[House Report 111-330] [From the U.S. Government Publishing Office] 111th Congress Report HOUSE OF REPRESENTATIVES 1st Session 111-330 ====================================================================== PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 3962) TO PROVIDE AFFORDABLE, QUALITY HEALTH CARE FOR ALL AMERICANS AND REDUCE THE GROWTH IN HEALTH CARE SPENDING, AND FOR OTHER PURPOSES, AND PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 3961) TO AMEND TITLE XVIII OF THE SOCIAL SECURITY ACT TO REFORM THE MEDICARE SGR PAYMENT SYSTEM FOR PHYSICIANS _______ November 7, 2009 (legislative day of November 6, 2009).--Referred to the House Calendar and ordered to be printed _______ Ms. Slaughter, from the Committee on Rules, submitted the following R E P O R T [To accompany H. Res. 903] The Committee on Rules, having had under consideration House Resolution 903, by a record vote of 6 to 4, report the same to the House with the recommendation that the resolution be adopted. SUMMARY OF PROVISIONS OF THE RESOLUTION The resolution provides for consideration of H.R. 3962, the Affordable Health Care for America Act, under a structured rule. The resolution provides four hours of debate in the House to be equally divided and controlled by the chair and ranking minority member of the Committee on Energy and Commerce, the chair and ranking minority member of the Committee on Ways and Means, and the chair and ranking minority member of the Committee on Education and Labor. The resolution waives all points of order against consideration of the bill except for clauses 9 and 10 of rule XXI. The resolution provides that the amendment printed in part A of this report, perfected by the modification printed in part B of this report, shall be considered as adopted. The resolution waives all points of order against provisions of the bill, as amended and provides that the bill, as amended, shall be considered as read. The resolution makes in order the further amendment printed in part C of this report if offered by Representative Stupak of Michigan or his designee, which shall be in order without intervention of any point of order except those arising under clause 9 of rule XXI, shall be considered as read, shall be separately debatable for 20 minutes equally divided and controlled by the proponent and an opponent, and shall not be subject to a demand for a division of the question. The resolution makes in order the further amendment in the nature of a substitute printed in part D of this report, if offered by Representative Boehner of Ohio or his designee, which shall be in order without intervention of any point of order, shall be considered as read, and shall be separately debatable for one hour equally divided and controlled by the proponent and an opponent. The resolution provides one motion to recommit with or without instructions, which shall be considered as read. The resolution provides that during consideration of an amendment printed in this report, the Chair may postpone the question of adoption as though under clause 8 of rule XX. The resolution also provides for consideration of H.R. 3961, the Medicare Physician Payment Reform Act of 2009 under a closed rule. The rule provides one hour of debate equally divided and controlled by the chair and ranking minority member of the Committee on Energy and Commerce. The resolution waives all points of order against consideration of the bill except for clauses 9 and 10 of rule XXI, and provides that the bill shall be considered as read. The rule waives all points of order against provisions of the bill. The resolution provides one motion to recommit with or without instructions. The resolution provides that in the engrossment of H.R. 3961, the Clerk shall add the text of H.R. 2920, as passed by the House, as new matter at the end of H.R. 3961. EXPLANATION OF WAIVERS Although the rule waives all points of order against consideration of H.R. 3962 (except for clauses 9 and 10 of rule XXI) and all points of order against provisions of H.R. 3962, as amended, the Committee is not aware of any points of order. The waivers of all points of order are prophylactic. Although the rule waives all points of order against consideration of H.R. 3961 (except for clauses 9 and 10 of rule XXI) and all points of order against H.R. 3961, the Committee is not aware of any points of order. The waivers of all points of order are prophylactic. COMMITTEE VOTES The results of each record vote on an amendment or motion to report, together with the names of those voting for and against, are printed below: Rules Committee record vote No. 264 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Dreier. Summary of motion: To postpone vote on final passage on H.R. 3962 until 72 hours after the rule has been filed, so that Members have an opportunity to review last minute changes to the bill and Manager's Amendment. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 265 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Dreier. Summary of motion: To double the amount of debate time to 8 hours. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 266 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Dreier. Summary of motion: To make in order all amendments submitted to the Rules Committee for H.R. 3962. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 267 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Dreier. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Barton (TX), #67, which would add a group of amendments that were accepted at the Committee on Energy and Commerce's full committee markup and were stripped from H.R. 3962 and not included in the managers amendment to H.R. 3962. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 268 Date: November 7, 2009 (Legislative Day of November 06, 2009). Measure: H.R. 3962. Motion by: Mr. Lincoln Diaz-Balart of Florida. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Rogers (MI), #144, which would strike all the Medicare cuts contained in H.R. 3962. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 269 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Lincoln Diaz-Balart of Florida. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Barrett (SC), #142, which would strike the section in the bill that eliminates the nontaxable reimbursements of over-the-counter medication from health savings accounts-HSAs, HRAs, and FSAs. Basically this bill weakens HSAs. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 270 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Lincoln Diaz-Balart of Florida. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Brady (TX), #91, which would block the implementation of sections of HR 3962, including reductions to the Medicare program, in any geographic area unless the Secretary of HHS certifies that implementation will not result in: rationing of health care services; reduced health care services for seniors; longer patient wait times; or reduced availability of health care providers participating in the Medicare program. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 271 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Lincoln Diaz-Balart of Florida. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Reichert (WA), #116, which this amendment would create a hardship exemption from the employer mandate if its compliance would result in the employer laying off employees, reducing employee wages, or prevent the hiring of new employees. The amendment requires the Treasury Department to establish documentation to verify such hardship. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 272 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Sessions. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Fleming (LA) and Rep. Wilson (SC) and Rep. Scalise (LA) and Rep. Herger (CA) and Rep. Gingrey (GA), #1, which would automatically enroll all Members of Congress and all Senators in the public option. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 273 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Sessions. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Hastings (WA), #34, which would strike Section 1156 of the bill, which prohibits the expansion of physician-owned hospitals. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 274 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Sessions. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Price (GA), #115, which strikes Sec. 2401 and inserts language establishing best practice guidelines. It places limitations on noneconomic damages and punitive damages in a health care lawsuit in cases in which treatments are based on these practices. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 275 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Sessions. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Sessions (TX), #190, which would not allow any of the provisions of this bill to be implemented if the OMB, in consultation with the Department of Labor find that 4 million jobs will be lost as a result of this bill. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 276 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Sessions. Summary of motion: To make in order and provide the necessary waivers for an amendment that would prohibit the criminal penalties that provide a $25,000 fine and up to 1 year in prison to a $250,000 fine and up to 5 years in prison for not complying with the individual mandate if offered by Rep Sessions or a designee. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 277 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Dr. Foxx. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Foxx (NC), #203, which would direct the Secretary of Health and Human Services to extend for two years the reclassification in effect during fiscal year 2009 for hospitals whose Medicare Geographic Classification Review Board reclassification changed from fiscal year 2009 to fiscal year 2010 or ended as of September 30, 2009. The affected hospitals would have 20 days from enactment and publication of this provision to notify the Secretary of their decision to extend their fiscal 2009 reclassification. This is a temporary extension; any Medicare Geographic Classification Review Board reclassification that these hospitals have or will obtain for fiscal years beyond the two year extension will remain valid. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 278 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Dr. Foxx. Summary of motion: To make in order and provide appropriate waivers for the following amendments to be considered and separately debatable for ten minutes: an amendment by Rep. Deal (GA) and Rep. Wilson (SC) and Rep. Johnson (TX) and Rep. Heller (NV), #56--since the operation of the Health Insurance Exchange will be funded with taxpayer dollars, this amendment will limit participation in the Exchange to U.S. citizens and members of one of the nine groups of qualified aliens that are eligible for Medicaid. To enforce this requirement, the Health Choices Commissioner must verify that all applicants to purchase an Exchange-participating plan are qualified based on citizenship or qualified alien status, and it requires the Commissioner to verify the identity of all applicants using the same process used in Medicaid. The amendment also incorporates the five-year waiting period for new legal permanent residents that was created by the welfare reform legislation in 1996; and an amendment by Rep. Deal (GA) and Rep. Wilson (SC) and Rep. Johnson (TX) and Rep. Heller (NV), #60, which would require the Health Choices Commissioner to verify that all applicants for Affordability Credits are U.S. citizens (or members of one of the nine groups of qualified aliens that are eligible for Medicaid) and would require the Commissioner to verify the applicant's identity using the same identity verification process the DRA required for Medicaid applicants. The amendment also would incorporate the five-year waiting period for new legal permanent residents that was created by the welfare reform legislation in 1996; and an amendment by Rep. King (IA), #130, which would require that beneficiaries of the insurance exchange provide proof of their citizenship. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 279 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Dr. Foxx. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Price (GA), #114, which would add language protecting the private right to contract between individuals and health care providers. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 280 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Dr. Foxx. Summary of motion: To make in order and provide appropriate waivers for an amendment by Rep. Paulsen (MN) and Rep. Lance (NJ) and Rep. Gerlach (PA), #35, which would remove the medical innovation tax and replaces it with unobligated stimulus funds. Results: Defeated 4-6. Vote by Members: McGovern--Nay; Hastings (FL)--Nay; Cardoza--Nay; Arcuri--Nay; Perlmutter--Nay; Polis--Nay; Dreier--Yea; Diaz-Balart, L.--Yea; Sessions--Yea; Foxx--Yea. Rules Committee record vote No. 281 Date: November 7, 2009 (Legislative Day of November 6, 2009). Measure: H.R. 3962. Motion by: Mr. Hastings of Florida. Summary of motion: To report the rule. Results: Adopted 6-4. Vote by Members: McGovern--Yea; Hastings (FL)--Yea; Cardoza--Yea; Arcuri--Yea; Perlmutter--Yea; Polis--Yea; Dreier--Nay; Diaz-Balart, L.--Nay; Sessions--Nay; Foxx--Nay. SUMMARY OF AMENDMENT IN PART A TO BE CONSIDERED AS ADOPTED Dingell (MI)--Would allow the Secretary to work with states that have alternative programs to state high risk pools as a part of the new temporary insurance program. It would provide that if the premiums of a retiree increase by an excessive amount, as determined by the Secretary, on or before the bill's introduction date (October 29, 2009), then such retiree is eligible for the high-risk pool. It prohibits undocumented individuals from accessing assistance from the national high risk pool program with requirements for verification of citizenship or lawful presence. It establishes a process for the review and public disclosure of health insurance premium increases and justifications by the Secretary of Health and Human Services and states. It permits the Commissioner to take into consideration excessive and unjustified premium increases in making decisions regarding which insurance companies will be permitted into the exchange and how quickly to open the exchange to employers for the purchase of insurance for their employees and provides funding for states for this process. It clarifies that the consumer collaborative provided for in the early access health grants is a nonprofit business collaborative. It provides that the new Commissioner may permit a qualified health benefits plan to provide coverage through a qualified direct primary care medical home plan. The FTC may investigate insurance companies that are registered as not-for- profit companies. It clarifies that nothing in the Act overrides a state law governing medical malpractice cases. It repeals the McCarran-Ferguson Act insurance antitrust exemption with respect to health insurers and medical malpractice insurance. It imposes performance assessment and accountability measures on the Health Choices Administration. It provides that those women receiving Medicaid assistance only for family planning services would be eligible for the Health Insurance Exchange. It ensures that the interstate insurance compacts do not override state laws governing rate review and fraud and that compacting states determine which of the compacting state's laws serve as primary for the insurance company. It extends the Maryland all-payor cost containment waiver to the public option. It delays by 2 years a provision of the bill that eliminates the deductibility of expenses that relate to retiree prescription drug benefits that are subsidized by the federal government. It replaces a provision in the bill that delays the application of worldwide allocation of interest with a provision that deletes the allocation rule. It closes a biofuel tax credit loophole. It changes from January 1, 2010, to April 1, 2010, the effective date for Skilled Nursing Facilities classification changes. It permits approval for expansion of certain hospitals that have a high percentage of Medicaid admissions. States may agree to reimburse long-term care facilities for costs incurred in conducting background checks. It imposes quality indicators for Alzheimer's care. It imposes a 90-day wait period for new durable medical equipment suppliers to be paid if the Secretary believes there is a risk for fraud. It requires that the Medicare fraud and abuse phone number be prominently displayed on Explanation of Benefits forms. It provides for Medicaid coverage of Compact of Free Association migrants. It includes a sense of Congress regarding Medicaid coverage of community-based attendant services and supports. It includes technical appropriations provisions. It provides that the medical malpractice demonstration projects do not preempt or modify state laws on attorneys' fee limits or damage caps. It provides for a new program on mental health and substance abuse screening, intervention, referral, and recovery services. It codifies the Office of Minority Health. It requires HHS to study and eliminate any duplicative programs. It provides for diabetes screening collaboration and outreach. It also includes changes to the Indian health provisions. SUMMARY OF THE MODIFICATION IN PART B The revision modifies the biofuel tax credit provision in the manager's amendment. Second, it would authorize HHS grants to assist in acquiring or developing medical schools in areas in need of medical professionals. The recipient would have to prove it has substantial non-federal funds to develop the medical school. It authorizes $100 million a year for five years. Third, it would modify provisions relating to FTC enforcement authority in patent settlement cases. Finally, it authorizes HHS to establish a demonstration program to make incentive payments for public health workers to work in areas with health professional shortages. The revision would authorize such sums as are necessary for five years. SUMMARY OF AMENDMENT IN PART C TO BE MADE IN ORDER Stupak (MI), Ellsworth (IN), Pitts (PA), Smith, Christopher (NJ), Kaptur (OH), Dahlkemper (PA)--The amendment codifies the Hyde Amendment in H.R. 3962. The amendment will prohibit federal funds for abortion services in the public option. It also prohibits individuals who receive affordability credits from purchasing a plan that provides elective abortions. However, it allows individuals, both who receive affordability credits and who do not, to separately purchase with their own funds plans that cover elective abortions. It also clarifies that private plans may still offer elective abortions. (20 minutes) SUMMARY OF AMENDMENT IN THE NATURE OF A SUBSTITUTE IN PART D TO BE MADE IN ORDER Boehner (OH) Substitute--Creates Universal Access Programs that expand and reform high-risk pools and reinsurance programs to guarantee that all Americans, regardless of pre-existing conditions or past illnesses, have access to affordable care-- while lowering costs for all Americans. It prevents insurers from unjustly canceling a policy or instituting annual or lifetime spending caps. The amendment puts in place medical liability reforms and gives small businesses the power to pool together and offer health care at lower prices. In addition, the legislation provides incentive payments to states that reduce premiums and the number of uninsured. The bill allows Americans living in one state to shop for coverage and purchase insurance in another. The legislation explicitly prohibits all Federal funds, whether they are authorized funds or appropriated funds, from being used to pay for abortion. The amendment creates new incentives to save for future and long- term care needs by allowing qualified participants to use HSAs to pay premiums. (one hour) PART A--TEXT OF THE AMENDMENT TO BE CONSIDERED AS ADOPTED Page 17, add at the end of line 10 the following: ``For a State without a high-risk pool program, the Secretary may work with the State to coordinate with other forms of coverage expansions, such as State public-private partnerships.''. Page 17, line 12, insert after ``means an individual'' the following: ``who meets the requirements of subsection (i)(1)''. Page 18, line 8, strike ``or''. Page 18, line 13, strike the period and insert ``; or''. Page 18, after line 13, insert the following: (4) who on or after October 29, 2009, had employment- based retiree health coverage (as defined in subsection (i)) and the annual increase in premiums for such individual under such coverage (for any coverage period beginning on or after such date) exceeds such excessive percentage as the Secretary shall specify. Page 19, line 23, insert ``, consistent with subsection (i)(2),'' after ``attest''. Page 26, after line 21, insert the following new subsections: (i) Application and Verification of Requirement of Citizenship or Lawful Presence in the United States.-- (1) Requirement.--No individual shall be an eligible individual under this section unless the individual is a citizen or national of the United States or is lawfully present in a State in the United States (other than as a nonimmigrant described in a subparagraph (excluding subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) of the Immigration and Nationality Act). (2) Application of verification process for affordability credits.--The provisions of paragraphs (4) (other than subparagraphs (F) and (H)(i)) and (5)(A) of section 341(b), and of subsections (v) (other than paragraph (3)) and (x) of section 205 of the Social Security Act, shall apply to the verification of eligibility of an eligible individual by the Secretary (or by a State agency approved by the Secretary) for benefits under this section in the same manner as such provisions apply to the verification of eligibility of an affordable credit eligible individual for affordability credits by the Commissioner under section 341(b). The agreement referred to in section 205(v)(2)(A) of the Social Security Act (as applied under this paragraph) shall also provide for funding, to be payable from the amount made available under subsection (h)(1), to the Commissioner of Social Security in such amount as is agreed to by such Commissioner and the Secretary. (j) Employment-based Retiree Health Coverage.--In this section, the term ``employment-based retiree health coverage'' means health insurance or other coverage of health care costs (whether provided by voluntary insurance coverage or pursuant to statutory or contractual obligation) for individuals (or for such individuals and their spouses and dependents) under a group health plan based on their status as retired participants in such plan. Page 31, strike lines 17 through 24 and insert the following: SEC. 104. SUNSHINE ON PRICE GOUGING BY HEALTH INSURANCE ISSUERS. (a) Initial Premium Review Process.-- (1) In general.--The Secretary of Health and Human Services, in conjunction with States, shall establish a process for the annual review, beginning with 2010 and subject to subsection (c)(3)(A), of increases in premiums for health insurance coverage. (2) Justification and disclosure.-- Such process shall require health insurance issuers to submit a justification for any premium increase prior to implementation of the increase. Such issuers shall prominently post such information on their websites. The Secretary shall ensure the public disclosure of information on such increases and justifications for all health insurance issuers. (b) Continuing Premium Review Process.-- (1) Informing commissioner of premium increase patterns.--As a condition of receiving a grant under subsection (c)(1), a State, through its Commissioner of Insurance, shall-- (A) provide the Health Choices Commissioner with information about trends in premium increases in health insurance coverage in premium rating areas in the State; and (B) make recommendations, as appropriate, to such Commissioner about whether particular health insurance issuers should be excluded from participation in the Health Insurance Exchange based on a pattern of excessive or unjustified premium increases. (2) Commissioner authority regarding exchange participation.--In making determinations concerning entering into contracts with QHBP offering entities for the offering of Exchange-participating health plans under section 304, the Commissioner shall take into account the information and recommendations provided under paragraph (1). (3) Monitoring by commissioner of premium increases.-- (A) In general.--Beginning in 2014, the Commissioner, in conjunction with the States and in place of the monitoring by the Secretary under subsection (a)(1) and consistent with the provisions of subsection (a)(2), shall monitor premium increases of health insurance coverage offered inside the Health Insurance Exchange under section 304 and outside of the Exchange. (B) Consideration in opening exchange.--In determining under section 302(e)(4) whether to make additional larger employers eligible to participate in the Health Insurance Exchange, the Commissioner shall take into account any excess of premium growth outside the Exchange as compared to the rate of such growth inside the Exchange, including information reported by the States. (c) Grants in Support of Process.-- (1) Premium review grants during 2010 through 2014.-- The Secretary shall carry out a program of grants to States during the 5-year period beginning with 2010 to assist them in carrying out subsection (a), including-- (A) in reviewing and, if appropriate under State law, approving premium increases for health insurance coverage; and (B) in providing information and recommendations to the Commissioner under subsection (b)(1). (2) Funding.-- (A) In general.--Out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary $1,000,000,000, to be available for expenditure for grants under paragraph (1) and subparagraph (B). (B) Further availability for insurance reform and consumer protection grants.--If the amounts appropriated under subparagraph (A) are not fully obligated under grants under paragraph (1) by the end of 2014, any remaining funds shall remain available to the Secretary for grants to States for planning and implementing the insurance reforms and consumer protections under title II. (C) Allocation.--The Secretary shall establish a formula for determining the amount of any grant to a State under this subsection. Under such formula-- (i) the Secretary shall consider the number of plans of health insurance coverage offered in each State and the population of the State; and (ii) no State qualifying for a grant under paragraph (1) shall receive less than $1,000,000, or more than $5,000,000 for a grant year. Page 39, line 4, insert ``Affordable Health Care for America Act'' after ``section 211 of the''. Page 52, line 20, strike ``annual or''. Page 74, line 3, strike ``Business'' and insert ``Not-for- profit business''. Page 90, after line 22, insert the following: (d) Treatment of Qualified Direct Primary Care Medical Home Plans.--The Commissioner may permit a qualified health benefits plan to provide coverage through a qualified direct primary care medical home plan so long as the qualified health benefits plan meets all requirements that are otherwise applicable and the services covered by the medical home plan are coordinated with the QHBP offering entity. Page 97, line 19, strike ``222(d)(4)(A)'' and insert ``222(e)(4)(A)''. Page 114, line 22 and page 118, line 21, strike ``subsection (d)'' and insert ``subsection (e)''. Page 149, lines 8 and 12, strike ``the business of'' each place it appears. Page 149, line 9, strike ``such authority'' and insert ``the Commission's authority''. Page 149, beginning on line 12, strike ``without regard to whether the entity or entities that is the subject of such studies, reports, or information is a for-profit or not-for- profit entity'' and insert ``without regard to whether the subject of such studies, reports, or information is for-profit or not-for-profit''. Page 150, after line 17, insert the following: (c) Savings Clause for State Medical Malpractice Laws.-- Nothing in this Act or the amendments made by this Act shall be construed to modify or impair State law governing legal standards or procedures used in medical malpractice cases, including the authority of a State to make or implement such law. Page 150, strike line 20 and all that follows through page 152, line 13, and insert the following: (a) Amendment to McCarran-Ferguson Act.--Section 3 of the Act of March 9, 1945 (15 U.S.C. 1013), commonly known as the McCarran-Ferguson Act, is amended by adding at the end the following: ``(c)(1) Except as provided in paragraph (2), nothing contained in this Act shall modify, impair, or supersede the operation of any of the antitrust laws with respect to the business of health insurance or the business of medical malpractice insurance. ``(2) Paragraph (1) shall not apply to-- ``(A) collecting, compiling, classifying, or disseminating historical loss data; ``(B) determining a loss development factor applicable to historical loss data; or ``(C) performing actuarial services if doing so does not involve a restraint of trade. ``(3) For purposes of this subsection-- ``(A) the term `antitrust laws'' has the meaning given it in subsection (a) of the first section of the Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act to the extent that such section 5 applies to unfair methods of competition; ``(B) the term `historical loss data' means information respecting claims paid, or reserves held for claims reported, by any person engaged in the business of insurance; and ``(C) the term `loss development factor' means an adjustment to be made to the aggregate of losses incurred during a prior period of time that have been paid, or for which claims have been received and reserves are being held, in order to estimate the aggregate of the losses incurred during such period that will ultimately be paid.''. Page 154, after line 18, insert the following (and conform the table of contents of division A accordingly): SEC. 264. PERFORMANCE ASSESSMENT AND ACCOUNTABILITY: APPLICATION OF GPRA. (a) Application of GPRA.--Section 306 of title 5, United States Code, and sections 1115, 1116, 1117, and 9703 of title 31 of such Code (originally enacted by the Government Performance and Results Act of 1993, Public Law 103-62) apply to the executive agencies established by this Act, including the Health Choices Administration. Under such section 306, each such executive agency is required to provide for a strategic plan every 3 years. (b) Improving Consumer Service and Streamlining Procedures.-- Every 3 years each such executive agency shall-- (1)(A) assess the quality of customer service provided, (B) develop a strategy for improving such service, and (C) establish standards for high-quality customer service; and (2)(A) identify redundant rules, regulations, and procedures, and(B) develop and implement a plan for eliminating or streamlining such redundancies. Page 156, line 16, insert ``certain'' before ``other''. Page 159, line 22, strike ``or (aa)'' and insert ``(aa), or (hh)''. Page 171, line 10, strike ``plan'' and insert ``plans''. Page 171, line 15, strike ``222(d)(4)'' and insert ``222(e)(4)''. Page 171, lines 19 and 21, strike ``222(d)(4)(A)'' and ``222(d)(4)(B)'' and insert ``222(e)(4)(A)'' and ``222(e)(4)(B)'', respectively. Page 171, line 24, strike ``222(d)(4)(A)'' and insert ``222(e)(4)(A)''. Page 203, line 3, strike ``request'' and insert ``consult with''. Page 203, line 5, insert ``not later than January 1, 2014,'' after ``to develop''. Page 203, line 6, strike ``NAIC'' and insert ``Secretary''. Page 203, line 7, strike ``the Secretary,''. Page 203, line 13, strike ``health insurance issuer'' and insert ``compacting States''. Page 203, line 18, strike ``address'' and insert ``enforce law relating to''. Page 203, line 24, strike ``and''. Page 203, after line 25, insert the following: (H) rate review; and (I) fraud. Page 204, strike lines 10 through 16 and redesignate succeeding subsections accordingly. Page 217, after line 12, insert the following: (4) Treatment of certain state waivers.