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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3000 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 3000

 To provide for incentives to encourage health insurance coverage, and 
                          for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           September 21, 2011

Mr. Price of Georgia (for himself, Mr. Burton of Indiana, Mr. Wilson of 
South Carolina, Mr. Sessions, and Mr. Fleming) introduced the following 
 bill; which was referred to the Committee on Energy and Commerce, and 
in addition to the Committees on Education and the Workforce, Ways and 
 Means, the Judiciary, Natural Resources, Rules, House Administration, 
Appropriations, Oversight and Government Reform, and the Budget, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL

 
 To provide for incentives to encourage health insurance coverage, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Empowering 
Patients First Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Repeal of PPACA and health care-related HCERA provisions.
   TITLE I--TAX INCENTIVES FOR MAINTAINING HEALTH INSURANCE COVERAGE

Sec. 101. Refundable tax credit for health insurance costs of low-
                            income individuals.
Sec. 102. Advance payment of credit as premium payment for qualified 
                            health insurance.
Sec. 103. Election of tax credit instead of alternative government or 
                            group plan benefits.
Sec. 104. Deduction for qualified health insurance costs of 
                            individuals.
Sec. 105. Limitation on abortion funding.
Sec. 106. No government discrimination against certain health care 
                            entities.
Sec. 107. Equal employer contribution rule to promote choice.
Sec. 108. Limitations on State restrictions on employer auto-
                            enrollment.
Sec. 109. Credit for small employers adopting auto-enrollment and 
                            defined contribution options.
Sec. 110. HSA modifications and clarifications.
     TITLE II--HEALTH INSURANCE POOLING MECHANISMS FOR INDIVIDUALS

  Subtitle A--Safety Net for Individuals With Pre-Existing Conditions

Sec. 201. Requiring operation of high-risk pool or other mechanism as 
                            condition for availability of tax credit.
   Subtitle B--Federal Block Grants for State Insurance Expenditures

Sec. 211. Federal block grants for State insurance expenditures.
            Subtitle C--Health Care Access and Availability

Sec. 221. Expansion of access and choice through individual membership 
                            associations (IMAs).
               Subtitle D--Small Business Health Fairness

Sec. 231. Short title.
Sec. 232. Rules governing association health plans.
Sec. 233. Clarification of treatment of single employer arrangements.
Sec. 234. Enforcement provisions relating to association health plans.
Sec. 235. Cooperation between Federal and State authorities.
Sec. 236. Effective date and transitional and other rules.
           TITLE III--INTERSTATE MARKET FOR HEALTH INSURANCE

Sec. 301. Cooperative governing of individual health insurance 
                            coverage.
                      TITLE IV--SAFETY NET REFORMS

Sec. 401. Requiring outreach and coverage before expansion of 
                            eligibility.
Sec. 402. Easing administrative barriers to State cooperation with 
                            employer-sponsored insurance coverage.
Sec. 403. Improving beneficiary choice in SCHIP.
                   TITLE V--MEDICAL LIABILITY REFORMS

Sec. 501. Short title.
Sec. 502. Findings and purpose.
Sec. 503. Encouraging speedy resolution of claims.
Sec. 504. Compensating patient injury.
Sec. 505. Maximizing patient recovery.
Sec. 506. Additional health benefits.
Sec. 507. Punitive damages.
Sec. 508. Limitation on recovery in a health care lawsuit based on 
                            compliance with best practice guidelines.
Sec. 509. State grants to create administrative health care tribunals.
Sec. 510. Authorization of payment of future damages to claimants in 
                            health care lawsuits.
Sec. 511. Definitions.
Sec. 512. Effect on other laws.
Sec. 513. State flexibility and protection of States' rights.
Sec. 514. Applicability; effective date.
                   TITLE VI--WELLNESS AND PREVENTION

Sec. 601. Providing financial incentives for treatment compliance.
         TITLE VII--TRANSPARENCY AND INSURANCE REFORM MEASURES

Sec. 701. Receipt and response to requests for claim information.
                          TITLE VIII--QUALITY

Sec. 801. Prohibition on certain uses of data obtained from comparative 
                            effectiveness research; accounting for 
                            personalized medicine and differences in 
                            patient treatment response.
Sec. 802. Establishment of performance-based quality measures.
                TITLE IX--STATE TRANSPARENCY PLAN PORTAL

Sec. 901. Providing information on health coverage options and health 
                            care providers.
                   TITLE X--PATIENT FREEDOM OF CHOICE

Sec. 1001. Guaranteeing freedom of choice and contracting for patients 
                            under Medicare.
Sec. 1002. Preemption of State laws limiting charges for eligible 
                            professional services.
Sec. 1003. Health care provider licensure cannot be conditioned on 
                            participation in a health plan.
Sec. 1004. Bad debt deduction for doctors to partially offset the cost 
                            of providing uncompensated care required to 
                            be provided under amendments made by the 
                            Emergency Medical Treatment and Labor Act.
Sec. 1005. Right of contract with health care providers.
           TITLE XI--INCENTIVES TO REDUCE PHYSICIAN SHORTAGES

Subtitle A--Federally Supported Student Loan Funds for Medical Students

Sec. 1101. Federally supported student loan funds for medical students.
        Subtitle B--Loan Forgiveness for Primary Care Providers

Sec. 1111. Loan forgiveness for primary care providers.
                TITLE XII--QUALITY HEALTH CARE COALITION

Sec. 1201. Quality Health Care Coalition.
                          TITLE XIII--OFFSETS

               Subtitle A--Discretionary Spending Limits

Sec. 1301. Discretionary spending limits.
           Subtitle B--Savings From Health Care Efficiencies

Sec. 1311. Medicare DSH report and payment adjustments in response to 
                            coverage expansion.
Sec. 1312. Reduction in Medicaid DSH.
                  Subtitle C--Fraud, Waste, and Abuse

Sec. 1321. Provide adequate funding to HHS OIG and HCFAC.
Sec. 1322. Improved enforcement of the Medicare secondary payor 
                            provisions.
Sec. 1323. Strengthen Medicare provider enrollment standards and 
                            safeguards.
Sec. 1324. Tracking banned providers across State lines.

SEC. 2. REPEAL OF PPACA AND HEALTH CARE-RELATED HCERA PROVISIONS.

    (a) PPACA.--Effective as of the enactment of the Patient Protection 
and Affordable Care Act (Public Law 111-148), such Act is repealed, and 
the provisions of law amended or repealed by such Act are restored or 
revived as if such Act had not been enacted.
    (b) Health Care-Related Provisions in the Health Care and Education 
Reconciliation Act of 2010.--Effective as of the enactment of the 
Health Care and Education Reconciliation Act of 2010 (Public Law 111-
152), title I and subtitle B of title II of such Act are repealed, and 
the provisions of law amended or repealed by such title or subtitle, 
respectively, are restored or revived as if such title and subtitle had 
not been enacted.

   TITLE I--TAX INCENTIVES FOR MAINTAINING HEALTH INSURANCE COVERAGE

SEC. 101. REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE COSTS OF LOW-
              INCOME INDIVIDUALS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by inserting after section 36A the following new section:

``SEC. 36B. HEALTH INSURANCE COSTS OF LOW-INCOME INDIVIDUALS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by subtitle A the aggregate 
amount paid by the taxpayer for coverage of the taxpayer and the 
taxpayer's qualifying family members under qualified health insurance 
for eligible coverage months beginning in the taxable year.
    ``(b) Limitations.--
            ``(1) In general.--The amount allowable as a credit under 
        subsection (a) for the taxable year shall not exceed the lesser 
        of--
                    ``(A) the sum of the monthly limitations for months 
                during such taxable year that the taxpayer or the 
                taxpayer's qualifying family members is an eligible 
                individual, and
                    ``(B) the aggregate premiums paid by the taxpayer 
                for the taxable year for coverage described in 
                subsection (a).
            ``(2) Monthly limitation.--The monthly limitation for any 
        month is the credit percentage of \1/12\ of the sum of--
                    ``(A) $2,000 for coverage of the taxpayer ($4,000 
                in the case of a joint return for coverage of the 
                taxpayer and the taxpayer's spouse), and
                    ``(B) $500 for coverage of each dependent of the 
                taxpayer.
            ``(3) Credit percentage.--
                    ``(A) In general.--For purposes of this section, 
                the term `credit percentage' means 100 percent reduced 
                by 1 percentage point for each $1,000 (or fraction 
                thereof) by which the taxpayer's adjusted gross income 
                for the taxable year exceeds the threshold amount.
                    ``(B) Threshold amount.--For purposes of this 
                paragraph, the term `threshold amount' means, with 
                respect to any taxpayer for any taxable year, 200 
                percent of the Federal poverty guideline (as determined 
                by the Secretary of Health and Human Service for the 
                taxable year) applicable to the taxpayer.
            ``(4) Only 2 dependents taken into account.--Not more than 
        2 dependents of the taxpayer may be taken into account under 
        paragraphs (2)(C) and (3)(B).
            ``(5) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2011, each dollar 
        amount contained in paragraph (2) shall be increased by an 
        amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2010' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $50.
    ``(c) Eligible Coverage Month.--For purposes of this section, the 
term `eligible coverage month' means, with respect to any individual, 
any month if, as of the first day of such month, the individual--
            ``(1) is covered by qualified health insurance,
            ``(2) does not have other specified coverage, and
            ``(3) is not imprisoned under Federal, State, or local 
        authority.
    ``(d) Qualifying Family Member.--For purposes of this section, the 
term `qualifying family member' means--
            ``(1) in the case of a joint return, the taxpayer's spouse, 
        and
            ``(2) any dependent of the taxpayer.
    ``(e) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' means health insurance coverage 
(other than excepted benefits as defined in section 9832(c)) which 
constitutes medical care.
    ``(f) Other Specified Coverage.--For purposes of this section, an 
individual has other specified coverage for any month if, as of the 
first day of such month--
            ``(1) Coverage under medicare, medicaid, or schip.--Such 
        individual--
                    ``(A) is entitled to benefits under part A of title 
                XVIII of the Social Security Act or is enrolled under 
                part B of such title, or
                    ``(B) is enrolled in the program under title XIX or 
                XXI of such Act (other than under section 1928 of such 
                Act).
            ``(2) Certain other coverage.--Such individual--
                    ``(A) is enrolled in a health benefits plan under 
                chapter 89 of title 5, United States Code,
                    ``(B) is entitled to receive benefits under chapter 
                55 of title 10, United States Code,
                    ``(C) in entitled to receive benefits under chapter 
                17 of title 38, United States Code, or
                    ``(D) is enrolled in a group health plan (within 
                the meaning of section 5000(b)(1)) which is subsidized 
                by the employer.
    ``(g) Special Rules.--
            ``(1) Coordination with advance payments of credit; 
        recapture of excess advance payments.--With respect to any 
        taxable year--
                    ``(A) the amount which would (but for this 
                subsection) be allowed as a credit to the taxpayer 
                under subsection (a) shall be reduced (but not below 
                zero) by the aggregate amount paid on behalf of such 
                taxpayer under section 7529 for months beginning in 
                such taxable year, and
                    ``(B) the tax imposed by section 1 for such taxable 
                year shall be increased by the excess (if any) of--
                            ``(i) the aggregate amount paid on behalf 
                        of such taxpayer under section 7529 for months 
                        beginning in such taxable year, over
                            ``(ii) the amount which would (but for this 
                        subsection) be allowed as a credit to the 
                        taxpayer under subsection (a).
            ``(2) Coordination with other deductions.--Amounts taken 
        into account under subsection (a) shall not be taken into 
        account in determining--
                    ``(A) any deduction allowed under section 162(l), 
                213, or 224, or
                    ``(B) any credit allowed under section 35.
            ``(3) Medical and health savings accounts.--Amounts 
        distributed from an Archer MSA (as defined in section 220(d)) 
        or from a health savings account (as defined in section 223(d)) 
        shall not be taken into account under subsection (a).
            ``(4) Denial of credit to dependents and nonpermanent 
        resident alien individuals.--No credit shall be allowed under 
        this section to any individual who is--
                    ``(A) not a citizen or lawful permanent resident of 
                the United States for the calendar year in which the 
                taxable year begins, or
                    ``(B) a dependent with respect to another taxpayer 
                for a taxable year beginning in the calendar year in 
                which such individual's taxable year begins.
            ``(5) Insurance which covers other individuals.--For 
        purposes of this section, rules similar to the rules of section 
        213(d)(6) shall apply with respect to any contract for 
        qualified health insurance under which amounts are payable for 
        coverage of an individual other than the taxpayer and 
        qualifying family members.
            ``(6) Treatment of payments.--For purposes of this 
        section--
                    ``(A) Payments by secretary.--Payments made by the 
                Secretary on behalf of any individual under section 
                7529 (relating to advance payment of credit for health 
                insurance costs of low-income individuals) shall be 
                treated as having been made by the taxpayer on the 
                first day of the month for which such payment was made.
                    ``(B) Payments by taxpayer.--Payments made by the 
                taxpayer for eligible coverage months shall be treated 
                as having been made by the taxpayer on the first day of 
                the month for which such payment was made.
            ``(7) Regulations.--The Secretary may prescribe such 
        regulations and other guidance as may be necessary or 
        appropriate to carry out this section, section 6050W, and 
        section 7529.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36B,'' after ``36A,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36A 
        the following new item:

``Sec. 36B. Health insurance costs of low-income individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.
    (d) Sense of Congress.--It is the sense of Congress that the cost 
of the advanceable refundable credit under sections 36B and 7529 of the 
Internal Revenue Code of 1986, as added by this title, will be offset 
by savings derived from the provisions of title XIII.

SEC. 102. ADVANCE PAYMENT OF CREDIT AS PREMIUM PAYMENT FOR QUALIFIED 
              HEALTH INSURANCE.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 
(relating to miscellaneous provisions) is amended by adding at the end 
the following:

``SEC. 7529. ADVANCE PAYMENT OF CREDIT AS PREMIUM PAYMENT FOR QUALIFIED 
              HEALTH INSURANCE.

    ``(a) General Rule.--Not later than January 1, 2012, the Secretary 
shall establish a program for making payments to providers of qualified 
health insurance (as defined in section 36B(e)) on behalf of taxpayers 
eligible for the credit under section 36B. Except as otherwise provided 
by the Secretary, such payments shall be made on the basis of the 
adjusted gross income of the taxpayer for the preceding taxable year.
    ``(b) Certification Process and Proof of Coverage.--For purposes of 
this section, payments may be made pursuant to subsection (a) only with 
respect to individuals for whom a qualified health insurance costs 
credit eligibility certificate is in effect.''.
    (b) Disclosure of Return Information for Purposes of Advance 
Payment of Credit as Premiums for Qualified Health Insurance.--
            (1) In general.--Subsection (l) of section 6103 of such 
        Code is amended by adding at the end the following new 
        paragraph:
            ``(21) Disclosure of return information for purposes of 
        advance payment of credit as premiums for qualified health 
        insurance.--The Secretary may, on behalf of taxpayers eligible 
        for the credit under section 36B, disclose to a provider of 
        qualified health insurance (as defined in section 36(e)), and 
        persons acting on behalf of such provider, return information 
        with respect to any such taxpayer only to the extent necessary 
        (as prescribed by regulations issued by the Secretary) to carry 
        out the program established by section 7529 (relating to 
        advance payment of credit as premium payment for qualified 
        health insurance).''.
            (2) Confidentiality of information.--Paragraph (3) of 
        section 6103(a) of such Code is amended by striking ``or (20)'' 
        and inserting ``(20), or (21)''.
            (3) Unauthorized disclosure.--Paragraph (2) of section 
        7213(a) of such Code is amended by striking ``or (20)'' and 
        inserting ``(20), or (21)''.
    (c) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code (relating to information concerning 
        transactions with other persons) is amended by adding at the 
        end the following new section:

``SEC. 6050X. RETURNS RELATING TO CREDIT FOR HEALTH INSURANCE COSTS OF 
              LOW-INCOME INDIVIDUALS.

    ``(a) Requirement of Reporting.--Every person who is entitled to 
receive payments for any month of any calendar year under section 7529 
(relating to advance payment of credit as premium payment for qualified 
health insurance) with respect to any individual shall, at such time as 
the Secretary may prescribe, make the return described in subsection 
(b) with respect to each such individual.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of each individual 
                referred to in subsection (a),
                    ``(B) the number of months for which amounts were 
                entitled to be received with respect to such individual 
                under section 7529 (relating to advance payment of 
                credit as premium payment for qualified health 
                insurance),
                    ``(C) the amount entitled to be received for each 
                such month, and
                    ``(D) such other information as the Secretary may 
                prescribe.
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be 
made.''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code (relating to definitions) is amended by striking 
                ``or'' at the end of clause (xxii), by striking ``and'' 
                at the end of clause (xxiii) and inserting ``or'', and 
                by inserting after clause (xxiii) the following new 
                clause:
                            ``(xxiv) section 6050X (relating to returns 
                        relating to credit for health insurance costs 
                        of low-income individuals), and''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by striking ``or'' at the end of 
                subparagraph (EE), by striking the period at the end of 
                subparagraph (FF) and inserting ``, or'', and by adding 
                after subparagraph (FF) the following new subparagraph:
                    ``(GG) section 6050X (relating to returns relating 
                to credit for health insurance costs of low-income 
                individuals).''.
    (d) Clerical Amendments.--
            (1) The table of sections for chapter 77 of such Code is 
        amended by adding at the end the following new item:

``Sec. 7529. Advance payment of credit as premium payment for qualified 
                            health insurance.''.
            (2) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by adding at 
        the end the following new item:

``Sec. 6050X. Returns relating to credit for health insurance costs of 
                            low-income individuals.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 103. ELECTION OF TAX CREDIT INSTEAD OF ALTERNATIVE GOVERNMENT OR 
              GROUP PLAN BENEFITS.

    (a) In General.--Notwithstanding any other provision of law, an 
individual who is otherwise eligible for benefits under a health 
program (as defined in subsection (c)) may elect, in a form and manner 
specified by the Secretary of Health and Human Services in consultation 
with the Secretary of the Treasury, to receive a tax credit described 
in section 36B of the Internal Revenue Code of 1986 (which may be used 
for the purpose of health insurance coverage) in lieu of receiving any 
benefits under such program.
    (b) Effective Date.--An election under subsection (a) may first be 
made for calendar year 2012 and any such election shall be effective 
for such period (not less than one calendar year) as the Secretary of 
Health and Human Services shall specify, in consultation with the 
Secretary of the Treasury.
    (c) Health Program Defined.--For purposes of this section, the term 
``health program'' means any of the following:
            (1) Medicare.--The Medicare program under part A of title 
        XVIII of the Social Security Act.
            (2) Medicaid.--The Medicaid program under title XIX of such 
        Act (including such a program operating under a Statewide 
        waiver under section 1115 of such Act).
            (3) SCHIP.--The State children's health insurance program 
        under title XXI of such Act.
            (4) TRICARE.--The TRICARE program under chapter 55 of title 
        10, United States Code.
            (5) Veterans benefits.--Coverage for benefits under chapter 
        17 of title 38, United States Code.
            (6) FEHBP.--Coverage under chapter 89 of title 5, United 
        States Code.
            (7) Subsidized group health plans.--Coverage under a group 
        health plan (within the meaning of section 5000(b)(1)) which is 
        subsidized by the employer.
    (d) Other Social Security Benefits Not Waived.--An election to 
waive the benefits described in subsection (c)(1) shall not result in 
the waiver of any other benefits under the Social Security Act.

SEC. 104. DEDUCTION FOR QUALIFIED HEALTH INSURANCE COSTS OF 
              INDIVIDUALS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions) is amended by redesignating section 224 as section 225 and 
by inserting after section 223 the following new section:

``SEC. 224. COSTS OF QUALIFIED HEALTH INSURANCE.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to the amount paid during the 
taxable year for coverage for the taxpayer, his spouse, and dependents 
under qualified health insurance.
    ``(b) Limitation.--In the case of any taxpayer for any taxable 
year, the deduction under subsection (a) shall not exceed an amount 
that would cause the taxpayer's Federal income tax liability to be 
reduced by more than the average value of the national health exclusion 
for employer sponsored insurance as determined by calculating the value 
of the exclusion for each household followed by calculating the average 
of those values.
    ``(c) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' has the meaning given such term 
by section 36B(e).
    ``(d) Special Rules.--
            ``(1) Coordination with medical deduction, etc.--Any amount 
        paid by a taxpayer for insurance to which subsection (a) 
        applies shall not be taken into account in computing the amount 
        allowable to the taxpayer as a deduction under section 162(l) 
        or 213(a). Any amount taken into account in determining the 
        credit allowed under section 35 or 36B shall not be taken into 
        account for purposes of this section.
            ``(2) Deduction not allowed for self-employment tax 
        purposes.--The deduction allowable by reason of this section 
        shall not be taken into account in determining an individual's 
        net earnings from self-employment (within the meaning of 
        section 1402(a)) for purposes of chapter 2.''.
    (b) Deduction Allowed in Computing Adjusted Gross Income.--
Subsection (a) of section 62 of such Code is amended by inserting 
before the last sentence the following new paragraph:
            ``(22) Costs of qualified health insurance.--The deduction 
        allowed by section 224.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by redesignating the 
item relating to section 224 as an item relating to section 225 and 
inserting before such item the following new item:

``Sec. 224. Costs of qualified health insurance.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 105. LIMITATION ON ABORTION FUNDING.

    No funds authorized under, or credits or deductions allowed under 
the Internal Revenue Code of 1986 by reason of, this Act (or any 
amendment made by this Act) may be used to pay for any abortion or to 
cover any part of the costs of any health plan that includes coverage 
of abortion, except in the case where a woman suffers from a physical 
disorder, physical injury, or physical illness that would, as certified 
by a physician, place the woman in danger of death unless an abortion 
is performed, including a life-endangering physical condition caused by 
or arising from the pregnancy itself, or unless the pregnancy is the 
result of an act of rape or incest.

SEC. 106. NO GOVERNMENT DISCRIMINATION AGAINST CERTAIN HEALTH CARE 
              ENTITIES.

    (a) Non-Discrimination.--A Federal agency or program, and any State 
or local government that receives Federal financial assistance under 
this Act or any amendment made by this Act (either directly or 
indirectly), may not subject any individual or institutional health 
care entity to discrimination on the basis that the health care entity 
does not provide, pay for, provide coverage of, or refer for abortions.
    (b) Health Care Entity Defined.--For purposes of this section, the 
term ``health care entity'' includes an individual physician or other 
health care professional, a hospital, a provider-sponsored 
organization, a health maintenance organization, a health insurance 
plan, or any other kind of health care facility, organization, or plan.
    (c) Remedies.--
            (1) In general.--The courts of the United States shall have 
        jurisdiction to prevent and redress actual or threatened 
        violations of this section by issuing any form of legal or 
        equitable relief, including--
                    (A) injunctions prohibiting conduct that violates 
                this section; and
                    (B) orders preventing the disbursement of all or a 
                portion of Federal financial assistance to a State or 
                local government, or to a specific offending agency or 
                program of a State or local government, until such time 
                as the conduct prohibited by this section has ceased.
            (2) Commencement of action.--An action under this 
        subsection may be instituted by--
                    (A) any health care entity that has standing to 
                complain of an actual or threatened violation of this 
                section; or
                    (B) the Attorney General of the United States.
    (d) Administration.--The Secretary of Health and Human Services 
shall designate the Director of the Office for Civil Rights of the 
Department of Health and Human Services--
            (1) to receive complaints alleging a violation of this 
        section;
            (2) subject to paragraph (3), to pursue the investigation 
        of such complaints in coordination with the Attorney General; 
        and
            (3) in the case of a complaint related to a Federal agency 
        (other than with respect to the Department of Health and Human 
        Services) or program administered through such other agency or 
        any State or local government receiving Federal financial 
        assistance through such other agency, to refer the complaint to 
        the appropriate office of such other agency.

SEC. 107. EQUAL EMPLOYER CONTRIBUTION RULE TO PROMOTE CHOICE.

    (a) Excise Tax for Failure To Provide Contribution Election.--
Section 5000 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subsection:
    ``(e) Health Care Contribution Election.--
            ``(1) In general.--Subsection (a) shall not apply in the 
        case of a group health plan with respect to which the 
        requirements of paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to a group health plan if any 
        employee of an employer (who but for this paragraph would be 
        covered by such plan) may elect to have the employer or 
        employee organization pay an amount which is not less than the 
        contribution amount to any provider of health insurance 
        coverage (other than excepted benefits as defined in section 
        9832(c)) which constitutes medical care of the individual or 
        individual's spouse or dependents in lieu of such group health 
        plan coverage otherwise provided or contributed to by the 
        employer with respect to such employee.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 9801 are met with respect to 
                the participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 
                9801 applies.
            ``(4) Contribution amount.--For purposes of this section, 
        the term `contribution amount' means, with respect to an 
        individual under a group health plan, the portion of the 
        applicable premium of such individual under such plan (as 
        determined under section 4980B(f)(4)) which is not paid by the 
        individual. In the case that the employer offers more than one 
        group health plan, the contribution amount shall be the average 
        amount of the applicable premiums under such plans.
            ``(5) Group health plan.--For purpose of this subsection, 
        subsection (d) shall not apply.
            ``(6) Application to fehbp.--Notwithstanding any other 
        provision of law, the Office of Personnel Management shall 
        carry out the health benefits program under chapter 89 of title 
        5, United States Code, consistent with the requirements of this 
        subsection.''.
    (b) Requirement of Equal Contributions to All FEHBP Plans.--Section 
8906 of title 5, United States Code, is amended by adding at the end 
the following new subsection:
    ``(j) Notwithstanding the previous provisions of this section the 
Office of Personnel Management shall revise the amount of the 
Government contribution made under this section in a manner so that--
            ``(1) the amount of such contribution does not change based 
        on the health benefits plan in which the individual is 
        enrolled; and
            ``(2) the aggregate amount of such contributions is 
        estimated to be equal to the aggregate amount of such 
        contributions if this subsection did not apply.''.
    (c) ERISA Conforming Amendments.--
            (1) Exception from hipaa requirements for benefits provided 
        under health care contribution election.--Section 732 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1191a) is amended by adding at the end the following new 
        subsection:
    ``(e) Health Care Contribution Election.--
            ``(1) In general.--The requirements of this part shall not 
        apply in the case of health insurance coverage (other than 
        excepted benefits as defined in section 9832(c) of the Internal 
        Revenue Code of 1986)--
                    ``(A) which is provided to a participant or 
                beneficiary by a health insurance issuer under a group 
                health plan, and
                    ``(B) with respect to which the requirements of 
                paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to health insurance coverage 
        provided to a participant or beneficiary by any health 
        insurance issuer under a group health plan if, under such 
        plan--
                    ``(A) the participant may elect such coverage for 
                any period of coverage in lieu of health insurance 
                coverage otherwise provided under such plan for such 
                period, and
                    ``(B) in the case of such an election, the plan 
                sponsor is required to pay to such issuer for the 
                elected coverage for such period an amount which is not 
                less than the contribution amount for such health 
                insurance coverage otherwise provided under such plan 
                for such period.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 701 are met with respect to the 
                participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 701 
                applies.
            ``(4) Contribution amount.--
                    ``(A) In general.--For purposes of this section, 
                the term `contribution amount' means, with respect to 
                any period of health insurance coverage offered to a 
                participant or beneficiary, the portion of the 
                applicable premium of such participant or beneficiary 
                under such plan which is not paid by such participant 
                or beneficiary. In the case that the employer offers 
                more than one group health plan, the contribution 
                amount shall be the average amount of the applicable 
                premiums under such plans.
                    ``(B) Applicable premium.--For purposes of 
                subparagraph (A), the term `applicable premium' means, 
                with respect to any period of health insurance coverage 
                of a participant or beneficiary under a group health 
                plan, the cost to the plan for such period of such 
                coverage for similarly situated beneficiaries (without 
                regard to whether such cost is paid by the plan sponsor 
                or the participant or beneficiary).''.
            (2) Exemption from fiduciary liability.--Section 404 of 
        such Act (29 U.S.C. 1104) is amended by adding at the end the 
        following new subsection:
    ``(e) The plan sponsor of a group health plan (as defined in 
section 733(a)) shall not be treated as breaching any of the 
responsibilities, obligations, or duties imposed upon fiduciaries by 
this title in the case of any individual who is a participant or 
beneficiary under such plan solely because of the extent to which the 
plan sponsor provides, in the case of such individual, some or all of 
such benefits by means of payment of contribution amounts pursuant to a 
contribution election under section 732(e), irrespective of the amount 
or type of benefits that would otherwise be provided to such individual 
under such plan.''.
    (d) Exception From HIPAA Requirements Under IRC for Benefits 
Provided Under Health Care Contribution Election.--Section 9831 of the 
Internal Revenue Code of 1986 (relating to general exceptions) is 
amended by adding at the end the following new subsection:
    ``(d) Health Care Contribution Election.--
            ``(1) In general.--The requirements of this chapter shall 
        not apply in the case of health insurance coverage (other than 
        excepted benefits as defined in section 9832(c))--
                    ``(A) which is provided to a participant or 
                beneficiary by a health insurance issuer under a group 
                health plan, and
                    ``(B) with respect to which the requirements of 
                paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to health insurance coverage 
        provided to a participant or beneficiary by any health 
        insurance issuer under a group health plan if, under such 
        plan--
                    ``(A) the participant may elect such coverage for 
                any period of coverage in lieu of health insurance 
                coverage otherwise provided under such plan for such 
                period, and
                    ``(B) in the case of such an election, the plan 
                sponsor is required to pay to such issuer for the 
                elected coverage for such period an amount which is not 
                less than the contribution amount for such health 
                insurance coverage otherwise provided under such plan 
                for such period.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 9801 are met with respect to 
                the participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 
                9801 applies.
            ``(4) Contribution amount.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `contribution amount' means, with respect to 
                any period of health insurance coverage offered to a 
                participant or beneficiary, the portion of the 
                applicable premium of such participant or beneficiary 
                under such plan which is not paid by such participant 
                or beneficiary. In the case that the employer offers 
                more than one group health plan, the contribution 
                amount shall be the average amount of the applicable 
                premiums under such plans.
                    ``(B) Applicable premium.--For purposes of 
                subparagraph (A), the term `applicable premium' means, 
                with respect to any period of health insurance coverage 
                of a participant or beneficiary under a group health 
                plan, the cost to the plan for such period of such 
                coverage for similarly situated beneficiaries (without 
                regard to whether such cost is paid by the plan sponsor 
                or the participant or beneficiary).''.
    (e) Exception From HIPAA Requirements Under the PHSA for Benefits 
Provided Under Health Care Contribution Election.--Section 2721 of the 
Public Health Service Act (42 U.S.C. 300gg-21) is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Health Care Contribution Election.--
            ``(1) In general.--The requirements of subparts 1 through 3 
        shall not apply in the case of health insurance coverage (other 
        than excepted benefits as defined in section 9832(c) of the 
        Internal Revenue Code of 1986)--
                    ``(A) which is provided to a participant or 
                beneficiary by a health insurance issuer under a group 
                health plan, and
                    ``(B) with respect to which the requirements of 
                paragraphs (2) and (3) are met.
            ``(2) Contribution election.--The requirement of this 
        paragraph is met with respect to health insurance coverage 
        provided to a participant or beneficiary by any health 
        insurance issuer under a group health plan if, under such 
        plan--
                    ``(A) the participant may elect such coverage for 
                any period of coverage in lieu of health insurance 
                coverage otherwise provided under such plan for such 
                period, and
                    ``(B) in the case of such an election, the plan 
                sponsor is required to pay to such issuer for the 
                elected coverage for such period an amount which is not 
                less than the contribution amount for such health 
                insurance coverage otherwise provided under such plan 
                for such period.
            ``(3) Pre-existing conditions.--
                    ``(A) In general.--The requirement of this 
                paragraph is met with respect to health insurance 
                coverage provided to a participant or beneficiary by 
                any health insurance issuer if, under such plan the 
                requirements of section 2701 are met with respect to 
                the participant or beneficiary.
                    ``(B) Enforcement with respect to individual 
                election.--For purposes of subparagraph (A), any health 
                insurance coverage with respect to the participant or 
                beneficiary shall be treated as health insurance 
                coverage under a group health plan to which section 
                2701 applies.
            ``(4) Contribution amount.--
                    ``(A) In general.--For purposes of this section, 
                the term `contribution amount' means, with respect to 
                any period of health insurance coverage offered to a 
                participant or beneficiary, the portion of the 
                applicable premium of such participant or beneficiary 
                under such plan which is not paid by such participant 
                or beneficiary. In the case that the employer offers 
                more than one group health plan, the contribution 
                amount shall be the average amount of the applicable 
                premiums under such plans.
                    ``(B) Applicable premium.--For purposes of 
                subparagraph (A), the term `applicable premium' means, 
                with respect to any period of health insurance coverage 
                of a participant or beneficiary under a group health 
                plan, the cost to the plan for such period of such 
                coverage for similarly situated beneficiaries (without 
                regard to whether such cost is paid by the plan sponsor 
                or the participant or beneficiary).''.

