I 

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. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Empowering Patients First Act’’. 

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

7 this Act is as follows: 


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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 employersponsored insurance coverage. 

Sec. 403. Improving beneficiary choice in SCHIP. 

TITLE V—MEDICAL LIABILITY REFORMS 


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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 


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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. 

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

2 HCERA PROVISIONS. 

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

4 Patient Protection and Affordable Care Act (Public Law 

5 111–148), such Act is repealed, and the provisions of law 

6 amended or repealed by such Act are restored or revived 

7 as if such Act had not been enacted. 

8 (b) HEALTH CARE-RELATED PROVISIONS IN THE

9 HEALTH CARE AND EDUCATION RECONCILIATION ACT OF

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

11 and Education Reconciliation Act of 2010 (Public Law 

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

13 are repealed, and the provisions of law amended or re14 pealed by such title or subtitle, respectively, are restored 


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1 or revived as if such title and subtitle had not been en2 acted. 

3 TITLE I—TAX INCENTIVES FOR 

4 MAINTAINING HEALTH IN5 SURANCE COVERAGE 

6 SEC. 101. REFUNDABLE TAX CREDIT FOR HEALTH INSUR7 ANCE COSTS OF LOW-INCOME INDIVIDUALS. 

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

10 1986 (relating to refundable credits) is amended by insert11 ing after section 36A the following new section: 

12 ‘‘SEC. 36B. HEALTH INSURANCE COSTS OF LOW-INCOME IN13 DIVIDUALS. 

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

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

16 by subtitle A the aggregate amount paid by the taxpayer 

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

18 family members under qualified health insurance for eligi19 ble coverage months beginning in the taxable year. 

20 ‘‘(b) LIMITATIONS.— 

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

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

23 not exceed the lesser of— 

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

25 for months during such taxable year that the 


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1 taxpayer or the taxpayer’s qualifying family 

2 members is an eligible individual, and 

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

4 taxpayer for the taxable year for coverage de5 scribed in subsection (a). 

6 ‘‘(2) MONTHLY LIMITATION.—The monthly limitation for any month is the credit percentage of 1 7 ⁄12

8 of the sum of— 

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

10 ($4,000 in the case of a joint return for cov11 erage of the taxpayer and the taxpayer’s 

12 spouse), and 

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

14 of the taxpayer. 

15 ‘‘(3) CREDIT PERCENTAGE.— 

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

17 section, the term ‘credit percentage’ means 100 

18 percent reduced by 1 percentage point for each 

19 $1,000 (or fraction thereof) by which the tax20 payer’s adjusted gross income for the taxable 

21 year exceeds the threshold amount. 

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

23 of this paragraph, the term ‘threshold amount’ 

24 means, with respect to any taxpayer for any 

25 taxable year, 200 percent of the Federal povVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 erty guideline (as determined by the Secretary 

2 of Health and Human Service for the taxable 

3 year) applicable to the taxpayer. 

4 ‘‘(4) ONLY 2 DEPENDENTS TAKEN INTO AC5 COUNT.—Not more than 2 dependents of the tax6 payer may be taken into account under paragraphs 

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

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

9 any taxable year beginning in a calendar year after 

10 2011, each dollar amount contained in paragraph 

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

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

13 ‘‘(B) the cost-of-living adjustment deter14 mined under section 1(f)(3) for the calendar 

15 year in which the taxable year begins, deter16 mined by substituting ‘calendar year 2010’ for 

17 ‘calendar year 1992’ in subparagraph (B) 

18 thereof. 

19 Any increase determined under the preceding sen20 tence shall be rounded to the nearest multiple of 

21 $50. 

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

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

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

25 day of such month, the individual— 


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

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

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

4 local authority. 

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

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

7 means— 

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

9 spouse, and 

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

11 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur12 poses of this section, the term ‘qualified health insurance’ 

13 means health insurance coverage (other than excepted 

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

15 medical care. 

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

17 this section, an individual has other specified coverage for 

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

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

20 OR SCHIP.—Such individual— 

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

22 title XVIII of the Social Security Act or is en23 rolled under part B of such title, or 


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

2 XIX or XXI of such Act (other than under sec3 tion 1928 of such Act). 

4 ‘‘(2) CERTAIN OTHER COVERAGE.—Such indi5 vidual— 

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

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

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

9 chapter 55 of title 10, United States Code, 

10 ‘‘(C) in entitled to receive benefits under 

11 chapter 17 of title 38, United States Code, or 

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

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

14 which is subsidized by the employer. 

15 ‘‘(g) SPECIAL RULES.— 

16 ‘‘(1) COORDINATION WITH ADVANCE PAYMENTS

17 OF CREDIT; RECAPTURE OF EXCESS ADVANCE PAY18 MENTS.—With respect to any taxable year— 

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

20 subsection) be allowed as a credit to the tax21 payer under subsection (a) shall be reduced 

22 (but not below zero) by the aggregate amount 

23 paid on behalf of such taxpayer under section 

24 7529 for months beginning in such taxable 

25 year, and 


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

2 taxable year shall be increased by the excess (if 

3 any) of— 

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

6 for months beginning in such taxable year, 

7 over 

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

9 this subsection) be allowed as a credit to 

10 the taxpayer under subsection (a). 

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

15 ‘‘(A) any deduction allowed under section 

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

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

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

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

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

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

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

24 NONPERMANENT RESIDENT ALIEN INDIVIDUALS.— 


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1 No credit shall be allowed under this section to any 

2 individual who is— 

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

4 resident of the United States for the calendar 

5 year in which the taxable year begins, or 

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

7 taxpayer for a taxable year beginning in the 

8 calendar year in which such individual’s taxable 

9 year begins. 

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

13 respect to any contract for qualified health insurance 

14 under which amounts are payable for coverage of an 

15 individual other than the taxpayer and qualifying 

16 family members. 

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

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

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

23 costs of low-income individuals) shall be treated 

24 as having been made by the taxpayer on the 


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1 first day of the month for which such payment 

2 was made. 

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

6 made by the taxpayer on the first day of the 

7 month for which such payment was made. 

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

10 be necessary or appropriate to carry out this section, 

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

12 (b) CONFORMING AMENDMENTS.— 

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

14 31, United States Code, is amended by inserting 

15 ‘‘36B,’’ after ‘‘36A,’’. 

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

17 IV of subchapter A of chapter 1 of the Internal Rev18 enue Code of 1986 is amended by inserting after the 

19 item relating to section 36A the following new item: 

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

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

21 this section shall apply to taxable years beginning after 

22 December 31, 2011. 

23 (d) SENSE OF CONGRESS.—It is the sense of Con24 gress that the cost of the advanceable refundable credit 

25 under sections 36B and 7529 of the Internal Revenue 


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1 Code of 1986, as added by this title, will be offset by sav2 ings derived from the provisions of title XIII. 

3 SEC. 102. ADVANCE PAYMENT OF CREDIT AS PREMIUM 

4 PAYMENT FOR QUALIFIED HEALTH INSUR5 ANCE. 

6 (a) IN GENERAL.—Chapter 77 of the Internal Rev7 enue Code of 1986 (relating to miscellaneous provisions) 

8 is amended by adding at the end the following: 

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

10 PAYMENT FOR QUALIFIED HEALTH INSUR11 ANCE. 

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

13 2012, the Secretary shall establish a program for making 

14 payments to providers of qualified health insurance (as de15 fined in section 36B(e)) on behalf of taxpayers eligible for 

16 the credit under section 36B. Except as otherwise pro17 vided by the Secretary, such payments shall be made on 

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

19 the preceding taxable year. 

20 ‘‘(b) CERTIFICATION PROCESS AND PROOF OF COV21 ERAGE.—For purposes of this section, payments may be 

22 made pursuant to subsection (a) only with respect to indi23 viduals for whom a qualified health insurance costs credit 

24 eligibility certificate is in effect.’’. 


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1 (b) DISCLOSURE OF RETURN INFORMATION FOR

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

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

5 6103 of such Code is amended by adding at the end 

6 the following new paragraph: 

7 ‘‘(21) DISCLOSURE OF RETURN INFORMATION

8 FOR PURPOSES OF ADVANCE PAYMENT OF CREDIT

9 AS PREMIUMS FOR QUALIFIED HEALTH INSUR10 ANCE.—The Secretary may, on behalf of taxpayers 

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

12 a provider of qualified health insurance (as defined 

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

14 such provider, return information with respect to 

15 any such taxpayer only to the extent necessary (as 

16 prescribed by regulations issued by the Secretary) to 

17 carry out the program established by section 7529 

18 (relating to advance payment of credit as premium 

19 payment for qualified health insurance).’’. 

20 (2) CONFIDENTIALITY OF INFORMATION.— 

21 Paragraph (3) of section 6103(a) of such Code is 

22 amended by striking ‘‘or (20)’’ and inserting ‘‘(20), 

23 or (21)’’. 


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1 (3) UNAUTHORIZED DISCLOSURE.—Paragraph 

2 (2) of section 7213(a) of such Code is amended by 

3 striking ‘‘or (20)’’ and inserting ‘‘(20), or (21)’’. 

4 (c) INFORMATION REPORTING.— 

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

6 subchapter A of chapter 61 of such Code (relating 

7 to information concerning transactions with other 

8 persons) is amended by adding at the end the fol9 lowing new section: 

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

11 INSURANCE COSTS OF LOW-INCOME INDIVID12 UALS. 

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

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

15 calendar year under section 7529 (relating to advance pay16 ment of credit as premium payment for qualified health 

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

18 time as the Secretary may prescribe, make the return de19 scribed in subsection (b) with respect to each such indi20 vidual. 

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

22 is described in this subsection if such return— 

23 ‘‘(1) is in such form as the Secretary may pre24 scribe, and 

25 ‘‘(2) contains— 


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

2 individual referred to in subsection (a), 

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

4 amounts were entitled to be received with re5 spect to such individual under section 7529 (re6 lating to advance payment of credit as premium 

7 payment for qualified health insurance), 

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

9 each such month, and 

10 ‘‘(D) such other information as the Sec11 retary may prescribe. 

12 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID13 UALS WITH RESPECT TO WHOM INFORMATION IS RE14 QUIRED.—Every person required to make a return under 

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

16 is required to be set forth in such return a written state17 ment showing— 

18 ‘‘(1) the name and address of the person re19 quired to make such return and the phone number 

20 of the information contact for such person, and 

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

22 the return with respect to such individual. 

23 The written statement required under the preceding sen24 tence shall be furnished on or before January 31 of the 


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1 year following the calendar year for which the return 

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

3 (2) ASSESSABLE PENALTIES.— 

4 (A) Subparagraph (B) of section 

5 6724(d)(1) of such Code (relating to defini6 tions) is amended by striking ‘‘or’’ at the end 

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

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

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

13 and’’. 

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

15 such Code is amended by striking ‘‘or’’ at the 

16 end of subparagraph (EE), by striking the pe17 riod at the end of subparagraph (FF) and in18 serting ‘‘, or’’, and by adding after subpara19 graph (FF) the following new subparagraph: 

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

21 relating to credit for health insurance costs of 

22 low-income individuals).’’. 

23 (d) CLERICAL AMENDMENTS.— 


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

2 Code is amended by adding at the end the following 

3 new item: 

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

health insurance.’’. 

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

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

6 amended by adding at the end the following new 

7 item: 

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

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

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

10 of this Act. 

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

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

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

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

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

23 program. 


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

2 (a) may first be made for calendar year 2012 and any 

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

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

5 Human Services shall specify, in consultation with the 

6 Secretary of the Treasury. 

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

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

9 following: 

10 (1) MEDICARE.—The Medicare program under 

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

12 (2) MEDICAID.—The Medicaid program under 

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

15 of such Act). 

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

18 (4) TRICARE.—The TRICARE program 

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

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

22 Code. 

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

24 title 5, United States Code. 


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

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

4 employer. 

5 (d) OTHER SOCIAL SECURITY BENEFITS NOT

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

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

8 benefits under the Social Security Act. 

9 SEC. 104. DEDUCTION FOR QUALIFIED HEALTH INSURANCE 

10 COSTS OF INDIVIDUALS. 

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

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

15 section 223 the following new section: 

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

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

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

19 the amount paid during the taxable year for coverage for 

20 the taxpayer, his spouse, and dependents under qualified 

21 health insurance. 

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

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

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

25 Federal income tax liability to be reduced by more than 


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

3 the value of the exclusion for each household followed by 

4 calculating the average of those values. 

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

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

8 ‘‘(d) SPECIAL RULES.— 

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

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

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

15 determining the credit allowed under section 35 or 

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

17 this section. 

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

21 account in determining an individual’s net earnings 

22 from self-employment (within the meaning of section 

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

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


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1 such Code is amended by inserting before the last sentence 

2 the following new paragraph: 

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

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

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

7 is amended by redesignating the item relating to section 

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

9 such item the following new item: 

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

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2011. 

13 SEC. 105. LIMITATION ON ABORTION FUNDING. 

14 No funds authorized under, or credits or deductions 

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

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

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

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

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

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

23 a life-endangering physical condition caused by or arising 

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

25 result of an act of rape or incest. 


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1 SEC. 106. NO GOVERNMENT DISCRIMINATION AGAINST 

2 CERTAIN HEALTH CARE ENTITIES. 

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

4 program, and any State or local government that receives 

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

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

10 for abortions. 

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

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

13 individual physician or other health care professional, a 

14 hospital, a provider-sponsored organization, a health 

15 maintenance organization, a health insurance plan, or any 

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

17 (c) REMEDIES.— 

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

19 States shall have jurisdiction to prevent and redress 

20 actual or threatened violations of this section by 

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

23 (A) injunctions prohibiting conduct that 

24 violates this section; and 

25 (B) orders preventing the disbursement of 

26 all or a portion of Federal financial assistance 


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

2 offending agency or program of a State or local 

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

5 (2) COMMENCEMENT OF ACTION.—An action 

6 under this subsection may be instituted by— 

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

10 (B) the Attorney General of the United 

11 States. 

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

13 Human Services shall designate the Director of the Office 

14 for Civil Rights of the Department of Health and Human 

15 Services— 

16 (1) to receive complaints alleging a violation of 

17 this section; 

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

20 the Attorney General; and 

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

24 administered through such other agency or any 

25 State or local government receiving Federal financial 


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1 assistance through such other agency, to refer the 

2 complaint to the appropriate office of such other 

3 agency. 

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

6 (a) EXCISE TAX FOR FAILURE TO PROVIDE CON7 TRIBUTION ELECTION.—Section 5000 of the Internal 

8 Revenue Code of 1986 is amended by adding at the end 

9 the following new subsection: 

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

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

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

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

14 are met. 

15 ‘‘(2) CONTRIBUTION ELECTION.—The require16 ment of this paragraph is met with respect to a 

17 group health plan if any employee of an employer 

18 (who but for this paragraph would be covered by 

19 such plan) may elect to have the employer or em20 ployee organization pay an amount which is not less 

21 than the contribution amount to any provider of 

22 health insurance coverage (other than excepted bene23 fits as defined in section 9832(c)) which constitutes 

24 medical care of the individual or individual’s spouse 

25 or dependents in lieu of such group health plan covVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 erage otherwise provided or contributed to by the 

2 employer with respect to such employee. 

3 ‘‘(3) PRE-EXISTING CONDITIONS.— 

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

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

7 beneficiary by any health insurance issuer if, 

8 under such plan the requirements of section 

9 9801 are met with respect to the participant or 

10 beneficiary. 

11 ‘‘(B) ENFORCEMENT WITH RESPECT TO

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

14 with respect to the participant or beneficiary 

15 shall be treated as health insurance coverage 

16 under a group health plan to which section 

17 9801 applies. 

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

19 of this section, the term ‘contribution amount’ 

20 means, with respect to an individual under a group 

21 health plan, the portion of the applicable premium of 

22 such individual under such plan (as determined 

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

24 individual. In the case that the employer offers more 

25 than one group health plan, the contribution amount 


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

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

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

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

7 Personnel Management shall carry out the health 

8 benefits program under chapter 89 of title 5, United 

9 States Code, consistent with the requirements of this 

10 subsection.’’. 

11 (b) REQUIREMENT OF EQUAL CONTRIBUTIONS TO

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

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

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

16 section the Office of Personnel Management shall revise 

17 the amount of the Government contribution made under 

18 this section in a manner so that— 

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

20 change based on the health benefits plan in which 

21 the individual is enrolled; and 

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

24 amount of such contributions if this subsection did 

25 not apply.’’. 


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1 (c) ERISA CONFORMING AMENDMENTS.— 

2 (1) EXCEPTION FROM HIPAA REQUIREMENTS

3 FOR BENEFITS PROVIDED UNDER HEALTH CARE

4 CONTRIBUTION ELECTION.—Section 732 of the Em5 ployee Retirement Income Security Act of 1974 (29 

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

7 following new subsection: 

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

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

10 part shall not apply in the case of health insurance 

11 coverage (other than excepted benefits as defined in 

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

13 1986)— 

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

15 beneficiary by a health insurance issuer under 

16 a group health plan, and 

17 ‘‘(B) with respect to which the require18 ments of paragraphs (2) and (3) are met. 

19 ‘‘(2) CONTRIBUTION ELECTION.—The require20 ment of this paragraph is met with respect to health 

21 insurance coverage provided to a participant or ben22 eficiary by any health insurance issuer under a 

23 group health plan if, under such plan— 

24 ‘‘(A) the participant may elect such cov25 erage for any period of coverage in lieu of 


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1 health insurance coverage otherwise provided 

2 under such plan for such period, and 

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

4 plan sponsor is required to pay to such issuer 

5 for the elected coverage for such period an 

6 amount which is not less than the contribution 

7 amount for such health insurance coverage oth8 erwise provided under such plan for such pe9 riod. 

10 ‘‘(3) PRE-EXISTING CONDITIONS.— 

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

12 this paragraph is met with respect to health in13 surance coverage provided to a participant or 

14 beneficiary by any health insurance issuer if, 

15 under such plan the requirements of section 

16 701 are met with respect to the participant or 

17 beneficiary. 

18 ‘‘(B) ENFORCEMENT WITH RESPECT TO

19 INDIVIDUAL ELECTION.—For purposes of sub20 paragraph (A), any health insurance coverage 

21 with respect to the participant or beneficiary 

22 shall be treated as health insurance coverage 

23 under a group health plan to which section 701 

24 applies. 

25 ‘‘(4) CONTRIBUTION AMOUNT.— 


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

2 section, the term ‘contribution amount’ means, 

3 with respect to any period of health insurance 

4 coverage offered to a participant or beneficiary, 

5 the portion of the applicable premium of such 

6 participant or beneficiary under such plan 

7 which is not paid by such participant or bene8 ficiary. In the case that the employer offers 

9 more than one group health plan, the contribu10 tion amount shall be the average amount of the 

11 applicable premiums under such plans. 

12 ‘‘(B) APPLICABLE PREMIUM.—For pur13 poses of subparagraph (A), the term ‘applicable 

14 premium’ means, with respect to any period of 

15 health insurance coverage of a participant or 

16 beneficiary under a group health plan, the cost 

17 to the plan for such period of such coverage for 

18 similarly situated beneficiaries (without regard 

19 to whether such cost is paid by the plan spon20 sor or the participant or beneficiary).’’. 

21 (2) EXEMPTION FROM FIDUCIARY LIABILITY.— 

22 Section 404 of such Act (29 U.S.C. 1104) is amend23 ed by adding at the end the following new sub24 section: 


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1 ‘‘(e) The plan sponsor of a group health plan (as de2 fined in section 733(a)) shall not be treated as breaching 

3 any of the responsibilities, obligations, or duties imposed 

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

5 who is a participant or beneficiary under such plan solely 

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

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

8 by means of payment of contribution amounts pursuant 

9 to a contribution election under section 732(e), irrespec10 tive of the amount or type of benefits that would otherwise 

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

12 (d) EXCEPTION FROM HIPAA REQUIREMENTS

13 UNDER IRC FOR BENEFITS PROVIDED UNDER HEALTH

14 CARE CONTRIBUTION ELECTION.—Section 9831 of the 

15 Internal Revenue Code of 1986 (relating to general excep16 tions) is amended by adding at the end the following new 

17 subsection: 

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

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

20 chapter shall not apply in the case of health insur21 ance coverage (other than excepted benefits as de22 fined in section 9832(c))— 

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

24 beneficiary by a health insurance issuer under 

25 a group health plan, and 


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

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

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

7 group health plan if, under such plan— 

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

10 health insurance coverage otherwise provided 

11 under such plan for such period, and 

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

13 plan sponsor is required to pay to such issuer 

14 for the elected coverage for such period an 

15 amount which is not less than the contribution 

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

19 ‘‘(3) PRE-EXISTING CONDITIONS.— 

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

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

23 beneficiary by any health insurance issuer if, 

24 under such plan the requirements of section 


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1 9801 are met with respect to the participant or 

2 beneficiary. 

3 ‘‘(B) ENFORCEMENT WITH RESPECT TO

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

6 with respect to the participant or beneficiary 

7 shall be treated as health insurance coverage 

8 under a group health plan to which section 

9 9801 applies. 

10 ‘‘(4) CONTRIBUTION AMOUNT.— 

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

12 subsection, the term ‘contribution amount’ 

13 means, with respect to any period of health in14 surance coverage offered to a participant or 

15 beneficiary, the portion of the applicable pre16 mium of such participant or beneficiary under 

17 such plan which is not paid by such participant 

18 or beneficiary. In the case that the employer of19 fers more than one group health plan, the con20 tribution amount shall be the average amount 

21 of the applicable premiums under such plans. 

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

24 premium’ means, with respect to any period of 

25 health insurance coverage of a participant or 


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1 beneficiary under a group health plan, the cost 

2 to the plan for such period of such coverage for 

3 similarly situated beneficiaries (without regard 

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

6 (e) EXCEPTION FROM HIPAA REQUIREMENTS

7 UNDER THE PHSA FOR BENEFITS PROVIDED UNDER

8 HEALTH CARE CONTRIBUTION ELECTION.—Section 2721 

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

10 is amended— 

11 (1) by redesignating subsection (e) as sub12 section (f); and 

13 (2) by inserting after subsection (d) the fol14 lowing new subsection: 

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

16 ‘‘(1) IN GENERAL.—The requirements of sub17 parts 1 through 3 shall not apply in the case of 

18 health insurance coverage (other than excepted bene19 fits as defined in section 9832(c) of the Internal 

20 Revenue Code of 1986)— 

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

22 beneficiary by a health insurance issuer under 

23 a group health plan, and 

24 ‘‘(B) with respect to which the require25 ments of paragraphs (2) and (3) are met. 


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1 ‘‘(2) CONTRIBUTION ELECTION.—The require2 ment of this paragraph is met with respect to health 

3 insurance coverage provided to a participant or ben4 eficiary by any health insurance issuer under a 

5 group health plan if, under such plan— 

6 ‘‘(A) the participant may elect such cov7 erage for any period of coverage in lieu of 

8 health insurance coverage otherwise provided 

9 under such plan for such period, and 

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

11 plan sponsor is required to pay to such issuer 

12 for the elected coverage for such period an 

13 amount which is not less than the contribution 

14 amount for such health insurance coverage oth15 erwise provided under such plan for such pe16 riod. 

17 ‘‘(3) PRE-EXISTING CONDITIONS.— 

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

19 this paragraph is met with respect to health in20 surance coverage provided to a participant or 

21 beneficiary by any health insurance issuer if, 

22 under such plan the requirements of section 

23 2701 are met with respect to the participant or 

24 beneficiary. 


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1 ‘‘(B) ENFORCEMENT WITH RESPECT TO

2 INDIVIDUAL ELECTION.—For purposes of sub3 paragraph (A), any health insurance coverage 

4 with respect to the participant or beneficiary 

5 shall be treated as health insurance coverage 

6 under a group health plan to which section 

7 2701 applies. 

8 ‘‘(4) CONTRIBUTION AMOUNT.— 

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

10 section, the term ‘contribution amount’ means, 

11 with respect to any period of health insurance 

12 coverage offered to a participant or beneficiary, 

13 the portion of the applicable premium of such 

14 participant or beneficiary under such plan 

15 which is not paid by such participant or bene16 ficiary. In the case that the employer offers 

17 more than one group health plan, the contribu18 tion amount shall be the average amount of the 

19 applicable premiums under such plans. 

20 ‘‘(B) APPLICABLE PREMIUM.—For pur21 poses of subparagraph (A), the term ‘applicable 

22 premium’ means, with respect to any period of 

23 health insurance coverage of a participant or 

24 beneficiary under a group health plan, the cost 

25 to the plan for such period of such coverage for 


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1 similarly situated beneficiaries (without regard 

2 to whether such cost is paid by the plan spon3 sor or the participant or beneficiary).’’. 

4 SEC. 108. LIMITATIONS ON STATE RESTRICTIONS ON EM5 PLOYER AUTO-ENROLLMENT. 

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

7 that prevents an employer from instituting auto-enroll8 ment which meets the requirements of subsection (b) for 

9 coverage of a participant or beneficiary under a group 

10 health plan, or health insurance coverage offered in con11 nection with such a plan, so long as the participant or 

12 beneficiary has the option of declining such coverage. 

13 (b) AUTOMATIC ENROLLMENT FOR EMPLOYER

14 SPONSORED HEALTH BENEFITS.— 

15 (1) IN GENERAL.—The requirement of this sub16 section with respect to an employer and an employee 

17 is that the employer automatically enroll such em18 ployee into the employment-based health benefits 

19 plan for individual coverage under the plan option 

20 with the lowest applicable employee premium. 

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

22 automatically enroll an employee in a plan under 

23 paragraph (1) if such employee makes an affirmative 

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

25 under an employment-based health benefits plan ofVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 fered by such employer. An employer shall provide 

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

3 affirmative election before the employer may auto4 matically enroll the employee in such a plan. 

5 (3) NOTICE REQUIREMENTS.— 

6 (A) IN GENERAL.—Each employer de7 scribed in paragraph (1) who automatically en8 rolls an employee into a plan as described in 

9 such paragraph shall provide the employees, 

10 within a reasonable period before the beginning 

11 of each plan year (or, in the case of new em12 ployees, within a reasonable period before the 

13 end of the enrollment period for such a new em14 ployee), written notice of the employees’ rights 

15 and obligations relating to the automatic enroll16 ment requirement under such paragraph. Such 

17 notice must be comprehensive and understood 

18 by the average employee to whom the automatic 

19 enrollment requirement applies. 

20 (B) INCLUSION OF SPECIFIC INFORMA21 TION.—The written notice under subparagraph 

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

23 of being automatically enrolled in a plan and in 

24 the case that more than one level of benefits or 

25 employee premium level is offered by the emVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00038 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 ployer involved, the notice must explain which 

2 level of benefits and employee premium level the 

3 employee will be automatically enrolled in the 

4 absence of an affirmative election by the em5 ployee. 

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

7 construed to supersede State law which establishes, imple8 ments, or continues in effect any standard or requirement 

9 relating to employers in connection with payroll or the 

10 sponsoring of employer sponsored health insurance cov11 erage except to the extent that such standard or require12 ment prevents an employer from instituting the auto-en13 rollment described in subsection (a). 

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

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

16 does not include excepted benefits (as defined in section 

17 2781(c) of the Public Health Service Act (42 U.S.C. 

18 300gg–91(c)). 

19 SEC. 109. CREDIT FOR SMALL EMPLOYERS ADOPTING 

20 AUTO-ENROLLMENT AND DEFINED CON21 TRIBUTION OPTIONS. 

22 (a) IN GENERAL.—Subpart D of part IV of sub23 chapter A of chapter 1 of the Internal Revenue Code of 

24 1986 (relating to business-related credits) is amended by 

25 adding at the end the following new section: 


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1 ‘‘SEC. 45R. AUTO-ENROLLMENT AND DEFINED CONTRIBU2 TION OPTION FOR HEALTH BENEFITS PLANS 

3 OF SMALL EMPLOYERS. 

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

5 the case of a small employer, the health benefits plan im6 plementation credit determined under this section for the 

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

8 amount paid or incurred by the taxpayer during the tax9 able year for qualified health benefits expenses. 

10 ‘‘(b) LIMITATION.—The credit determined under sub11 section (a) with respect to any taxpayer for any taxable 

12 year shall not exceed the excess of— 

13 ‘‘(1) $1,500, over 

14 ‘‘(2) sum of the credits determined under sub15 section (a) with respect to such taxpayer for all pre16 ceding taxable years. 

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

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

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

20 any taxable year, amounts paid or incurred by the tax21 payer during such taxable year for— 

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

23 the requirements of section 107 of the Empowering 

24 Patients First Act for coverage of a participant or 

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1 surance coverage offered in connection with such a 

2 plan, and 

3 ‘‘(2) implementing the employer contribution 

4 option for health insurance coverage pursuant to 

5 section 5000(e)(2). 

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

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

8 any employer for any taxable year if the number of em9 ployees employed by such employer during such taxable 

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

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

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

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

14 shall be allowed under any other provision of this chapter 

15 with respect to the amount of the credit determined under 

16 this section. 

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

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

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

20 (b) CREDIT TO BE PART OF GENERAL BUSINESS

21 CREDIT.—Subsection (b) of section 38 of such Code (re22 lating to general business credit) is amended by striking 

23 ‘‘plus’’ at the end of paragraph (34), by striking the period 

24 at the end of paragraph (35) and inserting ‘‘, plus’’ , and 

25 by adding at the end the following new paragraph: 


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1 ‘‘(36) in the case of a small employer (as de2 fined in section 45R(d)), the health benefits plan im3 plementation credit determined under section 

4 45R(a).’’. 

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

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

7 of such Code is amended by inserting after the item relat8 ing to section 45Q the following new item: 

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

plans of small employers.’’. 

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

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 SEC. 110. HSA MODIFICATIONS AND CLARIFICATIONS. 

13 (a) CLARIFICATION OF TREATMENT OF CAPITATED

14 PRIMARY CARE PAYMENTS AS AMOUNTS PAID FOR MED15 ICAL CARE.—Section 213(d) of the Internal Revenue Code 

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

17 the end the following new paragraph: 

18 ‘‘(12) TREATMENT OF CAPITATED PRIMARY

19 CARE PAYMENTS.—Capitated primary care payments 

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

21 (b) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR

22 VETERANS OR INDIAN HEALTH BENEFITS.—Section 

23 223(c)(1) of such Code (defining eligible individual) is 


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1 amended by adding at the end the following new subpara2 graph: 

3 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI4 GIBLE FOR VETERANS OR INDIAN HEALTH BEN5 EFITS.—For purposes of subparagraph (A)(ii), 

6 an individual shall not be treated as covered 

7 under a health plan described in such subpara8 graph merely because the individual receives 

9 periodic hospital care or medical services under 

10 any law administered by the Secretary of Vet11 erans Affairs or the Bureau of Indian Affairs.’’. 

12 (c) CERTAIN PHYSICIAN FEES TO BE TREATED AS

13 MEDICAL CARE.—Section 213(d) of such Code is amend14 ed by adding at the end the following new paragraph: 

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

16 ‘medical care’ shall include amounts paid by patients 

17 to their primary physician in advance for the right 

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

19 (d) EFFECTIVE DATE.—The amendment made by 

20 this section shall apply to taxable years beginning after 

21 the date of the enactment of this Act. 


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1 TITLE II—HEALTH INSURANCE 

2 POOLING MECHANISMS FOR 

3 INDIVIDUALS 

4 Subtitle A—Safety Net for Individ5 uals With Pre-Existing Condi6 tions 

7 SEC. 201. REQUIRING OPERATION OF HIGH-RISK POOL OR 

8 OTHER MECHANISM AS CONDITION FOR 

9 AVAILABILITY OF TAX CREDIT. 

10 No credit shall be allowed under section 36B of the 

11 Internal Revenue Code of 1986 (relating to health insur12 ance costs of low-income individuals) to the residents of 

13 any State unless such State meets the following require14 ments: 

15 (1) The State must implement a high-risk pool 

16 or a reinsurance pool or other risk-adjustment mech17 anism (as defined in section 211(h)). 

18 (2) Assessments levied by the State for pur19 poses of funding such a pool or mechanism must 

20 only be used for funding and administering such 

21 pool or mechanism. 

22 (3) Such pool or mechanism must incorporate 

23 the application of such tax credit into such pool or 

24 mechanism. 


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1 Subtitle B—Federal Block Grants 

2 for State Insurance Expenditures 

3 SEC. 211. FEDERAL BLOCK GRANTS FOR STATE INSURANCE 

4 EXPENDITURES. 

5 (a) IN GENERAL.—Subject to the succeeding provi6 sions of this section, each State shall receive from the Sec7 retary of Health and Human Services (in this subtitle re8 ferred to as the ‘‘Secretary’’) a block grant for the State’s 

9 providing for the use, in connection with providing health 

10 benefits coverage, of a qualifying high-risk pool or a rein11 surance pool or other risk-adjustment mechanism used for 

12 the purpose of subsidizing the purchase of private health 

13 insurance. 

