II 

110TH CONGRESS 

1ST SESSION S. 1783 

To provide 10 steps to transform health care in America. 

IN THE SENATE OF THE UNITED STATES 

JULY 12, 2007 

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

the Committee on Finance 

A BILL 

To provide 10 steps to transform health care in America. 

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 ‘‘Ten Steps to Transform Health Care in America Act’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Purposes. 

Sec. 3. Definitions. 

TITLE I—AFFORDABLE HEALTH INSURANCE COVERAGE 

Subtitle A—Individual Coverage Responsibility and Availability of Core Plan 

Options 

Sec. 101. Coverage responsibility. 

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Sec. 102. Qualified core plans. 

Sec. 103. Qualified core compatible plans. 

Sec. 104. Certification. 

Sec. 105. State-based risk adjustments. 

Sec. 106. Relation to self-insured plans. 

Sec. 107. State flexibility and enforcement. 

Subtitle B—Standard Deduction for Health Insurance and Related Provisions 

Sec. 121. Amendment of 1986 Code. 

Sec. 122. Standard deduction for health insurance. 

Sec. 123. Changes to existing tax preferences for medical coverage and costs 

for individuals eligible for standard deduction for health insurance. 

Sec. 124. Exclusion of standard deduction for health insurance from employment taxes. 

Sec. 125. Information reporting. 

Sec. 126. Reduction of phaseout for earned income credit. 

Subtitle C—Health Insurance Tax Credit for the Purchase of Health 

Insurance 

PART I—REFUNDABLE HEALTH INSURANCE TAX CREDIT

Sec. 131. Refundable credit for health insurance coverage. 

Sec. 132. Advance payment of credit for purchasers of qualified health insurance. 

Sec. 133. Designation of health insurance status required by individuals on 

Federal income tax returns. 

Subtitle D—Education and Outreach 

Sec. 141. Notice to taxpayers of availability of standard deduction for health 

insurance and refundable health insurance credit. 

Sec. 142. Optional enrollment and outreach. 

TITLE II—INCREASING INSURANCE MARKET PORTABILITY AND 

AFFORDABILITY 

Subtitle A—Merging and Improving Insurance Markets 

Sec. 201. Development of merged and improved State insurance market standards. 

Sec. 202. Modifications relating to self-funded group health plans. 

Sec. 203. Legislative proposals. 

Sec. 204. Enforcement. 

Subtitle B—Reduction in Premium Variation and Health Status 

Discrimination 

Sec. 211. Development of standards for reduction in premium variation and 

health status discrimination among enrollees. 

Sec. 212. Enforcement. 

Subtitle C—Enhanced Marketplace Pooling and Related Market Rating 

PART I—ENHANCED MARKETPLACE POOLS

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Sec. 245. Rules governing enhanced marketplace pools. 

Sec. 246. Cooperation between Federal and State authorities. 

Sec. 247. Effective date and transitional and other rules. 

PART II—MARKET RELIEF

Sec. 251. Market relief. 

PART III—HARMONIZATION OF HEALTH INSURANCE STANDARDS

Sec. 261. Health Insurance Standards Harmonization. 

TITLE III—AFFORDABLE ACCESS TO HEALTH CARE FOR ALL 

AMERICANS 

Subtitle A—Improving the Quality of Health Care by More Effectively Using 

Health Information Technology 

Sec. 300. Short title. 

PART I—HEALTH INFORMATION TECHNOLOGY

SUBPART A—IMPROVING THE INTEROPERABILITY OF HEALTH INFORMATION

TECHNOLOGY

Sec. 301. Improving health care quality, safety, and efficiency. 

SUBPART B—FACILITATING THE WIDESPREAD ADOPTION OF INTEROPERABLE

HEALTH INFORMATION TECHNOLOGY

Sec. 305. Facilitating the widespread adoption of interoperable health information technology. 

SUBPART C—IMPROVING THE QUALITY OF HEALTH CARE

Sec. 311. Consensus process for the adoption of quality measures for use in the 

nationwide interoperable health information technology infrastructure. 

SUBPART D—PRIVACY AND SECURITY

Sec. 321. Privacy and security. 

SUBPART E—MISCELLANEOUS PROVISIONS

Sec. 331. GAO study. 

Sec. 332. Health information technology resource center. 

Sec. 333. Facilitating the provision of telehealth services across State lines. 

PART II—MAKING HEALTH CARE MORE ACCESSIBLE FOR ALL AMERICANS

Sec. 341. Reauthorization of certain telehealth programs. 

Sec. 342. Quality improvement activities. 

Sec. 343. Sense of the senate regarding physician payments under medicare. 

Subtitle B—Increasing Access to Physicians and Nurses 

Sec. 351. Reauthorization of programs and miscellaneous amendments. 

Sec. 352. Nurse workforce enhancement. 

Sec. 353. Visas for registered nurses. 

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Sec. 354. MedPAC study and report on the impact of payment caps for IME 

and GME. 

Subtitle C—Increasing Access to Primary Care 

Sec. 361. Reauthorization of the community health center programs. 

Sec. 362. Reauthorization of loan repayment programs of the National Health 

Service Corps. 

Sec. 363. Clarification of authority for convenient care clinics to participate in 

Medicaid and SCHIP. 

Subtitle D—Rural Health Care 

Sec. 371. Reathorization of rural health care programs. 

Subtitle E—Long Term Care 

Sec. 381. Sense of the Senate. 

Sec. 382. Living wills. 

Sec. 383. Increasing Senior Choice and Access to Community-Based Long 

Term Care. 

Subtitle F—Fair and Reliable Medical Justice 

Sec. 391. Short title. 

Sec. 392. Purposes. 

Sec. 393. State demonstration programs to evaluate alternatives to current 

medical tort litigation. 

1 SEC. 2. PURPOSES. 

2 It is the purpose of this Act to— 

3 (1) eliminate unfair tax treatment of health in4 surance thereby expanding choices, coverage, and 

5 control over health care for all Americans; 

6 (2) increase affordable options for working fam7 ilies to purchase health insurance through a stand8 ard tax deduction; 

9 (3) ensure that affordable health insurance is 

10 available to low-income individuals through the pro11 vision of a refundable, advanceable, assignable tax12 based subsidy; 

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1 (4) provide cross-State pooling to reduce health 

2 care costs and increase accessibility for small busi3 ness owners, unions, associations, and their workers, 

4 members, and families; 

5 (5) blend the individual and group health insur6 ance markets to extend important Health Insurance 

7 Portability and Accountability Act portability protec8 tions to the individual market so that insurance se9 curity can better move with an individual from job 

10 to job; 

11 (6) emphasize preventive health care and help 

12 individuals with chronic diseases better manage their 

13 health so America will finally have health care and 

14 not sick care; 

15 (7) give individuals the choice to convert the 

16 value of Medicaid and SCHIP program benefits into 

17 private health insurance, putting Americans in con18 trol of their health care, not the Federal govern19 ment; 

20 (8) save lives and money by better coordinating 

21 health information technology to improve health care 

22 delivery; 

23 (9) increase access to primary care in rural and 

24 frontier areas by helping future providers and nurses 

25 pay for their education, and giving seniors more opmstockstill on PROD1PC66 with BILLS

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1 tions to receive care in their homes and commu2 nities; and 

3 (10) decrease the sky-rocketing cost of health 

4 care by restoring reliability in our medical justice 

5 system through State-based solutions. 

6 SEC. 3. DEFINITIONS. 

7 Except as otherwise provided, in this Act: 

8 (1) ADULT INDIVIDUAL.—The term ‘‘adult indi9 vidual’’ means an individual who— 

10 (A) is— 

11 (i) age 19 or older; 

12 (ii) a resident of a State; 

13 (iii)(I) a United States citizen; or 

14 (II) an alien with permanent resi15 dence; and 

16 (iv) not a dependent child; and 

17 (B) in the case of an incarcerated indi18 vidual, such an individual who is incarcerated 

19 for less than 1 month. 

20 (2) ALIEN WITH PERMANENT RESIDENCE.— 

21 The term ‘‘alien with permanent residence’’ has the 

22 meaning given the term ‘‘qualified alien’’ in section 

23 431 of the Personal Responsibility and Work Oppor24 tunity Reconciliation Act of 1996 (8 U.S.C. 1641). 

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1 (3) APPLICABLE STATE LAW.—The term ‘‘ap2 plicable State law’’ means the health insurance and 

3 related laws and regulations of a State. 

4 (4) DEPENDENT CHILD.—The term ‘‘dependent 

5 child’’ has the meaning given the term ‘‘qualifying 

6 child’’ in section 152(c) of the Internal Revenue 

7 Code of 1986. 

8 (5) HEALTH INSURANCE ISSUER.—The term 

9 ‘‘health insurance issuer’’ means an insurance com10 pany, insurance service, or insurance organization 

11 (including a health maintenance organization, as de12 fined in paragraph (6)) which is licensed to engage 

13 in the business of insurance in a State and which is 

14 subject to State law which regulates insurance (with15 in the meaning of section 514(b)(2) of the Employee 

16 Retirement Income Security Act of 1974). 

17 (6) HEALTH MAINTENANCE ORGANIZATION.— 

18 The term ‘‘health maintenance organization’’ 

19 means— 

20 (A) a federally qualified health mainte21 nance organization (as defined in section 

22 1301(a) of the Public Health Service Act); 

23 (B) an organization recognized under State 

24 law as a health maintenance organization; or 

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1 (C) a similar organization regulated under 

2 State law for solvency in the same manner and 

3 to the same extent as such a health mainte4 nance organization. 

5 (7) QUALIFIED CORE COMPATIBLE PLAN.—The 

6 term ‘‘qualified core compatible plan’’ means a com7 patible qualified core plan that meets the require8 ments of section 103. 

9 (8) QUALIFIED CORE PLAN.—The term ‘‘quali10 fied core plan’’ means a qualified core plan described 

11 under section 102. 

12 (9) SECRETARY.—The term ‘‘Secretary’’ means 

13 the Secretary of Health and Human Services, unless 

14 expressly provided for otherwise in this Act. 

15 (10) STATE.—The term ‘‘State’’ means each of 

16 the several States of the United States, the District 

17 of Columbia, the Commonwealth of Puerto Rico, the 

18 Virgin Islands, American Samoa, Guam, the Com19 monwealth of the Northern Mariana Islands, and 

20 other territories of the United States. 

21 (11) STATE OF RESIDENCE.—The term ‘‘State 

22 of residence’’, with respect to an individual, means 

23 the State in which the individual has primary resi24 dence. 

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1 TITLE I—AFFORDABLE HEALTH 

2 INSURANCE COVERAGE 

3 Subtitle A—Individual Coverage 

4 Responsibility and Availability 

5 of Core Plan Options 

6 SEC. 101. COVERAGE RESPONSIBILITY. 

7 (a) INDIVIDUAL RESPONSIBILITY.— 

8 (1) ADULT INDIVIDUALS.—Not later than 3 

9 years after the date of enactment of this Act, each 

10 adult individual shall be encouraged to enroll in a 

11 qualified health plan that meets at least the require12 ments applied under section 224(d)(2) of the Inter13 nal Revenue Code of 1986. 

14 (2) DEPENDENT CHILDREN.—Each adult indi15 vidual enrolled in a health plan described in para16 graph (1) shall have the responsibility to enroll (or 

17 provide evidence of enrollment of) each dependent 

18 child of the adult individual in such a health plan, 

19 or in a Federal or State governmental health cov20 erage program for which such dependent child is eli21 gible and which does not otherwise qualify as a 

22 health plan for purposes of paragraph (1). 

23 (3) DETERMINATIONS OF ENROLLMENT.—An 

24 individual may demonstrate compliance with this 

25 subsection through— 

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1 (A) proof of enrollment of such individual 

2 and dependent children of such individual (if 

3 any) provided on the individual Federal tax re4 turn of the individual pursuant to regulations 

5 developed by the Secretary of the Treasury; or 

6 (B) proof of such enrollment obtained pur7 suant to automatic enrollment as provided for 

8 in subsection (d). 

9 (b) ELIGIBILITY FOR HEALTH INSURANCE ASSIST10 ANCE.—Subject to this subsection and subsection (c), an 

11 individual and such dependent children of such individual 

12 who is enrolled in a health plan described in subsection 

13 (a)(1) shall be eligible to elect to receive— 

14 (1) a standard Federal income tax deduction 

15 for health insurance; or 

16 (2) an income-based tax credit subsidy. 

17 (c) ENCOURAGEMENT.—Each State shall determine 

18 appropriate mechanisms, which may not include revoca19 tion or ineligibility for coverage under a qualified core plan 

20 or qualified core compatible plan, to encourage each adult 

21 individual to demonstrate coverage under a health plan de22 scribed in subsection (a)(1) for such individual and com23 pliance by such individual with the terms of paragraph (2) 

24 with respect to any dependent children of such individual. 

25 (d) AUTOMATIC ENROLLMENT.— 

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1 (1) IN GENERAL.—Each State shall implement 

2 mechanisms to automatically enroll an uninsured in3 dividual for health coverage if— 

4 (A) such individual presents for treatment 

5 to a licensed health care facility or provider 

6 without health coverage under a health plan de7 scribed in subsection (a)(1) or otherwise under 

8 a Federal or State government health coverage 

9 program; or 

10 (B) such individual designates the lack of 

11 such coverage on the Federal tax return filed by 

12 such individual. 

13 (2) TYPE OF PLAN.—The mechanisms imple14 mented under paragraph (1) shall ensure that an in15 dividual is automatically enrolled, on a randomized 

16 basis, in a qualified core plan offered in the State 

17 of residence of the individual, or in any Federal or 

18 State government health program if the individual is 

19 eligible for such enrollment. 

20 (3) COORDINATION.—The Secretary shall co21 ordinate with the Secretary of the Treasury and the 

22 State insurance commissioners to develop procedures 

23 for providing notification to relevant entities regard24 ing individuals who have indicated a lack of health 

25 coverage on Federal tax returns, or who have premstockstill on PROD1PC66 with BILLS

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1 sented to a licensed healthcare entity or provider as 

2 provided for in paragraph (1)(A). 

3 SEC. 102. QUALIFIED CORE PLANS. 

4 (a) OFFERING OF COVERAGE.—Each health insur5 ance issuer offering health insurance coverage in a State 

6 shall offer at least one certified qualified core plan to indi7 viduals residing in that State and shall market such plans 

8 in a manner that is substantially similar to the manner 

9 in which such issuer markets coverage or other health in10 surance plans such issuer offers in the State. If a State 

11 determines that a health insurance issuer is failing to offer 

12 (or market) such coverage in the State as provided for 

13 in this subsection, the State shall not license such issuer 

14 to offer health insurance coverage in such State (or revoke 

15 any existing license of such issuer effective upon the expi16 ration of the subsequent plan year). 

17 (b) CERTIFICATION.—Each State shall certify a plan 

18 as a qualified core plan if the plan meets the requirements 

19 of subsection (c). 

20 (c) REQUIREMENTS.— 

21 (1) IN GENERAL.—To be certified as a qualified 

22 core plan, the plan shall— 

23 (A) provide coverage for benefits, items, or 

24 services as required by the State; 

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1 (B) provide coverage for basic preventive 

2 items or services, as the State may define such 

3 items or services, in accordance with paragraph 

4 (2); 

5 (C) provide coverage for medical self-man6 agement and for items or services needed for 

7 such self-management, as the State may define 

8 such items or services; 

9 (D) require payment of the applicable 

10 standard premium for coverage under the plan 

11 (as determined in accordance with subsection 

12 (d)); 

13 (E) adhere to the cost sharing limitations 

14 prescribed under subsection (e); 

15 (F) provide for the submission of data as 

16 required under subsection (f); and 

17 (G) comply with any other requirements 

18 applicable under State law. 

19 (2) BASIC PREVENTIVE ITEMS OR SERVICES.— 

20 The basic preventive items or services for which cov21 erage shall be provided under a qualified core plan 

22 shall be determined— 

23 (A) pursuant to applicable State law; or 

24 (B) if no such State law is in effect, based 

25 on standards and guidelines issued by the Secmstockstill on PROD1PC66 with BILLS

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1 retary (in consultation with the National Asso2 ciation of Insurance Commissioners). 

3 (d) STANDARD PREMIUM AMOUNT.— 

4 (1) IN GENERAL.—Except as provided for in 

5 this subsection, the standard premium for coverage 

6 under a qualified core plan for the initial plan year 

7 following the date on which the requirement under 

8 section 101(a) applies shall be— 

9 (A) $2,500 for individual coverage; and 

10 (B) $5,000 for family coverage. 

11 (2) CPI ADJUSTMENT.—Each of the amounts 

12 provided for under paragraph (1) shall be annually 

13 increased, beginning in the second plan year fol14 lowing the date on which the requirement under sec15 tion 101(a) applies, by the percentage increase in 

16 the Consumer Price Index for the previous plan 

17 year. As used in the preceding sentence, the term 

18 ‘‘Consumer Price Index’’ means the last Consumer 

19 Price Index for all-urban consumers published by 

20 the Department of Labor. 

21 (e) COST SHARING LIMITATIONS.— 

22 (1) IN GENERAL.—A qualified core plan shall 

23 comply with the following cost sharing limitations: 

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1 (A) DEDUCTIBLES.—The amount of any 

2 deductible shall not exceed $2,500 for a plan 

3 year. 

4 (B) COPAYMENTS.—The amount of any 

5 copayments shall not exceed 20 percent. 

6 (C) ANNUAL LIMITS.—The annual limit on 

7 cost sharing payment shall not exceed $5,000. 

8 (2) ADJUSTMENT FOR INFLATION.—Each of 

9 the amounts provided for under paragraph (1) shall 

10 be annually increased, beginning in the second plan 

11 year following the date on which the requirement 

12 under section 101(a) applies, by the percentage in13 crease in the Consumer Price Index for the previous 

14 plan year. As used in the preceding sentence, the 

15 term ‘‘Consumer Price Index’’ means the last Con16 sumer Price Index for all-urban consumers published 

17 by the Department of Labor. 

18 (3) NO APPLICATION OF COST SHARING FOR

19 PREVENTION AND MEDICAL SELF-MANAGEMENT.—A 

20 qualified core plan may not impose cost sharing re21 quirements on— 

22 (A) basic preventive items or services; or 

23 (B) medical self-management items or 

24 services. 

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1 (4) DECERTIFICATION.—A State shall suspend 

2 or revoke the certification of any qualified core plan 

3 if the State determines that any policy or procedure 

4 implemented with respect to the plan has the effect, 

5 or likely effect, of materially altering the overall level 

6 of cost sharing obligations that may be required of 

7 enrollees under the plan. Notwithstanding the pre8 vious sentence, an individual covered under such a 

9 plan may continue coverage under such plan through 

10 the expiration of the current plan year, or if such ex11 piration date is less than 6 months from the date of 

12 decertification, for an additional plan year. 

13 (f) ACTUARIAL VALUE DATA AND APPLICATION.— 

14 (1) IN GENERAL.—A health insurance issuer 

15 shall annually submit to the State insurance com16 missioner and the Secretary a determination as to 

17 the aggregate actuarial value of each qualified core 

18 plan and qualified core compatible plan offered by 

19 the issuer in the State. In developing and submitting 

20 such data, the issuer shall utilize actuarial standards 

21 established by the National Association of Insurance 

22 Commissioners. 

23 (2) PUBLICATION AND SUBMISSION TO SEC24 RETARY.—A State insurance commissioner shall— 

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1 (A) compile all data received under para2 graph (1) with respect to the State; 

3 (B) publish such data in a manner that en4 ables individuals in the State to use such data 

5 in making health insurance decisions; and 

6 (C) submit such data in report form to the 

7 Secretary. 

8 (3) USE OF DATA.— 

9 (A) IN GENERAL.—The Secretary shall, 

10 using the data provided under paragraph 

11 (2)(C), annually publish a national standard 

12 qualified core plan actuarial value (referred to 

13 as the ‘‘National actuarial value’’). 

14 (B) QUALIFIED CORE COMPATIBLE

15 PLANS.—For provisions relating to the use of 

16 the National actuarial value with respect to 

17 qualified core compatible plans, see section 

18 103(c)(1)(D). 

19 (4) SUSPENSION OR REVOCATION OF CERTIFI20 CATION.—The State shall suspend or revoke the cer21 tification of any qualified core plan or qualified core 

22 compatible plan, upon the expiration of the subse23 quent plan year, for which a health insurance issuer 

24 has failed to submit data as required under para25 graph (1). 

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1 (g) APPLICATION TO STATE LAW.—Unless provided 

2 otherwise in this Act, nothing in this Act shall be con3 strued to preempt State laws relating to health insurance, 

4 including State benefit mandate laws, consumer protection 

5 requirements, solvency and related fiscal requirements for 

6 qualified core plans. 

7 (h) MARKET AVAILABILITY STUDY.— 

8 (1) ASSESSMENT.—Prior to the implementation 

9 of regulations relating to the certification of quali10 fied core plans under this Act, the Secretary, in con11 sultation with the National Association of Insurance 

12 Commissioners, shall conduct an assessment of the 

13 effect of the application of the National actuarial 

14 value as a requirement for certification of qualified 

15 core compatible plans under section103(c)(1)(D), in16 cluding the effect of such application on the afford17 ability of qualified core compatible plans, the entry 

18 of health insurance issuers into the qualified core 

19 plan and qualified core compatible plan market, and 

20 on health insurance market access, affordability, and 

21 competition. 

22 (2) REPORT.—The Secretary shall submit to 

23 Congress a report concerning the results of the as24 sessment conducted under paragraph (1). 

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1 SEC. 103. QUALIFIED CORE COMPATIBLE PLANS. 

2 (a) OFFERING OF COVERAGE.—A health insurance 

3 issuer offering health insurance coverage in a State may 

4 offer one or more certified qualified core compatible plans 

5 to individuals residing in that State. 

6 (b) CERTIFICATION.—Each State shall certify a plan 

7 as a qualified core compatible plan if the plan meets the 

8 requirements of subsection (c). 

9 (c) REQUIREMENTS.— 

10 (1) IN GENERAL.—To be certified as a qualified 

11 core compatible plan, the plan shall— 

12 (A) provide coverage for benefits, items, or 

13 services as required by the State; 

14 (B) provide coverage for basic preventive 

15 items or services; 

16 (C) provide coverage for medical self-man17 agement and for items or services needed for 

18 such self-management, as the State may define 

19 such items or services; 

20 (D) have an actuarial value that is not less 

21 than the national standard actuarial value de22 termined under section 102(f)(3)(A); and 

23 (E) comply with any other requirements 

24 imposed by the State. 

25 (2) BASIC PREVENTIVE ITEMS OR SERVICES.— 

26 The basic preventive items or services for which covmstockstill on PROD1PC66 with BILLS

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1 erage shall be provided under a qualified core com2 patible plan shall be determined is the same manner 

3 as provided for under section 102(c)(2). 

4 (3) PREMIUMS AND COST SHARING.—Except as 

5 provided in this Act, premium and cost sharing re6 quirements applicable to qualified core compatible 

7 plans shall be determined in accordance with appli8 cable State law. 

9 (d) APPLICATION OF STATE LAW.—Unless specifi10 cally provided otherwise in this Act, nothing in this Act 

11 shall be construed to preempt State laws relating to health 

12 insurance, including State benefit mandate laws, consumer 

13 protection requirements, and solvency and related fiscal 

14 requirements for qualified core compatible plans. 

15 SEC. 104. CERTIFICATION. 

16 (a) IN GENERAL.—A health insurance issuer shall 

17 submit an application to the State insurance commissioner 

18 for the certification of a health plan as a qualified core 

19 plan or a qualified core compatible plan for purposes of 

20 offering coverage under such plan in the State. 

21 (b) REGULATIONS.—The Secretary, in consultation 

22 with the National Association of Insurance Commis23 sioners, shall promulgate regulations that provide stand24 ards and procedures for the certification, and suspension 

25 or revocation of the certification, of qualified core plans 

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1 and qualified core compatible plans to ensure that such 

2 plans comply, and maintain such compliance, with the re3 quirements and standards applicable to such plans under 

4 this title. 

5 SEC. 105. STATE-BASED RISK ADJUSTMENTS. 

6 (a) IN GENERAL.—The State shall seek to lessen 

7 such material risk selection as may occur among qualified 

8 core plans, qualified compatible core plans, and other li9 censed health insurance products (not including self-in10 sured plans) through the application of State risk adjust11 ment requirements that are certified by the Secretary as 

12 meeting standards established by the Secretary (in con13 sultation with the National Association of Insurance Com14 missioners). 

15 (b) ASSESSMENT AND REPORT.— 

16 (1) IN GENERAL.—Prior to the development of 

17 standards under subsection (a), the Secretary, in 

18 consultation with the National Association of Insur19 ance Commissioners, shall conduct an assessment 

20 of— 

21 (A) the degree of the actual or actuarially 

22 anticipated material adverse selection among 

23 qualified core plans, qualified core compatible 

24 plans, and other insured health plans; and 

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1 (B) the comparative efficiency of State risk 

2 adjustment requirement options to minimize 

3 such hazards. 

4 (2) REPORT.—The Secretary shall submit a re5 port to Congress concerning the results of the as6 sessment conducted under paragraph (1). Such re7 port shall include such recommendations as the Sec8 retary may include for additional or future legisla9 tion to adjust the standards developed under sub10 section (a) if the Secretary determines that such leg11 islation is reasonably necessary to provide for the ef12 fective application of the requirements of subsection 

13 (a). 

14 SEC. 106. RELATION TO SELF-INSURED PLANS. 

15 (a) IN GENERAL.—An individual who is enrolled in 

16 health care coverage under a self-insured health plan (as 

17 defined for purposes of the Employee Retirement Income 

18 Security Act of 1974 (29 U.S.C. 1001 et seq.)) shall be 

19 deemed to be in compliance with the requirements of sec20 tion 101(a), and other than as expressly provided for oth21 erwise in this Act, current law with respect to such plans 

22 shall remain in effect. 

23 (b) DEMONSTRATION OF ACTUARIAL VALUE.—The 

24 health insurance issuer of a plan described in subsection 

25 (a), shall submit to the Secretary of Labor evidence demmstockstill on PROD1PC66 with BILLS

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1 onstrating that the coverage alternative involved meets the 

2 requirements of such subsection. 

3 (c) CERTIFICATION PROCESS.—Certification, or sus4 pension or revocation of certification, of health plans 

5 under this section shall be administered by the Secretary 

6 of Labor in consultation with the State insurance commis7 sioner. 

8 SEC. 107. STATE FLEXIBILITY AND ENFORCEMENT. 

9 (a) IN GENERAL.— 

10 (1) STATE AUTHORITY.—Subject to subsection 

11 (d), each State shall require that health insurance 

12 issuers that issue, sell, renew, or offer health insur13 ance coverage in the State meet the requirements es14 tablished under this subtitle with respect to such 

15 issuers and with respect to qualified core plans and 

16 qualified core compatible plans. 

17 (2) FAILURE TO IMPLEMENT REQUIRE18 MENTS.—In the case of a State that fails to sub19 stantially implement and enforce the requirements 

20 set forth in this subtitle with respect to health insur21 ance issuers in the State, the Secretary shall imple22 ment and enforce the requirements of this subtitle 

23 under subsection (c) insofar as they relate to the 

24 issuance, sale, renewal, and offering of qualified core 

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1 plans and qualified core compatible plans in such 

2 State. 

3 (b) PROCEDURE.— 

4 (1) PRESUMPTION.— 

5 (A) IN GENERAL.—Subject to the suc6 ceeding provisions of this subsection, a State is 

7 presumed to be implementing and enforcing 

8 this subtitle if, by not later than the date that 

9 is 6 months after the date of enactment of this 

10 Act, the chief executive officer of the State— 

11 (i) notifies the Secretary that the 

12 State has enacted or intends to enact (by 

13 not later than January 1, 2009, or July 1, 

14 2009 in the case of a State described in 

15 subparagraph (B)(ii)) any necessary legis16 lation to provide for the implementation 

17 and enforcement of such subtitle; and 

18 (ii) provides the Secretary with such 

19 information as the Secretary may require 

20 to review the legislation and its implemen21 tation (or proposed implementation) under 

22 this subsection. 

23 (B) DELAY PERMITTED FOR CERTAIN

24 STATES.— 

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1 (i) EFFECT OF DELAY.—In the case 

2 of a State described in clause (ii) that pro3 vides notice under subparagraph (A)(i), for 

4 the presumption to continue on and after 

5 July 1, 2009, the chief executive officer of 

6 the State by April 1, 2009— 

7 (I) must notify the Secretary 

8 that the State has enacted any nec9 essary legislation to provide for the 

10 implementation and enforcement of 

11 this subtitle as of July 1, 2009; and 

12 (II) must provide the Secretary 

13 with such information as the Sec14 retary may require to review the legis15 lation and its implementation (or pro16 posed implementation) under this sub17 section. 

18 (ii) STATES DESCRIBED.—A State de19 scribed in this clause is a State that has 

20 a legislature that does not meet within the 

21 12-month period beginning on the date of 

22 enactment of this Act. 

23 (C) CONTINUED APPLICATION.—In order 

24 for a State to continue to be presumed to be 

25 implementing and enforcing the requirements of 

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•S 1783 IS

1 this subtitle, the State shall provide the Sec2 retary every 3 years with information described 

3 in subparagraph (A)(ii) or (B)(i)(II) (as the 

4 case may be). 

5 (2) NOTICE.—If the Secretary finds, after re6 view of information provided under paragraph (1) 

7 and in consultation with the chief executive officer of 

8 the State and the insurance commissioner of the 

9 State, that the State is not implementing and en10 forcing the requirements of this subtitle, the Sec11 retary— 

12 (A) shall notify the State of— 

13 (i) such preliminary determination, 

14 and 

15 (ii) the consequences under paragraph 

16 (3) of a failure to carry out such imple17 mentation and enforcement; and 

18 (B) shall permit the State a reasonable op19 portunity in which to modify State law in a 

20 manner so that may be acceptable implementa21 tion and enforcement. 

22 (3) FINAL DETERMINATION.—If, after pro23 viding notice and opportunity under paragraph (2), 

24 the Secretary finds that the State is not imple25 menting or enforcing the requirements of this submstockstill on PROD1PC66 with BILLS

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•S 1783 IS

1 title, the Secretary shall notify the State of such fact 

2 and that the Secretary shall be responsible for en3 forcing such requirements in the State. 

4 (4) FUTURE ADOPTION OF MECHANISMS.—If a 

5 State, after the Secretary makes a notification de6 scribed in paragraph (3), submits the notice and in7 formation described in paragraph (1), unless the 

8 Secretary makes a finding described in paragraph 

9 (3) within the 90-day period beginning on the date 

10 of submission of the notice and information, the 

11 mechanism shall be considered to be an acceptable 

12 alternative mechanism for purposes of this section, 

13 effective 90 days after the end of such period, sub14 ject to the second sentence of paragraph (1). 

15 (c) SECRETARIAL ENFORCEMENT AUTHORITY.— 

16 (1) LIMITATION.—The provisions of this sub17 section shall apply with respect to the enforcement 

18 of a provision (or provisions) of this subtitle only— 

19 (A) as provided under subsection (a)(2); 

20 and 

21 (B) with respect to health insurance 

22 issuers and qualified core plans and qualified 

23 core compatible plans. 

24 (2) IMPOSITION OF PENALTIES.—In the cases 

25 described in paragraph (1): 

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•S 1783 IS

1 (A) IN GENERAL.—Subject to the suc2 ceeding provisions of this subsection, any health 

3 insurance issuer that fails to comply with a pro4 vision of this subtitle applicable to such issuer 

5 with respect to a qualified core plan or qualified 

6 core compatible plan is subject to a civil money 

7 penalty under this subsection. 

8 (B) AMOUNT OF PENALTY.— 

9 (i) IN GENERAL.—The maximum 

10 amount of penalty imposed under this 

11 paragraph is $100 for each day for each 

12 individual with respect to which such a 

13 failure occurs. 

14 (ii) CONSIDERATIONS IN IMPOSI15 TION.—In determining the amount of any 

16 penalty to be assessed under this para17 graph, the Secretary shall take into ac18 count the previous record of compliance of 

19 the issuer being assessed with the applica20 ble provisions of this subtitle and the grav21 ity of the violation. 

22 (iii) LIMITATIONS.— 

23 (I) PENALTY NOT TO APPLY

24 WHERE FAILURE NOT DISCOVERED

25 EXERCISING REASONABLE DILImstockstill on PROD1PC66 with BILLS

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•S 1783 IS

1 GENCE.—No civil money penalty shall 

2 be imposed under this paragraph on 

3 any failure during any period for 

4 which it is established to the satisfac5 tion of the Secretary that none of the 

6 entities against whom the penalty 

7 would be imposed knew, or exercising 

8 reasonable diligence would have 

9 known, that such failure existed. 

10 (II) PENALTY NOT TO APPLY TO

11 FAILURES CORRECTED WITHIN 30

12 DAYS.—No civil money penalty shall 

13 be imposed under this paragraph on 

14 any failure if such failure was due to 

15 reasonable cause and not to willful ne16 glect, and such failure is corrected 

17 during the 30-day period beginning on 

18 the first day any of the entities 

19 against whom the penalty would be 

20 imposed knew, or exercising reason21 able diligence would have known, that 

22 such failure existed. 

23 (C) ADMINISTRATIVE REVIEW.— 

24 (i) OPPORTUNITY FOR HEARING.— 

25 The entity assessed shall be afforded an 

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•S 1783 IS

1 opportunity for hearing by the Secretary 

2 upon request made within 30 days after 

3 the date of the issuance of a notice of as4 sessment. In such hearing the decision 

5 shall be made on the record pursuant to 

6 section 554 of title 5, United States Code. 

7 If no hearing is requested, the assessment 

8 shall constitute a final and unappealable 

9 order. 

10 (ii) HEARING PROCEDURE.—If a 

11 hearing is requested, the initial agency de12 cision shall be made by an administrative 

13 law judge, and such decision shall become 

14 the final order unless the Secretary modi15 fies or vacates the decision. Notice of in16 tent to modify or vacate the decision of the 

17 administrative law judge shall be issued to 

18 the parties within 30 days after the date of 

19 the decision of the judge. A final order 

20 which takes effect under this paragraph 

21 shall be subject to review only as provided 

22 under subparagraph (D). 

23 (D) JUDICIAL REVIEW.— 

24 (i) FILING OF ACTION FOR REVIEW.— 

25 Any entity against whom an order imposmstockstill on PROD1PC66 with BILLS

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•S 1783 IS

1 ing a civil money penalty has been entered 

2 after an agency hearing under this para3 graph may obtain review by the United 

4 States district court for any district in 

5 which such entity is located or the United 

6 States District Court for the District of 

7 Columbia by filing a notice of appeal in 

8 such court within 30 days from the date of 

9 such order, and simultaneously sending a 

10 copy of such notice by registered mail to 

11 the Secretary. 

12 (ii) CERTIFICATION OF ADMINISTRA13 TIVE RECORD.—The Secretary shall 

14 promptly certify and file in such court the 

15 record upon which the penalty was im16 posed. 

17 (iii) STANDARD FOR REVIEW.—The 

18 findings of the Secretary shall be set aside 

19 only if found to be unsupported by sub20 stantial evidence as provided by section 

21 706(2)(E) of title 5, United States Code. 

22 (iv) APPEAL.—Any final decision, 

23 order, or judgment of the district court 

24 concerning such review shall be subject to 

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•S 1783 IS

1 appeal as provided in chapter 83 of title 28 

2 of such Code. 

3 (E) FAILURE TO PAY ASSESSMENT; MAIN4 TENANCE OF ACTION.— 

5 (i) FAILURE TO PAY ASSESSMENT.—If 

6 any entity fails to pay an assessment after 

7 it has become a final and unappealable 

8 order, or after the court has entered final 

9 judgment in favor of the Secretary, the 

10 Secretary shall refer the matter to the At11 torney General who shall recover the 

12 amount assessed by action in the appro13 priate United States district court. 

14 (ii) NONREVIEWABILITY.—In such ac15 tion the validity and appropriateness of the 

16 final order imposing the penalty shall not 

17 be subject to review. 

18 (F) PAYMENT OF PENALTIES.—Except as 

19 otherwise provided, penalties collected under 

20 this paragraph shall be paid to the Secretary 

21 (or other officer) imposing the penalty and shall 

22 be available without appropriation and until ex23 pended for the purpose of enforcing the provi24 sions with respect to which the penalty was im25 posed. 

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•S 1783 IS

1 (d) PREEMPTION.— 

2 (1) IN GENERAL.—Subject to subsection (b), 

3 nothing in this subtitle shall be construed to prevent 

4 a State from establishing, implementing, or con5 tinuing in effect standards and requirements unless 

6 such standards and requirements prevent the appli7 cation of a requirement of this subtitle. 

8 (2) RULES OF CONSTRUCTION.—Except as oth9 erwise provided for in this Act, nothing in this sub10 title shall be construed to affect or modify the provi11 sions of section 514 of the Employee Retirement In12 come Security Act of 1974 (29 U.S.C. 1144). 

13 Subtitle B—Standard Deduction 

14 for Health Insurance and Re15 lated Provisions 

16 SEC. 121. AMENDMENT OF 1986 CODE. 

17 Except as otherwise expressly provided, whenever in 

18 this subtitle an amendment or repeal is expressed in terms 

19 of an amendment to, or repeal of, a section or other provi20 sion, the reference shall be considered to be made to a 

21 section or other provision of the Internal Revenue Code 

22 of 1986. 

