I 

111TH CONGRESS 

1ST SESSION H. R. 3400 

To provide for incentives to encourage health insurance coverage, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2009 

Mr. PRICE of Georgia (for himself, Mr. AKIN, Mr. ALEXANDER, Mr. SCALISE, 

Mrs. BACHMANN, Mr. SOUDER, Mr. MILLER of Florida, Mr. BURTON of 

Indiana, Mr. JORDAN of Ohio, Mr. GINGREY of Georgia, Mr. ROE of Tennessee, Mr. CASSIDY, Mr. LAMBORN, Mr. FLEMING, Mrs. LUMMIS, Mr. 

WAMP, Mr. MARCHANT, Mr. ROONEY, Mr. COFFMAN of Colorado, and 

Ms. FALLIN) introduced the following bill; which was referred to the 

Committee on Energy and Commerce, and in addition to the Committees 

on Ways and Means, Education and Labor, Oversight and Government 

Reform, the Judiciary, Rules, the Budget, and Appropriations, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide for incentives to encourage health insurance 

coverage, and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Empowering Patients First Act’’. 


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

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—TAX INCENTIVES FOR MAINTAINING HEALTH 

INSURANCE COVERAGE 

Sec. 101. Refundable tax credit for health insurance costs of low-income individuals. 

Sec. 102. Advance payment of credit as premium payment for qualified health 

insurance. 

Sec. 103. Election of tax credit instead of alternative government or group plan 

benefits. 

Sec. 104. Deduction for qualified health insurance costs of individuals. 

Sec. 105. Limitation on abortion funding. 

Sec. 106. Non-discrimination on abortion and respect for rights of conscience. 

Sec. 107. Equal employer contribution rule to promote choice. 

Sec. 108. Limitations on State restrictions on employer auto-enrollment. 

Sec. 109. Credit for small employers adopting auto-enrollment and defined contribution options. 

Sec. 110. Require employers to disclose amounts paid for employer-provided 

health plan coverage. 

Sec. 111. HSA modifications and clarifications. 

TITLE II—HEALTH INSURANCE POOLING MECHANISMS FOR 

INDIVIDUALS 

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

Sec. 201. Requiring operation of high-risk pool or other mechanism as condition for availability of tax credit. 

Subtitle B—Federal Block Grants for State Insurance Expenditures 

Sec. 211. Federal block grants for State insurance expenditures. 

Subtitle C—Health Care Access and Availability 

Sec. 221. Expansion of access and choice through individual membership associations (IMAs). 

Subtitle D—Small Business Health Fairness 

Sec. 231. Short title. 

Sec. 232. Rules governing association health plans. 

Sec. 233. Clarification of treatment of single employer arrangements. 

Sec. 234. Enforcement provisions relating to association health plans. 

Sec. 235. Cooperation between Federal and State authorities. 

Sec. 236. Effective date and transitional and other rules. 

TITLE III—INTERSTATE MARKET FOR HEALTH INSURANCE 

Sec. 301. Cooperative governing of individual health insurance coverage. 

TITLE IV—SAFETY NET REFORMS 


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Sec. 401. Requiring outreach and coverage before expansion of eligibility. 

Sec. 402. Easing administrative barriers to State cooperation with employersponsored insurance coverage. 

Sec. 403. Improving beneficiary choice in SCHIP. 

Sec. 404. Liability protections for health center volunteer practitioners. 

Sec. 405. Liability protections for health center practitioners providing services 

in emergency areas. 

TITLE V—MEDICAL LIABILITY AND UNCOMPENSATED CARE 

REFORMS 

Sec. 501. Short title. 

Sec. 502. Findings and purpose. 

Sec. 503. Encouraging speedy resolution of claims. 

Sec. 504. Compensating patient injury. 

Sec. 505. Maximizing patient recovery. 

Sec. 506. Additional health benefits. 

Sec. 507. Punitive damages. 

Sec. 508. Authorization of payment of future damages to claimants in health 

care lawsuits. 

Sec. 509. Definitions. 

Sec. 510. Effect on other laws. 

Sec. 511. State flexibility and protection of States’ rights. 

Sec. 512. Applicability; effective date. 

Sec. 513. Sense of Congress. 

Sec. 514. State grants to create administrative health care tribunals. 

Sec. 515. Affirmative defense based on compliance with best practice guidelines. 

Sec. 516. Bad debt deduction for doctors to partially offset the cost of providing uncompensated care required to be provided under 

amendments made by the Emergency Medical Treatment and 

Labor Act. 

TITLE VI—WELLNESS AND PREVENTION 

Sec. 601. Providing financial incentives for treatment compliance. 

TITLE VII—TRANSPARENCY AND INSURANCE REFORM MEASURES 

Sec. 701. Receipt and response to requests for claim information. 

TITLE VIII—QUALITY 

Sec. 801. Prohibition on certain uses of data obtained from comparative effectiveness research; accounting for personalized medicine and differences in patient treatment response. 

Sec. 802. Establishment of performance-based quality measures. 

TITLE IX—STATE TRANSPARENCY PLAN PORTAL 

Sec. 901. Providing information on health coverage options and health care 

providers. 

TITLE X—PHYSICIAN PAYMENT REFORM 

Sec. 1001. Sustainable growth rate reform. 

TITLE XI—INCENTIVES TO REDUCE PHYSICIAN SHORTAGES 


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Subtitle A—Federally Supported Student Loan Funds for Medical Students 

Sec. 1101. Federally Supported Student Loan Funds for Medical Students. 

Subtitle B—Loan Forgiveness for Primary Care Providers 

Sec. 1111. Loan forgiveness for primary care providers. 

TITLE XII—OFFSETS 

Subtitle A—Enforcing Discretionary Spending Limits 

Sec. 1201. Enforcing discretionary spending limits. 

Subtitle B—Repeal of Unused Stimulus Funds 

Sec. 1211. Rescission and repeal in ARRA. 

Subtitle C—Savings From Health Care Efficiencies 

Sec. 1221. Medicare DSH report and payment adjustments in response to coverage expansion. 

Sec. 1222. Reduction in Medicaid DSH. 

Subtitle D—Fraud, Waste, and Abuse 

Sec. 1231. Provide adequate funding to HHS OIG and HCFAC. 

Sec. 1232. Improved enforcement of the Medicare secondary payor provisions. 

Sec. 1233. Strengthen Medicare provider enrollment standards and safeguards. 

Sec. 1234. Tracking banned providers across State lines. 

Sec. 1235. Reinstate the Medicare trigger. 

1 TITLE I—TAX INCENTIVES FOR 

2 MAINTAINING HEALTH IN3 SURANCE COVERAGE 

4 SEC. 101. REFUNDABLE TAX CREDIT FOR HEALTH INSUR5 ANCE COSTS OF LOW-INCOME INDIVIDUALS. 

6 (a) IN GENERAL.—Subpart C of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 (relating to refundable credits) is amended by insert9 ing after section 36A the following new section: 


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1 ‘‘SEC. 36B. HEALTH INSURANCE COSTS OF LOW-INCOME IN2 DIVIDUALS. 

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

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

5 by subtitle A the aggregate amount paid by the taxpayer 

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

7 family members under qualified health insurance for eligi8 ble coverage months beginning in the taxable year. 

9 ‘‘(b) LIMITATIONS.— 

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

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

12 not exceed the lesser of— 

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

14 for months during such taxable year that the 

15 taxpayer or the taxpayer’s qualifying family 

16 members is an eligible individual, and 

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

18 taxpayer for the taxable year for coverage de19 scribed in subsection (a). 

20 ‘‘(2) MONTHLY LIMITATION.—The monthly limitation for any month is the credit percentage of 1 21 ⁄12

22 of the sum of— 

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

24 ($4,000 in the case of a joint return for cov25 erage of the taxpayer and the taxpayer’s 

26 spouse), and 


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

2 of the taxpayer. 

3 ‘‘(3) CREDIT PERCENTAGE.— 

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

5 section, the term ‘credit percentage’ means 100 

6 percent reduced by 1 percentage point for each 

7 $1,000 (or fraction thereof) by which the tax8 payer’s adjusted gross income for the taxable 

9 year exceeds the threshold amount. 

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

11 of this paragraph, the term ‘threshold amount’ 

12 means, with respect to any taxpayer for any 

13 taxable year, 200 percent of the Federal pov14 erty guideline (as determined by the Secretary 

15 of Health and Human Service for the taxable 

16 year) applicable to the taxpayer. 

17 ‘‘(4) ONLY 2 DEPENDENTS TAKEN INTO AC18 COUNT.—Not more than 2 dependents of the tax19 payer may be taken into account under paragraphs 

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

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

22 any taxable year beginning in a calendar year after 

23 2009, each dollar amount contained in paragraph 

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

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


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1 ‘‘(B) the cost-of-living adjustment deter2 mined under section 1(f)(3) for the calendar 

3 year in which the taxable year begins, deter4 mined by substituting ‘calendar year 2008’ for 

5 ‘calendar year 1992’ in subparagraph (B) 

6 thereof. 

7 Any increase determined under the preceding sen8 tence shall be rounded to the nearest multiple of 

9 $50. 

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

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

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

13 day of such month, the individual— 

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

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

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

17 local authority. 

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

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

20 means— 

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

22 spouse, and 

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

24 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur25 poses of this section, the term ‘qualified health insurance’ 


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1 means health insurance coverage (other than excepted 

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

3 medical care. 

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

5 this section, an individual has other specified coverage for 

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

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

8 OR SCHIP.—Such individual— 

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

10 title XVIII of the Social Security Act or is en11 rolled under part B of such title, or 

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

13 XIX or XXI of such Act (other than under sec14 tion 1928 of such Act). 

15 ‘‘(2) CERTAIN OTHER COVERAGE.—Such indi16 vidual— 

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

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

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

20 chapter 55 of title 10, United States Code, 

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

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

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

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

25 which is subsidized by the employer. 


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1 ‘‘(g) SPECIAL RULES.— 

2 ‘‘(1) COORDINATION WITH ADVANCE PAYMENTS

3 OF CREDIT; RECAPTURE OF EXCESS ADVANCE PAY4 MENTS.—With respect to any taxable year— 

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

6 subsection) be allowed as a credit to the tax7 payer under subsection (a) shall be reduced 

8 (but not below zero) by the aggregate amount 

9 paid on behalf of such taxpayer under section 

10 7529 for months beginning in such taxable 

11 year, and 

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

13 taxable year shall be increased by the excess (if 

14 any) of— 

15 ‘‘(i) the aggregate amount paid on be16 half of such taxpayer under section 7529 

17 for months beginning in such taxable year, 

18 over 

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

20 this subsection) be allowed as a credit to 

21 the taxpayer under subsection (a). 

22 ‘‘(2) COORDINATION WITH OTHER DEDUC23 TIONS.—Amounts taken into account under sub24 section (a) shall not be taken into account in deter25 mining— 


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1 ‘‘(A) any deduction allowed under section 

2 162(l), 213, or 224, or 

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

4 ‘‘(3) MEDICAL AND HEALTH SAVINGS AC5 COUNTS.—Amounts distributed from an Archer 

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

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

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

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

10 NONPERMANENT RESIDENT ALIEN INDIVIDUALS.— 

11 No credit shall be allowed under this section to any 

12 individual who is— 

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

14 resident of the United States for the calendar 

15 year in which the taxable year begins, or 

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

17 taxpayer for a taxable year beginning in the 

18 calendar year in which such individual’s taxable 

19 year begins. 

20 ‘‘(5) INSURANCE WHICH COVERS OTHER INDI21 VIDUALS.—For purposes of this section, rules simi22 lar to the rules of section 213(d)(6) shall apply with 

23 respect to any contract for qualified health insurance 

24 under which amounts are payable for coverage of an 


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1 individual other than the taxpayer and qualifying 

2 family members. 

3 ‘‘(6) TREATMENT OF PAYMENTS.—For pur4 poses of this section— 

5 ‘‘(A) PAYMENTS BY SECRETARY.—Pay6 ments made by the Secretary on behalf of any 

7 individual under section 7529 (relating to ad8 vance payment of credit for health insurance 

9 costs of low-income individuals) shall be treated 

10 as having been made by the taxpayer on the 

11 first day of the month for which such payment 

12 was made. 

13 ‘‘(B) PAYMENTS BY TAXPAYER.—Pay14 ments made by the taxpayer for eligible cov15 erage months shall be treated as having been 

16 made by the taxpayer on the first day of the 

17 month for which such payment was made. 

18 ‘‘(7) REGULATIONS.—The Secretary may pre19 scribe such regulations and other guidance as may 

20 be necessary or appropriate to carry out this section, 

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

22 (b) CONFORMING AMENDMENTS.— 

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

24 31, United States Code, is amended by inserting 

25 ‘‘36B,’’ after ‘‘36A,’’. 


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

2 IV of subchapter A of chapter 1 of the Internal Rev3 enue Code of 1986 is amended by inserting after the 

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

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

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

6 this section shall apply to taxable years beginning after 

7 December 31, 2009. 

8 (d) SENSE OF CONGRESS.—It is the sense of Con9 gress that the cost of the advanceable refundable credit 

10 under sections 36B and 7529 of the Internal Revenue 

11 Code of 1986, as added by this title, will be offset by sav12 ings derived from the provisions of title XII. 

13 SEC. 102. ADVANCE PAYMENT OF CREDIT AS PREMIUM 

14 PAYMENT FOR QUALIFIED HEALTH INSUR15 ANCE. 

16 (a) IN GENERAL.—Chapter 77 of the Internal Rev17 enue Code of 1986 (relating to miscellaneous provisions) 

18 is amended by adding at the end the following: 

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

20 PAYMENT FOR QUALIFIED HEALTH INSUR21 ANCE. 

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

23 2010, the Secretary shall establish a program for making 

24 payments to providers of qualified health insurance (as de25 fined in section 36B(e)) on behalf of taxpayers eligible for 


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1 the credit under section 36B. Except as otherwise pro2 vided by the Secretary, such payments shall be made on 

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

4 the preceding taxable year. 

5 ‘‘(b) CERTIFICATION PROCESS AND PROOF OF COV6 ERAGE.—For purposes of this section, payments may be 

7 made pursuant to subsection (a) only with respect to indi8 viduals for whom a qualified health insurance costs credit 

9 eligibility certificate is in effect.’’. 

10 (b) DISCLOSURE OF RETURN INFORMATION FOR

11 PURPOSES OF ADVANCE PAYMENT OF CREDIT AS PRE12 MIUMS FOR QUALIFIED HEALTH INSURANCE.— 

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

14 6103 of such Code is amended by adding at the end 

15 the following new paragraph: 

16 ‘‘(21) DISCLOSURE OF RETURN INFORMATION

17 FOR PURPOSES OF ADVANCE PAYMENT OF CREDIT

18 AS PREMIUMS FOR QUALIFIED HEALTH INSUR19 ANCE.—The Secretary may, on behalf of taxpayers 

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

21 a provider of qualified health insurance (as defined 

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

23 such provider, return information with respect to 

24 any such taxpayer only to the extent necessary (as 

25 prescribed by regulations issued by the Secretary) to 


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1 carry out the program established by section 7529 

2 (relating to advance payment of credit as premium 

3 payment for qualified health insurance).’’. 

4 (2) CONFIDENTIALITY OF INFORMATION.— 

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

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

7 or (21)’’. 

8 (3) UNAUTHORIZED DISCLOSURE.—Paragraph 

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

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

11 (c) INFORMATION REPORTING.— 

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

13 subchapter A of chapter 61 of such Code (relating 

14 to information concerning transactions with other 

15 persons) is amended by adding at the end the fol16 lowing new section: 

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

18 INSURANCE COSTS OF LOW-INCOME INDIVID19 UALS. 

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

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

22 calendar year under section 7529 (relating to advance pay23 ment of credit as premium payment for qualified health 

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

25 time as the Secretary may prescribe, make the return deVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 scribed in subsection (b) with respect to each such indi2 vidual. 

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

4 is described in this subsection if such return— 

5 ‘‘(1) is in such form as the Secretary may pre6 scribe, and 

7 ‘‘(2) contains— 

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

9 individual referred to in subsection (a), 

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

11 amounts were entitled to be received with re12 spect to such individual under section 7529 (re13 lating to advance payment of credit as premium 

14 payment for qualified health insurance), 

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

16 each such month, and 

17 ‘‘(D) such other information as the Sec18 retary may prescribe. 

19 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID20 UALS WITH RESPECT TO WHOM INFORMATION IS RE21 QUIRED.—Every person required to make a return under 

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

23 is required to be set forth in such return a written state24 ment showing— 


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1 ‘‘(1) the name and address of the person re2 quired to make such return and the phone number 

3 of the information contact for such person, and 

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

5 the return with respect to such individual. 

6 The written statement required under the preceding sen7 tence shall be furnished on or before January 31 of the 

8 year following the calendar year for which the return 

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

10 (2) ASSESSABLE PENALTIES.— 

11 (A) Subparagraph (B) of section 

12 6724(d)(1) of such Code (relating to defini13 tions) is amended by striking ‘‘or’’ at the end 

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

15 clause (xxiii) and inserting ‘‘or’’, and by insert16 ing after clause (xxiii) the following new clause: 

17 ‘‘(xxiv) section 6050X (relating to re18 turns relating to credit for health insur19 ance costs of low-income individuals), 

20 and’’. 

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

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

23 end of subparagraph (EE), by striking the pe24 riod at the end of subparagraph (FF) and inVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 serting ‘‘, or’’, and by adding after subpara2 graph (FF) the following new subparagraph: 

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

4 relating to credit for health insurance costs of 

5 low-income individuals).’’. 

6 (d) CLERICAL AMENDMENTS.— 

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

8 Code is amended by adding at the end the following 

9 new item: 

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

health insurance.’’. 

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

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

12 amended by adding at the end the following new 

13 item: 

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

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

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

16 of this Act. 

17 SEC. 103. ELECTION OF TAX CREDIT INSTEAD OF ALTER18 NATIVE GOVERNMENT OR GROUP PLAN BEN19 EFITS. 

20 (a) IN GENERAL.—Notwithstanding any other provi21 sion of law, an individual who is otherwise eligible for ben22 efits under a health program (as defined in subsection (c)) 

23 may elect, in a form and manner specified by the SecVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 retary of Health and Human Services in consultation with 

2 the Secretary of the Treasury, to receive a tax credit de3 scribed in section 36B of the Internal Revenue Code of 

4 1986 (which may be used for the purpose of health insur5 ance coverage) in lieu of receiving any benefits under such 

6 program. 

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

8 (a) may first be made for calendar year 2010 and any 

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

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

11 Human Services shall specify, in consultation with the 

12 Secretary of the Treasury. 

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

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

15 following: 

16 (1) MEDICARE.—The medicare program under 

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

18 (2) MEDICAID.—The Medicaid program under 

19 title XIX of such Act (including such a program op20 erating under a Statewide waiver under section 1115 

21 of such Act). 

22 (3) SCHIP.—The State children’s health insur23 ance program under title XXI of such Act. 

24 (4) TRICARE.—The TRICARE program 

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


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1 (5) VETERANS BENEFITS.—Coverage for bene2 fits under chapter 17 of title 38, United States 

3 Code. 

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

5 title 5, United States Code. 

6 (7) SUBSIDIZED GROUP HEALTH PLANS.—Cov7 erage under a group health plan (within the meaning 

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

9 employer. 

10 (d) OTHER SOCIAL SECURITY BENEFITS NOT

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

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

13 benefits under the Social Security Act. 

14 SEC. 104. DEDUCTION FOR QUALIFIED HEALTH INSURANCE 

15 COSTS OF INDIVIDUALS. 

16 (a) IN GENERAL.—Part VII of subchapter B of chap17 ter 1 of the Internal Revenue Code of 1986 (relating to 

18 additional itemized deductions) is amended by redesig19 nating section 224 as section 225 and by inserting after 

20 section 223 the following new section: 

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

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

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

24 the amount paid during the taxable year for coverage for 


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1 the taxpayer, his spouse, and dependents under qualified 

2 health insurance. 

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

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

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

6 Federal income tax liability to be reduced by more than 

7 the average value of the national health exclusion for em8 ployer sponsored insurance as determined by calculating 

9 the value of the exclusion for each household followed by 

10 calculating the average of those values. 

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

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

14 ‘‘(d) SPECIAL RULES.— 

15 ‘‘(1) COORDINATION WITH MEDICAL DEDUC16 TION, ETC.—Any amount paid by a taxpayer for in17 surance to which subsection (a) applies shall not be 

18 taken into account in computing the amount allow19 able to the taxpayer as a deduction under section 

20 162(l) or 213(a). Any amount taken into account in 

21 determining the credit allowed under section 35 or 

22 36B shall not be taken into account for purposes of 

23 this section. 

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1 able by reason of this section shall not be taken into 

2 account in determining an individual’s net earnings 

3 from self-employment (within the meaning of section 

4 1402(a)) for purposes of chapter 2.’’. 

5 (b) DEDUCTION ALLOWED IN COMPUTING AD6 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 

7 such Code is amended by inserting before the last sentence 

8 the following new paragraph: 

9 ‘‘(22) COSTS OF QUALIFIED HEALTH INSUR10 ANCE.—The deduction allowed by section 224.’’. 

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

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

13 is amended by redesignating the item relating to section 

14 224 as an item relating to section 225 and inserting before 

15 such item the following new item: 

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

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2009. 

19 SEC. 105. LIMITATION ON ABORTION FUNDING. 

20 No funds authorized under this Act (or any amend21 ment made by this Act) may be used to pay for any abor22 tion or to cover any part of the costs of any health plan 

23 that includes coverage of abortion, except in the case 

24 where a woman suffers from a physical disorder, physical 

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1 sician, place the woman in danger of death unless an abor2 tion is performed, including a life-endangering physical 

3 condition caused by or arising from the pregnancy itself, 

4 or unless the pregnancy is the result of an act of forcible 

5 rape or incest. 

6 SEC. 106. NON-DISCRIMINATION ON ABORTION AND RE7 SPECT FOR RIGHTS OF CONSCIENCE. 

8 (a) NON-DISCRIMINATION.—A Federal agency or pro9 gram, and any State or local government that receives 

10 Federal financial assistance, may not subject any indi11 vidual or institutional health care entity to discrimination 

12 on the basis that the health care entity does not provide, 

13 pay for, provide coverage of, or refer for abortions. 

14 (b) DEFINITION.—In this section, the term ‘‘health 

15 care entity’’ includes an individual physician or other 

16 health care professional, a hospital, a provider-sponsored 

17 organization, a health maintenance organization, a health 

18 insurance plan, or any other kind of health care facility, 

19 organization, or plan. 

20 (c) ADMINISTRATION.—The Office for Civil Rights of 

21 the Department of Health and Human Services is des22 ignated to receive complaints of discrimination based on 

23 this section, and coordinate the investigation of such com24 plaints. 


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1 (d) CONSCIENTIOUS OBJECTION.—Nothing in this 

2 Act shall be construed as forbidding a health plan or 

3 health insurance issuer to accommodate the conscientious 

4 objection of a purchaser or an individual or institutional 

5 health care provider when a procedure is contrary to the 

6 religious beliefs or moral convictions of such purchaser or 

7 provider. 

8 SEC. 107. EQUAL EMPLOYER CONTRIBUTION RULE TO PRO9 MOTE CHOICE. 

10 (a) EXCISE TAX FOR FAILURE TO PROVIDE CON11 TRIBUTION ELECTION.—Section 5000 of the Internal 

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

13 the following new subsection: 

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

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

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

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

18 are met. 

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

21 group health plan if any employee of an employer 

22 (who but for this paragraph would be covered by 

23 such plan) may elect to have the employer or em24 ployee organization pay an amount which is not less 

25 than the contribution amount to any provider of inVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 surance (other than excepted benefits as defined in 

2 section 9832(c)(1)) which constitutes medical care of 

3 the individual or individual’s spouse or dependents 

4 in lieu of such group health plan coverage otherwise 

5 provided or contributed to by the employer with re6 spect to such employee. 

7 ‘‘(3) PRE-EXISTING CONDITIONS.— 

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

9 this paragraph is met with respect to health in10 surance coverage provided to a participant or 

11 beneficiary by any health insurance issuer if, 

12 under such plan the requirements of section 

13 9801 are met with respect to the participant or 

14 beneficiary. 

15 ‘‘(B) ENFORCEMENT WITH RESPECT TO

16 INDIVIDUAL ELECTION.—For purposes of sub17 paragraph (A), any health insurance coverage 

18 with respect to the participant or beneficiary 

19 shall be treated as health insurance coverage 

20 under a group health plan to which section 

21 9801 applies. 

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

23 of this section, the term ‘contribution amount’ 

24 means, with respect to an individual under a group 

25 health plan, the portion of the applicable premium of 


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1 such individual under such plan (as determined 

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

3 individual. In the case that the employer offers more 

4 than one group health plan, the contribution amount 

5 shall be the average amount of the applicable pre6 miums under such plans. 

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

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

9 ‘‘(6) APPLICATION TO FEHBP.—Notwith10 standing any other provision of law, the Office of 

11 Personnel Management shall carry out the health 

12 benefits program under chapter 89 of title 5, United 

13 States Code, consistent with the requirements of this 

14 subsection.’’. 

15 (b) REQUIREMENT OF EQUAL CONTRIBUTIONS TO

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

17 States Code, is amended by adding at the end the fol18 lowing new subsection: 

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

20 section the Office of Personnel Management shall revise 

21 the amount of the Government contribution made under 

22 this section in a manner so that— 

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

24 change based on the health benefits plan in which 

25 the individual is enrolled; and 


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1 ‘‘(2) the aggregate amount of such contribu2 tions is estimated to be equal to the aggregate 

3 amount of such contributions if this subsection did 

4 not apply.’’. 

5 (c) ERISA CONFORMING AMENDMENTS.— 

6 (1) EXCEPTION FROM HIPAA REQUIREMENTS

7 FOR BENEFITS PROVIDED UNDER HEALTH CARE

8 CONTRIBUTION ELECTION.—Section 732 of the Em9 ployee Retirement Income Security Act of 1974 (29 

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

11 following new subsection: 

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

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

14 part shall not apply in the case of health insurance 

15 coverage (other than excepted benefits as defined in 

16 section 9832(c)(1) of the Internal Revenue Code of 

17 1986)— 

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

19 beneficiary by a health insurance issuer under 

20 a group health plan, and 

21 ‘‘(B) with respect to which the require22 ments of paragraphs (2) and (3) are met. 

23 ‘‘(2) CONTRIBUTION ELECTION.—The require24 ment of this paragraph is met with respect to health 

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1 eficiary by any health insurance issuer under a 

2 group health plan if, under such plan— 

3 ‘‘(A) the participant may elect such cov4 erage for any period of coverage in lieu of 

5 health insurance coverage otherwise provided 

6 under such plan for such period, and 

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

8 plan sponsor is required to pay to such issuer 

9 for the elected coverage for such period an 

10 amount which is not less than the contribution 

11 amount for such health insurance coverage oth12 erwise provided under such plan for such pe13 riod. 

14 ‘‘(3) PRE-EXISTING CONDITIONS.— 

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

16 this paragraph is met with respect to health in17 surance coverage provided to a participant or 

18 beneficiary by any health insurance issuer if, 

19 under such plan the requirements of section 

20 701 are met with respect to the participant or 

21 beneficiary. 

22 ‘‘(B) ENFORCEMENT WITH RESPECT TO

23 INDIVIDUAL ELECTION.—For purposes of sub24 paragraph (A), any health insurance coverage 

25 with respect to the participant or beneficiary 


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1 shall be treated as health insurance coverage 

2 under a group health plan to which section 701 

3 applies. 

4 ‘‘(4) CONTRIBUTION AMOUNT.— 

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

6 section, the term ‘contribution amount’ means, 

7 with respect to any period of health insurance 

8 coverage offered to a participant or beneficiary, 

9 the portion of the applicable premium of such 

10 participant or beneficiary under such plan 

11 which is not paid by such participant or bene12 ficiary. In the case that the employer offers 

13 more than one group health plan, the contribu14 tion amount shall be the average amount of the 

15 applicable premiums under such plans. 

16 ‘‘(B) APPLICABLE PREMIUM.—For pur17 poses of subparagraph (A), the term ‘applicable 

18 premium’ means, with respect to any period of 

19 health insurance coverage of a participant or 

20 beneficiary under a group health plan, the cost 

21 to the plan for such period of such coverage for 

22 similarly situated beneficiaries (without regard 

23 to whether such cost is paid by the plan spon24 sor or the participant or beneficiary).’’. 


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1 (2) EXEMPTION FROM FIDUCIARY LIABILITY.— 

2 Section 404 of such Act (29 U.S.C. 1104) is amend3 ed by adding at the end the following new sub4 section: 

5 ‘‘(e) The plan sponsor of a group health plan (as de6 fined in section 733(a)) shall not be treated as breaching 

7 any of the responsibilities, obligations, or duties imposed 

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

9 who is a participant or beneficiary under such plan solely 

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

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

12 by means of payment of contribution amounts pursuant 

13 to a contribution election under section 732(e), irrespec14 tive of the amount or type of benefits that would otherwise 

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

16 (d) EXCEPTION FROM HIPAA REQUIREMENTS

17 UNDER IRC FOR BENEFITS PROVIDED UNDER HEALTH

18 CARE CONTRIBUTION ELECTION.—Section 9831 of the 

19 Internal Revenue Code of 1986 (relating to general excep20 tions) is amended by adding at the end the following new 

21 subsection: 

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

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

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1 ance coverage (other than excepted benefits as de2 fined in section 9832(c)(1))— 

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

4 beneficiary by a health insurance issuer under 

5 a group health plan, and 

6 ‘‘(B) with respect to which the require7 ments of paragraphs (2) and (3) are met. 

8 ‘‘(2) CONTRIBUTION ELECTION.—The require9 ment of this paragraph is met with respect to health 

10 insurance coverage provided to a participant or ben11 eficiary by any health insurance issuer under a 

12 group health plan if, under such plan— 

13 ‘‘(A) the participant may elect such cov14 erage for any period of coverage in lieu of 

15 health insurance coverage otherwise provided 

16 under such plan for such period, and 

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

18 plan sponsor is required to pay to such issuer 

19 for the elected coverage for such period an 

20 amount which is not less than the contribution 

21 amount for such health insurance coverage oth22 erwise provided under such plan for such pe23 riod. 

24 ‘‘(3) PRE-EXISTING CONDITIONS.— 


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

2 this paragraph is met with respect to health in3 surance coverage provided to a participant or 

4 beneficiary by any health insurance issuer if, 

5 under such plan the requirements of section 

6 9801 are met with respect to the participant or 

7 beneficiary. 

8 ‘‘(B) ENFORCEMENT WITH RESPECT TO

9 INDIVIDUAL ELECTION.—For purposes of sub10 paragraph (A), any health insurance coverage 

11 with respect to the participant or beneficiary 

12 shall be treated as health insurance coverage 

13 under a group health plan to which section 

14 9801 applies. 

15 ‘‘(4) CONTRIBUTION AMOUNT.— 

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

17 subsection, the term ‘contribution amount’ 

18 means, with respect to any period of health in19 surance coverage offered to a participant or 

20 beneficiary, the portion of the applicable pre21 mium of such participant or beneficiary under 

22 such plan which is not paid by such participant 

23 or beneficiary. In the case that the employer of24 fers more than one group health plan, the conVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 tribution amount shall be the average amount 

2 of the applicable premiums under such plans. 

3 ‘‘(B) APPLICABLE PREMIUM.—For pur4 poses of subparagraph (A), the term ‘applicable 

5 premium’ means, with respect to any period of 

6 health insurance coverage of a participant or 

7 beneficiary under a group health plan, the cost 

8 to the plan for such period of such coverage for 

9 similarly situated beneficiaries (without regard 

10 to whether such cost is paid by the plan spon11 sor or the participant or beneficiary).’’. 

12 (e) EXCEPTION FROM HIPAA REQUIREMENTS

13 UNDER THE PHSA FOR BENEFITS PROVIDED UNDER

14 HEALTH CARE CONTRIBUTION ELECTION.—Section 2721 

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

16 is amended—— 

17 (1) by redesignating subsection (e) as sub18 section (f); and 

19 (2) by inserting after subsection (d) the fol20 lowing new subsection: 

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

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

23 subparts 1 through 3 shall not apply in the case of 

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1 fits as defined in section 9832(c)(1) of the Internal 

2 Revenue Code of 1986)— 

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

4 beneficiary by a health insurance issuer under 

5 a group health plan, and 

6 ‘‘(B) with respect to which the require7 ments of paragraphs (2) and (3) are met. 

8 ‘‘(2) CONTRIBUTION ELECTION.—The require9 ment of this paragraph is met with respect to health 

10 insurance coverage provided to a participant or ben11 eficiary by any health insurance issuer under a 

12 group health plan if, under such plan— 

13 ‘‘(A) the participant may elect such cov14 erage for any period of coverage in lieu of 

15 health insurance coverage otherwise provided 

16 under such plan for such period, and 

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

18 plan sponsor is required to pay to such issuer 

19 for the elected coverage for such period an 

20 amount which is not less than the contribution 

21 amount for such health insurance coverage oth22 erwise provided under such plan for such pe23 riod. 

24 ‘‘(3) PRE-EXISTING CONDITIONS.— 


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

2 this paragraph is met with respect to health in3 surance coverage provided to a participant or 

4 beneficiary by any health insurance issuer if, 

5 under such plan the requirements of section 

6 2701 are met with respect to the participant or 

7 beneficiary. 

8 ‘‘(B) ENFORCEMENT WITH RESPECT TO

9 INDIVIDUAL ELECTION.—For purposes of sub10 paragraph (A), any health insurance coverage 

11 with respect to the participant or beneficiary 

12 shall be treated as health insurance coverage 

13 under a group health plan to which section 

14 2701 applies. 

