I 

111TH CONGRESS 

1ST SESSION H. R. 3067 

To amend title XVIII of the Social Security Act to reform Medicare payments 

to physicians and certain other providers and improve Medicare benefits, 

to encourage the offering of health coverage by small businesses, to 

provide tax incentives for the purchase of health insurance by individuals, 

to increase access to health care for veterans, to address the nursing 

shortage, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 26, 2009 

Mr. LATHAM introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on 

Education and Labor, Ways and Means, Veterans’ Affairs, and Armed 

Services, 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 amend title XVIII of the Social Security Act to reform 

Medicare payments to physicians and certain other providers and improve Medicare benefits, to encourage the 

offering of health coverage by small businesses, to provide tax incentives for the purchase of health insurance 

by individuals, to increase access to health care for veterans, to address the nursing shortage, 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, 


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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

3 ‘‘Health Security for All Americans Act of 2009’’. 

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

5 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—MEDICARE 

Sec. 101. Medicare physician payment update reform. 

Sec. 102. Medicare GPCI floors. 

Sec. 103. Annual physical examinations under Medicare. 

Sec. 104. Medicare outreach campaign on availability of welcome to Medicare 

physicals. 

Sec. 105. Improvements to the medicare-dependent hospital (MDH) program. 

Sec. 106. Temporary improvements to the Medicare inpatient hospital payment 

adjustment for low-volume hospitals. 

Sec. 107. Ensuring proportional representation of interests of rural areas on 

MedPAC. 

TITLE II—SMALL BUSINESS HEALTH PLANS 

Subtitle A—Enhanced Marketplace Pools 

Sec. 201. Rules governing enhanced marketplace pools. 

‘‘PART 8—RULES GOVERNING ENHANCED MARKETPLACE POOLS

‘‘Sec. 801. Small business health plans. 

‘‘Sec. 802. Alternative Market Pooling Organizations. 

‘‘Sec. 803. Certification of small business health plans. 

‘‘Sec. 804. Requirements relating to sponsors and boards of trustees. 

‘‘Sec. 805. Participation and coverage requirements. 

‘‘Sec. 806. Other requirements relating to plan documents, contribution 

rates, and benefit options. 

‘‘Sec. 807. Requirements for application and related requirements. 

‘‘Sec. 808. Notice requirements for voluntary termination. 

‘‘Sec. 809. Implementation and application authority by Secretary. 

‘‘Sec. 810. Definitions and rules of construction. 

Sec. 202. Cooperation between Federal and State authorities. 

Sec. 203. Effective date and transitional and other rules. 

Subtitle B—Market Relief 

Sec. 211. Market relief. 

‘‘TITLE XXXI—HEALTH CARE INSURANCE MARKETPLACE 

MODERNIZATION 

‘‘Sec. 3101. General insurance definitions. 

‘‘Sec. 3102. Implementation and application authority by Secretary. 


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‘‘Subtitle A—Market Relief 

‘‘PART I—RATING REQUIREMENTS

‘‘Sec. 3111. Definitions. 

‘‘Sec. 3112. Rating rules. 

‘‘Sec. 3113. Application and preemption. 

‘‘Sec. 3114. Civil actions and jurisdiction. 

‘‘Sec. 3115. Ongoing review. 

‘‘PART II—AFFORDABLE PLANS

‘‘Sec. 3121. Definitions. 

‘‘Sec. 3122. Offering affordable plans. 

‘‘Sec. 3123. Application and preemption. 

‘‘Sec. 3124. Civil actions and jurisdiction. 

‘‘Sec. 3125. Rules of construction. 

Subtitle C—Harmonization of Health Insurance Standards 

Sec. 221. Health Insurance Standards Harmonization. 

‘‘Subtitle B—Standards Harmonization 

‘‘Sec. 3131. Definitions. 

‘‘Sec. 3132. Harmonized standards. 

‘‘Sec. 3133. Application and preemption. 

‘‘Sec. 3134. Civil actions and jurisdiction. 

‘‘Sec. 3135. Authorization of appropriations; rule of construction. 

TITLE III—TAX-RELATED HEALTH INCENTIVES 

Sec. 301. SECA tax deduction for health insurance costs. 

Sec. 302. Deduction for qualified health insurance costs of individuals. 

TITLE IV—INCREASING ACCESS TO VA HEALTH CARE 

Sec. 401. Requirement for payments to facilities other than the Department of 

Veterans Affairs for covered health services. 

Sec. 402. Authority of Department of Veterans Affairs pharmacies to dispense 

medications to veterans on prescriptions written by private 

practitioners. 

TITLE V—NURSING SHORTAGE 

Sec. 501. Child care assistance for individuals pursuing advanced nursing degrees. 

Sec. 502. Nurse faculty program. 

‘‘PART E—NURSE FACULTY PROJECT

‘‘Sec. 771. Purposes. 

‘‘Sec. 772. Assistance authorized. 

‘‘Sec. 773. Applications. 

‘‘Sec. 774. Authorization of appropriations. 

‘‘Sec. 775. Definition. 

Sec. 503. Nurse Faculty Loan Repayment Program. 

Sec. 504. Programs to increase the number of nurses within the Armed Forces. 


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TITLE VI—RESERVE COMPONENTS OF THE ARMED FORCES 

Sec. 601. Effective date of active duty for purposes of entitlement to active 

duty health care of members of the reserve components of the 

Armed Forces receiving alert order anticipating a call or order 

to active duty in support of a contingency operation. 

1 TITLE I—MEDICARE 

2 SEC. 101. MEDICARE PHYSICIAN PAYMENT UPDATE RE3 FORM. 

4 (a) SUBSTITUTION OF MEI INCREASE FOR SGR AD5 JUSTMENTS.—Section 1848(d) of the Social Security Act 

6 (42 U.S.C. 1395w–4(d)) is amended— 

7 (1) in paragraph (1)(A), by inserting ‘‘and be8 fore 2010’’ after ‘‘beginning with 2001’’; 

9 (2) in paragraph (1)(A), by inserting before the 

10 period at the end the following: ‘‘, and for years be11 ginning with 2010, multiplied by the update estab12 lished under paragraph (10) applicable to the year 

13 involved’’; and 

14 (3) in paragraph (4)— 

15 (A) in the heading by striking ‘‘YEARS BE16 GINNING WITH 2001’’ and inserting ‘‘2001, 2002, 

17 AND 2003’’; and 

18 (B) in subparagraph (A), by inserting 

19 ‘‘and ending with 2003’’ after ‘‘beginning with 

20 2001’’; and 

21 (4) by adding at the end the following new 

22 paragraph: 


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1 ‘‘(10) UPDATE BEGINNING WITH 2010.—The 

2 update to the single conversion factor established in 

3 paragraph (1)(C) for 2010 and each succeeding year 

4 shall be the percentage increase in the MEI (as de5 fined in section 1842(i)(3)) for the year involved 

6 minus 1 percentage point.’’. 

7 (b) ENDING APPLICATION OF SUSTAINABLE

8 GROWTH RATE (SGR).—Section 1848(f)(1)(B) of such 

9 Act (42 U.S.C. 1395w–4(f)(1)(B)) is amended by insert10 ing ‘‘(and before 2009)’’ after ‘‘each succeeding year’’. 

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

12 this section shall apply to payment for services furnished 

13 on or after January 1, 2010. 

14 SEC. 102. MEDICARE GPCI FLOORS. 

15 Section 1848(e)(1) of the Social Security Act (42 

16 U.S.C. 1395w–4(e)(1)) is amended— 

17 (1) in subparagraph (A), by striking ‘‘and (G)’’ 

18 and inserting ‘‘(G), (H), and (I)’’; and 

19 (2) by adding at the end the following new sub20 paragraphs: 

21 ‘‘(H) FLOOR AT 1.0 FOR PRACTICE EX22 PENSE INDEX.—After calculating the practice 

23 expense index in subparagraph (A)(ii), for pur24 poses of payment for services furnished on or 

25 after January 1, 2010, the Secretary shall inVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 crease the practice expense geographic index to 

2 1.00 for any locality for which such practice ex3 pense geographic index is less than 1.00. 

4 ‘‘(I) FLOOR AT 1.0 FOR WORK EXPENSES

5 INDEX.—After calculating the practice expense 

6 index in subparagraph (A)(ii), for purposes of 

7 payment for services furnished on or after Jan8 uary 1, 2010, the Secretary shall increase the 

9 practice expense geographic index to 1.00 for 

10 any locality for which such practice expense ge11 ographic index is less than 1.00.’’. 

12 SEC. 103. ANNUAL PHYSICAL EXAMINATIONS UNDER MEDI13 CARE. 

14 (a) IN GENERAL.—Section 1861 of the Social Secu15 rity Act (42 U.S.C. 1395x) is amended— 

16 (1) in each of subparagraphs (W) and (AA)(i) 

17 of subsection (s)(2), by striking ‘‘initial’’ and insert18 ing ‘‘annual’’; 

19 (2) in the heading of subsection (ww), by strik20 ing ‘‘Initial’’ and inserting ‘‘Annual’’; and 

21 (3) by amending paragraph (1) of subsection 

22 (ww) to read as follows: 

23 ‘‘(1) The term ‘annual preventive physical ex24 amination’ means professional services of a physi25 cian, or of a nurse practitioner or physician assistVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 ant which the practitioner or assistant is authorized 

2 to provide under State law, consisting of a physical 

3 examination (including, as medically appropriate, 

4 measurement of height, weight, body mass index, 

5 and blood pressure) with the goal of health pro6 motion and disease detection and includes education, 

7 counseling, and referral with respect to screening 

8 and other preventive services described in paragraph 

9 (2) and end-of-life planning (as defined in paragraph 

10 (3)) upon the agreement with the individual, as well 

11 as related clinical laboratory tests and such other 

12 preventive services in connection with the same visit 

13 as the Secretary may provide (taking into account 

14 services typically included in an annual physical ex15 amination covered under private health benefit 

16 plans).’’. 

17 (b) MODIFICATION OF EXCLUSIONS.—Section 

18 1862(a) of such Act (42 U.S.C. 1395y(a)) is amended— 

19 (1) in paragraph (1), by amending subpara20 graph (K) to read as follows: 

21 ‘‘(K) in the case of an annual preventive 

22 physical examination, which is performed for an 

23 individual more frequently than once in any 12- 

24 month period,’’; and 


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1 (2) in paragraph (7), by inserting ‘‘(other than 

2 annual preventive physical examinations)’’ after 

3 ‘‘routine physical checkups’’. 

4 (c) CONFORMING AMENDMENT.—Section 1833(b)(9) 

5 of such Act (42 U.S.C. 1395l(b)(9)) is amended by strik6 ing ‘‘initial’’ and inserting ‘‘annual’’. 

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

8 this section shall apply to services furnished on or after 

9 January 1 of the first year beginning more than 60 days 

10 after the date of the enactment of this Act. 

11 SEC. 104. MEDICARE OUTREACH CAMPAIGN ON AVAIL12 ABILITY OF WELCOME TO MEDICARE 

13 PHYSICALS. 

14 (a) IN GENERAL.—The Secretary of Health and 

15 Human Services shall conduct a national campaign to pro16 vide information to the public on the availability of an ini17 tial preventive physical examination (as defined in section 

18 1861(ww) of the Social Security Act (42 U.S.C. 

19 1395x(ww))) for beneficiaries of the Medicare program 

20 under title XVIII of the Social Security Act (42 U.S.C. 

21 1395 et seq.). 

22 (b) AUTHORIZATION OF APPROPRIATIONS.—There is 

23 authorized to be appropriated to carry out this section 

24 $1,000,000 for each of fiscal years 2010 through 2014. 


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1 SEC. 105. IMPROVEMENTS TO THE MEDICARE-DEPENDENT 

2 HOSPITAL (MDH) PROGRAM. 

3 (a) USE OF NON-WAGE ADJUSTED PPS RATE.— 

4 Section 1886(d)(5)(G) of the Social Security Act (42 

5 U.S.C. 1395ww(d)(5)(G)) is amended by adding at the 

6 end the following new clause: 

7 ‘‘(v) In the case of discharges occurring on or after 

8 October 1, 2010, and before October 1, 2012, in deter9 mining the amount under paragraph (1)(A)(iii) for pur10 poses of clauses (i) and (ii)(II), such amount shall, if it 

11 results in greater payments to the hospital, be determined 

12 without regard to any adjustment for different area wage 

13 levels under paragraph (3)(E).’’. 

14 (b) ENHANCED PAYMENT FOR AMOUNT BY WHICH

15 THE TARGET EXCEEDS THE PPS RATE.—Section 

16 1886(d)(5)(G)(ii)(II) of the Social Security Act (42 

17 U.S.C. 1395ww(d)(5)(G)(ii)(II)) is amended by inserting 

18 ‘‘, and before October 1, 2010, or 85 percent in the case 

19 of discharges occurring on or after October 1, 2010, and 

20 before October 1, 2012’’ after ‘‘October 1, 2011’’. 

21 SEC. 106. TEMPORARY IMPROVEMENTS TO THE MEDICARE 

22 INPATIENT HOSPITAL PAYMENT ADJUST23 MENT FOR LOW-VOLUME HOSPITALS. 

24 Section 1886(d)(12) of the Social Security Act (42 

25 U.S.C. 1395ww(d)(12)) is amended— 


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1 (1) in subparagraph (A), by inserting ‘‘or (D)’’ 

2 after ‘‘subparagraph (B)’’; 

3 (2) in subparagraph (B), by striking ‘‘The Sec4 retary’’ and inserting ‘‘For discharges occurring in 

5 fiscal years 2005 through 2010 and for discharges 

6 occurring in fiscal year 2013 and subsequent fiscal 

7 years, the Secretary’’; 

8 (3) in subparagraph (C)(i)— 

9 (A) by inserting ‘‘(or, with respect to fiscal 

10 years 2011 and 2012, 15 road miles)’’ after 

11 ‘‘25 road miles’’; and 

12 (B) by inserting ‘‘(or, with respect to fiscal 

13 years 2011 and 2012, 2,000 discharges of indi14 viduals entitled to, or enrolled for, benefits 

15 under part A)’’ after ‘‘800 discharges’’; and 

16 (4) by adding at the end the following new sub17 paragraph: 

18 ‘‘(D) TEMPORARY APPLICABLE PERCENT19 AGE INCREASE.—For discharges occurring in 

20 fiscal years 2011 or 2012, the Secretary shall 

21 determine an applicable percentage increase for 

22 purposes of subparagraph (A) using a linear 

23 sliding scale ranging from 25 percent for low24 volume hospitals with fewer than an appro25 priate number (as determined by the Secretary) 


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1 of discharges of individuals entitled to, or en2 rolled for, benefits under part A in the fiscal 

3 year to 0 percent for low-volume hospitals with 

4 greater than 2,000 discharges of such individ5 uals in the fiscal year.’’. 

6 SEC. 107. ENSURING PROPORTIONAL REPRESENTATION OF 

7 INTERESTS OF RURAL AREAS ON MEDPAC. 

8 (a) IN GENERAL.—Section 1805(c)(2) of the Social 

9 Security Act (42 U.S.C. 1395b–6(c)(2)) is amended— 

10 (1) in subparagraph (A), by inserting ‘‘con11 sistent with subparagraph (E)’’ after ‘‘rural rep12 resentatives’’; and 

13 (2) by adding at the end the following new sub14 paragraph: 

15 ‘‘(E) PROPORTIONAL REPRESENTATION OF

16 INTERESTS OF RURAL AREAS.—In order to pro17 vide a balance between urban and rural rep18 resentatives under subparagraph (A), the pro19 portion of members of the Commission who rep20 resent the interests of health care providers and 

21 Medicare beneficiaries located in rural areas 

22 shall be no less than the proportion of the total 

23 number of Medicare beneficiaries who reside in 

24 rural areas.’’. 


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

2 subsection (a) shall apply to appointments to the Medicare 

3 Payment Advisory Commission made after the date of en4 actment of this Act. 

5 TITLE II—SMALL BUSINESS 

6 HEALTH PLANS 

7 Subtitle A—Enhanced Marketplace 

8 Pools 

9 SEC. 201. RULES GOVERNING ENHANCED MARKETPLACE 

10 POOLS. 

11 (a) IN GENERAL.—Subtitle B of title I of the Em12 ployee Retirement Income Security Act of 1974 is amend13 ed by adding after part 7 the following new part: 

14 ‘‘PART 8—RULES GOVERNING ENHANCED 

15 MARKETPLACE POOLS 

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

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

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

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

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

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

22 plan is described in this subsection if such sponsor— 

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

24 with a constitution and bylaws specifically stating its 

25 purpose and providing for periodic meetings on at 


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1 least an annual basis, as a bona fide trade associa2 tion, a bona fide industry association (including a 

3 rural electric cooperative association or a rural tele4 phone cooperative association), a bona fide profes5 sional association, or a bona fide chamber of com6 merce (or similar bona fide business association, in7 cluding a corporation or similar organization that 

8 operates on a cooperative basis (within the meaning 

9 of section 1381 of the Internal Revenue Code of 

10 1986)), for substantial purposes other than that of 

11 obtaining medical care; 

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

13 receives the active support of its members and re14 quires for membership payment on a periodic basis 

15 of dues or payments necessary to maintain eligibility 

16 for membership; 

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

18 or payments, or coverage under the plan on the 

19 basis of health status-related factors with respect to 

20 the employees of its members (or affiliated mem21 bers), or the dependents of such employees, and does 

22 not condition such dues or payments on the basis of 

23 group health plan participation; and 

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

25 basis of a minimum group size. 


