II 
December 24, 2009 
Ordered to be printed as passed 
In the Senate of the United States, 
December 24, 2009. 
Resolved, That the bill from the House of Representa-
tives (H.R. 3590) entitled ‘‘An Act to amend the Internal 
Revenue Code of 1986 to modify the first-time homebuyers 
credit in the case of members of the Armed Forces and cer-
tain other Federal employees, and for other purposes.’’, do 
pass with the following 
AMENDMENTS: 
Strike out all after the enacting clause and insert:
HR 3590 EAS/PP 
Subtitle H—Improved Coordination for Dual Eligible Beneficiaries 
Sec. 2601. 5-year period for demonstration projects. 
Sec. 2602. Providing Federal coverage and payment coordination for dual eligible 
beneficiaries. 
Subtitle I—Improving the Quality of Medicaid for Patients and Providers 
Sec. 2701. Adult health quality measures. 
Sec. 2702. Payment Adjustment for Health Care-Acquired Conditions. 
Sec. 2703. State option to provide health homes for enrollees with chronic condi-
tions. 
Sec. 2704. Demonstration project to evaluate integrated care around a hos-
pitalization. 
Sec. 2705. Medicaid Global Payment System Demonstration Project. 
Sec. 2706. Pediatric Accountable Care Organization Demonstration Project. 
Sec. 2707. Medicaid emergency psychiatric demonstration project. 
Subtitle J—Improvements to the Medicaid and CHIP Payment and Access 
Commission (MACPAC) 
Sec. 2801. MACPAC assessment of policies affecting all Medicaid beneficiaries. 
Subtitle K—Protections for American Indians and Alaska Natives 
Sec. 2901. Special rules relating to Indians. 
Sec. 2902. Elimination of sunset for reimbursement for all medicare part B serv-
ices furnished by certain indian hospitals and clinics. 
Subtitle L—Maternal and Child Health Services 
Sec. 2951. Maternal, infant, and early childhood home visiting programs. 
Sec. 2952. Support, education, and research for postpartum depression. 
Sec. 2953. Personal responsibility education. 
Sec. 2954. Restoration of funding for abstinence education. 
Sec. 2955. Inclusion of information about the importance of having a health care 
power of attorney in transition planning for children aging out 
of foster care and independent living programs. 
TITLE III—IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH 
CARE 
Subtitle A—Transforming the Health Care Delivery System 
PART I—LINKING PAYMENT TO QUALITY OUTCOMES UNDER THE MEDICARE 
PROGRAM 
Sec. 3001. Hospital Value-Based purchasing program. 
Sec. 3002. Improvements to the physician quality reporting system. 
Sec. 3003. Improvements to the physician feedback program. 
Sec. 3004. Quality reporting for long-term care hospitals, inpatient rehabilitation 
hospitals, and hospice programs. 
Sec. 3005. Quality reporting for PPS-exempt cancer hospitals. 
Sec. 3006. Plans for a Value-Based purchasing program for skilled nursing facili-
ties and home health agencies. 
Sec. 3007. Value-based payment modifier under the physician fee schedule. 
Sec. 3008. Payment adjustment for conditions acquired in hospitals.
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PART II—NATIONAL STRATEGY TO IMPROVE HEALTH CARE QUALITY 
Sec. 3011. National strategy. 
Sec. 3012. Interagency Working Group on Health Care Quality. 
Sec. 3013. Quality measure development. 
Sec. 3014. Quality measurement. 
Sec. 3015. Data collection; public reporting. 
PART III—ENCOURAGING DEVELOPMENT OF NEW PATIENT CARE MODELS 
Sec. 3021. Establishment of Center for Medicare and Medicaid Innovation within 
CMS. 
Sec. 3022. Medicare shared savings program. 
Sec. 3023. National pilot program on payment bundling. 
Sec. 3024. Independence at home demonstration program. 
Sec. 3025. Hospital readmissions reduction program. 
Sec. 3026. Community-Based Care Transitions Program. 
Sec. 3027. Extension of gainsharing demonstration. 
Subtitle B—Improving Medicare for Patients and Providers 
PART I—ENSURING BENEFICIARY ACCESS TO PHYSICIAN CARE AND OTHER 
SERVICES 
Sec. 3101. Increase in the physician payment update. 
Sec. 3102. Extension of the work geographic index floor and revisions to the prac-
tice expense geographic adjustment under the Medicare physi-
cian fee schedule. 
Sec. 3103. Extension of exceptions process for Medicare therapy caps. 
Sec. 3104. Extension of payment for technical component of certain physician pa-
thology services. 
Sec. 3105. Extension of ambulance add-ons. 
Sec. 3106. Extension of certain payment rules for long-term care hospital services 
and of moratorium on the establishment of certain hospitals and 
facilities. 
Sec. 3107. Extension of physician fee schedule mental health add-on. 
Sec. 3108. Permitting physician assistants to order post-Hospital extended care 
services. 
Sec. 3109. Exemption of certain pharmacies from accreditation requirements. 
Sec. 3110. Part B special enrollment period for disabled TRICARE beneficiaries. 
Sec. 3111. Payment for bone density tests. 
Sec. 3112. Revision to the Medicare Improvement Fund. 
Sec. 3113. Treatment of certain complex diagnostic laboratory tests. 
Sec. 3114. Improved access for certified nurse-midwife services. 
PART II—RURAL PROTECTIONS 
Sec. 3121. Extension of outpatient hold harmless provision. 
Sec. 3122. Extension of Medicare reasonable costs payments for certain clinical 
diagnostic laboratory tests furnished to hospital patients in cer-
tain rural areas. 
Sec. 3123. Extension of the Rural Community Hospital Demonstration Program. 
Sec. 3124. Extension of the Medicare-dependent hospital (MDH) program. 
Sec. 3125. Temporary improvements to the Medicare inpatient hospital payment 
adjustment for low-volume hospitals. 
Sec. 3126. Improvements to the demonstration project on community health inte-
gration models in certain rural counties.
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Sec. 3127. MedPAC study on adequacy of Medicare payments for health care pro-
viders serving in rural areas. 
Sec. 3128. Technical correction related to critical access hospital services. 
Sec. 3129. Extension of and revisions to Medicare rural hospital flexibility pro-
gram. 
PART III—IMPROVING PAYMENT ACCURACY 
Sec. 3131. Payment adjustments for home health care. 
Sec. 3132. Hospice reform. 
Sec. 3133. Improvement to medicare disproportionate share hospital (DSH) pay-
ments. 
Sec. 3134. Misvalued codes under the physician fee schedule. 
Sec. 3135. Modification of equipment utilization factor for advanced imaging 
services. 
Sec. 3136. Revision of payment for power-driven wheelchairs. 
Sec. 3137. Hospital wage index improvement. 
Sec. 3138. Treatment of certain cancer hospitals. 
Sec. 3139. Payment for biosimilar biological products. 
Sec. 3140. Medicare hospice concurrent care demonstration program. 
Sec. 3141. Application of budget neutrality on a national basis in the calculation 
of the Medicare hospital wage index floor. 
Sec. 3142. HHS study on urban Medicare-dependent hospitals. 
Sec. 3143. Protecting home health benefits. 
Subtitle C—Provisions Relating to Part C 
Sec. 3201. Medicare Advantage payment. 
Sec. 3202. Benefit protection and simplification. 
Sec. 3203. Application of coding intensity adjustment during MA payment tran-
sition. 
Sec. 3204. Simplification of annual beneficiary election periods. 
Sec. 3205. Extension for specialized MA plans for special needs individuals. 
Sec. 3206. Extension of reasonable cost contracts. 
Sec. 3207. Technical correction to MA private fee-for-service plans. 
Sec. 3208. Making senior housing facility demonstration permanent. 
Sec. 3209. Authority to deny plan bids. 
Sec. 3210. Development of new standards for certain Medigap plans. 
Subtitle D—Medicare Part D Improvements for Prescription Drug Plans and 
MA–PD Plans 
Sec. 3301. Medicare coverage gap discount program. 
Sec. 3302. Improvement in determination of Medicare part D low-income bench-
mark premium. 
Sec. 3303. Voluntary de minimis policy for subsidy eligible individuals under 
prescription drug plans and MA–PD plans. 
Sec. 3304. Special rule for widows and widowers regarding eligibility for low-in-
come assistance. 
Sec. 3305. Improved information for subsidy eligible individuals reassigned to 
prescription drug plans and MA–PD plans. 
Sec. 3306. Funding outreach and assistance for low-income programs. 
Sec. 3307. Improving formulary requirements for prescription drug plans and 
MA–PD plans with respect to certain categories or classes of 
drugs. 
Sec. 3308. Reducing part D premium subsidy for high-income beneficiaries.
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Sec. 3309. Elimination of cost sharing for certain dual eligible individuals. 
Sec. 3310. Reducing wasteful dispensing of outpatient prescription drugs in long- 
term care facilities under prescription drug plans and MA–PD 
plans. 
Sec. 3311. Improved Medicare prescription drug plan and MA–PD plan com-
plaint system. 
Sec. 3312. Uniform exceptions and appeals process for prescription drug plans 
and MA–PD plans. 
Sec. 3313. Office of the Inspector General studies and reports. 
Sec. 3314. Including costs incurred by AIDS drug assistance programs and In-
dian Health Service in providing prescription drugs toward the 
annual out-of-pocket threshold under part D. 
Sec. 3315. Immediate reduction in coverage gap in 2010. 
Subtitle E—Ensuring Medicare Sustainability 
Sec. 3401. Revision of certain market basket updates and incorporation of pro-
ductivity improvements into market basket updates that do not 
already incorporate such improvements. 
Sec. 3402. Temporary adjustment to the calculation of part B premiums. 
Sec. 3403. Independent Medicare Advisory Board. 
Subtitle F—Health Care Quality Improvements 
Sec. 3501. Health care delivery system research; Quality improvement technical 
assistance. 
Sec. 3502. Establishing community health teams to support the patient-centered 
medical home. 
Sec. 3503. Medication management services in treatment of chronic disease. 
Sec. 3504. Design and implementation of regionalized systems for emergency care. 
Sec. 3505. Trauma care centers and service availability. 
Sec. 3506. Program to facilitate shared decisionmaking. 
Sec. 3507. Presentation of prescription drug benefit and risk information. 
Sec. 3508. Demonstration program to integrate quality improvement and patient 
safety training into clinical education of health professionals. 
Sec. 3509. Improving women’s health. 
Sec. 3510. Patient navigator program. 
Sec. 3511. Authorization of appropriations. 
Subtitle G—Protecting and Improving Guaranteed Medicare Benefits 
Sec. 3601. Protecting and improving guaranteed Medicare benefits. 
Sec. 3602. No cuts in guaranteed benefits. 
TITLE IV—PREVENTION OF CHRONIC DISEASE AND IMPROVING 
PUBLIC HEALTH 
Subtitle A—Modernizing Disease Prevention and Public Health Systems 
Sec. 4001. National Prevention, Health Promotion and Public Health Council. 
Sec. 4002. Prevention and Public Health Fund. 
Sec. 4003. Clinical and community preventive services. 
Sec. 4004. Education and outreach campaign regarding preventive benefits. 
Subtitle B—Increasing Access to Clinical Preventive Services 
Sec. 4101. School-based health centers. 
Sec. 4102. Oral healthcare prevention activities.
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Sec. 4103. Medicare coverage of annual wellness visit providing a personalized 
prevention plan. 
Sec. 4104. Removal of barriers to preventive services in Medicare. 
Sec. 4105. Evidence-based coverage of preventive services in Medicare. 
Sec. 4106. Improving access to preventive services for eligible adults in Medicaid. 
Sec. 4107. Coverage of comprehensive tobacco cessation services for pregnant 
women in Medicaid. 
Sec. 4108. Incentives for prevention of chronic diseases in medicaid. 
Subtitle C—Creating Healthier Communities 
Sec. 4201. Community transformation grants. 
Sec. 4202. Healthy aging, living well; evaluation of community-based prevention 
and wellness programs for Medicare beneficiaries. 
Sec. 4203. Removing barriers and improving access to wellness for individuals 
with disabilities. 
Sec. 4204. Immunizations. 
Sec. 4205. Nutrition labeling of standard menu items at chain restaurants. 
Sec. 4206. Demonstration project concerning individualized wellness plan. 
Sec. 4207. Reasonable break time for nursing mothers. 
Subtitle D—Support for Prevention and Public Health Innovation 
Sec. 4301. Research on optimizing the delivery of public health services. 
Sec. 4302. Understanding health disparities: data collection and analysis. 
Sec. 4303. CDC and employer-based wellness programs. 
Sec. 4304. Epidemiology-Laboratory Capacity Grants. 
Sec. 4305. Advancing research and treatment for pain care management. 
Sec. 4306. Funding for Childhood Obesity Demonstration Project. 
Subtitle E—Miscellaneous Provisions 
Sec. 4401. Sense of the Senate concerning CBO scoring. 
Sec. 4402. Effectiveness of Federal health and wellness initiatives. 
TITLE V—HEALTH CARE WORKFORCE 
Subtitle A—Purpose and Definitions 
Sec. 5001. Purpose. 
Sec. 5002. Definitions. 
Subtitle B—Innovations in the Health Care Workforce 
Sec. 5101. National health care workforce commission. 
Sec. 5102. State health care workforce development grants. 
Sec. 5103. Health care workforce assessment. 
Subtitle C—Increasing the Supply of the Health Care Workforce 
Sec. 5201. Federally supported student loan funds. 
Sec. 5202. Nursing student loan program. 
Sec. 5203. Health care workforce loan repayment programs. 
Sec. 5204. Public health workforce recruitment and retention programs. 
Sec. 5205. Allied health workforce recruitment and retention programs. 
Sec. 5206. Grants for State and local programs. 
Sec. 5207. Funding for National Health Service Corps. 
Sec. 5208. Nurse-managed health clinics.
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Sec. 5209. Elimination of cap on commissioned corps. 
Sec. 5210. Establishing a Ready Reserve Corps. 
Subtitle D—Enhancing Health Care Workforce Education and Training 
Sec. 5301. Training in family medicine, general internal medicine, general pedi-
atrics, and physician assistantship. 
Sec. 5302. Training opportunities for direct care workers. 
Sec. 5303. Training in general, pediatric, and public health dentistry. 
Sec. 5304. Alternative dental health care providers demonstration project. 
Sec. 5305. Geriatric education and training; career awards; comprehensive geri-
atric education. 
Sec. 5306. Mental and behavioral health education and training grants. 
Sec. 5307. Cultural competency, prevention, and public health and individuals 
with disabilities training. 
Sec. 5308. Advanced nursing education grants. 
Sec. 5309. Nurse education, practice, and retention grants. 
Sec. 5310. Loan repayment and scholarship program. 
Sec. 5311. Nurse faculty loan program. 
Sec. 5312. Authorization of appropriations for parts B through D of title VIII. 
Sec. 5313. Grants to promote the community health workforce. 
Sec. 5314. Fellowship training in public health. 
Sec. 5315. United States Public Health Sciences Track. 
Subtitle E—Supporting the Existing Health Care Workforce 
Sec. 5401. Centers of excellence. 
Sec. 5402. Health care professionals training for diversity. 
Sec. 5403. Interdisciplinary, community-based linkages. 
Sec. 5404. Workforce diversity grants. 
Sec. 5405. Primary care extension program. 
Subtitle F—Strengthening Primary Care and Other Workforce Improvements 
Sec. 5501. Expanding access to primary care services and general surgery serv-
ices. 
Sec. 5502. Medicare Federally qualified health center improvements. 
Sec. 5503. Distribution of additional residency positions. 
Sec. 5504. Counting resident time in nonprovider settings. 
Sec. 5505. Rules for counting resident time for didactic and scholarly activities 
and other activities. 
Sec. 5506. Preservation of resident cap positions from closed hospitals. 
Sec. 5507. Demonstration projects To address health professions workforce needs; 
extension of family-to-family health information centers. 
Sec. 5508. Increasing teaching capacity. 
Sec. 5509. Graduate nurse education demonstration. 
Subtitle G—Improving Access to Health Care Services 
Sec. 5601. Spending for Federally Qualified Health Centers (FQHCs). 
Sec. 5602. Negotiated rulemaking for development of methodology and criteria for 
designating medically underserved populations and health pro-
fessions shortage areas. 
Sec. 5603. Reauthorization of the Wakefield Emergency Medical Services for Chil-
dren Program. 
Sec. 5604. Co-locating primary and specialty care in community-based mental 
health settings.
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Sec. 5605. Key National indicators. 
Subtitle H—General Provisions 
Sec. 5701. Reports. 
TITLE VI—TRANSPARENCY AND PROGRAM INTEGRITY 
Subtitle A—Physician Ownership and Other Transparency 
Sec. 6001. Limitation on Medicare exception to the prohibition on certain physi-
cian referrals for hospitals. 
Sec. 6002. Transparency reports and reporting of physician ownership or invest-
ment interests. 
Sec. 6003. Disclosure requirements for in-office ancillary services exception to the 
prohibition on physician self-referral for certain imaging serv-
ices. 
Sec. 6004. Prescription drug sample transparency. 
Sec. 6005. Pharmacy benefit managers transparency requirements. 
Subtitle B—Nursing Home Transparency and Improvement 
PART I—IMPROVING TRANSPARENCY OF INFORMATION 
Sec. 6101. Required disclosure of ownership and additional disclosable parties in-
formation. 
Sec. 6102. Accountability requirements for skilled nursing facilities and nursing 
facilities. 
Sec. 6103. Nursing home compare Medicare website. 
Sec. 6104. Reporting of expenditures. 
Sec. 6105. Standardized complaint form. 
Sec. 6106. Ensuring staffing accountability. 
Sec. 6107. GAO study and report on Five-Star Quality Rating System. 
PART II—TARGETING ENFORCEMENT 
Sec. 6111. Civil money penalties. 
Sec. 6112. National independent monitor demonstration project. 
Sec. 6113. Notification of facility closure. 
Sec. 6114. National demonstration projects on culture change and use of informa-
tion technology in nursing homes. 
PART III—IMPROVING STAFF TRAINING 
Sec. 6121. Dementia and abuse prevention training. 
Subtitle C—Nationwide Program for National and State Background Checks on 
Direct Patient Access Employees of Long-term Care Facilities and Providers 
Sec. 6201. Nationwide program for National and State background checks on di-
rect patient access employees of long-term care facilities and pro-
viders. 
Subtitle D—Patient-Centered Outcomes Research 
Sec. 6301. Patient-Centered Outcomes Research. 
Sec. 6302. Federal coordinating council for comparative effectiveness research.
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Subtitle E—Medicare, Medicaid, and CHIP Program Integrity Provisions 
Sec. 6401. Provider screening and other enrollment requirements under Medicare, 
Medicaid, and CHIP. 
Sec. 6402. Enhanced Medicare and Medicaid program integrity provisions. 
Sec. 6403. Elimination of duplication between the Healthcare Integrity and Pro-
tection Data Bank and the National Practitioner Data Bank. 
Sec. 6404. Maximum period for submission of Medicare claims reduced to not 
more than 12 months. 
Sec. 6405. Physicians who order items or services required to be Medicare enrolled 
physicians or eligible professionals. 
Sec. 6406. Requirement for physicians to provide documentation on referrals to 
programs at high risk of waste and abuse. 
Sec. 6407. Face to face encounter with patient required before physicians may 
certify eligibility for home health services or durable medical 
equipment under Medicare. 
Sec. 6408. Enhanced penalties. 
Sec. 6409. Medicare self-referral disclosure protocol. 
Sec. 6410. Adjustments to the Medicare durable medical equipment, prosthetics, 
orthotics, and supplies competitive acquisition program. 
Sec. 6411. Expansion of the Recovery Audit Contractor (RAC) program. 
Subtitle F—Additional Medicaid Program Integrity Provisions 
Sec. 6501. Termination of provider participation under Medicaid if terminated 
under Medicare or other State plan. 
Sec. 6502. Medicaid exclusion from participation relating to certain ownership, 
control, and management affiliations. 
Sec. 6503. Billing agents, clearinghouses, or other alternate payees required to 
register under Medicaid. 
Sec. 6504. Requirement to report expanded set of data elements under MMIS to 
detect fraud and abuse. 
Sec. 6505. Prohibition on payments to institutions or entities located outside of 
the United States. 
Sec. 6506. Overpayments. 
Sec. 6507. Mandatory State use of national correct coding initiative. 
Sec. 6508. General effective date. 
Subtitle G—Additional Program Integrity Provisions 
Sec. 6601. Prohibition on false statements and representations. 
Sec. 6602. Clarifying definition. 
Sec. 6603. Development of model uniform report form. 
Sec. 6604. Applicability of State law to combat fraud and abuse. 
Sec. 6605. Enabling the Department of Labor to issue administrative summary 
cease and desist orders and summary seizures orders against 
plans that are in financially hazardous condition. 
Sec. 6606. MEWA plan registration with Department of Labor. 
Sec. 6607. Permitting evidentiary privilege and confidential communications. 
Subtitle H—Elder Justice Act 
Sec. 6701. Short title of subtitle. 
Sec. 6702. Definitions. 
Sec. 6703. Elder Justice.
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Subtitle I—Sense of the Senate Regarding Medical Malpractice 
Sec. 6801. Sense of the Senate regarding medical malpractice. 
TITLE VII—IMPROVING ACCESS TO INNOVATIVE MEDICAL 
THERAPIES 
Subtitle A—Biologics Price Competition and Innovation 
Sec. 7001. Short title. 
Sec. 7002. Approval pathway for biosimilar biological products. 
Sec. 7003. Savings. 
Subtitle B—More Affordable Medicines for Children and Underserved 
Communities 
Sec. 7101. Expanded participation in 340B program. 
Sec. 7102. Improvements to 340B program integrity. 
Sec. 7103. GAO study to make recommendations on improving the 340B pro-
gram. 
TITLE VIII—CLASS ACT 
Sec. 8001. Short title of title. 
Sec. 8002. Establishment of national voluntary insurance program for pur-
chasing community living assistance services and support. 
TITLE IX—REVENUE PROVISIONS 
Subtitle A—Revenue Offset Provisions 
Sec. 9001. Excise tax on high cost employer-sponsored health coverage. 
Sec. 9002. Inclusion of cost of employer-sponsored health coverage on W–2. 
Sec. 9003. Distributions for medicine qualified only if for prescribed drug or in-
sulin. 
Sec. 9004. Increase in additional tax on distributions from HSAs and Archer 
MSAs not used for qualified medical expenses. 
Sec. 9005. Limitation on health flexible spending arrangements under cafeteria 
plans. 
Sec. 9006. Expansion of information reporting requirements. 
Sec. 9007. Additional requirements for charitable hospitals. 
Sec. 9008. Imposition of annual fee on branded prescription pharmaceutical 
manufacturers and importers. 
Sec. 9009. Imposition of annual fee on medical device manufacturers and import-
ers. 
Sec. 9010. Imposition of annual fee on health insurance providers. 
Sec. 9011. Study and report of effect on veterans health care. 
Sec. 9012. Elimination of deduction for expenses allocable to Medicare Part D 
subsidy. 
Sec. 9013. Modification of itemized deduction for medical expenses. 
Sec. 9014. Limitation on excessive remuneration paid by certain health insurance 
providers. 
Sec. 9015. Additional hospital insurance tax on high-income taxpayers. 
Sec. 9016. Modification of section 833 treatment of certain health organizations. 
Sec. 9017. Excise tax on elective cosmetic medical procedures.
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Subtitle B—Other Provisions 
Sec. 9021. Exclusion of health benefits provided by Indian tribal governments. 