14 (b) FUNDING AMOUNT.— 

15 (1) IN GENERAL.—There are hereby appro16 priated, out of any funds in the Treasury not other17 wise appropriated, $300,000,000 for fiscal year 

18 2012 and each subsequent fiscal year for block 

19 grants under this section. Such amount shall be di20 vided among the States as determined by the Sec21 retary. 

22 (2) CONSTRUCTION.—Nothing in this section 

23 shall be construed as preventing a State from using 

24 funding under section 2745 of the Public Health 


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1 Service Act for purposes of funding reinsurance or 

2 other risk mechanisms. 

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

4 only be used for the following: 

5 (1) QUALIFYING HIGH-RISK POOLS.— 

6 (A) CURRENT POOLS.—A qualifying high7 risk pool created before the date of the enact8 ment of this Act that only cover high-risk popu9 lations and individuals (and their spouse and 

10 dependents) receiving a health care tax credit 

11 under section 35 of the Internal Revenue Code 

12 of 1986 for a limited period of time as deter13 mined by the Secretary or under section 2741 

14 of Public Health Service Act. 

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

16 pool created on or after such date that only cov17 ers populations and individuals described in 

18 subparagraph (A) if the pool— 

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

20 more high-deductible plan options, in com21 bination with a contribution into a health 

22 savings account; 

23 (ii) offers multiple competing health 

24 plan options; and 

25 (iii) covers only high-risk populations. 


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1 (2) RISK INSURANCE POOL OR OTHER RISK-AD2 JUSTMENT MECHANISMS.— 

3 (A) CURRENT REINSURANCE.—A reinsur4 ance pool, or other risk-adjustment mechanism, 

5 created before the date of the enactment of this 

6 Act that only covers populations and individuals 

7 described in paragraph (1)(A). 

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

9 other risk-adjustment mechanism created on or 

10 after such date that provides reinsurance only 

11 covers populations and individuals described in 

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

13 basis under which a health insurance issuer 

14 cedes covered lives to the pool in exchange for 

15 payment of a reinsurance premium. 

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

17 be construed as preventing a State from using funds 

18 available to transition from an existing high-risk 

19 pool to a reinsurance pool. 

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

21 amounts made available to the States under this section, 

22 the Secretary shall set aside a portion of such amounts 

23 that shall only be available for the following activities by 

24 such States: 


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1 (1) Providing guaranteed availability of indi2 vidual health insurance coverage to certain individ3 uals with prior group coverage under part B of title 

4 XXVII of the Public Health Service Act. 

5 (2) A reduction in premium trends, actual pre6 miums, or other cost-sharing requirements. 

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

8 high-risk individuals eligible for coverage. 

9 (4) States that adopt the Model Health Plan 

10 for Uninsurable Individuals Act of the National As11 sociation of Insurance Commissioners (if and when 

12 updated by such Association). 

13 The Secretary may request such Association to update 

14 such Model Health Plan as needed by 2013. 

15 (e) ADMINISTRATION.—The Secretary shall provide 

16 for the administration of this section and may establish 

17 such terms and conditions, including the requirement of 

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

19 section. 

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

21 construed as requiring a State to operate a reinsurance 

22 pool (or other risk-adjustment mechanism) under this sec23 tion or as preventing a State from operating such a pool 

24 or mechanism through one or more private entities. 


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1 (g) QUALIFYING HIGH-RISK POOL.—For purposes of 

2 this section, the term ‘‘qualifying high-risk pool’’ means 

3 any qualified high-risk pool (as defined in subsection 

4 (g)(1)(A) of section 2745) of the Public Health Service 

5 Act) that meets the conditions to receive a grant under 

6 section (b)(1) of such section. 

7 (h) REINSURANCE POOL OR OTHER RISK-ADJUST8 MENT MECHANISM DEFINED.—For purposes of this sec9 tion, the term ‘‘reinsurance pool or other risk-adjustment 

10 mechanism’’ means any State-based risk spreading mecha11 nism to subsidize the purchase of private health insurance 

12 for the high-risk population. 

13 (i) HIGH-RISK POPULATION.—For purposes of this 

14 section, the term ‘‘high-risk population’’ means— 

15 (1) individuals who, by reason of the existence 

16 or history of a medical condition, are able to acquire 

17 health coverage only at rates which are at least 150 

18 percent of the standard risk rates for such coverage 

19 (in a non-community-rated non-guaranteed issue 

20 State), and 

21 (2) individuals who are provided health cov22 erage by a high-risk pool. 

23 (j) STATE DEFINED.—For purposes of this section, 

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1 to Rico, the Virgin Islands, Guam, American Samoa, and 

2 the Northern Mariana Islands. 

3 (k) EXTENDING FUNDING.—Section 2745(d)(2) of 

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

5 is amended by striking ‘‘2010’’ and inserting ‘‘2014’’ each 

6 place it appears. 

7 Subtitle C—Health Care Access and 

8 Availability 

9 SEC. 221. EXPANSION OF ACCESS AND CHOICE THROUGH 

10 INDIVIDUAL MEMBERSHIP ASSOCIATIONS 

11 (IMAS). 

12 The Public Health Service Act, as amended by sec13 tion 2, is further amended by inserting after title XXX 

14 the following new title: 

15 ‘‘TITLE XXXI—INDIVIDUAL 

16 MEMBERSHIP ASSOCIATIONS 

17 ‘‘SEC. 3101. DEFINITION OF INDIVIDUAL MEMBERSHIP AS18 SOCIATION (IMA). 

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

20 terms ‘individual membership association’ and ‘IMA’ 

21 mean a legal entity that meets the following requirements: 

22 ‘‘(1) ORGANIZATION.—The IMA is an organiza23 tion operated under the direction of an association 

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


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1 ‘‘(2) OFFERING HEALTH BENEFITS COV2 ERAGE.— 

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

4 conjunction with those health insurance issuers 

5 that offer health benefits coverage through the 

6 IMA, makes available health benefits coverage 

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

8 members of the IMA and the dependents of 

9 such members in the manner described in sub10 section (c)(2) at rates that are established by 

11 the health insurance issuer on a policy or prod12 uct specific basis and that may vary only as 

13 permissible under State law. 

14 ‘‘(B) NONDISCRIMINATION IN COVERAGE

15 OFFERED.— 

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

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

18 coverage to a member of an IMA unless 

19 the same coverage is offered to all such 

20 members of the IMA. 

21 ‘‘(ii) CONSTRUCTION.—Nothing in 

22 this title shall be construed as requiring or 

23 permitting a health insurance issuer to 

24 provide coverage outside the service area of 

25 the issuer, as approved under State law, or 


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1 requiring a health insurance issuer from 

2 excluding or limiting the coverage on any 

3 individual, subject to the requirement of 

4 section 2741. 

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

6 IMA provides health benefits coverage only 

7 through contracts with health insurance issuers 

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

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

11 shall be construed as preventing the establishment 

12 and operation of more than one IMA in a geographic 

13 area or as limiting the number of IMAs that may 

14 operate in any area. 

15 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES

16 TO PURCHASERS.— 

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

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

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

22 subsection shall be construed as preventing an 

23 IMA from serving as an administrative service 

24 organization to any entity. 


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

2 with the Secretary information that demonstrates 

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

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

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

9 offered through an IMA shall— 

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

11 issuer that— 

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

14 ‘‘(ii) meets all applicable State stand15 ards relating to consumer protection, sub16 ject to section 3002(b), and 

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

18 or otherwise permitted to be offered under 

19 State law. 

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

21 benefits coverage made available through an IMA 

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

24 of this title: 


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

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

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

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

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

10 contribution into a medical savings account or 

11 flexible spending account. 

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

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

15 coverage. 

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

18 precluding a health insurance issuer offering health 

19 benefits coverage through an IMA from establishing 

20 premium discounts or rebates for members or from 

21 modifying otherwise applicable copayments or 

22 deductibles in return for adherence to programs of 

23 health promotion and disease prevention so long as 

24 such programs are agreed to in advance by the IMA 

25 and comply with all other provisions of this title and 


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1 do not discriminate among similarly situated mem2 bers. 

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

4 ‘‘(1) MEMBERS.— 

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

7 individual who is a member of an IMA, the in8 dividual may enroll for health benefits coverage 

9 (including coverage for dependents of such indi10 vidual) offered by a health insurance issuer 

11 through the IMA. 

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

13 in this paragraph shall preclude an IMA from 

14 establishing rules of enrollment and reenroll15 ment of members. Such rules shall be applied 

16 consistently to all members within the IMA and 

17 shall not be based in any manner on health sta18 tus-related factors. 

19 ‘‘(2) HEALTH INSURANCE ISSUERS.—The con20 tract between an IMA and a health insurance issuer 

21 shall provide, with respect to a member enrolled with 

22 health benefits coverage offered by the issuer 

23 through the IMA, for the payment of the premiums 

24 collected by the issuer. 


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1 ‘‘SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIRE2 MENTS. 

3 ‘‘State laws insofar as they relate to any of the fol4 lowing are superseded and shall not apply to health bene5 fits coverage made available through an IMA: 

6 ‘‘(1) Benefit requirements for health benefits 

7 coverage offered through an IMA, including (but not 

8 limited to) requirements relating to coverage of spe9 cific providers, specific services or conditions, or the 

10 amount, duration, or scope of benefits, but not in11 cluding requirements to the extent required to imple12 ment title XXVII or other Federal law and to the 

13 extent the requirement prohibits an exclusion of a 

14 specific disease from such coverage. 

15 ‘‘(2) Any other requirements (including limita16 tions on compensation arrangements) that, directly 

17 or indirectly, preclude (or have the effect of pre18 cluding) the offering of such coverage through an 

19 IMA, if the IMA meets the requirements of this 

20 title. 

21 Any State law or regulation relating to the composition 

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

23 law or regulation is inconsistent with the provisions of this 

24 title. 


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1 ‘‘SEC. 3103. ADMINISTRATION. 

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

3 this title and is authorized to issue such regulations as 

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

5 shall be subject to Congressional review under the provi6 sions of chapter 8 of title 5, United States Code. The Sec7 retary shall incorporate the process of ‘deemed file and 

8 use’ with respect to the information filed under section 

9 3001(a)(5)(A) and shall determine whether information 

10 filed by an IMA demonstrates compliance with the applica11 ble requirements of this title. The Secretary shall exercise 

12 authority under this title in a manner that fosters and 

13 promotes the development of IMAs in order to improve 

14 access to health care coverage and services. 

15 ‘‘(b) PERIODIC REPORTS.—The Secretary shall sub16 mit to Congress a report every 30 months, during the 10- 

17 year period beginning on the effective date of the rules 

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

19 the effectiveness of this title in promoting coverage of un20 insured individuals. The Secretary may provide for the 

21 production of such reports through one or more contracts 

22 with appropriate private entities. 

23 ‘‘SEC. 3104. DEFINITIONS. 

24 ‘‘For purposes of this title: 


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

2 means, with respect to health insurance coverage of3 fered in a State, a legal entity which— 

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

5 least 5 years; 

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

7 good faith for purposes other than obtaining in8 surance; 

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

10 association on any health status-related factor 

11 relating to an individual (including an employee 

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

13 and 

14 ‘‘(D) does not make health insurance cov15 erage offered through the association available 

16 other than in connection with a member of the 

17 association. 

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

19 applied to health insurance coverage offered by a 

20 health insurance issuer licensed (or otherwise regu21 lated) in a State, shall have the meaning applied to 

22 such term with respect to such coverage under the 

23 laws of the State relating to such coverage and such 

24 an issuer. Such term may include the spouse and 

25 children of the individual involved. 


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

2 ‘health benefits coverage’ has the meaning given the 

3 term health insurance coverage in section 

4 2791(b)(1), and does not include excepted benefits 

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

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

7 ‘health insurance issuer’ has the meaning given such 

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

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

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

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

12 ‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA13 TION.—The terms ‘IMA’ and ‘individual membership 

14 association’ are defined in section 3101(a). 

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

16 with respect to an IMA, an individual who is a mem17 ber of the association to which the IMA is offering 

18 coverage.’’. 

19 Subtitle D—Small Business Health 

20 Fairness 

21 SEC. 231. SHORT TITLE. 

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

23 Health Fairness Act of 2011’’. 


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1 SEC. 232. RULES GOVERNING ASSOCIATION HEALTH 

2 PLANS. 

3 (a) IN GENERAL.—Subtitle B of title I of the Em4 ployee Retirement Income Security Act of 1974 is amend5 ed by adding after part 7 the following new part: 

6 ‘‘PART 8—RULES GOVERNING ASSOCIATION 

7 HEALTH PLANS 

8 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 

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

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

11 whose sponsor is (or is deemed under this part to be) de12 scribed in subsection (b). 

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

14 plan is described in this subsection if such sponsor— 

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

16 with a constitution and bylaws specifically stating its 

17 purpose and providing for periodic meetings on at 

18 least an annual basis, as a bona fide trade associa19 tion, a bona fide industry association (including a 

20 rural electric cooperative association or a rural tele21 phone cooperative association), a bona fide profes22 sional association, or a bona fide chamber of com23 merce (or similar bona fide business association, in24 cluding a corporation or similar organization that 

25 operates on a cooperative basis (within the meaning 

26 of section 1381 of the Internal Revenue Code of 


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1 1986)), for substantial purposes other than that of 

2 obtaining or providing medical care; 

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

4 receives the active support of its members and re5 quires for membership payment on a periodic basis 

6 of dues or payments necessary to maintain eligibility 

7 for membership in the sponsor; and 

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

9 or payments, or coverage under the plan on the 

10 basis of health status-related factors with respect to 

11 the employees of its members (or affiliated mem12 bers), or the dependents of such employees, and does 

13 not condition such dues or payments on the basis of 

14 group health plan participation. 

15 Any sponsor consisting of an association of entities which 

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

17 shall be deemed to be a sponsor described in this sub18 section. 

19 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH 

20 PLANS. 

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

22 prescribe by regulation a procedure under which, subject 

23 to subsection (b), the applicable authority shall certify as24 sociation health plans which apply for certification as 

25 meeting the requirements of this part. 


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

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

3 health plan that provides at least one benefit option which 

4 does not consist of health insurance coverage, the applica5 ble authority shall certify such plan as meeting the re6 quirements of this part only if the applicable authority is 

7 satisfied that the applicable requirements of this part are 

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

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

10 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

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

12 certification under this part is in effect shall meet the ap13 plicable requirements of this part, effective on the date 

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

15 is to commence operations). 

16 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI17 CATION.—The applicable authority may provide by regula18 tion for continued certification of association health plans 

19 under this part. 

20 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

21 PLANS.—The applicable authority shall establish a class 

22 certification procedure for association health plans under 

23 which all benefits consist of health insurance coverage. 

24 Under such procedure, the applicable authority shall pro25 vide for the granting of certification under this part to 


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1 the plans in each class of such association health plans 

2 upon appropriate filing under such procedure in connec3 tion with plans in such class and payment of the pre4 scribed fee under section 807(a). 

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

6 HEALTH PLANS.—An association health plan which offers 

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

8 insurance coverage may be certified under this part only 

9 if such plan consists of any of the following: 

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

11 date of the enactment of the Small Business Health 

12 Fairness Act of 2011, 

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

14 restrict membership to one or more trades and busi15 nesses or industries and whose eligible participating 

16 employers represent a broad cross-section of trades 

17 and businesses or industries, or 

18 ‘‘(3) a plan whose eligible participating employ19 ers represent one or more trades or businesses, or 

20 one or more industries, consisting of any of the fol21 lowing: agriculture; equipment and automobile deal22 erships; barbering and cosmetology; certified public 

23 accounting practices; child care; construction; dance, 

24 theatrical and orchestra productions; disinfecting 

25 and pest control; financial services; fishing; food 


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1 service establishments; hospitals; labor organiza2 tions; logging; manufacturing (metals); mining; med3 ical and dental practices; medical laboratories; pro4 fessional consulting services; sanitary services; trans5 portation (local and freight); warehousing; whole6 saling/distributing; or any other trade or business or 

7 industry which has been indicated as having average 

8 or above-average risk or health claims experience by 

9 reason of State rate filings, denials of coverage, pro10 posed premium rate levels, or other means dem11 onstrated by such plan in accordance with regula12 tions. 

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

14 BOARDS OF TRUSTEES. 

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

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

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

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

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

20 the application for certification under this part. 

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

22 this subsection are met with respect to an association 

23 health plan if the following requirements are met: 

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

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1 ees which has complete fiscal control over the plan 

2 and which is responsible for all operations of the 

3 plan. 

4 ‘‘(2) RULES OF OPERATION AND FINANCIAL

5 CONTROLS.—The board of trustees has in effect 

6 rules of operation and financial controls, based on a 

7 3-year plan of operation, adequate to carry out the 

8 terms of the plan and to meet all requirements of 

9 this title applicable to the plan. 

10 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

11 PARTICIPATING EMPLOYERS AND TO CONTRAC12 TORS.— 

13 ‘‘(A) BOARD MEMBERSHIP.— 

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clauses (ii) and (iii), the members 

16 of the board of trustees are individuals se17 lected from individuals who are the owners, 

18 officers, directors, or employees of the par19 ticipating employers or who are partners in 

20 the participating employers and actively 

21 participate in the business. 

22 ‘‘(ii) LIMITATION.— 

23 ‘‘(I) GENERAL RULE.—Except as 

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

25 no such member is an owner, officer, 


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1 director, or employee of, or partner in, 

2 a contract administrator or other 

3 service provider to the plan. 

4 ‘‘(II) LIMITED EXCEPTION FOR

5 PROVIDERS OF SERVICES SOLELY ON

6 BEHALF OF THE SPONSOR.—Officers 

7 or employees of a sponsor which is a 

8 service provider (other than a contract 

9 administrator) to the plan may be 

10 members of the board if they con11 stitute not more than 25 percent of 

12 the membership of the board and they 

13 do not provide services to the plan 

14 other than on behalf of the sponsor. 

15 ‘‘(III) TREATMENT OF PRO16 VIDERS OF MEDICAL CARE.—In the 

17 case of a sponsor which is an associa18 tion whose membership consists pri19 marily of providers of medical care, 

20 subclause (I) shall not apply in the 

21 case of any service provider described 

22 in subclause (I) who is a provider of 

23 medical care under the plan. 

24 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

25 Clause (i) shall not apply to an association 


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1 health plan which is in existence on the 

2 date of the enactment of the Small Busi3 ness Health Fairness Act of 2011. 

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

5 sole authority under the plan to approve appli6 cations for participation in the plan and to con7 tract with a service provider to administer the 

8 day-to-day affairs of the plan. 

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

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

11 maintained by a franchiser for a franchise network con12 sisting of its franchisees— 

13 ‘‘(1) the requirements of subsection (a) and sec14 tion 801(a) shall be deemed met if such require15 ments would otherwise be met if the franchiser were 

16 deemed to be the sponsor referred to in section 

17 801(b), such network were deemed to be an associa18 tion described in section 801(b), and each franchisee 

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

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

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

22 be deemed met. 

23 The Secretary may by regulation define for purposes of 

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

25 and ‘franchisee’. 


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1 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE2 MENTS. 

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

4 requirements of this subsection are met with respect to 

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

6 plan— 

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

8 ‘‘(A) a member of the sponsor, 

9 ‘‘(B) the sponsor, or 

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

11 with respect to which the requirements of sub12 section (b) are met, 

13 except that, in the case of a sponsor which is a pro14 fessional association or other individual-based asso15 ciation, if at least one of the officers, directors, or 

16 employees of an employer, or at least one of the in17 dividuals who are partners in an employer and who 

18 actively participates in the business, is a member or 

19 such an affiliated member of the sponsor, partici20 pating employers may also include such employer; 

21 and 

22 ‘‘(2) all individuals commencing coverage under 

23 the plan after certification under this part must 

24 be— 

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

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


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1 employees of, or partners in, participating em2 ployers; or 

3 ‘‘(B) the beneficiaries of individuals de4 scribed in subparagraph (A). 

5 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM6 PLOYEES.—In the case of an association health plan in 

7 existence on the date of the enactment of the Small Busi8 ness Health Fairness Act of 2011, an affiliated member 

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

10 the plan as a participating employer only if— 

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

12 member on the date of certification under this part; 

13 or 

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

15 date of the offering of such coverage, the affiliated 

16 member has not maintained or contributed to a 

17 group health plan with respect to any of its employ18 ees who would otherwise be eligible to participate in 

19 such association health plan. 

20 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re21 quirements of this subsection are met with respect to an 

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

23 no participating employer may provide health insurance 

24 coverage in the individual market for any employee not 

25 covered under the plan which is similar to the coverage 


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1 contemporaneously provided to employees of the employer 

2 under the plan, if such exclusion of the employee from cov3 erage under the plan is based on a health status-related 

4 factor with respect to the employee and such employee 

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

6 for coverage under the plan. 

7 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

8 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI9 PATE.—The requirements of this subsection are met with 

10 respect to an association health plan if— 

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

12 meeting the preceding requirements of this section 

13 are eligible to qualify as participating employers for 

14 all geographically available coverage options, unless, 

15 in the case of any such employer, participation or 

16 contribution requirements of the type referred to in 

17 section 2711 of the Public Health Service Act are 

18 not met; 

19 ‘‘(2) upon request, any employer eligible to par20 ticipate is furnished information regarding all cov21 erage options available under the plan; and 

22 ‘‘(3) the applicable requirements of sections 

23 701, 702, and 703 are met with respect to the plan. 


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

2 DOCUMENTS, CONTRIBUTION RATES, AND 

3 BENEFIT OPTIONS. 

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

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

6 following requirements are met: 

7 ‘‘(1) CONTENTS OF GOVERNING INSTRU8 MENTS.—The instruments governing the plan in9 clude a written instrument, meeting the require10 ments of an instrument required under section 

11 402(a)(1), which— 

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

13 serves as the named fiduciary required for plans 

14 under section 402(a)(1) and serves in the ca15 pacity of a plan administrator (referred to in 

16 section 3(16)(A)); 

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

18 is to serve as plan sponsor (referred to in sec19 tion 3(16)(B)); and 

20 ‘‘(C) incorporates the requirements of sec21 tion 806. 

22 ‘‘(2) CONTRIBUTION RATES MUST BE NON23 DISCRIMINATORY.— 

24 ‘‘(A) The contribution rates for any par25 ticipating small employer do not vary on the 

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1 tion to employees of such employer or their 

2 beneficiaries and do not vary on the basis of the 

3 type of business or industry in which such em4 ployer is engaged. 

5 ‘‘(B) Nothing in this title or any other pro6 vision of law shall be construed to preclude an 

7 association health plan, or a health insurance 

8 issuer offering health insurance coverage in 

9 connection with an association health plan, 

10 from— 

11 ‘‘(i) setting contribution rates based 

12 on the claims experience of the plan; or 

13 ‘‘(ii) varying contribution rates for 

14 small employers in a State to the extent 

15 that such rates could vary using the same 

16 methodology employed in such State for 

17 regulating premium rates in the small 

18 group market with respect to health insur19 ance coverage offered in connection with 

20 bona fide associations (within the meaning 

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

22 Service Act), 

23 subject to the requirements of section 702(b) 

24 relating to contribution rates. 


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1 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI2 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If 

3 any benefit option under the plan does not consist 

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

5 beginning of the plan year not fewer than 1,000 par6 ticipants and beneficiaries. 

7 ‘‘(4) MARKETING REQUIREMENTS.— 

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

9 which consists of health insurance coverage is 

10 offered under the plan, State-licensed insurance 

11 agents shall be used to distribute to small em12 ployers coverage which does not consist of 

13 health insurance coverage in a manner com14 parable to the manner in which such agents are 

15 used to distribute health insurance coverage. 

16 ‘‘(B) STATE-LICENSED INSURANCE

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

18 the term ‘State-licensed insurance agents’ 

19 means one or more agents who are licensed in 

20 a State and are subject to the laws of such 

21 State relating to licensure, qualification, test22 ing, examination, and continuing education of 

23 persons authorized to offer, sell, or solicit 

24 health insurance coverage in such State. 


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1 ‘‘(5) REGULATORY REQUIREMENTS.—Such 

2 other requirements as the applicable authority deter3 mines are necessary to carry out the purposes of this 

4 part, which shall be prescribed by the applicable au5 thority by regulation. 

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

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

8 nothing in this part or any provision of State law (as de9 fined in section 514(c)(1)) shall be construed to preclude 

10 an association health plan, or a health insurance issuer 

11 offering health insurance coverage in connection with an 

12 association health plan, from exercising its sole discretion 

13 in selecting the specific items and services consisting of 

14 medical care to be included as benefits under such plan 

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

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

17 section 731(a)(1) with respect to matters governed by sec18 tion 711, 712, or 713, or (2) any law of the State with 

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

20 plan was initially obtained to the extent that such law pro21 hibits an exclusion of a specific disease from such cov22 erage. 


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

2 FOR SOLVENCY FOR PLANS PROVIDING 

3 HEALTH BENEFITS IN ADDITION TO HEALTH 

4 INSURANCE COVERAGE. 

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

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

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

8 of health insurance coverage; or 

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

10 options which do not consist of health insurance cov11 erage, the plan— 

12 ‘‘(A) establishes and maintains reserves 

13 with respect to such additional benefit options, 

14 in amounts recommended by the qualified 

15 health actuary, consisting of— 

16 ‘‘(i) a reserve sufficient for unearned 

17 contributions; 

18 ‘‘(ii) a reserve sufficient for benefit li19 abilities which have been incurred, which 

20 have not been satisfied, and for which risk 

21 of loss has not yet been transferred, and 

22 for expected administrative costs with re23 spect to such benefit liabilities; 

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

25 obligations of the plan; and 


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

2 of error and other fluctuations, taking into 

3 account the specific circumstances of the 

4 plan; and 

5 ‘‘(B) establishes and maintains aggregate 

6 and specific excess/stop loss insurance and sol7 vency indemnification, with respect to such ad8 ditional benefit options for which risk of loss 

9 has not yet been transferred, as follows: 

10 ‘‘(i) The plan shall secure aggregate 

11 excess/stop loss insurance for the plan with 

12 an attachment point which is not greater 

13 than 125 percent of expected gross annual 

14 claims. The applicable authority may by 

15 regulation provide for upward adjustments 

16 in the amount of such percentage in speci17 fied circumstances in which the plan spe18 cifically provides for and maintains re19 serves in excess of the amounts required 

20 under subparagraph (A). 

21 ‘‘(ii) The plan shall secure specific ex22 cess/stop loss insurance for the plan with 

23 an attachment point which is at least equal 

24 to an amount recommended by the plan’s 

25 qualified health actuary. The applicable 


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1 authority may by regulation provide for ad2 justments in the amount of such insurance 

3 in specified circumstances in which the 

4 plan specifically provides for and maintains 

5 reserves in excess of the amounts required 

6 under subparagraph (A). 

7 ‘‘(iii) The plan shall secure indem8 nification insurance for any claims which 

9 the plan is unable to satisfy by reason of 

10 a plan termination. 

11 Any person issuing to a plan insurance described in clause 

12 (i), (ii), or (iii) of subparagraph (B) shall notify the Sec13 retary of any failure of premium payment meriting can14 cellation of the policy prior to undertaking such a cancella15 tion. Any regulations prescribed by the applicable author16 ity pursuant to clause (i) or (ii) of subparagraph (B) may 

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

18 stop loss insurance as the qualified health actuary may 

19 recommend, taking into account the specific circumstances 

20 of the plan. 

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

22 RESERVES.—In the case of any association health plan de23 scribed in subsection (a)(2), the requirements of this sub24 section are met if the plan establishes and maintains sur25 plus in an amount at least equal to— 


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1 ‘‘(1) $500,000, or 

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

3 $2,000,000) as may be set forth in regulations pre4 scribed by the applicable authority, considering the 

5 level of aggregate and specific excess/stop loss insur6 ance provided with respect to such plan and other 

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

8 projected levels of participation or claims, the nature 

9 of the plan’s liabilities, and the types of assets avail10 able to assure that such liabilities are met. 

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

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

13 the applicable authority may provide such additional re14 quirements relating to reserves, excess/stop loss insurance, 

15 and indemnification insurance as the applicable authority 

16 considers appropriate. Such requirements may be provided 

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

18 of such plans. 

19 ‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR20 ANCE.—The applicable authority may provide for adjust21 ments to the levels of reserves otherwise required under 

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

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

24 provided with respect to such plan or plans. 


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

2 applicable authority may permit an association health plan 

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

4 of the requirements of this section (except subsection 

5 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar6 rangement, or other financial arrangement as the applica7 ble authority determines to be adequate to enable the plan 

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

9 and is otherwise no less protective of the interests of par10 ticipants and beneficiaries than the requirements for 

11 which it is substituted. The applicable authority may take 

12 into account, for purposes of this subsection, evidence pro13 vided by the plan or sponsor which demonstrates an as14 sumption of liability with respect to the plan. Such evi15 dence may be in the form of a contract of indemnification, 

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

17 applicable terms of the plan in the form of assessments 

18 of participating employers, security, or other financial ar19 rangement. 

20 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

21 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 

22 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO23 CIATION HEALTH PLAN FUND.— 

24 ‘‘(A) IN GENERAL.—In the case of an as25 sociation health plan described in subsection 


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

2 met if the plan makes payments into the Asso3 ciation Health Plan Fund under this subpara4 graph when they are due. Such payments shall 

5 consist of annual payments in the amount of 

6 $5,000, and, in addition to such annual pay7 ments, such supplemental payments as the Sec8 retary may determine to be necessary under 

9 paragraph (2). Payments under this paragraph 

10 are payable to the Fund at the time determined 

11 by the Secretary. Initial payments are due in 

12 advance of certification under this part. Pay13 ments shall continue to accrue until a plan’s as14 sets are distributed pursuant to a termination 

15 procedure. 

16 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

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

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

19 not more than 100 percent of the payment 

20 which was not timely paid shall be payable by 

21 the plan to the Fund. 

22 ‘‘(C) CONTINUED DUTY OF THE SEC23 RETARY.—The Secretary shall not cease to 

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1 count of the failure of a plan to pay any pay2 ment when due. 

3 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

4 EXCESS/STOP LOSS INSURANCE COVERAGE AND IN5 DEMNIFICATION INSURANCE COVERAGE FOR CER6 TAIN PLANS.—In any case in which the applicable 

7 authority determines that there is, or that there is 

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

9 take necessary corrective actions under section 

10 809(a) with respect to an association health plan de11 scribed in subsection (a)(2); or (B) a termination of 

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

13 if the applicable authority is not the Secretary, cer14 tifies such determination to the Secretary), the Sec15 retary shall determine the amounts necessary to 

16 make payments to an insurer (designated by the 

17 Secretary) to maintain in force excess/stop loss in18 surance coverage or indemnification insurance cov19 erage for such plan, if the Secretary determines that 

20 there is a reasonable expectation that, without such 

21 payments, claims would not be satisfied by reason of 

22 termination of such coverage. The Secretary shall, to 

23 the extent provided in advance in appropriation 

24 Acts, pay such amounts so determined to the insurer 

25 designated by the Secretary. 


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

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

3 on the books of the Treasury a fund to be 

4 known as the ‘Association Health Plan Fund’. 

5 The Fund shall be available for making pay6 ments pursuant to paragraph (2). The Fund 

7 shall be credited with payments received pursu8 ant to paragraph (1)(A), penalties received pur9 suant to paragraph (1)(B), and earnings on in10 vestments of amounts of the Fund under sub11 paragraph (B). 

12 ‘‘(B) INVESTMENT.—Whenever the Sec13 retary determines that the moneys of the fund 

14 are in excess of current needs, the Secretary 

15 may request the investment of such amounts as 

16 the Secretary determines advisable by the Sec17 retary of the Treasury in obligations issued or 

18 guaranteed by the United States. 

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

20 of this section— 

21 ‘‘(1) AGGREGATE EXCESS/STOP LOSS INSUR22 ANCE.—The term ‘aggregate excess/stop loss insur23 ance’ means, in connection with an association 

24 health plan, a contract— 


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

2 minimum standards as the applicable authority 

3 may prescribe by regulation) provides for pay4 ment to the plan with respect to aggregate 

5 claims under the plan in excess of an amount 

6 or amounts specified in such contract; 

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

8 ‘‘(C) which allows for payment of pre9 miums by any third party on behalf of the in10 sured plan. 