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•S 1783 IS

1 SEC. 122. STANDARD DEDUCTION FOR HEALTH INSUR2 ANCE. 

3 (a) IN GENERAL.—Part VII of subchapter B of chap4 ter 1 (relating to additional itemized deductions for indi5 viduals) is amended by redesignating section 224 as sec6 tion 225 and by inserting after section 223 the following 

7 new section: 

8 ‘‘SEC. 224. STANDARD DEDUCTION FOR HEALTH INSUR9 ANCE. 

10 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi11 vidual, there shall be allowed as a deduction to the tax12 payer for the taxable year the standard deduction for 

13 health insurance. 

14 ‘‘(b) STANDARD DEDUCTION FOR HEALTH INSUR15 ANCE.—For purposes of this section— 

16 ‘‘(1) IN GENERAL.—The term ‘standard deduc17 tion for health insurance’ means the sum of the 

18 amounts determined under paragraph (2) with re19 spect to each individual for whom the taxpayer is al20 lowed a deduction under section 151 (relating to al21 lowance of deduction for personal exemptions) for 

22 the taxable year. 

23 ‘‘(2) ALLOWANCE FOR EACH INDIVIDUAL.—The 

24 amount determined under this paragraph with re25 spect to any individual is the sum of the monthly 

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•S 1783 IS

1 limitations for months during the taxable year that 

2 the individual is an eligible individual. 

3 ‘‘(3) MONTHLY LIMITATION.— 

4 ‘‘(A) IN GENERAL.—The monthly limita5 tion for any month is 1/12 of $7,500. 

6 ‘‘(B) COST-OF-LIVING ADJUSTMENT.— 

7 ‘‘(i) IN GENERAL.—In the case of tax8 able years beginning in calendar years 

9 after the first calendar year to which this 

10 section applies, the $7,500 amount under 

11 subparagraph (A) shall be increased by an 

12 amount equal to— 

13 ‘‘(I) such dollar amount, multi14 plied by 

15 ‘‘(II) the cost-of-living adjust16 ment determined under section 1(f)(3) 

17 for the calendar year in which such 

18 taxable year begins, determined by 

19 substituting ‘the calendar year pre20 ceding the first calendar year to which 

21 section 224 applies’ for ‘calendar year 

22 1992’ in subparagraph (B) thereof. 

23 ‘‘(ii) ROUNDING.—If any increase 

24 under clause (i) is not a multiple of $50, 

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•S 1783 IS

1 such increase shall be rounded to the near2 est multiple of $50. 

3 ‘‘(c) LIMITATIONS AND SPECIAL RULES RELATING

4 TO STANDARD DEDUCTION.—For purposes of this sec5 tion— 

6 ‘‘(1) ONLY 2 ELIGIBLE INDIVIDUALS TAKEN

7 INTO ACCOUNT.—A taxpayer shall not take into ac8 count more than 2 eligible individuals for any month 

9 in computing the standard deduction for health in10 surance for purposes of subsection (a). 

11 ‘‘(2) SPECIAL RULE FOR MARRIED INDIVIDUALS

12 FILING SEPARATELY.—In the case of a married indi13 vidual who files a separate return for the taxable 

14 year, the deduction allowed under subsection (a) 

15 shall be equal to one-half of the amount which would 

16 otherwise be determined under subsection (a) if such 

17 individual filed a joint return for the taxable year. 

18 ‘‘(3) DENIAL OF DEDUCTION TO DEPEND19 ENTS.—No deduction shall be allowed under this 

20 section to any individual with respect to whom a de21 duction under section 151 is allowable to another 

22 taxpayer for a taxable year beginning in the cal23 endar year in which such individual’s taxable year 

24 begins. 

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•S 1783 IS

1 ‘‘(4) COORDINATION WITH OTHER HEALTH TAX

2 INCENTIVES.— 

3 ‘‘(A) DENIAL OF DEDUCTION IF HEALTH

4 INSURANCE COSTS CREDIT ALLOWED.—No de5 duction shall be allowed under this section to 

6 any taxpayer if a credit is allowed to the tax7 payer under section 35 or 36 for the taxable 

8 year. 

9 ‘‘(B) REDUCTION FOR INSURANCE PUR10 CHASED WITH MSAOR HSAFUNDS.—The 

11 amount allowed as a deduction under subsection 

12 (a) for the taxable year shall be reduced by the 

13 aggregate amount— 

14 ‘‘(i) paid during the taxable year from 

15 an Archer MSA to which section 

16 220(d)(2)(B)(ii) (other than subclause (II) 

17 thereof) applies, and 

18 ‘‘(ii) paid during the taxable year 

19 from a health savings account to which 

20 section 223(d)(2)(C) (other than clause (ii) 

21 thereof) applies. 

22 ‘‘(5) SPECIAL RULE FOR DIVORCED PARENTS, 

23 ETC.—Notwithstanding subsection (b)(1), an indi24 vidual who is a child may be taken into account on 

25 the return of the parent other than the parent for 

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•S 1783 IS

1 whom a deduction with respect to the child is al2 lowed under section 151 for a taxable year beginning 

3 in a calendar year if— 

4 ‘‘(A) the parent for whom the deduction 

5 under section 151 is allowed for a taxable year 

6 beginning in such calendar year signs a written 

7 declaration (in such manner and form as the 

8 Secretary may by regulations prescribe) that 

9 such parent will not claim the deduction allow10 able under this section with respect to the child 

11 for taxable years beginning in such calendar 

12 year, and 

13 ‘‘(B) the parent for whom the deduction 

14 under section 151 is not allowed attaches such 

15 written declaration to the parent’s return for 

16 the taxable year beginning in such calendar 

17 year. 

18 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

19 section— 

20 ‘‘(1) ELIGIBLE INDIVIDUAL.— 

21 ‘‘(A) IN GENERAL.—The term ‘eligible in22 dividual’ means, with respect to any month, an 

23 individual who is covered under a qualified 

24 health plan as of the 1st day of such month. 

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•S 1783 IS

1 ‘‘(B) COVERAGE UNDER MEDICARE, MED2 ICAID, OR SCHIP AND GRANDFATHERED EM3 PLOYER COVERAGE.—The term ‘eligible indi4 vidual’ shall not include any individual who for 

5 any month is— 

6 ‘‘(i) entitled to benefits under part A 

7 of title XVIII of the Social Security Act or 

8 enrolled under part B of such title, 

9 ‘‘(ii) enrolled in the program under 

10 title XIX or XXI of such Act (other than 

11 under section 1928 of such Act), or 

12 ‘‘(iii) receiving benefits (other than 

13 under continuation coverage under section 

14 4980B) which constitute medical care from 

15 an employer— 

16 ‘‘(I) from whom such individual 

17 is separated from service at the time 

18 of receipt of such benefits, and 

19 ‘‘(II) after such separation, if 

20 such benefits began before January 1, 

21 2010, 

22 unless such individual is also covered by a 

23 qualified health plan as of the 1st day of such 

24 month. 

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•S 1783 IS

1 ‘‘(C) IDENTIFICATION REQUIREMENTS.— 

2 The term ‘eligible individual’ shall not include 

3 any individual for any month unless the policy 

4 number associated with coverage under the 

5 qualified health plan and the TIN of each eligi6 ble individual covered under such coverage for 

7 such month is included on the return for the 

8 taxable year in which such month occurs. 

9 ‘‘(2) QUALIFIED HEALTH PLAN.— 

10 ‘‘(A) IN GENERAL.—The term ‘qualified 

11 health plan’ means a health plan (within the 

12 meaning of section 223(c)(2), without regard to 

13 subparagraph (A)(i) thereof) which, under regu14 lations prescribed by the Secretary, meets the 

15 following requirements: 

16 ‘‘(i) The plan has a reasonable annual 

17 or lifetime benefit maximum. 

18 ‘‘(ii) The plan has coverage for inpa19 tient and outpatient care, emergency bene20 fits, and physician care. 

21 ‘‘(iii) No pre-existing condition limita22 tions are imposed with respect to any eligi23 ble individual. 

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•S 1783 IS

1 ‘‘(iv) The plan has coverage which 

2 meaningfully limits individual economic ex3 posure to extraordinary medical expenses 

4 ‘‘(B) EXCLUSION OF CERTAIN PLANS.— 

5 The term ‘qualified health plan’ does not in6 clude— 

7 ‘‘(i) a health plan if substantially all 

8 of its coverage is coverage described in sec9 tion 223(c)(1)(B), 

10 ‘‘(ii) any program or benefits referred 

11 to in clause (i), (ii), or (iii) of paragraph 

12 (1)(B), and 

13 ‘‘(iii) a medicare supplemental policy 

14 (as defined in section 1882 of the Social 

15 Security Act). 

16 ‘‘(e) REGULATIONS.—The Secretary may prescribe 

17 such regulations as may be necessary to carry out this 

18 section.’’. 

19 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI20 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

21 of section 62 is amended by inserting before the last sen22 tence at the end the following new paragraph: 

23 ‘‘(22) STANDARD DEDUCTION FOR HEALTH IN24 SURANCE.—The deduction allowed by section 224.’’. 

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•S 1783 IS

1 (c) ELECTION TO TAKE HEALTH INSURANCE COSTS

2 CREDIT.—Section 35(g) (relating to special rules for cred3 it for health insurance costs of eligible individuals) is 

4 amended by redesignating paragraph (9) as paragraph 

5 (10) and by inserting after paragraph (8) the following 

6 new paragraph: 

7 ‘‘(9) ELECTION NOT TO CLAIM CREDIT.—This 

8 section shall not apply to a taxpayer for any taxable 

9 year if such taxpayer elects to have this section not 

10 apply for such taxable year.’’. 

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

12 for part VII of subchapter B of chapter 1 is amended by 

13 striking the item relating to section 224 and adding at 

14 the end the following new items: 

‘‘Sec. 224. Standard deduction for health insurance. 

‘‘Sec. 225. Cross reference.’’. 

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

16 this section shall apply to taxable years beginning on or 

17 after the first day of the first calendar year in which oc18 curs the first date on which the requirement of section 

19 101(a) of this Act applies. 

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•S 1783 IS

1 SEC. 123. CHANGES TO EXISTING TAX PREFERENCES FOR 

2 MEDICAL COVERAGE AND COSTS FOR INDI3 VIDUALS ELIGIBLE FOR STANDARD DEDUC4 TION FOR HEALTH INSURANCE. 

5 (a) DEDUCTION FOR MEDICAL, DENTAL, ETC., EX6 PENSES.—Section 213 (relating to medical, dental, etc., 

7 expenses) is amended by adding at the end the following 

8 new subsection: 

9 ‘‘(f) TERMINATION OF DEDUCTION FOR INDIVIDUALS

10 NOT COVERED BY MEDICARE, MEDICAID, SCHIP, OR

11 GRANDFATHERED EMPLOYER PLANS.— 

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graph (2), no deduction shall be allowed under sub14 section (a) for any taxable year with respect to 

15 which a deduction under section 224 is allowable. 

16 ‘‘(2) EXCEPTION FOR INDIVIDUALS COVERED

17 BY MEDICARE, MEDICAID, SCHIP, OR GRAND18 FATHERED EMPLOYER PLANS.—Paragraph (1) shall 

19 not apply to an individual for any taxable year if 

20 such individual is not an eligible individual (as de21 fined in section 224(d)(1)) for any month during 

22 such taxable year by reason of coverage described in 

23 section 224(d)(1)(B).’’. 

24 (b) EXCLUSION FOR CONTRIBUTIONS BY EMPLOYER

25 TO ACCIDENT AND HEALTH PLANS.— 

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•S 1783 IS

1 (1) IN GENERAL.—Section 106 (relating to con2 tributions by employer to accident and health plans) 

3 is amended by adding at the end the following new 

4 subsection: 

5 ‘‘(f) SUBSECTIONS (a) AND (c) APPLY ONLY TO INDI6 VIDUALS COVERED BY MEDICARE, MEDICAID, SCHIP, OR

7 GRANDFATHERED EMPLOYER PLANS.— 

8 ‘‘(1) IN GENERAL.—Except as provided in para9 graph (2), subsections (a) and (c) shall not apply for 

10 any taxable year with respect to which a deduction 

11 under section 224 is allowable. 

12 ‘‘(2) EXCEPTION FOR INDIVIDUALS COVERED

13 BY MEDICARE, MEDICAID, SCHIP, OR GRAND14 FATHERED EMPLOYER PLANS.—Paragraph (1) shall 

15 not apply to an individual for any taxable year if 

16 such individual is not an eligible individual (as de17 fined in section 224(d)(1)) for any month during 

18 such taxable year by reason of coverage described in 

19 section 224(d)(1)(B).’’. 

20 (2) CONFORMING AMENDMENTS.— 

21 (A) Section 106(b)(1) is amended— 

22 (i) by inserting ‘‘gross income does 

23 not include’’ before ‘‘amounts contrib24 uted’’, and 

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•S 1783 IS

1 (ii) by striking ‘‘shall be treated as 

2 employer-provided coverage for medical ex3 penses under an accident or health plan’’. 

4 (B) Section 106(d)(1) is amended— 

5 (i) by inserting ‘‘gross income does 

6 not include’’ before ‘‘amounts contrib7 uted’’, and 

8 (ii) by striking ‘‘shall be treated as 

9 employer-provided coverage for medical ex10 penses under an accident or health plan’’. 

11 (c) AMOUNTS RECEIVED UNDER ACCIDENT AND

12 HEALTH PLANS.— 

13 (1) IN GENERAL.—Section 105 (relating to 

14 amounts received under accident and health plans) 

15 is amended by adding at the end the following new 

16 subsection: 

17 ‘‘(j) SECTION ONLY TO APPLY TO INDIVIDUALS COV18 ERED BY MEDICARE, MEDICAID, SCHIP, OR GRAND19 FATHERED EMPLOYER PLANS.— 

20 ‘‘(1) IN GENERAL.—Except as provided in para21 graph (2), subsection (b) shall not apply for any tax22 able year with respect to which a deduction under 

23 section 224 is allowable. 

24 ‘‘(2) EXCEPTION FOR INDIVIDUALS COVERED

25 BY MEDICARE, MEDICAID, SCHIP, OR GRANDmstockstill on PROD1PC66 with BILLS

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•S 1783 IS

1 FATHERED EMPLOYER PLANS.—Paragraph (1) shall 

2 not apply to an individual for any taxable year if 

3 such individual is not an eligible individual (as de4 fined in section 224(d)(1)) for any month during 

5 such taxable year by reason of coverage described in 

6 section 224(d)(1)(B).’’. 

7 (d) TERMINATION OF DEDUCTION FOR HEALTH IN8 SURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.— 

9 Subsection (l) of section 162 (relating to special rules for 

10 health insurance costs of self-employed individuals) is 

11 amended by adding at the end the following new para12 graph: 

13 ‘‘(6) TERMINATION.—This subsection shall not 

14 apply to taxable years with respect to which a deduc15 tion under section 224 is allowable.’’. 

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

17 this section shall apply to taxable years beginning on or 

18 after the first day of the first calendar year in which oc19 curs the first date on which the requirement of section 

20 101(a) of this Act applies. 

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•S 1783 IS

1 SEC. 124. EXCLUSION OF STANDARD DEDUCTION FOR 

2 HEALTH INSURANCE FROM EMPLOYMENT 

3 TAXES. 

4 (a) IN GENERAL.—Chapter 25 (relating to general 

5 provisions relating to employment taxes) is amended by 

6 adding at the end the following new section: 

7 ‘‘SEC. 3511. EXCLUSION OF STANDARD DEDUCTION FROM 

8 EMPLOYMENT TAXES. 

9 ‘‘(a) IN GENERAL.—For purposes of chapters 21, 22, 

10 and 23, each of the following amounts for any period (de11 termined without regard to this section) shall be reduced 

12 by the portion of the standard deduction for health insur13 ance (as defined in section 224) allocable to the period: 

14 ‘‘(1) The amount of wages determined under 

15 section 3121(a). 

16 ‘‘(2) The amount of compensation determined 

17 under section 3231(e). 

18 ‘‘(3) The amount of wages determined under 

19 section 3306(b). 

20 ‘‘(b) DETERMINATION OF STANDARD DEDUCTION

21 ALLOCABLE TO A PERIOD.—For purposes of subsection 

22 (a)— 

23 ‘‘(1) IN GENERAL.—The determination of the 

24 portion of the standard deduction for health insur25 ance allocable to a period shall be made on the basis 

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•S 1783 IS

1 of a qualified certificate of eligible coverage fur2 nished by the employee to the employer. 

3 ‘‘(2) QUALIFIED CERTIFICATE OF ELIGIBLE

4 COVERAGE.—The term ‘qualified certificate of eligi5 ble coverage’ means a statement of eligibility for the 

6 deduction allowable under section 224 which con7 tains such information, is in such form, and is pro8 vided at such times, as the Secretary may prescribe. 

9 ‘‘(3) ONLY 1 CERTIFICATE IN EFFECT AT A

10 TIME.—Except as provided by the Secretary, an em11 ployee may have only 1 qualified certificate of eligi12 ble coverage in effect for any period. 

13 ‘‘(4) ELECTION.—An employee may elect not to 

14 have this section apply for any period for purposes 

15 of chapter 21 or 22. 

16 ‘‘(c) RECONCILIATION OF ERRONEOUS PAYMENTS

17 TO BE MADE AT EMPLOYEE LEVEL.— 

18 ‘‘(1) IN GENERAL.—If the application of this 

19 subsection results in an incorrect amount being 

20 treated as wages or compensation for purposes of 

21 chapter 21, 22, or 23, whichever is applicable, with 

22 respect to any employee for 1 or more periods end23 ing within a taxable year of the employee— 

24 ‘‘(A) in the case of an aggregate overpay25 ment of the taxes imposed by any such chapter 

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•S 1783 IS

1 for all such periods, there shall be allowed as a 

2 credit against the tax imposed by chapter 1 for 

3 such taxable year on such employee an amount 

4 equal to the amount of such overpayment, and 

5 ‘‘(B) in the case of an aggregate under6 payment of the taxes imposed by any such 

7 chapter for all such periods, the employee shall 

8 be liable for payment of the entire amount of 

9 such underpayment. 

10 ‘‘(2) CREDITS TREATED AS REFUNDABLE.—For 

11 purposes of this title, any credit determined under 

12 paragraph (1)(A) or subsection (d)(2) shall be treat13 ed as if it were a credit allowed under subpart C of 

14 part IV of subchapter A of chapter 1. 

15 ‘‘(3) RULES FOR REPORTING AND COLLECTION

16 OF TAX.—Any tax required to be paid by an em17 ployee under paragraph (1)(B) shall be included 

18 with the employee’s return of Federal income tax for 

19 the taxable year. 

20 ‘‘(4) SECRETARIAL AUTHORITY.—The Secretary 

21 shall prescribe such rules as may be necessary to 

22 carry out the provisions of this subsection. 

23 ‘‘(d) PHASE IN.— 

24 ‘‘(1) IN GENERAL.—In the case of the first 3 

25 calendar years to which this section applies, submstockstill on PROD1PC66 with BILLS

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•S 1783 IS

1 section (a) shall apply to wages and compensation of 

2 an employee only for purposes of section 3101, 

3 3201, 3211, or 3301, whichever is applicable. 

4 ‘‘(2) CREDIT.—In the case of any taxable year 

5 beginning in a calendar year to which paragraph (1) 

6 applies, there shall be allowed as a credit against the 

7 tax imposed by chapter 1 for such taxable year on 

8 an employee an amount equal to the excess of— 

9 ‘‘(A) the tax imposed under section 3111 

10 or 3231, whichever is applicable, on the wages 

11 of the employee for the part of such calendar 

12 year in such taxable year, over 

13 ‘‘(B) the tax which would have been im14 posed under section 3111 or 3231, whichever is 

15 applicable, on the wages of the employee for the 

16 part of such calendar year in such taxable year 

17 if subsection (a) had applied for purposes of 

18 section 3111 or 3231.’’. 

19 (b) SELF-EMPLOYMENT INCOME.—Section 1402 (de20 fining net earnings from self-employment) is amended by 

21 adding at the end the following: 

22 ‘‘(l) STANDARD DEDUCTION FOR HEALTH INSUR23 ANCE.—For purposes of this chapter— 

24 ‘‘(1) IN GENERAL.—The self-employment in25 come of a taxpayer for any period (determined withmstockstill on PROD1PC66 with BILLS

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1 out regard to this subsection) shall be reduced by 

2 the excess (if any) of— 

3 ‘‘(A) the portion of the standard deduction 

4 for health insurance (as defined in section 224) 

5 allocable to the period, over 

6 ‘‘(B) the amount of any reduction in wages 

7 or compensation for such period under section 

8 3511. 

9 ‘‘(2) DETERMINATION OF STANDARD DEDUC10 TION ALLOCABLE TO A PERIOD.—For purposes of 

11 paragraph (1), the portion of the standard deduction 

12 allocable to any period shall be determined in a man13 ner similar to the manner under section 3511.’’. 

14 (c) CONFORMING AMENDMENTS.— 

15 (1) Section 3121(a)(2) is amended by inserting 

16 ‘‘which is excludable from gross income under sec17 tion 105 or 106’’ after ‘‘such payment)’’. 

18 (2) Subsection (a) of section 209 of the Social 

19 Security Act (42 U.S.C. 409) is amended by striking 

20 ‘‘or’’ at the end of paragraph (18), by striking the 

21 period at the end of paragraph (19) and inserting ‘‘; 

22 or’’, and by inserting after paragraph (19) the fol23 lowing new paragraph: 

24 ‘‘(20) any amount excluded from wages under 

25 section 3511(a) of the Internal Revenue Code of 

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1 1986 (relating to exclusion of standard deduction 

2 from employment taxes).’’. 

3 (3) Section 1324(b)(2) of title 31, United 

4 States Code, is amended by inserting ‘‘, or the credit 

5 under section 3511(c)(2) of such Code’’ before the 

6 period at the end. 

7 (4) Section 209(k)(2) of the Social Security Act 

8 is amended by redesignating subparagraphs (C) and 

9 (D) as subparagraphs (D) and (E), respectively, and 

10 by inserting after subparagraph (B) the following 

11 new subparagraph: 

12 ‘‘(C) by disregarding the exclusion from wages 

13 in subsection (a)(20),’’. 

14 (5) The table of sections for chapter 25 is 

15 amended by adding at the end the following new 

16 item: 

‘‘Sec. 3511. Exclusion of standard deduction from employment taxes.’’. 

17 (d) EFFECTIVE DATES.— 

18 (1) IN GENERAL.—Except as provided in para19 graph (2), the amendments made by this section 

20 shall apply to remuneration paid or accrued for peri21 ods on or after the first day of the first calendar 

22 year in which occurs the first date on which the re23 quirement of section 101(a) of this Act applies. 

24 (2) RECONCILIATION AND SELF-EMPLOYED.— 

25 Sections 3511(c) and (d)(2) of the Internal Revenue 

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1 Code of 1986 (as added by subsection (a)), and the 

2 amendments made by subsection (b), shall apply to 

3 taxable years beginning on or after the first day de4 scribed in paragraph (1). 

5 SEC. 125. INFORMATION REPORTING. 

6 (a) HEALTH PLAN PROVIDERS.—Subpart B of part 

7 III of subchapter A of chapter 61 (relating to information 

8 concerning transactions with other persons) is amended 

9 by adding at the end the following new section: 

10 ‘‘SEC. 6050W. COVERAGE UNDER QUALIFIED HEALTH PLAN. 

11 ‘‘(a) IN GENERAL.—Every person providing coverage 

12 under a qualified health plan (as defined in section 

13 224(d)(2)) during a calendar year shall, on or before Jan14 uary 31 of the succeeding year, make a return described 

15 in subsection (b) with respect to each individual who is 

16 covered by such person under a qualified health plan for 

17 any month during the calendar year. 

18 ‘‘(b) RETURN.—A return is described in this sub19 section if such return— 

20 ‘‘(1) is in such form as the Secretary pre21 scribes, and 

22 ‘‘(2) contains— 

23 ‘‘(A) the name of the person providing cov24 erage under the qualified health plan, 

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1 ‘‘(B) the name, address, and TIN of the 

2 individual covered by the plan, 

3 ‘‘(C) if such individual is the owner of the 

4 policy under which such plan is provided, the 

5 name, address, and TIN of each other indi6 vidual covered by such policy and the relation7 ship of each such individual to such owner, and 

8 ‘‘(D) the specific months of the year for 

9 which each individual referred to in subpara10 graph (B) is, as of the first day of each such 

11 month, covered by such plan. 

12 ‘‘(c) STATEMENT TO BE FURNISHED WITH RE13 SPECT TO WHOM INFORMATION IS REQUIRED.—Every 

14 person required to make a return under subsection (a) 

15 shall furnish to each individual whose name is required 

16 to be set forth in such return under subsection (b)(2)(A) 

17 a written statement showing— 

18 ‘‘(1) the name, address, and phone number of 

19 the information contact of the person required to 

20 make such return, and 

21 ‘‘(2) the information described in subsection 

22 (b)(2). 

23 The written statement required under the preceding sen24 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) was required to be made.’’. 

3 (b) EMPLOYERS.—Subsection (a) of section 6051 (re4 lating to requirement for employers to provide W-2 infor5 mation) is amended by striking ‘‘and’’ at the end of para6 graph (12), by striking the period at the end of paragraph 

7 (13) and inserting ‘‘, and’’, and by inserting after para8 graph (13) the following new paragraph: 

9 ‘‘(14) the value (determined under section 

10 4980B(f)(4)) of employer-provided coverage for each 

11 month under an accident or health plan and the cat12 egory of such coverage for purposes of section 

13 6116.’’. 

14 (c) APPLICATION TO RETIREES.—Subsection (a) of 

15 section 6051 is amended by adding at the end the fol16 lowing: ‘‘In the case of a retiree, this section shall (to the 

17 extent established by the Secretary by regulation) apply 

18 only with respect to paragraph (14).’’. 

19 (d) ASSESSABLE PENALTIES.— 

20 (1) Subparagraph (B) of section 6724(d)(1) of 

21 such Code (relating to definitions) is amended by re22 designating clauses (xv) through (xx) as clauses (xvi) 

23 through (xxi), respectively, and by inserting after 

24 clause (xi) the following new clause: 

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1 ‘‘(xv) section 6050W (relating to re2 turns relating to payments for qualified 

3 health insurance),’’. 

4 (2) Paragraph (2) of section 6724(d) of such 

5 Code is amended by striking the period at the end 

6 of subparagraph (CC) and inserting ‘‘, or’’ and by 

7 adding at the end the following new subparagraph: 

8 ‘‘(DD) section 6050W(d) (relating to re9 turns relating to payments for qualified health 

10 insurance).’’. 

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

12 for such subpart B is amended by adding at the end the 

13 following new item: 

‘‘Sec. 6050W. Coverage under qualified health plan.’’. 

14 (f) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to years beginning on or after the 

16 first day of the first calendar year in which occurs the 

17 first date on which the requirement of section 101(a) of 

18 this Act applies. 

19 SEC. 126. REDUCTION OF PHASEOUT FOR EARNED INCOME 

20 CREDIT. 

21 (a) IN GENERAL.—Paragraph (1) of section 32(b) 

22 (relating to percentages) is amended— 

23 (1) in subparagraph (A)— 

24 (A) by striking ‘‘15.98’’ and inserting 

25 ‘‘15’’, and 

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1 (B) by striking ‘‘21.06’’ and inserting 

2 ‘‘15’’, 

3 (2) in subparagraph (B)— 

4 (A) by striking ‘‘15.98’’ and inserting 

5 ‘‘15’’, and 

6 (B) by striking ‘‘20.22’’ and inserting 

7 ‘‘15’’, and 

8 (3) in subparagraph (C)— 

9 (A) by striking ‘‘15.98’’ and inserting 

10 ‘‘15’’, and 

11 (B) by striking ‘‘17.68’’ and inserting 

12 ‘‘15’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 subsection (a) shall apply to taxable years beginning on 

15 or after the first day of the first calendar year in which 

16 occurs the first date on which the requirement of section 

17 101(a) of this Act applies. 

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1 Subtitle C—Health Insurance Tax 

2 Credit for the Purchase of 

3 Health Insurance 

4 PART I—REFUNDABLE HEALTH INSURANCE TAX 

5 CREDIT 

6 SEC. 131. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

7 COVERAGE. 

8 (a) IN GENERAL.—Subpart C of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 (relating to refundable credits) is amended by redes11 ignating section 36 as section 37 and by inserting after 

12 section 35 the following new section: 

13 ‘‘SEC. 36. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

14 COVERAGE. 

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

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

17 by this subtitle an amount equal to the health insurance 

18 credit amount of the taxpayer for the taxable year. 

19 ‘‘(b) HEALTH INSURANCE CREDIT AMOUNT.—For 

20 purposes of this section— 

21 ‘‘(1) IN GENERAL.—The term ‘health insurance 

22 credit amount’ means, with respect to any taxable 

23 year, the lesser of— 

24 ‘‘(A) the sum of the amounts determined 

25 under paragraph (2) with respect to each indimstockstill on PROD1PC66 with BILLS

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1 vidual for whom the taxpayer is allowed a de2 duction under section 151 (relating to allowance 

3 of deduction for personal exemptions) for the 

4 taxable year, or 

5 ‘‘(B) an amount equal to twice the indi6 vidual annual limit in effect for the taxable year 

7 under paragraph (3). 

8 ‘‘(2) ALLOWANCE FOR EACH INDIVIDUAL.—The 

9 amount determined under this paragraph with re10 spect to any individual is the sum of the monthly 

11 limitations for coverage months of the individual oc12 curring during the taxable year. 

13 ‘‘(3) MONTHLY LIMITATION.— 

14 ‘‘(A) IN GENERAL.—The monthly limita15 tion for any month is 1/12 of the individual an16 nual limit for the taxable year. 

17 ‘‘(B) INDIVIDUAL ANNUAL LIMIT.—The in18 dividual annual limit is $2,500. 

19 ‘‘(C) COST-OF-LIVING ADJUSTMENT.— 

20 ‘‘(i) IN GENERAL.—In the case of tax21 able years beginning in calendar years 

22 after the first calendar year to which this 

23 section applies, the $2,500 amount under 

24 subparagraph (B) shall be increased by an 

25 amount equal to— 

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1 ‘‘(I) such dollar amount, multi2 plied by 

3 ‘‘(II) the cost-of-living adjust4 ment determined under section 1(f)(3) 

5 for the calendar year in which such 

6 taxable year begins, determined by 

7 substituting ‘the calendar year pre8 ceding the first calendar year to which 

9 section 36 applies’ for ‘calendar year 

10 1992’ in subparagraph (B) thereof. 

11 ‘‘(ii) ROUNDING.—If any increase 

12 under clause (i) is not a multiple of $50, 

13 such increase shall be rounded to the near14 est multiple of $50. 

15 ‘‘(4) COVERAGE MONTH.—For purposes of this 

16 subsection— 

17 ‘‘(A) IN GENERAL.—The term ‘coverage 

18 month’ means, with respect to an individual, 

19 any month if— 

20 ‘‘(i) as of the first day of such month 

21 such individual is covered by qualified 

22 health insurance, and 

23 ‘‘(ii) the premium for coverage under 

24 such insurance for such month is paid by 

25 the taxpayer. 

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1 ‘‘(B) EXCEPTION FOR EMPLOYER-SUB2 SIDIZED COVERAGE.—If an individual is eligible 

3 to participate for any month in any subsidized 

4 health plan maintained by any employer of the 

5 taxpayer or the taxpayer’s spouse, such month 

6 shall not be treated as a coverage month with 

7 respect to the individual. 

8 ‘‘(C) EXCEPTION FOR CERTAIN GOVERN9 MENTAL COVERAGE.—The term ‘coverage 

10 month’ shall not include any month with re11 spect to an individual if for such month the in12 dividual is— 

13 ‘‘(i) entitled to benefits under part A 

14 of title XVIII of the Social Security Act or 

15 enrolled under part B of such title, 

16 ‘‘(ii) enrolled in the program under 

17 title XIX or XXI of such Act (other than 

18 under section 1928 of such Act), unless 

19 the individual has elected under such pro20 gram to be enrolled for coverage under 

21 qualified health insurance for the month in 

22 lieu of coverage under such program, or 

23 ‘‘(iii) is entitled to any benefit 

24 under— 

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1 ‘‘(I) chapter 55 of title 10, 

2 United States Code, 

3 ‘‘(II) chapter 17 of title 38, 

4 United States Code, or 

5 ‘‘(III) any medical care program 

6 under the Indian Health Care Im7 provement Act. 

8 ‘‘(D) PRISONERS.—The term ‘coverage 

9 month’ shall not include any month with re10 spect to an individual if for such month the in11 dividual is imprisoned under Federal, State, or 

12 local authority for a period of at least 1 month. 

13 ‘‘(E) INSUFFICIENT PRESENCE IN UNITED

14 STATES.—The term ‘coverage month’ shall not 

15 include any month during a taxable year with 

16 respect to an individual if such individual is 

17 present in the United States on fewer than 183 

18 days during such year (determined in accord19 ance with section 7701(b)(7)). 

20 ‘‘(c) LIMITATIONS.— 

21 ‘‘(1) PHASEOUT OF CREDIT BASED ON AD22 JUSTED GROSS INCOME.— 

23 ‘‘(A) IN GENERAL.—If the taxpayer’s 

24 modified adjusted gross income exceeds the ap25 plicable threshold amount for any taxable year, 

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1 the amount allowed as a credit under subsection 

2 (a) (determined without regard to this para3 graph) shall be reduced (but not below zero) by 

4 the amount which bears the same ratio to such 

5 amount as such excess bears to an amount 

6 equal to the difference between the applicable 

7 threshold amount and 300 percent of the appli8 cable threshold amount. 

9 ‘‘(B) APPLICABLE THRESHOLD AMOUNT.— 

10 For purposes of subparagraph (A), the applica11 ble threshold amount for a taxable year shall be 

12 determined in accordance with the following 

13 table: 

‘‘If the number of personal exemptions is: 

The applicable 

threshold 

amount is: 

1 ................................................................................ $10,210 

2 ................................................................................ $13,690 

3 ................................................................................ $17,170 

4 or more .................................................................. $20,650 

14 ‘‘(C) PERSONAL EXEMPTIONS.—For pur15 poses of subparagraph (B), the number of per16 sonal exemptions of a taxpayer is equal to the 

17 number of individuals for whom the taxpayer is 

18 allowed a deduction under section 151 (relating 

19 to allowance of deduction for personal exemp20 tions) for the taxable year. 

21 ‘‘(D) COST-OF-LIVING ADJUSTMENT.— 

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1 ‘‘(i) IN GENERAL.—In the case of tax2 able years beginning in calendar years 

3 after the first calendar year to which this 

4 section applies, each of the dollar amounts 

5 in the table under subparagraph (B) shall 

6 be increased by an amount equal to— 

7 ‘‘(I) such dollar amount, multi8 plied by 

9 ‘‘(II) the cost-of-living adjust10 ment determined under section 1(f)(3) 

11 for the calendar year in which such 

12 taxable year begins, determined by 

13 substituting ‘the calendar year pre14 ceding the first calendar year to which 

15 section 36 applies’ for ‘calendar year 

16 1992’ in subparagraph (B) thereof. 

17 ‘‘(ii) ROUNDING.—If any increase 

18 under clause (i) is not a multiple of $50, 

19 such increase shall be rounded to the near20 est multiple of $50. 

21 ‘‘(E) MODIFIED ADJUSTED GROSS IN22 COME.—The term ‘modified adjusted gross in23 come’ means adjusted gross income deter24 mined— 

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1 ‘‘(i) without regard to sections 911, 

2 931, and 933, and 

3 ‘‘(ii) after application of sections 86, 

4 135, 137, 219, 221, and 469. 

5 ‘‘(2) IDENTIFICATION REQUIREMENTS.—No 

6 credit shall be allowed under subsection (a) for any 

7 coverage month with respect to an individual unless 

8 the policy number associated with coverage under 

9 the qualified health plan and the TIN of the indi10 vidual covered under such coverage for such month 

11 is included on the return for the taxable year in 

12 which such month occurs. 

13 ‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur14 poses of this section, the term ‘qualified health insurance’ 

15 means coverage under— 

16 ‘‘(1) a qualified core plan certified under sec17 tion 102 of the Ten Steps to Transform Health Care 

18 in America Act , and 

19 ‘‘(2) any plan certified under section 103 of 

20 such Act as a qualified core compatible plan with re21 spect to a qualified core plan. 

22 ‘‘(e) ARCHER MSA AND HEALTH SAVINGS ACCOUNT

23 CONTRIBUTIONS.— 

24 ‘‘(1) IN GENERAL.—If a deduction would (but 

25 for paragraph (2)) be allowed under section 220 or 

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1 223 to the taxpayer for a payment for the taxable 

2 year to the Archer MSA or health savings account 

3 of an individual established in connection with quali4 fied health insurance, subsection (a) shall be applied 

5 by treating such payment as a payment for qualified 

6 health insurance for such individual. 

7 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc8 tion shall be allowed under section 220 or 223 for 

9 that portion of the payments otherwise allowable as 

10 a deduction under section 220 or 223 for the taxable 

11 year which is equal to the amount of credit allowed 

12 for such taxable year by reason of this subsection. 

13 ‘‘(f) SPECIAL RULES.—For purposes of this sec14 tion— 

15 ‘‘(1) MARRIED COUPLES MUST FILE JOINT RE16 TURN.—If the taxpayer is married at the close of 

17 the taxable year, the credit shall be allowed under 

18 subsection (a) only if the taxpayer and the tax19 payer’s spouse file a joint return for the taxable 

20 year. 