Sec. 9022. Establishment of simple cafeteria plans for small businesses. 
Sec. 9023. Qualifying therapeutic discovery project credit. 
TITLE X—STRENGTHENING QUALITY, AFFORDABLE HEALTH CARE 
FOR ALL AMERICANS 
Subtitle A—Provisions Relating to Title I 
Sec. 10101. Amendments to subtitle A. 
Sec. 10102. Amendments to subtitle B. 
Sec. 10103. Amendments to subtitle C. 
Sec. 10104. Amendments to subtitle D. 
Sec. 10105. Amendments to subtitle E. 
Sec. 10106. Amendments to subtitle F. 
Sec. 10107. Amendments to subtitle G. 
Sec. 10108. Free choice vouchers. 
Sec. 10109. Development of standards for financial and administrative trans-
actions. 
Subtitle B—Provisions Relating to Title II 
PART I—MEDICAID AND CHIP 
Sec. 10201. Amendments to the Social Security Act and title II of this Act. 
Sec. 10202. Incentives for States to offer home and community-based services as 
a long-term care alternative to nursing homes. 
Sec. 10203. Extension of funding for CHIP through fiscal year 2015 and other 
CHIP-related provisions. 
PART II—SUPPORT FOR PREGNANT AND PARENTING TEENS AND WOMEN 
Sec. 10211. Definitions. 
Sec. 10212. Establishment of pregnancy assistance fund. 
Sec. 10213. Permissible uses of Fund. 
Sec. 10214. Appropriations. 
PART III—INDIAN HEALTH CARE IMPROVEMENT 
Sec. 10221. Indian health care improvement. 
Subtitle C—Provisions Relating to Title III 
Sec. 10301. Plans for a Value-Based purchasing program for ambulatory surgical 
centers. 
Sec. 10302. Revision to national strategy for quality improvement in health care. 
Sec. 10303. Development of outcome measures. 
Sec. 10304. Selection of efficiency measures. 
Sec. 10305. Data collection; public reporting. 
Sec. 10306. Improvements under the Center for Medicare and Medicaid Innova-
tion. 
Sec. 10307. Improvements to the Medicare shared savings program. 
Sec. 10308. Revisions to national pilot program on payment bundling. 
Sec. 10309. Revisions to hospital readmissions reduction program. 
Sec. 10310. Repeal of physician payment update. 
Sec. 10311. Revisions to extension of ambulance add-ons.
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Sec. 10312. Certain payment rules for long-term care hospital services and mora-
torium on the establishment of certain hospitals and facilities. 
Sec. 10313. Revisions to the extension for the rural community hospital dem-
onstration program. 
Sec. 10314. Adjustment to low-volume hospital provision. 
Sec. 10315. Revisions to home health care provisions. 
Sec. 10316. Medicare DSH. 
Sec. 10317. Revisions to extension of section 508 hospital provisions. 
Sec. 10318. Revisions to transitional extra benefits under Medicare Advantage. 
Sec. 10319. Revisions to market basket adjustments. 
Sec. 10320. Expansion of the scope of, and additional improvements to, the Inde-
pendent Medicare Advisory Board. 
Sec. 10321. Revision to community health teams. 
Sec. 10322. Quality reporting for psychiatric hospitals. 
Sec. 10323. Medicare coverage for individuals exposed to environmental health 
hazards. 
Sec. 10324. Protections for frontier States. 
Sec. 10325. Revision to skilled nursing facility prospective payment system. 
Sec. 10326. Pilot testing pay-for-performance programs for certain Medicare pro-
viders. 
Sec. 10327. Improvements to the physician quality reporting system. 
Sec. 10328. Improvement in part D medication therapy management (MTM) 
programs. 
Sec. 10329. Developing methodology to assess health plan value. 
Sec. 10330. Modernizing computer and data systems of the Centers for Medicare 
& Medicaid services to support improvements in care delivery. 
Sec. 10331. Public reporting of performance information. 
Sec. 10332. Availability of medicare data for performance measurement. 
Sec. 10333. Community-based collaborative care networks. 
Sec. 10334. Minority health. 
Sec. 10335. Technical correction to the hospital value-based purchasing program. 
Sec. 10336. GAO study and report on Medicare beneficiary access to high-quality 
dialysis services. 
Subtitle D—Provisions Relating to Title IV 
Sec. 10401. Amendments to subtitle A. 
Sec. 10402. Amendments to subtitle B. 
Sec. 10403. Amendments to subtitle C. 
Sec. 10404. Amendments to subtitle D. 
Sec. 10405. Amendments to subtitle E. 
Sec. 10406. Amendment relating to waiving coinsurance for preventive services. 
Sec. 10407. Better diabetes care. 
Sec. 10408. Grants for small businesses to provide comprehensive workplace 
wellness programs. 
Sec. 10409. Cures Acceleration Network. 
Sec. 10410. Centers of Excellence for Depression. 
Sec. 10411. Programs relating to congenital heart disease. 
Sec. 10412. Automated Defibrillation in Adam’s Memory Act. 
Sec. 10413. Young women’s breast health awareness and support of young women 
diagnosed with breast cancer. 
Subtitle E—Provisions Relating to Title V 
Sec. 10501. Amendments to the Public Health Service Act, the Social Security 
Act, and title V of this Act.
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Sec. 10502. Infrastructure to Expand Access to Care. 
Sec. 10503. Community Health Centers and the National Health Service Corps 
Fund. 
Sec. 10504. Demonstration project to provide access to affordable care. 
Subtitle F—Provisions Relating to Title VI 
Sec. 10601. Revisions to limitation on medicare exception to the prohibition on 
certain physician referrals for hospitals. 
Sec. 10602. Clarifications to patient-centered outcomes research. 
Sec. 10603. Striking provisions relating to individual provider application fees. 
Sec. 10604. Technical correction to section 6405. 
Sec. 10605. Certain other providers permitted to conduct face to face encounter 
for home health services. 
Sec. 10606. Health care fraud enforcement. 
Sec. 10607. State demonstration programs to evaluate alternatives to current 
medical tort litigation. 
Sec. 10608. Extension of medical malpractice coverage to free clinics. 
Sec. 10609. Labeling changes. 
Subtitle G—Provisions Relating to Title VIII 
Sec. 10801. Provisions relating to title VIII. 
Subtitle H—Provisions Relating to Title IX 
Sec. 10901. Modifications to excise tax on high cost employer-sponsored health 
coverage. 
Sec. 10902. Inflation adjustment of limitation on health flexible spending ar-
rangements under cafeteria plans. 
Sec. 10903. Modification of limitation on charges by charitable hospitals. 
Sec. 10904. Modification of annual fee on medical device manufacturers and im-
porters. 
Sec. 10905. Modification of annual fee on health insurance providers. 
Sec. 10906. Modifications to additional hospital insurance tax on high-income 
taxpayers. 
Sec. 10907. Excise tax on indoor tanning services in lieu of elective cosmetic med-
ical procedures. 
Sec. 10908. Exclusion for assistance provided to participants in State student 
loan repayment programs for certain health professionals. 
Sec. 10909. Expansion of adoption credit and adoption assistance programs.
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TITLE I—QUALITY, AFFORDABLE 
HEALTH CARE FOR ALL AMER-
ICANS 
Subtitle 
A—Immediate 
Improve-
ments in Health Care Coverage 
for All Americans 
SEC. 1001. AMENDMENTS TO THE PUBLIC HEALTH SERVICE 
ACT. 
Part A of title XXVII of the Public Health Service Act 
(42 U.S.C. 300gg et seq.) is amended— 
(1) by striking the part heading and inserting 
the following: 
‘‘PART A—INDIVIDUAL AND GROUP MARKET 
REFORMS’’; 
(2) by redesignating sections 2704 through 2707 
as sections 2725 through 2728, respectively; 
(3) by redesignating sections 2711 through 2713 
as sections 2731 through 2733, respectively; 
(4) by redesignating sections 2721 through 2723 
as sections 2735 through 2737, respectively; and 
(5) by inserting after section 2702, the following:
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‘‘Subpart II—Improving Coverage 
‘‘SEC. 2711. NO LIFETIME OR ANNUAL LIMITS. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering group or individual health insur-
ance coverage may not establish— 
‘‘(1) lifetime limits on the dollar value of benefits 
for any participant or beneficiary; or 
‘‘(2) unreasonable annual limits (within the 
meaning of section 223 of the Internal Revenue Code 
of 1986) on the dollar value of benefits for any partic-
ipant or beneficiary. 
‘‘(b) PER BENEFICIARY LIMITS.—Subsection (a) shall 
not be construed to prevent a group health plan or health 
insurance coverage that is not required to provide essential 
health benefits under section 1302(b) of the Patient Protec-
tion and Affordable Care Act from placing annual or life-
time per beneficiary limits on specific covered benefits to 
the extent that such limits are otherwise permitted under 
Federal or State law. 
‘‘SEC. 2712. PROHIBITION ON RESCISSIONS. 
‘‘A group health plan and a health insurance issuer 
offering group or individual health insurance coverage shall 
not rescind such plan or coverage with respect to an enrollee 
once the enrollee is covered under such plan or coverage in-
volved, except that this section shall not apply to a covered 
individual who has performed an act or practice that con-
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stitutes fraud or makes an intentional misrepresentation of 
material fact as prohibited by the terms of the plan or cov-
erage. Such plan or coverage may not be cancelled except 
with prior notice to the enrollee, and only as permitted 
under section 2702(c) or 2742(b). 
‘‘SEC. 2713. COVERAGE OF PREVENTIVE HEALTH SERVICES. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering group or individual health insur-
ance coverage shall, at a minimum provide coverage for and 
shall not impose any cost sharing requirements for— 
‘‘(1) evidence-based items or services that have in 
effect a rating of ‘A’ or ‘B’ in the current rec-
ommendations of the United States Preventive Serv-
ices Task Force; 
‘‘(2) immunizations that have in effect a rec-
ommendation from the Advisory Committee on Im-
munization Practices of the Centers for Disease Con-
trol and Prevention with respect to the individual in-
volved; and 
‘‘(3) with respect to infants, children, and ado-
lescents, 
evidence-informed 
preventive 
care 
and 
screenings provided for in the comprehensive guide-
lines supported by the Health Resources and Services 
Administration.
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‘‘(A) in reviewing and, if appropriate under 
State law, approving premium increases for 
health insurance coverage; and 
‘‘(B) in providing information and rec-
ommendations to the Secretary under subsection 
(b)(1). 
‘‘(2) FUNDING.— 
‘‘(A) IN GENERAL.—Out of all funds in the 
Treasury not otherwise appropriated, there are 
appropriated to the Secretary $250,000,000, to 
be available for expenditure for grants under 
paragraph (1) and subparagraph (B). 
‘‘(B) FURTHER AVAILABILITY FOR INSUR-
ANCE REFORM AND CONSUMER PROTECTION.—If 
the amounts appropriated under subparagraph 
(A) are not fully obligated under grants under 
paragraph (1) by the end of fiscal year 2014, 
any remaining funds shall remain available to 
the Secretary for grants to States for planning 
and implementing the insurance reforms and 
consumer protections under part A. 
‘‘(C) ALLOCATION.—The Secretary shall es-
tablish a formula for determining the amount of 
any grant to a State under this subsection. 
Under such formula—
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‘‘(i) the Secretary shall consider the 
number of plans of health insurance cov-
erage offered in each State and the popu-
lation of the State; and 
‘‘(ii) no State qualifying for a grant 
under paragraph (1) shall receive less than 
$1,000,000, or more than $5,000,000 for a 
grant year.’’. 
SEC. 1004. EFFECTIVE DATES. 
(a) IN GENERAL.—Except as provided for in sub-
section (b), this subtitle (and the amendments made by this 
subtitle) shall become effective for plan years beginning on 
or after the date that is 6 months after the date of enactment 
of this Act, except that the amendments made by sections 
1002 and 1003 shall become effective for fiscal years begin-
ning with fiscal year 2010. 
(b) SPECIAL RULE.—The amendments made by sec-
tions 1002 and 1003 shall take effect on the date of enact-
ment of this Act.
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Subtitle B—Immediate Actions to 
Preserve and Expand Coverage 
SEC. 1101. IMMEDIATE ACCESS TO INSURANCE FOR UNIN-
SURED INDIVIDUALS WITH A PREEXISTING 
CONDITION. 
(a) IN GENERAL.—Not later than 90 days after the 
date of enactment of this Act, the Secretary shall establish 
a temporary high risk health insurance pool program to 
provide health insurance coverage for eligible individuals 
during the period beginning on the date on which such pro-
gram is established and ending on January 1, 2014. 
(b) ADMINISTRATION.— 
(1) IN GENERAL.—The Secretary may carry out 
the program under this section directly or through 
contracts to eligible entities. 
(2) ELIGIBLE ENTITIES.—To be eligible for a 
contract under paragraph (1), an entity shall— 
(A) be a State or nonprofit private entity; 
(B) submit to the Secretary an application 
at such time, in such manner, and containing 
such information as the Secretary may require; 
and 
(C) agree to utilize contract funding to es-
tablish and administer a qualified high risk pool 
for eligible individuals.
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(3) MAINTENANCE OF EFFORT.—To be eligible to 
enter into a contract with the Secretary under this 
subsection, a State shall agree not to reduce the an-
nual amount the State expended for the operation of 
one or more State high risk pools during the year pre-
ceding the year in which such contract is entered into. 
(c) QUALIFIED HIGH RISK POOL.— 
(1) IN
GENERAL.—Amounts made available 
under this section shall be used to establish a quali-
fied high risk pool that meets the requirements of 
paragraph (2). 
(2) REQUIREMENTS.—A qualified high risk pool 
meets the requirements of this paragraph if such 
pool— 
(A) provides to all eligible individuals 
health insurance coverage that does not impose 
any preexisting condition exclusion with respect 
to such coverage; 
(B) provides health insurance coverage— 
(i) in which the issuer’s share of the 
total allowed costs of benefits provided 
under such coverage is not less than 65 per-
cent of such costs; and 
(ii) that has an out of pocket limit not 
greater than the applicable amount de-
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scribed in section 223(c)(2) of the Internal 
Revenue Code of 1986 for the year involved, 
except that the Secretary may modify such 
limit if necessary to ensure the pool meets 
the actuarial value limit under clause (i); 
(C) ensures that with respect to the pre-
mium rate charged for health insurance coverage 
offered to eligible individuals through the high 
risk pool, such rate shall— 
(i) except as provided in clause (ii), 
vary only as provided for under section 
2701 of the Public Health Service Act (as 
amended by this Act and notwithstanding 
the date on which such amendments take ef-
fect); 
(ii) vary on the basis of age by a factor 
of not greater than 4 to 1; and 
(iii) be established at a standard rate 
for a standard population; and 
(D) meets any other requirements deter-
mined appropriate by the Secretary. 
(d) ELIGIBLE INDIVIDUAL.—An individual shall be 
deemed to be an eligible individual for purposes of this sec-
tion if such individual—
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finds was encouraged by the issuer to disenroll from 
health benefits coverage prior to enrolling in coverage 
through the program. The criteria shall include at 
least the following circumstances: 
(A) In the case of prior coverage obtained 
through an employer, the provision by the em-
ployer, group health plan, or the issuer of money 
or other financial consideration for disenrolling 
from the coverage. 
(B) In the case of prior coverage obtained 
directly from an issuer or under an employment- 
based health plan— 
(i) the provision by the issuer or plan 
of money or other financial consideration 
for disenrolling from the coverage; or 
(ii) in the case of an individual whose 
premium for the prior coverage exceeded the 
premium required by the program (adjusted 
based on the age factors applied to the prior 
coverage)— 
(I) the prior coverage is a policy 
that is no longer being actively mar-
keted (as defined by the Secretary) by 
the issuer; or
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(II) the prior coverage is a policy 
for which duration of coverage form 
issue or health status are factors that 
can be considered in determining pre-
miums at renewal. 
(3) CONSTRUCTION.—Nothing in this subsection 
shall be construed as constituting exclusive remedies 
for violations of criteria established under paragraph 
(1) or as preventing States from applying or enforc-
ing such paragraph or other provisions under law 
with respect to health insurance issuers. 
(f) OVERSIGHT.—The Secretary shall establish— 
(1) an appeals process to enable individuals to 
appeal a determination under this section; and 
(2) procedures to protect against waste, fraud, 
and abuse. 
(g) FUNDING; TERMINATION OF AUTHORITY.— 
(1) IN GENERAL.—There is appropriated to the 
Secretary, out of any moneys in the Treasury not oth-
erwise appropriated, $5,000,000,000 to pay claims 
against (and the administrative costs of) the high risk 
pool under this section that are in excess of the 
amount of premiums collected from eligible individ-
uals enrolled in the high risk pool. Such funds shall 
be available without fiscal year limitation.
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(2) INSUFFICIENT FUNDS.—If the Secretary esti-
mates for any fiscal year that the aggregate amounts 
available for the payment of the expenses of the high 
risk pool will be less than the actual amount of such 
expenses, the Secretary shall make such adjustments 
as are necessary to eliminate such deficit. 
(3) TERMINATION OF AUTHORITY.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), coverage of eligible individ-
uals under a high risk pool in a State shall ter-
minate on January 1, 2014. 
(B) TRANSITION TO EXCHANGE.—The Sec-
retary shall develop procedures to provide for the 
transition of eligible individuals enrolled in 
health insurance coverage offered through a high 
risk pool established under this section into 
qualified health plans offered through an Ex-
change. Such procedures shall ensure that there 
is no lapse in coverage with respect to the indi-
vidual and may extend coverage after the termi-
nation of the risk pool involved, if the Secretary 
determines necessary to avoid such a lapse. 
(4) LIMITATIONS.—The Secretary has the au-
thority to stop taking applications for participation
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in the program under this section to comply with the 
funding limitation provided for in paragraph (1). 
(5) RELATION TO STATE LAWS.—The standards 
established under this section shall supersede any 
State law or regulation (other than State licensing 
laws or State laws relating to plan solvency) with re-
spect to qualified high risk pools which are established 
in accordance with this section. 
SEC. 1102. REINSURANCE FOR EARLY RETIREES. 
(a) ADMINISTRATION.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of enactment of this Act, the Secretary shall 
establish a temporary reinsurance program to provide 
reimbursement to participating employment-based 
plans for a portion of the cost of providing health in-
surance coverage to early retirees (and to the eligible 
spouses, surviving spouses, and dependents of such re-
tirees) during the period beginning on the date on 
which such program is established and ending on 
January 1, 2014. 
(2) REFERENCE.—In this section: 
(A) HEALTH BENEFITS.—The term ‘‘health 
benefits’’ means medical, surgical, hospital, pre-
scription drug, and such other benefits as shall 
be determined by the Secretary, whether self-
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funded, or delivered through the purchase of in-
surance or otherwise. 
(B) EMPLOYMENT-BASED PLAN.—The term 
‘‘employment-based plan’’ means a group health 
benefits plan that— 
(i) is— 
(I) maintained by one or more 
current or former employers (including 
without limitation any State or local 
government or political subdivision 
thereof), employee organization, a vol-
untary employees’ beneficiary associa-
tion, or a committee or board of indi-
viduals appointed to administer such 
plan; or 
(II) a multiemployer plan (as de-
fined in section 3(37) of the Employee 
Retirement Income Security Act of 
1974); and 
(ii) provides health benefits to early re-
tirees. 
(C) EARLY RETIREES.—The term ‘‘early re-
tirees’’ means individuals who are age 55 and 
older but are not eligible for coverage under title 
XVIII of the Social Security Act, and who are
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not active employees of an employer maintain-
ing, or currently contributing to, the employ-
ment-based plan or of any employer that has 
made substantial contributions to fund such 
plan. 
(b) PARTICIPATION.— 
(1) EMPLOYMENT-BASED PLAN ELIGIBILITY.—A 
participating employment-based plan is an employ-
ment-based plan that— 
(A) meets the requirements of paragraph (2) 
with respect to health benefits provided under the 
plan; and 
(B) submits to the Secretary an application 
for participation in the program, at such time, 
in such manner, and containing such informa-
tion as the Secretary shall require. 
(2) EMPLOYMENT-BASED
HEALTH
BENEFITS.— 
An employment-based plan meets the requirements of 
this paragraph if the plan— 
(A) implements programs and procedures to 
generate cost-savings with respect to participants 
with chronic and high-cost conditions; 
(B) provides documentation of the actual 
cost of medical claims involved; and 
(C) is certified by the Secretary.
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with adequate documentation of such compliance) 
under this subsection. 
‘‘(4) CERTIFICATION BY OUTSIDE ENTITY.—The 
Secretary may designate independent, outside entities 
to certify that a health plan has complied with the re-
quirements under this subsection, provided that the 
certification standards employed by such entities are 
in accordance with any standards or operating rules 
issued by the Secretary. 
‘‘(5) COMPLIANCE
WITH
REVISED
STANDARDS 
AND OPERATING RULES.— 
‘‘(A) IN GENERAL.—A health plan (includ-
ing entities described under paragraph (3)) shall 
file a statement with the Secretary, in such form 
as the Secretary may require, certifying that the 
data and information systems for such plan are 
in compliance with any applicable revised stand-
ards and associated operating rules under this 
subsection for any interim final rule promul-
gated by the Secretary under subsection (i) 
that— 
‘‘(i) amends any standard or operating 
rule described under paragraph (1) of this 
subsection; or
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‘‘(ii) establishes a standard (as de-
scribed under subsection (a)(1)(B)) or asso-
ciated operating rules (as described under 
subsection (i)(5)) for any other financial 
and administrative transactions. 
‘‘(B) DATE OF COMPLIANCE.—A health plan 
shall comply with such requirements not later 
than the effective date of the applicable standard 
or operating rule. 
‘‘(6) AUDITS OF HEALTH PLANS.—The Secretary 
shall conduct periodic audits to ensure that health 
plans (including entities described under paragraph 
(3)) are in compliance with any standards and oper-
ating rules that are described under paragraph (1) or 
subsection (i)(5). 
‘‘(i) REVIEW AND AMENDMENT OF STANDARDS AND 
OPERATING RULES.— 
‘‘(1) ESTABLISHMENT.—Not later than January 
1, 2014, the Secretary shall establish a review com-
mittee (as described under paragraph (4)). 
‘‘(2) EVALUATIONS AND REPORTS.— 
‘‘(A) HEARINGS.—Not later than April 1, 
2014, and not less than biennially thereafter, the 
Secretary, acting through the review committee, 
shall conduct hearings to evaluate and review the
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adopted standards and operating rules estab-
lished under this section. 
‘‘(B) REPORT.—Not later than July 1, 
2014, and not less than biennially thereafter, the 
review committee shall provide recommendations 
for updating and improving such standards and 
operating rules. The review committee shall rec-
ommend a single set of operating rules per trans-
action standard and maintain the goal of cre-
ating as much uniformity as possible in the im-
plementation of the electronic standards. 
‘‘(3) INTERIM FINAL RULEMAKING.— 
‘‘(A) IN GENERAL.—Any recommendations 
to amend adopted standards and operating rules 
that have been approved by the review committee 
and reported to the Secretary under paragraph 
(2)(B) shall be adopted by the Secretary through 
promulgation of an interim final rule not later 
than 90 days after receipt of the committee’s re-
port. 
‘‘(B) PUBLIC COMMENT.— 
‘‘(i) PUBLIC
COMMENT
PERIOD.—The 
Secretary shall accept and consider public 
comments on any interim final rule pub-
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lished under this paragraph for 60 days 
after the date of such publication. 
