I 

111TH CONGRESS 

2D SESSION H. R. 4696 

To expand the availability of health savings accounts, to eliminate restrictions 

on the deduction for medical expenses, and to provide for cooperative 

governing of individual health insurance coverage offered in interstate 

commerce. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2010 

Mrs. BACHMANN introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on 

Ways and Means, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To expand the availability of health savings accounts, to 

eliminate restrictions on the deduction for medical expenses, and to provide for cooperative governing of individual health insurance coverage offered in interstate 

commerce. 

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

3 SECTION 1. EXPANSION OF HEALTH SAVINGS ACCOUNTS. 

4 (a) REPEAL OF HEALTH INSURANCE REQUIREMENT

5 AS CONDITION OF DEDUCTION FOR CONTRIBUTIONS TO

6 HEALTH SAVINGS ACCOUNTS.—Subsection (a) of section 

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1 223 of the Internal Revenue Code of 1986 is amended by 

2 striking ‘‘who is an eligible individual for any month dur3 ing the taxable year’’. 

4 (b) INCREASE IN LIMITATION.—Paragraph (1) of 

5 section 223(b) of such Code is amended to read as follows: 

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

7 deduction under subsection (a) to an individual for 

8 the taxable year shall not exceed— 

9 ‘‘(A) in the case of an individual who is 

10 not married and does not have any qualifying 

11 children (within the meaning of section 152(c)), 

12 $8,500, and 

13 ‘‘(B) in the case of any other individual, 

14 $17,000.’’. 

15 (c) DISTRIBUTIONS FOR HEALTH INSURANCE

16 TREATED AS QUALIFIED DISTRIBUTIONS.—Paragraph 

17 (2) of section 223(d) of such Code is amended by striking 

18 subparagraphs (B) and (C). 

19 (d) CONFORMING AMENDMENTS.— 

20 (1) Subsection (b) of section 223 of such Code 

21 is amended by striking paragraphs (2) and (8) and 

22 by redesignating paragraphs (3) through (7) as 

23 paragraphs (2) through (6), respectively. 

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1 (2) Paragraph (4) of section 223(b) of such 

2 Code, as redesignated by paragraph (1), is amended 

3 to read as follows: 

4 ‘‘(4) SPECIAL RULE FOR MARRIED INDIVID5 UALS.—In the case of individuals who are married 

6 to each other, the limitation under paragraph (1) 

7 (without regard to any additional contribution 

8 amount under paragraph (2))— 

9 ‘‘(A) shall be reduced by the aggregate 

10 amount paid to Archer MSAs (within the mean11 ing of section 220) of such spouses for the tax12 able year, and 

13 ‘‘(B) after such reduction, shall be divided 

14 equally between them unless they agree on a 

15 different division.’’. 

16 (3)(A) Section 223 of such Code is amended by 

17 striking subsection (c). 

18 (B) Subparagraph (A) of section 223(b)(3) of 

19 such Code, as redesignated by paragraph (1), is 

20 amended by inserting ‘‘(within the meaning of sec21 tion 220)’’ after ‘‘Archer MSAs’’. 

22 (4) Section 223 of such Code is amended by 

23 striking subsection (g). 

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

25 this section shall apply to taxable years beginning after 

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1 the calendar year which includes the date of the enactment 

2 of this Act. 

3 SEC. 2. TAX DEDUCTIBILITY OF MEDICAL EXPENSES FOR 

4 INDIVIDUALS. 

5 (a) IN GENERAL.—Section 213(a) of the Internal 

6 Revenue Code of 1986 (relating to the treatment of med7 ical and dental expenses) is amended to read as follows: 

8 ‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be 

9 allowed as a deduction the expenses paid during the tax10 able year, not compensated for by insurance or otherwise, 

11 for medical care of the taxpayer, the taxpayer’s spouse, 

12 or a dependent (as defined in section 152, determined 

13 without regard to subsections (b)(1), (b)(2), and (d)(1)(B) 

14 thereof).’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 subsection (a) shall apply to taxable years beginning after 

17 the calendar year which includes the date of the enactment 

18 of this Act. 

19 SEC. 3. 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.) is amended by add23 ing at the end the following new part: 

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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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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). 

14 ‘‘(5) APPLICABLE STATE AUTHORITY.—The 

15 term ‘applicable State authority’ means, with respect 

16 to a health insurance issuer in a State, the State in17 surance commissioner or official or officials des18 ignated by the State to enforce the requirements of 

19 this title for the State with respect to the issuer. 

