[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4038 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 4038
To take meaningful steps to lower health care costs and increase access
to health insurance coverage without raising taxes, cutting Medicare
benefits for seniors, adding to the national deficit, intervening in
the doctor-patient relationship, or instituting a government takeover
of health care.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 6, 2009
Mr. Camp (for himself, Mr. Boehner, Mr. Cantor, Mr. Pence, Mr.
McCotter, Mr. Carter, Mr. Sessions, Mr. McCarthy of California, Mr.
Blunt, Mr. Kline of Minnesota, Mr. Barton of Texas, Mr. Dreier, Mr.
Herger, Mr. Tiberi, Mr. Davis of Kentucky, Mr. Sam Johnson of Texas,
Mr. Boustany, Mr. Scalise, Mr. Brady of Texas, Mr. Reichert, Mr.
Roskam, Mr. Linder, Mr. Stearns, and Mr. Buyer) 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, 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 take meaningful steps to lower health care costs and increase access
to health insurance coverage without raising taxes, cutting Medicare
benefits for seniors, adding to the national deficit, intervening in
the doctor-patient relationship, or instituting a government takeover
of health care.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; PURPOSE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Common Sense
Health Care Reform and Affordability Act''.
(b) Purpose.--The purpose of this Act is to take meaningful steps
to lower health care costs and increase access to health insurance
coverage (especially for individuals with preexisting conditions)
without--
(1) raising taxes;
(2) cutting Medicare benefits for seniors;
(3) adding to the national deficit;
(4) intervening in the doctor-patient relationship; or
(5) instituting a government takeover of health care.
(c) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; purpose; table of contents.
DIVISION A--MAKING HEALTH CARE COVERAGE AFFORDABLE FOR EVERY AMERICAN
TITLE I--ENSURING COVERAGE FOR INDIVIDUALS WITH PREEXISTING CONDITIONS
AND MULTIPLE HEALTH CARE NEEDS
Sec. 101. Establish universal access programs to improve high risk
pools and reinsurance markets.
Sec. 102. Elimination of certain requirements for guaranteed
availability in individual market.
Sec. 103. No annual or lifetime spending caps.
Sec. 104. Preventing unjust cancellation of insurance coverage.
TITLE II--REDUCING HEALTH CARE PREMIUMS AND THE NUMBER OF UNINSURED
AMERICANS
Sec. 111. State innovation programs.
Sec. 112. Health plan finders.
Sec. 113. Administrative simplification.
DIVISION B--IMPROVING ACCESS TO HEALTH CARE
TITLE I--EXPANDING ACCESS AND LOWERING COSTS FOR SMALL BUSINESSES
Sec. 201. Rules governing association health plans.
Sec. 202. Clarification of treatment of single employer arrangements.
Sec. 203. Enforcement provisions relating to association health plans.
Sec. 204. Cooperation between Federal and State authorities.
Sec. 205. Effective date and transitional and other rules.
TITLE II--TARGETED EFFORTS TO EXPAND ACCESS
Sec. 211. Extending coverage of dependents.
Sec. 212. Allowing auto-enrollment for employer sponsored coverage.
TITLE III--EXPANDING CHOICES BY ALLOWING AMERICANS TO BUY HEALTH CARE
COVERAGE ACROSS STATE LINES
Sec. 221. Interstate purchasing of health insurance.
TITLE IV--IMPROVING HEALTH SAVINGS ACCOUNTS
Sec. 231. Saver's credit for contributions to health savings accounts.
Sec. 232. HSA funds for premiums for high deductible health plans.
Sec. 233. Requiring greater coordination between HDHP administrators
and HSA account administrators so that
enrollees can enroll in both at the same
time.
Sec. 234. Special rule for certain medical expenses incurred before
establishment of account.
DIVISION C--ENACTING REAL MEDICAL LIABILITY REFORM
Sec. 301. Encouraging speedy resolution of claims.
Sec. 302. Compensating patient injury.
Sec. 303. Maximizing patient recovery.
Sec. 304. Additional health benefits.
Sec. 305. Punitive damages.
Sec. 306. Authorization of payment of future damages to claimants in
health care lawsuits.
Sec. 307. Definitions.
Sec. 308. Effect on other laws.
Sec. 309. State flexibility and protection of states' rights.
Sec. 310. Applicability; effective date.
DIVISION D--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP
Sec. 401. Rule of construction.
Sec. 402. Repeal of Federal Coordinating Council for Comparative
Effectiveness Research.
DIVISION E--INCENTIVIZING WELLNESS AND QUALITY IMPROVEMENTS
Sec. 501. Incentives for prevention and wellness programs.
DIVISION F--PROTECTING TAXPAYERS
Sec. 601. Provide full funding to HHS OIG and HCFAC.
Sec. 602. Prohibiting taxpayer funded abortions and conscience
protections.
Sec. 603. Improved enforcement of the Medicare and Medicaid secondary
payer provisions.
Sec. 604. Strengthen Medicare provider enrollment standards and
safeguards.
Sec. 605. Tracking banned providers across State lines.
DIVISION G--PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS
Sec. 701. Licensure pathway for biosimilar biological products.
Sec. 702. Fees relating to biosimilar biological products.
Sec. 703. Amendments to certain patent provisions.
DIVISION A--MAKING HEALTH CARE COVERAGE AFFORDABLE FOR EVERY AMERICAN
TITLE I--ENSURING COVERAGE FOR INDIVIDUALS WITH PREEXISTING CONDITIONS
AND MULTIPLE HEALTH CARE NEEDS
SEC. 101. ESTABLISH UNIVERSAL ACCESS PROGRAMS TO IMPROVE HIGH RISK
POOLS AND REINSURANCE MARKETS.
(a) State Requirement.--
(1) In general.--Not later than January 1, 2010, each State
shall--
(A) subject to paragraph (3), operate--
(i) a qualified State reinsurance program
described in subsection (b); or
(ii) qualifying State high risk pool
described in subsection (c)(1); and
(B) subject to paragraph (3), apply to the
operation of such a program from State funds an amount
equivalent to the portion of State funds derived from
State premium assessments (as defined by the Secretary)
that are not otherwise used on State health care
programs.
(2) Relation to current qualified high risk pool program.--
(A) States not operating a qualified high risk
pool.--In the case of a State that is not operating a
current section 2745 qualified high risk pool as of the
date of the enactment of this Act--
(i) the State may only meet the requirement
of paragraph (1) through the operation of a
qualified State reinsurance program described
in subsection (b); and
(ii) the State's operation of such a
reinsurance program shall be treated, for
purposes of section 2745 of the Public Health
Service Act, as the operation of a qualified
high risk pool described in such section.
(B) State operating a qualified high risk pool.--In
the case of a State that is operating a current section
2745 qualified high risk pool as of the date of the
enactment of this Act--
(i) as of January 1, 2010, such a pool
shall not be treated as a qualified high risk
pool under section 2745 of the Public Health
Service Act unless the pool is a qualifying
State high risk pool described in subsection
(c)(1); and
(ii) the State may use premium assessment
funds described in paragraph (1)(B) to
transition from operation of such a pool to
operation of a qualified State reinsurance
program described in subsection (b).
(3) Application of funds.--If the program or pool operated
under paragraph (1)(A) is in strong fiscal health, as
determined in accordance with standards established by the
National Association of Insurance Commissioners and as approved
by the State Insurance Commissioner involved, the requirement
of paragraph (1)(B) shall be deemed to be met.
(b) Qualified State Reinsurance Program.--
(1) In general.--For purposes of this section, a
``qualified State reinsurance program'' means a program
operated by a State program that provides reinsurance for
health insurance coverage offered in the small group market in
accordance with the model for such a program established (as of
the date of the enactment of this Act).
(2) Form of program.--A qualified State reinsurance program
may provide reinsurance--
(A) on a prospective or retrospective basis; and
(B) on a basis that protects health insurance
issuers against the annual aggregate spending of their
enrollees as well as purchase protection against
individual catastrophic costs.
(3) Satisfaction of hipaa requirement.--A qualified State
reinsurance program shall be deemed, for purposes of section
2745 of the Public Health Service Act, to be a qualified high
risk pool under such section.
(c) Qualifying State High Risk Pool.--
(1) In general.--A qualifying State high risk pool
described in this subsection means a current section 2745
qualified high risk pool that meets the following requirements:
(A) The pool must provide at least two coverage
options, one of which must be a high deductible health
plan coupled with a health savings account.
(B) The pool must be funded with a stable funding
source.
(C) The pool must eliminate any waiting lists so
that all eligible residents who are seeking coverage
through the pool should be allowed to receive coverage
through the pool.
(D) The pool must allow for coverage of individuals
who, but for the 24-month disability waiting period
under section 226(b) of the Social Security Act, would
be eligible for Medicare during the period of such
waiting period.
(E) The pool must limit the pool premiums to no
more than 150 percent of the average premium for
applicable standard risk rates in that State.
(F) The pool must conduct education and outreach
initiatives so that residents and brokers understand
that the pool is available to eligible residents.
(G) The pool must provide coverage for preventive
services and disease management for chronic diseases.
(2) Verification of citizenship or alien qualification.--
(A) In general.--Notwithstanding any other
provision of law, only citizens and nationals of the
United States shall be eligible to participate in a
qualifying State high risk pool that receives funds
under section 2745 of the Public Health Service Act or
this section.
(B) Condition of participation.--As a condition of
a State receiving such funds, the Secretary shall
require the State to certify, to the satisfaction of
the Secretary, that such State requires all applicants
for coverage in the qualifying State high risk pool to
provide satisfactory documentation of citizenship or
nationality in a manner consistent with section 1903(x)
of the Social Security Act.
(C) Records.--The Secretary shall keep sufficient
records such that a determination of citizenship or
nationality only has to be made once for any individual
under this paragraph.
(3) Relation to section 2745.--As of January 1, 2010, a
pool shall not qualify as qualified high risk pool under
section 2745 of the Public Health Service Act unless the pool
is a qualifying State high risk pool described in paragraph
(1).
(d) Waivers.--In order to accommodate new and innovative programs,
the Secretary may waive such requirements of this section for qualified
State reinsurance programs and for qualifying State high risk pools as
the Secretary deems appropriate.
(e) Funding.--In addition to any other amounts appropriated, there
is appropriated to carry out section 2745 of the Public Health Service
Act (including through a program or pool described in subsection
(a)(1))--
(1) $15,000,000,000 for the period of fiscal years 2010
through 2019; and
(2) an additional $10,000,000,000 for the period of fiscal
years 2015 through 2019.
(f) Definitions.--In this section:
(1) Health insurance coverage; health insurance issuer.--
The terms ``health insurance coverage'' and ``health insurance
issuer'' have the meanings given such terms in section 2791 of
the Public Health Service Act.
(2) Current section 2745 qualified high risk pool.--The
term ``current section 2745 qualified high risk pool'' has the
meaning given the term ``qualified high risk pool'' under
section 2745(g) of the Public Health Service Act as in effect
as of the date of the enactment of this Act.
(3) Secretary.--The term ``Secretary'' means Secretary of
Health and Human Services.
(4) Standard risk rate.--The term ``standard risk rate''
means a rate that--
(A) is determined under the State high risk pool by
considering the premium rates charged by other health
insurance issuers offering health insurance coverage to
individuals in the insurance market served;
(B) is established using reasonable actuarial
techniques; and
(C) reflects anticipated claims experience and
expenses for the coverage involved.
(5) State.--The term ``State'' means any of the 50 States
or the District of Columbia.
SEC. 102. ELIMINATION OF CERTAIN REQUIREMENTS FOR GUARANTEED
AVAILABILITY IN INDIVIDUAL MARKET.
(a) In General.--Section 2741(b) of the Public Health Service Act
(42 U.S.C. 300gg-41(b)) is amended--
(1) in paragraph (1)--
(A) by striking ``(1)(A)'' and inserting ``(1)'';
and
(B) by striking ``and (B)'' and all that follows up
to the semicolon at the end;
(2) by adding ``and'' at the end of paragraph (2);
(3) in paragraph (3)--
(A) by striking ``(1)(A)'' and inserting ``(1)'';
and
(B) by striking the semicolon at the end and
inserting a period; and
(4) by striking paragraphs (4) and (5).
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on the date of the enactment of this Act.
SEC. 103. NO ANNUAL OR LIFETIME SPENDING CAPS.
Notwithstanding any other provision of law, a health insurance
issuer (including an entity licensed to sell insurance with respect to
a State or group health plan) may not apply an annual or lifetime
aggregate spending cap on any health insurance coverage or plan offered
by such issuer.
SEC. 104. PREVENTING UNJUST CANCELLATION OF INSURANCE COVERAGE.
(a) Clarification Regarding Application of Guaranteed Renewability
of Individual Health Insurance Coverage.--Section 2742 of the Public
Health Service Act (42 U.S.C. 300gg-42) is amended--
(1) in its heading, by inserting ``, continuation in force,
including prohibition of rescission,'' after ``guaranteed
renewability'';
(2) in subsection (a), by inserting ``, including without
rescission,'' after ``continue in force''; and
(3) in subsection (b)(2), by inserting before the period at
the end the following: ``, including intentional concealment of
material facts regarding a health condition related to the
condition for which coverage is being claimed''.
(b) Opportunity for Independent, External Third Party Review in
Certain Cases.--Subpart 1 of part B of title XXVII of the Public Health
Service Act is amended by adding at the end the following new section:
``SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL THIRD PARTY REVIEW
IN CERTAIN CASES.
``(a) Notice and Review Right.--If a health insurance issuer
determines to nonrenew or not continue in force, including rescind,
health insurance coverage for an individual in the individual market on
the basis described in section 2742(b)(2) before such nonrenewal,
discontinuation, or rescission, may take effect the issuer shall
provide the individual with notice of such proposed nonrenewal,
discontinuation, or rescission and an opportunity for a review of such
determination by an independent, external third party under procedures
specified by the Secretary.
``(b) Independent Determination.--If the individual requests such
review by an independent, external third party of a nonrenewal,
discontinuation, or rescission of health insurance coverage, the
coverage shall remain in effect until such third party determines that
the coverage may be nonrenewed, discontinued, or rescinded under
section 2742(b)(2).''.
(c) Effective Date.--The amendments made by this section shall
apply after the date of the enactment of this Act with respect to
health insurance coverage issued before, on, or after such date.
TITLE II--REDUCING HEALTH CARE PREMIUMS AND THE NUMBER OF UNINSURED
AMERICANS
SEC. 111. STATE INNOVATION PROGRAMS.
(a) Programs That Reduce the Cost of Health Insurance Premiums.--
(1) Payments to states.--
(A) For premium reductions in the small group
market.--If the Secretary determines that a State has
reduced the average per capita premium for health
insurance coverage in the small group market in year 3,
in year 6, or year 9 (as defined in subsection (c))
below the premium baseline for such year (as defined
paragraph (2)), the Secretary shall pay the State an
amount equal to the product of--
(i) bonus premium percentage (as defined in
paragraph (3)) for the State, market, and year;
and
(ii) the maximum State premium payment
amount (as defined in paragraph (4)) for the
State, market, and year
(B) For premium reductions in the individual
market.--If the Secretary determines that a State has
reduced the average per capita premium for health
insurance coverage in the individual market in year 3,
in year 6, or in year 9 below the premium baseline for
such year, the Secretary shall pay the State an amount
equal to the product of--
(i) bonus premium percentage for the State,
market, and year; and
(ii) the maximum State premium payment
amount for the State, market, and year.
(2) Premium baseline.--For purposes of this subsection, the
term ``premium baseline'' means, for a market in a State--
(A) for year 1, the average per capita premiums for
health insurance coverage in such market in the State
in such year; or
(B) for a subsequent year, the baseline for the
market in the State for the previous year under this
paragraph increased by a percentage specified in
accordance with a formula established by the Secretary,
in consultation with the Congressional Budget Office
and the Bureau of the Census, that takes into account
at least the following:
(i) Growth factor.--The inflation in the
costs of inputs to health care services in the
year.
(ii) Historic premium growth rates.--
Historic growth rates, during the 10 years
before year 1, of per capita premiums for
health insurance coverage.
(iii) Demographic considerations.--Historic
average changes in the demographics of the
population covered that impact on the rate of
growth of per capita health care costs.
(3) Bonus premium percentage defined.--
(A) In general.--For purposes of this subsection,
the term ``bonus premium percentage'' means, for the
small group market or individual market in a State for
a year, such percentage as determined in accordance
with the following table based on the State's premium
performance level (as defined in subparagraph (B)) for
such market and year:
----------------------------------------------------------------------------------------------------------------
The bonus
premium For year 3 if the premium For year 6 if the premium For year 9 if the premium
percentage for performance level of the State performance level of the State performance level of the State
a State is-- is-- is-- is--
----------------------------------------------------------------------------------------------------------------
100 percent at least 8.5% at least 11% at least 13.5%
----------------------------------------------------------------------------------------------------------------
50 percent at least 6.38%, but less than at least 10.38%, but less than at least 12.88%, but less than
8.5% 11% 13.5%
----------------------------------------------------------------------------------------------------------------
25 percent at least 4.25%, but less than at least 9.75%, but less than at least 12.25%, but less than
6.38% 10.38% 12.88%
----------------------------------------------------------------------------------------------------------------
0 percent less than 4.25% less than 9.75% less than 12.25%.
----------------------------------------------------------------------------------------------------------------
(B) Premium performance level.--For purposes of
this subsection, the term ``premium performance level''
means, for a State, market, and year, the percentage
reduction in the average per capita premiums for health
insurance coverage for the State, market, and year, as
compared to the premium baseline for such State,
market, and year.
(4) Maximum state premium payment amount defined.--For
purposes of this subsection, the term ``maximum State premium
payment amount'' means, for a State for the small group market
or the individual market for a year, the product of--
(A) the proportion (as determined by the
Secretary), of the number of nonelderly individuals
lawfully residing in all the States who are enrolled in
health insurance coverage in the respective market in
the year, who are residents of the State; and
(B) the amount available for obligation from
amounts appropriated under subsection (d) for such
market with respect to performance in such year.
(5) Methodology for calculating average per capita
premiums.--
(A) Establishment.--The Secretary shall establish,
by rule and consistent with this subsection, a
methodology for computing the average per capita
premiums for health insurance coverage for the small
group market and for the individual market in each
State for each year beginning with year 1.
(B) Adjustments.--Under such methodology, the
Secretary shall provide for the following adjustments
(in a manner determined appropriate by the Secretary):
(i) Exclusion of illegal aliens.--An
adjustment so as not to take into account
enrollees who are not lawfully present in the
United States and their premium costs.
(ii) Treating state premium subsidies as
premium costs.--An adjustment so as to increase
per capita premiums to remove the impact of
premium subsidies made directly by a State to
reduce health insurance premiums.
(6) Conditions of payment.--As a condition of receiving a
payment under paragraph (1), a State must agree to submit
aggregate, non-individually identifiable data to the Secretary,
in a form and manner specified by the Secretary, for use by the
Secretary to determine the State's premium baseline and premium
performance level for purposes of this subsection.
(b) Programs That Reduce the Number of Uninsured.--
(1) In general.--If the Secretary determines that a State
has reduced the percentage of uninsured nonelderly residents in
year 5, year 7, or year 9, below the uninsured baseline (as
defined in paragraph (2)) for the State for the year, the
Secretary shall pay the State an amount equal to the product
of--
(A) bonus uninsured percentage (as defined in
paragraph (3)) for the State and year; and
(B) the maximum uninsured payment amount (as
defined in paragraph (4)) for the State and year.
(2) Uninsured baseline.--
(A) In general.--For purposes of this subsection,
and subject to subparagraph (B), the term ``uninsured
baseline'' means, for a State, the percentage of
nonelderly residents in the State who are uninsured in
year 1.
(B) Adjustment.--The Secretary may, at the written
request of a State, adjust the uninsured baseline for
States for a year to take into account unanticipated
and exceptional changes, such as an unanticipated
migration, of nonelderly individuals into, or out of,
States in a manner that does not reflect substantially
the proportion of uninsured nonelderly residents in the
States involved in year 1. Any such adjustment shall
only be done in a manner that does not result in the
average of the uninsured baselines for nonelderly
residents for all States being changed.
(3) Bonus uninsured percentage.--
(A) Bonus uninsured percentage.--For purposes of
this subsection, the term ``bonus uninsured
percentage'' means, for a State for a year, such
percentage as determined in accordance with the
following table, based on the uninsured performance
level (as defined in subparagraph (B)) for such State
and year:
----------------------------------------------------------------------------------------------------------------
The bonus
uninsured For year 5 if the uninsured For year 7 if the uninsured For year 9 if the uninsured
percentage for performance level of the State performance level of the State performance level of the State
a State is-- is-- is-- is--
----------------------------------------------------------------------------------------------------------------
100 percent at least 10% at least 15% at least 20%
----------------------------------------------------------------------------------------------------------------
50 percent at least 7.5% but less than 10% at least 13.75% but less than at least 18.75% but less than
15% 20%
----------------------------------------------------------------------------------------------------------------
25 percent at least 5% but less than 7.5% at least 12.5% but less than at least 17.5% but less than
13.75% 18.75%
----------------------------------------------------------------------------------------------------------------
0 percent less than 5% less than 12.5% less than 17.5%.
----------------------------------------------------------------------------------------------------------------
(B) Uninsured performance level.--For purposes of
this subsection, the term ``uninsured performance
level'' means, for a State for a year, the reduction
(expressed as a percentage) in the percentage of
uninsured nonelderly residents in such State in the
year as compared to the uninsured baseline for such
State for such year.
(4) Maximum state uninsured payment amount defined.--For
purposes of this subsection, the term ``maximum State uninsured
payment amount'' means, for a State for a year, the product
of--
(A) the proportion (as determined by the
Secretary), of the number of uninsured nonelderly
individuals lawfully residing in all the States in the
year, who are residents of the State; and
(B) the amount available for obligation under this
subsection from amounts appropriated under subsection
(d) with respect to performance in such year.
(5) Methodology for computing the percentage of uninsured
nonelderly residents in a state.--
(A) Establishment.--The Secretary shall establish,
by rule and consistent with this subsection, a
methodology for computing the percentage of nonelderly
residents in a State who are uninsured in each year
beginning with year 1.
(B) Rules.--
(i) Treatment of uninsured.--Such
methodology shall treat as uninsured those
residents who do not have health insurance
coverage or other creditable coverage (as
defined in section 9801(c)(1) of the Internal
Revenue Code of 1986), except that such
methodology shall rely upon data on the
nonelderly and uninsured populations within
each State in such year provided through
population surveys conducted by federal
agencies.
(ii) Limitation to nonelderly.--Such
methodology shall exclude individuals who are
65 years of age or older.
(iii) Exclusion of illegal aliens.--Such
methodology shall exclude individuals not
lawfully present in the United States.
(6) Conditions of payment.--As a condition of receiving a
payment under paragraph (1), a State must agree to submit
aggregate, non-individually identifiable data to the Secretary,
in a form and manner specified by the Secretary, for use by the
Secretary in determining the State's uninsured baseline and
uninsured performance level for purposes of this subsection.
(c) Definitions.--For purposes of this section:
(1) Group health plan.--The term ``group health plan'' has
the meaning given such term in section 9832(a) of the Internal
Revenue Code of 1986.
