(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical 
care’’, and ‘‘participating employer’’ shall have the 
meanings provided in section 808 of the Employee 
Retirement Income Security Act of 1974, except 
that the reference in paragraph (7) of such section 
to an ‘‘small business health plan’’ shall be deemed 
a reference to an arrangement referred to in this 
subsection. 
Subtitle B—Market Relief 
SEC. 211. MARKET RELIEF. 
The Public Health Service Act (42 U.S.C. 201 et 
seq.) is amended by adding at the end the following: 
‘‘TITLE XXXI—HEALTH CARE IN-
SURANCE 
MARKETPLACE 
MODERNIZATION 
‘‘SEC. 3101. GENERAL INSURANCE DEFINITIONS. 
‘‘In this title, the terms ‘health insurance coverage’, 
‘health insurance issuer’, ‘group health plan’, and ‘indi-
vidual health insurance’ shall have the meanings given 
such terms in section 2791. 
‘‘SEC. 3102. IMPLEMENTATION AND APPLICATION AUTHOR-
ITY BY SECRETARY. 
‘‘The Secretary shall, through promulgation and im-
plementation of such regulations as the Secretary may 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
reasonably determine necessary or appropriate, and in 
consultation with a balanced spectrum of effected entities 
and persons, modify the implementation and application 
of this title to accommodate with minimum disruption 
such changes to State or Federal law provided in this title 
and the (and the amendments made by such Act) or in 
regulations issued thereto. 
‘‘Subtitle A—Market Relief 
‘‘PART I—RATING REQUIREMENTS 
‘‘SEC. 3111. DEFINITIONS. 
‘‘In this part: 
‘‘(1) ADOPTING
STATE.—The term ‘adopting 
State’ means a State that, with respect to the small 
group market, has enacted small group rating rules 
that meet the minimum standards set forth in sec-
tion 3112(a)(1) or, as applicable, transitional small 
group rating rules set forth in section 3112(b). 
‘‘(2) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the insurance laws 
of such State. 
‘‘(3) BASE
PREMIUM
RATE.—The term ‘base 
premium rate’ means, for each class of business with 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
respect to a rating period, the lowest premium rate 
charged or that could have been charged under a 
rating system for that class of business by the small 
employer carrier to small employers with similar 
case characteristics for health benefit plans with the 
same or similar coverage. 
‘‘(4) ELIGIBLE
INSURER.—The term ‘eligible 
insurer’ means a health insurance issuer that is li-
censed in a State and that— 
‘‘(A) notifies the Secretary, not later than 
30 days prior to the offering of coverage de-
scribed in this subparagraph, that the issuer in-
tends to offer health insurance coverage con-
sistent with the Model Small Group Rating 
Rules or, as applicable, transitional small group 
rating rules in a State; 
‘‘(B) notifies the insurance department of 
a nonadopting State (or other State agency), 
not later than 30 days prior to the offering of 
coverage described in this subparagraph, that 
the issuer intends to offer small group health 
insurance coverage in that State consistent with 
the Model Small Group Rating Rules, and pro-
vides with such notice a copy of any insurance 
policy that it intends to offer in the State, its 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00048
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
most recent annual and quarterly financial re-
ports, and any other information required to be 
filed with the insurance department of the State 
(or other State agency); and 
‘‘(C) includes in the terms of the health in-
surance coverage offered in nonadopting States 
(including in the terms of any individual certifi-
cates that may be offered to individuals in con-
nection with such group health coverage) and 
filed with the State pursuant to subparagraph 
(B), a description in the insurer’s contract of 
the Model Small Group Rating Rules and an af-
firmation that such Rules are included in the 
terms of such contract. 
‘‘(5) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ means any coverage 
issued in the small group health insurance market, 
except that such term shall not include excepted 
benefits (as defined in section 2791(c)). 
‘‘(6) INDEX
RATE.—The term ‘index rate’ 
means for each class of business with respect to the 
rating period for small employers with similar case 
characteristics, the arithmetic average of the appli-
cable base premium rate and the corresponding 
highest premium rate. 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00049
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(7) MODEL SMALL GROUP RATING RULES.— 
The term ‘Model Small Group Rating Rules’ means 
the rules set forth in section 3112(a)(2). 
‘‘(8) NONADOPTING
STATE.—The term ‘non-
adopting State’ means a State that is not an adopt-
ing State. 
‘‘(9) SMALL GROUP INSURANCE MARKET.—The 
term ‘small group insurance market’ shall have the 
meaning given the term ‘small group market’ in sec-
tion 2791(e)(5). 
‘‘(10) STATE
LAW.—The term ‘State law’ 
means all laws, decisions, rules, regulations, or other 
State actions (including actions by a State agency) 
having the effect of law, of any State. 