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1 Any sponsor consisting of an association of entities which 

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

3 shall be deemed to be a sponsor described in this sub4 section. 

5 ‘‘SEC. 802. ALTERNATIVE MARKET POOLING ORGANIZA6 TIONS. 

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

8 year after the date of enactment of this part, shall promul9 gate regulations that apply the rules and standards of this 

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

11 entity other (hereinafter ‘Alternative Market Pooling Or12 ganizations’) is not made up principally of employers and 

13 their employees, or not a professional organization or such 

14 small business health plan entity identified in section 801. 

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

16 promulgating regulations pursuant to subsection (a), the 

17 Secretary, in consultation with the Secretary of Health 

18 and Human Services, small business health plans, small 

19 and large employers, large and small insurance issuers, 

20 consumer representatives, and state insurance commis21 sioners, shall— 

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

23 maximum degree practicable, to assure balanced and 

24 comparable oversight standards for both small busiVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 ness health plans and alternative market pooling or2 ganizations; 

3 ‘‘(2) permit the participation as alternative 

4 market pooling organizations unions, churches and 

5 other faith-based organizations, or other organiza6 tions composed of individuals and groups which may 

7 have little or no association with employment, pro8 vided however, that such alternative market pooling 

9 organizations meet, and continue meeting on an on10 going basis, to satisfy standards, rules, and require11 ments materially equivalent to those set forth in this 

12 part with respect to small business health plans; 

13 ‘‘(3) conduct periodic verification of such com14 pliance by alternative market pooling organizations, 

15 in consultation with the Secretary of Health and 

16 Human Services and the National Association of In17 surance Commissioners, except that such periodic 

18 verification shall not materially impede market entry 

19 or participation as pooling entities comparable to 

20 that of small business health plans; 

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

22 monitored standards are applied with respect to al23 ternative market pooling organizations to avert ma24 terial risk-selection within or among the composition 

25 of such organizations; 


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1 ‘‘(5) the expedited and deemed certification pro2 cedures provided in section 805(d) shall not apply to 

3 alternative market pooling organizations until sooner 

4 of the promulgation of regulations under this sub5 section or the expiration of one year following enact6 ment of this Act; and 

7 ‘‘(6) make such other appropriate adjustments 

8 to the requirements of this part as the Secretary 

9 may reasonably deem appropriate to fit the cir10 cumstances of an individual alternative market pool11 ing organization or category of such organization, 

12 including but not limited to the application of the 

13 membership payment requirements of section 

14 801(b)(2) to alternative market pooling organiza15 tions composed primarily of church- or faith-based 

16 membership. 

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

18 PLANS. 

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

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

21 shall prescribe by interim final rule a procedure under 

22 which the applicable authority shall certify small business 

23 health plans which apply for certification as meeting the 

24 requirements of this part. 


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1 ‘‘(b) REQUIREMENTS APPLICABLE TO CERTIFIED

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

3 which certification under this part is in effect shall meet 

4 the applicable requirements of this part, effective on the 

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

6 plan is to commence operations). 

7 ‘‘(c) REQUIREMENTS FOR CONTINUED CERTIFI8 CATION.—The applicable authority may provide by regula9 tion for continued certification of small business health 

10 plans under this part. Such regulation shall provide for 

11 the revocation of a certification if the applicable authority 

12 finds that the small business health plan involved is failing 

13 to comply with the requirements of this part. 

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

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

16 on an application for certification under this section 

17 within 90 days of receipt of such application, the ap18 plying small business health plan shall be deemed 

19 certified until such time as the Secretary may deny 

20 for cause the application for certification. 

21 ‘‘(2) CIVIL PENALTY.—The Secretary may as22 sess a civil penalty against the board of trustees and 

23 plan sponsor (jointly and severally) of a small busi24 ness health plan that is deemed certified under para25 graph (1) of up to $500,000 in the event the SecVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 retary determines that the application for certifi2 cation of such small business health plan was will3 fully or with gross negligence incomplete or inac4 curate. 

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

6 BOARDS OF TRUSTEES. 

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

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

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

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

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

12 the application for certification under this part. 

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

14 this subsection are met with respect to a small business 

15 health plan if the following requirements are met: 

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

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

18 which pursuant to a trust agreement has complete 

19 fiscal control over the plan and which is responsible 

20 for all operations of the plan. 

21 ‘‘(2) RULES OF OPERATION AND FINANCIAL

22 CONTROLS.—The board of trustees has in effect 

23 rules of operation and financial controls, based on a 

24 3-year plan of operation, adequate to carry out the 


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1 terms of the plan and to meet all requirements of 

2 this title applicable to the plan. 

3 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

4 PARTICIPATING EMPLOYERS AND TO CONTRAC5 TORS.— 

6 ‘‘(A) BOARD MEMBERSHIP.— 

7 ‘‘(i) IN GENERAL.—Except as pro8 vided in clauses (ii) and (iii), the members 

9 of the board of trustees are individuals se10 lected from individuals who are the owners, 

11 officers, directors, or employees of the par12 ticipating employers or who are partners in 

13 the participating employers and actively 

14 participate in the business. 

15 ‘‘(ii) LIMITATION.— 

16 ‘‘(I) GENERAL RULE.—Except as 

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

18 no such member is an owner, officer, 

19 director, or employee of, or partner in, 

20 a contract administrator or other 

21 service provider to the plan. 

22 ‘‘(II) LIMITED EXCEPTION FOR

23 PROVIDERS OF SERVICES SOLELY ON

24 BEHALF OF THE SPONSOR.—Officers 

25 or employees of a sponsor which is a 


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1 service provider (other than a contract 

2 administrator) to the plan may be 

3 members of the board if they con4 stitute not more than 25 percent of 

5 the membership of the board and they 

6 do not provide services to the plan 

7 other than on behalf of the sponsor. 

8 ‘‘(III) TREATMENT OF PRO9 VIDERS OF MEDICAL CARE.—In the 

10 case of a sponsor which is an associa11 tion whose membership consists pri12 marily of providers of medical care, 

13 subclause (I) shall not apply in the 

14 case of any service provider described 

15 in subclause (I) who is a provider of 

16 medical care under the plan. 

17 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

18 Clause (i) shall not apply to a small busi19 ness health plan which is in existence on 

20 the date of the enactment of this part. 

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

22 sole authority under the plan to approve appli23 cations for participation in the plan and to con24 tract with insurers. 


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

2 a group health plan which is established and maintained 

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

4 ‘‘(1) the requirements of subsection (a) and sec5 tion 801(a) shall be deemed met if such require6 ments would otherwise be met if the franchisor were 

7 deemed to be the sponsor referred to in section 

8 801(b) and each franchisee were deemed to be a 

9 member (of the sponsor) referred to in section 

10 801(b); and 

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

12 be deemed met. 

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

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

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

16 Code of Federal Regulations (including any such amend17 ments to such regulation after the date of enactment of 

18 this part). 

19 ‘‘SEC. 805. PARTICIPATION AND COVERAGE REQUIRE20 MENTS. 

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

22 requirements of this subsection are met with respect to 

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

24 plan— 

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


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1 ‘‘(A) a member of the sponsor; 

2 ‘‘(B) the sponsor; or 

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

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

5 a professional association or other individual6 based association, if at least one of the officers, 

7 directors, or employees of an employer, or at 

8 least one of the individuals who are partners in 

9 an employer and who actively participates in 

10 the business, is a member or such an affiliated 

11 member of the sponsor, participating employers 

12 may also include such employer; and 

13 ‘‘(2) all individuals commencing coverage under 

14 the plan after certification under this part must 

15 be— 

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

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

18 employees of, or partners in, participating em19 ployers; or 

20 ‘‘(B) the dependents of individuals de21 scribed in subparagraph (A). 

22 ‘‘(b) INDIVIDUAL MARKET UNAFFECTED.—The re23 quirements of this subsection are met with respect to a 

24 small business health plan if, under the terms of the plan, 

25 no participating employer may provide health insurance 


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1 coverage in the individual market for any employee not 

2 covered under the plan which is similar to the coverage 

3 contemporaneously provided to employees of the employer 

4 under the plan, if such exclusion of the employee from cov5 erage under the plan is based on a health status-related 

6 factor with respect to the employee and such employee 

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

8 for coverage under the plan. 

9 ‘‘(c) PROHIBITION OF DISCRIMINATION AGAINST EM10 PLOYERS AND EMPLOYEES ELIGIBLE TO PARTICIPATE.— 

11 The requirements of this subsection are met with respect 

12 to a small business health plan if— 

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

14 meeting the preceding requirements of this section 

15 are eligible to qualify as participating employers for 

16 all geographically available coverage options, unless, 

17 in the case of any such employer, participation or 

18 contribution requirements of the type referred to in 

19 section 2711 of the Public Health Service Act are 

20 not met; 

21 ‘‘(2) information regarding all coverage options 

22 available under the plan is made readily available to 

23 any employer eligible to participate; and 

24 ‘‘(3) the applicable requirements of sections 

25 701, 702, and 703 are met with respect to the plan. 


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

6 the following requirements are met: 

7 ‘‘(1) CONTENTS OF GOVERNING INSTRU8 MENTS.— 

9 ‘‘(A) IN GENERAL.—The instruments gov10 erning the plan include a written instrument, 

11 meeting the requirements of an instrument re12 quired under section 402(a)(1), which— 

13 ‘‘(i) provides that the board of trust14 ees serves as the named fiduciary required 

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

16 serves in the capacity of a plan adminis17 trator (referred to in section 3(16)(A)); 

18 and 

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

20 plan is to serve as plan sponsor (referred 

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

22 ‘‘(B) DESCRIPTION OF MATERIAL PROVI23 SIONS.—The terms of the health insurance cov24 erage (including the terms of any individual 

25 certificates that may be offered to individuals in 

26 connection with such coverage) describe the maVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 terial benefit and rating, and other provisions 

2 set forth in this section and such material pro3 visions are included in the summary plan de4 scription. 

5 ‘‘(2) CONTRIBUTION RATES MUST BE NON6 DISCRIMINATORY.— 

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

8 for any participating small employer shall not 

9 vary on the basis of any health status-related 

10 factor in relation to employees of such employer 

11 or their beneficiaries and shall not vary on the 

12 basis of the type of business or industry in 

13 which such employer is engaged, subject to sub14 paragraph (B) and the terms of this title. 

15 ‘‘(B) EFFECT OF TITLE.—Nothing in this 

16 title or any other provision of law shall be con17 strued to preclude a health insurance issuer of18 fering health insurance coverage in connection 

19 with a small business health plan that meets 

20 the requirements of this part, and at the re21 quest of such small business health plan, 

22 from— 

23 ‘‘(i) setting contribution rates for the 

24 small business health plan based on the 

25 claims experience of the small business 


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1 health plan so long as any variation in 

2 such rates for participating small employ3 ers complies with the requirements of 

4 clause (ii), except that small business 

5 health plans shall not be subject, in non6 adopting States, to subparagraphs (A)(ii) 

7 and (C) of section 2912(a)(2) of the Public 

8 Health Service Act, and in adopting 

9 States, to any State law that would have 

10 the effect of imposing requirements as out11 lined in such subparagraphs (A)(ii) and 

12 (C); or 

13 ‘‘(ii) varying contribution rates for 

14 participating small employers in a small 

15 business health plan in a State to the ex16 tent that such rates could vary using the 

17 same methodology employed in such State 

18 for regulating small group premium rates, 

19 subject to the terms of part I of subtitle A 

20 of title XXXI of the Public Health Service 

21 Act (relating to rating requirements), as 

22 added by subtitle B of title II of the 

23 Health Security for All Americans Act of 

24 2009. 


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1 ‘‘(3) EXCEPTIONS REGARDING SELF-EMPLOYED

2 AND LARGE EMPLOYERS.— 

3 ‘‘(A) SELF-EMPLOYED.— 

4 ‘‘(i) IN GENERAL.—Small business 

5 health plans with participating employers 

6 who are self-employed individuals (and 

7 their dependents) shall enroll such self-em8 ployed participating employers in accord9 ance with rating rules that do not violate 

10 the rating rules for self-employed individ11 uals in the State in which such self-em12 ployed participating employers are located. 

13 ‘‘(ii) GUARANTEE ISSUE.—Small busi14 ness health plans with participating em15 ployers who are self-employed individuals 

16 (and their dependents) may decline to 

17 guarantee issue to such participating em18 ployers in States in which guarantee issue 

19 is not otherwise required for the self-em20 ployed in that State. 

21 ‘‘(B) LARGE EMPLOYERS.—Small business 

22 health plans with participating employers that 

23 are larger than small employers (as defined in 

24 section 808(a)(10)) shall enroll such large par25 ticipating employers in accordance with rating 


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1 rules that do not violate the rating rules for 

2 large employers in the State in which such large 

3 participating employers are located. 

4 ‘‘(4) REGULATORY REQUIREMENTS.—Such 

5 other requirements as the applicable authority deter6 mines are necessary to carry out the purposes of this 

7 part, which shall be prescribed by the applicable au8 thority by regulation. 

9 ‘‘(b) ABILITY OF SMALL BUSINESS HEALTH PLANS

10 TO DESIGN BENEFIT OPTIONS.—Nothing in this part or 

11 any provision of State law (as defined in section 

12 514(c)(1)) shall be construed to preclude a small business 

13 health plan or a health insurance issuer offering health 

14 insurance coverage in connection with a small business 

15 health plan from exercising its sole discretion in selecting 

16 the specific benefits and services consisting of medical care 

17 to be included as benefits under such plan or coverage, 

18 except that such benefits and services must meet the terms 

19 and specifications of part II of subtitle A of title XXXI 

20 of the Public Health Service Act (relating to lower cost 

21 plans), as added by subtitle B of title II of the Health 

22 Security for All Americans Act of 2009. 

23 ‘‘(c) DOMICILE AND NON-DOMICILE STATES.— 

24 ‘‘(1) DOMICILE STATE.—Coverage shall be 

25 issued to a small business health plan in the State 


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1 in which the sponsor’s principal place of business is 

2 located. 

3 ‘‘(2) NON-DOMICILE STATES.—With respect to 

4 a State (other than the domicile State) in which par5 ticipating employers of a small business health plan 

6 are located but in which the insurer of the small 

7 business health plan in the domicile State is not yet 

8 licensed, the following shall apply: 

9 ‘‘(A) TEMPORARY PREEMPTION.—If, upon 

10 the expiration of the 90-day period following 

11 the submission of a licensure application by 

12 such insurer (that includes a certified copy of 

13 an approved licensure application as submitted 

14 by such insurer in the domicile State) to such 

15 State, such State has not approved or denied 

16 such application, such State’s health insurance 

17 licensure laws shall be temporarily preempted 

18 and the insurer shall be permitted to operate in 

19 such State, subject to the following terms: 

20 ‘‘(i) APPLICATION OF NON-DOMICILE

21 STATE LAW.—Except with respect to licen22 sure and with respect to the terms of sub23 title A of title XXXI of the Public Health 

24 Service Act (relating to rating and benefits 

25 as added by subtitle B of title II of the 


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1 Health Security for All Americans Act of 

2 2009), the laws and authority of the non3 domicile State shall remain in full force 

4 and effect. 

5 ‘‘(ii) REVOCATION OF PREEMPTION.— 

6 The preemption of a non-domicile State’s 

7 health insurance licensure laws pursuant to 

8 this subparagraph, shall be terminated 

9 upon the occurrence of either of the fol10 lowing: 

11 ‘‘(I) APPROVAL OR DENIAL OF

12 APPLICATION.—The approval of denial 

13 of an insurer’s licensure application, 

14 following the laws and regulations of 

15 the non-domicile State with respect to 

16 licensure. 

17 ‘‘(II) DETERMINATION OF MATE18 RIAL VIOLATION.—A determination by 

19 a non-domicile State that an insurer 

20 operating in a non-domicile State pur21 suant to the preemption provided for 

22 in this subparagraph is in material 

23 violation of the insurance laws (other 

24 than licensure and with respect to the 

25 terms of subtitle A of title XXXI of 


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1 the Public Health Service Act (relat2 ing to rating and benefits added by 

3 subtitle B of title II of the Health Se4 curity for All Americans Act of 2009)) 

5 of such State. 

6 ‘‘(B) NO PROHIBITION ON PROMOTION.— 

7 Nothing in this paragraph shall be construed to 

8 prohibit a small business health plan or an in9 surer from promoting coverage prior to the ex10 piration of the 90-day period provided for in 

11 subparagraph (A), except that no enrollment or 

12 collection of contributions shall occur before the 

13 expiration of such 90-day period. 

