105 
otherwise) for employees (or their dependents) cov-
ered thereunder and which demonstrates to the Sec-
retary that all requirements for certification under 
this part would be met with respect to such plan, 
fund, or program if such plan, fund, or program 
were a group health plan, such plan, fund, or pro-
gram shall be treated for purposes of this title as an 
employee welfare benefit plan on and after the date 
of such demonstration.’’. 
(b) CONFORMING AMENDMENTS
TO PREEMPTION 
RULES.— 
(1) Section 514(b)(6) of such Act (29 U.S.C. 
1144(b)(6)) is amended by adding at the end the 
following new subparagraph: 
‘‘(E) The preceding subparagraphs of this paragraph 
do not apply with respect to any State law in the case 
of an association health plan which is certified under part 
8.’’. 
(2) Section 514 of such Act (29 U.S.C. 1144) 
is amended— 
(A) in subsection (b)(4), by striking ‘‘Sub-
section (a)’’ and inserting ‘‘Subsections (a) and 
(d)’’; 
(B) in subsection (b)(5), by striking ‘‘sub-
section (a)’’ in subparagraph (A) and inserting 
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106 
‘‘subsection (a) of this section and subsections 
(a)(2)(B) and (b) of section 805’’, and by strik-
ing ‘‘subsection (a)’’ in subparagraph (B) and 
inserting ‘‘subsection (a) of this section or sub-
section (a)(2)(B) or (b) of section 805’’; 
(C) by redesignating subsection (d) as sub-
section (e); and 
(D) by inserting after subsection (c) the 
following new subsection: 
‘‘(d)(1) Except as provided in subsection (b)(4), the 
provisions of this title shall supersede any and all State 
laws insofar as they may now or hereafter preclude, or 
have the effect of precluding, a health insurance issuer 
from offering health insurance coverage in connection with 
an association health plan which is certified under part 
8. 
‘‘(2) Except as provided in paragraphs (4) and (5) 
of subsection (b) of this section— 
‘‘(A) In any case in which health insurance cov-
erage of any policy type is offered under an associa-
tion health plan certified under part 8 to a partici-
pating employer operating in such State, the provi-
sions of this title shall supersede any and all laws 
of such State insofar as they may preclude a health 
insurance issuer from offering health insurance cov-
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107 
erage of the same policy type to other employers op-
erating in the State which are eligible for coverage 
under such association health plan, whether or not 
such other employers are participating employers in 
such plan. 
‘‘(B) In any case in which health insurance cov-
erage of any policy type is offered in a State under 
an association health plan certified under part 8 and 
the filing, with the applicable State authority (as de-
fined in section 812(a)(9)), of the policy form in 
connection with such policy type is approved by such 
State authority, the provisions of this title shall su-
persede any and all laws of any other State in which 
health insurance coverage of such type is offered, in-
sofar as they may preclude, upon the filing in the 
same form and manner of such policy form with the 
applicable State authority in such other State, the 
approval of the filing in such other State. 
‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 
provisions of this subsection shall be construed, with re-
spect to health insurance issuers or health insurance cov-
erage, to supersede or impair the law of any State— 
‘‘(A) providing solvency standards or similar 
standards regarding the adequacy of insurer capital, 
surplus, reserves, or contributions, or 
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108 
‘‘(B) relating to prompt payment of claims. 
‘‘(4) For additional provisions relating to association 
health plans, see subsections (a)(2)(B) and (b) of section 
805. 
‘‘(5) For purposes of this subsection, the term ‘asso-
ciation health plan’ has the meaning provided in section 
801(a), and the terms ‘health insurance coverage’, ‘par-
ticipating employer’, and ‘health insurance issuer’ have 
the meanings provided such terms in section 812, respec-
tively.’’. 
(3) Section 514(b)(6)(A) of such Act (29 
U.S.C. 1144(b)(6)(A)) is amended— 
(A) in clause (i)(II), by striking ‘‘and’’ at 
the end; 
(B) in clause (ii), by inserting ‘‘and which 
does not provide medical care (within the mean-
ing of section 733(a)(2)),’’ after ‘‘arrange-
ment,’’, and by striking ‘‘title.’’ and inserting 
‘‘title, and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) subject to subparagraph (E), in the case 
of any other employee welfare benefit plan which is 
a multiple employer welfare arrangement and which 
provides medical care (within the meaning of section 
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109 
733(a)(2)), any law of any State which regulates in-
surance may apply.’’. 
(4) Section 514(e) of such Act (as redesignated 
by paragraph (2)(C)) is amended— 
(A) by striking ‘‘Nothing’’ and inserting 
‘‘(1) Except as provided in paragraph (2), noth-
ing’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) Nothing in any other provision of law enacted 
on or after the date of the enactment of the Small Busi-
ness Health Fairness Act of 2009 shall be construed to 
alter, amend, modify, invalidate, impair, or supersede any 
provision of this title, except by specific cross-reference to 
the affected section.’’. 
(c) PLAN SPONSOR.—Section 3(16)(B) of such Act 
(29 U.S.C. 102(16)(B)) is amended by adding at the end 
the following new sentence: ‘‘Such term also includes a 
person serving as the sponsor of an association health plan 
under part 8.’’. 
(d) DISCLOSURE OF SOLVENCY PROTECTIONS RE-
LATED TO SELF-INSURED AND FULLY INSURED OPTIONS 
UNDER ASSOCIATION HEALTH PLANS.—Section 102(b) 
of such Act (29 U.S.C. 102(b)) is amended by adding at 
the end the following: ‘‘An association health plan shall 
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110 
include in its summary plan description, in connection 
with each benefit option, a description of the form of sol-
vency or guarantee fund protection secured pursuant to 
this Act or applicable State law, if any.’’. 
(e) SAVINGS CLAUSE.—Section 731(c) of such Act is 
amended by inserting ‘‘or part 8’’ after ‘‘this part’’. 
(f) REPORT TO THE CONGRESS REGARDING CERTIFI-
CATION
OF
SELF-INSURED
ASSOCIATION
HEALTH 
PLANS.—Not later than January 1, 2012, the Secretary 
of Labor shall report to the Committee on Education and 
the Workforce of the House of Representatives and the 
Committee on Health, Education, Labor, and Pensions of 
the Senate the effect association health plans have had, 
if any, on reducing the number of uninsured individuals. 
(g) CLERICAL AMENDMENT.—The table of contents 
in section 1 of the Employee Retirement Income Security 
Act of 1974 is amended by inserting after the item relat-
ing to section 734 the following new items: 
‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS 
‘‘801. Association health plans. 
‘‘802. Certification of association health plans. 
‘‘803. Requirements relating to sponsors and boards of trustees. 
‘‘804. Participation and coverage requirements. 
‘‘805. Other requirements relating to plan documents, contribution rates, and 
benefit options. 
‘‘806. Maintenance of reserves and provisions for solvency for plans providing 
health benefits in addition to health insurance coverage. 
‘‘807. Requirements for application and related requirements. 
‘‘808. Notice requirements for voluntary termination. 
‘‘809. Corrective actions and mandatory termination. 
‘‘810. Trusteeship by the Secretary of insolvent association health plans pro-
viding health benefits in addition to health insurance coverage. 
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111 
‘‘811. State assessment authority. 
‘‘812. Definitions and rules of construction.’’. 
SEC. 233. CLARIFICATION OF TREATMENT OF SINGLE EM-
PLOYER ARRANGEMENTS. 
Section 3(40)(B) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amend-
ed— 
(1) in clause (i), by inserting after ‘‘control 
group,’’ the following: ‘‘except that, in any case in 
which the benefit referred to in subparagraph (A) 
consists of medical care (as defined in section 
812(a)(2)), two or more trades or businesses, wheth-
er or not incorporated, shall be deemed a single em-
ployer for any plan year of such plan, or any fiscal 
year of such other arrangement, if such trades or 
businesses are within the same control group during 
such year or at any time during the preceding 1-year 
period,’’; 
(2) in clause (iii), by striking ‘‘(iii) the deter-
mination’’ and inserting the following: 
‘‘(iii)(I) in any case in which the benefit re-
ferred to in subparagraph (A) consists of medical 
care (as defined in section 812(a)(2)), the deter-
mination of whether a trade or business is under 
‘common control’ with another trade or business 
shall be determined under regulations of the Sec-
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112 
retary applying principles consistent and coextensive 
with the principles applied in determining whether 
employees of two or more trades or businesses are 
treated as employed by a single employer under sec-
tion 4001(b), except that, for purposes of this para-
graph, an interest of greater than 25 percent may 
not be required as the minimum interest necessary 
for common control, or 
‘‘(II) in any other case, the determination’’; 
(3) by redesignating clauses (iv) and (v) as 
clauses (v) and (vi), respectively; and 
(4) by inserting after clause (iii) the following 
new clause: 
‘‘(iv) in any case in which the benefit referred 
to in subparagraph (A) consists of medical care (as 
defined in section 812(a)(2)), in determining, after 
the application of clause (i), whether benefits are 
provided to employees of two or more employers, the 
arrangement shall be treated as having only one par-
ticipating employer if, after the application of clause 
(i), the number of individuals who are employees and 
former employees of any one participating employer 
and who are covered under the arrangement is 
greater than 75 percent of the aggregate number of 
all individuals who are employees or former employ-
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113 
ees of participating employers and who are covered 
under the arrangement,’’. 
SEC. 234. ENFORCEMENT PROVISIONS RELATING TO ASSO-
CIATION HEALTH PLANS. 
(a) CRIMINAL PENALTIES FOR CERTAIN WILLFUL 
MISREPRESENTATIONS.—Section 501 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1131) 
is amended— 
(1) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) Any person who willfully falsely represents, to 
any employee, any employee’s beneficiary, any employer, 
the Secretary, or any State, a plan or other arrangement 
established or maintained for the purpose of offering or 
providing any benefit described in section 3(1) to employ-
ees or their beneficiaries as— 
‘‘(1) being an association health plan which has 
been certified under part 8; 
‘‘(2) having been established or maintained 
under or pursuant to one or more collective bar-
gaining agreements which are reached pursuant to 
collective bargaining described in section 8(d) of the 
National Labor Relations Act (29 U.S.C. 158(d)) or 
paragraph Fourth of section 2 of the Railway Labor 
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114 
Act (45 U.S.C. 152, paragraph Fourth) or which are 
reached pursuant to labor-management negotiations 
under similar provisions of State public employee re-
lations laws; or 
‘‘(3) being a plan or arrangement described in 
section 3(40)(A)(i), 
shall, upon conviction, be imprisoned not more than 5 
years, be fined under title 18, United States Code, or 
both.’’. 
(b) CEASE ACTIVITIES ORDERS.—Section 502 of 
such Act (29 U.S.C. 1132) is amended by adding at the 
end the following new subsection: 
‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE-
SIST ORDERS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
upon application by the Secretary showing the oper-
ation, promotion, or marketing of an association 
health plan (or similar arrangement providing bene-
fits consisting of medical care (as defined in section 
733(a)(2))) that— 
‘‘(A) is not certified under part 8, is sub-
ject under section 514(b)(6) to the insurance 
laws of any State in which the plan or arrange-
ment offers or provides benefits, and is not li-
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115 
censed, registered, or otherwise approved under 
the insurance laws of such State; or 
‘‘(B) is an association health plan certified 
under part 8 and is not operating in accordance 
with the requirements under part 8 for such 
certification, 
a district court of the United States shall enter an 
order requiring that the plan or arrangement cease 
activities. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply in the case of an association health plan or 
other arrangement if the plan or arrangement shows 
that— 
‘‘(A) all benefits under it referred to in 
paragraph (1) consist of health insurance cov-
erage; and 
‘‘(B) with respect to each State in which 
the plan or arrangement offers or provides ben-
efits, the plan or arrangement is operating in 
accordance with applicable State laws that are 
not superseded under section 514. 
‘‘(3) ADDITIONAL
EQUITABLE
RELIEF.—The 
court may grant such additional equitable relief, in-
cluding any relief available under this title, as it 
deems necessary to protect the interests of the pub-
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116 
lic and of persons having claims for benefits against 
the plan.’’. 
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.— 
Section 503 of such Act (29 U.S.C. 1133) is amended by 
inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 
and by adding at the end the following new subsection: 
‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 
each association health plan which is or has been certified 
under part 8 shall require the board of trustees or the 
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims 
filed under the plan.’’. 
SEC. 235. COOPERATION BETWEEN FEDERAL AND STATE 
AUTHORITIES. 
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding 
at the end the following new subsection: 
‘‘(d) CONSULTATION WITH STATES WITH RESPECT 
TO ASSOCIATION HEALTH PLANS.— 
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under 
paragraph (2) with respect to an association health 
plan regarding the exercise of— 
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117 
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements 
for certification under part 8; and 
‘‘(B) the Secretary’s authority to certify 
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8. 
‘‘(2) RECOGNITION
OF
PRIMARY
DOMICILE 
STATE.—In carrying out paragraph (1), the Sec-
retary shall ensure that only one State will be recog-
nized, with respect to any particular association 
health plan, as the State with which consultation is 
required. In carrying out this paragraph— 
‘‘(A) in the case of a plan which provides 
health insurance coverage (as defined in section 
812(a)(3)), such State shall be the State with 
which filing and approval of a policy type of-
fered by the plan was initially obtained, and 
‘‘(B) in any other case, the Secretary shall 
take into account the places of residence of the 
participants and beneficiaries under the plan 
and the State in which the trust is main-
tained.’’. 
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118 
SEC. 236. EFFECTIVE DATE AND TRANSITIONAL AND 
OTHER RULES. 
(a) EFFECTIVE DATE.—The amendments made by 
this subtitle shall take effect 1 year after the date of the 
enactment of this Act. The Secretary of Labor shall first 
issue all regulations necessary to carry out the amend-
ments made by this subtitle within 1 year after the date 
of the enactment of this Act. 
(b) TREATMENT
OF CERTAIN EXISTING HEALTH 
BENEFITS PROGRAMS.— 
(1) IN GENERAL.—In any case in which, as of 
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of 
providing benefits consisting of medical care for the 
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make 
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and 
such arrangement is licensed under the laws of one 
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of 
the Employee Retirement Income Security Act of 
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
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119 
rangement under part 8 of subtitle B of title I of 
such Act— 
(A) such arrangement shall be deemed to 
be a group health plan for purposes of title I 
of such Act; 
(B) the requirements of sections 801(a) 
and 803(a) of the Employee Retirement Income 
Security Act of 1974 shall be deemed met with 
respect to such arrangement; 
(C) the requirements of section 803(b) of 
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors 
which— 
(i) is elected by the participating em-
ployers, with each employer having one 
vote; and 
(ii) has complete fiscal control over 
the arrangement and which is responsible 
for all operations of the arrangement; 
(D) the requirements of section 804(a) of 
such Act shall be deemed met with respect to 
such arrangement; and 
(E) the arrangement may be certified by 
any applicable authority with respect to its op-
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120 
erations in any State only if it operates in such 
State on the date of certification. 
The provisions of this subsection shall cease to apply 
with respect to any such arrangement at such time 
after the date of the enactment of this Act as the 
applicable requirements of this subsection are not 
met with respect to such arrangement. 
(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical 
care’’, and ‘‘participating employer’’ shall have the 
meanings provided in section 812 of the Employee 
Retirement Income Security Act of 1974, except 
that the reference in paragraph (7) of such section 
to an ‘‘association health plan’’ shall be deemed a 
reference to an arrangement referred to in this sub-
section. 
TITLE III—INTERSTATE MARKET 
FOR HEALTH INSURANCE 
SEC. 
301. 
COOPERATIVE 
GOVERNING 
OF 
INDIVIDUAL 
HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.) is amended by add-
ing at the end the following new part: 
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121 
‘‘PART D—COOPERATIVE GOVERNING OF 
INDIVIDUAL HEALTH INSURANCE COVERAGE 
‘‘SEC. 2795. DEFINITIONS. 
‘‘In this part: 
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
the State designated by the issuer as the State 
whose covered laws shall govern the health insurance 
issuer in the sale of such coverage under this part. 