‘‘(11) VARIATION LIMITS.— 
‘‘(A) COMPOSITE VARIATION LIMIT.— 
‘‘(i) IN
GENERAL.—The term ‘com-
posite variation limit’ means the total vari-
ation in premium rates charged by a 
health insurance issuer in the small group 
market as permitted under applicable State 
law based on the following factors or case 
characteristics: 
‘‘(I) Age. 
‘‘(II) Duration of coverage. 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00050
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(III) Claims experience. 
‘‘(IV) Health status. 
‘‘(ii) USE OF FACTORS.—With respect 
to the use of the factors described in 
clause (i) in setting premium rates, a 
health insurance issuer shall use one or 
both of the factors described in subclauses 
(I) or (IV) of such clause and may use the 
factors described in subclauses (II) or (III) 
of such clause. 
‘‘(B) TOTAL VARIATION LIMIT.—The term 
‘total variation limit’ means the total variation 
in premium rates charged by a health insurance 
issuer in the small group market as permitted 
under applicable State law based on all factors 
and case characteristics (as described in section 
3112(a)(1)). 
‘‘SEC. 3112. RATING RULES. 
‘‘(a) ESTABLISHMENT OF MINIMUM STANDARDS FOR 
PREMIUM VARIATIONS AND MODEL SMALL GROUP RAT-
ING RULES.—Not later than 6 months after the date of 
enactment of this title, the Secretary shall promulgate reg-
ulations establishing the following Minimum Standards 
and Model Small Group Rating Rules: 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00051
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(1) MINIMUM STANDARDS FOR PREMIUM VARI-
ATIONS.— 
‘‘(A) COMPOSITE VARIATION LIMIT.—The 
composite variation limit shall not be less than 
3:1. 
‘‘(B) TOTAL VARIATION LIMIT.—The total 
variation limit shall not be less than 5:1. 
‘‘(C) PROHIBITION
ON
USE
OF
CERTAIN 
CASE CHARACTERISTICS.—For purposes of this 
paragraph, in calculating the total variation 
limit, the State shall not use case characteris-
tics other than those used in calculating the 
composite variation limit and industry, geo-
graphic area, group size, participation rate, 
class of business, and participation in wellness 
programs. 
‘‘(2) MODEL SMALL GROUP RATING RULES.— 
The following apply to an eligible insurer in a non-
adopting State: 
‘‘(A) PREMIUM
RATES.—Premium rates 
for small group health benefit plans to which 
this title applies shall comply with the following 
provisions relating to premiums, except as pro-
vided for under subsection (b): 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00052
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(i) 
VARIATION
IN
PREMIUM 
RATES.—The plan may not vary premium 
rates by more than the minimum stand-
ards provided for under paragraph (1). 
‘‘(ii) INDEX
RATE.—The index rate 
for a rating period for any class of busi-
ness shall not exceed the index rate for any 
other class of business by more than 20 
percent, excluding those classes of business 
related to association groups under this 
title. 
‘‘(iii) CLASS
OF
BUSINESSES.—With 
respect to a class of business, the premium 
rates charged during a rating period to 
small employers with similar case charac-
teristics for the same or similar coverage 
or the rates that could be charged to such 
employers under the rating system for that 
class of business, shall not vary from the 
index rate by more than 25 percent of the 
index rate under clause (ii). 
‘‘(iv) INCREASES
FOR
NEW
RATING 
PERIODS.—The percentage increase in the 
premium rate charged to a small employer 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00053
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
for a new rating period may not exceed the 
sum of the following: 
‘‘(I) The percentage change in 
the new business premium rate meas-
ured from the first day of the prior 
rating period to the first day of the 
new rating period. In the case of a 
health benefit plan into which the 
small employer carrier is no longer en-
rolling new small employers, the small 
employer carrier shall use the percent-
age change in the base premium rate, 
except that such change shall not ex-
ceed, on a percentage basis, the 
change in the new business premium 
rate for the most similar health ben-
efit plan into which the small em-
ployer carrier is actively enrolling new 
small employers. 
‘‘(II) Any adjustment, not to ex-
ceed 15 percent annually and adjusted 
pro rata for rating periods of less 
then 1 year, due to the claim experi-
ence, health status or duration of cov-
erage of the employees or dependents 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00054
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
of the small employer as determined 
from the small employer carrier’s rate 
manual for the class of business in-
volved. 
‘‘(III) Any adjustment due to 
change in coverage or change in the 
case characteristics of the small em-
ployer as determined from the small 
employer carrier’s rate manual for the 
class of business. 
‘‘(v) UNIFORM APPLICATION OF AD-
JUSTMENTS.—Adjustments 
in 
premium 
rates for claim experience, health status, or 
duration of coverage shall not be charged 
to individual employees or dependents. Any 
such adjustment shall be applied uniformly 
to the rates charged for all employees and 
dependents of the small employer. 