20 ‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 

21 term ‘hazardous financial condition’ means that, 

22 based on its present or reasonably anticipated finan23 cial condition, a health insurance issuer is unlikely 

24 to be able— 

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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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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 the 50 

15 States and includes the District of Columbia, Puerto 

16 Rico, the Virgin Islands, Guam, American Samoa, 

17 and the Northern Mariana Islands. 

18 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC19 TICES.—The term ‘unfair claims settlement prac20 tices’ means only the following practices: 

21 ‘‘(A) Knowingly misrepresenting to claim22 ants and insured individuals relevant facts or 

23 policy provisions relating to coverage at issue. 

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1 ‘‘(B) Failing to acknowledge with reason2 able promptness pertinent communications with 

3 respect to claims arising under policies. 

4 ‘‘(C) Failing to adopt and implement rea5 sonable standards for the prompt investigation 

6 and settlement of claims arising under policies. 

7 ‘‘(D) Failing to effectuate prompt, fair, 

8 and equitable settlement of claims submitted in 

9 which liability has become reasonably clear. 

10 ‘‘(E) Refusing to pay claims without con11 ducting a reasonable investigation. 

12 ‘‘(F) Failing to affirm or deny coverage of 

13 claims within a reasonable period of time after 

14 having completed an investigation related to 

15 those claims. 

16 ‘‘(G) A pattern or practice of compelling 

17 insured individuals or their beneficiaries to in18 stitute suits to recover amounts due under its 

19 policies by offering substantially less than the 

20 amounts ultimately recovered in suits brought 

21 by them. 

22 ‘‘(H) A pattern or practice of attempting 

23 to settle or settling claims for less than the 

24 amount that a reasonable person would believe 

25 the insured individual or his or her beneficiary 

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1 was entitled by reference to written or printed 

2 advertising material accompanying or made 

3 part of an application. 

4 ‘‘(I) Attempting to settle or settling claims 

5 on the basis of an application that was materi6 ally altered without notice to, or knowledge or 

7 consent of, the insured. 

8 ‘‘(J) Failing to provide forms necessary to 

9 present claims within 15 calendar days of a re10 quests with reasonable explanations regarding 

11 their use. 

12 ‘‘(K) Attempting to cancel a policy in less 

13 time than that prescribed in the policy or by the 

14 law of the primary State. 

15 ‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 

16 and abuse’ means an act or omission committed by 

17 a person who, knowingly and with intent to defraud, 

18 commits, or conceals any material information con19 cerning, one or more of the following: 

20 ‘‘(A) Presenting, causing to be presented 

21 or preparing with knowledge or belief that it 

22 will be presented to or by an insurer, a rein23 surer, broker or its agent, false information as 

24 part of, in support of or concerning a fact ma25 terial to one or more of the following: 

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1 ‘‘(i) An application for the issuance or 

2 renewal of an insurance policy or reinsur3 ance contract. 

4 ‘‘(ii) The rating of an insurance policy 

5 or reinsurance contract. 

6 ‘‘(iii) A claim for payment or benefit 

7 pursuant to an insurance policy or reinsur8 ance contract. 

9 ‘‘(iv) Premiums paid on an insurance 

10 policy or reinsurance contract. 

11 ‘‘(v) Payments made in accordance 

12 with the terms of an insurance policy or 

13 reinsurance contract. 

14 ‘‘(vi) A document filed with the com15 missioner or the chief insurance regulatory 

16 official of another jurisdiction. 

17 ‘‘(vii) The financial condition of an in18 surer or reinsurer. 

19 ‘‘(viii) The formation, acquisition, 

20 merger, reconsolidation, dissolution or 

21 withdrawal from one or more lines of in22 surance or reinsurance in all or part of a 

23 State by an insurer or reinsurer. 

24 ‘‘(ix) The issuance of written evidence 

25 of insurance. 

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1 ‘‘(x) The reinstatement of an insur2 ance policy. 

3 ‘‘(B) Solicitation or acceptance of new or 

4 renewal insurance risks on behalf of an insurer 

5 reinsurer or other person engaged in the busi6 ness of insurance by a person who knows or 

7 should know that the insurer or other person 

8 responsible for the risk is insolvent at the time 

9 of the transaction. 

10 ‘‘(C) Transaction of the business of insur11 ance in violation of laws requiring a license, cer12 tificate of authority or other legal authority for 

13 the transaction of the business of insurance. 