An issuer, with respect to a particular policy, may 
only designate one such State as its primary State 
with respect to all such coverage it offers. Such an 
issuer may not change the designated primary State 
with respect to individual health insurance coverage 
once the policy is issued, except that such a change 
may be made upon renewal of the policy. With re-
spect to such designated State, the issuer is deemed 
to be doing business in that State. 
‘‘(2) SECONDARY STATE.—The term ‘secondary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
any State that is not the primary State. In the case 
of a health insurance issuer that is selling a policy 
in, or to a resident of, a secondary State, the issuer 
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122 
is deemed to be doing business in that secondary 
State. 
‘‘(3) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2), except that such an 
issuer must be licensed in the primary State and be 
qualified to sell individual health insurance coverage 
in that State. 
‘‘(4) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘individual health insurance cov-
erage’ means health insurance coverage offered in 
the individual market, as defined in section 
2791(e)(1). 
‘‘(5) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
this title for the State with respect to the issuer. 
‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 
term ‘hazardous financial condition’ means that, 
based on its present or reasonably anticipated finan-
cial condition, a health insurance issuer is unlikely 
to be able— 
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123 
‘‘(A) to meet obligations to policyholders 
with respect to known claims and reasonably 
anticipated claims; or 
‘‘(B) to pay other obligations in the normal 
course of business. 
‘‘(7) COVERED LAWS.— 
‘‘(A) IN
GENERAL.—The term ‘covered 
laws’ means the laws, rules, regulations, agree-
ments, and orders governing the insurance busi-
ness pertaining to— 
‘‘(i) individual health insurance cov-
erage issued by a health insurance issuer; 
‘‘(ii) the offer, sale, rating (including 
medical 
underwriting), 
renewal, 
and 
issuance of individual health insurance cov-
erage to an individual; 
‘‘(iii) the provision to an individual in 
relation to individual health insurance cov-
erage of health care and insurance related 
services; 
‘‘(iv) the provision to an individual in 
relation to individual health insurance cov-
erage of management, operations, and in-
vestment activities of a health insurance 
issuer; and 
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124 
‘‘(v) the provision to an individual in 
relation to individual health insurance cov-
erage of loss control and claims adminis-
tration for a health insurance issuer with 
respect to liability for which the issuer pro-
vides insurance. 
‘‘(B) EXCEPTION.—Such term does not in-
clude any law, rule, regulation, agreement, or 
order governing the use of care or cost manage-
ment techniques, including any requirement re-
lated to provider contracting, network access or 
adequacy, health care data collection, or quality 
assurance. 
‘‘(8) STATE.—The term ‘State’ means only the 
50 States and the District of Columbia. 
‘‘(9) UNFAIR
CLAIMS
SETTLEMENT
PRAC-
TICES.—The term ‘unfair claims settlement prac-
tices’ means only the following practices: 
‘‘(A) Knowingly misrepresenting to claim-
ants and insured individuals relevant facts or 
policy provisions relating to coverage at issue. 
‘‘(B) Failing to acknowledge with reason-
able promptness pertinent communications with 
respect to claims arising under policies. 
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125 
‘‘(C) Failing to adopt and implement rea-
sonable standards for the prompt investigation 
and settlement of claims arising under policies. 
‘‘(D) Failing to effectuate prompt, fair, 
and equitable settlement of claims submitted in 
which liability has become reasonably clear. 
‘‘(E) Refusing to pay claims without con-
ducting a reasonable investigation. 
‘‘(F) Failing to affirm or deny coverage of 
claims within a reasonable period of time after 
having completed an investigation related to 
those claims. 
‘‘(G) A pattern or practice of compelling 
insured individuals or their beneficiaries to in-
stitute suits to recover amounts due under its 
policies by offering substantially less than the 
amounts ultimately recovered in suits brought 
by them. 
‘‘(H) A pattern or practice of attempting 
to settle or settling claims for less than the 
amount that a reasonable person would believe 
the insured individual or his or her beneficiary 
was entitled by reference to written or printed 
advertising material accompanying or made 
part of an application. 
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‘‘(I) Attempting to settle or settling claims 
on the basis of an application that was materi-
ally altered without notice to, or knowledge or 
consent of, the insured. 
‘‘(J) Failing to provide forms necessary to 
present claims within 15 calendar days of a re-
quests with reasonable explanations regarding 
their use. 
‘‘(K) Attempting to cancel a policy in less 
time than that prescribed in the policy or by the 
law of the primary State. 
‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 
and abuse’ means an act or omission committed by 
a person who, knowingly and with intent to defraud, 
commits, or conceals any material information con-
cerning, one or more of the following: 
‘‘(A) Presenting, causing to be presented 
or preparing with knowledge or belief that it 
will be presented to or by an insurer, a rein-
surer, broker or its agent, false information as 
part of, in support of or concerning a fact ma-
terial to one or more of the following: 
‘‘(i) An application for the issuance or 
renewal of an insurance policy or reinsur-
ance contract. 
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127 
‘‘(ii) The rating of an insurance policy 
or reinsurance contract. 
‘‘(iii) A claim for payment or benefit 
pursuant to an insurance policy or reinsur-
ance contract. 
‘‘(iv) Premiums paid on an insurance 
policy or reinsurance contract. 
‘‘(v) Payments made in accordance 
with the terms of an insurance policy or 
reinsurance contract. 
‘‘(vi) A document filed with the com-
missioner or the chief insurance regulatory 
official of another jurisdiction. 
‘‘(vii) The financial condition of an in-
surer or reinsurer. 
‘‘(viii) The formation, acquisition, 
merger, 
reconsolidation, 
dissolution 
or 
withdrawal from one or more lines of in-
surance or reinsurance in all or part of a 
State by an insurer or reinsurer. 
‘‘(ix) The issuance of written evidence 
of insurance. 
‘‘(x) The reinstatement of an insur-
ance policy. 
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129 
ing (including medical underwriting), renewal, and 
issuance of individual health insurance coverage in any 
secondary State is exempt from any covered laws of the 
secondary State (and any rules, regulations, agreements, 
or orders sought or issued by such State under or related 
to such covered laws) to the extent that such laws would— 
‘‘(1) make unlawful, or regulate, directly or in-
directly, the operation of the health insurance issuer 
operating in the secondary State, except that any 
secondary State may require such an issuer— 
‘‘(A) to pay, on a nondiscriminatory basis, 
applicable premium and other taxes (including 
high risk pool assessments) which are levied on 
insurers and surplus lines insurers, brokers, or 
policyholders under the laws of the State; 
‘‘(B) to register with and designate the 
State insurance commissioner as its agent solely 
for the purpose of receiving service of legal doc-
uments or process; 
‘‘(C) to submit to an examination of its fi-
nancial condition by the State insurance com-
missioner in any State in which the issuer is 
doing business to determine the issuer’s finan-
cial condition, if— 
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130 
‘‘(i) the State insurance commissioner 
of the primary State has not done an ex-
amination within the period recommended 
by the National Association of Insurance 
Commissioners; and 
‘‘(ii) any such examination is con-
ducted in accordance with the examiners’ 
handbook of the National Association of 
Insurance Commissioners and is coordi-
nated to avoid unjustified duplication and 
unjustified repetition; 
‘‘(D) to comply with a lawful order 
issued— 
‘‘(i) in a delinquency proceeding com-
menced by the State insurance commis-
sioner if there has been a finding of finan-
cial impairment under subparagraph (C); 
or 
‘‘(ii) in a voluntary dissolution pro-
ceeding; 
‘‘(E) to comply with an injunction issued 
by a court of competent jurisdiction, upon a pe-
tition by the State insurance commissioner al-
leging that the issuer is in hazardous financial 
condition; 
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131 
‘‘(F) to participate, on a nondiscriminatory 
basis, in any insurance insolvency guaranty as-
sociation or similar association to which a 
health insurance issuer in the State is required 
to belong; 
‘‘(G) to comply with any State law regard-
ing fraud and abuse (as defined in section 
2795(10)), except that if the State seeks an in-
junction regarding the conduct described in this 
subparagraph, such injunction must be obtained 
from a court of competent jurisdiction; 
‘‘(H) to comply with any State law regard-
ing unfair claims settlement practices (as de-
fined in section 2795(9)); or 
‘‘(I) to comply with the applicable require-
ments for independent review under section 
2798 with respect to coverage offered in the 
State; 
‘‘(2) require any individual health insurance 
coverage issued by the issuer to be countersigned by 
an insurance agent or broker residing in that Sec-
ondary State; or 
‘‘(3) otherwise discriminate against the issuer 
issuing insurance in both the primary State and in 
any secondary State. 
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132 
‘‘(c) CLEAR
AND CONSPICUOUS DISCLOSURE.—A 
health insurance issuer shall provide the following notice, 
in 12-point bold type, in any insurance coverage offered 
in a secondary State under this part by such a health in-
surance issuer and at renewal of the policy, with the 5 
blank spaces therein being appropriately filled with the 
name of the health insurance issuer, the name of primary 
State, the name of the secondary State, the name of the 
secondary State, and the name of the secondary State, re-
spectively, for the coverage concerned: 
This policy is issued by lllll and is governed by 
the laws and regulations of the State of lllll, and 
it has met all the laws of that State as determined by 
that State’s Department of Insurance. This policy may be 
less expensive than others because it is not subject to all 
of the insurance laws and regulations of the State of 
lllll, including coverage of some services or bene-
fits mandated by the law of the State of lllll. Ad-
ditionally, this policy is not subject to all of the consumer 
protection laws or restrictions on rate changes of the State 
of lllll. As with all insurance products, before pur-
chasing this policy, you should carefully review the policy 
and determine what health care services the policy covers 
and what benefits it provides, including any exclusions, 
limitations, or conditions for such services or benefits. 
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133 
‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS 
AND PREMIUM INCREASES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a health insurance issuer that provides indi-
vidual health insurance coverage to an individual 
under this part in a primary or secondary State may 
not upon renewal— 
‘‘(A) move or reclassify the individual in-
sured under the health insurance coverage from 
the class such individual is in at the time of 
issue of the contract based on the health-status 
related factors of the individual; or 
‘‘(B) increase the premiums assessed the 
individual for such coverage based on a health 
status-related factor or change of a health sta-
tus-related factor or the past or prospective 
claim experience of the insured individual. 
‘‘(2) CONSTRUCTION.—Nothing in paragraph 
(1) shall be construed to prohibit a health insurance 
issuer— 
‘‘(A) from terminating or discontinuing 
coverage or a class of coverage in accordance 
with subsections (b) and (c) of section 2742; 
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134 
‘‘(B) from raising premium rates for all 
policy holders within a class based on claims ex-
perience; 
‘‘(C) from changing premiums or offering 
discounted premiums to individuals who engage 
in wellness activities at intervals prescribed by 
the issuer, if such premium changes or incen-
tives— 
‘‘(i) are disclosed to the consumer in 
the insurance contract; 
‘‘(ii) are based on specific wellness ac-
tivities that are not applicable to all indi-
viduals; and 
‘‘(iii) are not obtainable by all individ-
uals to whom coverage is offered; 
‘‘(D) from reinstating lapsed coverage; or 
‘‘(E) from retroactively adjusting the rates 
charged an insured individual if the initial rates 
were set based on material misrepresentation by 
the individual at the time of issue. 
‘‘(e) PRIOR OFFERING
OF POLICY
IN PRIMARY 
STATE.—A health insurance issuer may not offer for sale 
individual health insurance coverage in a secondary State 
unless that coverage is currently offered for sale in the 
primary State. 
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135 
‘‘(f) LICENSING
OF AGENTS
OR BROKERS
FOR 
HEALTH INSURANCE ISSUERS.—Any State may require 
that a person acting, or offering to act, as an agent or 
broker for a health insurance issuer with respect to the 
offering of individual health insurance coverage obtain a 
license from that State, with commissions or other com-
pensation subject to the provisions of the laws of that 
State, except that a State may not impose any qualifica-
tion or requirement which discriminates against a non-
resident agent or broker. 
‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN-
SURANCE COMMISSIONER.—Each health insurance issuer 
issuing individual health insurance coverage in both pri-
mary and secondary States shall submit— 
‘‘(1) to the insurance commissioner of each 
State in which it intends to offer such coverage, be-
fore it may offer individual health insurance cov-
erage in such State— 
‘‘(A) a copy of the plan of operation or fea-
sibility study or any similar statement of the 
policy being offered and its coverage (which 
shall include the name of its primary State and 
its principal place of business); 
‘‘(B) written notice of any change in its 
designation of its primary State; and 
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136 
‘‘(C) written notice from the issuer of the 
issuer’s compliance with all the laws of the pri-
mary State; and 
‘‘(2) to the insurance commissioner of each sec-
ondary State in which it offers individual health in-
surance coverage, a copy of the issuer’s quarterly fi-
nancial statement submitted to the primary State, 
which statement shall be certified by an independent 
public accountant and contain a statement of opin-
ion on loss and loss adjustment expense reserves 
made by— 
‘‘(A) a member of the American Academy 
of Actuaries; or 
‘‘(B) a qualified loss reserve specialist. 
‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 
Nothing in this section shall be construed to affect the 
authority of any Federal or State court to enjoin— 
‘‘(1) the solicitation or sale of individual health 
insurance coverage by a health insurance issuer to 
any person or group who is not eligible for such in-
surance; or 
‘‘(2) the solicitation or sale of individual health 
insurance coverage that violates the requirements of 
the law of a secondary State which are described in 
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137 
subparagraphs 
(A) 
through 
(H) 
of 
section 
2796(b)(1). 
‘‘(i) POWER OF SECONDARY STATES TO TAKE AD-
MINISTRATIVE ACTION.—Nothing in this section shall be 
construed to affect the authority of any State to enjoin 
conduct in violation of that State’s laws described in sec-
tion 2796(b)(1). 
‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
subsection (b)(1)(G) (relating to injunctions) and 
paragraph (2), nothing in this section shall be con-
strued to affect the authority of any State to make 
use of any of its powers to enforce the laws of such 
State with respect to which a health insurance issuer 
is not exempt under subsection (b). 
‘‘(2) COURTS OF COMPETENT JURISDICTION.— 
If a State seeks an injunction regarding the conduct 
described in paragraphs (1) and (2) of subsection 
(h), such injunction must be obtained from a Fed-
eral or State court of competent jurisdiction. 
‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 
section shall affect the authority of any State to bring ac-
tion in any Federal or State court. 
‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 
this section shall be construed to affect the applicability 
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138 
of State laws generally applicable to persons or corpora-
tions. 
‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO 
HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 
health insurance issuer is offering coverage in a primary 
State that does not accommodate residents of secondary 
States or does not provide a working mechanism for resi-
dents of a secondary State, and the issuer is offering cov-
erage under this part in such secondary State which has 
not adopted a qualified high risk pool as its acceptable 
alternative mechanism (as defined in section 2744(c)(2)), 
the issuer shall, with respect to any individual health in-
surance coverage offered in a secondary State under this 
part, comply with the guaranteed availability requirements 
for eligible individuals in section 2741. 
‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 
BEFORE ISSUER MAY SELL INTO SECONDARY 
STATES. 
‘‘A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary 
State if the State insurance commissioner does not use 
a risk-based capital formula for the determination of cap-
ital and surplus requirements for all health insurance 
issuers. 
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139 
‘‘SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SEC-
ONDARY STATE. 
‘‘Effective beginning two years after the date of en-
actment of this part, an individual in a State may not 
buy individual health insurance coverage in a secondary 
State if the premium for individual health insurance in 
the primary State (with respect to the individual) exceeds 
the national average premium by 10 percent or more. 
‘‘SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCE-
DURES. 
‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur-
ance issuer may not offer, sell, or issue individual health 
insurance coverage in a secondary State under the provi-
sions of this title unless— 
‘‘(1) both the secondary State and the primary 
State have legislation or regulations in place estab-
lishing an independent review process for individuals 
who are covered by individual health insurance cov-
erage, or 
‘‘(2) in any case in which the requirements of 
subparagraph (A) are not met with respect to the ei-
ther of such States, the issuer provides an inde-
pendent review mechanism substantially identical (as 
determined by the applicable State authority of such 
State) to that prescribed in the ‘Health Carrier Ex-
ternal Review Model Act’ of the National Association 
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140 
of Insurance Commissioners for all individuals who 
purchase insurance coverage under the terms of this 
part, except that, under such mechanism, the review 
is conducted by an independent medical reviewer, or 
a panel of such reviewers, with respect to whom the 
requirements of subsection (b) are met. 
‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL 
REVIEWERS.—In the case of any independent review 
mechanism referred to in subsection (a)(2)— 
‘‘(1) IN GENERAL.—In referring a denial of a 
claim to an independent medical reviewer, or to any 
panel of such reviewers, to conduct independent 
medical review, the issuer shall ensure that— 
‘‘(A) each independent medical reviewer 
meets the qualifications described in paragraphs 
(2) and (3); 
‘‘(B) with respect to each review, each re-
viewer meets the requirements of paragraph (4) 
and the reviewer, or at least 1 reviewer on the 
panel, meets the requirements described in 
paragraph (5); and 
‘‘(C) compensation provided by the issuer 
to each reviewer is consistent with paragraph 
(6). 
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141 
‘‘(2) LICENSURE AND EXPERTISE.—Each inde-
pendent medical reviewer shall be a physician 
(allopathic or osteopathic) or health care profes-
sional who— 
‘‘(A) is appropriately credentialed or li-
censed in 1 or more States to deliver health 
care services; and 
‘‘(B) typically treats the condition, makes 
the diagnosis, or provides the type of treatment 
under review. 
‘‘(3) INDEPENDENCE.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), each independent medical reviewer 
in a case shall— 
‘‘(i) not be a related party (as defined 
in paragraph (7)); 
‘‘(ii) not have a material familial, fi-
nancial, or professional relationship with 
such a party; and 
‘‘(iii) not otherwise have a conflict of 
interest with such a party (as determined 
under regulations). 
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to— 
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142 
‘‘(i) prohibit an individual, solely on 
the basis of affiliation with the issuer, 
from serving as an independent medical re-
viewer if— 
‘‘(I) a non-affiliated individual is 
not reasonably available; 
‘‘(II) the affiliated individual is 
not involved in the provision of items 
or services in the case under review; 
‘‘(III) the fact of such an affili-
ation is disclosed to the issuer and the 
enrollee (or authorized representative) 
and neither party objects; and 
‘‘(IV) the affiliated individual is 
not an employee of the issuer and 
does not provide services exclusively or 
primarily to or on behalf of the issuer; 
‘‘(ii) prohibit an individual who has 
staff privileges at the institution where the 
treatment involved takes place from serv-
ing as an independent medical reviewer 
merely on the basis of such affiliation if 
the affiliation is disclosed to the issuer and 
the enrollee (or authorized representative), 
and neither party objects; or 
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143 
‘‘(iii) prohibit receipt of compensation 
by an independent medical reviewer from 
an entity if the compensation is provided 
consistent with paragraph (6). 
‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL 
IN SAME FIELD.— 
‘‘(A) IN
GENERAL.—In a case involving 
treatment, or the provision of items or serv-
ices— 
‘‘(i) by a physician, a reviewer shall be 
a practicing physician (allopathic or osteo-
pathic) of the same or similar specialty, as 
a physician who, acting within the appro-
priate scope of practice within the State in 
which the service is provided or rendered, 
typically treats the condition, makes the 
diagnosis, or provides the type of treat-
ment under review; or 
‘‘(ii) by a non-physician health care 
professional, the reviewer, or at least 1 
member of the review panel, shall be a 
practicing non-physician health care pro-
fessional of the same or similar specialty 
as the non-physician health care profes-
sional who, acting within the appropriate 
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144 
scope of practice within the State in which 
the service is provided or rendered, typi-
cally treats the condition, makes the diag-
nosis, or provides the type of treatment 
under review. 
‘‘(B) PRACTICING
DEFINED.—For pur-
poses of this paragraph, the term ‘practicing’ 
means, with respect to an individual who is a 
physician or other health care professional, that 
the individual provides health care services to 
individual patients on average at least 2 days 
per week. 
‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 
external review relating to a child, a reviewer shall 
have expertise under paragraph (2) in pediatrics. 
‘‘(6) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by the issuer to an 
independent medical reviewer in connection with a 
review under this section shall— 
‘‘(A) not exceed a reasonable level; and 
‘‘(B) not be contingent on the decision ren-
dered by the reviewer. 
‘‘(7) RELATED PARTY DEFINED.—For purposes 
of this section, the term ‘related party’ means, with 
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145 
respect to a denial of a claim under a coverage relat-
ing to an enrollee, any of the following: 
‘‘(A) The issuer involved, or any fiduciary, 
officer, director, or employee of the issuer. 
‘‘(B) The enrollee (or authorized represent-
ative). 
‘‘(C) The health care professional that pro-
vides the items or services involved in the de-
nial. 
‘‘(D) The institution at which the items or 
services (or treatment) involved in the denial 
are provided. 
‘‘(E) The manufacturer of any drug or 
other item that is included in the items or serv-
ices involved in the denial. 
‘‘(F) Any other party determined under 
any regulations to have a substantial interest in 
the denial involved. 
‘‘(8) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ENROLLEE.—The term ‘enrollee’ 
means, with respect to health insurance cov-
erage offered by a health insurance issuer, an 
individual enrolled with the issuer to receive 
such coverage. 
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146 
‘‘(B) HEALTH CARE PROFESSIONAL.—The 
term ‘health care professional’ means an indi-
vidual who is licensed, accredited, or certified 
under State law to provide specified health care 
services and who is operating within the scope 
of such licensure, accreditation, or certification. 
‘‘SEC. 2800. ENFORCEMENT. 
‘‘(a) IN GENERAL.—Subject to subsection (b), with 
respect to specific individual health insurance coverage the 
primary State for such coverage has sole jurisdiction to 
enforce the primary State’s covered laws in the primary 
State and any secondary State. 
‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 
subsection (a) shall be construed to affect the authority 
of a secondary State to enforce its laws as set forth in 
the exception specified in section 2796(b)(1). 
‘‘(c) COURT INTERPRETATION.—In reviewing action 
initiated by the applicable secondary State authority, the 
court of competent jurisdiction shall apply the covered 
laws of the primary State. 
‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 
of individual health insurance coverage offered in a sec-
ondary State that fails to comply with the covered laws 
of the primary State, the applicable State authority of the 
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147 
secondary State may notify the applicable State authority 
of the primary State.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individual health insurance 
coverage offered, issued, or sold after the date that is one 
year after the date of the enactment of this Act. 
(c) GAO ONGOING STUDY AND REPORTS.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct an ongoing study con-
cerning the effect of the amendment made by sub-
section (a) on— 
(A) the number of uninsured and under-in-
sured; 
(B) the availability and cost of health in-
surance policies for individuals with pre-existing 
medical conditions; 
(C) the availability and cost of health in-
surance policies generally; 
(D) the elimination or reduction of dif-
ferent types of benefits under health insurance 
policies offered in different States; and 
(E) cases of fraud or abuse relating to 
health insurance coverage offered under such 
amendment and the resolution of such cases. 
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(2) ANNUAL REPORTS.—The Comptroller Gen-
eral shall submit to Congress an annual report, after 
the end of each of the 5 years following the effective 
date of the amendment made by subsection (a), on 
the ongoing study conducted under paragraph (1). 
(d) SEVERABILITY.—If any provision of the section 
or the application of such provision to any person or cir-
cumstance is held to be unconstitutional, the remainder 
of this section and the application of the provisions of such 
to any other person or circumstance shall not be affected. 
TITLE IV—SAFETY NET 
REFORMS 
SEC. 401. REQUIRING OUTREACH AND COVERAGE BEFORE 
EXPANSION OF ELIGIBILITY. 
(a) STATE PLAN REQUIRED TO SPECIFY HOW IT 
WILL ACHIEVE COVERAGE FOR 90 PERCENT OF TAR-
GETED LOW-INCOME CHILDREN.— 
(1) IN GENERAL.—Section 2102(a) of the So-
cial Security Act (42 U.S.C. 1397bb(a)) is amend-
ed— 
(A) in paragraph (6), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (7), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
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149 
(C) by adding at the end the following new 
paragraph: 
‘‘(8) how the eligibility and benefits provided 
for under the plan for each fiscal year (beginning 
with fiscal year 2011) will allow for the State’s an-
nual funding allotment to cover at least 90 percent 
of the eligible targeted low-income children in the 
State.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to State child health 
plans for fiscal years beginning with fiscal year 
2011. 
(b) LIMITATION ON PROGRAM EXPANSIONS UNTIL 
LOWEST INCOME ELIGIBLE INDIVIDUALS ENROLLED.— 
Section 2105(c) of such Act (42 U.S.C. 1397dd(c)) is 
amended by adding at the end the following new para-
graph: 
‘‘(8) LIMITATION ON INCREASED COVERAGE OF 
HIGHER INCOME CHILDREN.—For child health as-
sistance furnished in a fiscal year beginning with fis-
cal year 2011: 
‘‘(A) NO PAYMENT FOR CHILDREN WITH 
FAMILY INCOME ABOVE 300 PERCENT OF POV-
ERTY LINE.—Payment shall not be made under 
this section for child health assistance for a tar-
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geted low-income child in a family the income 
of which exceeds 300 percent of the poverty line 
applicable to a family of the size involved. 
‘‘(B) SPECIAL RULES FOR PAYMENT FOR 
CHILDREN
WITH
FAMILY
INCOME
ABOVE
200 
PERCENT OF POVERTY LINE.—In the case of 
child health assistance for a targeted low-in-
come child in a family the income of which ex-
ceeds 200 percent (but does not exceed 300 
percent) of the poverty line applicable to a fam-
ily of the size involved no payment shall be 
made under this section for such assistance un-
less the State demonstrates to the satisfaction 
of the Secretary that— 
‘‘(i) the State has met the 90 percent 
retrospective coverage test specified in sub-
paragraph (C)(i) for the previous fiscal 
year; and 
‘‘(ii) the State will meet the 90 per-
cent prospective coverage test specified in 
subparagraph (C)(ii) for the fiscal year. 
‘‘(C) 90 PERCENT COVERAGE TESTS.— 
‘‘(i) RETROSPECTIVE TEST.—The 90 
percent retrospective coverage test speci-
fied in this clause is, for a State for a fis-
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151 
cal year, that on average during the fiscal 
year, the State has enrolled under this title 
or title XIX at least 90 percent of the indi-
viduals residing in the State who— 
‘‘(I) are children under 19 years 
of age (or are pregnant women) and 
are eligible for medical assistance 
under title XIX; or 
‘‘(II) are targeted low-income 
children whose family income does not 
exceed 200 percent of the poverty line 
and who are eligible for child health 
assistance under this title. 
‘‘(ii) PROSPECTIVE
TEST.—The 90 
percent prospective test specified in this 
clause is, for a State for a fiscal year, that 
on average during the fiscal year, the State 
will enroll under this title or title XIX at 
least 90 percent of the individuals residing 
in the State who— 
‘‘(I) are children under 19 years 
of age (or are pregnant women) and 
are eligible for medical assistance 
under title XIX; or 
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152 
‘‘(II) are targeted low-income 
children whose family income does not 
exceed such percent of the poverty 
line (in excess of 200 percent) as the 
State elects consistent with this para-
graph and who are eligible for child 
health assistance under this title. 
‘‘(D) GRANDFATHER.—Subparagraphs (A) 
and (B) shall not apply to the provision of child 
health assistance— 
‘‘(i) to a targeted low-income child 
who is enrolled for child health assistance 
under this title as of September 30, 2008; 
‘‘(ii) to a pregnant woman who is en-
rolled for assistance under this title as of 
September 30, 2009, through the comple-
tion of the post-partum period following 
completion of her pregnancy; and 
‘‘(iii) for items and services furnished 
before October 1, 2010, to an individual 
who is not a targeted low-income child and 
who is enrolled for assistance under this 
title as of September 30, 2009. 
‘‘(E) 
TREATMENT
OF
PREGNANT 
WOMEN.—In 
this 
paragraph 
and 
sections 
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2102(a)(8) and 2104(a)(2), the term ‘targeted 
low-income child’ includes an individual under 
age 19, including the period from conception to 
birth, who is eligible for child health assistance 
under this title by virtue of the definition of the 
term ‘child’ under section 457.10 of title 42, 
Code of Federal Regulations.’’. 
(c) STANDARDIZATION
OF
INCOME
DETERMINA-
TIONS.— 
(1) IN GENERAL.—Section 2110(d) of such Act 
(42 U.S.C. 1397jj) is amended by adding at the end 
the following new subsection: 
‘‘(d) STANDARDIZATION
OF INCOME DETERMINA-
TIONS.—In determining family income under this title (in-
cluding in the case of a State child health plan that pro-
vides health benefits coverage in the manner described in 
section 2101(a)(2)), a State shall base such determination 
on gross income (including amounts that would be in-
cluded in gross income if they were not exempt from in-
come taxation) and may only take into consideration such 
income disregards as the Secretary shall develop.’’. 
(2) EFFECTIVE DATE.—(A) Subject to subpara-
graph (B), the amendment made by paragraph (1) 
shall apply to determinations (and redeterminations) 
of income made on or after April 1, 2010. 
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(B) In the case of a State child health plan 
under title XXI of the Social Security Act which the 
Secretary of Health and Human Services determines 
requires State legislation (other than legislation ap-
propriating funds) in order for the plan to meet the 
additional requirement imposed by the amendment 
made by paragraph (1), the State child health plan 
shall not be regarded as failing to comply with the 
requirements of such title solely on the basis of its 
failure to meet this additional requirement before 
the first day of the first calendar quarter beginning 
after the close of the first regular session of the 
State legislature that begins after the date of the en-
actment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year 
legislative session, each year of such session shall be 
deemed to be a separate regular session of the State 
legislature. 
SEC. 402. EASING ADMINISTRATIVE BARRIERS TO STATE 
COOPERATION WITH EMPLOYER-SPONSORED 
INSURANCE COVERAGE. 
(a) REQUIRING SOME COVERAGE FOR EMPLOYER- 
SPONSORED INSURANCE.— 
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(1) IN GENERAL.—Section 2102(a) of the So-
cial Security Act (42 U.S.C. 1397b(a)), as amended 
by section 401(a), is amended— 
(A) in paragraph (7), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (8), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(9) effective for plan years beginning on or 
after October 1, 2010, how the plan will provide for 
child health assistance with respect to targeted low- 
income children covered under a group health 
plan.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply beginning with fiscal 
year 2011. 
(b) FEDERAL FINANCIAL PARTICIPATION FOR EM-
PLOYER-SPONSORED INSURANCE.—Section 2105 of such 
Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), by inserting before 
the semicolon at the end the following: ‘‘and, subject 
to paragraph (3)(C), in the form of payment of the 
premiums for coverage under a group health plan 
that includes coverage of targeted low-income chil-
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156 
dren and benefits supplemental to such coverage’’; 
and 
(2) by amending paragraph (3) of subsection 
(c) to read as follows: 
‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN-
SURANCE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of family coverage under a group 
health plan that includes coverage of targeted 
low-income children unless such coverage would 
otherwise substitute for coverage that would be 
provided to such children but for the purchase 
of family coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A)— 
‘‘(i) notwithstanding section 2102, no 
minimum benefits requirement (other than 
those otherwise applicable with respect to 
services referred to in section 2102(a)(7)) 
under this title shall apply; and 
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‘‘(ii) no limitation on beneficiary cost- 
sharing otherwise applicable under this 
title or title XIX shall apply. 
‘‘(C) REQUIRED
PROVISION
OF
SUPPLE-
MENTAL BENEFITS.—If the coverage described 
in subparagraph (A) does not provide coverage 
for 
the 
services 
referred 
to 
in 
section 
2102(a)(7), the State child health plan shall 
provide coverage of such services as supple-
mental benefits. 
‘‘(D) LIMITATION ON FFP.—The amount 
of the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) (and sup-
plemental benefits under subparagraph (C) for 
individuals so covered) during a fiscal year may 
not exceed the product of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
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158 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(E) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means including the State transparency 
plan portal established under section 901 
of the Siding with America’s Patients Act) 
to the parent or guardian of the child in-
formation on the coverage available under 
this title, including benefits and cost-shar-
ing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
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159 
coverage that is otherwise made available 
under this title. 