‘‘(vi) PROHIBITION ON USE OF CER-
TAIN CASE CHARACTERISTIC.—A small em-
ployer carrier shall not utilize case charac-
teristics, other than those permitted under 
paragraph (1)(C), without the prior ap-
proval of the applicable State authority. 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00055
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(vii) CONSISTENT
APPLICATION
OF 
FACTORS.—Small employer carriers shall 
apply rating factors, including case charac-
teristics, consistently with respect to all 
small employers in a class of business. 
Rating factors shall produce premiums for 
identical groups which differ only by the 
amounts attributable to plan design and do 
not reflect differences due to the nature of 
the groups assumed to select particular 
health benefit plans. 
‘‘(viii) TREATMENT OF PLANS AS HAV-
ING SAME RATING PERIOD.—A small em-
ployer carrier shall treat all health benefit 
plans issued or renewed in the same cal-
endar month as having the same rating pe-
riod. 
‘‘(ix) REQUIRE
COMPLIANCE.—Pre-
mium rates for small business health ben-
efit plans shall comply with the require-
ments of this subsection notwithstanding 
any assessments paid or payable by a small 
employer carrier as required by a State’s 
small employer carrier reinsurance pro-
gram. 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00056
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(B) 
ESTABLISHMENT
OF
SEPARATE 
CLASS OF BUSINESS.—Subject to subparagraph 
(C), a small employer carrier may establish a 
separate class of business only to reflect sub-
stantial differences in expected claims experi-
ence or administrative costs related to the fol-
lowing: 
‘‘(i) The small employer carrier uses 
more than one type of system for the mar-
keting and sale of health benefit plans to 
small employers. 
‘‘(ii) The small employer carrier has 
acquired a class of business from another 
small employer carrier. 
‘‘(iii) The small employer carrier pro-
vides coverage to one or more association 
groups that meet the requirements of this 
title. 
‘‘(C) LIMITATION.—A small employer car-
rier may establish up to 9 separate classes of 
business under subparagraph (B), excluding 
those classes of business related to association 
groups under this title. 
‘‘(D) 
LIMITATION
ON
TRANSFERS.—A 
small employer carrier shall not transfer a 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00057
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
small employer involuntarily into or out of a 
class of business. A small employer carrier shall 
not offer to transfer a small employer into or 
out of a class of business unless such offer is 
made to transfer all small employers in the 
class of business without regard to case charac-
teristics, claim experience, health status or du-
ration of coverage since issue. 
‘‘(b) TRANSITIONAL MODEL SMALL GROUP RATING 
RULES.— 
‘‘(1) IN GENERAL.—Not later than 6 months 
after the date of enactment of this title and to the 
extent necessary to provide for a graduated transi-
tion to the minimum standards for premium vari-
ation as provided for in subsection (a)(1), the Sec-
retary, in consultation with the National Association 
of Insurance Commissioners (NAIC), shall promul-
gate State-specific transitional small group rating 
rules in accordance with this subsection, which shall 
be applicable with respect to nonadopting States and 
eligible insurers operating in such States for a pe-
riod of not to exceed 3 years from the date of the 
promulgation of the minimum standards for pre-
mium variation pursuant to subsection (a). 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00058
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(2) COMPLIANCE WITH TRANSITIONAL MODEL 
SMALL GROUP RATING RULES.—During the transi-
tion period described in paragraph (1), a State that, 
on the date of enactment of this title, has in effect 
a small group rating rules methodology that allows 
for a variation that is less than the variation pro-
vided for under subsection (a)(1) (concerning min-
imum standards for premium variation), shall be 
deemed to be an adopting State if the State complies 
with the transitional small group rating rules as pro-
mulgated by the Secretary pursuant to paragraph 
(1). 
‘‘(3) TRANSITIONING OF OLD BUSINESS.— 
‘‘(A) IN
GENERAL.—In developing the 
transitional small group rating rules under 
paragraph (1), the Secretary shall, after con-
sultation with the National Association of In-
surance Commissioners and representatives of 
insurers operating in the small group health in-
surance market in nonadopting States, promul-
gate special transition standards with respect to 
independent rating classes for old and new busi-
ness, to the extent reasonably necessary to pro-
tect health insurance consumers and to ensure 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00059
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
a stable and fair transition for old and new 
market entrants. 
‘‘(B) PERIOD FOR OPERATION OF INDE-
PENDENT RATING CLASSES.—In developing the 
special transition standards pursuant to sub-
paragraph (A), the Secretary shall permit a 
carrier in a nonadopting State, at its option, to 
maintain independent rating classes for old and 
new business for a period of up to 5 years, with 
the commencement of such 5-year period to 
begin at such time, but not later than the date 
that is 3 years after the date of enactment of 
this title, as the carrier offers a book of busi-
ness meeting the minimum standards for pre-
mium variation provided for in subsection 
(a)(1) or the transitional small group rating 
rules under paragraph (1). 