SEC. 108. LIMITATIONS ON STATE RESTRICTIONS ON EMPLOYER AUTO-
              ENROLLMENT.

    (a) In General.--No State shall establish a law that prevents an 
employer from instituting auto-enrollment which meets the requirements 
of subsection (b) for coverage of a participant or beneficiary under a 
group health plan, or health insurance coverage offered in connection 
with such a plan, so long as the participant or beneficiary has the 
option of declining such coverage.
    (b) Automatic Enrollment for Employer Sponsored Health Benefits.--
            (1) In general.--The requirement of this subsection with 
        respect to an employer and an employee is that the employer 
        automatically enroll such employee into the employment-based 
        health benefits plan for individual coverage under the plan 
        option with the lowest applicable employee premium.
            (2) Opt-out.--In no case may an employer automatically 
        enroll an employee in a plan under paragraph (1) if such 
        employee makes an affirmative election to opt-out of such plan 
        or to elect coverage under an employment-based health benefits 
        plan offered by such employer. An employer shall provide an 
        employee with a 30-day period to make such an affirmative 
        election before the employer may automatically enroll the 
        employee in such a plan.
            (3) Notice requirements.--
                    (A) In general.--Each employer described in 
                paragraph (1) who automatically enrolls an employee 
                into a plan as described in such paragraph shall 
                provide the employees, within a reasonable period 
                before the beginning of each plan year (or, in the case 
                of new employees, within a reasonable period before the 
                end of the enrollment period for such a new employee), 
                written notice of the employees' rights and obligations 
                relating to the automatic enrollment requirement under 
                such paragraph. Such notice must be comprehensive and 
                understood by the average employee to whom the 
                automatic enrollment requirement applies.
                    (B) Inclusion of specific information.--The written 
                notice under subparagraph (A) must explain an 
                employee's right to opt out of being automatically 
                enrolled in a plan and in the case that more than one 
                level of benefits or employee premium level is offered 
                by the employer involved, the notice must explain which 
                level of benefits and employee premium level the 
                employee will be automatically enrolled in the absence 
                of an affirmative election by the employee.
    (c) Construction.--Nothing in this section shall be construed to 
supersede State law which establishes, implements, or continues in 
effect any standard or requirement relating to employers in connection 
with payroll or the sponsoring of employer sponsored health insurance 
coverage except to the extent that such standard or requirement 
prevents an employer from instituting the auto-enrollment described in 
subsection (a).
    (d) Non-Application to Excepted Benefits.--For purposes of this 
section, the term ``group health plan'' does not include excepted 
benefits (as defined in section 2781(c) of the Public Health Service 
Act (42 U.S.C. 300gg-91(c)).

SEC. 109. CREDIT FOR SMALL EMPLOYERS ADOPTING AUTO-ENROLLMENT AND 
              DEFINED CONTRIBUTION OPTIONS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following new section:

``SEC. 45R. AUTO-ENROLLMENT AND DEFINED CONTRIBUTION OPTION FOR HEALTH 
              BENEFITS PLANS OF SMALL EMPLOYERS.

    ``(a) In General.--For purposes of section 38, in the case of a 
small employer, the health benefits plan implementation credit 
determined under this section for the taxable year is an amount equal 
to 100 percent of the amount paid or incurred by the taxpayer during 
the taxable year for qualified health benefits expenses.
    ``(b) Limitation.--The credit determined under subsection (a) with 
respect to any taxpayer for any taxable year shall not exceed the 
excess of--
            ``(1) $1,500, over
            ``(2) sum of the credits determined under subsection (a) 
        with respect to such taxpayer for all preceding taxable years.
    ``(c) Qualified Health Benefits Expenses.--For purposes of this 
section, the term `qualified health benefits auto-enrollment expenses' 
means, with respect to any taxable year, amounts paid or incurred by 
the taxpayer during such taxable year for--
            ``(1) establishing auto-enrollment which meets the 
        requirements of section 107 of the Empowering Patients First 
        Act for coverage of a participant or beneficiary under a group 
        health plan, or health insurance coverage offered in connection 
        with such a plan, and
            ``(2) implementing the employer contribution option for 
        health insurance coverage pursuant to section 5000(e)(2).
    ``(d) Qualified Small Employer.--For purposes of this section, the 
term `qualified small employer' means any employer for any taxable year 
if the number of employees employed by such employer during such 
taxable year does not exceed 50. All employers treated as a single 
employer under section (a) or (b) of section 52 shall be treated as a 
single employer for purposes of this section.
    ``(e) No Double Benefit.--No deduction or credit shall be allowed 
under any other provision of this chapter with respect to the amount of 
the credit determined under this section.
    ``(f) Termination.--Subsection (a) shall not apply to any taxable 
year beginning after the date which is 2 years after the date of the 
enactment of this section.''.
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38 of such Code (relating to general business credit) is 
amended by striking ``plus'' at the end of paragraph (34), by striking 
the period at the end of paragraph (35) and inserting ``, plus'' , and 
by adding at the end the following new paragraph:
            ``(36) in the case of a small employer (as defined in 
        section 45R(d)), the health benefits plan implementation credit 
        determined under section 45R(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 45Q the following new 
item:

``Sec. 45R. Auto-enrollment and defined contribution option for health 
                            benefits plans of small employers.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 110. HSA MODIFICATIONS AND CLARIFICATIONS.

    (a) Clarification of Treatment of Capitated Primary Care Payments 
as Amounts Paid for Medical Care.--Section 213(d) of the Internal 
Revenue Code of 1986 (relating to definitions) is amended by adding at 
the end the following new paragraph:
            ``(12) Treatment of capitated primary care payments.--
        Capitated primary care payments shall be treated as amounts 
        paid for medical care.''.
    (b) Special Rule for Individuals Eligible for Veterans or Indian 
Health Benefits.--Section 223(c)(1) of such Code (defining eligible 
individual) is amended by adding at the end the following new 
subparagraph:
                    ``(C) Special rule for individuals eligible for 
                veterans or indian health benefits.--For purposes of 
                subparagraph (A)(ii), an individual shall not be 
                treated as covered under a health plan described in 
                such subparagraph merely because the individual 
                receives periodic hospital care or medical services 
                under any law administered by the Secretary of Veterans 
                Affairs or the Bureau of Indian Affairs.''.
    (c) Certain Physician Fees To Be Treated as Medical Care.--Section 
213(d) of such Code is amended by adding at the end the following new 
paragraph:
            ``(13) Pre-paid physician fees.--The term `medical care' 
        shall include amounts paid by patients to their primary 
        physician in advance for the right to receive medical services 
        on an as-needed basis.''.
    (d) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

     TITLE II--HEALTH INSURANCE POOLING MECHANISMS FOR INDIVIDUALS

  Subtitle A--Safety Net for Individuals With Pre-Existing Conditions

SEC. 201. REQUIRING OPERATION OF HIGH-RISK POOL OR OTHER MECHANISM AS 
              CONDITION FOR AVAILABILITY OF TAX CREDIT.

    No credit shall be allowed under section 36B of the Internal 
Revenue Code of 1986 (relating to health insurance costs of low-income 
individuals) to the residents of any State unless such State meets the 
following requirements:
            (1) The State must implement a high-risk pool or a 
        reinsurance pool or other risk-adjustment mechanism (as defined 
        in section 211(h)).
            (2) Assessments levied by the State for purposes of funding 
        such a pool or mechanism must only be used for funding and 
        administering such pool or mechanism.
            (3) Such pool or mechanism must incorporate the application 
        of such tax credit into such pool or mechanism.

   Subtitle B--Federal Block Grants for State Insurance Expenditures

SEC. 211. FEDERAL BLOCK GRANTS FOR STATE INSURANCE EXPENDITURES.

    (a) In General.--Subject to the succeeding provisions of this 
section, each State shall receive from the Secretary of Health and 
Human Services (in this subtitle referred to as the ``Secretary'') a 
block grant for the State's providing for the use, in connection with 
providing health benefits coverage, of a qualifying high-risk pool or a 
reinsurance pool or other risk-adjustment mechanism used for the 
purpose of subsidizing the purchase of private health insurance.
    (b) Funding Amount.--
            (1) In general.--There are hereby appropriated, out of any 
        funds in the Treasury not otherwise appropriated, $300,000,000 
        for fiscal year 2012 and each subsequent fiscal year for block 
        grants under this section. Such amount shall be divided among 
        the States as determined by the Secretary.
            (2) Construction.--Nothing in this section shall be 
        construed as preventing a State from using funding under 
        section 2745 of the Public Health Service Act for purposes of 
        funding reinsurance or other risk mechanisms.
    (c) Limitation.--Funding under subsection (a) may only be used for 
the following:
            (1) Qualifying high-risk pools.--
                    (A) Current pools.--A qualifying high-risk pool 
                created before the date of the enactment of this Act 
                that only cover high-risk populations and individuals 
                (and their spouse and dependents) receiving a health 
                care tax credit under section 35 of the Internal 
                Revenue Code of 1986 for a limited period of time as 
                determined by the Secretary or under section 2741 of 
                Public Health Service Act.
                    (B) New pools.--A qualifying high-risk pool created 
                on or after such date that only covers populations and 
                individuals described in subparagraph (A) if the pool--
                            (i) offers at least the option of one or 
                        more high-deductible plan options, in 
                        combination with a contribution into a health 
                        savings account;
                            (ii) offers multiple competing health plan 
                        options; and
                            (iii) covers only high-risk populations.
            (2) Risk insurance pool or other risk-adjustment 
        mechanisms.--
                    (A) Current reinsurance.--A reinsurance pool, or 
                other risk-adjustment mechanism, created before the 
                date of the enactment of this Act that only covers 
                populations and individuals described in paragraph 
                (1)(A).
                    (B) New pools.--A reinsurance pool or other risk-
                adjustment mechanism created on or after such date that 
                provides reinsurance only covers populations and 
                individuals described in paragraph (1)(A) and only on a 
                prospective basis under which a health insurance issuer 
                cedes covered lives to the pool in exchange for payment 
                of a reinsurance premium.
            (3) Transition.--Nothing in this section shall be construed 
        as preventing a State from using funds available to transition 
        from an existing high-risk pool to a reinsurance pool.
    (d) Bonus Payments.--With respect to any amounts made available to 
the States under this section, the Secretary shall set aside a portion 
of such amounts that shall only be available for the following 
activities by such States:
            (1) Providing guaranteed availability of individual health 
        insurance coverage to certain individuals with prior group 
        coverage under part B of title XXVII of the Public Health 
        Service Act.
            (2) A reduction in premium trends, actual premiums, or 
        other cost-sharing requirements.
            (3) An expansion or broadening of the pool of high-risk 
        individuals eligible for coverage.
            (4) States that adopt the Model Health Plan for Uninsurable 
        Individuals Act of the National Association of Insurance 
        Commissioners (if and when updated by such Association).
The Secretary may request such Association to update such Model Health 
Plan as needed by 2013.
    (e) Administration.--The Secretary shall provide for the 
administration of this section and may establish such terms and 
conditions, including the requirement of an application, as may be 
appropriate to carry out this section.
    (f) Construction.--Nothing in this section shall be construed as 
requiring a State to operate a reinsurance pool (or other risk-
adjustment mechanism) under this section or as preventing a State from 
operating such a pool or mechanism through one or more private 
entities.
    (g) Qualifying High-Risk Pool.--For purposes of this section, the 
term ``qualifying high-risk pool'' means any qualified high-risk pool 
(as defined in subsection (g)(1)(A) of section 2745) of the Public 
Health Service Act) that meets the conditions to receive a grant under 
section (b)(1) of such section.
    (h) Reinsurance Pool or Other Risk-Adjustment Mechanism Defined.--
For purposes of this section, the term ``reinsurance pool or other 
risk-adjustment mechanism'' means any State-based risk spreading 
mechanism to subsidize the purchase of private health insurance for the 
high-risk population.
    (i) High-Risk Population.--For purposes of this section, the term 
``high-risk population'' means--
            (1) individuals who, by reason of the existence or history 
        of a medical condition, are able to acquire health coverage 
        only at rates which are at least 150 percent of the standard 
        risk rates for such coverage (in a non-community-rated non-
        guaranteed issue State), and
            (2) individuals who are provided health coverage by a high-
        risk pool.
    (j) State Defined.--For purposes of this section, the term 
``State'' includes the District of Columbia, Puerto Rico, the Virgin 
Islands, Guam, American Samoa, and the Northern Mariana Islands.
    (k) Extending Funding.--Section 2745(d)(2) of the Public Health 
Service Act (42 U.S.C. 300gg-45(d)(2)) is amended by striking ``2010'' 
and inserting ``2014'' each place it appears.

            Subtitle C--Health Care Access and Availability

SEC. 221. EXPANSION OF ACCESS AND CHOICE THROUGH INDIVIDUAL MEMBERSHIP 
              ASSOCIATIONS (IMAS).

    The Public Health Service Act, as amended by section 2, is further 
amended by inserting after title XXX the following new title:

            ``TITLE XXXI--INDIVIDUAL MEMBERSHIP ASSOCIATIONS

``SEC. 3101. DEFINITION OF INDIVIDUAL MEMBERSHIP ASSOCIATION (IMA).

    ``(a) In General.--For purposes of this title, the terms 
`individual membership association' and `IMA' mean a legal entity that 
meets the following requirements:
            ``(1) Organization.--The IMA is an organization operated 
        under the direction of an association (as defined in section 
        3104(1)).
            ``(2) Offering health benefits coverage.--
                    ``(A) Different groups.--The IMA, in conjunction 
                with those health insurance issuers that offer health 
                benefits coverage through the IMA, makes available 
                health benefits coverage in the manner described in 
                subsection (b) to all members of the IMA and the 
                dependents of such members in the manner described in 
                subsection (c)(2) at rates that are established by the 
                health insurance issuer on a policy or product specific 
                basis and that may vary only as permissible under State 
                law.
                    ``(B) Nondiscrimination in coverage offered.--
                            ``(i) In general.--Subject to clause (ii), 
                        the IMA may not offer health benefits coverage 
                        to a member of an IMA unless the same coverage 
                        is offered to all such members of the IMA.
                            ``(ii) Construction.--Nothing in this title 
                        shall be construed as requiring or permitting a 
                        health insurance issuer to provide coverage 
                        outside the service area of the issuer, as 
                        approved under State law, or requiring a health 
                        insurance issuer from excluding or limiting the 
                        coverage on any individual, subject to the 
                        requirement of section 2741.
                    ``(C) No financial underwriting.--The IMA provides 
                health benefits coverage only through contracts with 
                health insurance issuers and does not assume insurance 
                risk with respect to such coverage.
            ``(3) Geographic areas.--Nothing in this title shall be 
        construed as preventing the establishment and operation of more 
        than one IMA in a geographic area or as limiting the number of 
        IMAs that may operate in any area.
            ``(4) Provision of administrative services to purchasers.--
                    ``(A) In general.--The IMA may provide 
                administrative services for members. Such services may 
                include accounting, billing, and enrollment 
                information.
                    ``(B) Construction.--Nothing in this subsection 
                shall be construed as preventing an IMA from serving as 
                an administrative service organization to any entity.
            ``(5) Filing information.--The IMA files with the Secretary 
        information that demonstrates the IMA's compliance with the 
        applicable requirements of this title.
    ``(b) Health Benefits Coverage Requirements.--
            ``(1) Compliance with consumer protection requirements.--
        Any health benefits coverage offered through an IMA shall--
                    ``(A) be underwritten by a health insurance issuer 
                that--
                            ``(i) is licensed (or otherwise regulated) 
                        under State law,
                            ``(ii) meets all applicable State standards 
                        relating to consumer protection, subject to 
                        section 3002(b), and
                    ``(B) subject to paragraph (2), be approved or 
                otherwise permitted to be offered under State law.
            ``(2) Examples of types of coverage.--The benefits coverage 
        made available through an IMA may include, but is not limited 
        to, any of the following if it meets the other applicable 
        requirements of this title:
                    ``(A) Coverage through a health maintenance 
                organization.
                    ``(B) Coverage in connection with a preferred 
                provider organization.
                    ``(C) Coverage in connection with a licensed 
                provider-sponsored organization.
                    ``(D) Indemnity coverage through an insurance 
                company.
                    ``(E) Coverage offered in connection with a 
                contribution into a medical savings account or flexible 
                spending account.
                    ``(F) Coverage that includes a point-of-service 
                option.
                    ``(G) Any combination of such types of coverage.
            ``(3) Wellness bonuses for health promotion.--Nothing in 
        this title shall be construed as precluding a health insurance 
        issuer offering health benefits coverage through an IMA from 
        establishing premium discounts or rebates for members or from 
        modifying otherwise applicable copayments or deductibles in 
        return for adherence to programs of health promotion and 
        disease prevention so long as such programs are agreed to in 
        advance by the IMA and comply with all other provisions of this 
        title and do not discriminate among similarly situated members.
    ``(c) Members; Health Insurance Issuers.--
            ``(1) Members.--
                    ``(A) In general.--Under rules established to carry 
                out this title, with respect to an individual who is a 
                member of an IMA, the individual may enroll for health 
                benefits coverage (including coverage for dependents of 
                such individual) offered by a health insurance issuer 
                through the IMA.
                    ``(B) Rules for enrollment.--Nothing in this 
                paragraph shall preclude an IMA from establishing rules 
                of enrollment and reenrollment of members. Such rules 
                shall be applied consistently to all members within the 
                IMA and shall not be based in any manner on health 
                status-related factors.
            ``(2) Health insurance issuers.--The contract between an 
        IMA and a health insurance issuer shall provide, with respect 
        to a member enrolled with health benefits coverage offered by 
        the issuer through the IMA, for the payment of the premiums 
        collected by the issuer.

``SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIREMENTS.

    ``State laws insofar as they relate to any of the following are 
superseded and shall not apply to health benefits coverage made 
available through an IMA:
            ``(1) Benefit requirements for health benefits coverage 
        offered through an IMA, including (but not limited to) 
        requirements relating to coverage of specific providers, 
        specific services or conditions, or the amount, duration, or 
        scope of benefits, but not including requirements to the extent 
        required to implement title XXVII or other Federal law and to 
        the extent the requirement prohibits an exclusion of a specific 
        disease from such coverage.
            ``(2) Any other requirements (including limitations on 
        compensation arrangements) that, directly or indirectly, 
        preclude (or have the effect of precluding) the offering of 
        such coverage through an IMA, if the IMA meets the requirements 
        of this title.
Any State law or regulation relating to the composition or organization 
of an IMA is preempted to the extent the law or regulation is 
inconsistent with the provisions of this title.

``SEC. 3103. ADMINISTRATION.

    ``(a) In General.--The Secretary shall administer this title and is 
authorized to issue such regulations as may be required to carry out 
this title. Such regulations shall be subject to Congressional review 
under the provisions of chapter 8 of title 5, United States Code. The 
Secretary shall incorporate the process of `deemed file and use' with 
respect to the information filed under section 3001(a)(5)(A) and shall 
determine whether information filed by an IMA demonstrates compliance 
with the applicable requirements of this title. The Secretary shall 
exercise authority under this title in a manner that fosters and 
promotes the development of IMAs in order to improve access to health 
care coverage and services.
    ``(b) Periodic Reports.--The Secretary shall submit to Congress a 
report every 30 months, during the 10-year period beginning on the 
effective date of the rules promulgated by the Secretary to carry out 
this title, on the effectiveness of this title in promoting coverage of 
uninsured individuals. The Secretary may provide for the production of 
such reports through one or more contracts with appropriate private 
entities.

``SEC. 3104. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Association.--The term `association' means, with 
        respect to health insurance coverage offered in a State, a 
        legal entity which--
                    ``(A) has been actively in existence for at least 5 
                years;
                    ``(B) has been formed and maintained in good faith 
                for purposes other than obtaining insurance;
                    ``(C) does not condition membership in the 
                association on any health status-related factor 
                relating to an individual (including an employee of an 
                employer or a dependent of an employee); and
                    ``(D) does not make health insurance coverage 
                offered through the association available other than in 
                connection with a member of the association.
            ``(2) Dependent.--The term `dependent', as applied to 
        health insurance coverage offered by a health insurance issuer 
        licensed (or otherwise regulated) in a State, shall have the 
        meaning applied to such term with respect to such coverage 
        under the laws of the State relating to such coverage and such 
        an issuer. Such term may include the spouse and children of the 
        individual involved.
            ``(3) Health benefits coverage.--The term `health benefits 
        coverage' has the meaning given the term health insurance 
        coverage in section 2791(b)(1), and does not include excepted 
        benefits (as defined in section 2791(c)).
            ``(4) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 2791(b)(2).
            ``(5) Health status-related factor.--The term `health 
        status-related factor' has the meaning given such term in 
        section 2791(d)(9).
            ``(6) IMA; individual membership association.--The terms 
        `IMA' and `individual membership association' are defined in 
        section 3101(a).
            ``(7) Member.--The term `member' means, with respect to an 
        IMA, an individual who is a member of the association to which 
        the IMA is offering coverage.''.

               Subtitle D--Small Business Health Fairness

SEC. 231. SHORT TITLE.

    This subtitle may be cited as the ``Small Business Health Fairness 
Act of 2011''.

SEC. 232. RULES GOVERNING ASSOCIATION HEALTH PLANS.

    (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding after part 7 the 
following new part:

           ``PART 8--RULES GOVERNING ASSOCIATION HEALTH PLANS

``SEC. 801. ASSOCIATION HEALTH PLANS.

    ``(a) In General.--For purposes of this part, the term `association 
health plan' means a group health plan whose sponsor is (or is deemed 
under this part to be) described in subsection (b).
    ``(b) Sponsorship.--The sponsor of a group health plan is described 
in this subsection if such sponsor--
            ``(1) is organized and maintained in good faith, with a 
        constitution and bylaws specifically stating its purpose and 
        providing for periodic meetings on at least an annual basis, as 
        a bona fide trade association, a bona fide industry association 
        (including a rural electric cooperative association or a rural 
        telephone cooperative association), a bona fide professional 
        association, or a bona fide chamber of commerce (or similar 
        bona fide business association, including a corporation or 
        similar organization that operates on a cooperative basis 
        (within the meaning of section 1381 of the Internal Revenue 
        Code of 1986)), for substantial purposes other than that of 
        obtaining or providing medical care;
            ``(2) is established as a permanent entity which receives 
        the active support of its members and requires for membership 
        payment on a periodic basis of dues or payments necessary to 
        maintain eligibility for membership in the sponsor; and
            ``(3) does not condition membership, such dues or payments, 
        or coverage under the plan on the basis of health status-
        related factors with respect to the employees of its members 
        (or affiliated members), or the dependents of such employees, 
        and does not condition such dues or payments on the basis of 
        group health plan participation.
Any sponsor consisting of an association of entities which meet the 
requirements of paragraphs (1), (2), and (3) shall be deemed to be a 
sponsor described in this subsection.

``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

    ``(a) In General.--The applicable authority shall prescribe by 
regulation a procedure under which, subject to subsection (b), the 
applicable authority shall certify association health plans which apply 
for certification as meeting the requirements of this part.
    ``(b) Standards.--Under the procedure prescribed pursuant to 
subsection (a), in the case of an association health plan that provides 
at least one benefit option which does not consist of health insurance 
coverage, the applicable authority shall certify such plan as meeting 
the requirements of this part only if the applicable authority is 
satisfied that the applicable requirements of this part are met (or, 
upon the date on which the plan is to commence operations, will be met) 
with respect to the plan.
    ``(c) Requirements Applicable to Certified Plans.--An association 
health plan with respect to which certification under this part is in 
effect shall meet the applicable requirements of this part, effective 
on the date of certification (or, if later, on the date on which the 
plan is to commence operations).
    ``(d) Requirements for Continued Certification.--The applicable 
authority may provide by regulation for continued certification of 
association health plans under this part.
    ``(e) Class Certification for Fully Insured Plans.--The applicable 
authority shall establish a class certification procedure for 
association health plans under which all benefits consist of health 
insurance coverage. Under such procedure, the applicable authority 
shall provide for the granting of certification under this part to the 
plans in each class of such association health plans upon appropriate 
filing under such procedure in connection with plans in such class and 
payment of the prescribed fee under section 807(a).
    ``(f) Certification of Self-Insured Association Health Plans.--An 
association health plan which offers one or more benefit options which 
do not consist of health insurance coverage may be certified under this 
part only if such plan consists of any of the following:
            ``(1) a plan which offered such coverage on the date of the 
        enactment of the Small Business Health Fairness Act of 2011,
            ``(2) a plan under which the sponsor does not restrict 
        membership to one or more trades and businesses or industries 
        and whose eligible participating employers represent a broad 
        cross-section of trades and businesses or industries, or
            ``(3) a plan whose eligible participating employers 
        represent one or more trades or businesses, or one or more 
        industries, consisting of any of the following: agriculture; 
        equipment and automobile dealerships; barbering and 
        cosmetology; certified public accounting practices; child care; 
        construction; dance, theatrical and orchestra productions; 
        disinfecting and pest control; financial services; fishing; 
        food service establishments; hospitals; labor organizations; 
        logging; manufacturing (metals); mining; medical and dental 
        practices; medical laboratories; professional consulting 
        services; sanitary services; transportation (local and 
        freight); warehousing; wholesaling/distributing; or any other 
        trade or business or industry which has been indicated as 
        having average or above-average risk or health claims 
        experience by reason of State rate filings, denials of 
        coverage, proposed premium rate levels, or other means 
        demonstrated by such plan in accordance with regulations.

``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.

    ``(a) Sponsor.--The requirements of this subsection are met with 
respect to an association health plan if the sponsor has met (or is 
deemed under this part to have met) the requirements of section 801(b) 
for a continuous period of not less than 3 years ending with the date 
of the application for certification under this part.
    ``(b) Board of Trustees.--The requirements of this subsection are 
met with respect to an association health plan if the following 
requirements are met:
            ``(1) Fiscal control.--The plan is operated, pursuant to a 
        trust agreement, by a board of trustees which has complete 
        fiscal control over the plan and which is responsible for all 
        operations of the plan.
            ``(2) Rules of operation and financial controls.--The board 
        of trustees has in effect rules of operation and financial 
        controls, based on a 3-year plan of operation, adequate to 
        carry out the terms of the plan and to meet all requirements of 
        this title applicable to the plan.
            ``(3) Rules governing relationship to participating 
        employers and to contractors.--
                    ``(A) Board membership.--
                            ``(i) In general.--Except as provided in 
                        clauses (ii) and (iii), the members of the 
                        board of trustees are individuals selected from 
                        individuals who are the owners, officers, 
                        directors, or employees of the participating 
                        employers or who are partners in the 
                        participating employers and actively 
                        participate in the business.
                            ``(ii) Limitation.--
                                    ``(I) General rule.--Except as 
                                provided in subclauses (II) and (III), 
                                no such member is an owner, officer, 
                                director, or employee of, or partner 
                                in, a contract administrator or other 
                                service provider to the plan.
                                    ``(II) Limited exception for 
                                providers of services solely on behalf 
                                of the sponsor.--Officers or employees 
                                of a sponsor which is a service 
                                provider (other than a contract 
                                administrator) to the plan may be 
                                members of the board if they constitute 
                                not more than 25 percent of the 
                                membership of the board and they do not 
                                provide services to the plan other than 
                                on behalf of the sponsor.
                                    ``(III) Treatment of providers of 
                                medical care.--In the case of a sponsor 
                                which is an association whose 
                                membership consists primarily of 
                                providers of medical care, subclause 
                                (I) shall not apply in the case of any 
                                service provider described in subclause 
                                (I) who is a provider of medical care 
                                under the plan.
                            ``(iii) Certain plans excluded.--Clause (i) 
                        shall not apply to an association health plan 
                        which is in existence on the date of the 
                        enactment of the Small Business Health Fairness 
                        Act of 2011.
                    ``(B) Sole authority.--The board has sole authority 
                under the plan to approve applications for 
                participation in the plan and to contract with a 
                service provider to administer the day-to-day affairs 
                of the plan.
    ``(c) Treatment of Franchise Networks.--In the case of a group 
health plan which is established and maintained by a franchiser for a 
franchise network consisting of its franchisees--
            ``(1) the requirements of subsection (a) and section 801(a) 
        shall be deemed met if such requirements would otherwise be met 
        if the franchiser were deemed to be the sponsor referred to in 
        section 801(b), such network were deemed to be an association 
        described in section 801(b), and each franchisee were deemed to 
        be a member (of the association and the sponsor) referred to in 
        section 801(b); and
            ``(2) the requirements of section 804(a)(1) shall be deemed 
        met.
The Secretary may by regulation define for purposes of this subsection 
the terms `franchiser', `franchise network', and `franchisee'.