21 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.—No 

22 credit shall be allowed under this section to any indi23 vidual with respect to whom a deduction under sec24 tion 151 is allowable to another taxpayer for a taxmstockstill on PROD1PC66 with BILLS

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1 able year beginning in the calendar year in which 

2 such individual’s taxable year begins. 

3 ‘‘(3) DENIAL OF DOUBLE BENEFIT.—No credit 

4 shall be allowed under subsection (a) if the credit 

5 under section 35 is allowed and no credit shall be al6 lowed under 35 if a credit is allowed under this sec7 tion. 

8 ‘‘(4) SPECIAL RULE FOR DIVORCED PARENTS, 

9 ETC.—A rule similar to the rule of section 224(c)(5) 

10 shall apply for purposes of this section. 

11 ‘‘(5) ELECTION NOT TO CLAIM CREDIT.—This 

12 section shall not apply to a taxpayer for any taxable 

13 year if such taxpayer elects to have this section not 

14 apply for such taxable year.’’. 

15 (b) CONFORMING AMENDMENTS.— 

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

17 31, United States Code, is amended by inserting be18 fore the period ‘‘, or from section 36 of such Code’’. 

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

20 IV of subchapter A of chapter 1 of the Internal Rev21 enue Code of 1986 is amended by striking the last 

22 item and inserting the following new items: 

‘‘Sec. 36. Refundable credit for health insurance coverage. 

‘‘Sec. 37. Overpayments of tax.’’. 

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

24 this section shall apply to taxable years beginning on or 

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1 after the first day of the first calendar year in which oc2 curs the first date on which the requirement of section 

3 101(a) of this Act applies. 

4 SEC. 132. ADVANCE PAYMENT OF CREDIT FOR PUR5 CHASERS OF 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 new section: 

10 ‘‘SEC. 7529. ADVANCE PAYMENT OF CREDIT FOR PUR11 CHASERS OF QUALIFIED HEALTH INSUR12 ANCE. 

13 ‘‘(a) GENERAL RULE.—In the case of an eligible indi14 vidual, the Secretary shall make payments to the provider 

15 of such individual’s qualified health insurance equal to 

16 such individual’s qualified health insurance credit advance 

17 amount with respect to such provider. 

18 ‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this 

19 section, the term ‘eligible individual’ means any indi20 vidual— 

21 ‘‘(1) who purchases qualified health insurance 

22 (as defined in section 36(d)), and 

23 ‘‘(2) for whom a qualified health insurance 

24 credit eligibility certificate is in effect. 

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1 ‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI2 BILITY CERTIFICATE.—For purposes of this section, a 

3 qualified health insurance credit eligibility certificate is a 

4 statement furnished by an individual to the Secretary 

5 which— 

6 ‘‘(1) certifies that the individual will be eligible 

7 to receive the credit provided by section 36 for the 

8 taxable year, 

9 ‘‘(2) estimates the amount of such credit for 

10 such taxable year, and 

11 ‘‘(3) provides such other information as the 

12 Secretary may require for purposes of this section. 

13 ‘‘(d) QUALIFIED HEALTH INSURANCE CREDIT AD14 VANCE AMOUNT.—For purposes of this section, the term 

15 ‘qualified health insurance credit advance amount’ means, 

16 with respect to any provider of qualified health insurance, 

17 the lesser of— 

18 ‘‘(1) the Secretary’s estimate of the amount of 

19 credit allowable under section 36 to the individual 

20 for the taxable year which is attributable to the in21 surance provided to the individual by such provider, 

22 or 

23 ‘‘(2) the aggregate premiums with respect to 

24 such insurance for months occurring during such 

25 taxable year. 

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1 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

2 such regulations as may be necessary to carry out the pur3 poses of this section.’’. 

4 (b) CLERICAL AMENDMENT.—The table of sections 

5 for chapter 77 of the Internal Revenue Code of 1986 is 

6 amended by adding at the end the following new item: 

‘‘Sec. 7529. Advance payment of credit for purchasers of qualified health insurance.’’. 

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

8 this section shall apply to taxable years beginning on or 

9 after the first day of the first calendar year in which oc10 curs the first date on which the requirement of section 

11 101(a) of this Act applies. 

12 SEC. 133. DESIGNATION OF HEALTH INSURANCE STATUS 

13 REQUIRED BY INDIVIDUALS ON FEDERAL IN14 COME TAX RETURNS. 

15 (a) IN GENERAL.—Subchapter B of chapter 61 of the 

16 Internal Revenue Code of 1986 (relating to miscellaneous 

17 provisions involving information and returns) is amended 

18 by redesignating section 6116 as section 6117 and by in19 serting after section 6115 the following new section: 

20 ‘‘SEC. 6116. DESIGNATION OF HEALTH INSURANCE STATUS 

21 REQUIRED BY INDIVIDUALS ON FEDERAL IN22 COME TAX RETURNS. 

23 ‘‘(a) GENERAL RULE.—In the case of an individual, 

24 if a taxpayer is required to file a return of tax imposed 

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1 by chapter 1 for such taxable year, the taxpayer shall in2 clude with such return the designation described in sub3 section (b) with respect to the taxpayer and the spouse 

4 or any dependent of the taxpayer with respect to whom 

5 a deduction under section 151 is allowed to the taxpayer 

6 for the taxable year. 

7 ‘‘(b) DESIGNATION.— 

8 ‘‘(1) IN GENERAL.—The taxpayer shall des9 ignate with respect to each individual described in 

10 subsection (a) which of the following categories of 

11 health insurance coverage is applicable to the indi12 vidual as of the close of the taxable year for which 

13 the return is being filed: 

14 ‘‘(A) Coverage under a qualified health 

15 plan (as defined in section 224(d)(2). 

16 ‘‘(B) Coverage under qualified health in17 surance (as defined in section 36(d)). 

18 ‘‘(C) Coverage under an employer-spon19 sored health plan which is licensed and regu20 lated by the State in which the individual re21 sides. 

22 ‘‘(D) Coverage under an employer-spon23 sored, self-insured health plan which meets the 

24 requirements of the Employee Retirement Inmstockstill on PROD1PC66 with BILLS

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1 come Security Act of 1974 and any other appli2 cable law. 

3 ‘‘(E) Coverage described in clause (i), (ii), 

4 or (iii) of section 224(d)(1)(B) (relating to cov5 erage under medicare, medicaid, schip or grand6 fathered employer coverage). 

7 ‘‘(F) Coverage not described in any of the 

8 preceding subparagraphs. 

9 ‘‘(G) No coverage. 

10 ‘‘(2) FORM AND MANNER.—The Secretary shall 

11 prescribe the form and manner of making the des12 ignation under this section.’’. 

13 (b) CONFORMING AMENDMENTS.—The table of sec14 tions for subchapter B of chapter 61 of such Code is 

15 amended by striking the item relating to section 6116 and 

16 inserting the following new items: 

‘‘Sec. 6116. Designation of health insurance status required by individuals on 

Federal income tax returns. 

‘‘Sec. 6117. Cross reference.’’. 

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

18 this section shall apply to taxable years beginning in— 

19 (1) the calendar year preceding the first cal20 endar year in which occurs the first date on which 

21 the requirement of section 101(a) of this Act ap22 plies, and 

23 (2) any calendar year following the calendar 

24 year described in paragraph (1). 

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1 Subtitle D—Education and 

2 Outreach 

3 SEC. 141. NOTICE TO TAXPAYERS OF AVAILABILITY OF 

4 STANDARD DEDUCTION FOR HEALTH INSUR5 ANCE AND REFUNDABLE HEALTH INSUR6 ANCE CREDIT. 

7 The Secretary of the Treasury or the Secretary’s del8 egate shall ensure that— 

9 (1) any instructions booklet accompanying an 

10 individual Federal income tax return form (including 

11 forms 1040, 1040A, 1040EZ, and any similar or 

12 successor forms) , and 

13 (2) any other publication, announcement, or 

14 website that the Secretary or the Secretary’s dele15 gate considers appropriate, 

16 shall include, in clear language, in conspicuous print, and 

17 in a conspicuous place, information with respect to the 

18 availability of the standard deduction for health insurance 

19 or the health insurance tax credit for individuals enrolled 

20 in qualified core health plans and qualified core compatible 

21 plans certified as meeting the requirements of this Act. 

22 The requirement of this section shall apply with respect 

23 to booklets, publications, announcements, or information 

24 on websites made available on and after the date that is 

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1 1 year before the first date on which the coverage require2 ment under section 101(a) of this Act becomes effective. 

3 SEC. 142. OPTIONAL ENROLLMENT AND OUTREACH. 

4 (a) OPTION FOR MEDICAID OR SCHIP ELIGIBLE IN5 DIVIDUALS TO ENROLL IN A QUALIFIED CORE PLAN.— 

6 The Secretary of Health and Human Services, in consulta7 tion with the Secretary of the Treasury and the States, 

8 shall establish a process for permitting an individual who 

9 is eligible for medical assistance under a State plan or 

10 waiver under title XIX of the Social Security Act, or for 

11 child health assistance or other health benefits coverage 

12 under a State child health plan or waiver under title XXI 

13 of such Act, to elect to enroll (or in the case of an indi14 vidual who is a child under age 18, for the individual’s 

15 family to elect to be enrolled) in a qualified core plan of16 fered in the State of residence of the individual in lieu 

17 of being enrolled in such State plan or waiver for the year. 

18 The process established pursuant to this subsection 

19 shall— 

20 (1) allow for such an election to be made on an 

21 annual basis; 

22 (2) require the State of residence of the indi23 vidual to notify the Secretary of Health and Human 

24 Services and the Secretary of the Treasury of the 

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1 tection that would have been provided to the indi2 vidual under the State plan or waiver under title 

3 XIX or XXI of the Social Security Act for the year; 

4 (3) allow for an increase in the refundable cred5 it established under section 36 of the Internal Rev6 enue Code of 1986 for the year in an amount equal 

7 to the actuarial value determined for purposes of 

8 paragraph (2); and 

9 (4) require, as a condition of the continued ap10 proval of such State plans or waivers, for the Sec11 retary of Health and Human Services to reduce the 

12 amount to be paid to the State of residence of the 

13 individual under section 1903(a) or 2105(a) of the 

14 Social Security Act (as appropriate) for each cal15 endar quarter occurring during the year for which 

such credit applies by an amount equal to 1 16 ⁄4 of the 

17 State share of the amount described in paragraph 

18 (3). 

19 (b) ADDITIONAL OUTREACH.— 

20 (1) ESTABLISHMENT OF OUTREACH PRO21 GRAM.—Not later than 1 year after the date of en22 actment of this Act. the Secretary of Health and 

23 Human Services, in consultation with the Secretary 

24 of the Treasury, the States, and representatives of 

25 community health centers, hospitals, and other 

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1 health care providers, shall establish a program 

2 under which the Secretary of Health and Human 

3 Services shall provide access to informational mate4 rials regarding the standard deduction for health in5 surance established under section 224 of the Inter6 nal Revenue Code of 1986 and the refundable credit 

7 established under section 36 of such Code, including 

8 State-specific contact information for more detailed 

9 information and assistance, through health care pro10 viders and a national Internet website that meets 

11 the requirements of paragraph (1). 

12 (2) TARGETING OF HEALTH CARE PROVIDERS

13 THAT SERVE THE UNINSURED AND THE UNDER IN14 SURED.—The program established under paragraph 

15 (1) shall give priority to disseminating such informa16 tion through those health care providers that pri17 marily serve uninsured or under insured individuals. 

18 (3) NATIONAL INFORMATION WEBSITE.—For 

19 purposes of paragraph (1), the requirements of this 

20 subparagraph are that the Secretary of Health and 

21 Human Services establishes a one-stop website that 

22 provides information on the standard deduction for 

23 health insurance established under section 224 of 

24 the Internal Revenue Code of 1986 and the health 

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1 insurance tax credit established under section 36 of 

2 Code. The website shall— 

3 (A) include significant timelines for action, 

4 a general description of enrollment processes, 

5 and links to State insurance commissioners’ 

6 sites, which approve qualified core plans and 

7 shall provide a portal for comparison of such 

8 plans with respect to each State; and 

9 (B) provide such information in a manner 

10 that— 

11 (i) is concise, clear, and easy to un12 derstand; 

13 (ii) allows the information to be 

14 accessed in a downloadable format; 

15 (iii) provides appropriate links or con16 tacts for further information; and 

17 (iv) allows for use by providers in 

18 order to inform consumers at the point of 

19 delivery of health care items and services. 

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1 TITLE II—INCREASING INSUR2 ANCE MARKET PORTABILITY 

3 AND AFFORDABILITY 

4 Subtitle A—Merging and 

5 Improving Insurance Markets 

6 SEC. 201. DEVELOPMENT OF MERGED AND IMPROVED 

7 STATE INSURANCE MARKET STANDARDS. 

8 (a) IN GENERAL.—The Secretary, in consultation 

9 with State insurance commissioners and the National As10 sociation of Insurance Commissioners, shall promulgate 

11 regulations providing for the establishment in each State 

12 of a single market for all health plans (other than self13 funded plans or Federal or State governmental health cov14 erage programs) offered in each State. 

15 (b) REQUIREMENTS.—The regulations promulgated 

16 under subsection (a) shall, with respect to each State, re17 quire— 

18 (1) that State health insurance laws applicable 

19 to the small group market in the State be modified, 

20 except as provided for otherwise in this Act, to apply 

21 to all health plans offered in the State regardless of 

22 whether such plans are being purchased for the cov23 erage of individuals or for groups; 

24 (2) that the provisions of part A of title XXVII 

25 of the Public Health Service Act (42 U.S.C. 300gg 

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1 et seq.) (relating to group market rules) shall apply 

2 to all health plans offered in the State, subject to 

3 such modification as may be necessary to clarify and 

4 effectuate the application of such rules to all such 

5 health plans; 

6 (3) that the provisions of part B of title XXVII 

7 of the Public Health Service Act (42 U.S.C. 300gg– 

8 41 et seq.) (relating to individual market rules), and 

9 any other provisions or definitions within such title 

10 XXVII that apply independent standards to indi11 vidual insurance markets or that relate to the rela12 tionship between such markets and group markets, 

13 shall be superseded by the provisions of this Act and 

14 shall have no force or effect; and 

15 (4) that each health plan offered in the State 

16 fully comply with all standards provided for in this 

17 subsection, and that such standards, if not provided 

18 for otherwise in this Act, shall include requirements 

19 that each health plan— 

20 (A) must accept for enrollment under such 

21 plan every eligible individual who applies for en22 rollment during the period in which the indi23 vidual first becomes eligible to enroll in such 

24 plan and may not place any restriction which is 

25 inconsistent with section 2702 or 2711 of the 

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1 Public Health Service Act (42 U.S.C. 300gg–1 

2 and 300gg–11) on an eligible individual enroll3 ing in such plan; 

4 (B) must renew or continue in force cov5 erage under such plan at the option of the en6 rollee in accordance with section 2712 of such 

7 Act (42 U.S.C. 300gg–12); 

8 (C) must ensure that there is no re-under9 writing of such plan; and 

10 (D) must comply with the portability re11 quirements of section 2701 of such Act (42 

12 U.S.C. 300gg); 

13 (5) that the State comply with the regulations 

14 promulgated under section 211(d) with respect to re15 ducing the effect of such material risk selection as 

16 may occur among health plans (including self-in17 sured plans) through the establishment of State18 based risk adjustment requirements. 

19 SEC. 202. MODIFICATIONS RELATING TO SELF-FUNDED 

20 GROUP HEALTH PLANS. 

21 (a) ERISA.—Section 734 of the Employee Retire22 ment Income Security Act of 1974 (29 U.S.C. 1191c) is 

23 amended— 

24 (1) by striking ‘‘The Secretary’’ and inserting 

25 the following: 

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1 ‘‘(a) IN GENERAL.—The Secretary’’; and 

2 (2) by adding at the end the following: 

3 ‘‘(b) MODIFICATION RELATING TO THE ELIMINATION

4 OF THE INDIVIDUAL MARKETS.— 

5 ‘‘(1) IN GENERAL.—The Secretary shall pro6 mulgate regulations, or modify existing regulations, 

7 under this part as the Secretary determines nec8 essary to reflect changes in State law pursuant to 

9 the Ten Steps to Transform Health Care in America 

10 Act (and the amendments made by that Act) with 

11 respect to the treatment of individual State health 

12 insurance markets and to ensure the continued ap13 plication of this part to self-funded group health 

14 plans notwithstanding such changes. 

15 ‘‘(2) CLARIFICATIONS.—The regulations or 

16 modification promulgated under paragraph (1) shall 

17 not be construed as otherwise materially altering the 

18 provisions of this part as such provisions apply to 

19 self-funded group health plans. Nothing in this sub20 section shall be construed to preempt the application 

21 of State insurance laws with respect to State regu22 lated health insurance products.’’. 

23 (b) INTERNAL REVENUE CODE.—Section 9833 of the 

24 Internal Revenue Code of 1986 is amended— 

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1 (1) by striking ‘‘The Secretary’’ and inserting 

2 the following: 

3 ‘‘(a) IN GENERAL.—The Secretary’’; and 

4 (2) by adding at the end the following: 

5 ‘‘(b) MODIFICATION RELATING TO THE ELIMINATION

6 OF THE INDIVIDUAL MARKETS.— 

7 ‘‘(1) IN GENERAL.—The Secretary shall pro8 mulgate regulations, or modify existing regulations, 

9 under this chapter as the Secretary determines nec10 essary to reflect changes in State law pursuant to 

11 the Ten Steps to Transform Health Care in America 

12 Act (and the amendments made by that Act) with 

13 respect to the treatment of individual State health 

14 insurance markets and to ensure the continued ap15 plication of this part to self-funded group health 

16 plans notwithstanding such changes. 

17 ‘‘(2) CLARIFICATIONS.—The regulations or 

18 modification promulgated under paragraph (1) shall 

19 not be construed as otherwise materially altering the 

20 provisions of this part as such provisions apply to 

21 self-funded group health plans. Nothing in this sub22 section shall be construed to preempt the application 

23 of State insurance laws with respect to State regu24 lated health insurance products.’’. 

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1 SEC. 203. LEGISLATIVE PROPOSALS. 

2 Not later than 1 year after the date of enactment 

3 of this Act, and every 3 years thereafter, the Secretary 

4 of Health and Human Services, the Secretary of Labor, 

5 and the Secretary or the Treasury, in consultation with 

6 the National Association of Insurance Commissioners, 

7 shall jointly conduct a review of the effect of this subtitle 

8 (and the regulations promulgated thereunder) on health 

9 insurance access and affordability, particularly for individ10 uals with chronic illness or catastrophic medical expenses, 

11 and on market competition, and shall submit a report con12 cerning such review to the appropriate committees of Con13 gress that contains proposals for such amendments as 

14 each such Secretary may determine would substantially 

15 improve the effectiveness and the implementation of this 

16 subtitle. 

17 SEC. 204. ENFORCEMENT. 

18 The provisions of section 106 shall apply with respect 

19 to the implementation and enforcement of the require20 ments of this subtitle in the same manner as such provi21 sions apply to subtitle A of title I. 

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1 Subtitle B—Reduction in Premium 

2 Variation and Health Status Dis3 crimination 

4 SEC. 211. DEVELOPMENT OF STANDARDS FOR REDUCTION 

5 IN PREMIUM VARIATION AND HEALTH STA6 TUS DISCRIMINATION AMONG ENROLLEES. 

7 (a) IN GENERAL.—The Secretary, in consultation 

8 with State insurance commissioners and the National As9 sociation of Insurance Commissioners, shall promulgate 

10 regulations providing for the application by each State in 

11 the health insurance market of such State of improved 

12 standards regarding the range of allowable premium vari13 ation for enrollees. 

14 (b) REQUIREMENTS.—The regulations promulgated 

15 under subsection (a) shall, with respect to each State, re16 quire— 

17 (1) that for qualified core plans offered in the 

18 State— 

19 (A) no premium variation based on health 

20 status or any other factor shall be permitted; 

21 and 

22 (B) the standard premium amount shall be 

23 the same for all enrollees; 

24 (2) that for compatible qualified core plans of25 fered in the State— 

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1 (A) no premium variation based on health 

2 status shall be permitted; and 

3 (B) rating variation based on enrollee age 

4 shall be the only permitted rating factor so long 

5 as the total variation in premium rates charged 

6 by an issuer for coverage under such plan shall 

7 not be greater than a factor of 2:1; and 

8 (3) that for all other health insurance products 

9 offered in the State— 

10 (A) no premium variation based on health 

11 status shall be permitted; and 

12 (B) except as otherwise provided in this 

13 paragraph, premium variation shall be per14 mitted as determined by State law, subject to 

15 the application of small group market rules to 

16 all insured health plan in a State pursuant to 

17 section 201(a) and (b). 

18 (c) STATE RATING DISCRETION OTHERWISE PER19 MITTED.—Except as provided for in subsection (b), noth20 ing in this section shall be construed to preempt the State 

21 application of such health insurance premium rating fac22 tors as a State may determine appropriate. 

23 (d) STATE-BASED RISK ADJUSTMENTS.— 

24 (1) IN GENERAL.—The regulations promulgated 

25 under subsection (a) and otherwise promulgated 

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1 under this subtitle shall require the State to estab2 lish risk adjustment requirements to reduce the ef3 fect of such material risk selection as may occur 

4 among qualified core plans, qualified core compatible 

5 plans, and other health plans in a State (not includ6 ing self-insured plans) through the application of 

7 State risk adjustment requirements that are certified 

8 by the Secretary, pursuant to such regulations, as 

9 meeting standards established by the Secretary (in 

10 consultation with the National Association of Insur11 ance Commissioners). 

12 (2) ASSESSMENT AND REPORT ON STATE13 BASED RISK ADJUSTMENT.— 

14 (A) IN GENERAL.—Prior to the promulga15 tion of standards under paragraph (1), the Sec16 retary, in consultation with the National Asso17 ciation of Insurance Commissioners, shall con18 duct an assessment of— 

19 (i) the degree of significant actual or 

20 actuarially anticipated material adverse se21 lection among qualified core plans, quali22 fied core compatible plans, and other in23 sured health plans in a State; and 

24 (ii) the comparative effectiveness of 

25 State risk adjustment requirement options 

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1 or mechanisms to reduce the effect of such 

2 adverse selection. 

3 (B) REPORT.—The Secretary shall submit 

4 a report to Congress concerning the results of 

5 the assessment conducted under subparagraph 

6 (A). Such report may include recommendations 

7 by the Secretary for additional or future legisla8 tion to adjust the standards developed under 

9 paragraph (1) if the Secretary determines that 

10 such legislation is reasonably necessary to ma11 terially improve the effective application of 

12 State-based risk adjustment requirements pur13 suant to paragraph (1). 

14 (e) STUDY AND REPORT ON PREMIUM RATING.— 

15 (1) STUDY.—The Secretary, in consultation 

16 with the National Association of Insurance Commis17 sioners, shall conduct ongoing reviews of the effect 

18 modification of State health insurance premium rat19 ing rules under this section will have, or has had, on 

20 health insurance affordability, access, and market 

21 competition in the insurance market in the States 

22 and on a national basis. 

23 (2) REPORTS.—Not later than 1 year after the 

24 date of enactment of this Act, and every 2 years 

25 thereafter, the Secretary shall submit to the appromstockstill on PROD1PC66 with BILLS

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1 priate committees of Congress a report concerning 

2 the study conducted under paragraph (1), which 

3 may, as the Secretary may determine, include rec4 ommendations concerning proposed modifications 

5 and adjustments with respect to State premium rat6 ing rules. 

7 SEC. 212. ENFORCEMENT. 

8 The provisions of section 106 shall apply with respect 

9 to the implementation and enforcement of the require10 ments of this subtitle in the same manner as such provi11 sions apply to subtitle A of title I. 

12 Subtitle C—Enhanced Marketplace 

13 Pooling and Related Market Rating 

14 PART I—ENHANCED MARKETPLACE POOLS 

15 SEC. 245. RULES GOVERNING ENHANCED MARKETPLACE 

16 POOLS. 

17 (a) IN GENERAL.—Subtitle B of title I of the Em18 ployee Retirement Income Security Act of 1974 is amend19 ed by adding after part 7 the following new part: 

20 ‘‘PART 8—RULES GOVERNING ENHANCED 

21 MARKETPLACE POOLS 

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

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

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

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

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

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

4 plan is described in this subsection if such sponsor— 

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

6 with a constitution and bylaws specifically stating its 

7 purpose and providing for periodic meetings on at 

8 least an annual basis, as a bona fide trade associa9 tion, a bona fide industry association (including a 

10 rural electric cooperative association or a rural tele11 phone cooperative association), a bona fide profes12 sional association, or a bona fide chamber of com13 merce (or similar bona fide business association, in14 cluding a corporation or similar organization that 

15 operates on a cooperative basis (within the meaning 

16 of section 1381 of the Internal Revenue Code of 

17 1986)), for substantial purposes other than that of 

18 obtaining medical care; 

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

20 receives the active support of its members and re21 quires for membership payment on a periodic basis 

22 of dues or payments necessary to maintain eligibility 

23 for membership; 

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

25 or payments, or coverage under the plan on the 

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1 basis of health status-related factors with respect to 

2 the employees of its members (or affiliated mem3 bers), or the dependents of such employees, and does 

4 not condition such dues or payments on the basis of 

5 group health plan participation; and 

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

7 basis of a minimum group size. 

8 Any sponsor consisting of an association of entities which 

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

10 shall be deemed to be a sponsor described in this sub11 section. 

12 ‘‘SEC. 802. ALTERNATIVE MARKET POOLING ORGANIZA13 TIONS. 

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

15 year after the date of enactment of this part, shall promul16 gate regulations that apply the rules and standards of this 

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

18 entity other (hereinafter ‘Alternative Market Pooling Or19 ganizations’) is not made up principally of employers and 

20 their employees, or not a professional organization or such 

21 small business health plan entity identified in section 801. 

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

23 promulgating regulations pursuant to subsection (a), the 

24 Secretary, in consultation with the Secretary of Health 

25 and Human Services, small business health plans, small 

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1 and large employers, large and small insurance issuers, 

2 consumer representatives, and state insurance commis3 sioners, shall— 

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

5 maximum degree practicable, to assure balanced and 

6 comparable oversight standards for both small busi7 ness health plans and alternative market pooling or8 ganizations; 

9 ‘‘(2) permit the participation as alternative 

10 market pooling organizations unions, churches and 

11 other faith-based organizations, or other organiza12 tions composed of individuals and groups which may 

13 have little or no association with employment, pro14 vided however, that such alternative market pooling 

15 organizations meet, and continue meeting on an on16 going basis, to satisfy standards, rules, and require17 ments materially equivalent to those set forth in this 

18 part with respect to small business health plans; 

19 ‘‘(3) conduct periodic verification of such com20 pliance by alternative market pooling organizations, 

21 in consultation with the Secretary of Health and 

22 Human Services and the National Association of In23 surance Commissioners, except that such periodic 

24 verification shall not materially impede market entry 

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1 or participation as pooling entities comparable to 

2 that of small business health plans; and 

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

4 monitored standards are applied with respect to al5 ternative market pooling organizations to avert ma6 terial risk-selection within or among the composition 

7 of such organizations; 

8 ‘‘(5) the expedited and deemed certification pro9 cedures provided in section 805(d) shall not apply to 

10 alternative market pooling organizations until sooner 

11 of the promulgation of regulations under this sub12 section or the expiration of one year following enact13 ment of this Act; and 

14 ‘‘(6) make such other appropriate adjustments 

15 to the requirements of this part as the Secretary 

16 may reasonably deem appropriate to fit the cir17 cumstances of an individual alternative market pool18 ing organization or category of such organization, 

19 including but not limited to the application of the 

20 membership payment requirements of section 

21 801(b)(2) to alternative market pooling organiza22 tions composed primarily of church- or faith-based 

23 membership. 

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

2 PLANS. 

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

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

5 shall prescribe by interim final rule a procedure under 

6 which the applicable authority shall certify small business 

7 health plans which apply for certification as meeting the 

8 requirements of this part. 

9 ‘‘(b) REQUIREMENTS APPLICABLE TO CERTIFIED

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

11 which certification under this part is in effect shall meet 

12 the applicable requirements of this part, effective on the 

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

14 plan is to commence operations). 

15 ‘‘(c) REQUIREMENTS FOR CONTINUED CERTIFI16 CATION.—The applicable authority may provide by regula17 tion for continued certification of small business health 

18 plans under this part. Such regulation shall provide for 

19 the revocation of a certification if the applicable authority 

20 finds that the small business health plan involved is failing 

21 to comply with the requirements of this part. 

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

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

24 on an application for certification under this section 

25 within 90 days of receipt of such application, the ap26 plying small business health plan shall be deemed 

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1 certified until such time as the Secretary may deny 

2 for cause the application for certification. 

3 ‘‘(2) CIVIL PENALTY.—The Secretary may as4 sess a civil penalty against the board of trustees and 

5 plan sponsor (jointly and severally) of a small busi6 ness health plan that is deemed certified under para7 graph (1) of up to $500,000 in the event the Sec8 retary determines that the application for certifi9 cation of such small business health plan was will10 fully or with gross negligence incomplete or inac11 curate. 

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

13 BOARDS OF TRUSTEES. 

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

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

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

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

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

19 the application for certification under this part. 

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

21 this subsection are met with respect to a small business 

22 health plan if the following requirements are met: 

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

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

25 which pursuant to a trust agreement has complete 

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1 fiscal control over the plan and which is responsible 

2 for all operations of the plan. 

3 ‘‘(2) RULES OF OPERATION AND FINANCIAL

4 CONTROLS.—The board of trustees has in effect 

5 rules of operation and financial controls, based on a 

6 3-year plan of operation, adequate to carry out the 

7 terms of the plan and to meet all requirements of 

8 this title applicable to the plan. 

9 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

10 PARTICIPATING EMPLOYERS AND TO CONTRAC11 TORS.— 

12 ‘‘(A) BOARD MEMBERSHIP.— 

13 ‘‘(i) IN GENERAL.—Except as pro14 vided in clauses (ii) and (iii), the members 

15 of the board of trustees are individuals se16 lected from individuals who are the owners, 

17 officers, directors, or employees of the par18 ticipating employers or who are partners in 

19 the participating employers and actively 

20 participate in the business. 

21 ‘‘(ii) LIMITATION.— 

22 ‘‘(I) GENERAL RULE.—Except as 

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

24 no such member is an owner, officer, 

25 director, or employee of, or partner in, 

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1 a contract administrator or other 

2 service provider to the plan. 

3 ‘‘(II) LIMITED EXCEPTION FOR

4 PROVIDERS OF SERVICES SOLELY ON

5 BEHALF OF THE SPONSOR.—Officers 

6 or employees of a sponsor which is a 

7 service provider (other than a contract 

8 administrator) to the plan may be 

9 members of the board if they con10 stitute not more than 25 percent of 

11 the membership of the board and they 

12 do not provide services to the plan 

13 other than on behalf of the sponsor. 

14 ‘‘(III) TREATMENT OF PRO15 VIDERS OF MEDICAL CARE.—In the 

16 case of a sponsor which is an associa17 tion whose membership consists pri18 marily of providers of medical care, 

19 subclause (I) shall not apply in the 

20 case of any service provider described 

21 in subclause (I) who is a provider of 

22 medical care under the plan. 

23 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

24 Clause (i) shall not apply to a small busi25 ness health plan which is in existence on 

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1 the date of the enactment of the Health 

2 Insurance Marketplace Modernization and 

3 Affordability Act of 2007. 

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

5 sole authority under the plan to approve appli6 cations for participation in the plan and to con7 tract with insurers. 

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

9 a group health plan which is established and maintained 

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

11 ‘‘(1) the requirements of subsection (a) and sec12 tion 801(a) shall be deemed met if such require13 ments would otherwise be met if the franchisor were 

14 deemed to be the sponsor referred to in section 

15 801(b) and each franchisee were deemed to be a 

16 member (of the sponsor) referred to in section 

17 801(b); and 

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

19 be deemed met. 

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

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

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

23 Code of Federal Regulations (including any such amend24 ments to such regulation after the date of enactment of 

25 this part). 

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1 ‘‘SEC. 805. PARTICIPATION AND COVERAGE REQUIRE2 MENTS. 

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

4 requirements of this subsection are met with respect to 

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

6 plan— 

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

8 ‘‘(A) a member of the sponsor; 

9 ‘‘(B) the sponsor; or 

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

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

12 a professional association or other individual13 based association, if at least one of the officers, 

14 directors, or employees of an employer, or at 

15 least one of the individuals who are partners in 

16 an employer and who actively participates in 

17 the business, is a member or such an affiliated 

18 member of the sponsor, participating employers 

19 may also include such employer; and 

20 ‘‘(2) all individuals commencing coverage under 

21 the plan after certification under this part must 

22 be— 

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

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

25 employees of, or partners in, participating em26 ployers; or 

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1 ‘‘(B) the dependents of individuals de2 scribed in subparagraph (A). 

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

5 small business 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 ‘‘(c) PROHIBITION OF DISCRIMINATION AGAINST EM16 PLOYERS AND EMPLOYEES ELIGIBLE TO PARTICIPATE.— 

17 The requirements of this subsection are met with respect 

18 to a small business 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) information regarding all coverage options 

4 available under the plan is made readily available to 

5 any employer eligible to participate; and 

6 ‘‘(3) the applicable requirements of sections 

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

8 ‘‘SEC. 806. 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 a small business health plan if 

13 the following requirements are met: 

14 ‘‘(1) CONTENTS OF GOVERNING INSTRU15 MENTS.— 

16 ‘‘(A) IN GENERAL.—The instruments gov17 erning the plan include a written instrument, 

18 meeting the requirements of an instrument re19 quired under section 402(a)(1), which— 

20 ‘‘(i) provides that the board of trust21 ees serves as the named fiduciary required 

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

23 serves in the capacity of a plan adminis24 trator (referred to in section 3(16)(A)); 

25 and 

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

2 plan is to serve as plan sponsor (referred 

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

4 ‘‘(B) DESCRIPTION OF MATERIAL PROVI5 SIONS.—The terms of the health insurance cov6 erage (including the terms of any individual 

7 certificates that may be offered to individuals in 

8 connection with such coverage) describe the ma9 terial benefit and rating, and other provisions 

10 set forth in this section and such material pro11 visions are included in the summary plan de12 scription. 

13 ‘‘(2) CONTRIBUTION RATES MUST BE NON14 DISCRIMINATORY.— 

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

16 for any participating small employer shall not 

17 vary on the basis of any health status-related 

18 factor in relation to employees of such employer 

19 or their beneficiaries and shall not vary on the 

20 basis of the type of business or industry in 

21 which such employer is engaged, subject to sub22 paragraph (B) and the terms of this title. 

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

24 title or any other provision of law shall be con25 strued to preclude a health insurance issuer ofmstockstill on PROD1PC66 with BILLS

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1 fering health insurance coverage in connection 

2 with a small business health plan that meets 

3 the requirements of this part, and at the re4 quest of such small business health plan, 

5 from— 

6 ‘‘(i) setting contribution rates for the 

7 small business health plan based on the 

8 claims experience of the small business 

9 health plan so long as any variation in 

10 such rates for participating small employ11 ers complies with the requirements of 

12 clause (ii), except that small business 

13 health plans shall not be subject, in non14 adopting states, to subparagraphs (A)(ii) 

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

16 Health Service Act, and in adopting states, 

17 to any State law that would have the effect 

18 of imposing requirements as outlined in 

19 such subparagraphs (A)(ii) and (C); or 

20 ‘‘(ii) varying contribution rates for 

21 participating small employers in a small 

22 business health plan in a State to the ex23 tent that such rates could vary using the 

24 same methodology employed in such State 

25 for regulating small group premium rates, 

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1 subject to the terms of part I of subtitle A 

2 of title XXIX of the Public Health Service 

3 Act (relating to rating requirements), as 

4 added by title II of the Health Insurance 

5 Marketplace Modernization and Afford6 ability Act of 2007. 

7 ‘‘(3) EXCEPTIONS REGARDING SELF-EMPLOYED

8 AND LARGE EMPLOYERS.— 

9 ‘‘(A) SELF EMPLOYED.— 

10 ‘‘(i) IN GENERAL.—Small business 

11 health plans with participating employers 

12 who are self-employed individuals (and 

13 their dependents) shall enroll such self-em14 ployed participating employers in accord15 ance with rating rules that do not violate 

16 the rating rules for self-employed individ17 uals in the State in which such self-em18 ployed participating employers are located. 

19 ‘‘(ii) GUARANTEE ISSUE.—Small busi20 ness health plans with participating em21 ployers who are self-employed individuals 

22 (and their dependents) may decline to 

23 guarantee issue to such participating em24 ployers in States in which guarantee issue 

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1 is not otherwise required for the self-em2 ployed in that State. 

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

4 health plans with participating employers that 

5 are larger than small employers (as defined in 

6 section 808(a)(10)) shall enroll such large par7 ticipating employers in accordance with rating 

8 rules that do not violate the rating rules for 

9 large employers in the State in which such large 

10 participating employers are located. 

11 ‘‘(4) REGULATORY REQUIREMENTS.—Such 

12 other requirements as the applicable authority deter13 mines are necessary to carry out the purposes of this 

14 part, which shall be prescribed by the applicable au15 thority by regulation. 