11 ‘‘(2) SPECIFIC EXCESS/STOP LOSS INSUR12 ANCE.—The term ‘specific excess/stop loss insur13 ance’ means, in connection with an association 

14 health plan, a contract— 

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

16 minimum standards as the applicable authority 

17 may prescribe by regulation) provides for pay18 ment to the plan with respect to claims under 

19 the plan in connection with a covered individual 

20 in excess of an amount or amounts specified in 

21 such contract in connection with such covered 

22 individual; 

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


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1 ‘‘(C) which allows for payment of pre2 miums by any third party on behalf of the in3 sured plan. 

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

5 of this section, the term ‘indemnification insurance’ 

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

7 contract— 

8 ‘‘(1) under which an insurer (meeting such min9 imum standards as the applicable authority may pre10 scribe by regulation) provides for payment to the 

11 plan with respect to claims under the plan which the 

12 plan is unable to satisfy by reason of a termination 

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

14 termination); 

15 ‘‘(2) which is guaranteed renewable and 

16 noncancellable for any reason (except as the applica17 ble authority may prescribe by regulation); and 

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

19 any third party on behalf of the insured plan. 

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

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

22 health plan, plan assets which meet the fiduciary stand23 ards under part 4 and such additional requirements re24 garding liquidity as the applicable authority may prescribe 

25 by regulation. 


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

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

3 date of the enactment of the Small Business Health 

4 Fairness Act of 2011, the applicable authority shall 

5 establish a Solvency Standards Working Group. In 

6 prescribing the initial regulations under this section, 

7 the applicable authority shall take into account the 

8 recommendations of such Working Group. 

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

10 consist of not more than 15 members appointed by 

11 the applicable authority. The applicable authority 

12 shall include among persons invited to membership 

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

14 following: 

15 ‘‘(A) A representative of the National As16 sociation of Insurance Commissioners. 

17 ‘‘(B) A representative of the American 

18 Academy of Actuaries. 

19 ‘‘(C) A representative of the State govern20 ments, or their interests. 

21 ‘‘(D) A representative of existing self-in22 sured arrangements, or their interests. 

23 ‘‘(E) A representative of associations of 

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

25 their interests. 


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1 ‘‘(F) A representative of multiemployer 

2 plans that are group health plans, or their in3 terests. 

4 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE5 LATED REQUIREMENTS. 

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

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

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

9 an application for certification under this part a filing fee 

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

11 case of the Secretary, to the extent provided in appropria12 tion Acts, for the sole purpose of administering the certifi13 cation procedures applicable with respect to association 

14 health plans. 

15 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA16 TION FOR CERTIFICATION.—An application for certifi17 cation under this part meets the requirements of this sec18 tion only if it includes, in a manner and form which shall 

19 be prescribed by the applicable authority by regulation, at 

20 least the following information: 

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

22 and addresses of— 

23 ‘‘(A) the sponsor; and 

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

25 of the plan. 


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

2 BUSINESS.—The States in which participants and 

3 beneficiaries under the plan are to be located and 

4 the number of them expected to be located in each 

5 such State. 

6 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro7 vided by the board of trustees that the bonding re8 quirements of section 412 will be met as of the date 

9 of the application or (if later) commencement of op10 erations. 

11 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu12 ments governing the plan (including any bylaws and 

13 trust agreements), the summary plan description, 

14 and other material describing the benefits that will 

15 be provided to participants and beneficiaries under 

16 the plan. 

17 ‘‘(5) AGREEMENTS WITH SERVICE PRO18 VIDERS.—A copy of any agreements between the 

19 plan and contract administrators and other service 

20 providers. 

21 ‘‘(6) FUNDING REPORT.—In the case of asso22 ciation health plans providing benefits options in ad23 dition to health insurance coverage, a report setting 

24 forth information with respect to such additional 

25 benefit options determined as of a date within the 


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1 120-day period ending with the date of the applica2 tion, including the following: 

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

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

5 statement of actuarial opinion, signed by a 

6 qualified health actuary, that all applicable re7 quirements of section 806 are or will be met in 

8 accordance with regulations which the applica9 ble authority shall prescribe. 

10 ‘‘(B) ADEQUACY OF CONTRIBUTION

11 RATES.—A statement of actuarial opinion, 

12 signed by a qualified health actuary, which sets 

13 forth a description of the extent to which con14 tribution rates are adequate to provide for the 

15 payment of all obligations and the maintenance 

16 of required reserves under the plan for the 12- 

17 month period beginning with such date within 

18 such 120-day period, taking into account the 

19 expected coverage and experience of the plan. If 

20 the contribution rates are not fully adequate, 

21 the statement of actuarial opinion shall indicate 

22 the extent to which the rates are inadequate 

23 and the changes needed to ensure adequacy. 

24 ‘‘(C) CURRENT AND PROJECTED VALUE OF

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1 tuarial opinion signed by a qualified health ac2 tuary, which sets forth the current value of the 

3 assets and liabilities accumulated under the 

4 plan and a projection of the assets, liabilities, 

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

6 month period referred to in subparagraph (B). 

7 The income statement shall identify separately 

8 the plan’s administrative expenses and claims. 

9 ‘‘(D) COSTS OF COVERAGE TO BE

10 CHARGED AND OTHER EXPENSES.—A state11 ment of the costs of coverage to be charged, in12 cluding an itemization of amounts for adminis13 tration, reserves, and other expenses associated 

14 with the operation of the plan. 

15 ‘‘(E) OTHER INFORMATION.—Any other 

16 information as may be determined by the appli17 cable authority, by regulation, as necessary to 

18 carry out the purposes of this part. 

19 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

20 STATES.—A certification granted under this part to an 

21 association health plan shall not be effective unless written 

22 notice of such certification is filed with the applicable 

23 State authority of each State in which at least 25 percent 

24 of the participants and beneficiaries under the plan are 

25 located. For purposes of this subsection, an individual 


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1 shall be considered to be located in the State in which a 

2 known address of such individual is located or in which 

3 such individual is employed. 

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

5 of any association health plan certified under this part, 

6 descriptions of material changes in any information which 

7 was required to be submitted with the application for the 

8 certification under this part shall be filed in such form 

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

12 respect to specified matters which might serve as the basis 

13 for suspension or revocation of the certification. 

14 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS15 SOCIATION HEALTH PLANS.—An association health plan 

16 certified under this part which provides benefit options in 

17 addition to health insurance coverage for such plan year 

18 shall meet the requirements of section 103 by filing an 

19 annual report under such section which shall include infor20 mation described in subsection (b)(6) with respect to the 

21 plan year and, notwithstanding section 104(a)(1)(A), shall 

22 be filed with the applicable authority not later than 90 

23 days after the close of the plan year (or on such later date 

24 as may be prescribed by the applicable authority). The apVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00090 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 plicable authority may require by regulation such interim 

2 reports as it considers appropriate. 

3 ‘‘(f) ENGAGEMENT OF QUALIFIED HEALTH ACTU4 ARY.—The board of trustees of each association health 

5 plan which provides benefits options in addition to health 

6 insurance coverage and which is applying for certification 

7 under this part or is certified under this part shall engage, 

8 on behalf of all participants and beneficiaries, a qualified 

9 health actuary who shall be responsible for the preparation 

10 of the materials comprising information necessary to be 

11 submitted by a qualified health actuary under this part. 

12 The qualified health actuary shall utilize such assumptions 

13 and techniques as are necessary to enable such actuary 

14 to form an opinion as to whether the contents of the mat15 ters reported under this part— 

16 ‘‘(1) are in the aggregate reasonably related to 

17 the experience of the plan and to reasonable expecta18 tions; and 

19 ‘‘(2) represent such actuary’s best estimate of 

20 anticipated experience under the plan. 

21 The opinion by the qualified health actuary shall be made 

22 with respect to, and shall be made a part of, the annual 

23 report. 


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1 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER2 MINATION. 

3 ‘‘Except as provided in section 809(b), an association 

4 health plan which is or has been certified under this part 

5 may terminate (upon or at any time after cessation of ac6 cruals in benefit liabilities) only if the board of trustees, 

7 not less than 60 days before the proposed termination 

8 date— 

9 ‘‘(1) provides to the participants and bene10 ficiaries a written notice of intent to terminate stat11 ing that such termination is intended and the pro12 posed termination date; 

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

14 of the plan in connection with such termination in 

15 a manner which will result in timely payment of all 

16 benefits for which the plan is obligated; and 

17 ‘‘(3) submits such plan in writing to the appli18 cable authority. 

19 Actions required under this section shall be taken in such 

20 form and manner as may be prescribed by the applicable 

21 authority by regulation. 

22 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI23 NATION. 

24 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE25 SERVES.—An association health plan which is certified 

26 under this part and which provides benefits other than 


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1 health insurance coverage shall continue to meet the re2 quirements of section 806, irrespective of whether such 

3 certification continues in effect. The board of trustees of 

4 such plan shall determine quarterly whether the require5 ments of section 806 are met. In any case in which the 

6 board determines that there is reason to believe that there 

7 is or will be a failure to meet such requirements, or the 

8 applicable authority makes such a determination and so 

9 notifies the board, the board shall immediately notify the 

10 qualified health actuary engaged by the plan, and such 

11 actuary shall, not later than the end of the next following 

12 month, make such recommendations to the board for cor13 rective action as the actuary determines necessary to en14 sure compliance with section 806. Not later than 30 days 

15 after receiving from the actuary recommendations for cor16 rective actions, the board shall notify the applicable au17 thority (in such form and manner as the applicable au18 thority may prescribe by regulation) of such recommenda19 tions of the actuary for corrective action, together with 

20 a description of the actions (if any) that the board has 

21 taken or plans to take in response to such recommenda22 tions. The board shall thereafter report to the applicable 

23 authority, in such form and frequency as the applicable 

24 authority may specify to the board, regarding corrective 


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1 action taken by the board until the requirements of section 

2 806 are met. 

3 ‘‘(b) MANDATORY TERMINATION.—In any case in 

4 which— 

5 ‘‘(1) the applicable authority has been notified 

6 under subsection (a) (or by an issuer of excess/stop 

7 loss insurance or indemnity insurance pursuant to 

8 section 806(a)) of a failure of an association health 

9 plan which is or has been certified under this part 

10 and is described in section 806(a)(2) to meet the re11 quirements of section 806 and has not been notified 

12 by the board of trustees of the plan that corrective 

13 action has restored compliance with such require14 ments; and 

15 ‘‘(2) the applicable authority determines that 

16 there is a reasonable expectation that the plan will 

17 continue to fail to meet the requirements of section 

18 806, 

19 the board of trustees of the plan shall, at the direction 

20 of the applicable authority, terminate the plan and, in the 

21 course of the termination, take such actions as the appli22 cable authority may require, including satisfying any 

23 claims referred to in section 806(a)(2)(B)(iii) and recov24 ering for the plan any liability under subsection 

25 (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 


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1 that the affairs of the plan will be, to the maximum extent 

2 possible, wound up in a manner which will result in timely 

3 provision of all benefits for which the plan is obligated. 

4 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL5 VENT ASSOCIATION HEALTH PLANS PRO6 VIDING HEALTH BENEFITS IN ADDITION TO 

7 HEALTH INSURANCE COVERAGE. 

8 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

9 INSOLVENT PLANS.—Whenever the Secretary determines 

10 that an association health plan which is or has been cer11 tified under this part and which is described in section 

12 806(a)(2) will be unable to provide benefits when due or 

13 is otherwise in a financially hazardous condition, as shall 

14 be defined by the Secretary by regulation, the Secretary 

15 shall, upon notice to the plan, apply to the appropriate 

16 United States district court for appointment of the Sec17 retary as trustee to administer the plan for the duration 

18 of the insolvency. The plan may appear as a party and 

19 other interested persons may intervene in the proceedings 

20 at the discretion of the court. The court shall appoint such 

21 Secretary trustee if the court determines that the trustee22 ship is necessary to protect the interests of the partici23 pants and beneficiaries or providers of medical care or to 

24 avoid any unreasonable deterioration of the financial con25 dition of the plan. The trusteeship of such Secretary shall 


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1 continue until the conditions described in the first sen2 tence of this subsection are remedied or the plan is termi3 nated. 

4 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 

5 appointment as trustee under subsection (a), shall have 

6 the power— 

7 ‘‘(1) to do any act authorized by the plan, this 

8 title, or other applicable provisions of law to be done 

9 by the plan administrator or any trustee of the plan; 

10 ‘‘(2) to require the transfer of all (or any part) 

11 of the assets and records of the plan to the Sec12 retary as trustee; 

13 ‘‘(3) to invest any assets of the plan which the 

14 Secretary holds in accordance with the provisions of 

15 the plan, regulations prescribed by the Secretary, 

16 and applicable provisions of law; 

17 ‘‘(4) to require the sponsor, the plan adminis18 trator, any participating employer, and any employee 

19 organization representing plan participants to fur20 nish any information with respect to the plan which 

21 the Secretary as trustee may reasonably need in 

22 order to administer the plan; 

23 ‘‘(5) to collect for the plan any amounts due the 

24 plan and to recover reasonable expenses of the trust25 eeship; 


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1 ‘‘(6) to commence, prosecute, or defend on be2 half of the plan any suit or proceeding involving the 

3 plan; 

4 ‘‘(7) to issue, publish, or file such notices, state5 ments, and reports as may be required by the Sec6 retary by regulation or required by any order of the 

7 court; 

8 ‘‘(8) to terminate the plan (or provide for its 

9 termination in accordance with section 809(b)) and 

10 liquidate the plan assets, to restore the plan to the 

11 responsibility of the sponsor, or to continue the 

12 trusteeship; 

13 ‘‘(9) to provide for the enrollment of plan par14 ticipants and beneficiaries under appropriate cov15 erage options; and 

16 ‘‘(10) to do such other acts as may be nec17 essary to comply with this title or any order of the 

18 court and to protect the interests of plan partici19 pants and beneficiaries and providers of medical 

20 care. 

21 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac22 ticable after the Secretary’s appointment as trustee, the 

23 Secretary shall give notice of such appointment to— 

24 ‘‘(1) the sponsor and plan administrator; 

25 ‘‘(2) each participant; 


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1 ‘‘(3) each participating employer; and 

2 ‘‘(4) if applicable, each employee organization 

3 which, for purposes of collective bargaining, rep4 resents plan participants. 

5 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in6 consistent with the provisions of this title, or as may be 

7 otherwise ordered by the court, the Secretary, upon ap8 pointment as trustee under this section, shall be subject 

9 to the same duties as those of a trustee under section 704 

10 of title 11, United States Code, and shall have the duties 

11 of a fiduciary for purposes of this title. 

12 ‘‘(e) OTHER PROCEEDINGS.—An application by the 

13 Secretary under this subsection may be filed notwith14 standing the pendency in the same or any other court of 

15 any bankruptcy, mortgage foreclosure, or equity receiver16 ship proceeding, or any proceeding to reorganize, conserve, 

17 or liquidate such plan or its property, or any proceeding 

18 to enforce a lien against property of the plan. 

19 ‘‘(f) JURISDICTION OF COURT.— 

20 ‘‘(1) IN GENERAL.—Upon the filing of an appli21 cation for the appointment as trustee or the issuance 

22 of a decree under this section, the court to which the 

23 application is made shall have exclusive jurisdiction 

24 of the plan involved and its property wherever lo25 cated with the powers, to the extent consistent with 


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1 the purposes of this section, of a court of the United 

2 States having jurisdiction over cases under chapter 

3 11 of title 11, United States Code. Pending an adju4 dication under this section such court shall stay, and 

5 upon appointment by it of the Secretary as trustee, 

6 such court shall continue the stay of, any pending 

7 mortgage foreclosure, equity receivership, or other 

8 proceeding to reorganize, conserve, or liquidate the 

9 plan, the sponsor, or property of such plan or spon10 sor, and any other suit against any receiver, conser11 vator, or trustee of the plan, the sponsor, or prop12 erty of the plan or sponsor. Pending such adjudica13 tion and upon the appointment by it of the Sec14 retary as trustee, the court may stay any proceeding 

15 to enforce a lien against property of the plan or the 

16 sponsor or any other suit against the plan or the 

17 sponsor. 

18 ‘‘(2) VENUE.—An action under this section 

19 may be brought in the judicial district where the 

20 sponsor or the plan administrator resides or does 

21 business or where any asset of the plan is situated. 

22 A district court in which such action is brought may 

23 issue process with respect to such action in any 

24 other judicial district. 


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1 ‘‘(g) PERSONNEL.—In accordance with regulations 

2 which shall be prescribed by the Secretary, the Secretary 

3 shall appoint, retain, and compensate accountants, actu4 aries, and other professional service personnel as may be 

5 necessary in connection with the Secretary’s service as 

6 trustee under this section. 

7 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 

8 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a 

9 State may impose by law a contribution tax on an associa10 tion health plan described in section 806(a)(2), if the plan 

11 commenced operations in such State after the date of the 

12 enactment of the Small Business Health Fairness Act of 

13 2011. 

14 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec15 tion, the term ‘contribution tax’ imposed by a State on 

16 an association health plan means any tax imposed by such 

17 State if— 

18 ‘‘(1) such tax is computed by applying a rate to 

19 the amount of premiums or contributions, with re20 spect to individuals covered under the plan who are 

21 residents of such State, which are received by the 

22 plan from participating employers located in such 

23 State or from such individuals; 

24 ‘‘(2) the rate of such tax does not exceed the 

25 rate of any tax imposed by such State on premiums 


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1 or contributions received by insurers or health main2 tenance organizations for health insurance coverage 

3 offered in such State in connection with a group 

4 health plan; 

5 ‘‘(3) such tax is otherwise nondiscriminatory; 

6 and 

7 ‘‘(4) the amount of any such tax assessed on 

8 the plan is reduced by the amount of any tax or as9 sessment otherwise imposed by the State on pre10 miums, contributions, or both received by insurers or 

11 health maintenance organizations for health insur12 ance coverage, aggregate excess/stop loss insurance 

13 (as defined in section 806(g)(1)), specific excess/stop 

14 loss insurance (as defined in section 806(g)(2)), 

15 other insurance related to the provision of medical 

16 care under the plan, or any combination thereof pro17 vided by such insurers or health maintenance organi18 zations in such State in connection with such plan. 

19 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 

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

21 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group 

22 health plan’ has the meaning provided in section 

23 733(a)(1) (after applying subsection (b) of this sec24 tion). 


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1 ‘‘(2) MEDICAL CARE.—The term ‘medical care’ 

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

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

4 term ‘health insurance coverage’ has the meaning 

5 provided in section 733(b)(1). 

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

7 ‘health insurance issuer’ has the meaning provided 

8 in section 733(b)(2). 

9 ‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap10 plicable authority’ means the Secretary, except that, 

11 in connection with any exercise of the Secretary’s 

12 authority regarding which the Secretary is required 

13 under section 506(d) to consult with a State, such 

14 term means the Secretary, in consultation with such 

15 State. 

16 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 

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

18 provided in section 733(d)(2). 

19 ‘‘(7) INDIVIDUAL MARKET.— 

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

21 market’ means the market for health insurance 

22 coverage offered to individuals other than in 

23 connection with a group health plan. 

24 ‘‘(B) TREATMENT OF VERY SMALL

25 GROUPS.— 


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

2 (ii), such term includes coverage offered in 

3 connection with a group health plan that 

4 has fewer than 2 participants as current 

5 employees or participants described in sec6 tion 732(d)(3) on the first day of the plan 

7 year. 

8 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

9 shall not apply in the case of health insur10 ance coverage offered in a State if such 

11 State regulates the coverage described in 

12 such clause in the same manner and to the 

13 same extent as coverage in the small group 

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

15 the Public Health Service Act) is regulated 

16 by such State. 

17 ‘‘(8) PARTICIPATING EMPLOYER.—The term 

18 ‘participating employer’ means, in connection with 

19 an association health plan, any employer, if any indi20 vidual who is an employee of such employer, a part21 ner in such employer, or a self-employed individual 

22 who is such employer (or any dependent, as defined 

23 under the terms of the plan, of such individual) is 

24 or was covered under such plan in connection with 

25 the status of such individual as such an employee, 


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1 partner, or self-employed individual in relation to the 

2 plan. 

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

4 term ‘applicable State authority’ means, with respect 

5 to a health insurance issuer in a State, the State in6 surance commissioner or official or officials des7 ignated by the State to enforce the requirements of 

8 title XXVII of the Public Health Service Act for the 

9 State involved with respect to such issuer. 

10 ‘‘(10) QUALIFIED HEALTH ACTUARY.—The 

11 term ‘qualified health actuary’ means an individual 

12 who is a member of the American Academy of Actu13 aries with expertise in health care. 

14 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili15 ated member’ means, in connection with a sponsor— 

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

17 be a member of the sponsor but who elects an 

18 affiliated status with the sponsor, 

19 ‘‘(B) in the case of a sponsor with mem20 bers which consist of associations, a person who 

21 is a member of any such association and elects 

22 an affiliated status with the sponsor, or 

23 ‘‘(C) in the case of an association health 

24 plan in existence on the date of the enactment 

25 of the Small Business Health Fairness Act of 


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1 2011, a person eligible to be a member of the 

2 sponsor or one of its member associations. 

3 ‘‘(12) LARGE EMPLOYER.—The term ‘large em4 ployer’ means, in connection with a group health 

5 plan with respect to a plan year, an employer who 

6 employed an average of at least 51 employees on 

7 business days during the preceding calendar year 

8 and who employs at least 2 employees on the first 

9 day of the plan year. 

10 ‘‘(13) SMALL EMPLOYER.—The term ‘small em11 ployer’ means, in connection with a group health 

12 plan with respect to a plan year, an employer who 

13 is not a large employer. 

14 ‘‘(b) RULES OF CONSTRUCTION.— 

15 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur16 poses of determining whether a plan, fund, or pro17 gram is an employee welfare benefit plan which is an 

18 association health plan, and for purposes of applying 

19 this title in connection with such plan, fund, or pro20 gram so determined to be such an employee welfare 

21 benefit plan— 

22 ‘‘(A) in the case of a partnership, the term 

23 ‘employer’ (as defined in section 3(5)) includes 

24 the partnership in relation to the partners, and 

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


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1 includes any partner in relation to the partner2 ship; and 

3 ‘‘(B) in the case of a self-employed indi4 vidual, the term ‘employer’ (as defined in sec5 tion 3(5)) and the term ‘employee’ (as defined 

6 in section 3(6)) shall include such individual. 

7 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

8 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 

9 case of any plan, fund, or program which was estab10 lished or is maintained for the purpose of providing 

11 medical care (through the purchase of insurance or 

12 otherwise) for employees (or their dependents) cov13 ered thereunder and which demonstrates to the Sec14 retary that all requirements for certification under 

15 this part would be met with respect to such plan, 

16 fund, or program if such plan, fund, or program 

17 were a group health plan, such plan, fund, or pro18 gram shall be treated for purposes of this title as an 

19 employee welfare benefit plan on and after the date 

20 of such demonstration. 

21 ‘‘(3) EXCEPTION FOR CERTAIN BENEFITS.— 

22 The requirements of this part shall not apply to a 

23 group health plan in relation to its provision of ex24 cepted benefits, as defined in section 706(c).’’. 


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1 (b) CONFORMING AMENDMENTS TO PREEMPTION

2 RULES.— 

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

4 1144(b)(6)) is amended by adding at the end the 

5 following new subparagraph: 

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

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

8 of an association health plan which is certified under part 

9 8.’’. 

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

11 is amended— 

12 (A) in subsection (b)(4), by striking ‘‘Sub13 section (a)’’ and inserting ‘‘Subsections (a) and 

14 (d)’’; 

15 (B) in subsection (b)(5), by striking ‘‘sub16 section (a)’’ in subparagraph (A) and inserting 

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

18 (a)(2)(B) and (b) of section 805’’, and by strik19 ing ‘‘subsection (a)’’ in subparagraph (B) and 

20 inserting ‘‘subsection (a) of this section or sub21 section (a)(2)(B) or (b) of section 805’’; 

22 (C) by redesignating subsection (d) as sub23 section (e); and 

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

25 following new subsection: 


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

2 provisions of this title shall supersede any and all State 

3 laws insofar as they may now or hereafter preclude, or 

4 have the effect of precluding, a health insurance issuer 

5 from offering health insurance coverage in connection with 

6 an association health plan which is certified under part 

7 8. 

8 ‘‘(2) Except as provided in paragraphs (4) and (5) 

9 of subsection (b) of this section— 

10 ‘‘(A) In any case in which health insurance cov11 erage of any policy type is offered under an associa12 tion health plan certified under part 8 to a partici13 pating employer operating in such State, the provi14 sions of this title shall supersede any and all laws 

15 of such State insofar as they may preclude a health 

16 insurance issuer from offering health insurance cov17 erage of the same policy type to other employers op18 erating in the State which are eligible for coverage 

19 under such association health plan, whether or not 

20 such other employers are participating employers in 

21 such plan. 

22 ‘‘(B) In any case in which health insurance cov23 erage of any policy type is offered in a State under 

24 an association health plan certified under part 8 and 

25 the filing, with the applicable State authority (as deVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00108 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 fined in section 812(a)(9)), of the policy form in 

2 connection with such policy type is approved by such 

3 State authority, the provisions of this title shall su4 persede any and all laws of any other State in which 

5 health insurance coverage of such type is offered, in6 sofar as they may preclude, upon the filing in the 

7 same form and manner of such policy form with the 

8 applicable State authority in such other State, the 

9 approval of the filing in such other State. 

10 ‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 

11 provisions of this subsection shall be construed, with re12 spect to health insurance issuers or health insurance cov13 erage, to supersede or impair the law of any State— 

14 ‘‘(A) providing solvency standards or similar 

15 standards regarding the adequacy of insurer capital, 

16 surplus, reserves, or contributions, or 

17 ‘‘(B) relating to prompt payment of claims. 

18 ‘‘(4) For additional provisions relating to association 

19 health plans, see subsections (a)(2)(B) and (b) of section 

20 805. 

21 ‘‘(5) For purposes of this subsection, the term ‘asso22 ciation health plan’ has the meaning provided in section 

23 801(a), and the terms ‘health insurance coverage’, ‘par24 ticipating employer’, and ‘health insurance issuer’ have 


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1 the meanings provided such terms in section 812, respec2 tively.’’. 

3 (3) Section 514(b)(6)(A) of such Act (29 

4 U.S.C. 1144(b)(6)(A)) is amended— 

5 (A) in clause (i)(II), by striking ‘‘and’’ at 

6 the end; 

7 (B) in clause (ii), by inserting ‘‘and which 

8 does not provide medical care (within the mean9 ing of section 733(a)(2)),’’ after ‘‘arrange10 ment,’’, and by striking ‘‘title.’’ and inserting 

11 ‘‘title, and’’; and 

12 (C) by adding at the end the following new 

13 clause: 

14 ‘‘(iii) subject to subparagraph (E), in the case 

15 of any other employee welfare benefit plan which is 

16 a multiple employer welfare arrangement and which 

17 provides medical care (within the meaning of section 

18 733(a)(2)), any law of any State which regulates in19 surance may apply.’’. 

20 (4) Section 514(e) of such Act (as redesignated 

21 by paragraph (2)(C)) is amended— 

22 (A) by striking ‘‘Nothing’’ and inserting 

23 ‘‘(1) Except as provided in paragraph (2), noth24 ing’’; and 


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1 (B) by adding at the end the following new 

2 paragraph: 

3 ‘‘(2) Nothing in any other provision of law enacted 

4 on or after the date of the enactment of the Small Busi5 ness Health Fairness Act of 2011 shall be construed to 

6 alter, amend, modify, invalidate, impair, or supersede any 

7 provision of this title, except by specific cross-reference to 

8 the affected section.’’. 

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

10 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

11 the following new sentence: ‘‘Such term also includes a 

12 person serving as the sponsor of an association health plan 

13 under part 8.’’. 

14 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE15 LATED TO SELF-INSURED AND FULLY INSURED OPTIONS

16 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 

17 of such Act (29 U.S.C. 102(b)) is amended by adding at 

18 the end the following: ‘‘An association health plan shall 

19 include in its summary plan description, in connection 

20 with each benefit option, a description of the form of sol21 vency or guarantee fund protection secured pursuant to 

22 this Act or applicable State law, if any.’’. 

23 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is 

24 amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 


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1 (f) REPORT TO THE CONGRESS REGARDING CERTIFI2 CATION OF SELF-INSURED ASSOCIATION HEALTH

3 PLANS.—Not later than January 1, 2014, the Secretary 

4 of Labor shall report to the Committee on Education and 

5 the Workforce of the House of Representatives and the 

6 Committee on Health, Education, Labor, and Pensions of 

7 the Senate the effect association health plans have had, 

8 if any, on reducing the number of uninsured individuals. 

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

10 in section 1 of the Employee Retirement Income Security 

11 Act of 1974 is amended by inserting after the item relat12 ing to section 734 the following new items: 

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘801. Association health plans. 

‘‘802. Certification of association health plans. 

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

‘‘804. Participation and coverage requirements. 

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

benefit options. 

‘‘806. Maintenance of reserves and provisions for solvency for plans providing 

health benefits in addition to health insurance coverage. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Corrective actions and mandatory termination. 

‘‘810. Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage. 

‘‘811. State assessment authority. 

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

13 SEC. 233. CLARIFICATION OF TREATMENT OF SINGLE EM14 PLOYER ARRANGEMENTS. 

15 Section 3(40)(B) of the Employee Retirement Income 

16 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend17 ed— 


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1 (1) in clause (i), by inserting after ‘‘control 

2 group,’’ the following: ‘‘except that, in any case in 

3 which the benefit referred to in subparagraph (A) 

4 consists of medical care (as defined in section 

5 812(a)(2)), two or more trades or businesses, wheth6 er or not incorporated, shall be deemed a single em7 ployer for any plan year of such plan, or any fiscal 

8 year of such other arrangement, if such trades or 

9 businesses are within the same control group during 

10 such year or at any time during the preceding 1-year 

11 period,’’; 

12 (2) in clause (iii), by striking ‘‘(iii) the deter13 mination’’ and inserting the following: 

14 ‘‘(iii)(I) in any case in which the benefit re15 ferred to in subparagraph (A) consists of medical 

16 care (as defined in section 812(a)(2)), the deter17 mination of whether a trade or business is under 

18 ‘common control’ with another trade or business 

19 shall be determined under regulations of the Sec20 retary applying principles consistent and coextensive 

21 with the principles applied in determining whether 

22 employees of two or more trades or businesses are 

23 treated as employed by a single employer under sec24 tion 4001(b), except that, for purposes of this para25 graph, an interest of greater than 25 percent may 


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1 not be required as the minimum interest necessary 

2 for common control, or 

3 ‘‘(II) in any other case, the determination’’; 

4 (3) by redesignating clauses (iv) and (v) as 

5 clauses (v) and (vi), respectively; and 

6 (4) by inserting after clause (iii) the following 

7 new clause: 

8 ‘‘(iv) in any case in which the benefit referred 

9 to in subparagraph (A) consists of medical care (as 

10 defined in section 812(a)(2)), in determining, after 

11 the application of clause (i), whether benefits are 

12 provided to employees of two or more employers, the 

13 arrangement shall be treated as having only one par14 ticipating employer if, after the application of clause 

15 (i), the number of individuals who are employees and 

16 former employees of any one participating employer 

17 and who are covered under the arrangement is 

18 greater than 75 percent of the aggregate number of 

19 all individuals who are employees or former employ20 ees of participating employers and who are covered 

21 under the arrangement,’’. 

22 SEC. 234. ENFORCEMENT PROVISIONS RELATING TO ASSO23 CIATION HEALTH PLANS. 

24 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL

25 MISREPRESENTATIONS.—Section 501 of the Employee 


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1 Retirement Income Security Act of 1974 (29 U.S.C. 1131) 

2 is amended— 

3 (1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 

4 (2) by adding at the end the following new sub5 section: 

6 ‘‘(b) Any person who willfully falsely represents, to 

7 any employee, any employee’s beneficiary, any employer, 

8 the Secretary, or any State, a plan or other arrangement 

9 established or maintained for the purpose of offering or 

10 providing any benefit described in section 3(1) to employ11 ees or their beneficiaries as— 

12 ‘‘(1) being an association health plan which has 

13 been certified under part 8; 

14 ‘‘(2) having been established or maintained 

15 under or pursuant to one or more collective bar16 gaining agreements which are reached pursuant to 

17 collective bargaining described in section 8(d) of the 

18 National Labor Relations Act (29 U.S.C. 158(d)) or 

19 paragraph Fourth of section 2 of the Railway Labor 

20 Act (45 U.S.C. 152, paragraph Fourth) or which are 

21 reached pursuant to labor-management negotiations 

22 under similar provisions of State public employee re23 lations laws; or 

24 ‘‘(3) being a plan or arrangement described in 

25 section 3(40)(A)(i), 


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1 shall, upon conviction, be imprisoned not more than 5 

2 years, be fined under title 18, United States Code, or 

3 both.’’. 