‘‘(F) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2010; 
and 
‘‘(iii) post a description of these cov-
erage options on any official website that 
may be established by the State in connec-
tion with the plan, including the State 
transparency plan portal established under 
section 901 of the Siding with America’s 
Patients Act. 
‘‘(G) SEMIANNUAL VERIFICATION OF COV-
ERAGE.—If coverage described in subparagraph 
(A) is provided under a group health plan with 
respect to a targeted low-income child, the 
State child health plan shall provide for the col-
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160 
lection, at least once every six months, of proof 
from the plan that the child is enrolled in such 
coverage. 
‘‘(H) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) offering wrap around benefits in 
order for a group health plan to meet any 
State-established minimum benefit require-
ments; 
‘‘(ii) establishing a cost-effectiveness 
test to qualify for coverage under such a 
plan; 
‘‘(iii) establishing limits on beneficiary 
cost-sharing under such a plan; 
‘‘(iv) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such a plan; 
‘‘(v) paying less than the full cost of 
the employee’s share of the premium under 
such a plan, including prorating the cost of 
the premium to pay for only what the 
State determines is the portion of the pre-
mium that covers targeted low-income chil-
dren; 
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161 
‘‘(vi) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); 
‘‘(vii) allowing beneficiaries enrolled in 
group health plans from changing plans to 
another coverage option available under 
this title at any time; or 
‘‘(viii) providing any guidance or in-
formation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A). 
‘‘(I) GROUP HEALTH PLAN DEFINED.—In 
this paragraph, the term ‘group health plan’ 
has the meaning given such term in section 
2791(a)(1) of the Public Health Service Act (42 
U.S.C. 300gg–91(a)(1)).’’. 
(c) APPLICATION UNDER MEDICAID.—The Secretary 
of Health and Human Services shall provide for the appli-
cation of the amendments made by subsections (a) and 
(b) under the Medicaid program under title XIX of the 
Social Security Act in the same manner as such amend-
ments apply to SCHIP under title XXI of such Act. 
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162 
SEC. 403. IMPROVING BENEFICIARY CHOICE IN SCHIP. 
(a) REQUIRING OFFERING OF ALTERNATIVE COV-
ERAGE OPTIONS.—Section 2102 of the Social Security Act 
(42 U.S.C. 1397b), as amended by sections 401(a) and 
402(a), is amended— 
(1) in subsection (a)— 
(A) in paragraph (8), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (9), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(10) effective for plan years beginning on or 
after October 1, 2010, how the plan will provide for 
child health assistance with respect to targeted low- 
income children through alternative coverage options 
in accordance with subsection (e).’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(e) ALTERNATIVE COVERAGE OPTIONS.— 
‘‘(1) IN GENERAL.—Effective October 1, 2010, 
a State child health plan shall provide for the offer-
ing of any qualified alternative coverage that a 
qualified entity seeks to offer to targeted low-income 
children through the plan in the State. 
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163 
‘‘(2) APPLICATION
OF
UNIFORM
FINANCIAL 
LIMITATION FOR ALL ALTERNATIVE COVERAGE OP-
TIONS.—With respect to all qualified alternative cov-
erage offered in a State, the State child health plan 
shall establish a uniform dollar limitation on the per 
capita monthly amount that will be paid by the 
State to the qualified entity with respect to such 
coverage provided to a targeted low-income child. 
Such limitation may not be less than 90 percent of 
the per capita monthly payment made for coverage 
offered under the State child health plan that is not 
in the form of an alternative coverage option. Noth-
ing in this paragraph shall be construed— 
‘‘(A) as requiring a State to provide for 
the full payment of premiums for qualified al-
ternative coverage; 
‘‘(B) as preventing a State from charging 
additional premiums to cover the difference be-
tween the cost of qualified alternative coverage 
and the amount of such payment limitation; or 
‘‘(C) as preventing a State from using its 
own funds to provide a dollar limitation that ex-
ceeds the Federal financial participation as lim-
ited under section 2105(c)(10). 
‘‘(3) TREATMENT OF LOW COST COVERAGE.— 
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164 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), if the uniform dollar limita-
tion under paragraph (2) exceeds the premium 
for qualified alternative coverage for an en-
rollee, then such excess shall be refunded to the 
Federal and State governments in the same 
proportion as is otherwise applicable to recov-
ered funds under this title. 
‘‘(B) EXCEPTION FOR HIGH DEDUCTIBLE 
HEALTH PLANS.—In the case of coverage under 
a high deductible health plan, the excess de-
scribed in subparagraph (A) shall be deposited 
into a health savings account established with 
respect to such plan. 
‘‘(4) EXEMPTION.—A State is not subject to 
the requirement of paragraph (1) if the State child 
health plan provides, as of the date of the enactment 
of this subsection, for a cash out or health savings 
account type option for those enrolled under the 
plan. 
‘‘(5) QUALIFIED ALTERNATIVE COVERAGE DE-
FINED.—In this section, the term ‘qualified alter-
native coverage’ means health insurance coverage 
that— 
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165 
‘‘(A) meets the coverage requirements of 
section 2103 (other than cost-sharing require-
ments of such section); and 
‘‘(B) is offered by a qualified insurer, and 
not directly by the State. 
‘‘(6) QUALIFIED
INSURER
DEFINED.—In this 
section, the term ‘qualified insurer’ means, with re-
spect to a State, an entity that is licensed to offer 
health insurance coverage in the State.’’. 
(b) FEDERAL
FINANCIAL
PARTICIPATION
FOR 
QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 
such Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), as amended by sec-
tion 402(b), by inserting before the semicolon at the 
end the following: ‘‘and, subject to paragraph 
(8)(C), in the form of payment of the premiums for 
coverage for qualified alternative coverage’’; and 
(2) in subsection (c), by adding at the end the 
following new paragraph: 
‘‘(12) PURCHASE OF QUALIFIED ALTERNATIVE 
COVERAGE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of qualified alternative coverage. 
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166 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A), no limitation on beneficiary cost- 
sharing otherwise applicable under this title or 
title XIX shall apply. 
‘‘(C) LIMITATION ON FFP.—The amount of 
the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) during a 
fiscal year in the aggregate for all such cov-
erage in the State may not exceed the product 
of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(D) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
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167 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet website or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(E) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
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168 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2010; 
and 
‘‘(iii) post a description of these cov-
erage options on any official website that 
may be established by the State in connec-
tion with the plan. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) establishing limits on beneficiary 
cost-sharing under such alternative cov-
erage; 
‘‘(ii) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such coverage; 
‘‘(iii) paying less than the full cost of 
a child’s share of the premium under such 
coverage, insofar as the premium for such 
coverage exceeds the limitation established 
by the State under subparagraph (C); 
‘‘(iv) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); or 
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169 
‘‘(v) providing any guidance or infor-
mation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A).’’. 
(c) APPLICATION UNDER MEDICAID.—The Secretary 
of Health and Human Services shall provide for the appli-
cation of the amendments made by subsections (a) and 
(b) under the Medicaid program under title XIX of the 
Social Security Act in the same manner as such amend-
ments apply to SCHIP under title XXI of such Act. 
SEC. 404. LIABILITY PROTECTIONS FOR HEALTH CENTER 
VOLUNTEER PRACTITIONERS. 
(a) IN GENERAL.—Section 224 of the Public Health 
Service Act (42 U.S.C. 233) is amended— 
(1) in subsection (g)(1)(A)— 
(A) in the first sentence, by striking ‘‘or 
employee’’ and inserting ‘‘employee, or (subject 
to subsection (k)(4)) volunteer practitioner’’; 
and 
(B) in the second sentence, by inserting 
‘‘and subsection (k)(4)’’ after ‘‘subject to para-
graph (5)’’; and 
(2) in each of subsections (g), (i), (j), (k), (l), 
and (m)— 
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170 
(A) by striking the term ‘‘employee, or 
contractor’’ each place such term appears and 
inserting ‘‘employee, volunteer practitioner, or 
contractor’’; 
(B) by striking the term ‘‘employee, and 
contractor’’ each place such term appears and 
inserting ‘‘employee, volunteer practitioner, and 
contractor’’; 
(C) by striking the term ‘‘employee, or any 
contractor’’ each place such term appears and 
inserting ‘‘employee, volunteer practitioner, or 
contractor’’; and 
(D) by striking the term ‘‘employees, or 
contractors’’ each place such term appears and 
inserting ‘‘employees, volunteer practitioners, or 
contractors’’. 
(b) APPLICABILITY; DEFINITION.—Section 224(k) of 
the Public Health Service Act (42 U.S.C. 233(k)) is 
amended by adding at the end the following paragraph: 
‘‘(4)(A) Subsections (g) through (m) apply with re-
spect to volunteer practitioners beginning with the first 
fiscal year for which an appropriations Act provides that 
amounts in the fund under paragraph (2) are available 
with respect to such practitioners. 
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171 
‘‘(B) For purposes of subsections (g) through (m), 
the term ‘volunteer practitioner’ means a practitioner who, 
with respect to an entity described in subsection (g)(4), 
meets the following conditions: 
‘‘(i) In the State involved, the practitioner is a 
licensed physician, a licensed clinical psychologist, or 
other licensed or certified health care practitioner. 
‘‘(ii) At the request of such entity, the practi-
tioner provides services to patients of the entity, at 
a site at which the entity operates or at a site des-
ignated by the entity. The weekly number of hours 
of services provided to the patients by the practi-
tioner is not a factor with respect to meeting condi-
tions under this subparagraph. 
‘‘(iii) The practitioner does not for the provision 
of such services receive any compensation from such 
patients, from the entity, or from third-party payors 
(including reimbursement under any insurance pol-
icy or health plan, or under any Federal or State 
health benefits program).’’. 
SEC. 405. LIABILITY PROTECTIONS FOR HEALTH CENTER 
PRACTITIONERS PROVIDING SERVICES IN 
EMERGENCY AREAS. 
Section 224(g) of the Public Health Service Act (42 
U.S.C. 233(g)) is amended— 
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172 
(1) in paragraph (1)(B)(ii), by striking ‘‘sub-
paragraph (C)’’ and inserting ‘‘subparagraph (C) 
and paragraph (6)’’; and 
(2) by adding at the end the following para-
graph: 
‘‘(6)(A) Subject to subparagraph (C), paragraph 
(1)(B)(ii) applies to health services provided to individuals 
who are not patients of the entity involved if, as deter-
mined under criteria issued by the Secretary, the following 
conditions are met: 
‘‘(i) The services are provided by a contractor, 
volunteer practitioner (as defined in subsection 
(k)(4)(B)), or employee of the entity who is a physi-
cian or other licensed or certified health care practi-
tioner and who is otherwise deemed to be an em-
ployee for purposes of paragraph (1)(A) when pro-
viding services with respect to the entity. 
‘‘(ii) The services are provided in an emergency 
area (as defined in subparagraph (D)), with respect 
to a public health emergency or major disaster de-
scribed in subparagraph (D), and during the period 
for which such emergency or disaster is determined 
or declared, respectively. 
‘‘(iii) The services of the contractor, volunteer 
practitioner, or employee (referred to in this para-
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173 
graph as the ‘out-of-area practitioner’) are provided 
under an arrangement with— 
‘‘(I) an entity that is deemed to be an em-
ployee for purposes of paragraph (1)(A) and 
that serves the emergency area involved (re-
ferred to in this paragraph as an ‘emergency- 
area entity’); or 
‘‘(II) a Federal agency that has respon-
sibilities regarding the provision of health serv-
ices in such area during the emergency. 
‘‘(iv) The purposes of the arrangement are— 
‘‘(I) to coordinate, to the extent prac-
ticable, the provision of health services in the 
emergency area by the out-of-area practitioner 
with the provision of services by the emergency- 
area entity, or by the Federal agency, as the 
case may be; 
‘‘(II) to identify a location in the emer-
gency area to which such practitioner should re-
port for purposes of providing health services, 
and to identify an individual or individuals in 
the area to whom the practitioner should report 
for such purposes; and 
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174 
‘‘(III) to verify the identity of the practi-
tioner and that the practitioner is licensed or 
certified by one or more of the States. 
‘‘(v) With respect to the licensure or certifi-
cation of health care practitioners, the provision of 
services by the out-of-area practitioner in the emer-
gency area is not a violation of the law of the State 
in which the area is located. 
‘‘(B) In issuing criteria under subparagraph (A), the 
Secretary shall take into account the need to rapidly enter 
into arrangements under such subparagraph in order to 
provide health services in emergency areas promptly after 
the emergency begins. 
‘‘(C) Subparagraph (A) applies with respect to an act 
or omission of an out-of-area practitioner only to the ex-
tent that the practitioner is not immune from liability for 
such act or omission under the Volunteer Protection Act 
of 1997. 
‘‘(D) For purposes of this paragraph, the term ‘emer-
gency area’ means a geographic area for which— 
‘‘(i) the Secretary has made a determination 
under section 319 that a public health emergency 
exists; or 
‘‘(ii) a presidential declaration of major disaster 
has been issued under section 401 of the Robert T. 
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Stafford Disaster Relief and Emergency Assistance 
Act.’’. 
TITLE 
V—MEDICAL 
LIABILITY 
AND UNCOMPENSATED CARE 
REFORMS 
SEC. 501. SHORT TITLE. 
This title may be cited as the ‘‘Help Efficient, Acces-
sible, Low-cost, Timely Healthcare (HEALTH) Act of 
2009’’. 
SEC. 502. FINDINGS AND PURPOSE. 
(a) FINDINGS.— 
(1) EFFECT
ON
HEALTH
CARE
ACCESS
AND 
COSTS.—Congress finds that our current civil justice 
system is adversely affecting patient access to health 
care services, better patient care, and cost-efficient 
health care, in that the health care liability system 
is a costly and ineffective mechanism for resolving 
claims of health care liability and compensating in-
jured patients, and is a deterrent to the sharing of 
information among health care professionals which 
impedes efforts to improve patient safety and quality 
of care. 
(2) EFFECT
ON
INTERSTATE
COMMERCE.— 
Congress finds that the health care and insurance 
industries are industries affecting interstate com-
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176 
merce and the health care liability litigation systems 
existing throughout the United States are activities 
that affect interstate commerce by contributing to 
the high costs of health care and premiums for 
health care liability insurance purchased by health 
care system providers. 
(3) EFFECT
ON
FEDERAL
SPENDING.—Con-
gress finds that the health care liability litigation 
systems existing throughout the United States have 
a significant effect on the amount, distribution, and 
use of Federal funds because of— 
(A) the large number of individuals who 
receive health care benefits under programs op-
erated or financed by the Federal Government; 
(B) the large number of individuals who 
benefit because of the exclusion from Federal 
taxes of the amounts spent to provide them 
with health insurance benefits; and 
(C) the large number of health care pro-
viders who provide items or services for which 
the Federal Government makes payments. 
(b) PURPOSE.—It is the purpose of this title to imple-
ment reasonable, comprehensive, and effective health care 
liability reforms designed to— 
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(1) improve the availability of health care serv-
ices in cases in which health care liability actions 
have been shown to be a factor in the decreased 
availability of services; 
(2) reduce the incidence of ‘‘defensive medi-
cine’’ and lower the cost of health care liability in-
surance, all of which contribute to the escalation of 
health care costs; 
(3) ensure that persons with meritorious health 
care injury claims receive fair and adequate com-
pensation, including reasonable noneconomic dam-
ages; 
(4) improve the fairness and cost-effectiveness 
of our current health care liability system to resolve 
disputes over, and provide compensation for, health 
care liability by reducing uncertainty in the amount 
of compensation provided to injured individuals; and 
(5) provide an increased sharing of information 
in the health care system which will reduce unin-
tended injury and improve patient care. 