--In the case of any State operating a cost-containment waiver for health care providers in accordance with section 1814(b)(3) of the Social Security Act, the Secretary shall provide for payment to such providers under the public health insurance option consistent with the provisions and requirements of that waiver. Page 242, line 15, insert ``program'' after ``save''. Page 243, line 3, strike ``though'' and insert ``through''. Page 246, line 14, strike ``222(d)(4)(A)'' and insert ``222(e)(4)(A)''. Page 258, line 13, strike ``302(d)(2)'' and insert ``302(d)(4)''. Page 281, line 8; page 286, line 25; and page 294, lines 3 and 18, insert ``Affordable Health Care for America Act'' after ``of the''. Page 301, line 16; page 303, lines 6 and 10; page 310, lines 10 and 16; page 328, lines 3 and 9; page 329, line 14; page 330, lines 18 and 23, insert ``Affordable Health Care for America Act'' after ``of the'' each place it appears. Page 327, line 13, strike ``December 31, 2010'' and insert ``December 31, 2012''. Page 343, line 4, insert ``and'' after ``device,''. Page 345, strike line 20 and all that follows through page 346, line 2, and insert the following (and conform the table of contents of division A accordingly): SEC. 554. REPEAL OF WORLDWIDE ALLOCATION OF INTEREST. (a) In General.--Section 864 of the Internal Revenue Code of 1986 is amended by striking subsection (f) and by redesignating subsection (g) as subsection (f). (b) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2010. Page 346, after line 2, add the following (and conform the table of contents of division A accordingly): SEC. 555. SECOND GENERATION BIOFUEL PRODUCER CREDIT. (a) Credit Amount Determined Based on BTU Content of Fuel.-- Subparagraph (B) of section 40(b)(6) of the Internal Revenue Code of 1986 is amended to read as follows: ``(B) Applicable amount.--For purposes of this paragraph-- ``(i) In general.--The term `applicable amount' means, with respect to any type of second generation biofuel, the dollar amount which bears the same ratio to $1.01 as the BTU content of such type of fuel bears to the BTU content of ethanol. For purposes of the preceding sentence, the types of second generation biofuel and the BTU content of such types shall be determined in accordance with the table prescribed under clause (ii). ``(ii) BTU content determined by secretary.--The Secretary, after consultation with the Secretary of Energy, shall prescribe a table which lists the types of second generation biofuel and the BTU content of each such type. ``(iii) Coordination with alcohol credits.--In the case of second generation biofuel which is alcohol, the applicable amount determined under clause (i) shall be reduced by the sum of-- ``(I) the amount of the credit in effect for such alcohol under subsection (b)(1) (without regard to subsection (b)(3)) at the time of the qualified second generation biofuel production, plus ``(II) in the case of ethanol, the amount of the credit in effect under subsection (b)(4) at the time of such production.''. (b) Expansion of Qualified Fuels.-- (1) In general.--Subclause (I) of section 40(b)(6)(E)(i) of such Code is amended to read as follows: ``(I) is derived solely from qualified feedstocks, and''. (2) Qualified feedstock.--Paragraph (6) of section 40(b) of such Code is amended by redesignating subparagraphs (F), (G) and (H) as subparagraphs (G), (H), and (I), respectively, and by inserting after subparagraph (E) the following new subparagraph: ``(F) Qualified feedstock.--For purposes of this paragraph, the term `qualified feedstock' means-- ``(i) any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis, and ``(ii) any cultivated algae, cyanobacteria, or lemna.''. (3) Conforming amendments.-- (A) Section 40 of such Code is amended-- (i) by striking ``cellulosic biofuel'' each place it appears in the text thereof and inserting ``second generation biofuel'', (ii) by striking ``Cellulosic'' in the headings of subsections (b)(6), (b)(6)(E), and (d)(3)(D) and inserting ``Second generation'', and (iii) by striking ``cellulosic'' in the headings of subsections (b)(6)(C), (b)(6)(D), (b)(6)(F), (d)(6), and (e)(3) and inserting ``second generation''. (B) Clause (iii) of section 40(b)(6)(E) of such Code, as redesignated by paragraph (2), is amended by striking ``Such term shall not'' and inserting ``The term `second generation biofuel' shall not''. (C) Paragraph (1) of section 4101(a) of such Code is amended by striking ``cellulosic biofuel'' and inserting ``second generation biofuel''. (c) Exclusion of Fuels Produced From Coprocessing With Nonqualified Feedstocks.--Subparagraph (E) of section 40(b)(6) of such Code is amended by adding at the end the following new clause: ``(iii) Exclusion of fuels produced from coprocessing with nonqualified feedstocks.--The term `second generation biofuel' shall not include any fuel derived from coprocessing a qualified feedstock with any feedstock which is not a qualified feedstock.''. (d) Exclusion of Unprocessed Fuels.--Subparagraph (E) of section 40(b)(6) of such Code, as amended by subsection (c), is amended by adding at the end the following new clause: ``(iv) Exclusion of unprocessed fuels.--The term `second generation biofuel' shall not include any fuel if-- ``(I) more than 4 percent of such fuel (determined by weight) is any combination of water and sediment, or ``(II) the ash content of such fuel is more than 1 percent (determined by weight).''. (e) Liquid Fuel Defined.-- (1) In general.--Paragraph (6) of section 40(b) of such Code, as amended by subsection (b), is amended by redesignating subparagraphs (G), (H), and (I) as subparagraphs (H), (I), and (J), respectively, and by inserting after subparagraph (F) the following new subparagraph: ``(G) Liquid fuel.--The term `liquid fuel' shall not include any fuel unless such fuel would be a liquid at room temperature after extraction of all water from the fuel.''. (2) Application to alcohol mixture credit.--Paragraph (2) of section 40(d) of such Code is amended by inserting ``, within the meaning of subsection (b)(6)(G),'' after ``liquid fuel (other than gasoline)''. (3) Application to renewable diesel.--Paragraph (3) of section 40A(f) of such Code is amended by inserting ``(within the meaning of section 40(b)(6)(G))'' after ``liquid fuel''. (f) Registration of Fuels.--Subparagraph (I) of section 40(b)(6) of such Code, as redesignated by subsections (b) and (e), is amended to read as follows: ``(I) Registration requirements.--No credit shall be determined under this paragraph with respect to any second generation biofuel produced by the taxpayer unless-- ``(i) such taxpayer is registered with the Secretary as a producer of second generation biofuel under section 4101, and ``(ii) such taxpayer provides the Secretary such information with respect to such second generation biofuel as the Secretary may (after consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency) require, including-- ``(I) the type of such second generation biofuel, ``(II) the feedstocks from which such second generation biofuel is derived, and ``(III) the BTU content of such second generation biofuel.''. (g) Application of Biofuel Reforms to Bonus Depreciation for Biofuel Plant Property.-- (1) In general.--Subparagraph (A) of section 168(l)(2) of such Code is amended by striking ``solely to produce cellulosic biofuel'' and inserting ``solely to produce second generation biofuel (as defined in section 40(b)(6)(E)''. (2) Conforming amendments.--Subsection (l) of section 168 of such Code is amended-- (A) by striking ``cellulosic biofuel'' each place it appears in the text thereof and inserting ``second generation biofuel'', (B) by striking paragraph (3) and redesignating paragraphs (4) through (8) as paragraphs (3) through (7), respectively, (C) by striking ``Cellulosic'' in the heading of such subsection and inserting ``Second Generation'', and (D) by striking ``cellulosic'' in the heading of paragraph (2) and inserting ``second generation''. (h) Effective Date.-- (1) In general.--Except as provided in paragraph (2), the amendments made by this section shall apply to fuels sold or used after the date of the enactment of this Act. (2) Application to bonus depreciation.--The amendments made by subsection (g) shall apply to property placed in service after the date of the enactment of this Act. (3) Temporary rule for determining credit amount based on btu content of fuel.--With respect to any fuel sold or used after the date of the enactment of this Act and before the date on which the Secretary prescribes the table described in clause (ii) of section 40(b)(6)(B) of the Internal Revenue Code of 1986 (as amended by this Act), clause (i) of such section shall be applied by treating all second generation biofuel as though it were ethanol. Page 381, beginning on line 17, strike ``proposed rule'' and all that follows through ``(74 Federal Register 22214 et seq.)'' and insert ``final rule for Medicare skilled nursing facilities issued by such Secretary on August 11, 2009 (74 Federal Register 40287 et seq.)''. Page 382, line 11, strike ``January 1, 2010'' and insert ``April 1, 2010''. Page 493, line 1, insert ``a hospital described in subparagraph (F) or'' after ``only to''. Page 494, after line 8, insert the following subparagraph (and redesignate subparagraphs (F) through (H) as subparagraphs (G) through (I), respectively): ``(F) Special rule for a high medicaid facility.--A hospital described in this subparagraph is a hospital that-- ``(i) with respect to each of the 3 most recent cost reporting periods for which data are available, has an annual percent of total inpatient admissions that represent inpatient admissions under the program under title XIX that is determined by the Secretary to be greater than such percent with respect to such admissions for any other hospital located in the county in which the hospital is located; and ``(ii) meets the conditions described in clauses (iii) and (vi) of subparagraph (E). Page 828, after and below line 3, insert the following: ``Under such an agreement a State may agree to cover and reimburse each long-term care facility or provider for all costs attributable to conducting background checks and screening described in this subsection that were not otherwise required to be conducted by such long-term care facility or provider before the enactment of this subsection, except that Federal funding with respect to such reimbursement shall be limited to the amount made available to the State from funds under subsection (b)(1).''. Page 828, after and below line 15, insert the following: ``Under such an agreement a State may agree to cover and reimburse each long-term care facility or provider for all costs attributable to conducting background checks and screening described in this subsection that were not otherwise required to be conducted by such long-term care facility or provider before the enactment of this subsection, except that Federal funding with respect to such reimbursement shall be limited to the amount made available to the State from funds under subsection (b)(1).''. Page 888, line 14, insert a period after the closing quotation marks. Page 888, after line 14, insert the following (and conform the table of contents of division B accordingly): SEC. 1446. QUALITY INDICATORS FOR CARE OF PEOPLE WITH ALZHEIMER'S DISEASE. (a) Quality Indicators.--The Secretary of Health and Human Services shall develop quality indicators for the provision of medical services to people with Alzheimer's disease and other dementias and a plan for implementing the indicators to measure the quality of care provided for people with these conditions by physicians, hospitals, and other appropriate providers of services and suppliers. (b) Report.--The Secretary shall submit a report to the Committees on Energy and Commerce and Ways and Means of the United States House of Representatives and to the Committees on Finance and Health, Education, Labor, and Pensions of the United States Senate not later than 24 months after the date of the enactment of this Act setting forth the status of their efforts to implement the requirements of subsection (a). Page 970, after line 6, insert the following paragraph (and redesignate paragraph (5) as paragraph (6)): ``(5) 90-day period of enhanced oversight for initial claims of dme suppliers.--For periods beginning after January 1, 2011, if the Secretary determines under paragraph (1) that there is a significant risk of fraudulent activity among suppliers of durable medical equipment, in the case of a supplier of durable medical equipment who is within a category or geographic area under title XVIII identified pursuant to such determination and who is initially enrolling under such title, the Secretary shall, notwithstanding section 1842(c)(2), withhold payment under such title with respect to durable medical equipment furnished by such supplier during the 90-day period beginning on the date of the first submission of a claim under such title for durable medical equipment furnished by such supplier.''. Page 1010, after line 14, add the following new section: SEC. 1654. DISCLOSURE OF MEDICARE FRAUD AND ABUSE HOTLINE NUMBER ON EXPLANATION OF BENEFITS. (a) In General.--Section 1804 of the Social Security Act (42 U.S.C. 1395b-2) is amended by adding at the end the following new subsection: ``(d) Any statement or notice containing an explanation of the benefits available under this title, including the notice required by subsection (a), distributed for periods after July 1, 2011, shall prominently display in a manner prescribed by the Secretary a separate toll-free telephone number maintained by the Secretary for the receipt of complaints and information about waste, fraud, and abuse in the provision or billing of services under this title.''. (b) Conforming Amendments.--Section 1804(c) of the Social Security Act (42 U.S.C. 1395b-2(c)) is amended-- (1) in paragraph (2), by adding ``and'' at the end; (2) in paragraph (3), by striking ``; and'' and inserting a period; and (3) by striking paragraph (4). Page 1010, strike line 16 and all that follows through page 1012 before line 1 (and conform the table of contents of division B accordingly). Page 1017, line 6, strike ``subclause'' and insert ``subclauses''. Page 1017, line 24, strike ``over 5, and''. Page 1018, line 2, insert ``, (IV) (insofar as it relates to subsection (l)(1)(B)), (VI),'' after ``(I)''. Page 1048, line 14, strike ``section'' before ``subsection''. Page 1082, line 25, insert after ``Palau'' the following: ``and shall not apply, at the option of the Governor of Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa as communicated to the Secretary of Health and Human Services in writing, to any individual who lawfully resides in the respective territory in accordance with such Compacts''. Page 1092, after line 4, insert the following (and conform the table of contents of division B accordingly): SEC. 1739A. SENSE OF CONGRESS REGARDING COMMUNITY FIRST CHOICE OPTION TO PROVIDE MEDICAID COVERAGE OF COMMUNITY-BASED ATTENDANT SERVICES AND SUPPORTS. It is the sense of Congress that States should be allowed to elect under their Medicaid State plans under title XIX of the Social Security Act to implement a Community First Choice Option under which-- (1) coverage of community-based attendant services and supports furnished in homes and communities is available, at an individual's option, to individuals who would otherwise qualify for Medicaid institutional coverage under the respective State plan; (2) such supports and services include assistance to individuals with disabilities in accomplishing activities of daily living, instrumental activities of daily living, and health-related tasks; (3) the Federal matching assistance percentage (FMAP) under such title for medical assistance for such supports and services is enhanced; (4) States, consistent with minimum federal standards, ensure quality of such supports and services; and (5) States collect and provide data to the Secretary of Health and Human Services on the cost and effectiveness and quality of supports and services provided through such option. Page 1107, line 12, strike ``may payments'' and insert ``make payments''. Page 1215, line 18, through page 1216, line 18, amend subparagraph (A) to read as follows: (A) In general.--Amounts in the Fund are authorized to be appropriated (as described in paragraph (1)) for a fiscal year only if (excluding any amounts in or appropriated from the Fund) the amounts specified in subparagraph (B) for the fiscal year involved are equal to or greater than the amounts specified in subparagraph (B) for fiscal year 2008. Page 1216, line 21, strike ``the amounts appropriated'' and insert ``the amounts appropriated (excluding any amounts in or appropriated from the Fund)''. Page 1218, lines 4 and 5, strike ``appropriated'' and insert ``made available''. Page 1286, line 19, through page 1287, line 8, strike subsection (a) and insert the following: ``(a) Deposits Into Trust.--There is established a Prevention and Wellness Trust. There are authorized to be appropriated to the Trust, out of any monies in the Public Health Investment Fund-- ``(1) for fiscal year 2011, $2,400,000,000; ``(2) for fiscal year 2012, $2,845,000,000; ``(3) for fiscal year 2013, $3,100,000,000; ``(4) for fiscal year 2014, $3,455,000,000; and ``(5) for fiscal year 2015, $3,600,000,000. Page 1287, line 14, strike ``subsection (a)(2)'' and insert ``subsection (a)''. Page 1432, after line 15, insert the following: (5) No limitation on other state laws.--Nothing in this section shall be construed to-- (A) preempt or modify the application of any existing State law that limits attorneys' fees or imposes caps on damages; (B) impair the authority of a State to establish or implement a law limiting attorneys' fees or imposing caps on damages; or (C) restrict the eligibility of a State for an incentive payment under this section on the basis of a law described in subparagraph (A) or (B) so long as any such law is not established or implemented as part of the law described in paragraph (4), as determined by the Secretary. Page 1467, after line 6, insert the following (and conform the table of contents for division C accordingly): SEC. 2538. SCREENING, BRIEF INTERVENTION, REFERRAL, AND TREATMENT FOR MENTAL HEALTH AND SUBSTANCE ABUSE DISORDERS. Part D of title V (42 U.S.C. 290dd et seq.) is amended by adding at the end the following: ``SEC. 544. SCREENING, BRIEF INTERVENTION, REFERRAL, AND TREATMENT FOR MENTAL HEALTH AND SUBSTANCE ABUSE DISORDERS. ``(a) Program.--The Secretary, acting through the Administrator, shall establish a program (consisting of awarding grants, contracts, and cooperative agreements under subsection (b)) on mental health and substance abuse screening, brief intervention, referral, and recovery services for individuals in primary health care settings. ``(b) Use of Funds.--The Secretary may award grants to, or enter into contracts or cooperative agreements with, entities-- ``(1) to provide mental health and substance abuse screening, brief interventions, referral, and recovery services; ``(2) to coordinate these services with primary health care services in the same program and setting; ``(3) to develop a network of facilities to which patients may be referred if needed; ``(4) to purchase needed screening and other tools that are-- ``(A) necessary for providing these services; and ``(B) supported by evidence-based research; and ``(5) to maintain communication with appropriate State mental health and substance abuse agencies. ``(c) Eligibility.--To be eligible for a grant, contract, or cooperative agreement under this section, an entity shall be a public or private nonprofit entity that-- ``(1) provides primary health services; ``(2) seeks to integrate mental health and substance abuse services into its service system; ``(3) has developed a working relationship with providers of mental health and substance abuse services; ``(4) demonstrates a need for the inclusion of mental health and substance abuse services in its service system; and ``(5) agrees-- ``(A) to prepare and submit to the Secretary at the end of the grant, contract, or cooperative agreement period an evaluation of all activities funded through the grant, contract, or cooperative agreement; and ``(B) to use such performance measures as may be stipulated by the Secretary for purposes of such evaluation. ``(d) Preference.--In awarding grants, contracts, and cooperative agreements under this section, the Secretary shall give preference to entities that-- ``(1) provide services in rural or frontier areas of the Nation; ``(2) provide services to special needs populations, including American Indian or Alaska Native populations; or ``(3) provide services in school-based health clinics or on university and college campuses. ``(e) Duration.--The period of a grant, contract, or cooperative agreement under this section may not exceed 5 years. ``(f) Report.--Not later than 4 years after the first appropriation of funds to carry out this section, the Secretary shall submit a report to the Congress on the program under this section-- ``(1) including an evaluation of the benefits of integrating mental health and substance abuse care within primary health care; and ``(2) focusing on the performance measures stipulated by the Secretary under subsection (c)(5). ``(g) Authorization of Appropriations.-- ``(1) In general.--To carry out this section, there are authorized to be appropriated $30,000,000 for fiscal year 2011 and such sums as may be necessary for each of fiscal years 2012 through 2015. ``(2) Program management.--Of the funds appropriated to carry out this section for a fiscal year, the Secretary may use not more than 5 percent to manage the program under this section.''. Page 1612, line 22, strike the close quotation marks and second period at the end of subsection (d) and insert the following: ``(e) References.--Except as otherwise specified, any reference in Federal law to an Office on Women's Health (in the Department of Health and Human Services) is deemed to be a reference to the Office on Women's Health in the Office of the Secretary.''. Page 1623, after line 10, insert the following (and conform the table of contents for division C accordingly): SEC. 2588A. OFFICES OF MINORITY HEALTH. (a) Existing Office.--Section 1707(a) (42 U.S.C. 300u-6(a)) is amended by striking ``within the Office of Public Health and Science'' and inserting ``within the Office of the Secretary''. (b) Additional Offices.--Title XVII (42 U.S.C. 300u et seq.) is amended by inserting after section 1707 the following: ``SEC. 1707A. ADDITIONAL OFFICES OF MINORITY HEALTH. ``(a) Establishment.--In addition to the Office of Minority Health established within the Office of the Secretary under section 1707, the Secretary shall establish an Office of Minority Health in each of the following agencies: ``(1) The Centers for Disease Control and Prevention. ``(2) The Substance Abuse and Mental Health Services Administration. ``(3) The Agency for Healthcare Research and Quality. ``(4) The Health Resources and Services Administration. ``(5) The Food and Drug Administration. ``(b) Director; Appointment.--Each Office of Minority Health established in an agency listed in subsection (a) shall be headed by a director, who shall be appointed by and report directly to the head of such agency. ``(c) References.--Except as otherwise specified, any reference in Federal law to an Office of Minority Health (in the Department of Health and Human Services) is deemed to be a reference to the Office of Minority Health in the Office of the Secretary.''. (c) No New Regulatory Authority.--Nothing in this section and the amendments made by this section may be construed as establishing regulatory authority or modifying any existing regulatory authority. (d) Limitation on Termination.--Notwithstanding any other provision of law, a Federal office of minority health or Federal appointive position with primary responsibility over minority health issues that is in existence in an office or agency of the Department of Health and Human Services on the date of enactment of this section shall not be terminated, reorganized, or have any of its powers or duties transferred unless such termination, reorganization, or transfer is approved by an Act of Congress. Page 1635, after line 19, insert the following (and conform the table of contents for division C accordingly): SEC. 2593. DUPLICATIVE GRANT PROGRAMS. (a) Study.--The Secretary of Health and Human Services (in this section referred to as the ``Secretary'') shall conduct a study to determine if any new division C grant program is duplicative of one or more other grant programs of the Department of Health and Human Services that-- (1) are specifically authorized in the Public Health Service Act (42 U.S.C. 201 et seq.); or (2) are receiving appropriations. (b) Duplicative Programs.--If the Secretary determines under subsection (a) that a new division C grant program is duplicative of one or more other grant programs described in such subsection, the Secretary shall-- (1) attempt to integrate the new division C grant program with the duplicative programs; and (2) if the Secretary determines that such integration is not appropriate or has not been successful, promulgate a rule eliminating the duplication, including, if appropriate, by terminating one or more programs. (c) Continued Availability of Funds.--Any funds appropriated to carry out a program that is terminated under subsection (b)(2) shall remain available for obligation for the one or more programs that-- (1) were determined under subsection (a) to be duplicative of such program; and (2) remain in effect. (d) Report.--Not later than 1 year after the date of the enactment of this Act, the Secretary shall submit to the Congress and make available to the public a report that contains the results of the study required under subsection (a). (e) Congressional Review.--Any rule under subsection (b)(2) terminating a program is deemed to be a major rule for purposes of chapter 8 of title 5, United States Code. (f) Definition.--In this section, the term ``new division C grant program''-- (1) means a grant program first established by this division; and (2) excludes any program whose statutory authorization was in existence before the enactment of this division. SEC. 2594. DIABETES SCREENING COLLABORATION AND OUTREACH PROGRAM. (a) Establishment.--With respect to diabetes screening tests and for the purposes of reducing the number of undiagnosed seniors with diabetes or prediabetes, the Secretary of Health and Human Services (referred to in this section as the ``Secretary''), in collaboration with the Director of the Centers for Disease Control and Prevention (referred to in this section as the ``Director''), shall-- (1) review uptake and utilization of diabetes screening benefits, consistent with recommendations of the Task Force on Clinical Preventive Services (established under section 3131 of the Public Health Service Act, as added by section 2301 of this Act), to identify and address any existing problems with regard to uptake and utilization and related data collection mechanisms; and (2) establish an outreach program to identify existing efforts by agencies of the Department of Health and Human Services and by the private and nonprofit sectors to increase awareness among seniors and providers of diabetes screening benefits. (b) Consultation.--The Secretary shall carry out this section in consultation with-- (1) the heads of appropriate health agencies and offices in the Department of Health and Human Services, including the Office of Minority Health; and (2) entities with an interest in diabetes, including industry, voluntary health organizations, trade associations, and professional societies. (c) Report.--The Secretary shall submit an annual report to the Congress on the activities carried out under this section. SEC. 2595. IMPROVEMENT OF VITAL STATISTICS COLLECTION. (a) In General.--The Secretary of Health and Human Services (in this section referred to as the ``Secretary''), acting through the Director of the Centers for Disease Control and Prevention and in collaboration with appropriate agencies and States, shall-- (1) promote the education and training of physicians on the importance of birth and death certificate data and how to properly complete these documents in accordance with State law, including the collection of such data for diabetes and other chronic diseases as appropriate; (2) encourage State adoption of the latest standard revisions of birth and death certificates; and (3) work with States to re-engineer their vital statistics systems in order to provide cost-effective, timely, and accurate vital systems data. (b) Death Certificate Additional Language.--In carrying out this section, the Secretary may promote improvements to the collection of diabetes mortality data, including, as appropriate, the addition by States of a question for the individual certifying the cause of death regarding whether the deceased had diabetes. Page 1636, strike the heading for division D following line 2. Page 1636, line 5, insert ``act'' after ``improvement'' (and conform the table of contents of division D accordingly). Page 1760, lines 14 through 16, strike ``the California Rural Indian Health Board (hereafter in this section referred to as the `CRIHB')'' and insert ``an intertribal consortium''. Page 1760, line 20 and 21, strike ``the CRIHB'' each place it appears and insert ``the intertribal consortium''. Page 1761, lines 4, 6, 16, 18, and 21, strike ``the CRIHB'' each place it appears and insert ``the intertribal consortium''. Page 1950, strike line 16 and all that follows though page 1951, line 3 (and redesignate succeeding sections, and any cross-references thereto, accordingly). Page 1965, strike lines 16 through 24 (and conform the table of contents of division D accordingly). Page 1966, line 1, strike ``3103'' and insert ``3102'' (and conform the table of contents of division D accordingly). Page 1977, line 1, strike ``3104'' and insert ``3103'' (and conform the table of contents of division D accordingly). ---------- PART B--TEXT OF THE MODIFICATION TO THE AMENDMENT IN PART A On page 14 of the Amendment offered by Mr. Dingell of Michigan, strike section 555, as proposed to be added by the Amendment, and insert the following: SEC. 555. EXCLUSION OF UNPROCESSED FUELS FROM THE CELLULOSIC BIOFUEL PRODUCER CREDIT. (a) In General.--Subparagraph (E) of section 40(b)(6) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause: ``(iii) Exclusion of unprocessed fuels.--The term `cellulosic biofuel' shall not include any fuel if-- ``(I) more than 4 percent of such fuel (determined by weight) is any combination of water and sediment, or ``(II) the ash content of such fuel is more than 1 percent (determined by weight).''. (b) Effective Date.--The amendment made by this section shall apply to fuels sold or used after the date of the enactment of this Act. On page 34 of the Amendment offered by Mr. Dingell of Michigan, after line 21, insert the following: SEC. 2539. GRANTS TO ASSIST IN DEVELOPING MEDICAL SCHOOLS IN FEDERALLY- DESIGNATED HEALTH PROFESSIONAL SHORTAGE AREAS. (a) Grants Authorized.--The Secretary of Health and Human Services may make grants to nonprofit organizations or institutions of higher education for the purpose of assisting the organization or institution involved to develop a medical school if-- (1) the medical school will be located in an area that is designated (under section 332 of the Public Health Service Act (42 U.S.C. 254e)) as a health professional shortage area; (2) the organization or institution provides assurances satisfactory to the Secretary of substantial private or public funding from non-Federal sources for the development of the medical school; and (3) the organization or institution provides assurances satisfactory to the Secretary that accreditation will be achieved for the medical school. (b) Use of Grant Funds.--Grants awarded under this section may be used for the acquisition and building of the medical school campus in a health professional shortage area and the purchase of equipment, curriculum and faculty development, and general operations related to the development and establishment of the medical school. (c) Authorization of Appropriations.--For the purpose of carrying out this section, there is authorized to be appropriated $100,000,000 for each of fiscal years 2011 through 2015. On page 34 of the Amendment offered by Mr. Dingell of Michigan, before the amendment to page 1612, line 22, insert the following: Page 1523, strike lines 5 through 17 and insert the following: ``(i) In general.--A violation of subparagraph (A) shall be subject to enforcement by the Federal Trade Commission in the same manner, by the same means, and with the same jurisdiction as would an unfair and deceptive act or practice in or affecting interstate commerce or an unfair method of competition in or affecting interstate commerce prohibited under section 5 of the Federal Trade Commission Act, as though all applicable terms and provisions of the Federal Trade Commission Act were incorporated into and made a part of this subsection. Page 1525, lines 10 and 11, strike ``in furtherance of market competition and''. On page 41 of the Amendment offered by Mr. Dingell of Michigan, after line 12, insert the following section: SEC. 2596. NATIONAL HEALTH SERVICES CORPS DEMONSTRATION ON INCENTIVE PAYMENTS. (a) In General.