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

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

18 any provision of State law (as defined in section 

19 514(c)(1)) shall be construed to preclude a small business 

20 health plan or a health insurance issuer offering health 

21 insurance coverage in connection with a small business 

22 health plan from exercising its sole discretion in selecting 

23 the specific benefits and services consisting of medical care 

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

25 except that such benefits and services must meet the terms 

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1 and specifications of part II of subtitle A of title XXIX 

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

3 plans), as added by title II of the Health Insurance Mar4 ketplace Modernization and Affordability Act of 2007. 

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

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

7 issued to a small business health plan in the State 

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

9 located. 

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

11 a State (other than the domicile State) in which par12 ticipating employers of a small business health plan 

13 are located but in which the insurer of the small 

14 business health plan in the domicile State is not yet 

15 licensed, the following shall apply: 

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

17 the expiration of the 90-day period following 

18 the submission of a licensure application by 

19 such insurer (that includes a certified copy of 

20 an approved licensure application as submitted 

21 by such insurer in the domicile State) to such 

22 State, such State has not approved or denied 

23 such application, such State’s health insurance 

24 licensure laws shall be temporarily preempted 

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1 and the insurer shall be permitted to operate in 

2 such State, subject to the following terms: 

3 ‘‘(i) APPLICATION OF NON-DOMICILE

4 STATE LAW.—Except with respect to licen5 sure and with respect to the terms of sub6 title A of title XXIX of the Public Health 

7 Service Act (relating to rating and benefits 

8 as added by the Health Insurance Market9 place Modernization and Affordability Act 

10 of 2007), the laws and authority of the 

11 non-domicile State shall remain in full 

12 force and effect. 

13 ‘‘(ii) REVOCATION OF PREEMPTION.— 

14 The preemption of a non-domicile State’s 

15 health insurance licensure laws pursuant to 

16 this subparagraph, shall be terminated 

17 upon the occurrence of either of the fol18 lowing: 

19 ‘‘(I) APPROVAL OR DENIAL OF

20 APPLICATION.—The approval of denial 

21 of an insurer’s licensure application, 

22 following the laws and regulations of 

23 the non-domicile State with respect to 

24 licensure. 

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1 ‘‘(II) DETERMINATION OF MATE2 RIAL VIOLATION.—A determination by 

3 a non-domicile State that an insurer 

4 operating in a non-domicile State pur5 suant to the preemption provided for 

6 in this subparagraph is in material 

7 violation of the insurance laws (other 

8 than licensure and with respect to the 

9 terms of subtitle A of title XXIX of 

10 the Public Health Service Act (relat11 ing to rating and benefits added by 

12 the Health Insurance Marketplace 

13 Modernization and Affordability Act 

14 of 2007)) of such State. 

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

16 Nothing in this paragraph shall be construed to 

17 prohibit a small business health plan or an in18 surer from promoting coverage prior to the ex19 piration of the 90-day period provided for in 

20 subparagraph (A), except that no enrollment or 

21 collection of contributions shall occur before the 

22 expiration of such 90-day period. 

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

24 the application of the temporary preemption 

25 provision of this paragraph, nothing in this part 

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1 shall be construed to limit the requirement that 

2 insurers issuing coverage to small business 

3 health plans shall be licensed in each State in 

4 which the small business health plans operate. 

5 ‘‘(D) SERVICING BY LICENSED INSUR6 ERS.—Notwithstanding subparagraph (C), the 

7 requirements of this subsection may also be sat8 isfied if the participating employers of a small 

9 business health plan are serviced by a licensed 

10 insurer in that State, even where such insurer 

11 is not the insurer of such small business health 

12 plan in the State in which such small business 

13 health plan is domiciled. 

14 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE15 LATED REQUIREMENTS. 

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

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

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

19 an application for certification under this part a filing fee 

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

21 case of the Secretary, to the extent provided in appropria22 tion Acts, for the sole purpose of administering the certifi23 cation procedures applicable with respect to small business 

24 health plans. 

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1 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA2 TION FOR CERTIFICATION.—An application for certifi3 cation under this part meets the requirements of this sec4 tion only if it includes, in a manner and form which shall 

5 be prescribed by the applicable authority by regulation, at 

6 least the following information: 

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

8 and addresses of— 

9 ‘‘(A) the sponsor; and 

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

11 of the plan. 

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

13 BUSINESS.—The States in which participants and 

14 beneficiaries under the plan are to be located and 

15 the number of them expected to be located in each 

16 such State. 

17 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro18 vided by the board of trustees that the bonding re19 quirements of section 412 will be met as of the date 

20 of the application or (if later) commencement of op21 erations. 

22 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu23 ments governing the plan (including any bylaws and 

24 trust agreements), the summary plan description, 

25 and other material describing the benefits that will 

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1 be provided to participants and beneficiaries under 

2 the plan. 

3 ‘‘(5) AGREEMENTS WITH SERVICE PRO4 VIDERS.—A copy of any agreements between the 

5 plan, health insurance issuer, and contract adminis6 trators and other service providers. 

7 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

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

9 small business health plan shall not be effective unless 

10 written notice of such certification is filed with the appli11 cable State authority of each State in which the small 

12 business health plans operate. 

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

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

15 descriptions of material changes in any information which 

16 was required to be submitted with the application for the 

17 certification under this part shall be filed in such form 

18 and manner as shall be prescribed by the applicable au19 thority by regulation. The applicable authority may re20 quire by regulation prior notice of material changes with 

21 respect to specified matters which might serve as the basis 

22 for suspension or revocation of the certification. 

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1 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER2 MINATION. 

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

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

5 time after cessation of accruals in benefit liabilities) only 

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

7 proposed termination date— 

8 ‘‘(1) provides to the participants and bene9 ficiaries a written notice of intent to terminate stat10 ing that such termination is intended and the pro11 posed termination date; 

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

13 of the plan in connection with such termination in 

14 a manner which will result in timely payment of all 

15 benefits for which the plan is obligated; and 

16 ‘‘(3) submits such plan in writing to the appli17 cable authority. 

18 Actions required under this section shall be taken in such 

19 form and manner as may be prescribed by the applicable 

20 authority by regulation. 

21 ‘‘SEC. 809. IMPLEMENTATION AND APPLICATION AUTHOR22 ITY BY SECRETARY. 

23 ‘‘The Secretary shall, through promulgation and im24 plementation of such regulations as the Secretary may 

25 reasonably determine necessary or appropriate, and in 

26 consultation with a balanced spectrum of effected entities 

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1 and persons, modify the implementation and application 

2 of this part to accommodate with minimum disruption 

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

4 and the Ten Steps to Transform Health Care in America 

5 Act (and the amendments made by such Act) or in regula6 tions issued thereto. 

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

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

9 ‘‘(1) AFFILIATED MEMBER.—The term ‘affili10 ated member’ means, in connection with a sponsor— 

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

12 be a member of the sponsor but who elects an 

13 affiliated status with the sponsor, or 

14 ‘‘(B) in the case of a sponsor with mem15 bers which consist of associations, a person who 

16 is a member or employee of any such associa17 tion and elects an affiliated status with the 

18 sponsor. 

19 ‘‘(2) APPLICABLE AUTHORITY.—The term ‘ap20 plicable authority’ means the Secretary of Labor, ex21 cept that, in connection with any exercise of the Sec22 retary’s authority with respect to which the Sec23 retary is required under section 506(d) to consult 

24 with a State, such term means the Secretary, in con25 sultation with such State. 

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

2 term ‘applicable State authority’ means, with respect 

3 to a health insurance issuer in a State, the State in4 surance commissioner or official or officials des5 ignated by the State to enforce the requirements of 

6 title XXVII of the Public Health Service Act for the 

7 State involved with respect to such issuer. 

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

9 health plan’ has the meaning provided in section 

10 733(a)(1) (after applying subsection (b) of this sec11 tion). 

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

13 term ‘health insurance coverage’ has the meaning 

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

15 shall not include excepted benefits (as defined in sec16 tion 733(c)). 

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

18 ‘health insurance issuer’ has the meaning provided 

19 in section 733(b)(2). 

20 ‘‘(7) INDIVIDUAL MARKET.— 

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

22 market’ means the market for health insurance 

23 coverage offered to individuals other than in 

24 connection with a group health plan. 

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1 ‘‘(B) TREATMENT OF VERY SMALL

2 GROUPS.— 

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

4 (ii), such term includes coverage offered in 

5 connection with a group health plan that 

6 has fewer than 2 participants as current 

7 employees or participants described in sec8 tion 732(d)(3) on the first day of the plan 

9 year. 

10 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

11 shall not apply in the case of health insur12 ance coverage offered in a State if such 

13 State regulates the coverage described in 

14 such clause in the same manner and to the 

15 same extent as coverage in the small group 

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

17 the Public Health Service Act) is regulated 

18 by such State. 

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

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

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

22 ‘participating employer’ means, in connection with a 

23 small business health plan, any employer, if any in24 dividual who is an employee of such employer, a 

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1 vidual who is such employer (or any dependent, as 

2 defined under the terms of the plan, of such indi3 vidual) is or was covered under such plan in connec4 tion with the status of such individual as such an 

5 employee, partner, or self-employed individual in re6 lation to the plan. 

7 ‘‘(10) SMALL EMPLOYER.—The term ‘small em8 ployer’ means, in connection with a group health 

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

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

11 ‘‘(11) TRADE ASSOCIATION AND PROFESSIONAL

12 ASSOCIATION.—The terms ‘trade association’ and 

13 ‘professional association’ mean an entity that meets 

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

15 Code of Federal Regulations (as in effect on the 

16 date of enactment of this Act). 

17 ‘‘(b) RULE OF CONSTRUCTION.—For purposes of de18 termining whether a plan, fund, or program is an em19 ployee welfare benefit plan which is a small business 

20 health plan, and for purposes of applying this title in con21 nection with such plan, fund, or program so determined 

22 to be such an employee welfare benefit plan— 

23 ‘‘(1) in the case of a partnership, the term ‘em24 ployer’ (as defined in section 3(5)) includes the part25 nership in relation to the partners, and the term 

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

2 partner in relation to the partnership; and 

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

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

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

6 include such individual. 

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

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

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

10 sponsor in applying requirements relating to coverage re11 newal. 

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

13 part shall be construed to create any mandates for cov14 erage of benefits for HSA-qualified health plans that 

15 would require reimbursements in violation of section 

16 223(c)(2) of the Internal Revenue Code of 1986.’’. 

17 (b) CONFORMING AMENDMENTS TO PREEMPTION

18 RULES.— 

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

20 1144(b)(6)) is amended by adding at the end the 

21 following new subparagraph: 

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

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

24 of a small business health plan which is certified under 

25 part 8.’’. 

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

2 is amended— 

3 (A) in subsection (b)(4), by striking ‘‘Sub4 section (a)’’ and inserting ‘‘Subsections (a) and 

5 (d)’’; 

6 (B) in subsection (b)(5), by striking ‘‘sub7 section (a)’’ in subparagraph (A) and inserting 

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

9 (a)(2)(B) and (b) of section 805’’, and by strik10 ing ‘‘subsection (a)’’ in subparagraph (B) and 

11 inserting ‘‘subsection (a) of this section or sub12 section (a)(2)(B) or (b) of section 805’’; 

13 (C) by redesignating subsection (d) as sub14 section (e); and 

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

16 following new subsection: 

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

18 provisions of this title shall supersede any and all State 

19 laws insofar as they may now or hereafter preclude a 

20 health insurance issuer from offering health insurance cov21 erage in connection with a small business health plan 

22 which is certified under part 8. 

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

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

25 plan certified under part 8 to a participating employer opmstockstill on PROD1PC66 with BILLS

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1 erating in such State, the provisions of this title shall su2 persede any and all laws of such State insofar as they may 

3 establish rating and benefit requirements that would oth4 erwise apply to such coverage, provided the requirements 

5 of subtitle A of title XXIX of the Public Health Service 

6 Act (as added by title II of the Health Insurance Market7 place Modernization and Affordability Act of 2007) (con8 cerning health plan rating and benefits) are met.’’. 

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

10 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

11 the following new sentence: ‘‘Such term also includes a 

12 person serving as the sponsor of a small business health 

13 plan under part 8.’’. 

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

15 is amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 

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

17 in section 1 of the Employee Retirement Income Security 

18 Act of 1974 is amended by inserting after the item relat19 ing to section 734 the following new items: 

‘‘PART 8—RULES GOVERNING SMALL BUSINESS HEALTH PLANS

‘‘801. Small business health plans. 

‘‘802. Alternative market pooling organizations. 

‘‘803. Certification of small business health plans. 

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

‘‘805. Participation and coverage requirements. 

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

benefit options. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Implementation and application authority by Secretary. 

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

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1 SEC. 246. COOPERATION BETWEEN FEDERAL AND STATE 

2 AUTHORITIES. 

3 Section 506 of the Employee Retirement Income Se4 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

7 TO SMALL BUSINESS HEALTH PLANS.— 

8 ‘‘(1) AGREEMENTS WITH STATES.—The Sec9 retary shall consult with the State recognized under 

10 paragraph (2) with respect to a small business 

11 health plan regarding the exercise of— 

12 ‘‘(A) the Secretary’s authority under sec13 tions 502 and 504 to enforce the requirements 

14 for certification under part 8; and 

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

16 small business health plans under part 8 in ac17 cordance with regulations of the Secretary ap18 plicable to certification under part 8. 

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

20 carrying out paragraph (1), the Secretary shall en21 sure that only one State will be recognized, with re22 spect to any particular small business health plan, 

23 as the State with which consultation is required. In 

24 carrying out this paragraph such State shall be the 

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

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1 SEC. 247. EFFECTIVE DATE AND TRANSITIONAL AND 

2 OTHER RULES. 

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

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

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

6 first issue all regulations necessary to carry out the 

7 amendments made by this subtitle within 6 months after 

8 the date 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 808(a)(2) 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 armstockstill on PROD1PC66 with BILLS

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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 trustees which 

13 has control over the arrangement; 

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

15 such Act shall be deemed met with respect to 

16 such arrangement; and 

17 (E) the arrangement may be certified by 

18 any applicable authority with respect to its op19 erations in any State only if it operates in such 

20 State on the date of certification. 

21 The provisions of this subsection shall cease to apply 

22 with respect to any such arrangement at such time 

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

24 applicable requirements of this subsection are not 

25 met with respect to such arrangement or at such 

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1 time that the arrangement provides coverage to par2 ticipants and beneficiaries in any State other than 

3 the States in which coverage is provided on such 

4 date of enactment. 

5 (2) DEFINITIONS.—For purposes of this sub6 section, the terms ‘‘group health plan’’, ‘‘medical 

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

8 meanings provided in section 808 of the Employee 

9 Retirement Income Security Act of 1974, except 

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

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

12 a reference to an arrangement referred to in this 

13 subsection. 

14 PART II—MARKET RELIEF 

15 SEC. 251. MARKET RELIEF. 

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

17 seq.) is amended by adding at the end the following: 

18 ‘‘TITLE XXIX—HEALTH CARE IN19 SURANCE MARKETPLACE 

20 MODERNIZATION 

21 ‘‘SEC. 2901. GENERAL INSURANCE DEFINITIONS. 

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

23 ‘health insurance issuer’, ‘group health plan’, and ‘indi24 vidual health insurance’ shall have the meanings given 

25 such terms in section 2791. 

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1 ‘‘SEC. 2902. IMPLEMENTATION AND APPLICATION AUTHOR2 ITY BY SECRETARY. 

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

5 reasonably determine necessary or appropriate, and in 

6 consultation with a balanced spectrum of effected entities 

7 and persons, modify the implementation and application 

8 of this title to accommodate with minimum disruption 

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

10 and the Ten Steps to Transform Health Care in America 

11 Act (and the amendments made by such Act) or in regula12 tions issued thereto. 

13 ‘‘Subtitle A—Market Relief 

14 ‘‘PART I—RATING REQUIREMENTS 

15 ‘‘SEC. 2911. DEFINITIONS. 

16 ‘‘In this part: 

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

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

19 group market, has enacted small group rating rules 

20 that meet the minimum standards set forth in sec21 tion 2912(a)(1) or, as applicable, transitional small 

22 group rating rules set forth in section 2912(b). 

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

24 term ‘applicable State authority’ means, with respect 

25 to a health insurance issuer in a State, the State in26 surance commissioner or official or officials desmstockstill on PROD1PC66 with BILLS

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1 ignated by the State to enforce the insurance laws 

2 of such State. 

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

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

5 respect to a rating period, the lowest premium rate 

6 charged or that could have been charged under a 

7 rating system for that class of business by the small 

8 employer carrier to small employers with similar 

9 case characteristics for health benefit plans with the 

10 same or similar coverage 

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

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

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

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

19 Rules or, as applicable, transitional small group 

20 rating rules in a State; 

21 ‘‘(B) notifies the insurance department of 

22 a nonadopting State (or other State agency), 

23 not later than 30 days prior to the offering of 

24 coverage described in this subparagraph, that 

25 the issuer intends to offer small group health 

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1 insurance coverage in that State consistent with 

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

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

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

7 filed with the insurance department of the State 

8 (or other State agency); and 

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

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

14 filed with the State pursuant to subparagraph 

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

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

18 terms of such contract. 

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

20 term ‘health insurance coverage’ means any coverage 

21 issued in the small group health insurance market, 

22 except that such term shall not include excepted 

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

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

25 means for each class of business with respect to the 

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1 rating period for small employers with similar case 

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

4 highest premium rate. 

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

6 The term ‘ Model Small Group Rating Rules’ means 

7 the rules set forth in section 2912(a)(2). 

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

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

12 term ‘small group insurance market’ shall have the 

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

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

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

17 State actions (including actions by a State agency) 

18 having the effect of law, of any State. 

19 ‘‘(11) VARIATION LIMITS.— 

20 ‘‘(A) COMPOSITE VARIATION LIMIT.— 

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

24 health insurance issuer in the small group 

25 market as permitted under applicable State 

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1 law based on the following factors or case 

2 characteristics: 

3 ‘‘(I) Age. 

4 ‘‘(II) Duration of coverage. 

5 ‘‘(III) Claims experience. 

6 ‘‘(IV) Health status. 

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

8 to the use of the factors described in 

9 clause (i) in setting premium rates, a 

10 health insurance issuer shall use one or 

11 both of the factors described in subclauses 

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

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

14 of such clause. 

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

16 ‘total variation limit’ means the total variation 

17 in premium rates charged by a health insurance 

18 issuer in the small group market as permitted 

19 under applicable State law based on all factors 

20 and case characteristics (as described in section 

21 2912(a)(1)). 

22 ‘‘SEC. 2912. RATING RULES. 

23 ‘‘(a) ESTABLISHMENT OF MINIMUM STANDARDS FOR

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

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

3 and Model Small Group Rating Rules: 

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

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

7 composite variation limit shall not be less than 

8 3:1. 

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

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

11 ‘‘(C) PROHIBITION ON USE OF CERTAIN

12 CASE CHARACTERISTICS.—For purposes of this 

13 paragraph, in calculating the total variation 

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

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

18 class of business, and participation in wellness 

19 programs. 

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

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

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

24 for small group health benefit plans to which 

25 this title applies shall comply with the following 

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

3 ‘‘(i) VARIATION IN PREMIUM

4 RATES.—The plan may not vary premium 

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

7 ‘‘(ii) INDEX RATE.—The index rate 

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

10 other class of business by more than 20 

11 percent, excluding those classes of business 

12 related to association groups under this 

13 title. 

14 ‘‘(iii) CLASS OF BUSINESSES.—With 

15 respect to a class of business, the premium 

16 rates charged during a rating period to 

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

19 or the rates that could be charged to such 

20 employers under the rating system for that 

21 class of business, shall not vary from the 

22 index rate by more than 25 percent of the 

23 index rate under clause (ii). 

24 ‘‘(iv) INCREASES FOR NEW RATING

25 PERIODS.—The percentage increase in the 

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1 premium rate charged to a small employer 

2 for a new rating period may not exceed the 

3 sum of the following: 

4 ‘‘(I) The percentage change in 

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

7 rating period to the first day of the 

8 new rating period. In the case of a 

9 health benefit plan into which the 

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

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

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

16 change in the new business premium 

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

20 small employers. 

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

23 pro rata for rating periods of less 

24 then 1 year, due to the claim experi25 ence, health status or duration of covmstockstill on PROD1PC66 with BILLS

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1 erage of the employees or dependents 

2 of the small employer as determined 

3 from the small employer carrier’s rate 

4 manual for the class of business in5 volved. 

6 ‘‘(III) Any adjustment due to 

7 change in coverage or change in the 

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

10 employer carrier’s rate manual for the 

11 class of business. 

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

14 rates for claim experience, health status, or 

15 duration of coverage shall not be charged 

16 to individual employees or dependents. Any 

17 such adjustment shall be applied uniformly 

18 to the rates charged for all employees and 

19 dependents of the small employer. 

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

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

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1 ‘‘(vii) CONSISTENT APPLICATION OF

2 FACTORS.—Small employer carriers shall 

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

5 small employers in a class of business. 

6 Rating factors shall produce premiums for 

7 identical groups which differ only by the 

8 amounts attributable to plan design and do 

9 not reflect differences due to the nature of 

10 the groups assumed to select particular 

11 health benefit plans. 

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

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

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

22 any assessments paid or payable by a small 

23 employer carrier as required by a State’s 

24 small employer carrier reinsurance pro25 gram. 

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1 ‘‘(B) ESTABLISHMENT OF SEPARATE

2 CLASS OF BUSINESS.—Subject to subparagraph 

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

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

8 ‘‘(i) The small employer carrier uses 

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

11 small employers. 

12 ‘‘(ii) The small employer carrier has 

13 acquired a class of business from another 

14 small employer carrier. 

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

17 groups that meet the requirements of this 

18 title. 

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

21 business under subparagraph (B), excluding 

22 those classes of business related to association 

23 groups under this title. 

24 ‘‘(D) LIMITATION ON TRANSFERS.—A 

25 small employer carrier shall not transfer a 

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1 small employer involuntarily into or out of a 

2 class of business. A small employer carrier shall 

3 not offer to transfer a small employer into or 

4 out of a class of business unless such offer is 

5 made to transfer all small employers in the 

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

9 ‘‘(b) TRANSITIONAL MODEL SMALL GROUP RATING

10 RULES.— 

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

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

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

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

19 rules in accordance with this subsection, which shall 

20 be applicable with respect to non-adopting States 

21 and eligible insurers operating in such States for a 

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

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

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1 ‘‘(2) COMPLIANCE WITH TRANSITIONAL MODEL

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

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

5 a small group rating rules methodology that allows 

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

9 deemed to be an adopting State if the State complies 

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

12 (1). 

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

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

15 transitional small group rating rules under 

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

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

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

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1 a stable and fair transition for old and new 

2 market entrants. 

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

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

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

8 maintain independent rating classes for old and 

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

10 the commencement of such 5-year period to 

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

12 that is 3 years after the date of enactment of 

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

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

17 rules under paragraph (1). 

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

19 developing the transitional small group rating rules 

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

21 the application of the transitional small group rating 

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

24 ‘‘(c) MARKET RE-ENTRY.— 

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

2 provision of law, a health insurance issuer that has 

3 voluntarily withdrawn from providing coverage in the 

4 small group market prior to the date of enactment 

5 of the Health Insurance Marketplace Modernization 

6 and Affordability Act of 2007 shall not be excluded 

7 from re-entering such market on a date that is more 

8 than 180 days after such date of enactment. 

9 ‘‘(2) TERMINATION.—The provision of this sub10 section shall terminate on the date that is 24 

11 months after the date of enactment of the Health 

12 Insurance Marketplace Modernization and Afford13 ability Act of 2007. 

14 ‘‘SEC. 2913. APPLICATION AND PREEMPTION. 

15 ‘‘(a) SUPERSEDING OF STATE LAW.— 

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

17 any and all State laws of a non-adopting State inso18 far as such State laws (whether enacted prior to or 

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

20 rating in the small group insurance market as ap21 plied to an eligible insurer, or small group health in22 surance coverage issued by an eligible insurer, in23 cluding with respect to coverage issued to a small 

24 employer through a small business health plan, in a 

25 State. 

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

2 supersede any and all State laws of a nonadopting 

3 State insofar as such State laws (whether enacted 

4 prior to or after the date of enactment of this sub5 title)— 

6 ‘‘(A) prohibit an eligible insurer from of7 fering, marketing, or implementing small group 

8 health insurance coverage consistent with the 

9 Model Small Group Rating Rules or transitional 

10 model small group rating rules; or 

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

12 or otherwise punishing in any respect an eligible 

13 insurer for offering, marketing, or imple14 menting small group health insurance coverage 

15 consistent with the Model Small Group Rating 

16 Rules or transitional model small group rating 

17 rules. 

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

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

20 Subsection (a) shall not apply with respect to adopt21 ing states. 

22 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR23 ERS.—Subsection (a) shall not apply with respect to 

24 insurers that do not qualify as eligible insurers that 

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1 offer small group health insurance coverage in a 

2 nonadopting State. 

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

5 not supercede any State law in a nonadopting State 

6 to the extent necessary to permit individuals or the 

7 insurance department of the State (or other State 

8 agency) to obtain relief under State law to require 

9 an eligible insurer to comply with the Model Small 

10 Group Rating Rules or transitional model small 

11 group rating rules. 

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

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

14 manner the preemptive scope of sections 502 and 

15 514 of the Employee Retirement Income Security 

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

17 to create any cause of action under Federal or State 

18 law or enlarge or affect any remedy available under 

19 the Employee Retirement Income Security Act of 

20 1974. 

21 ‘‘(5) PREEMPTION LIMITED TO RATING.—Sub22 section (a) shall not preempt any State law that 

23 does not have a reference to or a connection with 

24 State rating rules that would otherwise apply to eli25 gible insurers. 

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

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

3 plan year or the first calendar year following the issuance 

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

5 Group Rating Rules or, as applicable, the Transitional 

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

7 than the date that is 12 months after the date of enact8 ment of this title. 

9 ‘‘SEC. 2914. CIVIL ACTIONS AND JURISDICTION. 

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

11 shall have exclusive jurisdiction over civil actions involving 

12 the interpretation of this part. 

13 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac14 tion in the district courts of the United States for injunc15 tive or other equitable relief against any officials or agents 

16 of a nonadopting State in connection with any conduct or 

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

18 agents which violates, or which would if undertaken vio19 late, section 2913. 

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

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

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

23 of Appeals for the circuit in which the nonadopting State 

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

25 Court. 

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1 ‘‘(d) EXPEDITED REVIEW.— 

2 ‘‘(1) DISTRICT COURT.—In the case of an ac3 tion brought in a district court of the United States 

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

5 action, including the issuance of a judgment, prior 

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

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

8 to such proceeding agree to an extension of such pe9 riod. 

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

11 action brought directly in a United States Court of 

12 Appeal under subsection (c), or in the case of an ap13 peal of an action brought in a district court under 

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

15 on the petition, including the issuance of a judg16 ment, prior to the end of the 60-day period begin17 ning on the date on which such petition is filed with 

18 the Court, unless all parties to such proceeding 

19 agree to an extension of such period. 

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

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

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

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

24 proposed conduct or action, of a nonadopting State. 

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1 ‘‘SEC. 2915. ONGOING REVIEW. 

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

3 Model Small Group Rating Rules are issued under this 

4 part, and every 5 years thereafter, the Secretary, in con5 sultation with the National Association of Insurance Com6 missioners, shall prepare and submit to the appropriate 

7 committees of Congress a report that assesses the effect 

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

9 and market functioning in the small group market. Such 

10 report may, if the Secretary, in consultation with the Na11 tional Association of Insurance Commissioners, deter12 mines such is appropriate for improving access, costs, and 

13 market functioning, contain legislative proposals for rec14 ommended modification to such Model Small Group Rat15 ing Rules. 

16 ‘‘PART II—AFFORDABLE PLANS 

17 ‘‘SEC. 2921. DEFINITIONS. 

18 ‘‘In this part: 

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

20 State’ means a State that has enacted a law pro21 viding that small group, individual, and large group 

22 health insurers in such State may offer and sell 

23 products in accordance with the List of Required 

24 Benefits and the Terms of Application as provided 

25 for in section 2922(b) 

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

2 insurer’ means a health insurance issuer that is li3 censed in a nonadopting State and that— 

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

5 30 days prior to the offering of coverage de6 scribed in this subparagraph, that the issuer in7 tends to offer health insurance coverage con8 sistent with the List of Required Benefits and 

9 Terms of Application in a nonadopting State; 

10 ‘‘(B) notifies the insurance department of 

11 a nonadopting State (or other applicable State 

12 agency), not later than 30 days prior to the of13 fering of coverage described in this subpara14 graph, that the issuer intends to offer health in15 surance coverage in that State consistent with 

16 the List of Required Benefits and Terms of Ap17 plication, and provides with such notice a copy 

18 of any insurance policy that it intends to offer 

19 in the State, its most recent annual and quar20 terly financial reports, and any other informa21 tion required to be filed with the insurance de22 partment of the State (or other State agency) 

23 by the Secretary in regulations; and 

24 ‘‘(C) includes in the terms of the health in25 surance coverage offered in nonadopting States 

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1 (including in the terms of any individual certifi2 cates that may be offered to individuals in con3 nection with such group health coverage) and 

4 filed with the State pursuant to subparagraph 

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

6 the List of Required Benefits and a description 

7 of the Terms of Application, including a de8 scription of the benefits to be provided, and 

9 that adherence to such standards is included as 

10 a term of such contract. 

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

12 term ‘health insurance coverage’ means any coverage 

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

14 health insurance markets, including with respect to 

15 small business health plans, except that such term 

16 shall not include excepted benefits (as defined in sec17 tion 2791(c)). 

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

19 ‘List of Required Benefits’ means the List issued 

20 under section 2922(a). 

21 ‘‘(5) NONADOPTING STATE.—The term ‘non22 adopting State’ means a State that is not an adopt23 ing State. 

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

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

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1 actions (including actions by a State agency) having 

2 the effect of law, of any State. 

3 ‘‘(7) STATE PROVIDER FREEDOM OF CHOICE

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

5 Law’ means a State law requiring that a health in6 surance issuer, with respect to health insurance cov7 erage, not discriminate with respect to participation, 

8 reimbursement, or indemnification as to any pro9 vider who is acting within the scope of the provider’s 

10 license or certification under applicable State law. 

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

12 ‘Terms of Application’ means terms provided under 

13 section 2922(a). 

14 ‘‘SEC. 2922. OFFERING AFFORDABLE PLANS. 

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

16 3 months after the date of enactment of this title, the Sec17 retary, in consultation with the National Association of In18 surance Commissioners, shall issue by interim final rule 

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

20 covered benefits, services, or categories of providers that 

21 are required to be provided by health insurance issuers, 

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

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

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

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

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1 small business health plans, the List of Required Benefits 

2 applicable to the small group market shall apply. 

3 ‘‘(b) TERMS OF APPLICATION.— 

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

5 a State that has a covered benefit, service, or cat6 egory of provider mandate in effect that is covered 

7 under the List of Required Benefits under sub8 section (a), such State mandate shall, subject to 

9 paragraph (3) (concerning uniform application), 

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

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

12 through a small business health plan in such State. 

13 ‘‘(2) STATES WITHOUT MANDATES.—With re14 spect to a State that does not have a covered ben15 efit, service, or category of provider mandate in ef16 fect that is covered under the List of Required Ben17 efits under subsection (a), such mandate shall not 

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

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

20 through a small business health plan in such State. 

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

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

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

24 covered benefit, service, or category of provider 

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1 fits under subsection (a) the State shall permit 

2 a coverage plan or plan offered in the small 

3 group, individual, or large group market or 

4 through a small business health plan in such 

5 State to apply such benefit, service, or category 

6 of provider coverage in a manner consistent 

7 with the manner in which such coverage is ap8 plied under one of the three most heavily sub9 scribed national health plans offered under the 

10 Federal Employee Health Benefits Program 

11 under chapter 89 of title 5, United States Code 

12 (as determined by the Secretary in consultation 

13 with the Director of the Office of Personnel 

14 Management), and consistent with the Publica15 tion of Benefit Applications under subsection 

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

17 category of provider appearing in the List of 

18 Required Benefits is not offered in one of the 

19 three most heavily subscribed national health 

20 plans offered under the Federal Employees 

21 Health Benefits Program, such covered benefit, 

22 service, or category of provider requirement 

23 shall be applied in a manner consistent with the 

24 manner in which such coverage is offered in the 

25 remaining most heavily subscribed plan of the 

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1 remaining Federal Employees Health Benefits 

2 Program plans, as determined by the Secretary, 

3 in consultation with the Director of the Office 

4 of Personnel Management. 

5 ‘‘(B) EXCEPTION REGARDING STATE PRO6 VIDER FREEDOM OF CHOICE LAWS.—Notwith7 standing subparagraph (A), in the event a cat8 egory of provider mandate is included in the 

9 List of Covered Benefits, any State Provider 

10 Freedom of Choice Law (as defined in section 

11 2921(7)) that is in effect in any State in which 

12 such category of provider mandate is in effect 

13 shall not be preempted, with respect to that cat14 egory of provider, by this part. 

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

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

17 this title, and on the first day of every calendar year there18 after, the Secretary, in consultation with the Director of 

19 the Office of Personnel Management, shall publish in the 

20 Federal Register a description of such covered benefits, 

21 services, and categories of providers covered in that cal22 endar year by each of the three most heavily subscribed 

23 nationally available Federal Employee Health Benefits 

24 Plan options which are also included on the List of Re25 quired Benefits. 

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1 ‘‘(d) EFFECTIVE DATES.— 

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

3 respect to health insurance provided to participating 

4 employers of small business health plans, the re5 quirements of this part (concerning lower cost plans) 

6 shall apply beginning on the date that is 12 months 

7 after the date of enactment of this title. 

8 ‘‘(2) NON-ASSOCIATION COVERAGE.—With re9 spect to health insurance provided to groups or indi10 viduals other than participating employers of small 

11 business health plans, the requirements of this part 

12 shall apply beginning on the date that is 15 months 

13 after the date of enactment of this title. 

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

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

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

17 every 2 years thereafter, the Secretary, in consultation 

18 with the National Association of Insurance Commis19 sioners, shall update the list based on changes in the laws 

20 and regulations of the States. The Secretary shall issue 

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

22 be effective upon the first plan year following the issuance 

23 of such regulation. 

24 ‘‘SEC. 2923. APPLICATION AND PREEMPTION. 

25 ‘‘(a) SUPERCEDING OF STATE LAW.— 

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

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

3 mandates relating to covered benefits, services, or 

4 categories of provider in the health insurance market 

5 as applied to an eligible insurer, or health insurance 

6 coverage issued by an eligible insurer, including with 

7 respect to coverage issued to a small business health 

8 plan, in a nonadopting State. 

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

10 supersede any and all State laws of a nonadopting 

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

12 enactment of this title) insofar as such laws— 

13 ‘‘(A) prohibit an eligible insurer from of14 fering, marketing, or implementing health in15 surance coverage consistent with the Benefit 

16 Choice Standards, as provided for in section 

17 2922(a); or 

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

19 or otherwise punishing in any respect an eligible 

20 insurer for offering, marketing, or imple21 menting health insurance coverage consistent 

22 with the Benefit Choice Standards. 

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

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

2 Subsection (a) shall not apply with respect to adopt3 ing States. 

4 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR5 ERS.—Subsection (a) shall not apply with respect to 

6 insurers that do not qualify as eligible insurers who 

7 offer health insurance coverage in a nonadopting 

8 State. 

9 ‘‘(3) NONAPPLICATION WHERE OBTAINING RE10 LIEF UNDER STATE LAW.—Subsection (a)(1) shall 

11 not supercede any State law of a nonadopting State 

12 to the extent necessary to permit individuals or the 

13 insurance department of the State (or other State 

14 agency) to obtain relief under State law to require 

15 an eligible insurer to comply with the Benefit Choice 

16 Standards. 

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

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

19 manner the preemptive scope of sections 502 and 

20 514 of the Employee Retirement Income Security 

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

22 to create any cause of action under Federal or State 

23 law or enlarge or affect any remedy available under 

24 the Employee Retirement Income Security Act of 

25 1974. 

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

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

3 does not have a reference to or a connection with 

4 State mandates regarding covered benefits, services, 

5 or categories of providers that would otherwise apply 

6 to eligible insurers. 

7 ‘‘SEC. 2924. CIVIL ACTIONS AND JURISDICTION. 

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

9 shall have exclusive jurisdiction over civil actions involving 

10 the interpretation of this part. 

11 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac12 tion in the district courts of the United States for injunc13 tive or other equitable relief against any officials or agents 

14 of a nonadopting State in connection with any conduct or 

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

16 agents which violates, or which would if undertaken vio17 late, section 2923. 

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

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

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

21 of Appeals for the circuit in which the nonadopting State 

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

23 Court. 

24 ‘‘(d) EXPEDITED REVIEW.— 

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1 ‘‘(1) DISTRICT COURT.—In the case of an ac2 tion brought in a district court of the United States 

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

4 action, including the issuance of a judgment, prior 

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

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

7 to such proceeding agree to an extension of such pe8 riod. 

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

10 action brought directly in a United States Court of 

11 Appeal under subsection (c), or in the case of an ap12 peal of an action brought in a district court under 

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

14 on the petition, including the issuance of a judg15 ment, prior to the end of the 60-day period begin16 ning on the date on which such petition is filed with 

17 the Court, unless all parties to such proceeding 

18 agree to an extension of such period. 