SEC. 503. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 
The time for the commencement of a health care law-
suit shall be 3 years after the date of manifestation of 
injury or 1 year after the claimant discovers, or through 
the use of reasonable diligence should have discovered, the 
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178 
injury, whichever occurs first. In no event shall the time 
for commencement of a health care lawsuit exceed 3 years 
after the date of manifestation of injury unless tolled for 
any of the following— 
(1) upon proof of fraud; 
(2) intentional concealment; or 
(3) the presence of a foreign body, which has no 
therapeutic or diagnostic purpose or effect, in the 
person of the injured person. Actions by a minor 
shall be commenced within 3 years from the date of 
the alleged manifestation of injury except that ac-
tions by a minor under the full age of 6 years shall 
be commenced within 3 years of manifestation of in-
jury or prior to the minor’s 8th birthday, whichever 
provides a longer period. Such time limitation shall 
be tolled for minors for any period during which a 
parent or guardian and a health care provider or 
health care organization have committed fraud or 
collusion in the failure to bring an action on behalf 
of the injured minor. 
SEC. 504. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this title shall limit a claim-
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179 
ant’s recovery of the full amount of the available economic 
damages, notwithstanding the limitation in subsection (b). 
(b) ADDITIONAL NONECONOMIC DAMAGES.—In any 
health care lawsuit, the amount of noneconomic damages, 
if available, may be as much as $250,000, regardless of 
the number of parties against whom the action is brought 
or the number of separate claims or actions brought with 
respect to the same injury. 
(c) NO DISCOUNT OF AWARD FOR NONECONOMIC 
DAMAGES.—For purposes of applying the limitation in 
subsection (b), future noneconomic damages shall not be 
discounted to present value. The jury shall not be in-
formed about the maximum award for noneconomic dam-
ages. An award for noneconomic damages in excess of 
$250,000 shall be reduced either before the entry of judg-
ment, or by amendment of the judgment after entry of 
judgment, and such reduction shall be made before ac-
counting for any other reduction in damages required by 
law. If separate awards are rendered for past and future 
noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be re-
duced first. 
(d) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
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180 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a sepa-
rate judgment shall be rendered against each such party 
for the amount allocated to such party. For purposes of 
this section, the trier of fact shall determine the propor-
tion of responsibility of each party for the claimant’s 
harm. 
SEC. 505. MAXIMIZING PATIENT RECOVERY. 
(a) COURT SUPERVISION OF SHARE OF DAMAGES 
ACTUALLY PAID TO CLAIMANTS.—In any health care law-
suit, the court shall supervise the arrangements for pay-
ment of damages to protect against conflicts of interest 
that may have the effect of reducing the amount of dam-
ages awarded that are actually paid to claimants. In par-
ticular, in any health care lawsuit in which the attorney 
for a party claims a financial stake in the outcome by vir-
tue of a contingent fee, the court shall have the power 
to restrict the payment of a claimant’s damage recovery 
to such attorney, and to redirect such damages to the 
claimant based upon the interests of justice and principles 
of equity. In no event shall the total of all contingent fees 
for representing all claimants in a health care lawsuit ex-
ceed the following limits: 
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181 
(1) 40 percent of the first $50,000 recovered by 
the claimant(s). 
(2) 331⁄3 percent of the next $50,000 recovered 
by the claimant(s). 
(3) 25 percent of the next $500,000 recovered 
by the claimant(s). 
(4) 15 percent of any amount by which the re-
covery by the claimant(s) is in excess of $600,000. 
(b) APPLICABILITY.—The limitations in this section 
shall apply whether the recovery is by judgment, settle-
ment, mediation, arbitration, or any other form of alter-
native dispute resolution. In a health care lawsuit involv-
ing a minor or incompetent person, a court retains the 
authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The require-
ment for court supervision in the first two sentences of 
subsection (a) applies only in civil actions. 
SEC. 506. ADDITIONAL HEALTH BENEFITS. 
In any health care lawsuit involving injury or wrong-
ful death, any party may introduce evidence of collateral 
source benefits. If a party elects to introduce such evi-
dence, any opposing party may introduce evidence of any 
amount paid or contributed or reasonably likely to be paid 
or contributed in the future by or on behalf of the oppos-
ing party to secure the right to such collateral source bene-
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182 
fits. No provider of collateral source benefits shall recover 
any amount against the claimant or receive any lien or 
credit against the claimant’s recovery or be equitably or 
legally subrogated to the right of the claimant in a health 
care lawsuit involving injury or wrongful death. This sec-
tion shall apply to any health care lawsuit that is settled 
as well as a health care lawsuit that is resolved by a fact 
finder. This section shall not apply to section 1862(b) (42 
U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) of the Social Security Act. 
SEC. 507. PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may, if other-
wise permitted by applicable State or Federal law, be 
awarded against any person in a health care lawsuit only 
if it is proven by clear and convincing evidence that such 
person acted with malicious intent to injure the claimant, 
or that such person deliberately failed to avoid unneces-
sary injury that such person knew the claimant was sub-
stantially certain to suffer. In any health care lawsuit 
where no judgment for compensatory damages is rendered 
against such person, no punitive damages may be awarded 
with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a mo-
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183 
tion by the claimant and after a finding by the court, upon 
review of supporting and opposing affidavits or after a 
hearing, after weighing the evidence, that the claimant has 
established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the re-
quest of any party in a health care lawsuit, the trier of 
fact shall consider in a separate proceeding— 
(1) whether punitive damages are to be award-
ed and the amount of such award; and 
(2) the amount of punitive damages following a 
determination of punitive liability. 
If a separate proceeding is requested, evidence relevant 
only to the claim for punitive damages, as determined by 
applicable State law, shall be inadmissible in any pro-
ceeding to determine whether compensatory damages are 
to be awarded. 
(b) DETERMINING AMOUNT
OF PUNITIVE DAM-
AGES.— 
(1) FACTORS
CONSIDERED.—In determining 
the amount of punitive damages, if awarded, in a 
health care lawsuit, the trier of fact shall consider 
only the following— 
(A) the severity of the harm caused by the 
conduct of such party; 
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184 
(B) the duration of the conduct or any 
concealment of it by such party; 
(C) the profitability of the conduct to such 
party; 
(D) the number of products sold or med-
ical procedures rendered for compensation, as 
the case may be, by such party, of the kind 
causing the harm complained of by the claim-
ant; 
(E) any criminal penalties imposed on such 
party, as a result of the conduct complained of 
by the claimant; and 
(F) the amount of any civil fines assessed 
against such party as a result of the conduct 
complained of by the claimant. 
(2) MAXIMUM AWARD.—The amount of punitive 
damages, if awarded, in a health care lawsuit may 
be as much as $250,000 or as much as two times 
the amount of economic damages awarded, which-
ever is greater. The jury shall not be informed of 
this limitation. 
(c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT 
COMPLY WITH FDA STANDARDS.— 
(1) IN GENERAL.— 
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185 
(A) No punitive damages may be awarded 
against the manufacturer or distributor of a 
medical product, or a supplier of any compo-
nent or raw material of such medical product, 
based on a claim that such product caused the 
claimant’s harm where— 
(i)(I) such medical product was sub-
ject to premarket approval, clearance, or li-
censure by the Food and Drug Administra-
tion with respect to the safety of the for-
mulation or performance of the aspect of 
such medical product which caused the 
claimant’s harm or the adequacy of the 
packaging or labeling of such medical 
product; and 
(II) such medical product was so ap-
proved, cleared, or licensed; or 
(ii) such medical product is generally 
recognized among qualified experts as safe 
and effective pursuant to conditions estab-
lished by the Food and Drug Administra-
tion and applicable Food and Drug Admin-
istration regulations, including without 
limitation those related to packaging and 
labeling, unless the Food and Drug Admin-
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186 
istration has determined that such medical 
product was not manufactured or distrib-
uted in substantial compliance with appli-
cable Food and Drug Administration stat-
utes and regulations. 
(B) RULE OF CONSTRUCTION.—Subpara-
graph (A) may not be construed as establishing 
the obligation of the Food and Drug Adminis-
tration to demonstrate affirmatively that a 
manufacturer, distributor, or supplier referred 
to in such subparagraph meets any of the con-
ditions described in such subparagraph. 
(2) LIABILITY OF HEALTH CARE PROVIDERS.— 
A health care provider who prescribes, or who dis-
penses pursuant to a prescription, a medical product 
approved, licensed, or cleared by the Food and Drug 
Administration shall not be named as a party to a 
product liability lawsuit involving such product and 
shall not be liable to a claimant in a class action 
lawsuit against the manufacturer, distributor, or 
seller of such product. Nothing in this paragraph 
prevents a court from consolidating cases involving 
health care providers and cases involving products li-
ability claims against the manufacturer, distributor, 
or product seller of such medical product. 
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187 
(3) PACKAGING.—In a health care lawsuit for 
harm which is alleged to relate to the adequacy of 
the packaging or labeling of a drug which is required 
to have tamper-resistant packaging under regula-
tions of the Secretary of Health and Human Serv-
ices (including labeling regulations related to such 
packaging), the manufacturer or product seller of 
the drug shall not be held liable for punitive dam-
ages unless such packaging or labeling is found by 
the trier of fact by clear and convincing evidence to 
be substantially out of compliance with such regula-
tions. 
(4) EXCEPTION.—Paragraph (1) shall not 
apply in any health care lawsuit in which— 
(A) a person, before or after premarket ap-
proval, clearance, or licensure of such medical 
product, knowingly misrepresented to or with-
held from the Food and Drug Administration 
information that is required to be submitted 
under the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 301 et seq.) or section 351 of 
the Public Health Service Act (42 U.S.C. 262) 
that is material and is causally related to the 
harm which the claimant allegedly suffered; or 
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188 
(B) a person made an illegal payment to 
an official of the Food and Drug Administra-
tion for the purpose of either securing or main-
taining approval, clearance, or licensure of such 
medical product. 
SEC. 508. AUTHORIZATION OF PAYMENT OF FUTURE DAM-
AGES TO CLAIMANTS IN HEALTH CARE LAW-
SUITS. 
(a) IN GENERAL.—In any health care lawsuit, if an 
award of future damages, without reduction to present 
value, equaling or exceeding $50,000 is made against a 
party with sufficient insurance or other assets to fund a 
periodic payment of such a judgment, the court shall, at 
the request of any party, enter a judgment ordering that 
the future damages be paid by periodic payments. In any 
health care lawsuit, the court may be guided by the Uni-
form Periodic Payment of Judgments Act promulgated by 
the National Conference of Commissioners on Uniform 
State Laws. 
(b) APPLICABILITY.—This section applies to all ac-
tions which have not been first set for trial or retrial be-
fore the effective date of this title. 
SEC. 509. DEFINITIONS. 
In this title: 
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189 
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution 
system’’ or ‘‘ADR’’ means a system that provides 
for the resolution of health care lawsuits in a man-
ner other than through a civil action brought in a 
State or Federal court. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
ing a person who asserts or claims a right to legal 
or equitable contribution, indemnity or subrogation, 
arising out of a health care liability claim or action, 
and any person on whose behalf such a claim is as-
serted or such an action is brought, whether de-
ceased, incompetent, or a minor. 
(3) COLLATERAL
SOURCE
BENEFITS.—The 
term ‘‘collateral source benefits’’ means any amount 
paid or reasonably likely to be paid in the future to 
or on behalf of the claimant, or any service, product 
or other benefit provided or reasonably likely to be 
provided in the future to or on behalf of the claim-
ant, as a result of the injury or wrongful death, pur-
suant to— 
(A) any State or Federal health, sickness, 
income-disability, accident, or workers’ com-
pensation law; 
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(B) any health, sickness, income-disability, 
or accident insurance that provides health bene-
fits or income-disability coverage; 
(C) any contract or agreement of any 
group, organization, partnership, or corporation 
to provide, pay for, or reimburse the cost of 
medical, hospital, dental, or income disability 
benefits; and 
(D) any other publicly or privately funded 
program. 
(4) 
COMPENSATORY
DAMAGES.—The 
term 
‘‘compensatory 
damages’’ 
means 
objectively 
verifiable monetary losses incurred as a result of the 
provision of, use of, or payment for (or failure to 
provide, use, or pay for) health care services or med-
ical products, such as past and future medical ex-
penses, loss of past and future earnings, cost of ob-
taining domestic services, loss of employment, and 
loss of business or employment opportunities, dam-
ages for physical and emotional pain, suffering, in-
convenience, physical impairment, mental anguish, 
disfigurement, loss of enjoyment of life, loss of soci-
ety and companionship, loss of consortium (other 
than loss of domestic service), hedonic damages, in-
jury to reputation, and all other nonpecuniary losses 
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of any kind or nature. The term ‘‘compensatory 
damages’’ includes economic damages and non-
economic damages, as such terms are defined in this 
section. 
(5) CONTINGENT FEE.—The term ‘‘contingent 
fee’’ includes all compensation to any person or per-
sons which is payable only if a recovery is effected 
on behalf of one or more claimants. 
(6) ECONOMIC DAMAGES.—The term ‘‘economic 
damages’’ means objectively verifiable monetary 
losses incurred as a result of the provision of, use 
of, or payment for (or failure to provide, use, or pay 
for) health care services or medical products, such as 
past and future medical expenses, loss of past and 
future earnings, cost of obtaining domestic services, 
loss of employment, and loss of business or employ-
ment opportunities. 
(7) 
HEALTH
CARE
LAWSUIT.—The 
term 
‘‘health care lawsuit’’ means any health care liability 
claim concerning the provision of health care goods 
or services or any medical product affecting inter-
state commerce, or any health care liability action 
concerning the provision of health care goods or 
services or any medical product affecting interstate 
commerce, brought in a State or Federal court or 
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pursuant to an alternative dispute resolution system, 
against a health care provider, a health care organi-
zation, or the manufacturer, distributor, supplier, 
marketer, promoter, or seller of a medical product, 
regardless of the theory of liability on which the 
claim is based, or the number of claimants, plain-
tiffs, defendants, or other parties, or the number of 
claims or causes of action, in which the claimant al-
leges a health care liability claim. Such term does 
not include a claim or action which is based on 
criminal liability; which seeks civil fines or penalties 
paid to Federal, State, or local government; or which 
is grounded in antitrust. 
(8) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal Court or pursu-
ant to an alternative dispute resolution system, 
against a health care provider, a health care organi-
zation, or the manufacturer, distributor, supplier, 
marketer, promoter, or seller of a medical product, 
regardless of the theory of liability on which the 
claim is based, or the number of plaintiffs, defend-
ants, or other parties, or the number of causes of ac-
tion, in which the claimant alleges a health care li-
ability claim. 
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(9) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
by any person, whether or not pursuant to ADR, 
against a health care provider, health care organiza-
tion, or the manufacturer, distributor, supplier, mar-
keter, promoter, or seller of a medical product, in-
cluding, but not limited to, third-party claims, cross- 
claims, counter-claims, or contribution claims, which 
are based upon the provision of, use of, or payment 
for (or the failure to provide, use, or pay for) health 
care services or medical products, regardless of the 
theory of liability on which the claim is based, or the 
number of plaintiffs, defendants, or other parties, or 
the number of causes of action. 
(10) HEALTH CARE ORGANIZATION.—The term 
‘‘health care organization’’ means any person or en-
tity which is obligated to provide or pay for health 
benefits under any health plan, including any person 
or entity acting under a contract or arrangement 
with a health care organization to provide or admin-
ister any health benefit. 
(11) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any person or entity 
required by State or Federal laws or regulations to 
be licensed, registered, or certified to provide health 
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care services, and being either so licensed, reg-
istered, or certified, or exempted from such require-
ment by other statute or regulation. 
(12) HEALTH CARE GOODS OR SERVICES.—The 
term ‘‘health care goods or services’’ means any 
goods or services provided by a health care organiza-
tion, provider, or by any individual working under 
the supervision of a health care provider, that relates 
to the diagnosis, prevention, or treatment of any 
human disease or impairment, or the assessment or 
care of the health of human beings. 
(13) MALICIOUS
INTENT
TO
INJURE.—The 
term ‘‘malicious intent to injure’’ means inten-
tionally causing or attempting to cause physical in-
jury other than providing health care goods or serv-
ices. 
(14) MEDICAL PRODUCT.—The term ‘‘medical 
product’’ means a drug, device, or biological product 
intended for humans, and the terms ‘‘drug’’, ‘‘de-
vice’’, and ‘‘biological product’’ have the meanings 
given such terms in sections 201(g)(1) and 201(h) 
of the Federal Food, Drug and Cosmetic Act (21 
U.S.C. 321) and section 351(a) of the Public Health 
Service Act (42 U.S.C. 262(a)), respectively, includ-
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ing any component or raw material used therein, but 
excluding health care services. 
