Public Option Deficit Reduction Act
Bill: H.R.2010 | Sponsor: Rep. DeFazio, Peter A. (D-OR)
Policy area: Health

Summary:
Public Option Deficit Reduction Act
This bill requires the Department of Health and Human Services (HHS) to offer a public health insurance option through health insurance exchanges. Unlike the coverage options currently available on exchanges, which are administered by private insurance companies, this public option must be administered directly by HHS. The public option must comply with the same general requirements as other plan types available on exchanges, including with respect to available benefits, benefit levels, provider networks, notices, consumer protections, and cost sharing. Medicare health care providers are automatically participants in the public option unless they opt out, and providers not participating in Medicare may opt in. In addition, the bill establishes requirements for setting premiums, payment rates, and provider incentives. The bill provides funding to establish the public health insurance option, which HHS must repay over 10 years.

To amend the Patient Protection and Affordable Care Act to establish a 
                    public health insurance option.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Public Option Deficit Reduction 
Act''.

SEC. 2. PUBLIC HEALTH INSURANCE OPTION.

    (a) In General.--Part 3 of subtitle D of title I of the Patient 
Protection and Affordable Care Act (Public Law 111-148) is amended by 
adding at the end the following new section:

``SEC. 1325. PUBLIC HEALTH INSURANCE OPTION.