--The Secretary of Health and Human Services may establish a demonstration program under which, in addition to the salary and benefits otherwise owed to a member of the National Health Services Corps, incentive payments are awarded to any such member who is assigned to a health professional shortage area with extreme need. (b) Report.--The Secretary shall submit to the Congress an annual report on the demonstration program under subsection (a). (c) Definitions.--In this section: (1) The term ``health professional shortage area with extreme need'' means a health professional shortage area that-- (A) is described in section 333A(a)(1)(A) of the Public Health Service Act (42 U.S.C. 254f- 1(a)(1)(A)); (B) is described in section 333(a)(1)(D)(ii)(IV) of such Act (42 U.S.C. 254f(a)(1)(D)(ii)(IV)); and (C) has high rates of untreated disease, including chronic conditions. (3) The term ``Secretary'' means the Secretary of Health and Human Services. (d) Authorization of Appropriations.--To carry out this section, there are authorized to be appropriated such sums as may be necessary for each of fiscal years 2011 through 2015. ---------- PART C--TEXT OF THE AMENDMENT BY REP. STUPAK TO BE MADE IN ORDER Page 97, strike line 13 and all that follows through page 98, line 7. Page 110, strike lines 1 through 7. Page 114, line 21, strike ``consistent with subsection (e) of such section''. Page 118, line 21, strike ``(including subsection (e))''. Page 154, after line 18, insert the following new section (and conform the table of contents of division A accordingly): SEC. 265. LIMITATION ON ABORTION FUNDING. (a) In General.--No funds authorized or appropriated by this Act (or an amendment made by this Act) may be used to pay for any abortion or to cover any part of the costs of any health plan that includes coverage of abortion, except in the case where a woman suffers from a physical disorder, physical injury, or physical illness that would, as certified by a physician, place the woman in danger of death unless an abortion is performed, including a life-endangering physical condition caused by or arising from the pregnancy itself, or unless the pregnancy is the result of an act of rape or incest. (b) Option to Purchase Separate Supplemental Coverage or Plan.--Nothing in this section shall be construed as prohibiting any nonfederal entity (including an individual or a State or local government) from purchasing separate supplemental coverage for abortions for which funding is prohibited under this section, or a plan that includes such abortions, so long as-- (1) such coverage or plan is paid for entirely using only funds not authorized or appropriated by this Act; and (2) such coverage or plan is not purchased using-- (A) individual premium payments required for a Exchange-participating health benefits plan towards which an affordability credit is applied; or (B) other nonfederal funds required to receive a federal payment, including a State's or locality's contribution of Medicaid matching funds. (c) Option to Offer Separate Supplemental Coverage or Plan.-- Notwithstanding section 303(b), nothing in this section shall restrict any nonfederal QHBP offering entity from offering separate supplemental coverage for abortions for which funding is prohibited under this section, or a plan that includes such abortions, so long as-- (1) premiums for such separate supplemental coverage or plan are paid for entirely with funds not authorized or appropriated by this Act; (2) administrative costs and all services offered through such supplemental coverage or plan are paid for using only premiums collected for such coverage or plan; and (3) any nonfederal QHBP offering entity that offers an Exchange-participating health benefits plan that includes coverage for abortions for which funding is prohibited under this section also offers an Exchange- participating health benefits plan that is identical in every respect except that it does not cover abortions for which funding is prohibited under this section. Page 171, strike line 5 and all that follows through page 172, line 8. Page 182, line 22, strike ``willingness or''. Page 246, strike lines 11 through 14. ---------- PART D--TEXT OF THE AMENDMENT IN THE NATURE OF A SUBSTITUTE BY REP. BOEHNER TO BE MADE IN ORDER Strike all after the enacting clause and insert the following: SECTION 1. SHORT TITLE; PURPOSE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Common Sense Health Care Reform and Affordability Act''. (b) Purpose.--The purpose of this Act is to take meaningful steps to lower health care costs and increase access to health insurance coverage (especially for individuals with preexisting conditions) without-- (1) raising taxes; (2) cutting Medicare benefits for seniors; (3) adding to the national deficit; (4) intervening in the doctor-patient relationship; or (5) instituting a government takeover of health care. (c) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; purpose; table of contents. DIVISION A--MAKING HEALTH CARE COVERAGE AFFORDABLE FOR EVERY AMERICAN TITLE I--ENSURING COVERAGE FOR INDIVIDUALS WITH PREEXISTING CONDITIONS AND MULTIPLE HEALTH CARE NEEDS Sec. 101. Establish universal access programs to improve high risk pools and reinsurance markets. Sec. 102. Elimination of certain requirements for guaranteed availability in individual market. Sec. 103. No annual or lifetime spending caps. Sec. 104. Preventing unjust cancellation of insurance coverage. TITLE II--REDUCING HEALTH CARE PREMIUMS AND THE NUMBER OF UNINSURED AMERICANS Sec. 111. State innovation programs. Sec. 112. Health plan finders. Sec. 113. Administrative simplification. DIVISION B--IMPROVING ACCESS TO HEALTH CARE TITLE I--EXPANDING ACCESS AND LOWERING COSTS FOR SMALL BUSINESSES Sec. 201. Rules governing association health plans. Sec. 202. Clarification of treatment of single employer arrangements. Sec. 203. Enforcement provisions relating to association health plans. Sec. 204. Cooperation between Federal and State authorities. Sec. 205. Effective date and transitional and other rules. TITLE II--TARGETED EFFORTS TO EXPAND ACCESS Sec. 211. Extending coverage of dependents. Sec. 212. Allowing auto-enrollment for employer sponsored coverage. TITLE III--EXPANDING CHOICES BY ALLOWING AMERICANS TO BUY HEALTH CARE COVERAGE ACROSS STATE LINES Sec. 221. Interstate purchasing of Health Insurance. TITLE IV--IMPROVING HEALTH SAVINGS ACCOUNTS Sec. 231. Saver's credit for contributions to health savings accounts. Sec. 232. HSA funds for premiums for high deductible health plans. Sec. 233. Requiring greater coordination between HDHP administrators and HSA account administrators so that enrollees can enroll in both at the same time. Sec. 234. Special rule for certain medical expenses incurred before establishment of account. DIVISION C--ENACTING REAL MEDICAL LIABILITY REFORM Sec. 301. Encouraging speedy resolution of claims. Sec. 302. Compensating patient injury. Sec. 303. Maximizing patient recovery. Sec. 304. Additional health benefits. Sec. 305. Punitive damages. Sec. 306. Authorization of payment of future damages to claimants in health care lawsuits. Sec. 307. Definitions. Sec. 308. Effect on other laws. Sec. 309. State flexibility and protection of states' rights. Sec. 310. Applicability; effective date. DIVISION D--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP Sec. 401. Rule of construction. Sec. 402. Repeal of Federal Coordinating Council for Comparative Effectiveness Research. DIVISION E--INCENTIVIZING WELLNESS AND QUALITY IMPROVEMENTS Sec. 501. Incentives for prevention and wellness programs. DIVISION F--PROTECTING TAXPAYERS Sec. 601. Provide full funding to HHS OIG and HCFAC. Sec. 602. Prohibiting taxpayer funded abortions and conscience protections. Sec. 603. Improved enforcement of the Medicare and Medicaid secondary payer provisions. Sec. 604. Strengthen Medicare provider enrollment standards and safeguards. Sec. 605. Tracking banned providers across State lines. DIVISION G--PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS Sec. 701. Licensure pathway for biosimilar biological products. Sec. 702. Fees relating to biosimilar biological products. Sec. 703. Amendments to certain patent provisions. DIVISION A--MAKING HEALTH CARE COVERAGE AFFORDABLE FOR EVERY AMERICAN TITLE I--ENSURING COVERAGE FOR INDIVIDUALS WITH PREEXISTING CONDITIONS AND MULTIPLE HEALTH CARE NEEDS SEC. 101. ESTABLISH UNIVERSAL ACCESS PROGRAMS TO IMPROVE HIGH RISK POOLS AND REINSURANCE MARKETS. (a) State Requirement.-- (1) In general.--Not later than January 1, 2010, each State shall-- (A) subject to paragraph (3), operate-- (i) a qualified State reinsurance program described in subsection (b); or (ii) qualifying State high risk pool described in subsection (c)(1); and (B) subject to paragraph (3), apply to the operation of such a program from State funds an amount equivalent to the portion of State funds derived from State premium assessments (as defined by the Secretary) that are not otherwise used on State health care programs. (2) Relation to current qualified high risk pool program.-- (A) States not operating a qualified high risk pool.--In the case of a State that is not operating a current section 2745 qualified high risk pool as of the date of the enactment of this Act-- (i) the State may only meet the requirement of paragraph (1) through the operation of a qualified State reinsurance program described in subsection (b); and (ii) the State's operation of such a reinsurance program shall be treated, for purposes of section 2745 of the Public Health Service Act, as the operation of a qualified high risk pool described in such section. (B) State operating a qualified high risk pool.--In the case of a State that is operating a current section 2745 qualified high risk pool as of the date of the enactment of this Act-- (i) as of January 1, 2010, such a pool shall not be treated as a qualified high risk pool under section 2745 of the Public Health Service Act unless the pool is a qualifying State high risk pool described in subsection (c)(1); and (ii) the State may use premium assessment funds described in paragraph (1)(B) to transition from operation of such a pool to operation of a qualified State reinsurance program described in subsection (b). (3) Application of funds.--If the program or pool operated under paragraph (1)(A) is in strong fiscal health, as determined in accordance with standards established by the National Association of Insurance Commissioners and as approved by the State Insurance Commissioner involved, the requirement of paragraph (1)(B) shall be deemed to be met. (b) Qualified State Reinsurance Program.-- (1) In general.--For purposes of this section, a ``qualified State reinsurance program'' means a program operated by a State program that provides reinsurance for health insurance coverage offered in the small group market in accordance with the model for such a program established (as of the date of the enactment of this Act). (2) Form of program.--A qualified State reinsurance program may provide reinsurance-- (A) on a prospective or retrospective basis; and (B) on a basis that protects health insurance issuers against the annual aggregate spending of their enrollees as well as purchase protection against individual catastrophic costs. (3) Satisfaction of hipaa requirement.--A qualified State reinsurance program shall be deemed, for purposes of section 2745 of the Public Health Service Act, to be a qualified high-risk pool under such section. (c) Qualifying State High Risk Pool.-- (1) In general.--A qualifying State high risk pool described in this subsection means a current section 2745 qualified high risk pool that meets the following requirements: (A) The pool must provide at least two coverage options, one of which must be a high deductible health plan coupled with a health savings account. (B) The pool must be funded with a stable funding source. (C) The pool must eliminate any waiting lists so that all eligible residents who are seeking coverage through the pool should be allowed to receive coverage through the pool. (D) The pool must allow for coverage of individuals who, but for the 24-month disability waiting period under section 226(b) of the Social Security Act, would be eligible for Medicare during the period of such waiting period. (E) The pool must limit the pool premiums to no more than 150 percent of the average premium for applicable standard risk rates in that State. (F) The pool must conduct education and outreach initiatives so that residents and brokers understand that the pool is available to eligible residents. (G) The pool must provide coverage for preventive services and disease management for chronic diseases. (2) Verification of citizenship or alien qualification.-- (A) In general.--Notwithstanding any other provision of law, only citizens and nationals of the United States shall be eligible to participate in a qualifying State high risk pool that receives funds under section 2745 of the Public Health Service Act or this section. (B) Condition of participation.--As a condition of a State receiving such funds, the Secretary shall require the State to certify, to the satisfaction of the Secretary, that such State requires all applicants for coverage in the qualifying State high risk pool to provide satisfactory documentation of citizenship or nationality in a manner consistent with section 1903(x) of the Social Security Act. (C) Records.--The Secretary shall keep sufficient records such that a determination of citizenship or nationality only has to be made once for any individual under this paragraph. (3) Relation to section 2745.--As of January 1, 2010, a pool shall not qualify as qualified high risk pool under section 2745 of the Public Health Service Act unless the pool is a qualifying State high risk pool described in paragraph (1). (d) Waivers.--In order to accommodate new and innovative programs, the Secretary may waive such requirements of this section for qualified State reinsurance programs and for qualifying State high risk pools as the Secretary deems appropriate. (e) Funding.--In addition to any other amounts appropriated, there is appropriated to carry out section 2745 of the Public Health Service Act (including through a program or pool described in subsection (a)(1))-- (1) $15,000,000,000 for the period of fiscal years 2010 through 2019; and (2) an additional $10,000,000,000 for the period of fiscal years 2015 through 2019. (f) Definitions.--In this section: (1) Health insurance coverage; health insurance issuer.--The terms ``health insurance coverage'' and ``health insurance issuer'' have the meanings given such terms in section 2791 of the Public Health Service Act. (2) Current section 2745 qualified high risk pool.-- The term ``current section 2745 qualified high risk pool'' has the meaning given the term ``qualified high risk pool'' under section 2745(g) of the Public Health Service Act as in effect as of the date of the enactment of this Act. (3) Secretary.--The term ``Secretary'' means Secretary of Health and Human Services. (4) Standard risk rate.--The term ``standard risk rate'' means a rate that-- (A) is determined under the State high risk pool by considering the premium rates charged by other health insurance issuers offering health insurance coverage to individuals in the insurance market served; (B) is established using reasonable actuarial techniques; and (C) reflects anticipated claims experience and expenses for the coverage involved. (5) State.--The term ``State'' means any of the 50 States or the District of Columbia. SEC. 102. ELIMINATION OF CERTAIN REQUIREMENTS FOR GUARANTEED AVAILABILITY IN INDIVIDUAL MARKET. (a) In General.--Section 2741(b) of the Public Health Service Act (42 U.S.C. 300gg-41(b)) is amended---- (1) in paragraph (1)-- (A) by striking ``(1)(A)'' and inserting ``(1)''; and (B) by striking ``and (B)'' and all that follows up to the semicolon at the end; (2) by adding ``and'' at the end of paragraph (2); (3) in paragraph (3)-- (A) by striking ``(1)(A)'' and inserting ``(1)''; and (B) by striking the semicolon at the end and inserting a period; and (4) by striking paragraphs (4) and (5). (b) Effective Date.--The amendments made by subsection (a) shall take effect on the date of the enactment of this Act. SEC. 103. NO ANNUAL OR LIFETIME SPENDING CAPS. Notwithstanding any other provision of law, a health insurance issuer (including an entity licensed to sell insurance with respect to a State or group health plan) may not apply an annual or lifetime aggregate spending cap on any health insurance coverage or plan offered by such issuer. SEC. 104. PREVENTING UNJUST CANCELLATION OF INSURANCE COVERAGE. (a) Clarification Regarding Application of Guaranteed Renewability of Individual Health Insurance Coverage.--Section 2742 of the Public Health Service Act (42 U.S.C. 300gg-42) is amended-- (1) in its heading, by inserting ``, continuation in force, including prohibition of rescission,'' after ``guaranteed renewability''; (2) in subsection (a), by inserting ``, including without rescission,'' after ``continue in force''; and (3) in subsection (b)(2), by inserting before the period at the end the following: ``, including intentional concealment of material facts regarding a health condition related to the condition for which coverage is being claimed''. (b) Opportunity for Independent, External Third Party Review in Certain Cases.--Subpart 1 of part B of title XXVII of the Public Health Service Act is amended by adding at the end the following new section: ``SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL THIRD PARTY REVIEW IN CERTAIN CASES. ``(a) Notice and Review Right.--If a health insurance issuer determines to nonrenew or not continue in force, including rescind, health insurance coverage for an individual in the individual market on the basis described in section 2742(b)(2) before such nonrenewal, discontinuation, or rescission, may take effect the issuer shall provide the individual with notice of such proposed nonrenewal, discontinuation, or rescission and an opportunity for a review of such determination by an independent, external third party under procedures specified by the Secretary. ``(b) Independent Determination.--If the individual requests such review by an independent, external third party of a nonrenewal, discontinuation, or rescission of health insurance coverage, the coverage shall remain in effect until such third party determines that the coverage may be nonrenewed, discontinued, or rescinded under section 2742(b)(2).''. (c) Effective Date.--The amendments made by this section shall apply after the date of the enactment of this Act with respect to health insurance coverage issued before, on, or after such date. TITLE II--REDUCING HEALTH CARE PREMIUMS AND THE NUMBER OF UNINSURED AMERICANS SEC. 111. STATE INNOVATION PROGRAMS. (a) Programs That Reduce the Cost of Health Insurance Premiums.-- (1) Payments to states.-- (A) For premium reductions in the small group market.--If the Secretary determines that a State has reduced the average per capita premium for health insurance coverage in the small group market in year 3, in year 6, or year 9 (as defined in subsection (c)) below the premium baseline for such year (as defined paragraph (2)), the Secretary shall pay the State an amount equal to the product of-- (i) bonus premium percentage (as defined in paragraph (3)) for the State, market, and year; and (ii) the maximum State premium payment amount (as defined in paragraph (4)) for the State, market, and year (B) For premium reductions in the individual market.--If the Secretary determines that a State has reduced the average per capita premium for health insurance coverage in the individual market in year 3, in year 6, or in year 9 below the premium baseline for such year, the Secretary shall pay the State an amount equal to the product of-- (i) bonus premium percentage for the State, market, and year; and (ii) the maximum State premium payment amount for the State, market, and year. (2) Premium baseline.--For purposes of this subsection, the term ``premium baseline'' means, for a market in a State-- (A) for year 1, the average per capita premiums for health insurance coverage in such market in the State in such year; or (B) for a subsequent year, the baseline for the market in the State for the previous year under this paragraph increased by a percentage specified in accordance with a formula established by the Secretary, in consultation with the Congressional Budget Office and the Bureau of the Census, that takes into account at least the following: (i) Growth factor.--The inflation in the costs of inputs to health care services in the year. (ii) Historic premium growth rates.-- Historic growth rates, during the 10 years before year 1, of per capita premiums for health insurance coverage. (iii) Demographic considerations.-- Historic average changes in the demographics of the population covered that impact on the rate of growth of per capita health care costs. (3) Bonus premium percentage defined.-- (A) In general.--For purposes of this subsection, the term ``bonus premium percentage'' means, for the small group market or individual market in a State for a year, such percentage as determined in accordance with the following table based on the State's premium performance level (as defined in subparagraph (B)) for such market and year: ---------------------------------------------------------------------------------------------------------------- The bonus premium For year 3 if the premium For year 6 if the premium For year 9 if the premium percentage for performance level of the State performance level of the State performance level of the State a State is-- is-- is-- is-- ---------------------------------------------------------------------------------------------------------------- 100 percent at least 8.5% at least 11% at least 13.5% ---------------------------------------------------------------------------------------------------------------- 50 percent at least 6.38%, but less than at least 10.38%, but less than at least 12.88%, but less than 8.5% 11% 13.5% ---------------------------------------------------------------------------------------------------------------- 25 percent at least 4.25%, but less than at least 9.75%, but less than at least 12.25%, but less than 6.38% 10.38% 12.88% ---------------------------------------------------------------------------------------------------------------- 0 percent less than 4.25% less than 9.75% less than 12.25% ---------------------------------------------------------------------------------------------------------------- (B) Premium performance level.--For purposes of this subsection, the term ``premium performance level'' means, for a State, market, and year, the percentage reduction in the average per capita premiums for health insurance coverage for the State, market, and year, as compared to the premium baseline for such State, market, and year. (4) Maximum state premium payment amount defined.-- For purposes of this subsection, the term ``maximum State premium payment amount'' means, for a State for the small group market or the individual market for a year, the product of-- (A) the proportion (as determined by the Secretary), of the number of nonelderly individuals lawfully residing in all the States who are enrolled in health insurance coverage in the respective market in the year, who are residents of the State; and (B) the amount available for obligation from amounts appropriated under subsection (d) for such market with respect to performance in such year. (5) Methodology for calculating average per capita premiums.-- (A) Establishment.--The Secretary shall establish, by rule and consistent with this subsection, a methodology for computing the average per capita premiums for health insurance coverage for the small group market and for the individual market in each State for each year beginning with year 1. (B) Adjustments.--Under such methodology, the Secretary shall provide for the following adjustments (in a manner determined appropriate by the Secretary): (i) Exclusion of illegal aliens.--An adjustment so as not to take into account enrollees who are not lawfully present in the United States and their premium costs. (ii) Treating state premium subsidies as premium costs.--An adjustment so as to increase per capita premiums to remove the impact of premium subsidies made directly by a State to reduce health insurance premiums. (6) Conditions of payment.--As a condition of receiving a payment under paragraph (1), a State must agree to submit aggregate, non-individually identifiable data to the Secretary, in a form and manner specified by the Secretary, for use by the Secretary to determine the State's premium baseline and premium performance level for purposes of this subsection. (b) Programs That Reduce the Number of Uninsured.-- (1) In general.--If the Secretary determines that a State has reduced the percentage of uninsured nonelderly residents in year 5, year 7, or year 9, below the uninsured baseline (as defined in paragraph (2)) for the State for the year, the Secretary shall pay the State an amount equal to the product of-- (A) bonus uninsured percentage (as defined in paragraph (3)) for the State and year; and (B) the maximum uninsured payment amount (as defined in paragraph (4)) for the State and year. (2) Uninsured baseline.-- (A) In general.--For purposes of this subsection, and subject to subparagraph (B), the term ``uninsured baseline'' means, for a State, the percentage of nonelderly residents in the State who are uninsured in year 1. (B) Adjustment.--The Secretary may, at the written request of a State, adjust the uninsured baseline for States for a year to take into account unanticipated and exceptional changes, such as an unanticipated migration, of nonelderly individuals into, or out of, States in a manner that does not reflect substantially the proportion of uninsured nonelderly residents in the States involved in year 1. Any such adjustment shall only be done in a manner that does not result in the average of the uninsured baselines for nonelderly residents for all States being changed. (3) Bonus uninsured percentage.-- (A) Bonus uninsured percentage.--For purposes of this subsection, the term ``bonus uninsured percentage'' means, for a State for a year, such percentage as determined in accordance with the following table, based on the uninsured performance level (as defined in subparagraph (B)) for such State and year: ---------------------------------------------------------------------------------------------------------------- The bonus uninsured For year 5 if the uninsured For year 7 if the uninsured For year 9 if the uninsured percentage for performance level of the State performance level of the State performance level of the State a State is-- is-- is-- is-- ---------------------------------------------------------------------------------------------------------------- 100 percent at least 10% at least 15% at least 20% ---------------------------------------------------------------------------------------------------------------- 50 percent at least 7.5% but less than 10% at least 13.75% but less than at least 18.75% but less than 15% 20% ---------------------------------------------------------------------------------------------------------------- 25 percent at least 5% but less than 7.5% at least 12.5% but less than at least 17.5% but less than 13.75% 18.75% ---------------------------------------------------------------------------------------------------------------- 0 percent less than 5% less than 12.5% less than 17.5% ---------------------------------------------------------------------------------------------------------------- (B) Uninsured performance level.--For purposes of this subsection, the term ``uninsured performance level'' means, for a State for a year, the reduction (expressed as a percentage) in the percentage of uninsured nonelderly residents in such State in the year as compared to the uninsured baseline for such State for such year. (4) Maximum state uninsured payment amount defined.-- For purposes of this subsection, the term ``maximum State uninsured payment amount'' means, for a State for a year, the product of-- (A) the proportion (as determined by the Secretary), of the number of uninsured nonelderly individuals lawfully residing in all the States in the year, who are residents of the State; and (B) the amount available for obligation under this subsection from amounts appropriated under subsection (d) with respect to performance in such year. (5) Methodology for computing the percentage of uninsured nonelderly residents in a state.-- (A) Establishment.--The Secretary shall establish, by rule and consistent with this subsection, a methodology for computing the percentage of nonelderly residents in a State who are uninsured in each year beginning with year 1. (B) Rules.-- (i) Treatment of uninsured.--Such methodology shall treat as uninsured those residents who do not have health insurance coverage or other creditable coverage (as defined in section 9801(c)(1) of the Internal Revenue Code of 1986), except that such methodology shall rely upon data on the nonelderly and uninsured populations within each State in such year provided through population surveys conducted by federal agencies. (ii) Limitation to nonelderly.--Such methodology shall exclude individuals who are 65 years of age or older. (iii) Exclusion of illegal aliens.-- Such methodology shall exclude individuals not lawfully present in the United States. (6) Conditions of payment.--As a condition of receiving a payment under paragraph (1), a State must agree to submit aggregate, non-individually identifiable data to the Secretary, in a form and manner specified by the Secretary, for use by the Secretary in determining the State's uninsured baseline and uninsured performance level for purposes of this subsection. (c) Definitions.--For purposes of this section: (1) Group health plan.--The term ``group health plan'' has the meaning given such term in section 9832(a) of the Internal Revenue Code of 1986. (2) Health insurance coverage.--The term ``health insurance coverage'' has the meaning given such term in section 9832(b)(1) of the Internal Revenue Code of 1986. (3) Individual market.--Except as the Secretary may otherwise provide in the case of group health plans that have fewer than 2 participants as current employees on the first day of a plan year, the term ``individual market'' means the market for health insurance coverage offered to individuals other than in connection with a group health plan. (4) Secretary.--The term ``Secretary'' means the Secretary of Health and Human Services. (5) Small group market.--The term ``small group market'' means the market for health insurance coverage under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by an employer who employed on average at least 2 but not more than 50 employees on business days during a calendar year. (6) State.--The term ``State'' means any of the 50 States and the District of Columbia. (7) Years.--The terms ``year 1'', ``year 2'', ``year 3'', and similar subsequently numbered years mean 2010, 2011, 2012, and subsequent sequentially numbered years. (d) Appropriations; Payments.-- (1) Payments for reductions in cost of health insurance coverage.-- (A) Small group market.-- (i) In general.--From any funds in the Treasury not otherwise appropriated, there is appropriated for payments under subsection (a)(1)(A)-- (I) $18,000,000,000 with respect to performance in year 3; (II) $5,000,000,000 with respect to performance in year 6; and (III) $2,000,000,000 with respect to performance in year 9. (ii) Availability of appropriated funds.--Funds appropriated under clause (i) shall remain available until expended. (B) Individual market.-- (i) In general.--Subject to clause (ii), from any funds in the Treasury not otherwise appropriated, there is appropriated for payments under subsection (a)(1)(B)-- (I) $7,000,000,000 with respect to performance in year 3; (II) $2,000,000,000 with respect to performance in year 6; and (III) $1,000,000,000 with respect to performance in year 9. (ii) Availability of appropriated funds.--Of the funds appropriated under clause (i) that are not expended or obligated by the end of the year following the year for which the funds are appropriated-- (I) 75 percent shall remain available until expended for payments under subsection (a)(1)(B); and (II) 25 percent shall remain available until expended for payments under subsection (a)(1)(A). (2) Payments for reductions in the percentage of uninsured.-- (A) In general.--From any funds in the Treasury not otherwise appropriated, there is appropriated for payments under subsection (b)(1)-- (i) $10,000,000,000 with respect to performance in year 5; (ii) $3,000,000,000 with respect to performance in year 7; and (iii) $2,000,000,000 with respect to performance in year 9 (B) Availability of appropriated funds.