15 ‘‘(4) CONTRIBUTION AMOUNT.— 

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

17 section, the term ‘contribution amount’ means, 

18 with respect to any period of health insurance 

19 coverage offered to a participant or beneficiary, 

20 the portion of the applicable premium of such 

21 participant or beneficiary under such plan 

22 which is not paid by such participant or bene23 ficiary. In the case that the employer offers 

24 more than one group health plan, the contribuVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 tion amount shall be the average amount of the 

2 applicable premiums under such plans. 

3 ‘‘(B) APPLICABLE PREMIUM.—For pur4 poses of subparagraph (A), the term ‘applicable 

5 premium’ means, with respect to any period of 

6 health insurance coverage of a participant or 

7 beneficiary under a group health plan, the cost 

8 to the plan for such period of such coverage for 

9 similarly situated beneficiaries (without regard 

10 to whether such cost is paid by the plan spon11 sor or the participant or beneficiary).’’. 

12 SEC. 108. LIMITATIONS ON STATE RESTRICTIONS ON EM13 PLOYER AUTO-ENROLLMENT. 

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

15 that prevents an employer from instituting auto-enroll16 ment which meets the requirements of subsection (b) for 

17 coverage of a participant or beneficiary under a group 

18 health plan, or health insurance coverage offered in con19 nection with such a plan, so long as the participant or 

20 beneficiary has the option of declining such coverage. 

21 (b) AUTOMATIC ENROLLMENT FOR EMPLOYER

22 SPONSORED HEALTH BENEFITS.— 

23 (1) IN GENERAL.—The requirement of this sub24 section with respect to an employer and an employee 

25 is that the employer automatically enroll such emVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 ployee into the employment-based health benefits 

2 plan for individual coverage under the plan option 

3 with the lowest applicable employee premium. 

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

5 automatically enroll an employee in a plan under 

6 paragraph (1) if such employee makes an affirmative 

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

8 under an employment-based health benefits plan of9 fered by such employer. An employer shall provide 

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

11 affirmative election before the employer may auto12 matically enroll the employee in such a plan. 

13 (3) NOTICE REQUIREMENTS.— 

14 (A) IN GENERAL.—Each employer de15 scribed in paragraph (1) who automatically en16 rolls an employee into a plan as described in 

17 such paragraph shall provide the employees, 

18 within a reasonable period before the beginning 

19 of each plan year (or, in the case of new em20 ployees, within a reasonable period before the 

21 end of the enrollment period for such a new em22 ployee), written notice of the employees’ rights 

23 and obligations relating to the automatic enroll24 ment requirement under such paragraph. Such 

25 notice must be comprehensive and understood 


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1 by the average employee to whom the automatic 

2 enrollment requirement applies. 

3 (B) INCLUSION OF SPECIFIC INFORMA4 TION.—The written notice under subparagraph 

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

6 of being automatically enrolled in a plan and in 

7 the case that more than one level of benefits or 

8 employee premium level is offered by the em9 ployer involved, the notice must explain which 

10 level of benefits and employee premium level the 

11 employee will be automatically enrolled in the 

12 absence of an affirmative election by the em13 ployee. 

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

15 construed to supersede State law which establishes, imple16 ments, or continues in effect any standard or requirement 

17 relating to employers in connection with payroll or the 

18 sponsoring of employer sponsored health insurance cov19 erage except to the extent that such standard or require20 ment prevents an employer from instituting the auto-en21 rollment described in subsection (a). 


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1 SEC. 109. CREDIT FOR SMALL EMPLOYERS ADOPTING 

2 AUTO-ENROLLMENT AND DEFINED CON3 TRIBUTION OPTIONS. 

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of 

6 1986 (relating to business-related credits) is amended by 

7 adding at the end the following new section: 

8 ‘‘SEC. 45R. AUTO-ENROLLMENT AND DEFINED CONTRIBU9 TION OPTION FOR HEALTH BENEFITS PLANS 

10 OF SMALL EMPLOYERS. 

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

12 the case of a small employer, the health benefits plan im13 plementation credit determined under this section for the 

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

15 amount paid or incurred by the taxpayer during the tax16 able year for qualified health benefits expenses. 

17 ‘‘(b) LIMITATION.—The credit determined under sub18 section (a) with respect to any taxpayer for any taxable 

19 year shall not exceed the excess of— 

20 ‘‘(1) $1,500, over 

21 ‘‘(2) sum of the credits determined under sub22 section (a) with respect to such taxpayer for all pre23 ceding taxable years. 

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

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

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


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1 any taxable year, amounts paid or incurred by the tax2 payer during such taxable year for— 

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

4 the requirements of section 107 of the Empowering 

5 Patients First Act for coverage of a participant or 

6 beneficiary under a group health plan, or health in7 surance coverage offered in connection with such a 

8 plan, and 

9 ‘‘(2) implementing the employer contribution 

10 option for health insurance coverage pursuant to 

11 section 5000(e)(2). 

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

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

14 any employer for any taxable year if the number of em15 ployees employed by such employer during such taxable 

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

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

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

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

20 shall be allowed under any other provision of this chapter 

21 with respect to the amount of the credit determined under 

22 this section. 

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

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

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


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1 (b) CREDIT TO BE PART OF GENERAL BUSINESS

2 CREDIT.—Subsection (b) of section 38 of such Code (re3 lating to general business credit) is amended by striking 

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

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

6 by adding at the end the following new paragraph: 

7 ‘‘(36) in the case of a small employer (as de8 fined in section 45R(d)), the health benefits plan im9 plementation credit determined under section 

10 45R(a).’’. 

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

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

13 of such Code is amended by inserting after the item relat14 ing to section 45Q the following new item: 

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

plans of small employers.’’. 

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

16 this section shall apply to taxable years beginning after 

17 the date of the enactment of this Act. 

18 SEC. 110. REQUIRE EMPLOYERS TO DISCLOSE AMOUNTS 

19 PAID FOR EMPLOYER-PROVIDED HEALTH 

20 PLAN COVERAGE. 

21 (a) IN GENERAL.—Subsection (a) of section 6051 is 

22 amended by striking ‘‘and’’ at the end of paragraph (12), 

23 by striking the period at the end of paragraph (13) and 


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1 inserting ‘‘, and’’, and by inserting after paragraph (13) 

2 the following new paragraph: 

3 ‘‘(14) the total amount paid or incurred by the 

4 employer with respect to employer-provided coverage 

5 under an accident or health plan with respect to 

6 such employee.’’. 

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

8 this section shall apply to amounts paid or incurred in cal9 endar years beginning after the date of the enactment of 

10 this Act. 

11 SEC. 111. HSA MODIFICATIONS AND CLARIFICATIONS. 

12 (a) CLARIFICATION OF TREATMENT OF CAPITATED

13 PRIMARY CARE PAYMENTS AS AMOUNTS PAID FOR MED14 ICAL CARE.—Section 213(d) of the Internal Revenue Code 

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

16 the end the following new paragraph: 

17 ‘‘(12) TREATMENT OF CAPITATED PRIMARY

18 CARE PAYMENTS.—Capitated primary care payments 

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

20 (b) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR

21 VETERANS OR INDIAN HEALTH BENEFITS.—Section 

22 223(c)(1) of such Code (defining eligible individual) is 

23 amended by adding at the end the following new subpara24 graph: 


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1 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI2 GIBLE FOR VETERANS OR INDIAN HEALTH BEN3 EFITS.—For purposes of subparagraph (A)(ii), 

4 an individual shall not be treated as covered 

5 under a health plan described in such subpara6 graph merely because the individual receives 

7 periodic hospital care or medical services under 

8 any law administered by the Secretary of Vet9 erans Affairs or the Bureau of Indian Affairs.’’. 

10 (c) CERTAIN PHYSICIAN FEES TO BE TREATED AS

11 MEDICAL CARE.—Section 213(d) of such Code is amend12 ed by adding at the end the following new paragraph: 

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

14 ‘medical care’ shall include amounts paid by patients 

15 to their primary physician in advance for the right 

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

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

18 this section shall apply to taxable years beginning after 

19 the date of the enactment of this Act. 


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1 TITLE II—HEALTH INSURANCE 

2 POOLING MECHANISMS FOR 

3 INDIVIDUALS 

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

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

8 OTHER MECHANISM AS CONDITION FOR 

9 AVAILABILITY OF TAX CREDIT. 

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

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

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

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

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

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

20 only be used for funding and administering such 

21 pool or mechanism. 

22 (3) Such pool or mechanism must incorporate 

23 the application of such tax credit into such pool or 

24 mechanism. 


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1 Subtitle B—Federal Block Grants 

2 for State Insurance Expenditures 

3 SEC. 211. FEDERAL BLOCK GRANTS FOR STATE INSURANCE 

4 EXPENDITURES. 

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

9 providing for the use, in connection with providing health 

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

12 the purpose of subsidizing the purchase of private health 

13 insurance. 

14 (b) FUNDING AMOUNT.— 

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

18 for block grants under this section. Such amount 

19 shall be divided among the States as determined by 

20 the Secretary. 

21 (2) CONSTRUCTION.—Nothing in this section 

22 shall be construed as preventing a State from using 

23 funding under section 2745 of the Public Health 

24 Service Act for purposes of funding reinsurance or 

25 other risk mechanisms. 


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

2 only be used for the following: 

3 (1) QUALIFYING HIGH-RISK POOLS.— 

4 (A) CURRENT POOLS.—A qualifying high5 risk pool created before the date of the enact6 ment of this Act that only cover high risk popu7 lations and individuals (and their spouse and 

8 dependents) receiving a health care tax credit 

9 under section 35 of the Internal Revenue Code 

10 of 1986 for a limited period of time as deter11 mined by the Secretary or under section 2741 

12 of Public Health Service Act. 

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

14 pool created on or after such date that only cov15 ers populations and individuals described in 

16 subparagraph (A) if the pool— 

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

18 more high deductible plan options, in com19 bination with a contribution into a health 

20 savings account; 

21 (ii) offers multiple competing health 

22 plan options; and 

23 (iii) covers only high risk populations. 

24 (2) RISK INSURANCE POOL OR OTHER RISK-AD25 JUSTMENT MECHANISMS.— 


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1 (A) CURRENT REINSURANCE.—A reinsur2 ance pool ,or other risk-adjustment mechanism, 

3 created before the date of the enactment of this 

4 Act that only covers populations and individuals 

5 described in paragraph (1)(A). 

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

7 other risk-adjustment mechanism created on or 

8 after such date that provides reinsurance only 

9 covers populations and individuals described in 

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

11 basis under which a health insurance issuer 

12 cedes covered lives to the pool in exchange for 

13 payment of a reinsurance premium. 

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

15 be construed as preventing a State from using funds 

16 available to transition from an existing high-risk 

17 pool to a reinsurance pool. 

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

19 amounts made available to the States under this section, 

20 the Secretary shall set aside a portion of such amounts 

21 that shall only be available for the following activities by 

22 such States: 

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1 uals with prior group coverage under part B of title 

2 XXVII of the Public Health Service Act. 

3 (2) A reduction in premium trends, actual pre4 miums, or other cost-sharing requirements. 

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

6 high risk individuals eligible for coverage. 

7 (4) States that adopt the Model Health Plan 

8 for Uninsurable Individuals Act of the National As9 sociation of Insurance Commissioners (if and when 

10 updated by such Association). 

11 The Secretary may request such Association to update 

12 such Model Health Plan as needed by 2011. 

13 (e) ADMINISTRATION.—The Secretary shall provide 

14 for the administration of this section and may establish 

15 such terms and conditions, including the requirement of 

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

17 section. 

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

19 construed as requiring a State to operate a reinsurance 

20 pool (or other risk-adjustment mechanism) under this sec21 tion or as preventing a State from operating such a pool 

22 or mechanism through one or more private entities. 

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

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

25 any qualified high risk pool (as defined in subsection 


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

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

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

4 (h) REINSURANCE POOL OR OTHER RISK-ADJUST5 MENT MECHANISM DEFINED.—For purposes of this sec6 tion, the term ‘‘reinsurance pool or other risk-adjustment 

7 mechanism’’ means any State-based risk spreading mecha8 nism to subsidize the purchase of private health insurance 

9 for the high-risk population. 

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

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

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

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

14 health coverage only at rates which are at least 150 

15 percent of the standard risk rates for such coverage 

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

17 State), and 

18 (2) individuals who are provided health cov19 erage by a high-risk pool. 

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

21 the term ‘‘State’’ includes the District of Columbia, Puer22 to Rico, the Virgin Islands, Guam, American Samoa, and 

23 the Northern Mariana Islands. 

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

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


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1 is amended by striking ‘‘2010’’ and inserting ‘‘2012’’ each 

2 place it appears. 

3 Subtitle C—Health Care Access and 

4 Availability 

5 SEC. 221. EXPANSION OF ACCESS AND CHOICE THROUGH 

6 INDIVIDUAL MEMBERSHIP ASSOCIATIONS 

7 (IMAS). 

8 The Public Health Service Act is amended by adding 

9 at the end the following new title: 

10 ‘‘TITLE XXXI—INDIVIDUAL 

11 MEMBERSHIP ASSOCIATIONS 

12 ‘‘SEC. 3101. DEFINITION OF INDIVIDUAL MEMBERSHIP AS13 SOCIATION (IMA). 

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

15 terms ‘individual membership association’ and ‘IMA’ 

16 mean a legal entity that meets the following requirements: 

17 ‘‘(1) ORGANIZATION.—The IMA is an organiza18 tion operated under the direction of an association 

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

20 ‘‘(2) OFFERING HEALTH BENEFITS COV21 ERAGE.— 

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

23 conjunction with those health insurance issuers 

24 that offer health benefits coverage through the 

25 IMA, makes available health benefits coverage 


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

2 members of the IMA and the dependents of 

3 such members in the manner described in sub4 section (c)(2) at rates that are established by 

5 the health insurance issuer on a policy or prod6 uct specific basis and that may vary only as 

7 permissible under State law. 

8 ‘‘(B) NONDISCRIMINATION IN COVERAGE

9 OFFERED.— 

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

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

12 coverage to a member of an IMA unless 

13 the same coverage is offered to all such 

14 members of the IMA. 

15 ‘‘(ii) CONSTRUCTION.—Nothing in 

16 this title shall be construed as requiring or 

17 permitting a health insurance issuer to 

18 provide coverage outside the service area of 

19 the issuer, as approved under State law, or 

20 requiring a health insurance issuer from 

21 excluding or limiting the coverage on any 

22 individual, subject to the requirement of 

23 section 2741. 

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

25 IMA provides health benefits coverage only 


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1 through contracts with health insurance issuers 

2 and does not assume insurance risk with re3 spect to such coverage. 

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

5 shall be construed as preventing the establishment 

6 and operation of more than one IMA in a geographic 

7 area or as limiting the number of IMAs that may 

8 operate in any area. 

9 ‘‘(4) PROVISION OF ADMINISTRATIVE SERVICES

10 TO PURCHASERS.— 

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

12 administrative services for members. Such serv13 ices may include accounting, billing, and enroll14 ment information. 

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

16 subsection shall be construed as preventing an 

17 IMA from serving as an administrative service 

18 organization to any entity. 

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

20 with the Secretary information that demonstrates 

21 the IMA’s compliance with the applicable require22 ments of this title. 

23 ‘‘(b) HEALTH BENEFITS COVERAGE REQUIRE24 MENTS.— 


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1 ‘‘(1) COMPLIANCE WITH CONSUMER PROTEC2 TION REQUIREMENTS.—Any health benefits coverage 

3 offered through an IMA shall— 

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

5 issuer that— 

6 ‘‘(i) is licensed (or otherwise regu7 lated) under State law, 

8 ‘‘(ii) meets all applicable State stand9 ards relating to consumer protection, sub10 ject to section 3002(b), and 

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

12 or otherwise permitted to be offered under 

13 State law. 

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

15 benefits coverage made available through an IMA 

16 may include, but is not limited to, any of the fol17 lowing if it meets the other applicable requirements 

18 of this title: 

19 ‘‘(A) Coverage through a health mainte20 nance organization. 

21 ‘‘(B) Coverage in connection with a pre22 ferred provider organization. 

23 ‘‘(C) Coverage in connection with a li24 censed provider-sponsored organization. 


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1 ‘‘(D) Indemnity coverage through an insur2 ance company. 

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

4 contribution into a medical savings account or 

5 flexible spending account. 

6 ‘‘(F) Coverage that includes a point-of7 service option. 

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

9 coverage. 

10 ‘‘(3) WELLNESS BONUSES FOR HEALTH PRO11 MOTION.—Nothing in this title shall be construed as 

12 precluding a health insurance issuer offering health 

13 benefits coverage through an IMA from establishing 

14 premium discounts or rebates for members or from 

15 modifying otherwise applicable copayments or 

16 deductibles in return for adherence to programs of 

17 health promotion and disease prevention so long as 

18 such programs are agreed to in advance by the IMA 

19 and comply with all other provisions of this title and 

20 do not discriminate among similarly situated mem21 bers. 

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

23 ‘‘(1) MEMBERS.— 

24 ‘‘(A) IN GENERAL.—Under rules estab25 lished to carry out this title, with respect to an 


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1 individual who is a member of an IMA, the in2 dividual may enroll for health benefits coverage 

3 (including coverage for dependents of such indi4 vidual) offered by a health insurance issuer 

5 through the IMA. 

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

7 in this paragraph shall preclude an IMA from 

8 establishing rules of enrollment and reenroll9 ment of members. Such rules shall be applied 

10 consistently to all members within the IMA and 

11 shall not be based in any manner on health sta12 tus-related factors. 

13 ‘‘(2) HEALTH INSURANCE ISSUERS.—The con14 tract between an IMA and a health insurance issuer 

15 shall provide, with respect to a member enrolled with 

16 health benefits coverage offered by the issuer 

17 through the IMA, for the payment of the premiums 

18 collected by the issuer. 

19 ‘‘SEC. 3102. APPLICATION OF CERTAIN LAWS AND REQUIRE20 MENTS. 

21 ‘‘State laws insofar as they relate to any of the fol22 lowing are superseded and shall not apply to health bene23 fits coverage made available through an IMA: 

24 ‘‘(1) Benefit requirements for health benefits 

25 coverage offered through an IMA, including (but not 


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1 limited to) requirements relating to coverage of spe2 cific providers, specific services or conditions, or the 

3 amount, duration, or scope of benefits, but not in4 cluding requirements to the extent required to imple5 ment title XXVII or other Federal law and to the 

6 extent the requirement prohibits an exclusion of a 

7 specific disease from such coverage. 

8 ‘‘(2) Any other requirements (including limita9 tions on compensation arrangements) that, directly 

10 or indirectly, preclude (or have the effect of pre11 cluding) the offering of such coverage through an 

12 IMA, if the IMA meets the requirements of this 

13 title. 

14 Any State law or regulation relating to the composition 

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

16 law or regulation is inconsistent with the provisions of this 

17 title. 

18 ‘‘SEC. 3103. ADMINISTRATION. 

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

20 this title and is authorized to issue such regulations as 

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

22 shall be subject to Congressional review under the provi23 sions of chapter 8 of title 5, United States Code. The Sec24 retary shall incorporate the process of ‘deemed file and 

25 use’ with respect to the information filed under section 


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1 3001(a)(5)(A) and shall determine whether information 

2 filed by an IMA demonstrates compliance with the applica3 ble requirements of this title. The Secretary shall exercise 

4 authority under this title in a manner that fosters and 

5 promotes the development of IMAs in order to improve 

6 access to health care coverage and services. 

7 ‘‘(b) PERIODIC REPORTS.—The Secretary shall sub8 mit to Congress a report every 30 months, during the 10- 

9 year period beginning on the effective date of the rules 

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

11 the effectiveness of this title in promoting coverage of un12 insured individuals. The Secretary may provide for the 

13 production of such reports through one or more contracts 

14 with appropriate private entities. 

15 ‘‘SEC. 3104. DEFINITIONS. 

16 ‘‘For purposes of this title: 

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

18 means, with respect to health insurance coverage of19 fered in a State, an association which— 

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

21 least 5 years; 

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

23 good faith for purposes other than obtaining in24 surance; 


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

2 association on any health status-related factor 

3 relating to an individual (including an employee 

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

5 and 

6 ‘‘(D) does not make health insurance cov7 erage offered through the association available 

8 other than in connection with a member of the 

9 association. 

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

11 applied to health insurance coverage offered by a 

12 health insurance issuer licensed (or otherwise regu13 lated) in a State, shall have the meaning applied to 

14 such term with respect to such coverage under the 

15 laws of the State relating to such coverage and such 

16 an issuer. Such term may include the spouse and 

17 children of the individual involved. 

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

19 ‘health benefits coverage’ has the meaning given the 

20 term health insurance coverage in section 

21 2791(b)(1). 

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

23 ‘health insurance issuer’ has the meaning given such 

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


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

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

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

4 ‘‘(6) IMA; INDIVIDUAL MEMBERSHIP ASSOCIA5 TION.—The terms ‘IMA’ and ‘individual membership 

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

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

8 with respect to an IMA, an individual who is a mem9 ber of the association to which the IMA is offering 

10 coverage.’’. 

11 Subtitle D—Small Business Health 

12 Fairness 

13 SEC. 231. SHORT TITLE. 

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

15 Health Fairness Act of 2009’’. 

16 SEC. 232. RULES GOVERNING ASSOCIATION HEALTH 

17 PLANS. 

18 (a) IN GENERAL.—Subtitle B of title I of the Em19 ployee Retirement Income Security Act of 1974 is amend20 ed by adding after part 7 the following new part: 

21 ‘‘PART 8—RULES GOVERNING ASSOCIATION 

22 HEALTH PLANS 

23 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 

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

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


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1 whose sponsor is (or is deemed under this part to be) de2 scribed in subsection (b). 

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

4 plan is described in this subsection if such sponsor— 

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

6 with a constitution and bylaws specifically stating its 

7 purpose and providing for periodic meetings on at 

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

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

15 operates on a cooperative basis (within the meaning 

16 of section 1381 of the Internal Revenue Code of 

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

18 obtaining or providing medical care; 

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

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

22 of dues or payments necessary to maintain eligibility 

23 for membership in the sponsor; and 

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

25 or payments, or coverage under the plan on the 


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1 basis of health status-related factors with respect to 

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

4 not condition such dues or payments on the basis of 

5 group health plan participation. 

6 Any sponsor consisting of an association of entities which 

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

8 shall be deemed to be a sponsor described in this sub9 section. 

10 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH 

11 PLANS. 

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

13 prescribe by regulation a procedure under which, subject 

14 to subsection (b), the applicable authority shall certify as15 sociation health plans which apply for certification as 

16 meeting the requirements of this part. 

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

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

19 health plan that provides at least one benefit option which 

20 does not consist of health insurance coverage, the applica21 ble authority shall certify such plan as meeting the re22 quirements of this part only if the applicable authority is 

23 satisfied that the applicable requirements of this part are 

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

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


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1 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

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

3 certification under this part is in effect shall meet the ap4 plicable requirements of this part, effective on the date 

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

6 is to commence operations). 

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

10 under this part. 

11 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

12 PLANS.—The applicable authority shall establish a class 

13 certification procedure for association health plans under 

14 which all benefits consist of health insurance coverage. 

15 Under such procedure, the applicable authority shall pro16 vide for the granting of certification under this part to 

17 the plans in each class of such association health plans 

18 upon appropriate filing under such procedure in connec19 tion with plans in such class and payment of the pre20 scribed fee under section 807(a). 

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

22 HEALTH PLANS.—An association health plan which offers 

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

24 insurance coverage may be certified under this part only 

25 if such plan consists of any of the following: 


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

2 date of the enactment of the Small Business Health 

3 Fairness Act of 2009, 

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

5 restrict membership to one or more trades and busi6 nesses or industries and whose eligible participating 

7 employers represent a broad cross-section of trades 

8 and businesses or industries, or 

9 ‘‘(3) a plan whose eligible participating employ10 ers represent one or more trades or businesses, or 

11 one or more industries, consisting of any of the fol12 lowing: agriculture; equipment and automobile deal13 erships; barbering and cosmetology; certified public 

14 accounting practices; child care; construction; dance, 

15 theatrical and orchestra productions; disinfecting 

16 and pest control; financial services; fishing; food 

17 service establishments; hospitals; labor organiza18 tions; logging; manufacturing (metals); mining; med19 ical and dental practices; medical laboratories; pro20 fessional consulting services; sanitary services; trans21 portation (local and freight); warehousing; whole22 saling/distributing; or any other trade or business or 

23 industry which has been indicated as having average 

24 or above-average risk or health claims experience by 

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1 posed premium rate levels, or other means dem2 onstrated by such plan in accordance with regula3 tions. 

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

5 BOARDS OF TRUSTEES. 

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

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

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

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

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

11 the application for certification under this part. 

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

13 this subsection are met with respect to an association 

14 health plan if the following requirements are met: 

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

16 pursuant to a trust agreement, by a board of trust17 ees which has complete fiscal control over the plan 

18 and which is responsible for all operations of the 

19 plan. 

20 ‘‘(2) RULES OF OPERATION AND FINANCIAL

21 CONTROLS.—The board of trustees has in effect 

22 rules of operation and financial controls, based on a 

23 3-year plan of operation, adequate to carry out the 

24 terms of the plan and to meet all requirements of 

25 this title applicable to the plan. 


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1 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

2 PARTICIPATING EMPLOYERS AND TO CONTRAC3 TORS.— 

4 ‘‘(A) BOARD MEMBERSHIP.— 

5 ‘‘(i) IN GENERAL.—Except as pro6 vided in clauses (ii) and (iii), the members 

7 of the board of trustees are individuals se8 lected from individuals who are the owners, 

9 officers, directors, or employees of the par10 ticipating employers or who are partners in 

11 the participating employers and actively 

12 participate in the business. 

13 ‘‘(ii) LIMITATION.— 

14 ‘‘(I) GENERAL RULE.—Except as 

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

16 no such member is an owner, officer, 

17 director, or employee of, or partner in, 

18 a contract administrator or other 

19 service provider to the plan. 

20 ‘‘(II) LIMITED EXCEPTION FOR

21 PROVIDERS OF SERVICES SOLELY ON

22 BEHALF OF THE SPONSOR.—Officers 

23 or employees of a sponsor which is a 

24 service provider (other than a contract 

25 administrator) to the plan may be 


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1 members of the board if they con2 stitute not more than 25 percent of 

3 the membership of the board and they 

4 do not provide services to the plan 

5 other than on behalf of the sponsor. 

6 ‘‘(III) TREATMENT OF PRO7 VIDERS OF MEDICAL CARE.—In the 

8 case of a sponsor which is an associa9 tion whose membership consists pri10 marily of providers of medical care, 

11 subclause (I) shall not apply in the 

12 case of any service provider described 

13 in subclause (I) who is a provider of 

14 medical care under the plan. 

15 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

16 Clause (i) shall not apply to an association 

17 health plan which is in existence on the 

18 date of the enactment of the Small Busi19 ness Health Fairness Act of 2009. 

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

21 sole authority under the plan to approve appli22 cations for participation in the plan and to con23 tract with a service provider to administer the 

24 day-to-day affairs of the plan. 


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

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

3 maintained by a franchiser for a franchise network con4 sisting of its franchisees— 

5 ‘‘(1) the requirements of subsection (a) and sec6 tion 801(a) shall be deemed met if such require7 ments would otherwise be met if the franchiser were 

8 deemed to be the sponsor referred to in section 

9 801(b), such network were deemed to be an associa10 tion described in section 801(b), and each franchisee 

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

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

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

14 be deemed met. 

15 The Secretary may by regulation define for purposes of 

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

17 and ‘franchisee’. 

18 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE19 MENTS. 

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

21 requirements of this subsection are met with respect to 

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

23 plan— 

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

25 ‘‘(A) a member of the sponsor, 


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1 ‘‘(B) the sponsor, or 

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

3 with respect to which the requirements of sub4 section (b) are met, 

5 except that, in the case of a sponsor which is a pro6 fessional association or other individual-based asso7 ciation, if at least one of the officers, directors, or 

8 employees of an employer, or at least one of the in9 dividuals who are partners in an employer and who 

10 actively participates in the business, is a member or 

11 such an affiliated member of the sponsor, partici12 pating employers may also include such employer; 

13 and 

14 ‘‘(2) all individuals commencing coverage under 

15 the plan after certification under this part must 

16 be— 

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

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

19 employees of, or partners in, participating em20 ployers; or 

21 ‘‘(B) the beneficiaries of individuals de22 scribed in subparagraph (A). 

23 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM24 PLOYEES.—In the case of an association health plan in 

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1 ness Health Fairness Act of 2009, an affiliated member 

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

3 the plan as a participating employer only if— 

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

5 member on the date of certification under this part; 

6 or 

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

8 date of the offering of such coverage, the affiliated 

9 member has not maintained or contributed to a 

10 group health plan with respect to any of its employ11 ees who would otherwise be eligible to participate in 

12 such association health plan. 

13 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re14 quirements of this subsection are met with respect to an 

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

16 no participating employer may provide health insurance 

17 coverage in the individual market for any employee not 

18 covered under the plan which is similar to the coverage 

19 contemporaneously provided to employees of the employer 

20 under the plan, if such exclusion of the employee from cov21 erage under the plan is based on a health status-related 

22 factor with respect to the employee and such employee 

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

24 for coverage under the plan. 


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1 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

2 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI3 PATE.—The requirements of this subsection are met with 

4 respect to an association health plan if— 

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

6 meeting the preceding requirements of this section 

7 are eligible to qualify as participating employers for 

8 all geographically available coverage options, unless, 

9 in the case of any such employer, participation or 

10 contribution requirements of the type referred to in 

11 section 2711 of the Public Health Service Act are 

12 not met; 

13 ‘‘(2) upon request, any employer eligible to par14 ticipate is furnished information regarding all cov15 erage options available under the plan; and 

16 ‘‘(3) the applicable requirements of sections 

17 701, 702, and 703 are met with respect to the plan. 

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

19 DOCUMENTS, CONTRIBUTION RATES, AND 

20 BENEFIT OPTIONS. 

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

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

23 following requirements are met: 

24 ‘‘(1) CONTENTS OF GOVERNING INSTRU25 MENTS.—The instruments governing the plan inVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00069 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 clude a written instrument, meeting the require2 ments of an instrument required under section 

3 402(a)(1), which— 

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

5 serves as the named fiduciary required for plans 

6 under section 402(a)(1) and serves in the ca7 pacity of a plan administrator (referred to in 

8 section 3(16)(A)); 

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

10 is to serve as plan sponsor (referred to in sec11 tion 3(16)(B)); and 

12 ‘‘(C) incorporates the requirements of sec13 tion 806. 

14 ‘‘(2) CONTRIBUTION RATES MUST BE NON15 DISCRIMINATORY.— 

16 ‘‘(A) The contribution rates for any par17 ticipating small employer do not vary on the 

18 basis of any health status-related factor in rela19 tion to employees of such employer or their 

20 beneficiaries and do not vary on the basis of the 

21 type of business or industry in which such em22 ployer is engaged. 

23 ‘‘(B) Nothing in this title or any other pro24 vision of law shall be construed to preclude an 

25 association health plan, or a health insurance 


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1 issuer offering health insurance coverage in 

2 connection with an association health plan, 

3 from— 

4 ‘‘(i) setting contribution rates based 

5 on the claims experience of the plan; or 

6 ‘‘(ii) varying contribution rates for 

7 small employers in a State to the extent 

8 that such rates could vary using the same 

9 methodology employed in such State for 

10 regulating premium rates in the small 

11 group market with respect to health insur12 ance coverage offered in connection with 

13 bona fide associations (within the meaning 

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

15 Service Act), 

16 subject to the requirements of section 702(b) 

17 relating to contribution rates. 

18 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI19 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If 

20 any benefit option under the plan does not consist 

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

22 beginning of the plan year not fewer than 1,000 par23 ticipants and beneficiaries. 

24 ‘‘(4) MARKETING REQUIREMENTS.— 


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

2 which consists of health insurance coverage is 

3 offered under the plan, State-licensed insurance 

4 agents shall be used to distribute to small em5 ployers coverage which does not consist of 

6 health insurance coverage in a manner com7 parable to the manner in which such agents are 

8 used to distribute health insurance coverage. 

9 ‘‘(B) STATE-LICENSED INSURANCE

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

11 the term ‘State-licensed insurance agents’ 

12 means one or more agents who are licensed in 

13 a State and are subject to the laws of such 

14 State relating to licensure, qualification, test15 ing, examination, and continuing education of 

16 persons authorized to offer, sell, or solicit 

17 health insurance coverage in such State. 

18 ‘‘(5) REGULATORY REQUIREMENTS.—Such 

19 other requirements as the applicable authority deter20 mines are necessary to carry out the purposes of this 

21 part, which shall be prescribed by the applicable au22 thority by regulation. 

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

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

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1 fined in section 514(c)(1)) shall be construed to preclude 

2 an association health plan, or a health insurance issuer 

3 offering health insurance coverage in connection with an 

4 association health plan, from exercising its sole discretion 

5 in selecting the specific items and services consisting of 

6 medical care to be included as benefits under such plan 

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

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

9 section 731(a)(1) with respect to matters governed by sec10 tion 711, 712, or 713, or (2) any law of the State with 

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

12 plan was initially obtained to the extent that such law pro13 hibits an exclusion of a specific disease from such cov14 erage. 