4 (b) CEASE ACTIVITIES ORDERS.—Section 502 of 

5 such Act (29 U.S.C. 1132) is amended by adding at the 

6 end the following new subsection: 

7 ‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE8 SIST ORDERS.— 

9 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

10 upon application by the Secretary showing the oper11 ation, promotion, or marketing of an association 

12 health plan (or similar arrangement providing bene13 fits consisting of medical care (as defined in section 

14 733(a)(2))) that— 

15 ‘‘(A) is not certified under part 8, is sub16 ject under section 514(b)(6) to the insurance 

17 laws of any State in which the plan or arrange18 ment offers or provides benefits, and is not li19 censed, registered, or otherwise approved under 

20 the insurance laws of such State; or 

21 ‘‘(B) is an association health plan certified 

22 under part 8 and is not operating in accordance 

23 with the requirements under part 8 for such 

24 certification, 


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1 a district court of the United States shall enter an 

2 order requiring that the plan or arrangement cease 

3 activities. 

4 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

5 apply in the case of an association health plan or 

6 other arrangement if the plan or arrangement shows 

7 that— 

8 ‘‘(A) all benefits under it referred to in 

9 paragraph (1) consist of health insurance cov10 erage; and 

11 ‘‘(B) with respect to each State in which 

12 the plan or arrangement offers or provides ben13 efits, the plan or arrangement is operating in 

14 accordance with applicable State laws that are 

15 not superseded under section 514. 

16 ‘‘(3) ADDITIONAL EQUITABLE RELIEF.—The 

17 court may grant such additional equitable relief, in18 cluding any relief available under this title, as it 

19 deems necessary to protect the interests of the pub20 lic and of persons having claims for benefits against 

21 the plan.’’. 

22 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.— 

23 Section 503 of such Act (29 U.S.C. 1133) is amended by 

24 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 

25 and by adding at the end the following new subsection: 


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1 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 

2 each association health plan which is or has been certified 

3 under part 8 shall require the board of trustees or the 

4 named fiduciary (as applicable) to ensure that the require5 ments of this section are met in connection with claims 

6 filed under the plan.’’. 

7 SEC. 235. COOPERATION BETWEEN FEDERAL AND STATE 

8 AUTHORITIES. 

9 Section 506 of the Employee Retirement Income Se10 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

11 at the end the following new subsection: 

12 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

13 TO ASSOCIATION HEALTH PLANS.— 

14 ‘‘(1) AGREEMENTS WITH STATES.—The Sec15 retary shall consult with the State recognized under 

16 paragraph (2) with respect to an association health 

17 plan regarding the exercise of— 

18 ‘‘(A) the Secretary’s authority under sec19 tions 502 and 504 to enforce the requirements 

20 for certification under part 8; and 

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

22 association health plans under part 8 in accord23 ance with regulations of the Secretary applica24 ble to certification under part 8. 


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1 ‘‘(2) RECOGNITION OF PRIMARY DOMICILE

2 STATE.—In carrying out paragraph (1), the Sec3 retary shall ensure that only one State will be recog4 nized, with respect to any particular association 

5 health plan, as the State with which consultation is 

6 required. In carrying out this paragraph— 

7 ‘‘(A) in the case of a plan which provides 

8 health insurance coverage (as defined in section 

9 812(a)(3)), such State shall be the State with 

10 which filing and approval of a policy type of11 fered by the plan was initially obtained, and 

12 ‘‘(B) in any other case, the Secretary shall 

13 take into account the places of residence of the 

14 participants and beneficiaries under the plan 

15 and the State in which the trust is main16 tained.’’. 

17 SEC. 236. EFFECTIVE DATE AND TRANSITIONAL AND 

18 OTHER RULES. 

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

20 this subtitle shall take effect 1 year after the date of the 

21 enactment of this Act. The Secretary of Labor shall first 

22 issue all regulations necessary to carry out the amend23 ments made by this subtitle within 1 year after the date 

24 of the enactment of this Act. 


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1 (b) TREATMENT OF CERTAIN EXISTING HEALTH

2 BENEFITS PROGRAMS.— 

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

4 the date of the enactment of this Act, an arrange5 ment is maintained in a State for the purpose of 

6 providing benefits consisting of medical care for the 

7 employees and beneficiaries of its participating em8 ployers, at least 200 participating employers make 

9 contributions to such arrangement, such arrange10 ment has been in existence for at least 10 years, and 

11 such arrangement is licensed under the laws of one 

12 or more States to provide such benefits to its par13 ticipating employers, upon the filing with the appli14 cable authority (as defined in section 812(a)(5) of 

15 the Employee Retirement Income Security Act of 

16 1974 (as amended by this subtitle)) by the arrange17 ment of an application for certification of the ar18 rangement under part 8 of subtitle B of title I of 

19 such Act— 

20 (A) such arrangement shall be deemed to 

21 be a group health plan for purposes of title I 

22 of such Act; 

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

24 and 803(a) of the Employee Retirement Income 


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1 Security Act of 1974 shall be deemed met with 

2 respect to such arrangement; 

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

4 such Act shall be deemed met, if the arrange5 ment is operated by a board of directors 

6 which— 

7 (i) is elected by the participating em8 ployers, with each employer having one 

9 vote; and 

10 (ii) has complete fiscal control over 

11 the arrangement and which is responsible 

12 for all operations of the arrangement; 

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

14 such Act shall be deemed met with respect to 

15 such arrangement; and 

16 (E) the arrangement may be certified by 

17 any applicable authority with respect to its op18 erations in any State only if it operates in such 

19 State on the date of certification. 

20 The provisions of this subsection shall cease to apply 

21 with respect to any such arrangement at such time 

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

23 applicable requirements of this subsection are not 

24 met with respect to such arrangement. 


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

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

4 meanings provided in section 812 of the Employee 

5 Retirement Income Security Act of 1974, except 

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

7 to an ‘‘association health plan’’ shall be deemed a 

8 reference to an arrangement referred to in this sub9 section. 

10 TITLE III—INTERSTATE MARKET 

11 FOR HEALTH INSURANCE 

12 SEC. 301. COOPERATIVE GOVERNING OF INDIVIDUAL 

13 HEALTH INSURANCE COVERAGE. 

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

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

17 part: 

18 ‘‘PART D—COOPERATIVE GOVERNING OF 

19 INDIVIDUAL HEALTH INSURANCE COVERAGE 

20 ‘‘SEC. 2795. DEFINITIONS. 

21 ‘‘In this part: 

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

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

25 the State designated by the issuer as the State 


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1 whose covered laws shall govern the health insurance 

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

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

4 only designate one such State as its primary State 

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

6 issuer may not change the designated primary State 

7 with respect to individual health insurance coverage 

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

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

11 to be doing business in that State. 

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

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

15 any State that is not the primary State. In the case 

16 of a health insurance issuer that is selling a policy 

17 in, or to a resident of, a secondary State, the issuer 

18 is deemed to be doing business in that secondary 

19 State. 

20 ‘‘(3) HEALTH INSURANCE ISSUER.—The term 

21 ‘health insurance issuer’ has the meaning given such 

22 term in section 2791(b)(2), except that such an 

23 issuer must be licensed in the primary State and be 

24 qualified to sell individual health insurance coverage 

25 in that State. 


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1 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV2 ERAGE.—The term ‘individual health insurance cov3 erage’ means health insurance coverage offered in 

4 the individual market, as defined in section 

5 2791(e)(1), but does not include excepted benefits 

6 described in section 2791(c). 

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

8 term ‘applicable State authority’ means, with respect 

9 to a health insurance issuer in a State, the State in10 surance commissioner or official or officials des11 ignated by the State to enforce the requirements of 

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

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

14 term ‘hazardous financial condition’ means that, 

15 based on its present or reasonably anticipated finan16 cial condition, a health insurance issuer is unlikely 

17 to be able— 

18 ‘‘(A) to meet obligations to policyholders 

19 with respect to known claims and reasonably 

20 anticipated claims; or 

21 ‘‘(B) to pay other obligations in the normal 

22 course of business. 

23 ‘‘(7) COVERED LAWS.— 

24 ‘‘(A) IN GENERAL.—The term ‘covered 

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1 ments, and orders governing the insurance busi2 ness pertaining to— 

3 ‘‘(i) individual health insurance cov4 erage issued by a health insurance issuer; 

5 ‘‘(ii) the offer, sale, rating (including 

6 medical underwriting), renewal, and 

7 issuance of individual health insurance cov8 erage to an individual; 

9 ‘‘(iii) the provision to an individual in 

10 relation to individual health insurance cov11 erage of health care and insurance related 

12 services; 

13 ‘‘(iv) the provision to an individual in 

14 relation to individual health insurance cov15 erage of management, operations, and in16 vestment activities of a health insurance 

17 issuer; and 

18 ‘‘(v) the provision to an individual in 

19 relation to individual health insurance cov20 erage of loss control and claims adminis21 tration for a health insurance issuer with 

22 respect to liability for which the issuer pro23 vides insurance. 

24 ‘‘(B) EXCEPTION.—Such term does not in25 clude any law, rule, regulation, agreement, or 


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1 order governing the use of care or cost manage2 ment techniques, including any requirement re3 lated to provider contracting, network access or 

4 adequacy, health care data collection, or quality 

5 assurance. 

6 ‘‘(8) STATE.—The term ‘State’ means only the 

7 50 States and the District of Columbia. 

8 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC9 TICES.—The term ‘unfair claims settlement prac10 tices’ means only the following practices: 

11 ‘‘(A) Knowingly misrepresenting to claim12 ants and insured individuals relevant facts or 

13 policy provisions relating to coverage at issue. 

14 ‘‘(B) Failing to acknowledge with reason15 able promptness pertinent communications with 

16 respect to claims arising under policies. 

17 ‘‘(C) Failing to adopt and implement rea18 sonable standards for the prompt investigation 

19 and settlement of claims arising under policies. 

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

21 and equitable settlement of claims submitted in 

22 which liability has become reasonably clear. 

23 ‘‘(E) Refusing to pay claims without con24 ducting a reasonable investigation. 


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

2 claims within a reasonable period of time after 

3 having completed an investigation related to 

4 those claims. 

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

6 insured individuals or their beneficiaries to in7 stitute suits to recover amounts due under its 

8 policies by offering substantially less than the 

9 amounts ultimately recovered in suits brought 

10 by them. 

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

12 to settle or settling claims for less than the 

13 amount that a reasonable person would believe 

14 the insured individual or his or her beneficiary 

15 was entitled by reference to written or printed 

16 advertising material accompanying or made 

17 part of an application. 

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

19 on the basis of an application that was materi20 ally altered without notice to, or knowledge or 

21 consent of, the insured. 

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

23 present claims within 15 calendar days of a re24 quests with reasonable explanations regarding 

25 their use. 


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

2 time than that prescribed in the policy or by the 

3 law of the primary State. 

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

5 and abuse’ means an act or omission committed by 

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

7 commits, or conceals any material information con8 cerning, one or more of the following: 

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

10 or preparing with knowledge or belief that it 

11 will be presented to or by an insurer, a rein12 surer, broker or its agent, false information as 

13 part of, in support of or concerning a fact ma14 terial to one or more of the following: 

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

16 renewal of an insurance policy or reinsur17 ance contract. 

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

19 or reinsurance contract. 

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

21 pursuant to an insurance policy or reinsur22 ance contract. 

23 ‘‘(iv) Premiums paid on an insurance 

24 policy or reinsurance contract. 


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1 ‘‘(v) Payments made in accordance 

2 with the terms of an insurance policy or 

3 reinsurance contract. 

4 ‘‘(vi) A document filed with the com5 missioner or the chief insurance regulatory 

6 official of another jurisdiction. 

7 ‘‘(vii) The financial condition of an in8 surer or reinsurer. 

9 ‘‘(viii) The formation, acquisition, 

10 merger, reconsolidation, dissolution or 

11 withdrawal from one or more lines of in12 surance or reinsurance in all or part of a 

13 State by an insurer or reinsurer. 

14 ‘‘(ix) The issuance of written evidence 

15 of insurance. 

16 ‘‘(x) The reinstatement of an insur17 ance policy. 

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

19 renewal insurance risks on behalf of an insurer, 

20 reinsurer, or other person engaged in the busi21 ness of insurance by a person who knows or 

22 should know that the insurer or other person 

23 responsible for the risk is insolvent at the time 

24 of the transaction. 


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1 ‘‘(C) Transaction of the business of insur2 ance in violation of laws requiring a license, cer3 tificate of authority or other legal authority for 

4 the transaction of the business of insurance. 

5 ‘‘(D) Attempt to commit, aiding or abet6 ting in the commission of, or conspiracy to com7 mit the acts or omissions specified in this para8 graph. 

9 ‘‘SEC. 2796. APPLICATION OF LAW. 

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

11 State shall apply to individual health insurance coverage 

12 offered by a health insurance issuer in the primary State 

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

14 issuer comply with the conditions of this section with re15 spect to the offering of coverage in any secondary State. 

16 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC17 ONDARY STATE.—Except as provided in this section, a 

18 health insurance issuer with respect to its offer, sale, rat19 ing (including medical underwriting), renewal, and 

20 issuance of individual health insurance coverage in any 

21 secondary State is exempt from any covered laws of the 

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

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

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


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1 ‘‘(1) make unlawful, or regulate, directly or in2 directly, the operation of the health insurance issuer 

3 operating in the secondary State, except that any 

4 secondary State may require such an issuer— 

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

6 applicable premium and other taxes (including 

7 high-risk pool assessments) which are levied on 

8 insurers and surplus lines insurers, brokers, or 

9 policyholders under the laws of the State; 

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

11 State insurance commissioner as its agent solely 

12 for the purpose of receiving service of legal doc13 uments or process; 

14 ‘‘(C) to submit to an examination of its fi15 nancial condition by the State insurance com16 missioner in any State in which the issuer is 

17 doing business to determine the issuer’s finan18 cial condition, if— 

19 ‘‘(i) the State insurance commissioner 

20 of the primary State has not done an ex21 amination within the period recommended 

22 by the National Association of Insurance 

23 Commissioners; and 

24 ‘‘(ii) any such examination is con25 ducted in accordance with the examiners’ 


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1 handbook of the National Association of 

2 Insurance Commissioners and is coordi3 nated to avoid unjustified duplication and 

4 unjustified repetition; 

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

6 issued— 

7 ‘‘(i) in a delinquency proceeding com8 menced by the State insurance commis9 sioner if there has been a finding of finan10 cial impairment under subparagraph (C); 

11 or 

12 ‘‘(ii) in a voluntary dissolution pro13 ceeding; 

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

15 by a court of competent jurisdiction, upon a pe16 tition by the State insurance commissioner al17 leging that the issuer is in hazardous financial 

18 condition; 

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

20 basis, in any insurance insolvency guaranty as21 sociation or similar association to which a 

22 health insurance issuer in the State is required 

23 to belong; 

24 ‘‘(G) to comply with any State law regard25 ing fraud and abuse (as defined in section 


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1 2795(10)), except that if the State seeks an in2 junction regarding the conduct described in this 

3 subparagraph, such injunction must be obtained 

4 from a court of competent jurisdiction; 

5 ‘‘(H) to comply with any State law regard6 ing unfair claims settlement practices (as de7 fined in section 2795(9)); or 

8 ‘‘(I) to comply with the applicable require9 ments for independent review under section 

10 2798 with respect to coverage offered in the 

11 State; 

12 ‘‘(2) require any individual health insurance 

13 coverage issued by the issuer to be countersigned by 

14 an insurance agent or broker residing in that Sec15 ondary State; or 

16 ‘‘(3) otherwise discriminate against the issuer 

17 issuing insurance in both the primary State and in 

18 any secondary State. 

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

20 health insurance issuer shall provide the following notice, 

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

22 in a secondary State under this part by such a health in23 surance issuer and at renewal of the policy, with the 5 

24 blank spaces therein being appropriately filled with the 

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


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1 State, the name of the secondary State, the name of the 

2 secondary State, and the name of the secondary State, re3 spectively, for the coverage concerned: 

4 This policy is issued by lllll and is governed by 

5 the laws and regulations of the State of lllll, and 

6 it has met all the laws of that State as determined by 

7 that State’s Department of Insurance. This policy may be 

8 less expensive than others because it is not subject to all 

9 of the insurance laws and regulations of the State of 

10 lllll, including coverage of some services or bene11 fits mandated by the law of the State of lllll. Ad12 ditionally, this policy is not subject to all of the consumer 

13 protection laws or restrictions on rate changes of the State 

14 of lllll. As with all insurance products, before pur15 chasing this policy, you should carefully review the policy 

16 and determine what health care services the policy covers 

17 and what benefits it provides, including any exclusions, 

18 limitations, or conditions for such services or benefits. 

19 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

20 AND PREMIUM INCREASES.— 

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion, a health insurance issuer that provides indi23 vidual health insurance coverage to an individual 

24 under this part in a primary or secondary State may 

25 not upon renewal— 


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1 ‘‘(A) move or reclassify the individual in2 sured under the health insurance coverage from 

3 the class such individual is in at the time of 

4 issue of the contract based on the health-status 

5 related factors of the individual; or 

6 ‘‘(B) increase the premiums assessed the 

7 individual for such coverage based on a health 

8 status-related factor or change of a health sta9 tus-related factor or the past or prospective 

10 claim experience of the insured individual. 

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

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

13 issuer— 

14 ‘‘(A) from terminating or discontinuing 

15 coverage or a class of coverage in accordance 

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

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

18 policy holders within a class based on claims ex19 perience; 

20 ‘‘(C) from changing premiums or offering 

21 discounted premiums to individuals who engage 

22 in wellness activities at intervals prescribed by 

23 the issuer, if such premium changes or incen24 tives— 


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

2 the insurance contract; 

3 ‘‘(ii) are based on specific wellness ac4 tivities that are not applicable to all indi5 viduals; and 

6 ‘‘(iii) are not obtainable by all individ7 uals to whom coverage is offered; 

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

9 ‘‘(E) from retroactively adjusting the rates 

10 charged an insured individual if the initial rates 

11 were set based on material misrepresentation by 

12 the individual at the time of issue. 

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

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

15 individual health insurance coverage in a secondary State 

16 unless that coverage is currently offered for sale in the 

17 primary State. 

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

19 HEALTH INSURANCE ISSUERS.—Any State may require 

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

21 broker for a health insurance issuer with respect to the 

22 offering of individual health insurance coverage obtain a 

23 license from that State, with commissions or other com24 pensation subject to the provisions of the laws of that 

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1 tion or requirement which discriminates against a non2 resident agent or broker. 

3 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN4 SURANCE COMMISSIONER.—Each health insurance issuer 

5 issuing individual health insurance coverage in both pri6 mary and secondary States shall submit— 

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

8 State in which it intends to offer such coverage, be9 fore it may offer individual health insurance cov10 erage in such State— 

11 ‘‘(A) a copy of the plan of operation or fea12 sibility study or any similar statement of the 

13 policy being offered and its coverage (which 

14 shall include the name of its primary State and 

15 its principal place of business); 

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

17 designation of its primary State; and 

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

19 issuer’s compliance with all the laws of the pri20 mary State; and 

21 ‘‘(2) to the insurance commissioner of each sec22 ondary State in which it offers individual health in23 surance coverage, a copy of the issuer’s quarterly fi24 nancial statement submitted to the primary State, 

25 which statement shall be certified by an independent 


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1 public accountant and contain a statement of opin2 ion on loss and loss adjustment expense reserves 

3 made by— 

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

5 of Actuaries; or 

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

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

8 Nothing in this section shall be construed to affect the 

9 authority of any Federal or State court to enjoin— 

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

11 insurance coverage by a health insurance issuer to 

12 any person or group who is not eligible for such in13 surance; or 

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

15 insurance coverage that violates the requirements of 

16 the law of a secondary State which are described in 

17 subparagraphs (A) through (H) of section 

18 2796(b)(1). 

19 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD20 MINISTRATIVE ACTION.—Nothing in this section shall be 

21 construed to affect the authority of any State to enjoin 

22 conduct in violation of that State’s laws described in sec23 tion 2796(b)(1). 

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


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

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

3 paragraph (2), nothing in this section shall be con4 strued to affect the authority of any State to make 

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

6 State with respect to which a health insurance issuer 

7 is not exempt under subsection (b). 

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

9 If a State seeks an injunction regarding the conduct 

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

11 (h), such injunction must be obtained from a Fed12 eral or State court of competent jurisdiction. 

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

14 section shall affect the authority of any State to bring ac15 tion in any Federal or State court. 

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

17 this section shall be construed to affect the applicability 

18 of State laws generally applicable to persons or corpora19 tions. 

20 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

21 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

22 health insurance issuer is offering coverage in a primary 

23 State that does not accommodate residents of secondary 

24 States or does not provide a working mechanism for resi25 dents of a secondary State, and the issuer is offering covVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00139 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 erage under this part in such secondary State which has 

2 not adopted a qualified high-risk pool as its acceptable al3 ternative mechanism (as defined in section 2744(c)(2)), 

4 the issuer shall, with respect to any individual health in5 surance coverage offered in a secondary State under this 

6 part, comply with the guaranteed availability requirements 

7 for eligible individuals in section 2741. 

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

9 BEFORE ISSUER MAY SELL INTO SECONDARY 

10 STATES. 

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

12 issue individual health insurance coverage in a secondary 

13 State if the State insurance commissioner does not use 

14 a risk-based capital formula for the determination of cap15 ital and surplus requirements for all health insurance 

16 issuers. 

17 ‘‘SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SEC18 ONDARY STATE. 

19 ‘‘Effective beginning two years after the date of en20 actment of this part, an individual in a State may not 

21 buy individual health insurance coverage in a secondary 

22 State if the premium for individual health insurance in 

23 the primary State (with respect to the individual) exceeds 

24 the national average premium by 10 percent or more. 


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1 ‘‘SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCE2 DURES. 

3 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur4 ance issuer may not offer, sell, or issue individual health 

5 insurance coverage in a secondary State under the provi6 sions of this title unless— 

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

8 State have legislation or regulations in place estab9 lishing an independent review process for individuals 

10 who are covered by individual health insurance cov11 erage, or 

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

13 subparagraph (A) are not met with respect to the ei14 ther of such States, the issuer provides an inde15 pendent review mechanism substantially identical (as 

16 determined by the applicable State authority of such 

17 State) to that prescribed in the ‘Health Carrier Ex18 ternal Review Model Act’ of the National Association 

19 of Insurance Commissioners for all individuals who 

20 purchase insurance coverage under the terms of this 

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

22 is conducted by an independent medical reviewer, or 

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

24 requirements of subsection (b) are met. 


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1 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

2 REVIEWERS.—In the case of any independent review 

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

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

5 claim to an independent medical reviewer, or to any 

6 panel of such reviewers, to conduct independent 

7 medical review, the issuer shall ensure that— 

8 ‘‘(A) each independent medical reviewer 

9 meets the qualifications described in paragraphs 

10 (2) and (3); 

11 ‘‘(B) with respect to each review, each re12 viewer meets the requirements of paragraph (4) 

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

14 panel, meets the requirements described in 

15 paragraph (5); and 

16 ‘‘(C) compensation provided by the issuer 

17 to each reviewer is consistent with paragraph 

18 (6). 

19 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde20 pendent medical reviewer shall be a physician 

21 (allopathic or osteopathic) or health care profes22 sional who— 

23 ‘‘(A) is appropriately credentialed or li24 censed in one or more States to deliver health 

25 care services; and 


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1 ‘‘(B) typically treats the condition, makes 

2 the diagnosis, or provides the type of treatment 

3 under review. 

4 ‘‘(3) INDEPENDENCE.— 

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B), each independent medical reviewer 

7 in a case shall— 

8 ‘‘(i) not be a related party (as defined 

9 in paragraph (7)); 

10 ‘‘(ii) not have a material familial, fi11 nancial, or professional relationship with 

12 such a party; and 

13 ‘‘(iii) not otherwise have a conflict of 

14 interest with such a party (as determined 

15 under regulations). 

16 ‘‘(B) EXCEPTION.—Nothing in subpara17 graph (A) shall be construed to— 

18 ‘‘(i) prohibit an individual, solely on 

19 the basis of affiliation with the issuer, 

20 from serving as an independent medical re21 viewer if— 

22 ‘‘(I) a non-affiliated individual is 

23 not reasonably available; 


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1 ‘‘(II) the affiliated individual is 

2 not involved in the provision of items 

3 or services in the case under review; 

4 ‘‘(III) the fact of such an affili5 ation is disclosed to the issuer and the 

6 enrollee (or authorized representative) 

7 and neither party objects; and 

8 ‘‘(IV) the affiliated individual is 

9 not an employee of the issuer and 

10 does not provide services exclusively or 

11 primarily to or on behalf of the issuer; 

12 ‘‘(ii) prohibit an individual who has 

13 staff privileges at the institution where the 

14 treatment involved takes place from serv15 ing as an independent medical reviewer 

16 merely on the basis of such affiliation if 

17 the affiliation is disclosed to the issuer and 

18 the enrollee (or authorized representative), 

19 and neither party objects; or 

20 ‘‘(iii) prohibit receipt of compensation 

21 by an independent medical reviewer from 

22 an entity if the compensation is provided 

23 consistent with paragraph (6). 

24 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

25 IN SAME FIELD.— 


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1 ‘‘(A) IN GENERAL.—In a case involving 

2 treatment, or the provision of items or serv3 ices— 

4 ‘‘(i) by a physician, a reviewer shall be 

5 a practicing physician (allopathic or osteo6 pathic) of the same or similar specialty, as 

7 a physician who, acting within the appro8 priate scope of practice within the State in 

9 which the service is provided or rendered, 

10 typically treats the condition, makes the 

11 diagnosis, or provides the type of treat12 ment under review; or 

13 ‘‘(ii) by a non-physician health care 

14 professional, the reviewer, or at least 1 

15 member of the review panel, shall be a 

16 practicing non-physician health care pro17 fessional of the same or similar specialty 

18 as the non-physician health care profes19 sional who, acting within the appropriate 

20 scope of practice within the State in which 

21 the service is provided or rendered, typi22 cally treats the condition, makes the diag23 nosis, or provides the type of treatment 

24 under review. 


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1 ‘‘(B) PRACTICING DEFINED.—For pur2 poses of this paragraph, the term ‘practicing’ 

3 means, with respect to an individual who is a 

4 physician or other health care professional, that 

5 the individual provides health care services to 

6 individual patients on average at least 2 days 

7 per week. 

8 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 

9 external review relating to a child, a reviewer shall 

10 have expertise under paragraph (2) in pediatrics. 

11 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA12 TION.—Compensation provided by the issuer to an 

13 independent medical reviewer in connection with a 

14 review under this section shall— 

15 ‘‘(A) not exceed a reasonable level; and 

16 ‘‘(B) not be contingent on the decision ren17 dered by the reviewer. 

18 ‘‘(7) RELATED PARTY DEFINED.—For purposes 

19 of this section, the term ‘related party’ means, with 

20 respect to a denial of a claim under a coverage relat21 ing to an enrollee, any of the following: 

22 ‘‘(A) The issuer involved, or any fiduciary, 

23 officer, director, or employee of the issuer. 

24 ‘‘(B) The enrollee (or authorized represent25 ative). 


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1 ‘‘(C) The health care professional that pro2 vides the items or services involved in the de3 nial. 

4 ‘‘(D) The institution at which the items or 

5 services (or treatment) involved in the denial 

6 are provided. 

7 ‘‘(E) The manufacturer of any drug or 

8 other item that is included in the items or serv9 ices involved in the denial. 

10 ‘‘(F) Any other party determined under 

11 any regulations to have a substantial interest in 

12 the denial involved. 

13 ‘‘(8) DEFINITIONS.—For purposes of this sub14 section: 

15 ‘‘(A) ENROLLEE.—The term ‘enrollee’ 

16 means, with respect to health insurance cov17 erage offered by a health insurance issuer, an 

18 individual enrolled with the issuer to receive 

19 such coverage. 

20 ‘‘(B) HEALTH CARE PROFESSIONAL.—The 

21 term ‘health care professional’ means an indi22 vidual who is licensed, accredited, or certified 

23 under State law to provide specified health care 

24 services and who is operating within the scope 

25 of such licensure, accreditation, or certification. 


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1 ‘‘SEC. 2800. ENFORCEMENT. 

2 ‘‘(a) IN GENERAL.—Subject to subsection (b), with 

3 respect to specific individual health insurance coverage the 

4 primary State for such coverage has sole jurisdiction to 

5 enforce the primary State’s covered laws in the primary 

6 State and any secondary State. 

7 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 

8 subsection (a) shall be construed to affect the authority 

9 of a secondary State to enforce its laws as set forth in 

10 the exception specified in section 2796(b)(1). 

11 ‘‘(c) COURT INTERPRETATION.—In reviewing action 

12 initiated by the applicable secondary State authority, the 

13 court of competent jurisdiction shall apply the covered 

14 laws of the primary State. 

15 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 

16 of individual health insurance coverage offered in a sec17 ondary State that fails to comply with the covered laws 

18 of the primary State, the applicable State authority of the 

19 secondary State may notify the applicable State authority 

20 of the primary State.’’. 

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

22 subsection (a) shall apply to individual health insurance 

23 coverage offered, issued, or sold after the date that is one 

24 year after the date of the enactment of this Act. 

25 (c) GAO ONGOING STUDY AND REPORTS.— 


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1 (1) STUDY.—The Comptroller General of the 

2 United States shall conduct an ongoing study con3 cerning the effect of the amendment made by sub4 section (a) on— 

5 (A) the number of uninsured and under-in6 sured; 

7 (B) the availability and cost of health in8 surance policies for individuals with pre-existing 

9 medical conditions; 

10 (C) the availability and cost of health in11 surance policies generally; 

12 (D) the elimination or reduction of dif13 ferent types of benefits under health insurance 

14 policies offered in different States; and 

15 (E) cases of fraud or abuse relating to 

16 health insurance coverage offered under such 

17 amendment and the resolution of such cases. 

18 (2) ANNUAL REPORTS.—The Comptroller Gen19 eral shall submit to Congress an annual report, after 

20 the end of each of the 5 years following the effective 

21 date of the amendment made by subsection (a), on 

22 the ongoing study conducted under paragraph (1). 

23 (d) SEVERABILITY.—If any provision of the section 

24 or the application of such provision to any person or cir25 cumstance is held to be unconstitutional, the remainder 


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1 of this section and the application of the provisions of such 

2 to any other person or circumstance shall not be affected. 

3 TITLE IV—SAFETY NET 

4 REFORMS 

5 SEC. 401. REQUIRING OUTREACH AND COVERAGE BEFORE 

6 EXPANSION OF ELIGIBILITY. 

7 (a) STATE CHILD HEALTH PLAN REQUIRED TO

8 SPECIFY HOW IT WILL ACHIEVE COVERAGE FOR 90 PER9 CENT OF TARGETED LOW-INCOME CHILDREN.— 

10 (1) IN GENERAL.—Section 2102(a) of the So11 cial Security Act (42 U.S.C. 1397bb(a)) is amend12 ed— 

13 (A) in paragraph (6), by striking ‘‘and’’ at 

14 the end; 

15 (B) in paragraph (7), by striking the pe16 riod at the end and inserting ‘‘; and’’; and 

17 (C) by adding at the end the following new 

18 paragraph: 

19 ‘‘(8) how the eligibility and benefits provided 

20 for under the plan for each fiscal year (beginning 

21 with fiscal year 2013) will allow for the State’s an22 nual funding allotment to cover at least 90 percent 

23 of the eligible targeted low-income children in the 

24 State.’’. 


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1 (2) EFFECTIVE DATE.—The amendments made 

2 by paragraph (1) shall apply to State child health 

3 plans for fiscal years beginning with fiscal year 

4 2013. 

5 (b) LIMITATION ON PROGRAM EXPANSIONS UNTIL

6 LOWEST INCOME ELIGIBLE INDIVIDUALS ENROLLED.— 

7 Section 2105(c) of such Act (42 U.S.C. 1397dd(c)) is 

8 amended by adding at the end the following new para9 graph: 

10 ‘‘(12) LIMITATION ON INCREASED COVERAGE

11 OF HIGHER INCOME CHILDREN.— 

12 ‘‘(A) IN GENERAL.—For child health as13 sistance furnished in a fiscal year beginning 

14 with fiscal year 2013: 

15 ‘‘(i) NO PAYMENT FOR CHILDREN

16 WITH FAMILY INCOME ABOVE 300 PERCENT

17 OF POVERTY LINE.—Payment shall not be 

18 made under this section for child health 

19 assistance for a targeted low-income child 

20 in a family the income of which exceeds 

21 300 percent of the poverty line applicable 

22 to a family of the size involved. 

