the prohibition of (or requirement of) coverage, funding, or 
procedural requirements on abortions, including parental 
notification or consent for the performance of an abortion 
on a minor. 
(b) NO EFFECT ON FEDERAL LAWS REGARDING ABOR-
TION.— 
(1) IN GENERAL.—Nothing in this Act shall be 
construed to have any effect on Federal laws regard-
ing— 
(A) conscience protection; 
(B) willingness or refusal to provide abor-
tion; and 
(C) discrimination on the basis of the will-
ingness or refusal to provide, pay for, cover, or 
refer for abortion or to provide or participate in 
training to provide abortion. 
(c) NO EFFECT ON FEDERAL CIVIL RIGHTS LAW.— 
Nothing in this section shall alter the rights and obligations 
of employees and employers under title VII of the Civil 
Rights Act of 1964. 
SEC. 157. NON-DISCRIMINATION ON ABORTION AND RE-
SPECT FOR RIGHTS OF CONSCIENCE. 
(a) NON-DISCRIMINATION.—A Federal agency or pro-
gram, and any State or local government that receives Fed-
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100 
eral financial assistance under this Act (or an amendment 
made by this Act), may not— 
(1) subject any individual or institutional health 
care entity to discrimination, or 
(2) require any health plan created or regulated 
under this Act (or an amendment made by this Act) 
to subject any individual or institutional health care 
entity to discrimination, 
on the basis that the health care entity does not provide, 
pay for, provide coverage of, or refer for abortions. 
(b) DEFINITION.—In this section, the term ‘‘health care 
entity’’ includes an individual physician or other health 
care professional, a hospital, a provider-sponsored organi-
zation, a health maintenance organization, a health insur-
ance plan, or any other kind of health care facility, organi-
zation, or plan. 
(c) ADMINISTRATION.—The Office for Civil Rights of 
the Department of Health and Human Services is des-
ignated to receive complaints of discrimination based on 
this section, and coordinate the investigation of such com-
plaints. 
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Subtitle G—Early Investments 
SEC. 161. ENSURING VALUE AND LOWER PREMIUMS. 
(a) GROUP HEALTH INSURANCE COVERAGE.—Title 
XXVII of the Public Health Service Act is amended by in-
serting after section 2713 the following new section: 
‘‘SEC. 2714. ENSURING VALUE AND LOWER PREMIUMS. 
‘‘(a) IN GENERAL.—Each health insurance issuer that 
offers health insurance coverage in the small or large group 
market shall provide that for any plan year in which the 
coverage has a medical loss ratio below a level specified by 
the Secretary, the issuer shall provide in a manner specified 
by the Secretary for rebates to enrollees of payment suffi-
cient to meet such loss ratio. Such methodology shall be set 
at the highest level medical loss ratio possible that is de-
signed to ensure adequate participation by issuers, competi-
tion in the health insurance market, and value for con-
sumers so that their premiums are used for services. 
‘‘(b) UNIFORM DEFINITIONS.—The Secretary shall es-
tablish a uniform definition of medical loss ratio and meth-
odology for determining how to calculate the medical loss 
ratio. Such methodology shall be designed to take into ac-
count the special circumstances of smaller plans, different 
types of plans, and newer plans.’’. 
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(b) INDIVIDUAL HEALTH INSURANCE COVERAGE.— 
Such title is further amended by inserting after section 
2753 the following new section: 
‘‘SEC. 2754. ENSURING VALUE AND LOWER PREMIUMS. 
‘‘The provisions of section 2714 shall apply to health 
insurance coverage offered in the individual market in the 
same manner as such provisions apply to health insurance 
coverage offered in the small or large group market.’’. 
(c) IMMEDIATE IMPLEMENTATION.—The amendments 
made by this section shall apply in the group and indi-
vidual market for plan years beginning on or after January 
1, 2011. 
SEC. 162. ENDING HEALTH INSURANCE RESCISSION ABUSE. 
(a) CLARIFICATION
REGARDING
APPLICATION
OF 
GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH IN-
SURANCE COVERAGE.—Section 2742 of the Public Health 
Service Act (42 U.S.C. 300gg–42) is amended— 
(1) in its heading, by inserting ‘‘AND CON-
TINUATION
IN
FORCE, INCLUDING
PROHIBI-
TION OF RESCISSION,’’ after ‘‘GUARANTEED RE-
NEWABILITY’’; and 
(2) in subsection (a), by inserting ‘‘, including 
without rescission,’’ after ‘‘continue in force’’. 