(2) Health insurance coverage.--The term ``health insurance
coverage'' has the meaning given such term in section
9832(b)(1) of the Internal Revenue Code of 1986.
(3) Individual market.--Except as the Secretary may
otherwise provide in the case of group health plans that have
fewer than 2 participants as current employees on the first day
of a plan year, the term ``individual market'' means the market
for health insurance coverage offered to individuals other than
in connection with a group health plan.
(4) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(5) Small group market.--The term ``small group market''
means the market for health insurance coverage under which
individuals obtain health insurance coverage (directly or
through any arrangement) on behalf of themselves (and their
dependents) through a group health plan maintained by an
employer who employed on average at least 2 but not more than
50 employees on business days during a calendar year.
(6) State.--The term ``State'' means any of the 50 States
and the District of Columbia.
(7) Years.--The terms ``year 1'', ``year 2'', ``year 3'',
and similar subsequently numbered years mean 2010, 2011, 2012,
and subsequent sequentially numbered years.
(d) Appropriations; Payments.--
(1) Payments for reductions in cost of health insurance
coverage.--
(A) Small group market.--
(i) In general.--From any funds in the
Treasury not otherwise appropriated, there is
appropriated for payments under subsection
(a)(1)(A)--
(I) $18,000,000,000 with respect to
performance in year 3;
(II) $5,000,000,000 with respect to
performance in year 6; and
(III) $2,000,000,000 with respect
to performance in year 9.
(ii) Availability of appropriated funds.--
Funds appropriated under clause (i) shall
remain available until expended.
(B) Individual market.--
(i) In general.--Subject to clause (ii),
from any funds in the Treasury not otherwise
appropriated, there is appropriated for
payments under subsection (a)(1)(B)--
(I) $7,000,000,000 with respect to
performance in year 3;
(II) $2,000,000,000 with respect to
performance in year 6; and
(III) $1,000,000,000 with respect
to performance in year 9.
(ii) Availability of appropriated funds.--
Of the funds appropriated under clause (i) that
are not expended or obligated by the end of the
year following the year for which the funds are
appropriated--
(I) 75 percent shall remain
available until expended for payments
under subsection (a)(1)(B); and
(II) 25 percent shall remain
available until expended for payments
under subsection (a)(1)(A).
(2) Payments for reductions in the percentage of
uninsured.--
(A) In general.--From any funds in the Treasury not
otherwise appropriated, there is appropriated for
payments under subsection (b)(1)--
(i) $10,000,000,000 with respect to
performance in year 5;
(ii) $3,000,000,000 with respect to
performance in year 7; and
(iii) $2,000,000,000 with respect to
performance in year 9
(B) Availability of appropriated funds.--Funds
appropriated under subparagraph (A) shall remain
available until expended.
(3) Payment timing.--Payments under this section shall be
made in a form and manner specified by the Secretary in the
year after the performance year involved.
SEC. 112. HEALTH PLAN FINDERS.
(a) State Plan Finders.--Not later than 12 months after the date of
the enactment of this Act, each State may contract with a private
entity to develop and operate a plan finder website (referred to in
this section as a ``State plan finder'') which shall provide
information to individuals in such State on plans of health insurance
coverage that are available to individuals in such State (in this
section referred to as a ``health insurance plan'') . Such State may
not operate a plan finder itself.
(b) Multi-State Plan Finders.--
(1) In general.--A private entity may operate a multi-State
finder that operates under this section in the States involved
in the same manner as a State plan finder would operate in a
single State.
(2) Sharing of information.--States shall regulate the
manner in which data is shared between plan finders to ensure
consistency and accuracy in the information about health
insurance plans contained in such finders.
(c) Requirements for Plan Finders.--Each plan finder shall meet the
following requirements:
(1) The plan finder shall ensure that each health insurance
plan in the plan finder meets the requirements for such plans
under subsection (d).
(2) The plan finder shall present complete information on
the costs and benefits of health insurance plans (including
information on monthly premium, copayments, and deductibles) in
a uniform manner that--
(A) uses the standard definitions developed under
paragraph (3); and
(B) is designed to allow consumers to easily
compare such plans.
(3) The plan finder shall be available on the Internet and
accessible to all individuals in the State or, in the case of a
multi-State plan finder, in all States covered by the multi-
State plan finder.
(4) The plan finder shall allow consumers to search and
sort data on the health insurance plans in the plan finder on
criteria such as coverage of specific benefits (such as
coverage of disease management services or pediatric care
services), as well as data available on quality.
(5) The plan finder shall meet all relevant State laws and
regulations, including laws and regulations related to the
marketing of insurance products. In the case of a multi-State
plan finder, the finder shall meet such laws and regulations
for all of the States involved.
(6) The plan finder shall meet solvency, financial, and
privacy requirements established by the State or States in
which the plan finder operates or the Secretary for multi-State
finders.
(7) The plan finder and the employees of the plan finder
shall be appropriately licensed in the State or States in which
the plan finder operates, if such licensure is required by such
State or States.
(8) Notwithstanding subsection (f)(1), the plan finder
shall assist individuals who are eligible for the Medicaid
program under title XIX of the Social Security Act or State
Children's Health Insurance Program under title XXI of such Act
by including information on Medicaid options, eligibility, and
how to enroll.
(d) Requirements for Plans Participating in a Plan Finder.--
(1) In general.--Each State shall ensure that health
insurance plans participating in the State plan finder or in a
multi-State plan finder meet the requirements of paragraph (2)
(relating to adequacy of insurance coverage, consumer
protection, and financial strength).
(2) Specific requirements.--In order to participate in a
plan finder, a health insurance plan must meet all of the
following requirements, as determined by each State in which
such plan operates:
(A) The health insurance plan shall be actuarially
sound.
(B) The health insurance plan may not have a
history of abusive policy rescissions.
(C) The health insurance plan shall meet financial
and solvency requirements.
(D) The health insurance plan shall disclose--
(i) all financial arrangements involving
the sale and purchase of health insurance, such
as the payment of fees and commissions; and
(ii) such arrangements may not be abusive.
(E) The health insurance plan shall maintain
electronic health records that comply with the
requirements of the American Recovery and Reinvestment
Act of 2009 (Public Law 111-5) related to electronic
health records.
(F) The health insurance plan shall make available
to plan enrollees via the finder, whether by
information provided to the finder or by a website link
directing the enrollee from the finder to the health
insurance plan website, data that includes the price
and cost to the individual of services offered by a
provider according to the terms and conditions of the
health plan. Data described in this paragraph is not
made public by the finder, only made available to the
individual once enrolled in the health plan.
(e) Prohibitions.--
(1) Direct enrollment.--The State plan finder may not
directly enroll individuals in health insurance plans.
(2) Conflicts of interest.--
(A) Companies.--A health insurance issuer offering
a health insurance plan through a plan finder may not--
(i) be the private entity developing and
maintaining a plan finder under subsections (a)
and (b); or
(ii) have an ownership interest in such
private entity or in the plan finder.
(B) Individuals.--An individual employed by a
health insurance issuer offering a health insurance
plan through a plan finder may not serve as a director
or officer for--
(i) the private entity developing and
maintaining a plan finder under subsections (a)
and (b); or
(ii) the plan finder.
(f) Construction.--Nothing in this section shall be construed to
allow the Secretary authority to regulate benefit packages or to
prohibit health insurance brokers and agents from--
(1) utilizing the plan finder for any purpose; or
(2) marketing or offering health insurance products.
(g) Plan Finder Defined.--For purposes of this section, the term
``plan finder'' means a State plan finder under subsection (a) or a
multi-State plan finder under subsection (b).
(h) State Defined.--In this section, the term ``State'' has the
meaning given such term for purposes of title XIX of the Social
Security Act.
SEC. 113. ADMINISTRATIVE SIMPLIFICATION.
(a) Operating Rules for Health Information Transactions.--
(1) Definition of operating rules.--Section 1171 of the
Social Security Act (42 U.S.C. 1320d) is amended by adding at
the end the following:
``(9) Operating rules.--The term `operating rules' means
the necessary business rules and guidelines for the electronic
exchange of information that are not defined by a standard or
its implementation specifications as adopted for purposes of
this part.''.
(2) Operating rules and compliance.--Section 1173 of the
Social Security Act (42 U.S.C. 1320d-2) is amended--
(A) in subsection (a)(2), by adding at the end the
following new subparagraph:
``(J) Electronic funds transfers.''; and
(B) by adding at the end the following new
subsections:
``(g) Operating Rules.--
``(1) In general.--The Secretary shall adopt a single set
of operating rules for each transaction described in subsection
(a)(2) with the goal of creating as much uniformity in the
implementation of the electronic standards as possible. Such
operating rules shall be consensus-based and reflect the
necessary business rules affecting health plans and health care
providers and the manner in which they operate pursuant to
standards issued under Health Insurance Portability and
Accountability Act of 1996.
``(2) Operating rules development.--In adopting operating
rules under this subsection, the Secretary shall rely on
recommendations for operating rules developed by a qualified
nonprofit entity, as selected by the Secretary, that meets the
following requirements:
``(A) The entity focuses its mission on
administrative simplification.
``(B) The entity demonstrates an established multi-
stakeholder and consensus-based process for development
of operating rules, including representation by or
participation from health plans, health care providers,
vendors, relevant Federal agencies, and other standard
development organizations.
``(C) The entity has established a public set of
guiding principles that ensure the operating rules and
process are open and transparent.
``(D) The entity coordinates its activities with
the HIT Policy Committee and the HIT Standards
Committee (as established under title XXX of the Public
Health Service Act) and complements the efforts of the
Office of the National Healthcare Coordinator and its
related health information exchange goals.
``(E) The entity incorporates national standards,
including the transaction standards issued under Health
Insurance Portability and Accountability Act of 1996.
``(F) The entity supports nondiscrimination and
conflict of interest policies that demonstrate a
commitment to open, fair, and nondiscriminatory
practices.
``(G) The entity allows for public review and
updates of the operating rules.
``(3) Review and recommendations.--The National Committee
on Vital and Health Statistics shall--
``(A) review the operating rules developed by a
nonprofit entity described under paragraph (2);
``(B) determine whether such rules represent a
consensus view of the health care industry and are
consistent with and do not alter current standards;
``(C) evaluate whether such rules are consistent
with electronic standards adopted for health
information technology; and
``(D) submit to the Secretary a recommendation as
to whether the Secretary should adopt such rules.
``(4) Implementation.--
``(A) In general.--The Secretary shall adopt
operating rules under this subsection, by regulation in
accordance with subparagraph (C), following
consideration of the rules developed by the non-profit
entity described in paragraph (2) and the
recommendation submitted by the National Committee on
Vital and Health Statistics under paragraph (3)(D) and
having ensured consultation with providers.
``(B) Adoption requirements; effective dates.--
``(i) Eligibility for a health plan and
health claim status.--The set of operating
rules for transactions for eligibility for a
health plan and health claim status shall be
adopted not later than July 1, 2011, in a
manner ensuring that such rules are effective
not later than January 1, 2013, and may allow
for the use of a machine readable
identification card.
``(ii) Electronic funds transfers and
health care payment and remittance advice.--The
set of operating rules for electronic funds
transfers and health care payment and
remittance advice shall be adopted not later
than July 1, 2012, in a manner ensuring that
such rules are effective not later than January
1, 2014.
``(iii) Other completed transactions.--The
set of operating rules for the remainder of the
completed transactions described in subsection
(a)(2), including health claims or equivalent
encounter information, enrollment and
disenrollment in a health plan, health plan
premium payments, and referral certification
and authorization, shall be adopted not later
than July 1, 2014, in a manner ensuring that
such rules are effective not later than January
1, 2016.
``(C) Expedited rulemaking.--The Secretary shall
promulgate an interim final rule applying any standard
or operating rule recommended by the National Committee
on Vital and Health Statistics pursuant to paragraph
(3). The Secretary shall accept public comments on any
interim final rule published under this subparagraph
for 60 days after the date of such publication.
``(h) Compliance.--
``(1) Health plan certification.--
``(A) Eligibility for a health plan, health claim
status, electronic funds transfers, health care payment
and remittance advice.--Not later than December 31,
2013, a health plan shall file a statement with the
Secretary, in such form as the Secretary may require,
certifying that the data and information systems for
such plan are in compliance with any applicable
standards (as described under paragraph (7) of section
1171) and operating rules (as described under paragraph
(9) of such section) for electronic funds transfers,
eligibility for a health plan, health claim status, and
health care payment and remittance advice,
respectively.
``(B) Other completed transactions.--Not later than
December 31, 2015, a health plan shall file a statement
with the Secretary, in such form as the Secretary may
require, certifying that the data and information
systems for such plan are in compliance with any
applicable standards and operating rules for the
remainder of the completed transactions described in
subsection (a)(2), including health claims or
equivalent encounter information, enrollment and
disenrollment in a health plan, health plan premium
payments, and referral certification and authorization,
respectively. A health plan shall provide the same
level of documentation to certify compliance with such
transactions as is required to certify compliance with
the transactions specified in subparagraph (A).
``(2) Documentation of compliance.--A health plan shall
provide the Secretary, in such form as the Secretary may
require, with adequate documentation of compliance with the
standards and operating rules described under paragraph (1). A
health plan shall not be considered to have provided adequate
documentation and shall not be certified as being in compliance
with such standards, unless the health plan--
``(A) demonstrates to the Secretary that the plan
conducts the electronic transactions specified in
paragraph (1) in a manner that fully complies with the
regulations of the Secretary; and
``(B) provides documentation showing that the plan
has completed end-to-end testing for such transactions
with their partners, such as hospitals and physicians.
``(3) Service contracts.--A health plan shall be required
to comply with any applicable certification and compliance
requirements (and provide the Secretary with adequate
documentation of such compliance) under this subsection for any
entities that provide services pursuant to a contract with such
health plan.
``(4) Certification by outside entity.--The Secretary may
contract with an independent, outside entity to certify that a
health plan has complied with the requirements under this
subsection, provided that the certification standards employed
by such entities are in accordance with any standards or rules
issued by the Secretary.
``(5) Compliance with revised standards and rules.--A
health plan (including entities described under paragraph (3))
shall comply with the certification and documentation
requirements under this subsection for any interim final rule
promulgated by the Secretary under subsection (i) that amends
any standard or operating rule described under paragraph (1) of
this subsection. A health plan shall comply with such
requirements not later than the effective date of the
applicable interim final rule.
``(6) Audits of health plans.--The Secretary shall conduct
periodic audits to ensure that health plans (including entities
described under paragraph (3)) are in compliance with any
standards and operating rules that are described under
paragraph (1).
``(i) Review and Amendment of Standards and Rules.--
``(1) Establishment.--Not later than January 1, 2014, the
Secretary shall establish a review committee (as described
under paragraph (4)).
``(2) Evaluations and reports.--
``(A) Hearings.--Not later than April 1, 2014, and
not less than biennially thereafter, the Secretary,
acting through the review committee, shall conduct
hearings to evaluate and review the existing standards
and operating rules established under this section.
``(B) Report.--Not later than July 1, 2014, and not
less than biennially thereafter, the review committee
shall provide recommendations for updating and
improving such standards and rules. The review
committee shall recommend a single set of operating
rules per transaction standard and maintain the goal of
creating as much uniformity as possible in the
implementation of the electronic standards.
``(3) Interim final rulemaking.--
``(A) In general.--Any recommendations to amend
existing standards and operating rules that have been
approved by the review committee and reported to the
Secretary under paragraph (2)(B) shall be adopted by
the Secretary through promulgation of an interim final
rule not later than 90 days after receipt of the
committee's report.
``(B) Public comment.--
``(i) Public comment period.--The Secretary
shall accept public comments on any interim
final rule published under this paragraph for
60 days after the date of such publication.
``(ii) Effective date.--The effective date
of any amendment to existing standards or
operating rules that is adopted through an
interim final rule published under this
paragraph shall be 25 months following the
close of such public comment period.
``(4) Review committee.--
``(A) Definition.--For the purposes of this
subsection, the term `review committee' means a
committee within the Department of Health and Human
services that has been designated by the Secretary to
carry out this subsection, including--
``(i) the National Committee on Vital and
Health Statistics; or
``(ii) any appropriate committee as
determined by the Secretary.
``(B) Coordination of hit standards.--In developing
recommendations under this subsection, the review
committee shall consider the standards approved by the
Office of the National Coordinator for Health
Information Technology.
``(j) Penalties.--
``(1) Penalty fee.--
``(A) In general.--Not later than April 1, 2014,
and annually thereafter, the Secretary shall assess a
penalty fee (as determined under subparagraph (B))
against a health plan that has failed to meet the
requirements under subsection (h) with respect to
certification and documentation of compliance with the
standards (and their operating rules) as described
under paragraph (1) of such subsection.
``(B) Fee amount.--Subject to subparagraphs (C),
(D), and (E), the Secretary shall assess a penalty fee
against a health plan in the amount of $1 per covered
life until certification is complete. The penalty shall
be assessed per person covered by the plan for which
its data systems for major medical policies are not in
compliance and shall be imposed against the health plan
for each day that the plan is not in compliance with
the requirements under subsection (h).
``(C) Additional penalty for misrepresentation.--A
health plan that knowingly provides inaccurate or
incomplete information in a statement of certification
or documentation of compliance under subsection (h)
shall be subject to a penalty fee that is double the
amount that would otherwise be imposed under this
subsection.
``(D) Annual fee increase.--The amount of the
penalty fee imposed under this subsection shall be
increased on an annual basis by the annual percentage
increase in total national health care expenditures, as
determined by the Secretary.
``(E) Penalty limit.--A penalty fee assessed
against a health plan under this subsection shall not
exceed, on an annual basis--
``(i) an amount equal to $20 per covered
life under such plan; or
``(ii) an amount equal to $40 per covered
life under the plan if such plan has knowingly
provided inaccurate or incomplete information
(as described under subparagraph (C)).
``(F) Determination of covered individuals.--The
Secretary shall determine the number of covered lives
under a health plan based upon the most recent
statements and filings that have been submitted by such
plan to the Securities and Exchange Commission.
``(2) Notice and dispute procedure.--The Secretary shall
establish a procedure for assessment of penalty fees under this
subsection that provides a health plan with reasonable notice
and a dispute resolution procedure prior to provision of a
notice of assessment by the Secretary of the Treasury (as
described under paragraph (4)(B)).
``(3) Penalty fee report.--Not later than May 1, 2014, and
annually thereafter, the Secretary shall provide the Secretary
of the Treasury with a report identifying those health plans
that have been assessed a penalty fee under this subsection.
``(4) Collection of penalty fee.--
``(A) In general.--The Secretary of the Treasury,
acting through the Financial Management Service, shall
administer the collection of penalty fees from health
plans that have been identified by the Secretary in the
penalty fee report provided under paragraph (3).
``(B) Notice.--Not later than August 1, 2014, and
annually thereafter, the Secretary of the Treasury
shall provide notice to each health plan that has been
assessed a penalty fee by the Secretary under this
subsection. Such notice shall include the amount of the
penalty fee assessed by the Secretary and the due date
for payment of such fee to the Secretary of the
Treasury (as described in subparagraph (C)).
``(C) Payment due date.--Payment by a health plan
for a penalty fee assessed under this subsection shall
be made to the Secretary of the Treasury not later than
November 1, 2014, and annually thereafter.
``(D) Unpaid penalty fees.--Any amount of a penalty
fee assessed against a health plan under this
subsection for which payment has not been made by the
due date provided under subparagraph (C) shall be--
``(i) increased by the interest accrued on
such amount, as determined pursuant to the
underpayment rate established under section
6601 of the Internal Revenue Code of 1986; and
``(ii) treated as a past-due, legally
enforceable debt owed to a Federal agency for
purposes of section 6402(d) of the Internal
Revenue Code of 1986.
``(E) Administrative fees.--Any fee charged or
allocated for collection activities conducted by the
Financial Management Service will be passed on to a
health plan on a pro-rata basis and added to any
penalty fee collected from the plan.''.
(b) Promulgation of Rules.--
(1) Unique health plan identifier.--The Secretary shall
promulgate a final rule to establish a unique health plan
identifier (as described in section 1173(b) of the Social
Security Act (42 U.S.C. 1320d-2(b))) based on the input of the
National Committee of Vital and Health Statistics. The
Secretary may do so on an interim final basis and such rule
shall be effective not later than October 1, 2012.
(2) Electronic funds transfer.--The Secretary shall
promulgate a final rule to establish a standard for electronic
funds transfers (as described in section 1173(a)(2)(J) of the
Social Security Act, as added by subsection (a)(2)(A)). The
Secretary may do so on an interim final basis and shall adopt
such standard not later than January 1, 2012, in a manner
ensuring that such standard is effective not later than January
1, 2014.
(c) Expansion of Electronic Transactions in Medicare.--Section
1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended--
(1) in paragraph (23), by striking the ``or'' at the end;
(2) in paragraph (24), by striking the period and inserting
``; or''; and
(3) by inserting after paragraph (24) the following new
paragraph:
``(25) not later than January 1, 2014, for which the
payment is other than by electronic funds transfer (EFT) or an
electronic remittance in a form as specified in ASC X12 835
Health Care Payment and Remittance Advice or subsequent
standard.''.
(d) Medicare and Medicaid Compliance Reports.--Not later than July
1, 2013, the Secretary of Health and Human Services shall submit a
report to the chairs and ranking members of the Committee on Ways and
Means and the Committee on Energy and Commerce of the House of
Representatives and the chairs and ranking members of the Committee on
Health, Education, Labor, and Pensions and the Committee on Finance of
the Senate on the extent to which the Medicare program and providers
that serve beneficiaries under that program, and State Medicaid
programs and providers that serve beneficiaries under those programs,
transact electronically in accordance with transaction standards issued
under the Health Insurance Portability and Accountability Act of 1996,
part C of title XI of the Social Security Act, and regulations
promulgated under such Acts.
DIVISION B--IMPROVING ACCESS TO HEALTH CARE
TITLE I--EXPANDING ACCESS AND LOWERING COSTS FOR SMALL BUSINESSES
SEC. 201. RULES GOVERNING ASSOCIATION HEALTH PLANS.
(a) In General.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding after part 7 the
following new part:
``PART 8--RULES GOVERNING ASSOCIATION HEALTH PLANS
``SEC. 801. ASSOCIATION HEALTH PLANS.
``(a) In General.--For purposes of this part, the term `association
health plan' means a group health plan whose sponsor is (or is deemed
under this part to be) described in subsection (b).
``(b) Sponsorship.--The sponsor of a group health plan is described
in this subsection if such sponsor--
``(1) is organized and maintained in good faith, with a
constitution and bylaws specifically stating its purpose and
providing for periodic meetings on at least an annual basis, as
a bona fide trade association, a bona fide industry association
(including a rural electric cooperative association or a rural
telephone cooperative association), a bona fide professional
association, or a bona fide chamber of commerce (or similar
bona fide business association, including a corporation or
similar organization that operates on a cooperative basis
(within the meaning of section 1381 of the Internal Revenue
Code of 1986)), for substantial purposes other than that of
obtaining or providing medical care;
``(2) is established as a permanent entity which receives
the active support of its members and requires for membership
payment on a periodic basis of dues or payments necessary to
maintain eligibility for membership in the sponsor; and
``(3) does not condition membership, such dues or payments,
or coverage under the plan on the basis of health status-
related factors with respect to the employees of its members
(or affiliated members), or the dependents of such employees,
and does not condition such dues or payments on the basis of
group health plan participation.