23 ‘‘(ii) SPECIAL RULES FOR PAYMENT

24 FOR CHILDREN WITH FAMILY INCOME

25 ABOVE 200 PERCENT OF POVERTY LINE.— 


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1 In the case of child health assistance for a 

2 targeted low-income child in a family the 

3 income of which exceeds 200 percent (but 

4 does not exceed 300 percent) of the pov5 erty line applicable to a family of the size 

6 involved no payment shall be made under 

7 this section for such assistance unless the 

8 State demonstrates to the satisfaction of 

9 the Secretary that— 

10 ‘‘(I) the State has met the 90 

11 percent retrospective coverage test 

12 specified in subparagraph (B)(i) for 

13 the previous fiscal year; and 

14 ‘‘(II) the State will meet the 90 

15 percent prospective coverage test spec16 ified in subparagraph (B)(ii) for the 

17 fiscal year. 

18 ‘‘(B) 90 PERCENT COVERAGE TESTS.— 

19 ‘‘(i) RETROSPECTIVE TEST.—The 90 

20 percent retrospective coverage test speci21 fied in this clause is, for a State for a fis22 cal year, that on average during the fiscal 

23 year, the State has enrolled under this title 

24 or title XIX at least 90 percent of the indi25 viduals residing in the State who— 


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1 ‘‘(I) are children under 19 years 

2 of age (or are pregnant women) and 

3 are eligible for medical assistance 

4 under title XIX; or 

5 ‘‘(II) are targeted low-income 

6 children whose family income does not 

7 exceed 200 percent of the poverty line 

8 and who are eligible for child health 

9 assistance under this title. 

10 ‘‘(ii) PROSPECTIVE TEST.—The 90 

11 percent prospective test specified in this 

12 clause is, for a State for a fiscal year, that 

13 on average during the fiscal year, the State 

14 will enroll under this title or title XIX at 

15 least 90 percent of the individuals residing 

16 in the State who— 

17 ‘‘(I) are children under 19 years 

18 of age (or are pregnant women) and 

19 are eligible for medical assistance 

20 under title XIX; or 

21 ‘‘(II) are targeted low-income 

22 children whose family income does not 

23 exceed such percent of the poverty 

24 line (in excess of 200 percent) as the 

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1 graph and who are eligible for child 

2 health assistance under this title. 

3 ‘‘(C) GRANDFATHER.—Clauses (i) and (ii) 

4 of subparagraph (A) shall not apply to the pro5 vision of child health assistance— 

6 ‘‘(i) to a targeted low-income child 

7 who is enrolled for child health assistance 

8 under this title as of September 30, 2010; 

9 ‘‘(ii) to a pregnant woman who is en10 rolled for assistance under this title as of 

11 September 30, 2011, through the comple12 tion of the post-partum period following 

13 completion of her pregnancy; and 

14 ‘‘(iii) for items and services furnished 

15 before October 1, 2012, to an individual 

16 who is not a targeted low-income child and 

17 who is enrolled for assistance under this 

18 title as of September 30, 2011. 

19 ‘‘(D) TREATMENT OF PREGNANT

20 WOMEN.—In this paragraph and sections 

21 2102(a)(8) and 2104(a)(2), the term ‘targeted 

22 low-income child’ includes an individual under 

23 age 19, including the period from conception to 

24 birth, who is eligible for child health assistance 

25 under this title by virtue of the definition of the 


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1 term ‘child’ under section 457.10 of title 42, 

2 Code of Federal Regulations.’’. 

3 (c) STANDARDIZATION OF INCOME DETERMINA4 TIONS.— 

5 (1) IN GENERAL.—Section 2110(d) of such Act 

6 (42 U.S.C. 1397jj) is amended by adding at the end 

7 the following new subsection: 

8 ‘‘(d) STANDARDIZATION OF INCOME DETERMINA9 TIONS.—In determining family income under this title (in10 cluding in the case of a State child health plan that pro11 vides health benefits coverage in the manner described in 

12 section 2101(a)(2)), a State shall base such determination 

13 on gross income (including amounts that would be in14 cluded in gross income if they were not exempt from in15 come taxation) and may only take into consideration such 

16 income disregards as the Secretary shall develop.’’. 

17 (2) EFFECTIVE DATE.—(A) Subject to subpara18 graph (B), the amendment made by paragraph (1) 

19 shall apply to determinations (and redeterminations) 

20 of income made on or after April 1, 2012. 

21 (B) In the case of a State child health plan 

22 under title XXI of the Social Security Act which the 

23 Secretary of Health and Human Services determines 

24 requires State legislation (other than legislation ap25 propriating funds) in order for the plan to meet the 


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1 additional requirement imposed by the amendment 

2 made by paragraph (1), the State child health plan 

3 shall not be regarded as failing to comply with the 

4 requirements of such title solely on the basis of its 

5 failure to meet this additional requirement before 

6 the first day of the first calendar quarter beginning 

7 after the close of the first regular session of the 

8 State legislature that begins after the date of the en9 actment of this Act. For purposes of the previous 

10 sentence, in the case of a State that has a 2-year 

11 legislative session, each year of such session shall be 

12 deemed to be a separate regular session of the State 

13 legislature. 

14 SEC. 402. EASING ADMINISTRATIVE BARRIERS TO STATE 

15 COOPERATION WITH EMPLOYER-SPONSORED 

16 INSURANCE COVERAGE. 

17 (a) REQUIRING SOME COVERAGE FOR EMPLOYER18 SPONSORED INSURANCE UNDER CHIP.—Section 2102(a) 

19 of the Social Security Act (42 U.S.C. 1397b(a)), as 

20 amended by section 401(a), is amended— 

21 (1) in paragraph (7), by striking ‘‘and’’ at the 

22 end; 

23 (2) in paragraph (8), by striking the period at 

24 the end and inserting ‘‘; and’’; and 


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1 (3) by adding at the end the following new 

2 paragraph: 

3 ‘‘(9) effective for plan years beginning on or 

4 after October 1, 2012, how the plan will provide for 

5 child health assistance with respect to targeted low6 income children covered under a group health 

7 plan.’’. 

8 (b) FEDERAL FINANCIAL PARTICIPATION FOR EM9 PLOYER-SPONSORED INSURANCE.—Section 2105 of such 

10 Act (42 U.S.C. 1397d) is amended— 

11 (1) in subsection (a)(1)(C), by inserting before 

12 the semicolon at the end the following: ‘‘and, subject 

13 to paragraph (3)(C), in the form of payment of the 

14 premiums for coverage under a group health plan 

15 that includes coverage of targeted low-income chil16 dren and benefits supplemental to such coverage’’; 

17 and 

18 (2) by amending paragraph (3) of subsection 

19 (c) to read as follows: 

20 ‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN21 SURANCE.— 

22 ‘‘(A) IN GENERAL.—Payment may be 

23 made to a State under subsection (a)(1)(C), 

24 subject to the provisions of this paragraph, for 

25 the purchase of family coverage under a group 


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1 health plan that includes coverage of targeted 

2 low-income children unless such coverage would 

3 otherwise substitute for coverage that would be 

4 provided to such children but for the purchase 

5 of family coverage. 

6 ‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 

7 With respect to coverage described in subpara8 graph (A)— 

9 ‘‘(i) notwithstanding section 2102, no 

10 minimum benefits requirement (other than 

11 those otherwise applicable with respect to 

12 services referred to in section 2102(a)(7)) 

13 under this title shall apply; and 

14 ‘‘(ii) no limitation on beneficiary cost15 sharing otherwise applicable under this 

16 title or title XIX shall apply. 

17 ‘‘(C) REQUIRED PROVISION OF SUPPLE18 MENTAL BENEFITS.—If the coverage described 

19 in subparagraph (A) does not provide coverage 

20 for the services referred to in section 

21 2102(a)(7), the State child health plan shall 

22 provide coverage of such services as supple23 mental benefits. 

24 ‘‘(D) LIMITATION ON FFP.—The amount 

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1 erage described in subparagraph (A) (and sup2 plemental benefits under subparagraph (C) for 

3 individuals so covered) during a fiscal year may 

4 not exceed the product of— 

5 ‘‘(i) the national per capita expendi6 ture under this title (taking into account 

7 both Federal and State expenditures) for 

8 the previous fiscal year (as determined by 

9 the Secretary using the best available 

10 data); 

11 ‘‘(ii) the enhanced FMAP for the 

12 State and fiscal year involved; and 

13 ‘‘(iii) the number of targeted low-in14 come children for whom such coverage is 

15 provided. 

16 ‘‘(E) VOLUNTARY ENROLLMENT.—A State 

17 child health plan— 

18 ‘‘(i) may not require a targeted low19 income child to enroll in coverage described 

20 in subparagraph (A) in order to obtain 

21 child health assistance under this title; 

22 ‘‘(ii) before providing such child 

23 health assistance for such coverage of a 

24 child, shall make available (which may be 

25 through an Internet Web site or other 


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1 means including the State transparency 

2 plan portal established under section 901 

3 of the Empowering Patients First Act) to 

4 the parent or guardian of the child infor5 mation on the coverage available under 

6 this title, including benefits and cost-shar7 ing; and 

8 ‘‘(iii) shall provide at least one oppor9 tunity per fiscal year for beneficiaries to 

10 switch coverage under this title from cov11 erage described in subparagraph (A) to the 

12 coverage that is otherwise made available 

13 under this title. 

14 ‘‘(F) INFORMATION ON COVERAGE OP15 TIONS.—A State child health plan shall— 

16 ‘‘(i) describe how the State will notify 

17 potential beneficiaries of coverage de18 scribed in subparagraph (A); 

19 ‘‘(ii) provide such notification in writ20 ing at least during the initial application 

21 for enrollment under this title and during 

22 redeterminations of eligibility if the indi23 vidual was enrolled before October 1, 2012; 

24 and 


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1 ‘‘(iii) post a description of these cov2 erage options on any official Web site that 

3 may be established by the State in connec4 tion with the plan, including the State 

5 transparency plan portal established under 

6 section 901 of the Empowering Patients 

7 First Act. 

8 ‘‘(G) SEMIANNUAL VERIFICATION OF COV9 ERAGE.—If coverage described in subparagraph 

10 (A) is provided under a group health plan with 

11 respect to a targeted low-income child, the 

12 State child health plan shall provide for the col13 lection, at least once every six months, of proof 

14 from the plan that the child is enrolled in such 

15 coverage. 

16 ‘‘(H) RULE OF CONSTRUCTION.—Nothing 

17 in this section is to be construed to prohibit a 

18 State from— 

19 ‘‘(i) offering wrap around benefits in 

20 order for a group health plan to meet any 

21 State-established minimum benefit require22 ments; 

23 ‘‘(ii) establishing a cost-effectiveness 

24 test to qualify for coverage under such a 

25 plan; 


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1 ‘‘(iii) establishing limits on beneficiary 

2 cost-sharing under such a plan; 

3 ‘‘(iv) paying all or part of a bene4 ficiary’s cost-sharing requirements under 

5 such a plan; 

6 ‘‘(v) paying less than the full cost of 

7 the employee’s share of the premium under 

8 such a plan, including prorating the cost of 

9 the premium to pay for only what the 

10 State determines is the portion of the pre11 mium that covers targeted low-income chil12 dren; 

13 ‘‘(vi) using State funds to pay for 

14 benefits above the Federal upper limit es15 tablished under subparagraph (C); 

16 ‘‘(vii) allowing beneficiaries enrolled in 

17 group health plans from changing plans to 

18 another coverage option available under 

19 this title at any time; or 

20 ‘‘(viii) providing any guidance or in21 formation it deems appropriate in order to 

22 help beneficiaries make an informed deci23 sion regarding the option to enroll in cov24 erage described in subparagraph (A). 


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1 ‘‘(I) GROUP HEALTH PLAN DEFINED.—In 

2 this paragraph, the term ‘group health plan’ 

3 has the meaning given such term in section 

4 2791(a)(1) of the Public Health Service Act (42 

5 U.S.C. 300gg–91(a)(1)).’’. 

6 (c) APPLICATION UNDER MEDICAID.—The Secretary 

7 of Health and Human Services shall provide for the appli8 cation of the amendments made by subsections (a) and 

9 (b) under the Medicaid program under title XIX of the 

10 Social Security Act in the same manner as such amend11 ments apply to SCHIP under title XXI of such Act. 

12 SEC. 403. IMPROVING BENEFICIARY CHOICE IN SCHIP. 

13 (a) REQUIRING OFFERING OF ALTERNATIVE COV14 ERAGE OPTIONS.—Section 2102 of the Social Security Act 

15 (42 U.S.C. 1397b), as amended by sections 401(a) and 

16 402(a), is amended— 

17 (1) in subsection (a)— 

18 (A) in paragraph (8), by striking ‘‘and’’ at 

19 the end; 

20 (B) in paragraph (9), by striking the pe21 riod at the end and inserting ‘‘; and’’; and 

22 (C) by adding at the end the following new 

23 paragraph: 

24 ‘‘(10) effective for plan years beginning on or 

25 after October 1, 2012, how the plan will provide for 


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1 child health assistance with respect to targeted low2 income children through alternative coverage options 

3 in accordance with subsection (e).’’; and 

4 (2) by adding at the end the following new sub5 section: 

6 ‘‘(d) ALTERNATIVE COVERAGE OPTIONS.— 

7 ‘‘(1) IN GENERAL.—Effective October 1, 2012, 

8 a State child health plan shall provide for the offer9 ing of any qualified alternative coverage that a 

10 qualified entity seeks to offer to targeted low-income 

11 children through the plan in the State. 

12 ‘‘(2) APPLICATION OF UNIFORM FINANCIAL

13 LIMITATION FOR ALL ALTERNATIVE COVERAGE OP14 TIONS.—With respect to all qualified alternative cov15 erage offered in a State, the State child health plan 

16 shall establish a uniform dollar limitation on the per 

17 capita monthly amount that will be paid by the 

18 State to the qualified entity with respect to such 

19 coverage provided to a targeted low-income child. 

20 Such limitation may not be less than 90 percent of 

21 the per capita monthly payment made for coverage 

22 offered under the State child health plan that is not 

23 in the form of an alternative coverage option. Noth24 ing in this paragraph shall be construed— 


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1 ‘‘(A) as requiring a State to provide for 

2 the full payment of premiums for qualified al3 ternative coverage; 

4 ‘‘(B) as preventing a State from charging 

5 additional premiums to cover the difference be6 tween the cost of qualified alternative coverage 

7 and the amount of such payment limitation; or 

8 ‘‘(C) as preventing a State from using its 

9 own funds to provide a dollar limitation that ex10 ceeds the Federal financial participation as lim11 ited under section 2105(c)(10). 

12 ‘‘(3) TREATMENT OF LOW COST COVERAGE.— 

13 ‘‘(A) IN GENERAL.—Except as provided in 

14 subparagraph (B), if the uniform dollar limita15 tion under paragraph (2) exceeds the premium 

16 for qualified alternative coverage for an en17 rollee, then such excess shall be refunded to the 

18 Federal and State governments in the same 

19 proportion as is otherwise applicable to recov20 ered funds under this title. 

21 ‘‘(B) EXCEPTION FOR HIGH-DEDUCTIBLE

22 HEALTH PLANS.—In the case of coverage under 

23 a high-deductible health plan, the excess de24 scribed in subparagraph (A) shall be deposited 


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1 into a health savings account established with 

2 respect to such plan. 

3 ‘‘(4) EXEMPTION.—A State is not subject to 

4 the requirement of paragraph (1) if the State child 

5 health plan provides, as of the date of the enactment 

6 of this subsection, for a cash out or health savings 

7 account type option for those enrolled under the 

8 plan. 

9 ‘‘(5) QUALIFIED ALTERNATIVE COVERAGE DE10 FINED.—In this section, the term ‘qualified alter11 native coverage’ means health insurance coverage 

12 that— 

13 ‘‘(A) meets the coverage requirements of 

14 section 2103 (other than cost-sharing require15 ments of such section); and 

16 ‘‘(B) is offered by a qualified insurer, and 

17 not directly by the State. 

18 ‘‘(6) QUALIFIED INSURER DEFINED.—In this 

19 section, the term ‘qualified insurer’ means, with re20 spect to a State, an entity that is licensed to offer 

21 health insurance coverage in the State.’’. 

22 (b) FEDERAL FINANCIAL PARTICIPATION FOR

23 QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 

24 such Act (42 U.S.C. 1397d) is amended— 


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1 (1) in subsection (a)(1)(C), as amended by sec2 tion 402(b), by inserting before the semicolon at the 

3 end the following: ‘‘and, subject to paragraph 

4 (13)(C), in the form of payment of the premiums for 

5 coverage for qualified alternative coverage’’; and 

6 (2) in subsection (c), as amended by section 

7 401(b) by adding at the end the following new para8 graph: 

9 ‘‘(13) PURCHASE OF QUALIFIED ALTERNATIVE

10 COVERAGE.— 

11 ‘‘(A) IN GENERAL.—Payment may be 

12 made to a State under subsection (a)(1)(C), 

13 subject to the provisions of this paragraph, for 

14 the purchase of qualified alternative coverage. 

15 ‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 

16 With respect to coverage described in subpara17 graph (A), no limitation on beneficiary cost18 sharing otherwise applicable under this title or 

19 title XIX shall apply. 

20 ‘‘(C) LIMITATION ON FFP.—The amount of 

21 the payment under paragraph (1)(C) for cov22 erage described in subparagraph (A) during a 

23 fiscal year in the aggregate for all such cov24 erage in the State may not exceed the product 

25 of— 


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1 ‘‘(i) the national per capita expendi2 ture under this title (taking into account 

3 both Federal and State expenditures) for 

4 the previous fiscal year (as determined by 

5 the Secretary using the best available 

6 data); 

7 ‘‘(ii) the enhanced FMAP for the 

8 State and fiscal year involved; and 

9 ‘‘(iii) the number of targeted low-in10 come children for whom such coverage is 

11 provided. 

12 ‘‘(D) VOLUNTARY ENROLLMENT.—A State 

13 child health plan— 

14 ‘‘(i) may not require a targeted low15 income child to enroll in coverage described 

16 in subparagraph (A) in order to obtain 

17 child health assistance under this title; 

18 ‘‘(ii) before providing such child 

19 health assistance for such coverage of a 

20 child, shall make available (which may be 

21 through an Internet Web site or other 

22 means) to the parent or guardian of the 

23 child information on the coverage available 

24 under this title, including benefits and 

25 cost-sharing; and 


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1 ‘‘(iii) shall provide at least one oppor2 tunity per fiscal year for beneficiaries to 

3 switch coverage under this title from cov4 erage described in subparagraph (A) to the 

5 coverage that is otherwise made available 

6 under this title. 

7 ‘‘(E) INFORMATION ON COVERAGE OP8 TIONS.—A State child health plan shall— 

9 ‘‘(i) describe how the State will notify 

10 potential beneficiaries of coverage de11 scribed in subparagraph (A); 

12 ‘‘(ii) provide such notification in writ13 ing at least during the initial application 

14 for enrollment under this title and during 

15 redeterminations of eligibility if the indi16 vidual was enrolled before October 1, 2012; 

17 and 

18 ‘‘(iii) post a description of these cov19 erage options on any official Web site that 

20 may be established by the State in connec21 tion with the plan. 

22 ‘‘(F) RULE OF CONSTRUCTION.—Nothing 

23 in this section is to be construed to prohibit a 

24 State from— 


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1 ‘‘(i) establishing limits on beneficiary 

2 cost-sharing under such alternative cov3 erage; 

4 ‘‘(ii) paying all or part of a bene5 ficiary’s cost-sharing requirements under 

6 such coverage; 

7 ‘‘(iii) paying less than the full cost of 

8 a child’s share of the premium under such 

9 coverage, insofar as the premium for such 

10 coverage exceeds the limitation established 

11 by the State under subparagraph (C); 

12 ‘‘(iv) using State funds to pay for 

13 benefits above the Federal upper limit es14 tablished under subparagraph (C); or 

15 ‘‘(v) providing any guidance or infor16 mation it deems appropriate in order to 

17 help beneficiaries make an informed deci18 sion regarding the option to enroll in cov19 erage described in subparagraph (A).’’. 

20 (c) APPLICATION UNDER MEDICAID.—The Secretary 

21 of Health and Human Services shall provide for the appli22 cation of the amendments made by subsections (a) and 

23 (b) under the Medicaid program under title XIX of the 

24 Social Security Act in the same manner as such amend25 ments apply to SCHIP under title XXI of such Act. 


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1 TITLE V—MEDICAL LIABILITY 

2 REFORMS 

3 SEC. 501. SHORT TITLE. 

4 This title may be cited as the ‘‘Help Efficient, Acces5 sible, Low-cost, Timely Healthcare (HEALTH) Act of 

6 2011’’. 

7 SEC. 502. FINDINGS AND PURPOSE. 

8 (a) FINDINGS.— 

9 (1) EFFECT ON HEALTH CARE ACCESS AND

10 COSTS.—Congress finds that our current civil justice 

11 system is adversely affecting patient access to health 

12 care services, better patient care, and cost-efficient 

13 health care, in that the health care liability system 

14 is a costly and ineffective mechanism for resolving 

15 claims of health care liability and compensating in16 jured patients, and is a deterrent to the sharing of 

17 information among health care professionals which 

18 impedes efforts to improve patient safety and quality 

19 of care. 

20 (2) EFFECT ON INTERSTATE COMMERCE.— 

21 Congress finds that the health care and insurance 

22 industries are industries affecting interstate com23 merce and the health care liability litigation systems 

24 existing throughout the United States are activities 

25 that affect interstate commerce by contributing to 


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1 the high costs of health care and premiums for 

2 health care liability insurance purchased by health 

3 care system providers. 

4 (3) EFFECT ON FEDERAL SPENDING.—Con5 gress finds that the health care liability litigation 

6 systems existing throughout the United States have 

7 a significant effect on the amount, distribution, and 

8 use of Federal funds because of— 

9 (A) the large number of individuals who 

10 receive health care benefits under programs op11 erated or financed by the Federal Government; 

12 (B) the large number of individuals who 

13 benefit because of the exclusion from Federal 

14 taxes of the amounts spent to provide them 

15 with health insurance benefits; and 

16 (C) the large number of health care pro17 viders who provide items or services for which 

18 the Federal Government makes payments. 

19 (b) PURPOSE.—It is the purpose of this title to imple20 ment reasonable, comprehensive, and effective health care 

21 liability reforms designed to 

22 (1) improve the availability of health care serv23 ices in cases in which health care liability actions 

24 have been shown to be a factor in the decreased 

25 availability of services; 


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1 (2) reduce the incidence of ‘‘defensive medi2 cine’’ and lower the cost of health care liability in3 surance, all of which contribute to the escalation of 

4 health care costs; 

5 (3) ensure that persons with meritorious health 

6 care injury claims receive fair and adequate com7 pensation, including reasonable noneconomic dam8 ages; 

9 (4) improve the fairness and cost-effectiveness 

10 of our current health care liability system to resolve 

11 disputes over, and provide compensation for, health 

12 care liability by reducing uncertainty in the amount 

13 of compensation provided to injured individuals; and 

14 (5) provide an increased sharing of information 

15 in the health care system which will reduce unin16 tended injury and improve patient care. 

17 SEC. 503. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

18 The time for the commencement of a health care law19 suit shall be 3 years after the date of manifestation of 

20 injury or 1 year after the claimant discovers, or through 

21 the use of reasonable diligence should have discovered, the 

22 injury, whichever occurs first. In no event shall the time 

23 for commencement of a health care lawsuit exceed 3 years 

24 after the date of manifestation of injury unless tolled for 

25 any of the following— 


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1 (1) upon proof of fraud; 

2 (2) intentional concealment; or 

3 (3) the presence of a foreign body, which has no 

4 therapeutic or diagnostic purpose or effect, in the 

5 person of the injured person. 

6 Actions by a minor shall be commenced within 3 years 

7 from the date of the alleged manifestation of injury except 

8 that actions by a minor under the full age of 6 years shall 

9 be commenced within 3 years of manifestation of injury 

10 or prior to the minor’s 8th birthday, whichever provides 

11 a longer period. Such time limitation shall be tolled for 

12 minors for any period during which a parent or guardian 

13 and a health care provider or health care organization 

14 have committed fraud or collusion in the failure to bring 

15 an action on behalf of the injured minor. 

16 SEC. 504. COMPENSATING PATIENT INJURY. 

17 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

18 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

19 health care lawsuit, nothing in this title shall limit a claim20 ant’s recovery of the full amount of the available economic 

21 damages, notwithstanding the limitation in subsection (b). 

22 (b) ADDITIONAL NONECONOMIC DAMAGES.—In any 

23 health care lawsuit, the amount of noneconomic damages, 

24 if available, may be as much as $250,000, regardless of 

25 the number of parties against whom the action is brought 


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1 or the number of separate claims or actions brought with 

2 respect to the same injury. 

3 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

4 DAMAGES.—For purposes of applying the limitation in 

5 subsection (b), future noneconomic damages shall not be 

6 discounted to present value. The jury shall not be in7 formed about the maximum award for noneconomic dam8 ages. An award for noneconomic damages in excess of 

9 $250,000 shall be reduced either before the entry of judg10 ment, or by amendment of the judgment after entry of 

11 judgment, and such reduction shall be made before ac12 counting for any other reduction in damages required by 

13 law. If separate awards are rendered for past and future 

14 noneconomic damages and the combined awards exceed 

15 $250,000, the future noneconomic damages shall be re16 duced first. 

17 (d) FAIR SHARE RULE.—In any health care lawsuit, 

18 each party shall be liable for that party’s several share 

19 of any damages only and not for the share of any other 

20 person. Each party shall be liable only for the amount of 

21 damages allocated to such party in direct proportion to 

22 such party’s percentage of responsibility. Whenever a 

23 judgment of liability is rendered as to any party, a sepa24 rate judgment shall be rendered against each such party 

25 for the amount allocated to such party. For purposes of 


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1 this section, the trier of fact shall determine the propor2 tion of responsibility of each party for the claimant’s 

3 harm. 

4 SEC. 505. MAXIMIZING PATIENT RECOVERY. 

5 (a) COURT SUPERVISION OF SHARE OF DAMAGES

6 ACTUALLY PAID TO CLAIMANTS.—In any health care law7 suit, the court shall supervise the arrangements for pay8 ment of damages to protect against conflicts of interest 

9 that may have the effect of reducing the amount of dam10 ages awarded that are actually paid to claimants. In par11 ticular, in any health care lawsuit in which the attorney 

12 for a party claims a financial stake in the outcome by vir13 tue of a contingent fee, the court shall have the power 

14 to restrict the payment of a claimant’s damage recovery 

15 to such attorney, and to redirect such damages to the 

16 claimant based upon the interests of justice and principles 

17 of equity. In no event shall the total of all contingent fees 

18 for representing all claimants in a health care lawsuit ex19 ceed the following limits: 

20 (1) Forty percent of the first $50,000 recovered 

21 by the claimant(s). 

22 (2) Thirty-three and one-third percent of the 

23 next $50,000 recovered by the claimant(s). 

24 (3) Twenty-five percent of the next $500,000 

25 recovered by the claimant(s). 


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1 (4) Fifteen percent of any amount by which the 

2 recovery by the claimant(s) is in excess of $600,000. 

3 (b) APPLICABILITY.—The limitations in this section 

4 shall apply whether the recovery is by judgment, settle5 ment, mediation, arbitration, or any other form of alter6 native dispute resolution. In a health care lawsuit involv7 ing a minor or incompetent person, a court retains the 

8 authority to authorize or approve a fee that is less than 

9 the maximum permitted under this section. The require10 ment for court supervision in the first two sentences of 

11 subsection (a) applies only in civil actions. 

12 SEC. 506. ADDITIONAL HEALTH BENEFITS. 

13 In any health care lawsuit involving injury or wrong14 ful death, any party may introduce evidence of collateral 

15 source benefits. If a party elects to introduce such evi16 dence, any opposing party may introduce evidence of any 

17 amount paid or contributed or reasonably likely to be paid 

18 or contributed in the future by or on behalf of the oppos19 ing party to secure the right to such collateral source bene20 fits. No provider of collateral source benefits shall recover 

21 any amount against the claimant or receive any lien or 

22 credit against the claimant’s recovery or be equitably or 

23 legally subrogated to the right of the claimant in a health 

24 care lawsuit involving injury or wrongful death. This sec25 tion shall apply to any health care lawsuit that is settled 


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1 as well as a health care lawsuit that is resolved by a fact 

2 finder. This section shall not apply to section 1862(b) (42 

3 U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 

4 1396a(a)(25)) of the Social Security Act. 

5 SEC. 507. PUNITIVE DAMAGES. 

6 (a) IN GENERAL.—Punitive damages may, if other7 wise permitted by applicable State or Federal law, be 

8 awarded against any person in a health care lawsuit only 

9 if it is proven by clear and convincing evidence that such 

10 person acted with malicious intent to injure the claimant, 

11 or that such person deliberately failed to avoid unneces12 sary injury that such person knew the claimant was sub13 stantially certain to suffer. In any health care lawsuit 

14 where no judgment for compensatory damages is rendered 

15 against such person, no punitive damages may be awarded 

16 with respect to the claim in such lawsuit. No demand for 

17 punitive damages shall be included in a health care lawsuit 

18 as initially filed. A court may allow a claimant to file an 

19 amended pleading for punitive damages only upon a mo20 tion by the claimant and after a finding by the court, upon 

21 review of supporting and opposing affidavits or after a 

22 hearing, after weighing the evidence, that the claimant has 

23 established by a substantial probability that the claimant 

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1 quest of any party in a health care lawsuit, the trier of 

2 fact shall consider in a separate proceeding— 

3 (1) whether punitive damages are to be award4 ed and the amount of such award; and 

5 (2) the amount of punitive damages following a 

6 determination of punitive liability. 

7 If a separate proceeding is requested, evidence relevant 

8 only to the claim for punitive damages, as determined by 

9 applicable State law, shall be inadmissible in any pro10 ceeding to determine whether compensatory damages are 

11 to be awarded. 

12 (b) DETERMINING AMOUNT OF PUNITIVE DAM13 AGES.— 

14 (1) FACTORS CONSIDERED.—In determining 

15 the amount of punitive damages, if awarded, in a 

16 health care lawsuit, the trier of fact shall consider 

17 only the following— 

18 (A) the severity of the harm caused by the 

19 conduct of such party; 

20 (B) the duration of the conduct or any 

21 concealment of it by such party; 

22 (C) the profitability of the conduct to such 

23 party; 

24 (D) the number of products sold or med25 ical procedures rendered for compensation, as 


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1 the case may be, by such party, of the kind 

2 causing the harm complained of by the claim3 ant; 

4 (E) any criminal penalties imposed on such 

5 party, as a result of the conduct complained of 

6 by the claimant; and 

7 (F) the amount of any civil fines assessed 

8 against such party as a result of the conduct 

9 complained of by the claimant. 

10 (2) MAXIMUM AWARD.—The amount of punitive 

11 damages, if awarded, in a health care lawsuit may 

12 be as much as $250,000 or as much as two times 

13 the amount of economic damages awarded, which14 ever is greater. The jury shall not be informed of 

15 this limitation. 

16 (c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT

17 COMPLY WITH FDA STANDARDS.— 

18 (1) IN GENERAL.— 

19 (A) No punitive damages may be awarded 

20 against the manufacturer or distributor of a 

21 medical product, or a supplier of any compo22 nent or raw material of such medical product, 

23 based on a claim that such product caused the 

24 claimant’s harm where— 


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1 (i)(I) such medical product was sub2 ject to premarket approval, clearance, or li3 censure by the Food and Drug Administra4 tion with respect to the safety of the for5 mulation or performance of the aspect of 

6 such medical product which caused the 

7 claimant’s harm or the adequacy of the 

8 packaging or labeling of such medical 

9 product; and 

10 (II) such medical product was so ap11 proved, cleared, or licensed; or 

12 (ii) such medical product is generally 

13 recognized among qualified experts as safe 

14 and effective pursuant to conditions estab15 lished by the Food and Drug Administra16 tion and applicable Food and Drug Admin17 istration regulations, including without 

18 limitation those related to packaging and 

19 labeling, unless the Food and Drug Admin20 istration has determined that such medical 

21 product was not manufactured or distrib22 uted in substantial compliance with appli23 cable Food and Drug Administration stat24 utes and regulations. 


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1 (B) RULE OF CONSTRUCTION.—Subpara2 graph (A) may not be construed as establishing 

3 the obligation of the Food and Drug Adminis4 tration to demonstrate affirmatively that a 

5 manufacturer, distributor, or supplier referred 

6 to in such subparagraph meets any of the con7 ditions described in such subparagraph. 