    ``(a) Establishment and Administration of a Public Health Insurance 
Option.--
            ``(1) Establishment.--For years beginning with 2022, the 
        Secretary of Health and Human Services (in this subtitle 
        referred to as the `Secretary') shall provide for the offering 
        through Exchanges established under this title of a health 
        benefits plan (in this Act referred to as the `public health 
        insurance option') that ensures choice, competition, and 
        stability of affordable, high-quality coverage throughout the 
        United States in accordance with this section. In designing the 
        option, the Secretary's primary responsibility is to create a 
        low-cost plan without compromising quality or access to care.
            ``(2) Offering through exchanges.--
                    ``(A) Exclusive to exchanges.--The public health 
                insurance option shall only be made available through 
                Exchanges established under this title.
                    ``(B) Ensuring a level playing field.--Consistent 
                with this section, the public health insurance option 
                shall comply with requirements that are applicable 
                under this title to health benefits plans offered 
                through such Exchanges, including requirements related 
                to benefits, benefit levels, provider networks, 
                notices, consumer protections, and cost sharing.
                    ``(C) Provision of benefit levels.--The public 
                health insurance option--
                            ``(i) shall offer bronze, silver, and gold 
                        plans; and
                            ``(ii) may offer platinum plans.
            ``(3) Administrative contracting.--The Secretary may enter 
        into contracts for the purpose of performing administrative 
        functions (including functions described in subsection (a)(4) 
        of section 1874A of the Social Security Act) with respect to 
        the public health insurance option in the same manner as the 
        Secretary may enter into contracts under subsection (a)(1) of 
        such section. The Secretary has the same authority with respect 
        to the public health insurance option as the Secretary has 
        under subsections (a)(1) and (b) of section 1874A of the Social 
        Security Act with respect to title XVIII of such Act. Contracts 
        under this subsection shall not involve the transfer of 
        insurance risk to such entity.
            ``(4) Ombudsman.--The Secretary shall establish an office 
        of the ombudsman for the public health insurance option which 
        shall have duties with respect to the public health insurance 
        option similar to the duties of the Medicare Beneficiary 
        Ombudsman under section 1808(c)(2) of the Social Security Act. 
        In addition, such office shall work with States to ensure that 
        information and notice is provided that the public health 
        insurance option is one of the health plans available through 
        an Exchange.
            ``(5) Data collection.--The Secretary shall collect such 
        data as may be required to establish premiums and payment rates 
        for the public health insurance option and for other purposes 
        under this section, including to improve quality and to reduce 
        racial, ethnic, and other disparities in health and health 
        care.
            ``(6) Access to federal courts.--The provisions of Medicare 
        (and related provisions of title II of the Social Security Act) 
        relating to access of Medicare beneficiaries to Federal courts 
        for the enforcement of rights under Medicare, including with 
        respect to amounts in controversy, shall apply to the public 
        health insurance option and individuals enrolled under such 
        option under this title in the same manner as such provisions 
        apply to Medicare and Medicare beneficiaries.
    ``(b) Premiums and Financing.--
            ``(1) Establishment of premiums.--
                    ``(A) In general.--The Secretary shall establish 
                geographically adjusted premium rates for the public 
                health insurance option--
                            ``(i) in a manner that complies with the 
                        premium rules under paragraph (3); and
                            ``(ii) at a level sufficient to fully 
                        finance the costs of--
                                    ``(I) health benefits provided by 
                                the public health insurance option; and
                                    ``(II) administrative costs related 
                                to operating the public health 
                                insurance option.
                    ``(B) Contingency margin.--In establishing premium 
                rates under subparagraph (A), the Secretary shall 
                include an appropriate amount for a contingency margin.
            ``(2) Account.--
                    ``(A) Establishment.--There is established in the 
                Treasury of the United States an account for the 
                receipts and disbursements attributable to the 
                operation of the public health insurance option, 
                including the start-up funding under subparagraph (B). 
                Section 1854(g) of the Social Security Act shall apply 
                to receipts described in the previous sentence in the 
                same manner as such section applies to payments or 
                premiums described in such section.
                    ``(B) Start-up funding.--
                            ``(i) In general.--In order to provide for 
                        the establishment of the public health 
                        insurance option there is hereby appropriated 
                        to the Secretary, out of any funds in the 
                        Treasury not otherwise appropriated, 
                        $2,000,000,000. In order to provide for initial 
                        claims reserves before the collection of 
                        premiums, there is hereby appropriated to the 
                        Secretary, out of any funds in the Treasury not 
                        otherwise appropriated, such sums as necessary 
                        to cover 90 days worth of claims reserves based 
                        on projected enrollment.
                            ``(ii) Amortization of start-up funding.--
                        The Secretary shall provide for the repayment 
                        of the start-up funding provided under clause 
                        (i) to the Treasury in an amortized manner over 
                        the 10-year period beginning with 2022.
                            ``(iii) Limitation on funding.--Nothing in 
                        this subsection shall be construed as 
                        authorizing any additional appropriations to 
                        the account, other than such amounts as are 
                        otherwise provided with respect to other health 
                        benefits plans participating under the Exchange 
                        involved.
            ``(3) Insurance rating rules.--The premium rate charged for 
        the public health insurance option may not vary except as 
        provided under section 2701 of the Public Health Service Act.
    ``(c) Payment Rates for Items and Services.--
            ``(1) Rates established by secretary.--
                    ``(A) In general.--The Secretary shall establish 
                payment rates for the public health insurance option 
                for services and health care providers consistent with 
                this subsection and may change such payment rates in 
                accordance with subsection (d).
                    ``(B) Initial payment rules.--
                            ``(i) In general.--During 2022, 2023, and 
                        2024, the Secretary shall set the payment rates 
                        under this subsection for services and 
                        providers described in subparagraph (A) equal 
                        to the payment rates for equivalent services 
                        and providers under parts A and B of Medicare, 
                        subject to clause (ii), paragraphs (2)(A) and 
                        (4), and subsection (d).
                            ``(ii) Exceptions.--
                                    ``(I) Practitioners' services.--
                                Payment rates for practitioners' 
                                services otherwise established under 
                                the fee schedule under section 1848 of 
                                the Social Security Act shall be 
                                applied without regard to the 
                                provisions under subsection (f) of such 
                                section and the update under subsection 
                                (d)(4) under such section for a year as 
                                applied under this paragraph shall be 
