176 
amended by section 221 of Public Law 111–8). The 
Commissioner shall specify the extent to which and 
manner in which the previous sentence shall apply in 
the case of a basic plan with respect to which the 
Commissioner determines provides substantially all 
benefits through a health maintenance organization, 
as defined in section 2791(b)(3) of the Public 
Health Service Act. This paragraph shall not be con-
strued to require a basic plan to contract with a pro-
vider if such provider refuses to accept the generally 
applicable payment rates of such plan. 
(8) CULTURALLY AND LINGUISTICALLY APPRO-
PRIATE SERVICES AND COMMUNICATIONS.—The en-
tity shall provide for culturally and linguistically ap-
propriate communication and health services. 
(9) SPECIAL RULES WITH RESPECT TO INDIAN 
ENROLLEES
AND
INDIAN
HEALTH
CARE
PRO-
VIDERS.— 
(A) CHOICE
OF
PROVIDERS.—The entity 
shall— 
(i) demonstrate to the satisfaction of 
the Commissioner that it has contracted 
with a sufficient number of Indian health 
care providers to ensure timely access to 
covered services furnished by such pro-
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viders to individual Indians through the 
entity’s Exchange-participating health ben-
efits plan; and 
(ii) agree to pay Indian health care 
providers, whether such providers are par-
ticipating or nonparticipating providers 
with respect to the entity, for covered serv-
ices provided to those enrollees who are eli-
gible to receive services from such pro-
viders at a rate that is not less than the 
level and amount of payment which the en-
tity would make for the services of a par-
ticipating provider which is not an Indian 
health care provider. 
(B) SPECIAL RULE RELATING TO INDIAN 
HEALTH CARE PROVIDERS.—Provision of serv-
ices by an Indian health care provider exclu-
sively to Indians and their dependents shall not 
constitute discrimination under this Act. 
(10) PROGRAM
INTEGRITY
STANDARDS.—The 
entity shall establish and operate a program to pro-
tect and promote the integrity of Exchange-partici-
pating health benefits plans it offers, in accordance 
with standards and functions established by the 
Commissioner. 
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(11) ADDITIONAL REQUIREMENTS.—The entity 
shall comply with other applicable requirements of 
this title, as specified by the Commissioner, which 
shall include standards regarding billing and collec-
tion practices for premiums and related grace peri-
ods and which may include standards to ensure that 
the entity does not use coercive practices to force 
providers not to contract with other entities offering 
coverage through the Health Insurance Exchange. 
(c) CONTRACTS.— 
(1) BID APPLICATION.—To be eligible to enter 
into a contract under this section, a QHBP offering 
entity shall submit to the Commissioner a bid at 
such time, in such manner, and containing such in-
formation as the Commissioner may require. 
(2) TERM.—Each contract with a QHBP offer-
ing entity under this section shall be for a term of 
not less than one year, but may be made automati-
cally renewable from term to term in the absence of 
notice of termination by either party. 
(3) ENFORCEMENT OF NETWORK ADEQUACY.— 
In the case of a health benefits plan of a QHBP of-
fering entity that uses a provider network, the con-
tract under this section with the entity shall provide 
that if— 
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(A) the Commissioner determines that 
such provider network does not meet such 
standards as the Commissioner shall establish 
under section 215; and 
(B) an individual enrolled in such plan re-
ceives an item or service from a provider that 
is not within such network; 
then any cost-sharing for such item or service shall 
be equal to the amount of such cost-sharing that 
would be imposed if such item or service was fur-
nished by a provider within such network. 
(4) OVERSIGHT AND ENFORCEMENT RESPON-
SIBILITIES.—The Commissioner shall establish proc-
esses, in coordination with State insurance regu-
lators, to oversee, monitor, and enforce applicable re-
quirements of this title with respect to QHBP offer-
ing entities offering Exchange-participating health 
benefits plans, including the marketing of such 
plans. Such processes shall include the following: 
(A) GRIEVANCE AND COMPLAINT MECHA-
NISMS.—The Commissioner shall establish, in 
coordination with State insurance regulators, a 
process under which Exchange-eligible individ-
uals and employers may file complaints con-
cerning violations of such standards. 
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(B) ENFORCEMENT.—In carrying out au-
thorities under this division relating to the 
Health Insurance Exchange, the Commissioner 
may impose one or more of the intermediate 
sanctions described in section 242(d). 
(C) TERMINATION.— 
(i) IN GENERAL.—The Commissioner 
may terminate a contract with a QHBP of-
fering entity under this section for the of-
fering of an Exchange-participating health 
benefits plan if such entity fails to comply 
with the applicable requirements of this 
title. Any determination by the Commis-
sioner to terminate a contract shall be 
made in accordance with formal investiga-
tion and compliance procedures established 
by the Commissioner under which— 
(I) the Commissioner provides 
the entity with the reasonable oppor-
tunity to develop and implement a 
corrective action plan to correct the 
deficiencies that were the basis of the 
Commissioner’s determination; and 
(II) the Commissioner provides 
the entity with reasonable notice and 
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181 
opportunity for hearing (including the 
right to appeal an initial decision) be-
fore terminating the contract. 
(ii) EXCEPTION FOR IMMINENT AND 
SERIOUS
RISK
TO
HEALTH.—Clause (i) 
shall not apply if the Commissioner deter-
mines that a delay in termination, result-
ing from compliance with the procedures 
specified in such clause prior to termi-
nation, would pose an imminent and seri-
ous risk to the health of individuals en-
rolled under the qualified health benefits 
plan of the QHBP offering entity. 
(D) CONSTRUCTION.—Nothing in this sub-
section shall be construed as preventing the ap-
plication of other sanctions under subtitle E of 
title II with respect to an entity for a violation 
of such a requirement. 
(5) SPECIAL RULE RELATED TO COST-SHARING 
AND INDIAN HEALTH CARE PROVIDERS.—The con-
tract under this section with a QHBP offering entity 
for a health benefits plan shall provide that if an in-
dividual who is an Indian is enrolled in such a plan 
and such individual receives a covered item or serv-
ice from an Indian health care provider (regardless 
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of whether such provider is in the plan’s provider 
network), the cost-sharing for such item or service 
shall be equal to the amount of cost-sharing that 
would be imposed if such item or service— 
(A) had been furnished by another pro-
vider in the plan’s provider network; or 
(B) in the case that the plan has no such 
network, was furnished by a non-Indian pro-
vider. 
(6) NATIONAL PLAN.—Nothing in this section 
shall be construed as preventing the Commissioner 
from entering into a contract under this subsection 
with a QHBP offering entity for the offering of a 
health benefits plan with the same benefits in every 
State so long as such entity is licensed to offer such 
plan in each State and the benefits meet the applica-
ble requirements in each such State. 
(d) NO DISCRIMINATION ON THE BASIS OF PROVI-
SION OF ABORTION.—No Exchange participating health 
benefits plan may discriminate against any individual 
health care provider or health care facility because of its 
willingness or unwillingness to provide, pay for, provide 
coverage of, or refer for abortions. 
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SEC. 305. OUTREACH AND ENROLLMENT OF EXCHANGE-EL-
IGIBLE INDIVIDUALS AND EMPLOYERS IN EX-
CHANGE-PARTICIPATING HEALTH BENEFITS 
PLAN. 
(a) IN GENERAL.— 
(1) OUTREACH.—The Commissioner shall con-
duct outreach activities consistent with subsection 
(c), including through use of appropriate entities as 
described in paragraph (3) of such subsection, to in-
form and educate individuals and employers about 
the Health Insurance Exchange and Exchange-par-
ticipating health benefits plan options. Such out-
reach shall include outreach specific to vulnerable 
populations, such as children, individuals with dis-
abilities, individuals with mental illness, and individ-
uals with other cognitive impairments. 
(2) ELIGIBILITY.—The Commissioner shall 
make timely determinations of whether individuals 
and employers are Exchange-eligible individuals and 
employers (as defined in section 302). 
(3) ENROLLMENT.—The Commissioner shall es-
tablish and carry out an enrollment process for Ex-
change-eligible individuals and employers, including 
at community locations, in accordance with sub-
section (b). 
(b) ENROLLMENT PROCESS.— 
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(1) IN GENERAL.—The Commissioner shall es-
tablish a process consistent with this title for enroll-
ments in Exchange-participating health benefits 
plans. Such process shall provide for enrollment 
through means such as the mail, by telephone, elec-
tronically, and in person. 
(2) ENROLLMENT PERIODS.— 
(A) OPEN
ENROLLMENT
PERIOD.—The 
Commissioner shall establish an annual open 
enrollment period during which an Exchange-el-
igible individual or employer may elect to enroll 
in an Exchange-participating health benefits 
plan for the following plan year and an enroll-
ment period for affordability credits under sub-
title C. Such periods shall be during September 
through November of each year, or such other 
time that would maximize timeliness of income 
verification for purposes of such subtitle. The 
open enrollment period shall not be less than 30 
days. 
(B) SPECIAL
ENROLLMENT.—The Com-
missioner shall also provide for special enroll-
ment periods to take into account special cir-
cumstances of individuals and employers, such 
as an individual who— 
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(i) loses acceptable coverage; 
(ii) experiences a change in marital or 
other dependent status; 
(iii) moves outside the service area of 
the Exchange-participating health benefits 
plan in which the individual is enrolled; or 
(iv) experiences a significant change 
in income. 