‘‘(4) OTHER
TRANSITIONAL
AUTHORITY.—In 
developing the transitional small group rating rules 
under paragraph (1), the Secretary shall provide for 
the application of the transitional small group rating 
rules in transition States as the Secretary may de-
termine necessary for a an effective transition. 
‘‘(c) MARKET RE-ENTRY.— 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00060
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, a health insurance issuer that has 
voluntarily withdrawn from providing coverage in the 
small group market prior to the date of enactment 
of this title shall not be excluded from re-entering 
such market on a date that is more than 180 days 
after such date of enactment. 
‘‘(2) TERMINATION.—The provision of this sub-
section shall terminate on the date that is 24 
months after the date of enactment of this title. 
‘‘SEC. 3113. APPLICATION AND PREEMPTION. 
‘‘(a) SUPERSEDING OF STATE LAW.— 
‘‘(1) IN GENERAL.—This part shall supersede 
any and all State laws of a nonadopting State inso-
far as such State laws (whether enacted prior to or 
after the date of enactment of this subtitle) relate to 
rating in the small group insurance market as ap-
plied to an eligible insurer, or small group health in-
surance coverage issued by an eligible insurer, in-
cluding with respect to coverage issued to a small 
employer through a small business health plan, in a 
State. 
‘‘(2) NONADOPTING STATES.—This part shall 
supersede any and all State laws of a nonadopting 
State insofar as such State laws (whether enacted 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00061
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
prior to or after the date of enactment of this sub-
title)— 
‘‘(A) prohibit an eligible insurer from of-
fering, marketing, or implementing small group 
health insurance coverage consistent with the 
Model Small Group Rating Rules or transitional 
model small group rating rules; or 
‘‘(B) have the effect of retaliating against 
or otherwise punishing in any respect an eligible 
insurer for offering, marketing, or imple-
menting small group health insurance coverage 
consistent with the Model Small Group Rating 
Rules or transitional model small group rating 
rules. 
‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 
‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 
Subsection (a) shall not apply with respect to adopt-
ing states. 
‘‘(2) NONAPPLICATION
TO
CERTAIN
INSUR-
ERS.—Subsection (a) shall not apply with respect to 
insurers that do not qualify as eligible insurers that 
offer small group health insurance coverage in a 
nonadopting State. 
‘‘(3) NONAPPLICATION WHERE OBTAINING RE-
LIEF UNDER STATE LAW.—Subsection (a)(1) shall 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00062
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
Group Rating Rules or, as applicable, the Transitional 
Model Small Group Rating Rules, but in no event earlier 
than the date that is 12 months after the date of enact-
ment of this title. 
‘‘SEC. 3114. CIVIL ACTIONS AND JURISDICTION. 
‘‘(a) IN GENERAL.—The courts of the United States 
shall have exclusive jurisdiction over civil actions involving 
the interpretation of this part. 
‘‘(b) ACTIONS.—An eligible insurer may bring an ac-
tion in the district courts of the United States for injunc-
tive or other equitable relief against any officials or agents 
of a nonadopting State in connection with any conduct or 
action, or proposed conduct or action, by such officials or 
agents which violates, or which would if undertaken vio-
late, section 3113. 
‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 
election of the eligible insurer, an action may be brought 
under subsection (b) directly in the United States Court 
of Appeals for the circuit in which the nonadopting State 
is located by the filing of a petition for review in such 
Court. 
‘‘(d) EXPEDITED REVIEW.— 
‘‘(1) DISTRICT COURT.—In the case of an ac-
tion brought in a district court of the United States 
under subsection (b), such court shall complete such 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00064
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
action, including the issuance of a judgment, prior 
to the end of the 120-day period beginning on the 
date on which such action is filed, unless all parties 
to such proceeding agree to an extension of such pe-
riod. 
‘‘(2) COURT OF APPEALS.—In the case of an 
action brought directly in a United States Court of 
Appeal under subsection (c), or in the case of an ap-
peal of an action brought in a district court under 
subsection (b), such Court shall complete all action 
on the petition, including the issuance of a judg-
ment, prior to the end of the 60-day period begin-
ning on the date on which such petition is filed with 
the Court, unless all parties to such proceeding 
agree to an extension of such period. 
‘‘(e) STANDARD OF REVIEW.—A court in an action 
filed under this section, shall render a judgment based on 
a review of the merits of all questions presented in such 
action and shall not defer to any conduct or action, or 
proposed conduct or action, of a nonadopting State. 
‘‘SEC. 3115. ONGOING REVIEW. 