14 ‘‘(C) LICENSURE.—Except with respect to 

15 the application of the temporary preemption 

16 provision of this paragraph, nothing in this part 

17 shall be construed to limit the requirement that 

18 insurers issuing coverage to small business 

19 health plans shall be licensed in each State in 

20 which the small business health plans operate. 

21 ‘‘(D) SERVICING BY LICENSED INSUR22 ERS.—Notwithstanding subparagraph (C), the 

23 requirements of this subsection may also be sat24 isfied if the participating employers of a small 

25 business health plan are serviced by a licensed 


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1 insurer in that State, even where such insurer 

2 is not the insurer of such small business health 

3 plan in the State in which such small business 

4 health plan is domiciled. 

5 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE6 LATED REQUIREMENTS. 

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

8 pursuant to section 802(a), a small business health plan 

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

10 an application for certification under this part a filing fee 

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

12 case of the Secretary, to the extent provided in appropria13 tion Acts, for the sole purpose of administering the certifi14 cation procedures applicable with respect to small business 

15 health plans. 

16 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA17 TION FOR CERTIFICATION.—An application for certifi18 cation under this part meets the requirements of this sec19 tion only if it includes, in a manner and form which shall 

20 be prescribed by the applicable authority by regulation, at 

21 least the following information: 

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

23 and addresses of— 

24 ‘‘(A) the sponsor; and 


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

2 of the plan. 

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

4 BUSINESS.—The States in which participants and 

5 beneficiaries under the plan are to be located and 

6 the number of them expected to be located in each 

7 such State. 

8 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro9 vided by the board of trustees that the bonding re10 quirements of section 412 will be met as of the date 

11 of the application or (if later) commencement of op12 erations. 

13 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu14 ments governing the plan (including any bylaws and 

15 trust agreements), the summary plan description, 

16 and other material describing the benefits that will 

17 be provided to participants and beneficiaries under 

18 the plan. 

19 ‘‘(5) AGREEMENTS WITH SERVICE PRO20 VIDERS.—A copy of any agreements between the 

21 plan, health insurance issuer, and contract adminis22 trators and other service providers. 

23 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

24 STATES.—A certification granted under this part to a 

25 small business health plan shall not be effective unless 


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1 written notice of such certification is filed with the appli2 cable State authority of each State in which the small 

3 business health plans operate. 

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

5 of any small business 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 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER15 MINATION. 

16 ‘‘A small business health plan which is or has been 

17 certified under this part may terminate (upon or at any 

18 time after cessation of accruals in benefit liabilities) only 

19 if the board of trustees, not less than 60 days before the 

20 proposed termination date— 

21 ‘‘(1) provides to the participants and bene22 ficiaries a written notice of intent to terminate stat23 ing that such termination is intended and the pro24 posed termination date; 


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

2 of the plan in connection with such termination in 

3 a manner which will result in timely payment of all 

4 benefits for which the plan is obligated; and 

5 ‘‘(3) submits such plan in writing to the appli6 cable authority. 

7 Actions required under this section shall be taken in such 

8 form and manner as may be prescribed by the applicable 

9 authority by regulation. 

10 ‘‘SEC. 809. IMPLEMENTATION AND APPLICATION AUTHOR11 ITY BY SECRETARY. 

12 ‘‘The Secretary shall, through promulgation and im13 plementation of such regulations as the Secretary may 

14 reasonably determine necessary or appropriate, and in 

15 consultation with a balanced spectrum of effected entities 

16 and persons, modify the implementation and application 

17 of this part to accommodate with minimum disruption 

18 such changes to State or Federal law provided in this part 

19 and the (and the amendments made by such Act) or in 

20 regulations issued thereto. 

21 ‘‘SEC. 810. DEFINITIONS AND RULES OF CONSTRUCTION. 

22 ‘‘(a) DEFINITIONS.—For purposes of this part— 

23 ‘‘(1) AFFILIATED MEMBER.—The term ‘affili24 ated member’ means, in connection with a sponsor— 


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1 ‘‘(A) a person who is otherwise eligible to 

2 be a member of the sponsor but who elects an 

3 affiliated status with the sponsor, or 

4 ‘‘(B) in the case of a sponsor with mem5 bers which consist of associations, a person who 

6 is a member or employee of any such associa7 tion and elects an affiliated status with the 

8 sponsor. 

9 ‘‘(2) APPLICABLE AUTHORITY.—The term ‘ap10 plicable authority’ means the Secretary of Labor, ex11 cept that, in connection with any exercise of the Sec12 retary’s authority with respect to which the Sec13 retary is required under section 506(d) to consult 

14 with a State, such term means the Secretary, in con15 sultation with such State. 

16 ‘‘(3) APPLICABLE STATE AUTHORITY.—The 

17 term ‘applicable State authority’ means, with respect 

18 to a health insurance issuer in a State, the State in19 surance commissioner or official or officials des20 ignated by the State to enforce the requirements of 

21 title XXVII of the Public Health Service Act for the 

22 State involved with respect to such issuer. 

23 ‘‘(4) GROUP HEALTH PLAN.—The term ‘group 

24 health plan’ has the meaning provided in section 


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1 733(a)(1) (after applying subsection (b) of this sec2 tion). 

3 ‘‘(5) HEALTH INSURANCE COVERAGE.—The 

4 term ‘health insurance coverage’ has the meaning 

5 provided in section 733(b)(1), except that such term 

6 shall not include excepted benefits (as defined in sec7 tion 733(c)). 

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

9 ‘health insurance issuer’ has the meaning provided 

10 in section 733(b)(2). 

11 ‘‘(7) INDIVIDUAL MARKET.— 

12 ‘‘(A) IN GENERAL.—The term ‘individual 

13 market’ means the market for health insurance 

14 coverage offered to individuals other than in 

15 connection with a group health plan. 

16 ‘‘(B) TREATMENT OF VERY SMALL

17 GROUPS.— 

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

19 (ii), such term includes coverage offered in 

20 connection with a group health plan that 

21 has fewer than 2 participants as current 

22 employees or participants described in sec23 tion 732(d)(3) on the first day of the plan 

24 year. 


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1 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

2 shall not apply in the case of health insur3 ance coverage offered in a State if such 

4 State regulates the coverage described in 

5 such clause in the same manner and to the 

6 same extent as coverage in the small group 

7 market (as defined in section 2791(e)(5) of 

8 the Public Health Service Act) is regulated 

9 by such State. 

10 ‘‘(8) MEDICAL CARE.—The term ‘medical care’ 

11 has the meaning provided in section 733(a)(2). 

12 ‘‘(9) PARTICIPATING EMPLOYER.—The term 

13 ‘participating employer’ means, in connection with a 

14 small business health plan, any employer, if any in15 dividual who is an employee of such employer, a 

16 partner in such employer, or a self-employed indi17 vidual who is such employer (or any dependent, as 

18 defined under the terms of the plan, of such indi19 vidual) is or was covered under such plan in connec20 tion with the status of such individual as such an 

21 employee, partner, or self-employed individual in re22 lation to the plan. 

23 ‘‘(10) SMALL EMPLOYER.—The term ‘small em24 ployer’ means, in connection with a group health 


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1 plan with respect to a plan year, a small employer 

2 as defined in section 2791(e)(4). 

3 ‘‘(11) TRADE ASSOCIATION AND PROFESSIONAL

4 ASSOCIATION.—The terms ‘trade association’ and 

5 ‘professional association’ mean an entity that meets 

6 the requirements of section 1.501(c)(6)–1 of title 26, 

7 Code of Federal Regulations (as in effect on the 

8 date of enactment of this Act). 

9 ‘‘(b) RULE OF CONSTRUCTION.—For purposes of de10 termining whether a plan, fund, or program is an em11 ployee welfare benefit plan which is a small business 

12 health plan, and for purposes of applying this title in con13 nection with such plan, fund, or program so determined 

14 to be such an employee welfare benefit plan— 

15 ‘‘(1) in the case of a partnership, the term ‘em16 ployer’ (as defined in section 3(5)) includes the part17 nership in relation to the partners, and the term 

18 ‘employee’ (as defined in section 3(6)) includes any 

19 partner in relation to the partnership; and 

20 ‘‘(2) in the case of a self-employed individual, 

21 the term ‘employer’ (as defined in section 3(5)) and 

22 the term ‘employee’ (as defined in section 3(6)) shall 

23 include such individual. 

24 ‘‘(c) RENEWAL.—Notwithstanding any provision of 

25 law to the contrary, a participating employer in a small 


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1 business health plan shall not be deemed to be a plan 

2 sponsor in applying requirements relating to coverage re3 newal. 

4 ‘‘(d) HEALTH SAVINGS ACCOUNTS.—Nothing in this 

5 part shall be construed to create any mandates for cov6 erage of benefits for HSA-qualified health plans that 

7 would require reimbursements in violation of section 

8 223(c)(2) of the Internal Revenue Code of 1986.’’. 

9 (b) CONFORMING AMENDMENTS TO PREEMPTION

10 RULES.— 

11 (1) Section 514(b)(6) of such Act (29 U.S.C. 

12 1144(b)(6)) is amended by adding at the end the 

13 following new subparagraph: 

14 ‘‘(E) The preceding subparagraphs of this paragraph 

15 do not apply with respect to any State law in the case 

16 of a small business health plan which is certified under 

17 part 8.’’. 

18 (2) Section 514 of such Act (29 U.S.C. 1144) 

19 is amended— 

20 (A) in subsection (b)(4), by striking ‘‘Sub21 section (a)’’ and inserting ‘‘Subsections (a) and 

22 (d)’’; 

23 (B) in subsection (b)(5), by striking ‘‘sub24 section (a)’’ in subparagraph (A) and inserting 

25 ‘‘subsection (a) of this section and subsections 


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1 (a)(2)(B) and (b) of section 805’’, and by strik2 ing ‘‘subsection (a)’’ in subparagraph (B) and 

3 inserting ‘‘subsection (a) of this section or sub4 section (a)(2)(B) or (b) of section 805’’; 

5 (C) by redesignating subsection (d) as sub6 section (e); and 

7 (D) by inserting after subsection (c) the 

8 following new subsection: 

9 ‘‘(d)(1) Except as provided in subsection (b)(4), the 

10 provisions of this title shall supersede any and all State 

11 laws insofar as they may now or hereafter preclude a 

12 health insurance issuer from offering health insurance cov13 erage in connection with a small business health plan 

14 which is certified under part 8. 

15 ‘‘(2) In any case in which health insurance coverage 

16 of any policy type is offered under a small business health 

17 plan certified under part 8 to a participating employer op18 erating in such State, the provisions of this title shall su19 persede any and all laws of such State insofar as they may 

20 establish rating and benefit requirements that would oth21 erwise apply to such coverage, provided the requirements 

22 of subtitle A of title XXXI of the Public Health Service 

23 Act (as added by title II of the Health Security for All 

24 Americans Act of 2009) (concerning health plan rating 

25 and benefits) are met.’’. 


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1 (c) PLAN SPONSOR.—Section 3(16)(B) of such Act 

2 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

3 the following new sentence: ‘‘Such term also includes a 

4 person serving as the sponsor of a small business health 

5 plan under part 8.’’. 

6 (d) SAVINGS CLAUSE.—Section 731(c) of such Act 

7 is amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 

8 (e) CLERICAL AMENDMENT.—The table of contents 

9 in section 1 of the Employee Retirement Income Security 

10 Act of 1974 is amended by inserting after the item relat11 ing to section 734 the following new items: 

‘‘PART 8—RULES GOVERNING SMALL BUSINESS HEALTH PLANS

‘‘801. Small business health plans. 

‘‘802. Alternative market pooling organizations. 

‘‘803. Certification of small business health plans. 

‘‘804. Requirements relating to sponsors and boards of trustees. 

‘‘805. Participation and coverage requirements. 

‘‘806. Other requirements relating to plan documents, contribution rates, and 

benefit options. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Implementation and application authority by Secretary. 

‘‘810. Definitions and rules of construction.’’. 

12 SEC. 202. COOPERATION BETWEEN FEDERAL AND STATE 

13 AUTHORITIES. 

14 Section 506 of the Employee Retirement Income Se15 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

16 at the end the following new subsection: 

17 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

18 TO SMALL BUSINESS HEALTH PLANS.— 


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1 ‘‘(1) AGREEMENTS WITH STATES.—The Sec2 retary shall consult with the State recognized under 

3 paragraph (2) with respect to a small business 

4 health plan regarding the exercise of— 

5 ‘‘(A) the Secretary’s authority under sec6 tions 502 and 504 to enforce the requirements 

7 for certification under part 8; and 

8 ‘‘(B) the Secretary’s authority to certify 

9 small business health plans under part 8 in ac10 cordance with regulations of the Secretary ap11 plicable to certification under part 8. 

12 ‘‘(2) RECOGNITION OF DOMICILE STATE.—In 

13 carrying out paragraph (1), the Secretary shall en14 sure that only one State will be recognized, with re15 spect to any particular small business health plan, 

16 as the State with which consultation is required. In 

17 carrying out this paragraph such State shall be the 

18 domicile State, as defined in section 805(c).’’. 

19 SEC. 203. EFFECTIVE DATE AND TRANSITIONAL AND 

20 OTHER RULES. 

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

22 this subtitle shall take effect 12 months after the date of 

23 the enactment of this Act. The Secretary of Labor shall 

24 first issue all regulations necessary to carry out the 


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1 amendments made by this subtitle within 6 months after 

2 the date of the enactment of this Act. 

3 (b) TREATMENT OF CERTAIN EXISTING HEALTH

4 BENEFITS PROGRAMS.— 

5 (1) IN GENERAL.—In any case in which, as of 

6 the date of the enactment of this Act, an arrange7 ment is maintained in a State for the purpose of 

8 providing benefits consisting of medical care for the 

9 employees and beneficiaries of its participating em10 ployers, at least 200 participating employers make 

11 contributions to such arrangement, such arrange12 ment has been in existence for at least 10 years, and 

13 such arrangement is licensed under the laws of one 

14 or more States to provide such benefits to its par15 ticipating employers, upon the filing with the appli16 cable authority (as defined in section 808(a)(2) of 

17 the Employee Retirement Income Security Act of 

18 1974 (as amended by this subtitle)) by the arrange19 ment of an application for certification of the ar20 rangement under part 8 of subtitle B of title I of 

21 such Act— 

22 (A) such arrangement shall be deemed to 

23 be a group health plan for purposes of title I 

24 of such Act; 


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1 (B) the requirements of sections 801(a) 

2 and 803(a) of the Employee Retirement Income 

3 Security Act of 1974 shall be deemed met with 

4 respect to such arrangement; 

5 (C) the requirements of section 803(b) of 

6 such Act shall be deemed met, if the arrange7 ment is operated by a board of trustees which 

8 has control over the arrangement; 

9 (D) the requirements of section 804(a) of 

10 such Act shall be deemed met with respect to 

11 such arrangement; and 

12 (E) the arrangement may be certified by 

13 any applicable authority with respect to its op14 erations in any State only if it operates in such 

15 State on the date of certification. 

16 The provisions of this subsection shall cease to apply 

17 with respect to any such arrangement at such time 

18 after the date of the enactment of this Act as the 

19 applicable requirements of this subsection are not 

20 met with respect to such arrangement or at such 

21 time that the arrangement provides coverage to par22 ticipants and beneficiaries in any State other than 

23 the States in which coverage is provided on such 

24 date of enactment. 


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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 808 of the Employee 

5 Retirement Income Security Act of 1974, except 

6 that the reference in paragraph (7) of such section 

7 to an ‘‘small business health plan’’ shall be deemed 

8 a reference to an arrangement referred to in this 

9 subsection. 

10 Subtitle B—Market Relief 

11 SEC. 211. MARKET RELIEF. 

12 The Public Health Service Act (42 U.S.C. 201 et 

13 seq.) is amended by adding at the end the following: 

14 ‘‘TITLE XXXI—HEALTH CARE IN15 SURANCE MARKETPLACE 

16 MODERNIZATION 

17 ‘‘SEC. 3101. GENERAL INSURANCE DEFINITIONS. 

18 ‘‘In this title, the terms ‘health insurance coverage’, 

19 ‘health insurance issuer’, ‘group health plan’, and ‘indi20 vidual health insurance’ shall have the meanings given 

21 such terms in section 2791. 

22 ‘‘SEC. 3102. IMPLEMENTATION AND APPLICATION AUTHOR23 ITY BY SECRETARY. 

24 ‘‘The Secretary shall, through promulgation and im25 plementation of such regulations as the Secretary may 


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1 reasonably determine necessary or appropriate, and in 

2 consultation with a balanced spectrum of effected entities 

3 and persons, modify the implementation and application 

4 of this title to accommodate with minimum disruption 

5 such changes to State or Federal law provided in this title 

6 and the (and the amendments made by such Act) or in 

7 regulations issued thereto. 

8 ‘‘Subtitle A—Market Relief 

9 ‘‘PART I—RATING REQUIREMENTS 

10 ‘‘SEC. 3111. DEFINITIONS. 