(C) 
ENROLLMENT
INFORMATION.—The 
Commissioner shall provide for the broad dis-
semination of information to prospective enroll-
ees on the enrollment process, including before 
each open enrollment period. In carrying out 
the previous sentence, the Commissioner may 
work with other appropriate entities to facilitate 
such provision of information. 
(3) AUTOMATIC ENROLLMENT FOR NON-MED-
ICAID ELIGIBLE INDIVIDUALS.— 
(A) IN
GENERAL.—The Commissioner 
shall provide for a process under which individ-
uals who are Exchange-eligible individuals de-
scribed in subparagraph (B) are automatically 
enrolled under an appropriate Exchange-partici-
pating health benefits plan. Such process may 
involve a random assignment or some other 
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form of assignment that takes into account the 
health care providers used by the individual in-
volved or such other relevant factors as the 
Commissioner may specify. 
(B) 
SUBSIDIZED
INDIVIDUALS
DE-
SCRIBED.—An individual described in this sub-
paragraph is an Exchange-eligible individual 
who is either of the following: 
(i) AFFORDABILITY CREDIT ELIGIBLE 
INDIVIDUALS.—The individual— 
(I) has applied for, and been de-
termined eligible for, affordability 
credits under subtitle C; 
(II) has not opted out from re-
ceiving such affordability credit; and 
(III) does not otherwise enroll in 
another Exchange-participating health 
benefits plan. 
(ii) INDIVIDUALS
ENROLLED
IN
A 
TERMINATED
PLAN.—The individual who 
is enrolled in an Exchange-participating 
health benefits plan that is terminated 
(during or at the end of a plan year) and 
who does not otherwise enroll in another 
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Exchange-participating 
health 
benefits 
plan. 
(4) DIRECT
PAYMENT
OF
PREMIUMS
TO 
PLANS.—Under the enrollment process, individuals 
enrolled in an Exchange-participating health benefits 
plan shall pay such plans directly, and not through 
the Commissioner or the Health Insurance Ex-
change. 
(c) COVERAGE INFORMATION AND ASSISTANCE.— 
(1) COVERAGE
INFORMATION.—The Commis-
sioner shall provide for the broad dissemination of 
information on Exchange-participating health bene-
fits plans offered under this title. Such information 
shall be provided in a comparative manner, and shall 
include information on benefits, premiums, cost- 
sharing, quality, provider networks, and consumer 
satisfaction. 
(2) CONSUMER ASSISTANCE WITH CHOICE.—To 
provide assistance to Exchange-eligible individuals 
and employers, the Commissioner shall— 
(A) provide for the operation of a toll-free 
telephone hotline to respond to requests for as-
sistance and maintain an Internet Web site 
through which individuals may obtain informa-
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tion on coverage under Exchange-participating 
health benefits plans and file complaints; 
(B) develop and disseminate information to 
Exchange-eligible enrollees on their rights and 
responsibilities; 
(C) assist Exchange-eligible individuals in 
selecting Exchange-participating health benefits 
plans and obtaining benefits through such 
plans; and 
(D) ensure that the Internet Web site de-
scribed in subparagraph (A) and the informa-
tion described in subparagraph (B) is developed 
using plain language (as defined in section 
233(a)(2)). 
(3) USE OF OTHER ENTITIES.—In carrying out 
this subsection, the Commissioner may work with 
other appropriate entities to facilitate the dissemina-
tion of information under this subsection and to pro-
vide assistance as described in paragraph (2). 
(d) COVERAGE
FOR CERTAIN NEWBORNS UNDER 
MEDICAID.— 
(1) IN GENERAL.—In the case of a child born 
in the United States who at the time of birth is not 
otherwise covered under acceptable coverage, for the 
period of time beginning on the date of birth and 
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ending on the date the child otherwise is covered 
under acceptable coverage (or, if earlier, the end of 
the month in which the 60-day period, beginning on 
the date of birth, ends), the child shall be deemed— 
(A) to be a Medicaid eligible individual for 
purposes of this division and Medicaid; and 
(B) to be automatically enrolled in Med-
icaid as a traditional Medicaid eligible indi-
vidual (as defined in section 1943(c) of the So-
cial Security Act). 
(2) EXTENDED TREATMENT AS MEDICAID ELI-
GIBLE INDIVIDUAL.—In the case of a child described 
in paragraph (1) who at the end of the period re-
ferred to in such paragraph is not otherwise covered 
under acceptable coverage, the child shall be deemed 
(until such time as the child obtains such coverage 
or the State otherwise makes a determination of the 
child’s eligibility for medical assistance under its 
Medicaid plan pursuant to section 1943(b)(1) of the 
Social Security Act) to be a Medicaid eligible indi-
vidual described in section 1902(l)(1)(B) of such 
Act. 
(e) MEDICAID COVERAGE FOR MEDICAID ELIGIBLE 
INDIVIDUALS.— 
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(1) MEDICAID ENROLLMENT OBLIGATION.—An 
individual may apply, in the manner described in 
section 341(b)(1), for a determination of whether 
the individual is a Medicaid-eligible individual. If the 
individual is determined to be so eligible, the Com-
missioner, through the Medicaid memorandum of 
understanding under paragraph (2), shall provide 
for the enrollment of the individual under the State 
Medicaid plan in accordance with such memorandum 
of understanding. In the case of such an enrollment, 
the State shall provide for the same periodic redeter-
mination of eligibility under Medicaid as would oth-
erwise apply if the individual had directly applied for 
medical assistance to the State Medicaid agency. 
(2) COORDINATED ENROLLMENT WITH STATE 
THROUGH
MEMORANDUM
OF
UNDERSTANDING.— 
The Commissioner, in consultation with the Sec-
retary of Health and Human Services, shall enter 
into a memorandum of understanding with each 
State with respect to coordinating enrollment of in-
dividuals in Exchange-participating health benefits 
plans and under the State’s Medicaid program con-
sistent with this section and to otherwise coordinate 
the implementation of the provisions of this division 
with respect to the Medicaid program. Such memo-
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randum shall permit the exchange of information 
consistent with the limitations described in section 
1902(a)(7) of the Social Security Act. Nothing in 
this section shall be construed as permitting such 
memorandum to modify or vitiate any requirement 
of a State Medicaid plan. 
(f) EFFECTIVE CULTURALLY AND LINGUISTICALLY 
APPROPRIATE COMMUNICATION.—In carrying out this 
section, the Commissioner shall establish effective methods 
for communicating in plain language and a culturally and 
linguistically appropriate manner. 
(g) ROLE
FOR ENROLLMENT AGENTS
AND BRO-
KERS.—Nothing in this division shall be construed to af-
fect the role of enrollment agents and brokers under State 
law, including with regard to the enrollment of individuals 
and employers in qualified health benefits plans including 
the public health insurance option. 
(h) ASSISTANCE FOR SMALL EMPLOYERS.— 
(1) IN GENERAL.—The Commissioner, in con-
sultation with the Small Business Administration, 
shall establish and carry out a program to provide 
to small employers counseling and technical assist-
ance with respect to the provision of health insur-
ance to employees of such employers through the 
Health Insurance Exchange. 
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(2) DUTIES.—The program established under 
paragraph (1) shall include the following services: 
(A) Educational activities to increase 
awareness of the Health Insurance Exchange 
and available small employer health plan op-
tions. 
(B) Distribution of information to small 
employers with respect to the enrollment and 
selection process for health plans available 
under the Health Insurance Exchange, includ-
ing standardized comparative information on 
the health plans available under the Health In-
surance Exchange. 
(C) Distribution of information to small 
employers with respect to available affordability 
credits or other financial assistance. 
(D) Referrals to appropriate entities of 
complaints and questions relating to the Health 
Insurance Exchange. 
(E) Enrollment and plan selection assist-
ance for employers with respect to the Health 
Insurance Exchange. 
(F) Responses to questions relating to the 
Health Insurance Exchange and the program 
established under paragraph (1). 
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(3) AUTHORITY
TO
PROVIDE
SERVICES
DI-
RECTLY OR BY CONTRACT.—The Commissioner may 
provide services under paragraph (2) directly or by 
contract with nonprofit entities that the Commis-
sioner determines capable of carrying out such serv-
ices. 
(4) SMALL EMPLOYER DEFINED.—In this sub-
section, the term ‘‘small employer’’ means an em-
ployer with less than 100 employees. 
(i) PARTICIPATION OF SMALL EMPLOYER BENEFIT 
ARRANGEMENTS.— 
(1) IN
GENERAL.—The Commissioner may 
enter into contracts with small employer benefit ar-
rangements to provide consumer information, out-
reach, and assistance in the enrollment of small em-
ployers (and their employees) who are members of 
such an arrangement under Exchange participating 
health benefits plans. 
(2) SMALL EMPLOYER BENEFIT ARRANGEMENT 
DEFINED.—In this subsection, the term ‘‘small em-
ployer benefit arrangement’’ means a not-for-profit 
agricultural or other cooperative that— 
(A) consists solely of its members and is 
operated for the primary purpose of providing 
affordable employee benefits to its members; 
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(B) only has as members small employers 
in the same industry or line of business; 
(C) has no member that has more than a 
5 percent voting interest in the cooperative; and 
(D) is governed by a board of directors 
elected by its members. 
