the date of the enactment 

10 of this Act. 

11 SEC. 103. ELECTION OF TAX CREDIT INSTEAD OF ALTER12 NATIVE GOVERNMENT OR GROUP PLAN BEN13 EFITS. 

14 (a) IN GENERAL.—Notwithstanding any other provi15 sion of law, an individual who is otherwise eligible for ben16 efits under a health program (as defined in subsection (c)) 

17 may elect, in a form and manner specified by the Sec18 retary of Health and Human Services in consultation with 

19 the Secretary of the Treasury, to receive a tax credit de20 scribed in section 36B of the Internal Revenue Code of 

21 1986 (which may be used for the purpose of health insur22 ance coverage) in lieu of receiving any benefits under such 

23 program. 


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1 (b) EFFECTIVE DATE.—An election under subsection 

2 (a) may first be made for calendar year 2014 and any 

3 such election shall be effective for such period (not less 

4 than one calendar year) as the Secretary of Health and 

5 Human Services shall specify, in consultation with the 

6 Secretary of the Treasury. 

7 (c) HEALTH PROGRAM DEFINED.—For purposes of 

8 this section, the term ‘‘health program’’ means any of the 

9 following: 

10 (1) MEDICARE.—The Medicare program under 

11 part A of title XVIII of the Social Security Act. 

12 (2) MEDICAID.—The Medicaid program under 

13 title XIX of such Act (including such a program op14 erating under a Statewide waiver under section 1115 

15 of such Act). 

16 (3) SCHIP.—The State children’s health insur17 ance program under title XXI of such Act. 

18 (4) TRICARE.—The TRICARE program 

19 under chapter 55 of title 10, United States Code. 

20 (5) VETERANS BENEFITS.—Coverage for bene21 fits under chapter 17 of title 38, United States 

22 Code. 

23 (6) FEHBP.—Coverage under chapter 89 of 

24 title 5, United States Code. 


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1 (7) SUBSIDIZED GROUP HEALTH PLANS.—Cov2 erage under a group health plan (within the meaning 

3 of section 5000(b)(1)) which is subsidized by the 

4 employer. 

5 (d) OTHER SOCIAL SECURITY BENEFITS NOT

6 WAIVED.—An election to waive the benefits described in 

7 subsection (c)(1) shall not result in the waiver of any other 

8 benefits under the Social Security Act. 

9 SEC. 104. DEDUCTION FOR QUALIFIED HEALTH INSURANCE 

10 COSTS OF INDIVIDUALS. 

11 (a) IN GENERAL.—Part VII of subchapter B of chap12 ter 1 of the Internal Revenue Code of 1986 (relating to 

13 additional itemized deductions) is amended by redesig14 nating section 224 as section 225 and by inserting after 

15 section 223 the following new section: 

16 ‘‘SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE. 

17 ‘‘(a) IN GENERAL.—In the case of an individual, 

18 there shall be allowed as a deduction an amount equal to 

19 the amount paid during the taxable year for coverage for 

20 the taxpayer, his spouse, and dependents under qualified 

21 health insurance. 

22 ‘‘(b) LIMITATION.—In the case of any taxpayer for 

23 any taxable year, the deduction under subsection (a) shall 

24 not exceed an amount that would cause the taxpayer’s 

25 Federal income tax liability to be reduced by more than 


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1 the average value of the national health exclusion for em2 ployer-sponsored insurance as determined by calculating 

3 the value of the exclusion for each household followed by 

4 calculating the average of those values. 

5 ‘‘(c) QUALIFIED HEALTH INSURANCE.—For pur6 poses of this section, the term ‘qualified health insurance’ 

7 has the meaning given such term by section 36B(e). 

8 ‘‘(d) SPECIAL RULES.— 

9 ‘‘(1) COORDINATION WITH MEDICAL DEDUC10 TION, ETC.—Any amount paid by a taxpayer for in11 surance to which subsection (a) applies shall not be 

12 taken into account in computing the amount allow13 able to the taxpayer as a deduction under section 

14 162(l) or 213(a). Any amount taken into account in 

15 determining the credit allowed under section 35 or 

16 36B shall not be taken into account for purposes of 

17 this section. 

18 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM19 PLOYMENT TAX PURPOSES.—The deduction allow20 able by reason of this section shall not be taken into 

21 account in determining an individual’s net earnings 

22 from self-employment (within the meaning of section 

23 1402(a)) for purposes of chapter 2.’’. 

24 (b) DEDUCTION ALLOWED IN COMPUTING AD25 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 


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•S 1851 IS

1 such Code is amended by inserting before the last sentence 

2 the following new paragraph: 

3 ‘‘(22) COSTS OF QUALIFIED HEALTH INSUR4 ANCE.—The deduction allowed by section 224.’’. 

5 (c) CLERICAL AMENDMENT.—The table of sections 

6 for part VII of subchapter B of chapter 1 of such Code 

7 is amended by redesignating the item relating to section 

8 224 as an item relating to section 225 and inserting before 

9 such item the following new item: 

‘‘Sec. 224. Costs of qualified health insurance.’’. 

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2013. 

13 SEC. 105. LIMITATION ON ABORTION FUNDING. 

14 No funds authorized under, or credits or deductions 

15 allowed under the Internal Revenue Code of 1986 by rea16 son of, this Act (or any amendment made by this Act) 

17 may be used to pay for any abortion or to cover any part 

18 of the costs of any health plan that includes coverage of 

19 abortion, except in the case where a woman suffers from 

20 a physical disorder, physical injury, or physical illness that 

21 would, as certified by a physician, place the woman in dan22 ger of death unless an abortion is performed, including 

23 a life-endangering physical condition caused by or arising 

24 from the pregnancy itself, or unless the pregnancy is the 

25 result of an act of rape or incest. 


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1 SEC. 106. NO GOVERNMENT DISCRIMINATION AGAINST 

2 CERTAIN HEALTH CARE ENTITIES. 

3 (a) NON-DISCRIMINATION.—A Federal agency or 

4 program, and any State or local government that receives 

5 Federal financial assistance under this Act or any amend6 ment made by this Act (either directly or indirectly), may 

7 not subject any individual or institutional health care enti8 ty to discrimination on the basis that the health care enti9 ty does not provide, pay for, provide coverage of, or refer 

10 for abortions. 

11 (b) HEALTH CARE ENTITY DEFINED.—For purposes 

12 of this section, the term ‘‘health care entity’’ includes an 

13 individual physician or other health care professional, a 

14 hospital, a provider-sponsored organization, a health 

15 maintenance organization, a health insurance plan, or any 

16 other kind of health care facility, organization, or plan. 

17 (c) REMEDIES.— 

18 (1) IN GENERAL.—The courts of the United 

19 States shall have jurisdiction to prevent and redress 

20 actual or threatened violations of this section by 

21 issuing any form of legal or equitable relief, includ22 ing— 

23 (A) injunctions prohibiting conduct that 

24 violates this section; and 

25 (B) orders preventing the disbursement of 

26 all or a portion of Federal financial assistance 


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•S 1851 IS

1 to a State or local government, or to a specific 

2 offending agency or program of a State or local 

3 government, until such time as the conduct pro4 hibited by this section has ceased. 

5 (2) COMMENCEMENT OF ACTION.—An action 

6 under this subsection may be instituted by— 

7 (A) any health care entity that has stand8 ing to complain of an actual or threatened vio9 lation of this section; or 

10 (B) the Attorney General of the United 

11 States. 

12 (d) ADMINISTRATION.—The Secretary of Health and 

13 Human Services shall designate the Director of the Office 

14 for Civil Rights of the Department of Health and Human 

15 Services— 

16 (1) to receive complaints alleging a violation of 

17 this section; 

18 (2) subject to paragraph (3), to pursue the in19 vestigation of such complaints in coordination with 

20 the Attorney General; and 

21 (3) in the case of a complaint related to a Fed22 eral agency (other than with respect to the Depart23 ment of Health and Human Services) or program 

24 administered through such other agency or any 

25 State or local government receiving Federal financial 


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•S 1851 IS

1 assistance through such other agency, to refer the 

2 complaint to the appropriate office of such other 

3 agency. 

4 SEC. 107. EQUAL EMPLOYER CONTRIBUTION RULE TO PRO5 MOTE CHOICE. 

6 (a) IN GENERAL.—Section 5000 of the Internal Rev7 enue Code of 1986 is amended by adding at the end the 

8 following new subsection: 

9 ‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.— 

10 ‘‘(1) IN GENERAL.—Subsection (a) shall not 

11 apply in the case of a group health plan with respect 

12 to which the requirements of paragraphs (2) and (3) 

13 are met. 

14 ‘‘(2) CONTRIBUTION ELECTION.—The require15 ment of this paragraph is met with respect to a 

16 group health plan if any employee of an employer 

17 (who but for this paragraph would be covered by 

18 such plan) may elect to have the employer or em19 ployee organization pay an amount which is not less 

20 than the contribution amount to any provider of 

21 health insurance coverage (other than excepted bene22 fits as defined in section 9832(c)) which constitutes 

23 medical care of the individual or individual’s spouse 

24 or dependents in lieu of such group health plan covVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 erage otherwise provided or contributed to by the 

2 employer with respect to such employee. 

3 ‘‘(3) PRE-EXISTING CONDITIONS.— 

4 ‘‘(A) IN GENERAL.—The requirement of 

5 this paragraph is met with respect to health in6 surance coverage provided to a participant or 

7 beneficiary by any health insurance issuer if, 

8 under such plan the requirements of section 

9 9801 are met with respect to the participant or 

10 beneficiary. 

11 ‘‘(B) ENFORCEMENT WITH RESPECT TO

12 INDIVIDUAL ELECTION.—For purposes of sub13 paragraph (A), any health insurance coverage 

14 with respect to the participant or beneficiary 

15 shall be treated as health insurance coverage 

16 under a group health plan to which section 

17 9801 applies. 

18 ‘‘(4) CONTRIBUTION AMOUNT.—For purposes 

19 of this section, the term ‘contribution amount’ 

20 means, with respect to an individual under a group 

21 health plan, the portion of the applicable premium of 

22 such individual under such plan (as determined 

23 under section 4980B(f)(4)) which is not paid by the 

24 individual. In the case that the employer offers more 

25 than one group health plan, the contribution amount 


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•S 1851 IS

1 shall be the average amount of the applicable pre2 miums under such plans. 

3 ‘‘(5) GROUP HEALTH PLAN.—For purposes of 

4 this subsection, subsection (d) shall not apply. 

5 ‘‘(6) APPLICATION TO FEHBP.—Notwith6 standing any other provision of law, the Office of 

7 Personnel Management shall carry out the health 

8 benefits program under chapter 89 of title 5, United 

9 States Code, consistent with the requirements of this 

10 subsection.’’. 

11 (b) REQUIREMENT OF EQUAL CONTRIBUTIONS TO

12 ALL FEHBP PLANS.—Section 8906 of title 5, United 

13 States Code, is amended by adding at the end the fol14 lowing new subsection: 

15 ‘‘(j) Notwithstanding the previous provisions of this 

16 section the Office of Personnel Management shall revise 

17 the amount of the Government contribution made under 

18 this section in a manner so that— 

19 ‘‘(1) the amount of such contribution does not 

20 change based on the health benefits plan in which 

21 the individual is enrolled; and 

22 ‘‘(2) the aggregate amount of such contribu23 tions is estimated to be equal to the aggregate 

24 amount of such contributions if this subsection did 

25 not apply.’’. 


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•S 1851 IS

1 (c) EMPLOYEE RETIREMENT INCOME SECURITY ACT

2 OF 1974 CONFORMING AMENDMENTS.— 

3 (1) EXCEPTION FROM HIPAA REQUIREMENTS

4 FOR BENEFITS PROVIDED UNDER HEALTH CARE

5 CONTRIBUTION ELECTION.—Section 732 of the Em6 ployee Retirement Income Security Act of 1974 (29 

7 U.S.C. 1191a) is amended by adding at the end the 

8 following new subsection: 

9 ‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.— 

10 ‘‘(1) IN GENERAL.—The requirements of this 

11 part shall not apply in the case of health insurance 

12 coverage (other than excepted benefits as defined in 

13 section 9832(c) of the Internal Revenue Code of 

14 1986)— 

15 ‘‘(A) which is provided to a participant or 

16 beneficiary by a health insurance issuer under 

17 a group health plan, and 

18 ‘‘(B) with respect to which the require19 ments of paragraphs (2) and (3) are met. 

20 ‘‘(2) CONTRIBUTION ELECTION.—The require21 ment of this paragraph is met with respect to health 

22 insurance coverage provided to a participant or ben23 eficiary by any health insurance issuer under a 

24 group health plan if, under such plan— 


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•S 1851 IS

1 ‘‘(A) the participant may elect such cov2 erage for any period of coverage in lieu of 

3 health insurance coverage otherwise provided 

4 under such plan for such period, and 

5 ‘‘(B) in the case of such an election, the 

6 plan sponsor is required to pay to such issuer 

7 for the elected coverage for such period an 

8 amount which is not less than the contribution 

9 amount for such health insurance coverage oth10 erwise provided under such plan for such pe11 riod. 

12 ‘‘(3) PRE-EXISTING CONDITIONS.— 

13 ‘‘(A) IN GENERAL.—The requirement of 

14 this paragraph is met with respect to health in15 surance coverage provided to a participant or 

16 beneficiary by any health insurance issuer if, 

17 under such plan the requirements of section 

18 701 are met with respect to the participant or 

19 beneficiary. 

20 ‘‘(B) ENFORCEMENT WITH RESPECT TO

21 INDIVIDUAL ELECTION.—For purposes of sub22 paragraph (A), any health insurance coverage 

23 with respect to the participant or beneficiary 

24 shall be treated as health insurance coverage 


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•S 1851 IS

1 under a group health plan to which section 701 

2 applies. 

3 ‘‘(4) CONTRIBUTION AMOUNT.— 

4 ‘‘(A) IN GENERAL.—For purposes of this 

5 section, the term ‘contribution amount’ means, 

6 with respect to any period of health insurance 

7 coverage offered to a participant or beneficiary, 

8 the portion of the applicable premium of such 

9 participant or beneficiary under such plan 

10 which is not paid by such participant or bene11 ficiary. In the case that the employer offers 

12 more than one group health plan, the contribu13 tion amount shall be the average amount of the 

14 applicable premiums under such plans. 

15 ‘‘(B) APPLICABLE PREMIUM.—For pur16 poses of subparagraph (A), the term ‘applicable 

17 premium’ means, with respect to any period of 

18 health insurance coverage of a participant or 

19 beneficiary under a group health plan, the cost 

20 to the plan for such period of such coverage for 

21 similarly situated beneficiaries (without regard 

22 to whether such cost is paid by the plan spon23 sor or the participant or beneficiary).’’. 

24 (2) EXEMPTION FROM FIDUCIARY LIABILITY.— 

25 Section 404 of such Act (29 U.S.C. 1104) is amendVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 ed by adding at the end the following new sub2 section: 

3 ‘‘(e) The plan sponsor of a group health plan (as de4 fined in section 733(a)) shall not be treated as breaching 

5 any of the responsibilities, obligations, or duties imposed 

6 upon fiduciaries by this title in the case of any individual 

7 who is a participant or beneficiary under such plan solely 

8 because of the extent to which the plan sponsor provides, 

9 in the case of such individual, some or all of such benefits 

10 by means of payment of contribution amounts pursuant 

11 to a contribution election under section 732(e), irrespec12 tive of the amount or type of benefits that would otherwise 

13 be provided to such individual under such plan.’’. 

14 (d) EXCEPTION FROM HIPAA REQUIREMENTS

15 UNDER IRC FOR BENEFITS PROVIDED UNDER HEALTH

16 CARE CONTRIBUTION ELECTION.—Section 9831 of the 

17 Internal Revenue Code of 1986 (relating to general excep18 tions) is amended by adding at the end the following new 

19 subsection: 

20 ‘‘(d) HEALTH CARE CONTRIBUTION ELECTION.— 

21 ‘‘(1) IN GENERAL.—The requirements of this 

22 chapter shall not apply in the case of health insur23 ance coverage (other than excepted benefits as de24 fined in section 9832(c))— 


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•S 1851 IS

1 ‘‘(A) which is provided to a participant or 

2 beneficiary by a health insurance issuer under 

3 a group health plan, and 

4 ‘‘(B) with respect to which the require5 ments of paragraphs (2) and (3) are met. 

6 ‘‘(2) CONTRIBUTION ELECTION.—The require7 ment of this paragraph is met with respect to health 

8 insurance coverage provided to a participant or ben9 eficiary by any health insurance issuer under a 

10 group health plan if, under such plan— 

11 ‘‘(A) the participant may elect such cov12 erage for any period of coverage in lieu of 

13 health insurance coverage otherwise provided 

14 under such plan for such period, and 

15 ‘‘(B) in the case of such an election, the 

16 plan sponsor is required to pay to such issuer 

17 for the elected coverage for such period an 

18 amount which is not less than the contribution 

19 amount for such health insurance coverage oth20 erwise provided under such plan for such pe21 riod. 

22 ‘‘(3) PRE-EXISTING CONDITIONS.— 

23 ‘‘(A) IN GENERAL.—The requirement of 

24 this paragraph is met with respect to health in25 surance coverage provided to a participant or 


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•S 1851 IS

1 beneficiary by any health insurance issuer if, 

2 under such plan the requirements of section 

3 9801 are met with respect to the participant or 

4 beneficiary. 

5 ‘‘(B) ENFORCEMENT WITH RESPECT TO

6 INDIVIDUAL ELECTION.—For purposes of sub7 paragraph (A), any health insurance coverage 

8 with respect to the participant or beneficiary 

9 shall be treated as health insurance coverage 

10 under a group health plan to which section 

11 9801 applies. 

12 ‘‘(4) CONTRIBUTION AMOUNT.— 

13 ‘‘(A) IN GENERAL.—For purposes of this 

14 subsection, the term ‘contribution amount’ 

15 means, with respect to any period of health in16 surance coverage offered to a participant or 

17 beneficiary, the portion of the applicable pre18 mium of such participant or beneficiary under 

19 such plan which is not paid by such participant 

20 or beneficiary. In the case that the employer of21 fers more than one group health plan, the con22 tribution amount shall be the average amount 

23 of the applicable premiums under such plans. 

24 ‘‘(B) APPLICABLE PREMIUM.—For pur25 poses of subparagraph (A), the term ‘applicable 


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•S 1851 IS

1 premium’ means, with respect to any period of 

2 health insurance coverage of a participant or 

3 beneficiary under a group health plan, the cost 

4 to the plan for such period of such coverage for 

5 similarly situated beneficiaries (without regard 

6 to whether such cost is paid by the plan spon7 sor or the participant or beneficiary).’’. 

8 (e) EXCEPTION FROM HIPAA REQUIREMENTS

9 UNDER THE PHSA FOR BENEFITS PROVIDED UNDER

10 HEALTH CARE CONTRIBUTION ELECTION.—Section 2721 

11 of the Public Health Service Act (42 U.S.C. 300gg–21) 

12 is amended— 

13 (1) by redesignating subsection (e) as sub14 section (f); and 

15 (2) by inserting after subsection (d) the fol16 lowing new subsection: 

17 ‘‘(e) HEALTH CARE CONTRIBUTION ELECTION.— 

18 ‘‘(1) IN GENERAL.—The requirements of sub19 parts 1 through 3 shall not apply in the case of 

20 health insurance coverage (other than excepted bene21 fits as defined in section 9832(c) of the Internal 

22 Revenue Code of 1986)— 

23 ‘‘(A) which is provided to a participant or 

24 beneficiary by a health insurance issuer under 

25 a group health plan, and 


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•S 1851 IS

1 ‘‘(B) with respect to which the require2 ments of paragraphs (2) and (3) are met. 

3 ‘‘(2) CONTRIBUTION ELECTION.—The require4 ment of this paragraph is met with respect to health 

5 insurance coverage provided to a participant or ben6 eficiary by any health insurance issuer under a 

7 group health plan if, under such plan— 

8 ‘‘(A) the participant may elect such cov9 erage for any period of coverage in lieu of 

10 health insurance coverage otherwise provided 

11 under such plan for such period, and 

12 ‘‘(B) in the case of such an election, the 

13 plan sponsor is required to pay to such issuer 

14 for the elected coverage for such period an 

15 amount which is not less than the contribution 

16 amount for such health insurance coverage oth17 erwise provided under such plan for such pe18 riod. 

19 ‘‘(3) PRE-EXISTING CONDITIONS.— 

20 ‘‘(A) IN GENERAL.—The requirement of 

21 this paragraph is met with respect to health in22 surance coverage provided to a participant or 

23 beneficiary by any health insurance issuer if, 

24 under such plan the requirements of section 


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•S 1851 IS

1 2701 are met with respect to the participant or 

2 beneficiary. 

3 ‘‘(B) ENFORCEMENT WITH RESPECT TO

4 INDIVIDUAL ELECTION.—For purposes of sub5 paragraph (A), any health insurance coverage 

6 with respect to the participant or beneficiary 

7 shall be treated as health insurance coverage 

8 under a group health plan to which section 

9 2701 applies. 

10 ‘‘(4) CONTRIBUTION AMOUNT.— 

11 ‘‘(A) IN GENERAL.—For purposes of this 

12 section, the term ‘contribution amount’ means, 

13 with respect to any period of health insurance 

14 coverage offered to a participant or beneficiary, 

15 the portion of the applicable premium of such 

16 participant or beneficiary under such plan 

17 which is not paid by such participant or bene18 ficiary. In the case that the employer offers 

19 more than one group health plan, the contribu20 tion amount shall be the average amount of the 

21 applicable premiums under such plans. 

22 ‘‘(B) APPLICABLE PREMIUM.—For pur23 poses of subparagraph (A), the term ‘applicable 

24 premium’ means, with respect to any period of 

25 health insurance coverage of a participant or 


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•S 1851 IS

1 beneficiary under a group health plan, the cost 

2 to the plan for such period of such coverage for 

3 similarly situated beneficiaries (without regard 

4 to whether such cost is paid by the plan spon5 sor or the participant or beneficiary).’’. 

6 SEC. 108. LIMITATIONS ON STATE RESTRICTIONS ON EM7 PLOYER AUTO-ENROLLMENT. 

8 (a) IN GENERAL.—No State shall establish a law 

9 that prevents an employer that is allowed an exclusion 

10 from gross income, a deduction, or a credit for Federal 

11 income tax purposes for health benefits furnished to a par12 ticipant or beneficiary from instituting auto-enrollment 

13 which meets the requirements of subsection (b) for cov14 erage of a participant or beneficiary under a group health 

15 plan, or health insurance coverage offered in connection 

16 with such a plan, so long as the participant or beneficiary 

17 has the option of declining such coverage. 

18 (b) AUTOMATIC ENROLLMENT FOR EMPLOYER19 SPONSORED HEALTH BENEFITS.— 

20 (1) IN GENERAL.—The requirement of this sub21 section with respect to an employer and an employee 

22 is that the employer automatically enroll such em23 ployee into the employment-based health benefits 

24 plan for individual coverage under the plan option 

25 with the lowest applicable employee premium. 


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•S 1851 IS

1 (2) OPT-OUT.—In no case may an employer 

2 automatically enroll an employee in a plan under 

3 paragraph (1) if such employee makes an affirmative 

4 election to opt-out of such plan or to elect coverage 

5 under an employment-based health benefits plan of6 fered by such employer. An employer shall provide 

7 an employee with a 30-day period to make such an 

8 affirmative election before the employer may auto9 matically enroll the employee in such a plan. 

10 (3) NOTICE REQUIREMENTS.— 

11 (A) IN GENERAL.—Each employer de12 scribed in paragraph (1) who automatically en13 rolls an employee into a plan as described in 

14 such paragraph shall provide the employees, 

15 within a reasonable period before the beginning 

16 of each plan year (or, in the case of new em17 ployees, within a reasonable period before the 

18 end of the enrollment period for such a new em19 ployee), written notice of the employees’ rights 

20 and obligations relating to the automatic enroll21 ment requirement under such paragraph. Such 

22 notice must be comprehensive and understood 

23 by the average employee to whom the automatic 

24 enrollment requirement applies. 


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•S 1851 IS

1 (B) INCLUSION OF SPECIFIC INFORMA2 TION.—The written notice under subparagraph 

3 (A) must explain an employee’s right to opt out 

4 of being automatically enrolled in a plan and in 

5 the case that more than one level of benefits or 

6 employee premium level is offered by the em7 ployer involved, the notice must explain which 

8 level of benefits and employee premium level the 

9 employee will be automatically enrolled in the 

10 absence of an affirmative election by the em11 ployee. 

12 (c) CONSTRUCTION.—Nothing in this section shall be 

13 construed to supersede State law which establishes, imple14 ments, or continues in effect any standard or requirement 

15 relating to employers in connection with payroll or the 

16 sponsoring of employer-sponsored health insurance cov17 erage except to the extent that such standard or require18 ment prevents an employer from instituting the auto-en19 rollment described in subsection (a). 

20 (d) NON-APPLICATION TO EXCEPTED BENEFITS.— 

21 For purposes of this section, the term ‘‘group health plan’’ 

22 does not include excepted benefits (as defined in section 

23 2781(c) of the Public Health Service Act (42 U.S.C. 

24 300gg–91(c))). 


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•S 1851 IS

1 SEC. 109. CREDIT FOR SMALL EMPLOYERS ADOPTING 

2 AUTO-ENROLLMENT AND DEFINED CON3 TRIBUTION OPTIONS. 

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of 

6 1986, as amended by section 2, is amended by adding at 

7 the end the following new section: 

8 ‘‘SEC. 45R. AUTO-ENROLLMENT AND DEFINED CONTRIBU9 TION OPTION FOR HEALTH BENEFITS PLANS 

10 OF SMALL EMPLOYERS. 

11 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

12 the case of a small employer, the health benefits plan im13 plementation credit determined under this section for the 

14 taxable year is an amount equal to 100 percent of the 

15 amount paid or incurred by the taxpayer during the tax16 able year for qualified health benefits expenses. 

17 ‘‘(b) LIMITATION.—The credit determined under sub18 section (a) with respect to any taxpayer for any taxable 

19 year shall not exceed the excess of— 

20 ‘‘(1) $1,500, over 

21 ‘‘(2) sum of the credits determined under sub22 section (a) with respect to such taxpayer for all pre23 ceding taxable years. 

24 ‘‘(c) QUALIFIED HEALTH BENEFITS EXPENSES.— 

25 For purposes of this section, the term ‘qualified health 

26 benefits auto-enrollment expenses’ means, with respect to 


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•S 1851 IS

1 any taxable year, amounts paid or incurred by the tax2 payer during such taxable year for— 

3 ‘‘(1) establishing auto-enrollment which meets 

4 the requirements of section 107 of the Empowering 

5 Patients First Act of 2013 for coverage of a partici6 pant or beneficiary under a group health plan, or 

7 health insurance coverage offered in connection with 

8 such a plan, and 

9 ‘‘(2) implementing the employer contribution 

10 option for health insurance coverage pursuant to 

11 section 5000(e)(2). 

12 ‘‘(d) QUALIFIED SMALL EMPLOYER.—For purposes 

13 of this section, the term ‘qualified small employer’ means 

14 any employer for any taxable year if the number of em15 ployees employed by such employer during such taxable 

16 year does not exceed 50. All employers treated as a single 

17 employer under section (a) or (b) of section 52 shall be 

18 treated as a single employer for purposes of this section. 

19 ‘‘(e) NO DOUBLE BENEFIT.—No deduction or credit 

20 shall be allowed under any other provision of this chapter 

21 with respect to the amount of the credit determined under 

22 this section. 

23 ‘‘(f) TERMINATION.—Subsection (a) shall not apply 

24 to any taxable year beginning after the date which is 2 

25 years after the date of the enactment of this section.’’. 


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•S 1851 IS

1 (b) CREDIT TO BE PART OF GENERAL BUSINESS

2 CREDIT.—Subsection (b) of section 38 of such Code, as 

3 amended by section 2, is amended by striking ‘‘plus’’ at 

4 the end of paragraph (34), by striking the period at the 

5 end of paragraph (35) and inserting ‘‘, plus’’, and by add6 ing at the end the following new paragraph: 

7 ‘‘(36) in the case of a small employer (as de8 fined in section 45R(d)), the health benefits plan im9 plementation credit determined under section 

10 45R(a).’’. 

11 (c) CLERICAL AMENDMENT.—The table of sections 

12 for subpart D of part IV of subchapter A of chapter 1 

13 of such Code, as amended by section 2, is amended by 

14 inserting after the item relating to section 45Q the fol15 lowing new item: 

‘‘Sec. 45R. Auto-enrollment and defined contribution option for health benefits 

plans of small employers.’’. 

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

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

19 SEC. 110. HSA MODIFICATIONS AND CLARIFICATIONS. 

20 (a) CLARIFICATION OF TREATMENT OF CAPITATED

21 PRIMARY CARE PAYMENTS AS AMOUNTS PAID FOR MED22 ICAL CARE.—Section 213(d) of the Internal Revenue Code 

23 of 1986 (relating to definitions) is amended by adding at 

24 the end the following new paragraph: 


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•S 1851 IS

1 ‘‘(12) TREATMENT OF CAPITATED PRIMARY

2 CARE PAYMENTS.—Capitated primary care payments 

3 shall be treated as amounts paid for medical care.’’. 

4 (b) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR

5 VETERANS OR INDIAN HEALTH BENEFITS.—Section 

6 223(c)(1) of such Code (defining eligible individual) is 

7 amended by adding at the end the following new subpara8 graph: 

9 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI10 GIBLE FOR VETERANS OR INDIAN HEALTH BEN11 EFITS.—For purposes of subparagraph (A)(ii), 

12 an individual shall not be treated as covered 

13 under a health plan described in such subpara14 graph merely because the individual receives 

15 periodic hospital care or medical services under 

16 any law administered by the Secretary of Vet17 erans Affairs or the Bureau of Indian Affairs.’’. 

18 (c) CERTAIN PHYSICIAN FEES TO BE TREATED AS

19 MEDICAL CARE.—Section 213(d) of such Code is amend20 ed by adding at the end the following new paragraph: 

21 ‘‘(13) PRE-PAID PHYSICIAN FEES.—The term 

22 ‘medical care’ shall include amounts paid by patients 

23 to their primary physician in advance for the right 

24 to receive medical services on an as-needed basis.’’. 


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•S 1851 IS

1 (d) APPLICATION TO HEALTH CARE SHARING MIN2 ISTRIES.—Section 223 of such Code is amended by adding 

3 at the end the following new subsection: 

4 ‘‘(i) APPLICATION TO HEALTH CARE SHARING MIN5 ISTRIES.—For purposes of this section, membership in a 

6 health care sharing ministry (as defined in section 

7 36B(f)(3)) shall be treated as coverage under a high de8 ductible health plan.’’. 