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

16 FOR SOLVENCY FOR PLANS PROVIDING 

17 HEALTH BENEFITS IN ADDITION TO HEALTH 

18 INSURANCE COVERAGE. 

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

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

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

22 of health insurance coverage; or 

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

24 options which do not consist of health insurance cov25 erage, the plan— 


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1 ‘‘(A) establishes and maintains reserves 

2 with respect to such additional benefit options, 

3 in amounts recommended by the qualified 

4 health actuary, consisting of— 

5 ‘‘(i) a reserve sufficient for unearned 

6 contributions; 

7 ‘‘(ii) a reserve sufficient for benefit li8 abilities which have been incurred, which 

9 have not been satisfied, and for which risk 

10 of loss has not yet been transferred, and 

11 for expected administrative costs with re12 spect to such benefit liabilities; 

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

14 obligations of the plan; and 

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

16 of error and other fluctuations, taking into 

17 account the specific circumstances of the 

18 plan; and 

19 ‘‘(B) establishes and maintains aggregate 

20 and specific excess/stop loss insurance and sol21 vency indemnification, with respect to such ad22 ditional benefit options for which risk of loss 

23 has not yet been transferred, as follows: 

24 ‘‘(i) The plan shall secure aggregate 

25 excess/stop loss insurance for the plan with 


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1 an attachment point which is not greater 

2 than 125 percent of expected gross annual 

3 claims. The applicable authority may by 

4 regulation provide for upward adjustments 

5 in the amount of such percentage in speci6 fied circumstances in which the plan spe7 cifically provides for and maintains re8 serves in excess of the amounts required 

9 under subparagraph (A). 

10 ‘‘(ii) The plan shall secure specific ex11 cess/stop loss insurance for the plan with 

12 an attachment point which is at least equal 

13 to an amount recommended by the plan’s 

14 qualified health actuary. The applicable 

15 authority may by regulation provide for ad16 justments in the amount of such insurance 

17 in specified circumstances in which the 

18 plan specifically provides for and maintains 

19 reserves in excess of the amounts required 

20 under subparagraph (A). 

21 ‘‘(iii) The plan shall secure indem22 nification insurance for any claims which 

23 the plan is unable to satisfy by reason of 

24 a plan termination. 


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1 Any person issuing to a plan insurance described in clause 

2 (i), (ii), or (iii) of subparagraph (B) shall notify the Sec3 retary of any failure of premium payment meriting can4 cellation of the policy prior to undertaking such a cancella5 tion. Any regulations prescribed by the applicable author6 ity pursuant to clause (i) or (ii) of subparagraph (B) may 

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

8 stop loss insurance as the qualified health actuary may 

9 recommend, taking into account the specific circumstances 

10 of the plan. 

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

12 RESERVES.—In the case of any association health plan de13 scribed in subsection (a)(2), the requirements of this sub14 section are met if the plan establishes and maintains sur15 plus in an amount at least equal to— 

16 ‘‘(1) $500,000, or 

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

18 $2,000,000) as may be set forth in regulations pre19 scribed by the applicable authority, considering the 

20 level of aggregate and specific excess/stop loss insur21 ance provided with respect to such plan and other 

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

23 projected levels of participation or claims, the nature 

24 of the plan’s liabilities, and the types of assets avail25 able to assure that such liabilities are met. 


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

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

3 the applicable authority may provide such additional re4 quirements relating to reserves, excess/stop loss insurance, 

5 and indemnification insurance as the applicable authority 

6 considers appropriate. Such requirements may be provided 

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

8 of such plans. 

9 ‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR10 ANCE.—The applicable authority may provide for adjust11 ments to the levels of reserves otherwise required under 

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

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

14 provided with respect to such plan or plans. 

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

16 applicable authority may permit an association health plan 

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

18 of the requirements of this section (except subsection 

19 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar20 rangement, or other financial arrangement as the applica21 ble authority determines to be adequate to enable the plan 

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

23 and is otherwise no less protective of the interests of par24 ticipants and beneficiaries than the requirements for 

25 which it is substituted. The applicable authority may take 


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1 into account, for purposes of this subsection, evidence pro2 vided by the plan or sponsor which demonstrates an as3 sumption of liability with respect to the plan. Such evi4 dence may be in the form of a contract of indemnification, 

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

6 applicable terms of the plan in the form of assessments 

7 of participating employers, security, or other financial ar8 rangement. 

9 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

10 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 

11 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO12 CIATION HEALTH PLAN FUND.— 

13 ‘‘(A) IN GENERAL.—In the case of an as14 sociation health plan described in subsection 

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

16 met if the plan makes payments into the Asso17 ciation Health Plan Fund under this subpara18 graph when they are due. Such payments shall 

19 consist of annual payments in the amount of 

20 $5,000, and, in addition to such annual pay21 ments, such supplemental payments as the Sec22 retary may determine to be necessary under 

23 paragraph (2). Payments under this paragraph 

24 are payable to the Fund at the time determined 

25 by the Secretary. Initial payments are due in 


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1 advance of certification under this part. Pay2 ments shall continue to accrue until a plan’s as3 sets are distributed pursuant to a termination 

4 procedure. 

5 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

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

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

8 not more than 100 percent of the payment 

9 which was not timely paid shall be payable by 

10 the plan to the Fund. 

11 ‘‘(C) CONTINUED DUTY OF THE SEC12 RETARY.—The Secretary shall not cease to 

13 carry out the provisions of paragraph (2) on ac14 count of the failure of a plan to pay any pay15 ment when due. 

16 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

17 EXCESS/STOP LOSS INSURANCE COVERAGE AND IN18 DEMNIFICATION INSURANCE COVERAGE FOR CER19 TAIN PLANS.—In any case in which the applicable 

20 authority determines that there is, or that there is 

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

22 take necessary corrective actions under section 

23 809(a) with respect to an association health plan de24 scribed in subsection (a)(2); or (B) a termination of 

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


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1 if the applicable authority is not the Secretary, cer2 tifies such determination to the Secretary), the Sec3 retary shall determine the amounts necessary to 

4 make payments to an insurer (designated by the 

5 Secretary) to maintain in force excess/stop loss in6 surance coverage or indemnification insurance cov7 erage for such plan, if the Secretary determines that 

8 there is a reasonable expectation that, without such 

9 payments, claims would not be satisfied by reason of 

10 termination of such coverage. The Secretary shall, to 

11 the extent provided in advance in appropriation 

12 Acts, pay such amounts so determined to the insurer 

13 designated by the Secretary. 

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

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

16 on the books of the Treasury a fund to be 

17 known as the ‘Association Health Plan Fund’. 

18 The Fund shall be available for making pay19 ments pursuant to paragraph (2). The Fund 

20 shall be credited with payments received pursu21 ant to paragraph (1)(A), penalties received pur22 suant to paragraph (1)(B); and earnings on in23 vestments of amounts of the Fund under sub24 paragraph (B). 


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1 ‘‘(B) INVESTMENT.—Whenever the Sec2 retary determines that the moneys of the fund 

3 are in excess of current needs, the Secretary 

4 may request the investment of such amounts as 

5 the Secretary determines advisable by the Sec6 retary of the Treasury in obligations issued or 

7 guaranteed by the United States. 

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

9 of this section— 

10 ‘‘(1) AGGREGATE EXCESS/STOP LOSS INSUR11 ANCE.—The term ‘aggregate excess/stop loss insur12 ance’ means, in connection with an association 

13 health plan, a contract— 

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

15 minimum standards as the applicable authority 

16 may prescribe by regulation) provides for pay17 ment to the plan with respect to aggregate 

18 claims under the plan in excess of an amount 

19 or amounts specified in such contract; 

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

21 ‘‘(C) which allows for payment of pre22 miums by any third party on behalf of the in23 sured plan. 

24 ‘‘(2) SPECIFIC EXCESS/STOP LOSS INSUR25 ANCE.—The term ‘specific excess/stop loss insurVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00081 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 ance’ means, in connection with an association 

2 health plan, a contract— 

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

4 minimum standards as the applicable authority 

5 may prescribe by regulation) provides for pay6 ment to the plan with respect to claims under 

7 the plan in connection with a covered individual 

8 in excess of an amount or amounts specified in 

9 such contract in connection with such covered 

10 individual; 

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

12 ‘‘(C) which allows for payment of pre13 miums by any third party on behalf of the in14 sured plan. 

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

16 of this section, the term ‘indemnification insurance’ 

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

18 contract— 

19 ‘‘(1) under which an insurer (meeting such min20 imum standards as the applicable authority may pre21 scribe by regulation) provides for payment to the 

22 plan with respect to claims under the plan which the 

23 plan is unable to satisfy by reason of a termination 

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

25 termination); 


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1 ‘‘(2) which is guaranteed renewable and 

2 noncancellable for any reason (except as the applica3 ble authority may prescribe by regulation); and 

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

5 any third party on behalf of the insured plan. 

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

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

8 health plan, plan assets which meet the fiduciary stand9 ards under part 4 and such additional requirements re10 garding liquidity as the applicable authority may prescribe 

11 by regulation. 

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

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

14 date of the enactment of the Small Business Health 

15 Fairness Act of 2009, the applicable authority shall 

16 establish a Solvency Standards Working Group. In 

17 prescribing the initial regulations under this section, 

18 the applicable authority shall take into account the 

19 recommendations of such Working Group. 

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

21 consist of not more than 15 members appointed by 

22 the applicable authority. The applicable authority 

23 shall include among persons invited to membership 

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

25 following: 


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1 ‘‘(A) a representative of the National Asso2 ciation of Insurance Commissioners; 

3 ‘‘(B) a representative of the American 

4 Academy of Actuaries; 

5 ‘‘(C) a representative of the State govern6 ments, or their interests; 

7 ‘‘(D) a representative of existing self-in8 sured arrangements, or their interests; 

9 ‘‘(E) a representative of associations of the 

10 type referred to in section 801(b)(1), or their 

11 interests; and 

12 ‘‘(F) a representative of multiemployer 

13 plans that are group health plans, or their in14 terests. 

15 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE16 LATED REQUIREMENTS. 

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

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

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

20 an application for certification under this part a filing fee 

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

22 case of the Secretary, to the extent provided in appropria23 tion Acts, for the sole purpose of administering the certifi24 cation procedures applicable with respect to association 

25 health plans. 


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1 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA2 TION FOR CERTIFICATION.—An application for certifi3 cation under this part meets the requirements of this sec4 tion only if it includes, in a manner and form which shall 

5 be prescribed by the applicable authority by regulation, at 

6 least the following information: 

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

8 and addresses of— 

9 ‘‘(A) the sponsor; and 

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

11 of the plan. 

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

13 BUSINESS.—The States in which participants and 

14 beneficiaries under the plan are to be located and 

15 the number of them expected to be located in each 

16 such State. 

17 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro18 vided by the board of trustees that the bonding re19 quirements of section 412 will be met as of the date 

20 of the application or (if later) commencement of op21 erations. 

22 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu23 ments governing the plan (including any bylaws and 

24 trust agreements), the summary plan description, 

25 and other material describing the benefits that will 


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1 be provided to participants and beneficiaries under 

2 the plan. 

3 ‘‘(5) AGREEMENTS WITH SERVICE PRO4 VIDERS.—A copy of any agreements between the 

5 plan and contract administrators and other service 

6 providers. 

7 ‘‘(6) FUNDING REPORT.—In the case of asso8 ciation health plans providing benefits options in ad9 dition to health insurance coverage, a report setting 

10 forth information with respect to such additional 

11 benefit options determined as of a date within the 

12 120-day period ending with the date of the applica13 tion, including the following: 

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

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

16 statement of actuarial opinion, signed by a 

17 qualified health actuary, that all applicable re18 quirements of section 806 are or will be met in 

19 accordance with regulations which the applica20 ble authority shall prescribe. 

21 ‘‘(B) ADEQUACY OF CONTRIBUTION

22 RATES.—A statement of actuarial opinion, 

23 signed by a qualified health actuary, which sets 

24 forth a description of the extent to which con25 tribution rates are adequate to provide for the 


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1 payment of all obligations and the maintenance 

2 of required reserves under the plan for the 12- 

3 month period beginning with such date within 

4 such 120-day period, taking into account the 

5 expected coverage and experience of the plan. If 

6 the contribution rates are not fully adequate, 

7 the statement of actuarial opinion shall indicate 

8 the extent to which the rates are inadequate 

9 and the changes needed to ensure adequacy. 

10 ‘‘(C) CURRENT AND PROJECTED VALUE OF

11 ASSETS AND LIABILITIES.—A statement of ac12 tuarial opinion signed by a qualified health ac13 tuary, which sets forth the current value of the 

14 assets and liabilities accumulated under the 

15 plan and a projection of the assets, liabilities, 

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

17 month period referred to in subparagraph (B). 

18 The income statement shall identify separately 

19 the plan’s administrative expenses and claims. 

20 ‘‘(D) COSTS OF COVERAGE TO BE

21 CHARGED AND OTHER EXPENSES.—A state22 ment of the costs of coverage to be charged, in23 cluding an itemization of amounts for adminis24 tration, reserves, and other expenses associated 

25 with the operation of the plan. 


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1 ‘‘(E) OTHER INFORMATION.—Any other 

2 information as may be determined by the appli3 cable authority, by regulation, as necessary to 

4 carry out the purposes of this part. 

5 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

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

7 association health plan shall not be effective unless written 

8 notice of such certification is filed with the applicable 

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

10 of the participants and beneficiaries under the plan are 

11 located. For purposes of this subsection, an individual 

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

13 known address of such individual is located or in which 

14 such individual is employed. 

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

16 of any association health plan certified under this part, 

17 descriptions of material changes in any information which 

18 was required to be submitted with the application for the 

19 certification under this part shall be filed in such form 

20 and manner as shall be prescribed by the applicable au21 thority by regulation. The applicable authority may re22 quire by regulation prior notice of material changes with 

23 respect to specified matters which might serve as the basis 

24 for suspension or revocation of the certification. 


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1 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS2 SOCIATION HEALTH PLANS.—An association health plan 

3 certified under this part which provides benefit options in 

4 addition to health insurance coverage for such plan year 

5 shall meet the requirements of section 103 by filing an 

6 annual report under such section which shall include infor7 mation described in subsection (b)(6) with respect to the 

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

9 be filed with the applicable authority not later than 90 

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

11 as may be prescribed by the applicable authority). The ap12 plicable authority may require by regulation such interim 

13 reports as it considers appropriate. 

14 ‘‘(f) ENGAGEMENT OF QUALIFIED HEALTH ACTU15 ARY.—The board of trustees of each association health 

16 plan which provides benefits options in addition to health 

17 insurance coverage and which is applying for certification 

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

19 on behalf of all participants and beneficiaries, a qualified 

20 health actuary who shall be responsible for the preparation 

21 of the materials comprising information necessary to be 

22 submitted by a qualified health actuary under this part. 

23 The qualified health actuary shall utilize such assumptions 

24 and techniques as are necessary to enable such actuary 


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1 to form an opinion as to whether the contents of the mat2 ters reported under this part— 

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

4 the experience of the plan and to reasonable expecta5 tions; and 

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

7 anticipated experience under the plan. 

8 The opinion by the qualified health actuary shall be made 

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

10 report. 

11 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER12 MINATION. 

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

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

15 may terminate (upon or at any time after cessation of ac16 cruals in benefit liabilities) only if the board of trustees, 

17 not less than 60 days before the proposed termination 

18 date— 

19 ‘‘(1) provides to the participants and bene20 ficiaries a written notice of intent to terminate stat21 ing that such termination is intended and the pro22 posed termination date; 

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

24 of the plan in connection with such termination in 


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1 a manner which will result in timely payment of all 

2 benefits for which the plan is obligated; and 

3 ‘‘(3) submits such plan in writing to the appli4 cable authority. 

5 Actions required under this section shall be taken in such 

6 form and manner as may be prescribed by the applicable 

7 authority by regulation. 

8 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI9 NATION. 

10 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE11 SERVES.—An association health plan which is certified 

12 under this part and which provides benefits other than 

13 health insurance coverage shall continue to meet the re14 quirements of section 806, irrespective of whether such 

15 certification continues in effect. The board of trustees of 

16 such plan shall determine quarterly whether the require17 ments of section 806 are met. In any case in which the 

18 board determines that there is reason to believe that there 

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

20 applicable authority makes such a determination and so 

21 notifies the board, the board shall immediately notify the 

22 qualified health actuary engaged by the plan, and such 

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

24 month, make such recommendations to the board for cor25 rective action as the actuary determines necessary to enVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00091 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 sure compliance with section 806. Not later than 30 days 

2 after receiving from the actuary recommendations for cor3 rective actions, the board shall notify the applicable au4 thority (in such form and manner as the applicable au5 thority may prescribe by regulation) of such recommenda6 tions of the actuary for corrective action, together with 

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

8 taken or plans to take in response to such recommenda9 tions. The board shall thereafter report to the applicable 

10 authority, in such form and frequency as the applicable 

11 authority may specify to the board, regarding corrective 

12 action taken by the board until the requirements of section 

13 806 are met. 

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

15 which— 

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

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

18 loss insurance or indemnity insurance pursuant to 

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

20 plan which is or has been certified under this part 

21 and is described in section 806(a)(2) to meet the re22 quirements of section 806 and has not been notified 

23 by the board of trustees of the plan that corrective 

24 action has restored compliance with such require25 ments; and 


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1 ‘‘(2) the applicable authority determines that 

2 there is a reasonable expectation that the plan will 

3 continue to fail to meet the requirements of section 

4 806, 

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

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

7 course of the termination, take such actions as the appli8 cable authority may require, including satisfying any 

9 claims referred to in section 806(a)(2)(B)(iii) and recov10 ering for the plan any liability under subsection 

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

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

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

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

15 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL16 VENT ASSOCIATION HEALTH PLANS PRO17 VIDING HEALTH BENEFITS IN ADDITION TO 

18 HEALTH INSURANCE COVERAGE. 

19 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

20 INSOLVENT PLANS.—Whenever the Secretary determines 

21 that an association health plan which is or has been cer22 tified under this part and which is described in section 

23 806(a)(2) will be unable to provide benefits when due or 

24 is otherwise in a financially hazardous condition, as shall 

25 be defined by the Secretary by regulation, the Secretary 


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1 shall, upon notice to the plan, apply to the appropriate 

2 United States district court for appointment of the Sec3 retary as trustee to administer the plan for the duration 

4 of the insolvency. The plan may appear as a party and 

5 other interested persons may intervene in the proceedings 

6 at the discretion of the court. The court shall appoint such 

7 Secretary trustee if the court determines that the trustee8 ship is necessary to protect the interests of the partici9 pants and beneficiaries or providers of medical care or to 

10 avoid any unreasonable deterioration of the financial con11 dition of the plan. The trusteeship of such Secretary shall 

12 continue until the conditions described in the first sen13 tence of this subsection are remedied or the plan is termi14 nated. 

15 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 

16 appointment as trustee under subsection (a), shall have 

17 the power— 

18 ‘‘(1) to do any act authorized by the plan, this 

19 title, or other applicable provisions of law to be done 

20 by the plan administrator or any trustee of the plan; 

21 ‘‘(2) to require the transfer of all (or any part) 

22 of the assets and records of the plan to the Sec23 retary as trustee; 

24 ‘‘(3) to invest any assets of the plan which the 

25 Secretary holds in accordance with the provisions of 


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1 the plan, regulations prescribed by the Secretary, 

2 and applicable provisions of law; 

3 ‘‘(4) to require the sponsor, the plan adminis4 trator, any participating employer, and any employee 

5 organization representing plan participants to fur6 nish any information with respect to the plan which 

7 the Secretary as trustee may reasonably need in 

8 order to administer the plan; 

9 ‘‘(5) to collect for the plan any amounts due the 

10 plan and to recover reasonable expenses of the trust11 eeship; 

12 ‘‘(6) to commence, prosecute, or defend on be13 half of the plan any suit or proceeding involving the 

14 plan; 

15 ‘‘(7) to issue, publish, or file such notices, state16 ments, and reports as may be required by the Sec17 retary by regulation or required by any order of the 

18 court; 

19 ‘‘(8) to terminate the plan (or provide for its 

20 termination in accordance with section 809(b)) and 

21 liquidate the plan assets, to restore the plan to the 

22 responsibility of the sponsor, or to continue the 

23 trusteeship; 


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1 ‘‘(9) to provide for the enrollment of plan par2 ticipants and beneficiaries under appropriate cov3 erage options; and 

4 ‘‘(10) to do such other acts as may be nec5 essary to comply with this title or any order of the 

6 court and to protect the interests of plan partici7 pants and beneficiaries and providers of medical 

8 care. 

9 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac10 ticable after the Secretary’s appointment as trustee, the 

11 Secretary shall give notice of such appointment to— 

12 ‘‘(1) the sponsor and plan administrator; 

13 ‘‘(2) each participant; 

14 ‘‘(3) each participating employer; and 

15 ‘‘(4) if applicable, each employee organization 

16 which, for purposes of collective bargaining, rep17 resents plan participants. 

18 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in19 consistent with the provisions of this title, or as may be 

20 otherwise ordered by the court, the Secretary, upon ap21 pointment as trustee under this section, shall be subject 

22 to the same duties as those of a trustee under section 704 

23 of title 11, United States Code, and shall have the duties 

24 of a fiduciary for purposes of this title. 


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1 ‘‘(e) OTHER PROCEEDINGS.—An application by the 

2 Secretary under this subsection may be filed notwith3 standing the pendency in the same or any other court of 

4 any bankruptcy, mortgage foreclosure, or equity receiver5 ship proceeding, or any proceeding to reorganize, conserve, 

6 or liquidate such plan or its property, or any proceeding 

7 to enforce a lien against property of the plan. 

8 ‘‘(f) JURISDICTION OF COURT.— 

9 ‘‘(1) IN GENERAL.—Upon the filing of an appli10 cation for the appointment as trustee or the issuance 

11 of a decree under this section, the court to which the 

12 application is made shall have exclusive jurisdiction 

13 of the plan involved and its property wherever lo14 cated with the powers, to the extent consistent with 

15 the purposes of this section, of a court of the United 

16 States having jurisdiction over cases under chapter 

17 11 of title 11, United States Code. Pending an adju18 dication under this section such court shall stay, and 

19 upon appointment by it of the Secretary as trustee, 

20 such court shall continue the stay of, any pending 

21 mortgage foreclosure, equity receivership, or other 

22 proceeding to reorganize, conserve, or liquidate the 

23 plan, the sponsor, or property of such plan or spon24 sor, and any other suit against any receiver, conser25 vator, or trustee of the plan, the sponsor, or propVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00097 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 erty of the plan or sponsor. Pending such adjudica2 tion and upon the appointment by it of the Sec3 retary as trustee, the court may stay any proceeding 

4 to enforce a lien against property of the plan or the 

5 sponsor or any other suit against the plan or the 

6 sponsor. 

7 ‘‘(2) VENUE.—An action under this section 

8 may be brought in the judicial district where the 

9 sponsor or the plan administrator resides or does 

10 business or where any asset of the plan is situated. 

11 A district court in which such action is brought may 

12 issue process with respect to such action in any 

13 other judicial district. 

14 ‘‘(g) PERSONNEL.—In accordance with regulations 

15 which shall be prescribed by the Secretary, the Secretary 

16 shall appoint, retain, and compensate accountants, actu17 aries, and other professional service personnel as may be 

18 necessary in connection with the Secretary’s service as 

19 trustee under this section. 

20 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 

21 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a 

22 State may impose by law a contribution tax on an associa23 tion health plan described in section 806(a)(2), if the plan 

24 commenced operations in such State after the date of the 


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1 enactment of the Small Business Health Fairness Act of 

2 2009. 

3 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec4 tion, the term ‘contribution tax’ imposed by a State on 

5 an association health plan means any tax imposed by such 

6 State if— 

7 ‘‘(1) such tax is computed by applying a rate to 

8 the amount of premiums or contributions, with re9 spect to individuals covered under the plan who are 

10 residents of such State, which are received by the 

11 plan from participating employers located in such 

12 State or from such individuals; 

13 ‘‘(2) the rate of such tax does not exceed the 

14 rate of any tax imposed by such State on premiums 

15 or contributions received by insurers or health main16 tenance organizations for health insurance coverage 

17 offered in such State in connection with a group 

18 health plan; 

19 ‘‘(3) such tax is otherwise nondiscriminatory; 

20 and 

21 ‘‘(4) the amount of any such tax assessed on 

22 the plan is reduced by the amount of any tax or as23 sessment otherwise imposed by the State on pre24 miums, contributions, or both received by insurers or 

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1 ance coverage, aggregate excess/stop loss insurance 

2 (as defined in section 806(g)(1)), specific excess/stop 

3 loss insurance (as defined in section 806(g)(2)), 

4 other insurance related to the provision of medical 

5 care under the plan, or any combination thereof pro6 vided by such insurers or health maintenance organi7 zations in such State in connection with such plan. 

8 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 

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

10 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group 

11 health plan’ has the meaning provided in section 

12 733(a)(1) (after applying subsection (b) of this sec13 tion). 

14 ‘‘(2) MEDICAL CARE.—The term ‘medical care’ 

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

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

17 term ‘health insurance coverage’ has the meaning 

18 provided in section 733(b)(1). 

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

20 ‘health insurance issuer’ has the meaning provided 

21 in section 733(b)(2). 

22 ‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap23 plicable authority’ means the Secretary, except that, 

24 in connection with any exercise of the Secretary’s 

25 authority regarding which the Secretary is required 


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1 under section 506(d) to consult with a State, such 

2 term means the Secretary, in consultation with such 

3 State. 

4 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 

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

6 provided in section 733(d)(2). 

7 ‘‘(7) INDIVIDUAL MARKET.— 

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

9 market’ means the market for health insurance 

10 coverage offered to individuals other than in 

11 connection with a group health plan. 

12 ‘‘(B) TREATMENT OF VERY SMALL

13 GROUPS.— 

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

15 (ii), such term includes coverage offered in 

16 connection with a group health plan that 

17 has fewer than 2 participants as current 

18 employees or participants described in sec19 tion 732(d)(3) on the first day of the plan 

20 year. 

21 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

22 shall not apply in the case of health insur23 ance coverage offered in a State if such 

24 State regulates the coverage described in 

25 such clause in the same manner and to the 


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1 same extent as coverage in the small group 

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

3 the Public Health Service Act) is regulated 

4 by such State. 

5 ‘‘(8) PARTICIPATING EMPLOYER.—The term 

6 ‘participating employer’ means, in connection with 

7 an association health plan, any employer, if any indi8 vidual who is an employee of such employer, a part9 ner in such employer, or a self-employed individual 

10 who is such employer (or any dependent, as defined 

11 under the terms of the plan, of such individual) is 

12 or was covered under such plan in connection with 

13 the status of such individual as such an employee, 

14 partner, or self-employed individual in relation to the 

15 plan. 

16 ‘‘(9) 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 ‘‘(10) QUALIFIED HEALTH ACTUARY.—The 

24 term ‘qualified health actuary’ means an individual 


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1 who is a member of the American Academy of Actu2 aries with expertise in health care. 

3 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili4 ated member’ means, in connection with a sponsor— 

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

6 be a member of the sponsor but who elects an 

7 affiliated status with the sponsor, 

8 ‘‘(B) in the case of a sponsor with mem9 bers which consist of associations, a person who 

10 is a member of any such association and elects 

11 an affiliated status with the sponsor, or 

12 ‘‘(C) in the case of an association health 

13 plan in existence on the date of the enactment 

14 of the Small Business Health Fairness Act of 

15 2009, a person eligible to be a member of the 

16 sponsor or one of its member associations. 

17 ‘‘(12) LARGE EMPLOYER.—The term ‘large em18 ployer’ means, in connection with a group health 

19 plan with respect to a plan year, an employer who 

20 employed an average of at least 51 employees on 

21 business days during the preceding calendar year 

22 and who employs at least 2 employees on the first 

23 day of the plan year. 

24 ‘‘(13) SMALL EMPLOYER.—The term ‘small em25 ployer’ means, in connection with a group health 


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1 plan with respect to a plan year, an employer who 

2 is not a large employer. 

3 ‘‘(b) RULES OF CONSTRUCTION.— 

4 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur5 poses of determining whether a plan, fund, or pro6 gram is an employee welfare benefit plan which is an 

7 association health plan, and for purposes of applying 

8 this title in connection with such plan, fund, or pro9 gram so determined to be such an employee welfare 

10 benefit plan— 

11 ‘‘(A) in the case of a partnership, the term 

12 ‘employer’ (as defined in section 3(5)) includes 

13 the partnership in relation to the partners, and 

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

15 includes any partner in relation to the partner16 ship; and 

17 ‘‘(B) in the case of a self-employed indi18 vidual, the term ‘employer’ (as defined in sec19 tion 3(5)) and the term ‘employee’ (as defined 

20 in section 3(6)) shall include such individual. 

21 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

22 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 

23 case of any plan, fund, or program which was estab24 lished or is maintained for the purpose of providing 

25 medical care (through the purchase of insurance or 


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1 otherwise) for employees (or their dependents) cov2 ered thereunder and which demonstrates to the Sec3 retary that all requirements for certification under 

4 this part would be met with respect to such plan, 

5 fund, or program if such plan, fund, or program 

6 were a group health plan, such plan, fund, or pro7 gram shall be treated for purposes of this title as an 

8 employee welfare benefit plan on and after the date 

9 of such demonstration.’’. 

10 (b) CONFORMING AMENDMENTS TO PREEMPTION

11 RULES.— 

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

13 1144(b)(6)) is amended by adding at the end the 

14 following new subparagraph: 

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

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

17 of an association health plan which is certified under part 

18 8.’’. 

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

20 is amended— 

21 (A) in subsection (b)(4), by striking ‘‘Sub22 section (a)’’ and inserting ‘‘Subsections (a) and 

23 (d)’’; 

24 (B) in subsection (b)(5), by striking ‘‘sub25 section (a)’’ in subparagraph (A) and inserting 


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

2 (a)(2)(B) and (b) of section 805’’, and by strik3 ing ‘‘subsection (a)’’ in subparagraph (B) and 

4 inserting ‘‘subsection (a) of this section or sub5 section (a)(2)(B) or (b) of section 805’’; 

6 (C) by redesignating subsection (d) as sub7 section (e); and 

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

9 following new subsection: 

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

11 provisions of this title shall supersede any and all State 

12 laws insofar as they may now or hereafter preclude, or 

13 have the effect of precluding, a health insurance issuer 

14 from offering health insurance coverage in connection with 

15 an association health plan which is certified under part 

16 8. 

17 ‘‘(2) Except as provided in paragraphs (4) and (5) 

18 of subsection (b) of this section— 

19 ‘‘(A) In any case in which health insurance cov20 erage of any policy type is offered under an associa21 tion health plan certified under part 8 to a partici22 pating employer operating in such State, the provi23 sions of this title shall supersede any and all laws 

24 of such State insofar as they may preclude a health 

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1 erage of the same policy type to other employers op2 erating in the State which are eligible for coverage 

3 under such association health plan, whether or not 

4 such other employers are participating employers in 

5 such plan. 

6 ‘‘(B) In any case in which health insurance cov7 erage of any policy type is offered in a State under 

8 an association health plan certified under part 8 and 

9 the filing, with the applicable State authority (as de10 fined in section 812(a)(9)), of the policy form in 

11 connection with such policy type is approved by such 

12 State authority, the provisions of this title shall su13 persede any and all laws of any other State in which 

14 health insurance coverage of such type is offered, in15 sofar as they may preclude, upon the filing in the 

16 same form and manner of such policy form with the 

17 applicable State authority in such other State, the 

18 approval of the filing in such other State. 

19 ‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 

20 provisions of this subsection shall be construed, with re21 spect to health insurance issuers or health insurance cov22 erage, to supersede or impair the law of any State— 

23 ‘‘(A) providing solvency standards or similar 

24 standards regarding the adequacy of insurer capital, 

25 surplus, reserves, or contributions, or 


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1 ‘‘(B) relating to prompt payment of claims. 

2 ‘‘(4) For additional provisions relating to association 

3 health plans, see subsections (a)(2)(B) and (b) of section 

4 805. 

5 ‘‘(5) For purposes of this subsection, the term ‘asso6 ciation health plan’ has the meaning provided in section 

7 801(a), and the terms ‘health insurance coverage’, ‘par8 ticipating employer’, and ‘health insurance issuer’ have 

9 the meanings provided such terms in section 812, respec10 tively.’’. 

11 (3) Section 514(b)(6)(A) of such Act (29 

12 U.S.C. 1144(b)(6)(A)) is amended— 

13 (A) in clause (i)(II), by striking ‘‘and’’ at 

14 the end; 

15 (B) in clause (ii), by inserting ‘‘and which 

16 does not provide medical care (within the mean17 ing of section 733(a)(2)),’’ after ‘‘arrange18 ment,’’, and by striking ‘‘title.’’ and inserting 

19 ‘‘title, and’’; and 

20 (C) by adding at the end the following new 

21 clause: 

22 ‘‘(iii) subject to subparagraph (E), in the case 

23 of any other employee welfare benefit plan which is 

24 a multiple employer welfare arrangement and which 

25 provides medical care (within the meaning of section 


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1 733(a)(2)), any law of any State which regulates in2 surance may apply.’’. 

3 (4) Section 514(e) of such Act (as redesignated 

4 by paragraph (2)(C)) is amended— 

5 (A) by striking ‘‘Nothing’’ and inserting 

6 ‘‘(1) Except as provided in paragraph (2), noth7 ing’’; and 

8 (B) by adding at the end the following new 

9 paragraph: 

10 ‘‘(2) Nothing in any other provision of law enacted 

11 on or after the date of the enactment of the Small Busi12 ness Health Fairness Act of 2009 shall be construed to 

13 alter, amend, modify, invalidate, impair, or supersede any 

14 provision of this title, except by specific cross-reference to 

15 the affected section.’’. 

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

17 (29 U.S.C. 102(16)(B)) is amended by adding at the end 

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

19 person serving as the sponsor of an association health plan 

20 under part 8.’’. 

21 (d) DISCLOSURE OF SOLVENCY PROTECTIONS RE22 LATED TO SELF-INSURED AND FULLY INSURED OPTIONS

23 UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 

24 of such Act (29 U.S.C. 102(b)) is amended by adding at 

25 the end the following: ‘‘An association health plan shall 


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1 include in its summary plan description, in connection 

2 with each benefit option, a description of the form of sol3 vency or guarantee fund protection secured pursuant to 

4 this Act or applicable State law, if any.’’. 