-- Funds appropriated under subparagraph (A) shall remain available until expended. (3) Payment timing.--Payments under this section shall be made in a form and manner specified by the Secretary in the year after the performance year involved. SEC. 112. HEALTH PLAN FINDERS. (a) State Plan Finders.--Not later than 12 months after the date of the enactment of this Act, each State may contract with a private entity to develop and operate a plan finder website (referred to in this section as a ``State plan finder'') which shall provide information to individuals in such State on plans of health insurance coverage that are available to individuals in such State (in this section referred to as a ``health insurance plan'') . Such State may not operate a plan finder itself. (b) Multi-State Plan Finders.-- (1) In general.--A private entity may operate a multi-State finder that operates under this section in the States involved in the same manner as a State plan finder would operate in a single State. (2) Sharing of information.--States shall regulate the manner in which data is shared between plan finders to ensure consistency and accuracy in the information about health insurance plans contained in such finders. (c) Requirements for Plan Finders.--Each plan finder shall meet the following requirements: (1) The plan finder shall ensure that each health insurance plan in the plan finder meets the requirements for such plans under subsection (d). (2) The plan finder shall present complete information on the costs and benefits of health insurance plans (including information on monthly premium, copayments, and deductibles) in a uniform manner that-- (A) uses the standard definitions developed under paragraph (3); and (B) is designed to allow consumers to easily compare such plans. (3) The plan finder shall be available on the internet and accessible to all individuals in the State or, in the case of a multi-State plan finder, in all States covered by the multi-State plan finder. (4) The plan finder shall allow consumers to search and sort data on the health insurance plans in the plan finder on criteria such as coverage of specific benefits (such as coverage of disease management services or pediatric care services), as well as data available on quality. (5) The plan finder shall meet all relevant State laws and regulations, including laws and regulations related to the marketing of insurance products. In the case of a multi-State plan finder, the finder shall meet such laws and regulations for all of the States involved. (6) The plan finder shall meet solvency, financial, and privacy requirements established by the State or States in which the plan finder operates or the Secretary for multi-State finders. (7) The plan finder and the employees of the plan finder shall be appropriately licensed in the State or States in which the plan finder operates, if such licensure is required by such State or States. (8) Notwithstanding subsection (f)(1), the plan finder shall assist individuals 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 information on Medicaid options, eligibility, and how to enroll. (d) Requirements for Plans Participating in a Plan Finder.-- (1) In general.--Each State shall ensure that health insurance plans participating in the State plan finder or in a multi-State plan finder meet the requirements of paragraph (2) (relating to adequacy of insurance coverage, consumer protection, and financial strength). (2) Specific requirements.--In order to participate in a plan finder, a health insurance plan must meet all of the following requirements, as determined by each State in which such plan operates: (A) The health insurance plan shall be actuarially sound. (B) The health insurance plan may not have a history of abusive policy rescissions. (C) The health insurance plan shall meet financial and solvency requirements. (D) The health insurance plan shall disclose-- (i) all financial arrangements involving the sale and purchase of health insurance, such as the payment of fees and commissions; and (ii) such arrangements may not be abusive. (E) The health insurance plan shall maintain electronic health records that comply with the requirements of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) related to electronic health records. (F) The health insurance plan shall make available to plan enrollees via the finder, whether by information provided to the finder or by a website link directing the enrollee from the finder to the health insurance plan website, data that includes the price and cost to the individual of services offered by a provider according to the terms and conditions of the health plan. Data described in this paragraph is not made public by the finder, only made available to the individual once enrolled in the health plan. (e) Prohibitions.-- (1) Direct enrollment.--The State plan finder may not directly enroll individuals in health insurance plans. (2 Conflicts of interest.-- (A) Companies.--A health insurance issuer offering a health insurance plan through a plan finder may not-- (i) be the private entity developing and maintaining a plan finder under subsections (a) and (b); or (ii) have an ownership interest in such private entity or in the plan finder. (B) Individuals.--An individual employed by a health insurance issuer offering a health insurance plan through a plan finder may not serve as a director or officer for-- (i) the private entity developing and maintaining a plan finder under subsections (a) and (b); or (ii) the plan finder. (f) Construction.--Nothing in this section shall be construed to allow the Secretary authority to regulate benefit packages or to prohibit health insurance brokers and agents from-- (1) utilizing the plan finder for any purpose; or (2) marketing or offering health insurance products. (g) Plan Finder Defined.--For purposes of this section, the term ``plan finder'' means a State plan finder under subsection (a) or a multi-State plan finder under subsection (b). (h) State Defined.--In this section, the term ``State'' has the meaning given such term for purposes of title XIX of the Social Security Act. SEC. 113. ADMINISTRATIVE SIMPLIFICATION. (a) Operating Rules for Health Information Transactions.-- (1) Definition of operating rules.--Section 1171 of the Social Security Act (42 U.S.C. 1320d) is amended by adding at the end the following: ``(9) Operating rules.--The term `operating rules'' means the necessary business rules and guidelines for the electronic exchange of information that are not defined by a standard or its implementation specifications as adopted for purposes of this part.''. (2) Operating rules and compliance.--Section 1173 of the Social Security Act (42 U.S.C. 1320d-2) is amended-- (A) in subsection (a)(2), by adding at the end the following new subparagraph: ``(J) Electronic funds transfers.''; and (B) by adding at the end the following new subsections: ``(g) Operating Rules.-- ``(1) In general.--The Secretary shall adopt a single set of operating rules for each transaction described in subsection (a)(2) with the goal of creating as much uniformity in the implementation of the electronic standards as possible. Such operating rules shall be consensus-based and reflect the necessary business rules affecting health plans and health care providers and the manner in which they operate pursuant to standards issued under Health Insurance Portability and Accountability Act of 1996. ``(2) Operating rules development.--In adopting operating rules under this subsection, the Secretary shall rely on recommendations for operating rules developed by a qualified nonprofit entity, as selected by the Secretary, that meets the following requirements: ``(A) The entity focuses its mission on administrative simplification. ``(B) The entity demonstrates an established multi-stakeholder and consensus-based process for development of operating rules, including representation by or participation from health plans, health care providers, vendors, relevant Federal agencies, and other standard development organizations. ``(C) The entity has established a public set of guiding principles that ensure the operating rules and process are open and transparent. ``(D) The entity coordinates its activities with the HIT Policy Committee and the HIT Standards Committee (as established under title XXX of the Public Health Service Act) and complements the efforts of the Office of the National Healthcare Coordinator and its related health information exchange goals. ``(E) The entity incorporates national standards, including the transaction standards issued under Health Insurance Portability and Accountability Act of 1996. ``(F) The entity supports nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair, and nondiscriminatory practices. ``(G) The entity allows for public review and updates of the operating rules. ``(3) Review and recommendations.--The National Committee on Vital and Health Statistics shall-- ``(A) review the operating rules developed by a nonprofit entity described under paragraph (2); ``(B) determine whether such rules represent a consensus view of the health care industry and are consistent with and do not alter current standards; ``(C) evaluate whether such rules are consistent with electronic standards adopted for health information technology; and ``(D) submit to the Secretary a recommendation as to whether the Secretary should adopt such rules. ``(4) Implementation.-- ``(A) In general.--The Secretary shall adopt operating rules under this subsection, by regulation in accordance with subparagraph (C), following consideration of the rules developed by the non-profit entity described in paragraph (2) and the recommendation submitted by the National Committee on Vital and Health Statistics under paragraph (3)(D) and having ensured consultation with providers. ``(B) Adoption requirements; effective dates.-- ``(i) Eligibility for a health plan and health claim status.--The set of operating rules for transactions for eligibility for a health plan and health claim status shall be adopted not later than July 1, 2011, in a manner ensuring that such rules are effective not later than January 1, 2013, and may allow for the use of a machine readable identification card. ``(ii) Electronic funds transfers and health care payment and remittance advice.--The set of operating rules for electronic funds transfers and health care payment and remittance advice shall be adopted not later than July 1, 2012, in a manner ensuring that such rules are effective not later than January 1, 2014. ``(iii) Other completed transactions.--The set of operating rules for the remainder of the completed transactions described in subsection (a)(2), including health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization, shall be adopted not later than July 1, 2014, in a manner ensuring that such rules are effective not later than January 1, 2016. ``(C) Expedited rulemaking.--The Secretary shall promulgate an interim final rule applying any standard or operating rule recommended by the National Committee on Vital and Health Statistics pursuant to paragraph (3). The Secretary shall accept public comments on any interim final rule published under this subparagraph for 60 days after the date of such publication. ``(h) Compliance.-- ``(1) Health plan certification.-- ``(A) Eligibility for a health plan, health claim status, electronic funds transfers, health care payment and remittance advice.--Not later than December 31, 2013, a health plan shall file a statement with the Secretary, in such form as the Secretary may require, certifying that the data and information systems for such plan are in compliance with any applicable standards (as described under paragraph (7) of section 1171) and operating rules (as described under paragraph (9) of such section) for electronic funds transfers, eligibility for a health plan, health claim status, and health care payment and remittance advice, respectively. ``(B) Other completed transactions.--Not later than December 31, 2015, a health plan shall file a statement with the Secretary, in such form as the Secretary may require, certifying that the data and information systems for such plan are in compliance with any applicable standards and operating rules for the remainder of the completed transactions described in subsection (a)(2), including health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization, respectively. A health plan shall provide the same level of documentation to certify compliance with such transactions as is required to certify compliance with the transactions specified in subparagraph (A). ``(2) Documentation of compliance.--A health plan shall provide the Secretary, in such form as the Secretary may require, with adequate documentation of compliance with the standards and operating rules described under paragraph (1). A health plan shall not be considered to have provided adequate documentation and shall not be certified as being in compliance with such standards, unless the health plan-- ``(A) demonstrates to the Secretary that the plan conducts the electronic transactions specified in paragraph (1) in a manner that fully complies with the regulations of the Secretary; and ``(B) provides documentation showing that the plan has completed end-to-end testing for such transactions with their partners, such as hospitals and physicians. ``(3) Service contracts.--A health plan shall be required to comply with any applicable certification and compliance requirements (and provide the Secretary with adequate documentation of such compliance) under this subsection for any entities that provide services pursuant to a contract with such health plan. ``(4) Certification by outside entity.--The Secretary may contract with an independent, outside entity to certify that a health plan has complied with the requirements under this subsection, provided that the certification standards employed by such entities are in accordance with any standards or rules issued by the Secretary. ``(5) Compliance with revised standards and rules.--A health plan (including entities described under paragraph (3)) shall comply with the certification and documentation requirements under this subsection for any interim final rule promulgated by the Secretary under subsection (i) that amends any standard or operating rule described under paragraph (1) of this subsection. A health plan shall comply with such requirements not later than the effective date of the applicable interim final rule. ``(6) Audits of health plans.--The Secretary shall conduct periodic audits to ensure that health plans (including entities described under paragraph (3)) are in compliance with any standards and operating rules that are described under paragraph (1). ``(i) Review and Amendment of Standards and Rules.-- ``(1) Establishment.--Not later than January 1, 2014, the Secretary shall establish a review committee (as described under paragraph (4)). ``(2) Evaluations and reports.-- ``(A) Hearings.--Not later than April 1, 2014, and not less than biennially thereafter, the Secretary, acting through the review committee, shall conduct hearings to evaluate and review the existing standards and operating rules established under this section. ``(B) Report.--Not later than July 1, 2014, and not less than biennially thereafter, the review committee shall provide recommendations for updating and improving such standards and rules. The review committee shall recommend a single set of operating rules per transaction standard and maintain the goal of creating as much uniformity as possible in the implementation of the electronic standards. ``(3) Interim final rulemaking.-- ``(A) In general.--Any recommendations to amend existing standards and operating rules that have been approved by the review committee and reported to the Secretary under paragraph (2)(B) shall be adopted by the Secretary through promulgation of an interim final rule not later than 90 days after receipt of the committee's report. ``(B) Public comment.-- ``(i) Public comment period.--The Secretary shall accept public comments on any interim final rule published under this paragraph for 60 days after the date of such publication. ``(ii) Effective date.--The effective date of any amendment to existing standards or operating rules that is adopted through an interim final rule published under this paragraph shall be 25 months following the close of such public comment period. ``(4) Review committee.-- ``(A) Definition.--For the purposes of this subsection, the term `review committee' means a committee within the Department of Health and Human services that has been designated by the Secretary to carry out this subsection, including-- ``(i) the National Committee on Vital and Health Statistics; or ``(ii) any appropriate committee as determined by the Secretary. ``(B) Coordination of hit standards.--In developing recommendations under this subsection, the review committee shall consider the standards approved by the Office of the National Coordinator for Health Information Technology. ``(j) Penalties.-- ``(1) Penalty fee.-- ``(A) In general.--Not later than April 1, 2014, and annually thereafter, the Secretary shall assess a penalty fee (as determined under subparagraph (B)) against a health plan that has failed to meet the requirements under subsection (h) with respect to certification and documentation of compliance with the standards (and their operating rules) as described under paragraph (1) of such subsection. ``(B) Fee amount.--Subject to subparagraphs (C), (D), and (E), the Secretary shall assess a penalty fee against a health plan in the amount of $1 per covered life until certification is complete. The penalty shall be assessed per person covered by the plan for which its data systems for major medical policies are not in compliance and shall be imposed against the health plan for each day that the plan is not in compliance with the requirements under subsection (h). ``(C) Additional penalty for misrepresentation.--A health plan that knowingly provides inaccurate or incomplete information in a statement of certification or documentation of compliance under subsection (h) shall be subject to a penalty fee that is double the amount that would otherwise be imposed under this subsection. ``(D) Annual fee increase.--The amount of the penalty fee imposed under this subsection shall be increased on an annual basis by the annual percentage increase in total national health care expenditures, as determined by the Secretary. ``(E) Penalty limit.--A penalty fee assessed against a health plan under this subsection shall not exceed, on an annual basis-- ``(i) an amount equal to $20 per covered life under such plan; or ``(ii) an amount equal to $40 per covered life under the plan if such plan has knowingly provided inaccurate or incomplete information (as described under subparagraph (C)). ``(F) Determination of covered individuals.-- The Secretary shall determine the number of covered lives under a health plan based upon the most recent statements and filings that have been submitted by such plan to the Securities and Exchange Commission. ``(2) Notice and dispute procedure.--The Secretary shall establish a procedure for assessment of penalty fees under this subsection that provides a health plan with reasonable notice and a dispute resolution procedure prior to provision of a notice of assessment by the Secretary of the Treasury (as described under paragraph (4)(B)). ``(3) Penalty fee report.--Not later than May 1, 2014, and annually thereafter, the Secretary shall provide the Secretary of the Treasury with a report identifying those health plans that have been assessed a penalty fee under this subsection. ``(4) Collection of penalty fee.-- ``(A) In general.--The Secretary of the Treasury, acting through the Financial Management Service, shall administer the collection of penalty fees from health plans that have been identified by the Secretary in the penalty fee report provided under paragraph (3). ``(B) Notice.--Not later than August 1, 2014, and annually thereafter, the Secretary of the Treasury shall provide notice to each health plan that has been assessed a penalty fee by the Secretary under this subsection. Such notice shall include the amount of the penalty fee assessed by the Secretary and the due date for payment of such fee to the Secretary of the Treasury (as described in subparagraph (C)). ``(C) Payment due date.--Payment by a health plan for a penalty fee assessed under this subsection shall be made to the Secretary of the Treasury not later than November 1, 2014, and annually thereafter. ``(D) Unpaid penalty fees.--Any amount of a penalty fee assessed against a health plan under this subsection for which payment has not been made by the due date provided under subparagraph (C) shall be-- ``(i) increased by the interest accrued on such amount, as determined pursuant to the underpayment rate established under section 6601 of the Internal Revenue Code of 1986; and ``(ii) treated as a past-due, legally enforceable debt owed to a Federal agency for purposes of section 6402(d) of the Internal Revenue Code of 1986. ``(E) Administrative fees.--Any fee charged or allocated for collection activities conducted by the Financial Management Service will be passed on to a health plan on a pro- rata basis and added to any penalty fee collected from the plan.''. (b) Promulgation of Rules.-- (1) Unique health plan identifier.--The Secretary shall promulgate a final rule to establish a unique health plan identifier (as described in section 1173(b) of the Social Security Act (42 U.S.C. 1320d-2(b))) based on the input of the National Committee of Vital and Health Statistics. The Secretary may do so on an interim final basis and such rule shall be effective not later than October 1, 2012. (2) Electronic funds transfer.--The Secretary shall promulgate a final rule to establish a standard for electronic funds transfers (as described in section 1173(a)(2)(J) of the Social Security Act, as added by subsection (a)(2)(A)). The Secretary may do so on an interim final basis and shall adopt such standard not later than January 1, 2012, in a manner ensuring that such standard is effective not later than January 1, 2014. (c) Expansion of Electronic Transactions in Medicare.-- Section 1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended-- (1) in paragraph (23), by striking the ``or'' at the end; (2) in paragraph (24), by striking the period and inserting ``; or''; and (3) by inserting after paragraph (24) the following new paragraph: ``(25) not later than January 1, 2014, for which the payment is other than by electronic funds transfer (EFT) or an electronic remittance in a form as specified in ASC X12 835 Health Care Payment and Remittance Advice or subsequent standard.''. (d) Medicare and Medicaid Compliance Reports.--Not later than July 1, 2013, the Secretary of Health and Human Services shall submit a report to the Chairs and Ranking Members of the Committee on Ways and Means and the Committee on Energy and Commerce of the House of Representatives and the Chairs and Ranking Members of the Committee on Health, Education, Labor, and Pensions and the Committee on Finance of the Senate on the extent to which the Medicare program and providers that serve beneficiaries under that program, and State Medicaid programs and providers that serve beneficiaries under those programs, transact electronically in accordance with transaction standards issued under the Health Insurance Portability and Accountability Act of 1996, part C of title XI of the Social Security Act, and regulations promulgated under such Acts. DIVISION B--IMPROVING ACCESS TO HEALTH CARE TITLE I--EXPANDING ACCESS AND LOWERING COSTS FOR SMALL BUSINESSES SEC. 201. RULES GOVERNING ASSOCIATION HEALTH PLANS. (a) In General.--Subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding after part 7 the following new part: ``PART 8--RULES GOVERNING ASSOCIATION HEALTH PLANS ``SEC. 801. ASSOCIATION HEALTH PLANS. ``(a) In General.--For purposes of this part, the term `association health plan' means a group health plan whose sponsor is (or is deemed under this part to be) described in subsection (b). ``(b) Sponsorship.--The sponsor of a group health plan is described in this subsection if such sponsor-- ``(1) is organized and maintained in good faith, with a constitution and bylaws specifically stating its purpose and providing for periodic meetings on at least an annual basis, as a bona fide trade association, a bona fide industry association (including a rural electric cooperative association or a rural telephone cooperative association), a bona fide professional association, or a bona fide chamber of commerce (or similar bona fide business association, including a corporation or similar organization that operates on a cooperative basis (within the meaning of section 1381 of the Internal Revenue Code of 1986)), for substantial purposes other than that of obtaining or providing medical care; ``(2) is established as a permanent entity which receives the active support of its members and requires for membership payment on a periodic basis of dues or payments necessary to maintain eligibility for membership in the sponsor; and ``(3) does not condition membership, such dues or payments, or coverage under the plan on the basis of health status-related factors with respect to the employees of its members (or affiliated members), or the dependents of such employees, and does not condition such dues or payments on the basis of group health plan participation. Any sponsor consisting of an association of entities which meet the requirements of paragraphs (1), (2), and (3) shall be deemed to be a sponsor described in this subsection. ``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS. ``(a) In General.--The applicable authority shall prescribe by regulation a procedure under which, subject to subsection (b), the applicable authority shall certify association health plans which apply for certification as meeting the requirements of this part. ``(b) Standards.--Under the procedure prescribed pursuant to subsection (a), in the case of an association health plan that provides at least one benefit option which does not consist of health insurance coverage, the applicable authority shall certify such plan as meeting the requirements of this part only if the applicable authority is satisfied that the applicable requirements of this part are met (or, upon the date on which the plan is to commence operations, will be met) with respect to the plan. ``(c) Requirements Applicable to Certified Plans.--An association health plan with respect to which certification under this part is in effect shall meet the applicable requirements of this part, effective on the date of certification (or, if later, on the date on which the plan is to commence operations). ``(d) Requirements for Continued Certification.--The applicable authority may provide by regulation for continued certification of association health plans under this part. ``(e) Class Certification for Fully Insured Plans.--The applicable authority shall establish a class certification procedure for association health plans under which all benefits consist of health insurance coverage. Under such procedure, the applicable authority shall provide for the granting of certification under this part to the plans in each class of such association health plans upon appropriate filing under such procedure in connection with plans in such class and payment of the prescribed fee under section 807(a). ``(f) Certification of Self-Insured Association Health Plans.--An association health plan which offers one or more benefit options which do not consist of health insurance coverage may be certified under this part only if such plan consists of any of the following: ``(1) a plan which offered such coverage on the date of the enactment of the Small Business Health Fairness Act of 2009, ``(2) a plan under which the sponsor does not restrict membership to one or more trades and businesses or industries and whose eligible participating employers represent a broad cross-section of trades and businesses or industries, or ``(3) a plan whose eligible participating employers represent one or more trades or businesses, or one or more industries, consisting of any of the following: agriculture; equipment and automobile dealerships; barbering and cosmetology; certified public accounting practices; child care; construction; dance, theatrical and orchestra productions; disinfecting and pest control; financial services; fishing; food service establishments; hospitals; labor organizations; logging; manufacturing (metals); mining; medical and dental practices; medical laboratories; professional consulting services; sanitary services; transportation (local and freight); warehousing; wholesaling/ distributing; or any other trade or business or industry which has been indicated as having average or above-average risk or health claims experience by reason of State rate filings, denials of coverage, proposed premium rate levels, or other means demonstrated by such plan in accordance with regulations. ``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES. ``(a) Sponsor.--The requirements of this subsection are met with respect to an association health plan if the sponsor has met (or is deemed under this part to have met) the requirements of section 801(b) for a continuous period of not less than 3 years ending with the date of the application for certification under this part. ``(b) Board of Trustees.--The requirements of this subsection are met with respect to an association health plan if the following requirements are met: ``(1) Fiscal control.--The plan is operated, pursuant to a trust agreement, by a board of trustees which has complete fiscal control over the plan and which is responsible for all operations of the plan. ``(2) Rules of operation and financial controls.--The board of trustees has in effect rules of operation and financial controls, based on a 3-year plan of operation, adequate to carry out the terms of the plan and to meet all requirements of this title applicable to the plan. ``(3) Rules governing relationship to participating employers and to contractors.-- ``(A) Board membership.-- ``(i) In general.--Except as provided in clauses (ii) and (iii), the members of the board of trustees are individuals selected from individuals who are the owners, officers, directors, or employees of the participating employers or who are partners in the participating employers and actively participate in the business. ``(ii) Limitation.-- ``(I) General rule.--Except as provided in subclauses (II) and (III), no such member is an owner, officer, director, or employee of, or partner in, a contract administrator or other service provider to the plan. ``(II) Limited exception for providers of services solely on behalf of the sponsor.-- Officers or employees of a sponsor which is a service provider (other than a contract administrator) to the plan may be members of the board if they constitute not more than 25 percent of the membership of the board and they do not provide services to the plan other than on behalf of the sponsor. ``(III) Treatment of providers of medical care.--In the case of a sponsor which is an association whose membership consists primarily of providers of medical care, subclause (I) shall not apply in the case of any service provider described in subclause (I) who is a provider of medical care under the plan. ``(iii) Certain plans excluded.-- Clause (i) shall not apply to an association health plan which is in existence on the date of the enactment of the Small Business Health Fairness Act of 2009. ``(B) Sole authority.--The board has sole authority under the plan to approve applications for participation in the plan and to contract with a service provider to administer the day-to-day affairs of the plan. ``(c) Treatment of Franchise Networks.--In the case of a group health plan which is established and maintained by a franchiser for a franchise network consisting of its franchisees-- ``(1) the requirements of subsection (a) and section 801(a) shall be deemed met if such requirements would otherwise be met if the franchiser were deemed to be the sponsor referred to in section 801(b), such network were deemed to be an association described in section 801(b), and each franchisee were deemed to be a member (of the association and the sponsor) referred to in section 801(b); and ``(2) the requirements of section 804(a)(1) shall be deemed met. The Secretary may by regulation define for purposes of this subsection the terms `franchiser', `franchise network', and `franchisee'. ``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS. ``(a) Covered Employers and Individuals.