‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI-
NATION. 
‘‘(a) ACTIONS
TO
AVOID
DEPLETION
OF
RE-
SERVES.—An association health plan which is certified 
under this part and which provides benefits other than 
health insurance coverage shall continue to meet the re-
quirements of section 806, irrespective of whether such 
certification continues in effect. The board of trustees of 
such plan shall determine quarterly whether the require-
ments of section 806 are met. In any case in which the 
board determines that there is reason to believe that there 
is or will be a failure to meet such requirements, or the 
applicable authority makes such a determination and so 
notifies the board, the board shall immediately notify the 
qualified health actuary engaged by the plan, and such 
actuary shall, not later than the end of the next following 
month, make such recommendations to the board for cor-
rective action as the actuary determines necessary to en-
sure compliance with section 806. Not later than 30 days 
after receiving from the actuary recommendations for cor-
rective actions, the board shall notify the applicable au-
thority (in such form and manner as the applicable au-
thority may prescribe by regulation) of such recommenda-
tions of the actuary for corrective action, together with 
a description of the actions (if any) that the board has 
taken or plans to take in response to such recommenda-
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tions. The board shall thereafter report to the applicable 
authority, in such form and frequency as the applicable 
authority may specify to the board, regarding corrective 
action taken by the board until the requirements of section 
806 are met. 
‘‘(b) MANDATORY TERMINATION.—In any case in 
which— 
‘‘(1) the applicable authority has been notified 
under subsection (a) (or by an issuer of excess/stop 
loss insurance or indemnity insurance pursuant to 
section 806(a)) of a failure of an association health 
plan which is or has been certified under this part 
and is described in section 806(a)(2) to meet the re-
quirements of section 806 and has not been notified 
by the board of trustees of the plan that corrective 
action has restored compliance with such require-
ments; and 
‘‘(2) the applicable authority determines that 
there is a reasonable expectation that the plan will 
continue to fail to meet the requirements of section 
806, 
the board of trustees of the plan shall, at the direction 
of the applicable authority, terminate the plan and, in the 
course of the termination, take such actions as the appli-
cable authority may require, including satisfying any 
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claims referred to in section 806(a)(2)(B)(iii) and recov-
ering for the plan any liability under subsection 
(a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
that the affairs of the plan will be, to the maximum extent 
possible, wound up in a manner which will result in timely 
provision of all benefits for which the plan is obligated. 
‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL-
VENT ASSOCIATION HEALTH PLANS PRO-
VIDING HEALTH BENEFITS IN ADDITION TO 
HEALTH INSURANCE COVERAGE. 
‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR 
INSOLVENT PLANS.—Whenever the Secretary determines 
that an association health plan which is or has been cer-
tified under this part and which is described in section 
806(a)(2) will be unable to provide benefits when due or 
is otherwise in a financially hazardous condition, as shall 
be defined by the Secretary by regulation, the Secretary 
shall, upon notice to the plan, apply to the appropriate 
United States district court for appointment of the Sec-
retary as trustee to administer the plan for the duration 
of the insolvency. The plan may appear as a party and 
other interested persons may intervene in the proceedings 
at the discretion of the court. The court shall appoint such 
Secretary trustee if the court determines that the trustee-
ship is necessary to protect the interests of the partici-
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pants and beneficiaries or providers of medical care or to 
avoid any unreasonable deterioration of the financial con-
dition of the plan. The trusteeship of such Secretary shall 
continue until the conditions described in the first sen-
tence of this subsection are remedied or the plan is termi-
nated. 
‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 
appointment as trustee under subsection (a), shall have 
the power— 
‘‘(1) to do any act authorized by the plan, this 
title, or other applicable provisions of law to be done 
by the plan administrator or any trustee of the plan; 
‘‘(2) to require the transfer of all (or any part) 
of the assets and records of the plan to the Sec-
retary as trustee; 
‘‘(3) to invest any assets of the plan which the 
Secretary holds in accordance with the provisions of 
the plan, regulations prescribed by the Secretary, 
and applicable provisions of law; 
‘‘(4) to require the sponsor, the plan adminis-
trator, any participating employer, and any employee 
organization representing plan participants to fur-
nish any information with respect to the plan which 
the Secretary as trustee may reasonably need in 
order to administer the plan; 
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‘‘(5) to collect for the plan any amounts due the 
plan and to recover reasonable expenses of the trust-
eeship; 
‘‘(6) to commence, prosecute, or defend on be-
half of the plan any suit or proceeding involving the 
plan; 
‘‘(7) to issue, publish, or file such notices, state-
ments, and reports as may be required by the Sec-
retary by regulation or required by any order of the 
court; 
‘‘(8) to terminate the plan (or provide for its 
termination in accordance with section 809(b)) and 
liquidate the plan assets, to restore the plan to the 
responsibility of the sponsor, or to continue the 
trusteeship; 
‘‘(9) to provide for the enrollment of plan par-
ticipants and beneficiaries under appropriate cov-
erage options; and 
‘‘(10) to do such other acts as may be nec-
essary to comply with this title or any order of the 
court and to protect the interests of plan partici-
pants and beneficiaries and providers of medical 
care. 
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‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac-
ticable after the Secretary’s appointment as trustee, the 
Secretary shall give notice of such appointment to— 
‘‘(1) the sponsor and plan administrator; 
‘‘(2) each participant; 
‘‘(3) each participating employer; and 
‘‘(4) if applicable, each employee organization 
which, for purposes of collective bargaining, rep-
resents plan participants. 
‘‘(d) ADDITIONAL DUTIES.—Except to the extent in-
consistent with the provisions of this title, or as may be 
otherwise ordered by the court, the Secretary, upon ap-
pointment as trustee under this section, shall be subject 
to the same duties as those of a trustee under section 704 
of title 11, United States Code, and shall have the duties 
of a fiduciary for purposes of this title. 
‘‘(e) OTHER PROCEEDINGS.—An application by the 
Secretary under this subsection may be filed notwith-
standing the pendency in the same or any other court of 
any bankruptcy, mortgage foreclosure, or equity receiver-
ship proceeding, or any proceeding to reorganize, conserve, 
or liquidate such plan or its property, or any proceeding 
to enforce a lien against property of the plan. 
‘‘(f) JURISDICTION OF COURT.— 
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smartinez on DSK6TPTVN1PROD with BILLS
100 
‘‘(1) IN GENERAL.—Upon the filing of an appli-
cation for the appointment as trustee or the issuance 
of a decree under this section, the court to which the 
application is made shall have exclusive jurisdiction 
of the plan involved and its property wherever lo-
cated with the powers, to the extent consistent with 
the purposes of this section, of a court of the United 
States having jurisdiction over cases under chapter 
11 of title 11, United States Code. Pending an adju-
dication under this section such court shall stay, and 
upon appointment by it of the Secretary as trustee, 
such court shall continue the stay of, any pending 
mortgage foreclosure, equity receivership, or other 
proceeding to reorganize, conserve, or liquidate the 
plan, the sponsor, or property of such plan or spon-
sor, and any other suit against any receiver, conser-
vator, or trustee of the plan, the sponsor, or prop-
erty of the plan or sponsor. Pending such adjudica-
tion and upon the appointment by it of the Sec-
retary as trustee, the court may stay any proceeding 
to enforce a lien against property of the plan or the 
sponsor or any other suit against the plan or the 
sponsor. 
‘‘(2) VENUE.—An action under this section 
may be brought in the judicial district where the 
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101 
sponsor or the plan administrator resides or does 
business or where any asset of the plan is situated. 
A district court in which such action is brought may 
issue process with respect to such action in any 
other judicial district. 
‘‘(g) PERSONNEL.—In accordance with regulations 
which shall be prescribed by the Secretary, the Secretary 
shall appoint, retain, and compensate accountants, actu-
aries, and other professional service personnel as may be 
necessary in connection with the Secretary’s service as 
trustee under this section. 
‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 
‘‘(a) IN GENERAL.—Notwithstanding section 514, a 
State may impose by law a contribution tax on an associa-
tion health plan described in section 806(a)(2), if the plan 
commenced operations in such State after the date of the 
enactment of the Small Business Health Fairness Act of 
2013. 
‘‘(b) CONTRIBUTION TAX.—For purposes of this sec-
tion, the term ‘contribution tax’ imposed by a State on 
an association health plan means any tax imposed by such 
State if— 
‘‘(1) such tax is computed by applying a rate to 
the amount of premiums or contributions, with re-
spect to individuals covered under the plan who are 
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smartinez on DSK6TPTVN1PROD with BILLS
102 
residents of such State, which are received by the 
plan from participating employers located in such 
State or from such individuals; 
‘‘(2) the rate of such tax does not exceed the 
rate of any tax imposed by such State on premiums 
or contributions received by insurers or health main-
tenance organizations for health insurance coverage 
offered in such State in connection with a group 
health plan; 
‘‘(3) such tax is otherwise nondiscriminatory; 
and 
‘‘(4) the amount of any such tax assessed on 
the plan is reduced by the amount of any tax or as-
sessment otherwise imposed by the State on pre-
miums, contributions, or both received by insurers or 
health maintenance organizations for health insur-
ance coverage, aggregate excess/stop loss insurance 
(as defined in section 806(g)(1)), specific excess/stop 
loss insurance (as defined in section 806(g)(2)), 
other insurance related to the provision of medical 
care under the plan, or any combination thereof pro-
vided by such insurers or health maintenance organi-
zations in such State in connection with such plan. 
‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 
‘‘(a) DEFINITIONS.—For purposes of this part— 
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103 
‘‘(1) GROUP HEALTH PLAN.—The term ‘group 
health plan’ has the meaning provided in section 
733(a)(1) (after applying subsection (b) of this sec-
tion). 
‘‘(2) MEDICAL CARE.—The term ‘medical care’ 
has the meaning provided in section 733(a)(2). 
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The 
term ‘health insurance coverage’ has the meaning 
provided in section 733(b)(1). 
‘‘(4) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning provided 
in section 733(b)(2). 
‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap-
plicable authority’ means the Secretary, except that, 
in connection with any exercise of the Secretary’s 
authority regarding which the Secretary is required 
under section 506(d) to consult with a State, such 
term means the Secretary, in consultation with such 
State. 
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 
term ‘health status-related factor’ has the meaning 
provided in section 733(d)(2). 
‘‘(7) INDIVIDUAL MARKET.— 
‘‘(A) IN GENERAL.—The term ‘individual 
market’ means the market for health insurance 
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104 
coverage offered to individuals other than in 
connection with a group health plan. 
‘‘(B) 
TREATMENT
OF
VERY
SMALL 
GROUPS.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), such term includes coverage offered in 
connection with a group health plan that 
has fewer than 2 participants as current 
employees or participants described in sec-
tion 732(d)(3) on the first day of the plan 
year. 
‘‘(ii) STATE
EXCEPTION.—Clause (i) 
shall not apply in the case of health insur-
ance coverage offered in a State if such 
State regulates the coverage described in 
such clause in the same manner and to the 
same extent as coverage in the small group 
market (as defined in section 2791(e)(5) of 
the Public Health Service Act) is regulated 
by such State. 
‘‘(8) PARTICIPATING
EMPLOYER.—The term 
‘participating employer’ means, in connection with 
an association health plan, any employer, if any indi-
vidual who is an employee of such employer, a part-
ner in such employer, or a self-employed individual 
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105 
who is such employer (or any dependent, as defined 
under the terms of the plan, of such individual) is 
or was covered under such plan in connection with 
the status of such individual as such an employee, 
partner, or self-employed individual in relation to the 
plan. 
‘‘(9) 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 requirements of 
title XXVII of the Public Health Service Act for the 
State involved with respect to such issuer. 
‘‘(10) QUALIFIED
HEALTH
ACTUARY.—The 
term ‘qualified health actuary’ means an individual 
who is a member of the American Academy of Actu-
aries with expertise in health care. 
‘‘(11) AFFILIATED MEMBER.—The term ‘affili-
ated member’ means, in connection with a sponsor— 
‘‘(A) a person who is otherwise eligible to 
be a member of the sponsor but who elects an 
affiliated status with the sponsor, 
‘‘(B) in the case of a sponsor with mem-
bers which consist of associations, a person who 
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106 
is a member of any such association and elects 
an affiliated status with the sponsor, or 
‘‘(C) in the case of an association health 
plan in existence on the date of the enactment 
of the Small Business Health Fairness Act of 
2013, a person eligible to be a member of the 
sponsor or one of its member associations. 
‘‘(12) LARGE EMPLOYER.—The term ‘large em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
employed an average of at least 51 employees on 
business days during the preceding calendar year 
and who employs at least 2 employees on the first 
day of the plan year. 
‘‘(13) SMALL EMPLOYER.—The term ‘small em-
ployer’ means, in connection with a group health 
plan with respect to a plan year, an employer who 
is not a large employer. 
‘‘(b) RULES OF CONSTRUCTION.— 
‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur-
poses of determining whether a plan, fund, or pro-
gram is an employee welfare benefit plan which is an 
association health plan, and for purposes of applying 
this title in connection with such plan, fund, or pro-
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107 
gram so determined to be such an employee welfare 
benefit plan— 
‘‘(A) in the case of a partnership, the term 
‘employer’ (as defined in section 3(5)) includes 
the partnership in relation to the partners, and 
the term ‘employee’ (as defined in section 3(6)) 
includes any partner in relation to the partner-
ship; and 
‘‘(B) in the case of a self-employed indi-
vidual, the term ‘employer’ (as defined in sec-
tion 3(5)) and the term ‘employee’ (as defined 
in section 3(6)) shall include such individual. 
‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED 
AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 
case of any plan, fund, or program which was estab-
lished or is maintained for the purpose of providing 
medical care (through the purchase of insurance or 
otherwise) for employees (or their dependents) cov-
ered thereunder and which demonstrates to the Sec-
retary that all requirements for certification under 
this part would be met with respect to such plan, 
fund, or program if such plan, fund, or program 
were a group health plan, such plan, fund, or pro-
gram shall be treated for purposes of this title as an 
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employee welfare benefit plan on and after the date 
of such demonstration. 
‘‘(3) EXCEPTION
FOR
CERTAIN
BENEFITS.— 
The requirements of this part shall not apply to a 
group health plan in relation to its provision of ex-
cepted benefits, as defined in section 706(c).’’. 
(b) CONFORMING AMENDMENTS
TO PREEMPTION 
RULES.— 
(1) Section 514(b)(6) of such Act (29 U.S.C. 
1144(b)(6)) is amended by adding at the end the 
following new subparagraph: 
‘‘(E) The preceding subparagraphs of this paragraph 
do not apply with respect to any State law in the case 
of an association health plan which is certified under part 
8.’’. 
(2) Section 514 of such Act (29 U.S.C. 1144) 
is amended— 
(A) in subsection (b)(4), by striking ‘‘Sub-
section (a)’’ and inserting ‘‘Subsections (a) and 
(d)’’; 
(B) in subsection (b)(5), by striking ‘‘sub-
section (a)’’ in subparagraph (A) and inserting 
‘‘subsection (a) of this section and subsections 
(a)(2)(B) and (b) of section 805’’, and by strik-
ing ‘‘subsection (a)’’ in subparagraph (B) and 
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smartinez on DSK6TPTVN1PROD with BILLS
109 
inserting ‘‘subsection (a) of this section or sub-
section (a)(2)(B) or (b) of section 805’’; 
(C) by redesignating subsection (d) as sub-
section (e); and 
(D) by inserting after subsection (c) the 
following new subsection: 
‘‘(d)(1) Except as provided in subsection (b)(4), the 
provisions of this title shall supersede any and all State 
laws insofar as they may now or hereafter preclude, or 
have the effect of precluding, a health insurance issuer 
from offering health insurance coverage in connection with 
an association health plan which is certified under part 
8. 
‘‘(2) Except as provided in paragraphs (4) and (5) 
of subsection (b) of this section— 
‘‘(A) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan certified under part 8 to a partici-
pating employer operating in such State, the provi-
sions of this title shall supersede any and all laws 
of such State insofar as they may preclude a health 
insurance issuer from offering health insurance cov-
erage of the same policy type to other employers op-
erating in the State which are eligible for coverage 
under such association health plan, whether or not 
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smartinez on DSK6TPTVN1PROD with BILLS
110 
such other employers are participating employers in 
such plan. 
‘‘(B) In any case in which health insurance cov-
erage of any policy type is offered in a State under 
an association health plan certified under part 8 and 
the filing, with the applicable State authority (as de-
fined in section 812(a)(9)), of the policy form in 
connection with such policy type is approved by such 
State authority, the provisions of this title shall su-
persede any and all laws of any other State in which 
health insurance coverage of such type is offered, in-
sofar as they may preclude, upon the filing in the 
same form and manner of such policy form with the 
applicable State authority in such other State, the 
approval of the filing in such other State. 
‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 
provisions of this subsection shall be construed, with re-
spect to health insurance issuers or health insurance cov-
erage, to supersede or impair the law of any State— 
‘‘(A) providing solvency standards or similar 
standards regarding the adequacy of insurer capital, 
surplus, reserves, or contributions, or 
‘‘(B) relating to prompt payment of claims. 
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111 
‘‘(4) For additional provisions relating to association 
health plans, see subsections (a)(2)(B) and (b) of section 
805. 
‘‘(5) For purposes of this subsection, the term ‘asso-
ciation health plan’ has the meaning provided in section 
801(a), and the terms ‘health insurance coverage’, ‘par-
ticipating employer’, and ‘health insurance issuer’ have 
the meanings provided such terms in section 812, respec-
tively.’’. 
(3) Section 514(b)(6)(A) of such Act (29 
U.S.C. 1144(b)(6)(A)) is amended— 
(A) in clause (i)(II), by striking ‘‘and’’ at 
the end; 
(B) in clause (ii), by inserting ‘‘and which 
does not provide medical care (within the mean-
ing of section 733(a)(2)),’’ after ‘‘arrange-
ment,’’, and by striking ‘‘title.’’ and inserting 
‘‘title, and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) subject to subparagraph (E), in the case 
of any other employee welfare benefit plan which is 
a multiple employer welfare arrangement and which 
provides medical care (within the meaning of section 
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smartinez on DSK6TPTVN1PROD with BILLS
112 
733(a)(2)), any law of any State which regulates in-
surance may apply.’’. 