SEC. 306. OTHER FUNCTIONS. 
(a) COORDINATION OF AFFORDABILITY CREDITS.— 
The Commissioner shall coordinate the distribution of af-
fordability premium and cost-sharing credits under sub-
title C to QHBP offering entities offering Exchange-par-
ticipating health benefits plans. 
(b) COORDINATION OF RISK POOLING.—The Com-
missioner shall establish a mechanism whereby there is an 
adjustment made of the premium amounts payable among 
QHBP offering entities offering Exchange-participating 
health benefits plans of premiums collected for such plans 
that takes into account (in a manner specified by the Com-
missioner) the differences in the risk characteristics of in-
dividuals and employees enrolled under the different Ex-
change-participating health benefits plans offered by such 
entities so as to minimize the impact of adverse selection 
of enrollees among the plans offered by such entities. For 
purposes of the previous sentence, the Commissioner may 
utilize data regarding enrollee demographics, inpatient 
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and outpatient diagnoses (in a similar manner as such 
data are used under parts C and D of title XVIII of the 
Social Security Act), and such other information as the 
Secretary determines may be necessary, such as the actual 
medical costs of enrollees during the previous year. 
SEC. 307. HEALTH INSURANCE EXCHANGE TRUST FUND. 
(a) ESTABLISHMENT OF HEALTH INSURANCE EX-
CHANGE TRUST FUND.—There is created within the 
Treasury of the United States a trust fund to be known 
as the ‘‘Health Insurance Exchange Trust Fund’’ (in this 
section referred to as the ‘‘Trust Fund’’), consisting of 
such amounts as may be appropriated or credited to the 
Trust Fund under this section or any other provision of 
law. 
(b) PAYMENTS FROM TRUST FUND.—The Commis-
sioner shall pay from time to time from the Trust Fund 
such amounts as the Commissioner determines are nec-
essary to make payments to operate the Health Insurance 
Exchange, including payments under subtitle C (relating 
to affordability credits). 
(c) TRANSFERS TO TRUST FUND.— 
(1) DEDICATED PAYMENTS.—There are hereby 
appropriated to the Trust Fund amounts equivalent 
to the following: 
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(A) TAXES ON INDIVIDUALS NOT OBTAIN-
ING ACCEPTABLE COVERAGE.—The amounts re-
ceived in the Treasury under section 59B of the 
Internal Revenue Code of 1986 (relating to re-
quirement of health insurance coverage for indi-
viduals). 
(B) EMPLOYMENT TAXES ON EMPLOYERS 
NOT PROVIDING ACCEPTABLE COVERAGE.—The 
amounts received in the Treasury under sec-
tions 3111(c) and 3221(c) of the Internal Rev-
enue Code of 1986 (relating to employers elect-
ing to not provide health benefits). 
(C) EXCISE TAX ON FAILURES TO MEET 
CERTAIN
HEALTH
COVERAGE
REQUIRE-
MENTS.—The amounts received in the Treasury 
under section 4980H(b) (relating to excise tax 
with respect to failure to meet health coverage 
participation requirements). 
(2) APPROPRIATIONS TO COVER GOVERNMENT 
CONTRIBUTIONS.—There are hereby appropriated, 
out of any moneys in the Treasury not otherwise ap-
propriated, to the Trust Fund, an amount equivalent 
to the amount of payments made from the Trust 
Fund under subsection (b) plus such amounts as are 
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necessary reduced by the amounts deposited under 
paragraph (1). 
(d) APPLICATION OF CERTAIN RULES.—Rules simi-
lar to the rules of subchapter B of chapter 98 of the Inter-
nal Revenue Code of 1986 shall apply with respect to the 
Trust Fund. 
SEC. 308. OPTIONAL OPERATION OF STATE-BASED HEALTH 
INSURANCE EXCHANGES. 
(a) IN GENERAL.—If— 
(1) a State (or group of States, subject to the 
approval of the Commissioner) applies to the Com-
missioner for approval of a State-based Health In-
surance Exchange to operate in the State (or group 
of States); and 
(2) the Commissioner approves such State- 
based Health Insurance Exchange, 
then, subject to subsections (c) and (d), the State-based 
Health Insurance Exchange shall operate, instead of the 
Health Insurance Exchange, with respect to such State 
(or group of States). The Commissioner shall approve a 
State-based Health Insurance Exchange if it meets the re-
quirements for approval under subsection (b). 
(b) REQUIREMENTS FOR APPROVAL.— 
(1) IN GENERAL.—The Commissioner may not 
approve a State-based Health Insurance Exchange 
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under this section unless the following requirements 
are met: 
(A) The State-based Health Insurance Ex-
change must demonstrate the capacity to and 
provide assurances satisfactory to the Commis-
sioner that the State-based Health Insurance 
Exchange will carry out the functions specified 
for the Health Insurance Exchange in the State 
(or States) involved, including— 
(i) negotiating and contracting with 
QHBP offering entities for the offering of 
Exchange-participating 
health 
benefits 
plans, which satisfy the standards and re-
quirements of this title and title II; 
(ii) enrolling Exchange-eligible indi-
viduals and employers in such State in 
such plans; 
(iii) the establishment of sufficient 
local offices to meet the needs of Ex-
change-eligible individuals and employers; 
(iv) administering affordability credits 
under subtitle B using the same meth-
odologies (and at least the same income 
verification methods) as would otherwise 
apply under such subtitle and at a cost to 
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the Federal Government which does exceed 
the cost to the Federal Government if this 
section did not apply; and 
(v) enforcement activities consistent 
with Federal requirements. 
(B) There is no more than one Health In-
surance Exchange operating with respect to any 
one State. 
(C) The State provides assurances satisfac-
tory to the Commissioner that approval of such 
an Exchange will not result in any net increase 
in expenditures to the Federal Government. 
(D) The State provides for reporting of 
such information as the Commissioner deter-
mines and assurances satisfactory to the Com-
missioner that it will vigorously enforce viola-
tions of applicable requirements. 
(E) Such other requirements as the Com-
missioner may specify. 
(2) PRESUMPTION FOR CERTAIN STATE-OPER-
ATED EXCHANGES.— 
(A) IN GENERAL.—In the case of a State 
operating an Exchange prior to January 1, 
2010, that seeks to operate the State-based 
Health Insurance Exchange under this section, 
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the Commissioner shall presume that such Ex-
change meets the standards under this section 
unless the Commissioner determines, after com-
pletion of the process established under sub-
paragraph (B), that the Exchange does not 
comply with such standards. 
(B) PROCESS.—The Commissioner shall 
establish a process to work with a State de-
scribed in subparagraph (A) to provide assist-
ance necessary to assure that the State’s Ex-
change comes into compliance with the stand-
ards for approval under this section. 
(c) CEASING OPERATION.— 
(1) IN GENERAL.—A State-based Health Insur-
ance Exchange may, at the option of each State in-
volved, and only after providing timely and reason-
able notice to the Commissioner, cease operation as 
such an Exchange, in which case the Health Insur-
ance Exchange shall operate, instead of such State- 
based Health Insurance Exchange, with respect to 
such State (or States). 
(2) TERMINATION; HEALTH
INSURANCE
EX-
CHANGE RESUMPTION OF FUNCTIONS.—The Com-
missioner may terminate the approval (for some or 
all functions) of a State-based Health Insurance Ex-
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change under this section if the Commissioner deter-
mines that such Exchange no longer meets the re-
quirements of subsection (b) or is no longer capable 
of carrying out such functions in accordance with 
the requirements of this subtitle. In lieu of termi-
nating such approval, the Commissioner may tempo-
rarily assume some or all functions of the State- 
based Health Insurance Exchange until such time as 
the 
Commissioner 
determines 
the 
State-based 
Health Insurance Exchange meets such require-
ments of subsection (b) and is capable of carrying 
out such functions in accordance with the require-
ments of this subtitle. 
(3) EFFECTIVENESS.—The ceasing or termi-
nation of a State-based Health Insurance Exchange 
under this subsection shall be effective in such time 
and manner as the Commissioner shall specify. 
(d) RETENTION OF AUTHORITY.— 
(1) AUTHORITY RETAINED.—Enforcement au-
thorities of the Commissioner shall be retained by 
the Commissioner. 
(2) DISCRETION TO RETAIN ADDITIONAL AU-
THORITY.—The Commissioner may specify functions 
of the Health Insurance Exchange that— 
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(A) may not be performed by a State- 
based Health Insurance Exchange under this 
section; or 
(B) may be performed by the Commis-
sioner and by such a State-based Health Insur-
ance Exchange. 
(e) REFERENCES.—In the case of a State-based 
Health Insurance Exchange, except as the Commissioner 
may otherwise specify under subsection (d), any references 
in this subtitle to the Health Insurance Exchange or to 
the Commissioner in the area in which the State-based 
Health Insurance Exchange operates shall be deemed a 
reference to the State-based Health Insurance Exchange 
and the head of such Exchange, respectively. 
(f) FUNDING.—In the case of a State-based Health 
Insurance Exchange, there shall be assistance provided for 
the operation of such Exchange in the form of a matching 
grant with a State share of expenditures required. 
SEC. 309. INTERSTATE HEALTH INSURANCE COMPACTS. 
(a) IN GENERAL.—Effective January 1, 2015, 2 or 
more States may form Health Care Choice Compacts (in 
this section referred to as ‘‘compacts’’) to facilitate the 
purchase of individual health insurance coverage across 
State lines. 