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(b) SECRETARIAL GUIDANCE REGARDING RESCIS-
SIONS.—Section 2742 of such Act (42 U.S.C. 300gg–42) is 
amended by adding at the end the following: 
‘‘(f) RESCISSION.—A health insurance issuer may re-
scind health insurance coverage only upon clear and con-
vincing evidence of fraud described in subsection (b)(2). The 
Secretary, no later than July 1, 2010, shall issue guidance 
implementing this requirement, including procedures for 
independent, external third party review.’’. 
(c) OPPORTUNITY
FOR
INDEPENDENT, EXTERNAL 
THIRD PARTY REVIEW IN CERTAIN CASES.—Subpart 1 of 
part B of title XXVII of such Act (42 U.S.C. 300gg–41 et 
seq.) is amended by adding at the end the following: 
‘‘SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL 
THIRD PARTY REVIEW IN CASES OF RESCIS-
SION. 
‘‘(a) NOTICE AND REVIEW RIGHT.—If a health insur-
ance issuer determines to rescind health insurance coverage 
for an individual in the individual market, before such re-
scission may take effect the issuer shall provide the indi-
vidual with notice of such proposed rescission and an op-
portunity for a review of such determination by an inde-
pendent, external third party under procedures specified by 
the Secretary under section 2742(f). 
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‘‘(b) INDEPENDENT DETERMINATION.—If the indi-
vidual requests such review by an independent, external 
third party of a rescission of health insurance coverage, the 
coverage shall remain in effect until such third party deter-
mines that the coverage may be rescinded under the guid-
ance issued by the Secretary under section 2742(f).’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply on and after October 1, 2010, with re-
spect to health insurance coverage issued before, on, or after 
such date. 
SEC. 163. ENDING HEALTH INSURANCE DENIALS AND 
DELAYS OF NECESSARY TREATMENT FOR 
CHILDREN WITH DEFORMITIES. 
(a) IN GENERAL.—Subpart 2 of part A of title XXVII 
of the Public Health Service Act is amended by adding at 
the end the following new section: 
‘‘SEC. 2708. STANDARDS RELATING TO BENEFITS FOR 
MINOR CHILD’S CONGENITAL OR DEVELOP-
MENTAL DEFORMITY OR DISORDER. 
‘‘(a) REQUIREMENTS FOR TREATMENT FOR CHILDREN 
WITH DEFORMITIES.— 
‘‘(1) IN GENERAL.—A group health plan, and a 
health insurance issuer offering group health insur-
ance coverage, that provides coverage for surgical ben-
efits shall provide coverage for outpatient and inpa-
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tient diagnosis and treatment of a minor child’s con-
genital or developmental deformity, disease, or injury. 
A minor child shall include any individual who 21 
years of age or younger. 
‘‘(2) REQUIREMENTS.—Any coverage provided 
under paragraph (1) shall be subject to pre-authoriza-
tion or pre-certification as required by the plan or 
issuer, and such coverage shall include any surgical 
treatment which, in the opinion of the treating physi-
cian, is medically necessary to approximate a normal 
appearance. 
‘‘(3) TREATMENT DEFINED.— 
‘‘(A) IN
GENERAL.—In this section, the 
term ‘treatment’ includes reconstructive surgical 
procedures (procedures that are generally per-
formed to improve function, but may also be per-
formed to approximate a normal appearance) 
that are performed on abnormal structures of the 
body caused by congenital defects, developmental 
abnormalities, trauma, infection, tumors, or dis-
ease, including— 
‘‘(i) procedures that do not materially 
affect the function of the body part being 
treated; and 
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‘‘(ii) procedures for secondary condi-
tions and follow-up treatment. 
‘‘(B) EXCEPTION.—Such term does not in-
clude cosmetic surgery performed to reshape nor-
mal structures of the body to improve appear-
ance or self-esteem. 
‘‘(b) NOTICE.—A group health plan under this part 
shall comply with the notice requirement under section 
714(b) of the Employee Retirement Income Security Act of 
1974 with respect to the requirements of this section as if 
such section applied to such plan.’’. 