(4) Section 514(e) of such Act (as redesignated 
by paragraph (2)(C)) is amended— 
(A) by striking ‘‘Nothing’’ and inserting 
‘‘(1) Except as provided in paragraph (2), noth-
ing’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) Nothing in any other provision of law enacted 
on or after the date of the enactment of the Small Busi-
ness Health Fairness Act of 2013 shall be construed to 
alter, amend, modify, invalidate, impair, or supersede any 
provision of this title, except by specific cross-reference to 
the affected section.’’. 
(c) PLAN SPONSOR.—Section 3(16)(B) of such Act 
(29 U.S.C. 102(16)(B)) is amended by adding at the end 
the following new sentence: ‘‘Such term also includes a 
person serving as the sponsor of an association health plan 
under part 8.’’. 
(d) DISCLOSURE OF SOLVENCY PROTECTIONS RE-
LATED TO SELF-INSURED AND FULLY INSURED OPTIONS 
UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at 
the end the following: ‘‘An association health plan shall 
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113 
include in its summary plan description, in connection 
with each benefit option, a description of the form of sol-
vency or guarantee fund protection secured pursuant to 
this Act or applicable State law, if any.’’. 
(e) SAVINGS CLAUSE.—Section 731(c) of such Act is 
amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 
(f) REPORT TO THE CONGRESS REGARDING CERTIFI-
CATION
OF
SELF-INSURED
ASSOCIATION
HEALTH 
PLANS.—Not later than January 1, 2016, the Secretary 
of Labor shall report to the Committee on Education and 
the Workforce of the House of Representatives and the 
Committee on Health, Education, Labor, and Pensions of 
the Senate the effect association health plans have had, 
if any, on reducing the number of uninsured individuals. 
(g) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974 is amended by inserting after the item relat-
ing to section 734 the following new items: 
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS 
‘‘801. Association health plans. 
‘‘802. Certification of association health plans. 
‘‘803. Requirements relating to sponsors and boards of trustees. 
‘‘804. Participation and coverage requirements. 
‘‘805. Other requirements relating to plan documents, contribution rates, and 
benefit options. 
‘‘806. Maintenance of reserves and provisions for solvency for plans providing 
health benefits in addition to health insurance coverage. 
‘‘807. Requirements for application and related requirements. 
‘‘808. Notice requirements for voluntary termination. 
‘‘809. Corrective actions and mandatory termination. 
‘‘810. Trusteeship by the Secretary of insolvent association health plans pro-
viding health benefits in addition to health insurance coverage. 
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‘‘811. State assessment authority. 
‘‘812. Definitions and rules of construction.’’. 
SEC. 223. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS. 
Section 3(40)(B) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend-
ed— 
(1) in clause (i), by inserting after ‘‘control 
group,’’ the following: ‘‘except that, in any case in 
which the benefit referred to in subparagraph (A) 
consists of medical care (as defined in section 
812(a)(2)), two or more trades or businesses, wheth-
er or not incorporated, shall be deemed a single em-
ployer for any plan year of such plan, or any fiscal 
year of such other arrangement, if such trades or 
businesses are within the same control group during 
such year or at any time during the preceding 1-year 
period,’’; 
(2) in clause (iii), by striking ‘‘(iii) the deter-
mination’’ and inserting the following: 
‘‘(iii)(I) in any case in which the benefit re-
ferred to in subparagraph (A) consists of medical 
care (as defined in section 812(a)(2)), the deter-
mination of whether a trade or business is under 
‘common control’ with another trade or business 
shall be determined under regulations of the Sec-
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115 
retary applying principles consistent and coextensive 
with the principles applied in determining whether 
employees of two or more trades or businesses are 
treated as employed by a single employer under sec-
tion 4001(b), except that, for purposes of this para-
graph, an interest of greater than 25 percent may 
not be required as the minimum interest necessary 
for common control, or 
‘‘(II) in any other case, the determination’’; 
(3) by redesignating clauses (iv) and (v) as 
clauses (v) and (vi), respectively; and 
(4) by inserting after clause (iii) the following 
new clause: 
‘‘(iv) in any case in which the benefit referred 
to in subparagraph (A) consists of medical care (as 
defined in section 812(a)(2)), in determining, after 
the application of clause (i), whether benefits are 
provided to employees of two or more employers, the 
arrangement shall be treated as having only one par-
ticipating employer if, after the application of clause 
(i), the number of individuals who are employees and 
former employees of any one participating employer 
and who are covered under the arrangement is 
greater than 75 percent of the aggregate number of 
all individuals who are employees or former employ-
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ees of participating employers and who are covered 
under the arrangement,’’. 
SEC. 224. ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS. 
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL 
MISREPRESENTATIONS.—Section 501 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1131) 
is amended— 
(1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) Any person who willfully falsely represents, to 
any employee, any employee’s beneficiary, any employer, 
the Secretary, or any State, a plan or other arrangement 
established or maintained for the purpose of offering or 
providing any benefit described in section 3(1) to employ-
ees or their beneficiaries as— 
‘‘(1) being an association health plan which has 
been certified under part 8; 
‘‘(2) having been established or maintained 
under or pursuant to one or more collective bar-
gaining agreements which are reached pursuant to 
collective bargaining described in section 8(d) of the 
National Labor Relations Act (29 U.S.C. 158(d)) or 
paragraph Fourth of section 2 of the Railway Labor 
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Act (45 U.S.C. 152, paragraph Fourth) or which are 
reached pursuant to labor-management negotiations 
under similar provisions of State public employee re-
lations laws; or 
‘‘(3) being a plan or arrangement described in 
section 3(40)(A)(i), 
shall, upon conviction, be imprisoned not more than 5 
years, be fined under title 18, United States Code, or 
both.’’. 
(b) CEASE ACTIVITIES ORDERS.—Section 502 of 
such Act (29 U.S.C. 1132) is amended by adding at the 
end the following new subsection: 
‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE-
SIST ORDERS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
upon application by the Secretary showing the oper-
ation, promotion, or marketing of an association 
health plan (or similar arrangement providing bene-
fits consisting of medical care (as defined in section 
733(a)(2))) that— 
‘‘(A) is not certified under part 8, is sub-
ject under section 514(b)(6) to the insurance 
laws of any State in which the plan or arrange-
ment offers or provides benefits, and is not li-
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censed, registered, or otherwise approved under 
the insurance laws of such State; or 
‘‘(B) is an association health plan certified 
under part 8 and is not operating in accordance 
with the requirements under part 8 for such 
certification, 
a district court of the United States shall enter an 
order requiring that the plan or arrangement cease 
activities. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply in the case of an association health plan or 
other arrangement if the plan or arrangement shows 
that— 
‘‘(A) all benefits under it referred to in 
paragraph (1) consist of health insurance cov-
erage; and 
‘‘(B) with respect to each State in which 
the plan or arrangement offers or provides ben-
efits, the plan or arrangement is operating in 
accordance with applicable State laws that are 
not superseded under section 514. 
‘‘(3) ADDITIONAL
EQUITABLE
RELIEF.—The 
court may grant such additional equitable relief, in-
cluding any relief available under this title, as it 
deems necessary to protect the interests of the pub-
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lic and of persons having claims for benefits against 
the plan.’’. 
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.— 
Section 503 of such Act (29 U.S.C. 1133) is amended by 
inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 
and by adding at the end the following new subsection: 
‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 
each association health plan which is or has been certified 
under part 8 shall require the board of trustees or the 
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims 
filed under the plan.’’. 
SEC. 225. COOPERATION BETWEEN FEDERAL AND STATE 
AUTHORITIES. 
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding 
at the end the following new subsection: 
‘‘(d) CONSULTATION WITH STATES WITH RESPECT 
TO ASSOCIATION HEALTH PLANS.— 
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under 
paragraph (2) with respect to an association health 
plan regarding the exercise of— 
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‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements 
for certification under part 8; and 
‘‘(B) the Secretary’s authority to certify 
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8. 
‘‘(2) RECOGNITION
OF
PRIMARY
DOMICILE 
STATE.—In carrying out paragraph (1), the Sec-
retary shall ensure that only one State will be recog-
nized, with respect to any particular association 
health plan, as the State with which consultation is 
required. In carrying out this paragraph— 
‘‘(A) in the case of a plan which provides 
health insurance coverage (as defined in section 
812(a)(3)), such State shall be the State with 
which filing and approval of a policy type of-
fered by the plan was initially obtained, and 
‘‘(B) in any other case, the Secretary shall 
take into account the places of residence of the 
participants and beneficiaries under the plan 
and the State in which the trust is main-
tained.’’. 
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SEC. 226. EFFECTIVE DATE AND TRANSITIONAL AND 
OTHER RULES. 
(a) EFFECTIVE DATE.—The amendments made by 
this subtitle shall take effect 1 year after the date of the 
enactment of this Act. The Secretary of Labor shall first 
issue all regulations necessary to carry out the amend-
ments made by this subtitle within 1 year after the date 
of the enactment of this Act. 
(b) TREATMENT
OF CERTAIN EXISTING HEALTH 
BENEFITS PROGRAMS.— 
(1) IN GENERAL.—In any case in which, as of 
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of 
providing benefits consisting of medical care for the 
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make 
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and 
such arrangement is licensed under the laws of one 
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of 
the Employee Retirement Income Security Act of 
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
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rangement under part 8 of subtitle B of title I of 
such Act— 
(A) such arrangement shall be deemed to 
be a group health plan for purposes of title I 
of such Act; 
(B) the requirements of sections 801(a) 
and 803(a) of the Employee Retirement Income 
Security Act of 1974 shall be deemed met with 
respect to such arrangement; 
(C) the requirements of section 803(b) of 
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors 
which— 
(i) is elected by the participating em-
ployers, with each employer having one 
vote; and 
(ii) has complete fiscal control over 
the arrangement and which is responsible 
for all operations of the arrangement; 
(D) the requirements of section 804(a) of 
such Act shall be deemed met with respect to 
such arrangement; and 
(E) the arrangement may be certified by 
any applicable authority with respect to its op-
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erations in any State only if it operates in such 
State on the date of certification. 
The provisions of this subsection shall cease to apply 
with respect to any such arrangement at such time 
after the date of the enactment of this Act as the 
applicable requirements of this subsection are not 
met with respect to such arrangement. 
(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 812 of the Employee 
Retirement Income Security Act of 1974, except 
that the reference in paragraph (7) of such section 
to an ‘‘association health plan’’ shall be deemed a 
reference to an arrangement referred to in this sub-
section. 
TITLE III—INTERSTATE MARKET 
FOR HEALTH INSURANCE 
SEC. 
301. 
COOPERATIVE 
GOVERNING 
OF 
INDIVIDUAL 
HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.), as restored by sec-
tion 2, is amended by adding at the end the following new 
part: 
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‘‘PART D—COOPERATIVE GOVERNING OF 
INDIVIDUAL HEALTH INSURANCE COVERAGE 
‘‘SEC. 2795. DEFINITIONS. 
‘‘In this part: 
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
the State designated by the issuer as the State 
whose covered laws shall govern the health insurance 
issuer in the sale of such coverage under this part. 
An issuer, with respect to a particular policy, may 
only designate one such State as its primary State 
with respect to all such coverage it offers. Such an 
issuer may not change the designated primary State 
with respect to individual health insurance coverage 
once the policy is issued, except that such a change 
may be made upon renewal of the policy. With re-
spect to such designated State, the issuer is deemed 
to be doing business in that State. 
‘‘(2) SECONDARY STATE.—The term ‘secondary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
any State that is not the primary State. In the case 
of a health insurance issuer that is selling a policy 
in, or to a resident of, a secondary State, the issuer 
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is deemed to be doing business in that secondary 
State. 
‘‘(3) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2), except that such an 
issuer must be licensed in the primary State and be 
qualified to sell individual health insurance coverage 
in that State. 
‘‘(4) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘individual health insurance cov-
erage’ means health insurance coverage offered in 
the individual market, as defined in section 
2791(e)(1), but does not include excepted benefits 
described in section 2791(c). 
‘‘(5) 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 requirements of 
this title for the State with respect to the issuer. 
‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 
term ‘hazardous financial condition’ means that, 
based on its present or reasonably anticipated finan-
cial condition, a health insurance issuer is unlikely 
to be able— 
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‘‘(A) to meet obligations to policyholders 
with respect to known claims and reasonably 
anticipated claims; or 
‘‘(B) to pay other obligations in the normal 
course of business. 
‘‘(7) COVERED LAWS.— 
‘‘(A) IN
GENERAL.—The term ‘covered 
laws’ means the laws, rules, regulations, agree-
ments, and orders governing the insurance busi-
ness pertaining to— 
‘‘(i) individual health insurance cov-
erage issued by a health insurance issuer; 
‘‘(ii) the offer, sale, rating (including 
medical 
underwriting), 
renewal, 
and 
issuance of individual health insurance cov-
erage to an individual; 
‘‘(iii) the provision to an individual in 
relation to individual health insurance cov-
erage of health care and insurance related 
services; 
‘‘(iv) the provision to an individual in 
relation to individual health insurance cov-
erage of management, operations, and in-
vestment activities of a health insurance 
issuer; and 
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‘‘(v) the provision to an individual in 
relation to individual health insurance cov-
erage of loss control and claims adminis-
tration for a health insurance issuer with 
respect to liability for which the issuer pro-
vides insurance. 
‘‘(B) EXCEPTION.—Such term does not in-
clude any law, rule, regulation, agreement, or 
order governing the use of care or cost manage-
ment techniques, including any requirement re-
lated to provider contracting, network access or 
adequacy, health care data collection, or quality 
assurance. 
‘‘(8) STATE.—The term ‘State’ means only the 
50 States and the District of Columbia. 
‘‘(9) UNFAIR
CLAIMS
SETTLEMENT
PRAC-
TICES.—The term ‘unfair claims settlement prac-
tices’ means only the following practices: 
‘‘(A) Knowingly misrepresenting to claim-
ants and insured individuals relevant facts or 
policy provisions relating to coverage at issue. 
‘‘(B) Failing to acknowledge with reason-
able promptness pertinent communications with 
respect to claims arising under policies. 
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smartinez on DSK6TPTVN1PROD with BILLS
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‘‘(C) Failing to adopt and implement rea-
sonable standards for the prompt investigation 
and settlement of claims arising under policies. 
‘‘(D) Failing to effectuate prompt, fair, 
and equitable settlement of claims submitted in 
which liability has become reasonably clear. 
‘‘(E) Refusing to pay claims without con-
ducting a reasonable investigation. 
‘‘(F) Failing to affirm or deny coverage of 
claims within a reasonable period of time after 
having completed an investigation related to 
those claims. 
‘‘(G) A pattern or practice of compelling 
insured individuals or their beneficiaries to in-
stitute suits to recover amounts due under its 
policies by offering substantially less than the 
amounts ultimately recovered in suits brought 
by them. 
‘‘(H) A pattern or practice of attempting 
to settle or settling claims for less than the 
amount that a reasonable person would believe 
the insured individual or his or her beneficiary 
was entitled by reference to written or printed 
advertising material accompanying or made 
part of an application. 
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smartinez on DSK6TPTVN1PROD with BILLS
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‘‘(I) Attempting to settle or settling claims 
on the basis of an application that was materi-
ally altered without notice to, or knowledge or 
consent of, the insured. 
‘‘(J) Failing to provide forms necessary to 
present claims within 15 calendar days of a re-
quests with reasonable explanations regarding 
their use. 
‘‘(K) Attempting to cancel a policy in less 
time than that prescribed in the policy or by the 
law of the primary State. 
‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 
and abuse’ means an act or omission committed by 
a person who, knowingly and with intent to defraud, 
commits, or conceals any material information con-
cerning, one or more of the following: 
‘‘(A) Presenting, causing to be presented 
or preparing with knowledge or belief that it 
will be presented to or by an insurer, a rein-
surer, broker or its agent, false information as 
part of, in support of or concerning a fact ma-
terial to one or more of the following: 
‘‘(i) An application for the issuance or 
renewal of an insurance policy or reinsur-
ance contract. 
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smartinez on DSK6TPTVN1PROD with BILLS
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‘‘(ii) The rating of an insurance policy 
or reinsurance contract. 
‘‘(iii) A claim for payment or benefit 
pursuant to an insurance policy or reinsur-
ance contract. 
‘‘(iv) Premiums paid on an insurance 
policy or reinsurance contract. 
‘‘(v) Payments made in accordance 
with the terms of an insurance policy or 
reinsurance contract. 
‘‘(vi) A document filed with the com-
missioner or the chief insurance regulatory 
official of another jurisdiction. 
‘‘(vii) The financial condition of an in-
surer or reinsurer. 
‘‘(viii) The formation, acquisition, 
merger, 
reconsolidation, 
dissolution 
or 
withdrawal from one or more lines of in-
surance or reinsurance in all or part of a 
State by an insurer or reinsurer. 
‘‘(ix) The issuance of written evidence 
of insurance. 
‘‘(x) The reinstatement of an insur-
ance policy. 
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smartinez on DSK6TPTVN1PROD with BILLS
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‘‘(B) Solicitation or acceptance of new or 
renewal insurance risks on behalf of an insurer, 
reinsurer, or other person engaged in the busi-
ness of insurance by a person who knows or 
should know that the insurer or other person 
responsible for the risk is insolvent at the time 
of the transaction. 
‘‘(C) Transaction of the business of insur-
ance in violation of laws requiring a license, cer-
tificate of authority or other legal authority for 
the transaction of the business of insurance. 
‘‘(D) Attempt to commit, aiding or abet-
ting in the commission of, or conspiracy to com-
mit the acts or omissions specified in this para-
graph. 
‘‘SEC. 2796. APPLICATION OF LAW. 
‘‘(a) IN GENERAL.—The covered laws of the primary 
State shall apply to individual health insurance coverage 
offered by a health insurance issuer in the primary State 
and in any secondary State, but only if the coverage and 
issuer comply with the conditions of this section with re-
spect to the offering of coverage in any secondary State. 
‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC-
ONDARY STATE.—Except as provided in this section, a 
health insurance issuer with respect to its offer, sale, rat-
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ing (including medical underwriting), renewal, and 
issuance of individual health insurance coverage in any 
secondary State is exempt from any covered laws of the 
secondary State (and any rules, regulations, agreements, 
or orders sought or issued by such State under or related 
to such covered laws) to the extent that such laws would— 
‘‘(1) make unlawful, or regulate, directly or in-
directly, the operation of the health insurance issuer 
operating in the secondary State, except that any 
secondary State may require such an issuer— 
‘‘(A) to pay, on a nondiscriminatory basis, 
applicable premium and other taxes (including 
high-risk pool assessments) which are levied on 
insurers and surplus lines insurers, brokers, or 
policyholders under the laws of the State; 
‘‘(B) to register with and designate the 
State insurance commissioner as its agent solely 
for the purpose of receiving service of legal doc-
uments or process; 
‘‘(C) to submit to an examination of its fi-
nancial condition by the State insurance com-
missioner in any State in which the issuer is 
doing business to determine the issuer’s finan-
cial condition, if— 
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‘‘(i) the State insurance commissioner 
of the primary State has not done an ex-
amination within the period recommended 
by the National Association of Insurance 
Commissioners; and 
‘‘(ii) any such examination is con-
ducted in accordance with the examiners’ 
handbook of the National Association of 
Insurance Commissioners and is coordi-
nated to avoid unjustified duplication and 
unjustified repetition; 
‘‘(D) to comply with a lawful order 
issued— 
‘‘(i) in a delinquency proceeding com-
menced by the State insurance commis-
sioner if there has been a finding of finan-
cial impairment under subparagraph (C); 
or 
‘‘(ii) in a voluntary dissolution pro-
ceeding; 
‘‘(E) to comply with an injunction issued 
by a court of competent jurisdiction, upon a pe-
tition by the State insurance commissioner al-
leging that the issuer is in hazardous financial 
condition; 
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‘‘(F) to participate, on a nondiscriminatory 
basis, in any insurance insolvency guaranty as-
sociation or similar association to which a 
health insurance issuer in the State is required 
to belong; 
‘‘(G) to comply with any State law regard-
ing fraud and abuse (as defined in section 
2795(10)), except that if the State seeks an in-
junction regarding the conduct described in this 
subparagraph, such injunction must be obtained 
from a court of competent jurisdiction; 
‘‘(H) to comply with any State law regard-
ing unfair claims settlement practices (as de-
fined in section 2795(9)); or 
‘‘(I) to comply with the applicable require-
ments for independent review under section 
2798 with respect to coverage offered in the 
State; 
‘‘(2) require any individual health insurance 
coverage issued by the issuer to be countersigned by 
an insurance agent or broker residing in that Sec-
ondary State; or 
‘‘(3) otherwise discriminate against the issuer 
issuing insurance in both the primary State and in 
any secondary State. 
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‘‘(c) CLEAR
AND CONSPICUOUS DISCLOSURE.—A 
health insurance issuer shall provide the following notice, 
in 12-point bold type, in any insurance coverage offered 
in a secondary State under this part by such a health in-
surance issuer and at renewal of the policy, with the 5 
blank spaces therein being appropriately filled with the 
name of the health insurance issuer, the name of primary 
State, the name of the secondary State, the name of the 
secondary State, and the name of the secondary State, re-
spectively, for the coverage concerned: 
This policy is issued by lllll and is governed by 
the laws and regulations of the State of lllll, and 
it has met all the laws of that State as determined by 
that State’s Department of Insurance. This policy may be 
less expensive than others because it is not subject to all 
of the insurance laws and regulations of the State of 
lllll, including coverage of some services or bene-
fits mandated by the law of the State of lllll. Ad-
ditionally, this policy is not subject to all of the consumer 
protection laws or restrictions on rate changes of the State 
of lllll. As with all insurance products, before pur-
chasing this policy, you should carefully review the policy 
and determine what health care services the policy covers 
and what benefits it provides, including any exclusions, 
limitations, or conditions for such services or benefits. 
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‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS 
AND PREMIUM INCREASES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a health insurance issuer that provides indi-
vidual health insurance coverage to an individual 
under this part in a primary or secondary State may 
not upon renewal— 
‘‘(A) move or reclassify the individual in-
sured under the health insurance coverage from 
the class such individual is in at the time of 
issue of the contract based on the health-status 
related factors of the individual; or 
‘‘(B) increase the premiums assessed the 
individual for such coverage based on a health 
status-related factor or change of a health sta-
tus-related factor or the past or prospective 
claim experience of the insured individual. 
‘‘(2) CONSTRUCTION.—Nothing in paragraph 
(1) shall be construed to prohibit a health insurance 
issuer— 
‘‘(A) from terminating or discontinuing 
coverage or a class of coverage in accordance 
with subsections (b) and (c) of section 2742; 
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‘‘(B) from raising premium rates for all 
policy holders within a class based on claims ex-
perience; 
‘‘(C) from changing premiums or offering 
discounted premiums to individuals who engage 
in wellness activities at intervals prescribed by 
the issuer, if such premium changes or incen-
tives— 
‘‘(i) are disclosed to the consumer in 
the insurance contract; 
‘‘(ii) are based on specific wellness ac-
tivities that are not applicable to all indi-
viduals; and 
‘‘(iii) are not obtainable by all individ-
uals to whom coverage is offered; 
‘‘(D) from reinstating lapsed coverage; or 
‘‘(E) from retroactively adjusting the rates 
charged an insured individual if the initial rates 
were set based on material misrepresentation by 
the individual at the time of issue. 
‘‘(e) PRIOR OFFERING
OF POLICY
IN PRIMARY 
STATE.—A health insurance issuer may not offer for sale 
individual health insurance coverage in a secondary State 
unless that coverage is currently offered for sale in the 
primary State. 
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‘‘(f) LICENSING
OF AGENTS
OR BROKERS
FOR 
HEALTH INSURANCE ISSUERS.—Any State may require 
that a person acting, or offering to act, as an agent or 
broker for a health insurance issuer with respect to the 
offering of individual health insurance coverage obtain a 
license from that State, with commissions or other com-
pensation subject to the provisions of the laws of that 
State, except that a State may not impose any qualifica-
tion or requirement which discriminates against a non-
resident agent or broker. 
‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN-
SURANCE COMMISSIONER.—Each health insurance issuer 
issuing individual health insurance coverage in both pri-
mary and secondary States shall submit— 
‘‘(1) to the insurance commissioner of each 
State in which it intends to offer such coverage, be-
fore it may offer individual health insurance cov-
erage in such State— 
‘‘(A) a copy of the plan of operation or fea-
sibility study or any similar statement of the 
policy being offered and its coverage (which 
shall include the name of its primary State and 
its principal place of business); 
‘‘(B) written notice of any change in its 
designation of its primary State; and 
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‘‘(C) written notice from the issuer of the 
issuer’s compliance with all the laws of the pri-
mary State; and 
‘‘(2) to the insurance commissioner of each sec-
ondary State in which it offers individual health in-
surance coverage, a copy of the issuer’s quarterly fi-
nancial statement submitted to the primary State, 
which statement shall be certified by an independent 
public accountant and contain a statement of opin-
ion on loss and loss adjustment expense reserves 
made by— 
‘‘(A) a member of the American Academy 
of Actuaries; or 
‘‘(B) a qualified loss reserve specialist. 
‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 
Nothing in this section shall be construed to affect the 
authority of any Federal or State court to enjoin— 
‘‘(1) the solicitation or sale of individual health 
insurance coverage by a health insurance issuer to 
any person or group who is not eligible for such in-
surance; or 
‘‘(2) the solicitation or sale of individual health 
insurance coverage that violates the requirements of 
the law of a secondary State which are described in 
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subparagraphs 
(A) 
through 
(H) 
of 
section 
2796(b)(1). 
‘‘(i) POWER OF SECONDARY STATES TO TAKE AD-
MINISTRATIVE ACTION.—Nothing in this section shall be 
construed to affect the authority of any State to enjoin 
conduct in violation of that State’s laws described in sec-
tion 2796(b)(1). 
‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
subsection (b)(1)(G) (relating to injunctions) and 
paragraph (2), nothing in this section shall be con-
strued to affect the authority of any State to make 
use of any of its powers to enforce the laws of such 
State with respect to which a health insurance issuer 
is not exempt under subsection (b). 
‘‘(2) COURTS OF COMPETENT JURISDICTION.— 
If a State seeks an injunction regarding the conduct 
described in paragraphs (1) and (2) of subsection 
(h), such injunction must be obtained from a Fed-
eral or State court of competent jurisdiction. 
‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 
section shall affect the authority of any State to bring ac-
tion in any Federal or State court. 
‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 
this section shall be construed to affect the applicability 
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of State laws generally applicable to persons or corpora-
tions. 
‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO 
HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 
health insurance issuer is offering coverage in a primary 
State that does not accommodate residents of secondary 
States or does not provide a working mechanism for resi-
dents of a secondary State, and the issuer is offering cov-
erage under this part in such secondary State which has 
not adopted a qualified high-risk pool as its acceptable al-
ternative mechanism (as defined in section 2744(c)(2)), 
the issuer shall, with respect to any individual health in-
surance coverage offered in a secondary State under this 
part, comply with the guaranteed availability requirements 
for eligible individuals in section 2741. 
‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 
BEFORE ISSUER MAY SELL INTO SECONDARY 
STATES. 
‘‘A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary 
State if the State insurance commissioner does not use 
a risk-based capital formula for the determination of cap-
ital and surplus requirements for all health insurance 
issuers. 
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‘‘SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SEC-
ONDARY STATE. 
‘‘Effective beginning two years after the date of en-
actment of this part, an individual in a State may not 
buy individual health insurance coverage in a secondary 
State if the premium for individual health insurance in 
the primary State (with respect to the individual) exceeds 
the national average premium by 10 percent or more. 
‘‘SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCE-
DURES. 
‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur-
ance issuer may not offer, sell, or issue individual health 
insurance coverage in a secondary State under the provi-
sions of this title unless— 
‘‘(1) both the secondary State and the primary 
State have legislation or regulations in place estab-
lishing an independent review process for individuals 
who are covered by individual health insurance cov-
erage, or 
‘‘(2) in any case in which the requirements of 
subparagraph (A) are not met with respect to the ei-
ther of such States, the issuer provides an inde-
pendent review mechanism substantially identical (as 
determined by the applicable State authority of such 
State) to that prescribed in the ‘Health Carrier Ex-
ternal Review Model Act’ of the National Association 
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of Insurance Commissioners for all individuals who 
purchase insurance coverage under the terms of this 
part, except that, under such mechanism, the review 
is conducted by an independent medical reviewer, or 
a panel of such reviewers, with respect to whom the 
requirements of subsection (b) are met. 
‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL 
REVIEWERS.—In the case of any independent review 
mechanism referred to in subsection (a)(2)— 
‘‘(1) IN GENERAL.—In referring a denial of a 
claim to an independent medical reviewer, or to any 
panel of such reviewers, to conduct independent 
medical review, the issuer shall ensure that— 
‘‘(A) each independent medical reviewer 
meets the qualifications described in paragraphs 
(2) and (3); 
‘‘(B) with respect to each review, each re-
viewer meets the requirements of paragraph (4) 
and the reviewer, or at least 1 reviewer on the 
panel, meets the requirements described in 
paragraph (5); and 
‘‘(C) compensation provided by the issuer 
to each reviewer is consistent with paragraph 
(6). 
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‘‘(2) LICENSURE AND EXPERTISE.—Each inde-
pendent medical reviewer shall be a physician 
(allopathic or osteopathic) or health care profes-
sional who— 
‘‘(A) is appropriately credentialed or li-
censed in one or more States to deliver health 
care services; and 
‘‘(B) typically treats the condition, makes 
the diagnosis, or provides the type of treatment 
under review. 
‘‘(3) INDEPENDENCE.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), each independent medical reviewer 
in a case shall— 
‘‘(i) not be a related party (as defined 
in paragraph (7)); 
‘‘(ii) not have a material familial, fi-
nancial, or professional relationship with 
such a party; and 
‘‘(iii) not otherwise have a conflict of 
interest with such a party (as determined 
under regulations). 
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to— 
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‘‘(i) prohibit an individual, solely on 
the basis of affiliation with the issuer, 
from serving as an independent medical re-
viewer if— 
‘‘(I) a non-affiliated individual is 
not reasonably available; 
‘‘(II) the affiliated individual is 
not involved in the provision of items 
or services in the case under review; 
‘‘(III) the fact of such an affili-
ation is disclosed to the issuer and the 
enrollee (or authorized representative) 
and neither party objects; and 
‘‘(IV) the affiliated individual is 
not an employee of the issuer and 
does not provide services exclusively or 
primarily to or on behalf of the issuer; 
‘‘(ii) prohibit an individual who has 
staff privileges at the institution where the 
treatment involved takes place from serv-
ing as an independent medical reviewer 
merely on the basis of such affiliation if 
the affiliation is disclosed to the issuer and 
the enrollee (or authorized representative), 
and neither party objects; or 
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‘‘(iii) prohibit receipt of compensation 
by an independent medical reviewer from 
an entity if the compensation is provided 
consistent with paragraph (6). 
‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL 
IN SAME FIELD.— 
‘‘(A) IN
GENERAL.—In a case involving 
treatment, or the provision of items or serv-
ices— 
‘‘(i) by a physician, a reviewer shall be 
a practicing physician (allopathic or osteo-
pathic) of the same or similar specialty, as 
a physician who, acting within the appro-
priate scope of practice within the State in 
which the service is provided or rendered, 
typically treats the condition, makes the 
diagnosis, or provides the type of treat-
ment under review; or 
‘‘(ii) by a non-physician health care 
professional, the reviewer, or at least 1 
member of the review panel, shall be a 
practicing non-physician health care pro-
fessional of the same or similar specialty 
as the non-physician health care profes-
sional who, acting within the appropriate 
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scope of practice within the State in which 
the service is provided or rendered, typi-
cally treats the condition, makes the diag-
nosis, or provides the type of treatment 
under review. 
‘‘(B) PRACTICING
DEFINED.—For pur-
poses of this paragraph, the term ‘practicing’ 
means, with respect to an individual who is a 
physician or other health care professional, that 
the individual provides health care services to 
individual patients on average at least 2 days 
per week. 
‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 
external review relating to a child, a reviewer shall 
have expertise under paragraph (2) in pediatrics. 
‘‘(6) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by the issuer to an 
independent medical reviewer in connection with a 
review under this section shall— 
‘‘(A) not exceed a reasonable level; and 
‘‘(B) not be contingent on the decision ren-
dered by the reviewer. 
‘‘(7) RELATED PARTY DEFINED.—For purposes 
of this section, the term ‘related party’ means, with 
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respect to a denial of a claim under a coverage relat-
ing to an enrollee, any of the following: 
‘‘(A) The issuer involved, or any fiduciary, 
officer, director, or employee of the issuer. 
‘‘(B) The enrollee (or authorized represent-
ative). 
‘‘(C) The health care professional that pro-
vides the items or services involved in the de-
nial. 
‘‘(D) The institution at which the items or 
services (or treatment) involved in the denial 
are provided. 
‘‘(E) The manufacturer of any drug or 
other item that is included in the items or serv-
ices involved in the denial. 
‘‘(F) Any other party determined under 
any regulations to have a substantial interest in 
the denial involved. 
‘‘(8) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ENROLLEE.—The term ‘enrollee’ 
means, with respect to health insurance cov-
erage offered by a health insurance issuer, an 
individual enrolled with the issuer to receive 
such coverage. 
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‘‘(B) HEALTH CARE PROFESSIONAL.—The 
term ‘health care professional’ means an indi-
vidual who is licensed, accredited, or certified 
under State law to provide specified health care 
services and who is operating within the scope 
of such licensure, accreditation, or certification. 
‘‘SEC. 2800. ENFORCEMENT. 
‘‘(a) IN GENERAL.—Subject to subsection (b), with 
respect to specific individual health insurance coverage the 
primary State for such coverage has sole jurisdiction to 
enforce the primary State’s covered laws in the primary 
State and any secondary State. 
‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 
subsection (a) shall be construed to affect the authority 
of a secondary State to enforce its laws as set forth in 
the exception specified in section 2796(b)(1). 
‘‘(c) COURT INTERPRETATION.—In reviewing action 
initiated by the applicable secondary State authority, the 
court of competent jurisdiction shall apply the covered 
laws of the primary State. 
‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 
of individual health insurance coverage offered in a sec-
ondary State that fails to comply with the covered laws 
of the primary State, the applicable State authority of the 
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secondary State may notify the applicable State authority 
of the primary State.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individual health insurance 
coverage offered, issued, or sold after the date that is one 
year after the date of the enactment of this Act. 
(c) GAO ONGOING STUDY AND REPORTS.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct an ongoing study con-
cerning the effect of the amendment made by sub-
section (a) on— 
(A) the number of uninsured and under-in-
sured; 
(B) the availability and cost of health in-
surance policies for individuals with pre-existing 
medical conditions; 
(C) the availability and cost of health in-
surance policies generally; 
(D) the elimination or reduction of dif-
ferent types of benefits under health insurance 
policies offered in different States; and 
(E) cases of fraud or abuse relating to 
health insurance coverage offered under such 
amendment and the resolution of such cases. 
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(2) ANNUAL REPORTS.—The Comptroller Gen-
eral shall submit to Congress an annual report, after 
the end of each of the 5 years following the effective 
date of the amendment made by subsection (a), on 
the ongoing study conducted under paragraph (1). 
(d) SEVERABILITY.—If any provision of the section 
or the application of such provision to any person or cir-
cumstance is held to be unconstitutional, the remainder 
of this section and the application of the provisions of such 
to any other person or circumstance shall not be affected. 
TITLE IV—SAFETY NET 
REFORMS 
SEC. 401. REQUIRING OUTREACH AND COVERAGE BEFORE 
EXPANSION OF ELIGIBILITY. 
(a) STATE CHILD HEALTH PLAN REQUIRED TO 
SPECIFY HOW IT WILL ACHIEVE COVERAGE FOR 90 PER-
CENT OF TARGETED LOW-INCOME CHILDREN.— 
(1) IN GENERAL.—Section 2102(a) of the So-
cial Security Act (42 U.S.C. 1397bb(a)) is amend-
ed— 
(A) in paragraph (6), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (7), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
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(C) by adding at the end the following new 
paragraph: 
‘‘(8) how the eligibility and benefits provided 
for under the plan for each fiscal year (beginning 
with fiscal year 2015) will allow for the State’s an-
nual funding allotment to cover at least 90 percent 
of the eligible targeted low-income children in the 
State.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to State child health 
plans for fiscal years beginning with fiscal year 
2015. 
(b) LIMITATION ON PROGRAM EXPANSIONS UNTIL 
LOWEST INCOME ELIGIBLE INDIVIDUALS ENROLLED.— 
Section 2105(c) of the Social Security Act (42 U.S.C. 