‘‘Not later than 5 years after the date on which the 
Model Small Group Rating Rules are issued under this 
part, and every 5 years thereafter, the Secretary, in con-
sultation with the National Association of Insurance Com-
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00065
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
missioners, shall prepare and submit to the appropriate 
committees of Congress a report that assesses the effect 
of the Model Small Group Rating Rules on access, cost, 
and market functioning in the small group market. Such 
report may, if the Secretary, in consultation with the Na-
tional Association of Insurance Commissioners, deter-
mines such is appropriate for improving access, costs, and 
market functioning, contain legislative proposals for rec-
ommended modification to such Model Small Group Rat-
ing Rules. 
‘‘PART II—AFFORDABLE PLANS 
‘‘SEC. 3121. DEFINITIONS. 
‘‘In this part: 
‘‘(1) ADOPTING
STATE.—The term ‘adopting 
State’ means a State that has enacted a law pro-
viding that small group, individual, and large group 
health insurers in such State may offer and sell 
products in accordance with the List of Required 
Benefits and the Terms of Application as provided 
for in section 3122(b). 
‘‘(2) ELIGIBLE
INSURER.—The term ‘eligible 
insurer’ means a health insurance issuer that is li-
censed in a nonadopting State and that— 
‘‘(A) notifies the Secretary, not later than 
30 days prior to the offering of coverage de-
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00066
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
scribed in this subparagraph, that the issuer in-
tends to offer health insurance coverage con-
sistent with the List of Required Benefits and 
Terms of Application in a nonadopting State; 
‘‘(B) notifies the insurance department of 
a nonadopting State (or other applicable State 
agency), not later than 30 days prior to the of-
fering of coverage described in this subpara-
graph, that the issuer intends to offer health in-
surance coverage in that State consistent with 
the List of Required Benefits and Terms of Ap-
plication, and provides with such notice a copy 
of any insurance policy that it intends to offer 
in the State, its most recent annual and quar-
terly financial reports, and any other informa-
tion required to be filed with the insurance de-
partment of the State (or other State agency) 
by the Secretary in regulations; and 
‘‘(C) includes in the terms of the health in-
surance coverage offered in nonadopting States 
(including in the terms of any individual certifi-
cates that may be offered to individuals in con-
nection with such group health coverage) and 
filed with the State pursuant to subparagraph 
(B), a description in the insurer’s contract of 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00067
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
the List of Required Benefits and a description 
of the Terms of Application, including a de-
scription of the benefits to be provided, and 
that adherence to such standards is included as 
a term of such contract. 
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ means any coverage 
issued in the small group, individual, or large group 
health insurance markets, including with respect to 
small business health plans, except that such term 
shall not include excepted benefits (as defined in sec-
tion 2791(c)). 
‘‘(4) LIST OF REQUIRED BENEFITS.—The term 
‘List of Required Benefits’ means the list issued 
under section 3122(a). 
‘‘(5) NONADOPTING
STATE.—The term ‘non-
adopting State’ means a State that is not an adopt-
ing State. 
‘‘(6) STATE LAW.—The term ‘State law’ means 
all laws, decisions, rules, regulations, or other State 
actions (including actions by a State agency) having 
the effect of law, of any State. 
‘‘(7) STATE
PROVIDER
FREEDOM
OF
CHOICE 
LAW.—The term ‘State Provider Freedom of Choice 
Law’ means a State law requiring that a health in-
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00068
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
surance issuer, with respect to health insurance cov-
erage, not discriminate with respect to participation, 
reimbursement, or indemnification as to any pro-
vider who is acting within the scope of the provider’s 
license or certification under applicable State law. 
‘‘(8) TERMS
OF
APPLICATION.—The term 
‘Terms of Application’ means terms provided under 
section 3122(a). 
‘‘SEC. 3122. OFFERING AFFORDABLE PLANS. 
‘‘(a) LIST OF REQUIRED BENEFITS.—Not later than 
3 months after the date of enactment of this title, the Sec-
retary, in consultation with the National Association of In-
surance Commissioners, shall issue by interim final rule 
a list (to be known as the ‘List of Required Benefits’) of 
covered benefits, services, or categories of providers that 
are required to be provided by health insurance issuers, 
in each of the small group, individual, and large group 
markets, in at least 26 States as a result of the application 
of State covered benefit, service, and category of provider 
mandate laws. With respect to plans sold to or through 
small business health plans, the List of Required Benefits 
applicable to the small group market shall apply. 
‘‘(b) TERMS OF APPLICATION.— 
‘‘(1) STATE WITH MANDATES.—With respect to 
a State that has a covered benefit, service, or cat-
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00069
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
egory of provider mandate in effect that is covered 
under the List of Required Benefits under sub-
section (a), such State mandate shall, subject to 
paragraph (3) (concerning uniform application), 
apply to a coverage plan or plan in, as applicable, 
the small group, individual, or large group market or 
through a small business health plan in such State. 