11 ‘‘In this part: 

12 ‘‘(1) ADOPTING STATE.—The term ‘adopting 

13 State’ means a State that, with respect to the small 

14 group market, has enacted small group rating rules 

15 that meet the minimum standards set forth in sec16 tion 3112(a)(1) or, as applicable, transitional small 

17 group rating rules set forth in section 3112(b). 

18 ‘‘(2) APPLICABLE STATE AUTHORITY.—The 

19 term ‘applicable State authority’ means, with respect 

20 to a health insurance issuer in a State, the State in21 surance commissioner or official or officials des22 ignated by the State to enforce the insurance laws 

23 of such State. 

24 ‘‘(3) BASE PREMIUM RATE.—The term ‘base 

25 premium rate’ means, for each class of business with 


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1 respect to a rating period, the lowest premium rate 

2 charged or that could have been charged under a 

3 rating system for that class of business by the small 

4 employer carrier to small employers with similar 

5 case characteristics for health benefit plans with the 

6 same or similar coverage. 

7 ‘‘(4) ELIGIBLE INSURER.—The term ‘eligible 

8 insurer’ means a health insurance issuer that is li9 censed in a State and that— 

10 ‘‘(A) notifies the Secretary, not later than 

11 30 days prior to the offering of coverage de12 scribed in this subparagraph, that the issuer in13 tends to offer health insurance coverage con14 sistent with the Model Small Group Rating 

15 Rules or, as applicable, transitional small group 

16 rating rules in a State; 

17 ‘‘(B) notifies the insurance department of 

18 a nonadopting State (or other State agency), 

19 not later than 30 days prior to the offering of 

20 coverage described in this subparagraph, that 

21 the issuer intends to offer small group health 

22 insurance coverage in that State consistent with 

23 the Model Small Group Rating Rules, and pro24 vides with such notice a copy of any insurance 

25 policy that it intends to offer in the State, its 


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1 most recent annual and quarterly financial re2 ports, and any other information required to be 

3 filed with the insurance department of the State 

4 (or other State agency); and 

5 ‘‘(C) includes in the terms of the health in6 surance coverage offered in nonadopting States 

7 (including in the terms of any individual certifi8 cates that may be offered to individuals in con9 nection with such group health coverage) and 

10 filed with the State pursuant to subparagraph 

11 (B), a description in the insurer’s contract of 

12 the Model Small Group Rating Rules and an af13 firmation that such Rules are included in the 

14 terms of such contract. 

15 ‘‘(5) HEALTH INSURANCE COVERAGE.—The 

16 term ‘health insurance coverage’ means any coverage 

17 issued in the small group health insurance market, 

18 except that such term shall not include excepted 

19 benefits (as defined in section 2791(c)). 

20 ‘‘(6) INDEX RATE.—The term ‘index rate’ 

21 means for each class of business with respect to the 

22 rating period for small employers with similar case 

23 characteristics, the arithmetic average of the appli24 cable base premium rate and the corresponding 

25 highest premium rate. 


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1 ‘‘(7) MODEL SMALL GROUP RATING RULES.— 

2 The term ‘Model Small Group Rating Rules’ means 

3 the rules set forth in section 3112(a)(2). 

4 ‘‘(8) NONADOPTING STATE.—The term ‘non5 adopting State’ means a State that is not an adopt6 ing State. 

7 ‘‘(9) SMALL GROUP INSURANCE MARKET.—The 

8 term ‘small group insurance market’ shall have the 

9 meaning given the term ‘small group market’ in sec10 tion 2791(e)(5). 

11 ‘‘(10) STATE LAW.—The term ‘State law’ 

12 means all laws, decisions, rules, regulations, or other 

13 State actions (including actions by a State agency) 

14 having the effect of law, of any State. 

15 ‘‘(11) VARIATION LIMITS.— 

16 ‘‘(A) COMPOSITE VARIATION LIMIT.— 

17 ‘‘(i) IN GENERAL.—The term ‘com18 posite variation limit’ means the total vari19 ation in premium rates charged by a 

20 health insurance issuer in the small group 

21 market as permitted under applicable State 

22 law based on the following factors or case 

23 characteristics: 

24 ‘‘(I) Age. 

25 ‘‘(II) Duration of coverage. 


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1 ‘‘(III) Claims experience. 

2 ‘‘(IV) Health status. 

3 ‘‘(ii) USE OF FACTORS.—With respect 

4 to the use of the factors described in 

5 clause (i) in setting premium rates, a 

6 health insurance issuer shall use one or 

7 both of the factors described in subclauses 

8 (I) or (IV) of such clause and may use the 

9 factors described in subclauses (II) or (III) 

10 of such clause. 

11 ‘‘(B) TOTAL VARIATION LIMIT.—The term 

12 ‘total variation limit’ means the total variation 

13 in premium rates charged by a health insurance 

14 issuer in the small group market as permitted 

15 under applicable State law based on all factors 

16 and case characteristics (as described in section 

17 3112(a)(1)). 

18 ‘‘SEC. 3112. RATING RULES. 

19 ‘‘(a) ESTABLISHMENT OF MINIMUM STANDARDS FOR

20 PREMIUM VARIATIONS AND MODEL SMALL GROUP RAT21 ING RULES.—Not later than 6 months after the date of 

22 enactment of this title, the Secretary shall promulgate reg23 ulations establishing the following Minimum Standards 

24 and Model Small Group Rating Rules: 


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1 ‘‘(1) MINIMUM STANDARDS FOR PREMIUM VARI2 ATIONS.— 

3 ‘‘(A) COMPOSITE VARIATION LIMIT.—The 

4 composite variation limit shall not be less than 

5 3:1. 

6 ‘‘(B) TOTAL VARIATION LIMIT.—The total 

7 variation limit shall not be less than 5:1. 

8 ‘‘(C) PROHIBITION ON USE OF CERTAIN

9 CASE CHARACTERISTICS.—For purposes of this 

10 paragraph, in calculating the total variation 

11 limit, the State shall not use case characteris12 tics other than those used in calculating the 

13 composite variation limit and industry, geo14 graphic area, group size, participation rate, 

15 class of business, and participation in wellness 

16 programs. 

17 ‘‘(2) MODEL SMALL GROUP RATING RULES.— 

18 The following apply to an eligible insurer in a non19 adopting State: 

20 ‘‘(A) PREMIUM RATES.—Premium rates 

21 for small group health benefit plans to which 

22 this title applies shall comply with the following 

23 provisions relating to premiums, except as pro24 vided for under subsection (b): 


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1 ‘‘(i) VARIATION IN PREMIUM

2 RATES.—The plan may not vary premium 

3 rates by more than the minimum stand4 ards provided for under paragraph (1). 

5 ‘‘(ii) INDEX RATE.—The index rate 

6 for a rating period for any class of busi7 ness shall not exceed the index rate for any 

8 other class of business by more than 20 

9 percent, excluding those classes of business 

10 related to association groups under this 

11 title. 

12 ‘‘(iii) CLASS OF BUSINESSES.—With 

13 respect to a class of business, the premium 

14 rates charged during a rating period to 

15 small employers with similar case charac16 teristics for the same or similar coverage 

17 or the rates that could be charged to such 

18 employers under the rating system for that 

19 class of business, shall not vary from the 

20 index rate by more than 25 percent of the 

21 index rate under clause (ii). 

22 ‘‘(iv) INCREASES FOR NEW RATING

23 PERIODS.—The percentage increase in the 

24 premium rate charged to a small employer 


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1 for a new rating period may not exceed the 

2 sum of the following: 

3 ‘‘(I) The percentage change in 

4 the new business premium rate meas5 ured from the first day of the prior 

6 rating period to the first day of the 

7 new rating period. In the case of a 

8 health benefit plan into which the 

9 small employer carrier is no longer en10 rolling new small employers, the small 

11 employer carrier shall use the percent12 age change in the base premium rate, 

13 except that such change shall not ex14 ceed, on a percentage basis, the 

15 change in the new business premium 

16 rate for the most similar health ben17 efit plan into which the small em18 ployer carrier is actively enrolling new 

19 small employers. 

20 ‘‘(II) Any adjustment, not to ex21 ceed 15 percent annually and adjusted 

22 pro rata for rating periods of less 

23 then 1 year, due to the claim experi24 ence, health status or duration of cov25 erage of the employees or dependents 


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1 of the small employer as determined 

2 from the small employer carrier’s rate 

3 manual for the class of business in4 volved. 

5 ‘‘(III) Any adjustment due to 

6 change in coverage or change in the 

7 case characteristics of the small em8 ployer as determined from the small 

9 employer carrier’s rate manual for the 

10 class of business. 

11 ‘‘(v) UNIFORM APPLICATION OF AD12 JUSTMENTS.—Adjustments in premium 

13 rates for claim experience, health status, or 

14 duration of coverage shall not be charged 

15 to individual employees or dependents. Any 

16 such adjustment shall be applied uniformly 

17 to the rates charged for all employees and 

18 dependents of the small employer. 

19 ‘‘(vi) PROHIBITION ON USE OF CER20 TAIN CASE CHARACTERISTIC.—A small em21 ployer carrier shall not utilize case charac22 teristics, other than those permitted under 

23 paragraph (1)(C), without the prior ap24 proval of the applicable State authority. 


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1 ‘‘(vii) CONSISTENT APPLICATION OF

2 FACTORS.—Small employer carriers shall 

3 apply rating factors, including case charac4 teristics, consistently with respect to all 

5 small employers in a class of business. 

6 Rating factors shall produce premiums for 

7 identical groups which differ only by the 

8 amounts attributable to plan design and do 

9 not reflect differences due to the nature of 

10 the groups assumed to select particular 

11 health benefit plans. 

12 ‘‘(viii) TREATMENT OF PLANS AS HAV13 ING SAME RATING PERIOD.—A small em14 ployer carrier shall treat all health benefit 

15 plans issued or renewed in the same cal16 endar month as having the same rating pe17 riod. 

18 ‘‘(ix) REQUIRE COMPLIANCE.—Pre19 mium rates for small business health ben20 efit plans shall comply with the require21 ments of this subsection notwithstanding 

22 any assessments paid or payable by a small 

23 employer carrier as required by a State’s 

24 small employer carrier reinsurance pro25 gram. 


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1 ‘‘(B) ESTABLISHMENT OF SEPARATE

2 CLASS OF BUSINESS.—Subject to subparagraph 

3 (C), a small employer carrier may establish a 

4 separate class of business only to reflect sub5 stantial differences in expected claims experi6 ence or administrative costs related to the fol7 lowing: 

8 ‘‘(i) The small employer carrier uses 

9 more than one type of system for the mar10 keting and sale of health benefit plans to 

11 small employers. 

12 ‘‘(ii) The small employer carrier has 

13 acquired a class of business from another 

14 small employer carrier. 

15 ‘‘(iii) The small employer carrier pro16 vides coverage to one or more association 

17 groups that meet the requirements of this 

18 title. 

19 ‘‘(C) LIMITATION.—A small employer car20 rier may establish up to 9 separate classes of 

21 business under subparagraph (B), excluding 

22 those classes of business related to association 

23 groups under this title. 

24 ‘‘(D) LIMITATION ON TRANSFERS.—A 

25 small employer carrier shall not transfer a 


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1 small employer involuntarily into or out of a 

2 class of business. A small employer carrier shall 

3 not offer to transfer a small employer into or 

4 out of a class of business unless such offer is 

5 made to transfer all small employers in the 

6 class of business without regard to case charac7 teristics, claim experience, health status or du8 ration of coverage since issue. 

9 ‘‘(b) TRANSITIONAL MODEL SMALL GROUP RATING

10 RULES.— 

11 ‘‘(1) IN GENERAL.—Not later than 6 months 

12 after the date of enactment of this title and to the 

13 extent necessary to provide for a graduated transi14 tion to the minimum standards for premium vari15 ation as provided for in subsection (a)(1), the Sec16 retary, in consultation with the National Association 

17 of Insurance Commissioners (NAIC), shall promul18 gate State-specific transitional small group rating 

19 rules in accordance with this subsection, which shall 

20 be applicable with respect to nonadopting States and 

21 eligible insurers operating in such States for a pe22 riod of not to exceed 3 years from the date of the 

23 promulgation of the minimum standards for pre24 mium variation pursuant to subsection (a). 


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1 ‘‘(2) COMPLIANCE WITH TRANSITIONAL MODEL

2 SMALL GROUP RATING RULES.—During the transi3 tion period described in paragraph (1), a State that, 

4 on the date of enactment of this title, has in effect 

5 a small group rating rules methodology that allows 

6 for a variation that is less than the variation pro7 vided for under subsection (a)(1) (concerning min8 imum standards for premium variation), shall be 

9 deemed to be an adopting State if the State complies 

10 with the transitional small group rating rules as pro11 mulgated by the Secretary pursuant to paragraph 

12 (1). 

13 ‘‘(3) TRANSITIONING OF OLD BUSINESS.— 

14 ‘‘(A) IN GENERAL.—In developing the 

15 transitional small group rating rules under 

16 paragraph (1), the Secretary shall, after con17 sultation with the National Association of In18 surance Commissioners and representatives of 

19 insurers operating in the small group health in20 surance market in nonadopting States, promul21 gate special transition standards with respect to 

22 independent rating classes for old and new busi23 ness, to the extent reasonably necessary to pro24 tect health insurance consumers and to ensure 


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1 a stable and fair transition for old and new 

2 market entrants. 

3 ‘‘(B) PERIOD FOR OPERATION OF INDE4 PENDENT RATING CLASSES.—In developing the 

5 special transition standards pursuant to sub6 paragraph (A), the Secretary shall permit a 

7 carrier in a nonadopting State, at its option, to 

8 maintain independent rating classes for old and 

9 new business for a period of up to 5 years, with 

10 the commencement of such 5-year period to 

11 begin at such time, but not later than the date 

12 that is 3 years after the date of enactment of 

13 this title, as the carrier offers a book of busi14 ness meeting the minimum standards for pre15 mium variation provided for in subsection 

16 (a)(1) or the transitional small group rating 

17 rules under paragraph (1). 

18 ‘‘(4) OTHER TRANSITIONAL AUTHORITY.—In 

19 developing the transitional small group rating rules 

20 under paragraph (1), the Secretary shall provide for 

21 the application of the transitional small group rating 

22 rules in transition States as the Secretary may de23 termine necessary for a an effective transition. 

24 ‘‘(c) MARKET RE-ENTRY.— 


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1 ‘‘(1) IN GENERAL.—Notwithstanding any other 

2 provision of law, a health insurance issuer that has 

3 voluntarily withdrawn from providing coverage in the 

4 small group market prior to the date of enactment 

5 of this title shall not be excluded from re-entering 

6 such market on a date that is more than 180 days 

7 after such date of enactment. 

8 ‘‘(2) TERMINATION.—The provision of this sub9 section shall terminate on the date that is 24 

10 months after the date of enactment of this title. 

11 ‘‘SEC. 3113. APPLICATION AND PREEMPTION. 

12 ‘‘(a) SUPERSEDING OF STATE LAW.— 

13 ‘‘(1) IN GENERAL.—This part shall supersede 

14 any and all State laws of a nonadopting State inso15 far as such State laws (whether enacted prior to or 

16 after the date of enactment of this subtitle) relate to 

17 rating in the small group insurance market as ap18 plied to an eligible insurer, or small group health in19 surance coverage issued by an eligible insurer, in20 cluding with respect to coverage issued to a small 

21 employer through a small business health plan, in a 

22 State. 

23 ‘‘(2) NONADOPTING STATES.—This part shall 

24 supersede any and all State laws of a nonadopting 

25 State insofar as such State laws (whether enacted 


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1 prior to or after the date of enactment of this sub2 title)— 

3 ‘‘(A) prohibit an eligible insurer from of4 fering, marketing, or implementing small group 

5 health insurance coverage consistent with the 

6 Model Small Group Rating Rules or transitional 

7 model small group rating rules; or 

8 ‘‘(B) have the effect of retaliating against 

9 or otherwise punishing in any respect an eligible 

10 insurer for offering, marketing, or imple11 menting small group health insurance coverage 

12 consistent with the Model Small Group Rating 

13 Rules or transitional model small group rating 

14 rules. 

15 ‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 

16 ‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 

17 Subsection (a) shall not apply with respect to adopt18 ing states. 

19 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR20 ERS.—Subsection (a) shall not apply with respect to 

21 insurers that do not qualify as eligible insurers that 

22 offer small group health insurance coverage in a 

23 nonadopting State. 

24 ‘‘(3) NONAPPLICATION WHERE OBTAINING RE25 LIEF UNDER STATE LAW.—Subsection (a)(1) shall 


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1 not supercede any State law in a nonadopting State 

2 to the extent necessary to permit individuals or the 

3 insurance department of the State (or other State 

4 agency) to obtain relief under State law to require 

5 an eligible insurer to comply with the Model Small 

6 Group Rating Rules or transitional model small 

7 group rating rules. 