``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

    ``(a) Covered Employers and Individuals.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan--
            ``(1) each participating employer must be--
                    ``(A) a member of the sponsor,
                    ``(B) the sponsor, or
                    ``(C) an affiliated member of the sponsor with 
                respect to which the requirements of subsection (b) are 
                met,
        except that, in the case of a sponsor which is a professional 
        association or other individual-based association, if at least 
        one of the officers, directors, or employees of an employer, or 
        at least one of the individuals who are partners in an employer 
        and who actively participates in the business, is a member or 
        such an affiliated member of the sponsor, participating 
        employers may also include such employer; and
            ``(2) all individuals commencing coverage under the plan 
        after certification under this part must be--
                    ``(A) active or retired owners (including self-
                employed individuals), officers, directors, or 
                employees of, or partners in, participating employers; 
                or
                    ``(B) the beneficiaries of individuals described in 
                subparagraph (A).
    ``(b) Coverage of Previously Uninsured Employees.--In the case of 
an association health plan in existence on the date of the enactment of 
the Small Business Health Fairness Act of 2011, an affiliated member of 
the sponsor of the plan may be offered coverage under the plan as a 
participating employer only if--
            ``(1) the affiliated member was an affiliated member on the 
        date of certification under this part; or
            ``(2) during the 12-month period preceding the date of the 
        offering of such coverage, the affiliated member has not 
        maintained or contributed to a group health plan with respect 
        to any of its employees who would otherwise be eligible to 
        participate in such association health plan.
    ``(c) Individual Market Unaffected.--The requirements of this 
subsection are met with respect to an association health plan if, under 
the terms of the plan, no participating employer may provide health 
insurance coverage in the individual market for any employee not 
covered under the plan which is similar to the coverage 
contemporaneously provided to employees of the employer under the plan, 
if such exclusion of the employee from coverage under the plan is based 
on a health status-related factor with respect to the employee and such 
employee would, but for such exclusion on such basis, be eligible for 
coverage under the plan.
    ``(d) Prohibition of Discrimination Against Employers and Employees 
Eligible To Participate.--The requirements of this subsection are met 
with respect to an association health plan if--
            ``(1) under the terms of the plan, all employers meeting 
        the preceding requirements of this section are eligible to 
        qualify as participating employers for all geographically 
        available coverage options, unless, in the case of any such 
        employer, participation or contribution requirements of the 
        type referred to in section 2711 of the Public Health Service 
        Act are not met;
            ``(2) upon request, any employer eligible to participate is 
        furnished information regarding all coverage options available 
        under the plan; and
            ``(3) the applicable requirements of sections 701, 702, and 
        703 are met with respect to the plan.

``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION 
              RATES, AND BENEFIT OPTIONS.

    ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if the following requirements are 
met:
            ``(1) Contents of governing instruments.--The instruments 
        governing the plan include a written instrument, meeting the 
        requirements of an instrument required under section 402(a)(1), 
        which--
                    ``(A) provides that the board of trustees serves as 
                the named fiduciary required for plans under section 
                402(a)(1) and serves in the capacity of a plan 
                administrator (referred to in section 3(16)(A));
                    ``(B) provides that the sponsor of the plan is to 
                serve as plan sponsor (referred to in section 
                3(16)(B)); and
                    ``(C) incorporates the requirements of section 806.
            ``(2) Contribution rates must be nondiscriminatory.--
                    ``(A) The contribution rates for any participating 
                small employer do not vary on the basis of any health 
                status-related factor in relation to employees of such 
                employer or their beneficiaries and do not vary on the 
                basis of the type of business or industry in which such 
                employer is engaged.
                    ``(B) Nothing in this title or any other provision 
                of law shall be construed to preclude an association 
                health plan, or a health insurance issuer offering 
                health insurance coverage in connection with an 
                association health plan, from--
                            ``(i) setting contribution rates based on 
                        the claims experience of the plan; or
                            ``(ii) varying contribution rates for small 
                        employers in a State to the extent that such 
                        rates could vary using the same methodology 
                        employed in such State for regulating premium 
                        rates in the small group market with respect to 
                        health insurance coverage offered in connection 
                        with bona fide associations (within the meaning 
                        of section 2791(d)(3) of the Public Health 
                        Service Act),
                subject to the requirements of section 702(b) relating 
                to contribution rates.
            ``(3) Floor for number of covered individuals with respect 
        to certain plans.--If any benefit option under the plan does 
        not consist of health insurance coverage, the plan has as of 
        the beginning of the plan year not fewer than 1,000 
        participants and beneficiaries.
            ``(4) Marketing requirements.--
                    ``(A) In general.--If a benefit option which 
                consists of health insurance coverage is offered under 
                the plan, State-licensed insurance agents shall be used 
                to distribute to small employers coverage which does 
                not consist of health insurance coverage in a manner 
                comparable to the manner in which such agents are used 
                to distribute health insurance coverage.
                    ``(B) State-licensed insurance agents.--For 
                purposes of subparagraph (A), the term `State-licensed 
                insurance agents' means one or more agents who are 
                licensed in a State and are subject to the laws of such 
                State relating to licensure, qualification, testing, 
                examination, and continuing education of persons 
                authorized to offer, sell, or solicit health insurance 
                coverage in such State.
            ``(5) Regulatory requirements.--Such other requirements as 
        the applicable authority determines are necessary to carry out 
        the purposes of this part, which shall be prescribed by the 
        applicable authority by regulation.
    ``(b) Ability of Association Health Plans To Design Benefit 
Options.--Subject to section 514(d), nothing in this part or any 
provision of State law (as defined in section 514(c)(1)) shall be 
construed to preclude an association health plan, or a health insurance 
issuer offering health insurance coverage in connection with an 
association health plan, from exercising its sole discretion in 
selecting the specific items and services consisting of medical care to 
be included as benefits under such plan or coverage, except (subject to 
section 514) in the case of (1) any law to the extent that it is not 
preempted under section 731(a)(1) with respect to matters governed by 
section 711, 712, or 713, or (2) any law of the State with which filing 
and approval of a policy type offered by the plan was initially 
obtained to the extent that such law prohibits an exclusion of a 
specific disease from such coverage.

``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR 
              PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH 
              INSURANCE COVERAGE.

    ``(a) In General.--The requirements of this section are met with 
respect to an association health plan if--
            ``(1) the benefits under the plan consist solely of health 
        insurance coverage; or
            ``(2) if the plan provides any additional benefit options 
        which do not consist of health insurance coverage, the plan--
                    ``(A) establishes and maintains reserves with 
                respect to such additional benefit options, in amounts 
                recommended by the qualified health actuary, consisting 
                of--
                            ``(i) a reserve sufficient for unearned 
                        contributions;
                            ``(ii) a reserve sufficient for benefit 
                        liabilities which have been incurred, which 
                        have not been satisfied, and for which risk of 
                        loss has not yet been transferred, and for 
                        expected administrative costs with respect to 
                        such benefit liabilities;
                            ``(iii) a reserve sufficient for any other 
                        obligations of the plan; and
                            ``(iv) a reserve sufficient for a margin of 
                        error and other fluctuations, taking into 
                        account the specific circumstances of the plan; 
                        and
                    ``(B) establishes and maintains aggregate and 
                specific excess/stop loss insurance and solvency 
                indemnification, with respect to such additional 
                benefit options for which risk of loss has not yet been 
                transferred, as follows:
                            ``(i) The plan shall secure aggregate 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is not greater than 125 
                        percent of expected gross annual claims. The 
                        applicable authority may by regulation provide 
                        for upward adjustments in the amount of such 
                        percentage in specified circumstances in which 
                        the plan specifically provides for and 
                        maintains reserves in excess of the amounts 
                        required under subparagraph (A).
                            ``(ii) The plan shall secure specific 
                        excess/stop loss insurance for the plan with an 
                        attachment point which is at least equal to an 
                        amount recommended by the plan's qualified 
                        health actuary. The applicable authority may by 
                        regulation provide for adjustments in the 
                        amount of such insurance in specified 
                        circumstances in which the plan specifically 
                        provides for and maintains reserves in excess 
                        of the amounts required under subparagraph (A).
                            ``(iii) The plan shall secure 
                        indemnification insurance for any claims which 
                        the plan is unable to satisfy by reason of a 
                        plan termination.
Any person issuing to a plan insurance described in clause (i), (ii), 
or (iii) of subparagraph (B) shall notify the Secretary of any failure 
of premium payment meriting cancellation of the policy prior to 
undertaking such a cancellation. Any regulations prescribed by the 
applicable authority pursuant to clause (i) or (ii) of subparagraph (B) 
may allow for such adjustments in the required levels of excess/stop 
loss insurance as the qualified health actuary may recommend, taking 
into account the specific circumstances of the plan.
    ``(b) Minimum Surplus in Addition to Claims Reserves.--In the case 
of any association health plan described in subsection (a)(2), the 
requirements of this subsection are met if the plan establishes and 
maintains surplus in an amount at least equal to--
            ``(1) $500,000, or
            ``(2) such greater amount (but not greater than $2,000,000) 
        as may be set forth in regulations prescribed by the applicable 
        authority, considering the level of aggregate and specific 
        excess/stop loss insurance provided with respect to such plan 
        and other factors related to solvency risk, such as the plan's 
        projected levels of participation or claims, the nature of the 
        plan's liabilities, and the types of assets available to assure 
        that such liabilities are met.
    ``(c) Additional Requirements.--In the case of any association 
health plan described in subsection (a)(2), the applicable authority 
may provide such additional requirements relating to reserves, excess/
stop loss insurance, and indemnification insurance as the applicable 
authority considers appropriate. Such requirements may be provided by 
regulation with respect to any such plan or any class of such plans.
    ``(d) Adjustments for Excess/Stop Loss Insurance.--The applicable 
authority may provide for adjustments to the levels of reserves 
otherwise required under subsections (a) and (b) with respect to any 
plan or class of plans to take into account excess/stop loss insurance 
provided with respect to such plan or plans.
    ``(e) Alternative Means of Compliance.--The applicable authority 
may permit an association health plan described in subsection (a)(2) to 
substitute, for all or part of the requirements of this section (except 
subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
arrangement, or other financial arrangement as the applicable authority 
determines to be adequate to enable the plan to fully meet all its 
financial obligations on a timely basis and is otherwise no less 
protective of the interests of participants and beneficiaries than the 
requirements for which it is substituted. The applicable authority may 
take into account, for purposes of this subsection, evidence provided 
by the plan or sponsor which demonstrates an assumption of liability 
with respect to the plan. Such evidence may be in the form of a 
contract of indemnification, lien, bonding, insurance, letter of 
credit, recourse under applicable terms of the plan in the form of 
assessments of participating employers, security, or other financial 
arrangement.
    ``(f) Measures To Ensure Continued Payment of Benefits by Certain 
Plans in Distress.--
            ``(1) Payments by certain plans to association health plan 
        fund.--
                    ``(A) In general.--In the case of an association 
                health plan described in subsection (a)(2), the 
                requirements of this subsection are met if the plan 
                makes payments into the Association Health Plan Fund 
                under this subparagraph when they are due. Such 
                payments shall consist of annual payments in the amount 
                of $5,000, and, in addition to such annual payments, 
                such supplemental payments as the Secretary may 
                determine to be necessary under paragraph (2). Payments 
                under this paragraph are payable to the Fund at the 
                time determined by the Secretary. Initial payments are 
                due in advance of certification under this part. 
                Payments shall continue to accrue until a plan's assets 
                are distributed pursuant to a termination procedure.
                    ``(B) Penalties for failure to make payments.--If 
                any payment is not made by a plan when it is due, a 
                late payment charge of not more than 100 percent of the 
                payment which was not timely paid shall be payable by 
                the plan to the Fund.
                    ``(C) Continued duty of the secretary.--The 
                Secretary shall not cease to carry out the provisions 
                of paragraph (2) on account of the failure of a plan to 
                pay any payment when due.
            ``(2) Payments by secretary to continue excess/stop loss 
        insurance coverage and indemnification insurance coverage for 
        certain plans.--In any case in which the applicable authority 
        determines that there is, or that there is reason to believe 
        that there will be: (A) a failure to take necessary corrective 
        actions under section 809(a) with respect to an association 
        health plan described in subsection (a)(2); or (B) a 
        termination of such a plan under section 809(b) or 810(b)(8) 
        (and, if the applicable authority is not the Secretary, 
        certifies such determination to the Secretary), the Secretary 
        shall determine the amounts necessary to make payments to an 
        insurer (designated by the Secretary) to maintain in force 
        excess/stop loss insurance coverage or indemnification 
        insurance coverage for such plan, if the Secretary determines 
        that there is a reasonable expectation that, without such 
        payments, claims would not be satisfied by reason of 
        termination of such coverage. The Secretary shall, to the 
        extent provided in advance in appropriation Acts, pay such 
        amounts so determined to the insurer designated by the 
        Secretary.
            ``(3) Association health plan fund.--
                    ``(A) In general.--There is established on the 
                books of the Treasury a fund to be known as the 
                `Association Health Plan Fund'. The Fund shall be 
                available for making payments pursuant to paragraph 
                (2). The Fund shall be credited with payments received 
                pursuant to paragraph (1)(A), penalties received 
                pursuant to paragraph (1)(B), and earnings on 
                investments of amounts of the Fund under subparagraph 
                (B).
                    ``(B) Investment.--Whenever the Secretary 
                determines that the moneys of the fund are in excess of 
                current needs, the Secretary may request the investment 
                of such amounts as the Secretary determines advisable 
                by the Secretary of the Treasury in obligations issued 
                or guaranteed by the United States.
    ``(g) Excess/Stop Loss Insurance.--For purposes of this section--
            ``(1) Aggregate excess/stop loss insurance.--The term 
        `aggregate excess/stop loss insurance' means, in connection 
        with an association health plan, a contract--
                    ``(A) under which an insurer (meeting such minimum 
                standards as the applicable authority may prescribe by 
                regulation) provides for payment to the plan with 
                respect to aggregate claims under the plan in excess of 
                an amount or amounts specified in such contract;
                    ``(B) which is guaranteed renewable; and
                    ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
            ``(2) Specific excess/stop loss insurance.--The term 
        `specific excess/stop loss insurance' means, in connection with 
        an association health plan, a contract--
                    ``(A) under which an insurer (meeting such minimum 
                standards as the applicable authority may prescribe by 
                regulation) provides for payment to the plan with 
                respect to claims under the plan in connection with a 
                covered individual in excess of an amount or amounts 
                specified in such contract in connection with such 
                covered individual;
                    ``(B) which is guaranteed renewable; and
                    ``(C) which allows for payment of premiums by any 
                third party on behalf of the insured plan.
    ``(h) Indemnification Insurance.--For purposes of this section, the 
term `indemnification insurance' means, in connection with an 
association health plan, a contract--
            ``(1) under which an insurer (meeting such minimum 
        standards as the applicable authority may prescribe by 
        regulation) provides for payment to the plan with respect to 
        claims under the plan which the plan is unable to satisfy by 
        reason of a termination pursuant to section 809(b) (relating to 
        mandatory termination);
            ``(2) which is guaranteed renewable and noncancellable for 
        any reason (except as the applicable authority may prescribe by 
        regulation); and
            ``(3) which allows for payment of premiums by any third 
        party on behalf of the insured plan.
    ``(i) Reserves.--For purposes of this section, the term `reserves' 
means, in connection with an association health plan, plan assets which 
meet the fiduciary standards under part 4 and such additional 
requirements regarding liquidity as the applicable authority may 
prescribe by regulation.
    ``(j) Solvency Standards Working Group.--
            ``(1) In general.--Within 90 days after the date of the 
        enactment of the Small Business Health Fairness Act of 2011, 
        the applicable authority shall establish a Solvency Standards 
        Working Group. In prescribing the initial regulations under 
        this section, the applicable authority shall take into account 
        the recommendations of such Working Group.
            ``(2) Membership.--The Working Group shall consist of not 
        more than 15 members appointed by the applicable authority. The 
        applicable authority shall include among persons invited to 
        membership on the Working Group at least one of each of the 
        following:
                    ``(A) A representative of the National Association 
                of Insurance Commissioners.
                    ``(B) A representative of the American Academy of 
                Actuaries.
                    ``(C) A representative of the State governments, or 
                their interests.
                    ``(D) A representative of existing self-insured 
                arrangements, or their interests.
                    ``(E) A representative of associations of the type 
                referred to in section 801(b)(1), or their interests.
                    ``(F) A representative of multiemployer plans that 
                are group health plans, or their interests.

``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.

    ``(a) Filing Fee.--Under the procedure prescribed pursuant to 
section 802(a), an association health plan shall pay to the applicable 
authority at the time of filing an application for certification under 
this part a filing fee in the amount of $5,000, which shall be 
available in the case of the Secretary, to the extent provided in 
appropriation Acts, for the sole purpose of administering the 
certification procedures applicable with respect to association health 
plans.
    ``(b) Information To Be Included in Application for 
Certification.--An application for certification under this part meets 
the requirements of this section only if it includes, in a manner and 
form which shall be prescribed by the applicable authority by 
regulation, at least the following information:
            ``(1) Identifying information.--The names and addresses 
        of--
                    ``(A) the sponsor; and
                    ``(B) the members of the board of trustees of the 
                plan.
            ``(2) States in which plan intends to do business.--The 
        States in which participants and beneficiaries under the plan 
        are to be located and the number of them expected to be located 
        in each such State.
            ``(3) Bonding requirements.--Evidence provided by the board 
        of trustees that the bonding requirements of section 412 will 
        be met as of the date of the application or (if later) 
        commencement of operations.
            ``(4) Plan documents.--A copy of the documents governing 
        the plan (including any bylaws and trust agreements), the 
        summary plan description, and other material describing the 
        benefits that will be provided to participants and 
        beneficiaries under the plan.
            ``(5) Agreements with service providers.--A copy of any 
        agreements between the plan and contract administrators and 
        other service providers.
            ``(6) Funding report.--In the case of association health 
        plans providing benefits options in addition to health 
        insurance coverage, a report setting forth information with 
        respect to such additional benefit options determined as of a 
        date within the 120-day period ending with the date of the 
        application, including the following:
                    ``(A) Reserves.--A statement, certified by the 
                board of trustees of the plan, and a statement of 
                actuarial opinion, signed by a qualified health 
                actuary, that all applicable requirements of section 
                806 are or will be met in accordance with regulations 
                which the applicable authority shall prescribe.
                    ``(B) Adequacy of contribution rates.--A statement 
                of actuarial opinion, signed by a qualified health 
                actuary, which sets forth a description of the extent 
                to which contribution rates are adequate to provide for 
                the payment of all obligations and the maintenance of 
                required reserves under the plan for the 12-month 
                period beginning with such date within such 120-day 
                period, taking into account the expected coverage and 
                experience of the plan. If the contribution rates are 
                not fully adequate, the statement of actuarial opinion 
                shall indicate the extent to which the rates are 
                inadequate and the changes needed to ensure adequacy.
                    ``(C) Current and projected value of assets and 
                liabilities.--A statement of actuarial opinion signed 
                by a qualified health actuary, which sets forth the 
                current value of the assets and liabilities accumulated 
                under the plan and a projection of the assets, 
                liabilities, income, and expenses of the plan for the 
                12-month period referred to in subparagraph (B). The 
                income statement shall identify separately the plan's 
                administrative expenses and claims.
                    ``(D) Costs of coverage to be charged and other 
                expenses.--A statement of the costs of coverage to be 
                charged, including an itemization of amounts for 
                administration, reserves, and other expenses associated 
                with the operation of the plan.
                    ``(E) Other information.--Any other information as 
                may be determined by the applicable authority, by 
                regulation, as necessary to carry out the purposes of 
                this part.
    ``(c) Filing Notice of Certification With States.--A certification 
granted under this part to an association health plan shall not be 
effective unless written notice of such certification is filed with the 
applicable State authority of each State in which at least 25 percent 
of the participants and beneficiaries under the plan are located. For 
purposes of this subsection, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed.
    ``(d) Notice of Material Changes.--In the case of any association 
health plan certified under this part, descriptions of material changes 
in any information which was required to be submitted with the 
application for the certification under this part shall be filed in 
such form and manner as shall be prescribed by the applicable authority 
by regulation. The applicable authority may require by regulation prior 
notice of material changes with respect to specified matters which 
might serve as the basis for suspension or revocation of the 
certification.
    ``(e) Reporting Requirements for Certain Association Health 
Plans.--An association health plan certified under this part which 
provides benefit options in addition to health insurance coverage for 
such plan year shall meet the requirements of section 103 by filing an 
annual report under such section which shall include information 
described in subsection (b)(6) with respect to the plan year and, 
notwithstanding section 104(a)(1)(A), shall be filed with the 
applicable authority not later than 90 days after the close of the plan 
year (or on such later date as may be prescribed by the applicable 
authority). The applicable authority may require by regulation such 
interim reports as it considers appropriate.
    ``(f) Engagement of Qualified Health Actuary.--The board of 
trustees of each association health plan which provides benefits 
options in addition to health insurance coverage and which is applying 
for certification under this part or is certified under this part shall 
engage, on behalf of all participants and beneficiaries, a qualified 
health actuary who shall be responsible for the preparation of the 
materials comprising information necessary to be submitted by a 
qualified health actuary under this part. The qualified health actuary 
shall utilize such assumptions and techniques as are necessary to 
enable such actuary to form an opinion as to whether the contents of 
the matters reported under this part--
            ``(1) are in the aggregate reasonably related to the 
        experience of the plan and to reasonable expectations; and
            ``(2) represent such actuary's best estimate of anticipated 
        experience under the plan.
The opinion by the qualified health actuary shall be made with respect 
to, and shall be made a part of, the annual report.

``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

    ``Except as provided in section 809(b), an association health plan 
which is or has been certified under this part may terminate (upon or 
at any time after cessation of accruals in benefit liabilities) only if 
the board of trustees, not less than 60 days before the proposed 
termination date--
            ``(1) provides to the participants and beneficiaries a 
        written notice of intent to terminate stating that such 
        termination is intended and the proposed termination date;
            ``(2) develops a plan for winding up the affairs of the 
        plan in connection with such termination in a manner which will 
        result in timely payment of all benefits for which the plan is 
        obligated; and
            ``(3) submits such plan in writing to the applicable 
        authority.
Actions required under this section shall be taken in such form and 
manner as may be prescribed by the applicable authority by regulation.

``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

    ``(a) Actions To Avoid Depletion of Reserves.--An association 
health plan which is certified under this part and which provides 
benefits other than health insurance coverage shall continue to meet 
the requirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of such plan 
shall determine quarterly whether the requirements of section 806 are 
met. In any case in which the board determines that there is reason to 
believe that there is or will be a failure to meet such requirements, 
or the applicable authority makes such a determination and so notifies 
the board, the board shall immediately notify the qualified health 
actuary engaged by the plan, and such actuary shall, not later than the 
end of the next following month, make such recommendations to the board 
for corrective action as the actuary determines necessary to ensure 
compliance with section 806. Not later than 30 days after receiving 
from the actuary recommendations for corrective actions, the board 
shall notify the applicable authority (in such form and manner as the 
applicable authority may prescribe by regulation) of such 
recommendations of the actuary for corrective action, together with a 
description of the actions (if any) that the board has taken or plans 
to take in response to such recommendations. The board shall thereafter 
report to the applicable authority, in such form and frequency as the 
applicable authority may specify to the board, regarding corrective 
action taken by the board until the requirements of section 806 are 
met.
    ``(b) Mandatory Termination.--In any case in which--
            ``(1) the applicable authority has been notified under 
        subsection (a) (or by an issuer of excess/stop loss insurance 
        or indemnity insurance pursuant to section 806(a)) of a failure 
        of an association health plan which is or has been certified 
        under this part and is described in section 806(a)(2) to meet 
        the requirements of section 806 and has not been notified by 
        the board of trustees of the plan that corrective action has 
        restored compliance with such requirements; and
            ``(2) the applicable authority determines that there is a 
        reasonable expectation that the plan will continue to fail to 
        meet the requirements of section 806,
the board of trustees of the plan shall, at the direction of the 
applicable authority, terminate the plan and, in the course of the 
termination, take such actions as the applicable authority may require, 
including satisfying any claims referred to in section 
806(a)(2)(B)(iii) and recovering for the plan any liability under 
subsection (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent possible, 
wound up in a manner which will result in timely provision of all 
benefits for which the plan is obligated.

``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION 
              HEALTH PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO 
              HEALTH INSURANCE COVERAGE.

    ``(a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary determines that an association health plan which 
is or has been certified under this part and which is described in 
section 806(a)(2) will be unable to provide benefits when due or is 
otherwise in a financially hazardous condition, as shall be defined by 
the Secretary by regulation, the Secretary shall, upon notice to the 
plan, apply to the appropriate United States district court for 
appointment of the Secretary as trustee to administer the plan for the 
duration of the insolvency. The plan may appear as a party and other 
interested persons may intervene in the proceedings at the discretion 
of the court. The court shall appoint such Secretary trustee if the 
court determines that the trusteeship is necessary to protect the 
interests of the participants and beneficiaries or providers of medical 
care or to avoid any unreasonable deterioration of the financial 
condition of the plan. The trusteeship of such Secretary shall continue 
until the conditions described in the first sentence of this subsection 
are remedied or the plan is terminated.
    ``(b) Powers as Trustee.--The Secretary, upon appointment as 
trustee under subsection (a), shall have the power--
            ``(1) to do any act authorized by the plan, this title, or 
        other applicable provisions of law to be done by the plan 
        administrator or any trustee of the plan;
            ``(2) to require the transfer of all (or any part) of the 
        assets and records of the plan to the Secretary as trustee;
            ``(3) to invest any assets of the plan which the Secretary 
        holds in accordance with the provisions of the plan, 
        regulations prescribed by the Secretary, and applicable 
        provisions of law;
            ``(4) to require the sponsor, the plan administrator, any 
        participating employer, and any employee organization 
        representing plan participants to furnish any information with 
        respect to the plan which the Secretary as trustee may 
        reasonably need in order to administer the plan;
            ``(5) to collect for the plan any amounts due the plan and 
        to recover reasonable expenses of the trusteeship;
            ``(6) to commence, prosecute, or defend on behalf of the 
        plan any suit or proceeding involving the plan;
            ``(7) to issue, publish, or file such notices, statements, 
        and reports as may be required by the Secretary by regulation 
        or required by any order of the court;
            ``(8) to terminate the plan (or provide for its termination 
        in accordance with section 809(b)) and liquidate the plan 
        assets, to restore the plan to the responsibility of the 
        sponsor, or to continue the trusteeship;
            ``(9) to provide for the enrollment of plan participants 
        and beneficiaries under appropriate coverage options; and
            ``(10) to do such other acts as may be necessary to comply 
        with this title or any order of the court and to protect the 
        interests of plan participants and beneficiaries and providers 
        of medical care.
    ``(c) Notice of Appointment.--As soon as practicable after the 
Secretary's appointment as trustee, the Secretary shall give notice of 
such appointment to--
            ``(1) the sponsor and plan administrator;
            ``(2) each participant;
            ``(3) each participating employer; and
            ``(4) if applicable, each employee organization which, for 
        purposes of collective bargaining, represents plan 
        participants.
    ``(d) Additional Duties.--Except to the extent inconsistent with 
the provisions of this title, or as may be otherwise ordered by the 
court, the Secretary, upon appointment as trustee under this section, 
shall be subject to the same duties as those of a trustee under section 
704 of title 11, United States Code, and shall have the duties of a 
fiduciary for purposes of this title.
    ``(e) Other Proceedings.--An application by the Secretary under 
this subsection may be filed notwithstanding the pendency in the same 
or any other court of any bankruptcy, mortgage foreclosure, or equity 
receivership proceeding, or any proceeding to reorganize, conserve, or 
liquidate such plan or its property, or any proceeding to enforce a 
lien against property of the plan.
    ``(f) Jurisdiction of Court.--
            ``(1) In general.--Upon the filing of an application for 
        the appointment as trustee or the issuance of a decree under 
        this section, the court to which the application is made shall 
        have exclusive jurisdiction of the plan involved and its 
        property wherever located with the powers, to the extent 
        consistent with the purposes of this section, of a court of the 
        United States having jurisdiction over cases under chapter 11 
        of title 11, United States Code. Pending an adjudication under 
        this section such court shall stay, and upon appointment by it 
        of the Secretary as trustee, such court shall continue the stay 
        of, any pending mortgage foreclosure, equity receivership, or 
        other proceeding to reorganize, conserve, or liquidate the 
        plan, the sponsor, or property of such plan or sponsor, and any 
        other suit against any receiver, conservator, or trustee of the 
        plan, the sponsor, or property of the plan or sponsor. Pending 
        such adjudication and upon the appointment by it of the 
        Secretary as trustee, the court may stay any proceeding to 
        enforce a lien against property of the plan or the sponsor or 
        any other suit against the plan or the sponsor.
            ``(2) Venue.--An action under this section may be brought 
        in the judicial district where the sponsor or the plan 
        administrator resides or does business or where any asset of 
        the plan is situated. A district court in which such action is 
        brought may issue process with respect to such action in any 
        other judicial district.
    ``(g) Personnel.--In accordance with regulations which shall be 
prescribed by the Secretary, the Secretary shall appoint, retain, and 
compensate accountants, actuaries, and other professional service 
personnel as may be necessary in connection with the Secretary's 
service as trustee under this section.

``SEC. 811. STATE ASSESSMENT AUTHORITY.

    ``(a) In General.--Notwithstanding section 514, a State may impose 
by law a contribution tax on an association health plan described in 
section 806(a)(2), if the plan commenced operations in such State after 
the date of the enactment of the Small Business Health Fairness Act of 
2011.
    ``(b) Contribution Tax.--For purposes of this section, the term 
`contribution tax' imposed by a State on an association health plan 
means any tax imposed by such State if--
            ``(1) such tax is computed by applying a rate to the amount 
        of premiums or contributions, with respect to individuals 
        covered under the plan who are residents of such State, which 
        are received by the plan from participating employers located 
        in such State or from such individuals;
            ``(2) the rate of such tax does not exceed the rate of any 
        tax imposed by such State on premiums or contributions received 
        by insurers or health maintenance organizations for health 
        insurance coverage offered in such State in connection with a 
        group health plan;
            ``(3) such tax is otherwise nondiscriminatory; and
            ``(4) the amount of any such tax assessed on the plan is 
        reduced by the amount of any tax or assessment otherwise 
        imposed by the State on premiums, contributions, or both 
        received by insurers or health maintenance organizations for 
        health insurance coverage, aggregate excess/stop loss insurance 
        (as defined in section 806(g)(1)), specific excess/stop loss 
        insurance (as defined in section 806(g)(2)), other insurance 
        related to the provision of medical care under the plan, or any 
        combination thereof provided by such insurers or health 
        maintenance organizations in such State in connection with such 
        plan.

``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.