(b) INDIVIDUAL HEALTH INSURANCE.—Subpart 2 of 
part B of title XXVII of the Public Health Service Act, as 
amended by section 161(b), is further amended by adding 
at the end the following new section: 
‘‘SEC. 2755. STANDARDS RELATING TO BENEFITS FOR 
MINOR CHILD’S CONGENITAL OR DEVELOP-
MENTAL DEFORMITY OR DISORDER. 
‘‘(a) REQUIREMENTS
FOR RECONSTRUCTIVE SUR-
GERY.— 
‘‘(1) IN GENERAL.—A health insurance issuer of-
fering health insurance coverage in the individual 
market that provides coverage for surgical benefits 
shall provide coverage for outpatient and inpatient 
diagnosis and treatment of a minor child’s congenital 
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or developmental deformity, disease, or injury. A 
minor child shall include any individual through 21 
years of age. 
‘‘(2) REQUIREMENTS.—Any coverage provided 
under paragraph (1) shall be subject to pre-authoriza-
tion or pre-certification as required by the insurance 
issuer offering such coverage, and such coverage shall 
include any surgical treatment which, in the opinion 
of the treating physician, is medically necessary to 
approximate a normal appearance. 
‘‘(3) TREATMENT DEFINED.— 
‘‘(A) IN
GENERAL.—In this section, the 
term ‘treatment’ includes reconstructive surgical 
procedures (procedures that are generally per-
formed to improve function, but may also be per-
formed to approximate a normal appearance) 
that are performed on abnormal structures of the 
body caused by congenital defects, developmental 
abnormalities, trauma, infection, tumors, or dis-
ease, including— 
‘‘(i) procedures that do not materially 
affect the function of the body part being 
treated; and 
‘‘(ii) procedures for secondary condi-
tions and follow-up treatment. 
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‘‘(B) EXCEPTION.—Such term does not in-
clude cosmetic surgery performed to reshape nor-
mal structures of the body to improve appear-
ance or self-esteem. 
‘‘(b) NOTICE.—A health insurance issuer under this 
part shall comply with the notice requirement under section 
714(b) of the Employee Retirement Income Security Act of 
1974 with respect to the requirements referred to in sub-
section (a) as if such section applied to such issuer and 
such issuer were a group health plan.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 2723(c) of such Act (42 U.S.C. 
300gg–23(c)) is amended by striking ‘‘section 2704’’ 
and inserting ‘‘sections 2704 and 2708’’. 
(2) Section 2762(b)(2) of such Act (42 U.S.C. 
300gg–62(b)(2)) is amended by striking ‘‘section 
2751’’ and inserting ‘‘sections 2751 and 2754’’. 
(d) EFFECTIVE DATES.— 
(1) The amendments made by subsection (a) 
shall apply with respect to group health plans for 
plan years beginning on or after January 1, 2010. 
(2) The amendment made by subsection (b) shall 
apply with respect to health insurance coverage of-
fered, sold, issued, renewed, in effect, or operated in 
the individual market on or after such date. 
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(e) COORDINATION RULES.— 
(1) The amendments made by subsection (a) 
shall remain in effect until such time as benefit 
standards are adopted subject to section 124 of this 
title. 
(2) Section 104(1) of the Health Insurance Port-
ability and Accountability Act of 1996 is amended by 
striking ‘‘this subtitle (and the amendments made by 
this subtitle and section 401)’’ and inserting ‘‘the pro-
visions of part 7 of subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974, the 
provisions of parts A and C of title XXVII of the Pub-
lic Health Service Act, and chapter 100 of the Inter-
nal Revenue Code of 1986’’. 
SEC. 164. ADMINISTRATIVE SIMPLIFICATION. 
(a) STANDARDIZING ELECTRONIC ADMINISTRATIVE 
TRANSACTIONS.— 
(1) IN GENERAL.—Part C of title XI of the So-
cial Security Act (42 U.S.C. 1320d et seq.) is amend-
ed by inserting after section 1173 the following new 
sections: 
‘‘SEC. 1173A. STANDARDIZE ELECTRONIC ADMINISTRATIVE 
TRANSACTIONS. 