Any sponsor consisting of an association of entities which meet the
requirements of paragraphs (1), (2), and (3) shall be deemed to be a
sponsor described in this subsection.
``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.
``(a) In General.--The applicable authority shall prescribe by
regulation a procedure under which, subject to subsection (b), the
applicable authority shall certify association health plans which apply
for certification as meeting the requirements of this part.
``(b) Standards.--Under the procedure prescribed pursuant to
subsection (a), in the case of an association health plan that provides
at least one benefit option which does not consist of health insurance
coverage, the applicable authority shall certify such plan as meeting
the requirements of this part only if the applicable authority is
satisfied that the applicable requirements of this part are met (or,
upon the date on which the plan is to commence operations, will be met)
with respect to the plan.
``(c) Requirements Applicable to Certified Plans.--An association
health plan with respect to which certification under this part is in
effect shall meet the applicable requirements of this part, effective
on the date of certification (or, if later, on the date on which the
plan is to commence operations).
``(d) Requirements for Continued Certification.--The applicable
authority may provide by regulation for continued certification of
association health plans under this part.
``(e) Class Certification for Fully Insured Plans.--The applicable
authority shall establish a class certification procedure for
association health plans under which all benefits consist of health
insurance coverage. Under such procedure, the applicable authority
shall provide for the granting of certification under this part to the
plans in each class of such association health plans upon appropriate
filing under such procedure in connection with plans in such class and
payment of the prescribed fee under section 807(a).
``(f) Certification of Self-Insured Association Health Plans.--An
association health plan which offers one or more benefit options which
do not consist of health insurance coverage may be certified under this
part only if such plan consists of any of the following:
``(1) a plan which offered such coverage on the date of the
enactment of the Small Business Health Fairness Act of 2009,
``(2) a plan under which the sponsor does not restrict
membership to one or more trades and businesses or industries
and whose eligible participating employers represent a broad
cross-section of trades and businesses or industries, or
``(3) a plan whose eligible participating employers
represent one or more trades or businesses, or one or more
industries, consisting of any of the following: agriculture;
equipment and automobile dealerships; barbering and
cosmetology; certified public accounting practices; child care;
construction; dance, theatrical and orchestra productions;
disinfecting and pest control; financial services; fishing;
food service establishments; hospitals; labor organizations;
logging; manufacturing (metals); mining; medical and dental
practices; medical laboratories; professional consulting
services; sanitary services; transportation (local and
freight); warehousing; wholesaling/distributing; or any other
trade or business or industry which has been indicated as
having average or above-average risk or health claims
experience by reason of State rate filings, denials of
coverage, proposed premium rate levels, or other means
demonstrated by such plan in accordance with regulations.
``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.
``(a) Sponsor.--The requirements of this subsection are met with
respect to an association health plan if the sponsor has met (or is
deemed under this part to have met) the requirements of section 801(b)
for a continuous period of not less than 3 years ending with the date
of the application for certification under this part.
``(b) Board of Trustees.--The requirements of this subsection are
met with respect to an association health plan if the following
requirements are met:
``(1) Fiscal control.--The plan is operated, pursuant to a
trust agreement, by a board of trustees which has complete
fiscal control over the plan and which is responsible for all
operations of the plan.
``(2) Rules of operation and financial controls.--The board
of trustees has in effect rules of operation and financial
controls, based on a 3-year plan of operation, adequate to
carry out the terms of the plan and to meet all requirements of
this title applicable to the plan.
``(3) Rules governing relationship to participating
employers and to contractors.--
``(A) Board membership.--
``(i) In general.--Except as provided in
clauses (ii) and (iii), the members of the
board of trustees are individuals selected from
individuals who are the owners, officers,
directors, or employees of the participating
employers or who are partners in the
participating employers and actively
participate in the business.
``(ii) Limitation.--
``(I) General rule.--Except as
provided in subclauses (II) and (III),
no such member is an owner, officer,
director, or employee of, or partner
in, a contract administrator or other
service provider to the plan.
``(II) Limited exception for
providers of services solely on behalf
of the sponsor.--Officers or employees
of a sponsor which is a service
provider (other than a contract
administrator) to the plan may be
members of the board if they constitute
not more than 25 percent of the
membership of the board and they do not
provide services to the plan other than
on behalf of the sponsor.
``(III) Treatment of providers of
medical care.--In the case of a sponsor
which is an association whose
membership consists primarily of
providers of medical care, subclause
(I) shall not apply in the case of any
service provider described in subclause
(I) who is a provider of medical care
under the plan.
``(iii) Certain plans excluded.--Clause (i)
shall not apply to an association health plan
which is in existence on the date of the
enactment of the Small Business Health Fairness
Act of 2009.
``(B) Sole authority.--The board has sole authority
under the plan to approve applications for
participation in the plan and to contract with a
service provider to administer the day-to-day affairs
of the plan.
``(c) Treatment of Franchise Networks.--In the case of a group
health plan which is established and maintained by a franchiser for a
franchise network consisting of its franchisees--
``(1) the requirements of subsection (a) and section 801(a)
shall be deemed met if such requirements would otherwise be met
if the franchiser were deemed to be the sponsor referred to in
section 801(b), such network were deemed to be an association
described in section 801(b), and each franchisee were deemed to
be a member (of the association and the sponsor) referred to in
section 801(b); and
``(2) the requirements of section 804(a)(1) shall be deemed
met.
The Secretary may by regulation define for purposes of this subsection
the terms `franchiser', `franchise network', and `franchisee'.
``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.
``(a) Covered Employers and Individuals.--The requirements of this
subsection are met with respect to an association health plan if, under
the terms of the plan--
``(1) each participating employer must be--
``(A) a member of the sponsor,
``(B) the sponsor, or
``(C) an affiliated member of the sponsor with
respect to which the requirements of subsection (b) are
met,
except that, in the case of a sponsor which is a professional
association or other individual-based association, if at least
one of the officers, directors, or employees of an employer, or
at least one of the individuals who are partners in an employer
and who actively participates in the business, is a member or
such an affiliated member of the sponsor, participating
employers may also include such employer; and
``(2) all individuals commencing coverage under the plan
after certification under this part must be--
``(A) active or retired owners (including self-
employed individuals), officers, directors, or
employees of, or partners in, participating employers;
or
``(B) the beneficiaries of individuals described in
subparagraph (A).
``(b) Coverage of Previously Uninsured Employees.--In the case of
an association health plan in existence on the date of the enactment of
the Small Business Health Fairness Act of 2009, an affiliated member of
the sponsor of the plan may be offered coverage under the plan as a
participating employer only if--
``(1) the affiliated member was an affiliated member on the
date of certification under this part; or
``(2) during the 12-month period preceding the date of the
offering of such coverage, the affiliated member has not
maintained or contributed to a group health plan with respect
to any of its employees who would otherwise be eligible to
participate in such association health plan.
``(c) Individual Market Unaffected.--The requirements of this
subsection are met with respect to an association health plan if, under
the terms of the plan, no participating employer may provide health
insurance coverage in the individual market for any employee not
covered under the plan which is similar to the coverage
contemporaneously provided to employees of the employer under the plan,
if such exclusion of the employee from coverage under the plan is based
on a health status-related factor with respect to the employee and such
employee would, but for such exclusion on such basis, be eligible for
coverage under the plan.
``(d) Prohibition of Discrimination Against Employers and Employees
Eligible To Participate.--The requirements of this subsection are met
with respect to an association health plan if--
``(1) under the terms of the plan, all employers meeting
the preceding requirements of this section are eligible to
qualify as participating employers for all geographically
available coverage options, unless, in the case of any such
employer, participation or contribution requirements of the
type referred to in section 2711 of the Public Health Service
Act are not met;
``(2) upon request, any employer eligible to participate is
furnished information regarding all coverage options available
under the plan; and
``(3) the applicable requirements of sections 701, 702, and
703 are met with respect to the plan.
``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION
RATES, AND BENEFIT OPTIONS.
``(a) In General.--The requirements of this section are met with
respect to an association health plan if the following requirements are
met:
``(1) Contents of governing instruments.--The instruments
governing the plan include a written instrument, meeting the
requirements of an instrument required under section 402(a)(1),
which--
``(A) provides that the board of trustees serves as
the named fiduciary required for plans under section
402(a)(1) and serves in the capacity of a plan
administrator (referred to in section 3(16)(A));
``(B) provides that the sponsor of the plan is to
serve as plan sponsor (referred to in section
3(16)(B)); and
``(C) incorporates the requirements of section 806.
``(2) Contribution rates must be nondiscriminatory.--
``(A) The contribution rates for any participating
small employer do not vary on the basis of any health
status-related factor in relation to employees of such
employer or their beneficiaries and do not vary on the
basis of the type of business or industry in which such
employer is engaged.
``(B) Nothing in this title or any other provision
of law shall be construed to preclude an association
health plan, or a health insurance issuer offering
health insurance coverage in connection with an
association health plan, from--
``(i) setting contribution rates based on
the claims experience of the plan; or
``(ii) varying contribution rates for small
employers in a State to the extent that such
rates could vary using the same methodology
employed in such State for regulating premium
rates in the small group market with respect to
health insurance coverage offered in connection
with bona fide associations (within the meaning
of section 2791(d)(3) of the Public Health
Service Act),
subject to the requirements of section 702(b) relating
to contribution rates.
``(3) Floor for number of covered individuals with respect
to certain plans.--If any benefit option under the plan does
not consist of health insurance coverage, the plan has as of
the beginning of the plan year not fewer than 1,000
participants and beneficiaries.
``(4) Marketing requirements.--
``(A) In general.--If a benefit option which
consists of health insurance coverage is offered under
the plan, State-licensed insurance agents shall be used
to distribute to small employers coverage which does
not consist of health insurance coverage in a manner
comparable to the manner in which such agents are used
to distribute health insurance coverage.
``(B) State-licensed insurance agents.--For
purposes of subparagraph (A), the term `State-licensed
insurance agents' means one or more agents who are
licensed in a State and are subject to the laws of such
State relating to licensure, qualification, testing,
examination, and continuing education of persons
authorized to offer, sell, or solicit health insurance
coverage in such State.
``(5) Regulatory requirements.--Such other requirements as
the applicable authority determines are necessary to carry out
the purposes of this part, which shall be prescribed by the
applicable authority by regulation.
``(b) Ability of Association Health Plans To Design Benefit
Options.--Subject to section 514(d), nothing in this part or any
provision of State law (as defined in section 514(c)(1)) shall be
construed to preclude an association health plan, or a health insurance
issuer offering health insurance coverage in connection with an
association health plan, from exercising its sole discretion in
selecting the specific items and services consisting of medical care to
be included as benefits under such plan or coverage, except (subject to
section 514) in the case of (1) any law to the extent that it is not
preempted under section 731(a)(1) with respect to matters governed by
section 711, 712, or 713, or (2) any law of the State with which filing
and approval of a policy type offered by the plan was initially
obtained to the extent that such law prohibits an exclusion of a
specific disease from such coverage.
``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR
PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH
INSURANCE COVERAGE.
``(a) In General.--The requirements of this section are met with
respect to an association health plan if--
``(1) the benefits under the plan consist solely of health
insurance coverage; or
``(2) if the plan provides any additional benefit options
which do not consist of health insurance coverage, the plan--
``(A) establishes and maintains reserves with
respect to such additional benefit options, in amounts
recommended by the qualified actuary, consisting of--
``(i) a reserve sufficient for unearned
contributions;
``(ii) a reserve sufficient for benefit
liabilities which have been incurred, which
have not been satisfied, and for which risk of
loss has not yet been transferred, and for
expected administrative costs with respect to
such benefit liabilities;
``(iii) a reserve sufficient for any other
obligations of the plan; and
``(iv) a reserve sufficient for a margin of
error and other fluctuations, taking into
account the specific circumstances of the plan;
and
``(B) establishes and maintains aggregate and
specific excess/stop loss insurance and solvency
indemnification, with respect to such additional
benefit options for which risk of loss has not yet been
transferred, as follows:
``(i) The plan shall secure aggregate
excess/stop loss insurance for the plan with an
attachment point which is not greater than 125
percent of expected gross annual claims. The
applicable authority may by regulation provide
for upward adjustments in the amount of such
percentage in specified circumstances in which
the plan specifically provides for and
maintains reserves in excess of the amounts
required under subparagraph (A).
``(ii) The plan shall secure specific
excess/stop loss insurance for the plan with an
attachment point which is at least equal to an
amount recommended by the plan's qualified
actuary. The applicable authority may by
regulation provide for adjustments in the
amount of such insurance in specified
circumstances in which the plan specifically
provides for and maintains reserves in excess
of the amounts required under subparagraph (A).
``(iii) The plan shall secure
indemnification insurance for any claims which
the plan is unable to satisfy by reason of a
plan termination.
Any person issuing to a plan insurance described in clause (i), (ii),
or (iii) of subparagraph (B) shall notify the Secretary of any failure
of premium payment meriting cancellation of the policy prior to
undertaking such a cancellation. Any regulations prescribed by the
applicable authority pursuant to clause (i) or (ii) of subparagraph (B)
may allow for such adjustments in the required levels of excess/stop
loss insurance as the qualified actuary may recommend, taking into
account the specific circumstances of the plan.
``(b) Minimum Surplus in Addition to Claims Reserves.--In the case
of any association health plan described in subsection (a)(2), the
requirements of this subsection are met if the plan establishes and
maintains surplus in an amount at least equal to--
``(1) $500,000, or
``(2) such greater amount (but not greater than $2,000,000)
as may be set forth in regulations prescribed by the applicable
authority, considering the level of aggregate and specific
excess/stop loss insurance provided with respect to such plan
and other factors related to solvency risk, such as the plan's
projected levels of participation or claims, the nature of the
plan's liabilities, and the types of assets available to assure
that such liabilities are met.
``(c) Additional Requirements.--In the case of any association
health plan described in subsection (a)(2), the applicable authority
may provide such additional requirements relating to reserves, excess/
stop loss insurance, and indemnification insurance as the applicable
authority considers appropriate. Such requirements may be provided by
regulation with respect to any such plan or any class of such plans.
``(d) Adjustments for Excess/Stop Loss Insurance.--The applicable
authority may provide for adjustments to the levels of reserves
otherwise required under subsections (a) and (b) with respect to any
plan or class of plans to take into account excess/stop loss insurance
provided with respect to such plan or plans.
``(e) Alternative Means of Compliance.--The applicable authority
may permit an association health plan described in subsection (a)(2) to
substitute, for all or part of the requirements of this section (except
subsection (a)(2)(B)(iii)), such security, guarantee, hold-harmless
arrangement, or other financial arrangement as the applicable authority
determines to be adequate to enable the plan to fully meet all its
financial obligations on a timely basis and is otherwise no less
protective of the interests of participants and beneficiaries than the
requirements for which it is substituted. The applicable authority may
take into account, for purposes of this subsection, evidence provided
by the plan or sponsor which demonstrates an assumption of liability
with respect to the plan. Such evidence may be in the form of a
contract of indemnification, lien, bonding, insurance, letter of
credit, recourse under applicable terms of the plan in the form of
assessments of participating employers, security, or other financial
arrangement.
``(f) Measures To Ensure Continued Payment of Benefits by Certain
Plans in Distress.--
``(1) Payments by certain plans to association health plan
fund.--
``(A) In general.--In the case of an association
health plan described in subsection (a)(2), the
requirements of this subsection are met if the plan
makes payments into the Association Health Plan Fund
under this subparagraph when they are due. Such
payments shall consist of annual payments in the amount
of $5,000, and, in addition to such annual payments,
such supplemental payments as the Secretary may
determine to be necessary under paragraph (2). Payments
under this paragraph are payable to the Fund at the
time determined by the Secretary. Initial payments are
due in advance of certification under this part.
Payments shall continue to accrue until a plan's assets
are distributed pursuant to a termination procedure.
``(B) Penalties for failure to make payments.--If
any payment is not made by a plan when it is due, a
late payment charge of not more than 100 percent of the
payment which was not timely paid shall be payable by
the plan to the Fund.
``(C) Continued duty of the secretary.--The
Secretary shall not cease to carry out the provisions
of paragraph (2) on account of the failure of a plan to
pay any payment when due.
``(2) Payments by secretary to continue excess/stop loss
insurance coverage and indemnification insurance coverage for
certain plans.--In any case in which the applicable authority
determines that there is, or that there is reason to believe
that there will be: (A) a failure to take necessary corrective
actions under section 809(a) with respect to an association
health plan described in subsection (a)(2); or (B) a
termination of such a plan under section 809(b) or 810(b)(8)
(and, if the applicable authority is not the Secretary,
certifies such determination to the Secretary), the Secretary
shall determine the amounts necessary to make payments to an
insurer (designated by the Secretary) to maintain in force
excess/stop loss insurance coverage or indemnification
insurance coverage for such plan, if the Secretary determines
that there is a reasonable expectation that, without such
payments, claims would not be satisfied by reason of
termination of such coverage. The Secretary shall, to the
extent provided in advance in appropriation Acts, pay such
amounts so determined to the insurer designated by the
Secretary.
``(3) Association health plan fund.--
``(A) In general.--There is established on the
books of the Treasury a fund to be known as the
`Association Health Plan Fund'. The Fund shall be
available for making payments pursuant to paragraph
(2). The Fund shall be credited with payments received
pursuant to paragraph (1)(A), penalties received
pursuant to paragraph (1)(B); and earnings on
investments of amounts of the Fund under subparagraph
(B).
``(B) Investment.--Whenever the Secretary
determines that the moneys of the fund are in excess of
current needs, the Secretary may request the investment
of such amounts as the Secretary determines advisable
by the Secretary of the Treasury in obligations issued
or guaranteed by the United States.
``(g) Excess/Stop Loss Insurance.--For purposes of this section--
``(1) Aggregate excess/stop loss insurance.--The term
`aggregate excess/stop loss insurance' means, in connection
with an association health plan, a contract--
``(A) under which an insurer (meeting such minimum
standards as the applicable authority may prescribe by
regulation) provides for payment to the plan with
respect to aggregate claims under the plan in excess of
an amount or amounts specified in such contract;
``(B) which is guaranteed renewable; and
``(C) which allows for payment of premiums by any
third party on behalf of the insured plan.
``(2) Specific excess/stop loss insurance.--The term
`specific excess/stop loss insurance' means, in connection with
an association health plan, a contract--
``(A) under which an insurer (meeting such minimum
standards as the applicable authority may prescribe by
regulation) provides for payment to the plan with
respect to claims under the plan in connection with a
covered individual in excess of an amount or amounts
specified in such contract in connection with such
covered individual;
``(B) which is guaranteed renewable; and
``(C) which allows for payment of premiums by any
third party on behalf of the insured plan.
``(h) Indemnification Insurance.--For purposes of this section, the
term `indemnification insurance' means, in connection with an
association health plan, a contract--
``(1) under which an insurer (meeting such minimum
standards as the applicable authority may prescribe by
regulation) provides for payment to the plan with respect to
claims under the plan which the plan is unable to satisfy by
reason of a termination pursuant to section 809(b) (relating to
mandatory termination);
``(2) which is guaranteed renewable and noncancellable for
any reason (except as the applicable authority may prescribe by
regulation); and
``(3) which allows for payment of premiums by any third
party on behalf of the insured plan.
``(i) Reserves.--For purposes of this section, the term `reserves'
means, in connection with an association health plan, plan assets which
meet the fiduciary standards under part 4 and such additional
requirements regarding liquidity as the applicable authority may
prescribe by regulation.
``(j) Solvency Standards Working Group.--
``(1) In general.--Within 90 days after the date of the
enactment of the Small Business Health Fairness Act of 2009,
the applicable authority shall establish a Solvency Standards
Working Group. In prescribing the initial regulations under
this section, the applicable authority shall take into account
the recommendations of such Working Group.
``(2) Membership.--The Working Group shall consist of not
more than 15 members appointed by the applicable authority. The
applicable authority shall include among persons invited to
membership on the Working Group at least one of each of the
following:
``(A) a representative of the National Association
of Insurance Commissioners;
``(B) a representative of the American Academy of
Actuaries;
``(C) a representative of the State governments, or
their interests;
``(D) a representative of existing self-insured
arrangements, or their interests;
``(E) a representative of associations of the type
referred to in section 801(b)(1), or their interests;
and
``(F) a representative of multiemployer plans that
are group health plans, or their interests.
``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.
``(a) Filing Fee.--Under the procedure prescribed pursuant to
section 802(a), an association health plan shall pay to the applicable
authority at the time of filing an application for certification under
this part a filing fee in the amount of $5,000, which shall be
available in the case of the Secretary, to the extent provided in
appropriation Acts, for the sole purpose of administering the
certification procedures applicable with respect to association health
plans.
``(b) Information To Be Included in Application for
Certification.--An application for certification under this part meets
the requirements of this section only if it includes, in a manner and
form which shall be prescribed by the applicable authority by
regulation, at least the following information:
``(1) Identifying information.--The names and addresses
of--
``(A) the sponsor; and
``(B) the members of the board of trustees of the
plan.
``(2) States in which plan intends to do business.--The
States in which participants and beneficiaries under the plan
are to be located and the number of them expected to be located
in each such State.
``(3) Bonding requirements.--Evidence provided by the board
of trustees that the bonding requirements of section 412 will
be met as of the date of the application or (if later)
commencement of operations.
``(4) Plan documents.--A copy of the documents governing
the plan (including any bylaws and trust agreements), the
summary plan description, and other material describing the
benefits that will be provided to participants and
beneficiaries under the plan.
``(5) Agreements with service providers.--A copy of any
agreements between the plan and contract administrators and
other service providers.
``(6) Funding report.--In the case of association health
plans providing benefits options in addition to health
insurance coverage, a report setting forth information with
respect to such additional benefit options determined as of a
date within the 120-day period ending with the date of the
application, including the following:
``(A) Reserves.--A statement, certified by the
board of trustees of the plan, and a statement of
actuarial opinion, signed by a qualified actuary, that
all applicable requirements of section 806 are or will
be met in accordance with regulations which the
applicable authority shall prescribe.
``(B) Adequacy of contribution rates.--A statement
of actuarial opinion, signed by a qualified actuary,
which sets forth a description of the extent to which
contribution rates are adequate to provide for the
payment of all obligations and the maintenance of
required reserves under the plan for the 12-month
period beginning with such date within such 120-day
period, taking into account the expected coverage and
experience of the plan. If the contribution rates are
not fully adequate, the statement of actuarial opinion
shall indicate the extent to which the rates are
inadequate and the changes needed to ensure adequacy.
``(C) Current and projected value of assets and
liabilities.--A statement of actuarial opinion signed
by a qualified actuary, which sets forth the current
value of the assets and liabilities accumulated under
the plan and a projection of the assets, liabilities,
income, and expenses of the plan for the 12-month
period referred to in subparagraph (B). The income
statement shall identify separately the plan's
administrative expenses and claims.
``(D) Costs of coverage to be charged and other
expenses.--A statement of the costs of coverage to be
charged, including an itemization of amounts for
administration, reserves, and other expenses associated
with the operation of the plan.
``(E) Other information.--Any other information as
may be determined by the applicable authority, by
regulation, as necessary to carry out the purposes of
this part.