9 (e) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 TITLE II—HEALTH INSURANCE 

13 POOLING MECHANISMS FOR 

14 INDIVIDUALS 

15 Subtitle A—Federal Grants for 

16 State Insurance Expenditures 

17 SEC. 201. FEDERAL GRANTS FOR STATE INSURANCE EX18 PENDITURES. 

19 (a) IN GENERAL.—Subject to the succeeding provi20 sions of this section, each State shall receive from the Sec21 retary of Health and Human Services (in this subtitle re22 ferred to as the ‘‘Secretary’’) a grant for the State’s pro23 viding for the use, in connection with providing health ben24 efits coverage, of a qualifying high-risk pool or a reinsur25 ance pool or other risk-adjustment mechanism used for 


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1 the purpose of subsidizing the purchase of private health 

2 insurance. 

3 (b) FUNDING AMOUNT.— 

4 (1) IN GENERAL.—There are hereby appro5 priated, out of any funds in the Treasury not other6 wise appropriated, $300,000,000 for each of fiscal 

7 years 2014, 2015, and 2016 for grants under this 

8 section. Such amount shall be divided among the 

9 States as determined by the Secretary. 

10 (2) CONSTRUCTION.—Nothing in this section 

11 shall be construed as preventing a State from using 

12 funding under section 2745 of the Public Health 

13 Service Act for purposes of funding reinsurance or 

14 other risk mechanisms. 

15 (c) LIMITATION.—Funding under subsection (a) may 

16 only be used for the following: 

17 (1) QUALIFYING HIGH-RISK POOLS.— 

18 (A) CURRENT POOLS.—A qualifying high19 risk pool created before the date of the enact20 ment of this Act that only cover high-risk popu21 lations and individuals (and their spouse and 

22 dependents) receiving a health care tax credit 

23 under section 35 of the Internal Revenue Code 

24 of 1986 for a limited period of time as deterVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 mined by the Secretary or under section 2741 

2 of Public Health Service Act. 

3 (B) NEW POOLS.—A qualifying high-risk 

4 pool created on or after such date that only cov5 ers populations and individuals described in 

6 subparagraph (A) if the pool— 

7 (i) offers at least the option of one or 

8 more high-deductible plan options, in com9 bination with a contribution into a health 

10 savings account; 

11 (ii) offers multiple competing health 

12 plan options; and 

13 (iii) covers only high-risk populations. 

14 (2) RISK INSURANCE POOL OR OTHER RISK-AD15 JUSTMENT MECHANISMS.— 

16 (A) CURRENT REINSURANCE.—A reinsur17 ance pool, or other risk-adjustment mechanism, 

18 created before the date of the enactment of this 

19 Act that only covers populations and individuals 

20 described in paragraph (1)(A). 

21 (B) NEW POOLS.—A reinsurance pool or 

22 other risk-adjustment mechanism created on or 

23 after such date that provides reinsurance only 

24 covers populations and individuals described in 

25 paragraph (1)(A) and only on a prospective 


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•S 1851 IS

1 basis under which a health insurance issuer 

2 cedes covered lives to the pool in exchange for 

3 payment of a reinsurance premium. 

4 (3) TRANSITION.—Nothing in this section shall 

5 be construed as preventing a State from using funds 

6 available to transition from an existing high-risk 

7 pool to a reinsurance pool. 

8 (d) BONUS PAYMENTS.—With respect to any 

9 amounts made available to the States under this section, 

10 the Secretary shall set aside a portion of such amounts 

11 that shall only be available for the following activities by 

12 such States: 

13 (1) Providing guaranteed availability of indi14 vidual health insurance coverage to certain individ15 uals with prior group coverage under part B of title 

16 XXVII of the Public Health Service Act. 

17 (2) A reduction in premium trends, actual pre18 miums, or other cost-sharing requirements. 

19 (3) An expansion or broadening of the pool of 

20 high-risk individuals eligible for coverage. 

21 (4) States that adopt the Model Health Plan 

22 for Uninsurable Individuals Act of the National As23 sociation of Insurance Commissioners (if and when 

24 updated by such Association). 


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•S 1851 IS

1 The Secretary may request such Association to update 

2 such Model Health Plan as needed by 2015. 

3 (e) ADMINISTRATION.—The Secretary shall provide 

4 for the administration of this section and may establish 

5 such terms and conditions, including the requirement of 

6 an application, as may be appropriate to carry out this 

7 section. 

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

9 construed as requiring a State to operate a reinsurance 

10 pool (or other risk-adjustment mechanism) under this sec11 tion or as preventing a State from operating such a pool 

12 or mechanism through one or more private entities. 

13 (g) DEFINITIONS.—In this section: 

14 (1) QUALIFYING HIGH-RISK POOL.—The term 

15 ‘‘qualifying high-risk pool’’ means any qualified 

16 high-risk pool (as defined in subsection (g)(1)(A) of 

17 section 2745 of the Public Health Service Act) that 

18 meets the conditions to receive a grant under section 

19 (b)(1) of such section. 

20 (2) REINSURANCE POOL OR OTHER RISK-AD21 JUSTMENT MECHANISM DEFINED.—The term ‘‘rein22 surance pool or other risk-adjustment mechanism’’ 

23 means any State-based risk spreading mechanism to 

24 subsidize the purchase of private health insurance 

25 for the high-risk population. 


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1 (3) HIGH-RISK POPULATION.—The term ‘‘high2 risk population’’ means— 

3 (A) individuals who, by reason of the exist4 ence or history of a medical condition, are able 

5 to acquire health coverage only at rates which 

6 are at least 150 percent of the standard risk 

7 rates for such coverage (in a non-community8 rated non-guaranteed issue State), and 

9 (B) individuals who are provided health 

10 coverage by a high-risk pool. 

11 (4) STATE DEFINED.—The term ‘‘State’’ in12 cludes the District of Columbia, Puerto Rico, the 

13 Virgin Islands, Guam, American Samoa, and the 

14 Northern Mariana Islands. 

15 (h) EXTENDING FUNDING.—Section 2745(d)(2) of 

16 the Public Health Service Act (42 U.S.C. 300gg–45(d)(2)) 

17 is amended— 

18 (1) in the heading, by inserting ‘‘AND 2014

19 THROUGH 2016’’ after ‘‘2010’’; and 

20 (2) by inserting ‘‘and for each of fiscal years 

21 2014 through 2016’’ after ‘‘for each of fiscal years 

22 2007 through 2010’’. 

23 (i) SUNSET.—Funds made available under this sec24 tion shall not be used for the purpose of subsidizing the 


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1 purchase of private health insurance on or after October 

2 1, 2016. 

3 Subtitle B—Health Care Access and 

4 Availability 

5 SEC. 211. EXPANSION OF ACCESS AND CHOICE THROUGH 

6 INDIVIDUAL AND SMALL EMPLOYER MEM7 BERSHIP ASSOCIATIONS (IMAS). 

8 The Public Health Service Act, as amended by sec9 tion 2, is further amended by inserting after title XXX 

10 the following new title: 

11 ‘‘TITLE XXXI—INDIVIDUAL AND 

12 SMALL EMPLOYER MEMBER13 SHIP ASSOCIATIONS 

14 ‘‘SEC. 3101. DEFINITION OF INDIVIDUAL AND SMALL EM15 PLOYER MEMBERSHIP ASSOCIATION (IMA). 

16 ‘‘(a) IN GENERAL.—For purposes of this title, the 

17 terms ‘individual and small employer membership associa18 tion’ and ‘IMA’ mean a legal entity that meets the fol19 lowing requirements: 

20 ‘‘(1) ORGANIZATION.—The IMA is an organiza21 tion operated under the direction of an association 

22 (as defined in section 3104(1)). 

23 ‘‘(2) OFFERING HEALTH BENEFITS COV24 ERAGE.— 


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1 ‘‘(A) DIFFERENT GROUPS.—The IMA, in 

2 conjunction with those health insurance issuers 

3 that offer health benefits coverage through the 

4 IMA, makes available health benefits coverage 

5 in the manner described in subsection (b) to all 

6 members of the IMA and the dependents of 

7 such members (and, in the case of small em8 ployers, employees and their dependents) in the 

9 manner described in subsection (c)(2) at rates 

10 that are established by the health insurance 

11 issuer on a policy or product specific basis and 

12 that may vary only as permissible under State 

13 law. 

14 ‘‘(B) NONDISCRIMINATION IN COVERAGE

15 OFFERED.— 

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

17 (ii), the IMA may not offer health benefits 

18 coverage to a member of an IMA unless 

19 the same coverage is offered to all such 

20 members of the IMA. 

21 ‘‘(ii) CONSTRUCTION.—Nothing in 

22 this title shall be construed as requiring or 

23 permitting a health insurance issuer to 

24 provide coverage outside the service area of 

25 the issuer, as approved under State law, or 


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1 requiring a health insurance issuer from 

2 excluding or limiting the coverage on any 

3 individual, subject to the requirement of 

4 section 2741. 

5 ‘‘(C) NO FINANCIAL UNDERWRITING.—The 

6 IMA provides health benefits coverage only 

7 through contracts with health insurance issuers 

8 and does not assume insurance risk with re9 spect to such coverage. 

10 ‘‘(3) GEOGRAPHIC AREAS.—Nothing in this title 

11 shall be construed as preventing the establishment 

12 and operation of more than one IMA in a geographic 

13 area or as limiting the number of IMAs that may 

14 operate in any area. 

15 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES

16 TO PURCHASERS.— 

17 ‘‘(A) IN GENERAL.—The IMA may provide 

18 administrative services for members. Such serv19 ices may include accounting, billing, and enroll20 ment information. 

21 ‘‘(B) CONSTRUCTION.—Nothing in this 

22 subsection shall be construed as preventing an 

23 IMA from serving as an administrative service 

24 organization to any entity. 


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1 ‘‘(5) FILING INFORMATION.—The IMA files 

2 with the Secretary information that demonstrates 

3 the IMA’s compliance with the applicable require4 ments of this title. 

5 ‘‘(b) HEALTH BENEFITS COVERAGE REQUIRE6 MENTS.— 

7 ‘‘(1) COMPLIANCE WITH CONSUMER PROTEC8 TION REQUIREMENTS.—Any health benefits coverage 

9 offered through an IMA shall— 

10 ‘‘(A) be underwritten by a health insurance 

11 issuer that— 

12 ‘‘(i) is licensed (or otherwise regu13 lated) under State law, and 

14 ‘‘(ii) meets all applicable State stand15 ards relating to consumer protection, sub16 ject to section 3102(b), and 

17 ‘‘(B) subject to paragraph (2), be approved 

18 or otherwise permitted to be offered under 

19 State law. 

20 ‘‘(2) EXAMPLES OF TYPES OF COVERAGE.—The 

21 benefits coverage made available through an IMA 

22 may include, but is not limited to, any of the fol23 lowing if it meets the other applicable requirements 

24 of this title: 


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1 ‘‘(A) Coverage through a health mainte2 nance organization. 

3 ‘‘(B) Coverage in connection with a pre4 ferred provider organization. 

5 ‘‘(C) Coverage in connection with a li6 censed provider-sponsored organization. 

7 ‘‘(D) Indemnity coverage through an insur8 ance company. 

9 ‘‘(E) Coverage offered in connection with a 

10 contribution into a medical savings account or 

11 flexible spending account. 

12 ‘‘(F) Coverage that includes a point-of13 service option. 

14 ‘‘(G) Any combination of such types of 

15 coverage. 

16 ‘‘(3) WELLNESS BONUSES FOR HEALTH PRO17 MOTION.—Nothing in this title shall be construed as 

18 precluding a health insurance issuer offering health 

19 benefits coverage through an IMA from establishing 

20 premium discounts or rebates for members or from 

21 modifying otherwise applicable copayments or 

22 deductibles in return for adherence to programs of 

23 health promotion and disease prevention so long as 

24 such programs are agreed to in advance by the IMA 

25 and comply with all other provisions of this title and 


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•S 1851 IS

1 do not discriminate among similarly situated mem2 bers. 

3 ‘‘(c) MEMBERS; HEALTH INSURANCE ISSUERS.— 

4 ‘‘(1) MEMBERS.— 

5 ‘‘(A) IN GENERAL.—Under rules estab6 lished to carry out this title, with respect to an 

7 individual or small employer who is a member 

8 of an IMA, the individual may enroll for health 

9 benefits coverage (including coverage for de10 pendents of such individual) or employer may 

11 enroll employees for health benefits coverage 

12 (including coverage for dependents of such em13 ployees) offered by a health insurance issuer 

14 through the IMA. 

15 ‘‘(B) RULES FOR ENROLLMENT.—Nothing 

16 in this paragraph shall preclude an IMA from 

17 establishing rules of enrollment and reenroll18 ment of members. Such rules shall be applied 

19 consistently to all members within the IMA and 

20 shall not be based in any manner on health sta21 tus-related factors. 

22 ‘‘(2) HEALTH INSURANCE ISSUERS.—The con23 tract between an IMA and a health insurance issuer 

24 shall provide, with respect to a member enrolled with 

25 health benefits coverage offered by the issuer 


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1 through the IMA, for the payment of the premiums 

2 collected by the issuer. 

3 ‘‘SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIRE4 MENTS. 

5 ‘‘State laws insofar as they relate to any of the fol6 lowing are superseded and shall not apply to health bene7 fits coverage made available through an IMA: 

8 ‘‘(1) Benefit requirements for health benefits 

9 coverage offered through an IMA, including (but not 

10 limited to) requirements relating to coverage of spe11 cific providers, specific services or conditions, or the 

12 amount, duration, or scope of benefits, but not in13 cluding requirements to the extent required to imple14 ment title XXVII or other Federal law and to the 

15 extent the requirement prohibits an exclusion of a 

16 specific disease from such coverage. 

17 ‘‘(2) Any other requirements (including limita18 tions on compensation arrangements) that, directly 

19 or indirectly, preclude (or have the effect of pre20 cluding) the offering of such coverage through an 

21 IMA, if the IMA meets the requirements of this 

22 title. 

23 Any State law or regulation relating to the composition 

24 or organization of an IMA is preempted to the extent the 


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1 law or regulation is inconsistent with the provisions of this 

2 title. 

3 ‘‘SEC. 3103. ADMINISTRATION. 

4 ‘‘(a) IN GENERAL.—The Secretary shall administer 

5 this title and is authorized to issue such regulations as 

6 may be required to carry out this title. Such regulations 

7 shall be subject to Congressional review under the provi8 sions of chapter 8 of title 5, United States Code. The Sec9 retary shall incorporate the process of ‘deemed file and 

10 use’ with respect to the information filed under section 

11 3101(a)(5)(A) and shall determine whether information 

12 filed by an IMA demonstrates compliance with the applica13 ble requirements of this title. The Secretary shall exercise 

14 authority under this title in a manner that fosters and 

15 promotes the development of IMAs in order to improve 

16 access to health care coverage and services. 

17 ‘‘(b) PERIODIC REPORTS.—The Secretary shall sub18 mit to Congress a report every 30 months, during the 10- 

19 year period beginning on the effective date of the rules 

20 promulgated by the Secretary to carry out this title, on 

21 the effectiveness of this title in promoting coverage of un22 insured individuals. The Secretary may provide for the 

23 production of such reports through one or more contracts 

24 with appropriate private entities. 


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1 ‘‘SEC. 3104. DEFINITIONS. 

2 ‘‘For purposes of this title: 

3 ‘‘(1) ASSOCIATION.—The term ‘association’ 

4 means, with respect to health insurance coverage of5 fered in a State, a legal entity which— 

6 ‘‘(A) has been actively in existence for at 

7 least 5 years; 

8 ‘‘(B) has been formed and maintained in 

9 good faith for purposes other than obtaining in10 surance; 

11 ‘‘(C) does not condition membership in the 

12 association on any health status-related factor 

13 relating to an individual (including an employee 

14 of an employer or a dependent of an employee); 

15 and 

16 ‘‘(D) does not make health insurance cov17 erage offered through the association available 

18 other than in connection with a member of the 

19 association. 

20 ‘‘(2) DEPENDENT.—The term ‘dependent’, as 

21 applied to health insurance coverage offered by a 

22 health insurance issuer licensed (or otherwise regu23 lated) in a State, shall have the meaning applied to 

24 such term with respect to such coverage under the 

25 laws of the State relating to such coverage and such 


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1 an issuer. Such term may include the spouse and 

2 children of the individual involved. 

3 ‘‘(3) HEALTH BENEFITS COVERAGE.—The term 

4 ‘health benefits coverage’ has the meaning given the 

5 term health insurance coverage in section 

6 2791(b)(1), and does not include excepted benefits 

7 (as defined in section 2791(c)). 

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

9 ‘health insurance issuer’ has the meaning given such 

10 term in section 2791(b)(2). 

11 ‘‘(5) HEALTH STATUS-RELATED FACTOR.—The 

12 term ‘health status-related factor’ has the meaning 

13 given such term in section 2791(d)(9). 

14 ‘‘(6) IMA; INDIVIDUAL AND SMALL EMPLOYER

15 MEMBERSHIP ASSOCIATION.—The terms ‘IMA’ and 

16 ‘individual and small employer membership associa17 tion’ are defined in section 3101(a). 

18 ‘‘(7) MEMBER.—The term ‘member’ means, 

19 with respect to an IMA, an individual or small em20 ployer who is a member of the association to which 

21 the IMA is offering coverage. 

22 ‘‘(8) SMALL EMPLOYER.—The term ‘small em23 ployer’ has the meaning given such term in section 

24 812(a)(13) of the Employee Retirement and Income 

25 Security Act of 1974.’’. 


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1 Subtitle C—Small Business Health 

2 Fairness 

3 SEC. 221. SHORT TITLE. 

4 This subtitle may be cited as the ‘‘Small Business 

5 Health Fairness Act of 2013’’. 

6 SEC. 222. RULES GOVERNING ASSOCIATION HEALTH 

7 PLANS. 

8 (a) IN GENERAL.—Subtitle B of title I of the Em9 ployee Retirement Income Security Act of 1974 is amend10 ed by adding after part 7 the following new part: 

11 ‘‘PART 8—RULES GOVERNING ASSOCIATION 

12 HEALTH PLANS 

13 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 

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

15 term ‘association health plan’ means a group health plan 

16 whose sponsor is (or is deemed under this part to be) de17 scribed in subsection (b). 

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

19 plan is described in this subsection if such sponsor— 

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

21 with a constitution and bylaws specifically stating its 

22 purpose and providing for periodic meetings on at 

23 least an annual basis, as a bona fide trade associa24 tion, a bona fide industry association (including a 

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1 phone cooperative association), a bona fide profes2 sional association, or a bona fide chamber of com3 merce (or similar bona fide business association, in4 cluding a corporation or similar organization that 

5 operates on a cooperative basis (within the meaning 

6 of section 1381 of the Internal Revenue Code of 

7 1986)), for substantial purposes other than that of 

8 obtaining or providing medical care; 

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

10 receives the active support of its members and re11 quires for membership payment on a periodic basis 

12 of dues or payments necessary to maintain eligibility 

13 for membership in the sponsor; and 

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

15 or payments, or coverage under the plan on the 

16 basis of health status-related factors with respect to 

17 the employees of its members (or affiliated mem18 bers), or the dependents of such employees, and does 

19 not condition such dues or payments on the basis of 

20 group health plan participation. 

21 Any sponsor consisting of an association of entities which 

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

23 shall be deemed to be a sponsor described in this sub24 section. 


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1 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH 

2 PLANS. 

3 ‘‘(a) IN GENERAL.—The applicable authority shall 

4 prescribe by regulation a procedure under which, subject 

5 to subsection (b), the applicable authority shall certify as6 sociation health plans which apply for certification as 

7 meeting the requirements of this part. 

8 ‘‘(b) STANDARDS.—Under the procedure prescribed 

9 pursuant to subsection (a), in the case of an association 

10 health plan that provides at least one benefit option which 

11 does not consist of health insurance coverage, the applica12 ble authority shall certify such plan as meeting the re13 quirements of this part only if the applicable authority is 

14 satisfied that the applicable requirements of this part are 

15 met (or, upon the date on which the plan is to commence 

16 operations, will be met) with respect to the plan. 

17 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

18 PLANS.—An association health plan with respect to which 

19 certification under this part is in effect shall meet the ap20 plicable requirements of this part, effective on the date 

21 of certification (or, if later, on the date on which the plan 

22 is to commence operations). 

23 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI24 CATION.—The applicable authority may provide by regula25 tion for continued certification of association health plans 

26 under this part. 


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1 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

2 PLANS.—The applicable authority shall establish a class 

3 certification procedure for association health plans under 

4 which all benefits consist of health insurance coverage. 

5 Under such procedure, the applicable authority shall pro6 vide for the granting of certification under this part to 

7 the plans in each class of such association health plans 

8 upon appropriate filing under such procedure in connec9 tion with plans in such class and payment of the pre10 scribed fee under section 807(a). 

11 ‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION

12 HEALTH PLANS.—An association health plan which offers 

13 one or more benefit options which do not consist of health 

14 insurance coverage may be certified under this part only 

15 if such plan consists of any of the following: 

16 ‘‘(1) a plan which offered such coverage on the 

17 date of the enactment of the Small Business Health 

18 Fairness Act of 2013, 

19 ‘‘(2) a plan under which the sponsor does not 

20 restrict membership to one or more trades and busi21 nesses or industries and whose eligible participating 

22 employers represent a broad cross-section of trades 

23 and businesses or industries, or 

24 ‘‘(3) a plan whose eligible participating employ25 ers represent one or more trades or businesses, or 


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•S 1851 IS

1 one or more industries, consisting of any of the fol2 lowing: agriculture; equipment and automobile deal3 erships; barbering and cosmetology; certified public 

4 accounting practices; child care; construction; dance, 

5 theatrical and orchestra productions; disinfecting 

6 and pest control; financial services; fishing; food 

7 service establishments; hospitals; labor organiza8 tions; logging; manufacturing (metals); mining; med9 ical and dental practices; medical laboratories; pro10 fessional consulting services; sanitary services; trans11 portation (local and freight); warehousing; whole12 saling/distributing; or any other trade or business or 

13 industry which has been indicated as having average 

14 or above-average risk or health claims experience by 

15 reason of State rate filings, denials of coverage, pro16 posed premium rate levels, or other means dem17 onstrated by such plan in accordance with regula18 tions. 

19 ‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 

20 BOARDS OF TRUSTEES. 

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

22 are met with respect to an association health plan if the 

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

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


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•S 1851 IS

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

2 the application for certification under this part. 

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

4 this subsection are met with respect to an association 

5 health plan if the following requirements are met: 

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

7 pursuant to a trust agreement, by a board of trust8 ees which has complete fiscal control over the plan 

9 and which is responsible for all operations of the 

10 plan. 

11 ‘‘(2) RULES OF OPERATION AND FINANCIAL

12 CONTROLS.—The board of trustees has in effect 

13 rules of operation and financial controls, based on a 

14 3-year plan of operation, adequate to carry out the 

15 terms of the plan and to meet all requirements of 

16 this title applicable to the plan. 

17 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

18 PARTICIPATING EMPLOYERS AND TO CONTRAC19 TORS.— 

20 ‘‘(A) BOARD MEMBERSHIP.— 

21 ‘‘(i) IN GENERAL.—Except as pro22 vided in clauses (ii) and (iii), the members 

23 of the board of trustees are individuals se24 lected from individuals who are the owners, 

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1 ticipating employers or who are partners in 

2 the participating employers and actively 

3 participate in the business. 

4 ‘‘(ii) LIMITATION.— 

5 ‘‘(I) GENERAL RULE.—Except as 

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

7 no such member is an owner, officer, 

8 director, or employee of, or partner in, 

9 a contract administrator or other 

10 service provider to the plan. 

11 ‘‘(II) LIMITED EXCEPTION FOR

12 PROVIDERS OF SERVICES SOLELY ON

13 BEHALF OF THE SPONSOR.—Officers 

14 or employees of a sponsor which is a 

15 service provider (other than a contract 

16 administrator) to the plan may be 

17 members of the board if they con18 stitute not more than 25 percent of 

19 the membership of the board and they 

20 do not provide services to the plan 

21 other than on behalf of the sponsor. 

22 ‘‘(III) TREATMENT OF PRO23 VIDERS OF MEDICAL CARE.—In the 

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1 marily of providers of medical care, 

2 subclause (I) shall not apply in the 

3 case of any service provider described 

4 in subclause (I) who is a provider of 

5 medical care under the plan. 

6 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

7 Clause (i) shall not apply to an association 

8 health plan which is in existence on the 

9 date of the enactment of the Small Busi10 ness Health Fairness Act of 2013. 

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

12 sole authority under the plan to approve appli13 cations for participation in the plan and to con14 tract with a service provider to administer the 

15 day-to-day affairs of the plan. 

16 ‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 

17 the case of a group health plan which is established and 

18 maintained by a franchiser for a franchise network con19 sisting of its franchisees— 

20 ‘‘(1) the requirements of subsection (a) and sec21 tion 801(a) shall be deemed met if such require22 ments would otherwise be met if the franchiser were 

23 deemed to be the sponsor referred to in section 

24 801(b), such network were deemed to be an associa25 tion described in section 801(b), and each franchisee 


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1 were deemed to be a member (of the association and 

2 the sponsor) referred to in section 801(b); and 

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

4 be deemed met. 

5 The Secretary may by regulation define for purposes of 

6 this subsection the terms ‘franchiser’, ‘franchise network’, 

7 and ‘franchisee’. 

8 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE9 MENTS. 

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

11 requirements of this subsection are met with respect to 

12 an association health plan if, under the terms of the 

13 plan— 

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

15 ‘‘(A) a member of the sponsor, 

16 ‘‘(B) the sponsor, or 

17 ‘‘(C) an affiliated member of the sponsor 

18 with respect to which the requirements of sub19 section (b) are met, 

20 except that, in the case of a sponsor which is a pro21 fessional association or other individual-based asso22 ciation, if at least one of the officers, directors, or 

23 employees of an employer, or at least one of the in24 dividuals who are partners in an employer and who 

25 actively participates in the business, is a member or 


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1 such an affiliated member of the sponsor, partici2 pating employers may also include such employer; 

3 and 

4 ‘‘(2) all individuals commencing coverage under 

5 the plan after certification under this part must 

6 be— 

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

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

9 employees of, or partners in, participating em10 ployers; or 

11 ‘‘(B) the beneficiaries of individuals de12 scribed in subparagraph (A). 

13 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM14 PLOYEES.—In the case of an association health plan in 

15 existence on the date of the enactment of the Small Busi16 ness Health Fairness Act of 2013, an affiliated member 

17 of the sponsor of the plan may be offered coverage under 

18 the plan as a participating employer only if— 

19 ‘‘(1) the affiliated member was an affiliated 

20 member on the date of certification under this part; 

21 or 

22 ‘‘(2) during the 12-month period preceding the 

23 date of the offering of such coverage, the affiliated 

24 member has not maintained or contributed to a 

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1 ees who would otherwise be eligible to participate in 

2 such association health plan. 

3 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re4 quirements of this subsection are met with respect to an 

5 association health plan if, under the terms of the plan, 

6 no participating employer may provide health insurance 

7 coverage in the individual market for any employee not 

8 covered under the plan which is similar to the coverage 

9 contemporaneously provided to employees of the employer 

10 under the plan, if such exclusion of the employee from cov11 erage under the plan is based on a health status-related 

12 factor with respect to the employee and such employee 

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

14 for coverage under the plan. 

15 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

16 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI17 PATE.—The requirements of this subsection are met with 

18 respect to an association health plan if— 

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

20 meeting the preceding requirements of this section 

21 are eligible to qualify as participating employers for 

22 all geographically available coverage options, unless, 

23 in the case of any such employer, participation or 

24 contribution requirements of the type referred to in 


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1 section 2711 of the Public Health Service Act are 

2 not met; 

3 ‘‘(2) upon request, any employer eligible to par4 ticipate is furnished information regarding all cov5 erage options available under the plan; and 

6 ‘‘(3) the applicable requirements of sections 

7 701, 702, and 703 are met with respect to the plan. 

8 ‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN 

9 DOCUMENTS, CONTRIBUTION RATES, AND 

10 BENEFIT OPTIONS. 

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

12 are met with respect to an association health plan if the 

13 following requirements are met: 

14 ‘‘(1) CONTENTS OF GOVERNING INSTRU15 MENTS.—The instruments governing the plan in16 clude a written instrument, meeting the require17 ments of an instrument required under section 

18 402(a)(1), which— 

19 ‘‘(A) provides that the board of trustees 

20 serves as the named fiduciary required for plans 

21 under section 402(a)(1) and serves in the ca22 pacity of a plan administrator (referred to in 

23 section 3(16)(A)); 


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1 ‘‘(B) provides that the sponsor of the plan 

2 is to serve as plan sponsor (referred to in sec3 tion 3(16)(B)); and 

4 ‘‘(C) incorporates the requirements of sec5 tion 806. 

6 ‘‘(2) CONTRIBUTION RATES MUST BE NON7 DISCRIMINATORY.— 

8 ‘‘(A) The contribution rates for any par9 ticipating small employer do not vary on the 

10 basis of any health status-related factor in rela11 tion to employees of such employer or their 

12 beneficiaries and do not vary on the basis of the 

13 type of business or industry in which such em14 ployer is engaged. 

15 ‘‘(B) Nothing in this title or any other pro16 vision of law shall be construed to preclude an 

17 association health plan, or a health insurance 

18 issuer offering health insurance coverage in 

19 connection with an association health plan, 

20 from— 

21 ‘‘(i) setting contribution rates based 

22 on the claims experience of the plan; or 

23 ‘‘(ii) varying contribution rates for 

24 small employers in a State to the extent 

25 that such rates could vary using the same 


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1 methodology employed in such State for 

2 regulating premium rates in the small 

3 group market with respect to health insur4 ance coverage offered in connection with 

5 bona fide associations (within the meaning 

6 of section 2791(d)(3) of the Public Health 

7 Service Act), 

8 subject to the requirements of section 702(b) 

9 relating to contribution rates. 

10 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI11 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If 

12 any benefit option under the plan does not consist 

13 of health insurance coverage, the plan has as of the 

14 beginning of the plan year not fewer than 1,000 par15 ticipants and beneficiaries. 

16 ‘‘(4) MARKETING REQUIREMENTS.— 

17 ‘‘(A) IN GENERAL.—If a benefit option 

18 which consists of health insurance coverage is 

19 offered under the plan, State-licensed insurance 

20 agents shall be used to distribute to small em21 ployers coverage which does not consist of 

22 health insurance coverage in a manner com23 parable to the manner in which such agents are 

24 used to distribute health insurance coverage. 


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1 ‘‘(B) STATE-LICENSED INSURANCE

2 AGENTS.—For purposes of subparagraph (A), 

3 the term ‘State-licensed insurance agents’ 

4 means one or more agents who are licensed in 

5 a State and are subject to the laws of such 

6 State relating to licensure, qualification, test7 ing, examination, and continuing education of 

8 persons authorized to offer, sell, or solicit 

9 health insurance coverage in such State. 

10 ‘‘(5) REGULATORY REQUIREMENTS.—Such 

11 other requirements as the applicable authority deter12 mines are necessary to carry out the purposes of this 

13 part, which shall be prescribed by the applicable au14 thority by regulation. 