                                not less than 1 percent.
                                    ``(II) Adjustments.--The Secretary 
                                may determine the extent to which 
                                Medicare adjustments applicable to base 
                                payment rates under parts A and B of 
                                Medicare for graduate medical education 
                                and disproportionate share hospitals 
                                shall apply under this section.
                    ``(C) For new services.--The Secretary shall modify 
                payment rates described in subparagraph (B) in order to 
                accommodate payments for services, such as well-child 
                visits, that are not otherwise covered under Medicare.
                    ``(D) Prescription drugs.--Payment rates under this 
                subsection for prescription drugs that are not paid for 
                under part A or part B of Medicare shall be at rates 
                negotiated by the Secretary.
            ``(2) Incentives for participating providers.--
                    ``(A) Initial incentive period.--
                            ``(i) In general.--The Secretary shall 
                        provide, in the case of services described in 
                        clause (ii) furnished during 2022, 2023, and 
                        2024, for payment rates that are 5 percent 
                        greater than the rates established under 
                        paragraph (1).
                            ``(ii) Services described.--The services 
                        described in this clause are items and 
                        professional services, under the public health 
                        insurance option by a physician or other health 
                        care practitioner who participates in both 
                        Medicare and the public health insurance 
                        option.
                            ``(iii) Special rules.--A pediatrician and 
                        any other health care practitioner who is a 
                        type of practitioner that does not typically 
                        participate in Medicare (as determined by the 
                        Secretary) shall also be eligible for the 
                        increased payment rates under clause (i).
                    ``(B) Subsequent periods.--Beginning with 2025 and 
                for subsequent years, the Secretary shall continue to 
                use an administrative process to set such rates in 
                order to promote payment accuracy, to ensure adequate 
                beneficiary access to providers, and to promote 
                affordability and the efficient delivery of medical 
                care consistent with subsection (a)(1). Such rates 
                shall not be set at levels expected to increase average 
                medical costs per enrollee covered under the public 
                health insurance option beyond what would be expected 
                if the process under paragraph (1)(B) and subparagraph 
                (A) were continued, as certified by the Office of the 
                Actuary of the Centers for Medicare & Medicaid 
                Services.
                    ``(C) Establishment of a provider network.--Health 
                care providers participating under Medicare are 
                participating providers in the public health insurance 
                option unless they opt out in a process established by 
                the Secretary.
            ``(3) Administrative process for setting rates.--Chapter 5 
        of title 5, United States Code, shall apply to the process for 
        the initial establishment of payment rates under this 
        subsection but not to the specific methodology for establishing 
        such rates or the calculation of such rates.
            ``(4) Construction.--Nothing in this section shall be 
        construed as limiting the Secretary's authority to correct for 
        payments that are excessive or deficient, taking into account 
        the provisions of subsection (a)(1) and any appropriate 
        adjustments based on the demographic characteristics of 
        enrollees covered under the public health insurance option, but 
        in no case shall the correction of payments under this 
        paragraph result in a level of expenditures per enrollee that 
        exceeds the level of expenditures that would have occurred 
        under paragraphs (1)(B) and (2)(A), as certified by the Office 
        of the Actuary of the Centers for Medicare & Medicaid Services.
            ``(5) Construction.--Nothing in this section shall be 
        construed as affecting the authority of the Secretary to 
        establish payment rates, including payments to provide for the 
        more efficient delivery of services, such as the initiatives 
        provided for under subsection (d).
            ``(6) Limitations on review.--There shall be no 
        administrative or judicial review of a payment rate or 
        methodology established under this subsection or under 
        subsection (d).
    ``(d) Modernized Payment Initiatives and Delivery System Reform.--
            ``(1) In general.--For plan years beginning with 2022, the 
        Secretary may utilize innovative payment mechanisms and 
        policies to determine payments for items and services under the 
        public health insurance option. The payment mechanisms and 
        policies under this subsection may include patient-centered 
        medical home and other care management payments, accountable 
        care organizations, value-based purchasing, bundling of 
        services, differential payment rates, performance or 
        utilization based payments, partial capitation, and direct 
        contracting with providers. Payment rates under such payment 
        mechanisms and policies shall not be set at levels expected to 
        increase average medical costs per enrollee covered under the 
        public health insurance option beyond 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 payments.--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 (including 
                        racial, ethnic, and other disparities);
                            ``(iii) provide efficient and affordable 
                        care;
                            ``(iv) address geographic variation in the 
                        provision of health services; or
                            ``(v) prevent or manage chronic illness; 
                        and
                    ``(B) promotes care that is integrated, patient-
                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 participating 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 structure models (such as accountable care 
        organizations and medical homes) under the public health 
        insurance option for different geographic areas.
    ``(e) Provider Participation.--
            ``(1) In general.--The Secretary shall establish conditions 
        of participation for health care providers under the public 
        health insurance option.
            ``(2) Licensure or certification.--The Secretary shall not 
        allow a health care provider to participate in the public 
        health insurance option unless 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 physicians 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 payment rate 
                        established under this section (without regard 
                        to cost sharing) as the payment in full.
                            ``(ii) Participating, non-preferred 
                        physicians.--Those physicians who agree not to 
                        impose charges (in relation to the payment rate 
                        described in subsection (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 which payment shall only be 
                available if the provider agrees to accept the payment 
                rate established 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 provider that is excluded from 
        participation in a Federal health care program (as defined in 
        section 1128B(f) of the Social Security Act).
    ``(f) Application of Fraud and Abuse Provisions.--Provisions of law 
(other than criminal law provisions) identified by the Secretary by 
regulation, in consultation 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 section, the term 
`Medicare' means the health insurance programs 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 and Affordable Care Act is amended--
                    (A) in the heading, by inserting ``, the public 
                health insurance option,'' before ``and''; and
                    (B) by inserting ``the public health insurance 
                option under section 1325,'' before ``and a multi-State 
                plan''.
            (2) Level playing field.--Section 1324(a) of such Act is 
        amended by inserting ``the public health insurance option under 
        section 1325,'' before ``or a multi-State qualified health 
        plan''.
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