‘‘(ii) EFFECTIVE DATE.—The effective 
date of any amendment to existing stand-
ards or operating rules that is adopted 
through an interim final rule published 
under this paragraph shall be 25 months 
following the close of such public comment 
period. 
‘‘(4) REVIEW COMMITTEE.— 
‘‘(A) DEFINITION.—For the purposes of this 
subsection, the term ‘review committee’ means a 
committee chartered by or within the Depart-
ment of Health and Human services that has 
been designated by the Secretary to carry out 
this subsection, including— 
‘‘(i) the National Committee on Vital 
and Health Statistics; or 
‘‘(ii) any appropriate committee as de-
termined by the Secretary. 
‘‘(B) COORDINATION OF HIT STANDARDS.— 
In developing recommendations under this sub-
section, the review committee shall ensure coordi-
nation, as appropriate, with the standards that 
support the certified electronic health record tech-
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nology approved by the Office of the National 
Coordinator for Health Information Technology. 
‘‘(5) OPERATING RULES FOR OTHER STANDARDS 
ADOPTED BY THE SECRETARY.—The Secretary shall 
adopt a single set of operating rules (pursuant to the 
process described under subsection (g)) for any trans-
action for which a standard had been adopted pursu-
ant to subsection (a)(1)(B). 
‘‘(j) PENALTIES.— 
‘‘(1) PENALTY FEE.— 
‘‘(A) IN GENERAL.—Not later than April 1, 
2014, and annually thereafter, the Secretary 
shall assess a penalty fee (as determined under 
subparagraph (B)) against a health plan that 
has failed to meet the requirements under sub-
section (h) with respect to certification and docu-
mentation of compliance with— 
‘‘(i) the standards and associated oper-
ating rules described under paragraph (1) 
of such subsection; and 
‘‘(ii) a standard (as described under 
subsection (a)(1)(B)) and associated oper-
ating rules (as described under subsection 
(i)(5)) for any other financial and adminis-
trative transactions.
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‘‘(B) FEE
AMOUNT.—Subject to subpara-
graphs (C), (D), and (E), the Secretary shall as-
sess a penalty fee against a health plan in the 
amount of $1 per covered life until certification 
is complete. The penalty shall be assessed per 
person covered by the plan for which its data 
systems for major medical policies are not in 
compliance and shall be imposed against the 
health plan for each day that the plan is not in 
compliance with the requirements under sub-
section (h). 
‘‘(C) ADDITIONAL PENALTY FOR MISREPRE-
SENTATION.—A health plan that knowingly pro-
vides inaccurate or incomplete information in a 
statement of certification or documentation of 
compliance under subsection (h) shall be subject 
to a penalty fee that is double the amount that 
would otherwise be imposed under this sub-
section. 
‘‘(D) ANNUAL FEE INCREASE.—The amount 
of the penalty fee imposed under this subsection 
shall be increased on an annual basis by the an-
nual percentage increase in total national health 
care expenditures, as determined by the Sec-
retary.
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shall provide the Secretary of the Treasury with a re-
port identifying those health plans that have been as-
sessed a penalty fee under this subsection. 
‘‘(4) COLLECTION OF PENALTY FEE.— 
‘‘(A) IN
GENERAL.—The Secretary of the 
Treasury, acting through the Financial Manage-
ment Service, shall administer the collection of 
penalty fees from health plans that have been 
identified by the Secretary in the penalty fee re-
port provided under paragraph (3). 
‘‘(B) NOTICE.—Not later than August 1, 
2014, and annually thereafter, the Secretary of 
the Treasury shall provide notice to each health 
plan that has been assessed a penalty fee by the 
Secretary under this subsection. Such notice 
shall include the amount of the penalty fee as-
sessed by the Secretary and the due date for pay-
ment of such fee to the Secretary of the Treasury 
(as described in subparagraph (C)). 
‘‘(C) PAYMENT DUE DATE.—Payment by a 
health plan for a penalty fee assessed under this 
subsection shall be made to the Secretary of the 
Treasury not later than November 1, 2014, and 
annually thereafter.
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‘‘(D) UNPAID PENALTY FEES.—Any amount 
of a penalty fee assessed against a health plan 
under this subsection for which payment has not 
been made by the due date provided under sub-
paragraph (C) shall be— 
‘‘(i) increased by the interest accrued 
on such amount, as determined pursuant to 
the underpayment rate established under 
section 6621 of the Internal Revenue Code 
of 1986; and 
‘‘(ii) treated as a past-due, legally en-
forceable debt owed to a Federal agency for 
purposes of section 6402(d) of the Internal 
Revenue Code of 1986. 
‘‘(E) 
ADMINISTRATIVE
FEES.—Any 
fee 
charged or allocated for collection activities con-
ducted by the Financial Management Service 
will be passed on to a health plan on a pro-rata 
basis and added to any penalty fee collected from 
the plan.’’. 
(c) PROMULGATION OF RULES.— 
(1) UNIQUE
HEALTH
PLAN
IDENTIFIER.—The 
Secretary shall promulgate a final rule to establish a 
unique health plan identifier (as described in section 
1173(b) of the Social Security Act (42 U.S.C. 1320d–
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2(b))) based on the input of the National Committee 
on Vital and Health Statistics. The Secretary may do 
so on an interim final basis and such rule shall be 
effective not later than October 1, 2012. 
(2) ELECTRONIC
FUNDS
TRANSFER.—The Sec-
retary shall promulgate a final rule to establish a 
standard for electronic funds transfers (as described 
in section 1173(a)(2)(J) of the Social Security Act, as 
added by subsection (b)(2)(A)). The Secretary may do 
so on an interim final basis and shall adopt such 
standard not later than January 1, 2012, in a man-
ner ensuring that such standard is effective not later 
than January 1, 2014. 
(3) HEALTH CLAIMS ATTACHMENTS.—The Sec-
retary shall promulgate a final rule to establish a 
transaction standard and a single set of associated 
operating rules for health claims attachments (as de-
scribed in section 1173(a)(2)(B) of the Social Secu-
rity Act (42 U.S.C. 1320d–2(a)(2)(B))) that is con-
sistent with the X12 Version 5010 transaction stand-
ards. The Secretary may do so on an interim final 
basis and shall adopt a transaction standard and a 
single set of associated operating rules not later than 
January 1, 2014, in a manner ensuring that such 
standard is effective not later than January 1, 2016.
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(d) EXPANSION
OF ELECTRONIC TRANSACTIONS
IN 
MEDICARE.—Section 1862(a) of the Social Security Act (42 
U.S.C. 1395y(a)) is amended— 
(1) in paragraph (23), by striking the ‘‘or’’ at 
the end; 
(2) in paragraph (24), by striking the period 
and inserting ‘‘; or’’; and 
(3) by inserting after paragraph (24) the fol-
lowing new paragraph: 
‘‘(25) not later than January 1, 2014, for which 
the payment is other than by electronic funds transfer 
(EFT) or an electronic remittance in a form as speci-
fied in ASC X12 835 Health Care Payment and Re-
mittance Advice or subsequent standard.’’. 
SEC. 1105. EFFECTIVE DATE. 
This subtitle shall take effect on the date of enactment 
of this Act. 
Subtitle C—Quality Health Insur-
ance Coverage for All Americans 
PART I—HEALTH INSURANCE MARKET REFORMS 
SEC. 1201. AMENDMENT TO THE PUBLIC HEALTH SERVICE 
ACT. 
Part A of title XXVII of the Public Health Service Act 
(42 U.S.C. 300gg et seq.), as amended by section 1001, is 
further amended—
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(1) by striking the heading for subpart 1 and in-
serting the following: 
‘‘Subpart I—General Reform’’; 
(2)(A) in section 2701 (42 U.S.C. 300gg), by 
striking the section heading and subsection (a) and 
inserting the following: 
‘‘SEC. 2704. PROHIBITION OF PREEXISTING CONDITION EX-
CLUSIONS 
OR 
OTHER 
DISCRIMINATION 
BASED ON HEALTH STATUS. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering group or individual health insur-
ance coverage may not impose any preexisting condition 
exclusion with respect to such plan or coverage.’’; and 
(B) by transferring such section (as amended by 
subparagraph (A)) so as to appear after the section 
2703 added by paragraph (4); 
(3)(A) in section 2702 (42 U.S.C. 300gg–1)— 
(i) by striking the section heading and all 
that follows through subsection (a); 
(ii) in subsection (b)— 
(I) by striking ‘‘health insurance issuer 
offering health insurance coverage in con-
nection with a group health plan’’ each 
place that such appears and inserting
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‘‘health insurance issuer offering group or 
individual health insurance coverage’’; and 
(II) in paragraph (2)(A)— 
(aa) by inserting ‘‘or individual’’ 
after ‘‘employer’’; and 
(bb) by inserting ‘‘or individual 
health coverage, as the case may be’’ 
before the semicolon; and 
(iii) in subsection (e)— 
(I) by striking ‘‘(a)(1)(F)’’ and insert-
ing ‘‘(a)(6)’’; 
(II) by striking ‘‘2701’’ and inserting 
‘‘2704’’; and 
(III) by striking ‘‘2721(a)’’ and insert-
ing ‘‘2735(a)’’; and 
(B) by transferring such section (as amend-
ed by subparagraph (A)) to appear after section 
2705(a) as added by paragraph (4); and 
(4) by inserting after the subpart heading (as 
added by paragraph (1)) the following: 
‘‘SEC. 2701. FAIR HEALTH INSURANCE PREMIUMS. 
‘‘(a) 
PROHIBITING
DISCRIMINATORY
PREMIUM 
RATES.— 
‘‘(1) IN GENERAL.—With respect to the premium 
rate charged by a health insurance issuer for health
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insurance coverage offered in the individual or small 
group market— 
‘‘(A) such rate shall vary with respect to the 
particular plan or coverage involved only by— 
‘‘(i) whether such plan or coverage cov-
ers an individual or family; 
‘‘(ii) rating area, as established in ac-
cordance with paragraph (2); 
‘‘(iii) age, except that such rate shall 
not vary by more than 3 to 1 for adults 
(consistent with section 2707(c)); and 
‘‘(iv) tobacco use, except that such rate 
shall not vary by more than 1.5 to 1; and 
‘‘(B) such rate shall not vary with respect 
to the particular plan or coverage involved by 
any other factor not described in subparagraph 
(A). 
‘‘(2) RATING AREA.— 
‘‘(A) IN GENERAL.—Each State shall estab-
lish 1 or more rating areas within that State for 
purposes of applying the requirements of this 
title. 
‘‘(B) 
SECRETARIAL
REVIEW.—The 
Sec-
retary shall review the rating areas established 
by each State under subparagraph (A) to ensure
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the adequacy of such areas for purposes of car-
rying out the requirements of this title. If the 
Secretary determines a State’s rating areas are 
not adequate, or that a State does not establish 
such areas, the Secretary may establish rating 
areas for that State. 
‘‘(3) PERMISSIBLE AGE BANDS.—The Secretary, 
in consultation with the National Association of In-
surance Commissioners, shall define the permissible 
age bands for rating purposes under paragraph 
(1)(A)(iii). 
‘‘(4) APPLICATION OF VARIATIONS BASED ON AGE 
OR TOBACCO USE.—With respect to family coverage 
under a group health plan or health insurance cov-
erage, the rating variations permitted under clauses 
(iii) and (iv) of paragraph (1)(A) shall be applied 
based on the portion of the premium that is attrib-
utable to each family member covered under the plan 
or coverage. 
‘‘(5) SPECIAL
RULE
FOR
LARGE
GROUP
MAR-
KET.—If a State permits health insurance issuers 
that offer coverage in the large group market in the 
State to offer such coverage through the State Ex-
change (as provided for under section 1312(f)(2)(B) of 
the Patient Protection and Affordable Care Act), the
HR 3590 EAS/PP 
provisions of this subsection shall apply to all cov-
erage offered in such market in the State. 
‘‘SEC. 2702. GUARANTEED AVAILABILITY OF COVERAGE. 
‘‘(a) GUARANTEED ISSUANCE OF COVERAGE IN THE 
INDIVIDUAL AND GROUP MARKET.—Subject to subsections 
(b) through (e), each health insurance issuer that offers 
health insurance coverage in the individual or group mar-
ket in a State must accept every employer and individual 
in the State that applies for such coverage. 
‘‘(b) ENROLLMENT.— 
‘‘(1) RESTRICTION.—A health insurance issuer 
described in subsection (a) may restrict enrollment in 
coverage described in such subsection to open or spe-
cial enrollment periods. 
‘‘(2) 
ESTABLISHMENT.—A 
health 
insurance 
issuer described in subsection (a) shall, in accordance 
with the regulations promulgated under paragraph 
(3), establish special enrollment periods for qualifying 
events (under section 603 of the Employee Retirement 
Income Security Act of 1974). 
‘‘(3) REGULATIONS.—The Secretary shall pro-
mulgate regulations with respect to enrollment periods 
under paragraphs (1) and (2).
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‘‘SEC. 2703. GUARANTEED RENEWABILITY OF COVERAGE. 
‘‘(a) IN GENERAL.—Except as provided in this section, 
if a health insurance issuer offers health insurance coverage 
in the individual or group market, the issuer must renew 
or continue in force such coverage at the option of the plan 
sponsor or the individual, as applicable. 
‘‘SEC. 2705. PROHIBITING DISCRIMINATION AGAINST INDI-
VIDUAL PARTICIPANTS AND BENEFICIARIES 
BASED ON HEALTH STATUS. 
‘‘(a) IN GENERAL.—A group health plan and a health 
insurance issuer offering group or individual health insur-
ance coverage may not establish rules for eligibility (includ-
ing continued eligibility) of any individual to enroll under 
the terms of the plan or coverage based on any of the fol-
lowing health status-related factors in relation to the indi-
vidual or a dependent of the individual: 
‘‘(1) Health status. 
‘‘(2) Medical condition (including both physical 
and mental illnesses). 
‘‘(3) Claims experience. 
‘‘(4) Receipt of health care. 
‘‘(5) Medical history. 
‘‘(6) Genetic information. 
‘‘(7) Evidence of insurability (including condi-
tions arising out of acts of domestic violence). 
‘‘(8) Disability.
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reward for participation in a wellness program 
is based on an individual satisfying a standard 
that is related to a health status factor, such 
wellness program shall not violate this section if 
the requirements of paragraph (3) are complied 
with. 
‘‘(2) WELLNESS PROGRAMS NOT SUBJECT TO RE-
QUIREMENTS.—If none of the conditions for obtaining 
a premium discount or rebate or other reward under 
a wellness program as described in paragraph (1)(B) 
are based on an individual satisfying a standard that 
is related to a health status factor (or if such a 
wellness program does not provide such a reward), the 
wellness program shall not violate this section if par-
ticipation in the program is made available to all 
similarly situated individuals. The following pro-
grams shall not have to comply with the requirements 
of paragraph (3) if participation in the program is 
made available to all similarly situated individuals: 
‘‘(A) A program that reimburses all or part 
of the cost for memberships in a fitness center. 
‘‘(B) A diagnostic testing program that pro-
vides a reward for participation and does not 
base any part of the reward on outcomes.
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‘‘(C) A program that encourages preventive 
care related to a health condition through the 
waiver of the copayment or deductible require-
ment under group health plan for the costs of 
certain items or services related to a health con-
dition (such as prenatal care or well-baby visits). 
‘‘(D) A program that reimburses individ-
uals for the costs of smoking cessation programs 
without regard to whether the individual quits 
smoking. 
‘‘(E) A program that provides a reward to 
individuals for attending a periodic health edu-
cation seminar. 
‘‘(3) WELLNESS
PROGRAMS
SUBJECT
TO
RE-
QUIREMENTS.—If any of the conditions for obtaining 
a premium discount, rebate, or reward under a 
wellness program as described in paragraph (1)(C) is 
based on an individual satisfying a standard that is 
related to a health status factor, the wellness program 
shall not violate this section if the following require-
ments are complied with: 
‘‘(A) The reward for the wellness program, 
together with the reward for other wellness pro-
grams with respect to the plan that requires sat-
isfaction of a standard related to a health status
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factor, shall not exceed 30 percent of the cost of 
employee-only coverage under the plan. If, in ad-
dition to employees or individuals, any class of 
dependents (such as spouses or spouses and de-
pendent children) may participate fully in the 
wellness program, such reward shall not exceed 
30 percent of the cost of the coverage in which 
an employee or individual and any dependents 
are enrolled. For purposes of this paragraph, the 
cost of coverage shall be determined based on the 
total amount of employer and employee contribu-
tions for the benefit package under which the em-
ployee is (or the employee and any dependents 
are) receiving coverage. A reward may be in the 
form of a discount or rebate of a premium or 
contribution, a waiver of all or part of a cost- 
sharing mechanism (such as deductibles, copay-
ments, or coinsurance), the absence of a sur-
charge, or the value of a benefit that would other-
wise not be provided under the plan. The Secre-
taries of Labor, Health and Human Services, 
and the Treasury may increase the reward avail-
able under this subparagraph to up to 50 percent 
of the cost of coverage if the Secretaries deter-
mine that such an increase is appropriate.
HR 3590 EAS/PP 
‘‘(B) The wellness program shall be reason-
ably designed to promote health or prevent dis-
ease. A program complies with the preceding sen-
tence if the program has a reasonable chance of 
improving the health of, or preventing disease in, 
participating individuals and it is not overly 
burdensome, is not a subterfuge for discrimi-
nating based on a health status factor, and is 
not highly suspect in the method chosen to pro-
mote health or prevent disease. 
‘‘(C) The plan shall give individuals eligible 
for the program the opportunity to qualify for 
the reward under the program at least once each 
year. 
‘‘(D) The full reward under the wellness 
program shall be made available to all similarly 
situated individuals. For such purpose, among 
other things: 
‘‘(i) The reward is not available to all 
similarly situated individuals for a period 
unless the wellness program allows— 
‘‘(I) for a reasonable alternative 
standard (or waiver of the otherwise 
applicable standard) for obtaining the 
reward for any individual for whom,
HR 3590 EAS/PP 
for that period, it is unreasonably dif-
ficult due to a medical condition to 
satisfy the otherwise applicable stand-
ard; and 
‘‘(II) for a reasonable alternative 
standard (or waiver of the otherwise 
applicable standard) for obtaining the 
reward for any individual for whom, 
for that period, it is medically inadvis-
able to attempt to satisfy the otherwise 
applicable standard. 
‘‘(ii) If reasonable under the cir-
cumstances, the plan or issuer may seek 
verification, such as a statement from an 
individual’s physician, that a health status 
factor makes it unreasonably difficult or 
medically inadvisable for the individual to 
satisfy or attempt to satisfy the otherwise 
applicable standard. 
‘‘(E) The plan or issuer involved shall dis-
close in all plan materials describing the terms 
of the wellness program the availability of a rea-
sonable alternative standard (or the possibility of 
waiver of the otherwise applicable standard) re-
quired under subparagraph (D). If plan mate-
HR 3590 EAS/PP 
rials disclose that such a program is available, 
without describing its terms, the disclosure under 
this subparagraph shall not be required. 
‘‘(k) EXISTING PROGRAMS.—Nothing in this section 
shall prohibit a program of health promotion or disease pre-
vention that was established prior to the date of enactment 
of this section and applied with all applicable regulations, 
and that is operating on such date, from continuing to be 
carried out for as long as such regulations remain in effect. 
‘‘(l) 
WELLNESS
PROGRAM
DEMONSTRATION 
PROJECT.— 
‘‘(1) IN GENERAL.—Not later than July 1, 2014, 
the Secretary, in consultation with the Secretary of 
the Treasury and the Secretary of Labor, shall estab-
lish a 10-State demonstration project under which 
participating States shall apply the provisions of sub-
section (j) to programs of health promotion offered by 
a health insurance issuer that offers health insurance 
coverage in the individual market in such State. 
‘‘(2) 
EXPANSION
OF
DEMONSTRATION 
PROJECT.—If the Secretary, in consultation with the 
Secretary of the Treasury and the Secretary of Labor, 
determines that the demonstration project described in 
paragraph (1) is effective, such Secretaries may, be-
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HR 3590 EAS/PP 
enue Code of 1986 (determined without regard to 
any salary reduction arrangement). 
(B) INDEXING OF LIMITS.—In the case of 
any plan year beginning in a calendar year 
after 2014— 
(i) the dollar amount under subpara-
graph (A)(i) shall be increased by an 
amount equal to the product of that amount 
and the premium adjustment percentage 
under paragraph (4) for the calendar year; 
and 
(ii) the dollar amount under subpara-
graph (A)(ii) shall be increased to an 
amount equal to twice the amount in effect 
under subparagraph (A)(i) for plan years 
beginning in the calendar year, determined 
after application of clause (i). 
If the amount of any increase under clause (i) 
is not a multiple of $50, such increase shall be 
rounded to the next lowest multiple of $50. 
(C) ACTUARIAL
VALUE.—The limitation 
under this paragraph shall be applied in such a 
manner so as to not affect the actuarial value of 
any health plan, including a plan in the bronze 
level.
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(D) COORDINATION WITH PREVENTIVE LIM-
ITS.—Nothing in this paragraph shall be con-
strued to allow a plan to have a deductible under 
the plan apply to benefits described in section 
2713 of the Public Health Service Act. 
(3) COST-SHARING.—In this title— 
(A) IN GENERAL.—The term ‘‘cost-sharing’’ 
includes— 
(i) deductibles, coinsurance, copay-
ments, or similar charges; and 
(ii) any other expenditure required of 
an insured individual which is a qualified 
medical expense (within the meaning of sec-
tion 223(d)(2) of the Internal Revenue Code 
of 1986) with respect to essential health ben-
efits covered under the plan. 
(B) EXCEPTIONS.—Such term does not in-
clude premiums, balance billing amounts for 
non-network providers, or spending for non-cov-
ered services. 
(4) PREMIUM ADJUSTMENT PERCENTAGE.—For 
purposes of paragraphs (1)(B)(i) and (2)(B)(i), the 
premium adjustment percentage for any calendar 
year is the percentage (if any) by which the average 
per capita premium for health insurance coverage in
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the United States for the preceding calendar year (as 
estimated by the Secretary no later than October 1 of 
such preceding calendar year) exceeds such average 
per capita premium for 2013 (as determined by the 
Secretary). 
(d) LEVELS OF COVERAGE.— 
(1) LEVELS OF COVERAGE DEFINED.—The levels 
of coverage described in this subsection are as follows: 
(A) BRONZE LEVEL.—A plan in the bronze 
level shall provide a level of coverage that is de-
signed to provide benefits that are actuarially 
equivalent to 60 percent of the full actuarial 
value of the benefits provided under the plan. 
(B) SILVER LEVEL.—A plan in the silver 
level shall provide a level of coverage that is de-
signed to provide benefits that are actuarially 
equivalent to 70 percent of the full actuarial 
value of the benefits provided under the plan. 
(C) GOLD LEVEL.—A plan in the gold level 
shall provide a level of coverage that is designed 
to provide benefits that are actuarially equiva-
lent to 80 percent of the full actuarial value of 
the benefits provided under the plan. 
(D) PLATINUM LEVEL.—A plan in the plat-
inum level shall provide a level of coverage that
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is designed to provide benefits that are actuari-
ally equivalent to 90 percent of the full actuarial 
value of the benefits provided under the plan. 
(2) ACTUARIAL VALUE.— 
(A) IN GENERAL.—Under regulations issued 
by the Secretary, the level of coverage of a plan 
shall be determined on the basis that the essential 
health benefits described in subsection (b) shall 
be provided to a standard population (and with-
out regard to the population the plan may actu-
ally provide benefits to). 