‘‘(2) STATES WITHOUT MANDATES.—With re-
spect to a State that does not have a covered ben-
efit, service, or category of provider mandate in ef-
fect that is covered under the List of Required Ben-
efits under subsection (a), such mandate shall not 
apply, as applicable, to a coverage plan or plan in 
the small group, individual, or large group market or 
through a small business health plan in such State. 
‘‘(3) UNIFORM APPLICATION OF LAWS.— 
‘‘(A) IN
GENERAL.—With respect to a 
State described in paragraph (1), in applying a 
covered benefit, service, or category of provider 
mandate that is on the List of Required Bene-
fits under subsection (a) the State shall permit 
a coverage plan or plan offered in the small 
group, individual, or large group market or 
through a small business health plan in such 
State to apply such benefit, service, or category 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00070
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(B) EXCEPTION REGARDING STATE PRO-
VIDER FREEDOM OF CHOICE LAWS.—Notwith-
standing subparagraph (A), in the event a cat-
egory of provider mandate is included in the 
List of Covered Benefits, any State Provider 
Freedom of Choice Law (as defined in section 
3121(7)) that is in effect in any State in which 
such category of provider mandate is in effect 
shall not be preempted, with respect to that cat-
egory of provider, by this part. 
‘‘(c) PUBLICATION
OF BENEFIT APPLICATIONS.— 
Not later than 3 months after the date of enactment of 
this title, and on the first day of every calendar year there-
after, the Secretary, in consultation with the Director of 
the Office of Personnel Management, shall publish in the 
Federal Register a description of such covered benefits, 
services, and categories of providers covered in that cal-
endar year by each of the three most heavily subscribed 
nationally available Federal Employee Health Benefits 
Plan options which are also included on the List of Re-
quired Benefits. 
‘‘(d) EFFECTIVE DATES.— 
‘‘(1) SMALL BUSINESS HEALTH PLANS.—With 
respect to health insurance provided to participating 
employers of small business health plans, the re-
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00072
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
quirements of this part (concerning lower cost plans) 
shall apply beginning on the date that is 12 months 
after the date of enactment of this title. 
‘‘(2) NON-ASSOCIATION
COVERAGE.—With re-
spect to health insurance provided to groups or indi-
viduals other than participating employers of small 
business health plans, the requirements of this part 
shall apply beginning on the date that is 15 months 
after the date of enactment of this title. 
‘‘(e) UPDATING OF LIST OF REQUIRED BENEFITS.— 
Not later than 2 years after the date on which the List 
of Required Benefits is issued under subsection (a), and 
every 2 years thereafter, the Secretary, in consultation 
with the National Association of Insurance Commis-
sioners, shall update the list based on changes in the laws 
and regulations of the States. The Secretary shall issue 
the updated list by regulation, and such updated list shall 
be effective upon the first plan year following the issuance 
of such regulation. 
‘‘SEC. 3123. APPLICATION AND PREEMPTION. 
‘‘(a) SUPERCEDING OF STATE LAW.— 
‘‘(1) IN GENERAL.—This part shall supersede 
any and all State laws insofar as such laws relate to 
mandates relating to covered benefits, services, or 
categories of provider in the health insurance market 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00073
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
as applied to an eligible insurer, or health insurance 
coverage issued by an eligible insurer, including with 
respect to coverage issued to a small business health 
plan, in a nonadopting State. 
‘‘(2) NONADOPTING STATES.—This part shall 
supersede any and all State laws of a nonadopting 
State (whether enacted prior to or after the date of 
enactment of this title) insofar as such laws— 
‘‘(A) prohibit an eligible insurer from of-
fering, marketing, or implementing health in-
surance coverage consistent with the Benefit 
Choice Standards, as provided for in section 
3122(a); or 
‘‘(B) have the effect of retaliating against 
or otherwise punishing in any respect an eligible 
insurer for offering, marketing, or imple-
menting health insurance coverage consistent 
with the Benefit Choice Standards. 
‘‘(b) SAVINGS CLAUSE AND CONSTRUCTION.— 
‘‘(1) NONAPPLICATION TO ADOPTING STATES.— 
Subsection (a) shall not apply with respect to adopt-
ing States. 
‘‘(2) NONAPPLICATION
TO
CERTAIN
INSUR-
ERS.—Subsection (a) shall not apply with respect to 
insurers that do not qualify as eligible insurers who 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00074
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
offer health insurance coverage in a nonadopting 
State. 