8 (2) LIABILITY OF HEALTH CARE PROVIDERS.— 

9 A health care provider who prescribes, or who dis10 penses pursuant to a prescription, a medical product 

11 approved, licensed, or cleared by the Food and Drug 

12 Administration shall not be named as a party to a 

13 product liability lawsuit involving such product and 

14 shall not be liable to a claimant in a class action 

15 lawsuit against the manufacturer, distributor, or 

16 seller of such product. Nothing in this paragraph 

17 prevents a court from consolidating cases involving 

18 health care providers and cases involving products li19 ability claims against the manufacturer, distributor, 

20 or product seller of such medical product. 

21 (3) PACKAGING.—In a health care lawsuit for 

22 harm which is alleged to relate to the adequacy of 

23 the packaging or labeling of a drug which is required 

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1 ices (including labeling regulations related to such 

2 packaging), the manufacturer or product seller of 

3 the drug shall not be held liable for punitive dam4 ages unless such packaging or labeling is found by 

5 the trier of fact by clear and convincing evidence to 

6 be substantially out of compliance with such regula7 tions. 

8 (4) EXCEPTION.—Paragraph (1) shall not 

9 apply in any health care lawsuit in which— 

10 (A) a person, before or after premarket ap11 proval, clearance, or licensure of such medical 

12 product, knowingly misrepresented to or with13 held from the Food and Drug Administration 

14 information that is required to be submitted 

15 under the Federal Food, Drug, and Cosmetic 

16 Act (21 U.S.C. 301 et seq.) or section 351 of 

17 the Public Health Service Act (42 U.S.C. 262) 

18 that is material and is causally related to the 

19 harm which the claimant allegedly suffered; 

20 (B) a person made an illegal payment to 

21 an official of the Food and Drug Administra22 tion for the purpose of either securing or main23 taining approval, clearance, or licensure of such 

24 medical product; or 


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1 (C) the defendant caused the medical prod2 uct which caused the claimant’s harm to be 

3 misbranded or adulterated (as such terms are 

4 used in chapter V of the Federal Food, Drug, 

5 and Cosmetic Act (21 U.S.C. 351 et seq.)). 

6 SEC. 508. LIMITATION ON RECOVERY IN A HEALTH CARE 

7 LAWSUIT BASED ON COMPLIANCE WITH BEST 

8 PRACTICE GUIDELINES. 

9 (a) SELECTION AND ISSUANCE OF BEST PRACTICES

10 GUIDELINES.— 

11 (1) IN GENERAL.—The Secretary of Health and 

12 Human Services (in this section referred to as the 

13 ‘‘Secretary’’) shall provide for the selection and 

14 issuance of best practice guidelines for treatment of 

15 medical conditions (each in this subsection referred 

16 to as a ‘‘guideline’’) in accordance with paragraphs 

17 (2) and (3). 

18 (2) DEVELOPMENT PROCESS.—Not later than 

19 90 days after the date of enactment of this title, the 

20 Secretary shall enter into a contract with a qualified 

21 physician consensus-building organization (such as 

22 the Physician Consortium for Performance Improve23 ment), in concert and agreement with physician spe24 cialty organizations, to develop guidelines. The con25 tract shall require that the organization submit 


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1 guidelines to the agency not later than 18 months 

2 after the date of enactment of this title. 

3 (3) ISSUANCE.— 

4 (A) IN GENERAL.—Not later than 2 years 

5 after the date of the enactment of this title, the 

6 Secretary shall, after notice and opportunity for 

7 public comment, make a rule that provides for 

8 the establishment of the guidelines submitted 

9 under paragraph (2). 

10 (B) LIMITATION.—The Secretary may not 

11 make a rule that includes guidelines other than 

12 those submitted under paragraph (2). 

13 (C) DISSEMINATION.—The Secretary shall 

14 post such guidelines on the public Internet web 

15 page of the Department of Health and Human 

16 Services. 

17 (4) MAINTENANCE.—Not later than 4 years 

18 after the date of enactment of this title, and every 

19 2 years thereafter, the Secretary shall review the 

20 guidelines and shall, as necessary, enter into con21 tracts similar to the contract described in paragraph 

22 (2), and issue guidelines in a manner similar to the 

23 issuance of guidelines under paragraph (3). 

24 (b) LIMITATION ON DAMAGES.— 


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1 (1) LIMITATION ON NONECONOMIC DAMAGES.— 

2 In any health care lawsuit, a court may not award 

3 noneconomic damages with respect to treatment that 

4 is consistent with a guideline issued under sub5 section (a). 

6 (2) LIMITATION ON PUNITIVE DAMAGES.—In 

7 any health care lawsuit, no punitive damages may be 

8 awarded against a health care provider based on a 

9 claim that such treatment caused the claimant harm 

10 if— 

11 (A) such treatment was subject to quality 

12 review by a qualified physician consensus-build13 ing organization and has been found to be safe, 

14 effective, and appropriate; 

15 (B) such treatment was approved in a 

16 guideline that underwent full review by such or17 ganization, public comment, approval by the 

18 Secretary, and dissemination as described in 

19 subparagraph (a); or 

20 (C) such medical treatment is generally 

21 recognized among qualified experts (including 

22 medical providers and relevant physician spe23 cialty organizations) as safe, effective, and ap24 propriate. 

25 (c) USE.— 


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1 (1) INTRODUCTION AS EVIDENCE.—Guidelines 

2 established in a rule made under subsection (a) may 

3 not be introduced as evidence of negligence or devi4 ation in the standard of care in any health care law5 suit unless they have previously been introduced by 

6 the defendant. 

7 (2) NO PRESUMPTION OF NEGLIGENCE.—There 

8 shall be no presumption of negligence if a health 

9 care provider provides treatment in a manner incon10 sistent with such guidelines. 

11 (d) CONSTRUCTION.—Nothing in this section shall be 

12 construed as preventing a State from— 

13 (1) replacing their current medical malpractice 

14 rules with rules that rely, as a defense, upon a 

15 health care provider’s compliance with a guideline 

16 issued under subsection (a); or 

17 (2) applying additional guidelines or safe-har18 bors that are in addition to, but not in lieu of, the 

19 guidelines issued under subsection (a). 

20 SEC. 509. STATE GRANTS TO CREATE ADMINISTRATIVE 

21 HEALTH CARE TRIBUNALS. 

22 Part P of title III of the Public Health Service Act 

23 (42 U.S.C. 280g et seq.) is amended by adding at the end 

24 the following: 


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1 ‘‘SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE 

2 HEALTH CARE TRIBUNALS. 

3 ‘‘(a) IN GENERAL.—The Secretary may award grants 

4 to States for the development, implementation, and eval5 uation of administrative health care tribunals that comply 

6 with this section, for the resolution of disputes concerning 

7 injuries allegedly caused by health care providers. 

8 ‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 

9 To be eligible to receive a grant under this section, a State 

10 shall submit to the Secretary an application at such time, 

11 in such manner, and containing such information as may 

12 be required by the Secretary. A grant shall be awarded 

13 under this section on such terms and conditions as the 

14 Secretary determines appropriate. 

15 ‘‘(c) REPRESENTATION BY COUNSEL.—A State that 

16 receives a grant under this section may not preclude any 

17 party to a dispute before an administrative health care tri18 bunal operated under such grant from obtaining legal rep19 resentation during any review by the expert panel under 

20 subsection (d), the administrative health care tribunal 

21 under subsection (e), or a State court under subsection 

22 (f). 

23 ‘‘(d) EXPERT PANEL REVIEW AND EARLY OFFER

24 GUIDELINES.— 

25 ‘‘(1) IN GENERAL.—Prior to the submission of 

26 any dispute concerning injuries allegedly caused by 


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1 health care providers to an administrative health 

2 care tribunal under this section, such allegations 

3 shall first be reviewed by an expert panel. 

4 ‘‘(2) COMPOSITION.— 

5 ‘‘(A) IN GENERAL.—The members of each 

6 expert panel under this subsection shall be ap7 pointed by the head of the State agency respon8 sible for health. Each expert panel shall be 

9 composed of no fewer than 3 members and not 

10 more than 7 members. At least one-half of such 

11 members shall be medical experts (either physi12 cians or health care professionals). 

13 ‘‘(B) LICENSURE AND EXPERTISE.—Each 

14 physician or health care professional appointed 

15 to an expert panel under subparagraph (A) 

16 shall— 

17 ‘‘(i) be appropriately credentialed or 

18 licensed in one or more States to deliver 

19 health care services; and 

20 ‘‘(ii) typically treat the condition, 

21 make the diagnosis, or provide the type of 

22 treatment that is under review. 

23 ‘‘(C) INDEPENDENCE.— 


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

2 (ii), each individual appointed to an expert 

3 panel under this paragraph shall— 

4 ‘‘(I) not have a material familial, 

5 financial, or professional relationship 

6 with a party involved in the dispute 

7 reviewed by the panel; and 

8 ‘‘(II) not otherwise have a con9 flict of interest with such a party. 

10 ‘‘(ii) EXCEPTION.—Nothing in clause 

11 (i) shall be construed to prohibit an indi12 vidual who has staff privileges at an insti13 tution where the treatment involved in the 

14 dispute was provided from serving as a 

15 member of an expert panel merely on the 

16 basis of such affiliation, if the affiliation is 

17 disclosed to the parties and neither party 

18 objects. 

19 ‘‘(D) PRACTICING HEALTH CARE PROFES20 SIONAL IN SAME FIELD.— 

21 ‘‘(i) IN GENERAL.—In a dispute be22 fore an expert panel that involves treat23 ment, or the provision of items or serv24 ices— 


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1 ‘‘(I) by a physician, the medical 

2 experts on the expert panel shall be 

3 practicing physicians (allopathic or os4 teopathic) of the same or similar spe5 cialty as a physician who typically 

6 treats the condition, makes the diag7 nosis, or provides the type of treat8 ment under review; or 

9 ‘‘(II) by a health care profes10 sional other than a physician, at least 

11 two medical experts on the expert 

12 panel shall be practicing physicians 

13 (allopathic or osteopathic) of the same 

14 or similar specialty as the health care 

15 professional who typically treats the 

16 condition, makes the diagnosis, or 

17 provides the type of treatment under 

18 review, and, if determined appropriate 

19 by the State agency, an additional 

20 medical expert shall be a practicing 

21 health care professional (other than 

22 such a physician) of such a same or 

23 similar specialty. 

24 ‘‘(ii) PRACTICING DEFINED.—In this 

25 paragraph, the term ‘practicing’ means, 


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1 with respect to an individual who is a phy2 sician or other health care professional, 

3 that the individual provides health care 

4 services to individual patients on average 

5 at least 2 days a week. 

6 ‘‘(E) PEDIATRIC EXPERTISE.—In the case 

7 of dispute relating to a child, at least 1 medical 

8 expert on the expert panel shall have expertise 

9 described in subparagraph (D)(i) in pediatrics. 

10 ‘‘(3) DETERMINATION.—After a review under 

11 paragraph (1), an expert panel shall make a deter12 mination as to the liability of the parties involved 

13 and compensation. 

14 ‘‘(4) ACCEPTANCE.—If the parties to a dispute 

15 before an expert panel under this subsection accept 

16 the determination of the expert panel concerning li17 ability and compensation, such compensation shall 

18 be paid to the claimant and the claimant shall agree 

19 to forgo any further action against the health care 

20 providers involved. 

21 ‘‘(5) FAILURE TO ACCEPT.—If any party de22 cides not to accept the expert panel’s determination, 

23 the matter shall be referred to an administrative 

24 health care tribunal created pursuant to this section. 

25 ‘‘(e) ADMINISTRATIVE HEALTH CARE TRIBUNALS.— 


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1 ‘‘(1) IN GENERAL.—Upon the failure of any 

2 party to accept the determination of an expert panel 

3 under subsection (d), the parties shall have the right 

4 to request a hearing concerning the liability or com5 pensation involved by an administrative health care 

6 tribunal established by the State involved. 

7 ‘‘(2) REQUIREMENTS.—In establishing an ad8 ministrative health care tribunal under this section, 

9 a State shall— 

10 ‘‘(A) ensure that such tribunals are pre11 sided over by special judges with health care ex12 pertise; 

13 ‘‘(B) provide authority to such judges to 

14 make binding rulings, rendered in written deci15 sions, on standards of care, causation, com16 pensation, and related issues with reliance on 

17 independent expert witnesses commissioned by 

18 the tribunal; 

19 ‘‘(C) establish gross negligence as the legal 

20 standard for the tribunal; 

21 ‘‘(D) allow the admission into evidence of 

22 the recommendation made by the expert panel 

23 under subsection (d); and 

24 ‘‘(E) provide for an appeals process to 

25 allow for review of decisions by State courts. 


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1 ‘‘(f) REVIEW BY STATE COURT AFTER EXHAUSTION

2 OF ADMINISTRATIVE REMEDIES.— 

3 ‘‘(1) RIGHT TO FILE.—If any party to a dispute 

4 before a health care tribunal under subsection (e) is 

5 not satisfied with the determinations of the tribunal, 

6 the party shall have the right to file their claim in 

7 a State court of competent jurisdiction. 

8 ‘‘(2) FORFEIT OF AWARDS.—Any party filing 

9 an action in a State court in accordance with para10 graph (1) shall forfeit any compensation award 

11 made under subsection (e). 

12 ‘‘(3) ADMISSIBILITY.—The determinations of 

13 the expert panel and the administrative health care 

14 tribunal pursuant to subsections (d) and (e) with re15 spect to a State court proceeding under paragraph 

16 (1) shall be admissible into evidence in any such 

17 State court proceeding. 

18 ‘‘(g) DEFINITION.—In this section, the term ‘health 

19 care provider’ means any person or entity required by 

20 State or Federal laws or regulations to be licensed, reg21 istered, or certified to provide health care services, and 

22 being either so licensed, registered, or certified, or exempt23 ed from such requirement by other statute or regulation. 

24 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 

25 are authorized to be appropriated for any fiscal year such 


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1 sums as may be necessary for purposes of making grants 

2 to States under this section.’’. 

3 SEC. 510. AUTHORIZATION OF PAYMENT OF FUTURE DAM4 AGES TO CLAIMANTS IN HEALTH CARE LAW5 SUITS. 

6 (a) IN GENERAL.—In any health care lawsuit, if an 

7 award of future damages, without reduction to present 

8 value, equaling or exceeding $50,000 is made against a 

9 party with sufficient insurance or other assets to fund a 

10 periodic payment of such a judgment, the court shall, at 

11 the request of any party, enter a judgment ordering that 

12 the future damages be paid by periodic payments, in ac13 cordance with the Uniform Periodic Payment of Judg14 ments Act promulgated by the National Conference of 

15 Commissioners on Uniform State Laws. 

16 (b) APPLICABILITY.—This section applies to all ac17 tions which have not been first set for trial or retrial be18 fore the effective date of this title. 

19 SEC. 511. DEFINITIONS. 

20 In this title: 

21 (1) ALTERNATIVE DISPUTE RESOLUTION SYS22 TEM; ADR.—The term ‘‘alternative dispute resolution 

23 system’’ or ‘‘ADR’’ means a system that provides 

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1 ner other than through a civil action brought in a 

2 State or Federal court. 

3 (2) CLAIMANT.—The term ‘‘claimant’’ means 

4 any person who brings a health care lawsuit, includ5 ing a person who asserts or claims a right to legal 

6 or equitable contribution, indemnity, or subrogation, 

7 arising out of a health care liability claim or action, 

8 and any person on whose behalf such a claim is as9 serted or such an action is brought, whether de10 ceased, incompetent, or a minor. 

11 (3) COLLATERAL SOURCE BENEFITS.—The 

12 term ‘‘collateral source benefits’’ means any amount 

13 paid or reasonably likely to be paid in the future to 

14 or on behalf of the claimant, or any service, product, 

15 or other benefit provided or reasonably likely to be 

16 provided in the future to or on behalf of the claim17 ant, as a result of the injury or wrongful death, pur18 suant to— 

19 (A) any State or Federal health, sickness, 

20 income-disability, accident, or workers’ com21 pensation law; 

22 (B) any health, sickness, income-disability, 

23 or accident insurance that provides health bene24 fits or income-disability coverage; 


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1 (C) any contract or agreement of any 

2 group, organization, partnership, or corporation 

3 to provide, pay for, or reimburse the cost of 

4 medical, hospital, dental, or income-disability 

5 benefits; and 

6 (D) any other publicly or privately funded 

7 program. 

8 (4) COMPENSATORY DAMAGES.—The term 

9 ‘‘compensatory damages’’ means objectively 

10 verifiable monetary losses incurred as a result of the 

11 provision of, use of, or payment for (or failure to 

12 provide, use, or pay for) health care services or med13 ical products, such as past and future medical ex14 penses, loss of past and future earnings, cost of ob15 taining domestic services, loss of employment, and 

16 loss of business or employment opportunities, dam17 ages for physical and emotional pain, suffering, in18 convenience, physical impairment, mental anguish, 

19 disfigurement, loss of enjoyment of life, loss of soci20 ety and companionship, loss of consortium (other 

21 than loss of domestic service), hedonic damages, in22 jury to reputation, and all other nonpecuniary losses 

23 of any kind or nature. The term ‘‘compensatory 

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1 economic damages, as such terms are defined in this 

2 section. 

3 (5) CONTINGENT FEE.—The term ‘‘contingent 

4 fee’’ includes all compensation to any person or per5 sons which is payable only if a recovery is effected 

6 on behalf of one or more claimants. 

7 (6) ECONOMIC DAMAGES.—The term ‘‘economic 

8 damages’’ means objectively verifiable monetary 

9 losses incurred as a result of the provision of, use 

10 of, or payment for (or failure to provide, use, or pay 

11 for) health care services or medical products, such as 

12 past and future medical expenses, loss of past and 

13 future earnings, cost of obtaining domestic services, 

14 loss of employment, and loss of business or employ15 ment opportunities. 

16 (7) FEDERAL TAX BENEFIT.—A claimant shall 

17 be treated as receiving a Federal tax benefit with re18 spect to payment for items or services if— 

19 (A) such payment is compensation by in20 surance— 

21 (i) which constitutes medical care, and 

22 (ii) with respect to the payment of 

23 premiums for which the claimant, or the 

24 employer of the claimant, was allowed an 

25 exclusion from gross income, a deduction, 


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1 or a credit for Federal income tax pur2 poses, 

3 (B) a deduction was allowed with respect 

4 to such payment for Federal income tax pur5 poses, or 

6 (C) such payment was from an Archer 

7 MSA (as defined in section 220(d) of the Inter8 nal Revenue Code of 1986), a health savings 

9 account (as defined in section 223(d) of such 

10 Code), a flexible spending arrangement (as de11 fined in section 106(c)(2) of such Code), or a 

12 health reimbursement arrangement which is 

13 treated as employer-provided coverage under an 

14 accident or health plan for purposes of section 

15 106 of such Code. 

16 (8) HEALTH CARE LAWSUIT.—The term 

17 ‘‘health care lawsuit’’ means any health care liability 

18 claim concerning the provision of health care goods 

19 or services brought in a Federal court or in a State 

20 court or pursuant to an alternative dispute resolu21 tion system, if such claim concerns items or services 

22 with respect to which payment is made under title 

23 XVIII, title XIX, or title XXI of the Social Security 

24 Act or for which the claimant receives a Federal tax 

25 benefit, against a health care provider, a health care 


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1 organization, or the manufacturer, distributor, sup2 plier, marketer, promoter, or seller of a medical 

3 product, regardless of the theory of liability on which 

4 the claim is based, or the number of claimants, 

5 plaintiffs, defendants, or other parties, or the num6 ber of claims or causes of action, in which the claim7 ant alleges a health care liability claim. Such term 

8 does not include a claim or action which is based on 

9 criminal liability; which seeks civil fines or penalties 

10 paid to Federal government; or which is grounded in 

11 antitrust. 

12 (9) HEALTH CARE LIABILITY ACTION.—The 

13 term ‘‘health care liability action’’ means a civil ac14 tion brought in a State or Federal court or pursuant 

15 to an alternative dispute resolution system, against 

16 a health care provider, a health care organization, or 

17 the manufacturer, distributor, supplier, marketer, 

18 promoter, or seller of a medical product, regardless 

19 of the theory of liability on which the claim is based, 

20 or the number of plaintiffs, defendants, or other par21 ties, or the number of causes of action, in which the 

22 claimant alleges a health care liability claim. 

23 (10) HEALTH CARE LIABILITY CLAIM.—The 

24 term ‘‘health care liability claim’’ means a demand 

25 by any person, whether or not pursuant to ADR, 


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1 against a health care provider, health care organiza2 tion, or the manufacturer, distributor, supplier, mar3 keter, promoter, or seller of a medical product, in4 cluding, but not limited to, third-party claims, cross5 claims, counter-claims, or contribution claims, which 

6 are based upon the provision of, use of, or payment 

7 for (or the failure to provide, use, or pay for) health 

8 care services or medical products, regardless of the 

9 theory of liability on which the claim is based, or the 

10 number of plaintiffs, defendants, or other parties, or 

11 the number of causes of action. 

12 (11) HEALTH CARE ORGANIZATION.—The term 

13 ‘‘health care organization’’ means any person or en14 tity which is obligated to provide or pay for health 

15 benefits under any health plan, including any person 

16 or entity acting under a contract or arrangement 

17 with a health care organization to provide or admin18 ister any health benefit. 

19 (12) HEALTH CARE PROVIDER.—The term 

20 ‘‘health care provider’’ means any person or entity 

21 required by State or Federal laws or regulations to 

22 be licensed, registered, or certified to provide health 

23 care services, and being either so licensed, reg24 istered, or certified, or exempted from such require25 ment by other statute or regulation. 


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1 (13) HEALTH CARE GOODS OR SERVICES.—The 

2 term ‘‘health care goods or services’’ means any 

3 goods or services provided by a health care organiza4 tion, provider, or by any individual working under 

5 the supervision of a health care provider, that relates 

6 to the diagnosis, prevention, or treatment of any 

7 human disease or impairment, or the assessment or 

8 care of the health of human beings. 

9 (14) MALICIOUS INTENT TO INJURE.—The 

10 term ‘‘malicious intent to injure’’ means inten11 tionally causing or attempting to cause physical in12 jury other than providing health care goods or serv13 ices. 

14 (15) MEDICAL PRODUCT.—The term ‘‘medical 

15 product’’ means a drug, device, or biological product 

16 intended for humans, and the terms ‘‘drug’’, ‘‘de17 vice’’, and ‘‘biological product’’ have the meanings 

18 given such terms in sections 201(g)(1) and 201(h) 

19 of the Federal Food, Drug and Cosmetic Act (21 

20 U.S.C. 321(g)(1) and (h)) and section 351(a) of the 

21 Public Health Service Act (42 U.S.C. 262(a)), re22 spectively, including any component or raw material 

23 used therein, but excluding health care services. 

24 (16) MEDICAL TREATMENT.—The term ‘‘med25 ical treatment’’ means the provision of any goods or 


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1 services by a health care provider or by any indi2 vidual working under the supervision of a health 

3 care provider, that relates to the diagnosis, preven4 tion, or treatment of any human disease or impair5 ment, or the assessment or care of the health of 

6 human beings. 

7 (17) NONECONOMIC DAMAGES.—The term 

8 ‘‘noneconomic damages’’ means damages for losses 

9 for physical and emotional pain, suffering, inconven10 ience, physical impairment, mental anguish, dis11 figurement, loss of enjoyment of life, loss of society 

12 and companionship, loss of consortium, hedonic 

13 damages, injury to reputation, and any other non14 pecuniary losses. 

15 (18) PUNITIVE DAMAGES.—The term ‘‘punitive 

16 damages’’ means damages awarded, for the purpose 

17 of punishment or deterrence, and not solely for com18 pensatory purposes, against a health care provider, 

19 health care organization, or a manufacturer, dis20 tributor, or supplier of a medical product. Punitive 

21 damages are neither economic nor noneconomic 

22 damages. 

23 (19) RECOVERY.—The term ‘‘recovery’’ means 

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1 tion or settlement of the claim, including all costs 

2 paid or advanced by any person. Costs of health care 

3 incurred by the plaintiff and the attorneys’ office 

4 overhead costs or charges for legal services are not 

5 deductible disbursements or costs for such purpose. 

6 (20) STATE.—The term ‘‘State’’ means each of 

7 the several States, the District of Columbia, the 

8 Commonwealth of Puerto Rico, the Virgin Islands, 

9 Guam, American Samoa, the Northern Mariana Is10 lands, the Trust Territory of the Pacific Islands, and 

11 any other territory or possession of the United 

12 States, or any political subdivision thereof. 

13 SEC. 512. EFFECT ON OTHER LAWS. 

14 (a) VACCINE INJURY.— 

15 (1) To the extent that title XXI of the Public 

16 Health Service Act establishes a Federal rule of law 

17 applicable to a civil action brought for a vaccine-re18 lated injury or death— 

19 (A) this title does not affect the application 

20 of the rule of law to such an action; and 

21 (B) any rule of law prescribed by this title 

22 in conflict with a rule of law of such title XXI 

23 shall not apply to such action. 

24 (2) If there is an aspect of a civil action 

25 brought for a vaccine-related injury or death to 


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1 which a Federal rule of law under title XXI of the 

2 Public Health Service Act does not apply, then this 

3 title or otherwise applicable law (as determined 

4 under this title) will apply to such aspect of such ac5 tion. 

6 (b) OTHER FEDERAL LAW.—Except as provided in 

7 this section, nothing in this title shall be deemed to affect 

8 any defense available to a defendant in a health care law9 suit or action under any other provision of Federal law. 

10 SEC. 513. STATE FLEXIBILITY AND PROTECTION OF 

11 STATES’ RIGHTS. 

12 (a) HEALTH CARE LAWSUITS.—The provisions gov13 erning health care lawsuits set forth in this title preempt, 

14 subject to subsections (b) and (c), State law to the extent 

15 that State law prevents the application of any provisions 

16 of law established by or under this title. The provisions 

17 governing health care lawsuits set forth in this title super18 sede chapter 171 of title 28, United States Code, to the 

19 extent that such chapter— 

20 (1) provides for a greater amount of damages 

21 or contingent fees, a longer period in which a health 

22 care lawsuit may be commenced, or a reduced appli23 cability or scope of periodic payment of future dam24 ages, than provided in this title; or 


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1 (2) prohibits the introduction of evidence re2 garding collateral source benefits, or mandates or 

3 permits subrogation or a lien on collateral source 

4 benefits. 

5 (b) PROTECTION OF STATES’ RIGHTS AND OTHER

6 LAWS.—(1) Any issue that is not governed by any provi7 sion of law established by or under this title (including 

8 State standards of negligence) shall be governed by other9 wise applicable State or Federal law. 

10 (2) This title shall not preempt or supersede any 

11 State or Federal law that imposes greater procedural or 

12 substantive protections for health care providers and 

13 health care organizations from liability, loss, or damages 

14 than those provided by this title or create a cause of ac15 tion. 

16 (c) STATE FLEXIBILITY.—No provision of this title 

17 shall be construed to preempt— 

18 (1) any State law (whether effective before, on, 

19 or after the date of the enactment of this title) that 

20 specifies a particular monetary amount of compen21 satory or punitive damages (or the total amount of 

22 damages) that may be awarded in a health care law23 suit, regardless of whether such monetary amount is 

24 greater or lesser than is provided for under this title, 

25 notwithstanding section 4(a); or 


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1 (2) any defense available to a party in a health 

2 care lawsuit under any other provision of State or 

3 Federal law. 

4 SEC. 514. APPLICABILITY; EFFECTIVE DATE. 

5 This title shall apply to any health care lawsuit 

6 brought in a Federal or State court, or subject to an alter7 native dispute resolution system, that is initiated on or 

8 after the date of the enactment of this title, except that 

9 any health care lawsuit arising from an injury occurring 

10 prior to the date of the enactment of this title shall be 

11 governed by the applicable statute of limitations provisions 

12 in effect at the time the injury occurred. 

13 TITLE VI—WELLNESS AND 

14 PREVENTION 

15 SEC. 601. PROVIDING FINANCIAL INCENTIVES FOR TREAT16 MENT COMPLIANCE. 

17 (a) LIMITATION ON EXCEPTION FOR WELLNESS

18 PROGRAMS UNDER HIPAA DISCRIMINATION RULES.— 

19 (1) ERISA AMENDMENT.—Section 702(b)(2) of 

20 the Employee Retirement Income Security Act of 

21 1974 (29 U.S.C. 1182(b)(2)) is amended by adding 

22 after and below subparagraph (B) the following: 

23 ‘‘In applying subparagraph (B), a group health plan 

24 (or a health insurance issuer with respect to health 

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1 sharing by up to 50 percent of the value of the bene2 fits under the plan (or coverage) based on participa3 tion (or lack of participation) in a standards-based 

4 wellness program.’’. 

5 (2) PHSA AMENDMENT.—Section 2702(b)(2) 

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

7 1(b)(2)) is amended by adding after and below sub8 paragraph (B) the following: 

9 ‘‘In applying subparagraph (B), a group health plan 

10 (or a health insurance issuer with respect to health 

11 insurance coverage) may vary premiums and cost12 sharing by up to 50 percent of the value of the bene13 fits under the plan (or coverage) based on participa14 tion (or lack of participation) in a standards-based 

15 wellness program.’’. 

16 (3) IRC AMENDMENT.—Section 9802(b)(2) of 

17 the Internal Revenue Code of 1986 is amended by 

18 adding after and below subparagraph (B) the fol19 lowing: 

20 ‘‘In applying subparagraph (B), a group health plan 

21 may vary premiums and cost-sharing by up to 50 

22 percent of the value of the benefits under the plan 

23 based on participation (or lack of participation) in a 

24 standards-based wellness program.’’. 


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

2 subsection (a) shall apply to plan years beginning more 

3 than 1 year after the date of the enactment of this Act. 

4 TITLE VII—TRANSPARENCY AND 

5 INSURANCE REFORM MEASURES 

6 SEC. 701. RECEIPT AND RESPONSE TO REQUESTS FOR 

7 CLAIM INFORMATION. 

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

9 Service Act is amended by inserting after section 2713 the 

10 following new section: 

11 ‘‘SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR 

12 CLAIM INFORMATION. 

13 ‘‘(a) REQUIREMENT.— 

14 ‘‘(1) IN GENERAL.—In the case of health insur15 ance coverage offered in connection with a group 

16 health plan, not later than the 30th day after the 

17 date a health insurance issuer receives a written re18 quest for a written report of claim information from 

19 the plan, plan sponsor, or plan administrator, the 

20 health insurance issuer shall provide the requesting 

21 party the report, subject to the succeeding provisions 

22 of this section. 

23 ‘‘(2) EXCEPTION.—The health insurance issuer 

24 is not obligated to provide a report under this sub25 section regarding a particular employer or group 


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1 health plan more than twice in any 12-month period 

2 and is not obligated to provide such a report in the 

3 case of an employer with fewer than 50 employees. 

4 ‘‘(3) DEADLINE.—A plan, plan sponsor, or plan 

5 administrator must request a report under this sub6 section before or on the second anniversary of the 

7 date of termination of coverage under a group health 

8 plan issued by the health insurance issuer. 

9 ‘‘(b) FORM OF REPORT; INFORMATION TO BE IN10 CLUDED.— 

11 ‘‘(1) IN GENERAL.—A health insurance issuer 

12 shall provide the report of claim information under 

13 subsection (a)— 

14 ‘‘(A) in a written report; 

15 ‘‘(B) through an electronic file transmitted 

16 by secure electronic mail or a file transfer pro17 tocol site; or 

18 ‘‘(C) by making the required information 

19 available through a secure Web site or Web por20 tal accessible by the requesting plan, plan spon21 sor, or plan administrator. 

22 ‘‘(2) INFORMATION TO BE INCLUDED.—A re23 port of claim information provided under subsection 

24 (a) shall contain all information available to the 

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1 quest made under such subsection, including, subject 

2 to subsection (c), protected health information, for 

3 the 36-month period preceding the date of the report 

4 or the period specified by subparagraphs (D), (E), 

5 and (F) of paragraph (3), if applicable, or for the 

6 entire period of coverage, whichever period is short7 er. 

8 ‘‘(3) REQUIRED INFORMATION.—Subject to 

9 subsection (c), a report provided under subsection 

10 (a) shall include the following: 

11 ‘‘(A) Aggregate paid claims experience by 

12 month, including claims experience for medical, 

13 dental, and pharmacy benefits, as applicable. 

14 ‘‘(B) Total premium paid by month. 

15 ‘‘(C) Total number of covered employees 

16 on a monthly basis by coverage tier, including 

17 whether coverage was for— 

18 ‘‘(i) an employee only; 

19 ‘‘(ii) an employee with dependents 

20 only; 

21 ‘‘(iii) an employee with a spouse only; 

22 or 

23 ‘‘(iv) an employee with a spouse and 

24 dependents. 