(B) EMPLOYER CONTRIBUTIONS.—The Sec-
retary may issue regulations under which em-
ployer contributions to a health savings account 
(within the meaning of section 223 of the Inter-
nal Revenue Code of 1986) may be taken into ac-
count in determining the level of coverage for a 
plan of the employer. 
(C) APPLICATION.—In determining under 
this title, the Public Health Service Act, or the 
Internal Revenue Code of 1986 the percentage of 
the total allowed costs of benefits provided under 
a group health plan or health insurance coverage 
that are provided by such plan or coverage, the
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rules contained in the regulations under this 
paragraph shall apply. 
(3) ALLOWABLE VARIANCE.—The Secretary shall 
develop guidelines to provide for a de minimis vari-
ation in the actuarial valuations used in determining 
the level of coverage of a plan to account for dif-
ferences in actuarial estimates. 
(4) PLAN REFERENCE.—In this title, any ref-
erence to a bronze, silver, gold, or platinum plan shall 
be treated as a reference to a qualified health plan 
providing a bronze, silver, gold, or platinum level of 
coverage, as the case may be. 
(e) CATASTROPHIC PLAN.— 
(1) IN GENERAL.—A health plan not providing 
a bronze, silver, gold, or platinum level of coverage 
shall be treated as meeting the requirements of sub-
section (d) with respect to any plan year if— 
(A) the only individuals who are eligible to 
enroll in the plan are individuals described in 
paragraph (2); and 
(B) the plan provides— 
(i) except as provided in clause (ii), 
the essential health benefits determined 
under subsection (b), except that the plan 
provides no benefits for any plan year until
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the individual has incurred cost-sharing ex-
penses in an amount equal to the annual 
limitation in effect under subsection (c)(1) 
for the plan year (except as provided for in 
section 2713); and 
(ii) coverage for at least three primary 
care visits. 
(2) INDIVIDUALS ELIGIBLE FOR ENROLLMENT.— 
An individual is described in this paragraph for any 
plan year if the individual— 
(A) has not attained the age of 30 before the 
beginning of the plan year; or 
(B) has a certification in effect for any plan 
year under this title that the individual is ex-
empt from the requirement under section 5000A 
of the Internal Revenue Code of 1986 by reason 
of— 
(i) section 5000A(e)(1) of such Code 
(relating to individuals without affordable 
coverage); or 
(ii) section 5000A(e)(5) of such Code 
(relating to individuals with hardships). 
(3) RESTRICTION TO INDIVIDUAL MARKET.—If a 
health insurance issuer offers a health plan described
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HR 3590 EAS/PP 
(ii) the issuer of a qualified health 
plan shall determine whether or not the 
plan provides coverage of services described 
in subparagraph (B)(i) or (B)(ii) as part of 
such benefits for the plan year. 
(B) ABORTION SERVICES.— 
(i) ABORTIONS
FOR
WHICH
PUBLIC 
FUNDING IS PROHIBITED.—The services de-
scribed in this clause are abortions for 
which the expenditure of Federal funds ap-
propriated for the Department of Health 
and Human Services is not permitted, 
based on the law as in effect as of the date 
that is 6 months before the beginning of the 
plan year involved. 
(ii) ABORTIONS
FOR
WHICH
PUBLIC 
FUNDING
IS
ALLOWED.—The services de-
scribed in this clause are abortions for 
which the expenditure of Federal funds ap-
propriated for the Department of Health 
and Human Services is permitted, based on 
the law as in effect as of the date that is 6 
months before the beginning of the plan 
year involved.
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(C) PROHIBITION ON FEDERAL FUNDS FOR 
ABORTION SERVICES IN COMMUNITY HEALTH IN-
SURANCE OPTION.— 
(i) DETERMINATION BY SECRETARY.— 
The Secretary may not determine, in ac-
cordance with subparagraph (A)(ii), that 
the community health insurance option es-
tablished under section 1323 shall provide 
coverage of services described in subpara-
graph (B)(i) as part of benefits for the plan 
year unless the Secretary— 
(I) assures compliance with the 
requirements of paragraph (2); 
(II) assures, in accordance with 
applicable provisions of generally ac-
cepted accounting requirements, circu-
lars on funds management of the Office 
of Management and Budget, and guid-
ance on accounting of the Government 
Accountability Office, that no Federal 
funds are used for such coverage; and 
(III) 
notwithstanding 
section 
1323(e)(1)(C) or any other provision of 
this title, takes all necessary steps to 
assure that the United States does not
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bear the insurance risk for a commu-
nity health insurance option’s coverage 
of services described in subparagraph 
(B)(i). 
(ii) STATE REQUIREMENT.—If a State 
requires, in addition to the essential health 
benefits required under section 1323(b)(3) 
(A), coverage of services described in sub-
paragraph (B)(i) for enrollees of a commu-
nity health insurance option offered in such 
State, the State shall assure that no funds 
flowing through or from the community 
health insurance option, and no other Fed-
eral funds, pay or defray the cost of pro-
viding coverage of services described in sub-
paragraph (B)(i). The United States shall 
not bear the insurance risk for a State’s re-
quired coverage of services described in sub-
paragraph (B)(i). 
(iii) EXCEPTIONS.—Nothing in this 
subparagraph shall apply to coverage of 
services described in subparagraph (B)(ii) 
by the community health insurance option. 
Services described in subparagraph (B)(ii) 
shall be covered to the same extent as such
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services are covered under title XIX of the 
Social Security Act. 
(D) ASSURED
AVAILABILITY
OF
VARIED 
COVERAGE THROUGH EXCHANGES.— 
(i) IN GENERAL.—The Secretary shall 
assure that with respect to qualified health 
plans offered in any Exchange established 
pursuant to this title— 
(I) there is at least one such plan 
that provides coverage of services de-
scribed in clauses (i) and (ii) of sub-
paragraph (B); and 
(II) there is at least one such plan 
that does not provide coverage of serv-
ices described in subparagraph (B)(i). 
(ii) SPECIAL RULES.—For purposes of 
clause (i)— 
(I) a plan shall be treated as de-
scribed in clause (i)(II) if the plan 
does not provide coverage of services 
described in either subparagraph (B)(i) 
or (B)(ii); and 
(II) if a State has one Exchange 
covering more than 1 insurance mar-
ket, the Secretary shall meet the re-
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quirements of clause (i) separately 
with respect to each such market. 
(2) PROHIBITION
ON
THE
USE
OF
FEDERAL 
FUNDS.— 
(A) IN
GENERAL.—If a qualified health 
plan provides coverage of services described in 
paragraph (1)(B)(i), the issuer of the plan shall 
not use any amount attributable to any of the 
following for purposes of paying for such serv-
ices: 
(i) The credit under section 36B of the 
Internal Revenue Code of 1986 (and the 
amount (if any) of the advance payment of 
the credit under section 1412 of the Patient 
Protection and Affordable Care Act). 
(ii) Any cost-sharing reduction under 
section 1402 of thePatient Protection and 
Affordable Care Act (and the amount (if 
any) of the advance payment of the reduc-
tion under section 1412 of the Patient Pro-
tection and Affordable Care Act). 
(B) SEGREGATION OF FUNDS.—In the case 
of a plan to which subparagraph (A) applies, the 
issuer of the plan shall, out of amounts not de-
scribed in subparagraph (A), segregate an
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amount equal to the actuarial amounts deter-
mined under subparagraph (C) for all enrollees 
from the amounts described in subparagraph 
(A). 
(C) ACTUARIAL VALUE OF OPTIONAL SERV-
ICE COVERAGE.— 
(i) IN GENERAL.—The Secretary shall 
estimate the basic per enrollee, per month 
cost, determined on an average actuarial 
basis, for including coverage under a quali-
fied health plan of the services described in 
paragraph (1)(B)(i). 
(ii) 
CONSIDERATIONS.—In 
making 
such estimate, the Secretary— 
(I) may take into account the im-
pact on overall costs of the inclusion of 
such coverage, but may not take into 
account any cost reduction estimated 
to result from such services, including 
prenatal care, delivery, or postnatal 
care; 
(II) shall estimate such costs as if 
such coverage were included for the en-
tire population covered; and
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(2) INDIVIDUAL MARKET.—The term ‘‘individual 
market’’ means the market for health insurance cov-
erage offered to individuals other than in connection 
with a group health plan. 
(3) LARGE AND SMALL GROUP MARKETS.—The 
terms ‘‘large group market’’ and ‘‘small group mar-
ket’’ mean the health insurance market under which 
individuals obtain health insurance coverage (directly 
or through any arrangement) on behalf of themselves 
(and their dependents) through a group health plan 
maintained by a large employer (as defined in sub-
section (b)(1)) or by a small employer (as defined in 
subsection (b)(2)), respectively. 
(b) EMPLOYERS.—In this title: 
(1) LARGE
EMPLOYER.—The term ‘‘large em-
ployer’’ means, in connection with a group health 
plan with respect to a calendar year and a plan year, 
an employer who employed an average of at least 101 
employees on business days during the preceding cal-
endar year and who employs at least 1 employee on 
the first day of the plan year. 
(2) SMALL
EMPLOYER.—The term ‘‘small em-
ployer’’ means, in connection with a group health 
plan with respect to a calendar year and a plan year, 
an employer who employed an average of at least 1
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but not more than 100 employees on business days 
during the preceding calendar year and who employs 
at least 1 employee on the first day of the plan year. 
(3) STATE OPTION TO TREAT 50 EMPLOYEES AS 
SMALL.—In the case of plan years beginning before 
January 1, 2016, a State may elect to apply this sub-
section by substituting ‘‘51 employees’’ for ‘‘101 em-
ployees’’ in paragraph (1) and by substituting ‘‘50 
employees’’ for ‘‘100 employees’’ in paragraph (2). 
(4) 
RULES
FOR
DETERMINING
EMPLOYER 
SIZE.—For purposes of this subsection— 
(A) APPLICATION
OF
AGGREGATION
RULE 
FOR EMPLOYERS.—All persons treated as a sin-
gle employer under subsection (b), (c), (m), or 
(o) of section 414 of the Internal Revenue Code 
of 1986 shall be treated as 1 employer. 
(B) EMPLOYERS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of an employer which 
was not in existence throughout the preceding 
calendar year, the determination of whether such 
employer is a small or large employer shall be 
based on the average number of employees that 
it is reasonably expected such employer will em-
ploy on business days in the current calendar 
year.
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(C) PREDECESSORS.—Any reference in this 
subsection to an employer shall include a ref-
erence to any predecessor of such employer. 
(D) CONTINUATION OF PARTICIPATION FOR 
GROWING SMALL EMPLOYERS.—If— 
(i) a qualified employer that is a small 
employer makes enrollment in qualified 
health plans offered in the small group mar-
ket available to its employees through an 
Exchange; and 
(ii) the employer ceases to be a small 
employer by reason of an increase in the 
number of employees of such employer; 
the employer shall continue to be treated as a 
small employer for purposes of this subtitle for 
the period beginning with the increase and end-
ing with the first day on which the employer 
does not make such enrollment available to its 
employees. 
(c) SECRETARY.—In this title, the term ‘‘Secretary’’ 
means the Secretary of Health and Human Services. 
(d) STATE.—In this title, the term ‘‘State’’ means each 
of the 50 States and the District of Columbia.
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PART II—CONSUMER CHOICES AND INSURANCE 
COMPETITION THROUGH HEALTH BENEFIT 
EXCHANGES 
SEC. 1311. AFFORDABLE CHOICES OF HEALTH BENEFIT 
PLANS. 
(a) ASSISTANCE TO STATES TO ESTABLISH AMERICAN 
HEALTH BENEFIT EXCHANGES.— 
(1) PLANNING AND ESTABLISHMENT GRANTS.— 
There shall be appropriated to the Secretary, out of 
any moneys in the Treasury not otherwise appro-
priated, an amount necessary to enable the Secretary 
to make awards, not later than 1 year after the date 
of enactment of this Act, to States in the amount 
specified in paragraph (2) for the uses described in 
paragraph (3). 
(2) AMOUNT SPECIFIED.—For each fiscal year, 
the Secretary shall determine the total amount that 
the Secretary will make available to each State for 
grants under this subsection. 
(3) USE OF FUNDS.—A State shall use amounts 
awarded under this subsection for activities (includ-
ing planning activities) related to establishing an 
American Health Benefit Exchange, as described in 
subsection (b). 
(4) RENEWABILITY OF GRANT.—
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HR 3590 EAS/PP 
(A) IN
GENERAL.—Subject to subsection 
(d)(4), the Secretary may renew a grant award-
ed under paragraph (1) if the State recipient of 
such grant— 
(i) is making progress, as determined 
by the Secretary, toward— 
(I) establishing an Exchange; and 
(II) implementing the reforms de-
scribed in subtitles A and C (and the 
amendments made by such subtitles); 
and 
(ii) is meeting such other benchmarks 
as the Secretary may establish. 
(B) LIMITATION.—No grant shall be award-
ed under this subsection after January 1, 2015. 
(5) TECHNICAL ASSISTANCE TO FACILITATE PAR-
TICIPATION
IN
SHOP
EXCHANGES.—The Secretary 
shall provide technical assistance to States to facili-
tate the participation of qualified small businesses in 
such States in SHOP Exchanges. 
(b) AMERICAN HEALTH BENEFIT EXCHANGES.— 
(1) IN GENERAL.—Each State shall, not later 
than January 1, 2014, establish an American Health 
Benefit Exchange (referred to in this title as an ‘‘Ex-
change’’) for the State that—
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(A) facilitates the purchase of qualified 
health plans; 
(B) provides for the establishment of a 
Small Business Health Options Program (in this 
title referred to as a ‘‘SHOP Exchange’’) that is 
designed to assist qualified employers in the 
State who are small employers in facilitating the 
enrollment of their employees in qualified health 
plans offered in the small group market in the 
State; and 
(C) meets the requirements of subsection (d). 
(2) MERGER
OF
INDIVIDUAL
AND
SHOP
EX-
CHANGES.—A State may elect to provide only one 
Exchange in the State for providing both Exchange 
and SHOP Exchange services to both qualified indi-
viduals and qualified small employers, but only if the 
Exchange has adequate resources to assist such indi-
viduals and employers. 
(c) RESPONSIBILITIES OF THE SECRETARY.— 
(1) IN GENERAL.—The Secretary shall, by regu-
lation, establish criteria for the certification of health 
plans as qualified health plans. Such criteria shall re-
quire that, to be certified, a plan shall, at a min-
imum—
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HR 3590 EAS/PP 
(i) there is no affordable qualified 
health plan available through the Exchange, 
or the individual’s employer, covering the 
individual; or 
(ii) the individual meets the require-
ments for any other such exemption from 
the individual responsibility requirement or 
penalty; 
(I) transfer to the Secretary of the Treas-
ury— 
(i) a list of the individuals who are 
issued a certification under subparagraph 
(H), including the name and taxpayer iden-
tification number of each individual; 
(ii) the name and taxpayer identifica-
tion number of each individual who was an 
employee of an employer but who was deter-
mined to be eligible for the premium tax 
credit under section 36B of the Internal 
Revenue Code of 1986 because— 
(I) the employer did not provide 
minimum essential coverage; or 
(II) the employer provided such 
minimum essential coverage but it was 
determined under section 36B(c)(2)(C)
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of such Code to either be unaffordable 
to the employee or not provide the re-
quired minimum actuarial value; and 
(iii) the name and taxpayer identifica-
tion number of each individual who notifies 
the Exchange under section 1411(b)(4) that 
they have changed employers and of each 
individual who ceases coverage under a 
qualified health plan during a plan year 
(and the effective date of such cessation); 
(J) provide to each employer the name of 
each employee of the employer described in sub-
paragraph (I)(ii) who ceases coverage under a 
qualified health plan during a plan year (and 
the effective date of such cessation); and 
(K) establish the Navigator program de-
scribed in subsection (i). 
(5) FUNDING LIMITATIONS.— 
(A) NO FEDERAL FUNDS FOR CONTINUED 
OPERATIONS.—In 
establishing 
an 
Exchange 
under this section, the State shall ensure that 
such Exchange is self-sustaining beginning on 
January 1, 2015, including allowing the Ex-
change to charge assessments or user fees to par-
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ticipating health insurance issuers, or to other-
wise generate funding, to support its operations. 
(B) 
PROHIBITING
WASTEFUL
USE
OF 
FUNDS.—In carrying out activities under this 
subsection, an Exchange shall not utilize any 
funds intended for the administrative and oper-
ational expenses of the Exchange for staff re-
treats, promotional giveaways, excessive executive 
compensation, or promotion of Federal or State 
legislative and regulatory modifications. 
(6) CONSULTATION.—An Exchange shall consult 
with stakeholders relevant to carrying out the activi-
ties under this section, including— 
(A) health care consumers who are enrollees 
in qualified health plans; 
(B) individuals and entities with experience 
in facilitating enrollment in qualified health 
plans; 
(C) representatives of small businesses and 
self-employed individuals; 
(D) State Medicaid offices; and 
(E) advocates for enrolling hard to reach 
populations. 
(7) PUBLICATION OF COSTS.—An Exchange shall 
publish the average costs of licensing, regulatory fees,
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and any other payments required by the Exchange, 
and the administrative costs of such Exchange, on an 
Internet website to educate consumers on such costs. 
Such information shall also include monies lost to 
waste, fraud, and abuse. 
(e) CERTIFICATION.— 
(1) IN GENERAL.—An Exchange may certify a 
health plan as a qualified health plan if— 
(A) such health plan meets the requirements 
for certification as promulgated by the Secretary 
under subsection (c)(1); and 
(B) the Exchange determines that making 
available such health plan through such Ex-
change is in the interests of qualified individuals 
and qualified employers in the State or States in 
which such Exchange operates, except that the 
Exchange may not exclude a health plan— 
(i) on the basis that such plan is a fee- 
for-service plan; 
(ii) through the imposition of premium 
price controls; or 
(iii) on the basis that the plan provides 
treatments necessary to prevent patients’ 
deaths in circumstances the Exchange deter-
mines are inappropriate or too costly.
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(2) PREMIUM CONSIDERATIONS.—The Exchange 
shall require health plans seeking certification as 
qualified health plans to submit a justification for 
any premium increase prior to implementation of the 
increase. Such plans shall prominently post such in-
formation on their websites. The Exchange may take 
this information, and the information and the rec-
ommendations provided to the Exchange by the State 
under section 2794(b)(1) of the Public Health Service 
Act (relating to patterns or practices of excessive or 
unjustified premium increases), into consideration 
when determining whether to make such health plan 
available through the Exchange. The Exchange shall 
take into account any excess of premium growth out-
side the Exchange as compared to the rate of such 
growth inside the Exchange, including information 
reported by the States. 
(f) FLEXIBILITY.— 
(1) REGIONAL
OR
OTHER
INTERSTATE
EX-
CHANGES.—An Exchange may operate in more than 
one State if— 
(A) each State in which such Exchange op-
erates permits such operation; and 
(B) the Secretary approves such regional or 
interstate Exchange.
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(2) SUBSIDIARY EXCHANGES.—A State may es-
tablish one or more subsidiary Exchanges if— 
(A) each such Exchange serves a geographi-
cally distinct area; and 
(B) the area served by each such Exchange 
is at least as large as a rating area described in 
section 2701(a) of the Public Health Service Act. 
(3) AUTHORITY TO CONTRACT.— 
(A) IN GENERAL.—A State may elect to au-
thorize an Exchange established by the State 
under this section to enter into an agreement 
with an eligible entity to carry out 1 or more re-
sponsibilities of the Exchange. 
(B) ELIGIBLE ENTITY.—In this paragraph, 
the term ‘‘eligible entity’’ means— 
(i) a person— 
(I) incorporated under, and sub-
ject to the laws of, 1 or more States; 
(II) that has demonstrated experi-
ence on a State or regional basis in the 
individual and small group health in-
surance markets and in benefits cov-
erage; and 
(III) that is not a health insur-
ance issuer or that is treated under
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(iii) provide information consistent 
with the standards developed under para-
graph (5). 
(3) DUTIES.—An entity that serves as a navi-
gator under a grant under this subsection shall— 
(A) conduct public education activities to 
raise awareness of the availability of qualified 
health plans; 
(B) distribute fair and impartial informa-
tion concerning enrollment in qualified health 
plans, and the availability of premium tax cred-
its under section 36B of the Internal Revenue 
Code of 1986 and cost-sharing reductions under 
section 1402; 
(C) facilitate enrollment in qualified health 
plans; 
(D) provide referrals to any applicable of-
fice of health insurance consumer assistance or 
health insurance ombudsman established under 
section 2793 of the Public Health Service Act, or 
any other appropriate State agency or agencies, 
for any enrollee with a grievance, complaint, or 
question regarding their health plan, coverage, or 
a determination under such plan or coverage; 
and
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(E) provide information in a manner that 
is culturally and linguistically appropriate to 
the needs of the population being served by the 
Exchange or Exchanges. 
(4) STANDARDS.— 
(A) IN GENERAL.—The Secretary shall es-
tablish standards for navigators under this sub-
section, including provisions to ensure that any 
private or public entity that is selected as a nav-
igator is qualified, and licensed if appropriate, 
to engage in the navigator activities described in 
this subsection and to avoid conflicts of interest. 
Under such standards, a navigator shall not— 
(i) be a health insurance issuer; or 
(ii) receive any consideration directly 
or indirectly from any health insurance 
issuer in connection with the enrollment of 
any qualified individuals or employees of a 
qualified employer in a qualified health 
plan. 
(5) FAIR
AND
IMPARTIAL
INFORMATION
AND 
SERVICES.—The Secretary, in collaboration with 
States, shall develop standards to ensure that infor-
mation made available by navigators is fair, accu-
rate, and impartial.
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(6) FUNDING.—Grants under this subsection 
shall be made from the operational funds of the Ex-
change and not Federal funds received by the State to 
establish the Exchange. 
(j) APPLICABILITY OF MENTAL HEALTH PARITY.— 
Section 2726 of the Public Health Service Act shall apply 
to qualified health plans in the same manner and to the 
same extent as such section applies to health insurance 
issuers and group health plans. 
(k) CONFLICT.—An Exchange may not establish rules 
that conflict with or prevent the application of regulations 
promulgated by the Secretary under this subtitle. 
SEC. 1312. CONSUMER CHOICE. 
(a) CHOICE.— 
(1) QUALIFIED INDIVIDUALS.—A qualified indi-
vidual may enroll in any qualified health plan avail-
able to such individual. 
(2) QUALIFIED EMPLOYERS.— 
(A) EMPLOYER
MAY
SPECIFY
LEVEL.—A 
qualified employer may provide support for cov-
erage of employees under a qualified health plan 
by selecting any level of coverage under section 
1302(d) to be made available to employees 
through an Exchange.
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(B) EMPLOYEE MAY CHOOSE PLANS WITHIN 
A
LEVEL.—Each employee of a qualified em-
ployer that elects a level of coverage under sub-
paragraph (A) may choose to enroll in a quali-
fied health plan that offers coverage at that level. 
(b) PAYMENT OF PREMIUMS BY QUALIFIED INDIVID-
UALS.—A qualified individual enrolled in any qualified 
health plan may pay any applicable premium owed by such 
individual to the health insurance issuer issuing such quali-
fied health plan. 
(c) SINGLE RISK POOL.— 
(1) INDIVIDUAL
MARKET.—A health insurance 
issuer shall consider all enrollees in all health plans 
(other than grandfathered health plans) offered by 
such issuer in the individual market, including those 
enrollees who do not enroll in such plans through the 
Exchange, to be members of a single risk pool. 