14 ‘‘(D) Attempt to commit, aiding or abet15 ting in the commission of, or conspiracy to com16 mit the acts or omissions specified in this para17 graph. 

18 ‘‘SEC. 2796. APPLICATION OF LAW. 

19 ‘‘(a) IN GENERAL.—The covered laws of the primary 

20 State shall apply to individual health insurance coverage 

21 offered by a health insurance issuer in the primary State 

22 and in any secondary State, but only if the coverage and 

23 issuer comply with the conditions of this section with re24 spect to the offering of coverage in any secondary State. 

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1 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC2 ONDARY STATE.—Except as provided in this section, a 

3 health insurance issuer with respect to its offer, sale, rat4 ing (including medical underwriting), renewal, and 

5 issuance of individual health insurance coverage in any 

6 secondary State is exempt from any covered laws of the 

7 secondary State (and any rules, regulations, agreements, 

8 or orders sought or issued by such State under or related 

9 to such covered laws) to the extent that such laws would— 

10 ‘‘(1) make unlawful, or regulate, directly or in11 directly, the operation of the health insurance issuer 

12 operating in the secondary State, except that any 

13 secondary State may require such an issuer— 

14 ‘‘(A) to pay, on a nondiscriminatory basis, 

15 applicable premium and other taxes (including 

16 high risk pool assessments) which are levied on 

17 insurers and surplus lines insurers, brokers, or 

18 policyholders under the laws of the State; 

19 ‘‘(B) to register with and designate the 

20 State insurance commissioner as its agent solely 

21 for the purpose of receiving service of legal doc22 uments or process; 

23 ‘‘(C) to submit to an examination of its fi24 nancial condition by the State insurance com25 missioner in any State in which the issuer is 

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1 doing business to determine the issuer’s finan2 cial condition, if— 

3 ‘‘(i) the State insurance commissioner 

4 of the primary State has not done an ex5 amination within the period recommended 

6 by the National Association of Insurance 

7 Commissioners; and 

8 ‘‘(ii) any such examination is con9 ducted in accordance with the examiners’ 

10 handbook of the National Association of 

11 Insurance Commissioners and is coordi12 nated to avoid unjustified duplication and 

13 unjustified repetition; 

14 ‘‘(D) to comply with a lawful order 

15 issued— 

16 ‘‘(i) in a delinquency proceeding com17 menced by the State insurance commis18 sioner if there has been a finding of finan19 cial impairment under subparagraph (C); 

20 or 

21 ‘‘(ii) in a voluntary dissolution pro22 ceeding; 

23 ‘‘(E) to comply with an injunction issued 

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1 leging that the issuer is in hazardous financial 

2 condition; 

3 ‘‘(F) to participate, on a nondiscriminatory 

4 basis, in any insurance insolvency guaranty as5 sociation or similar association to which a 

6 health insurance issuer in the State is required 

7 to belong; 

8 ‘‘(G) to comply with any State law regard9 ing fraud and abuse (as defined in section 

10 2795(10)), except that if the State seeks an in11 junction regarding the conduct described in this 

12 subparagraph, such injunction must be obtained 

13 from a court of competent jurisdiction; 

14 ‘‘(H) to comply with any State law regard15 ing unfair claims settlement practices (as de16 fined in section 2795(9)); or 

17 ‘‘(I) to comply with the applicable require18 ments for independent review under section 

19 2798 with respect to coverage offered in the 

20 State; 

21 ‘‘(2) require any individual health insurance 

22 coverage issued by the issuer to be countersigned by 

23 an insurance agent or broker residing in that Sec24 ondary State; or 

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1 ‘‘(3) otherwise discriminate against the issuer 

2 issuing insurance in both the primary State and in 

3 any secondary State. 

4 ‘‘(c) CLEAR AND CONSPICUOUS DISCLOSURE.—A 

5 health insurance issuer shall provide the following notice, 

6 in 12-point bold type, in any insurance coverage offered 

7 in a secondary State under this part by such a health in8 surance issuer and at renewal of the policy, with the 5 

9 blank spaces therein being appropriately filled with the 

10 name of the health insurance issuer, the name of primary 

11 State, the name of the secondary State, the name of the 

12 secondary State, and the name of the secondary State, re13 spectively, for the coverage concerned: 

14 ‘Notice: This policy is issued by lllll and 

15 is governed by the laws and regulations of the 

16 State of lllll, and it has met all the laws 

17 of that State as determined by that State’s De18 partment of Insurance. This policy may be 

19 less expensive than others because it is not 

20 subject to all of the insurance laws and regu21 lations of the State of lllll, including 

22 coverage of some services or benefits man23 dated by the law of the State of lllll. Ad24 ditionally, this policy is not subject to all of 

25 the consumer protection laws or restrictions 

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1 on rate changes of the State of lllll. As 

2 with all insurance products, before pur3 chasing this policy, you should carefully re4 view the policy and determine what health 

5 care services the policy covers and what bene6 fits it provides, including any exclusions, limi7 tations, or conditions for such services or ben8 efits.’ 