    ``(a) Definitions.--For purposes of this part--
            ``(1) Group health plan.--The term `group health plan' has 
        the meaning provided in section 733(a)(1) (after applying 
        subsection (b) of this section).
            ``(2) Medical care.--The term `medical care' has the 
        meaning provided in section 733(a)(2).
            ``(3) Health insurance coverage.--The term `health 
        insurance coverage' has the meaning provided in section 
        733(b)(1).
            ``(4) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning provided in section 733(b)(2).
            ``(5) Applicable authority.--The term `applicable 
        authority' means the Secretary, except that, in connection with 
        any exercise of the Secretary's authority regarding which the 
        Secretary is required under section 506(d) to consult with a 
        State, such term means the Secretary, in consultation with such 
        State.
            ``(6) Health status-related factor.--The term `health 
        status-related factor' has the meaning provided in section 
        733(d)(2).
            ``(7) Individual market.--
                    ``(A) In general.--The term `individual market' 
                means the market for health insurance coverage offered 
                to individuals other than in connection with a group 
                health plan.
                    ``(B) Treatment of very small groups.--
                            ``(i) In general.--Subject to clause (ii), 
                        such term includes coverage offered in 
                        connection with a group health plan that has 
                        fewer than 2 participants as current employees 
                        or participants described in section 732(d)(3) 
                        on the first day of the plan year.
                            ``(ii) State exception.--Clause (i) shall 
                        not apply in the case of health insurance 
                        coverage offered in a State if such State 
                        regulates the coverage described in such clause 
                        in the same manner and to the same extent as 
                        coverage in the small group market (as defined 
                        in section 2791(e)(5) of the Public Health 
                        Service Act) is regulated by such State.
            ``(8) Participating employer.--The term `participating 
        employer' means, in connection with an association health plan, 
        any employer, if any individual who is an employee of such 
        employer, a partner in such employer, or a self-employed 
        individual who is such employer (or any dependent, as defined 
        under the terms of the plan, of such individual) is or was 
        covered under such plan in connection with the status of such 
        individual as such an employee, partner, or self-employed 
        individual in relation to the plan.
            ``(9) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of title XXVII of the Public Health Service Act 
        for the State involved with respect to such issuer.
            ``(10) Qualified health actuary.--The term `qualified 
        health actuary' means an individual who is a member of the 
        American Academy of Actuaries with expertise in health care.
            ``(11) Affiliated member.--The term `affiliated member' 
        means, in connection with a sponsor--
                    ``(A) a person who is otherwise eligible to be a 
                member of the sponsor but who elects an affiliated 
                status with the sponsor,
                    ``(B) in the case of a sponsor with members which 
                consist of associations, a person who is a member of 
                any such association and elects an affiliated status 
                with the sponsor, or
                    ``(C) in the case of an association health plan in 
                existence on the date of the enactment of the Small 
                Business Health Fairness Act of 2011, a person eligible 
                to be a member of the sponsor or one of its member 
                associations.
            ``(12) Large employer.--The term `large employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who employed an average of at least 51 
        employees on business days during the preceding calendar year 
        and who employs at least 2 employees on the first day of the 
        plan year.
            ``(13) Small employer.--The term `small employer' means, in 
        connection with a group health plan with respect to a plan 
        year, an employer who is not a large employer.
    ``(b) Rules of Construction.--
            ``(1) Employers and employees.--For purposes of determining 
        whether a plan, fund, or program is an employee welfare benefit 
        plan which is an association health plan, and for purposes of 
        applying this title in connection with such plan, fund, or 
        program so determined to be such an employee welfare benefit 
        plan--
                    ``(A) in the case of a partnership, the term 
                `employer' (as defined in section 3(5)) includes the 
                partnership in relation to the partners, and the term 
                `employee' (as defined in section 3(6)) includes any 
                partner in relation to the partnership; and
                    ``(B) in the case of a self-employed individual, 
                the term `employer' (as defined in section 3(5)) and 
                the term `employee' (as defined in section 3(6)) shall 
                include such individual.
            ``(2) Plans, funds, and programs treated as employee 
        welfare benefit plans.--In the case of any plan, fund, or 
        program which was established or is maintained for the purpose 
        of providing medical care (through the purchase of insurance or 
        otherwise) for employees (or their dependents) covered 
        thereunder and which demonstrates to the Secretary that all 
        requirements for certification under this part would be met 
        with respect to such plan, fund, or program if such plan, fund, 
        or program were a group health plan, such plan, fund, or 
        program shall be treated for purposes of this title as an 
        employee welfare benefit plan on and after the date of such 
        demonstration.
            ``(3) Exception for certain benefits.--The requirements of 
        this part shall not apply to a group health plan in relation to 
        its provision of excepted benefits, as defined in section 
        706(c).''.
    (b) Conforming Amendments to Preemption Rules.--
            (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
        amended by adding at the end the following new subparagraph:
    ``(E) The preceding subparagraphs of this paragraph do not apply 
with respect to any State law in the case of an association health plan 
which is certified under part 8.''.
            (2) Section 514 of such Act (29 U.S.C. 1144) is amended--
                    (A) in subsection (b)(4), by striking ``Subsection 
                (a)'' and inserting ``Subsections (a) and (d)'';
                    (B) in subsection (b)(5), by striking ``subsection 
                (a)'' in subparagraph (A) and inserting ``subsection 
                (a) of this section and subsections (a)(2)(B) and (b) 
                of section 805'', and by striking ``subsection (a)'' in 
                subparagraph (B) and inserting ``subsection (a) of this 
                section or subsection (a)(2)(B) or (b) of section 
                805'';
                    (C) by redesignating subsection (d) as subsection 
                (e); and
                    (D) by inserting after subsection (c) the following 
                new subsection:
    ``(d)(1) Except as provided in subsection (b)(4), the provisions of 
this title shall supersede any and all State laws insofar as they may 
now or hereafter preclude, or have the effect of precluding, a health 
insurance issuer from offering health insurance coverage in connection 
with an association health plan which is certified under part 8.
    ``(2) Except as provided in paragraphs (4) and (5) of subsection 
(b) of this section--
            ``(A) In any case in which health insurance coverage of any 
        policy type is offered under an association health plan 
        certified under part 8 to a participating employer operating in 
        such State, the provisions of this title shall supersede any 
        and all laws of such State insofar as they may preclude a 
        health insurance issuer from offering health insurance coverage 
        of the same policy type to other employers operating in the 
        State which are eligible for coverage under such association 
        health plan, whether or not such other employers are 
        participating employers in such plan.
            ``(B) In any case in which health insurance coverage of any 
        policy type is offered in a State under an association health 
        plan certified under part 8 and the filing, with the applicable 
        State authority (as defined in section 812(a)(9)), of the 
        policy form in connection with such policy type is approved by 
        such State authority, the provisions of this title shall 
        supersede any and all laws of any other State in which health 
        insurance coverage of such type is offered, insofar as they may 
        preclude, upon the filing in the same form and manner of such 
        policy form with the applicable State authority in such other 
        State, the approval of the filing in such other State.
    ``(3) Nothing in subsection (b)(6)(E) or the preceding provisions 
of this subsection shall be construed, with respect to health insurance 
issuers or health insurance coverage, to supersede or impair the law of 
any State--
            ``(A) providing solvency standards or similar standards 
        regarding the adequacy of insurer capital, surplus, reserves, 
        or contributions, or
            ``(B) relating to prompt payment of claims.
    ``(4) For additional provisions relating to association health 
plans, see subsections (a)(2)(B) and (b) of section 805.
    ``(5) For purposes of this subsection, the term `association health 
plan' has the meaning provided in section 801(a), and the terms `health 
insurance coverage', `participating employer', and `health insurance 
issuer' have the meanings provided such terms in section 812, 
respectively.''.
            (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
        1144(b)(6)(A)) is amended--
                    (A) in clause (i)(II), by striking ``and'' at the 
                end;
                    (B) in clause (ii), by inserting ``and which does 
                not provide medical care (within the meaning of section 
                733(a)(2)),'' after ``arrangement,'', and by striking 
                ``title.'' and inserting ``title, and''; and
                    (C) by adding at the end the following new clause:
            ``(iii) subject to subparagraph (E), in the case of any 
        other employee welfare benefit plan which is a multiple 
        employer welfare arrangement and which provides medical care 
        (within the meaning of section 733(a)(2)), any law of any State 
        which regulates insurance may apply.''.
            (4) Section 514(e) of such Act (as redesignated by 
        paragraph (2)(C)) is amended--
                    (A) by striking ``Nothing'' and inserting ``(1) 
                Except as provided in paragraph (2), nothing''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(2) Nothing in any other provision of law enacted on or after the 
date of the enactment of the Small Business Health Fairness Act of 2011 
shall be construed to alter, amend, modify, invalidate, impair, or 
supersede any provision of this title, except by specific cross-
reference to the affected section.''.
    (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
102(16)(B)) is amended by adding at the end the following new sentence: 
``Such term also includes a person serving as the sponsor of an 
association health plan under part 8.''.
    (d) Disclosure of Solvency Protections Related to Self-Insured and 
Fully Insured Options Under Association Health Plans.--Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at the end the 
following: ``An association health plan shall include in its summary 
plan description, in connection with each benefit option, a description 
of the form of solvency or guarantee fund protection secured pursuant 
to this Act or applicable State law, if any.''.
    (e) Savings Clause.--Section 731(c) of such Act is amended by 
inserting ``or part 8'' after ``this part''.
    (f) Report to the Congress Regarding Certification of Self-Insured 
Association Health Plans.--Not later than January 1, 2014, the 
Secretary of Labor shall report to the Committee on Education and the 
Workforce of the House of Representatives and the Committee on Health, 
Education, Labor, and Pensions of the Senate the effect association 
health plans have had, if any, on reducing the number of uninsured 
individuals.
    (g) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 734 the following new items:

           ``Part 8--Rules Governing Association Health Plans

``801. Association health plans.
``802. Certification of association health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution 
                            rates, and benefit options.
``806. Maintenance of reserves and provisions for solvency for plans 
                            providing health benefits in addition to 
                            health insurance coverage.
``807. Requirements for application and related requirements.
``808. Notice requirements for voluntary termination.
``809. Corrective actions and mandatory termination.
``810. Trusteeship by the Secretary of insolvent association health 
                            plans providing health benefits in addition 
                            to health insurance coverage.
``811. State assessment authority.
``812. Definitions and rules of construction.''.

SEC. 233. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.

    Section 3(40)(B) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(40)(B)) is amended--
            (1) in clause (i), by inserting after ``control group,'' 
        the following: ``except that, in any case in which the benefit 
        referred to in subparagraph (A) consists of medical care (as 
        defined in section 812(a)(2)), two or more trades or 
        businesses, whether or not incorporated, shall be deemed a 
        single employer for any plan year of such plan, or any fiscal 
        year of such other arrangement, if such trades or businesses 
        are within the same control group during such year or at any 
        time during the preceding 1-year period,'';
            (2) in clause (iii), by striking ``(iii) the 
        determination'' and inserting the following:
            ``(iii)(I) in any case in which the benefit referred to in 
        subparagraph (A) consists of medical care (as defined in 
        section 812(a)(2)), the determination of whether a trade or 
        business is under `common control' with another trade or 
        business shall be determined under regulations of the Secretary 
        applying principles consistent and coextensive with the 
        principles applied in determining whether employees of two or 
        more trades or businesses are treated as employed by a single 
        employer under section 4001(b), except that, for purposes of 
        this paragraph, an interest of greater than 25 percent may not 
        be required as the minimum interest necessary for common 
        control, or
            ``(II) in any other case, the determination'';
            (3) by redesignating clauses (iv) and (v) as clauses (v) 
        and (vi), respectively; and
            (4) by inserting after clause (iii) the following new 
        clause:
            ``(iv) in any case in which the benefit referred to in 
        subparagraph (A) consists of medical care (as defined in 
        section 812(a)(2)), in determining, after the application of 
        clause (i), whether benefits are provided to employees of two 
        or more employers, the arrangement shall be treated as having 
        only one participating employer if, after the application of 
        clause (i), the number of individuals who are employees and 
        former employees of any one participating employer and who are 
        covered under the arrangement is greater than 75 percent of the 
        aggregate number of all individuals who are employees or former 
        employees of participating employers and who are covered under 
        the arrangement,''.

SEC. 234. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.

    (a) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1131) is amended--
            (1) by inserting ``(a)'' after ``Sec. 501.''; and
            (2) by adding at the end the following new subsection:
    ``(b) Any person who willfully falsely represents, to any employee, 
any employee's beneficiary, any employer, the Secretary, or any State, 
a plan or other arrangement established or maintained for the purpose 
of offering or providing any benefit described in section 3(1) to 
employees or their beneficiaries as--
            ``(1) being an association health plan which has been 
        certified under part 8;
            ``(2) having been established or maintained under or 
        pursuant to one or more collective bargaining agreements which 
        are reached pursuant to collective bargaining described in 
        section 8(d) of the National Labor Relations Act (29 U.S.C. 
        158(d)) or paragraph Fourth of section 2 of the Railway Labor 
        Act (45 U.S.C. 152, paragraph Fourth) or which are reached 
        pursuant to labor-management negotiations under similar 
        provisions of State public employee relations laws; or
            ``(3) being a plan or arrangement described in section 
        3(40)(A)(i),
shall, upon conviction, be imprisoned not more than 5 years, be fined 
under title 18, United States Code, or both.''.
    (b) Cease Activities Orders.--Section 502 of such Act (29 U.S.C. 
1132) is amended by adding at the end the following new subsection:
    ``(n) Association Health Plan Cease and Desist Orders.--
            ``(1) In general.--Subject to paragraph (2), upon 
        application by the Secretary showing the operation, promotion, 
        or marketing of an association health plan (or similar 
        arrangement providing benefits consisting of medical care (as 
        defined in section 733(a)(2))) that--
                    ``(A) is not certified under part 8, is subject 
                under section 514(b)(6) to the insurance laws of any 
                State in which the plan or arrangement offers or 
                provides benefits, and is not licensed, registered, or 
                otherwise approved under the insurance laws of such 
                State; or
                    ``(B) is an association health plan certified under 
                part 8 and is not operating in accordance with the 
                requirements under part 8 for such certification,
        a district court of the United States shall enter an order 
        requiring that the plan or arrangement cease activities.
            ``(2) Exception.--Paragraph (1) shall not apply in the case 
        of an association health plan or other arrangement if the plan 
        or arrangement shows that--
                    ``(A) all benefits under it referred to in 
                paragraph (1) consist of health insurance coverage; and
                    ``(B) with respect to each State in which the plan 
                or arrangement offers or provides benefits, the plan or 
                arrangement is operating in accordance with applicable 
                State laws that are not superseded under section 514.
            ``(3) Additional equitable relief.--The court may grant 
        such additional equitable relief, including any relief 
        available under this title, as it deems necessary to protect 
        the interests of the public and of persons having claims for 
        benefits against the plan.''.
    (c) Responsibility for Claims Procedure.--Section 503 of such Act 
(29 U.S.C. 1133) is amended by inserting ``(a) In General.--'' before 
``In accordance'', and by adding at the end the following new 
subsection:
    ``(b) Association Health Plans.--The terms of each association 
health plan which is or has been certified under part 8 shall require 
the board of trustees or the named fiduciary (as applicable) to ensure 
that the requirements of this section are met in connection with claims 
filed under the plan.''.

SEC. 235. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(d) Consultation With States With Respect to Association Health 
Plans.--
            ``(1) Agreements with states.--The Secretary shall consult 
        with the State recognized under paragraph (2) with respect to 
        an association health plan regarding the exercise of--
                    ``(A) the Secretary's authority under sections 502 
                and 504 to enforce the requirements for certification 
                under part 8; and
                    ``(B) the Secretary's authority to certify 
                association health plans under part 8 in accordance 
                with regulations of the Secretary applicable to 
                certification under part 8.
            ``(2) Recognition of primary domicile state.--In carrying 
        out paragraph (1), the Secretary shall ensure that only one 
        State will be recognized, with respect to any particular 
        association health plan, as the State with which consultation 
        is required. In carrying out this paragraph--
                    ``(A) in the case of a plan which provides health 
                insurance coverage (as defined in section 812(a)(3)), 
                such State shall be the State with which filing and 
                approval of a policy type offered by the plan was 
                initially obtained, and
                    ``(B) in any other case, the Secretary shall take 
                into account the places of residence of the 
                participants and beneficiaries under the plan and the 
                State in which the trust is maintained.''.

SEC. 236. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

    (a) Effective Date.--The amendments made by this subtitle shall 
take effect 1 year after the date of the enactment of this Act. The 
Secretary of Labor shall first issue all regulations necessary to carry 
out the amendments made by this subtitle within 1 year after the date 
of the enactment of this Act.
    (b) Treatment of Certain Existing Health Benefits Programs.--
            (1) In general.--In any case in which, as of the date of 
        the enactment of this Act, an arrangement is maintained in a 
        State for the purpose of providing benefits consisting of 
        medical care for the employees and beneficiaries of its 
        participating employers, at least 200 participating employers 
        make contributions to such arrangement, such arrangement has 
        been in existence for at least 10 years, and such arrangement 
        is licensed under the laws of one or more States to provide 
        such benefits to its participating employers, upon the filing 
        with the applicable authority (as defined in section 812(a)(5) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this subtitle)) by the arrangement of an application 
        for certification of the arrangement under part 8 of subtitle B 
        of title I of such Act--
                    (A) such arrangement shall be deemed to be a group 
                health plan for purposes of title I of such Act;
                    (B) the requirements of sections 801(a) and 803(a) 
                of the Employee Retirement Income Security Act of 1974 
                shall be deemed met with respect to such arrangement;
                    (C) the requirements of section 803(b) of such Act 
                shall be deemed met, if the arrangement is operated by 
                a board of directors which--
                            (i) is elected by the participating 
                        employers, with each employer having one vote; 
                        and
                            (ii) has complete fiscal control over the 
                        arrangement and which is responsible for all 
                        operations of the arrangement;
                    (D) the requirements of section 804(a) of such Act 
                shall be deemed met with respect to such arrangement; 
                and
                    (E) the arrangement may be certified by any 
                applicable authority with respect to its operations in 
                any State only if it operates in such State on the date 
                of certification.
        The provisions of this subsection shall cease to apply with 
        respect to any such arrangement at such time after the date of 
        the enactment of this Act as the applicable requirements of 
        this subsection are not met with respect to such arrangement.
            (2) Definitions.--For purposes of this subsection, the 
        terms ``group health plan'', ``medical care'', and 
        ``participating employer'' shall have the meanings provided in 
        section 812 of the Employee Retirement Income Security Act of 
        1974, except that the reference in paragraph (7) of such 
        section to an ``association health plan'' shall be deemed a 
        reference to an arrangement referred to in this subsection.

           TITLE III--INTERSTATE MARKET FOR HEALTH INSURANCE

SEC. 301. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE 
              COVERAGE.

    (a) In General.--Title XXVII of the Public Health Service Act (42 
U.S.C. 300gg et seq.), as restored by section 2, is amended by adding 
at the end the following new part:

``PART D--COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE

``SEC. 2795. DEFINITIONS.

    ``In this part:
            ``(1) Primary state.--The term `primary State' means, with 
        respect to individual health insurance coverage offered by a 
        health insurance issuer, the State designated by the issuer as 
        the State whose covered laws shall govern the health insurance 
        issuer in the sale of such coverage under this part. An issuer, 
        with respect to a particular policy, may only designate one 
        such State as its primary State with respect to all such 
        coverage it offers. Such an issuer may not change the 
        designated primary State with respect to individual health 
        insurance coverage once the policy is issued, except that such 
        a change may be made upon renewal of the policy. With respect 
        to such designated State, the issuer is deemed to be doing 
        business in that State.
            ``(2) Secondary state.--The term `secondary State' means, 
        with respect to individual health insurance coverage offered by 
        a health insurance issuer, any State that is not the primary 
        State. In the case of a health insurance issuer that is selling 
        a policy in, or to a resident of, a secondary State, the issuer 
        is deemed to be doing business in that secondary State.
            ``(3) Health insurance issuer.--The term `health insurance 
        issuer' has the meaning given such term in section 2791(b)(2), 
        except that such an issuer must be licensed in the primary 
        State and be qualified to sell individual health insurance 
        coverage in that State.
            ``(4) Individual health insurance coverage.--The term 
        `individual health insurance coverage' means health insurance 
        coverage offered in the individual market, as defined in 
        section 2791(e)(1), but does not include excepted benefits 
        described in section 2791(c).
            ``(5) Applicable state authority.--The term `applicable 
        State authority' means, with respect to a health insurance 
        issuer in a State, the State insurance commissioner or official 
        or officials designated by the State to enforce the 
        requirements of this title for the State with respect to the 
        issuer.
            ``(6) Hazardous financial condition.--The term `hazardous 
        financial condition' means that, based on its present or 
        reasonably anticipated financial condition, a health insurance 
        issuer is unlikely to be able--
                    ``(A) to meet obligations to policyholders with 
                respect to known claims and reasonably anticipated 
                claims; or
                    ``(B) to pay other obligations in the normal course 
                of business.
            ``(7) Covered laws.--
                    ``(A) In general.--The term `covered laws' means 
                the laws, rules, regulations, agreements, and orders 
                governing the insurance business pertaining to--
                            ``(i) individual health insurance coverage 
                        issued by a health insurance issuer;
                            ``(ii) the offer, sale, rating (including 
                        medical underwriting), renewal, and issuance of 
                        individual health insurance coverage to an 
                        individual;
                            ``(iii) the provision to an individual in 
                        relation to individual health insurance 
                        coverage of health care and insurance related 
                        services;
                            ``(iv) the provision to an individual in 
                        relation to individual health insurance 
                        coverage of management, operations, and 
                        investment activities of a health insurance 
                        issuer; and
                            ``(v) the provision to an individual in 
                        relation to individual health insurance 
                        coverage of loss control and claims 
                        administration for a health insurance issuer 
                        with respect to liability for which the issuer 
                        provides insurance.
                    ``(B) Exception.--Such term does not include any 
                law, rule, regulation, agreement, or order governing 
                the use of care or cost management techniques, 
                including any requirement related to provider 
                contracting, network access or adequacy, health care 
                data collection, or quality assurance.
            ``(8) State.--The term `State' means only the 50 States and 
        the District of Columbia.
            ``(9) Unfair claims settlement practices.--The term `unfair 
        claims settlement practices' means only the following 
        practices:
                    ``(A) Knowingly misrepresenting to claimants and 
                insured individuals relevant facts or policy provisions 
                relating to coverage at issue.
                    ``(B) Failing to acknowledge with reasonable 
                promptness pertinent communications with respect to 
                claims arising under policies.
                    ``(C) Failing to adopt and implement reasonable 
                standards for the prompt investigation and settlement 
                of claims arising under policies.
                    ``(D) Failing to effectuate prompt, fair, and 
                equitable settlement of claims submitted in which 
                liability has become reasonably clear.
                    ``(E) Refusing to pay claims without conducting a 
                reasonable investigation.
                    ``(F) Failing to affirm or deny coverage of claims 
                within a reasonable period of time after having 
                completed an investigation related to those claims.
                    ``(G) A pattern or practice of compelling insured 
                individuals or their beneficiaries to institute suits 
                to recover amounts due under its policies by offering 
                substantially less than the amounts ultimately 
                recovered in suits brought by them.
                    ``(H) A pattern or practice of attempting to settle 
                or settling claims for less than the amount that a 
                reasonable person would believe the insured individual 
                or his or her beneficiary was entitled by reference to 
                written or printed advertising material accompanying or 
                made part of an application.
                    ``(I) Attempting to settle or settling claims on 
                the basis of an application that was materially altered 
                without notice to, or knowledge or consent of, the 
                insured.
                    ``(J) Failing to provide forms necessary to present 
                claims within 15 calendar days of a requests with 
                reasonable explanations regarding their use.
                    ``(K) Attempting to cancel a policy in less time 
                than that prescribed in the policy or by the law of the 
                primary State.
            ``(10) Fraud and abuse.--The term `fraud and abuse' means 
        an act or omission committed by a person who, knowingly and 
        with intent to defraud, commits, or conceals any material 
        information concerning, one or more of the following:
                    ``(A) Presenting, causing to be presented or 
                preparing with knowledge or belief that it will be 
                presented to or by an insurer, a reinsurer, broker or 
                its agent, false information as part of, in support of 
                or concerning a fact material to one or more of the 
                following:
                            ``(i) An application for the issuance or 
                        renewal of an insurance policy or reinsurance 
                        contract.
                            ``(ii) The rating of an insurance policy or 
                        reinsurance contract.
                            ``(iii) A claim for payment or benefit 
                        pursuant to an insurance policy or reinsurance 
                        contract.
                            ``(iv) Premiums paid on an insurance policy 
                        or reinsurance contract.
                            ``(v) Payments made in accordance with the 
                        terms of an insurance policy or reinsurance 
                        contract.
                            ``(vi) A document filed with the 
                        commissioner or the chief insurance regulatory 
                        official of another jurisdiction.
                            ``(vii) The financial condition of an 
                        insurer or reinsurer.
                            ``(viii) The formation, acquisition, 
                        merger, reconsolidation, dissolution or 
                        withdrawal from one or more lines of insurance 
                        or reinsurance in all or part of a State by an 
                        insurer or reinsurer.
                            ``(ix) The issuance of written evidence of 
                        insurance.
                            ``(x) The reinstatement of an insurance 
                        policy.
                    ``(B) Solicitation or acceptance of new or renewal 
                insurance risks on behalf of an insurer, reinsurer, or 
                other person engaged in the business of insurance by a 
                person who knows or should know that the insurer or 
                other person responsible for the risk is insolvent at 
                the time of the transaction.
                    ``(C) Transaction of the business of insurance in 
                violation of laws requiring a license, certificate of 
                authority or other legal authority for the transaction 
                of the business of insurance.
                    ``(D) Attempt to commit, aiding or abetting in the 
                commission of, or conspiracy to commit the acts or 
                omissions specified in this paragraph.

``SEC. 2796. APPLICATION OF LAW.

    ``(a) In General.--The covered laws of the primary State shall 
apply to individual health insurance coverage offered by a health 
insurance issuer in the primary State and in any secondary State, but 
only if the coverage and issuer comply with the conditions of this 
section with respect to the offering of coverage in any secondary 
State.
    ``(b) Exemptions From Covered Laws in a Secondary State.--Except as 
provided in this section, a health insurance issuer with respect to its 
offer, sale, rating (including medical underwriting), renewal, and 
issuance of individual health insurance coverage in any secondary State 
is exempt from any covered laws of the secondary State (and any rules, 
regulations, agreements, or orders sought or issued by such State under 
or related to such covered laws) to the extent that such laws would--
            ``(1) make unlawful, or regulate, directly or indirectly, 
        the operation of the health insurance issuer operating in the 
        secondary State, except that any secondary State may require 
        such an issuer--
                    ``(A) to pay, on a nondiscriminatory basis, 
                applicable premium and other taxes (including high-risk 
                pool assessments) which are levied on insurers and 
                surplus lines insurers, brokers, or policyholders under 
                the laws of the State;
                    ``(B) to register with and designate the State 
                insurance commissioner as its agent solely for the 
                purpose of receiving service of legal documents or 
                process;
                    ``(C) to submit to an examination of its financial 
                condition by the State insurance commissioner in any 
                State in which the issuer is doing business to 
                determine the issuer's financial condition, if--
                            ``(i) the State insurance commissioner of 
                        the primary State has not done an examination 
                        within the period recommended by the National 
                        Association of Insurance Commissioners; and
                            ``(ii) any such examination is conducted in 
                        accordance with the examiners' handbook of the 
                        National Association of Insurance Commissioners 
                        and is coordinated to avoid unjustified 
                        duplication and unjustified repetition;
                    ``(D) to comply with a lawful order issued--
                            ``(i) in a delinquency proceeding commenced 
                        by the State insurance commissioner if there 
                        has been a finding of financial impairment 
                        under subparagraph (C); or
                            ``(ii) in a voluntary dissolution 
                        proceeding;
                    ``(E) to comply with an injunction issued by a 
                court of competent jurisdiction, upon a petition by the 
                State insurance commissioner alleging that the issuer 
                is in hazardous financial condition;
                    ``(F) to participate, on a nondiscriminatory basis, 
                in any insurance insolvency guaranty association or 
                similar association to which a health insurance issuer 
                in the State is required to belong;
                    ``(G) to comply with any State law regarding fraud 
                and abuse (as defined in section 2795(10)), except that 
                if the State seeks an injunction regarding the conduct 
                described in this subparagraph, such injunction must be 
                obtained from a court of competent jurisdiction;
                    ``(H) to comply with any State law regarding unfair 
                claims settlement practices (as defined in section 
                2795(9)); or
                    ``(I) to comply with the applicable requirements 
                for independent review under section 2798 with respect 
                to coverage offered in the State;
            ``(2) require any individual health insurance coverage 
        issued by the issuer to be countersigned by an insurance agent 
        or broker residing in that Secondary State; or
            ``(3) otherwise discriminate against the issuer issuing 
        insurance in both the primary State and in any secondary State.
    ``(c) Clear and Conspicuous Disclosure.--A health insurance issuer 
shall provide the following notice, in 12-point bold type, in any 
insurance coverage offered in a secondary State under this part by such 
a health insurance issuer and at renewal of the policy, with the 5 
blank spaces therein being appropriately filled with the name of the 
health insurance issuer, the name of primary State, the name of the 
secondary State, the name of the secondary State, and the name of the 
secondary State, respectively, for the coverage concerned:
This policy is issued by _____ and is governed by the laws and 
regulations of the State of _____, and it has met all the laws of that 
State as determined by that State's Department of Insurance. This 
policy may be less expensive than others because it is not subject to 
all of the insurance laws and regulations of the State of _____, 
including coverage of some services or benefits mandated by the law of 
the State of _____. Additionally, this policy is not subject to all of 
the consumer protection laws or restrictions on rate changes of the 
State of _____. As with all insurance products, before purchasing this 
policy, you should carefully review the policy and determine what 
health care services the policy covers and what benefits it provides, 
including any exclusions, limitations, or conditions for such services 
or benefits.
    ``(d) Prohibition on Certain Reclassifications and Premium 
Increases.--
            ``(1) In general.--For purposes of this section, a health 
        insurance issuer that provides individual health insurance 
        coverage to an individual under this part in a primary or 
        secondary State may not upon renewal--
                    ``(A) move or reclassify the individual insured 
                under the health insurance coverage from the class such 
                individual is in at the time of issue of the contract 
                based on the health-status related factors of the 
                individual; or
                    ``(B) increase the premiums assessed the individual 
                for such coverage based on a health status-related 
                factor or change of a health status-related factor or 
                the past or prospective claim experience of the insured 
                individual.
            ``(2) Construction.--Nothing in paragraph (1) shall be 
        construed to prohibit a health insurance issuer--
                    ``(A) from terminating or discontinuing coverage or 
                a class of coverage in accordance with subsections (b) 
                and (c) of section 2742;
                    ``(B) from raising premium rates for all policy 
                holders within a class based on claims experience;
                    ``(C) from changing premiums or offering discounted 
                premiums to individuals who engage in wellness 
                activities at intervals prescribed by the issuer, if 
                such premium changes or incentives--
                            ``(i) are disclosed to the consumer in the 
                        insurance contract;
                            ``(ii) are based on specific wellness 
                        activities that are not applicable to all 
                        individuals; and
                            ``(iii) are not obtainable by all 
                        individuals to whom coverage is offered;
                    ``(D) from reinstating lapsed coverage; or
                    ``(E) from retroactively adjusting the rates 
                charged an insured individual if the initial rates were 
                set based on material misrepresentation by the 
                individual at the time of issue.
    ``(e) Prior Offering of Policy in Primary State.--A health 
insurance issuer may not offer for sale individual health insurance 
coverage in a secondary State unless that coverage is currently offered 
for sale in the primary State.
    ``(f) Licensing of Agents or Brokers for Health Insurance 
Issuers.--Any State may require that a person acting, or offering to 
act, as an agent or broker for a health insurance issuer with respect 
to the offering of individual health insurance coverage obtain a 
license from that State, with commissions or other compensation subject 
to the provisions of the laws of that State, except that a State may 
not impose any qualification or requirement which discriminates against 
a nonresident agent or broker.
    ``(g) Documents for Submission to State Insurance Commissioner.--
Each health insurance issuer issuing individual health insurance 
coverage in both primary and secondary States shall submit--
            ``(1) to the insurance commissioner of each State in which 
        it intends to offer such coverage, before it may offer 
        individual health insurance coverage in such State--
                    ``(A) a copy of the plan of operation or 
                feasibility study or any similar statement of the 
                policy being offered and its coverage (which shall 
                include the name of its primary State and its principal 
                place of business);
                    ``(B) written notice of any change in its 
                designation of its primary State; and
                    ``(C) written notice from the issuer of the 
                issuer's compliance with all the laws of the primary 
                State; and
            ``(2) to the insurance commissioner of each secondary State 
        in which it offers individual health insurance coverage, a copy 
        of the issuer's quarterly financial statement submitted to the 
        primary State, which statement shall be certified by an 
        independent public accountant and contain a statement of 
        opinion on loss and loss adjustment expense reserves made by--
                    ``(A) a member of the American Academy of 
                Actuaries; or
                    ``(B) a qualified loss reserve specialist.
    ``(h) Power of Courts To Enjoin Conduct.--Nothing in this section 
shall be construed to affect the authority of any Federal or State 
court to enjoin--
            ``(1) the solicitation or sale of individual health 
        insurance coverage by a health insurance issuer to any person 
        or group who is not eligible for such insurance; or
            ``(2) the solicitation or sale of individual health 
        insurance coverage that violates the requirements of the law of 
        a secondary State which are described in subparagraphs (A) 
        through (H) of section 2796(b)(1).
    ``(i) Power of Secondary States To Take Administrative Action.--
Nothing in this section shall be construed to affect the authority of 
any State to enjoin conduct in violation of that State's laws described 
in section 2796(b)(1).
    ``(j) State Powers To Enforce State Laws.--
            ``(1) In general.--Subject to the provisions of subsection 
        (b)(1)(G) (relating to injunctions) and paragraph (2), nothing 
        in this section shall be construed to affect the authority of 
        any State to make use of any of its powers to enforce the laws 
        of such State with respect to which a health insurance issuer 
        is not exempt under subsection (b).
            ``(2) Courts of competent jurisdiction.--If a State seeks 
        an injunction regarding the conduct described in paragraphs (1) 
        and (2) of subsection (h), such injunction must be obtained 
        from a Federal or State court of competent jurisdiction.
    ``(k) States' Authority To Sue.--Nothing in this section shall 
affect the authority of any State to bring action in any Federal or 
State court.
    ``(l) Generally Applicable Laws.--Nothing in this section shall be 
construed to affect the applicability of State laws generally 
applicable to persons or corporations.
    ``(m) Guaranteed Availability of Coverage to HIPAA Eligible 
Individuals.--To the extent that a health insurance issuer is offering 
coverage in a primary State that does not accommodate residents of 
secondary States or does not provide a working mechanism for residents 
of a secondary State, and the issuer is offering coverage under this 
part in such secondary State which has not adopted a qualified high-
risk pool as its acceptable alternative mechanism (as defined in 
section 2744(c)(2)), the issuer shall, with respect to any individual 
health insurance coverage offered in a secondary State under this part, 
comply with the guaranteed availability requirements for eligible 
individuals in section 2741.