(15) 
NONECONOMIC
DAMAGES.—The 
term 
‘‘noneconomic damages’’ means damages for phys-
ical and emotional pain, suffering, inconvenience, 
physical impairment, mental anguish, disfigurement, 
loss of enjoyment of life, loss of society and compan-
ionship, loss of consortium (other than loss of do-
mestic service), hedonic damages, injury to reputa-
tion, and all other nonpecuniary losses of any kind 
or nature. 
(16) PUNITIVE DAMAGES.—The term ‘‘punitive 
damages’’ means damages awarded, for the purpose 
of punishment or deterrence, and not solely for com-
pensatory purposes, against a health care provider, 
health care organization, or a manufacturer, dis-
tributor, or supplier of a medical product. Punitive 
damages are neither economic nor noneconomic 
damages. 
(17) RECOVERY.—The term ‘‘recovery’’ means 
the net sum recovered after deducting any disburse-
ments or costs incurred in connection with prosecu-
tion or settlement of the claim, including all costs 
paid or advanced by any person. Costs of health care 
incurred by the plaintiff and the attorneys’ office 
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overhead costs or charges for legal services are not 
deductible disbursements or costs for such purpose. 
(18) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana Is-
lands, the Trust Territory of the Pacific Islands, and 
any other territory or possession of the United 
States, or any political subdivision thereof. 
SEC. 510. EFFECT ON OTHER LAWS. 
(a) VACCINE INJURY.— 
(1) To the extent that title XXI of the Public 
Health Service Act establishes a Federal rule of law 
applicable to a civil action brought for a vaccine-re-
lated injury or death— 
(A) this title does not affect the application 
of the rule of law to such an action; and 
(B) any rule of law prescribed by this title 
in conflict with a rule of law of such title XXI 
shall not apply to such action. 
(2) If there is an aspect of a civil action 
brought for a vaccine-related injury or death to 
which a Federal rule of law under title XXI of the 
Public Health Service Act does not apply, then this 
title or otherwise applicable law (as determined 
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under this title) will apply to such aspect of such ac-
tion. 
(b) OTHER FEDERAL LAW.—Except as provided in 
this section, nothing in this title shall be deemed to affect 
any defense available to a defendant in a health care law-
suit or action under any other provision of Federal law. 
SEC. 
511. 
STATE 
FLEXIBILITY 
AND 
PROTECTION 
OF 
STATES’ RIGHTS. 
(a) HEALTH CARE LAWSUITS.—The provisions gov-
erning health care lawsuits set forth in this title preempt, 
subject to subsections (b) and (c), State law to the extent 
that State law prevents the application of any provisions 
of law established by or under this title. The provisions 
governing health care lawsuits set forth in this title super-
sede chapter 171 of title 28, United States Code, to the 
extent that such chapter— 
(1) provides for a greater amount of damages 
or contingent fees, a longer period in which a health 
care lawsuit may be commenced, or a reduced appli-
cability or scope of periodic payment of future dam-
ages, than provided in this title; or 
(2) prohibits the introduction of evidence re-
garding collateral source benefits, or mandates or 
permits subrogation or a lien on collateral source 
benefits. 
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(b) PROTECTION OF STATES’ RIGHTS AND OTHER 
LAWS.—(1) Any issue that is not governed by any provi-
sion of law established by or under this title (including 
State standards of gross negligence) shall be governed by 
otherwise applicable State or Federal law. 
(2) This title shall not preempt or supersede any 
State or Federal law that imposes greater procedural or 
substantive protections for health care providers and 
health care organizations from liability, loss, or damages 
than those provided by this title or create a cause of ac-
tion. 
(c) STATE FLEXIBILITY.—No provision of this title 
shall be construed to preempt— 
(1) any State law (whether effective before, on, 
or after the date of the enactment of this title) that 
specifies a particular monetary amount of compen-
satory or punitive damages (or the total amount of 
damages) that may be awarded in a health care law-
suit, regardless of whether such monetary amount is 
greater or lesser than is provided for under this title, 
notwithstanding section 404(a); or 
(2) any defense available to a party in a health 
care lawsuit under any other provision of State or 
Federal law. 
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SEC. 512. APPLICABILITY; EFFECTIVE DATE. 
The previous provisions of this title shall apply to any 
health care lawsuit brought in a Federal or State court, 
or subject to an alternative dispute resolution system, that 
is initiated on or after the date of the enactment of this 
title, except that any health care lawsuit arising from an 
injury occurring prior to the date of the enactment of this 
title shall be governed by the applicable statute of limita-
tions provisions in effect at the time the injury occurred. 
SEC. 513. SENSE OF CONGRESS. 
It is the sense of Congress that a health insurer 
should be liable for damages for harm caused when it 
makes a decision as to what care is medically necessary 
and appropriate. 
SEC. 514. STATE GRANTS TO CREATE ADMINISTRATIVE 
HEALTH CARE TRIBUNALS. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE 
HEALTH CARE TRIBUNALS. 
‘‘(a) IN GENERAL.—The Secretary may award grants 
to States for the development, implementation, and eval-
uation of administrative health care tribunals that comply 
with this section, for the resolution of disputes concerning 
injuries allegedly caused by health care providers. 
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‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 
To be eligible to receive a grant under this section, a State 
shall submit to the Secretary an application at such time, 
in such manner, and containing such information as may 
be required by the Secretary. A grant shall be awarded 
under this section on such terms and conditions as the 
Secretary determines appropriate. 
‘‘(c) REPRESENTATION BY COUNSEL.—A State that 
receives a grant under this section may not preclude any 
party to a dispute before an administrative health care tri-
bunal operated under such grant from obtaining legal rep-
resentation during any review by the expert panel under 
subsection (d), the administrative health care tribunal 
under subsection (e), or a State court under subsection 
(f). 
‘‘(d) EXPERT PANEL REVIEW AND EARLY OFFER 
GUIDELINES.— 
‘‘(1) IN GENERAL.—Prior to the submission of 
any dispute concerning injuries allegedly caused by 
health care providers to an administrative health 
care tribunal under this section, such allegations 
shall first be reviewed by an expert panel. 
‘‘(2) COMPOSITION.— 
‘‘(A) IN GENERAL.—The members of each 
expert panel under this subsection shall be ap-
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pointed by the head of the State agency respon-
sible for health. Each expert panel shall be 
composed of no fewer than 3 members and not 
more than 7 members. At least one-half of such 
members shall be medical experts (either physi-
cians or health care professionals). 
‘‘(B) LICENSURE AND EXPERTISE.—Each 
physician or health care professional appointed 
to an expert panel under subparagraph (A) 
shall— 
‘‘(i) be appropriately credentialed or 
licensed in 1 or more States to deliver 
health care services; and 
‘‘(ii) typically treat the condition, 
make the diagnosis, or provide the type of 
treatment that is under review. 
‘‘(C) INDEPENDENCE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), each individual appointed to an expert 
panel under this paragraph shall— 
‘‘(I) not have a material familial, 
financial, or professional relationship 
with a party involved in the dispute 
reviewed by the panel; and 
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‘‘(II) not otherwise have a con-
flict of interest with such a party. 
‘‘(ii) EXCEPTION.—Nothing in clause 
(i) shall be construed to prohibit an indi-
vidual who has staff privileges at an insti-
tution where the treatment involved in the 
dispute was provided from serving as a 
member of an expert panel merely on the 
basis of such affiliation, if the affiliation is 
disclosed to the parties and neither party 
objects. 
‘‘(D) PRACTICING HEALTH CARE PROFES-
SIONAL IN SAME FIELD.— 
‘‘(i) IN GENERAL.—In a dispute be-
fore an expert panel that involves treat-
ment, or the provision of items or serv-
ices— 
‘‘(I) by a physician, the medical 
experts on the expert panel shall be 
practicing physicians (allopathic or os-
teopathic) of the same or similar spe-
cialty as a physician who typically 
treats the condition, makes the diag-
nosis, or provides the type of treat-
ment under review; or 
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‘‘(II) by a health care profes-
sional other than a physician, at least 
two medical experts on the expert 
panel shall be practicing physicians 
(allopathic or osteopathic) of the same 
or similar specialty as the health care 
professional who typically treats the 
condition, makes the diagnosis, or 
provides the type of treatment under 
review, and, if determined appropriate 
by the State agency, an additional 
medical expert shall be a practicing 
health care professional (other than 
such a physician) of such a same or 
similar specialty. 
‘‘(ii) PRACTICING DEFINED.—In this 
paragraph, the term ‘practicing’ means, 
with respect to an individual who is a phy-
sician or other health care professional, 
that the individual provides health care 
services to individual patients on average 
at least 2 days a week. 
‘‘(E) PEDIATRIC EXPERTISE.—In the case 
of dispute relating to a child, at least 1 medical 
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expert on the expert panel shall have expertise 
described in subparagraph (D)(i) in pediatrics. 
‘‘(3) DETERMINATION.—After a review under 
paragraph (1), an expert panel shall make a deter-
mination as to the liability of the parties involved 
and compensation. 
‘‘(4) ACCEPTANCE.—If the parties to a dispute 
before an expert panel under this subsection accept 
the determination of the expert panel concerning li-
ability and compensation, such compensation shall 
be paid to the claimant and the claimant shall agree 
to forgo any further action against the health care 
providers involved. 
‘‘(5) FAILURE TO ACCEPT.—If any party de-
cides not to accept the expert panel’s determination, 
the matter shall be referred to an administrative 
health care tribunal created pursuant to this section. 
‘‘(e) ADMINISTRATIVE HEALTH CARE TRIBUNALS.— 
‘‘(1) IN GENERAL.—Upon the failure of any 
party to accept the determination of an expert panel 
under subsection (d), the parties shall have the right 
to request a hearing concerning the liability or com-
pensation involved by an administrative health care 
tribunal established by the State involved. 
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‘‘(2) REQUIREMENTS.—In establishing an ad-
ministrative health care tribunal under this section, 
a State shall— 
‘‘(A) ensure that such tribunals are pre-
sided over by special judges with health care ex-
pertise; 
‘‘(B) provide authority to such judges to 
make binding rulings, rendered in written deci-
sions, on standards of care, causation, com-
pensation, and related issues with reliance on 
independent expert witnesses commissioned by 
the tribunal; 
‘‘(C) establish gross negligence as the legal 
standard for the tribunal; 
‘‘(D) allow the admission into evidence of 
the recommendation made by the expert panel 
under subsection (d); and 
‘‘(E) provide for an appeals process to 
allow for review of decisions by State courts. 
‘‘(f) REVIEW BY STATE COURT AFTER EXHAUSTION 
OF ADMINISTRATIVE REMEDIES.— 
‘‘(1) RIGHT TO FILE.—If any party to a dispute 
before a health care tribunal under subsection (e) is 
not satisfied with the determinations of the tribunal, 
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the party shall have the right to file their claim in 
a State court of competent jurisdiction. 
‘‘(2) FORFEIT OF AWARDS.—Any party filing 
an action in a State court in accordance with para-
graph (1) shall forfeit any compensation award 
made under subsection (e). 
‘‘(3) ADMISSIBILITY.—The determinations of 
the expert panel and the administrative health care 
tribunal pursuant to subsections (d) and (e) with re-
spect to a State court proceeding under paragraph 
(1) shall be admissible into evidence in any such 
State court proceeding. 
‘‘(g) DEFINITION.—In this section, the term ‘health 
care provider’ has the meaning given such term for pur-
poses of part A of title VII. 
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated for any fiscal year such 
sums as may be necessary for purposes of making grants 
to States under this section.’’. 
SEC. 515. AFFIRMATIVE DEFENSE BASED ON COMPLIANCE 
WITH BEST PRACTICE GUIDELINES. 
(a) SELECTION AND ISSUANCE OF BEST PRACTICES 
GUIDELINES.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
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‘‘Secretary’’) shall provide for the selection and 
issuance of best practice guidelines (each in this sub-
section referred to as a ‘‘guideline’’) in accordance 
with paragraphs (2) and (3). 
(2) DEVELOPMENT PROCESS.—Not later than 
90 days after the date of the enactment of this Act, 
the Secretary shall enter into a contract with a 
qualified physician consensus-building organization 
(such as the Physician Consortium for Performance 
Improvement), in concert and agreement with physi-
cian specialty organizations, to develop guidelines for 
treatment of medical conditions for application 
under subsection (b). Under the contract, the orga-
nization shall take into consideration any endorsed 
performance-based quality measures described in 
section 802. Under the contract and not later than 
18 months after the date of the enactment of this 
Act, the organization shall submit best practice 
guidelines for issuance as guidelines under para-
graph (3). 
(3) ISSUANCE.— 
(A) IN GENERAL.—Not later than 2 years 
after the date of the enactment of this Act, the 
Secretary shall issue, by regulation, after notice 
and opportunity for public comment, guidelines 
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that have been recommended under paragraph 
(2) for application under subsection (b). 
(B) LIMITATION.—The Secretary may not 
issue guidelines unless they have been approved 
or endorsed by qualified physician consensus- 
building organization involved and physician 
specialty organizations. 
(C) DISSEMINATION.—The Secretary shall 
broadly disseminate the guidelines so issued. 
(b) LIMITATION ON DAMAGES.— 
(1) LIMITATION ON NONECONOMIC DAMAGES.— 
In any health care lawsuit, no noneconomic damages 
may awarded with respect to treatment that is with-
in a guideline issued under subsection (a). 
(2) LIMITATION
ON
PUNITIVE
DAMAGES.—In 
any health care lawsuit, no punitive damages may be 
awarded against a health care practitioner based on 
a claim that such treatment caused the claimant 
harm if— 
(A) such treatment was subject to the 
quality review by a qualified physician con-
sensus-building organization; 
(B) such treatment was approved in a 
guideline that underwent full review by such or-
ganization, public comment, approval by the 
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Secretary, and dissemination as described in 
subparagraph (a); and 
(C) such medical treatment is generally 
recognized among qualified experts (including 
medical providers and relevant physician spe-
cialty organizations) as safe, effective, and ap-
propriate. 
(c) USE.— 
(1) INTRODUCTION AS EVIDENCE.—Guidelines 
under subsection (a) may not be introduced as evi-
dence of negligence or deviation in the standard of 
care in any civil action unless they have previously 
been introduced by the defendant. 
(2) NO PRESUMPTION OF NEGLIGENCE.—There 
would be no presumption of negligence if a partici-
pating physician does not adhere to such guidelines. 
(d) CONSTRUCTION.—Nothing in this section shall be 
construed as preventing a State from— 
(1) replacing their current medical malpractice 
rules with rules that rely, as a defense, upon a 
health care provider’s compliance with a guideline 
issued under subsection (a); or 
(2) applying additional guidelines or safe-har-
bors that are in addition to, but not in lieu of, the 
guidelines issued under subsection (a). 
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SEC. 516. BAD DEBT DEDUCTION FOR DOCTORS TO PAR-
TIALLY OFFSET THE COST OF PROVIDING UN-
COMPENSATED CARE REQUIRED TO BE PRO-
VIDED UNDER AMENDMENTS MADE BY THE 
EMERGENCY 
MEDICAL 
TREATMENT 
AND 
LABOR ACT. 
(a) IN GENERAL.—Section 166 of the Internal Rev-
enue Code of 1986 (relating to bad debts) is amended by 
redesignating subsection (f) as subsection (g) and by in-
serting after subsection (e) the following new subsection: 
‘‘(f) BAD DEBT TREATMENT FOR DOCTORS TO PAR-
TIALLY OFFSET COST OF PROVIDING UNCOMPENSATED 
CARE REQUIRED TO BE PROVIDED.— 
‘‘(1) AMOUNT OF DEDUCTION.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the basis for determining the 
amount of any deduction for an eligible 
EMTALA debt shall be treated as being equal 
to the Medicare payment amount. 