15 ‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO

16 DESIGN BENEFIT OPTIONS.—Subject to section 514(d), 

17 nothing in this part or any provision of State law (as de18 fined in section 514(c)(1)) shall be construed to preclude 

19 an association health plan, or a health insurance issuer 

20 offering health insurance coverage in connection with an 

21 association health plan, from exercising its sole discretion 

22 in selecting the specific items and services consisting of 

23 medical care to be included as benefits under such plan 

24 or coverage, except (subject to section 514) in the case 

25 of (1) any law to the extent that it is not preempted under 


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1 section 731(a)(1) with respect to matters governed by sec2 tion 711, 712, or 713, or (2) any law of the State with 

3 which filing and approval of a policy type offered by the 

4 plan was initially obtained to the extent that such law pro5 hibits an exclusion of a specific disease from such cov6 erage. 

7 ‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS 

8 FOR SOLVENCY FOR PLANS PROVIDING 

9 HEALTH BENEFITS IN ADDITION TO HEALTH 

10 INSURANCE COVERAGE. 

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

12 are met with respect to an association health plan if— 

13 ‘‘(1) the benefits under the plan consist solely 

14 of health insurance coverage; or 

15 ‘‘(2) if the plan provides any additional benefit 

16 options which do not consist of health insurance cov17 erage, the plan— 

18 ‘‘(A) establishes and maintains reserves 

19 with respect to such additional benefit options, 

20 in amounts recommended by the qualified 

21 health actuary, consisting of— 

22 ‘‘(i) a reserve sufficient for unearned 

23 contributions; 

24 ‘‘(ii) a reserve sufficient for benefit li25 abilities which have been incurred, which 


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1 have not been satisfied, and for which risk 

2 of loss has not yet been transferred, and 

3 for expected administrative costs with re4 spect to such benefit liabilities; 

5 ‘‘(iii) a reserve sufficient for any other 

6 obligations of the plan; and 

7 ‘‘(iv) a reserve sufficient for a margin 

8 of error and other fluctuations, taking into 

9 account the specific circumstances of the 

10 plan; and 

11 ‘‘(B) establishes and maintains aggregate 

12 and specific excess/stop loss insurance and sol13 vency indemnification, with respect to such ad14 ditional benefit options for which risk of loss 

15 has not yet been transferred, as follows: 

16 ‘‘(i) The plan shall secure aggregate 

17 excess/stop loss insurance for the plan with 

18 an attachment point which is not greater 

19 than 125 percent of expected gross annual 

20 claims. The applicable authority may by 

21 regulation provide for upward adjustments 

22 in the amount of such percentage in speci23 fied circumstances in which the plan spe24 cifically provides for and maintains reVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00077 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 serves in excess of the amounts required 

2 under subparagraph (A). 

3 ‘‘(ii) The plan shall secure specific ex4 cess/stop loss insurance for the plan with 

5 an attachment point which is at least equal 

6 to an amount recommended by the plan’s 

7 qualified health actuary. The applicable 

8 authority may by regulation provide for ad9 justments in the amount of such insurance 

10 in specified circumstances in which the 

11 plan specifically provides for and maintains 

12 reserves in excess of the amounts required 

13 under subparagraph (A). 

14 ‘‘(iii) The plan shall secure indem15 nification insurance for any claims which 

16 the plan is unable to satisfy by reason of 

17 a plan termination. 

18 Any person issuing to a plan insurance described in clause 

19 (i), (ii), or (iii) of subparagraph (B) shall notify the Sec20 retary of any failure of premium payment meriting can21 cellation of the policy prior to undertaking such a cancella22 tion. Any regulations prescribed by the applicable author23 ity pursuant to clause (i) or (ii) of subparagraph (B) may 

24 allow for such adjustments in the required levels of excess/ 

25 stop loss insurance as the qualified health actuary may 


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1 recommend, taking into account the specific circumstances 

2 of the plan. 

3 ‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS

4 RESERVES.—In the case of any association health plan de5 scribed in subsection (a)(2), the requirements of this sub6 section are met if the plan establishes and maintains sur7 plus in an amount at least equal to— 

8 ‘‘(1) $500,000, or 

9 ‘‘(2) such greater amount (but not greater than 

10 $2,000,000) as may be set forth in regulations pre11 scribed by the applicable authority, considering the 

12 level of aggregate and specific excess/stop loss insur13 ance provided with respect to such plan and other 

14 factors related to solvency risk, such as the plan’s 

15 projected levels of participation or claims, the nature 

16 of the plan’s liabilities, and the types of assets avail17 able to assure that such liabilities are met. 

18 ‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 

19 any association health plan described in subsection (a)(2), 

20 the applicable authority may provide such additional re21 quirements relating to reserves, excess/stop loss insurance, 

22 and indemnification insurance as the applicable authority 

23 considers appropriate. Such requirements may be provided 

24 by regulation with respect to any such plan or any class 

25 of such plans. 


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1 ‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR2 ANCE.—The applicable authority may provide for adjust3 ments to the levels of reserves otherwise required under 

4 subsections (a) and (b) with respect to any plan or class 

5 of plans to take into account excess/stop loss insurance 

6 provided with respect to such plan or plans. 

7 ‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The 

8 applicable authority may permit an association health plan 

9 described in subsection (a)(2) to substitute, for all or part 

10 of the requirements of this section (except subsection 

11 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar12 rangement, or other financial arrangement as the applica13 ble authority determines to be adequate to enable the plan 

14 to fully meet all its financial obligations on a timely basis 

15 and is otherwise no less protective of the interests of par16 ticipants and beneficiaries than the requirements for 

17 which it is substituted. The applicable authority may take 

18 into account, for purposes of this subsection, evidence pro19 vided by the plan or sponsor which demonstrates an as20 sumption of liability with respect to the plan. Such evi21 dence may be in the form of a contract of indemnification, 

22 lien, bonding, insurance, letter of credit, recourse under 

23 applicable terms of the plan in the form of assessments 

24 of participating employers, security, or other financial ar25 rangement. 


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1 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

2 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 

3 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO4 CIATION HEALTH PLAN FUND.— 

5 ‘‘(A) IN GENERAL.—In the case of an as6 sociation health plan described in subsection 

7 (a)(2), the requirements of this subsection are 

8 met if the plan makes payments into the Asso9 ciation Health Plan Fund under this subpara10 graph when they are due. Such payments shall 

11 consist of annual payments in the amount of 

12 $5,000, and, in addition to such annual pay13 ments, such supplemental payments as the Sec14 retary may determine to be necessary under 

15 paragraph (2). Payments under this paragraph 

16 are payable to the Fund at the time determined 

17 by the Secretary. Initial payments are due in 

18 advance of certification under this part. Pay19 ments shall continue to accrue until a plan’s as20 sets are distributed pursuant to a termination 

21 procedure. 

22 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

23 PAYMENTS.—If any payment is not made by a 

24 plan when it is due, a late payment charge of 

25 not more than 100 percent of the payment 


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1 which was not timely paid shall be payable by 

2 the plan to the Fund. 

3 ‘‘(C) CONTINUED DUTY OF THE SEC4 RETARY.—The Secretary shall not cease to 

5 carry out the provisions of paragraph (2) on ac6 count of the failure of a plan to pay any pay7 ment when due. 

8 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

9 EXCESS/STOP LOSS INSURANCE COVERAGE AND IN10 DEMNIFICATION INSURANCE COVERAGE FOR CER11 TAIN PLANS.—In any case in which the applicable 

12 authority determines that there is, or that there is 

13 reason to believe that there will be: (A) a failure to 

14 take necessary corrective actions under section 

15 809(a) with respect to an association health plan de16 scribed in subsection (a)(2); or (B) a termination of 

17 such a plan under section 809(b) or 810(b)(8) (and, 

18 if the applicable authority is not the Secretary, cer19 tifies such determination to the Secretary), the Sec20 retary shall determine the amounts necessary to 

21 make payments to an insurer (designated by the 

22 Secretary) to maintain in force excess/stop loss in23 surance coverage or indemnification insurance cov24 erage for such plan, if the Secretary determines that 

25 there is a reasonable expectation that, without such 


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1 payments, claims would not be satisfied by reason of 

2 termination of such coverage. The Secretary shall, to 

3 the extent provided in advance in appropriation 

4 Acts, pay such amounts so determined to the insurer 

5 designated by the Secretary. 

6 ‘‘(3) ASSOCIATION HEALTH PLAN FUND.— 

7 ‘‘(A) IN GENERAL.—There is established 

8 on the books of the Treasury a fund to be 

9 known as the ‘Association Health Plan Fund’. 

10 The Fund shall be available for making pay11 ments pursuant to paragraph (2). The Fund 

12 shall be credited with payments received pursu13 ant to paragraph (1)(A), penalties received pur14 suant to paragraph (1)(B), and earnings on in15 vestments of amounts of the Fund under sub16 paragraph (B). 

17 ‘‘(B) INVESTMENT.—Whenever the Sec18 retary determines that the moneys of the fund 

19 are in excess of current needs, the Secretary 

20 may request the investment of such amounts as 

21 the Secretary determines advisable by the Sec22 retary of the Treasury in obligations issued or 

23 guaranteed by the United States. 

24 ‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 

25 of this section— 


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1 ‘‘(1) AGGREGATE EXCESS/STOP LOSS INSUR2 ANCE.—The term ‘aggregate excess/stop loss insur3 ance’ means, in connection with an association 

4 health plan, a contract— 

5 ‘‘(A) under which an insurer (meeting such 

6 minimum standards as the applicable authority 

7 may prescribe by regulation) provides for pay8 ment to the plan with respect to aggregate 

9 claims under the plan in excess of an amount 

10 or amounts specified in such contract; 

11 ‘‘(B) which is guaranteed renewable; and 

12 ‘‘(C) which allows for payment of pre13 miums by any third party on behalf of the in14 sured plan. 

15 ‘‘(2) SPECIFIC EXCESS/STOP LOSS INSUR16 ANCE.—The term ‘specific excess/stop loss insur17 ance’ means, in connection with an association 

18 health plan, a contract— 

19 ‘‘(A) under which an insurer (meeting such 

20 minimum standards as the applicable authority 

21 may prescribe by regulation) provides for pay22 ment to the plan with respect to claims under 

23 the plan in connection with a covered individual 

24 in excess of an amount or amounts specified in 


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1 such contract in connection with such covered 

2 individual; 

3 ‘‘(B) which is guaranteed renewable; and 

4 ‘‘(C) which allows for payment of pre5 miums by any third party on behalf of the in6 sured plan. 

7 ‘‘(h) INDEMNIFICATION INSURANCE.—For purposes 

8 of this section, the term ‘indemnification insurance’ 

9 means, in connection with an association health plan, a 

10 contract— 

11 ‘‘(1) under which an insurer (meeting such min12 imum standards as the applicable authority may pre13 scribe by regulation) provides for payment to the 

14 plan with respect to claims under the plan which the 

15 plan is unable to satisfy by reason of a termination 

16 pursuant to section 809(b) (relating to mandatory 

17 termination); 

18 ‘‘(2) which is guaranteed renewable and 

19 noncancellable for any reason (except as the applica20 ble authority may prescribe by regulation); and 

21 ‘‘(3) which allows for payment of premiums by 

22 any third party on behalf of the insured plan. 

23 ‘‘(i) RESERVES.—For purposes of this section, the 

24 term ‘reserves’ means, in connection with an association 

25 health plan, plan assets which meet the fiduciary standVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00085 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 ards under part 4 and such additional requirements re2 garding liquidity as the applicable authority may prescribe 

3 by regulation. 

4 ‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 

5 ‘‘(1) IN GENERAL.—Within 90 days after the 

6 date of the enactment of the Small Business Health 

7 Fairness Act of 2013, the applicable authority shall 

8 establish a Solvency Standards Working Group. In 

9 prescribing the initial regulations under this section, 

10 the applicable authority shall take into account the 

11 recommendations of such Working Group. 

12 ‘‘(2) MEMBERSHIP.—The Working Group shall 

13 consist of not more than 15 members appointed by 

14 the applicable authority. The applicable authority 

15 shall include among persons invited to membership 

16 on the Working Group at least one of each of the 

17 following: 

18 ‘‘(A) A representative of the National As19 sociation of Insurance Commissioners. 

20 ‘‘(B) A representative of the American 

21 Academy of Actuaries. 

22 ‘‘(C) A representative of the State govern23 ments, or their interests. 

24 ‘‘(D) A representative of existing self-in25 sured arrangements, or their interests. 


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1 ‘‘(E) A representative of associations of 

2 the type referred to in section 801(b)(1), or 

3 their interests. 

4 ‘‘(F) A representative of multiemployer 

5 plans that are group health plans, or their in6 terests. 

7 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE8 LATED REQUIREMENTS. 

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

10 pursuant to section 802(a), an association health plan 

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

12 an application for certification under this part a filing fee 

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

14 case of the Secretary, to the extent provided in appropria15 tion Acts, for the sole purpose of administering the certifi16 cation procedures applicable with respect to association 

17 health plans. 

18 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA19 TION FOR CERTIFICATION.—An application for certifi20 cation under this part meets the requirements of this sec21 tion only if it includes, in a manner and form which shall 

22 be prescribed by the applicable authority by regulation, at 

23 least the following information: 

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

25 and addresses of— 


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1 ‘‘(A) the sponsor; and 

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

3 of the plan. 

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

5 BUSINESS.—The States in which participants and 

6 beneficiaries under the plan are to be located and 

7 the number of them expected to be located in each 

8 such State. 

9 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro10 vided by the board of trustees that the bonding re11 quirements of section 412 will be met as of the date 

12 of the application or (if later) commencement of op13 erations. 

14 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu15 ments governing the plan (including any bylaws and 

16 trust agreements), the summary plan description, 

17 and other material describing the benefits that will 

18 be provided to participants and beneficiaries under 

19 the plan. 

20 ‘‘(5) AGREEMENTS WITH SERVICE PRO21 VIDERS.—A copy of any agreements between the 

22 plan and contract administrators and other service 

23 providers. 

24 ‘‘(6) FUNDING REPORT.—In the case of asso25 ciation health plans providing benefits options in adVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00088 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 dition to health insurance coverage, a report setting 

2 forth information with respect to such additional 

3 benefit options determined as of a date within the 

4 120-day period ending with the date of the applica5 tion, including the following: 

6 ‘‘(A) RESERVES.—A statement, certified 

7 by the board of trustees of the plan, and a 

8 statement of actuarial opinion, signed by a 

9 qualified health actuary, that all applicable re10 quirements of section 806 are or will be met in 

11 accordance with regulations which the applica12 ble authority shall prescribe. 

13 ‘‘(B) ADEQUACY OF CONTRIBUTION

14 RATES.—A statement of actuarial opinion, 

15 signed by a qualified health actuary, which sets 

16 forth a description of the extent to which con17 tribution rates are adequate to provide for the 

18 payment of all obligations and the maintenance 

19 of required reserves under the plan for the 12- 

20 month period beginning with such date within 

21 such 120-day period, taking into account the 

22 expected coverage and experience of the plan. If 

23 the contribution rates are not fully adequate, 

24 the statement of actuarial opinion shall indicate 


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1 the extent to which the rates are inadequate 

2 and the changes needed to ensure adequacy. 

3 ‘‘(C) CURRENT AND PROJECTED VALUE OF

4 ASSETS AND LIABILITIES.—A statement of ac5 tuarial opinion signed by a qualified health ac6 tuary, which sets forth the current value of the 

7 assets and liabilities accumulated under the 

8 plan and a projection of the assets, liabilities, 

9 income, and expenses of the plan for the 12- 

10 month period referred to in subparagraph (B). 

11 The income statement shall identify separately 

12 the plan’s administrative expenses and claims. 

13 ‘‘(D) COSTS OF COVERAGE TO BE

14 CHARGED AND OTHER EXPENSES.—A state15 ment of the costs of coverage to be charged, in16 cluding an itemization of amounts for adminis17 tration, reserves, and other expenses associated 

18 with the operation of the plan. 

19 ‘‘(E) OTHER INFORMATION.—Any other 

20 information as may be determined by the appli21 cable authority, by regulation, as necessary to 

22 carry out the purposes of this part. 

23 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

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

25 association health plan shall not be effective unless written 


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•S 1851 IS

1 notice of such certification is filed with the applicable 

2 State authority of each State in which at least 25 percent 

3 of the participants and beneficiaries under the plan are 

4 located. For purposes of this subsection, an individual 

5 shall be considered to be located in the State in which a 

6 known address of such individual is located or in which 

7 such individual is employed. 

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

9 of any association health plan certified under this part, 

10 descriptions of material changes in any information which 

11 was required to be submitted with the application for the 

12 certification under this part shall be filed in such form 

13 and manner as shall be prescribed by the applicable au14 thority by regulation. The applicable authority may re15 quire by regulation prior notice of material changes with 

16 respect to specified matters which might serve as the basis 

17 for suspension or revocation of the certification. 

18 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS19 SOCIATION HEALTH PLANS.—An association health plan 

20 certified under this part which provides benefit options in 

21 addition to health insurance coverage for such plan year 

22 shall meet the requirements of section 103 by filing an 

23 annual report under such section which shall include infor24 mation described in subsection (b)(6) with respect to the 

25 plan year and, notwithstanding section 104(a)(1)(A), shall 


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1 be filed with the applicable authority not later than 90 

2 days after the close of the plan year (or on such later date 

3 as may be prescribed by the applicable authority). The ap4 plicable authority may require by regulation such interim 

5 reports as it considers appropriate. 

6 ‘‘(f) ENGAGEMENT OF QUALIFIED HEALTH ACTU7 ARY.—The board of trustees of each association health 

8 plan which provides benefits options in addition to health 

9 insurance coverage and which is applying for certification 

10 under this part or is certified under this part shall engage, 

11 on behalf of all participants and beneficiaries, a qualified 

12 health actuary who shall be responsible for the preparation 

13 of the materials comprising information necessary to be 

14 submitted by a qualified health actuary under this part. 

15 The qualified health actuary shall utilize such assumptions 

16 and techniques as are necessary to enable such actuary 

17 to form an opinion as to whether the contents of the mat18 ters reported under this part— 

19 ‘‘(1) are in the aggregate reasonably related to 

20 the experience of the plan and to reasonable expecta21 tions; and 

22 ‘‘(2) represent such actuary’s best estimate of 

23 anticipated experience under the plan. 


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1 The opinion by the qualified health actuary shall be made 

2 with respect to, and shall be made a part of, the annual 

3 report. 

4 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER5 MINATION. 

6 ‘‘Except as provided in section 809(b), an association 

7 health plan which is or has been certified under this part 

8 may terminate (upon or at any time after cessation of ac9 cruals in benefit liabilities) only if the board of trustees, 

10 not less than 60 days before the proposed termination 

11 date— 

12 ‘‘(1) provides to the participants and bene13 ficiaries a written notice of intent to terminate stat14 ing that such termination is intended and the pro15 posed termination date; 

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

17 of the plan in connection with such termination in 

18 a manner which will result in timely payment of all 

19 benefits for which the plan is obligated; and 

20 ‘‘(3) submits such plan in writing to the appli21 cable authority. 

22 Actions required under this section shall be taken in such 

23 form and manner as may be prescribed by the applicable 

24 authority by regulation. 


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1 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI2 NATION. 

3 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE4 SERVES.—An association health plan which is certified 

5 under this part and which provides benefits other than 

6 health insurance coverage shall continue to meet the re7 quirements of section 806, irrespective of whether such 

8 certification continues in effect. The board of trustees of 

9 such plan shall determine quarterly whether the require10 ments of section 806 are met. In any case in which the 

11 board determines that there is reason to believe that there 

12 is or will be a failure to meet such requirements, or the 

13 applicable authority makes such a determination and so 

14 notifies the board, the board shall immediately notify the 

15 qualified health actuary engaged by the plan, and such 

16 actuary shall, not later than the end of the next following 

17 month, make such recommendations to the board for cor18 rective action as the actuary determines necessary to en19 sure compliance with section 806. Not later than 30 days 

20 after receiving from the actuary recommendations for cor21 rective actions, the board shall notify the applicable au22 thority (in such form and manner as the applicable au23 thority may prescribe by regulation) of such recommenda24 tions of the actuary for corrective action, together with 

25 a description of the actions (if any) that the board has 

26 taken or plans to take in response to such recommendaVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00094 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 tions. The board shall thereafter report to the applicable 

2 authority, in such form and frequency as the applicable 

3 authority may specify to the board, regarding corrective 

4 action taken by the board until the requirements of section 

5 806 are met. 

6 ‘‘(b) MANDATORY TERMINATION.—In any case in 

7 which— 

8 ‘‘(1) the applicable authority has been notified 

9 under subsection (a) (or by an issuer of excess/stop 

10 loss insurance or indemnity insurance pursuant to 

11 section 806(a)) of a failure of an association health 

12 plan which is or has been certified under this part 

13 and is described in section 806(a)(2) to meet the re14 quirements of section 806 and has not been notified 

15 by the board of trustees of the plan that corrective 

16 action has restored compliance with such require17 ments; and 

18 ‘‘(2) the applicable authority determines that 

19 there is a reasonable expectation that the plan will 

20 continue to fail to meet the requirements of section 

21 806, 

22 the board of trustees of the plan shall, at the direction 

23 of the applicable authority, terminate the plan and, in the 

24 course of the termination, take such actions as the appli25 cable authority may require, including satisfying any 


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1 claims referred to in section 806(a)(2)(B)(iii) and recov2 ering for the plan any liability under subsection 

3 (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 

4 that the affairs of the plan will be, to the maximum extent 

5 possible, wound up in a manner which will result in timely 

6 provision of all benefits for which the plan is obligated. 

7 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL8 VENT ASSOCIATION HEALTH PLANS PRO9 VIDING HEALTH BENEFITS IN ADDITION TO 

10 HEALTH INSURANCE COVERAGE. 

11 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

12 INSOLVENT PLANS.—Whenever the Secretary determines 

13 that an association health plan which is or has been cer14 tified under this part and which is described in section 

15 806(a)(2) will be unable to provide benefits when due or 

16 is otherwise in a financially hazardous condition, as shall 

17 be defined by the Secretary by regulation, the Secretary 

18 shall, upon notice to the plan, apply to the appropriate 

19 United States district court for appointment of the Sec20 retary as trustee to administer the plan for the duration 

21 of the insolvency. The plan may appear as a party and 

22 other interested persons may intervene in the proceedings 

23 at the discretion of the court. The court shall appoint such 

24 Secretary trustee if the court determines that the trustee25 ship is necessary to protect the interests of the particiVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00096 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 pants and beneficiaries or providers of medical care or to 

2 avoid any unreasonable deterioration of the financial con3 dition of the plan. The trusteeship of such Secretary shall 

4 continue until the conditions described in the first sen5 tence of this subsection are remedied or the plan is termi6 nated. 

7 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 

8 appointment as trustee under subsection (a), shall have 

9 the power— 

10 ‘‘(1) to do any act authorized by the plan, this 

11 title, or other applicable provisions of law to be done 

12 by the plan administrator or any trustee of the plan; 

13 ‘‘(2) to require the transfer of all (or any part) 

14 of the assets and records of the plan to the Sec15 retary as trustee; 

16 ‘‘(3) to invest any assets of the plan which the 

17 Secretary holds in accordance with the provisions of 

18 the plan, regulations prescribed by the Secretary, 

19 and applicable provisions of law; 

20 ‘‘(4) to require the sponsor, the plan adminis21 trator, any participating employer, and any employee 

22 organization representing plan participants to fur23 nish any information with respect to the plan which 

24 the Secretary as trustee may reasonably need in 

25 order to administer the plan; 


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1 ‘‘(5) to collect for the plan any amounts due the 

2 plan and to recover reasonable expenses of the trust3 eeship; 

4 ‘‘(6) to commence, prosecute, or defend on be5 half of the plan any suit or proceeding involving the 

6 plan; 

7 ‘‘(7) to issue, publish, or file such notices, state8 ments, and reports as may be required by the Sec9 retary by regulation or required by any order of the 

10 court; 

11 ‘‘(8) to terminate the plan (or provide for its 

12 termination in accordance with section 809(b)) and 

13 liquidate the plan assets, to restore the plan to the 

14 responsibility of the sponsor, or to continue the 

15 trusteeship; 

16 ‘‘(9) to provide for the enrollment of plan par17 ticipants and beneficiaries under appropriate cov18 erage options; and 

19 ‘‘(10) to do such other acts as may be nec20 essary to comply with this title or any order of the 

21 court and to protect the interests of plan partici22 pants and beneficiaries and providers of medical 

23 care. 


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1 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac2 ticable after the Secretary’s appointment as trustee, the 

3 Secretary shall give notice of such appointment to— 

4 ‘‘(1) the sponsor and plan administrator; 

5 ‘‘(2) each participant; 

6 ‘‘(3) each participating employer; and 

7 ‘‘(4) if applicable, each employee organization 

8 which, for purposes of collective bargaining, rep9 resents plan participants. 

10 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in11 consistent with the provisions of this title, or as may be 

12 otherwise ordered by the court, the Secretary, upon ap13 pointment as trustee under this section, shall be subject 

14 to the same duties as those of a trustee under section 704 

15 of title 11, United States Code, and shall have the duties 

16 of a fiduciary for purposes of this title. 

17 ‘‘(e) OTHER PROCEEDINGS.—An application by the 

18 Secretary under this subsection may be filed notwith19 standing the pendency in the same or any other court of 

20 any bankruptcy, mortgage foreclosure, or equity receiver21 ship proceeding, or any proceeding to reorganize, conserve, 

22 or liquidate such plan or its property, or any proceeding 

23 to enforce a lien against property of the plan. 

24 ‘‘(f) JURISDICTION OF COURT.— 


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1 ‘‘(1) IN GENERAL.—Upon the filing of an appli2 cation for the appointment as trustee or the issuance 

3 of a decree under this section, the court to which the 

4 application is made shall have exclusive jurisdiction 

5 of the plan involved and its property wherever lo6 cated with the powers, to the extent consistent with 

7 the purposes of this section, of a court of the United 

8 States having jurisdiction over cases under chapter 

9 11 of title 11, United States Code. Pending an adju10 dication under this section such court shall stay, and 

11 upon appointment by it of the Secretary as trustee, 

12 such court shall continue the stay of, any pending 

13 mortgage foreclosure, equity receivership, or other 

14 proceeding to reorganize, conserve, or liquidate the 

15 plan, the sponsor, or property of such plan or spon16 sor, and any other suit against any receiver, conser17 vator, or trustee of the plan, the sponsor, or prop18 erty of the plan or sponsor. Pending such adjudica19 tion and upon the appointment by it of the Sec20 retary as trustee, the court may stay any proceeding 

21 to enforce a lien against property of the plan or the 

22 sponsor or any other suit against the plan or the 

23 sponsor. 

24 ‘‘(2) VENUE.—An action under this section 

25 may be brought in the judicial district where the 


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1 sponsor or the plan administrator resides or does 

2 business or where any asset of the plan is situated. 

3 A district court in which such action is brought may 

4 issue process with respect to such action in any 

5 other judicial district. 

6 ‘‘(g) PERSONNEL.—In accordance with regulations 

7 which shall be prescribed by the Secretary, the Secretary 

8 shall appoint, retain, and compensate accountants, actu9 aries, and other professional service personnel as may be 

10 necessary in connection with the Secretary’s service as 

11 trustee under this section. 

12 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 

13 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a 

14 State may impose by law a contribution tax on an associa15 tion health plan described in section 806(a)(2), if the plan 

16 commenced operations in such State after the date of the 

17 enactment of the Small Business Health Fairness Act of 

18 2013. 

19 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec20 tion, the term ‘contribution tax’ imposed by a State on 

21 an association health plan means any tax imposed by such 

22 State if— 

23 ‘‘(1) such tax is computed by applying a rate to 

24 the amount of premiums or contributions, with re25 spect to individuals covered under the plan who are 


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1 residents of such State, which are received by the 

2 plan from participating employers located in such 

3 State or from such individuals; 

4 ‘‘(2) the rate of such tax does not exceed the 

5 rate of any tax imposed by such State on premiums 

6 or contributions received by insurers or health main7 tenance organizations for health insurance coverage 

8 offered in such State in connection with a group 

9 health plan; 

10 ‘‘(3) such tax is otherwise nondiscriminatory; 

11 and 

12 ‘‘(4) the amount of any such tax assessed on 

13 the plan is reduced by the amount of any tax or as14 sessment otherwise imposed by the State on pre15 miums, contributions, or both received by insurers or 

16 health maintenance organizations for health insur17 ance coverage, aggregate excess/stop loss insurance 

18 (as defined in section 806(g)(1)), specific excess/stop 

19 loss insurance (as defined in section 806(g)(2)), 

20 other insurance related to the provision of medical 

21 care under the plan, or any combination thereof pro22 vided by such insurers or health maintenance organi23 zations in such State in connection with such plan. 

24 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 

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


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1 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group 

2 health plan’ has the meaning provided in section 

3 733(a)(1) (after applying subsection (b) of this sec4 tion). 

5 ‘‘(2) MEDICAL CARE.—The term ‘medical care’ 

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

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

8 term ‘health insurance coverage’ has the meaning 

9 provided in section 733(b)(1). 

10 ‘‘(4) HEALTH INSURANCE ISSUER.—The term 

11 ‘health insurance issuer’ has the meaning provided 

12 in section 733(b)(2). 

13 ‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap14 plicable authority’ means the Secretary, except that, 

15 in connection with any exercise of the Secretary’s 

16 authority regarding which the Secretary is required 

17 under section 506(d) to consult with a State, such 

18 term means the Secretary, in consultation with such 

19 State. 

20 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 

21 term ‘health status-related factor’ has the meaning 

22 provided in section 733(d)(2). 

23 ‘‘(7) INDIVIDUAL MARKET.— 

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

25 market’ means the market for health insurance 


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1 coverage offered to individuals other than in 

2 connection with a group health plan. 

3 ‘‘(B) TREATMENT OF VERY SMALL

4 GROUPS.— 

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

6 (ii), such term includes coverage offered in 

7 connection with a group health plan that 

8 has fewer than 2 participants as current 

9 employees or participants described in sec10 tion 732(d)(3) on the first day of the plan 

11 year. 

12 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

13 shall not apply in the case of health insur14 ance coverage offered in a State if such 

15 State regulates the coverage described in 

16 such clause in the same manner and to the 

17 same extent as coverage in the small group 

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

19 the Public Health Service Act) is regulated 

20 by such State. 

21 ‘‘(8) PARTICIPATING EMPLOYER.—The term 

22 ‘participating employer’ means, in connection with 

23 an association health plan, any employer, if any indi24 vidual who is an employee of such employer, a part25 ner in such employer, or a self-employed individual 


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1 who is such employer (or any dependent, as defined 

2 under the terms of the plan, of such individual) is 

3 or was covered under such plan in connection with 

4 the status of such individual as such an employee, 

5 partner, or self-employed individual in relation to the 

6 plan. 

7 ‘‘(9) APPLICABLE STATE AUTHORITY.—The 

8 term ‘applicable State authority’ means, with respect 

9 to a health insurance issuer in a State, the State in10 surance commissioner or official or officials des11 ignated by the State to enforce the requirements of 

12 title XXVII of the Public Health Service Act for the 

13 State involved with respect to such issuer. 

14 ‘‘(10) QUALIFIED HEALTH ACTUARY.—The 

15 term ‘qualified health actuary’ means an individual 

16 who is a member of the American Academy of Actu17 aries with expertise in health care. 