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(b) MODEL GUIDELINES.—The Secretary of Health 
and Human Services (in this section referred to as the 
‘‘Secretary’’) shall request the National Association of In-
surance Commissioners (in this section referred to as 
‘‘NAIC’’) to develop model guidelines for the creation of 
compacts. In developing such guidelines, the NAIC shall 
consult with consumers, health insurance issuers, the Sec-
retary, and other interested parties. Such guidelines 
shall— 
(1) provide for the sale of health insurance cov-
erage to residents of all compacting States subject to 
the laws and regulations of a primary State des-
ignated by the health insurance issuer; 
(2) require health insurance issuers issuing 
health insurance coverage in secondary States to 
maintain licensure in every such State; 
(3) preserve the authority of the State of an in-
dividual’s residence to address— 
(A) market conduct; 
(B) unfair trade practices; 
(C) network adequacy; 
(D) consumer protection standards; 
(E) grievance and appeals; 
(F) fair claims payment requirements; and 
(G) prompt payment of claims; 
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(4) permit State insurance commissioners and 
other State agencies in secondary States access to 
the records of a health insurance issuer to the same 
extent as if the policy were written in that State; 
and 
(5) provide for clear and conspicuous disclosure 
to consumers that the policy may not be subject to 
all the laws and regulations of the State in which 
the purchaser resides. 
(c) REQUIRED CONSIDERATION.—If model guidelines 
developed under subsection (b) are submitted to the Sec-
retary by January 1, 2013, the Secretary shall issue them 
as regulations. If the NAIC fails to submit such model 
guidelines by such date, the Secretary shall, no later than 
October 1, 2013, develop and promulgate the regulations 
implementing model guidelines described in subsection (b). 
(d) NO REQUIREMENT TO COMPACT.—Nothing in 
this section shall be construed to require a State to join 
a compact. 
(e) STATE AUTHORITY.—A State may not enter into 
a compact under this subsection unless the State enacts 
a law after the date of enactment of this Act that specifi-
cally authorizes the State to enter into such compact. 
(f) CONSUMER PROTECTIONS.—If a State enters into 
a compact it must retain responsibility for the consumer 
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protections of its residents and its residents retain the 
right to bring a claim in a State court in the State in 
which the resident resides. 
(g) ASSISTANCE TO COMPACTING STATES.— 
(1) IN GENERAL.—Beginning January 1, 2015, 
the Secretary shall make awards, from amounts ap-
propriated under paragraph (5), to States in the 
amount specified in paragraph (2) for the uses de-
scribed in paragraph (3). 
(2) AMOUNT SPECIFIED.— 
(A) IN GENERAL.—For each fiscal year, 
the Secretary shall determine the total amount 
that the Secretary will make available for 
grants under this subsection. 
(B) STATE AMOUNT.—For each State that 
is awarded a grant under paragraph (1), the 
amount of such grants shall be based on a for-
mula established by the Secretary, not to exceed 
$1 million per State, under which States shall 
receive an award in the amount that is based 
on the following two components: 
(i) A minimum amount for each 
State. 
(ii) An additional amount based on 
population of the State. 
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(3) USE
OF
FUNDS.—A State shall use 
amounts awarded under this subsection for activities 
(including planning activities) related regulating 
health insurance coverage sold in secondary States. 
(4) RENEWABILITY OF GRANT.—The Secretary 
may renew a grant award under paragraph (1) if the 
State receiving the grant continues to be a member 
of a compact. 
(5) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated such sums 
as may be necessary to carry out this subsection in 
each of fiscal years 2015 through 2020. 
SEC. 310. HEALTH INSURANCE COOPERATIVES. 
(a) ESTABLISHMENT.—Not later than 6 months after 
the date of the enactment of this Act, the Commissioner, 
in consultation with the Secretary of the Treasury, shall 
establish a Consumer Operated and Oriented Plan pro-
gram (in this section referred to as the ‘‘CO–OP pro-
gram’’) under which the Commissioner may make grants 
and loans for the establishment and initial operation of 
not-for-profit, member–run health insurance cooperatives 
(in this section individually referred to as a ‘‘cooperative’’) 
that provide insurance through the Health Insurance Ex-
change or a State-based Health Insurance Exchange 
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under section 308. Nothing in this section shall be con-
strued as requiring a State to establish such a cooperative. 
(b) 
START-UP
AND
SOLVENCY
GRANTS
AND 
LOANS.— 
(1) IN GENERAL.—Not later than 36 months 
after the date of the enactment of this Act, the 
Commissioner, acting through the CO–OP program, 
may make— 
(A) loans (of such period and with such 
terms as the Secretary may specify) to coopera-
tives to assist such cooperatives with start-up 
costs; and 
(B) grants to cooperatives to assist such 
cooperatives in meeting State solvency require-
ments in the States in which such cooperative 
offers or issues insurance coverage. 
(2) CONDITIONS.—A grant or loan may not be 
awarded under this subsection with respect to a co-
operative unless the following conditions are met: 
(A) The cooperative is structured as a not- 
for-profit, member organization under the law 
of each State in which such cooperative offers, 
intends to offer, or issues insurance coverage, 
with the membership of the cooperative being 
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made up entirely of beneficiaries of the insur-
ance coverage offered by such cooperative. 
(B) The cooperative did not offer insur-
ance on or before July 16, 2009, and the coop-
erative is not an affiliate or successor to an in-
surance company offering insurance on or be-
fore such date. 
(C) The governing documents of the coop-
erative incorporate ethical and conflict of inter-
est standards designed to protect against insur-
ance industry involvement and interference in 
the governance of the cooperative. 
(D) The cooperative is not sponsored by a 
State government. 
(E) Substantially all of the activities of the 
cooperative consist of the issuance of qualified 
health benefits plans through the Health Insur-
ance Exchange or a State-based health insur-
ance exchange. 
(F) The cooperative is licensed to offer in-
surance in each State in which it offers insur-
ance. 
(G) The governance of the cooperative 
must be subject to a majority vote of its mem-
bers. 
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(H) As provided in guidance issued by the 
Secretary of Health and Human Services, the 
cooperative operates with a strong consumer 
focus, including timeliness, responsiveness, and 
accountability to members. 
(I) Any profits made by the cooperative 
are used to lower premiums, improve benefits, 
or to otherwise improve the quality of health 
care delivered to members. 
(3) PRIORITY.—The Commissioner, in making 
grants and loans under this subsection, shall give 
priority to cooperatives that— 
(A) operate on a statewide basis; 
(B) use an integrated delivery system; or 
(C) have a significant level of financial 
support from nongovernmental sources. 
(4) RULES
OF
CONSTRUCTION.—Nothing in 
this section shall be construed to prevent a coopera-
tive established in one State from integrating with a 
cooperative established in another State the adminis-
tration, issuance of coverage, or other activities re-
lated to acting as a QHBP offering entity. Nothing 
in this section shall be construed as preventing State 
governments from taking actions to permit such in-
tegration. 
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(5) AMORTIZATION OF GRANTS AND LOANS.— 
The Secretary shall provide for the repayment of 
grants or loans provided under this subsection to the 
Treasury in an amortized manner over a 10-year pe-
riod. 
(6) REPAYMENT FOR VIOLATIONS OF TERMS OF 
PROGRAM.—If a cooperative violates the terms of the 
CO–OP program and fails to correct the violation 
within a reasonable period of time, as determined by 
the Commissioner, the cooperative shall repay the 
total amount of any loan or grant received by such 
cooperative under this section, plus interest (at a 
rate determined by the Secretary). 
(7) AUTHORIZATION
OF
APPROPRIATIONS.— 
There 
is 
authorized 
to 
be 
appropriated 
$5,000,000,000 for the period of fiscal years 2010 
through 2014 to provide for grants and loans under 
this subsection. 
(c) DEFINITIONS.—For purposes of this section: 
(1) STATE.—The term ‘‘State’’ means each of 
the 50 States and the District of Columbia. 
(2) MEMBER.—The term ‘‘member’’, with re-
spect to a cooperative, means an individual who, 
after the cooperative offers health insurance cov-
erage, is enrolled in such coverage. 
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SEC. 311. RETENTION OF DOD AND VA AUTHORITY. 
Nothing in this subtitle shall be construed as affect-
ing any authority under title 38, United States Code, or 
chapter 55 of title 10, United States Code. 
Subtitle B—Public Health 
Insurance Option 
SEC. 321. ESTABLISHMENT AND ADMINISTRATION OF A 
PUBLIC HEALTH INSURANCE OPTION AS AN 
EXCHANGE-QUALIFIED 
HEALTH 
BENEFITS 
PLAN. 
(a) ESTABLISHMENT.—For years beginning with Y1, 
the Secretary of Health and Human Services (in this sub-
title referred to as the ‘‘Secretary’’) shall provide for the 
offering of an Exchange-participating health benefits plan 
(in this division referred to as the ‘‘public health insurance 
option’’) that ensures choice, competition, and stability of 
affordable, high quality coverage throughout the United 
States in accordance with this subtitle. In designing the 
option, the Secretary’s primary responsibility is to create 
a low-cost plan without compromising quality or access to 
care. 