``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE ISSUER MAY 
              SELL INTO SECONDARY STATES.

    ``A health insurance issuer may not offer, sell, or issue 
individual health insurance coverage in a secondary State if the State 
insurance commissioner does not use a risk-based capital formula for 
the determination of capital and surplus requirements for all health 
insurance issuers.

``SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SECONDARY STATE.

    ``Effective beginning two years after the date of enactment of this 
part, an individual in a State may not buy individual health insurance 
coverage in a secondary State if the premium for individual health 
insurance in the primary State (with respect to the individual) exceeds 
the national average premium by 10 percent or more.

``SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

    ``(a) Right to External Appeal.--A health insurance issuer may not 
offer, sell, or issue individual health insurance coverage in a 
secondary State under the provisions of this title unless--
            ``(1) both the secondary State and the primary State have 
        legislation or regulations in place establishing an independent 
        review process for individuals who are covered by individual 
        health insurance coverage, or
            ``(2) in any case in which the requirements of subparagraph 
        (A) are not met with respect to the either of such States, the 
        issuer provides an independent review mechanism substantially 
        identical (as determined by the applicable State authority of 
        such State) to that prescribed in the `Health Carrier External 
        Review Model Act' of the National Association of Insurance 
        Commissioners for all individuals who purchase insurance 
        coverage under the terms of this part, except that, under such 
        mechanism, the review is conducted by an independent medical 
        reviewer, or a panel of such reviewers, with respect to whom 
        the requirements of subsection (b) are met.
    ``(b) Qualifications of Independent Medical Reviewers.--In the case 
of any independent review mechanism referred to in subsection (a)(2)--
            ``(1) In general.--In referring a denial of a claim to an 
        independent medical reviewer, or to any panel of such 
        reviewers, to conduct independent medical review, the issuer 
        shall ensure that--
                    ``(A) each independent medical reviewer meets the 
                qualifications described in paragraphs (2) and (3);
                    ``(B) with respect to each review, each reviewer 
                meets the requirements of paragraph (4) and the 
                reviewer, or at least 1 reviewer on the panel, meets 
                the requirements described in paragraph (5); and
                    ``(C) compensation provided by the issuer to each 
                reviewer is consistent with paragraph (6).
            ``(2) Licensure and expertise.--Each independent medical 
        reviewer shall be a physician (allopathic or osteopathic) or 
        health care professional who--
                    ``(A) is appropriately credentialed or licensed in 
                one or more States to deliver health care services; and
                    ``(B) typically treats the condition, makes the 
                diagnosis, or provides the type of treatment under 
                review.
            ``(3) Independence.--
                    ``(A) In general.--Subject to subparagraph (B), 
                each independent medical reviewer in a case shall--
                            ``(i) not be a related party (as defined in 
                        paragraph (7));
                            ``(ii) not have a material familial, 
                        financial, or professional relationship with 
                        such a party; and
                            ``(iii) not otherwise have a conflict of 
                        interest with such a party (as determined under 
                        regulations).
                    ``(B) Exception.--Nothing in subparagraph (A) shall 
                be construed to--
                            ``(i) prohibit an individual, solely on the 
                        basis of affiliation with the issuer, from 
                        serving as an independent medical reviewer if--
                                    ``(I) a non-affiliated individual 
                                is not reasonably available;
                                    ``(II) the affiliated individual is 
                                not involved in the provision of items 
                                or services in the case under review;
                                    ``(III) the fact of such an 
                                affiliation is disclosed to the issuer 
                                and the enrollee (or authorized 
                                representative) and neither party 
                                objects; and
                                    ``(IV) the affiliated individual is 
                                not an employee of the issuer and does 
                                not provide services exclusively or 
                                primarily to or on behalf of the 
                                issuer;
                            ``(ii) prohibit an individual who has staff 
                        privileges at the institution where the 
                        treatment involved takes place from serving as 
                        an independent medical reviewer merely on the 
                        basis of such affiliation if the affiliation is 
                        disclosed to the issuer and the enrollee (or 
                        authorized representative), and neither party 
                        objects; or
                            ``(iii) prohibit receipt of compensation by 
                        an independent medical reviewer from an entity 
                        if the compensation is provided consistent with 
                        paragraph (6).
            ``(4) Practicing health care professional in same field.--
                    ``(A) In general.--In a case involving treatment, 
                or the provision of items or services--
                            ``(i) by a physician, a reviewer shall be a 
                        practicing physician (allopathic or 
                        osteopathic) of the same or similar specialty, 
                        as a physician who, acting within the 
                        appropriate scope of practice within the State 
                        in which the service is provided or rendered, 
                        typically treats the condition, makes the 
                        diagnosis, or provides the type of treatment 
                        under review; or
                            ``(ii) by a non-physician health care 
                        professional, the reviewer, or at least 1 
                        member of the review panel, shall be a 
                        practicing non-physician health care 
                        professional of the same or similar specialty 
                        as the non-physician health care professional 
                        who, acting within the appropriate scope of 
                        practice within the State in which the service 
                        is provided or rendered, typically treats the 
                        condition, makes the diagnosis, or provides the 
                        type of treatment under review.
                    ``(B) Practicing defined.--For purposes of this 
                paragraph, the term `practicing' means, with respect to 
                an individual who is a physician or other health care 
                professional, that the individual provides health care 
                services to individual patients on average at least 2 
                days per week.
            ``(5) Pediatric expertise.--In the case of an external 
        review relating to a child, a reviewer shall have expertise 
        under paragraph (2) in pediatrics.
            ``(6) Limitations on reviewer compensation.--Compensation 
        provided by the issuer to an independent medical reviewer in 
        connection with a review under this section shall--
                    ``(A) not exceed a reasonable level; and
                    ``(B) not be contingent on the decision rendered by 
                the reviewer.
            ``(7) Related party defined.--For purposes of this section, 
        the term `related party' means, with respect to a denial of a 
        claim under a coverage relating to an enrollee, any of the 
        following:
                    ``(A) The issuer involved, or any fiduciary, 
                officer, director, or employee of the issuer.
                    ``(B) The enrollee (or authorized representative).
                    ``(C) The health care professional that provides 
                the items or services involved in the denial.
                    ``(D) The institution at which the items or 
                services (or treatment) involved in the denial are 
                provided.
                    ``(E) The manufacturer of any drug or other item 
                that is included in the items or services involved in 
                the denial.
                    ``(F) Any other party determined under any 
                regulations to have a substantial interest in the 
                denial involved.
            ``(8) Definitions.--For purposes of this subsection:
                    ``(A) Enrollee.--The term `enrollee' means, with 
                respect to health insurance coverage offered by a 
                health insurance issuer, an individual enrolled with 
                the issuer to receive such coverage.
                    ``(B) Health care professional.--The term `health 
                care professional' means an individual who is licensed, 
                accredited, or certified under State law to provide 
                specified health care services and who is operating 
                within the scope of such licensure, accreditation, or 
                certification.

``SEC. 2800. ENFORCEMENT.

    ``(a) In General.--Subject to subsection (b), with respect to 
specific individual health insurance coverage the primary State for 
such coverage has sole jurisdiction to enforce the primary State's 
covered laws in the primary State and any secondary State.
    ``(b) Secondary State's Authority.--Nothing in subsection (a) shall 
be construed to affect the authority of a secondary State to enforce 
its laws as set forth in the exception specified in section 2796(b)(1).
    ``(c) Court Interpretation.--In reviewing action initiated by the 
applicable secondary State authority, the court of competent 
jurisdiction shall apply the covered laws of the primary State.
    ``(d) Notice of Compliance Failure.--In the case of individual 
health insurance coverage offered in a secondary State that fails to 
comply with the covered laws of the primary State, the applicable State 
authority of the secondary State may notify the applicable State 
authority of the primary State.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to individual health insurance coverage offered, issued, or sold 
after the date that is one year after the date of the enactment of this 
Act.
    (c) GAO Ongoing Study and Reports.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct an ongoing study concerning the effect of the 
        amendment made by subsection (a) on--
                    (A) the number of uninsured and under-insured;
                    (B) the availability and cost of health insurance 
                policies for individuals with pre-existing medical 
                conditions;
                    (C) the availability and cost of health insurance 
                policies generally;
                    (D) the elimination or reduction of different types 
                of benefits under health insurance policies offered in 
                different States; and
                    (E) cases of fraud or abuse relating to health 
                insurance coverage offered under such amendment and the 
                resolution of such cases.
            (2) Annual reports.--The Comptroller General shall submit 
        to Congress an annual report, after the end of each of the 5 
        years following the effective date of the amendment made by 
        subsection (a), on the ongoing study conducted under paragraph 
        (1).
    (d) Severability.--If any provision of the section or the 
application of such provision to any person or circumstance is held to 
be unconstitutional, the remainder of this section and the application 
of the provisions of such to any other person or circumstance shall not 
be affected.

                      TITLE IV--SAFETY NET REFORMS

SEC. 401. REQUIRING OUTREACH AND COVERAGE BEFORE EXPANSION OF 
              ELIGIBILITY.

    (a) State Child Health Plan Required To Specify How It Will Achieve 
Coverage for 90 Percent of Targeted Low-Income Children.--
            (1) In general.--Section 2102(a) of the Social Security Act 
        (42 U.S.C. 1397bb(a)) is amended--
                    (A) in paragraph (6), by striking ``and'' at the 
                end;
                    (B) in paragraph (7), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(8) how the eligibility and benefits provided for under 
        the plan for each fiscal year (beginning with fiscal year 2013) 
        will allow for the State's annual funding allotment to cover at 
        least 90 percent of the eligible targeted low-income children 
        in the State.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to State child health plans for fiscal years 
        beginning with fiscal year 2013.
    (b) Limitation on Program Expansions Until Lowest Income Eligible 
Individuals Enrolled.--Section 2105(c) of such Act (42 U.S.C. 
1397dd(c)) is amended by adding at the end the following new paragraph:
            ``(12) Limitation on increased coverage of higher income 
        children.--
                    ``(A) In general.--For child health assistance 
                furnished in a fiscal year beginning with fiscal year 
                2013:
                            ``(i) No payment for children with family 
                        income above 300 percent of poverty line.--
                        Payment shall not be made under this section 
                        for child health assistance for a targeted low-
                        income child in a family the income of which 
                        exceeds 300 percent of the poverty line 
                        applicable to a family of the size involved.
                            ``(ii) Special rules for payment for 
                        children with family income above 200 percent 
                        of poverty line.--In the case of child health 
                        assistance for a targeted low-income child in a 
                        family the income of which exceeds 200 percent 
                        (but does not exceed 300 percent) of the 
                        poverty line applicable to a family of the size 
                        involved no payment shall be made under this 
                        section for such assistance unless the State 
                        demonstrates to the satisfaction of the 
                        Secretary that--
                                    ``(I) the State has met the 90 
                                percent retrospective coverage test 
                                specified in subparagraph (B)(i) for 
                                the previous fiscal year; and
                                    ``(II) the State will meet the 90 
                                percent prospective coverage test 
                                specified in subparagraph (B)(ii) for 
                                the fiscal year.
                    ``(B) 90 percent coverage tests.--
                            ``(i) Retrospective test.--The 90 percent 
                        retrospective coverage test specified in this 
                        clause is, for a State for a fiscal year, that 
                        on average during the fiscal year, the State 
                        has enrolled under this title or title XIX at 
                        least 90 percent of the individuals residing in 
                        the State who--
                                    ``(I) are children under 19 years 
                                of age (or are pregnant women) and are 
                                eligible for medical assistance under 
                                title XIX; or
                                    ``(II) are targeted low-income 
                                children whose family income does not 
                                exceed 200 percent of the poverty line 
                                and who are eligible for child health 
                                assistance under this title.
                            ``(ii) Prospective test.--The 90 percent 
                        prospective test specified in this clause is, 
                        for a State for a fiscal year, that on average 
                        during the fiscal year, the State will enroll 
                        under this title or title XIX at least 90 
                        percent of the individuals residing in the 
                        State who--
                                    ``(I) are children under 19 years 
                                of age (or are pregnant women) and are 
                                eligible for medical assistance under 
                                title XIX; or
                                    ``(II) are targeted low-income 
                                children whose family income does not 
                                exceed such percent of the poverty line 
                                (in excess of 200 percent) as the State 
                                elects consistent with this paragraph 
                                and who are eligible for child health 
                                assistance under this title.
                    ``(C) Grandfather.--Clauses (i) and (ii) of 
                subparagraph (A) shall not apply to the provision of 
                child health assistance--
                            ``(i) to a targeted low-income child who is 
                        enrolled for child health assistance under this 
                        title as of September 30, 2010;
                            ``(ii) to a pregnant woman who is enrolled 
                        for assistance under this title as of September 
                        30, 2011, through the completion of the post-
                        partum period following completion of her 
                        pregnancy; and
                            ``(iii) for items and services furnished 
                        before October 1, 2012, to an individual who is 
                        not a targeted low-income child and who is 
                        enrolled for assistance under this title as of 
                        September 30, 2011.
                    ``(D) Treatment of pregnant women.--In this 
                paragraph and sections 2102(a)(8) and 2104(a)(2), the 
                term `targeted low-income child' includes an individual 
                under age 19, including the period from conception to 
                birth, who is eligible for child health assistance 
                under this title by virtue of the definition of the 
                term `child' under section 457.10 of title 42, Code of 
                Federal Regulations.''.
    (c) Standardization of Income Determinations.--
            (1) In general.--Section 2110(d) of such Act (42 U.S.C. 
        1397jj) is amended by adding at the end the following new 
        subsection:
    ``(d) Standardization of Income Determinations.--In determining 
family income under this title (including in the case of a State child 
health plan that provides health benefits coverage in the manner 
described in section 2101(a)(2)), a State shall base such determination 
on gross income (including amounts that would be included in gross 
income if they were not exempt from income taxation) and may only take 
into consideration such income disregards as the Secretary shall 
develop.''.
            (2) Effective date.--(A) Subject to subparagraph (B), the 
        amendment made by paragraph (1) shall apply to determinations 
        (and redeterminations) of income made on or after April 1, 
        2012.
            (B) In the case of a State child health plan under title 
        XXI of the Social Security Act which the Secretary of Health 
        and Human Services determines requires State legislation (other 
        than legislation appropriating funds) in order for the plan to 
        meet the additional requirement imposed by the amendment made 
        by paragraph (1), the State child health plan shall not be 
        regarded as failing to comply with the requirements of such 
        title solely on the basis of its failure to meet this 
        additional requirement before the first day of the first 
        calendar quarter beginning after the close of the first regular 
        session of the State legislature that begins after the date of 
        the enactment of this Act. For purposes of the previous 
        sentence, in the case of a State that has a 2-year legislative 
        session, each year of such session shall be deemed to be a 
        separate regular session of the State legislature.

SEC. 402. EASING ADMINISTRATIVE BARRIERS TO STATE COOPERATION WITH 
              EMPLOYER-SPONSORED INSURANCE COVERAGE.

    (a) Requiring Some Coverage for Employer-Sponsored Insurance Under 
CHIP.--Section 2102(a) of the Social Security Act (42 U.S.C. 1397b(a)), 
as amended by section 401(a), is amended--
            (1) in paragraph (7), by striking ``and'' at the end;
            (2) in paragraph (8), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(9) effective for plan years beginning on or after 
        October 1, 2012, how the plan will provide for child health 
        assistance with respect to targeted low-income children covered 
        under a group health plan.''.
    (b) Federal Financial Participation for Employer-Sponsored 
Insurance.--Section 2105 of such Act (42 U.S.C. 1397d) is amended--
            (1) in subsection (a)(1)(C), by inserting before the 
        semicolon at the end the following: ``and, subject to paragraph 
        (3)(C), in the form of payment of the premiums for coverage 
        under a group health plan that includes coverage of targeted 
        low-income children and benefits supplemental to such 
        coverage''; and
            (2) by amending paragraph (3) of subsection (c) to read as 
        follows:
            ``(3) Purchase of employer-sponsored insurance.--
                    ``(A) In general.--Payment may be made to a State 
                under subsection (a)(1)(C), subject to the provisions 
                of this paragraph, for the purchase of family coverage 
                under a group health plan that includes coverage of 
                targeted low-income children unless such coverage would 
                otherwise substitute for coverage that would be 
                provided to such children but for the purchase of 
                family coverage.
                    ``(B) Waiver of certain provisions.--With respect 
                to coverage described in subparagraph (A)--
                            ``(i) notwithstanding section 2102, no 
                        minimum benefits requirement (other than those 
                        otherwise applicable with respect to services 
                        referred to in section 2102(a)(7)) under this 
                        title shall apply; and
                            ``(ii) no limitation on beneficiary cost-
                        sharing otherwise applicable under this title 
                        or title XIX shall apply.
                    ``(C) Required provision of supplemental 
                benefits.--If the coverage described in subparagraph 
                (A) does not provide coverage for the services referred 
                to in section 2102(a)(7), the State child health plan 
                shall provide coverage of such services as supplemental 
                benefits.
                    ``(D) Limitation on ffp.--The amount of the payment 
                under paragraph (1)(C) for coverage described in 
                subparagraph (A) (and supplemental benefits under 
                subparagraph (C) for individuals so covered) during a 
                fiscal year may not exceed the product of--
                            ``(i) the national per capita expenditure 
                        under this title (taking into account both 
                        Federal and State expenditures) for the 
                        previous fiscal year (as determined by the 
                        Secretary using the best available data);
                            ``(ii) the enhanced FMAP for the State and 
                        fiscal year involved; and
                            ``(iii) the number of targeted low-income 
                        children for whom such coverage is provided.
                    ``(E) Voluntary enrollment.--A State child health 
                plan--
                            ``(i) may not require a targeted low-income 
                        child to enroll in coverage described in 
                        subparagraph (A) in order to obtain child 
                        health assistance under this title;
                            ``(ii) before providing such child health 
                        assistance for such coverage of a child, shall 
                        make available (which may be through an 
                        Internet Web site or other means including the 
                        State transparency plan portal established 
                        under section 901 of the Empowering Patients 
                        First Act) to the parent or guardian of the 
                        child information on the coverage available 
                        under this title, including benefits and cost-
                        sharing; and
                            ``(iii) shall provide at least one 
                        opportunity per fiscal year for beneficiaries 
                        to switch coverage under this title from 
                        coverage described in subparagraph (A) to the 
                        coverage that is otherwise made available under 
                        this title.
                    ``(F) Information on coverage options.--A State 
                child health plan shall--
                            ``(i) describe how the State will notify 
                        potential beneficiaries of coverage described 
                        in subparagraph (A);
                            ``(ii) provide such notification in writing 
                        at least during the initial application for 
                        enrollment under this title and during 
                        redeterminations of eligibility if the 
                        individual was enrolled before October 1, 2012; 
                        and
                            ``(iii) post a description of these 
                        coverage options on any official Web site that 
                        may be established by the State in connection 
                        with the plan, including the State transparency 
                        plan portal established under section 901 of 
                        the Empowering Patients First Act.
                    ``(G) Semiannual verification of coverage.--If 
                coverage described in subparagraph (A) is provided 
                under a group health plan with respect to a targeted 
                low-income child, the State child health plan shall 
                provide for the collection, at least once every six 
                months, of proof from the plan that the child is 
                enrolled in such coverage.
                    ``(H) Rule of construction.--Nothing in this 
                section is to be construed to prohibit a State from--
                            ``(i) offering wrap around benefits in 
                        order for a group health plan to meet any 
                        State-established minimum benefit requirements;
                            ``(ii) establishing a cost-effectiveness 
                        test to qualify for coverage under such a plan;
                            ``(iii) establishing limits on beneficiary 
                        cost-sharing under such a plan;
                            ``(iv) paying all or part of a 
                        beneficiary's cost-sharing requirements under 
                        such a plan;
                            ``(v) paying less than the full cost of the 
                        employee's share of the premium under such a 
                        plan, including prorating the cost of the 
                        premium to pay for only what the State 
                        determines is the portion of the premium that 
                        covers targeted low-income children;
                            ``(vi) using State funds to pay for 
                        benefits above the Federal upper limit 
                        established under subparagraph (C);
                            ``(vii) allowing beneficiaries enrolled in 
                        group health plans from changing plans to 
                        another coverage option available under this 
                        title at any time; or
                            ``(viii) providing any guidance or 
                        information it deems appropriate in order to 
                        help beneficiaries make an informed decision 
                        regarding the option to enroll in coverage 
                        described in subparagraph (A).
                    ``(I) Group health plan defined.--In this 
                paragraph, the term `group health plan' has the meaning 
                given such term in section 2791(a)(1) of the Public 
                Health Service Act (42 U.S.C. 300gg-91(a)(1)).''.
    (c) Application Under Medicaid.--The Secretary of Health and Human 
Services shall provide for the application of the amendments made by 
subsections (a) and (b) under the Medicaid program under title XIX of 
the Social Security Act in the same manner as such amendments apply to 
SCHIP under title XXI of such Act.

SEC. 403. IMPROVING BENEFICIARY CHOICE IN SCHIP.

    (a) Requiring Offering of Alternative Coverage Options.--Section 
2102 of the Social Security Act (42 U.S.C. 1397b), as amended by 
sections 401(a) and 402(a), is amended--
            (1) in subsection (a)--
                    (A) in paragraph (8), by striking ``and'' at the 
                end;
                    (B) in paragraph (9), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(10) effective for plan years beginning on or after 
        October 1, 2012, how the plan will provide for child health 
        assistance with respect to targeted low-income children through 
        alternative coverage options in accordance with subsection 
        (e).''; and
            (2) by adding at the end the following new subsection:
    ``(d) Alternative Coverage Options.--
            ``(1) In general.--Effective October 1, 2012, a State child 
        health plan shall provide for the offering of any qualified 
        alternative coverage that a qualified entity seeks to offer to 
        targeted low-income children through the plan in the State.
            ``(2) Application of uniform financial limitation for all 
        alternative coverage options.--With respect to all qualified 
        alternative coverage offered in a State, the State child health 
        plan shall establish a uniform dollar limitation on the per 
        capita monthly amount that will be paid by the State to the 
        qualified entity with respect to such coverage provided to a 
        targeted low-income child. Such limitation may not be less than 
        90 percent of the per capita monthly payment made for coverage 
        offered under the State child health plan that is not in the 
        form of an alternative coverage option. Nothing in this 
        paragraph shall be construed--
                    ``(A) as requiring a State to provide for the full 
                payment of premiums for qualified alternative coverage;
                    ``(B) as preventing a State from charging 
                additional premiums to cover the difference between the 
                cost of qualified alternative coverage and the amount 
                of such payment limitation; or
                    ``(C) as preventing a State from using its own 
                funds to provide a dollar limitation that exceeds the 
                Federal financial participation as limited under 
                section 2105(c)(10).
            ``(3) Treatment of low cost coverage.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if the uniform dollar limitation 
                under paragraph (2) exceeds the premium for qualified 
                alternative coverage for an enrollee, then such excess 
                shall be refunded to the Federal and State governments 
                in the same proportion as is otherwise applicable to 
                recovered funds under this title.
                    ``(B) Exception for high-deductible health plans.--
                In the case of coverage under a high-deductible health 
                plan, the excess described in subparagraph (A) shall be 
                deposited into a health savings account established 
                with respect to such plan.
            ``(4) Exemption.--A State is not subject to the requirement 
        of paragraph (1) if the State child health plan provides, as of 
        the date of the enactment of this subsection, for a cash out or 
        health savings account type option for those enrolled under the 
        plan.
            ``(5) Qualified alternative coverage defined.--In this 
        section, the term `qualified alternative coverage' means health 
        insurance coverage that--
                    ``(A) meets the coverage requirements of section 
                2103 (other than cost-sharing requirements of such 
                section); and
                    ``(B) is offered by a qualified insurer, and not 
                directly by the State.
            ``(6) Qualified insurer defined.--In this section, the term 
        `qualified insurer' means, with respect to a State, an entity 
        that is licensed to offer health insurance coverage in the 
        State.''.
    (b) Federal Financial Participation for Qualified Alternative 
Coverage.--Section 2105 of such Act (42 U.S.C. 1397d) is amended--
            (1) in subsection (a)(1)(C), as amended by section 402(b), 
        by inserting before the semicolon at the end the following: 
        ``and, subject to paragraph (13)(C), in the form of payment of 
        the premiums for coverage for qualified alternative coverage''; 
        and
            (2) in subsection (c), as amended by section 401(b) by 
        adding at the end the following new paragraph:
            ``(13) Purchase of qualified alternative coverage.--
                    ``(A) In general.--Payment may be made to a State 
                under subsection (a)(1)(C), subject to the provisions 
                of this paragraph, for the purchase of qualified 
                alternative coverage.
                    ``(B) Waiver of certain provisions.--With respect 
                to coverage described in subparagraph (A), no 
                limitation on beneficiary cost-sharing otherwise 
                applicable under this title or title XIX shall apply.
                    ``(C) Limitation on ffp.--The amount of the payment 
                under paragraph (1)(C) for coverage described in 
                subparagraph (A) during a fiscal year in the aggregate 
                for all such coverage in the State may not exceed the 
                product of--
                            ``(i) the national per capita expenditure 
                        under this title (taking into account both 
                        Federal and State expenditures) for the 
                        previous fiscal year (as determined by the 
                        Secretary using the best available data);
                            ``(ii) the enhanced FMAP for the State and 
                        fiscal year involved; and
                            ``(iii) the number of targeted low-income 
                        children for whom such coverage is provided.
                    ``(D) Voluntary enrollment.--A State child health 
                plan--
                            ``(i) may not require a targeted low-income 
                        child to enroll in coverage described in 
                        subparagraph (A) in order to obtain child 
                        health assistance under this title;
                            ``(ii) before providing such child health 
                        assistance for such coverage of a child, shall 
                        make available (which may be through an 
                        Internet Web site or other means) to the parent 
                        or guardian of the child information on the 
                        coverage available under this title, including 
                        benefits and cost-sharing; and
                            ``(iii) shall provide at least one 
                        opportunity per fiscal year for beneficiaries 
                        to switch coverage under this title from 
                        coverage described in subparagraph (A) to the 
                        coverage that is otherwise made available under 
                        this title.
                    ``(E) Information on coverage options.--A State 
                child health plan shall--
                            ``(i) describe how the State will notify 
                        potential beneficiaries of coverage described 
                        in subparagraph (A);
                            ``(ii) provide such notification in writing 
                        at least during the initial application for 
                        enrollment under this title and during 
                        redeterminations of eligibility if the 
                        individual was enrolled before October 1, 2012; 
                        and
                            ``(iii) post a description of these 
                        coverage options on any official Web site that 
                        may be established by the State in connection 
                        with the plan.
                    ``(F) Rule of construction.--Nothing in this 
                section is to be construed to prohibit a State from--
                            ``(i) establishing limits on beneficiary 
                        cost-sharing under such alternative coverage;
                            ``(ii) paying all or part of a 
                        beneficiary's cost-sharing requirements under 
                        such coverage;
                            ``(iii) paying less than the full cost of a 
                        child's share of the premium under such 
                        coverage, insofar as the premium for such 
                        coverage exceeds the limitation established by 
                        the State under subparagraph (C);
                            ``(iv) using State funds to pay for 
                        benefits above the Federal upper limit 
                        established under subparagraph (C); or
                            ``(v) providing any guidance or information 
                        it deems appropriate in order to help 
                        beneficiaries make an informed decision 
                        regarding the option to enroll in coverage 
                        described in subparagraph (A).''.
    (c) Application Under Medicaid.--The Secretary of Health and Human 
Services shall provide for the application of the amendments made by 
subsections (a) and (b) under the Medicaid program under title XIX of 
the Social Security Act in the same manner as such amendments apply to 
SCHIP under title XXI of such Act.