``(c) Filing Notice of Certification With States.--A certification
granted under this part to an association health plan shall not be
effective unless written notice of such certification is filed with the
applicable State authority of each State in which at least 25 percent
of the participants and beneficiaries under the plan are located. For
purposes of this subsection, an individual shall be considered to be
located in the State in which a known address of such individual is
located or in which such individual is employed.
``(d) Notice of Material Changes.--In the case of any association
health plan certified under this part, descriptions of material changes
in any information which was required to be submitted with the
application for the certification under this part shall be filed in
such form and manner as shall be prescribed by the applicable authority
by regulation. The applicable authority may require by regulation prior
notice of material changes with respect to specified matters which
might serve as the basis for suspension or revocation of the
certification.
``(e) Reporting Requirements for Certain Association Health
Plans.--An association health plan certified under this part which
provides benefit options in addition to health insurance coverage for
such plan year shall meet the requirements of section 103 by filing an
annual report under such section which shall include information
described in subsection (b)(6) with respect to the plan year and,
notwithstanding section 104(a)(1)(A), shall be filed with the
applicable authority not later than 90 days after the close of the plan
year (or on such later date as may be prescribed by the applicable
authority). The applicable authority may require by regulation such
interim reports as it considers appropriate.
``(f) Engagement of Qualified Actuary.--The board of trustees of
each association health plan which provides benefits options in
addition to health insurance coverage and which is applying for
certification under this part or is certified under this part shall
engage, on behalf of all participants and beneficiaries, a qualified
actuary who shall be responsible for the preparation of the materials
comprising information necessary to be submitted by a qualified actuary
under this part. The qualified actuary shall utilize such assumptions
and techniques as are necessary to enable such actuary to form an
opinion as to whether the contents of the matters reported under this
part--
``(1) are in the aggregate reasonably related to the
experience of the plan and to reasonable expectations; and
``(2) represent such actuary's best estimate of anticipated
experience under the plan.
The opinion by the qualified actuary shall be made with respect to, and
shall be made a part of, the annual report.
``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.
``Except as provided in section 809(b), an association health plan
which is or has been certified under this part may terminate (upon or
at any time after cessation of accruals in benefit liabilities) only if
the board of trustees, not less than 60 days before the proposed
termination date--
``(1) provides to the participants and beneficiaries a
written notice of intent to terminate stating that such
termination is intended and the proposed termination date;
``(2) develops a plan for winding up the affairs of the
plan in connection with such termination in a manner which will
result in timely payment of all benefits for which the plan is
obligated; and
``(3) submits such plan in writing to the applicable
authority.
Actions required under this section shall be taken in such form and
manner as may be prescribed by the applicable authority by regulation.
``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.
``(a) Actions To Avoid Depletion of Reserves.--An association
health plan which is certified under this part and which provides
benefits other than health insurance coverage shall continue to meet
the requirements of section 806, irrespective of whether such
certification continues in effect. The board of trustees of such plan
shall determine quarterly whether the requirements of section 806 are
met. In any case in which the board determines that there is reason to
believe that there is or will be a failure to meet such requirements,
or the applicable authority makes such a determination and so notifies
the board, the board shall immediately notify the qualified actuary
engaged by the plan, and such actuary shall, not later than the end of
the next following month, make such recommendations to the board for
corrective action as the actuary determines necessary to ensure
compliance with section 806. Not later than 30 days after receiving
from the actuary recommendations for corrective actions, the board
shall notify the applicable authority (in such form and manner as the
applicable authority may prescribe by regulation) of such
recommendations of the actuary for corrective action, together with a
description of the actions (if any) that the board has taken or plans
to take in response to such recommendations. The board shall thereafter
report to the applicable authority, in such form and frequency as the
applicable authority may specify to the board, regarding corrective
action taken by the board until the requirements of section 806 are
met.
``(b) Mandatory Termination.--In any case in which--
``(1) the applicable authority has been notified under
subsection (a) (or by an issuer of excess/stop loss insurance
or indemnity insurance pursuant to section 806(a)) of a failure
of an association health plan which is or has been certified
under this part and is described in section 806(a)(2) to meet
the requirements of section 806 and has not been notified by
the board of trustees of the plan that corrective action has
restored compliance with such requirements; and
``(2) the applicable authority determines that there is a
reasonable expectation that the plan will continue to fail to
meet the requirements of section 806,
the board of trustees of the plan shall, at the direction of the
applicable authority, terminate the plan and, in the course of the
termination, take such actions as the applicable authority may require,
including satisfying any claims referred to in section
806(a)(2)(B)(iii) and recovering for the plan any liability under
subsection (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure
that the affairs of the plan will be, to the maximum extent possible,
wound up in a manner which will result in timely provision of all
benefits for which the plan is obligated.
``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT ASSOCIATION
HEALTH PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO
HEALTH INSURANCE COVERAGE.
``(a) Appointment of Secretary as Trustee for Insolvent Plans.--
Whenever the Secretary determines that an association health plan which
is or has been certified under this part and which is described in
section 806(a)(2) will be unable to provide benefits when due or is
otherwise in a financially hazardous condition, as shall be defined by
the Secretary by regulation, the Secretary shall, upon notice to the
plan, apply to the appropriate United States district court for
appointment of the Secretary as trustee to administer the plan for the
duration of the insolvency. The plan may appear as a party and other
interested persons may intervene in the proceedings at the discretion
of the court. The court shall appoint such Secretary trustee if the
court determines that the trusteeship is necessary to protect the
interests of the participants and beneficiaries or providers of medical
care or to avoid any unreasonable deterioration of the financial
condition of the plan. The trusteeship of such Secretary shall continue
until the conditions described in the first sentence of this subsection
are remedied or the plan is terminated.
``(b) Powers as Trustee.--The Secretary, upon appointment as
trustee under subsection (a), shall have the power--
``(1) to do any act authorized by the plan, this title, or
other applicable provisions of law to be done by the plan
administrator or any trustee of the plan;
``(2) to require the transfer of all (or any part) of the
assets and records of the plan to the Secretary as trustee;
``(3) to invest any assets of the plan which the Secretary
holds in accordance with the provisions of the plan,
regulations prescribed by the Secretary, and applicable
provisions of law;
``(4) to require the sponsor, the plan administrator, any
participating employer, and any employee organization
representing plan participants to furnish any information with
respect to the plan which the Secretary as trustee may
reasonably need in order to administer the plan;
``(5) to collect for the plan any amounts due the plan and
to recover reasonable expenses of the trusteeship;
``(6) to commence, prosecute, or defend on behalf of the
plan any suit or proceeding involving the plan;
``(7) to issue, publish, or file such notices, statements,
and reports as may be required by the Secretary by regulation
or required by any order of the court;
``(8) to terminate the plan (or provide for its termination
in accordance with section 809(b)) and liquidate the plan
assets, to restore the plan to the responsibility of the
sponsor, or to continue the trusteeship;
``(9) to provide for the enrollment of plan participants
and beneficiaries under appropriate coverage options; and
``(10) to do such other acts as may be necessary to comply
with this title or any order of the court and to protect the
interests of plan participants and beneficiaries and providers
of medical care.
``(c) Notice of Appointment.--As soon as practicable after the
Secretary's appointment as trustee, the Secretary shall give notice of
such appointment to--
``(1) the sponsor and plan administrator;
``(2) each participant;
``(3) each participating employer; and
``(4) if applicable, each employee organization which, for
purposes of collective bargaining, represents plan
participants.
``(d) Additional Duties.--Except to the extent inconsistent with
the provisions of this title, or as may be otherwise ordered by the
court, the Secretary, upon appointment as trustee under this section,
shall be subject to the same duties as those of a trustee under section
704 of title 11, United States Code, and shall have the duties of a
fiduciary for purposes of this title.
``(e) Other Proceedings.--An application by the Secretary under
this subsection may be filed notwithstanding the pendency in the same
or any other court of any bankruptcy, mortgage foreclosure, or equity
receivership proceeding, or any proceeding to reorganize, conserve, or
liquidate such plan or its property, or any proceeding to enforce a
lien against property of the plan.
``(f) Jurisdiction of Court.--
``(1) In general.--Upon the filing of an application for
the appointment as trustee or the issuance of a decree under
this section, the court to which the application is made shall
have exclusive jurisdiction of the plan involved and its
property wherever located with the powers, to the extent
consistent with the purposes of this section, of a court of the
United States having jurisdiction over cases under chapter 11
of title 11, United States Code. Pending an adjudication under
this section such court shall stay, and upon appointment by it
of the Secretary as trustee, such court shall continue the stay
of, any pending mortgage foreclosure, equity receivership, or
other proceeding to reorganize, conserve, or liquidate the
plan, the sponsor, or property of such plan or sponsor, and any
other suit against any receiver, conservator, or trustee of the
plan, the sponsor, or property of the plan or sponsor. Pending
such adjudication and upon the appointment by it of the
Secretary as trustee, the court may stay any proceeding to
enforce a lien against property of the plan or the sponsor or
any other suit against the plan or the sponsor.
``(2) Venue.--An action under this section may be brought
in the judicial district where the sponsor or the plan
administrator resides or does business or where any asset of
the plan is situated. A district court in which such action is
brought may issue process with respect to such action in any
other judicial district.
``(g) Personnel.--In accordance with regulations which shall be
prescribed by the Secretary, the Secretary shall appoint, retain, and
compensate accountants, actuaries, and other professional service
personnel as may be necessary in connection with the Secretary's
service as trustee under this section.
``SEC. 811. STATE ASSESSMENT AUTHORITY.
``(a) In General.--Notwithstanding section 514, a State may impose
by law a contribution tax on an association health plan described in
section 806(a)(2), if the plan commenced operations in such State after
the date of the enactment of the Small Business Health Fairness Act of
2009.
``(b) Contribution Tax.--For purposes of this section, the term
`contribution tax' imposed by a State on an association health plan
means any tax imposed by such State if--
``(1) such tax is computed by applying a rate to the amount
of premiums or contributions, with respect to individuals
covered under the plan who are residents of such State, which
are received by the plan from participating employers located
in such State or from such individuals;
``(2) the rate of such tax does not exceed the rate of any
tax imposed by such State on premiums or contributions received
by insurers or health maintenance organizations for health
insurance coverage offered in such State in connection with a
group health plan;
``(3) such tax is otherwise nondiscriminatory; and
``(4) the amount of any such tax assessed on the plan is
reduced by the amount of any tax or assessment otherwise
imposed by the State on premiums, contributions, or both
received by insurers or health maintenance organizations for
health insurance coverage, aggregate excess/stop loss insurance
(as defined in section 806(g)(1)), specific excess/stop loss
insurance (as defined in section 806(g)(2)), other insurance
related to the provision of medical care under the plan, or any
combination thereof provided by such insurers or health
maintenance organizations in such State in connection with such
plan.
``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.
``(a) Definitions.--For purposes of this part--
``(1) Group health plan.--The term `group health plan' has
the meaning provided in section 733(a)(1) (after applying
subsection (b) of this section).
``(2) Medical care.--The term `medical care' has the
meaning provided in section 733(a)(2).
``(3) Health insurance coverage.--The term `health
insurance coverage' has the meaning provided in section
733(b)(1).
``(4) Health insurance issuer.--The term `health insurance
issuer' has the meaning provided in section 733(b)(2).
``(5) Applicable authority.--The term `applicable
authority' means the Secretary, except that, in connection with
any exercise of the Secretary's authority regarding which the
Secretary is required under section 506(d) to consult with a
State, such term means the Secretary, in consultation with such
State.
``(6) Health status-related factor.--The term `health
status-related factor' has the meaning provided in section
733(d)(2).
``(7) Individual market.--
``(A) In general.--The term `individual market'
means the market for health insurance coverage offered
to individuals other than in connection with a group
health plan.
``(B) Treatment of very small groups.--
``(i) In general.--Subject to clause (ii),
such term includes coverage offered in
connection with a group health plan that has
fewer than 2 participants as current employees
or participants described in section 732(d)(3)
on the first day of the plan year.
``(ii) State exception.--Clause (i) shall
not apply in the case of health insurance
coverage offered in a State if such State
regulates the coverage described in such clause
in the same manner and to the same extent as
coverage in the small group market (as defined
in section 2791(e)(5) of the Public Health
Service Act) is regulated by such State.
``(8) Participating employer.--The term `participating
employer' means, in connection with an association health plan,
any employer, if any individual who is an employee of such
employer, a partner in such employer, or a self-employed
individual who is such employer (or any dependent, as defined
under the terms of the plan, of such individual) is or was
covered under such plan in connection with the status of such
individual as such an employee, partner, or self-employed
individual in relation to the plan.
``(9) Applicable state authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official
or officials designated by the State to enforce the
requirements of title XXVII of the Public Health Service Act
for the State involved with respect to such issuer.
``(10) Qualified actuary.--The term `qualified actuary'
means an individual who is a member of the American Academy of
Actuaries.
``(11) Affiliated member.--The term `affiliated member'
means, in connection with a sponsor--
``(A) a person who is otherwise eligible to be a
member of the sponsor but who elects an affiliated
status with the sponsor,
``(B) in the case of a sponsor with members which
consist of associations, a person who is a member of
any such association and elects an affiliated status
with the sponsor, or
``(C) in the case of an association health plan in
existence on the date of the enactment of the Small
Business Health Fairness Act of 2009, a person eligible
to be a member of the sponsor or one of its member
associations.
``(12) Large employer.--The term `large employer' means, in
connection with a group health plan with respect to a plan
year, an employer who employed an average of at least 51
employees on business days during the preceding calendar year
and who employs at least 2 employees on the first day of the
plan year.
``(13) Small employer.--The term `small employer' means, in
connection with a group health plan with respect to a plan
year, an employer who is not a large employer.
``(b) Rules of Construction.--
``(1) Employers and employees.--For purposes of determining
whether a plan, fund, or program is an employee welfare benefit
plan which is an association health plan, and for purposes of
applying this title in connection with such plan, fund, or
program so determined to be such an employee welfare benefit
plan--
``(A) in the case of a partnership, the term
`employer' (as defined in section 3(5)) includes the
partnership in relation to the partners, and the term
`employee' (as defined in section 3(6)) includes any
partner in relation to the partnership; and
``(B) in the case of a self-employed individual,
the term `employer' (as defined in section 3(5)) and
the term `employee' (as defined in section 3(6)) shall
include such individual.
``(2) Plans, funds, and programs treated as employee
welfare benefit plans.--In the case of any plan, fund, or
program which was established or is maintained for the purpose
of providing medical care (through the purchase of insurance or
otherwise) for employees (or their dependents) covered
thereunder and which demonstrates to the Secretary that all
requirements for certification under this part would be met
with respect to such plan, fund, or program if such plan, fund,
or program were a group health plan, such plan, fund, or
program shall be treated for purposes of this title as an
employee welfare benefit plan on and after the date of such
demonstration.''.
(b) Conforming Amendments to Preemption Rules.--
(1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is
amended by adding at the end the following new subparagraph:
``(E) The preceding subparagraphs of this paragraph do not apply
with respect to any State law in the case of an association health plan
which is certified under part 8.''.
(2) Section 514 of such Act (29 U.S.C. 1144) is amended--
(A) in subsection (b)(4), by striking ``Subsection
(a)'' and inserting ``Subsections (a) and (d)'';
(B) in subsection (b)(5), by striking ``subsection
(a)'' in subparagraph (A) and inserting ``subsection
(a) of this section and subsections (a)(2)(B) and (b)
of section 805'', and by striking ``subsection (a)'' in
subparagraph (B) and inserting ``subsection (a) of this
section or subsection (a)(2)(B) or (b) of section
805'';
(C) by redesignating subsections (d) and (e) as
subsections (e) and (f), respectively; and
(D) by inserting after subsection (c) the following
new subsection:
``(d)(1) Except as provided in subsection (b)(4), the provisions of
this title shall supersede any and all State laws insofar as they may
now or hereafter preclude, or have the effect of precluding, a health
insurance issuer from offering health insurance coverage in connection
with an association health plan which is certified under part 8.
``(2) Except as provided in paragraphs (4) and (5) of subsection
(b) of this section--
``(A) In any case in which health insurance coverage of any
policy type is offered under an association health plan
certified under part 8 to a participating employer operating in
such State, the provisions of this title shall supersede any
and all laws of such State insofar as they may preclude a
health insurance issuer from offering health insurance coverage
of the same policy type to other employers operating in the
State which are eligible for coverage under such association
health plan, whether or not such other employers are
participating employers in such plan.
``(B) In any case in which health insurance coverage of any
policy type is offered in a State under an association health
plan certified under part 8 and the filing, with the applicable
State authority (as defined in section 812(a)(9)), of the
policy form in connection with such policy type is approved by
such State authority, the provisions of this title shall
supersede any and all laws of any other State in which health
insurance coverage of such type is offered, insofar as they may
preclude, upon the filing in the same form and manner of such
policy form with the applicable State authority in such other
State, the approval of the filing in such other State.
``(3) Nothing in subsection (b)(6)(E) or the preceding provisions
of this subsection shall be construed, with respect to health insurance
issuers or health insurance coverage, to supersede or impair the law of
any State--
``(A) providing solvency standards or similar standards
regarding the adequacy of insurer capital, surplus, reserves,
or contributions, or
``(B) relating to prompt payment of claims.
``(4) For additional provisions relating to association health
plans, see subsections (a)(2)(B) and (b) of section 805.
``(5) For purposes of this subsection, the term `association health
plan' has the meaning provided in section 801(a), and the terms `health
insurance coverage', `participating employer', and `health insurance
issuer' have the meanings provided such terms in section 812,
respectively.''.
(3) Section 514(b)(6)(A) of such Act (29 U.S.C.
1144(b)(6)(A)) is amended--
(A) in clause (i)(II), by striking ``and'' at the
end;
(B) in clause (ii), by inserting ``and which does
not provide medical care (within the meaning of section
733(a)(2)),'' after ``arrangement,'', and by striking
``title.'' and inserting ``title, and''; and
(C) by adding at the end the following new clause:
``(iii) subject to subparagraph (E), in the case of any
other employee welfare benefit plan which is a multiple
employer welfare arrangement and which provides medical care
(within the meaning of section 733(a)(2)), any law of any State
which regulates insurance may apply.''.
(4) Section 514(e) of such Act (as redesignated by
paragraph (2)(C)) is amended--
(A) by striking ``Nothing'' and inserting ``(1)
Except as provided in paragraph (2), nothing''; and
(B) by adding at the end the following new
paragraph:
``(2) Nothing in any other provision of law enacted on or after the
date of the enactment of the Small Business Health Fairness Act of 2009
shall be construed to alter, amend, modify, invalidate, impair, or
supersede any provision of this title, except by specific cross-
reference to the affected section.''.
(c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C.
102(16)(B)) is amended by adding at the end the following new sentence:
``Such term also includes a person serving as the sponsor of an
association health plan under part 8.''.
(d) Disclosure of Solvency Protections Related to Self-Insured and
Fully Insured Options Under Association Health Plans.--Section 102(b)
of such Act (29 U.S.C. 102(b)) is amended by adding at the end the
following: ``An association health plan shall include in its summary
plan description, in connection with each benefit option, a description
of the form of solvency or guarantee fund protection secured pursuant
to this Act or applicable State law, if any.''.
(e) Savings Clause.--Section 731(c) of such Act is amended by
inserting ``or part 8'' after ``this part''.
(f) Report to the Congress Regarding Certification of Self-Insured
Association Health Plans.--Not later than January 1, 2012, the
Secretary of Labor shall report to the Committee on Education and the
Workforce of the House of Representatives and the Committee on Health,
Education, Labor, and Pensions of the Senate the effect association
health plans have had, if any, on reducing the number of uninsured
individuals.
(g) Clerical Amendment.--The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974 is amended by inserting
after the item relating to section 734 the following new items:
``Part 8--Rules Governing Association Health Plans
``801. Association health plans.
``802. Certification of association health plans.
``803. Requirements relating to sponsors and boards of trustees.
``804. Participation and coverage requirements.
``805. Other requirements relating to plan documents, contribution
rates, and benefit options.
``806. Maintenance of reserves and provisions for solvency for plans
providing health benefits in addition to
health insurance coverage.
``807. Requirements for application and related requirements.
``808. Notice requirements for voluntary termination.
``809. Corrective actions and mandatory termination.
``810. Trusteeship by the Secretary of insolvent association health
plans providing health benefits in addition
to health insurance coverage.
``811. State assessment authority.
``812. Definitions and rules of construction.''.
SEC. 202. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002(40)(B)) is amended--
(1) in clause (i), by inserting after ``control group,''
the following: ``except that, in any case in which the benefit
referred to in subparagraph (A) consists of medical care (as
defined in section 812(a)(2)), two or more trades or
businesses, whether or not incorporated, shall be deemed a
single employer for any plan year of such plan, or any fiscal
year of such other arrangement, if such trades or businesses
are within the same control group during such year or at any
time during the preceding 1-year period,'';
(2) in clause (iii), by striking ``(iii) the
determination'' and inserting the following:
``(iii)(I) in any case in which the benefit referred to in
subparagraph (A) consists of medical care (as defined in
section 812(a)(2)), the determination of whether a trade or
business is under `common control' with another trade or
business shall be determined under regulations of the Secretary
applying principles consistent and coextensive with the
principles applied in determining whether employees of two or
more trades or businesses are treated as employed by a single
employer under section 4001(b), except that, for purposes of
this paragraph, an interest of greater than 25 percent may not
be required as the minimum interest necessary for common
control, or
``(II) in any other case, the determination'';
(3) by redesignating clauses (iv) and (v) as clauses (v)
and (vi), respectively; and
(4) by inserting after clause (iii) the following new
clause:
``(iv) in any case in which the benefit referred to in
subparagraph (A) consists of medical care (as defined in
section 812(a)(2)), in determining, after the application of
clause (i), whether benefits are provided to employees of two
or more employers, the arrangement shall be treated as having
only one participating employer if, after the application of
clause (i), the number of individuals who are employees and
former employees of any one participating employer and who are
covered under the arrangement is greater than 75 percent of the
aggregate number of all individuals who are employees or former
employees of participating employers and who are covered under
the arrangement,''.
SEC. 203. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.
(a) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1131) is amended--
(1) by inserting ``(a)'' after ``Sec. 501.''; and
(2) by adding at the end the following new subsection:
``(b) Any person who willfully falsely represents, to any employee,
any employee's beneficiary, any employer, the Secretary, or any State,
a plan or other arrangement established or maintained for the purpose
of offering or providing any benefit described in section 3(1) to
employees or their beneficiaries as--
``(1) being an association health plan which has been
certified under part 8;
``(2) having been established or maintained under or
pursuant to one or more collective bargaining agreements which
are reached pursuant to collective bargaining described in
section 8(d) of the National Labor Relations Act (29 U.S.C.
158(d)) or paragraph fourth of section 2 of the Railway Labor
Act (45 U.S.C. 152, paragraph fourth) or which are reached
pursuant to labor-management negotiations under similar
provisions of State public employee relations laws; or
``(3) being a plan or arrangement described in section
3(40)(A)(i),
shall, upon conviction, be imprisoned not more than 5 years, be fined
under title 18, United States Code, or both.''.
(b) Cease Activities Orders.--Section 502 of such Act (29 U.S.C.