--The requirements of this subsection are met with respect to an association health plan if, under the terms of the plan-- ``(1) each participating employer must be-- ``(A) a member of the sponsor, ``(B) the sponsor, or ``(C) an affiliated member of the sponsor with respect to which the requirements of subsection (b) are met, except that, in the case of a sponsor which is a professional association or other individual-based association, if at least one of the officers, directors, or employees of an employer, or at least one of the individuals who are partners in an employer and who actively participates in the business, is a member or such an affiliated member of the sponsor, participating employers may also include such employer; and ``(2) all individuals commencing coverage under the plan after certification under this part must be-- ``(A) active or retired owners (including self-employed individuals), officers, directors, or employees of, or partners in, participating employers; or ``(B) the beneficiaries of individuals described in subparagraph (A). ``(b) Coverage of Previously Uninsured Employees.--In the case of an association health plan in existence on the date of the enactment of the Small Business Health Fairness Act of 2009, an affiliated member of the sponsor of the plan may be offered coverage under the plan as a participating employer only if-- ``(1) the affiliated member was an affiliated member on the date of certification under this part; or ``(2) during the 12-month period preceding the date of the offering of such coverage, the affiliated member has not maintained or contributed to a group health plan with respect to any of its employees who would otherwise be eligible to participate in such association health plan. ``(c) Individual Market Unaffected.--The requirements of this subsection are met with respect to an association health plan if, under the terms of the plan, no participating employer may provide health insurance coverage in the individual market for any employee not covered under the plan which is similar to the coverage contemporaneously provided to employees of the employer under the plan, if such exclusion of the employee from coverage under the plan is based on a health status-related factor with respect to the employee and such employee would, but for such exclusion on such basis, be eligible for coverage under the plan. ``(d) Prohibition of Discrimination Against Employers and Employees Eligible To Participate.--The requirements of this subsection are met with respect to an association health plan if-- ``(1) under the terms of the plan, all employers meeting the preceding requirements of this section are eligible to qualify as participating employers for all geographically available coverage options, unless, in the case of any such employer, participation or contribution requirements of the type referred to in section 2711 of the Public Health Service Act are not met; ``(2) upon request, any employer eligible to participate is furnished information regarding all coverage options available under the plan; and ``(3) the applicable requirements of sections 701, 702, and 703 are met with respect to the plan. ``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION RATES, AND BENEFIT OPTIONS. ``(a) In General.--The requirements of this section are met with respect to an association health plan if the following requirements are met: ``(1) Contents of governing instruments.--The instruments governing the plan include a written instrument, meeting the requirements of an instrument required under section 402(a)(1), which-- ``(A) provides that the board of trustees serves as the named fiduciary required for plans under section 402(a)(1) and serves in the capacity of a plan administrator (referred to in section 3(16)(A)); ``(B) provides that the sponsor of the plan is to serve as plan sponsor (referred to in section 3(16)(B)); and ``(C) incorporates the requirements of section 806. ``(2) Contribution rates must be nondiscriminatory.-- ``(A) The contribution rates for any participating small employer do not vary on the basis of any health status-related factor in relation to employees of such employer or their beneficiaries and do not vary on the basis of the type of business or industry in which such employer is engaged. ``(B) Nothing in this title or any other provision of law shall be construed to preclude an association health plan, or a health insurance issuer offering health insurance coverage in connection with an association health plan, from-- ``(i) setting contribution rates based on the claims experience of the plan; or ``(ii) varying contribution rates for small employers in a State to the extent that such rates could vary using the same methodology employed in such State for regulating premium rates in the small group market with respect to health insurance coverage offered in connection with bona fide associations (within the meaning of section 2791(d)(3) of the Public Health Service Act), subject to the requirements of section 702(b) relating to contribution rates. ``(3) Floor for number of covered individuals with respect to certain plans.--If any benefit option under the plan does not consist of health insurance coverage, the plan has as of the beginning of the plan year not fewer than 1,000 participants and beneficiaries. ``(4) Marketing requirements.-- ``(A) In general.--If a benefit option which consists of health insurance coverage is offered under the plan, State-licensed insurance agents shall be used to distribute to small employers coverage which does not consist of health insurance coverage in a manner comparable to the manner in which such agents are used to distribute health insurance coverage. ``(B) State-licensed insurance agents.--For purposes of subparagraph (A), the term `State- licensed insurance agents' means one or more agents who are licensed in a State and are subject to the laws of such State relating to licensure, qualification, testing, examination, and continuing education of persons authorized to offer, sell, or solicit health insurance coverage in such State. ``(5) Regulatory requirements.--Such other requirements as the applicable authority determines are necessary to carry out the purposes of this part, which shall be prescribed by the applicable authority by regulation. ``(b) Ability of Association Health Plans To Design Benefit Options.--Subject to section 514(d), nothing in this part or any provision of State law (as defined in section 514(c)(1)) shall be construed to preclude an association health plan, or a health insurance issuer offering health insurance coverage in connection with an association health plan, from exercising its sole discretion in selecting the specific items and services consisting of medical care to be included as benefits under such plan or coverage, except (subject to section 514) in the case of (1) any law to the extent that it is not preempted under section 731(a)(1) with respect to matters governed by section 711, 712, or 713, or (2) any law of the State with which filing and approval of a policy type offered by the plan was initially obtained to the extent that such law prohibits an exclusion of a specific disease from such coverage. ``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH INSURANCE COVERAGE. ``(a) In General.--The requirements of this section are met with respect to an association health plan if-- ``(1) the benefits under the plan consist solely of health insurance coverage; or ``(2) if the plan provides any additional benefit options which do not consist of health insurance coverage, the plan-- ``(A) establishes and maintains reserves with respect to such additional benefit options, in amounts recommended by the qualified actuary, consisting of-- ``(i) a reserve sufficient for unearned contributions; ``(ii) a reserve sufficient for benefit liabilities which have been incurred, which have not been satisfied, and for which risk of loss has not yet been transferred, and for expected administrative costs with respect to such benefit liabilities; ``(iii) a reserve sufficient for any other obligations of the plan; and ``(iv) a reserve sufficient for a margin of error and other fluctuations, taking into account the specific circumstances of the plan; and ``(B) establishes and maintains aggregate and specific excess/stop loss insurance and solvency indemnification, with respect to such additional benefit options for which risk of loss has not yet been transferred, as follows: ``(i) The plan shall secure aggregate excess/stop loss insurance for the plan with an attachment point which is not greater than 125 percent of expected gross annual claims. The applicable authority may by regulation provide for upward adjustments in the amount of such percentage in specified circumstances in which the plan specifically provides for and maintains reserves in excess of the amounts required under subparagraph (A). ``(ii) The plan shall secure specific excess/stop loss insurance for the plan with an attachment point which is at least equal to an amount recommended by the plan's qualified actuary. The applicable authority may by regulation provide for adjustments in the amount of such insurance in specified circumstances in which the plan specifically provides for and maintains reserves in excess of the amounts required under subparagraph (A). ``(iii) The plan shall secure indemnification insurance for any claims which the plan is unable to satisfy by reason of a plan termination. Any person issuing to a plan insurance described in clause (i), (ii), or (iii) of subparagraph (B) shall notify the Secretary of any failure of premium payment meriting cancellation of the policy prior to undertaking such a cancellation. Any regulations prescribed by the applicable authority pursuant to clause (i) or (ii) of subparagraph (B) may allow for such adjustments in the required levels of excess/stop loss insurance as the qualified actuary may recommend, taking into account the specific circumstances of the plan. ``(b) Minimum Surplus in Addition to Claims Reserves.--In the case of any association health plan described in subsection (a)(2), the requirements of this subsection are met if the plan establishes and maintains surplus in an amount at least equal to-- ``(1) $500,000, or ``(2) such greater amount (but not greater than $2,000,000) as may be set forth in regulations prescribed by the applicable authority, considering the level of aggregate and specific excess/stop loss insurance provided with respect to such plan and other factors related to solvency risk, such as the plan's projected levels of participation or claims, the nature of the plan's liabilities, and the types of assets available to assure that such liabilities are met. ``(c) Additional Requirements.--In the case of any association health plan described in subsection (a)(2), the applicable authority may provide such additional requirements relating to reserves, excess/stop loss insurance, and indemnification insurance as the applicable authority considers appropriate. Such requirements may be provided by regulation with respect to any such plan or any class of such plans. ``(d) Adjustments for Excess/Stop Loss Insurance.--The applicable authority may provide for adjustments to the levels of reserves otherwise required under subsections (a) and (b) with respect to any plan or class of plans to take into account excess/stop loss insurance provided with respect to such plan or plans. ``(e) Alternative Means of Compliance.--The applicable authority may permit an association health plan described in subsection (a)(2) to substitute, for all or part of the requirements of this section (except subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless arrangement, or other financial arrangement as the applicable authority determines to be adequate to enable the plan to fully meet all its financial obligations on a timely basis and is otherwise no less protective of the interests of participants and beneficiaries than the requirements for which it is substituted. The applicable authority may take into account, for purposes of this subsection, evidence provided by the plan or sponsor which demonstrates an assumption of liability with respect to the plan. Such evidence may be in the form of a contract of indemnification, lien, bonding, insurance, letter of credit, recourse under applicable terms of the plan in the form of assessments of participating employers, security, or other financial arrangement. ``(f) Measures To Ensure Continued Payment of Benefits by Certain Plans in Distress.-- ``(1) Payments by certain plans to association health plan fund.-- ``(A) In general.--In the case of an association health plan described in subsection (a)(2), the requirements of this subsection are met if the plan makes payments into the Association Health Plan Fund under this subparagraph when they are due. Such payments shall consist of annual payments in the amount of $5,000, and, in addition to such annual payments, such supplemental payments as the Secretary may determine to be necessary under paragraph (2). Payments under this paragraph are payable to the Fund at the time determined by the Secretary. Initial payments are due in advance of certification under this part. Payments shall continue to accrue until a plan's assets are distributed pursuant to a termination procedure. ``(B) Penalties for failure to make payments.--If any payment is not made by a plan when it is due, a late payment charge of not more than 100 percent of the payment which was not timely paid shall be payable by the plan to the Fund. ``(C) Continued duty of the secretary.--The Secretary shall not cease to carry out the provisions of paragraph (2) on account of the failure of a plan to pay any payment when due. ``(2) Payments by secretary to continue excess/stop loss insurance coverage and indemnification insurance coverage for certain plans.--In any case in which the applicable authority determines that there is, or that there is reason to believe that there will be: (A) a failure to take necessary corrective actions under section 809(a) with respect to an association health plan described in subsection (a)(2); or (B) a termination of such a plan under section 809(b) or 810(b)(8) (and, if the applicable authority is not the Secretary, certifies such determination to the Secretary), the Secretary shall determine the amounts necessary to make payments to an insurer (designated by the Secretary) to maintain in force excess/stop loss insurance coverage or indemnification insurance coverage for such plan, if the Secretary determines that there is a reasonable expectation that, without such payments, claims would not be satisfied by reason of termination of such coverage. The Secretary shall, to the extent provided in advance in appropriation Acts, pay such amounts so determined to the insurer designated by the Secretary. ``(3) Association health plan fund.-- ``(A) In general.--There is established on the books of the Treasury a fund to be known as the `Association Health Plan Fund'. The Fund shall be available for making payments pursuant to paragraph (2). The Fund shall be credited with payments received pursuant to paragraph (1)(A), penalties received pursuant to paragraph (1)(B); and earnings on investments of amounts of the Fund under subparagraph (B). ``(B) Investment.--Whenever the Secretary determines that the moneys of the fund are in excess of current needs, the Secretary may request the investment of such amounts as the Secretary determines advisable by the Secretary of the Treasury in obligations issued or guaranteed by the United States. ``(g) Excess/Stop Loss Insurance.--For purposes of this section-- ``(1) Aggregate excess/stop loss insurance.--The term `aggregate excess/stop loss insurance' means, in connection with an association health plan, a contract-- ``(A) under which an insurer (meeting such minimum standards as the applicable authority may prescribe by regulation) provides for payment to the plan with respect to aggregate claims under the plan in excess of an amount or amounts specified in such contract; ``(B) which is guaranteed renewable; and ``(C) which allows for payment of premiums by any third party on behalf of the insured plan. ``(2) Specific excess/stop loss insurance.--The term `specific excess/stop loss insurance' means, in connection with an association health plan, a contract-- ``(A) under which an insurer (meeting such minimum standards as the applicable authority may prescribe by regulation) provides for payment to the plan with respect to claims under the plan in connection with a covered individual in excess of an amount or amounts specified in such contract in connection with such covered individual; ``(B) which is guaranteed renewable; and ``(C) which allows for payment of premiums by any third party on behalf of the insured plan. ``(h) Indemnification Insurance.--For purposes of this section, the term `indemnification insurance' means, in connection with an association health plan, a contract-- ``(1) under which an insurer (meeting such minimum standards as the applicable authority may prescribe by regulation) provides for payment to the plan with respect to claims under the plan which the plan is unable to satisfy by reason of a termination pursuant to section 809(b) (relating to mandatory termination); ``(2) which is guaranteed renewable and noncancellable for any reason (except as the applicable authority may prescribe by regulation); and ``(3) which allows for payment of premiums by any third party on behalf of the insured plan. ``(i) Reserves.--For purposes of this section, the term `reserves'' means, in connection with an association health plan, plan assets which meet the fiduciary standards under part 4 and such additional requirements regarding liquidity as the applicable authority may prescribe by regulation. ``(j) Solvency Standards Working Group.-- ``(1) In general.--Within 90 days after the date of the enactment of the Small Business Health Fairness Act of 2009, the applicable authority shall establish a Solvency Standards Working Group. In prescribing the initial regulations under this section, the applicable authority shall take into account the recommendations of such Working Group. ``(2) Membership.--The Working Group shall consist of not more than 15 members appointed by the applicable authority. The applicable authority shall include among persons invited to membership on the Working Group at least one of each of the following: ``(A) a representative of the National Association of Insurance Commissioners; ``(B) a representative of the American Academy of Actuaries; ``(C) a representative of the State governments, or their interests; ``(D) a representative of existing self- insured arrangements, or their interests; ``(E) a representative of associations of the type referred to in section 801(b)(1), or their interests; and ``(F) a representative of multiemployer plans that are group health plans, or their interests. ``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS. ``(a) Filing Fee.--Under the procedure prescribed pursuant to section 802(a), an association health plan shall pay to the applicable authority at the time of filing an application for certification under this part a filing fee in the amount of $5,000, which shall be available in the case of the Secretary, to the extent provided in appropriation Acts, for the sole purpose of administering the certification procedures applicable with respect to association health plans. ``(b) Information To Be Included in Application for Certification.--An application for certification under this part meets the requirements of this section only if it includes, in a manner and form which shall be prescribed by the applicable authority by regulation, at least the following information: ``(1) Identifying information.--The names and addresses of-- ``(A) the sponsor; and ``(B) the members of the board of trustees of the plan. ``(2) States in which plan intends to do business.-- The States in which participants and beneficiaries under the plan are to be located and the number of them expected to be located in each such State. ``(3) Bonding requirements.--Evidence provided by the board of trustees that the bonding requirements of section 412 will be met as of the date of the application or (if later) commencement of operations. ``(4) Plan documents.--A copy of the documents governing the plan (including any bylaws and trust agreements), the summary plan description, and other material describing the benefits that will be provided to participants and beneficiaries under the plan. ``(5) Agreements with service providers.--A copy of any agreements between the plan and contract administrators and other service providers. ``(6) Funding report.--In the case of association health plans providing benefits options in addition to health insurance coverage, a report setting forth information with respect to such additional benefit options determined as of a date within the 120-day period ending with the date of the application, including the following: ``(A) Reserves.--A statement, certified by the board of trustees of the plan, and a statement of actuarial opinion, signed by a qualified actuary, that all applicable requirements of section 806 are or will be met in accordance with regulations which the applicable authority shall prescribe. ``(B) Adequacy of contribution rates.--A statement of actuarial opinion, signed by a qualified actuary, which sets forth a description of the extent to which contribution rates are adequate to provide for the payment of all obligations and the maintenance of required reserves under the plan for the 12- month period beginning with such date within such 120-day period, taking into account the expected coverage and experience of the plan. If the contribution rates are not fully adequate, the statement of actuarial opinion shall indicate the extent to which the rates are inadequate and the changes needed to ensure adequacy. ``(C) Current and projected value of assets and liabilities.--A statement of actuarial opinion signed by a qualified actuary, which sets forth the current value of the assets and liabilities accumulated under the plan and a projection of the assets, liabilities, income, and expenses of the plan for the 12-month period referred to in subparagraph (B). The income statement shall identify separately the plan's administrative expenses and claims. ``(D) Costs of coverage to be charged and other expenses.--A statement of the costs of coverage to be charged, including an itemization of amounts for administration, reserves, and other expenses associated with the operation of the plan. ``(E) Other information.--Any other information as may be determined by the applicable authority, by regulation, as necessary to carry out the purposes of this part. ``(c) Filing Notice of Certification With States.--A certification granted under this part to an association health plan shall not be effective unless written notice of such certification is filed with the applicable State authority of each State in which at least 25 percent of the participants and beneficiaries under the plan are located. For purposes of this subsection, an individual shall be considered to be located in the State in which a known address of such individual is located or in which such individual is employed. ``(d) Notice of Material Changes.--In the case of any association health plan certified under this part, descriptions of material changes in any information which was required to be submitted with the application for the certification under this part shall be filed in such form and manner as shall be prescribed by the applicable authority by regulation. The applicable authority may require by regulation prior notice of material changes with respect to specified matters which might serve as the basis for suspension or revocation of the certification. ``(e) Reporting Requirements for Certain Association Health Plans.--An association health plan certified under this part which provides benefit options in addition to health insurance coverage for such plan year shall meet the requirements of section 103 by filing an annual report under such section which shall include information described in subsection (b)(6) with respect to the plan year and, notwithstanding section 104(a)(1)(A), shall be filed with the applicable authority not later than 90 days after the close of the plan year (or on such later date as may be prescribed by the applicable authority). The applicable authority may require by regulation such interim reports as it considers appropriate. ``(f) Engagement of Qualified Actuary.--The board of trustees of each association health plan which provides benefits options in addition to health insurance coverage and which is applying for certification under this part or is certified under this part shall engage, on behalf of all participants and beneficiaries, a qualified actuary who shall be responsible for the preparation of the materials comprising information necessary to be submitted by a qualified actuary under this part. The qualified actuary shall utilize such assumptions and techniques as are necessary to enable such actuary to form an opinion as to whether the contents of the matters reported under this part-- ``(1) are in the aggregate reasonably related to the experience of the plan and to reasonable expectations; and ``(2) represent such actuary's best estimate of anticipated experience under the plan. The opinion by the qualified actuary shall be made with respect to, and shall be made a part of, the annual report. ``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION. ``Except as provided in section 809(b), an association health plan which is or has been certified under this part may terminate (upon or at any time after cessation of accruals in benefit liabilities) only if the board of trustees, not less than 60 days before the proposed termination date-- ``(1) provides to the participants and beneficiaries a written notice of intent to terminate stating that such termination is intended and the proposed termination date; ``(2) develops a plan for winding up the affairs of the plan in connection with such termination in a manner which will result in timely payment of all benefits for which the plan is obligated; and ``(3) submits such plan in writing to the applicable authority. Actions required under this section shall be taken in such form and manner as may be prescribed by the applicable authority by regulation. ``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION. ``(a) Actions To Avoid Depletion of Reserves.--An association health plan which is certified under this part and which provides benefits other than health insurance coverage shall continue to meet the requirements of section 806, irrespective of whether such certification continues in effect. The board of trustees of such plan shall determine quarterly whether the requirements of section 806 are met. In any case in which the board determines that there is reason to believe that there is or will be a failure to meet such requirements, or the applicable authority makes such a determination and so notifies the board, the board shall immediately notify the qualified actuary engaged by the plan, and such actuary shall, not later than the end of the next following month, make such recommendations to the board for corrective action as the actuary determines necessary to ensure compliance with section 806. Not later than 30 days after receiving from the actuary recommendations for corrective actions, the board shall notify the applicable authority (in such form and manner as the applicable authority may prescribe by regulation) of such recommendations of the actuary for corrective action, together with a description of the actions (if any) that the board has taken or plans to take in response to such recommendations. The board shall thereafter report to the applicable authority, in such form and frequency as the applicable authority may specify to the board, regarding corrective action taken by the board until the requirements of section 806 are met. ``(b) Mandatory Termination.--In any case in which-- ``(1) the applicable authority has been notified under subsection (a) (or by an issuer of excess/stop loss insurance or indemnity insurance pursuant to section 806(a)) of a failure of an association health plan which is or has been certified under this part and is described in section 806(a)(2) to meet the requirements of section 806 and has not been notified by the board of trustees of the plan that corrective action has restored compliance with such requirements; and ``(2) the applicable authority determines that there is a reasonable expectation that the plan will continue to fail to meet the requirements of section 806, the board of trustees of the plan shall, at the direction of the applicable authority, terminate the plan and, in the course of the termination, take such actions as the applicable authority may require, including satisfying any claims referred to in section 806(a)(2)(B)(iii) and recovering for the plan any liability under subsection (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure that the affairs of the plan will be, to the maximum extent possible, wound up in a manner which will result in timely provision of all benefits for which the plan is obligated. ``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION HEALTH PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH INSURANCE COVERAGE. ``(a) Appointment of Secretary as Trustee for Insolvent Plans.--Whenever the Secretary determines that an association health plan which is or has been certified under this part and which is described in section 806(a)(2) will be unable to provide benefits when due or is otherwise in a financially hazardous condition, as shall be defined by the Secretary by regulation, the Secretary shall, upon notice to the plan, apply to the appropriate United States district court for appointment of the Secretary as trustee to administer the plan for the duration of the insolvency. The plan may appear as a party and other interested persons may intervene in the proceedings at the discretion of the court. The court shall appoint such Secretary trustee if the court determines that the trusteeship is necessary to protect the interests of the participants and beneficiaries or providers of medical care or to avoid any unreasonable deterioration of the financial condition of the plan. The trusteeship of such Secretary shall continue until the conditions described in the first sentence of this subsection are remedied or the plan is terminated. ``(b) Powers as Trustee.--The Secretary, upon appointment as trustee under subsection (a), shall have the power-- ``(1) to do any act authorized by the plan, this title, or other applicable provisions of law to be done by the plan administrator or any trustee of the plan; ``(2) to require the transfer of all (or any part) of the assets and records of the plan to the Secretary as trustee; ``(3) to invest any assets of the plan which the Secretary holds in accordance with the provisions of the plan, regulations prescribed by the Secretary, and applicable provisions of law; ``(4) to require the sponsor, the plan administrator, any participating employer, and any employee organization representing plan participants to furnish any information with respect to the plan which the Secretary as trustee may reasonably need in order to administer the plan; ``(5) to collect for the plan any amounts due the plan and to recover reasonable expenses of the trusteeship; ``(6) to commence, prosecute, or defend on behalf of the plan any suit or proceeding involving the plan; ``(7) to issue, publish, or file such notices, statements, and reports as may be required by the Secretary by regulation or required by any order of the court; ``(8) to terminate the plan (or provide for its termination in accordance with section 809(b)) and liquidate the plan assets, to restore the plan to the responsibility of the sponsor, or to continue the trusteeship; ``(9) to provide for the enrollment of plan participants and beneficiaries under appropriate coverage options; and ``(10) to do such other acts as may be necessary to comply with this title or any order of the court and to protect the interests of plan participants and beneficiaries and providers of medical care. ``(c) Notice of Appointment.--As soon as practicable after the Secretary's appointment as trustee, the Secretary shall give notice of such appointment to-- ``(1) the sponsor and plan administrator; ``(2) each participant; ``(3) each participating employer; and ``(4) if applicable, each employee organization which, for purposes of collective bargaining, represents plan participants. ``(d) Additional Duties.