9 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

10 AND PREMIUM INCREASES.— 

11 ‘‘(1) IN GENERAL.—For purposes of this sec12 tion, a health insurance issuer that provides indi13 vidual health insurance coverage to an individual 

14 under this part in a primary or secondary State may 

15 not upon renewal— 

16 ‘‘(A) move or reclassify the individual in17 sured under the health insurance coverage from 

18 the class such individual is in at the time of 

19 issue of the contract based on the health-status 

20 related factors of the individual; or 

21 ‘‘(B) increase the premiums assessed the 

22 individual for such coverage based on a health 

23 status-related factor or change of a health sta24 tus-related factor or the past or prospective 

25 claim experience of the insured individual. 

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1 ‘‘(2) CONSTRUCTION.—Nothing in paragraph 

2 (1) shall be construed to prohibit a health insurance 

3 issuer— 

4 ‘‘(A) from terminating or discontinuing 

5 coverage or a class of coverage in accordance 

6 with subsections (b) and (c) of section 2742; 

7 ‘‘(B) from raising premium rates for all 

8 policy holders within a class based on claims ex9 perience; 

10 ‘‘(C) from changing premiums or offering 

11 discounted premiums to individuals who engage 

12 in wellness activities at intervals prescribed by 

13 the issuer, if such premium changes or incen14 tives— 

15 ‘‘(i) are disclosed to the consumer in 

16 the insurance contract; 

17 ‘‘(ii) are based on specific wellness ac18 tivities that are not applicable to all indi19 viduals; and 

20 ‘‘(iii) are not obtainable by all individ21 uals to whom coverage is offered; 

22 ‘‘(D) from reinstating lapsed coverage; or 

23 ‘‘(E) from retroactively adjusting the rates 

24 charged an insured individual if the initial rates 

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1 were set based on material misrepresentation by 

2 the individual at the time of issue. 

3 ‘‘(e) PRIOR OFFERING OF POLICY IN PRIMARY

4 STATE.—A health insurance issuer may not offer for sale 

5 individual health insurance coverage in a secondary State 

6 unless that coverage is currently offered for sale in the 

7 primary State. 

8 ‘‘(f) LICENSING OF AGENTS OR BROKERS FOR

9 HEALTH INSURANCE ISSUERS.—Any State may require 

10 that a person acting, or offering to act, as an agent or 

11 broker for a health insurance issuer with respect to the 

12 offering of individual health insurance coverage obtain a 

13 license from that State, with commissions or other com14 pensation subject to the provisions of the laws of that 

15 State, except that a State may not impose any qualifica16 tion or requirement which discriminates against a non17 resident agent or broker. 

18 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN19 SURANCE COMMISSIONER.—Each health insurance issuer 

20 issuing individual health insurance coverage in both pri21 mary and secondary States shall submit— 

22 ‘‘(1) to the insurance commissioner of each 

23 State in which it intends to offer such coverage, be24 fore it may offer individual health insurance cov25 erage in such State— 

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1 ‘‘(A) a copy of the plan of operation or fea2 sibility study or any similar statement of the 

3 policy being offered and its coverage (which 

4 shall include the name of its primary State and 

5 its principal place of business); 

6 ‘‘(B) written notice of any change in its 

7 designation of its primary State; and 

8 ‘‘(C) written notice from the issuer of the 

9 issuer’s compliance with all the laws of the pri10 mary State; and 

11 ‘‘(2) to the insurance commissioner of each sec12 ondary State in which it offers individual health in13 surance coverage, a copy of the issuer’s quarterly fi14 nancial statement submitted to the primary State, 

15 which statement shall be certified by an independent 

16 public accountant and contain a statement of opin17 ion on loss and loss adjustment expense reserves 

18 made by— 

19 ‘‘(A) a member of the American Academy 

20 of Actuaries; or 

21 ‘‘(B) a qualified loss reserve specialist. 