‘‘(3) NONAPPLICATION WHERE OBTAINING RE-
LIEF UNDER STATE LAW.—Subsection (a)(1) shall 
not supercede any State law of a nonadopting State 
to the extent necessary to permit individuals or the 
insurance department of the State (or other State 
agency) to obtain relief under State law to require 
an eligible insurer to comply with the Benefit Choice 
Standards. 
‘‘(4) NO EFFECT ON PREEMPTION.—In no case 
shall this part be construed to limit or affect in any 
manner the preemptive scope of sections 502 and 
514 of the Employee Retirement Income Security 
Act of 1974. In no case shall this part be construed 
to create any cause of action under Federal or State 
law or enlarge or affect any remedy available under 
the Employee Retirement Income Security Act of 
1974. 
‘‘(5) PREEMPTION
LIMITED
TO
BENEFITS.— 
Subsection (a) shall not preempt any State law that 
does not have a reference to or a connection with 
State mandates regarding covered benefits, services, 
or categories of providers that would otherwise apply 
to eligible insurers. 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00075
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘SEC. 3124. CIVIL ACTIONS AND JURISDICTION. 
‘‘(a) IN GENERAL.—The courts of the United States 
shall have exclusive jurisdiction over civil actions involving 
the interpretation of this part. 
‘‘(b) ACTIONS.—An eligible insurer may bring an ac-
tion in the district courts of the United States for injunc-
tive or other equitable relief against any officials or agents 
of a nonadopting State in connection with any conduct or 
action, or proposed conduct or action, by such officials or 
agents which violates, or which would if undertaken vio-
late, section 3123. 
‘‘(c) DIRECT FILING IN COURT OF APPEALS.—At the 
election of the eligible insurer, an action may be brought 
under subsection (b) directly in the United States Court 
of Appeals for the circuit in which the nonadopting State 
is located by the filing of a petition for review in such 
Court. 
‘‘(d) EXPEDITED REVIEW.— 
‘‘(1) DISTRICT COURT.—In the case of an ac-
tion brought in a district court of the United States 
under subsection (b), such court shall complete such 
action, including the issuance of a judgment, prior 
to the end of the 120-day period beginning on the 
date on which such action is filed, unless all parties 
to such proceeding agree to an extension of such pe-
riod. 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00076
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
‘‘(2) COURT OF APPEALS.—In the case of an 
action brought directly in a United States Court of 
Appeal under subsection (c), or in the case of an ap-
peal of an action brought in a district court under 
subsection (b), such Court shall complete all action 
on the petition, including the issuance of a judg-
ment, prior to the end of the 60-day period begin-
ning on the date on which such petition is filed with 
the Court, unless all parties to such proceeding 
agree to an extension of such period. 
‘‘(e) STANDARD OF REVIEW.—A court in an action 
filed under this section, shall render a judgment based on 
a review of the merits of all questions presented in such 
action and shall not defer to any conduct or action, or 
proposed conduct or action, of a nonadopting State. 
‘‘SEC. 3125. RULES OF CONSTRUCTION. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of Federal or State law, a health insurance issuer 
in an adopting State or an eligible insurer in a non-
adopting State may amend its existing policies to be con-
sistent with the terms of this subtitle (concerning rating 
and benefits). 
‘‘(b) HEALTH SAVINGS ACCOUNTS.—Nothing in this 
subtitle shall be construed to create any mandates for cov-
erage of benefits for HSA-qualified health plans that 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00077
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
would require reimbursements in violation of section 
223(c)(2) of the Internal Revenue Code of 1986.’’. 
Subtitle C—Harmonization of 
Health Insurance Standards 
SEC. 221. HEALTH INSURANCE STANDARDS HARMONI-
ZATION. 
Title XXXI of the Public Health Service Act (as 
added by section 211) is amended by adding at the end 
the following: 
‘‘Subtitle B—Standards 
Harmonization 
‘‘SEC. 3131. DEFINITIONS. 
‘‘In this subtitle: 
‘‘(1) ADOPTING
STATE.—The term ‘adopting 
State’ means a State that has enacted the har-
monized standards adopted under this subtitle in 
their entirety and as the exclusive laws of the State 
that relate to the harmonized standards. 
‘‘(2) ELIGIBLE
INSURER.—The term ‘eligible 
insurer’ means a health insurance issuer that is li-
censed in a nonadopting State and that— 
‘‘(A) notifies the Secretary, not later than 
30 days prior to the offering of coverage de-
scribed in this subparagraph, that the issuer in-
tends to offer health insurance coverage con-
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00078
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
sistent with the harmonized standards in a non-
adopting State; 
‘‘(B) notifies the insurance department of 
a nonadopting State (or other State agency), 
not later than 30 days prior to the offering of 
coverage described in this subparagraph, that 
the issuer intends to offer health insurance cov-
erage in that State consistent with the har-
monized standards published pursuant to sec-
tion 3133(d), and provides with such notice a 
copy of any insurance policy that it intends to 
offer in the State, its most recent annual and 
quarterly financial reports, and any other infor-
mation required to be filed with the insurance 
department of the State (or other State agency) 
by the Secretary in regulations; and 
‘‘(C) includes in the terms of the health in-
surance coverage offered in nonadopting States 
(including in the terms of any individual certifi-
cates that may be offered to individuals in con-
nection with such health coverage) and filed 
with the State pursuant to subparagraph (B), a 
description of the harmonized standards pub-
lished pursuant to section 3133(g)(2) and an 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00079
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
affirmation that such standards are a term of 
the contract. 