(b) OFFERING
AS
AN EXCHANGE-PARTICIPATING 
HEALTH BENEFITS PLAN.— 
(1) EXCLUSIVE TO THE EXCHANGE.—The pub-
lic health insurance option shall only be made avail-
able through the Health Insurance Exchange. 
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(2) ENSURING A LEVEL PLAYING FIELD.—Con-
sistent with this subtitle, the public health insurance 
option shall comply with requirements that are ap-
plicable under this title to an Exchange-participating 
health benefits plan, including requirements related 
to benefits, benefit levels, provider networks, notices, 
consumer protections, and cost-sharing. 
(3) PROVISION OF BENEFIT LEVELS.—The pub-
lic health insurance option— 
(A) shall offer basic, enhanced, and pre-
mium plans; and 
(B) may offer premium-plus plans. 
(c) ADMINISTRATIVE CONTRACTING.—The Secretary 
may enter into contracts for the purpose of performing 
administrative functions (including functions described in 
subsection (a)(4) of section 1874A of the Social Security 
Act) with respect to the public health insurance option in 
the same manner as the Secretary may enter into con-
tracts under subsection (a)(1) of such section. The Sec-
retary has the same authority with respect to the public 
health insurance option as the Secretary has under sub-
sections (a)(1) and (b) of section 1874A of the Social Se-
curity Act with respect to title XVIII of such Act. Con-
tracts under this subsection shall not involve the transfer 
of insurance risk to such entity. 
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(d) OMBUDSMAN.—The Secretary shall establish an 
office of the ombudsman for the public health insurance 
option which shall have duties with respect to the public 
health insurance option similar to the duties of the Medi-
care Beneficiary Ombudsman under section 1808(c)(2) of 
the Social Security Act. 
(e) DATA COLLECTION.—The Secretary shall collect 
such data as may be required to establish premiums and 
payment rates for the public health insurance option and 
for other purposes under this subtitle, including to im-
prove quality and to reduce racial, ethnic, and other dis-
parities in health and health care. Nothing in this subtitle 
may be construed as authorizing the Secretary (or any em-
ployee or contractor) to create or maintain lists of non- 
medical personal property. 
(f) TREATMENT OF PUBLIC HEALTH INSURANCE OP-
TION.—With respect to the public health insurance option, 
the Secretary shall be treated as a QHBP offering entity 
offering an Exchange-participating health benefits plan. 
(g) ACCESS TO FEDERAL COURTS.—The provisions 
of Medicare (and related provisions of title II of the Social 
Security Act) relating to access of Medicare beneficiaries 
to Federal courts for the enforcement of rights under 
Medicare, including with respect to amounts in con-
troversy, shall apply to the public health insurance option 
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214 
and individuals enrolled under such option under this title 
in the same manner as such provisions apply to Medicare 
and Medicare beneficiaries. 
SEC. 322. PREMIUMS AND FINANCING. 
(a) ESTABLISHMENT OF PREMIUMS.— 
(1) IN GENERAL.—The Secretary shall establish 
geographically adjusted premium rates for the public 
health insurance option— 
(A) in a manner that complies with the 
premium rules established by the Commissioner 
under section 213 for Exchange-participating 
health benefits plans; and 
(B) at a level sufficient to fully finance the 
costs of— 
(i) health benefits provided by the 
public health insurance option; and 
(ii) administrative costs related to op-
erating the public health insurance option. 
(2) CONTINGENCY
MARGIN.—In establishing 
premium rates under paragraph (1), the Secretary 
shall include an appropriate amount for a contin-
gency margin (which shall be not less than 90 days 
of estimated claims). Before setting such appropriate 
amount for years starting with Y3, the Secretary 
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shall solicit a recommendation on such amount from 
the American Academy of Actuaries. 
(b) ACCOUNT.— 
(1) ESTABLISHMENT.—There is established in 
the Treasury of the United States an Account for 
the receipts and disbursements attributable to the 
operation of the public health insurance option, in-
cluding the start-up funding under paragraph (2). 
Section 1854(g) of the Social Security Act shall 
apply to receipts described in the previous sentence 
in the same manner as such section applies to pay-
ments or premiums described in such section. 
(2) START-UP FUNDING.— 
(A) IN GENERAL.—In order to provide for 
the establishment of the public health insurance 
option, there is hereby appropriated to the Sec-
retary, out of any funds in the Treasury not 
otherwise appropriated, $2,000,000,000. In 
order to provide for initial claims reserves be-
fore the collection of premiums, there are here-
by appropriated to the Secretary, out of any 
funds in the Treasury not otherwise appro-
priated, such sums as necessary to cover 90 
days worth of claims reserves based on pro-
jected enrollment. 
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216 
(B) AMORTIZATION
OF
START-UP
FUND-
ING.—The Secretary shall provide for the re-
payment of the startup funding provided under 
subparagraph (A) to the Treasury in an amor-
tized manner over the 10-year period beginning 
with Y1. 
(C) LIMITATION ON FUNDING.—Nothing in 
this section shall be construed as authorizing 
any additional appropriations to the Account, 
other than such amounts as are otherwise pro-
vided with respect to other Exchange-partici-
pating health benefits plans. 
(3) NO BAILOUTS.—In no case shall the public 
health insurance option receive any Federal funds 
for purposes of insolvency in any manner similar to 
the manner in which entities receive Federal funding 
under the Troubled Assets Relief Program of the 
Secretary of the Treasury. 
SEC. 323. PAYMENT RATES FOR ITEMS AND SERVICES. 
(a) NEGOTIATION OF PAYMENT RATES.— 
(1) IN GENERAL.—The Secretary shall nego-
tiate payment for the public health insurance option 
for health care providers and items and services, in-
cluding prescription drugs, consistent with this sec-
tion and section 324. 
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(2) MANNER OF NEGOTIATION.—The Secretary 
shall negotiate such rates in a manner that results 
in payment rates that are not lower, in the aggre-
gate, than rates under title XVIII of the Social Se-
curity Act, and not higher, in the aggregate, than 
the average rates paid by other QHBP offering enti-
ties for services and health care providers. 
(3) INNOVATIVE PAYMENT METHODS.—Nothing 
in this subsection shall be construed as preventing 
the use of innovative payment methods such as those 
described in section 324 in connection with the nego-
tiation of payment rates under this subsection. 
(b) ESTABLISHMENT OF A PROVIDER NETWORK.— 
(1) IN GENERAL.—Health care providers (in-
cluding physicians and hospitals) participating in 
Medicare are participating providers in the public 
health insurance option unless they opt out in a 
process established by the Secretary consistent with 
this subsection. 
(2) REQUIREMENTS FOR OPT-OUT PROCESS.— 
Under the process established under paragraph 
(1)— 
(A) providers described in such paragraph 
shall be provided at least a 1-year period prior 
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to the first day of Y1 to opt out of participating 
in the public health insurance option; 
(B) no provider shall be subject to a pen-
alty for not participating in the public health 
insurance option; 
(C) the Secretary shall include information 
on how providers participating in Medicare who 
chose to opt out of participating in the public 
health insurance option may opt back in; and 
(D) there shall be an annual enrollment 
period in which providers may decide whether 
to participate in the public health insurance op-
tion. 
(3) RULEMAKING.—Not later than 18 months 
before the first day of Y1, the Secretary shall pro-
mulgate rules (pursuant to notice and comment) for 
the process described in paragraph (1). 
(c) LIMITATIONS ON REVIEW.—There shall be no ad-
ministrative or judicial review of a payment rate or meth-
odology established under this section or under section 
324. 
SEC. 324. MODERNIZED PAYMENT INITIATIVES AND DELIV-
ERY SYSTEM REFORM. 
(a) IN GENERAL.—For plan years beginning with Y1, 
the Secretary may utilize innovative payment mechanisms 
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and policies to determine payments for items and services 
under the public health insurance option. The payment 
mechanisms and policies under this section may include 
patient-centered medical home and other care manage-
ment payments, accountable care organizations, value- 
based purchasing, bundling of services, differential pay-
ment rates, performance or utilization based payments, 
partial capitation, and direct contracting with providers. 
(b) REQUIREMENTS FOR INNOVATIVE PAYMENTS.— 
The Secretary shall design and implement the payment 
mechanisms and policies under this section in a manner 
that— 
(1) seeks to— 
(A) improve health outcomes; 
(B) reduce health disparities (including ra-
cial, ethnic, and other disparities); 
(C) provide efficient and affordable care; 
(D) address geographic variation in the 
provision of health services; or 
(E) prevent or manage chronic illness; and 
(2) promotes care that is integrated, patient- 
centered, quality, and efficient. 
(c) ENCOURAGING THE USE OF HIGH VALUE SERV-
ICES.—To the extent allowed by the benefit standards ap-
plied to all Exchange-participating health benefits plans, 
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the public health insurance option may modify cost-shar-
ing and payment rates to encourage the use of services 
that promote health and value. 
(d) PROMOTION OF DELIVERY SYSTEM REFORM.— 
The Secretary shall monitor and evaluate the progress of 
payment and delivery system reforms under this Act and 
shall seek to implement such reforms subject to the fol-
lowing: 
(1) To the extent that the Secretary finds a 
payment and delivery system reform successful in 
improving quality and reducing costs, the Secretary 
shall implement such reform on as large a geo-
graphic scale as practical and economical. 
(2) The Secretary may delay the implementa-
tion of such a reform in geographic areas in which 
such implementation would place the public health 
insurance option at a competitive disadvantage. 