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1 ‘‘(D) The total dollar amount of claims 

2 pending as of the date of the report. 

3 ‘‘(E) A separate description and individual 

4 claims report for any individual whose total 

5 paid claims exceed $15,000 during the 12- 

6 month period preceding the date of the report, 

7 including the following information related to 

8 the claims for that individual— 

9 ‘‘(i) a unique identifying number, 

10 characteristic, or code for the individual; 

11 ‘‘(ii) the amounts paid; 

12 ‘‘(iii) dates of service; and 

13 ‘‘(iv) applicable procedure codes and 

14 diagnosis codes. 

15 ‘‘(F) For claims that are not part of the 

16 information described in a previous subpara17 graph, a statement describing precertification 

18 requests for hospital stays of 5 days or longer 

19 that were made during the 30-day period pre20 ceding the date of the report. 

21 ‘‘(c) LIMITATIONS ON DISCLOSURE.— 

22 ‘‘(1) IN GENERAL.—A health insurance issuer 

23 may not disclose protected health information in a 

24 report of claim information provided under this sec25 tion if the health insurance issuer is prohibited from 


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1 disclosing that information under another State or 

2 Federal law that imposes more stringent privacy re3 strictions than those imposed under Federal law 

4 under the HIPAA privacy regulations. To withhold 

5 information in accordance with this subsection, the 

6 health insurance issuer must— 

7 ‘‘(A) notify the plan, plan sponsor, or plan 

8 administrator requesting the report that infor9 mation is being withheld; and 

10 ‘‘(B) provide to the plan, plan sponsor, or 

11 plan administrator a list of categories of claim 

12 information that the health insurance issuer has 

13 determined are subject to the more stringent 

14 privacy restrictions under another State or Fed15 eral law. 

16 ‘‘(2) PROTECTION.—A plan sponsor is entitled 

17 to receive protected health information under sub18 paragraph (E) and (F) of subsection (b)(3) and sub19 section (d) only after an appropriately authorized 

20 representative of the plan sponsor makes to the 

21 health insurance issuer a certification substantially 

22 similar to the following certification: ‘I hereby certify 

23 that the plan documents comply with the require24 ments of section 164.504(f)(2) of title 45, Code of 

25 Federal Regulations, and that the plan sponsor will 


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1 safeguard and limit the use and disclosure of pro2 tected health information that the plan sponsor may 

3 receive from the group health plan to perform the 

4 plan administration functions.’. 

5 ‘‘(3) RESULTS.—A plan sponsor that does not 

6 provide the certification required by paragraph (2) is 

7 not entitled to receive the protected health informa8 tion described by subparagraphs (E) and (F) of sub9 section (b)(3) and subsection (d), but is entitled to 

10 receive a report of claim information that includes 

11 the information described by subparagraphs (A) 

12 through (D) of subsection (b)(3). 

13 ‘‘(4) INFORMATION.—In the case of a request 

14 made under subsection (a) after the date of termi15 nation of coverage, the report must contain all infor16 mation available to the health insurance issuer as of 

17 the date of the report that is responsive to the re18 quest, including protected health information, and 

19 including the information described by subsection 

20 (b)(3), for the period described by subsection (b)(2) 

21 preceding the date of termination of coverage or for 

22 the entire policy period, whichever period is shorter. 

23 Notwithstanding this subsection, the report may not 

24 include the protected health information described 

25 by subparagraphs (E) and (F) of subsection (b)(3) 


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1 unless a certification has been provided in accord2 ance with paragraph (2). 

3 ‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.— 

4 ‘‘(1) REVIEW.—On receipt of the report re5 quired by subsection (a), the plan, plan sponsor, or 

6 plan administrator may review the report and, not 

7 later than the 10th day after the date the report is 

8 received, may make a written request to the health 

9 insurance issuer for additional information in ac10 cordance with this subsection for specified individ11 uals. 

12 ‘‘(2) REQUEST.—With respect to a request for 

13 additional information concerning specified individ14 uals for whom claims information has been provided 

15 under subsection (b)(3)(E), the health insurance 

16 issuer shall provide additional information on the 

17 prognosis or recovery if available and, for individuals 

18 in active case management, the most recent case 

19 management information, including any future ex20 pected costs and treatment plan, that relate to the 

21 claims for that individual. 

22 ‘‘(3) RESPONSE.—The health insurance issuer 

23 must respond to the request for additional informa24 tion under this subsection not later than the 15th 

25 day after the date of such request unless the reVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00215 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 questing plan, plan sponsor, or plan administrator 

2 agrees to a request for additional time. 

3 ‘‘(4) LIMITATION.—The health insurance issuer 

4 is not required to produce the report described by 

5 this subsection unless a certification has been pro6 vided in accordance with subsection (c)(2). 

7 ‘‘(5) COMPLIANCE WITH SECTION DOES NOT

8 CREATE LIABILITY.—A health insurance issuer that 

9 releases information, including protected health in10 formation, in accordance with this subsection has 

11 not violated a standard of care and is not liable for 

12 civil damages resulting from, and is not subject to 

13 criminal prosecution for, releasing that information. 

14 ‘‘(e) LIMITATION ON PREEMPTION.—Nothing in this 

15 section is meant to limit States from enacting additional 

16 laws in addition to the provisions of this section, but not 

17 in lieu of such provisions. 

18 ‘‘(f) DEFINITIONS.—In this section: 

19 ‘‘(1) The terms ‘employer’, ‘plan administrator’, 

20 and ‘plan sponsor’ have the meanings given such 

21 terms in section 3 of the Employee Retirement In22 come Security Act of 1974. 

23 ‘‘(2) The term ‘HIPAA privacy regulations’ has 

24 the meaning given such term in section 1180(b)(3) 

25 of the Social Security Act. 


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1 ‘‘(3) The term ‘protected health information’ 

2 has the meaning given such term under the HIPAA 

3 privacy regulations.’’. 

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

5 subsection (a) shall take effect on the date of the enact6 ment of this Act. 

7 TITLE VIII—QUALITY 

8 SEC. 801. PROHIBITION ON CERTAIN USES OF DATA OB9 TAINED FROM COMPARATIVE EFFECTIVE10 NESS RESEARCH; ACCOUNTING FOR PERSON11 ALIZED MEDICINE AND DIFFERENCES IN PA12 TIENT TREATMENT RESPONSE. 

13 (a) IN GENERAL.—Notwithstanding any other provi14 sion of law, the Secretary of Health and Human Serv15 ices— 

16 (1) shall not use data obtained from the con17 duct of comparative effectiveness research, including 

18 such research that is conducted or supported using 

19 funds appropriated under the American Recovery 

20 and Reinvestment Act of 2009 (Public Law 111–5), 

21 to deny coverage of an item or service under a Fed22 eral health care program (as defined in section 

23 1128B(f) of the Social Security Act (42 U.S.C. 

24 1320a–7b(f))); and 


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1 (2) shall ensure that comparative effectiveness 

2 research conducted or supported by the Federal 

3 Government accounts for factors contributing to dif4 ferences in the treatment response and treatment 

5 preferences of patients, including patient-reported 

6 outcomes, genomics and personalized medicine, the 

7 unique needs of health disparity populations, and in8 direct patient benefits. 

9 (b) CONSULTATION AND APPROVAL REQUIRED.— 

10 Nothing the Federal Coordinating Council for Compara11 tive Effectiveness Research finds can be released in final 

12 form until after consultation with and approved by rel13 evant physician specialty organizations. 

14 (c) RULE OF CONSTRUCTION.—Nothing in this sec15 tion shall be construed as affecting the authority of the 

16 Commissioner of Food and Drugs under the Federal 

17 Food, Drug, and Cosmetic Act or the Public Health Serv18 ice Act. 

19 SEC. 802. ESTABLISHMENT OF PERFORMANCE-BASED 

20 QUALITY MEASURES. 

21 Not later than January 1, 2012, the Secretary of 

22 Health and Human Services shall submit to Congress a 

23 proposal for a formalized process for the development of 

24 performance-based quality measures that could be applied 

25 to physicians’ services under the Medicare program under 


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1 title XVIII of the Social Security Act. Such proposal shall 

2 be in concert and agreement with the Physician Consor3 tium for Performance Improvement and shall only utilize 

4 measures agreed upon by each physician specialty organi5 zation. 

6 TITLE IX—STATE 

7 TRANSPARENCY PLAN PORTAL 

8 SEC. 901. PROVIDING INFORMATION ON HEALTH COV9 ERAGE OPTIONS AND HEALTH CARE PRO10 VIDERS. 

11 (a) STATE-BASED PORTAL.—A State (by itself or 

12 jointly with other States) may contract with a private enti13 ty to establish a Health Plan and Provider Portal Web 

14 site (referred to in this section as a ‘‘plan portal’’) for 

15 the purposes of providing standardized information— 

16 (1) on health insurance plans that have been 

17 certified to be available for purchase in that State; 

18 and 

19 (2) on price and quality information on health 

20 care providers (including physicians, hospitals, and 

21 other health care institutions). 

22 (b) PILOT PROGRAM.— 

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

24 the date of the enactment of this Act the Secretary 

25 of Health and Human Services shall work with 


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1 States to establish no later than January 1, 2013, 

2 consistent with this title, a Web site that will serve 

3 as a pilot program for a national portal for informa4 tion structured in a manner so individuals may di5 rectly link to the State plan portal for the State in 

6 which they reside. 

7 (2) CONTRACTS WITH STATE.—The Secretary 

8 shall enter into contracts with States, in a number 

9 and distribution determined by the Secretary, to de10 velop State plan portals that follow the applicable 

11 standards and regulations under this section. 

12 (3) COMMON STANDARDS FOR PLAN POR13 TALS.— 

14 (A) IN GENERAL.—In connection with such 

15 Web site, the Secretary shall establish stand16 ards for interoperability and consistency for 

17 State plan portals so that individuals can access 

18 and view information in a similar manner on 

19 plan portals of different States. Such standards 

20 shall include standard definitions for health in21 surance plan benefits so that individuals can ac22 curately compare health insurance plans within 

23 such portals and standards for the inclusion of 

24 information described in subsection (c). 


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1 (B) CONSULTATION.—The Secretary shall 

2 consult with a group consisting of a balanced 

3 representation of the critical stakeholders (in4 cluding States, health insurance issuers, the 

5 National Association of Insurance Commis6 sioners, qualified health care provider-based en7 tities (including physicians, hospitals, and other 

8 health care institutions), and a standards devel9 opment organization) to develop such stand10 ards. 

11 (C) ISSUANCE.— 

12 (i) IN GENERAL.—Not later than 6 

13 months after the date of the enactment of 

14 this Act, the Secretary shall issue, by regu15 lation, after notice and opportunity for 

16 public comment, standards that are con17 sistent with the recommendations made by 

18 the group under subparagraph (B). 

19 (ii) DISSEMINATION.—The Secretary 

20 shall broadly disseminate the standards so 

21 issued. 

22 (D) REVIEW.—One year after the date of 

23 establishment of the pilot program under this 

24 subsection, the Secretary, in consultation with 

25 stakeholder group described in subparagraph 


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1 (B), shall review the standards established and 

2 make such changes in such standards as may 

3 be appropriate. 

4 (4) AUTHORIZATION OF APPROPRIATIONS.— 

5 There are authorized to be appropriated to the Sec6 retary such amounts as may be necessary for— 

7 (A) the development and operation of the 

8 national Web site under this subsection; and 

9 (B) contracts with States under paragraph 

10 (2) to assist in the development and initial op11 eration of plan portals in accordance with 

12 standards established under paragraph (3) and 

13 other applicable provisions of this section. 

14 (c) INFORMATION IN PLAN PORTALS.—The stand15 ards for plan portals under subsection (b)(3) shall include 

16 the following: 

17 (1) HEALTH INSURANCE INFORMATION.—Each 

18 plan portal shall meet the following requirements 

19 with respect to information on health insurance 

20 plans: 

21 (A) The plan portal shall present complete 

22 information on the costs and benefits of health 

23 insurance plans (including information on 

24 monthly premium, copayments, deductibles, and 

25 covered benefits) in a uniform manner that— 


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1 (i) uses the standard definitions devel2 oped under subsection (b)(3); and 

3 (ii) is designed to allow consumers to 

4 easily compare such plans. 

5 (B) The plan portal shall be available on 

6 the internet and accessible to all individuals in 

7 the United States. 

8 (C) The plan portal shall allow consumers 

9 to search and sort data on the health insurance 

10 plans in the plan portal on criteria such as cov11 erage of specific benefits (such as coverage of 

12 disease management services or pediatric care 

13 services), as well as data available respecting 

14 quality of plans. 

15 (D) The plan portal shall meet all relevant 

16 State laws and regulations, including laws and 

17 regulations related to the marketing of insur18 ance products. 

19 (E) Notwithstanding subsection (d)(1), the 

20 plan portal shall provide information to individ21 uals who are eligible for the Medicaid program 

22 under title XIX of the Social Security Act or 

23 State Children’s Health Insurance Program 

24 under title XXI of such Act by including infor25 mation on options, eligibility, and how to enroll 


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1 through providing a link to a Web site main2 tained with respect to such State programs. 

3 (F) The plan portal shall provide support 

4 to individuals who are eligible for tax credits 

5 and deductions under the amendments made by 

6 this Act to enhance such individual’s ability to 

7 access such credits and deductions. 

8 (G) The plan portal shall allow consumers 

9 to access quality data on providers as made 

10 available through a Web site described in sec11 tion 802 once that data is available. 

12 (2) PROVIDER INFORMATION.—Each plan por13 tal shall meet the following requirements with re14 spect to information on health care providers: 

15 (A) Identifying and licensure information. 

16 (B) Self-pay prices charged, including vari17 ation in such prices. 

18 For purposes of subparagraph (B), the term ‘‘self19 pay price’’ means the price charged by a provider to 

20 individuals for items or services where the price is 

21 not established or negotiated through a health care 

22 program or third party. 

23 (3) TAX CREDIT AND DEDUCTION INFORMA24 TION.—Each plan portal shall also include informaVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00224 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 tion on tax credits and deductions that may be avail2 able for purpose of qualified health plans. 

3 (4) INCLUSION OF QUALITY INFORMATION.— 

4 The Secretary, after collaboration with States and 

5 health care providers (including practicing physi6 cians, hospitals, and other health care institutions), 

7 shall submit to Congress recommendations on how 

8 to include on plan portals information on perform9 ance-based quality measures obtained under section 

10 802. 

11 (d) PROHIBITIONS.— 

12 (1) DIRECT ENROLLMENT.—A plan portal may 

13 not directly enroll individuals in health insurance 

14 plans or under a State Medicaid plan or a State 

15 children’s health insurance plan. 

16 (2) CONFLICTS OF INTEREST.— 

17 (A) COMPANIES.—A health insurance 

18 issuer offering a health insurance plan through 

19 a plan portal may not— 

20 (i) be the private entity developing 

21 and maintaining a plan portal under this 

22 section; or 

23 (ii) have an ownership interest in such 

24 private entity or in the plan portal. 


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1 (B) INDIVIDUALS.—An individual em2 ployed by a health insurance issuer offering a 

3 health insurance plan through a plan portal 

4 may not serve as a director or officer for— 

5 (i) the private entity developing and 

6 maintaining a plan portal under this sec7 tion; or 

8 (ii) the plan portal. 

9 (e) CONSTRUCTION.—Nothing in this section shall be 

10 construed to prohibit health insurance brokers and agents 

11 from— 

12 (1) utilizing the plan portal for any purpose; or 

13 (2) marketing or offering health insurance 

14 products. 

15 (f) STATE DEFINED.—In this section, the term 

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

17 title XIX of the Social Security Act. 

18 (g) HEALTH INSURANCE PLANS.—For purposes of 

19 this section, the term ‘‘health insurance plan’’ does not 

20 include coverage of excepted benefits, as defined in section 

21 2791(c) of the Public Health Service Act (42 U.S.C. 

22 300gg–91(c)). 


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1 TITLE X—PATIENT FREEDOM OF 

2 CHOICE 

3 SEC. 1001. GUARANTEEING FREEDOM OF CHOICE AND CON4 TRACTING FOR PATIENTS UNDER MEDICARE. 

5 (a) IN GENERAL.—Section 1802 of the Social Secu6 rity Act (42 U.S.C. 1395a) is amended to read as follows: 

7 ‘‘FREEDOM OF CHOICE AND CONTRACTING BY PATIENT

8 GUARANTEED

9 ‘‘SEC. 1802. (a) BASIC FREEDOM OF CHOICE.—Any 

10 individual entitled to insurance benefits under this title 

11 may obtain health services from any institution, agency, 

12 or person qualified to participate under this title if such 

13 institution, agency, or person undertakes to provide that 

14 individual such services. 

15 ‘‘(b) FREEDOM TO CONTRACT BY MEDICARE BENE16 FICIARIES.— 

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

18 this subsection, nothing in this title shall prohibit a 

19 Medicare beneficiary from entering into a contract 

20 with an eligible professional (whether or not the pro21 fessional is a participating or non-participating phy22 sician or practitioner) for any item or service cov23 ered under this title. 

24 ‘‘(2) SUBMISSION OF CLAIMS.—Any Medicare 

25 beneficiary that enters into a contract under this 


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1 section with an eligible professional shall be per2 mitted to submit a claim for payment under this 

3 title for services furnished by such professional, and 

4 such payment shall be made in the amount that 

5 would otherwise apply to such professional under 

6 this title except that where such professional is con7 sidered to be non-participating, payment shall be 

8 paid as if the professional were participating. Pay9 ment made under this title for any item or service 

10 provided under the contract shall not render the pro11 fessional a participating or non-participating physi12 cian or practitioner, and as such, requirements of 

13 this title that may otherwise apply to a participating 

14 or non-participating physician or practitioner would 

15 not apply with respect to any items or services fur16 nished under the contract. 

17 ‘‘(3) BENEFICIARY PROTECTIONS.— 

18 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

19 not apply to any contract unless— 

20 ‘‘(i) the contract is in writing, is 

21 signed by the Medicare beneficiary and the 

22 eligible professional, and establishes all 

23 terms of the contract (including specific 

24 payment for items and services covered by 

25 the contract) before any item or service is 


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1 provided pursuant to the contract, and the 

2 beneficiary shall be held harmless for any 

3 subsequent payment charged for an item 

4 or service in excess of the amount estab5 lished under the contract during the period 

6 the contract is in effect; 

7 ‘‘(ii) the contract contains the items 

8 described in subparagraph (B); and 

9 ‘‘(iii) the contract is not entered into 

10 at a time when the Medicare beneficiary is 

11 facing an emergency medical condition or 

12 urgent health care situation. 

13 ‘‘(B) ITEMS REQUIRED TO BE INCLUDED

14 IN CONTRACT.—Any contract to provide items 

15 and services to which paragraph (1) applies 

16 shall clearly indicate to the Medicare beneficiary 

17 that by signing such contract the beneficiary— 

18 ‘‘(i) agrees to be responsible for pay19 ment to such eligible professional for such 

20 items or services under the terms of and 

21 amounts established under the contract; 

22 ‘‘(ii) agrees to be responsible for sub23 mitting claims under this title to the Sec24 retary, and to any other supplemental in25 surance plan that may provide suppleVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00229 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 mental insurance, for such items or serv2 ices furnished under the contract if such 

3 items or services are covered by this title, 

4 unless otherwise provided in the contract 

5 under subparagraph (C)(i); and 

6 ‘‘(iii) acknowledges that no limits or 

7 other payment incentives that may other8 wise apply under this title (such as the 

9 limits under subsection (g) of section 1848 

10 or incentives under subsection (a)(5), (m), 

11 (q), and (p) of such section) shall apply to 

12 amounts that may be charged, or paid to 

13 a beneficiary for, such items or services. 

14 Such contract shall also clearly indicate whether 

15 the eligible professional is excluded from par16 ticipation under the Medicare program under 

17 section 1128. 

18 ‘‘(C) BENEFICIARY ELECTIONS UNDER

19 THE CONTRACT.—Any Medicare beneficiary 

20 that enters into a contract under this section 

21 may elect to negotiate, as a term of the con22 tract, a provision under which— 

23 ‘‘(i) the eligible professional shall file 

24 claims on behalf of the beneficiary with the 

25 Secretary and any supplemental insurance 


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1 plan for items or services furnished under 

2 the contract if such items or services are 

3 covered under this title or under the plan; 

4 and 

5 ‘‘(ii) the beneficiary assigns payment 

6 to the eligible professional for any claims 

7 filed by, or on behalf of, the beneficiary 

8 with the Secretary and any supplemental 

9 insurance plan for items or services fur10 nished under the contract. 

11 ‘‘(D) EXCLUSION OF DUAL ELIGIBLE INDI12 VIDUALS.—Paragraph (1) shall not apply to 

13 any contract if a beneficiary who is eligible for 

14 medical assistance under title XIX is a party to 

15 the contract. 

16 ‘‘(4) LIMITATION ON ACTUAL CHARGE AND

17 CLAIM SUBMISSION REQUIREMENT NOT APPLICA18 BLE.—Section 1848(g) shall not apply with respect 

19 to any item or service provided to a Medicare bene20 ficiary under a contract described in paragraph (1). 

21 ‘‘(5) CONSTRUCTION.—Nothing in this section 

22 shall be construed— 

23 ‘‘(A) to prohibit any eligible professional 

24 from maintaining an election and acting as a 

25 participating or non-participating physician or 


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1 practitioner with respect to any patient not cov2 ered under a contract established under this 

3 section; and 

4 ‘‘(B) as changing the items and services 

5 for which an eligible professional may bill under 

6 this title. 

7 ‘‘(6) DEFINITIONS.—In this subsection: 

8 ‘‘(A) MEDICARE BENEFICIARY.—The term 

9 ‘Medicare beneficiary’ means an individual who 

10 is entitled to benefits under part A or enrolled 

11 under part B. 

12 ‘‘(B) ELIGIBLE PROFESSIONAL.—The term 

13 ‘eligible professional’ has the meaning given 

14 such term in section 1848(k)(3)(B). 

15 ‘‘(C) EMERGENCY MEDICAL CONDITION.— 

16 The term ‘emergency medical condition’ means 

17 a medical condition manifesting itself by acute 

18 symptoms of sufficient severity (including se19 vere pain) such that a prudent layperson, with 

20 an average knowledge of health and medicine, 

21 could reasonably expect the absence of imme22 diate medical attention to result in— 

23 ‘‘(i) serious jeopardy to the health of 

24 the individual or, in the case of a pregnant 


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1 woman, the health of the woman or her 

2 unborn child; 

3 ‘‘(ii) serious impairment to bodily 

4 functions; or 

5 ‘‘(iii) serious dysfunction of any bodily 

6 organ or part. 

7 ‘‘(D) URGENT HEALTH CARE SITUA8 TION.—The term ‘urgent health care situation’ 

9 means services furnished to an individual who 

10 requires services to be furnished within 12 

11 hours in order to avoid the likely onset of an 

12 emergency medical condition.’’. 

13 SEC. 1002. PREEMPTION OF STATE LAWS LIMITING 

14 CHARGES FOR ELIGIBLE PROFESSIONAL 

15 SERVICES. 

16 (a) IN GENERAL.—No State may impose a limit on 

17 the amount of charges for services, furnished by an eligible 

18 professional (as defined in subsection (k)(3)(B) of section 

19 1848 of the Social Security Act, 42 U.S.C. 1395w–4), for 

20 which payment is made under such section, and any such 

21 limit is hereby preempted. 

22 (b) STATE.—In this section, the term ‘‘State’’ in23 cludes the District of Columbia, Puerto Rico, the Virgin 

24 Islands, Guam, and American Samoa. 


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1 SEC. 1003. HEALTH CARE PROVIDER LICENSURE CANNOT 

2 BE CONDITIONED ON PARTICIPATION IN A 

3 HEALTH PLAN. 

4 (a) IN GENERAL.—The Secretary of Health and 

5 Human Services and any State (as a condition of receiving 

6 Federal financial participation under title XIX of the So7 cial Security Act) may not require any health care pro8 vider to participate in any health plan as a condition of 

9 licensure of the provider in any State. 

10 (b) DEFINITIONS.—In this section: 

11 (1) HEALTH PLAN.—The term ‘‘health plan’’ 

12 has the meaning given such term in section 1171(5) 

13 of the Social Security Act (42 U.S.C. 1320d(5)). 

14 (2) HEALTH CARE PROVIDER.—The term 

15 ‘‘health care provider’’ means any person or entity 

16 that is required by State or Federal laws or regula17 tions to be licensed, registered, or certified to pro18 vide health care services and is so licensed, reg19 istered, or certified, or exempted from such require20 ment by other statute or regulation. 

21 (3) STATE.—The term ‘‘State’’ has the mean22 ing given such term for purposes of title XIX of the 

23 Social Security Act. 


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1 SEC. 1004. BAD DEBT DEDUCTION FOR DOCTORS TO PAR2 TIALLY OFFSET THE COST OF PROVIDING UN3 COMPENSATED CARE REQUIRED TO BE PRO4 VIDED UNDER AMENDMENTS MADE BY THE 

5 EMERGENCY MEDICAL TREATMENT AND 

6 LABOR ACT. 

7 (a) IN GENERAL.—Section 166 of the Internal Rev8 enue Code of 1986 (relating to bad debts) is amended by 

9 redesignating subsection (f) as subsection (g) and by in10 serting after subsection (e) the following new subsection: 

11 ‘‘(f) BAD DEBT TREATMENT FOR DOCTORS TO PAR12 TIALLY OFFSET COST OF PROVIDING UNCOMPENSATED

13 CARE REQUIRED TO BE PROVIDED.— 

14 ‘‘(1) AMOUNT OF DEDUCTION.— 

15 ‘‘(A) IN GENERAL.—For purposes of sub16 section (a), the basis for determining the 

17 amount of any deduction for an eligible 

18 EMTALA debt shall be treated as being equal 

19 to the Medicare payment amount. 

20 ‘‘(B) MEDICARE PAYMENT AMOUNT.—For 

21 purposes of subparagraph (A), the Medicare 

22 payment amount with respect to an eligible 

23 EMTALA debt is the fee schedule amount es24 tablished under section 1848 of the Social Secu25 rity Act for the physicians’ service (to which 

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1 vided to an individual enrolled under part B of 

2 title XVIIII of such Act. 

3 ‘‘(2) ELIGIBLE EMTALA DEBT.—For purposes 

4 of this section, the term ‘eligible EMTALA debt’ 

5 means any debt if— 

6 ‘‘(A) such debt arose as a result of physi7 cians’ services— 

8 ‘‘(i) which were performed in an 

9 EMTALA hospital by a board-certified 

10 physician (whether as part of medical 

11 screening or necessary stabilizing treat12 ment and whether as an emergency depart13 ment physician, as an on-call physician, or 

14 otherwise), and 

15 ‘‘(ii) which were required to be pro16 vided under section 1867 of the Social Se17 curity Act (42 U.S.C. 1395dd), and 

18 ‘‘(B) such debt is owed— 

19 ‘‘(i) to such physician, or 

20 ‘‘(ii) to an entity if— 

21 ‘‘(I) such entity is a corporation 

22 and the sole shareholder of such cor23 poration is such physician, or 

24 ‘‘(II) such entity is a partnership 

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1 section with respect to such debt is al2 located to such physician or to an en3 tity described in subclause (I). 

4 ‘‘(3) BOARD-CERTIFIED PHYSICIAN.—For pur5 poses of this subsection, the term ‘board-certified 

6 physician’ means any physician (as defined in sec7 tion 1861(r) of the Social Security Act (42 U.S.C. 

8 1395x(r)) who is certified by the American Board of 

9 Emergency Medicine or other appropriate medical 

10 specialty board for the specialty in which the physi11 cian practices, or who meets comparable require12 ments, as identified by the Secretary of the Treasury 

13 in consultation with Secretary of Health and Human 

14 Services. 

15 ‘‘(4) OTHER DEFINITIONS.—For purposes of 

16 this subsection— 

17 ‘‘(A) EMTALA HOSPITAL.—The term 

18 ‘EMTALA hospital’ means any hospital having 

19 a hospital emergency department which is re20 quired to comply with section 1867 of the So21 cial Security Act (42 U.S.C. 1395dd) (relating 

22 to examination and treatment for emergency 

23 medical conditions and women in labor). 

24 ‘‘(B) PHYSICIANS’ SERVICES.—The term 

25 ‘physicians’ services’ has the meaning given 


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1 such term in section 1861(q) of the Social Se2 curity Act (42 U.S.C. 1395x(q)).’’. 

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

4 this section shall apply to debts arising from services per5 formed in taxable years beginning after the date of the 

6 enactment of this Act. 

7 SEC. 1005. RIGHT OF CONTRACT WITH HEALTH CARE PRO8 VIDERS. 

9 (a) IN GENERAL.—The Secretary of Health and 

10 Human Services shall not preclude an enrollee, partici11 pant, or beneficiary in a health benefits plan from entering 

12 into any contract or arrangement for health care with any 

13 health care provider. 

14 (b) HEALTH BENEFITS PLAN DEFINED.— 

15 (1) IN GENERAL.—In this section, subject to 

16 paragraph (2), the term ‘‘health benefits plan’’ 

17 means any of the following: 

18 (A) Group health plan (as defined in sec19 tion 2791 of the Public Health Service Act). 

20 (B) Health insurance coverage (as defined 

21 in section 2791 of such Act). 

22 (C) A health benefits plan under chapter 

23 89 of title 5, United States Code. 


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1 (2) EXCLUSION OF MEDICAID AND TRICARE.— 

2 Such term does not include a health plan partici3 pating in— 

4 (A) the Medicaid program under title XIX 

5 of the Social Security Act; or 

6 (B) the TRICARE program under chapter 

7 55 of title 10, United States Code. 

8 (c) HEALTH CARE PROVIDER DEFINED.—In this 

9 section, the term ‘‘health care provider’’ means— 

10 (1) a physician, as defined in paragraphs (1), 

11 (2), (3), and (4) of section 1861(r) of the Social Se12 curity Act (42 U.S.C. 1395x(r)); and 

13 (2) a health care practitioner described in sec14 tion 1842(b)(18)(C) of such Act (42 U.S.C. 

15 1395u(b)(18)(C)). 

16 TITLE XI—INCENTIVES TO 

17 REDUCE PHYSICIAN SHORTAGES 

18 Subtitle A—Federally Supported 

19 Student Loan Funds for Medical 

20 Students 

21 SEC. 1101. FEDERALLY SUPPORTED STUDENT LOAN FUNDS 

22 FOR MEDICAL STUDENTS. 

23 (a) PRIMARY HEALTH CARE MEDICAL STUDENTS.— 

24 Subpart II of part A of the Public Health Service Act (42 

25 U.S.C. 292q et seq.) is amended— 


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1 (1) by redesignating section 735 as section 729; 

2 and 

3 (2) in subsection (f) of section 729 (as so redes4 ignated), by striking ‘‘is authorized to be appro5 priated $10,000,000 for each of the fiscal years 

6 1994 through 1996’’ and inserting ‘‘are authorized 

7 to be appropriated such sums as may be necessary 

8 for fiscal year 2012 and each fiscal year thereafter’’. 

9 (b) OTHER MEDICAL STUDENTS.—Part A of title VII 

10 of the Public Health Service Act (42 U.S.C. 292 et seq.) 

11 is amended by adding at the end the following: 

12 ‘‘Subpart III—Federally Supported Student Loan 

13 Funds for Certain Medical Students 

14 ‘‘SEC. 730. SCHOOL LOAN FUNDS FOR CERTAIN MEDICAL 

15 STUDENTS. 

16 ‘‘(a) FUND AGREEMENTS.—For the purpose de17 scribed in subsection (b), the Secretary is authorized to 

18 enter into an agreement for the establishment and oper19 ation of a student loan fund with any public or nonprofit 

20 school of medicine or osteopathic medicine. 

21 ‘‘(b) PURPOSE.—The purpose of this subpart is to 

22 provide for loans to medical students who would be eligible 

23 for a loan under subpart II, except for the student’s deci24 sion to enter a residency training program in a field other 

25 than primary health care. 


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1 ‘‘(c) COMMENCEMENT OF REPAYMENT PERIOD.— 

2 The repayment period for a loan under this section shall 

3 not begin before the end of any period during which the 

4 student is participating in an internship, residency, or fel5 lowship training program directly related to the field of 

6 medicine which the student agrees to enter pursuant to 

7 subsection (d). 

8 ‘‘(d) REQUIREMENTS FOR STUDENTS.—Each agree9 ment under this section for the establishment of a student 

10 loan fund shall provide that the school of medicine or os11 teopathic medicine will make a loan to a student from such 

12 fund only if the student agrees— 

13 ‘‘(1) to enter and complete a residency training 

14 program (in a field of medicine other than primary 

15 health care) not later than a period determined by 

16 the Secretary to be reasonable after the date on 

17 which the student graduates from such school; and 

18 ‘‘(2) to practice medicine through the date on 

19 which the loan is repaid in full. 