--Except to the extent inconsistent with the provisions of this title, or as may be otherwise ordered by the court, the Secretary, upon appointment as trustee under this section, shall be subject to the same duties as those of a trustee under section 704 of title 11, United States Code, and shall have the duties of a fiduciary for purposes of this title. ``(e) Other Proceedings.--An application by the Secretary under this subsection may be filed notwithstanding the pendency in the same or any other court of any bankruptcy, mortgage foreclosure, or equity receivership proceeding, or any proceeding to reorganize, conserve, or liquidate such plan or its property, or any proceeding to enforce a lien against property of the plan. ``(f) Jurisdiction of Court.-- ``(1) In general.--Upon the filing of an application for the appointment as trustee or the issuance of a decree under this section, the court to which the application is made shall have exclusive jurisdiction of the plan involved and its property wherever located with the powers, to the extent consistent with the purposes of this section, of a court of the United States having jurisdiction over cases under chapter 11 of title 11, United States Code. Pending an adjudication under this section such court shall stay, and upon appointment by it of the Secretary as trustee, such court shall continue the stay of, any pending mortgage foreclosure, equity receivership, or other proceeding to reorganize, conserve, or liquidate the plan, the sponsor, or property of such plan or sponsor, and any other suit against any receiver, conservator, or trustee of the plan, the sponsor, or property of the plan or sponsor. Pending such adjudication and upon the appointment by it of the Secretary as trustee, the court may stay any proceeding to enforce a lien against property of the plan or the sponsor or any other suit against the plan or the sponsor. ``(2) Venue.--An action under this section may be brought in the judicial district where the sponsor or the plan administrator resides or does business or where any asset of the plan is situated. A district court in which such action is brought may issue process with respect to such action in any other judicial district. ``(g) Personnel.--In accordance with regulations which shall be prescribed by the Secretary, the Secretary shall appoint, retain, and compensate accountants, actuaries, and other professional service personnel as may be necessary in connection with the Secretary's service as trustee under this section. ``SEC. 811. STATE ASSESSMENT AUTHORITY. ``(a) In General.--Notwithstanding section 514, a State may impose by law a contribution tax on an association health plan described in section 806(a)(2), if the plan commenced operations in such State after the date of the enactment of the Small Business Health Fairness Act of 2009. ``(b) Contribution Tax.--For purposes of this section, the term `contribution tax' imposed by a State on an association health plan means any tax imposed by such State if-- ``(1) such tax is computed by applying a rate to the amount of premiums or contributions, with respect to individuals covered under the plan who are residents of such State, which are received by the plan from participating employers located in such State or from such individuals; ``(2) the rate of such tax does not exceed the rate of any tax imposed by such State on premiums or contributions received by insurers or health maintenance organizations for health insurance coverage offered in such State in connection with a group health plan; ``(3) such tax is otherwise nondiscriminatory; and ``(4) the amount of any such tax assessed on the plan is reduced by the amount of any tax or assessment otherwise imposed by the State on premiums, contributions, or both received by insurers or health maintenance organizations for health insurance coverage, aggregate excess/stop loss insurance (as defined in section 806(g)(1)), specific excess/stop loss insurance (as defined in section 806(g)(2)), other insurance related to the provision of medical care under the plan, or any combination thereof provided by such insurers or health maintenance organizations in such State in connection with such plan. ``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. ``(a) Definitions.--For purposes of this part-- ``(1) Group health plan.--The term `group health plan' has the meaning provided in section 733(a)(1) (after applying subsection (b) of this section). ``(2) Medical care.--The term `medical care' has the meaning provided in section 733(a)(2). ``(3) Health insurance coverage.--The term `health insurance coverage' has the meaning provided in section 733(b)(1). ``(4) Health insurance issuer.--The term `health insurance issuer' has the meaning provided in section 733(b)(2). ``(5) Applicable authority.--The term `applicable authority' means the Secretary, except that, in connection with any exercise of the Secretary's authority regarding which the Secretary is required under section 506(d) to consult with a State, such term means the Secretary, in consultation with such State. ``(6) Health status-related factor.--The term `health status-related factor' has the meaning provided in section 733(d)(2). ``(7) Individual market.-- ``(A) In general.--The term `individual market' means the market for health insurance coverage offered to individuals other than in connection with a group health plan. ``(B) Treatment of very small groups.-- ``(i) In general.--Subject to clause (ii), such term includes coverage offered in connection with a group health plan that has fewer than 2 participants as current employees or participants described in section 732(d)(3) on the first day of the plan year. ``(ii) State exception.--Clause (i) shall not apply in the case of health insurance coverage offered in a State if such State regulates the coverage described in such clause in the same manner and to the same extent as coverage in the small group market (as defined in section 2791(e)(5) of the Public Health Service Act) is regulated by such State. ``(8) Participating employer.--The term `participating employer' means, in connection with an association health plan, any employer, if any individual who is an employee of such employer, a partner in such employer, or a self-employed individual who is such employer (or any dependent, as defined under the terms of the plan, of such individual) is or was covered under such plan in connection with the status of such individual as such an employee, partner, or self-employed individual in relation to the plan. ``(9) Applicable state authority.--The term `applicable State authority' means, with respect to a health insurance issuer in a State, the State insurance commissioner or official or officials designated by the State to enforce the requirements of title XXVII of the Public Health Service Act for the State involved with respect to such issuer. ``(10) Qualified actuary.--The term `qualified actuary' means an individual who is a member of the American Academy of Actuaries. ``(11) Affiliated member.--The term `affiliated member' means, in connection with a sponsor-- ``(A) a person who is otherwise eligible to be a member of the sponsor but who elects an affiliated status with the sponsor, ``(B) in the case of a sponsor with members which consist of associations, a person who is a member of any such association and elects an affiliated status with the sponsor, or ``(C) in the case of an association health plan in existence on the date of the enactment of the Small Business Health Fairness Act of 2009, a person eligible to be a member of the sponsor or one of its member associations. ``(12) Large employer.--The term `large employer' means, in connection with a group health plan with respect to a plan year, an employer who employed an average of at least 51 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year. ``(13) Small employer.--The term `small employer' means, in connection with a group health plan with respect to a plan year, an employer who is not a large employer. ``(b) Rules of Construction.-- ``(1) Employers and employees.--For purposes of determining whether a plan, fund, or program is an employee welfare benefit plan which is an association health plan, and for purposes of applying this title in connection with such plan, fund, or program so determined to be such an employee welfare benefit plan-- ``(A) in the case of a partnership, the term `employer' (as defined in section 3(5)) includes the partnership in relation to the partners, and the term `employee' (as defined in section 3(6)) includes any partner in relation to the partnership; and ``(B) in the case of a self-employed individual, the term `employer' (as defined in section 3(5)) and the term `employee' (as defined in section 3(6)) shall include such individual. ``(2) Plans, funds, and programs treated as employee welfare benefit plans.--In the case of any plan, fund, or program which was established or is maintained for the purpose of providing medical care (through the purchase of insurance or otherwise) for employees (or their dependents) covered thereunder and which demonstrates to the Secretary 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 program 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 ``Subsection (a)'' and inserting ``Subsections (a) and (d)''; (B) in subsection (b)(5), by striking ``subsection (a)'' in subparagraph (A) and inserting ``subsection (a) of this section and subsections (a)(2)(B) and (b) of section 805'', and by striking ``subsection (a)'' in subparagraph (B) and inserting ``subsection (a) of this section or subsection (a)(2)(B) or (b) of section 805''; (C) by redesignating subsections (d) and (e) as subsections (e) and (f), respectively; 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 coverage of any policy type is offered under an association health plan certified under part 8 to a participating employer operating in such State, the provisions 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 coverage of the same policy type to other employers operating 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 coverage 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 defined 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 supersede any and all laws of any other State in which health insurance coverage of such type is offered, insofar 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 respect to health insurance issuers or health insurance coverage, to supersede or impair the law of any State-- ``(A) providing solvency standards or similar standards regarding the adequacy of insurer capital, surplus, reserves, or contributions, or ``(B) relating to prompt payment of claims. ``(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 `association health plan' has the meaning provided in section 801(a), and the terms `health insurance coverage', `participating employer', and `health insurance issuer' have the meanings provided such terms in section 812, respectively.''. (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 meaning of section 733(a)(2)),'' after ``arrangement,'', 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 733(a)(2)), any law of any State which regulates insurance 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), nothing''; 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 Business 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 Related 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 include in its summary plan description, in connection with each benefit option, a description of the form of solvency 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 Certification 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 relating 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 providing health benefits in addition to health insurance coverage. ``811. State assessment authority. ``812. Definitions and rules of construction.''. SEC. 202. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS. Section 3(40)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(40)(B)) is amended-- (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, whether or not incorporated, shall be deemed a single employer 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 determination'' and inserting the following: ``(iii)(I) in any case in which the benefit referred to in subparagraph (A) consists of medical care (as defined in section 812(a)(2)), the determination of whether a trade or business is under `common control' with another trade or business shall be determined under regulations of the Secretary 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 section 4001(b), except that, for purposes of this paragraph, 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 participating 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 employees of participating employers and who are covered under the arrangement,''. SEC. 203. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION 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 subsection: ``(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 employees 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 bargaining 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 Act (45 U.S.C. 152, paragraph Fourth) or which are reached pursuant to labor-management negotiations under similar provisions of State public employee relations 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 Desist Orders.-- ``(1) In general.--Subject to paragraph (2), upon application by the Secretary showing the operation, promotion, or marketing of an association health plan (or similar arrangement providing benefits consisting of medical care (as defined in section 733(a)(2))) that-- ``(A) is not certified under part 8, is subject under section 514(b)(6) to the insurance laws of any State in which the plan or arrangement offers or provides benefits, and is not licensed, 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 coverage; and ``(B) with respect to each State in which the plan or arrangement offers or provides benefits, 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, including any relief available under this title, as it deems necessary to protect the interests of the public 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 requirements of this section are met in connection with claims filed under the plan.''. SEC. 204. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES. Section 506 of the Employee Retirement Income Security 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 Secretary shall consult with the State recognized under paragraph (2) with respect to an association health plan regarding the exercise of-- ``(A) the Secretary's authority under sections 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 accordance with regulations of the Secretary applicable to certification under part 8. ``(2) Recognition of primary domicile state.--In carrying out paragraph (1), the Secretary shall ensure that only one State will be recognized, 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 offered 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 maintained.''. SEC. 205. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES. (a) Effective Date.--The amendments made by this title 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 amendments made by this title 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 arrangement is maintained in a State for the purpose of providing benefits consisting of medical care for the employees and beneficiaries of its participating employers, at least 200 participating employers make contributions to such arrangement, such arrangement 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 participating employers, upon the filing with the applicable authority (as defined in section 812(a)(5) of the Employee Retirement Income Security Act of 1974 (as amended by this subtitle)) by the arrangement of an application for certification of the arrangement 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 arrangement is operated by a board of directors which-- (i) is elected by the participating employers, 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 operations 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 subsection, 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 subsection. TITLE II--TARGETED EFFORTS TO EXPAND ACCESS SEC. 211. EXTENDING COVERAGE OF DEPENDENTS. (a) Employee Retirement Income Security Act of 1974.-- (1) In general.--Part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by inserting after section 2714 the following new section: ``SEC. 715. EXTENDING COVERAGE OF DEPENDENTS. ``(a) In General.--In the case of a group health plan, or health insurance coverage offered in connection with a group health plan, that treats as a beneficiary under the plan an individual who is a dependent child of a participant or beneficiary under the plan, the plan or coverage shall continue to treat the individual as a dependent child without regard to the individual's age through at least the end of the plan year in which the individual turns an age specified in the plan, but not less than 25 years of age. ``(b) Construction.--Nothing in this section shall be construed as requiring a group health plan to provide benefits for dependent children as beneficiaries under the plan or to require a participant to elect coverage of dependent children.''. (2) Clerical amendment.--The table of contents of such Act is amended by inserting after the item relating to section 714 the following new item: ``Sec. 715. Extending coverage of dependents through plan year that includes 25th birthday.''. (b) PHSA.--Title XXVII of the Public Health Service Act is amended by inserting after section 2707 the following new section: ``SEC. 2708. EXTENDING COVERAGE OF DEPENDENTS. ``(a) In General.--In the case of a group health plan, or health insurance coverage offered in connection with a group health plan, that treats as a beneficiary under the plan an individual who is a dependent child of a participant or beneficiary under the plan, the plan or coverage shall continue to treat the individual as a dependent child without regard to the individual's age through at least the end of the plan year in which the individual turns an age specified in the plan, but not less than 25 years of age.. ``(b) Construction.--Nothing in this section shall be construed as requiring a group health plan to provide benefits for dependent children as beneficiaries under the plan or to require a participant to elect coverage of dependent children.''. (c) IRC.-- (1) In general.--Subchapter B of chapter 100 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: ``SEC. 9814. EXTENDING COVERAGE OF DEPENDENTS. ``(a) In General.--In the case of a group health plan that treats as a beneficiary under the plan an individual who is a dependent child of a participant or beneficiary under the plan, the plan shall continue to treat the individual as a dependent child without regard to the individual's age through at least the end of the plan year in which the individual turns an age specified in the plan, but not less than 25 years of age. ``(b) Construction.--Nothing in this section shall be construed as requiring a group health plan to provide coverage for dependent children as beneficiaries under the plan or to require a participant to elect coverage of dependent children.''. (2) Clerical amendment.--The table of sections in such subchapter is amended by adding at the end the following new item: ``Sec. 9814. Extending coverage of dependents through plan year that includes 25th birthday.''. (d) Effective Date.--The amendments made by this section shall apply to group health plans for plan years beginning more than 3 months after the date of the enactment of this Act and shall apply to individuals who are dependent children under a group health plan, or health insurance coverage offered in connection with such a plan, on or after such date. SEC. 212. ALLOWING AUTO-ENROLLMENT FOR EMPLOYER SPONSORED COVERAGE. (a) In General.--No State shall establish a law that prevents an employer from instituting auto-enrollment for coverage of a participant or beneficiary, including current employees, under a group health plan, or health insurance coverage offered in connection with such a plan, so long as the participant or beneficiary has the option of declining such coverage. (b) Autoenrollment.-- (1) Notice required.--Employers with auto-enrollment under a group health plan or health insurance coverage shall provide annual notification, within a reasonable period before the beginning of each plan year, to each employee eligible to participate in the plan. The notice shall explain the employee contribution to such plan and the employee's right to decline coverage. (2) Treatment of non-action.--After a reasonable period of time after receipt of the notice, if an employee fails to make an affirmative declaration declining coverage, then such an employee may be enrolled in the group health plan or health insurance coverage offered in connection with such a plan.'' (c) Construction.--Nothing in this section shall be construed to supersede State law which establishes, implements, or continues in effect any standard or requirement relating to employers in connection with payroll or the sponsoring of employer sponsored health insurance coverage except to the extent that such standard or requirement prevents an employer from instituting the auto-enrollment described in subsection (a). TITLE III--EXPANDING CHOICES BY ALLOWING AMERICANS TO BUY HEALTH CARE COVERAGE ACROSS STATE LINES SEC. 221. INTERSTATE PURCHASING OF HEALTH INSURANCE. (a) In General.--Title XXVII of the Public Health Service Act (42 U.S.C. 300gg et seq.) is amended by adding at the end the following new part: ``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 insurance 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 respect 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 insurance 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 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 coverage.--The term `individual health insurance coverage' 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 insurance commissioner or official or officials designated 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 financial condition, a health insurance issuer is unlikely to be able-- ``(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, agreements, and orders governing the insurance business pertaining to-- ``(i) individual health insurance coverage issued by a health insurance issuer; ``(ii) the offer, sale, rating (including medical underwriting), renewal, and issuance of individual health insurance coverage to an individual; ``(iii) the provision to an individual in relation to individual health insurance coverage of health care and insurance related services; ``(iv) the provision to an individual in relation to individual health insurance coverage of management, operations, and investment activities of a health insurance issuer; and ``(v) the provision to an individual in relation to individual health insurance coverage of loss control and claims administration for a health insurance issuer with respect to liability for which the issuer provides insurance. ``(B) Exception.--Such term does not include any law, rule, regulation, agreement, or order governing the use of care or cost management techniques, including any requirement related to provider contracting, network access or adequacy, health care data collection, or quality assurance. ``(8) State.--The term `State' means the 50 States and includes the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands. ``(9) Unfair claims settlement practices.--The term `unfair claims settlement practices' means only the following practices: ``(A) Knowingly misrepresenting to claimants and insured individuals relevant facts or policy provisions relating to coverage at issue. ``(B) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under policies. ``(C) Failing to adopt and implement reasonable 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 conducting 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 institute 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. ``(I) Attempting to settle or settling claims on the basis of an application that was materially 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 requests 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 concerning, 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 reinsurer, broker or its agent, false information as part of, in support of or concerning a fact material to one or more of the following: ``(i) An application for the issuance or renewal of an insurance policy or reinsurance contract. ``(ii) The rating of an insurance policy or reinsurance contract. ``(iii) A claim for payment or benefit pursuant to an insurance policy or reinsurance 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 commissioner or the chief insurance regulatory official of another jurisdiction. ``(vii) The financial condition of an insurer or reinsurer. ``(viii) The formation, acquisition, merger, reconsolidation, dissolution or withdrawal from one or more lines of insurance 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 insurance policy. ``(B) Solicitation or acceptance of new or renewal insurance risks on behalf of an insurer reinsurer or other person engaged in the business of insurance by a person who knows or should know that the insurer or other person responsible for the risk is insolvent at the time of the transaction. ``(C) Transaction of the business of insurance in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of insurance. ``(D) Attempt to commit, aiding or abetting in the commission of, or conspiracy to commit the acts or omissions specified in this paragraph. ``SEC. 2796. APPLICATION OF LAW. ``(a) In General.--The covered laws of the primary State shall apply to individual health insurance coverage offered by a health insurance issuer in the primary State and in any secondary State, but only if the coverage and issuer comply with the conditions of this section with respect to the offering of coverage in any secondary State. ``(b) Exemptions From Covered Laws in a Secondary State.-- Except as provided in this section, a health insurance issuer with respect to its offer, sale, rating (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 indirectly, 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 documents or process; ``(C) to submit to an examination of its financial condition by the State insurance commissioner in any State in which the issuer is doing business to determine the issuer's financial condition, if-- ``(i) the State insurance commissioner of the primary State has not done an examination within the period recommended by the National Association of Insurance Commissioners; and ``(ii) any such examination is conducted in accordance with the examiners'' handbook of the National Association of Insurance Commissioners and is coordinated to avoid unjustified duplication and unjustified repetition; ``(D) to comply with a lawful order issued-- ``(i) in a delinquency proceeding commenced by the State insurance commissioner if there has been a finding of financial impairment under subparagraph (C); or ``(ii) in a voluntary dissolution proceeding; ``(E) to comply with an injunction issued by a court of competent jurisdiction, upon a petition by the State insurance commissioner alleging that the issuer is in hazardous financial condition; ``(F) to participate, on a nondiscriminatory basis, in any insurance insolvency guaranty association or similar association to which a health insurance issuer in the State is required to belong; ``(G) to comply with any State law regarding fraud and abuse (as defined in section 2795(10)), except that if the State seeks an injunction 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 regarding unfair claims settlement practices (as defined in section 2795(9)); or ``(I) to comply with the applicable requirements 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 Secondary State; or ``(3) otherwise discriminate against the issuer issuing insurance in both the primary State and in any secondary State. ``(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 insurance 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, respectively, for the coverage concerned: this policy is issued by _____ AND IS GOVERNED BY THE LAWS AND REGULATIONS OF THE STATE OF _____, 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 _____, INCLUDING COVERAGE OF SOME SERVICES OR BENEFITS MANDATED BY THE LAW OF THE STATE OF _____. ADDITIONALLY, THIS POLICY IS NOT SUBJECT TO ALL OF THE CONSUMER PROTECTION LAWS OR RESTRICTIONS ON RATE CHANGES OF THE STATE OF _____. AS WITH ALL INSURANCE PRODUCTS, BEFORE PURCHASING 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.''. ``(d) Prohibition on Certain Reclassifications and Premium Increases.-- ``(1) In general.--For purposes of this section, a health insurance issuer that provides individual 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 insured 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 status-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; ``(B) from raising premium rates for all policy holders within a class based on claims experience; ``(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 incentives-- ``(i) are disclosed to the consumer in the insurance contract; ``(ii) are based on specific wellness activities that are not applicable to all individuals; and ``(iii) are not obtainable by all individuals 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. ``(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 compensation subject to the provisions of the laws of that State, except that a State may not impose any qualification or requirement which discriminates against a nonresident agent or broker. ``(g) Documents for Submission to State Insurance Commissioner.--Each health insurance issuer issuing individual health insurance coverage in both primary and secondary States shall submit-- ``(1) to the insurance commissioner of each State in which it intends to offer such coverage, before it may offer individual health insurance coverage in such State-- ``(A) a copy of the plan of operation or feasibility 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 ``(C) written notice from the issuer of the issuer's compliance with all the laws of the primary State; and ``(2) to the insurance commissioner of each secondary State in which it offers individual health insurance coverage, a copy of the issuer's quarterly financial statement submitted to the primary State, which statement shall be certified by an independent public accountant and contain a statement of opinion 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 insurance; 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 subparagraphs (A) through (H) of section 2796(b)(1). ``(i) Power of Secondary States To Take Administrative 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 section 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 construed 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 Federal or State court of competent jurisdiction. ``(k) States' Authority To Sue.--Nothing in this section shall affect the authority of any State to bring action in any Federal or State court. ``(l) Generally Applicable Laws.--Nothing in this section shall be construed to affect the applicability of State laws generally applicable to persons or corporations. ``(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 residents of a secondary State, and the issuer is offering coverage 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 insurance 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 capital and surplus requirements for all health insurance issuers. ``SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCEDURES. ``(a) Right to External Appeal.--A health insurance issuer may not offer, sell, or issue individual health insurance coverage in a secondary State under the provisions of this title unless-- ``(1) both the secondary State and the primary State have legislation or regulations in place establishing an independent review process for individuals who are covered by individual health insurance coverage, or ``(2) in any case in which the requirements of subparagraph (A) are not met with respect to the either of such States, the issuer provides an independent review mechanism substantially identical (as determined by the applicable State authority of such State) to that prescribed in the `Health Carrier External Review Model Act' of the National Association 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 reviewer 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). ``(2) Licensure and expertise.