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

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

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

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

23 proposed conduct or action, of a nonadopting State. 

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1 ‘‘SEC. 2925. RULES OF CONSTRUCTION. 

2 ‘‘(a) IN GENERAL.—Notwithstanding any other pro3 vision of Federal or State law, a health insurance issuer 

4 in an adopting State or an eligible insurer in a non-adopt5 ing State may amend its existing policies to be consistent 

6 with the terms of this subtitle (concerning rating and ben7 efits). 

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

9 subtitle shall be construed to create any mandates for cov10 erage of benefits for HSA-qualified health plans that 

11 would require reimbursements in violation of section 

12 223(c)(2) of the Internal Revenue Code of 1986.’’. 

13 PART III—HARMONIZATION OF HEALTH 

14 INSURANCE STANDARDS 

15 SEC. 261. HEALTH INSURANCE STANDARDS HARMONI16 ZATION. 

17 Title XXIX of the Public Health Service Act (as 

18 added by section 201) is amended by adding at the end 

19 the following: 

20 ‘‘Subtitle B—Standards 

21 Harmonization 

22 ‘‘SEC. 2931. DEFINITIONS. 

23 ‘‘In this subtitle: 

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

25 State’ means a State that has enacted the har26 monized standards adopted under this subtitle in 

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1 their entirety and as the exclusive laws of the State 

2 that relate to the harmonized standards. 

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

4 insurer’ means a health insurance issuer that is li5 censed in a nonadopting State and that— 

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

7 30 days prior to the offering of coverage de8 scribed in this subparagraph, that the issuer in9 tends to offer health insurance coverage con10 sistent with the harmonized standards in a non11 adopting State; 

12 ‘‘(B) notifies the insurance department of 

13 a nonadopting State (or other State agency), 

14 not later than 30 days prior to the offering of 

15 coverage described in this subparagraph, that 

16 the issuer intends to offer health insurance cov17 erage in that State consistent with the har18 monized standards published pursuant to sec19 tion 2933(d), and provides with such notice a 

20 copy of any insurance policy that it intends to 

21 offer in the State, its most recent annual and 

22 quarterly financial reports, and any other infor23 mation required to be filed with the insurance 

24 department of the State (or other State agency) 

25 by the Secretary in regulations; and 

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1 ‘‘(C) includes in the terms of the health in2 surance coverage offered in nonadopting States 

3 (including in the terms of any individual certifi4 cates that may be offered to individuals in con5 nection with such health coverage) and filed 

6 with the State pursuant to subparagraph (B), a 

7 description of the harmonized standards pub8 lished pursuant to section 2933(g)(2) and an 

9 affirmation that such standards are a term of 

10 the contract. 

11 ‘‘(3) HARMONIZED STANDARDS.—The term 

12 ‘harmonized standards’ means the standards cer13 tified by the Secretary under section 2933(d). 

14 ‘‘(4) HEALTH INSURANCE COVERAGE.—The 

15 term ‘health insurance coverage’ means any coverage 

16 issued in the health insurance market, except that 

17 such term shall not include excepted benefits (as de18 fined in section 2791(c). 

19 ‘‘(5) NONADOPTING STATE.—The term ‘non20 adopting State’ means a State that fails to enact, 

21 within 18 months of the date on which the Secretary 

22 certifies the harmonized standards under this sub23 title, the harmonized standards in their entirety and 

24 as the exclusive laws of the State that relate to the 

25 harmonized standards. 

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

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

3 actions (including actions by a State agency) having 

4 the effect of law, of any State. 

5 ‘‘SEC. 2932. HARMONIZED STANDARDS. 

6 ‘‘(a) BOARD.— 

7 ‘‘(1) ESTABLISHMENT.—Not later than 3 

8 months after the date of enactment of this title, the 

9 Secretary, in consultation with the NAIC, shall es10 tablish the Health Insurance Consensus Standards 

11 Board (referred to in this subtitle as the ‘Board’) to 

12 develop recommendations that harmonize incon13 sistent State health insurance laws in accordance 

14 with the procedures described in subsection (b). 

15 ‘‘(2) COMPOSITION.— 

16 ‘‘(A) IN GENERAL.—The Board shall be 

17 composed of the following voting members to be 

18 appointed by the Secretary after considering the 

19 recommendations of professional organizations 

20 representing the entities and constituencies de21 scribed in this paragraph: 

22 ‘‘(i) Four State insurance commis23 sioners as recommended by the National 

24 Association of Insurance Commissioners, of 

25 which 2 shall be Democrats and 2 shall be 

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1 Republicans, and of which one shall be des2 ignated as the chairperson and one shall be 

3 designated as the vice chairperson. 

4 ‘‘(ii) Four representatives of State 

5 government, two of which shall be gov6 ernors of States and two of which shall be 

7 State legislators, and two of which shall be 

8 Democrats and two of which shall be Re9 publicans. 

10 ‘‘(iii) Four representatives of health 

11 insurers, of which one shall represent in12 surers that offer coverage in the small 

13 group market, one shall represent insurers 

14 that offer coverage in the large group mar15 ket, one shall represent insurers that offer 

16 coverage in the individual market, and one 

17 shall represent carriers operating in a re18 gional market. 

19 ‘‘(iv) Two representatives of insurance 

20 agents and brokers. 

21 ‘‘(v) Two independent representatives 

22 of the American Academy of Actuaries who 

23 have familiarity with the actuarial methods 

24 applicable to health insurance. 

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1 ‘‘(B) EX OFFICIO MEMBER.—A representa2 tive of the Secretary shall serve as an ex officio 

3 member of the Board. 

4 ‘‘(3) ADVISORY PANEL.—The Secretary shall 

5 establish an advisory panel to provide advice to the 

6 Board, and shall appoint its members after consid7 ering the recommendations of professional organiza8 tions representing the entities and constituencies 

9 identified in this paragraph: 

10 ‘‘(A) Two representatives of small business 

11 health plans. 

12 ‘‘(B) Two representatives of employers, of 

13 which one shall represent small employers and 

14 one shall represent large employers. 

15 ‘‘(C) Two representatives of consumer or16 ganizations. 

17 ‘‘(D) Two representatives of health care 

18 providers. 

19 ‘‘(4) QUALIFICATIONS.—The membership of the 

20 Board shall include individuals with national rec21 ognition for their expertise in health finance and ec22 onomics, actuarial science, health plans, providers of 

23 health services, and other related fields, who provide 

24 a mix of different professionals, broad geographic 

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1 representation, and a balance between urban and 

2 rural representatives. 

3 ‘‘(5) ETHICAL DISCLOSURE.—The Secretary 

4 shall establish a system for public disclosure by 

5 members of the Board of financial and other poten6 tial conflicts of interest relating to such members. 

7 Members of the Board shall be treated as employees 

8 of Congress for purposes of applying title I of the 

9 Ethics in Government Act of 1978 (Public Law 95– 

10 521). 

11 ‘‘(6) DIRECTOR AND STAFF.—Subject to such 

12 review as the Secretary deems necessary to assure 

13 the efficient administration of the Board, the chair 

14 and vice-chair of the Board may— 

15 ‘‘(A) employ and fix the compensation of 

16 an Executive Director (subject to the approval 

17 of the Comptroller General) and such other per18 sonnel as may be necessary to carry out its du19 ties (without regard to the provisions of title 5, 

20 United States Code, governing appointments in 

21 the competitive service); 

22 ‘‘(B) seek such assistance and support as 

23 may be required in the performance of its du24 ties from appropriate Federal departments and 

25 agencies; 

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1 ‘‘(C) enter into contracts or make other ar2 rangements, as may be necessary for the con3 duct of the work of the Board (without regard 

4 to section 3709 of the Revised Statutes (41 

5 U.S.C. 5)); 

6 ‘‘(D) make advance, progress, and other 

7 payments which relate to the work of the 

8 Board; 

9 ‘‘(E) provide transportation and subsist10 ence for persons serving without compensation; 

11 and 

12 ‘‘(F) prescribe such rules as it deems nec13 essary with respect to the internal organization 

14 and operation of the Board. 

15 ‘‘(7) TERMS.—The members of the Board shall 

16 serve for the duration of the Board. Vacancies in the 

17 Board shall be filled as needed in a manner con18 sistent with the composition described in paragraph 

19 (2). 

20 ‘‘(b) DEVELOPMENT OF HARMONIZED STAND21 ARDS.— 

22 ‘‘(1) IN GENERAL.—In accordance with the 

23 process described in subsection (c), the Board shall 

24 identify and recommend nationally harmonized 

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1 standards for each of the following process cat2 egories: 

3 ‘‘(A) FORM FILING AND RATE FILING.— 

4 Form and rate filing standards shall be estab5 lished which promote speed to market and in6 clude the following defined areas for States that 

7 require such filings: 

8 ‘‘(i) Procedures for form and rate fil9 ing pursuant to a streamlined administra10 tive filing process. 

11 ‘‘(ii) Timeframes for filings to be re12 viewed by a State if review is required be13 fore they are deemed approved. 

14 ‘‘(iii) Timeframes for an eligible in15 surer to respond to State requests fol16 lowing its review. 

17 ‘‘(iv) A process for an eligible insurer 

18 to self-certify. 

19 ‘‘(v) State development of form and 

20 rate filing templates that include only non21 preempted State law and Federal law re22 quirements for eligible insurers with timely 

23 updates. 

24 ‘‘(vi) Procedures for the resubmission 

25 of forms and rates. 

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1 ‘‘(vii) Disapproval rationale of a form 

2 or rate filing based on material omissions 

3 or violations of non-preempted State law or 

4 Federal law with violations cited and ex5 plained. 

6 ‘‘(viii) For States that may require a 

7 hearing, a rationale for hearings based on 

8 violations of non-preempted State law or 

9 insurer requests. 

10 ‘‘(B) MARKET CONDUCT REVIEW.—Market 

11 conduct review standards shall be developed 

12 which provide for the following: 

13 ‘‘(i) Mandatory participation in na14 tional databases. 

15 ‘‘(ii) The confidentiality of examina16 tion materials. 

17 ‘‘(iii) The identification of the State 

18 agency with primary responsibility for ex19 aminations. 

20 ‘‘(iv) Consultation and verification of 

21 complaint data with the eligible insurer 

22 prior to State actions. 

23 ‘‘(v) Consistency of reporting require24 ments with the recordkeeping and adminis25 trative practices of the eligible insurer. 

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1 ‘‘(vi) Examinations that seek to cor2 rect material errors and harmful business 

3 practices rather than infrequent errors. 

4 ‘‘(vii) Transparency and publishing of 

5 the State’s examination standards. 

6 ‘‘(viii) Coordination of market conduct 

7 analysis. 

8 ‘‘(ix) Coordination and nonduplication 

9 between State examinations of the same el10 igible insurer. 

11 ‘‘(x) Rationale and protocols to be 

12 met before a full examination is conducted. 

13 ‘‘(xi) Requirements on examiners 

14 prior to beginning examinations such as 

15 budget planning and work plans. 

16 ‘‘(xii) Consideration of methods to 

17 limit examiners’ fees such as caps, com18 petitive bidding, or other alternatives. 

19 ‘‘(xiii) Reasonable fines and penalties 

20 for material errors and harmful business 

21 practices. 

22 ‘‘(C) PROMPT PAYMENT OF CLAIMS.—The 

23 Board shall establish prompt payment stand24 ards for eligible insurers based on standards 

25 similar to those applicable to the Social Secumstockstill on PROD1PC66 with BILLS

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1 rity Act as set forth in section 1842(c)(2) of 

2 such Act (42 U.S.C. 1395u(c)(2)). Such prompt 

3 payment standards shall be consistent with the 

4 timing and notice requirements of the claims 

5 procedure rules to be specified under subpara6 graph (D), and shall include appropriate excep7 tions such as for fraud, nonpayment of pre8 miums, or late submission of claims. 

9 ‘‘(D) INTERNAL REVIEW.—The Board 

10 shall establish standards for claims procedures 

11 for eligible insurers that are consistent with the 

12 requirements relating to initial claims for bene13 fits and appeals of claims for benefits under the 

14 Employee Retirement Income Security Act of 

15 1974 as set forth in section 503 of such Act 

16 (29 U.S.C. 1133) and the regulations there17 under. 

18 ‘‘(2) RECOMMENDATIONS.—The Board shall 

19 recommend harmonized standards for each element 

20 of the categories described in subparagraph (A) 

21 through (D) of paragraph (1) within each such mar22 ket. Notwithstanding the previous sentence, the 

23 Board shall not recommend any harmonized stand24 ards that disrupt, expand, or duplicate the benefit, 

25 service, or provider mandate standards provided in 

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1 the Benefit Choice Standards pursuant to section 

2 2922(a). 

3 ‘‘(c) PROCESS FOR IDENTIFYING HARMONIZED

4 STANDARDS.— 

5 ‘‘(1) IN GENERAL.—The Board shall develop 

6 recommendations to harmonize inconsistent State in7 surance laws with respect to each of the process cat8 egories described in subparagraphs (A) through (D) 

9 of subsection (b)(1). 

10 ‘‘(2) REQUIREMENTS.—In adopting standards 

11 under this section, the Board shall consider the fol12 lowing: 

13 ‘‘(A) Any model acts or regulations of the 

14 National Association of Insurance Commis15 sioners in each of the process categories de16 scribed in subparagraphs (A) through (D) of 

17 subsection (b)(1). 

18 ‘‘(B) Substantially similar standards fol19 lowed by a plurality of States, as reflected in 

20 existing State laws, relating to the specific proc21 ess categories described in subparagraphs (A) 

22 through (D) of subsection (b)(1). 

23 ‘‘(C) Any Federal law requirement related 

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1 paragraphs (A) through (D) of subsection 

2 (b)(1). 

3 ‘‘(D) In the case of the adoption of any 

4 standard that differs substantially from those 

5 referred to in subparagraphs (A), (B), or (C), 

6 the Board shall provide evidence to the Sec7 retary that such standard is necessary to pro8 tect health insurance consumers or promote 

9 speed to market or administrative efficiency. 

10 ‘‘(E) The criteria specified in clauses (i) 

11 through (iii) of subsection (d)(2)(B). 

12 ‘‘(d) RECOMMENDATIONS AND CERTIFICATION BY

13 SECRETARY.— 

14 ‘‘(1) RECOMMENDATIONS.—Not later than 18 

15 months after the date on which all members of the 

16 Board are selected under subsection (a), the Board 

17 shall recommend to the Secretary the certification of 

18 the harmonized standards identified pursuant to 

19 subsection (c). 

20 ‘‘(2) CERTIFICATION.— 

21 ‘‘(A) IN GENERAL.—Not later than 120 

22 days after receipt of the Board’s recommenda23 tions under paragraph (1), the Secretary shall 

24 certify the recommended harmonized standards 

25 as provided for in subparagraph (B), and issue 

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1 such standards in the form of an interim final 

2 regulation. 

3 ‘‘(B) CERTIFICATION PROCESS.—The Sec4 retary shall establish a process for certifying 

5 the recommended harmonized standard, by cat6 egory, as recommended by the Board under this 

7 section. Such process shall— 

8 ‘‘(i) ensure that the certified stand9 ards for a particular process area achieve 

10 regulatory harmonization with respect to 

11 health plans on a national basis; 

12 ‘‘(ii) ensure that the approved stand13 ards are the minimum necessary, with re14 gard to substance and quantity of require15 ments, to protect health insurance con16 sumers and maintain a competitive regu17 latory environment; and 

18 ‘‘(iii) ensure that the approved stand19 ards will not limit the range of group 

20 health plan designs and insurance prod21 ucts, such as catastrophic coverage only 

22 plans, health savings accounts, and health 

23 maintenance organizations, that might oth24 erwise be available to consumers. 

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1 ‘‘(3) APPLICATION AND EFFECTIVE DATE.— 

2 The standards certified by the Secretary under para3 graph (2) shall apply and become effective on the 

4 date that is 18 months after the date on which the 

5 Secretary certifies the harmonized standards. 

6 ‘‘(e) TERMINATION.—The Board shall terminate and 

7 be dissolved after making the recommendations to the Sec8 retary pursuant to subsection (d)(1). 

9 ‘‘(f) ONGOING REVIEW.—Not earlier than 3 years 

10 after the termination of the Board under subsection (e), 

11 and not earlier than every 3 years thereafter, the Sec12 retary, in consultation with the National Association of In13 surance Commissioners and the entities and constituencies 

14 represented on the Board and the Advisory Panel, shall 

15 prepare and submit to the appropriate committees of Con16 gress a report that assesses the effect of the harmonized 

17 standards applied under this section on access, cost, and 

18 health insurance market functioning. The Secretary may, 

19 based on such report and applying the process established 

20 for certification under subsection (d)(2)(B), in consulta21 tion with the National Association of Insurance Commis22 sioners and the entities and constituencies represented on 

23 the Board and the Advisory Panel, update the harmonized 

24 standards through notice and comment rulemaking. 

25 ‘‘(g) PUBLICATION.— 

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1 ‘‘(1) LISTING.—The Secretary shall maintain 

2 an up to date listing of all harmonized standards 

3 certified under this section on the Internet website 

4 of the Department of Health and Human Services. 

5 ‘‘(2) SAMPLE CONTRACT LANGUAGE.—The Sec6 retary shall publish on the Internet website of the 

7 Department of Health and Human Services sample 

8 contract language that incorporates the harmonized 

9 standards certified under this section, which may be 

10 used by insurers seeking to qualify as an eligible in11 surer. The types of harmonized standards that shall 

12 be included in sample contract language are the 

13 standards that are relevant to the contractual bar14 gain between the insurer and insured. 

15 ‘‘(h) STATE ADOPTION AND ENFORCEMENT.—Not 

16 later than 18 months after the certification by the Sec17 retary of harmonized standards under this section, the 

18 States may adopt such harmonized standards (and become 

19 an adopting State) and, in which case, shall enforce the 

20 harmonized standards pursuant to State law. 

21 ‘‘SEC. 2933. APPLICATION AND PREEMPTION. 

22 ‘‘(a) SUPERCEDING OF STATE LAW.— 

23 ‘‘(1) IN GENERAL.—The harmonized standards 

24 certified under this subtitle and applied as provided 

25 for in section 2933(d)(3), shall supersede any and 

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1 all State laws of a non-adopting State insofar as 

2 such State laws relate to the areas of harmonized 

3 standards as applied to an eligible insurer, or health 

4 insurance coverage issued by a eligible insurer, in5 cluding with respect to coverage issued to a small 

6 business health plan, in a nonadopting State. 

7 ‘‘(2) NONADOPTING STATES.—This subtitle 

8 shall supersede any and all State laws of a non9 adopting State (whether enacted prior to or after the 

10 date of enactment of this title) insofar as they 

11 may— 

12 ‘‘(A) prohibit an eligible insurer from of13 fering, marketing, or implementing health in14 surance coverage consistent with the har15 monized standards; or 

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

17 or otherwise punishing in any respect an eligible 

18 insurer for offering, marketing, or imple19 menting health insurance coverage consistent 

20 with the harmonized standards under this sub21 title. 

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

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

24 Subsection (a) shall not apply with respect to adopt25 ing States. 

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1 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR2 ERS.—Subsection (a) shall not apply with respect to 

3 insurers that do not qualify as eligible insurers who 

4 offer health insurance coverage in a nonadopting 

5 State. 

6 ‘‘(3) NONAPPLICATION WHERE OBTAINING RE7 LIEF UNDER STATE LAW.—Subsection (a)(1) shall 

8 not supercede any State law of a nonadopting State 

9 to the extent necessary to permit individuals or the 

10 insurance department of the State (or other State 

11 agency) to obtain relief under State law to require 

12 an eligible insurer to comply with the harmonized 

13 standards under this subtitle. 

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

15 shall this subtitle be construed to limit or affect in 

16 any manner the preemptive scope of sections 502 

17 and 514 of the Employee Retirement Income Secu18 rity Act of 1974. In no case shall this subtitle be 

19 construed to create any cause of action under Fed20 eral or State law or enlarge or affect any remedy 

21 available under the Employee Retirement Income 

22 Security Act of 1974. 

23 ‘‘(c) EFFECTIVE DATE.—This section shall apply be24 ginning on the date that is 18 months after the date on 

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1 harmonized standards are certified by the Secretary under 

2 this subtitle. 

3 ‘‘SEC. 2934. CIVIL ACTIONS AND JURISDICTION. 

4 ‘‘(a) IN GENERAL.—The district courts of the United 

5 States shall have exclusive jurisdiction over civil actions 

6 involving the interpretation of this subtitle. 

7 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac8 tion in the district courts of the United States for injunc9 tive or other equitable relief against any officials or agents 

10 of a nonadopting State in connection with any conduct or 

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

12 agents which violates, or which would if undertaken vio13 late, section 2933. 

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

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

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

17 of Appeals for the circuit in which the nonadopting State 

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

19 Court. 

20 ‘‘(d) EXPEDITED REVIEW.— 

21 ‘‘(1) DISTRICT COURT.—In the case of an ac22 tion brought in a district court of the United States 

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

24 action, including the issuance of a judgment, prior 

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

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

2 to such proceeding agree to an extension of such pe3 riod. 

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

5 action brought directly in a United States Court of 

6 Appeal under subsection (c), or in the case of an ap7 peal of an action brought in a district court under 

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

9 on the petition, including the issuance of a judg10 ment, prior to the end of the 60-day period begin11 ning on the date on which such petition is filed with 

12 the Court, unless all parties to such proceeding 

13 agree to an extension of such period. 

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

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

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

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

18 proposed conduct or action, of a nonadopting State. 

19 ‘‘SEC. 2935. AUTHORIZATION OF APPROPRIATIONS; RULE 

20 OF CONSTRUCTION. 

21 ‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—There 

22 are authorized to be appropriated such sums as may be 

23 necessary to carry out this subtitle. 

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

25 subtitle shall be construed to create any mandates for covmstockstill on PROD1PC66 with BILLS

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1 erage of any benefits below the deductible levels set for 

2 any health savings account-qualified health plan pursuant 

3 to section 223 of the Internal Revenue Code of 1986.’’. 

4 TITLE III—AFFORDABLE ACCESS 

5 TO HEALTH CARE FOR ALL 

6 AMERICANS 

7 Subtitle A—Improving the Quality 

8 of Health Care by More Effec9 tively Using Health Information 

10 Technology 

11 SEC. 300. SHORT TITLE. 

12 This subtitle may be cited as the ‘‘Wired for Health 

13 Care Quality Act’’. 

14 PART I—HEALTH INFORMATION TECHNOLOGY 

15 Subpart A—Improving the Interoperability of Health 

16 Information Technology 

17 SEC. 301. IMPROVING HEALTH CARE QUALITY, SAFETY, 

18 AND EFFICIENCY. 

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

20 seq.) is amended by adding at the end the following: 

21 ‘‘TITLE XXX—HEALTH INFORMA22 TION TECHNOLOGY AND 

23 QUALITY 

24 ‘‘SEC. 3001. DEFINITIONS; REFERENCE. 

25 ‘‘(a) IN GENERAL.—In this title: 

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1 ‘‘(1) COMMUNITY.—The term ‘Community’ 

2 means the American Health Information Community 

3 established under section 3004. 

4 ‘‘(2) HEALTH CARE PROVIDER.—The term 

5 ‘health care provider’ means a hospital, skilled nurs6 ing facility, home health entity, health care clinic, 

7 federally qualified health center, group practice (as 

8 defined in section 1877(h)(4) of the Social Security 

9 Act), a pharmacist, a pharmacy, a laboratory, a phy10 sician (as defined in section 1861(r) of the Social 

11 Security Act), a practitioner (as defined in section 

12 1842(b)(18)(CC) of the Social Security Act), a 

13 health facility operated by or pursuant to a contract 

14 with the Indian Health Service, a rural health clinic, 

15 and any other category of facility or clinician deter16 mined appropriate by the Secretary. 

17 ‘‘(3) HEALTH INFORMATION.—The term ‘health 

18 information’ has the meaning given such term in 

19 section 1171(4) of the Social Security Act. 

20 ‘‘(4) HEALTH INSURANCE PLAN.— 

21 ‘‘(A) IN GENERAL.—The term ‘health in22 surance plan’ means— 

23 ‘‘(i) a health insurance issuer (as de24 fined in section 2791(b)(2)); 

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1 ‘‘(ii) a group health plan (as defined 

2 in section 2791(a)(1)); and 

3 ‘‘(iii) a health maintenance organiza4 tion (as defined in section 2791(b)(3)); or 

5 ‘‘(iv) a safety net health plan. 

6 ‘‘(B) SAFETY NET HEALTH PLAN.—The 

7 term ‘safety net health plan’ means a managed 

8 care organization, as defined in section 

9 1932(a)(1)(B)(i) of the Social Security Act— 

10 ‘‘(i) that is exempt from or not sub11 ject to Federal income tax, or that is 

12 owned by an entity or entities exempt from 

13 or not subject to Federal income tax; and 

14 ‘‘(ii) for which not less than 75 per15 cent of the enrolled population receives 

16 benefits under a Federal health care pro17 gram (as defined in section 1128B(f)(1) of 

18 the Social Security Act) or a health care 

19 plan or program which is funded, in whole 

20 or in part, by a State (other than a pro21 gram for government employees). 

22 ‘‘(C) REFERENCES.—All references in this 

23 title to ‘health plan’ shall be deemed to be ref24 erences to ‘health insurance plan’. 

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1 ‘‘(5) INDIVIDUALLY IDENTIFIABLE HEALTH IN2 FORMATION.—The term ‘individually identifiable 

3 health information’ has the meaning given such term 

4 in section 1171 of the Social Security Act. 

5 ‘‘(6) LABORATORY.—The term ‘laboratory’ has 

6 the meaning given such term in section 353. 

7 ‘‘(7) NATIONAL COORDINATOR.—The term ‘Na8 tional Coordinator’ means the National Coordinator 

9 of Health Information Technology appointed pursu10 ant to section 3002. 

11 ‘‘(8) PARTNERSHIP.—The term ‘Partnership’ 

12 means the Partnership for Health Care Improve13 ment established under section 3003. 

14 ‘‘(9) QUALIFIED HEALTH INFORMATION TECH15 NOLOGY.—The term ‘qualified health information 

16 technology’ means a computerized system (including 

17 hardware and software) that— 

18 ‘‘(A) protects the privacy and security of 

19 health information; 

20 ‘‘(B) maintains and provides permitted ac21 cess to health information in an electronic for22 mat; 

23 ‘‘(C) with respect to individually identifi24 able health information maintained in a des25 ignated record set, preserves an audit trail of 

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1 each individual that has gained access to such 

2 record set; 

3 ‘‘(D) incorporates decision support to re4 duce medical errors and enhance health care 

5 quality; 

6 ‘‘(E) complies with the standards adopted 

7 by the Federal Government under section 3003; 

8 ‘‘(F) has the ability to transmit and ex9 change information to other health information 

10 technology systems and, to the extent feasible, 

11 public health information technology systems; 

12 and 

13 ‘‘(G) allows for the reporting of quality 

14 measures adopted under section 3010. 

15 ‘‘(10) STATE.—The term ‘State’ means each of 

16 the several States, the District of Columbia, Puerto 

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

18 and the Northern Mariana Islands. 

19 ‘‘(b) REFERENCES TO SOCIAL SECURITY ACT.—Any 

20 reference in this section to the Social Security Act shall 

21 be deemed to be a reference to such Act as in effect on 

22 the date of enactment of this title. 

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1 ‘‘SEC. 3002. OFFICE OF THE NATIONAL COORDINATOR FOR 

2 HEALTH INFORMATION TECHNOLOGY. 

3 ‘‘(a) ESTABLISHMENT.—There is established within 

4 the office of the Secretary, the Office of the National Co5 ordinator of Health Information Technology. The Na6 tional Coordinator shall be appointed by the Secretary in 

7 consultation with the President, and shall report directly 

8 to the Secretary. 

9 ‘‘(b) PURPOSE.—The Office of the National Coordi10 nator shall be responsible for— 

11 ‘‘(1) ensuring that key health information tech12 nology initiatives are coordinated across programs of 

13 the Department of Health and Human Services; 

14 ‘‘(2) ensuring that health information tech15 nology policies and programs of the Department of 

16 Health and Human Services are coordinated with 

17 such policies and programs of other relevant Federal 

18 agencies (including Federal commissions and advi19 sory committees) with a goal of avoiding duplication 

20 of efforts and of helping to ensure that each agency 

21 undertakes activities primarily within the areas of its 

22 greatest expertise and technical capability; 

23 ‘‘(3) reviewing Federal health information tech24 nology investments to ensure that Federal health in25 formation technology programs are meeting the ob26 jectives of the strategic plan published by the Office 

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1 of the National Coordinator of Health Information 

2 Technology to establish a nationwide interoperable 

3 health information technology infrastructure; 

4 ‘‘(4) providing comments and advice regarding 

5 specific Federal health information technology pro6 grams, at the request of Office of Management and 

7 Budget; and 

8 ‘‘(5) enhancing the use of health information 

9 technology to improve the quality of health care in 

10 the prevention and management of chronic disease 

11 and to address population health. 

12 ‘‘(c) ROLE WITH COMMUNITY AND THE PARTNER13 SHIP.—The Office of the National Coordinator shall— 

14 ‘‘(1) serve as an ex officio member of the Com15 munity, and act as a liaison between the Federal 

16 Government and the Community; 

17 ‘‘(2) serve as an ex officio member of the Part18 nership and act as a liaison between the Federal 

19 Government and the Partnership; and 

20 ‘‘(3) serve as a liaison between the Partnership 

21 and the Community. 

22 ‘‘(d) REPORTS AND WEBSITE.—The Office of the 

23 National Coordinator shall— 

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1 ‘‘(1) develop and publish a strategic plan for 

2 implementing a nationwide interoperable health in3 formation technology infrastructure; 

4 ‘‘(2) maintain and frequently update an Inter5 net website that— 

6 ‘‘(A) publishes the schedule for the assess7 ment of standards for significant use cases; 

8 ‘‘(B) publishes the recommendations of the 

9 Community; 

10 ‘‘(C) publishes the recommendations of the 

11 Partnership; 

12 ‘‘(D) publishes quality measures; 

13 ‘‘(E) identifies sources of funds that will 

14 be made available to facilitate the purchase of, 

15 or enhance the utilization of, health information 

16 technology systems, either through grants or 

17 technical assistance; and 

18 ‘‘(F) publishes a plan for a transition of 

19 any functions of the Office of the National Co20 ordinator that should be continued after Sep21 tember 30, 2014; 

22 ‘‘(3) prepare a report on the lessons learned 

23 from major public and private health care systems 

24 that have implemented health information tech25 nology systems, including an explanation of whether 

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1 the systems and practices developed by such systems 

2 may be applicable to and usable in whole or in part 

3 by other health care providers; and 

4 ‘‘(4) assess the impact of health information 

5 technology in communities with health disparities 

6 and identify practices to increase the adoption of 

7 such technology by health care providers in such 

8 communities. 

9 ‘‘(e) RULE OF CONSTRUCTION.—Nothing in this sec10 tion shall be construed as requiring the duplication of Fed11 eral efforts with respect to the establishment of the Office 

12 of the National Coordinator for Health Information Tech13 nology, regardless of whether such efforts are carried out 

14 before or after the date of the enactment of this title. 

15 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 

16 is authorized to be appropriated to carry out this section, 

17 $5,000,000 for each of fiscal years 2008 and 2009. 

18 ‘‘(g) SUNSET.—The provisions of this section shall 

19 not apply after September 30, 2014. 

20 ‘‘SEC. 3003. PARTNERSHIP FOR HEALTH CARE IMPROVE21 MENT-STANDARDS AND TECHNOLOGY. 

22 ‘‘(a) ESTABLISHMENT.— 

23 ‘‘(1) IN GENERAL.—There is established a pub24 lic-private Partnership for Health Care Improvement 

25 to— 

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1 ‘‘(A) provide advice to the Secretary and 

2 the Nation and recommend specific actions to 

3 achieve a nationwide interoperable health infor4 mation technology infrastructure; 

5 ‘‘(B) make recommendations concerning 

6 standards, implementation specifications, and 

7 certification criteria for the electronic exchange 

8 of health information (including for the report9 ing of quality data under section 3010) for 

10 adoption by the Federal Government and vol11 untary adoption by private entities; 

12 ‘‘(C) serve as a forum for the participation 

13 of a broad range of stakeholders with specific 

14 technical expertise in the development of stand15 ards, implementation specifications, and certifi16 cation criteria to provide input on the effective 

17 implementation of health information tech18 nology systems; and 

19 ‘‘(D) develop and maintain an Internet 

20 website that— 

21 ‘‘(i) publishes established governance 

22 rules (including a subsequent appointment 

23 process); 

24 ‘‘(ii) publishes a business plan; 

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1 ‘‘(iii) publishes meeting notices at 

2 least 14 days prior to each meeting; 

3 ‘‘(iv) publishes meeting agendas at 

4 least 7 days prior to each meeting; and 

5 ‘‘(v) publishes meeting materials at 

6 least 3 days prior to each meeting. 

7 ‘‘(2) LIMITATION.—The Partnership shall not 

8 meet or take any action until an advisory committee 

9 charter has been filed with the Secretary and with 

10 the appropriate committees of the Senate and House 

11 of Representatives for the Community described in 

12 section 3004. 

13 ‘‘(b) MEMBERSHIP.— 

14 ‘‘(1) APPOINTMENTS.— 

15 ‘‘(A) IN GENERAL.—The Partnership shall 

16 be composed of members to be appointed as fol17 lows: 

18 ‘‘(i) 2 members shall be appointed by 

19 the Secretary. 

20 ‘‘(ii) 1 member shall be appointed by 

21 the majority leader of the Senate. 

22 ‘‘(iii) 1 member shall be appointed by 

23 the minority leader of the Senate. 

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1 ‘‘(iv) 1 member shall be appointed by 

2 the Speaker of the House of Representa3 tives. 

4 ‘‘(v) 1 member shall be appointed by 

5 the minority leader of the House of Rep6 resentatives. 

7 ‘‘(vi) Seven members shall be ap8 pointed by the Comptroller General of 

9 whom— 

10 ‘‘(I) one member shall be a rep11 resentative of consumer or patient or12 ganizations; 

13 ‘‘(II) one member shall be a rep14 resentative of organizations with ex15 pertise in privacy; 

16 ‘‘(III) one member shall be a rep17 resentative of organizations with ex18 pertise in security; 

19 ‘‘(IV) one member shall be a rep20 resentative of health care providers; 

21 ‘‘(V) one member shall be a rep22 resentative of health plans or other 

23 third party payers; 

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1 ‘‘(VI) one member shall be a rep2 resentative of information technology 

3 vendors; and 

4 ‘‘(VII) one member shall be a 

5 representative of purchasers or em6 ployers. 

7 ‘‘(B) NATIONAL COORDINATOR.—The Na8 tional Coordinator shall be a member of the 

9 Partnership and act as a liaison among the 

10 Partnership, the community, and the Federal 

11 Government. 

12 ‘‘(2) CHAIRPERSON AND VICE CHAIRPERSON.— 

13 The Partnership shall designate one member to 

14 serve as the chairperson and one member to serve as 

15 the vice chairperson of the Partnership. 

16 ‘‘(3) PARTICIPATION.—In appointing members 

17 under paragraph (1)(A), and in developing the pro18 cedures for conducting the activities of the Partner19 ship, the Partnership shall ensure a balance among 

20 various sectors of the health care system so that no 

21 single sector unduly influences the recommendations 

22 of the Partnership. 

23 ‘‘(4) TERMS.—Members appointed under para24 graph (1)(A) shall serve for 3 year terms, except 

25 that any member appointed to fill a vacancy for an 

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1 unexpired term shall be appointed for the remainder 

2 of such term. A member may serve for not to exceed 

3 180 days after the expiration of such member’s term 

4 or until a successor has been appointed. 

5 ‘‘(5) OUTSIDE INVOLVEMENT.—The Partner6 ship shall ensure an adequate opportunity for the 

7 participation of outside advisors, including individ8 uals with expertise in— 

9 ‘‘(A) health information privacy; 

10 ‘‘(B) health information security; 

11 ‘‘(C) health care quality and patient safety, 

12 including individuals with expertise in utilizing 

13 health information technology to improve health 

14 care quality and patient safety; 

15 ‘‘(D) medical and clinical research data ex16 change; and 

17 ‘‘(E) developing health information tech18 nology standards and new health information 

19 technology. 

20 ‘‘(6) QUORUM.—Two-thirds of the members of 

21 the Partnership shall constitute a quorum for the 

22 purpose of conducting votes. 

23 ‘‘(c) STANDARDS AND IMPLEMENTATION SPECIFICA24 TIONS.— 

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1 ‘‘(1) SCHEDULE.—Not later than 90 days after 

2 the date of enactment of this title, the Partnership 

3 shall develop a schedule for the assessment of stand4 ards and implementation specifications under this 

5 section. The Partnership shall update such schedule 

6 annually. The Secretary shall publish such schedule 

7 in the Federal Register and on the Internet website 

8 of the Department of Health and Human Services. 

9 ‘‘(2) FIRST YEAR RECOMMENDATIONS.—Con10 sistent with the schedule published under paragraph 

11 (1) and not later than 1 year after date of enact12 ment of this title, the Partnership shall recommend, 

13 and the Secretary shall review, such standards and 

14 implementation specifications. 

15 ‘‘(3) ONGOING RECOMMENDATIONS.—The Part16 nership shall review and modify, as appropriate but 

17 at least annually, adopted standards and implemen18 tation specifications and continue to recommend ad19 ditional standards and implementation specifications, 

20 consistent with the schedule published pursuant to 

21 paragraph (1). The Secretary shall review such 

22 modifications and recommendations. 