5 (e) SAVINGS CLAUSE.—Section 731(c) of such Act is 

6 amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 

7 (f) REPORT TO THE CONGRESS REGARDING CERTIFI8 CATION OF SELF-INSURED ASSOCIATION HEALTH

9 PLANS.—Not later than January 1, 2012, the Secretary 

10 of Labor shall report to the Committee on Education and 

11 the Workforce of the House of Representatives and the 

12 Committee on Health, Education, Labor, and Pensions of 

13 the Senate the effect association health plans have had, 

14 if any, on reducing the number of uninsured individuals. 

15 (g) CLERICAL AMENDMENT.—The table of contents 

16 in section 1 of the Employee Retirement Income Security 

17 Act of 1974 is amended by inserting after the item relat18 ing to section 734 the following new items: 

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘801. Association health plans. 

‘‘802. Certification of association health plans. 

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

‘‘804. Participation and coverage requirements. 

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

benefit options. 

‘‘806. Maintenance of reserves and provisions for solvency for plans providing 

health benefits in addition to health insurance coverage. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Corrective actions and mandatory termination. 

‘‘810. Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage. 


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‘‘811. State assessment authority. 

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

1 SEC. 233. CLARIFICATION OF TREATMENT OF SINGLE EM2 PLOYER ARRANGEMENTS. 

3 Section 3(40)(B) of the Employee Retirement Income 

4 Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend5 ed— 

6 (1) in clause (i), by inserting after ‘‘control 

7 group,’’ the following: ‘‘except that, in any case in 

8 which the benefit referred to in subparagraph (A) 

9 consists of medical care (as defined in section 

10 812(a)(2)), two or more trades or businesses, wheth11 er or not incorporated, shall be deemed a single em12 ployer for any plan year of such plan, or any fiscal 

13 year of such other arrangement, if such trades or 

14 businesses are within the same control group during 

15 such year or at any time during the preceding 1-year 

16 period,’’; 

17 (2) in clause (iii), by striking ‘‘(iii) the deter18 mination’’ and inserting the following: 

19 ‘‘(iii)(I) in any case in which the benefit re20 ferred to in subparagraph (A) consists of medical 

21 care (as defined in section 812(a)(2)), the deter22 mination of whether a trade or business is under 

23 ‘common control’ with another trade or business 

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1 retary applying principles consistent and coextensive 

2 with the principles applied in determining whether 

3 employees of two or more trades or businesses are 

4 treated as employed by a single employer under sec5 tion 4001(b), except that, for purposes of this para6 graph, an interest of greater than 25 percent may 

7 not be required as the minimum interest necessary 

8 for common control, or 

9 ‘‘(II) in any other case, the determination’’; 

10 (3) by redesignating clauses (iv) and (v) as 

11 clauses (v) and (vi), respectively; and 

12 (4) by inserting after clause (iii) the following 

13 new clause: 

14 ‘‘(iv) in any case in which the benefit referred 

15 to in subparagraph (A) consists of medical care (as 

16 defined in section 812(a)(2)), in determining, after 

17 the application of clause (i), whether benefits are 

18 provided to employees of two or more employers, the 

19 arrangement shall be treated as having only one par20 ticipating employer if, after the application of clause 

21 (i), the number of individuals who are employees and 

22 former employees of any one participating employer 

23 and who are covered under the arrangement is 

24 greater than 75 percent of the aggregate number of 

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1 ees of participating employers and who are covered 

2 under the arrangement,’’. 

3 SEC. 234. ENFORCEMENT PROVISIONS RELATING TO ASSO4 CIATION HEALTH PLANS. 

5 (a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL

6 MISREPRESENTATIONS.—Section 501 of the Employee 

7 Retirement Income Security Act of 1974 (29 U.S.C. 1131) 

8 is amended— 

9 (1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 

10 (2) by adding at the end the following new sub11 section: 

12 ‘‘(b) Any person who willfully falsely represents, to 

13 any employee, any employee’s beneficiary, any employer, 

14 the Secretary, or any State, a plan or other arrangement 

15 established or maintained for the purpose of offering or 

16 providing any benefit described in section 3(1) to employ17 ees or their beneficiaries as— 

18 ‘‘(1) being an association health plan which has 

19 been certified under part 8; 

20 ‘‘(2) having been established or maintained 

21 under or pursuant to one or more collective bar22 gaining agreements which are reached pursuant to 

23 collective bargaining described in section 8(d) of the 

24 National Labor Relations Act (29 U.S.C. 158(d)) or 

25 paragraph Fourth of section 2 of the Railway Labor 


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1 Act (45 U.S.C. 152, paragraph Fourth) or which are 

2 reached pursuant to labor-management negotiations 

3 under similar provisions of State public employee re4 lations laws; or 

5 ‘‘(3) being a plan or arrangement described in 

6 section 3(40)(A)(i), 

7 shall, upon conviction, be imprisoned not more than 5 

8 years, be fined under title 18, United States Code, or 

9 both.’’. 

10 (b) CEASE ACTIVITIES ORDERS.—Section 502 of 

11 such Act (29 U.S.C. 1132) is amended by adding at the 

12 end the following new subsection: 

13 ‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE14 SIST ORDERS.— 

15 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

16 upon application by the Secretary showing the oper17 ation, promotion, or marketing of an association 

18 health plan (or similar arrangement providing bene19 fits consisting of medical care (as defined in section 

20 733(a)(2))) that— 

21 ‘‘(A) is not certified under part 8, is sub22 ject under section 514(b)(6) to the insurance 

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1 censed, registered, or otherwise approved under 

2 the insurance laws of such State; or 

3 ‘‘(B) is an association health plan certified 

4 under part 8 and is not operating in accordance 

5 with the requirements under part 8 for such 

6 certification, 

7 a district court of the United States shall enter an 

8 order requiring that the plan or arrangement cease 

9 activities. 

10 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

11 apply in the case of an association health plan or 

12 other arrangement if the plan or arrangement shows 

13 that— 

14 ‘‘(A) all benefits under it referred to in 

15 paragraph (1) consist of health insurance cov16 erage; and 

17 ‘‘(B) with respect to each State in which 

18 the plan or arrangement offers or provides ben19 efits, the plan or arrangement is operating in 

20 accordance with applicable State laws that are 

21 not superseded under section 514. 

22 ‘‘(3) ADDITIONAL EQUITABLE RELIEF.—The 

23 court may grant such additional equitable relief, in24 cluding any relief available under this title, as it 

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1 lic and of persons having claims for benefits against 

2 the plan.’’. 

3 (c) RESPONSIBILITY FOR CLAIMS PROCEDURE.— 

4 Section 503 of such Act (29 U.S.C. 1133) is amended by 

5 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 

6 and by adding at the end the following new subsection: 

7 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 

8 each association health plan which is or has been certified 

9 under part 8 shall require the board of trustees or the 

10 named fiduciary (as applicable) to ensure that the require11 ments of this section are met in connection with claims 

12 filed under the plan.’’. 

13 SEC. 235. COOPERATION BETWEEN FEDERAL AND STATE 

14 AUTHORITIES. 

15 Section 506 of the Employee Retirement Income Se16 curity Act of 1974 (29 U.S.C. 1136) is amended by adding 

17 at the end the following new subsection: 

18 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

19 TO ASSOCIATION HEALTH PLANS.— 

20 ‘‘(1) AGREEMENTS WITH STATES.—The Sec21 retary shall consult with the State recognized under 

22 paragraph (2) with respect to an association health 

23 plan regarding the exercise of— 


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1 ‘‘(A) the Secretary’s authority under sec2 tions 502 and 504 to enforce the requirements 

3 for certification under part 8; and 

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

5 association health plans under part 8 in accord6 ance with regulations of the Secretary applica7 ble to certification under part 8. 

8 ‘‘(2) RECOGNITION OF PRIMARY DOMICILE

9 STATE.—In carrying out paragraph (1), the Sec10 retary shall ensure that only one State will be recog11 nized, with respect to any particular association 

12 health plan, as the State with which consultation is 

13 required. In carrying out this paragraph— 

14 ‘‘(A) in the case of a plan which provides 

15 health insurance coverage (as defined in section 

16 812(a)(3)), such State shall be the State with 

17 which filing and approval of a policy type of18 fered by the plan was initially obtained, and 

19 ‘‘(B) in any other case, the Secretary shall 

20 take into account the places of residence of the 

21 participants and beneficiaries under the plan 

22 and the State in which the trust is main23 tained.’’. 


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1 SEC. 236. EFFECTIVE DATE AND TRANSITIONAL AND 

2 OTHER RULES. 

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

4 this subtitle shall take effect 1 year after the date of the 

5 enactment of this Act. The Secretary of Labor shall first 

6 issue all regulations necessary to carry out the amend7 ments made by this subtitle within 1 year after the date 

8 of the enactment of this Act. 

9 (b) TREATMENT OF CERTAIN EXISTING HEALTH

10 BENEFITS PROGRAMS.— 

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

12 the date of the enactment of this Act, an arrange13 ment is maintained in a State for the purpose of 

14 providing benefits consisting of medical care for the 

15 employees and beneficiaries of its participating em16 ployers, at least 200 participating employers make 

17 contributions to such arrangement, such arrange18 ment has been in existence for at least 10 years, and 

19 such arrangement is licensed under the laws of one 

20 or more States to provide such benefits to its par21 ticipating employers, upon the filing with the appli22 cable authority (as defined in section 812(a)(5) of 

23 the Employee Retirement Income Security Act of 

24 1974 (as amended by this subtitle)) by the arrange25 ment of an application for certification of the arVerDate Nov 24 2008 04:35 Aug 02, 2009 Jkt 079200 PO 00000 Frm 00118 Fmt 6652 Sfmt 6201 E:\BILLS\H3400.IH H3400

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1 rangement under part 8 of subtitle B of title I of 

2 such Act— 

3 (A) such arrangement shall be deemed to 

4 be a group health plan for purposes of title I 

5 of such Act; 

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

7 and 803(a) of the Employee Retirement Income 

8 Security Act of 1974 shall be deemed met with 

9 respect to such arrangement; 

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

11 such Act shall be deemed met, if the arrange12 ment is operated by a board of directors 

13 which— 

14 (i) is elected by the participating em15 ployers, with each employer having one 

16 vote; and 

17 (ii) has complete fiscal control over 

18 the arrangement and which is responsible 

19 for all operations of the arrangement; 

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

21 such Act shall be deemed met with respect to 

22 such arrangement; and 

23 (E) the arrangement may be certified by 

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1 erations in any State only if it operates in such 

2 State on the date of certification. 

3 The provisions of this subsection shall cease to apply 

4 with respect to any such arrangement at such time 

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

6 applicable requirements of this subsection are not 

7 met with respect to such arrangement. 

8 (2) DEFINITIONS.—For purposes of this sub9 section, the terms ‘‘group health plan’’, ‘‘medical 

10 care’’, and ‘‘participating employer’’ shall have the 

11 meanings provided in section 812 of the Employee 

12 Retirement Income Security Act of 1974, except 

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

14 to an ‘‘association health plan’’ shall be deemed a 

15 reference to an arrangement referred to in this sub16 section. 

17 TITLE III—INTERSTATE MARKET 

18 FOR HEALTH INSURANCE 

19 SEC. 301. COOPERATIVE GOVERNING OF INDIVIDUAL 

20 HEALTH INSURANCE COVERAGE. 

21 (a) IN GENERAL.—Title XXVII of the Public Health 

22 Service Act (42 U.S.C. 300gg et seq.) is amended by add23 ing at the end the following new part: 


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1 ‘‘PART D—COOPERATIVE GOVERNING OF 

2 INDIVIDUAL HEALTH INSURANCE COVERAGE 

3 ‘‘SEC. 2795. DEFINITIONS. 

4 ‘‘In this part: 

5 ‘‘(1) PRIMARY STATE.—The term ‘primary 

6 State’ means, with respect to individual health insur7 ance coverage offered by a health insurance issuer, 

8 the State designated by the issuer as the State 

9 whose covered laws shall govern the health insurance 

10 issuer in the sale of such coverage under this part. 

11 An issuer, with respect to a particular policy, may 

12 only designate one such State as its primary State 

13 with respect to all such coverage it offers. Such an 

14 issuer may not change the designated primary State 

15 with respect to individual health insurance coverage 

16 once the policy is issued, except that such a change 

17 may be made upon renewal of the policy. With re18 spect to such designated State, the issuer is deemed 

19 to be doing business in that State. 

20 ‘‘(2) SECONDARY STATE.—The term ‘secondary 

21 State’ means, with respect to individual health insur22 ance coverage offered by a health insurance issuer, 

23 any State that is not the primary State. In the case 

24 of a health insurance issuer that is selling a policy 

25 in, or to a resident of, a secondary State, the issuer 


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1 is deemed to be doing business in that secondary 

2 State. 

3 ‘‘(3) HEALTH INSURANCE ISSUER.—The term 

4 ‘health insurance issuer’ has the meaning given such 

5 term in section 2791(b)(2), except that such an 

6 issuer must be licensed in the primary State and be 

7 qualified to sell individual health insurance coverage 

8 in that State. 

9 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV10 ERAGE.—The term ‘individual health insurance cov11 erage’ means health insurance coverage offered in 

12 the individual market, as defined in section 

13 2791(e)(1). 

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

15 term ‘applicable State authority’ means, with respect 

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

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

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

21 term ‘hazardous financial condition’ means that, 

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

24 to be able— 


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1 ‘‘(A) to meet obligations to policyholders 

2 with respect to known claims and reasonably 

3 anticipated claims; or 

4 ‘‘(B) to pay other obligations in the normal 

5 course of business. 

6 ‘‘(7) COVERED LAWS.— 

7 ‘‘(A) IN GENERAL.—The term ‘covered 

8 laws’ means the laws, rules, regulations, agree9 ments, and orders governing the insurance busi10 ness pertaining to— 

11 ‘‘(i) individual health insurance cov12 erage issued by a health insurance issuer; 

13 ‘‘(ii) the offer, sale, rating (including 

14 medical underwriting), renewal, and 

15 issuance of individual health insurance cov16 erage to an individual; 

17 ‘‘(iii) the provision to an individual in 

18 relation to individual health insurance cov19 erage of health care and insurance related 

20 services; 

21 ‘‘(iv) the provision to an individual in 

22 relation to individual health insurance cov23 erage of management, operations, and in24 vestment activities of a health insurance 

25 issuer; and 


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1 ‘‘(v) the provision to an individual in 

2 relation to individual health insurance cov3 erage of loss control and claims adminis4 tration for a health insurance issuer with 

5 respect to liability for which the issuer pro6 vides insurance. 

7 ‘‘(B) EXCEPTION.—Such term does not in8 clude any law, rule, regulation, agreement, or 

9 order governing the use of care or cost manage10 ment techniques, including any requirement re11 lated to provider contracting, network access or 

12 adequacy, health care data collection, or quality 

13 assurance. 

14 ‘‘(8) STATE.—The term ‘State’ means only the 

15 50 States and the District of Columbia. 

16 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC17 TICES.—The term ‘unfair claims settlement prac18 tices’ means only the following practices: 

19 ‘‘(A) Knowingly misrepresenting to claim20 ants and insured individuals relevant facts or 

21 policy provisions relating to coverage at issue. 

22 ‘‘(B) Failing to acknowledge with reason23 able promptness pertinent communications with 

24 respect to claims arising under policies. 


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1 ‘‘(C) Failing to adopt and implement rea2 sonable standards for the prompt investigation 

3 and settlement of claims arising under policies. 

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

5 and equitable settlement of claims submitted in 

6 which liability has become reasonably clear. 

7 ‘‘(E) Refusing to pay claims without con8 ducting a reasonable investigation. 

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

10 claims within a reasonable period of time after 

11 having completed an investigation related to 

12 those claims. 

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

14 insured individuals or their beneficiaries to in15 stitute suits to recover amounts due under its 

16 policies by offering substantially less than the 

17 amounts ultimately recovered in suits brought 

18 by them. 

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

20 to settle or settling claims for less than the 

21 amount that a reasonable person would believe 

22 the insured individual or his or her beneficiary 

23 was entitled by reference to written or printed 

24 advertising material accompanying or made 

25 part of an application. 


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

2 on the basis of an application that was materi3 ally altered without notice to, or knowledge or 

4 consent of, the insured. 

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

6 present claims within 15 calendar days of a re7 quests with reasonable explanations regarding 

8 their use. 

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

10 time than that prescribed in the policy or by the 

11 law of the primary State. 

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

13 and abuse’ means an act or omission committed by 

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

15 commits, or conceals any material information con16 cerning, one or more of the following: 

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

18 or preparing with knowledge or belief that it 

19 will be presented to or by an insurer, a rein20 surer, broker or its agent, false information as 

21 part of, in support of or concerning a fact ma22 terial to one or more of the following: 

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

24 renewal of an insurance policy or reinsur25 ance contract. 


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

2 or reinsurance contract. 

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

4 pursuant to an insurance policy or reinsur5 ance contract. 

6 ‘‘(iv) Premiums paid on an insurance 

7 policy or reinsurance contract. 

8 ‘‘(v) Payments made in accordance 

9 with the terms of an insurance policy or 

10 reinsurance contract. 

11 ‘‘(vi) A document filed with the com12 missioner or the chief insurance regulatory 

13 official of another jurisdiction. 

14 ‘‘(vii) The financial condition of an in15 surer or reinsurer. 

16 ‘‘(viii) The formation, acquisition, 

17 merger, reconsolidation, dissolution or 

18 withdrawal from one or more lines of in19 surance or reinsurance in all or part of a 

20 State by an insurer or reinsurer. 

21 ‘‘(ix) The issuance of written evidence 

22 of insurance. 

23 ‘‘(x) The reinstatement of an insur24 ance policy. 


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

2 renewal insurance risks on behalf of an insurer 

3 reinsurer or other person engaged in the busi4 ness of insurance by a person who knows or 

5 should know that the insurer or other person 

6 responsible for the risk is insolvent at the time 

7 of the transaction. 

8 ‘‘(C) Transaction of the business of insur9 ance in violation of laws requiring a license, cer10 tificate of authority or other legal authority for 

11 the transaction of the business of insurance. 

12 ‘‘(D) Attempt to commit, aiding or abet13 ting in the commission of, or conspiracy to com14 mit the acts or omissions specified in this para15 graph. 

16 ‘‘SEC. 2796. APPLICATION OF LAW. 

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

18 State shall apply to individual health insurance coverage 

19 offered by a health insurance issuer in the primary State 

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

21 issuer comply with the conditions of this section with re22 spect to the offering of coverage in any secondary State. 

23 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC24 ONDARY STATE.—Except as provided in this section, a 

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1 ing (including medical underwriting), renewal, and 

2 issuance of individual health insurance coverage in any 

3 secondary State is exempt from any covered laws of the 

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

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

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

7 ‘‘(1) make unlawful, or regulate, directly or in8 directly, the operation of the health insurance issuer 

9 operating in the secondary State, except that any 

10 secondary State may require such an issuer— 

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

12 applicable premium and other taxes (including 

13 high risk pool assessments) which are levied on 

14 insurers and surplus lines insurers, brokers, or 

15 policyholders under the laws of the State; 

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

17 State insurance commissioner as its agent solely 

18 for the purpose of receiving service of legal doc19 uments or process; 

20 ‘‘(C) to submit to an examination of its fi21 nancial condition by the State insurance com22 missioner in any State in which the issuer is 

23 doing business to determine the issuer’s finan24 cial condition, if— 


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1 ‘‘(i) the State insurance commissioner 

2 of the primary State has not done an ex3 amination within the period recommended 

4 by the National Association of Insurance 

5 Commissioners; and 

6 ‘‘(ii) any such examination is con7 ducted in accordance with the examiners’ 

8 handbook of the National Association of 

9 Insurance Commissioners and is coordi10 nated to avoid unjustified duplication and 

11 unjustified repetition; 

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

13 issued— 

14 ‘‘(i) in a delinquency proceeding com15 menced by the State insurance commis16 sioner if there has been a finding of finan17 cial impairment under subparagraph (C); 

18 or 

19 ‘‘(ii) in a voluntary dissolution pro20 ceeding; 

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

22 by a court of competent jurisdiction, upon a pe23 tition by the State insurance commissioner al24 leging that the issuer is in hazardous financial 

25 condition; 


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

2 basis, in any insurance insolvency guaranty as3 sociation or similar association to which a 

4 health insurance issuer in the State is required 

5 to belong; 

6 ‘‘(G) to comply with any State law regard7 ing fraud and abuse (as defined in section 

8 2795(10)), except that if the State seeks an in9 junction regarding the conduct described in this 

10 subparagraph, such injunction must be obtained 

11 from a court of competent jurisdiction; 

12 ‘‘(H) to comply with any State law regard13 ing unfair claims settlement practices (as de14 fined in section 2795(9)); or 

15 ‘‘(I) to comply with the applicable require16 ments for independent review under section 

17 2798 with respect to coverage offered in the 

18 State; 

19 ‘‘(2) require any individual health insurance 

20 coverage issued by the issuer to be countersigned by 

21 an insurance agent or broker residing in that Sec22 ondary State; or 

23 ‘‘(3) otherwise discriminate against the issuer 

24 issuing insurance in both the primary State and in 

25 any secondary State. 


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

2 health insurance issuer shall provide the following notice, 

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

4 in a secondary State under this part by such a health in5 surance issuer and at renewal of the policy, with the 5 

6 blank spaces therein being appropriately filled with the 

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

8 State, the name of the secondary State, the name of the 

9 secondary State, and the name of the secondary State, re10 spectively, for the coverage concerned: 

11 This policy is issued by lllll and is governed by 

12 the laws and regulations of the State of lllll, and 

13 it has met all the laws of that State as determined by 

14 that State’s Department of Insurance. This policy may be 

15 less expensive than others because it is not subject to all 

16 of the insurance laws and regulations of the State of 

17 lllll, including coverage of some services or bene18 fits mandated by the law of the State of lllll. Ad19 ditionally, this policy is not subject to all of the consumer 

20 protection laws or restrictions on rate changes of the State 

21 of lllll. As with all insurance products, before pur22 chasing this policy, you should carefully review the policy 

23 and determine what health care services the policy covers 

24 and what benefits it provides, including any exclusions, 

25 limitations, or conditions for such services or benefits. 


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1 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

2 AND PREMIUM INCREASES.— 

3 ‘‘(1) IN GENERAL.—For purposes of this sec4 tion, a health insurance issuer that provides indi5 vidual health insurance coverage to an individual 

6 under this part in a primary or secondary State may 

7 not upon renewal— 

8 ‘‘(A) move or reclassify the individual in9 sured under the health insurance coverage from 

10 the class such individual is in at the time of 

11 issue of the contract based on the health-status 

12 related factors of the individual; or 

13 ‘‘(B) increase the premiums assessed the 

14 individual for such coverage based on a health 

15 status-related factor or change of a health sta16 tus-related factor or the past or prospective 

17 claim experience of the insured individual. 

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

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

20 issuer— 

21 ‘‘(A) from terminating or discontinuing 

22 coverage or a class of coverage in accordance 

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


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

2 policy holders within a class based on claims ex3 perience; 

4 ‘‘(C) from changing premiums or offering 

5 discounted premiums to individuals who engage 

6 in wellness activities at intervals prescribed by 

7 the issuer, if such premium changes or incen8 tives— 

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

10 the insurance contract; 

11 ‘‘(ii) are based on specific wellness ac12 tivities that are not applicable to all indi13 viduals; and 

14 ‘‘(iii) are not obtainable by all individ15 uals to whom coverage is offered; 

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

17 ‘‘(E) from retroactively adjusting the rates 

18 charged an insured individual if the initial rates 

19 were set based on material misrepresentation by 

20 the individual at the time of issue. 

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

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

23 individual health insurance coverage in a secondary State 

24 unless that coverage is currently offered for sale in the 

25 primary State. 


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

2 HEALTH INSURANCE ISSUERS.—Any State may require 

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

4 broker for a health insurance issuer with respect to the 

5 offering of individual health insurance coverage obtain a 

6 license from that State, with commissions or other com7 pensation subject to the provisions of the laws of that 

8 State, except that a State may not impose any qualifica9 tion or requirement which discriminates against a non10 resident agent or broker. 

11 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN12 SURANCE COMMISSIONER.—Each health insurance issuer 

13 issuing individual health insurance coverage in both pri14 mary and secondary States shall submit— 

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

16 State in which it intends to offer such coverage, be17 fore it may offer individual health insurance cov18 erage in such State— 

19 ‘‘(A) a copy of the plan of operation or fea20 sibility study or any similar statement of the 

21 policy being offered and its coverage (which 

22 shall include the name of its primary State and 

23 its principal place of business); 

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

25 designation of its primary State; and 


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

2 issuer’s compliance with all the laws of the pri3 mary State; and 

4 ‘‘(2) to the insurance commissioner of each sec5 ondary State in which it offers individual health in6 surance coverage, a copy of the issuer’s quarterly fi7 nancial statement submitted to the primary State, 

8 which statement shall be certified by an independent 

9 public accountant and contain a statement of opin10 ion on loss and loss adjustment expense reserves 

11 made by— 

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

13 of Actuaries; or 

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

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

16 Nothing in this section shall be construed to affect the 

17 authority of any Federal or State court to enjoin— 

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

19 insurance coverage by a health insurance issuer to 

20 any person or group who is not eligible for such in21 surance; or 

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

23 insurance coverage that violates the requirements of 

24 the law of a secondary State which are described in 


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1 subparagraphs (A) through (H) of section 

2 2796(b)(1). 

3 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD4 MINISTRATIVE ACTION.—Nothing in this section shall be 

5 construed to affect the authority of any State to enjoin 

6 conduct in violation of that State’s laws described in sec7 tion 2796(b)(1). 

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

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

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

11 paragraph (2), nothing in this section shall be con12 strued to affect the authority of any State to make 

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

14 State with respect to which a health insurance issuer 

15 is not exempt under subsection (b). 

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

17 If a State seeks an injunction regarding the conduct 

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

19 (h), such injunction must be obtained from a Fed20 eral or State court of competent jurisdiction. 

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

22 section shall affect the authority of any State to bring ac23 tion in any Federal or State court. 

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

25 this section shall be construed to affect the applicability 


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1 of State laws generally applicable to persons or corpora2 tions. 

3 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

4 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

5 health insurance issuer is offering coverage in a primary 

6 State that does not accommodate residents of secondary 

7 States or does not provide a working mechanism for resi8 dents of a secondary State, and the issuer is offering cov9 erage under this part in such secondary State which has 

10 not adopted a qualified high risk pool as its acceptable 

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

12 the issuer shall, with respect to any individual health in13 surance coverage offered in a secondary State under this 

14 part, comply with the guaranteed availability requirements 

15 for eligible individuals in section 2741. 

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

17 BEFORE ISSUER MAY SELL INTO SECONDARY 

18 STATES. 

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

20 issue individual health insurance coverage in a secondary 

21 State if the State insurance commissioner does not use 

22 a risk-based capital formula for the determination of cap23 ital and surplus requirements for all health insurance 

24 issuers. 


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1 ‘‘SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SEC2 ONDARY STATE. 

3 ‘‘Effective beginning two years after the date of en4 actment of this part, an individual in a State may not 

5 buy individual health insurance coverage in a secondary 

6 State if the premium for individual health insurance in 

7 the primary State (with respect to the individual) exceeds 

8 the national average premium by 10 percent or more. 

9 ‘‘SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCE10 DURES. 

11 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur12 ance issuer may not offer, sell, or issue individual health 

13 insurance coverage in a secondary State under the provi14 sions of this title unless— 

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

16 State have legislation or regulations in place estab17 lishing an independent review process for individuals 

18 who are covered by individual health insurance cov19 erage, or 

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

21 subparagraph (A) are not met with respect to the ei22 ther of such States, the issuer provides an inde23 pendent review mechanism substantially identical (as 

24 determined by the applicable State authority of such 

25 State) to that prescribed in the ‘Health Carrier Ex26 ternal Review Model Act’ of the National Association 


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1 of Insurance Commissioners for all individuals who 

2 purchase insurance coverage under the terms of this 

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

4 is conducted by an independent medical reviewer, or 

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

6 requirements of subsection (b) are met. 

7 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

8 REVIEWERS.—In the case of any independent review 

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

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

11 claim to an independent medical reviewer, or to any 

12 panel of such reviewers, to conduct independent 

13 medical review, the issuer shall ensure that— 

14 ‘‘(A) each independent medical reviewer 

15 meets the qualifications described in paragraphs 

16 (2) and (3); 

17 ‘‘(B) with respect to each review, each re18 viewer meets the requirements of paragraph (4) 

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

20 panel, meets the requirements described in 

21 paragraph (5); and 

22 ‘‘(C) compensation provided by the issuer 

23 to each reviewer is consistent with paragraph 

24 (6). 


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1 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde2 pendent medical reviewer shall be a physician 

3 (allopathic or osteopathic) or health care profes4 sional who— 

5 ‘‘(A) is appropriately credentialed or li6 censed in 1 or more States to deliver health 

7 care services; and 

8 ‘‘(B) typically treats the condition, makes 

9 the diagnosis, or provides the type of treatment 

10 under review. 

11 ‘‘(3) INDEPENDENCE.— 

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graph (B), each independent medical reviewer 

14 in a case shall— 

15 ‘‘(i) not be a related party (as defined 

16 in paragraph (7)); 

17 ‘‘(ii) not have a material familial, fi18 nancial, or professional relationship with 

19 such a party; and 

20 ‘‘(iii) not otherwise have a conflict of 

21 interest with such a party (as determined 

22 under regulations). 

23 ‘‘(B) EXCEPTION.—Nothing in subpara24 graph (A) shall be construed to— 


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1 ‘‘(i) prohibit an individual, solely on 

2 the basis of affiliation with the issuer, 

3 from serving as an independent medical re4 viewer if— 

5 ‘‘(I) a non-affiliated individual is 

6 not reasonably available; 

7 ‘‘(II) the affiliated individual is 

8 not involved in the provision of items 

9 or services in the case under review; 

10 ‘‘(III) the fact of such an affili11 ation is disclosed to the issuer and the 

12 enrollee (or authorized representative) 

13 and neither party objects; and 

14 ‘‘(IV) the affiliated individual is 

15 not an employee of the issuer and 

16 does not provide services exclusively or 

17 primarily to or on behalf of the issuer; 

18 ‘‘(ii) prohibit an individual who has 

19 staff privileges at the institution where the 

20 treatment involved takes place from serv21 ing as an independent medical reviewer 

22 merely on the basis of such affiliation if 

23 the affiliation is disclosed to the issuer and 

24 the enrollee (or authorized representative), 

25 and neither party objects; or 


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1 ‘‘(iii) prohibit receipt of compensation 

2 by an independent medical reviewer from 

3 an entity if the compensation is provided 

4 consistent with paragraph (6). 

5 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

6 IN SAME FIELD.— 

7 ‘‘(A) IN GENERAL.—In a case involving 

8 treatment, or the provision of items or serv9 ices— 

10 ‘‘(i) by a physician, a reviewer shall be 

11 a practicing physician (allopathic or osteo12 pathic) of the same or similar specialty, as 

13 a physician who, acting within the appro14 priate scope of practice within the State in 

15 which the service is provided or rendered, 

16 typically treats the condition, makes the 

17 diagnosis, or provides the type of treat18 ment under review; or 

19 ‘‘(ii) by a non-physician health care 

20 professional, the reviewer, or at least 1 

21 member of the review panel, shall be a 

22 practicing non-physician health care pro23 fessional of the same or similar specialty 

24 as the non-physician health care profes25 sional who, acting within the appropriate 


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1 scope of practice within the State in which 

2 the service is provided or rendered, typi3 cally treats the condition, makes the diag4 nosis, or provides the type of treatment 

5 under review. 

6 ‘‘(B) PRACTICING DEFINED.—For pur7 poses of this paragraph, the term ‘practicing’ 

8 means, with respect to an individual who is a 

9 physician or other health care professional, that 

10 the individual provides health care services to 

11 individual patients on average at least 2 days 

12 per week. 

13 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 

14 external review relating to a child, a reviewer shall 

15 have expertise under paragraph (2) in pediatrics. 

16 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA17 TION.—Compensation provided by the issuer to an 

18 independent medical reviewer in connection with a 

19 review under this section shall— 

20 ‘‘(A) not exceed a reasonable level; and 

21 ‘‘(B) not be contingent on the decision ren22 dered by the reviewer. 

23 ‘‘(7) RELATED PARTY DEFINED.—For purposes 

24 of this section, the term ‘related party’ means, with 


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1 respect to a denial of a claim under a coverage relat2 ing to an enrollee, any of the following: 

3 ‘‘(A) The issuer involved, or any fiduciary, 

4 officer, director, or employee of the issuer. 

5 ‘‘(B) The enrollee (or authorized represent6 ative). 

7 ‘‘(C) The health care professional that pro8 vides the items or services involved in the de9 nial. 

10 ‘‘(D) The institution at which the items or 

11 services (or treatment) involved in the denial 

12 are provided. 

13 ‘‘(E) The manufacturer of any drug or 

14 other item that is included in the items or serv15 ices involved in the denial. 

16 ‘‘(F) Any other party determined under 

17 any regulations to have a substantial interest in 

18 the denial involved. 

19 ‘‘(8) DEFINITIONS.—For purposes of this sub20 section: 

21 ‘‘(A) ENROLLEE.—The term ‘enrollee’ 

22 means, with respect to health insurance cov23 erage offered by a health insurance issuer, an 

24 individual enrolled with the issuer to receive 

25 such coverage. 