18 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili19 ated member’ means, in connection with a sponsor— 

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

21 be a member of the sponsor but who elects an 

22 affiliated status with the sponsor, 

23 ‘‘(B) in the case of a sponsor with mem24 bers which consist of associations, a person who 


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1 is a member of any such association and elects 

2 an affiliated status with the sponsor, or 

3 ‘‘(C) in the case of an association health 

4 plan in existence on the date of the enactment 

5 of the Small Business Health Fairness Act of 

6 2013, a person eligible to be a member of the 

7 sponsor or one of its member associations. 

8 ‘‘(12) LARGE EMPLOYER.—The term ‘large em9 ployer’ means, in connection with a group health 

10 plan with respect to a plan year, an employer who 

11 employed an average of at least 51 employees on 

12 business days during the preceding calendar year 

13 and who employs at least 2 employees on the first 

14 day of the plan year. 

15 ‘‘(13) SMALL EMPLOYER.—The term ‘small em16 ployer’ means, in connection with a group health 

17 plan with respect to a plan year, an employer who 

18 is not a large employer. 

19 ‘‘(b) RULES OF CONSTRUCTION.— 

20 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur21 poses of determining whether a plan, fund, or pro22 gram is an employee welfare benefit plan which is an 

23 association health plan, and for purposes of applying 

24 this title in connection with such plan, fund, or proVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00106 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 gram so determined to be such an employee welfare 

2 benefit plan— 

3 ‘‘(A) in the case of a partnership, the term 

4 ‘employer’ (as defined in section 3(5)) includes 

5 the partnership in relation to the partners, and 

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

7 includes any partner in relation to the partner8 ship; and 

9 ‘‘(B) in the case of a self-employed indi10 vidual, the term ‘employer’ (as defined in sec11 tion 3(5)) and the term ‘employee’ (as defined 

12 in section 3(6)) shall include such individual. 

13 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

14 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 

15 case of any plan, fund, or program which was estab16 lished or is maintained for the purpose of providing 

17 medical care (through the purchase of insurance or 

18 otherwise) for employees (or their dependents) cov19 ered thereunder and which demonstrates to the Sec20 retary that all requirements for certification under 

21 this part would be met with respect to such plan, 

22 fund, or program if such plan, fund, or program 

23 were a group health plan, such plan, fund, or pro24 gram shall be treated for purposes of this title as an 


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1 employee welfare benefit plan on and after the date 

2 of such demonstration. 

3 ‘‘(3) EXCEPTION FOR CERTAIN BENEFITS.— 

4 The requirements of this part shall not apply to a 

5 group health plan in relation to its provision of ex6 cepted benefits, as defined in section 706(c).’’. 

7 (b) CONFORMING AMENDMENTS TO PREEMPTION

8 RULES.— 

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

10 1144(b)(6)) is amended by adding at the end the 

11 following new subparagraph: 

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

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

14 of an association health plan which is certified under part 

15 8.’’. 

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

17 is amended— 

18 (A) in subsection (b)(4), by striking ‘‘Sub19 section (a)’’ and inserting ‘‘Subsections (a) and 

20 (d)’’; 

21 (B) in subsection (b)(5), by striking ‘‘sub22 section (a)’’ in subparagraph (A) and inserting 

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

24 (a)(2)(B) and (b) of section 805’’, and by strik25 ing ‘‘subsection (a)’’ in subparagraph (B) and 


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1 inserting ‘‘subsection (a) of this section or sub2 section (a)(2)(B) or (b) of section 805’’; 

3 (C) by redesignating subsection (d) as sub4 section (e); and 

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

6 following new subsection: 

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

8 provisions of this title shall supersede any and all State 

9 laws insofar as they may now or hereafter preclude, or 

10 have the effect of precluding, a health insurance issuer 

11 from offering health insurance coverage in connection with 

12 an association health plan which is certified under part 

13 8. 

14 ‘‘(2) Except as provided in paragraphs (4) and (5) 

15 of subsection (b) of this section— 

16 ‘‘(A) In any case in which health insurance cov17 erage of any policy type is offered under an associa18 tion health plan certified under part 8 to a partici19 pating employer operating in such State, the provi20 sions of this title shall supersede any and all laws 

21 of such State insofar as they may preclude a health 

22 insurance issuer from offering health insurance cov23 erage of the same policy type to other employers op24 erating in the State which are eligible for coverage 

25 under such association health plan, whether or not 


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1 such other employers are participating employers in 

2 such plan. 

3 ‘‘(B) In any case in which health insurance cov4 erage of any policy type is offered in a State under 

5 an association health plan certified under part 8 and 

6 the filing, with the applicable State authority (as de7 fined in section 812(a)(9)), of the policy form in 

8 connection with such policy type is approved by such 

9 State authority, the provisions of this title shall su10 persede any and all laws of any other State in which 

11 health insurance coverage of such type is offered, in12 sofar as they may preclude, upon the filing in the 

13 same form and manner of such policy form with the 

14 applicable State authority in such other State, the 

15 approval of the filing in such other State. 

16 ‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 

17 provisions of this subsection shall be construed, with re18 spect to health insurance issuers or health insurance cov19 erage, to supersede or impair the law of any State— 

20 ‘‘(A) providing solvency standards or similar 

21 standards regarding the adequacy of insurer capital, 

22 surplus, reserves, or contributions, or 

23 ‘‘(B) relating to prompt payment of claims. 


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1 ‘‘(4) For additional provisions relating to association 

2 health plans, see subsections (a)(2)(B) and (b) of section 

3 805. 

4 ‘‘(5) For purposes of this subsection, the term ‘asso5 ciation health plan’ has the meaning provided in section 

6 801(a), and the terms ‘health insurance coverage’, ‘par7 ticipating employer’, and ‘health insurance issuer’ have 

8 the meanings provided such terms in section 812, respec9 tively.’’. 

10 (3) Section 514(b)(6)(A) of such Act (29 

11 U.S.C. 1144(b)(6)(A)) is amended— 

12 (A) in clause (i)(II), by striking ‘‘and’’ at 

13 the end; 

14 (B) in clause (ii), by inserting ‘‘and which 

15 does not provide medical care (within the mean16 ing of section 733(a)(2)),’’ after ‘‘arrange17 ment,’’, and by striking ‘‘title.’’ and inserting 

18 ‘‘title, and’’; and 

19 (C) by adding at the end the following new 

20 clause: 

21 ‘‘(iii) subject to subparagraph (E), in the case 

22 of any other employee welfare benefit plan which is 

23 a multiple employer welfare arrangement and which 

24 provides medical care (within the meaning of section 


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•S 1851 IS

1 733(a)(2)), any law of any State which regulates in2 surance may apply.’’. 

3 (4) Section 514(e) of such Act (as redesignated 

4 by paragraph (2)(C)) is amended— 

5 (A) by striking ‘‘Nothing’’ and inserting 

6 ‘‘(1) Except as provided in paragraph (2), noth7 ing’’; and 

8 (B) by adding at the end the following new 

9 paragraph: 

10 ‘‘(2) Nothing in any other provision of law enacted 

11 on or after the date of the enactment of the Small Busi12 ness Health Fairness Act of 2013 shall be construed to 

13 alter, amend, modify, invalidate, impair, or supersede any 

14 provision of this title, except by specific cross-reference to 

15 the affected section.’’. 

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

17 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

18 the following new sentence: ‘‘Such term also includes a 

19 person serving as the sponsor of an association health plan 

20 under part 8.’’. 

21 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE22 LATED TO SELF-INSURED AND FULLY INSURED OPTIONS

23 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 

24 of such Act (29 U.S.C. 102(b)) is amended by adding at 

25 the end the following: ‘‘An association health plan shall 


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1 include in its summary plan description, in connection 

2 with each benefit option, a description of the form of sol3 vency or guarantee fund protection secured pursuant to 

4 this Act or applicable State law, if any.’’. 

5 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is 

6 amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 

7 (f) REPORT TO THE CONGRESS REGARDING CERTIFI8 CATION OF SELF-INSURED ASSOCIATION HEALTH

9 PLANS.—Not later than January 1, 2016, the Secretary 

10 of Labor shall report to the Committee on Education and 

11 the Workforce of the House of Representatives and the 

12 Committee on Health, Education, Labor, and Pensions of 

13 the Senate the effect association health plans have had, 

14 if any, on reducing the number of uninsured individuals. 

15 (g) CLERICAL AMENDMENT.—The table of contents 

16 in section 1 of the Employee Retirement Income Security 

17 Act of 1974 is amended by inserting after the item relat18 ing to section 734 the following new items: 

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘801. Association health plans. 

‘‘802. Certification of association health plans. 

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

‘‘804. Participation and coverage requirements. 

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

benefit options. 

‘‘806. Maintenance of reserves and provisions for solvency for plans providing 

health benefits in addition to health insurance coverage. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Corrective actions and mandatory termination. 

‘‘810. Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage. 


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‘‘811. State assessment authority. 

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

1 SEC. 223. CLARIFICATION OF TREATMENT OF SINGLE EM2 PLOYER ARRANGEMENTS. 

3 Section 3(40)(B) of the Employee Retirement Income 

4 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend5 ed— 

6 (1) in clause (i), by inserting after ‘‘control 

7 group,’’ the following: ‘‘except that, in any case in 

8 which the benefit referred to in subparagraph (A) 

9 consists of medical care (as defined in section 

10 812(a)(2)), two or more trades or businesses, wheth11 er or not incorporated, shall be deemed a single em12 ployer for any plan year of such plan, or any fiscal 

13 year of such other arrangement, if such trades or 

14 businesses are within the same control group during 

15 such year or at any time during the preceding 1-year 

16 period,’’; 

17 (2) in clause (iii), by striking ‘‘(iii) the deter18 mination’’ and inserting the following: 

19 ‘‘(iii)(I) in any case in which the benefit re20 ferred to in subparagraph (A) consists of medical 

21 care (as defined in section 812(a)(2)), the deter22 mination of whether a trade or business is under 

23 ‘common control’ with another trade or business 

24 shall be determined under regulations of the SecVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00114 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 retary applying principles consistent and coextensive 

2 with the principles applied in determining whether 

3 employees of two or more trades or businesses are 

4 treated as employed by a single employer under sec5 tion 4001(b), except that, for purposes of this para6 graph, an interest of greater than 25 percent may 

7 not be required as the minimum interest necessary 

8 for common control, or 

9 ‘‘(II) in any other case, the determination’’; 

10 (3) by redesignating clauses (iv) and (v) as 

11 clauses (v) and (vi), respectively; and 

12 (4) by inserting after clause (iii) the following 

13 new clause: 

14 ‘‘(iv) in any case in which the benefit referred 

15 to in subparagraph (A) consists of medical care (as 

16 defined in section 812(a)(2)), in determining, after 

17 the application of clause (i), whether benefits are 

18 provided to employees of two or more employers, the 

19 arrangement shall be treated as having only one par20 ticipating employer if, after the application of clause 

21 (i), the number of individuals who are employees and 

22 former employees of any one participating employer 

23 and who are covered under the arrangement is 

24 greater than 75 percent of the aggregate number of 

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•S 1851 IS

1 ees of participating employers and who are covered 

2 under the arrangement,’’. 

3 SEC. 224. ENFORCEMENT PROVISIONS RELATING TO ASSO4 CIATION HEALTH PLANS. 

5 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL

6 MISREPRESENTATIONS.—Section 501 of the Employee 

7 Retirement Income Security Act of 1974 (29 U.S.C. 1131) 

8 is amended— 

9 (1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 

10 (2) by adding at the end the following new sub11 section: 

12 ‘‘(b) Any person who willfully falsely represents, to 

13 any employee, any employee’s beneficiary, any employer, 

14 the Secretary, or any State, a plan or other arrangement 

15 established or maintained for the purpose of offering or 

16 providing any benefit described in section 3(1) to employ17 ees or their beneficiaries as— 

18 ‘‘(1) being an association health plan which has 

19 been certified under part 8; 

20 ‘‘(2) having been established or maintained 

21 under or pursuant to one or more collective bar22 gaining agreements which are reached pursuant to 

23 collective bargaining described in section 8(d) of the 

24 National Labor Relations Act (29 U.S.C. 158(d)) or 

25 paragraph Fourth of section 2 of the Railway Labor 


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•S 1851 IS

1 Act (45 U.S.C. 152, paragraph Fourth) or which are 

2 reached pursuant to labor-management negotiations 

3 under similar provisions of State public employee re4 lations laws; or 

5 ‘‘(3) being a plan or arrangement described in 

6 section 3(40)(A)(i), 

7 shall, upon conviction, be imprisoned not more than 5 

8 years, be fined under title 18, United States Code, or 

9 both.’’. 

10 (b) CEASE ACTIVITIES ORDERS.—Section 502 of 

11 such Act (29 U.S.C. 1132) is amended by adding at the 

12 end the following new subsection: 

13 ‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE14 SIST ORDERS.— 

15 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

16 upon application by the Secretary showing the oper17 ation, promotion, or marketing of an association 

18 health plan (or similar arrangement providing bene19 fits consisting of medical care (as defined in section 

20 733(a)(2))) that— 

21 ‘‘(A) is not certified under part 8, is sub22 ject under section 514(b)(6) to the insurance 

23 laws of any State in which the plan or arrange24 ment offers or provides benefits, and is not liVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00117 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 censed, registered, or otherwise approved under 

2 the insurance laws of such State; or 

3 ‘‘(B) is an association health plan certified 

4 under part 8 and is not operating in accordance 

5 with the requirements under part 8 for such 

6 certification, 

7 a district court of the United States shall enter an 

8 order requiring that the plan or arrangement cease 

9 activities. 

10 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

11 apply in the case of an association health plan or 

12 other arrangement if the plan or arrangement shows 

13 that— 

14 ‘‘(A) all benefits under it referred to in 

15 paragraph (1) consist of health insurance cov16 erage; and 

17 ‘‘(B) with respect to each State in which 

18 the plan or arrangement offers or provides ben19 efits, the plan or arrangement is operating in 

20 accordance with applicable State laws that are 

21 not superseded under section 514. 

22 ‘‘(3) ADDITIONAL EQUITABLE RELIEF.—The 

23 court may grant such additional equitable relief, in24 cluding any relief available under this title, as it 

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1 lic and of persons having claims for benefits against 

2 the plan.’’. 

3 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.— 

4 Section 503 of such Act (29 U.S.C. 1133) is amended by 

5 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 

6 and by adding at the end the following new subsection: 

7 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 

8 each association health plan which is or has been certified 

9 under part 8 shall require the board of trustees or the 

10 named fiduciary (as applicable) to ensure that the require11 ments of this section are met in connection with claims 

12 filed under the plan.’’. 

13 SEC. 225. COOPERATION BETWEEN FEDERAL AND STATE 

14 AUTHORITIES. 

15 Section 506 of the Employee Retirement Income Se16 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

17 at the end the following new subsection: 

18 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

19 TO ASSOCIATION HEALTH PLANS.— 

20 ‘‘(1) AGREEMENTS WITH STATES.—The Sec21 retary shall consult with the State recognized under 

22 paragraph (2) with respect to an association health 

23 plan regarding the exercise of— 


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1 ‘‘(A) the Secretary’s authority under sec2 tions 502 and 504 to enforce the requirements 

3 for certification under part 8; and 

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

5 association health plans under part 8 in accord6 ance with regulations of the Secretary applica7 ble to certification under part 8. 

8 ‘‘(2) RECOGNITION OF PRIMARY DOMICILE

9 STATE.—In carrying out paragraph (1), the Sec10 retary shall ensure that only one State will be recog11 nized, with respect to any particular association 

12 health plan, as the State with which consultation is 

13 required. In carrying out this paragraph— 

14 ‘‘(A) in the case of a plan which provides 

15 health insurance coverage (as defined in section 

16 812(a)(3)), such State shall be the State with 

17 which filing and approval of a policy type of18 fered by the plan was initially obtained, and 

19 ‘‘(B) in any other case, the Secretary shall 

20 take into account the places of residence of the 

21 participants and beneficiaries under the plan 

22 and the State in which the trust is main23 tained.’’. 


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1 SEC. 226. EFFECTIVE DATE AND TRANSITIONAL AND 

2 OTHER RULES. 

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

4 this subtitle shall take effect 1 year after the date of the 

5 enactment of this Act. The Secretary of Labor shall first 

6 issue all regulations necessary to carry out the amend7 ments made by this subtitle within 1 year after the date 

8 of the enactment of this Act. 

9 (b) TREATMENT OF CERTAIN EXISTING HEALTH

10 BENEFITS PROGRAMS.— 

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

12 the date of the enactment of this Act, an arrange13 ment is maintained in a State for the purpose of 

14 providing benefits consisting of medical care for the 

15 employees and beneficiaries of its participating em16 ployers, at least 200 participating employers make 

17 contributions to such arrangement, such arrange18 ment has been in existence for at least 10 years, and 

19 such arrangement is licensed under the laws of one 

20 or more States to provide such benefits to its par21 ticipating employers, upon the filing with the appli22 cable authority (as defined in section 812(a)(5) of 

23 the Employee Retirement Income Security Act of 

24 1974 (as amended by this subtitle)) by the arrange25 ment of an application for certification of the arVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00121 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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•S 1851 IS

1 rangement under part 8 of subtitle B of title I of 

2 such Act— 

3 (A) such arrangement shall be deemed to 

4 be a group health plan for purposes of title I 

5 of such Act; 

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

7 and 803(a) of the Employee Retirement Income 

8 Security Act of 1974 shall be deemed met with 

9 respect to such arrangement; 

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

11 such Act shall be deemed met, if the arrange12 ment is operated by a board of directors 

13 which— 

14 (i) is elected by the participating em15 ployers, with each employer having one 

16 vote; and 

17 (ii) has complete fiscal control over 

18 the arrangement and which is responsible 

19 for all operations of the arrangement; 

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

21 such Act shall be deemed met with respect to 

22 such arrangement; and 

23 (E) the arrangement may be certified by 

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1 erations in any State only if it operates in such 

2 State on the date of certification. 

3 The provisions of this subsection shall cease to apply 

4 with respect to any such arrangement at such time 

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

6 applicable requirements of this subsection are not 

7 met with respect to such arrangement. 

8 (2) DEFINITIONS.—For purposes of this sub9 section, the terms ‘‘group health plan’’, ‘‘medical 

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

11 meanings provided in section 812 of the Employee 

12 Retirement Income Security Act of 1974, except 

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

14 to an ‘‘association health plan’’ shall be deemed a 

15 reference to an arrangement referred to in this sub16 section. 

17 TITLE III—INTERSTATE MARKET 

18 FOR HEALTH INSURANCE 

19 SEC. 301. COOPERATIVE GOVERNING OF INDIVIDUAL 

20 HEALTH INSURANCE COVERAGE. 

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

22 Service Act (42 U.S.C. 300gg et seq.), as restored by sec23 tion 2, is amended by adding at the end the following new 

24 part: 


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•S 1851 IS

1 ‘‘PART D—COOPERATIVE GOVERNING OF 

2 INDIVIDUAL HEALTH INSURANCE COVERAGE 

3 ‘‘SEC. 2795. DEFINITIONS. 

4 ‘‘In this part: 

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

6 State’ means, with respect to individual health insur7 ance coverage offered by a health insurance issuer, 

8 the State designated by the issuer as the State 

9 whose covered laws shall govern the health insurance 

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

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

12 only designate one such State as its primary State 

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

14 issuer may not change the designated primary State 

15 with respect to individual health insurance coverage 

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

17 may be made upon renewal of the policy. With re18 spect to such designated State, the issuer is deemed 

19 to be doing business in that State. 

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

21 State’ means, with respect to individual health insur22 ance coverage offered by a health insurance issuer, 

23 any State that is not the primary State. In the case 

24 of a health insurance issuer that is selling a policy 

25 in, or to a resident of, a secondary State, the issuer 


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•S 1851 IS

1 is deemed to be doing business in that secondary 

2 State. 

3 ‘‘(3) HEALTH INSURANCE ISSUER.—The term 

4 ‘health insurance issuer’ has the meaning given such 

5 term in section 2791(b)(2), except that such an 

6 issuer must be licensed in the primary State and be 

7 qualified to sell individual health insurance coverage 

8 in that State. 

9 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV10 ERAGE.—The term ‘individual health insurance cov11 erage’ means health insurance coverage offered in 

12 the individual market, as defined in section 

13 2791(e)(1), but does not include excepted benefits 

14 described in section 2791(c). 

15 ‘‘(5) APPLICABLE STATE AUTHORITY.—The 

16 term ‘applicable State authority’ means, with respect 

17 to a health insurance issuer in a State, the State in18 surance commissioner or official or officials des19 ignated by the State to enforce the requirements of 

20 this title for the State with respect to the issuer. 

21 ‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 

22 term ‘hazardous financial condition’ means that, 

23 based on its present or reasonably anticipated finan24 cial condition, a health insurance issuer is unlikely 

25 to be able— 


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•S 1851 IS

1 ‘‘(A) to meet obligations to policyholders 

2 with respect to known claims and reasonably 

3 anticipated claims; or 

4 ‘‘(B) to pay other obligations in the normal 

5 course of business. 

6 ‘‘(7) COVERED LAWS.— 

7 ‘‘(A) IN GENERAL.—The term ‘covered 

8 laws’ means the laws, rules, regulations, agree9 ments, and orders governing the insurance busi10 ness pertaining to— 

11 ‘‘(i) individual health insurance cov12 erage issued by a health insurance issuer; 

13 ‘‘(ii) the offer, sale, rating (including 

14 medical underwriting), renewal, and 

15 issuance of individual health insurance cov16 erage to an individual; 

17 ‘‘(iii) the provision to an individual in 

18 relation to individual health insurance cov19 erage of health care and insurance related 

20 services; 

21 ‘‘(iv) the provision to an individual in 

22 relation to individual health insurance cov23 erage of management, operations, and in24 vestment activities of a health insurance 

25 issuer; and 


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•S 1851 IS

1 ‘‘(v) the provision to an individual in 

2 relation to individual health insurance cov3 erage of loss control and claims adminis4 tration for a health insurance issuer with 

5 respect to liability for which the issuer pro6 vides insurance. 

7 ‘‘(B) EXCEPTION.—Such term does not in8 clude any law, rule, regulation, agreement, or 

9 order governing the use of care or cost manage10 ment techniques, including any requirement re11 lated to provider contracting, network access or 

12 adequacy, health care data collection, or quality 

13 assurance. 

14 ‘‘(8) STATE.—The term ‘State’ means only the 

15 50 States and the District of Columbia. 

16 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC17 TICES.—The term ‘unfair claims settlement prac18 tices’ means only the following practices: 

19 ‘‘(A) Knowingly misrepresenting to claim20 ants and insured individuals relevant facts or 

21 policy provisions relating to coverage at issue. 

22 ‘‘(B) Failing to acknowledge with reason23 able promptness pertinent communications with 

24 respect to claims arising under policies. 


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•S 1851 IS

1 ‘‘(C) Failing to adopt and implement rea2 sonable standards for the prompt investigation 

3 and settlement of claims arising under policies. 

4 ‘‘(D) Failing to effectuate prompt, fair, 

5 and equitable settlement of claims submitted in 

6 which liability has become reasonably clear. 

7 ‘‘(E) Refusing to pay claims without con8 ducting a reasonable investigation. 

9 ‘‘(F) Failing to affirm or deny coverage of 

10 claims within a reasonable period of time after 

11 having completed an investigation related to 

12 those claims. 

13 ‘‘(G) A pattern or practice of compelling 

14 insured individuals or their beneficiaries to in15 stitute suits to recover amounts due under its 

16 policies by offering substantially less than the 

17 amounts ultimately recovered in suits brought 

18 by them. 

19 ‘‘(H) A pattern or practice of attempting 

20 to settle or settling claims for less than the 

21 amount that a reasonable person would believe 

22 the insured individual or his or her beneficiary 

23 was entitled by reference to written or printed 

24 advertising material accompanying or made 

25 part of an application. 


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1 ‘‘(I) Attempting to settle or settling claims 

2 on the basis of an application that was materi3 ally altered without notice to, or knowledge or 

4 consent of, the insured. 

5 ‘‘(J) Failing to provide forms necessary to 

6 present claims within 15 calendar days of a re7 quests with reasonable explanations regarding 

8 their use. 

9 ‘‘(K) Attempting to cancel a policy in less 

10 time than that prescribed in the policy or by the 

11 law of the primary State. 

12 ‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 

13 and abuse’ means an act or omission committed by 

14 a person who, knowingly and with intent to defraud, 

15 commits, or conceals any material information con16 cerning, one or more of the following: 

17 ‘‘(A) Presenting, causing to be presented 

18 or preparing with knowledge or belief that it 

19 will be presented to or by an insurer, a rein20 surer, broker or its agent, false information as 

21 part of, in support of or concerning a fact ma22 terial to one or more of the following: 

23 ‘‘(i) An application for the issuance or 

24 renewal of an insurance policy or reinsur25 ance contract. 


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•S 1851 IS

1 ‘‘(ii) The rating of an insurance policy 

2 or reinsurance contract. 

3 ‘‘(iii) A claim for payment or benefit 

4 pursuant to an insurance policy or reinsur5 ance contract. 

6 ‘‘(iv) Premiums paid on an insurance 

7 policy or reinsurance contract. 

8 ‘‘(v) Payments made in accordance 

9 with the terms of an insurance policy or 

10 reinsurance contract. 

11 ‘‘(vi) A document filed with the com12 missioner or the chief insurance regulatory 

13 official of another jurisdiction. 

14 ‘‘(vii) The financial condition of an in15 surer or reinsurer. 

16 ‘‘(viii) The formation, acquisition, 

17 merger, reconsolidation, dissolution or 

18 withdrawal from one or more lines of in19 surance or reinsurance in all or part of a 

20 State by an insurer or reinsurer. 

21 ‘‘(ix) The issuance of written evidence 

22 of insurance. 

23 ‘‘(x) The reinstatement of an insur24 ance policy. 


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•S 1851 IS

1 ‘‘(B) Solicitation or acceptance of new or 

2 renewal insurance risks on behalf of an insurer, 

3 reinsurer, or other person engaged in the busi4 ness of insurance by a person who knows or 

5 should know that the insurer or other person 

6 responsible for the risk is insolvent at the time 

7 of the transaction. 

8 ‘‘(C) Transaction of the business of insur9 ance in violation of laws requiring a license, cer10 tificate of authority or other legal authority for 

11 the transaction of the business of insurance. 

12 ‘‘(D) Attempt to commit, aiding or abet13 ting in the commission of, or conspiracy to com14 mit the acts or omissions specified in this para15 graph. 

16 ‘‘SEC. 2796. APPLICATION OF LAW. 

17 ‘‘(a) IN GENERAL.—The covered laws of the primary 

18 State shall apply to individual health insurance coverage 

19 offered by a health insurance issuer in the primary State 

20 and in any secondary State, but only if the coverage and 

21 issuer comply with the conditions of this section with re22 spect to the offering of coverage in any secondary State. 

23 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC24 ONDARY STATE.—Except as provided in this section, a 

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1 ing (including medical underwriting), renewal, and 

2 issuance of individual health insurance coverage in any 

3 secondary State is exempt from any covered laws of the 

4 secondary State (and any rules, regulations, agreements, 

5 or orders sought or issued by such State under or related 

6 to such covered laws) to the extent that such laws would— 

7 ‘‘(1) make unlawful, or regulate, directly or in8 directly, the operation of the health insurance issuer 

9 operating in the secondary State, except that any 

10 secondary State may require such an issuer— 

11 ‘‘(A) to pay, on a nondiscriminatory basis, 

12 applicable premium and other taxes (including 

13 high-risk pool assessments) which are levied on 

14 insurers and surplus lines insurers, brokers, or 

15 policyholders under the laws of the State; 

16 ‘‘(B) to register with and designate the 

17 State insurance commissioner as its agent solely 

18 for the purpose of receiving service of legal doc19 uments or process; 

20 ‘‘(C) to submit to an examination of its fi21 nancial condition by the State insurance com22 missioner in any State in which the issuer is 

23 doing business to determine the issuer’s finan24 cial condition, if— 


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•S 1851 IS

1 ‘‘(i) the State insurance commissioner 

2 of the primary State has not done an ex3 amination within the period recommended 

4 by the National Association of Insurance 

5 Commissioners; and 

6 ‘‘(ii) any such examination is con7 ducted in accordance with the examiners’ 

8 handbook of the National Association of 

9 Insurance Commissioners and is coordi10 nated to avoid unjustified duplication and 

11 unjustified repetition; 

12 ‘‘(D) to comply with a lawful order 

13 issued— 

14 ‘‘(i) in a delinquency proceeding com15 menced by the State insurance commis16 sioner if there has been a finding of finan17 cial impairment under subparagraph (C); 

18 or 

19 ‘‘(ii) in a voluntary dissolution pro20 ceeding; 

21 ‘‘(E) to comply with an injunction issued 

22 by a court of competent jurisdiction, upon a pe23 tition by the State insurance commissioner al24 leging that the issuer is in hazardous financial 

25 condition; 


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•S 1851 IS

1 ‘‘(F) to participate, on a nondiscriminatory 

2 basis, in any insurance insolvency guaranty as3 sociation or similar association to which a 

4 health insurance issuer in the State is required 

5 to belong; 

6 ‘‘(G) to comply with any State law regard7 ing fraud and abuse (as defined in section 

8 2795(10)), except that if the State seeks an in9 junction regarding the conduct described in this 

10 subparagraph, such injunction must be obtained 

11 from a court of competent jurisdiction; 

12 ‘‘(H) to comply with any State law regard13 ing unfair claims settlement practices (as de14 fined in section 2795(9)); or 

15 ‘‘(I) to comply with the applicable require16 ments for independent review under section 

17 2798 with respect to coverage offered in the 

18 State; 

19 ‘‘(2) require any individual health insurance 

20 coverage issued by the issuer to be countersigned by 

21 an insurance agent or broker residing in that Sec22 ondary State; or 

23 ‘‘(3) otherwise discriminate against the issuer 

24 issuing insurance in both the primary State and in 

25 any secondary State. 


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•S 1851 IS

1 ‘‘(c) CLEAR AND CONSPICUOUS DISCLOSURE.—A 

2 health insurance issuer shall provide the following notice, 

3 in 12-point bold type, in any insurance coverage offered 

4 in a secondary State under this part by such a health in5 surance issuer and at renewal of the policy, with the 5 

6 blank spaces therein being appropriately filled with the 

7 name of the health insurance issuer, the name of primary 

8 State, the name of the secondary State, the name of the 

9 secondary State, and the name of the secondary State, re10 spectively, for the coverage concerned: 

11 This policy is issued by lllll and is governed by 

12 the laws and regulations of the State of lllll, and 

13 it has met all the laws of that State as determined by 

14 that State’s Department of Insurance. This policy may be 

15 less expensive than others because it is not subject to all 

16 of the insurance laws and regulations of the State of 

17 lllll, including coverage of some services or bene18 fits mandated by the law of the State of lllll. Ad19 ditionally, this policy is not subject to all of the consumer 

20 protection laws or restrictions on rate changes of the State 

21 of lllll. As with all insurance products, before pur22 chasing this policy, you should carefully review the policy 

23 and determine what health care services the policy covers 

24 and what benefits it provides, including any exclusions, 

25 limitations, or conditions for such services or benefits. 