                   TITLE V--MEDICAL LIABILITY REFORMS

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Help Efficient, Accessible, Low-
cost, Timely Healthcare (HEALTH) Act of 2011''.

SEC. 502. FINDINGS AND PURPOSE.

    (a) Findings.--
            (1) Effect on health care access and costs.--Congress finds 
        that our current civil justice system is adversely affecting 
        patient access to health care services, better patient care, 
        and cost-efficient health care, in that the health care 
        liability system is a costly and ineffective mechanism for 
        resolving claims of health care liability and compensating 
        injured patients, and is a deterrent to the sharing of 
        information among health care professionals which impedes 
        efforts to improve patient safety and quality of care.
            (2) Effect on interstate commerce.--Congress finds that the 
        health care and insurance industries are industries affecting 
        interstate commerce and the health care liability litigation 
        systems existing throughout the United States are activities 
        that affect interstate commerce by contributing to the high 
        costs of health care and premiums for health care liability 
        insurance purchased by health care system providers.
            (3) Effect on federal spending.--Congress finds that the 
        health care liability litigation systems existing throughout 
        the United States have a significant effect on the amount, 
        distribution, and use of Federal funds because of--
                    (A) the large number of individuals who receive 
                health care benefits under programs operated or 
                financed by the Federal Government;
                    (B) the large number of individuals who benefit 
                because of the exclusion from Federal taxes of the 
                amounts spent to provide them with health insurance 
                benefits; and
                    (C) the large number of health care providers who 
                provide items or services for which the Federal 
                Government makes payments.
    (b) Purpose.--It is the purpose of this title to implement 
reasonable, comprehensive, and effective health care liability reforms 
designed to
            (1) improve the availability of health care services in 
        cases in which health care liability actions have been shown to 
        be a factor in the decreased availability of services;
            (2) reduce the incidence of ``defensive medicine'' and 
        lower the cost of health care liability insurance, all of which 
        contribute to the escalation of health care costs;
            (3) ensure that persons with meritorious health care injury 
        claims receive fair and adequate compensation, including 
        reasonable noneconomic damages;
            (4) improve the fairness and cost-effectiveness of our 
        current health care liability system to resolve disputes over, 
        and provide compensation for, health care liability by reducing 
        uncertainty in the amount of compensation provided to injured 
        individuals; and
            (5) provide an increased sharing of information in the 
        health care system which will reduce unintended injury and 
        improve patient care.

SEC. 503. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

    The time for the commencement of a health care lawsuit shall be 3 
years after the date of manifestation of injury or 1 year after the 
claimant discovers, or through the use of reasonable diligence should 
have discovered, the injury, whichever occurs first. In no event shall 
the time for commencement of a health care lawsuit exceed 3 years after 
the date of manifestation of injury unless tolled for any of the 
following--
            (1) upon proof of fraud;
            (2) intentional concealment; or
            (3) the presence of a foreign body, which has no 
        therapeutic or diagnostic purpose or effect, in the person of 
        the injured person.
Actions by a minor shall be commenced within 3 years from the date of 
the alleged manifestation of injury except that actions by a minor 
under the full age of 6 years shall be commenced within 3 years of 
manifestation of injury or prior to the minor's 8th birthday, whichever 
provides a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian and a health 
care provider or health care organization have committed fraud or 
collusion in the failure to bring an action on behalf of the injured 
minor.

SEC. 504. COMPENSATING PATIENT INJURY.

    (a) Unlimited Amount of Damages for Actual Economic Losses in 
Health Care Lawsuits.--In any health care lawsuit, nothing in this 
title shall limit a claimant's recovery of the full amount of the 
available economic damages, notwithstanding the limitation in 
subsection (b).
    (b) Additional Noneconomic Damages.--In any health care lawsuit, 
the amount of noneconomic damages, if available, may be as much as 
$250,000, regardless of the number of parties against whom the action 
is brought or the number of separate claims or actions brought with 
respect to the same injury.
    (c) No Discount of Award for Noneconomic Damages.--For purposes of 
applying the limitation in subsection (b), future noneconomic damages 
shall not be discounted to present value. The jury shall not be 
informed about the maximum award for noneconomic damages. An award for 
noneconomic damages in excess of $250,000 shall be reduced either 
before the entry of judgment, or by amendment of the judgment after 
entry of judgment, and such reduction shall be made before accounting 
for any other reduction in damages required by law. If separate awards 
are rendered for past and future noneconomic damages and the combined 
awards exceed $250,000, the future noneconomic damages shall be reduced 
first.
    (d) Fair Share Rule.--In any health care lawsuit, each party shall 
be liable for that party's several share of any damages only and not 
for the share of any other person. Each party shall be liable only for 
the amount of damages allocated to such party in direct proportion to 
such party's percentage of responsibility. Whenever a judgment of 
liability is rendered as to any party, a separate judgment shall be 
rendered against each such party for the amount allocated to such 
party. For purposes of this section, the trier of fact shall determine 
the proportion of responsibility of each party for the claimant's harm.

SEC. 505. MAXIMIZING PATIENT RECOVERY.

    (a) Court Supervision of Share of Damages Actually Paid to 
Claimants.--In any health care lawsuit, the court shall supervise the 
arrangements for payment of damages to protect against conflicts of 
interest that may have the effect of reducing the amount of damages 
awarded that are actually paid to claimants. In particular, in any 
health care lawsuit in which the attorney for a party claims a 
financial stake in the outcome by virtue of a contingent fee, the court 
shall have the power to restrict the payment of a claimant's damage 
recovery to such attorney, and to redirect such damages to the claimant 
based upon the interests of justice and principles of equity. In no 
event shall the total of all contingent fees for representing all 
claimants in a health care lawsuit exceed the following limits:
            (1) Forty percent of the first $50,000 recovered by the 
        claimant(s).
            (2) Thirty-three and one-third percent of the next $50,000 
        recovered by the claimant(s).
            (3) Twenty-five percent of the next $500,000 recovered by 
        the claimant(s).
            (4) Fifteen percent of any amount by which the recovery by 
        the claimant(s) is in excess of $600,000.
    (b) Applicability.--The limitations in this section shall apply 
whether the recovery is by judgment, settlement, mediation, 
arbitration, or any other form of alternative dispute resolution. In a 
health care lawsuit involving a minor or incompetent person, a court 
retains the authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The requirement for court 
supervision in the first two sentences of subsection (a) applies only 
in civil actions.

SEC. 506. ADDITIONAL HEALTH BENEFITS.

    In any health care lawsuit involving injury or wrongful death, any 
party may introduce evidence of collateral source benefits. If a party 
elects to introduce such evidence, any opposing party may introduce 
evidence of any amount paid or contributed or reasonably likely to be 
paid or contributed in the future by or on behalf of the opposing party 
to secure the right to such collateral source benefits. No provider of 
collateral source benefits shall recover any amount against the 
claimant or receive any lien or credit against the claimant's recovery 
or be equitably or legally subrogated to the right of the claimant in a 
health care lawsuit involving injury or wrongful death. This section 
shall apply to any health care lawsuit that is settled as well as a 
health care lawsuit that is resolved by a fact finder. This section 
shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section 
1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act.

SEC. 507. PUNITIVE DAMAGES.

    (a) In General.--Punitive damages may, if otherwise permitted by 
applicable State or Federal law, be awarded against any person in a 
health care lawsuit only if it is proven by clear and convincing 
evidence that such person acted with malicious intent to injure the 
claimant, or that such person deliberately failed to avoid unnecessary 
injury that such person knew the claimant was substantially certain to 
suffer. In any health care lawsuit where no judgment for compensatory 
damages is rendered against such person, no punitive damages may be 
awarded with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit as 
initially filed. A court may allow a claimant to file an amended 
pleading for punitive damages only upon a motion by the claimant and 
after a finding by the court, upon review of supporting and opposing 
affidavits or after a hearing, after weighing the evidence, that the 
claimant has established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the request of any 
party in a health care lawsuit, the trier of fact shall consider in a 
separate proceeding--
            (1) whether punitive damages are to be awarded and the 
        amount of such award; and
            (2) the amount of punitive damages following a 
        determination of punitive liability.
If a separate proceeding is requested, evidence relevant only to the 
claim for punitive damages, as determined by applicable State law, 
shall be inadmissible in any proceeding to determine whether 
compensatory damages are to be awarded.
    (b) Determining Amount of Punitive Damages.--
            (1) Factors considered.--In determining the amount of 
        punitive damages, if awarded, in a health care lawsuit, the 
        trier of fact shall consider only the following--
                    (A) the severity of the harm caused by the conduct 
                of such party;
                    (B) the duration of the conduct or any concealment 
                of it by such party;
                    (C) the profitability of the conduct to such party;
                    (D) the number of products sold or medical 
                procedures rendered for compensation, as the case may 
                be, by such party, of the kind causing the harm 
                complained of by the claimant;
                    (E) any criminal penalties imposed on such party, 
                as a result of the conduct complained of by the 
                claimant; and
                    (F) the amount of any civil fines assessed against 
                such party as a result of the conduct complained of by 
                the claimant.
            (2) Maximum award.--The amount of punitive damages, if 
        awarded, in a health care lawsuit may be as much as $250,000 or 
        as much as two times the amount of economic damages awarded, 
        whichever is greater. The jury shall not be informed of this 
        limitation.
    (c) No Punitive Damages for Products That Comply With FDA 
Standards.--
            (1) In general.--
                    (A) No punitive damages may be awarded against the 
                manufacturer or distributor of a medical product, or a 
                supplier of any component or raw material of such 
                medical product, based on a claim that such product 
                caused the claimant's harm where--
                            (i)(I) such medical product was subject to 
                        premarket approval, clearance, or licensure by 
                        the Food and Drug Administration with respect 
                        to the safety of the formulation or performance 
                        of the aspect of such medical product which 
                        caused the claimant's harm or the adequacy of 
                        the packaging or labeling of such medical 
                        product; and
                            (II) such medical product was so approved, 
                        cleared, or licensed; or
                            (ii) such medical product is generally 
                        recognized among qualified experts as safe and 
                        effective pursuant to conditions established by 
                        the Food and Drug Administration and applicable 
                        Food and Drug Administration regulations, 
                        including without limitation those related to 
                        packaging and labeling, unless the Food and 
                        Drug Administration has determined that such 
                        medical product was not manufactured or 
                        distributed in substantial compliance with 
                        applicable Food and Drug Administration 
                        statutes and regulations.
                    (B) Rule of construction.--Subparagraph (A) may not 
                be construed as establishing the obligation of the Food 
                and Drug Administration to demonstrate affirmatively 
                that a manufacturer, distributor, or supplier referred 
                to in such subparagraph meets any of the conditions 
                described in such subparagraph.
            (2) Liability of health care providers.--A health care 
        provider who prescribes, or who dispenses pursuant to a 
        prescription, a medical product approved, licensed, or cleared 
        by the Food and Drug Administration shall not be named as a 
        party to a product liability lawsuit involving such product and 
        shall not be liable to a claimant in a class action lawsuit 
        against the manufacturer, distributor, or seller of such 
        product. Nothing in this paragraph prevents a court from 
        consolidating cases involving health care providers and cases 
        involving products liability claims against the manufacturer, 
        distributor, or product seller of such medical product.
            (3) Packaging.--In a health care lawsuit for harm which is 
        alleged to relate to the adequacy of the packaging or labeling 
        of a drug which is required to have tamper-resistant packaging 
        under regulations of the Secretary of Health and Human Services 
        (including labeling regulations related to such packaging), the 
        manufacturer or product seller of the drug shall not be held 
        liable for punitive damages unless such packaging or labeling 
        is found by the trier of fact by clear and convincing evidence 
        to be substantially out of compliance with such regulations.
            (4) Exception.--Paragraph (1) shall not apply in any health 
        care lawsuit in which--
                    (A) a person, before or after premarket approval, 
                clearance, or licensure of such medical product, 
                knowingly misrepresented to or withheld from the Food 
                and Drug Administration information that is required to 
                be submitted under the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 301 et seq.) or section 351 of the 
                Public Health Service Act (42 U.S.C. 262) that is 
                material and is causally related to the harm which the 
                claimant allegedly suffered;
                    (B) a person made an illegal payment to an official 
                of the Food and Drug Administration for the purpose of 
                either securing or maintaining approval, clearance, or 
                licensure of such medical product; or
                    (C) the defendant caused the medical product which 
                caused the claimant's harm to be misbranded or 
                adulterated (as such terms are used in chapter V of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351 et 
                seq.)).

SEC. 508. LIMITATION ON RECOVERY IN A HEALTH CARE LAWSUIT BASED ON 
              COMPLIANCE WITH BEST PRACTICE GUIDELINES.

    (a) Selection and Issuance of Best Practices Guidelines.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        provide for the selection and issuance of best practice 
        guidelines for treatment of medical conditions (each in this 
        subsection referred to as a ``guideline'') in accordance with 
        paragraphs (2) and (3).
            (2) Development process.--Not later than 90 days after the 
        date of enactment of this title, the Secretary shall enter into 
        a contract with a qualified physician consensus-building 
        organization (such as the Physician Consortium for Performance 
        Improvement), in concert and agreement with physician specialty 
        organizations, to develop guidelines. The contract shall 
        require that the organization submit guidelines to the agency 
        not later than 18 months after the date of enactment of this 
        title.
            (3) Issuance.--
                    (A) In general.--Not later than 2 years after the 
                date of the enactment of this title, the Secretary 
                shall, after notice and opportunity for public comment, 
                make a rule that provides for the establishment of the 
                guidelines submitted under paragraph (2).
                    (B) Limitation.--The Secretary may not make a rule 
                that includes guidelines other than those submitted 
                under paragraph (2).
                    (C) Dissemination.--The Secretary shall post such 
                guidelines on the public Internet web page of the 
                Department of Health and Human Services.
            (4) Maintenance.--Not later than 4 years after the date of 
        enactment of this title, and every 2 years thereafter, the 
        Secretary shall review the guidelines and shall, as necessary, 
        enter into contracts similar to the contract described in 
        paragraph (2), and issue guidelines in a manner similar to the 
        issuance of guidelines under paragraph (3).
    (b) Limitation on Damages.--
            (1) Limitation on noneconomic damages.--In any health care 
        lawsuit, a court may not award noneconomic damages with respect 
        to treatment that is consistent with a guideline issued under 
        subsection (a).
            (2) Limitation on punitive damages.--In any health care 
        lawsuit, no punitive damages may be awarded against a health 
        care provider based on a claim that such treatment caused the 
        claimant harm if--
                    (A) such treatment was subject to quality review by 
                a qualified physician consensus-building organization 
                and has been found to be safe, effective, and 
                appropriate;
                    (B) such treatment was approved in a guideline that 
                underwent full review by such organization, public 
                comment, approval by the Secretary, and dissemination 
                as described in subparagraph (a); or
                    (C) such medical treatment is generally recognized 
                among qualified experts (including medical providers 
                and relevant physician specialty organizations) as 
                safe, effective, and appropriate.
    (c) Use.--
            (1) Introduction as evidence.--Guidelines established in a 
        rule made under subsection (a) may not be introduced as 
        evidence of negligence or deviation in the standard of care in 
        any health care lawsuit unless they have previously been 
        introduced by the defendant.
            (2) No presumption of negligence.--There shall be no 
        presumption of negligence if a health care provider provides 
        treatment in a manner inconsistent with such guidelines.
    (d) Construction.--Nothing in this section shall be construed as 
preventing a State from--
            (1) replacing their current medical malpractice rules with 
        rules that rely, as a defense, upon a health care provider's 
        compliance with a guideline issued under subsection (a); or
            (2) applying additional guidelines or safe-harbors that are 
        in addition to, but not in lieu of, the guidelines issued under 
        subsection (a).

SEC. 509. STATE GRANTS TO CREATE ADMINISTRATIVE HEALTH CARE TRIBUNALS.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE HEALTH CARE 
              TRIBUNALS.

    ``(a) In General.--The Secretary may award grants to States for the 
development, implementation, and evaluation of administrative health 
care tribunals that comply with this section, for the resolution of 
disputes concerning injuries allegedly caused by health care providers.
    ``(b) Conditions for Demonstration Grants.--To be eligible to 
receive a grant under this section, a State shall submit to the 
Secretary an application at such time, in such manner, and containing 
such information as may be required by the Secretary. A grant shall be 
awarded under this section on such terms and conditions as the 
Secretary determines appropriate.
    ``(c) Representation by Counsel.--A State that receives a grant 
under this section may not preclude any party to a dispute before an 
administrative health care tribunal operated under such grant from 
obtaining legal representation during any review by the expert panel 
under subsection (d), the administrative health care tribunal under 
subsection (e), or a State court under subsection (f).
    ``(d) Expert Panel Review and Early Offer Guidelines.--
            ``(1) In general.--Prior to the submission of any dispute 
        concerning injuries allegedly caused by health care providers 
        to an administrative health care tribunal under this section, 
        such allegations shall first be reviewed by an expert panel.
            ``(2) Composition.--
                    ``(A) In general.--The members of each expert panel 
                under this subsection shall be appointed by the head of 
                the State agency responsible for health. Each expert 
                panel shall be composed of no fewer than 3 members and 
                not more than 7 members. At least one-half of such 
                members shall be medical experts (either physicians or 
                health care professionals).
                    ``(B) Licensure and expertise.--Each physician or 
                health care professional appointed to an expert panel 
                under subparagraph (A) shall--
                            ``(i) be appropriately credentialed or 
                        licensed in one or more States to deliver 
                        health care services; and
                            ``(ii) typically treat the condition, make 
                        the diagnosis, or provide the type of treatment 
                        that is under review.
                    ``(C) Independence.--
                            ``(i) In general.--Subject to clause (ii), 
                        each individual appointed to an expert panel 
                        under this paragraph shall--
                                    ``(I) not have a material familial, 
                                financial, or professional relationship 
                                with a party involved in the dispute 
                                reviewed by the panel; and
                                    ``(II) not otherwise have a 
                                conflict of interest with such a party.
                            ``(ii) Exception.--Nothing in clause (i) 
                        shall be construed to prohibit an individual 
                        who has staff privileges at an institution 
                        where the treatment involved in the dispute was 
                        provided from serving as a member of an expert 
                        panel merely on the basis of such affiliation, 
                        if the affiliation is disclosed to the parties 
                        and neither party objects.
                    ``(D) Practicing health care professional in same 
                field.--
                            ``(i) In general.--In a dispute before an 
                        expert panel that involves treatment, or the 
                        provision of items or services--
                                    ``(I) by a physician, the medical 
                                experts on the expert panel shall be 
                                practicing physicians (allopathic or 
                                osteopathic) of the same or similar 
                                specialty as a physician who typically 
                                treats the condition, makes the 
                                diagnosis, or provides the type of 
                                treatment under review; or
                                    ``(II) by a health care 
                                professional other than a physician, at 
                                least two medical experts on the expert 
                                panel shall be practicing physicians 
                                (allopathic or osteopathic) of the same 
                                or similar specialty as the health care 
                                professional who typically treats the 
                                condition, makes the diagnosis, or 
                                provides the type of treatment under 
                                review, and, if determined appropriate 
                                by the State agency, an additional 
                                medical expert shall be a practicing 
                                health care professional (other than 
                                such a physician) of such a same or 
                                similar specialty.
                            ``(ii) Practicing defined.--In this 
                        paragraph, the term `practicing' means, with 
                        respect to an individual who is a physician or 
                        other health care professional, that the 
                        individual provides health care services to 
                        individual patients on average at least 2 days 
                        a week.
                    ``(E) Pediatric expertise.--In the case of dispute 
                relating to a child, at least 1 medical expert on the 
                expert panel shall have expertise described in 
                subparagraph (D)(i) in pediatrics.
            ``(3) Determination.--After a review under paragraph (1), 
        an expert panel shall make a determination as to the liability 
        of the parties involved and compensation.
            ``(4) Acceptance.--If the parties to a dispute before an 
        expert panel under this subsection accept the determination of 
        the expert panel concerning liability and compensation, such 
        compensation shall be paid to the claimant and the claimant 
        shall agree to forgo any further action against the health care 
        providers involved.
            ``(5) Failure to accept.--If any party decides not to 
        accept the expert panel's determination, the matter shall be 
        referred to an administrative health care tribunal created 
        pursuant to this section.
    ``(e) Administrative Health Care Tribunals.--
            ``(1) In general.--Upon the failure of any party to accept 
        the determination of an expert panel under subsection (d), the 
        parties shall have the right to request a hearing concerning 
        the liability or compensation involved by an administrative 
        health care tribunal established by the State involved.
            ``(2) Requirements.--In establishing an administrative 
        health care tribunal under this section, a State shall--
                    ``(A) ensure that such tribunals are presided over 
                by special judges with health care expertise;
                    ``(B) provide authority to such judges to make 
                binding rulings, rendered in written decisions, on 
                standards of care, causation, compensation, and related 
                issues with reliance on independent expert witnesses 
                commissioned by the tribunal;
                    ``(C) establish gross negligence as the legal 
                standard for the tribunal;
                    ``(D) allow the admission into evidence of the 
                recommendation made by the expert panel under 
                subsection (d); and
                    ``(E) provide for an appeals process to allow for 
                review of decisions by State courts.
    ``(f) Review by State Court After Exhaustion of Administrative 
Remedies.--
            ``(1) Right to file.--If any party to a dispute before a 
        health care tribunal under subsection (e) is not satisfied with 
        the determinations of the tribunal, the party shall have the 
        right to file their claim in a State court of competent 
        jurisdiction.
            ``(2) Forfeit of awards.--Any party filing an action in a 
        State court in accordance with paragraph (1) shall forfeit any 
        compensation award made under subsection (e).
            ``(3) Admissibility.--The determinations of the expert 
        panel and the administrative health care tribunal pursuant to 
        subsections (d) and (e) with respect to a State court 
        proceeding under paragraph (1) shall be admissible into 
        evidence in any such State court proceeding.
    ``(g) Definition.--In this section, the term `health care provider' 
means any person or entity required by State or Federal laws or 
regulations to be licensed, registered, or certified to provide health 
care services, and being either so licensed, registered, or certified, 
or exempted from such requirement by other statute or regulation.
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated for any fiscal year such sums as may be necessary for 
purposes of making grants to States under this section.''.

SEC. 510. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN 
              HEALTH CARE LAWSUITS.

    (a) In General.--In any health care lawsuit, if an award of future 
damages, without reduction to present value, equaling or exceeding 
$50,000 is made against a party with sufficient insurance or other 
assets to fund a periodic payment of such a judgment, the court shall, 
at the request of any party, enter a judgment ordering that the future 
damages be paid by periodic payments, in accordance with the Uniform 
Periodic Payment of Judgments Act promulgated by the National 
Conference of Commissioners on Uniform State Laws.
    (b) Applicability.--This section applies to all actions which have 
not been first set for trial or retrial before the effective date of 
this title.

SEC. 511. DEFINITIONS.

    In this title:
            (1) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system that provides for the resolution of health care lawsuits 
        in a manner other than through a civil action brought in a 
        State or Federal court.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care lawsuit, including a person who asserts or 
        claims a right to legal or equitable contribution, indemnity, 
        or subrogation, arising out of a health care liability claim or 
        action, and any person on whose behalf such a claim is asserted 
        or such an action is brought, whether deceased, incompetent, or 
        a minor.
            (3) Collateral source benefits.--The term ``collateral 
        source benefits'' means any amount paid or reasonably likely to 
        be paid in the future to or on behalf of the claimant, or any 
        service, product, or other benefit provided or reasonably 
        likely to be provided in the future to or on behalf of the 
        claimant, as a result of the injury or wrongful death, pursuant 
        to--
                    (A) any State or Federal health, sickness, income-
                disability, accident, or workers' compensation law;
                    (B) any health, sickness, income-disability, or 
                accident insurance that provides health benefits or 
                income-disability coverage;
                    (C) any contract or agreement of any group, 
                organization, partnership, or corporation to provide, 
                pay for, or reimburse the cost of medical, hospital, 
                dental, or income-disability benefits; and
                    (D) any other publicly or privately funded program.
            (4) Compensatory damages.--The term ``compensatory 
        damages'' means objectively verifiable monetary losses incurred 
        as a result of the provision of, use of, or payment for (or 
        failure to provide, use, or pay for) health care services or 
        medical products, such as past and future medical expenses, 
        loss of past and future earnings, cost of obtaining domestic 
        services, loss of employment, and loss of business or 
        employment opportunities, damages for physical and emotional 
        pain, suffering, inconvenience, physical impairment, mental 
        anguish, disfigurement, loss of enjoyment of life, loss of 
        society and companionship, loss of consortium (other than loss 
        of domestic service), hedonic damages, injury to reputation, 
        and all other nonpecuniary losses of any kind or nature. The 
        term ``compensatory damages'' includes economic damages and 
        noneconomic damages, as such terms are defined in this section.
            (5) Contingent fee.--The term ``contingent fee'' includes 
        all compensation to any person or persons which is payable only 
        if a recovery is effected on behalf of one or more claimants.
            (6) Economic damages.--The term ``economic damages'' means 
        objectively verifiable monetary losses incurred as a result of 
        the provision of, use of, or payment for (or failure to 
        provide, use, or pay for) health care services or medical 
        products, such as past and future medical expenses, loss of 
        past and future earnings, cost of obtaining domestic services, 
        loss of employment, and loss of business or employment 
        opportunities.
            (7) Federal tax benefit.--A claimant shall be treated as 
        receiving a Federal tax benefit with respect to payment for 
        items or services if--
                    (A) such payment is compensation by insurance--
                            (i) which constitutes medical care, and
                            (ii) with respect to the payment of 
                        premiums for which the claimant, or the 
                        employer of the claimant, was allowed an 
                        exclusion from gross income, a deduction, or a 
                        credit for Federal income tax purposes,
                    (B) a deduction was allowed with respect to such 
                payment for Federal income tax purposes, or
                    (C) such payment was from an Archer MSA (as defined 
                in section 220(d) of the Internal Revenue Code of 
                1986), a health savings account (as defined in section 
                223(d) of such Code), a flexible spending arrangement 
                (as defined in section 106(c)(2) of such Code), or a 
                health reimbursement arrangement which is treated as 
                employer-provided coverage under an accident or health 
                plan for purposes of section 106 of such Code.
            (8) Health care lawsuit.--The term ``health care lawsuit'' 
        means any health care liability claim concerning the provision 
        of health care goods or services brought in a Federal court or 
        in a State court or pursuant to an alternative dispute 
        resolution system, if such claim concerns items or services 
        with respect to which payment is made under title XVIII, title 
        XIX, or title XXI of the Social Security Act or for which the 
        claimant receives a Federal tax benefit, against a health care 
        provider, a health care organization, or the manufacturer, 
        distributor, supplier, marketer, promoter, or seller of a 
        medical product, regardless of the theory of liability on which 
        the claim is based, or the number of claimants, plaintiffs, 
        defendants, or other parties, or the number of claims or causes 
        of action, in which the claimant alleges a health care 
        liability claim. Such term does not include a claim or action 
        which is based on criminal liability; which seeks civil fines 
        or penalties paid to Federal government; or which is grounded 
        in antitrust.
            (9) Health care liability action.--The term ``health care 
        liability action'' means a civil action brought in a State or 
        Federal court or pursuant to an alternative dispute resolution 
        system, against a health care provider, a health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, regardless 
        of the theory of liability on which the claim is based, or the 
        number of plaintiffs, defendants, or other parties, or the 
        number of causes of action, in which the claimant alleges a 
        health care liability claim.
            (10) Health care liability claim.--The term ``health care 
        liability claim'' means a demand by any person, whether or not 
        pursuant to ADR, against a health care provider, health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, including, 
        but not limited to, third-party claims, cross-claims, counter-
        claims, or contribution claims, which are based upon the 
        provision of, use of, or payment for (or the failure to 
        provide, use, or pay for) health care services or medical 
        products, regardless of the theory of liability on which the 
        claim is based, or the number of plaintiffs, defendants, or 
        other parties, or the number of causes of action.
            (11) Health care organization.--The term ``health care 
        organization'' means any person or entity which is obligated to 
        provide or pay for health benefits under any health plan, 
        including any person or entity acting under a contract or 
        arrangement with a health care organization to provide or 
        administer any health benefit.
            (12) Health care provider.--The term ``health care 
        provider'' means any person or entity required by State or 
        Federal laws or regulations to be licensed, registered, or 
        certified to provide health care services, and being either so 
        licensed, registered, or certified, or exempted from such 
        requirement by other statute or regulation.
            (13) Health care goods or services.--The term ``health care 
        goods or services'' means any goods or services provided by a 
        health care organization, provider, or by any individual 
        working under the supervision of a health care provider, that 
        relates to the diagnosis, prevention, or treatment of any human 
        disease or impairment, or the assessment or care of the health 
        of human beings.
            (14) Malicious intent to injure.--The term ``malicious 
        intent to injure'' means intentionally causing or attempting to 
        cause physical injury other than providing health care goods or 
        services.
            (15) Medical product.--The term ``medical product'' means a 
        drug, device, or biological product intended for humans, and 
        the terms ``drug'', ``device'', and ``biological product'' have 
        the meanings given such terms in sections 201(g)(1) and 201(h) 
        of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(g)(1) 
        and (h)) and section 351(a) of the Public Health Service Act 
        (42 U.S.C. 262(a)), respectively, including any component or 
        raw material used therein, but excluding health care services.
            (16) Medical treatment.--The term ``medical treatment'' 
        means the provision of any goods or services by a health care 
        provider or by any individual working under the supervision of 
        a health care provider, that relates to the diagnosis, 
        prevention, or treatment of any human disease or impairment, or 
        the assessment or care of the health of human beings.
            (17) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages for losses for physical and emotional pain, 
        suffering, inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium, hedonic damages, injury to 
        reputation, and any other nonpecuniary losses.
            (18) Punitive damages.--The term ``punitive damages'' means 
        damages awarded, for the purpose of punishment or deterrence, 
        and not solely for compensatory purposes, against a health care 
        provider, health care organization, or a manufacturer, 
        distributor, or supplier of a medical product. Punitive damages 
        are neither economic nor noneconomic damages.
            (19) Recovery.--The term ``recovery'' means the net sum 
        recovered after deducting any disbursements or costs incurred 
        in connection with prosecution or settlement of the claim, 
        including all costs paid or advanced by any person. Costs of 
        health care incurred by the plaintiff and the attorneys' office 
        overhead costs or charges for legal services are not deductible 
        disbursements or costs for such purpose.
            (20) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the Northern 
        Mariana Islands, the Trust Territory of the Pacific Islands, 
        and any other territory or possession of the United States, or 
        any political subdivision thereof.