1397dd(c)) is amended by adding at the end the following 
new paragraph: 
‘‘(12) LIMITATION
ON
INCREASED
COVERAGE 
OF HIGHER INCOME CHILDREN.— 
‘‘(A) IN GENERAL.—For child health as-
sistance furnished in a fiscal year beginning 
with fiscal year 2015: 
‘‘(i) NO
PAYMENT
FOR
CHILDREN 
WITH FAMILY INCOME ABOVE 300 PERCENT 
OF POVERTY LINE.—Payment shall not be 
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made under this section for child health 
assistance for a targeted low-income child 
in a family the income of which exceeds 
300 percent of the poverty line applicable 
to a family of the size involved. 
‘‘(ii) SPECIAL RULES FOR PAYMENT 
FOR
CHILDREN
WITH
FAMILY
INCOME 
ABOVE 200 PERCENT OF POVERTY LINE.— 
In the case of child health assistance for a 
targeted low-income child in a family the 
income of which exceeds 200 percent (but 
does not exceed 300 percent) of the pov-
erty line applicable to a family of the size 
involved no payment shall be made under 
this section for such assistance unless the 
State demonstrates to the satisfaction of 
the Secretary that— 
‘‘(I) the State has met the 90 
percent retrospective coverage test 
specified in subparagraph (B)(i) for 
the previous fiscal year; and 
‘‘(II) the State will meet the 90 
percent prospective coverage test spec-
ified in subparagraph (B)(ii) for the 
fiscal year. 
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‘‘(B) 90 PERCENT COVERAGE TESTS.— 
‘‘(i) RETROSPECTIVE TEST.—The 90 
percent retrospective coverage test speci-
fied in this clause is, for a State for a fis-
cal year, that on average during the fiscal 
year, the State has enrolled under this title 
or title XIX at least 90 percent of the indi-
viduals residing in the State who— 
‘‘(I) are children under 19 years 
of age (or are pregnant women) and 
are eligible for medical assistance 
under title XIX; or 
‘‘(II) are targeted low-income 
children whose family income does not 
exceed 200 percent of the poverty line 
and who are eligible for child health 
assistance under this title. 
‘‘(ii) PROSPECTIVE
TEST.—The 90 
percent prospective test specified in this 
clause is, for a State for a fiscal year, that 
on average during the fiscal year, the State 
will enroll under this title or title XIX at 
least 90 percent of the individuals residing 
in the State who— 
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‘‘(I) are children under 19 years 
of age (or are pregnant women) and 
are eligible for medical assistance 
under title XIX; or 
‘‘(II) are targeted low-income 
children whose family income does not 
exceed such percent of the poverty 
line (in excess of 200 percent) as the 
State elects consistent with this para-
graph and who are eligible for child 
health assistance under this title. 
‘‘(C) GRANDFATHER.—Clauses (i) and (ii) 
of subparagraph (A) shall not apply to the pro-
vision of child health assistance— 
‘‘(i) to a targeted low-income child 
who is enrolled for child health assistance 
under this title as of September 30, 2012; 
‘‘(ii) to a pregnant woman who is en-
rolled for assistance under this title as of 
September 30, 2013, through the comple-
tion of the post-partum period following 
completion of her pregnancy; and 
‘‘(iii) for items and services furnished 
before October 1, 2014, to an individual 
who is not a targeted low-income child and 
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who is enrolled for assistance under this 
title as of September 30, 2013. 
‘‘(D) 
TREATMENT
OF
PREGNANT 
WOMEN.—In 
this 
paragraph 
and 
sections 
2102(a)(8) and 2104(a)(2), the term ‘targeted 
low-income child’ includes an individual under 
age 19, including the period from conception to 
birth, who is eligible for child health assistance 
under this title by virtue of the definition of the 
term ‘child’ under section 457.10 of title 42, 
Code of Federal Regulations.’’. 
(c) STANDARDIZATION
OF
INCOME
DETERMINA-
TIONS.— 
(1) IN GENERAL.—Section 2110 of the Social 
Security Act (42 U.S.C. 1397jj) is amended by add-
ing at the end the following new subsection: 
‘‘(d) STANDARDIZATION
OF INCOME DETERMINA-
TIONS.—In determining family income under this title (in-
cluding in the case of a State child health plan that pro-
vides health benefits coverage in the manner described in 
section 2101(a)(2)), a State shall base such determination 
on gross income (including amounts that would be in-
cluded in gross income if they were not exempt from in-
come taxation) and may only take into consideration such 
income disregards as the Secretary shall develop.’’. 
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(2) EFFECTIVE DATE.—(A) Subject to subpara-
graph (B), the amendment made by paragraph (1) 
shall apply to determinations (and redeterminations) 
of income made on or after April 1, 2012. 
(B) In the case of a State child health plan 
under title XXI of the Social Security Act which the 
Secretary of Health and Human Services determines 
requires State legislation (other than legislation ap-
propriating funds) in order for the plan to meet the 
additional requirement imposed by the amendment 
made by paragraph (1), the State child health plan 
shall not be regarded as failing to comply with the 
requirements of such title solely on the basis of its 
failure to meet this additional requirement before 
the first day of the first calendar quarter beginning 
after the close of the first regular session of the 
State legislature that begins after the date of the en-
actment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year 
legislative session, each year of such session shall be 
deemed to be a separate regular session of the State 
legislature. 
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SEC. 402. EASING ADMINISTRATIVE BARRIERS TO STATE 
COOPERATION WITH EMPLOYER-SPONSORED 
INSURANCE COVERAGE. 
(a) REQUIRING SOME COVERAGE FOR EMPLOYER- 
SPONSORED INSURANCE UNDER CHIP.—Section 2102(a) 
of the Social Security Act (42 U.S.C. 1397b(a)), as 
amended by section 401(a), is amended— 
(1) in paragraph (7), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (8), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(9) effective for plan years beginning on or 
after October 1, 2014, how the plan will provide for 
child health assistance with respect to targeted low- 
income children covered under a group health 
plan.’’. 
(b) FEDERAL FINANCIAL PARTICIPATION FOR EM-
PLOYER-SPONSORED INSURANCE.—Section 2105 of the 
Social Security Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), by inserting before 
the semicolon at the end the following: ‘‘and, subject 
to paragraph (3)(C), in the form of payment of the 
premiums for coverage under a group health plan 
that includes coverage of targeted low-income chil-
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dren and benefits supplemental to such coverage’’; 
and 
(2) by amending paragraph (3) of subsection 
(c) to read as follows: 
‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN-
SURANCE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of family coverage under a group 
health plan that includes coverage of targeted 
low-income children unless such coverage would 
otherwise substitute for coverage that would be 
provided to such children but for the purchase 
of family coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A)— 
‘‘(i) notwithstanding section 2102, no 
minimum benefits requirement (other than 
those otherwise applicable with respect to 
services referred to in section 2102(a)(7)) 
under this title shall apply; and 
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‘‘(ii) no limitation on beneficiary cost- 
sharing otherwise applicable under this 
title or title XIX shall apply. 
‘‘(C) REQUIRED
PROVISION
OF
SUPPLE-
MENTAL BENEFITS.—If the coverage described 
in subparagraph (A) does not provide coverage 
for 
the 
services 
referred 
to 
in 
section 
2102(a)(7), the State child health plan shall 
provide coverage of such services as supple-
mental benefits. 
‘‘(D) LIMITATION ON FFP.—The amount 
of the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) (and sup-
plemental benefits under subparagraph (C) for 
individuals so covered) during a fiscal year may 
not exceed the product of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
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‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(E) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet Web site or other 
means including the State transparency 
plan portal established under section 901 
of the Empowering Patients First Act of 
2013) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
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coverage that is otherwise made available 
under this title. 
‘‘(F) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2014; 
and 
‘‘(iii) post a description of these cov-
erage options on any official Web site that 
may be established by the State in connec-
tion with the plan, including the State 
transparency plan portal established under 
section 901 of the Empowering Patients 
First Act of 2013. 
‘‘(G) SEMIANNUAL VERIFICATION OF COV-
ERAGE.—If coverage described in subparagraph 
(A) is provided under a group health plan with 
respect to a targeted low-income child, the 
State child health plan shall provide for the col-
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lection, at least once every six months, of proof 
from the plan that the child is enrolled in such 
coverage. 
‘‘(H) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) offering wrap around benefits in 
order for a group health plan to meet any 
State-established minimum benefit require-
ments; 
‘‘(ii) establishing a cost-effectiveness 
test to qualify for coverage under such a 
plan; 
‘‘(iii) establishing limits on beneficiary 
cost-sharing under such a plan; 
‘‘(iv) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such a plan; 
‘‘(v) paying less than the full cost of 
the employee’s share of the premium under 
such a plan, including prorating the cost of 
the premium to pay for only what the 
State determines is the portion of the pre-
mium that covers targeted low-income chil-
dren; 
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‘‘(vi) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); 
‘‘(vii) allowing beneficiaries enrolled in 
group health plans from changing plans to 
another coverage option available under 
this title at any time; or 
‘‘(viii) providing any guidance or in-
formation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A). 
‘‘(I) GROUP HEALTH PLAN DEFINED.—In 
this paragraph, the term ‘group health plan’ 
has the meaning given such term in section 
2791(a)(1) of the Public Health Service Act (42 
U.S.C. 300gg–91(a)(1)).’’. 
(c) APPLICATION UNDER MEDICAID.—The Secretary 
of Health and Human Services shall provide for the appli-
cation of the amendments made by subsections (a) and 
(b) under the Medicaid program under title XIX of the 
Social Security Act in the same manner as such amend-
ments apply to SCHIP under title XXI of such Act. 
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SEC. 403. IMPROVING BENEFICIARY CHOICE IN SCHIP. 
(a) REQUIRING OFFERING OF ALTERNATIVE COV-
ERAGE OPTIONS.—Section 2102 of the Social Security Act 
(42 U.S.C. 1397b), as amended by sections 401(a) and 
402(a), is amended— 
(1) in subsection (a)— 
(A) in paragraph (8), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (9), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(10) effective for plan years beginning on or 
after October 1, 2014, how the plan will provide for 
child health assistance with respect to targeted low- 
income children through alternative coverage options 
in accordance with subsection (e).’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) ALTERNATIVE COVERAGE OPTIONS.— 
‘‘(1) IN GENERAL.—Effective October 1, 2014, 
a State child health plan shall provide for the offer-
ing of any qualified alternative coverage that a 
qualified entity seeks to offer to targeted low-income 
children through the plan in the State. 
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‘‘(2) APPLICATION
OF
UNIFORM
FINANCIAL 
LIMITATION FOR ALL ALTERNATIVE COVERAGE OP-
TIONS.—With respect to all qualified alternative cov-
erage offered in a State, the State child health plan 
shall establish a uniform dollar limitation on the per 
capita monthly amount that will be paid by the 
State to the qualified entity with respect to such 
coverage provided to a targeted low-income child. 
Such limitation may not be less than 90 percent of 
the per capita monthly payment made for coverage 
offered under the State child health plan that is not 
in the form of an alternative coverage option. Noth-
ing in this paragraph shall be construed— 
‘‘(A) as requiring a State to provide for 
the full payment of premiums for qualified al-
ternative coverage; 
‘‘(B) as preventing a State from charging 
additional premiums to cover the difference be-
tween the cost of qualified alternative coverage 
and the amount of such payment limitation; or 
‘‘(C) as preventing a State from using its 
own funds to provide a dollar limitation that ex-
ceeds the Federal financial participation as lim-
ited under section 2105(c)(10). 
‘‘(3) TREATMENT OF LOW COST COVERAGE.— 
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‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), if the uniform dollar limita-
tion under paragraph (2) exceeds the premium 
for qualified alternative coverage for an en-
rollee, then such excess shall be refunded to the 
Federal and State governments in the same 
proportion as is otherwise applicable to recov-
ered funds under this title. 
‘‘(B) EXCEPTION FOR HIGH-DEDUCTIBLE 
HEALTH PLANS.—In the case of coverage under 
a high-deductible health plan, the excess de-
scribed in subparagraph (A) shall be deposited 
into a health savings account established with 
respect to such plan. 
‘‘(4) EXEMPTION.—A State is not subject to 
the requirement of paragraph (1) if the State child 
health plan provides, as of the date of the enactment 
of this subsection, for a cash out or health savings 
account type option for those enrolled under the 
plan. 
‘‘(5) QUALIFIED ALTERNATIVE COVERAGE DE-
FINED.—In this section, the term ‘qualified alter-
native coverage’ means health insurance coverage 
that— 
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‘‘(A) meets the coverage requirements of 
section 2103 (other than cost-sharing require-
ments of such section); and 
‘‘(B) is offered by a qualified insurer, and 
not directly by the State. 
‘‘(6) QUALIFIED
INSURER
DEFINED.—In this 
section, the term ‘qualified insurer’ means, with re-
spect to a State, an entity that is licensed to offer 
health insurance coverage in the State.’’. 
(b) FEDERAL
FINANCIAL
PARTICIPATION
FOR 
QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 
the Social Security Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), as amended by sec-
tion 402(b), by inserting before the semicolon at the 
end the following: ‘‘and, subject to paragraph 
(13)(C), in the form of payment of the premiums for 
coverage for qualified alternative coverage’’; and 
(2) in subsection (c), as amended by section 
401(b) by adding at the end the following new para-
graph: 
‘‘(13) PURCHASE OF QUALIFIED ALTERNATIVE 
COVERAGE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
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subject to the provisions of this paragraph, for 
the purchase of qualified alternative coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A), no limitation on beneficiary cost- 
sharing otherwise applicable under this title or 
title XIX shall apply. 
‘‘(C) LIMITATION ON FFP.—The amount of 
the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) during a 
fiscal year in the aggregate for all such cov-
erage in the State may not exceed the product 
of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
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‘‘(D) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet Web site or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(E) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
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‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2014; 
and 
‘‘(iii) post a description of these cov-
erage options on any official Web site that 
may be established by the State in connec-
tion with the plan. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) establishing limits on beneficiary 
cost-sharing under such alternative cov-
erage; 
‘‘(ii) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such coverage; 
‘‘(iii) paying less than the full cost of 
a child’s share of the premium under such 
coverage, insofar as the premium for such 
coverage exceeds the limitation established 
by the State under subparagraph (C); 
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‘‘(iv) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); or 
‘‘(v) providing any guidance or infor-
mation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A).’’. 
(c) APPLICATION UNDER MEDICAID.—The Secretary 
of Health and Human Services shall provide for the appli-
cation of the amendments made by subsections (a) and 
(b) under the Medicaid program under title XIX of the 
Social Security Act in the same manner as such amend-
ments apply to SCHIP under title XXI of such Act. 
TITLE V—LAWSUIT ABUSE 
REFORMS 
SEC. 501. CHANGE IN BURDEN OF PROOF BASED ON COM-
PLIANCE WITH BEST PRACTICE GUIDELINES. 
(a) SELECTION AND ISSUANCE OF BEST PRACTICES 
GUIDELINES.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall provide for the selection and 
issuance of best practice guidelines for treatment of 
medical conditions (each in this subsection referred 
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to as a ‘‘guideline’’) in accordance with paragraphs 
(2) and (3). 
(2) DEVELOPMENT PROCESS.—Not later than 
90 days after the date of enactment of this title, the 
Secretary shall enter into a contract with a qualified 
physician consensus-building organization (such as 
the Physician Consortium for Performance Improve-
ment), in concert and agreement with physician spe-
cialty organizations, to develop guidelines. The con-
tract shall require that the organization submit 
guidelines to the agency not later than 18 months 
after the date of the enactment of this title. 
(3) ISSUANCE.— 
(A) IN GENERAL.—Not later than 2 years 
after the date of the enactment of this title, the 
Secretary shall, after notice and opportunity for 
public comment, make a rule that provides for 
the issuance of the guidelines submitted under 
paragraph (2). 
(B) LIMITATION.—The Secretary may not 
make a rule that includes guidelines other than 
those submitted under paragraph (2). 
(C) DISSEMINATION.—The Secretary shall 
post such guidelines on the public Internet Web 
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page of the Department of Health and Human 
Services. 
(4) MAINTENANCE.—Not later than 4 years 
after the date of enactment of this title, and every 
2 years thereafter, the Secretary shall review the 
guidelines and shall, as necessary, enter into con-
tracts similar to the contract described in paragraph 
(2), and issue guidelines in a manner similar to the 
issuance of guidelines under paragraph (3). 
(b) USE.— 
(1) USE BY DEFENDANT TO CHANGE THE BUR-
DEN OF PROOF.—If a defendant in a health care 
lawsuit relating to treatment of an individual estab-
lishes by a preponderance of the evidence that the 
treatment was provided in a manner consistent with 
an applicable guideline issued under subsection (a), 
the defendant may not be held liable unless the 
plaintiff establishes the liability of the defendant by 
clear and convincing evidence. 
(2) LIMITATION
ON
INTRODUCTION
AS
EVI-
DENCE AGAINST A DEFENDANT.—Guidelines issued 
under subsection (a) may not be introduced as evi-
dence of negligence or deviation in the standard of 
care in any health care lawsuit unless they have pre-
viously been introduced by the defendant. 
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(3) NO PRESUMPTION OF NEGLIGENCE AGAINST 
A DEFENDANT.—There shall be no presumption of 
negligence with respect to treatment if a health care 
provider provides the treatment in a manner incon-
sistent with such guidelines. 
(c) CONSTRUCTION.—Nothing in this section shall be 
construed as preventing a State from— 
(1) replacing their current medical malpractice 
rules with rules that rely, as a defense, upon a 
health care provider’s compliance with a guideline 
issued under subsection (a); or 
(2) applying additional guidelines or limitations 
on liability that are in addition to, but not in lieu 
of, the guidelines issued under subsection (a). 
SEC. 502. STATE GRANTS TO CREATE ADMINISTRATIVE 
HEALTH CARE TRIBUNALS. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE 
HEALTH CARE TRIBUNALS. 
‘‘(a) IN GENERAL.—The Secretary may award grants 
to States for the development, implementation, and eval-
uation of administrative health care tribunals that comply 
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with this section, for the resolution of disputes concerning 
injuries allegedly caused by health care providers. 
‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 
To be eligible to receive a grant under this section, a State 
shall submit to the Secretary an application at such time, 
in such manner, and containing such information as may 
be required by the Secretary. A grant shall be awarded 
under this section on such terms and conditions as the 
Secretary determines appropriate. 