1132) is amended by adding at the end the following new subsection:
``(n) Association Health Plan Cease and Desist Orders.--
``(1) In general.--Subject to paragraph (2), upon
application by the Secretary showing the operation, promotion,
or marketing of an association health plan (or similar
arrangement providing benefits consisting of medical care (as
defined in section 733(a)(2))) that--
``(A) is not certified under part 8, is subject
under section 514(b)(6) to the insurance laws of any
State in which the plan or arrangement offers or
provides benefits, and is not licensed, registered, or
otherwise approved under the insurance laws of such
State; or
``(B) is an association health plan certified under
part 8 and is not operating in accordance with the
requirements under part 8 for such certification,
a district court of the United States shall enter an order
requiring that the plan or arrangement cease activities.
``(2) Exception.--Paragraph (1) shall not apply in the case
of an association health plan or other arrangement if the plan
or arrangement shows that--
``(A) all benefits under it referred to in
paragraph (1) consist of health insurance coverage; and
``(B) with respect to each State in which the plan
or arrangement offers or provides benefits, the plan or
arrangement is operating in accordance with applicable
State laws that are not superseded under section 514.
``(3) Additional equitable relief.--The court may grant
such additional equitable relief, including any relief
available under this title, as it deems necessary to protect
the interests of the public and of persons having claims for
benefits against the plan.''.
(c) Responsibility for Claims Procedure.--Section 503 of such Act
(29 U.S.C. 1133) is amended by inserting ``(a) In General.--'' before
``In accordance'', and by adding at the end the following new
subsection:
``(b) Association Health Plans.--The terms of each association
health plan which is or has been certified under part 8 shall require
the board of trustees or the named fiduciary (as applicable) to ensure
that the requirements of this section are met in connection with claims
filed under the plan.''.
SEC. 204. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1136) is amended by adding at the end the following new
subsection:
``(d) Consultation With States With Respect to Association Health
Plans.--
``(1) Agreements with states.--The Secretary shall consult
with the State recognized under paragraph (2) with respect to
an association health plan regarding the exercise of--
``(A) the Secretary's authority under sections 502
and 504 to enforce the requirements for certification
under part 8; and
``(B) the Secretary's authority to certify
association health plans under part 8 in accordance
with regulations of the Secretary applicable to
certification under part 8.
``(2) Recognition of primary domicile state.--In carrying
out paragraph (1), the Secretary shall ensure that only one
State will be recognized, with respect to any particular
association health plan, as the State with which consultation
is required. In carrying out this paragraph--
``(A) in the case of a plan which provides health
insurance coverage (as defined in section 812(a)(3)),
such State shall be the State with which filing and
approval of a policy type offered by the plan was
initially obtained, and
``(B) in any other case, the Secretary shall take
into account the places of residence of the
participants and beneficiaries under the plan and the
State in which the trust is maintained.''.
SEC. 205. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.
(a) Effective Date.--The amendments made by this title shall take
effect 1 year after the date of the enactment of this Act. The
Secretary of Labor shall first issue all regulations necessary to carry
out the amendments made by this title within 1 year after the date of
the enactment of this Act.
(b) Treatment of Certain Existing Health Benefits Programs.--
(1) In general.--In any case in which, as of the date of
the enactment of this Act, an arrangement is maintained in a
State for the purpose of providing benefits consisting of
medical care for the employees and beneficiaries of its
participating employers, at least 200 participating employers
make contributions to such arrangement, such arrangement has
been in existence for at least 10 years, and such arrangement
is licensed under the laws of one or more States to provide
such benefits to its participating employers, upon the filing
with the applicable authority (as defined in section 812(a)(5)
of the Employee Retirement Income Security Act of 1974 (as
amended by this subtitle)) by the arrangement of an application
for certification of the arrangement under part 8 of subtitle B
of title I of such Act--
(A) such arrangement shall be deemed to be a group
health plan for purposes of title I of such Act;
(B) the requirements of sections 801(a) and 803(a)
of the Employee Retirement Income Security Act of 1974
shall be deemed met with respect to such arrangement;
(C) the requirements of section 803(b) of such Act
shall be deemed met, if the arrangement is operated by
a board of directors which--
(i) is elected by the participating
employers, with each employer having one vote;
and
(ii) has complete fiscal control over the
arrangement and which is responsible for all
operations of the arrangement;
(D) the requirements of section 804(a) of such Act
shall be deemed met with respect to such arrangement;
and
(E) the arrangement may be certified by any
applicable authority with respect to its operations in
any State only if it operates in such State on the date
of certification.
The provisions of this subsection shall cease to apply with
respect to any such arrangement at such time after the date of
the enactment of this Act as the applicable requirements of
this subsection are not met with respect to such arrangement.
(2) Definitions.--For purposes of this subsection, the
terms ``group health plan'', ``medical care'', and
``participating employer'' shall have the meanings provided in
section 812 of the Employee Retirement Income Security Act of
1974, except that the reference in paragraph (7) of such
section to an ``association health plan'' shall be deemed a
reference to an arrangement referred to in this subsection.
TITLE II--TARGETED EFFORTS TO EXPAND ACCESS
SEC. 211. EXTENDING COVERAGE OF DEPENDENTS.
(a) Employee Retirement Income Security Act of 1974.--
(1) In general.--Part 7 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 is amended by
inserting after section 2714 the following new section:
``SEC. 715. EXTENDING COVERAGE OF DEPENDENTS.
``(a) In General.--In the case of a group health plan, or health
insurance coverage offered in connection with a group health plan, that
treats as a beneficiary under the plan an individual who is a dependent
child of a participant or beneficiary under the plan, the plan or
coverage shall continue to treat the individual as a dependent child
without regard to the individual's age through at least the end of the
plan year in which the individual turns an age specified in the plan,
but not less than 25 years of age.
``(b) Construction.--Nothing in this section shall be construed as
requiring a group health plan to provide benefits for dependent
children as beneficiaries under the plan or to require a participant to
elect coverage of dependent children.''.
(2) Clerical amendment.--The table of contents of such Act
is amended by inserting after the item relating to section 714
the following new item:
``Sec. 715. Extending coverage of dependents through plan year that
includes 25th birthday.''.
(b) PHSA.--Title XXVII of the Public Health Service Act is amended
by inserting after section 2707 the following new section:
``SEC. 2708. EXTENDING COVERAGE OF DEPENDENTS.
``(a) In General.--In the case of a group health plan, or health
insurance coverage offered in connection with a group health plan, that
treats as a beneficiary under the plan an individual who is a dependent
child of a participant or beneficiary under the plan, the plan or
coverage shall continue to treat the individual as a dependent child
without regard to the individual's age through at least the end of the
plan year in which the individual turns an age specified in the plan,
but not less than 25 years of age.
``(b) Construction.--Nothing in this section shall be construed as
requiring a group health plan to provide benefits for dependent
children as beneficiaries under the plan or to require a participant to
elect coverage of dependent children.''.
(c) IRC.--
(1) In general.--Subchapter B of chapter 100 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 9814. EXTENDING COVERAGE OF DEPENDENTS.
``(a) In General.--In the case of a group health plan that treats
as a beneficiary under the plan an individual who is a dependent child
of a participant or beneficiary under the plan, the plan shall continue
to treat the individual as a dependent child without regard to the
individual's age through at least the end of the plan year in which the
individual turns an age specified in the plan, but not less than 25
years of age.
``(b) Construction.--Nothing in this section shall be construed as
requiring a group health plan to provide coverage for dependent
children as beneficiaries under the plan or to require a participant to
elect coverage of dependent children.''.
(2) Clerical amendment.--The table of sections in such
subchapter is amended by adding at the end the following new
item:
``Sec. 9814. Extending coverage of dependents through plan year that
includes 25th birthday.''.
(d) Effective Date.--The amendments made by this section shall
apply to group health plans for plan years beginning more than 3 months
after the date of the enactment of this Act and shall apply to
individuals who are dependent children under a group health plan, or
health insurance coverage offered in connection with such a plan, on or
after such date.
SEC. 212. ALLOWING AUTO-ENROLLMENT FOR EMPLOYER SPONSORED COVERAGE.
(a) In General.--No State shall establish a law that prevents an
employer from instituting auto-enrollment for coverage of a participant
or beneficiary, including current employees, under a group health plan,
or health insurance coverage offered in connection with such a plan, so
long as the participant or beneficiary has the option of declining such
coverage.
(b) Auto-Enrollment.--
(1) Notice required.--Employers with auto-enrollment under
a group health plan or health insurance coverage shall provide
annual notification, within a reasonable period before the
beginning of each plan year, to each employee eligible to
participate in the plan. The notice shall explain the employee
contribution to such plan and the employee's right to decline
coverage.
(2) Treatment of non-action.--After a reasonable period of
time after receipt of the notice, if an employee fails to make
an affirmative declaration declining coverage, then such an
employee may be enrolled in the group health plan or health
insurance coverage offered in connection with such a plan.''
(c) Construction.--Nothing in this section shall be construed to
supersede State law which establishes, implements, or continues in
effect any standard or requirement relating to employers in connection
with payroll or the sponsoring of employer sponsored health insurance
coverage except to the extent that such standard or requirement
prevents an employer from instituting the auto-enrollment described in
subsection (a).
TITLE III--EXPANDING CHOICES BY ALLOWING AMERICANS TO BUY HEALTH CARE
COVERAGE ACROSS STATE LINES
SEC. 221. INTERSTATE PURCHASING OF HEALTH INSURANCE.
(a) In General.--Title XXVII of the Public Health Service Act (42
U.S.C. 300gg et seq.) is amended by adding at the end the following new
part:
``PART D--COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE
``SEC. 2795. DEFINITIONS.
``In this part:
``(1) Primary state.--The term `primary State' means, with
respect to individual health insurance coverage offered by a
health insurance issuer, the State designated by the issuer as
the State whose covered laws shall govern the health insurance
issuer in the sale of such coverage under this part. An issuer,
with respect to a particular policy, may only designate one
such State as its primary State with respect to all such
coverage it offers. Such an issuer may not change the
designated primary State with respect to individual health
insurance coverage once the policy is issued, except that such
a change may be made upon renewal of the policy. With respect
to such designated State, the issuer is deemed to be doing
business in that State.
``(2) Secondary state.--The term `secondary State' means,
with respect to individual health insurance coverage offered by
a health insurance issuer, any State that is not the primary
State. In the case of a health insurance issuer that is selling
a policy in, or to a resident of, a secondary State, the issuer
is deemed to be doing business in that secondary State.
``(3) Health insurance issuer.--The term `health insurance
issuer' has the meaning given such term in section 2791(b)(2),
except that such an issuer must be licensed in the primary
State and be qualified to sell individual health insurance
coverage in that State.
``(4) Individual health insurance coverage.--The term
`individual health insurance coverage' means health insurance
coverage offered in the individual market, as defined in
section 2791(e)(1).
``(5) Applicable state authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official
or officials designated by the State to enforce the
requirements of this title for the State with respect to the
issuer.
``(6) Hazardous financial condition.--The term `hazardous
financial condition' means that, based on its present or
reasonably anticipated financial condition, a health insurance
issuer is unlikely to be able--
``(A) to meet obligations to policyholders with
respect to known claims and reasonably anticipated
claims; or
``(B) to pay other obligations in the normal course
of business.
``(7) Covered laws.--
``(A) In general.--The term `covered laws' means
the laws, rules, regulations, agreements, and orders
governing the insurance business pertaining to--
``(i) individual health insurance coverage
issued by a health insurance issuer;
``(ii) the offer, sale, rating (including
medical underwriting), renewal, and issuance of
individual health insurance coverage to an
individual;
``(iii) the provision to an individual in
relation to individual health insurance
coverage of health care and insurance related
services;
``(iv) the provision to an individual in
relation to individual health insurance
coverage of management, operations, and
investment activities of a health insurance
issuer; and
``(v) the provision to an individual in
relation to individual health insurance
coverage of loss control and claims
administration for a health insurance issuer
with respect to liability for which the issuer
provides insurance.
``(B) Exception.--Such term does not include any
law, rule, regulation, agreement, or order governing
the use of care or cost management techniques,
including any requirement related to provider
contracting, network access or adequacy, health care
data collection, or quality assurance.
``(8) State.--The term `State' means the 50 States and
includes the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Northern Mariana
Islands.
``(9) Unfair claims settlement practices.--The term `unfair
claims settlement practices' means only the following
practices:
``(A) Knowingly misrepresenting to claimants and
insured individuals relevant facts or policy provisions
relating to coverage at issue.
``(B) Failing to acknowledge with reasonable
promptness pertinent communications with respect to
claims arising under policies.
``(C) Failing to adopt and implement reasonable
standards for the prompt investigation and settlement
of claims arising under policies.
``(D) Failing to effectuate prompt, fair, and
equitable settlement of claims submitted in which
liability has become reasonably clear.
``(E) Refusing to pay claims without conducting a
reasonable investigation.
``(F) Failing to affirm or deny coverage of claims
within a reasonable period of time after having
completed an investigation related to those claims.
``(G) A pattern or practice of compelling insured
individuals or their beneficiaries to institute suits
to recover amounts due under its policies by offering
substantially less than the amounts ultimately
recovered in suits brought by them.
``(H) A pattern or practice of attempting to settle
or settling claims for less than the amount that a
reasonable person would believe the insured individual
or his or her beneficiary was entitled by reference to
written or printed advertising material accompanying or
made part of an application.
``(I) Attempting to settle or settling claims on
the basis of an application that was materially altered
without notice to, or knowledge or consent of, the
insured.
``(J) Failing to provide forms necessary to present
claims within 15 calendar days of a requests with
reasonable explanations regarding their use.
``(K) Attempting to cancel a policy in less time
than that prescribed in the policy or by the law of the
primary State.
``(10) Fraud and abuse.--The term `fraud and abuse' means
an act or omission committed by a person who, knowingly and
with intent to defraud, commits, or conceals any material
information concerning, one or more of the following:
``(A) Presenting, causing to be presented or
preparing with knowledge or belief that it will be
presented to or by an insurer, a reinsurer, broker or
its agent, false information as part of, in support of
or concerning a fact material to one or more of the
following:
``(i) An application for the issuance or
renewal of an insurance policy or reinsurance
contract.
``(ii) The rating of an insurance policy or
reinsurance contract.
``(iii) A claim for payment or benefit
pursuant to an insurance policy or reinsurance
contract.
``(iv) Premiums paid on an insurance policy
or reinsurance contract.
``(v) Payments made in accordance with the
terms of an insurance policy or reinsurance
contract.
``(vi) A document filed with the
commissioner or the chief insurance regulatory
official of another jurisdiction.
``(vii) The financial condition of an
insurer or reinsurer.
``(viii) The formation, acquisition,
merger, reconsolidation, dissolution or
withdrawal from one or more lines of insurance
or reinsurance in all or part of a State by an
insurer or reinsurer.
``(ix) The issuance of written evidence of
insurance.
``(x) The reinstatement of an insurance
policy.
``(B) Solicitation or acceptance of new or renewal
insurance risks on behalf of an insurer reinsurer or
other person engaged in the business of insurance by a
person who knows or should know that the insurer or
other person responsible for the risk is insolvent at
the time of the transaction.
``(C) Transaction of the business of insurance in
violation of laws requiring a license, certificate of
authority or other legal authority for the transaction
of the business of insurance.
``(D) Attempt to commit, aiding or abetting in the
commission of, or conspiracy to commit the acts or
omissions specified in this paragraph.
``SEC. 2796. APPLICATION OF LAW.
``(a) In General.--The covered laws of the primary State shall
apply to individual health insurance coverage offered by a health
insurance issuer in the primary State and in any secondary State, but
only if the coverage and issuer comply with the conditions of this
section with respect to the offering of coverage in any secondary
State.
``(b) Exemptions From Covered Laws in a Secondary State.--Except as
provided in this section, a health insurance issuer with respect to its
offer, sale, rating (including medical underwriting), renewal, and
issuance of individual health insurance coverage in any secondary State
is exempt from any covered laws of the secondary State (and any rules,
regulations, agreements, or orders sought or issued by such State under
or related to such covered laws) to the extent that such laws would--
``(1) make unlawful, or regulate, directly or indirectly,
the operation of the health insurance issuer operating in the
secondary State, except that any secondary State may require
such an issuer--
``(A) to pay, on a nondiscriminatory basis,
applicable premium and other taxes (including high risk
pool assessments) which are levied on insurers and
surplus lines insurers, brokers, or policyholders under
the laws of the State;
``(B) to register with and designate the State
insurance commissioner as its agent solely for the
purpose of receiving service of legal documents or
process;
``(C) to submit to an examination of its financial
condition by the State insurance commissioner in any
State in which the issuer is doing business to
determine the issuer's financial condition, if--
``(i) the State insurance commissioner of
the primary State has not done an examination
within the period recommended by the National
Association of Insurance Commissioners; and
``(ii) any such examination is conducted in
accordance with the examiners' handbook of the
National Association of Insurance Commissioners
and is coordinated to avoid unjustified
duplication and unjustified repetition;
``(D) to comply with a lawful order issued--
``(i) in a delinquency proceeding commenced
by the State insurance commissioner if there
has been a finding of financial impairment
under subparagraph (C); or
``(ii) in a voluntary dissolution
proceeding;
``(E) to comply with an injunction issued by a
court of competent jurisdiction, upon a petition by the
State insurance commissioner alleging that the issuer
is in hazardous financial condition;
``(F) to participate, on a nondiscriminatory basis,
in any insurance insolvency guaranty association or
similar association to which a health insurance issuer
in the State is required to belong;
``(G) to comply with any State law regarding fraud
and abuse (as defined in section 2795(10)), except that
if the State seeks an injunction regarding the conduct
described in this subparagraph, such injunction must be
obtained from a court of competent jurisdiction;
``(H) to comply with any State law regarding unfair
claims settlement practices (as defined in section
2795(9)); or
``(I) to comply with the applicable requirements
for independent review under section 2798 with respect
to coverage offered in the State;
``(2) require any individual health insurance coverage
issued by the issuer to be countersigned by an insurance agent
or broker residing in that Secondary State; or
``(3) otherwise discriminate against the issuer issuing
insurance in both the primary State and in any secondary State.
``(c) Clear and Conspicuous Disclosure.--A health insurance issuer
shall provide the following notice, in 12-point bold type, in any
insurance coverage offered in a secondary State under this part by such
a health insurance issuer and at renewal of the policy, with the 5
blank spaces therein being appropriately filled with the name of the
health insurance issuer, the name of primary State, the name of the
secondary State, the name of the secondary State, and the name of the
secondary State, respectively, for the coverage concerned:
THIS POLICY IS ISSUED BY _____ AND IS GOVERNED BY THE LAWS AND
REGULATIONS OF THE STATE OF _____, AND IT HAS MET ALL THE LAWS OF THAT
STATE AS DETERMINED BY THAT STATE'S DEPARTMENT OF INSURANCE. THIS
POLICY MAY BE LESS EXPENSIVE THAN OTHERS BECAUSE IT IS NOT SUBJECT TO
ALL OF THE INSURANCE LAWS AND REGULATIONS OF THE STATE OF _____,
INCLUDING COVERAGE OF SOME SERVICES OR BENEFITS MANDATED BY THE LAW OF
THE STATE OF _____. ADDITIONALLY, THIS POLICY IS NOT SUBJECT TO ALL OF
THE CONSUMER PROTECTION LAWS OR RESTRICTIONS ON RATE CHANGES OF THE
STATE OF _____. AS WITH ALL INSURANCE PRODUCTS, BEFORE PURCHASING THIS
POLICY, YOU SHOULD CAREFULLY REVIEW THE POLICY AND DETERMINE WHAT
HEALTH CARE SERVICES THE POLICY COVERS AND WHAT BENEFITS IT PROVIDES,
INCLUDING ANY EXCLUSIONS, LIMITATIONS, OR CONDITIONS FOR SUCH SERVICES
OR BENEFITS.''.
``(d) Prohibition on Certain Reclassifications and Premium
Increases.--
``(1) In general.--For purposes of this section, a health
insurance issuer that provides individual health insurance
coverage to an individual under this part in a primary or
secondary State may not upon renewal--
``(A) move or reclassify the individual insured
under the health insurance coverage from the class such
individual is in at the time of issue of the contract
based on the health-status related factors of the
individual; or
``(B) increase the premiums assessed the individual
for such coverage based on a health status-related
factor or change of a health status-related factor or
the past or prospective claim experience of the insured
individual.
``(2) Construction.--Nothing in paragraph (1) shall be
construed to prohibit a health insurance issuer--
``(A) from terminating or discontinuing coverage or
a class of coverage in accordance with subsections (b)
and (c) of section 2742;
``(B) from raising premium rates for all policy
holders within a class based on claims experience;
``(C) from changing premiums or offering discounted
premiums to individuals who engage in wellness
activities at intervals prescribed by the issuer, if
such premium changes or incentives--
``(i) are disclosed to the consumer in the
insurance contract;
``(ii) are based on specific wellness
activities that are not applicable to all
individuals; and
``(iii) are not obtainable by all
individuals to whom coverage is offered;
``(D) from reinstating lapsed coverage; or
``(E) from retroactively adjusting the rates
charged an insured individual if the initial rates were
set based on material misrepresentation by the
individual at the time of issue.
``(e) Prior Offering of Policy in Primary State.--A health
insurance issuer may not offer for sale individual health insurance
coverage in a secondary State unless that coverage is currently offered
for sale in the primary State.
``(f) Licensing of Agents or Brokers for Health Insurance
Issuers.--Any State may require that a person acting, or offering to
act, as an agent or broker for a health insurance issuer with respect
to the offering of individual health insurance coverage obtain a
license from that State, with commissions or other compensation subject
to the provisions of the laws of that State, except that a State may
not impose any qualification or requirement which discriminates against
a nonresident agent or broker.
``(g) Documents for Submission to State Insurance Commissioner.--
Each health insurance issuer issuing individual health insurance
coverage in both primary and secondary States shall submit--
``(1) to the insurance commissioner of each State in which
it intends to offer such coverage, before it may offer
individual health insurance coverage in such State--
``(A) a copy of the plan of operation or
feasibility study or any similar statement of the
policy being offered and its coverage (which shall
include the name of its primary State and its principal
place of business);
``(B) written notice of any change in its
designation of its primary State; and
``(C) written notice from the issuer of the
issuer's compliance with all the laws of the primary
State; and
``(2) to the insurance commissioner of each secondary State
in which it offers individual health insurance coverage, a copy
of the issuer's quarterly financial statement submitted to the
primary State, which statement shall be certified by an
independent public accountant and contain a statement of
opinion on loss and loss adjustment expense reserves made by--
``(A) a member of the American Academy of
Actuaries; or
``(B) a qualified loss reserve specialist.
``(h) Power of Courts To Enjoin Conduct.--Nothing in this section
shall be construed to affect the authority of any Federal or State
court to enjoin--
``(1) the solicitation or sale of individual health
insurance coverage by a health insurance issuer to any person
or group who is not eligible for such insurance; or
``(2) the solicitation or sale of individual health
insurance coverage that violates the requirements of the law of
a secondary State which are described in subparagraphs (A)
through (H) of section 2796(b)(1).
``(i) Power of Secondary States To Take Administrative Action.--
Nothing in this section shall be construed to affect the authority of
any State to enjoin conduct in violation of that State's laws described
in section 2796(b)(1).