8 ‘‘(4) NO EFFECT ON PREEMPTION.—In no case 

9 shall this part be construed to limit or affect in any 

10 manner the preemptive scope of sections 502 and 

11 514 of the Employee Retirement Income Security 

12 Act of 1974. In no case shall this part be construed 

13 to create any cause of action under Federal or State 

14 law or enlarge or affect any remedy available under 

15 the Employee Retirement Income Security Act of 

16 1974. 

17 ‘‘(5) PREEMPTION LIMITED TO RATING.—Sub18 section (a) shall not preempt any State law that 

19 does not have a reference to or a connection with 

20 State rating rules that would otherwise apply to eli21 gible insurers. 

22 ‘‘(c) EFFECTIVE DATE.—This section shall apply, at 

23 the election of the eligible insurer, beginning in the first 

24 plan year or the first calendar year following the issuance 

25 of the final rules by the Secretary under the Model Small 


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1 Group Rating Rules or, as applicable, the Transitional 

2 Model Small Group Rating Rules, but in no event earlier 

3 than the date that is 12 months after the date of enact4 ment of this title. 

5 ‘‘SEC. 3114. CIVIL ACTIONS AND JURISDICTION. 

6 ‘‘(a) IN GENERAL.—The courts of the United States 

7 shall have exclusive jurisdiction over civil actions involving 

8 the interpretation of this part. 

9 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac10 tion in the district courts of the United States for injunc11 tive or other equitable relief against any officials or agents 

12 of a nonadopting State in connection with any conduct or 

13 action, or proposed conduct or action, by such officials or 

14 agents which violates, or which would if undertaken vio15 late, section 3113. 

16 ‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 

17 election of the eligible insurer, an action may be brought 

18 under subsection (b) directly in the United States Court 

19 of Appeals for the circuit in which the nonadopting State 

20 is located by the filing of a petition for review in such 

21 Court. 

22 ‘‘(d) EXPEDITED REVIEW.— 

23 ‘‘(1) DISTRICT COURT.—In the case of an ac24 tion brought in a district court of the United States 

25 under subsection (b), such court shall complete such 


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1 action, including the issuance of a judgment, prior 

2 to the end of the 120-day period beginning on the 

3 date on which such action is filed, unless all parties 

4 to such proceeding agree to an extension of such pe5 riod. 

6 ‘‘(2) COURT OF APPEALS.—In the case of an 

7 action brought directly in a United States Court of 

8 Appeal under subsection (c), or in the case of an ap9 peal of an action brought in a district court under 

10 subsection (b), such Court shall complete all action 

11 on the petition, including the issuance of a judg12 ment, prior to the end of the 60-day period begin13 ning on the date on which such petition is filed with 

14 the Court, unless all parties to such proceeding 

15 agree to an extension of such period. 

16 ‘‘(e) STANDARD OF REVIEW.—A court in an action 

17 filed under this section, shall render a judgment based on 

18 a review of the merits of all questions presented in such 

19 action and shall not defer to any conduct or action, or 

20 proposed conduct or action, of a nonadopting State. 

21 ‘‘SEC. 3115. ONGOING REVIEW. 

22 ‘‘Not later than 5 years after the date on which the 

23 Model Small Group Rating Rules are issued under this 

24 part, and every 5 years thereafter, the Secretary, in con25 sultation with the National Association of Insurance ComVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00065 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 missioners, shall prepare and submit to the appropriate 

2 committees of Congress a report that assesses the effect 

3 of the Model Small Group Rating Rules on access, cost, 

4 and market functioning in the small group market. Such 

5 report may, if the Secretary, in consultation with the Na6 tional Association of Insurance Commissioners, deter7 mines such is appropriate for improving access, costs, and 

8 market functioning, contain legislative proposals for rec9 ommended modification to such Model Small Group Rat10 ing Rules. 

11 ‘‘PART II—AFFORDABLE PLANS 

12 ‘‘SEC. 3121. DEFINITIONS. 

13 ‘‘In this part: 

14 ‘‘(1) ADOPTING STATE.—The term ‘adopting 

15 State’ means a State that has enacted a law pro16 viding that small group, individual, and large group 

17 health insurers in such State may offer and sell 

18 products in accordance with the List of Required 

19 Benefits and the Terms of Application as provided 

20 for in section 3122(b). 

21 ‘‘(2) ELIGIBLE INSURER.—The term ‘eligible 

22 insurer’ means a health insurance issuer that is li23 censed in a nonadopting State and that— 

24 ‘‘(A) notifies the Secretary, not later than 

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1 scribed in this subparagraph, that the issuer in2 tends to offer health insurance coverage con3 sistent with the List of Required Benefits and 

4 Terms of Application in a nonadopting State; 

5 ‘‘(B) notifies the insurance department of 

6 a nonadopting State (or other applicable State 

7 agency), not later than 30 days prior to the of8 fering of coverage described in this subpara9 graph, that the issuer intends to offer health in10 surance coverage in that State consistent with 

11 the List of Required Benefits and Terms of Ap12 plication, and provides with such notice a copy 

13 of any insurance policy that it intends to offer 

14 in the State, its most recent annual and quar15 terly financial reports, and any other informa16 tion required to be filed with the insurance de17 partment of the State (or other State agency) 

18 by the Secretary in regulations; and 

19 ‘‘(C) includes in the terms of the health in20 surance coverage offered in nonadopting States 

21 (including in the terms of any individual certifi22 cates that may be offered to individuals in con23 nection with such group health coverage) and 

24 filed with the State pursuant to subparagraph 

25 (B), a description in the insurer’s contract of 


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1 the List of Required Benefits and a description 

2 of the Terms of Application, including a de3 scription of the benefits to be provided, and 

4 that adherence to such standards is included as 

5 a term of such contract. 

6 ‘‘(3) HEALTH INSURANCE COVERAGE.—The 

7 term ‘health insurance coverage’ means any coverage 

8 issued in the small group, individual, or large group 

9 health insurance markets, including with respect to 

10 small business health plans, except that such term 

11 shall not include excepted benefits (as defined in sec12 tion 2791(c)). 

13 ‘‘(4) LIST OF REQUIRED BENEFITS.—The term 

14 ‘List of Required Benefits’ means the list issued 

15 under section 3122(a). 

16 ‘‘(5) NONADOPTING STATE.—The term ‘non17 adopting State’ means a State that is not an adopt18 ing State. 

19 ‘‘(6) STATE LAW.—The term ‘State law’ means 

20 all laws, decisions, rules, regulations, or other State 

21 actions (including actions by a State agency) having 

22 the effect of law, of any State. 

23 ‘‘(7) STATE PROVIDER FREEDOM OF CHOICE

24 LAW.—The term ‘State Provider Freedom of Choice 

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1 surance issuer, with respect to health insurance cov2 erage, not discriminate with respect to participation, 

3 reimbursement, or indemnification as to any pro4 vider who is acting within the scope of the provider’s 

5 license or certification under applicable State law. 

6 ‘‘(8) TERMS OF APPLICATION.—The term 

7 ‘Terms of Application’ means terms provided under 

8 section 3122(a). 

9 ‘‘SEC. 3122. OFFERING AFFORDABLE PLANS. 

10 ‘‘(a) LIST OF REQUIRED BENEFITS.—Not later than 

11 3 months after the date of enactment of this title, the Sec12 retary, in consultation with the National Association of In13 surance Commissioners, shall issue by interim final rule 

14 a list (to be known as the ‘List of Required Benefits’) of 

15 covered benefits, services, or categories of providers that 

16 are required to be provided by health insurance issuers, 

17 in each of the small group, individual, and large group 

18 markets, in at least 26 States as a result of the application 

19 of State covered benefit, service, and category of provider 

20 mandate laws. With respect to plans sold to or through 

21 small business health plans, the List of Required Benefits 

22 applicable to the small group market shall apply. 

23 ‘‘(b) TERMS OF APPLICATION.— 

24 ‘‘(1) STATE WITH MANDATES.—With respect to 

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1 egory of provider mandate in effect that is covered 

2 under the List of Required Benefits under sub3 section (a), such State mandate shall, subject to 

4 paragraph (3) (concerning uniform application), 

5 apply to a coverage plan or plan in, as applicable, 

6 the small group, individual, or large group market or 

7 through a small business health plan in such State. 

8 ‘‘(2) STATES WITHOUT MANDATES.—With re9 spect to a State that does not have a covered ben10 efit, service, or category of provider mandate in ef11 fect that is covered under the List of Required Ben12 efits under subsection (a), such mandate shall not 

13 apply, as applicable, to a coverage plan or plan in 

14 the small group, individual, or large group market or 

15 through a small business health plan in such State. 

16 ‘‘(3) UNIFORM APPLICATION OF LAWS.— 

17 ‘‘(A) IN GENERAL.—With respect to a 

18 State described in paragraph (1), in applying a 

19 covered benefit, service, or category of provider 

20 mandate that is on the List of Required Bene21 fits under subsection (a) the State shall permit 

22 a coverage plan or plan offered in the small 

23 group, individual, or large group market or 

24 through a small business health plan in such 

25 State to apply such benefit, service, or category 


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1 of provider coverage in a manner consistent 

2 with the manner in which such coverage is ap3 plied under one of the three most heavily sub4 scribed national health plans offered under the 

5 Federal Employee Health Benefits Program 

6 under chapter 89 of title 5, United States Code 

7 (as determined by the Secretary in consultation 

8 with the Director of the Office of Personnel 

9 Management), and consistent with the Publica10 tion of Benefit Applications under subsection 

11 (c). In the event a covered benefit, service, or 

12 category of provider appearing in the List of 

13 Required Benefits is not offered in one of the 

14 three most heavily subscribed national health 

15 plans offered under the Federal Employees 

16 Health Benefits Program, such covered benefit, 

17 service, or category of provider requirement 

18 shall be applied in a manner consistent with the 

19 manner in which such coverage is offered in the 

20 remaining most heavily subscribed plan of the 

21 remaining Federal Employees Health Benefits 

22 Program plans, as determined by the Secretary, 

23 in consultation with the Director of the Office 

24 of Personnel Management. 


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1 ‘‘(B) EXCEPTION REGARDING STATE PRO2 VIDER FREEDOM OF CHOICE LAWS.—Notwith3 standing subparagraph (A), in the event a cat4 egory of provider mandate is included in the 

5 List of Covered Benefits, any State Provider 

6 Freedom of Choice Law (as defined in section 

7 3121(7)) that is in effect in any State in which 

8 such category of provider mandate is in effect 

9 shall not be preempted, with respect to that cat10 egory of provider, by this part. 

11 ‘‘(c) PUBLICATION OF BENEFIT APPLICATIONS.— 

12 Not later than 3 months after the date of enactment of 

13 this title, and on the first day of every calendar year there14 after, the Secretary, in consultation with the Director of 

15 the Office of Personnel Management, shall publish in the 

16 Federal Register a description of such covered benefits, 

17 services, and categories of providers covered in that cal18 endar year by each of the three most heavily subscribed 

19 nationally available Federal Employee Health Benefits 

20 Plan options which are also included on the List of Re21 quired Benefits. 

22 ‘‘(d) EFFECTIVE DATES.— 

23 ‘‘(1) SMALL BUSINESS HEALTH PLANS.—With 

24 respect to health insurance provided to participating 

25 employers of small business health plans, the reVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00072 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 quirements of this part (concerning lower cost plans) 

2 shall apply beginning on the date that is 12 months 

3 after the date of enactment of this title. 

4 ‘‘(2) NON-ASSOCIATION COVERAGE.—With re5 spect to health insurance provided to groups or indi6 viduals other than participating employers of small 

7 business health plans, the requirements of this part 

8 shall apply beginning on the date that is 15 months 

9 after the date of enactment of this title. 

10 ‘‘(e) UPDATING OF LIST OF REQUIRED BENEFITS.— 

11 Not later than 2 years after the date on which the List 

12 of Required Benefits is issued under subsection (a), and 

13 every 2 years thereafter, the Secretary, in consultation 

14 with the National Association of Insurance Commis15 sioners, shall update the list based on changes in the laws 

16 and regulations of the States. The Secretary shall issue 

17 the updated list by regulation, and such updated list shall 

18 be effective upon the first plan year following the issuance 

19 of such regulation. 

20 ‘‘SEC. 3123. APPLICATION AND PREEMPTION. 

21 ‘‘(a) SUPERCEDING OF STATE LAW.— 

22 ‘‘(1) IN GENERAL.—This part shall supersede 

23 any and all State laws insofar as such laws relate to 

24 mandates relating to covered benefits, services, or 

25 categories of provider in the health insurance market 


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1 as applied to an eligible insurer, or health insurance 

2 coverage issued by an eligible insurer, including with 

3 respect to coverage issued to a small business health 

4 plan, in a nonadopting State. 

5 ‘‘(2) NONADOPTING STATES.—This part shall 

6 supersede any and all State laws of a nonadopting 

7 State (whether enacted prior to or after the date of 

8 enactment of this title) insofar as such laws— 

9 ‘‘(A) prohibit an eligible insurer from of10 fering, marketing, or implementing health in11 surance coverage consistent with the Benefit 

12 Choice Standards, as provided for in section 

13 3122(a); or 

14 ‘‘(B) have the effect of retaliating against 

15 or otherwise punishing in any respect an eligible 

16 insurer for offering, marketing, or imple17 menting health insurance coverage consistent 

18 with the Benefit Choice Standards. 

19 ‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 

20 ‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 

21 Subsection (a) shall not apply with respect to adopt22 ing States. 

23 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR24 ERS.—Subsection (a) shall not apply with respect to 

25 insurers that do not qualify as eligible insurers who 


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1 offer health insurance coverage in a nonadopting 

2 State. 

3 ‘‘(3) NONAPPLICATION WHERE OBTAINING RE4 LIEF UNDER STATE LAW.—Subsection (a)(1) shall 

5 not supercede any State law of a nonadopting State 

6 to the extent necessary to permit individuals or the 

7 insurance department of the State (or other State 

8 agency) to obtain relief under State law to require 

9 an eligible insurer to comply with the Benefit Choice 

10 Standards. 

11 ‘‘(4) NO EFFECT ON PREEMPTION.—In no case 

12 shall this part be construed to limit or affect in any 

13 manner the preemptive scope of sections 502 and 

14 514 of the Employee Retirement Income Security 

15 Act of 1974. In no case shall this part be construed 

16 to create any cause of action under Federal or State 

17 law or enlarge or affect any remedy available under 

18 the Employee Retirement Income Security Act of 

19 1974. 

20 ‘‘(5) PREEMPTION LIMITED TO BENEFITS.— 

21 Subsection (a) shall not preempt any State law that 

22 does not have a reference to or a connection with 

23 State mandates regarding covered benefits, services, 

24 or categories of providers that would otherwise apply 

25 to eligible insurers. 


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1 ‘‘SEC. 3124. CIVIL ACTIONS AND JURISDICTION. 

2 ‘‘(a) IN GENERAL.—The courts of the United States 

3 shall have exclusive jurisdiction over civil actions involving 

4 the interpretation of this part. 

5 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac6 tion in the district courts of the United States for injunc7 tive or other equitable relief against any officials or agents 

8 of a nonadopting State in connection with any conduct or 

9 action, or proposed conduct or action, by such officials or 

10 agents which violates, or which would if undertaken vio11 late, section 3123. 

12 ‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 

13 election of the eligible insurer, an action may be brought 

14 under subsection (b) directly in the United States Court 

15 of Appeals for the circuit in which the nonadopting State 

16 is located by the filing of a petition for review in such 

17 Court. 

18 ‘‘(d) EXPEDITED REVIEW.— 

19 ‘‘(1) DISTRICT COURT.—In the case of an ac20 tion brought in a district court of the United States 

21 under subsection (b), such court shall complete such 

22 action, including the issuance of a judgment, prior 

23 to the end of the 120-day period beginning on the 

24 date on which such action is filed, unless all parties 

25 to such proceeding agree to an extension of such pe26 riod. 


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1 ‘‘(2) COURT OF APPEALS.—In the case of an 

2 action brought directly in a United States Court of 

3 Appeal under subsection (c), or in the case of an ap4 peal of an action brought in a district court under 

5 subsection (b), such Court shall complete all action 

6 on the petition, including the issuance of a judg7 ment, prior to the end of the 60-day period begin8 ning on the date on which such petition is filed with 

9 the Court, unless all parties to such proceeding 

10 agree to an extension of such period. 

11 ‘‘(e) STANDARD OF REVIEW.—A court in an action 

12 filed under this section, shall render a judgment based on 

13 a review of the merits of all questions presented in such 

14 action and shall not defer to any conduct or action, or 

15 proposed conduct or action, of a nonadopting State. 

16 ‘‘SEC. 3125. RULES OF CONSTRUCTION. 

17 ‘‘(a) IN GENERAL.—Notwithstanding any other pro18 vision of Federal or State law, a health insurance issuer 

19 in an adopting State or an eligible insurer in a non20 adopting State may amend its existing policies to be con21 sistent with the terms of this subtitle (concerning rating 

22 and benefits). 

23 ‘‘(b) HEALTH SAVINGS ACCOUNTS.—Nothing in this 

24 subtitle shall be construed to create any mandates for cov25 erage of benefits for HSA-qualified health plans that 


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1 would require reimbursements in violation of section 

2 223(c)(2) of the Internal Revenue Code of 1986.’’. 