23 ‘‘(4) RECOGNITION OF PRIVATE ENTITIES.— 

24 The Partnership, in consultation with the Secretary, 

25 may recognize a private entity or entities for the 

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1 purpose of developing and updating standards and 

2 implementation specifications to achieve uniform and 

3 consistent implementation of the standards adopted 

4 by the President under this title. Such entity or enti5 ties shall make recommendations to the Partnership 

6 consistent with this section. 

7 ‘‘(5) PUBLICATION.—All recommendations 

8 made by the Partnership pursuant to this section 

9 shall be published in the Federal Register and on 

10 the Internet website of the Office of the National 

11 Coordinator. 

12 ‘‘(6) PILOT TESTING.—The Secretary may con13 duct, or recognize a private entity or entities to con14 duct, a pilot project to test the standards and imple15 mentation specifications developed under this section 

16 in order to provide for the efficient implementation 

17 of the standards and implementation specifications 

18 described in this subsection prior to issuing such 

19 recommendations. 

20 ‘‘(7) PUBLIC INPUT.—The Partnership shall 

21 conduct open public meetings and develop a process 

22 to allow for public comment on the schedule and rec23 ommendations described in this section. Such proc24 ess shall ensure that such comments will be submstockstill on PROD1PC66 with BILLS

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1 mitted within 30 days of the publication of a rec2 ommendation under this section. 

3 ‘‘(8) FEDERAL ACTION.—Not later than 90 

4 days after the issuance of a recommendation from 

5 the Partnership under this subsection, the Secretary, 

6 the Secretary of Veterans Affairs, and the Secretary 

7 of Defense, in collaboration with representatives of 

8 other relevant Federal agencies as determined ap9 propriate by the President, shall jointly review such 

10 recommendation. If appropriate, the President shall 

11 provide for the adoption by the Federal Government 

12 of any standard or implementation specification con13 tained in such recommendation. Such determination 

14 shall be published in the Federal Register and on 

15 the Internet website of the Office of the National 

16 Coordinator within 30 days after such determination 

17 is made. 

18 ‘‘(9) CONSISTENCY.—The standards and imple19 mentation specifications described in this subsection 

20 shall be consistent with the standards for informa21 tion transactions and data elements developed pur22 suant to the regulations promulgated under section 

23 264(c) of the Health Insurance Portability and Ac24 countability Act of 1996. 

25 ‘‘(d) CERTIFICATION.— 

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1 ‘‘(1) DEVELOPING CRITERIA.—The Partner2 ship, in consultation with the Secretary, may recog3 nize a private entity or entities for the purpose of 

4 developing and recommending to the Partnership 

5 criteria to certify that appropriate categories of 

6 health information technology products that claim to 

7 be in compliance with applicable standards and im8 plementation specifications adopted under this title 

9 have established such compliance. 

10 ‘‘(2) ADOPTION OF CRITERIA.—The Secretary, 

11 based upon the recommendations of the Partnership, 

12 shall review, and if appropriate, adopt such criteria. 

13 ‘‘(3) CONDUCTING CERTIFICATION.—The Sec14 retary may recognize a private entity or entities to 

15 conduct the certifications described under paragraph 

16 (1) using the criteria adopted by the Secretary 

17 under this subsection. 

18 ‘‘(e) RULE OF CONSTRUCTION.—Nothing in this sec19 tion shall be construed as disrupting existing activities de20 scribed in subsection (c) or (d). 

21 ‘‘(f) REQUIREMENT TO CONSIDER RECOMMENDA22 TIONS.—In carrying out the activities described in sub23 sections (c) and (d), the Partnership shall adopt and inte24 grate the recommendations of the Community that are 

25 adopted by the Secretary. 

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1 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to carry out this section, 

3 $2,000,000 for each of the fiscal years 2008 and 2009. 

4 ‘‘SEC. 3004. AMERICAN HEALTH INFORMATION COMMU5 NITY—POLICIES. 

6 ‘‘(a) ESTABLISHMENT.—There is established a com7 mittee to be known as the American Health Information 

8 Community. The Community shall— 

9 ‘‘(1) provide advice to the Secretary and the 

10 heads of any relevant Federal agencies concerning 

11 the policy considerations related to health informa12 tion technology; 

13 ‘‘(2) not later than 1 year after the date of en14 actment of this title, and annually thereafter, make 

15 recommendations concerning a policy framework for 

16 the development and adoption of a nationwide inter17 operable health information technology infrastruc18 ture; 

19 ‘‘(3) not later than 1 year after the date of en20 actment of this title, and annually thereafter, make 

21 recommendation concerning national policies for 

22 adoption by the Federal Government, and voluntary 

23 adoption by private entities, to support the wide24 spread adoption of health information technology, 

25 including— 

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1 ‘‘(A) the protection of individually identifi2 able health information, including policies con3 cerning the individual’s ability to control the ac4 quisition, uses, and disclosures of individually 

5 identifiable health information; 

6 ‘‘(B) methods to protect individually iden7 tifiable health information from improper use 

8 and disclosures and methods to notify patients 

9 if their individually identifiable health informa10 tion is wrongfully disclosed; 

11 ‘‘(C) methods to facilitate secure access to 

12 such individual’s individually identifiable health 

13 information; 

14 ‘‘(D) the appropriate uses of a nationwide 

15 health information network including— 

16 ‘‘(i) the collection of quality data and 

17 public reporting; 

18 ‘‘(ii) biosurveillance and public health; 

19 ‘‘(iii) medical and clinical research; 

20 and 

21 ‘‘(iv) drug safety; 

22 ‘‘(E) fostering the public understanding of 

23 health information technology; 

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1 ‘‘(F) strategies to enhance the use of 

2 health information technology in preventing and 

3 managing chronic disease; 

4 ‘‘(G) policies to incorporate the input of 

5 employees of health care providers in the design 

6 and implementation of health information tech7 nology systems; and 

8 ‘‘(H) other policies determined to be nec9 essary by the Community; and 

10 ‘‘(4) serve as a forum for the participation of 

11 a broad range of stakeholders to provide input on 

12 improving the effective implementation of health in13 formation technology systems. 

14 ‘‘(b) PUBLICATION.—All recommendations made by 

15 the Community pursuant to this section shall be published 

16 in the Federal Register and on the Internet website of the 

17 National Coordinator. The Secretary shall review all rec18 ommendations and determine which recommendations 

19 shall be endorsed by the Federal Government and such 

20 determination shall be published on the Internet website 

21 of the Office of the National Coordinator within 30 days 

22 after the date on which such endorsement is made. 

23 ‘‘(c) MEMBERSHIP.— 

24 ‘‘(1) IN GENERAL.—The Community shall be 

25 composed of members to be appointed as follows: 

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1 ‘‘(A) 3 members shall be appointed by the 

2 Secretary, 1 of whom shall be a representative 

3 from the Department of Health and Human 

4 Services. 

5 ‘‘(B) 1 member shall be appointed by the 

6 Secretary of Veterans Affairs who shall rep7 resent the Department of Veterans Affairs. 

8 ‘‘(C) 1 member shall be appointed by the 

9 Secretary of Defense who shall represent the 

10 Department of Defense. 

11 ‘‘(D) 1 member shall be appointed by the 

12 majority leader of the Senate. 

13 ‘‘(E) 1 member shall be appointed by the 

14 minority leader of the Senate. 

15 ‘‘(F) 1 member shall be appointed by the 

16 Speaker of the House of Representatives. 

17 ‘‘(G) 1 member shall be appointed by the 

18 minority leader of the House of Representa19 tives. 

20 ‘‘(H) Nine members shall be appointed by 

21 the Comptroller General of whom— 

22 ‘‘(i) one member shall be advocates 

23 for patients or consumers; 

24 ‘‘(ii) one member shall represent 

25 health care providers; 

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1 ‘‘(iii) one member shall be from a 

2 labor organization representing health care 

3 workers; 

4 ‘‘(iv) one member shall have expertise 

5 in privacy and security; 

6 ‘‘(v) one member shall have expertise 

7 in improving the health of vulnerable popu8 lations; 

9 ‘‘(vi) one member shall represent 

10 health plans or other third party payers; 

11 ‘‘(vii) one member shall represent in12 formation technology vendors; 

13 ‘‘(viii) one member shall represent 

14 purchasers or employers; and 

15 ‘‘(ix) one member shall have expertise 

16 in health care quality measurement and re17 porting. 

18 ‘‘(2) CHAIRPERSON AND VICE CHAIRPERSON.— 

19 The Community shall designate one member to serve 

20 as the chairperson and one member to serve as the 

21 vice chairperson of the Community. 

22 ‘‘(3) NATIONAL COORDINATOR.—The National 

23 Coordinator shall be a member of the Community 

24 and act as a liaison among the Community, the 

25 partnership, and the Federal Government. 

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1 ‘‘(4) PARTICIPATION.—The members of the 

2 Community appointed under paragraph (1) shall 

3 represent a balance among various sectors of the 

4 health care system so that no single sector unduly 

5 influences the recommendations of the Community. 

6 ‘‘(5) TERMS.— 

7 ‘‘(A) IN GENERAL.—The terms of mem8 bers of the Community shall be for 3 years ex9 cept that the Comptroller General shall des10 ignate staggered terms for the members first 

11 appointed. 

12 ‘‘(B) VACANCIES.—Any member appointed 

13 to fill a vacancy in the membership of the Com14 munity that occurs prior to the expiration of 

15 the term for which the member’s predecessor 

16 was appointed shall be appointed only for the 

17 remainder of that term. A member may serve 

18 after the expiration of that member’s term until 

19 a successor has been appointed. A vacancy in 

20 the Community shall be filled in the manner in 

21 which the original appointment was made. 

22 ‘‘(6) OUTSIDE INVOLVEMENT.—The Commu23 nity shall ensure an adequate opportunity for the 

24 participation of outside advisors, including individ25 uals with expertise in— 

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1 ‘‘(A) health information privacy and secu2 rity; 

3 ‘‘(B) improving the health of vulnerable 

4 populations; 

5 ‘‘(C) health care quality and patient safety, 

6 including individuals with expertise in measure7 ment and the use of health information tech8 nology to capture data to improve health care 

9 quality and patient safety; 

10 ‘‘(D) ethics; 

11 ‘‘(E) medical and clinical research data ex12 change; and 

13 ‘‘(F) developing health information tech14 nology standards and new health information 

15 technology. 

16 ‘‘(7) QUORUM.—Ten members of the Commu17 nity shall constitute a quorum for purposes of vot18 ing, but a lesser number of members may meet and 

19 hold hearings. 

20 ‘‘(d) FEDERAL AGENCIES.— 

21 ‘‘(1) STAFF OF OTHER FEDERAL AGENCIES.— 

22 Upon the request of the Community, the head of any 

23 Federal agency may detail, without reimbursement, 

24 any of the personnel of such agency to the Commu25 nity to assist in carrying out the duties of the Commstockstill on PROD1PC66 with BILLS

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1 munity. Any such detail shall not interrupt or other2 wise affect the civil service status or privileges of the 

3 Federal employee involved. 

4 ‘‘(2) TECHNICAL ASSISTANCE.—Upon the re5 quest of the Community, the head of a Federal 

6 agency shall provide such technical assistance to the 

7 Community as the Community determines to be nec8 essary to carry out its duties. 

9 ‘‘(3) OTHER RESOURCES.—The Community 

10 shall have reasonable access to materials, resources, 

11 statistical data, and other information from the Li12 brary of Congress and agencies and elected rep13 resentatives of the executive and legislative branches 

14 of the Federal Government. The chairperson or vice 

15 chairperson of the Community shall make requests 

16 for such access in writing when necessary. 

17 ‘‘(e) APPLICATION OF FACA.—The Federal Advisory 

18 Committee Act (5 U.S.C. App.) shall apply to the Commu19 nity, except that the term provided for under section 

20 14(a)(2) of such Act shall be not longer than 7 years. 

21 ‘‘(f) SUNSET.—The provisions of this section shall 

22 not apply after September 20, 2014. 

23 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 

24 is authorized to be appropriated to carry out this section, 

25 $2,000,000 for each of fiscal years 2008 and 2009. 

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1 ‘‘SEC. 3005. FEDERAL PURCHASING AND DATA COLLEC2 TION. 

3 ‘‘(a) COORDINATION OF FEDERAL SPENDING.— 

4 ‘‘(1) IN GENERAL.—Not later than 1 year after 

5 the adoption by the President of a recommendation 

6 under section 3003(c)(6), a Federal agency shall not 

7 expend Federal funds for the purchase of any new 

8 health information technology or health information 

9 technology system for clinical care or for the elec10 tronic retrieval, storage, or exchange of health infor11 mation if such technology or system is not consistent 

12 with applicable standards adopted by the Federal 

13 Government under section 3003. 

14 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

15 paragraph (1) shall be construed to restrict the pur16 chase of minor (as determined by the Secretary) 

17 hardware or software components in order to mod18 ify, correct a deficiency in, or extend the life of exist19 ing hardware or software. 

20 ‘‘(b) VOLUNTARY ADOPTION.— 

21 ‘‘(1) IN GENERAL.—Any standards and imple22 mentation specifications adopted by the Federal 

23 Government under section 303(c)(6) shall be vol24 untary with respect to private entities. 

25 ‘‘(2) REQUIREMENT.—Private entities that 

26 enter into a contract with the Federal Government 

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1 shall adopt the standards and implementation speci2 fications adopted by the Federal Government under 

3 this section for the purpose of activities under such 

4 Federal contract. 

5 ‘‘(3) RULE OF CONSTRUCTION.—Nothing in 

6 this section shall be construed to require that a pri7 vate entity that enters into a contract with the Fed8 eral Government adopt the standards and implemen9 tation specifications adopted by the Federal Govern10 ment under this section with respect to activities not 

11 related to the contract. 

12 ‘‘(c) COORDINATION OF FEDERAL DATA COLLEC13 TION.—Not later than 3 years after the adoption by the 

14 Federal Government of a recommendation as provided for 

15 in section 303(c)(6), all Federal agencies collecting health 

16 data in an electronic format for the purposes of quality 

17 reporting, surveillance, epidemiology, adverse event report18 ing, research, or for other purposes determined appro19 priate by the Secretary, shall comply with the standards 

20 and implementation specifications adopted under such 

21 subsection. 

22 ‘‘SEC. 3006. QUALITY AND EFFICIENCY REPORTS. 

23 ‘‘(a) PURPOSE.—The purpose of this section is to 

24 provide for the development of reports based on Federal 

25 health care data and private data that is publicly available 

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1 or is provided by the entity making the request for the 

2 report in order to— 

3 ‘‘(1) improve the quality and efficiency of 

4 health care and advance health care research; 

5 ‘‘(2) enhance the education and awareness of 

6 consumers for evaluating health care services; and 

7 ‘‘(3) provide the public with reports on national, 

8 regional, and provider- and supplier-specific per9 formance, which may be in a provider- or supplier10 identifiable format. 

11 ‘‘(b) PROCEDURES FOR THE DEVELOPMENT OF RE12 PORTS.— 

13 ‘‘(1) IN GENERAL.—Notwithstanding section 

14 552(b)(6) or 552a(b) of title 5, United States Code, 

15 not later than 12 months after the date of enact16 ment of this section, the Secretary, in accordance 

17 with the purpose described in subsection (a), shall 

18 establish and implement procedures under which an 

19 entity may submit a request to a Quality Reporting 

20 Organization for the Organization to develop a re21 port based on— 

22 ‘‘(A) Federal health care data disclosed to 

23 the Organization under subsection (c); and 

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1 ‘‘(B) private data that is publicly available 

2 or is provided to the Organization by the entity 

3 making the request for the report. 

4 ‘‘(2) DEFINITIONS.—In this section: 

5 ‘‘(A) FEDERAL HEALTH CARE DATA.—The 

6 term ‘Federal health care data’ means — 

7 ‘‘(i) deidentified patient enrollment 

8 data, reimbursement claims, and survey 

9 data maintained by the Secretary or enti10 ties under programs, contracts, grants, or 

11 memoranda of understanding administered 

12 by the Secretary; and 

13 ‘‘(ii) where feasible, other deidentified 

14 patient enrollment data, reimbursement 

15 claims, and survey data maintained by the 

16 Federal Government or entities under con17 tract with the Federal Government. 

18 ‘‘(B) QUALITY REPORTING ORGANIZA19 TION.—The term ‘Quality Reporting Organiza20 tion’ means an entity with a contract under 

21 subsection (d). 

22 ‘‘(c) ACCESS TO FEDERAL HEALTH CARE DATA.— 

23 ‘‘(1) IN GENERAL.—The procedures established 

24 under subsection (b)(1) shall provide for the secure 

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1 disclosure of Federal health care data to each Qual2 ity Reporting Organization. 

3 ‘‘(2) UPDATE OF INFORMATION.—Not less than 

4 every 6 months, the Secretary shall update the infor5 mation disclosed under paragraph (1) to Quality Re6 porting Organizations. 

7 ‘‘(d) QUALITY REPORTING ORGANIZATIONS.— 

8 ‘‘(1) IN GENERAL.— 

9 ‘‘(A) THREE CONTRACTS.—Subject to sub10 paragraph (B), the Secretary shall enter into a 

11 contract with 3 private entities to serve as 

12 Quality Reporting Organizations under which 

13 an entity shall— 

14 ‘‘(i) store the Federal health care data 

15 that is to be disclosed under subsection (c); 

16 and 

17 ‘‘(ii) develop and release reports pur18 suant to subsection (e). 

19 ‘‘(B) ADDITIONAL CONTRACTS.—If the 

20 Secretary determines that reports are not being 

21 developed and released within 6 months of the 

22 receipt of the request for the report, the Sec23 retary shall enter into contracts with additional 

24 private entities in order to ensure that such remstockstill on PROD1PC66 with BILLS

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1 ports are developed and released in a timely 

2 manner. 

3 ‘‘(2) QUALIFICATIONS.—The Secretary shall 

4 enter into a contract with an entity under paragraph 

5 (1) only if the Secretary determines that the enti6 ty— 

7 ‘‘(A) has the research capability to conduct 

8 and complete reports under this section; 

9 ‘‘(B) has in place– 

10 ‘‘(i) an information technology infra11 structure to support the database of Fed12 eral health care data that is to be disclosed 

13 to the entity; and 

14 ‘‘(ii) operational standards to provide 

15 security for such database; 

16 ‘‘(C) has experience with, and expertise on, 

17 the development of reports on health care qual18 ity and efficiency; and 

19 ‘‘(D) has a significant business presence in 

20 the United States. 

21 ‘‘(3) CONTRACT REQUIREMENTS.—Each con22 tract with an entity under paragraph (1) shall con23 tain the following requirements: 

24 ‘‘(A) ENSURING BENEFICIARY PRIVACY.— 

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1 ‘‘(i) HIPAA.—The entity shall meet 

2 the requirements imposed on a covered en3 tity for purposes of applying part C of title 

4 XI and all regulatory provisions promul5 gated thereunder, including regulations 

6 (relating to privacy) adopted pursuant to 

7 the authority of the Secretary under sec8 tion 264(c) of the Health Insurance Port9 ability and Accountability Act of 1996 (42 

10 U.S.C. 1320d–2 note). 

11 ‘‘(ii) PRIVACY.—The entity shall pro12 vide assurances that the entity will not use 

13 the Federal health care data disclosed 

14 under subsection (c) in a manner that vio15 lates sections 552 or 552a of title 5, 

16 United States Code, with regard to the pri17 vacy of and individual’s individually identi18 fiable health information. 

19 ‘‘(B) PROPRIETARY INFORMATION.—The 

20 entity shall provide assurances that the entity 

21 will not disclose any negotiated price conces22 sions, such as discounts, direct or indirect sub23 sidies, rebates, and direct or indirect remunera24 tions, obtained by health care providers or supmstockstill on PROD1PC66 with BILLS

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1 pliers or health care plans, or any other propri2 etary cost information. 

3 ‘‘(C) DISCLOSURE.—The entity shall dis4 close— 

5 ‘‘(i) any financial, reporting, or con6 tractual relationship between the entity 

7 and any health care provider or supplier or 

8 health care plan; and 

9 ‘‘(ii) if applicable, the fact that the 

10 entity is managed, controlled, or operated 

11 by any health care provider or supplier or 

12 health care plan. 

13 ‘‘(D) COMPONENT OF ANOTHER ORGANIZA14 TION.—If the entity is a component of another 

15 organization— 

16 ‘‘(i) the entity shall maintain Federal 

17 health care data and reports separately 

18 from the rest of the organization and es19 tablish appropriate security measures to 

20 maintain the confidentiality and privacy of 

21 the Federal health care data and reports; 

22 and 

23 ‘‘(ii) the entity shall not make an un24 authorized disclosure to the rest of the or25 ganization of Federal health care data or 

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1 reports in breach of such confidentiality 

2 and privacy requirement. 

3 ‘‘(E) TERMINATION OR NONRENEWAL.—If 

4 a contract under this section is terminated or 

5 not renewed, the following requirements shall 

6 apply: 

7 ‘‘(i) CONFIDENTIALITY AND PRIVACY

8 PROTECTIONS.—The entity shall continue 

9 to comply with the confidentiality and pri10 vacy requirements under this section with 

11 respect to all Federal health care data dis12 closed to the entity and each report devel13 oped by the entity. 

14 ‘‘(ii) DISPOSITION OF DATA AND RE15 PORTS.—The entity shall— 

16 ‘‘(I) return to the Secretary all 

17 Federal health care data disclosed to 

18 the entity and each report developed 

19 by the entity; or 

20 ‘‘(II) if returning the Federal 

21 health care data and reports is not 

22 practicable, destroy the reports and 

23 Federal health care data. 

24 ‘‘(4) COMPETITIVE PROCEDURES.—Competitive 

25 procedures (as defined in section 4(5) of the Federal 

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1 Procurement Policy Act) shall be used to enter into 

2 contracts under paragraph (1). 

3 ‘‘(5) REVIEW OF CONTRACT IN THE EVENT OF

4 AMERGER OR ACQUISITION.—The Secretary shall 

5 review the contract with a Quality Reporting Orga6 nization under this section in the event of a merger 

7 or acquisition of the Organization in order to ensure 

8 that the requirements under this section will con9 tinue to be met. 

10 ‘‘(e) DEVELOPMENT AND RELEASE OF REPORTS

11 BASED ON REQUESTS.— 

12 ‘‘(1) REQUEST FOR AREPORT.— 

13 ‘‘(A) REQUEST.— 

14 ‘‘(i) IN GENERAL.—The procedures 

15 established under subsection (b)(1) shall 

16 include a process for an entity to submit a 

17 request to a Quality Reporting Organiza18 tion for a report based on Federal health 

19 care data and private data that is publicly 

20 available or is provided by the entity mak21 ing the request for the report. Such re22 quest shall comply with the purpose de23 scribed in subsection (a). 

24 ‘‘(ii) REQUEST FOR SPECIFIC METH25 ODOLOGY.—The process described in 

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1 clause (i) shall permit an entity making a 

2 request for a report to request that a spe3 cific methodology, including appropriate 

4 risk adjustment, be used by the Quality 

5 Reporting Organization in developing the 

6 report. The Organization shall work with 

7 the entity making the request to finalize 

8 the methodology to be used. 

9 ‘‘(iii) REQUEST FOR ASPECIFIC

10 QRO.—The process described in clause (i) 

11 shall permit an entity to submit the re12 quest for a report to any Quality Report13 ing Organization. 

14 ‘‘(B) RELEASE TO PUBLIC.—The proce15 dures established under subsection (b)(1) shall 

16 provide that at the time a request for a report 

17 is finalized under subparagraph (A) by a Qual18 ity Reporting Organization, the Organization 

19 shall make available to the public, through the 

20 Internet website of the Department of Health 

21 and Human Services and other appropriate 

22 means, a brief description of both the requested 

23 report and the methodology to be used to de24 velop such report. 

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1 ‘‘(2) DEVELOPMENT AND RELEASE OF RE2 PORT.— 

3 ‘‘(A) DEVELOPMENT.— 

4 ‘‘(i) IN GENERAL.—If the request for 

5 a report complies with the purpose de6 scribed in subsection (a), the Quality Re7 porting Organization may develop the re8 port based on the request. 

9 ‘‘(ii) REQUIREMENT.—A report devel10 oped under clause (i) shall include a de11 tailed description of the standards, meth12 odologies, and measures of quality used in 

13 developing the report. 

14 ‘‘(B) REVIEW OF REPORT BY SECRETARY

15 TO ENSURE COMPLIANCE WITH PRIVACY RE16 QUIREMENT.—Prior to a Quality Reporting Or17 ganization releasing a report under subpara18 graph (C), the Secretary shall review the report 

19 to ensure that the report complies with the 

20 Federal regulations (concerning the privacy of 

21 individually identifiable beneficiary health infor22 mation) promulgated under section 264(c) of 

23 the Health Insurance Portability and Account24 ability Act of 1996 and sections 552 or 552a of 

25 title 5, United States Code, with regard to the 

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1 privacy of individually identifiable beneficiary 

2 health information. The Secretary shall act 

3 within 30 business days of receiving such re4 port. 

5 ‘‘(C) RELEASE OF REPORT.— 

6 ‘‘(i) RELEASE TO ENTITY MAKING RE7 QUEST.—If the Secretary finds that the re8 port complies with the provisions described 

9 in subparagraph (B), the Quality Report10 ing Organization shall release the report to 

11 the entity that made the request for the re12 port. 

13 ‘‘(ii) RELEASE TO PUBLIC.—The pro14 cedures established under subsection (b)(1) 

15 shall provide for the following: 

16 ‘‘(I) UPDATED DESCRIPTION.— 

17 At the time of the release of a report 

18 by a Quality Reporting Organization 

19 under clause (i), the entity shall make 

20 available to the public, through the 

21 Internet website of the Department of 

22 Health and Human Services and 

23 other appropriate means, an updated 

24 brief description of both the requested 

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1 report and the methodology used to 

2 develop such report. 

3 ‘‘(II) COMPLETE REPORT.—Not 

4 later than 1 year after the date of the 

5 release of a report under clause (i), 

6 the report shall be made available to 

7 the public through the Internet 

8 website of the Department of Health 

9 and Human Services and other appro10 priate means. 

11 ‘‘(f) ANNUAL REVIEW OF REPORTS AND TERMI12 NATION OF CONTRACTS.— 

13 ‘‘(1) ANNUAL REVIEW OF REPORTS.—The 

14 Comptroller General of the United States shall re15 view reports released under subsection (e)(2)(C) to 

16 ensure that such reports comply with the purpose 

17 described in subsection (a) and annually submit a 

18 report to the Secretary on such review. 

19 ‘‘(2) TERMINATION OF CONTRACTS.—The Sec20 retary may terminate a contract with a Quality Re21 porting Organization if the Secretary determines 

22 that there is a pattern of reports being released by 

23 the Organization that do not comply with the pur24 pose described in subsection (a). 

25 ‘‘(g) FEES.— 

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1 ‘‘(1) FEES FOR SECRETARY.—The Secretary 

2 shall charge a Quality Reporting Organization a fee 

3 for— 

4 ‘‘(A) disclosing the data under subsection 

5 (c); and 

6 ‘‘(B) conducting the review under sub7 section (e)(2)(B). 

8 The Secretary shall ensure that such fees are suffi9 cient to cover the costs of the activities described in 

10 subparagraph (A) and (B). 

11 ‘‘(2) FEES FOR QRO.— 

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graphs (A) and (B), a Quality Reporting Orga14 nization may charge an entity making a request 

15 for a report a reasonable fee for the develop16 ment and release of the report. 

17 ‘‘(B) DISCOUNT FOR SMALL ENTITIES.—In 

18 the case of an entity making a request for a re19 port (including a not-for-profit) that has annual 

20 revenue that does not exceed $10,000,000, the 

21 Quality Reporting Organization shall reduce the 

22 reasonable fee charged to such entity under 

23 subparagraph (A) by an amount equal to 10 

24 percent of such fee. 

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1 ‘‘(C) INCREASE FOR LARGE ENTITIES

2 THAT DO NOT AGREE TO RELEASE REPORTS

3 WITHIN 6 MONTHS.—In the case of an entity 

4 making a request for a report that is not de5 scribed in subparagraph (B) and that does not 

6 agree to the report being released to the public 

7 under clause (ii)(II) of subsection (e)(2)(C) 

8 within 6 months of the date of the release of 

9 the report to the entity under clause (i) of such 

10 subsection, the Quality Reporting Organization 

11 shall increase the reasonable fee charged to 

12 such entity under subparagraph (A) by an 

13 amount equal to 10 percent of such fee. 

14 ‘‘(D) RULE OF CONSTRUCTION.—Nothing 

15 in this paragraph shall be construed to effect 

16 the requirement that a report be released to the 

17 public under clause (ii)(II) of subsection 

18 (e)(2)(C)(ii)(II) by not later than 1 year after 

19 the date of the release of the report to the re20 questing entity under clause (i) of such sub21 section. 

22 ‘‘(h) COORDINATION.—Not later than 1 year after 

23 the date of enactment of this title, the Secretary shall sub24 mit a report (including recommendations) to the appromstockstill on PROD1PC66 with BILLS

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1 priate committees of Congress concerning the coordination 

2 of existing Federal health care quality initiatives. 

3 ‘‘(i) REGULATIONS.—Not later than 6 months after 

4 the date of enactment of this section, the Secretary shall 

5 prescribe regulations to carry out this section. 

6 ‘‘SEC. 3007. RESEARCH ACCESS TO HEALTH CARE DATA 

7 AND REPORTING ON PERFORMANCE. 

8 ‘‘The Secretary shall permit researchers that meet 

9 criteria used to evaluate the appropriateness of the release 

10 data for research purpose (as established by the Sec11 retary) to— 

12 ‘‘(1) have access to all Federal health care data 

13 (as defined in section 3006(b)(2)(A)); and 

14 ‘‘(2) report on the performance of health care 

15 providers and suppliers, including reporting in a 

16 provider- or supplier-identifiable format.’’. 

17 Subpart B—Facilitating the Widespread Adoption of 

18 Interoperable Health Information Technology 

19 SEC. 305. FACILITATING THE WIDESPREAD ADOPTION OF 

20 INTEROPERABLE HEALTH INFORMATION 

21 TECHNOLOGY. 

22 Title XXX of the Public Health Service Act, as added 

23 by section 301, is amended by adding at the end the fol24 lowing: 

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1 ‘‘SEC. 3008. FACILITATING THE WIDESPREAD ADOPTION OF 

2 INTEROPERABLE HEALTH INFORMATION 

3 TECHNOLOGY. 

4 ‘‘(a) COMPETITIVE GRANTS FOR ADOPTION OF

5 TECHNOLOGY.— 

6 ‘‘(1) IN GENERAL.—The Secretary may award 

7 competitive grants to eligible entities to facilitate the 

8 purchase and enhance the utilization of qualified 

9 health information technology systems to improve 

10 the quality and efficiency of health care. 

11 ‘‘(2) ELIGIBILITY.—To be eligible to receive a 

12 grant under paragraph (1) an entity shall— 

13 ‘‘(A) submit to the Secretary an applica14 tion at such time, in such manner, and con15 taining such information as the Secretary may 

16 require; 

17 ‘‘(B) submit to the Secretary a strategic 

18 plan for the implementation of data sharing 

19 and interoperability measures; 

20 ‘‘(C) adopt the standards adopted by the 

21 Federal Government under section 3005; 

22 ‘‘(D) implement the measures adopted 

23 under section 3010 and report to the Secretary 

24 on such measures; 

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1 ‘‘(E) agree to notify individuals if their in2 dividually identifiable health information is 

3 wrongfully disclosed; 

4 ‘‘(F) take into account the input of em5 ployees and staff who are directly involved in 

6 patient care of such health care providers in the 

7 design, implementation, and use of qualified 

8 health information technology systems; 

9 ‘‘(G) demonstrate significant financial 

10 need; 

11 ‘‘(H) provide matching funds in accord12 ance with paragraph (4); and 

13 ‘‘(I) be a— 

14 ‘‘(i) public or not for profit hospital; 

15 ‘‘(ii) federally qualified health center 

16 (as defined in section 1861(aa)(4) of the 

17 Social Security Act); 

18 ‘‘(iii) individual or group practice (or 

19 a consortium thereof); or 

20 ‘‘(iv) another health care provider not 

21 described in clause (i) or (ii); 

22 that serves medically underserved communities. 

23 ‘‘(3) USE OF FUNDS.—Amounts received under 

24 a grant under this subsection shall be used to— 

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1 ‘‘(A) facilitate the purchase of qualified 

2 health information technology systems; 

3 ‘‘(B) train personnel in the use of such 

4 systems; 

5 ‘‘(C) enhance the utilization of qualified 

6 health information technology systems (which 

7 may include activities to increase the awareness 

8 among consumers of health care privacy protec9 tions); or 

10 ‘‘(D) improve the prevention and manage11 ment of chronic disease. 

12 ‘‘(4) MATCHING REQUIREMENT.—To be eligible 

13 for a grant under this subsection an entity shall con14 tribute non-Federal contributions to the costs of car15 rying out the activities for which the grant is award16 ed in an amount equal to $1 for each $3 of Federal 

17 funds provided under the grant. 

18 ‘‘(5) PREFERENCE IN AWARDING GRANTS.—In 

19 awarding grants under this subsection the Secretary 

20 shall give preference to— 

21 ‘‘(A) eligible entities that will improve the 

22 degree to which such entity will link the quali23 fied health information system to local or re24 gional health information plan or plans; and 

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1 ‘‘(B) with respect to awards made for the 

2 purpose of providing care in an outpatient med3 ical setting, entities that organize their prac4 tices as a patient-centered medical home. 

5 ‘‘(b) COMPETITIVE GRANTS FOR THE DEVELOPMENT

6 OF STATE LOAN PROGRAMS TO FACILITATE THE WIDE7 SPREAD ADOPTION OF HEALTH INFORMATION TECH8 NOLOGY.— 

9 ‘‘(1) IN GENERAL.—The Secretary may award 

10 competitive grants to States for the establishment of 

11 State programs for loans to health care providers to 

12 facilitate the purchase and enhance the utilization of 

13 qualified health information technology. 

14 ‘‘(2) ESTABLISHMENT OF FUND.—To be eligi15 ble to receive a competitive grant under this sub16 section, a State shall establish a qualified health in17 formation technology loan fund (referred to in this 

18 subsection as a ‘State loan fund’) and comply with 

19 the other requirements contained in this subsection. 

20 Amounts received under a grant under this sub21 section shall be deposited in the State loan fund es22 tablished by the State. No funds authorized by other 

23 provisions of this title to be used for other purposes 

24 specified in this title shall be deposited in any such 

25 State loan fund. 

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1 ‘‘(3) ELIGIBILITY.—To be eligible to receive a 

2 grant under paragraph (1) a State shall— 

3 ‘‘(A) submit to the Secretary an applica4 tion at such time, in such manner, and con5 taining such information as the Secretary may 

6 require; 

7 ‘‘(B) submit to the Secretary a strategic 

8 plan in accordance with paragraph (4); 

9 ‘‘(C) establish a qualified health informa10 tion technology loan fund in accordance with 

11 paragraph (2); 

12 ‘‘(D) require that health care providers re13 ceiving loans under the grant— 

14 ‘‘(i) link, to the extent practicable, the 

15 qualified health information system to a 

16 local or regional health information net17 work; 

18 ‘‘(ii) consult, as needed, with the 

19 Health Information Technology Resource 

20 Center established in section 914(d) to ac21 cess the knowledge and experience of exist22 ing initiatives regarding the successful im23 plementation and effective use of health in24 formation technology; 

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1 ‘‘(iii) agree to notify individuals if 

2 their individually identifiable health infor3 mation is wrongfully disclosed; and 

4 ‘‘(iv) take into account the input of 

5 employees and staff who are directly in6 volved in patient care of such health care 

7 providers in the design and implementation 

8 and use of qualified health information 

9 technology systems; 

10 ‘‘(E) require that health care providers re11 ceiving loans under the grant adopt the stand12 ards adopted by the Federal Government under 

13 section 3005; 

14 ‘‘(F) require that health care providers re15 ceiving loans under the grant implement the 

16 measures adopted under section 3010 and re17 port to the Secretary on such measures; and 

18 ‘‘(G) provide matching funds in accordance 

19 with paragraph (8). 

20 ‘‘(4) STRATEGIC PLAN.— 

21 ‘‘(A) IN GENERAL.—A State that receives 

22 a grant under this subsection shall annually 

23 prepare a strategic plan that identifies the in24 tended uses of amounts available to the State 

25 loan fund of the State. 

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1 ‘‘(B) CONTENTS.—A strategic plan under 

2 subparagraph (A) shall include— 

3 ‘‘(i) a list of the projects to be as4 sisted through the State loan fund in the 

5 first fiscal year that begins after the date 

6 on which the plan is submitted; 

7 ‘‘(ii) a description of the criteria and 

8 methods established for the distribution of 

9 funds from the State loan fund; 

10 ‘‘(iii) a description of the financial 

11 status of the State loan fund and the 

12 short-term and long-term goals of the 

13 State loan fund; and 

14 ‘‘(iv) a description of the strategies 

15 the State will use to address challenges in 

16 the adoption of health information tech17 nology due to limited broadband access. 