--Each independent medical reviewer shall be a physician (allopathic or osteopathic) or health care professional who-- ``(A) is appropriately credentialed or licensed 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 subparagraph (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, financial, 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 subparagraph (A) shall be construed to-- ``(i) prohibit an individual, solely on the basis of affiliation with the issuer, from serving as an independent medical reviewer 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 affiliation 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 serving 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 ``(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 services-- ``(i) by a physician, a reviewer shall be a practicing physician (allopathic or osteopathic) of the same or similar specialty, as a physician who, acting within the appropriate 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 treatment 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 professional of the same or similar specialty as the non-physician health care professional who, acting within the appropriate 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 treatment under review. ``(B) Practicing defined.--For purposes 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 compensation.-- 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 rendered by the reviewer. ``(7) Related party defined.--For purposes of this section, the term `related party' means, with respect to a denial of a claim under a coverage relating 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 representative). ``(C) The health care professional that provides the items or services involved in the denial. ``(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 services 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 subsection: ``(A) Enrollee.--The term `enrollee' means, with respect to health insurance coverage offered by a health insurance issuer, an individual enrolled with the issuer to receive such coverage. ``(B) Health care professional.--The term `health care professional' means an individual 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. 2799. 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 secondary State that fails to comply with the covered laws of the primary State, the applicable State authority of the 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 concerning the effect of the amendment made by subsection (a) on-- (A) the number of uninsured and under-insured; (B) the availability and cost of health insurance policies for individuals with preexisting medical conditions; (C) the availability and cost of health insurance policies generally; (D) the elimination or reduction of different 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. (2) Annual reports.--The Comptroller General 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). TITLE IV--IMPROVING HEALTH SAVINGS ACCOUNTS SEC. 231. SAVER'S CREDIT FOR CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNTS. (a) Allowance of Credit.--Subsection (a) of section 25B of the Internal Revenue Code of 1986 is amended by inserting ``aggregate qualified HSA contributions and'' after ``so much of the''. (b) Qualified HSA Contributions.--Subsection (d) of section 25B of such Code is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: ``(2) Qualified hsa contributions.--The term `qualified HSA contribution' means, with respect to any taxable year, a contribution of the eligible individual to a health savings account (as defined in section 223(d)(1)) for which a deduction is allowable under section 223(a) for such taxable year.''. (c) Conforming Amendment.--The first sentence of section 25B(d)(3)(A) of such Code (as redesignated by subsection (b)) is amended to read as follows: ``The aggregate qualified retirement savings contributions determined under paragraph (1) and qualified HSA contributions determined under paragraph (2) shall be reduced (but not below zero) by the aggregate distributions received by the individual during the testing period from any entity of a type to which contributions under paragraph (1) or paragraph (2) (as the case may be) may be made.''. (d) Effective Date.--The amendments made by this section shall apply to contributions made after December 31, 2009. SEC. 232. HSA FUNDS FOR PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS. (a) In General.--Subparagraph (C) of section 223(d)(2) of the Internal Revenue Code of 1986 is amended by striking ``or'' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ``, or'', and by adding at the end the following: ``(v) a high deductible health plan if-- ``(I) such plan is not offered in connection with a group health plan, ``(II) no portion of any premium (within the meaning of applicable premium under section 4980B(f)(4)) for such plan is excludable from gross income under section 106, and ``(III) the account beneficiary demonstrates, using procedures deemed appropriate by the Secretary, that after payment of the premium for such insurance the balance in the health savings account is at least twice the minimum deductible in effect under subsection (c)(2)(A)(i) which is applicable to such plan.''. (b) Effective Date.--The amendment made by subsection (a) shall apply to premiums for a high deductible health plan for periods beginning after December 31, 2009. SEC. 233. REQUIRING GREATER COORDINATION BETWEEN HDHP ADMINISTRATORS AND HSA ACCOUNT ADMINISTRATORS SO THAT ENROLLEES CAN ENROLL IN BOTH AT THE SAME TIME. The Secretary of the Treasury, through the issuance of regulations or other guidance, shall encourage administrators of health plans and trustees of health savings accounts to provide for simultaneous enrollment in high deductible health plans and setup of health savings accounts. SEC. 234. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF ACCOUNT. (a) In General.--Subsection (d) of section 223 of the Internal Revenue Code of 1986 is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph: ``(4) Certain medical expenses incurred before establishment of account treated as qualified.-- ``(A) In general.--For purposes of paragraph (2), an expense shall not fail to be treated as a qualified medical expense solely because such expense was incurred before the establishment of the health savings account if such expense was incurred during the 60-day period beginning on the date on which the high deductible health plan is first effective. ``(B) Special rules.--For purposes of subparagraph (A)-- ``(i) an individual shall be treated as an eligible individual for any portion of a month for which the individual is described in subsection (c)(1), determined without regard to whether the individual is covered under a high deductible health plan on the 1st day of such month, and ``(ii) the effective date of the health savings account is deemed to be the date on which the high deductible health plan is first effective after the date of the enactment of this paragraph.''. (b) Effective Date.--The amendment made by this section shall apply with respect to insurance purchased after the date of the enactment of this Act in taxable years beginning after such date. DIVISION C--ENACTING REAL MEDICAL LIABILITY REFORM SEC. 301. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. The time for the commencement of a health care lawsuit 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 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 actions by a minor under the full age of 6 years shall be commenced within 3 years of manifestation of injury 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. 302. 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 claimant'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 informed about the maximum award for noneconomic damages. An award for noneconomic damages in excess of $250,000 shall be reduced either before the entry of judgment, or by amendment of the judgment after entry of judgment, and such reduction shall be made before accounting 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 reduced 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 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 separate 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 proportion of responsibility of each party for the claimant's harm. SEC. 303. MAXIMIZING PATIENT RECOVERY. (a) Court Supervision of Share of Damages Actually Paid to Claimants.--In any health care lawsuit, the court shall supervise the arrangements for payment of damages to protect against conflicts of interest that may have the effect of reducing the amount of damages awarded that are actually paid to claimants. In particular, in any health care lawsuit in which the attorney for a party claims a financial stake in the outcome by virtue 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 exceed the following limits: (1) 40 percent of the first $50,000 recovered by the claimant(s). (2) 33\1/3\ 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 recovery 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, settlement, mediation, arbitration, or any other form of alternative dispute resolution. In a health care lawsuit involving 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 requirement for court supervision in the first two sentences of subsection (a) applies only in civil actions. SEC. 304. ADDITIONAL HEALTH BENEFITS. In any health care lawsuit involving injury or wrongful death, any party may introduce evidence of collateral source benefits. If a party elects to introduce such evidence, 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 opposing party to secure the right to such collateral source benefits. 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 section 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. 305. PUNITIVE DAMAGES. (a) In General.--Punitive damages may, if otherwise 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 unnecessary injury that such person knew the claimant was substantially 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 motion 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 request 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 awarded 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 proceeding to determine whether compensatory damages are to be awarded. (b) Determining Amount of Punitive Damages.-- (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; (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 medical procedures rendered for compensation, as the case may be, by such party, of the kind causing the harm complained of by the claimant; (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, whichever is greater. The jury shall not be informed of this limitation. SEC. 306. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN HEALTH CARE LAWSUITS. (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 Uniform Periodic Payment of Judgments Act promulgated by the National Conference of Commissioners on Uniform State Laws. (b) Applicability.--This section applies to all actions which have not been first set for trial or retrial before the effective date of this title. SEC. 307. DEFINITIONS. In this title: (1) Alternative dispute resolution system; adr.--The term ``alternative dispute resolution system'' or ``ADR'' means a system that provides for the resolution of health care lawsuits in a manner 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, including 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 asserted or such an action is brought, whether deceased, 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 claimant, as a result of the injury or wrongful death, pursuant to-- (A) any State or Federal health, sickness, income-disability, accident, or workers' compensation law; (B) any health, sickness, income-disability, or accident insurance that provides health benefits 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 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 employment opportunities, damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature. The term ``compensatory damages'' includes economic damages and noneconomic damages, as such terms are defined in this section. (5) Contingent fee.--The term ``contingent fee'' includes all compensation to any person or persons 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 employment 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 interstate 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 pursuant to an alternative dispute resolution system, against a health care provider, a health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, regardless of the theory of liability on which the claim is based, or the number of claimants, plaintiffs, defendants, or other parties, or the number of claims or causes of action, in which the claimant alleges a health care liability claim. Such term does not include a claim or action which is based on criminal liability; which 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 action brought in a State or Federal court or pursuant to an alternative dispute resolution system, against a health care provider, a health care organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, regardless of the theory of liability on which the claim is based, or the number of plaintiffs, defendants, or other parties, or the number of causes of action, in which the claimant alleges a health care liability claim. (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 organization, or the manufacturer, distributor, supplier, marketer, promoter, or seller of a medical product, including, 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 entity 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 administer 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 care services, and being either so licensed, registered, or certified, or exempted from such requirement 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 organization, 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 intentionally causing or attempting to cause physical injury other than providing health care goods or services. (14) Medical product.--The term ``medical product'' means a drug, device, or biological product intended for humans, and the terms ``drug'', ``device'', and ``biological product'' have the meanings given such terms in sections 201(g)(1) and 201(h) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(g)(1) and (h)) and section 351(a) of the Public Health Service Act (42 U.S.C. 262(a)), respectively, including any component or raw material used therein, but excluding health care services. (15) Noneconomic damages.--The term ``noneconomic damages'' means damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, 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 compensatory purposes, against a health care provider, health care organization, or a manufacturer, distributor, 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 disbursements or costs incurred in connection with prosecution 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 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 Islands, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States, or any political subdivision thereof. SEC. 308. 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- related 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 under this title) will apply to such aspect of such action. (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 lawsuit or action under any other provision of Federal law. SEC. 309. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS. (a) Health Care Lawsuits.--The provisions governing 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 supersede 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 applicability or scope of periodic payment of future damages, than provided in this title; or (2) prohibits the introduction of evidence regarding collateral source benefits, or mandates or permits subrogation or a lien on collateral source benefits. (b) Protection of States' Rights and Other Laws.--(1) Any issue that is not governed by any provision of law established by or under this title (including State standards of 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 action. (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 Act) that specifies a particular monetary amount of compensatory or punitive damages (or the total amount of damages) that may be awarded in a health care lawsuit, regardless of whether such monetary amount is greater or lesser than is provided for under this title, notwithstanding section 302(a); or (2) any defense available to a party in a health care lawsuit under any other provision of State or Federal law. SEC. 310. APPLICABILITY; EFFECTIVE DATE. 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 Act, except that any health care lawsuit arising from an injury occurring prior to the date of the enactment of this Act shall be governed by the applicable statute of limitations provisions in effect at the time the injury occurred. DIVISION D--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP SEC. 401. RULE OF CONSTRUCTION. Nothing in this Act shall be construed to interfere with the doctor-patient relationship or the practice of medicine. SEC. 402. REPEAL OF FEDERAL COORDINATING COUNCIL FOR COMPARATIVE EFFECTIVENESS RESEARCH. Effective on the date of the enactment of this Act, section 804 of the American Recovery and Reinvestment Act of 2009 is repealed. DIVISION E--INCENTIVIZING WELLNESS AND QUALITY IMPROVEMENTS SEC. 501. INCENTIVES FOR PREVENTION AND WELLNESS PROGRAMS. (a) EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 Limitation on Exception for Wellness Programs Under HIPAA Discrimination Rules.-- (1) In general.--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 benefits under the plan (or coverage) based on participation in a standards-based wellness program.''. (2) Effective date.--The amendment made by paragraph (1) shall apply to plan years beginning more than 1 year after the date of the enactment of this Act. (b) Conforming Amendments to PHSA.-- (1) Group market rules.-- (A) In general.--Section 2702(b)(2) of the Public Health Service Act (42 U.S.C. 300gg- 1(b)(2)) is amended by adding after and below 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 benefits under the plan (or coverage) based on participation in a standards-based wellness program.''. (B) Effective date.--The amendment made by subparagraph (A) shall apply to plan years beginning more than 1 year after the date of the enactment of this Act. (2) Individual market rules relating to guaranteed availability.-- (A) In general.--Section 2741(f) of the Public Health Service Act (42 U.S.C. 300gg- 1(b)(2)) is amended by adding after and below paragraph (1) the following: ``In applying paragraph (2), a health insurance issuer may vary premiums and cost-sharing under health insurance coverage by up to 50 percent of the value of the benefits under the coverage based on participation in a standards-based wellness program.''. (B) Effective date.--The amendment made by paragraph (1) shall apply to health insurance coverage offered or renewed on and after the date that is 1 year after the date of the enactment of this Act. (c) Conforming Amendments to IRC.-- (1) In general.--Section 9802(b)(2) of the Internal Revenue Code of 1986 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 benefits under the plan (or coverage) based on participation in a standards-based wellness program.''. (2) Effective date.--The amendment made by paragraph (1) shall apply to plan years beginning more than 1 year after the date of the enactment of this Act. DIVISION F--PROTECTING TAXPAYERS SEC. 601. PROVIDE FULL FUNDING TO HHS OIG AND HCFAC. (a) HCFAC Funding.-- Section 1817(k)(3)(A) of the Social Security Act (42 U.S.C. 1395i(k)(3)(A)) is amended-- (1) in clause (i)-- (A) in subclause (IV), by striking ``2009, and 2010'' and inserting ``and 2009''; and (B) by amending subclause (V) to read as follows: ``(V) for each fiscal year after fiscal year 2009, $300,000,000.''; and (2) in clause (ii)-- (A) in subclause (IX), by striking ``2009, and 2010'' and inserting ``and 2009''; and (B) in subclause (X), by striking ``2010'' and inserting ``2009'' and by inserting before the period at the end the following: ``, plus the amount by which the amount made available under clause (i)(V) for fiscal year 2010 exceeds the amount made available under clause (i)(IV) for 2009''. (b) OIG Funding.--There are authorized to be appropriated for each of fiscal years 2010 through 2019 $100,000,000 for the Office of the Inspector General of the Department of Health and Human Services for fraud prevention activities under the Medicare and Medicaid programs. SEC. 602. PROHIBITING TAXPAYER FUNDED ABORTIONS AND CONSCIENCE PROTECTIONS. Title 1 of the United States Code is amended by adding at the end the following new chapter: ``CHAPTER 4--PROHIBITING TAXPAYER FUNDED ABORTIONS AND CONSCIENCE PROTECTIONS ``SEC. 301. PROHIBITION ON FUNDING FOR ABORTIONS. ``No funds authorized or appropriated by federal law, and none of the funds in any trust fund to which funds are authorized or appropriated by federal law, shall be expended for any abortion. ``SEC. 302. PROHIBITION ON FUNDING FOR HEALTH BENEFITS PLANS THAT COVER ABORTION. ``None of the funds authorized or appropriated by federal law, and none of the funds in any trust fund to which funds are authorized or appropriated by federal law, shall be expended for a health benefits plan that includes coverage of abortion. ``SEC. 303. TREATMENT OF ABORTIONS RELATED TO RAPE, INCEST, OR PRESERVING THE LIFE OF THE MOTHER. ``The limitations established in sections 301 and 302 shall not apply to an abortion-- ``(1) if the pregnancy is the result of an act of rape or incest; or ``(2) in the case where a woman suffers from a physical disorder, physical injury, or physical illness that would, as certified by a physician, place the woman in danger of death unless an abortion is performed, including a life-endangering physical condition caused by or arising from the pregnancy itself. ``SEC. 304. CONSTRUCTION RELATING TO SUPPLEMENTAL COVERAGE. ``Nothing in this chapter shall be construed as prohibiting any individual, entity, or State or locality from purchasing separate supplemental abortion plan or coverage that includes abortion so long as such plan or coverage is paid for entirely using only funds not authorized or appropriated by federal law and such plan or coverage shall not be purchased using matching funds required for a federally subsidized program, including a State's or locality's contribution of Medicaid matching funds. ``SEC. 305. CONSTRUCTION RELATING TO THE USE OF NON-FEDERAL FUNDS FOR HEALTH COVERAGE. ``Nothing in this chapter shall be construed as restricting the ability of any managed care provider or other organization from offering abortion coverage or the ability of a State to contract separately with such a provider or organization for such coverage with funds not authorized or appropriated by federal law and such plan or coverage shall not be purchased using matching funds required for a federally subsidized program, including a State's or locality's contribution of Medicaid matching funds. ``SEC. 306. NO GOVERNMENT DISCRIMINATION AGAINST CERTAIN HEALTH CARE ENTITIES. ``(a) In General.--No funds authorized or appropriated by federal law may be made available to a Federal agency or program, or to a State or local government, if such agency, program, or government subjects any institutional or individual health care entity to discrimination on the basis that the health care entity does not provide, pay for, provide coverage of, or refer for abortions. ``(b) Health Care Entity Defined.--For purposes of this section, the term `health care entity' includes an individual physician or other health care professional, a hospital, a provider-sponsored organization, a health maintenance organization, a health insurance plan, or any other kind of health care facility, organization, or plan.''. SEC. 603. IMPROVED ENFORCEMENT OF THE MEDICARE AND MEDICAID SECONDARY PAYER PROVISIONS. (a) Medicare.-- (1) In general.--The Secretary, in coordination with the Inspector General of the Department of Health and Human Services, shall provide through the Coordination of Benefits Contractor for the identification of instances where the Medicare program should be, but is not, acting as a secondary payer to an individual's private health benefits coverage under section 1862(b) of the Social Security Act (42 U.S.C. 1395y(b)). (2) Updating procedures.--The Secretary shall update procedures for identifying and resolving credit balance situations which occur under the Medicare program when payment under such title and from other health benefit plans exceed the providers' charges or the allowed amount. (3) Report on improved enforcement.--Not later than 1 year after the date of the enactment of this Act, the Secretary shall submit a report to Congress on progress made in improved enforcement of the Medicare secondary payer provisions, including recoupment of credit balances. (b) Medicaid.--Section 1903 of the Social Security Act (42 U.S.C. 1396b) is amended by adding at the end the following new subsection: ``(aa) Enforcement of Payer of Last Resort Provisions.-- ``(1) Submission of state plan amendment.--Each State shall submit, not later than 1 year after the date of the enactment of this subsection, a State plan amendment that details how the State will become fully compliant with the requirements of section 1902(a)(25). ``(2) Bonus for compliance.--If a State submits a timely State plan amendment under paragraph (1) that the Secretary determines provides for full compliance of the State with the requirements of section 1902(a)(25), the Secretary shall provide for an additional payment to the State of $1,000,000. If a State certifies, to the Secretary's satisfaction, that it is already fully compliant with such requirements, such amount shall be increased to $2,000,000. ``(3) Reduction for noncompliance.--If a State does not submit such an amendment, the Secretary shall reduce the Federal medical assistance percentage otherwise applicable under this title by 1 percentage point until the State submits such an amendment. ``(4) Ongoing reduction.--If at any time the Secretary determines that a State is not in compliance with section 1902(a)(25), regardless of the status of the State's submission of a State plan amendment under this subsection or previous determinations of compliance such requirements, the Secretary shall reduce the Federal medical assistance percentage otherwise applicable under this title for the State by 1 percentage point during the period of non-compliance as determined by the Secretary.''. SEC. 604. STRENGTHEN MEDICARE PROVIDER ENROLLMENT STANDARDS AND SAFEGUARDS. (a) Protecting Against the Fraudulent Use of Medicare Provider Numbers.--Subject to subsection (c)(2)-- (1) Screening new providers.--As a condition of a provider of services or a supplier, including durable medical equipment suppliers and home health agencies, applying for the first time for a provider number under the Medicare program and before granting billing privileges under such title, the Secretary shall screen the provider or supplier for a criminal background or other financial or operational irregularities through fingerprinting, licensure checks, site-visits, other database checks. (2) Application fees.--The Secretary shall impose an application charge on such a provider or supplier in order to cover the Secretary's costs in performing the screening required under paragraph (1) and that is revenue neutral to the Federal government. (3) Provisional approval.--During an initial, provisional period (specified by the Secretary) In which such a provider or supplier has been issued such a number, the Secretary shall provide enhanced oversight of the activities of such provider or supplier under the Medicare program, such as through prepayment review and payment limitations. (4) Penalties for false statements.--In the case of a provider or supplier that makes a false statement in an application for such a number, the Secretary may exclude the provider or supplier from participation under the Medicare program, or may impose a civil money penalty (in the amount described in section 1128A(a)(4) of the Social Security Act), in the same manner as the Secretary may impose such an exclusion or penalty under sections 1128 and 1128A, respectively, of such Act in the case of knowing presentation of a false claim described in section 1128A(a)(1)(A) of such Act. (5) Disclosure requirements.--With respect to approval of such an application, the Secretary-- (A) shall require applicants to disclose previous affiliation with enrolled entities that have uncollected debt related to the Medicare or Medicaid programs; (B) may deny approval if the Secretary determines that these affiliations pose undue risk to the Medicare or Medicaid program, subject to an appeals process for the applicant as determined by the Secretary; and (C) may implement enhanced safeguards (such as surety bonds). (b) Moratoria.--The Secretary may impose moratoria on approval of provider and supplier numbers under the Medicare program for new providers of services and suppliers as determined necessary to prevent or combat fraud a period of delay for any one applicant cannot exceed 30 days unless cause is shown by the Secretary. (c) Funding.-- (1) In general.--There are authorized to be appropriated to carry out this section such sums as may be necessary. (2) Condition.--The provisions of paragraphs (1) and (2) of subsection (a) shall not apply unless and until funds are appropriated to carry out such provisions SEC. 605. TRACKING BANNED PROVIDERS ACROSS STATE LINES. (a) Greater Coordination.--The Secretary of Health and Human Services shall provide for increased coordination between the Administrator of the Centers for Medicare & Medicaid Services (in this section referred to as ``CMS'') and its regional offices to ensure that providers of services and suppliers that have operated in one State and are excluded from participation in the Medicare program are unable to begin operation and participation in the Medicare program in another State. (b) Improved Information Systems.-- (1) In general.--The Secretary shall improve information systems to allow greater integration between databases under the Medicare program so that-- (A) medicare administrative contractors, fiscal intermediaries, and carriers have immediate access to information identifying providers and suppliers excluded from participation in the Medicare and Medicaid program and other Federal health care programs; and (B) such information can be shared across Federal health care programs and agencies, including between the Departments of Health and Human Services, the Social Security Administration, the Department of Veterans Affairs, the Department of Defense, the Department of Justice, and the Office of Personnel Management. (c) Medicare/Medicaid ``One PI'' Database.--The Secretary shall implement a database that includes claims and payment data for all components of the Medicare program and the Medicaid program. (d) Authorizing Expanded Data Matching.--Notwithstanding any provision of the Computer Matching and Privacy Protection Act of 1988 to the contrary-- (1) the Secretary and the Inspector General in the Department of Health and Human Services may perform data matching of data from the Medicare program with data from the Medicaid program; and (2) the Commissioner of Social Security and the Secretary may perform data matching of data of the Social Security Administration with data from the Medicare and Medicaid programs. (e) Consolidation of Data Bases.--The Secretary shall consolidate and expand into a centralized data base for individuals and entities that have been excluded from Federal health care programs the Healthcare Integrity and Protection Data Bank, the National Practitioner Data Bank, the List of Excluded Individuals/Entities, and a national patient abuse/ neglect registry. (f) Comprehensive Provider Database.-- (1) Establishment.--The Secretary shall establish a comprehensive database that includes information on providers of services, suppliers, and related entities participating in the Medicare program, the Medicaid program, or both. Such database shall include, information on ownership and business relationships, history of adverse actions, results of site visits or other monitoring by any program. (2) Use.--Prior to issuing a provider or supplier number for an entity under the Medicare program, the Secretary shall obtain information on the entity from such database to assure the entity qualifies for the issuance of such a number. (g) Comprehensive Sanctions Database.