‘‘(B) MEDICARE PAYMENT AMOUNT.—For 
purposes of subparagraph (A), the Medicare 
payment amount with respect to an eligible 
EMTALA debt is the fee schedule amount es-
tablished under section 1848 of the Social Secu-
rity Act for the physicians’ service (to which 
such debt relates) as if the service were pro-
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vided to an individual enrolled under part B of 
title XVIIII of such Act. 
‘‘(2) ELIGIBLE EMTALA DEBT.—For purposes 
of this section, the term ‘eligible EMTALA debt’ 
means any debt if— 
‘‘(A) such debt arose as a result of physi-
cians’ services— 
‘‘(i) which were performed in an 
EMTALA hospital by a board-certified 
physician (whether as part of medical 
screening or necessary stabilizing treat-
ment and whether as an emergency depart-
ment physician, as an on-call physician, or 
otherwise), and 
‘‘(ii) which were required to be pro-
vided under section 1867 of the Social Se-
curity Act (42 U.S.C. 1395dd), and 
‘‘(B) such debt is owed— 
‘‘(i) to such physician, or 
‘‘(ii) to an entity if— 
‘‘(I) such entity is a corporation 
and the sole shareholder of such cor-
poration is such physician, or 
‘‘(II) such entity is a partnership 
and any deduction under this sub-
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section with respect to such debt is al-
located to such physician or to an en-
tity described in subclause (I). 
‘‘(3) BOARD-CERTIFIED PHYSICIAN.—For pur-
poses of this subsection, the term ‘board-certified 
physician’ means any physician (as defined in sec-
tion 1861(r) of the Social Security Act (42 U.S.C. 
1395x(r)) who is certified by the American Board of 
Emergency Medicine or other appropriate medical 
specialty board for the specialty in which the physi-
cian practices, or who meets comparable require-
ments, as identified by the Secretary of the Treasury 
in consultation with Secretary of Health and Human 
Services. 
‘‘(4) OTHER
DEFINITIONS.—For purposes of 
this subsection— 
‘‘(A) EMTALA 
HOSPITAL.—The term 
‘EMTALA hospital’ means any hospital having 
a hospital emergency department which is re-
quired to comply with section 1867 of the So-
cial Security Act (42 U.S.C. 1395dd) (relating 
to examination and treatment for emergency 
medical conditions and women in labor). 
‘‘(B) PHYSICIANS’ SERVICES.—The term 
‘physicians’ services’ has the meaning given 
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such term in section 1861(q) of the Social Se-
curity Act (42 U.S.C. 1395x(q)).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to debts arising from services per-
formed in taxable years beginning after the date of the 
enactment of this Act. 
TITLE VI—WELLNESS AND 
PREVENTION 
SEC. 601. PROVIDING FINANCIAL INCENTIVES FOR TREAT-
MENT COMPLIANCE. 
(a) ERISA LIMITATION
ON
EXCEPTION
FOR 
WELLNESS PROGRAMS UNDER HIPAA DISCRIMINATION 
RULES.—Section 702(b)(2) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1182(b)(2)) is 
amended by adding after and below subparagraph (B) the 
following: 
‘‘In applying subparagraph (B), a group health plan 
(or a health insurance issuer with respect to health 
insurance coverage) may vary premiums and cost- 
sharing by up to 50 percent of the value of the bene-
fits under the plan (or coverage) based on participa-
tion (or lack of participation) in a standards-based 
wellness program.’’. 
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214 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to plan years beginning more 
than 1 year after the date of the enactment of this Act. 
TITLE VII—TRANSPARENCY AND 
INSURANCE REFORM MEASURES 
SEC. 701. RECEIPT AND RESPONSE TO REQUESTS FOR 
CLAIM INFORMATION. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act is amended by inserting after section 2713 the 
following new section: 
‘‘SEC. 2714. RECEIPT AND RESPONSE TO REQUESTS FOR 
CLAIM INFORMATION. 
‘‘(a) REQUIREMENT.— 
‘‘(1) IN GENERAL.—In the case of health insur-
ance coverage offered in connection with a group 
health plan, not later than the 30th day after the 
date a health insurance issuer receives a written re-
quest for a written report of claim information from 
the plan, plan sponsor, or plan administrator, the 
health insurance issuer shall provide the requesting 
party the report, subject to the succeeding provisions 
of this section. 
‘‘(2) EXCEPTION.—The health insurance issuer 
is not obligated to provide a report under this sub-
section regarding a particular employer or group 
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health plan more than twice in any 12-month period 
and is not obligated to provide such a report in the 
case of an employer with fewer than 50 employees. 
‘‘(3) DEADLINE.—A plan, plan sponsor, or plan 
administrator must request a report under this sub-
section before or on the second anniversary of the 
date of termination of coverage under a group health 
plan issued by the health insurance issuer. 
‘‘(b) FORM OF REPORT; INFORMATION TO BE IN-
CLUDED.— 
‘‘(1) IN GENERAL.—A health insurance issuer 
shall provide the report of claim information under 
subsection (a)— 
‘‘(A) in a written report; 
‘‘(B) through an electronic file transmitted 
by secure electronic mail or a file transfer pro-
tocol site; or 
‘‘(C) by making the required information 
available through a secure website or web portal 
accessible by the requesting plan, plan sponsor, 
or plan administrator. 
‘‘(2) INFORMATION TO BE INCLUDED.—A re-
port of claim information provided under subsection 
(a) shall contain all information available to the 
health insurance issuer that is responsive to the re-
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quest made under such subsection, including, subject 
to subsection (c), protected health information, for 
the 36-month period preceding the date of the report 
or the period specified by subparagraphs (D), (E), 
and (F) of paragraph (3), if applicable, or for the 
entire period of coverage, whichever period is short-
er. 
‘‘(3) REQUIRED
INFORMATION.—Subject to 
subsection (c), a report provided under subsection 
(a) shall include the following: 
‘‘(A) Aggregate paid claims experience by 
month, including claims experience for medical, 
dental, and pharmacy benefits, as applicable. 
‘‘(B) Total premium paid by month. 
‘‘(C) Total number of covered employees 
on a monthly basis by coverage tier, including 
whether coverage was for— 
‘‘(i) an employee only; 
‘‘(ii) an employee with dependents 
only; 
‘‘(iii) an employee with a spouse only; 
or 
‘‘(iv) an employee with a spouse and 
dependents. 
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217 
‘‘(D) The total dollar amount of claims 
pending as of the date of the report. 
‘‘(E) A separate description and individual 
claims report for any individual whose total 
paid claims exceed $15,000 during the 12- 
month period preceding the date of the report, 
including the following information related to 
the claims for that individual— 
‘‘(i) a unique identifying number, 
characteristic, or code for the individual; 
‘‘(ii) the amounts paid; 
‘‘(iii) dates of service; and 
‘‘(iv) applicable procedure codes and 
diagnosis codes. 
‘‘(F) For claims that are not part of the 
information described in a previous subpara-
graph, a statement describing precertification 
requests for hospital stays of 5 days or longer 
that were made during the 30-day period pre-
ceding the date of the report. 
‘‘(c) LIMITATIONS ON DISCLOSURE.— 
‘‘(1) IN GENERAL.—A health insurance issuer 
may not disclose protected health information in a 
report of claim information provided under this sec-
tion if the health insurance issuer is prohibited from 
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218 
disclosing that information under another State or 
federal law that imposes more stringent privacy re-
strictions than those imposed under federal law 
under the HIPAA privacy regulations. To withhold 
information in accordance with this subsection, the 
health insurance issuer must— 
‘‘(A) notify the plan, plan sponsor, or plan 
administrator requesting the report that infor-
mation is being withheld; and 
‘‘(B) provide to the plan, plan sponsor, or 
plan administrator a list of categories of claim 
information that the health insurance issuer has 
determined are subject to the more stringent 
privacy restrictions under another State or Fed-
eral law. 
‘‘(2) PROTECTION.—A plan sponsor is entitled 
to receive protected health information under sub-
paragraph (E) and (F) of subsection (b)(3) and sub-
section (d) only after an appropriately authorized 
representative of the plan sponsor makes to the 
health insurance issuer a certification substantially 
similar to the following certification: ‘I hereby certify 
that the plan documents comply with the require-
ments of section 164.504(f)(2) of title 45, Code of 
Federal Regulations, and that the plan sponsor will 
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219 
safeguard and limit the use and disclosure of pro-
tected health information that the plan sponsor may 
receive from the group health plan to perform the 
plan administration functions.’. 
‘‘(3) RESULTS.—A plan sponsor that does not 
provide the certification required by paragraph (2) is 
not entitled to receive the protected health informa-
tion described by subparagraphs (E) and (F) of sub-
section (b)(3) and subsection (d), but is entitled to 
receive a report of claim information that includes 
the information described by subparagraphs (A) 
through (D) of subsection (b)(3). 
‘‘(4) INFORMATION.—In the case of a request 
made under subsection (a) after the date of termi-
nation of coverage, the report must contain all infor-
mation available to the health insurance issuer as of 
the date of the report that is responsive to the re-
quest, including protected health information, and 
including the information described by subsection 
(b)(3), for the period described by subsection (b)(2) 
preceding the date of termination of coverage or for 
the entire policy period, whichever period is shorter. 
Notwithstanding this subsection, the report may not 
include the protected health information described 
by subparagraphs (E) and (F) of subsection (b)(3) 
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unless a certification has been provided in accord-
ance with paragraph (2). 
‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.— 
‘‘(1) REVIEW.—On receipt of the report re-
quired by subsection (a), the plan, plan sponsor, or 
plan administrator may review the report and, not 
later than the 10th day after the date the report is 
received, may make a written request to the health 
insurance issuer for additional information in ac-
cordance with this subsection for specified individ-
uals. 
‘‘(2) REQUEST.—With respect to a request for 
additional information concerning specified individ-
uals for whom claims information has been provided 
under subsection (b)(3)(E), the health insurance 
issuer shall provide additional information on the 
prognosis or recovery if available and, for individuals 
in active case management, the most recent case 
management information, including any future ex-
pected costs and treatment plan, that relate to the 
claims for that individual. 
‘‘(3) RESPONSE.—The health insurance issuer 
must respond to the request for additional informa-
tion under this subsection not later than the 15th 
day after the date of such request unless the re-
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221 
questing plan, plan sponsor, or plan administrator 
agrees to a request for additional time. 
‘‘(4) LIMITATION.—The health insurance issuer 
is not required to produce the report described by 
this subsection unless a certification has been pro-
vided in accordance with subsection (c)(2). 
‘‘(5) COMPLIANCE
WITH
SECTION
DOES
NOT 
CREATE LIABILITY.—A health insurance issuer that 
releases information, including protected health in-
formation, in accordance with this subsection has 
not violated a standard of care and is not liable for 
civil damages resulting from, and is not subject to 
criminal prosecution for, releasing that information. 
‘‘(e) LIMITATION ON PREEMPTION.—Nothing in this 
section is meant to limit States from enacting additional 
laws in addition to this, but not in lieu of. 
‘‘(f) DEFINITIONS.—In this section: 
‘‘(1) The terms ‘employer’, ‘plan administrator’, 
and ‘plan sponsor’ have the meanings given such 
terms in section 3 of the Employee Retirement In-
come Security Act of 1974. 
‘‘(2) The term ‘HIPAA privacy regulations’ has 
the meaning given such term in section 1180(b)(3) 
of the Social Security Act. 
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222 
‘‘(3) The term ‘protected health information’ 
has the meaning given such term under the HIPAA 
privacy regulations.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act. 
TITLE VIII—QUALITY 
SEC. 801. PROHIBITION ON CERTAIN USES OF DATA OB-
TAINED FROM COMPARATIVE EFFECTIVE-
NESS RESEARCH; ACCOUNTING FOR PERSON-
ALIZED MEDICINE AND DIFFERENCES IN PA-
TIENT TREATMENT RESPONSE. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, the Secretary of Health and Human Serv-
ices— 
(1) shall not use data obtained from the con-
duct of comparative effectiveness research, including 
such research that is conducted or supported using 
funds appropriated under the American Recovery 
and Reinvestment Act of 2009 (Public Law 111–5), 
to deny coverage of an item or service under a Fed-
eral health care program (as defined in section 
1128B(f) of the Social Security Act (42 U.S.C. 
1320a–7b(f))); and 
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(2) shall ensure that comparative effectiveness 
research conducted or supported by the Federal 
Government accounts for factors contributing to dif-
ferences in the treatment response and treatment 
preferences of patients, including patient-reported 
outcomes, genomics and personalized medicine, the 
unique needs of health disparity populations, and in-
direct patient benefits. 
(b) CONSULTATION
AND APPROVAL REQUIRED.— 
Nothing the Federal Coordinating Council for Compara-
tive Effectiveness Research finds can be released in final 
form until after consultation with and approved by rel-
evant physician specialty organizations. 
(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed as affecting the authority of the 
Commissioner of Food and Drugs under the Federal 
Food, Drug, and Cosmetic Act or the Public Health Serv-
ice Act. 
SEC. 
802. 
ESTABLISHMENT 
OF 
PERFORMANCE-BASED 
QUALITY MEASURES. 
Not later than January 1, 2010, the Secretary of 
Health and Human Services shall submit to Congress a 
proposal for a formalized process for the development of 
performance-based quality measures that could be applied 
to physicians’ services under the Medicare program. Such 
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224 
proposal shall be in concert and agreement with the Physi-
cian Consortium for Performance Improvement and shall 
only utilize measures agreed upon by each physician spe-
cialty organization. 
TITLE IX—STATE 
TRANSPARENCY PLAN PORTAL 
SEC. 901. PROVIDING INFORMATION ON HEALTH COV-
ERAGE OPTIONS AND HEALTH CARE PRO-
VIDERS. 
(a) STATE-BASED PORTAL.—A State (by itself or 
jointly with other States) may contract with a private enti-
ty to establish a Health Plan and Provider Portal website 
(referred to in this section as a ‘‘plan portal’’) for the pur-
poses of providing standardized information— 
(1) on health insurance plans that have been 
certified to be available for purchase in that State; 
and 
(2) on price and quality information on health 
care providers (including physicians, hospitals, and 
other health care institutions). 
(b) PILOT PROGRAM.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of the enactment of this Act the Secretary 
of Health and Human Services shall work with 
States to establish no later than 2011, consistent 
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with this title, a website that will serve as a pilot 
program for a national portal for information struc-
tured in a manner so individuals may directly link 
to the State plan portal for the State in which they 
reside. 
(2) CONTRACTS WITH STATE.—The Secretary 
shall enter into contracts with States, in a number 
and distribution determined by the Secretary, to de-
velop State plan portals that follow the applicable 
standards and regulations under this section. 
(3) COMMON
STANDARDS
FOR
PLAN
POR-
TALS.— 
(A) IN GENERAL.—In connection with such 
website, the Secretary shall establish standards 
for interoperability and consistency for State 
plan portals so that individuals can access and 
view information in a similar manner on plan 
portals of different States. Such standards shall 
include standard definitions for health insur-
ance plan benefits so that individuals can accu-
rately compare health insurance plans within 
such portals and standards for the inclusion of 
information described in subsection (c). 
(B) CONSULTATION.—The Secretary shall 
consult with a group consisting of a balanced 
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representation of the critical stakeholders (in-
cluding States, health insurance issuers, the 
National Association of Insurance Commis-
sioners, qualified health care provider-based en-
tities (including physicians, hospitals, and other 
health care institutions), and a standards devel-
opment organization) to develop such stand-
ards. 
(C) ISSUANCE.— 
(i) IN GENERAL.—Not later than 6 
months after the date of the enactment of 
this Act, the Secretary shall issue, by regu-
lation, after notice and opportunity for 
public comment, standards that are con-
sistent with the recommendations made by 
the group under subparagraph (B). 
(ii) DISSEMINATION.—The Secretary 
shall broadly disseminate the standards so 
issued. 
(D) REVIEW.—One year after the date of 
establishment of the pilot program under this 
subsection, the Secretary, in consultation with 
stakeholder group described in subparagraph 
(B), shall review the standards established and 
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make such changes in such standards as may 
be appropriate. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to the Sec-
retary such amounts as may be necessary for— 
(A) the development and operation of the 
national website under this subsection; and 
(B) contracts with States under paragraph 
(2) to assist in the development and initial op-
eration of plan portals in accordance with 
standards established under paragraph (3) and 
other applicable provisions of this section. 