‘‘(3) HARMONIZED
STANDARDS.—The term 
‘harmonized standards’ means the standards cer-
tified by the Secretary under section 3133(d). 
‘‘(4) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ means any coverage 
issued in the health insurance market, except that 
such term shall not include excepted benefits (as de-
fined in section 2791(c). 
‘‘(5) NONADOPTING
STATE.—The term ‘non-
adopting State’ means a State that fails to enact, 
within 18 months of the date on which the Secretary 
certifies the harmonized standards under this sub-
title, the harmonized standards in their entirety and 
as the exclusive laws of the State that relate to the 
harmonized standards. 
‘‘(6) STATE LAW.—The term ‘State law’ means 
all laws, decisions, rules, regulations, or other State 
actions (including actions by a State agency) having 
the effect of law, of any State. 
‘‘SEC. 3132. HARMONIZED STANDARDS. 
‘‘(a) BOARD.— 
‘‘(1) ESTABLISHMENT.—Not later than 3 
months after the date of enactment of this title, the 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00080
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
Secretary, in consultation with the NAIC, shall es-
tablish the Health Insurance Consensus Standards 
Board (referred to in this subtitle as the ‘Board’) to 
develop recommendations that harmonize incon-
sistent State health insurance laws in accordance 
with the procedures described in subsection (b). 
‘‘(2) COMPOSITION.— 
‘‘(A) IN GENERAL.—The Board shall be 
composed of the following voting members to be 
appointed by the Secretary after considering the 
recommendations of professional organizations 
representing the entities and constituencies de-
scribed in this paragraph: 
‘‘(i) Four State insurance commis-
sioners as recommended by the National 
Association of Insurance Commissioners, of 
which two shall be Democrats and two 
shall be Republicans, and of which one 
shall be designated as the chairperson and 
one shall be designated as the vice chair-
person. 
‘‘(ii) Four representatives of State 
government, two of which shall be gov-
ernors of States and two of which shall be 
State legislators, and two of which shall be 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00081
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
Democrats and two of which shall be Re-
publicans. 
‘‘(iii) Four representatives of health 
insurers, of which one shall represent in-
surers that offer coverage in the small 
group market, one shall represent insurers 
that offer coverage in the large group mar-
ket, one shall represent insurers that offer 
coverage in the individual market, and one 
shall represent carriers operating in a re-
gional market. 
‘‘(iv) Two representatives of insurance 
agents and brokers. 
‘‘(v) Two independent representatives 
of the American Academy of Actuaries who 
have familiarity with the actuarial methods 
applicable to health insurance. 
‘‘(B) EX OFFICIO MEMBER.—A representa-
tive of the Secretary shall serve as an ex officio 
member of the Board. 
‘‘(3) ADVISORY
PANEL.—The Secretary shall 
establish an advisory panel to provide advice to the 
Board, and shall appoint its members after consid-
ering the recommendations of professional organiza-
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00082
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS
tions representing the entities and constituencies 
identified in this paragraph: 
‘‘(A) Two representatives of small business 
health plans. 
‘‘(B) Two representatives of employers, of 
which one shall represent small employers and 
one shall represent large employers. 
‘‘(C) Two representatives of consumer or-
ganizations. 
‘‘(D) Two representatives of health care 
providers. 
‘‘(4) QUALIFICATIONS.—The membership of the 
Board shall include individuals with national rec-
ognition for their expertise in health finance and ec-
onomics, actuarial science, health plans, providers of 
health services, and other related fields, who provide 
a mix of different professionals, broad geographic 
representation, and a balance between urban and 
rural representatives. 
‘‘(5) ETHICAL
DISCLOSURE.—The Secretary 
shall establish a system for public disclosure by 
members of the Board of financial and other poten-
tial conflicts of interest relating to such members. 
Members of the Board shall be treated as employees 
of Congress for purposes of applying title I of the 
VerDate Nov 24 2008 
23:47 Jul 06, 2009
Jkt 059200
PO 00000
Frm 00083
Fmt 6652
Sfmt 6201
E:\BILLS\H3067.IH
H3067
tjames on PRODPC75 with BILLS