‘‘(c) REPRESENTATION BY COUNSEL.—A State that 
receives a grant under this section may not preclude any 
party to a dispute before an administrative health care tri-
bunal operated under such grant from obtaining legal rep-
resentation during any review by the expert panel under 
subsection (d), the administrative health care tribunal 
under subsection (e), or a State court under subsection 
(f). 
‘‘(d) EXPERT PANEL REVIEW AND EARLY OFFER 
GUIDELINES.— 
‘‘(1) IN GENERAL.—Prior to the submission of 
any dispute concerning injuries allegedly caused by 
health care providers to an administrative health 
care tribunal under this section, such allegations 
shall first be reviewed by an expert panel. 
‘‘(2) COMPOSITION.— 
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‘‘(A) IN GENERAL.—The members of each 
expert panel under this subsection shall be ap-
pointed by the head of the State agency respon-
sible for health. Each expert panel shall be 
composed of no fewer than 3 members and not 
more than 7 members. At least one-half of such 
members shall be medical experts (either physi-
cians or health care professionals). 
‘‘(B) LICENSURE AND EXPERTISE.—Each 
physician or health care professional appointed 
to an expert panel under subparagraph (A) 
shall— 
‘‘(i) be appropriately credentialed or 
licensed in one or more States to deliver 
health care services; and 
‘‘(ii) typically treat the condition, 
make the diagnosis, or provide the type of 
treatment that is under review. 
‘‘(C) INDEPENDENCE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), each individual appointed to an expert 
panel under this paragraph shall— 
‘‘(I) not have a material familial, 
financial, or professional relationship 
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with a party involved in the dispute 
reviewed by the panel; and 
‘‘(II) not otherwise have a con-
flict of interest with such a party. 
‘‘(ii) EXCEPTION.—Nothing in clause 
(i) shall be construed to prohibit an indi-
vidual who has staff privileges at an insti-
tution where the treatment involved in the 
dispute was provided from serving as a 
member of an expert panel merely on the 
basis of such affiliation, if the affiliation is 
disclosed to the parties and neither party 
objects. 
‘‘(D) PRACTICING HEALTH CARE PROFES-
SIONAL IN SAME FIELD.— 
‘‘(i) IN GENERAL.—In a dispute be-
fore an expert panel that involves treat-
ment, or the provision of items or serv-
ices— 
‘‘(I) by a physician, the medical 
experts on the expert panel shall be 
practicing physicians (allopathic or os-
teopathic) of the same or similar spe-
cialty as a physician who typically 
treats the condition, makes the diag-
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nosis, or provides the type of treat-
ment under review; or 
‘‘(II) by a health care profes-
sional other than a physician, at least 
two medical experts on the expert 
panel shall be practicing physicians 
(allopathic or osteopathic) of the same 
or similar specialty as the health care 
professional who typically treats the 
condition, makes the diagnosis, or 
provides the type of treatment under 
review, and, if determined appropriate 
by the State agency, an additional 
medical expert shall be a practicing 
health care professional (other than 
such a physician) of such a same or 
similar specialty. 
‘‘(ii) PRACTICING DEFINED.—In this 
paragraph, the term ‘practicing’ means, 
with respect to an individual who is a phy-
sician or other health care professional, 
that the individual provides health care 
services to individual patients on average 
at least 2 days a week. 
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‘‘(E) PEDIATRIC EXPERTISE.—In the case 
of dispute relating to a child, at least 1 medical 
expert on the expert panel shall have expertise 
described in subparagraph (D)(i) in pediatrics. 
‘‘(3) DETERMINATION.—After a review under 
paragraph (1), an expert panel shall make a deter-
mination as to the liability of the parties involved 
and compensation. 
‘‘(4) ACCEPTANCE.—If the parties to a dispute 
before an expert panel under this subsection accept 
the determination of the expert panel concerning li-
ability and compensation, such compensation shall 
be paid to the claimant and the claimant shall agree 
to forgo any further action against the health care 
providers involved. 
‘‘(5) FAILURE TO ACCEPT.—If any party de-
cides not to accept the expert panel’s determination, 
the matter shall be referred to an administrative 
health care tribunal created pursuant to this section. 
‘‘(e) ADMINISTRATIVE HEALTH CARE TRIBUNALS.— 
‘‘(1) IN GENERAL.—Upon the failure of any 
party to accept the determination of an expert panel 
under subsection (d), the parties shall have the right 
to request a hearing concerning the liability or com-
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pensation involved by an administrative health care 
tribunal established by the State involved. 
‘‘(2) REQUIREMENTS.—In establishing an ad-
ministrative health care tribunal under this section, 
a State shall— 
‘‘(A) ensure that such tribunals are pre-
sided over by special judges with health care ex-
pertise; 
‘‘(B) provide authority to such judges to 
make binding rulings, rendered in written deci-
sions, on standards of care, causation, com-
pensation, and related issues with reliance on 
independent expert witnesses commissioned by 
the tribunal; 
‘‘(C) establish gross negligence as the legal 
standard for the tribunal; 
‘‘(D) allow the admission into evidence of 
the recommendation made by the expert panel 
under subsection (d); and 
‘‘(E) provide for an appeals process to 
allow for review of decisions by State courts. 
‘‘(f) REVIEW BY STATE COURT AFTER EXHAUSTION 
OF ADMINISTRATIVE REMEDIES.— 
‘‘(1) RIGHT TO FILE.—If any party to a dispute 
before a health care tribunal under subsection (e) is 
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not satisfied with the determinations of the tribunal, 
the party shall have the right to file their claim in 
a State court of competent jurisdiction. 
‘‘(2) FORFEIT OF AWARDS.—Any party filing 
an action in a State court in accordance with para-
graph (1) shall forfeit any compensation award 
made under subsection (e). 
‘‘(3) ADMISSIBILITY.—The determinations of 
the expert panel and the administrative health care 
tribunal pursuant to subsections (d) and (e) with re-
spect to a State court proceeding under paragraph 
(1) shall be admissible into evidence in any such 
State court proceeding. 
‘‘(g) DEFINITION.—In this section, the term ‘health 
care provider’ means any person or entity required by 
State or Federal laws or regulations to be licensed, reg-
istered, or certified to provide health care services, and 
being either so licensed, registered, or certified, or exempt-
ed from such requirement by other statute or regulation. 
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated for any fiscal year such 
sums as may be necessary for purposes of making grants 
to States under this section.’’. 
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SEC. 503. AUTHORIZATION OF PAYMENT OF FUTURE DAM-
AGES TO CLAIMANTS IN HEALTH CARE LAW-
SUITS. 
(a) IN GENERAL.—In any health care lawsuit, if an 
award of future damages, without reduction to present 
value, equaling or exceeding $50,000 is made against a 
party with sufficient insurance or other assets to fund a 
periodic payment of such a judgment, the court shall, at 
the request of any party, enter a judgment ordering that 
the future damages be paid by periodic payments, in ac-
cordance with the Uniform Periodic Payment of Judg-
ments Act promulgated by the National Conference of 
Commissioners on Uniform State Laws. 
(b) APPLICABILITY.—This section applies to all ac-
tions which have not been first set for trial or retrial be-
fore the effective date of this title. 
SEC. 504. DEFINITIONS. 
In this title: 
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution 
system’’ or ‘‘ADR’’ means a system that provides 
for the resolution of health care lawsuits in a man-
ner other than through a civil action brought in a 
State or Federal court. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
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ing a person who asserts or claims a right to legal 
or equitable contribution, indemnity, or subrogation, 
arising out of a health care liability claim or action, 
and any person on whose behalf such a claim is as-
serted or such an action is brought, whether de-
ceased, incompetent, or a minor. 
(3) FEDERAL TAX BENEFIT.—A claimant shall 
be treated as receiving a Federal tax benefit with re-
spect to payment for items or services if— 
(A) such payment is compensation by in-
surance— 
(i) which constitutes medical care, and 
(ii) with respect to the payment of 
premiums for which the claimant, or the 
employer of the claimant, was allowed an 
exclusion from gross income, a deduction, 
or a credit for Federal income tax pur-
poses, 
(B) a deduction was allowed with respect 
to such payment for Federal income tax pur-
poses, or 
(C) such payment was from an Archer 
MSA (as defined in section 220(d) of the Inter-
nal Revenue Code of 1986), a health savings 
account (as defined in section 223(d) of such 
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Code), a flexible spending arrangement (as de-
fined in section 106(c)(2) of such Code), or a 
health reimbursement arrangement which is 
treated as employer-provided coverage under an 
accident or health plan for purposes of section 
106 of such Code. 
(4) 
HEALTH
CARE
LAWSUIT.—The 
term 
‘‘health care lawsuit’’ means any health care liability 
claim concerning the provision of health care goods 
or services brought in a Federal court or in a State 
court or pursuant to an alternative dispute resolu-
tion system, if such claim concerns items or services 
for which coverage is provided under title XVIII, 
XIX, or XXI of the Social Security Act or for which 
the claimant receives a Federal tax benefit, against 
a health care provider, a health care organization, or 
the manufacturer, distributor, supplier, marketer, 
promoter, or seller of a medical product, regardless 
of the theory of liability on which the claim is based, 
or the number of claimants, plaintiffs, defendants, 
or other parties, or the number of claims or causes 
of action, in which the claimant alleges a health care 
liability claim. Such term does not include a claim 
or action which is based on criminal liability; which 
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seeks civil fines or penalties paid to Federal govern-
ment; or which is grounded in antitrust. 
(5) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court or pursuant 
to an alternative dispute resolution system, against 
a health care provider, a health care organization, or 
the manufacturer, distributor, supplier, marketer, 
promoter, or seller of a medical product, regardless 
of the theory of liability on which the claim is based, 
or the number of plaintiffs, defendants, or other par-
ties, or the number of causes of action, in which the 
claimant alleges a health care liability claim. 
(6) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
by any person, whether or not pursuant to ADR, 
against a health care provider, health care organiza-
tion, or the manufacturer, distributor, supplier, mar-
keter, promoter, or seller of a medical product, in-
cluding, but not limited to, third-party claims, cross- 
claims, counter-claims, or contribution claims, which 
are based upon the provision of, use of, or payment 
for (or the failure to provide, use, or pay for) health 
care services or medical products, regardless of the 
theory of liability on which the claim is based, or the 
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number of plaintiffs, defendants, or other parties, or 
the number of causes of action. 
(7) HEALTH CARE ORGANIZATION.—The term 
‘‘health care organization’’ means any person or en-
tity which is obligated to provide or pay for health 
benefits under any health plan, including any person 
or entity acting under a contract or arrangement 
with a health care organization to provide or admin-
ister any health benefit. 
(8) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any person or entity 
required by State or Federal laws or regulations to 
be licensed, registered, or certified to provide health 
care services, and being either so licensed, reg-
istered, or certified, or exempted from such require-
ment by other statute or regulation. 
(9) HEALTH CARE GOODS OR SERVICES.—The 
term ‘‘health care goods or services’’ means any 
goods or services provided by a health care organiza-
tion, provider, or by any individual working under 
the supervision of a health care provider, that relates 
to the diagnosis, prevention, or treatment of any 
human disease or impairment, or the assessment or 
care of the health of human beings. 
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(10) MEDICAL PRODUCT.—The term ‘‘medical 
product’’ means a drug, device, or biological product 
intended for humans, and the terms ‘‘drug’’, ‘‘de-
vice’’, and ‘‘biological product’’ have the meanings 
given such terms in sections 201(g)(1) and 201(h) 
of the Federal Food, Drug and Cosmetic Act (21 
U.S.C. 321(g)(1) and (h)) and section 351(a) of the 
Public Health Service Act (42 U.S.C. 262(a)), re-
spectively, including any component or raw material 
used therein, but excluding health care services. 
(11) MEDICAL TREATMENT.—The term ‘‘med-
ical treatment’’ means the provision of any goods or 
services by a health care provider or by any indi-
vidual working under the supervision of a health 
care provider, that relates to the diagnosis, preven-
tion, or treatment of any human disease or impair-
ment, or the assessment or care of the health of 
human beings. 
(12) RECOVERY.—The term ‘‘recovery’’ means 
the net sum recovered after deducting any disburse-
ments or costs incurred in connection with prosecu-
tion or settlement of the claim, including all costs 
paid or advanced by any person. Costs of health care 
incurred by the plaintiff and the attorneys’ office 
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overhead costs or charges for legal services are not 
deductible disbursements or costs for such purpose. 
(13) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana Is-
lands, the Trust Territory of the Pacific Islands, and 
any other territory or possession of the United 
States, or any political subdivision thereof. 
SEC. 505. EFFECT ON OTHER LAWS. 
(a) VACCINE INJURY.— 
(1) To the extent that title XXI of the Public 
Health Service Act establishes a Federal rule of law 
applicable to a civil action brought for a vaccine-re-
lated injury or death— 
(A) this title does not affect the application 
of the rule of law to such an action; and 
(B) any rule of law prescribed by this title 
in conflict with a rule of law of such title XXI 
shall not apply to such action. 
(2) If there is an aspect of a civil action 
brought for a vaccine-related injury or death to 
which a Federal rule of law under title XXI of the 
Public Health Service Act does not apply, then this 
title or otherwise applicable law (as determined 
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under this title) will apply to such aspect of such ac-
tion. 
(b) OTHER FEDERAL LAW.—Except as provided in 
this section, nothing in this title shall be deemed to affect 
any defense available to a defendant in a health care law-
suit or action under any other provision of Federal law. 
SEC. 506. APPLICABILITY; EFFECTIVE DATE. 
This title shall apply to any health care lawsuit 
brought in a Federal or State court, or subject to an alter-
native dispute resolution system, that is initiated on or 
after the date of the enactment of this title, except that 
any health care lawsuit arising from an injury occurring 
prior to the date of the enactment of this title shall be 
governed by the applicable statute of limitations provisions 
in effect at the time the injury occurred. 
TITLE VI—WELLNESS AND 
PREVENTION 
SEC. 601. PROVIDING FINANCIAL INCENTIVES FOR TREAT-
MENT COMPLIANCE. 
(a) LIMITATION
ON EXCEPTION
FOR WELLNESS 
PROGRAMS UNDER HIPAA DISCRIMINATION RULES.— 
(1) EMPLOYEE RETIREMENT INCOME SECURITY 
ACT OF 1974 AMENDMENT.—Section 702(b)(2) of the 
Employee Retirement Income Security Act of 1974 
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(29 U.S.C. 1182(b)(2)) is amended by adding after 
and below subparagraph (B) the following: 
‘‘In applying subparagraph (B), a group health plan 
(or a health insurance issuer with respect to health 
insurance coverage) may vary premiums and cost- 
sharing by up to 50 percent of the value of the bene-
fits under the plan (or coverage) based on participa-
tion (or lack of participation) in a standards-based 
wellness program.’’. 
(2) PHSA AMENDMENT.—Section 2702(b)(2) 
of the Public Health Service Act (42 U.S.C. 300gg– 
1(b)(2)) is amended by adding after and below sub-
paragraph (B) the following: 
‘‘In applying subparagraph (B), a group health plan 
(or a health insurance issuer with respect to health 
insurance coverage) may vary premiums and cost- 
sharing by up to 50 percent of the value of the bene-
fits under the plan (or coverage) based on participa-
tion (or lack of participation) in a standards-based 
wellness program.’’. 
(3) IRC AMENDMENT.—Section 9802(b)(2) of 
the Internal Revenue Code of 1986 is amended by 
adding after and below subparagraph (B) the fol-
lowing: 
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‘‘In applying subparagraph (B), a group health plan 
may vary premiums and cost-sharing by up to 50 
percent of the value of the benefits under the plan 
based on participation (or lack of participation) in a 
standards-based wellness program.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to plan years beginning more 
than 1 year after the date of the enactment of this Act. 
TITLE VII—TRANSPARENCY AND 
INSURANCE REFORM MEASURES 
SEC. 701. RECEIPT AND RESPONSE TO REQUESTS FOR 
CLAIM INFORMATION. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act is amended by inserting after section 2713 the 
following new section: 
‘‘SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR 
CLAIM INFORMATION. 
‘‘(a) REQUIREMENT.— 
‘‘(1) IN GENERAL.—In the case of health insur-
ance coverage offered in connection with a group 
health plan, not later than the 30th day after the 
date a health insurance issuer receives a written re-
quest for a written report of claim information from 
the plan, plan sponsor, or plan administrator, the 
health insurance issuer shall provide the requesting 
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party the report, subject to the succeeding provisions 
of this section. 
‘‘(2) EXCEPTION.—The health insurance issuer 
is not obligated to provide a report under this sub-
section regarding a particular employer or group 
health plan more than twice in any 12-month period 
and is not obligated to provide such a report in the 
case of an employer with fewer than 50 employees. 
‘‘(3) DEADLINE.—A plan, plan sponsor, or plan 
administrator must request a report under this sub-
section before or on the second anniversary of the 
date of termination of coverage under a group health 
plan issued by the health insurance issuer. 
‘‘(b) FORM OF REPORT; INFORMATION TO BE IN-
CLUDED.— 
‘‘(1) IN GENERAL.—A health insurance issuer 
shall provide the report of claim information under 
subsection (a)— 
‘‘(A) in a written report; 
‘‘(B) through an electronic file transmitted 
by secure electronic mail or a file transfer pro-
tocol site; or 
‘‘(C) by making the required information 
available through a secure Web site or Web por-
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tal accessible by the requesting plan, plan spon-
sor, or plan administrator. 
‘‘(2) INFORMATION TO BE INCLUDED.—A re-
port of claim information provided under subsection 
(a) shall contain all information available to the 
health insurance issuer that is responsive to the re-
quest made under such subsection, including, subject 
to subsection (c), protected health information, for 
the 36-month period preceding the date of the report 
or the period specified by subparagraphs (D), (E), 
and (F) of paragraph (3), if applicable, or for the 
entire period of coverage, whichever period is short-
er. 
‘‘(3) REQUIRED
INFORMATION.—Subject to 
subsection (c), a report provided under subsection 
(a) shall include the following: 
‘‘(A) Aggregate paid claims experience by 
month, including claims experience for medical, 
dental, and pharmacy benefits, as applicable. 
‘‘(B) Total premium paid by month. 
‘‘(C) Total number of covered employees 
on a monthly basis by coverage tier, including 
whether coverage was for— 
‘‘(i) an employee only; 
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‘‘(ii) an employee with dependents 
only; 
‘‘(iii) an employee with a spouse only; 
or 
‘‘(iv) an employee with a spouse and 
dependents. 
‘‘(D) The total dollar amount of claims 
pending as of the date of the report. 