3 Subtitle C—Harmonization of 

4 Health Insurance Standards 

5 SEC. 221. HEALTH INSURANCE STANDARDS HARMONI6 ZATION. 

7 Title XXXI of the Public Health Service Act (as 

8 added by section 211) is amended by adding at the end 

9 the following: 

10 ‘‘Subtitle B—Standards 

11 Harmonization 

12 ‘‘SEC. 3131. DEFINITIONS. 

13 ‘‘In this subtitle: 

14 ‘‘(1) ADOPTING STATE.—The term ‘adopting 

15 State’ means a State that has enacted the har16 monized standards adopted under this subtitle in 

17 their entirety and as the exclusive laws of the State 

18 that relate to the harmonized standards. 

19 ‘‘(2) ELIGIBLE INSURER.—The term ‘eligible 

20 insurer’ means a health insurance issuer that is li21 censed in a nonadopting State and that— 

22 ‘‘(A) notifies the Secretary, not later than 

23 30 days prior to the offering of coverage de24 scribed in this subparagraph, that the issuer in25 tends to offer health insurance coverage conVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00078 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 sistent with the harmonized standards in a non2 adopting State; 

3 ‘‘(B) notifies the insurance department of 

4 a nonadopting State (or other State agency), 

5 not later than 30 days prior to the offering of 

6 coverage described in this subparagraph, that 

7 the issuer intends to offer health insurance cov8 erage in that State consistent with the har9 monized standards published pursuant to sec10 tion 3133(d), and provides with such notice a 

11 copy of any insurance policy that it intends to 

12 offer in the State, its most recent annual and 

13 quarterly financial reports, and any other infor14 mation required to be filed with the insurance 

15 department of the State (or other State agency) 

16 by the Secretary in regulations; and 

17 ‘‘(C) includes in the terms of the health in18 surance coverage offered in nonadopting States 

19 (including in the terms of any individual certifi20 cates that may be offered to individuals in con21 nection with such health coverage) and filed 

22 with the State pursuant to subparagraph (B), a 

23 description of the harmonized standards pub24 lished pursuant to section 3133(g)(2) and an 


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1 affirmation that such standards are a term of 

2 the contract. 

3 ‘‘(3) HARMONIZED STANDARDS.—The term 

4 ‘harmonized standards’ means the standards cer5 tified by the Secretary under section 3133(d). 

6 ‘‘(4) HEALTH INSURANCE COVERAGE.—The 

7 term ‘health insurance coverage’ means any coverage 

8 issued in the health insurance market, except that 

9 such term shall not include excepted benefits (as de10 fined in section 2791(c). 

11 ‘‘(5) NONADOPTING STATE.—The term ‘non12 adopting State’ means a State that fails to enact, 

13 within 18 months of the date on which the Secretary 

14 certifies the harmonized standards under this sub15 title, the harmonized standards in their entirety and 

16 as the exclusive laws of the State that relate to the 

17 harmonized standards. 

18 ‘‘(6) STATE LAW.—The term ‘State law’ means 

19 all laws, decisions, rules, regulations, or other State 

20 actions (including actions by a State agency) having 

21 the effect of law, of any State. 

22 ‘‘SEC. 3132. HARMONIZED STANDARDS. 

23 ‘‘(a) BOARD.— 

24 ‘‘(1) ESTABLISHMENT.—Not later than 3 

25 months after the date of enactment of this title, the 


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1 Secretary, in consultation with the NAIC, shall es2 tablish the Health Insurance Consensus Standards 

3 Board (referred to in this subtitle as the ‘Board’) to 

4 develop recommendations that harmonize incon5 sistent State health insurance laws in accordance 

6 with the procedures described in subsection (b). 

7 ‘‘(2) COMPOSITION.— 

8 ‘‘(A) IN GENERAL.—The Board shall be 

9 composed of the following voting members to be 

10 appointed by the Secretary after considering the 

11 recommendations of professional organizations 

12 representing the entities and constituencies de13 scribed in this paragraph: 

14 ‘‘(i) Four State insurance commis15 sioners as recommended by the National 

16 Association of Insurance Commissioners, of 

17 which two shall be Democrats and two 

18 shall be Republicans, and of which one 

19 shall be designated as the chairperson and 

20 one shall be designated as the vice chair21 person. 

22 ‘‘(ii) Four representatives of State 

23 government, two of which shall be gov24 ernors of States and two of which shall be 

25 State legislators, and two of which shall be 


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1 Democrats and two of which shall be Re2 publicans. 

3 ‘‘(iii) Four representatives of health 

4 insurers, of which one shall represent in5 surers that offer coverage in the small 

6 group market, one shall represent insurers 

7 that offer coverage in the large group mar8 ket, one shall represent insurers that offer 

9 coverage in the individual market, and one 

10 shall represent carriers operating in a re11 gional market. 

12 ‘‘(iv) Two representatives of insurance 

13 agents and brokers. 

14 ‘‘(v) Two independent representatives 

15 of the American Academy of Actuaries who 

16 have familiarity with the actuarial methods 

17 applicable to health insurance. 

18 ‘‘(B) EX OFFICIO MEMBER.—A representa19 tive of the Secretary shall serve as an ex officio 

20 member of the Board. 

21 ‘‘(3) ADVISORY PANEL.—The Secretary shall 

22 establish an advisory panel to provide advice to the 

23 Board, and shall appoint its members after consid24 ering the recommendations of professional organizaVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00082 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 tions representing the entities and constituencies 

2 identified in this paragraph: 

3 ‘‘(A) Two representatives of small business 

4 health plans. 

5 ‘‘(B) Two representatives of employers, of 

6 which one shall represent small employers and 

7 one shall represent large employers. 

8 ‘‘(C) Two representatives of consumer or9 ganizations. 

10 ‘‘(D) Two representatives of health care 

11 providers. 

12 ‘‘(4) QUALIFICATIONS.—The membership of the 

13 Board shall include individuals with national rec14 ognition for their expertise in health finance and ec15 onomics, actuarial science, health plans, providers of 

16 health services, and other related fields, who provide 

17 a mix of different professionals, broad geographic 

18 representation, and a balance between urban and 

19 rural representatives. 

20 ‘‘(5) ETHICAL DISCLOSURE.—The Secretary 

21 shall establish a system for public disclosure by 

22 members of the Board of financial and other poten23 tial conflicts of interest relating to such members. 

24 Members of the Board shall be treated as employees 

25 of Congress for purposes of applying title I of the 


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1 Ethics in Government Act of 1978 (Public Law 95– 

2 521). 

3 ‘‘(6) DIRECTOR AND STAFF.—Subject to such 

4 review as the Secretary deems necessary to assure 

5 the efficient administration of the Board, the chair 

6 and vice-chair of the Board may— 

7 ‘‘(A) employ and fix the compensation of 

8 an Executive Director (subject to the approval 

9 of the Comptroller General) and such other per10 sonnel as may be necessary to carry out its du11 ties (without regard to the provisions of title 5, 

12 United States Code, governing appointments in 

13 the competitive service); 

14 ‘‘(B) seek such assistance and support as 

15 may be required in the performance of its du16 ties from appropriate Federal departments and 

17 agencies; 

18 ‘‘(C) enter into contracts or make other ar19 rangements, as may be necessary for the con20 duct of the work of the Board (without regard 

21 to section 3709 of the Revised Statutes (41 

22 U.S.C. 5)); 

23 ‘‘(D) make advance, progress, and other 

24 payments which relate to the work of the 

25 Board; 


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1 ‘‘(E) provide transportation and subsist2 ence for persons serving without compensation; 

3 and 

4 ‘‘(F) prescribe such rules as it deems nec5 essary with respect to the internal organization 

6 and operation of the Board. 

7 ‘‘(7) TERMS.—The members of the Board shall 

8 serve for the duration of the Board. Vacancies in the 

9 Board shall be filled as needed in a manner con10 sistent with the composition described in paragraph 

11 (2). 

12 ‘‘(b) DEVELOPMENT OF HARMONIZED STAND13 ARDS.— 

14 ‘‘(1) IN GENERAL.—In accordance with the 

15 process described in subsection (c), the Board shall 

16 identify and recommend nationally harmonized 

17 standards for each of the following process cat18 egories: 

19 ‘‘(A) FORM FILING AND RATE FILING.— 

20 Form and rate filing standards shall be estab21 lished which promote speed to market and in22 clude the following defined areas for States that 

23 require such filings: 


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1 ‘‘(i) Procedures for form and rate fil2 ing pursuant to a streamlined administra3 tive filing process. 

4 ‘‘(ii) Timeframes for filings to be re5 viewed by a State if review is required be6 fore they are deemed approved. 

7 ‘‘(iii) Timeframes for an eligible in8 surer to respond to State requests fol9 lowing its review. 

10 ‘‘(iv) A process for an eligible insurer 

11 to self-certify. 

12 ‘‘(v) State development of form and 

13 rate filing templates that include only non14 preempted State law and Federal law re15 quirements for eligible insurers with timely 

16 updates. 

17 ‘‘(vi) Procedures for the resubmission 

18 of forms and rates. 

19 ‘‘(vii) Disapproval rationale of a form 

20 or rate filing based on material omissions 

21 or violations of non-preempted State law or 

22 Federal law with violations cited and ex23 plained. 

24 ‘‘(viii) For States that may require a 

25 hearing, a rationale for hearings based on 


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1 violations of non-preempted State law or 

2 insurer requests. 

3 ‘‘(B) MARKET CONDUCT REVIEW.—Market 

4 conduct review standards shall be developed 

5 which provide for the following: 

6 ‘‘(i) Mandatory participation in na7 tional databases. 

8 ‘‘(ii) The confidentiality of examina9 tion materials. 

10 ‘‘(iii) The identification of the State 

11 agency with primary responsibility for ex12 aminations. 

13 ‘‘(iv) Consultation and verification of 

14 complaint data with the eligible insurer 

15 prior to State actions. 

16 ‘‘(v) Consistency of reporting require17 ments with the recordkeeping and adminis18 trative practices of the eligible insurer. 

19 ‘‘(vi) Examinations that seek to cor20 rect material errors and harmful business 

21 practices rather than infrequent errors. 

22 ‘‘(vii) Transparency and publishing of 

23 the State’s examination standards. 

24 ‘‘(viii) Coordination of market conduct 

25 analysis. 


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1 ‘‘(ix) Coordination and nonduplication 

2 between State examinations of the same el3 igible insurer. 

4 ‘‘(x) Rationale and protocols to be 

5 met before a full examination is conducted. 

6 ‘‘(xi) Requirements on examiners 

7 prior to beginning examinations such as 

8 budget planning and work plans. 

9 ‘‘(xii) Consideration of methods to 

10 limit examiners’ fees such as caps, com11 petitive bidding, or other alternatives. 

12 ‘‘(xiii) Reasonable fines and penalties 

13 for material errors and harmful business 

14 practices. 

15 ‘‘(C) PROMPT PAYMENT OF CLAIMS.—The 

16 Board shall establish prompt payment stand17 ards for eligible insurers based on standards 

18 similar to those applicable to the Social Secu19 rity Act as set forth in section 1842(c)(2) of 

20 such Act (42 U.S.C. 1395u(c)(2)). Such prompt 

21 payment standards shall be consistent with the 

22 timing and notice requirements of the claims 

23 procedure rules to be specified under subpara24 graph (D), and shall include appropriate excepVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00088 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 tions such as for fraud, nonpayment of pre2 miums, or late submission of claims. 

3 ‘‘(D) INTERNAL REVIEW.—The Board 

4 shall establish standards for claims procedures 

5 for eligible insurers that are consistent with the 

6 requirements relating to initial claims for bene7 fits and appeals of claims for benefits under the 

8 Employee Retirement Income Security Act of 

9 1974 as set forth in section 503 of such Act 

10 (29 U.S.C. 1133) and the regulations there11 under. 

12 ‘‘(2) RECOMMENDATIONS.—The Board shall 

13 recommend harmonized standards for each element 

14 of the categories described in subparagraph (A) 

15 through (D) of paragraph (1) within each such mar16 ket. Notwithstanding the previous sentence, the 

17 Board shall not recommend any harmonized stand18 ards that disrupt, expand, or duplicate the benefit, 

19 service, or provider mandate standards provided in 

20 the Benefit Choice Standards pursuant to section 

21 3122(a). 

22 ‘‘(c) PROCESS FOR IDENTIFYING HARMONIZED

23 STANDARDS.— 

24 ‘‘(1) IN GENERAL.—The Board shall develop 

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1 surance laws with respect to each of the process cat2 egories described in subparagraphs (A) through (D) 

3 of subsection (b)(1). 

4 ‘‘(2) REQUIREMENTS.—In adopting standards 

5 under this section, the Board shall consider the fol6 lowing: 

7 ‘‘(A) Any model acts or regulations of the 

8 National Association of Insurance Commis9 sioners in each of the process categories de10 scribed in subparagraphs (A) through (D) of 

11 subsection (b)(1). 

12 ‘‘(B) Substantially similar standards fol13 lowed by a plurality of States, as reflected in 

14 existing State laws, relating to the specific proc15 ess categories described in subparagraphs (A) 

16 through (D) of subsection (b)(1). 

17 ‘‘(C) Any Federal law requirement related 

18 to specific process categories described in sub19 paragraphs (A) through (D) of subsection 

20 (b)(1). 

21 ‘‘(D) In the case of the adoption of any 

22 standard that differs substantially from those 

23 referred to in subparagraphs (A), (B), or (C), 

24 the Board shall provide evidence to the Sec25 retary that such standard is necessary to proVerDate Nov 24 2008 23:47 Jul 06, 2009 Jkt 059200 PO 00000 Frm 00090 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067

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1 tect health insurance consumers or promote 

2 speed to market or administrative efficiency. 

3 ‘‘(E) The criteria specified in clauses (i) 

4 through (iii) of subsection (d)(2)(B). 

5 ‘‘(d) RECOMMENDATIONS AND CERTIFICATION BY

6 SECRETARY.— 

7 ‘‘(1) RECOMMENDATIONS.—Not later than 18 

8 months after the date on which all members of the 

9 Board are selected under subsection (a), the Board 

10 shall recommend to the Secretary the certification of 

11 the harmonized standards identified pursuant to 

12 subsection (c). 

13 ‘‘(2) CERTIFICATION.— 

14 ‘‘(A) IN GENERAL.—Not later than 120 

15 days after receipt of the Board’s recommenda16 tions under paragraph (1), the Secretary shall 

17 certify the recommended harmonized standards 

18 as provided for in subparagraph (B), and issue 

19 such standards in the form of an interim final 

20 regulation. 

21 ‘‘(B) CERTIFICATION PROCESS.—The Sec22 retary shall establish a process for certifying 

23 the recommended harmonized standard, by cat24 egory, as recommended by the Board under this 

25 section. Such process shall— 


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1 ‘‘(i) ensure that the certified stand2 ards for a particular process area achieve 

3 regulatory harmonization with respect to 

4 health plans on a national basis; 

5 ‘‘(ii) ensure that the approved stand6 ards are the minimum necessary, with re7 gard to substance and quantity of require8 ments, to protect health insurance con9 sumers and maintain a competitive regu10 latory environment; and 

11 ‘‘(iii) ensure that the approved stand12 ards will not limit the range of group 

13 health plan designs and insurance prod14 ucts, such as catastrophic coverage only 

15 plans, health savings accounts, and health 

16 maintenance organizations, that might oth17 erwise be available to consumers. 

18 ‘‘(3) APPLICATION AND EFFECTIVE DATE.— 

19 The standards certified by the Secretary under para20 graph (2) shall apply and become effective on the 

21 date that is 18 months after the date on which the 

22 Secretary certifies the harmonized standards. 

23 ‘‘(e) TERMINATION.—The Board shall terminate and 

24 be dissolved after making the recommendations to the Sec25 retary pursuant to subsection (d)(1). 


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1 ‘‘(f) ONGOING REVIEW.—Not earlier than 3 years 

2 after the termination of the Board under subsection (e), 

3 and not earlier than every 3 years thereafter, the Sec4 retary, in consultation with the National Association of In5 surance Commissioners and the entities and constituencies 

6 represented on the Board and the Advisory Panel, shall 

7 prepare and submit to the appropriate committees of Con8 gress a report that assesses the effect of the harmonized 

9 standards applied under this section on access, cost, and 

10 health insurance market functioning. The Secretary may, 

11 based on such report and applying the process established 

12 for certification under subsection (d)(2)(B), in consulta13 tion with the National Association of Insurance Commis14 sioners and the entities and constituencies represented on 

15 the Board and the Advisory Panel, update the harmonized 

16 standards through notice and comment rulemaking. 

17 ‘‘(g) PUBLICATION.— 

18 ‘‘(1) LISTING.—The Secretary shall maintain 

19 an up to date listing of all harmonized standards 

20 certified under this section on the Internet website 

21 of the Department of Health and Human Services. 