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1 ‘‘(B) HEALTH CARE PROFESSIONAL.—The 

2 term ‘health care professional’ means an indi3 vidual who is licensed, accredited, or certified 

4 under State law to provide specified health care 

5 services and who is operating within the scope 

6 of such licensure, accreditation, or certification. 

7 ‘‘SEC. 2800. ENFORCEMENT. 

8 ‘‘(a) IN GENERAL.—Subject to subsection (b), with 

9 respect to specific individual health insurance coverage the 

10 primary State for such coverage has sole jurisdiction to 

11 enforce the primary State’s covered laws in the primary 

12 State and any secondary State. 

13 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 

14 subsection (a) shall be construed to affect the authority 

15 of a secondary State to enforce its laws as set forth in 

16 the exception specified in section 2796(b)(1). 

17 ‘‘(c) COURT INTERPRETATION.—In reviewing action 

18 initiated by the applicable secondary State authority, the 

19 court of competent jurisdiction shall apply the covered 

20 laws of the primary State. 

21 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 

22 of individual health insurance coverage offered in a sec23 ondary State that fails to comply with the covered laws 

24 of the primary State, the applicable State authority of the 


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1 secondary State may notify the applicable State authority 

2 of the primary State.’’. 

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

4 subsection (a) shall apply to individual health insurance 

5 coverage offered, issued, or sold after the date that is one 

6 year after the date of the enactment of this Act. 

7 (c) GAO ONGOING STUDY AND REPORTS.— 

8 (1) STUDY.—The Comptroller General of the 

9 United States shall conduct an ongoing study con10 cerning the effect of the amendment made by sub11 section (a) on— 

12 (A) the number of uninsured and under-in13 sured; 

14 (B) the availability and cost of health in15 surance policies for individuals with pre-existing 

16 medical conditions; 

17 (C) the availability and cost of health in18 surance policies generally; 

19 (D) the elimination or reduction of dif20 ferent types of benefits under health insurance 

21 policies offered in different States; and 

22 (E) cases of fraud or abuse relating to 

23 health insurance coverage offered under such 

24 amendment and the resolution of such cases. 


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1 (2) ANNUAL REPORTS.—The Comptroller Gen2 eral shall submit to Congress an annual report, after 

3 the end of each of the 5 years following the effective 

4 date of the amendment made by subsection (a), on 

5 the ongoing study conducted under paragraph (1). 

6 (d) SEVERABILITY.—If any provision of the section 

7 or the application of such provision to any person or cir8 cumstance is held to be unconstitutional, the remainder 

9 of this section and the application of the provisions of such 

10 to any other person or circumstance shall not be affected. 

11 TITLE IV—SAFETY NET 

12 REFORMS 

13 SEC. 401. REQUIRING OUTREACH AND COVERAGE BEFORE 

14 EXPANSION OF ELIGIBILITY. 

15 (a) STATE PLAN REQUIRED TO SPECIFY HOW IT

16 WILL ACHIEVE COVERAGE FOR 90 PERCENT OF TAR17 GETED LOW-INCOME CHILDREN.— 

18 (1) IN GENERAL.—Section 2102(a) of the So19 cial Security Act (42 U.S.C. 1397bb(a)) is amend20 ed— 

21 (A) in paragraph (6), by striking ‘‘and’’ at 

22 the end; 

23 (B) in paragraph (7), by striking the pe24 riod at the end and inserting ‘‘; and’’; and 


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1 (C) by adding at the end the following new 

2 paragraph: 

3 ‘‘(8) how the eligibility and benefits provided 

4 for under the plan for each fiscal year (beginning 

5 with fiscal year 2011) will allow for the State’s an6 nual funding allotment to cover at least 90 percent 

7 of the eligible targeted low-income children in the 

8 State.’’. 

9 (2) EFFECTIVE DATE.—The amendments made 

10 by paragraph (1) shall apply to State child health 

11 plans for fiscal years beginning with fiscal year 

12 2011. 

13 (b) LIMITATION ON PROGRAM EXPANSIONS UNTIL

14 LOWEST INCOME ELIGIBLE INDIVIDUALS ENROLLED.— 

15 Section 2105(c) of such Act (42 U.S.C. 1397dd(c)) is 

16 amended by adding at the end the following new para17 graph: 

18 ‘‘(8) LIMITATION ON INCREASED COVERAGE OF

19 HIGHER INCOME CHILDREN.—For child health as20 sistance furnished in a fiscal year beginning with fis21 cal year 2011: 

22 ‘‘(A) NO PAYMENT FOR CHILDREN WITH

23 FAMILY INCOME ABOVE 300 PERCENT OF POV24 ERTY LINE.—Payment shall not be made under 

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1 geted low-income child in a family the income 

2 of which exceeds 300 percent of the poverty line 

3 applicable to a family of the size involved. 

4 ‘‘(B) SPECIAL RULES FOR PAYMENT FOR

5 CHILDREN WITH FAMILY INCOME ABOVE 200

6 PERCENT OF POVERTY LINE.—In the case of 

7 child health assistance for a targeted low-in8 come child in a family the income of which ex9 ceeds 200 percent (but does not exceed 300 

10 percent) of the poverty line applicable to a fam11 ily of the size involved no payment shall be 

12 made under this section for such assistance un13 less the State demonstrates to the satisfaction 

14 of the Secretary that— 

15 ‘‘(i) the State has met the 90 percent 

16 retrospective coverage test specified in sub17 paragraph (C)(i) for the previous fiscal 

18 year; and 

19 ‘‘(ii) the State will meet the 90 per20 cent prospective coverage test specified in 

21 subparagraph (C)(ii) for the fiscal year. 

22 ‘‘(C) 90 PERCENT COVERAGE TESTS.— 

23 ‘‘(i) RETROSPECTIVE TEST.—The 90 

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1 cal year, that on average during the fiscal 

2 year, the State has enrolled under this title 

3 or title XIX at least 90 percent of the indi4 viduals residing in the State who— 

5 ‘‘(I) are children under 19 years 

6 of age (or are pregnant women) and 

7 are eligible for medical assistance 

8 under title XIX; or 

9 ‘‘(II) are targeted low-income 

10 children whose family income does not 

11 exceed 200 percent of the poverty line 

12 and who are eligible for child health 

13 assistance under this title. 

14 ‘‘(ii) PROSPECTIVE TEST.—The 90 

15 percent prospective test specified in this 

16 clause is, for a State for a fiscal year, that 

17 on average during the fiscal year, the State 

18 will enroll under this title or title XIX at 

19 least 90 percent of the individuals residing 

20 in the State who— 

21 ‘‘(I) are children under 19 years 

22 of age (or are pregnant women) and 

23 are eligible for medical assistance 

24 under title XIX; or 


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1 ‘‘(II) are targeted low-income 

2 children whose family income does not 

3 exceed such percent of the poverty 

4 line (in excess of 200 percent) as the 

5 State elects consistent with this para6 graph and who are eligible for child 

7 health assistance under this title. 

8 ‘‘(D) GRANDFATHER.—Subparagraphs (A) 

9 and (B) shall not apply to the provision of child 

10 health assistance— 

11 ‘‘(i) to a targeted low-income child 

12 who is enrolled for child health assistance 

13 under this title as of September 30, 2008; 

14 ‘‘(ii) to a pregnant woman who is en15 rolled for assistance under this title as of 

16 September 30, 2009, through the comple17 tion of the post-partum period following 

18 completion of her pregnancy; and 

19 ‘‘(iii) for items and services furnished 

20 before October 1, 2010, to an individual 

21 who is not a targeted low-income child and 

22 who is enrolled for assistance under this 

23 title as of September 30, 2009. 

24 ‘‘(E) TREATMENT OF PREGNANT

25 WOMEN.—In this paragraph and sections 


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1 2102(a)(8) and 2104(a)(2), the term ‘targeted 

2 low-income child’ includes an individual under 

3 age 19, including the period from conception to 

4 birth, who is eligible for child health assistance 

5 under this title by virtue of the definition of the 

6 term ‘child’ under section 457.10 of title 42, 

7 Code of Federal Regulations.’’. 

8 (c) STANDARDIZATION OF INCOME DETERMINA9 TIONS.— 

10 (1) IN GENERAL.—Section 2110(d) of such Act 

11 (42 U.S.C. 1397jj) is amended by adding at the end 

12 the following new subsection: 

13 ‘‘(d) STANDARDIZATION OF INCOME DETERMINA14 TIONS.—In determining family income under this title (in15 cluding in the case of a State child health plan that pro16 vides health benefits coverage in the manner described in 

17 section 2101(a)(2)), a State shall base such determination 

18 on gross income (including amounts that would be in19 cluded in gross income if they were not exempt from in20 come taxation) and may only take into consideration such 

21 income disregards as the Secretary shall develop.’’. 

22 (2) EFFECTIVE DATE.—(A) Subject to subpara23 graph (B), the amendment made by paragraph (1) 

24 shall apply to determinations (and redeterminations) 

25 of income made on or after April 1, 2010. 


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1 (B) In the case of a State child health plan 

2 under title XXI of the Social Security Act which the 

3 Secretary of Health and Human Services determines 

4 requires State legislation (other than legislation ap5 propriating funds) in order for the plan to meet the 

6 additional requirement imposed by the amendment 

7 made by paragraph (1), the State child health plan 

8 shall not be regarded as failing to comply with the 

9 requirements of such title solely on the basis of its 

10 failure to meet this additional requirement before 

11 the first day of the first calendar quarter beginning 

12 after the close of the first regular session of the 

13 State legislature that begins after the date of the en14 actment of this Act. For purposes of the previous 

15 sentence, in the case of a State that has a 2-year 

16 legislative session, each year of such session shall be 

17 deemed to be a separate regular session of the State 

18 legislature. 

19 SEC. 402. EASING ADMINISTRATIVE BARRIERS TO STATE 

20 COOPERATION WITH EMPLOYER-SPONSORED 

21 INSURANCE COVERAGE. 

22 (a) REQUIRING SOME COVERAGE FOR EMPLOYER23 SPONSORED INSURANCE.— 


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1 (1) IN GENERAL.—Section 2102(a) of the So2 cial Security Act (42 U.S.C. 1397b(a)), as amended 

3 by section 401(a), is amended— 

4 (A) in paragraph (7), by striking ‘‘and’’ at 

5 the end; 

6 (B) in paragraph (8), by striking the pe7 riod at the end and inserting ‘‘; and’’; and 

8 (C) by adding at the end the following new 

9 paragraph: 

10 ‘‘(9) effective for plan years beginning on or 

11 after October 1, 2010, how the plan will provide for 

12 child health assistance with respect to targeted low13 income children covered under a group health 

14 plan.’’. 

15 (2) EFFECTIVE DATE.—The amendment made 

16 by paragraph (1) shall apply beginning with fiscal 

17 year 2011. 

18 (b) FEDERAL FINANCIAL PARTICIPATION FOR EM19 PLOYER-SPONSORED INSURANCE.—Section 2105 of such 

20 Act (42 U.S.C. 1397d) is amended— 

21 (1) in subsection (a)(1)(C), by inserting before 

22 the semicolon at the end the following: ‘‘and, subject 

23 to paragraph (3)(C), in the form of payment of the 

24 premiums for coverage under a group health plan 

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1 dren and benefits supplemental to such coverage’’; 

2 and 

3 (2) by amending paragraph (3) of subsection 

4 (c) to read as follows: 

5 ‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN6 SURANCE.— 

7 ‘‘(A) IN GENERAL.—Payment may be 

8 made to a State under subsection (a)(1)(C), 

9 subject to the provisions of this paragraph, for 

10 the purchase of family coverage under a group 

11 health plan that includes coverage of targeted 

12 low-income children unless such coverage would 

13 otherwise substitute for coverage that would be 

14 provided to such children but for the purchase 

15 of family coverage. 

16 ‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 

17 With respect to coverage described in subpara18 graph (A)— 

19 ‘‘(i) notwithstanding section 2102, no 

20 minimum benefits requirement (other than 

21 those otherwise applicable with respect to 

22 services referred to in section 2102(a)(7)) 

23 under this title shall apply; and 


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1 ‘‘(ii) no limitation on beneficiary cost2 sharing otherwise applicable under this 

3 title or title XIX shall apply. 

4 ‘‘(C) REQUIRED PROVISION OF SUPPLE5 MENTAL BENEFITS.—If the coverage described 

6 in subparagraph (A) does not provide coverage 

7 for the services referred to in section 

8 2102(a)(7), the State child health plan shall 

9 provide coverage of such services as supple10 mental benefits. 

11 ‘‘(D) LIMITATION ON FFP.—The amount 

12 of the payment under paragraph (1)(C) for cov13 erage described in subparagraph (A) (and sup14 plemental benefits under subparagraph (C) for 

15 individuals so covered) during a fiscal year may 

16 not exceed the product of— 

17 ‘‘(i) the national per capita expendi18 ture under this title (taking into account 

19 both Federal and State expenditures) for 

20 the previous fiscal year (as determined by 

21 the Secretary using the best available 

22 data); 

23 ‘‘(ii) the enhanced FMAP for the 

24 State and fiscal year involved; and 


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1 ‘‘(iii) the number of targeted low-in2 come children for whom such coverage is 

3 provided. 

4 ‘‘(E) VOLUNTARY ENROLLMENT.—A State 

5 child health plan— 

6 ‘‘(i) may not require a targeted low7 income child to enroll in coverage described 

8 in subparagraph (A) in order to obtain 

9 child health assistance under this title; 

10 ‘‘(ii) before providing such child 

11 health assistance for such coverage of a 

12 child, shall make available (which may be 

13 through an Internet website or other 

14 means including the State transparency 

15 plan portal established under section 901 

16 of the Empowering Patients First Act) to 

17 the parent or guardian of the child infor18 mation on the coverage available under 

19 this title, including benefits and cost-shar20 ing; and 

21 ‘‘(iii) shall provide at least one oppor22 tunity per fiscal year for beneficiaries to 

23 switch coverage under this title from cov24 erage described in subparagraph (A) to the 


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1 coverage that is otherwise made available 

2 under this title. 

3 ‘‘(F) INFORMATION ON COVERAGE OP4 TIONS.—A State child health plan shall— 

5 ‘‘(i) describe how the State will notify 

6 potential beneficiaries of coverage de7 scribed in subparagraph (A); 

8 ‘‘(ii) provide such notification in writ9 ing at least during the initial application 

10 for enrollment under this title and during 

11 redeterminations of eligibility if the indi12 vidual was enrolled before October 1, 2010; 

13 and 

14 ‘‘(iii) post a description of these cov15 erage options on any official website that 

16 may be established by the State in connec17 tion with the plan, including the State 

18 transparency plan portal established under 

19 section 901 of the Empowering Patients 

20 First Act. 

21 ‘‘(G) SEMIANNUAL VERIFICATION OF COV22 ERAGE.—If coverage described in subparagraph 

23 (A) is provided under a group health plan with 

24 respect to a targeted low-income child, the 

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1 lection, at least once every six months, of proof 

2 from the plan that the child is enrolled in such 

3 coverage. 

4 ‘‘(H) RULE OF CONSTRUCTION.—Nothing 

5 in this section is to be construed to prohibit a 

6 State from— 

7 ‘‘(i) offering wrap around benefits in 

8 order for a group health plan to meet any 

9 State-established minimum benefit require10 ments; 

11 ‘‘(ii) establishing a cost-effectiveness 

12 test to qualify for coverage under such a 

13 plan; 

14 ‘‘(iii) establishing limits on beneficiary 

15 cost-sharing under such a plan; 

16 ‘‘(iv) paying all or part of a bene17 ficiary’s cost-sharing requirements under 

18 such a plan; 

19 ‘‘(v) paying less than the full cost of 

20 the employee’s share of the premium under 

21 such a plan, including prorating the cost of 

22 the premium to pay for only what the 

23 State determines is the portion of the pre24 mium that covers targeted low-income chil25 dren; 


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1 ‘‘(vi) using State funds to pay for 

2 benefits above the Federal upper limit es3 tablished under subparagraph (C); 

4 ‘‘(vii) allowing beneficiaries enrolled in 

5 group health plans from changing plans to 

6 another coverage option available under 

7 this title at any time; or 

8 ‘‘(viii) providing any guidance or in9 formation it deems appropriate in order to 

10 help beneficiaries make an informed deci11 sion regarding the option to enroll in cov12 erage described in subparagraph (A). 

13 ‘‘(I) GROUP HEALTH PLAN DEFINED.—In 

14 this paragraph, the term ‘group health plan’ 

15 has the meaning given such term in section 

16 2791(a)(1) of the Public Health Service Act (42 

17 U.S.C. 300gg–91(a)(1)).’’. 

18 (c) APPLICATION UNDER MEDICAID.—The Secretary 

19 of Health and Human Services shall provide for the appli20 cation of the amendments made by subsections (a) and 

21 (b) under the Medicaid program under title XIX of the 

22 Social Security Act in the same manner as such amend23 ments apply to SCHIP under title XXI of such Act. 


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1 SEC. 403. IMPROVING BENEFICIARY CHOICE IN SCHIP. 

2 (a) REQUIRING OFFERING OF ALTERNATIVE COV3 ERAGE OPTIONS.—Section 2102 of the Social Security Act 

4 (42 U.S.C. 1397b), as amended by sections 401(a) and 

5 402(a), is amended— 

6 (1) in subsection (a)— 

7 (A) in paragraph (8), by striking ‘‘and’’ at 

8 the end; 

9 (B) in paragraph (9), by striking the pe10 riod at the end and inserting ‘‘; and’’; and 

11 (C) by adding at the end the following new 

12 paragraph: 

13 ‘‘(10) effective for plan years beginning on or 

14 after October 1, 2010, how the plan will provide for 

15 child health assistance with respect to targeted low16 income children through alternative coverage options 

17 in accordance with subsection (e).’’; and 

18 (2) by adding at the end the following new sub19 section: 

20 ‘‘(e) ALTERNATIVE COVERAGE OPTIONS.— 

21 ‘‘(1) IN GENERAL.—Effective October 1, 2010, 

22 a State child health plan shall provide for the offer23 ing of any qualified alternative coverage that a 

24 qualified entity seeks to offer to targeted low-income 

25 children through the plan in the State. 


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1 ‘‘(2) APPLICATION OF UNIFORM FINANCIAL

2 LIMITATION FOR ALL ALTERNATIVE COVERAGE OP3 TIONS.—With respect to all qualified alternative cov4 erage offered in a State, the State child health plan 

5 shall establish a uniform dollar limitation on the per 

6 capita monthly amount that will be paid by the 

7 State to the qualified entity with respect to such 

8 coverage provided to a targeted low-income child. 

9 Such limitation may not be less than 90 percent of 

10 the per capita monthly payment made for coverage 

11 offered under the State child health plan that is not 

12 in the form of an alternative coverage option. Noth13 ing in this paragraph shall be construed— 

14 ‘‘(A) as requiring a State to provide for 

15 the full payment of premiums for qualified al16 ternative coverage; 

17 ‘‘(B) as preventing a State from charging 

18 additional premiums to cover the difference be19 tween the cost of qualified alternative coverage 

20 and the amount of such payment limitation; or 

21 ‘‘(C) as preventing a State from using its 

22 own funds to provide a dollar limitation that ex23 ceeds the Federal financial participation as lim24 ited under section 2105(c)(10). 

25 ‘‘(3) TREATMENT OF LOW COST COVERAGE.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), if the uniform dollar limita3 tion under paragraph (2) exceeds the premium 

4 for qualified alternative coverage for an en5 rollee, then such excess shall be refunded to the 

6 Federal and State governments in the same 

7 proportion as is otherwise applicable to recov8 ered funds under this title. 

9 ‘‘(B) EXCEPTION FOR HIGH DEDUCTIBLE

10 HEALTH PLANS.—In the case of coverage under 

11 a high deductible health plan, the excess de12 scribed in subparagraph (A) shall be deposited 

13 into a health savings account established with 

14 respect to such plan. 

15 ‘‘(4) EXEMPTION.—A State is not subject to 

16 the requirement of paragraph (1) if the State child 

17 health plan provides, as of the date of the enactment 

18 of this subsection, for a cash out or health savings 

19 account type option for those enrolled under the 

20 plan. 

21 ‘‘(5) QUALIFIED ALTERNATIVE COVERAGE DE22 FINED.—In this section, the term ‘qualified alter23 native coverage’ means health insurance coverage 

24 that— 


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1 ‘‘(A) meets the coverage requirements of 

2 section 2103 (other than cost-sharing require3 ments of such section); and 

4 ‘‘(B) is offered by a qualified insurer, and 

5 not directly by the State. 

6 ‘‘(6) QUALIFIED INSURER DEFINED.—In this 

7 section, the term ‘qualified insurer’ means, with re8 spect to a State, an entity that is licensed to offer 

9 health insurance coverage in the State.’’. 

10 (b) FEDERAL FINANCIAL PARTICIPATION FOR

11 QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 

12 such Act (42 U.S.C. 1397d) is amended— 

13 (1) in subsection (a)(1)(C), as amended by sec14 tion 402(b), by inserting before the semicolon at the 

15 end the following: ‘‘and, subject to paragraph 

16 (8)(C), in the form of payment of the premiums for 

17 coverage for qualified alternative coverage’’; and 

18 (2) in subsection (c), by adding at the end the 

19 following new paragraph: 

20 ‘‘(12) PURCHASE OF QUALIFIED ALTERNATIVE

21 COVERAGE.— 

22 ‘‘(A) IN GENERAL.—Payment may be 

23 made to a State under subsection (a)(1)(C), 

24 subject to the provisions of this paragraph, for 

25 the purchase of qualified alternative coverage. 


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1 ‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 

2 With respect to coverage described in subpara3 graph (A), no limitation on beneficiary cost4 sharing otherwise applicable under this title or 

5 title XIX shall apply. 

6 ‘‘(C) LIMITATION ON FFP.—The amount of 

7 the payment under paragraph (1)(C) for cov8 erage described in subparagraph (A) during a 

9 fiscal year in the aggregate for all such cov10 erage in the State may not exceed the product 

11 of— 

12 ‘‘(i) the national per capita expendi13 ture under this title (taking into account 

14 both Federal and State expenditures) for 

15 the previous fiscal year (as determined by 

16 the Secretary using the best available 

17 data); 

18 ‘‘(ii) the enhanced FMAP for the 

19 State and fiscal year involved; and 

20 ‘‘(iii) the number of targeted low-in21 come children for whom such coverage is 

22 provided. 

23 ‘‘(D) VOLUNTARY ENROLLMENT.—A State 

24 child health plan— 


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1 ‘‘(i) may not require a targeted low2 income child to enroll in coverage described 

3 in subparagraph (A) in order to obtain 

4 child health assistance under this title; 

5 ‘‘(ii) before providing such child 

6 health assistance for such coverage of a 

7 child, shall make available (which may be 

8 through an Internet website or other 

9 means) to the parent or guardian of the 

10 child information on the coverage available 

11 under this title, including benefits and 

12 cost-sharing; and 

13 ‘‘(iii) shall provide at least one oppor14 tunity per fiscal year for beneficiaries to 

15 switch coverage under this title from cov16 erage described in subparagraph (A) to the 

17 coverage that is otherwise made available 

18 under this title. 

19 ‘‘(E) INFORMATION ON COVERAGE OP20 TIONS.—A State child health plan shall— 

21 ‘‘(i) describe how the State will notify 

22 potential beneficiaries of coverage de23 scribed in subparagraph (A); 

24 ‘‘(ii) provide such notification in writ25 ing at least during the initial application 


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1 for enrollment under this title and during 

2 redeterminations of eligibility if the indi3 vidual was enrolled before October 1, 2010; 

4 and 

5 ‘‘(iii) post a description of these cov6 erage options on any official website that 

7 may be established by the State in connec8 tion with the plan. 

9 ‘‘(F) RULE OF CONSTRUCTION.—Nothing 

10 in this section is to be construed to prohibit a 

11 State from— 

12 ‘‘(i) establishing limits on beneficiary 

13 cost-sharing under such alternative cov14 erage; 

15 ‘‘(ii) paying all or part of a bene16 ficiary’s cost-sharing requirements under 

17 such coverage; 

18 ‘‘(iii) paying less than the full cost of 

19 a child’s share of the premium under such 

20 coverage, insofar as the premium for such 

21 coverage exceeds the limitation established 

22 by the State under subparagraph (C); 

23 ‘‘(iv) using State funds to pay for 

24 benefits above the Federal upper limit es25 tablished under subparagraph (C); or 


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1 ‘‘(v) providing any guidance or infor2 mation it deems appropriate in order to 

3 help beneficiaries make an informed deci4 sion regarding the option to enroll in cov5 erage described in subparagraph (A).’’. 

6 (c) APPLICATION UNDER MEDICAID.—The Secretary 

7 of Health and Human Services shall provide for the appli8 cation of the amendments made by subsections (a) and 

9 (b) under the Medicaid program under title XIX of the 

10 Social Security Act in the same manner as such amend11 ments apply to SCHIP under title XXI of such Act. 

12 SEC. 404. LIABILITY PROTECTIONS FOR HEALTH CENTER 

13 VOLUNTEER PRACTITIONERS. 

14 (a) IN GENERAL.—Section 224 of the Public Health 

15 Service Act (42 U.S.C. 233) is amended— 

16 (1) in subsection (g)(1)(A)— 

17 (A) in the first sentence, by striking ‘‘or 

18 employee’’ and inserting ‘‘employee, or (subject 

19 to subsection (k)(4)) volunteer practitioner’’; 

20 and 

21 (B) in the second sentence, by inserting 

22 ‘‘and subsection (k)(4)’’ after ‘‘subject to para23 graph (5)’’; and 

24 (2) in each of subsections (g), (i), (j), (k), (l), 

25 and (m)— 


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1 (A) by striking the term ‘‘employee, or 

2 contractor’’ each place such term appears and 

3 inserting ‘‘employee, volunteer practitioner, or 

4 contractor’’; 

5 (B) by striking the term ‘‘employee, and 

6 contractor’’ each place such term appears and 

7 inserting ‘‘employee, volunteer practitioner, and 

8 contractor’’; 

9 (C) by striking the term ‘‘employee, or any 

10 contractor’’ each place such term appears and 

11 inserting ‘‘employee, volunteer practitioner, or 

12 contractor’’; and 

13 (D) by striking the term ‘‘employees, or 

14 contractors’’ each place such term appears and 

15 inserting ‘‘employees, volunteer practitioners, or 

16 contractors’’. 

17 (b) APPLICABILITY; DEFINITION.—Section 224(k) of 

18 the Public Health Service Act (42 U.S.C. 233(k)) is 

19 amended by adding at the end the following paragraph: 

20 ‘‘(4)(A) Subsections (g) through (m) apply with re21 spect to volunteer practitioners beginning with the first 

22 fiscal year for which an appropriations Act provides that 

23 amounts in the fund under paragraph (2) are available 

24 with respect to such practitioners. 


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1 ‘‘(B) For purposes of subsections (g) through (m), 

2 the term ‘volunteer practitioner’ means a practitioner who, 

3 with respect to an entity described in subsection (g)(4), 

4 meets the following conditions: 

5 ‘‘(i) In the State involved, the practitioner is a 

6 licensed physician, a licensed clinical psychologist, or 

7 other licensed or certified health care practitioner. 

8 ‘‘(ii) At the request of such entity, the practi9 tioner provides services to patients of the entity, at 

10 a site at which the entity operates or at a site des11 ignated by the entity. The weekly number of hours 

12 of services provided to the patients by the practi13 tioner is not a factor with respect to meeting condi14 tions under this subparagraph. 

15 ‘‘(iii) The practitioner does not for the provision 

16 of such services receive any compensation from such 

17 patients, from the entity, or from third-party payors 

18 (including reimbursement under any insurance pol19 icy or health plan, or under any Federal or State 

20 health benefits program).’’. 

21 SEC. 405. LIABILITY PROTECTIONS FOR HEALTH CENTER 

22 PRACTITIONERS PROVIDING SERVICES IN 

23 EMERGENCY AREAS. 

24 Section 224(g) of the Public Health Service Act (42 

25 U.S.C. 233(g)) is amended— 


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1 (1) in paragraph (1)(B)(ii), by striking ‘‘sub2 paragraph (C)’’ and inserting ‘‘subparagraph (C) 

3 and paragraph (6)’’; and 

4 (2) by adding at the end the following para5 graph: 

6 ‘‘(6)(A) Subject to subparagraph (C), paragraph 

7 (1)(B)(ii) applies to health services provided to individuals 

8 who are not patients of the entity involved if, as deter9 mined under criteria issued by the Secretary, the following 

10 conditions are met: 

11 ‘‘(i) The services are provided by a contractor, 

12 volunteer practitioner (as defined in subsection 

13 (k)(4)(B)), or employee of the entity who is a physi14 cian or other licensed or certified health care practi15 tioner and who is otherwise deemed to be an em16 ployee for purposes of paragraph (1)(A) when pro17 viding services with respect to the entity. 

18 ‘‘(ii) The services are provided in an emergency 

19 area (as defined in subparagraph (D)), with respect 

20 to a public health emergency or major disaster de21 scribed in subparagraph (D), and during the period 

22 for which such emergency or disaster is determined 

23 or declared, respectively. 

24 ‘‘(iii) The services of the contractor, volunteer 

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1 graph as the ‘out-of-area practitioner’) are provided 

2 under an arrangement with— 

3 ‘‘(I) an entity that is deemed to be an em4 ployee for purposes of paragraph (1)(A) and 

5 that serves the emergency area involved (re6 ferred to in this paragraph as an ‘emergency7 area entity’); or 

8 ‘‘(II) a Federal agency that has respon9 sibilities regarding the provision of health serv10 ices in such area during the emergency. 

11 ‘‘(iv) The purposes of the arrangement are— 

12 ‘‘(I) to coordinate, to the extent prac13 ticable, the provision of health services in the 

14 emergency area by the out-of-area practitioner 

15 with the provision of services by the emergency16 area entity, or by the Federal agency, as the 

17 case may be; 

18 ‘‘(II) to identify a location in the emer19 gency area to which such practitioner should re20 port for purposes of providing health services, 

21 and to identify an individual or individuals in 

22 the area to whom the practitioner should report 

23 for such purposes; and 


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1 ‘‘(III) to verify the identity of the practi2 tioner and that the practitioner is licensed or 

3 certified by one or more of the States. 

4 ‘‘(v) With respect to the licensure or certifi5 cation of health care practitioners, the provision of 

6 services by the out-of-area practitioner in the emer7 gency area is not a violation of the law of the State 

8 in which the area is located. 

9 ‘‘(B) In issuing criteria under subparagraph (A), the 

10 Secretary shall take into account the need to rapidly enter 

11 into arrangements under such subparagraph in order to 

12 provide health services in emergency areas promptly after 

13 the emergency begins. 

14 ‘‘(C) Subparagraph (A) applies with respect to an act 

15 or omission of an out-of-area practitioner only to the ex16 tent that the practitioner is not immune from liability for 

17 such act or omission under the Volunteer Protection Act 

18 of 1997. 

19 ‘‘(D) For purposes of this paragraph, the term ‘emer20 gency area’ means a geographic area for which— 

21 ‘‘(i) the Secretary has made a determination 

22 under section 319 that a public health emergency 

23 exists; or 

24 ‘‘(ii) a presidential declaration of major disaster 

25 has been issued under section 401 of the Robert T. 


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1 Stafford Disaster Relief and Emergency Assistance 

2 Act.’’. 

3 TITLE V—MEDICAL LIABILITY 

4 AND UNCOMPENSATED CARE 

5 REFORMS 

6 SEC. 501. SHORT TITLE. 

7 This title may be cited as the ‘‘Help Efficient, Acces8 sible, Low-cost, Timely Healthcare (HEALTH) Act of 

9 2009’’. 

10 SEC. 502. FINDINGS AND PURPOSE. 

11 (a) FINDINGS.— 

12 (1) EFFECT ON HEALTH CARE ACCESS AND

13 COSTS.—Congress finds that our current civil justice 

14 system is adversely affecting patient access to health 

15 care services, better patient care, and cost-efficient 

16 health care, in that the health care liability system 

17 is a costly and ineffective mechanism for resolving 

18 claims of health care liability and compensating in19 jured patients, and is a deterrent to the sharing of 

20 information among health care professionals which 

21 impedes efforts to improve patient safety and quality 

22 of care. 

23 (2) EFFECT ON INTERSTATE COMMERCE.— 

24 Congress finds that the health care and insurance 

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1 merce and the health care liability litigation systems 

2 existing throughout the United States are activities 

3 that affect interstate commerce by contributing to 

4 the high costs of health care and premiums for 

5 health care liability insurance purchased by health 

6 care system providers. 

7 (3) EFFECT ON FEDERAL SPENDING.—Con8 gress finds that the health care liability litigation 

9 systems existing throughout the United States have 

10 a significant effect on the amount, distribution, and 

11 use of Federal funds because of— 

12 (A) the large number of individuals who 

13 receive health care benefits under programs op14 erated or financed by the Federal Government; 

15 (B) the large number of individuals who 

16 benefit because of the exclusion from Federal 

17 taxes of the amounts spent to provide them 

18 with health insurance benefits; and 

19 (C) the large number of health care pro20 viders who provide items or services for which 

21 the Federal Government makes payments. 

22 (b) PURPOSE.—It is the purpose of this title to imple23 ment reasonable, comprehensive, and effective health care 

24 liability reforms designed to— 


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1 (1) improve the availability of health care serv2 ices in cases in which health care liability actions 

3 have been shown to be a factor in the decreased 

4 availability of services; 

5 (2) reduce the incidence of ‘‘defensive medi6 cine’’ and lower the cost of health care liability in7 surance, all of which contribute to the escalation of 

8 health care costs; 

9 (3) ensure that persons with meritorious health 

10 care injury claims receive fair and adequate com11 pensation, including reasonable noneconomic dam12 ages; 

13 (4) improve the fairness and cost-effectiveness 

14 of our current health care liability system to resolve 

15 disputes over, and provide compensation for, health 

16 care liability by reducing uncertainty in the amount 

17 of compensation provided to injured individuals; and 

18 (5) provide an increased sharing of information 

19 in the health care system which will reduce unin20 tended injury and improve patient care. 