20 ‘‘(e) REQUIREMENTS FOR SCHOOLS.—The provisions 

21 of section 723(b) (regarding graduates in primary health 

22 care) shall not apply to a student loan fund established 

23 under this section. 

24 ‘‘(f) APPLICABILITY OF OTHER PROVISIONS.—Ex25 cept as inconsistent with this section, the provisions of 


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1 subpart II shall apply to the program of student loan 

2 funds established under this section to the same extent 

3 and in the same manner as such provisions apply to the 

4 program of student loan funds established under subpart 

5 II. 

6 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—To 

7 carry out this section, there are authorized to be appro8 priated such sums as may be necessary for fiscal year 

9 2012 and each fiscal year thereafter.’’. 

10 Subtitle B—Loan Forgiveness for 

11 Primary Care Providers 

12 SEC. 1111. LOAN FORGIVENESS FOR PRIMARY CARE PRO13 VIDERS. 

14 (a) IN GENERAL.—The Secretary of Health and 

15 Human Services shall carry out a program of entering into 

16 contracts with eligible individuals under which— 

17 (1) the individual agrees to serve for a period 

18 of not less than 5 years as a primary care provider; 

19 and 

20 (2) in consideration of such service, the Sec21 retary agrees to pay not more than $50,000 on the 

22 principal and interest on the individual’s graduate 

23 educational loans. 

24 (b) ELIGIBILITY.—To be eligible to enter into a con25 tract under subsection (a), an individual must— 


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1 (1) have a graduate degree in medicine, osteo2 pathic medicine, or another health profession from 

3 an accredited (as determined by the Secretary of 

4 Health and Human Services) institution of higher 

5 education; and 

6 (2) have practiced as a primary care provider 

7 for a period (excluding any residency or fellowship 

8 training period) of not less than— 

9 (A) 5 years; or 

10 (B) 3 years in a medically underserved 

11 community (as defined in section 799B of the 

12 Public Health Service Act (42 U.S.C. 295p)). 

13 (c) INSTALLMENTS.—Payments under this section 

14 may be made in installments of not more than $10,000 

15 for each year of service described in subsection (a)(1). 

16 (d) APPLICABILITY OF CERTAIN PROVISIONS.—The 

17 provisions of subpart III of part D of title III of the Public 

18 Health Service Act shall, except as inconsistent with this 

19 section, apply to the program established under this sec20 tion in the same manner and to the same extent as such 

21 provisions apply to the National Health Service Corps 

22 Loan Repayment Program established in such subpart. 


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1 TITLE XII—QUALITY HEALTH 

2 CARE COALITION 

3 SEC. 1201. QUALITY HEALTH CARE COALITION. 

4 (a) APPLICATION OF THE FEDERAL ANTITRUST

5 LAWS TO HEALTH CARE PROFESSIONALS NEGOTIATING

6 WITH HEALTH PLANS.— 

7 (1) IN GENERAL.—Any health care profes8 sionals who are engaged in negotiations with a 

9 health plan regarding the terms of any contract 

10 under which the professionals provide health care 

11 items or services for which benefits are provided 

12 under such plan shall, in connection with such nego13 tiations, be exempt from the Federal antitrust laws. 

14 (2) LIMITATION.— 

15 (A) NO NEW RIGHT FOR COLLECTIVE CES16 SATION OF SERVICE.—The exemption provided 

17 in paragraph (1) shall not confer any new right 

18 to participate in any collective cessation of serv19 ice to patients not already permitted by existing 

20 law. 

21 (B) NO CHANGE IN NATIONAL LABOR RE22 LATIONS ACT.—This section applies only to 

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1 ing any provision of the National Labor Rela2 tions Act, or as affecting the status of any 

3 group of persons under that Act. 

4 (3) NO APPLICATION TO FEDERAL PRO5 GRAMS.—Nothing in this section shall apply to nego6 tiations between health care professionals and health 

7 plans pertaining to benefits provided under any of 

8 the following: 

9 (A) The Medicare Program under title 

10 XVIII of the Social Security Act (42 U.S.C. 

11 1395 et seq.). 

12 (B) The Medicaid program under title XIX 

13 of the Social Security Act (42 U.S.C. 1396 et 

14 seq.). 

15 (C) The SCHIP program under title XXI 

16 of the Social Security Act (42 U.S.C. 1397aa et 

17 seq.). 

18 (D) Chapter 55 of title 10, United States 

19 Code (relating to medical and dental care for 

20 members of the uniformed services). 

21 (E) Chapter 17 of title 38, United States 

22 Code (relating to Veterans’ medical care). 

23 (F) Chapter 89 of title 5, United States 

24 Code (relating to the Federal employees’ health 

25 benefits program). 


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1 (G) The Indian Health Care Improvement 

2 Act (25 U.S.C. 1601 et seq.). 

3 (b) DEFINITIONS.—In this section, the following defi4 nitions shall apply: 

5 (1) ANTITRUST LAWS.—The term ‘‘antitrust 

6 laws’’— 

7 (A) has the meaning given it in subsection 

8 (a) of the first section of the Clayton Act (15 

9 U.S.C. 12(a)), except that such term includes 

10 section 5 of the Federal Trade Commission Act 

11 (15 U.S.C. 45) to the extent such section ap12 plies to unfair methods of competition; and 

13 (B) includes any State law similar to the 

14 laws referred to in subparagraph (A). 

15 (2) GROUP HEALTH PLAN.—The term ‘‘group 

16 health plan’’ means an employee welfare benefit plan 

17 to the extent that the plan provides medical care (in18 cluding items and services paid for as medical care) 

19 to employees or their dependents (as defined under 

20 the terms of the plan) directly or through insurance, 

21 reimbursement, or otherwise. 

22 (3) GROUP HEALTH PLAN, HEALTH INSURANCE

23 ISSUER.—The terms ‘‘group health plan’’ and 

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1 ministrator or other person acting for or on behalf 

2 of such plan or issuer. 

3 (4) HEALTH CARE SERVICES.—The term 

4 ‘‘health care services’’ means any services for which 

5 payment may be made under a health plan, includ6 ing services related to the delivery or administration 

7 of such services. 

8 (5) HEALTH CARE PROFESSIONAL.—The term 

9 ‘‘health care professional’’ means any individual or 

10 entity that provides health care items or services, 

11 treatment, assistance with activities of daily living, 

12 or medications to patients and who, to the extent re13 quired by State or Federal law, possesses specialized 

14 training that confers expertise in the provision of 

15 such items or services, treatment, assistance, or 

16 medications. 

17 (6) HEALTH INSURANCE COVERAGE.—The term 

18 ‘‘health insurance coverage’’ means benefits con19 sisting of medical care (provided directly, through 

20 insurance or reimbursement, or otherwise and in21 cluding items and services paid for as medical care) 

22 under any hospital or medical service policy or cer23 tificate, hospital or medical service plan contract, or 

24 health maintenance organization contract offered by 

25 a health insurance issuer. 


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1 (7) HEALTH INSURANCE ISSUER.—The term 

2 ‘‘health insurance issuer’’ means an insurance com3 pany, insurance service, or insurance organization 

4 (including a health maintenance organization) that 

5 is licensed to engage in the business of insurance in 

6 a State and that is subject to State law regulating 

7 insurance. Such term does not include a group 

8 health plan. 

9 (8) HEALTH MAINTENANCE ORGANIZATION.— 

10 The term ‘‘health maintenance organization’’ 

11 means— 

12 (A) a federally qualified health mainte13 nance organization (as defined in section 

14 1301(a) of the Public Health Service Act (42 

15 U.S.C. 300e(a))); 

16 (B) an organization recognized under State 

17 law as a health maintenance organization; or 

18 (C) a similar organization regulated under 

19 State law for solvency in the same manner and 

20 to the same extent as such a health mainte21 nance organization. 

22 (9) HEALTH PLAN.—The term ‘‘health plan’’ 

23 means a group health plan or a health insurance 

24 issuer that is offering health insurance coverage. 


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1 (10) MEDICAL CARE.—The term ‘‘medical 

2 care’’ means amounts paid for— 

3 (A) the diagnosis, cure, mitigation, treat4 ment, or prevention of disease, or amounts paid 

5 for the purpose of affecting any structure or 

6 function of the body; and 

7 (B) transportation primarily for and essen8 tial to receiving items and services referred to 

9 in subparagraph (A). 

10 (11) PERSON.—The term ‘‘person’’ includes a 

11 State or unit of local government. 

12 (12) STATE.—The term ‘‘State’’ includes the 

13 several States, the District of Columbia, Puerto 

14 Rico, the Virgin Islands of the United States, Guam, 

15 American Samoa, and the Commonwealth of the 

16 Northern Mariana Islands. 

17 (c) EFFECTIVE DATE.—This section shall take effect 

18 on on the date of the enactment of this Act and shall not 

19 apply with respect to conduct occurring before such date. 

20 TITLE XIII—OFFSETS 

21 Subtitle A—Discretionary 

22 Spending Limits 

23 SEC. 1301. DISCRETIONARY SPENDING LIMITS. 

24 Section 251(c) of the Balanced Budget and Emer25 gency Deficit Control Act of 1985 (2 U.S.C. 901(c)), as 


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1 amended by section 101 of the Budget Control Act of 

2 2011, is amended to read as follows: 

3 ‘‘(c) DISCRETIONARY SPENDING LIMIT.—As used in 

4 this part, the term ‘discretionary spending limit’ means— 

5 ‘‘(1) with respect to fiscal year 2012— 

6 ‘‘(A) for the security category, 

7 $684,000,000,000 in new budget authority; and 

8 ‘‘(B) for the nonsecurity category, 

9 $359,000,000,000 in new budget authority; 

10 ‘‘(2) with respect to fiscal year 2013— 

11 ‘‘(A) for the security category, 

12 $698,000,000,000 in new budget authority; and 

13 ‘‘(B) for the nonsecurity category, 

14 $329,000,000,000 in new budget authority; 

15 ‘‘(3) with respect to fiscal year 2014, for the 

16 discretionary category, $1,038,537,000,000 in new 

17 budget authority; 

18 ‘‘(4) with respect to fiscal year 2015, for the 

19 discretionary category, $1,046,680,000,000 in new 

20 budget authority; 

21 ‘‘(5) with respect to fiscal year 2016, for the 

22 discretionary category, $1,055,779,000,000 in new 

23 budget authority; 


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1 ‘‘(6) with respect to fiscal year 2017, for the 

2 discretionary category, $1,067,794,000,000 in new 

3 budget authority; 

4 ‘‘(7) with respect to fiscal year 2018, for the 

5 discretionary category, $1,085,259,000,000 in new 

6 budget authority; 

7 ‘‘(8) with respect to fiscal year 2019, for the 

8 discretionary category, $1,103,802,000,000 in new 

9 budget authority; 

10 ‘‘(9) with respect to fiscal year 2020, for the 

11 discretionary category, $1,122,611,000,000 in new 

12 budget authority; and 

13 ‘‘(10) with respect to fiscal year 2021, for the 

14 discretionary category, $1,141,640,000,000 in new 

15 budget authority; 

16 as adjusted in strict conformance with subsection (b).’’. 

17 Subtitle B—Savings From Health 

18 Care Efficiencies 

19 SEC. 1311. MEDICARE DSH REPORT AND PAYMENT ADJUST20 MENTS IN RESPONSE TO COVERAGE EXPAN21 SION. 

22 (a) DSH REPORT.— 

23 (1) IN GENERAL.—Not later than January 1, 

24 2016, the Secretary of Health and Human Services 

25 shall submit to Congress a report on Medicare DSH 


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1 taking into account the impact of the health care re2 forms carried out under this Act in reducing the 

3 number of uninsured individuals. The report shall 

4 include recommendations relating to the following: 

5 (A) The appropriate amount, targeting, 

6 and distribution of Medicare DSH to com7 pensate for higher Medicare costs associated 

8 with serving low-income beneficiaries (taking 

9 into account variations in the empirical jus10 tification for Medicare DSH attributable to hos11 pital characteristics, including bed size), con12 sistent with the original intent of Medicare 

13 DSH. 

14 (B) The appropriate amount, targeting, 

15 and distribution of Medicare DSH to hospitals 

16 given their continued uncompensated care costs, 

17 to the extent such costs remain. 

18 (2) COORDINATION WITH MEDICAID DSH RE19 PORT.—The Secretary shall coordinate the report 

20 under this subsection with the report on Medicaid 

21 DSH under section 1322(a). 

22 (b) PAYMENT ADJUSTMENTS IN RESPONSE TO COV23 ERAGE EXPANSION.— 

24 (1) IN GENERAL.—If there is a significant de25 crease in the national rate of uninsurance as a result 


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1 of this Act (as determined under paragraph (2)(A)), 

2 then the Secretary of Health and Human Services 

3 shall, beginning in fiscal year 2017, implement the 

4 following adjustments to Medicare DSH: 

5 (A) In lieu of the amount of Medicare 

6 DSH payment that would otherwise be made 

7 under section 1886(d)(5)(F) of the Social Secu8 rity Act, the amount of Medicare DSH payment 

9 shall be an amount based on the recommenda10 tions of the report under subsection (a)(1)(A) 

11 and shall take into account variations in the 

12 empirical justification for Medicare DSH attrib13 utable to hospital characteristics, including bed 

14 size. 

15 (B) Subject to paragraph (3), make an ad16 ditional payment to a hospital by an amount 

17 that is estimated based on the amount of un18 compensated care provided by the hospital 

19 based on criteria for uncompensated care as de20 termined by the Secretary, which shall exclude 

21 bad debt. 

22 (2) SIGNIFICANT DECREASE IN NATIONAL RATE

23 OF UNINSURANCE AS A RESULT OF THIS ACT.—For 

24 purposes of this subsection— 


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1 (A) IN GENERAL.—There is a ‘‘significant 

2 decrease in the national rate of uninsurance as 

3 a result of this Act’’ if there is a decrease in 

4 the national rate of uninsurance (as defined in 

5 subparagraph (B)) from 2012 to 2014 that ex6 ceeds 8 percentage points. 

7 (B) NATIONAL RATE OF UNINSURANCE

8 DEFINED.—The term ‘‘national rate of 

9 uninsurance’’ means, for a year, such rate for 

10 the under-65 population for the year as deter11 mined and published by the Bureau of the Cen12 sus in its Current Population Survey in or 

13 about September of the succeeding year. 

14 (3) UNCOMPENSATED CARE INCREASE.— 

15 (A) COMPUTATION OF DSH SAVINGS.—For 

16 each fiscal year (beginning with fiscal year 

17 2015), the Secretary shall estimate the aggre18 gate reduction in Medicare DSH that will result 

19 from the adjustment under paragraph (1)(A). 

20 (B) STRUCTURE OF PAYMENT IN21 CREASE.—The Secretary shall compute the in22 crease in Medicare DSH under paragraph 

23 (1)(B) for a fiscal year in accordance with a 

24 formula established by the Secretary that pro25 vides that— 


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1 (i) the aggregate amount of such in2 crease for the fiscal year does not exceed 

3 50 percent of the aggregate reduction in 

4 Medicare DSH estimated by the Secretary 

5 for such fiscal year; and 

6 (ii) hospitals with higher levels of un7 compensated care receive a greater in8 crease. 

9 (c) MEDICARE DSH.—In this section, the term 

10 ‘‘Medicare DSH’’ means adjustments in payments under 

11 section 1886(d)(5)(F) of the Social Security Act (42 

12 U.S.C. 1395ww(d)(5)(F)) for inpatient hospital services 

13 furnished by disproportionate share hospitals. 

14 SEC. 1312. REDUCTION IN MEDICAID DSH. 

15 (a) REPORT.— 

16 (1) IN GENERAL.—Not later than January 1, 

17 2016, the Secretary of Health and Human Services 

18 (in this title referred to as the ‘‘Secretary’’) shall 

19 submit to Congress a report concerning the extent to 

20 which, based upon the impact of the health care re21 forms carried out under this Act in reducing the 

22 number of uninsured individuals, there is a contin23 ued role for Medicaid DSH. In preparing the report, 

24 the Secretary shall consult with community-based 


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1 health care networks serving low-income bene2 ficiaries. 

3 (2) MATTERS TO BE INCLUDED.—The report 

4 shall include the following: 

5 (A) RECOMMENDATIONS.—Recommenda6 tions regarding— 

7 (i) the appropriate targeting of Med8 icaid DSH within States; and 

9 (ii) the distribution of Medicaid DSH 

10 among the States. 

11 (B) SPECIFICATION OF DSH HEALTH RE12 FORM METHODOLOGY.—The DSH Health Re13 form methodology described in paragraph (2) of 

14 subsection (b) for purposes of implementing the 

15 requirements of such subsection. 

16 (3) COORDINATION WITH MEDICARE DSH RE17 PORT.—The Secretary shall coordinate the report 

18 under this subsection with the report on Medicare 

19 DSH under section 1321. 

20 (4) MEDICAID DSH.—In this section, the term 

21 ‘‘Medicaid DSH’’ means adjustments in payments 

22 under section 1923 of the Social Security Act for in23 patient hospital services furnished by dispropor24 tionate share hospitals. 

25 (b) MEDICAID DSH REDUCTIONS.— 


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1 (1) IN GENERAL.—If there is a significant de2 crease in the national rate of uninsurance as a result 

3 of this Act (as determined under section 

4 1321(a)(2)(A)), then the Secretary of Health and 

5 Human Services shall reduce Medicaid DSH so as to 

6 reduce total Federal payments to all States for such 

7 purpose by $1,500,000,000 in fiscal year 2017, 

8 $2,500,000,000 in fiscal year 2018, and 

9 $6,000,000,000 in fiscal year 2019. 

10 (2) DSH HEALTH REFORM METHODOLOGY.— 

11 The Secretary shall carry out paragraph (1) through 

12 use of a DSH Health Reform methodology issued by 

13 the Secretary that imposes the largest percentage re14 ductions on the States that— 

15 (A) have the lowest percentages of unin16 sured individuals (determined on the basis of 

17 audited hospital cost reports) during the most 

18 recent year for which such data are available; 

19 or 

20 (B) do not target their DSH payments 

21 on— 

22 (i) hospitals with high volumes of 

23 Medicaid inpatients (as defined in section 

24 1923(b)(1)(A) of the Social Security Act 

25 (42 U.S.C. 1396r–4(b)(1)(A))); and 


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1 (ii) hospitals that have high levels of 

2 uncompensated care (excluding bad debt). 

3 (3) DSH ALLOTMENT PUBLICATIONS.— 

4 (A) IN GENERAL.—Not later than the pub5 lication deadline specified in subparagraph (B), 

6 the Secretary shall publish in the Federal Reg7 ister a notice specifying the DSH allotment to 

8 each State under 1923(f) of the Social Security 

9 Act for the respective fiscal year specified in 

10 such subparagraph, consistent with the applica11 tion of the DSH Health Reform methodology 

12 described in paragraph (2). 

13 (B) PUBLICATION DEADLINE.—The publi14 cation deadline specified in this subparagraph 

15 is— 

16 (i) January 1, 2016, with respect to 

17 DSH allotments described in subparagraph 

18 (A) for fiscal year 2017; 

19 (ii) January 1, 2017, with respect to 

20 DSH allotments described in subparagraph 

21 (A) for fiscal year 2018; and 

22 (iii) January 1, 2018, with respect to 

23 DSH allotments described in subparagraph 

24 (A) for fiscal year 2019. 

25 (c) CONFORMING AMENDMENTS.— 


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1 (1) Section 1923(f) of the Social Security Act 

2 (42 U.S.C. 1396r–4(f)) is amended— 

3 (A) by redesignating paragraph (7) as 

4 paragraph (8); and 

5 (B) by inserting after paragraph (6) the 

6 following new paragraph: 

7 ‘‘(7) SPECIAL RULE FOR FISCAL YEARS 2017, 

8 2018, AND 2019.—Notwithstanding paragraph (2), if 

9 the Secretary makes a reduction under section 

10 1322(b)(1) of the Empowering Patients First Act, 

11 the total DSH allotments for all States for— 

12 ‘‘(A) fiscal year 2017, shall be the total 

13 DSH allotments that would otherwise be deter14 mined under this subsection for such fiscal year 

15 decreased by $1,500,000,000; 

16 ‘‘(B) fiscal year 2018, shall be the total 

17 DSH allotments that would otherwise be deter18 mined under this subsection for such fiscal year 

19 decreased by $2,500,000,000; and 

20 ‘‘(C) fiscal year 2019, shall be the total 

21 DSH allotments that would otherwise be deter22 mined under this subsection for such fiscal year 

23 decreased by $6,000,000,000.’’. 

24 (2) Section 1923(b)(4) of such Act (42 U.S.C. 

25 1396r–4(b)(4)) is amended by adding before the peVerDate Mar 15 2010 01:39 Sep 23, 2011 Jkt 099200 PO 00000 Frm 00259 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000

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1 riod the following: ‘‘or to affect the authority of the 

2 Secretary to issue and implement the DSH Health 

3 Reform methodology under section 1322(b)(2) of the 

4 Empowering Patients First Act’’. 

5 (d) DISPROPORTIONATE SHARE HOSPITALS (DSH) 

6 AND ESSENTIAL ACCESS HOSPITAL (EAH) NON-DIS7 CRIMINATION.— 

8 (1) IN GENERAL.—Section 1923(d) of the So9 cial Security Act (42 U.S.C. 1396r–4) is amended 

10 by adding at the end the following new paragraph: 

11 ‘‘(4) No hospital may be defined or deemed as 

12 a disproportionate share hospital, or as an essential 

13 access hospital (for purposes of subsection 

14 (f)(6)(A)(iv)), under a State plan under this title or 

15 subsection (b) of this section (including any waiver 

16 under section 1115) unless the hospital— 

17 ‘‘(A) provides services to beneficiaries 

18 under this title without discrimination on the 

19 ground of race, color, national origin, creed, 

20 source of payment, status as a beneficiary 

21 under this title, or any other ground unrelated 

22 to such beneficiary’s need for the services or the 

23 availability of the needed services in the hos24 pital; and 


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1 ‘‘(B) makes arrangements for, and accepts, 

2 reimbursement under this title for services pro3 vided to eligible beneficiaries under this title.’’. 

4 (2) EFFECTIVE DATE.—The amendment made 

5 by subsection (a) shall be apply to expenditures 

6 made on or after July 1, 2012. 

7 Subtitle C—Fraud, Waste, and 

8 Abuse 

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

10 HCFAC. 

11 (a) HCFAC FUNDING.—Section 1817(k)(3)(A) of 

12 the Social Security Act (42 U.S.C. 1395i(k)(3)(A)) is 

13 amended— 

14 (1) in clause (i)— 

15 (A) in subclause (IV), by striking at the 

16 end ‘‘and’’; 

17 (B) in subclause (V)— 

18 (i) by striking ‘‘for each fiscal year 

19 after fiscal year 2010’’ and inserting ‘‘for 

20 fiscal year 2011’’; and 

21 (ii) by striking the period at the end 

22 and inserting ‘‘; and’’; and 

23 (C) by adding at the end the following new 

24 subclause: 


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1 ‘‘(VI) for each fiscal year after 

2 fiscal year 2011, $300,000,000.’’; and 

3 (2) in clause (ii)— 

4 (A) in subclause (IX), by striking at the 

5 end ‘‘and’’; 

6 (B) in subclause (X)— 

7 (i) by striking ‘‘for each fiscal year 

8 after fiscal year 2010’’ and inserting ‘‘for 

9 fiscal year 2011’’; and 

10 (ii) by striking the period at the end 

11 and inserting ‘‘; and’’; and 

12 (C) by adding at the end the following new 

13 subclause: 

14 ‘‘(XI) for each fiscal year after 

15 fiscal year 2011, not less than the 

16 amount required under this clause for 

17 fiscal year 2011, plus the amount by 

18 which the amount made available 

19 under clause (i)(VI) for fiscal year 

20 2012 exceeds the amount made avail21 able under clause (i)(V) for fiscal year 

22 2011.’’. 

23 (b) OIG FUNDING.—There are authorized to be ap24 propriated for each of fiscal years 2012 through 2021 

25 $100,000,000 for the Office of the Inspector General of 


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1 the Department of Health and Human Services for fraud 

2 prevention activities under the Medicare and Medicaid 

3 programs. 

4 SEC. 1322. IMPROVED ENFORCEMENT OF THE MEDICARE 

5 SECONDARY PAYOR PROVISIONS. 

6 (a) IN GENERAL.—The Secretary, in coordination 

7 with the Inspector General of the Department of Health 

8 and Human Services, shall provide through the Coordina9 tion of Benefits Contractor for the identification of in10 stances where the Medicare program should be, but is not, 

11 acting as a secondary payer to an individual’s private 

12 health benefits coverage under section 1862(b) of the So13 cial Security Act (42 U.S.C. 1395y(b)). 

14 (b) UPDATING PROCEDURES.—The Secretary shall 

15 update procedures for identifying and resolving credit bal16 ance situations which occur under the Medicare program 

17 when payment under such title and from other health ben18 efit plans exceed the providers’ charges or the allowed 

19 amount. 

20 (c) REPORT ON IMPROVED ENFORCEMENT.—Not 

21 later than 1 year after the date of the enactment of this 

22 Act, the Secretary shall submit a report to Congress on 

23 progress made in improved enforcement of the Medicare 

24 secondary payor provisions, including recoupment of credit 

25 balances. 


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1 SEC. 1323. STRENGTHEN MEDICARE PROVIDER ENROLL2 MENT STANDARDS AND SAFEGUARDS. 

3 (a) STRENGTHENING MEDICARE PROVIDER NUM4 BERS.— 

5 (1) SCREENING NEW PROVIDERS.—As a condi6 tion of a provider of services or a supplier, including 

7 durable medical equipment suppliers and home 

8 health agencies, applying for the first time for a pro9 vider number under the Medicare program under 

10 title XVIII of the Social Security Act and before 

11 granting billing privileges under such title, the Sec12 retary of Health and Human Services (referred to in 

13 this section as the ‘‘Secretary’’) shall screen the pro14 vider or supplier for a criminal background or other 

15 financial or operational irregularities through 

16 fingerprinting, licensure checks, site-visits, and other 

17 database checks. 

18 (2) APPLICATION FEES.—The Secretary shall 

19 impose an application charge on such a provider or 

20 supplier in order to cover the Secretary’s costs in 

21 performing the screening required under paragraph 

22 (1). 

23 (3) PROVISIONAL APPROVAL.—During an ini24 tial, provisional period (specified by the Secretary) 

25 in which such a provider or supplier has been issued 

26 such a number, the Secretary shall provide enhanced 


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1 oversight of the activities of such provider or sup2 plier under the Medicare program, such as through 

3 prepayment review and payment limitations. 

4 (4) PENALTIES FOR FALSE STATEMENTS.—In 

5 the case of a provider or supplier that knowingly 

6 makes a false statement in an application for such 

7 a number, the Secretary may exclude the provider or 

8 supplier from participation under the Medicare pro9 gram, or may impose a civil money penalty (in the 

10 amount described in section 1128A(a)(4) of the So11 cial Security Act), in the same manner as the Sec12 retary may impose such an exclusion or penalty 

13 under sections 1128 and 1128A, respectively, of 

14 such Act in the case of knowing presentation of a 

15 false claim described in section 1128A(a)(1)(A) of 

16 such Act. 

17 (5) DISCLOSURE REQUIREMENTS.—With re18 spect to approval of such an application, the Sec19 retary— 

20 (A) shall require applicants to disclose pre21 vious affiliation with enrolled entities that have 

22 uncollected debt related to the Medicare or 

23 Medicaid programs; 

24 (B) may deny approval if the Secretary de25 termines that these affiliations pose undue risk 


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1 to the Medicare or Medicaid program, subject 

2 to an appeals process for the applicant as deter3 mined by the Secretary; and 

4 (C) may implement enhanced safeguards 

5 (such as surety bonds). 

6 (b) MORATORIA.—The Secretary may impose mora7 toria on approval of provider and supplier numbers under 

8 the Medicare program for new providers of services and 

9 suppliers as determined necessary to prevent or combat 

10 fraud a period of delay for any one applicant cannot ex11 ceed 30 days unless cause is shown by the Secretary. 

12 (c) FUNDING.—There are authorized to be appro13 priated to carry out this section such sums as may be nec14 essary. 

15 SEC. 1324. TRACKING BANNED PROVIDERS ACROSS STATE 

16 LINES. 

17 (a) GREATER COORDINATION.—The Secretary of 

18 Health and Human Services (in this section referred to 

19 as the ‘‘Secretary’’) shall provide for increased coordina20 tion between the Administrator of the Centers for Medi21 care & Medicaid Services (in this section referred to as 

22 ‘‘CMS’’) and its regional offices to ensure that providers 

23 of services and suppliers that have operated in one State 

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1 gram are unable to begin operation and participation in 

2 the Medicare program in another State. 

3 (b) IMPROVED INFORMATION SYSTEMS.— 

4 (1) IN GENERAL.—The Secretary shall improve 

5 information systems to allow greater integration be6 tween databases under the Medicare program so 

7 that— 

8 (A) Medicare administrative contractors, 

9 fiscal intermediaries, and carriers have imme10 diate access to information identifying providers 

11 and suppliers excluded from participation in the 

12 Medicare and Medicaid program and other Fed13 eral health care programs; and 

14 (B) such information can be shared across 

15 Federal health care programs and agencies, in16 cluding between the Departments of Health and 

17 Human Services, the Social Security Adminis18 tration, the Department of Veterans Affairs, 

19 the Department of Defense, the Department of 

20 Justice, and the Office of Personnel Manage21 ment. 

22 (c) MEDICARE/MEDICAID ‘‘ONE PI’’ DATABASE.— 

23 The Secretary shall implement a database that includes 

24 claims and payment data for all components of the Medi25 care program and the Medicaid program. 


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1 (d) AUTHORIZING EXPANDED DATA MATCHING.— 

2 Notwithstanding any provision of the Computer Matching 

3 and Privacy Protection Act of 1988 to the contrary— 

4 (1) the Secretary and the Inspector General in 

5 the Department of Health and Human Services may 

6 perform data matching of data from the Medicare 

7 program with data from the Medicaid program; and 

8 (2) the Commissioner of Social Security and the 

9 Secretary may perform data matching of data of the 

10 Social Security Administration with data from the 

11 Medicare and Medicaid programs. 

12 (e) CONSOLIDATION OF DATA BASES.—The Sec13 retary shall consolidate and expand into a centralized data 

14 base for individuals and entities that have been excluded 

15 from Federal health care programs the Healthcare Integ16 rity and Protection Data Bank, the National Practitioner 

17 Data Bank, the List of Excluded Individuals/Entities, and 

18 a national patient abuse/neglect registry. 

19 (f) COMPREHENSIVE PROVIDER DATABASE.— 

20 (1) ESTABLISHMENT.—The Secretary shall es21 tablish a comprehensive database that includes infor22 mation on providers of services, suppliers, and re23 lated entities participating in the Medicare program, 

24 the Medicaid program, or both. Such database shall 

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1 tionships, history of adverse actions, results of site 

2 visits or other monitoring by any program. 

3 (2) USE.—Prior to issuing a provider or sup4 plier number for an entity under the Medicare pro5 gram, the Secretary shall obtain information on the 

6 entity from such database to assure the entity quali7 fies for the issuance of such a number. 

8 (g) COMPREHENSIVE SANCTIONS DATABASE.—The 

9 Secretary shall establish a comprehensive sanctions data10 base on sanctions imposed on providers of services, sup11 pliers, and related entities. Such database shall be over12 seen by the Inspector General of the Department of 

13 Health and Human Services and shall be linked to related 

14 databases maintained by State licensure boards and by 

15 Federal or State law enforcement agencies. 

16 (h) ACCESS TO CLAIMS AND PAYMENT DATA17 BASES.—The Secretary shall ensure that the Inspector 

18 General of the Department of Health and Human Services 

19 and Federal law enforcement agencies have direct access 

20 to all claims and payment databases of the Secretary 

21 under the Medicare or Medicaid programs. 

22 (i) CIVIL MONEY PENALTIES FOR SUBMISSION OF

23 ERRONEOUS INFORMATION.—In the case of a provider of 

24 services, supplier, or other entity that knowingly submits 

25 erroneous information that serves as a basis for payment 


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1 of any entity under the Medicare or Medicaid program, 

2 the Secretary may impose a civil money penalty of not to 

3 exceed $50,000 for each such erroneous submission. A 

4 civil money penalty under this subsection shall be imposed 

5 and collected in the same manner as a civil money penalty 

6 under subsection (a) of section 1128A of the Social Secu7 rity Act is imposed and collected under that section. 

Æ 


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