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•S 1851 IS

1 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

2 AND PREMIUM INCREASES.— 

3 ‘‘(1) IN GENERAL.—For purposes of this sec4 tion, a health insurance issuer that provides indi5 vidual health insurance coverage to an individual 

6 under this part in a primary or secondary State may 

7 not upon renewal— 

8 ‘‘(A) move or reclassify the individual in9 sured under the health insurance coverage from 

10 the class such individual is in at the time of 

11 issue of the contract based on the health-status 

12 related factors of the individual; or 

13 ‘‘(B) increase the premiums assessed the 

14 individual for such coverage based on a health 

15 status-related factor or change of a health sta16 tus-related factor or the past or prospective 

17 claim experience of the insured individual. 

18 ‘‘(2) CONSTRUCTION.—Nothing in paragraph 

19 (1) shall be construed to prohibit a health insurance 

20 issuer— 

21 ‘‘(A) from terminating or discontinuing 

22 coverage or a class of coverage in accordance 

23 with subsections (b) and (c) of section 2742; 


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•S 1851 IS

1 ‘‘(B) from raising premium rates for all 

2 policy holders within a class based on claims ex3 perience; 

4 ‘‘(C) from changing premiums or offering 

5 discounted premiums to individuals who engage 

6 in wellness activities at intervals prescribed by 

7 the issuer, if such premium changes or incen8 tives— 

9 ‘‘(i) are disclosed to the consumer in 

10 the insurance contract; 

11 ‘‘(ii) are based on specific wellness ac12 tivities that are not applicable to all indi13 viduals; and 

14 ‘‘(iii) are not obtainable by all individ15 uals to whom coverage is offered; 

16 ‘‘(D) from reinstating lapsed coverage; or 

17 ‘‘(E) from retroactively adjusting the rates 

18 charged an insured individual if the initial rates 

19 were set based on material misrepresentation by 

20 the individual at the time of issue. 

21 ‘‘(e) PRIOR OFFERING OF POLICY IN PRIMARY

22 STATE.—A health insurance issuer may not offer for sale 

23 individual health insurance coverage in a secondary State 

24 unless that coverage is currently offered for sale in the 

25 primary State. 


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•S 1851 IS

1 ‘‘(f) LICENSING OF AGENTS OR BROKERS FOR

2 HEALTH INSURANCE ISSUERS.—Any State may require 

3 that a person acting, or offering to act, as an agent or 

4 broker for a health insurance issuer with respect to the 

5 offering of individual health insurance coverage obtain a 

6 license from that State, with commissions or other com7 pensation subject to the provisions of the laws of that 

8 State, except that a State may not impose any qualifica9 tion or requirement which discriminates against a non10 resident agent or broker. 

11 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN12 SURANCE COMMISSIONER.—Each health insurance issuer 

13 issuing individual health insurance coverage in both pri14 mary and secondary States shall submit— 

15 ‘‘(1) to the insurance commissioner of each 

16 State in which it intends to offer such coverage, be17 fore it may offer individual health insurance cov18 erage in such State— 

19 ‘‘(A) a copy of the plan of operation or fea20 sibility study or any similar statement of the 

21 policy being offered and its coverage (which 

22 shall include the name of its primary State and 

23 its principal place of business); 

24 ‘‘(B) written notice of any change in its 

25 designation of its primary State; and 


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1 ‘‘(C) written notice from the issuer of the 

2 issuer’s compliance with all the laws of the pri3 mary State; and 

4 ‘‘(2) to the insurance commissioner of each sec5 ondary State in which it offers individual health in6 surance coverage, a copy of the issuer’s quarterly fi7 nancial statement submitted to the primary State, 

8 which statement shall be certified by an independent 

9 public accountant and contain a statement of opin10 ion on loss and loss adjustment expense reserves 

11 made by— 

12 ‘‘(A) a member of the American Academy 

13 of Actuaries; or 

14 ‘‘(B) a qualified loss reserve specialist. 

15 ‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 

16 Nothing in this section shall be construed to affect the 

17 authority of any Federal or State court to enjoin— 

18 ‘‘(1) the solicitation or sale of individual health 

19 insurance coverage by a health insurance issuer to 

20 any person or group who is not eligible for such in21 surance; or 

22 ‘‘(2) the solicitation or sale of individual health 

23 insurance coverage that violates the requirements of 

24 the law of a secondary State which are described in 


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1 subparagraphs (A) through (H) of section 

2 2796(b)(1). 

3 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD4 MINISTRATIVE ACTION.—Nothing in this section shall be 

5 construed to affect the authority of any State to enjoin 

6 conduct in violation of that State’s laws described in sec7 tion 2796(b)(1). 

8 ‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 

9 ‘‘(1) IN GENERAL.—Subject to the provisions of 

10 subsection (b)(1)(G) (relating to injunctions) and 

11 paragraph (2), nothing in this section shall be con12 strued to affect the authority of any State to make 

13 use of any of its powers to enforce the laws of such 

14 State with respect to which a health insurance issuer 

15 is not exempt under subsection (b). 

16 ‘‘(2) COURTS OF COMPETENT JURISDICTION.— 

17 If a State seeks an injunction regarding the conduct 

18 described in paragraphs (1) and (2) of subsection 

19 (h), such injunction must be obtained from a Fed20 eral or State court of competent jurisdiction. 

21 ‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 

22 section shall affect the authority of any State to bring ac23 tion in any Federal or State court. 

24 ‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 

25 this section shall be construed to affect the applicability 


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1 of State laws generally applicable to persons or corpora2 tions. 

3 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

4 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

5 health insurance issuer is offering coverage in a primary 

6 State that does not accommodate residents of secondary 

7 States or does not provide a working mechanism for resi8 dents of a secondary State, and the issuer is offering cov9 erage under this part in such secondary State which has 

10 not adopted a qualified high-risk pool as its acceptable al11 ternative mechanism (as defined in section 2744(c)(2)), 

12 the issuer shall, with respect to any individual health in13 surance coverage offered in a secondary State under this 

14 part, comply with the guaranteed availability requirements 

15 for eligible individuals in section 2741. 

16 ‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 

17 BEFORE ISSUER MAY SELL INTO SECONDARY 

18 STATES. 

19 ‘‘A health insurance issuer may not offer, sell, or 

20 issue individual health insurance coverage in a secondary 

21 State if the State insurance commissioner does not use 

22 a risk-based capital formula for the determination of cap23 ital and surplus requirements for all health insurance 

24 issuers. 


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1 ‘‘SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SEC2 ONDARY STATE. 

3 ‘‘Effective beginning two years after the date of en4 actment of this part, an individual in a State may not 

5 buy individual health insurance coverage in a secondary 

6 State if the premium for individual health insurance in 

7 the primary State (with respect to the individual) exceeds 

8 the national average premium by 10 percent or more. 

9 ‘‘SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCE10 DURES. 

11 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur12 ance issuer may not offer, sell, or issue individual health 

13 insurance coverage in a secondary State under the provi14 sions of this title unless— 

15 ‘‘(1) both the secondary State and the primary 

16 State have legislation or regulations in place estab17 lishing an independent review process for individuals 

18 who are covered by individual health insurance cov19 erage, or 

20 ‘‘(2) in any case in which the requirements of 

21 subparagraph (A) are not met with respect to the ei22 ther of such States, the issuer provides an inde23 pendent review mechanism substantially identical (as 

24 determined by the applicable State authority of such 

25 State) to that prescribed in the ‘Health Carrier Ex26 ternal Review Model Act’ of the National Association 


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1 of Insurance Commissioners for all individuals who 

2 purchase insurance coverage under the terms of this 

3 part, except that, under such mechanism, the review 

4 is conducted by an independent medical reviewer, or 

5 a panel of such reviewers, with respect to whom the 

6 requirements of subsection (b) are met. 

7 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

8 REVIEWERS.—In the case of any independent review 

9 mechanism referred to in subsection (a)(2)— 

10 ‘‘(1) IN GENERAL.—In referring a denial of a 

11 claim to an independent medical reviewer, or to any 

12 panel of such reviewers, to conduct independent 

13 medical review, the issuer shall ensure that— 

14 ‘‘(A) each independent medical reviewer 

15 meets the qualifications described in paragraphs 

16 (2) and (3); 

17 ‘‘(B) with respect to each review, each re18 viewer meets the requirements of paragraph (4) 

19 and the reviewer, or at least 1 reviewer on the 

20 panel, meets the requirements described in 

21 paragraph (5); and 

22 ‘‘(C) compensation provided by the issuer 

23 to each reviewer is consistent with paragraph 

24 (6). 


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1 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde2 pendent medical reviewer shall be a physician 

3 (allopathic or osteopathic) or health care profes4 sional who— 

5 ‘‘(A) is appropriately credentialed or li6 censed in one or more States to deliver health 

7 care services; and 

8 ‘‘(B) typically treats the condition, makes 

9 the diagnosis, or provides the type of treatment 

10 under review. 

11 ‘‘(3) INDEPENDENCE.— 

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graph (B), each independent medical reviewer 

14 in a case shall— 

15 ‘‘(i) not be a related party (as defined 

16 in paragraph (7)); 

17 ‘‘(ii) not have a material familial, fi18 nancial, or professional relationship with 

19 such a party; and 

20 ‘‘(iii) not otherwise have a conflict of 

21 interest with such a party (as determined 

22 under regulations). 

23 ‘‘(B) EXCEPTION.—Nothing in subpara24 graph (A) shall be construed to— 


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1 ‘‘(i) prohibit an individual, solely on 

2 the basis of affiliation with the issuer, 

3 from serving as an independent medical re4 viewer if— 

5 ‘‘(I) a non-affiliated individual is 

6 not reasonably available; 

7 ‘‘(II) the affiliated individual is 

8 not involved in the provision of items 

9 or services in the case under review; 

10 ‘‘(III) the fact of such an affili11 ation is disclosed to the issuer and the 

12 enrollee (or authorized representative) 

13 and neither party objects; and 

14 ‘‘(IV) the affiliated individual is 

15 not an employee of the issuer and 

16 does not provide services exclusively or 

17 primarily to or on behalf of the issuer; 

18 ‘‘(ii) prohibit an individual who has 

19 staff privileges at the institution where the 

20 treatment involved takes place from serv21 ing as an independent medical reviewer 

22 merely on the basis of such affiliation if 

23 the affiliation is disclosed to the issuer and 

24 the enrollee (or authorized representative), 

25 and neither party objects; or 


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1 ‘‘(iii) prohibit receipt of compensation 

2 by an independent medical reviewer from 

3 an entity if the compensation is provided 

4 consistent with paragraph (6). 

5 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

6 IN SAME FIELD.— 

7 ‘‘(A) IN GENERAL.—In a case involving 

8 treatment, or the provision of items or serv9 ices— 

10 ‘‘(i) by a physician, a reviewer shall be 

11 a practicing physician (allopathic or osteo12 pathic) of the same or similar specialty, as 

13 a physician who, acting within the appro14 priate scope of practice within the State in 

15 which the service is provided or rendered, 

16 typically treats the condition, makes the 

17 diagnosis, or provides the type of treat18 ment under review; or 

19 ‘‘(ii) by a non-physician health care 

20 professional, the reviewer, or at least 1 

21 member of the review panel, shall be a 

22 practicing non-physician health care pro23 fessional of the same or similar specialty 

24 as the non-physician health care profes25 sional who, acting within the appropriate 


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1 scope of practice within the State in which 

2 the service is provided or rendered, typi3 cally treats the condition, makes the diag4 nosis, or provides the type of treatment 

5 under review. 

6 ‘‘(B) PRACTICING DEFINED.—For pur7 poses of this paragraph, the term ‘practicing’ 

8 means, with respect to an individual who is a 

9 physician or other health care professional, that 

10 the individual provides health care services to 

11 individual patients on average at least 2 days 

12 per week. 

13 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 

14 external review relating to a child, a reviewer shall 

15 have expertise under paragraph (2) in pediatrics. 

16 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA17 TION.—Compensation provided by the issuer to an 

18 independent medical reviewer in connection with a 

19 review under this section shall— 

20 ‘‘(A) not exceed a reasonable level; and 

21 ‘‘(B) not be contingent on the decision ren22 dered by the reviewer. 

23 ‘‘(7) RELATED PARTY DEFINED.—For purposes 

24 of this section, the term ‘related party’ means, with 


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1 respect to a denial of a claim under a coverage relat2 ing to an enrollee, any of the following: 

3 ‘‘(A) The issuer involved, or any fiduciary, 

4 officer, director, or employee of the issuer. 

5 ‘‘(B) The enrollee (or authorized represent6 ative). 

7 ‘‘(C) The health care professional that pro8 vides the items or services involved in the de9 nial. 

10 ‘‘(D) The institution at which the items or 

11 services (or treatment) involved in the denial 

12 are provided. 

13 ‘‘(E) The manufacturer of any drug or 

14 other item that is included in the items or serv15 ices involved in the denial. 

16 ‘‘(F) Any other party determined under 

17 any regulations to have a substantial interest in 

18 the denial involved. 

19 ‘‘(8) DEFINITIONS.—For purposes of this sub20 section: 

21 ‘‘(A) ENROLLEE.—The term ‘enrollee’ 

22 means, with respect to health insurance cov23 erage offered by a health insurance issuer, an 

24 individual enrolled with the issuer to receive 

25 such coverage. 


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1 ‘‘(B) HEALTH CARE PROFESSIONAL.—The 

2 term ‘health care professional’ means an indi3 vidual who is licensed, accredited, or certified 

4 under State law to provide specified health care 

5 services and who is operating within the scope 

6 of such licensure, accreditation, or certification. 

7 ‘‘SEC. 2800. ENFORCEMENT. 

8 ‘‘(a) IN GENERAL.—Subject to subsection (b), with 

9 respect to specific individual health insurance coverage the 

10 primary State for such coverage has sole jurisdiction to 

11 enforce the primary State’s covered laws in the primary 

12 State and any secondary State. 

13 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 

14 subsection (a) shall be construed to affect the authority 

15 of a secondary State to enforce its laws as set forth in 

16 the exception specified in section 2796(b)(1). 

17 ‘‘(c) COURT INTERPRETATION.—In reviewing action 

18 initiated by the applicable secondary State authority, the 

19 court of competent jurisdiction shall apply the covered 

20 laws of the primary State. 

21 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 

22 of individual health insurance coverage offered in a sec23 ondary State that fails to comply with the covered laws 

24 of the primary State, the applicable State authority of the 


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1 secondary State may notify the applicable State authority 

2 of the primary State.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 subsection (a) shall apply to individual health insurance 

5 coverage offered, issued, or sold after the date that is one 

6 year after the date of the enactment of this Act. 

7 (c) GAO ONGOING STUDY AND REPORTS.— 

8 (1) STUDY.—The Comptroller General of the 

9 United States shall conduct an ongoing study con10 cerning the effect of the amendment made by sub11 section (a) on— 

12 (A) the number of uninsured and under-in13 sured; 

14 (B) the availability and cost of health in15 surance policies for individuals with pre-existing 

16 medical conditions; 

17 (C) the availability and cost of health in18 surance policies generally; 

19 (D) the elimination or reduction of dif20 ferent types of benefits under health insurance 

21 policies offered in different States; and 

22 (E) cases of fraud or abuse relating to 

23 health insurance coverage offered under such 

24 amendment and the resolution of such cases. 


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1 (2) ANNUAL REPORTS.—The Comptroller Gen2 eral shall submit to Congress an annual report, after 

3 the end of each of the 5 years following the effective 

4 date of the amendment made by subsection (a), on 

5 the ongoing study conducted under paragraph (1). 

6 (d) SEVERABILITY.—If any provision of the section 

7 or the application of such provision to any person or cir8 cumstance is held to be unconstitutional, the remainder 

9 of this section and the application of the provisions of such 

10 to any other person or circumstance shall not be affected. 

11 TITLE IV—SAFETY NET 

12 REFORMS 

13 SEC. 401. REQUIRING OUTREACH AND COVERAGE BEFORE 

14 EXPANSION OF ELIGIBILITY. 

15 (a) STATE CHILD HEALTH PLAN REQUIRED TO

16 SPECIFY HOW IT WILL ACHIEVE COVERAGE FOR 90 PER17 CENT OF TARGETED LOW-INCOME CHILDREN.— 

18 (1) IN GENERAL.—Section 2102(a) of the So19 cial Security Act (42 U.S.C. 1397bb(a)) is amend20 ed— 

21 (A) in paragraph (6), by striking ‘‘and’’ at 

22 the end; 

23 (B) in paragraph (7), by striking the pe24 riod at the end and inserting ‘‘; and’’; and 


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1 (C) by adding at the end the following new 

2 paragraph: 

3 ‘‘(8) how the eligibility and benefits provided 

4 for under the plan for each fiscal year (beginning 

5 with fiscal year 2015) will allow for the State’s an6 nual funding allotment to cover at least 90 percent 

7 of the eligible targeted low-income children in the 

8 State.’’. 

9 (2) EFFECTIVE DATE.—The amendments made 

10 by paragraph (1) shall apply to State child health 

11 plans for fiscal years beginning with fiscal year 

12 2015. 

13 (b) LIMITATION ON PROGRAM EXPANSIONS UNTIL

14 LOWEST INCOME ELIGIBLE INDIVIDUALS ENROLLED.— 

15 Section 2105(c) of the Social Security Act (42 U.S.C. 

16 1397dd(c)) is amended by adding at the end the following 

17 new paragraph: 

18 ‘‘(12) LIMITATION ON INCREASED COVERAGE

19 OF HIGHER INCOME CHILDREN.— 

20 ‘‘(A) IN GENERAL.—For child health as21 sistance furnished in a fiscal year beginning 

22 with fiscal year 2015: 

23 ‘‘(i) NO PAYMENT FOR CHILDREN

24 WITH FAMILY INCOME ABOVE 300 PERCENT

25 OF POVERTY LINE.—Payment shall not be 


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1 made under this section for child health 

2 assistance for a targeted low-income child 

3 in a family the income of which exceeds 

4 300 percent of the poverty line applicable 

5 to a family of the size involved. 

6 ‘‘(ii) SPECIAL RULES FOR PAYMENT

7 FOR CHILDREN WITH FAMILY INCOME

8 ABOVE 200 PERCENT OF POVERTY LINE.— 

9 In the case of child health assistance for a 

10 targeted low-income child in a family the 

11 income of which exceeds 200 percent (but 

12 does not exceed 300 percent) of the pov13 erty line applicable to a family of the size 

14 involved no payment shall be made under 

15 this section for such assistance unless the 

16 State demonstrates to the satisfaction of 

17 the Secretary that— 

18 ‘‘(I) the State has met the 90 

19 percent retrospective coverage test 

20 specified in subparagraph (B)(i) for 

21 the previous fiscal year; and 

22 ‘‘(II) the State will meet the 90 

23 percent prospective coverage test spec24 ified in subparagraph (B)(ii) for the 

25 fiscal year. 


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1 ‘‘(B) 90 PERCENT COVERAGE TESTS.— 

2 ‘‘(i) RETROSPECTIVE TEST.—The 90 

3 percent retrospective coverage test speci4 fied in this clause is, for a State for a fis5 cal year, that on average during the fiscal 

6 year, the State has enrolled under this title 

7 or title XIX at least 90 percent of the indi8 viduals residing in the State who— 

9 ‘‘(I) are children under 19 years 

10 of age (or are pregnant women) and 

11 are eligible for medical assistance 

12 under title XIX; or 

13 ‘‘(II) are targeted low-income 

14 children whose family income does not 

15 exceed 200 percent of the poverty line 

16 and who are eligible for child health 

17 assistance under this title. 

18 ‘‘(ii) PROSPECTIVE TEST.—The 90 

19 percent prospective test specified in this 

20 clause is, for a State for a fiscal year, that 

21 on average during the fiscal year, the State 

22 will enroll under this title or title XIX at 

23 least 90 percent of the individuals residing 

24 in the State who— 


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1 ‘‘(I) are children under 19 years 

2 of age (or are pregnant women) and 

3 are eligible for medical assistance 

4 under title XIX; or 

5 ‘‘(II) are targeted low-income 

6 children whose family income does not 

7 exceed such percent of the poverty 

8 line (in excess of 200 percent) as the 

9 State elects consistent with this para10 graph and who are eligible for child 

11 health assistance under this title. 

12 ‘‘(C) GRANDFATHER.—Clauses (i) and (ii) 

13 of subparagraph (A) shall not apply to the pro14 vision of child health assistance— 

15 ‘‘(i) to a targeted low-income child 

16 who is enrolled for child health assistance 

17 under this title as of September 30, 2012; 

18 ‘‘(ii) to a pregnant woman who is en19 rolled for assistance under this title as of 

20 September 30, 2013, through the comple21 tion of the post-partum period following 

22 completion of her pregnancy; and 

23 ‘‘(iii) for items and services furnished 

24 before October 1, 2014, to an individual 

25 who is not a targeted low-income child and 


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1 who is enrolled for assistance under this 

2 title as of September 30, 2013. 

3 ‘‘(D) TREATMENT OF PREGNANT

4 WOMEN.—In this paragraph and sections 

5 2102(a)(8) and 2104(a)(2), the term ‘targeted 

6 low-income child’ includes an individual under 

7 age 19, including the period from conception to 

8 birth, who is eligible for child health assistance 

9 under this title by virtue of the definition of the 

10 term ‘child’ under section 457.10 of title 42, 

11 Code of Federal Regulations.’’. 

12 (c) STANDARDIZATION OF INCOME DETERMINA13 TIONS.— 

14 (1) IN GENERAL.—Section 2110 of the Social 

15 Security Act (42 U.S.C. 1397jj) is amended by add16 ing at the end the following new subsection: 

17 ‘‘(d) STANDARDIZATION OF INCOME DETERMINA18 TIONS.—In determining family income under this title (in19 cluding in the case of a State child health plan that pro20 vides health benefits coverage in the manner described in 

21 section 2101(a)(2)), a State shall base such determination 

22 on gross income (including amounts that would be in23 cluded in gross income if they were not exempt from in24 come taxation) and may only take into consideration such 

25 income disregards as the Secretary shall develop.’’. 


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1 (2) EFFECTIVE DATE.—(A) Subject to subpara2 graph (B), the amendment made by paragraph (1) 

3 shall apply to determinations (and redeterminations) 

4 of income made on or after April 1, 2012. 

5 (B) In the case of a State child health plan 

6 under title XXI of the Social Security Act which the 

7 Secretary of Health and Human Services determines 

8 requires State legislation (other than legislation ap9 propriating funds) in order for the plan to meet the 

10 additional requirement imposed by the amendment 

11 made by paragraph (1), the State child health plan 

12 shall not be regarded as failing to comply with the 

13 requirements of such title solely on the basis of its 

14 failure to meet this additional requirement before 

15 the first day of the first calendar quarter beginning 

16 after the close of the first regular session of the 

17 State legislature that begins after the date of the en18 actment of this Act. For purposes of the previous 

19 sentence, in the case of a State that has a 2-year 

20 legislative session, each year of such session shall be 

21 deemed to be a separate regular session of the State 

22 legislature. 


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1 SEC. 402. EASING ADMINISTRATIVE BARRIERS TO STATE 

2 COOPERATION WITH EMPLOYER-SPONSORED 

3 INSURANCE COVERAGE. 

4 (a) REQUIRING SOME COVERAGE FOR EMPLOYER5 SPONSORED INSURANCE UNDER CHIP.—Section 2102(a) 

6 of the Social Security Act (42 U.S.C. 1397b(a)), as 

7 amended by section 401(a), is amended— 

8 (1) in paragraph (7), by striking ‘‘and’’ at the 

9 end; 

10 (2) in paragraph (8), by striking the period at 

11 the end and inserting ‘‘; and’’; and 

12 (3) by adding at the end the following new 

13 paragraph: 

14 ‘‘(9) effective for plan years beginning on or 

15 after October 1, 2014, how the plan will provide for 

16 child health assistance with respect to targeted low17 income children covered under a group health 

18 plan.’’. 

19 (b) FEDERAL FINANCIAL PARTICIPATION FOR EM20 PLOYER-SPONSORED INSURANCE.—Section 2105 of the 

21 Social Security Act (42 U.S.C. 1397d) is amended— 

22 (1) in subsection (a)(1)(C), by inserting before 

23 the semicolon at the end the following: ‘‘and, subject 

24 to paragraph (3)(C), in the form of payment of the 

25 premiums for coverage under a group health plan 

26 that includes coverage of targeted low-income chilVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00158 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 dren and benefits supplemental to such coverage’’; 

2 and 

3 (2) by amending paragraph (3) of subsection 

4 (c) to read as follows: 

5 ‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN6 SURANCE.— 

7 ‘‘(A) IN GENERAL.—Payment may be 

8 made to a State under subsection (a)(1)(C), 

9 subject to the provisions of this paragraph, for 

10 the purchase of family coverage under a group 

11 health plan that includes coverage of targeted 

12 low-income children unless such coverage would 

13 otherwise substitute for coverage that would be 

14 provided to such children but for the purchase 

15 of family coverage. 

16 ‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 

17 With respect to coverage described in subpara18 graph (A)— 

19 ‘‘(i) notwithstanding section 2102, no 

20 minimum benefits requirement (other than 

21 those otherwise applicable with respect to 

22 services referred to in section 2102(a)(7)) 

23 under this title shall apply; and 


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1 ‘‘(ii) no limitation on beneficiary cost2 sharing otherwise applicable under this 

3 title or title XIX shall apply. 

4 ‘‘(C) REQUIRED PROVISION OF SUPPLE5 MENTAL BENEFITS.—If the coverage described 

6 in subparagraph (A) does not provide coverage 

7 for the services referred to in section 

8 2102(a)(7), the State child health plan shall 

9 provide coverage of such services as supple10 mental benefits. 

11 ‘‘(D) LIMITATION ON FFP.—The amount 

12 of the payment under paragraph (1)(C) for cov13 erage described in subparagraph (A) (and sup14 plemental benefits under subparagraph (C) for 

15 individuals so covered) during a fiscal year may 

16 not exceed the product of— 

17 ‘‘(i) the national per capita expendi18 ture under this title (taking into account 

19 both Federal and State expenditures) for 

20 the previous fiscal year (as determined by 

21 the Secretary using the best available 

22 data); 

23 ‘‘(ii) the enhanced FMAP for the 

24 State and fiscal year involved; and 


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1 ‘‘(iii) the number of targeted low-in2 come children for whom such coverage is 

3 provided. 

4 ‘‘(E) VOLUNTARY ENROLLMENT.—A State 

5 child health plan— 

6 ‘‘(i) may not require a targeted low7 income child to enroll in coverage described 

8 in subparagraph (A) in order to obtain 

9 child health assistance under this title; 

10 ‘‘(ii) before providing such child 

11 health assistance for such coverage of a 

12 child, shall make available (which may be 

13 through an Internet Web site or other 

14 means including the State transparency 

15 plan portal established under section 901 

16 of the Empowering Patients First Act of 

17 2013) to the parent or guardian of the 

18 child information on the coverage available 

19 under this title, including benefits and 

20 cost-sharing; and 

21 ‘‘(iii) shall provide at least one oppor22 tunity per fiscal year for beneficiaries to 

23 switch coverage under this title from cov24 erage described in subparagraph (A) to the 


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1 coverage that is otherwise made available 

2 under this title. 

3 ‘‘(F) INFORMATION ON COVERAGE OP4 TIONS.—A State child health plan shall— 

5 ‘‘(i) describe how the State will notify 

6 potential beneficiaries of coverage de7 scribed in subparagraph (A); 

8 ‘‘(ii) provide such notification in writ9 ing at least during the initial application 

10 for enrollment under this title and during 

11 redeterminations of eligibility if the indi12 vidual was enrolled before October 1, 2014; 

13 and 

14 ‘‘(iii) post a description of these cov15 erage options on any official Web site that 

16 may be established by the State in connec17 tion with the plan, including the State 

18 transparency plan portal established under 

19 section 901 of the Empowering Patients 

20 First Act of 2013. 

21 ‘‘(G) SEMIANNUAL VERIFICATION OF COV22 ERAGE.—If coverage described in subparagraph 

23 (A) is provided under a group health plan with 

24 respect to a targeted low-income child, the 

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1 lection, at least once every six months, of proof 

2 from the plan that the child is enrolled in such 

3 coverage. 

4 ‘‘(H) RULE OF CONSTRUCTION.—Nothing 

5 in this section is to be construed to prohibit a 

6 State from— 

7 ‘‘(i) offering wrap around benefits in 

8 order for a group health plan to meet any 

9 State-established minimum benefit require10 ments; 

11 ‘‘(ii) establishing a cost-effectiveness 

12 test to qualify for coverage under such a 

13 plan; 

14 ‘‘(iii) establishing limits on beneficiary 

15 cost-sharing under such a plan; 

16 ‘‘(iv) paying all or part of a bene17 ficiary’s cost-sharing requirements under 

18 such a plan; 

19 ‘‘(v) paying less than the full cost of 

20 the employee’s share of the premium under 

21 such a plan, including prorating the cost of 

22 the premium to pay for only what the 

23 State determines is the portion of the pre24 mium that covers targeted low-income chil25 dren; 


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1 ‘‘(vi) using State funds to pay for 

2 benefits above the Federal upper limit es3 tablished under subparagraph (C); 

4 ‘‘(vii) allowing beneficiaries enrolled in 

5 group health plans from changing plans to 

6 another coverage option available under 

7 this title at any time; or 

8 ‘‘(viii) providing any guidance or in9 formation it deems appropriate in order to 

10 help beneficiaries make an informed deci11 sion regarding the option to enroll in cov12 erage described in subparagraph (A). 

13 ‘‘(I) GROUP HEALTH PLAN DEFINED.—In 

14 this paragraph, the term ‘group health plan’ 

15 has the meaning given such term in section 

16 2791(a)(1) of the Public Health Service Act (42 

17 U.S.C. 300gg–91(a)(1)).’’. 

18 (c) APPLICATION UNDER MEDICAID.—The Secretary 

19 of Health and Human Services shall provide for the appli20 cation of the amendments made by subsections (a) and 

21 (b) under the Medicaid program under title XIX of the 

22 Social Security Act in the same manner as such amend23 ments apply to SCHIP under title XXI of such Act. 


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1 SEC. 403. IMPROVING BENEFICIARY CHOICE IN SCHIP. 