(3) The Secretary may prioritize implementa-
tion of such a reform in high cost geographic areas 
or otherwise in order to reduce total program costs 
or to promote high value care. 
(e) NON-UNIFORMITY PERMITTED.—Nothing in this 
subtitle shall prevent the Secretary from varying payments 
based on different payment structure models (such as ac-
countable care organizations and medical homes) under 
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the public health insurance option for different geographic 
areas. 
SEC. 325. PROVIDER PARTICIPATION. 
(a) IN GENERAL.—The Secretary shall establish con-
ditions of participation for health care providers under the 
public health insurance option. 
(b) LICENSURE OR CERTIFICATION.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall not allow a health 
care provider to participate in the public health in-
surance option unless such provider is appropriately 
licensed, certified, or otherwise permitted to practice 
under State law. 
(2) SPECIAL RULE FOR IHS FACILITIES AND 
PROVIDERS.—The requirements under paragraph (1) 
shall not apply to— 
(A) a facility that is operated by the In-
dian Health Service; 
(B) a facility operated by an Indian Tribe 
or tribal organization under the Indian Self-De-
termination Act (Public Law 93–638); 
(C) a health care professional employed by 
the Indian Health Service; or 
(D) a health care professional— 
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(i) who is employed to provide health 
care services in a facility operated by an 
Indian Tribe or tribal organization under 
the Indian Self-Determination Act; and 
(ii) who is licensed or certified in any 
State. 
(c) PAYMENT TERMS FOR PROVIDERS.— 
(1) PHYSICIANS.—The Secretary shall provide 
for the annual participation of physicians under the 
public health insurance option, for which payment 
may be made for services furnished during the year, 
in one of 2 classes: 
(A) PREFERRED PHYSICIANS.—Those phy-
sicians who agree to accept the payment under 
section 323 (without regard to cost-sharing) as 
the payment in full. 
(B) 
PARTICIPATING, 
NON-PREFERRED 
PHYSICIANS.—Those physicians who agree not 
to impose charges (in relation to the payment 
described in section 323 for such physicians) 
that exceed the sum of the in-network cost- 
sharing plus 15 percent of the total payment 
for each item and service. The Secretary shall 
reduce the payment described in section 323 for 
such physicians. 
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(2) OTHER
PROVIDERS.—The Secretary shall 
provide for the participation (on an annual or other 
basis specified by the Secretary) of health care pro-
viders (other than physicians) under the public 
health insurance option under which payment shall 
only be available if the provider agrees to accept the 
payment under section 323 (without regard to cost- 
sharing) as the payment in full. 
(d) EXCLUSION OF CERTAIN PROVIDERS.—The Sec-
retary shall exclude from participation under the public 
health insurance option a health care provider that is ex-
cluded from participation in a Federal health care pro-
gram (as defined in section 1128B(f) of the Social Secu-
rity Act). 
SEC. 326. APPLICATION OF FRAUD AND ABUSE PROVI-
SIONS. 
Provisions of civil law identified by the Secretary by 
regulation, in consultation with the Inspector General of 
the Department of Health and Human Services, that im-
pose sanctions with respect to waste, fraud, and abuse 
under Medicare, such as sections 3729 through 3733 of 
title 31, United States Code (commonly known as the 
False Claims Act), shall also apply to the public health 
insurance option. 
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SEC. 327. APPLICATION OF HIPAA INSURANCE REQUIRE-
MENTS. 
The requirements of sections 2701 through 2792 of 
the Public Health Service Act shall apply to the public 
health insurance option in the same manner as they apply 
to health insurance coverage offered by a health insurance 
issuer in the individual market. 
SEC. 328. APPLICATION OF HEALTH INFORMATION PRI-
VACY, SECURITY, AND ELECTRONIC TRANS-
ACTION REQUIREMENTS. 
Part C of title XI of the Social Security Act, relating 
to standards for protections against the wrongful disclo-
sure of individually identifiable health information, health 
information security, and the electronic exchange of health 
care information, shall apply to the public health insur-
ance option in the same manner as such part applies to 
other health plans (as defined in section 1171(5) of such 
Act). 
SEC. 329. ENROLLMENT IN PUBLIC HEALTH INSURANCE 
OPTION IS VOLUNTARY. 
Nothing in this division shall be construed as requir-
ing anyone to enroll in the public health insurance option. 
Enrollment in such option is voluntary. 
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SEC. 330. ENROLLMENT IN PUBLIC HEALTH INSURANCE 
OPTION BY MEMBERS OF CONGRESS. 
Notwithstanding any other provision of this Act, 
Members of Congress may enroll in the public health in-
surance option. 
SEC. 331. REIMBURSEMENT OF SECRETARY OF VETERANS 
AFFAIRS. 
The Secretary of Health and Human Services shall 
seek to enter into a memorandum of understanding with 
the Secretary of Veterans Affairs regarding the recovery 
of costs related to non-service-connected care or services 
provided by the Secretary of Veterans Affairs to an indi-
vidual covered under the public health insurance option 
in a manner consistent with recovery of costs related to 
non-service-connected care from private health insurance 
plans. 
Subtitle C—Individual 
Affordability Credits 
SEC. 341. AVAILABILITY THROUGH HEALTH INSURANCE EX-
CHANGE. 
(a) IN GENERAL.—Subject to the succeeding provi-
sions of this subtitle, in the case of an affordable credit 
eligible individual enrolled in an Exchange-participating 
health benefits plan— 
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(1) the individual shall be eligible for, in accord-
ance with this subtitle, affordability credits con-
sisting of— 
(A) an affordability premium credit under 
section 343 to be applied against the premium 
for the Exchange-participating health benefits 
plan in which the individual is enrolled; and 
(B) an affordability cost-sharing credit 
under section 344 to be applied as a reduction 
of the cost-sharing otherwise applicable to such 
plan; and 
(2) the Commissioner shall pay the QHBP of-
fering entity that offers such plan from the Health 
Insurance Exchange Trust Fund the aggregate 
amount of affordability credits for all affordable 
credit eligible individuals enrolled in such plan. 
(b) APPLICATION.— 
(1) IN GENERAL.—An Exchange eligible indi-
vidual may apply to the Commissioner through the 
Health Insurance Exchange or through another enti-
ty under an arrangement made with the Commis-
sioner, in a form and manner specified by the Com-
missioner. The Commissioner through the Health 
Insurance Exchange or through another public enti-
ty under an arrangement made with the Commis-
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sioner shall make a determination as to eligibility of 
an individual for affordability credits under this sub-
title. The Commissioner shall establish a process 
whereby, on the basis of information otherwise avail-
able, individuals may be deemed to be affordable 
credit eligible individuals. In carrying this subtitle, 
the Commissioner shall establish effective methods 
that ensure that individuals with limited English 
proficiency are able to apply for affordability credits. 
(2) USE
OF
STATE
MEDICAID
AGENCIES.—If 
the Commissioner determines that a State Medicaid 
agency has the capacity to make a determination of 
eligibility for affordability credits under this subtitle 
and under the same standards as used by the Com-
missioner, under the Medicaid memorandum of un-
derstanding under section 305(e)(2)— 
(A) the State Medicaid agency is author-
ized to conduct such determinations for any Ex-
change-eligible individual who requests such a 
determination; and 
(B) the Commissioner shall reimburse the 
State Medicaid agency for the costs of con-
ducting such determinations. 
(3) MEDICAID SCREEN AND ENROLL OBLIGA-
TION.—In the case of an application made under 
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paragraph (1), there shall be a determination of 
whether the individual is a Medicaid-eligible indi-
vidual. If the individual is determined to be so eligi-
ble, the Commissioner, through the Medicaid memo-
randum of understanding under section 305(e)(2), 
shall provide for the enrollment of the individual 
under the State Medicaid plan in accordance with 
such Medicaid memorandum of understanding. In 
the case of such an enrollment, the State shall pro-
vide for the same periodic redetermination of eligi-
bility under Medicaid as would otherwise apply if the 
individual had directly applied for medical assistance 
to the State Medicaid agency. 
(4) APPLICATION
AND
VERIFICATION
OF
RE-
QUIREMENT OF CITIZENSHIP OR LAWFUL PRESENCE 
IN THE UNITED STATES.— 
(A) REQUIREMENT.—No individual shall 
be an affordable credit eligible individual (as 
defined in section 342(a)(1)) unless the indi-
vidual is a citizen or national of the United 
States or is lawfully present in a State in the 
United States (other than as a nonimmigrant 
described in a subparagraph (excluding sub-
paragraphs (K), (T), (U), and (V)) of section 
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101(a)(15) of the Immigration and Nationality 
Act). 
(B) DECLARATION
OF
CITIZENSHIP
OR 
LAWFUL IMMIGRATION STATUS.—No individual 
shall be an affordable credit eligible individual 
unless there has been a declaration made, in a 
form and manner specified by the Health 
Choices Commissioner similar to the manner re-
quired under section 1137(d)(1) of the Social 
Security Act and under penalty of perjury, that 
the individual— 
(i) is a citizen or national of the 
United States; or 
(ii) is not such a citizen or national 
but is lawfully present in a State in the 
United States (other than as a non-
immigrant described in a subparagraph 
(excluding subparagraphs (K), (T), (U), 
and (V)) of section 101(a)(15) of the Im-
migration and Nationality Act). 