(2) SMALL GROUP MARKET.—A health insurance 
issuer shall consider all enrollees in all health plans 
(other than grandfathered health plans) offered by 
such issuer in the small group market, including those 
enrollees who do not enroll in such plans through the 
Exchange, to be members of a single risk pool. 
(3) MERGER OF MARKETS.—A State may re-
quire the individual and small group insurance mar-
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kets within a State to be merged if the State deter-
mines appropriate. 
(4) STATE LAW.—A State law requiring grand-
fathered health plans to be included in a pool de-
scribed in paragraph (1) or (2) shall not apply. 
(d) EMPOWERING CONSUMER CHOICE.— 
(1) CONTINUED OPERATION OF MARKET OUTSIDE 
EXCHANGES.—Nothing in this title shall be construed 
to prohibit— 
(A) a health insurance issuer from offering 
outside of an Exchange a health plan to a quali-
fied individual or qualified employer; and 
(B) a qualified individual from enrolling 
in, or a qualified employer from selecting for its 
employees, a health plan offered outside of an 
Exchange. 
(2) CONTINUED OPERATION OF STATE BENEFIT 
REQUIREMENTS.—Nothing in this title shall be con-
strued to terminate, abridge, or limit the operation of 
any requirement under State law with respect to any 
policy or plan that is offered outside of an Exchange 
to offer benefits. 
(3) VOLUNTARY NATURE OF AN EXCHANGE.— 
(A) CHOICE TO ENROLL OR NOT TO EN-
ROLL.—Nothing in this title shall be construed to
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restrict the choice of a qualified individual to en-
roll or not to enroll in a qualified health plan 
or to participate in an Exchange. 
(B) PROHIBITION AGAINST COMPELLED EN-
ROLLMENT.—Nothing in this title shall be con-
strued to compel an individual to enroll in a 
qualified health plan or to participate in an Ex-
change. 
(C) INDIVIDUALS ALLOWED TO ENROLL IN 
ANY PLAN.—A qualified individual may enroll 
in any qualified health plan, except that in the 
case of a catastrophic plan described in section 
1302(e), a qualified individual may enroll in the 
plan only if the individual is eligible to enroll in 
the plan under section 1302(e)(2). 
(D) MEMBERS OF CONGRESS IN THE EX-
CHANGE.— 
(i) 
REQUIREMENT.—Notwithstanding 
any other provision of law, after the effec-
tive date of this subtitle, the only health 
plans that the Federal Government may 
make available to Members of Congress and 
congressional staff with respect to their serv-
ice as a Member of Congress or congres-
sional staff shall be health plans that are—
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(I) created under this Act (or an 
amendment made by this Act); or 
(II) offered through an Exchange 
established under this Act (or an 
amendment made by this Act). 
(ii) DEFINITIONS.—In this section: 
(I) MEMBER OF CONGRESS.—The 
term ‘‘Member of Congress’’ means any 
member of the House of Representa-
tives or the Senate. 
(II) CONGRESSIONAL STAFF.—The 
term ‘‘congressional staff’’ means all 
full-time and part-time employees em-
ployed by the official office of a Mem-
ber of Congress, whether in Wash-
ington, DC or outside of Washington, 
DC. 
(4) NO PENALTY FOR TRANSFERRING TO MIN-
IMUM ESSENTIAL COVERAGE OUTSIDE EXCHANGE.— 
An Exchange, or a qualified health plan offered 
through an Exchange, shall not impose any penalty 
or other fee on an individual who cancels enrollment 
in a plan because the individual becomes eligible for 
minimum essential coverage (as defined in section 
5000A(f) of the Internal Revenue Code of 1986 with-
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out regard to paragraph (1)(C) or (D) thereof) or 
such coverage becomes affordable (within the meaning 
of section 36B(c)(2)(C) of such Code). 
(e) ENROLLMENT THROUGH AGENTS OR BROKERS.— 
The Secretary shall establish procedures under which a 
State may allow agents or brokers— 
(1) to enroll individuals in any qualified health 
plans in the individual or small group market as 
soon as the plan is offered through an Exchange in 
the State; and 
(2) to assist individuals in applying for pre-
mium tax credits and cost-sharing reductions for 
plans sold through an Exchange. 
Such procedures may include the establishment of rate 
schedules for broker commissions paid by health benefits 
plans offered through an exchange. 
(f) QUALIFIED INDIVIDUALS AND EMPLOYERS; ACCESS 
LIMITED TO CITIZENS AND LAWFUL RESIDENTS.— 
(1) QUALIFIED INDIVIDUALS.—In this title: 
(A) IN GENERAL.—The term ‘‘qualified in-
dividual’’ means, with respect to an Exchange, 
an individual who— 
(i) is seeking to enroll in a qualified 
health plan in the individual market offered 
through the Exchange; and
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(ii) resides in the State that established 
the Exchange (except with respect to terri-
torial agreements under section 1312(f)). 
(B) 
INCARCERATED
INDIVIDUALS
EX-
CLUDED.—An individual shall not be treated as 
a qualified individual if, at the time of enroll-
ment, the individual is incarcerated, other than 
incarceration pending the disposition of charges. 
(2) QUALIFIED EMPLOYER.—In this title: 
(A) IN GENERAL.—The term ‘‘qualified em-
ployer’’ means a small employer that elects to 
make all full-time employees of such employer el-
igible for 1 or more qualified health plans offered 
in the small group market through an Exchange 
that offers qualified health plans. 
(B) EXTENSION TO LARGE GROUPS.— 
(i) IN GENERAL.—Beginning in 2017, 
each State may allow issuers of health in-
surance coverage in the large group market 
in the State to offer qualified health plans 
in such market through an Exchange. Noth-
ing in this subparagraph shall be construed 
as requiring the issuer to offer such plans 
through an Exchange.
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(ii) LARGE EMPLOYERS ELIGIBLE.—If 
a State under clause (i) allows issuers to 
offer qualified health plans in the large 
group market through an Exchange, the 
term ‘‘qualified employer’’ shall include a 
large employer that elects to make all full- 
time employees of such employer eligible for 
1 or more qualified health plans offered in 
the large group market through the Ex-
change. 
(3) ACCESS LIMITED TO LAWFUL RESIDENTS.— 
If an individual is not, or is not reasonably expected 
to be for the entire period for which enrollment is 
sought, a citizen or national of the United States or 
an alien lawfully present in the United States, the in-
dividual shall not be treated as a qualified individual 
and may not be covered under a qualified health plan 
in the individual market that is offered through an 
Exchange. 
SEC. 1313. FINANCIAL INTEGRITY. 
(a) ACCOUNTING FOR EXPENDITURES.— 
(1) IN GENERAL.—An Exchange shall keep an 
accurate accounting of all activities, receipts, and ex-
penditures and shall annually submit to the Secretary 
a report concerning such accountings.
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(2) INVESTIGATIONS.—The Secretary, in coordi-
nation with the Inspector General of the Department 
of Health and Human Services, may investigate the 
affairs of an Exchange, may examine the properties 
and records of an Exchange, and may require peri-
odic reports in relation to activities undertaken by an 
Exchange. An Exchange shall fully cooperate in any 
investigation conducted under this paragraph. 
(3) AUDITS.—An Exchange shall be subject to 
annual audits by the Secretary. 
(4) PATTERN OF ABUSE.—If the Secretary deter-
mines that an Exchange or a State has engaged in 
serious misconduct with respect to compliance with 
the requirements of, or carrying out of activities re-
quired under, this title, the Secretary may rescind 
from payments otherwise due to such State involved 
under this or any other Act administered by the Sec-
retary an amount not to exceed 1 percent of such pay-
ments per year until corrective actions are taken by 
the State that are determined to be adequate by the 
Secretary. 
(5) PROTECTIONS AGAINST FRAUD AND ABUSE.— 
With respect to activities carried out under this title, 
the Secretary shall provide for the efficient and non-
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discriminatory administration of Exchange activities 
and implement any measure or procedure that— 
(A) the Secretary determines is appropriate 
to reduce fraud and abuse in the administration 
of this title; and 
(B) the Secretary has authority to imple-
ment under this title or any other Act. 
(6) APPLICATION OF THE FALSE CLAIMS ACT.— 
(A) IN
GENERAL.—Payments made by, 
through, or in connection with an Exchange are 
subject to the False Claims Act (31 U.S.C. 3729 
et seq.) if those payments include any Federal 
funds. Compliance with the requirements of this 
Act concerning eligibility for a health insurance 
issuer to participate in the Exchange shall be a 
material condition of an issuer’s entitlement to 
receive payments, including payments of pre-
mium tax credits and cost-sharing reductions, 
through the Exchange. 
(B) 
DAMAGES.—Notwithstanding 
para-
graph (1) of section 3729(a) of title 31, United 
States Code, and subject to paragraph (2) of such 
section, the civil penalty assessed under the False 
Claims Act on any person found liable under 
such Act as described in subparagraph (A) shall
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be increased by not less than 3 times and not 
more than 6 times the amount of damages which 
the Government sustains because of the act of 
that person. 
(b) GAO OVERSIGHT.—Not later than 5 years after 
the first date on which Exchanges are required to be oper-
ational under this title, the Comptroller General shall con-
duct an ongoing study of Exchange activities and the enroll-
ees in qualified health plans offered through Exchanges. 
Such study shall review— 
(1) the operations and administration of Ex-
changes, including surveys and reports of qualified 
health plans offered through Exchanges and on the ex-
perience of such plans (including data on enrollees in 
Exchanges and individuals purchasing health insur-
ance coverage outside of Exchanges), the expenses of 
Exchanges, claims statistics relating to qualified 
health plans, complaints data relating to such plans, 
and the manner in which Exchanges meet their goals; 
(2) any significant observations regarding the 
utilization and adoption of Exchanges; 
(3) where appropriate, recommendations for im-
provements in the operations or policies of Exchanges; 
and
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(4) how many physicians, by area and specialty, 
are not taking or accepting new patients enrolled in 
Federal Government health care programs, and the 
adequacy of provider networks of Federal Government 
health care programs. 
PART III—STATE FLEXIBILITY RELATING TO 
EXCHANGES 
SEC. 1321. STATE FLEXIBILITY IN OPERATION AND EN-
FORCEMENT OF EXCHANGES AND RELATED 
REQUIREMENTS. 
(a) ESTABLISHMENT OF STANDARDS.— 
(1) IN GENERAL.—The Secretary shall, as soon 
as practicable after the date of enactment of this Act, 
issue regulations setting standards for meeting the re-
quirements under this title, and the amendments 
made by this title, with respect to— 
(A) the establishment and operation of Ex-
changes (including SHOP Exchanges); 
(B) the offering of qualified health plans 
through such Exchanges; 
(C) the establishment of the reinsurance and 
risk adjustment programs under part V; and 
(D) such other requirements as the Sec-
retary determines appropriate.
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The preceding sentence shall not apply to standards 
for requirements under subtitles A and C (and the 
amendments made by such subtitles) for which the 
Secretary issues regulations under the Public Health 
Service Act. 
(2) CONSULTATION.—In issuing the regulations 
under paragraph (1), the Secretary shall consult with 
the National Association of Insurance Commissioners 
and its members and with health insurance issuers, 
consumer organizations, and such other individuals 
as the Secretary selects in a manner designed to en-
sure balanced representation among interested par-
ties. 
(b) STATE ACTION.—Each State that elects, at such 
time and in such manner as the Secretary may prescribe, 
to apply the requirements described in subsection (a) shall, 
not later than January 1, 2014, adopt and have in effect— 
(1) the Federal standards established under sub-
section (a); or 
(2) a State law or regulation that the Secretary 
determines implements the standards within the 
State. 
(c) FAILURE TO ESTABLISH EXCHANGE OR IMPLE-
MENT REQUIREMENTS.— 
(1) IN GENERAL.—If—
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(A) a State is not an electing State under 
subsection (b); or 
(B) the Secretary determines, on or before 
January 1, 2013, that an electing State— 
(i) will not have any required Ex-
change operational by January 1, 2014; or 
(ii) has not taken the actions the Sec-
retary determines necessary to implement— 
(I) the other requirements set forth 
in the standards under subsection (a); 
or 
(II) the requirements set forth in 
subtitles A and C and the amendments 
made by such subtitles; 
the Secretary shall (directly or through agreement 
with a not-for-profit entity) establish and operate 
such Exchange within the State and the Secretary 
shall take such actions as are necessary to implement 
such other requirements. 
(2) ENFORCEMENT AUTHORITY.—The provisions 
of section 2736(b) of the Public Health Services Act 
shall apply to the enforcement under paragraph (1) 
of requirements of subsection (a)(1) (without regard to 
any limitation on the application of those provisions 
to group health plans).
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(d) NO INTERFERENCE WITH STATE REGULATORY 
AUTHORITY.—Nothing in this title shall be construed to 
preempt any State law that does not prevent the applica-
tion of the provisions of this title. 
(e) PRESUMPTION
FOR CERTAIN STATE-OPERATED 
EXCHANGES.— 
(1) IN GENERAL.—In the case of a State oper-
ating an Exchange before January 1, 2010, and 
which has insured a percentage of its population not 
less than the percentage of the population projected to 
be covered nationally after the implementation of this 
Act, that seeks to operate an Exchange under this sec-
tion, the Secretary shall presume that such Exchange 
meets the standards under this section unless the Sec-
retary determines, after completion of the process es-
tablished under paragraph (2), that the Exchange 
does not comply with such standards. 
(2) PROCESS.—The Secretary shall establish a 
process to work with a State described in paragraph 
(1) to provide assistance necessary to assist the 
State’s Exchange in coming into compliance with the 
standards for approval under this section.
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SEC. 1322. FEDERAL PROGRAM TO ASSIST ESTABLISHMENT 
AND OPERATION OF NONPROFIT, MEMBER- 
RUN HEALTH INSURANCE ISSUERS. 
(a) ESTABLISHMENT OF PROGRAM.— 
(1) IN GENERAL.—The Secretary shall establish 
a program to carry out the purposes of this section 
to be known as the Consumer Operated and Oriented 
Plan (CO–OP) program. 
(2) PURPOSE.—It is the purpose of the CO–OP 
program to foster the creation of qualified nonprofit 
health insurance issuers to offer qualified health plans 
in the individual and small group markets in the 
States in which the issuers are licensed to offer such 
plans. 
(b) LOANS AND GRANTS UNDER THE CO–OP PRO-
GRAM.— 
(1) IN GENERAL.—The Secretary shall provide 
through the CO–OP program for the awarding to per-
sons applying to become qualified nonprofit health in-
surance issuers of— 
(A) loans to provide assistance to such per-
son in meeting its start-up costs; and 
(B) grants to provide assistance to such per-
son in meeting any solvency requirements of 
States in which the person seeks to be licensed to 
issue qualified health plans.
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(2) REQUIREMENTS FOR AWARDING LOANS AND 
GRANTS.— 
(A) IN GENERAL.—In awarding loans and 
grants under the CO–OP program, the Secretary 
shall— 
(i) take into account the recommenda-
tions of the advisory board established 
under paragraph (3); 
(ii) give priority to applicants that 
will offer qualified health plans on a State-
wide basis, will utilize integrated care mod-
els, and have significant private support; 
and 
(iii) ensure that there is sufficient 
funding to establish at least 1 qualified 
nonprofit health insurance issuer in each 
State, except that nothing in this clause 
shall prohibit the Secretary from funding 
the establishment of multiple qualified non-
profit health insurance issuers in any State 
if the funding is sufficient to do so. 
(B) STATES
WITHOUT
ISSUERS
IN
PRO-
GRAM.—If no health insurance issuer applies to 
be a qualified nonprofit health insurance issuer 
within a State, the Secretary may use amounts
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appropriated under this section for the awarding 
of grants to encourage the establishment of a 
qualified nonprofit health insurance issuer with-
in the State or the expansion of a qualified non-
profit health insurance issuer from another State 
to the State. 
(C) AGREEMENT.— 
(i) IN GENERAL.—The Secretary shall 
require any person receiving a loan or 
grant under the CO–OP program to enter 
into an agreement with the Secretary which 
requires such person to meet (and to con-
tinue to meet)— 
(I) any requirement under this 
section for such person to be treated as 
a qualified nonprofit health insurance 
issuer; and 
(II) any requirements contained 
in the agreement for such person to re-
ceive such loan or grant. 
(ii) RESTRICTIONS
ON
USE
OF
FED-
ERAL FUNDS.—The agreement shall include 
a requirement that no portion of the funds 
made available by any loan or grant under 
this section may be used—
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(I) for carrying on propaganda, 
or otherwise attempting, to influence 
legislation; or 
(II) for marketing. 
Nothing in this clause shall be construed to 
allow a person to take any action prohib-
ited by section 501(c)(29) of the Internal 
Revenue Code of 1986. 
(iii) FAILURE
TO
MEET
REQUIRE-
MENTS.—If the Secretary determines that a 
person has failed to meet any requirement 
described in clause (i) or (ii) and has failed 
to correct such failure within a reasonable 
period of time of when the person first 
knows (or reasonably should have known) of 
such failure, such person shall repay to the 
Secretary an amount equal to the sum of— 
(I) 110 percent of the aggregate 
amount of loans and grants received 
under this section; plus 
(II) interest on the aggregate 
amount of loans and grants received 
under this section for the period the 
loans or grants were outstanding.
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The Secretary shall notify the Secretary of 
the Treasury of any determination under 
this section of a failure that results in the 
termination of an issuer’s tax-exempt status 
under section 501(c)(29) of such Code. 
(D) TIME
FOR
AWARDING
LOANS
AND 
GRANTS.—The Secretary shall not later than 
July 1, 2013, award the loans and grants under 
the CO–OP program and begin the distribution 
of amounts awarded under such loans and 
grants. 
(3) ADVISORY BOARD.— 
(A) IN
GENERAL.—The advisory board 
under this paragraph shall consist of 15 mem-
bers appointed by the Comptroller General of the 
United States from among individuals with 
qualifications described in section 1805(c)(2) of 
the Social Security Act. 
(B) RULES RELATING TO APPOINTMENTS.— 
(i) STANDARDS.—Any individual ap-
pointed under subparagraph (A) shall meet 
ethics and conflict of interest standards pro-
tecting against insurance industry involve-
ment and interference.
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(ii) ORIGINAL
APPOINTMENTS.—The 
original appointment of board members 
under subparagraph (A)(ii) shall be made 
no later than 3 months after the date of en-
actment of this Act. 
(C) VACANCY.—Any vacancy on the advi-
sory board shall be filled in the same manner as 
the original appointment. 
(D) PAY AND REIMBURSEMENT.— 
(i) NO COMPENSATION FOR MEMBERS 
OF ADVISORY BOARD.—Except as provided 
in clause (ii), a member of the advisory 
board may not receive pay, allowances, or 
benefits by reason of their service on the 
board. 
(ii) TRAVEL EXPENSES.—Each mem-
ber shall receive travel expenses, including 
per diem in lieu of subsistence under sub-
chapter I of chapter 57 of title 5, United 
States Code. 
(E) APPLICATION
OF
FACA.—The Federal 
Advisory Committee Act (5 U.S.C. App.) shall 
apply to the advisory board, except that section 
14 of such Act shall not apply.
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(F) TERMINATION.—The advisory board 
shall terminate on the earlier of the date that it 
completes its duties under this section or Decem-
ber 31, 2015. 
(c) QUALIFIED
NONPROFIT
HEALTH
INSURANCE 
ISSUER.—For purposes of this section— 
(1) IN GENERAL.—The term ‘‘qualified nonprofit 
health insurance issuer’’ means a health insurance 
issuer that is an organization— 
(A) that is organized under State law as a 
nonprofit, member corporation; 
(B) substantially all of the activities of 
which consist of the issuance of qualified health 
plans in the individual and small group markets 
in each State in which it is licensed to issue such 
plans; and 
(C) that meets the other requirements of this 
subsection. 
(2) CERTAIN ORGANIZATIONS PROHIBITED.—An 
organization shall not be treated as a qualified non-
profit health insurance issuer if— 
(A) the organization or a related entity (or 
any predecessor of either) was a health insurance 
issuer on July 16, 2009; or
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(B) the organization is sponsored by a State 
or local government, any political subdivision 
thereof, or any instrumentality of such govern-
ment or political subdivision. 
(3) GOVERNANCE REQUIREMENTS.—An organi-
zation shall not be treated as a qualified nonprofit 
health insurance issuer unless— 
(A) the governance of the organization is 
subject to a majority vote of its members; 
(B) its governing documents incorporate 
ethics and conflict of interest standards pro-
tecting against insurance industry involvement 
and interference; and 
(C) as provided in regulations promulgated 
by the Secretary, the organization is required to 
operate with a strong consumer focus, including 
timeliness, responsiveness, and accountability to 
members. 
(4) PROFITS INURE TO BENEFIT OF MEMBERS.— 
An organization shall not be treated as a qualified 
nonprofit health insurance issuer unless any profits 
made by the organization are required to be used to 
lower premiums, to improve benefits, or for other pro-
grams intended to improve the quality of health care 
delivered to its members.
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(5) 
COMPLIANCE
WITH
STATE
INSURANCE 
LAWS.—An organization shall not be treated as a 
qualified nonprofit health insurance issuer unless the 
organization meets all the requirements that other 
issuers of qualified health plans are required to meet 
in any State where the issuer offers a qualified health 
plan, including solvency and licensure requirements, 
rules on payments to providers, and compliance with 
network adequacy rules, rate and form filing rules, 
any applicable State premium assessments and any 
other State law described in section 1324(b). 
(6) COORDINATION WITH STATE INSURANCE RE-
FORMS.—An organization shall not be treated as a 
qualified nonprofit health insurance issuer unless the 
organization does not offer a health plan in a State 
until that State has in effect (or the Secretary has 
implemented for the State) the market reforms re-
quired by part A of title XXVII of the Public Health 
Service Act (as amended by subtitles A and C of this 
Act). 
(d) ESTABLISHMENT OF PRIVATE PURCHASING COUN-
CIL.— 
(1) IN GENERAL.—Qualified nonprofit health in-
surance issuers participating in the CO–OP program 
under this section may establish a private purchasing
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council to enter into collective purchasing arrange-
ments for items and services that increase adminis-
trative and other cost efficiencies, including claims 
administration, administrative services, health infor-
mation technology, and actuarial services. 
(2) COUNCIL MAY NOT SET PAYMENT RATES.— 
The private purchasing council established under 
paragraph (1) shall not set payment rates for health 
care facilities or providers participating in health in-
surance coverage provided by qualified nonprofit 
health insurance issuers. 
(3) CONTINUED
APPLICATION
OF
ANTITRUST 
LAWS.— 
(A) IN GENERAL.—Nothing in this section 
shall be construed to limit the application of the 
antitrust laws to any private purchasing council 
(whether or not established under this subsection) 
or to any qualified nonprofit health insurance 
issuer participating in such a council. 
(B) ANTITRUST
LAWS.—For purposes of 
this subparagraph, the term ‘‘antitrust laws’’ has 
the meaning given the term in subsection (a) of 
the first section of the Clayton Act (15 U.S.C. 
12(a)). Such term also includes section 5 of the 
Federal Trade Commission Act (15 U.S.C. 45) to
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the extent that such section 5 applies to unfair 
methods of competition. 
(e) LIMITATION ON PARTICIPATION.—No representa-
tive of any Federal, State, or local government (or of any 
political subdivision or instrumentality thereof), and no 
representative of a person described in subsection (c)(2)(A), 
may serve on the board of directors of a qualified nonprofit 
health insurance issuer or with a private purchasing coun-
cil established under subsection (d). 