‘‘(a) STANDARDS FOR FINANCIAL AND ADMINISTRA-
TIVE TRANSACTIONS.— 
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‘‘(1) IN GENERAL.—The Secretary shall adopt 
and regularly update standards consistent with the 
goals described in paragraph (2). 
‘‘(2) GOALS FOR FINANCIAL AND ADMINISTRA-
TIVE TRANSACTIONS.—The goals for standards under 
paragraph (1) are that such standards shall— 
‘‘(A) be unique with no conflicting or re-
dundant standards; 
‘‘(B) be authoritative, permitting no addi-
tions or constraints for electronic transactions, 
including companion guides; 
‘‘(C) be comprehensive, efficient and robust, 
requiring minimal augmentation by paper 
transactions or clarification by further commu-
nications; 
‘‘(D) enable the real-time (or near real- 
time) determination of an individual’s financial 
responsibility at the point of service and, to the 
extent possible, prior to service, including wheth-
er the individual is eligible for a specific service 
with a specific physician at a specific facility, 
which may include utilization of a machine- 
readable health plan beneficiary identification 
card; 
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‘‘(E) enable, where feasible, near real-time 
adjudication of claims; 
‘‘(F) provide for timely acknowledgment, re-
sponse, and status reporting applicable to any 
electronic transaction deemed appropriate by the 
Secretary; 
‘‘(G) describe all data elements (such as rea-
son and remark codes) in unambiguous terms, 
not permit optional fields, require that data ele-
ments be either required or conditioned upon set 
values in other fields, and prohibit additional 
conditions; and 
‘‘(H) harmonize all common data elements 
across administrative and clinical transaction 
standards. 
‘‘(3) TIME
FOR
ADOPTION.—Not later than 2 
years after the date of implementation of the X12 
Version 5010 transaction standards implemented 
under this part, the Secretary shall adopt standards 
under this section. 
‘‘(4) REQUIREMENTS
FOR
SPECIFIC
STAND-
ARDS.—The standards under this section shall be de-
veloped, adopted, and enforced so as to— 
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‘‘(A) clarify, refine, complete, and expand, 
as needed, the standards required under section 
1173; 
‘‘(B) require paper versions of standardized 
transactions to comply with the same standards 
as to data content such that a fully compliant, 
equivalent electronic transaction can be popu-
lated from the data from a paper version; 
‘‘(C) enable electronic funds transfers, in 
order to allow automated reconciliation with the 
related health care payment and remittance ad-
vice; 
‘‘(D) require timely and transparent claim 
and denial management processes, including 
tracking, adjudication, and appeal processing; 
‘‘(E) require the use of a standard electronic 
transaction with which health care providers 
may quickly and efficiently enroll with a health 
plan to conduct the other electronic transactions 
provided for in this part; and 
‘‘(F) provide for other requirements relating 
to administrative simplification as identified by 
the Secretary, in consultation with stakeholders. 
‘‘(5) BUILDING
ON
EXISTING
STANDARDS.—In 
developing the standards under this section, the Sec-
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retary shall build upon existing and planned stand-
ards. 
‘‘(6) IMPLEMENTATION AND ENFORCEMENT.—Not 
later than 6 months after the date of the enactment 
of this section, the Secretary shall submit to the ap-
propriate committees of Congress a plan for the im-
plementation and enforcement, by not later than 5 
years after such date of enactment, of the standards 
under this section. Such plan shall include— 
‘‘(A) a process and timeframe with mile-
stones for developing the complete set of stand-
ards; 
‘‘(B) an expedited upgrade program for 
continually developing and approving additions 
and modifications to the standards as often as 
annually to improve their quality and extend 
their functionality to meet evolving requirements 
in health care; 
‘‘(C) programs to provide incentives for, 
and ease the burden of, implementation for cer-
tain health care providers, with special consider-
ation given to such providers serving rural or 
underserved areas and ensure coordination with 
standards, implementation specifications, and 
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certification criteria being adopted under the 
HITECH Act; 
‘‘(D) programs to provide incentives for, 
and ease the burden of, health care providers who 
volunteer to participate in the process of setting 
standards for electronic transactions; 
‘‘(E) an estimate of total funds needed to 
ensure timely completion of the implementation 
plan; and 
‘‘(F) an enforcement process that includes 
timely investigation of complaints, random au-
dits to ensure compliance, civil monetary and 
programmatic penalties for non-compliance con-
sistent with existing laws and regulations, and a 
fair and reasonable appeals process building off 
of enforcement provisions under this part. 