Such declaration shall be verified in accordance 
with subparagraph (C) or (D), as the case may 
be. 
(C) VERIFICATION
PROCESS
FOR
CITI-
ZENS.— 
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(i) IN GENERAL.—In the case of an 
individual making the declaration described 
in subparagraph (B)(i), subject to clause 
(ii), section 1902(ee) of the Social Security 
Act shall apply to such declaration in the 
same manner as such section applies to a 
declaration described in paragraph (1) of 
such section. 
(ii) SPECIAL RULES.—In applying sec-
tion 1902(ee) of such Act under clause 
(i)— 
(I) any reference in such section 
to a State is deemed a reference to 
the Commissioner (or other public en-
tity making the eligibility determina-
tion); 
(II) any reference to medical as-
sistance or enrollment under a State 
plan is deemed a reference to provi-
sion of affordability credits under this 
subtitle; 
(III) a reference to a newly en-
rolled individual under paragraph 
(2)(A) of such section is deemed a ref-
erence to an individual newly in re-
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ceipt of an affordability credit under 
this subtitle; 
(IV) approval by the Secretary 
shall not be required in applying para-
graph (2)(B)(ii) of such section; 
(V) paragraph (3) of such section 
shall not apply; and 
(VI) before the end of Y2, the 
Health Choices Commissioner, in con-
sultation with the Commissioner of 
Social Security, may extend the peri-
ods specified in paragraph (1)(B)(ii) 
of such section. 
(D) VERIFICATION PROCESS FOR NONCITI-
ZENS.— 
(i) IN GENERAL.—In the case of an 
individual making the declaration described 
in subparagraph (B)(ii), subject to clause 
(ii), the verification procedures of para-
graphs (2) through (5) of section 1137(d) 
of the Social Security Act shall apply to 
such declaration in the same manner as 
such procedures apply to a declaration de-
scribed in paragraph (1) of such section. 
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(ii) SPECIAL
RULES.—In applying 
such paragraphs of section 1137(d) of such 
Act under clause (i)— 
(I) any reference in such para-
graphs to a State is deemed a ref-
erence to the Health Choices Commis-
sioner; and 
(II) any reference to benefits 
under a program is deemed a ref-
erence to affordability credits under 
this subtitle. 
(iii) APPLICATION
TO
STATE-BASED 
EXCHANGES.—In the case of the applica-
tion of the verification process under this 
subparagraph to a State-based Health In-
surance Exchange approved under section 
308, section 1137(e) of such Act shall 
apply to the Health Choices Commissioner 
in relation to the State. 
(E) 
ANNUAL
REPORTS.—The 
Health 
Choices Commissioner shall report to Congress 
annually on the number of applicants for af-
fordability credits under this subtitle, their citi-
zenship or immigration status, and the disposi-
tion of their applications. Such report shall be 
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made publicly available and shall include infor-
mation on— 
(i) the number of applicants whose 
declaration of citizenship or immigration 
status, name, or social security account 
number was not consistent with records 
maintained by the Commissioner of Social 
Security or the Department of Homeland 
Security and, of such applicants, the num-
ber who contested the inconsistency and 
sought to document their citizenship or im-
migration status, name, or social security 
account number or to correct the informa-
tion maintained in such records and, of 
those, the results of such contestations; 
and 
(ii) the administrative costs of con-
ducting the status verification under this 
paragraph. 
(F) GAO REPORT.—Not later than the end 
of Y2, the Comptroller General of the United 
States shall submit to the Committee on Ways 
and Means, the Committee on Energy and 
Commerce, the Committee on Education and 
Labor, and the Committee on the Judiciary of 
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the House of Representatives and the Com-
mittee on Finance, the Committee on Health, 
Education, Labor, and Pensions, and the Com-
mittee on the Judiciary of the Senate a report 
examining the effectiveness of the citizenship 
and immigration verification systems applied 
under this paragraph. Such report shall include 
an analysis of the following: 
(i) The causes of erroneous deter-
minations under such systems. 
(ii) The effectiveness of the processes 
used in remedying such erroneous deter-
minations. 
(iii) The impact of such systems on 
individuals, health care providers, and Fed-
eral and State agencies, including the ef-
fect of erroneous determinations under 
such systems. 
(iv) The effectiveness of such systems 
in preventing ineligible individuals from re-
ceiving for affordability credits. 
(v) The characteristics of applicants 
described in subparagraph (E)(i). 
(G) PROHIBITION OF DATABASE.—Nothing 
in this paragraph or the amendments made by 
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paragraph (6) shall be construed as authorizing 
the Health Choices Commissioner or the Com-
missioner of Social Security to establish a data-
base of information on citizenship or immigra-
tion status. 
(H) INITIAL FUNDING.— 
(i) IN GENERAL.—Out of any funds in 
the Treasury not otherwise appropriated, 
there is appropriated to the Commissioner 
of Social Security $30,000,000, to be avail-
able without fiscal year limit to carry out 
this paragraph and section 205(v) of the 
Social Security Act. 
(ii) FUNDING
LIMITATION.—In no 
case shall funds from the Social Security 
Administration’s Limitation on Adminis-
trative Expenses be used to carry out ac-
tivities related to this paragraph or section 
205(v) of the Social Security Act. 
(5) AGREEMENT WITH SOCIAL SECURITY COM-
MISSIONER.— 
(A) IN
GENERAL.—The Health Choices 
Commissioner shall enter into and maintain an 
agreement described in section 205(v)(2) of the 
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Social Security Act with the Commissioner of 
Social Security. 
(B) FUNDING.—The agreement entered 
into under subparagraph (A) shall, for each fis-
cal year (beginning with fiscal year 2013)— 
(i) provide funds to the Commissioner 
of Social Security for the full costs of the 
responsibilities of the Commissioner of So-
cial Security under paragraph (4), includ-
ing— 
(I) 
acquiring, 
installing, 
and 
maintaining technological equipment 
and systems necessary for the fulfill-
ment of the responsibilities of the 
Commissioner 
of 
Social 
Security 
under paragraph (4), but only that 
portion of such costs that are attrib-
utable to such responsibilities; and 
(II) responding to individuals 
who contest with the Commissioner of 
Social Security a reported inconsist-
ency with records maintained by the 
Commissioner of Social Security or 
the Department of Homeland Security 
relating to citizenship or immigration 
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status, name, or social security ac-
count number under paragraph (4); 
(ii) based on an estimating method-
ology agreed to by the Commissioner of 
Social Security and the Health Choices 
Commissioner, provide such funds, within 
10 calendar days of the beginning of the 
fiscal year for the first quarter and in ad-
vance for all subsequent quarters in that 
fiscal year; and 
(iii) provide for an annual accounting 
and reconciliation of the actual costs in-
curred and the funds provided under the 
agreement. 
(C) REVIEW
OF
ACCOUNTING.—The an-
nual accounting and reconciliation conducted 
pursuant to subparagraph (B)(iii) shall be re-
viewed by the Inspectors General of the Social 
Security Administration and the Health Choices 
Administration, including an analysis of consist-
ency with the requirements of paragraph (4). 
(D) CONTINGENCY.—In any case in which 
agreement with respect to the provisions re-
quired under subparagraph (B) for any fiscal 
year has not been reached as of the first day 
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of such fiscal year, the latest agreement with 
respect to such provisions shall be deemed in ef-
fect on an interim basis for such fiscal year 
until such time as an agreement relating to 
such provisions is subsequently reached. In any 
case in which an interim agreement applies for 
any fiscal year under this subparagraph, the 
Commissioner of Social Security shall, not later 
than the first day of such fiscal year, notify the 
appropriate Committees of the Congress of the 
failure to reach the agreement with respect to 
such provisions for such fiscal year. Until such 
time as the agreement with respect to such pro-
visions has been reached for such fiscal year, 
the Commissioner of Social Security shall, not 
later than the end of each 90-day period after 
October 1 of such fiscal year, notify such Com-
mittees of the status of negotiations between 
such Commissioner and the Health Choices 
Commissioner in order to reach such an agree-
ment. 
(E) APPLICATION
TO
PUBLIC
ENTITIES 
ADMINISTERING
AFFORDABILITY
CREDITS.—If 
the Health Choices Commissioner provides for 
the conduct of verifications under paragraph 
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(4) through a public entity, the Health Choices 
Commissioner shall require the public entity to 
enter into an agreement with the Commissioner 
of Social Security which provides the same 
terms as the agreement described in this para-
graph (and section 205(v) of the Social Security 
Act) between the Health Choices Commissioner 
and the Commissioner of Social Security, except 
that the Health Choices Commissioner shall be 
responsible for providing funds for the Commis-
sioner of Social Security in accordance with 
subparagraphs (B) through (D). 
(6) AMENDMENTS TO SOCIAL SECURITY ACT.— 
(A) COORDINATION OF INFORMATION BE-
TWEEN SOCIAL SECURITY ADMINISTRATION AND 
HEALTH CHOICES ADMINISTRATION.— 
(i) IN GENERAL.—Section 205 of the 
Social Security Act (42 U.S.C. 405) is 
amended by adding at the end the fol-
lowing new subsection: 
‘‘Coordination of Information With Health Choices 
Administration 
‘‘(v)(1) The Health Choices Commissioner may col-
lect and use the names and social security account num-
bers of individuals as required to provide for verification 
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of citizenship under subsection (b)(4)(C) of section 341 
of the Affordable Health Care for America Act in connec-
tion with determinations of eligibility for affordability 
credits under such section. 