22 ‘‘(2) SAMPLE CONTRACT LANGUAGE.—The Sec23 retary shall publish on the Internet website of the 

24 Department of Health and Human Services sample 

25 contract language that incorporates the harmonized 


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1 standards certified under this section, which may be 

2 used by insurers seeking to qualify as an eligible in3 surer. The types of harmonized standards that shall 

4 be included in sample contract language are the 

5 standards that are relevant to the contractual bar6 gain between the insurer and insured. 

7 ‘‘(h) STATE ADOPTION AND ENFORCEMENT.—Not 

8 later than 18 months after the certification by the Sec9 retary of harmonized standards under this section, the 

10 States may adopt such harmonized standards (and become 

11 an adopting State) and, in which case, shall enforce the 

12 harmonized standards pursuant to State law. 

13 ‘‘SEC. 3133. APPLICATION AND PREEMPTION. 

14 ‘‘(a) SUPERCEDING OF STATE LAW.— 

15 ‘‘(1) IN GENERAL.—The harmonized standards 

16 certified under this subtitle and applied as provided 

17 for in section 3133(d)(3), shall supersede any and 

18 all State laws of a nonadopting State insofar as such 

19 State laws relate to the areas of harmonized stand20 ards as applied to an eligible insurer, or health in21 surance coverage issued by a eligible insurer, includ22 ing with respect to coverage issued to a small busi23 ness health plan, in a nonadopting State. 

24 ‘‘(2) NONADOPTING STATES.—This subtitle 

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1 adopting State (whether enacted prior to or after the 

2 date of enactment of this title) insofar as they 

3 may— 

4 ‘‘(A) prohibit an eligible insurer from of5 fering, marketing, or implementing health in6 surance coverage consistent with the har7 monized standards; or 

8 ‘‘(B) have the effect of retaliating against 

9 or otherwise punishing in any respect an eligible 

10 insurer for offering, marketing, or imple11 menting health insurance coverage consistent 

12 with the harmonized standards under this sub13 title. 

14 ‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 

15 ‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 

16 Subsection (a) shall not apply with respect to adopt17 ing States. 

18 ‘‘(2) NONAPPLICATION TO CERTAIN INSUR19 ERS.—Subsection (a) shall not apply with respect to 

20 insurers that do not qualify as eligible insurers who 

21 offer health insurance coverage in a nonadopting 

22 State. 

23 ‘‘(3) NONAPPLICATION WHERE OBTAINING RE24 LIEF UNDER STATE LAW.—Subsection (a)(1) shall 

25 not supercede any State law of a nonadopting State 


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1 to the extent necessary to permit individuals or the 

2 insurance department of the State (or other State 

3 agency) to obtain relief under State law to require 

4 an eligible insurer to comply with the harmonized 

5 standards under this subtitle. 

6 ‘‘(4) NO EFFECT ON PREEMPTION.—In no case 

7 shall this subtitle be construed to limit or affect in 

8 any manner the preemptive scope of sections 502 

9 and 514 of the Employee Retirement Income Secu10 rity Act of 1974. In no case shall this subtitle be 

11 construed to create any cause of action under Fed12 eral or State law or enlarge or affect any remedy 

13 available under the Employee Retirement Income 

14 Security Act of 1974. 

15 ‘‘(c) EFFECTIVE DATE.—This section shall apply be16 ginning on the date that is 18 months after the date on 

17 harmonized standards are certified by the Secretary under 

18 this subtitle. 

19 ‘‘SEC. 3134. CIVIL ACTIONS AND JURISDICTION. 

20 ‘‘(a) IN GENERAL.—The district courts of the United 

21 States shall have exclusive jurisdiction over civil actions 

22 involving the interpretation of this subtitle. 

23 ‘‘(b) ACTIONS.—An eligible insurer may bring an ac24 tion in the district courts of the United States for injunc25 tive or other equitable relief against any officials or agents 


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1 of a nonadopting State in connection with any conduct or 

2 action, or proposed conduct or action, by such officials or 

3 agents which violates, or which would if undertaken vio4 late, section 3133. 

5 ‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 

6 election of the eligible insurer, an action may be brought 

7 under subsection (b) directly in the United States Court 

8 of Appeals for the circuit in which the nonadopting State 

9 is located by the filing of a petition for review in such 

10 Court. 

11 ‘‘(d) EXPEDITED REVIEW.— 

12 ‘‘(1) DISTRICT COURT.—In the case of an ac13 tion brought in a district court of the United States 

14 under subsection (b), such court shall complete such 

15 action, including the issuance of a judgment, prior 

16 to the end of the 120-day period beginning on the 

17 date on which such action is filed, unless all parties 

18 to such proceeding agree to an extension of such pe19 riod. 

20 ‘‘(2) COURT OF APPEALS.—In the case of an 

21 action brought directly in a United States Court of 

22 Appeal under subsection (c), or in the case of an ap23 peal of an action brought in a district court under 

24 subsection (b), such Court shall complete all action 

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1 ment, prior to the end of the 60-day period begin2 ning on the date on which such petition is filed with 

3 the Court, unless all parties to such proceeding 

4 agree to an extension of such period. 

5 ‘‘(e) STANDARD OF REVIEW.—A court in an action 

6 filed under this section, shall render a judgment based on 

7 a review of the merits of all questions presented in such 

8 action and shall not defer to any conduct or action, or 

9 proposed conduct or action, of a nonadopting State. 

10 ‘‘SEC. 3135. AUTHORIZATION OF APPROPRIATIONS; RULE 

11 OF CONSTRUCTION. 

12 ‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—There 

13 are authorized to be appropriated such sums as may be 

14 necessary to carry out this subtitle. 

15 ‘‘(b) HEALTH SAVINGS ACCOUNTS.—Nothing in this 

16 subtitle shall be construed to create any mandates for cov17 erage of any benefits below the deductible levels set for 

18 any health savings account-qualified health plan pursuant 

19 to section 223 of the Internal Revenue Code of 1986.’’. 

20 TITLE III—TAX-RELATED 

21 HEALTH INCENTIVES 

22 SEC. 301. SECA TAX DEDUCTION FOR HEALTH INSURANCE 

23 COSTS. 

24 (a) IN GENERAL.—Subsection (l) of section 162 of 

25 the Internal Revenue Code of 1986 (relating to special 


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1 rules for health insurance costs of self-employed individ2 uals) is amended by striking paragraph (4) and by redes3 ignating paragraph (5) as paragraph (4). 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2009. 

7 SEC. 302. DEDUCTION FOR QUALIFIED HEALTH INSURANCE 

8 COSTS OF INDIVIDUALS. 

9 (a) IN GENERAL.—Part VII of subchapter B of chap10 ter 1 of the Internal Revenue Code of 1986 (relating to 

11 additional itemized deductions for individuals) is amended 

12 by redesignating section 224 as section 225 and by insert13 ing after section 223 the following new section: 

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

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

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

17 the amount paid during the taxable year for coverage for 

18 the taxpayer, his spouse, and dependents under qualified 

19 health insurance. 

20 ‘‘(b) QUALIFIED HEALTH INSURANCE.—For pur21 poses of this section, the term ‘qualified health insurance’ 

22 means insurance which constitutes medical care, other 

23 than insurance substantially all of the coverage of which 

24 is of excepted benefits described in section 9832(c). 

25 ‘‘(c) SPECIAL RULES.— 


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1 ‘‘(1) COORDINATION WITH MEDICAL DEDUC2 TION, ETC.—Any amount paid by a taxpayer for in3 surance to which subsection (a) applies shall not be 

4 taken into account in computing the amount allow5 able to the taxpayer as a deduction under section 

6 162(l) or 213(a). Any amount taken into account in 

7 determining the credit allowed under section 35 shall 

8 not be taken into account for purposes of this sec9 tion. 

10 ‘‘(2) DEDUCTION NOT ALLOWED FOR SELF-EM11 PLOYMENT TAX PURPOSES.—The deduction allow12 able by reason of this section shall not be taken into 

13 account in determining an individual’s net earnings 

14 from self-employment (within the meaning of section 

15 1402(a)) for purposes of chapter 2.’’. 

16 (b) DEDUCTION ALLOWED IN COMPUTING AD17 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 

18 such Code is amended by inserting before the last sentence 

19 the following new paragraph: 

20 ‘‘(22) COSTS OF QUALIFIED HEALTH INSUR21 ANCE.—The deduction allowed by section 224.’’. 

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

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

24 is amended by redesignating the item relating to section 


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1 224 as an item relating to section 225 and inserting before 

2 such item the following new item: 

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

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2009. 

6 TITLE IV—INCREASING ACCESS 

7 TO VA HEALTH CARE 

8 SEC. 401. REQUIREMENT FOR PAYMENTS TO FACILITIES 

9 OTHER THAN THE DEPARTMENT OF VET10 ERANS AFFAIRS FOR COVERED HEALTH 

11 SERVICES. 

12 (a) REQUIREMENT TO AUTHORIZE RECEIPT OF COV13 ERED HEALTH SERVICES AT NON-DEPARTMENT FACILI14 TIES PURSUANT TO CONTRACTS WITH SUCH FACILI15 TIES.—Subsection (a) of section 1703 of title 38, United 

16 States Code, is amended to read as follows: 

17 ‘‘(a) An enrolled veteran may elect to receive covered 

18 health services through a non-Department facility. Such 

19 an election shall be made by submission to the Secretary 

20 of an application in accordance with such regulations as 

21 the Secretary prescribes. The Secretary shall authorize 

22 such services to be furnished to such veteran pursuant to 

23 contracting with such a facility to furnish such services 

24 to such a veteran, as authorized in section 1710 of this 

25 title.’’. 


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1 (b) DESCRIPTIONS OF COVERED HEALTH SERVICES

2 AND ENROLLED VETERANS.—Such section is further 

3 amended by adding at the end the following new sub4 section: 

5 ‘‘(e) For purposes of subsection (a)— 

6 ‘‘(1) a covered health service is any hospital 

7 care, medical service, rehabilitative service, or pre8 ventative health service for which the veteran de9 scribed in such subsection is eligible under this title; 

10 and 

11 ‘‘(2) an enrolled veteran is a veteran who is en12 rolled in the system of patient enrollment established 

13 under section 1705(a) of this title.’’. 

14 (c) EFFECTIVE DATE.—The Secretary of Veterans 

15 Affairs shall implement the amendments made by sub16 sections (a) and (b) in order for enrolled veterans de17 scribed in section 1703(e)(2) of title 38, United States 

18 Code, as added by subsection (b), to receive covered health 

19 services in accordance with section 1703(a) of such title, 

20 as amended by subsection (a), not later than 180 days 

21 after the date of the enactment of this Act. 


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1 SEC. 402. AUTHORITY OF DEPARTMENT OF VETERANS AF2 FAIRS PHARMACIES TO DISPENSE MEDICA3 TIONS TO VETERANS ON PRESCRIPTIONS 

4 WRITTEN BY PRIVATE PRACTITIONERS. 

5 Section 1712 of title 38, United States Code, is 

6 amended by adding at the end the following new sub7 section: 

8 ‘‘(f) Subject to section 1722A of this title, the Sec9 retary shall furnish to a veteran, through a Department 

10 health care facility, such drugs and medicines as may be 

11 ordered on prescription of a duly licensed physician in the 

12 treatment of any illness or injury of the veteran provided 

13 pursuant to the authority to contract with a non-Depart14 ment facility for such treatment under section 1703 of this 

15 title.’’. 

16 TITLE V—NURSING SHORTAGE 

17 SEC. 501. CHILD CARE ASSISTANCE FOR INDIVIDUALS PUR18 SUING ADVANCED NURSING DEGREES. 

19 Part E of title VIII of the Public Health Service Act 

20 (42 U.S.C. 297a et seq.) is amended— 

21 (1) by redesignating section 810 (relating to a 

22 prohibition against discrimination by schools) as sec23 tion 846B; and 

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


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1 ‘‘SEC. 846C. CHILD CARE ASSISTANCE FOR INDIVIDUALS 

2 PURSUING ADVANCED NURSING DEGREES. 

3 ‘‘(a) IN GENERAL.—The Secretary may carry out a 

4 program of entering into contracts with eligible individuals 

5 under which— 

6 ‘‘(1) the Secretary agrees to provide child care 

7 vouchers to the eligible individual for each month 

8 during which the individual is a student in an ad9 vanced nursing degree program; and 

10 ‘‘(2) the eligible individual agrees to serve, at 

11 the completion of such program, as a faculty mem12 ber at a school of nursing for a period of 4 years. 

13 ‘‘(b) VOUCHERS.—Vouchers provided to an eligible 

14 individual under this section— 

15 ‘‘(1) shall be for child care expenses; and 

16 ‘‘(2) shall be for not more than $500 per 

17 month. 

18 ‘‘(c) DEFINITION.—In this section, the term ‘eligible 

19 individual’ means an individual who is enrolled or accepted 

20 for enrollment as a full-time student in an advanced nurs21 ing degree program. 

22 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—To 

23 carry out this section, there are authorized to be appro24 priated such sums as may be necessary for each of fiscal 

25 years 2010 through 2014.’’. 


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1 SEC. 502. NURSE FACULTY PROGRAM. 

2 Title VII of the Higher Education Act of 1965 (20 

3 U.S.C. 1133 et seq.) is amended by adding at the end 

4 the following new part: 

5 ‘‘PART E—NURSE FACULTY PROJECT 

6 ‘‘SEC. 771. PURPOSES. 

7 ‘‘The purposes of this part are to create a program— 

8 ‘‘(1) to provide scholarships to qualified nurses 

9 in pursuit of an advanced degree with the goal of be10 coming faculty members in an accredited nursing 

11 program; and 

12 ‘‘(2) to provide grants to partnerships between 

13 accredited schools of nursing and hospitals or health 

14 facilities to fund release time for qualified nurse em15 ployees, so that those employees can earn a salary 

16 while obtaining an advanced degree in nursing with 

17 the goal of becoming nurse faculty. 

18 ‘‘SEC. 772. ASSISTANCE AUTHORIZED. 

19 ‘‘(a) COMPETITIVE GRANTS AUTHORIZED.—The Sec20 retary may, on a competitive basis, award grants to, and 

21 enter into contracts and cooperative agreements with, 

22 partnerships composed of an accredited school of nursing 

23 at an institution of higher education and a hospital or 

24 health facility to establish projects to enable such hospital 

25 or health facility to retain its staff of experienced nurses 

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1 come, through an accelerated nursing education program, 

2 faculty members of an accredited school of nursing. 

3 ‘‘(b) DURATION; EVALUATION AND DISSEMINA4 TION.— 

5 ‘‘(1) DURATION.—Grants under this part shall 

6 be awarded for a period of 3 to 5 years. 

7 ‘‘(2) MANDATORY EVALUATION AND DISSEMI8 NATION.—Grants under this part shall be primarily 

9 used for evaluation, and dissemination to other insti10 tutions of higher education, of the information ob11 tained through the activities described in section 

12 771(2). 

13 ‘‘(c) CONSIDERATIONS IN MAKING AWARDS.—In 

14 awarding grants and entering into contracts and coopera15 tive agreements under this section, the Secretary shall 

16 consider the following: 

17 ‘‘(1) GEOGRAPHIC DISTRIBUTION.—Providing 

18 an equitable geographic distribution of such grants. 

19 ‘‘(2) RURAL AND URBAN AREAS.—Distributing 

20 such grants to urban and rural areas. 

21 ‘‘(3) RANGE AND TYPE OF INSTITUTION.—En22 suring that the activities to be assisted are developed 

23 for a range of types and sizes of institutions of high24 er education. 


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1 ‘‘(4) PRIOR EXPERIENCE OR EXCEPTIONAL

2 PROGRAMS.—Institutions of higher education with 

3 demonstrated prior experience in providing advanced 

4 nursing education programs to prepare nurses inter5 ested in pursuing a faculty role. 

6 ‘‘(d) USES OF FUNDS.—Funds made available by 

7 grant, contract, or cooperative agreement under this part 

8 may be used— 

9 ‘‘(1) to develop a new national demonstration 

10 initiative to align nursing education with the emerg11 ing challenges of health care delivery; and 

12 ‘‘(2) for any one or more of the following inno13 vations in educational programs: 

14 ‘‘(A) to develop a clinical simulation lab15 oratory in a hospital, health facility, or accred16 ited school of nursing; 

17 ‘‘(B) to purchase distance learning tech18 nologies; 

19 ‘‘(C) to fund release time for qualified 

20 nurses enrolled in the graduate nursing pro21 gram; 

22 ‘‘(D) to provide for faculty salaries; and 

23 ‘‘(E) to collect and analyze data on edu24 cational outcomes. 


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1 ‘‘SEC. 773. APPLICATIONS. 