SEC. 512. EFFECT ON OTHER LAWS.

    (a) Vaccine Injury.--
            (1) To the extent that title XXI of the Public Health 
        Service Act establishes a Federal rule of law applicable to a 
        civil action brought for a vaccine-related injury or death--
                    (A) this title does not affect the application of 
                the rule of law to such an action; and
                    (B) any rule of law prescribed by this title in 
                conflict with a rule of law of such title XXI shall not 
                apply to such action.
            (2) If there is an aspect of a civil action brought for a 
        vaccine-related injury or death to which a Federal rule of law 
        under title XXI of the Public Health Service Act does not 
        apply, then this title or otherwise applicable law (as 
        determined under this title) will apply to such aspect of such 
        action.
    (b) Other Federal Law.--Except as provided in this section, nothing 
in this title shall be deemed to affect any defense available to a 
defendant in a health care lawsuit or action under any other provision 
of Federal law.

SEC. 513. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

    (a) Health Care Lawsuits.--The provisions governing health care 
lawsuits set forth in this title preempt, subject to subsections (b) 
and (c), State law to the extent that State law prevents the 
application of any provisions of law established by or under this 
title. The provisions governing health care lawsuits set forth in this 
title supersede chapter 171 of title 28, United States Code, to the 
extent that such chapter--
            (1) provides for a greater amount of damages or contingent 
        fees, a longer period in which a health care lawsuit may be 
        commenced, or a reduced applicability or scope of periodic 
        payment of future damages, than provided in this title; or
            (2) prohibits the introduction of evidence regarding 
        collateral source benefits, or mandates or permits subrogation 
        or a lien on collateral source benefits.
    (b) Protection of States' Rights and Other Laws.--(1) Any issue 
that is not governed by any provision of law established by or under 
this title (including State standards of negligence) shall be governed 
by otherwise applicable State or Federal law.
    (2) This title shall not preempt or supersede any State or Federal 
law that imposes greater procedural or substantive protections for 
health care providers and health care organizations from liability, 
loss, or damages than those provided by this title or create a cause of 
action.
    (c) State Flexibility.--No provision of this title shall be 
construed to preempt--
            (1) any State law (whether effective before, on, or after 
        the date of the enactment of this title) that specifies a 
        particular monetary amount of compensatory or punitive damages 
        (or the total amount of damages) that may be awarded in a 
        health care lawsuit, regardless of whether such monetary amount 
        is greater or lesser than is provided for under this title, 
        notwithstanding section 4(a); or
            (2) any defense available to a party in a health care 
        lawsuit under any other provision of State or Federal law.

SEC. 514. APPLICABILITY; EFFECTIVE DATE.

    This title shall apply to any health care lawsuit brought in a 
Federal or State court, or subject to an alternative dispute resolution 
system, that is initiated on or after the date of the enactment of this 
title, except that any health care lawsuit arising from an injury 
occurring prior to the date of the enactment of this title shall be 
governed by the applicable statute of limitations provisions in effect 
at the time the injury occurred.

                   TITLE VI--WELLNESS AND PREVENTION

SEC. 601. PROVIDING FINANCIAL INCENTIVES FOR TREATMENT COMPLIANCE.

    (a) Limitation on Exception for Wellness Programs Under HIPAA 
Discrimination Rules.--
            (1) ERISA amendment.--Section 702(b)(2) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1182(b)(2)) 
        is amended by adding after and below subparagraph (B) the 
        following:
        ``In applying subparagraph (B), a group health plan (or a 
        health insurance issuer with respect to health insurance 
        coverage) may vary premiums and cost-sharing by up to 50 
        percent of the value of the benefits under the plan (or 
        coverage) based on participation (or lack of participation) in 
        a standards-based wellness program.''.
            (2) PHSA amendment.--Section 2702(b)(2) of the Public 
        Health Service Act (42 U.S.C. 300gg-1(b)(2)) is amended by 
        adding after and below subparagraph (B) the following:
        ``In applying subparagraph (B), a group health plan (or a 
        health insurance issuer with respect to health insurance 
        coverage) may vary premiums and cost-sharing by up to 50 
        percent of the value of the benefits under the plan (or 
        coverage) based on participation (or lack of participation) in 
        a standards-based wellness program.''.
            (3) IRC amendment.--Section 9802(b)(2) of the Internal 
        Revenue Code of 1986 is amended by adding after and below 
        subparagraph (B) the following:
        ``In applying subparagraph (B), a group health plan may vary 
        premiums and cost-sharing by up to 50 percent of the value of 
        the benefits under the plan based on participation (or lack of 
        participation) in a standards-based wellness program.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to plan years beginning more than 1 year after the date of the 
enactment of this Act.

         TITLE VII--TRANSPARENCY AND INSURANCE REFORM MEASURES

SEC. 701. RECEIPT AND RESPONSE TO REQUESTS FOR CLAIM INFORMATION.

    (a) In General.--Title XXVII of the Public Health Service Act is 
amended by inserting after section 2713 the following new section:

``SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR CLAIM INFORMATION.

    ``(a) Requirement.--
            ``(1) In general.--In the case of health insurance coverage 
        offered in connection with a group health plan, not later than 
        the 30th day after the date a health insurance issuer receives 
        a written request for a written report of claim information 
        from the plan, plan sponsor, or plan administrator, the health 
        insurance issuer shall provide the requesting party the report, 
        subject to the succeeding provisions of this section.
            ``(2) Exception.--The health insurance issuer is not 
        obligated to provide a report under this subsection regarding a 
        particular employer or group health plan more than twice in any 
        12-month period and is not obligated to provide such a report 
        in the case of an employer with fewer than 50 employees.
            ``(3) Deadline.--A plan, plan sponsor, or plan 
        administrator must request a report under this subsection 
        before or on the second anniversary of the date of termination 
        of coverage under a group health plan issued by the health 
        insurance issuer.
    ``(b) Form of Report; Information To Be Included.--
            ``(1) In general.--A health insurance issuer shall provide 
        the report of claim information under subsection (a)--
                    ``(A) in a written report;
                    ``(B) through an electronic file transmitted by 
                secure electronic mail or a file transfer protocol 
                site; or
                    ``(C) by making the required information available 
                through a secure Web site or Web portal accessible by 
                the requesting plan, plan sponsor, or plan 
                administrator.
            ``(2) Information to be included.--A report of claim 
        information provided under subsection (a) shall contain all 
        information available to the health insurance issuer that is 
        responsive to the request made under such subsection, 
        including, subject to subsection (c), protected health 
        information, for the 36-month period preceding the date of the 
        report or the period specified by subparagraphs (D), (E), and 
        (F) of paragraph (3), if applicable, or for the entire period 
        of coverage, whichever period is shorter.
            ``(3) Required information.--Subject to subsection (c), a 
        report provided under subsection (a) shall include the 
        following:
                    ``(A) Aggregate paid claims experience by month, 
                including claims experience for medical, dental, and 
                pharmacy benefits, as applicable.
                    ``(B) Total premium paid by month.
                    ``(C) Total number of covered employees on a 
                monthly basis by coverage tier, including whether 
                coverage was for--
                            ``(i) an employee only;
                            ``(ii) an employee with dependents only;
                            ``(iii) an employee with a spouse only; or
                            ``(iv) an employee with a spouse and 
                        dependents.
                    ``(D) The total dollar amount of claims pending as 
                of the date of the report.
                    ``(E) A separate description and individual claims 
                report for any individual whose total paid claims 
                exceed $15,000 during the 12-month period preceding the 
                date of the report, including the following information 
                related to the claims for that individual--
                            ``(i) a unique identifying number, 
                        characteristic, or code for the individual;
                            ``(ii) the amounts paid;
                            ``(iii) dates of service; and
                            ``(iv) applicable procedure codes and 
                        diagnosis codes.
                    ``(F) For claims that are not part of the 
                information described in a previous subparagraph, a 
                statement describing precertification requests for 
                hospital stays of 5 days or longer that were made 
                during the 30-day period preceding the date of the 
                report.
    ``(c) Limitations on Disclosure.--
            ``(1) In general.--A health insurance issuer may not 
        disclose protected health information in a report of claim 
        information provided under this section if the health insurance 
        issuer is prohibited from disclosing that information under 
        another State or Federal law that imposes more stringent 
        privacy restrictions than those imposed under Federal law under 
        the HIPAA privacy regulations. To withhold information in 
        accordance with this subsection, the health insurance issuer 
        must--
                    ``(A) notify the plan, plan sponsor, or plan 
                administrator requesting the report that information is 
                being withheld; and
                    ``(B) provide to the plan, plan sponsor, or plan 
                administrator a list of categories of claim information 
                that the health insurance issuer has determined are 
                subject to the more stringent privacy restrictions 
                under another State or Federal law.
            ``(2) Protection.--A plan sponsor is entitled to receive 
        protected health information under subparagraph (E) and (F) of 
        subsection (b)(3) and subsection (d) only after an 
        appropriately authorized representative of the plan sponsor 
        makes to the health insurance issuer a certification 
        substantially similar to the following certification: `I hereby 
        certify that the plan documents comply with the requirements of 
        section 164.504(f)(2) of title 45, Code of Federal Regulations, 
        and that the plan sponsor will safeguard and limit the use and 
        disclosure of protected health information that the plan 
        sponsor may receive from the group health plan to perform the 
        plan administration functions.'.
            ``(3) Results.--A plan sponsor that does not provide the 
        certification required by paragraph (2) is not entitled to 
        receive the protected health information described by 
        subparagraphs (E) and (F) of subsection (b)(3) and subsection 
        (d), but is entitled to receive a report of claim information 
        that includes the information described by subparagraphs (A) 
        through (D) of subsection (b)(3).
            ``(4) Information.--In the case of a request made under 
        subsection (a) after the date of termination of coverage, the 
        report must contain all information available to the health 
        insurance issuer as of the date of the report that is 
        responsive to the request, including protected health 
        information, and including the information described by 
        subsection (b)(3), for the period described by subsection 
        (b)(2) preceding the date of termination of coverage or for the 
        entire policy period, whichever period is shorter. 
        Notwithstanding this subsection, the report may not include the 
        protected health information described by subparagraphs (E) and 
        (F) of subsection (b)(3) unless a certification has been 
        provided in accordance with paragraph (2).
    ``(d) Request for Additional Information.--
            ``(1) Review.--On receipt of the report required by 
        subsection (a), the plan, plan sponsor, or plan administrator 
        may review the report and, not later than the 10th day after 
        the date the report is received, may make a written request to 
        the health insurance issuer for additional information in 
        accordance with this subsection for specified individuals.
            ``(2) Request.--With respect to a request for additional 
        information concerning specified individuals for whom claims 
        information has been provided under subsection (b)(3)(E), the 
        health insurance issuer shall provide additional information on 
        the prognosis or recovery if available and, for individuals in 
        active case management, the most recent case management 
        information, including any future expected costs and treatment 
        plan, that relate to the claims for that individual.
            ``(3) Response.--The health insurance issuer must respond 
        to the request for additional information under this subsection 
        not later than the 15th day after the date of such request 
        unless the requesting plan, plan sponsor, or plan administrator 
        agrees to a request for additional time.
            ``(4) Limitation.--The health insurance issuer is not 
        required to produce the report described by this subsection 
        unless a certification has been provided in accordance with 
        subsection (c)(2).
            ``(5) Compliance with section does not create liability.--A 
        health insurance issuer that releases information, including 
        protected health information, in accordance with this 
        subsection has not violated a standard of care and is not 
        liable for civil damages resulting from, and is not subject to 
        criminal prosecution for, releasing that information.
    ``(e) Limitation on Preemption.--Nothing in this section is meant 
to limit States from enacting additional laws in addition to the 
provisions of this section, but not in lieu of such provisions.
    ``(f) Definitions.--In this section:
            ``(1) The terms `employer', `plan administrator', and `plan 
        sponsor' have the meanings given such terms in section 3 of the 
        Employee Retirement Income Security Act of 1974.
            ``(2) The term `HIPAA privacy regulations' has the meaning 
        given such term in section 1180(b)(3) of the Social Security 
        Act.
            ``(3) The term `protected health information' has the 
        meaning given such term under the HIPAA privacy regulations.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act.

                          TITLE VIII--QUALITY

SEC. 801. PROHIBITION ON CERTAIN USES OF DATA OBTAINED FROM COMPARATIVE 
              EFFECTIVENESS RESEARCH; ACCOUNTING FOR PERSONALIZED 
              MEDICINE AND DIFFERENCES IN PATIENT TREATMENT RESPONSE.

    (a) In General.--Notwithstanding any other provision of law, the 
Secretary of Health and Human Services--
            (1) shall not use data obtained from the conduct of 
        comparative effectiveness research, including such research 
        that is conducted or supported using funds appropriated under 
        the American Recovery and Reinvestment Act of 2009 (Public Law 
        111-5), to deny coverage of an item or service under a Federal 
        health care program (as defined in section 1128B(f) of the 
        Social Security Act (42 U.S.C. 1320a-7b(f))); and
            (2) shall ensure that comparative effectiveness research 
        conducted or supported by the Federal Government accounts for 
        factors contributing to differences in the treatment response 
        and treatment preferences of patients, including patient-
        reported outcomes, genomics and personalized medicine, the 
        unique needs of health disparity populations, and indirect 
        patient benefits.
    (b) Consultation and Approval Required.--Nothing the Federal 
Coordinating Council for Comparative Effectiveness Research finds can 
be released in final form until after consultation with and approved by 
relevant physician specialty organizations.
    (c) Rule of Construction.--Nothing in this section shall be 
construed as affecting the authority of the Commissioner of Food and 
Drugs under the Federal Food, Drug, and Cosmetic Act or the Public 
Health Service Act.

SEC. 802. ESTABLISHMENT OF PERFORMANCE-BASED QUALITY MEASURES.

    Not later than January 1, 2012, the Secretary of Health and Human 
Services shall submit to Congress a proposal for a formalized process 
for the development of performance-based quality measures that could be 
applied to physicians' services under the Medicare program under title 
XVIII of the Social Security Act. Such proposal shall be in concert and 
agreement with the Physician Consortium for Performance Improvement and 
shall only utilize measures agreed upon by each physician specialty 
organization.

                TITLE IX--STATE TRANSPARENCY PLAN PORTAL

SEC. 901. PROVIDING INFORMATION ON HEALTH COVERAGE OPTIONS AND HEALTH 
              CARE PROVIDERS.

    (a) State-Based Portal.--A State (by itself or jointly with other 
States) may contract with a private entity to establish a Health Plan 
and Provider Portal Web site (referred to in this section as a ``plan 
portal'') for the purposes of providing standardized information--
            (1) on health insurance plans that have been certified to 
        be available for purchase in that State; and
            (2) on price and quality information on health care 
        providers (including physicians, hospitals, and other health 
        care institutions).
    (b) Pilot Program.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act the Secretary of Health and Human 
        Services shall work with States to establish no later than 
        January 1, 2013, consistent with this title, a Web site that 
        will serve as a pilot program for a national portal for 
        information structured in a manner so individuals may directly 
        link to the State plan portal for the State in which they 
        reside.
            (2) Contracts with state.--The Secretary shall enter into 
        contracts with States, in a number and distribution determined 
        by the Secretary, to develop State plan portals that follow the 
        applicable standards and regulations under this section.
            (3) Common standards for plan portals.--
                    (A) In general.--In connection with such Web site, 
                the Secretary shall establish standards for 
                interoperability and consistency for State plan portals 
                so that individuals can access and view information in 
                a similar manner on plan portals of different States. 
                Such standards shall include standard definitions for 
                health insurance plan benefits so that individuals can 
                accurately compare health insurance plans within such 
                portals and standards for the inclusion of information 
                described in subsection (c).
                    (B) Consultation.--The Secretary shall consult with 
                a group consisting of a balanced representation of the 
                critical stakeholders (including States, health 
                insurance issuers, the National Association of 
                Insurance Commissioners, qualified health care 
                provider-based entities (including physicians, 
                hospitals, and other health care institutions), and a 
                standards development organization) to develop such 
                standards.
                    (C) Issuance.--
                            (i) In general.--Not later than 6 months 
                        after the date of the enactment of this Act, 
                        the Secretary shall issue, by regulation, after 
                        notice and opportunity for public comment, 
                        standards that are consistent with the 
                        recommendations made by the group under 
                        subparagraph (B).
                            (ii) Dissemination.--The Secretary shall 
                        broadly disseminate the standards so issued.
                    (D) Review.--One year after the date of 
                establishment of the pilot program under this 
                subsection, the Secretary, in consultation with 
                stakeholder group described in subparagraph (B), shall 
                review the standards established and make such changes 
                in such standards as may be appropriate.
            (4) Authorization of appropriations.--There are authorized 
        to be appropriated to the Secretary such amounts as may be 
        necessary for--
                    (A) the development and operation of the national 
                Web site under this subsection; and
                    (B) contracts with States under paragraph (2) to 
                assist in the development and initial operation of plan 
                portals in accordance with standards established under 
                paragraph (3) and other applicable provisions of this 
                section.
    (c) Information in Plan Portals.--The standards for plan portals 
under subsection (b)(3) shall include the following:
            (1) Health insurance information.--Each plan portal shall 
        meet the following requirements with respect to information on 
        health insurance plans:
                    (A) The plan portal shall present complete 
                information on the costs and benefits of health 
                insurance plans (including information on monthly 
                premium, copayments, deductibles, and covered benefits) 
                in a uniform manner that--
                            (i) uses the standard definitions developed 
                        under subsection (b)(3); and
                            (ii) is designed to allow consumers to 
                        easily compare such plans.
                    (B) The plan portal shall be available on the 
                internet and accessible to all individuals in the 
                United States.
                    (C) The plan portal shall allow consumers to search 
                and sort data on the health insurance plans in the plan 
                portal on criteria such as coverage of specific 
                benefits (such as coverage of disease management 
                services or pediatric care services), as well as data 
                available respecting quality of plans.
                    (D) The plan portal shall meet all relevant State 
                laws and regulations, including laws and regulations 
                related to the marketing of insurance products.
                    (E) Notwithstanding subsection (d)(1), the plan 
                portal shall provide information to individuals who are 
                eligible for the Medicaid program under title XIX of 
                the Social Security Act or State Children's Health 
                Insurance Program under title XXI of such Act by 
                including information on options, eligibility, and how 
                to enroll through providing a link to a Web site 
                maintained with respect to such State programs.
                    (F) The plan portal shall provide support to 
                individuals who are eligible for tax credits and 
                deductions under the amendments made by this Act to 
                enhance such individual's ability to access such 
                credits and deductions.
                    (G) The plan portal shall allow consumers to access 
                quality data on providers as made available through a 
                Web site described in section 802 once that data is 
                available.
            (2) Provider information.--Each plan portal shall meet the 
        following requirements with respect to information on health 
        care providers:
                    (A) Identifying and licensure information.
                    (B) Self-pay prices charged, including variation in 
                such prices.
        For purposes of subparagraph (B), the term ``self-pay price'' 
        means the price charged by a provider to individuals for items 
        or services where the price is not established or negotiated 
        through a health care program or third party.
            (3) Tax credit and deduction information.--Each plan portal 
        shall also include information on tax credits and deductions 
        that may be available for purpose of qualified health plans.
            (4) Inclusion of quality information.--The Secretary, after 
        collaboration with States and health care providers (including 
        practicing physicians, hospitals, and other health care 
        institutions), shall submit to Congress recommendations on how 
        to include on plan portals information on performance-based 
        quality measures obtained under section 802.
    (d) Prohibitions.--
            (1) Direct enrollment.--A plan portal may not directly 
        enroll individuals in health insurance plans or under a State 
        Medicaid plan or a State children's health insurance plan.
            (2) Conflicts of interest.--
                    (A) Companies.--A health insurance issuer offering 
                a health insurance plan through a plan portal may not--
                            (i) be the private entity developing and 
                        maintaining a plan portal under this section; 
                        or
                            (ii) have an ownership interest in such 
                        private entity or in the plan portal.
                    (B) Individuals.--An individual employed by a 
                health insurance issuer offering a health insurance 
                plan through a plan portal may not serve as a director 
                or officer for--
                            (i) the private entity developing and 
                        maintaining a plan portal under this section; 
                        or
                            (ii) the plan portal.
    (e) Construction.--Nothing in this section shall be construed to 
prohibit health insurance brokers and agents from--
            (1) utilizing the plan portal for any purpose; or
            (2) marketing or offering health insurance products.
    (f) State Defined.--In this section, the term ``State'' has the 
meaning given such term for purposes of title XIX of the Social 
Security Act.
    (g) Health Insurance Plans.--For purposes of this section, the term 
``health insurance plan'' does not include coverage of excepted 
benefits, as defined in section 2791(c) of the Public Health Service 
Act (42 U.S.C. 300gg-91(c)).

                   TITLE X--PATIENT FREEDOM OF CHOICE

SEC. 1001. GUARANTEEING FREEDOM OF CHOICE AND CONTRACTING FOR PATIENTS 
              UNDER MEDICARE.

    (a) In General.--Section 1802 of the Social Security Act (42 U.S.C. 
1395a) is amended to read as follows:

       ``freedom of choice and contracting by patient guaranteed

    ``Sec. 1802.  (a) Basic Freedom of Choice.--Any individual entitled 
to insurance benefits under this title may obtain health services from 
any institution, agency, or person qualified to participate under this 
title if such institution, agency, or person undertakes to provide that 
individual such services.
    ``(b) Freedom To Contract by Medicare Beneficiaries.--
            ``(1) In general.--Subject to the provisions of this 
        subsection, nothing in this title shall prohibit a Medicare 
        beneficiary from entering into a contract with an eligible 
        professional (whether or not the professional is a 
        participating or non-participating physician or practitioner) 
        for any item or service covered under this title.
            ``(2) Submission of claims.--Any Medicare beneficiary that 
        enters into a contract under this section with an eligible 
        professional shall be permitted to submit a claim for payment 
        under this title for services furnished by such professional, 
        and such payment shall be made in the amount that would 
        otherwise apply to such professional under this title except 
        that where such professional is considered to be non-
        participating, payment shall be paid as if the professional 
        were participating. Payment made under this title for any item 
        or service provided under the contract shall not render the 
        professional a participating or non-participating physician or 
        practitioner, and as such, requirements of this title that may 
        otherwise apply to a participating or non-participating 
        physician or practitioner would not apply with respect to any 
        items or services furnished under the contract.
            ``(3) Beneficiary protections.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any contract unless--
                            ``(i) the contract is in writing, is signed 
                        by the Medicare beneficiary and the eligible 
                        professional, and establishes all terms of the 
                        contract (including specific payment for items 
                        and services covered by the contract) before 
                        any item or service is provided pursuant to the 
                        contract, and the beneficiary shall be held 
                        harmless for any subsequent payment charged for 
                        an item or service in excess of the amount 
                        established under the contract during the 
                        period the contract is in effect;
                            ``(ii) the contract contains the items 
                        described in subparagraph (B); and
                            ``(iii) the contract is not entered into at 
                        a time when the Medicare beneficiary is facing 
                        an emergency medical condition or urgent health 
                        care situation.
                    ``(B) Items required to be included in contract.--
                Any contract to provide items and services to which 
                paragraph (1) applies shall clearly indicate to the 
                Medicare beneficiary that by signing such contract the 
                beneficiary--
                            ``(i) agrees to be responsible for payment 
                        to such eligible professional for such items or 
                        services under the terms of and amounts 
                        established under the contract;
                            ``(ii) agrees to be responsible for 
                        submitting claims under this title to the 
                        Secretary, and to any other supplemental 
                        insurance plan that may provide supplemental 
                        insurance, for such items or services furnished 
                        under the contract if such items or services 
                        are covered by this title, unless otherwise 
                        provided in the contract under subparagraph 
                        (C)(i); and
                            ``(iii) acknowledges that no limits or 
                        other payment incentives that may otherwise 
                        apply under this title (such as the limits 
                        under subsection (g) of section 1848 or 
                        incentives under subsection (a)(5), (m), (q), 
                        and (p) of such section) shall apply to amounts 
                        that may be charged, or paid to a beneficiary 
                        for, such items or services.
                Such contract shall also clearly indicate whether the 
                eligible professional is excluded from participation 
                under the Medicare program under section 1128.
                    ``(C) Beneficiary elections under the contract.--
                Any Medicare beneficiary that enters into a contract 
                under this section may elect to negotiate, as a term of 
                the contract, a provision under which--
                            ``(i) the eligible professional shall file 
                        claims on behalf of the beneficiary with the 
                        Secretary and any supplemental insurance plan 
                        for items or services furnished under the 
                        contract if such items or services are covered 
                        under this title or under the plan; and
                            ``(ii) the beneficiary assigns payment to 
                        the eligible professional for any claims filed 
                        by, or on behalf of, the beneficiary with the 
                        Secretary and any supplemental insurance plan 
                        for items or services furnished under the 
                        contract.
                    ``(D) Exclusion of dual eligible individuals.--
                Paragraph (1) shall not apply to any contract if a 
                beneficiary who is eligible for medical assistance 
                under title XIX is a party to the contract.
            ``(4) Limitation on actual charge and claim submission 
        requirement not applicable.--Section 1848(g) shall not apply 
        with respect to any item or service provided to a Medicare 
        beneficiary under a contract described in paragraph (1).
            ``(5) Construction.--Nothing in this section shall be 
        construed--
                    ``(A) to prohibit any eligible professional from 
                maintaining an election and acting as a participating 
                or non-participating physician or practitioner with 
                respect to any patient not covered under a contract 
                established under this section; and
                    ``(B) as changing the items and services for which 
                an eligible professional may bill under this title.
            ``(6) Definitions.--In this subsection:
                    ``(A) Medicare beneficiary.--The term `Medicare 
                beneficiary' means an individual who is entitled to 
                benefits under part A or enrolled under part B.
                    ``(B) Eligible professional.--The term `eligible 
                professional' has the meaning given such term in 
                section 1848(k)(3)(B).
                    ``(C) Emergency medical condition.--The term 
                `emergency medical condition' means a medical condition 
                manifesting itself by acute symptoms of sufficient 
                severity (including severe pain) such that a prudent 
                layperson, with an average knowledge of health and 
                medicine, could reasonably expect the absence of 
                immediate medical attention to result in--
                            ``(i) serious jeopardy to the health of the 
                        individual or, in the case of a pregnant woman, 
                        the health of the woman or her unborn child;
                            ``(ii) serious impairment to bodily 
                        functions; or
                            ``(iii) serious dysfunction of any bodily 
                        organ or part.
                    ``(D) Urgent health care situation.--The term 
                `urgent health care situation' means services furnished 
                to an individual who requires services to be furnished 
                within 12 hours in order to avoid the likely onset of 
                an emergency medical condition.''.

SEC. 1002. PREEMPTION OF STATE LAWS LIMITING CHARGES FOR ELIGIBLE 
              PROFESSIONAL SERVICES.

    (a) In General.--No State may impose a limit on the amount of 
charges for services, furnished by an eligible professional (as defined 
in subsection (k)(3)(B) of section 1848 of the Social Security Act, 42 
U.S.C. 1395w-4), for which payment is made under such section, and any 
such limit is hereby preempted.
    (b) State.--In this section, the term ``State'' includes the 
District of Columbia, Puerto Rico, the Virgin Islands, Guam, and 
American Samoa.

SEC. 1003. HEALTH CARE PROVIDER LICENSURE CANNOT BE CONDITIONED ON 
              PARTICIPATION IN A HEALTH PLAN.

    (a) In General.--The Secretary of Health and Human Services and any 
State (as a condition of receiving Federal financial participation 
under title XIX of the Social Security Act) may not require any health 
care provider to participate in any health plan as a condition of 
licensure of the provider in any State.
    (b) Definitions.--In this section:
            (1) Health plan.--The term ``health plan'' has the meaning 
        given such term in section 1171(5) of the Social Security Act 
        (42 U.S.C. 1320d(5)).
            (2) Health care provider.--The term ``health care 
        provider'' means any person or entity that is required by State 
        or Federal laws or regulations to be licensed, registered, or 
        certified to provide health care services and is so licensed, 
        registered, or certified, or exempted from such requirement by 
        other statute or regulation.
            (3) State.--The term ``State'' has the meaning given such 
        term for purposes of title XIX of the Social Security Act.

SEC. 1004. BAD DEBT DEDUCTION FOR DOCTORS TO PARTIALLY OFFSET THE COST 
              OF PROVIDING UNCOMPENSATED CARE REQUIRED TO BE PROVIDED 
              UNDER AMENDMENTS MADE BY THE EMERGENCY MEDICAL TREATMENT 
              AND LABOR ACT.

    (a) In General.--Section 166 of the Internal Revenue Code of 1986 
(relating to bad debts) is amended by redesignating subsection (f) as 
subsection (g) and by inserting after subsection (e) the following new 
subsection:
    ``(f) Bad Debt Treatment for Doctors To Partially Offset Cost of 
Providing Uncompensated Care Required To Be Provided.--
            ``(1) Amount of deduction.--
                    ``(A) In general.--For purposes of subsection (a), 
                the basis for determining the amount of any deduction 
                for an eligible EMTALA debt shall be treated as being 
                equal to the Medicare payment amount.
                    ``(B) Medicare payment amount.--For purposes of 
                subparagraph (A), the Medicare payment amount with 
                respect to an eligible EMTALA debt is the fee schedule 
                amount established under section 1848 of the Social 
                Security Act for the physicians' service (to which such 
                debt relates) as if the service were provided to an 
                individual enrolled under part B of title XVIIII of 
                such Act.
            ``(2) Eligible emtala debt.--For purposes of this section, 
        the term `eligible EMTALA debt' means any debt if--
                    ``(A) such debt arose as a result of physicians' 
                services--
                            ``(i) which were performed in an EMTALA 
                        hospital by a board-certified physician 
                        (whether as part of medical screening or 
                        necessary stabilizing treatment and whether as 
                        an emergency department physician, as an on-
                        call physician, or otherwise), and
                            ``(ii) which were required to be provided 
                        under section 1867 of the Social Security Act 
                        (42 U.S.C. 1395dd), and
                    ``(B) such debt is owed--
                            ``(i) to such physician, or
                            ``(ii) to an entity if--
                                    ``(I) such entity is a corporation 
                                and the sole shareholder of such 
                                corporation is such physician, or
                                    ``(II) such entity is a partnership 
                                and any deduction under this subsection 
                                with respect to such debt is allocated 
                                to such physician or to an entity 
                                described in subclause (I).
            ``(3) Board-certified physician.--For purposes of this 
        subsection, the term `board-certified physician' means any 
        physician (as defined in section 1861(r) of the Social Security 
        Act (42 U.S.C. 1395x(r)) who is certified by the American Board 
        of Emergency Medicine or other appropriate medical specialty 
        board for the specialty in which the physician practices, or 
        who meets comparable requirements, as identified by the 
        Secretary of the Treasury in consultation with Secretary of 
        Health and Human Services.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) EMTALA hospital.--The term `EMTALA hospital' 
                means any hospital having a hospital emergency 
                department which is required to comply with section 
                1867 of the Social Security Act (42 U.S.C. 1395dd) 
                (relating to examination and treatment for emergency 
                medical conditions and women in labor).
                    ``(B) Physicians' services.--The term `physicians' 
                services' has the meaning given such term in section 
                1861(q) of the Social Security Act (42 U.S.C. 
                1395x(q)).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to debts arising from services performed in taxable years 
beginning after the date of the enactment of this Act.