18 ‘‘(5) USE OF FUNDS.— 

19 ‘‘(A) IN GENERAL.—Amounts deposited in 

20 a State loan fund, including loan repayments 

21 and interest earned on such amounts, shall be 

22 used only for awarding loans or loan guaran23 tees, or as a source of reserve and security for 

24 leveraged loans, the proceeds of which are de25 posited in the State loan fund established under 

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1 paragraph (1). Loans under this section may be 

2 used by a health care provider to— 

3 ‘‘(i) facilitate the purchase of qualified 

4 health information technology systems; 

5 ‘‘(ii) enhance the utilization of quali6 fied health information technology systems 

7 (which may include activities to increase 

8 the awareness among consumers of health 

9 care of privacy protections and privacy 

10 rights); or 

11 ‘‘(iii) train personnel in the use of 

12 such systems. 

13 ‘‘(B) LIMITATION.—Amounts received by a 

14 State under this subsection may not be used— 

15 ‘‘(i) for the purchase or other acquisi16 tion of any health information technology 

17 system that is not a qualified health infor18 mation technology system; 

19 ‘‘(ii) to conduct activities for which 

20 Federal funds are expended under this 

21 title, or the amendments made by the 

22 Wired for Health Care Quality Act; or 

23 ‘‘(iii) for any purpose other than mak24 ing loans to eligible entities under this sec25 tion. 

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1 ‘‘(6) TYPES OF ASSISTANCE.—Except as other2 wise limited by applicable State law, amounts depos3 ited into a State loan fund under this subsection 

4 may only be used for the following: 

5 ‘‘(A) To award loans that comply with the 

6 following: 

7 ‘‘(i) The interest rate for each loan 

8 shall be less than or equal to the market 

9 interest rate. 

10 ‘‘(ii) The principal and interest pay11 ments on each loan shall commence not 

12 later than 1 year after the date on which 

13 the loan was awarded, and each loan shall 

14 be fully amortized not later than 10 years 

15 after such date. 

16 ‘‘(iii) The State loan fund shall be 

17 credited with all payments of principal and 

18 interest on each loan awarded from the 

19 fund. 

20 ‘‘(B) To guarantee, or purchase insurance 

21 for, a local obligation (all of the proceeds of 

22 which finance a project eligible for assistance 

23 under this subsection) if the guarantee or pur24 chase would improve credit market access or remstockstill on PROD1PC66 with BILLS

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1 duce the interest rate applicable to the obliga2 tion involved. 

3 ‘‘(C) As a source of revenue or security for 

4 the payment of principal and interest on rev5 enue or general obligation bonds issued by the 

6 State if the proceeds of the sale of the bonds 

7 will be deposited into the State loan fund. 

8 ‘‘(D) To earn interest on the amounts de9 posited into the State loan fund. 

10 ‘‘(7) ADMINISTRATION OF STATE LOAN

11 FUNDS.— 

12 ‘‘(A) COMBINED FINANCIAL ADMINISTRA13 TION.—A State may (as a convenience and to 

14 avoid unnecessary administrative costs) com15 bine, in accordance with State law, the financial 

16 administration of a State loan fund established 

17 under this subsection with the financial admin18 istration of any other revolving fund established 

19 by the State if not otherwise prohibited by the 

20 law under which the State loan fund was estab21 lished. 

22 ‘‘(B) COST OF ADMINISTERING FUND.— 

23 Each State may annually use not to exceed 4 

24 percent of the funds provided to the State 

25 under a grant under this subsection to pay the 

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1 reasonable costs of the administration of the 

2 programs under this section, including the re3 covery of reasonable costs expended to establish 

4 a State loan fund which are incurred after the 

5 date of enactment of this title. 

6 ‘‘(C) GUIDANCE AND REGULATIONS.—The 

7 Secretary shall publish guidance and promul8 gate regulations as may be necessary to carry 

9 out the provisions of this subsection, includ10 ing— 

11 ‘‘(i) provisions to ensure that each 

12 State commits and expends funds allotted 

13 to the State under this subsection as effi14 ciently as possible in accordance with this 

15 title and applicable State laws; and 

16 ‘‘(ii) guidance to prevent waste, fraud, 

17 and abuse. 

18 ‘‘(D) PRIVATE SECTOR CONTRIBUTIONS.— 

19 ‘‘(i) IN GENERAL.—A State loan fund 

20 established under this subsection may ac21 cept contributions from private sector enti22 ties, except that such entities may not 

23 specify the recipient or recipients of any 

24 loan issued under this subsection. 

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1 ‘‘(ii) AVAILABILITY OF INFORMA2 TION.—A State shall make publicly avail3 able the identity of, and amount contrib4 uted by, any private sector entity under 

5 clause (i) and may issue letters of com6 mendation or make other awards (that 

7 have no financial value) to any such entity. 

8 ‘‘(8) MATCHING REQUIREMENTS.— 

9 ‘‘(A) IN GENERAL.—The Secretary may 

10 not make a grant under paragraph (1) to a 

11 State unless the State agrees to make available 

12 (directly or through donations from public or 

13 private entities) non-Federal contributions in 

14 cash toward the costs of the State program to 

15 be implemented under the grant in an amount 

16 equal to not less than $1 for each $1 of Federal 

17 funds provided under the grant. 

18 ‘‘(B) DETERMINATION OF AMOUNT OF

19 NON-FEDERAL CONTRIBUTION.—In determining 

20 the amount of non-Federal contributions that a 

21 State has provided pursuant to subparagraph 

22 (A), the Secretary may not include any 

23 amounts provided to the State by the Federal 

24 Government. 

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1 ‘‘(9) PREFERENCE IN AWARDING GRANTS.— 

2 The Secretary may give a preference in awarding 

3 grants under this subsection to States that adopt 

4 value-based purchasing programs to improve health 

5 care quality. 

6 ‘‘(10) REPORTS.—The Secretary shall annually 

7 submit to the Committee on Health, Education, 

8 Labor, and Pensions and the Committee on Finance 

9 of the Senate, and the Committee on Energy and 

10 Commerce and the Committee on Ways and Means 

11 of the House of Representatives, a report summa12 rizing the reports received by the Secretary from 

13 each State that receives a grant under this sub14 section. 

15 ‘‘(c) COMPETITIVE GRANTS FOR THE IMPLEMENTA16 TION OF REGIONAL OR LOCAL HEALTH INFORMATION

17 TECHNOLOGY PLANS.— 

18 ‘‘(1) IN GENERAL.—The Secretary may award 

19 competitive grants to eligible entities to implement 

20 regional or local health information plans to improve 

21 health care quality and efficiency through the elec22 tronic exchange of health information pursuant to 

23 the standards, implementation specifications and 

24 certification criteria, and other requirements adopted 

25 by the Secretary under section 3010. 

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1 ‘‘(2) ELIGIBILITY.—To be eligible to receive a 

2 grant under paragraph (1) an entity shall— 

3 ‘‘(A) demonstrate financial need to the 

4 Secretary; 

5 ‘‘(B) demonstrate that one of its principal 

6 missions or purposes is to use information tech7 nology to improve health care quality and effi8 ciency; 

9 ‘‘(C) adopt bylaws, memoranda of under10 standing, or other charter documents that dem11 onstrate that the governance structure and de12 cisionmaking processes of such entity allow for 

13 participation on an ongoing basis by multiple 

14 stakeholders within a community, including— 

15 ‘‘(i) health care providers (including 

16 health care providers that provide services 

17 to low income and underserved popu18 lations); 

19 ‘‘(ii) pharmacists or pharmacies; 

20 ‘‘(iii) health plans; 

21 ‘‘(iv) health centers (as defined in sec22 tion 330(b)) and federally qualified health 

23 centers (as defined in section 1861(aa)(4) 

24 of the Social Security Act) and rural 

25 health clinics (as defined in section 

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1 1861(aa) of the Social Security Act), if 

2 such centers or clinics are present in the 

3 community served by the entity; 

4 ‘‘(v) patient or consumer organiza5 tions; 

6 ‘‘(vi) organizations dedicated to im7 proving the health of vulnerable popu8 lations; 

9 ‘‘(vii) employers; 

10 ‘‘(viii) State or local health depart11 ments; and 

12 ‘‘(ix) any other health care providers 

13 or other entities, as determined appro14 priate by the Secretary; 

15 ‘‘(D) demonstrate the participation, to the 

16 extent practicable, of stakeholders in the elec17 tronic exchange of health information within 

18 the local or regional plan pursuant to subpara19 graph (C); 

20 ‘‘(E) adopt nondiscrimination and conflict 

21 of interest policies that demonstrate a commit22 ment to open, fair, and nondiscriminatory par23 ticipation in the health information plan by all 

24 stakeholders; 

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1 ‘‘(F) adopt the standards adopted by the 

2 Secretary under section 3005; 

3 ‘‘(G) require that health care providers re4 ceiving such grants— 

5 ‘‘(i) implement the measures adopted 

6 under section 3010 and report to the Sec7 retary on such measures; and 

8 ‘‘(ii) take into account the input of 

9 employees and staff who are directly in10 volved in patient care of such health care 

11 providers in the design, implementation, 

12 and use of health information technology 

13 systems; 

14 ‘‘(H) agree to notify individuals if their in15 dividually identifiable health information is 

16 wrongfully disclosed; 

17 ‘‘(I) facilitate the electronic exchange of 

18 health information within the local or regional 

19 area and among local and regional areas; 

20 ‘‘(J) prepare and submit to the Secretary 

21 an application in accordance with paragraph 

22 (3); 

23 ‘‘(K) agree to provide matching funds in 

24 accordance with paragraph (5); and 

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1 ‘‘(L) reduce barriers to the implementation 

2 of health information technology by providers. 

3 ‘‘(3) APPLICATION.— 

4 ‘‘(A) IN GENERAL.—To be eligible to re5 ceive a grant under paragraph (1), an entity 

6 shall submit to the Secretary an application at 

7 such time, in such manner, and containing such 

8 information as the Secretary may require. 

9 ‘‘(B) REQUIRED INFORMATION.—At a 

10 minimum, an application submitted under this 

11 paragraph shall include— 

12 ‘‘(i) clearly identified short-term and 

13 long-term objectives of the regional or local 

14 health information plan; 

15 ‘‘(ii) a technology plan that complies 

16 with the standards, implementation speci17 fications, and certification criteria adopted 

18 under section 3003(c)(6) and that includes 

19 a descriptive and reasoned estimate of 

20 costs of the hardware, software, training, 

21 and consulting services necessary to imple22 ment the regional or local health informa23 tion plan; 

24 ‘‘(iii) a strategy that includes initia25 tives to improve health care quality and efmstockstill on PROD1PC66 with BILLS

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1 ficiency, including the use and reporting of 

2 health care quality measures adopted 

3 under section 3010; 

4 ‘‘(iv) a plan that describes provisions 

5 to encourage the implementation of the 

6 electronic exchange of health information 

7 by all health care providers participating in 

8 the health information plan; 

9 ‘‘(v) a plan to ensure the privacy and 

10 security of individually identifiable health 

11 information that is consistent with Federal 

12 and State law; 

13 ‘‘(vi) a governance plan that defines 

14 the manner in which the stakeholders shall 

15 jointly make policy and operational deci16 sions on an ongoing basis; 

17 ‘‘(vii) a financial or business plan that 

18 describes— 

19 ‘‘(I) the sustainability of the 

20 plan; 

21 ‘‘(II) the financial costs and ben22 efits of the plan; and 

23 ‘‘(III) the entities to which such 

24 costs and benefits will accrue; 

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1 ‘‘(viii) a description of whether the 

2 State in which the entity resides has re3 ceived a grant under section 319D, alone 

4 or as a part of a consortium, and if the 

5 State has received such a grant, how the 

6 entity will coordinate the activities funded 

7 under such section 319D with the system 

8 under this section; and 

9 ‘‘(ix) in the case of an applicant entity 

10 that is unable to demonstrate the partici11 pation of all stakeholders pursuant to 

12 paragraph (2)(C), the justification from 

13 the entity for any such nonparticipation. 

14 ‘‘(4) USE OF FUNDS.—Amounts received under 

15 a grant under paragraph (1) shall be used to estab16 lish and implement a regional or local health infor17 mation plan in accordance with this subsection. 

18 ‘‘(5) MATCHING REQUIREMENT.— 

19 ‘‘(A) IN GENERAL.—The Secretary may 

20 not make a grant under this subsection to an 

21 entity unless the entity agrees that, with re22 spect to the costs to be incurred by the entity 

23 in carrying out the infrastructure program for 

24 which the grant was awarded, the entity will 

25 make available (directly or through donations 

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1 from public or private entities) non-Federal 

2 contributions toward such costs in an amount 

3 equal to not less than 50 percent of such costs 

4 ($1 for each $2 of Federal funds provided 

5 under the grant). 

6 ‘‘(B) DETERMINATION OF AMOUNT CON7 TRIBUTED.—Non-Federal contributions re8 quired under subparagraph (A) may be in cash 

9 or in kind, fairly evaluated, including equip10 ment, technology, or services. Amounts provided 

11 by the Federal Government, or services assisted 

12 or subsidized to any significant extent by the 

13 Federal Government, may not be included in 

14 determining the amount of such non-Federal 

15 contributions. 

16 ‘‘(d) REPORTS.—Not later than 1 year after the date 

17 on which the first grant is awarded under this section, 

18 and annually thereafter during the grant period, an entity 

19 that receives a grant under this section shall submit to 

20 the Secretary a report on the activities carried out under 

21 the grant involved. Each such report shall include— 

22 ‘‘(1) a description of the financial costs and 

23 benefits of the project involved and of the entities to 

24 which such costs and benefits accrue; 

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1 ‘‘(2) an analysis of the impact of the project on 

2 health care quality and safety; 

3 ‘‘(3) a description of any reduction in duplica4 tive or unnecessary care as a result of the project in5 volved; and 

6 ‘‘(4) other information as required by the Sec7 retary. 

8 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.— 

9 ‘‘(1) IN GENERAL.—For the purpose of car10 rying out this section, there is authorized to be ap11 propriated $139,000,000 for fiscal year 2008 and 

12 $139,000,000 for fiscal year 2009. 

13 ‘‘(2) AVAILABILITY.—Amounts appropriated 

14 under paragraph (1) shall remain available through 

15 fiscal year 2012. 

16 ‘‘SEC. 3009. DEMONSTRATION PROGRAM TO INTEGRATE IN17 FORMATION TECHNOLOGY INTO CLINICAL 

18 EDUCATION. 

19 ‘‘(a) IN GENERAL.—The Secretary may award grants 

20 to eligible entities or consortia under this section to carry 

21 out demonstration projects to develop academic curricula 

22 integrating qualified health information technology sys23 tems in the clinical education of health professionals or 

24 analyze clinical data sets to discover quality measures. 

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1 Such awards shall be made on a competitive basis and 

2 pursuant to peer review. 

3 ‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 

4 under subsection (a), an entity or consortium shall— 

5 ‘‘(1) submit to the Secretary an application at 

6 such time, in such manner, and containing such in7 formation as the Secretary may require; 

8 ‘‘(2) be or include— 

9 ‘‘(A) a health professions school; 

10 ‘‘(B) a school of nursing; or 

11 ‘‘(C) an institution with a graduate med12 ical education program; 

13 ‘‘(3) provide for the collection of data regarding 

14 the effectiveness of the demonstration project to be 

15 funded under the grant in improving the safety of 

16 patients and the efficiency of health care delivery; 

17 and 

18 ‘‘(4) provide matching funds in accordance with 

19 subsection (d). 

20 ‘‘(c) USE OF FUNDS.— 

21 ‘‘(1) IN GENERAL.—With respect to a grant 

22 under subsection (a), an eligible entity or consortium 

23 shall use amounts received under the grant in col24 laboration with 2 or more disciplines. 

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1 ‘‘(2) LIMITATION.—An eligible entity or consor2 tium shall not award a grant under subsection (a) 

3 to purchase hardware, software, or services. 

4 ‘‘(d) MATCHING FUNDS.— 

5 ‘‘(1) IN GENERAL.—The Secretary may award 

6 a grant to an entity under or consortium this section 

7 only if the entity of consortium agrees to make avail8 able non-Federal contributions toward the costs of 

9 the program to be funded under the grant in an 

10 amount that is not less than $1 for each $2 of Fed11 eral funds provided under the grant. 

12 ‘‘(2) DETERMINATION OF AMOUNT CONTRIB13 UTED.—Non-Federal contributions under paragraph 

14 (1) may be in cash or in kind, fairly evaluated, in15 cluding equipment or services. Amounts provided by 

16 the Federal Government, or services assisted or sub17 sidized to any significant extent by the Federal Gov18 ernment, may not be included in determining the 

19 amount of such contributions. 

20 ‘‘(e) EVALUATION.—The Secretary shall take such 

21 action as may be necessary to evaluate the projects funded 

22 under this section and publish, make available, and dis23 seminate the results of such evaluations on as wide a basis 

24 as is practicable. 

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1 ‘‘(f) REPORTS.—Not later than 1 year after the date 

2 of enactment of this title, and annually thereafter, the Sec3 retary shall submit to the Committee on Health, Edu4 cation, Labor, and Pensions and the Committee on Fi5 nance of the Senate, and the Committee on Energy and 

6 Commerce and the Committee on Ways and Means of the 

7 House of Representatives a report that— 

8 ‘‘(1) describes the specific projects established 

9 under this section; and 

10 ‘‘(2) contains recommendations for Congress 

11 based on the evaluation conducted under subsection 

12 (e). 

13 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 

14 is authorized to be appropriated to carry out this section, 

15 $2,000,000 for each of fiscal years 2008 and 2009. 

16 ‘‘(h) SUNSET.—This provisions of this section shall 

17 not apply after September 30, 2012.’’. 

18 Subpart C—Improving the Quality of Health Care 

19 SEC. 311. CONSENSUS PROCESS FOR THE ADOPTION OF 

20 QUALITY MEASURES FOR USE IN THE NA21 TIONWIDE INTEROPERABLE HEALTH INFOR22 MATION TECHNOLOGY INFRASTRUCTURE. 

23 Title XXX of the Public Health Service Act, as 

24 amended by section 305, is further amended by adding 

25 at the end the following: 

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1 ‘‘SEC. 3010. FOSTERING DEVELOPMENT AND USE OF 

2 HEALTH CARE QUALITY MEASURES. 

3 ‘‘(a) IN GENERAL.—The Secretary shall provide for 

4 the development and use of health care quality measures 

5 (referred to in this title as ‘quality measures’) for the pur6 pose of measuring the quality and efficiency of health care 

7 that patients receive. 

8 ‘‘(b) DESIGNATION OF, AND ARRANGEMENT WITH, 

9 ORGANIZATION.— 

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

11 after the date of enactment of this title, the Sec12 retary shall designate, and have in effect an ar13 rangement with, a single organization that meets the 

14 requirements of subsection (c) under which such or15 ganization shall promote the development of quality 

16 measures and provide the Secretary with advice and 

17 recommendations on the key elements and priorities 

18 of a national system for healthcare performance 

19 measurement. 

20 ‘‘(2) RESPONSIBILITIES.—The responsibilities 

21 to be performed by the organization designated 

22 under paragraph (1) (in this title referred to as the 

23 ‘designated organization’) shall include— 

24 ‘‘(A) establishing and managing an inte25 grated national strategy and process for setting 

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1 priorities and goals in establishing quality 

2 measures; 

3 ‘‘(B) coordinating and harmonizing the de4 velopment and testing of such measures; 

5 ‘‘(C) establishing standards for the devel6 opment and testing of such measures; 

7 ‘‘(D) endorsing national consensus quality 

8 measures; 

9 ‘‘(E) recommending, in collaboration with 

10 multi-stakeholder groups, quality measures to 

11 the Secretary for adoption and use; 

12 ‘‘(F) promoting the development and use 

13 of electronic health records that contain the 

14 functionality for automated collection, aggrega15 tion, and transmission of performance measure16 ment information; and 

17 ‘‘(G) providing recommendations and ad18 vice to the Partnership regarding the integra19 tion of quality measures into the certification 

20 process outlined under section 3003 and the 

21 Community regarding national policies outlined 

22 under section 3004. 

23 ‘‘(c) REQUIREMENTS DESCRIBED.—The require24 ments described in this subsection are the following: 

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1 ‘‘(1) PRIVATE ENTITY.—The organization shall 

2 be a private nonprofit entity that is governed by a 

3 board of directors and an individual who is des4 ignated as president and chief executive officer. 

5 ‘‘(2) BOARD MEMBERSHIP.—The members of 

6 the board of directors of the entity shall include rep7 resentatives of— 

8 ‘‘(A) health care providers or groups rep9 resenting providers; 

10 ‘‘(B) health plans or groups representing 

11 health plans; 

12 ‘‘(C) patients or consumers enrolled in 

13 such plans or groups representing individuals 

14 enrolled in such plans; 

15 ‘‘(D) health care purchasers and employers 

16 or groups representing purchasers or employers; 

17 and 

18 ‘‘(E) organizations that develop health in19 formation technology standards and new health 

20 information technology. 

21 ‘‘(3) OTHER MEMBERSHIP REQUIREMENTS.— 

22 The membership of the board of directors of the en23 tity shall be representative of individuals with expe24 rience with— 

25 ‘‘(A) urban health care issues; 

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1 ‘‘(B) safety net health care issues; 

2 ‘‘(C) rural or frontier health care issues; 

3 ‘‘(D) quality and safety issues; 

4 ‘‘(E) State or local health programs; 

5 ‘‘(F) individuals or entities skilled in the 

6 conduct and interpretation of biomedical, health 

7 services, and health economics research and 

8 with expertise in outcomes and effectiveness re9 search and technology assessment; and 

10 ‘‘(G) individuals or entities involved in the 

11 development and establishment of standards 

12 and certification for health information tech13 nology systems and clinical data. 

14 ‘‘(4) OPEN AND TRANSPARENT.—With respect 

15 to matters related to the arrangement with the Sec16 retary under subsection (a)(1), the organization 

17 shall conduct its business in an open and trans18 parent manner, and provide the opportunity for pub19 lic comment and ensure a balance among disparate 

20 stakeholders, so that no member organization unduly 

21 influences the work of the organization. 

22 ‘‘(5) VOLUNTARY CONSENSUS STANDARDS SET23 TING ORGANIZATIONS.—The organization shall oper24 ate as a voluntary consensus standards setting orga25 nization as defined for purposes of section 12(d) of 

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1 the National Technology Transfer and Advancement 

2 Act of 1995 (Public Law 104–113) and Office of 

3 Management and Budget Revised Circular A-119 

4 (published in the Federal Register on February 10, 

5 1998). 

6 ‘‘(6) PARTICIPATION.—If the organization re7 quires a fee for membership, the organization shall 

8 ensure that such fee is not a substantial barrier to 

9 participation in the entity’s activities related to the 

10 arrangement with the Secretary. 

11 ‘‘(d) REQUIREMENTS FOR MEASURES.—The quality 

12 measures developed under this title shall comply with the 

13 following: 

14 ‘‘(1) MEASURES.—The designated organization, 

15 in promoting the development of quality measures 

16 under this title, shall ensure that such measures— 

17 ‘‘(A) are evidence-based, reliable, and 

18 valid; 

19 ‘‘(B) include— 

20 ‘‘(i) measures of clinical processes and 

21 outcomes, patient experience, efficiency, 

22 and equity; and 

23 ‘‘(ii) measures to assess effectiveness, 

24 timeliness, patient self-management, pa25 tient centeredness, and safety; and 

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1 ‘‘(C) include measures of underuse and 

2 overuse. 

3 ‘‘(2) PRIORITIES.—In carrying out its respon4 sibilities under this section, the designated organiza5 tion shall ensure that priority is given to— 

6 ‘‘(A) measures with the greatest potential 

7 impact for improving the performance and effi8 ciency of care; 

9 ‘‘(B) measures that may be rapidly imple10 mented by group health plans, health insurance 

11 issuers, physicians, hospitals, nursing homes, 

12 long-term care providers, and other providers; 

13 ‘‘(C) measures which may inform health 

14 care decisions made by consumers and patients; 

15 ‘‘(D) measures that apply to multiple serv16 ices furnished by different providers during an 

17 episode of care; 

18 ‘‘(E) measures that can be integrated into 

19 certification process described in section 3003; 

20 and 

21 ‘‘(F) measures that may be integrated into 

22 the decision support function of qualified health 

23 information technology as defined by this title. 

24 ‘‘(3) RISK ADJUSTMENT.—The designated orga25 nization, in consultation with performance measure 

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1 developers and other stakeholders, shall establish 

2 procedures to ensure that quality measures take into 

3 account differences in patient health status, patient 

4 characteristics, and geographic location, as appro5 priate. 

6 ‘‘(4) MAINTENANCE.—The designated organiza7 tion, in consultation with owners and developers of 

8 quality measures, shall require the owners or devel9 opers of quality measures to update and enhance 

10 such measures, including the development of more 

11 accurate and precise specifications, and retire exist12 ing outdated measures. Such updating shall occur 

13 not more often than once during each 12-month pe14 riod, except in the case of emergency circumstances 

15 requiring a more immediate update to a measure. 

16 ‘‘(e) GRANTS FOR PERFORMANCE MEASURE DEVEL17 OPMENT.—The Secretary, acting through the Agency for 

18 Healthcare Research and Quality, may award grants, in 

19 amounts not to exceed $50,000 each, to organizations to 

20 support the development and testing of quality measures 

21 that meet the standards established by the designated or22 ganization. 

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1 ‘‘SEC. 3011. ADOPTION AND USE OF QUALITY MEASURES; 

2 REPORTING. 

3 ‘‘(a) IN GENERAL.—For purposes of carrying out ac4 tivities authorized or required by this title to ensure the 

5 use of quality measures and to foster uniformity between 

6 health care quality measures utilized by private entities, 

7 the Secretary shall— 

8 ‘‘(1) select quality measures for adoption and 

9 use, from quality measures recommended by multi10 stakeholder groups and endorsed by the designated 

11 organization; and 

12 ‘‘(2) ensure that standards adopted under sec13 tion 3005 integrate the quality measures endorsed, 

14 adopted, and utilized under this section. 

15 ‘‘(b) RELATIONSHIP WITH PROGRAMS UNDER THE

16 SOCIAL SECURITY ACT.—The Secretary shall ensure that 

17 the quality measures adopted under this section— 

18 ‘‘(1) complement quality measures developed by 

19 the Secretary under programs administered by the 

20 Secretary under the Social Security Act, including 

21 programs under titles XVIII, XIX, and XXI of such 

22 Act; and 

23 ‘‘(2) do not conflict with the needs and prior24 ities of the programs under titles XVIII, XIX, and 

25 XXI of such Act, as set forth by the Administrator 

26 of the Centers for Medicare & Medicaid Services. 

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1 ‘‘(c) REPORTING.—The Secretary shall implement 

2 procedures, consistent with generally accepted standards, 

3 to enable the Department of Health and Human Services 

4 to accept the electronic submission of data for purposes 

5 of performance measurement, including at the provider 

6 level, using the quality measures developed, endorsed, and 

7 adopted pursuant to this title. 

8 ‘‘(d) DISSEMINATION OF INFORMATION.—In order to 

9 make comparative performance information available to 

10 health care consumers, health professionals, public health 

11 officials, oversight organizations, researchers, and other 

12 appropriate individuals and entities, after consultation 

13 with multi-stakeholder groups, the Secretary shall promul14 gate regulations to provide for the dissemination, aggrega15 tion, and analysis of quality measures collected pursuant 

16 to this title.’’. 

17 Subpart D—Privacy and Security 

18 SEC. 321. PRIVACY AND SECURITY. 

19 Title XXX of the Public Health Service Act, as 

20 amended by section 311, is further amended by adding 

21 at the end the following: 

22 ‘‘SEC. 3013. ENSURING PRIVACY AND SECURITY. 

23 ‘‘(a) PRIVACY PROTECTIONS APPLY TO HEALTH IN24 FORMATION ELECTRONIC DATABASES.—An operator of a 

25 health information electronic database shall be deemed to 

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1 be a ‘covered entity’ for purposes of sections 1171 through 

2 1179 of the Social Security Act and the regulations pro3 mulgated under section 264(c) of the Health Insurance 

4 Portability and Accountability Act of 1996 (42 U.S.C. 

5 1320d-2 note) (referred to in this section as the ‘HIPAA 

6 privacy regulations’. 

7 ‘‘(b) HEALTH INFORMATION ELECTRONIC DATABASE

8 DEFINED.—In this section, the term ‘operator of a health 

9 information electronic database’ means an entity that— 

10 ‘‘(1) is constituted, organized, or chartered for 

11 the primary purpose of maintaining or transmitting 

12 protected health information in a designated record 

13 set or sets; 

14 ‘‘(2) receives valuable consideration for main15 taining or transmitting protected health information 

16 in a designated record set or sets; and 

17 ‘‘(3) is not a health plan, healthcare clearing18 house, or healthcare provider who transmits any 

19 health information in electronic form in connection 

20 with a transaction referred to in section 1173(a)(1) 

21 of the Social Security Act. 

22 ‘‘(c) RIGHT OF INDIVIDUALS TO INSPECT THEIR

23 MEDICAL RECORDS MAINTAINED IN ELECTRONIC FOR24 MAT.—To the extent provided for under the HIPAA pri25 vacy regulations with respect to protected health informamstockstill on PROD1PC66 with BILLS

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1 tion, an individual shall have a right of access to inspect 

2 and obtain a copy of protected health information about 

3 the individual stored in electronic format. 

4 ‘‘(d) RIGHTS OF INDIVIDUALS WHO ARE VICTIMS OF

5 MEDICAL FRAUD.—To the extent provided for under the 

6 HIPAA privacy regulations and under the conditions spec7 ified in such regulations, with respect to protected health 

8 information, an individual who is a victim of medical fraud 

9 or who believes that there is an error in their protected 

10 health information stored in an electronic format shall 

11 have the right— 

12 ‘‘(1) to have access to inspect and obtain a copy 

13 of protected health information about the individual, 

14 including the information fraudulently entered, in a 

15 designated record set; and 

16 ‘‘(2) to have a covered entity amend protected 

17 health information or a record about the individual, 

18 including information fraudulently entered, in a des19 ignated electronic record set for as long as the pro20 tected health information is maintained in the des21 ignated electronic record set to ensure that fraudu22 lent and inaccurate health information is not shared 

23 or re-reported. 

24 ‘‘(e) RULE OF CONSTRUCTION.—Nothing in this sec25 tion shall be construed to supercede or otherwise limit the 

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1 provisions of any contract that provides for the application 

2 of privacy protections that are greater than the privacy 

3 protections provided for under the regulations promul4 gated under section 264 of the Health Insurance Port5 ability and Accountability Act of 1996.’’. 

6 Subpart E—Miscellaneous Provisions 

7 SEC. 331. GAO STUDY. 

8 Not later than 12 months after the date of enactment 

9 of this Act, the Comptroller General of the United States 

10 shall submit to Congress a report on the circumstances 

11 in which it is necessary and workable to require health 

12 plans (as defined in section 1171 of the Social Security 

13 Act (42 U.S.C. 1320d)), health care clearinghouses (as de14 fined in such section 1171), and health care providers (as 

15 defined in such section 1171) who transmit health infor16 mation in electronic form, to notify individuals if their in17 dividually identifiable health information (as defined in 

18 such section 1171) is wrongfully disclosed. 

19 SEC. 332. HEALTH INFORMATION TECHNOLOGY RESOURCE 

20 CENTER. 

21 Section 914 of the Public Health Service Act (42 

22 U.S.C. 299b–3) is amended by adding at the end the fol23 lowing: 

24 ‘‘(d) HEALTH INFORMATION TECHNOLOGY RE25 SOURCE CENTER.— 

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1 ‘‘(1) IN GENERAL.—The Secretary, acting 

2 through the Director, shall develop a Health Infor3 mation Technology Resource Center (referred to in 

4 this subsection as the ‘Center’) to provide technical 

5 assistance and develop best practices to support and 

6 accelerate efforts to adopt, implement, and effec7 tively use interoperable health information tech8 nology in compliance with sections 3003 and 3010. 

9 ‘‘(2) PURPOSES.—The purposes of the Center 

10 are to— 

11 ‘‘(A) provide a forum for the exchange of 

12 knowledge and experience; 

13 ‘‘(B) accelerate the transfer of lessons 

14 learned from existing public and private sector 

15 initiatives, including those currently receiving 

16 Federal financial support; 

17 ‘‘(C) assemble, analyze, and widely dis18 seminate evidence and experience related to the 

19 adoption, implementation, and effective use of 

20 interoperable health information technology; 

21 ‘‘(D) provide for the establishment of re22 gional and local health information networks to 

23 facilitate the development of interoperability 

24 across health care settings and improve the 

25 quality of health care; 

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1 ‘‘(E) provide for the development of solu2 tions to barriers to the exchange of electronic 

3 health information; and 

4 ‘‘(F) conduct other activities identified by 

5 the States, local, or regional health information 

6 networks, or health care stakeholders as a focus 

7 for developing and sharing best practices. 

8 ‘‘(3) SUPPORT FOR ACTIVITIES.—To provide 

9 support for the activities of the Center, the Director 

10 shall modify the requirements, if necessary, that 

11 apply to the National Resource Center for Health 

12 Information Technology to provide the necessary in13 frastructure to support the duties and activities of 

14 the Center and facilitate information exchange 

15 across the public and private sectors. 

16 ‘‘(4) RULE OF CONSTRUCTION.—Nothing in 

17 this subsection shall be construed to require the du18 plication of Federal efforts with respect to the estab19 lishment of the Center, regardless of whether such 

20 efforts were carried out prior to or after the enact21 ment of this subsection. 

22 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 

23 is authorized to be appropriated, such sums as may be 

24 necessary for each of fiscal years 2008 and 2009 to carry 

25 out this section.’’. 

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1 SEC. 333. FACILITATING THE PROVISION OF TELEHEALTH 

2 SERVICES ACROSS STATE LINES. 

3 Section 330L of the Public Health Service Act (42 

4 U.S.C. 254c–18) is amended to read as follows: 

5 ‘‘SEC. 330L. TELEMEDICINE; INCENTIVE GRANTS REGARD6 ING COORDINATION AMONG STATES. 

7 ‘‘(a) FACILITATING THE PROVISION OF TELE8 HEALTH SERVICES ACROSS STATE LINES.—The Sec9 retary may make grants to States that have adopted re10 gional State reciprocity agreements for practitioner licen11 sure, in order to expedite the provision of telehealth serv12 ices across State lines. 

13 ‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—For the 

14 purpose of carrying out subsection (a), there are author15 ized to be appropriated such sums as may be necessary 

16 for each of the fiscal years 2008 and 2009.’’. 

17 PART II—MAKING HEALTH CARE MORE 

18 ACCESSIBLE FOR ALL AMERICANS 

19 SEC. 341. REAUTHORIZATION OF CERTAIN TELEHEALTH 

20 PROGRAMS. 

21 (a) TELEHEALTH NETWORK AND TELEHEALTH RE22 SOURCE CENTERS GRANT PROGRAMS.—Section 330I(s) 

23 of the Public Health Service Act (42 U.S.C. 254c-14(s)) 

24 is amended— 

25 (1) in paragraph (1), by striking ‘‘2006’’ and 

26 inserting ‘‘2012’’; and 

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1 (2) in paragraph (2), by striking ‘‘2006’’ and 

2 inserting ‘‘2012’’. 

3 (b) RURAL EMERGENCY MEDICAL SERVICE TRAIN4 ING AND EQUIPMENT ASSISTANCE PROGRAM.—Section 

5 330J(g)(1) of the Public Health Service Act (42 U.S.C. 

6 254c–15(g)(1)) is amended by striking ‘‘2006’’ and insert7 ing ‘‘2012’’. 

8 (c) MENTAL HEALTH SERVICES DELIVERED VIA

9 TELEHEALTH.—Section 330K(g) of the Public Health 

10 Service Act (42 U.S.C. 254c–16(g)) is amended by strik11 ing ‘‘2006’’ and inserting ‘‘2012’’. 

12 SEC. 342. QUALITY IMPROVEMENT ACTIVITIES. 

13 Section 1154(a) of the Social Security Act (42 U.S.C. 

14 1320c–3(a)) is amended by adding at the end the fol15 lowing new paragraph: 

16 ‘‘(18) The organization shall offer quality im17 provement assistance to providers, practitioners, 

18 Medicare Advantage organizations offering Medicare 

19 Advantage plans under part C of title XVIII, and 

20 prescription drug sponsors offering prescription drug 

21 plans under part D of such title, including the fol22 lowing: 

23 ‘‘(A) Education on quality improvement 

24 initiatives, strategies, and techniques. 

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1 ‘‘(B) Instruction on how to collect, submit, 

2 aggregate, and interpret data on measures that 

3 may be used for quality improvement, public re4 porting, and payment. 

5 ‘‘(C) Technical assistance for providers 

6 and practitioners in beneficiary education to fa7 cilitate patient self-management. 

8 ‘‘(D) Guidance on redesigning clinical 

9 processes, including the adoption and effective 

10 use of health information technology, to im11 prove the coordination, effectiveness, and safety 

12 of care. 

13 ‘‘(E) Assistance in improving the quality of 

14 care delivered in rural and frontier areas, in15 cluding efforts to prevent or address any incon16 sistencies or delays in the rate of adoption of 

17 health information technology and in the effec18 tive use of such technology among entities that 

19 furnish such services in rural areas. 

20 ‘‘(F) Assistance in improving coordination 

21 of care as patients transition between providers 

22 and practitioners, including developing the ca23 pacity to securely exchange electronic health in24 formation and helping providers and practimstockstill on PROD1PC66 with BILLS

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1 tioners to effectively use secure electronic health 

2 information to improve quality.’’. 