21 SEC. 503. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

22 The time for the commencement of a health care law23 suit shall be 3 years after the date of manifestation of 

24 injury or 1 year after the claimant discovers, or through 

25 the use of reasonable diligence should have discovered, the 


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1 injury, whichever occurs first. In no event shall the time 

2 for commencement of a health care lawsuit exceed 3 years 

3 after the date of manifestation of injury unless tolled for 

4 any of the following— 

5 (1) upon proof of fraud; 

6 (2) intentional concealment; or 

7 (3) the presence of a foreign body, which has no 

8 therapeutic or diagnostic purpose or effect, in the 

9 person of the injured person. Actions by a minor 

10 shall be commenced within 3 years from the date of 

11 the alleged manifestation of injury except that ac12 tions by a minor under the full age of 6 years shall 

13 be commenced within 3 years of manifestation of in14 jury or prior to the minor’s 8th birthday, whichever 

15 provides a longer period. Such time limitation shall 

16 be tolled for minors for any period during which a 

17 parent or guardian and a health care provider or 

18 health care organization have committed fraud or 

19 collusion in the failure to bring an action on behalf 

20 of the injured minor. 

21 SEC. 504. COMPENSATING PATIENT INJURY. 

22 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

23 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

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1 ant’s recovery of the full amount of the available economic 

2 damages, notwithstanding the limitation in subsection (b). 

3 (b) ADDITIONAL NONECONOMIC DAMAGES.—In any 

4 health care lawsuit, the amount of noneconomic damages, 

5 if available, may be as much as $250,000, regardless of 

6 the number of parties against whom the action is brought 

7 or the number of separate claims or actions brought with 

8 respect to the same injury. 

9 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

10 DAMAGES.—For purposes of applying the limitation in 

11 subsection (b), future noneconomic damages shall not be 

12 discounted to present value. The jury shall not be in13 formed about the maximum award for noneconomic dam14 ages. An award for noneconomic damages in excess of 

15 $250,000 shall be reduced either before the entry of judg16 ment, or by amendment of the judgment after entry of 

17 judgment, and such reduction shall be made before ac18 counting for any other reduction in damages required by 

19 law. If separate awards are rendered for past and future 

20 noneconomic damages and the combined awards exceed 

21 $250,000, the future noneconomic damages shall be re22 duced first. 

23 (d) FAIR SHARE RULE.—In any health care lawsuit, 

24 each party shall be liable for that party’s several share 

25 of any damages only and not for the share of any other 


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1 person. Each party shall be liable only for the amount of 

2 damages allocated to such party in direct proportion to 

3 such party’s percentage of responsibility. Whenever a 

4 judgment of liability is rendered as to any party, a sepa5 rate judgment shall be rendered against each such party 

6 for the amount allocated to such party. For purposes of 

7 this section, the trier of fact shall determine the propor8 tion of responsibility of each party for the claimant’s 

9 harm. 

10 SEC. 505. MAXIMIZING PATIENT RECOVERY. 

11 (a) COURT SUPERVISION OF SHARE OF DAMAGES

12 ACTUALLY PAID TO CLAIMANTS.—In any health care law13 suit, the court shall supervise the arrangements for pay14 ment of damages to protect against conflicts of interest 

15 that may have the effect of reducing the amount of dam16 ages awarded that are actually paid to claimants. In par17 ticular, in any health care lawsuit in which the attorney 

18 for a party claims a financial stake in the outcome by vir19 tue of a contingent fee, the court shall have the power 

20 to restrict the payment of a claimant’s damage recovery 

21 to such attorney, and to redirect such damages to the 

22 claimant based upon the interests of justice and principles 

23 of equity. In no event shall the total of all contingent fees 

24 for representing all claimants in a health care lawsuit ex25 ceed the following limits: 


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1 (1) 40 percent of the first $50,000 recovered by 

2 the claimant(s). 

(2) 331 3 ⁄3 percent of the next $50,000 recovered 

4 by the claimant(s). 

5 (3) 25 percent of the next $500,000 recovered 

6 by the claimant(s). 

7 (4) 15 percent of any amount by which the re8 covery by the claimant(s) is in excess of $600,000. 

9 (b) APPLICABILITY.—The limitations in this section 

10 shall apply whether the recovery is by judgment, settle11 ment, mediation, arbitration, or any other form of alter12 native dispute resolution. In a health care lawsuit involv13 ing a minor or incompetent person, a court retains the 

14 authority to authorize or approve a fee that is less than 

15 the maximum permitted under this section. The require16 ment for court supervision in the first two sentences of 

17 subsection (a) applies only in civil actions. 

18 SEC. 506. ADDITIONAL HEALTH BENEFITS. 

19 In any health care lawsuit involving injury or wrong20 ful death, any party may introduce evidence of collateral 

21 source benefits. If a party elects to introduce such evi22 dence, any opposing party may introduce evidence of any 

23 amount paid or contributed or reasonably likely to be paid 

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1 fits. No provider of collateral source benefits shall recover 

2 any amount against the claimant or receive any lien or 

3 credit against the claimant’s recovery or be equitably or 

4 legally subrogated to the right of the claimant in a health 

5 care lawsuit involving injury or wrongful death. This sec6 tion shall apply to any health care lawsuit that is settled 

7 as well as a health care lawsuit that is resolved by a fact 

8 finder. This section shall not apply to section 1862(b) (42 

9 U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 

10 1396a(a)(25)) of the Social Security Act. 

11 SEC. 507. PUNITIVE DAMAGES. 

12 (a) IN GENERAL.—Punitive damages may, if other13 wise permitted by applicable State or Federal law, be 

14 awarded against any person in a health care lawsuit only 

15 if it is proven by clear and convincing evidence that such 

16 person acted with malicious intent to injure the claimant, 

17 or that such person deliberately failed to avoid unneces18 sary injury that such person knew the claimant was sub19 stantially certain to suffer. In any health care lawsuit 

20 where no judgment for compensatory damages is rendered 

21 against such person, no punitive damages may be awarded 

22 with respect to the claim in such lawsuit. No demand for 

23 punitive damages shall be included in a health care lawsuit 

24 as initially filed. A court may allow a claimant to file an 

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1 tion by the claimant and after a finding by the court, upon 

2 review of supporting and opposing affidavits or after a 

3 hearing, after weighing the evidence, that the claimant has 

4 established by a substantial probability that the claimant 

5 will prevail on the claim for punitive damages. At the re6 quest of any party in a health care lawsuit, the trier of 

7 fact shall consider in a separate proceeding— 

8 (1) whether punitive damages are to be award9 ed and the amount of such award; and 

10 (2) the amount of punitive damages following a 

11 determination of punitive liability. 

12 If a separate proceeding is requested, evidence relevant 

13 only to the claim for punitive damages, as determined by 

14 applicable State law, shall be inadmissible in any pro15 ceeding to determine whether compensatory damages are 

16 to be awarded. 

17 (b) DETERMINING AMOUNT OF PUNITIVE DAM18 AGES.— 

19 (1) FACTORS CONSIDERED.—In determining 

20 the amount of punitive damages, if awarded, in a 

21 health care lawsuit, the trier of fact shall consider 

22 only the following— 

23 (A) the severity of the harm caused by the 

24 conduct of such party; 


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1 (B) the duration of the conduct or any 

2 concealment of it by such party; 

3 (C) the profitability of the conduct to such 

4 party; 

5 (D) the number of products sold or med6 ical procedures rendered for compensation, as 

7 the case may be, by such party, of the kind 

8 causing the harm complained of by the claim9 ant; 

10 (E) any criminal penalties imposed on such 

11 party, as a result of the conduct complained of 

12 by the claimant; and 

13 (F) the amount of any civil fines assessed 

14 against such party as a result of the conduct 

15 complained of by the claimant. 

16 (2) MAXIMUM AWARD.—The amount of punitive 

17 damages, if awarded, in a health care lawsuit may 

18 be as much as $250,000 or as much as two times 

19 the amount of economic damages awarded, which20 ever is greater. The jury shall not be informed of 

21 this limitation. 

22 (c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT

23 COMPLY WITH FDA STANDARDS.— 

24 (1) IN GENERAL.— 


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1 (A) No punitive damages may be awarded 

2 against the manufacturer or distributor of a 

3 medical product, or a supplier of any compo4 nent or raw material of such medical product, 

5 based on a claim that such product caused the 

6 claimant’s harm where— 

7 (i)(I) such medical product was sub8 ject to premarket approval, clearance, or li9 censure by the Food and Drug Administra10 tion with respect to the safety of the for11 mulation or performance of the aspect of 

12 such medical product which caused the 

13 claimant’s harm or the adequacy of the 

14 packaging or labeling of such medical 

15 product; and 

16 (II) such medical product was so ap17 proved, cleared, or licensed; or 

18 (ii) such medical product is generally 

19 recognized among qualified experts as safe 

20 and effective pursuant to conditions estab21 lished by the Food and Drug Administra22 tion and applicable Food and Drug Admin23 istration regulations, including without 

24 limitation those related to packaging and 

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1 istration has determined that such medical 

2 product was not manufactured or distrib3 uted in substantial compliance with appli4 cable Food and Drug Administration stat5 utes and regulations. 

6 (B) RULE OF CONSTRUCTION.—Subpara7 graph (A) may not be construed as establishing 

8 the obligation of the Food and Drug Adminis9 tration to demonstrate affirmatively that a 

10 manufacturer, distributor, or supplier referred 

11 to in such subparagraph meets any of the con12 ditions described in such subparagraph. 

13 (2) LIABILITY OF HEALTH CARE PROVIDERS.— 

14 A health care provider who prescribes, or who dis15 penses pursuant to a prescription, a medical product 

16 approved, licensed, or cleared by the Food and Drug 

17 Administration shall not be named as a party to a 

18 product liability lawsuit involving such product and 

19 shall not be liable to a claimant in a class action 

20 lawsuit against the manufacturer, distributor, or 

21 seller of such product. Nothing in this paragraph 

22 prevents a court from consolidating cases involving 

23 health care providers and cases involving products li24 ability claims against the manufacturer, distributor, 

25 or product seller of such medical product. 


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1 (3) PACKAGING.—In a health care lawsuit for 

2 harm which is alleged to relate to the adequacy of 

3 the packaging or labeling of a drug which is required 

4 to have tamper-resistant packaging under regula5 tions of the Secretary of Health and Human Serv6 ices (including labeling regulations related to such 

7 packaging), the manufacturer or product seller of 

8 the drug shall not be held liable for punitive dam9 ages unless such packaging or labeling is found by 

10 the trier of fact by clear and convincing evidence to 

11 be substantially out of compliance with such regula12 tions. 

13 (4) EXCEPTION.—Paragraph (1) shall not 

14 apply in any health care lawsuit in which— 

15 (A) a person, before or after premarket ap16 proval, clearance, or licensure of such medical 

17 product, knowingly misrepresented to or with18 held from the Food and Drug Administration 

19 information that is required to be submitted 

20 under the Federal Food, Drug, and Cosmetic 

21 Act (21 U.S.C. 301 et seq.) or section 351 of 

22 the Public Health Service Act (42 U.S.C. 262) 

23 that is material and is causally related to the 

24 harm which the claimant allegedly suffered; or 


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1 (B) a person made an illegal payment to 

2 an official of the Food and Drug Administra3 tion for the purpose of either securing or main4 taining approval, clearance, or licensure of such 

5 medical product. 

6 SEC. 508. AUTHORIZATION OF PAYMENT OF FUTURE DAM7 AGES TO CLAIMANTS IN HEALTH CARE LAW8 SUITS. 

9 (a) IN GENERAL.—In any health care lawsuit, if an 

10 award of future damages, without reduction to present 

11 value, equaling or exceeding $50,000 is made against a 

12 party with sufficient insurance or other assets to fund a 

13 periodic payment of such a judgment, the court shall, at 

14 the request of any party, enter a judgment ordering that 

15 the future damages be paid by periodic payments. In any 

16 health care lawsuit, the court may be guided by the Uni17 form Periodic Payment of Judgments Act promulgated by 

18 the National Conference of Commissioners on Uniform 

19 State Laws. 

20 (b) APPLICABILITY.—This section applies to all ac21 tions which have not been first set for trial or retrial be22 fore the effective date of this title. 

23 SEC. 509. DEFINITIONS. 

24 In this title: 


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1 (1) ALTERNATIVE DISPUTE RESOLUTION SYS2 TEM; ADR.—The term ‘‘alternative dispute resolution 

3 system’’ or ‘‘ADR’’ means a system that provides 

4 for the resolution of health care lawsuits in a man5 ner other than through a civil action brought in a 

6 State or Federal court. 

7 (2) CLAIMANT.—The term ‘‘claimant’’ means 

8 any person who brings a health care lawsuit, includ9 ing a person who asserts or claims a right to legal 

10 or equitable contribution, indemnity or subrogation, 

11 arising out of a health care liability claim or action, 

12 and any person on whose behalf such a claim is as13 serted or such an action is brought, whether de14 ceased, incompetent, or a minor. 

15 (3) COLLATERAL SOURCE BENEFITS.—The 

16 term ‘‘collateral source benefits’’ means any amount 

17 paid or reasonably likely to be paid in the future to 

18 or on behalf of the claimant, or any service, product 

19 or other benefit provided or reasonably likely to be 

20 provided in the future to or on behalf of the claim21 ant, as a result of the injury or wrongful death, pur22 suant to— 

23 (A) any State or Federal health, sickness, 

24 income-disability, accident, or workers’ com25 pensation law; 


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1 (B) any health, sickness, income-disability, 

2 or accident insurance that provides health bene3 fits or income-disability coverage; 

4 (C) any contract or agreement of any 

5 group, organization, partnership, or corporation 

6 to provide, pay for, or reimburse the cost of 

7 medical, hospital, dental, or income disability 

8 benefits; and 

9 (D) any other publicly or privately funded 

10 program. 

11 (4) COMPENSATORY DAMAGES.—The term 

12 ‘‘compensatory damages’’ means objectively 

13 verifiable monetary losses incurred as a result of the 

14 provision of, use of, or payment for (or failure to 

15 provide, use, or pay for) health care services or med16 ical products, such as past and future medical ex17 penses, loss of past and future earnings, cost of ob18 taining domestic services, loss of employment, and 

19 loss of business or employment opportunities, dam20 ages for physical and emotional pain, suffering, in21 convenience, physical impairment, mental anguish, 

22 disfigurement, loss of enjoyment of life, loss of soci23 ety and companionship, loss of consortium (other 

24 than loss of domestic service), hedonic damages, in25 jury to reputation, and all other nonpecuniary losses 


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1 of any kind or nature. The term ‘‘compensatory 

2 damages’’ includes economic damages and non3 economic damages, as such terms are defined in this 

4 section. 

5 (5) CONTINGENT FEE.—The term ‘‘contingent 

6 fee’’ includes all compensation to any person or per7 sons which is payable only if a recovery is effected 

8 on behalf of one or more claimants. 

9 (6) ECONOMIC DAMAGES.—The term ‘‘economic 

10 damages’’ means objectively verifiable monetary 

11 losses incurred as a result of the provision of, use 

12 of, or payment for (or failure to provide, use, or pay 

13 for) health care services or medical products, such as 

14 past and future medical expenses, loss of past and 

15 future earnings, cost of obtaining domestic services, 

16 loss of employment, and loss of business or employ17 ment opportunities. 

18 (7) HEALTH CARE LAWSUIT.—The term 

19 ‘‘health care lawsuit’’ means any health care liability 

20 claim concerning the provision of health care goods 

21 or services or any medical product affecting inter22 state commerce, or any health care liability action 

23 concerning the provision of health care goods or 

24 services or any medical product affecting interstate 

25 commerce, brought in a State or Federal court or 


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1 pursuant to an alternative dispute resolution system, 

2 against a health care provider, a health care organi3 zation, or the manufacturer, distributor, supplier, 

4 marketer, promoter, or seller of a medical product, 

5 regardless of the theory of liability on which the 

6 claim is based, or the number of claimants, plain7 tiffs, defendants, or other parties, or the number of 

8 claims or causes of action, in which the claimant al9 leges a health care liability claim. Such term does 

10 not include a claim or action which is based on 

11 criminal liability; which seeks civil fines or penalties 

12 paid to Federal, State, or local government; or which 

13 is grounded in antitrust. 

14 (8) HEALTH CARE LIABILITY ACTION.—The 

15 term ‘‘health care liability action’’ means a civil ac16 tion brought in a State or Federal Court or pursu17 ant to an alternative dispute resolution system, 

18 against a health care provider, a health care organi19 zation, or the manufacturer, distributor, supplier, 

20 marketer, promoter, or seller of a medical product, 

21 regardless of the theory of liability on which the 

22 claim is based, or the number of plaintiffs, defend23 ants, or other parties, or the number of causes of ac24 tion, in which the claimant alleges a health care li25 ability claim. 


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1 (9) HEALTH CARE LIABILITY CLAIM.—The 

2 term ‘‘health care liability claim’’ means a demand 

3 by any person, whether or not pursuant to ADR, 

4 against a health care provider, health care organiza5 tion, or the manufacturer, distributor, supplier, mar6 keter, promoter, or seller of a medical product, in7 cluding, but not limited to, third-party claims, cross8 claims, counter-claims, or contribution claims, which 

9 are based upon the provision of, use of, or payment 

10 for (or the failure to provide, use, or pay for) health 

11 care services or medical products, regardless of the 

12 theory of liability on which the claim is based, or the 

13 number of plaintiffs, defendants, or other parties, or 

14 the number of causes of action. 

15 (10) HEALTH CARE ORGANIZATION.—The term 

16 ‘‘health care organization’’ means any person or en17 tity which is obligated to provide or pay for health 

18 benefits under any health plan, including any person 

19 or entity acting under a contract or arrangement 

20 with a health care organization to provide or admin21 ister any health benefit. 

22 (11) HEALTH CARE PROVIDER.—The term 

23 ‘‘health care provider’’ means any person or entity 

24 required by State or Federal laws or regulations to 

25 be licensed, registered, or certified to provide health 


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1 care services, and being either so licensed, reg2 istered, or certified, or exempted from such require3 ment by other statute or regulation. 

4 (12) HEALTH CARE GOODS OR SERVICES.—The 

5 term ‘‘health care goods or services’’ means any 

6 goods or services provided by a health care organiza7 tion, provider, or by any individual working under 

8 the supervision of a health care provider, that relates 

9 to the diagnosis, prevention, or treatment of any 

10 human disease or impairment, or the assessment or 

11 care of the health of human beings. 

12 (13) MALICIOUS INTENT TO INJURE.—The 

13 term ‘‘malicious intent to injure’’ means inten14 tionally causing or attempting to cause physical in15 jury other than providing health care goods or serv16 ices. 

17 (14) MEDICAL PRODUCT.—The term ‘‘medical 

18 product’’ means a drug, device, or biological product 

19 intended for humans, and the terms ‘‘drug’’, ‘‘de20 vice’’, and ‘‘biological product’’ have the meanings 

21 given such terms in sections 201(g)(1) and 201(h) 

22 of the Federal Food, Drug and Cosmetic Act (21 

23 U.S.C. 321) and section 351(a) of the Public Health 

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1 ing any component or raw material used therein, but 

2 excluding health care services. 

3 (15) NONECONOMIC DAMAGES.—The term 

4 ‘‘noneconomic damages’’ means damages for phys5 ical and emotional pain, suffering, inconvenience, 

6 physical impairment, mental anguish, disfigurement, 

7 loss of enjoyment of life, loss of society and compan8 ionship, loss of consortium (other than loss of do9 mestic service), hedonic damages, injury to reputa10 tion, and all other nonpecuniary losses of any kind 

11 or nature. 

12 (16) PUNITIVE DAMAGES.—The term ‘‘punitive 

13 damages’’ means damages awarded, for the purpose 

14 of punishment or deterrence, and not solely for com15 pensatory purposes, against a health care provider, 

16 health care organization, or a manufacturer, dis17 tributor, or supplier of a medical product. Punitive 

18 damages are neither economic nor noneconomic 

19 damages. 

20 (17) RECOVERY.—The term ‘‘recovery’’ means 

21 the net sum recovered after deducting any disburse22 ments or costs incurred in connection with prosecu23 tion or settlement of the claim, including all costs 

24 paid or advanced by any person. Costs of health care 

25 incurred by the plaintiff and the attorneys’ office 


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1 overhead costs or charges for legal services are not 

2 deductible disbursements or costs for such purpose. 

3 (18) STATE.—The term ‘‘State’’ means each of 

4 the several States, the District of Columbia, the 

5 Commonwealth of Puerto Rico, the Virgin Islands, 

6 Guam, American Samoa, the Northern Mariana Is7 lands, the Trust Territory of the Pacific Islands, and 

8 any other territory or possession of the United 

9 States, or any political subdivision thereof. 

10 SEC. 510. EFFECT ON OTHER LAWS. 

11 (a) VACCINE INJURY.— 

12 (1) To the extent that title XXI of the Public 

13 Health Service Act establishes a Federal rule of law 

14 applicable to a civil action brought for a vaccine-re15 lated injury or death— 

16 (A) this title does not affect the application 

17 of the rule of law to such an action; and 

18 (B) any rule of law prescribed by this title 

19 in conflict with a rule of law of such title XXI 

20 shall not apply to such action. 

21 (2) If there is an aspect of a civil action 

22 brought for a vaccine-related injury or death to 

23 which a Federal rule of law under title XXI of the 

24 Public Health Service Act does not apply, then this 

25 title or otherwise applicable law (as determined 


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1 under this title) will apply to such aspect of such ac2 tion. 

3 (b) OTHER FEDERAL LAW.—Except as provided in 

4 this section, nothing in this title shall be deemed to affect 

5 any defense available to a defendant in a health care law6 suit or action under any other provision of Federal law. 

7 SEC. 511. STATE FLEXIBILITY AND PROTECTION OF 

8 STATES’ RIGHTS. 

9 (a) HEALTH CARE LAWSUITS.—The provisions gov10 erning health care lawsuits set forth in this title preempt, 

11 subject to subsections (b) and (c), State law to the extent 

12 that State law prevents the application of any provisions 

13 of law established by or under this title. The provisions 

14 governing health care lawsuits set forth in this title super15 sede chapter 171 of title 28, United States Code, to the 

16 extent that such chapter— 

17 (1) provides for a greater amount of damages 

18 or contingent fees, a longer period in which a health 

19 care lawsuit may be commenced, or a reduced appli20 cability or scope of periodic payment of future dam21 ages, than provided in this title; or 

22 (2) prohibits the introduction of evidence re23 garding collateral source benefits, or mandates or 

24 permits subrogation or a lien on collateral source 

25 benefits. 


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1 (b) PROTECTION OF STATES’ RIGHTS AND OTHER

2 LAWS.—(1) Any issue that is not governed by any provi3 sion of law established by or under this title (including 

4 State standards of gross negligence) shall be governed by 

5 otherwise applicable State or Federal law. 

6 (2) This title shall not preempt or supersede any 

7 State or Federal law that imposes greater procedural or 

8 substantive protections for health care providers and 

9 health care organizations from liability, loss, or damages 

10 than those provided by this title or create a cause of ac11 tion. 

12 (c) STATE FLEXIBILITY.—No provision of this title 

13 shall be construed to preempt— 

14 (1) any State law (whether effective before, on, 

15 or after the date of the enactment of this title) that 

16 specifies a particular monetary amount of compen17 satory or punitive damages (or the total amount of 

18 damages) that may be awarded in a health care law19 suit, regardless of whether such monetary amount is 

20 greater or lesser than is provided for under this title, 

21 notwithstanding section 404(a); or 

22 (2) any defense available to a party in a health 

23 care lawsuit under any other provision of State or 

24 Federal law. 


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1 SEC. 512. APPLICABILITY; EFFECTIVE DATE. 

2 The previous provisions of this title shall apply to any 

3 health care lawsuit brought in a Federal or State court, 

4 or subject to an alternative dispute resolution system, that 

5 is initiated on or after the date of the enactment of this 

6 title, except that any health care lawsuit arising from an 

7 injury occurring prior to the date of the enactment of this 

8 title shall be governed by the applicable statute of limita9 tions provisions in effect at the time the injury occurred. 

10 SEC. 513. SENSE OF CONGRESS. 

11 It is the sense of Congress that a health insurer 

12 should be liable for damages for harm caused when it 

13 makes a decision as to what care is medically necessary 

14 and appropriate. 

15 SEC. 514. STATE GRANTS TO CREATE ADMINISTRATIVE 

16 HEALTH CARE TRIBUNALS. 

17 Part P of title III of the Public Health Service Act 

18 (42 U.S.C. 280g et seq.) is amended by adding at the end 

19 the following: 

20 ‘‘SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE 

21 HEALTH CARE TRIBUNALS. 

22 ‘‘(a) IN GENERAL.—The Secretary may award grants 

23 to States for the development, implementation, and eval24 uation of administrative health care tribunals that comply 

25 with this section, for the resolution of disputes concerning 

26 injuries allegedly caused by health care providers. 


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1 ‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 

2 To be eligible to receive a grant under this section, a State 

3 shall submit to the Secretary an application at such time, 

4 in such manner, and containing such information as may 

5 be required by the Secretary. A grant shall be awarded 

6 under this section on such terms and conditions as the 

7 Secretary determines appropriate. 

8 ‘‘(c) REPRESENTATION BY COUNSEL.—A State that 

9 receives a grant under this section may not preclude any 

10 party to a dispute before an administrative health care tri11 bunal operated under such grant from obtaining legal rep12 resentation during any review by the expert panel under 

13 subsection (d), the administrative health care tribunal 

14 under subsection (e), or a State court under subsection 

15 (f). 

16 ‘‘(d) EXPERT PANEL REVIEW AND EARLY OFFER

17 GUIDELINES.— 

18 ‘‘(1) IN GENERAL.—Prior to the submission of 

19 any dispute concerning injuries allegedly caused by 

20 health care providers to an administrative health 

21 care tribunal under this section, such allegations 

22 shall first be reviewed by an expert panel. 

23 ‘‘(2) COMPOSITION.— 

24 ‘‘(A) IN GENERAL.—The members of each 

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1 pointed by the head of the State agency respon2 sible for health. Each expert panel shall be 

3 composed of no fewer than 3 members and not 

4 more than 7 members. At least one-half of such 

5 members shall be medical experts (either physi6 cians or health care professionals). 

7 ‘‘(B) LICENSURE AND EXPERTISE.—Each 

8 physician or health care professional appointed 

9 to an expert panel under subparagraph (A) 

10 shall— 

11 ‘‘(i) be appropriately credentialed or 

12 licensed in 1 or more States to deliver 

13 health care services; and 

14 ‘‘(ii) typically treat the condition, 

15 make the diagnosis, or provide the type of 

16 treatment that is under review. 

17 ‘‘(C) INDEPENDENCE.— 

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

19 (ii), each individual appointed to an expert 

20 panel under this paragraph shall— 

21 ‘‘(I) not have a material familial, 

22 financial, or professional relationship 

23 with a party involved in the dispute 

24 reviewed by the panel; and 


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1 ‘‘(II) not otherwise have a con2 flict of interest with such a party. 

3 ‘‘(ii) EXCEPTION.—Nothing in clause 

4 (i) shall be construed to prohibit an indi5 vidual who has staff privileges at an insti6 tution where the treatment involved in the 

7 dispute was provided from serving as a 

8 member of an expert panel merely on the 

9 basis of such affiliation, if the affiliation is 

10 disclosed to the parties and neither party 

11 objects. 

12 ‘‘(D) PRACTICING HEALTH CARE PROFES13 SIONAL IN SAME FIELD.— 

14 ‘‘(i) IN GENERAL.—In a dispute be15 fore an expert panel that involves treat16 ment, or the provision of items or serv17 ices— 

18 ‘‘(I) by a physician, the medical 

19 experts on the expert panel shall be 

20 practicing physicians (allopathic or os21 teopathic) of the same or similar spe22 cialty as a physician who typically 

23 treats the condition, makes the diag24 nosis, or provides the type of treat25 ment under review; or 


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1 ‘‘(II) by a health care profes2 sional other than a physician, at least 

3 two medical experts on the expert 

4 panel shall be practicing physicians 

5 (allopathic or osteopathic) of the same 

6 or similar specialty as the health care 

7 professional who typically treats the 

8 condition, makes the diagnosis, or 

9 provides the type of treatment under 

10 review, and, if determined appropriate 

11 by the State agency, an additional 

12 medical expert shall be a practicing 

13 health care professional (other than 

14 such a physician) of such a same or 

15 similar specialty. 

16 ‘‘(ii) PRACTICING DEFINED.—In this 

17 paragraph, the term ‘practicing’ means, 

18 with respect to an individual who is a phy19 sician or other health care professional, 

20 that the individual provides health care 

21 services to individual patients on average 

22 at least 2 days a week. 

23 ‘‘(E) PEDIATRIC EXPERTISE.—In the case 

24 of dispute relating to a child, at least 1 medical 


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1 expert on the expert panel shall have expertise 

2 described in subparagraph (D)(i) in pediatrics. 

3 ‘‘(3) DETERMINATION.—After a review under 

4 paragraph (1), an expert panel shall make a deter5 mination as to the liability of the parties involved 

6 and compensation. 

7 ‘‘(4) ACCEPTANCE.—If the parties to a dispute 

8 before an expert panel under this subsection accept 

9 the determination of the expert panel concerning li10 ability and compensation, such compensation shall 

11 be paid to the claimant and the claimant shall agree 

12 to forgo any further action against the health care 

13 providers involved. 

14 ‘‘(5) FAILURE TO ACCEPT.—If any party de15 cides not to accept the expert panel’s determination, 

16 the matter shall be referred to an administrative 

17 health care tribunal created pursuant to this section. 

18 ‘‘(e) ADMINISTRATIVE HEALTH CARE TRIBUNALS.— 

19 ‘‘(1) IN GENERAL.—Upon the failure of any 

20 party to accept the determination of an expert panel 

21 under subsection (d), the parties shall have the right 

22 to request a hearing concerning the liability or com23 pensation involved by an administrative health care 

24 tribunal established by the State involved. 


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1 ‘‘(2) REQUIREMENTS.—In establishing an ad2 ministrative health care tribunal under this section, 

3 a State shall— 

4 ‘‘(A) ensure that such tribunals are pre5 sided over by special judges with health care ex6 pertise; 

7 ‘‘(B) provide authority to such judges to 

8 make binding rulings, rendered in written deci9 sions, on standards of care, causation, com10 pensation, and related issues with reliance on 

11 independent expert witnesses commissioned by 

12 the tribunal; 

13 ‘‘(C) establish gross negligence as the legal 

14 standard for the tribunal; 

15 ‘‘(D) allow the admission into evidence of 

16 the recommendation made by the expert panel 

17 under subsection (d); and 

18 ‘‘(E) provide for an appeals process to 

19 allow for review of decisions by State courts. 

20 ‘‘(f) REVIEW BY STATE COURT AFTER EXHAUSTION

21 OF ADMINISTRATIVE REMEDIES.— 

22 ‘‘(1) RIGHT TO FILE.—If any party to a dispute 

23 before a health care tribunal under subsection (e) is 

24 not satisfied with the determinations of the tribunal, 


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1 the party shall have the right to file their claim in 

2 a State court of competent jurisdiction. 

3 ‘‘(2) FORFEIT OF AWARDS.—Any party filing 

4 an action in a State court in accordance with para5 graph (1) shall forfeit any compensation award 

6 made under subsection (e). 

7 ‘‘(3) ADMISSIBILITY.—The determinations of 

8 the expert panel and the administrative health care 

9 tribunal pursuant to subsections (d) and (e) with re10 spect to a State court proceeding under paragraph 

11 (1) shall be admissible into evidence in any such 

12 State court proceeding. 

13 ‘‘(g) DEFINITION.—In this section, the term ‘health 

14 care provider’ has the meaning given such term for pur15 poses of part A of title VII. 

16 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 

17 are authorized to be appropriated for any fiscal year such 

18 sums as may be necessary for purposes of making grants 

19 to States under this section.’’. 

20 SEC. 515. AFFIRMATIVE DEFENSE BASED ON COMPLIANCE 

21 WITH BEST PRACTICE GUIDELINES. 

22 (a) SELECTION AND ISSUANCE OF BEST PRACTICES

23 GUIDELINES.— 

24 (1) IN GENERAL.—The Secretary of Health and 

25 Human Services (in this section referred to as the 


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1 ‘‘Secretary’’) shall provide for the selection and 

2 issuance of best practice guidelines (each in this sub3 section referred to as a ‘‘guideline’’) in accordance 

4 with paragraphs (2) and (3). 

5 (2) DEVELOPMENT PROCESS.—Not later than 

6 90 days after the date of the enactment of this Act, 

7 the Secretary shall enter into a contract with a 

8 qualified physician consensus-building organization 

9 (such as the Physician Consortium for Performance 

10 Improvement), in concert and agreement with physi11 cian specialty organizations, to develop guidelines for 

12 treatment of medical conditions for application 

13 under subsection (b). Under the contract, the orga14 nization shall take into consideration any endorsed 

15 performance-based quality measures described in 

16 section 802. Under the contract and not later than 

17 18 months after the date of the enactment of this 

18 Act, the organization shall submit best practice 

19 guidelines for issuance as guidelines under para20 graph (3). 

21 (3) ISSUANCE.— 

22 (A) IN GENERAL.—Not later than 2 years 

23 after the date of the enactment of this Act, the 

24 Secretary shall issue, by regulation, after notice 

25 and opportunity for public comment, guidelines 


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1 that have been recommended under paragraph 

2 (2) for application under subsection (b). 