(f) LIMITATIONS ON SECRETARY.— 
(1) IN GENERAL.—The Secretary shall not— 
(A) participate in any negotiations between 
1 or more qualified nonprofit health insurance 
issuers (or a private purchasing council estab-
lished under subsection (d)) and any health care 
facilities or providers, including any drug man-
ufacturer, pharmacy, or hospital; and 
(B) establish or maintain a price structure 
for reimbursement of any health benefits covered 
by such issuers. 
(2) COMPETITION.—Nothing in this section shall 
be construed as authorizing the Secretary to interfere 
with the competitive nature of providing health bene-
fits through qualified nonprofit health insurance 
issuers.
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(g) APPROPRIATIONS.—There are hereby appropriated, 
out of any funds in the Treasury not otherwise appro-
priated, $6,000,000,000 to carry out this section. 
(h) TAX EXEMPTION
FOR QUALIFIED NONPROFIT 
HEALTH INSURANCE ISSUER.— 
(1) IN GENERAL.—Section 501(c) of the Internal 
Revenue Code of 1986 (relating to list of exempt orga-
nizations) is amended by adding at the end the fol-
lowing: 
‘‘(29) CO–OP HEALTH INSURANCE ISSUERS.— 
‘‘(A) IN GENERAL.—A qualified nonprofit 
health insurance issuer (within the meaning of 
section 1322 of the Patient Protection and Af-
fordable Care Act) which has received a loan or 
grant under the CO–OP program under such sec-
tion, but only with respect to periods for which 
the issuer is in compliance with the requirements 
of such section and any agreement with respect 
to the loan or grant. 
‘‘(B) CONDITIONS
FOR
EXEMPTION.—Sub-
paragraph (A) shall apply to an organization 
only if— 
‘‘(i) the organization has given notice 
to the Secretary, in such manner as the Sec-
retary may by regulations prescribe, that it
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is applying for recognition of its status 
under this paragraph, 
‘‘(ii) except as provided in section 
1322(c)(4) of the Patient Protection and Af-
fordable Care Act, no part of the net earn-
ings of which inures to the benefit of any 
private shareholder or individual, 
‘‘(iii) no substantial part of the activi-
ties of which is carrying on propaganda, or 
otherwise attempting, to influence legisla-
tion, and 
‘‘(iv) the organization does not partici-
pate in, or intervene in (including the pub-
lishing or distributing of statements), any 
political campaign on behalf of (or in oppo-
sition to) any candidate for public office.’’. 
(2) ADDITIONAL
REPORTING
REQUIREMENT.— 
Section 6033 of such Code (relating to returns by ex-
empt organizations) is amended by redesignating sub-
section (m) as subsection (n) and by inserting after 
subsection (l) the following: 
‘‘(m) ADDITIONAL INFORMATION REQUIRED FROM 
CO–OP INSURERS.—An organization described in section 
501(c)(29) shall include on the return required under sub-
section (a) the following information:
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‘‘(1) The amount of the reserves required by each 
State in which the organization is licensed to issue 
qualified health plans. 
‘‘(2) The amount of reserves on hand.’’. 
(3) APPLICATION OF TAX ON EXCESS BENEFIT 
TRANSACTIONS.—Section 4958(e)(1) of such Code (de-
fining applicable tax-exempt organization) is amend-
ed by striking ‘‘paragraph (3) or (4)’’ and inserting 
‘‘paragraph (3), (4), or (29)’’. 
(i) GAO STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the 
General Accountability Office shall conduct an ongo-
ing study on competition and market concentration 
in the health insurance market in the United States 
after the implementation of the reforms in such mar-
ket under the provisions of, and the amendments 
made by, this Act. Such study shall include an anal-
ysis of new issuers of health insurance in such mar-
ket. 
(2) REPORT.—The Comptroller General shall, 
not later than December 31 of each even-numbered 
year (beginning with 2014), report to the appropriate 
committees of the Congress the results of the study 
conducted under paragraph (1), including any rec-
ommendations 
for 
administrative 
or 
legislative
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changes the Comptroller General determines necessary 
or appropriate to increase competition in the health 
insurance market. 
SEC. 1323. COMMUNITY HEALTH INSURANCE OPTION. 
(a) VOLUNTARY NATURE.— 
(1) NO REQUIREMENT FOR HEALTH CARE PRO-
VIDERS
TO
PARTICIPATE.—Nothing in this section 
shall be construed to require a health care provider to 
participate in a community health insurance option, 
or to impose any penalty for non-participation. 
(2) NO
REQUIREMENT
FOR
INDIVIDUALS
TO 
JOIN.—Nothing in this section shall be construed to 
require an individual to participate in a community 
health insurance option, or to impose any penalty for 
non-participation. 
(3) STATE OPT OUT.— 
(A) IN
GENERAL.—A State may elect to 
prohibit Exchanges in such State from offering a 
community health insurance option if such State 
enacts a law to provide for such prohibition. 
(B) TERMINATION OF OPT OUT.—A State 
may repeal a law described in subparagraph (A) 
and provide for the offering of such an option 
through the Exchange.
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(b) ESTABLISHMENT OF COMMUNITY HEALTH INSUR-
ANCE OPTION.— 
(1) ESTABLISHMENT.—The Secretary shall estab-
lish a community health insurance option to offer, 
through the Exchanges established under this title 
(other than Exchanges in States that elect to opt out 
as provided for in subsection (a)(3)), health care cov-
erage that provides value, choice, competition, and 
stability of affordable, high quality coverage through-
out the United States. 
(2) COMMUNITY HEALTH INSURANCE OPTION.— 
In this section, the term ‘‘community health insur-
ance option’’ means health insurance coverage that— 
(A) except as specifically provided for in 
this section, complies with the requirements for 
being a qualified health plan; 
(B) provides high value for the premium 
charged; 
(C) reduces administrative costs and pro-
motes administrative simplification for bene-
ficiaries; 
(D) promotes high quality clinical care; 
(E) provides high quality customer service 
to beneficiaries;
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(F) offers a sufficient choice of providers; 
and 
(G) complies with State laws (if any), ex-
cept as otherwise provided for in this title, relat-
ing to the laws described in section 1324(b). 
(3) ESSENTIAL HEALTH BENEFITS.— 
(A) GENERAL RULE.—Except as provided 
in subparagraph (B), a community health insur-
ance option offered under this section shall pro-
vide coverage only for the essential health bene-
fits described in section 1302(b). 
(B) STATES MAY OFFER ADDITIONAL BENE-
FITS.—Nothing in this section shall preclude a 
State from requiring that benefits in addition to 
the essential health benefits required under sub-
paragraph (A) be provided to enrollees of a com-
munity health insurance option offered in such 
State. 
(C) CREDITS.— 
(i) IN GENERAL.—An individual en-
rolled in a community health insurance op-
tion under this section shall be eligible for 
credits under section 36B of the Internal 
Revenue Code of 1986 in the same manner
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as an individual who is enrolled in a quali-
fied health plan. 
(ii) NO ADDITIONAL FEDERAL COST.— 
A requirement by a State under subpara-
graph (B) that benefits in addition to the 
essential health benefits required under sub-
paragraph (A) be provided to enrollees of a 
community health insurance option shall 
not affect the amount of a premium tax 
credit provided under section 36B of the In-
ternal Revenue Code of 1986 with respect to 
such plan. 
(D) STATE MUST ASSUME COST.—A State 
shall make payments to or on behalf of an eligi-
ble individual to defray the cost of any addi-
tional benefits described in subparagraph (B). 
(E) ENSURING ACCESS TO ALL SERVICES.— 
Nothing in this Act shall prohibit an individual 
enrolled in a community health insurance option 
from paying out-of-pocket the full cost of any 
item or service not included as an essential 
health benefit or otherwise covered as a benefit by 
a health plan. Nothing in subparagraph (B) 
shall prohibit any type of medical provider from 
accepting an out-of-pocket payment from an in-
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dividual enrolled in a community health insur-
ance option for a service otherwise not included 
as an essential health benefit. 
(F) PROTECTING ACCESS TO END OF LIFE 
CARE.—A community health insurance option 
offered under this section shall be prohibited 
from limiting access to end of life care. 
(4) COST SHARING.—A community health insur-
ance option shall offer coverage at each of the levels 
of coverage described in section 1302(d). 
(5) PREMIUMS.— 
(A) PREMIUMS
SUFFICIENT
TO
COVER 
COSTS.—The Secretary shall establish geographi-
cally adjusted premium rates in an amount suf-
ficient to cover expected costs (including claims 
and administrative costs) using methods in gen-
eral use by qualified health plans. 
(B) APPLICABLE RULES.—The provisions of 
title XXVII of the Public Health Service Act re-
lating to premiums shall apply to community 
health insurance options under this section, in-
cluding modified community rating provisions 
under section 2701 of such Act.
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(C) COLLECTION OF DATA.—The Secretary 
shall collect data as necessary to set premium 
rates under subparagraph (A). 
(D) NATIONAL POOLING.—Notwithstanding 
any other provision of law, the Secretary may 
treat all enrollees in community health insur-
ance options as members of a single pool. 
(E) CONTINGENCY MARGIN.—In establishing 
premium rates under subparagraph (A), the Sec-
retary shall include an appropriate amount for 
a contingency margin. 
(6) REIMBURSEMENT RATES.— 
(A) NEGOTIATED
RATES.—The Secretary 
shall negotiate rates for the reimbursement of 
health care providers for benefits covered under 
a community health insurance option. 
(B) LIMITATION.—The rates described in 
subparagraph (A) shall not be higher, in aggre-
gate, than the average reimbursement rates paid 
by health insurance issuers offering qualified 
health plans through the Exchange. 
(C) INNOVATION.—Subject to the limits con-
tained in subparagraph (A), a State Advisory 
Council established or designated under sub-
section (d) may develop or encourage the use of
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innovative payment policies that promote qual-
ity, efficiency and savings to consumers. 
(7) SOLVENCY AND CONSUMER PROTECTION.— 
(A) SOLVENCY.—The Secretary shall estab-
lish a Federal solvency standard to be applied 
with respect to a community health insurance 
option. A community health insurance option 
shall also be subject to the solvency standard of 
each State in which such community health in-
surance option is offered. 
(B) MINIMUM REQUIRED.—In establishing 
the standard described under subparagraph (A), 
the Secretary shall require a reserve fund that 
shall be equal to at least the dollar value of the 
incurred but not reported claims of a community 
health insurance option. 
(C) CONSUMER
PROTECTIONS.—The con-
sumer protection laws of a State shall apply to 
a community health insurance option. 
(8) REQUIREMENTS ESTABLISHED IN PARTNER-
SHIP WITH INSURANCE COMMISSIONERS.— 
(A) IN GENERAL.—The Secretary, in col-
laboration with the National Association of In-
surance Commissioners (in this paragraph re-
ferred to as the ‘‘NAIC’’), may promulgate regu-
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lations to establish additional requirements for a 
community health insurance option. 
(B) APPLICABILITY.—Any requirement pro-
mulgated under subparagraph (A) shall be appli-
cable to such option beginning 90 days after the 
date on which the regulation involved becomes 
final. 
(c) START-UP FUND.— 
(1) ESTABLISHMENT OF FUND.— 
(A) IN GENERAL.—There is established in 
the Treasury of the United States a trust fund 
to be known as the ‘‘Health Benefit Plan Start- 
Up Fund’’ (referred to in this section as the 
‘‘Start-Up Fund’’), that shall consist of such 
amounts as may be appropriated or credited to 
the Start-Up Fund as provided for in this sub-
section to provide loans for the initial operations 
of a community health insurance option. Such 
amounts shall remain available until expended. 
(B) FUNDING.—There is hereby appro-
priated to the Start-Up Fund, out of any mon-
eys in the Treasury not otherwise appropriated 
an amount requested by the Secretary of Health 
and Human Services as necessary to—
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(i) pay the start-up costs associated 
with the initial operations of a community 
health insurance option; and 
(ii) pay the costs of making payments 
on claims submitted during the period that 
is not more than 90 days from the date on 
which such option is offered. 
(2) USE
OF
START-UP
FUND.—The Secretary 
shall use amounts contained in the Start-Up Fund to 
make payments (subject to the repayment require-
ments in paragraph (4)) for the purposes described in 
paragraph (1)(B). 
(3) PASS
THROUGH
OF
REBATES.—The Sec-
retary may establish procedures for reducing the 
amount of payments to a contracting administrator 
to take into account any rebates or price concessions. 
(4) REPAYMENT.— 
(A) IN GENERAL.—A community health in-
surance option shall be required to repay the 
Secretary of the Treasury (on such terms as the 
Secretary may require) for any payments made 
under paragraph (1)(B) by the date that is not 
later than 9 years after the date on which the 
payment is made. The Secretary may require the 
payment of interest with respect to such repay-
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ments at rates that do not exceed the market in-
terest rate (as determined by the Secretary). 
(B) SANCTIONS
IN
CASE
OF
FOR-PROFIT 
CONVERSION.—In any case in which the Sec-
retary enters into a contract with a qualified en-
tity for the offering of a community health in-
surance option and such entity is determined to 
be a for-profit entity by the Secretary, such enti-
ty shall be— 
(i) immediately liable to the Secretary 
for any payments received by such entity 
from the Start-Up Fund; and 
(ii) permanently ineligible to offer a 
qualified health plan. 
(d) STATE ADVISORY COUNCIL.— 
(1) ESTABLISHMENT.—A State (other than a 
State that elects to opt out as provided for in sub-
section (a)(3)) shall establish or designate a public or 
non-profit private entity to serve as the State Advi-
sory Council to provide recommendations to the Sec-
retary on the operations and policies of a community 
health insurance option in the State. Such Council 
shall provide recommendations on at least the fol-
lowing:
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(A) policies and procedures to integrate 
quality improvement and cost containment 
mechanisms into the health care delivery system; 
(B) mechanisms to facilitate public aware-
ness of the availability of a community health 
insurance option; and 
(C) alternative payment structures under a 
community health insurance option for health 
care providers that encourage quality improve-
ment and cost control. 
(2) MEMBERS.—The members of the State Advi-
sory Council shall be representatives of the public and 
shall include health care consumers and providers. 
(3) APPLICABILITY OF RECOMMENDATIONS.—The 
Secretary may apply the recommendations of a State 
Advisory Council to a community health insurance 
option in that State, in any other State, or in all 
States. 
(e) AUTHORITY TO CONTRACT; TERMS
OF CON-
TRACT.— 
(1) AUTHORITY.— 
(A) IN GENERAL.—The Secretary may enter 
into a contract or contracts with one or more 
qualified entities for the purpose of performing 
administrative functions (including functions de-
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scribed in subsection (a)(4) of section 1874A of 
the Social Security Act) with respect to a com-
munity health insurance option in the same 
manner as the Secretary may enter into con-
tracts under subsection (a)(1) of such section. 
The Secretary shall have the same authority with 
respect to a community health insurance option 
under this section as the Secretary has under 
subsections (a)(1) and (b) of section 1874A of the 
Social Security Act with respect to title XVIII of 
such Act. 
(B) REQUIREMENTS
APPLY.—If the Sec-
retary enters into a contract with a qualified en-
tity to offer a community health insurance op-
tion, under such contract such entity— 
(i) shall meet the criteria established 
under paragraph (2); and 
(ii) shall receive an administrative fee 
under paragraph (7). 
(C) LIMITATION.—Contracts under this sub-
section shall not involve the transfer of insurance 
risk to the contracting administrator. 
(D) REFERENCE.—An entity with which 
the Secretary has entered into a contract under
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this paragraph shall be referred to as a ‘‘con-
tracting administrator’’. 
(2) QUALIFIED ENTITY.—To be qualified to be 
selected by the Secretary to offer a community health 
insurance option, an entity shall— 
(A) meet the criteria established under sec-
tion 1874A(a)(2) of the Social Security Act; 
(B) be a nonprofit entity for purposes of of-
fering such option; 
(C) meet the solvency standards applicable 
under subsection (b)(7); 
(D) be eligible to offer health insurance or 
health benefits coverage; 
(E) meet quality standards specified by the 
Secretary; 
(F) have in place effective procedures to 
control fraud, abuse, and waste; and 
(G) meet such other requirements as the 
Secretary may impose. 
Procedures described under subparagraph (F) shall 
include the implementation of procedures to use bene-
ficiary identifiers to identify individuals entitled to 
benefits so that such an individual’s social security 
account number is not used, and shall also include 
procedures for the use of technology (including front-
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end, prepayment intelligent data-matching technology 
similar to that used by hedge funds, investment funds, 
and banks) to provide real-time data analysis of 
claims for payment under this title to identify and 
investigate unusual billing or order practices under 
this title that could indicate fraud or abuse. 
(3) TERM.—A contract provided for under para-
graph (1) shall be for a term of at least 5 years but 
not more than 10 years, as determined by the Sec-
retary. At the end of each such term, the Secretary 
shall conduct a competitive bidding process for the 
purposes of renewing existing contracts or selecting 
new qualified entities with which to enter into con-
tracts under such paragraph. 
(4) LIMITATION.—A contract may not be re-
newed under this subsection unless the Secretary de-
termines that the contracting administrator has met 
performance requirements established by the Secretary 
in the areas described in paragraph (7)(B). 
(5) AUDITS.—The Inspector General shall con-
duct periodic audits with respect to contracting ad-
ministrators under this subsection to ensure that the 
administrator involved is in compliance with this sec-
tion.
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(6) REVOCATION.—A contract awarded under 
this subsection shall be revoked by the Secretary, upon 
the recommendation of the Inspector General, only 
after notice to the contracting administrator involved 
and an opportunity for a hearing. The Secretary may 
revoke such contract if the Secretary determines that 
such administrator has engaged in fraud, deception, 
waste, abuse of power, negligence, mismanagement of 
taxpayer dollars, or gross mismanagement. An entity 
that has had a contract revoked under this paragraph 
shall not be qualified to enter into a subsequent con-
tract under this subsection. 
(7) FEE FOR ADMINISTRATION.— 
(A) IN GENERAL.—The Secretary shall pay 
the contracting administrator a fee for the man-
agement, administration, and delivery of the 
benefits under this section. 
(B) REQUIREMENT FOR HIGH QUALITY AD-
MINISTRATION.—The Secretary may increase the 
fee described in subparagraph (A) by not more 
than 10 percent, or reduce the fee described in 
subparagraph (A) by not more than 50 percent, 
based on the extent to which the contracting ad-
ministrator, in the determination of the Sec-
retary, meets performance requirements estab-
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lished by the Secretary, in at least the following 
areas: 
(i) Maintaining low premium costs 
and low cost sharing requirements, provided 
that such requirements are consistent with 
section 1302. 
(ii) Reducing administrative costs and 
promoting administrative simplification for 
beneficiaries. 
(iii) Promoting high quality clinical 
care. 
(iv) Providing high quality customer 
service to beneficiaries. 
(C) NON-RENEWAL.—The Secretary may 
not renew a contract to offer a community health 
insurance option under this section with any 
contracting entity that has been assessed more 
than one reduction under subparagraph (B) dur-
ing the contract period. 
(8) LIMITATION.—Notwithstanding the terms of 
a contract under this subsection, the Secretary shall 
negotiate the reimbursement rates for purposes of sub-
section (b)(6). 
(f) REPORT BY HHS AND INSOLVENCY WARNINGS.—
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(1) IN GENERAL.—On an annual basis, the Sec-
retary shall conduct a study on the solvency of a com-
munity health insurance option and submit to Con-
gress a report describing the results of such study. 
(2) RESULT.—If, in any year, the result of the 
study under paragraph (1) is that a community 
health insurance option is insolvent, such result shall 
be treated as a community health insurance option 
solvency warning. 
(3) SUBMISSION OF PLAN AND PROCEDURE.— 
(A) IN GENERAL.—If there is a community 
health insurance option solvency warning under 
paragraph (2) made in a year, the President 
shall submit to Congress, within the 15-day pe-
riod beginning on the date of the budget submis-
sion to Congress under section 1105(a) of title 
31, United States Code, for the succeeding year, 
proposed legislation to respond to such warning. 
(B) PROCEDURE.—In the case of a legisla-
tive proposal submitted by the President pursu-
ant to subparagraph (A), such proposal shall be 
considered by Congress using the same proce-
dures described under sections 803 and 804 of 
the Medicare Prescription Drug, Improvement,
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and Modernization Act of 2003 that shall be used 
for a medicare funding warning. 
(g) MARKETING PARITY.—In a facility controlled by 
the Federal Government, or by a State, where marketing 
or promotional materials related to a community health in-
surance option are made available to the public, making 
available marketing or promotional materials relating to 
private health insurance plans shall not be prohibited. Such 
materials include informational pamphlets, guidebooks, en-
rollment forms, or other materials determined reasonable 
for display. 
(h) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated such sums as may be nec-
essary to carry out this section. 
SEC. 1324. LEVEL PLAYING FIELD. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, any health insurance coverage offered by a pri-
vate health insurance issuer shall not be subject to any Fed-
eral or State law described in subsection (b) if a qualified 
health plan offered under the Consumer Operated and Ori-
ented Plan program under section 1322, a community 
health insurance option under section 1323, or a nation-
wide qualified health plan under section 1333(b), is not sub-
ject to such law.
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(b) LAWS DESCRIBED.—The Federal and State laws 
described in this subsection are those Federal and State 
laws relating to— 
(1) guaranteed renewal; 
(2) rating; 
(3) preexisting conditions; 
(4) non-discrimination; 
(5) quality improvement and reporting; 
(6) fraud and abuse; 
(7) solvency and financial requirements; 
(8) market conduct; 
(9) prompt payment; 
(10) appeals and grievances; 
(11) privacy and confidentiality; 
(12) licensure; and 
(13) benefit plan material or information. 
PART IV—STATE FLEXIBILITY TO ESTABLISH 
ALTERNATIVE PROGRAMS 
SEC. 
1331. 
STATE 
FLEXIBILITY 
TO 
ESTABLISH 
BASIC 
HEALTH PROGRAMS FOR LOW-INCOME INDI-
VIDUALS NOT ELIGIBLE FOR MEDICAID. 
(a) ESTABLISHMENT OF PROGRAM.— 
(1) IN GENERAL.—The Secretary shall establish 
a basic health program meeting the requirements of 
this section under which a State may enter into con-
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tracts to offer 1 or more standard health plans pro-
viding at least the essential health benefits described 
in section 1302(b) to eligible individuals in lieu of of-
fering such individuals coverage through an Ex-
change. 
(2) CERTIFICATIONS AS TO BENEFIT COVERAGE 
AND
COSTS.—Such program shall provide that a 
State may not establish a basic health program under 
this section unless the State establishes to the satisfac-
tion of the Secretary, and the Secretary certifies, 
that— 
(A) in the case of an eligible individual en-
rolled in a standard health plan offered through 
the program, the State provides— 
(i) that the amount of the monthly pre-
mium an eligible individual is required to 
pay for coverage under the standard health 
plan for the individual and the individual’s 
dependents does not exceed the amount of 
the monthly premium that the eligible indi-
vidual would have been required to pay (in 
the rating area in which the individual re-
sides) if the individual had enrolled in the 
applicable second lowest cost silver plan (as 
defined in section 36B(b)(3)(B) of the Inter-
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nal Revenue Code of 1986) offered to the in-
dividual through an Exchange; and 
(ii) that the cost-sharing an eligible in-
dividual is required to pay under the stand-
ard health plan does not exceed— 
(I) 
the 
cost-sharing 
required 
under a platinum plan in the case of 
an eligible individual with household 
income not in excess of 150 percent of 
the poverty line for the size of the fam-
ily involved; and 
(II) 
the 
cost-sharing 
required 
under a gold plan in the case of an eli-
gible individual not described in sub-
clause (I); and 
(B) the benefits provided under the stand-
ard health plans offered through the program 
cover at least the essential health benefits de-
scribed in section 1302(b). 