‘‘(b) LIMITATIONS ON USE OF DATA.—Nothing in this 
section shall be construed to permit the use of information 
collected under this section in a manner that would ad-
versely affect any individual. 
‘‘(c) PROTECTION OF DATA.—The Secretary shall en-
sure (through the promulgation of regulations or otherwise) 
that all data collected pursuant to subsection (a) are— 
‘‘(1) used and disclosed in a manner that meets 
the HIPAA privacy and security law (as defined in 
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section 3009(a)(2) of the Public Health Service Act), 
including any privacy or security standard adopted 
under section 3004 of such Act; and 
‘‘(2) protected from all inappropriate internal 
use by any entity that collects, stores, or receives the 
data, including use of such data in determinations of 
eligibility (or continued eligibility) in health plans, 
and from other inappropriate uses, as defined by the 
Secretary. 
‘‘SEC. 1173B. OPERATING RULES. 
‘‘(a) IN GENERAL.—The Secretary shall adopt oper-
ating rules for each transaction described in section 
1173(a)(2) of the Social Security Act (42 U.S.C. 1320d- 
2(a)) 
‘‘(b) OPERATING RULES DEVELOPMENT.—In adopting 
such rules, the Secretary shall take into account the develop-
ment of operating rules that have been developed by a non-
profit entity that meets the following criteria: 
‘‘(1) The entity focuses its mission on adminis-
trative simplification. 
‘‘(2) The entity demonstrates a established multi- 
stakeholder process that creates consensus based oper-
ating rules using a voting policy with balanced rep-
resentation by the critical stakeholders (including 
health plans and health care providers) so that no one 
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group dominates the entity and shall include others 
such as standards development organizations, and rel-
evant Federal agencies. 
‘‘(3) The entity has in place a public set of guid-
ing principles that ensure the operating rules and 
process are open and transparent. 
‘‘(4) The entity shall coordinate its activities 
with the HIT Policy Committee and the HIT Stand-
ards Committee (established under title XXX of the 
Public Health Service Act) and complements the ef-
forts of the Office of the National Healthcare Coordi-
nator and its related health information exchange 
goals. 
‘‘(5) The entity incorporates national standards, 
including the transaction standards issued under 
Health Insurance Portability and Accountability Act 
of 1996. 
‘‘(6) The entity uses existing market research 
and proven best practices. 
‘‘(7) The entity has a set of measures that allow 
for the evaluation of their market impact and public 
reporting of aggregate stakeholder impact. 
‘‘(8) The entity supports nondiscrimination and 
conflict of interest policies that demonstrate a com-
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mitment to open, fair, and nondiscriminatory prac-
tices. 
‘‘(9) The entity allows for public reviews and up-
dates of the operating rules. 
‘‘(c) IMPLEMENTATION.—The Secretary shall adopt op-
erating rules under this section, by regulation or otherwise, 
only after taking into account the rules developed by the 
entity under subsection (b) and having ensured consultation 
with providers. The first set of operating rules for the trans-
actions for eligibility for health plan and health claims sta-
tus under this section shall be adopted not later than Octo-
ber 1, 2011, in a manner such that such set of rules is effec-
tive beginning not later than January 1, 2013. The second 
set of operating rules for the remainder of the transactions 
described in section 1173(a)(2) of the Social Security Act 
(42 U.S.C. 1320d-2(a)) shall be adopted not later than Oc-
tober 1, 2012, in a manner such that such set of rules is 
effective beginning not later than January 1, 2014.’’. 
(2) DEFINITIONS.—Section 1171 of such Act (42 
U.S.C. 1320d) is amended— 
(A) in paragraph (7), by striking ‘‘with ref-
erence to’’ and all that follows and inserting 
‘‘with reference to a transaction or data element 
of health information in section 1173 means im-
plementation specifications, certification criteria, 
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operating rules, messaging formats, codes, and 
code sets adopted or established by the Secretary 
for the electronic exchange and use of informa-
tion.’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(9) OPERATING RULES.—The term ‘operating 
rules’ means business rules for using and processing 
transactions. Operating rules should address the fol-
lowing: 
‘‘(A) Requirements for data content using 
available and established national standards. 