3 (B) LIMITATION.—The Secretary may not 

4 issue guidelines unless they have been approved 

5 or endorsed by qualified physician consensus6 building organization involved and physician 

7 specialty organizations. 

8 (C) DISSEMINATION.—The Secretary shall 

9 broadly disseminate the guidelines so issued. 

10 (b) LIMITATION ON DAMAGES.— 

11 (1) LIMITATION ON NONECONOMIC DAMAGES.— 

12 In any health care lawsuit, no noneconomic damages 

13 may awarded with respect to treatment that is with14 in a guideline issued under subsection (a). 

15 (2) LIMITATION ON PUNITIVE DAMAGES.—In 

16 any health care lawsuit, no punitive damages may be 

17 awarded against a health care practitioner based on 

18 a claim that such treatment caused the claimant 

19 harm if— 

20 (A) such treatment was subject to the 

21 quality review by a qualified physician con22 sensus-building organization; 

23 (B) such treatment was approved in a 

24 guideline that underwent full review by such or25 ganization, public comment, approval by the 


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1 Secretary, and dissemination as described in 

2 subparagraph (a); and 

3 (C) such medical treatment is generally 

4 recognized among qualified experts (including 

5 medical providers and relevant physician spe6 cialty organizations) as safe, effective, and ap7 propriate. 

8 (c) USE.— 

9 (1) INTRODUCTION AS EVIDENCE.—Guidelines 

10 under subsection (a) may not be introduced as evi11 dence of negligence or deviation in the standard of 

12 care in any civil action unless they have previously 

13 been introduced by the defendant. 

14 (2) NO PRESUMPTION OF NEGLIGENCE.—There 

15 would be no presumption of negligence if a partici16 pating physician does not adhere to such guidelines. 

17 (d) CONSTRUCTION.—Nothing in this section shall be 

18 construed as preventing a State from— 

19 (1) replacing their current medical malpractice 

20 rules with rules that rely, as a defense, upon a 

21 health care provider’s compliance with a guideline 

22 issued under subsection (a); or 

23 (2) applying additional guidelines or safe-har24 bors that are in addition to, but not in lieu of, the 

25 guidelines issued under subsection (a). 


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1 SEC. 516. BAD DEBT DEDUCTION FOR DOCTORS TO PAR2 TIALLY OFFSET THE COST OF PROVIDING UN3 COMPENSATED CARE REQUIRED TO BE PRO4 VIDED UNDER AMENDMENTS MADE BY THE 

5 EMERGENCY MEDICAL TREATMENT AND 

6 LABOR ACT. 

7 (a) IN GENERAL.—Section 166 of the Internal Rev8 enue Code of 1986 (relating to bad debts) is amended by 

9 redesignating subsection (f) as subsection (g) and by in10 serting after subsection (e) the following new subsection: 

11 ‘‘(f) BAD DEBT TREATMENT FOR DOCTORS TO PAR12 TIALLY OFFSET COST OF PROVIDING UNCOMPENSATED

13 CARE REQUIRED TO BE PROVIDED.— 

14 ‘‘(1) AMOUNT OF DEDUCTION.— 

15 ‘‘(A) IN GENERAL.—For purposes of sub16 section (a), the basis for determining the 

17 amount of any deduction for an eligible 

18 EMTALA debt shall be treated as being equal 

19 to the Medicare payment amount. 

20 ‘‘(B) MEDICARE PAYMENT AMOUNT.—For 

21 purposes of subparagraph (A), the Medicare 

22 payment amount with respect to an eligible 

23 EMTALA debt is the fee schedule amount es24 tablished under section 1848 of the Social Secu25 rity Act for the physicians’ service (to which 

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1 vided to an individual enrolled under part B of 

2 title XVIIII of such Act. 

3 ‘‘(2) ELIGIBLE EMTALA DEBT.—For purposes 

4 of this section, the term ‘eligible EMTALA debt’ 

5 means any debt if— 

6 ‘‘(A) such debt arose as a result of physi7 cians’ services— 

8 ‘‘(i) which were performed in an 

9 EMTALA hospital by a board-certified 

10 physician (whether as part of medical 

11 screening or necessary stabilizing treat12 ment and whether as an emergency depart13 ment physician, as an on-call physician, or 

14 otherwise), and 

15 ‘‘(ii) which were required to be pro16 vided under section 1867 of the Social Se17 curity Act (42 U.S.C. 1395dd), and 

18 ‘‘(B) such debt is owed— 

19 ‘‘(i) to such physician, or 

20 ‘‘(ii) to an entity if— 

21 ‘‘(I) such entity is a corporation 

22 and the sole shareholder of such cor23 poration is such physician, or 

24 ‘‘(II) such entity is a partnership 

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1 section with respect to such debt is al2 located to such physician or to an en3 tity described in subclause (I). 

4 ‘‘(3) BOARD-CERTIFIED PHYSICIAN.—For pur5 poses of this subsection, the term ‘board-certified 

6 physician’ means any physician (as defined in sec7 tion 1861(r) of the Social Security Act (42 U.S.C. 

8 1395x(r)) who is certified by the American Board of 

9 Emergency Medicine or other appropriate medical 

10 specialty board for the specialty in which the physi11 cian practices, or who meets comparable require12 ments, as identified by the Secretary of the Treasury 

13 in consultation with Secretary of Health and Human 

14 Services. 

15 ‘‘(4) OTHER DEFINITIONS.—For purposes of 

16 this subsection— 

17 ‘‘(A) EMTALA HOSPITAL.—The term 

18 ‘EMTALA hospital’ means any hospital having 

19 a hospital emergency department which is re20 quired to comply with section 1867 of the So21 cial Security Act (42 U.S.C. 1395dd) (relating 

22 to examination and treatment for emergency 

23 medical conditions and women in labor). 

24 ‘‘(B) PHYSICIANS’ SERVICES.—The term 

25 ‘physicians’ services’ has the meaning given 


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1 such term in section 1861(q) of the Social Se2 curity Act (42 U.S.C. 1395x(q)).’’. 

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

4 this section shall apply to debts arising from services per5 formed in taxable years beginning after the date of the 

6 enactment of this Act. 

7 TITLE VI—WELLNESS AND 

8 PREVENTION 

9 SEC. 601. PROVIDING FINANCIAL INCENTIVES FOR TREAT10 MENT COMPLIANCE. 

11 (a) ERISA LIMITATION ON EXCEPTION FOR

12 WELLNESS PROGRAMS UNDER HIPAA DISCRIMINATION

13 RULES.—Section 702(b)(2) of the Employee Retirement 

14 Income Security Act of 1974 (29 U.S.C. 1182(b)(2)) is 

15 amended by adding after and below subparagraph (B) the 

16 following: 

17 ‘‘In applying subparagraph (B), a group health plan 

18 (or a health insurance issuer with respect to health 

19 insurance coverage) may vary premiums and cost20 sharing by up to 50 percent of the value of the bene21 fits under the plan (or coverage) based on participa22 tion (or lack of participation) in a standards-based 

23 wellness program.’’. 


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

2 subsection (a) shall apply to plan years beginning more 

3 than 1 year after the date of the enactment of this Act. 

4 TITLE VII—TRANSPARENCY AND 

5 INSURANCE REFORM MEASURES 

6 SEC. 701. RECEIPT AND RESPONSE TO REQUESTS FOR 

7 CLAIM INFORMATION. 

8 (a) IN GENERAL.—Title XXVII of the Public Health 

9 Service Act is amended by inserting after section 2713 the 

10 following new section: 

11 ‘‘SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR 

12 CLAIM INFORMATION. 

13 ‘‘(a) REQUIREMENT.— 

14 ‘‘(1) IN GENERAL.—In the case of health insur15 ance coverage offered in connection with a group 

16 health plan, not later than the 30th day after the 

17 date a health insurance issuer receives a written re18 quest for a written report of claim information from 

19 the plan, plan sponsor, or plan administrator, the 

20 health insurance issuer shall provide the requesting 

21 party the report, subject to the succeeding provisions 

22 of this section. 

23 ‘‘(2) EXCEPTION.—The health insurance issuer 

24 is not obligated to provide a report under this sub25 section regarding a particular employer or group 


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1 health plan more than twice in any 12-month period 

2 and is not obligated to provide such a report in the 

3 case of an employer with fewer than 50 employees. 

4 ‘‘(3) DEADLINE.—A plan, plan sponsor, or plan 

5 administrator must request a report under this sub6 section before or on the second anniversary of the 

7 date of termination of coverage under a group health 

8 plan issued by the health insurance issuer. 

9 ‘‘(b) FORM OF REPORT; INFORMATION TO BE IN10 CLUDED.— 

11 ‘‘(1) IN GENERAL.—A health insurance issuer 

12 shall provide the report of claim information under 

13 subsection (a)— 

14 ‘‘(A) in a written report; 

15 ‘‘(B) through an electronic file transmitted 

16 by secure electronic mail or a file transfer pro17 tocol site; or 

18 ‘‘(C) by making the required information 

19 available through a secure website or web portal 

20 accessible by the requesting plan, plan sponsor, 

21 or plan administrator. 

22 ‘‘(2) INFORMATION TO BE INCLUDED.—A re23 port of claim information provided under subsection 

24 (a) shall contain all information available to the 

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1 quest made under such subsection, including, subject 

2 to subsection (c), protected health information, for 

3 the 36-month period preceding the date of the report 

4 or the period specified by subparagraphs (D), (E), 

5 and (F) of paragraph (3), if applicable, or for the 

6 entire period of coverage, whichever period is short7 er. 

8 ‘‘(3) REQUIRED INFORMATION.—Subject to 

9 subsection (c), a report provided under subsection 

10 (a) shall include the following: 

11 ‘‘(A) Aggregate paid claims experience by 

12 month, including claims experience for medical, 

13 dental, and pharmacy benefits, as applicable. 

14 ‘‘(B) Total premium paid by month. 

15 ‘‘(C) Total number of covered employees 

16 on a monthly basis by coverage tier, including 

17 whether coverage was for— 

18 ‘‘(i) an employee only; 

19 ‘‘(ii) an employee with dependents 

20 only; 

21 ‘‘(iii) an employee with a spouse only; 

22 or 

23 ‘‘(iv) an employee with a spouse and 

24 dependents. 


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1 ‘‘(D) The total dollar amount of claims 

2 pending as of the date of the report. 

3 ‘‘(E) A separate description and individual 

4 claims report for any individual whose total 

5 paid claims exceed $15,000 during the 12- 

6 month period preceding the date of the report, 

7 including the following information related to 

8 the claims for that individual— 

9 ‘‘(i) a unique identifying number, 

10 characteristic, or code for the individual; 

11 ‘‘(ii) the amounts paid; 

12 ‘‘(iii) dates of service; and 

13 ‘‘(iv) applicable procedure codes and 

14 diagnosis codes. 

15 ‘‘(F) For claims that are not part of the 

16 information described in a previous subpara17 graph, a statement describing precertification 

18 requests for hospital stays of 5 days or longer 

19 that were made during the 30-day period pre20 ceding the date of the report. 

21 ‘‘(c) LIMITATIONS ON DISCLOSURE.— 

22 ‘‘(1) IN GENERAL.—A health insurance issuer 

23 may not disclose protected health information in a 

24 report of claim information provided under this sec25 tion if the health insurance issuer is prohibited from 


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1 disclosing that information under another State or 

2 federal law that imposes more stringent privacy re3 strictions than those imposed under federal law 

4 under the HIPAA privacy regulations. To withhold 

5 information in accordance with this subsection, the 

6 health insurance issuer must— 

7 ‘‘(A) notify the plan, plan sponsor, or plan 

8 administrator requesting the report that infor9 mation is being withheld; and 

10 ‘‘(B) provide to the plan, plan sponsor, or 

11 plan administrator a list of categories of claim 

12 information that the health insurance issuer has 

13 determined are subject to the more stringent 

14 privacy restrictions under another State or Fed15 eral law. 

16 ‘‘(2) PROTECTION.—A plan sponsor is entitled 

17 to receive protected health information under sub18 paragraph (E) and (F) of subsection (b)(3) and sub19 section (d) only after an appropriately authorized 

20 representative of the plan sponsor makes to the 

21 health insurance issuer a certification substantially 

22 similar to the following certification: ‘I hereby certify 

23 that the plan documents comply with the require24 ments of section 164.504(f)(2) of title 45, Code of 

25 Federal Regulations, and that the plan sponsor will 


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1 safeguard and limit the use and disclosure of pro2 tected health information that the plan sponsor may 

3 receive from the group health plan to perform the 

4 plan administration functions.’. 

5 ‘‘(3) RESULTS.—A plan sponsor that does not 

6 provide the certification required by paragraph (2) is 

7 not entitled to receive the protected health informa8 tion described by subparagraphs (E) and (F) of sub9 section (b)(3) and subsection (d), but is entitled to 

10 receive a report of claim information that includes 

11 the information described by subparagraphs (A) 

12 through (D) of subsection (b)(3). 

13 ‘‘(4) INFORMATION.—In the case of a request 

14 made under subsection (a) after the date of termi15 nation of coverage, the report must contain all infor16 mation available to the health insurance issuer as of 

17 the date of the report that is responsive to the re18 quest, including protected health information, and 

19 including the information described by subsection 

20 (b)(3), for the period described by subsection (b)(2) 

21 preceding the date of termination of coverage or for 

22 the entire policy period, whichever period is shorter. 

23 Notwithstanding this subsection, the report may not 

24 include the protected health information described 

25 by subparagraphs (E) and (F) of subsection (b)(3) 


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1 unless a certification has been provided in accord2 ance with paragraph (2). 

3 ‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.— 

4 ‘‘(1) REVIEW.—On receipt of the report re5 quired by subsection (a), the plan, plan sponsor, or 

6 plan administrator may review the report and, not 

7 later than the 10th day after the date the report is 

8 received, may make a written request to the health 

9 insurance issuer for additional information in ac10 cordance with this subsection for specified individ11 uals. 

12 ‘‘(2) REQUEST.—With respect to a request for 

13 additional information concerning specified individ14 uals for whom claims information has been provided 

15 under subsection (b)(3)(E), the health insurance 

16 issuer shall provide additional information on the 

17 prognosis or recovery if available and, for individuals 

18 in active case management, the most recent case 

19 management information, including any future ex20 pected costs and treatment plan, that relate to the 

21 claims for that individual. 

22 ‘‘(3) RESPONSE.—The health insurance issuer 

23 must respond to the request for additional informa24 tion under this subsection not later than the 15th 

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1 questing plan, plan sponsor, or plan administrator 

2 agrees to a request for additional time. 

3 ‘‘(4) LIMITATION.—The health insurance issuer 

4 is not required to produce the report described by 

5 this subsection unless a certification has been pro6 vided in accordance with subsection (c)(2). 

7 ‘‘(5) COMPLIANCE WITH SECTION DOES NOT

8 CREATE LIABILITY.—A health insurance issuer that 

9 releases information, including protected health in10 formation, in accordance with this subsection has 

11 not violated a standard of care and is not liable for 

12 civil damages resulting from, and is not subject to 

13 criminal prosecution for, releasing that information. 

14 ‘‘(e) LIMITATION ON PREEMPTION.—Nothing in this 

15 section is meant to limit States from enacting additional 

16 laws in addition to this, but not in lieu of. 

17 ‘‘(f) DEFINITIONS.—In this section: 

18 ‘‘(1) The terms ‘employer’, ‘plan administrator’, 

19 and ‘plan sponsor’ have the meanings given such 

20 terms in section 3 of the Employee Retirement In21 come Security Act of 1974. 

22 ‘‘(2) The term ‘HIPAA privacy regulations’ has 

23 the meaning given such term in section 1180(b)(3) 

24 of the Social Security Act. 


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1 ‘‘(3) The term ‘protected health information’ 

2 has the meaning given such term under the HIPAA 

3 privacy regulations.’’. 

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

5 subsection (a) shall take effect on the date of the enact6 ment of this Act. 

7 TITLE VIII—QUALITY 

8 SEC. 801. PROHIBITION ON CERTAIN USES OF DATA OB9 TAINED FROM COMPARATIVE EFFECTIVE10 NESS RESEARCH; ACCOUNTING FOR PERSON11 ALIZED MEDICINE AND DIFFERENCES IN PA12 TIENT TREATMENT RESPONSE. 

13 (a) IN GENERAL.—Notwithstanding any other provi14 sion of law, the Secretary of Health and Human Serv15 ices— 

16 (1) shall not use data obtained from the con17 duct of comparative effectiveness research, including 

18 such research that is conducted or supported using 

19 funds appropriated under the American Recovery 

20 and Reinvestment Act of 2009 (Public Law 111–5), 

21 to deny coverage of an item or service under a Fed22 eral health care program (as defined in section 

23 1128B(f) of the Social Security Act (42 U.S.C. 

24 1320a–7b(f))); and 


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1 (2) shall ensure that comparative effectiveness 

2 research conducted or supported by the Federal 

3 Government accounts for factors contributing to dif4 ferences in the treatment response and treatment 

5 preferences of patients, including patient-reported 

6 outcomes, genomics and personalized medicine, the 

7 unique needs of health disparity populations, and in8 direct patient benefits. 

9 (b) CONSULTATION AND APPROVAL REQUIRED.— 

10 Nothing the Federal Coordinating Council for Compara11 tive Effectiveness Research finds can be released in final 

12 form until after consultation with and approved by rel13 evant physician specialty organizations. 

14 (c) RULE OF CONSTRUCTION.—Nothing in this sec15 tion shall be construed as affecting the authority of the 

16 Commissioner of Food and Drugs under the Federal 

17 Food, Drug, and Cosmetic Act or the Public Health Serv18 ice Act. 

19 SEC. 802. ESTABLISHMENT OF PERFORMANCE-BASED 

20 QUALITY MEASURES. 

21 Not later than January 1, 2010, the Secretary of 

22 Health and Human Services shall submit to Congress a 

23 proposal for a formalized process for the development of 

24 performance-based quality measures that could be applied 

25 to physicians’ services under the Medicare program. Such 


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1 proposal shall be in concert and agreement with the Physi2 cian Consortium for Performance Improvement and shall 

3 only utilize measures agreed upon by each physician spe4 cialty organization. 

5 TITLE IX—STATE 

6 TRANSPARENCY PLAN PORTAL 

7 SEC. 901. PROVIDING INFORMATION ON HEALTH COV8 ERAGE OPTIONS AND HEALTH CARE PRO9 VIDERS. 

10 (a) STATE-BASED PORTAL.—A State (by itself or 

11 jointly with other States) may contract with a private enti12 ty to establish a Health Plan and Provider Portal website 

13 (referred to in this section as a ‘‘plan portal’’) for the pur14 poses of providing standardized information— 

15 (1) on health insurance plans that have been 

16 certified to be available for purchase in that State; 

17 and 

18 (2) on price and quality information on health 

19 care providers (including physicians, hospitals, and 

20 other health care institutions). 

21 (b) PILOT PROGRAM.— 

22 (1) IN GENERAL.—Not later than 90 days after 

23 the date of the enactment of this Act the Secretary 

24 of Health and Human Services shall work with 

25 States to establish no later than 2011, consistent 


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1 with this title, a website that will serve as a pilot 

2 program for a national portal for information struc3 tured in a manner so individuals may directly link 

4 to the State plan portal for the State in which they 

5 reside. 

6 (2) CONTRACTS WITH STATE.—The Secretary 

7 shall enter into contracts with States, in a number 

8 and distribution determined by the Secretary, to de9 velop State plan portals that follow the applicable 

10 standards and regulations under this section. 

11 (3) COMMON STANDARDS FOR PLAN POR12 TALS.— 

13 (A) IN GENERAL.—In connection with such 

14 website, the Secretary shall establish standards 

15 for interoperability and consistency for State 

16 plan portals so that individuals can access and 

17 view information in a similar manner on plan 

18 portals of different States. Such standards shall 

19 include standard definitions for health insur20 ance plan benefits so that individuals can accu21 rately compare health insurance plans within 

22 such portals and standards for the inclusion of 

23 information described in subsection (c). 

24 (B) CONSULTATION.—The Secretary shall 

25 consult with a group consisting of a balanced 


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1 representation of the critical stakeholders (in2 cluding States, health insurance issuers, the 

3 National Association of Insurance Commis4 sioners, qualified health care provider-based en5 tities (including physicians, hospitals, and other 

6 health care institutions), and a standards devel7 opment organization) to develop such stand8 ards. 

9 (C) ISSUANCE.— 

10 (i) IN GENERAL.—Not later than 6 

11 months after the date of the enactment of 

12 this Act, the Secretary shall issue, by regu13 lation, after notice and opportunity for 

14 public comment, standards that are con15 sistent with the recommendations made by 

16 the group under subparagraph (B). 

17 (ii) DISSEMINATION.—The Secretary 

18 shall broadly disseminate the standards so 

19 issued. 

20 (D) REVIEW.—One year after the date of 

21 establishment of the pilot program under this 

22 subsection, the Secretary, in consultation with 

23 stakeholder group described in subparagraph 

24 (B), shall review the standards established and 


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1 make such changes in such standards as may 

2 be appropriate. 

3 (4) AUTHORIZATION OF APPROPRIATIONS.— 

4 There are authorized to be appropriated to the Sec5 retary such amounts as may be necessary for— 

6 (A) the development and operation of the 

7 national website under this subsection; and 

8 (B) contracts with States under paragraph 

9 (2) to assist in the development and initial op10 eration of plan portals in accordance with 

11 standards established under paragraph (3) and 

12 other applicable provisions of this section. 

13 (c) INFORMATION IN PLAN PORTALS.—The stand14 ards for plan portals under subsection (b)(3) shall include 

15 the following: 

16 (1) HEALTH INSURANCE INFORMATION.—Each 

17 plan portal shall meet the following requirements 

18 with respect to information on health insurance 

19 plans: 

20 (A) The plan portal shall present complete 

21 information on the costs and benefits of health 

22 insurance plans (including information on 

23 monthly premium, copayments, deductibles, and 

24 covered benefits) in a uniform manner that— 


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1 (i) uses the standard definitions devel2 oped under subsection (b)(3); and 

3 (ii) is designed to allow consumers to 

4 easily compare such plans. 

5 (B) The plan portal shall be available on 

6 the internet and accessible to all individuals in 

7 the United States. 

8 (C) The plan portal shall allow consumers 

9 to search and sort data on the health insurance 

10 plans in the plan portal on criteria such as cov11 erage of specific benefits (such as coverage of 

12 disease management services or pediatric care 

13 services), as well as data available respecting 

14 quality of plans. 

15 (D) The plan portal shall meet all relevant 

16 State laws and regulations, including laws and 

17 regulations related to the marketing of insur18 ance products. 

19 (E) Notwithstanding subsection (d)(1), the 

20 plan portal shall provide information to individ21 uals who are eligible for the Medicaid program 

22 under title XIX of the Social Security Act or 

23 State Children’s Health Insurance Program 

24 under title XXI of such Act by including infor25 mation on options, eligibility, and how to enroll 


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1 through providing a link to a website main2 tained with respect to such State programs. 

3 (F) The plan portal shall provide support 

4 to individuals who are eligible for tax credits 

5 and deductions under the amendments made by 

6 this Act to enhance such individual’s ability to 

7 access such credits and deductions. 

8 (G) The plan portal shall allow consumers 

9 to access quality data on providers as made 

10 available through a website described in section 

11 802 once that data is available. 

12 (2) PROVIDER INFORMATION.—Each plan por13 tal shall meet the following requirements with re14 spect to information on health care providers: 

15 (A) Identifying and licensure information. 

16 (B) Self-pay prices charged, including vari17 ation in such prices. 

18 For purposes of subparagraph (B), the term ‘‘self19 pay price’’ means the price charged by a provider to 

20 individuals for items or services where the price is 

21 not established or negotiated through a health care 

22 program or third party. 

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1 tion on tax credits and deductions that may be avail2 able for purpose of qualified health plans. 

3 (4) INCLUSION OF QUALITY INFORMATION.— 

4 The Secretary, after collaboration with States and 

5 health care providers (including practicing physi6 cians, hospitals, and other health care institutions), 

7 shall submit to Congress recommendations on how 

8 to include on plan portals information on perform9 ance-based quality measures obtained under section 

10 802. 

11 (d) PROHIBITIONS.— 

12 (1) DIRECT ENROLLMENT.—A plan portal may 

13 not directly enroll individuals in health insurance 

14 plans or under a State Medicaid plan or a State 

15 children’s health insurance plan. 

16 (2) CONFLICTS OF INTEREST.— 

17 (A) COMPANIES.—A health insurance 

18 issuer offering a health insurance plan through 

19 a plan portal may not— 

20 (i) be the private entity developing 

21 and maintaining a plan portal under this 

22 section; or 

23 (ii) have an ownership interest in such 

24 private entity or in the plan portal. 


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1 (B) INDIVIDUALS.—An individual em2 ployed by a health insurance issuer offering a 

3 health insurance plan through a plan portal 

4 may not serve as a director or officer for— 

5 (i) the private entity developing and 

6 maintaining a plan portal under this sec7 tion; or 

8 (ii) the plan portal. 

9 (e) CONSTRUCTION.—Nothing in this section shall be 

10 construed to prohibit health insurance brokers and agents 

11 from— 

12 (1) utilizing the plan portal for any purpose; or 

13 (2) marketing or offering health insurance 

14 products. 

15 (f) STATE DEFINED.—In this section, the term 

16 ‘‘State’’ has the meaning given such term for purposes of 

17 title XIX of the Social Security Act. 

18 TITLE X—PHYSICIAN PAYMENT 

19 REFORM 

20 SEC. 1001. SUSTAINABLE GROWTH RATE REFORM. 

21 (a) TRANSITIONAL UPDATE FOR 2010.—Section 

22 1848(d) of the Social Security Act (42 U.S.C. 1395w– 

23 4(d)) is amended by adding at the end the following new 

24 paragraph: 


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1 ‘‘(10) UPDATE FOR 2010.—The update to the 

2 single conversion factor established in paragraph 

3 (1)(C) for 2010 shall be the percentage increase in 

4 the MEI (as defined in section 1842(i)(3)) for that 

5 year.’’. 

6 (b) REBASING SGR USING 2009; LIMITATION ON

7 CUMULATIVE ADJUSTMENT PERIOD.—Section 1848(d)(4) 

8 of such Act (42 U.S.C. 1395w–4(d)(4)) is amended— 

9 (1) in subparagraph (B), by striking ‘‘subpara10 graph (D)’’ and inserting ‘‘subparagraphs (D) and 

11 (G)’’; and 

12 (2) by adding at the end the following new sub13 paragraph: 

14 ‘‘(G) REBASING USING 2009 FOR FUTURE

15 UPDATE ADJUSTMENTS.—In determining the 

16 update adjustment factor under subparagraph 

17 (B) for 2011 and subsequent years— 

18 ‘‘(i) the allowed expenditures for 2009 

19 shall be equal to the amount of the actual 

20 expenditures for physicians’ services during 

21 2009; and 

22 ‘‘(ii) the reference in subparagraph 

23 (B)(ii)(I) to ‘April 1, 1996’ shall be treat24 ed as a reference to ‘January 1, 2009 (or, 


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1 if later, the first day of the fifth year be2 fore the year involved)’.’’. 

3 (c) LIMITATION ON PHYSICIANS’ SERVICES IN4 CLUDED IN TARGET GROWTH RATE COMPUTATION TO

5 SERVICES COVERED UNDER PHYSICIAN FEE SCHED6 ULE.—Effective for services furnished on or after January 

7 1, 2009, section 1848(f)(4)(A) of such Act is amended 

8 striking ‘‘(such as clinical’’ and all that follows through 

9 ‘‘in a physician’s office’’ and inserting ‘‘for which payment 

10 under this part is made under the fee schedule under this 

11 section, for services for practitioners described in section 

12 1842(b)(18)(C) on a basis related to such fee schedule, 

13 or for services described in section 1861(p) (other than 

14 such services when furnished in the facility of a provider 

15 of services)’’. 

16 (d) ESTABLISHMENT OF SEPARATE TARGET

17 GROWTH RATES FOR CATEGORIES OF SERVICES.— 

18 (1) ESTABLISHMENT OF SERVICE CAT19 EGORIES.—Subsection (j) of section 1848 of the So20 cial Security Act (42 U.S.C. 1395w–4) is amended 

21 by adding at the end the following new paragraph: 

22 ‘‘(5) SERVICE CATEGORIES.—For services fur23 nished on or after January 1, 2009, each of the fol24 lowing categories of physicians’ services (as defined 


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1 in paragraph (3)) shall be treated as a separate 

2 ‘service category’: 

3 ‘‘(A) Evaluation and management services 

4 that are procedure codes (for services covered 

5 under this title) for— 

6 ‘‘(i) services in the category des7 ignated Evaluation and Management in the 

8 Health Care Common Procedure Coding 

9 System (established by the Secretary under 

10 subsection (c)(5) as of December 31, 2009, 

11 and as subsequently modified by the Sec12 retary); and 

13 ‘‘(ii) preventive services (as defined in 

14 section 1861(iii)) for which payment is 

15 made under this section. 

16 ‘‘(B) All other services not described in 

17 subparagraph (A). 

18 Service categories established under this paragraph 

19 shall apply without regard to the specialty of the 

20 physician furnishing the service.’’. 

21 (2) ESTABLISHMENT OF SEPARATE CONVER22 SION FACTORS FOR EACH SERVICE CATEGORY.— 

23 Subsection (d)(1) of section 1848 of the Social Secu24 rity Act (42 U.S.C. 1395w–4) is amended— 

25 (A) in subparagraph (A)— 


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1 (i) by designating the sentence begin2 ning ‘‘The conversion factor’’ as clause (i) 

3 with the heading ‘‘APPLICATION OF SIN4 GLE CONVERSION FACTOR.—’’ and with 

5 appropriate indentation; 

6 (ii) by striking ‘‘The conversion fac7 tor’’ and inserting ‘‘Subject to clause (ii), 

8 the conversion factor’’; and 

9 (iii) by adding at the end the fol10 lowing new clause: 

11 ‘‘(ii) APPLICATION OF MULTIPLE CON12 VERSION FACTORS BEGINNING WITH

13 2011.— 

14 ‘‘(I) IN GENERAL.—In applying 

15 clause (i) for years beginning with 

16 2011, separate conversion factors 

17 shall be established for each service 

18 category of physicians’ services (as de19 fined in subsection (j)(5)) and any 

20 reference in this section to a conver21 sion factor for such years shall be 

22 deemed to be a reference to the con23 version factor for each of such cat24 egories. 


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1 ‘‘(II) INITIAL CONVERSION FAC2 TORS.—Such factors for 2011 shall be 

3 based upon the single conversion fac4 tor for the previous year multiplied by 

5 the update established under para6 graph (11) for such category for 

7 2011. 

8 ‘‘(III) UPDATING OF CONVER9 SION FACTORS.—Such factor for a 

10 service category for a subsequent year 

11 shall be based upon the conversion 

12 factor for such category for the pre13 vious year and adjusted by the update 

14 established for such category under 

15 paragraph (11) for the year in16 volved.’’; and 

17 (B) in subparagraph (D), by striking 

18 ‘‘other physicians’ services’’ and inserting ‘‘for 

19 physicians’ services described in the service cat20 egory described in subsection (j)(5)(B)’’. 

21 (3) ESTABLISHING UPDATES FOR CONVERSION

22 FACTORS FOR SERVICE CATEGORIES.—Section 

23 1848(d) of the Social Security Act (42 U.S.C. 

24 1395w–4(d)), as amended by subsection (a), is 

25 amended— 


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1 (A) in paragraph (4)(C)(iii), by striking 

2 ‘‘The allowed’’ and inserting ‘‘Subject to para3 graph (11)(B), the allowed’’; and 

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

5 paragraph: 

6 ‘‘(11) UPDATES FOR SERVICE CATEGORIES BE7 GINNING WITH 2011.— 

8 ‘‘(A) IN GENERAL.—In applying paragraph 

9 (4) for a year beginning with 2011, the fol10 lowing rules apply: 

11 ‘‘(i) APPLICATION OF SEPARATE UP12 DATE ADJUSTMENTS FOR EACH SERVICE

13 CATEGORY.—Pursuant to paragraph 

14 (1)(A)(ii)(I), the update shall be made to 

15 the conversion factor for each service cat16 egory (as defined in subsection (j)(5)) 

17 based upon an update adjustment factor 

18 for the respective category and year and 

19 the update adjustment factor shall be com20 puted, for a year, separately for each serv21 ice category. 

22 ‘‘(ii) COMPUTATION OF ALLOWED AND

23 ACTUAL EXPENDITURES BASED ON SERV24 ICE CATEGORIES.—In computing the prior 

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1 lative adjustment component under clauses 

2 (i) and (ii) of paragraph (4)(B), the fol3 lowing rules apply: 

4 ‘‘(I) APPLICATION BASED ON

5 SERVICE CATEGORIES.—The allowed 

6 expenditures and actual expenditures 

7 shall be the allowed and actual ex8 penditures for the service category, as 

9 determined under subparagraph (B). 

10 ‘‘(II) APPLICATION OF CATEGORY

11 SPECIFIC TARGET GROWTH RATE.— 

12 The growth rate applied under clause 

13 (ii)(II) of such paragraph shall be the 

14 target growth rate for the service cat15 egory involved under subsection (f)(5). 

16 ‘‘(B) DETERMINATION OF ALLOWED EX17 PENDITURES.—In applying paragraph (4) for a 

18 year beginning with 2010, notwithstanding sub19 paragraph (C)(iii) of such paragraph, the al20 lowed expenditures for a service category for a 

21 year is an amount computed by the Secretary 

22 as follows: 

23 ‘‘(i) FOR 2010.—For 2010: 

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1 CLUDED IN SGR COMPUTATION FOR

2 EACH SERVICE CATEGORY.—Compute 

3 total actual expenditures for physi4 cians’ services (as defined in sub5 section (f)(4)(A)) for 2009 for each 

6 service category. 