2 ‘‘Each partnership desiring to receive a grant, con3 tract, or cooperative agreement under this part shall sub4 mit an application to the Secretary at such time, in such 

5 manner, and accompanied by such information as the Sec6 retary may require. Each application shall include assur7 ances that— 

8 ‘‘(1) the individuals enrolled in the program will 

9 be qualified nurses in pursuit of a master’s or doc10 toral degree in nursing and have a contractual obli11 gation with the hospital or health facility that is in 

12 partnership with the institution of higher education; 

13 ‘‘(2) the hospital or health facility of employ14 ment would be the clinical site for the accredited 

15 school of nursing program; 

16 ‘‘(3) individuals will also maintain their employ17 ment on a part-time basis to the hospital or health 

18 facility that allowed them to participate in the pro19 gram, and will receive an income from the hospital 

20 or health facility, as a part-time employee, and re21 lease times or flexible schedules to accommodate 

22 their class schedule; and 

23 ‘‘(4) upon completion of the program, individ24 uals agree to teach for 2 years in an accredited 

25 school of nursing for each year of support the indi26 vidual received under this program. 


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1 ‘‘SEC. 774. AUTHORIZATION OF APPROPRIATIONS. 

2 ‘‘There are authorized to be appropriated for this 

3 part not more than $10,000,000 for fiscal year 2009 and 

4 such sums as may be necessary for each of the 4 suc5 ceeding fiscal years. 

6 ‘‘SEC. 775. DEFINITION. 

7 ‘‘For purposes of this part, the term ‘health facility’ 

8 means an Indian Health Service health service center, a 

9 Native Hawaiian health center, a hospital, a federally 

10 qualified health center, a rural health clinic, a nursing 

11 home, a home health agency, a hospice program, a public 

12 health clinic, a State or local department of public health, 

13 a skilled nursing facility, or ambulatory surgical center.’’. 

14 SEC. 503. NURSE FACULTY LOAN REPAYMENT PROGRAM. 

15 Part E of title VIII of the Public Health Service Act 

16 (42 U.S.C. 297a et seq.) is amended by inserting after 

17 section 846C, as added by section 501, the following new 

18 section: 

19 ‘‘SEC. 846D. NURSE FACULTY LOAN REPAYMENT PROGRAM. 

20 ‘‘(a) ESTABLISHMENT.—The Secretary, acting 

21 through the Administrator of the Health Resources and 

22 Services Administration, may enter into an agreement 

23 with eligible individuals for the repayment of education 

24 loans, in accordance with this section, to increase the num25 ber of qualified nursing faculty. 


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1 ‘‘(b) AGREEMENTS.—Each agreement entered into 

2 under subsection (a) shall require that the eligible indi3 vidual shall serve as a full-time member of the faculty of 

4 an accredited school of nursing for a total period, in the 

5 aggregate, of at least four years during the six-year period 

6 beginning on the later of— 

7 ‘‘(1) the date on which the individual receives 

8 a master’s or doctorate nursing degree from an ac9 credited school of nursing; or 

10 ‘‘(2) the date on which the individual enters 

11 into an agreement under subsection (a). 

12 ‘‘(c) AGREEMENT PROVISIONS.—Agreements entered 

13 into pursuant to subsection (a) shall be entered into on 

14 such terms and conditions as the Secretary may deter15 mine, except that— 

16 ‘‘(1) not more than ten months after the date 

17 on which the six-year period described under sub18 section (b) begins, but in no case before the indi19 vidual starts as a full-time member of the faculty of 

20 an accredited school of nursing, the Secretary shall 

21 begin making payments, for and on behalf of that 

22 individual, on the outstanding principal of, and in23 terest on, any loan of that individual obtained to pay 

24 for such degree; 


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1 ‘‘(2) for an individual who has completed a 

2 master’s degree in nursing— 

3 ‘‘(A) payments may not exceed $10,000 

4 per calendar year; and 

5 ‘‘(B) total payments may not exceed 

6 $40,000; and 

7 ‘‘(3) for an individual who has completed a doc8 torate degree in nursing— 

9 ‘‘(A) payments may not exceed $20,000 

10 per calendar year; and 

11 ‘‘(B) total payments may not exceed 

12 $80,000. 

13 ‘‘(d) BREACH OF AGREEMENT.— 

14 ‘‘(1) IN GENERAL.—In the case of any agree15 ment made under subsection (a), the individual is 

16 liable to the Federal Government for the total 

17 amount paid by the Secretary under such agree18 ment, and for interest on such amount at the max19 imum legal prevailing rate, if the individual fails to 

20 meet the agreement terms required under subsection 

21 (b). 

22 ‘‘(2) WAIVER OR SUSPENSION OF LIABILITY.— 

23 In the case of an individual making an agreement 

24 for purposes of paragraph (1), the Secretary shall 

25 provide for the waiver or suspension of liability 


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1 under such paragraph if compliance by the indi2 vidual with the agreement involved is impossible or 

3 would involve extreme hardship to the individual or 

4 if enforcement of the agreement with respect to the 

5 individual would be unconscionable. 

6 ‘‘(3) DATE CERTAIN FOR RECOVERY.—Subject 

7 to paragraph (2), any amount that the Federal Gov8 ernment is entitled to recover under paragraph (1) 

9 shall be paid to the United States not later than the 

10 expiration of the 3-year period beginning on the date 

11 the United States becomes so entitled. 

12 ‘‘(4) AVAILABILITY.—Amounts recovered under 

13 paragraph (1) shall be available to the Secretary for 

14 making loan repayments under this section and shall 

15 remain available for such purpose until expended. 

16 ‘‘(e) ELIGIBLE INDIVIDUAL DEFINED.—For pur17 poses of this section, the term ‘eligible individual’ means 

18 an individual who— 

19 ‘‘(1) is a United States citizen, national, or law20 ful permanent resident; 

21 ‘‘(2) holds an unencumbered license as a reg22 istered nurse; and 

23 ‘‘(3) has either already completed a master’s or 

24 doctorate nursing program at an accredited school of 


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1 nursing or is currently enrolled on a full-time or 

2 part-time basis in such a program. 

3 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 

4 are authorized to be appropriated to the Secretary such 

5 sums as may be necessary for each of fiscal years 2010 

6 through 2014 to carry out this Act. Such sums shall re7 main available until expended.’’. 

8 SEC. 504. PROGRAMS TO INCREASE THE NUMBER OF 

9 NURSES WITHIN THE ARMED FORCES. 

10 (a) IN GENERAL.—The Secretary of Defense may 

11 provide for the carrying out of each of the programs de12 scribed in subsections (b) through (f). 

13 (b) SERVICE OF NURSE OFFICERS AS FACULTY IN

14 EXCHANGE FOR COMMITMENT TO ADDITIONAL SERVICE

15 IN THE ARMED FORCES.— 

16 (1) IN GENERAL.—One of the programs under 

17 this section may be a program in which covered com18 missioned officers with a graduate degree in nursing 

19 or a related field who are in the nurse corps of the 

20 Armed Force concerned serve a tour of duty of two 

21 years as a full-time faculty member of an accredited 

22 school of nursing. 

23 (2) COVERED OFFICERS.—A commissioned offi24 cer of the nurse corps of the Armed Forces de25 scribed in this paragraph is a nurse officer on active 


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1 duty who has served for more than nine years on ac2 tive duty in the Armed Forces as an officer of the 

3 nurse corps at the time of the commencement of the 

4 tour of duty described in paragraph (1). 

5 (3) BENEFITS AND PRIVILEGES.—An officer 

6 serving on the faculty of an accredited school or 

7 nursing under this subsection shall be accorded all 

8 the benefits, privileges, and responsibilities (other 

9 than compensation and compensation-related bene10 fits) of any other comparably situated individual 

11 serving a full-time faculty member of such school. 

12 (4) AGREEMENT FOR ADDITIONAL SERVICE.— 

13 Each officer who serves a tour of duty on the faculty 

14 of a school of nursing under this subsection shall 

15 enter into an agreement with the Secretary to serve 

16 upon the completion of such tour of duty for a pe17 riod of four years for such tour of duty as a member 

18 of the nurse corps of the Armed Force concerned. 

19 Any service agreed to by an officer under this para20 graph is in addition to any other service required of 

21 the officer under law. 

22 (c) SERVICE OF NURSE OFFICERS AS FACULTY IN

23 EXCHANGE FOR SCHOLARSHIPS FOR NURSE OFFICER

24 CANDIDATES.— 


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1 (1) IN GENERAL.—One of the programs under 

2 this section may be a program in which commis3 sioned officers with a graduate degree in nursing or 

4 a related field who are in the nurse corps of the 

5 Armed Force concerned serve while on active duty a 

6 tour of duty of two years as a full-time faculty mem7 ber of an accredited school of nursing. 

8 (2) BENEFITS AND PRIVILEGES.—An officer 

9 serving on the faculty of an accredited school of 

10 nursing under this subsection shall be accorded all 

11 the benefits, privileges, and responsibilities (other 

12 than compensation and compensation-related bene13 fits) of any other comparably situated individual 

14 serving as a full-time faculty member of such school. 

15 (3) SCHOLARSHIPS FOR NURSE OFFICER CAN16 DIDATES.—(A) Each accredited school of nursing at 

17 which an officer serves on the faculty under this 

18 subsection shall provide scholarships to individuals 

19 undertaking an educational program at such school 

20 leading to a degree in nursing who agree, upon com21 pletion of such program, to accept a commission as 

22 an officer in the nurse corps of the Armed Forces. 

23 (B) The total amount of funds made available 

24 for scholarships by an accredited school of nursing 

25 under subparagraph (A) for each officer serving on 


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1 the faculty of that school under this subsection shall 

2 be not less than the amount equal to an entry-level 

3 full-time faculty member of that school for each year 

4 that such officer so serves on the faculty of that 

5 school. 

6 (C) The total number of scholarships provided 

7 by an accredited school of nursing under subpara8 graph (A) for each officer serving on the faculty of 

9 that school under this subsection shall be such num10 ber as the Secretary of Defense shall specify for pur11 poses of this subsection. 

12 (d) SCHOLARSHIPS FOR CERTAIN NURSE OFFICERS

13 FOR EDUCATION AS NURSES.— 

14 (1) IN GENERAL.—One of the programs under 

15 this section may be a program in which the Sec16 retary provides scholarships to commissioned officers 

17 of the nurse corps of the Armed Force concerned de18 scribed in paragraph (2) who enter into an agree19 ment described in paragraph (4) for the participa20 tion of such officers in an educational program of an 

21 accredited school of nursing leading to a graduate 

22 degree in nursing. 

23 (2) COVERED NURSE OFFICERS.—A commis24 sioned officer of the nurse corps of the Armed 

25 Forces described in this paragraph is a nurse officer 


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1 who has served not less than 20 years on active duty 

2 in the Armed Forces and is otherwise eligible for re3 tirement from the Armed Forces. 

4 (3) SCOPE OF SCHOLARSHIPS.—Amounts in a 

5 scholarship provided a nurse officer under this sub6 section may be utilized by the officer to pay the 

7 costs of tuition, fees, and other educational expenses 

8 of the officer in participating in an educational pro9 gram described in paragraph (1). 

10 (4) AGREEMENT.—An agreement of a nurse of11 ficer described in this paragraph is the agreement of 

12 the officer— 

13 (A) to participate in an educational pro14 gram described in paragraph (1); and 

15 (B) upon graduation from such educational 

16 program— 

17 (i) to serve not less than two years as 

18 a full-time faculty member of an accredited 

19 school of nursing; and 

20 (ii) to undertake such activities as the 

21 Secretary considers appropriate to encour22 age current and prospective nurses to pur23 sue service in the nurse corps of the 

24 Armed Forces. 


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1 (e) TRANSITION ASSISTANCE FOR RETIRING NURSE

2 OFFICERS QUALIFIED AS FACULTY.— 

3 (1) IN GENERAL.—One of the programs under 

4 this section may be a program in which the Sec5 retary provides to commissioned officers of the nurse 

6 corps of the Armed Force concerned described in 

7 paragraph (2) the assistance described in paragraph 

8 (3) to assist such officers in obtaining and fulfilling 

9 positions as full-time faculty members of an accred10 ited school of nursing after retirement from the 

11 Armed Forces. 

12 (2) COVERED NURSE OFFICERS.—A commis13 sioned officer of the nurse corps of the Armed 

14 Forces described in this paragraph is a nurse officer 

15 who— 

16 (A) has served an aggregate of at least 20 

17 years on active duty or in reserve active status 

18 in the Armed Forces; 

19 (B) is eligible for retirement from the 

20 Armed Forces; and 

21 (C) possesses a doctoral or master degree 

22 in nursing or a related field which qualifies the 

23 nurse officer to discharge the position of nurse 

24 instructor at an accredited school of nursing. 


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1 (3) ASSISTANCE.—The assistance described in 

2 this paragraph is assistance as follows: 

3 (A) Career placement assistance. 

4 (B) Continuing education. 

5 (C) Stipends (in an amount specified by 

6 the Secretary). 

7 (4) AGREEMENT.—A nurse officer provided as8 sistance under this subsection shall enter into an 

9 agreement with the Secretary to serve as a full-time 

10 faculty member of an accredited school of nursing 

11 for such period as the Secretary shall provide in the 

12 agreement. 

13 (f) BENEFITS FOR RETIRED NURSE OFFICERS AC14 CEPTING APPOINTMENT AS FACULTY.— 

15 (1) IN GENERAL.—One of the programs under 

16 this section may be a program in which the Sec17 retary provides to any individual described in para18 graph (2) the benefits specified in paragraph (3). 

19 (2) COVERED INDIVIDUALS.—An individual de20 scribed in this paragraph is an individual who— 

21 (A) is retired from the Armed Forces after 

22 service as a commissioned officer in the nurse 

23 corps of the Armed Forces; 

24 (B) holds a graduate degree in nursing; 

25 and 


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1 (C) serves as a full-time faculty member of 

2 an accredited school of nursing. 

3 (3) BENEFITS.—The benefits specified in this 

4 paragraph shall include the following: 

5 (A) Payment of retired or retirement pay 

6 without reduction based on receipt of pay or 

7 other compensation from the institution of 

8 higher education concerned. 

9 (B) Payment by the institution of higher 

10 education concerned of a salary and other com11 pensation to which other similarly situated fac12 ulty members of the institution of higher edu13 cation would be entitled. 

14 (C) If the amount of pay and other com15 pensation payable by the institution of higher 

16 education concerned for service as an associate 

17 full-time faculty member is less than the basic 

18 pay to which the individual was entitled imme19 diately before retirement from the Armed 

20 Forces, payment of an amount equal to the dif21 ference between such basic pay and such pay22 ment and other compensation. 

23 (g) ADMINISTRATION AND DURATION OF PRO24 GRAMS.— 


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1 (1) IN GENERAL.—The Secretary shall establish 

2 requirements and procedures for the administration 

3 of the programs authorized by this section. Such re4 quirements and procedures shall include procedures 

5 for selecting participating schools of nursing. 

6 (2) DURATION.—Any program carried out 

7 under this section shall continue for not less than 

8 two years. 

9 (3) ASSESSMENT.—Not later than two years 

10 after commencing any program under this section, 

11 the Secretary shall assess the results of such pro12 gram and determine whether or not to continue such 

13 program. The assessment of any program shall be 

14 based on measurable criteria, information concerning 

15 results, and such other matters as the Secretary 

16 considers appropriate. 

17 (4) CONTINUATION.—The Secretary may con18 tinue carrying out any program under this section 

19 that the Secretary determines, pursuant to an as20 sessment under paragraph (3), to continue to carry 

21 out. In continuing to carry out a program, the Sec22 retary may modify the terms of the program within 

23 the scope of this section. The continuation of any 

24 program may include its expansion to include addi25 tional participating schools of nursing. 


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1 (h) DEFINITIONS.—In this section, the terms ‘‘school 

2 of nursing’’ and ‘‘accredited’’ have the meaning given 

3 those terms in section 801 of the Public Health Service 

4 Act (42 U.S.C. 296). 

5 TITLE VI—RESERVE COMPO6 NENTS OF THE ARMED 

7 FORCES 

8 SEC. 601. EFFECTIVE DATE OF ACTIVE DUTY FOR PUR9 POSES OF ENTITLEMENT TO ACTIVE DUTY 

10 HEALTH CARE OF MEMBERS OF THE RE11 SERVE COMPONENTS OF THE ARMED 

12 FORCES RECEIVING ALERT ORDER ANTICI13 PATING A CALL OR ORDER TO ACTIVE DUTY 

14 IN SUPPORT OF A CONTINGENCY OPER15 ATION. 

16 Subsection (d) of section 1074 of title 10, United 

17 States Code, is amended to read as follows: 

18 ‘‘(d)(1) For purposes of this chapter, a member of 

19 a reserve component of the Armed Forces shall be treated 

20 as a member of the Armed Forces on active duty as fol21 lows: 

22 ‘‘(A) On the date of the issuance of the alert 

23 order for the member’s unit in anticipation of the 

24 mobilization of the unit for service for a period of 


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1 more than 30 days in support of a contingency oper2 ation. 

3 ‘‘(B) On the date of the issuance of the order 

4 providing for the assignment or attachment of the 

5 member to a unit subject to an alert order described 

6 in paragraph (1). 

7 ‘‘(2) If the alert order for a member’s unit (or the 

8 unit to which the member is assigned or attached) is re9 scinded, the member shall cease to be treated on active 

10 duty for purposes of this chapter as of the date of the 

11 issuance of the order rescinding such alert order.’’. 

Æ 


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