(c) INFORMATION IN PLAN PORTALS.—The stand-
ards for plan portals under subsection (b)(3) shall include 
the following: 
(1) HEALTH INSURANCE INFORMATION.—Each 
plan portal shall meet the following requirements 
with respect to information on health insurance 
plans: 
(A) The plan portal shall present complete 
information on the costs and benefits of health 
insurance plans (including information on 
monthly premium, copayments, deductibles, and 
covered benefits) in a uniform manner that— 
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228 
(i) uses the standard definitions devel-
oped under subsection (b)(3); and 
(ii) is designed to allow consumers to 
easily compare such plans. 
(B) The plan portal shall be available on 
the internet and accessible to all individuals in 
the United States. 
(C) The plan portal shall allow consumers 
to search and sort data on the health insurance 
plans in the plan portal on criteria such as cov-
erage of specific benefits (such as coverage of 
disease management services or pediatric care 
services), as well as data available respecting 
quality of plans. 
(D) The plan portal shall meet all relevant 
State laws and regulations, including laws and 
regulations related to the marketing of insur-
ance products. 
(E) Notwithstanding subsection (d)(1), the 
plan portal shall provide information to individ-
uals who are eligible for the Medicaid program 
under title XIX of the Social Security Act or 
State Children’s Health Insurance Program 
under title XXI of such Act by including infor-
mation on options, eligibility, and how to enroll 
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229 
through providing a link to a website main-
tained with respect to such State programs. 
(F) The plan portal shall provide support 
to individuals who are eligible for tax credits 
and deductions under the amendments made by 
this Act to enhance such individual’s ability to 
access such credits and deductions. 
(G) The plan portal shall allow consumers 
to access quality data on providers as made 
available through a website described in section 
802 once that data is available. 
(2) PROVIDER INFORMATION.—Each plan por-
tal shall meet the following requirements with re-
spect to information on health care providers: 
(A) Identifying and licensure information. 
(B) Self-pay prices charged, including vari-
ation in such prices. 
For purposes of subparagraph (B), the term ‘‘self- 
pay price’’ means the price charged by a provider to 
individuals for items or services where the price is 
not established or negotiated through a health care 
program or third party. 
(3) TAX
CREDIT
AND
DEDUCTION
INFORMA-
TION.—Each plan portal shall also include informa-
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230 
tion on tax credits and deductions that may be avail-
able for purpose of qualified health plans. 
(4) INCLUSION
OF
QUALITY
INFORMATION.— 
The Secretary, after collaboration with States and 
health care providers (including practicing physi-
cians, hospitals, and other health care institutions), 
shall submit to Congress recommendations on how 
to include on plan portals information on perform-
ance-based quality measures obtained under section 
802. 
(d) PROHIBITIONS.— 
(1) DIRECT ENROLLMENT.—A plan portal may 
not directly enroll individuals in health insurance 
plans or under a State Medicaid plan or a State 
children’s health insurance plan. 
(2) CONFLICTS OF INTEREST.— 
(A) 
COMPANIES.—A 
health 
insurance 
issuer offering a health insurance plan through 
a plan portal may not— 
(i) be the private entity developing 
and maintaining a plan portal under this 
section; or 
(ii) have an ownership interest in such 
private entity or in the plan portal. 
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231 
(B) 
INDIVIDUALS.—An 
individual 
em-
ployed by a health insurance issuer offering a 
health insurance plan through a plan portal 
may not serve as a director or officer for— 
(i) the private entity developing and 
maintaining a plan portal under this sec-
tion; or 
(ii) the plan portal. 
(e) CONSTRUCTION.—Nothing in this section shall be 
construed to prohibit health insurance brokers and agents 
from— 
(1) utilizing the plan portal for any purpose; or 
(2) marketing or offering health insurance 
products. 
(f) STATE DEFINED.—In this section, the term 
‘‘State’’ has the meaning given such term for purposes of 
title XIX of the Social Security Act. 
TITLE X—PHYSICIAN PAYMENT 
REFORM 
SEC. 1001. SUSTAINABLE GROWTH RATE REFORM. 
(a) TRANSITIONAL
UPDATE
FOR
2010.—Section 
1848(d) of the Social Security Act (42 U.S.C. 1395w– 
4(d)) is amended by adding at the end the following new 
paragraph: 
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‘‘(10) UPDATE FOR 2010.—The update to the 
single conversion factor established in paragraph 
(1)(C) for 2010 shall be the percentage increase in 
the MEI (as defined in section 1842(i)(3)) for that 
year.’’. 
(b) REBASING SGR USING 2009; LIMITATION ON 
CUMULATIVE ADJUSTMENT PERIOD.—Section 1848(d)(4) 
of such Act (42 U.S.C. 1395w–4(d)(4)) is amended— 
(1) in subparagraph (B), by striking ‘‘subpara-
graph (D)’’ and inserting ‘‘subparagraphs (D) and 
(G)’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(G) REBASING USING 2009 FOR FUTURE 
UPDATE
ADJUSTMENTS.—In determining the 
update adjustment factor under subparagraph 
(B) for 2011 and subsequent years— 
‘‘(i) the allowed expenditures for 2009 
shall be equal to the amount of the actual 
expenditures for physicians’ services during 
2009; and 
‘‘(ii) the reference in subparagraph 
(B)(ii)(I) to ‘April 1, 1996’ shall be treat-
ed as a reference to ‘January 1, 2009 (or, 
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233 
if later, the first day of the fifth year be-
fore the year involved)’.’’. 
(c) LIMITATION
ON
PHYSICIANS’ SERVICES
IN-
CLUDED IN TARGET GROWTH RATE COMPUTATION TO 
SERVICES COVERED UNDER PHYSICIAN FEE SCHED-
ULE.—Effective for services furnished on or after January 
1, 2009, section 1848(f)(4)(A) of such Act is amended 
striking ‘‘(such as clinical’’ and all that follows through 
‘‘in a physician’s office’’ and inserting ‘‘for which payment 
under this part is made under the fee schedule under this 
section, for services for practitioners described in section 
1842(b)(18)(C) on a basis related to such fee schedule, 
or for services described in section 1861(p) (other than 
such services when furnished in the facility of a provider 
of services)’’. 
(d) 
ESTABLISHMENT
OF
SEPARATE
TARGET 
GROWTH RATES FOR CATEGORIES OF SERVICES.— 
(1) 
ESTABLISHMENT
OF
SERVICE
CAT-
EGORIES.—Subsection (j) of section 1848 of the So-
cial Security Act (42 U.S.C. 1395w–4) is amended 
by adding at the end the following new paragraph: 
‘‘(5) SERVICE CATEGORIES.—For services fur-
nished on or after January 1, 2009, each of the fol-
lowing categories of physicians’ services (as defined 
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234 
in paragraph (3)) shall be treated as a separate 
‘service category’: 
‘‘(A) Evaluation and management services 
that are procedure codes (for services covered 
under this title) for— 
‘‘(i) services in the category des-
ignated Evaluation and Management in the 
Health Care Common Procedure Coding 
System (established by the Secretary under 
subsection (c)(5) as of December 31, 2009, 
and as subsequently modified by the Sec-
retary); and 
‘‘(ii) preventive services (as defined in 
section 1861(iii)) for which payment is 
made under this section. 
‘‘(B) All other services not described in 
subparagraph (A). 
Service categories established under this paragraph 
shall apply without regard to the specialty of the 
physician furnishing the service.’’. 
(2) ESTABLISHMENT
OF
SEPARATE
CONVER-
SION
FACTORS
FOR
EACH
SERVICE
CATEGORY.— 
Subsection (d)(1) of section 1848 of the Social Secu-
rity Act (42 U.S.C. 1395w–4) is amended— 
(A) in subparagraph (A)— 
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(i) by designating the sentence begin-
ning ‘‘The conversion factor’’ as clause (i) 
with the heading ‘‘APPLICATION OF SIN-
GLE
CONVERSION
FACTOR.—’’ and with 
appropriate indentation; 
(ii) by striking ‘‘The conversion fac-
tor’’ and inserting ‘‘Subject to clause (ii), 
the conversion factor’’; and 
(iii) by adding at the end the fol-
lowing new clause: 
‘‘(ii) APPLICATION OF MULTIPLE CON-
VERSION
FACTORS
BEGINNING
WITH 
2011.— 
‘‘(I) IN
GENERAL.—In applying 
clause (i) for years beginning with 
2011, separate conversion factors 
shall be established for each service 
category of physicians’ services (as de-
fined in subsection (j)(5)) and any 
reference in this section to a conver-
sion factor for such years shall be 
deemed to be a reference to the con-
version factor for each of such cat-
egories. 
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236 
‘‘(II) INITIAL CONVERSION FAC-
TORS.—Such factors for 2011 shall be 
based upon the single conversion fac-
tor for the previous year multiplied by 
the update established under para-
graph (11) for such category for 
2011. 
‘‘(III) UPDATING
OF
CONVER-
SION
FACTORS.—Such factor for a 
service category for a subsequent year 
shall be based upon the conversion 
factor for such category for the pre-
vious year and adjusted by the update 
established for such category under 
paragraph (11) for the year in-
volved.’’; and 
(B) in subparagraph (D), by striking 
‘‘other physicians’ services’’ and inserting ‘‘for 
physicians’ services described in the service cat-
egory described in subsection (j)(5)(B)’’. 
(3) ESTABLISHING UPDATES FOR CONVERSION 
FACTORS
FOR
SERVICE
CATEGORIES.—Section 
1848(d) of the Social Security Act (42 U.S.C. 
1395w–4(d)), as amended by subsection (a), is 
amended— 
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237 
(A) in paragraph (4)(C)(iii), by striking 
‘‘The allowed’’ and inserting ‘‘Subject to para-
graph (11)(B), the allowed’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(11) UPDATES FOR SERVICE CATEGORIES BE-
GINNING WITH 2011.— 
‘‘(A) IN GENERAL.—In applying paragraph 
(4) for a year beginning with 2011, the fol-
lowing rules apply: 
‘‘(i) APPLICATION OF SEPARATE UP-
DATE ADJUSTMENTS FOR EACH SERVICE 
CATEGORY.—Pursuant 
to 
paragraph 
(1)(A)(ii)(I), the update shall be made to 
the conversion factor for each service cat-
egory (as defined in subsection (j)(5)) 
based upon an update adjustment factor 
for the respective category and year and 
the update adjustment factor shall be com-
puted, for a year, separately for each serv-
ice category. 
‘‘(ii) COMPUTATION OF ALLOWED AND 
ACTUAL EXPENDITURES BASED ON SERV-
ICE CATEGORIES.—In computing the prior 
year adjustment component and the cumu-
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238 
lative adjustment component under clauses 
(i) and (ii) of paragraph (4)(B), the fol-
lowing rules apply: 
‘‘(I) APPLICATION
BASED
ON 
SERVICE
CATEGORIES.—The allowed 
expenditures and actual expenditures 
shall be the allowed and actual ex-
penditures for the service category, as 
determined under subparagraph (B). 
‘‘(II) APPLICATION OF CATEGORY 
SPECIFIC
TARGET
GROWTH
RATE.— 
The growth rate applied under clause 
(ii)(II) of such paragraph shall be the 
target growth rate for the service cat-
egory involved under subsection (f)(5). 
‘‘(B) DETERMINATION
OF
ALLOWED
EX-
PENDITURES.—In applying paragraph (4) for a 
year beginning with 2010, notwithstanding sub-
paragraph (C)(iii) of such paragraph, the al-
lowed expenditures for a service category for a 
year is an amount computed by the Secretary 
as follows: 
‘‘(i) FOR 2010.—For 2010: 
‘‘(I) TOTAL
2009
ACTUAL
EX-
PENDITURES FOR ALL SERVICES IN-
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239 
CLUDED
IN
SGR
COMPUTATION
FOR 
EACH SERVICE CATEGORY.—Compute 
total actual expenditures for physi-
cians’ services (as defined in sub-
section (f)(4)(A)) for 2009 for each 
service category. 
‘‘(II) 
INCREASE
BY
GROWTH 
RATE TO OBTAIN 2010 ALLOWED EX-
PENDITURES
FOR
SERVICE
CAT-
EGORY.—Compute allowed expendi-
tures for the service category for 2010 
by increasing the allowed expenditures 
for the service category for 2009 com-
puted under subclause (I) by the tar-
get growth rate for such service cat-
egory under subsection (f) for 2010. 
‘‘(ii) FOR SUBSEQUENT YEARS.—For 
a subsequent year, take the amount of al-
lowed expenditures for such category for 
the preceding year (under clause (i) or this 
clause) and increase it by the target 
growth rate determined under subsection 
(f) for such category and year.’’. 
(4) 
APPLICATION
OF
SEPARATE
TARGET 
GROWTH RATES FOR EACH CATEGORY.— 
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240 
(A) IN GENERAL.—Section 1848(f) of the 
Social Security Act (42 U.S.C. 1395w–4(f)) is 
amended by adding at the end the following 
new paragraph: 
‘‘(5) APPLICATION
OF
SEPARATE
TARGET 
GROWTH RATES FOR EACH SERVICE CATEGORY BE-
GINNING WITH 2010.—The target growth rate for a 
year beginning with 2010 shall be computed and ap-
plied separately under this subsection for each serv-
ice category (as defined in subsection (j)(5)) and 
shall be computed using the same method for com-
puting the target growth rate except that the factor 
described in paragraph (2)(C) for— 
‘‘(A) the service category described in sub-
section (j)(5)(A) shall be increased by 0.02; and 
‘‘(B) the service category described in sub-
section (j)(5)(B) shall be increased by 0.01.’’. 
(B) USE OF TARGET GROWTH RATES.— 
Section 1848 of such Act is further amended— 
(i) in subsection (d)— 
(I) in paragraph (1)(E)(ii), by in-
serting ‘‘or target’’ after ‘‘sustain-
able’’; and 
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241 
(II) in paragraph (4)(B)(ii)(II), 
by inserting ‘‘or target’’ after ‘‘sus-
tainable’’; and 
(ii) in the heading of subsection (f), 
by inserting ‘‘AND
TARGET
GROWTH 
RATE’’ 
after 
‘‘SUSTAINABLE
GROWTH 
RATE’’; 
(iii) in subsection (f)(1)— 
(I) by striking ‘‘and’’ at the end 
of subparagraph (A); 
(II) in subparagraph (B), by in-
serting ‘‘before 2010’’ after ‘‘each 
succeeding year’’ and by striking the 
period at the end and inserting ‘‘; 
and’’; and 
(III) by adding at the end the 
following new subparagraph: 
‘‘(C) November 1 of each succeeding year 
the target growth rate for such succeeding year 
and each of the 2 preceding years.’’; and 
(iv) in subsection (f)(2), in the matter 
before subparagraph (A), by inserting after 
‘‘beginning with 2000’’ the following: ‘‘and 
ending with 2009’’. 
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258 
‘‘(A) fiscal year 2015, shall be the total 
DSH allotments that would otherwise be deter-
mined under this subsection for such fiscal year 
decreased by $1,500,000,000; 
‘‘(B) fiscal year 2016, shall be the total 
DSH allotments that would otherwise be deter-
mined under this subsection for such fiscal year 
decreased by $2,500,000,000; and 
‘‘(C) fiscal year 2017, shall be the total 
DSH allotments that would otherwise be deter-
mined under this subsection for such fiscal year 
decreased by $6,000,000,000.’’. 
(2) Section 1923(b)(4) of such Act (42 U.S.C. 
1396r–4(b)(4)) is amended by adding before the pe-
riod the following: ‘‘or to affect the authority of the 
Secretary to issue and implement the DSH Health 
Reform methodology under section 1704(b)(2) of the 
Siding with America’s Patients Act’’. 
(d) DISPROPORTIONATE SHARE HOSPITALS (DSH) 
AND ESSENTIAL ACCESS HOSPITAL (EAH) NON-DIS-
CRIMINATION.— 
(1) IN GENERAL.—Section 1923(d) of the So-
cial Security Act (42 U.S.C. 1396r–4) is amended 
by adding at the end the following new paragraph: 
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