--The Secretary shall establish a comprehensive sanctions database on sanctions imposed on providers of services, suppliers, and related entities. Such database shall be overseen by the Inspector General of the Department of Health and Human Services and shall be linked to related databases maintained by State licensure boards and by Federal or State law enforcement agencies. (h) Access to Claims and Payment Databases.--The Secretary shall ensure that the Inspector General of the Department of Health and Human Services and Federal law enforcement agencies have direct access to all claims and payment databases of the Secretary under the Medicare or Medicaid programs. (i) Civil Money Penalties for Submission of Erroneous Information.--In the case of a provider of services, supplier, or other entity that submits erroneous information that serves as a basis for payment of any entity under the Medicare or Medicaid program, the Secretary may impose a civil money penalty of not to exceed $50,000 for each such erroneous submission. A civil money penalty under this subsection shall be imposed and collected in the same manner as a civil money penalty under subsection (a) of section 1128A of the Social Security Act is imposed and collected under that section. DIVISION G--PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS SEC. 701. LICENSURE PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS. (a) Licensure of Biological Products as Biosimilar or Interchangeable.--Section 351 of the Public Health Service Act (42 U.S.C. 262) is amended-- (1) in subsection (a)(1)(A), by inserting ``under this subsection or subsection (k)'' after ``biologics license''; and (2) by adding at the end the following: ``(k) Licensure of Biological Products as Biosimilar or Interchangeable.-- ``(1) In general.--Any person may submit an application for licensure of a biological product under this subsection. ``(2) Content.-- ``(A) In general.-- ``(i) Required information.--An application submitted under this subsection shall include information demonstrating that-- ``(I) the biological product is biosimilar to a reference product based upon data derived from-- ``(aa) analytical studies that demonstrate that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components; ``(bb) animal studies (including the assessment of toxicity); and ``(cc) a clinical study or studies (including the assessment of immunogenicity and pharmacokinetics or pharmacodynamics) that are sufficient to demonstrate safety, purity, and potency in 1 or more appropriate conditions of use for which the reference product is licensed and intended to be used and for which licensure is sought for the biological product; ``(II) the biological product and reference product utilize the same mechanism or mechanisms of action for the condition or conditions of use prescribed, recommended, or suggested in the proposed labeling, but only to the extent the mechanism or mechanisms of action are known for the reference product; ``(III) the condition or conditions of use prescribed, recommended, or suggested in the labeling proposed for the biological product have been previously approved for the reference product; ``(IV) the route of administration, the dosage form, and the strength of the biological product are the same as those of the reference product; and ``(V) the facility in which the biological product is manufactured, processed, packed, or held meets standards designed to assure that the biological product continues to be safe, pure, and potent. ``(ii) Determination by secretary.-- The Secretary may determine, in the Secretary's discretion, that an element described in clause (i)(I) is unnecessary in an application submitted under this subsection. ``(iii) Additional information.--An application submitted under this subsection-- ``(I) shall include publicly available information regarding the Secretary's previous determination that the reference product is safe, pure, and potent; and ``(II) may include any additional information in support of the application, including publicly available information with respect to the reference product or another biological product. ``(B) Interchangeability.--An application (or a supplement to an application) submitted under this subsection may include information demonstrating that the biological product meets the standards described in paragraph (4). ``(3) Evaluation by secretary.--Upon review of an application (or a supplement to an application) submitted under this subsection, the Secretary shall license the biological product under this subsection if-- ``(A) the Secretary determines that the information submitted in the application (or the supplement) is sufficient to show that the biological product-- ``(i) is biosimilar to the reference product; or ``(ii) meets the standards described in paragraph (4), and therefore is interchangeable with the reference product; and ``(B) the applicant (or other appropriate person) consents to the inspection of the facility that is the subject of the application, in accordance with subsection (c). ``(4) Safety standards for determining interchangeability.--Upon review of an application submitted under this subsection or any supplement to such application, the Secretary shall determine the biological product to be interchangeable with the reference product if the Secretary determines that the information submitted in the application (or a supplement to such application) is sufficient to show that-- ``(A) the biological product-- ``(i) is biosimilar to the reference product; and ``(ii) can be expected to produce the same clinical result as the reference product in any given patient; and ``(B) for a biological product that is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch. ``(5) General rules.-- ``(A) One reference product per application.--A biological product, in an application submitted under this subsection, may not be evaluated against more than 1 reference product. ``(B) Review.--An application submitted under this subsection shall be reviewed by the division within the Food and Drug Administration that is responsible for the review and approval of the application under which the reference product is licensed. ``(C) Risk evaluation and mitigation strategies.--The authority of the Secretary with respect to risk evaluation and mitigation strategies under the Federal Food, Drug, and Cosmetic Act shall apply to biological products licensed under this subsection in the same manner as such authority applies to biological products licensed under subsection (a). ``(D) Restrictions on biological products containing dangerous ingredients.--If information in an application submitted under this subsection, in a supplement to such an application, or otherwise available to the Secretary shows that a biological product-- ``(i) is, bears, or contains a select agent or toxin listed in section 73.3 or 73.4 of title 42, section 121.3 or 121.4 of title 9, or section 331.3 of title 7, Code of Federal Regulations (or any successor regulations); or ``(ii) is, bears, or contains a controlled substance in schedule I or II of section 202 of the Controlled Substances Act, as listed in part 1308 of title 21, Code of Federal Regulations (or any successor regulations); the Secretary shall not license the biological product under this subsection unless the Secretary determines, after consultation with appropriate national security and drug enforcement agencies, that there would be no increased risk to the security or health of the public from licensing such biological product under this subsection. ``(6) Exclusivity for first interchangeable biological product.--Upon review of an application submitted under this subsection relying on the same reference product for which a prior biological product has received a determination of interchangeability for any condition of use, the Secretary shall not make a determination under paragraph (4) that the second or subsequent biological product is interchangeable for any condition of use until the earlier of-- ``(A) 1 year after the first commercial marketing of the first interchangeable biosimilar biological product to be approved as interchangeable for that reference product; ``(B) 18 months after-- ``(i) a final court decision on all patents in suit in an action instituted under subsection (l)(5) against the applicant that submitted the application for the first approved interchangeable biosimilar biological product; or ``(ii) the dismissal with or without prejudice of an action instituted under subsection (l)(5) against the applicant that submitted the application for the first approved interchangeable biosimilar biological product; or ``(C)(i) 42 months after approval of the first interchangeable biosimilar biological product if the applicant that submitted such application has been sued under subsection (l)(5) and such litigation is still ongoing within such 42-month period; or ``(ii) 18 months after approval of the first interchangeable biosimilar biological product if the applicant that submitted such application has not been sued under subsection (l)(5). For purposes of this paragraph, the term `final court decision' means a final decision of a court from which no appeal (other than a petition to the United States Supreme Court for a writ of certiorari) has been or can be taken. ``(7) Exclusivity for reference product.-- ``(A) Effective date of biosimilar application approval.--Approval of an application under this subsection may not be made effective by the Secretary until the date that is 12 years after the date on which the reference product was first licensed under subsection (a). ``(B) Filing period.--An application under this subsection may not be submitted to the Secretary until the date that is 4 years after the date on which the reference product was first licensed under subsection (a). ``(C) First licensure.--Subparagraphs (A) and (B) shall not apply to a license for or approval of-- ``(i) a supplement for the biological product that is the reference product; or ``(ii) a subsequent application filed by the same sponsor or manufacturer of the biological product that is the reference product (or a licensor, predecessor in interest, or other related entity) for-- ``(I) a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength; or ``(II) a modification to the structure of the biological product that does not result in a change in safety, purity, or potency. ``(8) Pediatric studies.-- ``(A) Exclusivity.--If, before or after licensure of the reference product under subsection (a) of this section, the Secretary determines that information relating to the use of such product in the pediatric population may produce health benefits in that population, the Secretary makes a written request for pediatric studies (which shall include a timeframe for completing such studies), the applicant or holder of the approved application agrees to the request, such studies are completed using appropriate formulations for each age group for which the study is requested within any such timeframe, and the reports thereof are submitted and accepted in accordance with section 505A(d)(3) of the Federal Food, Drug, and Cosmetic Act the period referred to in paragraph (7)(A) of this subsection is deemed to be 12 years and 6 months rather than 12 years. ``(B) Exception.--The Secretary shall not extend the period referred to in subparagraph (A) of this paragraph if the determination under section 505A(d)(3) of the Federal Food, Drug, and Cosmetic Act is made later than 9 months prior to the expiration of such period. ``(C) Application of certain provisions.--The provisions of subsections (a), (d), (e), (f), (h), (j), (k), and (l) of section 505A of the Federal Food, Drug, and Cosmetic Act shall apply with respect to the extension of a period under subparagraph (A) of this paragraph to the same extent and in the same manner as such provisions apply with respect to the extension of a period under subsection (b) or (c) of section 505A of the Federal Food, Drug, and Cosmetic Act. ``(9) Guidance documents.-- ``(A) In general.--The Secretary may, after opportunity for public comment, issue guidance in accordance, except as provided in subparagraph (B)(i), with section 701(h) of the Federal Food, Drug, and Cosmetic Act with respect to the licensure of a biological product under this subsection. Any such guidance may be general or specific. ``(B) Public comment.-- ``(i) In general.--The Secretary shall provide the public an opportunity to comment on any proposed guidance issued under subparagraph (A) before issuing final guidance. ``(ii) Input regarding most valuable guidance.--The Secretary shall establish a process through which the public may provide the Secretary with input regarding priorities for issuing guidance. ``(C) No requirement for application consideration.--The issuance (or non-issuance) of guidance under subparagraph (A) shall not preclude the review of, or action on, an application submitted under this subsection. ``(D) Requirement for product class-specific guidance.--If the Secretary issues product class-specific guidance under subparagraph (A), such guidance shall include a description of-- ``(i) the criteria that the Secretary will use to determine whether a biological product is highly similar to a reference product in such product class; and ``(ii) the criteria, if available, that the Secretary will use to determine whether a biological product meets the standards described in paragraph (4). ``(E) Certain product classes.-- ``(i) Guidance.--The Secretary may indicate in a guidance document that the science and experience, as of the date of such guidance, with respect to a product or product class (not including any recombinant protein) does not allow approval of an application for a license as provided under this subsection for such product or product class. ``(ii) Modification or reversal.--The Secretary may issue a subsequent guidance document under subparagraph (A) to modify or reverse a guidance document under clause (i). ``(iii) No effect on ability to deny license.--Clause (i) shall not be construed to require the Secretary to approve a product with respect to which the Secretary has not indicated in a guidance document that the science and experience, as described in clause (i), does not allow approval of such an application. ``(10) Naming.--The Secretary shall ensure that the labeling and packaging of each biological product licensed under this subsection bears a name that uniquely identifies the biological product and distinguishes it from the reference product and any other biological products licensed under this subsection following evaluation against such reference product. ``(l) Patent Notices; Relationship to Final Approval.-- ``(1) Definitions.--For the purposes of this subsection, the term-- ``(A) `biosimilar product' means the biological product that is the subject of the application under subsection (k); ``(B) `relevant patent' means a patent that-- ``(i) expires after the date specified in subsection (k)(7)(A) that applies to the reference product; and ``(ii) could reasonably be asserted against the applicant due to the unauthorized making, use, sale, or offer for sale within the United States, or the importation into the United States of the biosimilar product, or materials used in the manufacture of the biosimilar product, or due to a use of the biosimilar product in a method of treatment that is indicated in the application; ``(C) `reference product sponsor' means the holder of an approved application or license for the reference product; and ``(D) `interested third party' means a person other than the reference product sponsor that owns a relevant patent, or has the right to commence or participate in an action for infringement of a relevant patent. ``(2) Handling of confidential information.--Any entity receiving confidential information pursuant to this subsection shall designate one or more individuals to receive such information. Each individual so designated shall execute an agreement in accordance with regulations promulgated by the Secretary. The regulations shall require each such individual to take reasonable steps to maintain the confidentiality of information received pursuant to this subsection and use the information solely for purposes authorized by this subsection. The obligations imposed on an individual who has received confidential information pursuant to this subsection shall continue until the individual returns or destroys the confidential information, a court imposes a protective order that governs the use or handling of the confidential information, or the party providing the confidential information agrees to other terms or conditions regarding the handling or use of the confidential information. ``(3) Public notice by secretary.--Within 30 days of acceptance by the Secretary of an application filed under subsection (k), the Secretary shall publish a notice identifying-- ``(A) the reference product identified in the application; and ``(B) the name and address of an agent designated by the applicant to receive notices pursuant to paragraph (4)(B). ``(4) Exchanges concerning patents.-- ``(A) Exchanges with reference product sponsor.-- ``(i) Within 30 days of the date of acceptance of the application by the Secretary, the applicant shall provide the reference product sponsor with a copy of the application and information concerning the biosimilar product and its production. This information shall include a detailed description of the biosimilar product, its method of manufacture, and the materials used in the manufacture of the product. ``(ii) Within 60 days of the date of receipt of the information required to be provided under clause (i), the reference product sponsor shall provide to the applicant a list of relevant patents owned by the reference product sponsor, or in respect of which the reference product sponsor has the right to commence an action of infringement or otherwise has an interest in the patent as such patent concerns the biosimilar product. ``(iii) If the reference product sponsor is issued or acquires an interest in a relevant patent after the date on which the reference product sponsor provides the list required by clause (ii) to the applicant, the reference product sponsor shall identify that patent to the applicant within 30 days of the date of issue of the patent, or the date of acquisition of the interest in the patent, as applicable. ``(B) Exchanges with interested third parties.-- ``(i) At any time after the date on which the Secretary publishes a notice for an application under paragraph (3), any interested third party may provide notice to the designated agent of the applicant that the interested third party owns or has rights under 1 or more patents that may be relevant patents. The notice shall identify at least 1 patent and shall designate an individual who has executed an agreement in accordance with paragraph (2) to receive confidential information from the applicant. ``(ii) Within 30 days of the date of receiving notice pursuant to clause (i), the applicant shall send to the individual designated by the interested third party the information specified in subparagraph (A)(i), unless the applicant and interested third party otherwise agree. ``(iii) Within 90 days of the date of receiving information pursuant to clause (ii), the interested third party shall provide to the applicant a list of relevant patents which the interested third party owns, or in respect of which the interested third party has the right to commence or participate in an action for infringement. ``(iv) If the interested third party is issued or acquires an interest in a relevant patent after the date on which the interested third party provides the list required by clause (iii), the interested third party shall identify that patent within 30 days of the date of issue of the patent, or the date of acquisition of the interest in the patent, as applicable. ``(C) Identification of basis for infringement.--For any patent identified under clause (ii) or (iii) of subparagraph (A) or under clause (iii) or (iv) of subparagraph (B), the reference product sponsor or the interested third party, as applicable-- ``(i) shall explain in writing why the sponsor or the interested third party believes the relevant patent would be infringed by the making, use, sale, or offer for sale within the United States, or importation into the United States, of the biosimilar product or by a use of the biosimilar product in treatment that is indicated in the application; ``(ii) may specify whether the relevant patent is available for licensing; and ``(iii) shall specify the number and date of expiration of the relevant patent. ``(D) Certification by applicant concerning identified relevant patents.--Not later than 45 days after the date on which a patent is identified under clause (ii) or (iii) of subparagraph (A) or under clause (iii) or (iv) of subparagraph (B), the applicant shall send a written statement regarding each identified patent to the party that identified the patent. Such statement shall either-- ``(i) state that the applicant will not commence marketing of the biosimilar product and has requested the Secretary to not grant final approval of the application before the date of expiration of the noticed patent; or ``(ii) provide a detailed written explanation setting forth the reasons why the applicant believes-- ``(I) the making, use, sale, or offer for sale within the United States, or the importation into the United States, of the biosimilar product, or the use of the biosimilar product in a treatment indicated in the application, would not infringe the patent; or ``(II) the patent is invalid or unenforceable. ``(5) Action for infringement involving reference product sponsor.--If an action for infringement concerning a relevant patent identified by the reference product sponsor under clause (ii) or (iii) of paragraph (4)(A), or by an interested third party under clause (iii) or (iv) of paragraph (4)(B), is brought within 60 days of the date of receipt of a statement under paragraph (4)(D)(ii), and the court in which such action has been commenced determines the patent is infringed prior to the date applicable under subsection (k)(7)(A) or (k)(8), the Secretary shall make approval of the application effective on the day after the date of expiration of the patent that has been found to be infringed. If more than one such patent is found to be infringed by the court, the approval of the application shall be made effective on the day after the date that the last such patent expires. ``(6) Notification of agreements.-- ``(A) Requirements.-- ``(i) Agreement between biosimilar product applicant and reference product sponsor.--If a biosimilar product applicant under subsection (k) and the reference product sponsor enter into an agreement described in subparagraph (B), the applicant and sponsor shall each file the agreement in accordance with subparagraph (C). ``(ii) Agreement between biosimilar product applicants.--If 2 or more biosimilar product applicants submit an application under subsection (k) for biosimilar products with the same reference product and enter into an agreement described in subparagraph (B), the applicants shall each file the agreement in accordance with subparagraph (C). ``(B) Subject matter of agreement.--An agreement described in this subparagraph-- ``(i) is an agreement between the biosimilar product applicant under subsection (k) and the reference product sponsor or between 2 or more biosimilar product applicants under subsection (k) regarding the manufacture, marketing, or sale of-- ``(I) the biosimilar product (or biosimilar products) for which an application was submitted; or ``(II) the reference product; ``(ii) includes any agreement between the biosimilar product applicant under subsection (k) and the reference product sponsor or between 2 or more biosimilar product applicants under subsection (k) that is contingent upon, provides a contingent condition for, or otherwise relates to an agreement described in clause (i); and ``(iii) excludes any agreement that solely concerns-- ``(I) purchase orders for raw material supplies; ``(II) equipment and facility contracts; ``(III) employment or consulting contracts; or ``(IV) packaging and labeling contracts. ``(C) Filing.-- ``(i) In general.--The text of an agreement required to be filed by subparagraph (A) shall be filed with the Assistant Attorney General and the Federal Trade Commission not later than-- ``(I) 10 business days after the date on which the agreement is executed; and ``(II) prior to the date of the first commercial marketing of, for agreements described in subparagraph (A)(i), the biosimilar product that is the subject of the application or, for agreements described in subparagraph (A)(ii), any biosimilar product that is the subject of an application described in such subparagraph. ``(ii) If agreement not reduced to text.--If an agreement required to be filed by subparagraph (A) has not been reduced to text, the persons required to file the agreement shall each file written descriptions of the agreement that are sufficient to disclose all the terms and conditions of the agreement. ``(iii) Certification.--The chief executive officer or the company official responsible for negotiating any agreement required to be filed by subparagraph (A) shall include in any filing under this paragraph a certification as follows: `I declare under penalty of perjury that the following is true and correct: The materials filed with the Federal Trade Commission and the Department of Justice under section 351(l)(6) of the Public Health Service Act, with respect to the agreement referenced in this certification: (1) represent the complete, final, and exclusive agreement between the parties; (2) include any ancillary agreements that are contingent upon, provide a contingent condition for, or are otherwise related to, the referenced agreement; and (3) include written descriptions of any oral agreements, representations, commitments, or promises between the parties that are responsive to such section and have not been reduced to writing.'. ``(D) Disclosure exemption.--Any information or documentary material filed with the Assistant Attorney General or the Federal Trade Commission pursuant to this paragraph shall be exempt from disclosure under section 552 of title 5, United States Code, and no such information or documentary material may be made public, except as may be relevant to any administrative or judicial action or proceeding. Nothing in this subparagraph prevents disclosure of information or documentary material to either body of the Congress or to any duly authorized committee or subcommittee of the Congress. ``(E) Enforcement.-- ``(i) Civil penalty.--Any person that violates a provision of this paragraph shall be liable for a civil penalty of not more than $11,000 for each day on which the violation occurs. Such penalty may be recovered in a civil action-- ``(I) brought by the United States; or ``(II) brought by the Federal Trade Commission in accordance with the procedures established in section 16(a)(1) of the Federal Trade Commission Act. ``(ii) Compliance and equitable relief.--If any person violates any provision of this paragraph, the United States district court may order compliance, and may grant such other equitable relief as the court in its discretion determines necessary or appropriate, upon application of the Assistant Attorney General or the Federal Trade Commission. ``(F) Rulemaking.--The Federal Trade Commission, with the concurrence of the Assistant Attorney General and by rule in accordance with section 553 of title 5, United States Code, consistent with the purposes of this paragraph-- ``(i) may define the terms used in this paragraph; ``(ii) may exempt classes of persons or agreements from the requirements of this paragraph; and ``(iii) may prescribe such other rules as may be necessary and appropriate to carry out the purposes of this paragraph. ``(G) Savings clause.--Any action taken by the Assistant Attorney General or the Federal Trade Commission, or any failure of the Assistant Attorney General or the Commission to take action, under this paragraph shall not at any time bar any proceeding or any action with respect to any agreement between a biosimilar product applicant under subsection (k) and the reference product sponsor, or any agreement between biosimilar product applicants under subsection (k), under any other provision of law, nor shall any filing under this paragraph constitute or create a presumption of any violation of any competition laws.''. (b) Definitions.--Section 351(i) of the Public Health Service Act (42 U.S.C. 262(i)) is amended-- (1) by striking ``In this section, the term `biological product' means'' and inserting the following: ``In this section: ``(1) The term `biological product' means''; (2) in paragraph (1), as so designated, by inserting ``protein (except any chemically synthesized polypeptide),'' after ``allergenic product,''; and (3) by adding at the end the following: ``(2) The term `biosimilar' or `biosimilarity', in reference to a biological product that is the subject of an application under subsection (k), means-- ``(A) that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components; and ``(B) there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product. ``(3) The term `interchangeable' or `interchangeability', in reference to a biological product that is shown to meet the standards described in subsection (k)(4), means that the biological product may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product. ``(4) The term `reference product' means the single biological product licensed under subsection (a) against which a biological product is evaluated in an application submitted under subsection (k).''. (c) Products Previously Approved Under Section 505.-- (1) Requirement to follow section 351.--Except as provided in paragraph (2), an application for a biological product shall be submitted under section 351 of the Public Health Service Act (42 U.S.C. 262) (as amended by this Act). (2) Exception.--An application for a biological product may be submitted under section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) if-- (A) such biological product is in a product class for which a biological product in such product class is the subject of an application approved under such section 505 not later than the date of enactment of this Act; and (B) such application-- (i) has been submitted to the Secretary of Health and Human Services (referred to in this Act as the ``Secretary'') before the date of enactment of this Act; or (ii) is submitted to the Secretary not later than the date that is 10 years after the date of enactment of this Act. (3) Limitation.--Notwithstanding paragraph (2), an application for a biological product may not be submitted under section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) if there is another biological product approved under subsection (a) of section 351 of the Public Health Service Act that could be a reference product with respect to such application (within the meaning of such section 351) if such application were submitted under subsection (k) of such section 351. (4) Deemed approved under section 351.--An approved application for a biological product under section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) shall be deemed to be a license for the biological product under such section 351 on the date that is 10 years after the date of enactment of this Act. (5) Definitions.--For purposes of this subsection, the term ``biological product'' has the meaning given such term under section 351 of the Public Health Service Act (42 U.S.C. 262) (as amended by this Act). SEC. 702. FEES RELATING TO BIOSIMILAR BIOLOGICAL PRODUCTS. Subparagraph (B) of section 735(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 379g(1)) is amended by inserting ``, including licensure of a biological product under section 351(k) of such Act'' before the period at the end. SEC. 703. AMENDMENTS TO CERTAIN PATENT PROVISIONS. (a) Section 271(e)(2) of title 35, United States Code is amended-- (1) in subparagraph (A), by striking ``or'' after ``patent,''; (2) in subparagraph (B), by adding ``or'' after the comma at the end; (3) by inserting the following after subparagraph (B): ``(C) a statement under section 351(l)(4)(D)(ii) of the Public Health Service Act,''; and (4) in the matter following subparagraph (C) (as added by paragraph (3)), by inserting before the period the following: ``, or if the statement described in subparagraph (C) is provided in connection with an application to obtain a license to engage in the commercial manufacture, use, or sale of a biological product claimed in a patent or the use of which is claimed in a patent before the expiration of such patent''. (b) Section 271(e)(4) of title 35, United States Code, is amended by striking ``in paragraph (2)'' in both places it appears and inserting ``in paragraph (2)(A) or (2)(B)''.