``(j) State Powers To Enforce State Laws.--
``(1) In general.--Subject to the provisions of subsection
(b)(1)(G) (relating to injunctions) and paragraph (2), nothing
in this section shall be construed to affect the authority of
any State to make use of any of its powers to enforce the laws
of such State with respect to which a health insurance issuer
is not exempt under subsection (b).
``(2) Courts of competent jurisdiction.--If a State seeks
an injunction regarding the conduct described in paragraphs (1)
and (2) of subsection (h), such injunction must be obtained
from a Federal or State court of competent jurisdiction.
``(k) States' Authority To Sue.--Nothing in this section shall
affect the authority of any State to bring action in any Federal or
State court.
``(l) Generally Applicable Laws.--Nothing in this section shall be
construed to affect the applicability of State laws generally
applicable to persons or corporations.
``(m) Guaranteed Availability of Coverage to HIPAA Eligible
Individuals.--To the extent that a health insurance issuer is offering
coverage in a primary State that does not accommodate residents of
secondary States or does not provide a working mechanism for residents
of a secondary State, and the issuer is offering coverage under this
part in such secondary State which has not adopted a qualified high
risk pool as its acceptable alternative mechanism (as defined in
section 2744(c)(2)), the issuer shall, with respect to any individual
health insurance coverage offered in a secondary State under this part,
comply with the guaranteed availability requirements for eligible
individuals in section 2741.
``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE ISSUER MAY
SELL INTO SECONDARY STATES.
``A health insurance issuer may not offer, sell, or issue
individual health insurance coverage in a secondary State if the State
insurance commissioner does not use a risk-based capital formula for
the determination of capital and surplus requirements for all health
insurance issuers.
``SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCEDURES.
``(a) Right to External Appeal.--A health insurance issuer may not
offer, sell, or issue individual health insurance coverage in a
secondary State under the provisions of this title unless--
``(1) both the secondary State and the primary State have
legislation or regulations in place establishing an independent
review process for individuals who are covered by individual
health insurance coverage, or
``(2) in any case in which the requirements of subparagraph
(A) are not met with respect to the either of such States, the
issuer provides an independent review mechanism substantially
identical (as determined by the applicable State authority of
such State) to that prescribed in the `Health Carrier External
Review Model Act' of the National Association of Insurance
Commissioners for all individuals who purchase insurance
coverage under the terms of this part, except that, under such
mechanism, the review is conducted by an independent medical
reviewer, or a panel of such reviewers, with respect to whom
the requirements of subsection (b) are met.
``(b) Qualifications of Independent Medical Reviewers.--In the case
of any independent review mechanism referred to in subsection (a)(2)--
``(1) In general.--In referring a denial of a claim to an
independent medical reviewer, or to any panel of such
reviewers, to conduct independent medical review, the issuer
shall ensure that--
``(A) each independent medical reviewer meets the
qualifications described in paragraphs (2) and (3);
``(B) with respect to each review, each reviewer
meets the requirements of paragraph (4) and the
reviewer, or at least 1 reviewer on the panel, meets
the requirements described in paragraph (5); and
``(C) compensation provided by the issuer to each
reviewer is consistent with paragraph (6).
``(2) Licensure and expertise.--Each independent medical
reviewer shall be a physician (allopathic or osteopathic) or
health care professional who--
``(A) is appropriately credentialed or licensed in
1 or more States to deliver health care services; and
``(B) typically treats the condition, makes the
diagnosis, or provides the type of treatment under
review.
``(3) Independence.--
``(A) In general.--Subject to subparagraph (B),
each independent medical reviewer in a case shall--
``(i) not be a related party (as defined in
paragraph (7));
``(ii) not have a material familial,
financial, or professional relationship with
such a party; and
``(iii) not otherwise have a conflict of
interest with such a party (as determined under
regulations).
``(B) Exception.--Nothing in subparagraph (A) shall
be construed to--
``(i) prohibit an individual, solely on the
basis of affiliation with the issuer, from
serving as an independent medical reviewer if--
``(I) a non-affiliated individual
is not reasonably available;
``(II) the affiliated individual is
not involved in the provision of items
or services in the case under review;
``(III) the fact of such an
affiliation is disclosed to the issuer
and the enrollee (or authorized
representative) and neither party
objects; and
``(IV) the affiliated individual is
not an employee of the issuer and does
not provide services exclusively or
primarily to or on behalf of the
issuer;
``(ii) prohibit an individual who has staff
privileges at the institution where the
treatment involved takes place from serving as
an independent medical reviewer merely on the
basis of such affiliation if the affiliation is
disclosed to the issuer and the enrollee (or
authorized representative), and neither party
objects; or
``(iii) prohibit receipt of compensation by
an independent medical reviewer from an entity
if the compensation is provided consistent with
paragraph (6).
``(4) Practicing health care professional in same field.--
``(A) In general.--In a case involving treatment,
or the provision of items or services--
``(i) by a physician, a reviewer shall be a
practicing physician (allopathic or
osteopathic) of the same or similar specialty,
as a physician who, acting within the
appropriate scope of practice within the State
in which the service is provided or rendered,
typically treats the condition, makes the
diagnosis, or provides the type of treatment
under review; or
``(ii) by a non-physician health care
professional, the reviewer, or at least 1
member of the review panel, shall be a
practicing non-physician health care
professional of the same or similar specialty
as the non-physician health care professional
who, acting within the appropriate scope of
practice within the State in which the service
is provided or rendered, typically treats the
condition, makes the diagnosis, or provides the
type of treatment under review.
``(B) Practicing defined.--For purposes of this
paragraph, the term `practicing' means, with respect to
an individual who is a physician or other health care
professional, that the individual provides health care
services to individual patients on average at least 2
days per week.
``(5) Pediatric expertise.--In the case of an external
review relating to a child, a reviewer shall have expertise
under paragraph (2) in pediatrics.
``(6) Limitations on reviewer compensation.--Compensation
provided by the issuer to an independent medical reviewer in
connection with a review under this section shall--
``(A) not exceed a reasonable level; and
``(B) not be contingent on the decision rendered by
the reviewer.
``(7) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a denial of a
claim under a coverage relating to an enrollee, any of the
following:
``(A) The issuer involved, or any fiduciary,
officer, director, or employee of the issuer.
``(B) The enrollee (or authorized representative).
``(C) The health care professional that provides
the items or services involved in the denial.
``(D) The institution at which the items or
services (or treatment) involved in the denial are
provided.
``(E) The manufacturer of any drug or other item
that is included in the items or services involved in
the denial.
``(F) Any other party determined under any
regulations to have a substantial interest in the
denial involved.
``(8) Definitions.--For purposes of this subsection:
``(A) Enrollee.--The term `enrollee' means, with
respect to health insurance coverage offered by a
health insurance issuer, an individual enrolled with
the issuer to receive such coverage.
``(B) Health care professional.--The term `health
care professional' means an individual who is licensed,
accredited, or certified under State law to provide
specified health care services and who is operating
within the scope of such licensure, accreditation, or
certification.
``SEC. 2799. ENFORCEMENT.
``(a) In General.--Subject to subsection (b), with respect to
specific individual health insurance coverage the primary State for
such coverage has sole jurisdiction to enforce the primary State's
covered laws in the primary State and any secondary State.
``(b) Secondary State's Authority.--Nothing in subsection (a) shall
be construed to affect the authority of a secondary State to enforce
its laws as set forth in the exception specified in section 2796(b)(1).
``(c) Court Interpretation.--In reviewing action initiated by the
applicable secondary State authority, the court of competent
jurisdiction shall apply the covered laws of the primary State.
``(d) Notice of Compliance Failure.--In the case of individual
health insurance coverage offered in a secondary State that fails to
comply with the covered laws of the primary State, the applicable State
authority of the secondary State may notify the applicable State
authority of the primary State.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individual health insurance coverage offered, issued, or sold
after the date that is one year after the date of the enactment of this
Act.
(c) GAO Ongoing Study and Reports.--
(1) Study.--The Comptroller General of the United States
shall conduct an ongoing study concerning the effect of the
amendment made by subsection (a) on--
(A) the number of uninsured and under-insured;
(B) the availability and cost of health insurance
policies for individuals with preexisting medical
conditions;
(C) the availability and cost of health insurance
policies generally;
(D) the elimination or reduction of different types
of benefits under health insurance policies offered in
different States; and
(E) cases of fraud or abuse relating to health
insurance coverage offered under such amendment and the
resolution of such cases.
(2) Annual reports.--The Comptroller General shall submit
to Congress an annual report, after the end of each of the 5
years following the effective date of the amendment made by
subsection (a), on the ongoing study conducted under paragraph
(1).
TITLE IV--IMPROVING HEALTH SAVINGS ACCOUNTS
SEC. 231. SAVER'S CREDIT FOR CONTRIBUTIONS TO HEALTH SAVINGS ACCOUNTS.
(a) Allowance of Credit.--Subsection (a) of section 25B of the
Internal Revenue Code of 1986 is amended by inserting ``aggregate
qualified HSA contributions and'' after ``so much of the''.
(b) Qualified HSA Contributions.--Subsection (d) of section 25B of
such Code is amended by redesignating paragraph (2) as paragraph (3)
and by inserting after paragraph (1) the following new paragraph:
``(2) Qualified hsa contributions.--The term `qualified HSA
contribution' means, with respect to any taxable year, a
contribution of the eligible individual to a health savings
account (as defined in section 223(d)(1)) for which a deduction
is allowable under section 223(a) for such taxable year.''.
(c) Conforming Amendment.--The first sentence of section
25B(d)(3)(A) of such Code (as redesignated by subsection (b)) is
amended to read as follows: ``The aggregate qualified retirement
savings contributions determined under paragraph (1) and qualified HSA
contributions determined under paragraph (2) shall be reduced (but not
below zero) by the aggregate distributions received by the individual
during the testing period from any entity of a type to which
contributions under paragraph (1) or paragraph (2) (as the case may be)
may be made.''.
(d) Effective Date.--The amendments made by this section shall
apply to contributions made after December 31, 2009.
SEC. 232. HSA FUNDS FOR PREMIUMS FOR HIGH DEDUCTIBLE HEALTH PLANS.
(a) In General.--Subparagraph (C) of section 223(d)(2) of the
Internal Revenue Code of 1986 is amended by striking ``or'' at the end
of clause (iii), by striking the period at the end of clause (iv) and
inserting ``, or'', and by adding at the end the following:
``(v) a high deductible health plan if--
``(I) such plan is not offered in
connection with a group health plan,
``(II) no portion of any premium
(within the meaning of applicable
premium under section 4980B(f)(4)) for
such plan is excludable from gross
income under section 106, and
``(III) the account beneficiary
demonstrates, using procedures deemed
appropriate by the Secretary, that
after payment of the premium for such
insurance the balance in the health
savings account is at least twice the
minimum deductible in effect under
subsection (c)(2)(A)(i) which is
applicable to such plan.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to premiums for a high deductible health plan for periods
beginning after December 31, 2009.
SEC. 233. REQUIRING GREATER COORDINATION BETWEEN HDHP ADMINISTRATORS
AND HSA ACCOUNT ADMINISTRATORS SO THAT ENROLLEES CAN
ENROLL IN BOTH AT THE SAME TIME.
The Secretary of the Treasury, through the issuance of regulations
or other guidance, shall encourage administrators of health plans and
trustees of health savings accounts to provide for simultaneous
enrollment in high deductible health plans and setup of health savings
accounts.
SEC. 234. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE
ESTABLISHMENT OF ACCOUNT.
(a) In General.--Subsection (d) of section 223 of the Internal
Revenue Code of 1986 is amended by redesignating paragraph (4) as
paragraph (5) and by inserting after paragraph (3) the following new
paragraph:
``(4) Certain medical expenses incurred before
establishment of account treated as qualified.--
``(A) In general.--For purposes of paragraph (2),
an expense shall not fail to be treated as a qualified
medical expense solely because such expense was
incurred before the establishment of the health savings
account if such expense was incurred during the 60-day
period beginning on the date on which the high
deductible health plan is first effective.
``(B) Special rules.--For purposes of subparagraph
(A)--
``(i) an individual shall be treated as an
eligible individual for any portion of a month
for which the individual is described in
subsection (c)(1), determined without regard to
whether the individual is covered under a high
deductible health plan on the 1st day of such
month, and
``(ii) the effective date of the health
savings account is deemed to be the date on
which the high deductible health plan is first
effective after the date of the enactment of
this paragraph.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to insurance purchased after the date of the enactment of
this Act in taxable years beginning after such date.
DIVISION C--ENACTING REAL MEDICAL LIABILITY REFORM
SEC. 301. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.
The time for the commencement of a health care lawsuit shall be 3
years after the date of manifestation of injury or 1 year after the
claimant discovers, or through the use of reasonable diligence should
have discovered, the injury, whichever occurs first. In no event shall
the time for commencement of a health care lawsuit exceed 3 years after
the date of manifestation of injury unless tolled for any of the
following--
(1) upon proof of fraud;
(2) intentional concealment; or
(3) the presence of a foreign body, which has no
therapeutic or diagnostic purpose or effect, in the person of
the injured person.
Actions by a minor shall be commenced within 3 years from the date of
the alleged manifestation of injury except that actions by a minor
under the full age of 6 years shall be commenced within 3 years of
manifestation of injury or prior to the minor's 8th birthday, whichever
provides a longer period. Such time limitation shall be tolled for
minors for any period during which a parent or guardian and a health
care provider or health care organization have committed fraud or
collusion in the failure to bring an action on behalf of the injured
minor.
SEC. 302. COMPENSATING PATIENT INJURY.
(a) Unlimited Amount of Damages for Actual Economic Losses in
Health Care Lawsuits.--In any health care lawsuit, nothing in this
title shall limit a claimant's recovery of the full amount of the
available economic damages, notwithstanding the limitation in
subsection (b).
(b) Additional Noneconomic Damages.--In any health care lawsuit,
the amount of noneconomic damages, if available, may be as much as
$250,000, regardless of the number of parties against whom the action
is brought or the number of separate claims or actions brought with
respect to the same injury.
(c) No Discount of Award for Noneconomic Damages.--For purposes of
applying the limitation in subsection (b), future noneconomic damages
shall not be discounted to present value. The jury shall not be
informed about the maximum award for noneconomic damages. An award for
noneconomic damages in excess of $250,000 shall be reduced either
before the entry of judgment, or by amendment of the judgment after
entry of judgment, and such reduction shall be made before accounting
for any other reduction in damages required by law. If separate awards
are rendered for past and future noneconomic damages and the combined
awards exceed $250,000, the future noneconomic damages shall be reduced
first.
(d) Fair Share Rule.--In any health care lawsuit, each party shall
be liable for that party's several share of any damages only and not
for the share of any other person. Each party shall be liable only for
the amount of damages allocated to such party in direct proportion to
such party's percentage of responsibility. Whenever a judgment of
liability is rendered as to any party, a separate judgment shall be
rendered against each such party for the amount allocated to such
party. For purposes of this section, the trier of fact shall determine
the proportion of responsibility of each party for the claimant's harm.
SEC. 303. MAXIMIZING PATIENT RECOVERY.
(a) Court Supervision of Share of Damages Actually Paid to
Claimants.--In any health care lawsuit, the court shall supervise the
arrangements for payment of damages to protect against conflicts of
interest that may have the effect of reducing the amount of damages
awarded that are actually paid to claimants. In particular, in any
health care lawsuit in which the attorney for a party claims a
financial stake in the outcome by virtue of a contingent fee, the court
shall have the power to restrict the payment of a claimant's damage
recovery to such attorney, and to redirect such damages to the claimant
based upon the interests of justice and principles of equity. In no
event shall the total of all contingent fees for representing all
claimants in a health care lawsuit exceed the following limits:
(1) 40 percent of the first $50,000 recovered by the
claimant(s).
(2) 33\1/3\ percent of the next $50,000 recovered by the
claimant(s).
(3) 25 percent of the next $500,000 recovered by the
claimant(s).
(4) 15 percent of any amount by which the recovery by the
claimant(s) is in excess of $600,000.
(b) Applicability.--The limitations in this section shall apply
whether the recovery is by judgment, settlement, mediation,
arbitration, or any other form of alternative dispute resolution. In a
health care lawsuit involving a minor or incompetent person, a court
retains the authority to authorize or approve a fee that is less than
the maximum permitted under this section. The requirement for court
supervision in the first two sentences of subsection (a) applies only
in civil actions.
SEC. 304. ADDITIONAL HEALTH BENEFITS.
In any health care lawsuit involving injury or wrongful death, any
party may introduce evidence of collateral source benefits. If a party
elects to introduce such evidence, any opposing party may introduce
evidence of any amount paid or contributed or reasonably likely to be
paid or contributed in the future by or on behalf of the opposing party
to secure the right to such collateral source benefits. No provider of
collateral source benefits shall recover any amount against the
claimant or receive any lien or credit against the claimant's recovery
or be equitably or legally subrogated to the right of the claimant in a
health care lawsuit involving injury or wrongful death. This section
shall apply to any health care lawsuit that is settled as well as a
health care lawsuit that is resolved by a fact finder. This section
shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section
1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act.
SEC. 305. PUNITIVE DAMAGES.
(a) In General.--Punitive damages may, if otherwise permitted by
applicable State or Federal law, be awarded against any person in a
health care lawsuit only if it is proven by clear and convincing
evidence that such person acted with malicious intent to injure the
claimant, or that such person deliberately failed to avoid unnecessary
injury that such person knew the claimant was substantially certain to
suffer. In any health care lawsuit where no judgment for compensatory
damages is rendered against such person, no punitive damages may be
awarded with respect to the claim in such lawsuit. No demand for
punitive damages shall be included in a health care lawsuit as
initially filed. A court may allow a claimant to file an amended
pleading for punitive damages only upon a motion by the claimant and
after a finding by the court, upon review of supporting and opposing
affidavits or after a hearing, after weighing the evidence, that the
claimant has established by a substantial probability that the claimant
will prevail on the claim for punitive damages. At the request of any
party in a health care lawsuit, the trier of fact shall consider in a
separate proceeding--
(1) whether punitive damages are to be awarded and the
amount of such award; and
(2) the amount of punitive damages following a
determination of punitive liability.
If a separate proceeding is requested, evidence relevant only to the
claim for punitive damages, as determined by applicable State law,
shall be inadmissible in any proceeding to determine whether
compensatory damages are to be awarded.
(b) Determining Amount of Punitive Damages.--
(1) Factors considered.--In determining the amount of
punitive damages, if awarded, in a health care lawsuit, the
trier of fact shall consider only the following--
(A) the severity of the harm caused by the conduct
of such party;
(B) the duration of the conduct or any concealment
of it by such party;
(C) the profitability of the conduct to such party;
(D) the number of products sold or medical
procedures rendered for compensation, as the case may
be, by such party, of the kind causing the harm
complained of by the claimant;
(E) any criminal penalties imposed on such party,
as a result of the conduct complained of by the
claimant; and
(F) the amount of any civil fines assessed against
such party as a result of the conduct complained of by
the claimant.
(2) Maximum award.--The amount of punitive damages, if
awarded, in a health care lawsuit may be as much as $250,000 or
as much as two times the amount of economic damages awarded,
whichever is greater. The jury shall not be informed of this
limitation.
SEC. 306. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN
HEALTH CARE LAWSUITS.
(a) In General.--In any health care lawsuit, if an award of future
damages, without reduction to present value, equaling or exceeding
$50,000 is made against a party with sufficient insurance or other
assets to fund a periodic payment of such a judgment, the court shall,
at the request of any party, enter a judgment ordering that the future
damages be paid by periodic payments. In any health care lawsuit, the
court may be guided by the Uniform Periodic Payment of Judgments Act
promulgated by the National Conference of Commissioners on Uniform
State Laws.
(b) Applicability.--This section applies to all actions which have
not been first set for trial or retrial before the effective date of
this title.
SEC. 307. DEFINITIONS.
In this title:
(1) Alternative dispute resolution system; adr.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system that provides for the resolution of health care lawsuits
in a manner other than through a civil action brought in a
State or Federal court.
(2) Claimant.--The term ``claimant'' means any person who
brings a health care lawsuit, including a person who asserts or
claims a right to legal or equitable contribution, indemnity,
or subrogation, arising out of a health care liability claim or
action, and any person on whose behalf such a claim is asserted
or such an action is brought, whether deceased, incompetent, or
a minor.
(3) Collateral source benefits.--The term ``collateral
source benefits'' means any amount paid or reasonably likely to
be paid in the future to or on behalf of the claimant, or any
service, product, or other benefit provided or reasonably
likely to be provided in the future to or on behalf of the
claimant, as a result of the injury or wrongful death, pursuant
to--
(A) any State or Federal health, sickness, income-
disability, accident, or workers' compensation law;
(B) any health, sickness, income-disability, or
accident insurance that provides health benefits or
income-disability coverage;
(C) any contract or agreement of any group,
organization, partnership, or corporation to provide,
pay for, or reimburse the cost of medical, hospital,
dental, or income-disability benefits; and
(D) any other publicly or privately funded program.
(4) Compensatory damages.--The term ``compensatory
damages'' means objectively verifiable monetary losses incurred
as a result of the provision of, use of, or payment for (or
failure to provide, use, or pay for) health care services or
medical products, such as past and future medical expenses,
loss of past and future earnings, cost of obtaining domestic
services, loss of employment, and loss of business or
employment opportunities, damages for physical and emotional
pain, suffering, inconvenience, physical impairment, mental
anguish, disfigurement, loss of enjoyment of life, loss of
society and companionship, loss of consortium (other than loss
of domestic service), hedonic damages, injury to reputation,
and all other nonpecuniary losses of any kind or nature. The
term ``compensatory damages'' includes economic damages and
noneconomic damages, as such terms are defined in this section.
(5) Contingent fee.--The term ``contingent fee'' includes
all compensation to any person or persons which is payable only
if a recovery is effected on behalf of one or more claimants.
(6) Economic damages.--The term ``economic damages'' means
objectively verifiable monetary losses incurred as a result of
the provision of, use of, or payment for (or failure to
provide, use, or pay for) health care services or medical
products, such as past and future medical expenses, loss of
past and future earnings, cost of obtaining domestic services,
loss of employment, and loss of business or employment
opportunities.
(7) Health care lawsuit.--The term ``health care lawsuit''
means any health care liability claim concerning the provision
of health care goods or services or any medical product
affecting interstate commerce, or any health care liability
action concerning the provision of health care goods or
services or any medical product affecting interstate commerce,
brought in a State or Federal court or pursuant to an
alternative dispute resolution system, against a health care
provider, a health care organization, or the manufacturer,
distributor, supplier, marketer, promoter, or seller of a
medical product, regardless of the theory of liability on which
the claim is based, or the number of claimants, plaintiffs,
defendants, or other parties, or the number of claims or causes
of action, in which the claimant alleges a health care
liability claim. Such term does not include a claim or action
which is based on criminal liability; which seeks civil fines
or penalties paid to Federal, State, or local government; or
which is grounded in antitrust.
(8) Health care liability action.--The term ``health care
liability action'' means a civil action brought in a State or
Federal court or pursuant to an alternative dispute resolution
system, against a health care provider, a health care
organization, or the manufacturer, distributor, supplier,
marketer, promoter, or seller of a medical product, regardless
of the theory of liability on which the claim is based, or the
number of plaintiffs, defendants, or other parties, or the
number of causes of action, in which the claimant alleges a
health care liability claim.