2 (a) REQUIRING OFFERING OF ALTERNATIVE COV3 ERAGE OPTIONS.—Section 2102 of the Social Security Act 

4 (42 U.S.C. 1397b), as amended by sections 401(a) and 

5 402(a), is amended— 

6 (1) in subsection (a)— 

7 (A) in paragraph (8), by striking ‘‘and’’ at 

8 the end; 

9 (B) in paragraph (9), by striking the pe10 riod at the end and inserting ‘‘; and’’; and 

11 (C) by adding at the end the following new 

12 paragraph: 

13 ‘‘(10) effective for plan years beginning on or 

14 after October 1, 2014, how the plan will provide for 

15 child health assistance with respect to targeted low16 income children through alternative coverage options 

17 in accordance with subsection (e).’’; and 

18 (2) by adding at the end the following new sub19 section: 

20 ‘‘(d) ALTERNATIVE COVERAGE OPTIONS.— 

21 ‘‘(1) IN GENERAL.—Effective October 1, 2014, 

22 a State child health plan shall provide for the offer23 ing of any qualified alternative coverage that a 

24 qualified entity seeks to offer to targeted low-income 

25 children through the plan in the State. 


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1 ‘‘(2) APPLICATION OF UNIFORM FINANCIAL

2 LIMITATION FOR ALL ALTERNATIVE COVERAGE OP3 TIONS.—With respect to all qualified alternative cov4 erage offered in a State, the State child health plan 

5 shall establish a uniform dollar limitation on the per 

6 capita monthly amount that will be paid by the 

7 State to the qualified entity with respect to such 

8 coverage provided to a targeted low-income child. 

9 Such limitation may not be less than 90 percent of 

10 the per capita monthly payment made for coverage 

11 offered under the State child health plan that is not 

12 in the form of an alternative coverage option. Noth13 ing in this paragraph shall be construed— 

14 ‘‘(A) as requiring a State to provide for 

15 the full payment of premiums for qualified al16 ternative coverage; 

17 ‘‘(B) as preventing a State from charging 

18 additional premiums to cover the difference be19 tween the cost of qualified alternative coverage 

20 and the amount of such payment limitation; or 

21 ‘‘(C) as preventing a State from using its 

22 own funds to provide a dollar limitation that ex23 ceeds the Federal financial participation as lim24 ited under section 2105(c)(10). 

25 ‘‘(3) TREATMENT OF LOW COST COVERAGE.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), if the uniform dollar limita3 tion under paragraph (2) exceeds the premium 

4 for qualified alternative coverage for an en5 rollee, then such excess shall be refunded to the 

6 Federal and State governments in the same 

7 proportion as is otherwise applicable to recov8 ered funds under this title. 

9 ‘‘(B) EXCEPTION FOR HIGH-DEDUCTIBLE

10 HEALTH PLANS.—In the case of coverage under 

11 a high-deductible health plan, the excess de12 scribed in subparagraph (A) shall be deposited 

13 into a health savings account established with 

14 respect to such plan. 

15 ‘‘(4) EXEMPTION.—A State is not subject to 

16 the requirement of paragraph (1) if the State child 

17 health plan provides, as of the date of the enactment 

18 of this subsection, for a cash out or health savings 

19 account type option for those enrolled under the 

20 plan. 

21 ‘‘(5) QUALIFIED ALTERNATIVE COVERAGE DE22 FINED.—In this section, the term ‘qualified alter23 native coverage’ means health insurance coverage 

24 that— 


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1 ‘‘(A) meets the coverage requirements of 

2 section 2103 (other than cost-sharing require3 ments of such section); and 

4 ‘‘(B) is offered by a qualified insurer, and 

5 not directly by the State. 

6 ‘‘(6) QUALIFIED INSURER DEFINED.—In this 

7 section, the term ‘qualified insurer’ means, with re8 spect to a State, an entity that is licensed to offer 

9 health insurance coverage in the State.’’. 

10 (b) FEDERAL FINANCIAL PARTICIPATION FOR

11 QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 

12 the Social Security Act (42 U.S.C. 1397d) is amended— 

13 (1) in subsection (a)(1)(C), as amended by sec14 tion 402(b), by inserting before the semicolon at the 

15 end the following: ‘‘and, subject to paragraph 

16 (13)(C), in the form of payment of the premiums for 

17 coverage for qualified alternative coverage’’; and 

18 (2) in subsection (c), as amended by section 

19 401(b) by adding at the end the following new para20 graph: 

21 ‘‘(13) PURCHASE OF QUALIFIED ALTERNATIVE

22 COVERAGE.— 

23 ‘‘(A) IN GENERAL.—Payment may be 

24 made to a State under subsection (a)(1)(C), 


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1 subject to the provisions of this paragraph, for 

2 the purchase of qualified alternative coverage. 

3 ‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 

4 With respect to coverage described in subpara5 graph (A), no limitation on beneficiary cost6 sharing otherwise applicable under this title or 

7 title XIX shall apply. 

8 ‘‘(C) LIMITATION ON FFP.—The amount of 

9 the payment under paragraph (1)(C) for cov10 erage described in subparagraph (A) during a 

11 fiscal year in the aggregate for all such cov12 erage in the State may not exceed the product 

13 of— 

14 ‘‘(i) the national per capita expendi15 ture under this title (taking into account 

16 both Federal and State expenditures) for 

17 the previous fiscal year (as determined by 

18 the Secretary using the best available 

19 data); 

20 ‘‘(ii) the enhanced FMAP for the 

21 State and fiscal year involved; and 

22 ‘‘(iii) the number of targeted low-in23 come children for whom such coverage is 

24 provided. 


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1 ‘‘(D) VOLUNTARY ENROLLMENT.—A State 

2 child health plan— 

3 ‘‘(i) may not require a targeted low4 income child to enroll in coverage described 

5 in subparagraph (A) in order to obtain 

6 child health assistance under this title; 

7 ‘‘(ii) before providing such child 

8 health assistance for such coverage of a 

9 child, shall make available (which may be 

10 through an Internet Web site or other 

11 means) to the parent or guardian of the 

12 child information on the coverage available 

13 under this title, including benefits and 

14 cost-sharing; and 

15 ‘‘(iii) shall provide at least one oppor16 tunity per fiscal year for beneficiaries to 

17 switch coverage under this title from cov18 erage described in subparagraph (A) to the 

19 coverage that is otherwise made available 

20 under this title. 

21 ‘‘(E) INFORMATION ON COVERAGE OP22 TIONS.—A State child health plan shall— 

23 ‘‘(i) describe how the State will notify 

24 potential beneficiaries of coverage de25 scribed in subparagraph (A); 


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1 ‘‘(ii) provide such notification in writ2 ing at least during the initial application 

3 for enrollment under this title and during 

4 redeterminations of eligibility if the indi5 vidual was enrolled before October 1, 2014; 

6 and 

7 ‘‘(iii) post a description of these cov8 erage options on any official Web site that 

9 may be established by the State in connec10 tion with the plan. 

11 ‘‘(F) RULE OF CONSTRUCTION.—Nothing 

12 in this section is to be construed to prohibit a 

13 State from— 

14 ‘‘(i) establishing limits on beneficiary 

15 cost-sharing under such alternative cov16 erage; 

17 ‘‘(ii) paying all or part of a bene18 ficiary’s cost-sharing requirements under 

19 such coverage; 

20 ‘‘(iii) paying less than the full cost of 

21 a child’s share of the premium under such 

22 coverage, insofar as the premium for such 

23 coverage exceeds the limitation established 

24 by the State under subparagraph (C); 


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1 ‘‘(iv) using State funds to pay for 

2 benefits above the Federal upper limit es3 tablished under subparagraph (C); or 

4 ‘‘(v) providing any guidance or infor5 mation it deems appropriate in order to 

6 help beneficiaries make an informed deci7 sion regarding the option to enroll in cov8 erage described in subparagraph (A).’’. 

9 (c) APPLICATION UNDER MEDICAID.—The Secretary 

10 of Health and Human Services shall provide for the appli11 cation of the amendments made by subsections (a) and 

12 (b) under the Medicaid program under title XIX of the 

13 Social Security Act in the same manner as such amend14 ments apply to SCHIP under title XXI of such Act. 

15 TITLE V—LAWSUIT ABUSE 

16 REFORMS 

17 SEC. 501. CHANGE IN BURDEN OF PROOF BASED ON COM18 PLIANCE WITH BEST PRACTICE GUIDELINES. 

19 (a) SELECTION AND ISSUANCE OF BEST PRACTICES

20 GUIDELINES.— 

21 (1) IN GENERAL.—The Secretary of Health and 

22 Human Services (in this section referred to as the 

23 ‘‘Secretary’’) shall provide for the selection and 

24 issuance of best practice guidelines for treatment of 

25 medical conditions (each in this subsection referred 


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1 to as a ‘‘guideline’’) in accordance with paragraphs 

2 (2) and (3). 

3 (2) DEVELOPMENT PROCESS.—Not later than 

4 90 days after the date of enactment of this title, the 

5 Secretary shall enter into a contract with a qualified 

6 physician consensus-building organization (such as 

7 the Physician Consortium for Performance Improve8 ment), in concert and agreement with physician spe9 cialty organizations, to develop guidelines. The con10 tract shall require that the organization submit 

11 guidelines to the agency not later than 18 months 

12 after the date of the enactment of this title. 

13 (3) ISSUANCE.— 

14 (A) IN GENERAL.—Not later than 2 years 

15 after the date of the enactment of this title, the 

16 Secretary shall, after notice and opportunity for 

17 public comment, make a rule that provides for 

18 the issuance of the guidelines submitted under 

19 paragraph (2). 

20 (B) LIMITATION.—The Secretary may not 

21 make a rule that includes guidelines other than 

22 those submitted under paragraph (2). 

23 (C) DISSEMINATION.—The Secretary shall 

24 post such guidelines on the public Internet Web 


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1 page of the Department of Health and Human 

2 Services. 

3 (4) MAINTENANCE.—Not later than 4 years 

4 after the date of enactment of this title, and every 

5 2 years thereafter, the Secretary shall review the 

6 guidelines and shall, as necessary, enter into con7 tracts similar to the contract described in paragraph 

8 (2), and issue guidelines in a manner similar to the 

9 issuance of guidelines under paragraph (3). 

10 (b) USE.— 

11 (1) USE BY DEFENDANT TO CHANGE THE BUR12 DEN OF PROOF.—If a defendant in a health care 

13 lawsuit relating to treatment of an individual estab14 lishes by a preponderance of the evidence that the 

15 treatment was provided in a manner consistent with 

16 an applicable guideline issued under subsection (a), 

17 the defendant may not be held liable unless the 

18 plaintiff establishes the liability of the defendant by 

19 clear and convincing evidence. 

20 (2) LIMITATION ON INTRODUCTION AS EVI21 DENCE AGAINST A DEFENDANT.—Guidelines issued 

22 under subsection (a) may not be introduced as evi23 dence of negligence or deviation in the standard of 

24 care in any health care lawsuit unless they have pre25 viously been introduced by the defendant. 


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1 (3) NO PRESUMPTION OF NEGLIGENCE AGAINST

2 A DEFENDANT.—There shall be no presumption of 

3 negligence with respect to treatment if a health care 

4 provider provides the treatment in a manner incon5 sistent with such guidelines. 

6 (c) CONSTRUCTION.—Nothing in this section shall be 

7 construed as preventing a State from— 

8 (1) replacing their current medical malpractice 

9 rules with rules that rely, as a defense, upon a 

10 health care provider’s compliance with a guideline 

11 issued under subsection (a); or 

12 (2) applying additional guidelines or limitations 

13 on liability that are in addition to, but not in lieu 

14 of, the guidelines issued under subsection (a). 

15 SEC. 502. STATE GRANTS TO CREATE ADMINISTRATIVE 

16 HEALTH CARE TRIBUNALS. 

17 Part P of title III of the Public Health Service Act 

18 (42 U.S.C. 280g et seq.) is amended by adding at the end 

19 the following: 

20 ‘‘SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE 

21 HEALTH CARE TRIBUNALS. 

22 ‘‘(a) IN GENERAL.—The Secretary may award grants 

23 to States for the development, implementation, and eval24 uation of administrative health care tribunals that comply 


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1 with this section, for the resolution of disputes concerning 

2 injuries allegedly caused by health care providers. 

3 ‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 

4 To be eligible to receive a grant under this section, a State 

5 shall submit to the Secretary an application at such time, 

6 in such manner, and containing such information as may 

7 be required by the Secretary. A grant shall be awarded 

8 under this section on such terms and conditions as the 

9 Secretary determines appropriate. 

10 ‘‘(c) REPRESENTATION BY COUNSEL.—A State that 

11 receives a grant under this section may not preclude any 

12 party to a dispute before an administrative health care tri13 bunal operated under such grant from obtaining legal rep14 resentation during any review by the expert panel under 

15 subsection (d), the administrative health care tribunal 

16 under subsection (e), or a State court under subsection 

17 (f). 

18 ‘‘(d) EXPERT PANEL REVIEW AND EARLY OFFER

19 GUIDELINES.— 

20 ‘‘(1) IN GENERAL.—Prior to the submission of 

21 any dispute concerning injuries allegedly caused by 

22 health care providers to an administrative health 

23 care tribunal under this section, such allegations 

24 shall first be reviewed by an expert panel. 

25 ‘‘(2) COMPOSITION.— 


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1 ‘‘(A) IN GENERAL.—The members of each 

2 expert panel under this subsection shall be ap3 pointed by the head of the State agency respon4 sible for health. Each expert panel shall be 

5 composed of no fewer than 3 members and not 

6 more than 7 members. At least one-half of such 

7 members shall be medical experts (either physi8 cians or health care professionals). 

9 ‘‘(B) LICENSURE AND EXPERTISE.—Each 

10 physician or health care professional appointed 

11 to an expert panel under subparagraph (A) 

12 shall— 

13 ‘‘(i) be appropriately credentialed or 

14 licensed in one or more States to deliver 

15 health care services; and 

16 ‘‘(ii) typically treat the condition, 

17 make the diagnosis, or provide the type of 

18 treatment that is under review. 

19 ‘‘(C) INDEPENDENCE.— 

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

21 (ii), each individual appointed to an expert 

22 panel under this paragraph shall— 

23 ‘‘(I) not have a material familial, 

24 financial, or professional relationship 


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1 with a party involved in the dispute 

2 reviewed by the panel; and 

3 ‘‘(II) not otherwise have a con4 flict of interest with such a party. 

5 ‘‘(ii) EXCEPTION.—Nothing in clause 

6 (i) shall be construed to prohibit an indi7 vidual who has staff privileges at an insti8 tution where the treatment involved in the 

9 dispute was provided from serving as a 

10 member of an expert panel merely on the 

11 basis of such affiliation, if the affiliation is 

12 disclosed to the parties and neither party 

13 objects. 

14 ‘‘(D) PRACTICING HEALTH CARE PROFES15 SIONAL IN SAME FIELD.— 

16 ‘‘(i) IN GENERAL.—In a dispute be17 fore an expert panel that involves treat18 ment, or the provision of items or serv19 ices— 

20 ‘‘(I) by a physician, the medical 

21 experts on the expert panel shall be 

22 practicing physicians (allopathic or os23 teopathic) of the same or similar spe24 cialty as a physician who typically 

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1 nosis, or provides the type of treat2 ment under review; or 

3 ‘‘(II) by a health care profes4 sional other than a physician, at least 

5 two medical experts on the expert 

6 panel shall be practicing physicians 

7 (allopathic or osteopathic) of the same 

8 or similar specialty as the health care 

9 professional who typically treats the 

10 condition, makes the diagnosis, or 

11 provides the type of treatment under 

12 review, and, if determined appropriate 

13 by the State agency, an additional 

14 medical expert shall be a practicing 

15 health care professional (other than 

16 such a physician) of such a same or 

17 similar specialty. 

18 ‘‘(ii) PRACTICING DEFINED.—In this 

19 paragraph, the term ‘practicing’ means, 

20 with respect to an individual who is a phy21 sician or other health care professional, 

22 that the individual provides health care 

23 services to individual patients on average 

24 at least 2 days a week. 


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1 ‘‘(E) PEDIATRIC EXPERTISE.—In the case 

2 of dispute relating to a child, at least 1 medical 

3 expert on the expert panel shall have expertise 

4 described in subparagraph (D)(i) in pediatrics. 

5 ‘‘(3) DETERMINATION.—After a review under 

6 paragraph (1), an expert panel shall make a deter7 mination as to the liability of the parties involved 

8 and compensation. 

9 ‘‘(4) ACCEPTANCE.—If the parties to a dispute 

10 before an expert panel under this subsection accept 

11 the determination of the expert panel concerning li12 ability and compensation, such compensation shall 

13 be paid to the claimant and the claimant shall agree 

14 to forgo any further action against the health care 

15 providers involved. 

16 ‘‘(5) FAILURE TO ACCEPT.—If any party de17 cides not to accept the expert panel’s determination, 

18 the matter shall be referred to an administrative 

19 health care tribunal created pursuant to this section. 

20 ‘‘(e) ADMINISTRATIVE HEALTH CARE TRIBUNALS.— 

21 ‘‘(1) IN GENERAL.—Upon the failure of any 

22 party to accept the determination of an expert panel 

23 under subsection (d), the parties shall have the right 

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1 pensation involved by an administrative health care 

2 tribunal established by the State involved. 

3 ‘‘(2) REQUIREMENTS.—In establishing an ad4 ministrative health care tribunal under this section, 

5 a State shall— 

6 ‘‘(A) ensure that such tribunals are pre7 sided over by special judges with health care ex8 pertise; 

9 ‘‘(B) provide authority to such judges to 

10 make binding rulings, rendered in written deci11 sions, on standards of care, causation, com12 pensation, and related issues with reliance on 

13 independent expert witnesses commissioned by 

14 the tribunal; 

15 ‘‘(C) establish gross negligence as the legal 

16 standard for the tribunal; 

17 ‘‘(D) allow the admission into evidence of 

18 the recommendation made by the expert panel 

19 under subsection (d); and 

20 ‘‘(E) provide for an appeals process to 

21 allow for review of decisions by State courts. 

22 ‘‘(f) REVIEW BY STATE COURT AFTER EXHAUSTION

23 OF ADMINISTRATIVE REMEDIES.— 

24 ‘‘(1) RIGHT TO FILE.—If any party to a dispute 

25 before a health care tribunal under subsection (e) is 


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1 not satisfied with the determinations of the tribunal, 

2 the party shall have the right to file their claim in 

3 a State court of competent jurisdiction. 

4 ‘‘(2) FORFEIT OF AWARDS.—Any party filing 

5 an action in a State court in accordance with para6 graph (1) shall forfeit any compensation award 

7 made under subsection (e). 

8 ‘‘(3) ADMISSIBILITY.—The determinations of 

9 the expert panel and the administrative health care 

10 tribunal pursuant to subsections (d) and (e) with re11 spect to a State court proceeding under paragraph 

12 (1) shall be admissible into evidence in any such 

13 State court proceeding. 

14 ‘‘(g) DEFINITION.—In this section, the term ‘health 

15 care provider’ means any person or entity required by 

16 State or Federal laws or regulations to be licensed, reg17 istered, or certified to provide health care services, and 

18 being either so licensed, registered, or certified, or exempt19 ed from such requirement by other statute or regulation. 

20 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated for any fiscal year such 

22 sums as may be necessary for purposes of making grants 

23 to States under this section.’’. 


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1 SEC. 503. AUTHORIZATION OF PAYMENT OF FUTURE DAM2 AGES TO CLAIMANTS IN HEALTH CARE LAW3 SUITS. 

4 (a) IN GENERAL.—In any health care lawsuit, if an 

5 award of future damages, without reduction to present 

6 value, equaling or exceeding $50,000 is made against a 

7 party with sufficient insurance or other assets to fund a 

8 periodic payment of such a judgment, the court shall, at 

9 the request of any party, enter a judgment ordering that 

10 the future damages be paid by periodic payments, in ac11 cordance with the Uniform Periodic Payment of Judg12 ments Act promulgated by the National Conference of 

13 Commissioners on Uniform State Laws. 

14 (b) APPLICABILITY.—This section applies to all ac15 tions which have not been first set for trial or retrial be16 fore the effective date of this title. 

17 SEC. 504. DEFINITIONS. 

18 In this title: 

19 (1) ALTERNATIVE DISPUTE RESOLUTION SYS20 TEM; ADR.—The term ‘‘alternative dispute resolution 

21 system’’ or ‘‘ADR’’ means a system that provides 

22 for the resolution of health care lawsuits in a man23 ner other than through a civil action brought in a 

24 State or Federal court. 

25 (2) CLAIMANT.—The term ‘‘claimant’’ means 

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1 ing a person who asserts or claims a right to legal 

2 or equitable contribution, indemnity, or subrogation, 

3 arising out of a health care liability claim or action, 

4 and any person on whose behalf such a claim is as5 serted or such an action is brought, whether de6 ceased, incompetent, or a minor. 

7 (3) FEDERAL TAX BENEFIT.—A claimant shall 

8 be treated as receiving a Federal tax benefit with re9 spect to payment for items or services if— 

10 (A) such payment is compensation by in11 surance— 

12 (i) which constitutes medical care, and 

13 (ii) with respect to the payment of 

14 premiums for which the claimant, or the 

15 employer of the claimant, was allowed an 

16 exclusion from gross income, a deduction, 

17 or a credit for Federal income tax pur18 poses, 

19 (B) a deduction was allowed with respect 

20 to such payment for Federal income tax pur21 poses, or 

22 (C) such payment was from an Archer 

23 MSA (as defined in section 220(d) of the Inter24 nal Revenue Code of 1986), a health savings 

25 account (as defined in section 223(d) of such 


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1 Code), a flexible spending arrangement (as de2 fined in section 106(c)(2) of such Code), or a 

3 health reimbursement arrangement which is 

4 treated as employer-provided coverage under an 

5 accident or health plan for purposes of section 

6 106 of such Code. 

7 (4) HEALTH CARE LAWSUIT.—The term 

8 ‘‘health care lawsuit’’ means any health care liability 

9 claim concerning the provision of health care goods 

10 or services brought in a Federal court or in a State 

11 court or pursuant to an alternative dispute resolu12 tion system, if such claim concerns items or services 

13 for which coverage is provided under title XVIII, 

14 XIX, or XXI of the Social Security Act or for which 

15 the claimant receives a Federal tax benefit, against 

16 a health care provider, a health care organization, or 

17 the manufacturer, distributor, supplier, marketer, 

18 promoter, or seller of a medical product, regardless 

19 of the theory of liability on which the claim is based, 

20 or the number of claimants, plaintiffs, defendants, 

21 or other parties, or the number of claims or causes 

22 of action, in which the claimant alleges a health care 

23 liability claim. Such term does not include a claim 

24 or action which is based on criminal liability; which 


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1 seeks civil fines or penalties paid to Federal govern2 ment; or which is grounded in antitrust. 

3 (5) HEALTH CARE LIABILITY ACTION.—The 

4 term ‘‘health care liability action’’ means a civil ac5 tion brought in a State or Federal court or pursuant 

6 to an alternative dispute resolution system, against 

7 a health care provider, a health care organization, or 

8 the manufacturer, distributor, supplier, marketer, 

9 promoter, or seller of a medical product, regardless 

10 of the theory of liability on which the claim is based, 

11 or the number of plaintiffs, defendants, or other par12 ties, or the number of causes of action, in which the 

13 claimant alleges a health care liability claim. 

14 (6) HEALTH CARE LIABILITY CLAIM.—The 

15 term ‘‘health care liability claim’’ means a demand 

16 by any person, whether or not pursuant to ADR, 

17 against a health care provider, health care organiza18 tion, or the manufacturer, distributor, supplier, mar19 keter, promoter, or seller of a medical product, in20 cluding, but not limited to, third-party claims, cross21 claims, counter-claims, or contribution claims, which 

22 are based upon the provision of, use of, or payment 

23 for (or the failure to provide, use, or pay for) health 

24 care services or medical products, regardless of the 

25 theory of liability on which the claim is based, or the 


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1 number of plaintiffs, defendants, or other parties, or 

2 the number of causes of action. 

3 (7) HEALTH CARE ORGANIZATION.—The term 

4 ‘‘health care organization’’ means any person or en5 tity which is obligated to provide or pay for health 

6 benefits under any health plan, including any person 

7 or entity acting under a contract or arrangement 

8 with a health care organization to provide or admin9 ister any health benefit. 

10 (8) HEALTH CARE PROVIDER.—The term 

11 ‘‘health care provider’’ means any person or entity 

12 required by State or Federal laws or regulations to 

13 be licensed, registered, or certified to provide health 

14 care services, and being either so licensed, reg15 istered, or certified, or exempted from such require16 ment by other statute or regulation. 

17 (9) HEALTH CARE GOODS OR SERVICES.—The 

18 term ‘‘health care goods or services’’ means any 

19 goods or services provided by a health care organiza20 tion, provider, or by any individual working under 

21 the supervision of a health care provider, that relates 

22 to the diagnosis, prevention, or treatment of any 

23 human disease or impairment, or the assessment or 

24 care of the health of human beings. 


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1 (10) MEDICAL PRODUCT.—The term ‘‘medical 

2 product’’ means a drug, device, or biological product 

3 intended for humans, and the terms ‘‘drug’’, ‘‘de4 vice’’, and ‘‘biological product’’ have the meanings 

5 given such terms in sections 201(g)(1) and 201(h) 

6 of the Federal Food, Drug, and Cosmetic Act (21 

7 U.S.C. 321(g)(1) and (h)) and section 351(a) of the 

8 Public Health Service Act (42 U.S.C. 262(a)), re9 spectively, including any component or raw material 

10 used therein, but excluding health care services. 

11 (11) MEDICAL TREATMENT.—The term ‘‘med12 ical treatment’’ means the provision of any goods or 

13 services by a health care provider or by any indi14 vidual working under the supervision of a health 

15 care provider, that relates to the diagnosis, preven16 tion, or treatment of any human disease or impair17 ment, or the assessment or care of the health of 

18 human beings. 

19 (12) RECOVERY.—The term ‘‘recovery’’ means 

20 the net sum recovered after deducting any disburse21 ments or costs incurred in connection with prosecu22 tion or settlement of the claim, including all costs 

23 paid or advanced by any person. Costs of health care 

24 incurred by the plaintiff and the attorneys’ office 


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1 overhead costs or charges for legal services are not 

2 deductible disbursements or costs for such purpose. 

3 (13) STATE.—The term ‘‘State’’ means each of 

4 the several States, the District of Columbia, the 

5 Commonwealth of Puerto Rico, the Virgin Islands, 

6 Guam, American Samoa, the Northern Mariana Is7 lands, the Trust Territory of the Pacific Islands, and 

8 any other territory or possession of the United 

9 States, or any political subdivision thereof. 

10 SEC. 505. EFFECT ON OTHER LAWS. 

11 (a) VACCINE INJURY.— 

12 (1) To the extent that title XXI of the Public 

13 Health Service Act establishes a Federal rule of law 

14 applicable to a civil action brought for a vaccine-re15 lated injury or death— 

16 (A) this title does not affect the application 

17 of the rule of law to such an action; and 

18 (B) any rule of law prescribed by this title 

19 in conflict with a rule of law of such title XXI 

20 shall not apply to such action. 

21 (2) If there is an aspect of a civil action 

22 brought for a vaccine-related injury or death to 

23 which a Federal rule of law under title XXI of the 

24 Public Health Service Act does not apply, then this 

25 title or otherwise applicable law (as determined 


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1 under this title) will apply to such aspect of such ac2 tion. 

3 (b) OTHER FEDERAL LAW.—Except as provided in 

4 this section, nothing in this title shall be deemed to affect 

5 any defense available to a defendant in a health care law6 suit or action under any other provision of Federal law. 

7 SEC. 506. APPLICABILITY; EFFECTIVE DATE. 

8 This title shall apply to any health care lawsuit 

9 brought in a Federal or State court, or subject to an alter10 native dispute resolution system, that is initiated on or 

11 after the date of the enactment of this title, except that 

12 any health care lawsuit arising from an injury occurring 

13 prior to the date of the enactment of this title shall be 

14 governed by the applicable statute of limitations provisions 

15 in effect at the time the injury occurred. 

16 TITLE VI—WELLNESS AND 

17 PREVENTION 

18 SEC. 601. PROVIDING FINANCIAL INCENTIVES FOR TREAT19 MENT COMPLIANCE. 

20 (a) LIMITATION ON EXCEPTION FOR WELLNESS

21 PROGRAMS UNDER HIPAA DISCRIMINATION RULES.— 

22 (1) EMPLOYEE RETIREMENT INCOME SECURITY

23 ACT OF 1974 AMENDMENT.—Section 702(b)(2) of the 

24 Employee Retirement Income Security Act of 1974 


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1 (29 U.S.C. 1182(b)(2)) is amended by adding after 

2 and below subparagraph (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 (or lack of participation) in a standards-based 

9 wellness program.’’. 

10 (2) PHSA AMENDMENT.—Section 2702(b)(2) 

11 of the Public Health Service Act (42 U.S.C. 300gg– 

12 1(b)(2)) is amended by adding after and below sub13 paragraph (B) the following: 

14 ‘‘In applying subparagraph (B), a group health plan 

15 (or a health insurance issuer with respect to health 

16 insurance coverage) may vary premiums and cost17 sharing by up to 50 percent of the value of the bene18 fits under the plan (or coverage) based on participa19 tion (or lack of participation) in a standards-based 

20 wellness program.’’. 

21 (3) IRC AMENDMENT.—Section 9802(b)(2) of 

22 the Internal Revenue Code of 1986 is amended by 

23 adding after and below subparagraph (B) the fol24 lowing: 


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1 ‘‘In applying subparagraph (B), a group health plan 

2 may vary premiums and cost-sharing by up to 50 

3 percent of the value of the benefits under the plan 

4 based on participation (or lack of participation) in a 

5 standards-based wellness program.’’. 

6 (b) EFFECTIVE DATE.—The amendments made by 

7 subsection (a) shall apply to plan years beginning more 

8 than 1 year after the date of the enactment of this Act. 

9 TITLE VII—TRANSPARENCY AND 

10 INSURANCE REFORM MEASURES 

11 SEC. 701. RECEIPT AND RESPONSE TO REQUESTS FOR 

12 CLAIM INFORMATION. 

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

14 Service Act is amended by inserting after section 2713 the 

15 following new section: 

16 ‘‘SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR 

17 CLAIM INFORMATION. 

18 ‘‘(a) REQUIREMENT.— 

19 ‘‘(1) IN GENERAL.—In the case of health insur20 ance coverage offered in connection with a group 

21 health plan, not later than the 30th day after the 

22 date a health insurance issuer receives a written re23 quest for a written report of claim information from 

24 the plan, plan sponsor, or plan administrator, the 

25 health insurance issuer shall provide the requesting 


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1 party the report, subject to the succeeding provisions 

2 of this section. 

3 ‘‘(2) EXCEPTION.—The health insurance issuer 

4 is not obligated to provide a report under this sub5 section regarding a particular employer or group 

6 health plan more than twice in any 12-month period 

7 and is not obligated to provide such a report in the 

8 case of an employer with fewer than 50 employees. 

9 ‘‘(3) DEADLINE.—A plan, plan sponsor, or plan 

10 administrator must request a report under this sub11 section before or on the second anniversary of the 

12 date of termination of coverage under a group health 

13 plan issued by the health insurance issuer. 