‘‘(2)(A) The Commissioner of Social Security shall 
enter into and maintain an agreement with the Health 
Choices Commissioner for the purpose of establishing, in 
compliance with the requirements of section 1902(ee) as 
applied pursuant to section 341(b)(4)(C) of the Affordable 
Health Care for America Act, a program for verifying in-
formation required to be collected by the Health Choices 
Commissioner under such section 341(b)(4)(C). 
‘‘(B) The agreement entered into pursuant to sub-
paragraph (A) shall include such safeguards as are nec-
essary to ensure the maintenance of confidentiality of any 
information disclosed for purposes of verifying information 
described in subparagraph (A) and to provide procedures 
for permitting the Health Choices Commissioner to use 
the information for purposes of maintaining the records 
of the Health Choices Administration. 
‘‘(C) The agreement entered into pursuant to sub-
paragraph (A) shall provide that information provided by 
the Commissioner of Social Security to the Health Choices 
Commissioner pursuant to the agreement shall be provided 
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enrollee shares of premiums over time, for each in-
come tier identified in the table in paragraph (1). 
SEC. 344. AFFORDABILITY COST-SHARING CREDIT. 
(a) IN GENERAL.—The affordability cost-sharing 
credit under this section for an affordable credit eligible 
individual enrolled in an Exchange-participating health 
benefits plan is in the form of the cost-sharing reduction 
described in subsection (b) provided under this section for 
the income tier in which the individual is classified based 
on the individual’s modified adjusted gross income. 
(b) COST-SHARING
REDUCTIONS.—The Commis-
sioner shall specify a reduction in cost-sharing amounts 
and the annual limitation on cost-sharing specified in sec-
tion 222(c)(2)(B) under a basic plan for each income tier 
specified in the table under section 343(d), with respect 
to a year, in a manner so that, as estimated by the Com-
missioner— 
(1) the actuarial value of the coverage with 
such reduced cost-sharing amounts (and the reduced 
annual cost-sharing limit) is equal to the actuarial 
value percentage (specified in the table under section 
343(d) for the income tier involved) of the full actu-
arial value if there were no cost-sharing imposed 
under the plan; and 
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254 
(2) the annual limitation on cost-sharing speci-
fied in section 222(c)(2)(B) is reduced to a level 
that does not exceed the maximum out-of-pocket 
limit specified in subsection (c). 
(c) MAXIMUM OUT-OF-POCKET LIMIT.— 
(1) IN GENERAL.—Subject to paragraph (2), 
the maximum out-of-pocket limit specified in this 
subsection for an individual within an income tier— 
(A) for individual coverage— 
(i) for Y1 is the out-of-pocket limit 
for Y1 specified in subsection (c) in the 
table under section 343(d) for the income 
tier involved; or 
(ii) for a subsequent year is such out- 
of-pocket limit for the previous year under 
this subparagraph increased (rounded to 
the nearest $10) for each subsequent year 
by the percentage increase in the enroll-
ment-weighted average of premium in-
creases for basic plans applicable to such 
year; or 
(B) for family coverage is twice the max-
imum out-of-pocket limit under subparagraph 
(A) for the year involved. 
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307 
‘‘(xxiv) section 6050X (relating to re-
turns relating to health insurance cov-
erage), and’’. 
(B) STATEMENT.—Paragraph (2) of sec-
tion 6724(d) of such Code is amended by strik-
ing ‘‘or’’ at the end of subparagraph (EE), by 
striking the period at the end of subparagraph 
(FF) and inserting ‘‘, or’’, and by inserting 
after subparagraph (FF) the following new sub-
paragraph: 
‘‘(GG) section 6050X (relating to returns 
relating to health insurance coverage).’’. 
(c) RETURN REQUIREMENT.—Subsection (a) of sec-
tion 6012 of such Code is amended by inserting after 
paragraph (9) the following new paragraph: 
‘‘(10) Every individual to whom section 59B(a) 
applies and who fails to meet the requirements of 
section 59B(d) with respect to such individual or 
any qualifying child (as defined in section 152(c)) of 
such individual.’’. 
(d) CLERICAL AMENDMENTS.— 
(1) The table of parts for subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new 
item: 
‘‘PART VIII. HEALTH CARE RELATED TAXES.’’. 
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320 
‘‘(d) QUALIFIED EMPLOYEE HEALTH COVERAGE EX-
PENSES.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified em-
ployee health coverage expenses’ means, with respect 
to any employer for any taxable year, the aggregate 
amount paid or incurred by such employer during 
such taxable year for coverage of any qualified em-
ployee of the employer (including any family cov-
erage which covers such employee) under qualified 
health coverage. 
‘‘(2) QUALIFIED
HEALTH
COVERAGE.—The 
term ‘qualified health coverage’ means acceptable 
coverage (as defined in section 59B(d)) which— 
‘‘(A) is provided pursuant to an election 
under section 4980H(a), and 
‘‘(B) satisfies the requirements referred to 
in section 4980H(c). 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) QUALIFIED SMALL EMPLOYER.—For pur-
poses of this section, the term ‘qualified small em-
ployer’ means any employer for any taxable year 
if— 
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321 
‘‘(A) the number of qualified employees 
employed by such employer during the taxable 
year does not exceed 25, and 
‘‘(B) the average annual employee com-
pensation of such employer for such taxable 
year does not exceed the sum of the dollar 
amounts in effect under subsection (b)(2). 
‘‘(2) QUALIFIED EMPLOYEE.—The term ‘quali-
fied employee’ means any employee of an employer 
for any taxable year of the employer if such em-
ployee received at least $5,000 of compensation from 
such employer for services performed in the trade or 
business of such employer during such taxable year. 
‘‘(3) AVERAGE ANNUAL EMPLOYEE COMPENSA-
TION.—The term ‘average annual employee com-
pensation’ means, with respect to any employer for 
any taxable year, the average amount of compensa-
tion paid by such employer to qualified employees of 
such employer during such taxable year. 
‘‘(4) COMPENSATION.—The term ‘compensa-
tion’ has the meaning given such term in section 
408(p)(6)(A). 
‘‘(5) FAMILY
COVERAGE.—The term ‘family 
coverage’ means any coverage other than self-only 
coverage. 
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445 
pital for the applicable period for such fis-
cal year minus 1. 
‘‘(B) AGGREGATE PAYMENTS FOR ALL DIS-
CHARGES.—The term ‘aggregate payments for 
all discharges’ means, for a hospital for a fiscal 
year, the sum of the base operating DRG pay-
ment amounts for all discharges for all condi-
tions from such hospital for such fiscal year. 
‘‘(C) EXCESS READMISSION RATIO.— 
‘‘(i) IN GENERAL.—Subject to clauses 
(ii) and (iii), the term ‘excess readmissions 
ratio’ means, with respect to an applicable 
condition for a hospital for an applicable 
period, the ratio (but not less than 1.0) 
of— 
‘‘(I) the risk adjusted readmis-
sions based on actual readmissions, as 
determined consistent with a readmis-
sion measure methodology that has 
been 
endorsed 
under 
paragraph 
(5)(A)(ii)(I), for an applicable hospital 
for such condition with respect to the 
applicable period; to 
‘‘(II) the risk adjusted expected 
readmissions 
(as 
determined 
con-
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452 
this paragraph for a fiscal year shall not 
exceed 5 percent of the estimated dif-
ference in the spending that would occur 
for such fiscal year with and without appli-
cation of the adjustment factor described 
in paragraph (3) and applied pursuant to 
paragraph (1). 
‘‘(ii) HOSPITAL-SPECIFIC LIMIT.—The 
aggregate amount of the payment adjust-
ment for a hospital under this paragraph 
shall not exceed the estimated difference in 
spending that would occur for such fiscal 
year for such hospital with and without ap-
plication of the adjustment factor de-
scribed in paragraph (3) and applied pur-
suant to paragraph (1). 
‘‘(D) FORM OF PAYMENT.—The Secretary 
may make the additional payments under this 
paragraph on a lump sum basis, a periodic 
basis, a claim by claim basis, or otherwise. 
‘‘(E) USE OF ADDITIONAL PAYMENT.— 
‘‘(i) IN
GENERAL.—Funding under 
this paragraph shall be used by targeted 
hospitals for activities designed to address 
the patient noncompliance issues that re-
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488 
lated to acquiring any ownership or invest-
ment interest in the hospital. 
‘‘(iv) Ownership or investment returns 
are distributed to each owner or investor in 
the hospital in an amount that is directly 
proportional to the ownership or invest-
ment interest of such owner or investor in 
the hospital. 
‘‘(v) The investment interest of the 
owner or investor is directly proportional 
to the owner’s or investor’s capital con-
tributions made at the time the ownership 
or investment interest is obtained. 
‘‘(vi) Physician owners and investors 
do not receive, directly or indirectly, any 
guaranteed receipt of or right to purchase 
other business interests related to the hos-
pital, including the purchase or lease of 
any property under the control of other 
owners or investors in the hospital or lo-
cated near the premises of the hospital. 
‘‘(vii) The hospital does not offer a 
physician owner or investor the oppor-
tunity to purchase or lease any property 
under the control of the hospital or any 
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