(9) Health care liability claim.--The term ``health care
liability claim'' means a demand by any person, whether or not
pursuant to ADR, against a health care provider, health care
organization, or the manufacturer, distributor, supplier,
marketer, promoter, or seller of a medical product, including,
but not limited to, third-party claims, cross-claims, counter-
claims, or contribution claims, which are based upon the
provision of, use of, or payment for (or the failure to
provide, use, or pay for) health care services or medical
products, regardless of the theory of liability on which the
claim is based, or the number of plaintiffs, defendants, or
other parties, or the number of causes of action.
(10) Health care organization.--The term ``health care
organization'' means any person or entity which is obligated to
provide or pay for health benefits under any health plan,
including any person or entity acting under a contract or
arrangement with a health care organization to provide or
administer any health benefit.
(11) Health care provider.--The term ``health care
provider'' means any person or entity required by State or
Federal laws or regulations to be licensed, registered, or
certified to provide health care services, and being either so
licensed, registered, or certified, or exempted from such
requirement by other statute or regulation.
(12) Health care goods or services.--The term ``health care
goods or services'' means any goods or services provided by a
health care organization, provider, or by any individual
working under the supervision of a health care provider, that
relates to the diagnosis, prevention, or treatment of any human
disease or impairment, or the assessment or care of the health
of human beings.
(13) Malicious intent to injure.--The term ``malicious
intent to injure'' means intentionally causing or attempting to
cause physical injury other than providing health care goods or
services.
(14) Medical product.--The term ``medical product'' means a
drug, device, or biological product intended for humans, and
the terms ``drug'', ``device'', and ``biological product'' have
the meanings given such terms in sections 201(g)(1) and 201(h)
of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(g)(1)
and (h)) and section 351(a) of the Public Health Service Act
(42 U.S.C. 262(a)), respectively, including any component or
raw material used therein, but excluding health care services.
(15) Noneconomic damages.--The term ``noneconomic damages''
means damages for physical and emotional pain, suffering,
inconvenience, physical impairment, mental anguish,
disfigurement, loss of enjoyment of life, loss of society and
companionship, loss of consortium (other than loss of domestic
service), hedonic damages, injury to reputation, and all other
nonpecuniary losses of any kind or nature.
(16) Punitive damages.--The term ``punitive damages'' means
damages awarded, for the purpose of punishment or deterrence,
and not solely for compensatory purposes, against a health care
provider, health care organization, or a manufacturer,
distributor, or supplier of a medical product. Punitive damages
are neither economic nor noneconomic damages.
(17) Recovery.--The term ``recovery'' means the net sum
recovered after deducting any disbursements or costs incurred
in connection with prosecution or settlement of the claim,
including all costs paid or advanced by any person. Costs of
health care incurred by the plaintiff and the attorneys' office
overhead costs or charges for legal services are not deductible
disbursements or costs for such purpose.
(18) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, the Northern
Mariana Islands, the Trust Territory of the Pacific Islands,
and any other territory or possession of the United States, or
any political subdivision thereof.
SEC. 308. EFFECT ON OTHER LAWS.
(a) Vaccine Injury.--
(1) To the extent that title XXI of the Public Health
Service Act establishes a Federal rule of law applicable to a
civil action brought for a vaccine-related injury or death--
(A) this title does not affect the application of
the rule of law to such an action; and
(B) any rule of law prescribed by this title in
conflict with a rule of law of such title XXI shall not
apply to such action.
(2) If there is an aspect of a civil action brought for a
vaccine-related injury or death to which a Federal rule of law
under title XXI of the Public Health Service Act does not
apply, then this title or otherwise applicable law (as
determined under this title) will apply to such aspect of such
action.
(b) Other Federal Law.--Except as provided in this section, nothing
in this title shall be deemed to affect any defense available to a
defendant in a health care lawsuit or action under any other provision
of Federal law.
SEC. 309. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.
(a) Health Care Lawsuits.--The provisions governing health care
lawsuits set forth in this title preempt, subject to subsections (b)
and (c), State law to the extent that State law prevents the
application of any provisions of law established by or under this
title. The provisions governing health care lawsuits set forth in this
title supersede chapter 171 of title 28, United States Code, to the
extent that such chapter--
(1) provides for a greater amount of damages or contingent
fees, a longer period in which a health care lawsuit may be
commenced, or a reduced applicability or scope of periodic
payment of future damages, than provided in this title; or
(2) prohibits the introduction of evidence regarding
collateral source benefits, or mandates or permits subrogation
or a lien on collateral source benefits.
(b) Protection of States' Rights and Other Laws.--(1) Any issue
that is not governed by any provision of law established by or under
this title (including State standards of negligence) shall be governed
by otherwise applicable State or Federal law.
(2) This title shall not preempt or supersede any State or Federal
law that imposes greater procedural or substantive protections for
health care providers and health care organizations from liability,
loss, or damages than those provided by this title or create a cause of
action.
(c) State Flexibility.--No provision of this title shall be
construed to preempt--
(1) any State law (whether effective before, on, or after
the date of the enactment of this Act) that specifies a
particular monetary amount of compensatory or punitive damages
(or the total amount of damages) that may be awarded in a
health care lawsuit, regardless of whether such monetary amount
is greater or lesser than is provided for under this title,
notwithstanding section 302(a); or
(2) any defense available to a party in a health care
lawsuit under any other provision of State or Federal law.
SEC. 310. APPLICABILITY; EFFECTIVE DATE.
This title shall apply to any health care lawsuit brought in a
Federal or State court, or subject to an alternative dispute resolution
system, that is initiated on or after the date of the enactment of this
Act, except that any health care lawsuit arising from an injury
occurring prior to the date of the enactment of this Act shall be
governed by the applicable statute of limitations provisions in effect
at the time the injury occurred.
DIVISION D--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP
SEC. 401. RULE OF CONSTRUCTION.
Nothing in this Act shall be construed to interfere with the
doctor-patient relationship or the practice of medicine.
SEC. 402. REPEAL OF FEDERAL COORDINATING COUNCIL FOR COMPARATIVE
EFFECTIVENESS RESEARCH.
Effective on the date of the enactment of this Act, section 804 of
the American Recovery and Reinvestment Act of 2009 is repealed.
DIVISION E--INCENTIVIZING WELLNESS AND QUALITY IMPROVEMENTS
SEC. 501. INCENTIVES FOR PREVENTION AND WELLNESS PROGRAMS.
(a) Employee Retirement Income Security Act of 1974 Limitation on
Exception for Wellness Programs Under HIPAA Discrimination Rules.--
(1) In general.--Section 702(b)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1182(b)(2))
is amended by adding after and below subparagraph (B) the
following:
``In applying subparagraph (B), a group health plan (or a
health insurance issuer with respect to health insurance
coverage) may vary premiums and cost-sharing by up to 50
percent of the value of the benefits under the plan (or
coverage) based on participation in a standards-based wellness
program.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to plan years beginning more than 1 year after the
date of the enactment of this Act.
(b) Conforming Amendments to PHSA.--
(1) Group market rules.--
(A) In general.--Section 2702(b)(2) of the Public
Health Service Act (42 U.S.C. 300gg-1(b)(2)) is amended
by adding after and below subparagraph (B) the
following:
``In applying subparagraph (B), a group health plan (or a
health insurance issuer with respect to health insurance
coverage) may vary premiums and cost-sharing by up to 50
percent of the value of the benefits under the plan (or
coverage) based on participation in a standards-based wellness
program.''.
(B) Effective date.--The amendment made by
subparagraph (A) shall apply to plan years beginning
more than 1 year after the date of the enactment of
this Act.
(2) Individual market rules relating to guaranteed
availability.--
(A) In general.--Section 2741(f) of the Public
Health Service Act (42 U.S.C. 300gg-1(b)(2)) is amended
by adding after and below paragraph (1) the following:
``In applying paragraph (2), a health insurance issuer may vary
premiums and cost-sharing under health insurance coverage by up to 50
percent of the value of the benefits under the coverage based on
participation in a standards-based wellness program.''.
(B) Effective date.--The amendment made by
paragraph (1) shall apply to health insurance coverage
offered or renewed on and after the date that is 1 year
after the date of the enactment of this Act.
(c) Conforming Amendments to IRC.--
(1) In general.--Section 9802(b)(2) of the Internal Revenue
Code of 1986 is amended by adding after and below subparagraph
(B) the following:
``In applying subparagraph (B), a group health plan (or a
health insurance issuer with respect to health insurance
coverage) may vary premiums and cost-sharing by up to 50
percent of the value of the benefits under the plan (or
coverage) based on participation in a standards-based wellness
program.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to plan years beginning more than 1 year after the
date of the enactment of this Act.
DIVISION F--PROTECTING TAXPAYERS
SEC. 601. PROVIDE FULL FUNDING TO HHS OIG AND HCFAC.
(a) HCFAC Funding.--Section 1817(k)(3)(A) of the Social Security
Act (42 U.S.C. 1395i(k)(3)(A)) is amended--
(1) in clause (i)--
(A) in subclause (IV), by striking ``2009, and
2010'' and inserting ``and 2009''; and
(B) by amending subclause (V) to read as follows:
``(V) for each fiscal year after
fiscal year 2009, $300,000,000.''; and
(2) in clause (ii)--
(A) in subclause (IX), by striking ``2009, and
2010'' and inserting ``and 2009''; and
(B) in subclause (X), by striking ``2010'' and
inserting ``2009'' and by inserting before the period
at the end the following: ``, plus the amount by which
the amount made available under clause (i)(V) for
fiscal year 2010 exceeds the amount made available
under clause (i)(IV) for 2009''.
(b) OIG Funding.--There are authorized to be appropriated for each
of fiscal years 2010 through 2019 $100,000,000 for the Office of the
Inspector General of the Department of Health and Human Services for
fraud prevention activities under the Medicare and Medicaid programs.
SEC. 602. PROHIBITING TAXPAYER FUNDED ABORTIONS AND CONSCIENCE
PROTECTIONS.
Title 1 of the United States Code is amended by adding at the end
the following new chapter:
``CHAPTER 4--PROHIBITING TAXPAYER FUNDED ABORTIONS AND CONSCIENCE
PROTECTIONS
``SEC. 301. PROHIBITION ON FUNDING FOR ABORTIONS.
``No funds authorized or appropriated by federal law, and none of
the funds in any trust fund to which funds are authorized or
appropriated by federal law, shall be expended for any abortion.
``SEC. 302. PROHIBITION ON FUNDING FOR HEALTH BENEFITS PLANS THAT COVER
ABORTION.
``None of the funds authorized or appropriated by federal law, and
none of the funds in any trust fund to which funds are authorized or
appropriated by federal law, shall be expended for a health benefits
plan that includes coverage of abortion.
``SEC. 303. TREATMENT OF ABORTIONS RELATED TO RAPE, INCEST, OR
PRESERVING THE LIFE OF THE MOTHER.
``The limitations established in sections 301 and 302 shall not
apply to an abortion--
``(1) if the pregnancy is the result of an act of rape or
incest; or
``(2) in the case where a woman suffers from a physical
disorder, physical injury, or physical illness that would, as
certified by a physician, place the woman in danger of death
unless an abortion is performed, including a life-endangering
physical condition caused by or arising from the pregnancy
itself.
``SEC. 304. CONSTRUCTION RELATING TO SUPPLEMENTAL COVERAGE.
``Nothing in this chapter shall be construed as prohibiting any
individual, entity, or State or locality from purchasing separate
supplemental abortion plan or coverage that includes abortion so long
as such plan or coverage is paid for entirely using only funds not
authorized or appropriated by federal law and such plan or coverage
shall not be purchased using matching funds required for a federally
subsidized program, including a State's or locality's contribution of
Medicaid matching funds.
``SEC. 305. CONSTRUCTION RELATING TO THE USE OF NON-FEDERAL FUNDS FOR
HEALTH COVERAGE.
``Nothing in this chapter shall be construed as restricting the
ability of any managed care provider or other organization from
offering abortion coverage or the ability of a State to contract
separately with such a provider or organization for such coverage with
funds not authorized or appropriated by federal law and such plan or
coverage shall not be purchased using matching funds required for a
federally subsidized program, including a State's or locality's
contribution of Medicaid matching funds.
``SEC. 306. NO GOVERNMENT DISCRIMINATION AGAINST CERTAIN HEALTH CARE
ENTITIES.
``(a) In General.--No funds authorized or appropriated by federal
law may be made available to a Federal agency or program, or to a State
or local government, if such agency, program, or government subjects
any institutional or individual health care entity to discrimination on
the basis that the health care entity does not provide, pay for,
provide coverage of, or refer for abortions.
``(b) Health Care Entity Defined.--For purposes of this section,
the term `health care entity' includes an individual physician or other
health care professional, a hospital, a provider-sponsored
organization, a health maintenance organization, a health insurance
plan, or any other kind of health care facility, organization, or
plan.''.
SEC. 603. IMPROVED ENFORCEMENT OF THE MEDICARE AND MEDICAID SECONDARY
PAYER PROVISIONS.
(a) Medicare.--
(1) In general.--The Secretary, in coordination with the
Inspector General of the Department of Health and Human
Services, shall provide through the Coordination of Benefits
Contractor for the identification of instances where the
Medicare program should be, but is not, acting as a secondary
payer to an individual's private health benefits coverage under
section 1862(b) of the Social Security Act (42 U.S.C.
1395y(b)).
(2) Updating procedures.--The Secretary shall update
procedures for identifying and resolving credit balance
situations which occur under the Medicare program when payment
under such title and from other health benefit plans exceed the
providers' charges or the allowed amount.
(3) Report on improved enforcement.--Not later than 1 year
after the date of the enactment of this Act, the Secretary
shall submit a report to Congress on progress made in improved
enforcement of the Medicare secondary payer provisions,
including recoupment of credit balances.
(b) Medicaid.--Section 1903 of the Social Security Act (42 U.S.C.
1396b) is amended by adding at the end the following new subsection:
``(aa) Enforcement of Payer of Last Resort Provisions.--
``(1) Submission of state plan amendment.--Each State shall
submit, not later than 1 year after the date of the enactment
of this subsection, a State plan amendment that details how the
State will become fully compliant with the requirements of
section 1902(a)(25).
``(2) Bonus for compliance.--If a State submits a timely
State plan amendment under paragraph (1) that the Secretary
determines provides for full compliance of the State with the
requirements of section 1902(a)(25), the Secretary shall
provide for an additional payment to the State of $1,000,000.
If a State certifies, to the Secretary's satisfaction, that it
is already fully compliant with such requirements, such amount
shall be increased to $2,000,000.
``(3) Reduction for noncompliance.--If a State does not
submit such an amendment, the Secretary shall reduce the
Federal medical assistance percentage otherwise applicable
under this title by 1 percentage point until the State submits
such an amendment.
``(4) Ongoing reduction.--If at any time the Secretary
determines that a State is not in compliance with section
1902(a)(25), regardless of the status of the State's submission
of a State plan amendment under this subsection or previous
determinations of compliance such requirements, the Secretary
shall reduce the Federal medical assistance percentage
otherwise applicable under this title for the State by 1
percentage point during the period of non-compliance as
determined by the Secretary.''.
SEC. 604. STRENGTHEN MEDICARE PROVIDER ENROLLMENT STANDARDS AND
SAFEGUARDS.
(a) Protecting Against the Fraudulent Use of Medicare Provider
Numbers.--Subject to subsection (c)(2)--
(1) Screening new providers.--As a condition of a provider
of services or a supplier, including durable medical equipment
suppliers and home health agencies, applying for the first time
for a provider number under the Medicare program and before
granting billing privileges under such title, the Secretary
shall screen the provider or supplier for a criminal background
or other financial or operational irregularities through
fingerprinting, licensure checks, site-visits, other database
checks.
(2) Application fees.--The Secretary shall impose an
application charge on such a provider or supplier in order to
cover the Secretary's costs in performing the screening
required under paragraph (1) and that is revenue neutral to the
Federal government.
(3) Provisional approval.--During an initial, provisional
period (specified by the Secretary) In which such a provider or
supplier has been issued such a number, the Secretary shall
provide enhanced oversight of the activities of such provider
or supplier under the Medicare program, such as through
prepayment review and payment limitations.
(4) Penalties for false statements.--In the case of a
provider or supplier that makes a false statement in an
application for such a number, the Secretary may exclude the
provider or supplier from participation under the Medicare
program, or may impose a civil money penalty (in the amount
described in section 1128A(a)(4) of the Social Security Act),
in the same manner as the Secretary may impose such an
exclusion or penalty under sections 1128 and 1128A,
respectively, of such Act in the case of knowing presentation
of a false claim described in section 1128A(a)(1)(A) of such
Act.
(5) Disclosure requirements.--With respect to approval of
such an application, the Secretary--
(A) shall require applicants to disclose previous
affiliation with enrolled entities that have
uncollected debt related to the Medicare or Medicaid
programs;
(B) may deny approval if the Secretary determines
that these affiliations pose undue risk to the Medicare
or Medicaid program, subject to an appeals process for
the applicant as determined by the Secretary; and
(C) may implement enhanced safeguards (such as
surety bonds).
(b) Moratoria.--The Secretary may impose moratoria on approval of
provider and supplier numbers under the Medicare program for new
providers of services and suppliers as determined necessary to prevent
or combat fraud a period of delay for any one applicant cannot exceed
30 days unless cause is shown by the Secretary.
(c) Funding.--
(1) In general.--There are authorized to be appropriated to
carry out this section such sums as may be necessary.
(2) Condition.--The provisions of paragraphs (1) and (2) of
subsection (a) shall not apply unless and until funds are
appropriated to carry out such provisions.
SEC. 605. TRACKING BANNED PROVIDERS ACROSS STATE LINES.
(a) Greater Coordination.--The Secretary of Health and Human
Services shall provide for increased coordination between the
Administrator of the Centers for Medicare & Medicaid Services (in this
section referred to as ``CMS'') and its regional offices to ensure that
providers of services and suppliers that have operated in one State and
are excluded from participation in the Medicare program are unable to
begin operation and participation in the Medicare program in another
State.
(b) Improved Information Systems.--
(1) In general.--The Secretary shall improve information
systems to allow greater integration between databases under
the Medicare program so that--
(A) Medicare administrative contractors, fiscal
intermediaries, and carriers have immediate access to
information identifying providers and suppliers
excluded from participation in the Medicare and
Medicaid program and other Federal health care
programs; and
(B) such information can be shared across Federal
health care programs and agencies, including between
the Departments of Health and Human Services, the
Social Security Administration, the Department of
Veterans Affairs, the Department of Defense, the
Department of Justice, and the Office of Personnel
Management.
(c) Medicare/Medicaid ``One PI'' Database.--The Secretary shall
implement a database that includes claims and payment data for all
components of the Medicare program and the Medicaid program.
(d) Authorizing Expanded Data Matching.--Notwithstanding any
provision of the Computer Matching and Privacy Protection Act of 1988
to the contrary--
(1) the Secretary and the Inspector General in the
Department of Health and Human Services may perform data
matching of data from the Medicare program with data from the
Medicaid program; and
(2) the Commissioner of Social Security and the Secretary
may perform data matching of data of the Social Security
Administration with data from the Medicare and Medicaid
programs.
(e) Consolidation of Databases.--The Secretary shall consolidate
and expand into a centralized database for individuals and entities
that have been excluded from Federal health care programs the
Healthcare Integrity and Protection Data Bank, the National
Practitioner Data Bank, the List of Excluded Individuals/Entities, and
a national patient abuse/neglect registry.
(f) Comprehensive Provider Database.--
(1) Establishment.--The Secretary shall establish a
comprehensive database that includes information on providers
of services, suppliers, and related entities participating in
the Medicare program, the Medicaid program, or both. Such
database shall include, information on ownership and business
relationships, history of adverse actions, results of site
visits or other monitoring by any program.
(2) Use.--Prior to issuing a provider or supplier number
for an entity under the Medicare program, the Secretary shall
obtain information on the entity from such database to assure
the entity qualifies for the issuance of such a number.
(g) Comprehensive Sanctions Database.--The Secretary shall
establish a comprehensive sanctions database on sanctions imposed on
providers of services, suppliers, and related entities. Such database
shall be overseen by the Inspector General of the Department of Health
and Human Services and shall be linked to related databases maintained
by State licensure boards and by Federal or State law enforcement
agencies.
(h) Access to Claims and Payment Databases.--The Secretary shall
ensure that the Inspector General of the Department of Health and Human
Services and Federal law enforcement agencies have direct access to all
claims and payment databases of the Secretary under the Medicare or
Medicaid programs.
(i) Civil Money Penalties for Submission of Erroneous
Information.--In the case of a provider of services, supplier, or other
entity that submits erroneous information that serves as a basis for
payment of any entity under the Medicare or Medicaid program, the
Secretary may impose a civil money penalty of not to exceed $50,000 for
each such erroneous submission. A civil money penalty under this
subsection shall be imposed and collected in the same manner as a civil
money penalty under subsection (a) of section 1128A of the Social
Security Act is imposed and collected under that section.
DIVISION G--PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS
SEC. 701. LICENSURE PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS.
(a) Licensure of Biological Products as Biosimilar or
Interchangeable.--Section 351 of the Public Health Service Act (42
U.S.C. 262) is amended--
(1) in subsection (a)(1)(A), by inserting ``under this
subsection or subsection (k)'' after ``biologics license''; and
(2) by adding at the end the following:
``(k) Licensure of Biological Products as Biosimilar or
Interchangeable.--
``(1) In general.--Any person may submit an application for
licensure of a biological product under this subsection.
``(2) Content.--
``(A) In general.--
``(i) Required information.--An application
submitted under this subsection shall include
information demonstrating that--
``(I) the biological product is
biosimilar to a reference product based
upon data derived from--
``(aa) analytical studies
that demonstrate that the
biological product is highly
similar to the reference
product notwithstanding minor
differences in clinically
inactive components;
``(bb) animal studies
(including the assessment of
toxicity); and
``(cc) a clinical study or
studies (including the
assessment of immunogenicity
and pharmacokinetics or
pharmacodynamics) that are
sufficient to demonstrate
safety, purity, and potency in
1 or more appropriate
conditions of use for which the
reference product is licensed
and intended to be used and for
which licensure is sought for
the biological product;
``(II) the biological product and
reference product utilize the same
mechanism or mechanisms of action for
the condition or conditions of use
prescribed, recommended, or suggested
in the proposed labeling, but only to
the extent the mechanism or mechanisms
of action are known for the reference
product;
``(III) the condition or conditions
of use prescribed, recommended, or
suggested in the labeling proposed for
the biological product have been
previously approved for the reference
product;
``(IV) the route of administration,
the dosage form, and the strength of
the biological product are the same as
those of the reference product; and
``(V) the facility in which the
biological product is manufactured,
processed, packed, or held meets
standards designed to assure that the
biological product continues to be
safe, pure, and potent.
``(ii) Determination by secretary.--The
Secretary may determine, in the Secretary's
discretion, that an element described in clause
(i)(I) is unnecessary in an application
submitted under this subsection.
``(iii) Additional information.--An
application submitted under this subsection--
``(I) shall include publicly
available information regarding the
Secretary's previous determination that
the reference product is safe, pure,
and potent; and
``(II) may include any additional
information in support of the
application, including publicly
available information with respect to
the reference product or another
biological product.