14 ‘‘(b) FORM OF REPORT; INFORMATION TO BE IN15 CLUDED.— 

16 ‘‘(1) IN GENERAL.—A health insurance issuer 

17 shall provide the report of claim information under 

18 subsection (a)— 

19 ‘‘(A) in a written report; 

20 ‘‘(B) through an electronic file transmitted 

21 by secure electronic mail or a file transfer pro22 tocol site; or 

23 ‘‘(C) by making the required information 

24 available through a secure Web site or Web porVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00193 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 tal accessible by the requesting plan, plan spon2 sor, or plan administrator. 

3 ‘‘(2) INFORMATION TO BE INCLUDED.—A re4 port of claim information provided under subsection 

5 (a) shall contain all information available to the 

6 health insurance issuer that is responsive to the re7 quest made under such subsection, including, subject 

8 to subsection (c), protected health information, for 

9 the 36-month period preceding the date of the report 

10 or the period specified by subparagraphs (D), (E), 

11 and (F) of paragraph (3), if applicable, or for the 

12 entire period of coverage, whichever period is short13 er. 

14 ‘‘(3) REQUIRED INFORMATION.—Subject to 

15 subsection (c), a report provided under subsection 

16 (a) shall include the following: 

17 ‘‘(A) Aggregate paid claims experience by 

18 month, including claims experience for medical, 

19 dental, and pharmacy benefits, as applicable. 

20 ‘‘(B) Total premium paid by month. 

21 ‘‘(C) Total number of covered employees 

22 on a monthly basis by coverage tier, including 

23 whether coverage was for— 

24 ‘‘(i) an employee only; 


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1 ‘‘(ii) an employee with dependents 

2 only; 

3 ‘‘(iii) an employee with a spouse only; 

4 or 

5 ‘‘(iv) an employee with a spouse and 

6 dependents. 

7 ‘‘(D) The total dollar amount of claims 

8 pending as of the date of the report. 

9 ‘‘(E) A separate description and individual 

10 claims report for any individual whose total 

11 paid claims exceed $15,000 during the 12- 

12 month period preceding the date of the report, 

13 including the following information related to 

14 the claims for that individual— 

15 ‘‘(i) a unique identifying number, 

16 characteristic, or code for the individual; 

17 ‘‘(ii) the amounts paid; 

18 ‘‘(iii) dates of service; and 

19 ‘‘(iv) applicable procedure codes and 

20 diagnosis codes. 

21 ‘‘(F) For claims that are not part of the 

22 information described in a previous subpara23 graph, a statement describing precertification 

24 requests for hospital stays of 5 days or longer 


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1 that were made during the 30-day period pre2 ceding the date of the report. 

3 ‘‘(c) LIMITATIONS ON DISCLOSURE.— 

4 ‘‘(1) IN GENERAL.—A health insurance issuer 

5 may not disclose protected health information in a 

6 report of claim information provided under this sec7 tion if the health insurance issuer is prohibited from 

8 disclosing that information under another State or 

9 Federal law that imposes more stringent privacy re10 strictions than those imposed under Federal law 

11 under the HIPAA privacy regulations. To withhold 

12 information in accordance with this subsection, the 

13 health insurance issuer must— 

14 ‘‘(A) notify the plan, plan sponsor, or plan 

15 administrator requesting the report that infor16 mation is being withheld; and 

17 ‘‘(B) provide to the plan, plan sponsor, or 

18 plan administrator a list of categories of claim 

19 information that the health insurance issuer has 

20 determined are subject to the more stringent 

21 privacy restrictions under another State or Fed22 eral law. 

23 ‘‘(2) PROTECTION.—A plan sponsor is entitled 

24 to receive protected health information under sub25 paragraphs (E) and (F) of subsection (b)(3) and 


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1 subsection (d) only after an appropriately authorized 

2 representative of the plan sponsor makes to the 

3 health insurance issuer a certification substantially 

4 similar to the following certification: ‘I hereby certify 

5 that the plan documents comply with the require6 ments of section 164.504(f)(2) of title 45, Code of 

7 Federal Regulations, and that the plan sponsor will 

8 safeguard and limit the use and disclosure of pro9 tected health information that the plan sponsor may 

10 receive from the group health plan to perform the 

11 plan administration functions.’. 

12 ‘‘(3) RESULTS.—A plan sponsor that does not 

13 provide the certification required by paragraph (2) is 

14 not entitled to receive the protected health informa15 tion described by subparagraphs (E) and (F) of sub16 section (b)(3) and subsection (d), but is entitled to 

17 receive a report of claim information that includes 

18 the information described by subparagraphs (A) 

19 through (D) of subsection (b)(3). 

20 ‘‘(4) INFORMATION.—In the case of a request 

21 made under subsection (a) after the date of termi22 nation of coverage, the report must contain all infor23 mation available to the health insurance issuer as of 

24 the date of the report that is responsive to the re25 quest, including protected health information, and 


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1 including the information described by subsection 

2 (b)(3), for the period described by subsection (b)(2) 

3 preceding the date of termination of coverage or for 

4 the entire policy period, whichever period is shorter. 

5 Notwithstanding this subsection, the report may not 

6 include the protected health information described 

7 by subparagraphs (E) and (F) of subsection (b)(3) 

8 unless a certification has been provided in accord9 ance with paragraph (2). 

10 ‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.— 

11 ‘‘(1) REVIEW.—On receipt of the report re12 quired by subsection (a), the plan, plan sponsor, or 

13 plan administrator may review the report and, not 

14 later than the 10th day after the date the report is 

15 received, may make a written request to the health 

16 insurance issuer for additional information in ac17 cordance with this subsection for specified individ18 uals. 

19 ‘‘(2) REQUEST.—With respect to a request for 

20 additional information concerning specified individ21 uals for whom claims information has been provided 

22 under subsection (b)(3)(E), the health insurance 

23 issuer shall provide additional information on the 

24 prognosis or recovery if available and, for individuals 

25 in active case management, the most recent case 


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1 management information, including any future ex2 pected costs and treatment plan, that relate to the 

3 claims for that individual. 

4 ‘‘(3) RESPONSE.—The health insurance issuer 

5 must respond to the request for additional informa6 tion under this subsection not later than the 15th 

7 day after the date of such request unless the re8 questing plan, plan sponsor, or plan administrator 

9 agrees to a request for additional time. 

10 ‘‘(4) LIMITATION.—The health insurance issuer 

11 is not required to produce the report described by 

12 this subsection unless a certification has been pro13 vided in accordance with subsection (c)(2). 

14 ‘‘(5) COMPLIANCE WITH SECTION DOES NOT

15 CREATE LIABILITY.—A health insurance issuer that 

16 releases information, including protected health in17 formation, in accordance with this subsection has 

18 not violated a standard of care and is not liable for 

19 civil damages resulting from, and is not subject to 

20 criminal prosecution for, releasing that information. 

21 ‘‘(e) LIMITATION ON PREEMPTION.—Nothing in this 

22 section is meant to limit States from enacting additional 

23 laws in addition to the provisions of this section, but not 

24 in lieu of such provisions. 

25 ‘‘(f) DEFINITIONS.—In this section: 


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1 ‘‘(1) The terms ‘employer’, ‘plan administrator’, 

2 and ‘plan sponsor’ have the meanings given such 

3 terms in section 3 of the Employee Retirement In4 come Security Act of 1974. 

5 ‘‘(2) The term ‘HIPAA privacy regulations’ has 

6 the meaning given such term in section 1180(b)(3) 

7 of the Social Security Act. 

8 ‘‘(3) The term ‘protected health information’ 

9 has the meaning given such term under the HIPAA 

10 privacy regulations.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 subsection (a) shall take effect on the date of the enact13 ment of this Act. 

14 TITLE VIII—QUALITY 

15 SEC. 801. PROHIBITION ON CERTAIN USES OF DATA OB16 TAINED FROM COMPARATIVE EFFECTIVE17 NESS RESEARCH OR FROM PATIENT-CEN18 TERED OUTCOMES RESEARCH; ACCOUNTING 

19 FOR PERSONALIZED MEDICINE AND DIF20 FERENCES IN PATIENT TREATMENT RE21 SPONSE. 

22 (a) IN GENERAL.—Notwithstanding any other provi23 sion of law, the Secretary of Health and Human Serv24 ices— 


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1 (1) shall not use data obtained from the con2 duct of comparative effectiveness research or pa3 tient-centered outcomes research, including such re4 search that is conducted or supported using funds 

5 appropriated under the American Recovery and Re6 investment Act of 2009 (Public Law 111–5), to deny 

7 coverage of an item or service under a Federal 

8 health care program (as defined in section 1128B(f) 

9 of the Social Security Act (42 U.S.C. 1320a–7b(f))); 

10 and 

11 (2) shall ensure that comparative effectiveness 

12 research and patient-centered outcomes research 

13 conducted or supported by the Federal Government 

14 accounts for factors contributing to differences in 

15 the treatment response and treatment preferences of 

16 patients, including patient-reported outcomes, 

17 genomics and personalized medicine, the unique 

18 needs of health disparity populations, and indirect 

19 patient benefits. 

20 (b) CONSULTATION AND APPROVAL REQUIRED.— 

21 Nothing the Federal Coordinating Council for Compara22 tive Effectiveness Research finds can be released in final 

23 form until after consultation with and approved by rel24 evant physician specialty organizations. 


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1 (c) RULE OF CONSTRUCTION.—Nothing in this sec2 tion shall be construed as affecting the authority of the 

3 Commissioner of Food and Drugs under the Federal 

4 Food, Drug, and Cosmetic Act or the Public Health Serv5 ice Act. 

6 SEC. 802. ESTABLISHMENT OF PERFORMANCE-BASED 

7 QUALITY MEASURES. 

8 Not later than January 1, 2014, the Secretary of 

9 Health and Human Services shall submit to Congress a 

10 proposal for a formalized process for the development of 

11 performance-based quality measures that could be applied 

12 to physicians’ services under the Medicare program under 

13 title XVIII of the Social Security Act. Such proposal shall 

14 be in concert and agreement with the Physician Consor15 tium for Performance Improvement and shall only utilize 

16 measures agreed upon by each physician specialty organi17 zation. 

18 TITLE IX—STATE 

19 TRANSPARENCY PLAN PORTAL 

20 SEC. 901. PROVIDING INFORMATION ON HEALTH COV21 ERAGE OPTIONS AND HEALTH CARE PRO22 VIDERS. 

23 (a) STATE-BASED PORTAL.—A State (by itself or 

24 jointly with other States) may contract with a private enti25 ty to establish a Health Plan and Provider Portal Web 


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1 site (referred to in this section as a ‘‘plan portal’’) for 

2 the purposes of providing standardized information— 

3 (1) on health insurance plans that have been 

4 certified to be available for purchase in that State; 

5 and 

6 (2) on price and quality information on health 

7 care providers (including physicians, hospitals, and 

8 other health care institutions). 

9 (b) PROHIBITIONS.— 

10 (1) DIRECT ENROLLMENT.—A plan portal may 

11 not directly enroll individuals in health insurance 

12 plans or under a State Medicaid plan or a State 

13 children’s health insurance plan. 

14 (2) CONFLICTS OF INTEREST.— 

15 (A) COMPANIES.—A health insurance 

16 issuer offering a health insurance plan through 

17 a plan portal may not— 

18 (i) be the private entity developing 

19 and maintaining a plan portal under this 

20 section; or 

21 (ii) have an ownership interest in such 

22 private entity or in the plan portal. 

23 (B) INDIVIDUALS.—An individual em24 ployed by a health insurance issuer offering a 


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1 health insurance plan through a plan portal 

2 may not serve as a director or officer for— 

3 (i) the private entity developing and 

4 maintaining a plan portal under this sec5 tion; or 

6 (ii) the plan portal. 

7 (c) CONSTRUCTION.—Nothing in this section shall be 

8 construed to prohibit health insurance brokers and agents 

9 from— 

10 (1) utilizing the plan portal for any purpose; or 

11 (2) marketing or offering health insurance 

12 products. 

13 (d) STATE DEFINED.—In this section, the term 

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

15 title XIX of the Social Security Act. 

16 (e) HEALTH INSURANCE PLANS.—For purposes of 

17 this section, the term ‘‘health insurance plan’’ does not 

18 include coverage of excepted benefits, as defined in section 

19 2791(c) of the Public Health Service Act (42 U.S.C. 

20 300gg–91(c)). 


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1 TITLE X—PATIENT FREEDOM OF 

2 CHOICE 

3 SEC. 1001. GUARANTEEING FREEDOM OF CHOICE AND CON4 TRACTING FOR PATIENTS UNDER MEDICARE. 

5 (a) IN GENERAL.—Section 1802 of the Social Secu6 rity Act (42 U.S.C. 1395a) is amended to read as follows: 

7 ‘‘FREEDOM OF CHOICE AND CONTRACTING BY PATIENT

8 GUARANTEED

9 ‘‘SEC. 1802. (a) BASIC FREEDOM OF CHOICE.—Any 

10 individual entitled to insurance benefits under this title 

11 may obtain health services from any institution, agency, 

12 or person qualified to participate under this title if such 

13 institution, agency, or person undertakes to provide that 

14 individual such services. 

15 ‘‘(b) FREEDOM TO CONTRACT BY MEDICARE BENE16 FICIARIES.— 

17 ‘‘(1) IN GENERAL.—Subject to the provisions of 

18 this subsection, nothing in this title shall prohibit a 

19 Medicare beneficiary from entering into a contract 

20 with an eligible professional (whether or not the pro21 fessional is a participating or non-participating phy22 sician or practitioner) for any item or service cov23 ered under this title. 

24 ‘‘(2) SUBMISSION OF CLAIMS.—Any Medicare 

25 beneficiary that enters into a contract under this 


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1 section with an eligible professional shall be per2 mitted to submit a claim for payment under this 

3 title for services furnished by such professional, and 

4 such payment shall be made in the amount that 

5 would otherwise apply to such professional under 

6 this title except that where such professional is con7 sidered to be non-participating, payment shall be 

8 paid as if the professional were participating. Pay9 ment made under this title for any item or service 

10 provided under the contract shall not render the pro11 fessional a participating or non-participating physi12 cian or practitioner, and as such, requirements of 

13 this title that may otherwise apply to a participating 

14 or non-participating physician or practitioner would 

15 not apply with respect to any items or services fur16 nished under the contract. 

17 ‘‘(3) BENEFICIARY PROTECTIONS.— 

18 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

19 not apply to any contract unless— 

20 ‘‘(i) the contract is in writing, is 

21 signed by the Medicare beneficiary and the 

22 eligible professional, and establishes all 

23 terms of the contract (including specific 

24 payment for items and services covered by 

25 the contract) before any item or service is 


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1 provided pursuant to the contract, and the 

2 beneficiary shall be held harmless for any 

3 subsequent payment charged for an item 

4 or service in excess of the amount estab5 lished under the contract during the period 

6 the contract is in effect; 

7 ‘‘(ii) the contract contains the items 

8 described in subparagraph (B); and 

9 ‘‘(iii) the contract is not entered into 

10 at a time when the Medicare beneficiary is 

11 facing an emergency medical condition or 

12 urgent health care situation. 

13 ‘‘(B) ITEMS REQUIRED TO BE INCLUDED

14 IN CONTRACT.—Any contract to provide items 

15 and services to which paragraph (1) applies 

16 shall clearly indicate to the Medicare beneficiary 

17 that by signing such contract the beneficiary— 

18 ‘‘(i) agrees to be responsible for pay19 ment to such eligible professional for such 

20 items or services under the terms of and 

21 amounts established under the contract; 

22 ‘‘(ii) agrees to be responsible for sub23 mitting claims under this title to the Sec24 retary, and to any other supplemental in25 surance plan that may provide suppleVerDate Mar 15 2010 05:13 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00207 Fmt 6652 Sfmt 6201 E:\BILLS\S1851.IS S1851

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1 mental insurance, for such items or serv2 ices furnished under the contract if such 

3 items or services are covered by this title, 

4 unless otherwise provided in the contract 

5 under subparagraph (C)(i); and 

6 ‘‘(iii) acknowledges that no limits or 

7 other payment incentives that may other8 wise apply under this title (such as the 

9 limits under subsection (g) of section 1848 

10 or incentives under subsection (a)(5), (m), 

11 (q), and (p) of such section) shall apply to 

12 amounts that may be charged, or paid to 

13 a beneficiary for, such items or services. 

14 Such contract shall also clearly indicate whether 

15 the eligible professional is excluded from par16 ticipation under the Medicare program under 

17 section 1128. 

18 ‘‘(C) BENEFICIARY ELECTIONS UNDER

19 THE CONTRACT.—Any Medicare beneficiary 

20 that enters into a contract under this section 

21 may elect to negotiate, as a term of the con22 tract, a provision under which— 

23 ‘‘(i) the eligible professional shall file 

24 claims on behalf of the beneficiary with the 

25 Secretary and any supplemental insurance 


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1 plan for items or services furnished under 

2 the contract if such items or services are 

3 covered under this title or under the plan; 

4 and 

5 ‘‘(ii) the beneficiary assigns payment 

6 to the eligible professional for any claims 

7 filed by, or on behalf of, the beneficiary 

8 with the Secretary and any supplemental 

9 insurance plan for items or services fur10 nished under the contract. 

11 ‘‘(D) EXCLUSION OF DUAL ELIGIBLE INDI12 VIDUALS.—Paragraph (1) shall not apply to 

13 any contract if a beneficiary who is eligible for 

14 medical assistance under title XIX is a party to 

15 the contract. 

16 ‘‘(4) LIMITATION ON ACTUAL CHARGE AND

17 CLAIM SUBMISSION REQUIREMENT NOT APPLICA18 BLE.—Section 1848(g) shall not apply with respect 

19 to any item or service provided to a Medicare bene20 ficiary under a contract described in paragraph (1). 

21 ‘‘(5) CONSTRUCTION.—Nothing in this section 

22 shall be construed— 

23 ‘‘(A) to prohibit any eligible professional 

24 from maintaining an election and acting as a 

25 participating or non-participating physician or 


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1 practitioner with respect to any patient not cov2 ered under a contract established under this 

3 section; and 

4 ‘‘(B) as changing the items and services 

5 for which an eligible professional may bill under 

6 this title. 

7 ‘‘(6) DEFINITIONS.—In this subsection: 

8 ‘‘(A) MEDICARE BENEFICIARY.—The term 

9 ‘Medicare beneficiary’ means an individual who 

10 is entitled to benefits under part A or enrolled 

11 under part B. 

12 ‘‘(B) ELIGIBLE PROFESSIONAL.—The term 

13 ‘eligible professional’ has the meaning given 

14 such term in section 1848(k)(3)(B). 

15 ‘‘(C) EMERGENCY MEDICAL CONDITION.— 

16 The term ‘emergency medical condition’ means 

17 a medical condition manifesting itself by acute 

18 symptoms of sufficient severity (including se19 vere pain) such that a prudent layperson, with 

20 an average knowledge of health and medicine, 

21 could reasonably expect the absence of imme22 diate medical attention to result in— 

23 ‘‘(i) serious jeopardy to the health of 

24 the individual or, in the case of a pregnant 


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1 woman, the health of the woman or her 

2 unborn child; 

3 ‘‘(ii) serious impairment to bodily 

4 functions; or 

5 ‘‘(iii) serious dysfunction of any bodily 

6 organ or part. 

7 ‘‘(D) URGENT HEALTH CARE SITUA8 TION.—The term ‘urgent health care situation’ 

9 means services furnished to an individual who 

10 requires services to be furnished within 12 

11 hours in order to avoid the likely onset of an 

12 emergency medical condition.’’. 

13 SEC. 1002. PREEMPTION OF STATE LAWS LIMITING 

14 CHARGES FOR ELIGIBLE PROFESSIONAL 

15 SERVICES. 

16 (a) IN GENERAL.—No State may impose a limit on 

17 the amount of charges for services, furnished by an eligible 

18 professional (as defined in subsection (k)(3)(B) of section 

19 1848 of the Social Security Act, 42 U.S.C. 1395w–4), for 

20 which payment is made under such section, and any such 

21 limit is hereby preempted. 

22 (b) STATE.—In this section, the term ‘‘State’’ in23 cludes the District of Columbia, Puerto Rico, the Virgin 

24 Islands, Guam, and American Samoa. 


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1 SEC. 1003. HEALTH CARE PROVIDER LICENSURE CANNOT 

2 BE CONDITIONED ON PARTICIPATION IN A 

3 HEALTH PLAN. 

4 (a) IN GENERAL.—The Secretary of Health and 

5 Human Services and any State (as a condition of receiving 

6 Federal financial participation under title XIX of the So7 cial Security Act) may not require any health care pro8 vider to participate in any health plan as a condition of 

9 licensure of the provider in any State. 

10 (b) DEFINITIONS.—In this section: 

11 (1) HEALTH PLAN.—The term ‘‘health plan’’ 

12 has the meaning given such term in section 1171(5) 

13 of the Social Security Act (42 U.S.C. 1320d(5)). 

14 (2) HEALTH CARE PROVIDER.—The term 

15 ‘‘health care provider’’ means any person or entity 

16 that is required by State or Federal laws or regula17 tions to be licensed, registered, or certified to pro18 vide health care services and is so licensed, reg19 istered, or certified, or exempted from such require20 ment by other statute or regulation. 

21 (3) STATE.—The term ‘‘State’’ has the mean22 ing given such term for purposes of title XIX of the 

23 Social Security Act. 


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1 SEC. 1004. BAD DEBT DEDUCTION FOR DOCTORS TO PAR2 TIALLY OFFSET THE COST OF PROVIDING UN3 COMPENSATED CARE REQUIRED TO BE PRO4 VIDED UNDER AMENDMENTS MADE BY THE 

5 EMERGENCY MEDICAL TREATMENT AND 

6 LABOR ACT. 

7 (a) IN GENERAL.—Section 166 of the Internal Rev8 enue Code of 1986 (relating to bad debts) is amended by 

9 redesignating subsection (f) as subsection (g) and by in10 serting after subsection (e) the following new subsection: 

11 ‘‘(f) BAD DEBT TREATMENT FOR DOCTORS TO PAR12 TIALLY OFFSET COST OF PROVIDING UNCOMPENSATED

13 CARE REQUIRED TO BE PROVIDED.— 

14 ‘‘(1) AMOUNT OF DEDUCTION.— 

15 ‘‘(A) IN GENERAL.—For purposes of sub16 section (a), the basis for determining the 

17 amount of any deduction for an eligible 

18 EMTALA debt shall be treated as being equal 

19 to the Medicare payment amount. 

20 ‘‘(B) MEDICARE PAYMENT AMOUNT.—For 

21 purposes of subparagraph (A), the Medicare 

22 payment amount with respect to an eligible 

23 EMTALA debt is the fee schedule amount es24 tablished under section 1848 of the Social Secu25 rity Act for the physicians’ service (to which 

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1 vided to an individual enrolled under part B of 

2 title XVIII of such Act. 

3 ‘‘(2) ELIGIBLE EMTALA DEBT.—For purposes 

4 of this section, the term ‘eligible EMTALA debt’ 

5 means any debt if— 

6 ‘‘(A) such debt arose as a result of physi7 cians’ services— 

8 ‘‘(i) which were performed in an 

9 EMTALA hospital by a board-certified 

10 physician (whether as part of medical 

11 screening or necessary stabilizing treat12 ment and whether as an emergency depart13 ment physician, as an on-call physician, or 

14 otherwise), and 

15 ‘‘(ii) which were required to be pro16 vided under section 1867 of the Social Se17 curity Act (42 U.S.C. 1395dd), and 

18 ‘‘(B) such debt is owed— 

19 ‘‘(i) to such physician, or 

20 ‘‘(ii) to an entity if— 

21 ‘‘(I) such entity is a corporation 

22 and the sole shareholder of such cor23 poration is such physician, or 

24 ‘‘(II) such entity is a partnership 

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1 section with respect to such debt is al2 located to such physician or to an en3 tity described in subclause (I). 

4 ‘‘(3) BOARD-CERTIFIED PHYSICIAN.—For pur5 poses of this subsection, the term ‘board-certified 

6 physician’ means any physician (as defined in sec7 tion 1861(r) of the Social Security Act (42 U.S.C. 

8 1395x(r))) who is certified by the American Board 

9 of Emergency Medicine or other appropriate medical 

10 specialty board for the specialty in which the physi11 cian practices, or who meets comparable require12 ments, as identified by the Secretary of the Treasury 

13 in consultation with the Secretary of Health and 

14 Human Services. 

15 ‘‘(4) OTHER DEFINITIONS.—For purposes of 

16 this subsection— 

17 ‘‘(A) EMTALA HOSPITAL.—The term 

18 ‘EMTALA hospital’ means any hospital having 

19 a hospital emergency department which is re20 quired to comply with section 1867 of the So21 cial Security Act (42 U.S.C. 1395dd) (relating 

22 to examination and treatment for emergency 

23 medical conditions and women in labor). 

24 ‘‘(B) PHYSICIANS’ SERVICES.—The term 

25 ‘physicians’ services’ has the meaning given 


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1 such term in section 1861(q) of the Social Se2 curity Act (42 U.S.C. 1395x(q)).’’. 

3 (b) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to debts arising from services per5 formed in taxable years beginning after the date of the 

6 enactment of this Act. 

7 SEC. 1005. RIGHT OF CONTRACT WITH HEALTH CARE PRO8 VIDERS. 

9 (a) IN GENERAL.—The Secretary of Health and 

10 Human Services shall not preclude an enrollee, partici11 pant, or beneficiary in a health benefits plan from entering 

12 into any contract or arrangement for health care with any 

13 health care provider. 

14 (b) HEALTH BENEFITS PLAN DEFINED.— 

15 (1) IN GENERAL.—In this section, subject to 

16 paragraph (2), the term ‘‘health benefits plan’’ 

17 means any of the following: 

18 (A) Group health plan (as defined in sec19 tion 2791 of the Public Health Service Act). 

20 (B) Health insurance coverage (as defined 

21 in section 2791 of such Act). 

22 (C) A health benefits plan under chapter 

23 89 of title 5, United States Code. 


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1 (2) EXCLUSION OF MEDICAID AND TRICARE.— 

2 Such term does not include a health plan partici3 pating in— 

4 (A) the Medicaid program under title XIX 

5 of the Social Security Act; or 

6 (B) the TRICARE program under chapter 

7 55 of title 10, United States Code. 

8 (c) HEALTH CARE PROVIDER DEFINED.—In this 

9 section, the term ‘‘health care provider’’ means— 

10 (1) a physician, as defined in paragraphs (1), 

11 (2), (3), and (4) of section 1861(r) of the Social Se12 curity Act (42 U.S.C. 1395x(r)); and 

13 (2) a health care practitioner described in sec14 tion 1842(b)(18)(C) of such Act (42 U.S.C. 

15 1395u(b)(18)(C)). 

16 TITLE XI—INCENTIVES TO 

17 REDUCE PHYSICIAN SHORTAGES 

18 Subtitle A—Federally Supported 

19 Student Loan Funds for Medical 

20 Students 

21 SEC. 1101. FEDERALLY SUPPORTED STUDENT LOAN FUNDS 

22 FOR MEDICAL STUDENTS. 

23 (a) PRIMARY HEALTH CARE MEDICAL STUDENTS.— 

24 Subpart II of part A of the Public Health Service Act (42 

25 U.S.C. 292q et seq.) is amended— 


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1 (1) by redesignating section 735 as section 729; 

2 and 

3 (2) in subsection (f) of section 729 (as so redes4 ignated), by striking ‘‘is authorized to be appro5 priated $10,000,000 for each of the fiscal years 

6 1994 through 1996’’ and inserting ‘‘are authorized 

7 to be appropriated such sums as may be necessary 

8 for fiscal year 2014 and each fiscal year thereafter’’. 

9 (b) OTHER MEDICAL STUDENTS.—Part A of title VII 

10 of the Public Health Service Act (42 U.S.C. 292 et seq.) 

11 is amended by adding at the end the following: 

12 ‘‘Subpart III—Federally Supported Student Loan 

13 Funds for Certain Medical Students 

14 ‘‘SEC. 730. SCHOOL LOAN FUNDS FOR CERTAIN MEDICAL 

15 STUDENTS. 

16 ‘‘(a) FUND AGREEMENTS.—For the purpose de17 scribed in subsection (b), the Secretary is authorized to 

18 enter into an agreement for the establishment and oper19 ation of a student loan fund with any public or nonprofit 

20 school of medicine or osteopathic medicine. 

21 ‘‘(b) PURPOSE.—The purpose of this subpart is to 

22 provide for loans to medical students who would be eligible 

23 for a loan under subpart II, except for the student’s deci24 sion to enter a residency training program in a field other 

25 than primary health care. 


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1 ‘‘(c) COMMENCEMENT OF REPAYMENT PERIOD.— 

2 The repayment period for a loan under this section shall 

3 not begin before the end of any period during which the 

4 student is participating in an internship, residency, or fel5 lowship training program directly related to the field of 

6 medicine which the student agrees to enter pursuant to 

7 subsection (d). 

8 ‘‘(d) REQUIREMENTS FOR STUDENTS.—Each agree9 ment under this section for the establishment of a student 

10 loan fund shall provide that the school of medicine or os11 teopathic medicine will make a loan to a student from such 

12 fund only if the student agrees— 

13 ‘‘(1) to enter and complete a residency training 

14 program (in a field of medicine other than primary 

15 health care) not later than a period determined by 

16 the Secretary to be reasonable after the date on 

17 which the student graduates from such school; and 

18 ‘‘(2) to practice medicine through the date on 

19 which the loan is repaid in full. 

20 ‘‘(e) REQUIREMENTS FOR SCHOOLS.—The provisions 

21 of section 723(b) (regarding graduates in primary health 

22 care) shall not apply to a student loan fund established 

23 under this section. 

24 ‘‘(f) APPLICABILITY OF OTHER PROVISIONS.—Ex25 cept as inconsistent with this section, the provisions of 


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1 subpart II shall apply to the program of student loan 

2 funds established under this section to the same extent 

3 and in the same manner as such provisions apply to the 

4 program of student loan funds established under subpart 

5 II. 

6 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—To 

7 carry out this section, there are authorized to be appro8 priated such sums as may be necessary for fiscal year 

9 2014 and each fiscal year thereafter.’’. 

10 Subtitle B—Loan Forgiveness for 

11 Primary Care Providers 

12 SEC. 1111. LOAN FORGIVENESS FOR PRIMARY CARE PRO13 VIDERS. 

14 (a) IN GENERAL.—The Secretary of Health and 

15 Human Services shall carry out a program of entering into 

16 contracts with eligible individuals under which— 

17 (1) the individual agrees to serve for a period 

18 of not less than 5 years as a primary care provider; 

19 and 

20 (2) in consideration of such service, the Sec21 retary agrees to pay not more than $50,000 on the 

22 principal and interest on the individual’s graduate 

23 educational loans. 

24 (b) ELIGIBILITY.—To be eligible to enter into a con25 tract under subsection (a), an individual must— 


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1 (1) have a graduate degree in medicine, osteo2 pathic medicine, or another health profession from 

3 an accredited (as determined by the Secretary of 

4 Health and Human Services) institution of higher 

5 education; and 

6 (2) have practiced as a primary care provider 

7 for a period (excluding any residency or fellowship 

8 training period) of not less than— 

9 (A) 5 years; or 

10 (B) 3 years in a medically underserved 

11 community (as defined in section 799B of the 

12 Public Health Service Act (42 U.S.C. 295p)). 

13 (c) INSTALLMENTS.—Payments under this section 

14 may be made in installments of not more than $10,000 

15 for each year of service described in subsection (a)(1). 