For purposes of subparagraph (A)(i), the amount of 
the monthly premium an individual is required to 
pay under either the standard health plan or the ap-
plicable second lowest cost silver plan shall be deter-
mined after reduction for any premium tax credits
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and cost-sharing reductions allowable with respect to 
either plan. 
(b) STANDARD HEALTH PLAN.—In this section, the 
term ‘‘standard heath plan’’ means a health benefits plan 
that the State contracts with under this section— 
(1) under which the only individuals eligible to 
enroll are eligible individuals; 
(2) that provides at least the essential health ben-
efits described in section 1302(b); and 
(3) in the case of a plan that provides health in-
surance coverage offered by a health insurance issuer, 
that has a medical loss ratio of at least 85 percent. 
(c) CONTRACTING PROCESS.— 
(1) IN GENERAL.—A State basic health program 
shall establish a competitive process for entering into 
contracts with standard health plans under subsection 
(a), including negotiation of premiums and cost-shar-
ing and negotiation of benefits in addition to the es-
sential health benefits described in section 1302(b). 
(2) SPECIFIC
ITEMS
TO
BE
CONSIDERED.—A 
State shall, as part of its competitive process under 
paragraph (1), include at least the following: 
(A) INNOVATION.—Negotiation with offerors 
of a standard health plan for the inclusion of in-
novative features in the plan, including—
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(i) care coordination and care manage-
ment for enrollees, especially for those with 
chronic health conditions; 
(ii) incentives for use of preventive 
services; and 
(iii) the establishment of relationships 
between providers and patients that maxi-
mize patient involvement in health care de-
cision-making, including providing incen-
tives for appropriate utilization under the 
plan. 
(B) 
HEALTH
AND
RESOURCE
DIF-
FERENCES.—Consideration of, and the making 
of suitable allowances for, differences in health 
care needs of enrollees and differences in local 
availability of, and access to, health care pro-
viders. Nothing in this subparagraph shall be 
construed as allowing discrimination on the 
basis of pre-existing conditions or other health 
status-related factors. 
(C) MANAGED
CARE.—Contracting with 
managed care systems, or with systems that offer 
as many of the attributes of managed care as are 
feasible in the local health care market.
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(D) 
PERFORMANCE
MEASURES.—Estab-
lishing specific performance measures and stand-
ards for issuers of standard health plans that 
focus on quality of care and improved health 
outcomes, requiring such plans to report to the 
State with respect to the measures and stand-
ards, and making the performance and quality 
information available to enrollees in a useful 
form. 
(3) ENHANCED AVAILABILITY.— 
(A) MULTIPLE PLANS.—A State shall, to the 
maximum extent feasible, seek to make multiple 
standard health plans available to eligible indi-
viduals within a State to ensure individuals 
have a choice of such plans. 
(B) REGIONAL
COMPACTS.—A State may 
negotiate a regional compact with other States to 
include coverage of eligible individuals in all 
such States in agreements with issuers of stand-
ard health plans. 
(4) COORDINATION
WITH
OTHER
STATE
PRO-
GRAMS.—A State shall seek to coordinate the admin-
istration of, and provision of benefits under, its pro-
gram under this section with the State medicaid pro-
gram under title XIX of the Social Security Act, the
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State child health plan under title XXI of such Act, 
and other State-administered health programs to 
maximize the efficiency of such programs and to im-
prove the continuity of care. 
(d) TRANSFER OF FUNDS TO STATES.— 
(1) IN GENERAL.—If the Secretary determines 
that a State electing the application of this section 
meets the requirements of the program established 
under subsection (a), the Secretary shall transfer to 
the State for each fiscal year for which 1 or more 
standard health plans are operating within the State 
the amount determined under paragraph (3). 
(2) USE OF FUNDS.—A State shall establish a 
trust for the deposit of the amounts received under 
paragraph (1) and amounts in the trust fund shall 
only be used to reduce the premiums and cost-sharing 
of, or to provide additional benefits for, eligible indi-
viduals enrolled in standard health plans within the 
State. Amounts in the trust fund, and expenditures of 
such amounts, shall not be included in determining 
the amount of any non-Federal funds for purposes of 
meeting any matching or expenditure requirement of 
any federally-funded program. 
(3) AMOUNT OF PAYMENT.— 
(A) SECRETARIAL DETERMINATION.—
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(i) IN GENERAL.—The amount deter-
mined under this paragraph for any fiscal 
year is the amount the Secretary determines 
is equal to 85 percent of the premium tax 
credits under section 36B of the Internal 
Revenue Code of 1986, and the cost-sharing 
reductions under section 1402, that would 
have been provided for the fiscal year to eli-
gible individuals enrolled in standard 
health plans in the State if such eligible in-
dividuals were allowed to enroll in qualified 
health plans through an Exchange estab-
lished under this subtitle. 
(ii) SPECIFIC
REQUIREMENTS.—The 
Secretary shall make the determination 
under clause (i) on a per enrollee basis and 
shall take into account all relevant factors 
necessary to determine the value of the pre-
mium tax credits and cost-sharing reduc-
tions that would have been provided to eli-
gible individuals described in clause (i), in-
cluding the age and income of the enrollee, 
whether the enrollment is for self-only or 
family coverage, geographic differences in 
average spending for health care across rat-
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ing areas, the health status of the enrollee 
for purposes of determining risk adjustment 
payments and reinsurance payments that 
would have been made if the enrollee had 
enrolled in a qualified health plan through 
an Exchange, and whether any reconcili-
ation of the credit or cost-sharing reductions 
would have occurred if the enrollee had been 
so enrolled. This determination shall take 
into consideration the experience of other 
States with respect to participation in an 
Exchange and such credits and reductions 
provided to residents of the other States, 
with a special focus on enrollees with in-
come below 200 percent of poverty. 
(iii) CERTIFICATION.—The Chief Actu-
ary of the Centers for Medicare & Medicaid 
Services, in consultation with the Office of 
Tax Analysis of the Department of the 
Treasury, shall certify whether the method-
ology used to make determinations under 
this subparagraph, and such determina-
tions, meet the requirements of clause (ii). 
Such certifications shall be based on suffi-
cient data from the State and from com-
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parable States about their experience with 
programs created by this Act. 
(B) CORRECTIONS.—The Secretary shall ad-
just the payment for any fiscal year to reflect 
any error in the determinations under subpara-
graph (A) for any preceding fiscal year. 
(4) APPLICATION OF SPECIAL RULES.—The pro-
visions of section 1303 shall apply to a State basic 
health program, and to standard health plans offered 
through such program, in the same manner as such 
rules apply to qualified health plans. 
(e) ELIGIBLE INDIVIDUAL.— 
(1) IN GENERAL.—In this section, the term ‘‘eli-
gible individual’’ means, with respect to any State, 
an individual— 
(A) who a resident of the State who is not 
eligible to enroll in the State’s medicaid program 
under title XIX of the Social Security Act for 
benefits that at a minimum consist of the essen-
tial health benefits described in section 1302(b); 
(B) whose household income exceeds 133 
percent but does not exceed 200 percent of the 
poverty line for the size of the family involved; 
(C) who is not eligible for minimum essen-
tial coverage (as defined in section 5000A(f) of
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the Internal Revenue Code of 1986) or is eligible 
for an employer-sponsored plan that is not af-
fordable coverage (as determined under section 
5000A(e)(2) of such Code); and 
(D) who has not attained age 65 as of the 
beginning of the plan year. 
Such term shall not include any individual who is 
not a qualified individual under section 1312 who is 
eligible to be covered by a qualified health plan of-
fered through an Exchange. 
(2) ELIGIBLE INDIVIDUALS MAY NOT USE EX-
CHANGE.—An eligible individual shall not be treated 
as a qualified individual under section 1312 eligible 
for enrollment in a qualified health plan offered 
through an Exchange established under section 1311. 
(f) SECRETARIAL OVERSIGHT.—The Secretary shall 
each year conduct a review of each State program to ensure 
compliance with the requirements of this section, including 
ensuring that the State program meets— 
(1) eligibility verification requirements for par-
ticipation in the program; 
(2) the requirements for use of Federal funds re-
ceived by the program; and 
(3) the quality and performance standards under 
this section.
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(g) STANDARD HEALTH PLAN OFFERORS.—A State 
may provide that persons eligible to offer standard health 
plans under a basic health program established under this 
section may include a licensed health maintenance organi-
zation, a licensed health insurance insurer, or a network 
of health care providers established to offer services under 
the program. 
(h) DEFINITIONS.—Any term used in this section 
which is also used in section 36B of the Internal Revenue 
Code of 1986 shall have the meaning given such term by 
such section. 
SEC. 1332. WAIVER FOR STATE INNOVATION. 
(a) APPLICATION.— 
(1) IN GENERAL.—A State may apply to the 
Secretary for the waiver of all or any requirements 
described in paragraph (2) with respect to health in-
surance coverage within that State for plan years be-
ginning on or after January 1, 2017. Such applica-
tion shall— 
(A) be filed at such time and in such man-
ner as the Secretary may require; 
(B) contain such information as the Sec-
retary may require, including— 
(i) a comprehensive description of the 
State legislation and program to implement
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a plan meeting the requirements for a waiv-
er under this section; and 
(ii) a 10-year budget plan for such 
plan that is budget neutral for the Federal 
Government; and 
(C) provide an assurance that the State has 
enacted the law described in subsection (b)(2). 
(2) 
REQUIREMENTS.—The 
requirements 
de-
scribed in this paragraph with respect to health in-
surance coverage within the State for plan years be-
ginning on or after January 1, 2014, are as follows: 
(A) Part I of subtitle D. 
(B) Part II of subtitle D. 
(C) Section 1402. 
(D) Sections 36B, 4980H, and 5000A of the 
Internal Revenue Code of 1986. 
(3) PASS THROUGH OF FUNDING.—With respect 
to a State waiver under paragraph (1), under which, 
due to the structure of the State plan, individuals and 
small employers in the State would not qualify for the 
premium tax credits, cost-sharing reductions, or small 
business credits under sections 36B of the Internal 
Revenue Code of 1986 or under part I of subtitle E 
for which they would otherwise be eligible, the Sec-
retary shall provide for an alternative means by
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which the aggregate amount of such credits or reduc-
tions that would have been paid on behalf of partici-
pants in the Exchanges established under this title 
had the State not received such waiver, shall be paid 
to the State for purposes of implementing the State 
plan under the waiver. Such amount shall be deter-
mined annually by the Secretary, taking into consid-
eration the experience of other States with respect to 
participation in an Exchange and credits and reduc-
tions provided under such provisions to residents of 
the other States. 
(4) 
WAIVER
CONSIDERATION
AND
TRANS-
PARENCY.— 
(A) IN
GENERAL.—An application for a 
waiver under this section shall be considered by 
the Secretary in accordance with the regulations 
described in subparagraph (B). 
(B) REGULATIONS.—Not later than 180 
days after the date of enactment of this Act, the 
Secretary shall promulgate regulations relating 
to waivers under this section that provide— 
(i) a process for public notice and com-
ment at the State level, including public 
hearings, sufficient to ensure a meaningful 
level of public input;
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(ii) a process for the submission of an 
application that ensures the disclosure of— 
(I) the provisions of law that the 
State involved seeks to waive; and 
(II) the specific plans of the State 
to ensure that the waiver will be in 
compliance with subsection (b); 
(iii) a process for providing public no-
tice and comment after the application is 
received by the Secretary, that is sufficient 
to ensure a meaningful level of public input 
and that does not impose requirements that 
are in addition to, or duplicative of, re-
quirements imposed under the Administra-
tive Procedures Act, or requirements that 
are unreasonable or unnecessarily burden-
some with respect to State compliance; 
(iv) a process for the submission to the 
Secretary of periodic reports by the State 
concerning the implementation of the pro-
gram under the waiver; and 
(v) a process for the periodic evalua-
tion by the Secretary of the program under 
the waiver.
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(C) REPORT.—The Secretary shall annually 
report to Congress concerning actions taken by 
the Secretary with respect to applications for 
waivers under this section. 
(5) COORDINATED WAIVER PROCESS.—The Sec-
retary shall develop a process for coordinating and 
consolidating the State waiver processes applicable 
under the provisions of this section, and the existing 
waiver processes applicable under titles XVIII, XIX, 
and XXI of the Social Security Act, and any other 
Federal law relating to the provision of health care 
items or services. Such process shall permit a State 
to submit a single application for a waiver under any 
or all of such provisions. 
(6) DEFINITION.—In this section, the term ‘‘Sec-
retary’’ means— 
(A) the Secretary of Health and Human 
Services with respect to waivers relating to the 
provisions 
described 
in 
subparagraph 
(A) 
through (C) of paragraph (2); and 
(B) the Secretary of the Treasury with re-
spect to waivers relating to the provisions de-
scribed in paragraph (2)(D). 
(b) GRANTING OF WAIVERS.—
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(1) IN GENERAL.—The Secretary may grant a 
request for a waiver under subsection (a)(1) only if 
the Secretary determines that the State plan— 
(A) will provide coverage that is at least as 
comprehensive as the coverage defined in section 
1302(b) and offered through Exchanges estab-
lished under this title as certified by Office of the 
Actuary of the Centers for Medicare & Medicaid 
Services based on sufficient data from the State 
and from comparable States about their experi-
ence with programs created by this Act and the 
provisions of this Act that would be waived; 
(B) will provide coverage and cost sharing 
protections against excessive out-of-pocket spend-
ing that are at least as affordable as the provi-
sions of this title would provide; 
(C) will provide coverage to at least a com-
parable number of its residents as the provisions 
of this title would provide; and 
(D) will not increase the Federal deficit. 
(2) REQUIREMENT TO ENACT A LAW.— 
(A) IN GENERAL.—A law described in this 
paragraph is a State law that provides for State 
actions under a waiver under this section, in-
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cluding the implementation of the State plan 
under subsection (a)(1)(B). 
(B) TERMINATION OF OPT OUT.—A State 
may repeal a law described in subparagraph (A) 
and terminate the authority provided under the 
waiver with respect to the State. 
(c) SCOPE OF WAIVER.— 
(1) IN GENERAL.—The Secretary shall determine 
the scope of a waiver of a requirement described in 
subsection (a)(2) granted to a State under subsection 
(a)(1). 
(2) LIMITATION.—The Secretary may not waive 
under this section any Federal law or requirement 
that is not within the authority of the Secretary. 
(d) DETERMINATIONS BY SECRETARY.— 
(1) TIME FOR DETERMINATION.—The Secretary 
shall make a determination under subsection (a)(1) 
not later than 180 days after the receipt of an appli-
cation from a State under such subsection. 
(2) EFFECT OF DETERMINATION.— 
(A) GRANTING
OF
WAIVERS.—If the Sec-
retary determines to grant a waiver under sub-
section (a)(1), the Secretary shall notify the 
State involved of such determination and the 
terms and effectiveness of such waiver.
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(B) DENIAL OF WAIVER.—If the Secretary 
determines a waiver should not be granted under 
subsection (a)(1), the Secretary shall notify the 
State involved, and the appropriate committees 
of Congress of such determination and the rea-
sons therefore. 
(e) TERM OF WAIVER.—No waiver under this section 
may extend over a period of longer than 5 years unless the 
State requests continuation of such waiver, and such request 
shall be deemed granted unless the Secretary, within 90 
days after the date of its submission to the Secretary, either 
denies such request in writing or informs the State in writ-
ing with respect to any additional information which is 
needed in order to make a final determination with respect 
to the request. 
SEC. 1333. PROVISIONS RELATING TO OFFERING OF PLANS 
IN MORE THAN ONE STATE. 
(a) HEALTH CARE CHOICE COMPACTS.— 
(1) IN GENERAL.—Not later than July 1, 2013, 
the Secretary shall, in consultation with the National 
Association of Insurance Commissioners, issue regula-
tions for the creation of health care choice compacts 
under which 2 or more States may enter into an 
agreement under which—
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(A) 1 or more qualified health plans could 
be offered in the individual markets in all such 
States but, except as provided in subparagraph 
(B), only be subject to the laws and regulations 
of the State in which the plan was written or 
issued; 
(B) the issuer of any qualified health plan 
to which the compact applies— 
(i) would continue to be subject to 
market conduct, unfair trade practices, net-
work adequacy, and consumer protection 
standards (including standards relating to 
rating), including addressing disputes as to 
the performance of the contract, of the State 
in which the purchaser resides; 
(ii) would be required to be licensed in 
each State in which it offers the plan under 
the compact or to submit to the jurisdiction 
of each such State with regard to the stand-
ards described in clause (i) (including al-
lowing access to records as if the insurer 
were licensed in the State); and 
(iii) must clearly notify consumers 
that the policy may not be subject to all the
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laws and regulations of the State in which 
the purchaser resides. 
(2) STATE AUTHORITY.—A State may not enter 
into an agreement under this subsection unless the 
State enacts a law after the date of the enactment of 
this title that specifically authorizes the State to enter 
into such agreements. 
(3) APPROVAL
OF
COMPACTS.—The Secretary 
may approve interstate health care choice compacts 
under paragraph (1) only if the Secretary determines 
that such health care choice compact— 
(A) will provide coverage that is at least as 
comprehensive as the coverage defined in section 
1302(b) and offered through Exchanges estab-
lished under this title; 
(B) will provide coverage and cost sharing 
protections against excessive out-of-pocket spend-
ing that are at least as affordable as the provi-
sions of this title would provide; 
(C) will provide coverage to at least a com-
parable number of its residents as the provisions 
of this title would provide; 
(D) will not increase the Federal deficit; 
and
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(E) will not weaken enforcement of laws 
and regulations described in paragraph (1)(B)(i) 
in any State that is included in such compact. 
(4) EFFECTIVE DATE.—A health care choice com-
pact described in paragraph (1) shall not take effect 
before January 1, 2016. 
(b) AUTHORITY FOR NATIONWIDE PLANS.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), if an issuer (including a group of health 
insurance issuers affiliated either by common owner-
ship and control or by the common use of a nation-
ally licensed service mark) of a qualified health plan 
in the individual or small group market meets the re-
quirements of this subsection (in this subsection a 
‘‘nationwide qualified health plan’’)— 
(A) the issuer of the plan may offer the na-
tionwide qualified health plan in the individual 
or small group market in more than 1 State; 
and 
(B) with respect to State laws mandating 
benefit coverage by a health plan, only the State 
laws of the State in which such plan is written 
or issued shall apply to the nationwide qualified 
health plan.
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(2) STATE OPT-OUT.—A State may, by specific 
reference in a law enacted after the date of enactment 
of this title, provide that this subsection shall not 
apply to that State. Such opt-out shall be effective 
until such time as the State by law revokes it. 
(3) PLAN REQUIREMENTS.—An issuer meets the 
requirements of this subsection with respect to a na-
tionwide qualified health plan if, in the determina-
tion of the Secretary— 
(A) the plan offers a benefits package that 
is uniform in each State in which the plan is of-
fered and meets the requirements set forth in 
paragraphs (4) through (6); 
(B) the issuer is licensed in each State in 
which it offers the plan and is subject to all re-
quirements of State law not inconsistent with 
this section, including but not limited to, the 
standards and requirements that a State imposes 
that do not prevent the application of a require-
ment of part A of title XXVII of the Public 
Health Service Act or a requirement of this title; 
(C) the issuer meets all requirements of this 
title with respect to a qualified health plan, in-
cluding the requirement to offer the silver and
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gold levels of the plan in each Exchange in the 
State for the market in which the plan is offered; 
(D) the issuer determines the premiums for 
the plan in any State on the basis of the rating 
rules in effect in that State for the rating areas 
in which it is offered; 
(E) the issuer offers the nationwide quali-
fied health plan in at least 60 percent of the par-
ticipating States in the first year in which the 
plan is offered, 65 percent of such States in the 
second year, 70 percent of such States in the 
third year, 75 percent of such States in the 
fourth year, and 80 percent of such States in the 
fifth and subsequent years; 
(F) the issuer shall offer the plan in partici-
pating States across the country, in all geo-
graphic regions, and in all States that have 
adopted adjusted community rating before the 
date of enactment of this Act; and 
(G) the issuer clearly notifies consumers 
that the policy may not contain some benefits 
otherwise mandated for plans in the State in 
which the purchaser resides and provides a de-
tailed statement of the benefits offered and the
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benefit differences in that State, in accordance 
with rules promulgated by the Secretary. 
(4) FORM REVIEW FOR NATIONWIDE PLANS.— 
Notwithstanding any contrary provision of State law, 
at least 3 months before any nationwide qualified 
health plan is offered, the issuer shall file all nation-
wide qualified health plan forms with the regulator in 
each participating State in which the plan will be of-
fered. An issuer may appeal the disapproval of a na-
tionwide qualified health plan form to the Secretary. 
(5) APPLICABLE RULES.—The Secretary shall, in 
consultation with the National Association of Insur-
ance Commissioners, issue rules for the offering of na-
tionwide qualified health plans under this subsection. 
Nationwide qualified health plans may be offered only 
after such rules have taken effect. 
(6) COVERAGE.—The Secretary shall provide 
that the health benefits coverage provided to an indi-
vidual through a nationwide qualified health plan 
under this subsection shall include at least the essen-
tial benefits package described in section 1302. 
(7) STATE LAW MANDATING BENEFIT COVERAGE 
BY A HEALTH BENEFITS PLAN.—For the purposes of 
this subsection, a State law mandating benefit cov-
erage by a health plan is a law that mandates health
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insurance coverage or the offer of health insurance 
coverage for specific health services or specific dis-
eases. A law that mandates health insurance coverage 
or reimbursement for services provided by certain 
classes of providers of health care services, or a law 
that mandates that certain classes of individuals must 
be covered as a group or as dependents, is not a State 
law mandating benefit coverage by a health benefits 
plan. 
PART V—REINSURANCE AND RISK ADJUSTMENT 
SEC. 1341. TRANSITIONAL REINSURANCE PROGRAM FOR IN-
DIVIDUAL AND SMALL GROUP MARKETS IN 
EACH STATE. 
(a) IN GENERAL.—Each State shall, not later than 
January 1, 2014— 
(1) include in the Federal standards or State 
law or regulation the State adopts and has in effect 
under section 1321(b) the provisions described in sub-
section (b); and 
(2) establish (or enter into a contract with) 1 or 
more applicable reinsurance entities to carry out the 
reinsurance program under this section. 
(b) MODEL REGULATION.— 
(1) IN GENERAL.—In establishing the Federal 
standards under section 1321(a), the Secretary, in
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consultation with the National Association of Insur-
ance Commissioners (the ‘‘NAIC’’), shall include pro-
visions that enable States to establish and maintain 
a program under which— 
(A) health insurance issuers, and third 
party administrators on behalf of group health 
plans, are required to make payments to an ap-
plicable reinsurance entity for any plan year be-
ginning in the 3-year period beginning January 
1, 2014 (as specified in paragraph (3); and 
(B) the applicable reinsurance entity col-
lects payments under subparagraph (A) and uses 
amounts so collected to make reinsurance pay-
ments to health insurance issuers described in 
subparagraph (A) that cover high risk individ-
uals in the individual market (excluding grand-
fathered health plans) for any plan year begin-
ning in such 3-year period. 