SEC. 1005. RIGHT OF CONTRACT WITH HEALTH CARE PROVIDERS.

    (a) In General.--The Secretary of Health and Human Services shall 
not preclude an enrollee, participant, or beneficiary in a health 
benefits plan from entering into any contract or arrangement for health 
care with any health care provider.
    (b) Health Benefits Plan Defined.--
            (1) In general.--In this section, subject to paragraph (2), 
        the term ``health benefits plan'' means any of the following:
                    (A) Group health plan (as defined in section 2791 
                of the Public Health Service Act).
                    (B) Health insurance coverage (as defined in 
                section 2791 of such Act).
                    (C) A health benefits plan under chapter 89 of 
                title 5, United States Code.
            (2) Exclusion of medicaid and tricare.--Such term does not 
        include a health plan participating in--
                    (A) the Medicaid program under title XIX of the 
                Social Security Act; or
                    (B) the TRICARE program under chapter 55 of title 
                10, United States Code.
    (c) Health Care Provider Defined.--In this section, the term 
``health care provider'' means--
            (1) a physician, as defined in paragraphs (1), (2), (3), 
        and (4) of section 1861(r) of the Social Security Act (42 
        U.S.C. 1395x(r)); and
            (2) a health care practitioner described in section 
        1842(b)(18)(C) of such Act (42 U.S.C. 1395u(b)(18)(C)).

           TITLE XI--INCENTIVES TO REDUCE PHYSICIAN SHORTAGES

Subtitle A--Federally Supported Student Loan Funds for Medical Students

SEC. 1101. FEDERALLY SUPPORTED STUDENT LOAN FUNDS FOR MEDICAL STUDENTS.

    (a) Primary Health Care Medical Students.--Subpart II of part A of 
the Public Health Service Act (42 U.S.C. 292q et seq.) is amended--
            (1) by redesignating section 735 as section 729; and
            (2) in subsection (f) of section 729 (as so redesignated), 
        by striking ``is authorized to be appropriated $10,000,000 for 
        each of the fiscal years 1994 through 1996'' and inserting 
        ``are authorized to be appropriated such sums as may be 
        necessary for fiscal year 2012 and each fiscal year 
        thereafter''.
    (b) Other Medical Students.--Part A of title VII of the Public 
Health Service Act (42 U.S.C. 292 et seq.) is amended by adding at the 
end the following:

   ``Subpart III--Federally Supported Student Loan Funds for Certain 
                            Medical Students

``SEC. 730. SCHOOL LOAN FUNDS FOR CERTAIN MEDICAL STUDENTS.

    ``(a) Fund Agreements.--For the purpose described in subsection 
(b), the Secretary is authorized to enter into an agreement for the 
establishment and operation of a student loan fund with any public or 
nonprofit school of medicine or osteopathic medicine.
    ``(b) Purpose.--The purpose of this subpart is to provide for loans 
to medical students who would be eligible for a loan under subpart II, 
except for the student's decision to enter a residency training program 
in a field other than primary health care.
    ``(c) Commencement of Repayment Period.--The repayment period for a 
loan under this section shall not begin before the end of any period 
during which the student is participating in an internship, residency, 
or fellowship training program directly related to the field of 
medicine which the student agrees to enter pursuant to subsection (d).
    ``(d) Requirements for Students.--Each agreement under this section 
for the establishment of a student loan fund shall provide that the 
school of medicine or osteopathic medicine will make a loan to a 
student from such fund only if the student agrees--
            ``(1) to enter and complete a residency training program 
        (in a field of medicine other than primary health care) not 
        later than a period determined by the Secretary to be 
        reasonable after the date on which the student graduates from 
        such school; and
            ``(2) to practice medicine through the date on which the 
        loan is repaid in full.
    ``(e) Requirements for Schools.--The provisions of section 723(b) 
(regarding graduates in primary health care) shall not apply to a 
student loan fund established under this section.
    ``(f) Applicability of Other Provisions.--Except as inconsistent 
with this section, the provisions of subpart II shall apply to the 
program of student loan funds established under this section to the 
same extent and in the same manner as such provisions apply to the 
program of student loan funds established under subpart II.
    ``(g) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated such sums as may be necessary 
for fiscal year 2012 and each fiscal year thereafter.''.

        Subtitle B--Loan Forgiveness for Primary Care Providers

SEC. 1111. LOAN FORGIVENESS FOR PRIMARY CARE PROVIDERS.

    (a) In General.--The Secretary of Health and Human Services shall 
carry out a program of entering into contracts with eligible 
individuals under which--
            (1) the individual agrees to serve for a period of not less 
        than 5 years as a primary care provider; and
            (2) in consideration of such service, the Secretary agrees 
        to pay not more than $50,000 on the principal and interest on 
        the individual's graduate educational loans.
    (b) Eligibility.--To be eligible to enter into a contract under 
subsection (a), an individual must--
            (1) have a graduate degree in medicine, osteopathic 
        medicine, or another health profession from an accredited (as 
        determined by the Secretary of Health and Human Services) 
        institution of higher education; and
            (2) have practiced as a primary care provider for a period 
        (excluding any residency or fellowship training period) of not 
        less than--
                    (A) 5 years; or
                    (B) 3 years in a medically underserved community 
                (as defined in section 799B of the Public Health 
                Service Act (42 U.S.C. 295p)).
    (c) Installments.--Payments under this section may be made in 
installments of not more than $10,000 for each year of service 
described in subsection (a)(1).
    (d) Applicability of Certain Provisions.--The provisions of subpart 
III of part D of title III of the Public Health Service Act shall, 
except as inconsistent with this section, apply to the program 
established under this section in the same manner and to the same 
extent as such provisions apply to the National Health Service Corps 
Loan Repayment Program established in such subpart.

                TITLE XII--QUALITY HEALTH CARE COALITION

SEC. 1201. QUALITY HEALTH CARE COALITION.

    (a) Application of the Federal Antitrust Laws to Health Care 
Professionals Negotiating With Health Plans.--
            (1) In general.--Any health care professionals who are 
        engaged in negotiations with a health plan regarding the terms 
        of any contract under which the professionals provide health 
        care items or services for which benefits are provided under 
        such plan shall, in connection with such negotiations, be 
        exempt from the Federal antitrust laws.
            (2) Limitation.--
                    (A) No new right for collective cessation of 
                service.--The exemption provided in paragraph (1) shall 
                not confer any new right to participate in any 
                collective cessation of service to patients not already 
                permitted by existing law.
                    (B) No change in national labor relations act.--
                This section applies only to health care professionals 
                excluded from the National Labor Relations Act. Nothing 
                in this section shall be construed as changing or 
                amending any provision of the National Labor Relations 
                Act, or as affecting the status of any group of persons 
                under that Act.
            (3) No application to federal programs.--Nothing in this 
        section shall apply to negotiations between health care 
        professionals and health plans pertaining to benefits provided 
        under any of the following:
                    (A) The Medicare Program under title XVIII of the 
                Social Security Act (42 U.S.C. 1395 et seq.).
                    (B) The Medicaid program under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.).
                    (C) The SCHIP program under title XXI of the Social 
                Security Act (42 U.S.C. 1397aa et seq.).
                    (D) Chapter 55 of title 10, United States Code 
                (relating to medical and dental care for members of the 
                uniformed services).
                    (E) Chapter 17 of title 38, United States Code 
                (relating to Veterans' medical care).
                    (F) Chapter 89 of title 5, United States Code 
                (relating to the Federal employees' health benefits 
                program).
                    (G) The Indian Health Care Improvement Act (25 
                U.S.C. 1601 et seq.).
    (b) Definitions.--In this section, the following definitions shall 
apply:
            (1) Antitrust laws.--The term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition; and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A).
            (2) Group health plan.--The term ``group health plan'' 
        means an employee welfare benefit plan to the extent that the 
        plan provides medical care (including items and services paid 
        for as medical care) to employees or their dependents (as 
        defined under the terms of the plan) directly or through 
        insurance, reimbursement, or otherwise.
            (3) Group health plan, health insurance issuer.--The terms 
        ``group health plan'' and ``health insurance issuer'' include a 
        third-party administrator or other person acting for or on 
        behalf of such plan or issuer.
            (4) Health care services.--The term ``health care 
        services'' means any services for which payment may be made 
        under a health plan, including services related to the delivery 
        or administration of such services.
            (5) Health care professional.--The term ``health care 
        professional'' means any individual or entity that provides 
        health care items or services, treatment, assistance with 
        activities of daily living, or medications to patients and who, 
        to the extent required by State or Federal law, possesses 
        specialized training that confers expertise in the provision of 
        such items or services, treatment, assistance, or medications.
            (6) Health insurance coverage.--The term ``health insurance 
        coverage'' means benefits consisting of medical care (provided 
        directly, through insurance or reimbursement, or otherwise and 
        including items and services paid for as medical care) under 
        any hospital or medical service policy or certificate, hospital 
        or medical service plan contract, or health maintenance 
        organization contract offered by a health insurance issuer.
            (7) Health insurance issuer.--The term ``health insurance 
        issuer'' means an insurance company, insurance service, or 
        insurance organization (including a health maintenance 
        organization) that is licensed to engage in the business of 
        insurance in a State and that is subject to State law 
        regulating insurance. Such term does not include a group health 
        plan.
            (8) Health maintenance organization.--The term ``health 
        maintenance organization'' means--
                    (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a) of the 
                Public Health Service Act (42 U.S.C. 300e(a)));
                    (B) an organization recognized under State law as a 
                health maintenance organization; or
                    (C) a similar organization regulated under State 
                law for solvency in the same manner and to the same 
                extent as such a health maintenance organization.
            (9) Health plan.--The term ``health plan'' means a group 
        health plan or a health insurance issuer that is offering 
        health insurance coverage.
            (10) Medical care.--The term ``medical care'' means amounts 
        paid for--
                    (A) the diagnosis, cure, mitigation, treatment, or 
                prevention of disease, or amounts paid for the purpose 
                of affecting any structure or function of the body; and
                    (B) transportation primarily for and essential to 
                receiving items and services referred to in 
                subparagraph (A).
            (11) Person.--The term ``person'' includes a State or unit 
        of local government.
            (12) State.--The term ``State'' includes the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands of the United States, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.
    (c) Effective Date.--This section shall take effect on on the date 
of the enactment of this Act and shall not apply with respect to 
conduct occurring before such date.

                          TITLE XIII--OFFSETS

               Subtitle A--Discretionary Spending Limits

SEC. 1301. DISCRETIONARY SPENDING LIMITS.

    Section 251(c) of the Balanced Budget and Emergency Deficit Control 
Act of 1985 (2 U.S.C. 901(c)), as amended by section 101 of the Budget 
Control Act of 2011, is amended to read as follows:
    ``(c) Discretionary Spending Limit.--As used in this part, the term 
`discretionary spending limit' means--
            ``(1) with respect to fiscal year 2012--
                    ``(A) for the security category, $684,000,000,000 
                in new budget authority; and
                    ``(B) for the nonsecurity category, 
                $359,000,000,000 in new budget authority;
            ``(2) with respect to fiscal year 2013--
                    ``(A) for the security category, $698,000,000,000 
                in new budget authority; and
                    ``(B) for the nonsecurity category, 
                $329,000,000,000 in new budget authority;
            ``(3) with respect to fiscal year 2014, for the 
        discretionary category, $1,038,537,000,000 in new budget 
        authority;
            ``(4) with respect to fiscal year 2015, for the 
        discretionary category, $1,046,680,000,000 in new budget 
        authority;
            ``(5) with respect to fiscal year 2016, for the 
        discretionary category, $1,055,779,000,000 in new budget 
        authority;
            ``(6) with respect to fiscal year 2017, for the 
        discretionary category, $1,067,794,000,000 in new budget 
        authority;
            ``(7) with respect to fiscal year 2018, for the 
        discretionary category, $1,085,259,000,000 in new budget 
        authority;
            ``(8) with respect to fiscal year 2019, for the 
        discretionary category, $1,103,802,000,000 in new budget 
        authority;
            ``(9) with respect to fiscal year 2020, for the 
        discretionary category, $1,122,611,000,000 in new budget 
        authority; and
            ``(10) with respect to fiscal year 2021, for the 
        discretionary category, $1,141,640,000,000 in new budget 
        authority;
as adjusted in strict conformance with subsection (b).''.

           Subtitle B--Savings From Health Care Efficiencies

SEC. 1311. MEDICARE DSH REPORT AND PAYMENT ADJUSTMENTS IN RESPONSE TO 
              COVERAGE EXPANSION.

    (a) DSH Report.--
            (1) In general.--Not later than January 1, 2016, the 
        Secretary of Health and Human Services shall submit to Congress 
        a report on Medicare DSH taking into account the impact of the 
        health care reforms carried out under this Act in reducing the 
        number of uninsured individuals. The report shall include 
        recommendations relating to the following:
                    (A) The appropriate amount, targeting, and 
                distribution of Medicare DSH to compensate for higher 
                Medicare costs associated with serving low-income 
                beneficiaries (taking into account variations in the 
                empirical justification for Medicare DSH attributable 
                to hospital characteristics, including bed size), 
                consistent with the original intent of Medicare DSH.
                    (B) The appropriate amount, targeting, and 
                distribution of Medicare DSH to hospitals given their 
                continued uncompensated care costs, to the extent such 
                costs remain.
            (2) Coordination with medicaid dsh report.--The Secretary 
        shall coordinate the report under this subsection with the 
        report on Medicaid DSH under section 1322(a).
    (b) Payment Adjustments in Response to Coverage Expansion.--
            (1) In general.--If there is a significant decrease in the 
        national rate of uninsurance as a result of this Act (as 
        determined under paragraph (2)(A)), then the Secretary of 
        Health and Human Services shall, beginning in fiscal year 2017, 
        implement the following adjustments to Medicare DSH:
                    (A) In lieu of the amount of Medicare DSH payment 
                that would otherwise be made under section 
                1886(d)(5)(F) of the Social Security Act, the amount of 
                Medicare DSH payment shall be an amount based on the 
                recommendations of the report under subsection 
                (a)(1)(A) and shall take into account variations in the 
                empirical justification for Medicare DSH attributable 
                to hospital characteristics, including bed size.
                    (B) Subject to paragraph (3), make an additional 
                payment to a hospital by an amount that is estimated 
                based on the amount of uncompensated care provided by 
                the hospital based on criteria for uncompensated care 
                as determined by the Secretary, which shall exclude bad 
                debt.
            (2) Significant decrease in national rate of uninsurance as 
        a result of this act.--For purposes of this subsection--
                    (A) In general.--There is a ``significant decrease 
                in the national rate of uninsurance as a result of this 
                Act'' if there is a decrease in the national rate of 
                uninsurance (as defined in subparagraph (B)) from 2012 
                to 2014 that exceeds 8 percentage points.
                    (B) National rate of uninsurance defined.--The term 
                ``national rate of uninsurance'' means, for a year, 
                such rate for the under-65 population for the year as 
                determined and published by the Bureau of the Census in 
                its Current Population Survey in or about September of 
                the succeeding year.
            (3) Uncompensated care increase.--
                    (A) Computation of dsh savings.--For each fiscal 
                year (beginning with fiscal year 2015), the Secretary 
                shall estimate the aggregate reduction in Medicare DSH 
                that will result from the adjustment under paragraph 
                (1)(A).
                    (B) Structure of payment increase.--The Secretary 
                shall compute the increase in Medicare DSH under 
                paragraph (1)(B) for a fiscal year in accordance with a 
                formula established by the Secretary that provides 
                that--
                            (i) the aggregate amount of such increase 
                        for the fiscal year does not exceed 50 percent 
                        of the aggregate reduction in Medicare DSH 
                        estimated by the Secretary for such fiscal 
                        year; and
                            (ii) hospitals with higher levels of 
                        uncompensated care receive a greater increase.
    (c) Medicare DSH.--In this section, the term ``Medicare DSH'' means 
adjustments in payments under section 1886(d)(5)(F) of the Social 
Security Act (42 U.S.C. 1395ww(d)(5)(F)) for inpatient hospital 
services furnished by disproportionate share hospitals.

SEC. 1312. REDUCTION IN MEDICAID DSH.

    (a) Report.--
            (1) In general.--Not later than January 1, 2016, the 
        Secretary of Health and Human Services (in this title referred 
        to as the ``Secretary'') shall submit to Congress a report 
        concerning the extent to which, based upon the impact of the 
        health care reforms carried out under this Act in reducing the 
        number of uninsured individuals, there is a continued role for 
        Medicaid DSH. In preparing the report, the Secretary shall 
        consult with community-based health care networks serving low-
        income beneficiaries.
            (2) Matters to be included.--The report shall include the 
        following:
                    (A) Recommendations.--Recommendations regarding--
                            (i) the appropriate targeting of Medicaid 
                        DSH within States; and
                            (ii) the distribution of Medicaid DSH among 
                        the States.
                    (B) Specification of dsh health reform 
                methodology.--The DSH Health Reform methodology 
                described in paragraph (2) of subsection (b) for 
                purposes of implementing the requirements of such 
                subsection.
            (3) Coordination with medicare dsh report.--The Secretary 
        shall coordinate the report under this subsection with the 
        report on Medicare DSH under section 1321.
            (4) Medicaid dsh.--In this section, the term ``Medicaid 
        DSH'' means adjustments in payments under section 1923 of the 
        Social Security Act for inpatient hospital services furnished 
        by disproportionate share hospitals.
    (b) Medicaid DSH Reductions.--
            (1) In general.--If there is a significant decrease in the 
        national rate of uninsurance as a result of this Act (as 
        determined under section 1321(a)(2)(A)), then the Secretary of 
        Health and Human Services shall reduce Medicaid DSH so as to 
        reduce total Federal payments to all States for such purpose by 
        $1,500,000,000 in fiscal year 2017, $2,500,000,000 in fiscal 
        year 2018, and $6,000,000,000 in fiscal year 2019.
            (2) DSH health reform methodology.--The Secretary shall 
        carry out paragraph (1) through use of a DSH Health Reform 
        methodology issued by the Secretary that imposes the largest 
        percentage reductions on the States that--
                    (A) have the lowest percentages of uninsured 
                individuals (determined on the basis of audited 
                hospital cost reports) during the most recent year for 
                which such data are available; or
                    (B) do not target their DSH payments on--
                            (i) hospitals with high volumes of Medicaid 
                        inpatients (as defined in section 1923(b)(1)(A) 
                        of the Social Security Act (42 U.S.C. 1396r-
                        4(b)(1)(A))); and
                            (ii) hospitals that have high levels of 
                        uncompensated care (excluding bad debt).
            (3) DSH allotment publications.--
                    (A) In general.--Not later than the publication 
                deadline specified in subparagraph (B), the Secretary 
                shall publish in the Federal Register a notice 
                specifying the DSH allotment to each State under 
                1923(f) of the Social Security Act for the respective 
                fiscal year specified in such subparagraph, consistent 
                with the application of the DSH Health Reform 
                methodology described in paragraph (2).
                    (B) Publication deadline.--The publication deadline 
                specified in this subparagraph is--
                            (i) January 1, 2016, with respect to DSH 
                        allotments described in subparagraph (A) for 
                        fiscal year 2017;
                            (ii) January 1, 2017, with respect to DSH 
                        allotments described in subparagraph (A) for 
                        fiscal year 2018; and
                            (iii) January 1, 2018, with respect to DSH 
                        allotments described in subparagraph (A) for 
                        fiscal year 2019.
    (c) Conforming Amendments.--
            (1) Section 1923(f) of the Social Security Act (42 U.S.C. 
        1396r-4(f)) is amended--
                    (A) by redesignating paragraph (7) as paragraph 
                (8); and
                    (B) by inserting after paragraph (6) the following 
                new paragraph:
            ``(7) Special rule for fiscal years 2017, 2018, and 2019.--
        Notwithstanding paragraph (2), if the Secretary makes a 
        reduction under section 1322(b)(1) of the Empowering Patients 
        First Act, the total DSH allotments for all States for--
                    ``(A) fiscal year 2017, shall be the total DSH 
                allotments that would otherwise be determined under 
                this subsection for such fiscal year decreased by 
                $1,500,000,000;
                    ``(B) fiscal year 2018, shall be the total DSH 
                allotments that would otherwise be determined under 
                this subsection for such fiscal year decreased by 
                $2,500,000,000; and
                    ``(C) fiscal year 2019, shall be the total DSH 
                allotments that would otherwise be determined under 
                this subsection for such fiscal year decreased by 
                $6,000,000,000.''.
            (2) Section 1923(b)(4) of such Act (42 U.S.C. 1396r-
        4(b)(4)) is amended by adding before the period the following: 
        ``or to affect the authority of the Secretary to issue and 
        implement the DSH Health Reform methodology under section 
        1322(b)(2) of the Empowering Patients First Act''.
    (d) Disproportionate Share Hospitals (DSH) and Essential Access 
Hospital (EAH) Non-Discrimination.--
            (1) In general.--Section 1923(d) of the Social Security Act 
        (42 U.S.C. 1396r-4) is amended by adding at the end the 
        following new paragraph:
            ``(4) No hospital may be defined or deemed as a 
        disproportionate share hospital, or as an essential access 
        hospital (for purposes of subsection (f)(6)(A)(iv)), under a 
        State plan under this title or subsection (b) of this section 
        (including any waiver under section 1115) unless the hospital--
                    ``(A) provides services to beneficiaries under this 
                title without discrimination on the ground of race, 
                color, national origin, creed, source of payment, 
                status as a beneficiary under this title, or any other 
                ground unrelated to such beneficiary's need for the 
                services or the availability of the needed services in 
                the hospital; and
                    ``(B) makes arrangements for, and accepts, 
                reimbursement under this title for services provided to 
                eligible beneficiaries under this title.''.
            (2) Effective date.--The amendment made by subsection (a) 
        shall be apply to expenditures made on or after July 1, 2012.

                  Subtitle C--Fraud, Waste, and Abuse

SEC. 1321. PROVIDE ADEQUATE FUNDING TO HHS OIG AND HCFAC.

    (a) HCFAC Funding.--Section 1817(k)(3)(A) of the Social Security 
Act (42 U.S.C. 1395i(k)(3)(A)) is amended--
            (1) in clause (i)--
                    (A) in subclause (IV), by striking at the end 
                ``and'';
                    (B) in subclause (V)--
                            (i) by striking ``for each fiscal year 
                        after fiscal year 2010'' and inserting ``for 
                        fiscal year 2011''; and
                            (ii) by striking the period at the end and 
                        inserting ``; and''; and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(VI) for each fiscal year after 
                                fiscal year 2011, $300,000,000.''; and
            (2) in clause (ii)--
                    (A) in subclause (IX), by striking at the end 
                ``and'';
                    (B) in subclause (X)--
                            (i) by striking ``for each fiscal year 
                        after fiscal year 2010'' and inserting ``for 
                        fiscal year 2011''; and
                            (ii) by striking the period at the end and 
                        inserting ``; and''; and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(XI) for each fiscal year after 
                                fiscal year 2011, not less than the 
                                amount required under this clause for 
                                fiscal year 2011, plus the amount by 
                                which the amount made available under 
                                clause (i)(VI) for fiscal year 2012 
                                exceeds the amount made available under 
                                clause (i)(V) for fiscal year 2011.''.
    (b) OIG Funding.--There are authorized to be appropriated for each 
of fiscal years 2012 through 2021 $100,000,000 for the Office of the 
Inspector General of the Department of Health and Human Services for 
fraud prevention activities under the Medicare and Medicaid programs.

SEC. 1322. IMPROVED ENFORCEMENT OF THE MEDICARE SECONDARY PAYOR 
              PROVISIONS.

    (a) In General.--The Secretary, in coordination with the Inspector 
General of the Department of Health and Human Services, shall provide 
through the Coordination of Benefits Contractor for the identification 
of instances where the Medicare program should be, but is not, acting 
as a secondary payer to an individual's private health benefits 
coverage under section 1862(b) of the Social Security Act (42 U.S.C. 
1395y(b)).
    (b) Updating Procedures.--The Secretary shall update procedures for 
identifying and resolving credit balance situations which occur under 
the Medicare program when payment under such title and from other 
health benefit plans exceed the providers' charges or the allowed 
amount.
    (c) Report on Improved Enforcement.--Not later than 1 year after 
the date of the enactment of this Act, the Secretary shall submit a 
report to Congress on progress made in improved enforcement of the 
Medicare secondary payor provisions, including recoupment of credit 
balances.

SEC. 1323. STRENGTHEN MEDICARE PROVIDER ENROLLMENT STANDARDS AND 
              SAFEGUARDS.

    (a) Strengthening Medicare Provider Numbers.--
            (1) Screening new providers.--As a condition of a provider 
        of services or a supplier, including durable medical equipment 
        suppliers and home health agencies, applying for the first time 
        for a provider number under the Medicare program under title 
        XVIII of the Social Security Act and before granting billing 
        privileges under such title, the Secretary of Health and Human 
        Services (referred to in this section as the ``Secretary'') 
        shall screen the provider or supplier for a criminal background 
        or other financial or operational irregularities through 
        fingerprinting, licensure checks, site-visits, and other 
        database checks.
            (2) Application fees.--The Secretary shall impose an 
        application charge on such a provider or supplier in order to 
        cover the Secretary's costs in performing the screening 
        required under paragraph (1).
            (3) Provisional approval.--During an initial, provisional 
        period (specified by the Secretary) in which such a provider or 
        supplier has been issued such a number, the Secretary shall 
        provide enhanced oversight of the activities of such provider 
        or supplier under the Medicare program, such as through 
        prepayment review and payment limitations.
            (4) Penalties for false statements.--In the case of a 
        provider or supplier that knowingly makes a false statement in 
        an application for such a number, the Secretary may exclude the 
        provider or supplier from participation under the Medicare 
        program, or may impose a civil money penalty (in the amount 
        described in section 1128A(a)(4) of the Social Security Act), 
        in the same manner as the Secretary may impose such an 
        exclusion or penalty under sections 1128 and 1128A, 
        respectively, of such Act in the case of knowing presentation 
        of a false claim described in section 1128A(a)(1)(A) of such 
        Act.
            (5) Disclosure requirements.--With respect to approval of 
        such an application, the Secretary--
                    (A) shall require applicants to disclose previous 
                affiliation with enrolled entities that have 
                uncollected debt related to the Medicare or Medicaid 
                programs;
                    (B) may deny approval if the Secretary determines 
                that these affiliations pose undue risk to the Medicare 
                or Medicaid program, subject to an appeals process for 
                the applicant as determined by the Secretary; and
                    (C) may implement enhanced safeguards (such as 
                surety bonds).
    (b) Moratoria.--The Secretary may impose moratoria on approval of 
provider and supplier numbers under the Medicare program for new 
providers of services and suppliers as determined necessary to prevent 
or combat fraud a period of delay for any one applicant cannot exceed 
30 days unless cause is shown by the Secretary.
    (c) Funding.--There are authorized to be appropriated to carry out 
this section such sums as may be necessary.

SEC. 1324. TRACKING BANNED PROVIDERS ACROSS STATE LINES.

    (a) Greater Coordination.--The Secretary of Health and Human 
Services (in this section referred to as the ``Secretary'') shall 
provide for increased coordination between the Administrator of the 
Centers for Medicare & Medicaid Services (in this section referred to 
as ``CMS'') and its regional offices to ensure that providers of 
services and suppliers that have operated in one State and are excluded 
from participation in the Medicare program are unable to begin 
operation and participation in the Medicare program in another State.
    (b) Improved Information Systems.--
            (1) In general.--The Secretary shall improve information 
        systems to allow greater integration between databases under 
        the Medicare program so that--
                    (A) Medicare administrative contractors, fiscal 
                intermediaries, and carriers have immediate access to 
                information identifying providers and suppliers 
                excluded from participation in the Medicare and 
                Medicaid program and other Federal health care 
                programs; and
                    (B) such information can be shared across Federal 
                health care programs and agencies, including between 
                the Departments of Health and Human Services, the 
                Social Security Administration, the Department of 
                Veterans Affairs, the Department of Defense, the 
                Department of Justice, and the Office of Personnel 
                Management.
    (c) Medicare/Medicaid ``One PI'' Database.--The Secretary shall 
implement a database that includes claims and payment data for all 
components of the Medicare program and the Medicaid program.
    (d) Authorizing Expanded Data Matching.--Notwithstanding any 
provision of the Computer Matching and Privacy Protection Act of 1988 
to the contrary--
            (1) the Secretary and the Inspector General in the 
        Department of Health and Human Services may perform data 
        matching of data from the Medicare program with data from the 
        Medicaid program; and
            (2) the Commissioner of Social Security and the Secretary 
        may perform data matching of data of the Social Security 
        Administration with data from the Medicare and Medicaid 
        programs.
    (e) Consolidation of Data Bases.--The Secretary shall consolidate 
and expand into a centralized data base for individuals and entities 
that have been excluded from Federal health care programs the 
Healthcare Integrity and Protection Data Bank, the National 
Practitioner Data Bank, the List of Excluded Individuals/Entities, and 
a national patient abuse/neglect registry.
    (f) Comprehensive Provider Database.--
            (1) Establishment.--The Secretary shall establish a 
        comprehensive database that includes information on providers 
        of services, suppliers, and related entities participating in 
        the Medicare program, the Medicaid program, or both. Such 
        database shall include, information on ownership and business 
        relationships, history of adverse actions, results of site 
        visits or other monitoring by any program.
            (2) Use.--Prior to issuing a provider or supplier number 
        for an entity under the Medicare program, the Secretary shall 
        obtain information on the entity from such database to assure 
        the entity qualifies for the issuance of such a number.
    (g) Comprehensive Sanctions Database.--The Secretary shall 
establish a comprehensive sanctions database on sanctions imposed on 
providers of services, suppliers, and related entities. Such database 
shall be overseen by the Inspector General of the Department of Health 
and Human Services and shall be linked to related databases maintained 
by State licensure boards and by Federal or State law enforcement 
agencies.
    (h) Access to Claims and Payment Databases.--The Secretary shall 
ensure that the Inspector General of the Department of Health and Human 
Services and Federal law enforcement agencies have direct access to all 
claims and payment databases of the Secretary under the Medicare or 
Medicaid programs.
    (i) Civil Money Penalties for Submission of Erroneous 
Information.--In the case of a provider of services, supplier, or other 
entity that knowingly submits erroneous information that serves as a 
basis for payment of any entity under the Medicare or Medicaid program, 
the Secretary may impose a civil money penalty of not to exceed $50,000 
for each such erroneous submission. A civil money penalty under this 
subsection shall be imposed and collected in the same manner as a civil 
money penalty under subsection (a) of section 1128A of the Social 
Security Act is imposed and collected under that section.
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