7 ‘‘(II) INCREASE BY GROWTH

8 RATE TO OBTAIN 2010 ALLOWED EX9 PENDITURES FOR SERVICE CAT10 EGORY.—Compute allowed expendi11 tures for the service category for 2010 

12 by increasing the allowed expenditures 

13 for the service category for 2009 com14 puted under subclause (I) by the tar15 get growth rate for such service cat16 egory under subsection (f) for 2010. 

17 ‘‘(ii) FOR SUBSEQUENT YEARS.—For 

18 a subsequent year, take the amount of al19 lowed expenditures for such category for 

20 the preceding year (under clause (i) or this 

21 clause) and increase it by the target 

22 growth rate determined under subsection 

23 (f) for such category and year.’’. 

24 (4) APPLICATION OF SEPARATE TARGET

25 GROWTH RATES FOR EACH CATEGORY.— 


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1 (A) IN GENERAL.—Section 1848(f) of the 

2 Social Security Act (42 U.S.C. 1395w–4(f)) is 

3 amended by adding at the end the following 

4 new paragraph: 

5 ‘‘(5) APPLICATION OF SEPARATE TARGET

6 GROWTH RATES FOR EACH SERVICE CATEGORY BE7 GINNING WITH 2010.—The target growth rate for a 

8 year beginning with 2010 shall be computed and ap9 plied separately under this subsection for each serv10 ice category (as defined in subsection (j)(5)) and 

11 shall be computed using the same method for com12 puting the target growth rate except that the factor 

13 described in paragraph (2)(C) for— 

14 ‘‘(A) the service category described in sub15 section (j)(5)(A) shall be increased by 0.02; and 

16 ‘‘(B) the service category described in sub17 section (j)(5)(B) shall be increased by 0.01.’’. 

18 (B) USE OF TARGET GROWTH RATES.— 

19 Section 1848 of such Act is further amended— 

20 (i) in subsection (d)— 

21 (I) in paragraph (1)(E)(ii), by in22 serting ‘‘or target’’ after ‘‘sustain23 able’’; and 


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1 (II) in paragraph (4)(B)(ii)(II), 

2 by inserting ‘‘or target’’ after ‘‘sus3 tainable’’; and 

4 (ii) in the heading of subsection (f), 

5 by inserting ‘‘AND TARGET GROWTH

6 RATE’’ after ‘‘SUSTAINABLE GROWTH

7 RATE’’; 

8 (iii) in subsection (f)(1)— 

9 (I) by striking ‘‘and’’ at the end 

10 of subparagraph (A); 

11 (II) in subparagraph (B), by in12 serting ‘‘before 2010’’ after ‘‘each 

13 succeeding year’’ and by striking the 

14 period at the end and inserting ‘‘; 

15 and’’; and 

16 (III) by adding at the end the 

17 following new subparagraph: 

18 ‘‘(C) November 1 of each succeeding year 

19 the target growth rate for such succeeding year 

20 and each of the 2 preceding years.’’; and 

21 (iv) in subsection (f)(2), in the matter 

22 before subparagraph (A), by inserting after 

23 ‘‘beginning with 2000’’ the following: ‘‘and 

24 ending with 2009’’. 


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1 TITLE XI—INCENTIVES TO 

2 REDUCE PHYSICIAN SHORTAGES 

3 Subtitle A—Federally Supported 

4 Student Loan Funds for Medical 

5 Students 

6 SEC. 1101. FEDERALLY SUPPORTED STUDENT LOAN FUNDS 

7 FOR MEDICAL STUDENTS. 

8 (a) PRIMARY HEALTH CARE MEDICAL STUDENTS.— 

9 Subpart II of part A of the Public Health Service Act (42 

10 U.S.C. 292q et seq.) is amended— 

11 (1) by redesignating section 735 as section 729; 

12 and 

13 (2) in subsection (f) of section 729 (as so redes14 ignated), by striking ‘‘is authorized to be appro15 priated to be appropriated $10,000,000 for each of 

16 the fiscal years 1994 through 1996’’ and inserting 

17 ‘‘are authorized to be appropriated such sums as 

18 may be necessary for fiscal year 2010 and each fis19 cal year thereafter’’. 

20 (b) OTHER MEDICAL STUDENTS.—Part A of title VII 

21 of the Public Health Service Act (42 U.S.C. 292 et seq.) 

22 is amended by adding at the end the following: 


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1 ‘‘Subpart III—Federally Supported Student Loan 

2 Funds for Certain Medical Students 

3 ‘‘SEC. 730. SCHOOL LOAN FUNDS FOR CERTAIN MEDICAL 

4 STUDENTS. 

5 ‘‘(a) FUND AGREEMENTS.—For the purpose de6 scribed in subsection (b), the Secretary is authorized to 

7 enter into an agreement for the establishment and oper8 ation of a student loan fund with any public or nonprofit 

9 school of medicine or osteopathic medicine. 

10 ‘‘(b) PURPOSE.—The purpose of this subpart is to 

11 provide for loans to medical students who would be eligible 

12 for a loan under subpart II, except for the student’s deci13 sion to enter a residency training program in a field other 

14 than primary health care. 

15 ‘‘(c) COMMENCEMENT OF REPAYMENT PERIOD.— 

16 The repayment period for a loan under this section shall 

17 not begin before the end of any period during which the 

18 student is participating in an internship, residency, or fel19 lowship training program directly related to the field of 

20 medicine which the student agrees to enter pursuant to 

21 subsection (d). 

22 ‘‘(d) REQUIREMENTS FOR STUDENTS.—Each agree23 ment under this section for the establishment of a student 

24 loan fund shall provide that the school of medicine or os25 teopathic medicine will make a loan to a student from such 

26 fund only if the student agrees— 


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1 ‘‘(1) to enter and complete a residency training 

2 program (in a field of medicine other than primary 

3 health care) not later than a period determined by 

4 the Secretary to be reasonable after the date on 

5 which the student graduates from such school; and 

6 ‘‘(2) to practice medicine through the date on 

7 which the loan is repaid in full. 

8 ‘‘(e) REQUIREMENTS FOR SCHOOLS.—The provisions 

9 of section 723(b) (regarding graduates in primary health 

10 care) shall not apply to a student loan fund established 

11 under this section. 

12 ‘‘(f) APPLICABILITY OF OTHER PROVISIONS.—Ex13 cept as inconsistent with this section, the provisions of 

14 subpart II shall apply to the program of student loan 

15 funds established under this section to the same extent 

16 and in the same manner as such provisions apply to the 

17 program of student loan funds established under subpart 

18 II. 

19 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—To 

20 carry out this section, there are authorized to be appro21 priated such sums as may be necessary for fiscal year 

22 2010 and each fiscal year thereafter.’’. 


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1 Subtitle B—Loan Forgiveness for 

2 Primary Care Providers 

3 SEC. 1111. LOAN FORGIVENESS FOR PRIMARY CARE PRO4 VIDERS. 

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

6 Human Services shall carry out a program of entering into 

7 contracts with eligible individuals under which— 

8 (1) the individual agrees to serve for a period 

9 of not less than 5 years as a primary care provider; 

10 and 

11 (2) in consideration of such service, the Sec12 retary agrees to pay not more than $50,000 on the 

13 principal and interest on the individual’s graduate 

14 educational loans. 

15 (b) ELIGIBILITY.—To be eligible to enter into a con16 tract under subsection (a), an individual must— 

17 (1) have a graduate degree in medicine, osteo18 pathic medicine, or another health profession from 

19 an accredited (as determined by the Secretary of 

20 Health and Human Services) institution of higher 

21 education; and 

22 (2) have practiced as a primary care provider 

23 for a period (excluding any residency or fellowship 

24 training period) of not less than— 

25 (A) 5 years; or 


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1 (B) 3 years in a medically underserved 

2 community (as defined in section 799B of the 

3 Public Health Service Act (42 U.S.C. 295p)). 

4 (c) INSTALLMENTS.—Payments under this section 

5 may be made in installments of not more than $10,000 

6 for each year of service described in subsection (a)(1). 

7 (d) APPLICABILITY OF CERTAIN PROVISIONS.—The 

8 provisions of subpart III of part D of title III of the Public 

9 Health Service Act shall, except as inconsistent with this 

10 section, apply to the program established under this sec11 tion in the same manner and to the same extent as such 

12 provisions apply to the National Health Service Corps 

13 Loan Repayment Program established in such subpart. 

14 TITLE XII—OFFSETS 

15 Subtitle A—Enforcing 

16 Discretionary Spending Limits 

17 SEC. 1201. ENFORCING DISCRETIONARY SPENDING LIMITS. 

18 (a) DISCRETIONARY SPENDING LIMITS.—Sections 

19 251(b) and (c) of the Balanced Budget and Emergency 

20 Deficit Control of Act of 1985 are amended to read as 

21 follows: 

22 ‘‘(b) DISCRETIONARY SPENDING LIMIT.—As used in 

23 this part, the term ‘discretionary spending limit’ means— 

24 ‘‘(1) with respect to fiscal year 2010, 

25 $1,173,000,000,000 in new budget authority of 


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1 which no more than $481,140,000,000 shall be for 

2 the nondefense category; 

3 ‘‘(2) with respect to fiscal year 2011, 

4 $1,096,439,000,000 in new budget authority of 

5 which no more than $476,329,000,000 shall be for 

6 the nondefense category; 

7 ‘‘(3) with respect to fiscal year 2012, 

8 $1,100,705,000 in new budget authority of which no 

9 more than $471,565,000,000 shall be for the non10 defense category; 

11 ‘‘(4) with respect to fiscal year 2013, 

12 $1,106,750,000,000 in new budget authority of 

13 which no more than $466,850,000,000 shall be for 

14 the nondefense category; 

15 ‘‘(5) with respect to fiscal year 2014, 

16 $1,116,011,000,000 in new budget authority of 

17 which no more than $462,181,000,000 shall be for 

18 the nondefense category; 

19 ‘‘(6) with respect to fiscal year 2015, 

20 $1,117,559,000,000 in new budget authority of 

21 which no more than $457,559,000,000 shall be for 

22 the nondefense category; 

23 ‘‘(7) with respect to fiscal year 2016, 

24 $1,117,984,000,000 in new budget authority of 


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1 which no more than $452,984,000,000 shall be for 

2 the nondefense category; 

3 ‘‘(8) with respect to fiscal year 2017, 

4 $1,118,454,000,000 in new budget authority of 

5 which no more than $448,454,000,000 shall be for 

6 the nondefense category; 

7 ‘‘(9) with respect to fiscal year 2018, 

8 $1,118,969,000,000 in new budget authority of 

9 which no more than 443,969,000,000 shall be for 

10 the nondefense category; and 

11 ‘‘(10) with respect to fiscal year 2019, 

12 $1,127,530,000,000 in new budget authority of 

13 which no more than $439,530,000,000 shall be for 

14 the nondefense category.’’. 

15 (b) DISCRETIONARY SPENDING LIMIT POINT OF

16 ORDER.—Section 312 of the Congressional Budget Act of 

17 1974 (as amended by section 214(a)) is further amended 

18 by adding at the end the following new subsection: 

19 ‘‘(h) DISCRETIONARY SPENDING LIMIT POINT OF

20 ORDER.—It shall not be in order in the House of Rep21 resentatives or the Senate to consider any bill, joint resolu22 tion, amendment, or conference report that— 

23 ‘‘(1) increases the discretionary spending limits 

24 for any ensuing fiscal year after the budget year; or 


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1 ‘‘(2) would cause the discretionary spending 

2 limits for the budget year to be breached.’’. 

3 (c) ADVANCE APPROPRIATION POINT OF ORDER.— 

4 Section 312 of the Congressional Budget Act of 1974 (as 

5 amended by this section) is further amended by adding 

6 at the end the following new subsection: 

7 ‘‘(i) ADVANCE APPROPRIATION POINT OF ORDER.— 

8 It shall not be in order in the House of Representatives 

9 or the Senate to consider any appropriation bill or joint 

10 resolution, or amendment thereto or conference report 

11 thereon, that provides advance discretionary new budget 

12 authority that first becomes available for any fiscal year 

13 after the budget year at an amount for any program, 

14 project, or activity above the amount of appropriations for 

15 fiscal year 2007 for such program, project, or activity.’’. 

16 Subtitle B—Repeal of Unused 

17 Stimulus Funds 

18 SEC. 1211. RESCISSION AND REPEAL IN ARRA. 

19 (a) RESCISSION.—Of the discretionary appropria20 tions made available in division A of the American Recov21 ery and Reinvestment Act of 2009 (Public Law 111–5), 

22 all unobligated balances are rescinded. 

23 (b) REPEAL.—Subtitles B and C of title II and titles 

24 III through VII of division B of the American Recovery 


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1 and Reinvestment Act of 2009 (Public Law 111–5) are 

2 repealed. 

3 Subtitle C—Savings From Health 

4 Care Efficiencies 

5 SEC. 1221. MEDICARE DSH REPORT AND PAYMENT ADJUST6 MENTS IN RESPONSE TO COVERAGE EXPAN7 SION. 

8 (a) DSH REPORT.— 

9 (1) IN GENERAL.—Not later than January 1, 

10 2014, the Secretary of Health and Human Services 

11 shall submit to Congress a report on Medicare DSH 

12 taking into account the impact of the health care re13 forms carried out under this Act in reducing the 

14 number of uninsured individuals. The report shall 

15 include recommendations relating to the following: 

16 (A) The appropriate amount, targeting, 

17 and distribution of Medicare DSH to com18 pensate for higher Medicare costs associated 

19 with serving low-income beneficiaries (taking 

20 into account variations in the empirical jus21 tification for Medicare DSH attributable to hos22 pital characteristics, including bed size), con23 sistent with the original intent of Medicare 

24 DSH. 


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1 (B) The appropriate amount, targeting, 

2 and distribution of Medicare DSH to hospitals 

3 given their continued uncompensated care costs, 

4 to the extent such costs remain. 

5 (2) COORDINATION WITH MEDICAID DSH RE6 PORT.—The Secretary shall coordinate the report 

7 under this subsection with the report on Medicaid 

8 DSH under section 1222(a). 

9 (b) PAYMENT ADJUSTMENTS IN RESPONSE TO COV10 ERAGE EXPANSION.— 

11 (1) IN GENERAL.—If there is a significant de12 crease in the national rate of uninsurance as a result 

13 of this Act (as determined under paragraph (2)(A)), 

14 then the Secretary of Health and Human Services 

15 shall, beginning in fiscal year 2015, implement the 

16 following adjustments to Medicare DSH: 

17 (A) In lieu of the amount of Medicare 

18 DSH payment that would otherwise be made 

19 under section 1886(d)(5)(F) of the Social Secu20 rity Act, the amount of Medicare DSH payment 

21 shall be an amount based on the recommenda22 tions of the report under subsection (a)(1)(A) 

23 and shall take into account variations in the 

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1 utable to hospital characteristics, including bed 

2 size. 

3 (B) Subject to paragraph (3), make an ad4 ditional payment to a hospital by an amount 

5 that is estimated based on the amount of un6 compensated care provided by the hospital 

7 based on criteria for uncompensated care as de8 termined by the Secretary, which shall exclude 

9 bad debt. 

10 (2) SIGNIFICANT DECREASE IN NATIONAL RATE

11 OF UNINSURANCE AS A RESULT OF THIS ACT.—For 

12 purposes of this subsection— 

13 (A) IN GENERAL.—There is a ‘‘significant 

14 decrease in the national rate of uninsurance as 

15 a result of this Act’’ if there is a decrease in 

16 the national rate of uninsurance (as defined in 

17 subparagraph (B)) from 2010 to 2012 that ex18 ceeds 8 percentage points. 

19 (B) NATIONAL RATE OF UNINSURANCE

20 DEFINED.—The term ‘‘national rate of 

21 uninsurance’’ means, for a year, such rate for 

22 the under-65 population for the year as deter23 mined and published by the Bureau of the Cen24 sus in its Current Population Survey in or 

25 about September of the succeeding year. 


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1 (3) UNCOMPENSATED CARE INCREASE.— 

2 (A) COMPUTATION OF DSH SAVINGS.—For 

3 each fiscal year (beginning with fiscal year 

4 2015), the Secretary shall estimate the aggre5 gate reduction in Medicare DSH that will result 

6 from the adjustment under paragraph (1)(A). 

7 (B) STRUCTURE OF PAYMENT IN8 CREASE.—The Secretary shall compute the in9 crease in Medicare DSH under paragraph 

10 (1)(B) for a fiscal year in accordance with a 

11 formula established by the Secretary that pro12 vides that— 

13 (i) the aggregate amount of such in14 crease for the fiscal year does not exceed 

15 50 percent of the aggregate reduction in 

16 Medicare DSH estimated by the Secretary 

17 for such fiscal year; and 

18 (ii) hospitals with higher levels of un19 compensated care receive a greater in20 crease. 

21 (c) MEDICARE DSH.—In this section, the term 

22 ‘‘Medicare DSH’’ means adjustments in payments under 

23 section 1886(d)(5)(F) of the Social Security Act (42 

24 U.S.C. 1395ww(d)(5)(F)) for inpatient hospital services 

25 furnished by disproportionate share hospitals. 


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1 SEC. 1222. REDUCTION IN MEDICAID DSH. 

2 (a) REPORT.— 

3 (1) IN GENERAL.—Not later than January 1, 

4 2014, the Secretary of Health and Human Services 

5 (in this title referred to as the ‘‘Secretary’’) shall 

6 submit to Congress a report concerning the extent to 

7 which, based upon the impact of the health care re8 forms carried out under this Act in reducing the 

9 number of uninsured individuals, there is a contin10 ued role for Medicaid DSH. In preparing the report, 

11 the Secretary shall consult with community-based 

12 health care networks serving low-income bene13 ficiaries. 

14 (2) MATTERS TO BE INCLUDED.—The report 

15 shall include the following: 

16 (A) RECOMMENDATIONS.—Recommenda17 tions regarding— 

18 (i) the appropriate targeting of Med19 icaid DSH within States; and 

20 (ii) the distribution of Medicaid DSH 

21 among the States. 

22 (B) SPECIFICATION OF DSH HEALTH RE23 FORM METHODOLOGY.—The DSH Health Re24 form methodology described in paragraph (2) of 

25 subsection (b) for purposes of implementing the 

26 requirements of such subsection. 


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1 (3) COORDINATION WITH MEDICARE DSH RE2 PORT.—The Secretary shall coordinate the report 

3 under this subsection with the report on Medicare 

4 DSH under section 1221. 

5 (4) MEDICAID DSH.—In this section, the term 

6 ‘‘Medicaid DSH’’ means adjustments in payments 

7 under section 1923 of the Social Security Act for in8 patient hospital services furnished by dispropor9 tionate share hospitals. 

10 (b) MEDICAID DSH REDUCTIONS.— 

11 (1) IN GENERAL.—If there is a significant de12 crease in the national rate of uninsurance as a result 

13 of this Act (as determined under section 

14 1221(a)(2)(A)), then the Secretary of Health and 

15 Human Services shall reduce Medicaid DSH so as to 

16 reduce total Federal payments to all States for such 

17 purpose by $1,500,000,000 in fiscal year 2015, 

18 $2,500,000,000 in fiscal year 2016, and 

19 $6,000,000,000 in fiscal year 2017. 

20 (2) DSH HEALTH REFORM METHODOLOGY.— 

21 The Secretary shall carry out paragraph (1) through 

22 use of a DSH Health Reform methodology issued by 

23 the Secretary that imposes the largest percentage re24 ductions on the States that— 


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1 (A) have the lowest percentages of unin2 sured individuals (determined on the basis of 

3 audited hospital cost reports) during the most 

4 recent year for which such data are available; 

5 or 

6 (B) do not target their DSH payments 

7 on— 

8 (i) hospitals with high volumes of 

9 Medicaid inpatients (as defined in section 

10 1923(b)(1)(A) of the Social Security Act 

11 (42 U.S.C. 1396r–4(b)(1)(A)); and 

12 (ii) hospitals that have high levels of 

13 uncompensated care (excluding bad debt). 

14 (3) DSH ALLOTMENT PUBLICATIONS.— 

15 (A) IN GENERAL.—Not later than the pub16 lication deadline specified in subparagraph (B), 

17 the Secretary shall publish in the Federal Reg18 ister a notice specifying the DSH allotment to 

19 each State under 1923(f) of the Social Security 

20 Act for the respective fiscal year specified in 

21 such subparagraph, consistent with the applica22 tion of the DSH Health Reform methodology 

23 described in paragraph (2). 


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1 (B) PUBLICATION DEADLINE.—The publi2 cation deadline specified in this subparagraph 

3 is— 

4 (i) January 1, 2014, with respect to 

5 DSH allotments described in subparagraph 

6 (A) for fiscal year 2015; 

7 (ii) January 1, 2015, with respect to 

8 DSH allotments described in subparagraph 

9 (A) for fiscal year 2016; and 

10 (iii) January 1, 2016, with respect to 

11 DSH allotments described in subparagraph 

12 (A) for fiscal year 2017. 

13 (c) CONFORMING AMENDMENTS.— 

14 (1) Section 1923(f) of the Social Security Act 

15 (42 U.S.C. 1396r–4(f)) is amended— 

16 (A) by redesignating paragraph (7) as 

17 paragraph (8); and 

18 (B) by inserting after paragraph (6) the 

19 following new paragraph: 

20 ‘‘(7) SPECIAL RULE FOR FISCAL YEARS 2015, 

21 2016, AND 2017.—Notwithstanding paragraph (2), if 

22 the Secretary makes a reduction under section 

23 1222(b)(1) of the Empowering Patients First Act, 

24 the total DSH allotments for all States for— 


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1 ‘‘(A) fiscal year 2015, shall be the total 

2 DSH allotments that would otherwise be deter3 mined under this subsection for such fiscal year 

4 decreased by $1,500,000,000; 

5 ‘‘(B) fiscal year 2016, shall be the total 

6 DSH allotments that would otherwise be deter7 mined under this subsection for such fiscal year 

8 decreased by $2,500,000,000; and 

9 ‘‘(C) fiscal year 2017, shall be the total 

10 DSH allotments that would otherwise be deter11 mined under this subsection for such fiscal year 

12 decreased by $6,000,000,000.’’. 

13 (2) Section 1923(b)(4) of such Act (42 U.S.C. 

14 1396r–4(b)(4)) is amended by adding before the pe15 riod the following: ‘‘or to affect the authority of the 

16 Secretary to issue and implement the DSH Health 

17 Reform methodology under section 1704(b)(2) of the 

18 Empowering Patients First Act’’. 

19 (d) DISPROPORTIONATE SHARE HOSPITALS (DSH) 

20 AND ESSENTIAL ACCESS HOSPITAL (EAH) NON-DIS21 CRIMINATION.— 

22 (1) IN GENERAL.—Section 1923(d) of the So23 cial Security Act (42 U.S.C. 1396r–4) is amended 

24 by adding at the end the following new paragraph: 


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1 ‘‘(4) No hospital may be defined or deemed as 

2 a disproportionate share hospital, or as an essential 

3 access hospital (for purposes of subsection 

4 (f)(6)(A)(iv), under a State plan under this title or 

5 subsection (b) of this section (including any waiver 

6 under section 1115) unless the hospital— 

7 ‘‘(A) provides services to beneficiaries 

8 under this title without discrimination on the 

9 ground of race, color, national origin, creed, 

10 source of payment, status as a beneficiary 

11 under this title, or any other ground unrelated 

12 to such beneficiary’s need for the services or the 

13 availability of the needed services in the hos14 pital; and 

15 ‘‘(B) makes arrangements for, and accepts, 

16 reimbursement under this title for services pro17 vided to eligible beneficiaries under this title.’’. 

18 (2) EFFECTIVE DATE.—The amendment made 

19 by subsection (a) shall be apply to expenditures 

20 made on or after July 1, 2010. 


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1 Subtitle D—Fraud, Waste, and 

2 Abuse 

3 SEC. 1231. PROVIDE ADEQUATE FUNDING TO HHS OIG AND 

4 HCFAC. 

5 (a) HCFAC FUNDING.—Section 1817(k)(3)(A) of 

6 the Social Security Act (42 U.S.C. 1395i(k)(3)(A)) is 

7 amended— 

8 (1) in clause (i)— 

9 (A) in subclause (IV), by striking ‘‘2009, 

10 and 2010’’ and inserting ‘‘and 2009’’; and 

11 (B) by amending subclause (V) to read as 

12 follows: 

13 ‘‘(V) for each fiscal year after fis14 cal year 2009, $300,000,000.’’; and 

15 (2) in clause (ii)— 

16 (A) in subclause (IX), by striking ‘‘2009, 

17 and 2010’’ and inserting ‘‘and 2009’’; and 

18 (B) in subclause (X), by striking ‘‘2010’’ 

19 and inserting ‘‘2009’’ and by inserting before 

20 the period at the end the following: ‘‘, plus the 

21 amount by which the amount made available 

22 under clause (i)(V) for fiscal year 2010 exceeds 

23 the amount made available under clause (i)(IV) 

24 for 2009’’. 


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1 (b) OIG FUNDING.—There are authorized to be ap2 propriated for each of fiscal years 2010 through 2019 

3 $100,000,000 for the Office of the Inspector General of 

4 the Department of Health and Human Services for fraud 

5 prevention activities under the Medicare and Medicaid 

6 programs. 

7 SEC. 1232. IMPROVED ENFORCEMENT OF THE MEDICARE 

8 SECONDARY PAYOR PROVISIONS. 

9 (a) IN GENERAL.—The Secretary, in coordination 

10 with the Inspector General of the Department of Health 

11 and Human Services, shall provide through the Coordina12 tion of Benefits Contractor for the identification of in13 stances where the Medicare program should be, but is not, 

14 acting as a secondary payer to an individual’s private 

15 health benefits coverage under section 1862(b) of the So16 cial Security Act (42 U.S.C. 1395y(b)). 

17 (b) UPDATING PROCEDURES.—The Secretary shall 

18 update procedures for identifying and resolving credit bal19 ance situations which occur under the Medicare program 

20 when payment under such title and from other health ben21 efit plans exceed the providers’ charges or the allowed 

22 amount. 

23 (c) REPORT ON IMPROVED ENFORCEMENT.—Not 

24 later than 1 year after the date of the enactment of this 

25 Act, the Secretary shall submit a report to Congress on 


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1 progress made in improved enforcement of the Medicare 

2 secondary payor provisions, including recoupment of credit 

3 balances. 

4 SEC. 1233. STRENGTHEN MEDICARE PROVIDER ENROLL5 MENT STANDARDS AND SAFEGUARDS. 

6 (a) STRENGTHENING MEDICARE PROVIDER NUM7 BERS.— 

8 (1) SCREENING NEW PROVIDERS.—As a condi9 tion of a provider of services or a supplier, including 

10 durable medical equipment suppliers and home 

11 health agencies, applying for the first time for a pro12 vider number under the Medicare program and be13 fore granting billing privileges under such title, the 

14 Secretary shall screen the provider or supplier for a 

15 criminal background or other financial or oper16 ational irregularities through fingerprinting, licen17 sure checks, site-visits, other database checks. 

18 (2) APPLICATION FEES.—The Secretary shall 

19 impose an application charge on such a provider or 

20 supplier in order to cover the Secretary’s costs in 

21 performing the screening required under paragraph 

22 (1). 

23 (3) PROVISIONAL APPROVAL.—During an ini24 tial, provisional period (specified by the Secretary) 

25 In which such a provider or supplier has been issued 


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1 such a number, the Secretary shall provide enhanced 

2 oversight of the activities of such provider or sup3 plier under the Medicare program, such as through 

4 prepayment review and payment limitations. 

5 (4) PENALTIES FOR FALSE STATEMENTS.—In 

6 the case of a provider or supplier that knowingly 

7 makes a false statement in an application for such 

8 a number, the Secretary may exclude the provider or 

9 supplier from participation under the Medicare pro10 gram, or may impose a civil money penalty (in the 

11 amount described in section 1128A(a)(4) of the So12 cial Security Act) , in the same manner as the Sec13 retary may impose such an exclusion or penalty 

14 under sections 1128 and 1128A, respectively, of 

15 such Act in the case of knowing presentation of a 

16 false claim described in section 1128A(a)(1)(A) of 

17 such Act. 

18 (5) DISCLOSURE REQUIREMENTS.—With re19 spect to approval of such an application, the Sec20 retary— 

21 (A) shall require applicants to disclose pre22 vious affiliation with enrolled entities that have 

23 uncollected debt related to the Medicare or 

24 Medicaid programs; 


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1 (B) may deny approval if the Secretary de2 termines that these affiliations pose undue risk 

3 to the Medicare or Medicaid program, subject 

4 to an appeals process for the applicant as deter5 mined by the Secretary; and 

6 (C) may implement enhanced safeguards 

7 (such as surety bonds). 

8 (b) MORATORIA.—The Secretary may impose mora9 toria on approval of provider and supplier numbers under 

10 the Medicare program for new providers of services and 

11 suppliers as determined necessary to prevent or combat 

12 fraud a period of delay for any one applicant cannot ex13 ceed 30 days unless cause is shown by the Secretary. 

14 (c) FUNDING.—There are authorized to be appro15 priated to carry out this section such sums as may be nec16 essary. 

17 SEC. 1234. TRACKING BANNED PROVIDERS ACROSS STATE 

18 LINES. 

19 (a) GREATER COORDINATION.—The Secretary shall 

20 provide for increased coordination between the Adminis21 trator of the Centers for Medicare & Medicaid Services 

22 (in this section referred to as ‘‘CMS’’) and its regional 

23 offices to ensure that providers of services and suppliers 

24 that have operated in one State and are excluded from 

25 participation in the Medicare program are unable to begin 


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1 operation and participation in the Medicare program in 

2 another State. 

3 (b) IMPROVED INFORMATION SYSTEMS.— 

4 (1) IN GENERAL.—The Secretary shall improve 

5 information systems to allow greater integration be6 tween databases under the Medicare program so 

7 that— 

8 (A) medicare administrative contractors, 

9 fiscal intermediaries, and carriers have imme10 diate access to information identifying providers 

11 and suppliers excluded from participation in the 

12 Medicare and Medicaid program and other Fed13 eral health care programs; and 

14 (B) such information can be shared across 

15 Federal health care programs and agencies, in16 cluding between the Departments of Health and 

17 Human Services, the Social Security Adminis18 tration, the Department of Veterans Affairs, 

19 the Department of Defense, the Department of 

20 Justice, and the Office of Personnel Manage21 ment. 

22 (c) MEDICARE/MEDICAID ‘‘ONE PI’’ DATABASE.— 

23 The Secretary shall implement a database that includes 

24 claims and payment data for all components of the Medi25 care program and the Medicaid program. 


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1 (d) AUTHORIZING EXPANDED DATA MATCHING.— 

2 Notwithstanding any provision of the Computer Matching 

3 and Privacy Protection Act of 1988 to the contrary— 

4 (1) the Secretary and the Inspector General in 

5 the Department of Health and Human Services may 

6 perform data matching of data from the Medicare 

7 program with data from the Medicaid program; and 

8 (2) the Commissioner of Social Security and the 

9 Secretary may perform data matching of data of the 

10 Social Security Administration with data from the 

11 Medicare and Medicaid programs. 

12 (e) CONSOLIDATION OF DATA BASES.—The Sec13 retary shall consolidate and expand into a centralized data 

14 base for individuals and entities that have been excluded 

15 from Federal health care programs the Healthcare Integ16 rity and Protection Data Bank, the National Practitioner 

17 Data Bank, the List of Excluded Individuals/Entities, and 

18 a national patient abuse/neglect registry. 

19 (f) COMPREHENSIVE PROVIDER DATABASE.— 

20 (1) ESTABLISHMENT.—The Secretary shall es21 tablish a comprehensive database that includes infor22 mation on providers of services, suppliers, and re23 lated entities participating in the Medicare program, 

24 the Medicaid program, or both. Such database shall 

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1 tionships, history of adverse actions, results of site 

2 visits or other monitoring by any program. 

3 (2) USE.—Prior to issuing a provider or sup4 plier number for an entity under the Medicare pro5 gram, the Secretary shall obtain information on the 

6 entity from such database to assure the entity quali7 fies for the issuance of such a number. 

8 (g) COMPREHENSIVE SANCTIONS DATABASE.—The 

9 Secretary shall establish a comprehensive sanctions data10 base on sanctions imposed on providers of services, sup11 pliers, and related entities. Such database shall be over12 seen by the Inspector General of the Department of 

13 Health and Human Services and shall be linked to related 

14 databases maintained by State licensure boards and by 

15 Federal or State law enforcement agencies. 

16 (h) ACCESS TO CLAIMS AND PAYMENT DATA17 BASES.—The Secretary shall ensure that the Inspector 

18 General of the Department of Health and Human Services 

19 and Federal law enforcement agencies have direct access 

20 to all claims and payment databases of the Secretary 

21 under the Medicare or Medicaid programs. 

22 (i) CIVIL MONEY PENALTIES FOR SUBMISSION OF

23 ERRONEOUS INFORMATION.—In the case of a provider of 

24 services, supplier, or other entity that knowingly submits 

25 erroneous information that serves as a basis for payment 


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1 of any entity under the Medicare or Medicaid program, 

2 the Secretary may impose a civil money penalty of not to 

3 exceed $50,000 for each such erroneous submission. A 

4 civil money penalty under this subsection shall be imposed 

5 and collected in the same manner as a civil money penalty 

6 under subsection (a) of section 1128A of the Social Secu7 rity Act is imposed and collected under that section. 

8 SEC. 1235. REINSTATE THE MEDICARE TRIGGER. 

9 Section 3 of House Resolution 5 of the One Hundred 

10 Eleventh Congress is amended by striking subsection (e) 

11 (relating to Medicare cost containment). 

Æ 


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