‘‘(E) A separate description and individual 
claims report for any individual whose total 
paid claims exceed $15,000 during the 12- 
month period preceding the date of the report, 
including the following information related to 
the claims for that individual— 
‘‘(i) a unique identifying number, 
characteristic, or code for the individual; 
‘‘(ii) the amounts paid; 
‘‘(iii) dates of service; and 
‘‘(iv) applicable procedure codes and 
diagnosis codes. 
‘‘(F) For claims that are not part of the 
information described in a previous subpara-
graph, a statement describing precertification 
requests for hospital stays of 5 days or longer 
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that were made during the 30-day period pre-
ceding the date of the report. 
‘‘(c) LIMITATIONS ON DISCLOSURE.— 
‘‘(1) IN GENERAL.—A health insurance issuer 
may not disclose protected health information in a 
report of claim information provided under this sec-
tion if the health insurance issuer is prohibited from 
disclosing that information under another State or 
Federal law that imposes more stringent privacy re-
strictions than those imposed under Federal law 
under the HIPAA privacy regulations. To withhold 
information in accordance with this subsection, the 
health insurance issuer must— 
‘‘(A) notify the plan, plan sponsor, or plan 
administrator requesting the report that infor-
mation is being withheld; and 
‘‘(B) provide to the plan, plan sponsor, or 
plan administrator a list of categories of claim 
information that the health insurance issuer has 
determined are subject to the more stringent 
privacy restrictions under another State or Fed-
eral law. 
‘‘(2) PROTECTION.—A plan sponsor is entitled 
to receive protected health information under sub-
paragraph (E) and (F) of subsection (b)(3) and sub-
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section (d) only after an appropriately authorized 
representative of the plan sponsor makes to the 
health insurance issuer a certification substantially 
similar to the following certification: ‘I hereby certify 
that the plan documents comply with the require-
ments of section 164.504(f)(2) of title 45, Code of 
Federal Regulations, and that the plan sponsor will 
safeguard and limit the use and disclosure of pro-
tected health information that the plan sponsor may 
receive from the group health plan to perform the 
plan administration functions.’. 
‘‘(3) RESULTS.—A plan sponsor that does not 
provide the certification required by paragraph (2) is 
not entitled to receive the protected health informa-
tion described by subparagraphs (E) and (F) of sub-
section (b)(3) and subsection (d), but is entitled to 
receive a report of claim information that includes 
the information described by subparagraphs (A) 
through (D) of subsection (b)(3). 
‘‘(4) INFORMATION.—In the case of a request 
made under subsection (a) after the date of termi-
nation of coverage, the report must contain all infor-
mation available to the health insurance issuer as of 
the date of the report that is responsive to the re-
quest, including protected health information, and 
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including the information described by subsection 
(b)(3), for the period described by subsection (b)(2) 
preceding the date of termination of coverage or for 
the entire policy period, whichever period is shorter. 
Notwithstanding this subsection, the report may not 
include the protected health information described 
by subparagraphs (E) and (F) of subsection (b)(3) 
unless a certification has been provided in accord-
ance with paragraph (2). 
‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.— 
‘‘(1) REVIEW.—On receipt of the report re-
quired by subsection (a), the plan, plan sponsor, or 
plan administrator may review the report and, not 
later than the 10th day after the date the report is 
received, may make a written request to the health 
insurance issuer for additional information in ac-
cordance with this subsection for specified individ-
uals. 
‘‘(2) REQUEST.—With respect to a request for 
additional information concerning specified individ-
uals for whom claims information has been provided 
under subsection (b)(3)(E), the health insurance 
issuer shall provide additional information on the 
prognosis or recovery if available and, for individuals 
in active case management, the most recent case 
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management information, including any future ex-
pected costs and treatment plan, that relate to the 
claims for that individual. 
‘‘(3) RESPONSE.—The health insurance issuer 
must respond to the request for additional informa-
tion under this subsection not later than the 15th 
day after the date of such request unless the re-
questing plan, plan sponsor, or plan administrator 
agrees to a request for additional time. 
‘‘(4) LIMITATION.—The health insurance issuer 
is not required to produce the report described by 
this subsection unless a certification has been pro-
vided in accordance with subsection (c)(2). 
‘‘(5) COMPLIANCE
WITH
SECTION
DOES
NOT 
CREATE LIABILITY.—A health insurance issuer that 
releases information, including protected health in-
formation, in accordance with this subsection has 
not violated a standard of care and is not liable for 
civil damages resulting from, and is not subject to 
criminal prosecution for, releasing that information. 
‘‘(e) LIMITATION ON PREEMPTION.—Nothing in this 
section is meant to limit States from enacting additional 
laws in addition to the provisions of this section, but not 
in lieu of such provisions. 
‘‘(f) DEFINITIONS.—In this section: 
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‘‘(1) The terms ‘employer’, ‘plan administrator’, 
and ‘plan sponsor’ have the meanings given such 
terms in section 3 of the Employee Retirement In-
come Security Act of 1974. 
‘‘(2) The term ‘HIPAA privacy regulations’ has 
the meaning given such term in section 1180(b)(3) 
of the Social Security Act. 
‘‘(3) The term ‘protected health information’ 
has the meaning given such term under the HIPAA 
privacy regulations.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act. 
TITLE VIII—QUALITY 
SEC. 801. PROHIBITION ON CERTAIN USES OF DATA OB-
TAINED FROM COMPARATIVE EFFECTIVE-
NESS RESEARCH OR FROM PATIENT-CEN-
TERED OUTCOMES RESEARCH; ACCOUNTING 
FOR PERSONALIZED MEDICINE AND DIF-
FERENCES 
IN 
PATIENT 
TREATMENT 
RE-
SPONSE. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, the Secretary of Health and Human Serv-
ices— 
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(1) shall not use data obtained from the con-
duct of comparative effectiveness research or pa-
tient-centered outcomes research, including such re-
search that is conducted or supported using funds 
appropriated under the American Recovery and Re-
investment Act of 2009 (Public Law 111–5), to deny 
coverage of an item or service under a Federal 
health care program (as defined in section 1128B(f) 
of the Social Security Act (42 U.S.C. 1320a–7b(f))); 
and 
(2) shall ensure that comparative effectiveness 
research and patient-centered outcomes research 
conducted or supported by the Federal Government 
accounts for factors contributing to differences in 
the treatment response and treatment preferences of 
patients, 
including 
patient-reported 
outcomes, 
genomics and personalized medicine, the unique 
needs of health disparity populations, and indirect 
patient benefits. 
(b) CONSULTATION
AND APPROVAL REQUIRED.— 
Nothing the Federal Coordinating Council for Compara-
tive Effectiveness Research finds can be released in final 
form until after consultation with and approved by rel-
evant physician specialty organizations. 
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(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed as affecting the authority of the 
Commissioner of Food and Drugs under the Federal 
Food, Drug, and Cosmetic Act or the Public Health Serv-
ice Act. 
SEC. 
802. 
ESTABLISHMENT 
OF 
PERFORMANCE-BASED 
QUALITY MEASURES. 
Not later than January 1, 2014, the Secretary of 
Health and Human Services shall submit to Congress a 
proposal for a formalized process for the development of 
performance-based quality measures that could be applied 
to physicians’ services under the Medicare program under 
title XVIII of the Social Security Act. Such proposal shall 
be in concert and agreement with the Physician Consor-
tium for Performance Improvement and shall only utilize 
measures agreed upon by each physician specialty organi-
zation. 
TITLE IX—STATE 
TRANSPARENCY PLAN PORTAL 
SEC. 901. PROVIDING INFORMATION ON HEALTH COV-
ERAGE OPTIONS AND HEALTH CARE PRO-
VIDERS. 
(a) STATE-BASED PORTAL.—A State (by itself or 
jointly with other States) may contract with a private enti-
ty to establish a Health Plan and Provider Portal Web 
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site (referred to in this section as a ‘‘plan portal’’) for 
the purposes of providing standardized information— 
(1) on health insurance plans that have been 
certified to be available for purchase in that State; 
and 
(2) on price and quality information on health 
care providers (including physicians, hospitals, and 
other health care institutions). 
(b) PROHIBITIONS.— 
(1) DIRECT ENROLLMENT.—A plan portal may 
not directly enroll individuals in health insurance 
plans or under a State Medicaid plan or a State 
children’s health insurance plan. 
(2) CONFLICTS OF INTEREST.— 
(A) 
COMPANIES.—A 
health 
insurance 
issuer offering a health insurance plan through 
a plan portal may not— 
(i) be the private entity developing 
and maintaining a plan portal under this 
section; or 
(ii) have an ownership interest in such 
private entity or in the plan portal. 
(B) 
INDIVIDUALS.—An 
individual 
em-
ployed by a health insurance issuer offering a 
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health insurance plan through a plan portal 
may not serve as a director or officer for— 
(i) the private entity developing and 
maintaining a plan portal under this sec-
tion; or 
(ii) the plan portal. 
(c) CONSTRUCTION.—Nothing in this section shall be 
construed to prohibit health insurance brokers and agents 
from— 
(1) utilizing the plan portal for any purpose; or 
(2) marketing or offering health insurance 
products. 
(d) STATE DEFINED.—In this section, the term 
‘‘State’’ has the meaning given such term for purposes of 
title XIX of the Social Security Act. 
(e) HEALTH INSURANCE PLANS.—For purposes of 
this section, the term ‘‘health insurance plan’’ does not 
include coverage of excepted benefits, as defined in section 
2791(c) of the Public Health Service Act (42 U.S.C. 
300gg–91(c)). 
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TITLE X—PATIENT FREEDOM OF 
CHOICE 
SEC. 1001. GUARANTEEING FREEDOM OF CHOICE AND CON-
TRACTING FOR PATIENTS UNDER MEDICARE. 
(a) IN GENERAL.—Section 1802 of the Social Secu-
rity Act (42 U.S.C. 1395a) is amended to read as follows: 
‘‘FREEDOM OF CHOICE AND CONTRACTING BY PATIENT 
GUARANTEED 
‘‘SEC. 1802. (a) BASIC FREEDOM OF CHOICE.—Any 
individual entitled to insurance benefits under this title 
may obtain health services from any institution, agency, 
or person qualified to participate under this title if such 
institution, agency, or person undertakes to provide that 
individual such services. 
‘‘(b) FREEDOM TO CONTRACT BY MEDICARE BENE-
FICIARIES.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
this subsection, nothing in this title shall prohibit a 
Medicare beneficiary from entering into a contract 
with an eligible professional (whether or not the pro-
fessional is a participating or non-participating phy-
sician or practitioner) for any item or service cov-
ered under this title. 
‘‘(2) SUBMISSION OF CLAIMS.—Any Medicare 
beneficiary that enters into a contract under this 
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section with an eligible professional shall be per-
mitted to submit a claim for payment under this 
title for services furnished by such professional, and 
such payment shall be made in the amount that 
would otherwise apply to such professional under 
this title except that where such professional is con-
sidered to be non-participating, payment shall be 
paid as if the professional were participating. Pay-
ment made under this title for any item or service 
provided under the contract shall not render the pro-
fessional a participating or non-participating physi-
cian or practitioner, and as such, requirements of 
this title that may otherwise apply to a participating 
or non-participating physician or practitioner would 
not apply with respect to any items or services fur-
nished under the contract. 
‘‘(3) BENEFICIARY PROTECTIONS.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to any contract unless— 
‘‘(i) the contract is in writing, is 
signed by the Medicare beneficiary and the 
eligible professional, and establishes all 
terms of the contract (including specific 
payment for items and services covered by 
the contract) before any item or service is 
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provided pursuant to the contract, and the 
beneficiary shall be held harmless for any 
subsequent payment charged for an item 
or service in excess of the amount estab-
lished under the contract during the period 
the contract is in effect; 
‘‘(ii) the contract contains the items 
described in subparagraph (B); and 
‘‘(iii) the contract is not entered into 
at a time when the Medicare beneficiary is 
facing an emergency medical condition or 
urgent health care situation. 
‘‘(B) ITEMS REQUIRED TO BE INCLUDED 
IN CONTRACT.—Any contract to provide items 
and services to which paragraph (1) applies 
shall clearly indicate to the Medicare beneficiary 
that by signing such contract the beneficiary— 
‘‘(i) agrees to be responsible for pay-
ment to such eligible professional for such 
items or services under the terms of and 
amounts established under the contract; 
‘‘(ii) agrees to be responsible for sub-
mitting claims under this title to the Sec-
retary, and to any other supplemental in-
surance plan that may provide supple-
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mental insurance, for such items or serv-
ices furnished under the contract if such 
items or services are covered by this title, 
unless otherwise provided in the contract 
under subparagraph (C)(i); and 
‘‘(iii) acknowledges that no limits or 
other payment incentives that may other-
wise apply under this title (such as the 
limits under subsection (g) of section 1848 
or incentives under subsection (a)(5), (m), 
(q), and (p) of such section) shall apply to 
amounts that may be charged, or paid to 
a beneficiary for, such items or services. 
Such contract shall also clearly indicate whether 
the eligible professional is excluded from par-
ticipation under the Medicare program under 
section 1128. 
‘‘(C) BENEFICIARY
ELECTIONS
UNDER 
THE
CONTRACT.—Any Medicare beneficiary 
that enters into a contract under this section 
may elect to negotiate, as a term of the con-
tract, a provision under which— 
‘‘(i) the eligible professional shall file 
claims on behalf of the beneficiary with the 
Secretary and any supplemental insurance 
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plan for items or services furnished under 
the contract if such items or services are 
covered under this title or under the plan; 
and 
‘‘(ii) the beneficiary assigns payment 
to the eligible professional for any claims 
filed by, or on behalf of, the beneficiary 
with the Secretary and any supplemental 
insurance plan for items or services fur-
nished under the contract. 
‘‘(D) EXCLUSION OF DUAL ELIGIBLE INDI-
VIDUALS.—Paragraph (1) shall not apply to 
any contract if a beneficiary who is eligible for 
medical assistance under title XIX is a party to 
the contract. 
‘‘(4) LIMITATION
ON
ACTUAL
CHARGE
AND 
CLAIM
SUBMISSION
REQUIREMENT
NOT
APPLICA-
BLE.—Section 1848(g) shall not apply with respect 
to any item or service provided to a Medicare bene-
ficiary under a contract described in paragraph (1). 
‘‘(5) CONSTRUCTION.—Nothing in this section 
shall be construed— 
‘‘(A) to prohibit any eligible professional 
from maintaining an election and acting as a 
participating or non-participating physician or 
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practitioner with respect to any patient not cov-
ered under a contract established under this 
section; and 
‘‘(B) as changing the items and services 
for which an eligible professional may bill under 
this title. 
‘‘(6) DEFINITIONS.—In this subsection: 
‘‘(A) MEDICARE BENEFICIARY.—The term 
‘Medicare beneficiary’ means an individual who 
is entitled to benefits under part A or enrolled 
under part B. 
‘‘(B) ELIGIBLE PROFESSIONAL.—The term 
‘eligible professional’ has the meaning given 
such term in section 1848(k)(3)(B). 
‘‘(C) EMERGENCY MEDICAL CONDITION.— 
The term ‘emergency medical condition’ means 
a medical condition manifesting itself by acute 
symptoms of sufficient severity (including se-
vere pain) such that a prudent layperson, with 
an average knowledge of health and medicine, 
could reasonably expect the absence of imme-
diate medical attention to result in— 
‘‘(i) serious jeopardy to the health of 
the individual or, in the case of a pregnant 
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woman, the health of the woman or her 
unborn child; 
‘‘(ii) serious impairment to bodily 
functions; or 
‘‘(iii) serious dysfunction of any bodily 
organ or part. 
‘‘(D) URGENT
HEALTH
CARE
SITUA-
TION.—The term ‘urgent health care situation’ 
means services furnished to an individual who 
requires services to be furnished within 12 
hours in order to avoid the likely onset of an 
emergency medical condition.’’. 
SEC. 
1002. 
PREEMPTION 
OF 
STATE 
LAWS 
LIMITING 
CHARGES 
FOR 
ELIGIBLE 
PROFESSIONAL 
SERVICES. 
(a) IN GENERAL.—No State may impose a limit on 
the amount of charges for services, furnished by an eligible 
professional (as defined in subsection (k)(3)(B) of section 
1848 of the Social Security Act, 42 U.S.C. 1395w–4), for 
which payment is made under such section, and any such 
limit is hereby preempted. 
(b) STATE.—In this section, the term ‘‘State’’ in-
cludes the District of Columbia, Puerto Rico, the Virgin 
Islands, Guam, and American Samoa. 
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SEC. 1003. HEALTH CARE PROVIDER LICENSURE CANNOT 
BE CONDITIONED ON PARTICIPATION IN A 
HEALTH PLAN. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services and any State (as a condition of receiving 
Federal financial participation under title XIX of the So-
cial Security Act) may not require any health care pro-
vider to participate in any health plan as a condition of 
licensure of the provider in any State. 
(b) DEFINITIONS.—In this section: 
(1) HEALTH PLAN.—The term ‘‘health plan’’ 
has the meaning given such term in section 1171(5) 
of the Social Security Act (42 U.S.C. 1320d(5)). 
(2) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any person or entity 
that is required by State or Federal laws or regula-
tions to be licensed, registered, or certified to pro-
vide health care services and is so licensed, reg-
istered, or certified, or exempted from such require-
ment by other statute or regulation. 
(3) STATE.—The term ‘‘State’’ has the mean-
ing given such term for purposes of title XIX of the 
Social Security Act. 
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SEC. 1004. BAD DEBT DEDUCTION FOR DOCTORS TO PAR-
TIALLY OFFSET THE COST OF PROVIDING UN-
COMPENSATED CARE REQUIRED TO BE PRO-
VIDED UNDER AMENDMENTS MADE BY THE 
EMERGENCY 
MEDICAL 
TREATMENT 
AND 
LABOR ACT. 
(a) IN GENERAL.—Section 166 of the Internal Rev-
enue Code of 1986 (relating to bad debts) is amended by 
redesignating subsection (f) as subsection (g) and by in-
serting after subsection (e) the following new subsection: 
‘‘(f) BAD DEBT TREATMENT FOR DOCTORS TO PAR-
TIALLY OFFSET COST OF PROVIDING UNCOMPENSATED 
CARE REQUIRED TO BE PROVIDED.— 
‘‘(1) AMOUNT OF DEDUCTION.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the basis for determining the 
amount of any deduction for an eligible 
EMTALA debt shall be treated as being equal 
to the Medicare payment amount. 
