I 111th CONGRESS 1st Session H. R. 3713 IN THE HOUSE OF REPRESENTATIVES October 1, 2009 Mr. Rogers of Michigan (for himself, Mrs. Blackburn, Mr. Shimkus, Mr. Pitts, Mrs. Myrick, Mrs. Bono Mack, Mr. Buyer, Mr. Upton, and Mr. Hall of Texas) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, Education and Labor, Appropriations, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To provide bipartisan solutions to lower health costs, increase access to affordable coverage, and give patients more choices and control.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the American Health Care Solutions Act of 2009. (b)

Table of contents

The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Rule of construction regarding prohibition on authority to ration health care. Title I—Expanding Access to Coverage Subtitle A—Protecting Affordability Through Reinsurance or High Risk Pooling Sec. 101. Ensuring affordability for all through special pooling of cost for those with pre-existing conditions and many health care needs. Subtitle B—Individual membership associations Sec. 111. Expansion of access and choice of health insurance coverage through individual membership associations (IMAs). Subtitle C—Association health plans Sec. 121. Rules governing association health plans. Sec. 122. Clarification of treatment of single employer arrangements. Sec. 123. Enforcement provisions relating to association health plans. Sec. 124. Cooperation between Federal and State authorities. Sec. 125. Effective date and transitional and other rules. Subtitle D—Purchasing insurance across State lines Sec. 131. Cooperative governing of individual health insurance coverage. Sec. 132. Severability. Subtitle E—Protecting Patients from Rescissions Sec. 141. Opportunity for independent, external third party reviews of certain nonrenewals and discontinuations, including rescissions, of individual health insurance coverage. Title II—Promoting patient choice Subtitle A—Credit for small employers adopting auto-Enrollment and defined contribution options Sec. 201. Credit for small employers adopting auto-enrollment and defined contribution options. Subtitle B—Tax incentives for long-Term care insurance Sec. 211. Treatment of premiums on qualified long-term care insurance contracts. Sec. 212. Credit for taxpayers with long-term care needs. Sec. 213. Additional consumer protections for long-term care insurance. Subtitle C—Comparative effectiveness research Sec. 221. Prohibition on Certain Uses of Data Obtained from Comparative Effectiveness Research; Accounting for Personalized Medicine and Differences in Patient Treatment Response. Subtitle D—Programs of health promotion or disease prevention Sec. 231. Programs of health promotion or disease prevention. Title III—Strengthening safety net programs Subtitle A—Beneficiary choice under Medicaid and SCHIP Sec. 301. Easing administrative barriers to State cooperation with employer-sponsored insurance coverage. Sec. 302. Improving beneficiary choice in SCHIP. Sec. 303. Application to Medicaid. Sec. 304. Expansion of health opportunity account program. Sec. 305. Verification requirements to prevent illegal aliens from receiving Medicaid benefits. Subtitle B—Community Health Centers Sec. 311. Increased funding. Title IV—Expanding health savings accounts Sec. 401. Allow both spouses to make catch-up contributions to the same HSA account. Sec. 402. Provisions relating to Medicare. Sec. 403. Individuals eligible for veterans benefits for a service-connected disability. Sec. 404. Individuals eligible for Indian Health Service assistance. Sec. 405. FSA and HRA termination to fund HSAS. Sec. 406. Purchase of health insurance from HSA account. Sec. 407. Special rule for certain medical expenses incurred before establishment of account. Sec. 408. Preventive care prescription drug clarification. Sec. 409. Qualified medical expenses. Title V—Medical liability reform Subtitle A—Medical liability Sec. 501. Encouraging speedy resolution of claims. Sec. 502. Compensating patient injury. Sec. 503. Maximizing patient recovery. Sec. 504. Additional health benefits. Sec. 505. Punitive damages. Sec. 506. Authorization of payment of future damages to claimants in HEALTH care lawsuits. Sec. 507. Definitions. Sec. 508. Effect on other laws. Sec. 509. State flexibility and protection of states’ rights. Sec. 510. Applicability; effective date. Sec. 511. Sense of Congress. Subtitle B—Liability protection for Community Health Center volunteers Sec. 521. Health centers under Public Health Service Act; liability protections for volunteer practitioners. Title VI—Miscellaneous Subtitle A—Fighting fraud and abuse Sec. 601. Provide adequate funding to HHS OIG and HCFAC. Sec. 602. Increased civil money penalties and criminal fines for Medicare fraud and abuse. Sec. 603. Increased sentences for felonies involving Medicare fraud and abuse. Sec. 604. Illegal distribution of a Medicare or Medicaid beneficiary identification or provider number. Sec. 605. Use of technology for real-time data review. Subtitle B—State transparency plan portal Sec. 611. Providing information on health coverage options and health care providers. Sec. 612. Establishment of performance-based quality measures. Subtitle C—Medicare Accountable Care Organization demonstration program Sec. 621. Medicare Accountable Care Organization demonstration program. Subtitle D—Repeal of Unused Stimulus Funds Sec. 631. Rescission and repeal in ARRA.

2.

Rule of construction regarding prohibition on authority to ration health care

Nothing in this Act may be construed to authorize the Federal Government to ration health care for the American people.

. C

Association health plans

121.

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: 8

RULES GOVERNING ASSOCIATION HEALTH PLANS

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.

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. (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.

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.

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 (42 U.S.C. 300gg–11) 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.

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 (42 U.S.C. 300gg–91(d)(3))), 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.

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. (F)A representative of multiemployer plans that are group health plans, or their interests.

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.

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.

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.

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.

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.

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 (42 U.S.C. 300gg–91(e)(5)) 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 (42 U.S.C. 300hh et seq.) 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 subsection (d) as subsection (e); and (D)by inserting after subsection (c) the following new subsection: (d)(1)Except as provided in subsection (b)(4), the provisions of this title shall supersede any and all State laws insofar as they may now or hereafter preclude, or have the effect of precluding, a health insurance issuer from offering health insurance coverage in connection with an association health plan which is certified under part 8. (2)Except as provided in paragraphs (4) and (5) of subsection (b) of this section— (A)In any case in which health insurance 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. .

122.

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, .

123.

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. .

124.

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. .

125.

Effective date and transitional and other rules

(a)

Effective Date

The amendments made by this subtitle shall take effect 1 year after the date of the enactment of this Act. The Secretary of Labor shall first issue all regulations necessary to carry out the amendments made by this subtitle within 1 year after the date of the enactment of this Act. (b)

Treatment of Certain Existing Health Benefits Programs

(1)

In general

In any case in which, as of the date of the enactment of this Act, an 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.

D

Purchasing insurance across State lines

131.

Cooperative governing of individual health insurance coverage

(a)

In General

Title XXVII of the Public Health Service Act (42 U.S.C. 300gg et seq.) is amended by adding at the end the following new part: D

Cooperative Governing of Individual Health Insurance Coverage

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.

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: Notice 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.

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.

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.

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 pre-existing 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).

132.

Severability

If any provision of this subtitle or the application of such provision to any person or circumstance is held to be unconstitutional, the remainder of this subtitle and the application of the provisions of such to any other person or circumstance shall not be affected.

E

Protecting Patients from Rescissions

141.

Opportunity for independent, external third party reviews of certain nonrenewals and discontinuations, including rescissions, of individual health 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:

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.