(2) 
HIGH-RISK
INDIVIDUAL; 
PAYMENT 
AMOUNTS.—The Secretary shall include the following 
in the provisions under paragraph (1): 
(A) DETERMINATION
OF
HIGH-RISK
INDI-
VIDUALS.—The method by which individuals will 
be identified as high risk individuals for pur-
poses of the reinsurance program established
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under this section. Such method shall provide for 
identification of individuals as high-risk indi-
viduals on the basis of— 
(i) a list of at least 50 but not more 
than 100 medical conditions that are iden-
tified as high-risk conditions and that may 
be based on the identification of diagnostic 
and procedure codes that are indicative of 
individuals with pre-existing, high-risk con-
ditions; or 
(ii) any other comparable objective 
method of identification recommended by 
the American Academy of Actuaries. 
(B) PAYMENT
AMOUNT.—The formula for 
determining the amount of payments that will be 
paid to health insurance issuers described in 
paragraph (1)(A) that insure high-risk individ-
uals. Such formula shall provide for the equitable 
allocation of available funds through reconcili-
ation and may be designed— 
(i) to provide a schedule of payments 
that specifies the amount that will be paid 
for each of the conditions identified under 
subparagraph (A); or
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(ii) to use any other comparable meth-
od for determining payment amounts that 
is recommended by the American Academy 
of Actuaries and that encourages the use of 
care coordination and care management 
programs for high risk conditions. 
(3) DETERMINATION
OF
REQUIRED
CONTRIBU-
TIONS.— 
(A) IN GENERAL.—The Secretary shall in-
clude in the provisions under paragraph (1) the 
method for determining the amount each health 
insurance issuer and group health plan described 
in paragraph (1)(A) contributing to the reinsur-
ance program under this section is required to 
contribute under such paragraph for each plan 
year beginning in the 36-month period beginning 
January 1, 2014. The contribution amount for 
any plan year may be based on the percentage 
of revenue of each issuer and the total costs of 
providing benefits to enrollees in self-insured 
plans or on a specified amount per enrollee and 
may be required to be paid in advance or peri-
odically throughout the plan year. 
(B) SPECIFIC REQUIREMENTS.—The method 
under this paragraph shall be designed so that—
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(i) the contribution amount for each 
issuer proportionally reflects each issuer’s 
fully insured commercial book of business 
for all major medical products and the total 
value of all fees charged by the issuer and 
the costs of coverage administered by the 
issuer as a third party administrator; 
(ii) the contribution amount can in-
clude an additional amount to fund the ad-
ministrative expenses of the applicable rein-
surance entity; 
(iii) 
the 
aggregate 
contribution 
amounts for all States shall, based on the 
best estimates of the NAIC and without re-
gard to amounts described in clause (ii), 
equal $10,000,000,000 for plan years begin-
ning in 2014, $6,000,000,000 for plan years 
beginning 2015, and $4,000,000,000 for 
plan years beginning in 2016; and 
(iv) in addition to the aggregate con-
tribution amounts under clause (iii), each 
issuer’s contribution amount for any cal-
endar year under clause (iii) reflects its 
proportionate 
share 
of 
an 
additional 
$2,000,000,000 for 2014, an additional
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$2,000,000,000 for 2015, and an additional 
$1,000,000,000 for 2016. 
Nothing in this subparagraph shall be construed 
to preclude a State from collecting additional 
amounts from issuers on a voluntary basis. 
(4) EXPENDITURE
OF
FUNDS.—The provisions 
under paragraph (1) shall provide that— 
(A) the contribution amounts collected for 
any calendar year may be allocated and used in 
any of the three calendar years for which 
amounts are collected based on the reinsurance 
needs of a particular period or to reflect experi-
ence in a prior period; and 
(B) amounts remaining unexpended as of 
December, 2016, may be used to make payments 
under any reinsurance program of a State in the 
individual market in effect in the 2-year period 
beginning on January 1, 2017. 
Notwithstanding the preceding sentence, any con-
tribution amounts described in paragraph (3)(B)(iv) 
shall be deposited into the general fund of the Treas-
ury of the United States and may not be used for the 
program established under this section. 
(c) APPLICABLE REINSURANCE ENTITY.—For pur-
poses of this section—
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such Code (relating to tax on unrelated business tax-
able income of an exempt organization). 
(d) COORDINATION WITH STATE HIGH-RISK POOLS.— 
The State shall eliminate or modify any State high-risk 
pool to the extent necessary to carry out the reinsurance 
program established under this section. The State may co-
ordinate the State high-risk pool with such program to the 
extent not inconsistent with the provisions of this section. 
SEC. 1342. ESTABLISHMENT OF RISK CORRIDORS FOR 
PLANS IN INDIVIDUAL AND SMALL GROUP 
MARKETS. 
(a) IN GENERAL.—The Secretary shall establish and 
administer a program of risk corridors for calendar years 
2014, 2015, and 2016 under which a qualified health plan 
offered in the individual or small group market shall par-
ticipate in a payment adjustment system based on the ratio 
of the allowable costs of the plan to the plan’s aggregate 
premiums. Such program shall be based on the program 
for regional participating provider organizations under 
part D of title XVIII of the Social Security Act. 
(b) PAYMENT METHODOLOGY.— 
(1) PAYMENTS OUT.—The Secretary shall pro-
vide under the program established under subsection 
(a) that if—
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(A) a participating plan’s allowable costs 
for any plan year are more than 103 percent but 
not more than 108 percent of the target amount, 
the Secretary shall pay to the plan an amount 
equal to 50 percent of the target amount in ex-
cess of 103 percent of the target amount; and 
(B) a participating plan’s allowable costs 
for any plan year are more than 108 percent of 
the target amount, the Secretary shall pay to the 
plan an amount equal to the sum of 2.5 percent 
of the target amount plus 80 percent of allowable 
costs in excess of 108 percent of the target 
amount. 
(2) PAYMENTS IN.—The Secretary shall provide 
under the program established under subsection (a) 
that if— 
(A) a participating plan’s allowable costs 
for any plan year are less than 97 percent but 
not less than 92 percent of the target amount, the 
plan shall pay to the Secretary an amount equal 
to 50 percent of the excess of 97 percent of the 
target amount over the allowable costs; and 
(B) a participating plan’s allowable costs 
for any plan year are less than 92 percent of the 
target amount, the plan shall pay to the Sec-
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retary an amount equal to the sum of 2.5 per-
cent of the target amount plus 80 percent of the 
excess of 92 percent of the target amount over the 
allowable costs. 
(c) DEFINITIONS.—In this section: 
(1) ALLOWABLE COSTS.— 
(A) IN GENERAL.—The amount of allowable 
costs of a plan for any year is an amount equal 
to the total costs (other than administrative 
costs) of the plan in providing benefits covered 
by the plan. 
(B) REDUCTION
FOR
RISK
ADJUSTMENT 
AND REINSURANCE PAYMENTS.—Allowable costs 
shall reduced by any risk adjustment and rein-
surance payments received under section 1341 
and 1343. 
(2) TARGET AMOUNT.—The target amount of a 
plan for any year is an amount equal to the total 
premiums (including any premium subsidies under 
any governmental program), reduced by the adminis-
trative costs of the plan. 
SEC. 1343. RISK ADJUSTMENT. 
(a) IN GENERAL.— 
(1) LOW ACTUARIAL RISK PLANS.—Using the cri-
teria and methods developed under subsection (b),
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each State shall assess a charge on health plans and 
health insurance issuers (with respect to health insur-
ance coverage) described in subsection (c) if the actu-
arial risk of the enrollees of such plans or coverage for 
a year is less than the average actuarial risk of all 
enrollees in all plans or coverage in such State for 
such year that are not self-insured group health plans 
(which are subject to the provisions of the Employee 
Retirement Income Security Act of 1974). 
(2) HIGH ACTUARIAL RISK PLANS.—Using the 
criteria and methods developed under subsection (b), 
each State shall provide a payment to health plans 
and health insurance issuers (with respect to health 
insurance coverage) described in subsection (c) if the 
actuarial risk of the enrollees of such plans or cov-
erage for a year is greater than the average actuarial 
risk of all enrollees in all plans and coverage in such 
State for such year that are not self-insured group 
health plans (which are subject to the provisions of 
the Employee Retirement Income Security Act of 
1974). 
(b) CRITERIA AND METHODS.—The Secretary, in con-
sultation with States, shall establish criteria and methods 
to be used in carrying out the risk adjustment activities 
under this section. The Secretary may utilize criteria and
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methods similar to the criteria and methods utilized under 
part C or D of title XVIII of the Social Security Act. Such 
criteria and methods shall be included in the standards and 
requirements the Secretary prescribes under section 1321. 
(c) SCOPE.—A health plan or a health insurance issuer 
is described in this subsection if such health plan or health 
insurance issuer provides coverage in the individual or 
small group market within the State. This subsection shall 
not apply to a grandfathered health plan or the issuer of 
a grandfathered health plan with respect to that plan. 
Subtitle E—Affordable Coverage 
Choices for All Americans 
PART I—PREMIUM TAX CREDITS AND COST- 
SHARING REDUCTIONS 
Subpart A—Premium Tax Credits and Cost-sharing 
Reductions 
SEC. 1401. REFUNDABLE TAX CREDIT PROVIDING PREMIUM 
ASSISTANCE FOR COVERAGE UNDER A QUALI-
FIED HEALTH PLAN. 
(a) IN GENERAL.—Subpart C of part IV of subchapter 
A of chapter 1 of the Internal Revenue Code of 1986 (relat-
ing to refundable credits) is amended by inserting after sec-
tion 36A the following new section:
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‘‘SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A 
QUALIFIED HEALTH PLAN. 
‘‘(a) IN GENERAL.—In the case of an applicable tax-
payer, there shall be allowed as a credit against the tax 
imposed by this subtitle for any taxable year an amount 
equal to the premium assistance credit amount of the tax-
payer for the taxable year. 
‘‘(b) PREMIUM ASSISTANCE CREDIT AMOUNT.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘premium assist-
ance credit amount’ means, with respect to any tax-
able year, the sum of the premium assistance amounts 
determined under paragraph (2) with respect to all 
coverage months of the taxpayer occurring during the 
taxable year. 
‘‘(2) PREMIUM ASSISTANCE AMOUNT.—The pre-
mium assistance amount determined under this sub-
section with respect to any coverage month is the 
amount equal to the lesser of— 
‘‘(A) the monthly premiums for such month 
for 1 or more qualified health plans offered in 
the individual market within a State which 
cover the taxpayer, the taxpayer’s spouse, or any 
dependent (as defined in section 152) of the tax-
payer and which were enrolled in through an 
Exchange established by the State under 1311 of
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100 percent of the poverty line for a 
family of the size involved, bears to 
‘‘(II) an amount equal to 200 per-
cent of the poverty line for a family of 
the size involved. 
‘‘(ii) SPECIAL RULE FOR TAXPAYERS 
UNDER 133 PERCENT OF POVERTY LINE.—If 
a taxpayer’s household income for the tax-
able year is in excess of 100 percent, but not 
more than 133 percent, of the poverty line 
for a family of the size involved, the tax-
payer’s applicable percentage shall be 2 per-
cent. 
‘‘(iii) INDEXING.—In the case of tax-
able years beginning in any calendar year 
after 2014, the Secretary shall adjust the 
initial and final applicable percentages 
under clause (i), and the 2 percent under 
clause (ii), for the calendar year to reflect 
the excess of the rate of premium growth be-
tween the preceding calendar year and 2013 
over the rate of income growth for such pe-
riod. 
‘‘(B) APPLICABLE
SECOND
LOWEST
COST 
SILVER PLAN.—The applicable second lowest cost
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silver plan with respect to any applicable tax-
payer is the second lowest cost silver plan of the 
individual market in the rating area in which 
the taxpayer resides which— 
‘‘(i) is offered through the same Ex-
change through which the qualified health 
plans taken into account under paragraph 
(2)(A) were offered, and 
‘‘(ii) provides— 
‘‘(I) self-only coverage in the case 
of an applicable taxpayer— 
‘‘(aa) whose tax for the tax-
able year is determined under sec-
tion 1(c) (relating to unmarried 
individuals other than surviving 
spouses and heads of households) 
and who is not allowed a deduc-
tion under section 151 for the tax-
able year with respect to a de-
pendent, or 
‘‘(bb) who is not described in 
item (aa) but who purchases only 
self-only coverage, and 
‘‘(II) family coverage in the case 
of any other applicable taxpayer.
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If a taxpayer files a joint return and no credit 
is allowed under this section with respect to 1 of 
the spouses by reason of subsection (e), the tax-
payer shall be treated as described in clause 
(ii)(I) unless a deduction is allowed under sec-
tion 151 for the taxable year with respect to a 
dependent other than either spouse and sub-
section (e) does not apply to the dependent. 
‘‘(C) ADJUSTED MONTHLY PREMIUM.—The 
adjusted monthly premium for an applicable sec-
ond lowest cost silver plan is the monthly pre-
mium which would have been charged (for the 
rating area with respect to which the premiums 
under paragraph (2)(A) were determined) for the 
plan if each individual covered under a qualified 
health plan taken into account under paragraph 
(2)(A) were covered by such silver plan and the 
premium was adjusted only for the age of each 
such individual in the manner allowed under 
section 2701 of the Public Health Service Act. In 
the case of a State participating in the wellness 
discount demonstration project under section 
2705(d) of the Public Health Service Act, the ad-
justed monthly premium shall be determined
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without regard to any premium discount or re-
bate under such project. 
‘‘(D) ADDITIONAL BENEFITS.—If— 
‘‘(i) a qualified health plan under sec-
tion 1302(b)(5) of the Patient Protection 
and Affordable Care Act offers benefits in 
addition to the essential health benefits re-
quired to be provided by the plan, or 
‘‘(ii) a State requires a qualified health 
plan under section 1311(d)(3)(B) of such 
Act to cover benefits in addition to the es-
sential health benefits required to be pro-
vided by the plan, 
the portion of the premium for the plan properly 
allocable (under rules prescribed by the Secretary 
of Health and Human Services) to such addi-
tional benefits shall not be taken into account in 
determining either the monthly premium or the 
adjusted monthly premium under paragraph (2). 
‘‘(E) SPECIAL RULE FOR PEDIATRIC DEN-
TAL
COVERAGE.—For purposes of determining 
the amount of any monthly premium, if an indi-
vidual enrolls in both a qualified health plan 
and 
a 
plan 
described 
in 
section 
1311(d)(2)(B)(ii)(I) of the Patient Protection
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and Affordable Care Act for any plan year, the 
portion of the premium for the plan described in 
such section that (under regulations prescribed 
by the Secretary) is properly allocable to pedi-
atric dental benefits which are included in the 
essential health benefits required to be provided 
by a qualified health plan under section 
1302(b)(1)(J) of such Act shall be treated as a 
premium payable for a qualified health plan. 
‘‘(c) DEFINITION AND RULES RELATING TO APPLICA-
BLE TAXPAYERS, COVERAGE MONTHS, AND QUALIFIED 
HEALTH PLAN.—For purposes of this section— 
‘‘(1) APPLICABLE TAXPAYER.— 
‘‘(A) IN
GENERAL.—The term ‘applicable 
taxpayer’ means, with respect to any taxable 
year, a taxpayer whose household income for the 
taxable year exceeds 100 percent but does not ex-
ceed 400 percent of an amount equal to the pov-
erty line for a family of the size involved. 
‘‘(B) SPECIAL RULE FOR CERTAIN INDIVID-
UALS
LAWFULLY
PRESENT
IN
THE
UNITED 
STATES.—If— 
‘‘(i) a taxpayer has a household income 
which is not greater than 100 percent of an
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amount equal to the poverty line for a fam-
ily of the size involved, and 
‘‘(ii) the taxpayer is an alien lawfully 
present in the United States, but is not eli-
gible for the medicaid program under title 
XIX of the Social Security Act by reason of 
such alien status, 
the taxpayer shall, for purposes of the credit 
under this section, be treated as an applicable 
taxpayer with a household income which is equal 
to 100 percent of the poverty line for a family 
of the size involved. 
‘‘(C) MARRIED COUPLES MUST FILE JOINT 
RETURN.—If the taxpayer is married (within the 
meaning of section 7703) at the close of the tax-
able year, the taxpayer shall be treated as an ap-
plicable taxpayer only if the taxpayer and the 
taxpayer’s spouse file a joint return for the tax-
able year. 
‘‘(D) DENIAL
OF
CREDIT
TO
DEPEND-
ENTS.—No credit shall be allowed under this sec-
tion to any individual with respect to whom a 
deduction under section 151 is allowable to an-
other taxpayer for a taxable year beginning in
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the calendar year in which such individual’s 
taxable year begins. 
‘‘(2) COVERAGE MONTH.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘coverage 
month’ means, with respect to an applicable tax-
payer, any month if— 
‘‘(i) as of the first day of such month 
the taxpayer, the taxpayer’s spouse, or any 
dependent of the taxpayer is covered by a 
qualified health plan described in subsection 
(b)(2)(A) that was enrolled in through an 
Exchange established by the State under 
section 1311 of the Patient Protection and 
Affordable Care Act, and 
‘‘(ii) the premium for coverage under 
such plan for such month is paid by the 
taxpayer (or through advance payment of 
the credit under subsection (a) under section 
1412 of the Patient Protection and Afford-
able Care Act). 
‘‘(B) EXCEPTION FOR MINIMUM ESSENTIAL 
COVERAGE.— 
‘‘(i) IN GENERAL.—The term ‘coverage 
month’ shall not include any month with
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respect to an individual if for such month 
the individual is eligible for minimum es-
sential coverage other than eligibility for 
coverage described in section 5000A(f)(1)(C) 
(relating to coverage in the individual mar-
ket). 
‘‘(ii) 
MINIMUM
ESSENTIAL
COV-
ERAGE.—The term ‘minimum essential cov-
erage’ has the meaning given such term by 
section 5000A(f). 
‘‘(C) SPECIAL RULE FOR EMPLOYER-SPON-
SORED
MINIMUM
ESSENTIAL
COVERAGE.—For 
purposes of subparagraph (B)— 
‘‘(i) COVERAGE
MUST
BE
AFFORD-
ABLE.—Except as provided in clause (iii), 
an employee shall not be treated as eligible 
for minimum essential coverage if such cov-
erage— 
‘‘(I) consists of an eligible em-
ployer-sponsored plan (as defined in 
section 5000A(f)(2)), and 
‘‘(II) the employee’s required con-
tribution (within the meaning of sec-
tion 5000A(e)(1)(B)) with respect to
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the plan exceeds 9.8 percent of the ap-
plicable taxpayer’s household income. 
This clause shall also apply to an indi-
vidual who is eligible to enroll in the plan 
by reason of a relationship the individual 
bears to the employee. 
‘‘(ii) COVERAGE MUST PROVIDE MIN-
IMUM VALUE.—Except as provided in clause 
(iii), an employee shall not be treated as el-
igible for minimum essential coverage if 
such coverage consists of an eligible em-
ployer-sponsored plan (as defined in section 
5000A(f)(2)) and the plan’s share of the 
total allowed costs of benefits provided 
under the plan is less than 60 percent of 
such costs. 
‘‘(iii) EMPLOYEE OR FAMILY MUST NOT 
BE
COVERED
UNDER
EMPLOYER
PLAN.— 
Clauses (i) and (ii) shall not apply if the 
employee (or any individual described in 
the last sentence of clause (i)) is covered 
under the eligible employer-sponsored plan 
or the grandfathered health plan. 
‘‘(iv) INDEXING.—In the case of plan 
years beginning in any calendar year after
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2014, the Secretary shall adjust the 9.8 per-
cent under clause (i)(II) in the same man-
ner as the percentages are adjusted under 
subsection (b)(3)(A)(ii). 
‘‘(3) DEFINITIONS AND OTHER RULES.— 
‘‘(A) QUALIFIED HEALTH PLAN.—The term 
‘qualified health plan’ has the meaning given 
such term by section 1301(a) of the Patient Pro-
tection and Affordable Care Act, except that such 
term shall not include a qualified health plan 
which is a catastrophic plan described in section 
1302(e) of such Act. 
‘‘(B) GRANDFATHERED
HEALTH
PLAN.— 
The term ‘grandfathered health plan’ has the 
meaning given such term by section 1251 of the 
Patient Protection and Affordable Care Act. 
‘‘(d) TERMS RELATING TO INCOME AND FAMILIES.— 
For purposes of this section— 
‘‘(1) FAMILY
SIZE.—The family size involved 
with respect to any taxpayer shall be equal to the 
number of individuals for whom the taxpayer is al-
lowed a deduction under section 151 (relating to al-
lowance of deduction for personal exemptions) for the 
taxable year. 
‘‘(2) HOUSEHOLD INCOME.—
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‘‘(A) 
HOUSEHOLD
INCOME.—The 
term 
‘household income’ means, with respect to any 
taxpayer, an amount equal to the sum of— 
‘‘(i) the modified gross income of the 
taxpayer, plus 
‘‘(ii) the aggregate modified gross in-
comes of all other individuals who— 
‘‘(I) were taken into account in 
determining the taxpayer’s family size 
under paragraph (1), and 
‘‘(II) were required to file a re-
turn of tax imposed by section 1 for 
the taxable year. 
‘‘(B) MODIFIED GROSS INCOME.—The term 
‘modified gross income’ means gross income— 
‘‘(i) decreased by the amount of any 
deduction allowable under paragraph (1), 
(3), (4), or (10) of section 62(a), 
‘‘(ii) increased by the amount of inter-
est received or accrued during the taxable 
year which is exempt from tax imposed by 
this chapter, and 
‘‘(iii) determined without regard to 
sections 911, 931, and 933. 
‘‘(3) POVERTY LINE.—
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‘‘(A) IN GENERAL.—The term ‘poverty line’ 
has the meaning given that term in section 
2110(c)(5) of the Social Security Act (42 U.S.C. 
1397jj(c)(5)). 
‘‘(B) POVERTY LINE USED.—In the case of 
any qualified health plan offered through an Ex-
change for coverage during a taxable year begin-
ning in a calendar year, the poverty line used 
shall be the most recently published poverty line 
as of the 1st day of the regular enrollment period 
for coverage during such calendar year. 
‘‘(e) RULES
FOR
INDIVIDUALS
NOT
LAWFULLY 
PRESENT.— 
‘‘(1) IN GENERAL.—If 1 or more individuals for 
whom a taxpayer is allowed a deduction under sec-
tion 151 (relating to allowance of deduction for per-
sonal exemptions) for the taxable year (including the 
taxpayer or his spouse) are individuals who are not 
lawfully present— 
‘‘(A) the aggregate amount of premiums 
otherwise taken into account under clauses (i) 
and (ii) of subsection (b)(2)(A) shall be reduced 
by the portion (if any) of such premiums which 
is attributable to such individuals, and
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‘‘(B) for purposes of applying this section, 
the determination as to what percentage a tax-
payer’s household income bears to the poverty 
level for a family of the size involved shall be 
made under one of the following methods: 
‘‘(i) A method under which— 
‘‘(I) the taxpayer’s family size is 
determined by not taking such individ-
uals into account, and 
‘‘(II) the taxpayer’s household in-
come is equal to the product of the tax-
payer’s household income (determined 
without regard to this subsection) and 
a fraction— 
‘‘(aa) the numerator of which 
is the poverty line for the tax-
payer’s family size determined 
after application of subclause (I), 
and 
‘‘(bb) the denominator of 
which is the poverty line for the 
taxpayer’s family size determined 
without regard to subclause (I).