‘‘(B) MEDICARE PAYMENT AMOUNT.—For 
purposes of subparagraph (A), the Medicare 
payment amount with respect to an eligible 
EMTALA debt is the fee schedule amount es-
tablished under section 1848 of the Social Secu-
rity Act for the physicians’ service (to which 
such debt relates) as if the service were pro-
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vided to an individual enrolled under part B of 
title XVIII of such Act. 
‘‘(2) ELIGIBLE EMTALA DEBT.—For purposes 
of this section, the term ‘eligible EMTALA debt’ 
means any debt if— 
‘‘(A) such debt arose as a result of physi-
cians’ services— 
‘‘(i) which were performed in an 
EMTALA hospital by a board-certified 
physician (whether as part of medical 
screening or necessary stabilizing treat-
ment and whether as an emergency depart-
ment physician, as an on-call physician, or 
otherwise), and 
‘‘(ii) which were required to be pro-
vided under section 1867 of the Social Se-
curity Act (42 U.S.C. 1395dd), and 
‘‘(B) such debt is owed— 
‘‘(i) to such physician, or 
‘‘(ii) to an entity if— 
‘‘(I) such entity is a corporation 
and the sole shareholder of such cor-
poration is such physician, or 
‘‘(II) such entity is a partnership 
and any deduction under this sub-
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section with respect to such debt is al-
located to such physician or to an en-
tity described in subclause (I). 
‘‘(3) BOARD-CERTIFIED PHYSICIAN.—For pur-
poses of this subsection, the term ‘board-certified 
physician’ means any physician (as defined in sec-
tion 1861(r) of the Social Security Act (42 U.S.C. 
1395x(r))) who is certified by the American Board 
of Emergency Medicine or other appropriate medical 
specialty board for the specialty in which the physi-
cian practices, or who meets comparable require-
ments, as identified by the Secretary of the Treasury 
in consultation with Secretary of Health and Human 
Services. 
‘‘(4) OTHER
DEFINITIONS.—For purposes of 
this subsection— 
‘‘(A) EMTALA 
HOSPITAL.—The term 
‘EMTALA hospital’ means any hospital having 
a hospital emergency department which is re-
quired to comply with section 1867 of the So-
cial Security Act (42 U.S.C. 1395dd) (relating 
to examination and treatment for emergency 
medical conditions and women in labor). 
‘‘(B) PHYSICIANS’ SERVICES.—The term 
‘physicians’ services’ has the meaning given 
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such term in section 1861(q) of the Social Se-
curity Act (42 U.S.C. 1395x(q)).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to debts arising from services per-
formed in taxable years beginning after the date of the 
enactment of this Act. 
SEC. 1005. RIGHT OF CONTRACT WITH HEALTH CARE PRO-
VIDERS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall not preclude an enrollee, partici-
pant, or beneficiary in a health benefits plan from entering 
into any contract or arrangement for health care with any 
health care provider. 
(b) HEALTH BENEFITS PLAN DEFINED.— 
(1) IN GENERAL.—In this section, subject to 
paragraph (2), the term ‘‘health benefits plan’’ 
means any of the following: 
(A) Group health plan (as defined in sec-
tion 2791 of the Public Health Service Act). 
(B) Health insurance coverage (as defined 
in section 2791 of such Act). 
(C) A health benefits plan under chapter 
89 of title 5, United States Code. 
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(2) EXCLUSION OF MEDICAID AND TRICARE.— 
Such term does not include a health plan partici-
pating in— 
(A) the Medicaid program under title XIX 
of the Social Security Act; or 
(B) the TRICARE program under chapter 
55 of title 10, United States Code. 
(c) HEALTH CARE PROVIDER DEFINED.—In this 
section, the term ‘‘health care provider’’ means— 
(1) a physician, as defined in paragraphs (1), 
(2), (3), and (4) of section 1861(r) of the Social Se-
curity Act (42 U.S.C. 1395x(r)); and 
(2) a health care practitioner described in sec-
tion 1842(b)(18)(C) of such Act (42 U.S.C. 
1395u(b)(18)(C)). 
TITLE XI—INCENTIVES TO 
REDUCE PHYSICIAN SHORTAGES 
Subtitle 
A—Federally 
Supported 
Student Loan Funds for Medical 
Students 
SEC. 1101. FEDERALLY SUPPORTED STUDENT LOAN FUNDS 
FOR MEDICAL STUDENTS. 
(a) PRIMARY HEALTH CARE MEDICAL STUDENTS.— 
Subpart II of part A of the Public Health Service Act (42 
U.S.C. 292q et seq.) is amended— 
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(1) by redesignating section 735 as section 729; 
and 
(2) in subsection (f) of section 729 (as so redes-
ignated), by striking ‘‘is authorized to be appro-
priated $10,000,000 for each of the fiscal years 
1994 through 1996’’ and inserting ‘‘are authorized 
to be appropriated such sums as may be necessary 
for fiscal year 2014 and each fiscal year thereafter’’. 
(b) OTHER MEDICAL STUDENTS.—Part A of title VII 
of the Public Health Service Act (42 U.S.C. 292 et seq.) 
is amended by adding at the end the following: 
‘‘Subpart III—Federally Supported Student Loan 
Funds for Certain Medical Students 
‘‘SEC. 730. SCHOOL LOAN FUNDS FOR CERTAIN MEDICAL 
STUDENTS. 
‘‘(a) FUND AGREEMENTS.—For the purpose de-
scribed in subsection (b), the Secretary is authorized to 
enter into an agreement for the establishment and oper-
ation of a student loan fund with any public or nonprofit 
school of medicine or osteopathic medicine. 
‘‘(b) PURPOSE.—The purpose of this subpart is to 
provide for loans to medical students who would be eligible 
for a loan under subpart II, except for the student’s deci-
sion to enter a residency training program in a field other 
than primary health care. 
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‘‘(c) COMMENCEMENT
OF REPAYMENT PERIOD.— 
The repayment period for a loan under this section shall 
not begin before the end of any period during which the 
student is participating in an internship, residency, or fel-
lowship training program directly related to the field of 
medicine which the student agrees to enter pursuant to 
subsection (d). 
‘‘(d) REQUIREMENTS FOR STUDENTS.—Each agree-
ment under this section for the establishment of a student 
loan fund shall provide that the school of medicine or os-
teopathic medicine will make a loan to a student from such 
fund only if the student agrees— 
‘‘(1) to enter and complete a residency training 
program (in a field of medicine other than primary 
health care) not later than a period determined by 
the Secretary to be reasonable after the date on 
which the student graduates from such school; and 
‘‘(2) to practice medicine through the date on 
which the loan is repaid in full. 
‘‘(e) REQUIREMENTS FOR SCHOOLS.—The provisions 
of section 723(b) (regarding graduates in primary health 
care) shall not apply to a student loan fund established 
under this section. 
‘‘(f) APPLICABILITY OF OTHER PROVISIONS.—Ex-
cept as inconsistent with this section, the provisions of 
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subpart II shall apply to the program of student loan 
funds established under this section to the same extent 
and in the same manner as such provisions apply to the 
program of student loan funds established under subpart 
II. 
‘‘(g) AUTHORIZATION
OF
APPROPRIATIONS.—To 
carry out this section, there are authorized to be appro-
priated such sums as may be necessary for fiscal year 
2014 and each fiscal year thereafter.’’. 
Subtitle B—Loan Forgiveness for 
Primary Care Providers 
SEC. 1111. LOAN FORGIVENESS FOR PRIMARY CARE PRO-
VIDERS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall carry out a program of entering into 
contracts with eligible individuals under which— 
(1) the individual agrees to serve for a period 
of not less than 5 years as a primary care provider; 
and 
(2) in consideration of such service, the Sec-
retary agrees to pay not more than $50,000 on the 
principal and interest on the individual’s graduate 
educational loans. 
(b) ELIGIBILITY.—To be eligible to enter into a con-
tract under subsection (a), an individual must— 
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(1) have a graduate degree in medicine, osteo-
pathic medicine, or another health profession from 
an accredited (as determined by the Secretary of 
Health and Human Services) institution of higher 
education; and 
(2) have practiced as a primary care provider 
for a period (excluding any residency or fellowship 
training period) of not less than— 
(A) 5 years; or 
(B) 3 years in a medically underserved 
community (as defined in section 799B of the 
Public Health Service Act (42 U.S.C. 295p)). 
(c) INSTALLMENTS.—Payments under this section 
may be made in installments of not more than $10,000 
for each year of service described in subsection (a)(1). 
(d) APPLICABILITY OF CERTAIN PROVISIONS.—The 
provisions of subpart III of part D of title III of the Public 
Health Service Act shall, except as inconsistent with this 
section, apply to the program established under this sec-
tion in the same manner and to the same extent as such 
provisions apply to the National Health Service Corps 
Loan Repayment Program established in such subpart. 
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TITLE XII—QUALITY HEALTH 
CARE COALITION 
SEC. 1201. QUALITY HEALTH CARE COALITION. 
(a) APPLICATION
OF
THE FEDERAL ANTITRUST 
LAWS TO HEALTH CARE PROFESSIONALS NEGOTIATING 
WITH HEALTH PLANS.— 
(1) IN
GENERAL.—Any health care profes-
sionals who are engaged in negotiations with a 
health plan regarding the terms of any contract 
under which the professionals provide health care 
items or services for which benefits are provided 
under such plan shall, in connection with such nego-
tiations, be exempt from the Federal antitrust laws. 
(2) LIMITATION.— 
(A) NO NEW RIGHT FOR COLLECTIVE CES-
SATION OF SERVICE.—The exemption provided 
in paragraph (1) shall not confer any new right 
to participate in any collective cessation of serv-
ice to patients not already permitted by existing 
law. 
(B) NO CHANGE IN NATIONAL LABOR RE-
LATIONS
ACT.—This section applies only to 
health care professionals excluded from the Na-
tional Labor Relations Act. Nothing in this sec-
tion shall be construed as changing or amend-
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223 
ing any provision of the National Labor Rela-
tions Act, or as affecting the status of any 
group of persons under that Act. 
(3) NO
APPLICATION
TO
FEDERAL
PRO-
GRAMS.—Nothing in this section shall apply to nego-
tiations between health care professionals and health 
plans pertaining to benefits provided under any of 
the following: 
(A) The Medicare Program under title 
XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.). 
(B) The Medicaid program under title XIX 
of the Social Security Act (42 U.S.C. 1396 et 
seq.). 
(C) The SCHIP program under title XXI 
of the Social Security Act (42 U.S.C. 1397aa et 
seq.). 
(D) Chapter 55 of title 10, United States 
Code (relating to medical and dental care for 
members of the uniformed services). 
(E) Chapter 17 of title 38, United States 
Code (relating to Veterans’ medical care). 
(F) Chapter 89 of title 5, United States 
Code (relating to the Federal employees’ health 
benefits program). 
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(G) The Indian Health Care Improvement 
Act (25 U.S.C. 1601 et seq.). 
(b) DEFINITIONS.—In this section, the following defi-
nitions shall apply: 
(1) ANTITRUST
LAWS.—The term ‘‘antitrust 
laws’’— 
(A) has the meaning given it in subsection 
(a) of the first section of the Clayton Act (15 
U.S.C. 12(a)), except that such term includes 
section 5 of the Federal Trade Commission Act 
(15 U.S.C. 45) to the extent such section ap-
plies to unfair methods of competition; and 
(B) includes any State law similar to the 
laws referred to in subparagraph (A). 
(2) GROUP HEALTH PLAN.—The term ‘‘group 
health plan’’ means an employee welfare benefit plan 
to the extent that the plan provides medical care (in-
cluding items and services paid for as medical care) 
to employees or their dependents (as defined under 
the terms of the plan) directly or through insurance, 
reimbursement, or otherwise. 
(3) GROUP HEALTH PLAN, HEALTH INSURANCE 
ISSUER.—The terms ‘‘group health plan’’ and 
‘‘health insurance issuer’’ include a third-party ad-
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ministrator or other person acting for or on behalf 
of such plan or issuer. 
(4) 
HEALTH
CARE
SERVICES.—The 
term 
‘‘health care services’’ means any services for which 
payment may be made under a health plan, includ-
ing services related to the delivery or administration 
of such services. 
(5) HEALTH CARE PROFESSIONAL.—The term 
‘‘health care professional’’ means any individual or 
entity that provides health care items or services, 
treatment, assistance with activities of daily living, 
or medications to patients and who, to the extent re-
quired by State or Federal law, possesses specialized 
training that confers expertise in the provision of 
such items or services, treatment, assistance, or 
medications. 
(6) HEALTH INSURANCE COVERAGE.—The term 
‘‘health insurance coverage’’ means benefits con-
sisting of medical care (provided directly, through 
insurance or reimbursement, or otherwise and in-
cluding items and services paid for as medical care) 
under any hospital or medical service policy or cer-
tificate, hospital or medical service plan contract, or 
health maintenance organization contract offered by 
a health insurance issuer. 
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(7) HEALTH
INSURANCE
ISSUER.—The term 
‘‘health insurance issuer’’ means an insurance com-
pany, insurance service, or insurance organization 
(including a health maintenance organization) that 
is licensed to engage in the business of insurance in 
a State and that is subject to State law regulating 
insurance. Such term does not include a group 
health plan. 
(8) HEALTH MAINTENANCE ORGANIZATION.— 
The 
term 
‘‘health 
maintenance 
organization’’ 
means— 
(A) a federally qualified health mainte-
nance organization (as defined in section 
1301(a) of the Public Health Service Act (42 
U.S.C. 300e(a))); 
(B) an organization recognized under State 
law as a health maintenance organization; or 
(C) a similar organization regulated under 
State law for solvency in the same manner and 
to the same extent as such a health mainte-
nance organization. 
(9) HEALTH PLAN.—The term ‘‘health plan’’ 
means a group health plan or a health insurance 
issuer that is offering health insurance coverage. 
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(10) MEDICAL
CARE.—The term ‘‘medical 
care’’ means amounts paid for— 
(A) the diagnosis, cure, mitigation, treat-
ment, or prevention of disease, or amounts paid 
for the purpose of affecting any structure or 
function of the body; and 
(B) transportation primarily for and essen-
tial to receiving items and services referred to 
in subparagraph (A). 
(11) PERSON.—The term ‘‘person’’ includes a 
State or unit of local government. 
(12) STATE.—The term ‘‘State’’ includes the 
several States, the District of Columbia, Puerto 
Rico, the Virgin Islands of the United States, Guam, 
American Samoa, and the Commonwealth of the 
Northern Mariana Islands. 
(c) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act and shall not 
apply with respect to conduct occurring before such date. 
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TITLE XIII—OFFSETS 
Subtitle A—Discretionary 
Spending Limits 
SEC. 1301. DISCRETIONARY SPENDING LIMITS. 
The Balanced Budget and Emergency Deficit Control 
Act of 1985, as amended by section 101 of the Budget 
Control Act of 2011, is amended— 
(1) in section 251(c) (2 U.S.C. 901(c))— 
(A) by striking ‘‘and’’ at the end of para-
graph (9); and 
(B) by inserting after paragraph (10) the 
following: 
‘‘(11) with respect to fiscal year 2022— 
‘‘(A) 
for 
the 
security 
category, 
$662,562,510,000 in budget authority; and 
‘‘(B) 
for 
the 
nonsecurity 
category, 
$496,727,490,000 in budget authority; and 
‘‘(12) with respect to fiscal year 2023— 
‘‘(A) 
for 
the 
security 
category, 
$689,704,290,000 in budget authority; and 
‘‘(B) 
for 
the 
nonsecurity 
category, 
$495,325,710,000;’’; and 
(2) in section 251A(2) (2 U.S.C. 901a(2))— 
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(A) in subparagraph (B)(ii), by striking 
‘‘$510,000,000,000’’ 
and 
inserting 
‘‘$410,231,250,000’’; 
(B) in subparagraph (C)(ii), by striking 
‘‘$520,000,000,000’’ 
and 
inserting 
‘‘$424,377,360,000’’; 
(C) in subparagraph (D)(ii), by striking 
‘‘$530,000,000,000’’ 
and 
inserting 
‘‘$434,464,470,000’’; 
(D) in subparagraph (E)(ii), by striking 
‘‘$541,000,000,000’’ 
and 
inserting 
‘‘$445,368,000,000’’; 
(E) in subparagraph (F)(ii), by striking 
‘‘$553,000,000,000’’ 
and 
inserting 
‘‘$457,649,280,000’’; 
(F) in subparagraph (G)(ii), by striking 
‘‘$566,000,000,000’’ 
and 
inserting 
‘‘$472,098,360,000’’; 
(G) in subparagraph (H)(ii), by striking 
‘‘$578,000,000,000’’ 
and 
inserting 
‘‘$485,466,300,000’’; and 
(H) in subparagraph (I)(ii), by striking 
‘‘$590,000,000,000’’ 
and 
inserting 
‘‘$498,094,740,000’’. 
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230 
Subtitle B—Savings From Health 
Care Efficiencies 
SEC. 1311. MEDICARE DSH REPORT AND PAYMENT ADJUST-
MENTS IN RESPONSE TO COVERAGE EXPAN-
SION. 
(a) DSH REPORT.— 
(1) IN GENERAL.—Not later than January 1, 
2018, the Secretary of Health and Human Services 
shall submit to Congress a report on Medicare DSH 
taking into account the impact of the health care re-
forms carried out under this Act in reducing the 
number of uninsured individuals. The report shall 
include recommendations relating to the following: 
(A) The appropriate amount, targeting, 
and distribution of Medicare DSH to com-
pensate for higher Medicare costs associated 
with serving low-income beneficiaries (taking 
into account variations in the empirical jus-
tification for Medicare DSH attributable to hos-
pital characteristics, including bed size), con-
sistent with the original intent of Medicare 
DSH. 
(B) The appropriate amount, targeting, 
and distribution of Medicare DSH to hospitals 
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given their continued uncompensated care costs, 
to the extent such costs remain. 
(2) COORDINATION WITH MEDICAID DSH RE-
PORT.—The Secretary shall coordinate the report 
under this subsection with the report on Medicaid 
DSH under section 1322(a). 