3 SEC. 343. SENSE OF THE SENATE REGARDING PHYSICIAN 

4 PAYMENTS UNDER MEDICARE. 

5 It is the sense of the Senate that modifications to 

6 the Medicare fee schedule for physicians’ services under 

7 section 1848 of the Social Security Act (42 U.S.C. 

8 1395w–4) should include provisions based on the reporting 

9 of quality measures pursuant to those adopted in section 

10 3010 of the Public Health Service Act (as added by sec11 tion 305) and the overall improvement of health care qual12 ity through the use of the electronic exchange of health 

13 information pursuant to the standards adopted under sec14 tion 3003 of such Act (as added by section 301. 

15 Subtitle B—Increasing Access to 

16 Physicians and Nurses 

17 SEC. 351. REAUTHORIZATION OF PROGRAMS AND MIS18 CELLANEOUS AMENDMENTS. 

19 (a) HEALTH PROFESSIONS EDUCATION PRO20 GRAMS.—Part F of title VII of the Public Health Service 

21 Act (42 U.S.C. 295j et seq.) is amended by adding at the 

22 end the following: 

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1 ‘‘SEC. 799C. GENERAL AUTHORIZATION OF APPROPRIA2 TIONS. 

3 ‘‘(a) IN GENERAL.—Notwithstanding any other pro4 vision of this title, beginning with fiscal year 2008, there 

5 is authorized to be appropriated to carry out this title, 

6 such sums as may be necessary for each of fiscal years 

7 2008 through 2012. 

8 ‘‘(b) REFERENCES.—Any reference in this title to a 

9 provision of this title providing for an authorization of ap10 propriation for a fiscal year beginning with fiscal year 

11 2008, shall be deemed to be a reference to subsection 

12 (a).’’. 

13 (b) NURSING WORKFORCE DEVELOPMENT PRO14 GRAMS.—Part A of title VIII of the Public Health Service 

15 Act (42 U.S.C. 296 et seq.) is amended by adding at the 

16 end the following: 

17 ‘‘SEC. 809. GENERAL AUTHORIZATION OF APPROPRIA18 TIONS. 

19 ‘‘(a) IN GENERAL.—Notwithstanding any other pro20 vision of this title, beginning with fiscal year 2008, there 

21 is authorized to be appropriated to carry out this title, 

22 such sums as may be necessary for each of fiscal years 

23 2008 through 2012. 

24 ‘‘(b) REFERENCES.—Any reference in this title to a 

25 provision of this title providing for an authorization of ap26 propriation for a fiscal year beginning with fiscal year 

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1 2008, shall be deemed to be a reference to subsection 

2 (a).’’. 

3 (c) DEVELOPMENT OF METRICS TO MEASURE EF4 FECTIVENESS.— 

5 (1) HEALTH PROFESSIONS PROGRAMS.—Part F 

6 of title VII of the Public Health Service Act (42 

7 U.S.C. 295j et seq.), as amended by subsection (a), 

8 is further amended by adding at the end the fol9 lowing: 

10 ‘‘SEC. 799D. DEVELOPMENT OF MEASURES OF EFFECTIVE11 NESS. 

12 ‘‘The Secretary shall develop and publish in the Fed13 eral Register measures of effectiveness for each of the pro14 grams carried out under this title. The Secretary shall use 

15 such measures to annually submit to the Committee on 

16 Health, Education, Labor, and Pension of the Senate and 

17 the Committee on Energy and Commerce of the House 

18 of Representatives a report concerning the effectiveness of 

19 such programs.’’. 

20 (2) NURSING WORKFORCE DEVELOPMENT.— 

21 Part A of title VIII of the Public Health Service Act 

22 (42 U.S.C. 296 et seq.), as amended by subsection 

23 (b), is further amended by adding at the end the fol24 lowing: 

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1 ‘‘SEC. 810. DEVELOPMENT OF MEASURES OF EFFECTIVE2 NESS. 

3 ‘‘The Secretary shall develop and publish in the Fed4 eral Register measures of effectiveness for each of the pro5 grams carried out under this title. The Secretary shall use 

6 such measures to annually submit to the Committee on 

7 Health, Education, Labor, and Pension of the Senate and 

8 the Committee on Energy and Commerce of the House 

9 of Representatives a report concerning the effectiveness of 

10 such programs.’’. 

11 (d) PROVISION OF INFORMATION TO STUDENTS.— 

12 Section 726 of the Public Health Service Act (42 U.S.C. 

13 292v) is amended by adding at the end the following: 

14 ‘‘(c) PROVISION OF INFORMATION TO INCOMING STU15 DENTS.—Each school shall provide to each student, at the 

16 time the school provides such student with a letter of ac17 ceptance to attend the school, a statement of the amount 

18 of the average aggregate amount of debt incurred by grad19 uating students during their period of attendance at the 

20 school and the national average for such debt at all schools 

21 for the previous year (as determined by the Secretary).’’. 

22 (e) ENHANCED COMPETITIVENESS.—Section 

23 738(b)(2) of the Public Health Service Act (42 U.S.C. 

24 293b(b)(2)) is amended— 

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1 (1) by striking ‘‘that—’’ and all that follows 

2 through ‘‘amounts’’ in subparagraph (A), and insert3 ing ‘‘that amounts’’; 

4 (2) in subparagraph (A), by striking ‘‘; and’’ 

5 and inserting a period; and 

6 (3) by striking subparagraph (B). 

7 SEC. 352. NURSE WORKFORCE ENHANCEMENT. 

8 (a) REAUTHORIZATION OF PRACTICE AND RETEN9 TION GRANT PROGRAM.—Section 831(h) of the Public 

10 Health Service Act (42 U.S.C. 296p(h)) is amended by 

11 striking ‘‘2003 through 2007’’ and inserting ‘‘2008 

12 through 2012’’. 

13 (b) STATE DEMONSTRATION PROJECTS TO PROVIDE

14 INCENTIVES FOR NURSES TO REENTER THE WORK15 FORCE.—Part D of title VIII of the Public Health Service 

16 Act (42 U.S.C. 296p et seq.) is amended by adding at 

17 the end the following: 

18 ‘‘SEC. 832. STATE DEMONSTRATION PROJECTS TO PROVIDE 

19 INCENTIVES FOR NURSES TO REENTER THE 

20 WORKFORCE. 

21 ‘‘(a) IN GENERAL.—The Secretary shall award not 

22 to exceed 15 grants to States for the conduct of dem23 onstration projects to evaluate incentives to encourage 

24 nurses to reenter the nursing profession at positions in 

25 healthcare facilities. For purposes of projects under this 

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1 section, a nurse shall be deemed to have reentered the 

2 workforce if such nurse is licensed and had not practiced 

3 nursing for the 3-year period prior to their return to the 

4 workforce under a project under this section. 

5 ‘‘(b) APPLICATION.—To be eligible to receive a grant 

6 under subsection (a), a State shall submit to the Secretary 

7 an application at such time, in such manner, and con8 taining such information as the Secretary may require, in9 cluding— 

10 ‘‘(1) a description of the activities to be con11 ducted under the grant, including— 

12 ‘‘(A) how retraining will be encouraged to 

13 update skills; 

14 ‘‘(B) how license renewal will be encour15 aged; 

16 ‘‘(C) how loan repayment under programs 

17 under this title will be monitored; 

18 ‘‘(D) how healthcare facilities with a crit19 ical shortage of nurses will be identified and the 

20 shortage will be alleviated by the program; 

21 ‘‘(E) how the performance of reentry 

22 nurses will be monitored and evaluated; and 

23 ‘‘(F) how part-time positions will be cre24 ated to utilize nurses reentering the profession; 

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1 ‘‘(2) an assurance that the State will provide 

2 matching funds in accordance with subsection (c); 

3 ‘‘(3) an assurance that the State will conduct 

4 an evaluation in accordance with subsection (d); and 

5 ‘‘(4) any other assurances required by the Sec6 retary. 

7 ‘‘(c) MATCHING REQUIREMENT.—The Secretary may 

8 not make grants to a State under this section unless the 

9 State involved agrees, with respect to the costs of carrying 

10 out the program under the grant, to make available non11 Federal contributions (in cash or in kind) toward such 

12 costs in an amount equal to not less than $1 for each $1 

13 of Federal funds provided under the grant. 

14 ‘‘(d) EVALUATIONS.—A State that receives a grant 

15 under this section shall reserve 5 percent of the amount 

16 received under this grant to carry out activities to evaluate 

17 the project carried out under the grant. A State shall re18 port to the Secretary the results of such evaluation, in19 cluding the number of nurses reentering the profession in 

20 the State in years prior to the project and the number 

21 reentering such profession after the initiation of the 

22 project, and the number of such reentering nurses that 

23 serve in areas deemed underserved. 

24 ‘‘(e) AMOUNT AND LENGTH OF GRANTS.—A grant 

25 under this section shall not exceed $2,000,000 for each 

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1 fiscal year for up to 5 years. Grants may be extended for 

2 an additional 5-year period. 

3 ‘‘(f) DEFINITIONS.—In this section: 

4 ‘‘(1) HEALTHCARE FACILITY.—The term 

5 ‘healthcare facility’ means those facilities that regu6 larly dispense healthcare, including hospitals, public 

7 health departments, nursing homes, community 

8 health centers, rural health clinics, and Indian 

9 health service centers. 

10 ‘‘(2) NURSE.—The term ‘nurse’ includes Reg11 istered Nurses. 

12 ‘‘(3) POSITION.—The term ‘position’ means a 

13 full-time or part-time position that includes teaching 

14 or delivery of health care to patients. 

15 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 

16 is authorized to be appropriated such sums as may be nec17 essary to carry out this section.’’. 

18 SEC. 353. VISAS FOR REGISTERED NURSES. 

19 Paragraph (4) of section 212(m) of the Immigration 

20 and Nationality Act (8 U.S.C. 1182(m)) is amended in 

21 the matter preceding subparagraph (A) by striking ‘‘500’’ 

22 and inserting ‘‘600’’. 

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1 SEC. 354. MEDPAC STUDY AND REPORT ON THE IMPACT OF 

2 PAYMENT CAPS FOR IME AND GME. 

3 (a) STUDY.—The Medicare Payment Advisory Com4 mission shall conduct a study— 

5 (1) to analyze the impact that the limitation on 

6 the number of residents in allopathic and osteo7 pathic medicine under subsections (d)(5)(B)(v) and 

8 (h)(4)(F) of section 1886 of the Social Security Act 

9 (42 U.S.C. 1395ww) has had with respect to— 

10 (A) the national supply of general practi11 tioners and specialty healthcare providers; 

12 (B) the development of new teaching hos13 pitals and medical schools; 

14 (C) the ability to support residents in insti15 tutions (such as children’s hospitals and ad16 vanced practice nurse training facilities) that 

17 are not eligible for payments for indirect med18 ical education costs and direct graduate medical 

19 education costs under the Medicare program 

20 under title XVIII of the Social Security Act (42 

21 U.S.C. 1395 et seq.); 

22 (D) the recruitment and retention of 

23 healthcare providers in areas designated as 

24 health professional shortage areas (as defined 

25 in section 332(a)(1) of the Public Health Serv26 ice Act) or in areas designated as medically unmstockstill on PROD1PC66 with BILLS

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1 derserved areas, with particular focus on States 

2 that do not have a medical school located in the 

3 State; and 

4 (E) the practice of sharing or purchasing 

5 residency positions among institutions; and 

6 (2) to analyze the payment system for indirect 

7 medical education costs and direct graduate medical 

8 education costs under the Medicare program under 

9 such title with respect to— 

10 (A) the accuracy of payments for indirect 

11 graduate medical education costs under such 

12 system compared with the actual costs incurred 

13 by teaching hospitals in providing indirect med14 ical education; 

15 (B) the range and variance in reimbursable 

16 direct graduate medical education costs and the 

17 cause of such range and variance; and 

18 (C) the commitment of healthcare payers, 

19 other than the Medicare program under such 

20 title, to reimburse teaching hospitals and other 

21 healthcare facilities with qualified medical edu22 cation components at increased rates to offset 

23 graduate medical education costs that are in24 curred in such settings and are not paid under 

25 such program. 

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1 (b) REPORT.—Not later than 2 years after the date 

2 of enactment of this Act, the Medicare Payment Advisory 

3 Commission shall submit a report to the Secretary of 

4 Health and Human Services and to Congress containing 

5 the results of the study conducted under subsection (a), 

6 together with such recommendations regarding alter7 natives and revisions to the payment system for indirect 

8 medical education costs and direct graduate medical edu9 cation costs under the Medicare program under title 

10 XVIII of the Social Security Act as the Medicare Payment 

11 Advisory Commission determines appropriate. 

12 Subtitle C—Increasing Access to 

13 Primary Care 

14 SEC. 361. REAUTHORIZATION OF THE COMMUNITY HEALTH 

15 CENTER PROGRAMS. 

16 (a) IN GENERAL.—Section 330(r) of the Public 

17 Health Service Act (42 U.S.C. 254b(r)) is amended by 

18 striking paragraph (1) and inserting the following: 

19 ‘‘(1) IN GENERAL.—For the purpose of car20 rying out this section, in addition to the amounts 

21 authorized to be appropriated under subsection (d), 

22 there are authorized to be appropriated— 

23 ‘‘(A) $2,048,670 for fiscal year 2008; 

24 ‘‘(B) $2,110,130 for fiscal year 2009; 

25 ‘‘(C) $2,173,434 for fiscal year 2010; 

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1 ‘‘(D) $2,244,637 for fiscal year 2011; and 

2 ‘‘(E) $2,311,976 for fiscal year 2012.’’. 

3 (b) MEDICAL RESIDENCY TRAINING PROGRAMS.— 

4 Section 330 of the Public Health Service Act (42 U.S.C. 

5 254b) is amended— 

6 (1) by redesignating subsections (k) through (r) 

7 as subsections (l) through (s), respectively; and 

8 (2) by inserting after subsection (j), the fol9 lowing: 

10 ‘‘(k) GRANTS TO EXPAND MEDICAL RESIDENCY

11 TRAINING PROGRAMS AT COMMUNITY HEALTH CEN12 TERS.— 

13 ‘‘(1) PROGRAM AUTHORIZED.—The Secretary 

14 may make grants to community health centers— 

15 ‘‘(A) to establish, at the centers, new or al16 ternative-campus accredited medical residency 

17 training programs affiliated with a hospital or 

18 other health care facility; or 

19 ‘‘(B) to fund new residency positions with20 in existing accredited medical residency training 

21 programs at the centers and their affiliated 

22 partners. 

23 ‘‘(2) USE OF FUNDS.—Amounts awarded under 

24 a grant under this subsection shall be used to cover 

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1 dency training program described in paragraph (1), 

2 including costs associated with— 

3 ‘‘(A) curriculum development; 

4 ‘‘(B) equipment acquisition; 

5 ‘‘(C) recruitment, training, and retention 

6 of residents and faculty; and 

7 ‘‘(D) residency stipends. 

8 ‘‘(3) APPLICATIONS.—A community health cen9 ter seeking a grant under this subsection shall sub10 mit an application to the Secretary at such time, in 

11 such manner, and containing such information as 

12 the Secretary may require. 

13 ‘‘(4) PREFERENCE.—In selecting recipients for 

14 a grant under this subsection, the Secretary shall 

15 give preference to funding medical residency training 

16 programs focusing on primary health care. 

17 ‘‘(5) DEFINITION.—In this subsection, the term 

18 ‘accredited’, as applied to a new or alternative-cam19 pus medical residency training program, means a 

20 program that is accredited by a recognized body or 

21 bodies approved for such purpose by the Accredita22 tion Council for Graduate Medical Education, except 

23 that a new medical residency training program that, 

24 by reason of an insufficient period of operation, is 

25 not eligible for accreditation on or before the date of 

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1 submission of an application under paragraph (3) 

2 shall be deemed accredited if the Accreditation 

3 Council for Graduate Medical Education finds, after 

4 consultation with the appropriate accreditation body 

5 or bodies, that there is reasonable assurance that 

6 the program will meet the accreditation standards of 

7 such body or bodies prior to the date of graduation 

8 of the first entering class in that program.’’. 

9 SEC. 362. REAUTHORIZATION OF LOAN REPAYMENT PRO10 GRAMS OF THE NATIONAL HEALTH SERVICE 

11 CORPS. 

12 (a) IN GENERAL.—Section 338H(a) of the Public 

13 Health Service Act (42 U.S.C. 254q(a)) is amended to 

14 read as follows: 

15 ‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—For the 

16 purposes of carrying out this subpart, there are authorized 

17 to be appropriated $129,271,790 for fiscal year 2008, 

18 $133,150,393 for fiscal year 2009, $137,145,355 for fis19 cal year 2010, $141,260,166 for fiscal year 2011, and 

20 $145,498,421 for fiscal year 2012. Amounts appropriated 

21 under this subsection shall not be used to carry out section 

22 338A.’’. 

23 (b) STATE LOAN REPAYMENT PROGRAM.—Section 

24 338I(i)(1) of the Public Health Service Act (42 U.S.C. 

25 254q-1(i)(1)) is amended by striking ‘‘$12,000,000’’ and 

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1 all that follows through the end and inserting 

2 ‘‘$15,000,000 for each of fiscal years 2008 through 

3 2012.’’. 

4 SEC. 363. CLARIFICATION OF AUTHORITY FOR CONVEN5 IENT CARE CLINICS TO PARTICIPATE IN MED6 ICAID AND SCHIP. 

7 (a) MEDICAID.— 

8 (1) STATE PLAN AMENDMENT.—Section 

9 1902(a)(23)(A) of the Social Security Act (42 

10 U.S.C. 1396a(a)(23)(A)) is amended— 

11 (A) by inserting ‘‘, and a convenient care 

12 clinic, as defined in section 1905(y)’’ after 

13 ‘‘prepayment basis’’; and 

14 (B) by inserting ‘‘(other than with respect 

15 to the ability of an individual to obtain medical 

16 assistance from a convenient care clinic (as so 

17 defined))’’ after ‘‘Guam’’. 

18 (2) DEFINITION.—Section 1905 of the Social 

19 Security Act (42 U.S.C. 1396d) is amended by add20 ing at the end the following: 

21 ‘‘(y) For purposes of this title, the term ‘convenient 

22 care clinic’ means a health care facility located in a retail 

23 outlet that provides affordable and accessible, non-emer24 gency health care (as defined by the Secretary) to con25 sumers that is open 7 days a week, for extended hours 

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1 (as so defined) and is primarily staffed by advanced prac2 tice nurses (including nurse practitioners), as well as by 

3 physician assistants or physicians, who have advanced 

4 education in providing quality health care for common epi5 sodic ailments (as so defined).’’. 

6 (b) SCHIP.—Section 2107(e)(1) of the Social Secu7 rity Act (42 U.S.C. 1397gg(e)(1)) is amended— 

8 (1) by redesignating subparagraphs (B) 

9 through (D) as subparagraphs (C) through (E), re10 spectively; and 

11 (2) by inserting after subparagraph (A), the fol12 lowing: 

13 ‘‘(B) Section 1902(a)(23)(A) (but only 

14 with respect to the ability of an individual to 

15 obtain assistance from a convenient care clinic, 

16 as defined in section 1905(y)).’’. 

17 (c) EFFECTIVE DATE.— 

18 (1) IN GENERAL.—Subject to paragraph (2), 

19 the amendments made by this section take effect on 

20 October 1, 2007. 

21 (2) DELAY IF STATE LEGISLATION RE22 QUIRED.—In the case of a State plan under title 

23 XIX or XXI of the Social Security Act or a waiver 

24 of such plan under section 1115 of such Act which 

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1 mines requires State legislation (other than legisla2 tion appropriating funds) in order for the plan or 

3 waiver to meet the additional requirements imposed 

4 by the amendments made by this section, the State 

5 plan or waiver shall not be regarded as failing to 

6 comply with the requirements of such title solely on 

7 the basis of its failure to meet such additional re8 quirements before the first day of the first calendar 

9 quarter beginning after the close of the first regular 

10 session of the State legislature that begins after the 

11 date of the enactment of this Act. For purposes of 

12 the previous sentence, in the case of a State that has 

13 a 2-year legislative session, each year of such session 

14 shall be deemed to be a separate regular session of 

15 the State legislature. 

16 Subtitle D—Rural Health Care 

17 SEC. 371. REATHORIZATION OF RURAL HEALTH CARE PRO18 GRAMS. 

19 Section 330A(j) of the Public Health Service Act (42 

20 U.S.C. 254c(j)) is amended by striking ‘‘$40,000,000’’ 

21 and all that follows and inserting ‘‘$45,000,000 for each 

22 of fiscal years 2008 through 2010.’’. 

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1 Subtitle E—Long Term Care 

2 SEC. 381. SENSE OF THE SENATE. 

3 It is the Sense of the Senate that all Americans 

4 should establish an advance directive. 

5 SEC. 382. LIVING WILLS. 

6 The Secretary of Health and Human Service shall 

7 provide for the development of an Internet website (at 

8 www.livingwill.gov) to provide all Americans with access 

9 to information on advance directives and a website on 

10 which to store and access such directives. 

11 SEC. 383. INCREASING SENIOR CHOICE AND ACCESS TO 

12 COMMUNITY-BASED LONG TERM CARE. 

13 Part P of title III of the Public Health Service Act 

14 (42 U.S.C. 280g et seq.) is amended by adding at the end 

15 the following: 

16 ‘‘SEC. 399R. INCREASING SENIOR CHOICE AND ACCESS TO 

17 COMMUNITY-BASED LONG TERM CARE. 

18 ‘‘(a) IN GENERAL.—The Secretary may award one19 time grants to eligible entities, as defined by the Sec20 retary, for the conduct of demonstration projects to plan 

21 and develop the entity’s transitions from institutional set22 tings of skilled nursing care to residential or community23 based settings of integrated skilled nursing care, which 

24 shall include— 

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1 ‘‘(1) the provision of housing units and staff 

2 meeting all Federal and State qualifications and li3 censure requirements, as applicable to the level of 

4 care to be provided; 

5 ‘‘(2) eligibility and qualification assistance for 

6 reimbursement under applicable State Medicaid pro7 grams; 

8 ‘‘(3) the provision of a residential or home envi9 ronment which encourages independent living, pri10 vacy, and community engagement; 

11 ‘‘(4) encouraging a sense of community by hav12 ing a number of low-occupancy housing units ar13 ranged with similarly structured housing units spe14 cializing in long term care; 

15 ‘‘(5) an emphasis on building relationships be16 tween care providers and clients by encouraging 

17 teams to remain with a set of patients throughout 

18 their stay; 

19 ‘‘(6) the direct involvement by the clients in de20 veloping activities and structuring care needs; and 

21 ‘‘(7) the formation of an integrated, self-man22 aged clinical and personal care team, including 

23 healthcare providers, specialists and appropriate per24 sonnel, available to the community as needed. 

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1 ‘‘(b) APPLICATION.—An eligible entity desiring a 

2 grant under this section shall submit an application to the 

3 Secretary at such time, in such manner, and containing 

4 such information as the Secretary may reasonably require. 

5 ‘‘(c) REPORT.—Not later than 3 years after the date 

6 on which the first grant is awarded under this section, 

7 the Secretary shall submit to the appropriate committees 

8 of Congress a report concerning the efficacy of the model 

9 carried out under this section in improving quality of life 

10 indicators, employee satisfaction, and clinical outcomes. 

11 ‘‘(d) PRIORITY.—In making grants under this sec12 tion, the Secretary shall give priority to entities providing 

13 services to a medically undeserved area. 

14 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the 

15 purpose of awarding grants under this section, there is 

16 authorized to be appropriated $5,000,000 for each of fis17 cal years 2008 through 2013.’’. 

18 Subtitle F—Fair and Reliable 

19 Medical Justice 

20 SEC. 391. SHORT TITLE. 

21 This subtitle may be cited as the ‘‘Fair and Reliable 

22 Medical Justice Act’’. 

23 SEC. 392. PURPOSES. 

24 The purposes of this subtitle are— 

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1 (1) to restore fairness and reliability to the 

2 medical justice system by fostering alternatives to 

3 current medical tort litigation that promote early 

4 disclosure of health care errors and provide prompt, 

5 fair, and reasonable compensation to patients who 

6 are injured by health care errors; 

7 (2) to promote patient safety through disclosure 

8 of health care errors; and 

9 (3) to support and assist States in developing 

10 such alternatives. 

11 SEC. 393. STATE DEMONSTRATION PROGRAMS TO EVALU12 ATE ALTERNATIVES TO CURRENT MEDICAL 

13 TORT LITIGATION. 

14 Part P of title III of the Public Health Service Act 

15 (42 U.S.C. 280g et seq.) is amended by adding at the end 

16 the following: 

17 ‘‘SEC. 399R. STATE DEMONSTRATION PROGRAMS TO EVALU18 ATE ALTERNATIVES TO CURRENT MEDICAL 

19 TORT LITIGATION. 

20 ‘‘(a) IN GENERAL.—The Secretary is authorized to 

21 award demonstration grants to States for the develop22 ment, implementation, and evaluation of alternatives to 

23 current tort litigation for resolving disputes over injuries 

24 allegedly caused by health care providers or health care 

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1 organizations. In awarding such grants, the Secretary 

2 shall ensure the diversity of the alternatives so funded. 

3 ‘‘(b) DURATION.—The Secretary may award up to 10 

4 grants under subsection (a) and each grant awarded under 

5 such subsection may not exceed a period of 5 years. 

6 ‘‘(c) CONDITIONS FOR DEMONSTRATION GRANTS.— 

7 ‘‘(1) REQUIREMENTS.—Each State desiring a 

8 grant under subsection (a) shall— 

9 ‘‘(A) develop an alternative to current tort 

10 litigation for resolving disputes over injuries al11 legedly caused by health care providers or 

12 health care organizations; and 

13 ‘‘(B) promote a reduction of health care 

14 errors by allowing for patient safety data re15 lated to disputes resolved under subparagraph 

16 (A) to be collected and analyzed by organiza17 tions that engage in efforts to improve patient 

18 safety and the quality of health care. 

19 ‘‘(2) ALTERNATIVE TO CURRENT TORT LITIGA20 TION.—Each State desiring a grant under sub21 section (a) shall demonstrate how the proposed al22 ternative described in paragraph (1)(A)— 

23 ‘‘(A) makes the medical liability system 

24 more reliable through prompt and fair resolu25 tion of disputes; 

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1 ‘‘(B) encourages the disclosure of health 

2 care errors; 

3 ‘‘(C) enhances patient safety by detecting, 

4 analyzing, and reducing medical errors and ad5 verse events; 

6 ‘‘(D) maintains access to liability insur7 ance; and 

8 ‘‘(E) provides patients the opportunity to 

9 opt out of or voluntarily withdraw from partici10 pating in the alternative. 

11 ‘‘(3) SOURCES OF COMPENSATION.—Each State 

12 desiring a grant under subsection (a) shall identify 

13 the sources from and methods by which compensa14 tion would be paid for claims resolved under the pro15 posed alternative to current tort litigation, which 

16 may include public or private funding sources, or a 

17 combination of such sources. Funding methods shall 

18 to the extent practicable provide financial incentives 

19 for activities that improve patient safety. 

20 ‘‘(4) SCOPE.— 

21 ‘‘(A) IN GENERAL.—Each State desiring a 

22 grant under subsection (a) may establish a 

23 scope of jurisdiction (such as a designated geo24 graphic region, a designated area of health care 

25 practice, or a designated group of health care 

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1 providers or health care organizations) for the 

2 proposed alternative to current tort litigation 

3 that is sufficient to evaluate the effects of the 

4 alternative. 

5 ‘‘(B) NOTIFICATION OF PATIENTS.—A 

6 State proposing a scope of jurisdiction under 

7 subparagraph (A) shall demonstrate how pa8 tients would be notified that they are receiving 

9 health care services that fall within such scope, 

10 and that they may opt out of or voluntarily 

11 withdraw from participating in the alternative. 

12 ‘‘(5) PREFERENCE IN AWARDING DEMONSTRA13 TION GRANTS.—In awarding grants under sub14 section (a), the Secretary shall give preference to 

15 States— 

16 ‘‘(A) that have developed the proposed al17 ternative through substantive consultation with 

18 relevant stakeholders, including patient advo19 cates, health care providers and health care or20 ganizations, attorneys with expertise in rep21 resenting patients and health care providers, 

22 medical malpractice insurers, and patient safety 

23 experts; 

24 ‘‘(B) that make proposals that are likely to 

25 enhance patient safety by detecting, analyzing, 

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1 and reducing medical errors and adverse events; 

2 and 

3 ‘‘(C) in which State law at the time of the 

4 application would not prohibit the adoption of 

5 an alternative to current tort litigation. 

6 ‘‘(d) APPLICATION.— 

7 ‘‘(1) IN GENERAL.—Each State desiring a 

8 grant under subsection (a) shall submit to the Sec9 retary an application, at such time, in such manner, 

10 and containing such information as the Secretary 

11 may require. 

12 ‘‘(2) REVIEW PANEL.— 

13 ‘‘(A) IN GENERAL.—In reviewing applica14 tions under paragraph (1), the Secretary shall 

15 consult with a review panel composed of rel16 evant experts appointed by the Comptroller 

17 General. 

18 ‘‘(B) COMPOSITION.— 

19 ‘‘(i) NOMINATIONS.—The Comptroller 

20 General shall solicit nominations from the 

21 public for individuals to serve on the re22 view panel. 

23 ‘‘(ii) APPOINTMENT.—The Comp24 troller General shall appoint, at least 14 

25 but not more than 19, highly qualified and 

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1 knowledgeable individuals to serve on the 

2 review panel and shall ensure that the fol3 lowing entities receive fair representation 

4 on such panel: 

5 ‘‘(I) Patient advocates. 

6 ‘‘(II) Health care providers and 

7 health care organizations. 

8 ‘‘(III) Attorneys with expertise in 

9 representing patients and health care 

10 providers. 

11 ‘‘(IV) Medical malpractice insur12 ers. 

13 ‘‘(V) State officials. 

14 ‘‘(VI) Patient safety experts. 

15 ‘‘(C) CHAIRPERSON.—The Comptroller 

16 General, or an individual within the Govern17 ment Accountability Office designated by the 

18 Comptroller General, shall be the chairperson of 

19 the review panel. 

20 ‘‘(D) AVAILABILITY OF INFORMATION.— 

21 The Comptroller General shall make available 

22 to the review panel such information, personnel, 

23 and administrative services and assistance as 

24 the review panel may reasonably require to 

25 carry out its duties. 

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1 ‘‘(E) INFORMATION FROM AGENCIES.—The 

2 review panel may request directly from any de3 partment or agency of the United States any 

4 information that such panel considers necessary 

5 to carry out its duties. To the extent consistent 

6 with applicable laws and regulations, the head 

7 of such department or agency shall furnish the 

8 requested information to the review panel. 

9 ‘‘(e) REPORTS.— 

10 ‘‘(1) BY STATE.—Each State receiving a grant 

11 under subsection (a) shall submit to the Secretary 

12 an annual report evaluating the effectiveness of ac13 tivities funded with grants awarded under such sub14 section. 

15 ‘‘(2) BY SECRETARY.—The Secretary shall sub16 mit to Congress an annual compendium of the re17 ports submitted under paragraph (1). 

18 ‘‘(f) TECHNICAL ASSISTANCE.— 

19 ‘‘(1) IN GENERAL.—The Secretary shall provide 

20 technical assistance to the States applying for or 

21 awarded grants under subsection (a). 

22 ‘‘(2) REQUIREMENTS.—Technical assistance 

23 under paragraph (1) shall include— 

24 ‘‘(A) guidance on non-economic damages, 

25 including the consideration of individual facts 

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1 and circumstances in determining appropriate 

2 payment, guidance on identifying avoidable in3 juries, and guidance on disclosure to patients of 

4 health care errors and adverse events; and 

5 ‘‘(B) the development, in consultation with 

6 States, of common definitions, formats, and 

7 data collection infrastructure for States receiv8 ing grants under this section to use in reporting 

9 to facilitate aggregation and analysis of data 

10 both within and between States. 

11 ‘‘(3) USE OF COMMON DEFINITIONS, FORMATS, 

12 AND DATA COLLECTION INFRASTRUCTURE.—States 

13 not receiving grants under this section may also use 

14 the common definitions, formats, and data collection 

15 infrastructure developed under paragraph (2)(B). 

16 ‘‘(g) EVALUATION.— 

17 ‘‘(1) IN GENERAL.—The Secretary, in consulta18 tion with the review panel established under sub19 section (d)(2), shall enter into a contract with an ap20 propriate research organization to conduct an overall 

21 evaluation of the effectiveness of grants awarded 

22 under subsection (a) and to annually prepare and 

23 submit a report to Congress. Such an evaluation 

24 shall begin not later than 18 months following the 

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1 date of implementation of the first program funded 

2 by a grant under subsection (a). 

3 ‘‘(2) CONTENTS.—The evaluation under para4 graph (1) shall include— 

5 ‘‘(A) an analysis of the effects of the 

6 grants awarded under subsection (a) on the 

7 measures described in paragraph (3); 

8 ‘‘(B) a comparison between and among the 

9 alternatives approved under subsection (a) of 

10 the measures described in paragraph (3); and 

11 ‘‘(C) a comparison between and among 

12 States receiving grants approved under sub13 section (a) and similar States not receiving 

14 such grants of the measures described in para15 graph (3). 

16 ‘‘(3) MEASURES.—The evaluations under para17 graph (2) shall analyze and make comparisons on 

18 the basis of— 

19 ‘‘(A) the nature and number of disputes 

20 over injuries allegedly caused by health care 

21 providers or health care organizations; 

22 ‘‘(B) the nature and number of claims in 

23 which tort litigation was pursued despite the ex24 istence of an alternative under subsection (a); 

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1 ‘‘(C) the disposition of disputes and claims 

2 described in clauses (i) and (ii), including the 

3 length of time and estimated costs to all par4 ties; 

5 ‘‘(D) the medical liability environment; 

6 ‘‘(E) health care quality; 

7 ‘‘(F) patient safety in terms of detecting, 

8 analyzing, and reducing medical errors and ad9 verse events; and 

10 ‘‘(G) patient and health care provider and 

11 organization satisfaction with the alternative 

12 under subsection (a) and with the medical li13 ability environment. 

14 ‘‘(4) FUNDING.—The Secretary shall reserve 5 

15 percent of the amount appropriated in each fiscal 

16 year under subsection (j) to carry out this sub17 section. 

18 ‘‘(h) OPTION TO PROVIDE FOR INITIAL PLANNING

19 GRANTS.—Of the funds appropriated pursuant to sub20 section (j), the Secretary may use a portion not to exceed 

21 $500,000 per State to provide planning grants to such 

22 States for the development of demonstration project appli23 cations meeting the criteria described in subsection (c). 

24 In selecting States to receive such planning grants, the 

25 Secretary shall give preference to those States in which 

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1 State law at the time of the application would not prohibit 

2 the adoption of an alternative to current tort litigation. 

3 ‘‘(i) DEFINITIONS.—In this section: 

4 ‘‘(1) HEALTH CARE SERVICES.—The term 

5 ‘health care services’ means any services provided by 

6 a health care provider, or by any individual working 

7 under the supervision of a health care provider, that 

8 relate to— 

9 ‘‘(A) the diagnosis, prevention, or treat10 ment of any human disease or impairment; or 

11 ‘‘(B) the assessment of the health of 

12 human beings. 

13 ‘‘(2) HEALTH CARE ORGANIZATION.—The term 

14 ‘health care organization’ means any individual or 

15 entity which is obligated to provide, pay for, or ad16 minister health benefits under any health plan. 

17 ‘‘(3) HEALTH CARE PROVIDER.—The term 

18 ‘health care provider’ means any individual or enti19 ty— 

20 ‘‘(A) licensed, registered, or certified under 

21 Federal or State laws or regulations to provide 

22 health care services; or 

23 ‘‘(B) required to be so licensed, registered, 

24 or certified but that is exempted by other stat25 ute or regulation. 

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1 ‘‘(4) NET ECONOMIC LOSS.—The term ‘net eco2 nomic loss’ means— 

3 ‘‘(A) reasonable expenses incurred for 

4 products, services, and accommodations needed 

5 for health care, training, and other remedial 

6 treatment and care of an injured individual; 

7 ‘‘(B) reasonable and appropriate expenses 

8 for rehabilitation treatment and occupational 

9 training; 

10 ‘‘(C) 100 percent of the loss of income 

11 from work that an injured individual would 

12 have performed if not injured, reduced by any 

13 income from substitute work actually per14 formed; and 

15 ‘‘(D) reasonable expenses incurred in ob16 taining ordinary and necessary services to re17 place services an injured individual would have 

18 performed for the benefit of the individual or 

19 the family of such individual if the individual 

20 had not been injured. 

21 ‘‘(5) NON-ECONOMIC DAMAGES.—The term 

22 ‘non-economic damages’ means losses for physical 

23 and emotional pain, suffering, inconvenience, phys24 ical impairment, mental anguish, disfigurement, loss 

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1 ship, loss of consortium (other than loss of domestic 

2 service), injury to reputation, and all other non-pe3 cuniary losses of any kind or nature, to the extent 

4 permitted under State law. 

5 ‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There 

6 are authorized to be appropriated to carry out this section 

7 such sums as may be necessary. Amounts appropriated 

8 pursuant to this subsection shall remain available until ex9 pended.’’. 

Æ 

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