22 ‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 

23 Nothing in this section shall be construed to affect the 

24 authority of any Federal or State court to enjoin— 

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1 ‘‘(1) the solicitation or sale of individual health 

2 insurance coverage by a health insurance issuer to 

3 any person or group who is not eligible for such in4 surance; or 

5 ‘‘(2) the solicitation or sale of individual health 

6 insurance coverage that violates the requirements of 

7 the law of a secondary State which are described in 

8 subparagraphs (A) through (H) of section 

9 2796(b)(1). 

10 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD11 MINISTRATIVE ACTION.—Nothing in this section shall be 

12 construed to affect the authority of any State to enjoin 

13 conduct in violation of that State’s laws described in sec14 tion 2796(b)(1). 

15 ‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 

16 ‘‘(1) IN GENERAL.—Subject to the provisions of 

17 subsection (b)(1)(G) (relating to injunctions) and 

18 paragraph (2), nothing in this section shall be con19 strued to affect the authority of any State to make 

20 use of any of its powers to enforce the laws of such 

21 State with respect to which a health insurance issuer 

22 is not exempt under subsection (b). 

23 ‘‘(2) COURTS OF COMPETENT JURISDICTION.— 

24 If a State seeks an injunction regarding the conduct 

25 described in paragraphs (1) and (2) of subsection 

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1 (h), such injunction must be obtained from a Fed2 eral or State court of competent jurisdiction. 

3 ‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 

4 section shall affect the authority of any State to bring ac5 tion in any Federal or State court. 

6 ‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 

7 this section shall be construed to affect the applicability 

8 of State laws generally applicable to persons or corpora9 tions. 

10 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

11 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

12 health insurance issuer is offering coverage in a primary 

13 State that does not accommodate residents of secondary 

14 States or does not provide a working mechanism for resi15 dents of a secondary State, and the issuer is offering cov16 erage under this part in such secondary State which has 

17 not adopted a qualified high risk pool as its acceptable 

18 alternative mechanism (as defined in section 2744(c)(2)), 

19 the issuer shall, with respect to any individual health in20 surance coverage offered in a secondary State under this 

21 part, comply with the guaranteed availability requirements 

22 for eligible individuals in section 2741. 

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1 ‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 

2 BEFORE ISSUER MAY SELL INTO SECONDARY 

3 STATES. 

4 ‘‘A health insurance issuer may not offer, sell, or 

5 issue individual health insurance coverage in a secondary 

6 State if the State insurance commissioner does not use 

7 a risk-based capital formula for the determination of cap8 ital and surplus requirements for all health insurance 

9 issuers. 

10 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE11 DURES. 

12 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur13 ance issuer may not offer, sell, or issue individual health 

14 insurance coverage in a secondary State under the provi15 sions of this title unless— 

16 ‘‘(1) both the secondary State and the primary 

17 State have legislation or regulations in place estab18 lishing an independent review process for individuals 

19 who are covered by individual health insurance cov20 erage, or 

21 ‘‘(2) in any case in which the requirements of 

22 subparagraph (A) are not met with respect to the ei23 ther of such States, the issuer provides an inde24 pendent review mechanism substantially identical (as 

25 determined by the applicable State authority of such 

26 State) to that prescribed in the ‘Health Carrier Exmstockstill on DSKH9S0YB1PROD with BILLS

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1 ternal Review Model Act’ of the National Association 

2 of Insurance Commissioners for all individuals who 

3 purchase insurance coverage under the terms of this 

4 part, except that, under such mechanism, the review 

5 is conducted by an independent medical reviewer, or 

6 a panel of such reviewers, with respect to whom the 

7 requirements of subsection (b) are met. 

8 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

9 REVIEWERS.—In the case of any independent review 

10 mechanism referred to in subsection (a)(2)— 

11 ‘‘(1) IN GENERAL.—In referring a denial of a 

12 claim to an independent medical reviewer, or to any 

13 panel of such reviewers, to conduct independent 

14 medical review, the issuer shall ensure that— 

15 ‘‘(A) each independent medical reviewer 

16 meets the qualifications described in paragraphs 

17 (2) and (3); 

18 ‘‘(B) with respect to each review, each re19 viewer meets the requirements of paragraph (4) 

20 and the reviewer, or at least 1 reviewer on the 

21 panel, meets the requirements described in 

22 paragraph (5); and 

23 ‘‘(C) compensation provided by the issuer 

24 to each reviewer is consistent with paragraph 

25 (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 1 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. 2799. 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 this 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. 

Æ 

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