(b) PAYMENT ADJUSTMENTS IN RESPONSE TO COV-
ERAGE EXPANSION.— 
(1) IN GENERAL.—If there is a significant de-
crease in the national rate of uninsurance as a result 
of this Act (as determined under paragraph (2)(A)), 
then the Secretary of Health and Human Services 
shall, beginning in fiscal year 2019, implement the 
following adjustments to Medicare DSH: 
(A) In lieu of the amount of Medicare 
DSH payment that would otherwise be made 
under section 1886(d)(5)(F) of the Social Secu-
rity Act, the amount of Medicare DSH payment 
shall be an amount based on the recommenda-
tions of the report under subsection (a)(1)(A) 
and shall take into account variations in the 
empirical justification for Medicare DSH attrib-
utable to hospital characteristics, including bed 
size. 
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(B) Subject to paragraph (3), make an ad-
ditional payment to a hospital by an amount 
that is estimated based on the amount of un-
compensated care provided by the hospital 
based on criteria for uncompensated care as de-
termined by the Secretary, which shall exclude 
bad debt. 
(2) SIGNIFICANT DECREASE IN NATIONAL RATE 
OF UNINSURANCE AS A RESULT OF THIS ACT.—For 
purposes of this subsection— 
(A) IN GENERAL.—There is a ‘‘significant 
decrease in the national rate of uninsurance as 
a result of this Act’’ if there is a decrease in 
the national rate of uninsurance (as defined in 
subparagraph (B)) from 2014 to 2016 that ex-
ceeds 8 percentage points. 
(B) NATIONAL
RATE
OF
UNINSURANCE 
DEFINED.—The 
term 
‘‘national 
rate 
of 
uninsurance’’ means, for a year, such rate for 
the under-65 population for the year as deter-
mined and published by the Bureau of the Cen-
sus in its Current Population Survey in or 
about September of the succeeding year. 
(3) UNCOMPENSATED CARE INCREASE.— 
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(A) COMPUTATION OF DSH SAVINGS.—For 
each fiscal year (beginning with fiscal year 
2017), the Secretary shall estimate the aggre-
gate reduction in Medicare DSH that will result 
from the adjustment under paragraph (1)(A). 
(B) 
STRUCTURE
OF
PAYMENT
IN-
CREASE.—The Secretary shall compute the in-
crease in Medicare DSH under paragraph 
(1)(B) for a fiscal year in accordance with a 
formula established by the Secretary that pro-
vides that— 
(i) the aggregate amount of such in-
crease for the fiscal year does not exceed 
50 percent of the aggregate reduction in 
Medicare DSH estimated by the Secretary 
for such fiscal year; and 
(ii) hospitals with higher levels of un-
compensated care receive a greater in-
crease. 
(c) MEDICARE DSH.—In this section, the term 
‘‘Medicare DSH’’ means adjustments in payments under 
section 1886(d)(5)(F) of the Social Security Act (42 
U.S.C. 1395ww(d)(5)(F)) for inpatient hospital services 
furnished by disproportionate share hospitals. 
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SEC. 1312. REDUCTION IN MEDICAID DSH. 
(a) REPORT.— 
(1) IN GENERAL.—Not later than January 1, 
2018, the Secretary of Health and Human Services 
(in this title referred to as the ‘‘Secretary’’) shall 
submit to Congress a report concerning the extent to 
which, based upon the impact of the health care re-
forms carried out under this Act in reducing the 
number of uninsured individuals, there is a contin-
ued role for Medicaid DSH. In preparing the report, 
the Secretary shall consult with community-based 
health care networks serving low-income bene-
ficiaries. 
(2) MATTERS TO BE INCLUDED.—The report 
shall include the following: 
(A) 
RECOMMENDATIONS.—Recommenda-
tions regarding— 
(i) the appropriate targeting of Med-
icaid DSH within States; and 
(ii) the distribution of Medicaid DSH 
among the States. 
(B) SPECIFICATION OF DSH HEALTH RE-
FORM METHODOLOGY.—The DSH Health Re-
form methodology described in paragraph (2) of 
subsection (b) for purposes of implementing the 
requirements of such subsection. 
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(3) COORDINATION WITH MEDICARE DSH RE-
PORT.—The Secretary shall coordinate the report 
under this subsection with the report on Medicare 
DSH under section 1321. 
(4) MEDICAID DSH.—In this section, the term 
‘‘Medicaid DSH’’ means adjustments in payments 
under section 1923 of the Social Security Act for in-
patient hospital services furnished by dispropor-
tionate share hospitals. 
(b) MEDICAID DSH REDUCTIONS.— 
(1) IN GENERAL.—If there is a significant de-
crease in the national rate of uninsurance as a result 
of 
this 
Act 
(as 
determined 
under 
section 
1321(a)(2)(A)), then the Secretary of Health and 
Human Services shall reduce Medicaid DSH so as to 
reduce total Federal payments to all States for such 
purpose by $1,500,000,000 in fiscal year 2019, 
$2,500,000,000 
in 
fiscal 
year 
2020, 
and 
$6,000,000,000 in fiscal year 2021. 
(2) DSH HEALTH REFORM METHODOLOGY.— 
The Secretary shall carry out paragraph (1) through 
use of a DSH Health Reform methodology issued by 
the Secretary that imposes the largest percentage re-
ductions on the States that— 
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(A) have the lowest percentages of unin-
sured individuals (determined on the basis of 
audited hospital cost reports) during the most 
recent year for which such data are available; 
or 
(B) do not target their DSH payments 
on— 
(i) hospitals with high volumes of 
Medicaid inpatients (as defined in section 
1923(b)(1)(A) of the Social Security Act 
(42 U.S.C. 1396r–4(b)(1)(A))); and 
(ii) hospitals that have high levels of 
uncompensated care (excluding bad debt). 
(3) DSH ALLOTMENT PUBLICATIONS.— 
(A) IN GENERAL.—Not later than the pub-
lication deadline specified in subparagraph (B), 
the Secretary shall publish in the Federal Reg-
ister a notice specifying the DSH allotment to 
each State under 1923(f) of the Social Security 
Act for the respective fiscal year specified in 
such subparagraph, consistent with the applica-
tion of the DSH Health Reform methodology 
described in paragraph (2). 
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(B) PUBLICATION DEADLINE.—The publi-
cation deadline specified in this subparagraph 
is— 
(i) January 1, 2018, with respect to 
DSH allotments described in subparagraph 
(A) for fiscal year 2019; 
(ii) January 1, 2019, with respect to 
DSH allotments described in subparagraph 
(A) for fiscal year 2020; and 
(iii) January 1, 2020, with respect to 
DSH allotments described in subparagraph 
(A) for fiscal year 2021. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 1923(f) of the Social Security Act 
(42 U.S.C. 1396r–4(f)) is amended— 
(A) by redesignating paragraph (7) as 
paragraph (8); and 
(B) by inserting after paragraph (6) the 
following new paragraph: 
‘‘(7) SPECIAL RULE FOR FISCAL YEARS 2019, 
2020, AND 2021.—Notwithstanding paragraph (2), if 
the Secretary makes a reduction under section 
1322(b)(1) of the Empowering Patients First Act of 
2013, the total DSH allotments for all States for— 
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‘‘(A) fiscal year 2019, shall be the total 
DSH allotments that would otherwise be deter-
mined under this subsection for such fiscal year 
decreased by $1,500,000,000; 
‘‘(B) fiscal year 2020, shall be the total 
DSH allotments that would otherwise be deter-
mined under this subsection for such fiscal year 
decreased by $2,500,000,000; and 
‘‘(C) fiscal year 2021, shall be the total 
DSH allotments that would otherwise be deter-
mined under this subsection for such fiscal year 
decreased by $6,000,000,000.’’. 
(2) Section 1923(b)(4) of such Act (42 U.S.C. 
1396r–4(b)(4)) is amended by adding before the pe-
riod the following: ‘‘or to affect the authority of the 
Secretary to issue and implement the DSH Health 
Reform methodology under section 1322(b)(2) of the 
Empowering Patients First Act of 2013’’. 
(d) DISPROPORTIONATE SHARE HOSPITALS (DSH) 
AND ESSENTIAL ACCESS HOSPITAL (EAH) NON-DIS-
CRIMINATION.— 
(1) IN GENERAL.—Section 1923(d) of the So-
cial Security Act (42 U.S.C. 1396r–4) is amended 
by adding at the end the following new paragraph: 
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‘‘(4) No hospital may be defined or deemed as 
a disproportionate share hospital, or as an essential 
access 
hospital 
(for 
purposes 
of 
subsection 
(f)(6)(A)(iv)), under a State plan under this title or 
subsection (b) of this section (including any waiver 
under section 1115) unless the hospital— 
‘‘(A) provides services to beneficiaries 
under this title without discrimination on the 
ground of race, color, national origin, creed, 
source of payment, status as a beneficiary 
under this title, or any other ground unrelated 
to such beneficiary’s need for the services or the 
availability of the needed services in the hos-
pital; and 
‘‘(B) makes arrangements for, and accepts, 
reimbursement under this title for services pro-
vided to eligible beneficiaries under this title.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by subsection (a) shall be apply to expenditures 
made on or after July 1, 2014. 
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Subtitle C—Fraud, Waste, and 
Abuse 
SEC. 1321. PROVIDE ADEQUATE FUNDING TO HHS OIG AND 
HCFAC. 
(a) HCFAC FUNDING.—Section 1817(k)(3)(A) of 
the Social Security Act (42 U.S.C. 1395i(k)(3)(A)) is 
amended— 
(1) in clause (i)— 
(A) in subclause (III), by striking at the 
end ‘‘and’’; 
(B) in subclause (IV)— 
(i) by inserting ‘‘and before fiscal year 
2014’’ after ‘‘for each fiscal year after fis-
cal year 2006’’; and 
(ii) by striking the period at the end 
and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subclause: 
‘‘(V) for each fiscal year after fis-
cal year 2013, $300,000,000.’’; and 
(2) in clause (ii)— 
(A) in subclause (VIII), by striking at the 
end ‘‘and’’; 
(B) in subclause (IX)— 
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(i) by inserting ‘‘and before fiscal year 
2014’’ after ‘‘for each fiscal year after fis-
cal year 2007’’; and 
(ii) by striking the period at the end 
and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subclause: 
‘‘(X) for each fiscal year after 
fiscal year 2013, not less than the 
amount required under this clause for 
fiscal year 2013, plus the amount by 
which the amount made available 
under clause (i)(V) for fiscal year 
2014 exceeds the amount made avail-
able under clause (i)(IV) for fiscal 
year 2013.’’. 
(b) OIG FUNDING.—There are authorized to be ap-
propriated for each of fiscal years 2014 through 2023 
$100,000,000 for the Office of the Inspector General of 
the Department of Health and Human Services for fraud 
prevention activities under the Medicare and Medicaid 
programs. 
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242 
SEC. 1322. IMPROVED ENFORCEMENT OF THE MEDICARE 
SECONDARY PAYOR PROVISIONS. 
(a) IN GENERAL.—The Secretary, in coordination 
with the Inspector General of the Department of Health 
and Human Services, shall provide through the Coordina-
tion of Benefits Contractor for the identification of in-
stances where the Medicare program should be, but is not, 
acting as a secondary payer to an individual’s private 
health benefits coverage under section 1862(b) of the So-
cial Security Act (42 U.S.C. 1395y(b)). 
(b) UPDATING PROCEDURES.—The Secretary shall 
update procedures for identifying and resolving credit bal-
ance situations which occur under the Medicare program 
when payment under such title and from other health ben-
efit plans exceed the providers’ charges or the allowed 
amount. 
(c) REPORT
ON IMPROVED ENFORCEMENT.—Not 
later than 1 year after the date of the enactment of this 
Act, the Secretary shall submit a report to Congress on 
progress made in improved enforcement of the Medicare 
secondary payor provisions, including recoupment of credit 
balances. 
SEC. 1323. STRENGTHEN MEDICARE PROVIDER ENROLL-
MENT STANDARDS AND SAFEGUARDS. 
(a) STRENGTHENING MEDICARE PROVIDER NUM-
BERS.— 
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(1) SCREENING NEW PROVIDERS.—As a condi-
tion of a provider of services or a supplier, including 
durable medical equipment suppliers and home 
health agencies, applying for the first time for a pro-
vider number under the Medicare program under 
title XVIII of the Social Security Act and before 
granting billing privileges under such title, the Sec-
retary of Health and Human Services (referred to in 
this section as the ‘‘Secretary’’) shall screen the pro-
vider or supplier for a criminal background or other 
financial 
or 
operational 
irregularities 
through 
fingerprinting, licensure checks, site-visits, and other 
database checks. 
(2) APPLICATION FEES.—The Secretary shall 
impose an application charge on such a provider or 
supplier in order to cover the Secretary’s costs in 
performing the screening required under paragraph 
(1). 
(3) PROVISIONAL APPROVAL.—During an ini-
tial, provisional period (specified by the Secretary) 
in which such a provider or supplier has been issued 
such a number, the Secretary shall provide enhanced 
oversight of the activities of such provider or sup-
plier under the Medicare program, such as through 
prepayment review and payment limitations. 
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(4) PENALTIES FOR FALSE STATEMENTS.—In 
the case of a provider or supplier that knowingly 
makes a false statement in an application for such 
a number, the Secretary may exclude the provider or 
supplier from participation under the Medicare pro-
gram, or may impose a civil money penalty (in the 
amount described in section 1128A(a)(4) of the So-
cial Security Act), in the same manner as the Sec-
retary may impose such an exclusion or penalty 
under sections 1128 and 1128A, respectively, of 
such Act in the case of knowing presentation of a 
false claim described in section 1128A(a)(1)(A) of 
such Act. 
(5) DISCLOSURE
REQUIREMENTS.—With re-
spect to approval of such an application, the Sec-
retary— 
(A) shall require applicants to disclose pre-
vious affiliation with enrolled entities that have 
uncollected debt related to the Medicare or 
Medicaid programs; 
(B) may deny approval if the Secretary de-
termines that these affiliations pose undue risk 
to the Medicare or Medicaid program, subject 
to an appeals process for the applicant as deter-
mined by the Secretary; and 
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(C) may implement enhanced safeguards 
(such as surety bonds). 
(b) MORATORIA.—The Secretary may impose mora-
toria on approval of provider and supplier numbers under 
the Medicare program for new providers of services and 
suppliers as determined necessary to prevent or combat 
fraud a period of delay for any one applicant cannot ex-
ceed 30 days unless cause is shown by the Secretary. 
(c) FUNDING.—There are authorized to be appro-
priated to carry out this section such sums as may be nec-
essary. 
SEC. 1324. TRACKING BANNED PROVIDERS ACROSS STATE 
LINES. 
(a) GREATER COORDINATION.—The Secretary of 
Health and Human Services (in this section referred to 
as the ‘‘Secretary’’) shall provide for increased coordina-
tion between the Administrator of the Centers for Medi-
care & Medicaid Services (in this section referred to as 
‘‘CMS’’) and its regional offices to ensure that providers 
of services and suppliers that have operated in one State 
and are excluded from participation in the Medicare pro-
gram are unable to begin operation and participation in 
the Medicare program in another State. 
(b) IMPROVED INFORMATION SYSTEMS.— 
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(1) IN GENERAL.—The Secretary shall improve 
information systems to allow greater integration be-
tween databases under the Medicare program so 
that— 
(A) Medicare administrative contractors, 
fiscal intermediaries, and carriers have imme-
diate access to information identifying providers 
and suppliers excluded from participation in the 
Medicare and Medicaid program and other Fed-
eral health care programs; and 
(B) such information can be shared across 
Federal health care programs and agencies, in-
cluding between the Departments of Health and 
Human Services, the Social Security Adminis-
tration, the Department of Veterans Affairs, 
the Department of Defense, the Department of 
Justice, and the Office of Personnel Manage-
ment. 
(c) MEDICARE/MEDICAID ‘‘ONE PI’’ DATABASE.— 
The Secretary shall implement a database that includes 
claims and payment data for all components of the Medi-
care program and the Medicaid program. 
(d) AUTHORIZING EXPANDED DATA MATCHING.— 
Notwithstanding any provision of the Computer Matching 
and Privacy Protection Act of 1988 to the contrary— 
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(1) the Secretary and the Inspector General in 
the Department of Health and Human Services may 
perform data matching of data from the Medicare 
program with data from the Medicaid program; and 
(2) the Commissioner of Social Security and the 
Secretary may perform data matching of data of the 
Social Security Administration with data from the 
Medicare and Medicaid programs. 
(e) CONSOLIDATION OF DATABASES.—The Secretary 
shall consolidate and expand into a centralized database 
for individuals and entities that have been excluded from 
Federal health care programs the Healthcare Integrity 
and Protection Data Bank, the National Practitioner 
Data Bank, the List of Excluded Individuals/Entities, and 
a national patient abuse/neglect registry. 
(f) COMPREHENSIVE PROVIDER DATABASE.— 
(1) ESTABLISHMENT.—The Secretary shall es-
tablish a comprehensive database that includes infor-
mation on providers of services, suppliers, and re-
lated entities participating in the Medicare program, 
the Medicaid program, or both. Such database shall 
include, information on ownership and business rela-
tionships, history of adverse actions, results of site 
visits or other monitoring by any program. 
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(2) USE.—Prior to issuing a provider or sup-
plier number for an entity under the Medicare pro-
gram, the Secretary shall obtain information on the 
entity from such database to assure the entity quali-
fies for the issuance of such a number. 
(g) COMPREHENSIVE SANCTIONS DATABASE.—The 
Secretary shall establish a comprehensive sanctions data-
base on sanctions imposed on providers of services, sup-
pliers, and related entities. Such database shall be over-
seen by the Inspector General of the Department of 
Health and Human Services and shall be linked to related 
databases maintained by State licensure boards and by 
Federal or State law enforcement agencies. 
(h) ACCESS
TO
CLAIMS
AND
PAYMENT
DATA-
BASES.—The Secretary shall ensure that the Inspector 
General of the Department of Health and Human Services 
and Federal law enforcement agencies have direct access 
to all claims and payment databases of the Secretary 
under the Medicare or Medicaid programs. 
(i) CIVIL MONEY PENALTIES FOR SUBMISSION OF 
ERRONEOUS INFORMATION.—In the case of a provider of 
services, supplier, or other entity that knowingly submits 
erroneous information that serves as a basis for payment 
of any entity under the Medicare or Medicaid program, 
the Secretary may impose a civil money penalty of not to 
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exceed $50,000 for each such erroneous submission. A 
civil money penalty under this subsection shall be imposed 
and collected in the same manner as a civil money penalty 
under subsection (a) of section 1128A of the Social Secu-
rity Act is imposed and collected under that section. 
Æ 
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