‘‘(B) Infrastructure requirements that estab-
lish best practices for streamlining data flow to 
yield timely execution of transactions. 
‘‘(C) Policies defining the transaction re-
lated rights and responsibilities for entities that 
are transmitting or receiving data.’’. 
(3) CONFORMING AMENDMENT.—Section 1179 of 
such Act (42 U.S.C. 1320d–8) is amended, in the 
matter before paragraph (1)— 
(A) by inserting ‘‘on behalf of an indi-
vidual’’ after ‘‘1978)’’; and 
(B) by inserting ‘‘on behalf of an indi-
vidual’’ after ‘‘for a financial institution’’. 
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(b) STANDARDS FOR CLAIMS ATTACHMENTS AND CO-
ORDINATION OF BENEFITS .— 
(1) STANDARD
FOR
HEALTH
CLAIMS
ATTACH-
MENTS.—Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Health and 
Human Services shall promulgate a final rule to es-
tablish a standard for health claims attachment 
transaction described in section 1173(a)(2)(B) of the 
Social Security Act (42 U.S.C. 1320d-2(a)(2)(B)) and 
coordination of benefits. 
(2) REVISION IN PROCESSING PAYMENT TRANS-
ACTIONS BY FINANCIAL INSTITUTIONS.— 
(A) IN GENERAL.—Section 1179 of the So-
cial Security Act (42 U.S.C. 1320d–8) is amend-
ed, in the matter before paragraph (1)— 
(i) by striking ‘‘or is engaged’’ and in-
serting ‘‘and is engaged’’; and 
(ii) by inserting ‘‘(other than as a 
business associate for a covered entity)’’ 
after ‘‘for a financial institution’’. 
(B) EFFECTIVE
DATE.—The amendments 
made by paragraph (1) shall apply to trans-
actions occurring on or after such date (not later 
than 6 months after the date of the enactment of 
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bajohnson on DSK2BSOYB1PROD with BILLS
120 
this Act) as the Secretary of Health and Human 
Services shall specify. 
(c) UNIQUE HEALTH PLAN IDENTIFIER.—Not later 
than 2 years after the date of the enactment of this Act, 
the Secretary of Health and Human Services shall promul-
gate a final rule to establish a unique health plan identifier 
described in section 1173(b) of the Social Security Act (42 
U.S.C. 1320d-2(b)) based on the input of the National Com-
mittee of Vital and Health Statistics and consultation with 
health plans. The Secretary may do so on an interim final 
basis and effective not later than October 1, 2012. 
SEC. 165. EXPANSION OF ELECTRONIC TRANSACTIONS IN 
MEDICARE. 
(a) IN GENERAL.—Section 1862(a) of the Social Secu-
rity Act (42 U.S.C. 1395y(a)) is amended— 
(1) in paragraph (23), by striking the ‘‘or’’ at 
the end; 
(2) in paragraph (24), by striking the period 
and inserting ‘‘; or’’; and 
(3) by inserting after paragraph (24) the fol-
lowing new paragraph: 
‘‘(25) subject to subsection (h), not later than 
January 1, 2015, for which the payment is other than 
by electronic funds transfer (EFT) or an electronic re-
mittance in a form as specified in ASC X12 835 
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bajohnson on DSK2BSOYB1PROD with BILLS
121 
Health Care Payment and Remittance Advice or sub-
sequent standard.’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall take effect upon the date of the enactment 
of this Act. 
SEC. 166. REINSURANCE PROGRAM FOR RETIREES. 
(a) ESTABLISHMENT.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of the enactment of this Act, the Secretary of 
Health and Human Services shall establish a tem-
porary reinsurance program (in this section referred 
to as the ‘‘reinsurance program’’) to provide reim-
bursement to assist participating employment-based 
plans with the cost of providing health benefits to re-
tirees and to eligible spouses, surviving spouses and 
dependents of such retirees. 
(2) DEFINITIONS.—For purposes of this section: 
(A) The term ‘‘eligible employment-based 
plan’’ means a group health benefits plan that— 
(i) is maintained by one or more em-
ployers, former employers or employee asso-
ciations, or a voluntary employees’ bene-
ficiary association, or a committee or board 
of individuals appointed to administer such 
plan, and 
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bajohnson on DSK2BSOYB1PROD with BILLS
122 
(ii) provides health benefits to retirees. 
