payments, accountable care organizations, value- 
based purchasing, bundling of services, differential 
payment rates, performance or utilization based pay-
ments, partial capitation, and direct contracting with 
providers. Payment rates under such payment mech-
anisms and policies shall not be set at levels ex-
pected to increase average medical costs per enrollee 
covered under the public health insurance option be-
yond what would be expected if the process under 
paragraphs (1)(B) and (2)(A) of subsection (c) were 
continued, as certified by the Office of the Actuary 
of the Centers for Medicare & Medicaid Services. 
‘‘(2) REQUIREMENTS
FOR
INNOVATIVE
PAY-
MENTS.—The Secretary shall design and implement 
the payment mechanisms and policies under this 
subsection in a manner that— 
‘‘(A) seeks to— 
‘‘(i) improve health outcomes; 
‘‘(ii) reduce health disparities (includ-
ing racial, ethnic, and other disparities); 
‘‘(iii) provide efficient and affordable 
care; 
‘‘(iv) address geographic variation in 
the provision of health services; or 
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‘‘(v) prevent or manage chronic ill-
ness; and 
‘‘(B) promotes care that is integrated, pa-
tient-centered, high-quality, and efficient. 
‘‘(3) ENCOURAGING THE USE OF HIGH VALUE 
SERVICES.—To the extent allowed by the benefit 
standards applied to all health benefits plans partici-
pating under the Exchange involved, the public 
health insurance option may modify cost sharing and 
payment rates to encourage the use of services that 
promote health and value. 
‘‘(4) NON-UNIFORMITY
PERMITTED.—Nothing 
in this subtitle shall prevent the Secretary from 
varying payments based on different payment struc-
ture models (such as accountable care organizations 
and medical homes) under the public health insur-
ance option for different geographic areas. 
‘‘(e) PROVIDER PARTICIPATION.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish conditions of participation for health care pro-
viders under the public health insurance option. 
‘‘(2) LICENSURE OR CERTIFICATION.—The Sec-
retary shall not allow a health care provider to par-
ticipate in the public health insurance option unless 
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such provider is appropriately licensed or certified 
under State law. 
‘‘(3) PAYMENT TERMS FOR PROVIDERS.— 
‘‘(A) PHYSICIANS.—The Secretary shall 
provide for the annual participation of physi-
cians under the public health insurance option, 
for which payment may be made for services 
furnished during the year, in one of 2 classes: 
‘‘(i) PREFERRED PHYSICIANS.—Those 
physicians who agree to accept the pay-
ment rate established under this section 
(without regard to cost-sharing) as the 
payment in full. 
‘‘(ii) 
PARTICIPATING, 
NON-PRE-
FERRED
PHYSICIANS.—Those physicians 
who agree not to impose charges (in rela-
tion to the payment rate described in sub-
section (c) for such physicians) that exceed 
the 
ratio 
permitted 
under 
section 
1848(g)(2)(C) of the Social Security Act. 
‘‘(B) OTHER PROVIDERS.—The Secretary 
shall provide for the participation (on an annual 
or other basis specified by the Secretary) of 
health care providers (other than physicians) 
under the public health insurance option under 
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which payment shall only be available if the 
provider agrees to accept the payment rate es-
tablished under subsection (c) (without regard 
to cost-sharing) as the payment in full. 
‘‘(4) EXCLUSION
OF
CERTAIN
PROVIDERS.— 
The Secretary shall exclude from participation under 
the public health insurance option a health care pro-
vider that is excluded from participation in a Fed-
eral health care program (as defined in section 
1128B(f) of the Social Security Act). 
‘‘(f) APPLICATION OF FRAUD AND ABUSE PROVI-
SIONS.—Provisions of law (other than criminal law provi-
sions) identified by the Secretary by regulation, in con-
sultation with the Inspector General of the Department 
of Health and Human Services, that impose sanctions 
with respect to waste, fraud, and abuse under Medicare, 
such as the False Claims Act (31 U.S.C. 3729 et seq.), 
shall also apply to the public health insurance option. 
‘‘(g) MEDICARE DEFINED.—For purposes of this sec-
tion, the term ‘Medicare’ means the health insurance pro-
grams under title XVIII of the Social Security Act.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) 
TREATMENT
AS
QUALIFIED
HEALTH 
PLAN.—Section 1301(a)(2) of the Patient Protection 
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and Affordable Care Act, as amended by section 
10104(a) of such Act, is amended— 
(A) in the heading, by inserting ‘‘, THE 
PUBLIC
HEALTH
INSURANCE
OPTION,’’ before 
‘‘AND’’; and 
(B) by inserting ‘‘the public health insur-
ance option under section 1325,’’ before ‘‘and a 
multi-State plan’’. 
(2) LEVEL PLAYING FIELD.—Section 1324(a) 
of such Act, as amended by section 10104(n) of such 
Act, is amended by inserting ‘‘the public health in-
surance option under section 1325,’’ before ‘‘or a 
multi-State qualified health plan’’. 
Æ 
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