16 (d) APPLICABILITY OF CERTAIN PROVISIONS.—The 

17 provisions of subpart III of part D of title III of the Public 

18 Health Service Act shall, except as inconsistent with this 

19 section, apply to the program established under this sec20 tion in the same manner and to the same extent as such 

21 provisions apply to the National Health Service Corps 

22 Loan Repayment Program established in such subpart. 


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1 TITLE XII—QUALITY HEALTH 

2 CARE COALITION 

3 SEC. 1201. QUALITY HEALTH CARE COALITION. 

4 (a) APPLICATION OF THE FEDERAL ANTITRUST

5 LAWS TO HEALTH CARE PROFESSIONALS NEGOTIATING

6 WITH HEALTH PLANS.— 

7 (1) IN GENERAL.—Any health care profes8 sionals who are engaged in negotiations with a 

9 health plan regarding the terms of any contract 

10 under which the professionals provide health care 

11 items or services for which benefits are provided 

12 under such plan shall, in connection with such nego13 tiations, be exempt from the Federal antitrust laws. 

14 (2) LIMITATION.— 

15 (A) NO NEW RIGHT FOR COLLECTIVE CES16 SATION OF SERVICE.—The exemption provided 

17 in paragraph (1) shall not confer any new right 

18 to participate in any collective cessation of serv19 ice to patients not already permitted by existing 

20 law. 

21 (B) NO CHANGE IN NATIONAL LABOR RE22 LATIONS ACT.—This section applies only to 

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1 ing any provision of the National Labor Rela2 tions Act, or as affecting the status of any 

3 group of persons under that Act. 

4 (3) NO APPLICATION TO FEDERAL PRO5 GRAMS.—Nothing in this section shall apply to nego6 tiations between health care professionals and health 

7 plans pertaining to benefits provided under any of 

8 the following: 

9 (A) The Medicare Program under title 

10 XVIII of the Social Security Act (42 U.S.C. 

11 1395 et seq.). 

12 (B) The Medicaid program under title XIX 

13 of the Social Security Act (42 U.S.C. 1396 et 

14 seq.). 

15 (C) The SCHIP program under title XXI 

16 of the Social Security Act (42 U.S.C. 1397aa et 

17 seq.). 

18 (D) Chapter 55 of title 10, United States 

19 Code (relating to medical and dental care for 

20 members of the uniformed services). 

21 (E) Chapter 17 of title 38, United States 

22 Code (relating to Veterans’ medical care). 

23 (F) Chapter 89 of title 5, United States 

24 Code (relating to the Federal employees’ health 

25 benefits program). 


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1 (G) The Indian Health Care Improvement 

2 Act (25 U.S.C. 1601 et seq.). 

3 (b) DEFINITIONS.—In this section, the following defi4 nitions shall apply: 

5 (1) ANTITRUST LAWS.—The term ‘‘antitrust 

6 laws’’— 

7 (A) has the meaning given it in subsection 

8 (a) of the first section of the Clayton Act (15 

9 U.S.C. 12(a)), except that such term includes 

10 section 5 of the Federal Trade Commission Act 

11 (15 U.S.C. 45) to the extent such section ap12 plies to unfair methods of competition; and 

13 (B) includes any State law similar to the 

14 laws referred to in subparagraph (A). 

15 (2) GROUP HEALTH PLAN.—The term ‘‘group 

16 health plan’’ means an employee welfare benefit plan 

17 to the extent that the plan provides medical care (in18 cluding items and services paid for as medical care) 

19 to employees or their dependents (as defined under 

20 the terms of the plan) directly or through insurance, 

21 reimbursement, or otherwise. 

22 (3) GROUP HEALTH PLAN, HEALTH INSURANCE

23 ISSUER.—The terms ‘‘group health plan’’ and 

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1 ministrator or other person acting for or on behalf 

2 of such plan or issuer. 

3 (4) HEALTH CARE SERVICES.—The term 

4 ‘‘health care services’’ means any services for which 

5 payment may be made under a health plan, includ6 ing services related to the delivery or administration 

7 of such services. 

8 (5) HEALTH CARE PROFESSIONAL.—The term 

9 ‘‘health care professional’’ means any individual or 

10 entity that provides health care items or services, 

11 treatment, assistance with activities of daily living, 

12 or medications to patients and who, to the extent re13 quired by State or Federal law, possesses specialized 

14 training that confers expertise in the provision of 

15 such items or services, treatment, assistance, or 

16 medications. 

17 (6) HEALTH INSURANCE COVERAGE.—The term 

18 ‘‘health insurance coverage’’ means benefits con19 sisting of medical care (provided directly, through 

20 insurance or reimbursement, or otherwise and in21 cluding items and services paid for as medical care) 

22 under any hospital or medical service policy or cer23 tificate, hospital or medical service plan contract, or 

24 health maintenance organization contract offered by 

25 a health insurance issuer. 


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1 (7) HEALTH INSURANCE ISSUER.—The term 

2 ‘‘health insurance issuer’’ means an insurance com3 pany, insurance service, or insurance organization 

4 (including a health maintenance organization) that 

5 is licensed to engage in the business of insurance in 

6 a State and that is subject to State law regulating 

7 insurance. Such term does not include a group 

8 health plan. 

9 (8) HEALTH MAINTENANCE ORGANIZATION.— 

10 The term ‘‘health maintenance organization’’ 

11 means— 

12 (A) a federally qualified health mainte13 nance organization (as defined in section 

14 1301(a) of the Public Health Service Act (42 

15 U.S.C. 300e(a))); 

16 (B) an organization recognized under State 

17 law as a health maintenance organization; or 

18 (C) a similar organization regulated under 

19 State law for solvency in the same manner and 

20 to the same extent as such a health mainte21 nance organization. 

22 (9) HEALTH PLAN.—The term ‘‘health plan’’ 

23 means a group health plan or a health insurance 

24 issuer that is offering health insurance coverage. 


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1 (10) MEDICAL CARE.—The term ‘‘medical 

2 care’’ means amounts paid for— 

3 (A) the diagnosis, cure, mitigation, treat4 ment, or prevention of disease, or amounts paid 

5 for the purpose of affecting any structure or 

6 function of the body; and 

7 (B) transportation primarily for and essen8 tial to receiving items and services referred to 

9 in subparagraph (A). 

10 (11) PERSON.—The term ‘‘person’’ includes a 

11 State or unit of local government. 

12 (12) STATE.—The term ‘‘State’’ includes the 

13 several States, the District of Columbia, Puerto 

14 Rico, the Virgin Islands of the United States, Guam, 

15 American Samoa, and the Commonwealth of the 

16 Northern Mariana Islands. 

17 (c) EFFECTIVE DATE.—This section shall take effect 

18 on the date of the enactment of this Act and shall not 

19 apply with respect to conduct occurring before such date. 


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1 TITLE XIII—OFFSETS 

2 Subtitle A—Discretionary 

3 Spending Limits 

4 SEC. 1301. DISCRETIONARY SPENDING LIMITS. 

5 The Balanced Budget and Emergency Deficit Control 

6 Act of 1985, as amended by section 101 of the Budget 

7 Control Act of 2011, is amended— 

8 (1) in section 251(c) (2 U.S.C. 901(c))— 

9 (A) by striking ‘‘and’’ at the end of para10 graph (9); and 

11 (B) by inserting after paragraph (10) the 

12 following: 

13 ‘‘(11) with respect to fiscal year 2022— 

14 ‘‘(A) for the security category, 

15 $662,562,510,000 in budget authority; and 

16 ‘‘(B) for the nonsecurity category, 

17 $496,727,490,000 in budget authority; and 

18 ‘‘(12) with respect to fiscal year 2023— 

19 ‘‘(A) for the security category, 

20 $689,704,290,000 in budget authority; and 

21 ‘‘(B) for the nonsecurity category, 

22 $495,325,710,000;’’; and 

23 (2) in section 251A(2) (2 U.S.C. 901a(2))— 


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1 (A) in subparagraph (B)(ii), by striking 

2 ‘‘$510,000,000,000’’ and inserting 

3 ‘‘$410,231,250,000’’; 

4 (B) in subparagraph (C)(ii), by striking 

5 ‘‘$520,000,000,000’’ and inserting 

6 ‘‘$424,377,360,000’’; 

7 (C) in subparagraph (D)(ii), by striking 

8 ‘‘$530,000,000,000’’ and inserting 

9 ‘‘$434,464,470,000’’; 

10 (D) in subparagraph (E)(ii), by striking 

11 ‘‘$541,000,000,000’’ and inserting 

12 ‘‘$445,368,000,000’’; 

13 (E) in subparagraph (F)(ii), by striking 

14 ‘‘$553,000,000,000’’ and inserting 

15 ‘‘$457,649,280,000’’; 

16 (F) in subparagraph (G)(ii), by striking 

17 ‘‘$566,000,000,000’’ and inserting 

18 ‘‘$472,098,360,000’’; 

19 (G) in subparagraph (H)(ii), by striking 

20 ‘‘$578,000,000,000’’ and inserting 

21 ‘‘$485,466,300,000’’; and 

22 (H) in subparagraph (I)(ii), by striking 

23 ‘‘$590,000,000,000’’ and inserting 

24 ‘‘$498,094,740,000’’. 


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1 Subtitle B—Savings From Health 

2 Care Efficiencies 

3 SEC. 1311. MEDICARE DSH REPORT AND PAYMENT ADJUST4 MENTS IN RESPONSE TO COVERAGE EXPAN5 SION. 

6 (a) DSH REPORT.— 

7 (1) IN GENERAL.—Not later than January 1, 

8 2018, the Secretary of Health and Human Services 

9 shall submit to Congress a report on Medicare DSH 

10 taking into account the impact of the health care re11 forms carried out under this Act in reducing the 

12 number of uninsured individuals. The report shall 

13 include recommendations relating to the following: 

14 (A) The appropriate amount, targeting, 

15 and distribution of Medicare DSH to com16 pensate for higher Medicare costs associated 

17 with serving low-income beneficiaries (taking 

18 into account variations in the empirical jus19 tification for Medicare DSH attributable to hos20 pital characteristics, including bed size), con21 sistent with the original intent of Medicare 

22 DSH. 

23 (B) The appropriate amount, targeting, 

24 and distribution of Medicare DSH to hospitals 


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•S 1851 IS

1 given their continued uncompensated care costs, 

2 to the extent such costs remain. 

3 (2) COORDINATION WITH MEDICAID DSH RE4 PORT.—The Secretary shall coordinate the report 

5 under this subsection with the report on Medicaid 

6 DSH under section 1322(a). 

7 (b) PAYMENT ADJUSTMENTS IN RESPONSE TO COV8 ERAGE EXPANSION.— 

9 (1) IN GENERAL.—If there is a significant de10 crease in the national rate of uninsurance as a result 

11 of this Act (as determined under paragraph (2)(A)), 

12 then the Secretary of Health and Human Services 

13 shall, beginning in fiscal year 2019, implement the 

14 following adjustments to Medicare DSH: 

15 (A) In lieu of the amount of Medicare 

16 DSH payment that would otherwise be made 

17 under section 1886(d)(5)(F) of the Social Secu18 rity Act, the amount of Medicare DSH payment 

19 shall be an amount based on the recommenda20 tions of the report under subsection (a)(1)(A) 

21 and shall take into account variations in the 

22 empirical justification for Medicare DSH attrib23 utable to hospital characteristics, including bed 

24 size. 


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1 (B) Subject to paragraph (3), make an ad2 ditional payment to a hospital by an amount 

3 that is estimated based on the amount of un4 compensated care provided by the hospital 

5 based on criteria for uncompensated care as de6 termined by the Secretary, which shall exclude 

7 bad debt. 

8 (2) SIGNIFICANT DECREASE IN NATIONAL RATE

9 OF UNINSURANCE AS A RESULT OF THIS ACT.—For 

10 purposes of this subsection— 

11 (A) IN GENERAL.—There is a ‘‘significant 

12 decrease in the national rate of uninsurance as 

13 a result of this Act’’ if there is a decrease in 

14 the national rate of uninsurance (as defined in 

15 subparagraph (B)) from 2014 to 2016 that ex16 ceeds 8 percentage points. 

17 (B) NATIONAL RATE OF UNINSURANCE

18 DEFINED.—The term ‘‘national rate of 

19 uninsurance’’ means, for a year, such rate for 

20 the under-65 population for the year as deter21 mined and published by the Bureau of the Cen22 sus in its Current Population Survey in or 

23 about September of the succeeding year. 

24 (3) UNCOMPENSATED CARE INCREASE.— 


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1 (A) COMPUTATION OF DSH SAVINGS.—For 

2 each fiscal year (beginning with fiscal year 

3 2017), the Secretary shall estimate the aggre4 gate reduction in Medicare DSH that will result 

5 from the adjustment under paragraph (1)(A). 

6 (B) STRUCTURE OF PAYMENT IN7 CREASE.—The Secretary shall compute the in8 crease in Medicare DSH under paragraph 

9 (1)(B) for a fiscal year in accordance with a 

10 formula established by the Secretary that pro11 vides that— 

12 (i) the aggregate amount of such in13 crease for the fiscal year does not exceed 

14 50 percent of the aggregate reduction in 

15 Medicare DSH estimated by the Secretary 

16 for such fiscal year; and 

17 (ii) hospitals with higher levels of un18 compensated care receive a greater in19 crease. 

20 (c) MEDICARE DSH.—In this section, the term 

21 ‘‘Medicare DSH’’ means adjustments in payments under 

22 section 1886(d)(5)(F) of the Social Security Act (42 

23 U.S.C. 1395ww(d)(5)(F)) for inpatient hospital services 

24 furnished by disproportionate share hospitals. 


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•S 1851 IS

1 SEC. 1312. REDUCTION IN MEDICAID DSH. 

2 (a) REPORT.— 

3 (1) IN GENERAL.—Not later than January 1, 

4 2018, the Secretary of Health and Human Services 

5 (in this title referred to as the ‘‘Secretary’’) shall 

6 submit to Congress a report concerning the extent to 

7 which, based upon the impact of the health care re8 forms carried out under this Act in reducing the 

9 number of uninsured individuals, there is a contin10 ued role for Medicaid DSH. In preparing the report, 

11 the Secretary shall consult with community-based 

12 health care networks serving low-income bene13 ficiaries. 

14 (2) MATTERS TO BE INCLUDED.—The report 

15 shall include the following: 

16 (A) RECOMMENDATIONS.—Recommenda17 tions regarding— 

18 (i) the appropriate targeting of Med19 icaid DSH within States; and 

20 (ii) the distribution of Medicaid DSH 

21 among the States. 

22 (B) SPECIFICATION OF DSH HEALTH RE23 FORM METHODOLOGY.—The DSH Health Re24 form methodology described in paragraph (2) of 

25 subsection (b) for purposes of implementing the 

26 requirements of such subsection. 


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1 (3) COORDINATION WITH MEDICARE DSH RE2 PORT.—The Secretary shall coordinate the report 

3 under this subsection with the report on Medicare 

4 DSH under section 1321. 

5 (4) MEDICAID DSH.—In this section, the term 

6 ‘‘Medicaid DSH’’ means adjustments in payments 

7 under section 1923 of the Social Security Act for in8 patient hospital services furnished by dispropor9 tionate share hospitals. 

10 (b) MEDICAID DSH REDUCTIONS.— 

11 (1) IN GENERAL.—If there is a significant de12 crease in the national rate of uninsurance as a result 

13 of this Act (as determined under section 

14 1321(a)(2)(A)), then the Secretary of Health and 

15 Human Services shall reduce Medicaid DSH so as to 

16 reduce total Federal payments to all States for such 

17 purpose by $1,500,000,000 in fiscal year 2019, 

18 $2,500,000,000 in fiscal year 2020, and 

19 $6,000,000,000 in fiscal year 2021. 

20 (2) DSH HEALTH REFORM METHODOLOGY.— 

21 The Secretary shall carry out paragraph (1) through 

22 use of a DSH Health Reform methodology issued by 

23 the Secretary that imposes the largest percentage re24 ductions on the States that— 


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1 (A) have the lowest percentages of unin2 sured individuals (determined on the basis of 

3 audited hospital cost reports) during the most 

4 recent year for which such data are available; 

5 or 

6 (B) do not target their DSH payments 

7 on— 

8 (i) hospitals with high volumes of 

9 Medicaid inpatients (as defined in section 

10 1923(b)(1)(A) of the Social Security Act 

11 (42 U.S.C. 1396r–4(b)(1)(A))); and 

12 (ii) hospitals that have high levels of 

13 uncompensated care (excluding bad debt). 

14 (3) DSH ALLOTMENT PUBLICATIONS.— 

15 (A) IN GENERAL.—Not later than the pub16 lication deadline specified in subparagraph (B), 

17 the Secretary shall publish in the Federal Reg18 ister a notice specifying the DSH allotment to 

19 each State under 1923(f) of the Social Security 

20 Act for the respective fiscal year specified in 

21 such subparagraph, consistent with the applica22 tion of the DSH Health Reform methodology 

23 described in paragraph (2). 


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1 (B) PUBLICATION DEADLINE.—The publi2 cation deadline specified in this subparagraph 

3 is— 

4 (i) January 1, 2018, with respect to 

5 DSH allotments described in subparagraph 

6 (A) for fiscal year 2019; 

7 (ii) January 1, 2019, with respect to 

8 DSH allotments described in subparagraph 

9 (A) for fiscal year 2020; and 

10 (iii) January 1, 2020, with respect to 

11 DSH allotments described in subparagraph 

12 (A) for fiscal year 2021. 

13 (c) CONFORMING AMENDMENTS.— 

14 (1) Section 1923(f) of the Social Security Act 

15 (42 U.S.C. 1396r–4(f)) is amended— 

16 (A) by redesignating paragraph (7) as 

17 paragraph (8); and 

18 (B) by inserting after paragraph (6) the 

19 following new paragraph: 

20 ‘‘(7) SPECIAL RULE FOR FISCAL YEARS 2019, 

21 2020, AND 2021.—Notwithstanding paragraph (2), if 

22 the Secretary makes a reduction under section 

23 1322(b)(1) of the Empowering Patients First Act of 

24 2013, the total DSH allotments for all States for— 


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1 ‘‘(A) fiscal year 2019, shall be the total 

2 DSH allotments that would otherwise be deter3 mined under this subsection for such fiscal year 

4 decreased by $1,500,000,000; 

5 ‘‘(B) fiscal year 2020, shall be the total 

6 DSH allotments that would otherwise be deter7 mined under this subsection for such fiscal year 

8 decreased by $2,500,000,000; and 

9 ‘‘(C) fiscal year 2021, shall be the total 

10 DSH allotments that would otherwise be deter11 mined under this subsection for such fiscal year 

12 decreased by $6,000,000,000.’’. 

13 (2) Section 1923(b)(4) of such Act (42 U.S.C. 

14 1396r–4(b)(4)) is amended by adding before the pe15 riod the following: ‘‘or to affect the authority of the 

16 Secretary to issue and implement the DSH Health 

17 Reform methodology under section 1322(b)(2) of the 

18 Empowering Patients First Act of 2013’’. 

19 (d) DISPROPORTIONATE SHARE HOSPITALS (DSH) 

20 AND ESSENTIAL ACCESS HOSPITAL (EAH) NON-DIS21 CRIMINATION.— 

22 (1) IN GENERAL.—Section 1923(d) of the So23 cial Security Act (42 U.S.C. 1396r–4) is amended 

24 by adding at the end the following new paragraph: 


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1 ‘‘(4) No hospital may be defined or deemed as 

2 a disproportionate share hospital, or as an essential 

3 access hospital (for purposes of subsection 

4 (f)(6)(A)(iv)), under a State plan under this title or 

5 subsection (b) of this section (including any waiver 

6 under section 1115) unless the hospital— 

7 ‘‘(A) provides services to beneficiaries 

8 under this title without discrimination on the 

9 ground of race, color, national origin, creed, 

10 source of payment, status as a beneficiary 

11 under this title, or any other ground unrelated 

12 to such beneficiary’s need for the services or the 

13 availability of the needed services in the hos14 pital; and 

15 ‘‘(B) makes arrangements for, and accepts, 

16 reimbursement under this title for services pro17 vided to eligible beneficiaries under this title.’’. 

18 (2) EFFECTIVE DATE.—The amendment made 

19 by subsection (a) shall be apply to expenditures 

20 made on or after July 1, 2014. 


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1 Subtitle C—Fraud, Waste, and 

2 Abuse 

3 SEC. 1321. PROVIDE ADEQUATE FUNDING TO HHS OIG AND 

4 HCFAC. 

5 (a) HCFAC FUNDING.—Section 1817(k)(3)(A) of 

6 the Social Security Act (42 U.S.C. 1395i(k)(3)(A)) is 

7 amended— 

8 (1) in clause (i)— 

9 (A) in subclause (III), by striking at the 

10 end ‘‘and’’; 

11 (B) in subclause (IV)— 

12 (i) by inserting ‘‘and before fiscal year 

13 2014’’ after ‘‘for each fiscal year after fis14 cal year 2006’’; and 

15 (ii) by striking the period at the end 

16 and inserting ‘‘; and’’; and 

17 (C) by adding at the end the following new 

18 subclause: 

19 ‘‘(V) for each fiscal year after fis20 cal year 2013, $300,000,000.’’; and 

21 (2) in clause (ii)— 

22 (A) in subclause (VIII), by striking at the 

23 end ‘‘and’’; 

24 (B) in subclause (IX)— 


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1 (i) by inserting ‘‘and before fiscal year 

2 2014’’ after ‘‘for each fiscal year after fis3 cal year 2007’’; and 

4 (ii) by striking the period at the end 

5 and inserting ‘‘; and’’; and 

6 (C) by adding at the end the following new 

7 subclause: 

8 ‘‘(X) for each fiscal year after 

9 fiscal year 2013, not less than the 

10 amount required under this clause for 

11 fiscal year 2013, plus the amount by 

12 which the amount made available 

13 under clause (i)(V) for fiscal year 

14 2014 exceeds the amount made avail15 able under clause (i)(IV) for fiscal 

16 year 2013.’’. 

17 (b) OIG FUNDING.—There are authorized to be ap18 propriated for each of fiscal years 2014 through 2023 

19 $100,000,000 for the Office of the Inspector General of 

20 the Department of Health and Human Services for fraud 

21 prevention activities under the Medicare and Medicaid 

22 programs. 


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1 SEC. 1322. IMPROVED ENFORCEMENT OF THE MEDICARE 

2 SECONDARY PAYOR PROVISIONS. 

3 (a) IN GENERAL.—The Secretary, in coordination 

4 with the Inspector General of the Department of Health 

5 and Human Services, shall provide through the Coordina6 tion of Benefits Contractor for the identification of in7 stances where the Medicare program should be, but is not, 

8 acting as a secondary payer to an individual’s private 

9 health benefits coverage under section 1862(b) of the So10 cial Security Act (42 U.S.C. 1395y(b)). 

11 (b) UPDATING PROCEDURES.—The Secretary shall 

12 update procedures for identifying and resolving credit bal13 ance situations which occur under the Medicare program 

14 when payment under such title and from other health ben15 efit plans exceed the providers’ charges or the allowed 

16 amount. 

17 (c) REPORT ON IMPROVED ENFORCEMENT.—Not 

18 later than 1 year after the date of the enactment of this 

19 Act, the Secretary shall submit a report to Congress on 

20 progress made in improved enforcement of the Medicare 

21 secondary payor provisions, including recoupment of credit 

22 balances. 

23 SEC. 1323. STRENGTHEN MEDICARE PROVIDER ENROLL24 MENT STANDARDS AND SAFEGUARDS. 

25 (a) STRENGTHENING MEDICARE PROVIDER NUM26 BERS.— 


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1 (1) SCREENING NEW PROVIDERS.—As a condi2 tion of a provider of services or a supplier, including 

3 durable medical equipment suppliers and home 

4 health agencies, applying for the first time for a pro5 vider number under the Medicare program under 

6 title XVIII of the Social Security Act and before 

7 granting billing privileges under such title, the Sec8 retary of Health and Human Services (referred to in 

9 this section as the ‘‘Secretary’’) shall screen the pro10 vider or supplier for a criminal background or other 

11 financial or operational irregularities through 

12 fingerprinting, licensure checks, site-visits, and other 

13 database checks. 

14 (2) APPLICATION FEES.—The Secretary shall 

15 impose an application charge on such a provider or 

16 supplier in order to cover the Secretary’s costs in 

17 performing the screening required under paragraph 

18 (1). 

19 (3) PROVISIONAL APPROVAL.—During an ini20 tial, provisional period (specified by the Secretary) 

21 in which such a provider or supplier has been issued 

22 such a number, the Secretary shall provide enhanced 

23 oversight of the activities of such provider or sup24 plier under the Medicare program, such as through 

25 prepayment review and payment limitations. 


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1 (4) PENALTIES FOR FALSE STATEMENTS.—In 

2 the case of a provider or supplier that knowingly 

3 makes a false statement in an application for such 

4 a number, the Secretary may exclude the provider or 

5 supplier from participation under the Medicare pro6 gram, or may impose a civil money penalty (in the 

7 amount described in section 1128A(a)(4) of the So8 cial Security Act), in the same manner as the Sec9 retary may impose such an exclusion or penalty 

10 under sections 1128 and 1128A, respectively, of 

11 such Act in the case of knowing presentation of a 

12 false claim described in section 1128A(a)(1)(A) of 

13 such Act. 

14 (5) DISCLOSURE REQUIREMENTS.—With re15 spect to approval of such an application, the Sec16 retary— 

17 (A) shall require applicants to disclose pre18 vious affiliation with enrolled entities that have 

19 uncollected debt related to the Medicare or 

20 Medicaid programs; 

21 (B) may deny approval if the Secretary de22 termines that these affiliations pose undue risk 

23 to the Medicare or Medicaid program, subject 

24 to an appeals process for the applicant as deter25 mined by the Secretary; and 


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1 (C) may implement enhanced safeguards 

2 (such as surety bonds). 

3 (b) MORATORIA.—The Secretary may impose mora4 toria on approval of provider and supplier numbers under 

5 the Medicare program for new providers of services and 

6 suppliers as determined necessary to prevent or combat 

7 fraud a period of delay for any one applicant cannot ex8 ceed 30 days unless cause is shown by the Secretary. 

9 (c) FUNDING.—There are authorized to be appro10 priated to carry out this section such sums as may be nec11 essary. 

12 SEC. 1324. TRACKING BANNED PROVIDERS ACROSS STATE 

13 LINES. 

14 (a) GREATER COORDINATION.—The Secretary of 

15 Health and Human Services (in this section referred to 

16 as the ‘‘Secretary’’) shall provide for increased coordina17 tion between the Administrator of the Centers for Medi18 care & Medicaid Services (in this section referred to as 

19 ‘‘CMS’’) and its regional offices to ensure that providers 

20 of services and suppliers that have operated in one State 

21 and are excluded from participation in the Medicare pro22 gram are unable to begin operation and participation in 

23 the Medicare program in another State. 

24 (b) IMPROVED INFORMATION SYSTEMS.— 


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1 (1) IN GENERAL.—The Secretary shall improve 

2 information systems to allow greater integration be3 tween databases under the Medicare program so 

4 that— 

5 (A) Medicare administrative contractors, 

6 fiscal intermediaries, and carriers have imme7 diate access to information identifying providers 

8 and suppliers excluded from participation in the 

9 Medicare and Medicaid program and other Fed10 eral health care programs; and 

11 (B) such information can be shared across 

12 Federal health care programs and agencies, in13 cluding between the Departments of Health and 

14 Human Services, the Social Security Adminis15 tration, the Department of Veterans Affairs, 

16 the Department of Defense, the Department of 

17 Justice, and the Office of Personnel Manage18 ment. 

19 (c) MEDICARE/MEDICAID ‘‘ONE PI’’ DATABASE.— 

20 The Secretary shall implement a database that includes 

21 claims and payment data for all components of the Medi22 care program and the Medicaid program. 

23 (d) AUTHORIZING EXPANDED DATA MATCHING.— 

24 Notwithstanding any provision of the Computer Matching 

25 and Privacy Protection Act of 1988 to the contrary— 


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1 (1) the Secretary and the Inspector General in 

2 the Department of Health and Human Services may 

3 perform data matching of data from the Medicare 

4 program with data from the Medicaid program; and 

5 (2) the Commissioner of Social Security and the 

6 Secretary may perform data matching of data of the 

7 Social Security Administration with data from the 

8 Medicare and Medicaid programs. 

9 (e) CONSOLIDATION OF DATABASES.—The Secretary 

10 shall consolidate and expand into a centralized database 

11 for individuals and entities that have been excluded from 

12 Federal health care programs the Healthcare Integrity 

13 and Protection Data Bank, the National Practitioner 

14 Data Bank, the List of Excluded Individuals/Entities, and 

15 a national patient abuse/neglect registry. 

16 (f) COMPREHENSIVE PROVIDER DATABASE.— 

17 (1) ESTABLISHMENT.—The Secretary shall es18 tablish a comprehensive database that includes infor19 mation on providers of services, suppliers, and re20 lated entities participating in the Medicare program, 

21 the Medicaid program, or both. Such database shall 

22 include, information on ownership and business rela23 tionships, history of adverse actions, results of site 

24 visits or other monitoring by any program. 


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1 (2) USE.—Prior to issuing a provider or sup2 plier number for an entity under the Medicare pro3 gram, the Secretary shall obtain information on the 

4 entity from such database to assure the entity quali5 fies for the issuance of such a number. 

6 (g) COMPREHENSIVE SANCTIONS DATABASE.—The 

7 Secretary shall establish a comprehensive sanctions data8 base on sanctions imposed on providers of services, sup9 pliers, and related entities. Such database shall be over10 seen by the Inspector General of the Department of 

11 Health and Human Services and shall be linked to related 

12 databases maintained by State licensure boards and by 

13 Federal or State law enforcement agencies. 

14 (h) ACCESS TO CLAIMS AND PAYMENT DATA15 BASES.—The Secretary shall ensure that the Inspector 

16 General of the Department of Health and Human Services 

17 and Federal law enforcement agencies have direct access 

18 to all claims and payment databases of the Secretary 

19 under the Medicare or Medicaid programs. 

20 (i) CIVIL MONEY PENALTIES FOR SUBMISSION OF

21 ERRONEOUS INFORMATION.—In the case of a provider of 

22 services, supplier, or other entity that knowingly submits 

23 erroneous information that serves as a basis for payment 

24 of any entity under the Medicare or Medicaid program, 

25 the Secretary may impose a civil money penalty of not to 


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1 exceed $50,000 for each such erroneous submission. A 

2 civil money penalty under this subsection shall be imposed 

3 and collected in the same manner as a civil money penalty 

4 under subsection (a) of section 1128A of the Social Secu5 rity Act is imposed and collected under that section. 

Æ 


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