``(B) Interchangeability.--An application (or a
supplement to an application) submitted under this
subsection may include information demonstrating that
the biological product meets the standards described in
paragraph (4).
``(3) Evaluation by secretary.--Upon review of an
application (or a supplement to an application) submitted under
this subsection, the Secretary shall license the biological
product under this subsection if--
``(A) the Secretary determines that the information
submitted in the application (or the supplement) is
sufficient to show that the biological product--
``(i) is biosimilar to the reference
product; or
``(ii) meets the standards described in
paragraph (4), and therefore is interchangeable
with the reference product; and
``(B) the applicant (or other appropriate person)
consents to the inspection of the facility that is the
subject of the application, in accordance with
subsection (c).
``(4) Safety standards for determining
interchangeability.--Upon review of an application submitted
under this subsection or any supplement to such application,
the Secretary shall determine the biological product to be
interchangeable with the reference product if the Secretary
determines that the information submitted in the application
(or a supplement to such application) is sufficient to show
that--
``(A) the biological product--
``(i) is biosimilar to the reference
product; and
``(ii) can be expected to produce the same
clinical result as the reference product in any
given patient; and
``(B) for a biological product that is administered
more than once to an individual, the risk in terms of
safety or diminished efficacy of alternating or
switching between use of the biological product and the
reference product is not greater than the risk of using
the reference product without such alternation or
switch.
``(5) General rules.--
``(A) One reference product per application.--A
biological product, in an application submitted under
this subsection, may not be evaluated against more than
1 reference product.
``(B) Review.--An application submitted under this
subsection shall be reviewed by the division within the
Food and Drug Administration that is responsible for
the review and approval of the application under which
the reference product is licensed.
``(C) Risk evaluation and mitigation strategies.--
The authority of the Secretary with respect to risk
evaluation and mitigation strategies under the Federal
Food, Drug, and Cosmetic Act shall apply to biological
products licensed under this subsection in the same
manner as such authority applies to biological products
licensed under subsection (a).
``(D) Restrictions on biological products
containing dangerous ingredients.--If information in an
application submitted under this subsection, in a
supplement to such an application, or otherwise
available to the Secretary shows that a biological
product--
``(i) is, bears, or contains a select agent
or toxin listed in section 73.3 or 73.4 of
title 42, section 121.3 or 121.4 of title 9, or
section 331.3 of title 7, Code of Federal
Regulations (or any successor regulations); or
``(ii) is, bears, or contains a controlled
substance in schedule I or II of section 202 of
the Controlled Substances Act, as listed in
part 1308 of title 21, Code of Federal
Regulations (or any successor regulations);
the Secretary shall not license the biological product
under this subsection unless the Secretary determines,
after consultation with appropriate national security
and drug enforcement agencies, that there would be no
increased risk to the security or health of the public
from licensing such biological product under this
subsection.
``(6) Exclusivity for first interchangeable biological
product.--Upon review of an application submitted under this
subsection relying on the same reference product for which a
prior biological product has received a determination of
interchangeability for any condition of use, the Secretary
shall not make a determination under paragraph (4) that the
second or subsequent biological product is interchangeable for
any condition of use until the earlier of--
``(A) 1 year after the first commercial marketing
of the first interchangeable biosimilar biological
product to be approved as interchangeable for that
reference product;
``(B) 18 months after--
``(i) a final court decision on all patents
in suit in an action instituted under
subsection (l)(5) against the applicant that
submitted the application for the first
approved interchangeable biosimilar biological
product; or
``(ii) the dismissal with or without
prejudice of an action instituted under
subsection (l)(5) against the applicant that
submitted the application for the first
approved interchangeable biosimilar biological
product; or
``(C)(i) 42 months after approval of the first
interchangeable biosimilar biological product if the
applicant that submitted such application has been sued
under subsection (l)(5) and such litigation is still
ongoing within such 42-month period; or
``(ii) 18 months after approval of the first
interchangeable biosimilar biological product if the
applicant that submitted such application has not been
sued under subsection (l)(5).
For purposes of this paragraph, the term `final court decision'
means a final decision of a court from which no appeal (other
than a petition to the United States Supreme Court for a writ
of certiorari) has been or can be taken.
``(7) Exclusivity for reference product.--
``(A) Effective date of biosimilar application
approval.--Approval of an application under this
subsection may not be made effective by the Secretary
until the date that is 12 years after the date on which
the reference product was first licensed under
subsection (a).
``(B) Filing period.--An application under this
subsection may not be submitted to the Secretary until
the date that is 4 years after the date on which the
reference product was first licensed under subsection
(a).
``(C) First licensure.--Subparagraphs (A) and (B)
shall not apply to a license for or approval of--
``(i) a supplement for the biological
product that is the reference product; or
``(ii) a subsequent application filed by
the same sponsor or manufacturer of the
biological product that is the reference
product (or a licensor, predecessor in
interest, or other related entity) for--
``(I) a change (not including a
modification to the structure of the
biological product) that results in a
new indication, route of
administration, dosing schedule, dosage
form, delivery system, delivery device,
or strength; or
``(II) a modification to the
structure of the biological product
that does not result in a change in
safety, purity, or potency.
``(8) Pediatric studies.--
``(A) Exclusivity.--If, before or after licensure
of the reference product under subsection (a) of this
section, the Secretary determines that information
relating to the use of such product in the pediatric
population may produce health benefits in that
population, the Secretary makes a written request for
pediatric studies (which shall include a timeframe for
completing such studies), the applicant or holder of
the approved application agrees to the request, such
studies are completed using appropriate formulations
for each age group for which the study is requested
within any such timeframe, and the reports thereof are
submitted and accepted in accordance with section
505A(d)(3) of the Federal Food, Drug, and Cosmetic Act
the period referred to in paragraph (7)(A) of this
subsection is deemed to be 12 years and 6 months rather
than 12 years.
``(B) Exception.--The Secretary shall not extend
the period referred to in subparagraph (A) of this
paragraph if the determination under section 505A(d)(3)
of the Federal Food, Drug, and Cosmetic Act is made
later than 9 months prior to the expiration of such
period.
``(C) Application of certain provisions.--The
provisions of subsections (a), (d), (e), (f), (h), (j),
(k), and (l) of section 505A of the Federal Food, Drug,
and Cosmetic Act shall apply with respect to the
extension of a period under subparagraph (A) of this
paragraph to the same extent and in the same manner as
such provisions apply with respect to the extension of
a period under subsection (b) or (c) of section 505A of
the Federal Food, Drug, and Cosmetic Act.
``(9) Guidance documents.--
``(A) In general.--The Secretary may, after
opportunity for public comment, issue guidance in
accordance, except as provided in subparagraph (B)(i),
with section 701(h) of the Federal Food, Drug, and
Cosmetic Act with respect to the licensure of a
biological product under this subsection. Any such
guidance may be general or specific.
``(B) Public comment.--
``(i) In general.--The Secretary shall
provide the public an opportunity to comment on
any proposed guidance issued under subparagraph
(A) before issuing final guidance.
``(ii) Input regarding most valuable
guidance.--The Secretary shall establish a
process through which the public may provide
the Secretary with input regarding priorities
for issuing guidance.
``(C) No requirement for application
consideration.--The issuance (or non-issuance) of
guidance under subparagraph (A) shall not preclude the
review of, or action on, an application submitted under
this subsection.
``(D) Requirement for product class-specific
guidance.--If the Secretary issues product class-
specific guidance under subparagraph (A), such guidance
shall include a description of--
``(i) the criteria that the Secretary will
use to determine whether a biological product
is highly similar to a reference product in
such product class; and
``(ii) the criteria, if available, that the
Secretary will use to determine whether a
biological product meets the standards
described in paragraph (4).
``(E) Certain product classes.--
``(i) Guidance.--The Secretary may indicate
in a guidance document that the science and
experience, as of the date of such guidance,
with respect to a product or product class (not
including any recombinant protein) does not
allow approval of an application for a license
as provided under this subsection for such
product or product class.
``(ii) Modification or reversal.--The
Secretary may issue a subsequent guidance
document under subparagraph (A) to modify or
reverse a guidance document under clause (i).
``(iii) No effect on ability to deny
license.--Clause (i) shall not be construed to
require the Secretary to approve a product with
respect to which the Secretary has not
indicated in a guidance document that the
science and experience, as described in clause
(i), does not allow approval of such an
application.
``(10) Naming.--The Secretary shall ensure that the
labeling and packaging of each biological product licensed
under this subsection bears a name that uniquely identifies the
biological product and distinguishes it from the reference
product and any other biological products licensed under this
subsection following evaluation against such reference product.
``(l) Patent Notices; Relationship to Final Approval.--
``(1) Definitions.--For the purposes of this subsection,
the term--
``(A) `biosimilar product' means the biological
product that is the subject of the application under
subsection (k);
``(B) `relevant patent' means a patent that--
``(i) expires after the date specified in
subsection (k)(7)(A) that applies to the
reference product; and
``(ii) could reasonably be asserted against
the applicant due to the unauthorized making,
use, sale, or offer for sale within the United
States, or the importation into the United
States of the biosimilar product, or materials
used in the manufacture of the biosimilar
product, or due to a use of the biosimilar
product in a method of treatment that is
indicated in the application;
``(C) `reference product sponsor' means the holder
of an approved application or license for the reference
product; and
``(D) `interested third party' means a person other
than the reference product sponsor that owns a relevant
patent, or has the right to commence or participate in
an action for infringement of a relevant patent.
``(2) Handling of confidential information.--Any entity
receiving confidential information pursuant to this subsection
shall designate one or more individuals to receive such
information. Each individual so designated shall execute an
agreement in accordance with regulations promulgated by the
Secretary. The regulations shall require each such individual
to take reasonable steps to maintain the confidentiality of
information received pursuant to this subsection and use the
information solely for purposes authorized by this subsection.
The obligations imposed on an individual who has received
confidential information pursuant to this subsection shall
continue until the individual returns or destroys the
confidential information, a court imposes a protective order
that governs the use or handling of the confidential
information, or the party providing the confidential
information agrees to other terms or conditions regarding the
handling or use of the confidential information.
``(3) Public notice by secretary.--Within 30 days of
acceptance by the Secretary of an application filed under
subsection (k), the Secretary shall publish a notice
identifying--
``(A) the reference product identified in the
application; and
``(B) the name and address of an agent designated
by the applicant to receive notices pursuant to
paragraph (4)(B).
``(4) Exchanges concerning patents.--
``(A) Exchanges with reference product sponsor.--
``(i) Within 30 days of the date of
acceptance of the application by the Secretary,
the applicant shall provide the reference
product sponsor with a copy of the application
and information concerning the biosimilar
product and its production. This information
shall include a detailed description of the
biosimilar product, its method of manufacture,
and the materials used in the manufacture of
the product.
``(ii) Within 60 days of the date of
receipt of the information required to be
provided under clause (i), the reference
product sponsor shall provide to the applicant
a list of relevant patents owned by the
reference product sponsor, or in respect of
which the reference product sponsor has the
right to commence an action of infringement or
otherwise has an interest in the patent as such
patent concerns the biosimilar product.
``(iii) If the reference product sponsor is
issued or acquires an interest in a relevant
patent after the date on which the reference
product sponsor provides the list required by
clause (ii) to the applicant, the reference
product sponsor shall identify that patent to
the applicant within 30 days of the date of
issue of the patent, or the date of acquisition
of the interest in the patent, as applicable.
``(B) Exchanges with interested third parties.--
``(i) At any time after the date on which
the Secretary publishes a notice for an
application under paragraph (3), any interested
third party may provide notice to the
designated agent of the applicant that the
interested third party owns or has rights under
1 or more patents that may be relevant patents.
The notice shall identify at least 1 patent and
shall designate an individual who has executed
an agreement in accordance with paragraph (2)
to receive confidential information from the
applicant.
``(ii) Within 30 days of the date of
receiving notice pursuant to clause (i), the
applicant shall send to the individual
designated by the interested third party the
information specified in subparagraph (A)(i),
unless the applicant and interested third party
otherwise agree.
``(iii) Within 90 days of the date of
receiving information pursuant to clause (ii),
the interested third party shall provide to the
applicant a list of relevant patents which the
interested third party owns, or in respect of
which the interested third party has the right
to commence or participate in an action for
infringement.
``(iv) If the interested third party is
issued or acquires an interest in a relevant
patent after the date on which the interested
third party provides the list required by
clause (iii), the interested third party shall
identify that patent within 30 days of the date
of issue of the patent, or the date of
acquisition of the interest in the patent, as
applicable.
``(C) Identification of basis for infringement.--
For any patent identified under clause (ii) or (iii) of
subparagraph (A) or under clause (iii) or (iv) of
subparagraph (B), the reference product sponsor or the
interested third party, as applicable--
``(i) shall explain in writing why the
sponsor or the interested third party believes
the relevant patent would be infringed by the
making, use, sale, or offer for sale within the
United States, or importation into the United
States, of the biosimilar product or by a use
of the biosimilar product in treatment that is
indicated in the application;
``(ii) may specify whether the relevant
patent is available for licensing; and
``(iii) shall specify the number and date
of expiration of the relevant patent.
``(D) Certification by applicant concerning
identified relevant patents.--Not later than 45 days
after the date on which a patent is identified under
clause (ii) or (iii) of subparagraph (A) or under
clause (iii) or (iv) of subparagraph (B), the applicant
shall send a written statement regarding each
identified patent to the party that identified the
patent. Such statement shall either--
``(i) state that the applicant will not
commence marketing of the biosimilar product
and has requested the Secretary to not grant
final approval of the application before the
date of expiration of the noticed patent; or
``(ii) provide a detailed written
explanation setting forth the reasons why the
applicant believes--
``(I) the making, use, sale, or
offer for sale within the United
States, or the importation into the
United States, of the biosimilar
product, or the use of the biosimilar
product in a treatment indicated in the
application, would not infringe the
patent; or
``(II) the patent is invalid or
unenforceable.
``(5) Action for infringement involving reference product
sponsor.--If an action for infringement concerning a relevant
patent identified by the reference product sponsor under clause
(ii) or (iii) of paragraph (4)(A), or by an interested third
party under clause (iii) or (iv) of paragraph (4)(B), is
brought within 60 days of the date of receipt of a statement
under paragraph (4)(D)(ii), and the court in which such action
has been commenced determines the patent is infringed prior to
the date applicable under subsection (k)(7)(A) or (k)(8), the
Secretary shall make approval of the application effective on
the day after the date of expiration of the patent that has
been found to be infringed. If more than one such patent is
found to be infringed by the court, the approval of the
application shall be made effective on the day after the date
that the last such patent expires.
``(6) Notification of agreements.--
``(A) Requirements.--
``(i) Agreement between biosimilar product
applicant and reference product sponsor.--If a
biosimilar product applicant under subsection
(k) and the reference product sponsor enter
into an agreement described in subparagraph
(B), the applicant and sponsor shall each file
the agreement in accordance with subparagraph
(C).
``(ii) Agreement between biosimilar product
applicants.--If 2 or more biosimilar product
applicants submit an application under
subsection (k) for biosimilar products with the
same reference product and enter into an
agreement described in subparagraph (B), the
applicants shall each file the agreement in
accordance with subparagraph (C).
``(B) Subject matter of agreement.--An agreement
described in this subparagraph--
``(i) is an agreement between the
biosimilar product applicant under subsection
(k) and the reference product sponsor or
between 2 or more biosimilar product applicants
under subsection (k) regarding the manufacture,
marketing, or sale of--
``(I) the biosimilar product (or
biosimilar products) for which an
application was submitted; or
``(II) the reference product;
``(ii) includes any agreement between the
biosimilar product applicant under subsection
(k) and the reference product sponsor or
between 2 or more biosimilar product applicants
under subsection (k) that is contingent upon,
provides a contingent condition for, or
otherwise relates to an agreement described in
clause (i); and
``(iii) excludes any agreement that solely
concerns--
``(I) purchase orders for raw
material supplies;
``(II) equipment and facility
contracts;
``(III) employment or consulting
contracts; or
``(IV) packaging and labeling
contracts.
``(C) Filing.--
``(i) In general.--The text of an agreement
required to be filed by subparagraph (A) shall
be filed with the Assistant Attorney General
and the Federal Trade Commission not later
than--
``(I) 10 business days after the
date on which the agreement is
executed; and
``(II) prior to the date of the
first commercial marketing of, for
agreements described in subparagraph
(A)(i), the biosimilar product that is
the subject of the application or, for
agreements described in subparagraph
(A)(ii), any biosimilar product that is
the subject of an application described
in such subparagraph.
``(ii) If agreement not reduced to text.--
If an agreement required to be filed by
subparagraph (A) has not been reduced to text,
the persons required to file the agreement
shall each file written descriptions of the
agreement that are sufficient to disclose all
the terms and conditions of the agreement.
``(iii) Certification.--The chief executive
officer or the company official responsible for
negotiating any agreement required to be filed
by subparagraph (A) shall include in any filing
under this paragraph a certification as
follows: `I declare under penalty of perjury
that the following is true and correct: The
materials filed with the Federal Trade
Commission and the Department of Justice under
section 351(l)(6) of the Public Health Service
Act, with respect to the agreement referenced
in this certification: (1) represent the
complete, final, and exclusive agreement
between the parties; (2) include any ancillary
agreements that are contingent upon, provide a
contingent condition for, or are otherwise
related to, the referenced agreement; and (3)
include written descriptions of any oral
agreements, representations, commitments, or
promises between the parties that are
responsive to such section and have not been
reduced to writing.'.
``(D) Disclosure exemption.--Any information or
documentary material filed with the Assistant Attorney
General or the Federal Trade Commission pursuant to
this paragraph shall be exempt from disclosure under
section 552 of title 5, United States Code, and no such
information or documentary material may be made public,
except as may be relevant to any administrative or
judicial action or proceeding. Nothing in this
subparagraph prevents disclosure of information or
documentary material to either body of the Congress or
to any duly authorized committee or subcommittee of the
Congress.
``(E) Enforcement.--
``(i) Civil penalty.--Any person that
violates a provision of this paragraph shall be
liable for a civil penalty of not more than
$11,000 for each day on which the violation
occurs. Such penalty may be recovered in a
civil action--
``(I) brought by the United States;
or
``(II) brought by the Federal Trade
Commission in accordance with the
procedures established in section
16(a)(1) of the Federal Trade
Commission Act.
``(ii) Compliance and equitable relief.--If
any person violates any provision of this
paragraph, the United States district court may
order compliance, and may grant such other
equitable relief as the court in its discretion
determines necessary or appropriate, upon
application of the Assistant Attorney General
or the Federal Trade Commission.
``(F) Rulemaking.--The Federal Trade Commission,
with the concurrence of the Assistant Attorney General
and by rule in accordance with section 553 of title 5,
United States Code, consistent with the purposes of
this paragraph--
``(i) may define the terms used in this
paragraph;
``(ii) may exempt classes of persons or
agreements from the requirements of this
paragraph; and
``(iii) may prescribe such other rules as
may be necessary and appropriate to carry out
the purposes of this paragraph.
``(G) Savings clause.--Any action taken by the
Assistant Attorney General or the Federal Trade
Commission, or any failure of the Assistant Attorney
General or the Commission to take action, under this
paragraph shall not at any time bar any proceeding or
any action with respect to any agreement between a
biosimilar product applicant under subsection (k) and
the reference product sponsor, or any agreement between
biosimilar product applicants under subsection (k),
under any other provision of law, nor shall any filing
under this paragraph constitute or create a presumption
of any violation of any competition laws.''.
(b) Definitions.--Section 351(i) of the Public Health Service Act
(42 U.S.C. 262(i)) is amended--
(1) by striking ``In this section, the term `biological
product' means'' and inserting the following: ``In this
section:
``(1) The term `biological product' means'';
(2) in paragraph (1), as so designated, by inserting
``protein (except any chemically synthesized polypeptide),''
after ``allergenic product,''; and
(3) by adding at the end the following:
``(2) The term `biosimilar' or `biosimilarity', in
reference to a biological product that is the subject of an
application under subsection (k), means--
``(A) that the biological product is highly similar
to the reference product notwithstanding minor
differences in clinically inactive components; and
``(B) there are no clinically meaningful
differences between the biological product and the
reference product in terms of the safety, purity, and
potency of the product.
``(3) The term `interchangeable' or `interchangeability',
in reference to a biological product that is shown to meet the
standards described in subsection (k)(4), means that the
biological product may be substituted for the reference product
without the intervention of the health care provider who
prescribed the reference product.
``(4) The term `reference product' means the single
biological product licensed under subsection (a) against which
a biological product is evaluated in an application submitted
under subsection (k).''.
(c) Products Previously Approved Under Section 505.--
(1) Requirement to follow section 351.--Except as provided
in paragraph (2), an application for a biological product shall
be submitted under section 351 of the Public Health Service Act
(42 U.S.C. 262) (as amended by this Act).
(2) Exception.--An application for a biological product may
be submitted under section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) if--
(A) such biological product is in a product class
for which a biological product in such product class is
the subject of an application approved under such
section 505 not later than the date of enactment of
this Act; and
(B) such application--
(i) has been submitted to the Secretary of
Health and Human Services (referred to in this
Act as the ``Secretary'') before the date of
enactment of this Act; or
(ii) is submitted to the Secretary not
later than the date that is 10 years after the
date of enactment of this Act.
(3) Limitation.--Notwithstanding paragraph (2), an
application for a biological product may not be submitted under
section 505 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355) if there is another biological product approved
under subsection (a) of section 351 of the Public Health
Service Act that could be a reference product with respect to
such application (within the meaning of such section 351) if
such application were submitted under subsection (k) of such
section 351.
(4) Deemed approved under section 351.--An approved
application for a biological product under section 505 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) shall be
deemed to be a license for the biological product under such
section 351 on the date that is 10 years after the date of
enactment of this Act.
(5) Definitions.--For purposes of this subsection, the term
``biological product'' has the meaning given such term under
section 351 of the Public Health Service Act (42 U.S.C. 262)
(as amended by this Act).
SEC. 702. FEES RELATING TO BIOSIMILAR BIOLOGICAL PRODUCTS.
Subparagraph (B) of section 735(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 379g(1)) is amended by inserting ``, including
licensure of a biological product under section 351(k) of such Act''
before the period at the end.
SEC. 703. AMENDMENTS TO CERTAIN PATENT PROVISIONS.
(a) Section 271(e)(2) of title 35, United States Code is amended--
(1) in subparagraph (A), by striking ``or'' after
``patent,'';
(2) in subparagraph (B), by adding ``or'' after the comma
at the end;
(3) by inserting the following after subparagraph (B):
``(C) a statement under section 351(l)(4)(D)(ii) of
the Public Health Service Act,''; and
(4) in the matter following subparagraph (C) (as added by
paragraph (3)), by inserting before the period the following:
``, or if the statement described in subparagraph (C) is
provided in connection with an application to obtain a license
to engage in the commercial manufacture, use, or sale of a
biological product claimed in a patent or the use of which is
claimed in a patent before the expiration of such patent''.
(b) Section 271(e)(4) of title 35, United States Code, is amended
by striking ``in paragraph (2)'' in both places it appears and
inserting ``in paragraph (2)(A) or (2)(B)''.
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