(B) The term ‘‘health benefits’’ means med-
ical, surgical, hospital, prescription drug, and 
such other benefits as shall be determined by the 
Secretary, 
whether 
self-funded 
or 
delivered 
through the purchase of insurance or otherwise. 
(C) The term ‘‘participating employment- 
based plan’’ means an eligible employment-based 
plan that is participating in the reinsurance 
program. 
(D) The term ‘‘retiree’’ means, with respect 
to a participating employment-benefit plan, an 
individual who— 
(i) is 55 years of age or older; 
(ii) is not eligible for coverage under 
title XVIII of the Social Security Act; and 
(iii) is not an active employee of an 
employer maintaining the plan or of any 
employer that makes or has made substan-
tial contributions to fund such plan. 
(E) The term ‘‘Secretary’’ means Secretary 
of Health and Human Services. 
(b) PARTICIPATION.—To be eligible to participate in 
the reinsurance program, an eligible employment-based 
plan shall submit to the Secretary an application for par-
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bajohnson on DSK2BSOYB1PROD with BILLS
123 
ticipation in the program, at such time, in such manner, 
and containing such information as the Secretary shall re-
quire. 
(c) PAYMENT.— 
(1) SUBMISSION OF CLAIMS.— 
(A) IN GENERAL.—Under the reinsurance 
program, a participating employment-based 
plan shall submit claims for reimbursement to 
the Secretary which shall contain documentation 
of the actual costs of the items and services for 
which each claim is being submitted. 
(B) BASIS FOR CLAIMS.—Each claim sub-
mitted under subparagraph (A) shall be based on 
the actual amount expended by the participating 
employment-based plan involved within the plan 
year for the appropriate employment based 
health benefits provided to a retiree or to the 
spouse, surviving spouse, or dependent of a re-
tiree. In determining the amount of any claim 
for purposes of this subsection, the participating 
employment-based plan shall take into account 
any negotiated price concessions (such as dis-
counts, direct or indirect subsidies, rebates, and 
direct or indirect remunerations) obtained by 
such plan with respect to such health benefits. 
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178 
(2) TERMINATION; 
HEALTH
INSURANCE
EX-
CHANGE RESUMPTION OF FUNCTIONS.—The Commis-
sioner may terminate the approval (for some or all 
functions) of a State-based Health Insurance Ex-
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 terminating 
such approval, the Commissioner may temporarily 
assume some or all functions of the State-based 
Health Insurance Exchange until such time as the 
Commissioner determines the State-based Health In-
surance Exchange meets such requirements of sub-
section (b) and is capable of carrying out such func-
tions in accordance with the requirements of this sub-
title. 
(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. 
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179 
(2) DISCRETION
TO
RETAIN
ADDITIONAL
AU-
THORITY.—The Commissioner may specify functions 
of the Health Insurance Exchange that— 
(A) may not be performed by a State-based 
Health Insurance Exchange under this section; 
or 
(B) may be performed by the Commissioner 
and by such a State-based Health Insurance Ex-
change. 
(e) REFERENCES.—In the case of a State-based Health 
Insurance Exchange, except as the Commissioner may oth-
erwise specify under subsection (d), any references in this 
subtitle to the Health Insurance Exchange or to the Com-
missioner in the area in which the State-based Health In-
surance 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 In-
surance 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. 
(g) MEDICAL LIABILITY ALTERNATIVES.— 
(1) PURPOSES.—The purposes of this subsection 
are— 
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bajohnson on DSK2BSOYB1PROD with BILLS
1911 
sibility to oversee compliance 
with such standards and pro-
cedures and have sufficient 
resources and authority to as-
sure such compliance. 
‘‘(III) 
The 
organization 
must have used due care not 
to delegate substantial discre-
tionary authority to individ-
uals whom the organization 
knew, or should have known 
through the exercise of due 
diligence, had a propensity to 
engage in criminal, civil, and 
administrative 
violations 
under this Act. 
‘‘(IV) 
The 
organization 
must have taken steps to com-
municate effectively its stand-
ards and procedures to all em-
ployees 
and 
other 
agents, 
such as by requiring partici-
pation in training programs 
or by disseminating publica-
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